ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
5. Long-term debt
Long-term debt consists of the following:
|
|
|
|
|
|
|
|
|
(in millions)
|
|
September 30,
2013
|
|
December 31,
2012
|
|
Interest Rate
|
Recourse Debt:
|
|
|
|
|
|
|
|
|
Senior unsecured notes, due 2018
|
|
$
|
460.0
|
|
$
|
460.0
|
|
9.0%
|
Senior unsecured notes, due June 2036 (Cdn$210.0)
|
|
|
203.8
|
|
|
211.1
|
|
6.0%
|
Senior unsecured notes, due July 2014
|
|
|
190.0
|
|
|
190.0
|
|
5.9%
|
Series A senior unsecured notes, due August 2015
|
|
|
150.0
|
|
|
150.0
|
|
5.9%
|
Series B senior unsecured notes, due August 2017
|
|
|
75.0
|
|
|
75.0
|
|
6.0%
|
Non-Recourse Debt:
|
|
|
|
|
|
|
|
|
Epsilon Power Partners term facility, due 2019
|
|
|
31.2
|
|
|
33.5
|
|
7.4%
|
Cadillac term loan, due 2025
|
|
|
36.0
|
|
|
37.8
|
|
6.0% 8.0%
|
Piedmont construction loan, due 2013
|
|
|
76.6
|
(1)
|
|
127.4
|
|
Libor plus 3.5%
|
Meadow Creek term loan, due 2024
|
|
|
171.4
|
(2)
|
|
208.7
|
|
2.9% 5.1%
|
Rockland term loan, due 2027
|
|
|
85.8
|
|
|
86.5
|
|
6.4%
|
Other long-term debt
|
|
|
1.0
|
|
|
0.3
|
|
5.5% 6.7%
|
Less: current maturities
|
|
|
(206.7
|
)
|
|
(121.2
|
)
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
$
|
1,274.1
|
|
$
|
1,459.1
|
|
|
|
|
|
|
|
|
|
Current maturities consist of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30, 2013
|
|
December 31, 2012
|
|
Interest Rate
|
Current Maturities:
|
|
|
|
|
|
|
|
|
Senior unsecured notes, due July 2014
|
|
$
|
190.0
|
|
|
|
|
5.9%
|
Epsilon Power Partners term facility, due 2019
|
|
|
4.5
|
|
|
3.0
|
|
7.4%
|
Cadillac term loan, due 2025
|
|
|
2.1
|
|
|
2.4
|
|
6.0% 8.0%
|
Piedmont construction loan, due 2013
|
|
|
4.4
|
(1)
|
|
55.1
|
|
Libor plus 3.5%
|
Meadow Creek term loan, due 2024
|
|
|
4.1
|
(2)
|
|
59.5
|
|
2.9% 5.1%
|
Rockland term loan, due 2027
|
|
|
1.4
|
|
|
1.2
|
|
6.4%
|
Other short-term debt
|
|
|
0.2
|
|
|
|
|
5.5 6.7%
|
|
|
|
|
|
|
|
Total current maturities
|
|
$
|
206.7
|
|
$
|
121.2
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
terms of the Piedmont project-level debt financing include a $51.0 million bridge loan and an $82.0 million construction loan
($76.6 million at September 30, 2013) that is expected to convert to a term loan in the fourth quarter of 2013. On April 19, 2013, Piedmont achieved commercial operations and
submitted an application under the 1603 federal grant program to recover approximately 30% of its capital cost. The grant application was approved and we received a $49.5 million grant from the
U.S. Treasury in July 2013. Upon receipt of the grant, we repaid in full the $51.0 million bridge loan with the proceeds of the grant and a $1.5 million contribution from us to cover the
shortfall resulting from the federal sequester on spending. We expect to commence the repayment of the term loan in the fourth quarter of 2013.
-
(2)
-
Meadow
Creek debt consists of $171.4 million term loan and a $56.5 million cash grant loan. The cash grant loan was repaid in April 2013 with
$49.0 million of proceeds from the 1603 grant with the U.S. Treasury, $4.7 million from the former owners to cover the shortfall resulting from the federal sequester on spending and a
$2.8 million contribution from
18
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
5. Long-term debt (Continued)
us
to cover the shortfall from lower grant-eligible costs than anticipated, primarily as a result of a lower project cost versus budget.
Project-level debt of our consolidated projects is secured by the respective project and its contracts with no other recourse to us.
Project-level debt generally amortizes during the term of the respective revenue generating contracts of the projects. The loans have certain financial covenants that must be met.
At September 30, 2013, we had a senior credit facility of $150.0 million on a senior secured basis, which was amended on
August 2, 2013, as further described below (the "senior credit facility"). All $150.0 million of capacity could have been utilized for letters of credit and a sublimit of
$25.0 million could have been utilized for other borrowings. At September 30, 2013, the senior credit facility was undrawn and the applicable LIBOR margin was 4.25%. At
September 30, 2013, $91.2 million was issued in letters of credit, but not drawn, to support contractual credit requirements at several of our projects.
On
August 2, 2013 we entered into an amendment to our prior senior credit facility with our lenders (the "amendment"). The most significant changes to the prior senior credit
facility as a result of the amendment include the following:
-
-
a decrease in capacity from $300 million to $150 million, all of which may be utilized for letters of credit
(as compared to the previous $200 million that could have been utilized for letters of credit) and a sublimit of $25 million which may be utilized for other borrowings;
-
-
a requirement to cash collateralize outstanding letters of credit in an amount equal to the excess above
$125 million if the aggregate amount of letters of credit and borrowings outstanding under the senior credit facility exceeds $125 million;
-
-
a requirement to maintain at all times unrestricted cash and cash equivalents of at least $75 million (inclusive of
any cash collateral provided as described above), which shall be pledged to the lenders as security for the senior credit facility;
-
-
an amendment to the maximum permissible Consolidated Total Net Debt to Consolidated EBITDA (each as defined in the senior
credit facility) to 7.75 to 1.00 (as compared to a prior ratio of 7.50 to 1.00 declining to 7.00 to 1.00 over time);
-
-
an amendment to the minimum permissible Consolidated EBITDA to Consolidated Interest Expense (each as defined in the
senior credit facility) ratio to 1.60 to 1.00 (as compared to a prior ratio of 2.25 to 1.00);
-
-
a requirement to pay a commitment fee of between 0.75% and 1.75% per year based on a percentage of the amount committed
under the senior credit facility, which fee varies based on our unsecured debt rating (at September 30, 2013, the applicable commitment fee is 1.50%); and
-
-
an amendment to the maturity date from November 4, 2015 to March 4, 2015.
19
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
5. Long-term debt (Continued)
Among
other restrictions set forth in the senior credit facility, we are restricted from paying cash dividends to our shareholders if we do not comply with the financial covenants
specified above. The senior credit facility is secured by pledges of certain assets and interests in certain subsidiaries. The prior senior credit facility contained customary representations,
warranties, terms and conditions, and covenants, certain of which were amended in connection with the amendment to the senior credit facility. The covenants in the senior credit facility limit our
ability to, among other things, incur additional indebtedness, merge or consolidate with others, make acquisitions, change our business and sell or dispose of assets. These covenants also include
limitations on investments, limitations on dividends and other restricted payments, limitations on entering into certain types of restrictive agreements, limitations on transactions with affiliates
and limitations on the use of proceeds from the senior credit facility. Specifically, under the senior credit facility, we are effectively only permitted to make voluntary prepayments or repurchases
of our outstanding debt (including for these purposes subsidiary debt guaranteed by us) from the proceeds of debt permitted to be incurred to refinance that outstanding debt or during the 60-day
period preceding the maturity of that outstanding debt. Under the prior senior credit facility, we had the right generally to repurchase substantially more of our outstanding debt issuances, subject
to the satisfaction of certain conditions. In the amendment, the lenders also consented to (i) our previously announced sale of Delta-Person and (ii) the sale of AP Onondaga, LLC,
Onondaga Renewables, LLC and their property.
Borrowings
under the senior credit facility are available in U.S. dollars and Canadian dollars and bear interest at a variable rate equal to the US Prime Rate, the Eurocurrency LIBOR
Rate or the Cdn. Prime Rate (each as defined in the senior credit facility), as applicable, plus a margin of between 2.75% and 4.75% that varies based on our unsecured debt rating. At
September 30, 2013, the applicable margin for loans bearing interest at the Eurocurrency LIBOR Rate and for outstanding letters of credit was 4.25%. The foregoing summary is qualified in its
entirety by reference to the senior credit facility, which was filed as an exhibit to our Current Report on Form 8-K on August 5, 2013 and is incorporated by reference as an exhibit to
this Quarterly Report on Form 10-Q.
6. Fair value of financial instruments
The following represents the recurring measurements of fair value hierarchy of our financial assets and liabilities that were recognized at fair value as of September 30, 2013 and
December 31, 2012.
20
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
6. Fair value of financial instruments (Continued)
Financial
assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2013
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
170.7
|
|
$
|
|
|
$
|
|
|
$
|
170.7
|
|
Restricted cash
|
|
|
119.8
|
|
|
|
|
|
|
|
|
119.8
|
|
Derivative instruments asset
|
|
|
|
|
|
9.8
|
|
|
|
|
|
9.8
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
290.5
|
|
$
|
9.8
|
|
$
|
|
|
$
|
300.3
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments liability
|
|
$
|
|
|
$
|
119.9
|
|
$
|
|
|
$
|
119.9
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
$
|
119.9
|
|
$
|
|
|
$
|
119.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
60.2
|
|
$
|
|
|
$
|
|
|
$
|
60.2
|
|
Restricted cash
|
|
|
28.6
|
|
|
|
|
|
|
|
|
28.6
|
|
Derivative instruments asset
|
|
|
|
|
|
20.6
|
|
|
|
|
|
20.6
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
88.8
|
|
$
|
20.6
|
|
$
|
|
|
$
|
109.4
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments liability
|
|
$
|
|
|
$
|
151.1
|
|
$
|
|
|
$
|
151.1
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
$
|
151.1
|
|
$
|
|
|
$
|
151.1
|
|
|
|
|
|
|
|
|
|
|
|
The carrying amounts for cash and cash equivalents and restricted cash approximate fair value due to their short-term nature.
The
fair values of our derivative instruments are based upon trades in liquid markets. Valuation model inputs can generally be verified and valuation techniques do not involve
significant judgment. The fair values of such financial instruments are classified within Level 2 of the fair value hierarchy. We use our best estimates to determine the fair value of commodity
and derivative contracts we hold. These estimates consider various factors including closing exchange prices, time value, volatility factors and credit exposure. The fair value of each contract is
discounted using a risk free interest rate.
