Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NRG ENERGY, INC.
The following Unaudited Pro Forma Condensed Consolidated Financial Statements of NRG Energy, Inc. and its consolidated subsidiaries are included herein:
· Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2017;
· Unaudited Pro Forma Condensed Consolidated Statement of Operations for the three months ended March 31, 2017;
· Unaudited Pro Forma Condensed Consolidated Statement of Operations for the years ended December 31, 2016, 2015, and 2014; and
· Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.
The Unaudited Pro Forma Condensed Consolidated Financial Statements presented reflect the deconsolidation of GenOn Energy, Inc. and its subsidiaries (“GenOn”) as a result of voluntary filings by GenOn Energy, Inc. and certain of its wholly-owned subsidiaries (the “Petitions”) on June 14, 2017 (the “Petitions Date”) for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas. NRG Energy, Inc. (“NRG”) has determined that as a result of the Petitions and beginning on the Petitions Date, that it will no longer consolidate GenOn for financial reporting purposes. The Unaudited Pro Forma Condensed Consolidated Financial Statements have been prepared by applying pro forma adjustments to the amounts previously reported in the Consolidated Financial Statements included in NRG’s Annual Report on Form 10-K for the years ended December 31, 2016, 2015 and 2014 and the Unaudited Condensed Consolidated Financial Statements included in NRG’s Quarterly Report on Form 10-Q for the three months ended March 31, 2017. The pro forma adjustments reflect the impact of the deconsolidation of GenOn as well as certain specific items anticipated to occur upon emergence from bankruptcy. The Unaudited Pro Forma Condensed Consolidated Statements of Operations for the three months ended March 31, 2017 and the years ended December 31, 2016, 2015 and 2014 reflect the deconsolidation of GenOn, assuming the Petitions had occurred on January 1, 2014. The Unaudited Pro Forma Condensed Consolidated Balance Sheet reflects the deconsolidation of GenOn, assuming the Petitions had occurred on March 31, 2017. The pro forma adjustments, as described in the Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements, are based on currently available information.
The Unaudited Pro Forma Condensed Consolidated Financial Statements reflect the reclassification of GenOn from a consolidated entity together with subsidiaries to an investment accounted for under the cost method as a result of filing for relief under Chapter 11 of the United States Bankruptcy Code and will remain as a cost method investment with an estimated fair value of zero. Upon emergence from bankruptcy the investment will be removed. The Unaudited Pro Forma Condensed Consolidated Financial Statements are presented for informational purposes only and are not necessarily indicative of the operating results or financial position that would have occurred had the Petitions occurred on, or as of, the dates indicated, nor are they necessarily indicative of future operating results or financial position.
