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EX-99.1 - PRESS RELEASE - Energy Future Holdings Corp /TX/ | dex991.htm |
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) April 14, 2011
Energy Future Holdings Corp.
(Exact name of registrant as specified in its charter)
Texas | 1-12833 | 75-2669310 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
Energy Future Competitive Holdings Company
(Exact name of registrant as specified in its charter)
Texas | 1-34543 | 75-1837355 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
Energy Plaza, 1601 Bryan Street, Dallas, Texas 75201
(Address of principal executive offices, including zip code)
214-812-4600
(Registrants telephone number, including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrants under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
Introductory Note
On April 14, 2011, Texas Competitive Electric Holdings Company LLC (TCEH) and TCEH Finance, Inc. (together with TCEH, the Issuer), both wholly-owned subsidiaries of Energy Future Holdings Corp. (EFH Corp.) and Energy Future Competitive Holdings Company (EFCH), commenced a private offering (the Offering) of $1,725 million aggregate principal amount of the Issuers Senior Secured Notes due 2020 (the Notes). In connection with the Offering, the Issuer disclosed the financial information provided below. In addition, on April 14, 2011, the Issuer issued a press release (the Press Release) announcing the commencement of the Offering. A copy of the Press Release is filed as Exhibit 99.1 to this Form 8-K.
Neither this Form 8-K nor the Press Release shall constitute an offer to sell, or the solicitation of an offer to buy, any of the Notes, nor shall there be any sale of the Notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. The Notes have not been registered under the Securities Act of 1933, as amended (the Securities Act) or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. The Notes will be offered inside the United States only to qualified institutional buyers in reliance on Rule 144A under the Securities Act and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act.
Selected Preliminary Financial Data for the Quarterly Period Ended March 31, 2011
Management of EFCH has prepared the selected preliminary financial data below in good faith based upon the most current information available to management. EFCHs normal quarterly closing and financial reporting processes with respect to such preliminary financial data have not been fully completed. As a result, the actual financial results could be different from such preliminary financial data, and any differences could be material. EFCH expects to file its Quarterly Report on Form 10-Q with the U.S. Securities and Exchange Commission (the SEC) on or about April 29, 2011. EFCHs independent accountants have not performed their customary review procedures with respect to the preliminary financial data provided below, nor have they expressed any opinion or any other form of assurance on such information.
While the financial data provided is preliminary and subject to change, EFCH does not expect actual operating revenues for the three months ended March 31, 2011 to be different by more than 5% from the preliminary amount provided below. EFCH also does not expect actual net income (loss) and TCEH adjusted EBITDA for the three months ended March 31, 2011 to be different by more than 10% and 5%, respectively, from the preliminary amounts provided below.
The preliminary financial data below has been prepared on a basis consistent with EFCHs consolidated financial statements for the year ended December 31, 2010 included in EFCHs annual report on Form 10-K for the year ended December 31, 2010 that it filed with the SEC on February 18, 2011. The results of operations for an interim period, including the preliminary interim financial data provided below, may not give a true indication of the results to be expected for a full year or any future period.
EFCH Preliminary Financial Data
Selected preliminary financial data for EFCH for the three months ended March 31, 2011 and actual financial data for the three months ended March 31, 2010 (amounts in millions) are provided in the table below:
Three Months Ended | ||||||||
March 31, 2011 (Preliminary) |
March 31, 2010 |
|||||||
Operating revenues |
$ | 1,672 | $ | 1,999 | ||||
Net income (loss) |
$ | (315 | ) | $ | 401 | |||
TCEH adjusted EBITDA (per maintenance covenant) |
$ | 871 | $ | 953 |
Preliminary TCEH adjusted EBITDA (per TCEH maintenance covenant) for the twelve months ended March 31, 2011 totaled $3,754 million. Actual TCEH adjusted EBITDA (per TCEH maintenance covenant) for the twelve months ended March 31, 2010 totaled $3,822 million.
