8-K 1 f01655e8vk.htm FORM 8-K e8vk
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 2, 2004

CALPINE CORPORATION

(A Delaware Corporation)

Commission File Number: 001-12079

I.R.S. Employer Identification No. 77-0212977

50 West San Fernando Street

San Jose, California 95113

Telephone: (408) 995-5115

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

  o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
  o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
  o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
  o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

SECTION 1 — REGISTRANT’S BUSINESS AND OPERATIONS

ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

Calpine Corporation (the “Registrant”) entered into three material definitive agreements in the aggregate; to dispose of a significant portion of its oil and gas assets not made in the ordinary course of business of the Registrant. These agreements are outlined below:

Agreement no. 1:

Calpine Natural Gas L.P. (“CNG”) and the Registrant (collectively the “Seller”), entered into an agreement with Pogo Producing Company (“Pogo”), the buyer, effective July 1, 2004 (the “Effective Date”), to sell all of Seller’s right, title and interest in its oil and gas properties and associated assets in New Mexico, including all of Seller’s leases, minerals, overrides, easements, wells, contracts, and personal property (“New Mexico Properties”). The cash consideration was $83.1 million, which included a $3 million performance deposit. Although no purchase price adjustments were made prior to the closing on September 1, 2004, the Purchase and Sale Agreement with Pogo does provide for a post-closing settlement for: (1) certain title defects claimed by Pogo before Closing, provided that such defects cannot be resolved to the satisfaction of both parties, (2) adjustments if Seller is unable to obtain consents to assign certain New Mexico Properties, and (3) revenues and costs before and after the Effective Date.

The New Mexico Properties were sold subject to certain warranties and representations that are customary in transactions of this type in the United States. As noted above, the Seller retains responsibility for curing (or making a purchase price adjustment for) certain title defects claimed by Pogo. In addition, the Seller has agreed to indemnify Pogo for up to one-half of the purchase price for claims: (1) related to pre-Effective Date liabilities (other than certain environmental and title defects) and (2) made on or before December 31, 2005. Pogo agrees to indemnify the Seller for all post-Effective Date liabilities.

This agreement has been attached under Item 9.01(c) as Exhibit 99.1.

Agreement no. 2:

CNG and the Registrant (collectively with CNG the “Seller”), entered into an agreement with Bill Barrett Corporation, the buyer, effective July 1, 2004 (the “Effective Date”), to sell all of the Seller’s right, title and interest in its oil and gas properties and associated assets in Colorado (except for CNG’s Kitzmiller property in the north-west part of the state which were retained by the seller), including leases, minerals, overrides, easements, wells, contracts, and personal property (“Colorado Properties”). The purchase price was $139.7 million, which included a $7.0 million performance deposit. Although no purchase price adjustments were made prior to the closing on September 1, 2004, the Purchase and Sale Agreement with Bill Barrett Corporation does provide for a post-closing settlement for: (1) certain environmental and title defects claimed by Bill Barrett Corporation before closing, provided that such defects cannot be resolved to the satisfaction of both parties, (2) adjustments if Seller is unable to obtain consents to assign for certain Colorado Properties and (3) revenues and costs before and after the Effective Date.

The Colorado Properties were sold subject to certain warranties and representations that are customary in transactions of this type in the United States. As noted above, the Seller retains responsibility for curing (or making a purchase price adjustment for) certain title defects claimed by Barrett. In addition, the Seller has agreed to indemnify Bill Barrett Corporation for up to one-half of the purchase price for claims: (1) related to pre-Effective Date liabilities (other than certain environmental and title defects) and (2) made on or before one year following the closing. Barrett agrees to indemnify Seller for all post-Effective Date liabilities.

This agreement has been attached under Item 9.01(c) as Exhibit 99.2.

Agreement no. 3:

Calpine Canada Natural Gas Partnership (“CCNGP”) and Calpine Energy Holdings Limited (“CEHL”), entered into an agreement with PrimeWest Gas Corp. and PrimeWest Energy Trust, the Buyer, to sell, effective July 1, 2004, all of CCNGP’s interest in oil and gas properties located in Canada and all of CEHL’s ownership interest in 6.8 million units of Calpine Natural Gas Trust (“CNGT”), for cash consideration of CND$825.0 million, or approximately US$625.0 million, less adjustments of CND$15.6 million, to reflect a September 2, 2004, closing date. The agreement contained standard terms and conditions relating to the sale of oil and gas properties in Alberta. The transaction closed on September 2, 2004.

