UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/x/ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended September 30, 1999
or
| / / |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
Commission file number 0-19281
THE AES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or Other Jurisdiction of Incorporation or Organization) |
|
54-1163725
(I.R.S. Employer Identification No.) |
1001 North 19th Street, Arlington, Virginia
(Address of Principal Executive Offices) |
|
22209
(Zip Code) |
(703) 522-1315
(Registrant's Telephone Number, Including Area Code)
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes /x/ No / /
The
number of shares outstanding of Registrant's Common Stock, par value $0.01 per share, at November 5, 1999, was 206,384,035.
THE AES CORPORATION
INDEX
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Page
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| PART I. FINANCIAL INFORMATION |
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Item 1. |
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Interim Financial Statements: |
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Consolidated Statements of Operations |
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1 |
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Consolidated Balance Sheets |
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2 |
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Consolidated Statements of Cash Flow |
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3 |
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Notes to Consolidated Financial Statements |
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4 |
| Item 2. |
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Discussion and Analysis of Financial Condition and Results of Operations |
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10 |
| Item 3. |
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Quantitative and Qualitative Disclosures About Market Risk |
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15 |
PART II. OTHER INFORMATION |
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Item 1. |
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Legal Proceedings |
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16 |
| Item 2. |
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Changes in Securities and Use of Proceeds |
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16 |
| Item 6. |
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Exhibits and Reports on Form 8-K |
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16 |
| Signatures |
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20 |
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
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Three Months Ended
|
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Nine Months Ended
|
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9/30/99
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9/30/98
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9/30/99
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9/30/98
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($ in millions,
except per share amounts)
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| |
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| REVENUES: |
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|
|
|
|
|
|
|
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|
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| Sales and services |
|
$ |
847 |
|
$ |
612 |
|
$ |
2,125 |
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$ |
1,752 |
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| OPERATING COSTS AND EXPENSES: |
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| Cost of sales and services |
|
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602 |
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|
400 |
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1,432 |
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1,182 |
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| Selling, general and administrative expenses |
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13 |
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|
15 |
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|
44 |
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|
42 |
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| Provision to reduce (for recovery of) contract receivables |
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7 |
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(3 |
) |
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7 |
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12 |
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| |
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|
|
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| TOTAL OPERATING COSTS AND EXPENSES |
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|
622 |
|
|
412 |
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|
1,483 |
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|
1,236 |
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| |
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|
|
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| OPERATING INCOME |
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|
225 |
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|
200 |
|
|
642 |
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|
516 |
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| OTHER INCOME AND (EXPENSE): |
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| Interest expense |
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(141 |
) |
|
(126 |
) |
|
(417 |
) |
|
(346 |
) |
| Interest and other income |
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22 |
|
|
16 |
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|
55 |
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|
47 |
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| Foreign currency exchange loss |
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(7 |
) |
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— |
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(9 |
) |
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— |
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| Equity in earnings (loss) before income tax (includes foreign currency transaction loss of $54 for the 3 months ended September 30, 1999, and $198 for the 9 months ended September 30, 1999) |
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(3 |
) |
|
41 |
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(57 |
) |
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159 |
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| |
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| Income before income taxes, minority interest and extraordinary item |
|
|
96 |
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|
131 |
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214 |
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|
376 |
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| Income tax provision |
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27 |
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|
30 |
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|
55 |
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|
99 |
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| Minority interest |
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|
11 |
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|
22 |
|
|
43 |
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|
62 |
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| |
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|
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|
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| Income before extraordinary item |
|
|
58 |
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|
79 |
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|
116 |
|
|
215 |
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| Extraordinary item—Net gain on extinguishment of debt |
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— |
|
|
2 |
|
|
— |
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2 |
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| |
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| NET INCOME |
|
$ |
58 |
|
$ |
81 |
|
$ |
116 |
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$ |
217 |
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| BASIC EARNINGS PER SHARE: |
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| Before extraordinary item |
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$ |
0.30 |
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$ |
0.44 |
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$ |
0.62 |
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$ |
1.21 |
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| Extraordinary item |
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— |
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|
0.01 |
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— |
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|
0.01 |
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| |
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| Total |
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$ |
0.30 |
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$ |
0.45 |
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$ |
0.62 |
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$ |
1.22 |
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| |
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| DILUTED EARNINGS PER SHARE: |
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| Before extraordinary item |
|
$ |
0.29 |
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$ |
0.43 |
|
$ |
0.61 |
|
$ |
1.18 |
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| Extraordinary item |
|
|
— |
|
|
0.01 |
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|
— |
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|
0.01 |
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| |
|
|
|
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| Total |
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$ |
0.29 |
|
$ |
0.44 |
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$ |
0.61 |
|
$ |
1.19 |
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See
Notes to Consolidated Financial Statements.
THE AES CORPORATION
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
(Unaudited)
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|
September 30,
1999
|
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December 31,
1998
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($ in millions)
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| ASSETS |
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| CURRENT ASSETS: |
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| Cash and cash equivalents |
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$ |
702 |
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$ |
491 |
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| Short-term investments |
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|
49 |
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35 |
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| Accounts receivable, less provision to reduce contract recievables (1999-$49 and 1998-$49) |
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|
679 |
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365 |
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| Inventory |
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146 |
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119 |
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| Receivable from affiliates |
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— |
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18 |
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| Deferred income taxes |
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|
78 |
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|
71 |
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| Prepaid expenses and other current assets |
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|
212 |
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|
155 |
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| |
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| Total current assets |
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1,866 |
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|
1,254 |
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| PROPERTY, PLANT AND EQUIPMENT: |
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| Land |
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|
157 |
|
|
135 |
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| Electric generation and distribution assets |
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|
5,990 |
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|
5,301 |
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| Accumulated depreciation and amortization |
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|
(718 |
) |
|
(525 |
) |
| Construction in progress |
|
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1,252 |
|
|
634 |
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| |
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| Property, plant and equipment, net |
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6,681 |
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|
5,545 |
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| OTHER ASSETS: |
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| Deferred financing costs, net |
|
|
151 |
|
|
167 |
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| Project development costs |
|
|
106 |
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|
103 |
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| Investments in and advances to affiliates |
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|
1,510 |
|
|
1,933 |
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| Debt service reserves and other deposits |
|
|
328 |
|
|
205 |
|
| Electricity sales concessions and contracts |
|
|
1,050 |
|
|
1,280 |
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| Goodwill |
|
|
167 |
|
|
66 |
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| Other assets |
|
|
247 |
|
|
228 |
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| |
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| Total other assets |
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3,559 |
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|
3,982 |
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| |
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| TOTAL |
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$ |
12,106 |
|
$ |
10,781 |
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| |
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| LIABILITIES AND STOCKHOLDERS' EQUITY |
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|
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| CURRENT LIABILITIES: |
|
|
|
|
|
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| Accounts payable |
|
$ |
261 |
|
$ |
215 |
|
| Accrued interest |
|
|
206 |
|
|
113 |
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| Accrued and other liabilities |
|
|
443 |
|
|
235 |
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| Other notes payable—current portion |
|
|
10 |
|
|
8 |
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| Project financing debt—current portion |
|
|
958 |
|
|
1,405 |
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| |
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|
|
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| Total current liabilities |
|
|
1,878 |
|
|
1,976 |
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| LONG-TERM LIABILITIES: |
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|
|
|
|
|
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| Project financing debt |
|
|
4,786 |
|
|
3,597 |
|
| Other notes payable |
|
|
2,051 |
|
|
1,644 |
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| Deferred income taxes |
|
|
116 |
|
|
268 |
|
| Other long-term liabilities |
|
|
259 |
|
|
220 |
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| |
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| Total long-term liabilities |
|
|
7,212 |
|
|
5,729 |
|
| MINORITY INTEREST |
|
|
964 |
|
|
732 |
|
| COMPANY-OBLIGATED CONVERTIBLE MANDATORILY REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY TRUSTS HOLDING SOLELY JUNIOR SUBORDINATED DEBENTURES OF AES |
|
|
550 |
|
|
550 |
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| STOCKHOLDERS' EQUITY: |
|
|
|
|
|
|
|
| Common stock |
|
|
2 |
|
|
2 |
|
| Additional paid-in capital |
|
|
1,806 |
|
|
1,243 |
|
| Retained earnings |
|
|
1,008 |
|
|
892 |
|
| Accumulated other comprehensive loss |
|
|
(1,314 |
) |
|
(343 |
) |
| |
|
|
|
|
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| Total stockholders' equity |
|
|
1,502 |
|
|
1,794 |
|
| |
|
|
|
|
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| TOTAL |
|
$ |
12,106 |
|
$ |
10,781 |
|
| |
|
|
|
|
|
See Notes to Consolidated Financial Statements.
