x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 54 1163725 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
4300 Wilson Boulevard Arlington, Virginia | 22203 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer x | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company ¨ | |||
(Do not check if a smaller reporting company) |
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Adjusted EPS | Adjusted Earnings Per Share, a non-GAAP measure |
Adjusted PTC | Adjusted Pretax Contribution, a non-GAAP measure of operating performance |
AES | The Parent Company and its subsidiaries and affiliates |
AFS | Available For Sale |
ANEEL | Brazilian National Electric Energy Agency |
AOCL | Accumulated Other Comprehensive Loss |
ASC | Accounting Standards Codification |
ASU | Accounting Standards Update |
BNDES | Brazilian Development Bank |
CAA | United States Clean Air Act |
CAMMESA | Wholesale Electric Market Administrator in Argentina |
CCGT | Combined Cycle Gas Turbine |
CDPQ | La Caisse de depot et placement du Quebec |
CO2 | Carbon Dioxide |
COD | Commercial Operation Date |
COFINS | Contribuição para o Financiamento da Seguridade Social |
CSAPR | Cross-State Air Pollution Rule |
CTA | Cumulative Translation Adjustment |
DP&L | The Dayton Power & Light Company |
DPL | DPL Inc. |
DPLER | DPL Energy Resources, Inc. |
EPA | United States Environmental Protection Agency |
EPC | Engineering, Procurement and Construction |
EURIBOR | Euro Interbank Offered Rate |
FASB | Financial Accounting Standards Board |
FERC | Federal Energy Regulatory Commission |
FX | Foreign Exchange |
GAAP | Generally Accepted Accounting Principles in the United States |
GHG | Greenhouse Gas |
GWh | Gigawatt Hours |
HLBV | Hypothetical Liquidation Book Value |
IPALCO | IPALCO Enterprises, Inc. |
IPL | Indianapolis Power & Light Company |
IURC | Indiana Utility Regulatory Commission |
kWh | Kilowatt Hours |
LIBOR | London Interbank Offered Rate |
LNG | Liquid Natural Gas |
MATS | Mercury and Air Toxics Standards |
MW | Megawatts |
MWh | Megawatt Hours |
NAAQS | National Ambient Air Quality Standards |
NPDES | National Pollutant Discharge Elimination System |
NEK | Natsionalna Elektricheska Kompania (state-owned electricity public supplier in Bulgaria) |
NOV | Notice of Violation |
NOX | Nitrogen Oxides |
NCI | Noncontrolling Interest |
OCI | Other Comprehensive Income |
OPGC | Odisha Power Generation Corporation |
PIS | Partially Integrated System |
PPA | Power Purchase Agreement |
PREPA | Puerto Rico Electric Power Authority |
RSU | Restricted Stock Unit |
RTO | Regional Transmission Organization |
SIC | Central Interconnected Electricity System |
SBU | Strategic Business Unit |
SEC | United States Securities and Exchange Commission |
SO2 | Sulfur Dioxide |
U.S. | United States |
USD | United States Dollar |
VAT | Value-Added Tax |
September 30, 2016 | December 31, 2015 | ||||||
(in millions, except share and per share data) | |||||||
ASSETS | |||||||
CURRENT ASSETS | |||||||
Cash and cash equivalents | $ | 1,325 | $ | 1,257 | |||
Restricted cash | 291 | 295 | |||||
Short-term investments | 596 | 469 | |||||
Accounts receivable, net of allowance for doubtful accounts of $113 and $87, respectively | 2,081 | 2,302 | |||||
Inventory | 637 | 671 | |||||
Prepaid expenses | 92 | 106 | |||||
Other current assets | 1,266 | 1,318 | |||||
Current assets of discontinued operations and held-for-sale businesses | 1,006 | 424 | |||||
Total current assets | 7,294 | 6,842 | |||||
NONCURRENT ASSETS | |||||||
Property, Plant and Equipment: | |||||||
Land | 780 | 702 | |||||
Electric generation, distribution assets and other | 29,087 | 27,751 | |||||
Accumulated depreciation | (9,884 | ) | (9,327 | ) | |||
Construction in progress | 3,300 | 3,029 | |||||
Property, plant and equipment, net | 23,283 | 22,155 | |||||
Other Assets: | |||||||
Investments in and advances to affiliates | 626 | 610 | |||||
Debt service reserves and other deposits | 644 | 555 | |||||
Goodwill | 1,157 | 1,157 | |||||
Other intangible assets, net of accumulated amortization of $94 and $93, respectively | 227 | 207 | |||||
Deferred income taxes | 503 | 410 | |||||
Service concession assets, net of accumulated amortization of $93 and $34, respectively | 1,465 | 1,543 | |||||
Other noncurrent assets | 1,909 | 2,109 | |||||
Noncurrent assets of discontinued operations and held-for-sale businesses | — | 882 | |||||
Total other assets | 6,531 | 7,473 | |||||
