8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 5, 2003

CALPINE CORPORATION

(A Delaware Corporation)

Commission File Number: 001-12079

I.R.S. Employer Identification No. 77-0212977

50 West San Fernando Street

San Jose, California 95113

Telephone: (408) 995-5115

TABLE OF CONTENTS

	ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
SIGNATURES
EXHIBIT INDEX
EXHIBIT 99.1

ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On November 5, 2003, the Registrant issued the press release attached hereto as Exhibit 99.1 reporting the quarter and nine months ended September 30, 2003 financial results and providing an update on liquidity, refinancing transactions and earnings guidance for 2003.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CALPINE CORPORATION

By: /s/ Charles B. Clark, Jr.

Charles B. Clark, Jr.
Senior Vice President and Controller
Chief Accounting Officer

Date: November 5, 2003

EXHIBIT INDEX

Exhibit	Description
99.1	Press release

EX-99.1 3 f94263exv99w1.htm EXHIBIT 99.1

Exhibit 99.1

CONTACTS: (408) 995-5115
Media Relations: Bill Highlander, Ext. 1244
Investor Relations: Rick Barraza, Ext. 1125

CALPINE REPORTS THIRD QUARTER 2003 FINANCIAL RESULTS

Completes $4.6 Billion Refinancing Program

Nears Completion of $2.3 Billion Liquidity-Enhancing Program

Updates 2003 Earnings Guidance

     (SAN JOSE, CALIF.) /PR NEWSWIRE-First Call/ Nov. 5, 2003 – San Jose, Calif.-based Calpine Corporation [NYSE:CPN], one of North America’s leading power companies, today announced financial and operating results for the three and nine months ended September 30, 2003.

     For the quarter ended September 30, 2003, the company reported earnings per share of $0.51, or $237.8 million of net income, compared with earnings per share of $0.34, or $151.1 million of net income, for the third quarter of 2002. Results for the third quarter of 2003 include a $0.23 per share gain recorded on the purchases of outstanding debt and preferred securities, offset by a loss of $0.01 per share for other charges.

     For the nine months ended September 30, 2003, the company reported earnings per share of $0.41, or $162.4 million of net income, compared with earnings per share of $0.40, or $143.8 million of net income, for the nine months ended September 30, 2002. Results for the first nine months of 2003 include a $0.25 per share gain recorded on the purchases of outstanding debt and preferred securities, offset by a loss of $0.11 for other charges, including a $0.03 per share non-cash charge for equipment and development cost write-downs, a $0.04 per share non-cash charge for foreign exchange translation losses, a $0.03 per share charge for discontinued operations to reflect the sale of the company’s specialty engineering unit, and a $0.01 per share loss for non-routine equipment repair costs.

	Third Quarter
	2003		2002		% Chg
Megawatt-hours Generated (millions)		25.9		23.4		11	%
Megawatts in Operation		22,244		17,947		24	%
Revenue (millions)	$	2,687.1	$	2,474.7		9	%
Net Income (millions)	$	237.8	$	151.1		57	%
Earnings Per Share (millions)	$	0.51	$	0.34		50	%
Operating Cash Flow (millions)	$	58.2	$	366.8		(84	)%
EBITDA, as adjusted (millions) (a)	$	663.1	$	488.9		36	%
EBITDA, as adjusted, before charges (millions) (b)	$	480.7	$	510.1		(6	)%
Total Assets (billions)	$	26	$	23		13	%

(a)	Earnings Before Interest, Tax, Depreciation and Amortization, as adjusted; see attached Supplemental Data for reconciliation from net income.
(b)	See attached Supplemental Data for reconciliation from EBITDA, as adjusted.

- more -

CALPINE REPORTS THIRD QUARTER 2003 RESULTS
Page 2
Nov. 5, 2003

     Peter Cartwright, Calpine chairman, CEO and president, stated, “The quarter was highlighted by the very successful advancement of our refinancing and liquidity-enhancing programs—both of which, I’m pleased to report, exceeded our expectations. Following these liquidity and refinancing transactions, we expect to end the year with liquidity of approximately $2 billion. More important, we’ve accomplished this while continuing to execute our proven business plan, maintaining our financial strength and enhancing the long-term value of Calpine.

