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-- Adjusted EBITDA of $388 million up 44 percent period-over-period primarily due to: -- The sale and assignment of a multi-year power sales contract;
-- Higher capacity and tolling revenues; and
-- Higher realized energy prices in the Midwest
-- Net loss attributable to Dynegy Inc. of $212 million reflects after-tax charges of $238 million primarily related to asset impairments and $78 million of after-tax mark-to-market losses; compares to net income of $605 million for the third quarter 2008, which included $542 million of after-tax mark-to-market gains
-- Production volumes down slightly period-over-period
-- Company raises and tightens 2009 guidance estimates and provides details behind 2010 guidance estimates
Dynegy Inc. (NYSE: DYN | Quote | Chart | News | PowerRating) today announced that Adjusted EBITDA for the third quarter 2009 was $388 million, compared to $269 million for the third quarter 2008. The period-over-period increase in Adjusted EBITDA was primarily related to the sale and assignment of a multi-year power sales contract, higher capacity and tolling revenues and higher realized energy prices in the Midwest. The company also reported a net loss attributable to Dynegy Inc. of $212 million or ($0.25) per diluted share for the third quarter 2009, compared to net income of $605 million or $0.72 per diluted share for the third quarter 2008. The net loss in the third quarter 2009 was primarily driven by asset impairment charges and mark-to-market losses. GAAP results include mark-to-market losses of $128 million ($78 million after tax) for the third quarter 2009, compared to mark-to-market gains of $889 million ($542 million after tax) for the third quarter 2008.
"While Dynegy's third quarter financial results continued to be impacted by the overall weakness in U.S. energy prices, we again demonstrated the benefits of having a diverse, well-operated fleet of power generation assets," said Bruce A. Williamson, Chairman, President and Chief Executive Officer of Dynegy Inc. "Increased production volumes from our Midwest and Northeast combined-cycle facilities helped to partially offset reduced run-times from coal-fired generation. This fleet diversity contributed to third quarter production volumes that were down only slightly period-over-period. Our operational performance also included strong reliability levels, with in-market availability of 92 percent for our baseload coal fleet.
"Dynegy's capital structure currently includes available liquidity of $2.1 billion, with cash-on-hand of $699 million," Williamson added. "Following the anticipated completion of the sale of assets to LS Power in the fourth quarter, we will have improved financial strength to address near-term debt maturities and other obligations as we manage through the current depressed commodity markets and position the company to deliver long-term value to investors."
A comparison of the company's third quarter results period-over-period is set forth in the table below (in millions of dollars, except per share amounts). The non-GAAP financial measures of EBITDA, Adjusted EBITDA, Adjusted Cash Flow from Operations and Adjusted Free Cash Flow are used by management to evaluate Dynegy's business on an ongoing basis. Definitions, purposes and uses of such non-GAAP measures are included in Item 2.02 to our Current Report on Form 8-K filed with the SEC on November 5, 2009, which is available on the company's website free of charge at www.dynegy.com. Reconciliations of these measures to the most directly comparable GAAP measures are included in the accompanying schedules to this news release.
Three Months Three Months
Ended Ended
09/30/2009 09/30/2008
(unaudited) (unaudited)
Basic Income (Loss) Per Share Attributable to Dynegy Inc. $ (0.25 ) $ 0.72
Diluted Income (Loss) Per Share Attributable to Dynegy Inc. $ (0.25 ) $ 0.72
Net Income (Loss) Attributable to Dynegy Inc. $ (212 ) $ 605
Add Back:
Income Tax Expense (Benefit) (118 ) 414
Interest Expense 115 105
Depreciation and Amortization Expense 87 91
EBITDA (128 ) 1,215
Plus / (Less):
Impairments 383 -
Mark-to-Market Losses (Gains), Net 128 (889 )
Sandy Creek Mark-to-Market Losses 5 -
Gain on Sale of Rolling Hills - (57 )
Adjusted EBITDA $ 388 $ 269
Power Generation
Dynegy's diversified power generation business includes three business segments: the Midwest, with approximately 8,400 megawatts of generation capacity; the West, with approximately 5,500 megawatts of generation capacity; and the Northeast, with approximately 3,800 megawatts of generation capacity.
Adjusted EBITDA from the power generation segments was $431 million for the third quarter 2009, compared to $307 million for the third quarter 2008.
Management does not allocate interest expense and income taxes on a segment level and therefore uses operating income as the most directly comparable GAAP measure. Operating income from the power generation segments was $40 million for the third quarter 2009, compared to $1.1 billion for the third quarter 2008.
