UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K/A


x                              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2006

-OR-

o                                 TRANSITION REPORT FILED PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 0-19281


The AES Corporation

(Exact name of registrant as specified in its charter)

Delaware

 

54 1163725

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

4300 Wilson Boulevard Arlington, Virginia

 

22203

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (703) 522-1315

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

 

Name of Each Exchange on Which Registered

Common Stock, par value $0.01 per share

 

New York Stock Exchange

AES Trust III, $3.375 Trust Convertible

 

New York Stock Exchange

Preferred Securities

 

 

 

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o   No x

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act. Yes o   No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x   No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K/A or any amendment to this Form 10-K/A. o

Indicate by check mark whether the registrant is a large accelerated filter, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x      Accelerated filer o      Non-accelerated filer o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o   No x

The aggregate market value of the voting and non-voting common equity held by non-affiliates on June 30, 2006, the last business day after the Registrant’s most recently completed second fiscal quarter (based on the closing sale price of $18.45 of the Registrant’s Common Stock, as reported by the New York Stock Exchange on such date) was approximately $12.137 billion.

The number of shares outstanding of the Registrant’s Common Stock, par value $0.01 per share, on July 31, 2007, was 668,613,428.

 




EXPLANATORY NOTE

The accompanying financial statements and managements discussion and analysis of financial condition and results of operations have been restated to reflect the correction of errors that were contained in the Company’s 2006 Annual Report on Form 10-K. The adjustments relate to the accounting for certain Special Obligations in Brazil and accounting for leases at our Southland subsidiary and our subsidiaries in Pakistan, which are explained in further detail below. In addition, the Company reported discontinued operations in its Form 10-Q for the quarter ended March 31, 2007, as a result of the previously disclosed sales of EDC and Central Valley.  As required by Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long Lived Assets,” presentation of the results of operations of these businesses through the date of sale is reported in this Form 10-K/A as “Income (Loss) from Operations of Discontinued Businesses” in the Consolidated Statement of Operations. The combined impact of all restatement adjustments and reclassifications of EDC and Central Valley into Discontinued Operations is set forth in Restatement of Consolidated Financial Statements and Reclassification of Certain Subsidiaries into Discontinued Operations discussed below.

The impact of the restatement adjustments for the three restatement items that have occurred since the Company filed its 2006 Form 10-K on May 23, 2007, Special Obligations in Brazil and accounting for leases at Southland and Pakistan, resulted in a decrease to previously reported income from continuing operations and net income of $57 million and $18 million for the years ended December 31, 2006 and 2005, respectively, and an increase of $4 million for the year ended December 31, 2004. These adjustments also resulted in a decrease to previously reported income from continuing operations and net income of $6 million; $13 million and $19 million for the three, six and nine months ending March 31, June 30 and September 30, 2006. For the three months ended March 31, 2007, the impact of these adjustments on income from continuing operations and net income was a decrease of $6 million. Additionally, the cumulative adjustment for all periods prior to 2004 resulted in an immaterial increase to retained deficit.

Other than information relating to the restatement and conforming the presentation of discontinued operations as described below, no attempt has been made in this 10-K/A to amend or update other disclosures originally presented in the Form 10-K. Except as stated herein, this Form 10-K/A does not reflect events occurring after the filing of the Form 10-K on May 23, 2007 or amend or update those disclosures. Accordingly, this Form 10-K/A should be read in conjunction with our filings with the SEC subsequent to the filing of the Form 10-K.




