Company Description: Investment Thesis: Recommendation Risks: Recommendation: BUY. CALPINE Corporation. Ticker: CPN

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1 Company Description: Calpine Corporation (CPN) is a wholesale electric power generation company which is in the utilities sector of S&P 500. It owns and operates primarily natural gas-fired and geothermal power plants in North America and has a significant presence in major competitive wholesale power markets in California, Texas, and the Eastern region of the U.S (mostly in de-regulated market, see Appendix 5). One of the unique operating strategies is that CPN has been a leader in environmental clean energy stewardship. It has invested in clean power generation to become a leader in developing, constructing, owning and operating an environmentally responsible portfolio of power plants; its main two types of technologies are natural gas-fired combustion turbines and renewable geothermal conventional steam turbines. CPN s generation fleet consists of 88 power plants, in operation or under construction, which represent nearly 27,000 megawatts of generation capacity. Investment Thesis: My recommendation for CPN is a BUY. I think CPN offers the best risk/return profile among utilities sector competitors based on reasonable fundamental assumptions and gas and power prices. CPN s relatively clean generation fleet has a competitive advantage in the current environment of stricter EPA regulations. In addition, CPN s management team has demonstrated smart capital allocation (selling noncore assets and reallocating capital toward markets with strong fundamentals or share repurchases). Recommendation Risks: The following risks could cause CPN to underperform. - Operational risk: The operation of power plants involves several risks, such as breakdown/failure of power generation equipment and lower than expected levels of output/efficiency. - Commodity price risk: If natural gas prices fall, wholesale power price will most likely fall as well which will reduce CPN s earnings. Conversely, if natural gas prices rise significantly, CPN (whose power generation is primarily natural gas-fired) encounters cost-squeeze due to the lack of plant diversification where most of its peers have coal and nuclear plants. - Government regulation: CPN s revenue is affected by government regulation, such as rate caps, price limitations, and bidding rules, etc. CALPINE Corporation Ticker: CPN Sector: Utilities Sub Industry: Electric Power Recommendation: BUY Current Price (USD): $14.70 Target Price: $19.75 Total Return: +34.4% Market Cap (Million): $5,326 Shares Outstanding (Million): Dividend Yield: No Dividend 52-Week High: $ Week Low: $14.34 YTD Changes: -30.0% Last Fiscal Year End: Dec. 31, 2014 P/E (ttm): 6.92 EPS (ttm): $2.16 Avg Volume (3-month): 5,001,540 Beta: P a g e

2 Contents COMPANY OVERVIEW:... 3 Business Strategy:... 4 Competitive Landscape and Current Challenges:... 4 Calpine s Sustained Competitive Advantage:... 4 Recent Important News and Events:... 6 Management and Ownership:... 6 INVESTMENT THESIS:... 7 Economic Analysis:... 7 Key Industrial Drivers:... 8 Financial Analysis:... 9 Valuation and Price Target: RISKS/CONCERNS: CONCLUSION: APPENDIX 1: INCOME STATEMENT FORECAST PART APPENDIX 2: INCOME STATEMENT FORECAST PART APPENDIX 3: DCF MODEL APPENDIX 4: SENSITIVITY ANALYSIS OF VALUATION APPENDIX 5: REGULATED VS. DE-REGULATED U.S. MARKET P a g e

3 COMPANY OVERVIEW 1 : Calpine is the largest generator of electricity from natural gas and geothermal resources in the United States. Calpine is traded on the New York Stock Exchange, under the symbol CPN, and is a Fortune 500 company based in Houston, Texas. It owns and operates primarily natural gas-fired and geothermal power plants in North America and has a significant presence in major competitive wholesale power markets in the West (majority in California), Texas, and the Eastern region of the United States. Its fleet of 88 power plants, including 1 under construction, represents nearly 27,000 megawatts of generation capacity. Through wholesale power operation and its retail business, Calpine serves customers in 19 states and Canada. The company sells wholesale power, steam, capacity, renewable energy credits, and ancillary services to utilities, independent electric system operators, industrial and agricultural companies, retail power providers, municipalities, power marketers, and others. Unlike other power generation companies, Calpine has been a leader in environmental stewardship. It has invested in clean power generation to become a recognized leader in developing, constructing, owning and operating an environmentally responsible portfolio of power plants. Calpine Corporation was founded in Business Segments: The company s segments are the West (including geothermal), Texas, and the East (including Canada, mostly in de-regulated market, see Appendix 5). In December 2014, the West accounted for 28%, Texas accounted for 35%, and the East accounted for 37% of Calpine s revenues. Source: 1 Yahoo Finance, Calpine Corp 3 P a g e

