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Calpine Reports Fourth Quarter And Full Year 2012 Results, Raises Adjusted Free Cash Flow Per Share Guidance And Increases Share Repurchase Authorization By $400 Million

(1) Includes projected major maintenance expense of $210 million and maintenance capital expenditures of $160 million. Capital expenditures exclude major construction and development projects. 2013 figures exclude non-recurring IT system upgrade.

(2) Includes commitment, letter of credit and other bank fees from both consolidated and unconsolidated investments, net of capitalized interest and interest income.

As detailed above, today we are reaffirming our 2013 guidance. We project Adjusted EBITDA of $1,760 million to $1,960 million and Adjusted Free Cash Flow of $575 million to $775 million. Our guidance reflects all previously announced acquisition and divestiture activity, including the sales of Broad River and Riverside Energy Centers, and the purchase of Bosque Energy Center, each of which closed during the fourth quarter of 2012. We also expect to invest $250 million, net of debt funding, in growth-related projects during the year, including our Garrison Energy Center development project and the expansion of our Deer Park and Channel Energy Centers. (Though our construction projects at Russell City and Los Esteros continue into 2013, we met our equity contribution requirements on these projects in 2011, such that all costs incurred in 2013 will be funded from the project debt we have secured for these projects.)

INVESTOR CONFERENCE CALL AND WEBCAST

We will host a conference call to discuss our financial and operating results for the fourth quarter and full year 2012 on Wednesday, February 13, 2013, at 10 a.m. ET / 9 a.m. CT. A listen-only webcast of the call may be accessed through our website at www.calpine.com, or by dialing (800) 447-0521 in the U.S. or (847) 413-3238 outside the U.S. The confirmation code is 34044836. An archived recording of the call will be made available for a limited time on our website or by dialing (888) 843-7419 in the U.S. or (630) 652-3042 outside the U.S. and providing confirmation code 34044836. Presentation materials to accompany the conference call will be available on our website on February 13, 2013.

INVESTOR DAY

Calpine will be hosting an investor and analyst meeting on Wednesday, April 10, 2013, from 1 p.m. to 5 p.m. CT in Houston, Texas. Members of the Calpine management team will present their views on the company and its markets and provide updates on financial, regulatory and strategic initiatives. More information about the event, including online registration and a link to the live webcast, can be found on the Investor Relations section of our website at www.calpine.com.

ABOUT CALPINE

Calpine Corporation generates more electricity than any other independent power producer in America, with a fleet of 92 power plants in operation or under construction, representing more than 27,000 megawatts of generation capacity in operation. Serving customers in 20 states and Canada, we specialize in developing, constructing, owning and operating natural gas-fired and renewable geothermal power plants that use advanced technologies to generate power in a low-carbon and environmentally responsible manner. Our clean, efficient, modern and flexible fleet is uniquely positioned to benefit from the secular trends affecting our industry, including the abundant and affordable supply of clean natural gas, stricter environmental regulation, aging power generation infrastructure and the increasing need for dispatchable power plants to successfully integrate intermittent renewables into the grid. We focus on wholesale competitive power markets and advocate for market-driven solutions that result in nondiscriminatory forward price signals for investors. Please visit www.calpine.com to learn more about why Calpine is a generation ahead - today.

Calpine’s Annual Report on Form 10-K for the year ended December 31, 2012, has been filed with the Securities and Exchange Commission (SEC) and may be found on the SEC’s website at www.sec.gov.

FORWARD-LOOKING INFORMATION

In addition to historical information, this release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act. Forward-looking statements may appear throughout this release. We use words such as “believe,” “intend,” “expect,” “anticipate,” “plan,” “may,” “will,” “should,” “estimate,” “potential,” “project” and similar expressions to identify forward-looking statements. Such statements include, among others, those concerning our 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:

