Delaware | 001-38086 | 36-4833255 | |||||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | |||||
6555 Sierra Drive Irving, TX | 75039 | ||||||
(Address of principal executive offices) | (Zip Code) |
☐ | 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.l4a-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 9.01 | Financial Statements and Exhibits. |
Exhibit Number | Description of Exhibit | |
99.1 | ||
99.2 |
Vistra Energy Corp. | ||||||
Dated: June 1, 2018 | /s/ Christy Dobry | |||||
Name: | Christy Dobry | |||||
Title: | Vice President and Controller |
Page | |
DEFINITIONS | |
FINANCIAL STATEMENTS: | |
Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017 | |
Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017 | |
Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2018 and 2017 | |
Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017 | |
Notes to Consolidated Financial Statements |
CAA | Clean Air Act | |
CAISO | The California Independent System Operator | |
CDD | Cooling Degree Days | |
CT | Combustion Turbine | |
EBITDA | Earnings Before Interest, Taxes, Depreciation and Amortization | |
ECI | Earnings & Cost Improvement Initiative | |
ERCOT | Electric Reliability Council of Texas | |
FERC | Federal Energy Regulatory Commission | |
FTR | Financial Transmission Rights | |
HDD | Heating Degree Days | |
IMA | In-market Asset Availability | |
IPH | IPH, LLC | |
ISO | Independent System Operator | |
ISO-NE | Independent System Operator New England | |
MISO | Midcontinent Independent System Operator, Inc. | |
MMBtu | One Million British Thermal Units | |
MTM | Mark-to-market | |
MW | Megawatts | |
MWh | Megawatt Hour | |
NYISO | New York Independent System Operator | |
NYSE | New York Stock Exchange | |
PJM | PJM Interconnection, LLC | |
RGGI | Regional Greenhouse Gas Initiative | |
SEC | U.S. Securities and Exchange Commission |
March 31, 2018 | December 31, 2017 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 424 | $ | 365 | ||||
Accounts receivable, net of allowance for doubtful accounts of $1 and $1, respectively | 430 | 513 | ||||||
Inventory | 398 | 445 | ||||||
Assets from risk management activities | 45 | 32 | ||||||
Intangible assets | 31 | 25 | ||||||
Prepayments and other current assets | 160 | 144 | ||||||
Total Current Assets | 1,488 | 1,524 | ||||||
Property, plant and equipment, net | 8,737 | 8,884 | ||||||
Investment in unconsolidated affiliate | 125 | 123 | ||||||
Assets from risk management activities | 55 | 26 | ||||||
Goodwill | 772 | 772 | ||||||
Intangible assets | 30 | 39 | ||||||
Other long-term assets | 397 | 403 | ||||||
Total Assets | $ | 11,604 | $ | 11,771 |
March 31, 2018 | December 31, 2017 | |||||||||
LIABILITIES AND EQUITY | ||||||||||
Current Liabilities | ||||||||||
Accounts payable | $ | 276 | $ | 367 | ||||||
Accrued interest | 157 | 115 | ||||||||
Intangible liabilities | 11 | 14 | ||||||||
Accrued taxes | 45 | 64 | ||||||||
Accrued liabilities and other current liabilities | 60 | 109 | ||||||||
Liabilities from risk management activities | 371 | 229 | ||||||||
Asset retirement obligations | 41 | 46 | ||||||||
Debt, current portion, net | 62 | 105 | ||||||||
Total Current Liabilities | 1,023 | 1,049 | ||||||||
Debt, long-term portion, net | 8,339 | 8,328 | ||||||||
Liabilities from risk management activities | 93 | 31 | ||||||||
Asset retirement obligations | 274 | 283 | ||||||||
Deferred income taxes | 6 | 7 | ||||||||
Intangible liabilities | 33 | 34 | ||||||||
Other long-term liabilities | 152 | 146 | ||||||||
Total Liabilities | 9,920 | 9,878 | ||||||||
Commitments and Contingencies (Note 14) | ||||||||||
Stockholders’ Equity | ||||||||||
Preferred stock, $0.01 par value, 20,000,000 shares authorized | — | — | ||||||||
Common stock, $0.01 par value, 420,000,000 shares authorized; 156,108,262 shares issued and 144,782,140 shares outstanding at March 31, 2018; 155,710,613 shares issued and 144,384,491 shares outstanding at December 31, 2017 | 1 | 1 | ||||||||
Additional paid-in capital | 3,722 | 3,719 | ||||||||
Accumulated other comprehensive income, net of tax | 30 | 32 | ||||||||
Accumulated deficit | (2,059) | (1,851) | ||||||||
Total Dynegy Stockholders’ Equity | 1,694 | 1,901 | ||||||||
Noncontrolling interest | (10) | (8) | ||||||||
Total Equity | 1,684 | 1,893 | ||||||||
Total Liabilities and Equity | $ | 11,604 | $ | 11,771 |
Three Months Ended March 31, | ||||||||||
2018 | 2017 | |||||||||
Revenues | $ | 1,321 | $ | 1,247 | ||||||
Cost of sales, excluding depreciation expense | (919) | (757) | ||||||||
Gross margin | 402 | 490 | ||||||||
Operating and maintenance expense | (258) | (232) | ||||||||
Depreciation expense | (199) | (200) | ||||||||
Impairments | (6) | (20) | ||||||||
General and administrative expense | (42) | (40) | ||||||||
Acquisition and integration costs | — | (45) | ||||||||
Other | 1 | (2) | ||||||||
Operating loss | (102) | (49) | ||||||||
Bankruptcy reorganization items (Note 18) | — | 483 | ||||||||
Earnings (loss) from unconsolidated investments | 7 | (1) | ||||||||
Interest expense | (116) | (167) | ||||||||
Other income and expense, net | — | 17 | ||||||||
Income (loss) before income taxes | (211) | 283 | ||||||||
Income tax benefit (Note 15) | 1 | 313 | ||||||||
Net income (loss) | (210) | 596 | ||||||||
Less: Net loss attributable to noncontrolling interest | (2) | (1) | ||||||||
Net income (loss) attributable to Dynegy Inc. | $ | (208 | ) | $ | 597 |
Three Months Ended March 31, | |||||||||
2018 | 2017 | ||||||||
Net income (loss) | $ | (210) | $ | 596 | |||||
Other comprehensive income (loss) before reclassifications: | |||||||||
Actuarial gain and plan amendment (net of tax of zero and zero, respectively) | — | 15 | |||||||
Amounts reclassified from accumulated other comprehensive income (loss): | |||||||||
Amortization of unrecognized prior service credit (net of tax of zero and zero, respectively) | (2) | (2) | |||||||
Other comprehensive income (loss), net of tax | (2) | 13 | |||||||
Comprehensive income (loss) | (212) | 609 | |||||||
Less: Comprehensive loss attributable to noncontrolling interest | (2) | (1) | |||||||
Total comprehensive income (loss) attributable to Dynegy Inc. | $ | (210) | $ | 610 |
Three Months Ended March 31, | ||||||||||
2018 | 2017 | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||
Net income (loss) | $ | (210) | $ | 596 | ||||||
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | ||||||||||
Depreciation expense | 199 | 200 | ||||||||
Non-cash interest expense | 4 | 20 | ||||||||
Amortization of intangibles | (1) | 11 | ||||||||
Risk management activities | 148 | (20) | ||||||||
Loss (earnings) from unconsolidated investments | (7) | 1 | ||||||||
Deferred income taxes | (1) | (313) | ||||||||
Impairments | 6 | 20 | ||||||||
Change in value of common stock warrants | 1 | (12) | ||||||||
Bankruptcy reorganization items | — | (483) | ||||||||
Other | 18 | 16 | ||||||||
Changes in working capital: | ||||||||||
Accounts receivable, net | 81 | 24 | ||||||||
Inventory | 42 | 33 | ||||||||
Prepayments and other current assets | (9) | 19 | ||||||||
Accounts payable and accrued liabilities | (115) | 38 | ||||||||
Distributions from unconsolidated investments | 4 | — | ||||||||
Changes in non-current assets | (1) | — | ||||||||
Changes in non-current liabilities | — | (1) | ||||||||
Net cash provided by operating activities | 159 | 149 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||
Capital expenditures | (47) | (31) | ||||||||
Acquisitions, net of cash acquired | (2) | (3,263) | ||||||||
Distributions from unconsolidated investments | 1 | 2 | ||||||||
Proceeds received from asset sales, net | 8 | — | ||||||||
Net cash used in investing activities | (40) | (3,292) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||
Proceeds from long-term borrowings, net of debt issuance costs | — | 425 | ||||||||
Repayments of borrowings | (55) | (299) | ||||||||
Proceeds from issuance of equity, net of issuance costs | — | 150 | ||||||||
Preferred stock dividends paid | — | (5) | ||||||||
Interest rate swap settlement payments | (4) | (4) | ||||||||
Acquisition of noncontrolling interest | — | (375) | ||||||||
Payments related to bankruptcy settlement | — | (119) | ||||||||
Other financing | (1) | (1) | ||||||||
Net cash used in financing activities | (60) | (228) | ||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 59 | (3,371) | ||||||||
Cash, cash equivalents and restricted cash, beginning of period | 365 | 3,838 | ||||||||
Cash, cash equivalents and restricted cash, end of period | $ | 424 | $ | 467 |
