-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AaJXt5akaKwyLBQ7MATgWblcB17wJsgInnOYIRC9BP3dGLDlY1Oy7bVIlW6egSe5 6gQZOLn/kNtEsFpPxYPcVA== 0000916457-03-000005.txt : 20030214 0000916457-03-000005.hdr.sgml : 20030214 20030214175504 ACCESSION NUMBER: 0000916457-03-000005 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030213 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALPINE CORP CENTRAL INDEX KEY: 0000916457 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 770212977 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12079 FILM NUMBER: 03568761 BUSINESS ADDRESS: STREET 1: 50 WEST SAN FERNANDO ST CITY: SAN JOSE STATE: CA ZIP: 95113 BUSINESS PHONE: 4089955115 MAIL ADDRESS: STREET 1: 50 W SAN FERNANDO STREET 2: SUITE 500 CITY: SAN JOSE STATE: CA ZIP: 95113 8-K 1 o21303.txt 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): February 13, 2003 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 ITEM 5. OTHER EVENTS NEWS RELEASE CALPINE CONTACT: 408-995-5115 Investor Relations: Rick Barraza, X1125 CALPINE POWER INCOME FUND CONTACT Investor/Media Relations: Lisa Poelle, 403-781-6200 CALPINE COMPLETES SECONDARY OFFERING IN CANADIAN POWER INCOME FUND (Calgary, Alberta) February 13, 2003 -- Calpine Corporation [NYSE:CPN], a leading North American power producer, and Calpine Power Income Fund [TSX:CF.UN] today announced that they have completed the secondary offering of Warranted Units of the Calpine Power Income Fund for gross proceeds of Cdn $153.3 million. The 17,034,234 Warranted Units were sold to a syndicate of underwriters led by Scotia Capital Inc. and CIBC World Markets Inc. at a price of Cdn $9.00. The Warrants will trade on the Toronto Stock Exchange under the symbol CF.WT. The securities have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This news release shall not constitute an offer to sell or a solicitation to buy these securities in any state of the United States or province of Canada. Calpine Power Income Fund is an unincorporated open-ended trust that invests in electrical power generation assets. The Fund indirectly owns interests in two power generating facilities in British Columbia and Alberta and has a loan interest in a third power generating facility in Ontario. The Fund is managed by Calpine Canada Power Ltd., which is headquartered in Calgary, Alberta. The Trust Units of the Calpine Power Income Fund are listed on the Toronto Stock Exchange under the symbol CF.UN, and the Trust Units have the second-highest Canadian stability rating of 'SR-2' with a stable outlook from Standard & Poor's. For more information about the Fund, please visit its website at www.calpinepif.com. Based in San Jose, Calif., Calpine Corporation is an independent power company that is dedicated to providing wholesale and industrial customers with clean, efficient, natural gas-fired and geothermal power generation. It generates power through plants it owns, operates, leases and develops in 23 states in the United States, three provinces in Canada and in the United Kingdom. Calpine also owns approximately 1.0 trillion cubic feet equivalent of proved natural gas reserves in Canada and the United States. The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information about Calpine, visit its website at www.calpine.com. This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements such as those concerning Calpine Corporation's ("the Company") expected financial performance and its strategic and operational plans, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements, such as, but not limited to: (i) the timing and extent of deregulation of energy markets and the rules and regulations adopted on a transitional basis with respect thereto; (ii) the timing and extent of changes in commodity prices for energy, particularly natural gas and electricity; (iii) commercial operations of new plants that may be delayed or prevented because of various development and construction