Cheniere Energy, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Schedule I - Condensed Financial Information of Registrant

Schedule I - Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2019

Condensed Financial Statements, Captions [Line Items]

Schedule I - Condensed Financial Information of Registrant

CHENIERE ENERGY, INC.

CONDENSED BALANCE SHEETS

(in millions)



	December 31,
	2019			2018
ASSETS
Current assets
Cash and cash equivalents	$	55		$	—
Other current assets	1			1
Total current assets	56			1

Property, plant and equipment, net	17			14
Operating lease assets, net	24			—
Debt issuance and deferred financing costs, net	16			21
Investments in subsidiaries	1,139			883
Deferred tax assets, net	315			—
Total assets	$	1,567		$	919

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Current operating lease liabilities	$	5		$	—
Other current liabilities	9			9
Total current liabilities	14			9

Long-term debt, net	1,534			1,436
Non-current operating lease liabilities	33			—

Stockholders’ deficit	(14		)	(526		)
Total liabilities and stockholders’ deficit	$	1,567		$	919

The accompanying notes are an integral part of these condensed financial statements.

CHENIERE ENERGY, INC.

CONDENSED STATEMENTS OF OPERATIONS

(in millions)



	Year Ended December 31,
	2019			2018			2017
General and administrative expense	$	17		$	8		$	7

Other income (expense)
Interest expense, net	(141		)	(128		)	(118		)
Interest income	1			—			—
Equity in income (loss) of subsidiaries	490			607			(268		)
Total other income (expense)	350			479			(386		)

Income (loss) before income taxes	333			471			(393		)
Income tax benefit	315			—			—

Net income (loss) attributable to common stockholders	$	648		$	471		$	(393	)

The accompanying notes are an integral part of these condensed financial statements.

CHENIERE ENERGY, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(in millions)



	Common Stock		Treasury Stock			Additional Paid-in Capital		Accumulated Deficit			Total Member’s Deficit
Balance at December 31, 2016	$	1	$	(374	)	$	3,211	$	(4,234	)	$	(1,396	)
Issuance of stock to acquire additional interest in Cheniere Holdings	—		—			2		—			2
Share-based compensation	—		—			34		—			34
Shares withheld from employees related to share-based compensation, at cost	—		(12		)	—		—			(12		)
Equity portion of convertible notes, net	—		—			1		—			1
Net loss	—		—			—		(393		)	(393		)
Balance at December 31, 2017	1		(386		)	3,248		(4,627		)	(1,764		)
Issuance of stock to acquire additional interest in Cheniere Holdings and other merger related adjustments	—		—			694		—			694
Share-based compensation	—		—			90		—			90
Shares withheld from employees related to share-based compensation, at cost	—		(20		)	—		—			(20		)
Equity portion of convertible notes, net	—		—			3		—			3
Net income	—		—			—		471			471
Balance at December 31, 2018	1		(406		)	4,035		(4,156		)	(526		)
Share-based compensation	—		—			131		—			131
Shares withheld from employees related to share-based compensation, at cost	—		(19		)	—		—			(19		)
Shares repurchased, at cost	—		(249		)	—		—			(249		)
Equity portion of convertible notes, net	—		—			1		—			1
Net income	—		—			—		648			648
Balance at December 31, 2019	$	1	$	(674	)	$	4,167	$	(3,508	)	$	(14	)

The accompanying notes are an integral part of these condensed financial statements.

CHENIERE ENERGY, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(in millions)



	Year Ended December 31,
	2019			2018			2017
Net cash provided by (used in) operating activities	$	74		$	48		$	(4	)

Cash flows from investing activities
Property, plant and equipment, net	(2		)	—			—
Investments in subsidiaries	842			568			209
Net cash provided by investing activities	840			568			209

Cash flows from financing activities
Debt issuance and deferred financing costs	—			(13		)	(15		)
Distribution and dividends to non-controlling interest	(591		)	(576		)	(185		)
Payments related to tax withholdings for share-based compensation	(19		)	(20		)	(12		)
Repurchase of common stock	(249		)	—			—
Other	—			(7		)	—
Net cash used in financing activities	(859		)	(616		)	(212		)

Net increase (decrease) in cash and cash equivalents	55			—			(7		)
Cash and cash equivalents—beginning of period	—			—			7
Cash and cash equivalents—end of period	$	55		$	—		$	—

The accompanying notes are an integral part of these condensed financial statements.

CHENIERE ENERGY, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Condensed Financial Statements represent the financial information required by Securities and Exchange Commission Regulation S-X 5-04 for Cheniere.

In the Condensed Financial Statements, Cheniere’s investments in affiliates are presented under the equity method of accounting. Under this method, the assets and liabilities of affiliates are not consolidated. The investments in net assets of the affiliates are recorded on the Condensed Balance Sheets. The loss from operations of the affiliates is reported on a net basis as investment in affiliates (investment in and equity in net income (loss) of affiliates).

A substantial amount of Cheniere’s operating, investing and financing activities are conducted by its affiliates. The Condensed Financial Statements should be read in conjunction with Cheniere’s Consolidated Financial Statements.

Recent Accounting Standards

We adopted ASU 2016-02, Leases (Topic 842), and subsequent amendments thereto (“ASC 842”) on January 1, 2019 using the optional transition approach to apply the standard at the beginning of the first quarter of 2019 with no retrospective adjustments to prior periods. The adoption of the standard resulted in the recognition of right-of-use assets and lease liabilities for operating leases of approximately $3 million on our Condensed Balance Sheets, with no material impact on our Condensed Statements of Operations or Condensed Statements of Cash Flows. We have elected the practical expedients to (1) carryforward prior conclusions related to lease identification and classification for existing leases, (2) combine lease and non-lease components of an arrangement for all classes of leased assets and (3) omit short-term leases with a term of 12 months or less from recognition on the balance sheet. See Note 4—Leases for additional information on our leases following the adoption of this standard.

