paid AE Supply approximately $65 million of cash for related materials and supplies (at book value) and the settlement of FG’s economic interest in Pleasants. By eliminating a significant portion of its competitive generation fleet with the deconsolidation of the FES Debtors, FirstEnergy has concluded the FES Debtors meet the criteria for discontinued operations, as this represents a significant event in management’s strategic review to exit commodity-exposed generation and transition to a fully regulated company. Income Taxes As a result of the FES Debtors’ tax return deconsolidation, FirstEnergy recognized a worthless stock deduction, of approximately $4.9 billion, net of unrecognized tax benefits of $316 million, for the remaining tax basis in the stock of the FES Debtors. Based upon completion of the IRS’s review of the 2020 federal income tax return during fourth quarter 2021, FirstEnergy recognized the full tax benefit of the worthless stock deduction of approximately $5.2 billion, or $1.1 billion on a tax-effected basis, net of valuation allowances recorded against the state tax benefit ($21 million), eliminating associated uncertain tax position reserves. Upon emergence, FirstEnergy paid the FES Debtors $125 million to settle all reconciliations under the Intercompany Tax Allocation Agreement for 2018, 2019 and 2020 tax years, including all issues regarding nondeductible interest. In conjunction with filing the 2020 consolidated federal income tax return during the third quarter of 2021, FirstEnergy computed a final federal NOL allocation between the FES Debtors and FirstEnergy consolidated that resulted in FirstEnergy recording an increase to the consolidated NOL carryforward of approximately $289 million ($61 million tax-effected). Summarized Results of Discontinued Operations Summarized results of discontinued operations for the years ended December 31, 2022, 2021, and 2020 were as follows: For the Years Ended December 31, (In millions) 2022 2021 2020 Revenues $ — $ — $ 7 Fuel — — (6) Other operating expenses — — (6) Pleasants economic interest(1) — — 5 Other expense, net — (4) — Loss from discontinued operations, before tax — (4) — Income tax expense (benefit) — (1) — Loss from discontinued operations, net of tax — (3) — Settlement consideration and services credit — — (1) Accelerated net pension and OPEB prior service credits — — 18 Gain on disposal of FES and FENOC, before tax — — 17 Income tax benefits, including worthless stock deduction — (47) (59) Gain on disposal of FES and FENOC, net of tax — 47 76 Income from discontinued operations (2) $ — $ 44 $ 76 (1) Reflects the estimated amounts owed from FG for its economic interests in Pleasants effective January 1, 2019. As discussed above, settlement of the economic interests occurred during the first quarter of 2020. (2) Income from discontinued operations are included in Corporate/Other for segment reporting. FirstEnergy's Consolidated Statements of Cash Flows combines cash flows from discontinued operations with cash flows from continuing operations within each cash flow category. The following table summarizes the major classes of cash flow items from discontinued operations for the years ended December 31, 2022, 2021 and 2020: For the Years Ended December 31, (In millions) 2022 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Income from discontinued operations $ — $ 44 $ 76 Gain on disposal, net of tax — (47) (76) 128
RkJQdWJsaXNoZXIy NTIzOTM0