TOTAL ASSETS | $ | 37,108 | $ | 36,470 | |||
LIABILITIES AND EQUITY | |||||||
CURRENT LIABILITIES | |||||||
Accounts payable | $ | 1,426 | $ | 1,571 | |||
Accrued interest | 368 | 236 | |||||
Accrued and other liabilities | 2,026 | 2,286 | |||||
Non-recourse debt, includes $247 and $258, respectively, related to variable interest entities | 1,091 | 2,172 | |||||
Current liabilities of discontinued operations and held-for-sale businesses | 802 | 661 | |||||
Total current liabilities | 5,713 | 6,926 | |||||
NONCURRENT LIABILITIES | |||||||
Recourse debt | 4,944 | 4,966 | |||||
Non-recourse debt, includes $1,494 and $1,531, respectively, related to variable interest entities | 14,796 | 12,943 | |||||
Deferred income taxes | 1,042 | 1,090 | |||||
Pension and other post-retirement liabilities | 1,035 | 919 | |||||
Other noncurrent liabilities | 3,035 | 2,794 | |||||
Noncurrent liabilities of discontinued operations and held-for-sale businesses | — | 123 | |||||
Total noncurrent liabilities | 24,852 | 22,835 | |||||
Commitments and Contingencies (see Note 8) | |||||||
Redeemable stock of subsidiaries | 775 | 538 | |||||
EQUITY | |||||||
THE AES CORPORATION STOCKHOLDERS’ EQUITY | |||||||
Common stock ($0.01 par value, 1,200,000,000 shares authorized; 816,061,123 issued and 659,175,940 outstanding at September 30, 2016 and 815,846,621 issued and 666,808,790 outstanding at December 31, 2015) | 8 | 8 | |||||
Additional paid-in capital | 8,645 | 8,718 | |||||
Retained earnings (accumulated deficit) | (114 | ) | 143 | ||||
Accumulated other comprehensive loss | (3,753 | ) | (3,883 | ) | |||
Treasury stock, at cost (156,885,183 shares at September 30, 2016 and 149,037,831 at December 31, 2015) | (1,904 | ) | (1,837 | ) | |||
Total AES Corporation stockholders’ equity | 2,882 | 3,149 | |||||
NONCONTROLLING INTERESTS | 2,886 | 3,022 | |||||
Total equity | 5,768 | 6,171 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 37,108 | $ | 36,470 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(in millions, except per share amounts) | |||||||||||||||
Revenue: | |||||||||||||||
Regulated | $ | 1,785 | $ | 1,691 | $ | 4,926 | $ | 5,319 | |||||||
Non-Regulated | 1,757 | 1,831 | 5,116 | 5,617 | |||||||||||
Total revenue | 3,542 | 3,522 | 10,042 | 10,936 | |||||||||||
Cost of Sales: | |||||||||||||||
Regulated | (1,623 | ) | (1,458 | ) | (4,521 | ) | (4,447 | ) | |||||||
Non-Regulated | (1,231 | ) | (1,399 | ) | (3,750 | ) | (4,348 | ) | |||||||
Total cost of sales | (2,854 | ) | (2,857 | ) | (8,271 | ) | (8,795 | ) | |||||||
Operating margin | 688 | 665 | 1,771 | 2,141 | |||||||||||
General and administrative expenses | (40 | ) | (45 | ) | (135 | ) | (150 | ) | |||||||
Interest expense | (354 | ) | (365 | ) | (1,086 | ) | (995 | ) | |||||||
Interest income | 110 | 126 | 365 | 321 | |||||||||||
Loss on extinguishment of debt | (16 | ) | (20 | ) | (12 | ) | (161 | ) | |||||||
Other expense | (13 | ) | (18 | ) | (42 | ) | (47 | ) | |||||||
Other income | 18 | 12 | 43 | 42 | |||||||||||
Gain on disposal and sale of businesses | — | 24 | 30 | 24 | |||||||||||
Asset impairment expense | (79 | ) | (231 | ) | (473 | ) | (276 | ) | |||||||
Foreign currency transaction gains (losses) | (20 | ) | 12 | (16 | ) | 4 | |||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES AND EQUITY IN EARNINGS OF AFFILIATES | 294 | 160 | 445 | 903 | |||||||||||
Income tax expense | (75 | ) | (43 | ) | (165 | ) | (266 | ) | |||||||
Net equity in earnings of affiliates | 11 | 81 | 25 | 96 | |||||||||||
INCOME FROM CONTINUING OPERATIONS | 230 | 198 | 305 | 733 | |||||||||||
(Loss) income from operations of discontinued businesses, net of income tax benefit (expense) of $0, $(1), $4 and $6, respectively | (1 | ) | 5 | (7 | ) | (12 | ) | ||||||||
Net loss from disposal and impairments of discontinued businesses, net of income tax benefit of $401 for the nine months ended September 30, 2016 | — | — | (382 | ) | — | ||||||||||
NET INCOME (LOSS) | 229 | 203 | (84 | ) | 721 | ||||||||||
Less: Net income attributable to noncontrolling interests | (57 | ) | (23 | ) | (105 | ) | (330 | ) | |||||||
Less: Net loss attributable to redeemable stocks of subsidiaries | 3 | — | 8 | — | |||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION | $ | 175 | $ | 180 | $ | (181 | ) | $ | 391 | ||||||
AMOUNTS ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS: | |||||||||||||||
