(Mark
One)
|
||
[X]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the quarterly period ended September 30,
2007
|
or
|
[ ]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
Page
|
|
PART I — FINANCIAL
INFORMATION
|
|
Item 1. Financial
Statements
|
|
Consolidated
Condensed Balance Sheets at September 30, 2007 and December 31,
2006
|
|
Consolidated
Condensed Statements of Operations for the Three and Nine Months
Ended
September 30, 2007 and 2006
|
|
Consolidated
Condensed Statements of Cash Flows for the Nine Months Ended
September 30, 2007 and 2006
|
|
Notes
to Consolidated Condensed Financial Statements
|
|
1. Basis
of Presentation and Summary of Significant Accounting
Policies
|
|
2. Chapter 11
Cases and Related Disclosures
|
|
3. Property,
Plant and Equipment, Net and Capitalized Interest
|
|
4. Investments
|
|
5. Asset
Sales
|
|
6. Comprehensive
Income (Loss)
|
|
7. Debt
|
|
8. Derivative
Instruments
|
|
9. Earnings
(Loss) Per Share
|
|
10. Commitments
and Contingencies
|
|
Item
2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations
|
|
Forward-Looking
Information
|
|
Executive
Overview
|
|
Results
of Operations
|
|
Non-GAAP
Financial Measures
|
|
Operating
Performance Metrics
|
|
Liquidity
and Capital Resources
|
|
Recent
Regulatory Developments
|
|
Financial
Market Risks
|
|
Recent
Accounting Pronouncements
|
|
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
|
|
Item
4. Controls and Procedures
|
|
PART
II — OTHER INFORMATION
|
|
Item
1. Legal Proceedings
|
|
Item
3. Defaults Upon Senior Securities
|
|
Item
5. Other Information
|
|
Item
6. Exhibits
|
|
Signatures
|
ABBREVIATION
|
DEFINITION
|
|
2006
Form 10-K
|
Calpine
Corporation’s Annual Report on Form 10-K for the year ended
December 31, 2006, filed with the SEC on
March 14, 2007
|
|
2014
Convertible Notes
|
Calpine
Corporation’s Contingent Convertible Notes Due 2014
|
|
2015
Convertible Notes
|
Calpine
Corporation’s 7 3/4% Contingent Convertible Notes Due
2015
|
|
2023
Convertible Notes
|
Calpine
Corporation’s 4 3/4% Contingent Convertible Senior Notes Due
2023
|
|
345(b)
Waiver Order
|
Order,
dated May 4, 2006, pursuant to Section 345(b) of the Bankruptcy Code
authorizing continued use of existing investment guidelines and continued
operation of certain bank accounts
|
|
401(k)
Plan
|
Calpine
Corporation Retirement Savings Plan
|
|
Acadia
PP
|
Acadia
Power Partners, LLC
|
|
AOCI
|
Accumulated
Other Comprehensive Income
|
|
APH
|
Acadia
Power Holdings, LLC, a wholly owned subsidiary of Cleco
|
|
Bankruptcy
Code
|
U.S.
Bankruptcy Code
|
|
Bankruptcy
Courts
|
The
U.S. Bankruptcy Court and the Canadian Court
|
|
BLM
|
Bureau
of Land Management of the U.S. Department of the
Interior
|
|
Btu(s)
|
British
thermal unit(s)
|
|
CAA
|
Federal
Clean Air Act of 1970
|
|
Calgary
Energy Centre
|
Calgary
Energy Centre Limited Partnership
|
|
CalGen
|
Calpine
Generating Company, LLC
|
|
CalGen
First Lien Debt
|
Collectively,
$235,000,000 First Priority Secured Floating Rate Notes Due 2009
issued by
CalGen and CalGen Finance; $600,000,000 First Priority Secured
Institutional Term Loans Due 2009 issued by CalGen; and the CalGen
First
Priority Revolving Loans
|
|
CalGen
First Priority Revolving Loans
|
$200,000,000
First Priority Revolving Loans issued on or about March 23, 2004,
pursuant to that Amended and Restated Agreement, among CalGen, the
guarantors party thereto, the lenders party thereto, The Bank of
Nova
Scotia, as administrative agent, L/C Bank, lead arranger and sole
bookrunner, Bayerische Landesbank, Cayman Islands Branch, as arranger
and
co-syndication agent, Credit Lyonnais, New York Branch, as arranger
and
co-syndication agent, ING Capital LLC, as arranger and co-syndication
agent, Toronto Dominion (Texas) Inc., as arranger and co-syndication
agent, and Union Bank of California, N.A., as arranger and co-syndication
agent
|
|
CalGen
Second Lien Debt
|
Collectively,
$640,000,000 Second Priority Secured Floating Rate Notes Due 2010
issued
by CalGen and CalGen Finance; and $100,000,000 Second Priority Secured
Institutional Term Loans Due 2010 issued by
CalGen
|
ABBREVIATION
|
DEFINITION
|
|
CalGen
Third Lien Debt
|
Collectively,
$680,000,000 Third Priority Secured Floating Rate Notes Due 2011
issued by
CalGen and CalGen Finance; and $150,000,000 11 1/2% Third Priority
Secured Notes Due 2011 issued by CalGen and CalGen
Finance
|
|
CalGen
Notes
|
Collectively,
$235,000,000 First Priority Secured Floating Rate Notes Due 2009,
$640,000,000 Second Priority Secured Floating Rate Notes Due 2010,
$680,000,000 Third Priority Secured Floating Rate Notes Due 2011
and
$150,000,000 11 1/2% Third Priority Secured Notes Due 2011, each
issued by CalGen and CalGen Finance
|
|
CalGen
Secured Debt
|
Collectively,
the CalGen First Lien Debt, the CalGen Second Lien Debt and the CalGen
Third Lien Debt
|
|
CalGen
Term Loans
|
Collectively,
$600,000,000 First Priority Secured Institutional Term Loans Due
2009 and
$100,000,000 Second Priority Secured Institutional Term Loans Due
2010,
each issued by CalGen
|
|
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
|
|
Canadian
Settlement Agreement
|
Settlement
Agreement dated as of July 24, 2007, by and between Calpine
Corporation, on behalf of itself and its U.S. subsidiaries, Calpine
Canada
Energy Ltd., Calpine Canada Power Ltd., Calpine Canada Energy Finance
ULC,
Calpine Energy Services Canada Ltd., Calpine Canada Resources Company,
Calpine Canada Power Services Ltd., Calpine Canada Energy Finance
II ULC,
Calpine Natural Gas Services Limited, 3094479 Nova Scotia Company,
Calpine
Energy Services Canada Partnership, Calpine Canada Natural Gas
Partnership, Calpine Canadian Saltend Limited Partnership and HSBC
Bank
USA, National Association, as successor indenture
trustee
|
|
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
as modified by orders of the U.S. Bankruptcy Court dated June 21,
2006, July 12, 2006, October 25, 2006, November 15, 2006,
December 20, 2006, December 28, 2006, January 17, 2007, and
March 1, 2007
|
|
CCAA
|
Companies’
Creditors Arrangement Act (Canada)
|
|
CCFC
|
Calpine
Construction Finance Company, L.P.
|
|
CCFCP
|
CCFC
Preferred Holdings, LLC
|
|
CCRC
|
Calpine
Canada Resources Company, formerly Calpine Canada Resources
Ltd.
|
|
CDWR
|
California
Department of Water Resources
|
|
CES
|
Calpine
Energy Services, L.P.
|
|
CES-Canada
|
Calpine
Energy Services Canada Partnership
|
|
Chapter 11
|
Chapter 11
of the Bankruptcy Code
|
|
Cleco
|
Cleco
Corp.
|
|
Company
|
Calpine
Corporation, a Delaware corporation, and subsidiaries
|
|
Convertible
Notes
|
Collectively,
the 2014 Convertible Notes, the 2015 Convertible Notes, the 2023
Convertible Notes and Calpine Corporation’s 4% Convertible Senior Notes
due 2006
|
|
Creditors’
Committee
|
The
Official Committee of Unsecured Creditors of Calpine Corporation
appointed
by the Office of the U.S. Trustee
|
ABBREVIATION
|
DEFINITION
|
|
DB
London
|
Deutsche
Bank AG London
|
|
Deer
Park
|
Deer
Park Energy Center Limited Partnership
|
|
DIP
Facility
|
The
Revolving Credit, Term Loan and Guarantee Agreement, dated as of
March 29, 2007, among the Company, as borrower, certain of the
Company’s subsidiaries, as guarantors, the lenders party thereto, Credit
Suisse, Goldman Sachs Credit Partners L.P. and JPMorgan Chase Bank,
N.A.,
as co-syndication agents and co-documentation agents, General Electric
Capital Corporation, as sub-agent, and Credit Suisse, as administrative
agent and collateral agent, with Credit Suisse Securities (USA) LLC,
Goldman Sachs Credit Partners L.P., JPMorgan Securities Inc., and
Deutsche
Bank Securities Inc. acting as Joint Lead Arrangers and
Bookrunners
|
|
DIP
Order
|
Order
of the U.S. Bankruptcy Court dated March 12, 2007, approving the DIP
Facility
|
|
Disclosure
Statement
|
Disclosure
Statement for Debtors’ Joint Plan of Reorganization Pursuant to
Chapter 11 of the United States Bankruptcy Code filed by the U.S.
Debtors with the U.S. Bankruptcy Court on June 20, 2007, as amended,
modified or supplemented through the filing of this Report, and as
it may
be further amended, modified or supplemented from time to
time
|
|
EBITDA
|
Earnings
before interest, taxes, depreciation, and amortization
|
|
EPA
|
U.S.
Environmental Protection Agency
|
|
ERISA
|
Employee
Retirement Income Security Act
|
|
ERO
|
Electric
Reliability Organization
|
|
Exchange
Act
|
U.S.
Securities Exchange Act of 1934, as amended
|
|
FASB
|
Financial
Accounting Standards Board
|
|
FERC
|
Federal
Energy Regulatory Commission
|
|
FFIC
|
Fireman’s
Fund Insurance Company
|
|
FIN
|
FASB
Interpretation Number
|
|
First
Priority Notes
|
9 5/8%
First Priority Senior Secured Notes Due 2014
|
|
First
Priority Trustee
|
Until
February 2, 2006, Wilmington Trust Company, as trustee, and from
February 3, 2006, and thereafter, Law Debenture Trust Company of New
York, as successor trustee, under the Indenture, dated as of
September 30, 2004, with respect to the First Priority
Notes
|
|
FPA
|
Federal
Power Act
|
|
FSP
|
FASB
Staff Position
|
|
GAAP
|
Generally
accepted accounting principles in the U.S.
|
|
Geysers
Assets
|
19
geothermal power plant assets located in northern
California
|
|
GHG
|
Greenhouse
gases
|
|
Greenfield
LP
|
Greenfield
Energy Centre LP
|
|
Harbert
Convertible Fund
|
Harbert
Convertible Arbitrage Master Fund, L.P.
|
|
Harbert
Distressed Fund
|
Harbert
Distressed Investment Master Fund, Ltd.
|
|
Heat
Rate
|
A
measure of the amount of fuel required to produce a unit of
electricity
|
|
IRS
|
U.S.