THE AES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
|
|
Nine Months Ended
September 30
|
|
|
|
1999
|
|
1998
|
|
|
|
($ in millions)
|
|
| |
|
|
|
|
|
|
|
| OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
| Net cash provided by operating activities |
|
$ |
343 |
|
$ |
137 |
|
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
| Property additions |
|
|
(641 |
) |
|
(256 |
) |
| Acquisitions, net of cash acquired |
|
|
(1,439 |
) |
|
(1,356 |
) |
| Proceeds from the sales of assets |
|
|
666 |
|
|
254 |
|
| Sale of short-term investments |
|
|
8 |
|
|
32 |
|
| Purchase of short-term investments |
|
|
(22 |
) |
|
— |
|
| Affiliate advances and equity investments |
|
|
(142 |
) |
|
(60 |
) |
| Project development costs |
|
|
(44 |
) |
|
(26 |
) |
| Debt service reserves and other assets |
|
|
(123 |
) |
|
52 |
|
| |
|
|
|
|
|
| Net cash used in investing activities |
|
|
(1,737 |
) |
|
(1,360 |
) |
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
| Borrowings (repayments) under the revolver |
|
|
(91 |
) |
|
171 |
|
| Issuance of project financing debt and other coupon bearing securities |
|
|
1,947 |
|
|
1,572 |
|
| Repayments of project financing debt and other coupon bearing securities |
|
|
(706 |
) |
|
(559 |
) |
| Payments for deferred financing costs |
|
|
(12 |
) |
|
(17 |
) |
| Other liabilities |
|
|
(40 |
) |
|
(58 |
) |
| Minority interest payments |
|
|
(7 |
) |
|
— |
|
| Sales of common stock |
|
|
514 |
|
|
195 |
|
| |
|
|
|
|
|
| Net cash provided by financing activities |
|
|
1,605 |
|
|
1,304 |
|
Increase in cash and cash equivalents |
|
|
211 |
|
|
81 |
|
| Cash and cash equivalents, beginning |
|
|
491 |
|
|
302 |
|
| |
|
|
|
|
|
| Cash and cash equivalents, ending |
|
$ |
702 |
|
$ |
383 |
|
| |
|
|
|
|
|
| SUPPLEMENTAL INTEREST AND INCOME TAXES DISCLOSURES: |
|
|
|
|
|
|
|
| Cash payments for interest |
|
$ |
326 |
|
$ |
301 |
|
| |
|
|
|
|
|
| Cash payments for income taxes |
|
$ |
53 |
|
$ |
37 |
|
| |
|
|
|
|
|
| NONCASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
| Common stock issued for acquisition of NewEnergy |
|
$ |
49 |
|
|
— |
|
| |
|
|
|
|
|
See
Notes to Consolidated Financial Statements.
Notes to Consolidated Financial Statements
(unaudited)
1. Basis of Presentation
The consolidated financial statements include the accounts of The AES Corporation, its subsidiaries and controlled affiliates (the "Company" or "AES").
Intercompany transactions and balances have been eliminated. Investments in 50% or less owned affiliates over which the Company has the ability to exercise significant influence, but not control, are
accounted for using the equity method.
In
the Company's opinion, all adjustments necessary for a fair presentation of the unaudited results of operations for the nine months ended September 30, 1999 and 1998,
respectively, are included. All such adjustments are accruals of a normal and recurring nature. The results of operations for the period ended September 30, 1999 are not necessarily indicative
of the results of operations to be expected for the full year. The financial statements are unaudited and should be read in conjunction with the financial statements which are incorporated by
reference in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. Certain amounts previously presented have been reclassified to conform to the
September 30, 1999 presentation.
2. Foreign Currency Translation
During 1999, the Brazilian Reais experienced a significant devaluation relative to the U.S. Dollar, declining from 1.21 Reais to the Dollar at
December 31, 1998 to an average of 1.82 Reais to the Dollar for the nine months ended September 30, 1999. This devaluation resulted in significant foreign currency translation and
transaction losses for the Company for both the three months and the nine months ended September 30, 1999. A non-cash charge of approximately $61 million and
$207 million before income taxes was recorded during the three months and the nine months ended September 30, 1999, respectively. The non-cash charge was approximately
$41 million and $141 million after considering income taxes at the effective tax rate of 32% during the three months and the nine months ended September 30, 1999, respectively.
Excluding the effects of foreign currency transaction losses, the Company incurred net income of $99 million and diluted earnings per share of $0.50 for the three months ended
September 30, 1999, and net income of $257 million and diluted earnings per share of $1.34 for the nine months ended September 30, 1999. The Company also incurred $971 million in
foreign currency translation losses during the nine months ended September 30, 1999 which are included in "Accumulated other comprehensive loss" in the consolidated balance sheet.
3. Earnings Per Share
Basic and diluted earnings per share computations are based on the weighted average number of shares of common stock and potential common stock outstanding
during the period, after giving effect to stock splits. Potential common stock, for purposes of determining diluted earnings per share, includes the dilutive effects of stock options, warrants,
deferred compensation arrangements and convertible securities. The effect of such potential common stock is computed using the treasury stock method or the if-converted method, in
accordance with SFAS (Statement of Financial Accounting Standards) No. 128, Earnings Per Share. (See Exhibit 11).
4. Investments in and Advances to Affiliates
The Company is a party to joint venture/consortium agreements through which the Company has equity investments in several operating companies. The joint
venture/consortium parties generally share operational control of the investee. The agreements prescribe ownership and voting percentages as well as
other matters. The Company records its share of earnings from its equity investees on a pre-tax basis. The Company's share of the investee's income taxes is recorded in income tax expense.
The
following table presents summarized financial information (in millions) for equity method affiliates on a combined 100% basis. Amounts presented include condensed income statement
information of Northern/AES Energy (45% owned U.S. affiliate), NIGEN Ltd. (47% owned UK Affiliate), Medway Power Ltd. (25% owned UK affiliate), Elsta (50% owned Netherlands affiliate),
Light (18% and 14%, in 1999 and 1998, respectively, owned Brazilian affiliate), CEMIG (9.45% owned Brazilian affiliate), affiliates of Chigen, and Kingston (50% owned Canadian affiliate) for the nine
months ended September 30, 1999 and 1998. In addition to the affiliates owned as of September 30, 1998, the Company purchased OPGC (49% owned Indian affiliate) in late
December 1998 which is included in the table below for the nine months ended September 30, 1999.
|
|
Nine Months Ended
September 30,
|
|
|
1999
|
|
1998
|
| |
|
|
|
|
|
|
| Revenues |
|
$ |
2,461 |
|
$ |
4,845 |
| Operating Income |
|
|
781 |
|
|
1,448 |
| Net Income (Loss) |
|
|
(381 |
) |
|
815 |
5. Legal Proceedings
On October 14, 1999, the Company received a letter from the New York State Attorney General requesting operating and maintenance history for the
Greenidge and Westover stations which were recently acquired from NGE Generating Company. The information is being sought in connection with the Attorney General's investigation into whether major
modifications were made to several coal-fired electricity generating stations in New York without obtaining the requisite Prevention of Significance Deterioration ("PSD") and/or New Source Review
("NSR") pre-construction permits. The Company is cooperating with the Attorney General's investigation.
