Exhibit 99.1A
Media Contact: Rich Bulger 703-682-6318
Investor Contact: Ahmed Pasha 703-682-6451
AES Reports 54% Increase in Adjusted Earnings Per Share to $0.37 for First Quarter 2012
First Quarter 2012 Results
| • | | First Quarter Adjusted Earnings Per Share increased $0.13 to $0.37 |
| • | | First Quarter Diluted Earnings Per Share from Continuing Operations increased $0.14 to $0.44 |
| • | | Net Cash from Operating Activities increased 6% to $534 million and Proportional Free Cash Flow increased 51% to $235 million |
Other Significant Announcements
| • | | Reaffirmed full year 2012 guidance for Adjusted Earnings Per Share and Cash Flow |
| • | | Revised full year 2012 guidance for Diluted Earnings Per Share from Continuing Operations due to non-cash impairments |
| • | | Completed the sales of Ironwood and Red Oak in the United States with proceeds of $227 million |
| • | | Announced the sale of its interest in 379 MW of hydro assets in China for approximately $48 million in proceeds |
| • | | Increased the outstanding authorization for share repurchases by $180 million to $302 million |
ARLINGTON, Va, May 4, 2012 –The AES Corporation (NYSE: AES) today reported a 54% increase in Adjusted Earnings Per Share (EPS) for the first quarter of 2012. New businesses in the United States, Europe and Latin America, higher volumes in Latin America and a one-time favorable arbitration settlement at Cartagena in Spain drove the results for the quarter. These trends were partially offset by decreased spot prices in Chile, the estimated impact of a delayed tariff reset at Eletropaulo in Brazil and the financing costs related to the acquisition of DP&L.
“We continue to execute on our plan to unlock shareholder value. Our strong first quarter puts us on track to meet our full year 2012 Adjusted EPS guidance, driven by the contributions from new businesses we commissioned or acquired in 2011. In addition, we completed the sales of Ironwood and Red Oak for $227 million in proceeds,” said Andrés Gluski, AES President and Chief Executive Officer. “Looking forward, we are committed to delivering our three-year total return CAGR of 8% to 10% by 2015, and in support of that commitment, we increased the outstanding authorization for share repurchases from $122 million to $302 million.”
“With asset sales proceeds and strong cash flow reported for the quarter, we have many levers available to us to achieve our total return target,” said Victoria D. Harker, AES Executive Vice President, Chief Financial Officer and President of Global Business Services. “In addition, we remain committed to initiating a dividend in the third quarter of this year, with the first payment expected in the fourth quarter.”
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Additional Highlights
| • | | The Company announced a $180 million increase in its authorization for share repurchases from $500 million to $680 million. With $378 million of share repurchases completed since July 2010, $302 million of the authorization is outstanding. |
| • | | The Company announced the sale of its interest in 379 MW of hydro generation assets in China for proceeds of approximately $48 million. Subject to customary purchase price adjustments and regulatory approval, the sale is expected to close in the second half of 2012. |
| • | | AES has closed or announced seven asset sales since September 2011 with aggregate proceeds of $804 million. |
2012 Guidance
The Company reaffirmed its full year 2012 guidance for Adjusted EPS and Cash Flow. Current guidance includes the impacts of first quarter trends, foreign exchange and commodity price assumptions as of March 30, 2012, and closed asset sales. As a result of higher working capital in Brazil, increased environmental capital expenditures in Chile and the sale of Red Oak and Ironwood, the Company now expects its cash flow metrics to come in at the low end of the guidance range. The Company revised its Diluted EPS from Continuing Operations guidance due to $0.06 of non-cash impairments in the first quarter of 2012.
Table 1: Key Elements of 2012 Guidance as of May 4, 2012
| | | | |
| | | Updated 2012 Guidance | | Remarks |
Adjusted EPS1 | | $1.22-$1.30 | | No change |
Diluted EPS from Continuing Operations | | $1.22-$1.30 | | $0.06 lower due to non-cash impairments |
Consolidated Cash Flow from Operating Activities | | $3,100-$3,300 million | | No change; expect low end of range |
Proportional Free Cash Flow1 | | $1,050-$1,250 million | | No change; expect low end of range |
Subsidiary Distributions2 | | $1,325-$1,525 million | | No change |
| 1 | A Non-GAAP financial measure. See “Non-GAAP Financial Measures” for definitions and reconciliations to the most comparable GAAP financial measures. |
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Table 2: Results for First Quarter 2012
| | | | | | | | | | | | |
| | | First
Quarter
2011 | | | First
Quarter
2012 | | | Full
Year
2012
Guidance as
of 5/4/12 | |
Consolidated Revenue | | $ | 4,156 | M | | $ | 4,740 | M | | | NA | |
Consolidated Gross Margin | | $ | 993 | M | | $ | 1,078 | M | | $ | 4,000-4,200 | M |
Proportional Gross Margin1 | | $ | 607 | M | | $ | 779 | M | | $ | 2,700-2,900 | M |
Consolidated Cash Flow from Operating Activities | | $ | 502 | M | | $ | 534 | M | | $ | 3,100-3,300 | M |
Proportional Cash Flow from Operating Activities1 | | $ | 319 | M | | $ | 405 | M | | $ | 1,925-2,125 | M |
Consolidated Free Cash Flow1 | | $ | 260 | M | | $ | 292 | M | | $ | 1,900-2,100 | M |
Proportional Free Cash Flow1 | | $ | 156 | M | | $ | 235 | M | | $ | 1,050-1,250 | M |
Subsidiary Distributions to the Parent Company2 | | $ | 226 | M | | $ | 176 | M | | $ | 1,325-1,525 | M |
Diluted EPS from Continuing Operations | | $ | 0.30 | | | $ | 0.44 | | | $ | 1.22-1.30 | |
Adjusted EPS1 | | $ | 0.24 | | | $ | 0.37 | | | $ | 1.22-1.30 | |
| 1 | A non-GAAP financial measure. See “Non-GAAP Financial Measures” for definitions and reconciliations to the most comparable GAAP financial measures. |
Key drivers of First Quarter results include (comparison of Q1 2012 vs. Q1 2011):
