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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 MARCH 31, 2000
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
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(Exact name of registrant as specified in its charter)
DELAWARE 54-1163725
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1001 NORTH 19TH STREET, ARLINGTON, VIRGINIA 22209
(Address of Principal Executive Offices) (Zip Code)
(703) 522-1315
(Registrant's Telephone Number, Including Area Code)
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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 May 1, 2000, was 207,770,572.
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THE AES CORPORATION
INDEX
Page
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PART I. FINANCIAL INFORMATION
Item 1. Interim Financial Statements:
Consolidated Statements of Operations 1
Consolidated Balance Sheets 2
Consolidated Statements of Cash Flows 4
Notes to Consolidated Financial Statements 5
Item 2. Discussion and Analysis of Financial Condition and
Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities and Use of Proceeds 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 20
-0-
THE AES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31, 2000 MARCH 31, 1999
-------------- --------------
(in millions, except per share amounts)
REVENUES:
Sales and services $ 1,476 $ 638
OPERATING COSTS AND EXPENSES:
Cost of sales and services 1,057 418
Selling, general and administrative expenses 29 16
------- -------
TOTAL OPERATING COSTS AND EXPENSES 1,086 434
------- -------
OPERATING INCOME 390 204
OTHER INCOME AND (EXPENSE):
Interest expense (269) (133)
Interest and other income 31 19
Equity in earnings (loss) before income tax 118 (91)
------- -------
INCOME (LOSS) BEFORE INCOME TAXES
AND MINORITY INTEREST 270 (1)
Income tax provision (benefit) 71 (6)
Minority interest 18 18
------- -------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 181 (13)
Extraordinary item, net of tax-Early
extinguishment of debt (7) --
------- -------
NET INCOME (LOSS) $ 174 $ (13)
======= =======
BASIC EARNINGS (LOSS) PER SHARE: (1)
Before extraordinary item $ 0.88 $ (0.07)
Extraordinary item (0.03) --
------- -------
Total $ 0.85 $ (0.07)
======= =======
DILUTED EARNINGS (LOSS) PER SHARE: (1)
Before extraordinary item $ 0.83 $ (0.07)
Extraordinary item (0.03) --
------- -------
Total $ 0.80 $ (0.07)
======= =======
(1)Earnings per share amounts are calculated before the effect of the 2 for 1
stock split declared on April 17, 2000, payable on June 1, 2000, for
shareholders of record on May 1, 2000. See Note 2 to the Consolidated Financial
Statements for the effect of the stock split.
See Notes to the Consolidated Financial Statements
-1-
THE AES CORPORATION
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND DECEMBER 31, 1999
(UNAUDITED)
MARCH 31, 2000 DECEMBER 31, 1999
-------------- -----------------
($ in millions)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 822 $ 669
Short-term investments 166 164
Accounts receivable, net of reserves of
$138 and $104, respectively 1,002 934
Inventory 316 307
Receivable from affiliates 29 2
Deferred income taxes 105 184
Contract receivable 532 --
Prepaid expenses and other current assets 382 327
-------- --------
Total current assets 3,354 2,587
PROPERTY, PLANT AND EQUIPMENT:
Land 224 216
Electric generation and distribution assets 12,849 12,552
Accumulated depreciation and amortization (845) (763)
Construction in progress 1,504 1,442
-------- --------
Property, plant and equipment, net 13,732 13,447
OTHER ASSETS:
Deferred financing costs, net 234 236
Project development costs 72 53
Investments in and advances to affiliates 2,839 1,575
Debt service reserves and other deposits 330 328
Electricity sales concessions and contracts, net 1,064 1,056
Goodwill, net 817 795
Other assets 960 803
-------- --------
Total other assets 6,316 4,846
-------- --------
TOTAL $ 23,402 $ 20,880
======== ========
See Notes to Consolidated Financial Statements.