Income from continuing operations, net of tax | $ | 176 | $ | 175 | $ | 208 | $ | 403 | |||||||
(Loss) income from discontinued operations, net of tax | (1 | ) | 5 | (389 | ) | (12 | ) | ||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION | $ | 175 | $ | 180 | $ | (181 | ) | $ | 391 | ||||||
BASIC EARNINGS PER SHARE: | |||||||||||||||
Income from continuing operations attributable to The AES Corporation common stockholders, net of tax | $ | 0.26 | $ | 0.26 | $ | 0.31 | $ | 0.58 | |||||||
Income (loss) from discontinued operations attributable to The AES Corporation common stockholders, net of tax | — | 0.01 | (0.59 | ) | (0.01 | ) | |||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS | $ | 0.26 | $ | 0.27 | $ | (0.28 | ) | $ | 0.57 | ||||||
DILUTED EARNINGS PER SHARE: | |||||||||||||||
Income from continuing operations attributable to The AES Corporation common stockholders, net of tax | $ | 0.26 | $ | 0.26 | $ | 0.31 | $ | 0.58 | |||||||
Loss from discontinued operations attributable to The AES Corporation common stockholders, net of tax | — | — | (0.59 | ) | (0.02 | ) | |||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS | $ | 0.26 | $ | 0.26 | $ | (0.28 | ) | $ | 0.56 | ||||||
DILUTED SHARES OUTSTANDING | 662 | 682 | 662 | 694 | |||||||||||
DIVIDENDS DECLARED PER COMMON SHARE | $ | 0.11 | $ | 0.10 | $ | 0.22 | $ | 0.20 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(in millions) | |||||||||||||||
NET INCOME (LOSS) | $ | 229 | $ | 203 | $ | (84 | ) | $ | 721 | ||||||
Foreign currency translation activity: | |||||||||||||||
Foreign currency translation adjustments, net of income tax benefit (expense) of $(1), $1, $0 and $1, respectively | (16 | ) | (513 | ) | 232 | (857 | ) | ||||||||
Total foreign currency translation adjustments | (16 | ) | (513 | ) | 232 | (857 | ) | ||||||||
Derivative activity: | |||||||||||||||
Change in derivative fair value, net of income tax benefit (expense) of $(7), $22, $39 and $22, respectively | 19 | (70 | ) | (138 | ) | (73 | ) | ||||||||
Reclassification to earnings, net of income tax expense of $4, $0, $5 and $6, respectively | 21 | 14 | 23 | 46 | |||||||||||
Total change in fair value of derivatives | 40 | (56 | ) | (115 | ) | (27 | ) | ||||||||
Pension activity: | |||||||||||||||
Reclassification to earnings due to amortization of net actuarial loss, net of income tax expense of $2, $3, $4 and $8, respectively | 3 | 4 | 10 | 13 | |||||||||||
Total pension adjustments | 3 | 4 | 10 | 13 | |||||||||||
OTHER COMPREHENSIVE INCOME (LOSS) | 27 | (565 | ) | 127 | (871 | ) | |||||||||
COMPREHENSIVE INCOME (LOSS) | 256 | (362 | ) | 43 | (150 | ) | |||||||||
Less: Comprehensive (income) loss attributable to noncontrolling interests | (66 | ) | 229 | (94 | ) | 56 | |||||||||
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION | $ | 190 | $ | (133 | ) | $ | (51 | ) | $ | (94 | ) |
Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
(in millions) | |||||||
OPERATING ACTIVITIES: | |||||||
Net income (loss) | $ | (84 | ) | $ | 721 | ||
Adjustments to net income: | |||||||
Depreciation and amortization | 877 | 880 | |||||
Gain on sales and disposals of businesses | (30 | ) | (24 | ) | |||
Impairment expenses | 475 | 276 | |||||
Deferred income taxes | (475 | ) | (8 | ) | |||
Provisions for (reversals of) contingencies | 28 | (91 | ) | ||||
Loss on extinguishment of debt | 12 | 165 | |||||
Loss on sales of assets | 26 | 23 | |||||
Impairments of discontinued operations and held-for-sale businesses | 783 | — | |||||
Other | 106 | 50 | |||||
Changes in operating assets and liabilities | |||||||
(Increase) decrease in accounts receivable | 335 | (314 | ) | ||||
(Increase) decrease in inventory | 36 | (11 | ) | ||||
(Increase) decrease in prepaid expenses and other current assets | 670 | 377 | |||||
(Increase) decrease in other assets | (237 | ) | (1,103 | ) | |||
Increase (decrease) in accounts payable and other current liabilities | (567 | ) | 238 | ||||
Increase (decrease) in income tax payables, net and other tax payables | (270 | ) | (126 | ) | |||
Increase (decrease) in other liabilities | 497 | 452 | |||||
Net cash provided by operating activities | 2,182 | 1,505 | |||||
INVESTING ACTIVITIES: | |||||||
Capital expenditures | (1,770 | ) | (1,687 | ) | |||
Acquisitions, net of cash acquired | (61 | ) | (17 | ) | |||
Proceeds from the sale of businesses, net of cash sold, and equity method investments | 157 | 96 | |||||