Operating income from continuing and discontinued operations during the third quarter 2009 reflected $382 million in impairment charges ($234 million after tax) that were recorded based on the accounting classification of the eight power generation facilities anticipated to be sold to LS Power as held for sale. Operating income from continuing and discontinued operations during the third quarter 2009 also reflected mark-to-market losses of $128 million. This compares to mark-to-market gains of $889 million for the third quarter 2008, when forward market power prices decreased during the period.
The following factors influenced the quarter's results as compared to the third quarter 2008. Please read the accompanying schedules to this news release for additional information.
-- Midwest -- Adjusted EBITDA benefited from the sale and assignment of a multi-year power sales contract and higher realized energy prices that were contracted prior to the market downturn. Midwest production volumes decreased 7 percent period-over-period. This was primarily due to a 12 percent reduction in coal facility volumes that was largely related to decreased demand attributed to mild summer weather and increased off-peak wind generation. This decline was partially offset by a 15 percent increase in volumes related to the company's natural gas facilities. Specifically, the company's natural gas combined-cycle facilities experienced increased run-times due to coal-to-gas switching in PJM.
-- West -- Adjusted EBITDA benefited from increased tolling and capacity revenues. Production volumes decreased 5 percent due to weak spark spreads attributed to lower demand and mild weather.
-- Northeast -- Adjusted EBITDA benefited from a 20 percent increase in production volumes attributed to natural gas combined-cycle facilities, which benefited from coal-to-gas switching in the region and reduced transmission congestion. This was partially offset by reduced run-times for coal- and oil-fired units due to compressed spark spreads.
Adjusted Cash Flow from Operations for generation was $690 million for the nine months ended September 30, 2009, while maintenance and environmental capital expenditures were $103 million and $241 million, respectively. Adjusted Cash Flow from Operations for generation was $764 million for the nine months ended September 30, 2008, while maintenance and environmental capital expenditures were $83 million and $171 million, respectively. Adjusted Free Cash Flow from the power generation business was $346 million for the nine months ended September 30, 2009, compared to $510 million for the nine months ended September 30, 2008.
On a GAAP basis, Cash Flow from Operations for generation was $683 million for the nine months ended September 30, 2009, compared to $757 million for the nine months ended September 30, 2008. Net cash used in investing activities was $341 million for the nine months ended September 30, 2009, compared to net cash used in investing activities of $108 million for the nine months ended September 30, 2008. Net cash provided by financing activities was $47 million for the nine months ended September 30, 2009, compared to net cash provided by financing activities of $133 million for the nine months ended September 30, 2008.
Other
Other primarily consists of general and administrative expenses, partially offset by interest income. In Other, the company reported a $43 million Adjusted loss before interest, taxes and depreciation and amortization ($47 million operating loss) during the third quarter 2009, compared to an Adjusted loss of $38 million ($51 million operating loss) during the third quarter 2008. The higher Adjusted loss during the third quarter 2009 was primarily related to a decrease in interest income due to lower interest rates.
Consolidated Interest Expense and Taxes
The company's interest expense totaled $115 million for the third quarter 2009, compared to $105 million for the third quarter 2008. The increase was primarily attributable to $14 million of expenses related to the change in value and settlement of interest rate swaps associated with the Plum Point credit agreement, partially offset by lower LIBOR rates on the company's variable-rate debt.
The third quarter 2009 income tax benefit from continuing operations was $34 million, compared to an income tax expense from continuing operations of $392 million for the third quarter 2008.
Liquidity
As of September 30, 2009, Dynegy's liquidity was $1.9 billion. This consisted of $703 million in cash on hand and $1.2 billion in unused availability under the company's credit facility.
The company's previously disclosed transaction with LS Power is expected to be completed in the fourth quarter 2009, with an anticipated increase in available cash and liquidity of more than $1 billion.
Cash Flow
Adjusted Cash Flow from Operations totaled an inflow of $336 million for the nine months ended September 30, 2009. There was a cash inflow of $690 million from the power generation business, offset by outflows of $354 million in Other resulting primarily from interest payments and general and administrative expenses, net of interest income.
For the nine months ended September 30, 2009, Dynegy's Adjusted Free Cash Flow was an outflow of $13 million. Capital expenditures included maintenance and environmental capital expenditures of $108 million and $241 million, respectively, the latter of which reflects the company's continuing investment in environmental upgrades.
For the nine months ended September 30, 2008, Dynegy's Adjusted Free Cash Flow was an inflow of $156 million. This consisted of Adjusted Cash Flow from Operations of $421 million, offset by maintenance and environmental capital expenditures of $94 million and $171 million, respectively.
