Exhibit 99.1
Press Release | | 
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Media Contact Robin Pence 703 682 6552
Investor Contact Ahmed Pasha 703 682 6451
AES Reports Third Quarter Results
Quarterly Revenues Up 18% to $3.5 Billion; Gross Margin Up 2% to $840 Million
Arlington, VA, November 6, 2007 – The AES Corporation (NYSE:AES) today reported results for the third quarter ending September 30, 2007. During the quarter, revenues increased by $524 million or 18% to $3.5 billion. The increase in revenues reflects higher rates and volumes of approximately $284 million in Latin America, North America and Europe & Africa, favorable foreign currency translation of approximately $174 million and contributions from TEG and TEP, two plants in Mexico the Company acquired in first quarter 2007, of approximately $57 million. Gross margin increased by $14 million or 2% to $840 million, primarily due higher prices in North America and contributions from TEG and TEP as well as the impacts of favorable foreign currency translation, a combined impact of approximately $106 million. These gains were partially offset by the impacts of gas curtailments and lower hydrology at our businesses in Argentina and Chile of approximately $112 million.
Third quarter income from continuing operations was $91 million, or $0.14 per diluted share, versus ($368) million, or ($0.56) per diluted share in third quarter 2006. Third quarter net income was $103 million, or $0.15 per diluted share, versus net loss of $327 million, or $0.50 per diluted share, in third quarter 2006. Adjusted earnings per share (a non-GAAP financial measure) was $0.18 in third quarter 2007 versus $0.30 in third quarter 2006. The main driver of the quarter-over-quarter differences in both GAAP and adjusted earnings was the restructuring of certain of the Company’s Brazilian subsidiaries in third quarter 2006. This restructuring resulted in a non-cash, after-tax charge to income from continuing operations of $500 million, or $0.76 per diluted share in third quarter 2006. It also resulted in a benefit of $0.07 to adjusted earnings per share in third quarter 2006. Excluding these one-time impacts, the decrease in third quarter 2007 earnings per diluted share and adjusted earnings per share was primarily driven by the Company’s operations in Chile and Argentina, which negatively impacted income from continuing operations by approximately $45 million, or $0.07 impact on both diluted and adjusted earnings per share. Additionally, impairments in North American subsidiaries impacted income from continuing operations by approximately $20 million, or $0.03 impact on diluted earnings
per share. The impairments did not impact adjusted earnings per share. Higher energy prices in North America and contributions from new businesses partially offset these negative impacts.
During the quarter, net cash from operating activities decreased by $187 million to $741 million. This decrease was primarily due to the sale of a Venezuelan subsidiary, C.A. La Electricidad de Caracas (EDC), in May 2007. Excluding any contribution from EDC, net cash from operating activities would have decreased by approximately $19 million.
During the quarter, the Company was the winning bidder on two projects totaling 1,762 MW in the Philippines and the Republic of South Africa. Additionally, the Company’s Alternative Energy group announced plans to begin construction of a 170 MW expansion of its Buffalo Gap wind farm in Texas. Once completed, the project will increase capacity at Buffalo Gap to 524 MW, making it one of the largest operating wind farms in the United States.
“We are pleased with our continued progress toward achieving our growth goals, such as winning two strategically important projects in the Philippines and South Africa. These investments will be platforms for further expansion in these two high growth markets,” said Paul Hanrahan, AES President and CEO. “In October, the market gave us a vote of confidence when our $500 million offering of unsecured notes generated significant demand and was successfully upsized to $2 billion. This transaction will help us to achieve more flexibility in our existing capital structure, as we were able to refinance existing debt, and will support our growth program.”
Income from continuing operations was $482 million, or $0.71 per diluted share, for the first nine months of 2007 versus $149 million, or $0.22 per diluted share, for the prior year. Net loss, primarily due to the sale of EDC, was $112 million, or $0.17 per diluted share, for the first nine months of 2007 versus net income of $190 million, or $0.28 per diluted share, for the first nine months of 2006. Adjusted earnings per share (a non-GAAP financial measure) for the first nine months was $0.82 versus $0.96 last year. Net cash from operating activities was $1.8 billion for the first nine months of 2007 versus $1.9 billion last year. Excluding the contributions from EDC, net cash from operating activities would have been $1.8 billion for the first nine months of 2007 and $1.6 billion for the first nine months of 2006.
