SEC Filings

10-K
NRG ENERGY, INC. filed this Form 10-K on 02/29/2016
Entire Document
 
                

Deferred tax assets and valuation allowance
        Net deferred tax balance — As of December 31, 2015, and 2014, NRG recorded a net deferred tax asset of $148 million and $1.5 billion, respectively. The Company believes the federal and certain state net deferred tax assets may not be realizable under a “more likely than not” measurement and as such, a valuation allowance has been recorded to reduce the asset accordingly. The Company assesses cumulative and forecasted pretax book earnings, the future reversal of existing taxable temporary differences as well as assumptions and analysis used in assessing certain fixed assets and goodwill impairments during the quarter.
Based on the Company's assessment of positive and negative evidence, including available tax planning strategies, NRG believes that it is more likely than not that a benefit will not be realized on $3,575 million and $265 million of tax assets as of December 31, 2015, and 2014, respectively, thus a valuation allowance has been recorded.
NOL carryforwards — At December 31, 2015, the Company had tax effected cumulative domestic NOLs consisting of carryforwards for federal income tax purposes of $1.4 billion and state of $230 million. The Company estimates it will need to generate future taxable income to fully realize the net federal deferred tax asset before expiration commencing in 2026. In addition, NRG has cumulative foreign NOL carryforwards of $59 million with no expiration date.
        Valuation allowance — As of December 31, 2015, the Company's tax effected valuation allowance was $3,575 million, consisting of domestic federal net deferred tax assets of approximately $2,973 million, domestic state net deferred tax assets of $542 million, foreign net operating loss carryforwards of $59 million and foreign capital loss carryforwards of approximately $1 million. Based upon the assessment of cumulative and forecasted pretax book earnings, the future reversal of existing taxable temporary differences as well as assumptions and analysis used in assessing certain fixed assets and goodwill impairments, it was determined that a valuation allowance was required to be recorded during the quarter.
Taxes Receivable and Payable
As of December 31, 2015, NRG recorded a current tax payable of $5 million that represents a tax liability due for domestic state taxes. NRG has a domestic tax receivable of $42 million, of which $13 million relates to federal cash grants applied for eligible solar energy projects, net of sequestration. The remaining balance of $29 million is primarily related to current tax refunds due from the New York State Empire Zone program generated in years 2010 through 2014.
Uncertain tax benefits
NRG has identified uncertain tax benefits whose after-tax value is $32 million for which, as of December 31, 2015, and 2014, NRG has recorded a non-current tax liability of $35 million and $53 million, respectively. The Company recognizes interest and penalties related to uncertain tax benefits in income tax expense. During the year ended December 31, 2015, the Company recognized a benefit of $5 million in interest and penalties and accrued interest of $2 million. As of December 31, 2015 and 2014, NRG had cumulative interest and penalties related to these uncertain tax benefits of $3 million and $5 million, respectively.

        Tax jurisdictions — NRG is subject to examination by taxing authorities for income tax returns filed in the U.S. federal jurisdiction and various state and foreign jurisdictions including operations located in Australia.
The Company is no longer subject to U.S. federal income tax examinations for years prior to 2012. With few exceptions, state and local income tax examinations are no longer open for years before 2009.
The following table reconciles the total amounts of uncertain tax benefits:
 
As of December 31,
 
2015
 
2014
 
(In millions)
Balance as of January 1
$
71

 
$
115

Increase due to current year positions
4

 

Increase due to prior year positions

 
10

Decrease due to prior year positions
(25
)
 
(27
)
Decrease due to settlements and payments
(18
)
 
(27
)
Uncertain tax benefits as of December 31
$
32

 
$
71

Note 20 — Stock-Based Compensation
NRG Energy, Inc. Long-Term Incentive Plan
As of December 31, 2015, and 2014, a total of 22,000,000 shares of NRG common stock were authorized for issuance under the NRG LTIP, and 5,558,390 shares of NRG common stock were authorized for issuance under the NRG GenOn LTIP. The NRG LTIP and the NRG GenOn LTIP are subject to adjustments in the event of reorganization, recapitalization, stock split, reverse stock split, stock dividend, and a combination of shares, merger or similar change in NRG's structure or outstanding shares of common stock. There were 6,240,648 and 6,184,157 shares of common stock remaining available for grants under the NRG LTIP as of December 31, 2015, and 2014, respectively. There were 1,671,633 and 2,150,019 shares of common stock remaining available for grants under the NRG GenOn LTIP as of December 31, 2015, and 2014, respectively.
Non-Qualified Stock Options
NQSOs granted under the NRG LTIP and the NRG GenOn LTIP typically have three-year graded vesting schedules beginning on the grant date and become exercisable at the end of the requisite service period. NRG recognizes compensation costs for NQSOs over the requisite service period for the entire award. The maximum contractual term is 10 years for NRG's outstanding NQSOs. No NQSOs were granted in 2015, 2014 or 2013.
The following table summarizes the Company's NQSO activity and changes during the year:
 
Shares
 
Weighted Average
Exercise Price
 
Weighted Average Remaining Contractual Term (In years)
 
Aggregate Intrinsic Value
(In millions)
 
(In whole)
 
 
 
 
Outstanding at December 31, 2014
2,533,177

 
$
30.95

 
2
 
$
9

Forfeited
(59,617
)
 
35.28

 
 
 
 

Exercised
(401,647
)
 
23.23

 
 
 
 
Outstanding at December 31, 2015
2,071,913

 
32.27

 
3
 

Exercisable at December 31, 2015
2,071,913

 
32.27

 
3
 

The following table summarizes the total intrinsic value of options exercised and the cash received from the exercises of options:
 
Year Ended December 31,
 
2015
 
2014
 
2013
 
(In millions, except for weighted average)
Total intrinsic value of options exercised
$
2

 
$
7

 
$
19

Cash received from options exercised
9

 
21

 
33

Restricted Stock Units
As of December 31, 2015, RSUs granted under the Company's LTIPs typically fully vest three years from the date of issuance. Fair value of the RSUs is based on the closing price of NRG common stock on the date of grant. The following table summarizes the Company's non-vested RSU awards and changes during the year:
 
Units
 
Weighted Average Grant-Date Fair Value per Unit
 
(In whole)
Non-vested at December 31, 2014
2,674,626

 
$
26.15

Granted
741,351

 
27.31

Forfeited
(266,802
)
 
27.98

Vested
(887,179
)
 
23.31

Non-vested at December 31, 2015
2,261,996

 
27.59

The total fair value of RSUs vested during the years ended December 31, 2015, 2014, and 2013, was $10 million, $26 million and $22 million, respectively. The weighted average grant date fair value of RSUs granted during the years ended December 31, 2015, 2014, and 2013 was $27.31, $29.90, and $23.37, respectively. In January 2016, an additional 200,366 restricted stock units were forfeited.

194