NRG ENERGY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 2017
(Unaudited)
(In millions, except shares) |
| March 31, 2017 |
| Less: |
| Add: Pro |
| Pro Forma |
| ||||
|
| A |
| B |
| C |
| A-B+C= |
| ||||
ASSETS |
|
|
|
|
|
|
|
|
| ||||
Current Assets |
|
|
|
|
|
|
|
|
| ||||
Cash and cash equivalents |
| $ | 1,513 |
| $ | 885 |
| $ | (295 | )(c)(d)(e) | $ | 333 |
|
Funds deposited by counterparties |
| 3 |
| — |
| 34 | (c) | 37 |
| ||||
Restricted cash |
| 397 |
| — |
| — |
| 397 |
| ||||
Accounts receivable, net |
| 974 |
| 80 |
| 80 | (c)(f) | 974 |
| ||||
Inventory |
| 1,140 |
| 413 |
| — |
| 727 |
| ||||
Derivative instruments |
| 682 |
| 59 |
| 40 | (c) | 663 |
| ||||
Cash collateral paid in support of energy risk management activities |
| 277 |
| 79 |
| — |
| 198 |
| ||||
Prepayments and other current assets |
| 454 |
| 128 |
| — |
| 326 |
| ||||
Total current assets |
| 5,440 |
| 1,644 |
| (141 | ) | 3,655 |
| ||||
Property, plant and equipment, net |
| 17,942 |
| 2,524 |
| — |
| 15,418 |
| ||||
Other Assets |
|
|
|
|
|
|
|
|
| ||||
Equity investments in affiliates |
| 1,148 |
| — |
| — |
| 1,148 |
| ||||
Notes receivable, less current portion |
| 13 |
| — |
| — |
| 13 |
| ||||
Goodwill |
| 662 |
| — |
| — |
| 662 |
| ||||
Intangible assets, net |
| 1,957 |
| 39 |
| — |
| 1,918 |
| ||||
Nuclear decommissioning trust fund |
| 627 |
| — |
| — |
| 627 |
| ||||
Derivative instruments |
| 226 |
| 31 |
| 10 | (c) | 205 |
| ||||
Deferred income taxes |
| 223 |
| — |
| 2 | (g) | 225 |
| ||||
Non-current assets held-for-sale |
| 10 |
| — |
| — |
| 10 |
| ||||
Other non-current assets |
| 1,172 |
| 578 |
| — |
| 594 |
| ||||
Total other assets |
| 6,038 |
| 648 |
| 12 |
| 5,402 |
| ||||
Total Assets |
| $ | 29,420 |
| $ | 4,816 |
| $ | (129 | ) | $ | 24,475 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
| ||||
Current Liabilities |
|
|
|
|
|
|
|
|
| ||||
Current portion of long-term debt and capital leases |
| $ | 1,688 |
| $ | 700 |
| $ | — |
| $ | 988 |
|
Accounts payable |
| 872 |
| 128 |
| 73 | (c) | 817 |
| ||||
Derivative instruments |
| 747 |
| 57 |
| 40 | (c) | 730 |
| ||||
Cash collateral received in support of energy risk management activities |
| 3 |
| — |
| 34 | (c) | 37 |
| ||||
Accrued expenses and other current liabilities |
| 887 |
| 203 |
| — |
| 684 |
| ||||
Total current liabilities |
| 4,197 |
| 1,088 |
| 147 |
| 3,256 |
| ||||
Other Liabilities |
|
|
|
|
|
|
|
|
| ||||
Long-term debt and capital leases |
| 17,672 |
| 2,164 |
| — | (e) | 15,508 |
| ||||
Nuclear decommissioning reserve |
| 291 |
| — |
| — |
| 291 |
| ||||
Nuclear decommissioning trust liability |
| 352 |
| — |
| — |
| 352 |
| ||||
Deferred income taxes |
| 20 |
| — |
| — |
| 20 |
| ||||
Derivative instruments |
| 315 |
| 18 |
| 10 | (c) | 307 |
| ||||
Out-of-market contracts, net |
| 1,017 |
| 792 |
| — |
| 225 |
| ||||
Non-current liabilities held-for-sale |
| 12 |
| — |
| — |
| 12 |
| ||||
Other non-current liabilities |
| 1,487 |
| 450 |
| 120 | (h) | 1,157 |