Set forth below is a reconciliation (amounts in millions) of net income (loss) to EBITDA and then to TCEH adjusted EBITDA for the three and twelve months ended March 31, 2011 (preliminary) and 2010 (actual). For more information on EBITDA and adjusted EBITDA and why management believes adjusted EBITDA is a useful measure, see note (a) below.
Three Months Ended March 31, 2011 |
Three Months Ended March 31, 2010 |
Twelve Months Ended March 31, 2011 |
Twelve Months Ended March 31, 2010 |
|||||||||||||
Net income (loss) |
$ | (301 | ) | $ | 450 | $ | (4,133 | ) | $ | 583 | ||||||
Income tax expense (benefit) |
(155 | ) | 258 | (12 | ) | 339 | ||||||||||
Interest expense and related charges |
498 | 749 | 2,590 | 2,182 | ||||||||||||
Depreciation and amortization |
362 | 337 | 1,405 | 1,233 | ||||||||||||
EBITDA (a) |
$ | 404 | $ | 1,794 | $ | (150 | ) | $ | 4,337 | |||||||
Interest income |
(27 | ) | (22 | ) | (97 | ) | (78 | ) | ||||||||
Amortization of nuclear fuel |
37 | 37 | 139 | 108 | ||||||||||||
Purchase accounting adjustments (b) |
38 | 44 | 157 | 258 | ||||||||||||
Impairment of goodwill |
| | 4,100 | | ||||||||||||
Impairment of assets and inventory write down (c) |
| | 13 | 36 | ||||||||||||
Net gain on debt exchange offers |
| | (687 | ) | |
Three Months Ended March 31, 2011 |
Three Months Ended March 31, 2010 |
Twelve Months Ended March 31, 2011 |
Twelve Months Ended March 31, 2010 |
|||||||||||||
EBITDA amount attributable to consolidated unrestricted subsidiaries and variable interest entities |
(2 | ) | | (1 | ) | 1 | ||||||||||
Unrealized net (gain) loss resulting from hedging transactions |
316 | (993 | ) | 89 | (1,189 | ) | ||||||||||
Amortization of day one net loss on Sandow 5 power purchase agreement |
| (5 | ) | (16 | ) | (15 | ) | |||||||||
Corporate depreciation, interest and income tax expenses included in SG&A expense |
3 | 2 | 10 | 8 | ||||||||||||
Losses on sale of receivables |
| | | 8 | ||||||||||||
Noncash compensation expense (d) |
| 7 | 7 | 6 | ||||||||||||
Severance expense |
| 3 | 1 | 6 | ||||||||||||
Transition and business optimization costs (e) |
6 | 1 | 14 | 14 | ||||||||||||
Transaction and merger expenses (f) |
11 | 11 | 38 | 14 | ||||||||||||
Restructuring and other (g) |
(17 | ) | (11 | ) | (128 | ) | (29 | ) | ||||||||
Expenses incurred to upgrade or expand a generation station (h) |
36 | 23 | 100 | 100 | ||||||||||||
Adjusted EBITDA per Incurrence Covenant |
$ | 805 | $ | 891 | $ | 3,589 | $ | 3,585 | ||||||||
Expenses related to unplanned generation station outages |
58 | 59 | 131 | 117 | ||||||||||||
Pro forma adjustment for Sandow 5 and Oak Grove 1 reaching 70% capacity in Q1 2010 (i) |
| | | 84 | ||||||||||||
Other adjustments allowed to determine Adjusted EBITDA per Maintenance Covenant (j) |
8 | 3 | 34 | 36 | ||||||||||||
Adjusted EBITDA per Maintenance Covenant |
$ | 871 | $ | 953 | $ | 3,754 | $ | 3,822 | ||||||||
(a) | EBITDA refers to earnings (net income) before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA refers to EBITDA adjusted to exclude non-cash items, unusual items and other adjustments allowable under certain of TCEHs debt arrangements. Adjusted EBITDA and EBITDA are not recognized terms under generally accepted accounting principles (GAAP) and, thus, are non-GAAP financial measures. EFCH is providing TCEHs adjusted EBITDA solely because of the important role that it plays in respect of the certain covenants contained in TCEHs debt arrangements. EFCH does not intend for adjusted EBITDA (or EBITDA) to be an alternative to net income as a measure of operating performance or an alternative to cash flows from operating activities as a measure of liquidity or an alternative to any other measure of financial performance presented in accordance with GAAP. Additionally, EFCH does not intend for adjusted |
EBITDA (or EBITDA) to be used as a measure of free cash flow available for managements discretionary use, because the measure excludes certain cash requirements such as interest payments, tax payments and other debt service requirements. Because not all companies use identical calculations, EFCHs presentation of adjusted EBITDA (and EBITDA) may not be comparable to similarly titled measures of other companies. |