Internal Revenue Service
|
|
King
City Cogen
|
Calpine
King City Cogen, LLC
|
|
KWh
|
Kilowatt
hour(s)
|
ABBREVIATION
|
DEFINITION
|
|
LIBOR
|
London
Inter-Bank Offered Rate
|
|
LSTC
|
Liabilities
subject to compromise
|
|
Metcalf
|
Metcalf
Energy Center, LLC
|
|
MMBtu
|
Million
Btu
|
|
Moapa
|
Moapa
Energy Center, LLC
|
|
MW
|
Megawatt(s)
|
|
MWh
|
Megawatt
hour(s)
|
|
NERC
|
North
American Electric Reliability Council
|
|
Ninth
Circuit Court of Appeals
|
U.S.
Court of Appeals for the Ninth Circuit
|
|
NOL(s)
|
Net
operating loss(es)
|
|
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)
|
|
Northern
District Court
|
U.S.
District Court for the Northern District of California
|
|
NPC
|
Nevada
Power Company
|
|
OCI
|
Other
Comprehensive Income
|
|
OMEC
|
Otay
Mesa Energy Center, LLC
|
|
Original
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
|
|
Panda
|
Panda
Energy International, Inc., and related party PLC II,
LLC
|
|
PCF
|
Power
Contract Financing, L.L.C.
|
|
PCF
III
|
Power
Contract Financing III, LLC
|
|
Petition
Date
|
December 20,
2005
|
|
Plan
of Reorganization
|
Debtors’
Joint Plan of Reorganization Pursuant to Chapter 11 of the United
States Bankruptcy Code filed by the U.S. Debtors with the U.S. Bankruptcy
Court on June 20, 2007, as amended, modified or supplemented through
the filing of this Report, and as it may be further amended, modified
or
supplemented from time to time
|
ABBREVIATION
|
DEFINITION
|
|
Plan
Supplement
|
Supplement
to Debtors’ Joint Plan of Reorganization Pursuant to Chapter 11 of
the United States Bankruptcy Code filed by the U.S. Debtors with
the U.S.
Bankruptcy Court on June 20, 2007, as amended, modified or
supplemented through the filing of this Report, and as it may be
further
amended, modified or supplemented from time to time
|
|
PPA(s)
|
Any
contract for a physically settled sale (as distinguished from a
financially settled future, option or other derivative or hedge
transaction) of any electric power product, including electric energy,
capacity and/or ancillary services, in the form of a bilateral agreement
or a written or oral confirmation of a transaction between two parties
to
a master agreement, including sales related to a tolling transaction
in
which part of the consideration provided by the purchaser of an electric
power product is the fuel required by the seller to generate such
electric
power
|
|
PSM
|
Power
Systems Manufacturing, LLC
|
|
RMR
Contract(s)
|
Reliability
Must Run contract(s)
|
|
Rosetta
|
Rosetta
Resources, Inc.
|
|
SDG&E
|
San
Diego Gas & Electric Company
|
|
SDNY
Court
|
U.S.
District Court for the Southern District of New York
|
|
SEC
|
U.S.
Securities and Exchange Commission
|
|
Second
Priority Debt
|
Collectively,
the Second Priority Notes and Calpine Corporation’s Senior Secured Term
Loans Due 2007
|
|
Second
Priority Notes
|
Calpine
Corporation’s Second Priority Senior 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 and 9 7/8% Second
Priority Senior Secured Notes Due 2011
|
|
Securities
Act
|
U.S.
Securities Act of 1933, as amended
|
|
SFAS
|
Statement
of Financial Accounting Standards
|
|
SPPC
|
Sierra
Pacific Power Company
|
|
TSA(s)
|
Transmission
service agreement(s)
|
|
ULC
I
|
Calpine
Canada Energy Finance ULC
|
|
ULC
II
|
Calpine
Canada Energy Finance II ULC
|
|
Unsecured
Notes
|
Collectively,
Calpine Corporation’s 7 7/8% Senior Notes due 2008, 7 3/4%
Senior Notes due 2009, 8 5/8% Senior Notes due 2010 and 8 1/2%
Senior Notes due 2011, which constitutes a portion of Calpine
Corporation’s unsecured senior notes
|
|
Unsecured
Noteholders
|
Collectively,
the holders of the Unsecured Notes
|
|
U.S.
|
United
States of America
|
|
U.S.
Bankruptcy Court
|
U.S.
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)
|
September 30,
|
December 31,
|
|||||||
2007
|
2006
|
|||||||
(in
millions, except
|
||||||||
share
and per share amounts)
|
||||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ |
1,703
|
$ |
1,077
|
||||
Accounts
receivable, net of allowance of $54 and $32
|
1,047
|
735
|
||||||
Inventories
|
117
|
184
|
||||||
Margin
deposits and other prepaid expense
|
395
|
359
|
||||||
Restricted
cash, current
|
406
|
426
|
||||||
Current
derivative assets
|
227
|
152
|
||||||
Assets
held for sale
|
198
|
154
|
||||||
Other
current assets
|
55
|
81
|
||||||
Total
current assets
|
4,148
|
3,168
|
||||||
Property,
plant and equipment, net
|
12,452
|
13,603
|
||||||
Restricted
cash, net of current portion
|
155
|
192
|
||||||
Investments
|
249
|
129
|
||||||
Long-term
derivative assets
|
257
|
352
|
||||||
Other
assets
|
972
|
1,146
|
||||||
Total
assets
|
$ |
18,233
|
$ |
18,590
|
||||
LIABILITIES & STOCKHOLDERS’ DEFICIT
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ |
614
|
$ |
440
|
||||
Accrued
interest payable
|
187
|
406
|
||||||
Debt,
current
|
4,875
|
4,569
|
||||||
Current
derivative liabilities
|
280
|
225
|
||||||
Income
taxes payable
|
39
|
99
|
||||||
Other
current liabilities
|
466
|
319
|
||||||
Total
current liabilities
|
6,461
|
6,058
|
||||||
Debt,
net of current portion
|
3,129
|
3,352
|
||||||
Deferred
income taxes, net of current portion
|
655
|
490
|
||||||
Long-term
derivative liabilities
|
429
|
475
|
||||||
Other
long-term liabilities
|
269
|
345
|
||||||
Total
liabilities not subject to compromise
|
10,943
|
10,720
|
||||||
Liabilities
subject to compromise
|
11,667
|
14,757
|
||||||
Commitments
and contingencies (see Note 10)
|
||||||||
Minority
interest
|
8
|
266
|
||||||
Stockholders’
equity (deficit):
|
||||||||
Preferred
stock, $.001 par value per share; authorized 10,000,000 shares;
none
issued and outstanding in 2007 and 2006
|
—
|
—
|
||||||
Common
stock, $.001 par value per share; authorized 2,000,000,000 shares;
568,772,999 issued and 482,200,119 outstanding in 2007 and 568,764,920
issued and 529,764,920 outstanding in 2006
|
1
|
1
|
||||||
Additional
paid-in capital
|
3,270
|
3,270
|
||||||
Additional
paid-in capital, loaned shares
|
7
|
145
|
||||||
Additional
paid-in capital, returnable shares
|
(7 | ) | (145 | ) | ||||
Accumulated
deficit
|
(7,543 | ) | (10,378 | ) | ||||
Accumulated other comprehensive loss
|
(113 | ) | (46 | ) | ||||
Total
stockholders’ deficit
|
(4,385 | ) | (7,153 | ) | ||||
Total
liabilities and stockholders’ deficit
|
$ |
18,233
|
$ |
18,590
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(in
millions, except share and per share amounts)
|
||||||||||||||||
Revenue:
|
||||||||||||||||
Electricity
and steam revenue
|
$ |
1,690
|
$ |
1,842
|
$ |
4,412
|
$ |
4,070
|
||||||||
Sales
of purchased power and gas for hedging and optimization
|
540
|
273
|
1,357
|
891
|
||||||||||||
Mark-to-market
activities, net
|
2
|
28
|
5
|
88
|
||||||||||||
Other
revenue
|
7
|
15
|
55
|
57
|
||||||||||||
Total
revenue
|
2,239
|
2,158
|
5,829
|
5,106
|
||||||||||||
Cost
of revenue:
|
||||||||||||||||
Plant
operating expense
|
182
|
175
|
561
|
520
|
||||||||||||
Purchased
power and gas expense for hedging and optimization
|
370
|
296
|
1,046
|
857
|
||||||||||||
Fuel
expense
|
1,114
|
1,106
|
2,989
|
2,474
|
||||||||||||
Depreciation
and amortization expense
|
114
|
121
|
350
|
350
|
||||||||||||
Operating
plant impairments
|
—
|
—
|
—
|
53
|
||||||||||||
Operating
lease expense
|
15
|
11
|
39
|
53
|
||||||||||||
Other
cost of revenue
|
32
|
39
|
112
|
128
|
||||||||||||
Total
cost of revenue
|
1,827
|
1,748
|
5,097
|
4,435
|
||||||||||||
Gross
profit
|
412
|
410
|
732
|
671
|
||||||||||||
Equipment,
development project and other impairments
|
—
|
(4 | ) |
2
|
64
|
|||||||||||
Sales,
general and administrative expense
|
33
|
49
|
112
|
147
|
||||||||||||
Other
operating expense
|
12
|
10
|
22
|
25
|
||||||||||||
Income
from operations
|
367
|
355
|
596
|
435
|
||||||||||||
Interest
expense
|
602
|
228
|
1,176
|
820
|
||||||||||||
Interest
(income)
|
(14 | ) | (19 | ) | (48 | ) | (59 | ) | ||||||||
Minority
interest expense
|
1
|
7
|
—
|
10
|
||||||||||||
Other
(income) expense, net
|
(127 | ) | (10 | ) | (134 | ) |
7
|
|||||||||
Income
(loss) before reorganization items and income taxes
|
(95 | ) |
149
|
(398 | ) | (343 | ) | |||||||||
Reorganization
items
|
(3,940 | ) |
146
|
(3,366 | ) |
1,099
|
||||||||||
Income
(loss) before income taxes
|
3,845
|
3
|
2,968
|
(1,442 | ) | |||||||||||
Provision
(benefit) for income taxes
|
51
|
1
|
133
|
(36 | ) | |||||||||||
Income