We
also adjust the fair value of financial assets and liabilities to reflect credit risk, which is calculated based on our credit rating and the credit rating of our counterparties. As
of September 30, 2013, the credit valuation adjustments resulted in a $13.0 million net increase in fair value, which consists of a $0.6 million pre-tax gain in other
comprehensive income and a $12.4 million gain in change in fair value of derivative instruments. As of December 31, 2012, the credit valuation adjustments resulted in an
$18.4 million net increase in fair value, which consists of a $1.0 million pre-tax gain in other comprehensive income, a $13.8 million gain in change in fair value of derivative
21
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
6. Fair value of financial instruments (Continued)
instruments
and a $3.6 million increase related to interest rate swaps assumed in the acquisition of Ridgeline.
7. Derivative instruments and hedging activities
We recognize all derivative instruments on the balance sheet as either assets or liabilities and measure them at fair value each reporting period. For certain contracts designated as
cash flow hedges, we defer the effective portion of the change in fair value of the derivatives in accumulated other comprehensive income (loss), until the hedged transactions occur and are recognized
in earnings. The ineffective portion of a cash flow hedge is immediately recognized in earnings.
For
derivatives that are not designated as cash flow hedges, the changes in the fair value are immediately recognized in earnings. The guidelines apply to our natural gas swaps, interest
rate swaps, and foreign exchange contracts.
On March 12, 2012, we discontinued the application of the normal purchase normal sales ("NPNS") exemption on gas purchase
agreements at our North Bay, Kapuskasing and Nipigon projects. On that date, we entered into an agreement with a third party that resulted in the gas purchase agreements no longer qualifying for the
NPNS exemption. The agreements at North Bay and Kapuskasing expire on December 31, 2016. These gas purchase agreements are derivative financial instruments and are recorded in the consolidated
balance sheets at fair value and the changes in their fair market value are recorded in the consolidated statements of operations.
In
May 2012, the Nipigon project entered into a long-term contract for the purchase of natural gas beginning on January 1, 2013 and expiring on December 31, 2022. This
contract is accounted for as a derivative financial instrument and is recorded in the consolidated balance sheet at fair value at September 30, 2013 and December 31, 2012. Changes in the
fair market value of the contract are recorded in the consolidated statements of operations.
In
April, June and August 2013, the Tunis project entered into contracts for the purchase of natural gas beginning on October 1, 2013 and expiring on March 31, 2014. These
contracts are accounted for as derivative financial instruments and are recorded in the consolidated balance sheet at fair value as of September 30, 2013. Changes in the fair market value of
the contracts are recorded in the consolidated statement of operations.
Our strategy to mitigate a portion of the future exposure to changes in natural gas prices at our projects consists of periodically
entering into financial swaps that effectively fix the price of natural gas expected to be purchased at these projects. These natural gas swaps are derivative financial instruments and are recorded in
the consolidated balance sheets at fair value and the changes in their fair market value are recorded in the consolidated statements of operations.
The
operating margin at our 50% owned Orlando project is exposed to changes in natural gas prices following the expiration of its fuel contract at the end of 2013. We have entered into
natural gas
22
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
7. Derivative instruments and hedging activities (Continued)
swaps
to effectively fix the price of 3.2 million Mmbtu of future natural gas purchases, or approximately 74% of our share of the expected natural gas purchases at the project during 2014 and
2015. We also entered into natural gas swaps to effectively fix the price of 1.3 million Mmbtu of future natural gas purchases representing approximately 38% of our share of the expected
natural gas purchases at the project during 2016 and 2017.
Cadillac Renewable Energy, LLC ("Cadillac") has an interest rate swap agreement that effectively fixes the interest rate at 6.0%
from February 16, 2011 to February 15, 2015, 6.1% from February 16, 2015 to February 15, 2019, 6.3% from February 16, 2019 to February 15, 2023, and 6.4%
thereafter. The notional amount of the interest rate swap agreement matches the outstanding principal balance over the remaining life of Cadillac's debt. This swap agreement, which qualifies for
and is designated as a cash flow hedge, is effective through June 2025 and the effective portion of the changes in the fair market value is recorded in accumulated other comprehensive income (loss).
Piedmont
has interest rate swap agreements to economically fix its exposure to changes in interest rates related to its variable-rate debt. The interest rate swap agreement effectively
converts the floating rate debt to a fixed interest rate of 1.7% plus an applicable margin ranging from 3.5% to 3.8% through February 29, 2016. From February 2016 until November 2017, the fixed
rate of the swap is 4.5% and the applicable margin is 4.0%, resulting in an all-in rate of 8.5%. The swap continues at the fixed rate of 4.5% from the maturity of the debt in November 2017 until
November 2030. The notional amounts of the interest rate swap agreements match the estimated outstanding principal balance of Piedmont's cash grant bridge loan and the construction loan facility that
will convert to a term loan. The interest rate swaps were executed on October 21, 2010 and November 2, 2010 and expire on February 29, 2016 and November 30, 2030,
respectively. The interest rate swap agreements are not designated as hedges, and changes in their fair market value are recorded in the consolidated statements of operations.
Epsilon
Power Partners ("Epsilon") has an interest rate swap to economically fix the exposure to changes in interest rates related to the variable-rate non-recourse debt. The interest
rate swap agreement effectively converted the floating rate debt to a fixed interest rate of 7.4% and has a maturity date of July 2019. The notional amount of the swap matches the outstanding
principal balance over the remaining life of Epsilon's debt. This interest rate swap agreement is not designated as a hedge and changes in its fair market value are recorded in the consolidated
statements of operations.
Rockland
Wind Farm, LLC ("Rockland") entered into interest rate swaps to manage interest rate risk exposure. These swaps effectively modify the project's exposure by converting
the project's floating rate debt to a fixed basis. The interest rate swaps are with various counterparties and swap 100% of the expected interest payments from floating LIBOR to fixed rates structured
in two tranches. The first tranche is for the notional amount due on the term loan commencing on December 30, 2011 and ending December 31, 2026 and fixes the interest rate at 4.2% plus
an applicable margin of 2.3% - 2.8%. The second tranche is the post-term portion of the loan, or the balloon payment and commences on December 31, 2026 and ends on
December 31, 2031, fixing the interest rate at 7.8%. The interest rate swap agreements are not designated as a hedge and changes in their fair market value are recorded in the consolidated
statements of operations.
23
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
7. Derivative instruments and hedging activities (Continued)
The
Meadow Creek project ("Meadow Creek") has interest rate swap agreements to economically fix its exposure to changes in interest rates related to its variable-rate debt. The interest
rate swap agreements effectively converted 75% of the floating rate debt to a fixed interest rate of 2.3% plus an applicable margin of 2.8% - 3.3% from December 31, 2012 to
December 31, 2024. The second tranche is the post-term portion of the loan, or the balloon payment and commences on December 31, 2024 and ends on December 31, 2030, fixing the
interest rate at 7.2%. The interest rate swaps were both executed on September 17, 2012 and expire on December 31, 2024 and December 31, 2030, respectively. The interest rate swap
agreements are not designated as hedges, and changes in their fair market value are recorded in the consolidated statements of operations.
We use foreign currency forward contracts to manage our exposure to changes in foreign exchange rates, as many of our projects generate
cash flow in U.S. dollars and Canadian dollars but we pay dividends to shareholders, if and when declared by the board of directors, and interest on corporate level long-term debt and convertible
debentures, predominantly in Canadian dollars. We have a hedging strategy for the purpose of mitigating the currency risk impact on future payments of dividends to shareholders, if and when declared
by the board of directors. We have executed this strategy utilizing cash flows from our projects that generate Canadian dollars and by entering into forward contracts to purchase Canadian dollars at a
fixed rate to hedge an average of approximately 71% of any dividend and expected long-term debt and convertible debenture interest payments through 2015. Changes in the fair value of the forward
contracts partially offset foreign exchange gain or losses on the U.S. dollar equivalent of our Canadian dollar obligations. At September 30, 2013, the forward contracts consist of contracts
assumed in our acquisition of the Partnership with various expiration dates through December 2015 to purchase a total of Cdn$34.9 million at an average exchange rate of Cdn$1.108 per U.S.
dollar. It is our intention to periodically consider extending or terminating these forward contracts.
In
April 2013, we terminated various foreign currency forward contracts with expiration dates through June 2015 assumed in our acquisition of the Partnership resulting in proceeds and a
realized gain of $9.4 million.
