================================================================================
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): June 19, 2006
CALPINE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
Commission File Number: 001-12079
I.R.S. Employer Identification Number: 77-0212977
50 West San Fernando Street
San Jose, California 95113
Telephone: (408) 995-5115
(Address of principal executive offices and telephone number)
Not applicable
(Former name or former address if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| 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 7.01 -- REGULATION FD DISCLOSURE
On June 19, 2006, Calpine Corporation ("Calpine" or the "Company") and
certain of its subsidiaries (collectively, the "Debtors") filed their unaudited
consolidated Monthly Operating Statement for the month ended February 28, 2006
(the "Monthly Operating Statement") with the United States Bankruptcy Court for
the Southern District of New York (the "U.S. Bankruptcy Court") in the matter of
In re Calpine Corporation, et al., 05-60200 (BRL). Exhibit 99.1 to this Current
Report on Form 8-K contains the unaudited consolidated Monthly Operating
Statement as filed with the Bankruptcy Court.
The Monthly Operating Statement is limited in scope, covers a limited time
period, and has been prepared solely for the purpose of complying with the
monthly reporting requirements of the Bankruptcy Court. Certain of the Company's
Canadian subsidiaries were granted relief by the Court of Queen's Bench of
Alberta, Judicial District of Calgary (the "Canadian Court") under the
Companies' Creditors Arrangement Act (Canada) (the "CCAA"). As a result, certain
of the Company's Canadian and other foreign subsidiaries were deconsolidated as
of December 20, 2005. Financial information regarding such deconsolidated
subsidiaries is not part of the consolidated group included in the Monthly
Operating Statement. The financial information in the Monthly Operating
Statement is preliminary and unaudited and does not purport to show the
financial statements of any of the Debtors in accordance with accounting
principles generally accepted in the United States of America ("GAAP"), and
therefore may exclude items required by GAAP, such as certain reclassifications,
eliminations, accruals, valuations and disclosure items. The Company cautions
readers not to place undue reliance upon the Monthly Operating Statement. There
can be no assurance that such information is complete and the Monthly Operating
Statement may be subject to revision. The Monthly Operating Statement is in a
format required by the United States Bankruptcy Code (the "Bankruptcy Code") and
should not be used for investment purposes. The Monthly Operating Statement
should be read in conjunction with the consolidated financial statements and
notes thereto included in our 2005 Form 10-K that was filed with the SEC.
These unaudited financial statements have been derived from the books and
records of the Company. This information, however, has not been subject to
procedures that would typically be applied to financial information presented in
accordance with GAAP and, upon the application of such procedures, the Company
believes that the financial information could be subject to changes, and these
changes could be material. The information furnished in the Monthly Operating
Statement includes primarily normal recurring adjustments but does not include
all of the adjustments that would typically be made for quarterly financial
statements in accordance with GAAP. In addition, certain information and
footnote disclosures normally included in financial statements prepared in
accordance with GAAP have been condensed or omitted.
Access to documents filed with the Bankruptcy Court and other general
information about the Company's U.S. bankruptcy cases is available at
www.kccllc.net/calpine. Certain information regarding the Company's Canadian
cases under the CCAA, including the reports of the monitor appointed by the
Canadian court, is available at the monitor's website at
www.ey.com/ca/calpinecanada. The content of the foregoing websites is not a part
of this Report.
Limitation on Incorporation by Reference
The Monthly Operating Statement is being furnished for informational
purposes only and is not deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that section, nor shall it be deemed incorporated by reference in
any filing under the Securities Act of 1933, as amended. Registration statements
or other documents filed with the SEC shall not incorporate the Monthly
Operating Statement or any other information set forth in this Report by
reference, except as otherwise expressly stated in such filing. This Report will
not be deemed an admission as to the materiality of any information that is
required to be disclosed solely by Regulation FD.
Forward-Looking Statements
In addition to historical information, this Report contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The
Company uses words such as "believe," "intend," "expect," "anticipate," "plan,"
"may," "will" and similar expressions to identify forward-looking statements.
Such statements include, among others, those concerning the Company's expected
financial performance and strategic and operational plans, as well as all
assumptions, expectations, predictions, intentions or beliefs about future
events. You are cautioned that any such forward-looking statements are not
guarantees of future performance and that a number of risks and uncertainties
could cause actual results to differ materially from those anticipated in the
forward-looking statements. Such risks and uncertainties include, but are not
limited to: (i) the risks and uncertainties associated with the Company's U.S.
and Canadian bankruptcy cases, including impact on operations; (ii) the
Company's ability to attract, incentivize and motivate key employees and
successfully implement new strategies; (iii) the Company's ability to
- 2 -
successfully reorganize and emerge from bankruptcy; (iv) the Company's ability
to attract and retain customers and counterparties; (v) the Company's ability to
implement its business plan; (vi) financial results that may be volatile and may
not reflect historical trends; (vii) the Company's ability to manage liquidity
needs and comply with financing obligations; (viii) the direct or indirect
effects on the Company's business of its impaired credit including increased
cash collateral requirements; (ix) the expiration or termination of the
Company's PPAs and the related results on revenues; (x) potential volatility in
earnings and requirements for cash collateral associated with the use of
commodity contracts; (xi) price and supply of natural gas; (xii) risks
associated with power project development, acquisition and construction
activities; (xiii) unscheduled outages of operating plants; (xiv) factors that
impact the output of the Company's geothermal resources and generation
facilities, including unusual or unexpected steam field well and pipeline
maintenance and variables associated with the waste water injection projects
that supply added water to the steam reservoir; (xv) quarterly and seasonal
fluctuations of the Company's results; (xvi) competition; (xvii) risks
associated with marketing and selling power from plants in the evolving energy
markets; (xviii) present and possible future claims, litigation and enforcement
actions; (xix) effects of the application of laws or regulations, including
changes in laws or regulations or the interpretation thereof; and (xx) other
risks identified in this report and in the Company's annual and quarterly
reports on Forms 10-K and 10-Q. You should also carefully review other reports
that the Company files with the SEC. The Company undertakes no obligation to
update any forward-looking statements, whether as a result of new information,
future developments or otherwise.
ITEM 9.01. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(d) Exhibits
99.1 Calpine Corporation's Unaudited Monthly Operating Statement for the
month ended February 28, 2006.
- 3 -
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: June 19, 2006
- 4 -
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
99.1 Calpine Corporation's Unaudited Monthly Operating Statement for the
month ended February 28, 2006.
- 5 -
EXHIBIT 99.1
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
x
In re: : Chapter 11
:
CALPINE CORPORATION, et al., : Case No. 05-60200 BRL
:
Debtors. : (Jointly Administered)
:
x
MONTHLY OPERATING STATEMENT FOR THE PERIOD
FROM FEBRUARY 1, 2006, TO FEBRUARY 28, 2006
DEBTORS' ADDRESS: 50 West San Fernando Street, San Jose, California 95113
MONTHLY DISBURSEMENTS MADE BY CALPINE CORPORATION, ET AL.
AND ITS DEBTOR SUBSIDIARIES (IN THOUSANDS): $ 648,736
DEBTORS' ATTORNEY: Kirkland & Ellis LLP
Richard M. Cieri (RC 6062)
Matthew A. Cantor (MC 7727)
David R. Seligman admitted pro hac vice
Edward O. Sassower (ES 5823)
Citigroup Center
153 East 53rd Street
New York, NY 10022-4611
MONTHLY OPERATING LOSS (IN THOUSANDS): $ 108,393
REPORT PREPARER: CALPINE CORPORATION, et al.
The undersigned, having reviewed the attached report and being familiar
with the Debtors' financial affairs, verifies under penalty of perjury, that the
information contained therein is complete, accurate and truthful to the best of
my knowledge.
/s/ CHARLES B. CLARK, JR.
--------------------------
Charles B. Clark, Jr.
Senior Vice President, Controller and
Chief Accounting Officer
DATE: June 19, 2006 Calpine Corporation
- 6 -
DEFINITIONS
The following abbreviations contained herein have the meanings set forth
below. Additionally, the terms "the Company," "Calpine," "we," "us" and "our"
refer to Calpine Corporation and its consolidated subsidiaries, unless the
context clearly indicates otherwise. For clarification, such terms will not
include the Canadian and other foreign subsidiaries that were deconsolidated as
a result of the filings by the Canadian Debtors under the CCAA.
