DISCONTINUED OPERATIONS

Brazil Distribution — Due to a portfolio evaluation in the first half of 2016, management has decided to pursue a strategic shift of its distribution companies in Brazil, AES Sul and Eletropaulo. The disposal of Sul was completed in October 2016. In December 2016, Eletropaulo underwent a corporate restructuring which is expected to, among other things, provide more liquidity of its shares. AES is continuing to pursue strategic options for Eletropaulo in order to complete its strategic shift to reduce AES’ exposure to the Brazilian distribution business, including preparation for listing its shares into the Novo Mercado, which is a listing segment of the Brazilian stock exchange with the highest standards of corporate governance.

The Company executed an agreement for the sale of its wholly-owned subsidiary AES Sul in June 2016. We have reported the results of operations and financial position of AES Sul as discontinued operations in the consolidated financial statements for all periods presented. Upon meeting the held-for-sale criteria, the Company recognized an after tax loss of $382 million comprised of a pretax impairment charge of $783 million, offset by a tax benefit of $266 million related to the impairment of the Sul long lived assets and a tax benefit of $135 million for deferred taxes related to the investment in AES Sul. Prior to the impairment charge in the second quarter, the carrying value of the AES Sul asset group of $1.6 billion was greater than its approximate fair value less costs to sell. However, the impairment charge was limited to the carrying value of the long lived assets of the AES Sul disposal group.

On October 31, 2016, the Company completed the sale of AES Sul and received final proceeds less costs to sell of $484 million, excluding contingent consideration. Upon disposal of AES Sul, we incurred an additional after-tax loss on sale of $737 million. The cumulative impact to earnings of the impairment and loss on sale was $1.1 billion. This includes the reclassification of approximately $1 billion of cumulative translation losses, resulting in a net reduction to the Company’s stockholders’ equity of $92 million.

Sul’s pretax loss attributable to AES for the years ended December 31, 2016 and 2015 was $1.4 billion and $32 million, respectively. Sul’s pretax gain attributable to AES for the year ended December 31, 2014 was $133 million. Prior to its classification as discontinued operations, Sul was reported in the Brazil SBU reportable segment.

As discussed in Note 1—General and Summary of Significant Accounting Policies, effective July 1, 2014, the Company prospectively adopted ASU No. 2014-08. Discontinued operations prior to adoption of ASU No. 2014-08 include the results of Cameroon, Saurashtra and various U.S. wind projects which were each sold in the first half of 2014.

Cameroon — In September 2013, the Company executed agreements for the sale of its 56% equity interests in businesses in Cameroon: Sonel, an integrated utility, Kribi, a gas and light fuel oil plant, and Dibamba, a heavy fuel oil plant. The sale was completed in June 2014. Net proceeds from the sale transaction were $200 million, of which $156 million was received in 2014. Of the remaining non-contingent consideration of $44 million, $40 million was received in the second quarter of 2016. Between meeting the held-for-sale criteria in September 2013 and completing the sale in June 2014, the Company recognized impairments of $101 million and an additional loss on sale of $7 million. Prior to classification as discontinued operations, these businesses were reported in the Europe SBU reportable segment.

Saurashtra — In October 2013, the Company executed an agreement for the sale of Saurashtra, a wind project in India. The sale transaction was completed in February 2014 and net proceeds of $8 million were received. Prior to its classification as discontinued operations, Saurashtra was reported in the Asia SBU reportable segment.

U.S. Wind Projects — In November 2013, the Company executed an agreement for the sale of its 100% membership interests in three wind projects: Condon in California, Lake Benton I in Minnesota and Storm Lake II in Iowa. Upon meeting the held-for-sale criteria for these three projects, the Company recognized impairment expense of $47 million (of which $7 million was attributable to noncontrolling interests held by tax equity partners) representing the difference between their aggregate carrying amount of $77 million and the fair value less costs to sell of $30 million. The sale was completed in January 2014 and net proceeds of $27 million were received. Prior to classification as discontinued operations, these businesses were reported in the US SBU reportable segment.

As the sale of AES Sul closed October 31, 2016, there were no assets or liabilities of discontinued operations and held-for-sale businesses at December 31, 2016. The following table summarizes the carrying amounts of the major classes of assets and liabilities of discontinued operations and held-for-sale businesses at December 31, 2015:



(in millions)	December 31, 2015
Assets of discontinued operations and held-for-sale businesses:
Cash and cash equivalents	$	5
Accounts receivable, net of allowance for doubtful accounts of $8	171
Property, plant and equipment and intangibles, net	668
Deferred income taxes	133
Other classes of assets that are not major	233
Total assets of discontinued operations	1,210
Other assets of businesses classified as held-for-sale⁽¹⁾	96
Total assets of discontinued operations and held-for-sale businesses ⁽²⁾	$	1,306
Liabilities of discontinued operations and held-for-sale businesses:
Accounts payable	$	150
Accrued and other liabilities	150
Non-recourse debt	346
Other classes of liabilities that are not major	125
Total liabilities of discontinued operations	771
Other liabilities of businesses classified as held-for-sale⁽¹⁾	13
Total liabilities of discontinued operations and held-for-sale businesses ⁽²⁾	$	784

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⁽¹⁾	DPLER and Kelanitissa were classified as held-for-sale as of December 31, 2015. See Note 23—Dispositions for further information.


⁽²⁾	Amounts were classified as both current and long-term on the Consolidated Balance Sheet as of December 31, 2015.

The following table summarizes the major line items constituting income (losses) from discontinued operations for the periods indicated (in millions):



December 31,	2016			2015			2014
Income (loss) from discontinued operations, net of tax:
Revenue — regulated	$	701		$	808		$	1,255
Cost of sales	(672		)	(800		)	(1,078		)
Other income and expense items that are not major	(57		)	(40		)	5
Pretax income (loss) from operations of discontinued businesses	(28		)	(32		)	182
Pretax gain (loss) from disposal and impairments of discontinued businesses	(1,385		)	—			(51		)
Pretax income (loss) from discontinued operations	(1,413		)	(32		)	131
Less: Net loss attributable to noncontrolling interests	—			—			8
Pretax income (loss) from discontinued operations attributable to The AES Corporation	(1,413		)	(32		)	139
Income tax benefit (expense)	275			7			(75		)
Income (loss) from discontinued operations, net of tax	$	(1,138	)	$	(25	)	$	64

The following table summarizes the operating and investing cash flows from discontinued operations associated with Sul, the only business that qualifies for discontinued operations after the adoption of ASU No. 2014-08, for the periods indicated (in millions):



December 31,	2016			2015			2014
Cash flows from operating activities of Sul discontinued operations	$	58		$	(15	)	$	15
Cash flows from investing activities of Sul discontinued operations	(54		)	(25		)	(123		)