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 28, 2005
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 No. 77-0212977
50 West San Fernando Street
San Jose, California 95113
Telephone: (408) 995-5115
(Address of principal executive offices and telephone number)
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:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.01 -- COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
On July 28, 2005, Calpine Corporation ("Calpine") and its indirect, wholly
owned subsidiaries Calpine UK Holdings Limited (the "Seller"), and Quintana
Canada Holdings, LLC (the "Seller Guarantor", and, collectively with the Seller
and Calpine, the "Seller Parties"), sold the entire issued share capital of
Saltend Cogeneration Company Limited ("SCCL") and Calpine UK Operations Limited
("UK OpCo", together with SCCL, the "Sale Group") to Normantrail (UK CO 3)
Limited (the "Purchaser"), a partnership formed by International Power PLC
("IPR"), Mitsui & Co., Ltd. ("Mitsui") pursuant to the terms of a share sale and
purchase agreement (the "Agreement") among the Seller Parties, the Purchaser,
IPR and Mitsui. SCCL is the owner of, and UK OpCo is the operator of, the
Saltend Energy Centre, a 1200 MW (nominal) natural gas-fired cogeneration
facility located in Hull, England. Pursuant to the Agreement, Calpine and the
Seller have provided certain customary warranties and indemnities, and the
Seller Guarantor has guaranteed the payment by the Seller of liabilities in
respect of all claims under the Agreement other than claims for breach of a
warranty. The obligations of the Purchaser are guaranteed as to 70% by IPR and
30% by Mitsui. A copy of the Agreement was filed as an exhibit to Calpine's
Current Report on Form 8-K dated May 28, 2005, filed with the SEC on June 3,
2005.
The total amount payable by the Purchaser under the Agreement is British
pounds ("GBP") 498.4 million comprising an amount payable for the Sale Group
shares and an amount to repay intercompany loans made to SCCL by certain of its
affiliates. The purchase price is subject to a GBP for GBP post-closing net
working capital adjustment, subject to an upwards cap determinable on the basis
of completion accounts prepared in accordance with the procedures set out in the
Agreement. GBP 20 million of the purchase price has been placed in escrow and
will be retained for one year following closing of the sale, provided that the
Seller will be entitled to receive GBP 5 million from the escrow every three
months, subject to the Purchaser making any claims under the Agreement in such
period, which claims may be satisfied from amounts in escrow. The net proceeds,
after the redemption of two of our existing series of Redeemable Preferred
Shares described in Item 2.04 below, and the reasonable transaction costs and
adjustments associated with this sale, are being held under the control of
Calpine's subsidiary Calpine Canada Resources Company pursuant to an Interim
Order issued by the Supreme Court of Nova Scotia, pending a Final Order, in the
litigation commenced in May 2005 by Harbert Distressed Investment Master Fund,
Ltd. Pursuant to an August 2, 2005, decision by the Court in the case, the Court
stated its intention to issue a Final Order which would, in effect, adjust the
amount required to be so held so that it will be sufficient to cover the face
amount of certain qualifying Calpine-guaranteed bonds of our subsidiary, Calpine
Canada Energy Finance II ULC. The qualifying bonds will be those purchased by a
bondholder (other than certain Calpine entities) prior to September 1, 2004,
that continues to hold those bonds on August 2, 2005.
As a part of the sale, we have agreed to reimburse the Purchaser for up to
GBP 2 million of carbon emission credits purchased by SCCL in the year
immediately following the close of the sale. Under recently adopted EU
legislation, SCCL and other power generators in the United Kingdom were
allocated a certain number of carbon emission credits at the beginning of the
year; to the extent that their carbon emissions exceed the amounts allocated,
companies are required to purchase additional carbon emission credits in the
open market. Such reimbursement will be deducted from the final GBP 5 million
quarterly escrow payment. In anticipation of this expense, we will record an
accrued liability in the amount of GBP 2 million, which will reduce our expected
gain on the disposition.
The sale closed on July 28, 2005. For further information on the sale of
the Saltend Energy Centre, see the Form 8-K dated May 28, 2005, and filed on
June 3, 2005. A copy of the Agreement was filed as an exhibit to our Form 8-K
dated June 17, 2005, and filed on June 23, 2005.
ITEM 2.04 -- TRIGGERING EVENTS THAT ACCELERATE A DIRECT FINANCIAL OBLIGATION OR
AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT
The information in Item 2.01 above is incorporated by reference in this
Item 2.04. In connection with the sale of SCCL, we were required to redeem two
of our existing series of Redeemable Preferred Shares totaling $620 million. The
redemption of each series of Redeemable Preferred Shares was effected on July
28, 2005, with a portion of the proceeds of the sale of SCCL. The series
redeemed comprise $360 million of Redeemable Preferred Shares due October 15,
2006, which were redeemed at a price of 103% of par plus accrued and unpaid
interest to and including the date of redemption, and $260 million of Redeemable
Preferred Shares due July 30, 2005, which were redeemed at a price of 100% of
par plus accrued and unpaid interest to and including the date of redemption.
The information in Item 2.03 of our Current Report on Form 8-K dated October 26,
2004, filed with the SEC on November 5, 2004, which contains a description of
the Redeemable Preferred Shares due October 15, 2006, and in Item 2.03 of our
Current Report on Form 8-K dated February 1, 2005, filed with the SEC on
February 3, 2005, which contains a description of the Redeemable Preferred
Shares due July 30, 2005, are incorporated by reference herein.
ITEM 8.01 -- OTHER EVENTS
On July 7, 2005, the Registrant issued the press release attached hereto as
Exhibit 99.1.
ITEM 9.01 -- FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
Not Applicable
(b) Pro Forma Financial Information.
As disclosed in Item 2.01 of this 8-K, on July 28, 2005, we closed the
disposition of Saltend Cogeneration Company Limited ("SCCL") and Calpine UK
Operations Limited ("UK OpCo" or "Saltend"). In addition, as disclosed in our
Form 8-K dated July 7, 2005 and filed on July 13, 2005, on July 7, 2005, we and
the counterparty entered into and closed a Purchase and Sale Agreement with
Rosetta, the buyer, pursuant to which we sold our remaining oil and gas
properties ("oil and gas"). Upon closing of the sale, the Company no longer
holds any oil and gas reserves, with the exception of certain oil and gas
properties valued at $75 million for which we were unable to obtain consents to
assignment prior to closing but expect to do so in the near future. The pro
forma financial information below gives effect to the oil and gas sale and the
disposition of SCCL and UK OpCo, both of which will be accounted for as of June
30, 2005, as discontinued operations in accordance with Financial Accounting
Standards Board ("FASB") Statement of Financial Accounting Standards ("SFAS")
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS
No. 144").
