28.7.2004: Meldung: Calpine Power Income Fund financial results

Calpine Power Income Fund (TSX: CF.UN) today announced its results for the six months ending June 30, 2004. Based upon current forecast, cash distributions for the months of August, September and October will be $0.081 per trust unit.

------------------------------------------------------------------------- Ex-Distribution Distribution Distribution Record Date Date Date per Unit ------------------------------------------------------------------------- August 31, 2004 August 27, 2004 September 20, 2004 $0.081 ------------------------------------------------------------------------- September 30, 2004 September 28, 2004 October 20, 2004 $0.081 ------------------------------------------------------------------------- October 29, 2004 October 27, 2004 November 19, 2004 $0.081 ------------------------------------------------------------------------- The above reflects distributions expected to be paid. However, distributions are subject to change based upon actual conditions. -------------------------------------------------------------------------

"We are pleased with the operational results from all of our facilities. The planned outage at the Island Cogen Facility, although affecting overall availability, has seen the installation of new compressor blades at the plant, which should result in improved performance and financial results for that facility. In addition, we continue to have solid operational results at our Calgary and Whitby facilities, in line with expectations," said Toby Austin, president and chief executive officer of Calpine Canada Power Ltd., manager of the Calpine Power Income Fund. "Unitholders are also seeing the contribution from our recently completed acquisition of the King City Facility in California, resulting in increased distributions to unitholders. This contribution furthers our goal of stable and sustainable distributions for all unitholders."

MANAGEMENT""S DISCUSSION AND ANALYSIS

The following discussion and analysis as provided by Management should be read in conjunction with the accompanying unaudited consolidated financial statements and the notes thereto of Calpine Power Income Fund (the "Fund") and Calpine Power, L.P. ("CLP" or the "Partnership") for the three and six months ended June 30, 2004 and 2003 and is based on information to July 26, 2004. The following discussion and analysis should also be read in conjunction with the audited consolidated financial statements and related management""s discussion and analysis (the "Annual MD&A") contained in the 2003 Annual Report. All dollar amounts are shown in Canadian dollars unless otherwise specified.

SECOND QUARTER HIGHLIGHTS - For the three and six months ended June 30, 2004, the Calgary Energy Centre operated at 72% and 85% availability and generated 171,168 MWh and 379,583 MWh, respectively. - For the three and six months ended June 30, 2004, the Island Cogeneration Facility operated at 46% and 71% availability and generated 191,482 MWh and 627,982 MWh, respectively. This decrease in performance was due to a planned outage for regular scheduled major maintenance and completion of certain upgrades to improve the facility output. - For the three and six months ended June 30, 2004, the Whitby Cogeneration Facility operated at 96% and 95% availability, respectively. - In May 2004, the Fund acquired a 120MW natural gas-fired, combined cycle cogeneration facility (the "King City Facility") located in King City, California. In connection with the transaction, the Fund has acquired an amended and restated lease of the King City Facility to a wholly-owned subsidiary of Calpine Corporation ("Calpine") pursuant to a lease expiring in 2028. In addition, the Fund loaned $48.0 million ($53.4 million face value) to Calpine Canada Power Ltd., the Manager of the Fund (the "Manager") and a wholly-owned subsidiary of Calpine. - The Fund financed the King City transaction using a combination of a public offering of $99.8 million in Subscription Receipts that were exchanged for Trust Units of the Fund (the "Offering") and non-recourse long-term debt totaling US$82 million provided by a third party. - Distributable Cash of $14.0 million and $26.3 million was generated for the three and six months ended June 30, 2004 for distribution to the Fund""s Unitholders. - Distributable Cash per Trust Unit was $0.2476 and $0.4850 for the three months and six months ended June 30, 2004, respectively. - Per unit distributions increased by 2.5% per Trust Unit, commencing with the June 2004 distribution.

The Fund is an unincorporated open-ended trust established under the laws of Alberta. The Fund indirectly owns interests in the Island Cogeneration Facility located in British Columbia, the Calgary Energy Centre located in Alberta and the King City Facility located in California. The Fund also indirectly owns an economic interest in the Whitby Cogeneration Facility located in Ontario through a participating loan (the "Whitby Loan"). These Facilities are modern and environmentally friendly, powered by high-efficiency natural gas-fired turbines, and have long-term energy sales agreements. The Fund and the Partnership are administered and managed by the Manager, Calpine Canada Power Ltd., an indirect wholly-owned subsidiary of Calpine.

The Fund""s objectives are to provide, on a per Trust Unit basis, a stable and sustainable flow of Distributable Cash of the Fund and to increase, where prudent, such distributions. The Manager aims to achieve the Fund""s objectives by maximizing the efficiency and profitability of the Facilities and by acquiring or developing future facilities in accordance with established acquisition and investment guidelines. The Manager believes that Calpine""s extensive experience in all aspects of the development, acquisition and operation of power generation facilities will provide the Manager with a competitive advantage and will enable it to successfully implement the Fund""s objectives.

At June 30, 2004, the Fund had 61,742,288 Trust Units outstanding, of which 4,605 are held by Calpine Energy Holdings Ltd. ("CEHL"), an indirect wholly-owned subsidiary of Calpine, and 61,737,683 are widely held and trade on the Toronto Stock Exchange.

SIGNIFICANT TRANSACTIONS

On May 19, 2004 the Fund closed a transaction to acquire a 120 megawatt natural gas-fired, combined cycle cogeneration facility (the "King City Facility") located in King City, California. In addition, the Fund through its wholly-owned subsidiary, Calpine Commercial Trust ("CCT"), loaned $48.0 million ($53.4 million face value) to the Manager of the Fund. The Fund acquired the King City Facility from an unrelated third party, BAF Energy a California Limited Partnership.