Third Quarter 2007 Segment Highlights
• Latin America Generation revenue increased by $229 million to $914 million, primarily due to higher rates in Chile and Argentina of approximately $150 million and approximately $32 million in higher intercompany sales at Tiete in Brazil. Gross margin decreased by $84 million to $183 million, primarily due to higher costs associated with gas supply curtailments and lower hydrology in Chile and Argentina of approximately $112 million, partially offset by increased intercompany sales at Tiete.
• Latin America Utility revenue increased by $141 million to $1.3 billion, primarily due to approximately $135 million in favorable foreign currency translation and
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approximately $26 million in increased volumes at Eletropaulo in Brazil, partially offset by decreased rates at Eletropaulo due to the 2007 tariff reset. Gross margin increased by $71 million to $259 million, primarily due to approximately $55 million in favorable foreign currency translation and approximately $33 million in lower costs in Brazil.
• North America Generation revenue increased by $76 million to $566 million, primarily due to approximately $57 million in contributions from the newly acquired TEG and TEP businesses in Mexico and approximately $25 million in higher rates and volumes at Eastern Energy in New York. Gross margin increased by $47 million to $196 million, primarily due to the higher rates and volumes as well as lower costs at Eastern Energy, an impact of approximately $34 million, and contributions from TEG and TEP of approximately $20 million.
• North America Utility revenue remained flat at $274 million. Consistent with revenues, gross margin remained relatively flat with a decrease of $3 million to $86 million.
• Europe & Africa Generation revenue increased by $20 million to $216 million, primarily due to increased rates and volumes of approximately $15 million in Kazakhstan and approximately $3 million in favorable foreign currency translation. Gross margin decreased by $3 million, primarily due to decreased sales of excess emission allowances in Hungary.
• Europe & Africa Utility revenue increased by $26 million to $157 million, primarily due to increased rates of approximately $14 million in Ukraine and approximately $6 million in favorable foreign currency translation. Gross margin decreased by $8 million, primarily due to the reversal of approximately $7 million in VAT tax accrual during third quarter 2006 at SONEL in Cameroon.
• Asia Generation revenue increased by $44 million to $235 million, primarily due to higher dispatch in Pakistan and higher volume in Sri Lanka. Gross margin decreased by $6 million to $47 million, primarily due to lower volumes in China. Increased revenue in Pakistan and Sri Lanka had a relatively flat impact on gross margin due to related increases in fuel costs.
Non-GAAP Financial Measures
See Non-GAAP Financial Measures for definitions of adjusted earnings per share and free cash flow and reconciliations to the most comparable GAAP financial measure.
Attachments
Condensed Consolidated Statements of Operations, Segment Information, Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Cash Flows, Non-GAAP Financial Measures, Parent Financial Information.
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Conference Call Information
AES will host a conference call on Wednesday, November 7, 2007 at 9:00 a.m. Eastern Standard Time (EST). The call may be accessed via a live webcast which will be available at www.aes.com by selecting “Investor Information” and then “Quarterly Financial Results” or by telephone in listen-only mode at (877)-493-9121. International callers should dial (973)-582-2750. Please call at least ten minutes before the scheduled start time. You will be requested to provide your name and affiliation. The AES Financial Review presentation will be available prior to the call at www.aes.com by selecting “Investor Information” and then “Quarterly Financial Results.”