Abbreviation Definition
- ---------------------- -------------------------------------------------------
2005 Form 10-K Calpine Corporation's Annual Report on Form 10-K for
the year ended December 31, 2005, filed with the SEC on
May 19, 2006
2014 Convertible Notes Contingent Convertible Notes Due 2014
2015 Convertible Notes 7 3/4% Contingent Convertible Notes Due 2015
2023 Convertible Notes 4 3/4% Contingent Convertible Senior Notes Due 2023
AICPA American Institute of Certified Public Accountants
APB Accounting Principles Board
Bankruptcy Code United States Bankruptcy Code
Bankruptcy Courts The U.S. Bankruptcy Court and the Canadian Court
Calgary Energy Centre Calgary Energy Centre Limited Partnership
Calpine Debtor(s) The U.S. Debtors and the Canadian Debtors
Canadian Court The Court of Queen's Bench of Alberta, Judicial
District of Calgary
Canadian Debtor(s) The subsidiaries and affiliates of Calpine Corporation
that have been granted creditor protection under the
CCAA in the Canadian Court
Cash Collateral Order Second Amended Final Order of the U.S. Bankruptcy Court
Authorizing Use of Cash Collateral and Granting
Adequate Protection, dated February 24, 2006
CCAA Companies' Creditors Arrangement Act (Canada)
CDWR California Department of Water Resources
CES-Canada Calpine Energy Services Canada Partnership
Chapter 11 Chapter 11 of the Bankruptcy Code
DIG Derivatives Implementation Group
DIP Debtor-in-possession
DIP Facility The Revolving Credit, Term Loan and Guarantee
Agreement, dated as of December 22, 2005, as amended on
January 26, 2006, and as amended and restated by that
certain Amended and Restated Revolving Credit, Term
Loan and Guarantee Agreement, dated as of February 23,
2006, among Calpine Corporation, as borrower, the
Guarantors party thereto, the Lenders from time to time
party thereto, Credit Suisse Securities (USA) LLC and
Deutsche Bank Securities Inc., as joint syndication
agents, Deutsche Bank Trust Company Americas, as
administrative agent for the First Priority Lenders,
General Electric Capital Corporation, as Sub-Agent for
the Revolving Lenders, Credit Suisse, as administrative
agent for the Second Priority Term Lenders, Landesbank
Hessen Thuringen Girozentrale, New York Branch, General
Electric Capital Corporation and HSH Nordbank AG, New
York Branch, as joint documentation agents for the
first priority Lenders and Bayerische Landesbank,
General Electric Capital Corporation and Union Bank of
California, N.A., as joint documentation agents for the
second priority Lenders, as amended thereafter from
time to time
EITF Emerging Issues Task Force
EPS Earnings per share
- 7 -
Abbreviation Definition
- ---------------------- -------------------------------------------------------
Exchange Act United States Securities Exchange Act of 1934, as
amended
FASB Financial Accounting Standards Board
FERC Federal Energy Regulatory Commission
First Priority Notes Calpine Corporation's 9 5/8% First Priority Senior
Secured Notes Due 2014
FSP FASB staff positions
GAAP Generally accepted accounting principles in the United
States
GPC Geysers Power Company, LLC
ISO Independent System Operator
LSTC Liabilities Subject to Compromise
MW Megawatt(s)
NOL Net operating loss
Non-Debtor(s) The subsidiaries and affiliates of Calpine Corporation
that are not Calpine Debtors
Non-U.S. Debtor(s) The consolidated subsidiaries and affiliates of Calpine
Corporation that are not U.S. Debtor(s)
Petition Date December 20, 2005
PPA(s) Power purchase agreement(s)
SDNY Court United States District Court for the Southern District
of New York
SEC United States Securities and Exchange Commission
Second Priority Debt Calpine Corporation's Second Priority Secured Floating
Rate Notes due 2007, 8 1/2% Second Priority Senior
Secured Notes Due 2010, 8 3/4% Second Priority Senior
Secured Notes Due 2013, 9 7/8% Second Priority Senior
Secured Notes Due 2011, and Senior Secured Term Loans
Due 2007
Securities Act United States Securities Act of 1933, as amended
SFAS Statement of Financial Accounting Standards
SFAS No. 123-R SFAS No. 123, as revised
SFAS No. 128-R SFAS No. 128, as revised
SOP Statement of Position
The Geysers 19 Geothermal Power Plants at The Geysers in California
U.S. United States of America
U.S. Bankruptcy Court United States Bankruptcy Court for the Southern
District of New York
U.S. Debtor(s) Calpine Corporation and each of its subsidiaries and
affiliates that have filed voluntary petitions for
reorganization under Chapter 11 of the Bankruptcy Code
in the U.S. Bankruptcy Court, which matters are being
jointly administered in the U.S. Bankruptcy Court under
the caption In re Calpine Corporation, et al., Case No.
05-60200 (BRL)
- 8 -
CALPINE CORPORATION
(Debtor-in-Possession)
Index to Consolidated Condensed Financial Statements and Schedules
Page
----
Financial Statements as of and for the Month Ended February 28, 2006:
Consolidated Condensed Statement of Operations........................................................... 10
Consolidated Condensed Balance Sheet..................................................................... 11
Notes to Unaudited Consolidated Condensed Financial Statements........................................... 12
Schedules:
Schedule I Schedule of Consolidating Condensed Balance Sheet as of February 28, 2006................................ 20
Schedule II Schedule of Consolidating Condensed Statement of Operations for the Month Ended February 28, 2006........ 21
Schedule III Schedule of Payroll and Payroll Taxes.................................................................... 22
Schedule IV Schedule of Federal, State and Local Taxes Collected, Received, Due or Withheld.......................... 23
Schedule V Schedule of Total Disbursements by Debtor................................................................ 24
Schedule VI Insurance Statement...................................................................................... 28
- 9 -
CALPINE CORPORATION
(Debtor-in-Possession)
CASE NO. 05-60200 (Jointly Administered)
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
(In Thousands)
For the period from February 1, 2006, through February 28, 2006
Total revenue....................................................................................................... $ 470,138
Total cost of revenue............................................................................................... 438,330
------------
Gross profit..................................................................................................... 31,808
Operating expenses.................................................................................................. 14,122
------------
Income (loss) from operations.................................................................................... 17,686
Interest expense, net............................................................................................... 91,367
Other (income) expense, net......................................................................................... (814)
------------
Income (loss) from continuing operations before reorganization items and income taxes............................ (72,867)
Reorganization items................................................................................................ 35,526
Benefit for income taxes............................................................................................ --
------------
Income (loss) from continuing operations before discontinued operations and
cumulative effect of a change in accounting principle.......................................................... (108,393)
Income from discontinued operations................................................................................. --
Cumulative effect of change in accounting principle, net of tax..................................................... --
------------
Net income (loss)................................................................................................ $ (108,393)
============
The accompanying notes are an integral part of these
consolidated condensed financial statements.
- 10 -
CALPINE CORPORATION
(Debtor-in-Possession)
CASE NO. 05-60200 (Jointly Administered)
CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited)
(In Thousands)
February 28, 2006
ASSETS
Assets:
Current assets....................................... .... $ 3,503,968
Restricted cash, net of current portion............... ... 616,962
Investments................................................ 80,681
Property, plant and equipment, net......................... 14,514,900
Other assets............................................... 1,790,523
--------------
Total assets............................................ $ 20,507,034
==============
LIABILITIES AND
STOCKHOLDERS' DEFICIT
Liabilities not subject to compromise:
Current liabilities........................................ $ 6,863,208
Long-term debt............................................. 3,340,915
Long-term derivative liabilities........................... 600,342
Other liabilities.......................................... 664,766
Liabilities subject to compromise............................. 14,710,818
Minority interest............................................. 275,384
Stockholders' equity (deficit)................................ (5,948,399)
--------------
Total liabilities and stockholders' equity (deficit)... $ 20,507,034
==============
The accompanying notes are an integral part of these
consolidated condensed financial statements.
- 11 -
CALPINE CORPORATION
(Debtor-in-Possession)
CASE NO. 05-60200 (Jointly Administered)
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
For the period from February 1, 2006, to February 28, 2006
1. Petition for Relief Under Chapter 11
On December 20, 2005 and December 21, 2005, Calpine and 254 of its wholly
owned subsidiaries in the United States filed voluntary petitions for relief
under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court and, in
Canada, 12 of its Canadian subsidiaries were granted relief in the Canadian
Court under the CCAA, which, like Chapter 11, allows for reorganization under
the protection of the court system. On December 27 and 29, 2005, January 8 and
9, 2006, February 3, 2006, and May 2, 2006, 19 additional wholly owned
subsidiaries of Calpine commenced Chapter 11 cases in the U.S. Bankruptcy Court.
The U.S. Bankruptcy Court has treated December 20, 2005 as the filing date for
Calpine and its direct and indirect wholly owned subsidiaries that filed
voluntary petitions at various dates in December 2005. Certain other
subsidiaries could file in the U.S. or Canada in the future. The Chapter 11
cases of the U.S. Debtors are being jointly administered for procedural purposes
only by the U.S. Bankruptcy Court under the case captioned In re Calpine
Corporation et al., Case No. 05-60200 (BRL).
The Calpine Debtors are continuing to operate their business as
debtors-in-possession under the jurisdiction of the Bankruptcy Courts and in
accordance with the applicable provisions of the Bankruptcy Code, the Federal
Rules of Bankruptcy Procedure, the CCAA and applicable court orders, as well as
other applicable laws and rules. In general, as debtors-in-possession, each of
the Calpine Debtors is authorized to continue to operate as an ongoing business,
but may not engage in transactions outside the ordinary course of business
without the prior approval of the applicable Bankruptcy Court.