     “On the liquidity front, Calpine has completed approximately $2.1 billion of liquidity-enhancing transactions in 2003, and we expect to complete approximately $300 million of additional transactions by year-end. We also completed several successful financing transactions, totaling $4.6 billion, which allowed Calpine to extend debt maturities and selectively repurchase certain debt securities at a discount. Our efficient fleet of energy centers increased production by 11%; however, operating earnings for the quarter were lower than expected due to low spark spreads brought about by excess capacity in some markets, generally mild weather, high gas prices and a weak economy.

     “Although we anticipated stronger spark spreads during the quarter, we remained profitable due to the strength of our contractual portfolio. Looking forward, the power industry remains a strong, long-term investment, with tremendous opportunity for growth. Today, we generate over 22,000 megawatts of electricity, and when our construction program is complete, we will produce nearly 30,000 megawatts. As energy prices and industrial demand normalize, Calpine will have an unparalleled opportunity to leverage our fleet of highly efficient, integrated systems of power plants.”

2003 Third Quarter Results

     The company’s growing portfolio of operating power generation facilities contributed to an 11% and 17% increase in electric generation production for the three and nine months ended September 30, 2003, respectively, compared to the same periods in 2002. Electric generation and marketing revenue increased 3% and 23% for the three and nine months ended September 30, 2003, respectively, as electricity and steam revenue increased by $496.9 million or 53% and $1,361.8 million or 60%, respectively, as a result of the higher production and higher electricity prices. This was partially offset by a decline in sales of purchased power for hedging and optimization. Overall, the company achieved approximately $2.7 billion of revenue for the third quarter of 2003, compared to approximately $2.5 billion for the third quarter of 2002. Operating results for the three and nine months ended September 30, 2003, reflect a decrease in average spark spreads per megawatt-hour compared with the same periods in 2002. While the company experienced an increase in realized electricity prices in 2003, this was more than offset by higher fuel expense. At the same time, higher realized oil and gas pricing resulted in an increase in oil and gas production margins compared to the prior periods. During the quarter, the company recorded other revenue of $69.4 million in connection with its settlement with Enron, primarily related to the termination of commodity contracts following the Enron bankruptcy. This partially offsets the amounts being amortized to fuel expense related to the terminated Enron hedges.

- more -

CALPINE REPORTS THIRD QUARTER 2003 RESULTS
Page 3
Nov. 5, 2003

     Plant operating expense, interest expense and depreciation were higher due to the additional plants in operation. Gross profit for the three and nine months ended September 30, 2003, increased approximately 2% and decreased approximately 8%, respectively, compared to the same periods in 2002. For the three and nine months ended September 30, 2003, overall financial results significantly benefited from $192.2 million and $199.0 million, respectively, of net pre-tax gains recorded in connection with the repurchase of various issuances of debt and preferred securities at a discount.

     Also, effective July 1, 2003, the company adopted SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity” (“SFAS No. 150”), which required the company to prospectively classify as debt $244 million of certain preferred equity interests, some of which were previously classified as minority interests. However, we continue to classify $310 million of Calpine Power Income Fund preferred equity interests as minority interests, rather than debt, in anticipation that the Financial Accounting Standards Board will defer the applicability of SFAS No. 150 to limited life partnerships prior to our Form 10-Q filing for the quarter ended September 30, 2003.

2003 Liquidity Program Update

     Calpine is nearing the successful completion of its $2.3 billion liquidity program for 2003. To date, the company has closed approximately $2.1 billion of liquidity-enhancing transactions. Over the past several months, Calpine has:

• Completed its offering of approximately $301.7 million of Gilroy Energy Center, LLC (GEC) 4% Senior Secured Notes Due 2011. In connection with this offering, Calpine has also received funding on a third party preferred equity investment in GEC Holdings, LLC, totaling $74 million. GEC is a wholly owned, stand-alone subsidiary of the Calpine subsidiary GEC Holdings, LLC;

• Completed a $230 million, non-recourse project financing for its 600-megawatt Riverside Energy Center, currently under construction in Beloit, Wisc. The project will deliver 450 megawatts of electricity to Wisconsin Power and Light and provide 75 megawatts of capacity to Madison Gas & Electric under two, nine-year agreements;

• Closed the initial public offering of Calpine Natural Gas Trust (CNG Trust). CNG Trust acquired select Canadian natural gas and crude oil properties from Calpine, generating net proceeds of approximately $153 million;

• Sold a 70% interest in its 150-megawatt Auburndale, Fla. power plant for $86 million. Calpine will hold the remaining 30% interest and continue to operate and maintain the plant; and

- more -

CALPINE REPORTS THIRD QUARTER 2003 RESULTS
Page 4
Nov. 5, 2003

• Received approximately Cdn$19.2 million from the exercise of Warranted Units issued as part of the Calpine Power Income Fund secondary offering. To date, Calpine has received approximately Cdn$61.7 million (approximately US$46.3 million) from the exercise of the Warranted Units. The balance of approximately Cdn$15.0 million (approximately US$11.3 million), is expected to be received by year-end.

