Print Page  |  Close Window

SEC Filings

TERRAFORM GLOBAL, INC. filed this Form 10-K on 06/15/2017
Entire Document

Business Combinations
The Company accounts for its business combinations by recognizing in the financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interests in the acquired assets at fair value at the acquisition date. The Company also recognizes and measures a gain from a bargain purchase in the business combination and determines what information to disclose to enable users of an entity’s financial statements to evaluate the nature and financial effects of the business combination. In addition, acquisition costs are expensed as incurred.
When the Company acquires power plants, the purchase price is allocated to (i) the acquired tangible assets and liabilities assumed, primarily consisting of land, plant, and long-term debt, (ii) the identified intangible assets and liabilities, consisting of the value of above-market and below-market power purchase agreements and in-place power purchase agreements, (iii) non-controlling interests, and (iv) other working capital items based in each case on their fair values in accordance with ASC 805, Business Combinations (“ASC 805”). All expenses related to acquisition costs related to business combinations are expensed as incurred.
The Company generally uses independent appraisers to assist with the estimates and methodologies used such as a replacement cost approach, an income approach, or excess earnings approach. Factors considered by the Company in its analysis include considering current market conditions and costs to construct similar facilities. The Company also considers information obtained about each property as a result of its pre-acquisition due diligence in estimating the fair value of the tangible and identified intangible assets and liabilities acquired or assumed. In estimating the fair value, the Company also establishes estimates of energy production, current in-place and market power purchase rates, tax credit arrangements, and operating and maintenance costs. A change in any of the assumptions above, which are subjective, could have a significant impact on the results of operations.
The allocation of the purchase price directly affects the following items in the Company's consolidated financial statements:
The amount of purchase price allocated to the various tangible and intangible assets, liabilities, and non-controlling interests on the Company's balance sheets;
The amounts allocated to the value of above-market and below-market power purchase agreement values are amortized to revenue over the remaining non-cancelable terms of the respective arrangement. The amounts allocated to all other tangible and definite lived intangible assets are amortized to depreciation or amortization expense; and
The period of time over which tangible and intangible assets are depreciated or amortized varies and, thus, changes in the amounts allocated to these assets will have a direct impact on the Company's results of operations. Definite lived intangible assets are generally amortized over the remaining respective life of the PPA, which normally ranges from 10 to 25 years. The Company generally depreciates its power plants over their estimated useful lives of up to 30 years. These differences in timing could have an impact on the Company's results of operations.
Non-controlling Interests
Non-controlling interest represents the portion of net income (loss), net assets, and comprehensive income (loss) in consolidated entities that the Company does not own. The non-controlling interests’ balance is reported as a component of equity in the consolidated balance sheets and is calculated based on equity ownership percentage, for applicable facilities.
Basic and Diluted Earnings (Loss) Per Share
Basic earnings (loss) per share (“EPS” or “LPS”) is computed by dividing net income (loss) attributable to common stockholders by the number of weighted average ordinary shares outstanding during the period. Unvested restricted stock awards that contain non-forfeitable rights to dividends are treated as participating securities and are included in the EPS computation using the two-class method, to the extent that there are undistributed earnings available as such securities do not participate in losses. Diluted earnings (loss) per share is computed by adjusting basic EPS for the impact of weighted average dilutive common equivalent shares outstanding during the period. Common equivalent shares represent the incremental shares issuable for unvested restricted Class A common stock and redeemable shares of Class B and Class B1 common stock.
Stock-Based Compensation
Stock-based compensation expense for all share-based payment awards is based on the estimated grant-date fair value. The Company recognizes these compensation costs net of an estimated forfeiture rate for only those shares expected to vest on a straight-line basis over the requisite service period of the award, which is generally the award vesting term. For ratable