| ||||
Total non-current liabilities |
| 21,166 |
| 3,424 |
| 130 |
| 17,872 |
| ||||
Total Liabilities |
| 25,363 |
| 4,512 |
| 277 |
| 21,128 |
| ||||
Redeemable noncontrolling interest in subsidiaries |
| 44 |
| — |
| — |
| 44 |
| ||||
Commitments and Contingencies |
|
|
|
|
|
|
|
|
| ||||
Stockholders’ Equity |
|
|
|
|
|
|
|
|
| ||||
Common stock |
| 4 |
| — |
| — |
| 4 |
| ||||
Additional paid-in capital |
| 8,375 |
| 325 |
| 325 | (i) | 8,375 |
| ||||
Retained deficit |
| (4,238 | ) | 7 |
| (694 | )(i) | (4,939 | ) | ||||
Less treasury stock, at cost |
| (2,392 | ) | — |
| — |
| (2,392 | ) | ||||
Accumulated other comprehensive loss |
| (124 | ) | (28 | ) | (37 | )(h)(i) | (133 | ) | ||||
Noncontrolling interest |
| 2,388 |
| — |
| — |
| 2,388 |
| ||||
Total Stockholders’ Equity |
| 4,013 |
| 304 |
| (406 | ) | 3,303 |
| ||||
Total Liabilities and Stockholders’ Equity |
| $ | 29,420 |
| $ | 4,816 |
| $ | (129 | ) | $ | 24,475 |
|
NRG ENERGY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2017
(In millions, except for per share amounts) |
| Three Months |
| Less: |
| Add: Pro |
| Pro Forma |
| ||||
|
| A |
| B |
| C |
| A-B+C= |
| ||||
Operating Revenues |
|
|
|
|
|
|
|
|
| ||||
Total operating revenues |
| $ | 2,759 |
| $ | 381 |
| $ | 70 | (c)(j) | $ | 2,448 |
|
Operating Costs and Expenses |
|
|
|
|
|
|
|
|
| ||||
Cost of operations |
| 2,125 |
| 271 |
| 49 | (c) | 1,903 |
| ||||
Depreciation and amortization |
| 300 |
| 43 |
| — |
| 257 |
| ||||
Selling, general and administrative |
| 272 |
| 59 |
| 48 | (c)(j) | 261 |
| ||||
Development activity expenses |
| 17 |
| — |
| — |
| 17 |
| ||||
Total operating costs and expenses |
| 2,714 |
| 373 |
| 97 |
| 2,438 |
| ||||
Gain on sale of assets |
| 2 |
| — |
| — |
| 2 |
| ||||
Operating Income/(Loss) |
| 47 |
| 8 |
| (27 | ) | 12 |
| ||||
Other Income/(Expense) |
|
|
|
|
|
|
|
|
| ||||
Equity in earnings of unconsolidated affiliates |
| 5 |
| — |
| — |
| 5 |
| ||||
Other income, net |
| 12 |
| 3 |
| — |
| 9 |
| ||||
Loss on debt extinguishment, net |
| (2 | ) | — |
| — |
| (2 | ) | ||||
Interest expense |
| (269 | ) | (47 | ) | (3 | )(e) | (225 | ) | ||||
Total other expense |
| (254 | ) | (44 | ) | (3 | ) | (213 | ) | ||||
Loss Before Income Taxes |
| (207 | ) | (36 | ) | (30 | ) | (201 | ) | ||||
Income tax (benefit)/expense |
| (4 | ) | 1 |
| (2 | )(g) | (7 | ) | ||||
Net Loss |
| (203 | ) | (37 | ) | (28 | ) | (194 | ) | ||||
Less: Net loss attributable to noncontrolling interest and redeemable noncontrolling interests |
| (40 | ) | — |
| — |
| (40 | ) | ||||
Net Loss Attributable to NRG Energy, Inc. |
| (163 | ) | (37 | ) | (28 | ) | (154 | ) | ||||
Loss Available for Common Stockholders |
| $ | (163 | ) | $ | (37 | ) | $ | (28 | ) | $ | (154 | ) |
Loss per Share Attributable to NRG Energy, Inc. Common Stockholders |
|
|
|
|
|
|
|
|
| ||||
Weighted average number of common shares outstanding — basic |
| 316 |
|
|
|
|
| 316 |
| ||||
Loss per Weighted Average Common Share — Basic |
| $ | (0.52 | ) |
|
|
|
| $ | (0.49 | ) | ||