-2-
THE AES CORPORATION
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND DECEMBER 31, 1999
(Unaudited)
MARCH 31, 2000 DECEMBER 31, 1999
-------------- -----------------
($ in millions)
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 388 $ 381
Accrued interest 315 218
Accrued and other liabilities 736 755
Other notes payable - current portion -- 335
Project financing debt - current portion 1,102 881
-------- --------
Total current liabilities 2,541 2,570
LONG-TERM LIABILITIES:
Project financing debt 10,161 8,651
Other notes payable 2,452 2,167
Deferred income taxes 1,894 1,787
Other long-term liabilities 965 602
-------- --------
Total long-term liabilities 15,472 13,207
MINORITY INTEREST 1,215 1,148
COMPANY-OBLIGATED CONVERTIBLE MANDATORILY REDEEMABLE
PREFERRED SECURITIES OF SUBSIDIARY TRUSTS HOLDING
SOLELY JUNIOR SUBORDINATED DEBENTURES OF AES 1,318 1,318
STOCKHOLDERS' EQUITY:
Common stock 2 2
Additional paid-in capital 2,625 2,617
Retained earnings 1,294 1,120
Accumulated other comprehensive loss (1,065) (1,102)
-------- --------
Total stockholders' equity 2,856 2,637
-------- --------
TOTAL $ 23,402 $ 20,880
======== ========
See Notes to Consolidated Financial Statements.
-3-
THE AES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS ENDED MARCH 31, 2000 AND 1999
(Unaudited)
THREE MONTHS ENDED
MARCH 31, 2000 MARCH 31, 1999
-------------- --------------
($ in millions)
OPERATING ACTIVITIES:
Net cash provided by operating activities $ 249 $ 8
INVESTING ACTIVITIES:
Property additions (287) (63)
Construction contract payment (291) --
Acquisitions, net of cash acquired -- (115)
Purchase of short-term investments, net (2) (7)
Affiliate advances and equity investments (256) (1)
Project development costs (21) (19)
Debt service reserves and other assets (2) 35
------- -------
Net cash used in investing activities (859) (170)
FINANCING ACTIVITIES:
(Repayments) borrowings under the
revolver, net (50) 184
Issuance of project financing debt and other
coupon bearing securities 1,047 111
Repayments of project financing debt and other
coupon bearing securities (202) (144)
Payments for deferred financing costs (31) 3
Repayment of other liabilities (27) (41)
Proceeds from sale of common stock 8 7
Distributions to minority interests (4) (12)
Contributions by minority interests 22 --
------- -------
Net cash provided by financing activities 763 108
Increase (decrease) in cash and cash equivalents 153 (54)
Cash and cash equivalents, beginning of period 669 491
------- -------
Cash and cash equivalents, end of period $ 822 $ 437
======= =======
SUPPLEMENTAL INTEREST AND INCOME TAXES DISCLOSURES:
Cash payments for interest $ 169 $ 98
======= =======
Cash payments for income taxes $ 2 $ 2
======= =======
SUPPLEMENTAL SCHEDULE OF NONCASH
ACTIVITIES:
Liability incurred in connection with the acquisition
of Eletropaulo preferred shares $ 886 $ --
======= =======
See Notes to Consolidated Financial Statements.
-4-
THE AES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(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 three months ended March 31, 2000
and 1999, respectively, are included. All such adjustments are accruals of a
normal and recurring nature. The results of operations for the period ended
March 31, 2000 are not necessarily indicative of the results of operations to be
expected for the full year. The accompanying financial statements are unaudited
and should be read in conjunction with the financial statements, which are
incorporated herein by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1999.
2. Earnings (Loss) Per Share
Basic and diluted earnings (loss) per share computations are based on the
weighted average number of shares of common stock and potential common stock
outstanding during the period. 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 Statement
of Financial Accounting Standards No. 128, Earnings Per Share. (See Exhibit 11.)
On April 17, 2000, the Company declared a 2 for 1 stock split payable on
June 1, 2000 to each shareholder of record on May 1, 2000. The following per
share amounts are presented as if the stock split occurred as of the beginning
of the quarters presented:
QUARTERS ENDED MARCH 31,
2000 1999
----------- ---------
Basic earnings (loss) per share:
Before extraordinary item $ 0.44 $ (0.04)
Extraordinary item (0.02) --
-------- --------
Total $ 0.42 $ (0.04)
======== ========
Diluted earnings (loss) per share:
Before extraordinary item $ 0.41 $ (0.04)
Extraordinary item (0.02) --
-------- --------
Total $ 0.39 $ (0.04)
======== ========
-5-
3. Purchase Business Combinations
In March 2000, a subsidiary of the Company acquired GeoUtilities, Inc.
(GeoUtilities), an internet-based provider of energy, telecom and other
services for approximately $8 million in AES common stock and an additional
47,337 shares of common stock to be paid over a two-year period upon
GeoUtilities meeting specified future earnings targets.