On a GAAP basis, Cash Flow from Operations for the nine months ended September 30, 2009, and September 30, 2008, was $304 million and $397 million, respectively. Net cash used in investing activities for the nine months ended September 30, 2009, was $341 million, compared to net cash used in investing activities of $108 million for the nine months ended September 30, 2008. Net cash provided by financing activities for the nine months ended September 30, 2009, was $47 million, compared to net cash provided by financing activities of $133 million for the nine months ended September 30, 2008.
2009 Guidance Estimates
Adjusted EBITDA, Adjusted Cash Flow from Operations and Adjusted Free Cash Flow ranges for 2009 have been raised and tightened from the previous ranges presented on August 10, 2009.
The new estimates are:
-- A range of Adjusted EBITDA of $730 million to $760 million;
-- A range of Adjusted Cash Flow from Operations of $75 million to $105 million; and
-- A range of Adjusted Free Cash Flow of $(425) million to $(395) million.
Adjusted EBITDA improved due to the sale and assignment of a power sales contract, partially offset by the purchase of additional options that provide downside protection in future periods. Additionally, ranges were tightened across all of the company's operating segments. The decline in Adjusted Cash Flow from Operations and Adjusted Free Cash Flow resulted from increased cash collateral postings related to 2010 and 2011 contracted positions. This additional cash outflow is currently the most efficient means of collateralizing the company's hedging program due to the favorable economics of posting cash in lieu of letters of credit for exchange-traded positions. However, the company could decide to exchange letters of credit for cash, resulting in a significant cash inflow.
The guidance estimates for the most directly comparable measures on a GAAP basis include:
-- A range of Net Loss of $(1.2) billion to $(1.1) billion;
-- A range of Cash Flow from Operations of $45 million to $75 million;
-- Net Cash provided by Investing Activities of $260 million; and
-- Net Cash used in Financing Activities of $(555) million.
These estimates reflect quoted forward commodity price curves as of October 6, 2009. These estimates also reflect assumptions regarding, among other things, sales volumes, fuel costs and other operational activities.
2010 Guidance Estimates
On August 10, 2009, the company provided an Adjusted EBITDA range of $425 million to $550 million for 2010. In today's news release, the company is reaffirming that range and providing additional 2010 guidance estimate ranges relating to Adjusted Cash Flow from Operations and Adjusted Free Cash Flow. These ranges reflect business changes, including the sale of eight power generation facilities and a power generation project under construction, that are expected to result from the pending transaction with LS Power. The transaction is expected to close in the fourth quarter 2009 assuming all necessary closing conditions are satisfied.
The estimates are:
-- A range of Adjusted EBITDA of $425 million to $550 million;
-- A range of Adjusted Cash Flow from Operations of $(15) million to $110 million; and
-- A range of Adjusted Free Cash Flow of $(360) million to $(235) million. This primarily reflects the significant investment in environmental capital expense to reduce emissions.
The guidance estimates for the most directly comparable measures on a GAAP basis include:
-- A range of Net Loss of $(250) million to $(175) million;
-- A range of Cash Flow from Operations of $(15) million to $110 million;
-- Net Cash used in Investing Activities of $(345) million; and
-- Net Cash used in Financing Activities of $(65) million.
These estimates reflect quoted forward commodity price curves as of October 6, 2009. These estimates also reflect assumptions regarding, among other things, a liability management program, sales volumes, fuel costs and other operational activities.
Investor Conference Call/Web Cast
Dynegy will discuss its third quarter 2009 financial results during an investor conference call and web cast today, November 5, 2009, at 9 a.m. ET/8 a.m. CT. Participants may access the web cast and the related presentation materials in the "Investor Relations" section of www.dynegy.com.
About Dynegy Inc.
Through its subsidiaries, Dynegy Inc. produces and sells electric energy, capacity and ancillary services in key U.S. markets. The power generation portfolio consists of approximately 17,700 megawatts of baseload, intermediate and peaking power plants fueled by a mix of natural gas, coal and fuel oil. DYNC
Certain statements included in this news release are intended as "forward-looking statements." These statements include assumptions, expectations, predictions, intentions or beliefs about future events, particularly the statements concerning: anticipated earnings or cash flows; the closing of the LS Power transaction and the timing, terms or success thereof; Dynegy's commercial strategy; and Dynegy's estimated financial results for 2009 and 2010. Historically, Dynegy's performance has deviated, in some cases materially, from its cash flow and earnings estimates and Dynegy cautions that actual future results may vary materially from those expressed or implied in any forward-looking statements. While Dynegy would expect to update these estimates on a quarterly basis, it does not intend to update these estimates during any quarter because definitive information regarding its quarterly financial results is not available until after the books for the quarter have been closed. Accordingly, Dynegy expects to provide updates only after it has closed the books and reported the results for a particular quarter, or otherwise as may be required by applicable law.