Weighted average number of common shares outstanding — diluted |
| 316 |
|
|
|
|
| 316 |
| ||||
Loss per Weighted Average Common Share — Diluted |
| $ | (0.52 | ) |
|
|
|
| $ | (0.49 | ) |
NRG ENERGY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2016
(In millions, except for per share amounts) |
| Year Ended |
| Less: |
| Add: Pro |
| Pro Forma |
| ||||
|
| A |
| B |
| C |
| A-B+C= |
| ||||
Operating Revenues |
|
|
|
|
|
|
|
|
| ||||
Total operating revenues |
| $ | 12,351 |
| $ | 1,862 |
| $ | 116 | (c)(j) | $ | 10,605 |
|
Operating Costs and Expenses |
|
|
|
|
|
|
|
|
| ||||
Cost of operations |
| 8,555 |
| 1,279 |
| 32 | (c) | 7,308 |
| ||||
Depreciation and amortization |
| 1,367 |
| 195 |
| — |
| 1,172 |
| ||||
Impairment losses |
| 918 |
| 214 |
| — |
| 704 |
| ||||
Selling, general and administrative |
| 1,101 |
| 208 |
| 193 | (c)(j) | 1,086 |
| ||||
Acquisition-related transaction and integration costs |
| 8 |
| — |
| — |
| 8 |
| ||||
Development activity expenses |
| 90 |
| — |
| — |
| 90 |
| ||||
Total operating costs and expenses |
| 12,039 |
| 1,896 |
| 225 |
| 10,368 |
| ||||
Gain/(loss) on sale of assets |
| 215 |
| 294 |
| — |
| (79 | ) | ||||
Operating Income/(Loss) |
| 527 |
| 260 |
| (109 | ) | 158 |
| ||||
Other Income/(Expense) |
|
|
|
|
|
|
|
|
| ||||
Equity in earnings of unconsolidated affiliates |
| 27 |
| — |
| — |
| 27 |
| ||||
Impairment loss on investment |
| (268 | ) | — |
| — |
| (268 | ) | ||||
Other income, net |
| 42 |
| 8 |
| — |
| 34 |
| ||||
Loss on debt extinguishment, net |
| (142 | ) | — |
| — |
| (142 | ) | ||||
Interest expense |
| (1,061 | ) | (176 | ) | (11 | )(e) | (896 | ) | ||||
Total other expense |
| (1,402 | ) | (168 | ) | (11 | ) | (1,245 | ) | ||||
(Loss)/Income Before Income Taxes |
| (875 | ) | 92 |
| (120 | ) | (1,087 | ) | ||||
Income tax expense |
| 16 |
| 11 |
| — |
| 5 |
| ||||
Net (Loss)/Income |
| (891 | ) | 81 |
| (120 | ) | (1,092 | ) | ||||
Less: Net loss attributable to noncontrolling interest and redeemable noncontrolling interests |
| (117 | ) | — |
| — |
| (117 | ) | ||||
Net (Loss)/Income Attributable to NRG Energy, Inc. |
| (774 | ) | 81 |
| (120 | ) | (975 | ) | ||||
Dividends for preferred shares |
| 5 |
| — |
| — |
| 5 |
| ||||
Dividends for preferred shares |
| (78 | ) | — |
| — |
| (78 | ) | ||||
(Loss)/Income Available for Common Stockholders |
| $ | (701 | ) | $ | 81 |
| $ | (120 | ) | $ | (902 | ) |
Loss per Share Attributable to NRG Energy, Inc. Common Stockholders |
|
|
|
|
|
|
|
|
| ||||
Weighted average number of common shares outstanding — basic |
| 316 |
|
|
|
|
| 316 |
| ||||
Loss per Weighted Average Common Share — Basic |
| $ | (2.22 | ) |
|
|
|
|
| $ | (2.85 | ) | |
Weighted average number of common shares outstanding — diluted |
| 316 |
|
|
|
|
| 316 |
| ||||
Loss per Weighted Average Common Share — Diluted |
| $ | (2.22 | ) |
|
|
|
|
| $ | (2.85 | ) |
NRG ENERGY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2015
(In millions, except for per share amounts) |
| Year Ended |
| Less: |
| Add: Pro |
|
|
| Pro Forma |
| ||||
|
| A |
| B |
| C |
|
|
