CPN Calpine Corp.

Calpine Reports Second Quarter 2004 Financial and Operating Results SAN JOSE, Calif., Aug. 5 /PRNewswire-FirstCall/ -- Calpine Corporation (NYSE:CPN), one of North America's leading power companies, today announced financial and operating results for the three and six months ended June 30, 2004. A conference call, set for 8:30 a.m. PDT today, will be accompanied by a comprehensive presentation of the financial and operating results for the quarter. The presentation will be located on Calpine's investor relations page at http://www.calpine.com/. For the three months ended June 30, 2004, the company reported a loss per share of $0.07, or $28.7 million of net loss, compared to a loss per share of $0.06, or $23.4 million of net loss for the quarter ended June 30, 2003. The results for the second quarter of 2004 include a gain of approximately $0.25 per share associated with the restructuring and sale of power purchase agreements for two of the company's New Jersey power plants, net of transaction costs and the write-off of unamortized deferred financing costs; $0.02 per share from the restructuring of a long-term gas supply contract, net of transaction costs; and $0.02 per share from the King City restructuring transaction, which gave rise to a gain from the sale of the company's collateral debt securities, net of transaction costs and write-off of deferred financing costs. This gain was offset by non-cash charges including losses of $0.02 per share from the expensing of deferred financing costs in connection with refinancing activities; $0.03 per share from mark-to-market activities, net; and $0.01 per share from foreign exchange transaction losses. The results for the three months ended June 30, 2003, included a gain of approximately $0.10 per share, or $52.8 million, in connection with terminating a tolling arrangement with a unit of Aquila on the Acadia facility. For the six months ended June 30, 2004, the company reported a $0.24 loss per share, or a $99.9 million of net loss, compared with a $0.20 loss per share, or a $75.4 million of net loss for the six months ended June 30, 2003. Second Quarter (unaudited) 2004 2003 % Chg Megawatt-hours Generated (millions)(a) 22.1 17.5 26% Megawatts in Operation at June 30 26,285 22,351 18% Revenue (millions) $2,314.6 $2,165.3 7% Net Loss (millions) $(28.7) $(23.4) 23% Diluted Loss Per Share $(0.07) $(0.06) 17% Operating Cash Flow (millions) $185.2 $(52.1) 455% EBITDA, as adjusted (millions)(b) $388.5 $344.4 13% EBITDA, as adjusted, for non-cash and other charges (millions)(c) $445.9 $393.8 13% Total Assets (billions) $27 $26 4% (a) From continuing operations. (b) Earnings Before Interest, Tax, Depreciation and Amortization, as adjusted; see attached Supplemental Data for reconciliation from net income. (c) See Supplemental Data for reconciliation from EBITDA, as adjusted. "During the second quarter, power plant performance remained strong, and we continued to execute on our liquidity-enhancing and financing programs," stated Calpine Chief Executive Officer and President Peter Cartwright. "Calpine's earnings, however, were impacted by weak spark spreads across North America as well as additional operating, depreciation and interest costs associated with new plants coming on line. "For the quarter, Calpine added five plants to our power portfolio, representing more than 3,100 net megawatts of new capacity. Consistent with our long-term strategy, several of these new facilities are now serving major wholesale customers under long-term power and steam sales contracts. On the liquidity and financing front, we completed approximately $506 million in financing and liquidity transactions, and repurchased $181.6 million of debt and preferred securities. "During the quarter, we continued to see promising signals that point to a positive market shift," continued Cartwright. "Sparks spreads, while weak overall, rose quarter-over-quarter in all major markets, except for ERCOT. Power consumption in North America increased by about 2.4%, and we experienced record peak demand in two of Calpine's major power markets. Moving forward, Calpine will continue our program to enhance liquidity, increase our revenue-generating capabilities, lower operating and overhead costs, and strengthen our balance sheet." 