• | Working capital was valued using available market information (Level 2). |
• | Acquired property, plant and equipment (“PP&E”), excluding those assets classified as held-for-sale, was valued using a discounted cash flow (“DCF”) analysis based upon a debt-free, free cash flow model (Level 3). The DCF model was created for each power generation facility based on its remaining useful life, and: |
◦ | for the years 2017 and 2018, included gross margin forecasts using quoted forward commodity market prices; |
◦ | for the years 2019 through 2026, we used gross margin forecasts based upon commodity and capacity price curves developed internally using forward New York Mercantile Exchange natural gas prices and supply and demand factors; |
◦ | for periods beyond 2026, we assumed a 2.5 percent growth rate. |
• | Acquired PP&E classified as held-for-sale was valued based upon the sale price of the assets (Level 3). |
• | Acquired derivatives were valued using the methods described in Note 7—Fair Value Measurements (Level 2 or Level 3). |
• | Contracts with terms that were not at current market prices were also valued using a DCF analysis (Level 3). The cash flows generated by the contracts were compared with their cash flows based on current market prices with the resulting difference recorded as either an intangible asset or liability. |
• | Asset retirement obligations (“AROs”) were recorded in accordance with ASC 410, Asset Retirement and Environmental Obligations (Level 3). |
(amounts in millions) | ||||
Base purchase price | $ | 3,300 | ||
Working capital adjustments and other | (31) | |||
Fair value of total consideration transferred | $ | 3,269 | ||
Cash | $ | 20 | ||
Accounts receivable | 22 | |||
Inventory | 95 | |||
Prepayments and other current assets | 3 | |||
Assets from risk management activities (including current portion of $21 million) | 25 | |||
Property, plant and equipment | 2,775 | |||
Investment in unconsolidated affiliate | 132 | |||
Intangible assets (including current portion of $7 million) | 50 | |||
Assets held-for-sale | 472 | |||
Other long-term assets | 131 | |||
Total assets acquired | 3,725 | |||
Accounts payable | 18 | |||
Liabilities from risk management activities (including current portion of $13 million) | 16 | |||
Asset retirement obligations | 19 | |||
Intangible liabilities (including current portion of $16 million) | 30 | |||
Deferred income taxes, net | 372 | |||
Other long-term liabilities | 1 | |||
Total liabilities assumed | 456 | |||
Net assets acquired | $ | 3,269 |
Three Months Ended March 31, | |||||||||
(amounts in millions) | 2018 | 2017 | |||||||
Acquisition costs | $ | — | $ | 31 | |||||
Revenues | $ | 1 | $ | 78 | |||||
Operating loss | $ | (248) | $ | (17) |
(amounts in millions) | Three Months Ended March 31, 2017 | |||
Revenue | $ | 1,283 | ||
Net income | $ | 580 | ||
Net income attributable to Dynegy Inc. | $ | 581 |
Three Months Ended March 31, 2018 | |||||||||||||||||||||||||||
(amounts in millions) | PJM | NY/NE | ERCOT | MISO | CAISO | Total | |||||||||||||||||||||
Energy | $ | 529 | $ | 295 | $ | 101 | $ | 265 | $ | 22 | $ | 1,212 | |||||||||||||||
Capacity | 130 | 72 | 0 | 53 | 12 | 267 | |||||||||||||||||||||
Ancillary | 20 | 8 | 6 | 1 | 1 | 36 | |||||||||||||||||||||
Total ASC 606 revenues | 679 | 375 | 107 | 319 | 35 | 1,515 | |||||||||||||||||||||
Derivative transactions | 4 | 68 | (273) | 7 | (6) | (200) | |||||||||||||||||||||
Other revenues | — | 7 | — | (1) | — | 6 | |||||||||||||||||||||
Total revenues | $ | 683 | $ | 450 | $ | (166) | $ | 325 | $ | 29 | $ | 1,321 |
Three Months Ended March 31, 2017 | ||||||||||||||||||||||||||
(amounts in millions) | PJM | NY/NE | ERCOT | MISO | CAISO | Total | ||||||||||||||||||||
Energy | $ | 435 | $ | 183 | $ | 15 | $ | 202 | $ | 13 | $ | 848 | ||||||||||||||
Capacity | 107 | 46 | 0 | 46 | 4 | 203 | ||||||||||||||||||||
Ancillary | 15 | 7 | 1 | 2 | 1 | 26 | ||||||||||||||||||||
Total ASC 606 revenues | 557 | 236 | 16 | 250 | 18 | 1,077 | ||||||||||||||||||||
Derivative transactions | 75 | 76 | 0 | 27 | 6 | 184 | ||||||||||||||||||||
Other revenues | (10) | (2) | — | (2) | — | (14) | ||||||||||||||||||||
Total revenues | $ | 622 | $ | 310 | $ | 16 | $ | 275 | $ | 24 | $ | 1,247 |
Performance Obligations as of March 31, 2018 | ||||||||||||||||||||
(amounts in millions) | 2018 | 2019 | 2020 | Thereafter | Total | |||||||||||||||
Total capacity sold (MW) | 19,120 | 17,001 | 14,810 | 11,316 | 62,247 | |||||||||||||||
Average price per MW-day | $ | 5.61 | $ | 4.97 | $ | 4.35 | $ | 4.29 | $ | 4.90 |
Contract Type | Quantity | Unit of Measure | Fair Value (1) | |||||||
(dollars and quantities in millions) | Purchases (Sales) | Asset (Liability) | ||||||||
Commodity contracts: | ||||||||||
Electricity derivatives (2) | (64) | MWh | $ | (17) | ||||||
Electricity basis derivatives (3) | (15) | MWh | $ | (2) | ||||||
Natural gas derivatives (2) | 412 | MMBtu | $ | (51) | ||||||
Natural gas basis derivatives | 152 | MMBtu | $ | (27) | ||||||
Physical heat rate derivatives (4) | 194/(18) | MMBtu/MWh | $ | (330) | ||||||
Heat rate option | 4/0 | MMBtu/MWh | $ | (9) | ||||||
Emissions derivatives | 9 | Metric Ton | $ | — | ||||||
Interest rate swaps | 1,959 | U.S. Dollar | $ | 39 | ||||||
Common stock warrants (5) | 9 | Warrant | $ | (2) |
(1) | Includes both asset and liability risk management positions but excludes margin and collateral netting of $33 million. |
(2) | Mainly comprised of swaps and physical forwards. |
(3) | Comprised of FTRs and swaps. |
(4) | Comprised of swaps which settle on the relationship of power pricing to natural gas pricing. |
(5) | Each warrant is convertible into one share of Dynegy common stock. |
March 31, 2018 | |||||||||||||||||||||
Gross amounts offset in the balance sheet | |||||||||||||||||||||
Contract Type | Balance Sheet Location | Gross Fair Value | Contract Netting | Collateral or Margin Received or Paid | Net Fair Value | ||||||||||||||||
(amounts in millions) | |||||||||||||||||||||
Derivative assets: | |||||||||||||||||||||
Commodity contracts | Assets from risk management activities | $ | 180 | $ | (123) | $ | — | $ | 57 | ||||||||||||
Interest rate contracts | Assets from risk management activities | 45 | (2) | — | 43 | ||||||||||||||||
Total derivative assets | $ | 225 | $ | (125) | $ | — | $ | 100 | |||||||||||||
Derivative liabilities: | |||||||||||||||||||||
Commodity contracts | Liabilities from risk management activities | $ | (616) | $ | 123 | $ | 33 | $ | (460) | ||||||||||||
Interest rate contracts | Liabilities from risk management activities | (6) | 2 | — | (4) | ||||||||||||||||
Common stock warrants | Accrued liabilities and other current liabilities and other long-term liabilities | (2) | — | — | (2) | ||||||||||||||||
Total derivative liabilities | $ | (624) | $ | 125 | $ | 33 | $ | (466) | |||||||||||||
Total derivatives | $ | (399) | $ | — | $ | 33 | $ | (366) |
December 31, 2017 | |||||||||||||||||||||
Gross amounts offset in the balance sheet | |||||||||||||||||||||
Contract Type | Balance Sheet Location | Gross Fair Value | Contract Netting | Collateral or Margin Received or Paid | Net Fair Value | ||||||||||||||||
(amounts in millions) | |||||||||||||||||||||
Derivative assets: | |||||||||||||||||||||
Commodity contracts | Assets from risk management activities | $ | 155 | $ | (112) | $ | — | $ | 43 | ||||||||||||
Interest rate contracts | Assets from risk management activities | 20 | (5) | — | 15 | ||||||||||||||||
Total derivative assets | $ | 175 | $ | (117) | $ | — | $ | 58 | |||||||||||||
Derivative liabilities: | |||||||||||||||||||||
Commodity contracts | Liabilities from risk management activities | $ | (411) | $ | 112 | $ | 47 | $ | (252) | ||||||||||||
Interest rate contracts | Liabilities from risk management activities | (13) | 5 | — | (8) | ||||||||||||||||
Common stock warrants | Accrued liabilities and other current liabilities and other long-term liabilities | (2) | — | — | (2) | ||||||||||||||||
Total derivative liabilities | $ | (426) | $ | 117 | $ | 47 | $ | (262) | |||||||||||||
Total derivatives | $ | (251) | $ | — | $ | 47 | $ | (204) |
Location on Balance Sheet | March 31, 2018 | December 31, 2017 | ||||||
(amounts in millions) | ||||||||
Gross collateral posted with counterparties | $ | 109 | $ | 92 | ||||
Less: Collateral netted against risk management liabilities | 33 | 47 | ||||||
Net collateral within Prepayments and other current assets | $ | 76 | $ | 45 |
Derivatives Not Designated as Hedges | Location of Gain (Loss) Recognized in Income on Derivatives | Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||||