| A-B+C= |
| ||||
Operating Revenues |
|
|
|
|
|
|
|
|
|
|
| ||||
Total operating revenues |
| $ | 14,674 |
| $ | 2,371 |
| $ | 111 |
| (c)(j) |
| $ | 12,414 |
|
Operating Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
| ||||
Cost of operations |
| 10,784 |
| 1,779 |
| 27 |
| (c) |
| 9,032 |
| ||||
Depreciation and amortization |
| 1,566 |
| 215 |
| — |
|
|
| 1,351 |
| ||||
Impairment losses |
| 5,030 |
| 170 |
| — |
|
|
| 4,860 |
| ||||
Selling, general and administrative |
| 1,199 |
| 194 |
| 193 |
| (c)(j) |
| 1,198 |
| ||||
Acquisition-related transaction and integration costs |
| 10 |
| — |
| — |
|
|
| 10 |
| ||||
Development activity expenses |
| 146 |
| — |
| — |
|
|
| 146 |
| ||||
Total operating costs and expenses |
| 18,735 |
| 2,358 |
| 220 |
|
|
| 16,597 |
| ||||
Gain on postretirement benefits curtailments |
| 21 |
| — |
| — |
|
|
| 21 |
| ||||
Operating Income/(Loss) |
| (4,040 | ) | 13 |
| (109 | ) |
|
| (4,162 | ) | ||||
Other Income/(Expense) |
|
|
|
|
|
|
|
|
|
|
| ||||
Equity in earnings of unconsolidated affiliates |
| 36 |
| — |
| — |
|
|
| 36 |
| ||||
Impairment loss on investment |
| (56 | ) | — |
| — |
|
|
| (56 | ) | ||||
Other income, net |
| 33 |
| 6 |
| — |
|
|
| 27 |
| ||||
Loss on sale of equity method investment |
| (14 | ) | — |
| — |
|
|
| (14 | ) | ||||
Gain on debt extinguishment, net |
| 75 |
| 65 |
| — |
|
|
| 10 |
| ||||
Interest expense |
| (1,128 | ) | (202 | ) | (11 | ) | (e) |
| (937 | ) | ||||
Total other expense |
| (1,054 | ) | (131 | ) | (11 | ) |
|
| (934 | ) | ||||
Loss Before Income Taxes |
| (5,094 | ) | (118 | ) | (120 | ) |
|
| (5,096 | ) | ||||
Income tax expense/(benefit) |
| 1,342 |
| (3 | ) | — |
|
|
| 1,345 |
| ||||
Net Loss |
| (6,436 | ) | (115 | ) | (120 | ) |
|
| (6,441 | ) | ||||
Less: Net loss attributable to noncontrolling interest and redeemable noncontrolling interests |
| (54 | ) | — |
| — |
|
|
| (54 | ) | ||||
Net Loss Attributable to NRG Energy, Inc. |
| (6,382 | ) | (115 | ) | (120 | ) |
|
| (6,387 | ) | ||||
Dividends for preferred shares |
| 20 |
| — |
| — |
|
|
| 20 |
| ||||
Loss Available for Common Stockholders |
| $ | (6,402 | ) | $ | (115 | ) | $ | (120 | ) |
|
| $ | (6,407 | ) |
Loss per Share Attributable to NRG Energy, Inc. Common Stockholders |
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average number of common shares outstanding — basic |
| 329 |
|
|
|
|
|
|
| 329 |
| ||||
Loss per Weighted Average Common Share — Basic |
| $ | (19.46 | ) |
|
|
|
|
|
| $ | (19.47 | ) | ||
Weighted average number of common shares outstanding — diluted |
| 329 |
|
|
|
|
|
|
| 329 |
| ||||
Loss per Weighted Average Common Share — Diluted |
| $ | (19.46 | ) |
|
|
|
|
|
| $ | (19.47 | ) |
NRG ENERGY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2014
(In millions, except for per share amounts) |
| Year Ended |
| Less: |
| Add: Pro |
|
|
| Pro Forma |
| ||||
|
| A |
| B |
| C |
|
|
| A-B+C= |
| ||||
Operating Revenues |
|
|
|
|
|
|
|
|
|
|
| ||||
Total operating revenues |
| $ | 15,868 |
| $ | 3,090 |
| $ | 26 |
| (c)(j) |
| $ | 12,804 |
|