| • | | Consolidated Revenue increased by $584 million to $4.7 billion, benefiting from: (i) contributions from new businesses including DP&L in the United States, Maritza in Bulgaria, Angamos in Chile, and Changuinola in Panama; (ii) increased volume at its utility and generation businesses in Latin America; (iii) the impact of a non-recurring arbitration settlement at Cartagena in Spain; and (iv) increased prices at Sul in Brazil and its utility businesses in El Salvador. These gains were partially offset by: (i) unfavorable impact of foreign currency; (ii) lower prices at Eletropaulo in Brazil, primarily related to the estimated impact of the July 2011 tariff reset; (iii) decreased spot prices at AES Gener in Chile; and (iv) the impact of the sale of 80% of its interest in Cartagena in February 2012. |
| • | | Consolidated Gross Margin increased by $85 million to $1.1 billion, benefiting from: (i) the impact of new businesses; (ii) increased volume at its generation and utility businesses in Latin America; and (iii) the favorable impact of a non-recurring arbitration settlement at Cartagena. These gains were partially offset by: (i) the unfavorable impact of foreign currency; (ii) lower prices at Eletropaulo in Brazil; (iii) lower spot prices and higher fuel costs at AES Gener; and (iv) an increase in outages, primarily in Latin America and Europe. |
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| • | | Proportional Gross Margin (a non-GAAP financial measure, see Appendix for definition and reconciliation) increased by $172 million to $779 million due to the same factors driving Consolidated Gross Margin. |
| • | | Consolidated Cash Flow from Operating Activities increased by $32 million to $534 million driven by: (i) an increase from the acquisition of DP&L in the United States; and (ii) an increase in Europe primarily due to the non-recurring arbitration settlement at Cartagena in Spain. These factors were partially offset by: (i) a decrease at its utility businesses in Latin America primarily in Brazil due to higher working capital requirements; and (ii) an increase in interest payments due to the financing of the DP&L acquisition. |
| • | | Proportional Cash Flow from Operating Activities (a non-GAAP financial measure, see Appendix for definition and reconciliation) increased by $86 million to $405 million due to the same factors driving Consolidated Cash Flow from Operating Activities. |
| • | | Consolidated Free Cash Flow (a non-GAAP financial measure, see Appendix for definition and reconciliation) increased by $32 million to $292 million due to the same factors driving Consolidated Cash Flow from Operating Activities. |
| • | | Proportional Free Cash Flow (a non-GAAP financial measure, see Appendix for definition and reconciliation) increased by $79 million to $235 million due to the same factors driving Consolidated Cash Flow from Operating Activities. |
| • | | Diluted EPS from Continuing Operations increased by $0.14 per share to $0.44 per share due primarily to the increase in gross margin and a gain on the sale of 80% of its interest in Cartagena in Spain, partially offset by the financing costs related to the acquisition of DP&L and impairment losses, including other than temporary impairments of certain equity method investments. |
| • | | Adjusted EPS (a non-GAAP financial measure, see Appendix for definition and reconciliation) increased by $0.13 to $0.37 per share, as the increase in gross margin, including $0.06 from a favorable one-time arbitration settlement at Cartagena, was partially offset by the financing costs related to the acquisition of DP&L. Table 3 provides a reconciliation of Diluted EPS to Adjusted EPS for the first quarter of 2012 as compared to first quarter of 2011. |
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Table 3: Reconciliation of Diluted EPS to Adjusted EPS for Q1 2012 as compared to Q1 2011
| | | | | | | | |
| | | Q1 2012 | | | Q1 2011 | |
Diluted Earnings Per Share from Continuing Operations | | $ | 0.44 | | | $ | 0.30 | |
Derivative Mark-to-Market (Gains)/Losses | | $ | 0.03 | | | $ | (0.01 | ) |
Currency Transaction (Gains) | | $ | (0.02 | ) | | $ | (0.05 | ) |
Disposition/Acquisition (Gains) | | $ | (0.14 | ) | | $ | — | |
Impairment Losses | | $ | 0.06 | | | $ | — | |
| | | | | | | | |
Adjusted Earnings Per Share | | $ | 0.37 | | | $ | 0.24 | |
| | | | | | | | |
See Appendix for more detail and additional reconciliations for non-GAAP measures. Diluted weighted-average shares outstanding for non-GAAP measures: 785 million (2012) and 792 million (2011).
Non-GAAP Financial Measures
See Non-GAAP Financial Measures for definitions of Adjusted Earnings Per Share, Proportional Gross Margin, Adjusted Gross Margin, Proportional Adjusted Gross Margin, Proportional Cash Flow From Operating Activities, Consolidated Free Cash Flow, Proportional Free Cash Flow as well as reconciliations to the most comparable GAAP financial measure.
Attachments
Consolidated Statements of Operations, Consolidated Balance Sheets, Segment Information, Consolidated Statements of Cash Flows, Non-GAAP Financial Measures, Parent Financial Information and 2012 Financial Guidance Elements.
Conference Call Information
AES will host a conference call on Friday, May 4, 2012 at 10:00 a.m. Eastern Daylight Time (EDT). Interested parties may listen to the teleconference by dialing 1-800-857-6557 at least ten minutes before the start of the call. International callers should dial +1-415-228-4653. The participant passcode for this call is 5412. Internet access to the presentation materials will be available on the AES website atwww.aes.com by selecting “Investor Information” and then “Quarterly Financial Reports.”
A telephonic replay of the call will be available from approximately 12:00 p.m. EDT on Friday, May 4, 2012 through Friday, May 25, 2012. Callers in the U.S. please dial 1-866-456-9373. International callers should dial +1-203-369-1274. The system will ask for a passcode; please enter 5412. A webcast replay, as well as a replay in downloadable MP3 format, will be accessible atwww.aes.com beginning shortly after the completion of the call.