4 Business Strategy 2 : Calpine s goal is to continue to grow its generation presence in core markets with an emphasis on acquisitions, expansions or modernizations of existing power plants. Calpine is also actively seeking divestiture opportunities of non-core assets in order to pay down debt. Calpine also plans to focus on competitive wholesale power markets and advocate for market-driven solutions that result in nondiscriminatory forward price signals for investors. The company has disposed of most of its natural gas reserves and gathering and transportation assets in order to focus on power generation. It is seeking to grow organically through negotiating supply contracts and by making selected acquisitions supported by asset sales to ensure financial stability. Competitive Landscape and Current Challenges: Demand is driven by government, commercial, and residential needs for electricity. This demand is mainly due to economic activity and population growth. Because of government regulations and fuel costs, the profit could be significantly affected. Most large companies have the advantage in negotiating fuel contracts by being able to pass the costs of implementing government regulations to consumers. In contrast, smaller companies compete by exploiting niche markets, offering clean energy, etc. As expected, the U.S. utilities industry is highly concentrated: the 50 largest companies represent about 85% of total revenues. 2 Current low wholesale power, oil and other commodity prices will remain the key driver for utilities in power generation, exploration and production. In the utilities sector, the biggest challenge is managing considerable regulatory risk. Environmental regulations have become increasingly important. Another challenge in the industry is that, due to the low commodity prices, utilities stocks have been battered this year as expectations for a recovery in power markets have faded. 3 Calpine s Sustained Competitive Advantage: Although there are significant challenges in utilities industry, I believe Calpine is well Bloomberg, Power Generation by Stacy Nemeroff, September 25, P a g e

5 positioned to benefit from secular energy and power trends favoring natural gas generation. The company which has highly-efficient gasfired power plants is geographically diverse (West, Texas, and East) in the major power markets and offering the lowest carbon emission. It is expected that a large number of small-to-midsize coal plants will close over the next couple of years due to the EPA s clean energy plan. 4 Below, the graph shows the 2015 electricity products and services segmentation in the United States. Over the past five years, revenues from coal, petroleum, and nuclear-power has declined due to environmental and safety reasons. On the other hand, the new technology helps discover natural gas reserves which helps lower the cost resulting growth in natural gasfired generators. 5 Petroleum, 0.6% Hydroelect ricity, 6.0% Nuclear, 18.7% Natural gas, 27.0% ELECTRICITY SEGMENT 2015 Wind, 4.4% Coalgenerated, 38.6% Sources: IBISWorld Let s go over Calpine s SWOT analysis to review its strengths and weaknesses as well as its threats and opportunities. The table below summarizes Calpine s SWOT analysis 6 : Strength -clean energy -modernized natural gas-fired power plants Opportunities -expanding generation capacity -general population growth resulting in power demand -strategic divestments Strength: - Calpine is a leader in developing and operating a portfolio of clean power plants. - Calpine has most efficient natural gasfired combustion turbine. Weaknesses: Weaknesses -heavy dependence on third parties for distribution/transmission -commodity/natural gas price fluctuation -operating in US and Canada only Threats -governmental and environmental regulations -electricity price volatility - Power transmission and natural gas distribution facilities are owned by third parties. Additionally, independent system operators (ISO) that oversee transmission systems in regional power markets impose price limitations. - Heavily depend on natural gas/commodity price fluctuation - Calpine operates its business in 18 states in the United States and a small 4 Gabelli & Company, Calpine Corporation Research, by Tim Winter, Nicholas Yuelys, and Eric Guo, October 14, IBISWorld Industry Report Electric Power Transmission in the U.S. 6 MarketLine, May 8, P a g e