(amounts in millions) | ||||||||||
Commodity contracts | Revenues | $ | (200) | $ | 184 | |||||
Interest rate contracts | Interest expense | $ | 29 | $ | 2 | |||||
Common stock warrants | Other income and (expense), net | $ | (1) | $ | 12 |
Fair Value as of March 31, 2018 | |||||||||||||||||||
(amounts in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Assets: | |||||||||||||||||||
Assets from commodity risk management activities: | |||||||||||||||||||
Electricity derivatives | $ | — | $ | 128 | $ | 4 | $ | 132 | |||||||||||
Natural gas derivatives | — | 41 | 2 | 43 | |||||||||||||||
Physical heat rate derivatives | — | 4 | — | 4 | |||||||||||||||
Emissions derivatives | — | 1 | — | 1 | |||||||||||||||
Total assets from commodity risk management activities | — | 174 | 6 | 180 | |||||||||||||||
Assets from interest rate contracts | — | 45 | — | 45 | |||||||||||||||
Total assets | $ | — | $ | 219 | $ | 6 | $ | 225 | |||||||||||
Liabilities: | |||||||||||||||||||
Liabilities from commodity risk management activities: | |||||||||||||||||||
Electricity derivatives | $ | — | $ | (96) | $ | (55) | $ | (151) | |||||||||||
Natural gas derivatives | — | (119) | (2) | (121) | |||||||||||||||
Physical heat rate derivatives | — | (330) | (4) | (334) | |||||||||||||||
Heat rate option | — | — | (9) | (9) | |||||||||||||||
Emissions derivatives | — | (1) | — | (1) | |||||||||||||||
Total liabilities from commodity risk management activities | — | (546) | (70) | (616) | |||||||||||||||
Liabilities from interest rate contracts | — | (6) | — | (6) | |||||||||||||||
Liabilities from outstanding common stock warrants | (2) | — | — | (2) | |||||||||||||||
Total liabilities | $ | (2) | $ | (552) | $ | (70) | $ | (624) |
Fair Value as of December 31, 2017 | |||||||||||||||||||
(amounts in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Assets: | |||||||||||||||||||
Assets from commodity risk management activities: | |||||||||||||||||||
Electricity derivatives | $ | — | $ | 71 | $ | 6 | $ | 77 | |||||||||||
Natural gas derivatives | — | 62 | 10 | 72 | |||||||||||||||
Physical heat rate derivatives | — | 4 | — | 4 | |||||||||||||||
Emissions derivatives | — | 2 | — | 2 | |||||||||||||||
Total assets from commodity risk management activities | — | 139 | 16 | 155 | |||||||||||||||
Assets from interest rate contracts | — | 20 | — | 20 | |||||||||||||||
Total assets | $ | — | $ | 159 | $ | 16 | $ | 175 | |||||||||||
Liabilities: | |||||||||||||||||||
Liabilities from commodity risk management activities: | |||||||||||||||||||
Electricity derivatives | $ | — | $ | (200) | $ | (31) | $ | (231) | |||||||||||
Natural gas derivatives | — | (71) | (6) | (77) | |||||||||||||||
Physical heat rate derivatives | — | (99) | — | (99) | |||||||||||||||
Heat rate option | — | — | (4) | (4) | |||||||||||||||
Total liabilities from commodity risk management activities | — | (370) | (41) | (411) | |||||||||||||||
Liabilities from interest rate contracts | — | (13) | — | (13) | |||||||||||||||
Liabilities from outstanding common stock warrants | (2) | — | — | (2) | |||||||||||||||
Total liabilities | $ | (2) | $ | (383) | $ | (41) | $ | (426) |
Transaction Type | Quantity | Unit of Measure | Net Fair Value | Valuation Technique | Significant Unobservable Input | Significant Unobservable Input Range | |||||||||
(dollars in millions) | |||||||||||||||
Electricity derivatives: | |||||||||||||||
Forward contracts—power (1) | (17) | Million MWh | $ | (50) | Basis spread + liquid location | Basis spread | $4.25 - $6.25 | ||||||||
FTRs | (13) | Million MWh | $ | (1) | Historical congestion | Forward price | $0 - $6.00 | ||||||||
Physical heat rate derivatives | 4/0 | Million MMBtu/Million MWh | $ | (4) | Discounted Cash Flow | Forward price | $2.00 - $2.80 / $36 - $44 | ||||||||
Heat rate option | 4/0 | Million MMBtu/Million MWh | $ | (9) | Option models | Power price volatility Gas/Power price correlation | 30% - 50% / 70% - 100% | ||||||||
Natural gas derivatives (1) | 95 | Million MMBtu | $ | — | Illiquid location fixed price | Forward price | $2.00 - $2.50 |
(1) | Represents forward financial and physical transactions at illiquid pricing locations and long-dated contracts. |
Three Months Ended March 31, 2018 | |||||||||||||||||||||||
(amounts in millions) | Electricity Derivatives | Natural Gas Derivatives | Heat Rate Derivatives | Heat Rate Option | Total | ||||||||||||||||||
Balance at December 31, 2017 | $ | (25) | $ | 4 | $ | — | $ | (4) | $ | (25) | |||||||||||||
Total losses included in earnings | (36) | (1) | (4) | (5) | (46) | ||||||||||||||||||
Transfers between levels (1) | 11 | (11) | — | — | — | ||||||||||||||||||
Settlements (2) | (1) | 8 | — | — | 7 | ||||||||||||||||||
Balance at March 31, 2018 | $ | (51) | $ | 0 | $ | (4) | $ | (9) | $ | (64) | |||||||||||||
Unrealized losses relating to instruments held as of March 31, 2018 | $ | (36) | $ | (1) | $ | (4) | $ | (5) | $ | (46) |
Three Months Ended March 31, 2017 | |||||||||||||
(amounts in millions) | Electricity Derivatives | Natural Gas Derivatives | Total | ||||||||||
Balance at December 31, 2016 | $ | 8 | $ | (6) | $ | 2 | |||||||
Acquired derivatives | 1 | — | 1 | ||||||||||
Total gains (losses) included in earnings | (46) | 11 | (35) | ||||||||||
Settlements (2) | 20 | (7) | 13 | ||||||||||
Balance at March 31, 2017 | $ | (17) | $ | (2) | $ | (19) | |||||||
Unrealized gains (losses) relating to instruments held as of March 31, 2017 | $ | (46) | $ | 11 | $ | (35) |
(1) | During the three months ended March 31, 2018, we had transfers between Level 3 and Level 2 due to changes in market liquidity. |
(2) | For purposes of these tables, we define settlements as the beginning of period fair value of contracts that settled during the period. |
March 31, 2018 | December 31, 2017 | |||||||||||||||||||||
(amounts in millions) | Fair Value Hierarchy | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||||
Dynegy Inc.: | ||||||||||||||||||||||
Term Loan, due 2024 (1) | Level 2 | $ | (1,946) | $ | (2,031) | $ | (1,944) | $ | (2,021) | |||||||||||||
Revolving Facility (1) | Level 2 | $ | — | $ | — | $ | — | $ | — | |||||||||||||
6.75% Senior Notes, due 2019 (1) | Level 2 | $ | (846) | $ | (867) | $ | (845) | $ | (873) | |||||||||||||
7.375% Senior Notes, due 2022 (1) | Level 2 | $ | (1,735) | $ | (1,846) | $ | (1,734) | $ | (1,844) | |||||||||||||
5.875% Senior Notes, due 2023 (1) | Level 2 | $ | (494) | $ | (513) | $ | (493) | $ | (508) | |||||||||||||
7.625% Senior Notes, due 2024 (1) | Level 2 | $ | (1,237) | $ | (1,348) | $ | (1,237) | $ | (1,344) | |||||||||||||
8.034% Senior Notes, due 2024 (1) | Level 2 | $ | (188) | $ | (198) | $ | (188) | $ | (198) | |||||||||||||
8.00% Senior Notes, due 2025 (1) | Level 2 | $ | (739) | $ | (814) | $ | (739) | $ | (812) | |||||||||||||
8.125% Senior Notes, due 2026 (1) | Level 2 | $ | (842) | $ | (935) | $ | (842) | $ | (933) | |||||||||||||
7.00% Amortizing Notes, due 2019 (TEUs) (1) | Level 2 | $ | (45) | $ | (47) | $ | (51) | $ | (54) | |||||||||||||
Forward capacity agreement (1) | Level 3 | $ | (218) | $ | (218) | $ | (215) | $ | (215) | |||||||||||||
Inventory financing agreements | Level 3 | $ | — | $ | — | $ | (48) | $ | (48) | |||||||||||||
Equipment financing agreements (1) | Level 3 | $ | (111) | $ | (111) | $ | (97) | $ | (97) |
(1) | Carrying amounts include unamortized discounts and debt issuance costs. Please read Note 13—Debt for further discussion. |
Three Months Ended March 31, | |||||||||
(amounts in millions) | 2018 | 2017 | |||||||
Change in capital expenditures included in accounts payable | $ | (6) | $ | 5 | |||||
Change in capital expenditures pursuant to an equipment financing agreement | $ | 16 | $ | 9 | |||||
Issuance of 2017 Warrants | $ | — | $ | 17 | |||||
Issuance of senior notes related to the Genco restructuring | $ | — | $ | 182 | |||||
Non-cash working capital adjustment to purchase price of the ENGIE acquisition | $ | — | $ | 15 |
(amounts in millions) | March 31, 2018 | December 31, 2017 | |||||||
Materials and supplies | $ | 240 | $ | 242 | |||||
Coal | 140 | 166 | |||||||
Fuel oil | 13 | 15 | |||||||
Natural gas | — | 9 | |||||||
Emissions allowances (1) | 5 | 13 | |||||||
Total | $ | 398 | $ | 445 |
(1) | At December 31, 2017, a portion of this inventory was held as collateral by one of our counterparties as part of an inventory financing agreement. Please read Note 13—Debt—Emissions Repurchase Agreements for further discussion. |
