8-K 1 march2006.htm

 


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): July 17, 2006

CALPINE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

Commission File Number: 001-12079

I.R.S. Employer Identification Number: 77-0212977

 

50 West San Fernando Street

San Jose, California 95113

Telephone: (408) 995-5115

(Address of principal executive offices and telephone number)

 

Not applicable

(Former name or former address if changed since last report)

 

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:

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))

 


 

 

 

 

ITEM 2.02 — RESULTS OF OPERATIONS AND FINANCIAL CONDITION

 

The information set forth in Item 7.01 below is incorporated by reference in this Item 2.01 as if fully set forth herein.

ITEM 7.01 — REGULATION FD DISCLOSURE

 

On July 17, 2006, Calpine Corporation (“Calpine” or the “Company”) and certain of its subsidiaries (collectively, the “Debtors”) filed their unaudited consolidated Monthly Operating Statement for the month ended March 31, 2006 (the “Monthly Operating Statement”), with the United States Bankruptcy Court for the Southern District of New York (the “U.S. Bankruptcy Court”) in the matter of In re Calpine Corporation, et al., 05-60200 (BRL). Exhibit 99.1 to this Current Report on Form 8-K contains the unaudited consolidated Monthly Operating Statement as filed with the U.S. Bankruptcy Court.

 

The Monthly Operating Statement is limited in scope, covers a limited time period, and has been prepared solely for the purpose of complying with the monthly reporting requirements of the U.S. Bankruptcy Court. Certain of the Company’s Canadian subsidiaries were granted relief by the Court of Queen’s Bench of Alberta, Judicial District of Calgary (the “Canadian Court”) under the Companies’ Creditors Arrangement Act (Canada) (the “CCAA”). As a result, certain of the Company’s Canadian and other foreign subsidiaries were deconsolidated as of December 20, 2005. Financial information regarding such deconsolidated subsidiaries is not part of the consolidated group included in the Monthly Operating Statement. The financial information in the Monthly Operating Statement is preliminary and unaudited and does not purport to show the financial statements of any of the Debtors in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and therefore may exclude items required by GAAP, such as certain reclassifications, eliminations, accruals, valuations and disclosure items. The Company cautions readers not to place undue reliance upon the Monthly Operating Statement. There can be no assurance that such information is complete and the Monthly Operating Statement may be subject to revision. The March Monthly Operating Statement includes a reclassification from Sales, general and administrative expense to Plant operating expense of approximately $25 thousand relating to February 2006 activity. The Monthly Operating Statement is in a format required by the United States Bankruptcy Code (the “Bankruptcy Code”) and should not be used for investment purposes. The Monthly Operating Statement should be read in conjunction with the consolidated financial statements and notes thereto included in our 2005 Form 10-K and the 2006 First Quarter Form 10-Q that were filed with the SEC.

 

These unaudited financial statements have been derived from the books and records of the Company. This information, however, has not been subject to procedures that would typically be applied to financial information presented in accordance with GAAP and, upon the application of such procedures, the Company believes that the financial information could be subject to changes, and these changes could be material. The information furnished in the Monthly Operating Statement includes primarily normal recurring adjustments but does not include all of the adjustments that would typically be made for quarterly financial statements in accordance with GAAP. In addition, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.

 

Access to documents filed with the U.S. Bankruptcy Court and other general information about the Company’s U.S. bankruptcy cases is available at www.kccllc.net/calpine. Certain information regarding the Company’s Canadian cases under the CCAA, including the reports of the monitor appointed by the Canadian Court, is available at the monitor’s website at www.ey.com/ca/calpinecanada. The content of the foregoing websites is not a part of this Report.

Limitation on Incorporation by Reference

 

The Monthly Operating Statement is being furnished for informational purposes only and is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended. Registration statements or other documents filed with the SEC shall not incorporate the Monthly Operating Statement or any other information set forth in this Report by reference, except as otherwise expressly stated in such filing. This Report will not be deemed an admission as to the materiality of any information that is required to be disclosed solely by Regulation FD.

 

 

1

 

 

 

Forward-Looking Statements

 

In addition to historical information, this Report 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. The Company uses words such as “believe,” “intend,” “expect,” “anticipate,” “plan,” “may,” “will” and similar expressions to identify forward-looking statements. Such statements include, among others, those concerning the Company’s expected financial performance and 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 that a number of risks and uncertainties could cause actual results to differ materially from those anticipated in the forward-looking statements. Such risks and uncertainties include, but are not limited to: (i) the risks and uncertainties associated with the Company’s U.S. and Canadian bankruptcy cases, including impact on operations; (ii) the Company’s ability to attract, retain and motivate key employees and successfully implement new strategies; (iii) the Company’s ability to successfully reorganize and emerge from bankruptcy; (iv) the Company’s ability to attract and retain customers and counterparties; (v) the Company’s ability to implement its business plan; (vi) financial results that may be volatile and may not reflect historical trends; (vii) the Company’s ability to manage liquidity needs and comply with financing obligations; (viii) the direct or indirect effects on the Company’s business of its impaired credit including increased cash collateral requirements; (ix) the expiration or termination of the Company’s PPAs and the related results on revenues; (x) potential volatility in earnings and requirements for cash collateral associated with the use of commodity contracts; (xi) price and supply of natural gas; (xii) risks associated with power project development, acquisition and construction activities; (xiii) unscheduled outages of operating plants; (xiv) factors that impact the output of the Company’s geothermal resources and generation facilities, including unusual or unexpected steam field well and pipeline maintenance and variables associated with the waste water injection projects that supply added water to the steam reservoir; (xv) quarterly and seasonal fluctuations of the Company’s results; (xvi) competition; (xvii) risks associated with marketing and selling power from plants in the evolving energy markets; (xviii) present and possible future claims, litigation and enforcement actions; (xix) effects of the application of laws or regulations, including changes in laws or regulations or the interpretation thereof; and (xx) other risks identified in this report and in the Company’s annual and quarterly reports on Forms 10-K and 10-Q. You should also carefully review other reports that the Company files with the SEC. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future developments or otherwise.

ITEM 9.01 — FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.

 

 

(d)

Exhibits

 

99.1  Calpine Corporation’s Unaudited Monthly Operating Statement for the month ended March 31, 2006.

 

 

2

 

 

 

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, Controller and

Chief Accounting Officer

 

 

 

Date:  July 17, 2006                                        

 

 

 

 

3

 

 

 

EXHIBIT INDEX

 

 

Exhibit

Number

 

 

Description

99.1

 

Calpine Corporation’s Unaudited Monthly Operating Statement for the month ended March 31, 2006.

 

 

4

 

 

 

EXHIBIT 99.1

 

UNITED STATES BANKRUPTCY COURT                 

 

 

SOUTHERN DISTRICT OF NEW YORK

 

 

 

x

 

In re:

:

Chapter 11

 

:

 

CALPINE CORPORATION, et al.,

:

Case No. 05-60200 BRL

 

:

 

Debtors.

:

(Jointly Administered)

 

:

 

 

x

 

 

MONTHLY OPERATING STATEMENT FOR THE PERIOD

FROM MARCH 1, 2006, TO MARCH 31, 2006

 

DEBTORS’ ADDRESS:

50 West San Fernando Street, San Jose, California 95113

 

 

 

 

 

MONTHLY DISBURSEMENTS MADE BY CALPINE
CORPORATION, ET AL. AND ITS DEBTOR SUBSIDIARIES
(IN THOUSANDS):                                                                                     

$596,529

 

 

 

DEBTORS’ ATTORNEY:   

Kirkland & Ellis LLP

 

 

Richard M. Cieri (RC 6062)

 

 

Marc Kieselstein pro hac vice application pending

 

 

David R. Seligman admitted pro hac vice

 

 

Edward O. Sassower (ES 5823)

 

 

Citigroup Center

 

 

153 East 53rd Street

 

 

New York, NY 10022-4611

 

 

 

 

 

MONTHLY OPERATING LOSS (IN THOUSANDS):

$110,128

 

 

 

REPORT PREPARER:

CALPINE CORPORATION, et al.

 

 

The undersigned, having reviewed the attached report and being familiar with the Debtors’ financial affairs, verifies under penalty of perjury, that the information contained therein is complete, accurate and truthful to the best of my knowledge.

 

 

/s/ CHARLES B. CLARK, JR.

 

Charles B. Clark, Jr.

 

Senior Vice President, Controller and Chief Accounting Officer

DATE: July 17, 2006                                      

Calpine Corporation

 

 

5

 

 

 

DEFINITIONS

 

The following abbreviations contained herein have the meanings set forth below. Additionally, the terms “the Company,” “Calpine,” “we,” “us” and “our” refer to Calpine Corporation and its consolidated subsidiaries, unless the context clearly indicates otherwise. For clarification, such terms will not include the Canadian and other foreign subsidiaries that were deconsolidated as a result of the filings by the Canadian Debtors under the CCAA.

 

Abbreviation

 

Definition

 

 

 

2005 Form 10-K

 

Calpine Corporation’s Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on May 19, 2006

 

 

 

2006 First Quarter

Form 10-Q

 

Calpine Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, filed with the SEC on July 3, 2006

 

 

 

APB

 

Accounting Principles Board                                                                                             

 

 

 

Bankruptcy Code

 

United States Bankruptcy Code

 

 

 

Bankruptcy Courts

 

The U.S. Bankruptcy Court and the Canadian Court

 

 

 

Calgary Energy Centre

 

Calgary Energy Centre Limited Partnership

 

 

 

Calpine Debtor(s)

 

The U.S. Debtors and the Canadian Debtors

 

 

 

Canadian Court

 

The Court of Queen’s Bench of Alberta, Judicial District of Calgary

 

 

 

Canadian Debtor(s)

 

The subsidiaries and affiliates of Calpine Corporation that have been granted creditor protection under the CCAA in the Canadian Court

 

 

 

Cash Collateral Order

 

Second Amended Final Order of the U.S. Bankruptcy Court Authorizing Use of Cash Collateral and Granting Adequate Protection, dated February 24, 2006, as modified by the Order Granting U.S. Debtors’ Motion for Entry of an Order pursuant to 11 U.S.C. Sections 105,361 and 105,363 modifying Order Authorizing Use of Cash Collateral and Granting Adequate Protection, dated June 21, 2006

 

 

 

CCAA

 

Companies’ Creditors Arrangement Act (Canada)

 

 

 

CDWR

 

California Department of Water Resources

 

 

 

CES-Canada

 

Calpine Energy Services Canada Partnership

 

 

 

Chapter 11

 

Chapter 11 of the Bankruptcy Code

 

 

 

DIG

 

Derivatives Implementation Group

 

 

 

DIP

 

Debtor-in-possession

 

 

6

 

 

 

Abbreviation

 

Definition

 

 

 

DIP Facility

 

The Revolving Credit, Term Loan and Guarantee Agreement, dated as of December 22, 2005, as amended on January 26, 2006, and as amended and restated by that certain Amended and Restated Revolving Credit, Term Loan and Guarantee Agreement, dated as of February 23, 2006, among Calpine Corporation, as borrower, the Guarantors party thereto, the Lenders from time to time party thereto, Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc., as joint syndication agents, Deutsche Bank Trust Company Americas, as administrative agent for the First Priority Lenders, General Electric Capital Corporation, as Sub-Agent for the Revolving Lenders, Credit Suisse, as administrative agent for the Second Priority Term Lenders, Landesbank Hessen Thuringen Girozentrale, New York Branch, General Electric Capital Corporation and HSH Nordbank AG, New York Branch, as joint documentation agents for the first priority Lenders and Bayerische Landesbank, General Electric Capital Corporation and Union Bank of California, N.A., as joint documentation agents for the second priority Lenders, as amended thereafter from time to time

 

 

 

EITF

 

Emerging Issues Task Force

 

 

 

EPS                            

 

Earnings per share                                                                                                             

 

 

 

Exchange Act

 

United States Securities Exchange Act of 1934, as amended

 

 

 

FASB

 

Financial Accounting Standards Board

 

 

 

FERC

 

Federal Energy Regulatory Commission

 

 

 

First Priority Notes

 

Calpine Corporation’s 9 5/8% First Priority Senior Secured Notes Due 2014

 

 

 

GAAP

 

Generally accepted accounting principles in the United States

 

 

 

GPC

 

Geysers Power Company, LLC

 

 

 

ISO

 

Independent System Operator

 

 

 

LSTC

 

Liabilities Subject to Compromise

 

 

 

MW

 

Megawatt(s)

 

 

 

NOL

 

Net operating loss

 

 

 

Non-Debtor(s)

 

The subsidiaries and affiliates of Calpine Corporation that are not Calpine Debtors

 

 

 

Non-U.S. Debtor(s)

 

The consolidated subsidiaries and affiliates of Calpine Corporation that are not U.S. Debtor(s)

 

 

 

PCF

 

Power Contract Financing, L.L.C.