2004 Second Quarter Results Calpine recorded a net loss of $28.7 million for the three months ended June 30, 2004, compared to a net loss of $23.4 million for the same period in 2003, as gross profit decreased by $107.9 million, or 61%, to $67.7 million. The gross profit decrease is the result of lower per megawatt-hour spark spreads realized during the three months ended June 30, 2004, and additional costs associated with new power plants coming on line. For the three months ended June 30, 2004, Calpine generated 22.1 million megawatt-hours, which equated to a baseload capacity factor of 47%, and realized an average spark spread of $21.91 per megawatt-hour. For the same period in 2003, Calpine generated 17.5 million megawatt-hours, which equated to a capacity factor of 48%, and realized an average spark spread of $26.93 per megawatt-hour. In the quarter ended June 30, 2004, the company netted approximately $322 million of sales of purchased power for hedging and optimization with purchased power expense. This was due to the adoption on October 1, 2003, on a prospective basis, of new accounting rules related to presentation of non-trading derivative activity. Without this netting from sales of purchased power for hedging and optimization, total revenue would have grown by approximately 22% versus 7% as reported. Additional increases in power plant costs for the three months ended June 30, 2004, as compared to the three months ended June 30, 2003, include a $22.8 million increase in depreciation expense and a $64.0 million increase in plant operating expense. Also, during the three months ended June 30, 2004, financial results were affected by a $115.1 million increase in interest expense and distributions on trust preferred securities, as compared to the same period in 2003. This occurred as a result of higher debt balances, higher average interest rates and lower capitalization of interest expense as new plants entered commercial operation. The results for the three months ended June 30, 2003, included a gain of approximately $0.10 per share, or $52.8 million, in connection with terminating a tolling arrangement with a unit of Aquila on the Acadia facility. Other income was $206.0 million higher in the three months ended June 30, 2004, compared to the prior year primarily due to pre-tax income in the amount of $171.5 million associated with the restructuring and sale of power purchase agreements for two of the company's New Jersey plants, net of transaction costs and the write-off of unamortized deferred financing costs; an $11.7 million pre-tax gain from the restructuring of a long-term gas supply contract, net of transaction costs; and a $12.6 million pre-tax gain from the King City restructuring transaction related to the sale of the company's collateral debt securities, net of transaction costs. 2004 Six-Month Results Calpine recorded a net loss of $99.9 million for the six months ended June 30, 2004, compared to a net loss of $75.4 million for the six months ended June 30, 2003. Gross profit decreased by $152.5 million, or 45%, to $188.2 million. This decrease is the result of lower per megawatt-hour spark spreads realized during the six months ended June 30, 2004, and additional costs associated with new power plants coming on line. For the six months ended June 30, 2004, Calpine generated 43.1 million megawatt-hours, which equated to a capacity factor of 48%, and realized an average spark spread of $21.49 per megawatt-hour. For the same period in 2003, Calpine generated 36.6 million megawatt-hours, which equated to a capacity factor of 52%, and realized an average spark spread of $24.83 per megawatt-hour. Additional increases in power plant costs for the six months ended June 30, 2004 as compared to the six months ended June 30, 2003, include a $38.4 million increase in depreciation expense, a $77.9 million increase in plant operating expense and a $10.9 million increase in transmission purchase expense. Also, during the six months ended June 30, 2004, financial results were affected by a $211.3 million increase in interest expense and distributions on trust preferred securities, as compared to the first six months of 2003. This occurred as a result of higher debt balances, higher average interest rates and lower capitalization of interest expense as new plants entered commercial operation. Other income increased by $259.1 million during the six months ended June 30, 2004, as compared to the same period in 2003, primarily as a result of the factors indicated in the three-month discussion found above, and because during the six months ended June 30, 2004, the company recorded a foreign currency transaction gain of $4.8 million compared to a loss of $44.3 million in the corresponding period in 2003. Finance Program Highlights During the past several months, Calpine continued to focus on enhancing liquidity and addressing near-term financing obligations with a number of transactions, including: -- The refinancing of its Rocky Mountain and Riverside Energy Centers with the issuance of $633.4 million of floating rate secured institutional term loans due 2011. After repayment of amounts outstanding under existing non-recourse project financing facilities, the refinancing returned approximately $160 million to Calpine for general corporate purposes. -- The restructuring and sale of its power contracts related to two of its plants in New Jersey, the 118-megawatt Parlin and 58-megawatt Newark Power Plants. Calpine raised approximately $101 million after transaction costs and the repayment of approximately $79 million of non-recourse project debt associated with the projects. -- In transactions initiated during the second quarter, Calpine has repurchased $181.6 million of the principal amount of its outstanding debt and its High Tides preferred securities as listed below: -- 8 1/4% Senior Notes Due 2005 $38,950,000 -- 7 3/4% Senior Notes Due 2009 $11,000,000 -- 8 1/2% Senior Notes Due 2011 $ 9,000,000 -- 10 1/2% Senior Notes Due 2006 $ 7,650,000 -- 5 3/4% High Tides I $40,000,000 -- 5 1/2% High Tides II $75,000,000 The securities were repurchased in exchange for approximately $56.2 million in cash and approximately 24.3 million shares of Calpine common stock valued at approximately $112.5 million. -- Calpine created a new entity, Calpine Energy Management (CEM), and implemented a new credit enhancement structure that it expects will increase working capital and improve margins. CEM has entered into a $250 million letter of credit facility with Deutsche Bank (rated Aa3/AA-) that expires in October 2005. Deutsche Bank will guarantee CEM's short-term power and gas obligations by issuing letters of credit. CEM will provide Deutsche Bank with collateral in the form of receivables from its power sales. -- The company continued to reduce capital requirements for Calpine Energy Services (CES), the company's commodity transaction and risk management subsidiary. Compared to the first quarter of 2004, CES's total collateral requirements decreased by 11% to $288 million from $323 million. The company has identified a number of potential liquidity-enhancing opportunities that could raise in excess of $2 billion through transactions that include the issuance of additional First Priority Secured Debt, previously announced sale of the company's Canadian gas reserves and certain of its U.S. gas reserves, the monetization of power contracts, construction financing and the sale of a preferred interest in certain projects. Power Plant and Natural Gas Operations Calpine is a leading North American power company. Together, its 91 gas-fired and geothermal power plants currently in operation are capable of delivering up to 26,200 net megawatts of electricity for wholesale and industrial customers in 21 states, three Canadian provinces and the United Kingdom. In addition, Calpine is nearing completion of its merchant construction program and is selectively moving forward with construction on projects with long-term contracts in place. During the quarter, Calpine: -- Operated its natural gas-fired and geothermal power plants with an average plant availability factor of 89%, compared to an 87% average availability for the same period a year ago; -- Generated 22.1 million megawatt-hours, a 26% increase over the second quarter of 2003. Through hedging and optimization activity at its Calpine Energy Services subsidiary, the company delivered an additional 20.9 million megawatt-hours; -- Achieved an average heat rate of 7,203 British thermal units per kilowatt-hour, compared to 7,234 for the second quarter in 2003; -- Maintained a $5.49 average operating expense per megawatt-hour (assuming a 70% capacity factor) for the trailing twelve-month period ending June 30, 2004, up slightly from $5.44 in 2003 due to seasonal major maintenance costs incurred during the quarter; -- Completed construction of five new, highly efficient power plants, totaling more than 3,100 megawatts. These modern, gas-fired facilities supply major wholesale and industrial customers under long-term power and steam sales contracts. -- Managed the production of approximately 204 million cubic feet equivalent per day of natural gas -- representing about 14% of Calpine's