Unaudited Pro Forma Consolidated Condensed Financial Information of Calpine Corporation for the three months ended March 31, 2014 and for the year ended December 31, 2013 and as of March 31, 2014
As previously announced, on April 17, 2014, Calpine Corporation (“Calpine” or the “Company”) entered into a purchase and sale agreement, through its indirect wholly-owned subsidiaries, Calpine Project Holdings, Inc. and Calgen Expansion Company, LLC, to sell six of its power plants in the Southeast segment. The purchase and sale agreement dated April 17, 2014 (the “Agreement”) allows for the sale of 100% of the limited liability company interests in (i) Mobile Energy LLC, (ii) Santa Rosa Energy Center, LLC, (iii) Carville Energy, LLC, (iv) Decatur Energy Center, LLC, (v) Columbia Energy LLC and (vi) Calpine Oneta Power, LLC and thereby sell assets comprising 3,498 MW of combined-cycle generation capacity in Oklahoma, Louisiana, Alabama, Florida and South Carolina.
On July 3, 2014, the Company completed the sale of six of its power plants in the Southeast segment for a purchase price of approximately $1.57 billion, plus an additional approximately $4 million for working capital. In accordance with the Agreement, Calpine may also be required to make up to $16 million in future cash payments for certain planned maintenance events. The following unaudited pro forma consolidated condensed statements of operations of the Company for the three months ended March 31, 2014 and for the year ended December 31, 2013 and unaudited pro forma consolidated condensed balance sheet as of March 31, 2014, illustrate the financial impact of the transaction.
The unaudited pro forma consolidated condensed statements of operations illustrate the impact of the transaction as if it had occurred on January 1, 2013. The unaudited pro forma consolidated condensed balance sheet illustrate the impact of the transaction as if it had occurred on March 31, 2014.
The assumptions and estimates used in the preparation of the unaudited pro forma consolidated condensed financial statements are reasonable under the circumstances and intended for informational purposes only. They are not necessarily indicative of the financial results that would have occurred if the sale had taken place on the dates indicated. The pro forma consolidated condensed financial statements should be read in conjunction with the historical financial statements and related notes of Calpine Corporation filed with the Securities and Exchange Commission on Form 10-Q on May 1, 2014 and on Form 10-K on February 13, 2014.
CALPINE CORPORATION AND SUBSIDIARIES
PROFORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2014
(Unaudited)
|
| | | | | | | | | | | |
| | Calpine Historical As Reported | | Pro Forma Adjustments | | Pro Forma, as Adjusted |
| | (in millions, except share and per share amounts) |
| Operating revenues: | | | | | |
| Commodity revenue | $ | 2,048 |
| | $ | (127 | ) | (a) | $ | 1,921 |
|
| Unrealized mark-to-market (loss) | (86 | ) | | — |
| | (86 | ) |
| Other revenue | 3 |
| | — |
| | 3 |
|
| Operating revenues | 1,965 |
| | (127 | ) | | 1,838 |
|
| Operating expenses: | | | | | |
| Fuel and purchased energy expense: | | | | | |
| Commodity expense | 1,370 |
| | (86 | ) | (a) | 1,284 |
|
| Unrealized mark-to-market (gain) | (13 | ) | | — |
| | (13 | ) |
| Fuel and purchased energy expense | 1,357 |
| | (86 | ) | | 1,271 |
|
| Plant operating expense | 265 |
| | (13 | ) | (a) | 252 |
|
| Depreciation and amortization expense | 153 |
| | (10 | ) | (a) | 143 |
|
| Sales, general and other administrative expense | 33 |
| | — |
| | 33 |
|
| Other operating expenses | 22 |
| | — |
| | 22 |
|
