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SEC Filings

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

agreements in order to hedge the variability of expected future cash interest payments. Cross currency swaps are used to reduce risks arising from the change in fair value of certain foreign currency denominated assets and liabilities in order to minimize the impact of foreign currency fluctuations on operating results. The Company does not use derivative instruments for speculative purposes.
Activities related to derivative instruments were reported in the line items as of and for the periods indicated, as follows:
(In thousands)
 
 
 
 
 
Fair Value As of December 31,
Type of Instrument
 
Balance Sheet Classification
 
Notional Amount
 
2016
 
2015
Derivatives designated as hedging:
 
 
 
 
 
 
 
 
Interest rate swaps
 
Other assets (liabilities), net
 
130,026

 
$
(2,237
)
 
$
6,210

 
 
Accumulated other comprehensive (income) loss
 
 
 
2,237

 
(6,210
)
Cross currency swaps
 
Other assets
 
$
178,517

 
41,752

 
64,083

 
 
Accumulated other comprehensive (income) loss
 
 
 
6,688

 
1,202

Derivatives not designated as hedging:
 
 
 
 
 
 
 
 
Interest rate swaps
 
Other assets (liabilities)
 
$
123,449

 
$
(68
)
 
$
5,194

Foreign currency forward contracts
 
Other assets
 
$
193,275

 
(13,299
)
 
21,383

(In thousands)
 
 
 
Loss (Gain) for the Year Ended December 31,
Type of Instrument
 
Statement of Operations Classification
 
2016
 
2015
 
2014
Derivatives not designated as hedging:
 
 
 
 
 
 
 
 
Interest rate swaps
 
Interest (income) expense, net
 
$
5,538

 
$
(5,639
)
 
$
705

Foreign currency contracts
 
Loss on foreign currency exchange
 
31,806

 
33,142

 

Certain derivative contracts contain provisions providing the counterparties a lien on specific assets as collateral. There was no cash collateral received or pledged as of December 31, 2016, 2015 or 2014 related to the Company’s derivative transactions.    
The following table presents the changes in each component of accumulated other comprehensive (income) loss related to derivatives designated as hedges, and the related tax effects for the year ended December 31, 2016.
(In thousands)
 
Before Tax
 
Tax Effect
 
Net of Tax
Accumulated other comprehensive loss (income) related to interest rate swaps
 
8,447

 
(2,365
)
 
6,082

Accumulated other comprehensive loss (income) related to cross currency swaps
 
5,486

 
(1,536
)
 
3,950

Net other comprehensive loss (income) related to derivatives designated as hedges
 
13,933

 
(3,901
)
 
10,032

Derivatives Designated as Hedges
Interest Rate Swaps
The Company has entered into interest rate swap agreements to hedge variable rate project level debt. These interest rate swaps qualify for hedge accounting and are designated as cash flow hedges. Under the interest rate swap agreements, the power plant pays a fixed rate and the counterparty to the agreement pays a variable interest rate. No amounts deferred in other comprehensive income were reclassified into earnings during the years ended December 31, 2016, 2015 or 2014.
Cross Currency Swaps
The Company has entered into cross currency swap agreements to hedge its exposure to foreign currency fluctuations on debt denominated in U.S. dollars. These cross currency rate swaps qualify for hedge accounting and were designated as cash flow hedges. The amounts deferred in other comprehensive income and reclassified into earnings during the period related to these cross currency swaps are provided in the table above. There was no ineffectiveness recorded for the periods presented.


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