The unaudited Pro Forma Consolidated Condensed Statements of Operations are
presented for the three months ended March 31, 2005 and the years ended December
31, 2004, 2003 and 2002 and present Calpine's operations as if the transactions
described above had occurred at January 1, 2002. Basic earnings (loss) per
common share were computed by dividing net income (loss) by the weighted average
number of common shares outstanding for the respective periods. The dilutive
effect of the potential exercise of outstanding options to purchase shares of
common stock is calculated using the treasury stock method. The dilutive effect
of the assumed conversion of certain convertible securities into the Company's
common stock is based on the dilutive common share equivalents and the after-tax
distribution expense avoided upon conversion. An unaudited Pro Forma
Consolidated Condensed Balance Sheet as of March 31, 2005, is also presented.
The unaudited Pro Forma Consolidated Condensed Balance Sheet presents the
property sales described above, as if they had occurred at March 31, 2005.
The unaudited Pro Forma Consolidated Condensed Financial Statements should
be read in conjunction with Calpine's Financial Statements and related Notes
included in Calpine's Report on Form 10-Q for the quarter ended March 31, 2005
and the Report on Form 10-K for the year ended December 31, 2004 filed with the
Securities and Exchange Commission.
Calpine Corporation and Subsidiaries
Unaudited Pro Forma Consolidated Condensed Balance Sheet
March 31, 2005
(In thousands, except for per share amounts and unaudited)
After
Oil and Gas Oil and Gas Saltend Final
Actual Adjustments Adjustments Adjustments Pro Forma
(1) (2)
----------- ----------------- ------------------- ------------------- ------------
Assets:
Current assets
Cash and cash equivalents................ $ 812,612 $ 757,155 (3) $ 1,569,767 $ 134,321 (5)(10) $ 1,704,088
Accounts receivable, net................. 1,034,141 -- 1,034,141 (51,295) (5) 982,846
Margin deposits and other prepaid
expense................................. 461,097 -- 461,097 (19,762) (5) 441,335
Inventories.............................. 148,770 -- 148,770 (5,374) (5) 143,396
Restricted cash.......................... 513,753 -- 513,753 34,626 (15) 548,379
Current derivative assets................ 472,643 -- 472,643 -- 472,643
Other current assets..................... 169,068 74,074 (4)(5) 243,142 -- 243,142
----------- --------- ----------- ----------- -----------
Total current assets....................... $ 3,612,084 $ 831,229 4,443,313 $ 92,516 $ 4,535,829
----------- --------- ----------- ----------- -----------
Restricted cash, net of current portion.. 194,476 -- 194,476 -- 194,476
Notes receivable, net of current portion. 200,443 -- 200,443 -- 200,443
Project development costs................ 152,407 -- 152,407 -- 152,407
Unconsolidated investments............... 387,639 -- 387,639 -- 387,639
Deferred financing costs................. 423,122 (3,362) (6) 419,760 (20,118) (11) 399,642
Prepaid lease, net of current portion.... 431,600 -- 431,600 -- 431,600
Property, plant and equipment, net....... 20,712,038 (611,458) (5) 20,100,580 (1,056,269) (5) 19,044,311
Goodwill................................. 45,160 -- 45,160 -- 45,160
Other intangible assets, net............. 72,009 -- 72,009 (4,544) (5) 67,465
Long-term derivative assets.............. 658,440 -- 658,440 -- 658,440
Other assets............................. 690,049 -- 690,049 (3,520) (5) 686,529
----------- --------- ----------- ----------- -----------
Total assets............................... $27,579,467 $ 216,409 $27,795,876 $ (991,935) $26,803,941
=========== ========= =========== =========== ===========
Liabilities and stockholders' equity:
Current liabilities
Accounts payable......................... 945,578 -- 945,578 (42,127) (5) 903,451
Accrued payroll and related expense...... 65,555 -- 65,555 (291) (5) 65,264
Accrued interest payable................. 396,175 (6,764) (7) 389,411 (11,913) (12) 377,498
Income taxes payable..................... 79,163 -- 79,163 (16,452) (5) 62,711
Notes payable and borrowings under lines
of credit, current portion............. 209,652 -- 209,652 -- 209,652
Preferred interests, current portion..... 268,794 -- 268,794 (260,000) (12) 8,794
Capital lease obligation, current
portion................................. 5,780 -- 5,780 -- 5,780
CCFC I financing, current portion........ 3,208 -- 3,208 -- 3,208
Construction/project financing, current
portion................................. 100,773 -- 100,773 -- 100,773
Senior notes and term loans, current
portion................................. 922,489 -- 922,489 -- 922,489
Current derivative liabilities........... 626,125 -- 626,125 (43,291) (5) 582,834
Other current liabilities................ 287,940 10,964 (5)(16) 298,904 (998) (5)(15) 297,906
----------- --------- ----------- ----------- -----------
Total current liabilities.................. $ 3,911,232 $ 4,200 $ 3,915,432 $ (375,072) $ 3,540,360
----------- --------- ----------- ----------- -----------
Notes payable and borrowings under lines
of credit, net of current portion....... 682,429 -- 682,429 -- 682,429
Convertible debentures payable to Calpine
Capital Trust III....................... 517,500 -- 517,500 -- 517,500
Preferred interests, net of current
portion................................. 493,396 -- 493,396 (360,000) (12) 133,396
Capital lease obligation, net of current
portion................................. 281,756 -- 281,756 -- 281,756
CCFC I financing, net of current portion. 782,020 -- 782,020 -- 782,020
CalGen/CCFC II financing................. 2,395,795 -- 2,395,795 -- 2,395,795
Construction/project financing, net of
current portion......................... 2,003,443 -- 2,003,443 -- 2,003,443
Convertible Senior Notes Due 2006........ 1,311 -- 1,311 -- 1,311
Convertible Notes Due 2014............... 623,429 -- 623,429 -- 623,429
Convertible Senior Notes Due 2023........ 633,775 -- 633,775 -- 633,775
Senior notes and term loans, net of
current portion......................... 8,218,408 (138,895) (7) 8,079,513 -- 8,079,513
Deferred income taxes, net of current
portion................................. 925,365 136,565 (8) 1,061,930 (11,545) (5)(17) 1,050,385
Deferred revenue......................... 116,041 -- 116,041 -- 116,041
Long-term derivative liabilities......... 903,824 -- 903,824 (13,006) (5) 890,818
Other liabilities........................ 351,389 (8,278) (5) 343,111 (17,879) (5) 325,232
----------- --------- ----------- ----------- -----------
Total liabilities.......................... $22,841,113 $ (6,408) $22,834,705 $ (777,502) $22,057,203
----------- --------- ----------- ----------- -----------
Minority Interests....................... 388,499 -- 388,499 -- 388,499
----------- --------- ----------- ----------- -----------
Stockholders' equity
Preferred stock, $.001 par value per
share; authorized 10,000,000 shares;
none issued and outstanding in 2005..... -- -- -- -- --
Common stock, $.001 par value per
share; authorized 2,000,000,000 shares;
issued and outstanding 538,017,458
shares in 2005.......................... 538 -- 538 -- 538
Additional paid-in capital............... 3,159,385 -- 3,159,385 -- 3,159,385
Additional paid-in capital, loaned
shares.................................. 258,100 -- 258,100 -- 258,100
Additional paid-in capital, returnable
shares.................................. (258,100) -- (258,100) -- (258,100)
Retained earnings........................ 1,157,317 222,817 (9) 1,380,134 3,763 (12)(13) 1,383,897
Accumulated other comprehensive income... 32,615 -- 32,615 (218,196) (14) (185,581)
----------- --------- ----------- ----------- -----------
Total stockholders' equity................. $ 4,349,855 $ 222,817 $ 4,572,672 $ (214,433) $ 4,358,239
----------- --------- ----------- ----------- -----------
Total liabilities and stockholders' equity. $27,579,467 $ 216,409 $27,795,876 $ (991,935) $26,803,941
=========== ========= =========== =========== ===========
- ------------
<FN>
(1) The Pro Forma Consolidated Condensed Balance Sheet reflects the Oil and Gas disposition as if it had occurred on March 31,
2005.