| Total operating expenses | 1,830 |
| | (109 | ) | | 1,721 |
|
| (Income) from unconsolidated investments in power plants | (9 | ) | | — |
| | (9 | ) |
| Income from operations | 144 |
| | (18 | ) | | 126 |
|
| Interest expense | 166 |
| | — |
| | 166 |
|
| Interest (income) | (1 | ) | | — |
| | (1 | ) |
| Other (income) expense, net | 11 |
| | — |
| | 11 |
|
| Loss before income taxes | (32 | ) | | (18 | ) | | (50 | ) |
| Income tax benefit | (19 | ) | | — |
| (b) | (19 | ) |
| Net loss | (13 | ) | | (18 | ) | | (31 | ) |
| Net income attributable to the noncontrolling interest | (4 | ) | | — |
| | (4 | ) |
| Net loss attributable to Calpine | $ | (17 | ) | | $ | (18 | ) | | $ | (35 | ) |
| | | | | | |
| Basic and diluted loss per common share attributable to Calpine: | | | | | |
| Weighted average shares of common stock outstanding (in thousands) | 420,105 |
| | — |
| | 420,105 |
|
| Net loss per common share attributable to Calpine — basic and diluted | $ | (0.04 | ) | | — |
| | $ | (0.08 | ) |
See Notes to the Unaudited Pro Forma Consolidated Condensed Financial Statements
CALPINE CORPORATION AND SUBSIDIARIES
PROFORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2013
(Unaudited)
|
| | | | | | | | | | | | |
| | Calpine Historical As Reported | | Pro Forma Adjustments | | Pro Forma, as Adjusted | |
| | (in millions, except share and per share amounts) | |
| Operating revenues: | | | | | | |
| Commodity revenue | $ | 6,374 |
| | $ | (397 | ) | (a) | $ | 5,977 |
| |
| Unrealized mark-to-market (loss) | (86 | ) | | — |
| | (86 | ) | |
| Other revenue | 13 |
| | — |
| | 13 |
| |
| Operating revenues | 6,301 |
| | (397 | ) | | 5,904 |
| |
| Operating expenses: | | | | | | |
| Fuel and purchased energy expense: | | | | | | |
| Commodity expense | 3,808 |
| | (240 | ) | (a) | 3,568 |
| |
| Unrealized mark-to-market (gain) | (72 | ) | | — |
| | (72 | ) | |
| Fuel and purchased energy expense | 3,736 |
| | (240 | ) | | 3,496 |
| |
| Plant operating expense | 895 |
| | (57 | ) | (a) | 838 |
| |
| Depreciation and amortization expense | 609 |
| | (39 | ) | (a) | 570 |
| |
| Sales, general and other administrative expense | 136 |
| | — |
| | 136 |
| |
| Other operating expenses | 81 |
| | — |
| | 81 |
| |
| Total operating expenses | 5,457 |
| | (336 | ) | | 5,121 |
| |
| (Income) from unconsolidated investments in power plants | (30 | ) | | — |
| | (30 | ) | |
| Income from operations | 874 |
| | (61 | ) | | 813 |
| |
| Interest expense | 696 |
| | — |
| | 696 |
| |
| Interest (income) | (6 | ) | | — |
| | (6 | ) | |
| Debt extinguishment costs | 144 |
| | — |
| | 144 |
| |
| Other (income) expense, net | 20 |
| | (1 | ) | (a) | 19 |
| |
| Income (loss) before income taxes | 20 |
| | (60 | ) | | (40 | ) | |
| Income tax expense | 2 |
| | 1 |
| (b) | 3 |
| |
| Net income (loss) | 18 |
| | (61 | ) | | (43 | ) | |
| Net income attributable to the noncontrolling interest | (4 | ) | | — |
| | (4 | ) | |
| Net income (loss) attributable to Calpine | $ | 14 |
| | $ | (61 | ) | | $ | (47 | ) | |
| | | | | | | |
| Basic earnings (loss) per common share attributable to Calpine: | | | | | | |
| Weighted average shares of common stock outstanding (in thousands) | 440,666 |
| | — |
| | 440,666 |
| |
| Net income (loss) per common share attributable to Calpine — basic | $ | 0.03 |
| | — |
| | $ | (0.11 | ) | |
| | | | | | | |
| Diluted earnings (loss) per common share attributable to Calpine: | | | | | | |
| Weighted average shares of common stock outstanding (in thousands) | 444,773 |
| | — |
| | 440,666 |
| (c) |
| Net income (loss) per common share attributable to Calpine — diluted | $ | 0.03 |
| | — |
| | $ | (0.11 | ) | |