We have entered into derivative instruments in order to economically hedge the following notional volumes of forecasted transactions as
summarized below, by type, excluding those derivatives that qualified for the NPNS exemption as of September 30, 2013 and December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
September 30,
2013
|
|
December 31,
2012
|
|
Natural gas swaps
|
|
Natural Gas (Mmbtu)
|
|
|
5.6
|
|
|
10.6
|
|
Gas purchase agreements
|
|
Natural Gas (GJ)
|
|
|
43.9
|
|
|
49.8
|
|
Interest rate swaps
|
|
Interest (US$)
|
|
|
164.4
|
|
|
172.0
|
|
Foreign currency forwards
|
|
Cdn$
|
|
|
34.9
|
|
|
176.6
|
|
24
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
7. Derivative instruments and hedging activities (Continued)
Fair value of derivative instruments
The fair value of our derivative assets and liabilities under counterparty master netting agreement are disclosed net on the
consolidated balance sheets at September 30, 2013
and December 31, 2012. In the following table, we have elected to disclose derivative instrument assets and liabilities on a trade-by-trade basis and do not offset amounts at the counterparty
master agreement level. The following table summarizes the fair value of our derivative assets and liabilities:
|
|
|
|
|
|
|
|
|
|
September 30, 2013
|
|
|
|
Derivative
Assets
|
|
Derivative
Liabilities
|
|
Derivative instruments designated as cash flow hedges:
|
|
|
|
|
|
|
|
Interest rate swaps current
|
|
$
|
|
|
$
|
1.3
|
|
Interest rate swaps long-term
|
|
|
|
|
|
3.2
|
|
|
|
|
|
|
|
Total derivative instruments designated as cash flow hedges
|
|
|
|
|
|
4.5
|
|
|
|
|
|
|
|
Derivative instruments not designated as cash flow hedges:
|
|
|
|
|
|
|
|
Interest rate swaps current
|
|
|
|
|
|
7.5
|
|
Interest rate swaps long-term
|
|
|
7.9
|
|
|
12.6
|
|
Foreign currency forward contracts current
|
|
|
0.6
|
|
|
0.3
|
|
Foreign currency forward contracts long-term
|
|
|
1.6
|
|
|
|
|
Natural gas swaps current
|
|
|
|
|
|
1.2
|
|
Natural gas swaps long-term
|
|
|
|
|
|
3.9
|
|
Gas purchase agreements current
|
|
|
|
|
|
22.8
|
|
Gas purchase agreements long-term
|
|
|
|
|
|
67.4
|
|
|
|
|
|
|
|
Total derivative instruments not designated as cash flow hedges
|
|
|
10.1
|
|
|
115.7
|
|
|
|
|
|
|
|
Total derivative instruments
|
|
$
|
10.1
|
|
$
|
120.2
|
|
|
|
|
|
|
|
25
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
7. Derivative instruments and hedging activities (Continued)
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
Derivative
Assets
|
|
Derivative
Liabilities
|
|
Derivative instruments designated as cash flow hedges:
|
|
|
|
|
|
|
|
Interest rate swaps current
|
|
$
|
|
|
$
|
1.3
|
|
Interest rate swaps long-term
|
|
|
|
|
|
5.2
|
|
|
|
|
|
|
|
Total derivative instruments designated as cash flow hedges
|
|
|
|
|
|
6.5
|
|
|
|
|
|
|
|
Derivative instruments not designated as cash flow hedges:
|
|
|
|
|
|
|
|
Interest rate swaps current
|
|
|
|
|
|
7.3
|
|
Interest rate swaps long-term
|
|
|
0.1
|
|
|
27.7
|
|
Foreign currency forward contracts current
|
|
|
9.5
|
|
|
|
|
Foreign currency forward contracts long-term
|
|
|
11.0
|
|
|
|
|
Natural gas swaps current
|
|
|
|
|
|
|
|
Natural gas swaps long-term
|
|
|
0.1
|
|
|
3.9
|
|
Gas purchase agreements current
|
|
|
0.1
|
|
|
24.5
|
|
Gas purchase agreements long-term
|
|
|
|
|
|
81.4
|
|
|
|
|
|
|
|
Total derivative instruments not designated as cash flow hedges
|
|
|
20.8
|
|
|
144.8
|
|
|
|
|
|
|
|
Total derivative instruments
|
|
$
|
20.8
|
|
$
|
151.3
|
|
|
|
|
|
|
|
The following table summarizes the changes in the accumulated other comprehensive income (loss) ("OCI") balance attributable to
derivative financial instruments designated as a hedge, net of tax:
|
|
|
|
|
|
|
|
|
|
|
(in millions)
Three months ended September 30, 2013
|
|
Interest Rate
Swaps
|
|
Natural Gas
Swaps
|
|
Total
|
|
Accumulated OCI balance at June 30, 2013
|
|
$
|
(0.4
|
)
|
$
|
|
|
$
|
(0.4
|
)
|
Change in fair value of cash flow hedges
|
|
|
(0.1
|
)
|
|
|
|
|
(0.1
|
)
|
Realized from OCI during the period
|
|
|
0.2
|
|
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
Accumulated OCI balance at September 30, 2013
|
|
$
|
(0.3
|
)
|
$
|
|
|
$
|
(0.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
Three months ended September 30, 2012
|
|
Interest Rate
Swaps
|
|
Natural Gas
Swaps
|
|
Total
|
|
Accumulated OCI balance at June 30, 2012
|
|
$
|
(1.7
|
)
|
$
|
0.2
|
|
$
|
(1.5
|
)
|
Change in fair value of cash flow hedges
|
|
|
(0.3
|
)
|
|
|
|
|
(0.3
|
)
|
Realized from OCI during the period
|
|
|
0.2
|
|
|
(0.1
|
)
|
|
0.1
|
|
|
|
|
|
|
|
|
|
Accumulated OCI balance at September 30, 2012
|
|
$
|
(1.8
|
)
|
$
|
0.1
|
|
$
|
(1.7
|
)
|
|
|
|
|
|
|
|
|
26
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
7. Derivative instruments and hedging activities (Continued)
|
|
|
|
|
|
|
|
|
|
|
(in millions)
Nine months ended September 30, 2013
|
|
Interest Rate
Swaps
|
|
Natural Gas
Swaps
|
|
Total
|
|
Accumulated OCI balance at December 31, 2012
|
|
$
|
(1.5
|
)
|
$
|
0.1
|
|
$
|
(1.4
|
)
|
Change in fair value of cash flow hedges
|
|
|
0.5
|
|
|
|
|
|
0.5
|
|
Realized from OCI during the period
|
|
|
0.7
|
|
|
(0.1
|
)
|
|
0.6
|
|
|
|
|
|
|
|
|
|
Accumulated OCI balance at September 30, 2013
|
|
$
|
(0.3
|
)
|
$
|
|
|
$
|
(0.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
Nine months ended September 30, 2012
|
|
Interest Rate
Swaps
|
|
Natural Gas
Swaps
|
|
Total
|
|
Accumulated OCI balance at December 31, 2011
|
|
$
|
(1.7
|
)
|
$
|
0.3
|
|
$
|
(1.4
|
)
|
Change in fair value of cash flow hedges
|
|
|
(0.8
|
)
|
|
|
|
|
(0.8
|
)
|
Realized from OCI during the period
|
|
|
0.7
|
|
|
(0.2
|
)
|
|
0.5
|
|
|
|
|
|
|
|
|
|
Accumulated OCI balance at September 30, 2012
|
|
$
|
(1.8
|
)
|
$
|
0.1
|
|
$
|
(1.7
|
)
|
|
|
|
|
|
|
|
|
The following table summarizes realized (gains) and losses for derivative instruments not designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
September 30,
|
|
|
|
Classification of (gain) loss
recognized in income
|
|
|
|
2013
|
|
2012
|
|
Gas purchase agreements
|
|
Fuel
|
|
$
|
7.6
|
|
$
|
13.3
|
|
Foreign currency forwards
|
|
Foreign exchange gain
|
|
|
(1.1
|
)
|
|
(2.1
|
)
|
Interest rate swaps
|
|
Interest, net
|
|
|
2.7
|
|
|
1.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months
ended
September 30,
|
|
|
|
Classification of (gain) loss
recognized in income
|
|
|
|
2013
|
|
2012
|
|
Gas purchase agreements
|
|
Fuel
|
|
$
|
38.0
|
|
$
|
29.3
|
|
Foreign currency forwards
|
|
Foreign exchange gain
|
|
|
(14.4
|
)
|
|
(17.3
|
)
|
Interest rate swaps
|
|
Interest, net
|
|
|
9.4
|
|
|
3.4
|
|
27
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
7. Derivative instruments and hedging activities (Continued)
The following table summarizes the unrealized gains and losses resulting from changes in the fair value of derivative financial instruments that
are not designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
|
|
Classification of (gain) loss
recognized in income
|
|
|
|
2013
|
|
2012
|
|
Natural gas swaps
|
|
Change in fair value of derivatives
|
|
$
|
0.6
|
|
$
|
(1.0
|
)
|
Gas purchase agreements
|
|
Change in fair value of derivatives
|
|
|
3.6
|
|
|
(10.0
|
)
|
Interest rate swaps
|
|
Change in fair value of derivatives
|
|
|
(0.7
|
)
|
|
0.3
|
|
|
|
|
|
|
|
|
|
Total change in fair value of derivative instruments
|
|
|
|
$
|
3.5
|
|
$
|
(10.7
|
)
|
|
|
|
|
|
|
|
|
Foreign currency forwards
|
|
Foreign exchange loss (gain)
|
|
$
|
(0.2
|
)
|
$
|
(4.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
September 30,
|
|
|
|
Classification of (gain) loss
recognized in income
|
|
|
|
2013
|
|
2012
|
|
Natural gas swaps
|
|
Change in fair value of derivatives
|
|
$
|
1.4
|
|
$
|
(0.2
|
)
|
Gas purchase agreements
|
|
Change in fair value of derivatives
|
|
|
(12.0
|
)
|
|
(49.3
|
)
|
Interest rate swaps
|
|
Change in fair value of derivatives
|
|
|
(22.8
|
)
|
|
(1.8
|
)
|
|
|
|
|
|
|
|
|
Total change in fair value of derivative instruments
|
|
|
|
$
|
(33.4
|
)
|
$
|
(51.3
|
)
|
|
|
|
|
|
|
|
|
Foreign currency forwards
|
|
Foreign exchange loss (gain)
|
|
$
|
18.5
|
|
$
|
8.2
|
|
|
|
|
|
|
|
|
|
8. Income taxes
Income tax benefit from continuing operations for the nine months ended September 30, 2013 was $1.9 million. The difference between the actual tax benefit of
$1.9 million and the expected income tax benefit of $7.0 million, based on the Canadian enacted statutory rate of 25%, is primarily due to a goodwill impairment of $13.7 million,
a $4.5 million increase in the valuation allowance, $6.2 million in dividend withholding and preferred share taxes, and $5.2 million of changes in estimates at joint venture
projects. This is partially offset by $19.4 million related to 1603 Treasury grant proceeds, $3.9 million of foreign exchange, and $1.0 million of other permanent differences.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
Current income tax expense
|
|
$
|
5.4
|
|
$
|
1.9
|
|
$
|
10.8
|
|
$
|
6.1
|
|
Deferred tax (benefit) expense
|
|
|
(5.4
|
)
|
|
1.2
|
|
|
(12.7
|
)
|
|
(25.2
|
)
|
|
|
|
|
|
|
|
|
|
|
Total income tax (benefit) expense
|
|
$
|
|
|
$
|
3.1
|
|
$
|
(1.9
|
)
|
$
|
(19.1
|
)
|
|
|
|
|
|
|
|
|
|
|
28
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
8. Income taxes (Continued)
As of September 30, 2013, we have recorded a valuation allowance of $122.0 million. The amount is comprised primarily of provisions against Canadian and U.S. net operating
loss carryforwards. In assessing the recoverability of our deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The
ultimate realization of deferred tax assets is dependent upon projected future taxable income in the United States and in Canada and available tax planning strategies.
9. Employee incentive programs
The following table summarizes the changes in LTIP notional units during the nine months ended September 30, 2013:
|
|
|
|
|
|
|
|
(Units in thousands)
|
|
Units
|
|
Grant Date
Weighted-Average
Price per Unit
|
|
Outstanding at December 31, 2012
|
|
|
492,535
|
|
$
|
13.88
|
|
Granted
|
|
|
597,031
|
|
|
4.91
|
|
Reinvested
|
|
|
45,344
|
|
|
9.12
|
|
Forfeited
|
|
|
(138,473
|
)
|
|
8.88
|
|
Vested
|
|
|
(202,696
|
)
|
|
13.48
|
|
|
|
|
|
|
|
Outstanding at September 30, 2013
|
|
|
793,741
|
|
$
|
7.76
|
|
|
|
|
|
|
|
Certain awards have a market condition based on our total shareholder return during the performance period compared to a group of peer companies
and, in some cases, Project Adjusted EBITDA per common share compared to budget. Compensation expense for notional units granted in 2013 is recorded net of estimated forfeitures. See Note 14 to
the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2012 for further details. Cash payments made for vested notional units for the
nine months ended September 30, 2013 was $0.9 million. Compensation expense for LTIP was $0.4 million and $1.7 million for the three and nine months end
September 30, 2013, respectively.
