Exhibit 99.1
THE AES CORPORATION
UNAUDITED PRO FORMA FINANCIAL INFORMATION
On March 20, 2018, The AES Corporation ("AES" or the "Company") completed the previously announced sale of its entire 51% equity interest in its businesses in the Philippines to SMC Global Power Holdings Corp. for $1.05 billion in proceeds. The sale included AES' equity interest in the 630 MW Masinloc coal-fired power plant in operation, the 335 MW Masinloc 2 coal-fired power plant under construction and the 10 MW Masinloc energy storage project in operation. The Company will use the proceeds from the sale to retire $700 million aggregate principal amount of its 5.50% Senior Unsecured Notes due in 2024 and 2025 that were recently tendered. The remainder of the proceeds will primarily be used to retire approximately $250 million of other Parent debt.
The following unaudited pro forma condensed consolidated financial statements are based upon the historical financial statements for the Company, adjusted to reflect the sale of Masinloc.
THE AES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
YEAR ENDED DECEMBER 31, 2017
|
| | | | | | | | | | | |
| | Historical | | Pro Forma Adjustments(a) | | Pro Forma |
| | (in millions, except per share amounts) |
| Revenue: | | | | | |
| Regulated | $ | 3,109 |
| | $ | — |
| | $ | 3,109 |
|
| Non-Regulated | 7,421 |
| | (449 | ) | | 6,972 |
|
| Total revenue | 10,530 |
| | (449 | ) | | 10,081 |
|
| Cost of Sales: | | | | | |
| Regulated | (2,656 | ) | | — |
| | (2,656 | ) |
| Non-Regulated | (5,410 | ) | | 303 |
| | (5,107 | ) |
| Total cost of sales | (8,066 | ) | | 303 |
| | (7,763 | ) |
| Operating margin | 2,464 |
| | (146 | ) | | 2,318 |
|
| General and administrative expenses | (215 | ) | | 3 |
| | (212 | ) |
| Interest expense | (1,170 | ) | | 18 |
| | (1,152 | ) |
| Interest income | 244 |
| | — |
| | 244 |
|
| Loss on extinguishment of debt | (68 | ) | | — |
| | (68 | ) |
| Other expense | (57 | ) | | — |
| | (57 | ) |
| Other income | 120 |
| | (2 | ) | | 118 |
|
| Loss on disposal and sale of businesses | (52 | ) | | — |
| | (52 | ) |
| Asset impairment expense | (537 | ) | | — |
| | (537 | ) |
| Foreign currency transaction gains (losses) | 42 |
| | (14 | ) | | 28 |
|
| INCOME FROM CONTINUING OPERATIONS BEFORE TAXES AND EQUITY IN EARNINGS OF AFFILIATES | 771 |
| | (141 | ) | | 630 |
|
| Income tax expense | (990 | ) | | 49 |
| | (941 | ) |
| Net equity in earnings of affiliates | 71 |
| | — |
| | 71 |
|
| INCOME (LOSS) FROM CONTINUING OPERATIONS | (148 | ) | | (92 | ) | | (240 | ) |
| Less: Income from continuing operations attributable to noncontrolling interests and redeemable stock of subsidiaries | (359 | ) | | 48 |
| | (311 | ) |
| Income (loss) from continuing operations attributable to The AES Corporation common stockholders, net of tax | $ | (507 | ) | | $ | (44 | ) | | $ | (551 | ) |
| EARNINGS PER SHARE: | | | | | |
| Income (loss) from continuing operations attributable to The AES Corporation common stockholders, net of tax | | | | | |
| Basic | $ | (0.77 | ) | | $ | (0.07 | ) | | $ | (0.84 | ) |
| Diluted | (0.77 | ) | | $ | (0.07 | ) | | (0.84 | ) |
| Weighted-average shares of common stock outstanding (in millions) | | | | | |
| Basic | 660 |
| | | | 660 |
|
| Diluted | 660 |
| | | | 660 |
|
See Notes to Pro Forma Condensed Consolidated Financial Statements.