A telephonic replay will be available at approximately 12:00 p.m. EST by dialing (877)-519-4471 or (973)-341-3080 for international callers. The system will ask for a reservation number; please enter 9425835 followed by the pound key (#). The telephonic replay will be available until November 28, 2007. 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
AES is one of the world’s largest global power companies, with 2006 revenues of $11.6 billion. With operations in 28 countries on five continents, AES’s generation and distribution facilities have the capacity to serve 100 million people worldwide. Our 13 regulated utilities amass annual sales of over 73,000 GWh and our 121 generation facilities have the capacity to generate over 43,000 megawatts. Our global workforce of 30,000 people is committed to operational excellence and meeting the world’s growing power needs. To learn more about AES, please visit www.aes.com or contact AES media relations at media@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’s current expectations based on reasonable assumptions. Forecasted financial information is based on certain material assumptions. These assumptions include, but are not limited to, 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
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actual results are discussed in AES’s filings with the Securities and Exchange Commission, including, but not limited to, the risks discussed under Item 1A “Risk Factors” in AES’s 2006 Annual Report on Form 10-K/A. Readers are encouraged to read AES’s filings to learn more about the risk factors associated with AES’s business. AES undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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THE AES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
| | Three Months Ended | | Nine Months Ended | |
| | September 30, | | September 30, | |
($ in millions, except per share amounts) | | 2007 | | 2006 | | 2007 | | 2006 | |
| | | | (Restated) | | | | (Restated) | |
| | | | | | | | | |
Revenues | | $ | 3,471 | | $ | 2,947 | | $ | 9,924 | | $ | 8,615 | |
Cost of sales | | (2,631 | ) | (2,121 | ) | (7,340 | ) | (6,017 | ) |
GROSS MARGIN | | 840 | | 826 | | 2,584 | | 2,598 | |
| | | | | | | | | |
General and administrative expenses | | (93 | ) | (67 | ) | (264 | ) | (181 | ) |
| | | | | | | | | |
Interest expense | | (448 | ) | (473 | ) | (1,281 | ) | (1,323 | ) |
Interest income | | 122 | | 115 | | 363 | | 316 | |
Other expense | | (25 | ) | (53 | ) | (90 | ) | (162 | ) |
Other income | | 25 | | 31 | | 324 | | 74 | |
Gain on sale of investments | | — | | 9 | | 10 | | 98 | |
Loss on sale of subsidiary stock | | — | | (536 | ) | — | | (536 | ) |
Asset impairment expense | | (38 | ) | — | | (38 | ) | (16 | ) |
Foreign currency transaction gain (loss) on net monetary position | | 2 | | (49 | ) | (2 | ) | (76 | ) |
Equity in earnings of affiliates | | 15 | | 19 | | 56 | | 65 | |
Other non-operating expense | | — | | — | | (45 | ) | — | |
| | | | | | | | | |
INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST | | 400 | | (178 | ) | 1,617 | | 857 | |
| | | | | | | | | |
Income tax expense | | (146 | ) | (5 | ) | (601 | ) | (280 | ) |
Minority interest expense | | (163 | ) | (185 | ) | (534 | ) | (428 | ) |
| | | | | | | | | |
INCOME (LOSS) FROM CONTINUING OPERATIONS | | 91 | | (368 | ) | 482 | | 149 | |
| | | | | | | | | |
Income from operations of discontinued businesses, net of tax | | — | | 34 | | 71 | | 79 | |
Gain (loss) from disposal of discontinued businesses, net of tax | | 12 | | 7 | | (665 | ) | (59 | ) |
Income from extraordinary item, net of tax | | — | | — | | — | | 21 | |
| | | | | | | | | |
NET INCOME (LOSS) | | $ | 103 | | $ | (327 | ) | $ | (112 | ) | $ | 190 | |
