VISTRA ENERGY CORP., 10-K filed on 2/28/2019
Annual Report
v3.10.0.1
Document And Entity Information - USD ($)
12 Months Ended
Dec. 31, 2018
Feb. 25, 2019
Jun. 30, 2018
Document And Entity Information [Abstract]      
Entity Registrant Name Vistra Energy Corp.    
Entity Central Index Key 0001692819    
Current Fiscal Year End Date --12-31    
Entity Filer Category Large Accelerated Filer    
Document Type 10-K    
Document Period End Date Dec. 31, 2018    
Document Fiscal Year Focus 2018    
Document Fiscal Period Focus Q4    
Amendment Flag false    
Entity Common Stock, Shares Outstanding   485,894,408  
Entity Well-known Seasoned Issuer No    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Small Business false    
Entity Emerging Growth Company false    
Entity Public Float     $ 8,592,448,694
Entity Shell Company false    
v3.10.0.1
Statements Of Consolidated Income (Loss) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended 12 Months Ended
Dec. 31, 2016
Oct. 02, 2016
Dec. 31, 2018
Dec. 31, 2017
Operating revenues $ 1,191   $ 9,144 $ 5,430
Fuel, purchased power costs and delivery fees (720)   (5,036) (2,935)
Operating costs (208)   (1,297) (973)
Depreciation and amortization (216)   (1,394) (699)
Selling, general and administrative expenses (208)   (926) (600)
Impairment of long-lived assets       (25)
Operating income (loss) (161)   491 198
Other income 10   47 37
Other deductions     (5) (5)
Interest expense and related charges (60)   (572) (193)
Impacts of Tax Receivable Agreement (22)   (79) 213
Equity in earnings of unconsolidated investment     17  
Income (loss) before income taxes (233)   (101) 250
Income tax (expense) benefit 70   45 (504)
Net income (loss) (163)   (56) (254)
Net loss attributable to noncontrolling interest     2  
Net loss attributable to Vistra Energy     (54)  
Successor        
Operating revenues 1,191   9,144 5,430
Fuel, purchased power costs and delivery fees (720)   (5,036) (2,935)
Net gain from commodity hedging and trading activities 0   0 0
Operating costs (208)   (1,297) (973)
Depreciation and amortization (216)   (1,394) (699)
Selling, general and administrative expenses (208)   (926) (600)
Impairment of long-lived assets 0   0 (25)
Operating income (loss) (161)   491 198
Other income 10   47 37
Other deductions 0   (5) (5)
Interest expense and related charges (60)   (572) (193)
Impacts of Tax Receivable Agreement (22)   (79) 213
Equity in earnings of unconsolidated investment 0   17 0
Reorganization items 0   0 0
Income (loss) before income taxes (233)   (101) 250
Income tax (expense) benefit 70   45 (504)
Net income (loss) (163)   (56) (254)
Net loss attributable to noncontrolling interest 0   2 0
Net loss attributable to Vistra Energy $ (163)   $ (54) $ (254)
Weighted average shares of common stock outstanding:        
Weighted average shares of common stock outstanding - basic 427,560,620   504,954,371 427,761,460
Weighted average shares of common stock outstanding - diluted 427,560,620   504,954,371 427,761,460
Net loss per weighted average share of common stock outstanding:        
Net loss per weighted average share of common stock outstanding - basic $ (0.38)   $ (0.11) $ (0.59)
Net loss per weighted average share of common stock outstanding - diluted (0.38)   (0.11) (0.59)
Dividend declared per share of common stock $ 2.32   $ 0.00 $ 0.00
Predecessor        
Operating revenues   $ 3,973    
Fuel, purchased power costs and delivery fees   (2,082)    
Net gain from commodity hedging and trading activities   282    
Operating costs   (664)    
Depreciation and amortization   (459)    
Selling, general and administrative expenses   (482)    
Impairment of long-lived assets   0    
Operating income (loss)   568    
Other income   19    
Other deductions   (75)    
Interest expense and related charges   (1,049)    
Impacts of Tax Receivable Agreement   0    
Equity in earnings of unconsolidated investment   0    
Reorganization items   22,121    
Income (loss) before income taxes   21,584    
Income tax (expense) benefit   1,267    
Net income (loss)   $ 22,851    
v3.10.0.1
Statements Of Consolidated Comprehensive Income (Loss) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended 12 Months Ended
Dec. 31, 2016
Oct. 02, 2016
Dec. 31, 2018
Dec. 31, 2017
Net income (loss) $ (163)   $ (56) $ (254)
Other comprehensive income (loss), net of tax effects:        
Adoption of new accounting standard (Note 1)     1  
Total other comprehensive income (loss) 6   (5) (23)
Comprehensive income (loss) (157)   (61) (277)
Less: Comprehensive loss attributable to noncontrolling interest     2  
Comprehensive loss attributable to Vistra Energy     (59)  
Successor        
Net income (loss) (163)   (56) (254)
Other comprehensive income (loss), net of tax effects:        
Effects related to pension and other retirement benefit obligations (net of tax (benefit) expense of $(2), $(6), $3 and $—) 6   (6) (23)
Adoption of new accounting standard (Note 1) 0   1 0
Other comprehensive income, net of tax effects — cash flow hedges (net of tax benefit of $— in all periods) 0   0 0
Total other comprehensive income (loss) 6   (5) (23)
Comprehensive income (loss) (157)   (61) (277)
Less: Comprehensive loss attributable to noncontrolling interest 0   2 0
Comprehensive loss attributable to Vistra Energy $ (157)   $ (59) $ (277)
Predecessor        
Net income (loss)   $ 22,851    
Other comprehensive income (loss), net of tax effects:        
Effects related to pension and other retirement benefit obligations (net of tax (benefit) expense of $(2), $(6), $3 and $—)   0    
Adoption of new accounting standard (Note 1)   0    
Other comprehensive income, net of tax effects — cash flow hedges (net of tax benefit of $— in all periods)   1    
Total other comprehensive income (loss)   1    
Comprehensive income (loss)   $ 22,852    
v3.10.0.1
Statements Of Consolidated Comprehensive Income (Loss) (Parenthetical) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended 12 Months Ended
Dec. 31, 2016
Oct. 02, 2016
Dec. 31, 2018
Dec. 31, 2017
Successor        
Effects related to pension and other retirement benefit obligations (net of tax (benefit) expense of $(2), $(6), $3 and $—) $ 3   $ (2) $ (6)
Other comprehensive income, net of tax effects — cash flow hedges (net of tax benefit of $— in all periods) $ 0   $ 0 $ 0
Predecessor        
Effects related to pension and other retirement benefit obligations (net of tax (benefit) expense of $(2), $(6), $3 and $—)   $ 0    
Other comprehensive income, net of tax effects — cash flow hedges (net of tax benefit of $— in all periods)   $ 0    
v3.10.0.1
Statements Of Consolidated Cash Flows - USD ($)
$ in Millions
3 Months Ended 9 Months Ended 12 Months Ended
Dec. 31, 2016
Oct. 02, 2016
Dec. 31, 2018
Dec. 31, 2017
Cash flows — operating activities:        
Net income (loss) $ (163)   $ (56) $ (254)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:        
Impairment of long-lived assets       25
Changes in operating assets and liabilities:        
Cash provided by (used in) operating activities 81   1,471 1,386
Cash flows — financing activities:        
Issuances of long-term debt 1,000   1,000  
Repayments/repurchases of debt     (3,075) (191)
Net borrowings under accounts receivable securitization program     339  
Debt tender offer and other debt financing fee     (236) (8)
Stock repurchase     (763)  
Special Dividend (992)      
Other, net (2)   12 (2)
Cash provided by (used in) financing activities 6   (2,723) (201)
Cash flows — investing activities:        
Capital expenditures, including LTSA prepayments (48)   (378) (114)
Nuclear fuel purchases (41)   (118) (62)
Cash acquired in the Merger     445  
Odessa Acquisition       (355)
Proceeds from sales of nuclear decommissioning trust fund securities 25   252 252
Investments in nuclear decommissioning trust fund securities (30)   (274) (272)
Other, net 1   6 14
Cash used in investing activities (93)   (101) (727)
Net change in cash, cash equivalents and restricted cash (Successor) (6)   (1,353) 458
Cash and cash equivalents - beginning balance (Predecessor)     1,487  
Cash and cash equivalents - ending balance (Predecessor)     636 1,487
Cash, cash equivalents and restricted cash - beginning balance (Successor) 1,594   2,046 1,588
Cash, cash equivalents and restricted cash - ending balance (Successor) 1,588 $ 1,594 693 2,046
Successor        
Cash flows — operating activities:        
Net income (loss) (163)   (56) (254)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:        
Depreciation and amortization 285   1,533 835
Deferred income tax expense (benefit), net (76)   (62) 418
Unrealized net (gain) loss from mark-to-market valuations of commodities 165   380 145
Unrealized net (gain) loss from mark-to-market valuations of interest rate swaps 11   5 (29)
Gain on extinguishment of liabilities subject to compromise 0   0 0
Net loss from adopting fresh start reporting 0   0 0
Contract claims adjustments of Predecessor 0   0 0
Impairment of long-lived assets 0   0 25
Write-off of intangible and other assets 0   0 0
Impacts of Tax Receivables Agreement 22   79 (213)
Change in asset retirement obligation liability 0   (27) 112
Accretion expense 6   50 60
Share-based compensation 0   73 0
Other, net 1   92 69
Changes in operating assets and liabilities:        
Affiliate accounts receivable/payable — net 0   0 0
Accounts receivable — trade 135   (207) 7
Inventories 3   61 22
Accounts payable — trade (79)   90 (30)
Commodity and other derivative contractual assets and liabilities (48)   (80) (1)
Margin deposits, net (193)   (221) 146
Accrued interest 32   (105) (10)
Accrued taxes 12   (64) 33
Accrued employee incentive 24   40 (24)
Alcoa contract settlement 0   0 238
Tax Receivable Agreement payment 0   (16) (26)
Major plant outage deferral 0   (22) (66)
Other — net assets (2)   73 4
Other — net liabilities (54)   (145) (75)
Cash provided by (used in) operating activities 81   1,471 1,386
Cash flows — financing activities:        
Issuances of long-term debt 0   1,000 0
Repayments/repurchases of debt 0   (3,075) (191)
Net borrowings under accounts receivable securitization program 0   339 0
Debt tender offer and other debt financing fee 0   (236) (8)
Stock repurchase 0   (763) 0
Incremental Term Loan B Facility 1,000   0 0
Special Dividend (992)   0 0
Net proceeds from issuance of preferred stock 0   0 0
Payments to extinguish claims of TCEH first lien creditors 0   0 0
Cash distributed for TCEH unsecured claims 0   0 0
Borrowings under TCEH DIP Roll Facilities and DIP Facility 0   0 0
TCEH DIP Roll Facilities and DIP Facility financing fees 0   0 0
Other, net (2)   12 (2)
Cash provided by (used in) financing activities 6   (2,723) (201)
Cash flows — investing activities:        
Capital expenditures, including LTSA prepayments (48)   (378) (114)
Nuclear fuel purchases (41)   (118) (62)
Development and growth expenditures 0   (34) (190)
Cash acquired in the Merger 0   445 0
Odessa Acquisition 0   0 (355)
Lamar and Forney acquisition — net of cash acquired 0   0 0
Changes in restricted cash (Predecessor) 0   0 0
Proceeds from sales of nuclear decommissioning trust fund securities 25   252 252
Investments in nuclear decommissioning trust fund securities (30)   (274) (272)
Notes/advances due from affiliates 0   0 0
Other, net 1   6 14
Cash used in investing activities (93)   (101) (727)