The acquisition by the Fund of the King City Facility and the loan to the Manager (collectively, the "Transaction") resulted in the Fund acquiring two different payment streams. The first payment stream will be pursuant to a 24-year lease (the "Lease") of the King City Facility by Calpine King City Cogen, LLC ("Calpine King City"), a wholly-owned subsidiary of Calpine. Calpine King City leased the King City Facility from the previous owner and will continue the lease with revised terms from a wholly-owned subsidiary of the Fund. The King City Facility has a long-term Power Purchase Agreement supported by the underlying credit of an investment grade utility. The second payment stream will arise from the interest and principal stream from the loan issued to the Manager. The loan is repayable over a six year term with interest at a rate of 13% per annum. The purpose of the loan is to provide the Fund with sufficient cash to allow the Fund to maintain levelized distributions so as to assist in providing stable and sustainable distributions to Unitholders. The loan will be a full recourse obligation of the Manager and will be secured by a pledge of the Manager""s limited partnership interest in CLP, including the Manager""s rights to receive distributions under its ownership of Class B Subordinated Units of CLP. In addition, Calpine King City will provide the Fund with a limited recourse guarantee of the Manager""s obligations under the loan and will grant the Fund a security interest in the Lessee Guaranty Account established pursuant to the Guaranty Depositary Agreement as security for its obligations under the guarantee in favour of the Fund.

The Fund financed the transaction using a combination of a public offering of $99.8 million in Subscription Receipts that were exchanged for Trust Units of the Fund (the "Offering") and a non-recourse loan facility totaling US$82 million provided by a third party.

RESULTS OF OPERATIONS (unaudited) Calpine Power Income Fund Calpine Power, L.P. ------------------------------------------------------------------------- Three Three Three Three months months months months ended ended ended ended Selected Second- June 30, June 30, June 30, June 30, Quarter Information 2004 2003 2004 2003 (in 000""s) (restated)(1) (restated)(1) ------------------------------------------------------------------------- Total Revenue $ 13,562 $ 13,196 $ 19,408 $ 28,332 Net Earnings 6,431 12,858 8,319 18,844 Net Earnings Per Trust Unit 0.1138 0.2472 - - Net Earnings Per Class A Priority Unit - - 0.1034 0.2537 Net Earnings Per Class B Subordinated Unit - - 0.1320 0.2537 Total Assets 705,088 493,724 663,786 699,826 Total Long-term Liabilities 109,012 - 2,276 2,097 Distributions Declared Per Trust Unit 0.2476 0.2355 - - Distributions Declared Per Class A Priority Unit - - 0.2351 0.2362 Distributions Declared Per Class B Subordinated Unit - - 0.1025 0.4709 (1) 2003 has been restated for the retroactive application of the new CICA accounting standard, "Asset Retirement Obligations".

The Fund reported net earnings of $6.4 million and $18.8 million or $0.1138 and $0.3470 per Trust Unit for the three and six months ended June 30, 2004. For the same period in 2003, the Fund reported net earnings of $12.9 million and $16.7 million or $0.2472 and $0.3214 per Trust Unit, for the three and six months ended respectively. Equity earnings from CLP have decreased in comparison to the prior year as the Island Cogeneration Facility was shutdown for capital upgrades in the second quarter of 2004. The decrease in equity earnings was lessened by the fact that the Calgary Energy Centre commenced commercial operations on March 31, 2003. Finance, rental and interest income for the period ended June 30, 2004 are in relation to the public offering and purchase and subsequent lease of the King City Facility, which occurred in May 2004. Through the lease of the King City Facility and associated land to Calpine King City, the Fund has recorded finance income of $6.6 million and rental income for the land of $25 thousand for the period ended June 30, 2004. The Fund will recognize finance income over the lease term that will provide a constant rate of return on the net investment in the lease. Interest income of $1.5 million has been recognized for the period ended June 30, 2004, which was earned on the loan to the Manager. Management and administrative expenses were $357 thousand and $815 thousand for the three and six months ended June 30, 2004, including $41 thousand and $82 thousand for fees payable to the Manager to manage and administer the Fund, in accordance with applicable agreements. For the same period in 2003, management and administrative expenses were $338 thousand and $776 thousand, including $38 thousand and $77 thousand for the fees payable to the Manager to manage and administer the Fund, in accordance with applicable agreements. The Partnership pays management and administrative costs on the Fund""s behalf, in accordance with applicable agreements, and an amount of $413 thousand (Q2 2003 - $614 thousand) was due to the Partnership for reimbursement of these costs from the Fund at June 30, 2004.

The Partnership reported cash flow from operating activities of $5.1 million and $37.0 million for the three and six months ended June 30, 2004, compared to $28.8 million and $30.9 million for the three and six months ended June 30, 2003. Cash flow from operating activities was lower in 2004 due to the $10.5 million payment of the annual heat rate penalty to BC Hydro for the contract year April 2003 to April 2004, which amount had already been reflected in operating results for this period. Net earnings were $8.3 million and $26.1 million, respectively, for the three and six months ended June 30, 2004 compared to $18.8 million and $25.0 million for the same periods in 2003. Revenues were $19.4 million and $47.1 million for the three and six months ended June 30, 2004 compared to $28.3 million and $38.9 million for the three and six months ended June 30, 2003. Island Cogeneration Facility electricity generation revenue was $4.4 million and $13.0 million for the three and six months ended June 30, 2004 and $10.8 million and $18.8 million for the same periods in 2003. Electricity generation revenues at the Calgary Energy Centre were $13.5 million and $27.1 million for the three and six months ended June 30, 2004 compared to $12.6 million and $12.6 million for the same periods, as the Calgary Energy Centre commenced operations March 31, 2003. The overall increase in cash flow from operating activities is due to the commencement of commercial operations at the Calgary Energy Centre, on March 31, 2003, as well as stronger performance at the Island Cogeneration Facility, which operated at 96% availability in Q1 2004, compared to 34% availability in Q1 2003.