| | | | | | | | | |
DILUTED EARNINGS (LOSS) PER SHARE | | | | | | | | | |
Income (loss) from continuing operations | | $ | 0.14 | | $ | (0.56 | ) | $ | 0.71 | | $ | 0.22 | |
Discontinued operations | | 0.01 | | 0.06 | | (0.88 | ) | 0.03 | |
Extraordinary item | | — | | — | | — | | 0.03 | |
| | | | | | | | | |
DILUTED EARNINGS (LOSS) PER SHARE | | $ | 0.15 | | $ | (0.50 | ) | $ | (0.17 | ) | $ | 0.28 | |
| | | | | | | | | |
Diluted weighted average shares outstanding (in millions) | | 675 | | 658 | | 677 | | 670 | |
THE AES CORPORATION
SEGMENT INFORMATION (unaudited)
| | Three Months Ended | | Nine Months Ended | |
| | September 30, | | September 30, | |
($ in millions) | | 2007 | | 2006 | | 2007 | | 2006 | |
| | | | (Restated) | | | | (Restated) | |
REVENUES | | | | | | | | | |
Latin America Generation | | $ | 914 | | $ | 685 | | $ | 2,475 | | $ | 1,905 | |
Latin America Utilities | | 1,311 | | 1,170 | | 3,795 | | 3,430 | |
North America Generation | | 566 | | 490 | | 1,622 | | 1,444 | |
North America Utilities | | 274 | | 274 | | 796 | | 780 | |
Europe & Africa Generation | | 216 | | 196 | | 682 | | 590 | |
Europe & Africa Utilities | | 157 | | 131 | | 482 | | 419 | |
Asia Generation | | 235 | | 191 | | 686 | | 611 | |
Corporate and Other | | (202 | ) | (190 | ) | (614 | ) | (564 | ) |
| | | | | | | | | |
Total revenues | | $ | 3,471 | | $ | 2,947 | | $ | 9,924 | | $ | 8,615 | |
| | | | | | | | | |
GROSS MARGIN | | | | | | | | | |
Latin America Generation | | $ | 183 | | $ | 267 | | $ | 633 | | $ | 781 | |
Latin America Utilities | | 259 | | 188 | | 758 | | 684 | |
North America Generation | | 196 | | 149 | | 531 | | 458 | |
North America Utilities | | 86 | | 89 | | 245 | | 212 | |
Europe & Africa Generation | | 35 | | 38 | | 168 | | 173 | |
Europe & Africa Utilities | | 22 | | 30 | | 63 | | 95 | |
Asia Generation | | 47 | | 53 | | 153 | | 158 | |
Corporate and Other | | 12 | | 12 | | 33 | | 37 | |
| | | | | | | | | |
Total gross margin | | $ | 840 | | $ | 826 | | $ | 2,584 | | $ | 2,598 | |
| | | | | | | | | |
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST | | | | | | | | | |
Latin America Generation | | $ | 141 | | $ | 212 | | $ | 648 | | $ | 653 | |
Latin America Utilities | | 193 | | (444 | ) | 589 | | (151 | ) |
North America Generation | | 83 | | 62 | | 437 | | 337 | |
North America Utilities | | 57 | | 58 | | 159 | | 121 | |
Europe & Africa Generation | | 26 | | 13 | | 137 | | 151 | |
Europe & Africa Utilities | | 20 | | 25 | | 53 | | 84 | |
Asia Generation | | 35 | | 40 | | 112 | | 113 | |
Corporate and Other | | (155 | ) | (144 | ) | (518 | ) | (451 | ) |
| | | | | | | | | |
Total income before income taxes and minority interest | | $ | 400 | | $ | (178 | ) | $ | 1,617 | | $ | 857 | |
THE AES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
| | September 30, | | December 31, | |
($ in millions, except shares and par value) | | 2007 | | 2006 | |
ASSETS | | | | | |
CURRENT ASSETS | | | | | |
Cash and cash equivalents | | $ | 1,664 | | $ | 1,379 | |
Restricted cash | | 609 | | 548 | |
Short term investments | | 994 | | 640 | |
Accounts receivable, net of reserves of $261 and $233, respectively | | 2,088 | | 1,769 | |
Inventory | | 511 | | 471 | |
Receivable from affiliates | | 31 | | 76 | |
Deferred income taxes - current | | 256 | | 208 | |
Prepaid expenses | | 158 | | 109 | |
Other current assets | | 1,309 | | 927 | |
Current assets of held for sale and discontinued businesses | | — | | 438 | |
Total current assets | | 7,620 | | 6,565 | |
| | | | | |
NONCURRENT ASSETS | | | | | |
Property, plant and equipment: | | | | | |
Land | | 1,032 | | 928 | |
Electric generation and distribution assets | | 24,891 | | 21,835 | |