In
September, an appellate judge in the Minas Gerais state court system granted a temporary injunction that suspends the effectiveness of a shareholders' agreement for Cia. Energetica
de Minas Gerais ("CEMIG"). This appellate ruling suspends the shareholders' agreement while the action to determine the validity of the shareholders' agreement is litigated in the lower court. In
early November, the same appellate reversed this decision and reinstated the effectiveness of the shareholders' agreement, but did not restore the super majority voting rights that benefited the
Company. AES intends to vigorously pursue its legal rights in this matter and to restore all of its rights regarding CEMIG, and does not anticipate that this temporary suspension of the shareholders'
agreement will have a significant effect on its financial condition or results of operation.
The
Company is also involved in certain legal proceedings in the normal course of business. It is the opinion of the Company that none of the pending matters are expected to have a
material adverse effect on its results of operations or financial position.
6. Acquisitions
In September 1999, a subsidiary of the Company acquired approximately 51% of Central Electricity Supply Company of Orissa Limited (CESCO), an
electricity distribution company in the state of Orissa, India, for approximately $10 million. In October 1999, a cyclone struck India including the state of Orissa and caused extensive damage
to the transmission and distribution system of CESCO. The Company is currently assessing the extent of the damage as well as the costs of repair.
In
August 1999, a subsidiary of the Company won a bid to acquire a controlling 51% interest in Eletronet in Brazil for approximately $155 million. The remaining 49% will
be owned by a subsidiary of Eletrobas, a Brazilian utility. Eletronet was created in 1998 by the minority owner to construct a national broadband telecommunications network attached to the existing
national electrical transmission grid in Brazil. The business activities of Eletronet currently represent construction activities, preparing the network for its intended use. Therefore, no results of
operations have been included in the table below for this acquisition.
In
August 1999, a subsidiary of the Company acquired 50% of Empresa Distribuidora de Electricidad del Este S.A. ("Ede Este") the distribution company providing electricity to
approximately 400,000 users in the eastern portion of the Dominican Republic, for approximately $109 million. The Company controls the operations, and therefore, consolidates Ede Este.
In
July 1999, a subsidiary of the Company acquired all the outstanding shares of NewEnergy Ventures, Inc., a retail energy service company for approximately $90 million.
NewEnergy provides electric energy, energy products and services, and technology-based energy solutions to customers in deregulated energy markets in the U.S. The acquisition was financed through a
combination of cash, debt and AES common stock
In
May 1999, a subsidiary of the Company acquired two gas-fired power plants totaling 966 MW ("Ecogen") from the government of Victoria, Australia for approximately
$100 million.
In
January 1999, a subsidiary of the Company acquired 49% of both Empresa de Generación Chiriquí S.A. (EGE Chiriquí) and Empresa de
Generación Bayano (EGE Bayano), two hydroelectric generation companies in Panama, for approximately $91 million. AES controls the operations of both entities, and therefore,
consolidates them.
In
December 1998, a subsidiary of the Company acquired a 75% interest in Telasi, the electricity distribution company of Tbilisi, Republic of Georgia, for approximately
$26 million.
In
June 1998, a subsidiary of AES acquired approximately 90% of Empresa Distribuidora de La Plata S.A. ("EDELAP"), an electric distribution company in the province of Buenos
Aires, Argentina for approximately $355 million.
In
May 1998, AES Southland and other subsidiaries of the Company completed the purchase of three natural gas-fired electric generating stations located in Southern
California from Southern California Edison for approximately $786 million.
In
February 1998, the Company acquired approximately 80% of Compania de Luz Electrica de Santa Ana ("CLESA"), an electricity distribution company in El Salvador, for
approximately $97 million.
The
accompanying statements of operations include the operating results for all of the acquired companies from the dates of their respective acquisitions. The following table presents
supplemental
unaudited pro forma operating information as if each of the acquisitions had occurred at the beginning of the periods presented (in millions, except per share amounts):
|
|
Nine Months Ended
|
|
|
9/30/99
|
|
9/30/98
|
| |
|
|
|
|
|
|
| Revenues |
|
$ |
2,390 |
|
$ |
2,112 |
| Income before extraordinary item |
|
|
99 |
|
|
196 |
| Net Income |
|
|
99 |
|
|
198 |
| Basic Earnings Per Share before extraordinary item |
|
|
0.53 |
|
|
1.10 |
| Basic Earnings Per Share |
|
|
0.53 |
|
|
1.12 |
| Diluted Earnings Per Share before extraordinary item |
|
|
0.51 |
|
|
1.08 |
| Diluted Earnings Per Share |
|
|
0.51 |
|
|
1.09 |
The
pro forma results are based upon assumptions and estimates which the company believes are reasonable. The pro forma results do not purport to be indicative of the results that
actually would have been obtained had the acquisitions occurred on January 1, 1998, nor are they intended to be a projection of future results. Net income and earnings per share for the nine
months ended September 30, 1999 include a non-cash charge of $141 million, net of tax, from foreign currency transaction losses.
In
June 1999, a subsidiary of the Company assumed long-term managerial and voting control of two regional electric distribution companies ("RECs") in Kazakhstan as
part of a settlement of receivables outstanding from the government of Kazakhstan. The contractual rights to control the operations of the RECs received in this transaction were valued at
approximately $26 million. The two distribution businesses serve approximately 1.8 million people. There can be no assurance that the government of Kazakhstan will abide by the terms or
periods agreed to in the original memorandum of understanding that currently governs the Company's operating control of the RECs.
In
May 1999, a subsidiary of the Company acquired six electric generating stations from NGE Generation, Incorporated ("NGE") for approximately $953 million. These
coal-fired electric generating stations have a total installed capacity of 1,424 MW. Concurrently, the subsidiary sold two of the plants to an
unrelated third party for approximately $670 million and simultaneously entered into a leasing arrangement with the unrelated party. The former transaction was accounted for as a purchase while
the latter was accounted for as a sale-leaseback, with operating lease treatment.
The
purchase price allocations for recently completed acquisitions have been prepared on a preliminary basis subject to adjustments resulting from additional facts that may come to
light when the engineering, environmental and legal analysis are completed during their respective allocation periods.
7. Comprehensive Income
Comprehensive income (loss) consists of net income and foreign currency translation adjustments. It includes foreign currency translation losses of
$119 million and $86 million for the quarters ended September 30, 1999 and 1998, respectively, and foreign currency translation losses of $971 million and
$181 million for the nine months ended September 30, 1999 and 1998, respectively. Comprehensive loss was $61 million and $5 million for the quarters ended
September 30, 1999 and 1998, respectively. Comprehensive loss was $855 million for the nine months ended September 30, 1999, and comprehensive income was $36 million for
the nine months ended September 30, 1998.
