Breaking News

Sony Posts Surprise Q1 Net Profit, Beats Estimate on PS4, Yen
Tweet TWEET

Calpine Reports Record First Quarter Results, Reaffirms 2014 Guidance Despite Impact of Previously Announced Divestiture

  Calpine Reports Record First Quarter Results, Reaffirms 2014 Guidance   Despite Impact of Previously Announced Divestiture  Business Wire  HOUSTON -- May 1, 2014  Calpine Corporation (NYSE: CPN)  Summary of First Quarter 2014 Financial Results (in millions, except per share amounts):                                                                       Three Months Ended March 31,                                    2014       2013       % Change                                                                   Operating Revenues                 $ 1,965     $ 1,241     58.3  % Commodity Margin                   $ 645       $ 461       39.9  % Adjusted EBITDA                    $ 446       $ 286       55.9  % Adjusted Free Cash Flow            $ 130       $ (43   ) Per Share (diluted)                $ 0.31      $ (0.10 ) Net Loss^1                         $ (17   )   $ (125  ) Per Share (diluted)                $ (0.04 )   $ (0.28 ) Net Income (Loss), As Adjusted^2   $ 55        $ (70   )                                                                    Reaffirming 2014 Full Year Guidance^3 (in millions, except per share amounts):                                                             2014                               Adjusted EBITDA              $1,900 - 2,000 Adjusted Free Cash Flow      $785 - 885 Per Share Estimate (diluted) $1.85 - 2.10                                Recent Achievements:    *Operations:     — Generated approximately 24 million MWh^4 of electricity in first quarter     of 2014     — Leveraged dual-fuel capabilities in Mid-Atlantic and Northeast U.S. to     reliably provide power during extreme winter weather     — Despite extreme weather conditions, delivered low fleetwide forced     outage factor of 2.5%    *Capital Management:     — Announced value-enhancing agreement to divest approximately 3.5 GW of     non-core assets from our Southeast portfolio for $1.57 billion^5     — Completed acquisition of Guadalupe Energy Center in Texas and closed     related $425 million term loan     — Reached final stages of construction for expansions of Deer Park and     Channel Energy Centers in Texas, which are expected to commence commercial     operations during the second quarter of 2014     — Advanced construction on Garrison Energy Center in Delaware, which is     expected to commence commercial operations during the second quarter of     2015  Calpine Corporation (NYSE: CPN) today reported first quarter 2014 Adjusted EBITDA of $446 million, compared to $286 million in the prior year period, and Adjusted Free Cash Flow of $130 million, or $0.31 per diluted share, compared to $(43) million, or $(0.10) per diluted share, in the prior year period. Net Loss^1 for the first quarter of 2014 was $17 million, or $0.04 per diluted share, compared to $125 million, or $0.28 per diluted share, in the prior year period. Net Income, As Adjusted^2, for the first quarter of 2014 was $55 million compared to a Net Loss, As Adjusted^2, of $70 million in the prior year period. The increases in Adjusted EBITDA, Adjusted Free Cash Flow and Net Income, As Adjusted^2, were driven primarily by higher Commodity Margin resulting from stronger market conditions driven by colder than normal weather, our ability to capture the value of our dual-fuel-capable plants in the North during extreme commodity pricing conditions, portfolio changes and higher regulatory capacity revenue.  “Calpine’s power generation fleet and commercial operations produced record-breaking financial results in the first quarter of 2014,” said Jack Fusco, Calpine’s Chief Executive Officer. “Our versatile combined-cycle and dual-fueled fleet performed exceptionally well this winter, providing essential power to the grid during times of scarcity and price volatility. Despite the extreme weather conditions, our workforce preparedness and preventive maintenance enabled us to deliver a low forced outage factor of 2.5%. Our strong results confirm that Calpine has the right fleet, in the right place, at the right time.  “We continue to strategically reposition the company with the recently announced sale of six power plants in our Southeast region for $1.57 billion,” said Fusco. “This transaction unlocks shareholder value from these non-core, historically underappreciated assets, and we intend to redeploy the capital in a balanced and opportunistic manner that is accretive to Adjusted Free Cash Flow Per Share.  “As I reflect on my six years as CEO, I am proud of the strategic, operational and financial accomplishments of the Calpine team. I am confident that Calpine is very well positioned for further success and that Thad Hill is the right leader to capitalize upon those efforts as we navigate the ongoing secular shift in the U.S. power generation sector. As Executive Chairman, I expect to dedicate more time to focusing on corporate strategy including our capital allocation efforts, in order to maximize shareholder returns while also increasing my efforts to advocate for competitive markets and responsible environmental regulation.”  __________  ^1 Reported as Net Loss attributable to Calpine on our Consolidated Condensed Statements of Operations.  ^2 Refer to Table 1 for further detail of Net Income (Loss), As Adjusted.  ^3 2014 guidance assumes closing of previously announced Southeast asset divestiture as of June 1, 2014.  ^4 Includes generation from power plants owned but not operated by Calpine and our share of generation from unconsolidated power plants.  ^5 Subject to working capital and other adjustments.  SUMMARY OF FINANCIAL PERFORMANCE  First Quarter Results  Adjusted EBITDA for the first quarter of 2014 was $446 million compared to $286 million in the prior year period. The year-over-year increase in Adjusted EBITDA was primarily related to a $184 million increase in Commodity Margin, which was primarily due to:        +  stronger market conditions driven by colder than normal                 weather, resulting in higher realized market spark spreads                 running some of our dual-fuel power plants in our North region             +   on fuel oil rather than natural gas when fuel oil prices were                 lower than natural gas prices                 our Russell City and Los Esteros power plants commencing             +   commercial operations during the third quarter of 2013 and the                 acquisition of Guadalupe Energy Center in February 2014 and             +   higher regulatory capacity revenue in the North, partially                 offset by             –   lower contribution from hedges.  