Accumulated depreciation | | (7,395 | ) | (6,545 | ) |
Construction in progress | | 1,300 | | 979 | |
Property, plant and equipment, net | | 19,828 | | 17,197 | |
| | | | | |
Other assets: | | | | | |
Deferred financing costs, net of accumulated amortization of $213 and $188, respectively | | 290 | | 279 | |
Investment in and advances to affiliates | | 709 | | 595 | |
Debt service reserves and other deposits | | 612 | | 524 | |
Goodwill, net | | 1,438 | | 1,416 | |
Other intangible assets, net of accumulated amortization of $216 and $171, respectively | | 333 | | 298 | |
Deferred income taxes - noncurrent | | 695 | | 602 | |
Other assets | | 1,825 | | 1,634 | |
Noncurrent assets of held for sale and discontinued businesses | | — | | 2,091 | |
Total other assets | | 5,902 | | 7,439 | |
TOTAL ASSETS | | $ | 33,350 | | $ | 31,201 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
CURRENT LIABILITIES | | | | | |
Accounts payable | | $ | 978 | | $ | 795 | |
Accrued interest | | 335 | | 404 | |
Accrued and other liabilities | | 2,603 | | 2,131 | |
Non-recourse debt - current portion | | 1,247 | | 1,411 | |
Recourse debt - current portion | | 415 | | — | |
Current liabilities of held for sale and discontinued businesses | | — | | 288 | |
Total current liabilities | | 5,578 | | 5,029 | |
| | | | | |
LONG-TERM LIABILITIES | | | | | |
Non-recourse debt | | 11,058 | | 9,834 | |
Recourse debt | | 4,484 | | 4,790 | |
Deferred income taxes - noncurrent | | 1,181 | | 803 | |
Pension liabilities and other post-retirement liabilities | | 923 | | 844 | |
Other long-term liabilities | | 3,690 | | 3,554 | |
Long-term liabilities of held for sale and discontinued businesses | | — | | 434 | |
Total long-term liabilities | | 21,336 | | 20,259 | |
| | | | | |
Minority Interest (including discontinued businesses of $- and $175, respectively) | | 3,237 | | 2,948 | |
| | | | | |
STOCKHOLDERS’ EQUITY | | | | | |
Common stock ($.01 par value, 1,200,000,000 shares authorized; 668,825,239 and 665,126,309 shares issued and outstanding at September 30, 2007 and December 31, 2006, respectively) | | 7 | | 7 | |
Additional paid-in capital | | 6,820 | | 6,654 | |
Accumulated deficit | | (1,260 | ) | (1,096 | ) |
Accumulated other comprehensive loss | | (2,368 | ) | (2,600 | ) |
Total stockholders’ equity | | 3,199 | | 2,965 | |
| | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 33,350 | | $ | 31,201 | |
THE AES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
| | Three Months Ended September 30, | | Nine Months Ended September 30, | |
($ in millions) | | 2007 | | 2006 (Restated) | | 2007 | | 2006 (Restated) | |
| | | | | | | | | |
OPERATING ACTIVITIES | | | | | | | | | |
Net cash provided by operating activities | | $ | 741 | | $ | 928 | | $ | 1,848 | | $ | 1,879 | |
| | | | | | | | | |
INVESTING ACTIVITIES | | | | | | | | | |
Capital expenditures | | (538 | ) | (445 | ) | (1,728 | ) | (997 | ) |
Acquisitions - net of cash acquired | | (60 | ) | — | | (316 | ) | (13 | ) |
Proceeds from the sales of businesses | | 54 | | 583 | | 835 | | 817 | |
Proceeds from the sales of assets | | 5 | | 3 | | 10 | | 10 | |
Sales of short-term investments | | 909 | | 403 | | 1,663 | | 1,161 | |
Purchases of short-term investments | | (644 | ) | (518 | ) | (1,811 | ) | (1,463 | ) |
Decrease (increase) in restricted cash | | 74 | | 67 | | (105 | ) | (57 | ) |
Purchases of emission allowances | | (1 | ) | (5 | ) | (3 | ) | (53 | ) |
Proceeds from the sales of emission allowances | | — | | 8 | | 10 | | 75 | |
(Increase) decrease in debt service reserves and other assets | | (46 | ) | (4 | ) | 63 | | (14 | ) |
Purchases of long-term available-for-sale securities | | — | | — | | (23 | ) | (52 | ) |
Repayment of affiliate loan | | 55 | | — | | 55 | | — | |