total North American fuel consumption. New Power Contract Opportunities Calpine continued to execute its strategy of entering into long-term contracts and providing customers with a wide range of customized energy products and services. The company serves more than 100 wholesale and large retail customers through approximately 150 contracts. Today, Calpine is pursuing nearly 21,000 megawatts of contract opportunities. During the quarter, the company entered into 24 new power contracts, totaling more than 2,300 megawatts. Through June 30, 2004, the company has signed 42 power contracts -- representing approximately 4,300 megawatts of capacity and approximately 133 million megawatt-hours. The average on-peak spark spread for these contracts is approximately $17.00 per megawatt-hour, with a five-year weighted average life. Recent power contracts include: -- An expanded, long-term contract with Wisconsin Public Service Corporation. The new 235-megawatt, ten-year power sales commitment for capacity, energy and ancillary services is scheduled to begin on June 1, 2006, subject to approval by the Public Service Commission of Wisconsin. The additional commitment will be supported through an expansion of the Fox Energy Center, currently under construction in Kaukauna, Wis. -- A five-year agreement for 200 megawatts of capacity and energy for Snapping Shoals Electric Membership Corporation. Electricity will be delivered from Calpine's Hog Bayou Energy Center located in Mobile, Ala. beginning January 1, 2005. -- A 25-year agreement with The Dow Chemical Company (Dow) for the sale of up to 200 megawatts of electricity commencing in 2006 and one million pounds per hour of steam beginning in 2005 to Dow's Freeport, Texas facility. -- A proposed 20-year, 79.9-megawatt power contract for capacity and related energy and ancillary services to the Long Island Power Authority (LIPA) beginning in June 2005. The contract remains subject to review and approval by the State of New York's Comptroller and Attorney General. Included in the Supplemental Data with this news release is an updated report summarizing Calpine's total estimated generation capacity and capacity currently under contract through 2009. A full detailed report is available on the company's website on its investor relations page at http://www.calpine.com/. 2004 Earnings and Cash Flow Guidance The company is reaffirming its breakeven GAAP earnings guidance for the year ending December 31, 2004. The company is also reaffirming that EBITDA, as adjusted, is anticipated to be approximately $1.7 billion for 2004. Conference Call Information Calpine will host a conference call to discuss its financial and operating results for the three and six months ended June 30, 2004 this morning, Thursday, August 5, 2004, at 8:30 a.m. PDT. To participate via the teleconference (in listen-only mode), dial 1-888-603-6685 at least five minutes before the start of the call. In addition, Calpine will simulcast the conference call and a PowerPoint presentation live via the Internet. The web cast and presentation will be available for 30 days on Calpine's investor relations page at http://www.calpine.com/. About Calpine Calpine Corporation, celebrating its 20th year in power, is a leading North American power company dedicated to providing electric power to customers from clean, efficient, natural gas-fired and geothermal power plants. The company generates power at plants it owns or leases in 21 states in the United States, three provinces in Canada and in the United Kingdom. Calpine also owns or controls approximately one trillion cubic feet equivalent of proved natural gas reserves in the United States and Canada. The company is listed on the S&P 500 and was named FORTUNE's Most Admired Energy Company in America for 2004. Calpine was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information, visit http://www.calpine.com/. This news release discusses certain matters that may be considered "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the intent, belief or current expectations of Calpine Corporation ("the Company") and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that could materially affect actual results such as, but not limited to, (i) changes in legislation and regulation of energy markets and the rules and regulations adopted from time to time with respect thereto; (ii) the timing and extent of changes in commodity prices for energy, particularly natural gas and electricity; (iii) commercial operations of