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SEC Filings
10-K
TERRAFORM POWER, INC. filed this Form 10-K on 03/15/2019
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recorded in earnings. The gains in AOCI as of March 31, 2018 amounted to $44.3 million and $5.7 million of which were recorded in earnings during the three quarters following the discontinuation of hedge accounting. The balance of the accumulated gains deferred in AOCI as of December 31, 2018 was $38.6 million will be amortized through earnings over the term of the contract, which expires in 2023, of which $7.7 million will be amortized within the next 12 months.

As discussed in Note 4. Acquisitions and Dispositions, the Company consummated the sale of the U.K. Portfolio on May 11, 2017. As part of the sale agreement, Vortex Solar UK Limited assumed the debt and the associated interest rate swaps. As of the date of the sale, the remaining loss in AOCI of $0.4 million was reclassified into interest expense, net, and the fair value of the interest rate swap liability of $23.4 million is reflected within gain on sale of renewable energy facilities in the consolidated statements of operations for the year ended December 31, 2017. The interest expense amount reflected in the table above for the year ended December 31, 2017 primarily pertains to these interest rate swaps.

During the second quarter of 2016, the Company discontinued hedge accounting for interest rate swaps that were previously designated as cash flow hedges of the forecasted interest payments pertaining to variable rate project debt in the U.K. Portfolio. Hedge accounting was prospectively discontinued for interest payments occurring before the anticipated sale date of June 2017, and for periods beyond that, the losses of $16.9 million in AOCI were fully reclassified into interest expense, net during the second quarter of 2016. Subsequent to the discontinuation of hedge accounting, the Company recognized additional net unrealized losses of $7.3 million pertaining to these interest rate swaps during the year ended December 31, 2016 that are also reported in interest expense, net in the consolidated statements of operations.

Gains and losses recognized related to interest rate swaps, foreign currency forward contracts and commodity derivative contracts designated as hedging instruments for the years ended December 31, 2018, 2017 and 2016 consisted of the following:
 
 
Year Ended December 31,
Derivatives in Cash Flow and Net Investment Hedging Relationships
 
Gain (Loss) Included in the Assessment of Effectiveness Recognized in OCI, net of taxes1
 
Gain (Loss) Excluded from the Assessment of Effectiveness Recognized in OCI Using an Amortization Approach2
(In thousands)
 
2018
 
2017
 
2016
 
2018
 
2017
 
2016
Interest rate swaps
 
$
1,034

 
$
(396
)
 
$
(20,360
)
 
$

 
$

 
$

Foreign currency contracts
 
11,169

 

 

 

 

 

Commodity derivative contracts
 
(3,163
)
 
18,008

 
20,274

 
452

 

 

Total
 
$
9,040

 
$
17,612

 
$
(86
)
 
$
452

 
$

 
$


 
 
Year Ended December 31,
Location of Amount Reclassified from AOCI into Income
 
(Gain) Loss Included in the Assessment of Effectiveness Reclassified from AOCI into Income3
 
(Gain) Loss Excluded from the Assessment of Effectiveness that is Amortized through Earnings
 
2018
 
2017
 
2016
 
2018
 
2017
 
2016
Interest expense, net
 
$
1,307

 
$
5,507

 
$
11,618

 
$

 
$
(1,270
)
 
$

Gain on foreign currency exchange, net
 

 

 

 

 

 

Operating revenues, net
 
(1,804
)
 
(7,754
)
 
(12,572
)
 

 
(2,923
)
 
5,121

Total
 
$
(497
)
 
$
(2,247
)
 
$
(954
)
 
$

 
$
(4,193
)
 
$
5,121

———
(1)
Net of tax expense of $3.6 million and a benefit of $0.1 million attributed to interest rate swaps during the year ended December 31, 2018 and 2017, respectively. There were no taxes attributed to interest rate swaps during the year ended December 31, 2016. Net of tax expense of $3.9 million attributed to foreign currency contracts designated as net investment hedges during the year ended December 31, 2018. There were no taxes attributed to foreign currency contracts during the years ended December 31, 2017 and 2016. Net of tax benefit of $2.0 million and tax expense of $2.5 million and $0.4 million attributed to commodity contracts during the years ended December 31, 2018, 2017 and 2016, respectively.
(2)
Net of tax expense of $0.3 million for the year ended December 31, 2018.


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