 

 

 

PCF III

 

Power Contract Financing III, LLC

 

 

 

Petition Date

 

December 20, 2005

 

 

 

PPA(s)

 

Power purchase agreement(s)

 

 

 

SDNY Court

 

United States District Court for the Southern District of New York

 

 

 

SEC

 

United States Securities and Exchange Commission

 

 

7

 

 

 

Abbreviation

 

Definition

 

 

 

Second Priority Debt

 

Calpine Corporation’s Second Priority Secured Floating Rate Notes due 2007, 8 1/2% Second Priority Senior Secured Notes Due 2010, 8 3/4% Second Priority Senior Secured Notes Due 2013, 9 7/8% Second Priority Senior Secured Notes Due 2011, and Senior Secured Term Loans Due 2007

 

 

 

Securities Act

 

United States Securities Act of 1933, as amended

 

 

 

SFAS

 

Statement of Financial Accounting Standards

 

 

 

SFAS No. 123-R

 

FASB Statement No. 123-R (As Amended), “Accounting for Stock-Based Compensation—Share-Based Payment”

 

 

 

SOP

 

Statement of Position

 

 

 

The Geysers Assets

 

19 geothermal power plant assets located in Geyserville, California

 

 

 

ULC I

 

Calpine Canada Energy Finance ULC

 

 

 

ULC II

 

Calpine Canada Energy Finance II ULC

 

 

 

U.S.

 

United States of America

 

 

 

U.S. Bankruptcy Court

 

United States Bankruptcy Court for the Southern District of New York

 

 

 

U.S. Debtor(s)

 

Calpine Corporation and each of its subsidiaries and affiliates that have filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court, which matters are being jointly administered in the U.S. Bankruptcy Court under the caption In re Calpine Corporation, et al., Case No. 05-60200 (BRL)

 

 

8

 

 

 

CALPINE CORPORATION

(Debtor-in-Possession)

Index to Consolidated Condensed Financial Statements and Schedules

 

 

 

 

Page

Financial Statements as of and for the Month Ended March 31, 2006:

 

Consolidated Condensed Statement of Operations

10

Consolidated Condensed Balance Sheet

11

Notes to Unaudited Consolidated Condensed Financial Statements

13

 

1.

Petition for Relief Under Chapter 11

13

 

2.

Basis of Presentation

15

 

3.

Summary of Significant Accounting Policies

16

 

4.

Recent Accounting Pronouncements

16

 

5.

Cash and Cash Equivalents, Restricted Cash and Margin Deposits

17

 

6.

Rejected Contracts

18

 

7.

Liabilities Subject to Compromise

20

 

8.

DIP Facility

20

 

9.

Reorganization Items

21

Schedules:          

 

 

Schedule I

Schedule of Consolidating Condensed Balance Sheet as of March 31, 2006

22

Schedule II

Schedule of Consolidating Condensed Statement of Operations for the Month
Ended March 31, 2006

24

Schedule III

Schedule of Payroll and Payroll Taxes

26

Schedule IV

Schedule of Federal, State and Local Taxes Collected, Received, Due or Withheld                     

27

Schedule V

Schedule of Total Disbursements by Debtor

28

Schedule VI

Insurance Statement

35

Schedule VII

Consolidated Condensed Statement of Operations for the Three Months Ended March 31, 2006

36

Schedule VIII

Consolidated Condensed Statement of Cash Flows for the Three Months Ended March 31, 2006

37

 

 

9

 

 

 

CALPINE CORPORATION

(Debtor-in-Possession)

CASE NO. 05-60200 (Jointly Administered)

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS

(Unaudited)

(in thousands)

For the period from March 1, 2006, through March 31, 2006

 

 

Revenue:                                                                                                                                               

 

 

 

 

Electricity and steam revenue

 

$

342,886

 

Transmission sales revenue

 

 

719

 

Sales of purchased power and gas for hedging and optimization

 

 

54,953

 

Mark-to-market activities, net

 

 

7,318

 

Other revenue

 

 

9,566

 

Total revenue

 

 

415,442

 

Cost of revenue:

 

 

 

 

Plant operating expense

 

 

55,681

 

Royalty expense

 

 

1,793

 

Transmission purchase expense

 

 

7,633

 

Purchased power and gas expense for hedging and optimization

 

 

38,251

 

Fuel expense

 

 

200,324

 

Depreciation and amortization expense

 

 

28,907

 

Operating plant impairments

 

 

49,653

 

Operating lease expense

 

 

6,546

 

Other cost of revenue

 

 

8,803

 

Total cost of revenue

 

 

397,591

 

Gross profit

 

 

17,851

 

(Income) from unconsolidated investments

 

 

(2,939

)

Equipment, development project and other impairments

 

 

5,758

 

Project development expense

 

 

1,980

 

Research and development expense

 

 

1,488

 

Sales, general and administrative expense

 

 

29,839

 

Income (loss) from operations

 

 

(18,275

)

Interest expense

 

 

105,019

 

Interest (income)

 

 

(6,102

)

Minority interest expense

 

 

490

 

Other (income) expense, net

 

 

(6,400

)

Loss before reorganization items, benefit for income taxes and cumulative effect of a change
in accounting principle

 

 

(111,282

)

Reorganization items

 

 

2,159

 

Loss before benefit for income taxes and cumulative effect of a change in accounting principle

 

 

(113,441

)

Provision (benefit) for income taxes

 

 

(3,625

)

Loss before cumulative effect of a change in accounting principle

 

 

(109,816

)

Cumulative effect of a change in accounting principle, net of tax provision

 

 

(312

)

Net loss

 

$

(110,128

)

 

The accompanying notes are an integral part of these

Consolidated Condensed Financial Statements.

 

 

10

 

 

 

CALPINE CORPORATION

(Debtor-in-Possession)

CASE NO. 05-60200 (Jointly Administered)

CONSOLIDATED CONDENSED BALANCE SHEET

(Unaudited)

(in thousands)

March 31, 2006

 

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:                                                                                                                                       

 

 

 

 

Cash and cash equivalents

 

$

1,361,523

 

Accounts receivable, net

 

 

848,681

 

Margin deposits and other prepaid expense

 

 

298,096

 

Inventories

 

 

150,044

 

Restricted cash

 

 

764,214

 

Current derivative assets

 

 

297,860

 

Current assets held for sale

 

 

39,542

 

Other current assets

 

 

65,757

 

Total current assets

 

 

3,825,717

 

Restricted cash, net of current portion

 

 

207,280

 

Notes receivable, net of current portion

 

 

161,151

 

Project development costs

 

 

24,247

 

Investments

 

 

84,438

 

Deferred financing costs

 

 

197,083

 

Prepaid lease, net of current portion

 

 

351,909

 

Property, plant and equipment, net

 

 

14,460,435

 

Goodwill

 

 

45,160

 

Other intangible assets, net

 

 

53,199

 

Long-term derivative assets

 

 

528,799

 

Other assets

 

 

607,311

 

Total assets

 

$

20,546,729

 

 

 

11

 

 

 

CONSOLIDATED CONDENSED BALANCE SHEET — (Continued)

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

Current liabilities:                                                                                                                                

 

 

 

 

Accounts payable

 

$

521,491

 

Accrued payroll and related expense

 

 

40,872

 

Accrued interest payable

 

 

185,759

 

Income taxes payable

 

 

99,073

 

Notes payable and other borrowings, current portion

 

 

193,049

 

Preferred interests, current portion

 

 

8,877

 

Capital lease obligations, current portion

 

 

284,932

 

CCFC financing, current portion

 

 

782,991

 

CalGen financing, current portion

 

 

2,508,800

 

Construction/project financing, current portion

 

 

2,195,523

 

Senior notes and term loans, current portion

 

 

641,777

 

DIP Facility, current portion

 

 

3,500

 

Current derivative liabilities

 

 

454,330

 

Other current liabilities

 

 

292,605

 

Total current liabilities

 

 

8,213,579

 

Notes payable and other borrowings, net of current portion

 

 

468,864

 

Preferred interests, net of current portion

 

 

579,519

 

Capital lease obligations, net of current portion

 

 

505

 

Construction/project financing, net of current portion

 

 

173,581

 

DIP Facility, net of current portion

 

 

995,625

 

Deferred income taxes, net of current portion

 

 

371,433

 

Deferred revenue

 

 

133,899

 

Long-term derivative liabilities

 

 

714,267

 

Other liabilities

 

 

158,197

 

Total liabilities not subject to compromise

 

 

11,809,469

 

Liabilities subject to compromise

 

 

14,527,162

 

Commitments and contingencies

 

 

 

 

Minority interests

 

 

274,074

 

Stockholders’ equity (deficit):

 

 

 

 

Common stock

 

 

569

 

Additional paid-in capital

 

 

3,266,890

 

Additional paid-in capital, loaned shares

 

 

258,100

 

Additional paid-in capital, returnable shares

 

 

(258,100

)

Accumulated deficit

 

 

(9,202,603

)

Accumulated other comprehensive loss

 

 

(128,832

)

Total stockholders’ deficit

 

 

(6,063,976

)

Total liabilities and stockholders’ deficit

 

$

20,546,729

 

 

The accompanying notes are an integral part of these

Consolidated Condensed Financial Statements.

 

 

12

 

 

 

CALPINE CORPORATION

(Debtor-in-Possession)

CASE NO. 05-60200 (Jointly Administered)

NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

For the period from March 1, 2006, to March 31, 2006

 

1.  Petition for Relief Under Chapter 11

 

On December 20, 2005 and December 21, 2005, Calpine and 254 of its wholly owned subsidiaries in the United States filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court and, in Canada, 12 of its Canadian subsidiaries were granted relief in the Canadian Court under the CCAA, which, like Chapter 11, allows for reorganization under the protection of the court system. On December 27 and 29, 2005, January 8 and 9, 2006, February 3, 2006, and May 2, 2006, 19 additional wholly owned subsidiaries of Calpine commenced Chapter 11 cases in the U.S. Bankruptcy Court. The U.S. Bankruptcy Court has treated December 20, 2005 as the filing date for Calpine and its direct and indirect wholly owned subsidiaries that filed voluntary petitions at various dates in December 2005. Certain other subsidiaries could file in the U.S. or Canada in the future. The Chapter 11 cases of the U.S. Debtors are being jointly administered for procedural purposes only by the U.S. Bankruptcy Court under the case captioned In re Calpine Corporation et al., Case No. 05-60200 (BRL).

 

The Calpine Debtors are continuing to operate their business as debtors-in-possession under the jurisdiction of the Bankruptcy Courts and in accordance with the applicable provisions of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, the CCAA and applicable court orders, as well as other applicable laws and rules. In general, as debtors-in-possession, each of the Calpine Debtors is authorized to continue to operate as an ongoing business, but may not engage in transactions outside the ordinary course of business without the prior approval of the applicable Bankruptcy Court.