6 Opportunities: area of Canada (no additional geographical exposure). - Calpine continues to grow its presence in core markets by expansion, modernization or upgrading of existing power plants. - The United States population is projected to increase according to the U.S. Census Bureau. - Non-core market and old asset divesture could help Calpine invest in other opportunities and repay its debt. Threats: - Utilities sector is in the highly regulated environmental industry. Hence, any new or modified federal and state regulatory policies may give a negative impact to Calpine s operations. - Calpine s financial performance is affected by price fluctuations in the wholesale power and natural gas markets. Recent Important News and Events: On October 13, 2015, Calpine announced an agreement to acquire the Granite Ridge Energy Center, in Londonderry, NH which is part of ISO-NE (ISO-NE: ISO New England is an independent, non-profit Regional Transmission Organization, serving CT, ME, MA, NH, RI, and VT. It oversees the operation of New England s bulk electric power system, by Wikipedia) for $500 million. The deal will be financed with a mix of debt and cash, and is expected to close in the first quarter of I believe this move is positive to Calpine and that the deal will continually aid Calpine to penetrate into ISO- NE market. The acquisition will take Calpine s New England capacity from 1,352 to 2,023 Megawatts in the tightening New England power market. 7 October 1, 2015, Calpine closed on the purchase of Champion Energy Services, a retail marketer, for $240 million, which opens the door for Calpine to enter the retail energy market. Champion Energy serves approximately 115,000 residential customers, in 10 states, Texas, Mid-Atlantic, and Northeastern U.S. power markets. 8 Management and Ownership 9 : Calpine s management team has demonstrated excellent shareholder stewardship, smartly selling noncore assets, allocating capital, and reallocating capital toward markets with strong fundamentals. 7 Barclays Equity Research, Calpine Corp. acquiring capacity in New England, by Daniel Ford and Ross A. Fowler, October 13, closes-on-acquisition-of-champion-energy Morningstar Equity Research, Andrew Bischof, August 24, P a g e

7 The management also has been repurchasing its shares which I believe that the current price is significantly discounted to the fair value. Thad Hill replaced Jack Fusco as CEO in May Mr. Hill had been COO since 2010 and president since He joined Calpine in 2008, with previous management experience at NRG Energy. Management Activity Name Position Shares Held Jack A. Fusco Director 1,029,644 Thad Hill CEO/President 505,708 W. Thaddeus Executive 356,217 Miller VP/Secretary Denise M. Director 44,620 O Leary W. Benjamin Director 44,620 Moreland Frank Cassidy Director 44,620 W.G. Griggs Executive VP 34,937 Jeff Koshkin Senior VP/CFO 26,168 INVESTMENT THESIS: Economic Analysis 10 : Environmental regulations have become increasingly important. The EPA and its state oversee the control of emissions produced by power plants. Most commercial power comes from turbine engines powered by steam produced by burning fossil fuels, mainly coal and natural gas. Other power sources include steam from nuclear reactors; conventional hydroelectric conversion; and renewable sources such as solar, wind, and geothermal. Coal produces about 40 percent of electricity used in the US; natural gas, 27 percent; nuclear, 19 percent; hydroelectric, 6 percent; wind, 4 percent; biomass, 1 percent; and solar, less than 1 percent. While coal is the most plentiful and price stable fossil fuel available, it produces the most pollutants, including carbon dioxide. Carbon dioxide, which is classified as a greenhouse gas and considered harmful, is not regulated, but is considered in approving new and expanded plants. Nuclear power plants, because of the stringent safety features required in design, can be expensive to operate. In addition, the problem of disposing of spent fuels and waste isn't fully resolved. Calpine s plants have an average steamadjusted heat rate of 7,300 Btu/KWh, making the firm's natural gas fleet one of the most efficient and lowest cost in the United States. state.edu/h/industry360/overview.html?industryid= P a g e

