Freitag, 25. Mai | 20:44 Uhr

The AES Corporation (NYSE: AES) today reported results for the third
quarter 2010. The Company’s results were driven by improved operating
performance at its generation segment in Asia, higher volume at its
Latin America utilities, increased summer month peak demand in North
America and favorable foreign currency exchange rates. These
contributions were offset by lower margins in North America and Chile.
In addition, per share results reflected a higher share count.

“Operating performance improvements at our Asia generation businesses
and at our Latin America utilities this quarter enabled us to deliver on
the stronger demand in both markets. These favorable trends were
partially offset, however, by lower margins at our U.S. merchant
generation facilities, where we continue to see the impact of lower gas
prices,” said Paul Hanrahan, AES President and Chief Executive Officer.

During the quarter, the Company also completed the previously announced
acquisition of the 1,246 MW Ballylumford facility in Northern Ireland on
August 12, 2010. “This year, consistent with our strategy of allocating
capital to those opportunities with the greatest return, we repurchased
$90 million in common shares and retired parent debt of $904 million.
Coupled with the Ballylumford acquisition, which we expect to contribute
earnings during the fourth quarter of 2010, all of these investments
demonstrate our ongoing commitment to creating shareholder value,”
stated Victoria D. Harker, Executive Vice President and Chief Financial
Officer.
Table 1: Results for Third Quarter 2010, Year-To-Date 2010 and Full
Year 2010 Guidance
 

 
Third
 

 
Third
 

 
2010 Guidance

Quarter

Quarter

YTD

As of

2010
 

 
2009
 

 
2010
 

 
November 4, 2010
Consolidated Revenue

$

4,151

M

$

3,652

M

$

12,243

M

NA

Consolidated Gross Margin

$

985

M

$

967

M

$

2,953

M

$

3,700-3,900

M

Proportional Gross Margin

(a non-GAAP financial measure)

$

553

M

$

542

M

$

1,743

M

$

2,200-2,400

M

Consolidated Cash Flow fromOperating Activities

$

996

M

$

1,003

M

$

2,412

M

$

2,950-3,150

M

Proportional Cash Flow fromOperating Activities

$

530

M

$

543

M

$

1,311

M

$

1,525-1,725

M

(a non-GAAP financial measure)

Consolidated Free Cash Flow

(a non-GAAP financial measure)

$

827

M

$

859

M

$

1,928

M

$

2,175-2,375

M

Proportional Free Cash Flow

(a non-GAAP financial measure)

$

412

M

$

449

M

$

970

M

$

0.95-1.15

M

Subsidiary Distributions to theParent Company

$

235

M

$

202

M

$

888

M

$

1,100-1,200

M

(see definitions)

Diluted EPS from Continuing Operations

$

0.05

$

0.26

$

0.47

$

0.63-0.68

Adjusted EPS

(a non-GAAP financial measure)

$

0.20

$

0.24

$

0.68

$

0.90-0.95

 
Key drivers of the Third Quarter results include (comparison of Q3
2010 vs. Q3 2009):
During the third quarter 2010, AES benefited from increased summer month
peak weather related demand in North America, higher volume at its
utilities in Brazil, higher rates and volume at its generation segment
in Asia, as well as favorable foreign currency exchange rates,
particularly in Brazil. These benefits were offset by unfavorable
margins at the Company’s merchant generation plants in North America and
higher fuel and purchased energy prices in Chile.

The Company also recorded impairment charges in the third quarter. In
California, a regulation implementing Section 316(b) of the U.S. Clean
Water Act was approved in September 2010. Upon assessment, the
regulation was determined to require significant remediation capital
expenditures, resulting in a pre-tax impairment expense of $200 million.
In Hungary, as previously discussed in first quarter 2010, continued
regulatory and commodity price changes combined with lower demand and
margins based on contract negotiations in the third quarter, resulted in
the recognition of a pre-tax impairment charge of $85 million. Finally,
at the Company’s merchant generation business in Texas, lower dispatch
during the quarter, when coupled with near-term commodity price outlook,
caused the Company to record a goodwill impairment charge of $18 million.

Consolidated Revenue increased by $499 million to $4.2 billion,
benefitting from operating improvements of: (i) higher rates at its
generation businesses in Latin America, primarily in Argentina and
Panama; (ii) contributions from the Company’s Cartagena business in
Spain, which were previously reported under the equity method of
accounting, but as of January 1, 2010 are now included in the
Company’s consolidated results of operations in accordance with new
accounting guidance; (iii) increased demand at the Company’s utilities
in Brazil; (iv) higher rates and volume at its generation business in
the Philippines; (v) higher demand and rates at its North America
utility; and (vi) contributions from the newly-acquired generation
facility in Europe. Of the quarter-over-quarter increase, $94 million
was attributable to favorable foreign currency translation impacts,
particularly the Brazilian Real, which appreciated seven percent.
These gains were partially offset by lower rates at the Company’s
North America merchant generation businesses, net of increased volume
and favorable impact of mark-to-market derivative adjustments in North
America, and the unfavorable impact on rates at Eletropaulo in Brazil,
which resulted from a cumulative adjustment to regulatory liabilities.

Consolidated Gross Margin increased by $18 million to $1 billion,
benefitting from: (i) higher volume at the Company’s utilities in
Brazil due to the recovery of the local economy and in the Company’s
North America generation businesses that resulted from increased
summer month peak weather related demand; (ii) higher volume and rates
at the Company’s generation business in the Philippines; (iii) higher
demand at its North America utility; and (iv) $32 million of favorable
foreign currency translation impacts. These gains were mostly offset
by: (i) higher fixed costs in Brazil because of a bad debt recovery in
2009 that did not recur; (ii) higher purchased fuel and energy prices
in Chile; (iii) the cumulative tariff adjustment to regulatory
liabilities described above; and (iv) lower rates at the Company’s
merchant generation facilities in North America.

Proportional Gross Margin (a non-GAAP financial measure, see Appendix
for definition and reconciliation) increased by $11 million to $553
million, primarily because of higher rates and volume at the Company’s
businesses in Philippines and higher volume in North America, which
were partially offset by higher purchased fuel and energy prices in
Chile.