8. Segments
Information about the Company's operations by segment are as follows (in millions):
|
|
Revenue (1)
|
|
Operating
Income
|
|
Equity
Earnings
/ (Loss)
|
|
| |
|
|
|
|
|
|
|
|
|
|
| Quarter Ended September 30, 1999 |
|
|
|
|
|
|
|
|
|
|
| Generation |
|
$ |
529 |
|
$ |
203 |
|
$ |
10 |
|
| Distribution |
|
|
315 |
|
|
34 |
|
|
(13 |
) |
| Corporate and services |
|
|
3 |
|
|
(12 |
) |
|
— |
|
| |
|
|
|
|
|
|
|
| Total |
|
$ |
847 |
|
$ |
225 |
|
$ |
(3 |
) |
| |
|
|
|
|
|
|
|
| Quarter Ended September 30, 1998 |
|
|
|
|
|
|
|
|
|
|
| Generation |
|
$ |
366 |
|
$ |
162 |
|
$ |
6 |
|
| Distribution |
|
|
244 |
|
|
55 |
|
|
35 |
|
| Corporate and services |
|
|
2 |
|
|
(17 |
) |
|
— |
|
| |
|
|
|
|
|
|
|
| Total |
|
$ |
612 |
|
$ |
200 |
|
$ |
41 |
|
| |
|
|
|
|
|
|
|
| Nine Months Ended September 30, 1999 |
|
|
|
|
|
|
|
|
|
|
| Generation |
|
$ |
1,320 |
|
$ |
551 |
|
$ |
36 |
|
| Distribution |
|
|
791 |
|
|
128 |
|
|
(93 |
) |
| Corporate and services |
|
|
14 |
|
|
(37 |
) |
|
— |
|
| |
|
|
|
|
|
|
|
| Total |
|
$ |
2,125 |
|
$ |
642 |
|
$ |
(57 |
) |
| |
|
|
|
|
|
|
|
| Nine Months Ended September 30, 1998 |
|
|
|
|
|
|
|
|
|
|
| Generation |
|
$ |
1,022 |
|
$ |
410 |
|
$ |
21 |
|
| Distribution |
|
|
720 |
|
|
149 |
|
|
138 |
|
| Corporate and services |
|
|
10 |
|
|
(43 |
) |
|
— |
|
| |
|
|
|
|
|
|
|
| Total |
|
$ |
1,752 |
|
$ |
516 |
|
$ |
159 |
|
| |
|
|
|
|
|
|
|
- (1)
- Intersegment
revenues for the quarter ended September 30, 1999 and 1998 were $23 million and $24 million, respectively, and for nine months ended
September 30, 1999 and 1998 were $68 million and $49 million, respectively.
9. Subsequent Events
In November 1999 a subsidiary of the Company acquired a controlling interest in Tiete (Companhia de Geracao de Energia Eletrica Tiete), a generating
company in Brazil for approximately $498 million. AES acquired 61% of the voting stock and 39% of the total capital stock of the company. Approximately $186 million of the project
financing was provided by BNDES, the Brazilian national development bank, and AES funded the remaining amount.
In
November 1999 the Company sold an additional $250,000,000 of its 9.50% Senior Notes due 2009 at 99.5% plus accrued interest from June 11, 1999. The proceeds from this
offering were used to meet short-term liquidity needs of the Company related to financing certain acquisitions, providing equity investments or other credit support to assist in certain
project refinancings, repaying certain indebtedness and otherwise for general corporate purposes.
In
October 1999 the Company sold 14,000,000 shares of its common stock for gross proceeds of approximately $801 million and simultaneously sold trust convertible
preferred Securities ("Convertibles") for gross proceeds of approximately $450 million. The Convertibles were priced to yield 63/4%, with a 23% conversion premium. In November
1999 the underwriters exercised their entire overallotment option for the Convertibles in the amount of approximately $68 million. The proceeds from these offerings were used to meet
short-term liquidity needs of the Company related to financing certain acquisitions, providing equity investments or other credit support to assist in certain project refinancings,
repaying certain indebtedness, and otherwise for general corporate purposes.
In
October 1999 a subsidiary of the Company completed the acquisition of Peoria, Illinois-based CILCORP Inc. (NYSE:CER). AES entered into a definitive agreement in
November 1998 to acquire CILCORP for approximately $886 million in cash. The purchase price includes $475 million of subordinated debentures issued by the subsidiary formed to acquire
CILCORP. CILCORP is the parent company of Central Illinois Light Company, an electric and gas utility that serves approximately 190,000 electric and 200,000 gas customers in central Illinois.
Item 2. Discussion and Analysis of Financial Condition and Results of Operations.
Introduction
The AES Corporation (AES or the Company) is a global power company committed to serving the world's needs for electricity in a socially responsible way.
The
majority of the Company's revenues represent sales of electricity to customers (generally electric utilities or regional electric companies) for further resale to
end-users. This is referred to as the electricity "generation" business. AES's generation business represented 62% of total revenues for the nine months ended September 30, 1999.
Sales by these generation companies are made both under long-term contracts from power plants owned by the Company's subsidiaries and affiliates as well as through direct sales into
regional wholesale electricity markets without a contract. The Company owns plants that it has constructed ("greenfield" plants) as well those that it has purchased.
Because
of the significant complexities associated with building new electric generating plants, construction periods often range from two to five years, depending on the technology
and location. AES currently expects that projects now under construction will reach commercial operation and begin to sell electricity at various dates through the year 2002. The completion of each
plant in a timely manner is generally supported by a guarantee from the plant's construction contractor, although in certain cases, AES has assumed the risk of satisfactory construction completion.
Due to changes in the economic, political, technological, regulatory or logistical circumstances involving each individual plant, however, those commercial operations may be delayed.
AES
also sells electricity directly to end users such as commercial, industrial, governmental and residential customers. This is referred to as the electricity "distribution"
business. Electricity sales by AES's distribution businesses are generally made pursuant to the provisions of long-term electricity sale concessions granted by governments. In certain
cases, these distribution companies are "integrated", in that they also own electric power plants for the purpose of generating a portion of the electricity they sell. Each distribution company also
purchases electricity from third party wholesale suppliers, which may include other subsidiaries of the Company.
AES
continues to believe that there is significant demand for more efficiently operated electricity generation and distribution businesses. As a result, and guided by its commitment
to serve the world's needs for electricity, AES is pursuing additional greenfield development projects and acquisitions in many countries. Several of these, if consummated, would require the Company
to obtain substantial additional financing, including both debt and equity financing.
AES
is also currently in the process of completing several acquisitions, including its agreement to acquire the Drax Power Station, a 4,000 MW coal-fired base load
generating facility. On November 9, 1999, the British Secretary of State approved the sale of the Drax Power Station by National Power, Plc. to AES.
Certain
subsidiaries and affiliates of the Company (domestic and non-U.S.) have signed long-term contracts or made similar arrangements for the sale of
electricity and are in various stages of developing the related greenfield power plants. Substantial risks accompany their successful completion, including, but not limited to, those relating to
failures of siting, financing, construction, permitting, governmental approvals or termination of the power sales contract as a result of a failure to meet certain milestones.
As of September 30, 1999, capitalized costs for projects under development and in early stage construction were approximately $106 million. The Company believes that these costs are
recoverable; however, no assurance can be given that changes in circumstances related to individual projects will not occur or that any of these projects will be completed and reach commercial
operation.
It
may not always be possible to arrange project financing for specific potential acquisitions. Moreover, acquisitions or the commencement of construction on several greenfield
developments could require
the Company to obtain substantial additional financing including both debt and equity. In order to enhance its financial capabilities to respond to these more accelerated opportunities, the Company
maintains a $600 million revolving line and letter of credit facility (the "Revolver") and a $250 million letter of credit facility. AES also maintains a "universal shelf" registration
statement with the SEC, which allows for the public issuance of various additional debt and preferred or common equity securities, either individually or in combination, and which currently represents
approximately $932 million in unused potential proceeds from the issuance of public securities.
The
Company wishes to caution readers that there are important factors and areas affecting the Company which involve risk and uncertainty. These factors are set forth in the Company's
Annual Report on Form 10-K filed with the Commission for the year ended December 31, 1998 under the heading "Cautionary Statement and Risk Factors", and should be considered
when reviewing the Company's business. Such factors are relied upon by AES in issuing any forward-looking statements and could affect AES's actual results and cause such results to differ materially
from those expressed in any forward-looking statements made by, or on behalf of, AES. Some or all of these factors may apply to the Company's business as currently maintained or to be maintained.