risks, such as a failure to obtain the necessary permits to operate, failure of third-party contractors to perform their contractual obligations or failure to obtain financing on acceptable terms; (iv) unscheduled outages of operating plants; (v) unseasonable weather patterns that produce reduced demand for power; (vi) systemic economic slowdowns, which can adversely affect consumption of power by businesses and consumers; (vii) actual costs being higher than preliminary cost estimates; and (viii) other risks identified from time-to-time in our reports and registration statements filed with the SEC, including the risk factors identified in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2002 and in our Annual Report on Form 10-K for the year ended December 31, 2001, which can be found on the Company's web site at www.calpine.com. All information set forth in this news release is as of today's date, and the Company undertakes no duty to update this information. -2- ITEM 9. REGULATION FD DISCLOSURE This information is being furnished solely pursuant the rules regarding reports under Item 9 of Form 8-K. NEWS RELEASE CONTACTS: (408) 995-5115 Media Relations: Katherine Potter, X1168 Investor Relations: Rick Barraza, X1125 CALPINE REPORTS FOURTH QUARTER AND YEAR-END 2002 FINANCIAL AND OPERATING RESULTS (SAN JOSE, CALIF.) February 13, 2003 - San Jose, Calif.-based Calpine Corporation [NYSE:CPN], one of North America's leading power companies, today announced financial and operating results for the quarter and twelve months ended December 31, 2002. Before certain non-recurring items (as detailed in the attached Supplemental Data), Calpine achieved $0.09 diluted earnings per share, or $34.6 million in net income for the fourth quarter 2002. The company reported $0.05 diluted loss per share, or an $18.0 million net loss, compared with $0.30 diluted earnings per share, or $100.0 million of net income, in the fourth quarter of 2001. Before certain non-recurring items (as detailed in the attached Supplemental Data), Calpine achieved $0.84 diluted earnings per share, or $329.6 million in net income for the twelve months ended December 31, 2002. Calpine earned $0.39 diluted earnings per share, or $141.6 million in net income, compared with $1.87 diluted earnings per share, or $648.1 million of net income, for the same period of 2001. Results are unaudited and subject to the completion of the 2002 audit and the reaudit of 2000 and 2001 by Deloitte & Touche LLP.
Fourth Quarter (unaudited) Year-End (unaudited) --------------------------------- ------------------------------- 2002 2001 % Chg 2002 2001 % Chg --------- -------- ------ -------- --------- ------ Megawatt-hours Generated (millions) 20.7 14.7 41% 74.5 43.5 71% Megawatts in Operation 19,046 11,086 72% 19,046 11,086 72% Revenue (millions) $ 1,896 $ 1,465 29% $ 7,483 $ 6,769 11% GAAP: Net Income (Loss) (millions) $ (18.0) $ 100.0 (118)% $ 141.6 $ 648.1 (78)% Diluted Earnings (Loss) Per Share $ (0.05) $ 0.30 (117)% $ 0.39 $ 1.87 (79)% Recurring: Net Income (millions) (a) $ 34.6 $ 92.7 (63)% $ 329.6 $ 668.4 (51)% Diluted Earnings Per Share (a) $ 0.09 $ 0.27 (67)% $ 0.84 $ 1.92 (56)% EBITDA, as adjusted (millions) (b) $ 255.6 $ 332.6 (23)% $ 1,134 $ 1,601 (29)% Recurring EBITDA, as adjusted (millions) (c) $ 318.9 $ 320.9 (1)% $ 1,383 $ 1,632 (15)% Total Assets (billions) $ 23 $ 21 10% 23 21 10% (a) See attached Supplemental Data for reconciliation of GAAP net income to net income from recurring operations. The company believes that the presentation of recurring information herein is useful to analyzing the normalized earnings potential of the company and in providing consistency of reporting throughout 2002. (b) Earnings Before Interest, Tax, Depreciation and Amortization, as adjusted; see attached Supplemental Data for reconciliation from net income. (c) See attached Supplemental Data for reconciliation of EBITDA, as adjusted to recurring EBITDA, as adjusted.