 

On December 20, 2005, the U.S. Debtors entered into the $2.0 billion DIP Facility. On December 21, 2005, the U.S. Bankruptcy Court granted interim approval of the DIP Facility, but initially limited access under the DIP Facility to $500 million under the revolving credit facility. On January 26, 2006, the U.S. Bankruptcy Court entered a final order approving the DIP Facility and removing the limitation on our ability to borrow thereunder. On February 23, 2006, the DIP Facility was amended and restated and the term loans were funded. Deutsche Bank Securities Inc. and Credit Suisse were co-lead arrangers for the DIP Facility, which will remain in place until the earlier of an effective plan of reorganization or December 20, 2007. In connection with and as a condition to the closing, on February 3, 2006, we acquired ownership of The Geysers Assets, which had previously been leased pursuant to a leveraged lease. We used borrowings under the DIP Facility to pay a portion of the purchase price for The Geysers Assets. The DIP Facility is secured by first priority liens on all of the unencumbered assets of the U.S. Debtors, including The Geysers Assets, and junior liens on all of their encumbered assets. In addition, the DIP Facility was amended on May 3, 2006, to, among other things, provide us with extensions of time (i) to provide certain financial information to the DIP Facility lenders, including financial statements for the year ended December 31, 2005, and for the quarter ended March 31, 2006, and (ii) to cause GPC to file for protection under Chapter 11 of the Bankruptcy Code. See Note 8 contained herein, Note 22 of the Notes to Consolidated Financial Statements contained in the 2005 Form 10-K and Note 6 of the Notes to Consolidated Condensed Financial Statements contained in the 2006 First Quarter Form 10-Q for further details regarding the DIP Facility.

 

In addition, the U.S. Bankruptcy Court approved cash collateral and adequate assurance stipulations in connection with the approval of the DIP Facility, which has allowed our business activities to continue to function. We have also sought and obtained U.S. Bankruptcy Court approval through our “first day” and subsequent motions to continue to pay critical vendors, meet our pre-petition and post-petition payroll obligations, maintain our cash management systems, collateralize certain of our gas supply contracts, enter into and collateralize trading contracts, pay our taxes, continue to provide employee benefits, maintain our insurance programs and implement an employee severance program, which has allowed us to continue to operate the existing business in the ordinary course. In addition, the U.S. Bankruptcy Court has approved certain trading notification and transfer procedures designed to allow us to restrict trading in our common stock (and related securities) which could negatively impact our accrued NOLs and other tax attributes, and granted us extensions of time to file and seek approval of a plan of reorganization and to assume or reject real property leases.

 

13

 

 

 

Both the U.S. Bankruptcy Court and the Canadian Court have established August 1, 2006 as a bar date for filing proofs of claim against the U.S. Debtors’ estates and the Canadian Debtors’ estates, respectively (after the Canadian Court extended its original bar date of June 30, 2006, to August 1, 2006). We have not fully analyzed the validity and enforceability of any submitted proofs of claim filed against the Calpine Debtors’ estates to date. In addition, because the bar dates have not yet occurred, we expect that additional proofs of claim will be filed. However, it is not possible at this time to determine the extent of the claims that may be filed, whether or not such claims will be disputed, or whether or not such claims will be subject to discharge in the bankruptcy cases. Nor is it possible at this time to determine whether to establish any additional claims reserves. Once all applicable bar dates are established and all claims against the Calpine Debtors are filed, we will review all claims filed and begin the claims reconciliation process. In connection with the review and reconciliation process, we will also determine the reserves, if any, that may be established in respect of such claims. Notwithstanding the foregoing, we have recognized certain charges related to expected allowable claims.

 

Under the Bankruptcy Code, we have the right to assume, assume and assign, or reject certain executory contracts and unexpired leases, subject to the approval of the U.S. Bankruptcy Court and certain other conditions. Parties to executory contracts or unexpired leases rejected by a debtor may file proofs of claim against that debtor’s estate for damages and parties to executory contracts or unexpired leases that are assumed have an opportunity to assert cure amounts prior to such assumptions. Due to ongoing evaluation of contracts for assumption or rejection and the uncertain nature of many of the potential claims for damages, we cannot project the magnitude of these potential claims at this time. We have until July 18, 2006, to assume unexpired non-residential real property leases. Absent the consent of the applicable counterparty, such leases not assumed by that date are deemed rejected (except for Calpine Debtors filing after the Petition Date, which have a longer period of time). See Note 6 for further discussion of significant contracts and leases for which we have received or are seeking approval to reject.

 

On April 11, 2006, the U.S. Bankruptcy Court granted our application for an extension of the period during which we have the exclusive right to file a reorganization plan or plans from April 20, 2006, to December 31, 2006, and granted us the exclusive right until March 31, 2007, to solicit acceptances of such plan or plans. In addition, the U.S. Bankruptcy Court granted each of the U.S. Debtors an additional 90 days (or until July 18, 2006, for most of the U.S. Debtors) to assume or reject non-residential real property leases. Also on April 11, 2006, the U.S. Bankruptcy Court granted our application for the repayment of a portion of a loan we had extended to CPN Insurance Corporation, our wholly owned captive insurance subsidiary. The repayment of this loan facilitates our ability to continue to provide a portion of our insurance needs through our subsidiary and thus provides us additional flexibility to be able to continue to implement a favorable property insurance program.

 

By order dated May 10, 2006 (as amended by an amended order dated May 17, 2006), the U.S. Bankruptcy Court approved our motion to repay the outstanding principal amount of First Priority Notes at par ($646.1 million) plus accrued and unpaid interest. We completed the repayment of the First Priority Notes in June 2006. Such repayment was without prejudice to the rights of the holders of the First Priority Notes to pursue their claim to a “make whole” premium. On May 5, 2006, the First Priority Notes trustee filed an adversary proceeding in the U.S. Bankruptcy Court seeking a judgment on the merits of the claim for payment of the “make whole” premium. On June 21, 2006, the U.S. Bankruptcy Court rendered a verbal decision extending our time to answer the complaint in the adversary proceeding until the conclusion of an appeal filed in the SDNY Court by the First Priority Notes trustee of the U.S. Bankruptcy Court’s May 10, 2006, order authorizing us to repay the outstanding principal amount of First Priority Notes. The appeal in the SDNY Court is pending.

 

At this time, it is not possible to accurately predict the effects of the reorganization process on the business of the Calpine Debtors or if and when some or all of the Calpine Debtors may emerge from bankruptcy. The prospects for future results depend on the timely and successful development, confirmation and implementation of a plan or plans of reorganization. There can be no assurance that a successful plan or plans of reorganization will be proposed by the Calpine Debtors, supported by the Calpine Debtors’ creditors or confirmed by the Bankruptcy Courts, or that any such plan or plans will be consummated. The ultimate recovery, if any, that creditors and equity security holders receive will not be determined until confirmation of a plan or plans of reorganization. No assurance can be given as to what values, if any, will be ascribed in the bankruptcy cases to the interests of each of the various creditor and equity or other security holder constituencies, and it is possible that the equity interests in or other securities issued by Calpine and the other Calpine Debtors will be

 

14

 

 

 

restructured in a manner that will substantially reduce or eliminate any remaining value of such equity interests or other securities, or that certain creditors may ultimately receive little or no payment with respect to their claims. Whether or not a plan or plans of reorganization are approved, it is possible that the assets of any one or more of the Calpine Debtors may be liquidated.

 

As a result of our bankruptcy filings and the other matters described herein, including the uncertainties related to the fact that we have not yet had time to complete and have approved a plan of reorganization, there is substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern, including our ability to meet our ongoing operational obligations, is dependent upon, among other things: (i) our ability to maintain adequate cash on hand; (ii) our ability to generate cash from operations; (iii) the cost, duration and outcome of the restructuring process; (iv) our ability to comply with our DIP Facility agreement and the adequate assurance provisions of the Cash Collateral Order and (v) our ability to achieve profitability following a restructuring. These challenges are in addition to those operational and competitive challenges faced by us in connection with our business. In conjunction with our advisors, we are working to design and implement strategies to ensure that we maintain adequate liquidity and will be able to continue as a going concern. However, there can be no assurance as to the success of such efforts.

 

2.  Basis of Presentation

 

The accompanying consolidated condensed financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and satisfaction of liabilities in the ordinary course of business, and in accordance with SOP 90-7, “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code.” The consolidated condensed financial statements do not include any adjustments that might be required should we be unable to continue to operate as a going concern. In accordance with SOP 90-7, all pre-petition liabilities subject to compromise have been segregated in the consolidated condensed balance sheets and classified as LSTC, at the estimated amount of allowable claims. Interest expense related to pre-petition LSTC has been reported only to the extent that it will be paid during the pendency of the bankruptcy cases or is expected to be an allowable claim. Liabilities not subject to compromise are separately classified as current or noncurrent. Expenses, provisions for losses resulting from reorganization and certain other items directly related to our bankruptcy case are reported separately as reorganization expenses due to bankruptcy.

 

The Monthly Operating Statement is limited in scope, covers a limited time period, and has been prepared solely for the purpose of complying with the monthly reporting requirements of the U.S. Bankruptcy Court. Certain of our Canadian subsidiaries were granted relief by the Canadian Court under the CCAA. As a result, certain of our Canadian and other foreign subsidiaries were deconsolidated as of December 20, 2005. Financial information regarding such deconsolidated subsidiaries is not included with that of the consolidated group reported in the Monthly Operating Statement. The financial information in the Monthly Operating Statement is preliminary and unaudited and does not purport to show the financial statements of any of the U.S. Debtors in accordance with GAAP, and therefore may exclude items required by GAAP, such as certain reclassifications, eliminations, accruals, valuations and disclosure items. We caution readers not to place undue reliance upon the Monthly Operating Statement. There can be no assurance that such information is complete and the Monthly Operating Statement may be subject to revision. The Monthly Operating Statement is in a format required by the Bankruptcy Code and should not be used for investment purposes. The Monthly Operating Statement should be read in conjunction with the consolidated financial statements and notes thereto included in the 2005 Form 10-K that was filed with the SEC on May 19, 2006, and the 2006 First Quarter 10-Q filed with the SEC effective on July 3, 2006.

 

The unaudited financial statements contained in the Monthly Operating Statement have been derived from the books and records of the Company. This information, however, has not been subject to procedures that would typically be applied to financial information presented in accordance with GAAP, and upon the application of such procedures, we believe that the financial information could be subject to changes, and these changes could be material. The information furnished in this Monthly Operating Statement includes primarily normal recurring adjustments but does not include all of the adjustments that would typically be made for quarterly financial statements in accordance with GAAP. In addition, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.

 

Mark-to-Market — Mark-to-market, net activity includes realized settlements of and unrealized mark-to-market gains and losses on both power and gas derivative instruments not designated as cash flow hedges, including those held for trading purposes. Gains and losses due to ineffectiveness on hedging instruments are also included in unrealized mark-to-market gains and losses. Trading activity is presented net in accordance with EITF Issue No. 02-03. Of total mark-to-market revenue

 

15

 

 

 

of $7.3 million in March 2006, there was $42.2 million of unrealized gains (mostly from open gas contracts), and we had a realized loss of $34.9 million. Of the realized loss, there was approximately $14.1 million of non-cash amortization of various items.

 

Per agreement among the Company, the Office of the U.S. Trustee and the Committee of Unsecured Creditors, the Statements of Cash Flows will be excluded from Monthly Operating Statements except on a quarterly basis. See Schedule VIII attached for the Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2006.

 

3.  Summary of Significant Accounting Policies

 

See Note 2 “Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements included in our 2005 Form 10-K and Note 1 “Basis of Presentation and Summary of Significant Accounting Policies” in the Notes to Consolidated Condensed Financial Statements included in the 2006 First Quarter Form 10-Q for a summary of the accounting policies that we believe are significant to us.