(loss) before cumulative effect of a change in accounting
principle
|
3,794
|
2
|
2,835
|
(1,406 | ) | |||||||||||
Cumulative
effect of a change in accounting principle, net of tax
|
—
|
—
|
—
|
1
|
||||||||||||
Net
income (loss)
|
$ |
3,794
|
$ |
2
|
$ |
2,835
|
$ | (1,405 | ) |
Basic
earnings (loss) per common share:
|
||||||||||||||||
Weighted
average shares of common stock outstanding (in thousands)
|
479,312
|
479,136
|
479,208
|
479,136
|
||||||||||||
Income
(loss) before cumulative effect of a change in accounting
principle
|
$ |
7.92
|
$ |
—
|
$ |
5.92
|
$ | (2.93 | ) | |||||||
Cumulative
effect of a change in accounting principle, net of tax
|
—
|
—
|
—
|
—
|
||||||||||||
Net
income (loss)
|
$ |
7.92
|
$ |
—
|
$ |
5.92
|
$ | (2.93 | ) |
Diluted
earnings (loss) per common share:
|
||||||||||||||||
Weighted
average shares of common stock outstanding (in thousands)
|
479,617
|
479,136
|
479,543
|
479,136
|
||||||||||||
Income
(loss) before cumulative effect of a change in accounting
principle
|
$ |
7.91
|
$ |
—
|
$ |
5.91
|
$ | (2.93 | ) | |||||||
Cumulative
effect of a change in accounting principle, net of tax
|
—
|
—
|
—
|
—
|
||||||||||||
Net
income (loss)
|
$ |
7.91
|
$ |
—
|
$ |
5.91
|
$ | (2.93 | ) |
Nine Months Ended September 30,
|
||||||||
2007
|
2006
|
|||||||
(in
millions)
|
||||||||
Cash
flows from operating activities:
|
||||||||
Net
income (loss)
|
$ |
2,835
|
$ | (1,405 | ) | |||
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization(1)
|
420
|
437
|
||||||
Impairment
charges
|
2
|
117
|
||||||
Deferred
income taxes, net
|
132
|
(36 | ) | |||||
Loss
on sale of assets, excluding reorganization items
|
24
|
2
|
||||||
Foreign
currency transaction gain, excluding reorganization items
|
(2 | ) | (2 | ) | ||||
Gain
on settlement of notes receivable
|
—
|
(6 | ) | |||||
Mark-to-market
activities, net
|
(5 | ) | (88 | ) | ||||
Non-cash
derivative activities
|
2
|
120
|
||||||
Non-cash
reorganization items
|
(3,459 | ) |
976
|
|||||
Other
|
5
|
34
|
||||||
Change
in operating assets and liabilities, net of effects of
acquisitions:
|
||||||||
Accounts
receivable
|
(316 | ) |
155
|
|||||
Other
assets
|
19
|
22
|
||||||
Accounts
payable, liabilities subject to compromise and accrued
expenses
|
383
|
(238 | ) | |||||
Other
liabilities
|
53
|
79
|
||||||
Net
cash provided by operating activities
|
93
|
167
|
||||||
Cash
flows from investing activities:
|
||||||||
Purchases
of property, plant and equipment
|
(173 | ) | (159 | ) | ||||
Disposals
of property, plant and equipment
|
32
|
13
|
||||||
Acquisitions,
net of cash acquired
|
—
|
(267 | ) | |||||
Disposals
of investments, turbines and power plants
|
507
|
38
|
||||||
Advances
to joint ventures
|
(73 | ) | (31 | ) | ||||
Return
of investment in Canadian Debtors
|
75
|
—
|
||||||
Return
of investment in joint ventures
|
104
|
—
|
||||||
Cash
flows from derivatives not designated as hedges
|
(21 | ) | (95 | ) | ||||
Decrease
in restricted cash
|
57
|
442
|
||||||
Cash
effect of deconsolidation of OMEC
|
(29 | ) |
—
|
|||||
Other
|
4
|
13
|
||||||
Net
cash provided by (used in) investing activities
|
483
|
(46 | ) |
Nine Months Ended September 30,
|
||||||||
2007
|
2006
|
|||||||
(in
millions)
|
||||||||
Cash
flows from financing activities:
|
||||||||
Repayments
of notes payable and lines of credit
|
$ | (135 | ) | $ | (174 | ) | ||
Borrowings
under project financing
|
16
|
121
|
||||||
Repayments
of project financing
|
(108 | ) | (109 | ) | ||||
Repayments
of CalGen Secured Debt
|
(224 | ) |
—
|
|||||
Borrowings
under DIP Facility
|
614
|
1,150
|
||||||
Repayments
of DIP Facility
|
(28 | ) | (178 | ) | ||||
Repayments
and repurchases of Senior Notes
|
—
|
(646 | ) | |||||
Redemptions
of preferred interests
|
(9 | ) | (9 | ) | ||||
Financing
costs
|
(81 | ) | (34 | ) | ||||
Other
|
5
|
(21 | ) | |||||
Net
cash provided by financing activities
|
50
|
100
|
||||||
Net
increase in cash and cash equivalents, including discontinued
operations
cash
|
626
|
221
|
||||||
Change
in discontinued operations cash classified as assets held for
sale
|
—
|
(18 | ) | |||||
Net
increase in cash and cash equivalents
|
626
|
203
|
||||||
Cash
and cash equivalents, beginning of period
|
1,077
|
786
|
||||||
Cash
and cash equivalents, end of period
|
$ |
1,703
|
$ |
989
|
||||
Cash
paid (received) during the period for:
|
||||||||
Interest,
net of amounts capitalized
|
$ |
926
|
$ |
772
|
||||
Income
taxes
|
$ |
1
|
$ |
—
|
||||
Reorganization
items included in operating activities, net
|
$ |
88
|
$ |
78
|
||||
Reorganization
items included in investing activities, net
|
$ | (582 | ) | $ |
—
|
|||
Reorganization
items included in financing activities, net
|
$ |
74
|
$ |
34
|
(1)
|
Includes
depreciation and amortization that is also recorded in sales,
general and
administrative expense and interest
expense.
|
Nine Months Ended September 30,
|
||||||||
2007
|
2006
|
|||||||
(in
millions)
|
||||||||
Supplemental
disclosure of non-cash investing and financing activities:
|
||||||||
DIP
Facility borrowings used to extinguish the Original DIP Facility
principal
($989), CalGen Secured Debt principal ($2,309) and operating
liabilities
($88)
|
$ |
3,386
|
$ |
—
|
||||
Project
financing ($159) and operating liabilities ($33) extinguished
with sale of
Aries Power Plant
|
$ |
192
|
$ |
—
|
||||
Fair
value of loaned common stock returned
|
$ |
138
|
$ |
72
|
||||
Letter
of credit draws under the CalGen Secured Debt used for operating
activities
|
$ |
16
|
$ |
71
|
||||
Capital
contribution (equipment) to Greenfield LP
|
$ |
—
|
$ |
28
|
||||
Fair
value of Metcalf cooperation agreement, with offsets to notes
payable ($6)
and operating liabilities ($6)
|
$ |
12
|
$ |
—
|
||||
Acquisition
of property, plant and equipment for Geysers Assets, with offsets
to
operating assets
|
$ |
—
|
$ |
181
|
September 30,
2007
|
December 31,
2006
|
|||||||||||||||||||||||
Current
|
Non-Current
|
Total
|
Current
|
Non-Current
|
Total
|
|||||||||||||||||||
Debt
service
|
$ |
88
|
$ |
111
|
$ |
199
|
$ |
148
|
$ |
114
|
$ |
262
|
||||||||||||
Rent
reserve
|
13
|
—
|
13
|
58
|
—
|
58
|
||||||||||||||||||
Construction/major
maintenance
|
99
|
22
|
121
|
83
|
28
|
111
|
||||||||||||||||||
Security/project
reserves
|
151
|
—
|
151
|
46
|
32
|
78
|
||||||||||||||||||
Collateralized
letters of credit and other credit support
|
4
|
—
|
4
|
29
|
—
|
29
|
||||||||||||||||||
Other
|
51
|
22
|
73
|
62
|
18
|
80
|
||||||||||||||||||
Total
|
$ |
406
|
$ |
155
|
$ |
561
|
$ |
426
|
$ |
192
|
$ |
618
|
U.S.
Debtors
|
||||||||
September 30,
|
December 31,
|
|||||||
2007
|
2006
|
|||||||
(in
millions)
|
||||||||
Assets:
|
||||||||
Current
assets
|
$ |
5,324
|
$ |
4,746
|
||||
Restricted
cash, net of current portion
|
35
|
47
|
||||||
Investments
|
2,589
|
2,147
|
||||||
Property,
plant and equipment, net
|
7,001
|
7,629
|
||||||
Other
assets
|
964
|
1,192
|
||||||
Total
assets
|
$ |
15,913
|
$ |
15,761
|
||||
Liabilities
not subject to compromise:
|
||||||||
Current
liabilities
|
$ |
5,739
|
$ |
5,271
|
||||
Long-term
debt
|
409
|
411
|
||||||
Long-term
derivative liabilities
|
365
|
375
|
||||||
Other
long-term liabilities
|
578
|
454
|
||||||
Liabilities
subject to compromise
|
13,385
|
16,453
|
||||||
Stockholders’
deficit
|
(4,563 | ) | (7,203 | ) | ||||
Total
liabilities and stockholders’ deficit
|
$ |
15,913
|
$ |
15,761
|
U.S.
Debtors
|
||||||||||||||||
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(in
millions)
|
||||||||||||||||
Total
revenue
|
$ |
2,163
|
$ |
2,110
|
$ |
5,509
|
$ |
4,744
|
||||||||
Total
cost of revenue
|
1,916
|
1,929
|
5,348
|
4,501
|
||||||||||||
Operating
(income) expense(1)
|
(62 | ) | (46 | ) | (51 | ) |
134
|
|||||||||
Income
from operations
|
309
|
227
|
212
|
109
|
||||||||||||
Interest
expense
|
498
|
113
|
876
|
503
|
||||||||||||
Other
(income) expense, net
|
(138 | ) | (32 | ) | (136 | ) | (38 | ) | ||||||||
Reorganization
items
|
(3,833 | ) |
145
|
(3,348 | ) |
1,099
|
||||||||||
Provision
for income taxes
|
40
|
30
|
110
|
7
|
||||||||||||
Income
(loss) before cumulative effect of a change in accounting
principle
|
3,742
|
(29 | ) |
2,710
|
(1,462 | ) | ||||||||||
Cumulative
effect of a change in accounting principle
|
—
|
—
|
—
|
1
|
||||||||||||
Net
income (loss)
|
$ |
3,742
|
$ | (29 | ) | $ |
2,710
|
$ | (1,461 | ) |
(1)
|
Includes
equity in (income) loss of
affiliates.
|
U.S.