THE AES CORPORATION
FISCAL YEAR 2006 FORM 10-K
TABLE OF CONTENTS

PART I

 

1

 

ITEM 1. BUSINESS

 

19

 

Overview

 

19

 

Subsequent Events

 

22

 

Segments

 

23

 

Facilities

 

26

 

Customers

 

31

 

Employees

 

31

 

How to Contact AES and Sources of Other Information

 

31

 

Executive Officers of the Registrant

 

32

 

Regulatory Matters

 

33

 

ITEM 1A. RISK FACTORS

 

54

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

69

 

ITEM 2. PROPERTIES

 

69

 

ITEM 3. LEGAL PROCEEDINGS

 

70

 

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

 

78

 

PART II

 

79

 

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

79

 

Recent Sales Of Unregistered Securities

 

79

 

Market Information

 

79

 

Holders

 

81

 

Dividends

 

81

 

ITEM 6. SELECTED FINANCIAL DATA

 

81

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

83

 

Restatement Of Consolidated Financial Statements

 

83

 

Sale of EDC

 

99

 

Critical Accounting Estimates

 

105

 

Consolidated Results of Operations

 

109

 

Capital Resources And Liquidity

 

120

 

Off-Balance Sheet Arrangements

 

129

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

131

 

Overview Regarding Market Risks

 

131

 

Interest Rate Risks

 

131

 

Foreign Exchange Rate Risk

 

131

 

Commodity Price Risk

 

131

 

Value at Risk

 

131

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

134

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

217

 

ITEM 9A. CONTROLS AND PROCEDURES

 

217

 

ITEM 9B. OTHER INFORMATION.

 

232

 

i




 

PART III

 

232

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

232

 

ITEM 11. EXECUTIVE COMPENSATION

 

237

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

275

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

277

 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

279

 

PART IV

 

280

 

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 

280

 

SIGNATURES

 

284

 

 

ii




PART I

In this Annual Report the terms “AES,” “the Company,” “us,” or “we” refer to The AES Corporation and all of its subsidiaries and affiliates, collectively. The term “The AES Corporation” refers only to the parent, publicly- held holding company, The AES Corporation, excluding its subsidiaries and affiliates.

FORWARD-LOOKING INFORMATION

In this filing and from time to time, we make statements concerning our expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. Such statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe that these forward-looking statements and the underlying assumptions are reasonable, we cannot assure you that they will prove to be correct.

Forward-looking statements involve a number of risks and uncertainties, and there are factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. Some of those factors (in addition to others described elsewhere in this report and in subsequent securities filings) include:

·       our ability to achieve expected rate increases in our Utility businesses;

·       our ability to manage our operation and maintenance costs;

·       the performance and reliability of our generating plants, including our ability to reduce unscheduled down-times;

·       changes in the price of electricity at which our Generation businesses sell into the wholesale market and our Utility businesses purchase to distribute to their customers, and our ability to hedge our exposure to such market price risk;

·       changes in the prices and availability of coal, gas and other fuels and our ability to hedge our exposure to such market price risk, and our ability to meet credit support requirements for fuel and power supply contracts;

·       changes in and access to the financial markets, particularly those affecting the availability and cost of capital in order to refinance existing debt and finance capital expenditures, acquisitions, investments and other corporate purposes;

·       changes in our or any of our subsidiaries’ corporate credit ratings or the ratings of our or any of our subsidiaries’ debt securities or preferred stock, and changes in the rating agencies’ ratings criteria;

·       changes in inflation, interest rates and foreign currency exchange rates;

·       our ability to purchase and sell assets at attractive prices and on other attractive terms;

·       our ability to locate and acquire attractive “greenfield” projects and our ability to finance, construct and begin operating our “greenfield” projects on schedule and within budget;

·       the expropriation or nationalization of our businesses or assets by foreign governments, whether with or without adequate compensation;

·       changes in laws, rules and regulations affecting our business, including, but not limited to, deregulation of wholesale power markets and its effects on competition, the ability to recover net utility assets and other potential stranded costs by our utilities, the establishment of a regional transmission organization that includes our utility service territory, the application of market power criteria by the Federal Energy Regulatory Commission (“FERC”), changes in law resulting from new federal energy legislation, including the effects of the repeal of Public Utility Holding

1




Company Act (“PUHCA”), and changes in political or regulatory oversight or incentives affecting our alternative energy businesses, including tax incentives;