 

4.  Recent Accounting Pronouncements

 

SFAS No. 123-R

 

In December 2004, FASB issued SFAS No. 123-R, which requires a public company to use the fair value method of accounting for stock-based compensation. We adopted this standard as of January 1, 2006, and applied the modified prospective transition method. The modified prospective approach applies to the unvested portion of all awards granted prior to January 1, 2006, and to all prospective awards. Prior financial statements are not restated under this method.

 

SFAS No. 123-R also requires the cash flows resulting from the tax benefits that occur from estimated tax deductions in excess of the compensation cost recognized be presented as financing cash flows in the statement of cash flows. Prior to adopting this statement, we presented tax benefits from allowable deductions as operating cash flows in our Consolidated Condensed Statement of Cash Flows.

 

As we previously adopted the fair value method of accounting under SFAS No. 123 as amended by SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure” (“SFAS No. 123”) on January 1, 2003, the adoption of SFAS No. 123-R did not have a material impact on our results of operations, cash flows or financial position. For the three months ended March 31, 2006, we recorded a cumulative effect of a change in accounting principle that increased income by $0.5 million, net of tax.

 

SFAS No. 154

 

In May 2005, FASB issued SFAS No. 154, “Accounting Changes and Error Corrections.” This statement replaces APB Opinion No. 20, “Accounting Changes,” and FASB Statement No. 3, “Reporting Accounting Changes in Interim Financial Statements,” and changes the requirements for the accounting for and reporting of a change in accounting principle. SFAS No. 154 applies to all voluntary changes in accounting principle. SFAS No. 154 is effective for fiscal years beginning after December 15, 2005. Adoption of this statement did not materially impact our consolidated results of operations, cash flows or financial position.

 

SFAS No. 155

 

In February 2006 FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments—an amendment of FASB Statements No. 133 and 140,” to resolve issues addressed in DIG Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets.” SFAS No. 155 (i) permits fair value remeasurement for hybrid financial instruments containing embedded derivatives, (ii) clarifies that certain types of financial instruments are not subject to the requirements of SFAS No. 133, (iii) requires an evaluation of interests in securitized financial assets to determine whether an embedded derivative requires bifurcation, (iv) clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives and (v) amends SFAS No. 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. We do not expect the adoption of this statement to have a material impact on our results of operations, cash flows or financial position.

 

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SFAS No. 156

 

In March 2006 FASB issued FASB Statement No. 156, “Accounting for Servicing of Financial Assets – An Amendment of FASB Statement No. 140.” The new statement addresses the recognition and measurement of separately recognized servicing assets and liabilities and provides an approach to simplify efforts to obtain hedge-like (offset) accounting. The statement also (i) clarifies when an obligation to service financial assets should be separately recognized as a servicing asset or a servicing liability, (ii) requires that a separately recognized servicing asset or servicing liability be initially measured at fair value, if practicable, (iii) permits an entity with a separately recognized servicing asset or servicing liability to choose either the amortization or fair value method for subsequent measurement and (iv) permits a servicer that uses derivative financial instruments to offset risks on servicing to report both the derivative financial instrument and related servicing asset or liability by using a consistent measurement attribute, or fair value. SFAS No. 156 is effective for all separately recognized servicing assets and liabilities acquired or issued after the beginning of an entity’s fiscal year that begins after September 15, 2006, with early adoption permitted. We do not expect the adoption of this statement to have a material impact on our results of operations, cash flows or financial position.

 

5.  Cash and Cash Equivalents, Restricted Cash and Margin Deposits

 

Cash and Cash Equivalents — We have certain project finance facilities and lease agreements that establish segregated cash accounts. These accounts have been pledged as security in favor of the lenders to such project finance facilities, and the use of certain cash balances on deposit in such accounts with our project financed securities is limited to the operations of the respective projects. At March 31, 2006, $440.6 million of the cash and cash equivalents balance was subject to such project finance facilities and lease agreements.

 

Restricted Cash — We are required to maintain cash balances that are restricted by provisions of certain of our debt and lease agreements or by regulatory agencies. These amounts are held by depository banks in order to comply with the contractual provisions requiring reserves for payments such as for debt service, rent, major maintenance and debt repurchases. Funds that can be used to satisfy obligations due during the next twelve months are classified as current restricted cash, with the remainder classified as non-current restricted cash. Restricted cash is generally invested in accounts earning market rates; therefore the carrying value approximates fair value. Such cash is excluded from cash and cash equivalents in the Consolidated Condensed Statements of Cash Flows.

 

The table below represents the components of our consolidated restricted cash as of March 31, 2006, (in thousands):

 

 

 

Current

 

Non-Current

 

Total

 

Debt service

 

$

90,917

 

$

117,775

 

$

208,692

 

Rent reserve

 

 

22,761

 

 

—

 

 

22,761

 

Construction/major maintenance

 

 

83,712

 

 

37,441

 

 

121,153

 

Proceeds from asset sales

 

 

410,906

 

 

—

 

 

410,906

 

Collateralized letters of credit and other credit support

 

 

130,531

 

 

9,394

 

 

139,925

 

Other

 

 

25,387

 

 

42,670

 

 

68,057

 

Total

 

$

764,214

 

$

207,280

 

$

971,494

 

 

As part of a prior business acquisition, which included certain facilities subject to a pre-existing operating lease, we acquired certain restricted cash balances comprised of a portfolio of debt securities. This portfolio is classified as held-to-maturity because we have the intent and ability to hold the securities to maturity. The securities are held in escrow accounts to support operating activities of the leased facilities and consist of a $17.0 million debt security maturing in 2015 and a $7.4 million debt security maturing in 2023. This portfolio is stated at amortized cost, adjusted for amortization of premiums and accretion discounts to maturity.

 

 

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Of our restricted cash at March 31, 2006, $242.0 million relates to the assets of the following entities, each an entity with its existence separate from us and our other subsidiaries (in millions).

 

PCF

 

$

130.1

 

Gilroy Energy Center, LLC

 

 

39.0

 

Riverside Energy Center, LLC

 

 

29.5

 

Rocky Mountain Energy Center, LLC

 

 

28.1

 

Calpine Northbrook Energy Marketing, LLC

 

 

7.5

 

Calpine King City Cogen, LLC

 

 

5.4

 

Calpine Fox LLC

 

 

1.0

 

PCF III

 

 

1.4

 

 

 

$

242.0

 

 

Margin Deposits — As of March 31, 2006, to support commodity transactions, we had margin deposits with third parties of $165.3 million, we made gas and power prepayments of $90.3 million, and had letters of credit outstanding of $5.6 million. Counterparties had deposited with us $20.4 million as margin deposits at March 31, 2006. We use margin deposits, prepayments and letters of credit as credit support for commodity procurement and risk management activities. Future cash collateral requirements may increase based on the extent of our involvement in standard contracts and movements in commodity prices and also based on our credit ratings and general perception of creditworthiness in this market. While we believe that we have adequate liquidity to support our operations at this time, it is difficult to predict future developments and the amount of credit support that we may need to provide as part of our business operations.

 

6.  Rejected Contracts

 

We continue to evaluate our executory contracts and real property leases in order to determine which contracts will be assumed, assumed and assigned, or rejected. Once the evaluation is complete with respect to each particular contract or lease, the applicable U.S. Debtor will file the appropriate motion with the U.S. Bankruptcy Court seeking approval to assume, assume and assign, or reject the contract or lease. Pursuant to applicable orders of the U.S. Bankruptcy Court, if a U.S. Debtor seeks to reject a contract or lease, the contract or lease counterparties then have an opportunity to file objections. If an objection has been filed, the U.S. Bankruptcy Court will conduct a hearing to determine any matters raised by the objection. As of the date of this filing, the U.S. Debtors have identified the following significant contracts and leases to be rejected:

 

•

On December 21, 2005, we filed a motion with the U.S. Bankruptcy Court to reject eight PPAs and to enjoin FERC from asserting jurisdiction over the rejections. The U.S. Bankruptcy Court issued a temporary restraining order against FERC and set the matter for a hearing on January 5, 2006. Under most of the PPAs sought to be rejected, we are obligated to sell power at prices that are significantly lower than currently prevailing market prices. At the time of filing the motion, we forecasted that it would cost us in excess of $1.2 billion if we were required to continue to perform under these PPAs rather than to sell the contracted energy at current market prices. On December 29, 2005, certain counterparties to the various PPAs filed an action in the SDNY Court arguing that the U.S. Bankruptcy Court did not have jurisdiction over the dispute. On January 5, 2006, the SDNY Court entered an order that had the effect of transferring our motion seeking to reject the eight PPAs and our related request for an injunction against FERC to the SDNY Court from the U.S. Bankruptcy Court. Earlier, however, on December 19, 2005, CDWR, a counterparty to one of the eight PPAs, had filed a complaint with FERC seeking to obtain injunctive relief to prevent us from rejecting our PPA with CDWR and contending that FERC had exclusive jurisdiction over the matter. On January 3, 2006, FERC determined that it did not have exclusive jurisdiction, and that the matter could be heard by the U.S. Bankruptcy Court. However, despite the FERC ruling, on January 27, 2006, the SDNY Court determined that FERC had jurisdiction over whether the contracts could be rejected. We appealed the SDNY Court’s decision to the United States Court of Appeals for the Second Circuit. The appeal was heard on April 10, 2006 and we have not yet received a decision. We can not determine at this time whether the SDNY Court, the U.S. Bankruptcy Court or FERC will ultimately determine

 

 

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whether we may reject any or all of the eight PPAs, or when such determination will be made. In the meantime, three of the PPAs have been terminated by the applicable counterparties, and two of the PPAs are the subject of negotiated settlements. We continue to perform under the three PPAs that remain in effect. We can not presently determine the ultimate outcome of the pending court proceedings nor the market factors that will need to be considered in valuing the rejected contracts and therefore are unable to estimate the expected allowable claims related to these PPAs.

 

•

On February 6, 2006, we filed a notice of rejection of our leasehold interests in the Rumford Power Plant and the Tiverton Power Plant with the U.S. Bankruptcy Court, and noticed the proposed surrender of the two plants to their owner-lessor. The owner-lessor declined to take possession and control of the plants at that time. Both the indenture trustee related to the leaseholds and the owner-lessor filed objections to the rejection. Additionally, the indenture trustee and ISO New England, Inc. filed motions to withdraw the reference of the rejection notice to the SDNY Court, arguing that the U.S. Bankruptcy Court does not have jurisdiction over the lease rejection dispute. We engaged in extensive negotiations with the indenture trustee with respect to the surrender of possession and control of the two power plants and the sale of certain ancillary assets related to the power plants in consideration for the satisfaction and discharge of the indenture trustee’s administrative claims against us in the Chapter 11 cases. On May 18, 2006, we filed a motion with the U.S. Bankruptcy Court seeking approval of the terms and conditions of a transition agreement to be entered into between us, the indenture trustee and a receiver for certain assets of the owner-lessor to be appointed on a motion filed with the SDNY Court by the indenture trustee. The hearing with respect to the appointment of the receiver was heard before the SDNY Court on June 5, 2006, and a receiver was appointed on June 6, 2006. The hearing before the U.S. Bankruptcy Court with respect to the motion for approval of the transition agreement and with respect to the rejection notice, and all objections to both such pleadings, was held on June 7, 2006, and the transition agreement and effective date of the rejection of our leasehold interests in the Rumford and Tiverton power plants was approved by the U.S. Bankruptcy Court on June 9, 2006. In addition, we have been involved in negotiations with ISO New England, Inc. with respect to its objections to the rejection notice and on May 30, 2006, we filed a motion with the U.S. Bankruptcy Court seeking approval of the terms of a stipulation and settlement agreement by and among us, ISO New England, Inc., the receiver and the indenture trustee. The stipulation and settlement agreement provides for a standstill with respect to ISO New England, Inc.’s pending motion to withdraw the reference. The motion to approve the stipulation and settlement agreement was heard and approved by the U.S. Bankruptcy Court at the June 7, 2006, hearing. At closing on June 23, 2006, the receiver took possession and control of the Rumford and Tiverton power plants, as well as the ancillary assets related to the power plants transferred under the transition agreement and all of the motions to withdraw the reference related to the rejection notice were withdrawn or dismissed. In connection with the lease rejections, the Company expects to record a charge of approximately $109 million as its current estimate for an expected allowable claim related to the lease rejections and an additional charge of approximately $131 million to write off prepaid lease expense. The total amount of such charges is expected to be reported as a reorganization item in the Company’s Consolidated Condensed Statements of Operations for the quarter ending June 30, 2006, and the portion representing the expected allowable claim will be recorded as a liability subject to compromise in the Consolidated Condensed Balance Sheet at June 30, 2006.