"Looking back on 2002, I am pleased to report that Calpine remained profitable even in a recessionary year and during a period of depressed energy prices," stated Calpine Chairman and CEO Peter Cartwright. "The company made significant strides in enhancing liquidity and increasing our revenue-generating capabilities. In 2002, we completed approximately $3.1 billion of finance transactions, retired debt, completed non-strategic asset sales, and reduced 2002/2003 forecasted capital spending by over $4 billion. We recently announced restructuring of our turbine agreements, reducing capital expenditures by an additional $3.4 billion." "I am equally proud of the fact that Calpine has achieved another industry first. In 2002 alone, we completed the construction of more power plants in one year than any power company or agency in the history of the power industry. During the most favorable of market conditions, the addition of 8,200 megawatts of capacity would be impressive - given today's challenging marketplace, it is extraordinary." -3- "2002 is behind us. We faced intense pressures - with American industry, in general, and the power industry, in particular - suffering a great loss of confidence from the public and from investors. Calpine enters 2003 as a stronger organization, backed by the nation's largest, most efficient and cleanest fleet of natural gas-fired power-generating facilities in North America. Calpine has in place the people, the commitment to integrity, and the proven strategy to succeed." 2002 FOURTH QUARTER AND YEAR-END FINANCIAL RESULTS Results - ------- Financial results for the twelve months ended December 31, 2002, were affected by a significant decrease in electricity prices and spark spreads compared with the same periods in 2001, primarily reflecting an increase in supply. However, average realized electric prices increased in the three months ended December 31, 2002 compared to the fourth quarter of 2001 while sparks spreads were relatively flat because of rising fuel costs. The company has experienced a significant drop in margin from trading activities, which reflects the company's decision to limit this activity due to costs associated with credit support for trading. In addition, financial results have been impacted by charges in connection with equipment cancellations. Total electrical generating production for the three and twelve months ended December 31, 2002, increased by 41% and 71%, respectively, as the company brought additional facilities into operation. However, the combination of lower spark spreads on electrical generation, higher operating expenses and depreciation charges associated with additional plants coming on line, and lower trading gains resulted in decreases of 16% and 18%, respectively, in gross profit for the three and twelve months ended December 31, 2002, compared with the same periods in 2001. Calpine's low cost of production, economies of scale and portfolio of long-term contracts helped to mitigate the effects of the depressed power market on Calpine's financial results. In addition, the company recorded a pre-tax $404.7 million charge for the year in connection with the equipment cancellations and related charges. Financial results for the fourth quarter of 2002 reflect higher project development costs, as the company expensed costs related to the indefinite suspension of certain development projects. In addition, the company incurred a $210.7 million pre-tax charge for equipment cancellations and related charges. General and administrative expense increased due to the growth of the company's infrastructure needed to support operations and due to charges related to the company's reorganization, including severance and excess office space, and for reaudit fees for 2000 and 2001. Interest expense increased due to additional projects in commercial operation. Other income increased primarily as a result of a pre-tax gain of $114.5 million from the receipt of Senior Notes as consideration for British Columbia asset sales. Discontinued operations included $48.0 million net gains on the sale of the De Pere Energy Center, and Alberta and British Columbia oil and gas assets. OPERATIONS-FOCUSED