Dynegy cautions that actual future results may vary materially from those expressed or implied in any forward-looking statements. Specifically, Dynegy cautions that: the LS Power transaction may not close on the timing and terms expected, if at all; market fundamentals and trends may not be to Dynegy's benefit or as Dynegy anticipates; Dynegy's capital resources and available liquidity may be negatively impacted by market forces beyond its control, reducing capital available for discretionary or other purposes; Dynegy's asset base may not perform at the level anticipated; changes in commodity prices for fuel and power may negatively impact Dynegy and impact its ability to continue to satisfy its credit agreement financial covenants; and uncertainties exist regarding environmental regulations, litigation and other legal, legislative or regulatory developments and their potential impacts on Dynegy's businesses. More information about the risks and uncertainties relating to these forward-looking statements is found in Dynegy's SEC filings, including its Annual Report on Form 10-K, as supplemented, for the year ended December 31, 2008, its Quarterly Reports on Forms 10-Q for the quarters ended March 31, 2009, and June 30, 2009, and its Current Reports, all of which are available free of charge on Dynegy's website at www.dynegy.com. Dynegy expressly disclaims any obligation to update any forward-looking statements contained in this news release to reflect events or circumstances that may arise after the date of this release, except as otherwise required by applicable law.
DYNEGY INC.
REPORTED UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE DATA)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Revenues $ 673 $ 1,759 $ 2,027 $ 2,550
Cost of sales (286 ) (498 ) (927 ) (1,326 )
Operating and maintenance expense, exclusive of depreciation and (121 ) (122 ) (373 ) (344 )
amortization shown separately below
Depreciation and amortization expense (83 ) (85 ) (258 ) (258 )
Gain on sale of assets - 57 - 83
Goodwill impairments - - (433 ) -
Impairments and other charges, exclusive of goodwill impairments (148 ) - (535 ) -
shown separately above
General and administrative expenses (42 ) (48 ) (125 ) (126 )
Operating income (loss) (7 ) 1,063 (624 ) 579
Earnings (losses) from unconsolidated investments (8 ) (5 ) 13 (17 )
Interest expense (115 ) (105 ) (311 ) (322 )
Other income and expense, net 2 11 10 46
Income (loss) from continuing operations before income taxes (128 ) 964 (912 ) 286
Income tax benefit (expense) 34 (392 ) 147 (121 )
Income (loss) from continuing operations (94 ) 572 (765 ) 165
Income (loss) from discontinued operations, net of tax (129 ) 32 (141 ) 13
Net income (loss) (223 ) 604 (906 ) 178
Less: Net loss attributable to the noncontrolling interests (11 ) (1 ) (14 ) (3 )
Net income (loss) attributable to Dynegy Inc. $ (212 ) $ 605 $ (892 ) $ 181
Basic income (loss) per share attributable to Dynegy Inc. common
stockholders:
Income (loss) from continuing operations (1) $ (0.10 ) $ 0.68 $ (0.89 ) $ 0.20
Income (loss) from discontinued operations (0.15 ) 0.04 (0.17 ) 0.02
Basic income (loss) per share attributable to Dynegy Inc. common $ (0.25 ) $ 0.72 $ (1.06 ) $ 0.22
stockholders
Diluted income (loss) per share attributable to Dynegy Inc.
common stockholders:
Income (loss) from continuing operations (1) $ (0.10 ) $ 0.68 $ (0.89 ) $ 0.20
Income (loss) from discontinued operations (0.15 ) 0.04 (0.17 ) 0.02
Diluted income (loss) per share attributable to Dynegy Inc. $ (0.25 ) $ 0.72 $ (1.06 ) $ 0.22
common stockholders:
Basic shares outstanding 843 840 842 840
Diluted shares outstanding 846 842 845 842
(1) A reconciliation of basic loss per share from continuing
operations attributable to Dynegy Inc. to diluted loss per share
from continuing operations attributable to Dynegy Inc. is
presented below:
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Income (loss) from continuing operations $ (94 ) $ 572 $ (765 ) $ 165
Less: Net loss attributable to the noncontrolling interests (11 ) (1 ) (14 ) (3 )
Income (loss) from continuing operations attributable to Dynegy Inc. $ (83 ) $ 573 $ (751 ) $ 168
for basic and diluted loss per share
Basic weighted-average shares 843 840 842 840
Effect of dilutive securities:
Stock options and restricted stock 3 2 3 2
Diluted weighted-average shares 846 842 845 842
Income (loss) per share from continuing operations attributable to
Dynegy Inc.:
Basic $ (0.10 ) $ 0.68 $ (0.89 ) $ 0.20
Diluted (2) $ (0.10 ) $ 0.68 $ (0.89 ) $ 0.20
(2) Entities with a net loss from continuing operations are prohibited
from including potential common shares in the computation of
diluted per-share amounts. Accordingly, Dynegy Inc. has utilized
the basic shares outstanding amount to calculate both basic and
diluted loss per share for the three and nine months ended
September 30, 2009.
