Dramatic Growth At Calpine Continues; Recent Newsletter's Interpretation of Financial Results is Incorrect.Business Editors
SAN JOSE San Jose, city, United States
San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , Calif.--(BUSINESS WIRE)--March 27, 2000
Calpine Corporation (NYSE NYSE
See: New York Stock Exchange :CPN CPN Communist Party of Nepal
CPN Commercial Property News
CPN Civic Practices Network
CPN Calling Party Number
CPN Community Psychiatric Nurse (UK)
CPN Cisco Powered Network
CPN Connaitre et Proteger la Nature ), one of the nation's fastest growing power Growing Power is an urban agriculture organization headquartered in Milwaukee, Wisconsin. It runs the last functional farm within the Milwaukee city limits and also organizes activities in Chicago. companies, reported today that recently announced projects put the company ahead of schedule to achieve its current growth objectives. In spite of this progress, an independent newsletter issued March 24, 2000 portrayed Calpine's financial position in an inaccurate and misleading fashion.
"Calpine is a leader in the U.S. power industry. Our current project portfolio includes 70 projects in operation, construction or development, totaling approximately 17,000 megawatts. This is an enormous program that will continue to grow and provide significant long-term value as we move toward our goal of having over 25,000 megawatts in operation by the end of 2004," stated Calpine Chairman, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Peter Cartwright
"I want to assure our investors of the quality of our reported earnings, and toward that end we make the following observations," added Cartwright.
Calpine currently has 26 power plants under construction or in announced development, compared to eight plants at the beginning of 1999. With this growth in the development program, the company incurred $77.6 million in capitalized interest Capitalized interest
Interest that is not immediately expensed, but rather is considered as an asset and is then amortized through the income statement over time. In the context of project financing, interest that is paid by additional borrowing. and development costs in 1999, a significant increase from 1998. These costs will continue to increase and be substantial as the development program rolls out. In accordance with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records.
Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP
See: Generally Accepted Accounting Principles
See generally accepted accounting principles (GAAP). ), Calpine is required to capitalize interest during construction and development costs until the plant enters commercial operation. At this time, the costs begin to be amortized over the life of the power plant.
One of Calpine's competitive advantages is the ability to optimize its operating portfolio to enhance long-term value. Recent successes include the restructuring of the Gilroy power sales agreement with Pacific Gas and Electric Company
The Pacific Gas and Electric Company (PG&E) , (NYSE: PCG), is the utility that provides natural gas and electricity to most of Northern California. (PG&E). With this amendment, Calpine has the opportunity to earn assured payment streams from PG&E. The project will be available in 2002 for Calpine to market its output into the very attractive northern California Northern California, sometimes referred to as NorCal, is the northern portion of the U.S. state of California. The region contains the San Francisco Bay Area, the state capital, Sacramento; as well as the substantial natural beauty of the redwood forests, the northern power market as part of the company's system of efficient gas-fired and geothermal power Geothermal power
Thermal or electrical power produced from the thermal energy contained in the Earth (geothermal energy). Use of geothermal energy is based thermodynamically on the temperature difference between a mass of subsurface rock and water and a mass facilities. The company is in active discussions to utilize this model to restructure an additional 500 megawatts of generation in northern California. Calpine is also looking to restructure power sales agreements at its other plants across the country.
Another optimization success is Calpine's restructuring of its investment in the Sumas project. This investment is based on a pre-determined 24.5% pre-tax rate of return. In late 1998, the partnership agreement was amended to provide dividend distributions sooner than forecast. Calpine is using these distributions to invest in the accelerated growth of the development program. The company has fully amortized its investment and recognizes earnings from this project upon the receipt of the quarterly cash distributions.
The company enhanced its portfolio of low-cost gas resources in the Sacramento Basin with the acquisition of Vintage Petroleum, Inc.'s interest in the Rio Vista Rio Vista may refer to:
In the third quarter of 1999, the company reclassed its recognition of revenue and expenses related to third party sales and purchases of electricity and gas to be consistent with industry practices. This change had no impact to Calpine's net earnings.
"In structuring each acquisition and development project, we carefully work to maximize the economic value of each asset. All elements of the transactions are reviewed with Arthur Andersen For the U.S. Supreme Court case commonly known as Arthur Andersen, see .
Arthur Andersen LLP, based in Chicago, was once one of the "Big Five" accounting firms (the other four are PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG), performing , our outside accountants, to insure the proper recognition of earnings in accordance with GAAP," said Calpine Executive Vice President and Chief Financial Officer Ann B. Curtis. "We are well on our way toward becoming the premier power company in the U.S. The significant growth that Calpine has achieved during the past year has provided, and will continue to provide, solid financial performance and success in the years to come," added Curtis.
The company has scheduled a conference call for this morning at 8:30 a.m. Pacific Standard Time. To participate in a listen-only mode, please call (800) 322-9079.
Calpine Corporation is a leading U.S. power company dedicated to providing customers with reliable and competitively priced electricity. Calpine currently has interests in approximately 17,000 megawatts of capacity in operation, under construction or in announced development in 20 states--enough energy to power approximately 17 million households. Calpine has headquarters in San Jose, Calif., with regional offices in Houston, Texas; Pleasanton, Calif.; and Boston, Mass. The company was founded in 1984 and is publicly traded on the New York Stock Exchange New York Stock Exchange (NYSE)
World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol CPN. To learn more about Calpine, visit its website at www.calpine.com.
This news release discusses certain matters that may be considered "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the intent, belief or current expectations of Calpine Corporation ("the Company") and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that could materially affect actual results such as, but not limited to, (i) changes in government regulations and anticipated deregulation Deregulation
The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry.
Traditional areas that have been deregulated are the telephone and airline industries. of the electric energy industry; (ii) commercial operations of new plants that may be delayed or prevented because of various development and construction risks, such as a failure to obtain financing and the necessary permits to operate or the failure of third-party contractors to perform their contractual obligations (iii) cost estimates are preliminary and actual cost may be higher than estimated, (iv) the assurance that the Company will develop additional plants, (v) a competitor's development of a lower-cost generating gas-fired power plant or (vi) the risks associated with marketing and selling power from power plants in the newly competitive energy market. Prospective investors are also referred to the other risks identified from time to time in the Company's reports and registration statements filed with the Securities and Exchange Commission.