     The last significant transaction included in the 2003 liquidity program is the non-recourse project financing to fund the construction of the 600-megawatt Rocky Mountain Energy Center in Colorado. This financing is expected to close by December 31, 2003.

     On September 30, 2003, liquidity for the company totaled approximately $1.8 billion. This included cash and cash equivalents on hand of approximately $1.0 billion, the current portion of restricted cash of $0.4 billion and approximately $0.4 billion of borrowing capacity under the company’s various credit facilities.

Financing Program

     In what has been a challenging year in the U.S. capital markets, Calpine has completed $4.6 billion of capital market transactions. Proceeds from these financings have been used to refinance and repurchase existing debt. Most recently, Calpine has:

• Closed the $750 million financing at its wholly owned subsidiary, Calpine Construction Finance Company, L.P. (CCFC I); and

• Issued $50 million of secured notes through CCFC I, which was an add-on to the $750 million CCFC I offering.

     Net proceeds from these offerings were used to refinance a portion of CCFC I’s existing debt. The remaining balance was repaid from proceeds from the $3.3 billion term loan and second-priority senior secured notes offering.

     As of November 1, 2003, the company has repurchased approximately $1.4 billion in principal amount of its outstanding debt and preferred securities in exchange for approximately $1.0 billion in cash and 30.0 million shares of common stock valued at approximately $160.6 million. As a result of these transactions, the company has realized a net pre-tax gain on the repurchase of securities of $202.4 million, while reducing indebtedness by $393 million.

- more -

CALPINE REPORTS THIRD QUARTER 2003 RESULTS
Page 5
Nov. 5, 2003

Operations Update

     Calpine has built and manages the largest, cleanest and most efficient fleet of natural gas-fired and geothermal power plants in the industry, representing more than 22,000 megawatts of electricity. To help fuel its assets and hedge its long-term natural gas costs, Calpine also owns nearly 900 billion cubic feet equivalent of natural gas reserves. During the quarter, Calpine:

• Operated at a 60% baseload capacity factor, producing 25.9 million megawatt-hours, an 11% increase compared to third quarter production levels in 2002;

• Achieved an average baseload heat rate of approximately 7,160 British thermal units per kilowatt-hour for the quarter, significantly below the industry average;

• Increased the total average availability factor of its North American generating facilities to 98.3%, compared to 95.2% a year ago;

• Advanced construction of 13 projects in ten states, representing an additional 7,600 megawatts of new capacity; and

• Produced approximately 257 million cubic feet equivalent per day of natural gas – representing about 15% of Calpine’s total fuel consumption requirements.

New Market Opportunities

     Calpine is uniquely positioned to offer wholesale and industrial customers access to its integrated systems of highly efficient power plants, natural gas assets and energy products and services.

     Calpine continues to execute its strategy of selling the majority of its power under long-term contracts. In 2003 alone, Calpine has executed power sales contracts for nearly 5,400 megawatts of generation. These contracts have an average on-peak spark spread of approximately $18 per megawatt hour and have an average life of approximately two years.

     During the quarter, the company announced a number of new power contracts with major load-serving customers in key power markets, including:

• A two-year agreement to supply electricity to Reliant Energy Electric Solutions, LLC, Houston, Texas. Calpine will supply 150 megawatts beginning January 1, 2004, increasing to 250 megawatts on January 1, 2005;

• A term sheet for a ten-year power sales agreement with San Diego Gas & Electric for the full output of Calpine’s 570-megawatt Otay Mesa Energy Center currently under construction near San Diego; and

- more -

CALPINE REPORTS THIRD QUARTER 2003 RESULTS
Page 6
Nov. 5, 2003

• A partnership between Calpine and Mitsui & Co. that was selected by Comision Federal de Electricidad (CFE) to build, own and operate a 525-megawatt baseload, natural gas-fired, combined-cycle energy center for CFE in the Yucatan Peninsula. The proposed facility will deliver electricity to CFE under a 25-year power sales agreement. Calpine will supply two combustion gas turbines to the project, which will give the company a 45-percent interest in the facility. Mitsui will own the remaining interest.