Revenues also include amounts generated from steam generation in relation to the Island Cogeneration Facility as well as interest earned on the Whitby Loan and other cash balances. For the three and six month period ended June 30, 2004 revenues from steam generation in relation to the Island Cogeneration Facility were $1.1 million and $4.9 million compared to $3.7 million and $5.0 million for the same periods in 2003. Revenues from interest earned on the Whitby Loan and other cash balances were $0.9 million and $1.8 million for the three and six months ended June 30, 2004 compared to $1.3 million and $2.4 million for the same periods in 2003.

Foreign exchange expense primarily consists of foreign exchange gains and losses on US dollar transactions and US dollar denominated cash. The Partnership has a long-term service agreement ("LTSA") for the maintenance of the Calgary Energy Centre whereby amounts payable under this agreement will be settled in US currency. Therefore, a portion of the maintenance reserve has been converted to US currency to mitigate foreign exchange risk associated with satisfying future obligations under the LTSA. The Fund, through the Transaction to acquire the King City Facility, has a US $82.0 million loan with a third party and is also receiving part of the minimum lease payments associated with the Lease of the King City Facility in US dollars. The US dollar lease receipts are expected to offset substantially all foreign exchange risk associated with satisfying future obligations under the US dollar loan with the third party.

Island Cogeneration Facility

The 225 MW Island Cogeneration Facility is a combined cycle cogeneration plant located at Duncan Bay, near Campbell River, on Vancouver Island, British Columbia. The Island Cogeneration Facility operated at 46% and 71% availability and generated 191,482 MWh and 627,982 MWh for the three and six months ended June 30, 2004. The Island Cogeneration Facility was shutdown for major maintenance and capital upgrades from mid-April to mid-June 2004. The upgrades consisted of compressor blade modifications, an air intake upgrade with improved air filtration, and installation of a glycol freeze protection system. These upgrades are expected to improve output of the Facility by approximately 18 MWs which will be delivered to BC Hydro under the existing terms of the Electricity Purchase Agreement. The total cost of the upgrades are estimated at $16.5 million. The upgrades are not expected to affect distributions in 2004 but are expected to increase earnings at the Island Cogeneration Facility in 2005 and subsequent years.

The upgrades will be funded by a drawdown of the revolving credit facility established by the Fund in October 2003. Due to an extended maintenance period and plant shut down in the first quarter in 2003, the Island Cogeneration Facility operated at 97% and 67% availability and generated 440,849 MWh and 589,048 MWh, for the three and six months ended June 30, 2003.

Under the Island Cogeneration Facility Construction Contract with Alstom Canada Inc. ("Alstom"), there exist certain performance guarantees regarding plant availability during the first six years of operation. As a result of this extended maintenance period and plant shutdown in the first quarter of 2003, the actual plant availability for the first year of operations was below the guaranteed availability. Due to this guarantee, Alstom was contractually obligated to pay liquidating damages of $5.0 million, which the Partnership received in May 2003 and which were included as electricity and thermal revenue in the first quarter of 2003. No amounts have been received in 2004 with respect to the guarantees.

Pursuant to a settlement agreement with Alstom related to the Island Cogeneration Facility performance targets, the Partnership receives capital and operating expense services at no cash cost to the Partnership. As a result, electricity revenues of $0.7 million and $2.8 million, operating expenses of $0.2 million and $0.8 million and maintenance capital of $0.5 million and $2.0 million have been recognized in the consolidated financial statements of the Partnership for the three and six months ended June 30, 2004. For the same periods in 2003 the amounts were electricity revenues of $2.3 million and $3.4 million, operating expenses of $0.8 million and $1.1 million and maintenance capital of $1.5 million and $2.3 million.

Steam produced at the Island Cogeneration Facility is sold to Norske Skog Canada Limited ("Norske Skog"), a global supplier of newsprint and magazine printing papers. For the three and six months ended June 30, 2004, the Island Cogeneration Facility produced 157,622 GJ and 716,556 GJ of steam resulting in revenue of $1.1 million and $4.9 million. For the same periods in 2003 the Island Cogeneration Facility produced 546,101 GJ and 731,177 GJ of steam resulting in revenue of $3.7 million and $5.0 million. The decrease from the prior year is due to the maintenance and plant shutdown discussed earlier that occurred in the second quarter of 2004.

Operating and maintenance expense attributable to the Island Cogeneration Facility was $2.6 million and $5.2 million and depreciation expense was $2.5 million and $5.6 million for the three and six months ended June 30, 2004, respectively. For the same periods in 2003, the operating and maintenance expense attributable to the Island Cogeneration Facility was $2.5 million and $4.9 million and depreciation expense was $3.4 million and $5.3 million, respectively. Certain operating and maintenance expenses are paid by the Manager and reimbursed by the Partnership, in accordance with applicable agreements. At June 30, 2004 there was $0.4 million (Q2 2003 - $0.4 million) due to the Manager from the Partnership.

Calgary Energy Centre

The Calgary Energy Centre commenced operations on March 31, 2003. As a result, recognition of operations of the Calgary Energy Centre commenced during the second quarter of 2003. The Calgary Energy Centre is a natural gas-fired combined cycle plant located in Calgary, Alberta. The Calgary Energy Centre has a capacity of 300 MW, consisting of 250 MW of base capacity plus 50 MW of peaking capacity. The Calgary Energy Centre generated 171,168 MWh and 379,583 MWh for the three and six months ended June 30, 2004, and operated at 72% and 85% availability for the period. During the three and six months periods of 2003, the Calgary Energy Centre generated 136,400 MWh and operated at 97% availability.