(2) The Pro Forma Consolidated Condensed Balance Sheet also reflects the disposition of SCCL and UK OpCo as if it had occurred on
March 31, 2005.
(3) Represents the proceeds from the sale that are expected to be $1.05 billion before (a) approximately $11.5 million of
additional holdbacks and adjustments for operations from the transaction date, (b) approximately $60.6 million of estimated
transaction fees and expenses, (c) certain oil and gas properties valued at $75 million for which we were unable to obtain
consents to assignment prior to closing but expect to do so in the near future and (d) accrued interest of $6.8 million and
after the $138.9 million in repayment of Senior Notes.
(4) Represents $75 million of the purchase price that was withheld for non-consent properties.
(5) Adjustment represents the asset and liability balances of SCCL and UK OpCo or Oil and Gas which will reduce our asset and
liability positions upon completion of the dispositions as well as the addition of certain accruals for adjustments and exit
costs necessitated by the respective structures of these transactions.
(6) Adjustment represents the write-off of unamortized financing costs associated with the repayment of Senior Notes as part of the
use of proceeds.
(7) Adjustment represents the repayment of Senior notes as part of the use of the proceeds, as well as associated accrued interest.
(8) Represents taxes at the statutory rate of 38% on the estimated non-recurring pre-tax gain of $359.4 million. See Note 9 for
further information.
(9) Represents the anticipated non-recurring gain of $222.8 million (net of taxes of $136.6 million at a statutory rate of 38%)
after consideration of fees, contingencies and excess office space write-off. This non-recurring gain is an estimate based on
our Consolidated Condensed Balance Sheet at March 31, 2005. This estimate does not take into consideration our actual results
of operations and certain other changes to the Consolidated Condensed Balance Sheet that occurred after March 31, 2005 until
the closing date of the transaction. We estimate that these changes will increase the final pre-tax gain to $350.0 million.
(10) Adjustment represents the anticipated cash proceeds of the sale of SCCL and UK OpCo of $828.2 million, less the cost to redeem
the principal, interest and termination fees of $647.0 million associated with two of our existing series of Redeemable
Preferred Shares and direct costs associated with the sale of $8.3 million.
(11) Adjustment represents the write-off of unamortized financing costs of $12.9 million and $7.2 million, respectively, associated
with two of our existing series of Redeemable Preferred Shares which will be redeemed with the proceeds from the sale of SCCL
and UK OpCo.
(12) Adjustment represents the redemption of two of our existing series of Redeemable Preferred Shares totaling $620 million, as
well as associated accrued interest of $11.9 million and early termination fees of $10.8 million.
(13) Adjustment represents an estimated non-recurring gain associated with the transaction of $3.8 million (net of taxes of $1.6
million at a statutory rate of 30%) after consideration of fees, contingencies and costs associated with the redemption of two
of our existing series of Redeemable Preferred Shares. This non- recurring gain is an estimate based on our Consolidated
condensed Balance Sheet at March 31, 2005. This estimate does not take into consideration our actual results of operations and
certain other changes to the Consolidated Condensed Balance Sheet that occurred after March 31, 2005 until the closing date of
the transaction. We estimate that these changes will increase the final pre-tax gain to $6.0 million.
(14) Adjustment represents the cumulative balance of "out of the money" cash flow hedges held by SCCL of $39.4 million that will be
written off as a result of the sale of SCCL and UK OpCo and the realization into earnings of the Cumulative Translation
Adjustment ("CTA") of $257.6 million associated with the Company's GBP-denominated entities as a result of the sale of SCCL and
UK OpCo.
(15) Represents the impact of sales proceeds from SCCL and UK OpCo to be held in escrow and amounts anticipated to reimburse the
Seller for anticipated carbon emission credits as described in Item 2.01 and other indemnification and exit liabilities. Total
proceeds to be held in escrow will be approximately $34.6 million; these proceeds are presented on the Consolidated Condensed
Balance Sheet as restricted cash. The total amount we expect to accrue for the carbon emission credits is $3.5 million (based
on current exchange rates), and the total estimated liability for other indemnification and exit liabilities is $3 million.
These estimated accruals are presented on the Consolidated Condensed Balance Sheet within other current liabilities.
(16) Represents an additional liability of 1% of the gross sales proceeds, or $10.5 million, as an allowance for indemnification and
exit liabilities, and also other miscellaneous transaction fees of $2.2 million.
(17) Represents taxes of $1.6 million at the statutory rate of 30% associated with the estimated non-recurring pre-tax gain of $5.4
million. See Note 13 for further information.