DYNEGY INC.
REPORTED SEGMENTED RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2009
(UNAUDITED) (IN MILLIONS)
Power Generation
GEN - MW GEN - WE GEN - NE OTHER Total
Net loss attributable to Dynegy Inc. $ (212 )
Plus / (Less):
Income tax benefit (118 )
Interest expense 115
Depreciation and amortization expense 87
EBITDA (1) $ 73 $ (167 ) $ 9 $ (43 ) $ (128 )
Plus / (Less):
Asset impairments (2) 147 235 1 - 383
Sandy Creek mark-to-market losses (3) - 5 - - 5
Mark-to-market losses, net 44 39 45 - 128
Adjusted EBITDA (1) $ 264 $ 112 $ 55 $ (43 ) $ 388
(1) EBITDA and Adjusted EBITDA are non-GAAP financial measures. Please
refer to Item 2.02 of our Form 8-K filed on November 5, 2009, for
definitions, utility and uses of such non-GAAP financial measures. A
reconciliation of EBITDA to Operating income (loss) is presented
below. Management does not allocate interest expenses and income
taxes on a segment level and therefore uses Operating income (loss)
as the most directly comparable GAAP measure.
Power Generation
GEN - MW GEN - WE GEN - NE OTHER Total
Operating income (loss) $ 5 $ 34 $ 1 $ (47 ) $ (7 )
Losses from unconsolidated investments - (8 ) - - (8 )
Other items, net - 1 - 1 2
Net loss attributable to the noncontrolling interests 11 - - - 11
Depreciation and amortization expense 57 15 8 3 83
EBITDA from continuing operations 73 42 9 (43 ) 81
EBITDA from discontinued operations (4) - (209 ) - - (209 )
EBITDA $ 73 $ (167 ) $ 9 $ (43 ) $ (128 )
(2) On August 9, 2009, we entered into a purchase and sale agreement
with LS Power. At that time, the assets included in the agreement
met the criteria of held for sale. As a result, we recognized
pre-tax charges of approximately $382 million ($234 million
after-tax) related to asset impairments. Below is the breakdown of
the asset impairment charges by region:
Pre-tax After-tax
GEN-MW
Renaissance $ 65 $ 40
Riverside/Foothills 18 11
Rocky Road 22 14
Tilton 42 26
Total (a) $ 147 $ 91
GEN-WE
Arlington Valley $ 112 $ 68
Griffith 123 75
Total (b) $ 235 $ 143
(a) These charges are included in Impairments and other charges on
our Reported Unaudited Condensed Consolidated Statements of
Operations and will be further described in our Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 2009.
(b) These charges are included in Income (loss) from discontinued
operations, net on our Reported Unaudited Condensed Consolidated
Statements of Operations and will be further described in our
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2009.
In addition, GEN-NE also included a $1 million ($1 million
after-tax) impairment charge related to our Roseton and Danskammer
power generation facilities as a result of continued expected cash
flow losses related to these assets. This charge is included in
Impairments and other charges on our Reported Unaudited Condensed
Consolidated Statements of Operations and will be further described
in our Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2009.
(3) We recognized pre-tax losses of approximately $5 million ($3 million
after-tax) related to the change in fair value of the Sandy Creek
Project interest rate swaps. This loss is included in Earnings
(losses) from unconsolidated investments on our Reported Unaudited
Condensed Consolidated Statements of Operations.
(4) A reconciliation of EBITDA from discontinued operations to Loss from
discontinued operations, net of tax, is presented below.
EBITDA from discontinued operations $ (209 )
Depreciation and amortization expense from discontinued operations (4 )
Income tax benefit from discontinued operations 84
Loss from discontinued operations, net of tax $ (129 )
DYNEGY INC.
REPORTED SEGMENTED RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2008
(UNAUDITED) (IN MILLIONS)
Power Generation
GEN - MW GEN - WE GEN - NE OTHER Total
Net income attributable to Dynegy Inc. $ 605
Plus / (Less):
Income tax expense 414
Interest expense 105
Depreciation and amortization expense 91
EBITDA (1) $ 807 $ 229 $ 217 $ (38 ) $ 1,215
Plus / (Less):
Gain on sale of Rolling Hills (2) (57 ) - - - (57 )
Mark-to-market gains, net (568 ) (146 ) (175 ) - (889 )
Adjusted EBITDA (1) $ 182 $ 83 $ 42 $ (38 ) $ 269
(1) EBITDA and Adjusted EBITDA are non-GAAP financial measures. Please
refer to Item 2.02 of our Form 8-K filed on November 5, 2009, for
definitions, utility and uses of such non-GAAP financial measures.