Net change in cash, cash equivalents and restricted cash (Successor) (6)   (1,353) 458
Cash, cash equivalents and restricted cash - beginning balance (Successor) 1,594   2,046 1,588
Cash, cash equivalents and restricted cash - ending balance (Successor) 1,588 1,594 $ 693 $ 2,046
Predecessor        
Cash flows — operating activities:        
Net income (loss)   22,851    
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:        
Depreciation and amortization   532    
Deferred income tax expense (benefit), net   (1,270)    
Unrealized net (gain) loss from mark-to-market valuations of commodities   36    
Unrealized net (gain) loss from mark-to-market valuations of interest rate swaps   0    
Gain on extinguishment of liabilities subject to compromise   (24,344)    
Net loss from adopting fresh start reporting   2,013    
Contract claims adjustments of Predecessor   13    
Impairment of long-lived assets   0    
Write-off of intangible and other assets   45    
Impacts of Tax Receivables Agreement   0    
Change in asset retirement obligation liability   0    
Accretion expense   0    
Share-based compensation   0    
Other, net   63    
Changes in operating assets and liabilities:        
Affiliate accounts receivable/payable — net   31    
Accounts receivable — trade   (216)    
Inventories   71    
Accounts payable — trade   26    
Commodity and other derivative contractual assets and liabilities   29    
Margin deposits, net   (124)    
Accrued interest   (10)    
Accrued taxes   (13)    
Accrued employee incentive   (30)    
Alcoa contract settlement   0    
Tax Receivable Agreement payment   0    
Major plant outage deferral   0    
Other — net assets   (3)    
Other — net liabilities   62    
Cash provided by (used in) operating activities   (238)    
Cash flows — financing activities:        
Issuances of long-term debt   0    
Repayments/repurchases of debt   (2,655)    
Net borrowings under accounts receivable securitization program   0    
Debt tender offer and other debt financing fee   0    
Stock repurchase   0    
Incremental Term Loan B Facility   0    
Special Dividend   0    
Net proceeds from issuance of preferred stock   69    
Payments to extinguish claims of TCEH first lien creditors   (486)    
Cash distributed for TCEH unsecured claims   (429)    
Borrowings under TCEH DIP Roll Facilities and DIP Facility   4,680    
TCEH DIP Roll Facilities and DIP Facility financing fees   (112)    
Other, net   (8)    
Cash provided by (used in) financing activities   1,059    
Cash flows — investing activities:        
Capital expenditures, including LTSA prepayments   (230)    
Nuclear fuel purchases   (33)    
Development and growth expenditures   0    
Cash acquired in the Merger   0    
Odessa Acquisition   0    
Lamar and Forney acquisition — net of cash acquired   (1,343)    
Changes in restricted cash (Predecessor)   233    
Proceeds from sales of nuclear decommissioning trust fund securities   201    
Investments in nuclear decommissioning trust fund securities   (215)    
Notes/advances due from affiliates   (41)    
Other, net   8    
Cash used in investing activities   (1,420)    
Net change in cash and cash equivalents (Predecessor)   (599)    
Cash and cash equivalents - beginning balance (Predecessor) $ 801 1,400    
Cash and cash equivalents - ending balance (Predecessor)   $ 801    
v3.10.0.1
Consolidated Balance Sheets - USD ($)
$ in Millions
Dec. 31, 2018
Dec. 31, 2017
Current assets:    
Cash and cash equivalents $ 636 $ 1,487
Restricted cash 57 59
Trade accounts receivable — net 1,087 582
Income taxes receivable 0  
Inventories 412 253
Commodity and other derivative contractual assets 730 190
Margin deposits related to commodity contracts 361 30
Prepaid expense and other current assets 152 72
Total current assets 3,435 2,673
Restricted cash 0 500
Investments 1,250 1,240
Investment in unconsolidated subsidiary 131 0
Property, plant and equipment — net 14,612 4,820
Goodwill 2,068 1,907
Identifiable intangible assets — net 2,493 2,530
Commodity and other derivative contractual assets 109 58
Accumulated deferred income taxes 1,336 710
Other noncurrent assets 590 162
Total assets 26,024 14,600
Current liabilities:    
Accounts receivable securitization program 339 0
Long-term debt due currently 191 44
Trade accounts payable 945 473
Commodity and other derivative contractual liabilities 1,376 224
Margin deposits related to commodity contracts 4 4
Accrued taxes 10 58
Accrued taxes other than income 182 136
Accrued interest 77 16
Asset retirement obligations 156 99
Other current liabilities 345 297
Total current liabilities 3,625 1,351
Long-term debt, less amounts due currently 10,874 4,379
Commodity and other derivative contractual liabilities 270 102
Accumulated deferred income taxes 10 0
Tax Receivable Agreement obligation 420 333
Asset retirement obligation 2,217 1,837
Identifiable intangible liabilities 401 36
Other noncurrent liabilities and deferred credits 340 220
Total liabilities 18,157 8,258
Commitments and Contingencies
Total equity:    
Common stock (par value — $0.01; number of shares authorized — 1,800,000,000) (shares outstanding: December 31, 2018 — 493,215,309; December 31, 2017 — 428,398,802) 5 4
Additional paid-in-capital 9,329 7,765
Retained deficit (1,449) (1,410)
Accumulated other comprehensive income (loss) (22) (17)
Total equity 7,863 6,342
Stockholders' equity 4 0
Total equity 7,867 6,342
Total liabilities and equity $ 26,024 $ 14,600
v3.10.0.1
Consolidated Balance Sheets Consolidated Balance Sheets (Parenthetical)
Dec. 31, 2018
$ / shares
shares
Statement of Changes in Financial Position [Abstract]  
Common stock, par or stated value per share | $ / shares $ 0.01
Common stock, shares authorized 1,800,000,000
Common stock, shares outstanding 493,215,309
v3.10.0.1
Statements of Consolidated Equity Statement of Consolidated Equity - USD ($)
$ in Millions
Total
Common Stock [Member]
Capital Units [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
AOCI Including Portion Attributable to Noncontrolling Interest [Member]
Parent [Member]
Noncontrolling Interest [Member]
Balances at beginning of the period (Parent) (Predecessor) at Dec. 31, 2015     $ (22,851) $ 0 $ 0 $ (33) $ (22,884)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Net loss attributable to Vistra Energy | Predecessor     22,851       22,851  
Net income (loss) | Predecessor $ 22,851              
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss) Arising During Period, after Tax | Predecessor 0              
Cash flow hedges — change during period | Predecessor           33 33  
Balances at end of the period (Parent) (Predecessor) at Oct. 02, 2016     $ 0 0 0 0 0  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Net loss attributable to Vistra Energy | Successor (163)              
Net loss attributable to noncontrolling interest | Successor 0              
Net income (loss) | Successor (163)              
Net income (loss) (163)              
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss) Arising During Period, after Tax | Successor 6              
Balances at end of the period (Parent) (Successor) at Dec. 31, 2016   $ 4   7,742 (1,155) 6 6,597  
Balances at end of the period (Noncontrolling Interests) (Successor) at Dec. 31, 2016               $ 0
Balances at end of the period (Total Equity) (Successor) at Dec. 31, 2016 6,597              
Balances at beginning of the period (Parent) (Successor) at Oct. 03, 2016   0   0 0 0 0  
Balances at beginning of period (Noncontrolling Interests) (Successor) at Oct. 03, 2016               0
Balances at beginning of the period (Total Equity) (Successor) at Oct. 03, 2016 0              
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Shares issued upon Emergence | Successor 7,741 4   7,737     7,741  
Effects of stock-based compensation | Successor 4     4     4  
Other issuances of common stock | Successor 1     1     1  
Net loss attributable to Vistra Energy | Successor         (163)   (163)  
Net income (loss) | Successor (163)              
Dividends declared on common stock | Successor (992)       (992)   (992)  
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss) Arising During Period, after Tax | Successor 6         6 6  
Balances at end of the period (Parent) (Successor) at Dec. 31, 2016   4   7,742 (1,155) 6 6,597  
Balances at end of the period (Noncontrolling Interests) (Successor) at Dec. 31, 2016               0
Balances at end of the period (Total Equity) (Successor) at Dec. 31, 2016 6,597              
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Effects of stock-based compensation | Successor 23     23     23  
Net loss attributable to Vistra Energy | Successor (254)       (254)   (254)  
Net loss attributable to noncontrolling interest | Successor 0              
Net income (loss) | Successor (254)              
Net income (loss) (254)              
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss) Arising During Period, after Tax | Successor (23)         (23) (23)  
Other | Successor (1)       (1)   (1)  
Balances at end of the period (Parent) (Successor) at Dec. 31, 2017   4   7,765 (1,410) (17) 6,342  
Balances at end of the period (Parent) at Dec. 31, 2017 6,342              
Balances at end of the period (Noncontrolling Interests) at Dec. 31, 2017 0              
Balances at end of the period (Total Equity) (Successor) at Dec. 31, 2017 6,342              
Balances at end of the period (Total Equity) at Dec. 31, 2017 6,342              
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Stock issued in connection with the Merger | Successor 1,902 1   1,901     1,902  
Treasury Stock, Value, Acquired, Par Value Method | Successor (778)     (778)     (778)  
Effects of stock-based compensation | Successor 72     72     72  
Tangible equity units acquired | Successor 369     369     369  
Warrants acquired | Successor 2     2     2  
Net loss attributable to Vistra Energy | Successor (54)       (54)   (54)  
Net loss attributable to Vistra Energy (54)              
Net loss attributable to noncontrolling interest | Successor 2             2
Net loss attributable to noncontrolling interest 2              
Net income (loss) | Successor (56)              
Net income (loss) (56)              
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss) Arising During Period, after Tax | Successor (6)         (6) (6)  
Adoption of accounting standard | Successor 17       16 1 17  
Investment by noncontrolling interest | Successor 6             6
Other | Successor (3)     (2) (1)   (3)  
Balances at end of the period (Parent) (Successor) at Dec. 31, 2018   $ 5   $ 9,329 $ (1,449) $ (22) $ 7,863  
Balances at end of the period (Parent) at Dec. 31, 2018 7,863              
Balances at end of the period (Noncontrolling Interests) (Successor) at Dec. 31, 2018               $ 4
Balances at end of the period (Noncontrolling Interests) at Dec. 31, 2018 4              
Balances at end of the period (Total Equity) (Successor) at Dec. 31, 2018 7,867              
Balances at end of the period (Total Equity) at Dec. 31, 2018 $ 7,867              
v3.10.0.1
Business And Significant Accounting Policies
12 Months Ended
Dec. 31, 2018
Accounting Policies [Abstract]  
Business And Significant Accounting Policies
BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