Results of Operations
Revenues. Revenues increased $235 million, or 38%, to $847 million in the third quarter of 1999 from
$612 million in the third quarter of 1998. Revenues increased $373 million, or 21%, to $2.1 billion in the nine months ended September 30, 1999 from $1.7 billion in
the nine months ended September 30, 1998. Revenues increased primarily from the acquisition of new businesses and also from the development of greenfield projects during both the third quarter
of 1999 and the nine months ended September 30, 1999. The increase in revenues for the third quarter of 1999 is due primarily to the acquisitions of New Energy in July 1999 and the New
York plants in May 1999. Other acquisitions that also contributed to the increase in revenues during the nine months ended September 30, 1999 include Southland, Edelap, Panama and
Telasi. The start of commercial operations at Barry also contributed to the overall increase in revenues. Several other businesses also experienced modest increases in revenues. Revenues were
negatively impacted at Sul due to the effects of the devaluation of the Brazilian Reais. A few other businesses also experienced modest decreases in revenues.
Gross Margin. Gross margin, which represents total revenues reduced by cost of sales and services, increased
$33 million, or 16%, to $245 million in the third quarter of 1999 from $212 million in the third quarter of 1998. Gross margin as a percentage of revenues decreased to 29% in the
third quarter of 1999 from 35% in the third quarter of 1998. Gross margin in the third quarter of 1999 was negatively impacted by losses at New Energy which was acquired in July 1999, as well
as by a decline at Sul due to the devaluation of the Brazilian Reais. Gross margin increased $123 million, or 22%, to $693 million for the nine months ended September 30, 1999
from $570 million for the nine months ended September 30, 1998. Gross margin as a percentage of revenues was 32% for the nine months ended September 30, 1999 and was 33% for the
nine months ended September 30, 1998.
Provision to Reduce Contract Receivables. The Company recorded a $7 million provision to reduce contract
receivables during the three months ended September 30, 1999. This provision relates primarily to Telasi, a distribution company in Tiblisi, Georgia.
Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased $2 million,
or 13%, to $13 million for the three months ended September 30, 1999 from $15 million for the three months ended September 30, 1998. Selling, general and administrative
expenses as a percentage of revenues remained fairly consistent at 1% for the three months ended September 30, 1999 and 2% for the three months ended September 30, 1998. Business
development expenses declined slightly during the three months ended September 30, 1999, because more of the Company's resources were focused on completing acquisitions and projects under
construction. Selling, general and administrative expenses increased
$2 million, or 5%, to $44 million for the nine months ended September 30, 1999 from $42 million for the nine months ended September 30, 1998. Selling, general and
administrative expenses as a percentage of revenues remained constant at 2% for both the nine months ended September 30, 1999 and the nine months ended September 30, 1998.
Operating Income. Operating income increased $25 million, or 13%, to $225 million for the three months
ended September 30, 1999 from $200 million for the three months ended September 30, 1998. Operating income as a percentage of revenues decreased to 27% for the three months ended
September 30, 1999 from 33% for the three months ended September 30, 1998. The decrease in operating income as a percentage of revenues for the three months ended September 30,
1999 is consistent with the decrease in gross margin as a percentage of revenues for the three months ended September 30, 1999. Operating income increased $126 million, or 24%, to
$642 million for the nine months ended September 30, 1999 from $516 million for the nine months ended September 30, 1998. Operating income as a percentage of revenues
remained constant at 30% for both of the nine months ended September 30, 1999 and the nine months ended September 30, 1998.
Interest Expense. Interest expense increased $15 million, or 12%, to $141 million for the three months
ended September 30, 1999 from $126 million for the three months ended September 30, 1998. Interest expense increased $71 million, or 21%, to $417 million for the
nine months ended September 30, 1999 from $346 million for the nine months ended September 30, 1998. The overall increase in interest expense is due to interest at new businesses
and additional corporate interest on the senior debt and convertible subordinated debentures issued within the past twelve months to finance new investments, offset by reductions in debt at several
South American businesses and an increase in capitalized interest because of increased construction activity during 1999.
Interest and Other Income. Interest and other income increased $6 million, or 38%, to $22 million for the
three months ended September 30, 1999 from $16 million for the three months ended September 30, 1998. Interest and other income increased $8 million, or 17%, to
$55 million for the nine months ended September 30, 1999 from $47 million for the nine months ended September 30, 1998. The increase in interest and other income is due
primarily to an increase in funds available for investment.
Foreign Currency Transaction Losses. The Company recorded $7 million of foreign currency transaction losses in
businesses which are controlled and consolidated by the Company during the three months ended September 30, 1999. For the nine months ended September 30, 1999, the Company recorded
$9 million of foreign currency transaction losses in businesses which are controlled and consolidated by the Company. The losses relate primarily to a decline in the value of the Pakistani
Rupee. The Company was also impacted by the devaluation of the Brazilian Reais and recorded $54 million of foreign currency transaction losses on its investments in affiliates during the three
months ended September 30,
1999. For the nine months ended September 30, 1999, the Company recorded $198 million of foreign currency transaction losses due to the devaluation of the Brazilian Reais on its
investments in affiliates. Equity in earnings of affiliates (before income tax) is presented net of the foreign currency transaction losses on the Consolidated Statements of Operations.
Equity in Earnings (Losses) of Affiliates. The Company recorded a $3 million loss from its investments in
affiliates for the three months ended September 30, 1999. The $3 million loss is net of $54 million in foreign currency transaction losses. Excluding the foreign currency
transaction losses, equity in earnings of affiliates increased $10 million, or 24%, to $51 million for the three months ended September 30, 1999 from $41 million for the
three months ended September 30, 1998. The overall increase in equity earnings excluding foreign currency transaction losses is due primarily to increases at Eletropaulo, a subsidiary of Light,
OPGC and Elsta, offset by decreases at CEMIG and AES Northern. The settlement of a gross receipts tax dispute favorably impacted the equity earnings from Eletropaulo. The Company recorded a
$57 million loss for the nine months ended September 30, 1999. The $57 million loss is net of $198 million in foreign currency transaction losses. Excluding the foreign
currency transaction losses, equity in earnings
of affiliates decreased $18 million, or 11%, to $141 million for the nine months ended September 30, 1999 from $159 million for the nine months ended September 30,
1998. The decrease in equity earnings excluding foreign currency transaction losses is due primarily to decreases in the Brazilian businesses as well as at AES Northern.
Income Taxes. The Company recorded an income tax provision of $27 million for the three months ended
September 30, 1999 and an income tax provision of $30 million for the three months ended September 30, 1998. Excluding the foreign currency transaction losses, the income tax
provision would have been $47 million for the three months ended September 30, 1999. The Company recorded an income tax provision of $55 million for the nine months ended
September 30, 1999 and an income tax provision of $99 million for the nine months ended September 30, 1998. Excluding the foreign currency transaction losses, the income tax
provision would have been $121 million for the nine months ended September 30, 1999. The Company's effective tax rate was 32% in 1999 and 33% in 1998.
Minority Interest. Minority interest decreased $11 million, or 50%, to $11 million for the three months
ended September 30, 1999 from $22 million for the three months ended September 30, 1998. Minority interest decreased $19 million, or 31%, to $43 million for the nine
months ended September 30, 1999 from $62 million for the nine months ended September 30, 1998. The decrease in minority interest for both the three months and the nine months
ended September 30, 1999 is due mainly to a lower contribution from certain Brazilian businesses in 1999.
Net Income. Net income decreased $23 million, or 28%, to $58 million for the three months ended
September 30, 1999 from $81 million for the three months ended September 30, 1998. Excluding foreign currency transaction losses, net income increased $20 million, or 25%,
to $99 million for the three months ended September 30, 1999 from $79 million for the three months ended September 30, 1998. Net income excluding foreign currency
transaction losses as a percentage of revenues remained fairly constant at 12% for the three months ended September 30, 1999 and 13% for the three months ended September 30, 1998. Net
income decreased $101 million, or 47%, to $116 million for the nine months ended September 30, 1999 from $217 million for the nine months ended September 30, 1998.