     Included in the attached Supplemental Data to this news release is an updated report summarizing Calpine’s total generation capacity and capacity currently under contract through 2008. A full detailed report is available on the company’s website at www.calpine.com.

Updated 2003 Earnings Guidance

     The company is updating its GAAP fully diluted earnings per share guidance for the year ending December 31, 2003, to a range of approximately $0.85 to $1.00 per share. Core operating earnings for the year have been revised from $0.25 to $0.35 per share to $0.18 to $0.22 per share based on lower spark spreads expected during the fourth quarter. Included in this guidance are other expenses, which include equipment and development cost write-downs and foreign exchange translation losses; other income, which includes gains on sale of assets; gains to be recorded on the open-market purchases of existing indebtedness; mark-to-market gains recorded in the fourth quarter on certain power and gas contracts due to a change in accounting principles; and losses from discontinued operations. The following is a breakdown of the current 2003 earnings guidance:

•	Core operating earnings	$	0.18		to	$	0.22
•	Net other expense		($0.13	)	to		($0.16	)
•	Net other income	$	0.10		to	$	0.12
•	Gains on the purchase of existing debt	$	0.30		to	$	0.40
•	Mark-to-market earnings	$	0.42		to	$	0.45
•	Loss from discontinued operations		($0.02	)	to		($0.03	)
	Total	$	0.85		to	$	1.00

     EBITDA, as adjusted, before non-cash and other charges, is anticipated to be approximately $1.4 billion.

- more -

CALPINE REPORTS THIRD QUARTER 2003 RESULTS
Page 7
Nov. 5, 2003

Conference Call Information

     Calpine will host a conference call to discuss its third quarter 2003 financial and operating results along with an update on liquidity and refinancing activities. The conference call will occur Wednesday, November 5, 2003, at 8:30 a.m. PST. To participate via the teleconference (in listen-only mode), dial 1-888-603-6685 at least five minutes before the start of the call. 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 Calpine’s investor relations page at www.calpine.com.

About Calpine

     Calpine Corporation is a leading North American power company dedicated to providing electric power to wholesale and industrial customers from clean, efficient, natural gas-fired and geothermal power facilities. The company generates power at plants it owns or leases in 22 states in the United States, three provinces in Canada and in the United Kingdom. Calpine is also the world’s largest producer of renewable geothermal energy, and it owns approximately 900 billion cubic feet equivalent of proved natural gas reserves in Canada and the United States. The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information about Calpine, visit 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) the timing and extent of deregulation of energy markets and the rules and regulations adopted on a transitional basis with respect thereto; (ii) the timing and extent of changes in commodity prices for energy, particularly natural gas and electricity; (iii) commercial operations of new plants that may be delayed or prevented because of various development and construction risks, such as a failure to obtain the necessary permits to operate, failure of third-party contractors to perform their contractual obligations or failure to obtain financing on acceptable terms; (iv) unscheduled outages of operating plants; (v) a competitor’s development of lower cost generating gas-fired power plants; (vi) risks associated with marketing and selling power from power plants in the newly-competitive energy market; (vii) the successful exploitation of an oil or gas resource that ultimately depends upon the geology of the resource, the total amount and costs to develop recoverable reserves and operations factors relating to the extraction of natural gas; (viii) the effects on the Company’s business resulting from reduced liquidity in the trading and power industry; (ix) the Company’s ability to access the capital markets or obtain bank financing on attractive terms; (x) the direct or indirect effects on the Company’s business of a lowering of its credit rating (or actions it may take in response to changing credit rating criteria), including, increased collateral requirements, refusal by the Company’s current or potential counterparties to enter into transactions with it and its inability to obtain credit or capital in desired amounts or on favorable terms; and (xi) other risks identified from time-to-time in the Company’s reports and registration statements filed with the SEC, including the risk factors identified in its Annual Report on Form 10-K for the year ended December 31, 2002, its Form 8-K filed on October 23, 2003, and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, which can be found on the Company’s website at www.calpine.com. All information set forth in this news release is as of today’s date, and the Company undertakes no duty to update this information.

