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 |
AFUDC | Allowance for Funds Used During Construction |
ANEEL | Brazilian National Electric Energy Agency |
AOCL | Accumulated Other Comprehensive Loss |
ASC | Accounting Standards Codification |
ASU | Accounting Standards Update |
BNDES | Brazilian Development Bank |
CA | Commercial Availability |
CAA | United States Clean Air Act |
CAMMESA | Wholesale Electric Market Administrator in Argentina |
CCR | Coal Combustion Residuals |
CDPQ | La Caisse de depot et placement du Quebec |
CEEE | Companhia Estadual de Energia |
CESCO | Central Electricity Supply Company of Orissa Ltd. |
CFE | Federal Commission of Electricity |
CO2 | Carbon Dioxide |
COSO | Committee of Sponsoring Organizations of the Treadway Commission |
CPCN | Certificate of Public Convenience and Necessity |
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 |
ERC | Energy Regulatory Commission |
EURIBOR | Euro Interbank Offered Rate |
FASB | Financial Accounting Standards Board |
FCA | Federal Court of Appeals |
FX | Foreign Exchange |
GAAP | Generally Accepted Accounting Principles in the United States |
GHG | Greenhouse Gas |
GSA | Gas Supply Agreement |
GWh | Gigawatt Hours |
HTA | Heads of Terms Agreement |
ICC | International Chamber of Commerce |
IPALCO | IPALCO Enterprises, Inc. |
IPL | Indianapolis Power & Light Company |
IURC | Indiana Utility Regulatory Commission |
KPI | Key Performance Indicator |
kWh | Kilowatt Hours |
LIBOR | London Interbank Offered Rate |
LNG | Liquefied Natural Gas |
MATS | Mercury and Air Toxics Standards |
MRE | Energy Reallocation Mechanism |
MW | Megawatts |
MWh | Megawatt Hours |
NEK | Natsionalna Elektricheska Kompania (state-owned electricity public supplier in Bulgaria) |
NOV | Notice of Violation |
NOX | Nitrogen Dioxide |
NPDES | National Pollutant Discharge Elimination System |
OCI | Other Comprehensive Income |
O&M | Operations and Maintenance |
OPGC | Odisha Power Generation Corporation |
Parent Company | The AES Corporation |
PIS | Partially Integrated System |
PM | Particulate Matter |
PPA | Power Purchase Agreement |
PREPA | Puerto Rico Electric Power Authority |
RSU | Restricted Stock Unit |
SAIDI | System Average Interruption Duration Index |
SAIFI | System Average Interruption Frequency Index |
SBU | Strategic Business Unit |
SEC | United States Securities and Exchange Commission |
SO2 | Sulfur Dioxide |
SSR | Service Stability Rider |
TA | Transportation Agreement |
VAT | Value-added tax |
VIE | Variable Interest Entity |
June 30, 2015 | December 31, 2014 | ||||||
(in millions, except share and per share data) | |||||||
ASSETS | |||||||
CURRENT ASSETS | |||||||
Cash and cash equivalents | $ | 1,022 | $ | 1,539 | |||
Restricted cash | 308 | 283 | |||||
Short-term investments | 439 | 709 | |||||
Accounts receivable, net of allowance for doubtful accounts of $94 and $96, respectively | 2,877 | 2,709 | |||||
Inventory | 734 | 702 | |||||
Deferred income taxes | 213 | 275 | |||||
Prepaid expenses | 115 | 175 | |||||
Other current assets | 1,799 | 1,434 | |||||
Current assets of held-for-sale businesses | 8 | — | |||||
Total current assets | 7,515 | 7,826 | |||||
NONCURRENT ASSETS | |||||||
Property, Plant and Equipment: | |||||||
Land | 801 | 870 | |||||
Electric generation, distribution assets and other | 30,136 | 30,459 | |||||
Accumulated depreciation | (9,996 | ) | (9,962 | ) | |||
Construction in progress | 2,499 | 3,784 | |||||
Property, plant and equipment, net | 23,440 | 25,151 | |||||
Other Assets: | |||||||
Investments in and advances to affiliates | 562 | 537 | |||||
Debt service reserves and other deposits | 403 | 411 | |||||
Goodwill | 1,473 | 1,458 | |||||