new plants that may be delayed or prevented because of various development and construction risks, such as a failure to obtain the necessary permits to operate, failure of third-party contractors to perform their contractual obligations or failure to obtain financing on acceptable terms; (iv) unscheduled outages of operating plants; (v) a competitor's development of lower cost generating gas-fired power plants; (vi) risks associated with marketing and selling power from power plants in dynamic energy markets; (vii) the successful exploitation of an oil or gas resource that ultimately depends upon the geology of the resource, the total amount and costs to develop recoverable reserves and operations factors relating to the extraction of natural gas; (viii) the effects on the Company's business resulting from reduced liquidity in the trading and power industry; (ix) the Company's ability to access the capital markets or obtain bank financing on attractive terms; (x) the direct or indirect effects on the Company's business of a lowering of its credit rating (or actions it may take in response to changing credit rating criteria), including, increased collateral requirements, refusal by the Company's current or potential counterparties to enter into transactions with it and its inability to obtain credit or capital in desired amounts or on favorable terms; and (xi) other risks identified from time-to-time in the Company's reports and registration statements filed with the SEC, including its Annual Report on Form 10-K for the year ended Dec. 31, 2003, and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, which can also be found on the Company's website at http://www.calpine.com/. This news release includes certain non-GAAP financial measures as defined under SEC rules. As required by SEC rules, we have provided a reconciliation of those measures to the most directly comparable GAAP measures, which can be found in the Supplemental Data tables in this release. All information set forth in this news release is as of today's date, and the Company undertakes no duty to update this information. CALPINE CORPORATION AND SUBSIDIARIES Consolidated Condensed Statements of Operations For the Three and Six Months Ended June 30, 2004 and 2003 (In thousands, except per share amounts) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 Revenue: Electric generation and marketing revenue Electricity and steam revenue $1,312,792 $1,046,260 $2,558,678 $2,146,328 Sales of purchased power for hedging and optimization 496,652 744,805 876,680 1,426,089 Total electric generation and marketing revenue 1,809,444 1,791,065 3,435,358 3,572,417 Oil and gas production and marketing revenue Oil and gas sales 26,069 29,299 50,651 55,210 Sales of purchased gas for hedging and optimization 481,971 328,478 834,708 655,945 Total oil and gas production and marketing revenue 508,040 357,777 885,359 711,155 Mark-to-market activities, net (22,605) 1,839 (10,086) 22,282 Other revenue 19,755 14,627 46,741 25,386 Total revenue 2,314,634 2,165,308 4,357,372 4,331,240 Cost of revenue: Electric generation and marketing expense Plant operating expense 223,664 159,646 399,498 321,574 Transmission purchase expense 14,651 11,330 31,078 20,156 Royalty expense 6,951 6,461 12,833 11,818 Purchased power expense for hedging and optimization 445,169 738,719 820,108 1,418,668 Total electric generation and marketing expense 690,435 916,156 1,263,517 1,772,216 Oil and gas operating and marketing expense Oil and gas operating expense 23,443 29,033 45,770 54,694 Purchased gas expense for hedging and optimization 453,922 331,122 814,409 648,070 Total oil and gas operating and marketing expense 477,365 360,155 860,179 702,764 Fuel expense 867,785 539,409 1,630,490 1,174,778 Depreciation, depletion and amortization expense 161,789 138,957 311,203 272,771 Operating lease expense 26,963 28,168 54,762 55,860 Other cost of revenue 22,607 6,870 48,988 12,121 Total cost of revenue 2,246,944 1,989,715 4,169,139 3,990,510 Gross profit 67,690 175,593 188,233 340,730 Loss (income) from unconsolidated investments in power projects and oil and gas properties 718 (59,351) (1,788) (64,475) Equipment cancellation and impairment cost 7 19,222 2,367 19,309 Project development expense 4,030 6,072 11,748 11,158 Research and development expense 5,124 2,469 8,939 4,860 Sales, general and administrative expense 60,978 53,710 118,225 97,367 Income (loss) from operations (3,167) 153,471 48,742 272,511 Interest expense 279,659 148,879 534,452 