The
calculation of simulated total shareholder return under the Monte Carlo model for the remaining time in the performance period for awards with market conditions included the
following assumptions as of September 30, 2013 and December 31, 2012:
|
|
|
|
|
|
|
September 30, 2013
|
|
December 31, 2012
|
Weighted average risk free rate of return
|
|
0.0 0.5%
|
|
0.1 0.3%
|
Dividend yield
|
|
9.0%
|
|
10.1%
|
Expected volatilityAtlantic Power
|
|
42.2%
|
|
22.5%
|
Expected volatilitypeer companies
|
|
10.6 96.3%
|
|
11.9 97.1%
|
Weighted average remaining measurement period
|
|
2.1 years
|
|
1.4 years
|
29
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
10. Basic and diluted earnings (loss) per share
Basic earnings (loss) per share are calculated by dividing net income (loss) by the weighted average common shares outstanding during their respective period. Diluted earnings (loss) per
share are computed including dilutive potential shares as if they were outstanding shares during the year. Dilutive potential shares include shares that would be issued if all of the convertible
debentures were converted into shares at January 1, 2013. Dilutive potential shares also include the weighted average number of shares, as of the date such notional units were granted, that
would be issued if the unvested notional units outstanding under the LTIP were vested and redeemed for shares under the terms of the LTIP. The following table sets forth the diluted net income and
potentially dilutive shares utilized in the per share calculation for the three and nine months ended September 30, 2013 and 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations attributable to Atlantic Power Corporation
|
|
$
|
(40.9
|
)
|
$
|
(26.5
|
)
|
$
|
(31.8
|
)
|
$
|
(103.7
|
)
|
Income (loss) from discontinued operations, net of tax
|
|
|
(0.4
|
)
|
|
19.0
|
|
|
(6.1
|
)
|
|
48.8
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Atlantic Power Corporation
|
|
$
|
(41.3
|
)
|
$
|
(7.5
|
)
|
$
|
(37.9
|
)
|
$
|
(54.9
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average basic shares outstanding
|
|
|
120.0
|
|
|
119.0
|
|
|
119.8
|
|
|
115.4
|
|
Dilutive potential shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible debentures
|
|
|
27.7
|
|
|
20.5
|
|
|
27.7
|
|
|
15.7
|
|
LTIP notional units
|
|
|
0.8
|
|
|
0.5
|
|
|
0.7
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
Potentially dilutive shares
|
|
|
148.5
|
|
|
140.0
|
|
|
148.2
|
|
|
131.6
|
|
|
|
|
|
|
|
|
|
|
|
Diluted loss per share from continuing operations attributable to Atlantic Power Corporation
|
|
$
|
(0.34
|
)
|
$
|
(0.22
|
)
|
$
|
(0.27
|
)
|
$
|
(0.90
|
)
|
Diluted earnings (loss) per share from discontinued operations
|
|
|
(0.00
|
)
|
|
0.16
|
|
|
(0.05
|
)
|
|
0.42
|
|
|
|
|
|
|
|
|
|
|
|
Diluted loss per share attributable to Atlantic Power Corporation
|
|
$
|
(0.34
|
)
|
$
|
(0.06
|
)
|
$
|
(0.32
|
)
|
$
|
(0.48
|
)
|
|
|
|
|
|
|
|
|
|
|
Potentially dilutive shares from convertible debentures and LTIP notional units have been excluded from fully diluted shares for the three and
nine months ended September 30, 2013 and 2012 because their impact would be anti-dilutive.
30
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
11. Assets held for sale and discontinued operations
During the three months ended September 30, 2013, we initiated and approved a plan to sell our 60% interest in Rollcast. Rollcast is classified as held for sale and its net income
(loss) is recorded as income (loss) from discontinued operations, net of tax in the statements of operations for the three and nine months ended September 30, 2013 and 2012. Rollcast's loss
from discontinued operations includes a $3.5 million impairment of goodwill charge and a $1.4 million impairment of intangible asset charge recorded in the three months ended
June 30, 2013.
The
Florida Projects and Path 15 were sold on April 12, 2013 and April 30, 2013, respectively. Accordingly, the projects' net income (loss) is recorded as income (loss)
from discontinued operations, net of tax in the statements of operations for the nine months ended September 30, 2013 and the three and nine months ended September 30, 2012.
The
following tables summarize the revenue, income (loss) from operations, and income tax expense of Rollcast, Path 15 and the Florida Projects for the three and nine months ended
September 30, 2013 and 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
(in millions)
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
Revenue
|
|
$
|
|
|
$
|
55.2
|
|
$
|
71.6
|
|
$
|
158.2
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations of discontinued businesses
|
|
|
(0.4
|
)
|
|
19.5
|
|
|
(5.3
|
)
|
|
49.7
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
|
|
|
0.5
|
|
|
0.8
|
|
|
0.9
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations of discontinued businesses, net of tax
|
|
$
|
(0.4
|
)
|
$
|
19.0
|
|
$
|
(6.1
|
)
|
$
|
48.8
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings (loss) per share related to income (loss) from discontinued operations for Rollcast, the Florida Projects and Path 15
were $0.0 and $0.16 for the three month periods ended
September 30, 2013 and 2012, respectively, and $(0.05) and $0.42 for the nine month periods ended September 30, 2013 and 2012, respectively.
31
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
11. Assets held for sale and discontinued operations (Continued)
The
assets and liabilities of these projects classified as assets held for sale in the accompanying consolidated balance sheets as of September 30, 2013 and December 31,
2012 consisted of the following:
|
|
|
|
|
|
|
|
(in millions)
|
|
September 30, 2013
|
|
December 31, 2012
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
0.3
|
|
$
|
6.5
|
|
Restricted cash
|
|
|
|
|
|
12.6
|
|
Accounts receivable
|
|
|
0.1
|
|
|
21.9
|
|
Other current assets
|
|
|
|
|
|
6.3
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
|
47.3
|
|
Non-current assets:
|
|
|
|
|
|
|
|
Plant, Property & Equipment
|
|
|
0.1
|
|
|
111.9
|
|
Transmission system rights
|
|
|
|
|
|
172.4
|
|
Goodwill
|
|
|
|
|
|
8.9
|
|
Other assets
|
|
|
|
|
|
10.9
|
|
|
|
|
|
|
|
Assets from discontinued operations
|
|
|
0.5
|
|
|
351.4
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable and other accrued liabilities
|
|
$
|
0.1
|
|
$
|
16.5
|
|
Current portion of long-term debt
|
|
|
|
|
|
14.3
|
|
Current portion of derivative instruments liability
|
|
|
|
|
|
20.0
|
|
Other liabilities
|
|
|
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
|
51.3
|
|
Long-term liabilities
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
|
|
137.7
|
|
Other long-term liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities from discontinued operations
|
|
|
0.1
|
|
|
189.0
|
|
32
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
12. Equity
The following table provides a reconciliation of the beginning and ending equity attributable to shareholders of Atlantic Power, preferred shares issued by a subsidiary company,
noncontrolling interests and total equity for the nine months ended September 30, 2013 and 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2013
|
|
(in millions)
|
|
Total Atlantic Power
Corporation
Shareholders' Equity
|
|
Preferred shares
issued by a subsidiary
company
|
|
Noncontrolling
Interests
|
|
Total Equity
|
|
Balance at January 1
|
|
$
|
729.7
|
|
$
|
221.3
|
|
$
|
235.4
|
|
$
|
1,186.4
|
|
Net income (loss)
|
|
|
(37.9
|
)
|
|
9.5
|
|
|
(3.3
|
)
|
|
(31.7
|
)
|
Realized and unrealized loss on hedging activities, net of tax
|
|
|
1.1
|
|
|
|
|
|
|
|
|
1.1
|
|
Foreign currency translation adjustment, net of tax
|
|
|
(19.3
|
)
|
|
|
|
|
|
|
|
(19.3
|
)
|
Common shares issued for LTIP
|
|
|
1.2
|
|
|
|
|
|
|
|
|
1.2
|
|
Contribution by and sale of noncontrolling interst
|
|
|
|
|
|
|
|
|
44.6
|
|
|
44.6
|
|
Costs associated with tax equity raise
|
|
|
(0.9
|
)
|
|
|
|
|
|
|
|
(0.9
|
)
|
Dividends paid to noncontrolling interest
|
|
|
|
|
|
|
|
|
(4.4
|
)
|
|
(4.4
|
)
|
Dividends declared on common shares
|
|
|
(46.5
|
)
|
|
|
|
|
|
|
|
(46.5
|
)
|
Dividends declared on preferred shares of a subsidiary company
|
|
|
|
|
|
(9.5
|
)
|
|
|
|
|
(9.5
|
)
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30
|
|
$
|
627.4
|
|
$
|
221.3
|
|
$
|
272.3
|
|
$
|
1,121.0
|
|
|
|
|
|
|
|
|
|
|
|
33
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
12. Equity (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2012
|
|
|
|
Total Atlantic Power
Corporation
Shareholders' Equity
|
|
Preferred shares
issued by a subsidiary
company
|
|
Noncontrolling
Interests
|
|
Total Equity
|
|
Balance at January 1
|
|
$
|
891.5
|
|
$
|
221.3
|
|
$
|
3.0
|
|
$
|
1,115.8
|
|
Net income (loss)
|
|
|
(54.9
|
)
|
|
9.8
|
|
|
(0.7
|
)
|
|
(45.8
|
)
|
Realized and unrealized loss on hedging activities, net of tax
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
|
(0.3
|
)
|
Foreign currency translation adjustment, net of tax
|
|
|
22.6
|
|
|
|
|
|
|
|
|
22.6
|
|
Common shares issuance, net of costs
|
|
|
67.8
|
|
|
|
|
|
|
|
|
67.8
|
|
Common shares issued for LTIP
|
|
|
1.5
|
|
|
|
|
|
|
|
|
1.5
|
|
Dividends declared on common shares
|
|
|
(99.0
|
)
|
|
|
|
|
|
|
|
(99.0
|
)
|
Dividends declared on preferred shares of a subsidiary company
|
|
|
|
|
|
(9.8
|
)
|
|
|
|
|
(9.8
|
)
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30
|
|
$
|
829.2
|
|
$
|
221.3
|
|
$
|
2.3
|
|
$
|
1,052.8
|
|
|
|
|
|
|
|
|
|
|
|
13. Segment and geographic information
Our operating segments are Northeast, Northwest, Southeast, Southwest and Un-allocated Corporate.
The segment classified as Un-allocated Corporate includes activities that support the executive offices, capital structure and costs of being a public registrant in the United States and Canada.
Un-allocated Corporate also includes Rollcast, a 60% owned company, which develops, owns and operates renewable power plants that use wood or biomass fuel, and for which we initiated and approved a
plan to sell, and Ridgeline, which develops and operates wind and solar power projects. These costs are not allocated to the operating segments when determining segment profit or loss.
We
analyze the performance of our operating segments based on Project Adjusted EBITDA which is defined as project income plus interest, taxes, depreciation and amortization (including
non-cash impairment charges) and changes in fair value of derivative instruments. Project Adjusted EBITDA is not a measure recognized under GAAP and does not have a standardized meaning prescribed by
GAAP and is therefore unlikely to be comparable to similar measures presented by other companies. We use Project Adjusted EBITDA to provide comparative information about project performance without
considering how projects are capitalized or whether they contain derivative contracts that are required to be recorded at fair value. Rollcast, a component of the Un-allocated Corporate segment, Path
15, a component of the Southwest segment, and the Florida projects, which are components of the Southeast segment, are included in the income from discontinued operations line item in the table below.