Sale of short-term investments | 3,747 | 3,683 | |||||
Purchase of short-term investments | (3,797 | ) | (3,605 | ) | |||
Increase in restricted cash, debt service reserves and other assets | (123 | ) | (60 | ) | |||
Other investing | (22 | ) | (49 | ) | |||
Net cash used in investing activities | (1,869 | ) | (1,639 | ) | |||
FINANCING ACTIVITIES: | |||||||
Borrowings under the revolving credit facilities | 1,079 | 677 | |||||
Repayments under the revolving credit facilities | (856 | ) | (644 | ) | |||
Issuance of recourse debt | 500 | 575 | |||||
Repayments of recourse debt | (808 | ) | (915 | ) | |||
Issuance of non-recourse debt | 2,118 | 3,281 | |||||
Repayments of non-recourse debt | (1,720 | ) | (2,468 | ) | |||
Payments for financing fees | (86 | ) | (65 | ) | |||
Distributions to noncontrolling interests | (356 | ) | (182 | ) | |||
Contributions from noncontrolling interests and redeemable security holders | 154 | 117 | |||||
Proceeds from the sale of redeemable stock of subsidiaries | 134 | 461 | |||||
Dividends paid on AES common stock | (218 | ) | (209 | ) | |||
Payments for financed capital expenditures | (108 | ) | (110 | ) | |||
Purchase of treasury stock | (79 | ) | (408 | ) | |||
Other financing | (12 | ) | (24 | ) | |||
Net cash (used in) provided by financing activities | (258 | ) | 86 | ||||
Effect of exchange rate changes on cash | 7 | (40 | ) | ||||
Decrease in cash of discontinued operations and held-for-sale businesses | 6 | 7 | |||||
Total increase (decrease) in cash and cash equivalents | 68 | (81 | ) | ||||
Cash and cash equivalents, beginning | 1,257 | 1,517 | |||||
Cash and cash equivalents, ending | $ | 1,325 | $ | 1,436 | |||
SUPPLEMENTAL DISCLOSURES: | |||||||
Cash payments for interest, net of amounts capitalized | $ | 837 | $ | 875 | |||
Cash payments for income taxes, net of refunds | $ | 425 | $ | 319 | |||
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: | |||||||
Assets acquired through capital lease and other liabilities | $ | 5 | $ | 12 |
New Accounting Standards Adopted | |||
ASU Number and Name | Description | Date of Adoption | Effect on the financial statements upon adoption |
2015-03, 2015-15, Interest — Imputation of Interest (Subtopic 835-30) | These standards simplify the presentation of debt issuance costs by requiring that debt issuance costs related to a tranche of debt be presented on the balance sheet as a direct deduction from the carrying amount of that debt, consistent with debt discounts. Debt issuance costs related to a line-of-credit can still be presented as an asset and subsequently amortized over the term of the line-of-credit, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The recognition and measurement guidance for debt issuance costs are not affected by the standard. Transition method: retrospective. | January 1, 2016 | Deferred financing costs of $24 million previously classified within other current assets and $357 million previously classified within other noncurrent assets were reclassified to reduce the related debt liabilities as of December 31, 2015. |
2015-02, Consolidation — Amendments to the Consolidation Analysis (Topic 810) | The standard makes targeted amendments to the current consolidation guidance and ends the deferral granted to investment companies from applying the VIE guidance. The standard amends the evaluation of whether (1) fees paid to a decision-maker or service providers represent a variable interest, (2) a limited partnership or similar entity has the characteristics of a VIE and (3) a reporting entity is the primary beneficiary of a VIE. Transition method: retrospective. | January 1, 2016 | None, other than that some entities previously consolidated under the voting model are now consolidated under the VIE model. |
New Accounting Standards Issued But Not Yet Effective | |||
ASU Number and Name | Description | Date of Adoption | Effect on the financial statements upon adoption |
2016-17, Consolidation (Topic 810): Interest Held through Related Parties That Are under Common Control | This standard amends the evaluation of whether a reporting entity is the primary beneficiary of a VIE by amending how a reporting entity, that is a single decision maker of a VIE, treats indirect interests in that entity held through related parties that are under common control. Transition method: retrospectively. | January 1, 2017. Early adoption is permitted. | The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements. |