Operating and maintenance expense attributable to the Calgary Energy Centre was $3.9 million and $6.0 million and depreciation expense was $2.2 million and $4.4 million for the three and six months ended June 30, 2004, respectively. For the same periods in 2003, the operating and maintenance expense attributable to the Calgary Energy Centre was $1.4 million and depreciation expense was $2.1 million. The increase over the prior year periods is due to additional costs as a result of planned maintenance that occurred in the second quarter 2004 as well as the extended operating period for the plant. Certain operating and maintenance expenses are paid by the Manager and reimbursed by the Partnership, in accordance with applicable agreements. At June 30, 2004 there was $1.5 million (Q2 2003 - $1.0 million) due to the Manager from the Partnership.

Summary of Quarterly Results --------------------- Calpine Power, L.P 2004 (in 000""s) (unaudited) --------------------- Revenues Q2 Q1 -------- ---------- ---------- Electricity and thermal $ 18,490 $ 26,757 Interest - Whitby 846 846 Interest - Other 72 68 --------------------- 19,408 27,671 --------------------- Expenses -------- Operating and maintenance 6,417 4,777 Depreciation 4,777 5,203 Accretion 47 46 General and administration 10 3 Interest 47 - Foreign exchange (209) (126) --------------------- 11,089 9,903 --------------------- Net earnings $ 8,319 $ 17,768 --------------------- --------------------- Net earnings per Unit: Class A Priority Unit $ 0.1102 $ 0.2550 --------------------- --------------------- Class B Subordinated Unit $ 0.1160 $ 0.2022 --------------------- --------------------- ------------------------------------------- Calpine Power, L.P 2003 (in 000""s) (restated)(2) (unaudited) ------------------------------------------- Revenues Q4 Q3 Q2 Q1 -------- ---------- ---------- ---------- ---------- Electricity and thermal $ 26,564 $ 23,828 $ 27,078 $ 9,385 Interest - Whitby 855 859 843 800 Interest - Other 81 288 411 356 ------------------------------------------- 27,500 24,975 28,332 10,541 ------------------------------------------- Expenses -------- Operating and maintenance 4,597 3,587 3,881 2,442 Depreciation 5,017 5,144 5,546 1,906 Accretion 43 43 43 20 General and administration 78 48 18 8 Interest - - - - Foreign exchange 184 - - - 9,919 8,822 9,488 4,501 ------------------------------------------- Net earnings $ 17,581 $ 16,153 $ 18,844 $ 6,165 ------------------------------------------- ------------------------------------------- Net earnings per Unit: Class A Priority Unit $ 0.2415 $ 0.2174 $ 0.2537 $ 0.0830 ------------------------------------------- ------------------------------------------- Class B Subordinated Unit $ 0.2254 $ 0.2174 $ 0.2537 $ 0.0830 ------------------------------------------- ------------------------------------------- --------------------- Calpine Power, L.P 2002 (in 000""s) (restated)(2) (unaudited) --------------------- Revenues Q4 Q3(1) -------- ---------- ---------- Electricity and thermal $ 13,236 $ 4,592 Interest - Whitby 819 293 Interest - Other 692 390 --------------------- 14,747 5,275 --------------------- Expenses -------- Operating and maintenance 2,061 1,471 Depreciation 2,276 483 Accretion 19 7 General and administration 145 28 Interest - - Foreign exchange - - --------------------- 4,501 1,989 --------------------- Net earnings $ 10,246 $3,286 --------------------- --------------------- Net earnings per Unit: Class A Priority Unit $ 0.1379 $ 0.0442 --------------------- --------------------- Class B Subordinated Unit $ 0.1379 $ 0.0442 --------------------- --------------------- (1) Operations for the three and six months ended September 30, 2002 only represent 33-days of operations from inception of the Partnership. (2) 2003 and 2002 have been restated for the retroactive application of the new CICA accounting standard, "Asset Retirement Obligations".

The Island Cogeneration Facility was shut down for planned and additional maintenance during the three months ended March 31, 2003. As a result, the plant""s availability was 34% and it generated only 148,199 MWh during that period. However, under the Island Cogeneration Facility Construction Contract with Alstom, there exist certain performance guarantees regarding plant availability during the first six years of operation. As a result of $5.0 million in liquidating damages being paid by Alstom under the terms of this guarantee, there was no financial impact of the maintenance and shutdown in the first quarter of 2003. Revenues for the three months ended June 30, 2003 include operations of the Calgary Energy Centre which commenced operations on March 31, 2003. Revenues for the three months ended September 30, 2003 were low due to two planned minor shutdowns at the Island Cogeneration Facility. Revenues for the three months ended June 30, 2004 were low due to planned major maintenance and capital upgrades at the Island Cogeneration Facility that resulted in a shutdown from mid-April to mid-June.

Operating and maintenance expense and depreciation expense include amounts attributable to the Calgary Energy Centre which commenced operations on March 31, 2003. Operating and maintenance expense for the three months ended December 31, 2003 was $1.0 million higher at the Calgary Energy Centre due to two minor plant shutdowns in the quarter; one planned for regular winter maintenance and one unplanned for steam turbine maintenance. Operating and maintenance expense for the three months ended March 31, 2004 include additional property taxes for the Calgary Energy Centre as construction of the plant is now complete. Operating and maintenance expense for the three months ended June 30, 2004 was higher due to additional expenses as a result of planned maintenance at both the Calgary Energy Centre and Island Cogeneration Facility in the quarter.