Excluding foreign currency transaction losses, net income increased $42 million, or 20%, to $257 million for the nine months ended September 30, 1999 from $215 million for
the nine months ended September 30, 1998. Net income excluding foreign currency transaction losses as a percentage of revenues remained constant at 12% for both the nine months ended
September 30, 1999 and the nine months ended September 30, 1998.
Financial Position, Cash Flows and Foreign Currency Exchange Rates
At September 30, 1999, cash and cash equivalents totaled approximately $702 million, as compared to $491 million at December 31, 1998. The
$211 million increase in cash resulted from $1,605 million from financing activities, $343 million from operating activities and the funding of $1,737 million of investing activities. Significant
investing activities included the following acquisitions: EGE Chiriqui and EGE Bayano in Panama; Ecogen in Australia; NewEnergy in California; Ede Este in the Dominican Republic; Eletronet in Brazil;
CESCO in India; the six electric generating stations from NGE and the sale and leaseback of certain of the stations; as well as continued construction activities at various projects. The net source of
cash from financing activities was primarily the result of project finance borrowings of approximately $1,947 million, the issuance of $500 million in senior notes which were offset, in part,
by repayment of approximately $706 million of project financing debt. Unrestricted net cash flow of the parent company for the four quarters ended September 30, 1999 totaled approximately
$370 million.
Through
its equity investments in foreign affiliates and subsidiaries, AES operates in jurisdictions with currencies other than the Company's functional currency, the U.S. dollar.
Such investments and advances were made to fund equity requirements and to provide collateral for contingent obligations. Due primarily to the long-term nature of the investments and
advances, the Company accounts for any adjustments resulting from translation of the financial statements of its foreign investments as a charge or credit
directly to a separate component of stockholders' equity until such time as the Company realizes such charge or credit. At that time, any differences would be recognized in the statement of operations
as gains or losses.
In
addition, certain of the Company's foreign subsidiaries have entered into obligations in currencies other than their own functional currencies or the U.S. dollar. These
subsidiaries have attempted to limit potential foreign exchange exposure by entering into revenue contracts that adjust to changes in the foreign exchange rates. Certain foreign affiliates and
subsidiaries operate in countries where the local inflation rates are greater than U.S. inflation rates. In such cases the foreign currency tends to devalue relative to the U.S. dollar over time. The
Company's subsidiaries and affiliates have entered into revenue contracts which attempt to adjust for these differences, however, there can be no assurance that such adjustments will compensate for
the full effect of currency devaluation, if any. The Company had approximately $1,314 million in cumulative foreign currency translation adjustment losses at September 30, 1999.
Year 2000
There are three main elements in the provision of electricity: Generation, transmission and distribution, all of which form a tightly integrated
"supplier chain." In addition, the Company's businesses are also dependent on various industries supplying water, fuel and other utility services. AES, through its subsidiaries and affiliates, is
involved in each aspect of the supplier chain in various countries throughout the world. Set forth below is information regarding AES's efforts to be prepared for the problems associated with the
potential inability of many existing computer programs and/or embedded computer chips to recognize the year 2000, both those in AES's businesses as well as those that AES's businesses depend upon.
Certain
of these statements may constitute forward-looking information as contemplated by the Private Securities Litigation Reform Act of 1995, including those regarding AES's
expected readiness to handle Year 2000 problems, expected capital expenditures in the areas of remediation and testing, the future costs associated with business disruption caused by supplier or
customer Year 2000 problems and the
success of any contingency plans. AES cautions that its predictions of the extent of potential problems and the effectiveness of measures designed to address them are based on numerous assumptions,
like those regarding the accuracy of statements or certifications from critical third parties and vendors, the ability to identify and remediate or replace embedded computer chips in affected
equipment, and resource availability, among other things, and readers should be aware that actual results might differ materially from those discussed below.
AES's
approach to analyzing Year 2000 issues is to (1) inventory all systems and equipment likely to be affected, (2) perform an inventory assessment, (3) conduct
remediations, (4) test all equipment and systems, and (5) develop contingency plans to aid in business continuity.
AES's State of Readiness. In 1998, AES established a readiness program, led by senior executives and consisting of a
team of AES people with extensive knowledge of AES's businesses and processes, as well as outside consultants experienced in these areas who are being used as advisors to assist with third party
analysis and contingency planning.
Approximately
98% of the Company's businesses have completed a thorough Year 2000 readiness program. The remaining businesses are in the process of completing their contingency
planning and all elements of their readiness plan by December 1999. This readiness program has included, where possible, actual Year 2000 simulations as well as off-line tests using
dates occurring after the year 2000, and the development of contingency plans. These tests disclosed no material difficulties with recognizing and processing dates after 1999. The Company is still
evaluating the status of certain newly acquired or to be acquired subsidiaries and assets such as Empresa Distribuidora del Electricidad del Este, S.A., Tiete, and the Drax Power Station.
The
Company's generation plants are also significantly dependant on transmission and distribution systems to carry the electricity to the ultimate end users.
Due
to the interdependent nature of the supply chain, the Company has extended its evaluation of Year 2000 issues to include key suppliers, transmission companies, customers and
vendors, and has organized meetings and sought written assurance from these parties as to their Year 2000 readiness.
Costs of Addressing Year 2000 Issues. The Company has spent approximately $14 million to date to achieve full
Year 2000 readiness, and does not expect to spend significant additional funds to achieve full Year 2000 Readiness Company wide. These costs include estimates for the newly acquired CESCO and soon to
be acquired Drax Power Station. These amounts reflect AES's portion of expected costs to make its businesses Year 2000 ready, but not necessarily the cost associated with post-Year 2000
corrective actions or damages, if any. The Company has funded these expenditures through internal sources.
Risks of Year 2000 Failures. Failures by each of the Company's generation and distribution companies to address Year
2000 issues may lead to numerical errors that, if not addressed or mitigated, may cause system malfunctions resulting in the inability to deliver electricity or the inability to collect data necessary
for proper billing and tariff calculations, among other things.
The
Company's generation business may also be unable to deliver electricity because of the failure of the interconnected distribution companies to receive or transmit the electricity.
Conversely, the Company's distribution companies may not receive sufficient electricity to deliver to their customers because of failures by supplying generators. In such instances of business
interruption due to supplier or customer default, the Company will pursue all contractual remedies available to it to minimize the impact on its results of operations; however, there can be no
assurance that, in all instances, the Company will
be able to legally protect itself from damages arising from third party Year 2000 failures. Because of the significant interdependency of the supplier chain, the Company cannot guarantee that services
will be uninterrupted nor can it adequately predict a reasonably likely worst-case scenario until substantially all of the testing phase is completed.
Contingency Plans. The Company (together with appropriate interested parties like transmission companies, independent
system operators and government agencies) has identified and is testing appropriate contingency plans, addressing emergency operations, disaster recovery, data preservation and business continuation
plans, and intends to continue testing through the fourth quarter of 1999. In addition to our remediation programs, the Company's Year 2000 readiness efforts include evaluation of reasonably likely
worst case scenarios and the development of contingency plans to address how we would respond to problems, should they occur. As a part of the contingency planning process, the Company has addressed
the scenarios recommended in the North American Electric Reliability Council Year 2000 Contingency Planning Guide, as well as additional Company specific scenarios. In September 1999, the AES
businesses that are located within the North Americas Reliability Council (NERC) area were issued a Year 2000 ready status from NERC.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The company believes that there have been no material changes in exposure to market risks during the third quarter of 1999 from those set forth in the
Company's Annual Report filed with the Commission on Form 10-K for the year ended December 31, 1998.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
See discussion of litigation in Part I, Notes 5 and 9 to the Consolidated Financial Statements.
Item 2. Changes in Securities and Use of Proceeds.
In November 1999 the Company sold an additional $250,000,000 of its 9.50% Senior Notes due 2009 at 99.5% plus accrued interest from June 11,
1999. The proceeds from this offering were used to meet short-term liquidity needs of the Company related to financing certain acquisitions, providing equity investments or other credit
support to assist in certain project refinancings, repaying certain indebtedness and otherwise for general corporate purposes.