About AES
The AES Corporation (NYSE: AES) is a Fortune 200 global power company. We provide affordable, sustainable energy to 27 countries through our diverse portfolio of distribution businesses as well as thermal and renewable generation facilities. Our workforce of 27,000 people is committed to operational excellence and meeting the world's changing power needs. Our 2011 revenues were $17 billion and we own and manage $45 billion in total assets. To learn more, please visitwww.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,
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but are not limited to, those related to future earnings, growth and financial and operating performance. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute AES’ current expectations based on reasonable assumptions. Forecasted financial information is based on certain material assumptions. These assumptions include, but are not limited to, our accurate projections of future interest rates, commodity price and foreign currency pricing, continued normal levels of operating performance and electricity volume at our distribution companies and operational performance at our generation businesses consistent with historical levels, as well as achievements of planned productivity improvements and incremental growth investments at normalized investment levels and rates of return consistent with prior experience.
Actual results could differ materially from those projected in our forward-looking statements due to risks, uncertainties and other factors. Important factors that could affect actual results are discussed in AES’ filings with the Securities and Exchange Commission, including, but not limited to, the risks discussed under Item 1A “Risk Factors” in AES’ 2011 Annual Report on Form 10-K. Readers are encouraged to read AES’ filings to learn more about the risk factors associated with AES’ business. AES undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Any Stockholder who desires a copy of the Company’s 2011 Annual Report on Form 10-K dated on or about February 24, 2012 with the SEC may obtain a copy (excluding Exhibits) without charge by addressing a request to the Office of the Corporate Secretary, The AES Corporation, 4300 Wilson Boulevard, Arlington, Virginia 22203. Exhibits also may be requested, but a charge equal to the reproduction cost thereof will be made. A copy of the Form 10-K may be obtained by visiting the Company’s website atwww.aes.com.
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Exhibit 99.1
THE AES CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
| | | | | | | | |
| | | Three Months Ended
March 31, | |
| | | 2012 | | | 2011 | |
| | | (in millions, except
per share amounts) | |
Revenue: | | | | | | | | |
Regulated | | $ | 2,620 | | | $ | 2,349 | |
Non-Regulated | | | 2,120 | | | | 1,807 | |
| | | | | | | | |
Total revenue | | | 4,740 | | | | 4,156 | |
| | | | | | | | |
Cost of Sales: | | | | | | | | |
Regulated | | | (2,182 | ) | | | (1,773 | ) |
Non-Regulated | | | (1,480 | ) | | | (1,390 | ) |
| | | | | | | | |
Total cost of sales | | | (3,662 | ) | | | (3,163 | ) |
| | | | | | | | |
Gross margin | | | 1,078 | | | | 993 | |
| | | | | | | | |
General and administrative expenses | | | (87 | ) | | | (95 | ) |
Interest expense | | | (416 | ) | | | (338 | ) |
Interest income | | | 91 | | | | 95 | |
Other expense | | | (29 | ) | | | (15 | ) |
Other income | | | 18 | | | | 16 | |
Gain on sale of investments | | | 179 | | | | 6 | |
Asset impairment expense | | | (11 | ) | | | — | |
Foreign currency transaction gains (losses) | | | (1 | ) | | | 33 | |
Other non-operating expense | | | (49 | ) | | | — | |
| | | | | | | | |
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES AND EQUITY IN EARNINGS OF AFFILIATES | | | 773 | | | | 695 | |
Income tax expense | | | (267 | ) | | | (215 | ) |
Net equity in earnings of affiliates | | | 13 | | | | 10 | |
| | | | | | | | |
INCOME FROM CONTINUING OPERATIONS | | | 519 | | | | 490 | |
Income (loss) from operations of discontinued businesses, net of income tax (benefit) expense of $2 and $(3), respectively | | | 1 | | | | (7 | ) |
Net gain (loss) from disposal and impairments of discontinued businesses, net of income tax expense of $0 and $0, respectively | | | (5 | ) | | | — | |
| | | | | | | | |
NET INCOME | | | 515 | | | | 483 | |
Noncontrolling interests: | | | | | | | | |
Less: Income from continuing operations attributable to noncontrolling interests | | | (174 | ) | | | (253 | ) |
Less: Income from discontinued operations attributable to noncontrolling interests | | | — | | | | (6 | ) |
| | | | | | | | |
Total net income attributable to noncontrolling interests | | | (174 | ) | | | (259 | ) |
| | | | | | | | |
NET INCOME ATTRIBUTABLE TO THE AES CORPORATION | | $ | 341 | | | $ | 224 | |
| | | | | | | | |
BASIC EARNINGS PER SHARE: | | | | | | | | |
Income from continuing operations attributable to The AES Corporation common stockholders, net of tax | | $ | 0.45 | | | $ | 0.30 | |
Discontinued operations attributable to The AES Corporation common stockholders, net of tax | | | — | | | | (0.02 | ) |
| | | | | | | | |
NET INCOME ATTRIBUTABLE TO THE AES CORPORATION | | | | | | | | |
COMMON STOCKHOLDERS | | $ | 0.45 | | | $ | 0.28 | |
| | | | | | | | |
DILUTED EARNINGS PER SHARE: | | | | | | | | |
Income from continuing operations attributable to The AES Corporation common stockholders, net of tax | | $ | 0.44 | | | $ | 0.30 | |
Discontinued operations attributable to The AES Corporation common stockholders, net of tax | | | — | | | | (0.02 | ) |
| | | | | | | | |
NET INCOME ATTRIBUTABLE TO THE AES CORPORATION | | | | | | | | |
COMMON STOCKHOLDERS | | $ | 0.44 | | | $ | 0.28 | |
| | | | | | | | |
AMOUNTS ATTRIBUTABLE TO THE AES CORPORATION | | | | | | | | |
COMMON STOCKHOLDERS: | | | | | | | | |