As a result of the sale of the trust units of CNGT, the Registrant’s obligations under various agreements with CNGT have been terminated. This included the Registrant’s obligations under the energy management agreement, the participation agreement (wherein the Registrant had agreed to offer 50% of any future acquisition of properties to the CNGT) and the call on production agreement (wherein the Registrant had the right to purchase all of the CNGT’s production at index pricing, secured by the trust units owned by the Registrant).

This agreement has been attached under Item 9.01(c) as Exhibit 99.3.

 

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SECTION 2 — FINANCIAL INFORMATION

ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS

Calpine Corporation (the “Registrant”) completed the disposition of a significant amount of its oil and gas assets outside the ordinary course of business. A description of the transactions that represent the disposition of a significant amount of assets is listed below.

Calpine Natural Gas L.P. (“CNG”) and the Registrant, (collectively the “Seller”), entered into an agreement with Pogo Producing Company (“Pogo”), the buyer, effective July 1, 2004 (the “Effective Date”), to sell all of Seller’s right, title and interest in its oil and gas properties and associated assets in New Mexico, including all of Seller’s leases, minerals, overrides, easements, wells, contracts, and personal property (“New Mexico Properties”). The cash consideration was $83.1 million, which included a $3 million performance deposit. Although no purchase price adjustments were made prior to the closing on September 1, 2004, the Purchase and Sale Agreement with Pogo does provide for a post-closing settlement for: (1) certain title defects claimed by Pogo before the closing, provided that such defects cannot be resolved to the satisfaction of both parties, (2) adjustments if Seller is unable to obtain consents to assign certain New Mexico Properties, and (3) revenues and costs before and after the Effective Date. The New Mexico Properties were sold subject to certain warranties and representations that are customary in transactions of this type in the United States.

CNG and the Registrant (collectively with CNG the “Seller”), entered into an agreement with Bill Barrett Corporation, the buyer, effective July 1, 2004 (the “Effective Date”), to sell all of the Seller’s right, title and interest in its oil and gas properties and associated assets in Colorado (except for CNG’s Kitzmiller property in the north-west part of the state which were retained by the Seller), including leases, minerals, overrides, easements, wells, contracts, and Colorado Properties. The purchase price was $139.7 million, which included a $7.0 million performance deposit. Although no purchase price adjustments were made prior to the closing on September 1, 2004, the Purchase and Sale Agreement with Bill Barrett Corporation does provide for a post-closing settlement for: (1) certain environmental and title defects claimed by Bill Barrett Corporation before closing, provided that such defects cannot be resolved to the satisfaction of both parties, (2) adjustments if Seller is unable to obtain consents to assign for certain Colorado Properties and (3) revenues and costs before and after the Effective Date. The Colorado Properties were sold subject to certain warranties and representations that are customary in transactions of this type in the United States.

Calpine Canada Natural Gas Partnership (“CCNGP”) and Calpine Energy Holdings Limited (“CEHL”), entered into an agreement with PrimeWest Gas Corp. and PrimeWest Energy Trust, the Buyer, to sell, effective July 1, 2004, all of CCNGP’s interest in oil and gas properties located in Canada and all of CEHL’s ownership interest in 6.8 million units of Calpine Natural Gas Trust (“CNGT”), for cash consideration of CND$825.0 million, or approximately US$625.0 million, less adjustments of CND $15.6 million, to reflect a September 2, 2004, closing date. The agreement contained standard terms and conditions relating to the sale of oil and gas properties in Alberta. The transaction closed on September 2, 2004.

 

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ITEM 2.05. COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES

