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Discontinued Operations | 12 Months Ended
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Dec. 31, 2018
Discontinued Operations and Disposal Groups [Abstract] |
DISCONTINUED OPERATIONS AND HELD-FOR-SALE BUSINESSES | DISCONTINUED OPERATIONS Due to a portfolio evaluation in the first half of 2016, management decided to pursue a strategic shift of its distribution companies in Brazil, Sul and Eletropaulo, to reduce the Company's exposure to the Brazilian distribution market. The disposals of Sul and Eletropaulo were completed in October 2016 and June 2018, respectively. Eletropaulo — In November 2017, Eletropaulo converted its preferred shares into ordinary shares and transitioned the listing of those shares to the Novo Mercado, which is a listing segment of the Brazilian stock exchange with the highest standards of corporate governance. Upon conversion of the preferred shares into ordinary shares, AES no longer controlled Eletropaulo, but maintained significant influence over the business. As a result, the Company deconsolidated Eletropaulo. After deconsolidation, the Company's 17% ownership interest was reflected as an equity method investment. The Company recorded an after-tax loss on deconsolidation of $611 million, which primarily consisted of $455 million related to cumulative translation losses and $243 million related to pension losses reclassified from AOCL. In December 2017, all the remaining criteria were met for Eletropaulo to qualify as a discontinued operation. Therefore, its results of operations and financial position were reported as such in the consolidated financial statements for all periods presented. In June 2018, the Company completed the sale of its entire 17% ownership interest in Eletropaulo through a bidding process hosted by the Brazilian securities regulator, CVM. Gross proceeds of $340 million were received at our subsidiary in Brazil, subject to the payment of taxes. Upon disposal of Eletropaulo, the Company recorded a pre-tax gain on sale of $243 million (after-tax $199 million). Excluding the gain on sale, Eletropaulo's pre-tax loss attributable to AES was immaterial for the year ended December 31, 2018. Eletropaulo's pre-tax loss attributable to AES, including the loss on deconsolidation, for the years ended December 31, 2017 and 2016 was $633 million and $192 million, respectively. Prior to its classification as discontinued operations, Eletropaulo was reported in the South America SBU reportable segment. Sul — The Company executed an agreement for the sale of Sul, a wholly-owned subsidiary, in June 2016. The results of operations and financial position of Sul are reported 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 pre-tax 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 Sul. Prior to the impairment charge, the carrying value of the 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 Sul disposal group. On October 31, 2016, the Company completed the sale of Sul and received final proceeds less costs to sell of $484 million, excluding contingent consideration. Upon disposal of Sul, the Company 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 pre-tax loss attributable to AES for the year ended December 31, 2016 was $1.4 billion. Prior to its classification as discontinued operations, Sul was reported in the South America SBU reportable segment. Borsod — In 2011, Borsod, which held two coal and biomass-fired generation plants in Hungary, filed for liquidation and was deconsolidated with its historical operating results reflected in discontinued operations under prior accounting guidance. In October 2018, the liquidation was completed and the Company recognized a deferred gain of $26 million, primarily comprised of a $20 million write-off of cumulative translation balances. Prior to its liquidation, Borsod was reported in the Eurasia SBU reportable segment. The following table summarizes the carrying amounts of the major classes of assets and liabilities of discontinued operations at December 31, 2017:
(in millions) | December 31, 2017
Assets of discontinued operations and held-for-sale businesses: |
Investments in and advances to affiliates (1) | $ | 86 |
Total assets of discontinued operations | 86 |
Other assets of businesses classified as held-for-sale (2) | 1,948 |
Total assets of discontinued operations and held-for-sale businesses | $ | 2,034 |
Liabilities of discontinued operations and held-for-sale businesses: |
Other liabilities of businesses classified as held-for-sale (2) | 1,033 |
Total liabilities of discontinued operations and held-for-sale businesses | $ | 1,033 |
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(1) | Represents the Company's 17% ownership interest in Eletropaulo.
(2) | Masinloc, Eletrica Santiago, and the DPL peaker assets were classified as held-for-sale as of December 31, 2017. See Note 23—Held-for-Sale and Dispositions for further information.
Excluding the gain on sale of Eletropaulo and deferred gain on liquidation of Borsod, income from discontinued operations and cash flows from operating and investing activities of discontinued operations were immaterial for the year ended December 31, 2018. The following table summarizes the major line items constituting losses from discontinued operations for the periods indicated (in millions):
December 31, | 2017 |  | 2016
Income (loss) from discontinued operations, net of tax: |  |  |
Revenue — regulated | $ | 3,320 |  |  | $ | 4,036 |
Cost of sales | (3,151 | ) |  | (3,954 | )
Other income and expense items that are not major (1) | (166 | ) |  | (160 | )
Income (loss) from operations of discontinued businesses | 3 |  |  | (78 | )
Loss from disposal and impairments of discontinued businesses | (611 | ) |  | (1,385 | )
Income (loss) from discontinued operations | (608 | ) |  | (1,463 | )
Less: Net income attributable to noncontrolling interests | (25 | ) |  | (142 | )
Income (loss) from discontinued operations attributable to The AES Corporation | (633 | ) |  | (1,605 | )
Income tax benefit (expense) | (21 | ) |  | 495 |
Loss from discontinued operations, net of tax | $ | (654 | ) |  | $ | (1,110 | )
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(1) | Includes a loss contingency recognized by our equity method investment in discontinued operations.
The following table summarizes the operating and investing cash flows from discontinued operations for the periods indicated (in millions):
December 31, | 2017 |  | 2016
Cash flows provided by operating activities of discontinued operations | $ | 164 |  |  | $ | 529 |
Cash flows used in investing activities of discontinued operations | (288 | ) |  | (368 | )

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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