·       changes in environmental, tax and other laws, including requirements for reduced emissions of sulfur nitrogen, carbon, mercury, and other substances;

·       the economic climate, particularly the state of the economy in the areas in which we operate;

·       variations in weather, especially mild winters and cooler summers in the areas in which we operate, and the occurrence of hurricanes and other storms and disasters;

·       our ability to meet our expectations in the development, construction, operation and performance of our alternative energy businesses, which rely, in part, on actual wind volumes in areas affecting our existing and planned wind farms performing consistently with our expectations, and actual wind turbine performance operating consistently with our expectations, the continued attractiveness of market prices for carbon offsets under markets governed by the Kyoto Protocol, and consistent and orderly regulatory procedures governing the application, regulation, issuance of Certified Emission Reduction (“CER”) credits and the extension of such regulations beyond 2012;

·       our ability to keep up with advances in technology;

·       the potential effects of threatened or actual acts of terrorism and war;

·       changes in tax laws and the effects of our strategies to reduce tax payments;

·       the effects of litigation and government investigations;

·       changes in accounting standards, corporate governance and securities law requirements;

·       our ability to remediate and compensate for the material weaknesses in our internal controls over financial reporting; and

·       our ability to attract and retain talented directors, management and other personnel, including, but not limited to, financial personnel in our foreign businesses that have extensive knowledge of United States Generally Accepted Accounting Principles (“GAAP”).

Except to the extent required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS AND RECLASSIFICATION
OF CERTAIN SUBSIDIARIES INTO DISCONTINUED OPERATIONS

The accompanying financial statements and managements discussion and analysis of financial condition and results of operations have been restated to reflect the correction of errors that were contained in the Company’s 2006 Annual Report on Form 10-K. In addition the Company has conformed certain financial information presented in this Form 10-K/A to the presentation of the discontinued operations in its first quarter 2007 Form 10-Q. Other than information relating to the restatement and conforming the presentation of discontinued operations as described below, no attempt has been made in this 10-K/A to amend or update other disclosures originally presented in the Form 10-K. Except as stated herein, this Form 10-K/A does not reflect events occurring after the filing of the Form 10-K on May 23, 2007 or amend or update those disclosures. Accordingly, this Form 10-K/A should be read in conjunction with our filings with the SEC subsequent to the filing of the Form 10-K.

2




In this Form 10-K/A, the term “August 2007 Restatement” refers collectively to the errors related to special obligations liabilities at the AES Eletropaulo and AES Sul subsidiaries and the errors related to accounting for leases at the AES Southland and Pakistan subsidiaries and the reclassification of EDC and Central Valley into discontinued operations. The term “May 2007 Restatement” refers collectively to the errors that were previously discussed in our 2006 Annual Report on Form 10-K that was filed on May 23, 2007.

The combined impact of the August and May 2007 Restatements resulted in a decrease to previously reported net income of $57 million for the year ended December 31, 2006; a decrease of $43 million for the year ended December 31, 2005 and an increase of $6 million for the year ended December 31, 2004. It also resulted in a decrease to previously reported net income of $9 million for the three months ended March 31, 2006; a decrease of $3 million for the six months ended June 30, 2006; an increase of $11 million for the nine months ended September 30, 2006 and a decrease of $6 million for the three months ended March 31, 2007. Additionally, the cumulative adjustment for all periods prior to 2004 resulted in an increase to retained deficit of $50 million.

On July 31, 2007, the Financial Audit Committee of the Board of Directors determined that the Consolidated Financial Statements and the financial information in the Form 10-K filed on May 23, 2007 should no longer be relied upon. The determination was made after discussion with the Company’s external auditors.