References in this report to "we," "our," "us" and "the Company" are to Vistra Energy and/or its subsidiaries in the Successor period, and to TCEH and/or its subsidiaries in the Predecessor periods, as apparent in the context. See Glossary for defined terms.

Vistra Energy is a holding company operating an integrated retail and generation business in markets throughout the U.S. Through our subsidiaries, we are engaged in competitive electricity market activities including power generation, wholesale energy sales and purchases, commodity risk management and retail sales of electricity to end users.

Vistra Energy has six reportable segments: (i) Retail, (ii) ERCOT, (iii) PJM, (iv) NY/NE (comprising NYISO and ISO-NE), (v) MISO and (vi) Asset Closure. The PJM, NY/NE and MISO segments were established on the Merger Date to reflect markets served by businesses acquired in the Merger. See Note 22 for further information concerning reportable business segments.

On the Petition Date, EFH Corp. and the substantial majority of its direct and indirect subsidiaries, including the Debtors, filed voluntary petitions for relief under the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.

On the Effective Date, subsidiaries of TCEH that were Debtors in the Chapter 11 Cases (the TCEH Debtors) and certain EFH Corp. subsidiaries (the Contributed EFH Debtors) completed their reorganization under the Bankruptcy Code and emerged from the Chapter 11 Cases as subsidiaries of a newly formed company, Vistra Energy (our Successor). On the Effective Date, Vistra Energy was spun-off from EFH Corp. in a tax-free transaction to the former first lien creditors of TCEH (Spin-Off). As a result, as of the Effective Date, Vistra Energy is a holding company for subsidiaries principally engaged in competitive electricity market activities including power generation, wholesale energy sales and purchases, commodity risk management and retail sales of electricity to end users. TCEH is the Predecessor to Vistra Energy. See Note 5 for further discussion regarding the Chapter 11 Cases.

Merger Transaction

On the Merger Date, Vistra Energy and Dynegy completed the transactions contemplated by the Merger Agreement. Pursuant to the Merger Agreement, Dynegy merged with and into Vistra Energy, with Vistra Energy continuing as the surviving corporation. Because the Merger closed on April 9, 2018, Vistra Energy's consolidated financial statements and the notes related thereto do not include the financial condition or the operating results of Dynegy prior to April 9, 2018. See Note 2 for a summary of the Merger transaction and business combination accounting.

Basis of Presentation

As of the Effective Date, Vistra Energy applied fresh start reporting under the applicable provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 852, Reorganizations (ASC 852). Fresh start reporting included (1) distinguishing the consolidated financial statements of the entity that was previously in restructuring (TCEH, or the Predecessor) from the financial statements of the entity that emerges from restructuring (Vistra Energy, or the Successor), (2) accounting for the effects of the Plan of Reorganization, (3) assigning the reorganization value of the Successor entity by measuring all assets and liabilities of the Successor entity at fair value, and (4) selecting accounting policies for the Successor entity. The financial statements of Vistra Energy for periods subsequent to the Effective Date are not comparable to the financial statements of TCEH for periods prior to the Effective Date, as those previous periods do not give effect to any adjustments to the carrying values of assets or amounts of liabilities that resulted from the Plan of Reorganization and the related application of fresh start reporting. The reorganization value of Vistra Energy was assigned to its assets and liabilities in conformity with the procedures specified by FASB ASC 805, Business Combinations, and the portion of the reorganization value that was not attributable to identifiable tangible or intangible assets was recognized as goodwill. See Note 6 for further discussion of fresh start reporting.

The consolidated financial statements of the Predecessor reflect the application of ASC 852 as it applies to entities that have filed a petition for bankruptcy under Chapter 11 of the Bankruptcy Code. As a result, the consolidated financial statements of the Predecessor have been prepared as if TCEH was a going concern and contemplated the realization of assets and liabilities in the normal course of business. During the Chapter 11 Cases, the Debtors operated their businesses as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code. The guidance requires that transactions and events directly associated with the reorganization be distinguished from the ongoing operations of the business. In addition, the guidance provides for changes in the accounting and presentation of liabilities. Prior to the Effective Date, the Predecessor recorded the effects of the Plan of Reorganization in accordance with ASC 852. See Predecessor Reorganization Items in Note 5 for further discussion of these accounting and reporting changes.

The consolidated financial statements have been prepared in accordance with U.S. GAAP and on the same basis as the audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2017, with the exception of the changes in reportable segments as detailed above. Adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the results of operations and financial position have been included therein. All intercompany items and transactions have been eliminated in consolidation. All dollar amounts in the financial statements and tables in the notes are stated in millions of U.S. dollars unless otherwise indicated.

Use of Estimates

Preparation of financial statements requires estimates and assumptions about future events that affect the reporting of assets and liabilities at the balance sheet dates and the reported amounts of revenue and expense, including fair value measurements, estimates of expected obligations, judgment related to the potential timing of events and other estimates. In the event estimates and/or assumptions prove to be different from actual amounts, adjustments are made in subsequent periods to reflect more current information.

Derivative Instruments and Mark-to-Market Accounting

We enter into contracts for the purchase and sale of electricity, natural gas, coal, uranium and other commodities utilizing instruments such as options, swaps, futures and forwards primarily to manage commodity price and interest rate risks. If the instrument meets the definition of a derivative under accounting standards related to derivative instruments and hedging activities, changes in the fair value of the derivative are recognized in net income as unrealized gains and losses. This recognition is referred to as mark-to-market accounting. The fair values of our unsettled derivative instruments under mark-to-market accounting are reported in the consolidated balance sheets as commodity and other derivative contractual assets or liabilities. We report derivative assets and liabilities in the consolidated balance sheets without taking into consideration netting arrangements we have with counterparties. Margin deposits that contractually offset these assets and liabilities are reported separately in the consolidated balance sheets, except for certain margin amounts related to changes in fair value on CME transactions that, beginning in January 2017, are legally characterized as settlement of derivative contracts rather than collateral. When derivative instruments are settled and realized gains and losses are recorded, the previously recorded unrealized gains and losses and derivative assets and liabilities are reversed. See Notes 17 and 18 for additional information regarding fair value measurement and commodity and other derivative contractual assets and liabilities. A commodity-related derivative contract may be designated as a normal purchase or sale if the commodity is to be physically received or delivered for use or sale in the normal course of business. If designated as normal, the derivative contract is accounted for under the accrual method of accounting (not marked-to-market) with no balance sheet or income statement recognition of the contract until settlement.

Because derivative instruments are frequently used as economic hedges, accounting standards related to derivative instruments and hedging activities allow for hedge accounting, which provides for the designation of such instruments as cash flow or fair value hedges if certain conditions are met. At December 31, 2018 and 2017, there were no derivative positions accounted for as cash flow or fair value hedges.

For the Successor period, we report commodity hedging and trading results as revenue, fuel expense or purchased power in the statements of consolidated income (loss) depending on the type of activity. Electricity hedges, financial natural gas hedges and trading activities are primarily reported as revenue. Physical or financial hedges for coal, diesel or uranium, along with physical natural gas trades, are primarily reported as fuel expense. For the Predecessor periods, all activity was reported as a net gain (loss) from commodity hedging and trading activities. Realized and unrealized gains and losses associated with interest rate swap transactions are reported in the statements of consolidated income (loss) in interest expense for both the Predecessor and Successor.

Revenue Recognition

Revenue is recognized when electricity is delivered to our customers in an amount that we expect to invoice for volumes delivered or services provided. Sales tax is excluded from revenue. Energy sales and services that have been delivered but not billed by period end are estimated. Accrued unbilled revenues are based on estimates of customer usage since the date of the last meter reading provided by the independent system operators or electric distribution companies. Estimated amounts are adjusted when actual usage is known and billed. See Note 7 for detailed descriptions of revenue from contracts with customers.

We record wholesale generation revenue when volumes are delivered or services are performed for transactions that are not accounted for on a mark-to-market basis. These revenues primarily consist of physical electricity sales to the ISO or RTO, ancillary service revenue for reliability services, capacity revenue for making installed generation and demand response available for system reliability requirements, and certain other electricity sales contracts. See Note 7 for detailed descriptions of revenue from contracts with customers. See Derivative Instruments and Mark-to-Market Accounting for revenue recognition related to derivative contracts.

Advertising Expense

We expense advertising costs as incurred and include them within selling, general and administrative expenses. Advertising expenses totaled $46 million, $44 million, $9 million and $35 million for the Successor period for the year ended December 31, 2018 and 2017 and the period from October 3, 2016 through December 31, 2016 and the Predecessor period from January 1, 2016 through October 2, 2016, respectively.

Impairment of Long-Lived Assets

We evaluate long-lived assets (including intangible assets with finite lives) for impairment whenever indications of impairment exist. The carrying value of such assets is deemed to be impaired if the projected undiscounted cash flows are less than the carrying value. If there is such impairment, a loss would be recognized based on the amount by which the carrying value exceeds the fair value. Fair value is determined primarily by discounted cash flows, supported by available market valuations, if applicable.

Finite-lived intangibles identified as a result of fresh start reporting or purchase accounting are amortized over their estimated useful lives based on the expected realization of economic effects. See Note 8 for details of intangible assets with indefinite lives, including discussion of fair value determinations.

Goodwill and Intangible Assets with Indefinite Lives

As part of fresh start reporting and purchase accounting, reorganization value or the purchase consideration is generally allocated, first, to identifiable tangible assets, identifiable intangible assets and liabilities, then any remaining excess reorganization value is allocated to goodwill (see Note 6). We evaluate goodwill and intangible assets with indefinite lives for impairment at least annually, or when indications of impairment exist. We have established October 1 as the date we evaluate goodwill and intangible assets with indefinite lives for impairment. The Predecessor's annual evaluation date was December 1. See Note 8 for details of goodwill, including discussion of fair value determinations.

Nuclear Fuel

Nuclear fuel is capitalized and reported as a component of our property, plant and equipment in our consolidated balance sheets. Amortization of nuclear fuel is calculated on the units-of-production method and is reported as a component of fuel, purchased power costs and delivery fees in our statements of consolidated income (loss).