Consolidated Cash Flow from Operating Activities decreased by $7
million to $996 million. By comparison, the third quarter 2009
included operating cash flow contributions of $78 million from the
Oman and Pakistan businesses the Company sold in 2010. Excluding the
sold businesses, consolidated operating cash flow increased by $71
million over the third quarter 2009. Drivers of the quarterly cash
flow results included higher operating cash flow in the Company’s
Latin America utilities because of improved working capital and higher
operating cash flow in Asia and Middle East generation businesses
(excluding sold businesses) primarily because of higher gross margin.
These drivers were offset by lower operating cash flow because of
unfavorable working capital at the Company’s generation businesses in
Europe and Latin America.

Proportional Cash Flow from Operating Activities (a non-GAAP financial
measure, see Appendix for definition and reconciliation) decreased by
$13 million to $530 million, including the negative impact of $43
million in 2009 contributions from the businesses sold.

Consolidated Free Cash Flow (a non-GAAP financial measure, see
Appendix for definition and reconciliation) decreased by $32 million
to $827 million. This decrease is primarily a result of the
consolidated operating cash flow factors mentioned above as well as
higher environmental capital expenditures at the Company’s North
America utility.

Proportional Free Cash Flow (a non-GAAP financial measure, see
Appendix for definition and reconciliation) decreased by $37 million
to $412 million, including the negative impact of $44 million from the
businesses sold.

Diluted Earnings Per Share (EPS) from Continuing Operations decreased
$0.21 per share to $0.05 per share, which was affected by impairments
that contributed losses net of tax, of $0.26, including: (i) $0.17
related to the September 2010 environmental policy in California
implementing Section 316(b) of the U.S. Clean Water Act, which will
affect one of the Company’s generation businesses there; (ii) $0.07
from lower demand and margin at the Company’s generation business in
Hungary; and (iii) $0.02 as a result of an increase in fuel costs and
a decrease in future power prices at the Company’s merchant generation
business in Texas. These non-cash expenses did not impact Gross
Margin, Cash Flow or Adjusted EPS. In addition, the share count for
the third quarter of 2010 was 19 percent higher, which had a negative
$0.04 impact. These negative drivers were partially offset by
unrealized foreign currency transaction gains and the favorable gross
margin drivers listed above.

Adjusted EPS (a non-GAAP financial measure, see Appendix for
definition and reconciliation) decreased $0.04 to $0.20 per share.
This decrease was driven primarily by the higher share count,
unfavorable commodity price impacts on the Company’s merchant
generation businesses in North America and higher business development
costs. These were partially offset by favorable foreign exchange rates
and operating results. Table 2 provides a reconciliation of Diluted
EPS to Adjusted EPS for third quarter 2010 as compared to third
quarter 2009.
Table 2:Reconciliation of Diluted EPS to Adjusted EPS for Q3
2010 as compared to Q3 2009
 

 
Q3 2010 QTD
 

 
Q3 2009 QTDDiluted Earnings Per Share from Continuing Operations

$
 

 
0.05

 
$
 

 
0.26

Derivative Mark-to-Market (Gains)/Losses

$

0.02

$

0.02

Currency Transaction (Gains)/Losses

$

(0.13

)

$

(0.02

)

Disposition/Acquisition (Gains)/Losses

$

-

$

(0.02

)

Impairment Losses

$

0.26

$

-

 
Adjusted Earnings Per Share
 

 
$
 

 
0.20
 

 
$
 

 
0.24
 

See Appendix for more detail.

 
Key drivers of the YTD 2010 results include (comparison of Q3 YTD
2010 vs. Q3 YTD 2009):
During the first nine months of 2010, AES benefited from higher volume
and rates at its generation businesses in Asia and at its utilities in
Latin America. Additionally, the Company benefited from favorable
foreign currency exchange rates, particularly in Brazil. These benefits
were offset by unfavorable margins at the Company’s merchant generation
facilities in North America, a higher tax expense because of the
expiration of a favorable U.S. tax law on December 31, 2009 related to
the treatment of certain non-U.S. transactions, and a higher share count.

Consolidated Revenue increased by $2.1 billion to $12.2 billion. Of
that amount, $787 million was attributable to the impact of favorable
foreign currency translation, particularly the Brazilian Real, which
appreciated 17 percent. Further improvements to revenue resulted from:
(i) an increase in tariff rates and volumes at Brazilian utilities;
(ii) contributions from the consolidation of the Company’s Cartagena
business in Spain; (iii) higher rates and volume at the Company’s
generation businesses in Latin America; and (iv) improved operating
performance in Asia.

Consolidated Gross Margin increased by $334 million to $3.0 billion,
benefiting from: (i) $207 million of favorable foreign currency
translations; (ii) higher tariff rates and volume at its Brazilian
utilities; (iii) higher rates and volumes in Asia; (iv) higher rates
and volume at the Company’s generation businesses in Argentina; and
(v) the consolidation of Cartagena. These gains were partially offset
by higher fixed costs, largely driven by bad debt recoveries and a
reduction in bad debt expense in Latin America in 2009 which did not
recur, and lower margins at its merchant generation facilities in
North America.

Proportional Gross Margin (a non-GAAP financial measure, see Appendix
for definition and reconciliation) increased by $193 million to $1.7
billion, primarily driven by favorable performance of the Company’s
generation businesses in Asia, higher volume at the Company’s Latin
America generation businesses and the favorable impact of foreign
currency exchange rates.

Consolidated Cash Flow from Operating Activities increased by $535
million to $2.4 billion, reflecting higher gross margin and improved
working capital management in Latin America generation and utility
businesses.

Proportional Cash Flow from Operating Activities (a non-GAAP financial
measure, see Appendix for definition and reconciliation) increased by
$160 million to $1.3 billion.

Consolidated Free Cash Flow (a non-GAAP financial measure, see
Appendix for definition and reconciliation) increased by $480 million
to $1.9 billion. This increase is primarily a result of the
consolidated operating cash flow factors mentioned above as well as
higher environmental capital expenditures at the Company’s North
America utility and higher maintenance capital expenditures at the
Company’s Latin America utilities.