On December 20, 2005, the U.S. Debtors entered into the $2.0 billion DIP
Facility. On December 21, 2005, the U.S. Bankruptcy Court granted interim
approval of the DIP Facility, but initially limited access under the DIP
Facility to $500 million under the revolving credit facility. On January 26,
2006, the U.S. Bankruptcy Court entered a final order approving the DIP Facility
and removing the limitation on our ability to borrow thereunder. The syndication
of the DIP Facility was closed on February 23, 2006. Deutsche Bank Securities
Inc. and Credit Suisse were co-lead arrangers for the DIP Facility, which will
remain in place until the earlier of an effective plan of reorganization or
December 20, 2007. In connection with and as a condition to the closing, on
February 3, 2006, we acquired ownership of The Geysers, which had previously
been leased pursuant to a leveraged lease. We used borrowings under the DIP
Facility to pay a portion of the purchase price for The Geysers and to retire
certain facility operating leases and related debt obligations. The DIP Facility
is secured by first priority liens on all of the unencumbered assets of the U.S.
Debtors, including The Geysers, and junior liens on all of their encumbered
assets. In addition, the DIP Facility was amended on May 3, 2006, to, among
other things, provide us with extensions of time (i) to provide certain
financial information to the DIP Facility lenders, including financial
statements for the year ended December 31, 2005, and for the quarter ended March
31, 2006, and (ii) to cause GPC to file for protection under Chapter 11 of the
Bankruptcy Code. See Note 22 of the Notes to Consolidated Financial Statements
contained in the 2005 Form 10-K for further details regarding the DIP Facility.
In addition, the U.S. Bankruptcy Court approved cash collateral and
adequate assurance stipulations in connection with the approval of the DIP
Facility, which has allowed our business activities to continue to function. We
have also sought and obtained U.S. Bankruptcy Court approval through our "first
day" and subsequent motions to continue to pay critical vendors, meet our
pre-petition and post-petition payroll obligations, maintain our cash management
systems, collateralize certain of our gas supply contracts, enter into and
collateralize trading contracts, pay our taxes, continue to provide employee
benefits, maintain our insurance programs and implement an employee severance
program. In addition, the U.S. Bankruptcy Court has approved certain trading
notification and transfer procedures designed to allow us to restrict trading in
our common stock (and related securities) which could negatively impact our
accrued NOLs and other tax attributes, and granted us extensions of time to file
and seek approval of a plan of reorganization and to assume or reject real
property leases.
The U.S. Bankruptcy Court has established August 1, 2006 as a bar date for
filing proofs of claim against the U.S. Debtors' estates and the Canadian Court
has established June 30, 2006, as a bar date for filing claims against the
Canadian Debtors' estates. We have not fully analyzed the validity and
enforceability of any submitted proofs of claim filed against the Calpine
Debtors' estates to date. In addition, because the bar dates have not yet
occurred, we expect that additional proofs of claim will be filed. To date, we
have recognized certain charges related to expected, allowable claims (see Note
8). However, it is not possible at this time to determine the extent of the
claims that may be filed, whether or not such claims will be disputed, or
whether or not such claims will be subject to discharge in the bankruptcy
- 12 -
proceedings. Nor is it possible at this time to determine whether to establish
any additional claims reserves. Once all applicable bar dates are established
and all claims against the Calpine Debtors are filed, we will review all claims
filed and begin the claims reconciliation process. In connection with the review
and reconciliation process, we will also determine the additional reserves, if
any, that may be established in respect of such claims.
Under the Bankruptcy Code, we have the right to assume, assume and assign,
or reject certain executory contracts and unexpired leases, subject to the
approval of the U.S. Bankruptcy Court and certain other conditions. Generally,
the assumption of an executory contract or unexpired lease requires a debtor to
cure certain existing defaults under the contract. Rejection of an executory
contract or unexpired lease is typically treated as a breach occurring as of the
moment immediately preceding the Chapter 11 filing. Subject to certain
exceptions, this rejection relieves the debtor from performing its future
obligations under the contract but entitles the counterparty to assert a
pre-petition general unsecured claim for damages. Parties to executory contracts
or unexpired leases rejected by a debtor may file proofs of claim against that
debtor's estate for damages. Due to ongoing evaluation of contracts for
assumption or rejection and the uncertain nature of many of the potential claims
for damages, we cannot project the magnitude of these potential claims at this
time. See Note 5 for further discussion of significant contracts and leases for
which we have received or are seeking approval to reject.
At this time, it is not possible to accurately predict the effects of the
reorganization process on the business of the Calpine Debtors or if and when
some or all of the Calpine Debtors may emerge from bankruptcy. The prospects for
future results depend on the timely and successful development, confirmation and
implementation of a plan or plans of reorganization. There can be no assurance
that a successful plan or plans of reorganization will be proposed by the
Calpine Debtors, supported by the Calpine Debtors' creditors or confirmed by the
Bankruptcy Courts, or that any such plan or plans will be consummated. The
ultimate recovery, if any, that creditors and equity security holders receive
will not be determined until confirmation of a plan or plans of reorganization.
No assurance can be given as to what values, if any, will be ascribed in the
bankruptcy cases to the interests of each of the various creditor and equity or
other security holder constituencies, and it is possible that the equity
interests in or other securities issued by Calpine and the other Calpine Debtors
will be restructured in a manner that will substantially reduce or eliminate any
remaining value of such equity interests or other securities, or that certain
creditors may ultimately receive little or no payment with respect to their
claims. Whether or not a plan or plans of reorganization are approved, it is
possible that the assets of any one or more of the Calpine Debtors may be
liquidated.
As a result of our bankruptcy filings and the other matters described
herein, including the uncertainties related to the fact that we have not yet had
time to complete and have approved a plan of reorganization, there is
substantial doubt about our ability to continue as a going concern. Our ability
to continue as a going concern, including our ability to meet our ongoing
operational obligations, is dependent upon, among other things: (i) our ability
to maintain adequate cash on hand; (ii) our ability to generate cash from
operations; (iii) the cost, duration and outcome of the restructuring process;
(iv) our ability to comply with our DIP Facility agreement and the adequate
assurance provisions of the Cash Collateral Order and (v) our ability to achieve
profitability following a restructuring. These challenges are in addition to
those operational and competitive challenges faced by us in connection with our
business. In conjunction with our advisors, we are working to design and
implement strategies to ensure that we maintain adequate liquidity and will be
able to continue as a going concern. However, there can be no assurance as to
the success of such efforts.
2. Basis of Presentation
The accompanying consolidated condensed financial statements have been
prepared on a going concern basis, which assumes continuity of operations and
realization of assets and satisfaction of liabilities in the ordinary course of
business, and in accordance with SOP 90-7, "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code." The consolidated condensed financial
statements do not include any adjustments that might be required should we be
unable to continue to operate as a going concern. In accordance with SOP 90-7,
all pre-petition liabilities subject to compromise have been segregated in the
consolidated condensed balance sheets and classified as LSTC, at the estimated
amount of allowable claims. Interest expense related to pre-petition LSTC has
been reported only to the extent that it will be paid during the pendency of the
bankruptcy cases or is expected to be an allowable claim. Liabilities not
subject to compromise are separately classified as current or noncurrent.
Expenses, provisions for losses resulting from reorganization and certain other
items directly related to our bankruptcy case are reported separately as
reorganization expenses due to bankruptcy.
- 13 -
The Monthly Operating Statement is limited in scope, covers a limited time
period, and has been prepared solely for the purpose of complying with the
monthly reporting requirements of the U.S. Bankruptcy Court. Certain of our
Canadian subsidiaries were granted relief by the Canadian Court under the CCAA.
As a result, certain of our Canadian and other foreign subsidiaries were
deconsolidated as of December 20, 2005. Financial information regarding such
deconsolidated subsidiaries is not included with that of the consolidated group
reported in the Monthly Operating Statement. The financial information in the
Monthly Operating Statement is preliminary and unaudited and does not purport to
show the financial statements of any of the U.S. Debtors in accordance with
GAAP, and therefore may exclude items required by GAAP, such as certain
reclassifications, eliminations, accruals, valuations and disclosure items. We
caution readers not to place undue reliance upon the Monthly Operating
Statement. There can be no assurance that such information is complete and the
Monthly Operating Statement may be subject to revision. The Monthly Operating
Statement is in a format required by the Bankruptcy Code and should not be used
for investment purposes. The Monthly Operating Statement should be read in
conjunction with the consolidated financial statements and notes thereto
included in the 2005 Form 10-K that was filed with the SEC on May 19, 2006.
The unaudited financial statements contained in the Monthly Operating
Statement have been derived from the books and records of the Company. This
information, however, has not been subject to procedures that would typically be
applied to financial information presented in accordance with GAAP, and upon the
application of such procedures, we believe that the financial information could
be subject to changes, and these changes could be material. The information
furnished in this Monthly Operating Statement includes primarily normal
recurring adjustments but does not include all of the adjustments that would
typically be made for quarterly financial statements in accordance with GAAP. In
addition, certain information and footnote disclosures normally included in
financial statements prepared in accordance with GAAP have been condensed or
omitted.
Per agreement among the Company, the Office of the U.S. Trustee and the
Committee of Unsecured Creditors, the Statements of Cash Flows will be excluded
from Monthly Operating Statements except on a quarterly basis.