A reconciliation of EBITDA to Operating income (loss) is presented
below. Management does not allocate interest expenses and income
taxes on a segment level and therefore uses Operating income
(loss) as the most directly comparable GAAP measure.
Power Generation
GEN - MW GEN - WE GEN - NE OTHER Total
Operating income (loss) $ 757 $ 153 $ 204 $ (51 ) $ 1,063
Losses from unconsolidated investments - (5 ) - - (5 )
Other items, net - 1 (1 ) 11 11
Net loss attributable to the noncontrolling interests 1 - - - 1
Add: Depreciation and amortization expense 49 20 14 2 85
EBITDA from continuing operations 807 169 217 (38 ) 1,155
EBITDA from discontinued operations (3) - 60 - - 60
EBITDA $ 807 $ 229 $ 217 $ (38 ) $ 1,215
(2) We recognized a pre-tax gain of approximately $57 million ($32
million after-tax) on the sale of our Rolling Hills power generation
facility. This gain is included in Gain on sale of assets on our
Reported Unaudited Condensed Consolidated Statements of Operations.
(3) A reconciliation of EBITDA from discontinued operations to Income
from discontinued operations, net of tax, is presented below.
EBITDA from discontinued operations $ 60
Depreciation and amortization expense from discontinued operations (6 )
Income tax expense from discontinued operations (22 )
Income from discontinued operations, net of tax $ 32
DYNEGY INC.
REPORTED SEGMENTED RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2009
(UNAUDITED) (IN MILLIONS)
Power Generation
GEN - MW GEN - WE GEN - NE OTHER Total
Net loss attributable to Dynegy Inc. $ (892 )
Plus / (Less):
Income tax benefit (7) (238 )
Interest expense 311
Depreciation and amortization expense 273
EBITDA (1) $ 302 $ (344 ) $ (385 ) $ (119 ) $ (546 )
Plus / (Less):
Asset impairments (2) 170 235 388 - 793
Goodwill impairment (3) 76 260 97 - 433
Gain on sale of Heard County (4) - (10 ) - - (10 )
Sandy Creek mark-to-market gains (5) - (20 ) - - (20 )
Mark-to-market losses, net 4 50 8 - 62
Adjusted EBITDA (1) $ 552 $ 171 $ 108 $ (119 ) $ 712
(1) EBITDA and Adjusted EBITDA are non-GAAP financial measures. Please
refer to Item 2.02 of our Form 8-K filed on November 5, 2009, for
definitions, utility and uses of such non-GAAP financial measures. A
reconciliation of EBITDA to Operating income (loss) is presented
below. Management does not allocate interest expenses and income
taxes on a segment level and therefore uses Operating income (loss)
as the most directly comparable GAAP measure.
Power Generation
GEN - MW GEN - WE GEN - NE OTHER Total
Operating income (loss) $ 143 $ (209 ) $ (424 ) $ (134 ) $ (624 )
Earnings from unconsolidated investments - 12 - 1 13
Other items, net 2 3 - 5 10
Net loss attributable to the noncontrolling interests 14 - - - 14
Depreciation and amortization expense 165 45 39 9 258
EBITDA from continuing operations 324 (149 ) (385 ) (119 ) (329 )
EBITDA from discontinued operations (6) (22 ) (195 ) - - (217 )
EBITDA $ 302 $ (344 ) $ (385 ) $ (119 ) $ (546 )
(2) During the second quarter 2009, we recognized pre-tax charges of
approximately $202 million ($123 million after-tax) related to asset
impairments. These impairments were recorded due to management's
conclusion that it was more likely than not that these assets would
be sold prior to the end of their previously estimated useful lives.
On August 9, 2009, we entered into a purchase and sale agreement
with LS Power. At that time, the assets included in the agreement
met the criteria of held for sale. As a result, we recognized
pre-tax charges of approximately $382 million ($234 million
after-tax) related to asset impairments. Below is the breakdown of
these asset impairment charges by region:
Pre-tax After-tax
GEN-MW
Renaissance (a) $ 65 $ 40
Riverside/Foothills (a) 18 11
Rocky Road (a) 22 14
Tilton (a) 42 26
Blugrass (b) 23 14
Total $ 170 $ 105
GEN-WE
Arlington Valley (b) $ 112 $ 68
Griffith (b) 123 75
Total $ 235 $ 143
GEN-NE
Bridgeport (a) $ 179 $ 109
Total $ 179 $ 109
(a) These charges are included in Impairments and other charges on
our Reported Unaudited Condensed Consolidated Statements of
Operations and will be further described in our Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 2009.