</FN>
Calpine Corporation and Subsidiaries
Unaudited Pro Forma Consolidated Condensed Statement of Operations
For the Three Months Ended March 31, 2005
(In thousands, except for per share amounts)
Pro Forma
After
Oil and Gas Oil and Gas Saltend Final
Actual Adjustments Adjustments Adjustments Pro Forma
(1) (2)
----------- ----------------- ------------------- ------------------- ------------
Revenue:
Electric generation and marketing revenue
Electricity and steam revenue ........... $ 1,403,549 $ -- $ 1,403,549 $ (125,270) (3) $ 1,278,279
Transmission sales revenue .............. 3,744 -- 3,744 -- 3,744
Sales of purchased power for hedging and
optimization............................ 356,130 -- 356,130 (8,720) (3) 347,410
----------- --------- ----------- ----------- -----------
Total electric generation and marketing
revenue ............................... 1,763,423 -- 1,763,423 (133,990) 1,629,433
Oil and gas production and marketing revenue
Oil and gas sales ....................... 10,820 (10,759) (3) 61 -- 61
Sales of purchased gas for hedging and
optimization ........................... 420,296 -- 420,296 -- 420,296
----------- --------- ----------- ----------- -----------
Total oil and gas production and
marketing revenue...................... 431,116 (10,759) 420,357 -- 420,357
Mark-to-market activities, net ............ (3,531) -- (3,531) -- (3,531)
Other revenue ............................. 21,670 -- 21,670 (484) (3) 21,186
----------- --------- ----------- ----------- -----------
Total revenue.............................. 2,212,678 (10,759) 2,201,919 (134,474) 2,067,445
----------- --------- ----------- ----------- -----------
Cost of revenue:
Electric generation and marketing expense
Plant operating expense ................. 195,626 -- 195,626 (13,377) (3) 182,249
Transmission purchase expense ........... 23,510 -- 23,510 (2,636) (3) 20,874
Royalty expense.......................... 10,329 -- 10,329 -- 10,329
Purchased power expenses for hedging and
optimization............................ 288,787 -- 288,787 (7,592) (3) 281,195
----------- --------- ----------- ----------- -----------
Total electric generation and marketing
expense................................ 518,252 -- 518,252 (23,605) 494,647
Oil and gas operating and marketing expense
Oil and gas operating expense ........... 13,000 (11,199) (3) 1,801 -- 1,801
Purchased gas expense for hedging and
Optimization............................ 413,259 -- 413,259 -- 413,259
----------- --------- ----------- ----------- -----------
Total oil and gas operating and
marketing expense...................... 426,259 (11,199) 415,060 -- 415,060
Fuel expense .............................. 921,349 39,776 (3) 961,125 (66,817) (3) 894,308
Depreciation, depletion and amortization
expense................................... 143,228 (15,124) (3) 128,104 (7,398) (3) 120,706
Operating lease expense.................... 24,777 -- 24,777 -- 24,777
Other cost of revenue...................... 38,171 -- 38,171 -- 38,171
----------- --------- ----------- ----------- -----------
Total cost of revenue...................... 2,072,036 13,453 2,085,489 (97,820) 1,987,669
----------- --------- ----------- ----------- -----------
Gross Profit............................... 140,642 (24,212) 116,430 (36,654) 79,776
(Income) loss from unconsolidated
investments.............................. (6,064) 72 (3) (5,992) -- (5,992)
Equipment cancellation and impairment cost. (73) -- (73) -- (73)
Project development expense................ 8,720 -- 8,720 -- 8,720
Research and development expense........... 7,034 -- 7,034 -- 7,034
Sales, general and administrative expense.. 57,137 (3,351) (3)(4) 53,786 (723) (3)(4) 53,063
----------- --------- ----------- ----------- -----------
Income (loss) from operations.............. 73,888 (20,933) 52,955 (35,931) 17,024
Interest expense........................... 348,937 (4,631) (3)(5) 344,306 (14,602) (3)(5) 329,704
Interest (income).......................... (14,331) 5 (3) (14,326) 340 (3) (13,986)
Minority interest expense.................. 10,614 -- 10,614 -- 10,614
(Income) from repurchase of various
issuances of debt........................ (21,772) -- (21,772) -- (21,772)
Other expense (income), net................ 3,980 184 (3) 4,164 (9,122) (3) (4,958)
----------- --------- ----------- ----------- -----------
Income (Loss) before provision or benefit
for income taxes.......................... (253,540) (16,491) (270,031) (12,547) (282,578)
Provision (Benefit) for income taxes....... (84,809) (6,291) (6) (91,100) (3,764) (8) (94,864)
----------- --------- ----------- ----------- -----------
Income (Loss) from continuing
operations (7)............................ $ (168,731) $ (10,200) $ (178,931) $ (8,783) $ (187,714)
=========== ========= =========== =========== ===========
Basic and diluted loss per common share:
Weighted average shares of common
stock outstanding....................... 447,599 447,599
Loss from continuing operations (7)...... (0.38) (0.42)
- ------------
<FN>
(1) The Pro Forma Consolidated Condensed Statement of Operations assumes that Oil and Gas was sold by Calpine on January 1, 2002.
The results of these assets have been removed from the Pro Forma Consolidated Condensed Statement of Operations. The estimated
non-recurring gain associated with the sales transaction is not included within the Pro Forma Consolidated Condensed Statement
of Operations. See Note 9 to the Unaudited Pro Forma Consolidated Condensed Balance Sheet for further information.
(2) The Pro Forma Consolidated Condensed Statement of Operations assumes that SCCL and UK OpCo were sold by Calpine on January 1,
2002. The results of SCCL and UK OpCo have been removed from the Pro Forma Consolidated Condensed Statement of Operations. The
estimated non-recurring gain associated with the sales transaction is not included within the Pro Forma Consolidated Condensed
Statement of Operations. See Note 13 to the Unaudited Pro Forma Consolidated Condensed Balance Sheet for further information.
(3) Adjustment represents activity that was reclassified to discontinued operations as a result of the sale of the Domestic Oil and
Gas Properties or SCCL and UK OpCo.
(4) The Pro Forma adjustments in the Unaudited Pro Forma Consolidated Condensed Statement of Operations include certain sales,
general and administrative expenses allocated to Oil and Gas and to SCCL and UK OpCo based on a proportion of base wages.
Accordingly, these expenses have been included within the Oil and Gas and the SCCL and UK OpCo income figures to determine the
Pro Forma totals. For the year ended December 31, 2004, these expenses totaled $0.7 million and $0.6 million for Oil and Gas
and for SCCL and UK OpCo, respectively.
(5) The Pro Forma adjustments also include interest expense that we expect to allocate to discontinued operations in accordance
with Emerging Issues Task Force ("EITF") Issue No. 87-24, "Allocation of Interest to Discontinued Operations" ("EITF Issue No.
87-24"). We include interest expense on debt which is required to be repaid as a result of a disposal transaction in
discontinued operations. Additionally, other interest expense that cannot be attributed to other operations of Calpine is
allocated based on the ratio of net assets to be sold less debt that is required to be paid as a result of the disposal
transaction to the sum of total net assets of Calpine plus the consolidated debt of Calpine, excluding (a) debt of the
discontinued operation that will be assumed by the buyer, (b) known debt that will be paid as a result of the disposal
transaction and (c) debt that can be directly attributed to other operations of Calpine. For the three months ended March 31,
2005, the interest expense allocated within the Unaudited Pro Forma Consolidated Condensed Statement of Operations is $4.9
million and $12.5 million for Oil and Gas and for SCCL and UK OpCo, respectively.
(6) The Oil and Gas Pro Forma adjustments in the Pro Forma Consolidated Condensed Statement of Operations are tax effected at a
rate of 38%, which represents Calpine's statutory tax rate in the United States for those assets. Actual adjustments to
Calpine's Consolidated Financial Statements to reflect this disposition may reflect a different effective tax rate.
(7) Represents income before discontinued operations and cumulative effect of a change in accounting principle.
(8) The Saltend Pro Forma adjustments in the Pro Forma Consolidated Condensed Statement of Operations are tax effected at a rate of
30%, which represents Calpine's statutory tax rate in the United Kingdom. Actual adjustments to Calpine's Consolidated
Financial Statements to reflect this disposition may reflect a different effective tax rate.