Proportional Free Cash Flow (a non-GAAP financial measure, see
Appendix for definition and reconciliation) increased by $127 million
to $970 million.

Diluted EPS from Continuing Operations decreased $0.53 per share to
$0.47 per share. Year-to-date drivers from 2009 included a $0.15 per
share gain relating to the final settlement of the Northern Kazakhstan
businesses sold in 2008, the Kazakhstan earn out of $0.12 in 2009, and
a $0.05 per share gain from the settlement of a claim at a European
subsidiary. In addition, Diluted EPS declined in 2010 relative to 2009
because of $0.26 of impairment charges, $0.08 impact from higher
average shares outstanding and a higher effective tax rate. These
negative drivers were partially offset by the favorable gross margin
drivers listed above.

Adjusted EPS (a non-GAAP financial measure, see Appendix for
definition and reconciliation) decreased by $0.17 to $0.68 per share,
primarily driven by the Kazakhstan earn out of $0.12 in 2009, higher
share count of $0.08, and a higher effective tax rate. This was
partially offset by favorable foreign exchange rates and operating
results. Table 3 provides a reconciliation of Diluted EPS to Adjusted
EPS for the year-to-date 2010 as compared to year-to-date 2009.
Table 3:Reconciliation of Diluted EPS to Adjusted EPS for Q3
YTD 2010 as compared to Q3 YTD 2009
 

 
Q3 2010 YTD
 

 
Q3 2009 YTDDiluted Earnings Per Share from Continuing Operations

$
 

 
0.47

 
$
 

 
1.00

Derivative Mark-to-Market (Gains)/Losses

$

(0.01

)

$

0.05

Currency Transaction (Gains)/Losses

$

(0.05

)

$

(0.03

)

Disposition/Acquisition (Gains)/Losses

$

-

$

(0.19

)

Impairment Losses

$

0.26

$

0.02

Debt Retirement (Gains)/Losses

$

0.01

$

-

 
Adjusted Earnings Per Share
 

 
$
 

 
0.68
 

 
$
 

 
0.85
 

See Appendix for more detail.

 
2010 Guidance
The Company maintained its 2010 Gross Margin guidance and increased its
Consolidated and Proportional Free Cash Flow guidance ranges by $175
million and $50 million, respectively. For full year Adjusted EPS, the
Company reaffirmed a range of $0.90 to $0.95. To reflect impairments
recorded in the third quarter, the Company lowered its full year Diluted
EPS from Continuing Operations guidance to $0.63 to $0.68 from $0.80 to
$0.85.

The above guidance is based on foreign exchange and commodity forward
prices as of September 30, 2010, as well as extension of a favorable
U.S. tax provision affecting cash distributions from certain non-U.S.
subsidiaries. For a complete list of 2010 guidance elements and
reconciliations to GAAP, see Appendix.
Other Key Highlights:Third Quarter 2010
In August, the Company completed the acquisition of a 100 percent
stake in Premier Power Limited (PPL), owner of the 1,246 MW natural
gas-fired Ballylumford Power Station, Northern Ireland, for
approximately $160 million. Together with its Kilroot facility, the
Company operates 15 percent of the generation capacity in Ireland’s
Single Electricity Market.

In Turkey, the Company began commercial operations of two small
hydropower facilities totaling 44 MW. Turkey plans to privatize 15 GW
and forecasts an annual demand growth in electricity of 6.5 percent.
October 2010
The Company redeemed the remaining $290 million outstanding 8.75
percent Second Priority Senior Secured Notes, which were due in 2013.
The Notes were redeemed on October 8, 2010 at a redemption price equal
to 101.458 percent of the principal amount thereof, plus accrued
interest. This followed payment of a $214 million maturity in
September and brings the total amount of parent debt paid down year to
date to $904 million.

As part of its growth efforts in Asia, the Company announced that it
has commenced development on the expansion of its power generation
facility in the Philippines, which would represent an infrastructure
investment of up to $800 million. It is anticipated that the expansion
project will be funded with a combination of non-recourse financing
and equity.

The Company closed the sale of its equity interest in its Qatar
business, Ras Laffan, to its partner, the Qatar Electricity and Water
Company. The agreement was announced in April, 2010.
Non-GAAP Financial Measures
See Non-GAAP Financial Measures for definitions of Adjusted Earnings Per
Share, Proportional Gross Margin, Adjusted Gross Margin, Proportional
Adjusted Gross Margin, Proportional Operating Cash Flow, Free Cash Flow,
Proportional Free Cash Flow as well as reconciliations to the most
comparable GAAP financial measure.
Attachments
Consolidated Statements of Operations, Segment Information, Consolidated
Balance Sheets, Consolidated Statements of Cash Flows, Non-GAAP
Financial Measures, Parent Financial Information and 2010 Financial
Guidance.
Conference Call Information
AES will host a conference call on Thursday, November 4, 2010 at 10:00
a.m. Eastern Daylight Time (EDT). Interested parties may listen to the
teleconference by dialing 1-888-566-7708 at least ten minutes before the
start of the call. International callers should dial +1-517-308-9025.
The participant passcode for this call is 1104. Internet access to the
conference call and presentation materials will be available on the AES
website at www.aes.com
by selecting “Investor Information” and then “Quarterly Financial
Reports.”