3




A.             Adjustments and Reclassifications in Financial Statements

The following table details the impact of the August 2007 Restatement on the Company’s Consolidated Statement of Operations for the year ended December 31, 2006:

 

Year Ended December 31, 2006

 

 

 

2006

 

August 2007

 

Discontinued Operations

 

2006

 

 

 

Form 10-K

 

Restatement

 

EDC

 

Central Valley

 

Form 10-K/A

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulated

 

 

$

6,849

 

 

 

$

 

 

$

(651

)

 

$

 

 

 

6,198

 

 

Non-Regulated

 

 

5,450

 

 

 

(48

)

 

 

 

(36

)

 

 

5,366

 

 

Total revenues

 

 

12,299

 

 

 

(48

)

 

(651

)

 

(36

)

 

 

11,564

 

 

Cost of Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulated

 

 

(4,578

)

 

 

 

 

465

 

 

 

 

 

(4,114

)

 

Non-Regulated

 

 

(4,090

)

 

 

(1

)

 

 

 

38

 

 

 

(4,052

)

 

Total cost of sales

 

 

(8,668

)

 

 

(1

)

 

465

 

 

38

 

 

 

(8,166

)

 

Gross margin

 

 

3,631

 

 

 

(49

)

 

(186

)

 

2

 

 

 

3,398

 

 

General and administrative expenses

 

 

(305

)

 

 

 

 

 

 

 

 

 

(305

)

 

Interest expense

 

 

(1,802

)

 

 

 

 

39

 

 

 

 

 

(1,763

)

 

Interest income

 

 

443

 

 

 

 

 

(17

)

 

 

 

 

426

 

 

Other expense

 

 

(308

)

 

 

(139

)

 

(2

)

 

 

 

 

(449

)

 

Other income

 

 

115

 

 

 

 

 

(9

)

 

 

 

 

106

 

 

Gain (loss) on sale of investments

 

 

98

 

 

 

 

 

 

 

 

 

 

98

 

 

Loss on sale of subsidiary stock

 

 

(539

)

 

 

 

 

 

 

 

 

 

(539

)

 

Asset impairment expense

 

 

(29

)

 

 

 

 

1

 

 

 

 

 

(28

)

 

Foreign currency transaction losses on net monetary position

 

 

(77

)

 

 

 

 

(11

)

 

 

 

 

(88

)

 

Equity in earnings of affiliates

 

 

72

 

 

 

 

 

 

 

 

 

 

72

 

 

INCOME BEFORE INCOME TAXES AND MINORITY INTEREST

 

 

1,299

 

 

 

(188

)

 

(185

)

 

2

 

 

 

928

 

 

Income tax expense

 

 

(403

)

 

 

(1

)

 

72

 

 

(2

)

 

 

(334

)

 

Minority interest expense

 

 

(610

)

 

 

132

 

 

19

 

 

 

 

 

(459

)

 

INCOME FROM CONTINUING OPERATIONS

 

 

286

 

 

 

(57

)

 

(94

)

 

 

 

 

135

 

 

Income (loss) from operations of discontinued businesses net of income tax

 

 

11

 

 

 

 

 

94

 

 

 

 

 

105

 

 

(Loss) gain from disposal of discontinued businesses net of income tax

 

 

(57

)

 

 

 

 

 

 

 

 

 

(57

)

 

INCOME BEFORE EXTRAORDINARY ITEMS AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE

 

 

240

 

 

 

(57

)

 

 

 

 

 

 

183

 

 

Income from extraordinary items net of income tax

 

 

21

 

 

 

 

 

 

 

 

 

 

21

 

 

INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 

 

 

261

 

 

 

(57

)

 

 

 

 

 

 

204

 

 

Cumulative effect of change in accounting principle net of income tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

$

261

 

 

 

$

(57

)

 

$

 

 

$

 

 

 

$

204

 

 

 

4




The following table details the impact of both the May 2007 Restatement and the August 2007 Restatement on the Company’s Consolidated Statement of Operations for the year ended December 31, 2005:

 

 

Year Ended December 31, 2005

 

 

 

As Originally

 

May 2007

 

2006

 

August 2007

 

Discontinued Operations

 

2006

 

 

 

Filed

 

Restatement

 

Form 10-K

 

Restatement

 