Operating Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
| ||||
Cost of operations |
| 11,808 |
| 2,177 |
| (4 | ) | (c) |
| 9,627 |
| ||||
Depreciation and amortization |
| 1,523 |
| 245 |
| — |
|
|
| 1,278 |
| ||||
Impairment losses |
| 97 |
| 82 |
| — |
|
|
| 15 |
| ||||
Selling, general and administrative |
| 1,016 |
| 200 |
| 139 |
| (c)(j) |
| 955 |
| ||||
Acquisition-related transaction and integration costs |
| 84 |
| 4 |
| — |
|
|
| 80 |
| ||||
Development activity expenses |
| 88 |
| — |
| — |
|
|
| 88 |
| ||||
Total operating costs and expenses |
| 14,616 |
| 2,708 |
| 135 |
|
|
| 12,043 |
| ||||
Gain/(loss) on postretirement benefits curtailments |
| 19 |
| (6 | ) | (6 | ) | (h) |
| 19 |
| ||||
Operating Income/(Loss) |
| 1,271 |
| 376 |
| (115 | ) |
|
| 780 |
| ||||
Other Income/(Expense) |
|
|
|
|
|
|
|
|
|
|
| ||||
Equity in earnings of unconsolidated affiliates |
| 38 |
| — |
| — |
|
|
| 38 |
| ||||
Impairment loss on investment |
| — |
| — |
| — |
|
|
| — |
| ||||
Other income, net |
| 22 |
| 2 |
| — |
|
|
| 20 |
| ||||
Gain on sale of equity method investment |
| 18 |
| — |
| — |
|
|
| 18 |
| ||||
(Loss)/gain on debt extinguishment, net |
| (95 | ) | 18 |
| — |
|
|
| (113 | ) | ||||
Interest expense |
| (1,119 | ) | (198 | ) | (12 | ) | (e) |
| (933 | ) | ||||
Total other expense |
| (1,136 | ) | (178 | ) | (12 | ) |
|
| (970 | ) | ||||
Income/(Loss) Before Income Taxes |
| 135 |
| 198 |
| (127 | ) |
|
| (190 | ) | ||||
Income tax expense/(benefit) |
| 3 |
| 6 |
| — |
|
|
| (3 | ) | ||||
Net Income/(Loss) |
| 132 |
| 192 |
| (127 | ) |
|
| (187 | ) | ||||
Less: Net loss attributable to noncontrolling interest and redeemable noncontrolling interests |
| (2 | ) | — |
| — |
|
|
| (2 | ) | ||||
Net Income/(Loss) Attributable to NRG Energy, Inc. |
| 134 |
| 192 |
| (127 | ) |
|
| (185 | ) | ||||
Dividends for preferred shares |
| 56 |
| — |
| — |
|
|
| 56 |
| ||||
Income/(Loss) Available for Common Stockholders |
| $ | 78 |
| $ | 192 |
| $ | (127 | ) |
|
| $ | (241 | ) |
Earnings/(Loss) per Share Attributable to NRG Energy, Inc. Common Stockholders |
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average number of common shares outstanding — basic |
| 334 |
|
|
|
|
|
|
| 334 |
| ||||
Earnings/(Loss) per Weighted Average Common Share — Basic |
| $ | 0.23 |
|
|
|
|
|
|
| $ | (0.72 | ) | ||
Weighted average number of common shares outstanding — diluted |
| 334 |
|
|
|
|
|
|
| 334 |
| ||||
Earnings/(Loss) per Weighted Average Common Share — Diluted |
| $ | 0.23 |
|
|
|
|
|
|
| $ | (0.72 | ) |
NRG ENERGY, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(a) Amounts represent historical financial information from NRG’s Quarterly Report on Form 10-Q for the period ended March 31, 2017 or from NRG’s Annual Report on Form 10-K for the years ended December 31, 2016, 2015, and 2014.
(b) Amounts represent the GenOn Consolidated Statement of Operations for the three months ended March 31, 2017 and for the years ended December 31, 2016, 2015 and 2014 or GenOn’s Consolidated Balance Sheet as of March 31, 2017.