</FN>
Calpine Corporation and Subsidiaries
Unaudited Pro Forma Consolidated Condensed Statement of Operations
Year Ended December 31, 2004
(In thousands, except for per share amounts)
Pro Forma
After
Oil and Gas Oil and Gas Saltend Final
Actual Adjustments Adjustments Adjustments Pro Forma
(1) (2)
----------- ----------------- ------------------- ------------------- ------------
Revenue:
Electric generation and marketing revenue
Electricity and steam revenue............ $ 5,683,063 $ -- $ 5,683,063 $ (385,244) (3) $ 5,297,819
Transmission sales revenue............... 20,003 -- 20,003 -- 20,003
Sales of purchased power for hedging
and optimization........................ 1,651,767 -- 1,651,767 (3,775) (3) 1,647,992
----------- --------- ----------- ----------- -----------
Total electric generation and marketing
revenue................................ 7,354,833 -- 7,354,833 (389,019) 6,965,814
Oil and gas production and marketing
revenue...................................
Oil and gas sales........................ 63,153 (59,007) (3) 4,146 -- 4,146
Sales of purchased gas for hedging and
optimization............................ 1,728,301 -- 1,728,301 -- 1,728,301
----------- --------- ----------- ----------- -----------
Total oil and gas production and
marketing revenue...................... 1,791,454 (59,007) 1,732,447 -- 1,732,447
Mark-to-market activities, net............. 13,532 -- 13,532 (127) (3) 13,405
Other revenue.............................. 70,069 -- 70,069 (880) (3) 69,189
----------- --------- ----------- ----------- -----------
Total revenue.............................. 9,229,888 (59,007) 9,170,881 (390,026) 8,780,855
----------- --------- ----------- ----------- -----------
Cost of revenue:
Electric generation and marketing expense
Plant operating expense.................. 795,975 -- 795,975 (50,271) (3) 745,704
Transmission purchase expense............ 85,514 -- 85,514 (10,697) (3) 74,817
Royalty expense.......................... 28,673 -- 28,673 -- 28,673
Purchased power expenses for hedging and
optimization............................ 1,487,020 -- 1,487,020 (4,758) (3) 1,482,262
----------- --------- ----------- ----------- -----------
Total electric generation and marketing
expense................................ 2,397,182 -- 2,397,182 (65,726) 2,331,456
Oil and gas operating and marketing expense
Oil and gas operating expense............ 56,843 (48,261) (3) 8,582 -- 8,582
Purchased gas expense for hedging and
optimization............................ 1,716,714 -- 1,716,714 -- 1,716,714
----------- --------- ----------- ----------- -----------
Total oil and gas operating and
marketing expense...................... 1,773,557 (48,261) 1,725,296 -- 1,725,296
Fuel expense............................... 3,731,108 190,143 (3) 3,921,251 (228,279) (3) 3,692,972
Depreciation, depletion and amortization
expense................................... 574,200 (81,590) (3) 492,610 (28,862) (3) 463,748
Oil and gas impairment..................... 202,120 (202,120) (3) -- -- --
Operating lease expense.................... 105,886 -- 105,886 -- 105,886
Other cost of revenue...................... 90,742 -- 90,742 -- 90,742
----------- --------- ----------- ----------- -----------
Total cost of revenue...................... 8,874,795 (141,828) 8,732,967 (322,867) 8,410,100
----------- --------- ----------- ----------- -----------
Gross Profit............................... 355,093 82,821 437,914 (67,159) 370,755
(Income) loss from unconsolidated
investments.............................. 13,525 563 (3) 14,088 -- 14,088
Equipment cancellation and impairment cost. 42,374 -- 42,374 -- 42,374
Long-term service agreement cancellation
charge.................................... 11,334 -- 11,334 -- 11,334
Project development expense................ 24,409 -- 24,409 -- 24,409
Research and development expense........... 18,396 -- 18,396 -- 18,396
Sales, general and administrative expense.. 239,347 (17,220) (3)(4) 222,127 (1,870) (3)(4) 220,257
----------- --------- ----------- ----------- -----------
Income (loss) from operations.............. 5,708 99,478 105,186 (65,289) 39,897
Interest expense........................... 1,140,802 (7,801) (5) 1,133,001 (16,200) (5) 1,116,801
Interest (income).......................... (56,412) 43 (3) (56,369) 1,598 (3) (54,771)
Minority interest expense.................. 34,735 -- 34,735 -- 34,735
(Income) from repurchase of various
issuances of debt........................ (246,949) -- (246,949) -- (246,949)
Other expense (income), net................ (149,093) 3,275 (3) (145,818) 24,520 (3) (121,298)
----------- --------- ----------- ----------- -----------
Income (loss) before provision or (benefit)
for income taxes.......................... (717,375) 103,961 (613,414) (75,207) (688,621)
Provision (benefit) for income taxes....... (276,549) 39,594 (6) (236,955) (22,532) (8) (259,487)
----------- --------- ----------- ----------- -----------
Income (loss) from continuing
operations (7)............................ $ (440,826) $ 64,367 $ (376,459) $ (52,675) $ (429,134)
=========== ========= =========== =========== ===========
Basic and diluted loss per common share:
Weighted average shares of common stock
outstanding............................. 430,775 430,775
Loss from continuing operations (7)...... (1.02) (1.00)
- ------------
<FN>
(1) The Pro Forma Consolidated Condensed Statement of Operations assumes that Oil and Gas was sold by Calpine on January 1, 2002.
The results of these assets have been removed from the Pro Forma Consolidated Condensed Statement of Operations. The estimated
non-recurring gain associated with the sales transaction is not included within the Pro Forma Consolidated Condensed Statement
of Operations. See Note 9 to the Unaudited Pro Forma Consolidated Condensed Balance Sheet for further information.
(2) The Pro Forma Consolidated Condensed Statement of Operations assumes that SCCL and UK OpCo were sold by Calpine on January 1,
2002. The results of SCCL and UK OpCo have been removed from the Pro Forma Consolidated Condensed Statement of Operations. The
estimated non-recurring gain associated with the sales transaction is not included within the Pro Forma Consolidated Condensed
Statement of Operations. See Note 13 to the Unaudited Pro Forma Consolidated Condensed Balance Sheet for further information.
(3) Adjustment represents activity that was reclassified to discontinued operations as a result of the sale of the Domestic Oil and
Gas Properties or SCCL and UK OpCo.
(4) The Pro Forma adjustments in the Unaudited Pro Forma Consolidated Condensed Statement of Operations include certain sales,
general and administrative expenses allocated to Oil and Gas and to SCCL and UK OpCo based on a proportion of base wages.
Accordingly, these expenses have been included within the Oil and Gas and the SCCL and UK OpCo income figures to determine the
Pro Forma totals. For the year ended December 31, 2004, these expenses totaled $2.9 million and $1.7 million for Oil and Gas
and for SCCL and UK OpCo, respectively.
(5) The Pro Forma adjustments also include interest expense that we expect to allocate to discontinued operations in accordance
with Emerging Issues Task Force ("EITF") Issue No. 87-24, "Allocation of Interest to Discontinued Operations" ("EITF Issue No.