THE AES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
DECEMBER 31, 2017 |
| | | | | | | | | | |
| | Historical | | Pro Forma Adjustments | | Pro Forma |
| | (in millions, except share and per share data) |
| ASSETS | | | | | |
| CURRENT ASSETS | | | | | |
| Cash and cash equivalents | $ | 949 |
| | 1,050 |
| (b) | $ | 1,999 |
|
| Restricted cash | 274 |
| | — |
| | 274 |
|
| Short-term investments | 424 |
| | — |
| | 424 |
|
| Accounts receivable, net | 1,463 |
| | — |
| | 1,463 |
|
| Inventory | 562 |
| | — |
| | 562 |
|
| Prepaid expenses | 62 |
| | — |
| | 62 |
|
| Other current assets | 630 |
| | — |
| | 630 |
|
| Current assets of discontinued operations and held-for-sale businesses | 2,034 |
| | (1,444 | ) | (c) | 590 |
|
| Total current assets | 6,398 |
| | (394 | ) | | 6,004 |
|
| NONCURRENT ASSETS | | | | | |
| Property, Plant and Equipment: | | | | | |
| Land | 502 |
| | — |
| | 502 |
|
| Electric generation, distribution assets and other | 24,119 |
| | — |
| | 24,119 |
|
| Accumulated depreciation | (7,942 | ) | | — |
| | (7,942 | ) |
| Construction in progress | 3,617 |
| | — |
| | 3,617 |
|
| Property, plant and equipment, net | 20,296 |
| | — |
| | 20,296 |
|
| Other Assets: | | | | | |
| Investments in and advances to affiliates | 1,197 |
| | — |
| | 1,197 |
|
| Debt service reserves and other deposits | 565 |
| | — |
| | 565 |
|
| Goodwill | 1,059 |
| | — |
| | 1,059 |
|
| Other intangible assets, net of | 366 |
| | — |
| | 366 |
|
| Deferred income taxes | 130 |
| | — |
| | 130 |
|
| Service concession assets, net | 1,360 |
| | — |
| | 1,360 |
|
| Other noncurrent assets | 1,741 |
| | — |
| | 1,741 |
|
| Noncurrent assets of discontinued operations and held-for-sale businesses | — |
| | — |
| | — |
|
| Total other assets | 6,418 |
| | — |
| | 6,418 |
|
| TOTAL ASSETS | $ | 33,112 |
| | (394 | ) | | $ | 32,718 |
|
| LIABILITIES AND EQUITY | | | | | |
| CURRENT LIABILITIES | | | | | |
| Accounts payable | $ | 1,371 |
| | — |
| | $ | 1,371 |
|
| Accrued interest | 228 |
| | — |
| | 228 |
|
| Accrued and other liabilities | 1,232 |
| | 36 |
| (d) | 1,268 |
|
| Non-recourse debt | 2,164 |
| | — |
| | 2,164 |
|
| Current liabilities of discontinued operations and held-for-sale businesses | 1,033 |
| | (952 | ) | (c) | 81 |
|
| Total current liabilities | 6,028 |
| | (916 | ) | | 5,112 |
|
| NONCURRENT LIABILITIES | | | | | |
| Recourse debt | 4,625 |
| | — |
| | 4,625 |
|
| Non-recourse debt | 13,176 |
| | — |
| | 13,176 |
|
| Deferred income taxes | 1,006 |
| | — |
| | 1,006 |
|
| Pension and other postretirement liabilities | 230 |
| | — |
| | 230 |
|
| Other noncurrent liabilities | 2,365 |
| | — |
| | 2,365 |
|
| Noncurrent liabilities of discontinued operations and held-for-sale businesses | — |
| | — |
| | — |
|
| Total noncurrent liabilities | 21,402 |
| | — |
| | 21,402 |
|
| Commitments and Contingencies | | | | | |
| Redeemable stock of subsidiaries | 837 |
| | — |
| | 837 |
|
| EQUITY | | | | | |
| THE AES CORPORATION STOCKHOLDERS’ EQUITY | | | | | |
| Common stock | 8 |
| | — |
| | 8 |
|
| Additional paid-in capital | 8,501 |
| | — |
| | 8,501 |
|
| Accumulated deficit | (2,276 | ) | | 777 |
| (d) | (1,499 | ) |
| Accumulated other comprehensive loss | (1,876 | ) | | (15 | ) | | (1,891 | ) |
| Treasury stock, at cost | (1,892 | ) | | — |
| | (1,892 | ) |
| Total AES Corporation stockholders’ equity | 2,465 |
| | 762 |
| | 3,227 |
|
| NONCONTROLLING INTERESTS | 2,380 |
| | (240 | ) | (e) | 2,140 |
|
| Total equity | 4,845 |
| | 522 |
| | 5,367 |
|
| TOTAL LIABILITIES AND EQUITY | $ | 33,112 |
| | (394 | ) | | $ | 32,718 |
|
See Notes to Pro Forma Condensed Consolidated Financial Statements.
THE AES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRO FORMA PRESENTATION
The unaudited pro forma financial information is presented to illustrate the effect of the sale of Masinloc on the Company's historical financial position and operating results. The unaudited pro forma condensed consolidated balance sheet is as of December 31, 2017 and is based upon our historical statements after giving effect to the sale of Masinloc as if it had occurred on December 31, 2017. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2017 is based upon our historical statements after giving effect to the sale of Masinloc as if it had occurred on January 1, 2017. The unaudited pro forma financial information should be read in conjunction with the historical consolidated financial statements and notes thereto of the Company contained in the Annual Report on Form 10-K for the year ended December 31, 2017.
The unaudited pro forma condensed consolidated financial statements have been prepared in conformity with Article 11 of Regulation S-X. In addition, this unaudited pro forma condensed consolidated financial information is presented for illustrative purposes only and is not intended to represent or be indicative of our consolidated results of operations or financial position that would have been reported had the sale of Masinloc been completed as of the dates presented, and should not be taken as representation of our future consolidated results of operations or financial condition. The pro forma adjustments are based upon available information and certain assumptions that management believes are reasonable under the circumstances; however, actual amounts could differ.
2. PRO FORMA ADJUSTMENTS
The following adjustments have been reflected in the unaudited pro forma condensed consolidated financial information:
(a) Reflects the elimination of the operating results related to the Masinloc assets sold.
(b) Reflects the receipt of cash consideration of $1.05 billion at the closing of the transaction. Substantially all of the sales proceeds are expected to be subsequently used to reduce parent debt.
(c) Reflects Masinloc's assets and liabilities, which were classified as held for sale as of December 31, 2017 as reported in the Company's Form 10-K as of December 31, 2017.
(d) Reflects the estimated gain of approximately $777 million attributable to AES, net of estimated transaction and other directly attributable costs, arising from the transaction as of March 20, 2018. This estimated gain has not been reflected in the pro forma condensed consolidated statement of operations as it is considered to be nonrecurring in nature. No adjustment has been made to the sale proceeds to give effect to any potential post-closing adjustments under the terms of the sale.
(e) Reflects the removal of the noncontrolling interest upon deconsolidation.
