EX-99.3 6 a993-proformafinancialinfo.htm EXHIBIT 99.3 Exhibit


Exhibit 99.3

Unaudited Pro Forma Consolidated Combined Financial Statements

The Unaudited Pro Forma Consolidated Combined Financial Statements, (the “pro forma financial statements”) combine the historical consolidated financial statements of NRG Yield, Inc., or the Company, and the financial statements of the entity that was acquired by the Company to illustrate the potential effect of the acquisition. The Company acquired the remaining 51.05% interest in CVSR Holdco LLC ("CVSR"), which indirectly owns the CVSR solar facility through its ownership of High Plains Ranch II, LLC, from NRG Solar CVSR Holdings 2 LLC, a wholly-owned subsidiary of NRG Energy, Inc.

The pro forma financial statements are based on, and should be read in conjunction with, the:
•accompanying notes to the Unaudited Pro Forma Consolidated Combined Financial Statements;
•consolidated financial statements of the Company for the year ended December 31, 2015 and for the six months ended June 30, 2016, and the notes relating thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, and Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2016; and
•financial statements of High Plains Ranch II, LLC for the year ended December 31, 2015, and for the six months ended June 30, 2016, and the notes relating thereto included within Exhibits 99.1 and 99.2 to this Form 8-K.

The historical consolidated financial statements have been adjusted in the pro forma financial statements to give effect to pro forma events that are (1) directly attributable to the acquisition of the remaining 51.05% of CVSR, (2) factually supportable and (3) with respect to the pro forma statements of operations, expected to have a continuing impact on the combined results. The Unaudited Pro Forma Consolidated Combined Statements of Operations or the pro forma statement of operations, for the year ended December 31, 2015, and for the six months ended June 30, 2016, give effect to the acquisition as if it occurred on January 1, 2015. The Unaudited Pro Forma Consolidated Combined Balance Sheet, or the pro forma balance sheet, as of June 30, 2016, gives effect to the acquisition as if it occurred on June 30, 2016.

CVSR was acquired by NRG on September 30, 2011, and NRG applied the acquisition method of accounting and recorded the acquired assets and liabilities at fair market value on the date of the acquisition. As CVSR and the Company are under common control, all of the assets were transferred to the Company at historical carrying value.

The pro forma financial statements have been presented for informational purposes only and are not necessarily indicative of what the combined company’s results of operations and financial position would have been had the acquisition of the remaining 51.05% of CVSR been completed on the date indicated. The Company could incur significant costs to integrate the business. The pro forma financial statements do not reflect the cost of any integration activities or benefits that may result from synergies that may be derived from any integration activities. In addition, the pro forma financial statements do not purport to project the future results of operations or financial position of the combined company.
 




Unaudited Pro Forma Consolidated Combined Income Statement
Six Months Ended June 30, 2016

(In millions, except per share amounts)
NRG Yield, Inc. Historical
 
CVSR
 
Pro Forma Adjustments
 
NRG Yield, Inc. Pro Forma
Operating Revenues
 
 
 
 
 
 
Total operating revenues
$
478

 
$
39

 
$
—

 
$
517

Operating Costs and Expenses
 
 
 
 
 
 
 
Cost of operations
158

 
4

 
—

 
162

Depreciation and amortization
133

 
16

 
—

 
149

General and administrative
6

 
—

 
—

 
6

Total operating costs and expenses
297

 
20

 
—

 
317

Operating Income
181

 
19

 
—

 
200

Other Income (Expense)
 
 
 
 
 
 
 
Equity in earnings of unconsolidated affiliates
20

 
—

 
(4
)
(a)
16

Other income, net
1

 
1

 
—

 
2

Loss on debt extinguishment
—

 
—

 
—

 
—

Interest expense
(130
)
 
(12
)
 
(3
)
(b)
(145
)
Total other expense, net
(109
)
 
(11
)
 
(7
)
 
(127
)
Income Before Income Taxes
72

 
8

 
(7
)
 
73

Income tax expense
12

 
—

 
—

 
12

Net Income
60

 
8

 
(7
)
 
61

Less: Pre-acquisition net loss of Drop Down Assets
—

 
—

 
—

 
—

Net Income Excluding Pre-acquisition Net Loss of Drop Down Assets
60

 
8

 
(7
)
 
61

Less: Net income attributable to noncontrolling interests
23

 
—

 
—

 
23

Net Income Attributable to NRG Yield, Inc.
$
37

 
$
8

 
$
(7
)
 