On September 1, 2004, as further described in Items 1.01 and 2.01 of the Form 8-K, the Registrant along with CNG completed the sale of its Rocky Mountain gas reserves that are primarily concentrated in two geographic areas: the Colorado Piceance Basin and the New Mexico San Juan Basin. Together, these assets represent approximately 120 billion cubic feet equivalent (“Bcfe”) of proved gas reserves, producing approximately 16.3 million net cubic feet equivalent (“MMcfed”) per day of gas. On September 2, 2004, the Registrant completed the sale of its Canadian natural gas reserves and petroleum assets. These Canadian assets represent approximately 221 Bcfe of proved reserves, producing approximately 61 MMcfed. Included in this sale was the Registrant’s 25 percent interest in approximately 80 Bcfe of proved reserves (net of royalties) and 32 MMcfed of production owned by the Calpine Natural Gas Trust (“CNGT”). In connection with the Registrant’s sale of its Canadian and Rocky Mountain gas reserves, the Registrant will incur one-time future cash expenditures associated with the sale, consisting of employee severance and other related one-time termination benefits of approximately $4.9 million pre-tax, various other exit costs of approximately $0.6 million pre-tax and closing fees of approximately $4.6 million pre-tax, for total pre-tax exit activity costs of approximately $10.1 million ($6.1 million net of tax).

SECTION 8 — OTHER EVENTS

ITEM 8.01. OTHER EVENTS

On September 2, 2004, the Registrant issued a press release attached hereto as exhibit 99.4 announcing the sale of its Rocky Mountain gas reserves. Also, on September 2, 2004, the Registrant issued a press release attached hereto as exhibit 99.5 announcing the completion of the sale of its Canadian gas reserves.

 

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SECTION 9 — FINANCIAL STATEMENTS AND EXHIBITS

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements of Businesses Acquired
      Not Applicable

(b) Pro Forma Financial Information

Calpine Natural Gas L.P. (“CNG”) and the Registrant, (collectively the “Seller”), entered into an agreement with Pogo Producing Company (“Pogo”), the buyer, effective July 1, 2004 (the “Effective Date”), to sell all of Seller’s right, title and interest in its oil and gas properties and associated assets in New Mexico, including all of Seller’s leases, minerals, overrides, easements, wells, contracts, and personal property (“Properties”). The cash consideration was $83.1 million, which included a $3 million performance deposit. Although no purchase price adjustments were made for operations prior to the closing on September 1, 2004, the Purchase and Sale Agreement (“PSA”) does provide for a post-closing settlement for: (1) certain environment and title defects claimed by Pogo before Closing, provided that such defects cannot be resolved to the satisfaction of both parties, (2) adjustments if Seller is unable to obtain consents to assign for certain Properties, and (3) revenues and costs before and after the Effective Date. The Properties were sold subject to certain warranties and representations that are customary in transactions of this type in the United States.

CNG and the Registrant (collectively the “Seller”), entered into an agreement with Bill Barrett Corp. (“Barrett”), the buyer, effective July 1, 2004 (the “Effective Date”), to sell all of the Seller’s Effective Date right, title and interest in its oil and gas properties and associated assets in Colorado (except for CNG’s Kitzmiller property that was retained in the north-west part of the state), including leases, minerals, overrides, easements, wells, contracts, and Properties. The purchase price was $139.7 million, which included a $7.0 million performance deposit. Although no purchase price adjustments were made for operations prior to September 1, 2004, the closing date, the PSA does provide for a post-closing settlement for: (1) certain environment and title defects claimed by the Barrett before Closing, provided that such defects cannot be resolved to the satisfaction of both parties, (2) adjustments if Seller is unable to obtain consents to assign for certain Properties and (3) revenues and costs before and after the Effective Date. The Properties were sold subject to certain warranties and representations that are customary in transactions of this type in the United States.

Calpine Canada Natural Gas Partnership (“CCNGP”) and Calpine Energy Holdings Limited (“CEHL”), entered into an agreement with PrimeWest Gas Corp. and PrimeWest Energy Trust, the Buyer, to sell, effective July 1, 2004, all of CCNGP’s interest in oil and gas properties located in Canada and all of CEHL’s ownership interest in 6.8 million units of Calpine Natural Gas Trust (“CNGT”), for cash consideration of CND$825.0 million, or approximately US$625.0 million, less adjustments of CND$15.6 million, to reflect a September 2, 2004, closing date. The agreement contained standard terms and conditions relating to the sale of oil and gas properties in Alberta. The transaction closed on September 2, 2004 Effective Date.

In connection with the Registrant’s sale of its Canadian gas reserves, the Registrant will incur one-time future cash expenditures associated with the sale, consisting of employee severance and other related one-time termination benefits of approximately $4.9 million pre-tax, various other exit costs of approximately $0.6 million pre-tax and closing fees of approximately $4.6 million pre-tax, for total pre-tax exit activity costs of approximately $10.1 million ($6.1 million net of tax). These charges, which will be made in the third quarter of 2004, were not considered in the historical Pro-Forma Consolidated Condensed Statements of Operations presented below.