 

•

In February 2006, we filed notices of rejection with the U.S. Bankruptcy Court relating to our office leases in Portland, Oregon and in Deer Park, Texas. In March 2006, we filed notices of rejection relating to our office leases in Denver and Fort Collins, Colorado and in Tampa, Florida. In April 2006, we filed a notice of rejection relating to our office lease in Atlanta, Georgia. In May 2006, we filed a notice of rejection relating to our office lease in Dublin, California. The rejection of each of the foregoing leases has been approved by the U.S. Bankruptcy Court. In June 2006, we filed notices of rejection relating to our office lease and office sublease in Boston, Massachusetts and the seventh floor lease relating to our office in San Jose. The rejection of these leases had not been approved by the U.S. Bankruptcy Court at the time of this filing. We anticipate that it is more likely than not that we will file further notices of rejection with respect to additional office leases. We do not anticipate the expected allowable claims resulting from these office lease rejections, individually or in the aggregate, to be material.

 

 

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7.  Liabilities Subject to Compromise

 

The claims bar dates—the dates by which claims against the Calpine Debtors must be filed with the applicable Bankruptcy Court—have been set for August 1, 2006 by each of the Bankruptcy Courts. Accordingly, not all potential claims would have been filed as of March 31, 2006, and we expect that additional claims will be filed against us prior to the claims bar dates.

 

The amounts of LSTC at March 31, 2006 consisted of the following (in millions):

 

Accounts payable and accrued liabilities

 

$

394.6

 

Terminated derivative liabilities

 

 

134.2

 

Project financing                                                                                                                                   

 

 

164.0

 

Convertible notes

 

 

1,823.5

 

Second priority senior secured notes(1)

 

 

3,671.9

 

Unsecured senior notes

 

 

1,880.0

 

Notes payable and other liabilities – related party

 

 

1,100.6

 

Provision for allowable claims(2)

 

 

5,358.4

 

Total liabilities subject to compromise

 

$

14,527.2

 

__________

 

(1)

We have not made, and currently do not propose to make, an affirmative determination whether our Second Priority Debt is fully secured or under-secured. We do, however, believe that there is uncertainty about whether the market value of the assets securing the obligations owing in respect of the Second Priority Debt is less than, equals or exceeds the amount of these obligations. Accordingly, we have classified the Second Priority Debt as “liabilities subject to compromise.”

 

(2)

Consists primarily of estimated allowed claims related to guarantees by Calpine Corporation of repayment of unsecured senior notes (original principal amount of $2,597.2 million) for two wholly owned finance subsidiaries of ours, ULC I and ULC II. The amounts outstanding to unrelated security holders had been reduced to $1,943.0 million at December 31, 2005, due to repurchases of such senior notes. However, some of the repurchased notes are held by certain of the Company’s Canadian subsidiaries and are expected to give rise to allowable claims by these subsidiaries under the above guarantees. Additionally, there is a guarantee by Calpine Corporation of the obligations of its wholly owned subsidiary, Quintana Canada Holdings, LLC, under certain subscription agreements with ULC I, under which, claims may be asserted for the same amounts sought under the Calpine Corporation guarantees of the ULC I notes. Although the expected claims are redundant relative to the underlying exposure to unrelated security holders, we determined that these duplicative claims were probable of being allowed into the claim pool by the U.S. Bankruptcy Court, although the Debtors fully reserve their right in this regard.

 

8.  DIP Facility

 

On December 20, 2005, Calpine Corporation, as borrower, entered into the DIP Facility with Deutsche Bank Securities, Inc. and Credit Suisse, as joint syndication agents, Deutsche Bank Trust Company Americas as administrative agent for the first priority lenders and Credit Suisse as administrative agent for the second priority lenders. The DIP Facility is guaranteed by each of the other U.S. Debtors. On January 26, 2006, the U.S. Bankruptcy Court granted final approval of the DIP Facility, and on February 23, 2006, the DIP Facility was amended and restated and the term loans were funded. On May 3, 2006, the DIP Facility was further amended.

 

 

20

 

 

 

Pursuant to the DIP Facility, and applicable orders of the U.S. Bankruptcy Court, the lenders have made available to Calpine up to $2 billion comprising of a $1 billion revolving loan and letter of credit facility, a $400 million first priority term loan facility and a $600 million second priority term loan facility. The proceeds of borrowings and letters of credit issued under the DIP Facility will be used, among other things, for working capital and other general corporate purposes. A portion of the borrowings under the revolving loan facility in February 2006 were used to fund a portion of the costs in connection with the purchase of The Geysers Assets. In May 2006 and June 2006, a portion of the funds drawn under the term loan facilities, together with approximately $409 million of restricted cash, plus related interest thereon, were used to repay $646.1 million of the First Priority Notes. During the month of March 2006, there were no borrowings under the revolving loan facility, no additional borrowings under the first priority term loan facility nor the second priority term loan facility. We repaid $875,000 of the amount outstanding under first priority term loan facility, plus the related interest. Accordingly, at March 31, 2006, there was $999.1 million outstanding under the term loan facilities and nothing outstanding under the revolving loan facility. At June 30, 2006, there was $998.3 million outstanding under the term loan facilities as a result of the June repayment of $875,000 of the amounts outstanding under the first priority term loan, plus the related interest. Also at June 30, 2006, there were no amounts outstanding under the revolving loan facility; however, approximately $11.7 million of letters of credit had been issued against the revolving loan facility.

 

See Note 22 of the Notes to Consolidated Financial Statements included in the 2005 Form 10-K and Note 6 of the Notes to Consolidated Condensed Financial Statements included in the 2006 First Quarter Form 10-Q for further discussion of the DIP Facility.

 

9.  Reorganization Items

 

Reorganization items represent the direct and incremental costs of being in bankruptcy, such as professional fees, pre-petition liability claim adjustments related to terminated contracts that are probable and can be estimated and charges related to expected allowable claims.

 

The table below lists the significant items recognized within this category for the month ended March 31, 2006 (in millions)

 

 

Month Ended
March 31, 2006

 

Provision for allowable claims(1)

 

$

(1.7

)

Loss on terminated contracts, net

 

 

5.0

 

Professional fees(2)

 

 

(1.1

)

Total reorganization items

 

$

2.2

 

__________

 

(1)

During March 2006, a $2.7 million payment of debt guaranteed by a U.S. Subsidiary of Calpine Corporation was made by a Canadian Debtor. Accordingly, the provision for allowable claims was adjusted downward by this amount.

 

(2)

At March 31, 2006 an analysis of the accruals related to professional fees was performed and the account was adjusted accordingly.

 

See Note 4 of the Notes to Consolidated Financial Statements included in our 2005 Form 10-K for a discussion of the Reorganization items.

 

21

 

 

 

Schedule I

CALPINE CORPORATION

(Debtor-in-Possession)

CASE No. 05-60200 (Jointly Administered)

CONSOLIDATING CONDENSED BALANCE SHEET

(Unaudited)

(in thousands)

March 31, 2006

 

 

 

 

U.S. Debtors

 

Non-U.S. Debtors

 

Eliminations

 

Consolidated

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:                                                         

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,175,641

 

$

185,882

 

$

—

 

$

1,361,523

 

Accounts receivable, net

 

 

721,839

 

 

126,842

 

 

—

 

 

848,681

 

Accounts receivable (payable) from
affiliates, net

 

 

38,919,588

 

 

2,923,626

 

 

(41,843,214

)

 

—

 

Margin deposits and other prepaid expense

 

 

261,267

 

 

40,179

 

 

(3,350

)

 

298,096

 

Inventories

 

 

125,374

 

 

24,670

 

 

—

 

 

150,044

 

Restricted cash

 

 

619,193

 

 

145,021

 

 

—

 

 

764,214

 

Current derivative assets

 

 

200,970

 

 

96,890

 

 

—

 

 

297,860

 

Current assets held for sale

 

 

39,542

 

 

—

 

 

—

 

 

39,542

 

Other current assets

 

 

918,408

 

 

31,912

 

 

(884,563

)

 

65,757

 

Total current assets

 

 

42,981,822

 

 

3,575,022

 

 

(42,731,127

)

 

3,825,717

 

Restricted cash, net of current portion

 

 

51,662

 

 

155,618

 

 

—

 

 

207,280

 

Notes receivable, net of current portion

 

 

159,457

 

 

1,694

 

 

—

 

 

161,151

 

Notes receivable from affiliates,
net of current portion

 

 

4,148,887

 

 

38,100

 

 

(4,186,987

)

 

—

 

Project development costs

 

 

24,247

 

 

—

 

 

—

 

 

24,247

 

Investments

 

 

12,750,178

 

 

9,285,020

 

 

(21,950,760

)

 

84,438

 

Deferred financing costs

 

 

61,286

 

 

135,797

 

 

—

 

 

197,083

 

Prepaid lease, net of current portion

 

 

351,308

 

 

601

 

 

—

 

 

351,909

 

Property, plant and equipment, net

 

 

8,630,299

 

 

5,831,016

 

 

(880

)

 

14,460,435

 

Goodwill

 

 

45,160

 

 

—

 

 

—

 

 

45,160

 

Other intangible assets, net

 

 

16,107

 

 

37,092

 

 

—

 

 

53,199

 

Long-term derivative assets

 

 

411,739

 

 

117,060

 

 

—

 

 

528,799

 

Other assets

 

 

272,556

 

 

347,356

 

 

(12,601

)

 

607,311

 

Intercompany

 

 

521,564

 

 

69,874

 

 

(591,438

)

 

—

 

Total assets

 

$

70,426,272

 

$

19,594,250

 

$

(69,473,793

)

$

20,546,729

 

 

 

22

 

 

 

CONSOLIDATING CONDENSED BALANCE SHEET — (Continued)

 

 

 

 

U.S. Debtors

 

Non-U.S. Debtors

 

Eliminations

 

Consolidated

 

LIABILITIES AND

STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:                                                   

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

561,747

 

$

2,111,524

 

$

(2,151,780

)

$

521,491

 

Accrued payroll and related expense

 

 

39,496

 

 

1,376

 

 

—

 

 

40,872

 

Accrued interest payable

 

 

365,521

 

 

48,470

 

 

(228,232

)

 

185,759

 

Income taxes payable

 

 

99,073

 

 

—

 

 

—

 

 

99,073

 

Notes payable and other borrowings, current portion

 

 

727,550

 

 

184,042

 

 

(718,543

)

 

193,049

 

Preferred interests, current portion

 

 

—

 

 

8,877

 

 

—

 

 

8,877

 

Capital lease obligations, current portion

 

 

189,590

 

 

96,846

 

 

(1,504

)

 

284,932

 

CCFC financing, current portion

 

 

—

 

 

782,991

 

 

—

 

 

782,991

 

CalGen financing, current portion

 

 

2,508,800

 

 

—

 

 

—

 

 

2,508,800

 

Construction/project financing, current portion

 

 

387,555

 

 

1,807,968

 

 

—

 

 

2,195,523

 

Senior notes and term loans, current portion

 

 

641,777

 

 

—

 

 

—

 

 

641,777

 

DIP Facility, current portion

 

 

3,500

 

 

—

 

 

—

 

 

3,500

 

Current derivative liabilities

 

