Calpine Reports 2007 Full-Year Results

Calpine Corporation (NYSE:CPN) today reported full-year financial and operating results for the year ended Dec. 31, 2007. Calpine’s Annual Report on Form 10-K, including its audited financial statements, for the year ended Dec. 31, 2007, was filed with an effective date of today with the Securities and Exchange Commission (SEC) and can be found on the SEC’s website at http://www.sec.gov. Full-year highlights include:   Year Ended Dec. 31     2007       2006     % Chg Operating Revenues (millions) (a) $ 7,970 $ 6,937 15 % GAAP Net Income/(loss) (millions) (a) $ 2,693 $ (1,765 ) NA Commodity Margin (millions) (b,c) $ 2,225 $ 2,021 10 % Adjusted EBITDA (millions) (c,d) $ 1,412 $ 1,029 37 % Megawatt-Hours Generated (thousands) 90,811 83,146 9 % Average Total Megawatts in Operation (thousands) 24,755 26,785 (8 )% Average Capacity Factor (excluding peakers) 46.6 % 39.2 % 19 %   (a) See the accompanying Consolidated Statements of Operations for the periods ending on December 31 for 2005, 2006 and 2007   (b) Commodity margin includes Calpine’s electricity and steam revenues, hedging and optimization activities, renewable energy credit revenue, transmission revenue and expenses, and fuel and purchased energy expenses, but excludes mark-to-market activity and other service revenues.   (c) Commodity Margin and Adjusted EBITDA are non-GAAP measures important to management’s assessment of the Company’s performance. Commodity margin and Adjusted EBITDA do not purport to represent net income (loss), the most comparable GAAP measure, as an indicator of operating performance and are not necessarily comparable to similarly-titled measures reported by other companies. See the accompanying tables for a reconciliation of commodity margin and Adjusted EBITDA to net income (loss) from operations.   (d) Earnings Before Interest, Tax, Depreciation and Amortization, as adjusted. Robert P. May, Calpine’s Chief Executive Officer, stated, "We entered 2008 as the new Calpine with a renewed commitment to: generating and selling clean, reliable and cost-effective electricity. We continue to deliver on this commitment every day, which is why Calpine is one of the industry’s largest North American natural gas-fired power providers and is the nation’s largest renewable geothermal energy producer, well-positioned to lead a new era of clean power generation.” Outlook Going forward, Calpine expects to maintain its strong liquidity position and maximize the performance of core strategic assets in the markets in which Calpine operates. The Company has taken steps to stabilize, improve and strengthen its power generation business and financial health by reducing activities and curtailing expenditures in certain non-core areas. Analyst Meeting and Webcast As previously announced, Calpine will host an analyst meeting today. A live Internet Webcast of the meeting, including management's presentation will be active at approximately 12:45 p.m. EST and can be found at http://www.calpine.com by clicking on an available audio link. The Webcast will be available for replay purposes on the Company’s website approximately two hours after the event and then for 45 days following the live broadcast. About Calpine Calpine Corporation is helping meet the needs of an economy that demands more and cleaner sources of electricity. Founded in 1984, Calpine is a major U.S. power company, currently capable of delivering approximately 24,000 megawatts of clean, cost-effective, reliable, and fuel-efficient electricity to customers and communities in 18 states in the United States. Calpine owns, leases, and operates low-carbon, natural gas-fired, and renewable geothermal power plants. Using advanced technologies, Calpine generates electricity in a reliable and environmentally responsible manner for the customers and communities it serves. Please visit http://www.calpine.com for more information. Forward Looking Statement In addition to historical information, this release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Words such as "believe,” "intend,” "expect,” "anticipate,” "plan,” "may,” "will” and similar expressions identify forward-looking statements. Such statements include, among others, those concerning 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) Calpine’s ability to implement its business plan; (ii) financial results that may be volatile and may not reflect historical trends; (iii) seasonal fluctuations of results and exposure to variations in weather patterns; (iv) potential volatility in earnings associated with fluctuations in prices for commodities such as natural gas and power; (v) ability to manage liquidity needs and comply with covenants related to the Exit Credit and Bridge Facilities and other existing financing obligations; (vi) Calpine’s ability to complete the implementation of its Plan of Reorganization and the discharge of its chapter 11 cases including successfully resolving any remaining claims; (vii) disruptions in or limitations on the transportation of natural gas and transmission of electricity; (viii) the expiration or termination of power purchase agreements and the related results on revenues; (ix) risks associated with the operation of power plants including unscheduled outages; (x) factors that impact the output of Calpine’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; (xi) risks associated with power project development and construction activities; (xii) ability to attract, retain and motivate key employees including filling certain significant positions within Calpine’s management team; (xiii) ability to attract and retain customers and counterparties; (xiv) competition; (xv) risks