$
38

Earnings Per Share Attributable to NRG Yield, Inc. Class A and Class C Common Stockholders
 
 
 
 
 
 
 
Weighted average number of Class A common shares outstanding - basic
35

 
 
 
 
 
35

Weighted average number of Class A common shares outstanding - diluted
35

 
 
 
 
 
50

Weighted average number of Class C common shares outstanding - basic and diluted
63

 
 
 
 
 
63

Earnings per Weighted Average Class A and Class C Common Share - Basic
$
0.38

 
 
 
 
 
$
0.39

Earnings per Weighted Average Class A Common Share - Diluted
0.38

 
 
 
 
 
0.37

Earnings per Weighted Average Class C Common Share - Diluted
0.38

 
 
 
 
 
0.39






Unaudited Pro Forma Consolidated Combined Income Statement
Year Ended December 31, 2015

(In millions, except per share amounts)
NRG Yield, Inc. Historical
 
CVSR
 
Pro Forma Adjustments
 
NRG Yield, Inc. Pro Forma
Operating Revenues
 
 
 
 
 
 
Total operating revenues
$
869

 
$
84

 
$
—

 
$
953

Operating Costs and Expenses
 
 
 
 
 
 
 
Cost of operations
312

 
9

 
—

 
321

Depreciation and amortization
265

 
32

 
—

 
297

General and administrative
12

 
—

 
—

 
12

Acquisition-related transaction and integration costs
3

 
—

 
—

 
3

Total operating costs and expenses
592

 
41

 
—

 
633

Operating Income
277

 
43

 
—

 
320

Other Income (Expense)
 
 
 
 
 
 
 
Equity in earnings of unconsolidated affiliates
35

 
—

 
(9
)
(a)
26

Other income, net
2

 
1

 
—

 
3

Loss on debt extinguishment
(9
)
 
—

 
—

 
(9
)
Interest expense
(238
)
 
(25
)
 
(5
)
(b)
(268
)
Total other expense, net
(210
)
 
(24
)
 
(14
)
 
(248
)
Income Before Income Taxes
67

 
19

 
(14
)
 
72

Income tax expense
12

 
—

 
1

(c)
13

Net Income
55

 
19

 
(15
)
 
59

Less: Pre-acquisition net loss of Drop Down Assets
(20
)
 
—

 
—

 
(20
)
Net Income Excluding Pre-acquisition Net Loss of Drop Down Assets
75

 
19

 
(15
)
 
79

Less: Net income attributable to noncontrolling interests
42

 
 
 
2

(d)
44

Net Income Attributable to NRG Yield, Inc.
$
33

 
$
19

 
$
(17
)
 
$
35

Earnings Per Share Attributable to NRG Yield, Inc. Class A and Class C Common Stockholders
 
 
 
 
 
 
 
Weighted average number of Class A common shares outstanding - basic and diluted
35

 
 
 
 
 
35

Weighted average number of Class C common shares outstanding - basic and diluted
49

 
 
 
 
 
49

Earnings per Weighted Average Class A - Basic and Diluted
$
0.40

 
 
 
 
 
$
0.41

Earnings per Weighted Average Class C Common Share - Basic and Diluted
$
0.40

 
 
 
 
 
$
0.42







Unaudited Pro Forma Consolidated Combined Balance Sheet
As of June 30, 2016

(In millions)
NRG Yield, Inc. Historical
 
CVSR
 
Pro Forma Adjustments
 
 
NRG Yield, Inc. Pro Forma
ASSETS
 
 
 
 
 
 
 
 
Current Assets
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
89

 
$
—

 
$
(4
)
(e), (f)
 
$
85

Restricted cash
55

 
68

 
—

 
 
123

Accounts receivable — trade
109

 
12

 
—

 
 
121

Accounts receivable — affiliate
1

 
—

 
—

 
 
1

Inventory
35

 
1

 
—

 
 
36

Derivative instruments
1

 
—

 
—

 
 
1

Notes receivable
7

 
10

 
—

 
 
17

Prepayments and other current assets
22

 
1

 
—

 
 
23

Total current assets
319

 
92

 
(4
)
 
 
407

Property, plant and equipment, net of accumulated depreciation of $832 and $701
4,947

 
814

 
—

 
 
5,761

Other Assets
 
 
 
 
 
 
 
—

Equity investments in affiliates
778

 
—

 
(95
)
(a)
 