Other investing activities | | 4 | | 13 | | 15 | | 12 | |
Net cash (used in) provided by investing activities | | (188 | ) | 105 | | (1,335 | ) | (574 | ) |
| | | | | | | | | |
FINANCING ACTIVITIES | | | | | | | | | |
Borrowings (repayments) under the revolving credit facilities, net | | 101 | | (39 | ) | (82 | ) | 104 | |
Issuance of non-recourse debt | | 371 | | 237 | | 1,169 | | 1,437 | |
Repayments of recourse debt | | — | | — | | — | | (150 | ) |
Repayments of non-recourse debt | | (538 | ) | (353 | ) | (1,135 | ) | (1,934 | ) |
Payments for deferred financing costs | | (15 | ) | (9 | ) | (36 | ) | (64 | ) |
Distributions to minority interests | | (305 | ) | (85 | ) | (571 | ) | (210 | ) |
Contributions from minority interests | | 34 | | — | | 370 | | 117 | |
Issuance of common stock | | 7 | | 31 | | 36 | | 59 | |
Financed capital expenditures | | (19 | ) | (30 | ) | (27 | ) | (47 | ) |
Other financing | | 1 | | (4 | ) | 2 | | (7 | ) |
Net cash used in financing activities | | (363 | ) | (252 | ) | (274 | ) | (695 | ) |
Effect of exchange rate changes on cash | | (4 | ) | (14 | ) | 46 | | 13 | |
| | | | | | | | | |
Total increase in cash and cash equivalents | | 186 | | 767 | | 285 | | 623 | |
Cash and cash equivalents, beginning | | 1,478 | | 1,032 | | 1,379 | | 1,176 | |
| | | | | | | | | |
Cash and cash equivalents, ending | | $ | 1,664 | | $ | 1,799 | | $ | 1,664 | | $ | 1,799 | |
| | | | | | | | | | | | | | | |
THE AES CORPORATION
NON-GAAP FINANCIAL MEASURES (unaudited)
| | Three Months Ended | | Nine Months Ended | |
| | September 30, | | September 30, | |
($ in millions, except per share amounts) | | 2007 | | 2006 (Restated) | | 2007 | | 2006 (Restated) | |
| | | | | | | | | |
Diluted EPS From Continuing Operations | | $ | 0.14 | | $ | (0.56 | ) | $ | 0.71 | | $ | 0.22 | |
| | | | | | | | | |
FAS 133 Mark to Market (Gains)/Losses | | 0.01 | | 0.02 | | 0.02 | | — | |
Currency Transaction (Gains)/Losses | | — | | 0.01 | | — | | 0.01 | |
Net Asset (Gains)/Losses and Impairments | | 0.03 | | 0.83 | | 0.09 | | 0.69 | |
Debt Retirement (Gains)/Losses | | — | | — | | — | | 0.04 | |
| | | | | | | | | |
Adjusted Earnings Per Share (1) | | $ | 0.18 | | $ | 0.30 | | $ | 0.82 | | $ | 0.96 | |
| | | | | | | | | |
Capital Expenditures | | | | | | | | | |
| | | | | | | | | |
Maintenance Capital Expenditures | | $ | 168 | | $ | 196 | | $ | 679 | | $ | 575 | |
Growth Capital Expenditures | | 389 | | 279 | | 1,076 | | 469 | |
| | | | | | | | | |
Total Capital Expenditures | | $ | 557 | | $ | 475 | | $ | 1,755 | | $ | 1,044 | |
| | | | | | | | | |
Reconciliation of Free Cash Flow | | | | | | | | | |
| | | | | | | | | |
Net Cash from Operating Activities | | $ | 741 | | $ | 928 | | $ | 1,848 | | $ | 1,879 | |
Less: Maintenance Capital Expenditures | | 168 | | 196 | | 679 | | 575 | |
| | | | | | | | | |
Free Cash Flow (2) | | $ | 573 | | $ | 732 | | $ | 1,169 | | $ | 1,304 | |
(1) Adjusted earnings per share (a non-GAAP financial measure) is defined as diluted earnings per share from continuing operations excluding gains or losses associated with (a) mark-to-market amounts related to FAS 133 derivative transactions, (b) foreign currency transaction impacts on the net monetary position related to Braziland Argentina, (c) significant asset gains or losses due to disposition transactions and impairments, and (d) costs related to the early retirement of recourse debt. 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 associated with mark-to-market gains or losses related to certain derivative transactions, currency transaction gains or losses, periodic strategic decisions to dispose of certain assets which may influence results in a given period, and the early retirement of corporate debt.