associated with marketing and selling power from plants in the evolving energy markets; (xvi) present and possible future claims, litigation and enforcement actions; (xvii) effects of the application of laws or regulations, including changes in laws or regulations or the interpretation thereof; and (xviii) other risks identified from time-to-time in Calpine’s reports and registration statements filed with the SEC, including, without limitation, the risk factors identified in its Annual Report on Form 10-K for the year ended December 31, 2007. Actual results or developments may differ materially from the expectations expressed or implied in the forward-looking statements and Calpine undertakes no obligation to update any such statements. Unless specified otherwise, all information set forth in this release is as of today's date and Calpine undertakes no duty to update this information. For additional information about Calpine's chapter 11 reorganization or general business operations, please refer to Calpine's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, and any other recent Calpine report to the Securities and Exchange Commission. These filings are available by visiting the Securities and Exchange Commission's website at http://www.sec.gov or Calpine's website at http://www.calpine.com. CALPINE CORPORATION AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)   CONSOLIDATED STATEMENTS OF OPERATIONS   Years Ended December 31, 2007 2006 2005 (in millions, except per share amounts) Operating revenues $ 7,970 $ 6,937 $ 10,302   Cost of revenue: Fuel and purchased energy expenses 5,683 4,752 8,318 Plant operating expense 749 750 717 Depreciation and amortization 463 470 506 Operating plant impairments 44 53 2,413 Other cost of revenue   136   172   293 Gross profit (loss) 895 740 (1,945 ) Equipment, development project and other impairments 2 65 2,117 Sales, general and other administrative expense 146 175 240 Other operating expenses   42   36   69 Income (loss) from operations 705 464 (4,371 ) Interest expense 2,019 1,254 1,397 Interest (income) (64 ) (79 ) (84 ) Loss (income) from various repurchases of debt — 18 (203 ) Minority interest expense — 5 43 Other (income) expense, net   (139 )   (5 )   72 Loss before reorganization items, income taxes and discontinued operations (1,111 ) (729 ) (5,596 ) Reorganization items   (3,258 )   972   5,026 Income (loss) before income taxes and discontinued operations 2,147 (1,701 ) (10,622 ) Provision (benefit) for income taxes   (546 )   64   (741 ) Income (loss) before discontinued operations 2,693 (1,765 ) (9,881 ) Discontinued operations, net of tax provision of $132 in 2005   —   —   (58 ) Net income (loss) $ 2,693 $ (1,765 ) $ (9,939 )     Basic earnings (loss) per common share: Weighted average shares of common stock outstanding (in thousands) 479,235 479,136 463,567 Income (loss) before discontinued operations $ 5.62 $ (3.68 ) $ (21.32 ) Discontinued operations, net of tax   —   —   (0.12 ) Net income (loss) $ 5.62 $ (3.68 ) $ (21.44 )     Diluted earnings (loss) per common share: Weighted average shares of common stock outstanding (in thousands) 479,478 479,136 463,567 Income (loss) before discontinued operations $ 5.62 $ (3.68 ) $ (21.32 ) Discontinued operations, net of tax   —   —   (0.12 ) Net income (loss) $ 5.62 $ (3.68 ) $ (21.44 ) Consolidated Commodity Margin The following table reconciles our commodity margin to our GAAP results for the years ended December 31, 2007 and 2006 (in millions).   2007 2006 Operating revenues $ 7,970 $ 6,937 (Less): Other service revenues (57 ) (73 ) (Less): Fuel and purchased energy expenses (5,683 ) (4,752 ) Adjustment to remove: Mark-to-market activity, net(1)   (5 )   (91 ) Consolidated commodity margin $ 2,225 $ 2,021   (1) Included in operating revenues and fuel and purchased energy expenses. Adjusted EBITDA The below table provides a reconciliation of Adjusted EBITDA to our cash flow from operations and GAAP net income (loss):   Years Ended December 31, 2007 2006 2005 (in millions) Cash provided by (used in) operating activities $ 182 $ 156 $ (708 ) Less: Changes in operating assets and liabilities, excluding the effects of acquisition 686 259 (332 ) Additional adjustments to reconcile GAAP net loss to net cash provided by (used in) operating activities from both continuing and discontinued operations: Depreciation and amortization expense (1) 554 585 760 Deferred income taxes (517 ) 22 (610 ) Mark-to-market activity, net 13 (99 ) (11 ) Non-cash reorganization items (3,342 ) 807 5,013 Impairment charges and other   95   347   4,411 GAAP net income (loss) 2,693 (1,765 ) (9,939 ) Less: Loss from discontinued operations   —   —   (58 ) Net income (loss) from continuing operations 2,693 (1,765 ) (9,881 ) Add: Adjustments to reconcile Adjusted EBITDA to net income (loss) from continuing operations: Interest expense, net of interest income 1,955 1,175 1,313 Depreciation and amortization expense, excluding deferred financing costs(1) 507 522 558 Income tax provision (benefit) (546 ) 64 (741 ) Impairment charges 46 118 4,530 Reorganization items (3,258 ) 972 5,026 Major maintenance expense 98 77 70 Operating lease expense 54 66 105 Loss (income) on various repurchases of debt — 18 (203 ) (Gains) losses on derivatives 2 (213 ) 52 (Gains) losses on sales of assets and contract restructuring, excluding reorganization items (7 ) (6 ) 18 Claim settlement income (135 ) — — Other   3   1   80 Adjusted EBITDA $ 1,412 $ 1,029 $ 927     (1) Depreciation and amortization in the GAAP net income (loss) calculation on our Consolidated Statements of Operations excludes amortization of other assets and amounts classified as SG&A.