EDC

 

Central Valley

 

Form 10-K/A

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulated

 

 

$

5,737

 

 

 

$

515

 

 

 

$

6,252

 

 

 

$

 

 

$

(635

)

 

$

 

 

 

$

5,617

 

 

Non-Regulated

 

 

5,349

 

 

 

(580

)

 

 

4,769

 

 

 

(33

)

 

 

 

(33

)

 

 

4,703

 

 

Total revenues

 

 

11,086

 

 

 

(65

)

 

 

11,021

 

 

 

(33

)

 

(635

)

 

(33

)

 

 

10,320

 

 

Cost of Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulated

 

 

(4,500

)

 

 

82

 

 

 

(4,418

)

 

 

 

 

397

 

 

 

 

 

(4,021

)

 

Non-Regulated

 

 

(3,408

)

 

 

4

 

 

 

(3,404

)

 

 

(1

)

 

 

 

34

 

 

 

(3,371

)

 

Total cost of sales

 

 

(7,908

)

 

 

86

 

 

 

(7,822

)

 

 

(1

)

 

397

 

 

34

 

 

 

(7,392

)

 

Gross margin

 

 

3,178

 

 

 

21

 

 

 

3,199

 

 

 

(34

)

 

(238

)

 

1

 

 

 

2,928

 

 

General and administrative expenses

 

 

(221

)

 

 

(4

)

 

 

(225

)

 

 

 

 

 

 

 

 

 

(225

)

 

Interest expense

 

 

(1,896

)

 

 

3

 

 

 

(1,893

)

 

 

 

 

67

 

 

 

 

 

(1,826

)

 

Interest income

 

 

391

 

 

 

4

 

 

 

395

 

 

 

 

 

(20

)

 

 

 

 

375

 

 

Other expense

 

 

19

 

 

 

(151

)

 

 

(132

)

 

 

 

 

22

 

 

 

 

 

(110

)

 

Other income

 

 

 

 

 

171

 

 

 

171

 

 

 

 

 

(14

)

 

 

 

 

157

 

 

Gain (loss) on sale of investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on sale of subsidiary stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset impairment expense

 

 

 

 

 

(16

)

 

 

(16

)

 

 

 

 

 

 

 

 

 

(16

)

 

Foreign currency transaction losses on net monetary position

 

 

(89

)

 

 

(12

)

 

 

(101

)

 

 

 

 

(44

)

 

 

 

 

(145

)

 

Equity in earnings of affiliates

 

 

76

 

 

 

(6

)

 

 

70

 

 

 

 

 

1

 

 

 

 

 

71

 

 

INCOME BEFORE INCOME TAXES AND MINORITY INTEREST

 

 

1,458

 

 

 

10

 

 

 

1,468

 

 

 

(34

)

 

(226

)

 

1

 

 

 

1,209

 

 

Income tax expense

 

 

(465

)

 

 

(60

)

 

 

(525

)

 

 

(3

)

 

46

 

 

(1

)

 

 

(483

)

 

Minority interest expense

 

 

(361

)

 

 

(8

)

 

 

(369

)

 

 

19

 

 

26

 

 

 

 

 

(324

)

 

INCOME FROM CONTINUING OPERATIONS

 

 

632

 

 

 

(58

)

 

 

574

 

 

 

(18

)

 

(154

)

 

 

 

 

402

 

 

Income (loss) from operations of discontinued businesses net of income tax

 

 

 

 

 

34

 

 

 

34

 

 

 

 

 

154

 

 

 

 

 

188

 

 

(Loss) gain from disposal of discontinued businesses net of income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE EXTRAORDINARY ITEMS AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE

 

 

632

 

 

 

(24

)

 

 

608

 

 

 

(18

)

 

 

 

 

 

 

590

 

 

Income from extraordinary items net of income tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE

 

 

632

 

 

 

(24

)

 

 

608

 

 

 

(18

)

 

 

 

 

 

 

590

 

 