- table follows -

CALPINE CORPORATION AND SUBSIDIARIES

Consolidated Condensed Statements of Operations
For the Three and Nine Months Ended September 30, 2003 and 2002
(In thousands, except per share amounts)
(unaudited)

					Three Months Ended						Nine Months Ended
					September 30,						September 30,
					2003			2002			2003			2002
Revenue:
	Electric generation and marketing revenue
		Electricity and steam revenue			$	1,440,056		$	943,177		$	3,634,730		$	2,272,889
		Sales of purchased power for hedging and optimization				843,013			1,278,520			2,269,102			2,516,727
			Total electric generation and marketing revenue			2,283,069			2,221,697			5,903,832			4,789,616
	Oil and gas production and marketing revenue
		Oil and gas sales				27,879			21,827			83,358			91,031
		Sales of purchased gas for hedging and optimization				305,706			231,893			961,652			664,649
			Total oil and gas production and marketing revenue			333,585			253,720			1,045,010			755,680
	Mark-to-market activities, net
		Realized gain (loss) on power and gas transactions, net				(93	)		6,845			30,180			15,276
		Unrealized mark-to-market gain (loss) on power and gas transactions, net				(10,930	)		(10,957	)		(18,921	)		(6,166	)
			Total mark-to-market activities, net			(11,023	)		(4,112	)		11,259			9,110
	Other revenue					81,496			3,393			97,596			9,371
				Total revenue		2,687,127			2,474,698			7,057,697			5,563,777
Cost of Revenue:
	Electric generation and marketing expense
		Plant operating expense				185,091			141,170			514,518			376,058
		Royalty expense				7,022			4,743			18,840			13,092
		Purchased power expense for hedging and optimization				835,892			1,059,841			2,254,560			2,039,955
			Total electric generation and marketing expense			1,028,005			1,205,754			2,787,918			2,429,105
	Oil and gas operating and marketing expense
		Oil and gas operating expense				24,575			22,953			79,348			67,380
		Purchased gas expense for hedging and optimization				293,241			218,443			941,312			671,196
			Total oil and gas operating and marketing expense			317,816			241,396			1,020,660			738,576
	Fuel expense					800,270			525,478			2,005,874			1,208,310
	Depreciation, depletion and amortization expense					148,063			121,667			422,960			320,310
	Operating lease expense					28,439			28,497			84,298			84,877
	Other cost of revenue					8,380			1,354			20,501			4,452
				Total cost of revenue		2,330,973			2,124,146			6,342,211			4,785,630
				Gross profit		356,154			350,552			715,486			778,147
Income from unconsolidated investments in power projects						(4,110	)		(10,176	)		(68,584	)		(10,561	)
Equipment cancellation and impairment cost						632			10,884			19,940			193,555
Project development expense						2,979			7,624			14,137			29,474
General and administrative expense						61,757			53,366			179,277			163,614
	Income from operations					294,896			288,854			570,716			402,065
Interest expense						204,668			127,806			496,508			280,628
Distributions on trust preferred securities						15,297			15,654			46,610			46,962
Interest income						(10,742	)		(10,815	)		(27,782	)		(32,754	)
Minority interest expense						2,569			1,457			10,182			1,870
Other income						(197,725	)		(35,501	)		(149,431	)		(51,802	)
	Income before provision for income taxes					280,829			190,253			194,629			157,161
Provision for income taxes						41,920			48,386			21,487			33,585
	Income before discontinued operations and cumulative effect of a change in accounting principle					238,909			141,867			173,142			123,576
Discontinued operations, net						(1,127	)		9,261			(11,271	)		20,200
Cumulative effect of a change in accounting principle, net						—			—			529			—
				Net income	$	237,782		$	151,128		$	162,400		$	143,776

- table continues -

			Three Months Ended						Nine Months Ended
			September 30,						September 30,
			2003			2002			2003			2002
Basic earnings per common share:
	Weighted average shares of common stock outstanding			388,161			376,957			383,447			346,816
	Income before discontinued operations and cumulative effect of a change in accounting principle		$	0.62		$	0.38		$	0.45		$	0.36
	Discontinued operations, net of tax		$	(0.01	)	$	0.02		$	(0.03	)	$	0.05
	Cumulative effect of a change in accounting principle, net of tax		$	—		$	—		$	—		$	—
		Net income	$	0.61		$	0.40		$	0.42		$	0.41
Diluted earnings per common share:
	Weighted average shares of common stock outstanding before dilutive effect of certain convertible securities			394,950			382,607			388,622			355,577
	Income before dilutive effect of certain convertible securities, discontinued operations and cumulative effect of a change in accounting principle		$	0.60		$	0.37		$	0.45		$	0.35
	Dilutive effect of certain convertible securities (1)		$	(0.09	)	$	(0.05	)	$	(0.01	)	$	—
	Income before discontinued operations and cumulative effect of a change in accounting principle		$	0.51		$	0.32		$	0.44		$	0.35
	Discontinued operations, net of tax		$	—		$	0.02		$	(0.03	)	$	0.05
	Cumulative effect of a change in accounting principle, net of tax		$	—		$	—		$	—		$	—
		Net income	$	0.51		$	0.34		$	0.41		$	0.40

The financial information presented above and in the Supplemental Data attached hereto is subject to adjustment until the company files its Form 10-Q with the Securities and Exchange Commission for the quarter ended September 30, 2003.