(amounts in millions) | March 31, 2018 | December 31, 2017 | ||||||
Power generation | $ | 9,951 | $ | 9,998 | ||||
Buildings and improvements | 958 | 955 | ||||||
Office and other equipment | 114 | 115 | ||||||
Property, plant and equipment | 11,023 | 11,068 | ||||||
Accumulated depreciation | (2,286) | (2,184) | ||||||
Property, plant and equipment, net | $ | 8,737 | $ | 8,884 |
March 31, 2018 | ||||||||||||||||||||||||
(dollars in millions) | Ownership Interest | Property, Plant and Equipment | Accumulated Depreciation | Construction Work in Progress | Total | |||||||||||||||||||
Stuart (1)(2) | 39.0 | % | $ | 1 | $ | (1) | $ | — | $ | — | ||||||||||||||
Killen (1)(2) | 33.0 | % | $ | — | $ | — | $ | — | $ | — |
December 31, 2017 | ||||||||||||||||||||||||
(dollars in millions) | Ownership Interest | Property, Plant and Equipment | Accumulated Depreciation | Construction Work in Progress | Total | |||||||||||||||||||
Stuart (1)(2) | 39.0 | % | $ | 1 | $ | — | $ | — | $ | 1 | ||||||||||||||
Killen (1)(2) | 33.0 | % | $ | — | $ | — | $ | — | $ | — |
(1) | Facilities not operated by Dynegy. |
(2) | Stuart Unit 1 was retired early on September 30, 2017, with remaining Stuart and Killen units scheduled to be retired by mid-2018. |
March 31, 2018 | December 31, 2017 | ||||||||||||||||||||||||||
(amounts in millions) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||
Intangible Assets: | |||||||||||||||||||||||||||
Electricity contracts | $ | 178 | $ | (132) | $ | 46 | $ | 178 | $ | (131) | $ | 47 | |||||||||||||||
Gas transport contracts | 29 | (14) | 15 | 30 | (13) | 17 | |||||||||||||||||||||
Total intangible assets | $ | 207 | $ | (146) | $ | 61 | $ | 208 | $ | (144) | $ | 64 | |||||||||||||||
Intangible Liabilities: | |||||||||||||||||||||||||||
Electricity contracts | $ | (11) | $ | 7 | $ | (4) | $ | (11) | $ | 7 | $ | (4) | |||||||||||||||
Coal transport contracts | (48) | 44 | (4) | (48) | 44 | (4) | |||||||||||||||||||||
Gas transport contracts | (53) | 17 | (36) | (58) | 19 | (39) | |||||||||||||||||||||
Gas storage contracts | — | — | — | (2) | 1 | (1) | |||||||||||||||||||||
Total intangible liabilities | $ | (112) | $ | 68 | $ | (44) | $ | (119) | $ | 71 | $ | (48) | |||||||||||||||
Intangible assets and liabilities, net | $ | 95 | $ | (78) | $ | 17 | $ | 89 | $ | (73) | $ | 16 |
Three Months Ended March 31, | ||||||||||
(amounts in millions) | 2018 | 2017 | ||||||||
Electricity contracts, net (1) | $ | — | $ | 15 | ||||||
Coal contracts, net (2) | — | (2) | ||||||||
Coal transport contracts, net (2) | — | (2) | ||||||||
Gas transport contracts, net (2) | (1) | — | ||||||||
Total | $ | (1) | $ | 11 |
(1) | The amortization of these contracts is recognized in Revenues or Cost of sales in our unaudited consolidated statements of operations. |
(2) | The amortization of these contracts is recognized in Cost of sales in our unaudited consolidated statements of operations. |
(amounts in millions) | March 31, 2018 | December 31, 2017 | ||||||||
Secured Obligations: | ||||||||||
Term Loan, due 2024 | $ | 2,018 | $ | 2,018 | ||||||
Revolving Facility | — | — | ||||||||
Forward Capacity Agreement | 241 | 241 | ||||||||
Inventory Financing Agreements | — | 48 | ||||||||
Subtotal secured obligations | 2,259 | 2,307 | ||||||||
Unsecured Obligations: | ||||||||||
7.00% Amortizing Notes, due 2019 (TEUs) | 45 | 53 | ||||||||
6.75% Senior Notes, due 2019 | 850 | 850 | ||||||||
7.375% Senior Notes, due 2022 | 1,750 | 1,750 | ||||||||
5.875% Senior Notes, due 2023 | 500 | 500 | ||||||||
7.625% Senior Notes, due 2024 | 1,250 | 1,250 | ||||||||
8.034% Senior Notes, due 2024 | 188 | 188 | ||||||||
8.00% Senior Notes, due 2025 | 750 | 750 | ||||||||
8.125% Senior Notes, due 2026 | 850 | 850 | ||||||||
Equipment Financing Agreements | 137 | 132 | ||||||||
Subtotal unsecured obligations | 6,320 | 6,323 | ||||||||
Total debt obligations | 8,579 | 8,630 | ||||||||
Unamortized debt discounts and issuance costs | (178) | (197) | ||||||||
8,401 | 8,433 | |||||||||
Less: Current maturities, including unamortized debt discounts and issuance costs, net | 62 | 105 | ||||||||
Total long-term debt | $ | 8,339 | $ | 8,328 |
Three Months Ended March 31, | |||||||||
(amounts in millions) | 2018 | 2017 | |||||||
Valuation allowance release as a result of the 2017 ENGIE Acquisition and the 2016 EquiPower Acquisition | $ | — | $ | 317 | |||||
Other state taxes | 1 | (4) | |||||||
Income tax benefit | $ | 1 | $ | 313 |
Pension Benefits | Other Benefits | ||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||
(amounts in millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||
Service cost benefits earned during period | $ | 4 | $ | 4 | $ | — | $ | — | |||||||||||
Interest cost on projected benefit obligation | 5 | 5 | — | — | |||||||||||||||
Expected return on plan assets | (6) | (6) | (1) | — | |||||||||||||||
Amortization of prior service credit | (1) | — | (1) | (1) | |||||||||||||||
Net periodic benefit cost (gain) | $ | 2 | $ | 3 | $ | (2) | $ | (1) |
Three Months Ended March 31, | |||||||||
(amounts in millions) | 2018 | 2017 | |||||||
Beginning of period | $ | 32 | $ | 21 | |||||
Other comprehensive income before reclassifications: | |||||||||
Actuarial gain and plan amendments (net of tax of zero and zero, respectively) | — | 15 | |||||||
Amounts reclassified from accumulated other comprehensive income: | |||||||||
Amortization of unrecognized prior service credit (net of tax of zero and zero, respectively) (1) | (2) | (2) | |||||||
Net current period other comprehensive income (loss), net of tax | (2) | 13 | |||||||
End of period | $ | 30 | $ | 34 |
(1) | Amounts are associated with our defined benefit pension and other post-employment benefit plans and are included in the computation of net periodic pension cost (gain). Please read Note 16—Pension and Other Post-Employment Benefit Plans for further discussion. |
(amounts in millions) | PJM | NY/NE | ERCOT | MISO | CAISO | Other and Eliminations | Total | ||||||||||||||||||||||||||||
Domestic: | |||||||||||||||||||||||||||||||||||
Unaffiliated revenues | $ | 745 | $ | 450 | $ | (165) | $ | 262 | $ | 29 | $ | — | $ | 1,321 | |||||||||||||||||||||
Intercompany and affiliate revenues | (62) | — | (1) | 63 | — | — | — | ||||||||||||||||||||||||||||
Total revenues | $ | 683 | $ | 450 | $ | (166) | $ | 325 | $ | 29 | $ | — | $ | 1,321 | |||||||||||||||||||||
Depreciation expense | $ | (94) | $ | (52) | $ | (19) | $ | (18) | $ | (14) | $ | (2) | $ | (199) | |||||||||||||||||||||
General and administrative expense | — | — | — | — | — | (42) | (42) | ||||||||||||||||||||||||||||
Operating income (loss) | $ | 109 | $ | 92 | $ | (280) | $ | 29 | $ | (9) | $ | (43) | $ | (102) | |||||||||||||||||||||
Earnings from unconsolidated investments | — | 7 | — | — | — | — | 7 | ||||||||||||||||||||||||||||
Interest expense | — | — | — | — | — | (116) | (116) | ||||||||||||||||||||||||||||
Loss before income taxes | 0 | — | 0 | — | — | 0 | (211) | ||||||||||||||||||||||||||||
Income tax benefit | — | — | — | — | — | 1 | 1 | ||||||||||||||||||||||||||||
Net loss | (210) | ||||||||||||||||||||||||||||||||||
Less: Net loss attributable to noncontrolling interest | (2) | ||||||||||||||||||||||||||||||||||
Net loss attributable to Dynegy Inc. | $ | (208) | |||||||||||||||||||||||||||||||||
Total assets—domestic | $ | 4,869 | $ | 3,282 | $ | 1,548 | $ | 790 | $ | 443 | $ | 672 | $ | 11,604 | |||||||||||||||||||||
Investment in unconsolidated affiliate | $ | 66 | $ | 59 | $ | — | $ | — | $ | — | $ | — | $ | 125 | |||||||||||||||||||||
Capital expenditures | $ | (19) | $ | (8) | $ | (7) | $ | (8) | $ | (4) | $ | (1) | $ | (47) |
(amounts in millions) | PJM | NY/NE | ERCOT | MISO | CAISO | Other and Eliminations | Total | ||||||||||||||||||||||||||||
Domestic: | |||||||||||||||||||||||||||||||||||
Unaffiliated revenues | $ | 630 | $ | 309 | $ | 17 | $ | 267 | $ | 24 | $ | — | $ | 1,247 | |||||||||||||||||||||
Intercompany revenues | (8) | 1 | (1) | 8 | — | — | — | ||||||||||||||||||||||||||||
Total revenues | $ | 622 | $ | 310 | $ | 16 | $ | 275 | $ | 24 | $ | — | $ | 1,247 | |||||||||||||||||||||
Depreciation expense | $ | (92) | $ | (62) | $ | (13) | $ | (19) | $ | (12) | $ | (2) | $ | (200) | |||||||||||||||||||||
Impairments | (20) | — | — | — | — | — | (20) | ||||||||||||||||||||||||||||
General and administrative expense | — | — | — | — | — | (40) | (40) | ||||||||||||||||||||||||||||
Acquisition and integration costs | — | — | — | — | — | (45) | (45) | ||||||||||||||||||||||||||||
Operating income (loss) | $ | 86 | $ | (41) | $ | (28) | $ | 35 | $ | (14) | $ | (87) | $ | (49) | |||||||||||||||||||||