The unaudited Pro-forma Consolidated Condensed Statements of Operations are presented for the six months ended June 30, 2004 and the year ended December 31, 2003 and present the Registrant’s operations as if the transactions described above had occurred at January 1 of each of the periods presented. An unaudited Pro-Forma Consolidated Condensed Balance Sheet as of June 30, 2004, is also presented. The unaudited Pro-Forma Consolidated Condensed Balance Sheet presents the property sales described above, as if they had occurred at January 1, 2004.

The unaudited Pro-Forma Consolidated Condensed Financial Statements should be read in conjunction with the Registrant’s Financial Statements and related Notes included in the Registrant’s Report on Form 10-Q for the quarter ended June 30, 2004 and the Report on Form 10-K for the year ended December 31, 2003 filed with the Securities and Exchange Commission.

 

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CALPINE CORPORATION AND SUBSIDIARIES

PRO-FORMA CONSOLIDATED CONDENSED BALANCE SHEET
June 30, 2004
(In thousands, except share and per share amounts)
(Unaudited)

                                         
      Canadian   Rocky Mountain   New Mexico    
    Actual
   Gas Assets(1)
   Gas Assets(1)
   Gas Assets(1)
   Pro-Forma
    (Unaudited)
ASSETS
Current assets:
                                        
Cash and cash equivalents
   $ 844,031     $ —     $ —     $ —     $ 844,031  
Accounts receivable, net
     1,170,130     —     —     —       1,170,130  
Margin deposits and other prepaid expense
     406,741     —     —     —       406,741  
Inventories
     144,913       (1,838 )   —     —       143,075  
Restricted cash
     317,833     —     —     —       317,833  
Current derivative assets
     338,805     —     —     —       338,805  
Current assets held for sale
     —       1,838     —     —       1,838  
Other current assets
     72,117     —     —     —       72,117  
 
    
 		      
 		      
 		      
 		      
 		  
Total current assets
     3,294,570     —     —     —       3,294,570  
 
    
 		      
 		      
 		      
 		      
 		  
Restricted cash, net of current portion
     191,695     —     —     —       191,695  
Notes receivable, net of current portion
     225,396     —     —     —       225,396  
Project development costs
     151,084     —     —     —       151,084  
Investments in power projects and oil and gas properties
     417,303       (24,558 )   —     —       392,745  
Deferred financing costs
     423,499     —     —     —       423,499  
Prepaid lease, net of current portion
     383,940     —     —     —       383,940  
Property, plant and equipment, net
     21,031,174       (456,668 )     (65,654 )     (47,286 )     20,461,566  
Goodwill, net
     45,160     —     —     —       45,160  
Other intangible assets, net
     89,411     —     —     —       89,411  
Long-term derivative assets
     561,328     —     —     —       561,328  
Long-term assets held for sale
     —       481,226       65,654       47,286       594,166  
Other assets
     627,202     —     —     —       627,202  
 
    
 		      
 		      
 		      
 		      
 		  
Total assets
   $ 27,441,762     $ —     $ —     $ —     $ 27,441,762  
 
    
 		      
 		      
 		      
 		      
 		  
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
                                        
Accounts payable
   $ 1,160,600     —     —     —     $ 1,160,600  
Accrued payroll and related expense
     72,644       —       —       —       72,644  
Accrued interest payable
     362,497       —       —       —       362,497  
Income taxes payable
     5,680       —       —       —       5,680  
Notes payable and borrowings under lines of credit, current portion
     239,289       —       —       —       239,289  
Preferred interests, current portion
     8,758       —       —       —       8,758  
Capital lease obligation, current portion
     8,466       —       —       —       8,466  
CCFC I financing, current portion
     3,208       —       —       —       3,208  
Construction/project financing, current portion
     57,256       —       —       —       57,256  
Senior notes and term loans, current portion
     14,500       (2,000 )     —       —       12,500  
Current derivative liabilities
     383,097       —       —       —       383,097  
Current liabilities held for sale
     —       4,330       —       —       4,330  
Other current liabilities
     271,589       (2,330 )     —       —       269,259  
 
    
 		      
 		      
 		      
 		      
 		  