Income from continuing operations, net of tax | | $ | 345 | | | $ | 237 | |
Discontinued operations, net of tax | | | (4 | ) | | | (13 | ) |
| | | | | | | | |
Net income | | $ | 341 | | | $ | 224 | |
| | | | | | | | |
THE AES CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
| | | | | | | | |
| | | March 31,
2012 | | | December 31,
2011 | |
| | | (in millions, except
share and per share data) | |
ASSETS | | | | | | | | |
CURRENT ASSETS | | | | | | | | |
Cash and cash equivalents | | $ | 1,688 | | | $ | 1,704 | |
Restricted cash | | | 448 | | | | 478 | |
Short-term investments | | | 1,740 | | | | 1,356 | |
Accounts receivable, net of allowance for doubtful accounts of $300 and $273, respectively | | | 2,735 | | | | 2,534 | |
Inventory | | | 799 | | | | 785 | |
Deferred income taxes | | | 480 | | | | 454 | |
Prepaid expenses | | | 238 | | | | 157 | |
Other current assets | | | 1,394 | | | | 1,569 | |
Current assets of discontinued and held for sale businesses | | | 37 | | | | 191 | |
| | | | | | | | |
Total current assets | | | 9,559 | | | | 9,228 | |
| | | | | | | | |
NONCURRENT ASSETS | | | | | | | | |
Property, Plant and Equipment: | | | | | | | | |
Land | | | 1,113 | | | | 1,090 | |
Electric generation, distribution assets and other | | | 31,774 | | | | 31,143 | |
Accumulated depreciation | | | (9,290 | ) | | | (8,944 | ) |
Construction in progress | | | 1,992 | | | | 1,833 | |
| | | | | | | | |
Property, plant and equipment, net | | | 25,589 | | | | 25,122 | |
| | | | | | | | |
Other Assets: | | | | | | | | |
Investments in and advances to affiliates | | | 1,430 | | | | 1,422 | |
Debt service reserves and other deposits | | | 880 | | | | 876 | |
Goodwill | | | 3,732 | | | | 3,733 | |
Other intangible assets, net of accumulated amortization of $201 and $164, respectively | | | 550 | | | | 566 | |
Deferred income taxes | | | 736 | | | | 715 | |
Other | | | 2,273 | | | | 2,331 | |
Noncurrent assets of discontinued and held for sale businesses | | | 682 | | | | 1,340 | |
| | | | | | | | |
Total other assets | | | 10,283 | | | | 10,983 | |
| | | | | | | | |
TOTAL ASSETS | | $ | 45,431 | | | $ | 45,333 | |
| | | | | | | | |
LIABILITIES AND EQUITY | | | | | | | | |
CURRENT LIABILITIES | | | | | | | | |
Accounts payable | | $ | 2,014 | | | $ | 2,014 | |
Accrued interest | | | 433 | | | | 327 | |
Accrued and other liabilities | | | 3,114 | | | | 3,398 | |
Non-recourse debt, including $296 and $259, respectively, related to variable interest entities | | | 2,194 | | | | 2,123 | |
Recourse debt | | | 21 | | | | 305 | |
Current liabilities of discontinued and held for sale businesses | | | 202 | | | | 279 | |
| | | | | | | | |
Total current liabilities | | | 7,978 | | | | 8,446 | |
| | | | | | | | |
NONCURRENT LIABILITIES | | | | | | | | |
Non-recourse debt, including $1,173 and $1,156, respectively, related to variable interest entities | | | 13,841 | | | | 13,412 | |
Recourse debt | | | 6,179 | | | | 6,180 | |
Deferred income taxes | | | 1,445 | | | | 1,328 | |
Pension and other post-retirement liabilities | | | 1,755 | | | | 1,729 | |
Other noncurrent liabilities | | | 3,132 | | | | 3,083 | |
Noncurrent liabilities of discontinued and held for sale businesses | | | 552 | | | | 1,348 | |
| | | | | | | | |
Total noncurrent liabilities | | | 26,904 | | | | 27,080 | |
| | | | | | | | |
Contingencies and Commitments (see Note 8) | | | | | | | | |
Cumulative preferred stock of subsidiaries | | | 78 | | | | 78 | |
EQUITY | | | | | | | | |
THE AES CORPORATION STOCKHOLDERS’ EQUITY | | | | | | | | |
Common stock ($0.01 par value, 1,200,000,000 shares authorized; 809,082,637 issued and 767,434,120 outstanding at March 31, 2012 and 807,573,277 issued and 765,186,316 outstanding at December 31, 2011 | | | 8 | | | | 8 | |
Additional paid-in capital | | | 8,516 | | | | 8,507 | |
Retained earnings | | | 1,019 | | | | 678 | |
Accumulated other comprehensive loss | | | (2,575 | ) | | | (2,758 | ) |
Treasury stock, at cost (41,648,517 shares at March 31, 2012 and 42,386,961 shares at December 31, 2011, respectively) | | | (479 | ) | | | (489 | ) |
| | | | | | | | |
Total AES Corporation stockholders’ equity | | | 6,489 | | | | 5,946 | |
NONCONTROLLING INTERESTS | | | 3,982 | | | | 3,783 | |
| | | | | | | | |
Total equity | | | 10,471 | | | | 9,729 | |
| | | | | | | | |
TOTAL LIABILITIES AND EQUITY | | $ | 45,431 | | | $ | 45,333 | |
| | | | | | | | |
THE AES CORPORATION
SEGMENT INFORMATION (unaudited)
| | | | | | | | |
| | | Three Months Ended
March 31, | |
| ($ in millions) | | 2012 | | | 2011 | |
| | |
REVENUE | | | | | | | | |
Generation - Latin America(1) | | $ | 1,264 | | | $ | 1,131 | |
Generation - North America | | | 317 | | | | 334 | |
Generation - Europe | | | 450 | | | | 400 | |
Generation - Asia | | | 181 | | | | 115 | |
Utilities - Latin America | | | 1,734 | | | | 1,840 | |
Utilities - North America | | | 732 | | | | 289 | |
Corporate and Other(2) | | | 347 | | | | 293 | |
Intersegment Eliminations(3) | | | (285 | ) | | | (246 | ) |
| | | | | | | | |
| | |
Total Revenue | | $ | 4,740 | | | $ | 4,156 | |
| | | | | | | | |
| | |
GROSS MARGIN | | | | | | | | |
Generation - Latin America(1) | | $ | 456 | | | $ | 415 | |
Generation - North America | | | 77 | | | | 82 | |
Generation - Europe | | | 213 | | | | 81 | |
Generation - Asia | | | 54 | | | | 44 | |
Utilities - Latin America | | | 99 | | | | 246 | |
Utilities - North America | | | 114 | | | | 50 | |
Corporate and Other(2) | | | 65 | | | | 75 | |
| | | | | | | | |
| | |
Total Gross Margin | | $ | 1,078 | | | $ | 993 | |
| | | | | | | | |
| (1) | Includes Generation - Latin America - Other and Generation - Tiete. |
| (2) | Corporate and Other includes the Company’s Europe Utilities, Africa Utilities, Africa Generation, Wind Generation operating segments and other climate solutions and renewable projects. |