3. Summary of Significant Accounting Policies
See Note 2 "Summary of Significant Accounting Policies" in the Notes to
Consolidated Financial Statements included in our 2005 Form 10-K for a summary
of the accounting policies that we believe are significant to us.
4. New Accounting Pronouncements
SFAS No. 123-R and Related FSPs
In December 2004, FASB issued SFAS No. 123-R, which revises SFAS No. 123,
and supersedes APB Opinion No. 25 and its related implementation guidance. This
statement requires a public entity to measure the cost of employee services
received in exchange for an award of equity instruments based on the grant-date
fair value of the award (with limited exceptions), which must be recognized over
the requisite service period (usually the vesting period) during which an
employee is required to provide service in exchange for the award. The statement
applies to all share-based payment transactions in which an entity acquires
goods or services by issuing (or offering to issue) its shares, share options,
or other equity instruments or by incurring liabilities to an employee or other
supplier (a) in amounts based, at least in part, on the price of the entity's
shares or other equity instruments or (b) that require or may require settlement
by issuing the entity's equity shares or other equity instruments.
The new guidance requires the accounting for any excess tax benefits to be
consistent with the existing guidance under SFAS No. 123, which provides a
two-transaction model summarized as follows:
o If settlement of an award creates a tax deduction that exceeds
compensation cost, the additional tax benefit would be recorded as a
contribution to paid-in-capital.
o If the compensation cost exceeds the actual tax deduction, the
write-off of the unrealized excess tax benefits would first reduce any
available paid-in capital arising from prior excess tax benefits, and
any remaining amount would be charged against the tax provision in the
income statement.
The new guidance also amends SFAS No. 95, "Statement of Cash Flows," to
require that excess tax benefits be reported as a financing cash inflow rather
than as an operating cash inflow. However, the statement does not change the
accounting guidance for share-based payment transactions with parties other than
employees provided in SFAS No. 123 as originally issued and EITF Issue No.
96-18, "Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services."
Further, SFAS 123-R does not address the accounting for employee share ownership
plans, which are subject to AICPA Statement of Position 93-6, "Employers'
Accounting for Employee Stock Ownership Plans."
- 14 -
The statement applies to all awards granted, modified, repurchased, or
cancelled after January 1, 2006, and to the unvested portion of all awards
granted prior to that date. Public entities that used the fair-value-based
method for either recognition or disclosure under SFAS No. 123 may adopt SFAS
123-R using a modified version of prospective application pursuant to which
compensation cost for the portion of awards for which the employee's requisite
service has not been rendered, related to awards which are outstanding as of
January 1, 2006, must be recognized as the requisite service is rendered on or
after that date. The compensation cost for that portion of those awards shall be
based on the original grant-date fair value of those awards as calculated for
recognition under SFAS No. 123. The compensation cost for those earlier awards
shall be attributed to periods beginning on or after January 1, 2006 using the
attribution method that was used under SFAS No. 123. Furthermore, the method of
recognizing forfeitures must now be based on an estimated forfeiture rate and
can no longer be based on forfeitures as they occur.
We adopted SFAS No. 123-R effective January 1, 2006.
SFAS No. 151
In November 2004, FASB issued SFAS No. 151, "Inventory Costs, an amendment
of ARB No. 43, Chapter 4." This statement amends the guidance in ARB No. 43,
Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts
of idle facility expense, freight, handling costs and wasted material
(spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that "... under
some circumstances, items such as idle facility expense, excessive spoilage,
double freight, and rehandling costs may be so abnormal as to require treatment
as current period charges. . . ." SFAS No. 151 requires those items to be
recognized as a current-period charge regardless of whether they meet the
criterion of "so abnormal." In addition, SFAS No. 151 requires that allocation
of fixed production overheads to the costs of conversion be based on the normal
capacity of the production facilities. The provisions of SFAS No. 151 are
applicable to inventory costs incurred during fiscal years beginning after June
15, 2005. Adoption of this statement did not materially impact our consolidated
results of operations or financial position.
SFAS No. 154
In May 2005, FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections." This statement replaces APB Opinion No. 20, "Accounting Changes,"
and FASB Statement No. 3, "Reporting Accounting Changes in Interim Financial
Statements," and changes the requirements for the accounting for and reporting
of a change in accounting principle. SFAS No. 154 applies to all voluntary
changes in accounting principle. APB Opinion No. 20 previously required that
most voluntary changes in accounting principle be recognized by including in net
income for the period of the change the cumulative effect of changing to the new
accounting principle. SFAS No. 154 requires retrospective application to prior
periods' financial statements of changes in accounting principle, unless it is
impracticable to determine either the period-specific effects or the cumulative
effect of the change. When it is impracticable to determine the cumulative
effect of applying a change in accounting principle to all prior periods, SFAS
No. 154 requires that the new accounting principle be applied as if it were
adopted prospectively from the earliest date practicable.
SFAS No. 154 also requires that a change in depreciation, amortization, or
depletion method for long-lived, nonfinancial assets be accounted for as a
change in accounting estimate effected by a change in accounting principle. SFAS
No. 154 is effective for fiscal years beginning after December 15, 2005.
Adoption of this statement did not materially impact our consolidated results of
operations or financial position.
SFAS No. 155
In February 2006 FASB issued SFAS No. 155, "Accounting for Certain Hybrid
Financial Instruments -- an amendment of FASB Statements No. 133 and 140," to
resolve issues addressed in DIG Issue No. D1, "Application of Statement 133 to
Beneficial Interests in Securitized Financial Assets." SFAS No. 155 permits fair
value remeasurement for hybrid financial instruments containing embedded
derivatives, clarifies that certain types of financial instruments are not
subject to the requirements of SFAS No. 133, requires an evaluation of interests
in securitized financial assets to determine whether an embedded derivative
requires bifurcation, clarifies that concentrations of credit risk in the form
of subordination are not embedded derivatives and amends SFAS No. 140 to
eliminate the prohibition on a qualifying special-purpose entity from holding a
derivative financial instrument that pertains to a beneficial interest other
than another derivative financial instrument. SFAS No. 155 is effective for all
financial instruments acquired or issued after the beginning of an entity's
first fiscal year that begins after September 15, 2006. We do not expect the
adoption of this statement to have a material impact on our results of
operations, cash flows or financial position.
- 15 -
SFAS No. 156
In March 2006 FASB issued FASB Statement No. 156, "Accounting for Servicing
of Financial Assets -- An Amendment of FASB Statement No. 140." The new
statement addresses the recognition and measurement of separately recognized
servicing assets and liabilities and provides an approach to simplify efforts to
obtain hedge-like (offset) accounting. The statement also (i) clarifies when an
obligation to service financial assets should be separately recognized as a
servicing asset or a servicing liability, (ii) requires that a separately
recognized servicing asset or servicing liability be initially measured at fair
value, if practicable, (iii) permits an entity with a separately recognized
servicing asset or servicing liability to choose either the amortization or fair
value method for subsequent measurement and (iv) permits a servicer that uses
derivative financial instruments to offset risks on servicing to report both the
derivative financial instrument and related servicing asset or liability by
using a consistent measurement attribute, or fair value. SFAS is effective for
all separately recognized servicing assets and liabilities acquired or issued
after the beginning of an entity's fiscal year that begins after September 15,
2006, with early adoption permitted. We do not expect the adoption of this
statement to have a material impact on our results of operations, cash flows or
financial position.
5. Rejected Contracts
We continue to evaluate our executory contracts and real property leases in
order to determine which contracts will be assumed, assumed and assigned, or
rejected. Once the evaluation is complete with respect to each particular
contract or lease, the applicable Calpine Debtors file the appropriate motion
with the Bankruptcy Court seeking approval to assume, assume and assign, or
reject the contract or lease. Pursuant to applicable orders of the U.S.
Bankruptcy Court, if a U.S. Debtor seeks to reject a contract or lease, the
contract or lease counterparties then have an opportunity to file objections. If
an objection has been filed, the U.S. Bankruptcy Court will conduct a hearing to
determine any matters raised by the objection. As of the date of this filing,
the U.S. Debtors have identified the following significant contracts and leases
to be rejected:
o On December 21, 2005, we filed a motion with the U.S. Bankruptcy Court
to reject eight PPAs and to enjoin FERC from asserting jurisdiction
over the rejections. The U.S. Bankruptcy Court issued a temporary
restraining order against FERC and set the matter for a hearing on
January 5, 2006. Under most of the PPAs sought to be rejected, we are
obligated to sell power at prices that are significantly lower than
currently-prevailing market prices. At the time of filing the motion,
we forecasted that it would cost us in excess of $1.2 billion if we
were required to continue to perform under these PPAs rather than to
sell the contracted energy at current market prices. On December 29,
2005, certain counterparties to the various PPAs filed an action in
the SDNY Court arguing that the U.S. Bankruptcy Court did not have
jurisdiction over the dispute. On January 5, 2006, the SDNY Court
entered an order that had the effect of transferring our motion
seeking to reject the eight PPAs and our related request for an
injunction against FERC to the SDNY Court from the U.S. Bankruptcy
Court. Earlier, however, on December 19, 2005, CDWR, a counterparty to
one of the eight PPAs, had filed a complaint with FERC seeking to
obtain injunctive relief to prevent us from rejecting our PPA with
CDWR and contending that FERC had exclusive jurisdiction over the
matter. On January 3, 2006, FERC determined that it did not have
exclusive jurisdiction, and that the matter could be heard by the U.S.