2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory | This standard requires that an entity recognizes the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Transition method: modified retrospective method. | January 1, 2018. Early adoption is permitted. | The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements. |
2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) | This standard provides specific guidance on how certain cash transactions are presented and classified in the statement of cash flows. Transition method: retrospective method. | January 1, 2018. Early adoption is permitted. | The Company is currently evaluating the impact of adopting the standard, but does not anticipate a material impact on its consolidated financial statements. |
2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments | The standard updates the impairment model for financial assets measured at amortized cost to an expected loss model rather than an incurred loss model. It also allows for the presentation of credit losses on available-for-sale debt securities as an allowance rather than a write down. Transition method: various. | January 1, 2020. Early adoption is permitted only as of January 1, 2019. | The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements. |
2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting | The standard simplifies the following aspects of accounting for share-based payments awards: accounting for income taxes, classification of excess tax benefits on the statement of cash flows, forfeitures, statutory tax withholding requirements, classification of awards as either equity or liabilities and classification of employee taxes paid on statement of cash flows when an employer withholds shares for tax-withholding purposes. Transition method: various. | January 1, 2017. Early adoption is permitted. | The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements. |
2016-02, Leases (Topic 842) | The standard creates Topic 842, Leases, which supersedes Topic 840, Leases. It introduces a lessee model that brings substantially all leases onto the balance sheet while retaining most of the principles of the existing lessor model in U.S. GAAP and aligning many of those principles with ASC 606, Revenue from Contracts with Customers. Transition method: modified retrospective approach with certain practical expedients. | January 1, 2019. Early adoption is permitted. | The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements. |
2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory | The standard replaces the current lower of cost or market test with a lower of cost or net realizable value test. Transition method: prospectively. | January 1, 2017. Early adoption is permitted. | The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements. |
2014-09, 2015-14, 2016-08, 2016-10, 2016-12, Revenue from Contracts with Customers (Topic 606), | The Revenue from Contracts with Customers standard provides a single and comprehensive revenue recognition model for all contracts with customers to improve comparability. The standard contains principles to determine the measurement and timing of revenue recognition. The standard requires an entity to recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The amendments to the standard provide further clarification on contract revenue recognition specifically related to the implementation of the principal versus agent evaluation, the identification of performance obligations, clarification on accounting for licenses of intellectual property, and allows for the election to account for shipping and handling activities performed after control of a good has been transferred to the customer as a fulfillment cost. Transition method: a full retrospective or modified retrospective approach. | January 1, 2018. Earlier application is permitted only as of January 1, 2017. | The Company will adopt the standard on January 1, 2018; and it is currently evaluating the impact of its adoption on the consolidated financial statements. |
September 30, 2016 | December 31, 2015 | ||||||
Fuel and other raw materials | $ | 294 | $ | 343 | |||
Spare parts and supplies | 343 | 328 | |||||
Total | $ | 637 | $ | 671 |
September 30, 2016 | December 31, 2015 | ||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||
AVAILABLE FOR SALE: | |||||||||||||||||||||||||||||||
Debt securities: | |||||||||||||||||||||||||||||||
