Energy Future Holdings to Investors: “Hold Onto Your Effing Hats!”

An alert FBvian points us to an SEC filing yesterday made by Energy Future Holdings, the folks who own TXU, Oncor, and Luminant. The filing is essentially a heads-up that EFH is doing all it can to hold onto its effing hat. To wit:

Energy Future Holdings Corp. (“EFH Corp.”) expects that its fourth quarter 2008 results will include a non-cash goodwill impairment charge of approximately $8.9 billion of the approximately $23 billion of goodwill arising from purchase accounting for EFH Corp.’s merger transaction in October 2007. … EFH Corp. expects that the estimated goodwill charge will consist of impairments of approximately $8 billion related to its Competitive Electric segment and approximately $900 million related to its Regulated Delivery segment. … EFH Corp. also expects that its fourth quarter 2008 results will include a non-cash impairment charge of approximately $500 million ($320 million after tax) related to TCEH’s trade name intangible asset.

“Trade name intangible asset”? What they’re saying is that they overvalued and thus needed to mark down by $500 million the value associated with the TXU brand.

Newsletter

Get a weekly recap in your inbox every Sunday of our best stories from the week plus a primer for the days ahead.

Find It

Search our directories for...

Dining

Dining

Bars

Bars

Events

Events

Attractions

Attractions

View All

View All

Comments

7 responses to “Energy Future Holdings to Investors: “Hold Onto Your Effing Hats!””

  1. matt says:

    These kinds of actions are common during a recession–no one will notice the reduced ROE,ROA,or net income because everyone else sucks. Then next quarter all will look shiny on new on the higher earnings with lower assets and equity.

  2. Tim Rogers says:

    Before I get killed in the comments, no, I haven’t read the paper today.

    Here’s Elizabeth Souder’s story about EFH. And someone from the EFH sent me a note pointing out that the company’s liquidity and cash flow are fine. Noted.

  3. JB says:

    Wow. I will admit that I understood absolutely nothing in the above Sans Serif Typeface, but, it seems to me, I’ve heard a familiar story of a big Texas energy trading company overvaluing itself on future trading and causing some problems for a few people. I just wish I could remember where I heard the story……

  4. Ther Other Marty Cortland says:

    @ matt:

    The thrust of your broadstroke is true enough.

    Yet your charecterization ignores the fact that the mark-to-market accounting principles that underlie EFH’s action are meant to mirror economic realities. And there is little doubt that the value of the former TXU Corporation is dramatically less than at the time of the buyout roughly 18 months ago.

    Also understand that corporations do not experience goodwill writedowns of such dramatic magnitude as a result of having a Vegas-style winning streak.

    Today the senior bank debt of Energy Future Holdings was trading at 62 cents, down from 70 cents just last week. That pretty much says it all.

  5. Incognizant says:

    @ Tim Rogers:

    If you are having problems with the concept of “a non-cash impairment charge … related to TCEH’s trade name intangible asset,” there is a brief two word translation.

    To-wit: “Stream Energy.”

  6. Bill Marvel says:

    “What they’re saying is that they overvalued and thus needed to mark down by $500 million the value associated with the TXU brand.”
    Wrong, Tim.
    What they’re saying is that they have such withering contempt for ordinary folks that they’ve turned over corporate communications to lawyers who either are unable to write a clear English sentence, have no interest in learning how to do so, or are terrified that if ordinary people ever understood what they’re about, we might gather outside their headquarters with torches and pitchforks.
    Somebody will probably point out this was written for SEC wonks. God Lord! What does that tell us about the SEC???

  7. former brand monkey says:

    What’s a brand worth when the first thing you do is rebrand?