87-24"). We include interest expense on debt which is required to be repaid as a result of a disposal transaction in
discontinued operations. Additionally, other interest expense that cannot be attributed to other operations of Calpine is
allocated based on the ratio of net assets to be sold less debt that is required to be paid as a result of the disposal
transaction to the sum of total net assets of Calpine plus the consolidated debt of Calpine, excluding (a) debt of the
discontinued operation that will be assumed by the buyer, (b) known debt that will be paid as a result of the disposal
transaction and (c) debt that can be directly attributed to other operations of Calpine. For the year ended December 31, 2004,
the interest expense allocated within the Unaudited Pro Forma Consolidated Condensed Statement of Operations is $12.4 million
and $14.6 million for Oil and Gas and for SCCL and UK OpCo, respectively.
(6) The Oil and Gas Pro Forma adjustments in the Pro Forma Consolidated Condensed Statement of Operations are tax effected at a
rate of 38%, which represents Calpine's statutory tax rate in the United States for those assets. Actual adjustments to
Calpine's Consolidated Financial Statements to reflect this disposition may reflect a different effective tax rate.
(7) Represents income before discontinued operations and cumulative effect of a change in accounting principle.
(8) The Saltend Pro Forma adjustments in the Pro Forma Consolidated Condensed Statement of Operations are tax effected at a rate of
30%, which represents Calpine's statutory tax rate in the United Kingdom. Actual adjustments to Calpine's Consolidated
Financial Statements to reflect this disposition may reflect a different effective tax rate.
</FN>
Calpine Corporation and Subsidiaries
Unaudited Pro Forma Consolidated Condensed Statement of Operations
Year Ended December 31, 2003
(In thousands, except for per share amounts)
Pro Forma
After
Oil and Gas Oil and Gas Saltend Final
Actual Adjustments Adjustments Adjustments Pro Forma
(1) (2)
----------- ----------------- ------------------- ------------------- ------------
Revenue:
Electric generation and marketing revenue
Electricity and steam revenue............ $ 4,680,397 $ -- $ 4,680,397 $ (286,936) (3) $ 4,393,461
Transmission sales revenue............... 15,347 -- 15,347 -- 15,347
Sales of purchased power for hedging and
optimization............................ 2,714,187 -- 2,714,187 (1,896) (3) 2,712,291
----------- --------- ----------- ----------- -----------
Total electric generation and marketing
revenue................................ 7,409,931 -- 7,409,931 (288,832) 7,121,099
Oil and gas production and marketing
revenue...................................
Oil and gas sales......................... 59,156 (56,757) (3) 2,399 -- 2,399
Sales of purchased gas for hedging and
optimization............................ 1,320,902 -- 1,320,902 -- 1,320,902
----------- --------- ----------- ----------- -----------
Total oil and gas production and
marketing revenue...................... 1,380,058 (56,757) 1,323,301 -- 1,323,301
Mark-to-market activities, net............. (26,439) -- (26,439) -- (26,439)
Other revenue.............................. 107,483 -- 107,483 (1,246) (3) 106,237
----------- --------- ----------- ----------- -----------
Total revenue.............................. 8,871,033 (56,757) 8,814,276 (290,078) 8,524,198
----------- --------- ----------- ----------- -----------
Cost of revenue:
Electric generation and marketing expense
Plant operating expense.................. 663,045 -- 663,045 (46,607) (3) 616,438
Transmission purchase expense ........... 46,455 -- 46,455 (11,765) (3) 34,690
Royalty expense.......................... 24,932 -- 24,932 -- 24,932
Purchased power expenses for hedging and
optimization............................ 2,690,069 -- 2,690,069 (6,781) (3) 2,683,288
----------- --------- ----------- ----------- -----------
Total electric generation and marketing
expense................................ 3,424,501 -- 3,424,501 (65,153) 3,359,348
Oil and gas operating and marketing expense
Oil and gas operating expense............ 75,453 (55,461) (3) 19,992 -- 19,992
Purchased gas expense for hedging and
optimization............................ 1,279,568 -- 1,279,568 -- 1,279,568
----------- --------- ----------- ----------- -----------
Total oil and gas operating and
marketing expense...................... 1,355,021 (55,461) 1,299,560 -- 1,299,560
Fuel expense............................... 2,665,620 223,531 (3) 2,889,151 (185,696) (3) 2,703,455
Depreciation, depletion and amortization
expense................................... 504,383 (72,766) (3) 431,617 (31,511) (3) 400,106
Oil and gas impairment..................... 2,931 (2,931) (3) -- -- --
Operating lease expense.................... 112,070 -- 112,070 -- 112,070
Other cost of revenue...................... 42,270 -- 42,270 26 (3) 42,296
----------- --------- ----------- ----------- -----------
Total cost of revenue...................... 8,106,796 92,373 8,199,169 (282,334) 7,916,835
----------- --------- ----------- ----------- -----------
Gross Profit............................... 764,237 (149,130) 615,107 (7,744) 607,363
(Income) loss from unconsolidated
investments.............................. (75,804) 81 (3) (75,723) -- (75,723)
Equipment cancellation and impairment cost. 64,384 -- 64,384 -- 64,384
Long-term service agreement cancellation
charge.................................... 16,355 -- 16,355 -- 16,355
Project development expense................ 21,803 -- 21,803 -- 21,803
Research and development expense........... 10,630 -- 10,630 -- 10,630
Sales, general and administrative expense.. 216,471 (15,505) (3)(4) 200,966 (2,225) (3)(4) 198,741
----------- --------- ----------- ----------- -----------
Income from operations .................... 510,398 (133,706) 376,692 (5,519) 371,173
Interest expense .......................... 706,307 17,023 (5) 723,330 (7,206) (5) 716,124
Distributions on trust preferred
securities................................ 46,610 -- 46,610 -- 46,610
Interest (income).......................... (39,716) 90 (3) (39,626) 425 (3) (39,201)
Minority interest expense.................. 27,330 -- 27,330 -- 27,330
(Income) from repurchase of various
issuances of debt........................ (278,612) -- (278,612) -- (278,612)
Other expense (income), net................ (46,126) 1,063 (3) (45,063) (925) (3) (45,988)
----------- --------- ----------- ----------- -----------
Income (loss) before provision or benefit
for income taxes.......................... 94,605 (151,882) (57,277) 2,187 (55,090)
Provision (benefit) for income taxes....... 8,495 (57,858) (6) (49,363) 756 (8) (48,607)
----------- --------- ----------- ----------- -----------
Income from continuing operations (7)...... $ 86,110 $ (94,024) $ (7,914) $ 1,431 $ (6,483)
=========== ========= =========== =========== ===========
Basic earnings per common share:
Weighted average shares of common stock
outstanding............................. 390,772 390,772
Income from continuing operations (7).... 0.22 (0.02)
Diluted earnings per common share:
Weighted average shares of common stock
outstanding before dilutive effect of
certain convertible securities (7)...... 396,219 396,219
Income from continuing operations (7).... 0.22 (0.02)
- ------------
<FN>
(1) The Pro Forma Consolidated Condensed Statement of Operations assumes that Oil and Gas was sold by Calpine on January 1, 2002.