| (3) | Represents inter-segment eliminations of revenue primarily related to transfers of electricity from Tiete (Generation - Latin America) to Eletropaulo (Utilities - Latin America). |
THE AES CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| | | | | | | | |
| | | Three Months Ended
March 31, | |
| | | 2012 | | | 2011 | |
| | | (in millions) | |
OPERATING ACTIVITIES: | | | | | | | | |
Net income | | $ | 515 | | | $ | 483 | |
Adjustments to net income: | | | | | | | | |
Depreciation and amortization | | | 360 | | | | 305 | |
(Gain) loss from sale of investments and impairment expense | | | (92 | ) | | | 3 | |
Provision for deferred taxes | | | 101 | | | | 17 | |
Contingencies | | | 17 | | | | 22 | |
Other | | | (40 | ) | | | (84 | ) |
Changes in operating assets and liabilities: | | | | | | | | |
(Increase) decrease in accounts receivable | | | (189 | ) | | | (112 | ) |
(Increase) decrease in inventory | | | (11 | ) | | | (69 | ) |
(Increase) decrease in prepaid expenses and other current assets | | | (117 | ) | | | 13 | |
(Increase) decrease in other assets | | | (156 | ) | | | 11 | |
Increase (decrease) in accounts payable and other current liabilities | | | 266 | | | | (41 | ) |
Increase (decrease) in income taxes and other income tax payables, net | | | (161 | ) | | | (105 | ) |
Increase (decrease) in other liabilities | | | 41 | | | | 59 | |
| | | | | | | | |
Net cash provided by operating activities | | | 534 | | | | 502 | |
| | | | | | | | |
INVESTING ACTIVITIES: | | | | | | | | |
Capital expenditures | | | (579 | ) | | | (479 | ) |
Acquisitions - net of cash acquired | | | — | | | | (138 | ) |
Proceeds from the sale of businesses, net of cash sold | | | 63 | | | | 8 | |
Proceeds from the sale of assets | | | 4 | | | | 4 | |
Sale of short-term investments | | | 1,505 | | | | 1,241 | |
Purchase of short-term investments | | | (1,855 | ) | | | (1,181 | ) |
Decrease in restricted cash | | | 28 | | | | 11 | |
(Increase) decrease in debt service reserves and other assets | | | 20 | | | | (7 | ) |
Affiliate advances and equity investments | | | — | | | | (40 | ) |
Proceeds from government grants for asset construction | | | 85 | | | | 1 | |
Other investing | | | 4 | | | | (21 | ) |
| | | | | | | | |
Net cash used in investing activities | | | (725 | ) | | | (601 | ) |
| | | | | | | | |
FINANCING ACTIVITIES: | | | | | | | | |
(Repayments) borrowings under the revolving credit facilities, net | | | (281 | ) | | | 24 | |
Issuance of non-recourse debt | | | 503 | | | | 115 | |
Repayments of recourse debt | | | (3 | ) | | | (268 | ) |
Repayments of non-recourse debt | | | (151 | ) | | | (201 | ) |
Payments for financing fees | | | (12 | ) | | | (5 | ) |
Distributions to noncontrolling interests | | | (19 | ) | | | (43 | ) |
Contributions from noncontrolling interests | | | 5 | | | | — | |
Financed capital expenditures | | | (6 | ) | | | (17 | ) |
Purchase of treasury stock | | | — | | | | (63 | ) |
Other financing | | | 1 | | | | (5 | ) |
| | | | | | | | |
Net cash provided by (used in) financing activities | | | 37 | | | | (463 | ) |
Effect of exchange rate changes on cash | | | 25 | | | | 15 | |
Decrease in cash of discontinued and held for sale businesses | | | 113 | | | | 7 | |
| | | | | | | | |
Total decrease in cash and cash equivalents | | | (16 | ) | | | (540 | ) |
Cash and cash equivalents, beginning | | | 1,704 | | | | 2,522 | |
| | | | | | | | |
Cash and cash equivalents, ending | | $ | 1,688 | | | $ | 1,982 | |
| | | | | | | | |
SUPPLEMENTAL DISCLOSURES: | | | | | | | | |
Cash payments for interest, net of amounts capitalized | | $ | 291 | | | $ | 229 | |
Cash payments for income taxes, net of refunds | | $ | 325 | | | $ | 304 | |
THE AES CORPORATION
NON-GAAP FINANCIAL MEASURES (unaudited)
| | | | | | | | |
| | | Three Months Ended
March 31, | |
| | | 2012 | | | 2011 | |
Reconciliation of Adjusted Earnings Per Share (1) | | | | | | | | |
| | |
Diluted EPS From Continuing Operations | | $ | 0.44 | | | $ | 0.30 | |
Derivative mark-to-market (gains)/losses(2) | | | 0.03 | | | | (0.01 | ) |
Currency transaction (gains)(3) | | | (0.02 | ) | | | (0.05 | ) |
Disposition/acquisition (gains) | | | (0.14 | )(4) | | | — | |
Impairment losses | | | 0.06 | (5) | | | — | |
| | | | | | | | |
| | |
Adjusted Earnings Per Share(1) | | $ | 0.37 | | | $ | 0.24 | |
| | | | | | | | |
| (1) | Adjusted earnings per share (a non-GAAP financial measure) is defined as diluted earnings per share from continuing operations excluding gains or losses of the consolidated entity due to (a) mark-to-market amounts related to derivative transactions, (b) unrealized foreign currency gains or losses, (c) significant gains or losses due to dispositions and acquisitions of business interests, (d) significant losses due to impairments, and (e) costs due to the early retirement of debt. The GAAP measure most comparable to Adjusted EPS is diluted earnings per share from continuing operations. AES believes that adjusted earnings per share better reflects the underlying business performance of the Company, and is considered in the Company’s internal evaluation of financial performance. Factors in this determination include the variability due to mark-to-market gains or losses related to derivative transactions, currency gains or losses, losses due to impairments and strategic decisions to dispose or acquire business interests or retire debt, which affect results in a given period or periods. Adjusted earnings per share should not be construed as an alternative to diluted earnings per share from continuing operations, which is determined in accordance with GAAP. |
For the quarter ended March 31, 2012, the Company refined its process for computing the tax effects of adjusted EPS items for interim periods. Accordingly, the Company has also reflected the refined process in the comparative three month period ended March 31, 2011.