Other intangible assets, net of accumulated amortization of $130 and $158, respectively | 241 | 281 | |||||
Deferred income taxes | 571 | 662 | |||||
Service concession assets | 1,538 | — | |||||
Other noncurrent assets | 2,691 | 2,640 | |||||
Noncurrent assets of held-for-sale businesses | 150 | — | |||||
Total other assets | 7,629 | 5,989 | |||||
TOTAL ASSETS | $ | 38,584 | $ | 38,966 | |||
LIABILITIES AND EQUITY | |||||||
CURRENT LIABILITIES | |||||||
Accounts payable | $ | 1,994 | $ | 2,278 | |||
Accrued interest | 244 | 260 | |||||
Accrued and other liabilities | 2,317 | 2,326 | |||||
Non-recourse debt, including $220 and $240, respectively, related to variable interest entities | 1,999 | 1,982 | |||||
Recourse debt | — | 151 | |||||
Current liabilities of held-for-sale businesses | 9 | — | |||||
Total current liabilities | 6,563 | 6,997 | |||||
NONCURRENT LIABILITIES | |||||||
Non-recourse debt, including $1,058 and $1,030, respectively, related to variable interest entities | 13,750 | 13,618 | |||||
Recourse debt | 5,014 | 5,107 | |||||
Deferred income taxes | 1,281 | 1,277 | |||||
Pension and other post-retirement liabilities | 1,183 | 1,342 | |||||
Other noncurrent liabilities | 3,110 | 3,222 | |||||
Noncurrent liabilities of held-for-sale businesses | 61 | — | |||||
Total noncurrent liabilities | 24,399 | 24,566 | |||||
Contingencies and Commitments (see Note 9) | |||||||
Redeemable stock of subsidiaries | 538 | 78 | |||||
EQUITY | |||||||
THE AES CORPORATION STOCKHOLDERS’ EQUITY | |||||||
Common stock ($0.01 par value, 1,200,000,000 shares authorized; 815,558,389 issued and 682,607,128 outstanding at June 30, 2015 and 814,539,146 issued and 703,851,297 outstanding at December 31, 2014) | 8 | 8 | |||||
Additional paid-in capital | 8,705 | 8,409 | |||||
Retained earnings | 258 | 512 | |||||
Accumulated other comprehensive loss | (3,445 | ) | (3,286 | ) | |||
Treasury stock, at cost (132,951,261 shares at June 30, 2015 and 110,687,849 shares at December 31, 2014) | (1,662 | ) | (1,371 | ) | |||
Total AES Corporation stockholders’ equity | 3,864 | 4,272 | |||||
NONCONTROLLING INTERESTS | 3,220 | 3,053 | |||||
Total equity | 7,084 | 7,325 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 38,584 | $ | 38,966 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(in millions, except per share amounts) | |||||||||||||||
Revenue: | |||||||||||||||
Regulated | $ | 2,008 | $ | 2,116 | $ | 4,088 | $ | 4,258 | |||||||
Non-Regulated | 1,850 | 2,195 | 3,754 | 4,315 | |||||||||||
Total revenue | 3,858 | 4,311 | 7,842 | 8,573 | |||||||||||
Cost of Sales: | |||||||||||||||
Regulated | (1,634 | ) | (1,844 | ) | (3,441 | ) | (3,776 | ) | |||||||
Non-Regulated | (1,470 | ) | (1,648 | ) | (2,926 | ) | (3,184 | ) | |||||||
Total cost of sales | (3,104 | ) | (3,492 | ) | (6,367 | ) | (6,960 | ) | |||||||
Operating margin | 754 | 819 | 1,475 | 1,613 | |||||||||||
General and administrative expenses | (50 | ) | (52 | ) | (105 | ) | (103 | ) | |||||||
Interest expense | (310 | ) | (323 | ) | (673 | ) | (696 | ) | |||||||
Interest income | 133 | 73 | 223 | 136 | |||||||||||
Loss on extinguishment of debt | (122 | ) | (15 | ) | (145 | ) | (149 | ) | |||||||
Other expense | (14 | ) | (17 | ) | (34 | ) | (25 | ) | |||||||
Other income | 15 | 33 | 31 | 45 | |||||||||||
Goodwill impairment expense | — | — | — | (154 | ) | ||||||||||
Asset impairment expense | (37 | ) | (63 | ) | (45 | ) | (75 | ) | |||||||
Foreign currency transaction gains (losses) | 15 | 7 | (8 | ) | (12 | ) | |||||||||
Other non-operating expense | — | (44 | ) | — | (44 | ) | |||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES AND EQUITY IN EARNINGS OF AFFILIATES | 384 | 418 | 719 | 536 | |||||||||||