--------------------- Calpine Power Income Fund 2004 (in 000""s) (unaudited) --------------------- Revenues Q2(3) Q1 -------- ---------- ---------- Equity Earnings from Calpine Power, L.P. $ 5,378 $ 13,262 Finance income 6,577 - Rental income 25 - Interest income 1,582 - 13,562 13,262 --------------------- Expenses -------- Initial lease costs 4,191 - Management and administrative 357 458 Interest on long-term debt 1,671 - Interest 170 136 Amortization 311 276 Accretion 20 - Future income taxes 400 - Foreign exchange loss 11 - --------------------- 7,131 870 --------------------- Net earnings $ 6,431 $ 12,392 --------------------- --------------------- Net earnings per Trust Unit $ 0.1138 $ 0.2383 --------------------- --------------------- ------------------------------------------- Calpine Power Income Fund 2003 (in 000""s) (restated)(2) (unaudited) ------------------------------------------- Revenues Q4 Q3 Q2 Q1 -------- ---------- ---------- ---------- ---------- Equity Earnings from Calpine Power, L.P. $ 12,563 $ 11,312 $ 13,196 $ 4,299 Finance income - - - - Rental income - - - - Interest income 15 6 - - 12,578 11,318 13,196 4,299 Expenses -------- Initial lease costs Management and administrative 529 1,153 338 438 Interest on long-term debt - - - - Interest 134 - - - Amortization 271 - - - Accretion - - - - Future income taxes - - - - Foreign exchange loss - - - - ------------------------------------------- 934 1,153 338 438 ------------------------------------------- Net earnings $ 11,644 $ 10,165 $ 12,858 $ 3,861 ------------------------------------------- ------------------------------------------- Net earnings per Trust Unit $ 0.2239 $ 0.1955 $ 0.2472 $ 0.0742 ------------------------------------------- ------------------------------------------- --------------------- Calpine Power Income Fund 2002 (in 000""s) (restated)(2) (unaudited) --------------------- Revenues Q4 Q3(1) -------- ---------- ---------- Equity Earnings from Calpine Power, L.P. $ 7,172 $ 2,301 Finance income - - Rental income - - Interest income 2 7 --------------------- 7,174 2,308 --------------------- Expenses -------- Initial lease costs - - Management and administrative 519 14 Interest on long-term debt - - Interest - - Amortization - - Accretion - - Future income taxes - - Foreign exchange loss - - ----------------------- 519 14 ----------------------- Net earnings $ 6,655 $ 2,294 ----------------------- ----------------------- Net earnings per Trust Unit $ 0.1280 $ 0.0441 ----------------------- ----------------------- (1) Operations for the three and six months ended September 30, 2002 only represent 33-days of operations from inception of the Fund. (2) 2003 and 2002 have been restated for the retroactive application of the new CICA accounting standard, "Asset Retirement Obligations". (3) Operations for the three months ended June 30, 2004 include revenues and expenses as a result of the King City transaction, which closed in May 2004.

Management and administrative expenses for the three months ended September 30, 2003 include a $520 thousand management incentive fee related to excess distributions.

Interest expense is comprised of interest on the non-recourse loan facility provided by a third party, which was used to purchase the King City Facility in May 2004, and interest and standby fees related to the $120 million credit facility obtained in October 2003 by the Fund. During the second quarter of 2004, $8.0 million was borrowed under this facility to fund the Island Cogeneration Facility upgrade thereby causing the interest to increase. Amortization expense relates to the amortization of deferred financing costs associated with the credit facility and, commencing in the second quarter of 2004, also includes the amortization of deferred financing costs associated with the third party loan. Initial lease costs and finance income in the same amount have been recognized in the second quarter of 2004. Interest income for the second quarter 2004 included $1.5 million in interest on the loan to the Manager.

Future income tax expense is entirely related to the earnings of King City LP, a wholly-owned subsidiary of the Fund, which will be taxable in the United States of America.

LIQUIDITY AND CAPITAL RESOURCES (unaudited) Contractual 2004 2005 2006 2007 2008 2009 Total Obligations and (in 000""s) Beyond ------------------------------------------------------------------------- In Canadian $ Island Cogene- ration Facility land lease $ 30 $ 30 $ 30 $ 30 $ 30 $ 870 $ 1,020 Asset retirement liability Calpine Power, L.P. - - - - - 36,612 36,612 ------------------------------------------------------------------------- In US $ Calgary Energy Centre - LTSA $ 242 $ 669 $ 2,580 $ 7,130 $ 812 $15,993 $27,426 Asset retirement liability King City Facility - - - - - 7,610 7,610 Long-term debt 8,771 20,191 17,066 15,004 12,504 85,749 159,285 -------------------------------------------------------------------------

A cash reserve of $111.0 million was established in the Partnership on August 29, 2002 to cover the construction costs to complete the Calgary Energy Centre. During the first quarter of 2004, in accordance with applicable agreements, the remaining construction reserve balance of $1.7 million was paid to the Manager as a special distribution and the construction reserve account was closed.

The Calgary Energy Centre and the Island Cogeneration Facility are each required to make payments in accordance with LTSA""s for annual plant maintenance. Amounts paid in accordance with these agreements for the three months ended June 30, 2004 were $645 thousand (Q2 2003 - $420 thousand) for the Calgary Energy Centre and $204 thousand (Q2 2003 - $210 thousand) for the Island Cogeneration Facility. Future commitments relating to the Island LTSA have a significant variable portion that cannot be reasonably estimated. Additionally, due to the settlement agreement with Alstom, the Partnership will not be required to make significant cash payments for approximately five to seven years.

In accordance with applicable agreements, at June 30, 2004 the Partnership had a receivable of $195 thousand (Q2 2003 - nil) due from CEHL in respect of a heat rate penalty payable to BC Hydro.