In
October 1999 the Company sold 14,000,000 shares of its common stock for gross proceeds of approximately $801 million. In October 1999 the Company also sold
trust convertible preferred Securities ("Convertibles") for gross proceeds of approximately $450 million. The Convertibles were priced to yield 63/4%, with a 23% conversion
premium. Also, in November 1999 the underwriters exercised their entire overallotment option for the Convertibles which amounted to approximately $68 million. The proceeds from these offerings
were used to meet short-term liquidity needs of the Company related to financing certain acquisitions, providing equity investments or other credit support to assist in certain project
refinancings, repaying certain indebtedness, and otherwise for general corporate purposes.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
| 3.1 |
|
Fifth Amended and Restated Certificate of Incorporation of The AES Corporation is incorporated here in by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q of the Registrant for the quarterly period ended June
30, 1998 filed August 14, 1998. |
3.2 |
|
By-Laws of The AES Corporation, as amended is incorporated here in by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q of the Registrant for the quarterly period ended June 30, 1998 filed August 14, 1998. |
4.1 |
|
Amended and Restated Declaration of Trust of AES Trust I, among The AES Corporation, The First National Bank of Chicago and First Chicago Delaware, Inc., to provide for the issuance of the $2.6875 Term Convertible Securities, Series A is incorporated
herein by reference to Exhibit 4.1 to Annual Report on Form 10-K of the Registrant for the year ended December 31, 1997 filed March 30, 1998. |
4.2 |
|
Junior Subordinated Indenture, between The AES Corporation and The First National Bank of Chicago, to provide for the issuance of the $2.6875 Term Convertible Securities, Series A is incorporated herein by reference to Exhibit 4.1 to Annual Report on
Form 10-K of the Registrant for the year ended December 31, 1997 filed March 30, 1998. |
4.3 |
|
First Supplemental Indenture to Junior Subordinated Indenture, between The AES Corporation and The First National Bank of Chicago, as trustee, to provide for the issuance of the $2.6875 Term Convertible Securities, Series A is incorporated herein by
reference to Exhibit 4.1 to Annual Report on Form 10-K of the Registrant for the year ended December 31, 1997 filed March 30, 1998.
|
4.4 |
|
Guarantee Agreement, between The AES Corporation and The First National Bank of Chicago, as initial guarantee trustee, to provide for the issuance of the $2.6875 Term Convertible Securities, Series A is incorporated herein by reference to Exhibit 4.1
to Annual Report on Form 10-K of the Registrant for the year ended December 31, 1997 filed March 30, 1998. |
4.5 |
|
Second Supplemental Indenture dated as of October 13, 1997 between the Company and the First National Bank of Chicago, as trustee, to provide for the issuance from time to time of the 10.25% Senior Subordinated Notes Due 2006, is incorporated herein
by reference to Exhibit 4.2.1 of the Registration Statement on Form S-3/A (Registration No. 333-39857) filed November 19, 1997. |
4.6 |
|
Indenture dated as of October 29, 1997 between The AES Corporation and The First National Bank of Chicago, as trustee, to provide for the issuance from time to time of the 8.50% Senior Subordinated Notes due 2007 of the Company and the 8.875% Senior
Subordinated Debentures due 2027, is incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form S-4 (Registration No. 333-44845) filed January 23, 1998. |
4.7 |
|
First Supplemental Indenture dated as of November 21, 1997 between The AES Corporation and The First National Bank of Chicago, as trustee, to provide for the issuance from time to time of the 8.50% Senior Subordinated Notes due 2007 of the Company
and the 8.875% Senior Subordinated Debentures due 2027, is incorporated herein by reference to Exhibit 4.1.2 to the Registration Statement on Form S-4 (Registration No. 333-44845) filed January 23, 1998. |
4.8 |
|
Junior Subordinated Debt Trust Securities Indenture dated as of March 1, 1997 between the Company and The First National Bank of Chicago, to provide for the issuance of the $2.75 Term Convertible Securities, Series B, is incorporated herein by
reference to Exhibit 4.1 to the Registration Statement on Form S-3 (Registration No. 333-46189) filed February 12, 1998. |
4.9 |
|
Second Supplemental Indenture dated as of October 29, 1997 between the Company and The First National Bank of Chicago, to provide for the issuance of the $2.75 Term Convertible Securities, Series B, is incorporated herein by reference to Exhibit
4.1.1 to the Registration Statement on Form S-3 (Registration No. 333-46189) filed February 12, 1998. |
4.10 |
|
Amended and Restated Declaration of Trust of AES Trust II, to provide for the issuance of the $2.75 Term Convertible Securities, Series B, is incorporated herein by reference to Exhibit 4.3 to the Registration Statement on Form S-3 (Registration No.
333-46189) filed February 12, 1998. |
4.11 |
|
Restated Certificate of Trust of AES Trust II, to provide for the issuance of the $2.75 Term Convertible Securities, Series B, is incorporated herein by reference to Exhibit 4.4 to the Registration Statement on Form S-3 (Registration No. 333-46189)
filed February 12, 1998. |
4.12 |
|
Form of Preferred Security, to provide for the issuance of the $2.75 Term Convertible Securities, Series B, is incorporated herein by reference to Exhibit 4.5 to the Registration Statement on Form S-3 (Registration No. 333-46189) filed February 12,
1998. |
4.13 |
|
Form of Junior Subordinated Debt Trust Security, to provide for the issuance of the $2.75 Term Convertible Securities, Series B, is incorporated herein by reference to Exhibit 4.6 to the Registration Statement on Form S-3 (Registration No. 333-46189)
filed February 12, 1998. |
4.14 |
|
Preferred Securities Guarantee with respect to Preferred Securities, to provide for the issuance of the $2.75 Term Convertible Securities, Series B, is incorporated herein by reference to Exhibit 4.7 to the Registration Statement on Form S-3
(Registration No. 333-46189) filed February 12, 1998.
|
4.15 |
|
Junior Subordinated Indenture dated as of August 10, 1998, between The AES Corporation and The First National Bank of Chicago, as trustee, to provide for the issuance of the 4.5% Convertible Junior Subordinated Debentures due 2005 is incorporated
here in by reference to Exhibit 4.15 to the Quarterly Report on Form 10-Q of the Registrant for the quarterly period ended June 30, 1998 filed August 14, 1998. |
4.16 |
|
First Supplemental Indenture dated as of August 10. 1998, to the Junior Subordinated Indenture dated as of August 10, 1998, between The AES Corporation and The First National Bank of Chicago, as trustee, to provide for the issuance of the 4.5%
Convertible Junior Subordinated Debentures due 2005 is incorporated here in by reference to Exhibit 4.16 to the Quarterly Report on Form 10-Q of the Registrant for the quarterly period ended June 30, 1998 filed August 14, 1998. |
4.17 |
|
Senior Indenture dated December 8, 1998 between the Registrant and the First National Bank of Chicago to provide for the issuance of $200 million of 8% Senior Note due 2008 is incorporated herein by reference to Exhibit 4.01 to the Current Report on
Form 8-K of the Registrant filed December 11, 1998. |
4.18 |
|
First Supplemental Indenture dated December 8, 1998 to the Senior Indenture between the Registrant and the First National Bank of Chicago to provide for the issuance of $200 million of 8% Senior Note due 2008 is incorporated herein by reference to
Exhibit 4.02 to the Current Report on Form 8-K of the Registrant filed December 11, 1998. |
4.19 |
|
Other instruments defining the rights of holders of long-term indebtedness of the Registrant and its consolidated subsidiaries is incorporated here in by reference to Exhibit 4.17 to the Quarterly Report on Form 10-Q of the Registrant for the
quarterly period ended June 30, 1998 filed August 14, 1998. |
10.1 |
|
Amended Power Sales Agreement, dated as of December 10, 1985, between Oklahoma Gas and Electric Company and AES Shady Point, Inc. is incorporated herein by reference to Exhibit 10.5 to the Registration Statement on Form S-1 (Registration No. 33-40483)
. |
10.2 |
|
First Amendment to the Amended Power Sales Agreement, dated as of December 19, 1985, between Oklahoma Gas and Electric Company and AES Shady Point, Inc. is incorporated herein by reference to Exhibit 10.45 to the Registration Statement on Form S-1
(Registration No. 33-46011). |
10.3 |
|
Electricity Purchase Agreement, dated as of December 6, 1985, between The Connecticut Light and Power Company and AES Thames, Inc. is incorporated herein by reference to Exhibit 10.4 to the Registration Statement on Form S-1 (Registration No.