Income tax expense | (120 | ) | (157 | ) | (216 | ) | (211 | ) | |||||||
Net equity in earnings of affiliates | — | 20 | 15 | 45 | |||||||||||
INCOME FROM CONTINUING OPERATIONS | 264 | 281 | 518 | 370 | |||||||||||
Income from operations of discontinued businesses, net of income tax expense of $0, $8, $0 and $22, respectively | — | 7 | — | 27 | |||||||||||
Net loss from disposal and impairments of discontinued businesses, net of income tax expense (benefit) of $0, $5, $0 and $4, respectively | — | (13 | ) | — | (56 | ) | |||||||||
NET INCOME | 264 | 275 | 518 | 341 | |||||||||||
Noncontrolling interests: | |||||||||||||||
Less: (Income) from continuing operations attributable to noncontrolling interests | (195 | ) | (139 | ) | (307 | ) | (275 | ) | |||||||
Less: (Income) loss from discontinued operations attributable to noncontrolling interests | — | (3 | ) | — | 9 | ||||||||||
Total net income attributable to noncontrolling interests | (195 | ) | (142 | ) | (307 | ) | (266 | ) | |||||||
NET INCOME ATTRIBUTABLE TO THE AES CORPORATION | $ | 69 | $ | 133 | $ | 211 | $ | 75 | |||||||
AMOUNTS ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS: | |||||||||||||||
Income from continuing operations, net of tax | $ | 69 | $ | 142 | $ | 211 | $ | 95 | |||||||
Loss from discontinued operations, net of tax | — | (9 | ) | — | (20 | ) | |||||||||
Net income | $ | 69 | $ | 133 | $ | 211 | $ | 75 | |||||||
BASIC EARNINGS PER SHARE: | |||||||||||||||
Income from continuing operations attributable to The AES Corporation common stockholders, net of tax | $ | 0.10 | $ | 0.20 | $ | 0.30 | $ | 0.13 | |||||||
Loss from discontinued operations attributable to The AES Corporation common stockholders, net of tax | — | (0.02 | ) | — | (0.03 | ) | |||||||||
NET INCOME ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS | $ | 0.10 | $ | 0.18 | $ | 0.30 | $ | 0.10 | |||||||
DILUTED EARNINGS PER SHARE: | |||||||||||||||
Income from continuing operations attributable to The AES Corporation common stockholders, net of tax | $ | 0.10 | $ | 0.20 | $ | 0.30 | $ | 0.13 | |||||||
Loss from discontinued operations attributable to The AES Corporation common stockholders, net of tax | — | (0.02 | ) | — | (0.03 | ) | |||||||||
NET INCOME ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS | $ | 0.10 | $ | 0.18 | $ | 0.30 | $ | 0.10 | |||||||
DILUTED SHARES OUTSTANDING | 695 | 728 | 701 | 728 | |||||||||||
DIVIDENDS DECLARED PER COMMON SHARE | $ | 0.10 | $ | 0.05 | $ | 0.10 | $ | 0.05 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(in millions) | |||||||||||||||
NET INCOME | $ | 264 | $ | 275 | $ | 518 | $ | 341 | |||||||
Foreign currency translation activity: | |||||||||||||||
Foreign currency translation adjustments, net of income tax (expense) benefit of $0, $(7), $0 and $(8), respectively | 77 | 24 | (344 | ) | 29 | ||||||||||
Reclassification to earnings, net of income tax (expense) benefit of $0 for all periods | — | (53 | ) | — | (47 | ) | |||||||||
Total foreign currency translation adjustments | 77 | (29 | ) | (344 | ) | (18 | ) | ||||||||
Derivative activity: | |||||||||||||||
Change in derivative fair value, net of income tax (expense) benefit of $(20), $22, $(3) and $46, respectively | 82 | (105 | ) | 10 | (225 | ) | |||||||||
Reclassification to earnings, net of income tax (expense) benefit of $(1), $(10), $(3) and $(13), respectively | 7 | 13 | 19 | 32 | |||||||||||
Total change in fair value of derivatives | 89 | (92 | ) | 29 | (193 | ) | |||||||||
Pension activity: | |||||||||||||||
Change in pension adjustments due to prior service cost, net of income tax (expense) benefit of $0, $(1), $0, and $(1), respectively | — | 1 | — | 1 | |||||||||||