POWER COMPANY In 2002, Calpine increased its power generation portfolio by more than 72%, adding approximately 8,200 megawatts of the cleanest, most efficient natural gas-fired generation in North America. Calpine now has 76 power plants in operation - totaling more than 19,000 megawatts of capacity - and owns approximately one trillion cubic feet equivalent of proved natural gas reserves in Canada and the United States. With its 19,000-megawatt portfolio in place, Calpine has completed a corporate restructuring program - successfully transitioning the company from a development-focused independent power company, to one of North America's largest owners and operators of power-generating facilities. Consistent with its proven business model, the company continues to enter into long-term power contracts and currently serves more than 80 wholesale and industrial customers throughout North America. In 2002, Calpine: o Continued to enhance its safety program; the company's lost time accidents record was four times better than the nationwide power industry average. o Remained the industry leader for cleanest natural gas-fired power portfolio, with the most environmentally responsible natural gas-fired power plants in North America; remains the largest geothermal power producer in the world. o Operated 76 power plants with a 92% average availability. o Produced a record 74.5-million megawatt hours, a 71% increase from 2001. o Reduced plant operating expenses per megawatt-hour by approximately 10% in 2002, compared to 2001. -4- o Completed construction of nine natural gas-fired power plants and four expansion projects, adding more than 8,200 megawatts of capacity. o Advanced construction of 23 projects in 12 states and one province in Canada. o Produced approximately 350 million cubic feet equivalent per day of natural gas - representing about 26% of the company's total gas requirements. LIQUIDITY-ENHANCING INITIATIVES Calpine developed and continues to execute its program to enhance liquidity. In 2002, the company: o Completed $3.1 billion of finance transactions. o Divested nearly $550 million of non-strategic assets. o Retired approximately $1.2 billion of debt, including approximately $880 million of zero-coupon convertible debentures. o Reduced 2002/2003 capital spending by more than $4 billion, canceling and deferring delivery and payment of major equipment. o Restructured major power contracts, increasing near-term earnings and retaining long-term value. In February 2003, the company further advanced its capital expenditure reduction program, announcing restructured agreements with its major gas and steam turbine manufacturers. These new agreements give Calpine the option to cancel its existing orders for 87 gas turbines and 44 steam turbines. They reduce the company's future capital commitments by approximately $3.4 billion and will provide greater flexibility to better match equipment commitments with Calpine's revised construction and development program. The company has canceled 11 gas turbines and two steam turbines to date. The following table summarizes the company's currently anticipated sources and uses of funds. These estimates are based on current expectations. -5-
2003 Operating Assets ($ millions) Sources Beginning cash on hand 650 (1) Estimated 2003 operating cash flow 630 (2) --------- Total Sources $ 1,280 --------- Uses Cash lease payments 330 Maintenance capital 300 --------- Total Uses 630 --------- Net Cash Flow $ 650 --------- 2003 Construction Program ($ millions) Sources Liquidity - Lease financings $ 400 - Contract securitization 800 - Canadian Power Income Fund 140 - Asset sales 600 Construction project financings 400 --------- Total Sources $ 2,340 --------- Uses Construction capital 1,300 Future turbine capital 300 --------- Total Uses 1,600 --------- Net Cash Flow $ 740 --------- Total Estimated Cash Resources $ 1,390 ========= - ------------ (1) Includes cash and equivalents and current portion of restricted cash. (2) Estimated 2003 operating cash flow equals income from operations plus depreciation, non-cash operating lease expense, and other income, less approximately $1 billion of cash interest.