(b) These charges are included in Income (loss) from discontinued
operations, net on our Reported Unaudited Condensed Consolidated
Statements of Operations and will be further described in our
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2009.
In addition, GEN-NE also included a $209 million ($129 million
after-tax) impairment charge related to our Roseton and Danskammer
power generation facilities as a result of continued weakening in
forward capacity and forward power prices in certain of the markets
in which we operate. This charge is included in Impairments and
other charges on our Reported Unaudited Condensed Consolidated
Statements of Operations and will be further described in our
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2009.
(3) We recognized pre-tax charges of approximately $433 million ($433
million after-tax) related to the impairment of our goodwill . These
charges are included in Goodwill impairments on our Reported
Unaudited Condensed Consolidated Statement of Operations and will be
further described in our Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2009.
(4) We recognized a pre-tax gain of approximately $10 million ($6
million after-tax) on the sale of our Heard County power generation
facility. This gain is included in Income (loss) from discontinued
operations, net of tax on our Reported Unaudited Condensed
Consolidated Statements of Operations.
(5) We recognized pre-tax income of approximately $20 million ($12
million after-tax) related to the change in fair value of the Sandy
Creek Project interest rate swaps. This income is included in
Earnings (losses) from unconsolidated investments on our Reported
Unaudited Condensed Consolidated Statements of Operations.
(6) A reconciliation of EBITDA from discontinued operations to Loss from
discontinued operations, net of tax, is presented below.
EBITDA from discontinued operations $ (217 )
Depreciation and amortization expense from discontinued operations (15 )
Income tax benefit from discontinued operations 91
Loss from discontinued operations, net of tax $ (141 )
(7) Includes additional expenses primarily due to $151 million
nondeductible goodwill, $21 million due to a change in state income
tax law and $10 million due to revised assumptions around the
ability to utilize certain state deferred tax assets.
DYNEGY INC.
REPORTED SEGMENTED RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2008
(UNAUDITED) (IN MILLIONS)
Power Generation
GEN - MW GEN - WE GEN - NE OTHER Total
Net income attributable to Dynegy Inc. $ 181
Plus / (Less):
Income tax expense 131
Interest expense 322
Depreciation and amortization expense 277
EBITDA (1) $ 685 $ 201 $ 87 $ (62 ) $ 911
Plus / (Less):
Gain on sale of Rolling Hills (2) (57 ) - - - (57 )
Release of state franchise tax and sales tax liabilities (3) - - - (16 ) (16 )
Gain on sale of NYMEX shares (4) - - - (15 ) (15 )
Gain on sale of Sandy Creek ownership interest (5) - (13 ) - - (13 )
Gain on sale of Oyster Creek ownership interest (6) - (11 ) - - (11 )
Mark-to-market losses (gains), net (89 ) (44 ) 9 - (124 )
Adjusted EBITDA (1) $ 539 $ 133 $ 96 $ (93 ) $ 675
(1) EBITDA and Adjusted EBITDA are non-GAAP financial measures. Please
refer to Item 2.02 of our Form 8-K filed on November 5, 2009, for
definitions, utility and uses of such non-GAAP financial measures. A
reconciliation of EBITDA to Operating income (loss) is presented
below. Management does not allocate interest expenses and income
taxes on a segment level and therefore uses Operating income (loss)
as the most directly comparable GAAP measure.
Power Generation
GEN - MW GEN - WE GEN - NE OTHER Total
Operating income (loss) $ 529 $ 104 $ 41 $ (95 ) $ 579
Losses from unconsolidated investments - (7 ) - (10 ) (17 )
Other items, net - 5 5 36 46
Net loss attributable to the noncontrolling interests 3 - - - 3
Add: Depreciation and amortization expense 153 57 41 7 258
EBITDA from continuing operations 685 159 87 (62 ) 869
EBITDA from discontinued operations (7) - 42 - - 42
EBITDA $ 685 $ 201 $ 87 $ (62 ) $ 911
(2) We recognized a pre-tax gain of approximately $57 million ($32
million after-tax) on the sale of our Rolling Hills power generation
facility. This gain is included in Gain on sale of assets on our
Reported Unaudited Condensed Consolidated Statements of Operations.
(3) We recognized income related to a release of approximately $16
million ($10 million after-tax) of sales and use tax liability. This
income is included in Operating and maintenance expense on our
Reported Unaudited Condensed Consolidated Statements of Operations.