In October 2003, the Fund, through its wholly-owned subsidiary, CCT, obtained a $120 million extendible revolving term credit facility. The credit facility has a three year term, comprised of a two year revolving period followed by a one year term period. The credit facility is split into two tranches. One tranche of $90 million is available only to finance acquisitions and the second tranche of $30 million is available for acquisitions as well as for general corporate purposes.

During the second quarter of 2004, $8.0 million was borrowed under the second tranche of this facility and remains outstanding at June 30, 2004. These funds were advanced to Calpine Power, L.P. to fund the capital upgrades at the Island Cogeneration Facility. Costs of $3.3 million related to establishing the credit facility have been deferred and are amortized over a three year term commencing October 2003.

As part of the acquisition of the King City Facility, trust accounts with a third-party depositary were established to ensure revenues earned by Calpine King City, after payment of operating, fuel and major maintenance expenses, are applied to satisfy loan obligations on the non-recourse long-term debt provided by a third party and to satisfy lease payment obligations under the lease of the King City Facility, in priority to any distributions being made to Calpine King City. Under the applicable lease and loan agreements, payments will be made on December 31st of each year, commencing December 31, 2004.

Concurrent with the closing of the acquisition of the King City Facility, the Fund used a portion of the proceeds of the public offering to purchase a promissory note from the Manager for $48.0 million, which promissory note has a stated face value of approximately $53.4 million. This loan will mature in 2010 and bear interest at a rate of 13% per annum with principal and interest payments payable monthly.

The Fund has not entered into any off-balance sheet arrangements. Distributable Cash and Distributions

Distributable Cash is not a measure under Canadian generally accepted accounting principles and there is no standardized measure of Distributable Cash. Distributable Cash, as presented, may not be comparable to similar measures presented by other companies. Distributable Cash has been presented to assist readers of these consolidated financial statements in determining possible future cash distributions.

Distributable Cash generated by the Fund totaled $14.0 million and $26.3 million or $0.2476 and $0.4850 per Trust Unit for the three and six months ended June 30, 2004. For the same periods in 2003 the Fund generated distributable cash of $12.2 million and $24.5 million or $0.2355 and $0.4710 per unit. The Fund pays monthly cash distributions to Unitholders on or about the 20th day of each month following the record date. The Fund intends to establish a Distribution Levelization Reserve, the initial purpose of which will be to levelize, over the long-term, the distributions paid by the Fund to Unitholders in respect of KCLP, so as to enable the Fund to provide stable and sustainable distributions to the Unitholders. The CCT Trustees intend to annually increase or decrease the reserve with long-term consideration given to the expected distributions receivable from the Fund""s indirect investment in KCLP and the commitment to provide a priority entitlement of Distributable Cash to the Fund""s Unitholders, taking into account the intention to increase distributions to the Unitholders by 1% annually.

CCT, as the holder of Class A Priority Units in the Partnership, must be paid before the Manager receives distributions on its Class B Subordinated Units. The Class B Subordinated Units represent a 30% economic interest in the Island Cogeneration Facility, the Calgary Energy Centre and the Whitby Loan and their entitlement to distributions is subordinated to that of Class A Priority Unitholders until 2022. The target distribution per Trust Unit increases annually by 1%. With the successful close of the King City Transaction in May 2004, the target distribution per Trust Unit is $0.96 per Trust Unit for calendar year 2004.

Under the Calgary Energy Tolling Agreement, as pre-payment for the provision of future tolling services of the Calgary Energy Centre, Calpine Energy Services Canada Partnership ("CESCP"), a wholly-owned partnership of Calpine, had been required to pay to the Calgary Energy Centre Limited Partnership a monthly amount equivalent to the fixed charge component of the monthly tolling fee until COD of the Calgary Energy Centre. Payments of $9.5 million were received for the three and six months ended June 30, 2003. For the same period in 2004, there were no payments under this agreement. As a result of the Calgary Energy Centre declaring commercial operations on March 31, 2003, no further payments were received pursuant to this pre-Tolling Arrangement, and the tolling agreement is now in effect. The Calgary Energy Tolling Agreement is a 20-year contract, similar in terms to the Island Electricity Purchase Agreement and under which CESCP is required to deliver all fuel required to operate the Facility and is, in turn, obligated to pay for all electricity generated or deemed to have been made available.

The Fund declared a cash distribution of $5.0 million or $0.081 per Trust Unit for the period from June 1 to June 30, 2004. The cash distribution was paid July 20, 2004 to Unitholders of record on June 30, 2004. The Fund also declared a cash distribution of $5.0 million or $0.081 per Trust Unit for July 2004. This cash distribution will be paid on August 20, 2004 to Unitholders of record on July 30, 2004.

Tax Treatment of Distributions

For Canadian tax purposes, the taxable amounts of distributions to the Fund""s Unitholders in 2003 was 1.59%. The remaining amount of the distributions reduced the adjusted cost base of the Trust Units, thereby providing a significant tax deferral for the Unitholders. The tax deferral arose primarily due to the ability of the Partnership to shelter its taxable income with capital cost allowance claims on the Facilities. As a result, distributions from the Partnership to the Fund were a return of capital rather than an allocation of income. In 2004, the taxable amount of distributions is estimated to be less than 20%. The Manager anticipates that a higher proportion of Distributable Cash of the Fund in the future will be included in the income of the Unitholders for income tax purposes. Any Fund acquisitions could serve to extend or reduce the tax-deferred horizon. The Fund recommends that Unitholders consult their tax advisors regarding the tax implications of their investment in Trust Units.