Unsecured debentures | $ | — | $ | 372 | $ | — | $ | 372 | $ | — | $ | 318 | $ | — | $ | 318 | |||||||||||||||
Certificates of deposit | — | 168 | — | 168 | — | 129 | — | 129 | |||||||||||||||||||||||
Government debt securities | — | 9 | — | 9 | — | 28 | — | 28 | |||||||||||||||||||||||
Subtotal | — | 549 | — | 549 | — | 475 | — | 475 | |||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||||
Mutual funds | — | 40 | — | 40 | — | 15 | — | 15 | |||||||||||||||||||||||
Subtotal | — | 40 | — | 40 | — | 15 | — | 15 | |||||||||||||||||||||||
Total available for sale | — | 589 | — | 589 | — | 490 | — | 490 | |||||||||||||||||||||||
TRADING: | |||||||||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||||
Mutual funds | 16 | — | — | 16 | 15 | — | — | 15 | |||||||||||||||||||||||
Total trading | 16 | — | — | 16 | 15 | — | — | 15 | |||||||||||||||||||||||
DERIVATIVES: | |||||||||||||||||||||||||||||||
Cross-currency derivatives | — | 3 | — | 3 | — | — | — | — | |||||||||||||||||||||||
Foreign currency derivatives | — | 42 | 274 | 316 | — | 35 | 292 | 327 | |||||||||||||||||||||||
Commodity derivatives | — | 52 | 10 | 62 | — | 41 | 7 | 48 | |||||||||||||||||||||||
Total derivatives — assets | — | 97 | 284 | 381 | — | 76 | 299 | 375 | |||||||||||||||||||||||
TOTAL ASSETS | $ | 16 | $ | 686 | $ | 284 | $ | 986 | $ | 15 | $ | 566 | $ | 299 | $ | 880 | |||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||
DERIVATIVES: | |||||||||||||||||||||||||||||||
Interest rate derivatives | $ | — | $ | 194 | $ | 307 | $ | 501 | $ | — | $ | 54 | $ | 304 | $ | 358 | |||||||||||||||
Cross-currency derivatives | — | 26 | — | 26 | — | 43 | — | 43 | |||||||||||||||||||||||
Foreign currency derivatives | — | 82 | — | 82 | — | 41 | 15 | 56 | |||||||||||||||||||||||
Commodity derivatives | — | 37 | 1 | 38 | — | 29 | 4 | 33 | |||||||||||||||||||||||
Total derivatives — liabilities | — | 339 | 308 | 647 | — | 167 | 323 | 490 | |||||||||||||||||||||||
TOTAL LIABILITIES | $ | — | $ | 339 | $ | 308 | $ | 647 | $ | — | $ | 167 | $ | 323 | $ | 490 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Gross proceeds from sale of AFS securities | $ | 812 | $ | 1,105 | $ | 3,216 | $ | 3,285 |
Three Months Ended September 30, 2016 | Interest Rate | Foreign Currency | Commodity | Total | |||||||||||
Balance at the beginning of the period | $ | (421 | ) | $ | 271 | $ | 11 | $ | (139 | ) | |||||
Total realized and unrealized gains (losses): | |||||||||||||||
Included in earnings | (1 | ) | 12 | 1 | 12 | ||||||||||
Included in other comprehensive income — derivative activity | 6 | — | — | 6 | |||||||||||
Included in other comprehensive income — foreign currency translation activity | — | (5 | ) | — | (5 | ) | |||||||||
Settlements | 17 | (4 | ) | (3 | ) | 10 | |||||||||
Transfers of liabilities into Level 3 | (2 | ) | — | — | (2 | ) | |||||||||
Transfers of liabilities out of Level 3 | 94 | — | — | 94 | |||||||||||
Balance at the end of the period | $ | (307 | ) | $ | 274 | $ | 9 | $ | (24 | ) | |||||
Total gains for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period | $ | — | $ | 8 | $ | 1 | $ | 9 |
Three Months Ended September 30, 2015 | Interest Rate | Foreign Currency | Commodity | Total | |||||||||||
Balance at the beginning of the period | $ | (191 | ) | $ | 222 | $ | 17 | $ | 48 | ||||||
Total realized and unrealized gains (losses): | |||||||||||||||
Included in earnings | (1 | ) | 19 | — | 18 | ||||||||||
Included in other comprehensive income — derivative activity | (33 | ) | — | — | (33 | ) | |||||||||
Included in other comprehensive income — foreign currency translation activity | — | (8 | ) | — | (8 | ) | |||||||||
Included in regulatory (assets) liabilities | — | — | (20 | ) | (20 | ) | |||||||||
Settlements | 7 | (2 | ) | 12 | 17 | ||||||||||
Transfers of liabilities into Level 3 | (65 | ) | — | — | (65 | ) | |||||||||
Balance at the end of the period | $ | (283 | ) | $ | 231 | $ | 9 | $ | (43 | ) | |||||
Total gains for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period | $ | — | $ | 18 | $ | — | $ | 18 |
Nine Months Ended September 30, 2016 | Interest Rate | Foreign Currency | Commodity | Total | |||||||||||
Balance at the beginning of the period | $ | (304 | ) | $ | 277 | $ | 3 | $ | (24 | ) | |||||
Total realized and unrealized gains (losses): | |||||||||||||||
Included in earnings | — | 30 | 3 | 33 | |||||||||||