Total current liabilities
     2,587,584       —       —       —       2,587,584  
 
    
 		      
 		      
 		      
 		      
 		  
Notes payable and borrowings under lines of credit, net of current portion
     861,424       —       —       —       861,424  
Notes payable to Calpine Capital Trusts
     1,153,500       —       —       —       1,153,500  
Preferred interests, net of current portion
     142,064       —       —       —       142,064  
Capital lease obligation, net of current portion
     283,005       —       —       —       283,005  
CCFC I financing, net of current portion
     784,661       —       —       —       784,661  
CalGen/CCFC II financing
     2,448,907       —       —       —       2,448,907  
Construction/project financing, net of current portion
     1,723,040       —       —       —       1,723,040  
Convertible Senior Notes Due 2006
     72,126       —       —       —       72,126  

 

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CALPINE CORPORATION AND SUBSIDIARIES

PRO-FORMA CONSOLIDATED CONDENSED BALANCE SHEET — (Continued)
June 30, 2004
(In thousands, except share and per share amounts)
(Unaudited)

                                         
      Canadian   Rocky Mountain   New Mexico    
    Actual
   Gas Assets(1)
   Gas Assets(1)
   Gas Assets(1)
   Pro-Forma
    (Unaudited)
Convertible Senior Notes Due 2023
     900,000       —       —       —       900,000  
Senior notes and term loans, net of current portion
     9,370,936       (218,529 )     (48,949 )     (29,022 )     9,074,436  
Deferred income taxes, net
     1,185,712       —       —       —       1,185,712  
Deferred revenue
     110,087       —       —       —       110,087  
Long-term derivative liabilities
     599,495       —       —       —       599,495  
Long-term liabilities held for sale
     —       234,014       49,091       29,193       312,298  
Other liabilities
     267,769       (15,485 )     (142 )     (171 )     251,971  
 
    
 		      
 		      
 		      
 		      
 		  
Total liabilities
     22,490,310       —       —       —       22,490,310  
 
    
 		      
 		      
 		      
 		      
 		  
Minority interests
     350,561       —       —       —       350,561  
 
    
 		      
 		      
 		      
 		      
 		  
Stockholders’ equity:
                                        
Preferred stock, $.001 par value per share; authorized 10,000,000 shares; none issued and outstanding in 2004 and 2003
     —       —       —       —       —  
Common stock, $.001 par value per share; authorized 1,000,000,000 shares at December 31, 2003, and 2,000,000,000 shares at June 30, 2004; issued and outstanding 439,326,249 shares in 2004 and 415,010,125 shares in 2003
     439       —       —       —       439  
Additional paid-in capital
     3,109,778       —       —       —       3,109,778  
Retained earnings
     1,468,619       —       —       —       1,468,619  
Accumulated other comprehensive income
     22,055       —       —       —       22,055  
 
    
 		      
 		      
 		      
 		      
 		  
Total stockholders’ equity
   4,600,891       —       —     —       4,600,891  
 
    
 		      
 		      
 		      
 		      
 		  
Total liabilities and stockholders’ equity
   $ 27,441,762     $ —     $ —     $ —     $ 27,441,762  
 
    
 		      
 		      
 		      
 		      
 		  

(1)   Assumes sale by Calpine Corporation on June 30, 2004.

 

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CALPINE CORPORATION AND SUBSIDIARIES

PRO-FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS(1)(2)
Six Months Ended June 30, 2004
(In thousands, except per share amounts)
(Unaudited)

                                         
      Canadian   Rocky Mountain   New Mexico    
    Actual
   Gas Assets
   Gas Assets
   Gas Assets
   Pro-Forma
    (Unaudited)
Revenue:
                                        
Electric generation and marketing revenue
                                        
Electricity and steam revenue
   $ 2,558,678     $ —     $ —     $ —     $ 2,558,678  
Sales of purchased power for hedging and optimization
     876,680       —       —       —       876,680  
 
    
 		      
 		      
 		      
 		      
 		  
Total electric generation and marketing revenue
     3,435,358       —       —       —       3,435,358  
Oil and gas production and marketing revenue
                                        
Oil and gas sales
     50,651       (19,108 )     (374 )     (1,384 )     29,785  
Sales of purchased gas for hedging and optimization
     834,708       —       —       —       834,708  
 
    
 		      
 		      
 		      
 		      
 		  