Net Loss^1 was $17 million for the first quarter of 2014, compared to $125 million in the prior year period. As detailed in Table 1, Net Income, As Adjusted^2, was $55 million in the first quarter of 2014 compared to a Net Loss, As Adjusted^2, of $70 million in the prior year period. The year-over-year improvement was driven largely by:        +  higher Commodity Margin, as previously discussed, partially                 offset by                 higher plant operating expense driven primarily by our plant                 outage schedule that resulted in increased major maintenance                 expense compared to the prior year period, while normal             –   recurring plant operating expenses were roughly comparable                 after accounting for portfolio changes and the reversal of                 previously recognized regulatory fees that benefited the first                 quarter of 2013 and did not recur in the first quarter of                 2014, and                 lower income tax benefit resulting from an increase in various             –   state and foreign jurisdiction income taxes associated with a                 decrease in our pre-tax loss.  Adjusted Free Cash Flow was $130 million in the first quarter of 2014 compared to $(43) million in the prior year period. Adjusted Free Cash Flow increased during the period primarily due to the increase in Adjusted EBITDA, as previously discussed.                                                   Table 1: Net Income (Loss), As Adjusted                                                                                                      Three Months Ended March 31,                                                   2014            2013                                                   (in millions) Net loss attributable to Calpine                  $   (17   )      $  (125  ) Unrealized MtM (gain)/loss on                     72              55        derivatives^(1)(2) Net Income (Loss), As Adjusted^(3)                $   55          $  (70   )  __________  ^(1) Shown net of tax, assuming a 0% effective tax rate for these items.  ^(2) In addition to changes in market value on derivatives not designated as hedges, changes in unrealized (gain) loss also includes de-designation of interest rate swap cash flow hedges and related reclassification from AOCI into earnings, hedge ineffectiveness and adjustments to reflect changes in credit default risk exposure.  ^(3) See “Regulation G Reconciliations” for further discussion of Net Income (Loss), As Adjusted.   REGIONAL SEGMENT REVIEW OF RESULTS  Table 2: Commodity Margin by Segment (in millions)                           Three Months Ended March 31,               2014        2013        Variance West          $  202       $  202       $   — Texas         121           76            45 North         267           142           125 Southeast     55           41           14 Total         $  645       $  461       $   184                                                 West Region  First Quarter: Commodity Margin in our West segment was unchanged in the first quarter of 2014 compared to the prior year period. Primary drivers were:                  the commencement of commercial operations at our contracted       +  Russell City and Los Esteros power plants during the third                 quarter of 2013 and                 higher spark spreads due to stronger market conditions             +   resulting from lower hydroelectric generation and warmer                 weather, partially offset by             –   the expiration of a contract associated with our Delta Energy                 Center and             –   lower contribution from hedges.  Texas Region  First Quarter: Commodity Margin in our Texas segment increased by $45 million in the first quarter of 2014 compared to the prior year period. Primary drivers were:        +  higher spark spreads resulting from stronger market conditions                 due to colder than normal weather and             +   the acquisition of Guadalupe Energy Center in February 2014,                 partially offset by             –   lower contribution from hedges.  North Region  First Quarter: Commodity Margin in our North segment increased by $125 million in the first quarter of 2014 compared to the prior year period. Primary drivers were:        +  higher spark spreads resulting from stronger market conditions                 due to colder than normal weather                 higher commodity margin contribution from our             +   dual-fuel-capable plants during times when fuel oil prices                 were lower than natural gas prices and             +   higher regulatory capacity revenues, partially offset by             –   lower contribution from hedges.  Southeast Region  First Quarter: Commodity Margin in our Southeast segment increased by $14 million in the first quarter of 2014 compared to the prior year period. Primary drivers were:        +  higher spark spreads resulting from stronger market conditions                 due to colder than normal weather, partially offset by             –   lower contribution from hedges.   LIQUIDITY, CASH FLOW AND CAPITAL RESOURCES  Table 3: Liquidity                                                                                                   March 31,   December 31,                                             2014        2013                                             (in millions) Cash and cash equivalents, corporate^(1)    $ 417       $    649 Cash and cash equivalents, non-corporate    98         292 Total cash and cash equivalents             515         941 Restricted cash                             266         272 Corporate Revolving Facility availability   761         758 CDHI letter of credit availability          35         7 Total current liquidity availability        $ 1,577    $    1,978  __________  ^(1) Includes $18 million and $5 million of margin deposits posted with us by our counterparties at March 31, 2014, and December 31, 2013, respectively.  