291,840 Distributions on trust preferred securities -- 15,656 -- 31,313 Interest (income) (9,920) (9,003) (21,981) (17,037) Minority interest expense 4,724 5,335 13,159 7,612 (Income) from repurchase of various issuances of debt (2,559) (6,763) (3,394) (6,763) Other expense (income) (185,571) 20,467 (203,996) 55,056 Loss before (benefit) for income taxes (89,500) (21,100) (269,498) (89,510) (Benefit) for income taxes (60,604) (4,725) (146,553) (21,596) Loss before discontinued operations and cumulative effect of a change in accounting principle (28,896) (16,375) (122,945) (67,914) Discontinued operations, net of tax provision (benefit)of $126, $(4,484), $12,452 and $(5,275) 198 (6,991) 23,055 (7,997) Cumulative effect of a change in accounting principle, net of tax provision of $--, $--, $-- and $450 -- -- -- 529 Net loss $(28,698) $(23,366) $(99,890) $(75,382) Basic and diluted loss per common share: Weighted average shares of common stock outstanding 417,357 381,219 416,332 381,089 Loss before discontinued operations and cumulative effect of a change in accounting principle $(0.07) $(0.04) $(0.30) $(0.18) Discontinued operations, net of tax $-- $(0.02) $0.06 $(0.02) Cumulative affect of a change in accounting principle, net of tax $-- $-- $-- $-- Net loss $(0.07) $(0.06) $(0.24) $(0.20) The financial information presented above and in the Supplemental Data is subject to adjustment until the company files its Form 10-Q with the United States Securities and Exchange Commission for the three and six months ended June 30, 2004. CALPINE CORPORATION AND SUBSIDIARIES Supplemental Data (unaudited) CASH FLOW DATA Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 (in thousands) Cash (used in) provided by operating activities $185,223 $(52,063) $11,993 $113,304 Cash used in investing activities (96,020) (814,174) (167,391) (1,297,803) Cash (used in) provided by financing activities 180,860 904,771 20,769 1,017,314 Effect of exchange rate changes on cash and cash equivalents (8,836) 1,382 (13,146) 5,672 Net decrease in cash and cash equivalents $261,227 $39,916 $(147,775) $(161,513) RECONCILIATION OF GAAP CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES TO EBITDA, AS ADJUSTED (A) Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 (in thousands) Cash provided by (used in) operating activities $185,223 $(52,063) $11,993 $113,304 Less: Changes in operating assets and liabilities, excluding the effects of acquisitions 87,811 (682,335) (49,934) (408,312) Less: Additional adjustments to reconcile net income to net cash provided by (used in) operating activities, net 126,110 653,638 161,817 596,998 GAAP net loss (28,698) (23,366) (99,890) (75,382) (Income) loss from unconsolidated investments in power projects and oil and gas properties 718 (59,351) (1,788) (64,475) Distributions from unconsolidated investments in power projects and oil and gas properties 9,474 111,613 14,614 121,015 Subtotal (18,506) 28,896 (87,064) (18,842) Interest expense 279,659 148,879 534,452 291,840 1/3 of operating lease expense 8,988 9,389 18,254 18,620 Distributions on trust preferred securities -- 15,656 -- 31,313 (Benefit) for income taxes (60,604) (4,725) (146,553) (21,596) Depreciation, depletion and amortization expense 179,009 145,204 350,413 285,503 Interest expense, provision (benefit) for income taxes and depreciation, depletion and amortization from discontinued operations -- 1,077 12,338 1,184 EBITDA, as adjusted $388,546 $344,376 $681,840 $588,022 RECONCILIATION OF EBITDA, AS ADJUSTED TO EBITDA, AS ADJUSTED FOR NON-CASH AND OTHER CHARGES (B) Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 (in thousands) EBITDA, as adjusted $388,546 $344,376 $681,840 $588,022 Equipment cancellation and impairment cost 7 17,179 2,367 17,179 Foreign currency transaction (gain) loss 5,152 19,095 (4,832) 44,304 Unrealized mark-to-market activity loss 28,913 7,221 33,858 7,992 (Income) from repurchases of various issuances of debt (2,559) (6,763) (3,394) (6,763) SFAS No. 123 (stock-based compensation expense) 5,190 3,931 9,290 8,423 Minority interest expense 4,724 5,335 13,159 7,612 Write-off of deferred financing costs (not related to bonds repurchased) 19,376 -- 19,376 -- Other non-cash and other charges (3,487) 3,400 (1,041) 3,929 EBITDA, as adjusted, for non-cash and other charges $445,862 $393,774 $750,623 $670,698 SUPPLEMENTARY POWER DATA Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 Generation (in MWh, in thousands) (C) 22,083 17,519 43,132 36,620 Average electric price