Change in pension adjustments due to disposal of discontinued operations for the period, net of income tax (expense) benefit of $0, $(9), $0 and $(9), respectively | — | 14 | — | 14 | |||||||||||
Reclassification to earnings due to amortization of net actuarial loss, net of income tax (expense) benefit of $(2), $2, $(5) and $(1), respectively | 4 | 10 | 9 | 16 | |||||||||||
Total pension adjustments | 4 | 25 | 9 | 31 | |||||||||||
OTHER COMPREHENSIVE INCOME (LOSS) | 170 | (96 | ) | (306 | ) | (180 | ) | ||||||||
COMPREHENSIVE INCOME | 434 | 179 | 212 | 161 | |||||||||||
Less: Comprehensive (income) attributable to noncontrolling interests | (261 | ) | (102 | ) | (173 | ) | (227 | ) | |||||||
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION | $ | 173 | $ | 77 | $ | 39 | $ | (66 | ) |
Six Months Ended June 30, | |||||||
2015 | 2014 | ||||||
(in millions) | |||||||
OPERATING ACTIVITIES: | |||||||
Net income | $ | 518 | $ | 341 | |||
Adjustments to net income: | |||||||
Depreciation and amortization | 597 | 625 | |||||
Impairment expenses | 45 | 273 | |||||
Deferred income taxes | 17 | 52 | |||||
Releases of contingencies | (134 | ) | (48 | ) | |||
Loss on the extinguishment of debt | 145 | 149 | |||||
Loss on sale of assets | 12 | 8 | |||||
Loss on disposals and impairments — discontinued operations | — | 51 | |||||
Other | 70 | 45 | |||||
Changes in operating assets and liabilities | |||||||
(Increase) decrease in accounts receivable | (444 | ) | (312 | ) | |||
(Increase) decrease in inventory | (54 | ) | (39 | ) | |||
(Increase) decrease in prepaid expenses and other current assets | 132 | (72 | ) | ||||
(Increase) decrease in other assets | (815 | ) | (316 | ) | |||
Increase (decrease) in accounts payable and other current liabilities | 179 | (194 | ) | ||||
Increase (decrease) in income tax payables, net and other tax payables | (131 | ) | (176 | ) | |||
Increase (decrease) in other liabilities | 453 | 66 | |||||
Net cash provided by operating activities | 590 | 453 | |||||
INVESTING ACTIVITIES: | |||||||
Capital expenditures | (1,168 | ) | (908 | ) | |||
Acquisitions, net of cash acquired | (18 | ) | (728 | ) | |||
Proceeds from the sale of businesses, net of cash sold | 2 | 890 | |||||
Proceeds from the sale of assets | 1 | 16 | |||||
Sale of short-term investments | 2,460 | 2,198 | |||||
Purchase of short-term investments | (2,270 | ) | (1,925 | ) | |||
(Increase) decrease in restricted cash, debt service reserves and other assets | (51 | ) | 127 | ||||
Other investing | (26 | ) | (61 | ) | |||
Net cash used in investing activities | (1,070 | ) | (391 | ) | |||
FINANCING ACTIVITIES: | |||||||
Borrowings under the revolving credit facilities | 361 | 737 | |||||
Issuance of recourse debt | 575 | 1,525 | |||||
Issuance of non-recourse debt | 1,940 | 1,710 | |||||
Repayments under the revolving credit facilities | (359 | ) | (607 | ) | |||
Repayments of recourse debt | (915 | ) | (1,663 | ) | |||
Repayments of non-recourse debt | (1,457 | ) | (1,349 | ) | |||
Payments for financing fees | (40 | ) | (105 | ) | |||
Distributions to noncontrolling interests | (113 | ) | (197 | ) | |||
Contributions from noncontrolling interests | 97 | 110 | |||||
Proceeds from the sale of redeemable stock of subsidiaries | 461 | — | |||||
Dividends paid on AES common stock | (141 | ) | (72 | ) | |||
Payments for financed capital expenditures | (84 | ) | (312 | ) | |||
Purchase of treasury stock | (307 | ) | (32 | ) | |||
Other financing | (29 | ) | 5 | ||||
Net cash used in financing activities | (11 | ) | (250 | ) | |||
Effect of exchange rate changes on cash | (19 | ) | (14 | ) | |||
(Decrease) increase in cash of discontinued and held-for-sale businesses | (7 | ) | 75 | ||||
Total decrease in cash and cash equivalents | (517 | ) | (127 | ) | |||