A telephonic replay of the call will be available from approximately
1:00 p.m. EDT on Thursday, November 4, 2010 through Thursday, November
25, 2010. Callers in the U.S. please dial 1-800-879-7966. International
callers should dial +1-402-220-5346. The system will ask for a passcode;
please enter 1104. A webcast replay, as well as a replay in downloadable
MP3 format, will be accessible at www.aes.com
beginning shortly after the completion of the call.
About AES
The AES Corporation (NYSE: AES) is a Fortune 500 global power company
with generation and distribution businesses. Through our diverse
portfolio of thermal and renewable fuel sources, we provide affordable
and sustainable energy to 29 countries. Our workforce of 27,000 people
is committed to operational excellence and meeting the world’s changing
power needs. Our 2009 revenues were $14 billion and we own and manage
$40 billion in total assets. To learn more, please visit www.aes.com.
Safe Harbor Disclosure
This news release contains forward-looking statements within the meaning
of the Securities Act of 1933 and of the Securities Exchange Act of
1934. Such forward-looking statements include, but are not limited to,
those related to future earnings, growth and financial and operating
performance. Forward-looking statements are not intended to be a
guarantee of future results, but instead constitute AES’ current
expectations based on reasonable assumptions. Forecasted financial
information is based on certain material assumptions. These assumptions
include, but are not limited to, our accurate projections of future
interest rates, commodity price and foreign currency pricing, continued
normal levels of operating performance and electricity volume at our
distribution companies and operational performance at our generation
businesses consistent with historical levels, as well as achievements of
planned productivity improvements and incremental growth investments at
normalized investment levels and rates of return consistent with prior
experience.

Actual results could differ materially from those projected in our
forward-looking statements due to risks, uncertainties and other
factors. Important factors that could affect actual results are
discussed in AES’ filings with the Securities and Exchange Commission,
including, but not limited to, the risks discussed under Item 1A “Risk
Factors” in AES’ 2009 Annual Report on Form 10-K. Readers are encouraged
to read AES’ filings to learn more about the risk factors associated
with AES’ business. AES undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.

Any Stockholder who desires a copy of the Company’s 2009 Annual Report
on Form 10-K dated on or about February 25, 2010 with the SEC may obtain
a copy (excluding Exhibits) without charge by addressing a request to
the Office of the Corporate Secretary, The AES Corporation, 4300 Wilson
Boulevard, Arlington, Virginia 22203. Exhibits also may be requested,
but a charge equal to the reproduction cost thereof will be made. A copy
of the Form 10-K may be obtained by visiting the Company’s website at www.aes.com.

 
THE AES CORPORATIONCondensed Consolidated Statements of Operations(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2010
 

2009
 

2010
 

2009
 

(in millions, except per share amounts)
Revenue:

Regulated

$

2,274

$

2,097

$

6,728

$

5,542

Non-Regulated

1,877

1,555

5,515

4,636

Total revenue

4,151

3,652

12,243

10,178

Cost of Sales:

Regulated

(1,653

)

(1,457

)

(4,960

)

(3,988

)

Non-Regulated

(1,513

)

(1,228

)

(4,330

)

(3,571

)

Total cost of sales

(3,166

)

(2,685

)

(9,290

)

(7,559

)

Gross margin

985

967

2,953

2,619

General and administrative expenses

(98

)

(81

)

(279

)

(251

)

Interest expense

(387

)

(406

)

(1,167

)

(1,146

)

Interest income

97

90

307

272

Other expense

(23

)

(15

)

(83

)

(67

)

Other income

20

36

97

279

Gain on sale of investments

-

17

-

132

Goodwill impairment

(18

)

-

(18

)

-

Asset impairment expense

(296

)

(6

)

(297

)

(7

)

Foreign currency transaction gains (losses) on net monetary position

103

(1

)

(19

)

(12

)

Other non-operating expense

(2

)

(2

)

(7

)

(12

)

INCOME FROM CONTINUING OPERATIONS BEFORE

TAXES AND EQUITY IN EARNINGS OF AFFILIATES

381

599

1,487

1,807

Income tax expense

(111

)

(203

)

(562

)

(482

)

Net equity in earnings of affiliates

26

18

174

75

INCOME FROM CONTINUING OPERATIONS

296

414

1,099

1,400

Income from operations of discontinued businesses, net of income tax

expense of $0, $2, $2 and $3, respectively

22

26

72

72

Gain from disposal of discontinued businesses, net of income tax

expense of $38, $0, $38 and $0, respectively

79

-

57

-

NET INCOME

397

440

1,228

1,472

Noncontrolling interests:

Less: Income from continuing operations attributable to
noncontrolling interests

(253

)

(243

)

(741

)

(735

)

Less: Income from discontinued operations attributable to
noncontrolling interests

(30

)

(12

)

(42

)

(31

)

Total net income attributable to noncontrolling interests

(283

)

(255

)

(783

)

(766

)

NET INCOME ATTRIBUTABLE TO THE AES CORPORATION

$

114

$

185

$

445

$

706

BASIC EARNINGS PER SHARE:

Income from continuing operations attributable to The AES Corporation

common stockholders, net of tax

$

0.05

$

0.26

$

0.47

$

1.00

Discontinued operations attributable to The AES Corporation common

stockholders, net of tax

0.09

0.02

0.11

0.06

NET INCOME ATTRIBUTABLE TO THE AES CORPORATION

COMMON STOCKHOLDERS

$

0.14

$

0.28

$

0.58

$

1.06

DILUTED EARNINGS PER SHARE:

Income from continuing operations attributable to The AES Corporation

common stockholders, net of tax

$

0.05

$

0.26

$

0.47

$

1.00

Discontinued operations attributable to The AES Corporation common

stockholders, net of tax

0.09

0.02

0.11

0.06

NET INCOME ATTRIBUTABLE TO THE AES CORPORATION

COMMON STOCKHOLDERS

$

0.14

$

0.28

$

0.58

$

1.06

AMOUNTS ATTRIBUTABLE TO THE AES CORPORATION

COMMON STOCKHOLDERS:

Income from continuing operations, net of tax

$

43

$

171

$

358

$

665

Discontinued operations, net of tax

71

14

87

41

Net income

$

114

$

185

$

445

$

706

 
THE AES CORPORATIONSEGMENT INFORMATION (unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,
($ in millions)

  2010  

  2009  

  2010  

 
  2009  

 
REVENUE

Latin America – Generation

$

1,111

$

1,008

$

3,178

$

2,794

Latin America – Utilities

1,787

1,677

5,322

4,253

North America – Generation

532

486

1,519

1,463

North America – Utilities

306

266

869

817

Europe – Generation

294

183

898

586

Asia – Generation

136

78

491

268

Corp/Other & eliminations

(15

)

(46

)

(34

)

(3

)