8 1-Jul-00 1-Nov-01 1-Mar-03 1-Jul-04 1-Nov-05 1-Mar-07 1-Jul-08 1-Nov-09 1-Mar-11 1-Jul-12 1-Nov-13 1-Mar-15 1-Dec-11 1-Mar-12 1-Jun-12 1-Sep-12 1-Dec-12 1-Mar-13 1-Jun-13 1-Sep-13 1-Dec-13 1-Mar-14 1-Jun-14 1-Sep-14 1-Dec-14 1-Mar-15 Analyst: Ryan Kong This cost advantage positions Calpine well regardless of how natural gas prices move. In a low natural gas and power price environment, Calpine's fleet runs significantly more, helping to maintain total commodity margin. In addition, Calpine's fleet is well positioned in regions, such as New England where electricity supply/demand conditions are tightening. Also, due to the stricter EPA regulation, coal plants will continuously face difficulty in operation which should bolster Calpine s fleet value and margins. 11 Lower natural gas prices have meant higher utilization for Calpine s plants as generation shifts away from coal. As described earlier, demand is driven by commercial, government, and residential needs for electrical power, which depend mainly on economic activity (GDP), population growth, and weather changes. The United States Energy Information Administration (EIA) predicts that electricity demand in the U.S. will increase by 29% from 2012 to % 4.00% 3.00% 2.00% US GDP Growth Rate Source: % 1.10% 0.90% 0.70% 0.50% US Population Growth Rate Key Industrial Drivers: Natural gas price by Bloomberg Source: Because of lackluster growth in GDP and population, the utilities industry consumption 11 Morningstar Equity Research, Andrew Bischof, August 24, P a g e

9 has been weak for past few years. However, due to the growing concern of emissions, demand for clean energy is expecting to increase in near future. Clean Power Plan (CPP), the toughest climate change policy to date and the Environmental Protection Agency (EPA) have proposed new rules to cut the electricity sector s carbon dioxide emissions by 32% by year Below, the table shows the top 10 states that produce the most carbon dioxide. Calpine is a significant player in both California and Texas. If stricter environmental regulation is implemented in both states, Calpine could generate higher revenue because of its clean power plants. Rank State Total Carbon Dioxide Emissions, million metric tons 1 TX CA PA FL OH LA IL IN NY MI 150 Source: EIA.gov Financial Analysis: Revenues 14 : As shown in Appendix 1, my revenue projection for is in line with the analysts consensus. (in millions) FY 2015 E FY 2016 E FY 2017 E My Forecast $ 6,424 $ 6,552 $ 6,684 Analysts' Consensus $ 6,574 $ 6,404 $ 6,606 Other income statement forecast items are shown in Appendix 2 (which are mostly historical averages). One thing I would note is that in year 2014, the utilities sector experienced higher than normal revenue because of the unprecedented cold winter (polar vortex). Hence, for the future year, revenue projections were made based on average climate condition. FY 2012 FY 2013 FY 2014 Revenue (in millions) $ 5,478 $ 6,301 $ 8,030 Calpine s 2014 net income was exceptionally higher than previous years due to the weather and from the gain from power plants sales in the East region. During 2014, management strategically repositioned its portfolio by divesting six power plants of its non-core markets generating about $1.6 billion in cash. 13 IBISWorld-Electric Power Transmission in the US, September, Annual Report 9 P a g e

10 This divesture is believed to be a good strategic move to focus on competitive wholesale markets in the East region and to help Calpine repay outstanding debt. The addition cash also allows Calpine to invest in acquisition opportunities and repurchase its own shares. Calpine s returns have been steadily growing past few years, and it is mainly because its business strategy to continue to grow its presence in core markets by acquiring, expanding, and modernizing existing power plants. Management takes advantage of favorable opportunities to continue to develop, acquire, construct and operate the next generation of highly efficient and environmentally responsible power plants. During 2014 Calpine made following strategic transactions: - In February 2014, Calpine purchased a modern, natural gas-fired, combined-cycle power plant located in Texas of capacity of 1,050 megawatts. - In November 2014, Calpine purchased another power plant, Fore River Energy Center, located in Massachusetts. This addition of a natural gas-fired, efficient, modern power plant increases capacity in New England market of East region. In addition, Calpine continuously commits to its growth initiatives and modernization of power plants with several ongoing projects, such as: - Garrison Energy Center of 309 megawatts combined-cycle project located in Delaware - York 2 Energy Center of 760 megawatts dual fuel combined-cycle project located in Pennsylvania - Mankato Power Plant Expansion project in Minnesota - Turbine Modernization project by upgrading 13 Siemens turbines and 8 GE turbines in East region. This unique fleet favors Calpine in comparison of its major competitors on a cost basis, an environmental basis, and a scale and geographical diversity basis. Because of the new shale/fracking technology in discovering natural gas, Calpine s modern and efficient combined-cycle plants (mostly gas-fired) have advantage in lower cost resource to dispatch compared to other fuel types and potential environmental liabilities associated with other fuel type, such as coal. Below tables show return ratios comparison between Calpine and its competitors for past five years: 10 P a g e