We have adjusted prior periods to reflect this reclassification. A reconciliation of project income to Project Adjusted EBITDA is included in the tables below.
34
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
13. Segment and geographic information (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast
|
|
Southeast
|
|
Northwest
|
|
Southwest
|
|
Un-allocated
Corporate
|
|
Consolidated
|
|
Three months ended September 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Project revenues
|
|
$
|
47.3
|
|
$
|
10.6
|
|
$
|
23.5
|
|
$
|
61.0
|
|
$
|
(0.6
|
)
|
$
|
141.8
|
|
Segment assets
|
|
|
1,134.8
|
|
|
177.4
|
|
|
1,113.3
|
|
|
913.9
|
|
|
157.3
|
|
|
3,496.7
|
|
Project Adjusted EBITDA
|
|
$
|
24.9
|
|
$
|
5.9
|
|
$
|
19.4
|
|
$
|
29.5
|
|
$
|
(3.5
|
)
|
|
76.2
|
|
Change in fair value of derivative instruments
|
|
|
3.5
|
|
|
0.5
|
|
|
(0.5
|
)
|
|
|
|
|
|
|
|
3.5
|
|
Depreciation and amortization
|
|
|
17.8
|
|
|
3.4
|
|
|
15.1
|
|
|
14.9
|
|
|
0.2
|
|
|
51.4
|
|
Interest, net
|
|
|
4.1
|
|
|
1.4
|
|
|
4.8
|
|
|
0.4
|
|
|
(0.1
|
)
|
|
10.6
|
|
Other project (income) expense
|
|
|
31.4
|
|
|
|
|
|
|
|
|
(26.3
|
)
|
|
0.8
|
|
|
5.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Project income (loss)
|
|
|
(31.9
|
)
|
|
0.6
|
|
|
(0.0
|
)
|
|
40.5
|
|
|
(4.4
|
)
|
|
4.8
|
|
Administration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.4
|
|
|
8.4
|
|
Interest, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27.5
|
|
|
27.5
|
|
Foreign exchange gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.1
|
|
|
9.1
|
|
Other expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
(31.9
|
)
|
|
0.6
|
|
|
(0.0
|
)
|
|
40.5
|
|
|
(49.4
|
)
|
|
(40.2
|
)
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations
|
|
|
(31.9
|
)
|
|
0.6
|
|
|
(0.0
|
)
|
|
40.5
|
|
|
(49.4
|
)
|
|
(40.2
|
)
|
Income (loss) from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.4
|
)
|
|
(0.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(31.9
|
)
|
$
|
0.6
|
|
$
|
(0.0
|
)
|
$
|
40.5
|
|
$
|
(49.8
|
)
|
$
|
(40.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
13. Segment and geographic information (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast
|
|
Southeast
|
|
Northwest
|
|
Southwest
|
|
Un-allocated
Corporate
|
|
Consolidated
|
|
Three months ended September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Project revenues
|
|
$
|
43.8
|
|
$
|
|
|
$
|
15.0
|
|
$
|
47.7
|
|
$
|
(0.2
|
)
|
$
|
106.3
|
|
Segment assets
|
|
|
1,157.9
|
|
|
446.3
|
|
|
852.0
|
|
|
1,162.6
|
|
|
25.2
|
|
|
3,644.0
|
|
Project Adjusted EBITDA
|
|
$
|
20.3
|
|
$
|
2.3
|
|
$
|
12.6
|
|
$
|
23.4
|
|
$
|
(1.2
|
)
|
|
57.4
|
|
Change in fair value of derivative instruments
|
|
|
(10.2
|
)
|
|
(0.6
|
)
|
|
|
|
|
|
|
|
|
|
|
(10.8
|
)
|
Depreciation and amortization
|
|
|
20.4
|
|
|
1.4
|
|
|
10.7
|
|
|
9.3
|
|
|
|
|
|
41.8
|
|
Interest, net
|
|
|
4.5
|
|
|
|
|
|
1.2
|
|
|
0.1
|
|
|
|
|
|
5.8
|
|
Other project (income) expense
|
|
|
0.3
|
|
|
|
|
|
|
|
|
0.2
|
|
|
0.4
|
|
|
0.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Project income (loss)
|
|
|
5.3
|
|
|
1.5
|
|
|
0.7
|
|
|
13.8
|
|
|
(1.6
|
)
|
|
19.7
|
|
Administration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.3
|
|
|
6.3
|
|
Interest, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25.8
|
|
|
25.8
|
|
Foreign exchange loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.7
|
|
|
7.7
|
|
Other expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
5.3
|
|
|
1.5
|
|
|
0.7
|
|
|
13.8
|
|
|
(41.7
|
)
|
|
(20.4
|
)
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations
|
|
|
5.3
|
|
|
1.5
|
|
|
0.7
|
|
|
13.8
|
|
|
(44.8
|
)
|
|
(23.5
|
)
|
Income (loss) from discontinued operations
|
|
|
|
|
|
19.3
|
|
|
|
|
|
0.8
|
|
|
(1.1
|
)
|
|
19.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
5.3
|
|
$
|
20.8
|
|
$
|
0.7
|
|
$
|
14.6
|
|
$
|
(45.9
|
)
|
$
|
(4.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
13. Segment and geographic information (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast
|
|
Southeast
|
|
Northwest
|
|
Southwest
|
|
Un-allocated
Corporate
|
|
Consolidated
|
|
Nine months ended September 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Project revenues
|
|
$
|
167.9
|
|
$
|
16.8
|
|
$
|
69.5
|
|
$
|
167.7
|
|
$
|
(0.9
|
)
|
$
|
421.0
|
|
Segment assets
|
|
|
1,134.8
|
|
|
177.4
|
|
|
1,113.3
|
|
|
913.9
|
|
|
157.3
|
|
|
3,496.7
|
|
Project Adjusted EBITDA
|
|
$
|
96.8
|
|
$
|
10.4
|
|
$
|
53.0
|
|
$
|
64.5
|
|
$
|
(11.4
|
)
|
|
213.3
|
|
Change in fair value of derivative instruments
|
|
|
(12.9
|
)
|
|
(3.1
|
)
|
|
(18.8
|
)
|
|
|
|
|
|
|
|
(34.8
|
)
|
Depreciation and amortization
|
|
|
55.7
|
|
|
7.9
|
|
|
45.7
|
|
|
44.7
|
|
|
0.5
|
|
|
154.5
|
|
Interest, net
|
|
|
12.8
|
|
|
2.6
|
|
|
14.2
|
|
|
0.9
|
|
|
|
|
|
30.5
|
|
Other project (income) expense
|
|
|
32.3
|
|
|
0.1
|
|
|
|
|
|
(26.6
|
)
|
|
|
|
|
5.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Project income (loss)
|
|
|
8.9
|
|
|
2.9
|
|
|
11.9
|
|
|
45.5
|
|
|
(11.9
|
)
|
|
57.3
|
|
Administration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28.5
|
|
|
28.5
|
|
Interest, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78.7
|
|
|
78.7
|
|
Foreign exchange gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12.9
|
)
|
|
(12.9
|
)
|
Other expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9.5
|
)
|
|
(9.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
8.9
|
|
|
2.9
|
|
|
11.9
|
|
|
45.5
|
|
|
(96.7
|
)
|
|
(27.5
|
)
|
Income tax benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.9
|
)
|
|
(1.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations
|
|
|
8.9
|
|
|
2.9
|
|
|
11.9
|
|
|
45.5
|
|
|
(94.8
|
)
|
|
(25.6
|
)
|
Income (loss) from discontinued operations
|
|
|
|
|
|
(1.1
|
)
|
|
|
|
|
1.3
|
|
|
(6.3
|
)
|
|
(6.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
8.9
|
|
$
|
1.8
|
|
$
|
11.9
|
|
$
|
46.8
|
|
$
|
(101.1
|
)
|
$
|
(31.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
13. Segment and geographic information (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast
|
|
Southeast
|
|
Northwest
|
|
Southwest
|
|
Un-allocated
Corporate
|
|
Consolidated
|
|
Nine months ended September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Project revenues
|
|
$
|
156.6
|
|
$
|
|
|
$
|
46.9
|
|
$
|
121.7
|
|
$
|
1.2
|
|
$
|
326.4
|
|
Segment assets
|
|
|
1,157.9
|
|
|
446.3
|
|
|
852.0
|
|
|
1,162.6
|
|
|
25.2
|
|
|
3,644.0
|
|
Project Adjusted EBITDA
|
|
$
|
85.2
|
|
$
|
6.5
|
|
$
|
38.5
|
|
$
|
48.0
|
|
$
|
(7.5
|
)
|
|
170.7
|
|
Change in fair value of derivative instruments
|
|
|
46.3
|
|
|
2.6
|
|
|
|
|
|
|
|
|
|
|
|
48.9
|
|
Depreciation and amortization
|
|
|
58.0
|
|
|
4.3
|
|
|
31.7
|
|
|
28.9
|
|
|
0.1
|
|
|
123.0
|
|
Interest, net
|
|
|
13.9
|
|
|
|
|
|
3.8
|
|
|
0.4
|
|
|
|
|
|
18.1
|
|
Other project (income) expense
|
|
|
0.8
|
|
|
|
|
|
|
|
|
2.9
|
|
|
0.7
|
|
|
4.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Project income (loss)
|
|
|
(33.8
|
)
|
|
(0.4
|
)
|
|
3.0
|
|
|
15.8
|
|
|
(8.3
|
)
|
|
(23.7
|
)
|
Administration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22.0
|
|
|
22.0
|
|
Interest, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69.3
|
|
|
69.3
|
|
Foreign exchange loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.4
|
|
|
4.4
|
|
Other expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5.7
|
)
|
|
(5.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
(33.8
|
)
|
|
(0.4
|
)
|
|
3.0
|
|
|
15.8
|
|
|
(98.3
|
)
|
|
(113.7
|
)
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19.1
|
)
|
|
(19.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations
|
|
|
(33.8
|
)
|
|
(0.4
|
)
|
|
3.0
|
|
|
15.8
|
|
|
(79.2
|
)
|
|
(94.6
|
)
|
Income (loss) from discontinued operations
|
|
|
|
|
|
49.5
|
|
|
|
|
|
1.5
|
|
|
(2.2
|
)
|
|
48.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(33.8
|
)
|
$
|
49.1
|
|
$
|
3.0
|
|
$
|
17.3
|
|
$
|
(81.4
|
)
|
$
|
(45.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The tables below provide information, by country, about our consolidated operations. Revenue is recorded in the country in which it is earned and
assets are recorded in the country in which they are located.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, Plant and
Equipment, net of
accumulated depreciation
|
|
|
|
Project Revenue
Three months ended
September 30,
|
|
Project Revenue
Nine months ended
September 30,
|
|
|
|
September 30,
2013
|
|
December 31,
2012
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
United States
|
|
$
|
98.0
|
|
$
|
61.0
|
|
$
|
264.7
|
|
$
|
171.9
|
|
$
|
1,368.0
|
|
$
|
1,504.8
|
|
Canada
|
|
|
43.8
|
|
|
45.3
|
|
|
156.3
|
|
|
154.5
|
|
|
505.9
|
|
|
550.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
141.8
|
|
$
|
106.3
|
|
$
|
421.0
|
|
$
|
326.4
|
|
$
|
1,873.9
|
|
$
|
2,055.5
|
|
The Ontario Electricity Financial Corp ("OEFC"), British Columbia Hydro and Power Authority ("BC Hydro"), San Diego Gas & Electric ("SD
G&E") provided for approximately 20.7%, 10.2%, and 13.1% respectively, of total consolidated revenues for the three months ended September 30, 2013 and 26.3%, 10.8%, and 10.2% respectively, of
total consolidated revenues for the nine months ended
38
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
13. Segment and geographic information (Continued)
September 30,
2013. OEFC and BC Hydro provided for approximately 18.7% and 9.2%, respectively, of total consolidated revenues for the three months ended September 30, 2012 and 22.1% and
9.7% respectively, of total consolidated revenues for the nine months ended September 30, 2012. OEFC purchases electricity from the Calstock, Kapuskasing, Nipigon, North Bay and Tunis projects
in the Northeast segment, BC Hydro purchases electricity from the Mamquam, Moresby Lake and Williams Lake projects in the Northwest segment, and SD G&E purchases electricity from the Naval Station,
Naval Training Center, and North Island projects in the Southwest segment.