683

Notes receivable
6

 
15

 
—

 
 
21

Intangible assets, net of accumulated amortization of $132 and $93
1,321

 
—

 
—

 
 
1,321

Deferred income taxes
170

 
—

 
—

 
 
170

Other non-current assets
66

 
75

 
(75
)
(g)
 
66

Total other assets
2,341

 
90

 
(170
)
 
 
2,261

Total Assets
$
7,607

 
$
996

 
$
(174
)
 
 
$
8,429

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
Current Liabilities
 

 
 
 
 
 
 
 
Current portion of long-term debt
$
251

 
$
23

 
$
(125
)
(b)
 
$
149

Accounts payable — trade
21

 
1

 
—

 
 
22

Accounts payable — affiliate
32

 
1

 
—

 
 
33

Derivative instruments
37

 
—

 
—

 
 
37

Accrued expenses and other current liabilities
39

 
9

 
(7
)
(g)
 
41

Total current liabilities
380

 
34

 
(132
)
 
 
282

Other Liabilities
 
 
 
 
 
 
 
 
Long-term debt
4,465

 
753

 
200

(e)
 
5,418

Accounts payable — affiliate
20

 
—

 
—

 
 
20

Derivative instruments
122

 
—

 
—

 
 
122

Other non-current liabilities
63

 
16

 
—

 
 
79

Total non-current liabilities
4,670

 
769

 
200

 
 
5,639

Total Liabilities
5,050

 
803

 
68

 
 
5,921

Commitments and Contingencies
 
 
 
 
 
 
 
 
Stockholders' Equity
 
 
 
 
 
 
 
 
Common Stock
1

 
—

 
 
 
 
1

Additional paid-in capital
1,835

 
219

 
(219
)
(h)
 
1,835

Retained earnings
26

 
—

 
 
 
 
26

Accumulated other comprehensive loss
(47
)
 
(26
)
 
12

(h)
 
(61
)
Noncontrolling interest
742

 
—

 
(35
)
(g), (h)
 
707

Total Stockholders' Equity
2,557

 
193

 
(242
)
 
 
2,508

Total Liabilities and Stockholders' Equity
$
7,607

 
$
996

 
$
(174
)
 
 
$
8,429







Notes to the Unaudited Pro Forma Consolidated Combined Financial Statements

(a) Represents the removal of the equity-method investment and related equity earnings associated with the Company's historical 48.95% ownership of CVSR.
(b) Reflects the estimated net increase in interest expense for borrowings necessary to fund the purchase price of the acquisition. To fund the purchase price of the acquisition, in July 2016 CVSR Holdco, the indirect owner of the CVSR project, issued $200 million of senior unsecured notes that bear interest at 4.68% and mature on March 31, 2037.
(c) Represents the adjustment to record the tax effect of the increase in net income resulting from the acquisition of the remaining 51.05% interest in CVSR, partially offset by the increase in interest expense and the increase in noncontrolling interest, calculated utilizing the Company’s estimated combined statutory federal and state tax rate of 40.0%.
(d) Represents the adjustment to record noncontrolling interest associated with the results of the acquisition of the remaining 51.05% interest in CVSR in Yield Inc.'s results.
(e) Represents the cash received from the $200 million financing borrowings necessary to fund the purchase price of the acquisition. To fund the purchase price of the acquisition, in July 2016 CVSR Holdco, the indirect owner of the CVSR project, issued $200 million of senior unsecured notes. Net proceeds of $97.5 million were distributed to NRG Yield Operating LLC based on its historical pro rata ownership. The Company used its net proceeds of $97.5 million along with $28 million of cash on hand, to reduce borrowings under the Company's revolving credit facility, resulting in a net cash increase of $75 million.
(f) Represents cash of $78.5 million utilized to fund the purchase price of the remaining 51.05% interest in CVSR.
(g) The agreement between NRG and the Company for the acquisition specified that all amounts related to the litigation with SunPower, as further described in Note 2, Summary of Significant Accounting Policies, to the Company's audited financial statements, are excluded from the acquisition. Accordingly, prior to close of the transaction, the $75 million receivable and $7 million payable were transferred to NRG as a net reduction to its ownership interest in CVSR.
(h) Represents the adjustment to reclassify the equity of the acquired 51.05% interest in CVSR to non-controlling interest. The acquisition represents a transfer of interests under common control and the equity was transferred at carrying value with no gain or loss recorded.