33-40483). |
10.4 |
|
Power Purchase Agreement, dated March 25, 1988, between AES Barbers Point, Inc. and Hawaiian Electric Company, Inc., as amended, is incorporated herein by reference to Exhibit 10.6 to the Registration Statement on Form S-1 (Registration No. 33-40483)
. |
10.5 |
|
The AES Corporation Profit Sharing and Stock Ownership Plan is incorporated herein by reference to Exhibit 4(c)(1) to the Registration Statement on Form S-8 (Registration No. 33-49262). |
10.6 |
|
The AES Corporation Incentive Stock Option Plan of 1991, as amended, is incorporated herein by reference to Exhibit 10.30 to the Annual Report on Form 10-K of the Registrant for the fiscal year ended December 31, 1995. |
10.7 |
|
Applied Energy Services, Inc. Incentive Stock Option Plan of 1982 is incorporated herein by reference to Exhibit 10.31 to the Registration Statement on Form S-1 (Registration No. 33-40483).
|
10.8 |
|
Deferred Compensation Plan for Executive Officers, as amended, is incorporated herein by reference to Exhibit 10.32 to Amendment No. 1 to the Registration Statement on Form S-1 (Registration No. 33-40483). |
10.9 |
|
Deferred Compensation Plan for Directors is incorporated herein by reference to Exhibit 10.9 to the Quarterly Report on Form 10-Q of the Registrant for the quarter ended March 31, 1998, filed May 15, 1998. |
10.10 |
|
The AES Corporation Stock Option Plan for Outside Directors is incorporated herein by reference to Exhibit 10.43 to the Annual Report on Form 10-K of Registrant for the Fiscal Year ended December 31, 1991. |
10.11 |
|
The AES Corporation Supplemental Retirement Plan is incorporated herein by reference to Exhibit 10.64 to the Annual Report on Form 10-K of the Registrant for the year ended December 31, 1994. |
10.12 |
|
$600,000,000 Credit Agreement dated as of December 19, 1997 (amended and restated as of March 31, 1999) among AES, The Banks Listed Therein, The Fronting Banks Listed Therein, and Morgan Guaranty Trust Company of New York, as
Agent. |
10.13 |
|
Amendment No. 1 dated as of May 21, 1999 to the $600,000,000 Credit Agreement dated as of December 19, 1997 (amended and restated as of March 31, 1999) among AES, The Banks Listed Therein, The Fronting Banks Listed Therein, and Morgan
Guaranty Trust Company of New York, as Agent. |
10.14 |
|
Amendment No. 2 dated as of July 27, 1999 to the $600,000,000 Credit Agreement dated as of December 19, 1997 (amended and restated as of March 31, 1999) among AES, The Banks Listed Therein, The Fronting Banks Listed Therein, and Morgan
Guaranty Trust Company of New York, as Agent. |
10.15 |
|
Amendment No. 3 dated as of September 28, 1999 to the $600,000,000 Credit Agreement dated as of December 19, 1997 (amended and restated as of March 31, 1999) among AES, The Banks Listed Therein, The Fronting Banks Listed Therein, and
Morgan Guaranty Trust Company of New York, as Agent. |
10.16 |
|
Guaranty dated as of September 30, 1999 made by AES Oklahoma Management Co., Inc., AES Hawaii Management Company, Inc., AES Southland Funding LLC, and AES Warrior Run Funding LLC in favor of the Banks and the Fronting Banks party to the Credit
Agreement and Morgan Guaranty Trust Company of New York, as Agent. |
10.17 |
|
Letter of Credit and Reimbursement Agreement dated as of October 19, 1999, among AES, the Several Banks and Financial Institutions parties thereto from time to time, the Letter of Credit Issuing Banks parties thereto from time to time, Union
Bank of California, N.A. as Administrative Agent, Morgan Guaranty Trust Company of New York as Syndication Agent, and Bank of America, N.A. as Documentation Agent. |
11 |
|
Statement of computation of earnings per share. |
27 |
|
Financial Data Schedule (Article 5). |
|
|
|
(b) Reports on Form 8-K.
Registrant filed a Current Report on Form 8-K dated September 30, 1999 containing audited historical financial statements of CILCORP
as of and for the three years ended December 31, 1998, interim financial statements of CILCORP as of and for the six months ended June 30, 1999, and pro forma financial statements of The
AES Corporation as of and for the six months ended June 30, 1999 and for the year ended December 31, 1998 which reflect the acquisition of CILCORP.
Registrant
filed a Current Report on Form 8-K dated August 20, 1999 containing the Registrant's press release about the agreement to acquire the Drax Power
Station from National Power, Plc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
| |
|
THE AES CORPORATION
(Registrant) |
Date: November 15, 1999 |
|
By: |
/s/ BARRY J. SHARP
Name: Barry J. Sharp
Title: Senior Vice President and
Chief Financial Officer |
EXHIBIT INDEX
Exhibit
|
|
Description of Exhibit
|
|
Sequentially
Numbered Page
|
| |
|
|
|
|
| 10.12 |
|
$600,000,000 Credit Agreement dated as of December 19, 1997 (amended and restated as of March 31, 1999) among AES, The Banks Listed Therein, The Fronting Banks Listed Therein, and Morgan Guaranty Trust Company
of New York, as Agent |
|
|
| 10.13 |
|
Amendment No. 1 dated as of May 21, 1999 to the $600,000,000 Credit Agreement dated as of December 19, 1997 (amended and restated as of March 31, 1999) among AES, The Banks Listed Therein, The Fronting
Banks Listed Therein, and Morgan Guaranty Trust Company of New York, as Agent |
|
|
| 10.14 |
|
Amendment No. 2 dated as of July 27, 1999 to the $600,000,000 Credit Agreement dated as of December 19, 1997 (amended and restated as of March 31, 1999) among AES, The Banks Listed Therein, The Fronting
Banks Listed Therein, and Morgan Guaranty Trust Company of New York, as Agent |
|
|
| 10.15 |
|
Amendment No. 3 dated as of September 28, 1999 to the $600,000,000 Credit Agreement dated as of December 19, 1997 (amended and restated as of March 31, 1999) among AES, The Banks Listed Therein, The
Fronting Banks Listed Therein, and Morgan Guaranty Trust Company of New York, as Agent |
|
|
| 10.16 |
|
Guaranty dated as of September 30, 1999 made by AES Oklahoma Management Co., Inc., AES Hawaii Management Company, Inc., AES Southland Funding LLC, and AES Warrior Run Funding LLC in favor of the Banks and the
Fronting Banks party to the Credit Agreement and Morgan Guaranty Trust Company of New York, as Agent |
|
|
| 10.17 |
|
Letter of Credit and Reimbursement Agreement dated as of October 19, 1999, among AES, the Several Banks and Financial Institutions parties thereto from time to time, the Letter of Credit Issuing Banks parties thereto
from time to time, Union Bank of California, N.A. as Administrative Agent, Morgan Guaranty Trust Company of New York as Syndication Agent, and Bank of America, N.A. as Documentation Agent |
|
|
| 11 |
|
Statement of Computation of Earnings Per Share |
|
|
| 27 |
|
Financial Data Schedule |
|
|