Cumulative effect of change in accounting principle net of income tax

 

 

(2

)

 

 

(1

)

 

 

(3

)

 

 

 

 

 

 

 

 

 

(3

)

 

Net income

 

 

$

630

 

 

 

$

(25

)

 

 

$

605

 

 

 

$

(18

)

 

$

 

 

$

 

 

 

$

587

 

 

 

5




The following table details the impact of both the May 2007 Restatement and the August 2007 Restatement on the Company’s Consolidated Statement of Operations for the year ended December 31, 2004:

 

 

Year Ended December 31, 2004

 

 

 

As Originally

 

May 2007

 

2006

 

August 2007

 

Discontinued Operations

 

2006

 

 

 

Filed

 

Restatement

 

Form 10-K

 

Restatement

 

EDC

 

Central Valley

 

Form 10-K/A

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulated

 

 

$

4,897

 

 

 

$

275

 

 

 

$

5,172

 

 

 

$

 

 

$

(619

)

 

$

 

 

 

$

4,553

 

 

Non-Regulated

 

 

4,566

 

 

 

(346

)

 

 

4,220

 

 

 

10

 

 

 

 

(38

)

 

 

4,192

 

 

Total revenues

 

 

9,463

 

 

 

(71

)

 

 

9,392

 

 

 

10

 

 

(619

)

 

(38

)

 

 

8,745

 

 

Cost of Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulated

 

 

(3,781

)

 

 

71

 

 

 

(3,710

)

 

 

 

 

382

 

 

 

 

 

(3,328

)

 

Non-Regulated

 

 

(2,900

)

 

 

9

 

 

 

(2,891

)

 

 

(3

)

 

 

 

35

 

 

 

(2,859

)

 

Total cost of sales

 

 

(6,681

)

 

 

80

 

 

 

(6,601

)

 

 

(3

)

 

382

 

 

35

 

 

 

(6,187

)

 

Gross margin

 

 

2,782

 

 

 

9

 

 

 

2,791

 

 

 

7

 

 

(237

)

 

(3

)

 

 

2,558

 

 

General and administrative expenses

 

 

(182

)

 

 

1

 

 

 

(181

)

 

 

 

 

 

 

 

 

 

(181

)

 

Interest expense

 

 

(1,932

)

 

 

12

 

 

 

(1,920

)

 

 

 

 

104

 

 

 

 

 

(1,816

)

 

Interest income

 

 

282

 

 

 

1

 

 

 

283

 

 

 

 

 

(29

)

 

 

 

 

254

 

 

Other expense

 

 

12

 

 

 

(135

)

 

 

(123

)

 

 

 

 

10

 

 

 

 

 

(113

)

 

Other income

 

 

 

 

 

157

 

 

 

157

 

 

 

 

 

(7

)

 

 

 

 

150

 

 

Gain (loss) on sale of investments

 

 

(45

)

 

 

44

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

(1

)

 

Loss on sale of subsidiary stock

 

 

 

 

 

(24

)

 

 

(24

)

 

 

 

 

 

 

 

 

 

(24

)

 

Asset impairment expense

 

 

 

 

 

(50

)

 

 

(50

)

 

 

 

 

1

 

 

 

 

 

(49

)

 

Foreign currency transaction losses on net monetary position

 

 

(165

)

 

 

29

 

 

 

(136

)

 

 

 

 

27

 

 

 

 

 

(109

)

 

Equity in earnings of affiliates

 

 

70

 

 

 

(7

)

 

 

63

 

 

 

 

 

 

 

 

 

 

63

 

 

INCOME BEFORE INCOME TAXES AND MINORITY INTEREST

 

 

822

 

 

 

37

 

 

 

859

 

 

 

7

 

 

(131

)

 

(3

)

 

 

732

 

 

Income tax expense

 

 

(359

)

 

 

(21

)

 

 

(380

)

 

 

(3

)

 

18

 

 

 

 

 

(365

)

 