Cash and cash equivalents, beginning | 1,539 | 1,642 | |||||
Cash and cash equivalents, ending | $ | 1,022 | $ | 1,515 | |||
SUPPLEMENTAL DISCLOSURES: | |||||||
Cash payments for interest, net of amounts capitalized | $ | 665 | $ | 676 | |||
Cash payments for income taxes, net of refunds | $ | 247 | $ | 332 | |||
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||||
Assets received upon sale of subsidiaries | $ | — | $ | 44 | |||
Assets acquired through capital lease | $ | 10 | $ | 13 |
June 30, 2015 | December 31, 2014 | ||||||
(in millions) | |||||||
Fuel and other raw materials | $ | 391 | $ | 357 | |||
Spare parts and supplies | 343 | 345 | |||||
Total | $ | 734 | $ | 702 |
June 30, 2015 | December 31, 2014 | ||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||
AVAILABLE FOR SALE:(1) | |||||||||||||||||||||||||||||||
Debt securities: | |||||||||||||||||||||||||||||||
Unsecured debentures | $ | — | $ | 332 | $ | — | $ | 332 | $ | — | $ | 501 | $ | — | $ | 501 | |||||||||||||||
Certificates of deposit | — | 79 | — | 79 | — | 151 | — | 151 | |||||||||||||||||||||||
Government debt securities | — | 33 | — | 33 | — | 57 | — | 57 | |||||||||||||||||||||||
Subtotal | — | 444 | — | 444 | — | 709 | — | 709 | |||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||||
Mutual funds | — | 18 | — | 18 | — | 25 | — | 25 | |||||||||||||||||||||||
Subtotal | — | 18 | — | 18 | — | 25 | — | 25 | |||||||||||||||||||||||
Total available for sale | — | 462 | — | 462 | — | 734 | — | 734 | |||||||||||||||||||||||
TRADING: | |||||||||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||||
Mutual funds | 15 | — | — | 15 | 15 | — | — | 15 | |||||||||||||||||||||||
Total trading | 15 | — | — | 15 | 15 | — | — | 15 | |||||||||||||||||||||||
DERIVATIVES: | |||||||||||||||||||||||||||||||
Foreign currency derivatives | — | 14 | 237 | 251 | — | 18 | 218 | 236 | |||||||||||||||||||||||
Commodity derivatives | — | 44 | 18 | 62 | — | 37 | 7 | 44 | |||||||||||||||||||||||
Total derivatives | — | 58 | 255 | 313 | — | 55 | 225 | 280 | |||||||||||||||||||||||
TOTAL ASSETS | $ | 15 | $ | 520 | $ | 255 | $ | 790 | $ | 15 | $ | 789 | $ | 225 | $ | 1,029 | |||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||
DERIVATIVES: | |||||||||||||||||||||||||||||||
Interest rate derivatives | $ | — | $ | 178 | $ | 191 | $ | 369 | $ | — | $ | 206 | $ | 210 | $ | 416 | |||||||||||||||
Cross-currency derivatives | — | 32 | — | 32 | — | 29 | — | 29 | |||||||||||||||||||||||
Foreign currency derivatives | — | 38 | 15 | 53 | — | 43 | 9 | 52 | |||||||||||||||||||||||
Commodity derivatives | — | 23 | 1 | 24 | — | 16 | 1 | 17 | |||||||||||||||||||||||
Total derivatives | — | 271 | 207 | 478 | — | 294 | 220 | 514 | |||||||||||||||||||||||
TOTAL LIABILITIES | $ | — | $ | 271 | $ | 207 | $ | 478 | $ | — | $ | 294 | $ | 220 | $ | 514 |
(1) | Amortized cost approximated fair value at June 30, 2015 and December 31, 2014. |
Three Months Ended June 30, 2015 | |||||||||||||||||||
Interest Rate | Foreign Currency | Commodity | Cross Currency | Total | |||||||||||||||
(in millions) | |||||||||||||||||||
Balance at the beginning of the period | $ | (302 | ) | $ | 223 | $ | 4 | $ | (33 | ) | $ | (108 | ) | ||||||
Total gains (losses) (realized and unrealized): | |||||||||||||||||||
Included in earnings | — | 7 | — | — | 7 | ||||||||||||||
Included in other comprehensive income — derivative activity | 57 | — | — | — | 57 | ||||||||||||||
Included in other comprehensive income — foreign currency translation activity | (4 | ) | (6 | ) | — | — | (10 | ) | |||||||||||
Included in regulatory (assets) liabilities | — | — | 8 | — | 8 | ||||||||||||||
Settlements | 5 | (2 | ) | 5 | 1 | 9 | |||||||||||||