Liquidity was approximately $1.6 billion as of March 31, 2014. Cash and cash equivalents decreased during the first quarter of 2014 primarily resulting from the use of $244 million in cash on hand to fund the purchase of Guadalupe Energy Center, $140 million in share repurchases, $37 million in payments to fund the construction of Garrison Energy Center and the expansions of our Channel and Deer Park Energy Centers as well as other seasonal variations in working capital, which cause fluctuations in our cash and cash equivalents.                                                        Table 4: Cash Flow Activities                                                                                                      March 31,   March 31,                                             2014        2013                                             (in millions) Beginning cash and cash equivalents         $  941     $ 1,284  Net cash provided by (used in): Operating activities                        123         (157    ) Investing activities                        (769    )   (122    ) Financing activities                        220        (43     ) Net decrease in cash and cash equivalents   (426    )   (322    ) Ending cash and cash equivalents            $  515     $ 962                                                                      Cash flows from operating activities in the first quarter of 2014 resulted in net inflows of $123 million compared to net outflows of $157 million in the first quarter of 2013. The increase in cash provided by operating activities was primarily due to an increase in income from operations (adjusted for non-cash items). Also contributing to the increase was a decrease in working capital employed, largely due to a decrease in net accounts receivable/accounts payable balances resulting from timing of cash receipts/disbursements, along with reduced margin requirements. These increases were partially offset by higher cash paid for interest due to timing of interest payments.  Cash flows used in investing activities were $769 million in the first quarter of 2014 compared to $122 million in the first quarter of 2013. The increase in outflows was primarily due to the $656 million purchase of our Guadalupe Energy Center in 2014 with no corresponding acquisition activity in the first quarter of 2013.  Cash flows provided by financing activities were $220 million and were primarily related to proceeds received from the issuance of CCFC Term Loans used to fund a portion of the purchase price of our Guadalupe Energy Center, partially offset by payments associated with execution of our share repurchase program.  CAPITAL ALLOCATION  Sale of Six Southeast Power Plants  On April 17, 2014, we entered into a purchase and sale agreement to sell six of our power plants in the Southeast segment for a purchase price of approximately $1.57 billion in cash, subject to working capital and other adjustments. The divestiture of these power plants will better align our asset base with our strategic focus on competitive wholesale markets.  Share Repurchase Program  In November 2013, our Board of Directors authorized a new $1.0 billion multi-year share repurchase program, under which we have repurchased a total of 12,759,919 shares of our common stock for approximately $245 million at an average price of $19.18 per share as of the date of this release. In February 2014, we temporarily suspended our share repurchase program during our negotiations regarding the aforementioned transaction.  PLANT DEVELOPMENT  Texas:  Channel and Deer Park Expansions: In the fourth quarter of 2012, we began construction to expand the baseload capacity of our Deer Park and Channel Energy Centers by approximately 260 MW^6 each. Each power plant features an oversized steam turbine that, along with existing plant infrastructure, allows us to add capacity and improve the power plant’s overall efficiency at a meaningful discount to the market cost of building new capacity. We expect commercial operations on the expansions of our Channel and Deer Park Energy Centers to commence during the second quarter of 2014.  Guadalupe Energy Center: On February 26, 2014, we, through our indirect, wholly owned subsidiary Calpine Guadalupe GP, LLC, completed the purchase of a power plant owned by MinnTex Power Holdings, LLC with a nameplate capacity of 1,050 MW for approximately $625 million, excluding working capital adjustments. The addition of this modern, natural gas-fired, combined-cycle power plant increased capacity in our Texas segment, which is one of our core markets. We also paid $15 million to acquire the rights to an advanced development opportunity for an approximately 400 MW quick-start, natural gas-fired peaker. We funded the acquisition with $425 million in incremental CCFC Term Loans and cash on hand.  North:  Garrison Energy Center: Garrison Energy Center is a 309 MW combined-cycle project located in Delaware on a site secured by a long-term lease with the City of Dover. Construction commenced in April 2013, and we expect commercial operations to commence during the second quarter of 2015. The project’s capacity cleared PJM’s 2015/2016 and 2016/2017 base residual auctions. We are in the early stages of development of a second phase (309 MW) of this project. PJM has completed the feasibility and system impact studies for this phase, and the facilities study is currently underway.  Mankato Power Plant Expansion: We are proposing a 345 MW expansion of the Mankato Power Plant in response to a competitive resource acquisition process established by the Minnesota Public Utilities Commission (“MPUC”) to acquire up to approximately 500 MW of new capacity. The initial stage of the proceeding was managed via a contested case hearing. On March 27, 2014, the MPUC agreed in part and disagreed in part with the recommendation of the Administrative Law Judge and directed Xcel Energy (Northern States Power) to negotiate in parallel PPAs with Calpine and certain other entities, subject to final review and approval by the MPUC. A decision is expected in late 2014 or early 2015.  PJM Development Opportunities: We are currently evaluating opportunities to develop more than 1,000 MW in the PJM market area that feature cost advantages such as existing infrastructure and favorable transmission queue positions. These projects are continuing to advance entitlements (permits, zoning, transmission, etc.) for their potential development at a future date.  