(1) Includes the effect of the assumed conversion of certain convertible securities. No convertible securities were included in the nine months ended September 30, 2002, as the securities were antidilutive. For the three and nine months ended September 30, 2003, and for the three months ended September 30, 2002, the assumed conversion calculation added 106,844, 83,607, and 99,377 shares of common stock and $17,788, $32,368, and $14,326 to the net income results, respectively.

- table follows -

CALPINE CORPORATION AND SUBSIDIARIES

Supplemental Data
(unaudited)

CASH FLOW DATA

		Nine Months Ended
		September 30,
		2003			2002
(in thousands)
Cash provided by operating activities		$	171,539		$	799,370
Cash used in investing activities			(1,836,624	)		(3,242,777	)
Cash provided by financing activities			2,046,282			1,573,698
Effect of exchange rate changes on cash and cash equivalents			9,008			2,277
	Net increase (decrease) in cash and cash equivalents	$	390,205		$	(867,432	)

RECONCILIATION OF GAAP NET INCOME TO EBITDA, AS ADJUSTED (1)

				Three Months Ended						Nine Months Ended
				September 30,						September 30,
				2003			2002			2003			2002
(in thousands)
GAAP net income				$	237,782		$	151,128		$	162,400		$	143,776
	Income from unconsolidated investments in power projects				(4,110	)		(10,176	)		(68,584	)		(10,561	)
	Distributions from unconsolidated investments in power projects				4,665			2,126			125,680			2,144
			Subtotal		238,337			143,078			219,496			135,359
	Interest expense				204,668			127,806			496,508			280,628
	1/3 of operating lease expense				9,480			9,499			28,099			28,292
	Distributions on trust preferred securities				15,297			15,654			46,610			46,962
	Provision for income taxes				41,920			48,386			21,487			33,585
	Depreciation, depletion and amortization expense				154,072			126,715			441,702			335,434
	Interest expense, provision for income taxes and depreciation, depletion and amortization from discontinued operations				(709	)		17,744			(2,815	)		47,245
		EBITDA, as adjusted		$	663,065		$	488,882		$	1,251,087		$	907,505

RECONCILIATION OF EBITDA, AS ADJUSTED TO EBITDA, AS ADJUSTED BEFORE NON-CASH
AND OTHER CHARGES (2)

		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2003			2002			2003			2002
(in thousands)
EBITDA, as adjusted		$	663,065		$	488,882		$	1,251,087		$	907,505
Equipment cancellation charge			632			10,884			19,940			193,555
Gain from cumulative effect of a change in accounting principle			—			—			(529	)		—
Minority interest expense			2,569			1,457			10,182			1,870
Foreign currency translation (gains)/losses			(8,070	)		(2,893	)		36,234			(995	)
Mark-to-market activity losses			10,930			10,957			18,921			6,166
Deferred project cost write-off			—			843			3,400			6,135
Gain on extinguishment of debt			(192,206	)		—			(198,969	)		(3,491	)
Investment write-off			—			—			1,000			—
SFAS No. 123—stock-based compensation expense			3,813			—			12,236			—
	EBITDA, as adjusted, for non-cash and other charges	$	480,733		$	510,130		$	1,153,502		$	1,110,745

- table continues -

SUPPLEMENTARY POWER DATA

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2003		2002		2003		2002
Generation (in mwh, in thousands) (3)		25,882		23,375		63,213		53,809
Average electric price realized (per mwh)	$	55.91	$	49.71	$	57.73	$	51.10
Average spark spread adjusted for benefits of equity gas production (per mwh)	$	24.08	$	26.21	$	24.52	$	26.94

SUPPLEMENTARY EQUIVALENT NATURAL GAS PRODUCTION DATA (4)

