CALPINE SAYS DELOITTE DIDN'T QUIT OVER ACCOUNTING DISPUTE

Dow Jones Business News ^ | 18 April 2003 | David Bogoslaw

[MeneMeneTekelUpharsin]

NEW YORK -- The parting of ways last week between Calpine Corp. (NYSE:CPN - News) and its former independent auditor, Deloitte & Touche LLP, was a mutual decision and wasn't based on any unresolved disagreements, Calpine said Friday. The San Jose, Calif. power company and the accounting firm had previously wrangled over the accounting treatment of power sales agreements associated with power plants for which Calpine had used sale-leaseback transactions. Such transactions are central to Calpine's business model.

Calpine agreed in early March to reclassify two sale-leasebacks as financial transactions instead of operating leases. In a Form 8-K filing to the Securities and Exchange Commission (News - Websites) on Thursday, Calpine reported Deloitte & Touche's resignation on April 10 and cited past disputes with the firm over the interpretation of the power sales agreements. The accounting firm concluded that provisions of the agreements prevented operating lease accounting treatment. "The 8-K requires us to show any disagreements, past or present, whether or not they've been resolved," Rick Barraza, vice president of investor relations, told Dow Jones Newswires. "That disagreement obviously was resolved as part of the re-audit process that was completed a month and a half ago." No reason was given in the filing as to why Deloitte & Touche resigned, and the firm wouldn't comment.

Deloitte & Touche was hired as Calpine's independent auditor in March 2002 and signed off on the audit of Calpine's consolidated balance sheets for 2001 and 2002 on March 10. Calpine said it recorded adjustments to the sale-leaseback transactions in 2002 for its financial statements for 2000 and 2001. The accounting revision for the sale leasebacks brought $684 million in debt onto Calpine's balance sheet, boosted its debt-to-capital ratio by one percentage point to 73%, but had no impact on the company's cash flow or credit agreements. During a conference call in early March to discuss the earnings restatements, Calpine said it might amend the two contracts so they meet the criteria to qualify as operating leases.

But the company hasn't yet identified any potential corrections to those agreements, and doesn't have a timeframe for reaching a decision on them, Mr. Barraza said. Also on April 10, Calpine hired PricewaterhouseCoopers (News - Websites)LLP as its new independent auditor for the year ending Dec. 31.

[MeneMeneTekelUpharsin]

Calpine has, in my opinion, just about finalized their refinancing of debt. It is going to be interesting to watch developments with this firm in the coming weeks. If it takes off, a huge short squeeze is going to take place because a LOT of folks have sold this stock short...to the tune of 90 million shares short. With institutional buying and retail buying on good news AND shorts trying to cover, it is bound to get interesting.

[Ernest_at_the_Beach]

Calpine in the news again!

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[Dog Gone]

a LOT of folks have sold this stock short...to the tune of 90 million shares short.

And they've made a lot money doing so. My advice would be to hope to snare a small profit if the stock price ever gets up to $6, and get out.

[SierraWasp]

"...and get out."

Wow! What an intreaguing(sp?) company!!!

I've never owned their shares, but man-O-MAN have they ever been in a wild ride since the turn of the century! Simply incredible. I always thought of them as the ultimate in unprincipled pragmatists, the way they played politics with the EnvironMentalists, Democrats and Davis. It really looked for awhile like they were going to pull off a real coup during the CALPOWERCRISIS and end up in the "Cat-Bird Seat."

But this... This could really cripple them, especially after the Arthur Anderson/Enron, etc. scandals. They musta pist sumbody off and are now getting sabataged because this not only makes them look bad, but make the former accountants look good in the court of public opinion.

No spin or excuses will get them over this for a long time, even if it had nothing to do with anything shady. Conclusion jumping will abound and they're going to take it in "the shorts," alright.

Put a fork in 'em... They're done!!!

[Ernest_at_the_Beach]

Look at their 5 year chart:

Calpine chart

They are right back where they were prior to 1999!

[Ernest_at_the_Beach]

PERFORMANCE (%-CHANGES)

1 week:	12.32%
1 month:	26.54%
1 year:	65.89%

[SierraWasp]

"They are right back where they were prior to 1999!"

Yeah... they're singin... "We're gonna git right back to where we started frum... Well it's alright..."

Oh well, it was fun while it lasted, right? What an exercise in futility... Tryin to play ball with Davis and the Demonicrats!!!(sounds like a punk rock group)

I pinged Robert357 since I haven't seen him post a reply in quite awhile and he might have some prescient comments.

[MeneMeneTekelUpharsin]

I respectfully disagree. Time will tell who is right. A South Texas nuclear facility went offline due to some coolant leakage (probably minor) so Calpine will be selling more power here in the coming days. I know they've played the politics with Davis, but, they had to in order to survive. Such is life. I've had to quit criticizing Democrats in school in order to remain employed. What alternative do YOU have to survival? Asked Freepers to help me find another job (fluently bilingual) and got absolutely NO help. Some things are not soon forgotten.

[SierraWasp]

What's going on here? Looks like I was wrong... Again!!!

The Calpine Stock Keeps Rising!

[Grampa Dave]

They have to be Rat Oriented with all of the stuff that they try.

[Ernest_at_the_Beach]

It has doubled in the last 6 months!Starting at low point in Oct - about $2.00 then.