The results of these assets have been removed from the Pro Forma Consolidated Condensed Statement of Operations. The estimated
non-recurring gain associated with the sales transaction is not included within the Pro Forma Consolidated Condensed Statement
of Operations. See Note 9 to the Unaudited Pro Forma Consolidated Condensed Balance Sheet for further information.
(2) The Pro Forma Consolidated Condensed Statement of Operations assumes that SCCL and UK OpCo were sold by Calpine on January 1,
2002. The results of SCCL and UK OpCo have been removed from the Pro Forma Consolidated Condensed Statement of Operations. The
estimated non-recurring gain associated with the sales transaction is not included within the Pro Forma Consolidated Condensed
Statement of Operations. See Note 13 to the Unaudited Pro Forma Consolidated Condensed Balance Sheet for further information.
(3) Adjustment represents activity that was reclassified to discontinued operations as a result of the sale of the Domestic Oil and
Gas Properties or SCCL and UK OpCo.
(4) The Pro Forma adjustments in the Unaudited Pro Forma Consolidated Condensed Statement of Operations include certain sales,
general and administrative expenses allocated to Oil and Gas and to SCCL and UK OpCo based on a proportion of base wages.
Accordingly, these expenses have been included within Oil and Gas and the SCCL and UK OpCo income figures to determine the Pro
Forma totals. For the year ended December 31, 2003, these expenses totaled $3.3 million and $2.1 million for Oil and Gas and
for SCCL and UK OpCo, respectively.
(5) The Pro Forma adjustments also include interest expense that we expect to allocate to discontinued operations in accordance
with Emerging Issues Task Force ("EITF") Issue No. 87-24, "Allocation of Interest to Discontinued Operations" ("EITF Issue No.
87-24"). We include interest expense on debt which is required to be repaid as a result of a disposal transaction in
discontinued operations. Additionally, other interest expense that cannot be attributed to other operations of Calpine is
allocated based on the ratio of net assets to be sold less debt that is required to be paid as a result of the disposal
transaction to the sum of total net assets of Calpine plus the consolidated debt of Calpine, excluding (a) debt of the
discontinued operation that will be assumed by the buyer, (b) known debt that will be paid as a result of the disposal
transaction and (c) debt that can be directly attributed to other operations of Calpine. For the year ended December 31, 2003,
the interest expense allocated within the Unaudited Pro Forma Consolidated Condensed Statement of Operations is $7.3 million
and $7.2 million for Oil and Gas and for SCCL and UK OpCo, respectively.
(6) The Oil and Gas Pro Forma adjustments in the Pro Forma Consolidated Condensed Statement of Operations are tax effected at a
rate of 38%, which represents Calpine's statutory tax rate in the United States for those assets. Actual adjustments to
Calpine's Consolidated Financial Statements to reflect this disposition may reflect a different effective tax rate.
(7) Represents income before discontinued operations and cumulative effect of a change in accounting principle.
(8) The Saltend Pro Forma adjustments in the Pro Forma Consolidated Condensed Statement of Operations are tax effected at a rate of
30%, which represents Calpine's statutory tax rate in the United Kingdom. Actual adjustments to Calpine's Consolidated
Financial Statements to reflect this disposition may reflect a different effective tax rate.
</FN>
Calpine Corporation and Subsidiaries
Unaudited Pro Forma Consolidated Condensed Statement of Operations
Year Ended December 31, 2002
(In thousands, except for per share amounts)
Pro Forma
After
Oil and Gas Oil and Gas Saltend Final
Actual Adjustments Adjustments Adjustments Pro Forma
(1) (2)
----------- ----------------- ------------------- ------------------- ------------
Revenue:
Electric generation and marketing revenue
Electricity and steam revenue.............. $ 3,237,510 $ -- $ 3,237,510 $ (205,779) (3) $ 3,031,731
Sales of purchased power for hedging and
optimization............................ 3,145,991 -- 3,145,991 (2) (3) 3,145,989
----------- --------- ----------- ----------- -----------
Total electric generation and marketing
revenue................................ 6,383,501 -- 6,383,501 (205,781) 6,177,720
Oil and gas production and marketing revenue
Oil and gas sales........................ 63,514 (36,059) (3) 27,455 -- 27,455
Sales of purchased gas for hedging and
optimization............................ 870,466 -- 870,466 1 (3) 870,467
----------- --------- ----------- ----------- -----------
Total oil and gas production and
marketing revenue...................... 933,980 (36,059) 897,921 1 897,922
Mark-to-market activities, net............. 21,485 -- 21,485 -- 21,485
Other revenue.............................. 10,787 -- 10,787 (104) (3) 10,683
----------- --------- ----------- ----------- -----------
Total revenue.............................. 7,349,753 (36,059) 7,313,694 (205,884) 7,107,810
----------- --------- ----------- ----------- -----------
Cost of revenue:
Electric generation and marketing expense
Plant operating expense.................. 522,906 -- 522,906 (39,670) (3) 483,236
Transmission purchase expense............ 25,486 -- 25,486 (10,179) (3) 15,307
Royalty expense.......................... 17,615 -- 17,615 -- 17,615
Purchased power expenses for hedging and
optimization............................ 2,618,445 -- 2,618,445 -- 2,618,445
----------- --------- ----------- ----------- -----------
Total electric generation and marketing
expense................................ 3,184,452 -- 3,184,452 (49,849) 3,134,603
----------- --------- ----------- ----------- -----------
Oil and gas operating and marketing expense
Oil and gas operating expense............ 69,840 (43,315) (3) 26,525 -- 26,525
Purchased gas expense for hedging and
optimization............................ 821,065 -- 821,065 -- 821,065
----------- --------- ----------- ----------- -----------
Total oil and gas operating and
marketing expense...................... 890,905 (43,315) 847,590 -- 847,590
Fuel expense............................... 1,792,323 126,925 (3) 1,919,248 (161,048) (3) 1,758,200
Depreciation, depletion and amortization
expense................................... 398,889 (66,744) (3) 332,145 (32,133) (3) 300,012
Oil and gas impairment..................... 3,399 (3,399) (3) -- -- --
Operating lease expense.................... 111,022 -- 111,022 -- 111,022
Other cost of revenue...................... 7,279 -- 7,279 -- 7,279
----------- --------- ----------- ----------- -----------
Total cost of revenue...................... 6,388,269 13,467 6,401,736 (243,030) 6,158,706
----------- --------- ----------- ----------- -----------
Gross Profit............................... 961,484 (49,526) 911,958 37,146 949,104
(Income) loss from unconsolidated
investments.............................. (16,552) -- (16,552) -- (16,552)
Equipment cancellation and impairment cost. 404,737 -- 404,737 -- 404,737
Project development expense................ 66,981 -- 66,981 -- 66,981
Research and development expense........... 9,986 -- 9,986 -- 9,986
Sales, general and administrative expense.. 186,056 (16,537) (3)(4) 169,519 (2,048) (3)(4) 167,471
----------- --------- ----------- ----------- -----------
Income from operations..................... 310,276 (32,989) 277,287 39,194 316,481
Interest expense........................... 402,677 20,064 (5) 422,741 (5,372) (5) 417,369
Distributions on trust preferred
securities................................ 62,632 -- 62,632 -- 62,632
Interest (income).......................... (43,086) 244 (3) (42,842) 664 (3) (42,178)
Minority interest expense.................. 2,716 -- 2,716 -- 2,716
(Income) from repurchase of various
issuances of debt........................ (118,020) -- (118,020) -- (118,020)
Other expense (income), net................ (34,200) 195 (3) (34,005) (2,130) (3) (36,135)
----------- --------- ----------- ----------- -----------
Income (loss) before provision or benefit
for income taxes.......................... 37,557 (53,492) (15,935) 46,032 30,097
Provision (benefit) for income taxes....... 10,835 (20,381) (6) (9,546) 13,821 (8) 4,275
----------- --------- ----------- ----------- -----------
Income (loss) from continuing
operations (7)............................ $ 26,722 $ (33,111) $ (6,389) $ 32,211 $ 25,822
=========== ========= =========== =========== ===========
Basic earnings per common share:
Weighted average shares of common stock
outstanding............................. 354,822 354,822
Income from continuing operations (7).... 0.08 0.07
Diluted earnings per common share:
Weighted average shares of common stock
outstanding before dilutive effect of
certain convertible securities (7)...... 362,533 362,533
Income from continuing operations (7).... 0.07 0.07
- ------------
<FN>
(1) The Pro Forma Consolidated Condensed Statement of Operations assumes that Oil and Gas was sold by Calpine on January 1, 2002.
