Equity

12 Months Ended

Dec. 31, 2020

EQUITY

Equity Transactions with Noncontrolling Interests

Southland Energy — In November 2020, the Company completed the sale of 35% of its ownership interest in the Southland Energy assets for $424 million, which decreased the Company's economic interest to 65%. However, under the terms of the purchase and sale agreement, the Company is entitled to all earnings or losses until March 1, 2021, and any distributions related thereto. This transaction resulted in a $275 million increase in Parent Company Stockholder's Equity due to an increase in additional paid-in-capital of $266 million, net of tax and transaction costs, and the reclassification of accumulated other comprehensive losses from AOCL to NCI of $9 million. As the Company maintained control after the sale, Southland Energy continues to be consolidated by the Company within the US and Utilities SBU reportable segment.

Cochrane — In September 2020, AES Gener completed the sale of a portion of its stake in Cochrane. The transaction included the issuance of preferred shares and the sale of 5% of its stake in the subsidiary for $113 million, which decreased the Company’s economic interest in Cochrane to 38%. The preferred shareholders have the preferential right to receive an annual amount equal to $12 million, from any dividends or distributions of capital, until reaching the original investment of $113 million plus a specified rate of return. In November 2020, Cochrane distributed $12 million to the preferred shareholders. As the Company maintained control after the sale, Cochrane continues to be consolidated by the Company within the South America SBU reportable segment.

AES Brasil — In August 2020, AES Holdings Brasil Ltda. ("AHB") completed the acquisition of an additional 18.5% ownership in AES Brasil for $240 million. During the fourth quarter of 2020, through multiple transactions, AHB acquired another 1.3% ownership in AES Brasil for $16 million. In aggregate, these transactions increased the Company’s economic interest in AES Brasil to 44.1% and resulted in a $214 million decrease in Parent Company Stockholders’ Equity due to a decrease in additional paid-in-capital of $94 million and the reclassification of accumulated other comprehensive losses from NCI to AOCL of $120 million. AES Brasil is reported in the South America SBU reportable segment.

Distributed Energy — In 2020, 2019 and 2018, Distributed Energy, through multiple transactions, sold noncontrolling interests in multiple project companies to tax equity partners. These transactions resulted in a $144 million, $133 million, and $98 million increase to noncontrolling interest in 2020, 2019, and 2018 respectively. Distributed Energy is reported in the US and Utilities SBU reportable segment.

The following table summarizes the net income attributable to The AES Corporation and all transfers (to) from noncontrolling interests for the periods indicated (in millions):


	December 31,
	2020		2019		2018
Net income attributable to The AES Corporation	$	46	$	303	$	1,203
Transfers from noncontrolling interest:
Increase (decrease) in The AES Corporation's paid-in capital for sale of subsidiary shares	260		(5)		(3)
Increase (decrease) in The AES Corporation's paid-in-capital for purchase of subsidiary shares	(89)		—		—
Net transfers (to) from noncontrolling interest	171		(5)		(3)
Change from net income attributable to The AES Corporation and transfers (to) from noncontrolling interests	$	217	$	298	$	1,200

Accumulated Other Comprehensive Loss — The changes in AOCL by component, net of tax and noncontrolling interests, for the periods indicated were as follows (in millions):


	Foreign currency translation adjustment, net		Derivative gains (losses), net		Unfunded pension obligations, net		Total
Balance at December 31, 2018	$	(1,721)	$	(300)	$	(50)	$	(2,071)
Other comprehensive loss before reclassifications	(23)		(202)		(15)		(240)
Amount reclassified to earnings	23		36		27		86
Other comprehensive income (loss)	—		(166)		12		(154)
Cumulative effect of a change in accounting principle	—		(4)		—		(4)
Balance at December 31, 2019	$	(1,721)	$	(470)	$	(38)	$	(2,229)
Other comprehensive loss before reclassifications	—		(309)		(12)		(321)
Amount reclassified to earnings	192		72		—		264
Other comprehensive income (loss)	192		(237)		(12)		(57)
Reclassification from NCI due to share sales and repurchases	(115)		8		(4)		(111)
Balance at December 31, 2020	$	(1,644)	$	(699)	$	(54)	$	(2,397)

Reclassifications out of AOCL are presented in the following table. Amounts for the periods indicated are in millions and those in parenthesis indicate debits to the Consolidated Statements of Operations:


Details About		December 31,
AOCL Components	Affected Line Item in the Consolidated Statements of Operations	2020		2019		2018
Foreign currency translation adjustments, net
	Gain (loss) on disposal and sale of business interests	$	(192)	$	(23)	$	19
	Net gain from disposal of discontinued operations	—		—		2
	Net income (loss) attributable to The AES Corporation	$	(192)	$	(23)	$	21
Derivative gains (losses), net
	Non-regulated revenue	$	(1)	$	(1)	$	(6)
	Non-regulated cost of sales	(3)		(12)		(3)
	Interest expense	(60)		(26)		(49)
	Gain (loss) on disposal and sale of business interests	—		1		—
	Asset impairment expense	(10)		—		—
	Foreign currency transaction gains (losses)	(7)		(12)		(59)
	Income (loss) from continuing operations before taxes and equity in earnings of affiliates	(81)		(50)		(117)
	Income tax benefit (expense)	17		13		24
	Net equity in earnings (losses) of affiliates	(10)		(5)		—
	Income (loss) from continuing operations	(74)		(42)		(93)
	Less: Net loss (income) attributable to noncontrolling interests and redeemable stock of subsidiaries	2		6		15
	Net income (loss) attributable to The AES Corporation	$	(72)	$	(36)	$	(78)
Amortization of defined benefit pension actuarial losses, net
	Regulated cost of sales	$	(1)	$	—	$	—
	Non-regulated cost of sales	1		—		—

	Other expense	—		(2)		(6)
	Gain (loss) on disposal and sale of business interests	—		(26)		—
	Income (loss) from continuing operations before taxes and equity in earnings of affiliates	—		(28)		(6)
	Income tax benefit (expense)	—		—		2
	Income (loss) from continuing operations	—		(28)		(4)

	Net gain (loss) from disposal of discontinued operations	—		—		(2)
	Net income (loss)	—		(28)		(6)
	Less: Income from continuing operations attributable to noncontrolling interests and redeemable stock of subsidiaries	—		1		(1)

	Net income (loss) attributable to The AES Corporation	$	—	$	(27)	$	(7)
Total reclassifications for the period, net of income tax and noncontrolling interests		$	(264)	$	(86)	$	(64)

Common Stock Dividends — The Parent Company paid dividends of $0.1433 per outstanding share to its common stockholders during the first, second, third and fourth quarters of 2020 for dividends declared in December 2019, February 2020, July 2020, and October 2020, respectively.

On December 4, 2020, the Board of Directors declared a quarterly common stock dividend of $0.1505 per share payable on February 12, 2021 to shareholders of record at the close of business on January 29, 2021.

Stock Repurchase Program — No shares were repurchased in 2020. The cumulative repurchases from the commencement of the Stock Repurchase Program in July 2010 through December 31, 2020 totaled 154.3 million shares for a total cost of $1.9 billion, at an average price per share of $12.12 (including a nominal amount of

commissions). As of December 31, 2020, $264 million remained available for repurchase under the Stock Repurchase Program.

The common stock repurchased has been classified as treasury stock and accounted for using the cost method. A total of 153,028,526 and 153,891,260 shares were held as treasury stock at December 31, 2020 and December 31, 2019, respectively. Restricted stock units under the Company's employee benefit plans are issued from treasury stock. The Company has not retired any common stock repurchased since it began the Stock Repurchase Program in July 2010.