Minority interest expense

 

 

(199

)

 

 

(12

)

 

 

(211

)

 

 

 

 

16

 

 

 

 

 

(195

)

 

INCOME FROM CONTINUING OPERATIONS

 

 

264

 

 

 

4

 

 

 

268

 

 

 

4

 

 

(97

)

 

(3

)

 

 

172

 

 

Income (loss) from operations of discontinued businesses net of income

 

 

34

 

 

 

(93

)

 

 

(59

)

 

 

 

 

97

 

 

3

 

 

 

41

 

 

(Loss) gain from disposal of discontinued businesses net of income

 

 

 

 

 

91

 

 

 

91

 

 

 

 

 

 

 

 

 

 

91

 

 

INCOME BEFORE EXTRAORDINARY ITEMS AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE

 

 

298

 

 

 

2

 

 

 

300

 

 

 

4

 

 

 

 

 

 

 

304

 

 

Income from extraordinary items net of income tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE

 

 

298

 

 

 

2

 

 

 

300

 

 

 

4

 

 

 

 

 

 

 

304

 

 

Cumulative effect of change in accounting principle net of income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

$

298

 

 

 

$

2

 

 

 

$

300

 

 

 

$

4

 

 

$

 

 

$

 

 

 

$

304

 

 

 

6




The following table details the impact of the August  2007 Restatement on the Company’s Consolidated Balance Sheet as of December 31, 2006:

 

 

As of December 31, 2006

 

 

 

2006

 

August 2007

 

Discontinued Operations

 

2006

 

 

 

Form 10-K

 

Restatement

 

EDC

 

Central Valley

 

Form 10-K/A

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

$

1,575

 

 

 

$

 

 

$

(191

)

 

$

(5

)

 

 

$

1,379

 

 

Restricted cash

 

 

548

 

 

 

 

 

 

 

 

 

 

548

 

 

Short—term investments

 

 

640

 

 

 

 

 

 

 

 

 

 

640

 

 

Accounts receivable, net of reserves of $233

 

 

1,903

 

 

 

 

 

(129

)

 

(5

)

 

 

1,769

 

 

Inventory

 

 

518

 

 

 

 

 

(45

)

 

(2

)

 

 

471

 

 

Receivable from affiliates

 

 

81

 

 

 

 

 

(5

)

 

 

 

 

76

 

 

Deferred income taxes—current

 

 

213

 

 

 

 

 

(5

)

 

 

 

 

208

 

 

Prepaid expenses

 

 

113

 

 

 

 

 

(4

)

 

 

 

 

109

 

 

Other current assets

 

 

943

 

 

 

 

 

(16

)

 

 

 

 

927

 

 

Current assets of held for sale and discontinued businesses

 

 

31

 

 

 

 

 

395

 

 

12

 

 

 

438

 

 

Total current assets

 

 

6,565

 

 

 

 

 

 

 

 

 

 

6,565

 

 

NONCURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, Plant and Equipment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Land

 

 

950

 

 

 

 

 

(19

)

 

(3

)

 

 

928

 

 

Electric generation and distribution assets

 

 

23,990

 

 

 

 

 

(2,133

)

 

(22

)

 

 

21,835

 

 

Accumulated depreciation

 

 

(6,979

)

 

 

 

 

427

 

 

7

 

 

 

(6,545)

 

 

Construction in progress

 

 

1,113

 

 

 

 

 

(133

)

 

(1

)

 

 

979

 

 

Property, plant and equipment, net

 

 

19,074

 

 

 

 

 

(1,858

)

 

(19

)

 

 

17,197

 

 

Other assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred financing costs, net of accumulated amortization of $188

 

 

285

 

 

 

 

 

(6

)

 

 

 

 

279

 

 

Investments in and advances to affiliates

 

 

596

 

 

 

 

 

(1

)

 

 

 

 

595

 

 

Debt service reserves and other deposits

 

 

524

 

 

 

 

 

 

 

 

 

 