11 ROE FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Calpine Dynegy AES NRG Gross Margin FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Calpine Dynegy AES NRG ROA FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Calpine Dynegy AES NRG Operating Margin FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Calpine Dynegy AES NRG Return on Capital FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Calpine Dynegy AES NRG Net Income Margin FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Calpine Dynegy AES NRG FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Calpine Dynegy AES NRG Source: Bloomberg Below, tables show margins comparison between Calpine and its competitors for past five years: Return on Invested Capital Source: Bloomberg Earnings Per Share (EPS): I have a slightly different EPS projection compared to analysts forecast based on the future commodity movement, interest rate changes, and global economic growth. EPS - Basic FY 2015 E FY 2016 E FY 2017 E My Forecast $ 0.76 $ 0.82 $ 1.27 Analysts' Consensus $ 0.80 $ 0.77 $ 1.47 I expect Calpine s earning will be impacted more negatively than expected due to the above factors because Calpine is not as diversified as other competitors, and Calpine s current credit rating is below the investment grade, which will hurt the company s debt obligation (about 62% debt 11 P a g e

12 to asset) in rising interest periods. S&P 500 Utilities Valuation and Price Target: Calpine s credit ratings, source Bloomberg Then, following graphs show Calpine vs. S&P 500, Utilities, and Peers: In this section, I am going to compare the performance for Calpine, S&P 500, Utilities sector and peers. First, S&P 500 vs. Utilities, as table below shows that utilities sector has been underperforming against S&P 500 for a long period. Utilities Sector Relative to S&P Yr Median Current P/E P/B P/S P/EBITDA S&P 500 Calpine The main reason that Utilities sector s poor performance is due to the global economic slow-down which results heavy utilities using sector such as industrial has been weak for the same time period. Below graph shows price movements for S&P 500 and Utilities for past five years. Utilities Calpine 12 P a g e

13 NRG AES DYN Calpine In summary of pricing multiple valuation, below table shows that Calpine s stock price should be around $20. Absolute Valuation Current My Target Multiple* Target / Current Expected EPS Target Price P/E P/B P/S P/EBITDA *average of peer including CPN Average $ Lastly, Appendix 2 shows income statement growth projections in percentages, and Appendix 3 shows the DCF valuation model. The DCF model projects the next 10 years of revenue, expenses, and other financial data. I used the terminal discount rate and growth rate, 9.0% and 3.0% respectively. Although historical annual electricity consumption growth in the United States has been around 1%, I believe the company is well positioned to generate 3% growth benefitting from the current low natural-gas price environment which offers opportunities for Calpine s gasbased generation fleet to take market share from coal plants. Further EIA predicts future growth of the U.S. electricity consumption. One final note on the DCF model is that Calpine has net operating loss (NOL) carry forwards of $6.9 billion which expires between 2023 and This NOL should help reduce Calpine s tax rates. Appendix 4 shows a sensitive analysis which provides prices for various discount and growth rates. RISKS/CONCERNS 15 : - Financial performance can be significantly impacted by price fluctuations in the wholesale power and natural gas markets - Revenues and results of operations are relying on government regulation and market rule. - Revenue can be reduced due to unexpected termination of power purchasing agreement. - The operation of power plants involves risks including the Annual Report 13 P a g e