realized (per MWh) $61.78 $60.07 $60.63 $58.81 Average spark spread adjusted for benefits of equity gas production (per MWh) $21.91 $26.93 $21.49 $24.83 SUPPLEMENTARY EQUIVALENT NATURAL GAS PRODUCTION DATA (D) Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 (in Bcfe) Natural Gas Production United States 12.6 14.6 25.1 30.3 Canada 5.9 9.9 12.6 20.4 Total 18.5 24.5 37.7 50.7 Average daily production rate 204 269 207 280 Average realized price per Mcfe $6.10 $5.14 $5.78 $5.49 Average unit cost per Mcfe (excluding interest expense) 3.60 2.76 3.42 2.62 CALPINE CONTRACTUAL PORTFOLIO - AS OF MARCH 31, 2004 2005 2006 2007 2008 2009 Estimated Generation Capacity (in millions of MWh) - Baseload 185.3 207.6 215.3 215.9 215.3 - Peaking 25.5 26.6 27.0 27.0 27.0 Total 210.8 234.2 242.3 242.9 242.3 Contractual Generation (in millions of MWh) - Baseload 77.9 62.7 51.9 49.8 47.1 - Peaking 19.2 18.9 18.7 18.1 15.0 Total 97.1 81.6 70.6 67.9 62.1 % Sold - Baseload 42% 30% 24% 23% 22% - Peaking 77% 71% 69% 67% 56% Total 46% 35% 29% 28% 26% Contractual Spark Spread $2,025 $1,866 $1,600 $1,540 $1,446 (in millions) CAPITALIZATION As of As of June 30, 2004 Dec. 31, 2003 Cash and cash equivalents (in billions) $0.8 $1.0 Total debt (in billions) 18.1 $17.7 Debt to capitalization ratio 78% 78% Present value of operating leases (in billions) $1.3 $1.3 Unconsolidated debt of equity method investments (estimated, in billions) (E) $0.1 $0.1 (in thousands): Short-term debt Notes payable and borrowings under lines of credit, current portion $239,289 $254,292 Preferred interests, current portion 8,758 11,220 Capital lease obligation, current portion 8,466 4,008 CCFC I financing, current portion 3,208 3,208 Construction/project financing, current portion 57,256 61,900 Senior notes, current portion 14,500 14,500 Total short-term debt 331,477 349,128 Long-term debt Notes payable and borrowings under lines of credit, net of current portion 861,424 873,572 Notes payable to Calpine Capital Trusts 1,153,500 1,153,500 Preferred interests, net of current portion 142,064 232,412 Capital lease obligation, net of current portion 283,005 193,741 CCFC I financing, net of current portion 784,661 785,781 CalGen/CCFC II financing 2,448,907 2,200,358 Construction/project financing, net of current portion 1,723,040 1,209,505 Convertible Senior Notes Due 2006 72,126 660,059 Convertible Senior Notes Due 2023 900,000 650,000 Senior notes, net of current portion 9,370,936 9,369,253 Total long-term debt 17,739,663 17,328,181 Total debt $18,071,140 $17,677,309 Minority interests $350,561 $410,892 Total stockholders' equity (F) $4,600,891 $4,621,253 Total capitalization $23,022,592 $22,709,454 Debt to capitalization ratio Total debt $18,071,140 $17,677,309 Total capitalization $23,022,592 $22,709,454 Debt to capitalization 78% 78% (A) This non-GAAP measure is presented not as a measure of operating results, but rather as a measure of our ability to service debt and to raise additional funds. It should not be construed as an alternative to either (i) income from operations or (ii) cash flows from operating activities. It is defined as net income less income from unconsolidated investments, plus cash received from unconsolidated investments, plus provision for tax, plus interest expense (including distributions on trust preferred securities and one-third of operating lease expense, which is management's estimate of the component of operating lease expense that constitutes interest expense,) plus depreciation, depletion and amortization. The interest, tax and depreciation and amortization components of discontinued operations are added back in calculating EBITDA, as adjusted. (B) This non-GAAP measure is presented as a further refinement of EBITDA, as adjusted, to reflect the company's ability to service debt with cash. (C) Does not include MWh generated by unconsolidated investments in power projects. (D) From continuing operations. (E) Amounts based on Calpine's ownership percentage. (F) Includes accumulated other comprehensive income ("AOCI") of $22,054 at June 30, 2004, and $56,594 at December 31, 2003. Excluding AOCI from stockholders' equity would change the debt to capitalization ratio to 79% at June 30, 2004, but would not change the debt to capitalization ratio at December 31, 2003. DATASOURCE: Calpine Corporation CONTACT: media, Bill Highlander, +1-408-995-5115, ext. 1244, or investors, Rick Barraza, +1-408-995-5115, ext. 1125, both of Calpine Corporation Web site: http://www.calpine.com/

Copyright