NOTE 2—DEBT

As of December 31, 2019 and 2018, our debt consisted of the following (in millions):



	December 31,
	2019			2018
Long-term debt:
4.875% Convertible Unsecured Notes due 2021	$	1,278		$	1,218
4.25% Convertible Senior Notes due 2045	625			625
$1.25 billion Cheniere Revolving Credit Facility	—			—
Unamortized premium, discount and debt issuance costs, net	(369		)	(407		)
Total long-term debt, net	$	1,534		$	1,436

In December 2018, we amended and restated the Cheniere Revolving Credit Facility to increase total commitments under the Cheniere Revolving Credit Facility from $750 million to $1.25 billion. We have posted $585 million of letters of credit on behalf of CCH under the Cheniere Revolving Credit Facility, which is available to us to back-stop our obligations under the Equity Contribution Agreement with CCH and, provided that certain conditions are met, for general corporate purposes.

Below is a schedule of future principal payments that we are obligated to make on our outstanding debt at December 31, 2019 (in millions):



Years Ending December 31,	Principal Payments
2020	$	—
2021	1,278
2022	—
2023	—
2024	—
Thereafter	625
Total	$	1,903

CHENIERE ENERGY, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS—CONTINUED

NOTE 3—GUARANTEES

Cheniere has various financial and performance guarantees and indemnifications which are issued in the normal course of business. These contracts include performance guarantees and stand-by letters of credit. Cheniere enters into these arrangements to facilitate commercial transactions with third parties by enhancing the value of the transaction to the third party. As of December 31, 2019, outstanding guarantees and other assurances aggregated approximately $542 million of varying duration, consisting of parental guarantees. No liabilities were recognized under these guarantee arrangements as of December 31, 2019.

NOTE 4—LEASES

Our leased assets consist primarily of office space and facilities, which are classified as operating leases.

The following table shows the classification and location of our right-of-use assets and lease liabilities on our Condensed Balance Sheets (in millions):



	Condensed Balance Sheet Location	December 31, 2019
Right-of-use assets—Operating	Operating lease assets, net	$	24
Total right-of-use assets		$	24

Current operating lease liabilities	Current operating lease liabilities	$	5
Non-current operating lease liabilities	Non-current operating lease liabilities	33
Total lease liabilities		$	38

The following table shows the classification and location of our lease cost on our Condensed Statements of Operations (in millions):



	Condensed Statement of Operations Location	Year Ended December 31, 2019
Operating lease cost (1)	General and administrative expense	$	9


(1)	Includes $3 million of variable lease costs paid to the lessor.

Future annual minimum lease payments for operating leases as of December 31, 2019 are as follows (in millions):



Years Ending December 31,	Operating Leases (1)
2020	$	7
2021	7
2022	7
2023	7
2024	7
Thereafter	12
Total lease payments	47
Less: Interest	(9		)
Present value of lease liabilities	$	38


(1)	Does not include $1 million of legally binding minimum lease payments for an office space lease which was executed as of December 31, 2019 but will commence in 2020 and has a fixed minimum lease terms of up to two years.

CHENIERE ENERGY, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS—CONTINUED

Future annual minimum lease payments for operating leases as of December 31, 2018, prepared in accordance with accounting standards prior to the adoption of ASC 842, were as follows (in millions):



Years Ending December 31,	Operating Leases (1)
2019	$	8
2020	6
2021	6
2022	6
2023	7
Thereafter	18
Total lease payments	$	51


(1)	Includes payments for certain non-lease components.

The following table shows the weighted-average remaining lease term (in years) and the weighted-average discount rate for our operating leases:



	December 31, 2019
Weighted-average remaining lease term (in years)	6.6
Weighted-average discount rate	5.5%

The following table includes other quantitative information for our operating leases (in millions):



	Year Ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	7
Right-of-use assets obtained in exchange for new operating lease liabilities	1

NOTE 5—SHARE REPURCHASE PROGRAM

On June 3, 2019, we announced that our Board authorized a 3-year, $1.0 billion share repurchase program. During the year ended December 31, 2019, we repurchased an aggregate of 4.0 million shares of our common stock for $249 million, for a weighted average price per share of $62.27.

As of December 31, 2019, we had up to $751 million of the share repurchase program available. Under the share repurchase program, repurchases can be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or otherwise, all in accordance with the rules of the SEC and other applicable legal requirements. The timing and amount of any shares of our common stock that are repurchased under the share repurchase program will be determined by our management based on market conditions and other factors. The share repurchase program does not obligate us to acquire any particular amount of common stock, and may be modified, suspended or discontinued at any time or from time to time at our discretion.

CHENIERE ENERGY, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS—CONTINUED

NOTE 6 —SUPPLEMENTAL CASH FLOW INFORMATION

The following table provides supplemental disclosure of cash flow information (in millions):



	Year Ended December 31,
	2019		2018		2017
Cash paid during the period for interest, net of amounts capitalized	$	36	$	32	$	31
Non-cash investing and financing activities:
Non-cash capital distribution (contributions) (1)	490		607		(268		)
Additional interest in Cheniere Holdings acquired	—		702		2

(1)

Amounts represent equity income (losses) of affiliates.