 

344,769

 

 

109,561

 

 

—

 

 

454,330

 

Other current liabilities

 

 

186,728

 

 

107,964

 

 

(2,087

)

 

292,605

 

Total current liabilities

 

 

6,056,106

 

 

5,259,619

 

 

(3,102,146

)

 

8,213,579

 

Notes payable and other borrowings,
net of current portion

 

 

4,123,333

 

 

2,082,803

 

 

(5,737,272

)

 

468,864

 

Preferred interests, net of current portion

 

 

—

 

 

579,519

 

 

—

 

 

579,519

 

Capital lease obligations, net of current portion

 

 

318,402

 

 

—

 

 

(317,897

)

 

505

 

Construction/project financing,
net of current portion

 

 

—

 

 

173,581

 

 

—

 

 

173,581

 

DIP Facility, net of current portion

 

 

995,625

 

 

—

 

 

—

 

 

995,625

 

Deferred income taxes, net of current portion

 

 

125,413

 

 

246,020

 

 

—

 

 

371,433

 

Deferred revenue

 

 

126,453

 

 

20,926

 

 

(13,480

)

 

133,899

 

Long-term derivative liabilities

 

 

557,137

 

 

157,130

 

 

—

 

 

714,267

 

Other liabilities

 

 

128,540

 

 

29,661

 

 

(4

)

 

158,197

 

Total liabilities not subject to compromise

 

 

12,431,009

 

 

8,549,259

 

 

(9,170,799

)

 

11,809,469

 

Liabilities subject to compromise

 

 

53,100,257

 

 

265

 

 

(38,573,360

)

 

14,527,162

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Minority interests

 

 

274,074

 

 

—

 

 

—

 

 

274,074

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

31,566

 

 

5,097

 

 

(36,094

)

 

569

 

Additional paid-in capital

 

 

25,731,025

 

 

10,600,446

 

 

(33,064,581

)

 

3,266,890

 

Accumulated deficit

 

 

(20,979,558

)

 

449,597

 

 

11,327,358

 

 

(9,202,603

)

Accumulated other comprehensive loss

 

 

(162,101

)

 

(10,414

)

 

43,683

 

 

(128,832

)

Total stockholders’ deficit

 

 

4,620,932

 

 

11,044,726

 

 

(21,729,634

)

 

(6,063,976

)

Total liabilities and stockholders’ deficit

 

$

70,426,272

 

$

19,594,250

 

$

(69,473,793

)

$

20,546,729

 

 

Calpine Corporation’s consolidated results are comprised of U.S. Debtor and Non-U.S. Debtor entities that have affiliated transactions with other U.S. Debtor and Non-U.S. Debtor entities that must be eliminated in consolidation. Amounts listed under the “Eliminations” heading are required to correctly eliminate transactions between any affiliated entities for consolidated financial statement presentation purposes.

 

 

23

 

 

 

Schedule II

CALPINE CORPORATION

(Debtor-in-Possession)

CASE No. 05-60200 (Jointly Administered)

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

(Unaudited)

(in thousands)

For the Period from March 1, 2006, to March 31, 2006

 

 

 

 

U.S. Debtors

 

Non-U.S. Debtors

 

Eliminations

 

Consolidated

 

Revenue:                                                                

 

 

 

 

 

 

 

 

 

 

 

 

 

Electricity and steam revenue

 

$

521,247

 

$

114,749

 

$

(293,110

)

$

342,886

 

Transmission sales revenue

 

 

719

 

 

—

 

 

—

 

 

719

 

Sales of purchased power and gas
for hedging and optimization

 

 

248,604

 

 

12,261

 

 

(205,912

)

 

54,953

 

Mark-to-market activities, net

 

 

16,836

 

 

(9,518

)

 

—

 

 

7,318

 

Other revenue from operations

 

 

41,958

 

 

2,298

 

 

(34,690

)

 

9,566

 

Total revenue

 

 

829,364

 

 

119,790

 

 

(533,712

)

 

415,442

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Plant operating expense

 

 

352,856

 

 

22,268

 

 

(319,443

)

 

55,681

 

Royalty expense

 

 

4,061

 

 

(2,268

)

 

—

 

 

1,793

 

Transmission purchase expense

 

 

4,477

 

 

3,156

 

 

—

 

 

7,633

 

Purchased power and gas expense
for hedging and optimization

 

 

(2,762

)

 

48,406

 

 

(7,393

)

 

38,251

 

Fuel expense

 

 

368,920

 

 

38,333

 

 

(206,929

)

 

200,324

 

Depreciation and amortization expense

 

 

17,955

 

 

10,952

 

 

—

 

 

28,907

 

Operating plant impairments

 

 

—

 

 

49,653

 

 

—

 

 

49,653

 

Operating lease expense

 

 

8,761

 

 

(2,215

)

 

—

 

 

6,546

 

Other cost of revenue

 

 

6,583

 

 

2,215

 

 

5

 

 

8,803

 

Total cost of revenue

 

 

760,851

 

 

170,500

 

 

(533,760

)

 

397,591

 

Gross profit

 

 

68,513

 

 

(50,710

)

 

48

 

 

17,851

 

(Income) from unconsolidated investments

 

 

133,786

 

 

25,238

 

 

(161,963

)

 

(2,939

)

Equipment, development project and
other impairments

 

 

2,090

 

 

3,668

 

 

—

 

 

5,758

 

Project development expense

 

 

1,004

 

 

976

 

 

—

 

 

1,980

 

Research and development expense

 

 

1,488

 

 

—

 

 

—

 

 

1,488

 

Sales, general and administrative expense

 

 

14,063

 

 

15,776

 

 

—

 

 

29,839

 

Income (loss) from operations

 

 

(83,918

)

 

(96,368

)

 

162,011

 

 

(18,275

)

Interest expense

 

 

73,527

 

 

35,887

 

 

(4,395

)

 

105,019

 

Interest (income)

 

 

(8,085

)

 

(2,413

)

 

4,396

 

 

(6,102

)

Minority interest expense

 

 

1,457

 

 

(967

)

 

—

 

 

490

 

Other (income) expense, net

 

 

(11,326

)

 

4,876

 

 

50

 

 

(6,400

)

Loss before reorganization items, benefit for
income taxes, discontinued operations
and cumulative effect of a change in
accounting principle

 

 

(139,491

)

 

(133,751

)

 

161,960

 

 

(111,282

)

 

 

24

 

 

 

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS — (Continued)

 

 

 

U.S. Debtors

 

Non-U.S. Debtors

 

Eliminations

 

Consolidated

 

Reorganization items

 

$

2,213

 

$

(54

)

$

—

 

$

2,159

 

Loss before benefit for income taxes,
discontinued operations and cumulative
effect of a change in accounting principle

 

 

(141,704

)

 

(133,697

)

 

161,960

 

 

(113,441

)

Provision (benefit) for income taxes

 

 

9,618

 

 

(13,243

)

 

—

 

 

(3,625

)

Loss before discontinued operations and
cumulative effect of a change in
accounting principle

 

 

(151,322

)

 

(120,454

)

 

161,960

 

 

(109,816

)

Cumulative effect of a change in
accounting principle

 

 

(312

)

 

—

 

 

—

 

 

(312

)

Net loss                                                      

 

$

(151,634

)

$

(120,454

)

$

161,960

 

$

(110,128

)

 

Calpine Corporation’s consolidated results are comprised of U.S. Debtor and Non-U.S. Debtor entities that have affiliated transactions with other U.S. Debtor and Non-U.S. Debtor entities that must be eliminated in consolidation. Amounts listed under the “Eliminations” heading are required to correctly eliminate transactions between any affiliated entities for consolidated financial statement presentation purposes.

 

 

25

 

 

 

Schedule III

CALPINE CORPORATION

(Debtor-in-Possession)

CASE No. 05-60200 (Jointly Administered)

SCHEDULE OF PAYROLL AND PAYROLL TAXES

(in thousands)

For the Period from March 1, 2006, to March 31, 2006

 

 

Gross Wages Paid**

 

Employee Payroll
Taxes Withheld*

 

Employer Payroll
Taxes Remitted*

$19,722

 

$5,035

 

$1,524

 

 

*

Employee Payroll Taxes are withheld each pay period and remitted by the Company, together with the Employer Payroll Taxes, to the appropriate tax authorities.

 

**

Gross Wages were paid by the Company on March 3, 2006, March 10, 2006, March 17, 2006, March 24, 2006, and March 31, 2006.

 

26

 

 

 

Schedule IV

CALPINE CORPORATION

(Debtor-in-Possession)

CASE No. 05-60200 (Jointly Administered)

SCHEDULE OF FEDERAL, STATE AND LOCAL TAXES

COLLECTED, RECEIVED, DUE OR WITHHELD

(in thousands)

For the Period from March 1, 2006, to March 31, 2006

 

 

 

Amount
Withheld/Accrued

 

Amount
Paid

 

Federal and state income taxes                                                                 

 

$

—

 

$

—

 

State and local taxes:

 

 

 

 

 

 

 

Property

 

 

6,327

 

 

5,605

 

Sales and use

 

 

13,741

 

 

3,063

 

Franchise

 

 

1,037

 

 

1,037

 

Other

 

 

59

 

 

59

 

Total state and local taxes

 

 

21,164

 

 

9,764

 

Total taxes

 

$

21,164

 

$

9,764

 

 

 

27

 

 

 

Schedule V

CALPINE CORPORATION

(Debtor-in-Possession)

CASE No. 05-60200 (Jointly Administered)

TOTAL DISBURSEMENTS BY DEBTOR

For the Month Ended March 31, 2006

(In Dollars)

 

 

Legal Entity

Case Number

Disbursements

Amelia Energy Center, LP

05-60223-BRL

—

Anacapa Land Company, LLC

05-60226-BRL

11,123

Anderson Springs Energy Company

05-60232-BRL

7,985

Androscoggin Energy, Inc.

05-60239-BRL

—

Auburndale Peaker Energy Center, LLC

05-60244-BRL

18,863

Augusta Development Company, LLC

05-60248-BRL

—

Aviation Funding Corp.

05-60252-BRL

—

Baytown Energy Center, LP

05-60255-BRL

848,155

Baytown Power GP, LLC

05-60256-BRL

—

Baytown Power, LP

05-60258-BRL

—

Bellingham Cogen, Inc.

05-60224-BRL

—

Bethpage Energy Center 3, LLC

05-60225-BRL

1,470,733

Bethpage Fuel Management Inc.

05-60228-BRL

—

Blue Heron Energy Center, LLC

05-60235-BRL

—

Blue Spruce Holdings, LLC

05-60238-BRL

—

Broad River Energy LLC

05-60242-BRL

1,157,074

Broad River Holdings, LLC

05-60245-BRL

—

CalGen Equipment Finance Company, LLC

05-60249-BRL

—

CalGen Equipment Finance Holdings, LLC

05-60251-BRL

—

CalGen Expansion Company, LLC

05-60253-BRL

—

CalGen Finance Corp.

05-60229-BRL

—

CalGen Project Equipment Finance Company One, LLC

05-60236-BRL

100

CalGen Project Equipment Finance Company Three, LLC

05-60259-BRL

19,152

CalGen Project Equipment Finance Company Two, LLC

05-60262-BRL

—

Calpine Acadia Holdings, LLC

05-60265-BRL

—

Calpine Administrative Services Company, Inc.

05-60201-BRL

3,433,195

Calpine Agnews, Inc.

05-60268-BRL

—

Calpine Amelia Energy Center GP, LLC

05-60270-BRL

—

Calpine Amelia Energy Center LP, LLC

05-60272-BRL

—

Calpine Auburndale Holdings, LLC

05-60452-BRL

—

Calpine Baytown Energy Center GP, LLC

05-60453-BRL

—

Calpine Baytown Energy Center LP, LLC

05-60320-BRL

—

Calpine Bethpage 3 Pipeline Construction Company, Inc.