Debtors
|
||||||||
2007
|
2006
|
|||||||
(in
millions)
|
||||||||
Net
cash provided by (used in):
|
||||||||
Operating
activities
|
$ | (54 | ) | $ | (113 | ) | ||
Investing
activities
|
472
|
90
|
||||||
Financing
activities
|
273
|
272
|
||||||
Net
increase in cash and cash equivalents
|
691
|
249
|
||||||
Cash
and cash equivalents, beginning of year
|
883
|
444
|
||||||
Effect
on cash of new debtor filings
|
—
|
66
|
||||||
Cash
and cash equivalents, end of year
|
$ |
1,574
|
$ |
759
|
||||
Net
cash paid for reorganization items included in operating
activities
|
$ |
88
|
$ |
78
|
||||
Net
cash received from reorganization items included in investing
activities
|
$ | (577 | ) | $ |
—
|
|||
Net
cash paid for reorganization items included in financing
activities
|
$ |
74
|
$ |
34
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Provision
for expected allowed claims(1)
|
$ | (4,030 | ) | $ |
94
|
$ | (3,695 | ) | $ |
883
|
||||||
Gains
on asset sales
|
(36 | ) |
—
|
(286 | ) |
—
|
||||||||||
Asset
impairments(2)
|
—
|
—
|
120
|
2
|
||||||||||||
DIP
Facility financing and CalGen Secured Debt repayment costs
|
22
|
3
|
182
|
35
|
||||||||||||
Professional
fees
|
44
|
39
|
139
|
107
|
||||||||||||
Interest
(income) on accumulated cash
|
(16 | ) | (5 | ) | (39 | ) | (18 | ) | ||||||||
Other(3)
|
76
|
15
|
213
|
90
|
||||||||||||
Total
reorganization items
|
$ | (3,940 | ) | $ |
146
|
$ | (3,366 | ) | $ |
1,099
|
(1)
|
Represents
our estimate of the expected allowed claims related primarily
to
guarantees of subsidiary obligations for the nine months ended
September 30, 2006, the rejection or repudiation of leases and other
executory contracts in both current and prior year periods and
the effects
of approved settlements during the three and nine months ended
September 30, 2007. See further discussion below in “—
Chapter 11 Claims Assessment.”
|
(2)
|
Impairment
charges for the nine months ended September 30, 2007, primarily
relate to recording our interest in Acadia PP at fair value less
cost to
sell. See Note 5 for additional
information.
|
(3)
|
Other
reorganization items consist primarily of adjustments for foreign
exchange
rate changes on LSTC denominated in a foreign currency and governed
by
foreign law and employee severance and incentive costs in all
periods.
|
September 30,
|
December 31,
|
|||||||
2007
|
2006
|
|||||||
Provision
for expected allowed claims(1)
|
$ |
3,626
|
$ |
5,921
|
||||
Second
Priority Debt(2)
|
3,672
|
3,672
|
||||||
Unsecured
senior notes
|
1,880
|
1,880
|
||||||
Convertible
Notes
|
1,824
|
1,824
|
||||||
Notes
payable and other liabilities — related party
|
261
|
1,077
|
||||||
Accounts
payable and accrued liabilities
|
404
|
383
|
||||||
Total
liabilities subject to compromise
|
$ |
11,667
|
$ |
14,757
|
(1)
|
The
remaining balance in the provision for expected allowed claims
at
September 30, 2007, represents our allowed or expected allowed claims
(at current exchange rates) for U.S. Debtor guarantees of debt
issued by
certain of our deconsolidated Canadian entities, expected allowed
claims
related to the rejection or repudiation of leases and other executory
contracts and the results of other approved settlements. The
provision for
expected allowed claims was adjusted during the three months
ended
September 30, 2007, to record the effects of the Canadian Settlement
Agreement described below.
|
(2)
|
As
our total enterprise value upon emergence has not been finally
determined,
we have not yet concluded whether our Second Priority Debt is
fully
secured or undersecured. We do, however, believe that there is
uncertainty
about whether the market value of the assets collateralizing
the
obligations owing in respect of the Second Priority Debt is less
than,
equals or exceeds the amount of these obligations. Therefore,
in
accordance with the applicable accounting standards, we have
classified
the Second Priority Debt as LSTC.
|
September 30,
|
December 31,
|
|||||||
2007
|
2006
|
|||||||
Buildings,
machinery and equipment
|
$ |
13,520
|
$ |
13,993
|
||||
Geothermal
properties
|
935
|
934
|
||||||
Other
|
249
|
272
|
||||||
14,704
|
15,199
|
|||||||
Less:
Accumulated depreciation
|
(2,481 | ) | (2,253 | ) | ||||
12,223
|
12,946
|
|||||||
Land
|
78
|
85
|
||||||
Construction
in progress
|
151
|
572
|
||||||
Property,
plant and equipment, net
|
$ |
12,452
|
$ |
13,603
|
Ownership
|
||||||||
Interest as of
|
Investment
Balance at
|
|||||||
September 30,
|
September 30,
|
December 31,
|
||||||
2007
|
2007
|
2006
|
||||||
Greenfield
LP
|
50% |
$
|
90
|
$
|
129
|
|||
OMEC
|
100% |
159
|
—
|
|||||
Total
investments in power projects
|
$
|
249
|
$
|
129
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Net
income (loss)
|
$ |
3,794
|
$ |
2
|
$ |
2,835
|
$ | (1,405 | ) | |||||||
Other
comprehensive income (loss):
|
||||||||||||||||
Comprehensive
pre-tax gain (loss) on cash flow hedges before reclassification
adjustment
|
(51 | ) | (30 | ) | (56 | ) |
43
|
|||||||||
Reclassification
adjustment for (gains) losses included in net income
(loss)
|
(12 | ) |
93
|
17
|
104
|
|||||||||||
Foreign
currency translation loss
|
(4 | ) |
—
|
(15 | ) | (2 | ) | |||||||||
Income
tax provision
|
(4 | ) | (20 | ) | (13 | ) | (53 | ) | ||||||||
Total
comprehensive income (loss)
|
$ |
3,723
|
$ |
45
|
$ |
2,768
|
$ | (1,313 | ) |
September 30
|
December 31,
|
|||||||
2007
|
2006
|
|||||||
DIP
Facility
|
$ |
3,980
|
$ |
—
|
||||
Original
DIP Facility
|
—
|
997
|
||||||
CalGen
financing
|
—
|
2,511
|
||||||
Construction/project
financing
|
1,953
|
2,203
|
||||||
CCFC
financing
|
779
|
782
|
||||||
Preferred
interests
|
575
|
584
|
||||||
Notes
payable and other borrowings
|
433
|
564
|
||||||
Capital
lease obligations
|
284
|
280
|
||||||
Total
debt (not subject to compromise)
|
8,004
|
7,921
|
||||||
Less:
Amounts reclassified to debt, current portion
|
677
|
3,051
|
||||||
Less:
Current maturities
|
4,198
|
1,518
|
||||||
Debt
(not subject to compromise), net of current portion
|
$ |
3,129
|
$ |
3,352
|
October
through December 2007
|
$
|
28
|
||
2008
|
4,197
|
|||
2009
|
600
|
|||
2010
|
525
|
|||
2011
|
1,822
|
|||
Thereafter
|
866
|
|||
Total
debt
|
8,038
|
|||
(Discount)
Premium
|
(34
|
)
|
||
Total
|
$
|
8,004
|
Commodity
|
||||||||||||
Interest
Rate
|
Derivative
|
Total
|
||||||||||
Derivative
|
Instruments
|
Derivative
|
||||||||||
Instruments
|
Net
|
Instruments
|
||||||||||
Current
derivative assets
|
$ |
2
|
$ |
225
|
$ |
227
|
||||||
Long-term
derivative assets
|
—
|
257
|
257
|
|||||||||
Total
assets
|
$ |
2
|
$ |
482
|
$ |
484
|
||||||
Current
derivative liabilities
|
$ |
18
|
$ |
262
|
$ |
280
|
||||||
Long-term
derivative liabilities
|
39
|
390
|
429
|
|||||||||
Total
liabilities
|
$ |
57
|
$ |
652
|
$ |
709
|
||||||
Net
derivative assets (liabilities)
|
$ | (55 | ) | $ | (170 | ) | $ | (225 | ) |
September 30,
|
||||
2007
|
||||
Net
derivative liabilities
|
$
|
(225
|
)
|
|
Derivatives
not designated as cash flow hedges and recognized hedge
ineffectiveness
|
131
|
|||
Cash
flow hedges terminated prior to maturity
|
(14
|
)
|
||
Cumulative
OCI tax benefit
|
12
|
|||
Accumulated
other comprehensive loss from derivative instruments, net of tax(1)
|
$
|
(96
|
)
|
(1)
|
Amount
represents one portion of our total AOCI balance of
$(113).
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Natural
gas derivatives
|
$ | (77 | ) | $ |
43
|
$ | (92 | ) | $ |
227
|
||||||
Power
derivatives
|
89
|
(135 | ) |
85
|
(325 | ) | ||||||||||
Interest
rate derivatives
|
—
|
(1 | ) | (10 | ) | (6 | ) | |||||||||
Total
derivatives
|
$ |
12
|
$ | (93 | ) | $ | (17 | ) | $ | (104 | ) |
2007
|
2008
|
2009
|
2010
|
2011
|
Thereafter
|
Total
|
||||||||||||||||||||||
Natural
gas derivatives
|
$ | (48 | ) | $ | (27 | ) | $ |
1
|
$ | (1 | ) | $ | (3 | ) | $ | (4 | ) | $ | (82 | ) | ||||||||
Power
derivatives
|
60
|
35
|
(24 | ) | (15 | ) | (9 | ) | (6 | ) |
41
|
|||||||||||||||||
Interest
rate derivatives
|
(3 | ) | (20 | ) | (26 | ) | (9 | ) |
2
|
(11 | ) | (67 | ) | |||||||||||||||
Total
pre-tax AOCI
|
$ |
9
|
$ | (12 | ) | $ | (49 | ) | $ | (25 | ) | $ | (10 | ) | $ | (21 | ) | $ | (108 | ) |
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||||||||
2007
|
2006
|
2007
|
2006
|
||||||
(shares
in thousands)
|
|||||||||
Diluted
weighted average shares calculation:
|
|||||||||
Weighted
average shares outstanding (basic)
|
479,312
|
479,136
|
479,208
|
479,136
|
|||||
Plus:
Incremental shares from unexercised in-the-money stock
options
|
305
|
—
|
335
|
—
|
(1)
|
||||
Weighted
average shares outstanding (diluted)
|
479,617
|
479,136
|
479,543
|
479,136
|
(1)
|
As
we incurred net losses during the nine months ending September 30,
2006, diluted loss per share is computed on the same basis as basic
loss
per share as the inclusion of any other potential shares outstanding
would
be anti-dilutive.