Major Maintenance Costs

Major maintenance costs incurred by the Successor during generation plant outages are deferred and amortized into operating costs over the period between the major maintenance outages for the respective asset. Other routine costs of maintenance activities are charged to expense as incurred and reported as operating costs in our statements of consolidated income (loss). The Predecessor charged all maintenance activities to expense as incurred.

Defined Benefit Pension Plans and OPEB Plans

On the Merger Date, Vistra Energy assumed the pension and OPEB plans that Dynegy had provided to certain of its eligible employees and retirees. The excess of the benefit obligations over the fair value of plan assets was recognized as a liability. See Note 2 for additional information regarding the Merger.

On the Effective Date, EFH Corp. transferred sponsorship of certain employee benefit plans (including related assets), programs and policies to a subsidiary of Vistra Energy. Certain health care and life insurance benefits are offered to eligible employees and their dependents upon the retirement of such employee from the company. Pension benefits are offered to eligible employees under collective bargaining agreements based on either a traditional defined benefit formula or a cash balance formula. Effective January 1, 2017, the OPEB plan was amended to discontinue the life insurance benefits for active employees. Costs of pension and OPEB plans are dependent upon numerous factors, assumptions and estimates.

Prior to the Effective Date, our Predecessor bore a portion of the costs of the EFH Corp. sponsored pension and OPEB plans and accounted for the arrangement under multiple employer plan accounting.

See Note 19 for additional information regarding pension and OPEB plans.

Stock-Based Compensation

Stock-based compensation is accounted for in accordance with ASC 718, Compensation - Stock Compensation. The fair value of our non-qualified stock options is estimated on the date of grant using the Black-Scholes option-pricing model. Forfeitures are recognized as they occur. We recognize compensation expense for graded vesting awards on a straight-line basis over the requisite service period for the entire award. See Note 20 for additional information regarding stock-based compensation.

Sales and Excise Taxes

Sales and excise taxes are accounted for as "pass through" items on the consolidated balance sheets with no effect on the statements of consolidated income (loss) (i.e., the tax is billed to customers and recorded as trade accounts receivable with an offsetting amount recorded as a liability to the taxing jurisdiction).

Franchise and Revenue-Based Taxes

Unlike sales and excise taxes, franchise and gross receipt taxes are not a "pass through" item. These taxes are imposed on us by state and local taxing authorities, based on revenues or kWh delivered, as a cost of doing business and are recorded as an expense. Rates we charge to customers are intended to recover our costs, including the franchise and gross receipt taxes, but we are not acting as an agent to collect the taxes from customers. We report franchise and revenue-based taxes in SG&A expense in our statements of consolidated income (loss).

Income Taxes

On the Merger Date, Vistra Energy and Dynegy effected a merger transaction that for tax purposes was treated as a tax-free reorganization in which Vistra Energy survived as the parent entity. In general, all of Dynegy's tax basis and attributes were transferred to Vistra Energy, including approximately $4.2 billion of utilizable NOLs and refundable AMT tax credits.

Prior to the Effective Date, EFH Corp. filed a consolidated U.S. federal income tax return that included the results of our Predecessor; however, our Predecessor's income tax expense and related balance sheet amounts were recorded as if it filed separate corporate income tax returns.

Investment tax credits are accounted for under the deferral method, which resulted in a reduction to the basis of the Upton 2 solar facility of $78 million and a corresponding increase in the deferred tax assets in 2018.

Deferred income taxes are provided for temporary differences between the book and tax basis of assets and liabilities as required under accounting rules. See Note 9.

We report interest and penalties related to uncertain tax positions as current income tax expense. See Note 9.

Tax Receivable Agreement

The Company accounts for its obligations under the Tax Receivable Agreement (TRA) as a liability in our consolidated balance sheets (see Note 10). The carrying value of the TRA obligation represents the discounted amount of projected payments under the TRA. The projected payments are based on certain assumptions, including but not limited to (a) the federal corporate income tax rate and (b) estimates of our taxable income in the current and future years. Our taxable income takes into consideration the current federal tax code and reflects our current estimates of future results of the business.

The carrying value of the obligation is being accreted to the amount of the gross expected obligation using the effective interest method and the interest rate estimated at the Emergence Date. Changes in the estimated amount of this obligation resulting from changes to either the timing or amount of TRA payments are recognized in the period of change and are included on our statement of consolidated income (loss) under the heading of Impacts of Tax Receivable Agreement.

Accounting for Contingencies

Our financial results may be affected by judgments and estimates related to loss contingencies. Accruals for loss contingencies are recorded when management determines that it is probable that a liability has been incurred and that such economic loss can be reasonably estimated. Such determinations are subject to interpretations of current facts and circumstances, forecasts of future events and estimates of the financial impacts of such events. See Note 15 for a discussion of contingencies.

Cash and Cash Equivalents

For purposes of reporting cash and cash equivalents, temporary cash investments purchased with a remaining maturity of three months or less are considered cash equivalents.

Restricted Cash

The terms of certain agreements require the restriction of cash for specific purposes. See Notes 14 and 23 for more details regarding restricted cash.

Property, Plant and Equipment

In connection with fresh start reporting, carrying amounts of property, plant and equipment were adjusted to estimated fair values as of the Effective Date (see Note 6). Property, plant and equipment added subsequent to the Effective Date has been recorded at estimated fair values at the time of acquisition for assets acquired or at cost for capital improvements and individual facilities developed (see Notes 2 and 3). Significant improvements or additions to our property, plant and equipment that extend the life of the respective asset are capitalized at cost, while other costs are expensed when incurred. The cost of self-constructed property additions includes materials and both direct and indirect labor, including payroll-related costs. Interest related to qualifying construction projects and qualifying software projects is capitalized in accordance with accounting guidance related to capitalization of interest cost. See Note 11.

Depreciation of our property, plant and equipment (except for nuclear fuel) is calculated on a straight-line basis over the estimated service lives of the properties. Depreciation expense is calculated on an asset-by-asset basis. Estimated depreciable lives are based on management's estimates of the assets' economic useful lives. See Note 23.

Asset Retirement Obligations (ARO)

A liability is initially recorded at fair value for an asset retirement obligation associated with the legal obligation associated with law, regulatory, contractual or constructive retirement requirements of tangible long-lived assets in the period in which it is incurred if a fair value is reasonably estimable. At initial recognition of an ARO obligation, an offsetting asset is also recorded for the long-lived asset that the liability corresponds with, which is subsequently depreciated over the estimated useful life of the asset. These liabilities primarily relate to our nuclear generation plant decommissioning, land reclamation related to lignite mining and removal of lignite/coal-fueled plant ash treatment facilities. Over time, the liability is accreted for the change in present value and the initial capitalized costs are depreciated over the remaining useful lives of the assets. Generally, changes in estimates related to ARO obligations are recorded as increases or decreases to the liability and related asset as information becomes available. Changes in estimates related to assets that have been retired or for which capitalized costs are not recoverable are reflected in the statements of consolidated income (loss). See Note 23.

Inventories

Inventories consist of materials and supplies, fuel stock and natural gas in storage. Materials and supplies inventory is valued at weighted average cost and is expensed or capitalized when used for repairs/maintenance or capital projects, respectively. Fuel stock and natural gas in storage are reported at the lower of cost (on a weighted average basis) or market. We expect to recover the value of inventory costs in the normal course of business. See Note 23.

Investments

Investments in a nuclear decommissioning trust fund are carried at current market value in the consolidated balance sheets. Assets related to employee benefit plans represent investments held to satisfy deferred compensation liabilities and are recorded at current market value. See Note 23 for discussion of these and other investments.

Unconsolidated Investments

We use the equity method of accounting for investments in affiliates over which we exercise significant influence. Our share of net income (loss) from these affiliates is recorded to equity in earnings (loss) of unconsolidated investment in the statements of consolidated net income (loss). See Note 23.

Noncontrolling Interest

Noncontrolling interest is comprised of the 20% of Electric Energy, Inc. (EEI) that we do not own. EEI is our consolidated subsidiary that owns a coal facility in Joppa, Illinois. This noncontrolling interest is classified as a component of equity separate from stockholders' equity in the consolidated balance sheets.

Treasury Stock

Treasury stock purchases are accounted for under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock, which is presented in our consolidated balance sheets as a reduction to additional paid-in capital. See Note 16.

Adoption of New Accounting Standards

Revenue from Contracts with Customers On January 1, 2018, we adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606) and all related amendments (new revenue standard) using the modified retrospective method for all contracts outstanding at the time of adoption. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The impact of the adoption of the new revenue standard was immaterial and we expect the adoption to continue to be immaterial to our net income on an ongoing basis. Our retail energy charges and wholesale generation, capacity and contract revenues will continue to be recognized when electricity and other services are delivered to our customers. The impact of adopting the new revenue standard primarily relates to the deferral of acquisition costs associated with retail contracts with customers that were previously expensed as incurred. Under the new revenue standard, these amounts are capitalized and amortized over the expected life of the customer.

As of January 1, 2018, the cumulative effect of the changes made to our consolidated balance sheet for the adoption of the new revenue standard was as follows:
 
December 31, 2017
 
Adoption of New Revenue Standard
 
January 1,
2018
Impact on consolidated balance sheet:
 
 
 
 
 
Assets
 
 
 
 
 
Prepaid expense and other current assets
$
72

 
$
5

 
$
77

Accumulated deferred income taxes
$
710

 
$
(4
)
 
$
706

Other noncurrent assets
$
162

 
$
16

 
$
178

Equity
 
 
 
 
 
Retained deficit
$
(1,410
)
 
$
17

 
$
(1,393
)

The disclosure of the impact of adoption on our statement of consolidated income (loss) and consolidated balance sheet was as follows:
 
Year Ended December 31, 2018
 
As Reported
 
Amount Without Adoption of New Revenue Standard
 
Effect of Change
Higher (Lower)
Impact on statement of consolidated income (loss):
 
 
 
 
 
Operating revenues
$
9,144

 
$
9,141

 
$
3

Selling, general and administrative expenses
(926
)
 
(939
)
 
13

Net income (loss)
(56
)
 
(68
)
 
12


 
December 31, 2018
 
As Reported
 
Balances Without Adoption of New Revenue Standard
 
Effect of Change
Higher (Lower)
Impact on consolidated balance sheet:
 
 
 
 
 
Assets
 
 
 
 
 
Prepaid expense and other current assets
$
152

 
$
145

 
$
7

Accumulated deferred income taxes
1,336

 
1,349

 
(13
)
Other noncurrent assets
590

 
559

 
31

Equity

 

 
 
Retained deficit
$
(1,449
)
 
$
(1,478
)
 
$
29


See Note 7 for the disclosures required by the new revenue standard.

