HOUSTON, Aug. 14, 2003 — Dynegy Inc. has provided updates on its current liquidity position and 2003 earnings guidance estimate for its generation, natural gas liquids and regulated energy delivery segments.
As of Aug. 11, 2003, Dynegy’s liquidity was $1.336 billion. This consisted of $644 million in cash and $1.1 billion in revolving bank credit, less $408 million in letters of credit posted against the line of credit. Revolving credit facility exposure, including letters of credit and borrowings, totaled $408 million and total collateral posted, including cash and letters of credit, was $732 million.
The company’s liquidity position, as compared to the $1.7 billion reported on July 21, is lower primarily due to the use of cash on hand, together with proceeds from the long-term refinancing and restructuring transactions completed on Aug. 11, to repay certain outstanding indebtedness.
Updated 2003 Guidance Estimate
Management’s guidance estimate on April 29, 2003, which was made prior to its decision to execute the long-term refinancing and restructuring transactions, was $0.10 to $0.18 per share. Management has lowered the company’s 2003 guidance estimate by ($0.17) per share primarily to reflect the following items:
* ($0.09) per share relating to a second quarter 2003 $50 million pre-tax ($32 million after-tax) legal reserve;
* ($0.05) per share relating to the expected $31 million pre-tax ($20 million after-tax) increase in interest expense associated with the refinancing of the company’s 2005-2006 debt maturities and restructuring of the Series B preferred stock previously held by ChevronTexaco; and
* ($0.03) per share relating to the expected $21 million pre-tax ($13 million after-tax) charge associated with the acceleration of unamortized financing costs resulting from the debt payments made pursuant to the recently completed refinancing and restructuring transactions.
This results in a revised 2003 guidance estimate of ($0.07) to $0.01 per share for Dynegy’s generation, natural gas liquids and regulated energy delivery segments. Both prior and revised guidance estimates include corporate-level expenses and exclude the results associated with the company’s customer risk management business, which includes tolling contracts, and its discontinued operations, which includes the company’s former communications business, as well as related exit costs.
The company expects a net loss for 2003 of $270 to $250 million, or ($0.73) to ($0.67) per share, from its customer risk management business and discontinued operations. Dynegy already recorded net income for 2003 of $55 million, or $0.15 per share, relating to a cumulative effect of changes in accounting principles. As a result, for GAAP purposes, the company expects to report a net loss for 2003 of $240 to $190 million.
Guidance also continues to exclude the non-cash, implied dividends associated with the Series B preferred stock previously held by ChevronTexaco, as well as the benefit associated with the recently completed restructuring. After giving effect to these items, for GAAP purposes, Dynegy expects to report net income applicable to common stockholders for 2003 of $780 to $835 million, or $2.10 to $2.24 per share. These per share figures are based on 372 million common shares outstanding.
Dynegy noted that while the execution of its self-restructuring plan has proceeded ahead of schedule and that its operating businesses are performing as expected, the guidance estimate is sensitive to commodity prices, demand for energy and the company’s ability to achieve its targeted reductions in general and administrative expenses. Management’s revised guidance remains subject to the unpredictability of these factors and their effects on the company’s business.
About Dynegy Inc.
Dynegy Inc. provides electricity, natural gas and natural gas liquids to wholesale customers in the United States and to retail customers in the state of Illinois. The company owns and operates a diverse portfolio of energy assets, including power plants totaling more than 13,000 megawatts of net generating capacity, gas processing plants that process more than 2 billion cubic feet of natural gas per day and approximately 40,000 miles of electric transmission and distribution lines.