Bankruptcy Court. However, despite the FERC ruling, on January 27,
2006, the SDNY Court determined that FERC had jurisdiction over
whether the contracts could be rejected. We appealed the SDNY Court's
decision to the United States Court of Appeals for the Second Circuit.
The appeal was heard on April 10, 2006 and we have not yet received a
decision. We can not determine at this time whether the SDNY Court,
the U.S. Bankruptcy Court or FERC will ultimately determine whether we
may reject any or all of the eight PPAs, or when such determination
will be made. In the meantime, three of the PPAs have been terminated
by the applicable counterparties, and two of the PPAs are the subject
of negotiated settlements. We continue to perform under the three PPAs
that remain in effect.
o On February 6, 2006, we filed a notice of rejection of our leasehold
interests in the Rumford Power Plant and the Tiverton Power Plant with
the U.S. Bankruptcy Court, and noticed the proposed surrender of the
two plants to their owner-lessor. The owner-lessor declined to take
possession and control of the plants at that time. Both the indenture
trustee related to the leaseholds and the owner-lessor filed
objections to the rejection. Additionally, the indenture trustee and
ISO New England, Inc. filed motions to withdraw the reference of the
rejection notice to the SDNY Court, arguing that the U.S. Bankruptcy
Court does not have jurisdiction over the lease rejection dispute. We
engaged in extensive negotiations with the indenture trustee with
respect to the surrender of possession and control of the two power
plants and the sale of certain ancillary assets related to the power
- 16 -
plants in consideration for the satisfaction and discharge of the
indenture trustee's administrative claims against us in the Chapter 11
cases. On May 18, 2006, we filed a motion with the U.S. Bankruptcy
Court seeking approval of the terms and conditions of a Transition
Agreement to be entered into between us, the indenture trustee and a
receiver for certain assets of the owner-lessor to be appointed on a
motion filed with the SDNY Court by the indenture trustee. The hearing
with respect to the appointment of the receiver was heard before the
SDNY Court on June 5, 2006, and a receiver was appointed on June 6,
2006. The hearing before the U.S. Bankruptcy Court with respect to the
motion for approval of the Transition Agreement and with respect to
the rejection notice, and all objections to both such pleadings, was
held on June 7, 2006, and the Transition Agreement and effective date
of the rejection of our leasehold interests in the Rumford and
Tiverton power plants was approved by the Court on June 9, 2006. In
addition, we have been involved in negotiations with ISO New England,
Inc. with respect to its objections to the rejection notice and on May
30, 2006, we filed a motion with the U.S. Bankruptcy Court seeking
approval of the terms of a stipulation and settlement agreement by and
among us, ISO New England, Inc., the receiver and the indenture
trustee. The stipulation and settlement agreement provides for a
standstill with respect to ISO New England, Inc.'s pending motion to
withdraw the reference. The motion to approve the stipulation and
settlement agreement was heard and approved by the U.S. Bankruptcy
Court at the June 7, 2006, hearing. Upon the closing of the transfers
contemplated in the Transition Agreement, the receiver will have
possession and control of the Rumford and Tiverton power plants, as
well as the ancillary assets related to the power plants transferred
under the Transition Agreement and all of the motions to withdraw the
reference related to the rejection notice will be withdrawn or
dismissed.
o In February 2006, we filed notices of rejection with the U.S.
Bankruptcy Court relating to our office leases in Portland, Oregon and
in Deer Park, Texas. In March 2006, we filed notices of rejection
relating to our office leases in Denver and Fort Collins, Colorado and
in Tampa, Florida. In April 2006, we filed a notice of rejection
relating to our office lease in Atlanta, Georgia. In May 2006, we
filed a notice of rejection relating to our office lease in Dublin,
California. The rejection of each of the foregoing leases has been
approved by the U.S. Bankruptcy Court. We anticipate that it is more
likely than not that we will file further notices of rejection with
respect to additional office leases; in particular, we announced in
April 2006 that we intend to close our Boston, Massachusetts office.
6. Liabilities Subject to Compromise
Liabilities Subject to Compromise -- Liabilities subject to compromise
include unsecured and undersecured liabilities, including secured liabilities as
to which there is uncertainty as to whether the value of the collateral securing
such liabilities is less than, equals or exceeds such obligations, incurred
prior to the Petition Date and exclude liabilities that are fully secured or
liabilities of our subsidiaries or affiliates that have not made bankruptcy
filings and other approved payments such as taxes and payroll. In accordance
with SOP 90-7, "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code" ("SOP 90-7"), we ceased to accrue and recognize interest
expense on liabilities subject to compromise, except that paid pursuant to the
Cash Collateral Order. We are making periodic cash interest payments on our
Second Priority Debt through June 30, 2006, in accordance with the Cash
Collateral Order. In addition, we recorded a valuation allowance of
approximately $148.1 million within reorganization items against deferred
financing costs and debt discounts related to LSTC to reflect the related debt
at its expected, allowed claim amount. The amounts of various categories of
liabilities of which we are aware that are subject to compromise are set forth
below. These amounts represent our best estimates of known or potential
pre-petition liabilities that are probable of resulting in an allowed claim
against us in connection with the bankruptcy filings and are recorded at the
estimated amount of the allowed claim which may differ from the amount for which
the liability will be settled. Such claims remain subject to future adjustments.
Adjustments may result from negotiations, actions of the Bankruptcy Courts,
rejection of executory contracts and unexpired leases, the determination as to
the value of any collateral securing claims, proofs of claim or other events. We
expect that the liabilities of the Calpine Debtors could exceed the fair value
of their assets, which could result in claims being paid at less than 100% of
their face value, and the equity of Calpine's stockholders could be diluted or
eliminated entirely. In addition, the claims bar dates -- the dates by which
claims against the Calpine Debtors must be filed with the applicable Bankruptcy
Court -- have been set for August 1, 2006 by the U.S. Bankruptcy Court with
respect to claims against the U.S. Debtors and June 30, 2006 by the Canadian
Court with respect to claims against the Canadian Debtors. The Canadian Court
has set a hearing for June 23, 2006, to rule on a request by the Canadian
Debtors to extend the Canadian bar date to August 1, 2006. Accordingly, not all
potential claims would have been filed as of February 28, 2006, and we expect
that additional claims will be filed against us prior to the claims bar dates.
- 17 -
As a result, the total amount of such claims cannot be estimated at this time;
however, we have recognized as reorganization items certain charges related to
expected allowable claims. See Note 8. Any claims filed may result in additional
liabilities, some or all of which may be subject to compromise, and the amounts
of which may be material to us.
The amounts of LSTC at February 28, 2006 consisted of the following (in
millions):
Accounts payable and accrued liabilities........................ $ 551.4
Derivative liabilities.......................................... 140.0
Project financing............................................... 166.5
Convertible notes............................................... 1,823.5
Second priority senior secured notes............................ 3,671.9
Unsecured senior notes.......................................... 1,880.0
Notes payable and other liabilities -- related party............ 1,112.6
Provision for allowable claims.................................. 5,364.9
------------
Total liabilities subject to compromise...................... $ 14,710.8
============
As a result of our bankruptcy filings, the fair value cannot be reasonably
determined for the outstanding debt that is included in Liabilities subject to
compromise on the Consolidated Condensed Balance Sheet.
7. DIP Facility
On December 20, 2005, Calpine Corporation, as borrower, entered into the
DIP Facility with Deutsche Bank Securities, Inc. and Credit Suisse, as joint
syndication agents, Deutsche Bank Trust Company Americas as administrative agent
for the first priority lenders and Credit Suisse as administrative agent for the
second priority lenders. The DIP Facility is guaranteed by each of the other
U.S. Debtors. On January 26, 2006, the U.S. Bankruptcy Court granted final
approval of the DIP Facility, and on February 23, 2006, the DIP Facility was
amended and restated and the term loans were funded. On May 3, 2006, the DIP
Facility was further amended.
Pursuant to the DIP Facility, and applicable orders of the U.S. Bankruptcy
Court, the lenders have made available to Calpine up to $2 billion comprised of
a $1 billion revolving loan and letter of credit facility, a $400 million first
priority term loan facility and a $600 million second priority term loan
facility. The proceeds of borrowings and letters of credit issued under the DIP
Facility will be used, among other things, for working capital and other general
corporate purposes. A portion of the DIP Facility was used to purchase The
Geysers, including the redemption of the lessor's notes. In addition, borrowings
under the DIP Facility were used, together with approximately $412 million of
restricted cash, to repay the remaining balance of the First Priority Notes in
May 2006 and June 2006. As of January 31, 2006, there were no amounts
outstanding under the DIP Facility. During the month of February 2006, we
borrowed $150 million under the DIP revolving loan and letter of credit facility
("Revolver"), $400 million under the DIP first priority term loan facility and
$600 million under the DIP second priority term loan facility. We repaid the
total $150 million outstanding under the DIP Revolver, plus the related
interest. Accordingly, at February 28, 2006, there was $1 billion outstanding
under the DIP term loans and nothing outstanding under the DIP Revolver. At May
31, 2006, there was $999.1 million outstanding under the DIP Facility term loans
as a result of the March repayment of approximately $0.9 million of the amounts
outstanding under the DIP first priority term loan together with accrued
interest. Also at May 31, 2006, there were no amounts outstanding under the DIP
Revolver; however, approximately $3.4 million of letters of credit had been
issued against the Revolver.