Statement of Cash Flows In November 2016, the FASB issued ASU 2016-18 Statement of Cash Flows (Topic 230): Restricted Cash. The ASU requires restricted cash to be included in the cash and cash equivalents and a reconciliation between the change in cash and cash equivalents and the amounts presented on the balance sheet. We adopted the standard on January 1, 2018. The ASU modified our presentation of our statements of consolidated cash flows, and retrospective application to comparative periods presented was required. For the Successor period for the year ended December 31, 2017 and the period from October 3, 2016 through December 31, 2016, our statements of consolidated cash flows previously reflected a source of cash of $186 million and $48 million, respectively, reported as changes in restricted cash that is now reported in net change in cash, cash equivalents and restricted cash. See the statements of consolidated cash flows and Note 23 for disclosures related to the adoption of this accounting standard.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The ASU permits the reclassification of income tax effects of the Tax Cuts and Jobs Act on items within accumulated other comprehensive income (AOCI) to retained earnings. We adopted this ASU in the fourth quarter of 2018, and the impact was additional tax expense to AOCI of $1 million with the offset to retained earnings.

Changes to the Disclosure Requirements for Defined Benefit Plans In August 2018, the FASB issued ASU 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans. The ASU removes disclosure requirements for (a) the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year, (b) related party disclosures about the amount of future annual benefits covered by insurance and annuity contracts and significant transactions between the employer or related parties and the plan and (c) the effects of a one-percentage-point change in assumed health care cost trend rates on the aggregate of the service and interest cost components of net periodic benefit costs and benefit obligation for postretirement health care benefits. The ASU requires new disclosures for (a) the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates and (b) an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. We adopted this ASU in the fourth quarter of 2018, and the updated disclosures are included in Note 19.

Leases In February 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-02, Leases (ASU 2016-02), which was further amended through several updates issued by the FASB in 2018. The ASU amends previous GAAP to require lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. The ASU requires the lessee to recognize a right-of-use asset and lease liability on the balance sheet for all leases. Leases will be classified as finance and operating with classifications affecting the pattern and expense recognition in the income statement.

We adopted the new standard on January 1, 2019 using the modified retrospective approach. The new standard provides a number of optional practical expedients in transition. We have elected the practical expedient which permits us to not reassess our prior conclusion about lease classification and initial direct costs under the new standard. We have also elected the practical expedient to not separate lease and non-lease components for all applicable asset classes. We have also elected the short-term lease recognition exemption for all leases that qualify. On adoption, we currently expect to recognize additional liabilities within the range of approximately $230 million to $280 million, with corresponding right-of-use assets of the same amount based on the present value of the remaining rental payments for existing leases. The adoption of this standard will have an immaterial impact to beginning retained earnings and the statements of consolidated income (loss).

Changes in Accounting Standards

In August 2018, the FASB issued ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement. The ASU will be effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. The ASU removes disclosure requirements for (a) the reasons for transfers between Level 1 and Level 2, (b) the policy for timing of transfers between levels and (c) the valuation processes for Level 3. The ASU will require new disclosures around (a) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and (b) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. We are currently evaluating the impact of this ASU on our disclosures.

In August 2018, the FASB issued ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The ASU will be effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. The ASU requires a customer in a cloud hosting arrangement that is a service contract to determine which implementation costs to capitalize and which costs to expense based on the project stage of the implementation. The ASU also requires the customer to expense the capitalized implementation costs over the term of the hosting arrangement. The customer is required to apply the existing impairment and abandonment guidance on the capitalized implementation costs. We are currently evaluating the impact of this ASU on our financial statements.
v3.10.0.1
Merger Transaction and Business Combination Accounting (Notes)
12 Months Ended
Dec. 31, 2018
Business Combinations [Abstract]  
Merger Transaction and Business Combination Accounting

On the Merger Date, Vistra Energy and Dynegy, completed the transactions contemplated by the Merger Agreement. Pursuant to the Merger Agreement, Dynegy merged with and into Vistra Energy, with Vistra Energy continuing as the surviving corporation. The Merger is intended to qualify as a tax-free reorganization under the Internal Revenue Code, as amended, so that none of Vistra Energy, Dynegy or any of the Dynegy stockholders will recognize any gain or loss in the transaction, except that Dynegy stockholders could recognize a gain or loss with respect to cash received in lieu of fractional shares of Vistra Energy's common stock. Vistra Energy is the acquirer for both federal tax and accounting purposes.

At the closing of the Merger, each issued and outstanding share of Dynegy common stock, par value $0.01 per share, other than shares owned by Vistra Energy or its subsidiaries, held in treasury by Dynegy or held by a subsidiary of Dynegy, was automatically converted into 0.652 shares of common stock, par value $0.01 per share, of Vistra Energy (the Exchange Ratio), except that cash was paid in lieu of fractional shares, which resulted in Vistra Energy issuing 94,409,573 shares of Vistra Energy common stock to the former Dynegy stockholders, as well as converting stock options, equity-based awards, tangible equity units and warrants. The total number of Vistra Energy shares outstanding at the close of the Merger was 522,932,453 shares. Dynegy stock options and equity-based awards outstanding immediately prior to the Merger Date were generally automatically converted upon completion of the Merger into stock options and equity-based awards, respectively, with respect to Vistra Energy's common stock, after giving effect to the Exchange Ratio.

Business Combination Accounting

We believe the Merger provides significant potential strategic benefits and opportunities to Vistra Energy, including increased scale and market diversification, rebalanced asset portfolio and improved earnings and cash flow. The Merger is being accounted for in accordance with ASC 805, Business Combinations (ASC 805), with identifiable assets acquired and liabilities assumed recorded at their estimated fair values on the Merger Date. The combined results of operations are reported in our consolidated financial statements beginning as of the Merger Date. A summary of the techniques used to estimate the preliminary fair value of the identifiable assets and liabilities, as well as their classification within the fair value hierarchy (see Note 17), is listed below:

Working capital was valued using available market information (Level 2).
Acquired property, plant and equipment was valued using a combination of an income approach and a market approach. The income approach utilized a discounted cash flow analysis based upon a debt-free, free cash flow model (Level 3).
Acquired derivatives were valued using the methods described in Note 17 (Level 1, Level 2 or Level 3).
Contracts with terms that were not at current market prices were also valued using a discounted cash flow 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 discounted to present value and recorded as either an intangible asset or liability.
Long-term debt was valued using a market approach (Level 2).
AROs were recorded in accordance with ASC 410, Asset Retirement and Environmental Obligations (Level 3).

The following table summarizes the consideration paid and the preliminary allocation of the purchase price to the fair value amounts recognized for the assets acquired and liabilities assumed related to the Merger as of the Merger Date. Based on the opening price of Vistra Energy common stock on the Merger Date, the purchase price was approximately $2.3 billion. The preliminary values included below represent our current best estimates for property plant and equipment, identifiable intangible assets and liabilities, goodwill, inventories, asset retirement obligations, contingent liabilities and deferred taxes. During the year ended December 31, 2018, we updated the initial purchase price allocation reported as of June 30, 2018 with revised valuation estimates by increasing property, plant and equipment by $158 million, decreasing intangible assets by $36 million, increasing goodwill by $161 million, decreasing accounts receivable, inventory, prepaid expenses and other current assets by $7 million, increasing accumulated deferred tax asset by $101 million, decreasing other noncurrent assets by $109 million, increasing trade accounts payable and other current liabilities by $43 million, increasing other noncurrent liabilities by $172 million, increasing asset retirement obligations, including amounts due currently by $58 million as well as other minor adjustments. The valuation revisions were a result of updated inputs used in determining the fair value of the acquired assets and liabilities. The purchase price allocation is substantially complete, but is dependent upon final valuation determinations, which may materially change from our current estimates. Goodwill is currently recorded at the corporate and other non-segment operations pending the final valuation determinations. We currently expect the final purchase price allocation will be completed no later than the first quarter of 2019 and goodwill will be allocated to the related reporting units at that time.
Dynegy shares outstanding as of April 9, 2018 (in millions)
144.8

Exchange Ratio
0.652

Vistra Energy shares issued for Dynegy shares outstanding (in millions)
94.4

Opening price of Vistra Energy common stock on April 9, 2018
$
19.87

Purchase price for common stock
$
1,876

Fair value of equity component of tangible equity units
$
369

Fair value of outstanding stock compensation awards attributable to pre-combination service
$
26

Fair value of outstanding warrants
$
2

Total purchase price
$
2,273


Preliminary Purchase Price Allocation
Cash and cash equivalents
$
445

Trade accounts receivables, inventories, prepaid expenses and other current assets
856

Property, plant and equipment
10,520

Accumulated deferred income taxes
492

Identifiable intangible assets
351

Goodwill
161

Other noncurrent assets
423

Total assets acquired
13,248

Trade accounts payable and other current liabilities
687

Commodity and other derivative contractual assets and liabilities, net
422

Asset retirement obligations, including amounts due currently
477

Long-term debt, including amounts due currently
8,920

Other noncurrent liabilities
464

Total liabilities assumed
10,970

Identifiable net assets acquired
2,278

Noncontrolling interest in subsidiary
5

Total purchase price
$
2,273



Acquisition costs incurred in the Merger totaled $25 million for the year ended December 31, 2018. For the period from the Merger Date through December 31, 2018, our statements of consolidated income (loss) include revenues and net income (loss) acquired in the Merger totaling $3.902 billion and $224 million respectively.

Unaudited Pro Forma Financial Information — The following unaudited pro forma financial information for the year ended December 31, 2018 and 2017 assumes that the Merger occurred on January 1, 2017. The unaudited pro forma financial information is provided for information purposes only and is not necessarily indicative of the results of operations that would have occurred had the Merger been completed on January 1, 2017, nor is the unaudited pro forma financial information indicative of future results of operations, which may differ materially from the pro forma financial information presented here.
 
Year Ended December 31,
 
2018
 
2017
Revenues
$
10,595

 
$
10,509

Net loss
$
(268
)
 
$
(969
)
Net loss attributable to Vistra Energy
$
(265
)
 
$
(983
)
Net loss attributable to Vistra Energy per weighted average share of common stock outstanding — basic
$
(0.52
)
 
$
(1.83
)
Net loss attributable to Vistra Energy per weighted average share of common stock outstanding — diluted
$
(0.52
)
 
$
(1.83
)

The unaudited pro forma financial information presented above includes adjustments for incremental depreciation and amortization as a result of the fair value determination of the net assets acquired, interest expense on debt assumed in the Merger, effects of the Merger on tax expense (benefit), changes in the expected impacts of the tax receivable agreement due to the Merger, and other related adjustments.

Battery Energy Storage Projects (Successor)

We have completed the construction of our first battery energy storage system. In October 2018, we were awarded a $1 million grant from the TCEQ for our battery energy storage system at Upton 2 solar facility. The grant is part of the Texas Emissions Reduction Plan. The 10 MW lithium-ion energy storage system will capture excess solar energy produced during the day and releases the energy in late afternoon and early evening, when demand is highest. The project became operational on December 31, 2018.