All Segments:  Turbine Modernization: We continue to move forward with our turbine modernization program. Through March 31, 2014, we have completed the upgrade of twelve Siemens and eight GE turbines totaling approximately 200 MW and have committed to upgrade approximately four additional turbines. Similarly, we have the opportunity at several of our power plants in Texas to implement further turbine modernizations to add as much as 500 MW of incremental capacity across the region at attractive prices. In addition, we have begun a program to update our dual-fueled turbines at certain of our power plants in our North segment. Our decision to invest in these modernizations depends upon, among other things, further clarity on market design reforms currently being considered.  ___________  ^6 Represents incremental baseload capacity at annual average conditions. Incremental summer peaking capacity is approximately 200 MW per unit, supplemented by incremental efficiencies across the balance of plant.  OPERATIONS UPDATE  First Quarter 2014 Power Operations Achievements    *Safety Performance:     — Maintained top quartile^7 safety metrics: 0.80 Total Recordable Incident     Rate    *Availability Performance:     — Despite extreme weather conditions, achieved a low fleetwide forced     outage factor of 2.5% and impressive fleetwide starting reliability of     97.4%    *Geothermal Generation:     — Provided approximately 1.4 million MWh of renewable baseload generation    *Natural Gas-fired Generation:     — Provided approximately 350,000 MWh of reliable oil-fired generation from     dual-fuel PJM fleet during extreme weather conditions     — Pastoria Energy Center: 0% forced outage factor, 100% starting     reliability  ___________  ^7 According to EEI Safety Survey (2012).   2014 FINANCIAL OUTLOOK  (in millions, except per share amounts)                                                              Full Year 2014 Adjusted EBITDA                                               $ 1,900 - 2,000 Less: Operating lease payments                                        35 Major maintenance expense and maintenance capital               380 expenditures^(1) Cash interest, net^(2)                                          675 Cash taxes                                                      20 Other                                                          5         Adjusted Free Cash Flow                                       $ 785 - 885 Per Share Estimate (diluted)                                  $ 1.85 - 2.10                                                                           Debt amortization                                             $ (200     ) Growth capital expenditures (net of debt funding)             $ (200     ) Guadalupe Energy Center acquisition (net of debt funding)     $ (244     )  ________  ^(1) Includes projected major maintenance expense of $220 million and maintenance capital expenditures of $160 million. Capital expenditures exclude major construction and development projects.  ^(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 2014 guidance, even after accounting for the impact of our announced Southeast asset divestiture. We project Adjusted EBITDA of $1,900 million to $2,000 million, Adjusted Free Cash Flow of $785 million to $885 million and Adjusted Free Cash Flow Per Share guidance of $1.85 to $2.10. We expect to invest $200 million (net of debt funding) in our ongoing growth-related projects during the year, including the expected completion of our Deer Park and Channel Energy Center expansions and ongoing construction of our Garrison Energy Center.  INVESTOR CONFERENCE CALL AND WEBCAST  We will host a conference call to discuss our financial and operating results for the first quarter of 2014 on Thursday, May 1,2014, at 10 a.m. Eastern time / 9 a.m. Central time. 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 36846002. 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 36846002. Presentation materials to accompany the conference call will be available on our website on May 1,2014.  ABOUT CALPINE  Calpine Corporation generates more electricity than any other independent power producer in America, with a fleet of 94 power plants in operation or under construction, representing more than 29,000 megawatts of generation capacity. 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 competitive wholesale 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, 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, Section27A of the Securities Act, and Section21E 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, seasonality of demand, 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 Term Loans 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 water     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;   *Structural changes in the supply and demand of power, resulting from the     development of new fuels or technologies and demand-side management tools;   *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 2013 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 CONDENSED STATEMENTS OF OPERATIONS  (Unaudited)                                                                                     Three Months Ended March 31,                              2014                          2013                              (in millions, except share and per share amounts) Operating revenues: Commodity revenue            $      2,048                  $    1,308 Unrealized mark-to-market    (86                )          (71            ) (loss) Other revenue                3                            4               Operating revenues           1,965                        1,241           Operating expenses: Fuel and purchased energy expense: Commodity expense            1,370                         835 Unrealized mark-to-market    (13                )          (14            ) (gain) Fuel and purchased energy    1,357                        821             expense Plant operating expense      265                           227 Depreciation and             153                           146 amortization expense Sales, general and other     33                            33 administrative expense Other operating expenses     22                           18              Total operating expenses     1,830                        1,245           (Income) from unconsolidated investments   (9                 )          (8             ) in power plants Income from operations       144                           4 Interest expense             166                           176 Interest (income)            (1                 )          (2             ) Other (income) expense,      11                           5               net Loss before income taxes     (32                )          (175           ) Income tax benefit           (19                )          (50            ) Net loss                     (13                )          (125           ) Net income attributable to the noncontrolling           (4                 )          —               interest Net loss attributable to     $      (17         )          $    (125      ) Calpine                                                                            Basic and diluted loss per common share attributable to Calpine: Weighted average shares of common stock outstanding           420,105                   451,706    (in thousands) Net loss per common share attributable to Calpine —    $      (0.04       )          $    (0.28     ) basic and diluted                                                                              CALPINE CORPORATION AND SUBSIDIARIES  CONSOLIDATED CONDENSED BALANCE SHEETS  (Unaudited)                                                                                                 March 31,               December 31,                                       2014                    2013                                       (in millions, except share and per share                                       amounts) ASSETS Current assets: Cash and cash equivalents             $    515                $   941 Accounts receivable, net of           627                     552 allowance of $5 and $5 Margin deposits and other prepaid     293                     309 expense Restricted cash, current              195                     203 Derivative assets, current            655                     445 Inventory and other current assets    417                    406           Total current assets                  2,702                   2,856 Property, plant and equipment, net    13,598                  12,995 Restricted cash, net of current       71                      69 portion Investments in power plants           85                      93 Long-term derivative assets           174                     105 Other assets                          437                    441           Total assets                          $    17,067            $   16,559    LIABILITIES & STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable                      $    607                $   462 Accrued interest payable              93                      162 Debt, current portion                 189                     204 Derivative liabilities, current       728                     451 Other current liabilities             256                    252           Total current liabilities             1,873                   1,531 Debt, net of current portion          11,286                  10,908 Long-term derivative liabilities      230                     243 Other long-term liabilities           266                    309           Total liabilities                     13,655                  12,991                                                                             Commitments and contingencies Stockholders’ equity: Preferred stock, $0.001 par value per share; authorized 100,000,000     —                       — shares, none issued and outstanding Common stock, $0.001 par value per share; authorized 1,400,000,000 shares, 499,765,622 and 497,841,056   1                       1 shares issued, respectively, and 423,242,107 and 429,038,988 shares outstanding, respectively Treasury stock, at cost, 76,523,515   (1,378         )        (1,230       ) and 68,802,068 shares, respectively Additional paid-in capital            12,400                  12,389 Accumulated deficit                   (7,503         )        (7,486       ) Accumulated other comprehensive       (166           )        (160         ) loss Total Calpine stockholders’ equity    3,354                   3,514 Noncontrolling interest               58                     54            Total stockholders’ equity            3,412                  3,568         Total liabilities and stockholders’   $    17,067            $   16,559    equity                                                                               CALPINE CORPORATION AND SUBSIDIARIES  CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS  (Unaudited)                                                                                                    Three Months Ended March 31,                                                   2014            2013                                                   (in millions) Cash flows from operating activities: Net loss                                          $   (13    )     $  (125  ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization expense^(1)         164              158 Deferred income taxes                             (13        )     (7       ) Unrealized mark-to-market activity, net           72               55 (Income) from unconsolidated investments in       (9         )     (8       ) power plants Return on unconsolidated investments in power     13               — plants Stock-based compensation expense                  10               8 Other                                             (2         )     — Change in operating assets and liabilities: Accounts receivable                               (75        )     (45      ) Derivative instruments, net                       (87        )     (36      ) Other assets                                      29               (73      ) Accounts payable and accrued expenses             106              (91      ) Other liabilities                                 (72        )     7         Net cash provided by (used in) operating          123             (157     ) activities Cash flows from investing activities: Purchases of property, plant and equipment        (119       )     (176     ) Purchase of Guadalupe Energy Center, net of       (656       )     — cash Decrease in restricted cash                       6               54        Net cash used in investing activities             $   (769   )     $  (122  ) Cash flows from financing activities: Borrowings