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||||||||
2007
|
2006
|
2007
|
2006
|
||||||
(shares
in thousands)
|
|||||||||
Unexercised
out-of-the-money stock
options
|
16,944
|
24,889
|
18,585
|
30,159
|
|||||
Restricted
stock
awards(1)
|
500
|
709
|
553
|
797
|
|||||
Convertible
Notes(2)
|
399,914
|
399,914
|
399,914
|
399,914
|
|||||
DB
London shares(3)
|
2,427
|
64,000
|
2,427
|
64,000
|
(1)
|
Excluded
from diluted weighted average shares outstanding because our closing
stock
price had not reached the price at which the shares
vest.
|
(2)
|
Excluded
from diluted weighted average shares outstanding because we believe
the
conversion rights were terminated upon our Chapter 11 filings. On
August 10, 2007, the U.S. Bankruptcy Court disallowed the claims
for conversion right damages by the holders of the Convertible Notes
on
the basis that, among other things, such conversion rights had terminated
upon our Chapter 11 filings. Accordingly, we have excluded the Convertible
Notes from diluted weighted average shares
outstanding.
|
(3)
|
Excluded
from basic and diluted weighted average shares outstanding as the
share
lending agreement with DB London requires physical settlement of
these
common shares.
|
Three Months Ended September 30,
|
||||||||||||||||
2007
|
2006
|
$
Change
|
%
Change
|
|||||||||||||
Revenue:
|
||||||||||||||||
Electricity
and steam revenue
|
$ |
1,690
|
$ |
1,842
|
$ | (152 | ) | (8 | )% | |||||||
Sales
of purchased power and gas for hedging and optimization
|
540
|
273
|
267
|
98
|
||||||||||||
Mark-to-market
activities, net
|
2
|
28
|
(26 | ) | (93 | ) | ||||||||||
Other
revenue
|
7
|
15
|
(8 | ) | (53 | ) | ||||||||||
Total
revenue
|
2,239
|
2,158
|
81
|
4
|
||||||||||||
Cost
of revenue:
|
||||||||||||||||
Plant
operating expense
|
182
|
175
|
(7 | ) | (4 | ) | ||||||||||
Purchased
power and gas expense for hedging and optimization
|
370
|
296
|
(74 | ) | (25 | ) | ||||||||||
Fuel
expense
|
1,114
|
1,106
|
(8 | ) | (1 | ) | ||||||||||
Depreciation
and amortization expense
|
114
|
121
|
7
|
6
|
||||||||||||
Operating
lease expense
|
15
|
11
|
(4 | ) | (36 | ) | ||||||||||
Other
cost of revenue
|
32
|
39
|
7
|
18
|
||||||||||||
Total
cost of revenue
|
1,827
|
1,748
|
(79 | ) | (5 | ) | ||||||||||
Gross
profit
|
412
|
410
|
2
|
—
|
||||||||||||
Equipment,
development project and other impairments
|
—
|
(4 | ) | (4 | ) |
#
|
||||||||||
Sales,
general and administrative expense
|
33
|
49
|
16
|
33
|
||||||||||||
Other
operating expense
|
12
|
10
|
(2 | ) | (20 | ) | ||||||||||
Income
from operations
|
367
|
355
|
12
|
3
|
||||||||||||
Interest
expense
|
602
|
228
|
(374 | ) |
#
|
|||||||||||
Interest
(income)
|
(14 | ) | (19 | ) | (5 | ) | (26 | ) | ||||||||
Minority
interest expense
|
1
|
7
|
6
|
86
|
||||||||||||
Other
(income) expense, net
|
(127 | ) | (10 | ) |
117
|
#
|
||||||||||
Income
(loss) before reorganization items and income taxes
|
(95 | ) |
149
|
(244 | ) |
#
|
||||||||||
Reorganization
items
|
(3,940 | ) |
146
|
4,086
|
#
|
|||||||||||
Income
before income taxes
|
3,845
|
3
|
3,842
|
#
|
||||||||||||
Provision
for income taxes
|
51
|
1
|
(50 | ) |
#
|
|||||||||||
Net
income
|
$ |
3,794
|
$ |
2
|
$ |
3,792
|
#
|
#
|
Variance
of 100% or greater
|
Three Months Ended September 30,
|
||||||||||||||||
2007
|
2006
|
$
Change
|
%
Change
|
|||||||||||||
(Dollars
in millions, except pricing data)
|
||||||||||||||||
Electricity
and steam revenue:
|
||||||||||||||||
Energy
|
$ |
1,316
|
$ |
1,475
|
$ | (159 | ) | (11 | )% | |||||||
Capacity
|
259
|
271
|
(12 | ) | (4 | ) | ||||||||||
Thermal
and other
|
115
|
96
|
19
|
20
|
||||||||||||
Total
electricity and steam revenue
|
$ |
1,690
|
$ |
1,842
|
$ | (152 | ) | (8 | ) | |||||||
MWh
generated (in thousands)
|
27,223
|
28,385
|
(1,162 | ) | (4 | ) | ||||||||||
Average
electricity and steam revenue per MWh generated*
|
$ |
62.08
|
$ |
64.89
|
$ | (2.81 | ) | (4 | ) | |||||||
Average
energy revenue per MWh generated
|
$ |
48.34
|
$ |
51.96
|
$ | (3.62 | ) | (7 | ) |
*
|
Exclusive
of hedging and optimization
activity.
|
Three Months Ended September 30,
|
||||||||||||||||
2007
|
2006
|
$
Change
|
%
Change
|
|||||||||||||
(Dollars
in millions)
|
||||||||||||||||
Mark-to-market
activities, net:
|
||||||||||||||||
Deer
Park Energy Center
|
$ |
36
|
$ |
27
|
$ |
9
|
33 | % | ||||||||
Gas
|
(14 | ) |
9
|
(23 | ) |
#
|
||||||||||
Power
|
(14 | ) |
13
|
(27 | ) |
#
|
||||||||||
Interest
rate swaps and other
|
(6 | ) | (21 | ) |
15
|
71
|
||||||||||
Total
mark-to-market activities, net
|
$ |
2
|
$ |
28
|
$ | (26 | ) | (93 | ) |
#
|
Variance
of 100% or greater
|
Three Months Ended September 30,
|
||||||||||||||||
2007
|
2006
|
$
Change
|
%
Change
|
|||||||||||||
(Dollars
in millions)
|
||||||||||||||||
Provision
for expected allowed claims
|
$ | (4,030 | ) | $ |
94
|
$ |
4,124
|
# | % | |||||||
Gains
on asset sales
|
(36 | ) |
—
|
36
|
—
|
|||||||||||
DIP
Facility financing costs
|
22
|
3
|
(19 | ) |
#
|
|||||||||||
Professional
fees
|
44
|
39
|
(5 | ) | (13 | ) | ||||||||||
Interest
(income) on accumulated cash
|
(16 | ) | (5 | ) |
11
|
#
|
||||||||||
Other
|
76
|
15
|
(61 | ) |
#
|
|||||||||||
Total
reorganization items
|
$ | (3,940 | ) | $ |
146
|
$ |
4,086
|
#
|
#
|
Variance
of 100% or greater
|
Nine Months Ended September 30,
|
||||||||||||||||
2007
|
2006
|
$
Change
|
%
Change
|
|||||||||||||
Revenue:
|
||||||||||||||||
Electricity
and steam revenue
|
$ |
4,412
|
$ |
4,070
|
$ |
342
|
8 | % | ||||||||
Sales
of purchased power and gas for hedging and optimization
|
1,357
|
891
|
466
|
52
|
||||||||||||
Mark-to-market
activities, net
|
5
|
88
|
(83 | ) | (94 | ) | ||||||||||
Other
revenue
|
55
|
57
|
(2 | ) | (4 | ) | ||||||||||
Total
revenue
|
5,829
|
5,106
|
723
|
14
|
||||||||||||
Cost
of revenue:
|
||||||||||||||||
Plant
operating expense
|
561
|
520
|
(41 | ) | (8 | ) | ||||||||||
Purchased
power and gas expense for hedging and optimization
|
1,046
|
857
|
(189 | ) | (22 | ) | ||||||||||
Fuel
expense
|
2,989
|
2,474
|
(515 | ) | (21 | ) | ||||||||||
Depreciation
and amortization expense
|
350
|
350
|
—
|
—
|
||||||||||||
Operating
plant impairments
|
—
|
53
|
53
|
#
|
||||||||||||
Operating
lease expense
|
39
|
53
|
14
|
26
|
||||||||||||
Other
cost of revenue
|
112
|
128
|
16
|
13
|
||||||||||||
Total
cost of revenue
|
5,097
|
4,435
|
(662 | ) | (15 | ) | ||||||||||
Gross
profit
|
732
|
671
|
61
|
9
|
||||||||||||
Equipment,
development project and other impairments
|
2
|
64
|
62
|
97
|
||||||||||||
Sales,
general and administrative expense
|
112
|
147
|
35
|
24
|
||||||||||||
Other
operating expense
|
22
|
25
|
3
|
12
|
||||||||||||
Income
from operations
|
596
|
435
|
161
|
37
|
||||||||||||
Interest
expense
|
1,176
|
820
|
(356 | ) | (43 | ) | ||||||||||
Interest
(income)
|
(48 | ) | (59 | ) | (11 | ) | (19 | ) | ||||||||
Minority
interest expense
|
—
|
10
|
10
|
#
|
||||||||||||
Other
(income) expense, net
|
(134 | ) |
7
|
141
|
#
|
|||||||||||
Loss
before reorganization items and income taxes
|
(398 | ) | (343 | ) | (55 | ) | (16 | ) | ||||||||
Reorganization
items
|
(3,366 | ) |
1,099
|
4,465
|
#
|
|||||||||||
Income
(loss) before income taxes
|
2,968
|
(1,442 | ) |
4,410
|
#
|
|||||||||||
Provision
(benefit) for income taxes
|
133
|
(36 | ) | (169 | ) |
#
|
||||||||||
Income
(loss) before cumulative effect of a change in accounting
principle
|
2,835
|
(1,406 | ) |
4,241
|
#
|
|||||||||||
Cumulative
effect of a change in accounting principle, net of tax
|
—
|
1
|
(1 | ) |
#
|
|||||||||||
Net
income (loss)
|
$ |
2,835
|
$ | (1,405 | ) | $ |
4,240
|
#
|
#
|
Variance
of 100% or greater
|
Nine Months Ended September 30,
|
||||||||||||||||
2007
|
2006
|
$
Change
|
%
Change
|
|||||||||||||
(Dollars
in millions, except pricing data)
|
||||||||||||||||
Electricity
and steam revenue:
|
||||||||||||||||
Energy
|
$ |
3,349
|
$ |
3,068
|
$ |
281
|
9 | % | ||||||||
Capacity
|
718
|
726
|
(8 | ) | (1 | ) | ||||||||||
Thermal
and other
|
345
|
276
|
69
|
25
|
||||||||||||
Total
electricity and steam revenue
|
$ |
4,412
|
$ |
4,070
|
$ |
342
|
8
|
|||||||||
MWh
generated (in thousands)
|
69,005
|
62,826
|
6,179
|
10
|
||||||||||||
Average
electricity and steam revenue per MWh generated*
|
$ |
63.94
|
$ |
64.78
|
$ | (0.84 | ) | (1 | ) | |||||||
Average
energy revenue per MWh generated
|
$ |
48.53
|
$ |
48.83
|
$ | (0.30 | ) | (1 | ) |
*
|
Exclusive
of hedging and optimization
activity.