| (2) | Derivative mark-to-market (gains)/losses were net of income tax per share of $0.01 and $0.00 in the three months ended March 31, 2012 and 2011, respectively. |
| (3) | Unrealized foreign currency transaction (gains) were net of income tax per share of ($0.01) and ($0.02) in the three months ended March 31, 2012 and 2011, respectively. |
| (4) | Amount primarily relates to the proceeds from the sale of 80% of our interest in Cartagena for $178 million ($107 million or $0.14 per share, net of income tax). |
| (5) | Amount primarily includes other-than-temporary impairments of equity method investments in China of $32 million ($26 million, or $0.03 per share, net of income taxes) and at InnoVent of $17 million ($12 million or $0.02 per share, net of income tax). |
THE AES CORPORATION
NON-GAAP FINANCIAL MEASURES (unaudited)
| | | | | | | | |
| | | Three Months Ended March 31, | |
| ($ in millions) | | 2012 | | | 2011 | |
Reconciliation of Adjusted Gross Margin(1) | | | | | | | | |
| | |
Consolidated Gross Margin | | $ | 1,078 | | | $ | 993 | |
Add: Depreciation and Amortization | | | 351 | | | | 281 | |
Less: General and Administrative Expenses | | | (87 | ) | | | (95 | ) |
| | | | | | | | |
| | |
Adjusted Gross Margin(1) | | $ | 1,342 | | | $ | 1,179 | |
| | | | | | | | |
| | |
Reconciliation of Proportional Gross Margin(2) | | | | | | | | |
| | |
Consolidated Gross Margin | | $ | 1,078 | | | $ | 993 | |
Less: Proportional Adjustment Factor | | | 299 | | | | 386 | |
| | | | | | | | |
| | |
Proportional Gross Margin(2) | | $ | 779 | | | $ | 607 | |
| | | | | | | | |
| | |
Reconciliation of Proportional Adjusted Gross Margin(1),(2) | | | | | | | | |
| | |
Consolidated Adjusted Gross Margin | | $ | 1,342 | | | $ | 1,179 | |
Less: Proportional Adjustment Factor | | | 379 | | | | 472 | |
| | | | | | | | |
| | |
Proportional Adjusted Gross Margin(1),(2) | | $ | 963 | | | $ | 707 | |
| | | | | | | | |
| (1) | Adjusted Gross Margin (a non-GAAP financial measure) is defined by the Company as: Gross margin plus depreciation and amortization less general and administrative expenses. AES believes adjusted gross margin is a useful measure for evaluating and comparing the operating performance of its businesses because it includes the direct operating costs of its business including overhead related expenses and excludes potential differences caused by variations in capital structures affecting interest income and expense, tax positions, such as the impact of changes in effective tax rates and the impact of depreciation and amortization expense. |
| (2) | See footnote (2) on Guidance Elements for definition of proportional financial metrics. |
THE AES CORPORATION
NON-GAAP FINANCIAL MEASURES (unaudited)
| | | | | | | | |
| | | Three Months Ended
March 31, | |
| ($ in millions) | | 2012 | | | 2011 | |
| | |
Calculation of Maintenance Capital Expenditures for Free Cash Flow (1)
Reconciliation Below: | | | | | | | | |
| | |
Maintenance Capital Expenditures, excluding environmental | | $ | 234 | | | $ | 227 | |
Environmental Capital Expenditures | | | 8 | | | | 15 | |
Growth Capital Expenditures | | | 343 | | | | 254 | |
| | | | | | | | |
| | |
Total Capital Expenditures | | $ | 585 | | | $ | 496 | |
| | | | | | | | |
| | |
Reconciliation of Proportional Operating Cash Flow(2) | | | | | | | | |
| | |
Consolidated Operating Cash Flow | | $ | 534 | | | $ | 502 | |
Less: Proportional Adjustment Factor | | | (129 | ) | | | (183 | ) |
| | | | | | | | |
| | |
Proportional Operating Cash Flow(2) | | $ | 405 | | | $ | 319 | |
| | | | | | | | |
| | |
Reconciliation of Free Cash Flow(1) | | | | | | | | |
| | |
Consolidated Operating Cash Flow | | $ | 534 | | | $ | 502 | |
Less: Maintenance Capital Expenditures, excluding environmental | | | (234 | ) | | | (227 | ) |
Less: Environmental Capital Expenditures | | | (8 | ) | | | (15 | ) |
| | | | | | | | |
| | |
Free Cash Flow(1) | | $ | 292 | | | $ | 260 | |
| | | | | | | | |
| | |
Reconciliation of Proportional Free Cash Flow(1),(2) | | | | | | | | |
| | |
Proportional Operating Cash Flow | | $ | 405 | | | $ | 319 | |
Less: Proportional Maintenance Capital Expenditures | | | (170 | ) | | | (163 | ) |
| | | | | | | | |
| | |
Proportional Free Cash Flow(1),(2) | | $ | 235 | | | $ | 156 | |
| | | | | | | | |
| (1) | Free cash flow (a non-GAAP financial measure) is defined as net cash from operating activities less maintenance capital expenditures (including environmental capital expenditures), net of reinsurance proceeds from third parties. AES believes that free cash flow is a useful measure for evaluating our financial condition because it represents the amount of cash provided by operations less maintenance capital expenditures as defined by our businesses, that may be available for investing or for repaying debt. |
| (2) | See footnote (2) on Guidance Elements for definition of proportional financial metrics. |
The AES Corporation
Parent Financial Information
| | | | | | | | | | | | | | | | |
Parent only data: last four quarters ($ in millions) | | | | | | | | | | | | |
| | | 4 Quarters Ended | |
Total subsidiary distributions & returns of capital to Parent | | March 31,
2012
Actual | | | December 31,
2011
Actual | | | September 30,
2011
Actual | | | June 30,
2011
Actual | |
Subsidiary distributions(1) to Parent & QHCs | | $ | 1,287 | | | $ | 1,337 | | | $ | 1,298 | | | $ | 1,187 | |
Returns of capital distributions to Parent & QHCs | | | 207 | | | | 152 | | | | 154 | | | | 56 | |
| | | | | | | | | | | | | | | | |
Total subsidiary distributions & returns of capital to parent | | $ | 1,494 | | | $ | 1,489 | | | $ | 1,452 | | | $ | 1,243 | |
| | | | | | | | | | | | | | | | |
| | | |
Parent only data: quarterly ($ in millions) | | | | | | | | | |
| |
| | | Quarter Ended | |
Total subsidiary distributions & returns of capital to Parent | | March 31,
2012
Actual | | | December 31,
2011
Actual | | | September 30,
2011
Actual | | | June 30,
2011
Actual | |