Total Revenue

$

4,151

$

3,652

$

12,243

$

10,178

 
GROSS MARGIN

Latin America – Generation

$

386

$

390

$

1,145

$

1,098

Latin America – Utilities

262

288

758

641

North America – Generation

121

107

330

348

North America – Utilities

78

65

206

186

Europe – Generation

40

41

199

148

Asia – Generation

52

23

197

56

Corp/Other & eliminations

46

53

118

142

Total Gross Margin

$

985

$

967

$

2,953

$

2,619

 
THE AES CORPORATIONCondensed Consolidated Balance Sheets

September 30,

December 31,

2010

2009

(in millions except share and per sharedata)

(unaudited)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

2,848

$

1,782

Restricted cash

609

407

Short-term investments

1,645

1,648

Accounts receivable, net of allowance for doubtful accounts of $305
and $290, respectively

2,349

2,118

Inventory

611

560

Receivable from affiliates

32

24

Deferred income taxes – current

244

210

Prepaid expenses

190

161

Other current assets

1,142

1,557

Current assets of discontinued and held for sale businesses

98

320

Total current assets

9,768

8,787

NONCURRENT ASSETS

Property, Plant and Equipment:

Land

1,104

1,111

Electric generation, distribution assets and other

28,800

26,815

Accumulated depreciation

(9,151

)

(8,774

)

Construction in progress

4,222

4,644

Property, plant and equipment, net

24,975

23,796

Other Assets:

Deferred financing costs, net of accumulated amortization of $303
and $293, respectively

382

377

Investments in and advances to affiliates

1,313

1,157

Debt service reserves and other deposits

606

595

Goodwill

1,276

1,299

Other intangible assets, net of accumulated amortization of $240 and
$223, respectively

610

510

Deferred income taxes – noncurrent

689

587

Other

1,634

1,551

Noncurrent assets of discontinued and held for sale businesses

527

876

Total other assets

7,037

6,952

TOTAL ASSETS

$

41,780

$

39,535

 
LIABILITIES AND EQUITY

CURRENT LIABILITIES

Accounts payable and other accrued liabilities

$

4,523

$

4,193

Accrued interest

375

269

Non-recourse debt – current

1,591

1,718

Recourse debt – current

464

214

Current liabilities of discontinued and held for sale businesses

76

227

Total current liabilities

7,029

6,621

LONG-TERM LIABILITIES

Non-recourse debt – noncurrent

13,482

12,304

Recourse debt – noncurrent

4,438

5,301

Deferred income taxes – noncurrent

1,249

1,090

Pension and other post-retirement liabilities

1,306

1,322

Other long-term liabilities

3,025

3,146

Long-term liabilities of discontinued and held for sale businesses

408

811

Total long-term liabilities

23,908

23,974

Contingencies and Commitments (see Note 8)

Redeemable stock of subsidiaries

60

60

EQUITY

THE AES CORPORATION STOCKHOLDERS’ EQUITY

Common stock ($0.01 par value, 1,200,000,000 shares authorized;
804,560,572 issued

and 794,115,103 outstanding at September 30, 2010 and 677,214,493
issued and 667,679,913

outstanding at December 31, 2009

8

7

Additional paid-in capital

8,462

6,868

Retained earnings

1,056

650

Accumulated other comprehensive loss

(2,504

)

(2,724

)

Treasury stock, at cost (10,445,469 shares at September 30, 2010 and
9,534,580 shares at

December 31, 2009, respectively)

(132

)

(126

)

Total The AES Corporation stockholders’ equity

6,890

4,675

NONCONTROLLING INTERESTS

3,893

4,205

Total equity

10,783

8,880

TOTAL LIABILITIES AND EQUITY

$

41,780

$

39,535

 
THE AES CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Three Months Ended

Nine Months Ended

September 30

September 30,
($ in millions)

2010
 

 
2009

2010
 

 
2009
OPERATING ACTIVITIES:

Net income

$

397

$

440

$

1,228

$

1,472

Adjustments to net income:

Depreciation and amortization

292

269

876

767

(Gain) loss from sale of investments and impairment expense

332

(12

)

350

(115

)

(Gain) loss on disposal and impairment write-down – discontinued
operations

(120

)

-

(102

)

-

Provision for deferred taxes

(86

)

87

31

(24

)

Contingencies

3

40

75

(14

)

(Gain) loss on the extinguishment of debt

-

-

9

(3

)

Undistributed gain from sale of equity method investment

(3

)

-

(118

)

-

Other

(39

)

29

(81

)

33

Changes in operating assets and liabilities:

(Increase) decrease in accounts receivable

(67

)

(79

)

(136

)

(82

)

(Increase) decrease in inventory

10

1

9

(10

)

(Increase) decrease in prepaid expenses and other current assets

20

58

190

92

(Increase) decrease in other assets

-

6

(51

)

(133

)

Increase (decrease) in accounts payable and accrued liabilities

95

133

4

(159

)

Increase (decrease) in income taxes and other income tax payables,
net

110

42

20

96

Increase (decrease) increase in other liabilities

52

(11

)

108

(43

)

Net cash provided by operating activities

996

1,003

2,412

1,877

INVESTING ACTIVITIES:

Capital expenditures

(526

)

(572

)

(1,528

)

(1,765

)

Acquisitions–net of cash acquired

(137

)

-

(237

)

-

Proceeds from the sale of businesses

171

-

369

2

Proceeds from the sale of assets

11

16

11

16

Sale of short-term investments

1,444

1,008

4,583

3,277

Purchase of short-term investments

(1,285

)

(1,034

)

(4,540

)

(2,774

)

(Increase) decrease in restricted cash

(8

)

(33

)

(82

)

272

(Increase) decrease in debt service reserves and other assets

-

40

(9

)

80

Affiliate advances and equity investments

(50

)

(50

)

(77

)

(137

)

Proceeds from loan repayments

-

-

132

-

Other investing

(12

)

(35

)

31

(15

)

Net cash used in investing activities

(392

)

(660

)

(1,347

)

(1,044

)

FINANCING ACTIVITIES:

Issuance of common stock

(3

)

-

1,566

-

Borrowings (repayments) under the revolving credit facilities, net

(14

)

(65

)

74

(96

)