Total oil and gas production and marketing revenue
     885,359       (19,108 )     (374 )     (1,384 )     864,493  
Mark-to-market activities, net
     (10,086 )     —       —       —       (10,086 )
Other revenue
     46,741       —       —       —       46,741  
 
    
 		      
 		      
 		      
 		      
 		  
Total revenue
     4,357,372       (19,108 )     (374 )     (1,384 )     4,336,506  
 
    
 		      
 		      
 		      
 		      
 		  
Cost of revenue:
                                        
Electric generation and marketing expense
                                        
Plant operating expense
     399,498       —       —       —       399,498    
Transmission purchase expense
     31,078       —       —       —       31,078  
Royalty expense
     12,833       —       —       —       12,833  
Purchased power expense for hedging and optimization
     820,108       —       —       —       820,108  
 
    
 		      
 		      
 		      
 		      
 		  
Total electric generation and marketing expense
     1,263,517       —       —       —       1,263,517  
Oil and gas operating and marketing expense
                                        
Oil and gas operating expense
     45,770       (13,687 )     (1,290 )     (2,647 )     28,146  
Purchased gas expense for hedging and optimization
     814,409       —       —       —       814,409  
 
    
 		      
 		      
 		      
 		      
 		  
Total oil and gas operating and marketing expense
     860,179       (13,687 )     (1,290 )     (2,647 )     842,555  
Fuel expense
     1,630,490       39,188       9,486       6,756       1,685,920  
Depreciation, depletion and amortization expense
     311,203       (34,495 )     (3,099 )     (1,847 )     271,762  
Operating lease expense
     54,762       —       —       —       54,762  
Other cost of revenue
     48,988       —       —       —       48,988  
 
    
 		      
 		      
 		      
 		      
 		  
Total cost of revenue
     4,169,139       (8,994 )     5,097     2,262       4,167,504  
 
    
 		      
 		      
 		      
 		      
 		  
Gross profit
     188,233       (10,114 )     (5,471 )     (3,646 )     169,002  
Loss (income) from unconsolidated investments in power projects and oil and gas properties
     (1,788 )     2,586       —       —       798  
Equipment cancellation and impairment cost
     2,367       —       —       —       2,367  
Project development expense
     11,748       —       —       —       11,748  
Research and development expense
     8,939       —       —       —       8,939  
Sales, general and administrative expense
     118,225       (5,612 )     —       —       112,613  
 
    
 		      
 		      
 		      
 		      
 		  
Income from operations
     48,742       (7,088 )     (5,471 )     (3,646 )     32,537  
Interest expense
     534,452       (9,920 )     (1,694 )     (1,120 )     521,718  
Interest (income)
     (21,981 )     —       —       —       (21,981 )
Minority interest expense
     13,159       —       —       —       13,159  
(Income) from repurchase of various issuances of debt
     (3,394 )     —       —       —       (3,394 )
Other (income)
     (203,996 )     —       —       —       (203,996 )
 
    
 		      
 		      
 		      
 		      
 		  
Loss before (benefit) for income taxes
     (269,498 )     2,832       (3,777 )     (2,526 )     (272,969 )
(Benefit) for income taxes
     (146,553 )     1,109       (1,440 )     (1,003 )     (147,887 )
 
    
 		      
 		      
 		      
 		      
 		  
Loss from continuing operations(3)
   $ (122,945 )   $ 1,723     $ (2,337 )   $ (1,523 )   $ (125,082 )

 

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CALPINE CORPORATION AND SUBSIDIARIES

PRO-FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS(1)(2) — (Continued)
Six Months Ended June 30, 2004
(In thousands, except per share amounts)
(Unaudited)

                                         
      Canadian   Rocky Mountain   New Mexico    
    Actual
   Gas Assets
   Gas Assets
   Gas Assets
   Pro-Forma
    (Unaudited)
Basic and diluted loss per common share:
                                        
Weighted average shares of common stock outstanding
     416,332                               416,332  
Loss from continuing operations (3)
   $ (0.30 )                           $ (0.30 )

(1)   The Pro-Forma Consolidated Condensed Statement of Operations assumes that the gas asset sales described above were sold by Calpine Corporation on January 1, 2003.
 
(2)   Operating results for the gas assets described above are their actual operating results from January 1 to their respective dates of sale.
 