524

 

 

Goodwill, net

 

 

1,419

 

 

 

 

 

 

 

(3

)

 

 

1,416

 

 

Other intangible assets, net of accumulated amortization of $171

 

 

305

 

 

 

 

 

(6

)

 

(1

)

 

 

298

 

 

Deferred income taxes—noncurrent

 

 

663

 

 

 

 

 

(59

)

 

(2

)

 

 

602

 

 

Other assets

 

 

1,627

 

 

 

28

 

 

(20

)

 

(1

)

 

 

1,634

 

 

Noncurrent assets of held for sale and discontinued businesses

 

 

105

 

 

 

 

 

1,950

 

 

36

 

 

 

2,091

 

 

Total other assets

 

 

5,524

 

 

 

28

 

 

1,858

 

 

29

 

 

 

7,439

 

 

TOTAL ASSETS

 

 

$

31,163

 

 

 

$

28

 

 

$

 

 

$

10

 

 

 

$

31,201

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

$

892

 

 

 

 

 

$

(96

)

 

$

(1

)

 

 

$

795

 

 

Accrued interest

 

 

412

 

 

 

 

 

(8

)

 

 

 

 

404

 

 

Accrued and other liabilities

 

 

2,227

 

 

 

 

 

(95

)

 

(1

)

 

 

2,131

 

 

Recourse debt-current portion

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-recourse debt-current portion

 

 

1,453

 

 

 

 

 

(42

)

 

 

 

 

1,411

 

 

Current liabilities of held for sale and discontinued businesses

 

 

45

 

 

 

 

 

241

 

 

2

 

 

 

288

 

 

Total current liabilities

 

 

5,029

 

 

 

 

 

 

 

 

 

 

5,029

 

 

LONG-TERM LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-recourse debt

 

 

10,102

 

 

 

 

 

(268

)

 

 

 

 

9,834

 

 

Recourse debt

 

 

4,790

 

 

 

 

 

 

 

 

 

 

4,790

 

 

Deferred income taxes-noncurrent

 

 

790

 

 

 

9

 

 

(6

)

 

10

 

 

 

803

 

 

Pension liabilities and other post-retirement liabilities

 

 

883

 

 

 

 

 

(39

)

 

 

 

 

844

 

 

Other long-term liabilities

 

 

3,371

 

 

 

242

 

 

(57

)

 

(2

)

 

 

3,554

 

 

Long-term liabilities of held for sale and discontinued businesses

 

 

62

 

 

 

 

 

370

 

 

2

 

 

 

434

 

 

Total long-term liabilities

 

 

19,998

 

 

 

251

 

 

 

 

10

 

 

 

20,259

 

 

Minority Interest (including discontinued businesses of $175

 

 

3,100

 

 

 

(152

)

 

 

 

 

 

 

2,948

 

 

Commitments and Contingent Liabilities (see Notes 10 and 11)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock ($.01 par value, 1,200,000,000 shares authorized; 665,126,309 issued and outstanding at December 31, 2006

 

 

7

 

 

 

 

 

 

 

 

 

 

7

 

 

Additional paid-in capital

 

 

6,654

 

 

 

 

 

 

 

 

 

 

6,654

 

 

Accumulated deficit

 

 

(1,025

)

 

 

(71

)

 

 

 

 

 

 

(1,096

)

 

Accumulated other comprehensive loss

 

 

(2,600

)

 

 

 

 

 

 

 

 

 

(2,600

)

 

Total stockholders’ equity

 

 

3,036

 

 

 

(71

)

 

 

 

 

 

 

2,965

 

 

TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

 

 

$

31,163

 

 

 

$

28

 

 

$

 

 

$

10

 

 

 

$

31,201

 

 

 

7




The following table details the impact of both the May 2007 and the August 2007 Restatements on the Company’s Consolidated Balance Sheet as of December 31, 2005:

 

 

As of December 31, 2005

 

 

 

As Originally

 

May 2007

 

2006