05-60330-BRL

—

Calpine Bethpage 3, LLC

05-60342-BRL

—

Calpine c*Power, Inc.

05-60250-BRL

—

Calpine CalGen Holdings, Inc.

05-60352-BRL

20,100

Calpine California Development Company, LLC

05-60355-BRL

—

Calpine California Energy Finance, LLC

05-60360-BRL

—

 

 

28

 

 

 

TOTAL DISBURSEMENTS BY DEBTOR — (Continued)

 

 

Legal Entity

Case Number

Disbursements

Calpine California Equipment Finance Company, LLC

05-60464-BRL

—

Calpine Calistoga Holdings, LLC

05-60377-BRL

—

Calpine Capital Trust

05-60325-BRL

—

Calpine Capital Trust II

05-60379-BRL

—

Calpine Capital Trust III

05-60384-BRL

—

Calpine Capital Trust IV

05-60391-BRL

—

Calpine Capital Trust V

05-60221-BRL

—

Calpine Central Texas GP, Inc.

05-60329-BRL

—

Calpine Central, Inc.

05-60333-BRL

—

Calpine Central, L.P.

05-60351-BRL

1,096,415

Calpine Central-Texas, Inc.

05-60338-BRL

—

Calpine Channel Energy Center GP, LLC

05-60340-BRL

—

Calpine Channel Energy Center LP, LLC

05-60343-BRL

—

Calpine Clear Lake Energy GP, LLC

05-60345-BRL

—

Calpine Clear Lake Energy, LP

05-60349-BRL

—

Calpine Cogeneration Corporation

05-60233-BRL

21,000

Calpine Construction Management Company, Inc.

05-60260-BRL

3,252,050

Calpine Corporation

05-60200-BRL

112,935,904

Calpine Corpus Christi Energy GP, LLC

05-60247-BRL

—

Calpine Corpus Christi Energy, LP

05-60261-BRL

—

Calpine Decatur Pipeline, Inc.

05-60263-BRL

—

Calpine Decatur Pipeline, L.P.

05-60254-BRL

—

Calpine Dighton, Inc.

05-60264-BRL

—

Calpine East Fuels, Inc.

05-60257-BRL

—

Calpine Eastern Corporation

05-60266-BRL

184,072

Calpine Energy Holdings, Inc.

05-60207-BRL

—

Calpine Energy Services Holdings, Inc.

05-60208-BRL

—

Calpine Energy Services, L.P.

05-60222-BRL

386,612,829

Calpine Finance Company

05-60204-BRL

—

Calpine Freestone Energy GP, LLC

05-60227-BRL

—

Calpine Freestone Energy, LP

05-60230-BRL

—

Calpine Freestone, LLC

05-60231-BRL

—

Calpine Fuels Corporation

05-60203-BRL

—

Calpine Gas Holdings LLC

05-60234-BRL

—

Calpine Generating Company, LLC

05-60237-BRL

128,555

Calpine Gilroy 1, Inc.

05-60240-BRL

—

Calpine Gilroy 2, Inc.

05-60241-BRL

—

Calpine Gilroy Cogen, L.P.

05-60243-BRL

120,120

Calpine Global Services Company, Inc.

05-60246-BRL

527,217

Calpine Gordonsville GP Holdings, LLC

05-60281-BRL

—

Calpine Gordonsville LP Holdings, LLC

05-60282-BRL

—

Calpine Gordonsville, LLC

05-60283-BRL

—

Calpine Greenleaf Holdings, Inc.

05-60284-BRL

—

 

 

29

 

 

 

TOTAL DISBURSEMENTS BY DEBTOR — (Continued)

 

 

Legal Entity

Case Number

Disbursements

Calpine Greenleaf, Inc.

05-60285-BRL

379,276

Calpine Hidalgo Design, L.P.

06-10039-BRL

—

Calpine Hidalgo Energy Center, L.P.

06-10029-BRL

118,909

Calpine Hidalgo Holdings, Inc.

06-10027-BRL

—

Calpine Hidalgo Power GP, LLC

06-10030-BRL

—

Calpine Hidalgo Power, LP

06-10028-BRL

—

Calpine Hidalgo, Inc.

06-10026-BRL

—

Calpine International Holdings, Inc.

05-60205-BRL

—

Calpine International, LLC

05-60288-BRL

33,777

Calpine Investment Holdings, LLC

05-60289-BRL

—

Calpine Kennedy Airport, Inc.

05-60294-BRL

—

Calpine Kennedy Operators Inc.

05-60199-BRL

—

Calpine KIA, Inc.

05-60465-BRL

—

Calpine Leasing Inc.

05-60297-BRL

—

Calpine Long Island, Inc.

05-60298-BRL

—

Calpine Lost Pines Operations, Inc.

05-60314-BRL

—

Calpine Louisiana Pipeline Company

05-60328-BRL

—

Calpine Magic Valley Pipeline, Inc.

05-60331-BRL

—

Calpine Monterey Cogeneration, Inc.

05-60341-BRL

81,137

Calpine MVP, Inc.

05-60348-BRL

—

Calpine NCTP GP, LLC

05-60359-BRL

—

Calpine NCTP, LP

05-60406-BRL

—

Calpine Northbrook Corporation of Maine, Inc.

05-60409-BRL

—

Calpine Northbrook Energy Holdings, LLC

05-60418-BRL

—

Calpine Northbrook Energy, LLC

05-60431-BRL

—

Calpine Northbrook Holdings Corporation

05-60286-BRL

—

Calpine Northbrook Investors, LLC

05-60291-BRL

—

Calpine Northbrook Project Holdings, LLC

05-60295-BRL

—

Calpine Northbrook Services, LLC

05-60299-BRL

—

Calpine Northbrook Southcoast Investors, LLC

05-60304-BRL

—

Calpine NTC, LP

05-60308-BRL

—

Calpine Oneta Power I, LLC

05-60311-BRL

—

Calpine Oneta Power II, LLC

05-60315-BRL

—

Calpine Oneta Power, L.P.

05-60318-BRL

331,877

Calpine Operating Services Company, Inc.

05-60322-BRL

35,515,119

Calpine Operations Management Company, Inc.

05-60206-BRL

110

Calpine Pastoria Holdings, LLC

05-60302-BRL

—

Calpine Philadelphia, Inc.

05-60305-BRL

62,824

Calpine Pittsburg, LLC

05-60307-BRL

39,808

Calpine Power Company

05-60202-BRL

102,677

Calpine Power Equipment LP

05-60310-BRL

—

Calpine Power Management, Inc.

05-60319-BRL

—

Calpine Power Management, LP

05-60466-BRL

20,456

 

 

30

 

 

 

TOTAL DISBURSEMENTS BY DEBTOR — (Continued)

 

 

Legal Entity

Case Number

Disbursements

Calpine Power Services, Inc.

05-60323-BRL

300,001

Calpine Power, Inc.

05-60316-BRL

—

Calpine PowerAmerica, Inc.

05-60211-BRL

—

Calpine PowerAmerica, LP

05-60212-BRL

2,359,492

Calpine PowerAmerica-CA, LLC

05-60213-BRL

137,375

Calpine PowerAmerica-CT, LLC

05-60214-BRL

—

Calpine PowerAmerica-MA, LLC

05-60215-BRL

—

Calpine PowerAmerica-ME, LLC

05-60216-BRL

—

Calpine PowerAmerica-NH, LLC

06-10032-BRL

—

Calpine PowerAmerica-NY, LLC

06-10031-BRL

—

Calpine PowerAmerica-OR, LLC

06-10034-BRL

—

Calpine Producer Services, L.P.

05-60217-BRL

8,399,547

Calpine Project Holdings, Inc.

05-60324-BRL

—

Calpine Pryor, Inc.

05-60326-BRL

—

Calpine Rumford I, Inc.

05-60327-BRL

—

Calpine Rumford, Inc.

05-60414-BRL

—

Calpine Schuylkill, Inc.

05-60416-BRL

—

Calpine Siskiyou Geothermal Partners, L.P.

05-60420-BRL

1,480

Calpine Sonoran Pipeline LLC

05-60423-BRL

—

Calpine Stony Brook Operators, Inc.

05-60424-BRL

—

Calpine Stony Brook Power Marketing, LLC

05-60425-BRL

—

Calpine Stony Brook, Inc.

05-60426-BRL

—

Calpine Sumas, Inc.

05-60427-BRL

—

Calpine TCCL Holdings, Inc.

05-60429-BRL

—

Calpine Texas Pipeline GP, Inc.

05-60433-BRL

—

Calpine Texas Pipeline LP, Inc.

05-60439-BRL

—

Calpine Texas Pipeline, L.P.

05-60447-BRL

65

Calpine Tiverton I, Inc.

05-60450-BRL

—

Calpine Tiverton, Inc.

05-60451-BRL

—

Calpine ULC I Holding, LLC

05-60454-BRL

—

Calpine University Power, Inc.

05-60455-BRL

—

Calpine Unrestricted Funding, LLC

05-60456-BRL

—

Calpine Unrestricted Holdings, LLC

05-60458-BRL

—

Calpine Vapor, Inc.

05-60459-BRL

—

Carville Energy LLC

05-60460-BRL

194,859

CCFC Development Company, LLC

05-60267-BRL

—

CCFC Equipment Finance Company, LLC

05-60269-BRL

—

CCFC Project Equipment Finance Company One, LLC

05-60271-BRL

—

Celtic Power Corporation

05-60273-BRL

—

CES GP, LLC

05-60218-BRL

—

CGC Dighton, LLC

05-60274-BRL

—

Channel Energy Center, LP

05-60275-BRL

997,434

Channel Power GP, LLC

05-60276-BRL

—

 

 

31

 

 

 

TOTAL DISBURSEMENTS BY DEBTOR — (Continued)

 

 

Legal Entity

Case Number

Disbursements

Channel Power, LP

05-60277-BRL

—

Clear Lake Cogeneration Limited Partnership

05-60278-BRL

339,181

CogenAmerica Asia Inc.

05-60372-BRL

—

CogenAmerica Parlin Supply Corp.

05-60383-BRL

—

Columbia Energy LLC

05-60440-BRL

242,007

Corpus Christi Cogeneration L.P.

05-60441-BRL

1,463,191

CPN 3rd Turbine, Inc.

05-60443-BRL

—

CPN Acadia, Inc.

05-60444-BRL

—

CPN Berks Generation, Inc.

05-60445-BRL

—

CPN Berks, LLC

05-60446-BRL

—

CPN Bethpage 3rd Turbine, Inc.

05-60448-BRL

34,139

CPN Cascade, Inc.

05-60449-BRL

—

CPN Clear Lake, Inc.

05-60287-BRL

—

CPN Decatur Pipeline, Inc.

05-60290-BRL

—

CPN East Fuels, LLC

05-60476-BRL

—

CPN Energy Services GP, Inc.

05-60209-BRL

—

CPN Energy Services LP, Inc.

05-60210-BRL

—

CPN Freestone, LLC

05-60293-BRL

—

CPN Funding, Inc.

05-60296-BRL

25

CPN Morris, Inc.

05-60301-BRL

—

CPN Oxford, Inc.

05-60303-BRL

—

CPN Pipeline Company

05-60309-BRL

155,202

CPN Pleasant Hill Operating, LLC

05-60312-BRL

—

CPN Pleasant Hill, LLC

05-60317-BRL

—

CPN Power Services GP, LLC

05-60321-BRL

—

CPN Power Services, LP

05-60292-BRL

—

CPN Pryor Funding Corporation

05-60300-BRL

77,058

CPN Telephone Flat, Inc.

05-60306-BRL

2,002

Decatur Energy Center, LLC

05-60313-BRL

484,443

Deer Park Power GP, LLC

05-60363-BRL

—

Deer Park Power, LP

05-60370-BRL

—

Delta Energy Center, LLC

05-60375-BRL

3,183,075

Dighton Power Associates Limited Partnership

05-60382-BRL

52,481

East Altamont Energy Center, LLC

05-60386-BRL

—

Fond du Lac Energy Center, LLC

05-60412-BRL

—

Fontana Energy Center, LLC

05-60335-BRL

—

Freestone Power Generation LP

05-60339-BRL

225,948

GEC Bethpage Inc.