(3)   Represents loss before discontinued operations and cumulative effect of a change in accounting principle.

 

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CALPINE CORPORATION AND SUBSIDIARIES

PRO-FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS(1)(2)
Year Ended December 31, 2003
(In thousands, except per share amounts)
(Unaudited)

                                                 
Canadian Rocky Mountain New Mexico Other Pro-
Actual Gas Assets Gas Assets Gas Assets Reclassifications(3) Forma
(Unaudited)
Revenue:
                                               
 
Electric generation and marketing revenue
                                               
   
Electricity and steam revenue
  $ 4,695,744     $ —     $ —     $ —     $ (15,347)     $ 4,680,397  
   
Sales of purchased power for hedging and optimization
    2,714,187       —       —       —       —       2,714,187  
     
     
     
     
     
     
 
     
Total electric generation and marketing revenue
    7,409,931       —       —       —       (15,347)       7,394,584  
 
Oil and gas production and marketing revenue
                                       
   
Oil and gas sales
    107,662       (46,920 )     (275 )     (1,311 )     —       59,156  
   
Sales of purchased gas for hedging and optimization
    1,320,902       —       —       —       —       1,320,902
     
     
     
     
     
     
 
     
Total oil and gas production and marketing revenue
    1,428,564       (46,920 )     (275 )     (1,311 )     —       1,380,058  
 
Mark-to-market activities, net
    (26,439 )     —       —       —               (26,439 )
 
Other revenue
    107,483       —       —       —       15,347       122,830  
     
     
     
     
     
     
 
     
Total revenue
    8,919,539       (46,920 )     (275 )     (1,311 )     —       8,871,033  
     
     
     
     
     
     
 
Cost of revenue:
                                               
 
Electric generation and marketing expense
                                               
   
Plant operating expense
    679,031       —       —       —     (4,221 )     674,810  
   
Transmission purchase expense
    —       —       —       —       34,690       34,690  
   
Royalty expense
    24,932       —       —       —       —       24,932  
   
Purchased power expense for hedging and optimization
    2,690,069       —       —       —       —       2,690,069  
     
     
     
     
     
     
 
     
Total electric generation and marketing expense
    3,394,032       —       —       —       30,469       3,424,501  
 
Oil and gas operating and marketing expense
                                             
   
Oil and gas operating expense
    106,244       (24,011 )     (2,569 )     (4,211 )     —       75,453  
   
Purchased gas expense for hedging and optimization
    1,279,568       —       —       —       —       1,279,568  
     
     
     
     
     
     
 
     
Total oil and gas operating and marketing expense
    1,385,812       (24,011 )     (2,569 )     (4,211 )     —       1,355,021  
 
Fuel expense
    2,564,742       76,778       14,590       9,508       —       2,665,618  
 
Depreciation, depletion and amortization expense
    583,912       (69,056 )     (4,817 )     (2,724 )     —       507,315  
 
Operating lease expense
    112,070       —       —       —       —       112,070  
 
Other cost of revenue
    42,270       —       —       —       —       42,270  
     
     
     
     
     
     
 
     
Total cost of revenue
    8,082,838       (16,289 )     7,204       2,573       30,469     8,106,795  
     
     
     
     
     
     
 
       
Gross profit
    836,701       (30,631 )     (7,479 )     (3,884 )     (30,469 )     764,238  
(Income) from unconsolidated investments in power projects and oil and gas properties
    (76,703 )     898       —       —       —       (75,805 )
Equipment cancellation and impairment cost
    64,384       —       —       —       —       64,384  
Long-term service agreement cancellation charge
    16,355       —       —       —       —       16,355  
Project development expense
    21,804       —       —       —       —       21,804  
Research and development expense
    —       —       —       —       10,630       10,630  
Sales, general and administrative expense
    265,653       (8,083 )     —       —       (41,099 )     216,471  
Merger expense
    —       —       —       —       —       —  
     
     
     
     
     
     
 

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CALPINE CORPORATION AND SUBSIDIARIES

PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS — (Continued)
Year Ended December 31, 2003
(In thousands, except per share amounts)
(Unaudited)