See Note 22 of the Notes to Consolidated Financial Statements included in
the 2005 Form 10-K for further discussion of the DIP Facility.
8. Reorganization Items
Reorganization items represent the direct and incremental costs of the
bankruptcy cases, such as professional fees, pre-petition liability claim
adjustments and losses that are probable and can be estimated related to
terminated contracts. SOP 90-7 requires reorganization items to be separately
disclosed. The U.S. Debtors' reorganization items consist of the following (in
millions):
Month Ended
February 28, 2006
-----------------
Provision for allowable claims.............................. $ --
Impairment of investment in Canadian subsidiaries........... 1.1
Write-off of unamortized deferred financing costs
and debt discounts....................................... --
Loss on terminated contracts, net........................... --
Professional fees........................................... 28.5
Other reorganization items.................................. 5.9
--------
Total reorganization items............................. $ 35.5
========
- 18 -
On January 16, 2006, Calpine Energy Services Canada Partnership
("CES-Canada"), a Canadian debtor, repudiated its tolling agreement with Calgary
Energy Centre Limited Partnership ("Calgary Energy Centre"). Calpine Corporation
had guaranteed CES-Canada's performance under the tolling agreement. We recorded
a non-cash charge of $232.5 million, which was reported as a reorganization item
in our Consolidated Condensed Statements of Operations for the month ended
January 31, 2006. This charge represents the out-of-the money value of the
contract to CES-Canada and the expected allowable claim from Calgary Energy
Centre to Calpine Corporation under the guarantee.
See Note 4 of the Notes to Consolidated Financial Statements included in
our 2005 Form 10-K for a discussion of the Reorganization items.
- 19 -
Schedule I
CALPINE CORPORATION
(Debtor-in-Possession)
CASE No. 05-60200 (Jointly Administered)
CONSOLIDATING CONDENSED BALANCE SHEET
(Unaudited)
(In Thousands)
February 28, 2006
U.S. Debtors Non-U.S. Debtors Eliminations Consolidated
-------------- ---------------- -------------- --------------
ASSETS
Assets:
Current assets............................................. $ 42,501,312 $ 3,631,261 $ (42,628,605) $ 3,503,968
Restricted cash, net of current portion.................... 462,905 154,057 -- 616,962
Investments................................................ 12,864,388 9,453,685 (22,237,392) 80,681
Property, plant and equipment, net......................... 8,645,154 5,870,628 (882) 14,514,900
Other assets............................................... 6,111,778 748,709 (5,069,964) 1,790,523
-------------- -------------- -------------- --------------
Total assets............................................. $ 70,585,537 $ 19,858,340 $ (69,936,843) $ 20,507,034
============== ============== ============== ==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities not subject to compromise:
Current liabilities........................................ $ 5,880,380 $ 4,111,618 $ (3,128,790) $ 6,863,208
Long-term debt............................................. 5,380,230 3,969,908 (6,009,223) 3,340,915
Long-term derivative liabilities........................... 441,296 159,046 -- 600,342
Other liabilities.......................................... 370,881 307,548 (13,663) 664,766
Liabilities subject to compromise............................. 53,479,572 507 (38,769,261) 14,710,818
Minority interest............................................. 275,384 -- -- 275,384
Stockholders' equity (deficit)................................ 4,757,794 11,309,713 (22,015,906) (5,948,399)
-------------- -------------- -------------- --------------
Total liabilities and stockholders' equity (deficit) $ 70,585,537 $ 19,858,340 $ (69,936,843) $ 20,507,034
============== ============== ============== ==============
Calpine Corporation's consolidated results are comprised of U.S. Debtor and
Non-U.S. Debtor entities that have affiliated transactions with other U.S.
Debtor and Non-U.S. Debtor entities that must be eliminated in consolidation.
Amounts listed under the "Eliminations" heading are required to correctly
eliminate transactions between any affiliated entities for consolidated
financial statement presentation purposes.
- 20 -
Schedule II
CALPINE CORPORATION
(Debtor-in-Possession)
CASE No. 05-60200 (Jointly Administered)
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
(In Thousands)
For the Period from February 1, 2006, to February 28, 2006
U.S. Debtors Non-U.S. Debtors Eliminations Consolidated
-------------- ---------------- ------------- ------------
Total revenue................................................. $ 835,454 $ 202,609 $ (567,925) $ 470,138
Total cost of revenue......................................... 873,184 133,082 (567,936) 438,330
------------- ------------- ------------- ------------
Gross profit (loss)........................................ (37,730) 69,527 11 31,808
Operating expenses............................................ 209,854 (43,055) (152,677) 14,122
------------- -------------- ------------- ------------
Income (loss) from operations.............................. (247,584) 112,582 152,688 17,686
Interest expense, net......................................... 58,162 33,205 -- 91,367
Other (income) expense, net................................... 3,175 (4,000) 11 (814)
------------- -------------- ------------- ------------
Income (loss) from continuing operations before
reorganization items and income taxes.................... (308,921) 83,377 152,677 (72,867)
Reorganization items.......................................... 35,236 290 -- 35,526
Benefit for income taxes...................................... -- -- -- --
------------- -------------- ------------- ------------
Income (loss) from continuing operations before
discontinued operations and cumulative effect of
change in accounting principle........................... (344,157) 83,087 152,677 (108,393)
Income from discontinued operations........................... -- -- -- --
Cumulative effect of change in accounting principle,
net of tax.................................................. -- -- -- --
------------- -------------- ------------- ------------
Net income (loss)...................................... $ (344,157) $ 83,087 $ 152,677 $ (108,393)
============= ============= ============= ============
Calpine Corporation's consolidated results are comprised of U.S. Debtor and
Non-U.S. Debtor entities that have affiliated transactions with other U.S.
Debtor and Non-U.S. Debtor entities that must be eliminated in consolidation.
Amounts listed under the "Eliminations" heading are required to correctly
eliminate transactions between any affiliated entities for consolidated
financial statement presentation purposes.
- 21 -
Schedule III
CALPINE CORPORATION
(Debtor-in-Possession)
CASE No. 05-60200 (Jointly Administered)
SCHEDULE OF PAYROLL AND PAYROLL TAXES
(In Thousands)
For the Period from February 1, 2006, to February 28, 2006
Employee Payroll Employer Payroll
Gross Wages Paid** Taxes Withheld* Taxes Remitted*
-------------------- --------------- ---------------
$ 19,413 $ 4,845 $ 1,646
* Employee Payroll Taxes are withheld each pay period and remitted by the
Company, together with the Employer Payroll Taxes, to the appropriate tax
authorities.
** Gross Wages were paid by the Company on February 3, 2006, February 10,
2006, February 17,2006, and February 24, 2006.