Issuance of recourse debt

-

-

-

503

Issuance of non-recourse debt

154

373

1,497

1,189

Repayments of recourse debt

(213

)

-

(619

)

(154

)

Repayments of non-recourse debt

(144

)

(131

)

(1,441

)

(622

)

Payments for deferred financing costs

(21

)

(19

)

(50

)

(72

)

Distributions to noncontrolling interests

(409

)

(227

)

(951

)

(561

)

Contributions from noncontrolling interests

-

1

-

75

Financed capital expenditures

(4

)

(3

)

(21

)

(27

)

Purchase of treasury stock

(15

)

-

(15

)

-

Other financing

(1

)

(17

)

(18

)

8

Net cash (used in) provided by financing activities

(670

)

(88

)

22

243

Effect of exchange rate changes on cash

23

5

(21

)

19

Total (decrease) increase in cash and cash equivalents

(43

)

260

1,066

1,095

Cash and cash equivalents, beginning

2,891

1,700

1,782

865

Cash and cash equivalents, ending

$

2,848

$

1,960

$

2,848

$

1,960

 
THE AES CORPORATIONNON-GAAP FINANCIAL MEASURES (unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2010
 

 
2009

2010
 

 
2009

 
Reconciliation of Adjusted Earnings Per Share (1)

 
Diluted EPS From Continuing Operations

$0.05

$0.26

$0.47

$1.00

Derivative Mark-to-Market (Gains)/Losses(2)

0.02

0.02

(0.01)

0.05

Currency Transaction (Gains)/Losses(3)

(0.13)

(0.02)

(0.05)

(0.03)

Disposition/Acquisition (Gains)/Losses

-

(0.02)(4)

– (5)

(0.19)(6)

Impairment Losses

0.26 (7)

-

0.26 (7)

0.02 (8)

Debt Retirement (Gains)/Losses

-

-

0.01 (9)

-

 
Adjusted Earnings Per Share(1)

$0.20

$0.24

$0.68

$0.85
 

(1)

Adjusted earnings per share (a non-GAAP financial measure) is
defined as diluted earnings per share from continuing operations
excluding gains or losses of the consolidated entity due to (a)
mark-to-market amounts related to derivative transactions, (b)
unrealized foreign currency gains or losses, (c) significant gains
or losses due to dispositions and acquisitions of business
interests, (d) significant losses due to impairments, and (e) costs
due to the early retirement of debt. The GAAP measure most
comparable to Adjusted EPS is diluted earnings per share from
continuing operations. AES believes that adjusted earnings per share
better reflects the underlying business performance of the Company,
and is considered in the Company’s internal evaluation of financial
performance. Factors in this determination include the variability
due to mark-to-market gains or losses related to derivative
transactions, currency gains or losses, losses due to impairments
and strategic decisions to dispose or acquire business interests or
retire debt, which affect results in a given period or periods.
Adjusted earnings per share should not be construed as an
alternative to earnings per share, which is determined in accordance
with GAAP.

(2)

Derivative mark-to-market (gains)/losses were net of income tax per
share of $0.01 in the three months ended September 30, 2010 and
2009, and of $(0.01) and $0.02 for the nine months ended September
30, 2010, and 2009, respectively.

(3)

Unrealized foreign currency transaction (gains)/losses were net of
income tax per share of $0.00 and $(0.01) in the three months ended
September 30, 2010 and 2009, respectively, and of $(0.01) and $0.00
in the nine months ended September 30, 2010 and 2009, respectively.

(4)

Amount includes Hefei gain on sale of $15 million, or $0.02 per
share, net of noncontrolling interest associated with the shut down
of Hefei plant in China.

(5)

The Company has not adjusted for the gain or the related tax effect
from the sale of its indirect investment in CEMIG, disclosed in Note
6 – Investments in and Advances to Affiliates, in its determination
of adjusted EPS because the gain was recognized by an equity method
investee. The Company does not adjust for transactions of its equity
method investees in its determination of adjusted EPS.

(6)

Amount includes: Kazakhstan gain of $98 million, or $0.15 per share,
related to the termination of a management agreement, a gain of $13
million, or $0.02 per share, related to the reversal of a
withholding tax contingency, as well as a gain of $15 million, or
$0.02 per share, related to the sale of Hefei discussed above. There
were no taxes associated with these transactions.

(7)

Amount includes asset impairments at Southland (Huntington Beach) of
$200 million and Tisza of $85 million ($130 million, or $0.17 per
share, and $55 million, or $0.07 per share, net of income tax,
respectively) and goodwill impairment at Deepwater of $18 million
($12 million, or $0.02 per share, net of income tax).

(8)

Amount includes nontaxable impairment of the Company’s investment in
“blue gas” (coal to gas) technology of $10 million or $0.02 per
share.

(9)

Amount includes loss on retirement of Parent Company debt of $9
million ($6 million, or $0.01 per share, net of income tax).

 
THE AES CORPORATIONNON-GAAP FINANCIAL MEASURES (unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,
($ in millions)

2010
 

 
2009

2010
 

 
2009

 
Reconciliation of Adjusted Gross Margin(1)

Consolidated Gross Margin

$

985

$

967

$

2,953

$

2,619

Add: Depreciation and Amortization

286

252

847

715

Less: General and Administrative Expenses

(98

)

(81

)

(279

)

(251

)

 
Adjusted Gross Margin(1)

$1,173
 

$1,138
 

$3,521
 

$3,083
 

 
Reconciliation of Proportional Gross Margin(2)

Consolidated Gross Margin

$

985

$

967

$

2,953

$

2,619

Less: Proportional Adjustment Factor

432

425

1,210

1,069

 
Proportional Gross Margin(2)

$553
 

$542
 

$1,743
 

$1,550
 

 
Reconciliation of Proportional Adjusted Gross Margin(1),(2)

Consolidated Adjusted Gross Margin

$

1,173

$

1,138

$

3,521

$

3,083

Less: Proportional Adjustment Factor

502

488

1,427

1,243

 
Proportional Adjusted Gross Margin(1),(2)

$671
 

$650
 

$2,094
 

$1,840
 

 
(1)
 

Adjusted Gross Margin is defined by the Company as: Gross margin
plus depreciation and amortization less general and administrative
expenses. AES believes adjusted gross margin is a useful measure for
evaluating and comparing the operating performance of its businesses
because it includes the direct operating costs of its business
including overhead related expenses and excludes potential
differences caused by variations in capital structures affecting
interest income and expense, tax positions, such as the impact of
changes in effective tax rates and the impact of depreciation and
amortization expense.

