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 |
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22203 |
(Address of principal executive offices) |
|
(Zip Code) |
Registrants 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 registrants 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 Registrants most recently completed second fiscal quarter (based on the closing sale price of $18.45 of the Registrants 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 Registrants Common Stock, par value $0.01 per share, on July 31, 2007, was 668,613,428.
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 Companys 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
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1 |
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19 |
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19 |
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22 |
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23 |
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26 |
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31 |
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31 |
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31 |
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32 |
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33 |
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54 |
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69 |
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69 |
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70 |
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78 |
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79 |
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ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS |
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79 |
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79 |
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79 |
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81 |
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81 |
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81 |
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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
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83 |
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Restatement Of Consolidated Financial Statements |
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83 |
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99 |
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105 |
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109 |
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120 |
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129 |
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
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131 |
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131 |
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131 |
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131 |
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131 |
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131 |
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134 |
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
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217 |
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217 |
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232 |
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i
ii
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 Companys 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 Companys external auditors.
3
A. Adjustments and Reclassifications in Financial Statements
The following table details the impact of the August 2007 Restatement on the Companys 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 Companys 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 Companys 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 Companys 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 |
|
|
|||||
Shortterm 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 taxescurrent |
|
|
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 taxesnoncurrent |
|
|
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 Companys Consolidated Balance Sheet as of December 31, 2005:
|
|
As of December 31, 2005 |
|
|||||||||||||||||||||||||||||||
|
|
As Originally |
|
May 2007 |
|
2006 |