Bankruptcy reorganization items | — | — | — | 498 | — | (15) | 483 | ||||||||||||||||||||||||||||
Earnings from unconsolidated investments | (1) | — | — | — | — | — | (1) | ||||||||||||||||||||||||||||
Interest expense | — | — | — | — | — | (167) | (167) | ||||||||||||||||||||||||||||
Other income and expense, net | — | — | — | 1 | — | 16 | 17 | ||||||||||||||||||||||||||||
Income before income taxes | 0 | 283 | |||||||||||||||||||||||||||||||||
Income tax expense | — | — | — | — | — | 313 | 313 | ||||||||||||||||||||||||||||
Net income | 596 | ||||||||||||||||||||||||||||||||||
Less: Net loss attributable to noncontrolling interest | (1) | ||||||||||||||||||||||||||||||||||
Net income attributable to Dynegy Inc. | $ | 597 | |||||||||||||||||||||||||||||||||
Total assets—domestic | $ | 5,765 | $ | 3,720 | $ | 1,615 | $ | 937 | $ | 473 | $ | 570 | $ | 13,080 | |||||||||||||||||||||
Investment in unconsolidated affiliate | $ | 72 | $ | 77 | $ | — | $ | — | $ | — | $ | — | $ | 149 | |||||||||||||||||||||
Capital expenditures | $ | (16) | $ | (5) | $ | (3) | $ | (4) | $ | (1) | $ | (2) | $ | (31) |
• | the accompanying notes to the Unaudited Pro Forma Condensed Combined Consolidated Financial Statements; |
• | the historical unaudited condensed consolidated financial statements and related notes of Vistra Energy as of and for the three months ended March 31, 2018, included in Vistra Energy’s Quarterly Report on Form 10-Q; |
• | the historical audited condensed consolidated financial statements and related notes of Vistra Energy as of and for the year ended December 31, 2017, included in Vistra Energy's Annual Report on Form 10-K; |
• | the historical unaudited condensed consolidated financial statements and related notes of Dynegy as of and for the three months ended March 31, 2018 included as Exhibit 99.1; |
• | the historical audited consolidated financial statements and related notes of Dynegy as of and for the year ended December 31, 2017, included in Dynegy's Annual Report on Form 10-K; |
• | the Merger Form S-4 registration statement; and |
• | other information contained in or incorporated by reference into this document. |
VISTRA ENERGY UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF INCOME (LOSS) For the Three Months Ended March 31, 2018 | |||||||||||||||||
Historical Vistra Energy | Historical Dynegy, As Adjusted (A) | Pro Forma Adjustments | Pro Forma Combined | ||||||||||||||
(in millions, except per share amounts) | |||||||||||||||||
Operating revenues | $ | 765 | $ | 1,321 | $ | 41 | (C)(D)(E) | $ | 2,127 | ||||||||
Fuel, purchased power and delivery fees | (650 | ) | (919 | ) | (43 | ) | (C)(E) | (1,612 | ) | ||||||||
Operating costs | (194 | ) | (258 | ) | (10 | ) | (D)(F) | (462 | ) | ||||||||
Depreciation and amortization | (153 | ) | (199 | ) | (12 | ) | (G) | (364 | ) | ||||||||
Impairments | — | (6 | ) | — | (H) | (6 | ) | ||||||||||
Selling, general and administrative expenses | (162 | ) | (41 | ) | 6 | (I) | (197 | ) | |||||||||
Operating income (loss) | (394 | ) | (102 | ) | (18 | ) | (514 | ) | |||||||||
Other income and deductions, net | 8 | 7 | — | 15 | |||||||||||||
Interest expense and related charges | 9 | (116 | ) | 17 | (J) | (90 | ) | ||||||||||
Impacts of Tax Receivable Agreement | (18 | ) | — | 5 | (K) | (13 | ) | ||||||||||
Income (loss) before income taxes | (395 | ) | (211 | ) | 4 | (602 | ) | ||||||||||
Income tax (expense) benefit | 89 | 1 | 45 | (L) | 135 | ||||||||||||
Net income (loss) | (306 | ) | (210 | ) | 49 | (467 | ) | ||||||||||
Less: Net loss attributable to noncontrolling interest | — | (2 | ) | — | (2 | ) | |||||||||||
Net income (loss) attributable to Vistra Energy | $ | (306 | ) | $ | (208 | ) | $ | 49 | $ | (465 | ) | ||||||
Weighted average shares of common stock outstanding: | |||||||||||||||||
Basic | 428 | 167 | (58 | ) | (M) | 537 | |||||||||||
Diluted | 428 | 167 | (58 | ) | (M) | 537 | |||||||||||
Net income (loss) per weighted average share of common stock outstanding: | |||||||||||||||||
Basic | $ | (0.71 | ) | $ | (1.25 | ) | $ | (0.87 | ) | ||||||||
Diluted | $ | (0.71 | ) | $ | (1.25 | ) | $ | (0.87 | ) |
VISTRA ENERGY UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF INCOME (LOSS) For the Year Ended December 31, 2017 | |||||||||||||||||
Historical Vistra Energy | Historical Dynegy, As Adjusted (A) | Pro Forma Adjustments | Pro Forma Combined | ||||||||||||||
(in millions, except per share amounts) | |||||||||||||||||
Operating revenues | $ | 5,430 | $ | 4,842 | $ | 237 | (B)(C)(D)(E) | $ | 10,509 | ||||||||
Fuel, purchased power and delivery fees | (2,935 | ) | (2,932 | ) | (213 | ) | (C)(E) | (6,080 | ) | ||||||||
Operating costs | (973 | ) | (995 | ) | (12 | ) | (D)(F) | (1,980 | ) | ||||||||
Depreciation and amortization | (699 | ) | (811 | ) | (69 | ) | (G) | (1,579 | ) | ||||||||
Impairments | (25 | ) | (148 | ) | — | (H) | (173 | ) | |||||||||
Gain (loss) on sale of assets, net | — | (122 | ) | — | (H) | (122 | ) | ||||||||||
Selling, general and administrative expenses | (600 | ) | (246 | ) | 26 | (I) | (820 | ) | |||||||||
Operating income (loss) | 198 | (412 | ) | (31 | ) | (245 | ) | ||||||||||
Other income and deductions, net | 32 | 75 | — | (H) | 107 | ||||||||||||
Reorganization items | — | 494 | — | (H) | 494 | ||||||||||||
Interest expense and related charges | (193 | ) | (695 | ) | 78 | (H)(J) | (810 | ) | |||||||||
Impacts of Tax Receivable Agreement | 213 | — | 35 | (K) | 248 | ||||||||||||
Income (loss) before income taxes | 250 | (538 | ) | 82 | (206 | ) | |||||||||||
Income tax (expense) benefit | (504 | ) | 610 | (869 | ) | (L) | (763 | ) | |||||||||
Net income (loss) | (254 | ) | 72 | (787 | ) | (969 | ) | ||||||||||
Less: Net loss attributable to noncontrolling interest | — | (4 | ) | — | (4 | ) | |||||||||||
Net income (loss) attributable to Vistra Energy | (254 | ) | 76 | (787 | ) | (965 | ) | ||||||||||
Less: Dividends on preferred stock | — | 18 | — | 18 | |||||||||||||
Net income (loss) attributable to common stockholders | $ | (254 | ) | $ | 58 | $ | (787 | ) | $ | (983 | ) | ||||||
Weighted average shares of common stock outstanding: | |||||||||||||||||
Basic | 428 | 155 | (46 | ) | (M) | 537 | |||||||||||
Diluted | 428 | 162 | (53 | ) | (M) | 537 | |||||||||||
Net income (loss) per weighted average share of common stock outstanding: | |||||||||||||||||
Basic | $ | (0.59 | ) | $ | 0.37 | $ | (1.83 | ) | |||||||||
Diluted | $ | (0.59 | ) | $ | 0.36 | $ | (1.83 | ) |
VISTRA ENERGY UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET As of March 31, 2018 | |||||||||||||||||
Historical Vistra Energy | Historical Dynegy, As Adjusted (N) | Pro Forma Adjustments | Pro Forma Combined | ||||||||||||||
(in millions) | |||||||||||||||||
ASSETS | |||||||||||||||||
Current assets: | |||||||||||||||||
Cash and cash equivalents | $ | 1,379 | $ | 424 | $ | — | $ | 1,803 | |||||||||
Restricted cash | 59 | — | — | 59 | |||||||||||||
Trade accounts receivable — net | 463 | 430 | — | 893 | |||||||||||||
Inventories | 226 | 393 | (62 | ) | (O) | 557 | |||||||||||
Commodity and other derivative contractual assets | 404 | 45 | 133 | (P) | 582 | ||||||||||||
Prepaid expense and other current assets | 168 | 160 | 33 | (P) | 361 | ||||||||||||
Total current assets | 2,699 | 1,452 | 104 | 4,255 | |||||||||||||
Restricted cash | 500 | — | — | 500 | |||||||||||||
Investments | 1,232 | 125 | — | 1,357 | |||||||||||||
Property, plant and equipment — net | 4,850 | 8,737 | 478 | (Q)(R) | 14,065 | ||||||||||||
Goodwill | 1,907 | 772 | (202 | ) | (S) | 2,477 | |||||||||||
Identifiable intangible assets — net | 2,437 | 66 | 108 | (Q)(T) | 2,611 | ||||||||||||
Commodity and other derivative contractual assets | 169 | 55 | 22 | (P) | 246 | ||||||||||||
Accumulated deferred income taxes | 793 | (6 | ) | 817 | (V) | 1,604 | |||||||||||
Other noncurrent assets | 189 | 397 | — | 586 | |||||||||||||
Total assets | $ | 14,776 | $ | 11,598 | $ | 1,327 | $ | 27,701 | |||||||||
LIABILITIES AND EQUITY | |||||||||||||||||
Current liabilities: | |||||||||||||||||
Long-term debt due currently | $ | 44 | $ | 62 | $ | (4 | ) | (W) | $ | 102 | |||||||
Trade accounts payable | 421 | 276 | — | 697 | |||||||||||||
Commodity and other derivative contractual liabilities | 595 | 371 | 135 | (P) | 1,101 | ||||||||||||
Accrued taxes | 117 | 45 | — | 162 | |||||||||||||
Accrued interest | 3 | 157 | — | 160 | |||||||||||||
Asset retirement obligations | 126 | 41 | (4 | ) | (X) | 163 | |||||||||||
Other current liabilities | 251 | 60 | 98 | (Y) | 409 | ||||||||||||