14. Commitments and contingencies
We are party to numerous legal proceedings, including securities class actions, from time to time. In particular, we and/or certain of our current and former officers have been named as
defendants in various class action lawsuits. Due to the nature of these proceedings, the lack of precise damage claims and the type of claims we are subject to, we are unable to determine the ultimate
or maximum amount
of monetary liability or financial impact, if any, to us in these legal matters, which unless otherwise specified, seek damages from the defendants of material or indeterminate amounts.
Shareholder class action lawsuits
Massachusetts District Court Actions
On
March 8, 14, 15 and 25, 2013 and April 23, 2013, five purported securities fraud class action complaints were filed by alleged investors in
Atlantic Power common shares in the United States District Court for the District of Massachusetts (the "District Court") against Atlantic Power and Barry E. Welch, our President and Chief Executive
Officer and a Director of Atlantic Power, in each of the actions, and, in addition to Mr. Welch, some or all of Patrick J. Welch, our former Chief Financial Officer, Lisa Donahue, our former
interim Chief Financial Officer, and Terrence Ronan, our current Chief Financial Officer, in certain of the actions (the "Individual Defendants," and together with Atlantic Power, the "Defendants")
(the "U.S. Actions").
The
District Court complaints differ in terms of the identities of the Individual Defendants they name, as noted above, the named plaintiffs, and the purported class period they allege
(July 23, 2010 to March 4, 2013 in three of the District Court actions and August 8, 2012 to February 28, 2013 in the other two District Court actions), but in general each
alleges, among other things, that in Atlantic Power's press releases, quarterly and year-end filings and conference calls with analysts and investors, Atlantic Power and the Individual Defendants made
materially false and misleading statements and omissions regarding the sustainability of Atlantic Power's common share dividend that artificially inflated the price of Atlantic Power's common shares.
The District Court complaints assert claims under Section 10(b) and, against the Individual Defendants, under Section 20(a) of the Securities Exchange Act of 1934, as amended.
The
parties to each District Court action have filed joint motions requesting that the District Court set a schedule in the District Court actions, including: (i) setting a
deadline for the lead plaintiff to file a consolidated amended class action complaint (the "Amended Complaint"), after the appointment of lead plaintiff and counsel; (ii) setting a
deadline for Defendants to answer, file a motion to dismiss or otherwise respond to the Amended Complaint (and for subsequent briefing
39
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
14. Commitments and contingencies (Continued)
regarding
any such motion to dismiss); and (iii) confirming that Defendants need not answer, move to dismiss or otherwise respond to any of the five District Court complaints prior to the
filing of the Amended Complaint. On May 7, 2013, each of six groups of investors (the "U.S. Lead Plaintiff Applicants") filed a motion (collectively, the "U.S. Lead Plaintiff Motions") with the
District Court seeking: (i) to consolidate the five U.S. Actions (the "Consolidated U.S. Action"); (ii) to be appointed lead plaintiff in the Consolidated U.S. Action; and
(iii) to have its choice of lead counsel confirmed. On May 22, 2013, three of the U.S. Lead Plaintiff Applicants filed oppositions to the other U.S. Lead Plaintiff Motions, and on
June 6, 2013, those three Lead Plaintiff Applicants filed replies in support of their respective motions. On August 19, 2013, the District Court held a status conference to address
certain issues raised by the U.S. Lead Plaintiff Motions, entered an order consolidating the five U.S. Actions, and directed two of the six U.S. Lead Plaintiff Applicants to file supplemental
submissions by September 9, 2013. Both of those U.S. Lead Plaintiff Applicants filed the requested supplemental submissions, and then sought leave to file additional briefing. The Court granted
those requests for leave and additional submissions were filed on September 13 and September 18, 2013, which the Court will consider (along with the motion papers discussed above) in
deciding who will serve as lead plaintiff and lead counsel.
On
March 19, 2013, April 2, 2013 and May 10, 2013, three notices of action relating to Canadian securities class action claims against the
Defendants were also issued by alleged investors in Atlantic Power common shares, and in one of the actions, holders of Atlantic Power convertible debentures, with the Ontario Superior Court of
Justice in the Province of Ontario. On April 8, 2013, a similar claim issued by alleged investors in Atlantic Power common shares seeking to initiate a class action against the Defendants was
filed with the Superior Court of Quebec in the Province of Quebec (the "Canadian Actions").
On
April 17, May 22, and June 7, 2013 statements of claim relating to the notices of action were filed with the Ontario Superior Court of Justice in the Province of
Ontario.
On
August 30, 2013, the three Ontario actions were succeeded by one action with an amended claim being issued on behalf of Jacqeline Coffin and Sandra Lowry. This claim names the
Company, Barry Welch and Terrence Ronan as defendants (the "Defendants"). The Plaintiffs seeks leave to commence an action for statutory misrepresentation under the Ontario Securities Act and asserts
common law claims for misrepresentation. The Plaintiffs' allegations focus on among other things, claims the Defendants made materially false and misleading statements and omissions in Atlantic
Power's press releases, quarterly and year end filings and conference calls with analysts and investors, regarding the sustainability of Atlantic Power's common share dividend that artificially
inflated the price of Atlantic Power's common shares. The Plaintiffs seek to certify the statutory and common law claims under the
Class Proceedings Act for security holders who purchased and held securities through a proposed class period of November 5, 2012 to February 28, 2013.
On
October 4, 2013 the Plaintiffs delivered materials supporting their request for leave to commence an action for statutory misrepresentations and for certification of the
statutory and common claims as class proceedings. These materials estimate the damages claimed for statutory misrepresentation at $197.4 million.
40
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
14. Commitments and contingencies (Continued)
A
schedule for the Plaintiffs' motions and the action will be set on November 12, 2013.
The
Petitioner in the proposed Quebec class action has served and filed a motion to suspend those proceedings until a decision is made on certification of the Ontario action as a class
proceeding. This motion will not be contested.
Pursuant
to the Private Securities Litigation Reform Act of 1995, all discovery is stayed in the U.S. Actions. Plaintiffs have not yet specified an amount of alleged damages in the U.S.
Actions. As noted above, the plaintiffs in the Canadian Action have estimated their alleged statutory damages at $197.4 million. Because both the U.S. and Canadian Actions are in their early
stages, Atlantic Power is unable to reasonably estimate the possible loss or range of losses, if any, arising from this litigation. Atlantic Power intends to defend vigorously each of the actions.
Other than as described above, there were no material changes to legal proceedings disclosed in "Item 3. Legal Proceedings" of
our Annual Report on Form 10-K for the year ended December 31, 2012.
In
addition to the matters listed, from time to time, Atlantic Power, its subsidiaries and the projects are parties to disputes and litigation that arise in the normal course of
business. We assess our exposure to these matters and record estimated loss contingencies when a loss is likely and can be reasonably estimated. With respect to such other matters arising in the
normal course of business, there are no
matters pending which are expected to have a material adverse impact on our financial position or results of operations or have been reserved for as of September 30, 2013.
15. Guarantees and condensed consolidating financial information
In connection with the tax equity investments in our Canadian Hills project, we have expressly indemnified the investors for certain representations and warranties made by a wholly-owned
subsidiary with respect to matters which we believe are remote and improbable to occur. The expiration dates of these guarantees vary from less than one year through the indefinite termination date of
the project. Our maximum undiscounted potential exposure is limited to the amount of tax equity investment less cash distributions made to the investors and any amount equal to the net federal income
tax benefits arising from production tax credits.
We
and our subsidiaries enter into various contracts that include indemnification and guarantee provisions as a routine part of our business activities. Examples of these contracts
include asset purchases and sale agreements, joint venture agreements, operation and maintenance agreements, and other types of contractual agreements with vendors and other third parties, as well as
affiliates. These contracts generally indemnify the counterparty for certain tax, environmental liability, litigation and other matters, as well as breaches of representations, warranties and
covenants set forth in these agreements.
As
of September 30, 2013 and December 31, 2012, we had $460.0 million of Senior Notes. These notes are guaranteed by certain of our wholly owned subsidiaries, or
guarantor subsidiaries. These guarantees are joint and several.
41
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
15. Guarantees and condensed consolidating financial information (Continued)
Unless
otherwise noted below, each of the following 100% owned guarantor subsidiaries fully and unconditionally guaranteed the Senior Notes as of September 30, 2013:
Atlantic
Power Limited Partnership, Atlantic Power GP Inc., Atlantic Power (US) GP, Atlantic Oklahoma Wind LLC, Atlantic Power Corporation, Atlantic Power
Generation, Inc., Atlantic Power Transmission, Inc., Atlantic Power Holdings, Inc.,. Atlantic Power Services Canada GP Inc., Atlantic Power Services
Canada LP, Atlantic Power Services, LLC, Atlantic Rockland Holdings, LLC, Teton Power Funding, LLC, Harbor Capital Holdings, LLC, Epsilon Power Funding, LLC,
Atlantic Cadillac Holdings, LLC, Atlantic Idaho Wind Holdings, LLC, Atlantic Idaho Wind C, LLC, Baker Lake Hydro, LLC, Olympia Hydro, LLC, Teton East Coast
Generation, LLC, Atlantic Renewables Holdings, LLC, Orlando Power Generation I, LLC, Orlando Power Generation II, LLC, Atlantic Piedmont Holdings LLC, Teton
Selkirk, LLC, Teton Operating Services, LLC, Atlantic Ridgeline Holdings, LLC, Ridgeline Energy Holdings, Inc., Ridgeline Energy LLC, Pah Rah Holding
Company LLC, Lewis Ranch Wind Project LLC, Hurricane Wind LLC, Ridgeline Power Services LLC, Ridgeline Eastern Energy LLC, Ridgeline Alternative Energy LLC,
Frontier Solar LLC, Ridgeline Energy Solar LLC, Pah Rah Project Company LLC, Monticello Hills Wind LLC, Dry Lots Wind LLC, Smokey Avenue Wind LLC, Saunders
Bros. Transportation Corporation, Bruce Hill Wind LLC, South Mountain Wind LLC, Great Basin Solar Ranch LLC, Goshen Wind Holdings LLC, Meadow Creek Holdings LLC,
Ridgeline Holdings Junior Inc., Rockland Wind Ridgeline Holdings LLC and Meadow Creek Intermediate Holdings LLC.