In June 2018, we announced that we will enter into a 20-year resource adequacy contract with Pacific Gas and Electric Company (PG&E) to develop a 300 MW battery energy storage project at our Moss Landing Power Plant site in California. PG&E filed its application with the California Public Utilities Commission (CPUC) in June 2018 and the CPUC approved the contract in November 2018. We anticipate the battery storage project will enter commercial operations by the fourth quarter of 2020.

Odessa Acquisition (Successor)

In August 2017, La Frontera Holdings, LLC (La Frontera), an indirect wholly owned subsidiary of Vistra Energy, purchased a 1,054 MW CCGT natural gas-fueled generation plant (and other related assets and liabilities) located in Odessa, Texas (Odessa Facility) from Odessa-Ector Power Partners, L.P., an indirect wholly owned subsidiary of Koch Ag & Energy Solutions, LLC (Koch) (altogether, the Odessa Acquisition). La Frontera paid an aggregate purchase price of approximately $355 million, plus a five-year earn-out provision, to acquire the Odessa Facility. The purchase price was funded by cash on hand.

The Odessa Acquisition was accounted for as an asset acquisition. Substantially all of the approximately $355 million purchase price was assigned to property, plant and equipment in our consolidated balance sheet. Additionally, the initial fair value associated with an earn-out provision of approximately $16 million was included as consideration in the overall purchase price. The earn-out provision requires cash payments to be made to Koch if spark-spreads related to the pricing point of the Odessa Facility exceed certain thresholds. Subsequent to the acquisition, the earn-out provision has been accounted for as a derivative in our consolidated financial statements. Partial buybacks of the earn-out provision were settled in February and May 2018.

Upton 2 Solar Development (Successor)

In May 2017, we acquired the rights to develop, construct and operate a utility scale solar photovoltaic power generation facility in Upton County, Texas (Upton 2). As part of this project, we entered a turnkey engineering, procurement and construction agreement to construct the approximately 180 MW facility. During 2017 and 2018, we spent approximately $231 million related to this project primarily for progress payments under the engineering, procurement and construction agreement and the acquisition of the development rights. The facility began test operations in March 2018 and commercial operations began in June 2018.

Lamar and Forney Acquisition (Predecessor)

In April 2016, Luminant purchased all of the membership interests in La Frontera, the indirect owner of two combined-cycle gas turbine (CCGT) natural gas-fueled generation facilities representing nearly 3,000 MW of capacity located in ERCOT, from a subsidiary of NextEra Energy, Inc. (the Lamar and Forney Acquisition). The aggregate purchase price was approximately $1.313 billion, which included the repayment of approximately $950 million of existing project financing indebtedness of La Frontera at closing, plus approximately $236 million for cash and net working capital. The purchase price was funded by cash-on-hand and additional borrowings under our Predecessor's DIP Facility totaling $1.1 billion. After completing the acquisition, we repaid approximately $230 million of borrowings under our Predecessor's DIP Revolving Credit Facility primarily utilizing cash acquired in the transaction. La Frontera and its subsidiaries were subsidiary guarantors under our Predecessor's DIP Roll Facilities and, on the Effective Date, became subsidiary guarantors under the Vistra Operations Credit Facilities (see Note 14).

Predecessor Purchase Accounting — The Lamar and Forney Acquisition was accounted for in accordance with ASC 805, Business Combinations (ASC 805), with identifiable assets acquired and liabilities assumed recorded at their estimated fair values on the acquisition date.

To fair value the acquired property, plant and equipment, we used a discounted cash flow analysis, classified as Level 3 within the fair value hierarchy levels (see Note 17). This discounted cash flow model was created for each generation facility based on its remaining useful life. The discounted cash flow model included gross margin forecasts for each power generation facility determined using forward commodity market prices obtained from long-term forecasts. We also used management's forecasts of generation output, operations and maintenance expense, SG&A and capital expenditures. The resulting cash flows, estimated based upon the age of the assets, efficiency, location and useful life, were then discounted using plant specific discount rates of approximately 9%.

The following table summarizes the consideration paid and the allocation of the purchase price to the fair value amounts recognized for the assets acquired and liabilities assumed related to the Lamar and Forney Acquisition as of the acquisition date. During the three months ended September 30, 2016, the working capital adjustment included in the purchase price was finalized between the parties, and the purchase price allocation was completed.
Cash paid to seller at close
 
$
603

Net working capital adjustments
 
(4
)
Consideration paid to seller
 
599

Cash paid to repay project financing at close
 
950

Total cash paid related to acquisition
 
$
1,549

Cash and cash equivalents
 
$
210

Property, plant and equipment — net
 
1,316

Commodity and other derivative contractual assets
 
47

Other assets
 
44

Total assets acquired
 
1,617

Commodity and other derivative contractual liabilities
 
53

Trade accounts payable and other liabilities
 
15

Total liabilities assumed
 
68

Identifiable net assets acquired
 
$
1,549



The Lamar and Forney Acquisition did not result in the recording of goodwill since the purchase price did not exceed the fair value of the net assets acquired.

Unaudited Pro Forma Financial Information — The following unaudited pro forma financial information for the Predecessor period from January 1, 2016 through October 2, 2016 assumes that the Lamar and Forney Acquisition occurred on January 1, 2016. The unaudited pro forma financial information is provided for information purposes only and is not necessarily indicative of the results of operations that would have occurred had the Lamar and Forney Acquisition been completed on January 1, 2016, nor is the unaudited pro forma financial information indicative of future results of operations.
 
Predecessor
 
Period from January 1, 2016
through
October 2, 2016
Revenues
$
4,116

Net income (loss)
$
22,835



The unaudited pro forma financial information includes adjustments for incremental depreciation as a result of the fair value determination of the net assets acquired and interest expense on borrowings under our Predecessor's DIP Roll Facilities.
v3.10.0.1
Acquisition and Development of Generation Facilities (Notes)
12 Months Ended
Dec. 31, 2018
Acquisition And Development Of Generation Facilities [Abstract]  
Business Combination Disclosure [Text Block]

On the Merger Date, Vistra Energy and Dynegy, completed the transactions contemplated by the Merger Agreement. Pursuant to the Merger Agreement, Dynegy merged with and into Vistra Energy, with Vistra Energy continuing as the surviving corporation. The Merger is intended to qualify as a tax-free reorganization under the Internal Revenue Code, as amended, so that none of Vistra Energy, Dynegy or any of the Dynegy stockholders will recognize any gain or loss in the transaction, except that Dynegy stockholders could recognize a gain or loss with respect to cash received in lieu of fractional shares of Vistra Energy's common stock. Vistra Energy is the acquirer for both federal tax and accounting purposes.

At the closing of the Merger, each issued and outstanding share of Dynegy common stock, par value $0.01 per share, other than shares owned by Vistra Energy or its subsidiaries, held in treasury by Dynegy or held by a subsidiary of Dynegy, was automatically converted into 0.652 shares of common stock, par value $0.01 per share, of Vistra Energy (the Exchange Ratio), except that cash was paid in lieu of fractional shares, which resulted in Vistra Energy issuing 94,409,573 shares of Vistra Energy common stock to the former Dynegy stockholders, as well as converting stock options, equity-based awards, tangible equity units and warrants. The total number of Vistra Energy shares outstanding at the close of the Merger was 522,932,453 shares. Dynegy stock options and equity-based awards outstanding immediately prior to the Merger Date were generally automatically converted upon completion of the Merger into stock options and equity-based awards, respectively, with respect to Vistra Energy's common stock, after giving effect to the Exchange Ratio.

Business Combination Accounting

We believe the Merger provides significant potential strategic benefits and opportunities to Vistra Energy, including increased scale and market diversification, rebalanced asset portfolio and improved earnings and cash flow. The Merger is being accounted for in accordance with ASC 805, Business Combinations (ASC 805), with identifiable assets acquired and liabilities assumed recorded at their estimated fair values on the Merger Date. The combined results of operations are reported in our consolidated financial statements beginning as of the Merger Date. A summary of the techniques used to estimate the preliminary fair value of the identifiable assets and liabilities, as well as their classification within the fair value hierarchy (see Note 17), is listed below:

Working capital was valued using available market information (Level 2).
Acquired property, plant and equipment was valued using a combination of an income approach and a market approach. The income approach utilized a discounted cash flow analysis based upon a debt-free, free cash flow model (Level 3).
Acquired derivatives were valued using the methods described in Note 17 (Level 1, Level 2 or Level 3).
Contracts with terms that were not at current market prices were also valued using a discounted cash flow 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 discounted to present value and recorded as either an intangible asset or liability.
Long-term debt was valued using a market approach (Level 2).
AROs were recorded in accordance with ASC 410, Asset Retirement and Environmental Obligations (Level 3).

The following table summarizes the consideration paid and the preliminary allocation of the purchase price to the fair value amounts recognized for the assets acquired and liabilities assumed related to the Merger as of the Merger Date. Based on the opening price of Vistra Energy common stock on the Merger Date, the purchase price was approximately $2.3 billion. The preliminary values included below represent our current best estimates for property plant and equipment, identifiable intangible assets and liabilities, goodwill, inventories, asset retirement obligations, contingent liabilities and deferred taxes. During the year ended December 31, 2018, we updated the initial purchase price allocation reported as of June 30, 2018 with revised valuation estimates by increasing property, plant and equipment by $158 million, decreasing intangible assets by $36 million, increasing goodwill by $161 million, decreasing accounts receivable, inventory, prepaid expenses and other current assets by $7 million, increasing accumulated deferred tax asset by $101 million, decreasing other noncurrent assets by $109 million, increasing trade accounts payable and other current liabilities by $43 million, increasing other noncurrent liabilities by $172 million, increasing asset retirement obligations, including amounts due currently by $58 million as well as other minor adjustments. The valuation revisions were a result of updated inputs used in determining the fair value of the acquired assets and liabilities. The purchase price allocation is substantially complete, but is dependent upon final valuation determinations, which may materially change from our current estimates. Goodwill is currently recorded at the corporate and other non-segment operations pending the final valuation determinations. We currently expect the final purchase price allocation will be completed no later than the first quarter of 2019 and goodwill will be allocated to the related reporting units at that time.
Dynegy shares outstanding as of April 9, 2018 (in millions)
144.8

Exchange Ratio
0.652

Vistra Energy shares issued for Dynegy shares outstanding (in millions)
94.4

Opening price of Vistra Energy common stock on April 9, 2018
$
19.87

Purchase price for common stock
$
1,876

Fair value of equity component of tangible equity units
$
369

Fair value of outstanding stock compensation awards attributable to pre-combination service
$
26

Fair value of outstanding warrants
$
2

Total purchase price
$
2,273


Preliminary Purchase Price Allocation
Cash and cash equivalents
$
445

Trade accounts receivables, inventories, prepaid expenses and other current assets
856

Property, plant and equipment
10,520

Accumulated deferred income taxes
492

Identifiable intangible assets
351

Goodwill
161

Other noncurrent assets
423

Total assets acquired
13,248

Trade accounts payable and other current liabilities
687

Commodity and other derivative contractual assets and liabilities, net
422

Asset retirement obligations, including amounts due currently
477

Long-term debt, including amounts due currently
8,920

Other noncurrent liabilities
464

Total liabilities assumed
10,970

Identifiable net assets acquired
2,278

Noncontrolling interest in subsidiary
5

Total purchase price
$
2,273



Acquisition costs incurred in the Merger totaled $25 million for the year ended December 31, 2018. For the period from the Merger Date through December 31, 2018, our statements of consolidated income (loss) include revenues and net income (loss) acquired in the Merger totaling $3.902 billion and $224 million respectively.