			Three Months Ended				Nine Months Ended
			September 30,				September 30,
			2003		2002		2003		2002
(in Bcfe)
Natural Gas Production United States				14		14		44		41
	Canada			10		11		30		35
		Total		24		25		74		76
Average daily production rate				.257		.280		.273		.281
Average realized price per mcf			$	4.76	$	2.59	$	5.25	$	2.63
Average unit cost per mcf (excluding interest expense)			$	2.72	$	2.42	$	2.60	$	2.36

CALPINE CONTRACTUAL PORTFOLIO – AS OF SEPTEMBER 30, 2003

			2004			2005			2006			2007			2008
Estimated Generation Capacity
(in millions of mwh)
	- Baseload			159.4			183.4			193.2			195.3			195.8
	- Peaking			23.9			24.9			25.3			25.4			25.5
		Total		183.3			208.3			218.5			220.7			221.3
Contractual Generation
(in millions of mwh)
	- Baseload			65.4			63.1			56.4			42.3			38.9
	- Peaking			18.6			18.5			17.4			17.4			17.5
		Total		84.0			81.6			73.8			59.7			56.4
% Sold
	- Baseload			41	%		34	%		29	%		22	%		20	%
	- Peaking			78	%		74	%		69	%		69	%		69	%
	- Total			46	%		39	%		34	%		27	%		25	%
Contractual Spark Spread per mwh			$	24.28		$	25.06		$	25.00		$	25.40		$	25.92

- table continues -

					As of			As of
CAPITALIZATION					September 30, 2003			December 31, 2002
Cash and cash equivalents balance (in billions)					$	1.0		$	0.6
Total debt (in billions)					$	15.9		$	14.1
Debt to capitalization ratio (5)						73	%		73	%
Present value of operating leases (in billions)					$	1.4		$	1.4
Unconsolidated debt of equity method investments (estimated, in billions) (6)					$	0.2		$	0.2
(in thousands):
Short-term debt Notes payable, term loan and borrowings under lines of credit, current portion					$	199,866		$	509,883
	Capital lease obligation, current portion					3,990			3,454
	Construction/project financing, current portion					70,473			1,138,111
	Senior notes					14,500			—
		Total short-term debt				288,829			1,651,448
Long-term debt Notes payable, term loan and borrowings under lines of credit, net of current portion						1,070,286			957,814
	Capital lease obligation, net of current portion					193,956			197,653
	Construction/project financing, net of current portion					4,097,930			3,212,022
	Convertible Senior Notes Due 2006					1,047,996			1,200,000
	Senior notes, net of current portion					9,248,561			6,894,801
			Total long-term debt			15,658,729			12,462,290
				Total debt (5)	$	15,947,558		$	14,113,738
	Company-obligated mandatorily redeemable convertible preferred securities of subsidiary trusts (HIGH TIDES)				$	1,088,248		$	1,123,969
	Minority interests				$	347,254		$	185,203
	Total stockholders’ equity (7)				$	4,412,440		$	3,851,914
Total capitalization					$	21,795,500		$	19,274,824
Debt to capitalization ratio
Total debt					$	15,947,558		$	14,113,738
Total capitalization					$	21,795,500		$	19,274,824
Debt to capitalization						73	%		73	%

(1)	This non-GAAP measure is presented not as a measure of operating results, but rather as a measure of our ability to service debt. It should not be construed as an alternative to either (i) income from operations or (ii) cash flows from operating activities to be disclosed in the company’s Form 10-Q for the quarter ended September 30, 2003. It is defined as net income less income from unconsolidated investments, plus cash received from unconsolidated investments, plus provision for tax, plus interest expense, plus one-third of operating lease expense, plus depreciation, depletion and amortization, plus distributions on trust preferred securities. The interest, tax and depreciation, depletion and amortization components of discontinued operations are added back in calculating EBITDA, as adjusted.
(2)	This non-GAAP measure is presented as a further refinement of EBITDA, as adjusted, to reflect the company’s ability to service debt with cash.
(3)	Does not include mwh generated by unconsolidated investments in power projects.
(4)	From continuing operations
(5)	The September 30, 2003, amounts include classifications as debt of certain preferred equity interests totaling $244 million from the adoption, effective July 1, 2003, of Financial Accounting Standards Board Statement of Financial Accounting Standards No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” Excluding the effects of these items, total debt would have been $15.7 billion and the debt to capitalization ratio would have been 72%. Under SFAS No. 150, prior periods are not restated.
(6)	Amounts based on Calpine’s ownership percentage.
(7)	Includes accumulated other comprehensive income (loss) (“AOCI”) of $3,082 at September 30, 2003 and $(237,457) at December 31, 2002. Excluding AOCI from stockholders’ equity would not change the debt to capitalization ratio at September 30, 2003, and would change the ratio to 72% at December 31, 2002.