Transfers of (assets) liabilities out of Level 3 | 53 | — | — | 32 | 85 | ||||||||||||||
Balance at the end of the period | $ | (191 | ) | $ | 222 | $ | 17 | $ | — | $ | 48 | ||||||||
Total gains (losses) 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 | $ | (1 | ) | $ | — | $ | 4 |
Three Months Ended June 30, 2014 | |||||||||||||||
Interest Rate | Foreign Currency | Commodity | Total | ||||||||||||
(in millions) | |||||||||||||||
Balance at the beginning of the period | $ | (87 | ) | $ | 101 | $ | — | $ | 14 | ||||||
Total gains (losses) (realized and unrealized): | |||||||||||||||
Included in earnings | — | 10 | 3 | 13 | |||||||||||
Included in other comprehensive income — derivative activity | (30 | ) | — | — | (30 | ) | |||||||||
Included in other comprehensive income — foreign currency translation activity | — | (2 | ) | — | (2 | ) | |||||||||
Included in regulatory (assets) liabilities | — | — | 15 | 15 | |||||||||||
Settlements | 3 | (2 | ) | (2 | ) | (1 | ) | ||||||||
Transfers of assets (liabilities) into Level 3 | (69 | ) | — | — | (69 | ) | |||||||||
Balance at the end of the period | $ | (183 | ) | $ | 107 | $ | 16 | $ | (60 | ) | |||||
Total gains (losses) 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 | $ | — | $ | 9 | $ | — | $ | 9 |
Six Months Ended June 30, 2015 | |||||||||||||||
Interest Rate | Foreign Currency | Commodity | Total | ||||||||||||
(in millions) | |||||||||||||||
Balance at the beginning of the period | $ | (210 | ) | $ | 209 | $ | 6 | $ | 5 | ||||||
Total gains (losses) (realized and unrealized): | |||||||||||||||
Included in earnings | — | 30 | 2 | 32 | |||||||||||
Included in other comprehensive income — derivative activity | 3 | — | — | 3 | |||||||||||
Included in other comprehensive income — foreign currency translation activity | 7 | (13 | ) | — | (6 | ) | |||||||||
Included in regulatory (assets) liabilities | — | — | 8 | 8 | |||||||||||
Settlements | 9 | (4 | ) | 1 | 6 | ||||||||||
Balance at the end of the period | $ | (191 | ) | $ | 222 | $ | 17 | $ | 48 | ||||||
Total gains (losses) 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 | $ | — | $ | 26 | $ | 2 | $ | 28 |
Six Months Ended June 30, 2014 | |||||||||||||||
Interest Rate | Foreign Currency | Commodity | Total | ||||||||||||
(in millions) | |||||||||||||||
Balance at the beginning of the period | $ | (101 | ) | $ | 93 | $ | 4 | $ | (4 | ) | |||||
Total gains (losses) (realized and unrealized): | |||||||||||||||
Included in earnings | 1 | 37 | 1 | 39 | |||||||||||
Included in other comprehensive income — derivative activity | (99 | ) | (1 | ) | — | (100 | ) | ||||||||
Included in other comprehensive income — foreign currency translation activity | — | (20 | ) | — | (20 | ) | |||||||||
Included in regulatory (assets) liabilities | — | — | 12 | 12 | |||||||||||
Settlements | 16 | (3 | ) | (1 | ) | 12 | |||||||||
Transfers of (assets) liabilities out of Level 3 | — | 1 | — | 1 | |||||||||||
Balance at the end of the period | $ | (183 | ) | $ | 107 | $ | 16 | $ | (60 | ) | |||||
Total gains (losses) 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 | $ | 1 | $ | 34 | $ | — | $ | 35 |
Type of Derivative | Fair Value | Unobservable Input | Amount or Range (Weighted Avg) | |||||
(in millions) | ||||||||
Interest rate | $ | (191 | ) | Subsidiaries’ credit spreads | 3.75% — 7.34% (5.17%) | |||
Foreign currency: | ||||||||
Derivative — Argentine Peso | 220 | Argentine Peso to USD currency exchange rate after one year | 13.71 — 36.10 (24.25) | |||||
Embedded derivative — Euro | 2 | Subsidiaries’ credit spreads | 4.84% — 7.34% (6.09%) | |||||
Commodity: | ||||||||
Other | 17 | |||||||
Total | $ | 48 |
Six Months Ended June 30, 2015 | |||||||||||||||||||