(2) 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.
THE AES CORPORATION
PARENT FINANCIAL INFORMATION
| | 4 Quarters Ended | |
| | September 30, | | June 30, | | March 31, | | December 31, | |
Parent only data: last four quarters | | 2007 | | 2007 | | 2007 | | 2006 | |
($ in millions) | | Actual | | Actual | | Actual | | Actual | |
| | | | | | | | | |
Total subsidiary distributions & returns of capital to Parent | | | | | | | | | |
| | | | | | | | | |
Subsidiary distributions (1) to Parent & QHCs | | $ | 1,067 | | $ | 1,058 | | $ | 976 | | $ | 971 | |
| | | | | | | | | |
Returns of capital distributions to Parent & QHCs | | 94 | | 92 | | 87 | | 72 | |
| | | | | | | | | |
Total subsidiary distributions & returns of capital to parent | | $ | 1,161 | | $ | 1,150 | | $ | 1,063 | | $ | 1,043 | |
| | Quarter Ended | |
| | September 30, | | June 30, | | March 31, | | December 31, | |
Parent only data: quarterly | | 2007 | | 2007 | | 2007 | | 2006 | |
($in millions) | | Actual | | Actual | | Actual | | Actual | |
| | | | | | | | | |
Total subsidiary distributions & returns of capital to Parent | | | | | | | | | |
| | | | | | | | | |
Subsidiary distributions (1) to Parent & QHCs | | $ | 361 | | $ | 259 | | $ | 137 | | $ | 311 | |
| | | | | | | | | |
Returns of capital distributions to Parent & QHCs | | 35 | | 34 | | 15 | | 9 | |
| | | | | | | | | |
Total subsidiary distributions & returns of capital to Parent | | $ | 396 | | $ | 293 | | $ | 152 | | $ | 320 | |
| | Balance at | |
Parent Company | | September 30, | | June 30, | | March 31, | | December 31, | |
Liquidity (3) | | 2007 | | 2007 | | 2007 | | 2006 | |
($in millions) | | Actual | | Actual | | Actual | | Actual | |
Cash at Parent & Cash at QHCs (2) | | $ | 619 | | $ | 405 | | $ | 74 | | $ | 257 | |
Availability under revolver | | 896 | | 973 | | 804 | | 889 | |
Ending liquidity | | $ | 1,515 | | $ | 1,378 | | $ | 878 | | $ | 1,146 | |
(1) Subsidiary Distributions (a non-GAAP financial measure) is defined as cash distributions (primarily dividends and interest income) from subsidiary companies to the parent company and qualified holding companies. These cash flows are the source of cash flow to the parent.
(2) The cash held at qualifying holding companies (QHCs) (a non-GAAP financial measure) 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 (Parent). 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.
(3) AES believes that unconsolidated parent company liquidity (a non-GAAP financial measure) is important to the liquidity position of AES as a parent company because of the non-recourse nature of most of AES’s indebtedness.