-6- "Calpine continues to demonstrate the ability to raise substantial capital, reduce capital expenditures and increase our revenue-generating capabilities to meet both our liquidity needs and construction financing requirements," stated Calpine CFO Bob Kelly. "Our strong operating cash flow, combined with our ongoing program to enhance liquidity, gives Calpine a competitive advantage as we advance our 2003 refinancing program." 2003 EARNINGS GUIDANCE The company is establishing its diluted earnings per share guidance for the year ending December 31, 2003 of approximately $0.40 to $0.50 per share and anticipates EBITDA, as adjusted of approximately $1.4 billion to $1.5 billion. These estimates are based on average on-peak market spark spreads of approximately $8.00 - $10.00 per megawatt-hour, effective cost control and continued execution of the company's business plan. CONFERENCE CALL INFORMATION Calpine will host a conference call to discuss fourth quarter and year-end 2002 results. The conference call will occur Thursday, February 13, 2003, at 8:30 am PST. To participate via the teleconference (in listen-only mode), dial 1-888-603-6685 at least five minutes before the start of the conference call. In addition, Calpine will simulcast the conference call live via the Internet. The web cast can be accessed and will be available for 30 days on the investor relations page of Calpine's website at www.calpine.com. ABOUT CALPINE Based in San Jose, Calif., Calpine Corporation is leading North American power company that is dedicated to providing wholesale and industrial customers with clean, efficient, natural gas-fired power generation. It generates and markets power through plants it develops, owns, leases and operates in 23 states in the United States, three provinces in Canada and in the United Kingdom. Calpine also is the world's largest producer of renewable geothermal energy, and it owns approximately one trillion cubic feet equivalent of proved natural gas reserves in Canada and the United States. The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information about Calpine, visit its website at www.calpine.com. This news release discusses certain matters that may be considered "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the intent, belief or current expectations of Calpine Corporation ("the Company") and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that could materially affect actual results such as, but not limited to, (i) the timing and extent of deregulation of energy markets and the rules and regulations adopted on a transitional basis with respect thereto; (ii) the timing and extent of changes in commodity prices for energy, particularly natural gas and electricity; (iii) commercial operations of new plants that may be delayed or prevented because of various development and construction risks, such as a failure to obtain the necessary permits to operate, failure of third-party contractors to perform their contractual obligations or failure to obtain financing on acceptable terms; (iv) unscheduled outages of operating plants; (v) cost estimates are preliminary and actual costs may be higher than estimated; (vi) a competitor's development of lower-cost generating gas-fired power plants; (vii) risks associated with marketing and selling power from power plants in the newly-competitive energy market; (viii) the successful exploitation of an oil or gas resource that ultimately depends upon the geology of the resource, the total amount and costs to develop recoverable reserves and operations factors relating to the extraction of natural gas; (ix) the effects on the Company's business resulting from reduced liquidity in the trading and power industry; (x) the Company's ability to access the capital markets or obtain bank financing on attractive terms; (xi) sources and uses of cash are estimates based on current expectations; actual sources may be lower and actual uses may be higher than estimated (xii) the direct or indirect effects on the Company's business of a lowering of its credit rating (or actions it may take in response to changing credit rating criteria), including, increased collateral requirements, refusal by the Company's current or potential counterparties to enter into transactions with it and its inability to obtain credit or capital in desired amounts or on favorable terms; and (xiii) other risks identified from time-to-time in our reports and registration statements filed with the SEC, including the risk factors identified in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2002 and in its Annual Report on Form 10-K for the year ended December 31, 2001, which can be found on the Company's website at www.calpine.com. All information set forth in this news release is as of today's date, and the Company undertakes no duty to update this information. -7-
CALPINE CORPORATION AND SUBSIDIARIES Consolidated Condensed Statements of Operations For the Three and Twelve Months Ended December 31, 2002 and 2001 (In thousands, except per share amounts) (unaudited) Three Months Ended Twelve Months Ended December 31, December 31, --------------------------------- ------------------------------- 2002 2001 2002 2001 -------------- -------------- -------------- ------------- Revenue: Electric generation and marketing revenue Electricity and steam revenue.......................... $ 1,002,736 $ 614,301 $ 3,272,628 $ 2,417,982 Sales of purchased power for hedging and optimization.. 635,186 642,464 3,161,741 3,324,161 ------------ ------------ ------------ ------------ Total electric generation and marketing revenue...... 1,637,922 1,256,765 6,434,369 5,742,143 Oil and gas production and marketing revenue Oil and gas sales...................................... 30,196 50,513 119,782 291,065 Sales of purchased gas for hedging and optimization.... 205,817 107,940 871,911 520,110 ------------ ------------ ------------ ------------ Total oil and gas production and marketing revenue... 236,013 158,453 991,693 811,175 Trading revenue, net Realized revenue on power and gas trading transactions, net..................................... 10,814 7,805 26,090 29,145 Unrealized mark-to-market gain (loss) on power and gas transactions, net..................................... 1,562 23,846 (4,390) 131,708 ------------ ------------ ------------ ------------ Total trading revenue, net 12,376 31,651 21,700 160,853 Income from unconsolidated investments in power projects.. 