Total current liabilities | 1,557 | 1,012 | 225 | 2,794 | |||||||||||||
Long-term debt, less amounts due currently | 4,366 | 8,339 | 515 | (W) | 13,220 | ||||||||||||
Commodity and other derivative contractual liabilities | 386 | 93 | 20 | (P) | 499 | ||||||||||||
Tax Receivable Agreement obligation | 351 | — | (25 | ) | (Z) | 326 | |||||||||||
Asset retirement obligations | 1,817 | 274 | 47 | (X) | 2,138 | ||||||||||||
Other noncurrent liabilities and deferred credits | 239 | 196 | 39 | (T)(U) | 474 | ||||||||||||
Total liabilities | 8,716 | 9,914 | 821 | 19,451 |
VISTRA ENERGY UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET As of March 31, 2018 | |||||||||||||||||
Historical Vistra Energy | Historical Dynegy, As Adjusted (N) | Pro Forma Adjustments | Pro Forma Combined | ||||||||||||||
(in millions) | |||||||||||||||||
Equity: | |||||||||||||||||
Common stock | 4 | 1 | — | (AA) | 5 | ||||||||||||
Additional paid-in-capital | 7,772 | 3,722 | (1,475 | ) | (AA) | 10,019 | |||||||||||
Retained deficit | (1,700 | ) | (2,059 | ) | 2,011 | (AA) | (1,748 | ) | |||||||||
Accumulated other comprehensive income (loss) | (16 | ) | 30 | (30 | ) | (AA) | (16 | ) | |||||||||
Sub-total | 6,060 | 1,694 | 506 | 8,260 | |||||||||||||
Non-controlling interest | — | (10 | ) | — | (10 | ) | |||||||||||
Total equity | 6,060 | 1,684 | 506 | 8,250 | |||||||||||||
Total liabilities and equity | $ | 14,776 | $ | 11,598 | $ | 1,327 | $ | 27,701 |
A. | Financial information presented in the “Historical Dynegy, As Adjusted” columns in the “Unaudited Pro Forma Condensed Combined Consolidated Statements of Income (Loss)” represent the historical consolidated statements of operations of Dynegy for the three months ended March 31, 2018 and the year ended December 31, 2017. Such financial information has been reclassified to conform to the historical presentation in Vistra Energy’s consolidated statement of income (loss) as set forth below. Unless otherwise indicated, defined line items included in the footnotes have the meanings given to them in the historical financial statements of Dynegy. |
Three Months Ended March 31, 2018 | ||||||||||
Before Reclassification | Reclassification Amount | After Reclassification | ||||||||
(in millions) | ||||||||||
Reclassification and classification of the unaudited pro forma condensed combined consolidated statements of income: | ||||||||||
Other | 1 | (1 | ) | (a) | — | |||||
Selling, general and administrative expenses | (42 | ) | 1 | (a) | (41 | ) | ||||
Earnings from unconsolidated investments | 7 | (7 | ) | (b) | — | |||||
Other income and deductions, net | — | 7 | (b) | 7 |
(a) | Represents reclassification of $1 million from other to selling, general and administrative expenses. |
(b) | Represents reclassification of $7 million from earnings from unconsolidated investments to other income and deductions, net. |
Year Ended December 31, 2017 | ||||||||||
Before Reclassification | Reclassification Amount | After Reclassification | ||||||||
(in millions) | ||||||||||
Reclassification and classification of the unaudited pro forma condensed combined consolidated statements of income: | ||||||||||
Acquisition and integration costs | (57 | ) | 57 | (c) | — | |||||
Selling, general and administrative expenses | (189 | ) | (57 | ) | (c) | (246 | ) | |||
Earnings from unconsolidated investments | 8 | (8 | ) | (d) | — | |||||
Other income and deductions, net | 67 | 8 | (d) | 75 | ||||||
Loss on early extinguishment of debt | (79 | ) | 79 | (e) | — | |||||
Interest expense | (616 | ) | (79 | ) | (e) | (695 | ) |
(c) | Represents reclassification of $(57) million from acquisition and integration costs to selling, general and administrative expenses. |
(d) | Represents reclassification of $8 million from earnings from unconsolidated investments to other income and deductions, net. |
(e) | Represents reclassification of $(79) million from loss on early extinguishment of debt to interest expense. |
B. | During the year ended December 31, 2017, $4 million of transactions between Vistra Energy and Dynegy were recorded as operating revenue by Dynegy and as a contra-revenue in operating revenue by Vistra Energy. As the amounts are recorded within operating revenue for both entities, the transaction eliminates upon combination and no further adjustment is required. |
C. | Reflects adjustments for differences in accounting policy to: |
a. | Reclassify gains and losses for commodity hedges related to fuel, which increases revenue and expense by $2 and $99 million for the three months ended March 31, 2018 and for the year ended December 31, 2017, respectively. |
b. | Reclassify transmission and distribution delivery fees to conform with Vistra Energy’s historical presentation, which increases revenue and expense by $18 million and $89 million for the three months ended March 31, 2018 and for the year ended December 31, 2017, respectively. |
c. | Reclassify capacity costs to conform to Vistra Energy’s historical presentation, which increases revenue and expense by $31 million for the year ended December 31, 2017. |
d. | Adjust commodity derivative transactions to conform to Vistra Energy’s accounting policies, which use a mid-market valuation convention as a practical expedient. This adjustment increases revenue and expense by $17 million and $25 million, respectively, for the three months ended March 31, 2018 and by $9 million and $2 million, respectively, for the year ended December 31, 2017. |
D. | Reflects an adjustment for differences in accounting policy to reclassify commission or broker fees for retail customer acquisitions. In the historical Dynegy consolidated statement of income these amounts were presented net in operating revenues, whereas Vistra Energy presents similar amounts as operating costs. The adjustment increases revenue and operating costs by $7 million and $23 million for the three months ended March 31, 2018 and the year ended December 31, 2017, respectively. |
E. | Reflects an adjustment to decrease revenue and expense by $3 million and $2 million, respectively, for the three months ended March 31, 2018 and by $14 million and $8 million, respectively, for the year ended December 31, 2017 related to the amortization of acquired intangible contract assets and liabilities. |
F. | Reflects an adjustment to conform accounting policies of Dynegy to Vistra Energy related to recognition method for major maintenance expenses for power generation assets. Adjustment requires an increase to operating costs by $3 million for the three months ended March 31, 2018 and a decrease to operating costs by $11 million for the year ended December 31, 2017. |
G. | Reflects an adjustment to increase depreciation expense by $12 million and $69 million for the three months ended March 31, 2018 and the year ended December 31, 2017, respectively, due to the fair value measurement of long-lived assets performed in connection with the Merger. The remaining depreciable lives of the acquired long-lived assets range from 1 to 30 years. |
H. | In accordance with the requirements for reporting on combined pro forma financial information, Vistra Energy did not remove certain material, nonrecurring items from Dynegy’s as adjusted pro forma consolidated statements of income. These items include: |
a. | Impairment charges of $6 million and $148 million on certain power generation assets and equity method investments for the three months ended March 31, 2018 and the year ended December 31, 2017, respectively; |
b. | Gain of $494 million for the year ended December 31, 2017 of reorganization items related to the Genco Chapter 11 bankruptcy and emergence; |
c. | Loss on the sale of assets of $122 million for the year ended December 31, 2017 that is primarily due to the sale of the Lee, Dighton, and Milford, MA facilities; |
d. | Loss on early extinguishment of debt of $79 million for the year ended December 31, 2017. This amount was reclassified to interest expense to conform to Vistra Energy’s financial statement presentation. |
I. | Reflects an adjustment to remove $3 million of costs incurred by Dynegy and $3 million of costs incurred by Vistra Energy related to the Merger for the three months ended March 31, 2018. Also reflects an adjustment to remove $17 million and $9 million of merger-related costs, which were incurred by Dynegy and Vistra Energy, respectively, for the year ended December 31, 2017. |