Cash Reserves

Several cash reserves were established in the Partnership to fund significant expenditures and limit potential business risks of the Partnership. A cash reserve of $111.0 million was established in a segregated account of the Partnership at August 29, 2002 to meet the remaining construction costs of the Calgary Energy Centre. This amount was used to reimburse expenditures incurred by the Manager in connection with the completion of the Calgary Energy Centre. During the third quarter of 2003, $18.2 million of the construction reserve balance was returned to the Manager as a special distribution, in accordance with applicable agreements. During the first quarter of 2004, the remaining construction reserve balance of $1.7 million was returned to the Manager and the construction account was closed. As part of the King City Transaction, the Fund deposited US$4.6 million (Cdn$6.2 million) of the funds received from the offering into a segregated account. This cash amount will be used to partially satisfy its obligations on the third party long-term debt for the principal and interest payments under the terms of the debt, beginning on December 31, 2005.

As of June 30, 2004, an unsegregated cash reserve of $4.0 million (June 30, 2003 - $7.7 million) has also been accumulated to partially fund future maintenance costs.

NEW ACCOUNTING PRONOUNCEMENTS

In December 2002, the Canadian Institute of Chartered Accountants ("CICA") issued the new standard 3110 "Asset Retirement Obligations". This standard requires recognition of a liability for the future retirement obligations associated with property, plant and equipment. These obligations are initially measured at fair value, which is the discounted future cost of the liability. This fair value is capitalized as part of the cost of the related asset and amortized to expense over its useful life. The liability accretes until the date of expected settlement of the retirement obligations. The new standard is effective for all fiscal years beginning on or after January 1, 2004. The Partnership has adopted this standard as of January 1, 2004. The effect of this change in accounting policy was recorded retroactively with the restatement of prior periods. The impact of the adoption of the new standard is disclosed in Note 1 of the Fund""s and the Partnership""s consolidated financial statements.

FORECASTS

Forecasts of the Fund and the Partnership for the twelve months ending March 31, 2005 were prepared and included in the prospectus issued in respect of the acquisition of the King City Facility. The financial results of the Fund and the Partnership for the three months ended June 30, 2004 compare favorably to these forecasts, from the closing of the transaction on May 19, 2004 through June 30, 2004.

OUTLOOK

The Fund is focused on increasing distributions to Unitholders by optimizing the operations of its plants and by pursuing accretive acquisitions. In accordance with this strategy, the Fund completed the acquisition of the King City Facility during the quarter resulting in increased distributions of 2.5% for all Unitholders beginning with the distribution in respect of June 2004.

The Fund""s results were reduced for the quarter, as expected, due to the major maintenance and planned upgrades for the Island Cogeneration Facility. The upgrades consisted of compressor blade modifications, an air intake upgrade with improved air filtration, and installation of a glycol freeze protection system with the purpose of improving facility output deliverable under the terms of the existing Electricity Purchase Agreement with BC Hydro. The upgrades were successfully completed on time and under budget. The Fund expects to continue generating stable earnings and to pay all Trust Unit distributions for the remainder of 2004.

FORWARD-LOOKING INFORMATION

Certain information in this Management""s Discussion and Analysis is forward-looking and subject to risks and uncertainties. The results or events predicted in this information may differ from actual results or events. Factors which could cause actual results or events to differ materially from current expectations include, among other things, the ability of the Fund and the Partnership to successfully implement the Fund""s strategic initiatives and whether such strategic initiatives will yield the expected benefits, the availability and price of energy commodities, regulatory decisions, competitive factors in the power industry, and the prevailing economic conditions in North America. The Fund and the Partnership each disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Calpine Power Income Fund is an unincorporated open-ended trust that invests in electrical power assets. The Fund indirectly owns interests in three power plants; one in British Columbia, one in Alberta, and one in California. In addition, the Fund also has a loan interest in a power plant in Ontario. The Fund is managed by Calpine Canada Power Ltd., which is headquartered in Calgary, Alberta.

The Calpine Power Income Fund units are listed on the Toronto Stock Exchange under the symbol CF.UN.