 
(2)

See footnote (2) on Guidance Elements for definition of proportional
financial metrics.

 
THE AES CORPORATIONNON-GAAP FINANCIAL MEASURES (unaudited)

Three Months EndedNine Months Ended

September 30,

September 30,
($ in millions)

  2010  

 
2009

  2010  

 
2009

 
Calculation of Maintenance Capital Expenditures for Free Cash Flow
(1) Reconciliation Below:

Maintenance Capital Expenditures, excluding environmental

$

130

$

134

$

416

$

384

Environmental Capital Expenditures

39

10

68

45

Growth Capital Expenditures

361

431

1,065

1,363

 
Total Capital Expenditures

$530

$575

$1,549

$1,792
 

 
Reconciliation of Proportional Operating Cash Flow(2)

Consolidated Operating Cash Flow

$

996

$

1,003

$

2,412

$

1,877

Less: Proportional Adjustment Factor

466

460

1,101

726

 
Proportional Operating Cash Flow(2)

$530

$543

$1,311

$1,151
 

 
Reconciliation of Free Cash Flow(1)

Consolidated Operating Cash Flow

$

996

$

1,003

$

2,412

$

1,877

Less: Maintenance Capital Expenditures, excluding environmental

130

134

416

384

Less: Environmental Capital Expenditures

39

10

68

45

 
Free Cash Flow(1)

$827

$859

$1,928

$1,448
 

 
Reconciliation of Proportional Free Cash Flow(1),(2)

Proportional Operating Cash Flow

$

530

$

543

$

1,311

$

1,151

Less: Proportional Maintenance Capital Expenditures

118

94

341

308
Proportional Free Cash Flow(1),(2)

$412

$449

$970

$843
 

 
(1)
 

Free cash flow (a non-GAAP financial measure) is defined as net cash
from operating activities less maintenance capital expenditures
(including environmental capital expenditures). AES believes that
free cash flow is a useful measure for evaluating our financial
condition because it represents the amount of cash provided by
operations less maintenance capital expenditures as defined by our
businesses, that may be available for investing or for repaying debt.

 
(2)

See footnote (2) on Guidance Elements for definition of proportional
financial metrics.

 
THE AES CORPORATIONPARENT FINANCIAL INFORMATION (unaudited)

Parent only data: last four quarters

($ in millions)

4 Quarters Ended

Sept. 30,

June 30,

Mar. 31,

Dec. 31,Total subsidiary distributions & returns
of capital to Parent

2010

2010

2010

2009

Actual

Actual

Actual

Actual
Subsidiary distributions(1) to Parent & QHCs

$

1,184

$

1,151

$

1,329

$

1,255

Returns of capital distributions to Parent & QHCs

169

298

168

167
Total subsidiary distributions & returns of capital to Parent

$1,353

$1,449

$1,497

$1,422
 

Parent only data: quarterly

($ in millions)

Quarter Ended

Sept. 30,

June 30,

Mar. 31,

Dec. 31,Total subsidiary distributions & returns
of capital to Parent

2010

2010

2010

2009

Actual

Actual

Actual

Actual
Subsidiary distributions(1) to Parent & QHCs

$

235

$

350

$

303

$

296

Returns of capital distributions to Parent & QHCs

4

131

21

13
Total subsidiary distributions & returns of capital to Parent

$239

$481

$324

$309

 
Parent Company Liquidity(2)

Balance at($ in millions)

Sept. 30,

June 30,

Mar. 31,

Dec. 31,

2010

2010

2010

2009

Actual

Actual

Actual

Actual
Cash at Parent & Cash at QHCs(3)

$

1,418

$

1,776

$

2,153

$

677

Availability under corporate credit facilities

679

458

610

581
Ending liquidity

$2,097

$2,234

$2,763

$1,258
 

 
(1)
 

Subsidiary distributions should not be construed as an alternative
to Net Cash Provided by Operating Activities which are determined in
accordance with GAAP. Subsidiary distributions are important to the
Parent Company because the Parent Company is a holding company that
does not derive any significant direct revenues from its own
activities but instead relies on its subsidiaries’ business
activities and the resultant distributions to fund the debt service,
investment and other cash needs of the holding company. The
reconciliation of difference between the subsidiary distributions
and the Net Cash Provided by Operating Activities consists of cash
generated from operating activities that is retained at the
subsidiaries for a variety of reasons which are both discretionary
and non-discretionary in nature. These factors include, but are not
limited to, retention of cash to fund capital expenditures at the
subsidiary, cash retention associated with non-recourse debt
covenant restrictions and related debt service requirements at the
subsidiaries, retention of cash related to sufficiency of local GAAP
statutory retained earnings at the subsidiaries, retention of cash
for working capital needs at the subsidiaries, and other similar
timing differences between when the cash is generated at the
subsidiaries and when it reaches the Parent Company and related
holding companies.

 
(2)

Parent Company Liquidity is defined as cash at the Parent Company
plus availability under corporate credit facilities plus cash at
qualified holding companies (”QHCs”). AES believes that
unconsolidated Parent Company liquidity is important to the
liquidity position of AES as a Parent Company because of the
non-recourse nature of most of AES’s indebtedness.

 
(3)

The cash held at QHCs represents cash sent to subsidiaries of the
Company domiciled outside of the US. Such subsidiaries had no
contractual restrictions on their ability to send cash to AES, the
Parent Company. Cash at those subsidiaries was used for investment
and related activities outside of the US. These investments included
equity investments and loans to other foreign subsidiaries as well
as development and general costs and expenses incurred outside the
US. Since the cash held by these QHCs is available to the Parent,
AES uses the combined measure of subsidiary distributions to Parent
and QHCs as a useful measure of cash available to the Parent to meet
its international liquidity needs.