The
following condensed consolidating financial information presents the financial information of Atlantic Power, the guarantor subsidiaries, and Curtis Palmer, LLC ("Curtis
Palmer") (our non-guarantor subsidiary) in accordance with Rule 3-10 under the SEC's Regulation S-X. The principal elimination entries eliminate investments in subsidiaries and
intercompany balances and transactions. The financial information may not necessarily be indicative of results of operations or financial position had the guarantor subsidiaries or Curtis Palmer
operated as independent entities.
In
this presentation, Atlantic Power consists of parent company operations. Guarantor subsidiaries of Atlantic Power are reported on a combined basis. For companies acquired, the fair
values of the assets and liabilities acquired have been presented on a push-down accounting basis.
42
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
15. Guarantees and condensed consolidating financial information (Continued)
ATLANTIC POWER CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
September 30, 2013
(in millions of U.S. dollars)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
Subsidiaries
|
|
Curtis
Palmer
|
|
Atlantic
Power
|
|
Eliminations
|
|
Consolidated
Balance
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
163.5
|
|
$
|
|
|
$
|
7.2
|
|
$
|
|
|
$
|
170.7
|
|
Restricted cash
|
|
|
119.8
|
|
|
|
|
|
|
|
|
|
|
|
119.8
|
|
Accounts receivable
|
|
|
165.9
|
|
|
10.9
|
|
|
2.8
|
|
|
(116.3
|
)
|
|
63.3
|
|
Prepayments, supplies, and other current assets
|
|
|
32.2
|
|
|
2.3
|
|
|
0.8
|
|
|
(1.0
|
)
|
|
34.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
481.4
|
|
|
13.2
|
|
|
10.8
|
|
|
(117.3
|
)
|
|
388.1
|
|
Property, plant, and equipment, net
|
|
|
1,702.7
|
|
|
172.5
|
|
|
|
|
|
(1.3
|
)
|
|
1,873.9
|
|
Equity investments in unconsolidated affiliates
|
|
|
3,753.9
|
|
|
|
|
|
963.7
|
|
|
(4,313.1
|
)
|
|
404.5
|
|
Other intangible assets, net
|
|
|
321.5
|
|
|
149.6
|
|
|
|
|
|
|
|
|
471.1
|
|
Goodwill
|
|
|
238.1
|
|
|
58.2
|
|
|
|
|
|
|
|
|
296.3
|
|
Other assets
|
|
|
473.7
|
|
|
|
|
|
434.3
|
|
|
(845.2
|
)
|
|
62.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
6,971.3
|
|
$
|
393.5
|
|
$
|
1,408.8
|
|
$
|
(5,276.9
|
)
|
$
|
3,496.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
118.6
|
|
$
|
3.9
|
|
$
|
83.9
|
|
$
|
(116.3
|
)
|
$
|
90.1
|
|
Revolving credit facility
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
|
16.7
|
|
|
190.0
|
|
|
|
|
|
|
|
|
206.7
|
|
Other current liabilities
|
|
|
40.0
|
|
|
|
|
|
3.9
|
|
|
(1.0
|
)
|
|
42.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
175.3
|
|
|
193.9
|
|
|
87.8
|
|
|
(117.3
|
)
|
|
339.7
|
|
Long-term debt
|
|
|
814.1
|
|
|
|
|
|
460.0
|
|
|
|
|
|
1,274.1
|
|
Convertible debentures
|
|
|
|
|
|
|
|
|
414.1
|
|
|
|
|
|
414.1
|
|
Other non-current liabilities
|
|
|
1,184.0
|
|
|
8.5
|
|
|
0.5
|
|
|
(845.2
|
)
|
|
347.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
2,173.4
|
|
|
202.4
|
|
|
962.4
|
|
|
(962.5
|
)
|
|
2,375.7
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred shares issued by a subsidiary company
|
|
|
232.1
|
|
|
|
|
|
|
|
|
(10.8
|
)
|
|
221.3
|
|
Common shares
|
|
|
4,323.5
|
|
|
191.1
|
|
|
1,285.8
|
|
|
(4,514.7
|
)
|
|
1,285.7
|
|
Accumulated other comprehensive loss
|
|
|
(8.7
|
)
|
|
|
|
|
|
|
|
|
|
|
(8.7
|
)
|
Retained deficit
|
|
|
(21.3
|
)
|
|
|
|
|
(839.4
|
)
|
|
211.1
|
|
|
(649.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Atlantic Power Corporation shareholders' equity
|
|
|
4,525.6
|
|
|
191.1
|
|
|
446.4
|
|
|
(4,314.4
|
)
|
|
848.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest
|
|
|
272.3
|
|
|
|
|
|
|
|
|
|
|
|
272.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
4,797.9
|
|
|
191.1
|
|
|
446.4
|
|
|
(4,314.4
|
)
|
|
1,121.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
6,971.3
|
|
$
|
393.5
|
|
$
|
1,408.8
|
|
$
|
(5,276.9
|
)
|
$
|
3,496.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
15. Guarantees and condensed consolidating financial information (Continued)
ATLANTIC POWER CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Three months ended September 30, 2013
(in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
Subsidiaries
|
|
Curtis Palmer
|
|
Atlantic
Power
|
|
Eliminations
|
|
Consolidated
Balance
|
|
Project revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total project revenue
|
|
$
|
134.2
|
|
$
|
7.8
|
|
$
|
|
|
$
|
(0.2
|
)
|
$
|
141.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Project expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel
|
|
|
47.2
|
|
|
|
|
|
|
|
|
|
|
|
47.2
|
|
Project operations and maintenance
|
|
|
36.8
|
|
|
1.3
|
|
|
|
|
|
(0.1
|
)
|
|
38.0
|
|
Development
|
|
|
1.4
|
|
|
|
|
|
|
|
|
|
|
|
1.4
|
|
Depreciation and amortization
|
|
|
38.4
|
|
|
3.8
|
|
|
|
|
|
|
|
|
42.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
123.8
|
|
|
5.1
|
|
|
|
|
|
(0.1
|
)
|
|
128.8
|
|
Project other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of derivative instruments
|
|
|
(3.5
|
)
|
|
|
|
|
|
|
|
|
|
|
(3.5
|
)
|
Equity in earnings of unconsolidated affiliates
|
|
|
39.1
|
|
|
|
|
|
|
|
|
|
|
|
39.1
|
|
Interest expense, net
|
|
|
(6.3
|
)
|
|
(2.7
|
)
|
|
|
|
|
|
|
|
(9.0
|
)
|
Other
|
|
|
(34.8
|
)
|
|
|
|
|
|
|
|
|
|
|
(34.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5.5
|
)
|
|
(2.7
|
)
|
|
|
|
|
|
|
|
(8.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Project income
|
|
|
4.9
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
|
4.8
|
|
Administrative and other expenses (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administration expense
|
|
|
4.9
|
|
|
|
|
|
3.5
|
|
|
|
|
|
8.4
|
|
Interest, net
|
|
|
18.9
|
|
|
|
|
|
8.6
|
|
|
|
|
|
27.5
|
|
Foreign exchange loss
|
|
|
4.1
|
|
|
|
|
|
5.0
|
|
|
|
|
|
9.1
|
|
Other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27.9
|
|
|
|
|
|
17.1
|
|
|
|
|
|
45.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before income taxes
|
|
|
(23.0
|
)
|
|
|
|
|
(17.1
|
)
|
|
(0.1
|
)
|
|
(40.2
|
)
|
Income tax benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from continuing operations
|
|
|
(23.0
|
)
|
|
|
|
|
(17.1
|
)
|
|
(0.1
|
)
|
|
(40.2
|
)
|
Net loss from discontinued operations
|
|
|
(0.4
|
)
|
|
|
|
|
|
|
|
|
|
|
(0.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(23.4
|
)
|
|
|
|
|
(17.1
|
)
|
|
(0.1
|
)
|
|
(40.6
|
)
|
Net income (loss) attributable to noncontrolling interest
|
|
|
(2.5
|
)
|
|
|
|
|
|
|
|
3.2
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Atlantic Power Corporation
|
|
$
|
(20.9
|
)
|
$
|
|
|
$
|
(17.1
|
)
|
$
|
(3.3
|
)
|
$
|
(41.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
44
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
15. Guarantees and condensed consolidating financial information (Continued)
ATLANTIC POWER CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Nine months ended September 30, 2013
(in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
Subsidiaries
|
|
Curtis
Palmer
|
|
Atlantic
Power
|
|
Eliminations
|
|
Consolidated
Balance
|
|
Project revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total project revenue
|
|
$
|
394.1
|
|
$
|
27.4
|
|
$
|
|
|
$
|
(0.5
|
)
|
$
|
421.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Project expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel
|
|
|
148.8
|
|
|
|
|
|
|
|
|
|
|
|
148.8
|
|
Project operations and maintenance
|
|
|
110.0
|
|
|
2.2
|
|
|
0.5
|
|
|
(0.4
|
)
|
|
112.3
|
|
Development
|
|
|
4.9
|
|
|
|
|
|
|
|
|
|
|
|
4.9
|
|
Depreciation and amortization
|
|
|
114.2
|
|
|
11.5
|
|
|
|
|
|
|
|
|
125.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
377.9
|
|
|
13.7
|
|
|
0.5
|
|
|
(0.4
|
)
|
|
391.7
|
|
Project other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of derivative instruments
|
|
|
33.4
|
|
|
|
|
|
|
|
|
|
|
|
33.4
|
|
Equity in earnings of unconsolidated affiliates
|
|
|
55.0
|
|
|
|
|
|
|
|
|
|
|
|
55.0
|
|
Interest expense, net
|
|
|
(17.4
|
)
|
|
(8.3
|
)
|
|
|
|
|
|
|
|
(25.7
|
)
|
Other
|
|
|
(35.0
|
)
|
|
|
|
|
0.3
|
|
|
|
|
|
(34.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36.0
|
|
|
(8.3
|
)
|
|
0.3
|
|
|
|
|
|
28.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Project income
|
|
|
52.2
|
|
|
5.4
|
|
|
(0.2
|
)
|
|
(0.1
|
)
|
|
57.3
|
|
Administrative and other expenses (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administration expense
|
|
|
15.3
|
|
|
|
|
|
13.2
|
|
|
|
|
|
28.5
|
|
Interest, net
|
|
|
57.1
|
|
|
|
|
|
21.6
|
|
|
|
|
|
78.7
|
|
Foreign exchange loss
|
|
|
(3.9
|
)
|
|
|
|
|
(9.0
|
)
|
|
|
|
|
(12.9
|
)
|
Other income
|
|
|
(9.5
|
)
|
|
|
|
|
|
|
|
|
|
|
(9.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59.0
|
|
|
|
|
|
25.8
|
|
|
|
|
|
84.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
(6.8
|
)
|
|
5.4
|
|
|
(26.0
|
)
|
|
(0.1
|
)
|
|
(27.5
|
)
|
Income tax benefit
|
|
|
(1.9
|
)
|
|
|
|
|
|
|
|
|
|
|
(1.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations
|
|
|
(4.9
|
)
|
|
5.4
|
|
|
(26.0
|
)
|
|
(0.1
|
)
|
|
(25.6
|
)
|
Net loss from discontinued operations
|
|
|
(6.1
|
)
|
|
|
|
|
|
|
|
|
|
|
(6.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(11.0
|
)
|
|
5.4
|
|
|
(26.0
|
)
|
|
(0.1
|
)
|
|
(31.7
|
)
|
Net income (loss) attributable to noncontrolling interest
|
|
|
(3.3
|
)
|
|
|
|
|
|
|
|
9.5
|
|
|
6.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Atlantic Power Corporation
|
|
$
|
(7.7
|
)
|
$
|
5.4
|
|
$
|
(26.0
|
)
|
$
|
(9.6
|
)
|
$
|
(37.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
45
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
15. Guarantees and condensed consolidating financial information (Continued)
ATLANTIC POWER CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
Three and nine months ended September 30, 2013