|
Nine Months Ended September 30,
|
||||||||||||||||
2007
|
2006
|
$
Change
|
%
Change
|
|||||||||||||
(Dollars
in millions)
|
||||||||||||||||
Mark-to-market
activities, net:
|
||||||||||||||||
Deer
Park Energy Center
|
$ |
83
|
$ |
41
|
$ |
42
|
# | % | ||||||||
Gas
|
(49 | ) |
43
|
(92 | ) |
#
|
||||||||||
Power
|
(24 | ) | (5 | ) | (19 | ) |
#
|
|||||||||
Interest
rate swaps and other
|
(5 | ) |
9
|
(14 | ) |
#
|
||||||||||
Total
mark-to-market activities, net
|
$ |
5
|
$ |
88
|
$ | (83 | ) | (94 | ) |
#
|
Variance
of 100% or greater
|
Nine Months Ended September 30,
|
||||||||||||||||
2007
|
2006
|
$
Change
|
%
Change
|
|||||||||||||
(Dollars
in millions)
|
||||||||||||||||
Provision
for expected allowed claims
|
$ | (3,695 | ) | $ |
883
|
$ |
4,578
|
# | % | |||||||
Gains
on asset sales
|
(286 | ) |
—
|
286
|
—
|
|||||||||||
Asset
impairments
|
120
|
2
|
(118 | ) |
#
|
|||||||||||
DIP
Facility financing and CalGen Secured Debt repayment costs
|
182
|
35
|
(147 | ) |
#
|
|||||||||||
Professional
fees
|
139
|
107
|
(32 | ) | (30 | ) | ||||||||||
Interest
(income) on accumulated cash
|
(39 | ) | (18 | ) |
21
|
#
|
||||||||||
Other
|
213
|
90
|
(123 | ) |
#
|
|||||||||||
Total
reorganization items
|
$ | (3,366 | ) | $ |
1,099
|
$ |
4,465
|
#
|
#
|
Variance
of 100% or greater
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(in
millions)
|
||||||||||||||||
Cash
provided by operating activities
|
$ |
268
|
$ |
371
|
$ |
93
|
$ |
167
|
||||||||
Less:
|
||||||||||||||||
Changes
in operating assets and liabilities, excluding the effects of
acquisition
|
217
|
85
|
139
|
18
|
||||||||||||
Additional
adjustments to reconcile GAAP net income (loss) to net cash provided
by
operating activities from both continuing and discontinued
operations:
|
||||||||||||||||
Depreciation
and amortization expense(1)
|
136
|
148
|
420
|
437
|
||||||||||||
Deferred
income taxes, net
|
50
|
1
|
132
|
(36 | ) | |||||||||||
Mark-to-market
activities, net
|
(2 | ) | (28 | ) | (5 | ) | (88 | ) | ||||||||
Non-cash
reorganization items
|
(3,956 | ) |
106
|
(3,459 | ) |
976
|
||||||||||
Impairment
charges and other
|
29
|
57
|
31
|
265
|
||||||||||||
GAAP
net income (loss)
|
3,794
|
2
|
2,835
|
(1,405 | ) | |||||||||||
Add:
|
||||||||||||||||
Adjustments
to reconcile GAAP net loss to Adjusted EBITDA:
|
||||||||||||||||
Interest
expense, net of interest income
|
588
|
209
|
1,128
|
761
|
||||||||||||
Depreciation
and amortization expense(1)
|
125
|
134
|
383
|
389
|
||||||||||||
Income
tax provision (benefit)
|
51
|
1
|
133
|
(36 | ) | |||||||||||
Impairment
charges
|
—
|
(4 | ) |
2
|
117
|
|||||||||||
Reorganization
items
|
(3,940 | ) |
146
|
(3,366 | ) |
1,099
|
||||||||||
Major
maintenance expense
|
4
|
31
|
78
|
64
|
||||||||||||
Operating
lease expense
|
15
|
11
|
39
|
53
|
||||||||||||
(Gains)
on derivatives (non-cash portion)
|
(6 | ) | (28 | ) | (18 | ) | (178 | ) | ||||||||
Non-cash
loss on repurchase of debt
|
—
|
—
|
—
|
18
|
||||||||||||
Claim
settlement income
|
(129 | ) |
—
|
(129 | ) |
—
|
||||||||||
Other
|
3
|
(11 | ) | (4 | ) | (6 | ) | |||||||||
Adjusted
EBITDA
|
$ |
505
|
$ |
491
|
$ |
1,081
|
$ |
876
|
(1)
|
Depreciation
and amortization in the GAAP net income (loss) calculation includes
items,
such as deferred financing costs and discounts/premiums, which are
included in interest expense, net of interest income in the Adjusted
EBITDA calculation.
|
|
·
|
MWh
generated. We generate power that we sell to third
parties. These sales are recorded as electricity and steam revenue.
The
volume in MWh is a direct indicator of our level of electricity generation
activity.
|
|
·
|
Average
availability and average baseload capacity
factor. Availability represents the percent of total hours
during the period that our plants were available to run after taking
into
account the downtime associated with both scheduled and unscheduled
outages. The baseload capacity factor is calculated by dividing (a)
total
MWh generated by our power plants (excluding peaker facilities) by
the
product of multiplying (b) the weighted
average
|
|
·
|
Average
Heat Rate for
gas-fired fleet of power plants (excluding peakers) expressed in
Btus of
fuel consumed per KWh generated. We calculate
the
average Heat Rate for our gas-fired power plants (excluding peaker
facilities) by dividing (a) fuel consumed in Btu by (b) KWh generated.
The
resultant Heat Rate is a measure of fuel efficiency, so the lower
the Heat
Rate, the lower our cost of generation. We also calculate a
“steam-adjusted” Heat Rate, in which we adjust the fuel consumption in Btu
down by the equivalent heat content in steam or other thermal energy
exported to a third party, such as to steam hosts for our cogeneration
facilities.
|
|
·
|
Average
all-in realized
electric price expressed in dollars per
MWh generated. Our risk
management
and optimization activities are integral to our power generation
business
and directly impact our total realized revenues from generation.
Accordingly, we calculate the all-in realized electric price per
MWh
generated by dividing (a) adjusted electricity and steam revenue,
which
includes capacity revenues, energy revenues, thermal revenues, the
spread
on sales of purchased electricity for hedging, balancing, and optimization
activity and generating revenue recorded in mark-to-market activities,
net, by (b) total generated MWh in the
period.
|
|
·
|
Average
cost of natural gas expressed in dollars per MMBtu of fuel
consumed. Our risk management and optimization activities
related to fuel procurement directly impact our total fuel expense.
The
fuel costs for our gas-fired power plants are a function of the price
we
pay for fuel purchased and the results of the fuel hedging, balancing,
and
optimization activities. Accordingly, we calculate the cost of natural
gas
per MMBtu of fuel consumed in our power plants by dividing (a) adjusted
fuel expense, which includes the cost of fuel consumed by our plants
(adding back cost of inter-company gas pipeline costs, which is eliminated
in consolidation), the spread on sales of purchased gas for hedging,
balancing, and optimization activity, and fuel expense related to
generation recorded in mark-to-market activities, net by (b) the
heat
content in millions of Btu of the fuel we consumed in our power plants
for
the period.
|
|
·
|
All-in
realized spark spread expressed in dollars per
MWh generated. Our risk management
activities focus on managing the spark spread for our portfolio of
power
plants, the spread between the sales price for electricity generated
and
the cost of fuel. We calculate all-in realized spark spread by subtracting
(a) adjusted fuel expense from (b) adjusted electricity and steam
revenue.
We calculate the all-in realized spark spread per MWh generated by
dividing all-in realized spark spread by total MWh generated in the
period.
|
|
·
|
Average
plant operating expense per MWh. To assess trends in
electric power plant operating expense, or POX, per MWh, we divide
POX by
total MWh generated in the period.