Subsidiary distributions to Parent & QHCs | | $ | 176 | | | $ | 371 | | | $ | 346 | | | $ | 394 | |
Returns of capital distributions to Parent & QHCs | | | 83 | | | | 14 | | | | 102 | | | | 8 | |
| | | | | | | | | | | | | | | | |
Total subsidiary distributions & returns of capital to Parent | | $ | 259 | | | $ | 385 | | | $ | 448 | | | $ | 402 | |
| | | | | | | | | | | | | | | | |
| |
Parent Company Liquidity(2) ($ in millions) | | | |
| |
| | | Balance at | |
| | | March 31,
2012
Actual | | | December 31,
2011
Actual | | | September 30,
2011
Actual | | | June 30,
2011
Actual | |
Cash at Parent & Cash at QHCs(3) | | $ | 133 | | | $ | 200 | | | $ | 2,089 | | | $ | 2,303 | |
Availability under credit facilities | | | 778 | | | | 493 | | | | 788 | | | | 774 | |
| | | | | | | | | | | | | | | | |
Ending liquidity | | $ | 911 | | | $ | 693 | | | $ | 2,877 | | | $ | 3,077 | |
| | | | | | | | | | | | | | | | |
| (1) | Subsidiary distributions should not be construed as an alternative to Net Cash Provided by Operating Activities which are determined in accordance with GAAP. Subsidiary distributions are important to the Parent Company because the Parent Company is a holding company that does not derive any significant direct revenues from its own activities but instead relies on its subsidiaries’ business activities and the resultant distributions to fund the debt service, investment and other cash needs of the holding company. The reconciliation of difference between the subsidiary distributions and the Net Cash Provided by Operating Activities consists of cash generated from operating activities that is retained at the subsidiaries for a variety of reasons which are both discretionary and non-discretionary in nature. These factors include, but are not limited to, retention of cash to fund capital expenditures at the subsidiary, cash retention associated with non-recourse debt covenant restrictions and related debt service requirements at the subsidiaries, retention of cash related to sufficiency of local GAAP statutory retained earnings at the subsidiaries, retention of cash for working capital needs at the subsidiaries, and other similar timing differences between when the cash is generated at the subsidiaries and when it reaches the Parent Company and related holding companies. |
| (2) | Parent Company Liquidity is defined as cash at the Parent Company plus availability under corporate credit facilities plus cash at qualified holding companies (QHCs). AES believes that unconsolidated Parent Company liquidity is important to the liquidity position of AES as a Parent Company because of the non-recourse nature of most of AES’s indebtedness. |
| (3) | The cash held at QHCs represents cash sent to subsidiaries of the company domiciled outside of the US. Such subsidiaries had no contractual restrictions on their ability to send cash to AES, the Parent Company. Cash at those subsidiaries was used for investment and related activities outside of the US. These investments included equity investments and loans to other foreign subsidiaries as well as development and general costs and expenses incurred outside the US. Since the cash held by these QHCs is available to the Parent, AES uses the combined measure of subsidiary distributions to Parent and QHCs as a useful measure of cash available to the Parent to meet its international liquidity needs. |
8
THE AES CORPORATION
2012 FINANCIAL GUIDANCE ELEMENTS(1)
| | | | | | |
| | | 2012 Updated Financial Guidance (as of 5/4/2012) |
| | | Consolidated | | Proportional Adjustment
Factors(2) | | Proportional |
| | | |
Income Statement Elements | | | | | | |
Gross Margin | | $4,000 to 4,200 million | | $1,300 million | | $2,700 to 2,900 million |
Adjusted Gross Margin(3) | | $5,125 to 5,325 million | | $1,600 million | | $3,525 to 3,725 million |
| | | |
Diluted Earnings Per Share From Continuing Operations | | $1.22 to 1.30 | | | | |
Adjusted Earnings Per Share Factors(4) | | $0.00(5) | | | | |
Adjusted Earnings Per Share(4) | | $1.22 to 1.30(5) | | | | |
| | | |
Cash Flow Elements | | | | | | |
Net Cash From Operating Activities | | $3,100 to 3,300 million | | $1,175 million | | $1,925 to 2,125 million |
Operational Capital Expenditures (a) | | $1,050 to 1,125 million | | $300 million | | $725 to 850 million |
Environmental Capital Expenditures (b) | | $100 to 125 million | | $25 million | | $75 to 100 million |
Maintenance Capital Expenditures (a + b) | | $1,150 to 1,250 million | | $325 million | | $800 to 950 million |
Free Cash Flow(6) | | $1,900 to 2,100 million | | $850 million | | $1,050 to 1,250 million |
Subsidiary Distributions(7) | | $1,325 to 1,525 million | | | | |
Parent Free Cash Flow (8) | | $550 to $650 million | | | | |
| | | |
Reconciliation of Free Cash Flow | | | | | | |
Net Cash from Operating Activities | | $3,100 to 3,300 million | | $1,175 million | | $1,925 to 2,125 million |
Less: Maintenance Capital Expenditures | | $1,150 to 1,250 million | | $325 million | | $800 to 950 million |
| | | | | | |
Free Cash Flow(6) | | $1,900 to 2,100 million | | $850 million | | $1,050 to 1,250 million |
| | | |
Reconciliation of Parent Free Cash Flow | | | | | | |
Subsidiary distributions | | $1,325 to $1,525 million | | | | |
Less: Cash Interest | | $450 to $500 million | | | | |
Less: Cash for development, SGA, and taxes | | $325 to $375 million | | | | |
Parent Free Cash Flow(8) | | $550 to $650 million | | | | |
| | | |
Reconciliation of Adjusted Gross Margin | | | | | | |
Gross Margin | | $4,000 to 4,200 million | | $1,300 million | | $2,700 to 2,900 million |
Plus: Depreciation & Amortization | | $1,400 to 1,500 million | | $300 million | | $1,100 to 1,200 million |
Less: General & Administrative | | $300 to 350 million | | | | $300 to 350 million |
| | | | | | |
Adjusted Gross Margin(3) | | $5,125 to $5,325 million | | $1,600 million | | $3,525 to 3,725 million |
| (1) | 2012 Guidance is based on expectations for future foreign exchange rates and commodity prices as of March 30, 2012. |