CALPINE POWER INCOME FUND CONSOLIDATED BALANCE SHEETS (thousands) (unaudited) As at As at December 31, 2003 June 30, 2004 (restated - Note 1) ------------------------------------------------------------------------- ASSETS Current Assets Cash and Cash Equivalents $ 2,956 $ 37 Restricted Cash (Note 5) 6,227 - Distributions Receivable 4,122 4,763 Accounts Receivable 77 71 Loan to Calpine Canada Power Ltd., current portion (Note 3) 9,532 - Net Investment in Lease, current portion (Note 4) 7,476 - Loan to Calpine Power, L.P. (Note 6) 7,993 - Prepaids 54 212 ------------ ------------ 38,437 5,083 Loan to Calpine Canada Power Ltd., less current portion (Note 3) 36,782 - Deferred Financing Costs (Notes 5 and 6) 4,544 3,002 Net Investment in Lease, less current portion (Note 4) 147,850 - Land 1,870 - Investment in Calpine Power, L.P. (Notes 1 and 7) 475,605 484,734 ------------ ------------ $ 705,088 $ 492,819 ------------ ------------ ------------ ------------ LIABILITIES AND UNITHOLDERS"" EQUITY Current Liabilities Distributions Payable $ 5,001 $ 4,082 Accounts Payable 2,625 3,736 Long-term debt, current portion (Note 5) 3,092 - Borrowing under Credit Facility (Note 6) 8,000 - ------------ ------------ 18,718 7,818 Future Income Tax 395 - Asset Retirement Liability (Note 8) 1,391 - Long-term debt, less current portion (Note 5) 107,226 - ------------ ------------ 127,730 7,818 Unitholders"" Equity (Notes 1 and 9) 577,358 485,001 ------------ ------------ $ 705,088 $ 492,819 ------------ ------------ ------------ ------------ See accompanying notes to the consolidated financial statements CALPINE POWER INCOME FUND CONSOLIDATED STATEMENTS OF EARNINGS AND UNITHOLDERS"" EQUITY (thousands, except for Trust Units and per Trust Unit amounts) (unaudited) Three months Six months ended June ended June Three months 30, 2003 Six months 30, 2003 ended June (restated - ended June (restated - 30, 2004 Note 1) 30, 2004 Note 1) ------------------------------------------------------------------------- REVENUES Equity earnings from Calpine Power, L.P. (Note 1) $ 5,378 $ 13,196 $ 18,640 $ 17,495 Finance income 6,577 - 6,577 - Rental income 25 - 25 - Interest income 1,582 - 1,582 - ------------ ------------ ------------ ------------ 13,562 13,196 26,824 17,495 ------------ ------------ ------------ ------------ EXPENSES Initial lease costs 4,191 - 4,191 - Management and administrative 357 338 815 776 Interest on long- term debt 1,671 - 1,671 - Interest 170 - 306 - Amortization 311 - 587 - Accretion 20 - 20 - Foreign exchange loss 11 - 11 - ------------ ------------ ------------ ------------ 6,731 338 7,601 776 ------------ ------------ ------------ ------------ EARNINGS BEFORE INCOME AND OTHER TAXES 6,831 12,858 19,223 16,719 ------------ ------------ ------------ ------------ Future income taxes 400 - 400 - ------------ ------------ ------------ ------------ NET EARNINGS 6,431 12,858 18,823 16,719 UNITHOLDERS"" EQUITY, BEGINNING OF PERIOD 485,069 488,173 485,167 496,523 Adjustment for adoption of new accounting policy (Note 1) - (59) (166) (24) Trust Units issued (Note 2 and 9) 99,845 - 99,845 - Distributions (13,987) (12,246) (26,311) (24,492) ------------ ------------ ------------ ------------ UNITHOLDERS"" EQUITY, END OF PERIOD $ 577,358 $ 488,726 $ 577,358 $ 488,726 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Number of Trust Units outstanding 61,742,288 52,001,351 61,742,288 52,001,351 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Net earnings per Trust Unit (Note 9) $ 0.1138 $ 0.2472 $ 0.3470 $ 0.3214 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Distributable Cash and Distributable Cash Per Trust Unit - See Note 10 See accompanying notes to the consolidated financial statements CALPINE POWER INCOME FUND CONSOLIDATED STATEMENTS OF CASH FLOWS (thousands) (unaudited) Three months Six months ended June ended June Three months 30, 2003 Six months 30, 2003 ended June (restated - ended June (restated - 30, 2004 Note 1) 30, 2004 Note 1) ------------------------------------------------------------------------- OPERATING ACTIVITIES Net earnings $ 6,431 $ 12,858 $ 18,823 $ 16,719 Adjustments for non-cash items: Equity earnings from Calpine Power, L.P. (Note 1) (5,378) (13,196) (18,640) (17,495) Finance income (2,386) - (2,386) - Amortization expense 311 - 587 - Rental income (25) - (25) - Amortization of discount loan to Calpine Canada Power Ltd. (349) - (349) - Accretion expense 20 - 20 - Future income tax 400 - 400 - Unrealized foreign exchange loss 11 - 11 - Distributions received from Calpine Power, L.P. 12,223 12,271 28,410 25,843 Change in non-cash working capital (Note 11) 2,709 412 (478) 397 ------------ ------------ ------------ ------------ Net cash provided by operating activities 13,967 12,345 26,373 25,464 ------------ ------------ ------------ ------------ INVESTING ACTIVITIES Acquisition of King City Facility Lease and Land (154,658) - (154,658) - Loan to Calpine Canada Power Ltd. (47,968) - (47,968) - Receipt of principal on loan to Calpine Canada Power Ltd. 2,003 - 2,003 - Loan to Calpine Power, L.P. (7,993) - (7,993) - ------------ ------------ ------------ ------------ Net cash used in investing activities (208,616) (208,616) ------------ ------------ ------------ ------------ FINANCING ACTIVITIES Issue of long-term debt 111,111 - 111,111 - Financing costs (2,060) - (2,131) - Borrowing under credit facility 8,000 - 8,000 - Trust Units issued 99,845 - 99,845 - Distributions (13,094) (12,246) (25,392) (25,350) ------------ ------------ ------------ ------------ Net cash provided by (used in) financing activities 203,802 (12,246) 191,433 (25,350) ------------ ------------ ------------ ------------ Foreign exchange loss on cash held in a foreign currency (44) - (44) - ------------ ------------ ------------ ------------ INCREASE IN CASH AND CASH EQUIVALENTS 9,109 99 9,146 114 Cash and Cash Equivalents, beginning of period 74 25 37 10 ------------ ------------ ------------ ------------ Cash and Cash Equivalents, end of period $ 9,183 $ 124 $ 9,183 $ 124 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Represented by: Cash and Cash Equivalents $ 2,956 $ 124 $ 2,956 $ 124 Restricted Cash 6,227 - 6,227 - ------------ ------------ ------------ ------------ Balance at June 30 $ 9,183 $ 124 $ 9,183 $ 124 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ SUPPLEMENTARY CASH FLOW INFORMATION Taxes paid $ - $ - $ - $ - Interest received $ 1,146 $ - $ 1,146 $ - Interest paid $ 175 $ - $ 309 $ - See accompanying notes to the consolidated financial statements

Calpine Power Income Fund
Aktuell, seriös und kostenlos: Der ECOreporter-Newsletter. Seit 1999.
Nach oben scrollen
ECOreporter Journalistenpreise
Anmelden
x