biz.yahoo.com
``2001 was both a rewarding and challenging year for Calpine and the U.S. power sector. Not only did we conclude a five-year period in which recurring earnings per share grew at a compound annual rate of 78 percent, we successfully executed on our long-term strategy of building the nation's most efficient, low-cost fleet of power generating facilities. This considerably strengthens our competitive advantage in today's challenging market climate,'' said Calpine Chairman, CEO and President Peter Cartwright. ``Calpine nearly doubled its generating capacity in attractive power markets across North America and added its first European project in the United Kingdom. We secured attractive multi-year contracts with large load-serving entities and considerably enhanced our natural gas asset base to fuel our fleet of low-cost gas-fired facilities. These accomplishments combine to strengthen Calpine's business, positioning us to meet our long-term growth objectives when market conditions recover.
``Calpine's 2001 achievements occurred despite the reductions in demand due to the national economic recession and unusually mild weather -- short-term challenges that should not obscure the very real long-term need for new power generating capacity in the markets we serve,'' continued Cartwright. ``We enter 2002 mindful of the many uncertainties in today's economy. While we are focused on continuing to build our capacity to meet long-term power needs, we will do so on an economically sound basis and with disciplined attention to liquidity and evolving conditions in the power markets.''
...
2002 OUTLOOK
``We face challenges that are likely to continue well into 2002; however, we believe demand for power from efficient, modern plants will out-pace supply and improve pricing over the longer term. While many of our competitors are abandoning the market, canceling projects and selling assets, Calpine has developed a 2002 business plan that balances the pace of its development power program with its need to reduce capital spending and adapt to current market conditions. This plan retains our ability to respond quickly when power demand increases as a result of economic recovery and more normal weather patterns -- but only when new projects meet our exacting investment criteria,'' Cartwright said. ``Calpine has built a foundation of assets that will allow us to continue to grow, and to grow profitably.''
As outlined on January 16, 2002, Calpine has segmented its development program into two distinct components, a firm program and a flexible program.
Under the firm program, Calpine will continue to advance those projects already in construction in 2002. The company currently has 27 gas-fired energy centers under construction, totaling 15,200 mw of capacity, across a diversified range of key power markets. This program is expected to create strong cash flow and earnings and will more than double Calpine's generating base, increasing generating capacity from 11,100 mw today, to 23,200 mw by the end of 2002. Calpine has secured multi-year contracts with large load-serving entities, industrial customers and other wholesale counterparties for approximately 65% of its portfolio in 2002. Calpine expects to have 26,300 mw on line in 2003. Calpine will continuously monitor its construction capital expenditures to assure that this program remains in alignment with power market conditions and the availability of capital at attractive terms.
The flexible program represents an additional 15,100 mw of gas-fired generation. Development of these projects is expected to continue until they are ready for construction, at which point they will be placed on hold pending further review by the company. Construction will proceed only when there is an established market need for additional generating resources at prices that will allow the company to meet its established investment criteria.
Calpine remains focused on enhancing the financial strength of the company and ensuring sufficient liquidity. During 2002, the capital required to fund the construction of 27 projects is expected to be approximately $2.5 billion. In addition, approximately $250 million is planned for major maintenance for operating plants and capital for gas operations.
Funds available in 2002 include approximately $1.8 billion of cash resources(c), approximately $875 million of borrowing capacity under working capital(d) and construction revolvers, estimated annual operating cash flow(e) of $1.2 billion, and approximately $500 million of projected proceeds from a planned sale/leaseback of certain peaking facilities. These will be used in part to repay $819 million of zero coupon convertible debentures and $330 million of cash lease payments.
In addition, Calpine is currently evaluating other sources of liquidity that could yield an estimated $1.5 billion. These include additional lease financing, the sale of non-strategic power and gas assets and the monetization of certain receivables. Further, Calpine has existing power sales agreements with a current present value above market of $6.5 billion.
``Calpine has the people, the resources and the proven strategy in place to enable us to deliver value for our shareholders, our customers and our employees. We are proud that Calpine achieved earnings growth of 63 percent in such challenging times, and we are committed to executing our program in 2002 and beyond,'' Cartwright said.
(c) Cash resources include $1.5 billion on hand at year-end, $224 million
balance due and in escrow at December 31, 2001 on the PG&E
receivables sale and $100 million balance of proceeds from the
$1.2 billion convertible senior notes offering received in early
January 2002.
(d) Includes $750 million of borrowing capacity under an existing
$400 million working capital revolver and a pending $1 billion
working capital revolver. The company has received commitments for
the $1 billion facility and expects to complete the transaction in
February.
(e) Annual operating cash flow for 2002 is based on an initial earnings
estimate of $1.70 per share, which is expected to generate
approximately $2 billion of EBITDA, as adjusted. Annual operating
cash flow equals EBITDA, as adjusted, plus non-cash operating lease
expense of $200 million, less $900 million of cash interest and
$100 million of cash taxes.
Conference Call Information
Calpine will host a conference call to discuss fourth quarter and year-end results. The conference call will occur Thursday, January 31, 2002, at 7:30 a.m. PST. To participate via the teleconference (in listen-only mode), please dial 1-800-683-1535 at least five minutes before the start of the conference call. International callers may dial 1-973-872-3100. In addition, Calpine will simulcast the conference call live via the Internet. The web cast can be accessed and will be available for 30 days on the investor relations page of Calpine's web site at www.calpine.com. |