The results of these assets have been removed from the Pro Forma Consolidated Condensed Statement of Operations. The estimated
non-recurring gain associated with the sales transaction is not included within the Pro Forma Consolidated Condensed Statement
of Operations. See Note 9 to the Unaudited Pro Forma Consolidated Condensed Balance Sheet for further information.
(2) The Pro Forma Consolidated Condensed Statement of Operations assumes that SCCL and UK OpCo were sold by Calpine on January 1,
2002. The results of SCCL and UK OpCo have been removed from the Pro Forma Consolidated Condensed Statement of Operations. The
estimated non-recurring gain associated with the sales transaction is not included within the Pro Forma Consolidated Condensed
Statement of Operations. See Note 13 to the Unaudited Pro Forma Consolidated Condensed Balance Sheet for further information.
(3) Adjustment represents activity that was reclassified to discontinued operations as a result of the sale of the Domestic Oil and
Gas Properties or SCCL and UK OpCo.
(4) The Pro Forma adjustments in the Unaudited Pro Forma Consolidated Condensed Statement of Operations include certain sales,
general and administrative expenses allocated to Oil and Gas and to SCCL and UK OpCo based on a proportion of base wages.
Accordingly, these expenses have been included within the Oil and Gas and the SCCL and UK OpCo income figures to determine the
Pro Forma totals. For the year ended December 31, 2002, these expenses totaled $3.8 million and $2.0 million for Oil and Gas
and for SCCL and UK OpCo, respectively.
(5) The Pro Forma adjustments also include interest expense that we expect to allocate to discontinued operations in accordance
with Emerging Issues Task Force ("EITF") Issue No. 87-24, "Allocation of Interest to Discontinued Operations" ("EITF Issue No.
87-24"). We include interest expense on debt which is required to be repaid as a result of a disposal transaction in
discontinued operations. Additionally, other interest expense that cannot be attributed to other operations of Calpine is
allocated based on the ratio of net assets to be sold less debt that is required to be paid as a result of the disposal
transaction to the sum of total net assets of Calpine plus the consolidated debt of Calpine, excluding (a) debt of the
discontinued operation that will be assumed by the buyer, (b) known debt that will be paid as a result of the disposal
transaction and (c) debt that can be directly attributed to other operations of Calpine. For the year ended December 31, 2002,
the interest expense allocated within the Unaudited Pro Forma Consolidated Condensed Statement of Operations is $3.5 million
and $5.2 million for Oil and Gas and for SCCL and UK OpCo, respectively.
(6) The Oil and Gas Pro Forma adjustments in the Pro Forma Consolidated Condensed Statement of Operations are tax effected at a
rate of 38%, which represents Calpine's statutory tax rate in the United States for those assets. Actual adjustments to
Calpine's Consolidated Financial Statements to reflect this disposition may reflect a different effective tax rate.
(7) Represents income before discontinued operations and cumulative effect of a change in accounting principle.
(8) The Saltend Pro Forma adjustments in the Pro Forma Consolidated Condensed Statement of Operations are tax effected at a rate of
30%, which represents Calpine's statutory tax rate in the United Kingdom. Actual adjustments to Calpine's Consolidated
Financial Statements to reflect this disposition may reflect a different effective tax rate.
</FN>
(c) Exhibits.
99.1 Press Release dated July 28, 2005
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: August 3, 2005
EXHIBIT INDEX
-------------
Exhibit
Number Exhibit
------ -------
99.1 Press Release dated July 28, 2005
EXHIBIT 99.1
NEWS RELEASE CONTACTS: (408) 995-5115
Media Relations: Bill Highlander, Ext. 1244
Investor Relations: Karen Bunton, Ext. 1121
Calpine Completes Sale of Its Saltend Energy Centre
(SAN JOSE, Calif.) /PR Newswire - First Call/ July 28, 2005 - A Calpine
Corporation [NYSE:CPN] subsidiary has completed the sale of its 1,200-megawatt
Saltend Energy Centre in Hull, England for a total purchase price of (pound)490
million, or approximately $US848 million, plus adjustments for working capital
of $US14.5 million. The transaction, which has generated total gross proceeds to
Calpine of $US862.5 million (subject to post-closing adjustment), is part of the
company's strategic program to reduce debt and optimize its power plant
portfolio.
Calpine has sold the natural gas-fired Saltend power plant to a company
indirectly owned by International Power plc and Mitsui & Co., Ltd. Calpine
acquired the plant in August 2001 for the sterling equivalent of approximately
$810 million. With the completion of this transaction, Calpine no longer owns
any interest in Saltend.
"The sale of Saltend has allowed Calpine to capture significant value for
our investment," said Calpine Chief Financial Officer Bob Kelly. "The proceeds
from this sale will allow Calpine to reduce debt and focus our efforts on the
North American power market."
The two existing series of Redeemable Preferred Shares relating to the
Saltend Energy Centre were redeemed in connection with the sale. The remaining
net proceeds are being held under the control of Calpine's subsidiary Calpine
Canada Resources Company pursuant to an interim order issued yesterday, pending
final decision, by the Supreme Court of Nova Scotia in the current litigation
commenced in May by Harbert Distressed Investment Master Fund, Ltd. The final
decision of that Court is expected within the next week.
Calpine Corporation is a 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 and three provinces in Canada. The
company is included in the S&P 500. Calpine was founded in 1984 and is publicly
traded on the New York Stock Exchange under the symbol CPN. For more
information, visit www.calpine.com.