Carrying Amount (1) | Fair Value(5) | Pretax Loss | |||||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||||||
(in millions) | |||||||||||||||||||
Assets | |||||||||||||||||||
Equity method investment: | |||||||||||||||||||
Solar Spain | $ | 29 | $ | — | $ | — | $ | 29 | $ | — | |||||||||
Long-lived assets held and used: (2) | |||||||||||||||||||
UK Wind (Development Projects) | 38 | — | 1 | — | 37 | ||||||||||||||
Other | 29 | — | 21 | — | 8 |
Six Months Ended June 30, 2014 | |||||||||||||||||||
Carrying Amount (1) | Fair Value(5) | Pretax Loss | |||||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||||||
(in millions) | |||||||||||||||||||
Assets | |||||||||||||||||||
Long-lived assets held and used: (2) | |||||||||||||||||||
DPL (East Bend) | $ | 14 | $ | — | $ | 2 | $ | — | $ | 12 | |||||||||
Ebute | 99 | — | — | 47 | 52 | ||||||||||||||
UK Wind (Newfield) | 11 | — | — | — | 11 | ||||||||||||||
Discontinued operations and held-for-sale businesses: (3) | |||||||||||||||||||
Cameroon | 372 | — | 334 | — | 38 | ||||||||||||||
Equity method investments | |||||||||||||||||||
Silver Ridge Power | 317 | — | — | 273 | 44 | ||||||||||||||
Goodwill: (4) | |||||||||||||||||||
DPLER | 136 | — | — | — | 136 | ||||||||||||||
Buffalo Gap | 28 | — | — | 10 | 18 |
(1) | Represents the carrying value at the date of measurement, before fair value adjustment. |
(2) | See Note 15—Asset Impairment Expense for further information. |
(3) | See Note 17—Discontinued Operations and Held-For-Sale Businesses for further information. Fair value of long-lived assets held-for-sale excludes costs to sell. |
(4) | See Note 14—Goodwill Impairment for further information. |
(5) | Fair value measurements were estimated at various dates within the applicable reporting period and not necessarily as of the period’s end date. |
Fair Value | Valuation Technique | Unobservable Input | Range (Weighted Average) | |||||||
(in millions) | ||||||||||
Equity method investment: | ||||||||||
Solar Spain | $ | 29 | Discounted cash flow | Annual revenue growth | -3% to 0% (0%) | |||||
Annual pretax operating margin | -13% to 56% (24%) | |||||||||
Cost of equity | 12 | % |
Carrying Amount | Fair Value | ||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||
(in millions) | |||||||||||||||||||
June 30, 2015 | |||||||||||||||||||
Assets | |||||||||||||||||||
Accounts receivable — noncurrent (1) | $ | 260 | $ | 247 | $ | — | $ | — | $ | 247 | |||||||||
Liabilities | |||||||||||||||||||
Non-recourse debt | 15,749 | 16,101 | — | 12,644 | 3,457 | ||||||||||||||
Recourse debt | 5,014 | 5,150 | — | 5,150 | — | ||||||||||||||
December 31, 2014 | |||||||||||||||||||
Assets | |||||||||||||||||||
Accounts receivable — noncurrent (1) | $ | 301 | $ | 290 | $ | — | $ | — | $ | 290 | |||||||||
Liabilities | |||||||||||||||||||
Non-recourse debt | 15,600 | 16,008 | — | 12,538 | 3,470 | ||||||||||||||
Recourse debt | 5,258 | 5,552 | — | 5,552 | — |
(1) | These accounts receivable principally relate to amounts due from CAMMESA, and are included in Noncurrent assets—Other in the accompanying Condensed Consolidated Balance Sheets. The fair value and carrying amount of these receivables exclude VAT of $31 million and $36 million at June 30, 2015 and December 31, 2014, respectively. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(in millions) | |||||||||||||||
Gross proceeds from sales of AFS securities | $ | 1,395 | $ | 1,158 | $ | 2,481 | $ | 2,218 |
Current | Maximum | ||||||||||||||||||
Interest Rate and Cross-Currency(1) | Derivative Notional | Derivative Notional Translated to USD | Derivative Notional | Derivative Notional Translated to USD | Weighted Average Remaining Term | % of Debt Currently Hedged by Index (2) | |||||||||||||