- 22 -
Schedule IV
CALPINE CORPORATION
(Debtor-in-Possession)
CASE No. 05-60200 (Jointly Administered)
SCHEDULE OF FEDERAL, STATE AND LOCAL TAXES
COLLECTED, RECEIVED, DUE OR WITHHELD
(In Thousands)
For the Period from February 1, 2006, to February 28, 2006
Amount Amount
Withheld/Accrued Paid
Federal and state income taxes............. $ -- $ --
--------- ---------
State and local taxes:
Property................................ $ 5,857 219
Sales and use........................... 1,199 4,414
Franchise............................... 7 7
Other................................... 38 38
--------- ---------
Total state and local................ $ 7,101 $ 4,678
--------- ---------
Total taxes.............. $ 7,101 $ 4,678
========= =========
- 23 -
Schedule V
CALPINE CORPORATION
(Debtor-in-Possession)
CASE No. 05-60200 (Jointly Administered)
TOTAL DISBURSEMENTS BY DEBTOR
For the Month Ended February 28, 2006
(In Dollars)
Legal Entity Case Number Disbursements
- ------------------------------------------------------------------ ------------ ---------------
Amelia Energy Center, LP 05-60223-BRL $ --
Anacapa Land Company, LLC 05-60226-BRL 63,927
Anderson Springs Energy Company 05-60232-BRL 1,658
Androscoggin Energy, Inc. 05-60239-BRL --
Auburndale Peaker Energy Center, LLC 05-60244-BRL 22,148
Augusta Development Company, LLC 05-60248-BRL --
Aviation Funding Corp. 05-60252-BRL --
Baytown Energy Center, LP 05-60255-BRL 335,013
Baytown Power GP, LLC 05-60256-BRL --
Baytown Power, LP 05-60258-BRL --
Bellingham Cogen, Inc. 05-60224-BRL --
Bethpage Energy Center 3, LLC 05-60225-BRL 37,528
Bethpage Fuel Management Inc. 05-60228-BRL --
Blue Heron Energy Center, LLC 05-60235-BRL --
Blue Spruce Holdings, LLC 05-60238-BRL --
Broad River Energy LLC 05-60242-BRL 169,613
Broad River Holdings, LLC 05-60245-BRL --
CalGen Equipment Finance Company, LLC 05-60249-BRL --
CalGen Equipment Finance Holdings, LLC 05-60251-BRL --
CalGen Expansion Company, LLC 05-60253-BRL --
CalGen Finance Corp. 05-60229-BRL --
CalGen Project Equipment Finance Company One, LLC 05-60236-BRL 516,838
CalGen Project Equipment Finance Company Three, LLC 05-60259-BRL --
CalGen Project Equipment Finance Company Two, LLC 05-60262-BRL 328,256
Calpine Acadia Holdings, LLC 05-60265-BRL --
Calpine Administrative Services Company, Inc. 05-60201-BRL 3,385,334
Calpine Agnews, Inc. 05-60268-BRL --
Calpine Amelia Energy Center GP, LLC 05-60270-BRL --
Calpine Amelia Energy Center LP, LLC 05-60272-BRL --
Calpine Auburndale Holdings, LLC 05-60452-BRL --
Calpine Baytown Energy Center GP, LLC 05-60453-BRL --
Calpine Baytown Energy Center LP, LLC 05-60320-BRL --
Calpine Bethpage 3 Pipeline Construction Company, Inc. 05-60330-BRL --
Calpine Bethpage 3, LLC 05-60342-BRL --
Calpine c*Power, Inc. 05-60250-BRL --
Calpine CalGen Holdings, Inc. 05-60352-BRL 212
Calpine California Development Company, LLC 05-60355-BRL --
Calpine California Energy Finance, LLC 05-60360-BRL --
Calpine California Equipment Finance Company, LLC 05-60464-BRL --
Calpine Calistoga Holdings, LLC 05-60377-BRL --
Calpine Capital Trust 05-60325-BRL --
Calpine Capital Trust II 05-60379-BRL --
Calpine Capital Trust III 05-60384-BRL --
Calpine Capital Trust IV 05-60391-BRL --
Calpine Capital Trust V 05-60221-BRL --
Calpine Central Texas GP, Inc. 05-60329-BRL --
Calpine Central, Inc. 05-60333-BRL 30
Calpine Central, L.P. 05-60351-BRL 835,204
Calpine Central-Texas, Inc. 05-60338-BRL --
Calpine Channel Energy Center GP, LLC 05-60340-BRL --
Calpine Channel Energy Center LP, LLC 05-60343-BRL --
Calpine Clear Lake Energy GP, LLC 05-60345-BRL --
Calpine Clear Lake Energy, LP 05-60349-BRL --
Calpine Cogeneration Corporation 05-60233-BRL --
Calpine Construction Management Company, Inc. 05-60260-BRL 1,797,424
Calpine Corporation 05-60200-BRL 170,297,219
Calpine Corpus Christi Energy GP, LLC 05-60247-BRL --
Calpine Corpus Christi Energy, LP 05-60261-BRL --
Calpine Decatur Pipeline, Inc. 05-60263-BRL --
Calpine Decatur Pipeline, L.P. 05-60254-BRL --
Calpine Dighton, Inc. 05-60264-BRL --
Calpine East Fuels, Inc. 05-60257-BRL --
Calpine Eastern Corporation 05-60266-BRL 442,016
Calpine Energy Holdings, Inc. 05-60207-BRL --
Calpine Energy Services Holdings, Inc. 05-60208-BRL --
Calpine Energy Services, L.P. 05-60222-BRL 147,745,153
Calpine Finance Company 05-60204-BRL --
Calpine Freestone Energy GP, LLC 05-60227-BRL --
Calpine Freestone Energy, LP 05-60230-BRL --
- TABLE CONTINUES -
- 24 -
Legal Entity Case Number Disbursements
- ------------------------------------------------------------------ ------------ ---------------
Calpine Freestone, LLC 05-60231-BRL --
Calpine Fuels Corporation 05-60203-BRL --
Calpine Gas Holdings LLC 05-60234-BRL --
Calpine Generating Company, LLC 05-60237-BRL 4,755
Calpine Gilroy 1, Inc. 05-60240-BRL --
Calpine Gilroy 2, Inc. 05-60241-BRL --
Calpine Gilroy Cogen, L.P. 05-60243-BRL 39,895
Calpine Global Services Company, Inc. 05-60246-BRL 539,186
Calpine Gordonsville GP Holdings, LLC 05-60281-BRL --
Calpine Gordonsville LP Holdings, LLC 05-60282-BRL --
Calpine Gordonsville, LLC 05-60283-BRL --
Calpine Greenleaf Holdings, Inc. 05-60284-BRL --
Calpine Greenleaf, Inc. 05-60285-BRL 41,506
Calpine Hidalgo Design, L.P. 06-10039-BRL --
Calpine Hidalgo Energy Center, L.P. 06-10029-BRL 119,654
Calpine Hidalgo Holdings, Inc. 06-10027-BRL --
Calpine Hidalgo Power GP, LLC 06-10030-BRL --
Calpine Hidalgo Power, LP 06-10028-BRL --
Calpine Hidalgo, Inc. 06-10026-BRL --
Calpine International Holdings, Inc. 05-60205-BRL --
Calpine International, LLC 05-60288-BRL 323,775
Calpine Investment Holdings, LLC 05-60289-BRL --
Calpine Kennedy Airport, Inc. 05-60294-BRL --
Calpine Kennedy Operators Inc. 05-60199-BRL --
Calpine KIA, Inc. 05-60465-BRL --
Calpine Leasing Inc. 05-60297-BRL --
Calpine Long Island, Inc. 05-60298-BRL --
Calpine Lost Pines Operations, Inc. 05-60314-BRL --
Calpine Louisiana Pipeline Company 05-60328-BRL --
Calpine Magic Valley Pipeline, Inc. 05-60331-BRL --
Calpine Monterey Cogeneration, Inc. 05-60341-BRL 7,326
Calpine MVP, Inc. 05-60348-BRL --
Calpine NCTP GP, LLC 05-60359-BRL --
Calpine NCTP, LP 05-60406-BRL --
Calpine Northbrook Corporation of Maine, Inc. 05-60409-BRL --
Calpine Northbrook Energy Holdings, LLC 05-60418-BRL --
Calpine Northbrook Energy, LLC 05-60431-BRL --
Calpine Northbrook Holdings Corporation 05-60286-BRL --
Calpine Northbrook Investors, LLC 05-60291-BRL --
Calpine Northbrook Project Holdings, LLC 05-60295-BRL --
Calpine Northbrook Services, LLC 05-60299-BRL --
Calpine Northbrook Southcoast Investors, LLC 05-60304-BRL --
Calpine NTC, LP 05-60308-BRL --
Calpine Oneta Power I, LLC 05-60311-BRL --
Calpine Oneta Power II, LLC 05-60315-BRL --
Calpine Oneta Power, L.P. 05-60318-BRL 204,505
Calpine Operating Services Company, Inc. 05-60322-BRL 19,484,517
Calpine Operations Management Company, Inc. 05-60206-BRL --
Calpine Pastoria Holdings, LLC 05-60302-BRL --
Calpine Philadelphia, Inc. 05-60305-BRL 6,981
Calpine Pittsburg, LLC 05-60307-BRL 20,606
Calpine Power Company 05-60202-BRL 22,769
Calpine Power Equipment LP 05-60310-BRL --
Calpine Power Management, Inc. 05-60319-BRL --
Calpine Power Management, LP 05-60466-BRL --
Calpine Power Services, Inc. 05-60323-BRL 346,559
Calpine Power, Inc. 05-60316-BRL --
Calpine PowerAmerica, Inc. 05-60211-BRL --