5,991 (258) 16,490 8,763 Other revenue............................................. 3,710 17,909 18,502 46,353 ------------ ------------ ------------ ------------ Total revenue..................................... 1,896,012 1,464,520 7,482,754 6,769,287 ------------ ------------ ------------ ------------ Cost of revenue: Electric generation and marketing expense Plant operating expense................................ 134,682 80,916 509,179 327,597 Royalty expense........................................ 4,523 4,311 17,615 27,492 Purchased power expense for hedging and optimization... 578,491 589,774 2,618,445 2,986,578 ------------ ------------ ------------ ------------ Total electric generation and marketing expense...... 717,696 675,001 3,145,239 3,341,667 Oil and gas production and marketing expense Oil and gas production expense......................... 30,515 27,733 97,895 90,882 Purchased gas expense for hedging and optimization..... 152,201 102,774 830,394 492,587 ------------ ------------ ------------ ------------ Total oil and gas production and marketing expense... 182,716 130,507 928,289 583,469 Fuel expense.............................................. 583,620 318,743 1,791,712 1,164,938 Depreciation, depletion and amortization expense.......... 134,288 93,214 445,230 298,132 Operating lease expense................................... 34,169 35,583 143,086 118,873 Other expense............................................. 4,259 6,074 12,593 15,549 ------------ ------------ ------------ ------------ Total cost of revenue............................. 1,656,748 1,259,122 6,466,149 5,522,628 ------------ ------------ ------------ ------------ Gross profit................................... 239,264 205,398 1,016,605 1,246,659 Project development expense.................................. 19,375 10,773 79,348 35,879 Equipment cancellation and asset impairment charge........... 232,552 -- 404,737 -- General and administrative expense........................... 69,357 36,850 239,725 150,006 Merger expense............................................... -- -- -- 41,627 ------------ ------------ ------------ ------------ Income (loss) from operations............................. (82,020) 157,775 292,797 1,019,147 Interest expense............................................. 119,547 50,358 358,660 157,831 Distributions on trust preferred securities.................. 16,473 16,464 62,632 62,412 Interest income.............................................. (10,368) (11,646) (43,148) (72,516) Other income (expense), net.................................. (99,948) (39,767) (149,077) (54,857) ------------ ------------ ------------ ------------ Income (loss) before provision for income taxes........... (107,723) 142,366 63,730 926,277 Provision (benefit) for income taxes......................... (44,601) 44,984 (5,796) 321,201 ------------ ------------ ------------ ------------ Income (loss) before discontinued operations, extraordinary gain (loss), and cumulative effect of a change in accounting principle........................... (63,122) 97,382 69,526 605,077 Discontinued operations, net of tax provision of $29,720, $1,768, $48,066 and $28,086........... 45,115 2,596 72,064 41,993 Cumulative effect of a change in accounting principle, net of tax provision of $--, $--, $--and $669..................... -- -- -- 1,036 ------------ ------------ ------------ ------------ Net income (loss).............................. $ (18,008) $ 99,978 $ 141,590 $ 648,105 ============ ============ ============ ============
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CALPINE CORPORATION AND SUBSIDIARIES Consolidated Condensed Statements of Operations For the Three and Twelve Months Ended December 31, 2002 and 2001 (In thousands, except per share amounts) (unaudited) Three Months Ended Twelve Months Ended December 31, December 31, ------------------------------ ------------------------------ 2002 2001 2002 2001 ----------- ----------- ----------- ----------- Basic earnings per common share: Weighted average shares of common stock outstanding...... 378,843 306,142 354,822 303,522 Income (loss) before discontinued operations and cumulative effect of a change in accounting principle... $ (0.17) $ 0.32 $ 0.20 $ 1.99 Income from discontinued operations, net of tax.......... $ 0.12 $ 0.01 $ 0.20 $ 0.14 Cumulative effect of a change in accounting principle.... $ -- $ -- $ -- $ 0.01 ----------- ----------- ----------- ---------- Net income.................................... $ (0.05) $ 0.33 $ 0.40 $ 2.14 =========== =========== =========== ========== Diluted earnings per common share: Weighted average shares of common stock outstanding before dilutive effect of certain convertible securities 378,843 318,343 362,533 317,919 Income (loss) before dilutive effect of certain convertible securities, discontinued operations and cumulative effect of a change in accounting principle... $ (0.17) $ 0.31 $ 0.19 $ 1.90 Dilutive effect of certain convertible securities (1).... $ -- $ (0.02) $ -- $ (0.15) ----------- ----------- ----------- ---------- Income (loss) before discontinued operations and cumulative effect of a change in accounting principle... $ (0.17) $ 0.29 $ 0.19 $ 1.75 Income from discontinued operations, net of tax.......... $ 0.12 $ 0.01 $ 0.20 $ 0.11 Cumulative effect of a change in accounting principle.... $ -- $ -- $ -- $ 0.01 ----------- ----------- ----------- ---------- Net income (loss)............................. $ (0.05) $ 0.30 $ 0.39 $ 1.87 =========== =========== =========== ========== - ---------- The financial information presented above and in the Supplemental Data attached hereto is subject to adjustment until the company completes its reaudit of 2000 and 2001 and audit of 2002 financial statements and files its Form 10-K with the Securities and Exchange Commission for the year ended December 31, 2002. (1) Includes the effect of the assumed conversion of certain dilutive convertible securities. No convertible securities were included in the three or twelve months ended 2002 amounts as the securities were antidilutive. For the three and twelve months ended December 31, 2001, the assumed conversion calculation added 48,375 and 54,337 shares of common stock and $8,873 and $47,289 to the net income results, respectively.