                                             
  Canadian Rocky Mountain New Mexico Other Pro-
Actual Gas Assets Gas Assets Gas Assets Reclassifications(3) Forma
(Unaudited)
Income from operations
    545,208       (23,446 )     (7,479 )     (3,884 )     —       510,399  
Interest expense
    726,103       (15,892 )     (2,271 )     (1,634 )     —       706,306  
Distributions on trust preferred securities
    46,610       —       —       —       —       46,610  
Interest (income)
    (39,716 )     —       —       —       —       (39,716 )
Minority interest expense
    27,330       —       —       —       —       27,330  
(Income) from repurchase of various issuances of debt
    (278,612 )     —       —       —       —       (278,612 )
Other (income)
    (46,126 )     —       —       —       —       (46,126 )
Income before provision (benefit) for income taxes
    109,619       (7,554 )     (5,208 )     (2,250 )     —       94,607  
(Benefit) for income taxes
    (134 )     (2,960 )     (1,980 )     (899 )     —       (5,973 )
Income from continuing operations (4)
  $109,753       $(4,594 )     $(3,228 )     $(1,351 )     $—       $100,580  
 
Basic earnings per common share:
                                       
 
Weighted average shares of common stock outstanding
    390,772                                       390,772  
 
Income from continuing operations (4)
  $ 0.28                                     $ 0.26  
Diluted earnings per common share:
                                               
 
Weighted average shares of common stock outstanding before dilutive effect of certain convertible securities
    396,219                                       396,219  
 
Income from continuing operations (4)
  $ 0.28                                     $ 0.25  

     
(1)   The Pro-Forma Consolidated Statement of Operations assumes that the gas asset sales described above were sold on January 1, 2003.
 
(2)   Operating results for the gas assets described above are their actual operating results from January 1 to their respective dates of sales.
 
(3)   Certain amounts in the Pro-Forma Consolidated Statement of Operations have been reclassified to conform to the 2004 presentation. Note that these reclassifications did not occur as a result of the disposition of the gas assets described above. These reclassifications include: (1) $15,347 from Electricity and Steam revenue to Other revenue representing Transmission revenue; (2) $34,690 from Plant operating expense to Transmission purchase expense; (3) $25,075 from Sales, general and administrative expense to Plant operating expense for information systems costs for the Company’s power plants; (4) $10,630 from Sales, general and administrative expense to Research and development expense; and (5) $5,394 from Sales, general and administrative expense to Plant operating expense for the Company’s stock option compensation expense.
 
(4)   Represents income before discontinued operations and cumulative effect of a change in accounting principle.

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(c)  Exhibits

         
99.1   —   Purchase and Sale Agreement among Calpine Corporation, Calpine Natural Gas L.P. and Pogo Producing Company dated July 1, 2004.
99.2   —   Purchase and Sale Agreement among Calpine Corporation, Calpine Natural Gas L.P. and Bill Barrett Corporation dated July 1, 2004
99.3   —   Asset and Trust Unit Purchase and Sale Agreement among Calpine Canada Natural Gas Partnership and Calpine Energy Holdings Limited and Calpine Corporation and PrimeWest Gas Corp. and PrimeWest Energy Trust dated July 1, 2004.
99.4   —   Press release dated September 2, 2004, indicating the Registrant’s sale of its Rocky Mountain gas reserves.
99.5   —   Press release dated September 2, 2004, indicating the Registrant’s sale of its Canadian gas reserves.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CALPINE CORPORATION
         
     
  By:   /s/ Charles B. Clark, Jr.    
    Charles B. Clark, Jr.   
    Senior Vice President and Corporate Controller, Chief Accounting Officer   
 

Date: September 8, 2004

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EXHIBIT INDEX

 
Exhibit    
No.
   Description
 
99.1   Purchase and Sale Agreement among Calpine Corporation, Calpine Natural Gas L.P. and Pogo Producing Company dated July 1, 2004.
 
99.2   Purchase and Sale Agreement among Calpine Corporation, Calpine Natural Gas L.P. and Bill Barrett Corporation dated July 1, 2004.
 
99.3   Asset and Trust Unit Purchase and Sale Agreement among Calpine Canada Natural Gas Partnership and Calpine Energy Holdings Limited and Calpine Corporation and PrimeWest Gas Corp. and PrimeWest Energy Trust dated July 1, 2004.
 
99.4   Press release dated September 2, 2004, indicating the Registrant’s sale of its Rocky Mountain gas reserves.
 
99.5   Press release dated September 2, 2004, indicating the Registrant’s sale of its Canadian gas reserves.