under CCFC Term Loans                  $   420          $  — Repayment of CCFC Term Loans and First Lien       (11        )     (6       ) Term Loans Borrowings from project financing, notes          1                73 payable and other Repayments of project financing, notes payable    (43        )     (36      ) and other Financing costs                                   (10        )     (9       ) Stock repurchases                                 (140       )     (75      ) Proceeds from exercises of stock options          3                9 Other                                             —               1         Net cash provided by (used in) financing          220             (43      ) activities Net decrease in cash and cash equivalents         (426       )     (322     ) Cash and cash equivalents, beginning of period    941             1,284     Cash and cash equivalents, end of period          $   515         $  962                                                                                 Cash paid during the period for: Interest, net of amounts capitalized              $   225          $  213 Income taxes                                      $   8            $  5                                                                              Supplemental disclosure of non-cash investing activities: Change in capital expenditures included in        $   (9     )     $  17 accounts payable  __________  ^(1) Includes depreciation and amortization included in fuel and purchased energy expense and interest expense on our Consolidated Condensed Statements of Operations.  REGULATION G RECONCILIATIONS  Net Income (Loss), As Adjusted, Commodity Margin, Adjusted EBITDA and Adjusted Free Cash Flow are non-GAAP financial measures that we use as measures of our performance. These measures should be viewed as a supplement to and not a substitute for our U.S. GAAP measures of performance.  Net Income (Loss), As Adjusted, represents net income (loss) attributable to Calpine, adjusted for certain non-cash and non-recurring items as previously detailed in Table 1, including unrealized mark-to-market (gain) loss on derivatives, and other adjustments. Net Income (Loss), As Adjusted, is presented because we believe it is a useful tool for assessing the operating performance of our company in the current period. Net Income (Loss), As Adjusted, is not intended to represent net income (loss), the most comparable U.S. GAAP measure, as an indicator of operating performance and is not necessarily comparable to similarly titled measures reported by other companies.  Commodity Margin includes our power and steam revenues, sales of purchased power and physical natural gas, capacity revenue, revenue from renewable energy credits, sales of surplus emission allowances, transmission revenue and expenses, fuel and purchased energy expense, fuel transportation expense, environmental compliance expense, and realized settlements from our marketing, hedging, optimization and trading activities including natural gas transactions hedging future power sales, but excludes the unrealized portion of our mark-to-market activity and other revenues. We believe that Commodity Margin is a useful tool for assessing the performance of our core operations, and it is a key operational measure reviewed by our chief operating decision maker. Commodity Margin does not intend to represent income (loss) from operations, the most comparable U.S. GAAP measure, as an indicator of operating performance and is not necessarily comparable to similarly titled measures reported by other companies.  Adjusted EBITDA represents net income (loss) attributable to Calpine before net (income) loss attributable to the noncontrolling interest, interest, taxes, depreciation and amortization, adjusted for certain non-cash and non-recurring items as detailed in the following reconciliation. Adjusted EBITDA is not intended to represent cash flows from operations or net income (loss) as defined by U.S. GAAP as an indicator of operating performance and is not necessarily comparable to similarly titled measures reported by other companies.  We believe Adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We believe that EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired.  Additionally, we believe that investors commonly adjust EBITDA information to eliminate the effect of restructuring and other expenses, which vary widely from company to company and impair comparability. As we define it, Adjusted EBITDA represents EBITDA adjusted for the effects of impairment losses, gains or losses on sales, dispositions or retirements of assets, any unrealized gains or losses from accounting for derivatives, adjustments to exclude the Adjusted EBITDA related to the noncontrolling interest, stock-based compensation expense, operating lease expense, non-cash gains and losses from foreign currency translations, major maintenance expense, non-cash GAAP-related adjustments to levelize revenues from tolling contracts, gains or losses on the repurchase or extinguishment of debt and any extraordinary, unusual or non-recurring items plus adjustments to reflect the Adjusted EBITDA from our unconsolidated investments. We adjust for these items in our Adjusted EBITDA as our management believes that these items would distort their ability to efficiently view and assess our core operating trends.  In summary, our management uses Adjusted EBITDA as a measure of operating performance to assist in comparing performance from period to period on a consistent basis and to readily view operating trends, as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations, and in communications with our Board of Directors, shareholders, creditors, analysts and investors concerning our financial performance.  During the fourth quarter of 2013, we changed the methodology previously used during 2013 for allocating corporate expenses to our segments. This change had no impact to our Consolidated Condensed Statements of Operations for any period in 2013; however, segment amounts previously reported for the first three quarterly periods in 2013 were adjusted by immaterial amounts.  