(in millions) | (in years) | ||||||||||||||||||
Interest Rate Derivatives: | |||||||||||||||||||
LIBOR (U.S. Dollar) | 2,689 | $ | 2,689 | 3,061 | $ | 3,061 | 11 | 55 | % | ||||||||||
EURIBOR (Euro) | 506 | 564 | 506 | 564 | 7 | 75 | % | ||||||||||||
Cross-Currency Swaps: | |||||||||||||||||||
Chilean Unidad de Fomento | 4 | 172 | 4 | 172 | 13 | 82 | % |
(1) | The Company’s interest rate derivative instruments primarily include accreting and amortizing notionals. The maximum derivative notional represents the largest notional at any point between June 30, 2015 and the maturity of the derivative instrument, which includes forward-starting derivative instruments. The interest rate and cross-currency derivatives range in maturity through 2033 and 2028, respectively. |
(2) | The percentage of variable-rate debt currently hedged is based on the related index and excludes forecasted issuances of debt and variable-rate debt tied to other indices where the Company has no interest rate derivatives. |
Foreign Currency Derivatives | Notional (1) | Notional Translated to USD | Weighted Average Remaining Term (2) | ||||||
(in millions) | (in years) | ||||||||
Foreign Currency Options and Forwards: | |||||||||
Chilean Unidad de Fomento | 8 | $ | 311 | <1 | |||||
Chilean Peso | 80,373 | 126 | <1 | ||||||
Brazilian Real | 103 | 33 | <1 | ||||||
Euro | 107 | 119 | <1 | ||||||
Colombian Peso | 145,874 | 56 | <1 | ||||||
Argentine Peso | 2,032 | 224 | 10 | ||||||
British Pound | 16 | 24 | <1 | ||||||
Philippine Peso | 751 | 17 | <1 | ||||||
Embedded Foreign Currency Derivatives: | |||||||||
Kazakhstani Tenge | 3,761 | 20 | 1 |
(1) | Represents contractual notionals. The notionals for options have not been probability adjusted, which generally would decrease them. |
(2) | Represents the remaining tenor of our foreign currency derivatives weighted by the corresponding notional. These options and forwards and these embedded derivatives range in maturity through 2025 and 2017, respectively. |
Commodity Derivatives | Notional | Weighted-Average Remaining Term(1) | |||
(in millions) | (in years) | ||||
Power (MWh) | 9 | 2 | |||
Coal (Metric tons) | 1 | 2 |
(1) | Represents the remaining tenor of our commodity derivatives weighted by the corresponding volume. These derivatives range in maturity through 2017. |
June 30, 2015 | December 31, 2014 | ||||||||||||||||||||||
Designated | Not Designated | Total | Designated | Not Designated | Total | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||
Foreign currency derivatives | $ | 7 | $ | 244 | $ | 251 | $ | 6 | $ | 230 | $ | 236 | |||||||||||
Commodity derivatives | 31 | 31 | 62 | 25 | 19 | 44 | |||||||||||||||||
Total assets | $ | 38 | $ | 275 | $ | 313 | $ | 31 | $ | 249 | $ | 280 | |||||||||||
Liabilities | |||||||||||||||||||||||
Interest rate derivatives | $ | 369 | $ | — | $ | 369 | $ | 416 | $ | — | $ | 416 | |||||||||||
Cross-currency derivatives | 32 | — | 32 | 29 | — | 29 | |||||||||||||||||
Foreign currency derivatives | 32 | 21 | 53 | 38 | 14 | 52 | |||||||||||||||||
Commodity derivatives | 11 | 13 | 24 | 7 | 10 | 17 | |||||||||||||||||
Total liabilities | $ | 444 | $ | 34 | $ | 478 | $ | 490 | $ | 24 | $ | 514 |
June 30, 2015 | December 31, 2014 | ||||||||||||||
Assets | Liabilities | Assets | Liabilities | ||||||||||||
(in millions) | |||||||||||||||
Current | $ | 91 | $ | 151 | $ | 77 | $ | 148 | |||||||
Noncurrent | 222 | 327 | 203 | 366 | |||||||||||
Total | $ | 313 | $ | 478 | $ | 280 | $ | 514 | |||||||
Derivatives subject to master netting agreement or similar agreement: | |||||||||||||||
Gross amounts recognized in the balance sheet | $ | 36 | $ | 425 | $ | 53 |