Unaudited Pro Forma Financial Information — The following unaudited pro forma financial information for the year ended December 31, 2018 and 2017 assumes that the Merger occurred on January 1, 2017. The unaudited pro forma financial information is provided for information purposes only and is not necessarily indicative of the results of operations that would have occurred had the Merger been completed on January 1, 2017, nor is the unaudited pro forma financial information indicative of future results of operations, which may differ materially from the pro forma financial information presented here.
 
Year Ended December 31,
 
2018
 
2017
Revenues
$
10,595

 
$
10,509

Net loss
$
(268
)
 
$
(969
)
Net loss attributable to Vistra Energy
$
(265
)
 
$
(983
)
Net loss attributable to Vistra Energy per weighted average share of common stock outstanding — basic
$
(0.52
)
 
$
(1.83
)
Net loss attributable to Vistra Energy per weighted average share of common stock outstanding — diluted
$
(0.52
)
 
$
(1.83
)

The unaudited pro forma financial information presented above includes adjustments for incremental depreciation and amortization as a result of the fair value determination of the net assets acquired, interest expense on debt assumed in the Merger, effects of the Merger on tax expense (benefit), changes in the expected impacts of the tax receivable agreement due to the Merger, and other related adjustments.

Battery Energy Storage Projects (Successor)

We have completed the construction of our first battery energy storage system. In October 2018, we were awarded a $1 million grant from the TCEQ for our battery energy storage system at Upton 2 solar facility. The grant is part of the Texas Emissions Reduction Plan. The 10 MW lithium-ion energy storage system will capture excess solar energy produced during the day and releases the energy in late afternoon and early evening, when demand is highest. The project became operational on December 31, 2018.

In June 2018, we announced that we will enter into a 20-year resource adequacy contract with Pacific Gas and Electric Company (PG&E) to develop a 300 MW battery energy storage project at our Moss Landing Power Plant site in California. PG&E filed its application with the California Public Utilities Commission (CPUC) in June 2018 and the CPUC approved the contract in November 2018. We anticipate the battery storage project will enter commercial operations by the fourth quarter of 2020.

Odessa Acquisition (Successor)

In August 2017, La Frontera Holdings, LLC (La Frontera), an indirect wholly owned subsidiary of Vistra Energy, purchased a 1,054 MW CCGT natural gas-fueled generation plant (and other related assets and liabilities) located in Odessa, Texas (Odessa Facility) from Odessa-Ector Power Partners, L.P., an indirect wholly owned subsidiary of Koch Ag & Energy Solutions, LLC (Koch) (altogether, the Odessa Acquisition). La Frontera paid an aggregate purchase price of approximately $355 million, plus a five-year earn-out provision, to acquire the Odessa Facility. The purchase price was funded by cash on hand.

The Odessa Acquisition was accounted for as an asset acquisition. Substantially all of the approximately $355 million purchase price was assigned to property, plant and equipment in our consolidated balance sheet. Additionally, the initial fair value associated with an earn-out provision of approximately $16 million was included as consideration in the overall purchase price. The earn-out provision requires cash payments to be made to Koch if spark-spreads related to the pricing point of the Odessa Facility exceed certain thresholds. Subsequent to the acquisition, the earn-out provision has been accounted for as a derivative in our consolidated financial statements. Partial buybacks of the earn-out provision were settled in February and May 2018.

Upton 2 Solar Development (Successor)

In May 2017, we acquired the rights to develop, construct and operate a utility scale solar photovoltaic power generation facility in Upton County, Texas (Upton 2). As part of this project, we entered a turnkey engineering, procurement and construction agreement to construct the approximately 180 MW facility. During 2017 and 2018, we spent approximately $231 million related to this project primarily for progress payments under the engineering, procurement and construction agreement and the acquisition of the development rights. The facility began test operations in March 2018 and commercial operations began in June 2018.

Lamar and Forney Acquisition (Predecessor)

In April 2016, Luminant purchased all of the membership interests in La Frontera, the indirect owner of two combined-cycle gas turbine (CCGT) natural gas-fueled generation facilities representing nearly 3,000 MW of capacity located in ERCOT, from a subsidiary of NextEra Energy, Inc. (the Lamar and Forney Acquisition). The aggregate purchase price was approximately $1.313 billion, which included the repayment of approximately $950 million of existing project financing indebtedness of La Frontera at closing, plus approximately $236 million for cash and net working capital. The purchase price was funded by cash-on-hand and additional borrowings under our Predecessor's DIP Facility totaling $1.1 billion. After completing the acquisition, we repaid approximately $230 million of borrowings under our Predecessor's DIP Revolving Credit Facility primarily utilizing cash acquired in the transaction. La Frontera and its subsidiaries were subsidiary guarantors under our Predecessor's DIP Roll Facilities and, on the Effective Date, became subsidiary guarantors under the Vistra Operations Credit Facilities (see Note 14).

Predecessor Purchase Accounting — The Lamar and Forney Acquisition was accounted for in accordance with ASC 805, Business Combinations (ASC 805), with identifiable assets acquired and liabilities assumed recorded at their estimated fair values on the acquisition date.

To fair value the acquired property, plant and equipment, we used a discounted cash flow analysis, classified as Level 3 within the fair value hierarchy levels (see Note 17). This discounted cash flow model was created for each generation facility based on its remaining useful life. The discounted cash flow model included gross margin forecasts for each power generation facility determined using forward commodity market prices obtained from long-term forecasts. We also used management's forecasts of generation output, operations and maintenance expense, SG&A and capital expenditures. The resulting cash flows, estimated based upon the age of the assets, efficiency, location and useful life, were then discounted using plant specific discount rates of approximately 9%.

The following table summarizes the consideration paid and the allocation of the purchase price to the fair value amounts recognized for the assets acquired and liabilities assumed related to the Lamar and Forney Acquisition as of the acquisition date. During the three months ended September 30, 2016, the working capital adjustment included in the purchase price was finalized between the parties, and the purchase price allocation was completed.
Cash paid to seller at close
 
$
603

Net working capital adjustments
 
(4
)
Consideration paid to seller
 
599

Cash paid to repay project financing at close
 
950

Total cash paid related to acquisition
 
$
1,549

Cash and cash equivalents
 
$
210

Property, plant and equipment — net
 
1,316

Commodity and other derivative contractual assets
 
47

Other assets
 
44

Total assets acquired
 
1,617

Commodity and other derivative contractual liabilities
 
53

Trade accounts payable and other liabilities
 
15

Total liabilities assumed
 
68

Identifiable net assets acquired
 
$
1,549



The Lamar and Forney Acquisition did not result in the recording of goodwill since the purchase price did not exceed the fair value of the net assets acquired.

Unaudited Pro Forma Financial Information — The following unaudited pro forma financial information for the Predecessor period from January 1, 2016 through October 2, 2016 assumes that the Lamar and Forney Acquisition occurred on January 1, 2016. The unaudited pro forma financial information is provided for information purposes only and is not necessarily indicative of the results of operations that would have occurred had the Lamar and Forney Acquisition been completed on January 1, 2016, nor is the unaudited pro forma financial information indicative of future results of operations.
 
Predecessor
 
Period from January 1, 2016
through
October 2, 2016
Revenues
$
4,116

Net income (loss)
$
22,835



The unaudited pro forma financial information includes adjustments for incremental depreciation as a result of the fair value determination of the net assets acquired and interest expense on borrowings under our Predecessor's DIP Roll Facilities.
v3.10.0.1
Disposition of Generation Facilities (Notes)
12 Months Ended
Dec. 31, 2018
Retirement of Generation Facilities [Abstract]  
Disposition Of Long-Lived Assets [Text Block]

In January and February 2018, we retired three power plants with a total installed nameplate generation capacity of 4,167 MW. We decided to retire these units because they were projected to be uneconomic based on then current market conditions and would have faced significant environmental costs associated with operating such units. In the case of the Sandow units, the decision also reflected the execution of a contract termination agreement pursuant to which the Company and Alcoa agreed to an early settlement of a long-standing power and mining agreement. Expected retirement expenses were accrued in the third and fourth quarter 2017 and, as a result, no retirement expenses were recorded related to these facilities in the year ended December 31, 2018. The operational results of these facilities are included in our Asset Closure segment. The following table details the units retired.
Name
 
Location (all in the state of Texas)
 
Fuel Type
 
Installed Nameplate Generation Capacity (MW)
 
Number of Units
 
Date Units Taken Offline
Monticello
 
Titus County
 
Lignite/Coal
 
1,880

 
3
 
January 4, 2018
Sandow
 
Milam County
 
Lignite
 
1,137

 
2
 
January 11, 2018
Big Brown
 
Freestone County
 
Lignite/Coal
 
1,150

 
2
 
February 12, 2018
Total
 
 
 
 
 
4,167

 
7
 
 


In September and October 2017, we decided to retire our Monticello, Sandow and Big Brown plants and a related mine which supplies the Sandow plants. Management had previously announced its decisions to retire mines which supply the Monticello and Big Brown plants. The Monticello and Sandow plants were retired in January and the Big Brown plant in February 2018. We recorded a charge of approximately $206 million in 2017 related to the retirements, including employee-related severance costs, non-cash charges for writing off materials inventory and capitalized improvements and changes to the timing and amounts of asset retirement obligations for mining and plant-related reclamation at these facilities. The charge, all of which related to our Asset Closure segment, was recorded to operating costs and impairment of long-lived assets in our statements of consolidated income (loss). In addition, we will continue the ongoing reclamation work at the plants' mines.

In October 2017, the Company and Alcoa entered into a contract termination agreement pursuant to which the parties agreed to an early settlement of a long-standing power and mining agreement. In consideration for the early termination, Alcoa made a payment to Luminant of approximately $238 million in October 2017. The contract termination and related payment did not result in a material gain or loss. The contract had been important to the overall economic viability of the Sandow plant.

