14.2.2003: Meldung: Calpine Corp.: Fourth Quarter and Year-End 2002 Results
Before certain non-recurring items (as detailed in the attached Supplemental Data), Calpine achieved $0.09 diluted earnings per share, or $34.6 million in net income for the fourth quarter 2002. The company reported $0.05 diluted loss per share, or an $18.0 million net loss, compared with $0.30 diluted earnings per share, or $100.0 million of net income, in the fourth quarter of 2001.
Before certain non-recurring items (as detailed in the attached Supplemental Data), Calpine achieved $0.84 diluted earnings per share, or $329.6 million in net income for the twelve months ended December 31, 2002. Calpine earned $0.39 diluted earnings per share, or $141.6 million in net income, compared with $1.87 diluted earnings per share, or $648.1 million of net income, for the same period of 2001. Results are unaudited and subject to the completion of the 2002 audit and the reaudit of 2000 and 2001 by Deloitte & Touche LLP.
Fourth Quarter (unaudited) Year-End (unaudited) 2002 2001 % Chg 2002 2001 % Chg Megawatt- hours Generated (millions) 20.7 14.7 41% 74.5 43.5 71% Megawatts in Operation 19,046 11,086 72% 19,046 11,086 72% Revenue (millions) $1,896 $1,465 29% $7,483 $6,769 11% GAAP: Net Income (Loss) (millions) $(18.0) $100.0 (118)% $141.6 $648.1 (78)% Diluted Earnings (Loss) Per Share $(0.05) $0.30 (117)% $0.39 $1.87 (79)% Recurring: Net Income (millions) (a) $34.6 $92.7 (63)% $329.6 $668.4 (51)% Diluted Earnings Per Share (a) $0.09 $0.27 (67)% $0.84 $1.92 (56)% EBITDA, as adjusted (millions) (b) $255.6 $332.6 (23)% $1,134 $1,601 (29)% Recurring EBITDA, as adjusted (millions) (c) $318.9 $320.9 (1)% $1,383 $1,632 (15)% Total Assets (billions) $23 $21 10% 23 21 10% (a) See attached Supplemental Data for reconciliation of GAAP net income to net income from recurring operations. The company believes that the presentation of recurring information herein is useful to analyzing the normalized earnings potential of the company and in providing consistency of reporting throughout 2002. (b) Earnings Before Interest, Tax, Depreciation and Amortization, as adjusted; see attached Supplemental Data for reconciliation from net income. (c) See attached Supplemental Data for reconciliation of EBITDA, as adjusted to recurring EBITDA, as adjusted.
"Looking back on 2002, I am pleased to report that Calpine remained profitable even in a recessionary year and during a period of depressed energy prices," stated Calpine Chairman and CEO Peter Cartwright. "The company made significant strides in enhancing liquidity and increasing our revenue- generating capabilities. In 2002, we completed approximately $3.1 billion of finance transactions, retired debt, completed non-strategic asset sales, and reduced 2002/2003 forecasted capital spending by over $4 billion. We recently announced restructuring of our turbine agreements, reducing capital expenditures by an additional $3.4 billion.
"I am equally proud of the fact that Calpine has achieved another industry first. In 2002 alone, we completed the construction of more power plants in one year than any power company or agency in the history of the power industry. During the most favorable of market conditions, the addition of 8,200 megawatts of capacity would be impressive -- given today""s challenging marketplace, it is extraordinary.
"2002 is behind us. We faced intense pressures -- with American industry, in general, and the power industry, in particular -- suffering a great loss of confidence from the public and from investors. Calpine enters 2003 as a stronger organization, backed by the nation""s largest, most efficient and cleanest fleet of natural gas-fired power-generating facilities in North America. Calpine has in place the people, the commitment to integrity, and the proven strategy to succeed."
2002 Fourth Quarter and Year-End Financial Results Results
Financial results for the twelve months ended December 31, 2002, were affected by a significant decrease in electricity prices and spark spreads compared with the same periods in 2001, primarily reflecting an increase in supply. However, average realized electric prices increased in the three months ended December 31, 2002 compared to the fourth quarter of 2001 while sparks spreads were relatively flat because of rising fuel costs. The company has experienced a significant drop in margin from trading activities, which reflects the company""s decision to limit this activity due to costs associated with credit support for trading. In addition, financial results have been impacted by charges in connection with equipment cancellations.
Total electrical generating production for the three and twelve months ended December 31, 2002, increased by 41% and 71%, respectively, as the company brought additional facilities into operation. However, the combination of lower spark spreads on electrical generation, higher operating expenses and depreciation charges associated with additional plants coming on line, and lower trading gains resulted in decreases of 16% and 18%, respectively, in gross profit for the three and twelve months ended December 31, 2002, compared with the same periods in 2001. Calpine""s low cost of production, economies of scale and portfolio of long-term contracts helped to mitigate the effects of the depressed power market on Calpine""s financial results. In addition, the company recorded a pre-tax $404.7 million charge for the year in connection with the equipment cancellations and related charges.
Financial results for the fourth quarter of 2002 reflect higher project development costs, as the company expensed costs related to the indefinite suspension of certain development projects. In addition, the company incurred a $210.7 million pre-tax charge for equipment cancellations and related charges. General and administrative expense increased due to the growth of the company""s infrastructure needed to support operations and due to charges related to the company""s reorganization, including severance and excess office space, and for reaudit fees for 2000 and 2001. Interest expense increased due to additional projects in commercial operation. Other income increased primarily as a result of a pre-tax gain of $114.5 million from the receipt of Senior Notes as consideration for British Columbia asset sales. Discontinued operations included $48.0 million net gains on the sale of the De Pere Energy Center, and Alberta and British Columbia oil and gas assets.