(in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
Subsidiaries
|
|
Curtis Palmer
|
|
Atlantic
Power
|
|
Eliminations
|
|
Consolidated
Balance
|
|
Net loss
|
|
$
|
(23.4
|
)
|
$
|
|
|
$
|
(17.1
|
)
|
$
|
(0.1
|
)
|
$
|
(40.6
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on hedging activities
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
Net amount reclassified to earnings
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized losses on derivatives
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
Foreign currency translation adjustments
|
|
|
10.7
|
|
|
|
|
|
|
|
|
|
|
|
10.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income, net of tax
|
|
|
10.8
|
|
|
|
|
|
|
|
|
|
|
|
10.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
|
(12.6
|
)
|
|
|
|
|
(17.1
|
)
|
|
(0.1
|
)
|
|
(29.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Comprehensive income attributable to noncontrolling interest
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss attributable to Atlantic Power Corporation
|
|
$
|
(13.3
|
)
|
$
|
|
|
$
|
(17.1
|
)
|
$
|
(0.1
|
)
|
$
|
(30.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
Subsidiaries
|
|
Curtis Palmer
|
|
Atlantic
Power
|
|
Eliminations
|
|
Consolidated
Balance
|
|
Net income (loss)
|
|
$
|
(11.0
|
)
|
$
|
5.4
|
|
$
|
(26.0
|
)
|
$
|
(0.1
|
)
|
$
|
(31.7
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on hedging activities
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
0.5
|
|
Net amount reclassified to earnings
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized losses on derivatives
|
|
|
1.1
|
|
|
|
|
|
|
|
|
|
|
|
1.1
|
|
Foreign currency translation adjustments
|
|
|
(19.3
|
)
|
|
|
|
|
|
|
|
|
|
|
(19.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income, net of tax
|
|
|
(18.2
|
)
|
|
|
|
|
|
|
|
|
|
|
(18.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
|
(29.2
|
)
|
|
5.4
|
|
|
(26.0
|
)
|
|
(0.1
|
)
|
|
(49.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Comprehensive income attributable to noncontrolling interest
|
|
|
6.2
|
|
|
|
|
|
|
|
|
|
|
|
6.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to Atlantic Power Corporation
|
|
$
|
(35.4
|
)
|
$
|
5.4
|
|
$
|
(26.0
|
)
|
$
|
(0.1
|
)
|
$
|
(56.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
46
Table of Contents
ATLANTIC POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
15. Guarantees and condensed consolidating financial information (Continued)
ATLANTIC POWER CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Nine months ended September 30, 2013
(in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
Subsidiaries
|
|
Curtis
Palmer
|
|
Atlantic
Power
|
|
Eliminations
|
|
Consolidated
Balance
|
|
Net cash provided by operating activities
|
|
$
|
69.8
|
|
$
|
2.4
|
|
$
|
71.1
|
|
$
|
|
|
$
|
143.3
|
|
Cash flows provided by (used in) investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from treasury grant
|
|
|
103.2
|
|
|
|
|
|
|
|
|
|
|
|
103.2
|
|
Proceeds for sale of assets
|
|
|
183.0
|
|
|
|
|
|
|
|
|
|
|
|
183.0
|
|
Cash (paid) received for equity investments
|
|
|
8.5
|
|
|
|
|
|
(8.5
|
)
|
|
|
|
|
|
|
Change in restricted cash
|
|
|
(99.1
|
)
|
|
|
|
|
|
|
|
|
|
|
(99.1
|
)
|
Biomass development costs
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
Construction in progress
|
|
|
(32.2
|
)
|
|
|
|
|
|
|
|
|
|
|
(32.2
|
)
|
Purchase of property, plant and equipment
|
|
|
(4.8
|
)
|
|
(2.4
|
)
|
|
|
|
|
|
|
|
(7.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
158.5
|
|
|
(2.4
|
)
|
|
(8.5
|
)
|
|
|
|
|
147.6
|
|
Cash flows provided by (used in) financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offering costs related to tax equity
|
|
|
(1.0
|
)
|
|
|
|
|
|
|
|
|
|
|
(1.0
|
)
|
Repayment of project-level debt
|
|
|
(115.3
|
)
|
|
|
|
|
|
|
|
|
|
|
(115.3
|
)
|
Proceeds from project-level debt
|
|
|
20.8
|
|
|
|
|
|
|
|
|
|
|
|
20.8
|
|
Payments for revolving credit facility borrowings
|
|
|
(47.0
|
)
|
|
|
|
|
(20.0
|
)
|
|
|
|
|
(67.0
|
)
|
Equity investment from noncontrolling interest
|
|
|
42.6
|
|
|
|
|
|
1.9
|
|
|
|
|
|
44.5
|
|
Deferred financing costs
|
|
|
(0.5
|
)
|
|
|
|
|
|
|
|
|
|
|
(0.5
|
)
|
Dividends paid
|
|
|
(13.9
|
)
|
|
|
|
|
(54.2
|
)
|
|
|
|
|
(68.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(114.3
|
)
|
|
|
|
|
(72.3
|
)
|
|
|
|
|
(186.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
114.0
|
|
|
|
|
|
(9.7
|
)
|
|
|
|
|
104.3
|
|
Cash and cash equivalents at beginning of period
|
|
|
49.5
|
|
|
|
|
|
16.9
|
|
|
|
|
|
66.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
163.5
|
|
$
|
|
|
$
|
7.2
|
|
$
|
|
|
$
|
170.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47
Table of Contents
FORWARD-LOOKING INFORMATION
Certain statements in this Quarterly Report on Form 10-Q constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "outlook," "objective," "may," "will,"
"expect," "intend," "estimate," "anticipate," "believe," "should," "plans," "continue," or similar expressions suggesting future outcomes or events. Examples of such statements in this Quarterly
Report on Form 10-Q include, but are not limited to, statements with respect to the following:
-
-
our ability to generate sufficient amounts of cash and cash equivalents to maintain our operations and meet obligations as
they become due;
-
-
the amount of cash proceeds expected to be received following the sale of our projects and the timing of such sales;
-
-
our ability to meet the financial covenants under our senior credit facility and other indebtedness and the ability to
maintain our dividend payments at the current level;
-
-
our potential requirement to provide additional security to a natural gas supplier's agreements and the expected amount of
such security; and
-
-
the impact of legislative, regulatory, competitive and technological changes.
Such
forward-looking statements reflect our current expectations regarding future events and operating performance and speak only as of the date of this Quarterly Report on
Form 10-Q. Such forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to the assumption that the projects will operate and
perform in accordance with our expectations. Many of these risks and uncertainties can affect our actual results and could cause our actual results to differ materially from those expressed or implied
in any forward-looking statement made by us or on our behalf.
Forward-looking
statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate
indications of whether or not or the times at or by which such performance or results will be achieved. In addition, a number of factors could cause actual results to differ materially from the
results discussed in the forward-looking statements, including, but not limited to, the factors included in the filings Atlantic Power makes from time to time with the SEC and the risk factors
described under "Item 1A. Risk Factors" in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2012. Our business is
both highly competitive and subject to various risks.
These
risks include, without limitation:
-
-
the outcome of certain shareholder class action lawsuits;
-
-
the impact on us of recent amendments to and compliance with our senior credit facility;
-
-
the impact of compliance with covenants under our 9% senior unsecured notes;
-
-
changes in our creditworthiness;
-
-
the expiration or termination of power purchase agreements;
-
-
the dependence of our projects on their electricity and thermal energy customers;
-
-
exposure of certain of our projects to fluctuations in the price of electricity or natural gas;
-
-
projects not operating according to plan;
-
-
the dependence of our projects on third-party suppliers;
48
Table of Contents
-
-
the effects of weather, which affects demand for electricity and fuel as well as operating conditions;
-
-
the dependence of our windpower projects on suitable wind and associated conditions;
-
-
U.S., Canadian and/or global economic conditions and uncertainty;
-
-
risks beyond our control, including but not limited to acts of terrorism or related acts of war, geopolitical crisis,
natural disasters or other catastrophic events;
-
-
the adequacy of our insurance coverage;
-
-
the impact of significant energy, environmental and other regulations on our projects;
-
-
increased competition, including for acquisitions;
-
-
our limited control over the operation of certain minority owned projects;
-
-
transfer restrictions on our equity interests in certain projects;
-
-
construction risks;
-
-
labor disruptions;
-
-
our ability to retain, motivate and recruit executives and other key employees;
-
-
unstable capital and credit markets; and
-
-
our indebtedness and financing arrangements.
Material
factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information include third party projections of regional
fuel and electric capacity and energy prices or cash flows that are based on assumptions about future economic conditions and courses of action. Although the forward-looking statements contained in
this Quarterly Report on Form 10-Q are based upon what are believed to be reasonable assumptions, investors cannot be assured that actual results will be consistent with these forward-looking
statements, and the differences may be material. Certain statements included in this Quarterly Report on Form 10-Q may be considered "financial outlook" for the purposes of applicable
securities laws, and such financial outlook may not be appropriate for purposes other than this Quarterly Report on Form 10-Q. These forward-looking statements are made as of the date of this
Quarterly Report on Form 10-Q and, except as expressly required by applicable law, we assume no obligation to update or revise them to reflect new events or circumstances.
49
Table of Contents