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(in
thousands, except hours in period, percentages,
|
||||||||||||||||
Heat
Rate, price and cost information)
|
||||||||||||||||
Operating
Performance Metrics:
|
||||||||||||||||
MWh
generated
|
27,223
|
28,385
|
69,005
|
62,826
|
||||||||||||
Average
availability
|
93.9 | % | 95.8 | % | 91.5 | % | 92.6 | % | ||||||||
Average
baseload capacity factor:
|
||||||||||||||||
Average
total MW in operation
|
24,854
|
26,900
|
25,098
|
26,942
|
||||||||||||
Less:
Average MW of peaker facilities
|
3,019
|
2,965
|
3,013
|
2,965
|
||||||||||||
Average
baseload MW in operation
|
21,835
|
23,935
|
22,085
|
23,977
|
||||||||||||
Hours
in the period
|
2,208
|
2,208
|
6,552
|
6,552
|
||||||||||||
Potential
baseload generation (MWh)
|
48,212
|
52,848
|
144,701
|
157,097
|
||||||||||||
Actual
total generation (MWh)
|
27,223
|
28,385
|
69,005
|
62,826
|
||||||||||||
Less:
Actual peaker facilities’ generation (MWh)
|
880
|
866
|
1,651
|
1,230
|
||||||||||||
Actual
baseload generation (MWh)
|
26,343
|
27,519
|
67,354
|
61,596
|
||||||||||||
Average
baseload capacity factor
|
54.6 | % | 52.1 | % | 46.5 | % | 39.2 | % | ||||||||
Average
Heat Rate for gas-fired power plants (excluding
peakers)(Btu’s/KWh):
|
||||||||||||||||
Not
steam adjusted
|
8,107
|
7,999
|
8,213
|
8,372
|
||||||||||||
Steam
adjusted
|
7,211
|
7,213
|
7,172
|
7,235
|
||||||||||||
Average
all-in realized electric price:
|
||||||||||||||||
Electricity
and steam revenue
|
$ |
1,689,992
|
$ |
1,842,575
|
$ |
4,411,782
|
$ |
4,070,045
|
||||||||
Spread
on sales of purchased power for hedging and optimization
|
166,097
|
(32,372 | ) |
307,149
|
28,461
|
|||||||||||
Revenue
related to power generation in mark-to-market activity,
net
|
78,241
|
56,413
|
230,074
|
142,585
|
||||||||||||
Adjusted
electricity and steam revenue
|
$ |
1,934,330
|
$ |
1,866,616
|
$ |
4,949,005
|
$ |
4,241,091
|
||||||||
MWh
generated
|
27,223
|
28,385
|
69,005
|
62,826
|
||||||||||||
Average
all-in realized electric price per MWh
|
$ |
71.05
|
$ |
65.76
|
$ |
71.72
|
$ |
67.51
|
||||||||
Average
cost of natural gas:
|
||||||||||||||||
Fuel
expense
|
$ |
1,114,132
|
$ |
1,105,248
|
$ |
2,989,318
|
$ |
2,473,657
|
||||||||
Fuel
cost elimination
|
4,602
|
3,132
|
12,646
|
9,158
|
||||||||||||
Spread
on sales of purchased gas for hedging and optimization
|
(4,520 | ) | (8,920 | ) | (4,362 | ) | (5,148 | ) | ||||||||
Fuel
expense related to power generation in mark-to-market activity,
net
|
42,677
|
35,111
|
155,663
|
111,409
|
||||||||||||
Adjusted
fuel expense
|
$ |
1,156,891
|
$ |
1,134,571
|
$ |
3,153,265
|
$ |
2,589,076
|
||||||||
MMBtu
of fuel consumed by generating plants
|
174,719
|
195,181
|
462,567
|
426,027
|
||||||||||||
Average
cost of natural gas per MMBtu
|
$ |
6.62
|
$ |
5.81
|
$ |
6.82
|
$ |
6.08
|
||||||||
MWh
generated
|
27,223
|
28,385
|
69,005
|
62,826
|
||||||||||||
Average
cost of adjusted fuel expense per MWh
|
$ |
42.50
|
$ |
39.97
|
$ |
45.70
|
$ |
41.21
|
||||||||
All-in
realized spark spread:
|
||||||||||||||||
Adjusted
electricity and steam revenue
|
$ |
1,934,330
|
$ |
1,866,616
|
$ |
4,949,005
|
$ |
4,241,091
|
||||||||
Less:
Adjusted fuel expense
|
1,156,891
|
1,134,571
|
3,153,265
|
2,589,076
|
||||||||||||
All-in
realized spark spread
|
$ |
777,439
|
$ |
732,045
|
$ |
1,795,740
|
$ |
1,652,015
|
||||||||
MWh
generated
|
27,223
|
28,385
|
69,005
|
62,826
|
||||||||||||
All-in
realized spark spread per MWh
|
$ |
28.56
|
$ |
25.79
|
$ |
26.02
|
$ |
26.30
|
||||||||
Average
plant operating expense (POX) per actual MWh:
|
||||||||||||||||
POX
|
$ |
182,137
|
$ |
174,552
|
$ |
560,852
|
$ |
519,877
|
||||||||
POX
per actual MWh
|
$ |
6.69
|
$ |
6.15
|
$ |
8.13
|
$ |
8.27
|
Nine Months Ended September 30,
|
||||||||
2007
|
2006
|
|||||||
Beginning
cash and cash equivalents
|
$ |
1,077
|
$ |
786
|
||||
Net
cash provided by (used in):
|
||||||||
Operating
activities
|
93
|
167
|
||||||
Investing
activities
|
483
|
(46 | ) | |||||
Financing
activities
|
50
|
100
|
||||||
Net
increase in cash and cash equivalents including discontinued operations
cash
|
626
|
221
|
||||||
Change
in discontinued operations cash classified as assets held for
sale
|
—
|
(18 | ) | |||||
Net
increase in cash and cash equivalents
|
626
|
203
|
||||||
Ending
cash and cash equivalents
|
$ |
1,703
|
$ |
989
|
|
·
|
On
January 16, 2007, we completed the sale of the Aries Power Plant, a
590-MW natural gas-fired power plant in Pleasant Hill, Missouri,
to
Dogwood Energy LLC, an affiliate of Kelson Holdings, LLC for $234
million,
plus certain per diem expenses incurred by us for running the power
plant
after December 21, 2006, through the closing of the sale. We recorded
a pre-tax gain of approximately $78 million during the first quarter
of
2007. As part of the sale we were also required to use a portion
of the
proceeds received to repay approximately $159 million principal amount
of
financing obligations, $8 million in accrued interest, $11 million
in
accrued swap liabilities and $14 million in debt pre-payment and
make
whole premium fees to our project
lenders.
|
|
·
|
On
July 6, 2007, we completed the sale of the Parlin Power Plant, a
118-MW natural gas-fired power plant in Parlin, New Jersey, to EFS
Parlin
Holdings, LLC, an affiliate of General Electric Capital Corporation,
for
approximately $3 million in cash, plus the assumption by EFS Parlin
Holdings, LLC of certain liabilities and the agreement to waive certain
asserted claims against the Parlin Power Plant. We recorded a pre-tax
gain
of approximately $40 million during the three months ended
September 30, 2007.
|
|
·
|
On
September 13, 2007, we completed the sale of our 50% ownership
interest in Acadia PP, the owner of the Acadia Energy Center, a 1,212-MW
natural gas-fired power plant located near Eunice, Louisiana, to
Cajun Gas
Energy, L.L.C. for consideration totaling approximately $189 million
consisting of $104 million in cash and the payment of $85 million
in
priority distributions due to Cleco (the indirect owner, through
its
subsidiary APH, of the remaining 50% ownership interest in Acadia
PP) in
accordance with the limited liability company agreement, plus the
assumption by Cajun Gas Energy, L.L.C. of certain liabilities. We
recorded
a pre-tax loss of $6 million during the three months ended
September 30, 2007, after having recorded a pre-tax, predominately
non-cash impairment charge of approximately $89 million during the
second
quarter of 2007, to record our interest in Acadia PP at fair value
less
cost to sell, both of which charges are included in reorganization
items
on our Consolidated Condensed Statements of Operations. Additionally,
in
connection with the sale, we entered into a settlement agreement
with
Cleco, which was approved by the U.S. Bankruptcy Court on May 9,
2007, under which Cleco received an allowed unsecured claim against
us in
the amount of $85 million as a result of the
|
|
|
rejection
by CES of two long-term PPAs for the output of the Acadia
Energy Center and our guarantee of those agreements. We recorded
expense
of $85 million for this allowed claim during the second quarter
of 2007,
which is included in reorganization items on our Consolidated Condensed
Statements of
Operations.
|
|
·
|
On
February 21, 2007, we completed the sale of substantially all of the
assets of the Goldendale Energy Center, a 247-MW natural gas-fired
power
plant located in Goldendale, Washington, to Puget Sound Energy LLC
for
approximately $120 million, plus the assumption by Puget Sound of
certain
liabilities. We recorded a pre-tax gain of approximately $31 million
during the first quarter of 2007.
|
|
·
|
On
March 22, 2007, we completed the sale of substantially all of the
assets of PSM, a designer, manufacturer and marketer of turbine and
combustion components, to Alstom Power Inc. for approximately $242
million, plus the assumption by Alstom Power Inc. of certain liabilities.
In connection with the sale, we entered into a parts supply and
development agreement with PSM whereby we have committed to purchase
turbine parts and other services totaling approximately $200 million
over
a five-year period. Additionally, we recorded a pre-tax gain of $135
million during the first quarter of 2007 as the risks and other incidents
of ownership were transferred to Alstom Power
Inc.
|
Total
Claims
|
||||||||
Total
Number
|
Exposure
|
|||||||
Of
Claims
|
(in
millions)
|
|||||||
Total
claims filed
|
18,467
|
$ |
111,740
|
|||||
Less:
|
||||||||
Disallowed
and expunged claims
|
72,159
|
|||||||
Withdrawn
claims
|
8,127
|
|||||||
Redundant
claims
|
1,049
|
|||||||
Other
claims with basis for objection or reduction
|
18,888
|
|||||||
Total
estimate of liquidated claims exposure
|
$ |
11,517
|
||||||
Amounts
recorded as liabilities not subject to compromise
|
184
|
|||||||
Total
estimate of liquidated claims exposure (net of amounts not subject
to
compromise)
|
$ |
11,333
|
|
·
|
On
July 30, 2007, we entered into the Canadian Settlement Agreement
after the Bankruptcy Courts approved the terms of our two previously
disclosed proposed settlements with the Canadian Debtors and with
an ad
hoc committee of holders of notes issued by our subsidiary ULC I and
guaranteed by Calpine Corporation. The Canadian Settlement Agreement,
which encompasses both proposed settlements, resolves virtually all
major
cross-border issues among the parties relating to pre-petition
intercompany balances, our direct and indirect guarantees of the
ULC I notes and our guarantee of the ULC II notes and
related interest. The material contingencies within the Canadian
Settlement Agreement were resolved by September 30, 2007. As a
result, the provision for expected allowed claims in reorganization
items
was reduced by approximately $4.1 billion and interest expense was
increased by approximately $0.3 billion on our Consolidated Condensed
Statements of Operations during the three months ended September 30,
2007.
|
|
·
|
On
August 8, 2007, the U.S. Bankruptcy Court approved a settlement with
the Ad Hoc Committee of Second Lien Holders of Calpine Corporation
and
Wilmington Trust Company as indenture trustee for the Second Priority
Notes. Pursuant to the settlement, approximately $289 million of
claims
for make whole premiums and/or damages asserted against the U.S.