Operations-Focused Power Company
In 2002, Calpine increased its power generation portfolio by more than 72%, adding approximately 8,200 megawatts of the cleanest, most efficient natural gas-fired generation in North America. Calpine now has 76 power plants in operation -- totaling more than 19,000 megawatts of capacity -- and owns approximately one trillion cubic feet equivalent of proved natural gas reserves in Canada and the United States.
With its 19,000-megawatt portfolio in place, Calpine has completed a corporate restructuring program - - successfully transitioning the company from a development-focused independent power company, to one of North America""s largest owners and operators of power-generating facilities. Consistent with its proven business model, the company continues to enter into long-term power contracts and currently serves more than 80 wholesale and industrial customers throughout North America. In 2002, Calpine:
-- Continued to enhance its safety program; the company""s lost time accidents record was four times better than the nationwide power industry average. -- Remained the industry leader for cleanest natural gas-fired power portfolio, with the most environmentally responsible natural gas-fired power plants in North America; remains the largest geothermal power producer in the world. -- Operated 76 power plants with a 92% average availability. -- Produced a record 74.5-million megawatt hours, a 71% increase from 2001. -- Reduced plant operating expenses per megawatt-hour by approximately 10% in 2002, compared to 2001. -- Completed construction of nine natural gas-fired power plants and four expansion projects, adding more than 8,200 megawatts of capacity. -- Advanced construction of 23 projects in 12 states and one province in Canada. -- Produced approximately 350 million cubic feet equivalent per day of natural gas -- representing about 26% of the company""s total gas requirements. Liquidity-Enhancing Initiatives
Calpine developed and continues to execute its program to enhance liquidity. In 2002, the company:
-- Completed $3.1 billion of finance transactions. -- Divested nearly $550 million of non-strategic assets. -- Retired approximately $1.2 billion of debt, including approximately $880 million of zero- coupon convertible debentures. -- Reduced 2002/2003 capital spending by more than $4 billion, canceling and deferring delivery and payment of major equipment. -- Restructured major power contracts, increasing near-term earnings and retaining long-term value.
In February 2003, the company further advanced its capital expenditure reduction program, announcing restructured agreements with its major gas and steam turbine manufacturers. These new agreements give Calpine the option to cancel its existing orders for 87 gas turbines and 44 steam turbines. They reduce the company""s future capital commitments by approximately $3.4 billion and will provide greater flexibility to better match equipment commitments with Calpine""s revised construction and development program. The company has canceled 11 gas turbines and two steam turbines to date.
The following table summarizes the company""s currently anticipated sources and uses of funds. These estimates are based on current expectations.
2003 Operating Assets ($ millions) Sources Beginning cash on hand 650 (A) Estimated 2003 operating cash flow 630 (B) Total Sources $1,280 Uses Cash lease payments 330 Maintenance capital 300 Total Uses 630 Net Cash Flow $650 2003 Construction Program ($ millions) Sources Liquidity - Lease financings $400 - Contract securitization 800 - Canadian Power Income Fund 140 - Asset sales 600 Construction project financings 400 Total Sources $2,340 Uses Construction capital 1,300 Future turbine capital 300 Total Uses 1,600 Net Cash Flow $740 Total Estimated Cash Resources $1,390 (A) Includes cash and equivalents and current portion of restricted cash. (B) Estimated 2003 operating cash flow equals income from operations plus depreciation, non-cash operating lease expense, and other income, less approximately $1 billion of cash interest.
"Calpine continues to demonstrate the ability to raise substantial capital, reduce capital expenditures and increase our revenue-generating capabilities to meet both our liquidity needs and construction financing requirements," stated Calpine CFO Bob Kelly. "Our strong operating cash flow, combined with our ongoing program to enhance liquidity, gives Calpine a competitive advantage as we advance our 2003 refinancing program."
2003 Earnings Guidance
The company is establishing its diluted earnings per share guidance for the year ending December 31, 2003 of approximately $0.40 to $0.50 per share and anticipates EBITDA, as adjusted of approximately $1.4 billion to $1.5 billion. These estimates are based on average on-peak market spark spreads of approximately $8.00 - $10.00 per megawatt-hour, effective cost control and continued execution of the company""s business plan.
Conference Call Information
Calpine will host a conference call to discuss fourth quarter and year-end 2002 results. The conference call will occur Thursday, February 13, 2003, at 8:30 am PST. To participate via the teleconference (in listen-only mode), dial 1-888-603-6685 at least five minutes before the start of the conference call. In addition, Calpine will simulcast the conference call live via the Internet. The web cast can be accessed and will be available for 30 days on the investor relations page of Calpine""s website at http:// www.calpine.com/.
Based in San Jose, Calif., Calpine Corporation is leading North American power company that is dedicated to providing wholesale and industrial customers with clean, efficient, natural gas-fired power generation. It generates and markets power through plants it develops, owns, leases and operates in 23 states in the United States, three provinces in Canada and in the United Kingdom. Calpine also is the world""s largest producer of renewable geothermal energy, and it owns approximately one trillion cubic feet equivalent of proved natural gas reserves in Canada and the United States. The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information about Calpine, visit its website at http://www.calpine.com/.