(c) Adjustments relate to intercompany transactions and balances between NRG and GenOn, which as a result of the deconsolidation would no longer be eliminated in consolidation. These adjustments include the following:
· $34 million adjustment to classify consolidated cash and cash equivalents to funds deposited by GenOn to NRG Power Marketing LLC as funds deposited by counterparties and to classify this amount as cash collateral received in support of energy risk management activities from accounts payable.
· Adjustments to record derivative assets and liabilities for intercompany agreements, whereby NRG Power Marketing LLC has entered into physical and financial intercompany commodity and hedging transactions with GenOn Energy, Inc. and certain of its subsidiaries.
· Adjustments to present amounts owed to NRG from GenOn as accounts receivable and amounts owed from NRG to GenOn as accounts payable, primarily related to the Shared Services Agreement between NRG and GenOn and other direct costs charged between NRG and GenOn subsidiaries.
(d) Reflects $261 million in cash consideration to be paid by NRG, upon emergence from bankruptcy, to GenOn Energy, Inc. and other such payees pursuant to the Restructuring Support Agreement entered into on June 12, 2017 between GenOn Energy, Inc., NRG and consenting holders of the GenOn Energy, Inc. and GenOn Americas Generation, LLC senior unsecured notes.
(e) Reflects $125 million in cash consideration for GenOn Energy, Inc.’s repayment of borrowings that were drawn against the $500 million intercompany revolving credit agreement with NRG upon emergence from bankruptcy, as required by the Restructuring Support Agreement. The $500 million intercompany revolving credit agreement between GenOn, Energy Inc. and NRG will be terminated effective upon emergence from bankruptcy. Interest expense was also adjusted to remove NRG’s intercompany interest income from this intercompany revolving credit agreement. In addition, adjustments reflect NRG’s repayment of the balance outstanding under NRG’s revolving credit facility of $125 million on June 12, 2017.
(f) Reflects credit of $27 million to be applied against GenOn Energy, Inc.’s payment obligations to NRG upon emergence from bankruptcy, as specified in the Restructuring Support Agreement.
(g) Amount includes the cumulative effect for all periods presented of an increase in deferred tax assets from changes in state apportionment rates. Amount also reflects $2.9 billion of net deferred tax assets which represents an estimated $7.8 billion pre-tax benefit for the worthless stock deduction that is contingent upon emergence from bankruptcy and is offset by a full valuation allowance on the net deferred tax assets that may not be realizable under a “more likely than not” measurement. Such amounts are based on the carrying amount at March 31, 2017 and may be impacted by future events.
(h) Amount includes GenOn’s employee pension liabilities that NRG would assume upon effectiveness of the plan of reorganization, as specified in the Petitions, and related balances included in accumulated other comprehensive income.
(i) Subsequent to the deconsolidation, NRG accounts for its investment in GenOn using the cost method of accounting. For purposes of the Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2017, the investment in GenOn is
reflected at an estimated fair value of zero. The impact of the estimated loss on deconsolidation includes the removal of the investment in GenOn’s equity of $304 million and the following adjustments for a total estimated loss of $710 million.
(In millions) |
| March 31, 2017 |
| |
Removal of investment in GenOn’s equity |
| $ | (304 | ) |
Cash contribution to GenOn Energy, Inc. |
| (261 | ) | |
Assumption of pension liability |
| (120 | ) | |
Credit for amounts GenOn owes to NRG per Restructuring Support Agreement |
| (27 | ) | |
Impact of taxes |
| 2 |
| |
Loss on discontinued operations |
| $ | (710 | ) |
Eliminations |
| 16 |
| |
|
| $ | (694 | ) |
(j) Reflects the reduction of the fee due to NRG by GenOn under the Shared Services Agreement between NRG and GenOn to $7 million per month or $84 million per year from $16 million per month or $193 million per year, beginning on the Petitions Date and continuing through the term of the Shared Services Agreement between NRG and GenOn, expected to terminate subsequent to the completion of the plan of reorganization, as specified in the Petitions. Adjustment also reflects the reclassification of the the fee as operating revenue to NRG.