| (2) | AES is a holding company that derives its income and cash flows from the activities of its subsidiaries, some of which may not be wholly-owned by the Company. Accordingly, the Company has presented certain financial metrics which are defined as Proportional (a non-GAAP financial measure). Proportional metrics present the Company’s estimate of its share in the economics of the underlying metric. The Company believes that the Proportional metrics are useful to investors because they exclude the economic share in the metric presented that is held by non-AES shareholders. For example, Operating Cash Flow is a GAAP metric which presents the Company’s cash flow from operations on a consolidated basis, including operating cash flow allocable to noncontrolling interests. Proportional Operating Cash Flow removes the share of operating cash flow allocable to noncontrolling interests and therefore may act as an aid in the valuation of the Company. Proportional metrics are reconciled to the nearest GAAP measure. Certain assumptions have been made to estimate our proportional financial measures. These assumptions include: (i) the Company’s economic interest has been calculated based on a blended rate for each consolidated business when such business represents multiple legal entities; (ii) the Company’s economic interest may differ from the percentage implied by the recorded net income or loss attributable to noncontrolling interests or dividends paid during a given period; (iii) the Company’s economic interest for entities accounted for using the hypothetical liquidation at book value method is 100%; (iv) individual operating performance of the Company’s equity method investments is not reflected and (v) inter-segment transactions are included as applicable for the metric presented. |
| (3) | Adjusted Gross Margin is reconciled above. Adjusted Gross Margin (a non-GAAP financial measure) is defined by the Company as gross margin plus depreciation and amortization less general and administrative expenses. AES believes adjusted gross margin is a useful measure for evaluating and comparing the operating performance of its businesses because it includes the direct operating costs of its business including overhead related expenses and excludes potential differences caused by variations in capital structures affecting interest income and expense, tax positions, such as the impact of changes in effective tax rates and the impact of depreciation and amortization expense. |
| (4) | Adjusted earnings per share (a non-GAAP financial measure) is defined as diluted earnings per share from continuing operations excluding gains or losses of the consolidated entity due to (a) mark-to-market amounts related to derivative transactions, (b) unrealized foreign currency gains or losses, (c) significant gains or losses due to dispositions and acquisitions of business interests, (d) significant losses due to impairments, and (e) costs due to the early retirement of debt. The GAAP measure most comparable to Adjusted EPS is diluted earnings per share from continuing operations. AES believes that adjusted earnings per share better reflects the underlying business performance of the Company, and is considered in the Company’s internal evaluation of financial performance. Factors in this determination include the variability due to mark-to-market gains or losses related to derivative transactions, currency gains or losses, losses due to impairments and strategic decisions to dispose or acquire business interests or retire debt, which affect results in a given period or periods. Adjusted earnings per share should not be construed as an alternative to diluted earnings per share from continuing operations which is determined in accordance with GAAP. Non-GAAP financial measure as reconciled in the table. |
| (5) | Reconciliation of Adjusted EPS includes derivative losses of $0.05, debt retirement losses of $0.01, impairment losses of $0.09, and disposition gains of $0.15. |
| (6) | Free Cash Flow is reconciled above. Free cash flow (a non-GAAP financial measure) is defined as net cash from operating activities less maintenance capital expenditures (including environmental capital expenditures), net of reinsurance proceeds from third parties. 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. |
| (7) | Subsidiary distributions should not be construed as an alternative to Net Cash Provided by Operating Activities which are determined in accordance with GAAP. Subsidiary distributions are important to the Parent Company because the Parent Company is a holding company that does not derive any significant direct revenues from its own activities but instead relies on its subsidiaries’ business activities and the resultant distributions to fund the debt service, investment and other cash needs of the holding company. The reconciliation of the difference between the subsidiary distributions and the Net Cash Provided by Operating Activities consists of cash generated from operating activities that is retained at the subsidiaries for a variety of reasons which are both discretionary and non-discretionary in nature. These factors include, but are not limited to, retention of cash to fund capital expenditures at the subsidiary, cash retention associated with non-recourse debt covenant restrictions and related debt service requirements at the subsidiaries, retention of cash related to sufficiency of local GAAP statutory retained earnings at the subsidiaries, retention of cash for working capital needs at the subsidiaries, and other similar timing differences between when the cash is generated at the subsidiaries and when it reaches the Parent Company and related holding companies. |
| (8) | Parent Free Cash Flow is reconciled above. Parent Free Cash Flow (a non-GAAP financial measure) is defined as subsidiary distributions less parent cash interest less cash for development, general and administrative, and taxes. |
