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SEC Filings
10-K
TERRAFORM POWER, INC. filed this Form 10-K on 03/15/2019
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Income Tax (Benefit) Expense

Income tax benefit from continuing operations was $19.6 million for the year ended December 31, 2017, compared to income tax expense of $2.7 million during the same period in 2016. For the year ended December 31, 2017, the overall effective tax rate of 9.0% was lower than the statutory rate of 35% primarily due to loss allocated to the recording of a valuation allowance on certain tax benefits attributed to the Company, loss allocated to non-controlling interests, the revaluation of deferred federal and state tax balances and the effect of foreign and state taxes. As of December 31, 2017, in most jurisdictions in which we operate, we were in a net deferred tax asset position. A valuation allowance is recorded against the deferred tax assets primarily because of the history of losses in those jurisdictions. Additionally, as discussed in Government Incentives and Legislation within Item 1. Business, the Tax Act was enacted on December 22, 2017, which provides that all U.S. corporations will be taxed at a flat rate of 21% for taxable years beginning January 1, 2018. For certain deferred tax assets and deferred tax liabilities, we recorded a provisional net adjustment that increased the deferred tax benefit by $5.0 million for the year ended December 31, 2017.

Net Loss Attributable to Non-Controlling Interests

Net loss attributable to non-controlling interests, including redeemable non-controlling interests, was $76.1 million for the year ended December 31, 2017. This was the result of a $27.5 million loss attributable to SunEdison's interest in Terra LLC's net loss during the period prior to the consummation of the Merger on October 16, 2017, and a $48.6 million loss attributable to project-level tax equity partnerships. Net loss attributable to non-controlling interests, including redeemable non-controlling interests, was $120.2 million for the year ended December 31, 2016. This was the result of a $65.7 million loss attributable to SunEdison's interest in Terra LLC's net income during the year ended December 31, 2016 and a $54.5 million loss attributable to project-level tax equity partnerships.

Liquidity and Capital Resources

Capitalization

A key element to our financing strategy is to raise the majority of our debt in the form of project specific non-recourse borrowings at our subsidiaries with investment grade metrics. Going forward, we intend to primarily finance acquisitions or growth capital expenditures using long-term non-recourse debt that fully amortizes within the asset’s contracted life at investment grade metrics, as well as retained cash flows from operations and issuance of equity securities through public markets.

The following table summarizes the total capitalization and debt to capitalization percentage as of December 31, 2018 and 2017:
 
 
As of December 31,
(In thousands)
 
2018
 
2017
Revolving Credit Facilites1
 
$
377,000

 
$
60,000

Senior Notes2
 
1,500,000

 
1,500,000

Term Loan3
 
346,500

 
350,000

Non-recourse long-term debt, including current portion4
 
3,573,436

 
1,732,516

Long-term indebtedness, including current portion5
 
5,796,936

 
3,642,516

Total stockholders’ equity and redeemable non-controlling interests
 
2,768,417

 
2,422,372

Total capitalization
 
$
8,565,353

 
$
6,064,888

Debt to total capitalization
 
68
%
 
60
%
———
(1)
Represents $377.0 million drawn under our Revolver, and does not include the $99.5 million of outstanding project-level letters of credit. On October 5, 2018, Terra Operating LLC entered into an amendment to the Revolver. On October 26, 2018, Saeta repaid the outstanding balance under its revolver and terminated such revolving credit facility.
(2)
Represents corporate senior notes. See the Financing Activities section below for discussion regarding 2018 activity.
(3)
Represents senior secured term loan facility. See the Financing Activities section below for further discussion.
(4)
Represents asset-specific, non-recourse borrowings and financing lease obligations secured against the assets of certain project companies.
(5)
Represents total principal due for long-term debt and financing lease obligations, including the current portion, which excludes $35.1 million and $43.7 million of unamortized debt discounts and deferred financing costs as of December 31, 2018 and 2017, respectively.


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