|TERRAFORM POWER, INC. filed this Form 10-K on 07/21/2017|
Contractual Obligations and Commercial Commitments
We have a variety of contractual obligations and other commercial commitments that represent prospective cash requirements. The following table summarizes our outstanding contractual obligations and commercial commitments as of December 31, 2016.
Payment due by Period
Contractual Cash Obligations (in thousands)
Long-term debt (principal)1
Long-term debt (interest)2
Financing lease obligations3
Total contractual obligations
Represents the contractual principal payment due dates for our long-term debt and does not reflect the reclassification of $1.5 billion of long-term debt to current as a result of debt defaults under certain of our non-recourse financing arrangements (as further discussed in Note 11. Long-term Debt to our consolidated financial statements), except for the $100.0 million prepayment included in 2017 for the Midco Portfolio Term Loan, which we agreed to pay in June of 2017 in connection with obtaining (i) a waiver to extend the 2016 audited project financial statement deadline under the loan agreement and (ii) a waiver of the change of control default that would arise under the loan agreement as a result of the Merger until, in the case of the change of control waiver, the date that is the earlier of three months following the closing of the Merger and March 31, 2018. This prepayment was made using a portion of the proceeds we received from the sale of the U.K. Portfolio as discussed above. The 2017 amount also includes $552.0 million of Revolver indebtedness as management currently intends to repay this indebtedness during 2017.
Includes fixed rate interest and variable rate interest using December 31, 2016 rates.
Represents the minimum lease payment due dates for our financing lease obligations and does not reflect the reclassification of $49.7 million of financing lease obligations to current as a result of debt defaults under certain of our non-recourse financing arrangements as further discussed in Note 11. Long-term Debt to our consolidated financial statements.
Off-Balance Sheet Arrangements
The Company enters into guarantee arrangements in the normal course of business to facilitate commercial transactions with third parties. See Note 19 to our consolidated financial statements included in this Annual Report on Form 10-K for additional discussion.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions in certain circumstances that affect amounts reported in our consolidated financial statements and related footnotes. In preparing these consolidated financial statements, we have made our best estimates of certain amounts included in the consolidated financial statements. Application of accounting policies and estimates, however, involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. In arriving at our critical accounting estimates, factors we consider include how accurate the estimate or assumptions have been in the past, how much the estimate or assumptions have changed and how reasonably likely such change may have a material impact. Our critical accounting policies are discussed below.
The Company accounts for its business combinations by recognizing in the financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interests in the acquiree at fair value at the acquisition date. The Company also recognizes and measures the goodwill acquired or a gain from a bargain purchase in the business combination and determines what information to disclose to enable users of an entity's financial statements to evaluate the nature and financial effects of the business combination. In addition, acquisition costs related to business combinations are expensed as incurred. Business combinations is a critical accounting policy as there are significant judgments involved in the allocation of acquisition cost.
When we acquire renewable energy facilities, we allocate the purchase price to (i) the acquired tangible assets and liabilities assumed, primarily consisting of land, plant, and long-term debt, (ii) the identified intangible assets and liabilities,