Included in other comprehensive income — derivative activity | (172 | ) | 6 | — | (166 | ) | |||||||||
Included in other comprehensive income — foreign currency translation activity | (3 | ) | (43 | ) | — | (46 | ) | ||||||||
Included in regulatory (assets) liabilities | — | — | 11 | 11 | |||||||||||
Settlements | 56 | (8 | ) | (8 | ) | 40 | |||||||||
Transfers of liabilities into Level 3 | (2 | ) | — | — | (2 | ) | |||||||||
Transfers of liabilities out of Level 3 | 118 | 12 | — | 130 | |||||||||||
Balance at the end of the period | $ | (307 | ) | $ | 274 | $ | 9 | $ | (24 | ) | |||||
Total gains for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period | $ | 5 | $ | 25 | $ | 3 | $ | 33 |
Nine Months Ended September 30, 2015 | Interest Rate | Foreign Currency | Commodity | Total | |||||||||||
Balance at the beginning of the period | $ | (210 | ) | $ | 209 | $ | 6 | $ | 5 | ||||||
Total realized and unrealized gains (losses): | |||||||||||||||
Included in earnings | (1 | ) | 49 | 2 | 50 | ||||||||||
Included in other comprehensive income — derivative activity | (30 | ) | — | — | (30 | ) | |||||||||
Included in other comprehensive income — foreign currency translation activity | 7 | (21 | ) | — | (14 | ) | |||||||||
Included in regulatory (assets) liabilities | — | — | (12 | ) | (12 | ) | |||||||||
Settlements | 16 | (6 | ) | 13 | 23 | ||||||||||
Transfers of liabilities into Level 3 | (65 | ) | — | — | (65 | ) | |||||||||
Balance at the end of the period | $ | (283 | ) | $ | 231 | $ | 9 | $ | (43 | ) | |||||
Total gains for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period | $ | — | $ | 44 | $ | 2 | $ | 46 |
Type of Derivative | Fair Value | Unobservable Input | Amount or Range (Weighted Avg) | |||||
Interest rate | $ | (307 | ) | Subsidiaries’ credit spreads | 2.4% to 31.5% (4.3%) | |||
Foreign currency: | ||||||||
Argentine Peso | 274 | Argentine Peso to USD currency exchange rate after one year | 17.5 to 32.7 (25.4) | |||||
Other | 9 | |||||||
Total | $ | (24 | ) |
Nine Months Ended September 30, 2016 | Measurement Date | Carrying Amount (1) | Fair Value | Pretax Loss | |||||||||||||||||
Assets | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
Long-lived assets held and used: (2) | |||||||||||||||||||||
Buffalo Gap I | 08/31/2016 | $ | 113 | $ | — | $ | — | $ | 35 | $ | 78 | ||||||||||
DPL | 06/30/2016 | 324 | — | — | 89 | 235 | |||||||||||||||
Buffalo Gap II | 03/31/2016 | 251 | — | — | 92 | 159 | |||||||||||||||
Discontinued operations: (3) | |||||||||||||||||||||
Sul | 06/30/2016 | 1,581 | — | 470 | — | 783 |
Nine Months Ended September 30, 2015 | Measurement Date | Carrying Amount (1) | Fair Value | Pretax Loss | |||||||||||||||||
Assets | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
Long-lived assets held and used: (2) | |||||||||||||||||||||
Buffalo Gap III | 09/30/2015 | $ | 234 | $ | — | $ | — | $ | 116 | $ | 118 | ||||||||||
Kilroot | 08/28/2015 | 191 | — | — | 78 | 113 | |||||||||||||||
UK Wind | 06/30/2015 | 38 | — | 1 | — | 37 | |||||||||||||||
Other | Various | 29 | — | 21 | — | 8 | |||||||||||||||
Equity method investments: | |||||||||||||||||||||
Solar Spain | 02/09/2015 | 29 | — | — | 29 | — |
(1) | Represents the carrying values at the dates of measurement, before fair value adjustment. |
(2) | See Note 14—Asset Impairment Expense for further information. |
(3) | Per the Company’s policy, pre-tax loss is limited to the impairment of long-lived assets. Any additional loss will be recognized on completion of the sale. See Note 16—Discontinued Operations for further information. |
Fair Value | Valuation Technique | Unobservable Input | Range (Weighted Average) | |||||||
Long-lived assets held and used: | ||||||||||
Buffalo Gap I | $ | 35 | Discounted cash flow | Annual revenue growth | -20% to 9% (-14%) | |||||
Annual pretax operating margin | -40% to 42% (29%) | |||||||||
Weighted-average cost of capital | 9 | % | ||||||||
DPL | 89 | Discounted cash flow | Annual revenue growth | -11% to 13% (1%) | ||||||
Annual pretax operating margin | -50% to 60% (5%) | |||||||||
Weighted-average cost of capital | 7% to 12% | |||||||||
Buffalo Gap II | 92 | Discounted cash flow | Annual revenue growth | -17% to 21% (20%) | ||||||
Annual pretax operating margin | -166% to 48% (18%) | |||||||||
Weighted-average cost of capital | 9 | % |
September 30, 2016 | ||||||||||||||||||||
Carrying Amount | Fair Value | |||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Assets: | Accounts receivable — noncurrent (1) | $ | 222 | $ | 312 | $ | — | $ | — | $ | 312 | |||||||||