Regulatory Review — As part of the retirement process, Luminant filed notices with ERCOT, which triggered a reliability review regarding such proposed retirements. In October and November 2017, ERCOT determined the units were not needed for reliability, and the units were taken offline in January and February 2018.
v3.10.0.1
Emergence From Chapter 11 Cases
12 Months Ended
Dec. 31, 2018
Reorganizations [Abstract]  
Chapter 11 Cases
    EMERGENCE FROM CHAPTER 11 CASES

On the Petition Date, EFH Corp. and the substantial majority of its direct and indirect subsidiaries, including EFIH, EFCH and TCEH, but excluding the Oncor Ring-Fenced Entities, filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. On the Effective Date, the TCEH Debtors and the Contributed EFH Debtors completed their reorganization under the Bankruptcy Code and emerged from the Chapter 11 Cases as subsidiaries of Vistra Energy.

Separation of Vistra Energy from EFH Corp. and its Subsidiaries

Upon the Effective Date, Vistra Energy separated from EFH Corp. pursuant to a tax-free spin-off transaction that was part of a series of transactions that included a taxable component. The taxable portion of the transaction generated a taxable gain that resulted in no regular tax liability due to available net operating loss carryforwards of EFH Corp. The transaction did result in an alternative minimum tax liability estimated to be approximately $14 million payable by EFH Corp. to the IRS. Pursuant to the Tax Matters Agreement, Vistra Energy had an obligation to reimburse EFH Corp. 50% of the estimated alternative minimum tax, and approximately $7 million was reimbursed during the three months ended June 30, 2017. In October 2017, the 2016 federal tax return that included the results of EFCH, EFIH, Oncor Holdings and TCEH was filed with the IRS and resulted in a $3 million payment from EFH Corp. to Vistra Energy. The spin-off transaction resulted in Vistra Energy, including the TCEH Debtors and the Contributed EFH Debtors, no longer being an affiliate of EFH Corp. and its subsidiaries.

Separation Agreement

On the Effective Date, EFH Corp., Vistra Energy and a subsidiary of Vistra Energy entered into a separation agreement that provided for, among other things, the transfer of certain assets and liabilities by EFH Corp., EFCH and TCEH to Vistra Energy. Among other things, EFH Corp., EFCH and/or TCEH, as applicable, (a) transferred the TCEH Debtors and certain contracts and assets (and related liabilities) primarily related to the business of the TCEH Debtors to Vistra Energy, (b) transferred sponsorship of certain employee benefit plans (including related assets), programs and policies to a subsidiary of Vistra Energy and (c) assigned certain employment agreements from EFH Corp. and certain of the Contributed EFH Debtors to a subsidiary of Vistra Energy.

Tax Matters Agreement

On the Effective Date, Vistra Energy and EFH Corp. entered into the Tax Matters Agreement, which provides for the allocation of certain taxes among the parties and for certain rights and obligations related to, among other things, the filing of tax returns, resolutions of tax audits and preserving the tax-free nature of the spin-off.

Settlement Agreement

The Debtors, the Sponsor Group, certain settling TCEH first lien creditors, certain settling TCEH second lien creditors, certain settling TCEH unsecured creditors and the official committee of unsecured creditors of the TCEH Debtors entered into a settlement agreement (the Settlement Agreement) in August 2015 (as amended in September 2015 and approved by the Bankruptcy Court in December 2015) to settle, among other things, (a) intercompany claims among the Debtors, (b) claims and causes of actions against holders of first lien claims against TCEH and the agents under the TCEH Senior Secured Facilities, (c) claims and causes of action against holders of interests in EFH Corp. and certain related entities and (d) claims and causes of action against each of the Debtors' current and former directors, the Sponsor Group, managers and officers and other related entities.

Tax Matters

In July 2016, EFH Corp. received a private letter ruling from the IRS in connection with our emergence from bankruptcy, which provides, among other things, for certain rulings regarding the qualification of (a) the transfer of certain assets and ordinary course operating liabilities to Vistra Energy and (b) the distribution of the equity of Vistra Energy, the cash proceeds from Vistra Energy debt, the cash proceeds from the sale of preferred stock in a newly formed subsidiary of Vistra Energy, and the right to receive payments under a tax receivables agreement, to holders of TCEH first lien claims, as a reorganization qualifying for tax-free treatment.

Pre-Petition Claims

On the Effective Date, the TCEH Debtors (together with the Contributed EFH Debtors) emerged from the Chapter 11 Cases and discharged approximately $33.8 billion in LSTC. Initial distributions related to the allowed claims asserted against the TCEH Debtors and the Contributed EFH Debtors commenced subsequent to the Effective Date. As of December 31, 2018, the TCEH Debtors have approximately $52 million in escrow to (1) distribute to holders of currently contingent and/or disputed unsecured claims that become allowed and/or (2) make further distributions to holders of previously allowed unsecured claims, if applicable. Additionally, the TCEH Debtors have approximately $5 million in escrow to pay remaining professional fees incurred in the Chapter 11 Cases. The remaining contingent and/or disputed claims against the TCEH Debtors consist primarily of unsecured legal claims, including asbestos claims. These remaining claims and the related escrow balance for the claims are recorded in Vistra Energy's consolidated balance sheet as other current liabilities and current restricted cash, respectively. A small number of other disputed, de minimis claims that are asserted as being entitled to priority and/or against the Contributed EFH Debtors, if allowed, will be paid by Vistra Energy, but all non-priority unsecured claims, including asbestos claims arising before the Petition Date, will be satisfied solely from the approximately $52 million in escrow.

Predecessor Reorganization Items

Expenses and income directly associated with the Chapter 11 Cases are reported separately in the statements of consolidated income (loss) as reorganization items as required by ASC 852, Reorganizations. Reorganization items also included adjustments to reflect the carrying value of LSTC at their estimated allowed claim amounts, as such adjustments were determined. The following table presents reorganization items incurred in the Predecessor period from January 1, 2016 through October 2, 2016 as reported in the statements of consolidated income (loss):
 
Predecessor
 
Period from January 1, 2016
through
October 2, 2016
Gain on reorganization adjustments (Note 6)
$
(24,252
)
Loss from the adoption of fresh start reporting
2,013

Expenses related to legal advisory and representation services
55

Expenses related to other professional consulting and advisory services
39

Contract claims adjustments
13

Other
11

Total reorganization items
$
(22,121
)
v3.10.0.1
Fresh-Start Reporting (Notes)
12 Months Ended
Dec. 31, 2018
Reorganizations [Abstract]  
Fresh-Start Reporting
FRESH START REPORTING

As of the Effective Date, Vistra Energy applied fresh start reporting under the applicable provisions of ASC 852. In order to apply fresh-start reporting, ASC 852 requires two criteria to be satisfied: (1) that total post­ petition liabilities and allowed claims immediately before the date of confirmation of the Plan of Reorganization be in excess of reorganization value and (2) that holders of our Predecessor's voting shares immediately before confirmation of the Plan receive less than 50% of the voting shares of the emerging entity. Vistra Energy met both criteria. Under ASC 852, application of fresh start reporting is required on the date on which a plan of reorganization is confirmed by a bankruptcy court and all material conditions to the plan of reorganization are satisfied. All material conditions to the Plan of Reorganization were satisfied on the Effective Date, including the execution of the Spin-Off.

Reorganization Value

A third-party valuation specialist submitted a report to the Bankruptcy Court in July 2016 assuming an emergence from bankruptcy as of December 31, 2016. This report provided an estimated value range for the total Vistra Energy enterprise. Management selected an enterprise value within that range of $10.5 billion. The enterprise value submitted by the valuation specialist was based upon:

historical financial information of our Predecessor for recent years and interim periods;
certain internal financial and operating data of our Predecessor;
certain financial, tax and operational forecasts of Vistra Energy;
certain publicly available financial data for comparable companies to the operating business of Vistra Energy;
the Plan of Reorganization and related documents;
certain economic and industry information relevant to the operating business, and
other studies, analyses and inquiries.

The valuation analysis for Vistra Energy included (i) a discounted cash flow calculation and (ii) peer group company analysis. Equal weighting was assigned to the two methodologies, before adding the value of the tax basis step-up resulting from certain transactions pursuant to the Plan of Reorganization, which was valued separately. The estimated future cash flows included annual forecasts through 2021. A terminal value was included in the discounted cash flow calculation using an exit multiple approach based on the cash flows of the final year of the forecast period.

The valuation analysis used a discount rate of approximately 7%. The determination of the discount rate takes into consideration the capital structure, credit ratings and current debt yields of comparable publicly traded companies as well as an estimate of return on equity that reflects historical market returns and current market volatility for the industry.

Although the Company believes the assumptions and estimates used by the valuation specialist to develop the enterprise value are reasonable and appropriate, different assumption and estimates could materially impact the analysis and resulting conclusions.

Under ASC 852, reorganization value is generally allocated, first, to identifiable tangible assets, identifiable intangible assets and liabilities, then any remaining excess reorganization value is allocated to goodwill. Vistra Energy estimates its reorganization value of assets at approximately $15.161 billion as of October 3, 2016, which consists of the following:
Business enterprise value
$
10,500

Cash excluded from business enterprise value
1,594

Deferred asset related to prepaid capital lease obligation
38

Current liabilities, excluding short-term portion of debt and capital leases
1,123

Noncurrent, non-interest bearing liabilities
1,906

Vistra Energy reorganization value of assets
$
15,161


Consolidated Balance Sheet

The adjustments to TCEH's October 3, 2016 consolidated balance sheet below include the impacts of the Plan of Reorganization and the adoption of fresh start reporting.
 
October 3, 2016
 
TCEH (Predecessor) (1)
 
Reorganization
Adjustments (2)
 
Fresh Start
Adjustments
 
Vistra Energy (Successor)
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
1,829

 
$
(1,028
)
 
(3)
 
$

 
 
 
$
801

Restricted cash
12

 
131

 
(4)
 

 
 
 
143

Trade accounts receivable — net
750

 
4

 
 
 

 
 
 
754

Advances to parents and affiliates of Predecessor
78

 
(78
)
 
 
 

 
 
 

Inventories
374

 

 
 
 
(86
)
 
(17)
 
288

Commodity and other derivative contractual assets
255

 

 
 
 

 
 
 
255

Margin deposits related to commodity contracts
42

 

 
 
 

 
 
 
42

Other current assets
47

 
17

 
 
 
3

 
 
 
67

Total current assets
3,387

 
(954
)
 
 
 
(83
)
 
 
 
2,350

Restricted cash
650

 

 
 
 

 
 
 
650

Advance to parent and affiliates of Predecessor
17

 
(21
)
 
 
 
4

 
 
 

Investments
1,038

 
1

 
 
 
9

 
(18)
 
1,048

Property, plant and equipment — net
10,359

 
53

 
 
 
(5,970
)
 
(19)
 
4,442

Goodwill
152

 

 
 
 
1,755

 
(27)
 
1,907

Identifiable intangible assets — net
1,148

 
4

 
 
 
2,256

 
(20)
 
3,408

Commodity and other derivative contractual assets
73