(4) We recognized a pre-tax gain of approximately $15 million ($9
million after-tax) on the sale of our NYMEX shares and two
membership seats. This gain is included in Gain on sale of assets on
our Reported Unaudited Condensed Consolidated Statements of
Operations.
(5) We recognized equity earnings of approximately $13 million ($8
million after-tax) on the sale of an approximate 11 percent
undivided interest in the Sandy Creek Project. This gain is included
in Earnings (losses) from unconsolidated investments on our Reported
Unaudited Condensed Consolidated Statements of Operations.
(6) We recognized a pre-tax gain of approximately $11 million ($7
million after-tax) on the sale of our beneficial interest in Oyster
Creek. This gain is included in Gain on sale of assets on our
Reported Unaudited Condensed Consolidated Statements of Operations.
(7) A reconciliation of EBITDA from discontinued operations to Income
from discontinued operations, net of tax, is presented below.
EBITDA from discontinued operations $ 42
Depreciation and amortization expense from discontinued operations (19 )
Income tax expense from discontinued operations (10 )
Income from discontinued operations, net of tax $ 13
DYNEGY INC.
SUMMARY CASH FLOW INFORMATION (1)
(UNAUDITED) (IN MILLIONS)
Nine Months Ended September 30, 2009 Nine Months Ended September 30, 2008
GEN OTHER Total GEN OTHER Total
Adjusted EBITDA (2) $ 831 $ (119 ) $ 712 $ 768 $ (93 ) $ 675
Interest payments - (231 ) (231 ) - (257 ) (257 )
Cash taxes - (3 ) (3 ) - (12 ) (12 )
Collateral (3) (95 ) - (95 ) (61 ) - (61 )
Working capital / non-cash adjustments / other changes (46 ) (1 ) (47 ) 57 19 76
Adjusted Cash Flow from Operations (4) 690 (354 ) 336 764 (343 ) 421
Maintenance capital expenditures (103 ) (5 ) (108 ) (83 ) (11 ) (94 )
Environmental capital expenditures (241 ) - (241 ) (171 ) - (171 )
Adjusted Free Cash Flow (4) $ 346 $ (359 ) $ (13 ) $ 510 $ (354 ) $ 156
Net cash used in Investing Activities $ (341 ) $ (108 )
Net cash provided by Financing Activities $ 47 $ 133
(1) This presentation is intended to demonstrate the relationship
between the performance measure of Adjusted EBITDA and the liquidity
measure of Adjusted Free Cash Flow. We believe it is useful to our
analysts and investors to understand this relationship because it
demonstrates how the cash generated by our operations is used to
satisfy various liquidity requirements. This presentation is not
intended to be a reconciliation of non-GAAP measures pursuant to
Regulation G. Such reconciliations of these non-GAAP financial
measures to GAAP measures can be found below.
(2) Adjusted EBITDA is a non-GAAP financial measure. Please refer to
Item 2.02 of our Form 8-K filed on November 5, 2009 for definitions,
utility and uses of such non-GAAP financial measures. Please see
Reported Segmented Results of Operations for the nine months ended
September 30, 2009 and September 30, 2008 for a reconciliation of
Adjusted EBITDA to Net income (loss) attributable to Dynegy Inc.
(3) Collateral, including initial margin, includes the effect of cash
inflows and outflows arising from the daily settlements of our
exchange-traded or brokered commodity futures positions held with
our futures clearing manager.
(4) Adjusted Cash Flow from Operations and Adjusted Free Cash Flow are
non-GAAP financial measures. Please refer to Item 2.02 of our Form
8-K filed on November 5, 2009 for definitions, utility and uses of
such non-GAAP financial measures. A reconciliation of Adjusted Cash
Flow from Operations and Adjusted Free Cash Flow to Cash Flow from
Operations is presented below.
Nine Months Ended September 30, 2009 Nine Months Ended September 30, 2008
GEN OTHER Total GEN OTHER Total
Cash Flow from Operations $ 683 $ (379 ) $ 304 $ 757 $ (360 ) $ 397
Legal and regulatory payments 7 6 13 7 17 24
Payment for JV Dissolution - 19 19 - - -
Adjusted Cash Flow from Operations 690 (354 ) 336 764 (343 ) 421
Maintenance capital expenditures (103 ) (5 ) (108 ) (83 ) (11 ) (94 )
Environmental capital expenditures (241 ) - (241 ) (171 ) - (17 For full details on Dynegy Inc (DYN) click here. Dynegy Inc (DYN) has Short Term PowerRatings of 8. Details on Dynegy Inc (DYN) Short Term PowerRatings is available at This Link.
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