See Notes to the Unaudited Pro Forma Consolidated Condensed Financial Statements
CALPINE CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 2014
(Unaudited)
|
| | | | | | | | | | | |
| | Calpine Historical As Reported | | Pro Forma Adjustments | | Pro Forma, as Adjusted |
| | (in millions) |
| ASSETS | | | | | |
| Current assets: | | | | | |
| Cash and cash equivalents | $ | 515 |
| | $ | 1,570 |
| (d) | $ | 2,085 |
|
| Accounts receivable, net of allowance of $5 | 627 |
| | 17 |
| (e) | 644 |
|
| Margin deposits and other prepaid expense | 293 |
| | (5 | ) | | 288 |
|
| Restricted cash, current | 195 |
| | — |
| | 195 |
|
| Derivative assets, current | 655 |
| | — |
| | 655 |
|
| Inventory and other current assets | 417 |
| | (12 | ) | (e) | 405 |
|
| Total current assets | 2,702 |
| | 1,570 |
| | 4,272 |
|
| Property, plant and equipment, net | 13,598 |
| | (752 | ) | (e) | 12,846 |
|
| Restricted cash, net of current portion | 71 |
| | — |
| | 71 |
|
| Investments in power plants | 85 |
| | — |
| | 85 |
|
| Long-term derivative assets | 174 |
| | — |
| | 174 |
|
| Other assets | 437 |
| | 1 |
| (e) | 438 |
|
| Total assets | $ | 17,067 |
| | $ | 819 |
| | $ | 17,886 |
|
| LIABILITIES AND STOCKHOLDER'S EQUITY | | | | | |
| Current liabilities: | | | | | |
| Accounts payable | $ | 607 |
| | $ | — |
| | $ | 607 |
|
| Accrued interest payable | 93 |
| | — |
| | 93 |
|
| Debt, current portion | 189 |
| | — |
| | 189 |
|
| Derivative liabilities, current | 728 |
| | — |
| | 728 |
|
| Income taxes payable | — |
| | 4 |
| (e) | 4 |
|
| Other current liabilities | 256 |
| | 58 |
| (e) | 314 |
|
| Total current liabilities | 1,873 |
| | 62 |
| | 1,935 |
|
| Debt, net of current portion | 11,286 |
| | — |
| | 11,286 |
|
| Long-term derivative liabilities | 230 |
| | — |
| | 230 |
|
| Other long-term liabilities | 266 |
| | (2 | ) | (e) | 264 |
|
| Total liabilities | 13,655 |
| | 60 |
| | 13,715 |
|
| | | | | | |
| Commitments and contingencies | | | | | |
| Stockholders' equity | 3,412 |
| | 759 |
| (e) | 4,171 |
|
| Total liabilities and stockholders’ equity | $ | 17,067 |
| | $ | 819 |
| | $ | 17,886 |
|
See Notes to the Unaudited Pro Forma Consolidated Condensed Financial Statements
Notes to the Unaudited Pro Forma Consolidated Condensed Statements of Operations and Balance Sheet
| |
| (a) | Adjustments to eliminate the historical results of operations associated with the sale of six power plants as if the transaction had occurred on January 1, 2013. |
| |
| (b) | Related tax impact of pro forma adjustments using a modified effective tax rate which reflects the tax characteristics of the entities sold. |
| |
| (c) | Diluted loss per share for the pro forma results is computed on the same basis as basic loss per share as the inclusion of any other potential shares outstanding would be anti-dilutive. |
| |
| (d) | Adjustments to record the cash proceeds received upon closing of the sale of six power plants as if the transaction had occurred on March 31, 2014. |
| |
| (e) | Adjustments to eliminate the assets and liabilities that were transferred in the sale and record other transaction adjustments and the gain on sale of assets as if the transaction had occurred on March 31, 2014. The calculation of the gain on sale of assets is set forth below: |
|
| | | |
| Purchase price | $ | 1,570 |
|
| Working capital adjustments | 17 |
|
| Purchase price including working capital adjustments | 1,587 |
|
| Less: Estimated net book value of assets sold | (752 | ) |
| Transaction expenses | (4 | ) |
| Parts purchased subsequent to closing | (22 | ) |
| Other adjustments | (46 | ) |
| Income tax expense | (4 | ) |
| Estimated gain on sale, net of tax | 759 |
|