Calpine PowerAmerica, LP 05-60212-BRL 1,227,471
Calpine PowerAmerica-CA, LLC 05-60213-BRL 105,522
Calpine PowerAmerica-CT, LLC 05-60214-BRL --
Calpine PowerAmerica-MA, LLC 05-60215-BRL --
Calpine PowerAmerica-ME, LLC 05-60216-BRL --
Calpine PowerAmerica-NH, LLC 06-10032-BRL --
Calpine PowerAmerica-NY, LLC 06-10031-BRL --
Calpine PowerAmerica-OR, LLC 06-10034-BRL --
Calpine Producer Services, L.P. 05-60217-BRL 9,768,146
Calpine Project Holdings, Inc. 05-60324-BRL --
Calpine Pryor, Inc. 05-60326-BRL --
Calpine Rumford I, Inc. 05-60327-BRL --
Calpine Rumford, Inc. 05-60414-BRL --
Calpine Schuylkill, Inc. 05-60416-BRL --
Calpine Siskiyou Geothermal Partners, L.P. 05-60420-BRL --
Calpine Sonoran Pipeline LLC 05-60423-BRL --
Calpine Stony Brook Operators, Inc. 05-60424-BRL --
Calpine Stony Brook Power Marketing, LLC 05-60425-BRL --
Calpine Stony Brook, Inc. 05-60426-BRL --
Calpine Sumas, Inc. 05-60427-BRL --
- TABLE CONTINUES -
- 25 -
Legal Entity Case Number Disbursements
- ------------------------------------------------------------------ ------------ ---------------
Calpine TCCL Holdings, Inc. 05-60429-BRL --
Calpine Texas Pipeline GP, Inc. 05-60433-BRL --
Calpine Texas Pipeline LP, Inc. 05-60439-BRL --
Calpine Texas Pipeline, L.P. 05-60447-BRL 1,542
Calpine Tiverton I, Inc. 05-60450-BRL --
Calpine Tiverton, Inc. 05-60451-BRL --
Calpine ULC I Holding, LLC 05-60454-BRL --
Calpine University Power, Inc. 05-60455-BRL --
Calpine Unrestricted Funding, LLC 05-60456-BRL --
Calpine Unrestricted Holdings, LLC 05-60458-BRL --
Calpine Vapor, Inc. 05-60459-BRL --
Carville Energy LLC 05-60460-BRL 390,814
CCFC Development Company, LLC 05-60267-BRL --
CCFC Equipment Finance Company, LLC 05-60269-BRL --
CCFC Project Equipment Finance Company One, LLC 05-60271-BRL --
Celtic Power Corporation 05-60273-BRL --
CES GP, LLC 05-60218-BRL --
CGC Dighton, LLC 05-60274-BRL --
Channel Energy Center, LP 05-60275-BRL 564,637
Channel Power GP, LLC 05-60276-BRL --
Channel Power, LP 05-60277-BRL --
Clear Lake Cogeneration Limited Partnership 05-60278-BRL 127,799
CogenAmerica Asia Inc. 05-60372-BRL --
CogenAmerica Parlin Supply Corp. 05-60383-BRL --
Columbia Energy LLC 05-60440-BRL 146,451
Corpus Christi Cogeneration L.P. 05-60441-BRL 179,239
CPN 3rd Turbine, Inc. 05-60443-BRL --
CPN Acadia, Inc. 05-60444-BRL --
CPN Berks Generation, Inc. 05-60445-BRL --
CPN Berks, LLC 05-60446-BRL --
CPN Bethpage 3rd Turbine, Inc. 05-60448-BRL 17,369
CPN Cascade, Inc. 05-60449-BRL --
CPN Clear Lake, Inc. 05-60287-BRL --
CPN Decatur Pipeline, Inc. 05-60290-BRL --
CPN East Fuels, LLC 05-60476-BRL --
CPN Energy Services GP, Inc. 05-60209-BRL --
CPN Energy Services LP, Inc. 05-60210-BRL --
CPN Freestone, LLC 05-60293-BRL --
CPN Funding, Inc. 05-60296-BRL 69,425
CPN Morris, Inc. 05-60301-BRL --
CPN Oxford, Inc. 05-60303-BRL --
CPN Pipeline Company 05-60309-BRL 206,881
CPN Pleasant Hill Operating, LLC 05-60312-BRL --
CPN Pleasant Hill, LLC 05-60317-BRL --
CPN Power Services GP, LLC 05-60321-BRL --
CPN Power Services, LP 05-60292-BRL --
CPN Pryor Funding Corporation 05-60300-BRL 37,761
CPN Telephone Flat, Inc. 05-60306-BRL 1,728
Decatur Energy Center, LLC 05-60313-BRL 228,364
Deer Park Power GP, LLC 05-60363-BRL --
Deer Park Power, LP 05-60370-BRL --
Delta Energy Center, LLC 05-60375-BRL 397,344
Dighton Power Associates Limited Partnership 05-60382-BRL 177,738
East Altamont Energy Center, LLC 05-60386-BRL --
Fond du Lac Energy Center, LLC 05-60412-BRL --
Fontana Energy Center, LLC 05-60335-BRL --
Freestone Power Generation LP 05-60339-BRL 267,252
GEC Bethpage Inc. 05-60347-BRL --
Geothermal Energy Partners, LTD., a California limited partnership 05-60477-BRL --
Geysers Power Company II, LLC 05-60358-BRL 267,082,192
Geysers Power Company, LLC 06-10197-BRL 662,344
Geysers Power I Company 05-60389-BRL --
Goldendale Energy Center, LLC 05-60390-BRL 607,385
Hammond Energy LLC 05-60393-BRL --
Hillabee Energy Center, LLC 05-60394-BRL 8,314
Idlewild Fuel Management Corp. 05-60397-BRL --
JMC Bethpage, Inc. 05-60362-BRL --
KIAC Partners 05-60366-BRL 5,000,389
Lake Wales Energy Center, LLC 05-60369-BRL --
Lawrence Energy Center, LLC 05-60371-BRL --
Lone Oak Energy Center, LLC 05-60403-BRL 307
Los Esteros Critical Energy Facility, LLC 05-60404-BRL 85,011
Los Medanos Energy Center LLC 05-60405-BRL 774,012
Magic Valley Gas Pipeline GP, LLC 05-60407-BRL --
Magic Valley Gas Pipeline, LP 05-60408-BRL --
Magic Valley Pipeline, L.P. 05-60332-BRL --
MEP Pleasant Hill, LLC 05-60334-BRL 110,963
Moapa Energy Center, LLC 05-60337-BRL 978
- TABLE CONTINUES -
- 26 -
Legal Entity Case Number Disbursements
- ------------------------------------------------------------------ ------------ ---------------
Mobile Energy L L C 05-60344-BRL 46,267
Modoc Power, Inc. 05-60346-BRL --
Morgan Energy Center, LLC 05-60353-BRL 745,571
Mount Hoffman Geothermal Company, L.P. 05-60361-BRL --
Mt. Vernon Energy LLC 05-60376-BRL --
NewSouth Energy LLC 05-60381-BRL 61,129
Nissequogue Cogen Partners 05-60388-BRL 116,358
Northwest Cogeneration, Inc. 05-60336-BRL --
NTC Five, Inc. 05-60463-BRL --
NTC GP, LLC 05-60350-BRL --
Nueces Bay Energy LLC 05-60356-BRL --
O.L.S. Energy-Agnews, Inc. 05-60374-BRL 472,727
Odyssey Land Acquisition Company 05-60367-BRL --
Pajaro Energy Center, LLC 05-60385-BRL --
Pastoria Energy Center, LLC 05-60387-BRL --
Pastoria Energy Facility L.L.C. 05-60410-BRL 308,012
Philadelphia Biogas Supply, Inc. 05-60421-BRL --
Phipps Bend Energy Center, LLC 05-60395-BRL --
Pine Bluff Energy, LLC 05-60396-BRL 336,017
Power Investors, L.L.C. 05-60398-BRL --
Power Systems MFG., LLC 05-60399-BRL 6,331,540
Quintana Canada Holdings, LLC 05-60400-BRL --
RockGen Energy LLC 05-60401-BRL 75,465
Rumford Power Associates Limited Partnership 05-60467-BRL 55,836
Russell City Energy Center, LLC 05-60411-BRL 122
San Joaquin Valley Energy Center, LLC 05-60413-BRL 31
Silverado Geothermal Resources, Inc. 06-10198-BRL --
Skipanon Natural Gas, LLC 05-60415-BRL --
South Point Energy Center, LLC 05-60417-BRL 880,591
South Point Holdings, LLC 05-60419-BRL --
Stony Brook Cogeneration, Inc. 05-60422-BRL --
Stony Brook Fuel Management Corp. 05-60428-BRL 3,564,796
Sutter Dryers, Inc. 05-60430-BRL --
TBG Cogen Partners 05-60432-BRL 23,388
Texas City Cogeneration, L.P. 05-60434-BRL 108,225
Texas Cogeneration Company 05-60435-BRL --
Texas Cogeneration Five, Inc. 05-60436-BRL --
Texas Cogeneration One Company 05-60437-BRL --
Thermal Power Company 05-60438-BRL --
Thomassen Turbine Systems America, Inc. 05-60354-BRL 72,451
Tiverton Power Associates Limited Partnership 05-60357-BRL 60,258
Towantic Energy, L.L.C. 05-60364-BRL --
VEC Holdings, LLC 05-60365-BRL --
Venture Acquisition Company 05-60368-BRL --
Vineyard Energy Center, LLC 05-60373-BRL --
Wawayanda Energy Center, LLC 05-60378-BRL --
Whatcom Cogeneration Partners, L.P. 05-60468-BRL --
Zion Energy LLC 05-60380-BRL 90,187
---------------
Total $ 648,735,956
===============
- 27 -
SCHEDULE VI
CALPINE CORPORATION
(Debtor-in-Possession)
CASE No. 05-60200 (Jointly Administered)
DEBTORS' STATEMENT REGARDING INSURANCE POLICIES
For the Period from February 1, 2006, to February 28, 2006
All insurance policies are fully paid for the current period, including
amounts owed for workers' compensation and disability insurance.
- 28 -