Adjusted Free Cash Flow represents net income before interest, taxes, depreciation and amortization, as adjusted, less operating lease payments, major maintenance expense and maintenance capital expenditures, net cash interest, cash taxes and other adjustments, including non-recurring items. Adjusted Free Cash Flow is presented because we believe it is a useful tool for assessing the financial performance of our company in the current period. Adjusted Free Cash Flow is a performance measure and is not intended to represent net income (loss), the most directly comparable U.S. GAAP measure, or liquidity and is not necessarily comparable to similarly titled measures reported by other companies.  Commodity Margin Reconciliation  The following table reconciles our Commodity Margin to its U.S. GAAP results for the three months ended March 31, 2014 and 2013 (in millions):                                   Three Months Ended March 31, 2014                                                        Consolidation                                                             And                  West      Texas     North     Southeast   Elimination     Total Commodity        $ 202     $ 121     $ 267     $  55       $    —          $ 645 Margin Add: Unrealized mark-to-market   29        (46   )   (17   )   6           (9        )     (37   ) commodity activity, net and other^(1) Less: Plant operating        105       90        52        27          (9        )     265 expense Depreciation and              60        42        33        18          —               153 amortization expense Sales, general and other        10        12        6         6           (1        )     33 administrative expense Other operating        12        2         6         1           1               22 expenses (Income) from unconsolidated   —        —        (9    )   —          —              (9    ) investments in power plants Income (loss) from             $ 44     $ (71 )   $ 162    $  9       $    —         $ 144  operations                                                                                                                     Three Months Ended March 31, 2013                                                        Consolidation                                                             And                  West      Texas     North     Southeast   Elimination     Total Commodity        $ 202     $ 76      $ 142     $  41       $    —          $ 461 Margin Add: Unrealized mark-to-market   (37   )   (11   )   7         7           (7        )     (41   ) commodity activity, net and other^(1) Less: Plant operating        95        65        43        31          (7        )     227 expense Depreciation and              53        42        33        19          (1        )     146 amortization expense Sales, general and other        7         14        6         6           —               33 administrative expense Other operating        9         1         7         1           —               18 expenses (Income) from unconsolidated   —        —        (8    )   —          —              (8    ) investments in power plants Income (loss) from             $ 1      $ (57 )   $ 68     $  (9  )    $    1         $ 4    operations  _________  ^(1) Includes $(29) million and $(16) million of lease levelization and $4 million and $4 million of amortization expense for the three months ended March31, 2014 and 2013, respectively.  Consolidated Adjusted EBITDA Reconciliation  In the following table, we have reconciled our Adjusted EBITDA and Adjusted Free Cash Flow to our net loss attributable to Calpine for the three months ended March 31, 2014 and 2013, as reported under U.S. GAAP.                                                                                                     Three Months Ended March 31,                                                   2014           2013                                                   (in millions) Net loss attributable to Calpine                  $   (17   )     $  (125   ) Net income attributable to the noncontrolling     4               — interest Income tax benefit                                (19       )     (50       ) Other (income) expense, net                       11              5 Interest expense, net of interest income          165            174        Income from operations                            $   144         $  4 Add: Adjustments to reconcile income from operations to Adjusted EBITDA: Depreciation and amortization expense,            151             146 excluding deferred financing costs^(1) Major maintenance expense                         81              66 Operating lease expense                           9               9 Unrealized loss on commodity derivative           73              57 mark-to-market activity Adjustments to reflect Adjusted EBITDA from unconsolidated investments and exclude the        3               6 noncontrolling interest^(2) Stock-based compensation expense                  10              8 Loss on dispositions of assets                    —               2 Acquired contract amortization                    4               4 Other                                             (29       )     (16       ) Total Adjusted EBITDA                             $   446        $  286     Less: Operating lease payments                          9               9 Major maintenance expense and capital             133             136 expenditures^(3) Cash interest, net^(4)                            168             180 Cash taxes                                        6               3 Other                                             —              1          Adjusted Free Cash Flow^(5)                       $   130        $  (43    )                                                                              Weighted average shares of common stock           420,105        451,706    outstanding (diluted, in thousands) Adjusted Free Cash Flow Per Share (diluted)       $   0.31       $  (0.10  )  _________  ^(1) Depreciation and amortization expense in the income from operations calculation on our Consolidated Condensed Statements of Operations excludes amortization of other assets.  ^(2) Adjustments to reflect Adjusted EBITDA from unconsolidated investments include unrealized (gain) loss on mark-to-market activity of nil for each of the three months ended March 31, 2014 and 2013.  ^(3) Includes $83 million and $66 million in major maintenance expense for the three months ended March 31, 2014 and 2013, respectively, and $50 million and $70 million in maintenance capital expenditures for the three months ended March 31, 2014 and 2013, respectively.  ^(4) Includes commitment, letter of credit and other bank fees from both consolidated and unconsolidated investments, net of capitalized interest and interest income.  ^(5) Excludes an increase in working capital of $6 million and $94 million for the three months ended March 31, 2014 and 2013, respectively. Adjusted Free Cash Flow, as reported, excludes changes in working capital, such that it is calculated on the same basis as our guidance.  In the following table, we have reconciled our Adjusted EBITDA to our Commodity Margin, both of which are non-GAAP measures, for the three months ended March 31, 2014 and 2013. Reconciliations for both Adjusted EBITDA and Commodity Margin to comparable U.S. GAAP measures are provided above.                                                                                                     Three Months Ended March 31,                                                   2014             2013                                                   (in millions) Commodity Margin                                  $   645           $  461 Other revenue                                     3                 3 Plant operating expense^(1)                       (177      )       (154    ) Sales, general and administrative expense^(2)     (29       )       (29     ) Other operating expenses^(3)                      (12       )       (10     ) Adjusted EBITDA from unconsolidated investments   16               15       in power plants^(4) Adjusted EBITDA                                   $   446          $  286    _________  ^(1) Shown net of major maintenance expense, stock-based compensation expense, non-cash loss on dispositions of assets and other costs.  ^(2) Shown net of stock-based compensation expense and other costs.  ^(3) Shown net of operating lease expense, amortization and other costs.  ^(4) Amount is composed of income from unconsolidated investments in power plants, as well as adjustments to reflect Adjusted EBITDA from unconsolidated investments.                                                                            Adjusted EBITDA and Adjusted Free Cash Flow Reconciliation for Guidance                                                                           Full Year 2014 Range^(1):                                     Low        High                                                               (in millions) GAAP Net Income ^(2)                                       $  270      $ 370 Plus: Interest expense, net of interest income                      675        675 Depreciation and amortization expense                         610        610 Major maintenance expense                                     215        215 Operating lease expense                                       35         35 Other^(3)                                                     95        95 Adjusted EBITDA                                            $  1,900    $ 2,000 Less: Operating lease payments                                      35         35 Major maintenance expense and maintenance capital             380        380 expenditures^(4) Cash interest, net^(5)                                        675        675 Cash taxes                                                    20         20 Other                                                         5         5 Adjusted Free Cash Flow                                    $  785      $ 885  _________  ^(1) 2014 guidance assumes closing of previously announced Southeast asset divestiture as of June 1, 2014.  ^(2) For purposes of Net Income guidance reconciliation, unrealized mark-to-market adjustments are assumed to be nil.  ^(3) Other includes stock-based compensation expense, adjustments to reflect Adjusted EBITDA from unconsolidated investments, income tax expense and other items.  ^(4) Includes projected major maintenance expense of $220 million and maintenance capital expenditures of $160 million. Capital expenditures exclude major construction and development projects.  ^(5) Includes commitment, letter of credit and other bank fees from both consolidated and unconsolidated investments, net of capitalized interest and interest income.   OPERATING PERFORMANCE METRICS  The table below shows the operating performance metrics for continuing operations:                                                                                        Three Months Ended March 31,                                              2014              2013       Total MWh generated (in thousands)^(1)       22,977              23,998 West                                         8,831               8,337 Texas                                        6,877               8,030 North                                        3,645               3,909 Southeast                                    3,624               3,722                                                                             Average availability                         88.4      %         90.1      % West                                         89.0      %         88.5      % Texas                                        82.7      %         87.2      % North                                        88.1      %         92.3      % Southeast                                    97.6      %         94.1      %                                                                             Average capacity factor, excluding           43.2      %         47.6      % peakers West                                         58.2      %         61.6      % Texas                                        39.0      %         47.8      % North                                        38.4      %         43.2      % Southeast                                    32.8      %         33.7      %                                                                             Steam adjusted heat rate (Btu/kWh)           7,353               7,345 West                                         7,248               7,287 Texas                                        7,151               7,162 North                                        7,971               7,911 Southeast                                    7,377               7,269  ________  ^(1) Excludes generation from unconsolidated power plants and power plants owned but not operated by us.  Contact:  Calpine Corporation Media Relations: Brett Kerr, 713-830-8809 brett.kerr@calpine.com or Investor Relations: Bryan Kimzey, 713-830-8777 bryan.kimzey@calpine.com