J. | Historical interest expense for Dynegy was reduced by $17 million for the three months ended March 31, 2018 and $78 million for the year ended December 31, 2017 due to the removal of historical interest expense and recalculation of interest expense after the acquired debt was recorded at fair value as a result of allocating the purchase price of the acquisition. For purposes of estimating the pro forma interest expense related to the Tranche C-2 Term Loan Vistra Energy used interest rates of 4.35% and 3.57%, respectively, per annum for its variable interest rates. The Tranche C-2 Term Loan interest rate is based on LIBOR plus a 275 basis point fixed margin. The Revolving Facilities’ rate is based on LIBOR plus a 250 basis point leveraged margin. |
K. | Reflects adjustments to the accretion expense related to the Tax Receivable Agreement obligation by including Dynegy’s tax attributes and forecasted taxable income of the combined entity, which results in changes to the forecasted payments under the Tax Receivable Agreement obligation. The adjusted accretion expense was based off of the change in estimate as of March 31, 2018 (see Note Z below). The adjustment resulted in a decrease in expense of $5 million and an increase in gain of $35 million due to the impacts of tax receivable agreement for the three months ended March 31, 2018 and the year ended December 31, 2017, respectively. |
L. | Reflects the tax impact of the pro forma adjustments and the elimination of valuation allowances in Dynegy's historical financial statements. In the year ended December 31, 2017, Dynegy recognized an income tax benefit of $879 million resulting in a decrease in the valuation allowance against its deferred tax assets. In the three months ended March 31, 2018, Dynegy recognized an income tax charge of $43 million resulting in an increase in the valuation allowance. As more fully described in Note V below, on a pro forma combined basis the valuation allowance has been substantially eliminated as the pro forma combined valuation allowance only relates to a portion of the state income taxes NOL carryforward. Therefore, income tax expense is reflected on the pro forma pre-tax loss for the three months ended March 31, 2018 and the year ended December 31, 2017 with no significant impact from changes in the valuation allowance. Pro forma adjustments to tax expense result in an effective tax rate that is higher than the U.S. federal statutory tax rate of 21% at March 31, 2018 due primarily to the impact of state income tax expense. Pro forma adjustments to tax expense result in an effective tax rate that is lower than the U.S. federal statutory tax rate of 35% at December 31, 2017 due primarily to the reduction of deferred tax assets related to the tax rate reduction in the Tax Cuts and Jobs Act, offset by nondeductible Tax Receivable Agreement accretion and state income tax expense, reflective of the change in the timing and amount of the Tax Receivable Agreement payments due under the Tax Receivables Agreement after contemplating the effects of the Merger. |
M. | Reflects an adjustment for the replacement of the common stock, restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), stock options, Warrants and Tangible Equity Units of Dynegy with shares of common stock, RSUs, PSUs, stock options, Warrants and Tangible Equity Units of Vistra Energy to complete the Merger, at the Exchange Ratio of 0.652 shares of Vistra Energy per share of Dynegy. |
Historical Dynegy | Vistra Shares Issued | ||||
(in millions) | |||||
Basic shares: | |||||
Common shares outstanding | 144.8 | 94.4 | |||
Tangible Equity Units | 23.1 | 15.1 | |||
Total basic shares outstanding | 167.9 | 109.5 | |||
Dilutive shares: | |||||
Stock Options | 2.3 | 1.5 | |||
Restricted Stock Units (a) | 0.6 | 3.0 | |||
Performance Share Units | 1.4 | 0.9 | |||
Tangible Equity Units | 5.4 | 3.5 | |||
Total dilutive shares | 9.7 | 8.9 | |||
Total diluted shares outstanding | 177.6 | 118.4 |
(a) | Conversion of Dynegy RSUs to Vistra RSUs includes the addition of RSUs which Dynegy had historically recorded as a liability as the intent was to settle the RSUs in cash. Vistra intends to settle all RSUs outstanding in shares and therefore has included the effects of these RSUs in equity as the issuance of the shares will have a dilutive impact on common shares outstanding. |
N. | Financial information presented in the “Historical Dynegy, As Adjusted” column in the unaudited pro forma condensed combined consolidated balance sheet represents the historical consolidated balance sheet of Dynegy as of March 31, 2018. Such financial information has been reclassified or classified to conform to the historical presentation in Vistra Energy's consolidated financial statements as set forth below. Unless otherwise indicated, defined line items included in the footnotes have the meanings given to them in the historical financial statements of Dynegy. |
As of March 31, 2018 | |||||||||||||
Before Reclassification | Reclassification Amount | After Reclassification | |||||||||||
(in millions) | |||||||||||||
Reclassification and classification of the unaudited pro forma condensed combined consolidated balance sheet: | |||||||||||||
Inventories | $ | 398 | $ | (5 | ) | (a) | $ | 393 | |||||
Intangible assets — current | 31 | (31 | ) | (a) | — | ||||||||
Identifiable intangible assets — net | 30 | 36 | (a) | 66 | |||||||||
Accrued liabilities and other current liabilities | 60 | (60 | ) | (b) | — | ||||||||
Other current liabilities | — | 60 | (b) | 60 | |||||||||
Intangible liabilities — current | 11 | (11 | ) | (c) | — | ||||||||
Intangible liabilities — noncurrent | 33 | (33 | ) | (c) | — | ||||||||
Other noncurrent liabilities and deferred credits | 152 | 44 | (c) | 196 | |||||||||
Deferred income taxes | 6 | (6 | ) | (d) | — | ||||||||
Accumulated deferred income taxes | — | (6 | ) | (d) | (6 | ) |
(a) | Represents reclassification of $5 million and $31 million from inventories and intangible assets — current, respectively, to identifiable intangible assets — net. |
(b) | Represents reclassification of $60 million from accrued liabilities and other current liabilities to other current liabilities. |
(c) | Represents reclassification of $11 million and $33 million from intangible liabilities — current and intangible liabilities— noncurrent, respectively, to other noncurrent liabilities and deferred credits. |
(d) | Represents reclassification of $6 million from deferred income tax liability to net accumulated deferred income tax assets. |
O. | Reflects an adjustment of $62 million to measure inventory at fair value as part of the allocation of the purchase price. |
P. | Reflects increases to Dynegy’s consolidated balance sheet presentation of derivative assets and liabilities, current and noncurrent and prepaid expense, respectively, as a result of conforming the consolidated balance sheet presentation for derivative assets and liabilities. The adjustment converts these derivative assets and liabilities from a net presentation currently elected by Dynegy, to a gross basis elected by Vistra Energy, as well as adjusts for differences in accounting policy related to derivatives, for a net balance sheet impact of $33 million for the period ended March 31, 2018. |
Historical Net | Adjustments | Total | |||||||||
(in millions) | |||||||||||
Assets: | |||||||||||
Commodity and other derivative contractual assets — current | $ | 45 | $ | 133 | $ | 178 | |||||
Other current assets (a) | 160 | 33 | 193 | ||||||||
Commodity and other derivative contractual assets — noncurrent | 55 | 22 | 77 | ||||||||
Total assets | 260 | 188 | 448 | ||||||||
Liabilities: | |||||||||||
Commodity and other derivative contractual liabilities — current | 371 | 135 | 506 | ||||||||
Commodity and other derivative contractual liabilities — noncurrent | 93 | 20 | 113 | ||||||||
Total liabilities | $ | 464 | $ | 155 | $ | 619 | |||||
Total net assets | $ | (204 | ) | $ | 33 | $ | (171 | ) |
(a) | Of the other current assets, $109 million represents margin deposits related to commodity contracts. |
Q. | Reflects an adjustment to align accounting policies between Dynegy and Vistra Energy which results in the reclassification of $17 million of software and other intangibles from Property Plant and Equipment, net to Identifiable Intangible Assets, net for the period ended March 31, 2018. |