14 breakdown or failure of power generation equipment. - Catastrophic events, such as destruction of property, personal injury, and loss of life lead to legal matters. - Due to reliance on third parties for power transmission and fuel distribution, disruption of the service could adversely impact Calpine s operation. - Significant events, such as natural disasters or acts of terrorism could damage Calpine s power plants. - Calpine has high debt-to-equity which could cause liquidity pressure. - Its credit rating is below investment grade, which may restrict financing opportunities. CONCLUSION: Method I think CPN offers the best risk/return profile among utilities sector competitors. CPN s relatively clean generation fleet has a competitive advantage in the current environment of stricter EPA regulations. In addition, CPN s management team has demonstrated smart capital allocation, selling noncore assets and reallocating capital toward markets with strong fundamentals or share repurchases. Price Target Weight P/E $ % P/B $ % P/S $ % P/EBITDA $ % DCF $ % Final Target Price $ % Based upon the careful analysis of the business model, current/future economic environment, government regulation, and financial models, I am recommending to BUY Calpine with a target price of $ My final target price is based on combination of pricing multiple and DCF: 14 P a g e

15 APPENDIX 1: INCOME STATEMENT FORECAST PART 1 15 P a g e

16 APPENDIX 2: INCOME STATEMENT FORECAST PART 2 16 P a g e

17 APPENDIX 3: DCF MODEL Analyst: Ryan Kong Terminal Discount Rate = 9.0% Terminal FCF Growth = 3.0% (millions) Year 2015E 2016E 2017E* 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E Revenue 6,424 6,552 6,684 6,884 7,091 7,303 7,522 7,748 7,980 8,220 8,466 % Grow th 2.0% 2.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Operating Income 1,131 1,153 1,243 1,342 1,383 1,461 1,504 1,588 1,636 1,726 1,778 Operating Margin 17.6% 17.6% 18.6% 19.5% 19.5% 20.0% 20.0% 20.5% 20.5% 21.0% 21.0% Interest Income/(expense) (835) (852) (869) (895) (922) (949) (978) (1,007) (1,037) (1,069) (1,101) Interest % of Sales -13.0% -13.0% -13.0% -13.0% -13.0% -13.0% -13.0% -13.0% -13.0% -13.0% -13.0% Taxes Tax Rate** 5.0% 5.0% 5.0% 7.0% 7.0% 10.0% 10.0% 10.0% 12.0% 12.0% 12.0% Net Income % Grow th 2.0% 24.2% 17.0% 3.0% 7.3% 3.0% 10.4% 0.7% 9.9% 3.0% Add Depreciation/Amort % of Sales 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% Plus/(minus) Changes WC 85 (9) (9) (9) (9) (10) (10) (10) (10) (11) (11) % of Sales 1.3% -0.1% -0.1% -0.1% -0.1% -0.1% -0.1% -0.1% -0.1% -0.1% -0.1% Subtract Cap Ex Capex % of sales 7.0% 7.0% 7.0% 7.0% 7.5% 7.5% 7.5% 8.0% 8.0% 8.0% 8.0% Free Cash Flow % Grow th -20.1% 20.5% 15.1% -4.4% 7.1% 3.0% 2.2% 0.7% 10.0% 3.0% NPV of Cash Flows 3,017 42% NPV of terminal value 4,241 58% Terminal Value 10,041 Projected Equity Value 7, % Free Cash Flow Yield 7.92% Free Cash Yield 5.83% Current P/E Terminal P/E 16.8 Projected P/E Current EV/EBITDA Terminal EV/EBITDA 8.4 Projected EV/EBITDA Shares Outstanding Current Price $ Implied equity value/share $ Upside/(Downside) to DCF 33.8% Debt 11,282 Cash 717 Cash/share P a g e

18 APPENDIX 4: SENSITIVITY ANALYSIS OF VALUATION Sensitivity Analysis $ % 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 0.5% $ $ $ $ $ $ $ $ % $ $ $ $ $ $ $ $ % $ $ $ $ $ $ $ $ % $ $ $ $ $ $ $ $ % $ $ $ $ $ $ $ $ % $ $ $ $ $ $ $ $ % $ $ $ $ $ $ $ $ % $ $ $ $ $ $ $ $ % $ $ $ $ $ $ $ $ P a g e

19 APPENDIX 5: REGULATED VS. DE-REGULATED U.S. MARKET Source: Disclosure: security. I, Ryan Kong, hereby certify that the views expressed in this report accurately reflect my personal views about subject 19 P a g e