  • Financial results that may be volatile and may not reflect historical trends due to, among other things, fluctuations in prices for commodities such as natural gas and power, changes in U.S. macroeconomic conditions, fluctuations in liquidity and volatility in the energy commodities markets and our ability to hedge risks;
  • Laws, regulation and market rules in the markets in which we participate and our ability to effectively respond to changes in laws, regulations or market rules or the interpretation thereof including those related to the environment, derivative transactions and market design in the regions in which we operate;
  • Our ability to manage our liquidity needs and to comply with covenants under our First Lien Notes, Corporate Revolving Facility, First Lien Term Loans, CCFC Notes and other existing financing obligations;
  • Risks associated with the operation, construction and development of power plants including unscheduled outages or delays and plant efficiencies;
  • Risks related to our geothermal resources, including the adequacy of our steam reserves, unusual or unexpected steam field well and pipeline maintenance requirements, variables associated with the injection of wastewater to the steam reservoir and potential regulations or other requirements related to seismicity concerns that may delay or increase the cost of developing or operating geothermal resources;
  • The unknown future impact on our business from the Dodd-Frank Act and the rules to be promulgated thereunder;
  • Competition, including risks associated with marketing and selling power in the evolving energy markets;
  • The expiration or early termination of our PPAs and the related results on revenues;
  • Future capacity revenues may not occur at expected levels;
  • Natural disasters, such as hurricanes, earthquakes and floods, acts of terrorism or cyber attacks that may impact our power plants or the markets our power plants serve and our corporate headquarters;
  • Disruptions in or limitations on the transportation of natural gas, fuel oil and transmission of power;
  • Our ability to manage our customer and counterparty exposure and credit risk, including our commodity positions;
  • Our ability to attract, motivate and retain key employees;
  • Present and possible future claims, litigation and enforcement actions; and
  • Other risks identified in this press release and in our 2012 Form 10-K.

Given the risks and uncertainties surrounding forward-looking statements, you should not place undue reliance on these statements. Many of these factors are beyond our ability to control or predict. Our forward-looking statements speak only as of the date of this release. Other than as required by law, we undertake no obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise.

CALPINE CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except share and per share amounts)

 
  (Unaudited)    
Three Months Ended December 31, Year Ended December 31,
2012   2011 2012 2011
Operating revenues:
Commodity revenue $ 1,339 $ 1,477 $ 5,417 $ 6,753
Unrealized mark-to-market gain (loss) 24 (21 ) 48 35
Other revenue 4   3   13   12  
Operating revenues 1,367   1,459   5,478   6,800  
Operating expenses:
Fuel and purchased energy expense:
Commodity expense 821 924 2,894 4,299
Unrealized mark-to-market (gain) loss 57   (43 ) 130   60  
Fuel and purchased energy expense 878   881   3,024   4,359  
Plant operating expense 223 193 922 904
Depreciation and amortization expense 144 145 562 550
Sales, general and other administrative expense 36 32 140 131
Other operating expenses 20   21   78   77  
Total operating expenses 1,301   1,272   4,726   6,021  
(Gain) on sale of assets, net (222 ) (222 )
(Income) from unconsolidated investments in power plants (7 ) (9 ) (28 ) (21 )
Income from operations 295 196 1,002 800
Interest expense 184 185 736 760
(Gain) loss on interest rate derivatives (4 ) 14 145
Interest (income) (4 ) (2 ) (11 ) (9 )
Debt extinguishment costs 18 30 94
Other (income) expense, net 1   7   15   21  
Income (loss) before income taxes 96 10 218 (211 )
Income tax expense (benefit) (4 ) 23   19   (22 )
Net income (loss) 100 (13 ) 199 (189 )
Net income attributable to the noncontrolling interest       (1 )
Net income (loss) attributable to Calpine $ 100   $ (13 ) $ 199   $ (190 )
 
Basic earnings (loss) per common share attributable to Calpine:
Weighted average shares of common stock outstanding (in thousands) 459,304   482,468   467,752   485,381  
Net income (loss) per common share attributable to Calpine — basic $ 0.22   $ (0.03 ) $ 0.43   $ (0.39 )
 
Diluted earnings (loss) per common share attributable to Calpine:
Weighted average shares of common stock outstanding (in thousands) 463,291   482,468   471,343   485,381  
Net income (loss) per common share attributable to Calpine — diluted $ 0.22   $ (0.03 ) $ 0.42   $ (0.39 )
 
 

CALPINE CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

December 31, 2012 and 2011

(in millions, except share and per share amounts)