R. | Reflects an increase of $495 million to record Dynegy’s property, plant and equipment, at their respective estimated fair values. The fair value of Dynegy's property, plant and equipment related to its power generation assets was estimated using a discounted cash flow method which was based on a number of factors including forecasted power prices, fuel prices, capacity revenues, operating parameters, operating and maintenance costs and other variables. The cash flows for each respective generation asset were discounted using rates between 7% and 9%, depending on the related technology and market that each respective asset operates in. Under this method, fair value of Dynegy’s property, plant and equipment is estimated to be approximately $9.2 billion. The estimate is preliminary, subject to change and could vary materially from the actual adjustment. |
S. | Estimated equity consideration |
Calculation of Purchase Price | |||
Dynegy shares outstanding as of April 9, 2018 (in millions) | 173 | ||
Exchange Ratio | 0.652 | ||
Vistra Energy shares issued for Dynegy shares outstanding (in millions) | 113 | ||
Opening price of Vistra Energy common stock on April 9, 2018 | $ | 19.87 | |
Purchase price for common stock (in millions) | $ | 2,245 | |
Fair value of outstanding stock compensation awards attributable to pre-combination service (in millions) | $ | 26 | |
Fair value of outstanding Warrants (in millions) | $ | 2 | |
Total purchase price (in millions) | $ | 2,273 |
Preliminary Purchase Price Allocation | |||
(in millions) | |||
Current assets (excluding risk management) | $ | 1,378 | |
Property, plant and equipment | 9,215 | ||
Goodwill | 570 | ||
Deferred tax asset | 811 | ||
Investments | 125 | ||
Intangible assets | 174 | ||
Other long-term assets, excluding goodwill | 397 | ||
Commodity and other derivatives, net | (364 | ) | |
Current liabilities (excluding long-term debt due currently and risk management) | (575 | ) | |
Intangible liabilities | (109 | ) | |
Long-term debt, including amounts due currently | (8,912 | ) | |
Other long-term liabilities | (447 | ) | |
Non-controlling interests | 10 | ||
Total estimated purchase price | $ | 2,273 |
T. | Reflects adjustments to recognize or adjust intangible assets and liabilities as detailed below: |
As of March 31, 2018 | |||||||||||
Net Carrying Amount | Pro Forma Adjustment | Adjusted Balance | |||||||||
(in millions) | |||||||||||
Intangible assets: | |||||||||||
Electricity contracts | $ | 46 | $ | 33 | $ | 79 | |||||
Trade names | — | 35 | 35 | ||||||||
Fuel and transportation contracts | 15 | 23 | 38 | ||||||||
Emissions allowance | 5 | — | 5 | ||||||||
Computer software and other intangibles | 17 | — | 17 | ||||||||
Total intangible assets | $ | 83 | $ | 91 | $ | 174 | |||||
Intangible liabilities: | |||||||||||
Electricity contracts | $ | (4 | ) | $ | — | $ | (4 | ) | |||
Fuel and transportation contracts | (40 | ) | (65 | ) | (105 | ) | |||||
Total intangible liabilities | $ | (44 | ) | $ | (65 | ) | $ | (109 | ) |
U. | Reflects a $26 million adjustment to remove historical Dynegy equity-linked awards recorded as a liability. Vistra Energy management has determined that these awards will be settled in shares of the combined Company and are therefore recorded as a component of equity. |
V. | Reflects an adjustment for the combined deferred tax assets resulting from the Merger. The estimated increase in deferred tax asset of $817 million stems primarily from the addition of Dynegy’s net operating loss carryforward (which is approximately $4.5 billion gross (federal)) and the related fair value adjustments resulting from the purchase price allocation. The deferred tax asset is preliminary and subject to change based on the final determination of the fair value of assets acquired and liabilities assumed. The Historical Dynegy balance sheet does not reflect this net operating loss carryforward deferred tax asset as a valuation allowance was required; however, based on the expected future taxable income of the combined entity, a valuation allowance is not expected to be required on the federal NOL. Note that a valuation allowance (approximately $38 million) remains on a portion of the state NOL carryforward. The tax rate of 21% was utilized in determining the value of the combined deferred tax asset to give effect to the impact of the Tax Cuts and Jobs Act. |
W. | Reflects an adjustment to record Dynegy’s long-term debt at its respective fair value (including current maturities of long-term debt), which is approximated to be $8.9 billion. Estimated fair value was calculated using market quotes available at April 9, 2018 for the Tranche C-2 Term Loan, due 2024, all outstanding Senior Notes and the 7% Amortizing Notes. Remaining debt, Forward Capacity Agreements, Equipment Financing Agreements and Inventory Financing Agreements, were valued at March 31, 2018 utilizing the carrying value as an approximation of fair value. |
Facility | Historical Carrying Value as of March 31, 2018 | Pro Forma Adjustment | Fair Value as of April 9, 2018 | |||||||||
(in millions) | ||||||||||||
Senior Notes | $ | 6,081 | $ | 433 | $ | 6,514 | ||||||
Tranche C-2 Term Loan, due 2024 | 1,946 | 85 | 2,031 | |||||||||
7.00% Amortizing Notes, due 2019 | 45 | (7 | ) | 38 | ||||||||
Forward Capacity Agreements | 218 | — | 218 | |||||||||
Equipment Financing Agreements | 111 | — | 111 | |||||||||
Total | $ | 8,401 | $ | 511 | $ | 8,912 |
X. | Reflects the decrease of $4 million and the increase of $47 million in Dynegy’s short-term and long-term asset retirement obligations, respectively, as a result of the fair value adjustment for those obligations, primarily due to estimating the fair value of Dynegy’s asset retirement obligations using the relevant discount rates as of the pro forma balance sheet date. |
Y. | Reflects the addition of $43 million of advisor fees paid upon the closing of the Merger for advisors of Dynegy and Vistra Energy. Also reflects an adjustment of $55 million of severance costs incurred due to the transactions. |
Z. | Reflects the decrease of $25 million related to the non-current portion of the Tax Receivable Agreement, resulting from the impacts of the Merger on the forecasted payments under the Tax Receivable Agreement obligation. The adjustments to the Tax Receivable Agreement obligation are caused by the addition of Dynegy’s tax attributes and the forecasted taxable income of the combined entity, which results in changes to the forecasted payments under the tax receivable agreement obligation. The adjusted forecasted payments were used to determine the obligation based on Vistra Energy’s accounting policy related to changes in estimates for the obligation. The estimated obligation is based on certain assumptions which are subject to significant uncertainty, are not yet final and are subject to change. |
AA. | Reflects preliminary adjustments to remove Historical Dynegy retained deficit of $2.1 billion and accumulated other comprehensive income of $30 million. |
Common Stock | Additional Paid-In Capital | Retained Deficit | Accumulated Other Comprehensive Income | |||||||||||||
(in millions) | ||||||||||||||||
Elimination of pre-Merger Dynegy equity balances | $ | (1 | ) | $ | (3,722 | ) | $ | 2,059 | $ | (30 | ) | |||||
Impact of shares issued to Dynegy stockholders | 1 | 2,272 | — | — | ||||||||||||
Severance charges (a) | — | — | (55 | ) | — | |||||||||||
Advisor fees paid at close (b) | — | — | (43 | ) | — | |||||||||||
Acceleration of stock award vesting (c) | — | (25 | ) | 25 | — | |||||||||||
Adjustments to the Vistra Energy Tax Receivable Agreement | — | — | 25 | — | ||||||||||||
Total pro forma adjustments | $ | — | $ | (1,475 | ) | $ | 2,011 | $ | (30 | ) |
(a) | This amount represents severance costs related to Dynegy employees terminated in connection with the Merger. This is reflected as an adjustment to retained earnings and accrued liabilities. No adjustment was made to the unaudited pro forma condensed combined consolidated statement of income as these costs are one-time costs related to the Merger and do not have a continuing impact on the consolidated results. |
(b) | This amount represents success fees paid to financial advisors at the Merger close. This is reflected as an adjustment to retained earnings with an offsetting adjustment made to other current liabilities. |
(c) | This amount represents costs related to the acceleration of vesting of stock options and restricted stock units for Dynegy employees terminated in connection with the Merger. This is reflected as an adjustment to retained earnings, but not reflected as an adjustment in the unaudited pro forma condensed combined consolidated statement of income as this is a one-time cost related to the Merger and does not have a continuing impact on the consolidated results. |