 
THE AES CORPORATION

2010 FINANCIAL GUIDANCE ELEMENTS(1)

2010 Updated Financial Guidance (as of 11/4/2010)
2010 Previous Financial Guidance (issued 8/6/2010)

Consolidated
Proportional AdjustmentFactors(2)
Proportional
Consolidated
Proportional AdjustmentFactors(2)
Proportional

 
Income Statement Elements

Gross Margin

$3,700 to 3,900 million

$1,500 million

$2,200 to 2,400 million

$3,700 to 3,900 million

$1,500 million

$2,200 to 2,400 million

Adjusted Gross Margin (3)

$4,500 to 4,700 million

$1,775 million

$2,725 to 2,925 million

$4,500 to 4,700 million

$1,775 million

$2,725 to 2,925 million

Diluted Earnings Per Share From Continuing Operations

$0.63 to 0.68

$0.80 to 0.85

Adjusted Earnings Per Share Factors(4)

$0.27(5)

$0.10(6)

Adjusted Earnings Per Share(4)

$0.90 to 0.95(5)

$0.90 to 0.95(6)

 
Cash Flow Elements

Net Cash From Operating Activities(7)

$2,950 to 3,150 million

$1,425 million

$1,525 to 1,725 million

$2,775 to 2,975 million

$1,300 million

$1,475 to 1,675 million

Operational Capital Expenditures (a)

$650 to 725 million

$200 million

$450 to 525 million

$650 to 725 million

$200 million

$450 to 525 million

Environmental Capital Expenditures (b)

$75 to 100 million

-

$75 to 100 million

$75 to 100 million

-

$75 to 100 million

Maintenance Capital Expenditures (a + b)

$725 to 825 million

$200 million

$525 to 625 million

$725 to 825 million

$200 million

$525 to 625 million

Free Cash Flow(8)

$2,175 to 2,375 million

$1,225 million

$950 to 1,150 million

$2,000 to 2,200 million

$1,100 million

$900 to 1,100 million

Subsidiary Distributions(9)

$1,100 to 1,200 million

$1,100 to 1,200 million

 
Reconciliation of Free Cash Flow

Net Cash from Operating Activities

$2,950 to 3,150 million

$1,425 million

$1,525 to 1,725 million

$2,775 to 2,975 million

$1,300 million

$1,475 to 1,675 million

Less: Maintenance Capital Expenditures

$725 to 825 million

$200 million

$525 to 625 million

$725 to 825 million

$200 million

$525 to 625 million

Free Cash Flow(8)

$2,175 to 2,375 million

$1,225 million

$950 to 1,150 million

$2,000 to 2,200 million

$1,100 million

$900 to 1,100 million

 
Reconciliation of Adjusted Gross Margin

Gross Margin

$3,700 to 3,900 million

$1,500 million

$2,200 to 2,400 million

$3,700 to 3,900 million

$1,500 million

$2,200 to 2,400 million

Depreciation & Amortization

$1,125 to 1,225 million

$275 million

$850 to 950 million

$1,125 to 1,225 million

$275 million

$850 to 950 million

General & Administrative

$375 million

$375 million

$375 million

$375 million

Adjusted Gross Margin(3)

$4,500 to 4,700 million

$1,775 million

$2,725 to 2,925 million

$4,500 to 4,700 million

$1,775 million

$2,725 to 2,925 million
(1)
2010 Updated Guidance is based on expectations for future foreign
exchange rates and commodity prices as of September 30, 2010, as
well as other factors set forth in “2010 Guidance” in the Press
Release.

 
(2)
AES is a holding company that derives its income and cash flows
from the activities of its subsidiaries, some of which may not be
wholly-owned by the Company. Accordingly, the Company has
presented certain financial metrics which are defined as
Proportional (a non-GAAP financial measure). Proportional metrics
present the Company’s estimate of its share in the economics of
the underlying metric. The Company believes that the Proportional
metrics are useful to investors because they exclude the economic
share in the metric presented that is held by non-AES
shareholders. For example, Operating Cash Flow is a GAAP metric
which presents the Company’s cash flow from operations on a
consolidated basis, including operating cash flow allocable to
noncontrolling interests. Proportional Operating Cash Flow removes
the share of operating cash flow allocable to noncontrolling
interests and therefore may act as an aid in the valuation of the
Company. Proportional metrics are reconciled to the nearest GAAP
measure. Certain assumptions have been made to estimate our
proportional financial measures.   These assumptions include:  (i)
the Company’s economic interest has been calculated based on a
blended rate for each consolidated business when such business
represents multiple legal entities; (ii) the Company’s economic
interest may differ from the percentage implied by the recorded
net income or loss attributable to noncontrolling interests or
dividends paid during a given period; (iii) the Company’s economic
interest for entities accounted for using the hypothetical
liquidation at book value method is 100%; (iv) individual
operating performance of the Company’s equity method investments
is not reflected and (v) all intercompany amounts have been
excluded as applicable.

 
(3)
Non-GAAP financial measure as reconciled in the table. See Footnote
(1) on Non-GAAP Financial Measures – Reconciliation of Adjusted
Gross Margin for definition.

 
(4)
See Footnote (1) on Non-GAAP Financial Measures – Reconciliation of
Adjusted Earnings Per Share for definition.

 
(5)
Reconciliation of Adjusted EPS includes impairment losses of $0.26,
losses on debt retirement of $0.03, derivative mark-to-market losses
of $0.02 and unrealized foreign currency gains of ($0.04).

 
(6)
Reconciliation of Adjusted EPS includes unrealized foreign currency
losses of $0.08, derivative mark-to-market losses of $0.01 and
losses on debt retirement of $0.01.

 
(7)
Net cash from operating activities guidance excludes the impact of
any closing adjustments that may be recorded upon the conclusion of
the Middle East asset sales.

 
(8)
Free Cash Flow is reconciled above. See Footnote (1) on Non-GAAP
Financial Measures – Reconciliation of Free Cash Flow for definition.

 
(9)
See Footnote (1) on Parent Financial Information for definition.