 
  2012   2011
ASSETS
Current assets:
Cash and cash equivalents $ 1,284 $ 1,252
Accounts receivable, net of allowance of $6 and $13 437 598
Margin deposits and other prepaid expense 244 193
Restricted cash, current 193 139
Derivative assets, current 339 1,051
Inventory and other current assets 335   329  
Total current assets 2,832 3,562
Property, plant and equipment, net 13,005 13,019
Restricted cash, net of current portion 60 55
Investments 81 80
Long-term derivative assets 98 113
Other assets 473   542  
Total assets $ 16,549   $ 17,371  
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 382 $ 435
Accrued interest payable 180 200
Debt, current portion 115 104
Derivative liabilities, current 357 1,144
Income taxes payable 11 3
Other current liabilities 273   276  
Total current liabilities 1,318 2,162
Debt, net of current portion 10,635 10,321
Long-term derivative liabilities 293 279
Other long-term liabilities 247   245  
Total liabilities 12,493 13,007
 
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value per share; authorized 100,000,000 shares, none issued and outstanding at December 31, 2012 and 2011
Common stock, $0.001 par value per share; authorized 1,400,000,000 shares, 492,495,100 shares issued and 457,048,970 shares outstanding at December 31, 2012, and 490,468,815 shares issued and 481,743,738 shares outstanding at December 31, 2011 1 1
Treasury stock, at cost, 35,446,130 and 8,725,077 shares, respectively (594 ) (125 )
Additional paid-in capital 12,335 12,305
Accumulated deficit (7,500 ) (7,699 )
Accumulated other comprehensive loss (248 ) (178 )
Total Calpine stockholders’ equity 3,994 4,304
Noncontrolling interest 62   60  
Total stockholders’ equity 4,056   4,364  
Total liabilities and stockholders’ equity $ 16,549   $ 17,371  
 
 

CALPINE CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2012 and 2011

(in millions)

 
  2012   2011
Cash flows from operating activities:
Net income (loss) $ 199 $ (189 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense (1) 605 587
Debt extinguishment costs 82
Deferred income taxes 1 (21 )
(Gain) loss on sale of power plants and other, net (212 ) 13
Unrealized mark-to-market (gain) loss (72 ) (30 )
(Income) from unconsolidated investments in power plants (28 ) (21 )
Return on unconsolidated investments in power plants 24 6
Stock-based compensation expense 25 24
Other 1 6
Change in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable 159 74
Derivative instruments, net (52 ) 15
Other assets (57 ) 1
Accounts payable and accrued expenses (86 ) 28
Settlement of non-hedging interest rate swaps 156 189
Other liabilities (10 ) 11  
Net cash provided by operating activities 653   775  
Cash flows from investing activities:
Purchases of property, plant and equipment (637 ) (683 )
Proceeds from sale of power plants, interests and other 825 13
Purchase of Bosque Energy Center, net of cash (432 )
Return of investment from unconsolidated investments 5
Settlement of non-hedging interest rate swaps (156 ) (189 )
(Increase) decrease in restricted cash (59 ) 54
Purchases of deferred transmission credits (12 ) (31 )
Other (4 )  
Net cash used in investing activities

 

(470 )

 

(836 )
Cash flows from financing activities:
Borrowings under First Lien Term Loans 835 1,657
Repayments of First Lien Term Loans (19 )
Repayments on NDH Project Debt (1,283 )
Issuance of First Lien Notes 1,200
Repayments of First Lien Notes (590 )
Repayments on First Lien Credit Facility (1,195 )
Borrowings from project financing, notes payable and other 389 327
Repayments of project financing, notes payable and other (289 ) (550 )
Capital contributions from noncontrolling interest holder 33
Financing costs (20 ) (81 )
Stock repurchases (463 ) (119 )
Other 6   (3 )
Net cash used in financing activities (151 ) (14 )
Net increase (decrease) in cash and cash equivalents 32 (75 )
Cash and cash equivalents, beginning of period 1,252   1,327  
Cash and cash equivalents, end of period $ 1,284   $ 1,252  
 
Cash paid during the period for:
Interest, net of amounts capitalized $ 719 $ 656
Income taxes $ 16 $ 18
 
Supplemental disclosure of non-cash investing and financing activities:
Change in capital expenditures included in accounts payable $ 19 $ (24 )
Other non-cash additions to property, plant and equipment $ 13 $

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