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CALPINE CORPORATION AND SUBSIDIARIES Supplemental Data (unaudited) RECONCILIATION OF GAAP NET INCOME TO NET INCOME FROM RECURRING OPERATIONS Three Diluted Three Diluted Months Ended Earnings (loss) Months Ended Earnings (loss) December 31, 2002 per Share December 31, 2001 per Share ----------------- -------------- ----------------- -------------- (in thousands, except per share amounts) (all amounts are reflected net of tax (1) ) GAAP net income (loss).............................. $(18,008) $(0.05) $ 99,978 $ 0.30 (Gain) on sale of discontinued operations........ (47,954) (0.13) -- -- Severance and other costs in connection with reduction in work force......................... 5,445 0.01 -- -- Deferred project cost write-offs................. 20,383 0.05 -- -- Loss on sale of turbines......................... 6,343 0.02 -- -- (Gain) on extinguishment of debt................. (81,419) (0.21) (7,307) (0.03) Equipment cancellation cost...................... 149,807 0.40 -- -- -------- ------ -------- ------ Net income from recurring operations........ $ 34,597 $ 0.09 $ 92,671 $ 0.27 ======== ====== ======== ====== Twelve Diluted Twelve Diluted Months Ended Earnings (loss) Months Ended Earnings (loss) December 31, 2002 per Share December 31, 2001 per Share ----------------- -------------- ----------------- -------------- (in thousands, except per share amounts) (all amounts are reflected net of tax (1) ) GAAP net income..................................... $141,590 $ 0.39 $648,105 $ 1.87 (Gain) on sale of discontinued operations........ (60,859) (0.15) -- -- Severance and other costs in connection with reduction in work force......................... 11,865 0.03 -- -- Deferred project cost write-offs................. 24,744 0.06 -- -- Loss on sale of turbines......................... 8,464 0.02 -- -- Cumulative effect of a change in accounting principle....................................... -- -- (1,036) -- Equipment cancellation cost...................... 287,728 0.69 -- -- (Gain) on extinguishment of debt................. (83,900) (0.20) (6,007) (0.02) Merger expense................................... -- -- 27,311 0.07 -------- ------ -------- ------ Net income from recurring operations........ $329,632 $ 0.84 $668,373 $ 1.92 ======== ====== ======== ======
RECONCILIATION OF GAAP NET INCOME TO EBITDA, AS ADJUSTED (2) Three Months Ended Twelve Months Ended December 31, December 31, ---------------------------- -------------------------- 2002 2001 2002 2001 ---------- ---------- ---------- ---------- (in thousands) GAAP net income (loss).............................. $(18,008) $ 99,978 $ 141,590 $ 648,105 (Income) loss from unconsolidated investments in power projects.................................. (5,991) 259 (16,490) (8,763) Distributions from unconsolidated investments in power projects.................................. 11,972 2,387 14,117 5,983 -------- -------- ---------- ---------- Adjusted net income (loss).................. (12,027) 102,624 139,217 645,325 Interest expense................................. 119,547 50,358 358,660 157,831 1/3 of operating lease expense................... 11,389 11,861 47,695 39,624 Distributions on trust preferred securities...... 16,473 15,387 62,632 61,334 Provision (benefit) for income taxes............. (44,601) 44,984 (5,796) 321,201 Depreciation, depletion and amortization expense. 134,288 93,214 445,230 298,132 Interest expense, provision for income taxes and depreciation from discontinued operations....... 30,558 14,180 86,112 77,081 -------- -------- ---------- ---------- EBITDA, as adjusted........................... $255,627 $332,608 $1,133,750 $1,600,528 ======== ======== ========== ==========
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RECONCILIATION OF EBITDA, AS ADJUSTED TO RECURRING EBITDA, AS ADJUSTED Three Months Ended Twelve Months Ended December 31, December 31, ---------------------------- -------------------------- 2002 2001 2002 2001 ---------- ---------- ---------- ---------- (in thousands) EBITDA, as adjusted................................. $255,627 $332,608 $1,133,750 $1,600,528 Equipment cancellation cost......................... 210,729 -- 404,737 -- Deferred project cost, turbine write-offs........... 28,672 -- 34,807 -- Severance and other costs in connection with reduction in work force............................ 7,659 -- 16,690 -- Loss on sale of turbines............................ 8,923 -- 11,906 -- Merger expense...................................... -- -- -- 41,627 (Gain) on extinguishment of debt.................... (114,529) (11,747) (118,020) (9,613) (Gain) on sale of discontinued operations........... (78,216) -- (101,212) -- Cumulative effective of a change in accounting principle, net of tax provision -- -- -- (1,036) -------- -------- ---------- ---------- Recurring EBITDA, as adjusted................. $318,865 $320,861 $1,382,658 $1,631,506 ======== ======== ========== ==========
SUPPLEMENTARY POWER DATA Three Months Ended Twelve Months Ended December 31, December 31, ---------------------------- -------------------------- 2002 2001 2002 2001 ---------- ---------- ---------- ---------- Generation (in MWh, in thousands) (3)............... 20,733 14,738 74,542 43,542 Average electric price realized (per MWh)........... $51.31 $45.48 $51.38 $63.61 Average spark spread realized (per MWh)............. $22.56 $23.33 $25.39 $35.05