# # #

GRAPHIC 4 f94263f9426300.gif GRAPHIC begin 644 f94263f9426300.gif M1TE&.#EAF``F`/<```````@```@`"`@("!`("!`($!`0$!@0$!@0&!@8&"$8 M&"$8(2$A(2DA(2DA*2DI*3$I*3$I,3$Q,3DQ,3DQ.3DY.4(Y.4(Y0D)"0DI" M0DI*2E)*2E)*4E)24EI24EI26EI:6F-:6F-:8V-C8VMC8VMC:VMK:W-KWM[>X1[>X1[A(2$A(R$C(R,C)2,C)24E)R4E)RWN?GY^_G M[^_O[^_W]_?W]_?_____________________________________________ M____________________________________________________________ M____________________________________________________________ M____________________________________________________________ M____________________________________________________________ M____________________________________________________________ M____________________________________________________________ M____________________________________________________________ M____________________________________________________________ M____________________________________________________________ M____________________________________________________________ M____________________________________________________________ M_____________________RP`````F``F```(_@"7"!Q(D&"1'"M`6&!`I.!` M&`@>-'#0@$`1AQ@S:MS(L:/'CR!#%DSB@@&!`PL8F&R($4:"!A(?6!1)LZ;- MFS@Q)@D1X"5%B0X(L'3H\F<#`Q=S*EW*5"D,`0IBPIQJ8&C!HE,+)&W*M:M7 MAQ4.3'4`=*),JP2+QISYM:W;G$<*&%"0@*[=NG4!H!WH8JX"!@D";'U+N'!' M%"A2I%B1&`5CQBE0E!A,,`>($9A'=#ABN+/GD1V3)/E,NK1'#P`(#""@NK4` M``-<_!C]`,"#$C],ZR[M8X#1B3#I^BB(04&#!`0>"-G-O/!?B3#)-CC0`6,% MX`\8!$!1\P<*"@\R_L@8.")CB]P8?\C(@2-'CALT;F`,(J.]^QPUXOL8?$0& MC?OMT3!>#/?=$(1#^;F77WSVO4=#?C>T=\-P2]Q@P$]&)1!"1L65=51U(`W1 M```;-%0$"@"8$,(#&04`0D9$W##``0;0F,.!#AV$'(T$@`##![`I`(-`2?A@ M`@`'T!@`#_@X% M`4!%Z0'`IT,:+)#`#!K)\-(!/'`TQ(6T#M1`I`30,%`'41V@+$$5+!": M*D"JJD8J%5`#P#I0#@8<5T-&21S@D`PI!X7CRPA,%^Q&0U@J$T$C1+7`K4ML M@&8""`O4P!`:*!#GD`/5(/$2V?8[U`48ER=TJPQ`P%&'XL*$@`L;"7T4$!K- M/%`!022G0'D8R8"HOC@7(!$!!'6`I@(F#%1P_@,'%\1`;L^YBMX2$1,4M<5+ M``#R$M$#42Q34C`H3E!9,260`D=%%&_\\<5KE`3J`V#L$0@Y M+"%#S;"__/;-INM,MT`F(*```-&[;G#12S1`81#U'IN`0$X3Y-MQ#W90``&+ M2]"U`BMP)*`,_/?/?PSRRW#ED3(A0(&((!^!,&`68##``]P1`('0$`"#I``&=*P M1QNAG4PNN)$;O`L$_DHCP!"LYX#2.5!G!4A"$7A($+'UC2#F(X@)$%5$%/#@ M:81JSBI(%`N2DHG#0XVL`>[: MR$(>.<(YIH=3"#17WJ$7^PNA^F.\IJ7,!W`@`;6R][VKG<")LO!"$@P`A.0``1,/*]^,_*``OSE MOPP`L`)*EI$7$$!7=!',?A?,D1#H[IR),IE+HK,[!ELX(SRH4:O6(N$$&`6A M%P[Q$F`P(X8"!7%7\0E,0"SB$-\@`P/X[%]>E1%$5KC%.*84#5#0+>>..")4 )\7&.31,0```[ ` end -----END PRIVACY-ENHANCED MESSAGE-----

EX-99.1

Exhibit 99.1