|NRG ENERGY, INC. filed this Form 10-K on 02/29/2016|
Selling, Marketing, General and Administrative Expenses
Selling, marketing, general and administrative expenses are comprised of the following:
Selling and marketing expenses increased $166 million for the year ended December 31, 2015 compared to the same period in 2014, due primarily to an increase in expense related to retail acquisitions as well as channel and product expansions in the core retail business, which also contributed to margin expansion during the same time period. The increase was also driven by Home Solar acquisitions in 2014, which provided NRG Home Solar with an installation team, a sales team and additional sales channels.
General and administrative expenses increased by $27 million for the year ended December 31, 2015, compared to the same period in 2014, due primarily to expansion of the Home Solar business partially offset by continued integration and cost management efforts.
Acquisition-related Transaction and Integration Costs
NRG incurred transaction and integration costs of $10 million for the year ended December 31, 2015, compared to $84 million for the same period in 2014. The reduction in transaction and integration costs is due primarily to the substantial completion of integration activities for the acquisitions of Alta Wind, Dominion and EME in 2014.
NRG incurred development costs of $154 million for the year ended December 31, 2015, compared to $91 million for the same period in 2014. The increase in development costs is due to increased development activities, primarily for Renewables and NRG eVgo.
Equity in Earnings of Unconsolidated Affiliates
NRG's equity in earnings of unconsolidated affiliates was $36 million for the year ended December 31, 2015, compared to $38 million for the same period in 2014, due primarily to lower income at Watson, Midway Sunset, and Saguaro, partially offset by NRG Yield, Inc.'s acquisition of Desert Sunlight.
Impairment Losses on Investments
In 2015, the Company recorded other-than-temporary impairment losses on certain of its cost and equity-method investments of $56 million, as further described in Item 15 — Note 10, Asset Impairments, to the Consolidated Financial Statements.
(Loss)/Gain on Sale of Equity Method Investment
In the fourth quarter of 2015, the Company sold its 32% interest in Altenex, as described in Item 15 — Note 3, Business Acquisitions and Dispositions, to the Consolidated Financial Statements. In connection with the sale the Company received cash proceeds of $26 million and recorded a loss on the sale of $14 million.
In the fourth quarter of 2014, the Company sold its investment in Sabine, as described in Item 15 — Note 3, Business Acquisitions and Dispositions, to the Consolidated Financial Statements. In connection with the sale, the Company received cash proceeds of $35 million and recorded a gain on the sale of $18 million.
Gain/(Loss) on Debt Extinguishment
A gain on debt extinguishment of $75 million was recorded for the year ended December 31, 2015, primarily driven by the repurchase of NRG senior notes due 2023 and 2024, GenOn senior notes due 2020, and GenOn Americas Generation senior notes due 2021 and 2031 at a price below par value, combined with the write-off of unamortized premium. The repurchase of senior notes during 2015 will result in future interest savings of approximately $42 million annually.
In the fourth quarter of 2014, a loss of $95 million was recorded primarily due to the redemption premiums from the redemption of the 2019 Senior Notes. These gains/losses also included the write-off of previously deferred financing costs.