Liabilities: | Non-recourse debt | 15,887 | 16,411 | — | 14,381 | 2,030 | ||||||||||||||
Recourse debt | 4,944 | 5,298 | — | 5,298 | — |
December 31, 2015 | ||||||||||||||||||||
Carrying Amount | Fair Value | |||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Assets: | Accounts receivable — noncurrent (1) | $ | 238 | $ | 310 | $ | — | $ | 20 | $ | 290 | |||||||||
Liabilities: | Non-recourse debt | 15,115 | 15,592 | — | 13,325 | 2,267 | ||||||||||||||
Recourse debt | 4,966 | 4,696 | — | 4,696 | — |
(1) | These amounts principally relate to amounts due from CAMMESA, and are included in Other noncurrent assets in the accompanying Condensed Consolidated Balance Sheets. The fair value and carrying amount of these receivables exclude VAT of $23 million and $27 million as of September 30, 2016 and December 31, 2015, respectively. |
Derivatives | Current Notional Translated to USD | Latest Maturity | ||||
Interest Rate (LIBOR and EURIBOR) | $ | 3,324 | 2033 | |||
Cross-Currency Swaps (Chilean Unidad de Fomento and Chilean Peso) | 379 | 2029 | ||||
Foreign Currency: | ||||||
Argentine Peso | 158 | 2026 | ||||
Chilean Unidad de Fomento | 196 | 2019 | ||||
Others, primarily with weighted average remaining maturities of a year or less | 1,227 | 2019 |
Fair Value | September 30, 2016 | December 31, 2015 | |||||||||||||||||||||
Assets | Designated | Not Designated | Total | Designated | Not Designated | Total | |||||||||||||||||
Cross-currency derivatives | $ | 3 | $ | — | $ | 3 | $ | — | $ | — | $ | — | |||||||||||
Foreign currency derivatives | 11 | 305 | 316 | 8 | 319 | 327 | |||||||||||||||||
Commodity derivatives | 28 | 34 | 62 | 30 | 18 | 48 | |||||||||||||||||
Total assets | $ | 42 | $ | 339 | $ | 381 | $ | 38 | $ | 337 | $ | 375 | |||||||||||
Liabilities | |||||||||||||||||||||||
Interest rate derivatives | $ | 495 | $ | 6 | $ | 501 | $ | 358 | $ | — | $ | 358 | |||||||||||
Cross-currency derivatives | 26 | — | 26 | 43 | — | 43 | |||||||||||||||||
Foreign currency derivatives | 35 | 47 | 82 | 35 | 21 | 56 | |||||||||||||||||
Commodity derivatives | 20 | 18 | 38 | 12 | 21 | 33 | |||||||||||||||||
Total liabilities | $ | 576 | $ | 71 | $ | 647 | $ | 448 | $ | 42 | $ | 490 |
September 30, 2016 | December 31, 2015 | ||||||||||||||
Fair Value | Assets | Liabilities | Assets | Liabilities | |||||||||||
Current | $ | 110 | $ | 158 | $ | 86 | $ | 144 | |||||||
Noncurrent | 271 | 489 | 289 | 346 | |||||||||||
Total | $ | 381 | $ | 647 | $ | 375 | $ | 490 | |||||||
Credit Risk-Related Contingent Features (1) | September 30, 2016 | December 31, 2015 | |||||||||||||
Present value of liabilities subject to collateralization | $ | 47 | $ | 58 | |||||||||||
Cash collateral held by third parties or in escrow | 21 | 38 |
(1) | Based on the credit rating of certain subsidiaries |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Effective portion of cash flow hedges: | |||||||||||||||
Gain (Losses) recognized in AOCL | |||||||||||||||
Interest rate derivatives | $ | 7 | $ | (110 | ) | $ | (213 | ) | $ | (130 | ) | ||||
Cross-currency derivatives | 15 | 3 | 12 | 4 | |||||||||||
Foreign currency derivatives | (6 | ) | 5 | (11 | ) | 6 | |||||||||
Commodity derivatives | 10 | 10 | 35 | 25 | |||||||||||
Total | $ | 26 | $ | (92 | ) | $ | (177 | ) | $ | (95 | ) | ||||
Gain (Losses) reclassified from AOCL into earnings | |||||||||||||||
Interest rate derivatives | $ | (26 | ) | $ | (33 | ) | $ | (81 | ) | $ | (88 | ) | |||
Cross-currency derivatives | 4 | (1 | ) | 14 | (3 | ) | |||||||||
Foreign currency derivatives | (7 | ) | 12 | (3 | ) | 20 | |||||||||
Commodity derivatives | 4 | 8 | 42 | 19 | |||||||||||
Total | $ | (25 | ) | $ | (14 | ) | $ | (28 | ) | $ | (52 | ) | |||
Gain (Losses) recognized in earnings related to | |||||||||||||||
Ineffective portion of cash flow hedges | $ | (2 | ) | $ | (2 | ) | $ | — | $ | (6 | ) | ||||
Not designated as hedging instruments: | |||||||||||||||
Foreign currency derivatives | $ | (6 | ) | $ | 23 | $ | 10 | $ | 62 | ||||||
Commodity derivatives and Other | 7 | (10 | ) | (11 | ) | (18 | ) | ||||||||
Total | $ | 1 | $ | 13 | $ | (1 | ) | $ | 44 | ||||||
Twelve Months Ended September 30, 2017 | |||||||||||||||
AOCL expected to decrease pre-tax income from continuing operations (1) | $ | 133 |
(1) | Primarily due to interest rate derivatives |
September 30, 2016 |