Debtors
by the holders of the Second Priority Debt will be replaced by a
secured
claim for $60 million that shall be paid in cash and an unsecured
claim
for $40 million. As a result, we recorded expense of $100 million
to the
provision for expected allowed claims in reorganization items on
our
Consolidated Condensed Statements of Operations during the three
months
ended September 30, 2007.
|
|
·
|
On
August 10, 2007, the U.S. Bankruptcy Court approved our limited
objection to certain claims asserted by holders of the Convertible
Notes,
disallowing claims seeking damages for alleged breach of “conversion
rights.” The U.S. Bankruptcy Court’s decision does not affect a previous
agreement to allow claims for repayment of principal and interest
on the
Convertible Notes.
|
|
·
|
On
October 10, 2007, the U.S. Bankruptcy Court approved the settlement
agreement with the Unsecured Noteholders and the indenture trustee
for
such Unsecured Notes. Under the agreement, $109 million of claims
for make
whole premiums asserted against the U.S. Debtors were replaced with
unsecured claims totaling $54 million. In addition, the U.S. Debtors
have
agreed to pay the reasonable professional fees incurred by the Unsecured
Noteholders and the indenture trustee. As a result, we recorded expense
of
$54 million to the provision for expected allowed claims in reorganization
items on our Consolidated Condensed Statements of Operations during
the
three months ended September 30,
2007.
|
Fair
value of commodity contracts outstanding at January 1,
2007
|
$
|
(202
|
)
|
|
(Gains)
losses recognized or otherwise settled during the period(1)
|
81
|
|||
Fair
value attributable to new contracts
|
(75
|
)
|
||
Changes
in fair value attributable to price movements
|
26
|
|||
Fair
value of commodity contracts outstanding at September 30, 2007(2)
|
$
|
(170
|
)
|
(1)
|
Recognized
gains from commodity cash flow hedges of $5 million (represents a
portion
of the realized value of cash flow hedge activity of $7 million as
disclosed in Note 8 of the Notes to Consolidated Condensed Financial
Statements) net of losses related to the terminated fair value hedged
item
of $54 million (represents a portion of sales of purchased power
as
reported on our Consolidated Condensed Statements of Operations)
and
losses related to undesignated derivatives of $32 million (represents
a
portion of the realized mark-to-market activities, net as reported
on our
Consolidated Condensed Statements of
Operations).
|
(2)
|
Net
commodity derivative liabilities reported in Note 8 of the Notes to
Consolidated Condensed Financial
Statements.
|
Fair
Value Source
|
2007
|
2008-2009
|
2010-2011
|
After 2011
|
Total
|
|||||||||||||||
Prices
actively quoted
|
$ | (39 | ) | $ |
12
|
$ |
—
|
$ | (10 | ) | $ | (37 | ) | |||||||
Prices
provided by other external sources
|
21
|
(62 | ) | (92 | ) |
—
|
(133 | ) | ||||||||||||
Total
fair value
|
$ | (18 | ) | $ | (50 | ) | $ | (92 | ) | $ | (10 | ) | $ | (170 | ) |
Credit
Quality
|
||||||||||||||||||||
(Based on Standard & Poor’s Ratings
|
||||||||||||||||||||
as of September 30,
2007)
|
2007
|
2008-2009
|
2010-2011
|
After 2011
|
Total
|
|||||||||||||||
Investment
grade
|
$ |
14
|
$ |
328
|
$ | (54 | ) | $ | (10 | ) | $ |
278
|
||||||||
Non-investment
grade
|
(2 | ) | (2 | ) |
—
|
—
|
(4 | ) | ||||||||||||
No
external ratings
|
(30 | ) | (376 | ) | (38 | ) |
—
|
(444 | ) | |||||||||||
Total
fair value
|
$ | (18 | ) | $ | (50 | ) | $ | (92 | ) | $ | (10 | ) | $ | (170 | ) |
Fair
Value
|
||||||||
After
|
||||||||
10%
Adverse
|
||||||||
Fair Value
|
Price Change
|
|||||||
At
September 30, 2007:
|
||||||||
Electricity
|
$ | (36 | ) | $ | (288 | ) | ||
Natural
gas
|
(134 | ) | (299 | ) | ||||
Total
|
$ | (170 | ) | $ | (587 | ) |
Fair
Value
|
|||||||||||||||||||||||||
September 30,
|
|||||||||||||||||||||||||
2007
|
2008
|
2009
|
2010
|
2011
|
Thereafter
|
Total
|
2007
|
||||||||||||||||||
Debt:
|
|||||||||||||||||||||||||
|
|||||||||||||||||||||||||
Fixed
rate
|
$
|
15
|
$
|
206
|
$
|
218
|
$
|
253
|
$
|
125
|
$
|
820
|
$
|
1,637
|
$
|
1,608
|
|||||||||
Average
interest rate
|
9.5
|
%
|
6.9
|
%
|
7.1
|
%
|
7.7
|
%
|
9.0
|
%
|
9.4
|
%
|
|||||||||||||
|
|||||||||||||||||||||||||
Variable
rate
|
$
|
13
|
$
|
3,991
|
$
|
382
|
$
|
272
|
$
|
1,697
|
$
|
46
|
$
|
6,401
|
$
|
6,396
|
|||||||||
Average
interest rate
|
7.5
|
%
|
7.3
|
%
|
11.0
|
%
|
11.5
|
%
|
10.6
|
%
|
10.8
|
%
|
|||||||||||||
|
|||||||||||||||||||||||||
Interest
Rate Instruments:
|
|||||||||||||||||||||||||
|
|||||||||||||||||||||||||
Variable
to fixed swaps(1)
|
$
|
5,892
|
$
|
5,892
|
$
|
5,592
|
$
|
3,411
|
$
|
1,811
|
$
|
1,580
|
n/a
|
$
|
(55
|
)
|
|||||||||
Average
pay rate
|
5.0
|
%
|
5.0
|
%
|
5.0
|
%
|
5.2
|
%
|
4.9
|
%
|
4.9
|
%
|
|||||||||||||
Average
receive rate
|
5.2
|
%
|
4.9
|
%
|
4.7
|
%
|
4.7
|
%
|
4.8
|
%
|
4.9
|
%
|
(1)
|
Includes
interest rate swaps where forecasted issuance of variable rate debt
is
deemed probable.
|
|
·
|
The
Company’s procedures require all intercompany transactions to be recorded
in standardized “affiliate” accounts which are for the exclusive use of
recording intercompany transactions, and the balances in such accounts
are
properly eliminated in consolidation. To ensure that intercompany
balances
have properly eliminated, “Intercompany Out-of-Balance” reports are run
daily during the monthly closing process and distributed to all
accountants at the Company to identify and correct any out-of-balance
occurrences in each affiliate
account.
|
|
·
|
To
provide reasonable assurance that no intercompany transactions
have
inadvertently been recorded in accounts set aside for transactions
with
third parties, the Company performs an analysis of each account
with third
party balances during the quarterly closing process. These analyses
are
reviewed by the Company’s accounting
management.
|
Exhibit
|
||
Number
|
Description
|
|
2.1
|
Debtors’
Fourth Amended Joint Plan of Reorganization Pursuant to Chapter 11 of
the United States Bankruptcy Code.*
|
|
3.1.1
|
Amended
and Restated Certificate of Incorporation of the Company, as amended
(incorporated by reference to Exhibit 3.1 to the Company’s Annual
Report on Form 10-K for the period ended December 31, 2006,
filed with the SEC on March 14, 2007).
|
|
3.2
|
Amended
and Restated By-laws of the Company (incorporated by reference to
Exhibit 3.1.8 to the Company’s Annual Report on Form 10-K for
the year ended December 31, 2001, filed with the SEC on
March 29, 2002).
|
|
10.1
|
Settlement
Agreement dated as of July 24, 2007, by and between Calpine
Corporation, on behalf of itself and its U.S. subsidiaries, Calpine
Canada
Energy Ltd., Calpine Canada Power Ltd., Calpine Canada Energy Finance
ULC,
Calpine Energy Services Canada Ltd., Calpine Canada Resources Company,
Calpine Canada Power Services Ltd., Calpine Canada Energy Finance
II ULC,
Calpine Natural Gas Services Limited, 3094479 Nova Scotia Company,
Calpine
Energy Services Canada Partnership, Calpine Canada Natural Gas
Partnership, Calpine Canadian Saltend Limited Partnership and HSBC
Bank
USA, National Association, as successor indenture trustee (incorporated
by
reference to Exhibit 99.1 to the Company’s Current Report on
Form 8-K filed with the SEC on August 3,
2007).
|
|
10.2
|
Amendment,
dated October 10, 2007, to Employment Agreement between the Company
and Robert P. May.*†
|
|
10.3
|
Employment
Separation Agreement dated August 31, 2007, between the Company and
Eric N. Pryor.*†
|
|
10.4
|
Letter
dated September 20, 2007, from the Company to Gregory
Doody.*†
|
|
10.5
|
Aircraft
Travel Card Guidelines.*†
|
|
31.1
|
Certification
of the Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule
15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
31.2
|
Certification
of the Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule
15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
32.1
|
Certification
of Chief Executive Officer and Chief Financial Officer Pursuant to
18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*
|
*
|
Filed
herewith.
|
†
|
Management
contract or compensatory plan or
arrangement.
|
|
|
By:
|
/s/ LISA
DONAHUE
|
|
|
|
|
Lisa
Donahue
|
|
|
|
|
Senior
Vice President and
|
|
|
|
|
Chief
Financial Officer
|
|
|
|
|
|
|
|
Date: November 6,
2007
|
|
|
|
|
|
By:
|
/s/ CHARLES
B. CLARK, JR.
|
|
|
|
|
Charles
B. Clark, Jr.
|
|
|
|
|
Senior
Vice President and
|
|
|
|
|
Chief
Accounting Officer
|
|
|
|
|
|
|
|
Date: November 6,
2007
|
|
|
|
Exhibit
|
||
Number
|
Description
|
|
2.1
|
Debtors’
Fourth Amended Joint Plan of Reorganization Pursuant to Chapter 11 of
the United States Bankruptcy Code.*
|
|
3.1.1
|
Amended
and Restated Certificate of Incorporation of the Company, as amended
(incorporated by reference to Exhibit 3.1 to the Company’s Annual
Report on Form 10-K for the period ended December 31, 2006,
filed with the SEC on March 14, 2007).
|
|
3.2
|
Amended
and Restated By-laws of the Company (incorporated by reference to
Exhibit 3.1.8 to the Company’s Annual Report on Form 10-K for
the year ended December 31, 2001, filed with the SEC on
March 29, 2002).
|
|
10.1
|
Settlement
Agreement dated as of July 24, 2007, by and between Calpine
Corporation, on behalf of itself and its U.S. subsidiaries, Calpine
Canada
Energy Ltd., Calpine Canada Power Ltd., Calpine Canada Energy Finance
ULC,
Calpine Energy Services Canada Ltd., Calpine Canada Resources Company,
Calpine Canada Power Services Ltd., Calpine Canada Energy Finance
II ULC,
Calpine Natural Gas Services Limited, 3094479 Nova Scotia Company,
Calpine
Energy Services Canada Partnership, Calpine Canada Natural Gas
Partnership, Calpine Canadian Saltend Limited Partnership and HSBC
Bank
USA, National Association, as successor indenture trustee (incorporated
by
reference to Exhibit 99.1 to the Company’s Current Report on
Form 8-K filed with the SEC on August 3,
2007).
|
|
10.2
|
Amendment,
dated October 10, 2007, to Employment Agreement between the Company
and Robert P. May.*†
|
|
10.3
|
Employment
Separation Agreement dated August 31, 2007, between the Company and
Eric N. Pryor.*†
|
|
10.4
|
Letter
dated September 20, 2007, from the Company to Gregory
Doody.*†
|
|
10.5
|
Aircraft
Travel Card Guidelines.*†
|
|
31.1
|
Certification
of the Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule
15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
31.2
|
Certification
of the Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule
15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
32.1
|
Certification
of Chief Executive Officer and Chief Financial Officer Pursuant to
18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*
|
*
|
Filed
herewith.
|
†
|
Management
contract or compensatory plan or
arrangement.
|