05-60347-BRL

—

Geothermal Energy Partners, LTD., a California limited partnership

05-60477-BRL

—

Geysers Power Company II, LLC

05-60358-BRL

—

Geysers Power Company, LLC

06-10197-BRL

3,302,037

Geysers Power I Company

05-60389-BRL

—

Goldendale Energy Center, LLC

05-60390-BRL

454,899

 

 

32

 

 

 

TOTAL DISBURSEMENTS BY DEBTOR — (Continued)

 

 

Legal Entity

Case Number

Disbursements

Hammond Energy LLC

05-60393-BRL

—

Hillabee Energy Center, LLC

05-60394-BRL

86,573

Idlewild Fuel Management Corp.

05-60397-BRL

—

JMC Bethpage, Inc.

05-60362-BRL

—

KIAC Partners

05-60366-BRL

4,148,063

Lake Wales Energy Center, LLC

05-60369-BRL

—

Lawrence Energy Center, LLC

05-60371-BRL

—

Lone Oak Energy Center, LLC

05-60403-BRL

22,614

Los Esteros Critical Energy Facility, LLC

05-60404-BRL

968,213

Los Medanos Energy Center LLC

05-60405-BRL

1,001,456

Magic Valley Gas Pipeline GP, LLC

05-60407-BRL

—

Magic Valley Gas Pipeline, LP

05-60408-BRL

—

Magic Valley Pipeline, L.P.

05-60332-BRL

140

MEP Pleasant Hill, LLC

05-60334-BRL

380,442

Moapa Energy Center, LLC

05-60337-BRL

1,172

Mobile Energy L L C

05-60344-BRL

51,085

Modoc Power, Inc.

05-60346-BRL

—

Morgan Energy Center, LLC

05-60353-BRL

1,026,256

Mount Hoffman Geothermal Company, L.P.

05-60361-BRL

—

Mt. Vernon Energy LLC

05-60376-BRL

—

NewSouth Energy LLC

05-60381-BRL

80,116

Nissequogue Cogen Partners

05-60388-BRL

484,957

Northwest Cogeneration, Inc.

05-60336-BRL

—

NTC Five, Inc.

05-60463-BRL

—

NTC GP, LLC

05-60350-BRL

—

Nueces Bay Energy LLC

05-60356-BRL

—

O.L.S. Energy-Agnews, Inc.

05-60374-BRL

1,046,434

Odyssey Land Acquisition Company

05-60367-BRL

—

Pajaro Energy Center, LLC

05-60385-BRL

—

Pastoria Energy Center, LLC

05-60387-BRL

—

Pastoria Energy Facility L.L.C.

05-60410-BRL

565,987

Philadelphia Biogas Supply, Inc.

05-60421-BRL

—

Phipps Bend Energy Center, LLC

05-60395-BRL

—

Pine Bluff Energy, LLC

05-60396-BRL

286,228

Power Investors, L.L.C.

05-60398-BRL

—

Power Systems MFG., LLC

05-60399-BRL

7,707,386

Quintana Canada Holdings, LLC

05-60400-BRL

—

RockGen Energy LLC

05-60401-BRL

215,930

Rumford Power Associates Limited Partnership

05-60467-BRL

62,823

Russell City Energy Center, LLC

05-60411-BRL

18,002

San Joaquin Valley Energy Center, LLC

05-60413-BRL

3,828

Silverado Geothermal Resources, Inc.

06-10198-BRL

—

Skipanon Natural Gas, LLC

05-60415-BRL

—

 

 

33

 

 

 

TOTAL DISBURSEMENTS BY DEBTOR — (Continued)

 

 

Legal Entity

Case Number

Disbursements

South Point Energy Center, LLC

05-60417-BRL

3,254,305

South Point Holdings, LLC

05-60419-BRL

—

Stony Brook Cogeneration, Inc.

05-60422-BRL

—

Stony Brook Fuel Management Corp.

05-60428-BRL

2,956,562

Sutter Dryers, Inc.

05-60430-BRL

—

TBG Cogen Partners

05-60432-BRL

43,556

Texas City Cogeneration, L.P.

05-60434-BRL

918,674

Texas Cogeneration Company

05-60435-BRL

—

Texas Cogeneration Five, Inc.

05-60436-BRL

—

Texas Cogeneration One Company

05-60437-BRL

—

Thermal Power Company

05-60438-BRL

—

Thomassen Turbine Systems America, Inc.

05-60354-BRL

34,190

Tiverton Power Associates Limited Partnership

05-60357-BRL

110,062

Towantic Energy, L.L.C.

05-60364-BRL

7,505

VEC Holdings, LLC

05-60365-BRL

—

Venture Acquisition Company

05-60368-BRL

—

Vineyard Energy Center, LLC

05-60373-BRL

—

Wawayanda Energy Center, LLC

05-60378-BRL

1,306

Whatcom Cogeneration Partners, L.P.

05-60468-BRL

—

Zion Energy LLC

05-60380-BRL

88,172

 

 

 

TOTAL

 

596,528,590

 

 

34

 

 

 

SCHEDULE VI

CALPINE CORPORATION

(Debtor-in-Possession)

CASE No. 05-60200 (Jointly Administered)

DEBTORS’ STATEMENT REGARDING INSURANCE POLICIES

For the Period from March 1, 2006, to March 31, 2006

 

 

All insurance policies are fully paid for the current period, including amounts owed for workers’ compensation and disability insurance.

 

 

35

 

 

 

SCHEDULE VII

CALPINE CORPORATION

(Debtor-in-Possession)

CASE No. 05-60200 (Jointly Administered)

SCHEDULE OF CONSOLIDATED CONDENSED

STATEMENT OF OPERATIONS

(Unaudited)

(in thousands)

For the Three Months Ended March 31, 2006

 

 

Revenue:

 

 

 

 

Electricity and steam revenue

 

$

1,019,991

 

Transmission sales revenue

 

 

1,599

 

Sales of purchased power and gas for hedging and optimization

 

 

276,345

 

Mark-to-market activities, net

 

 

36,225

 

Other revenue

 

 

21,475

 

Total revenue

 

 

1,355,635

 

Cost of revenue:

 

 

 

 

Plant operating expense

 

 

150,703

 

Royalty expense

 

 

6,479

 

Transmission purchase expense

 

 

20,677

 

Purchased power and gas expense for hedging and optimization

 

 

248,269

 

Fuel expense

 

 

668,175

 

Depreciation and amortization expense

 

 

115,109

 

Operating plant impairments

 

 

49,653

 

Operating lease expense

 

 

21,600

 

Other cost of revenue

 

 

19,942

 

Total cost of revenue

 

 

1,300,607

 

Gross profit

 

 

55,028

 

Equipment, development project and other impairments

 

 

5,555

 

Project development expense

 

 

4,256

 

Research and development expense

 

 

3,727

 

Sales, general and administrative expense

 

 

50,946

 

Income (loss) from operations

 

 

(9,456

)

Interest expense

 

 

292,266

 

Interest (income)

 

 

(20,205

)

Minority interest expense

 

 

1,457

 

Other (income) expense, net

 

 

12,384

 

Loss before reorganization items, benefit for income taxes and cumulative effect
of a change in accounting principle

 

 

(295,358

)

Reorganization items

 

 

298,215

 

Loss before benefit for income taxes and cumulative effect of a change in accounting principle

 

 

(593,573

)

Provision (benefit) for income taxes

 

 

(3,625

)

Loss before cumulative effect of a change in accounting principle                                                    

 

 

(589,948

)

Cumulative effect of a change in accounting principle, net of tax provision

 

 

505

 

Net loss

 

$

(589,443

)

 

 

36

 

 

 

SCHEDULE VIII

CALPINE CORPORATION

(Debtor-in-Possession)

CASE No. 05-60200 (Jointly Administered)

SCHEDULE OF CONSOLIDATED CONDENSED

STATEMENT OF CASH FLOWS

(Unaudited)

(in thousands)

For the Three Months Ended March 31, 2006

 

 

Cash flows from operating activities:

 

 

 

 

Net loss                                                                                                                                             

 

$

(589,443

)

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization(1)

 

 

144,408

 

Operating plant impairments

 

 

49,653

 

Equipment, development project and other impairments

 

 

5,555

 

Deferred income taxes, net

 

 

(3,625

)

Gain on sale of assets

 

 

1,102

 

Foreign currency transaction loss (gain)

 

 

6,381

 

Minority interest expense

 

 

1,457

 

Change in net derivative liability

 

 

(4,288

)

Income from unconsolidated investments in power projects

 

 

—

 

Distributions from unconsolidated investments in power projects

 

 

—

 

Stock compensation expense

 

 

2,237

 

Other

 

 

(505

)

Reorganization items

 

 

253,695

 

Change in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

 

162,601

 

Other current assets

 

 

126,370

 

Other assets

 

 

(87,858

)

Accounts payable and accrued expenses

 

 

169,292

 

Other liabilities

 

 

67,919

 

Liabilities subject to compromise

 

 

(301,586

)

Net cash provided by (used in) operating activities

 

 

3,365

 

Cash flows from investing activities:

 

 

 

 

Purchases of property, plant and equipment

 

 

(114,958

)

Purchase of The Geysers Assets

 

 

(266,846

)

Cash flows from derivatives not designated as hedges

 

 

(70,159

)

Decrease in restricted cash

 

 

99,455

 

Other

 

 

1,810

 

Net cash (used in) investing activities

 

 

(350,698

)

 

 

37

 

 

 

SCHEDULE OF CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS — (Continued)

 

 

Cash flows from financing activities:

 

 

 

 

Borrowings from notes payable and lines of credit

 

$

—

 

Repayments of notes payable and lines of credit

 

 

(85,952

)

Borrowings from project financing

 

 

39,517

 

Repayments of project financing

 

 

(36,003

)

Borrowings under CalGen revolver

 

 

85,256

 

Repayments on CalGen financing

 

 

(14,901

)

DIP Facility borrowings

 

 

1,150,000

 

Repayments of DIP Facility

 

 

(175,875

)

Repayments and repurchases of senior notes

 

 

—

 

Proceeds from issuance of preferred interests

 

 

—

 

Redemptions of preferred interests

 

 

(4,500

)

Proceeds from Deer Park prepaid commodity contract

 

 

—

 

Financing costs

 

 

(29,019

)

Other

 

 

(5,304

)

Net cash provided by financing activities

 

 

923,219

 

Effect of exchange rate changes on cash and cash equivalents

 

 

—

 

Net increase in cash and cash equivalents including discontinued operations cash

 

 

575,886

 

Change in discontinued operations cash classified as current assets held for sale

 

 

—

 

Net increase in cash and cash equivalents

 

 

575,886

 

Cash and cash equivalents, beginning of period

 

 

785,637

 

Cash and cash equivalents, end of period

 

$

1,361,523

 

Cash paid during the period for:

 

 

 

 

Interest, net of amounts capitalized

 

$

289,831

 

Income taxes                                                                                                                                    

 

$

15

 

Reorganization items included in operating activities

 

$

62,306

 

__________

 

(1)

Includes depreciation and amortization that is recorded in sales, general and administrative expense and interest expense.

 

Schedule of non-cash investing and financing activities:

 

•

2006 purchase of The Geysers Assets for $266.8 million in cash also resulted in non-cash increases in assets for property, plant and equipment of $180.6 million, and non-cash decreases of $8.0 million in prepaid assets, $1.2 million in deferred financing costs, and $196.7 million in non-current prepaid lease, and non-cash decreases in liabilities of $23.8 million in deferred revenue and $1.4 million in other current liabilities.

 

 

38