(b) | Purchase accounting adjustments include amortization of the intangible net asset value of retail and wholesale power sales agreements, environmental credits, coal purchase contracts, nuclear fuel contracts and power purchase agreements and the stepped up value of nuclear fuel. They also include certain credits not recognized in net income due to purchase accounting. |
(c) | Impairment of assets includes impairment of land. |
(d) | Noncash compensation expenses represent amounts recorded under stock-based compensation accounting standards and exclude capitalized amounts. |
(e) | Transition and business optimization costs include incentive compensation expenses and professional fees primarily for retail billing and customer care systems enhancements. |
(f) | Transaction and merger expenses include costs related to the merger of Texas Energy Future Merger Sub Corp. with and into EFH Corp. on October 10, 2007, management fees to the private equity owners, outsourcing transition costs and costs related to certain growth initiatives. |
(g) | Restructuring and other includes gains on termination of a long-term power sales contract and settlement of amounts due from a hedging/trading counterparty, and reversal of certain liabilities accrued in purchase accounting. |
(h) | Expenses incurred to upgrade or expand a generation station reflect noncapital outage costs. |
(i) | Pro forma adjustment represents the annualization of the actual three months ended March 31, 2010 EBITDA results for these two units. |
(j) | Primarily pre-operating expenses relating to Oak Grove and Sandow 5. |
Item 8.01 | Other Events. |
The information provided under the heading Introductory Note in Item 2.02 above is incorporated by reference into this Item 8.01.
Forward-Looking Statements
The information set forth in this Current Report on Form 8-K and in the Press Release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to various risks and uncertainties that could cause actual results to differ materially from managements current projections, forecasts, estimates and expectations. All statements, other than statements of historical facts, that are included in this Current Report on Form 8-K and the Press Release that address activities, events or developments that EFH Corp., EFCH or the Issuer expect or anticipate to occur in the future (often, but not always, through the use of words or phrases such as preliminary, plan to, intend to, will likely result, is expected to, will continue, is anticipated, estimated, projection, target, goal, objective, and outlook), are forward-looking statements. Although EFH Corp., EFCH and the Issuer believe that in making any such forward-looking statement their expectations are based on reasonable assumptions, any such forward-looking statement involves uncertainties and is qualified in its entirety by reference to the discussion of risk factors in EFH Corp.s and EFCHs Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q filed with the U.S. Securities and Exchange Commission (including the sections entitled Risk Factors, Managements Discussion and Analysis of Financial Condition and Results of Operations and Forward-Looking Statements contained therein). Neither EFH Corp. nor EFCH undertakes any obligation to publicly release any revision to the forward-looking statements to reflect events or circumstances after the date of this Current Report on Form 8-K or the Press Release.
Item 9.01. | Financial Statements and Exhibits. |
(d) | Exhibit No. |
Description | ||
99.1 | Press Release dated April 14, 2011 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ENERGY FUTURE HOLDINGS CORP. |
/s/ Stan J. Szlauderbach |
Name: Stan J. Szlauderbach |
Title: Senior Vice President & Controller |
ENERGY FUTURE COMPETITIVE HOLDINGS COMPANY |
/s/ Stan J. Szlauderbach |
Name: Stan J. Szlauderbach |
Title: Senior Vice President & Controller |
Dated: April 14, 2011