1445146--2/25/2010--Energy_Future_Intermediate_Holding_CO

related topics

{debt, indebtedness, cash}

{operation, natural, condition}

{condition, economic, financial}

{cost, contract, operation}

{financial, litigation, operation}

{cost, regulation, environmental}

{investment, property, distribution}

{personnel, key, retain}

{gas, price, oil}

{cost, operation, labor}

Intermediate Holding is a holding company and its obligations are structurally subordinated to existing and future liabilities and preferred stock of its subsidiaries. Oncor may or may not make any distributions to Intermediate Holding. Risks Relating to Intermediate Holding s Substantial Indebtedness and Debt Agreements Intermediate Holding s substantial leverage could adversely affect its ability to raise additional capital, limit its ability to react to changes in the economy and prevent it from meeting obligations under its various debt agreements. Despite Intermediate Holding s current high indebtedness level, it may still be able to incur substantially more indebtedness. This could further exacerbate the risks associated with Intermediate Holding s substantial indebtedness. Intermediate Holding s debt agreements and certain of the debt agreements of EFH Corp. contain restrictions that limit flexibility in operating Intermediate Holding s businesses. Risks Relating to Intermediate Holding s Business Oncor s businesses are subject to ongoing complex governmental regulations and legislation that have impacted, and may in the future impact, its business and/or results of operations. PURA, the PUCT, ERCOT and the Office of Public Utility Council (OPC) are subject to a Sunset review by the Texas Sunset Advisory Commission. PURA will expire, and the PUCT will be abolished, on September 1, 2011 unless extended by the Texas Legislature following such review. If any of PURA, the PUCT, ERCOT or the OPC are not renewed by the Texas Legislature pursuant to Sunset review, it could have a material effect on Oncor s business. The rates of Oncor s electricity delivery business are subject to regulatory review, and may be reduced below current levels, which could adversely impact Oncor s financial condition and results of operations. The operation and maintenance of electricity delivery facilities involves significant risks that could adversely affect Oncor s results of operations and financial condition. Oncor s capital deployment program may not be executed as planned, which could adversely impact Oncor s financial condition and results of operations. Market volatility may have impacts on Oncor s business and financial condition that Oncor currently cannot predict. Oncor s revenues are concentrated in a small number of customers, and any delay or default in payment could adversely affect its cash flows, financial condition and results of operations. Oncor s ring-fencing measures may not work as planned. Oncor s credit ratings could negatively affect Oncor s ability to access capital. Oncor s results of operations and financial condition could be negatively impacted by any development or event beyond Oncor s control that causes economic weakness in the ERCOT market. In the future, Oncor could have liquidity needs that could be difficult to satisfy under some circumstances, especially in uncertain financial market conditions. The litigation environment in which Oncor operates poses a significant risk to its businesses. The allocated costs of providing pension and OPEB and related funding requirements are subject to changes in pension fund values, changing demographics and fluctuating actuarial assumptions and may have a material adverse effect on Oncor s results of operations and financial condition. Disruptions at power generation facilities owned by third parties could interrupt Oncor s sales of transmission and distribution services. Changes in technology or increased conservation efforts may reduce the value of Oncor s electricity delivery facilities and may significantly impact Oncor s businesses in other ways as well. The loss of the services of Oncor s key management and personnel could adversely affect Oncor s ability to operate its businesses. Oncor s revenues and results of operations are seasonal. As was the case in the fourth quarter 2008 (as discussed in Notes 1 and 3 to Financial Statements), goodwill that Oncor has recorded in connection with the Merger is subject to at least annual impairment evaluations, and as a result, Oncor could be required to write off some or all of this goodwill, which may cause adverse impacts on Oncor s financial condition and results of operations.

Full 10-K form ▸

1445146--2/25/2010--Energy_Future_Intermediate_Holding_CO_LLC