SUPPLEMENTARY NATURAL GAS DATA Three Months Ended Twelve Months Ended December 31, December 31, ---------------------------- -------------------------- 2002 2001 2002 2001 ---------- ---------- ---------- ---------- (in Bcfe) Natural Gas Production United States.................................... 15 13 56 44 Canada........................................... 11 23 72 95 -- -- --- --- Total......................................... 26 36 128 139 == == === === Average Daily Production Rate....................... 0.280 0.397 0.351 0.380 ----- ----- ----- -----
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CALPINE CONTRACTUAL PORTFOLIO - AS OF DECEMBER 31, 2002 2003 2004 2005 2006 2007 ------ ------ ------ ------ ------ Estimated Generation (in millions of mwh) - Baseload...................... 136.6 162.5 185.0 190.5 190.5 - Peaking....................... 22.4 25.0 26.1 26.3 26.3 ----- ----- ----- ----- ----- Total........................ 159.0 187.5 211.1 216.8 216.8 ===== ===== ===== ===== ===== Contractual Generation (in millions of mwh) - Baseload...................... 78.0 64.9 65.5 63.4 53.6 - Peaking....................... 18.5 18.7 18.6 17.5 17.5 ----- ----- ----- ----- ----- Total........................ 96.5 83.6 84.1 80.9 71.1 ===== ===== ===== ===== ===== % Sold - Baseload...................... 57% 40% 35% 33% 28% - Peaking....................... 83% 75% 71% 66% 66% Total........................ 61% 45% 40% 37% 33% Contractual Spark Spread per mwh... $21.25 $23.03 $23.08 $22.38 $23.61
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CAPITALIZATION As of As of December 31, 2002 December 31, 2001 ----------------- ----------------- Cash balance (in billions).............................................. $0.5 $1.5 Total debt (in billions) ............................................... $13.4 $12.7 Debt to capitalization ratio ........................................... 72% 75% Present value of operating leases (in billions) ........................ $2.1 $2.3 Unconsolidated debt of equity method investments (estimated, in billions) (4).......................................................... $0.2 $0.2 (in thousands): Short-term debt Notes payable and borrowings under lines of credit, current portion.. $ 347,437 $ 23,238 Capital lease obligation, current portion............................ 3,551 2,206 Construction/project financing, current portion...................... 1,189,290 -- Zero-Coupon Convertible Debentures Due 2021.......................... -- 878,000 ----------- ----------- Total short-term debt........................................... 1,540,278 903,444 Long-term debt Notes payable and borrowings under lines of credit, net of current portion.............................................. 1,038,080 74,750 Capital lease obligation, net of current portion..................... 206,345 207,219 Construction/project financing, net of current portion............... 2,553,183 3,393,410 Convertible Senior Notes Due 2006.................................... 1,200,000 1,100,000 Senior notes......................................................... 6,905,624 7,049,038 ----------- ----------- Total long-term debt............................................ 11,903,232 11,824,417 Total debt................................................... $13,443,510 $12,727,861 Company-obligated mandatorily redeemable convertible preferred securities of subsidiary trusts........................... $ 1,123,969 $ 1,123,024 Minority interests................................................... $ 185,660 $ 47,389 Total stockholders' equity (5)....................................... $ 3,904,206 $ 3,010,569 ----------- ----------- Total capitalization.................................................... $18,657,345 $16,908,843 =========== =========== Debt to capitalization ratio Total debt.............................................................. $13,443,510 $12,727,861 Total capitalization.................................................... $18,657,345 $16,908,843 Debt to capitalization.................................................. 72% 75% - ---------- (1) Based on the company's effective tax rate of approximately 28.9% for the three and twelve months ended December 31, 2002. (2) This non-GAAP measure is presented not as a measure of operating results, but rather as a measure of our ability to service debt. It should not be construed as an alternative to either (i) income (loss) from operations or (ii) cash flows from operating activities to be disclosed in the company's Form 10-K for the year ended December 31, 2002. It is defined as net income less income from unconsolidated investments, plus cash received from unconsolidated investments, plus provision for tax, plus interest expense, plus one-third of operating lease expense, plus depreciation, depletion and amortization, plus distributions on trust preferred securities. The interest, tax and depreciation and amortization components of discontinued operations are added back in calculating EBITDA, as adjusted. (3) Does not include MWh generated by unconsolidated investments in power projects. (4) Amounts based on Calpine's ownership percentage. (5) Includes other comprehensive loss ("OCI") of $236,270 at December 31, 2002 and $226,574 at December 31, 2001. Excluding OCI from stockholders' equity would change the debt to capitalization ratio to 71% at December 31, 2002, and would change the ratio to 74% at December 31, 2001.
-13- 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 Controller Chief Accounting Officer Date: February 14, 2003 -14- -----END PRIVACY-ENHANCED MESSAGE-----