In February 2000, a subsidiary of the Company entered into an agreement
to acquire a 59% equity interest in a Hidroeletrica Alicura S.A. (Alicura) in
Argentina from Southern Energy, Inc. Alicura holds the concession to operate
a 1,000 MW peaking hydro facility located in the province of Neuquen,
Argentina. The purchase price of approximately $205 million includes the
assumption of debt support obligations. This transaction is subject to
approval by the anti-trust authorities of the Federal Government of Argentina.
In January 1999, a subsidiary of the Company acquired a 49% interest in
AES Panama, an entity resulting from the merger of Empresa de Generacion
Electrica Chiriqui (EGE Chiriqui) and Empresa de Generacion Electrica Bayano
(EGE Bayano), two generation companies in Panama which control four
facilities representing a total of 283 MW. The acquisition purchase price of
approximately $91 million included $46 million of nonrecourse project
financing. AES controls the board of directors of AES Panama, and therefore,
consolidates it.
The table below presents supplemental unaudited pro forma operating results
as if all of the acquisitions had occurred at the beginning of the periods shown
(in millions, except per share amounts):
QUARTERS ENDED MARCH 31,
------------------------
2000 1999
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Revenues $1,476 $ 968
Income before extraordinary items 181 (1)
Net income $ 174 $ (1)
Basic earnings per share (1) $ 0.88 $ 0.00
Diluted earnings per share (1) $ 0.80 $ 0.00
- ---------
(1) Pro forma earnings per share do not give effect to the stock split
declared on April 17, 2000.
The pro forma results are based upon assumptions and estimates that 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, 1999, nor are they intended to be a
projection of future results. Other acquisitions which were acquired from
April 1999 through December 1999, are included in the pro forma numbers
presented above as if they had occurred on January 1, 1999.
On April 28, 2000, the Company announced offers to acquire 51% of the
outstanding common shares of C.A. La Electricidad de Caracas and Corporacion
EDC, C.A. (EDC), including shares represented by American Depository Shares
(ADS), at a price of U.S. $23.50 per ADS. Each ADS represents 50 common
shares. This price represents a premium of 77% over the closing price of the
ADS on April 26, 2000. Offers are being made concurrently in Venezuela for
926,462,000 common shares and in the United States for 17,719,350 ADS for an
aggregate consideration of $863 million. The price per common share being
paid in the Venezuelan offer is U.S. $0.47, which is equivalent to the amount
being paid in the U.S. offer. If more than 17,719,350 ADS and 926,426,000
common shares are tendered, and all other conditions to the offer are met, the
ADS and common shares will be purchased on a pro rata basis. The offers are
scheduled to expire on May 30, 2000.
EDC publicly opposes the Company's offer and on May 11, 2000, announced
a program to repurchase up to U.S. $300 million of EDC shares at a minimum
price of U.S. $0.57 per share up to a maximum price of U.S. $1.00 per share.
In addition, on May 11, 2000, the Venezuelan securities commission issued an
order that imposes certain conditions on the Company's offers. The Company
is currently reviewing the impact of this order. There can be no assurances
that the EDC acquisition will be consummated.
-6-
On April 28, 2000, the Company also announced its intention to launch a
tender offer to acquire all outstanding common and preferred shares of the
Brazilian generation company Companhia de Geracao de Energia Eletrica Tiete
(Tiete). Tiete is a hydroelectric generation company in the state of Sao
Paulo with an installed capacity of 2,644 MW. The Company currently owns
71.3% of the voting common stock and 14.0% of the preferred stock of Tiete.
On May 10, 2000, the Company won a bid to purchase a controlling
interest in a 1,580 MW Mohave Generating Station (Mohave) in Laughlin, Nevada
from Southern California Edison Company and Nevada Power Company for $667
million. Mohave provides power to Phoenix, Arizona, Las Vegas, Nevada and
Southern California. The acquisition is subject to approval by the FERC and
the California Public Utilities Commission and review by the Nevada Public
Utilities Commission. The Company will have a 70% interest in the facility
upon closing. Closing is expected to occur late in the fourth quarter of 2000.
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.
In January 2000, a subsidiary of the Company acquired 59% of the
outstanding preferred (non-voting) shares of Eletropaulo Metropolitana
Eletricidade de Sao Paulo S.A. (Eletropaulo) for $1,087 million. These shares
represent 35.5% of the total capital of Eletropaulo. The purchase price will be
paid in four annual installments which began upon acquisition. Eletropaulo is an
electric company serving approximately 4.5 million customers in greater Sao
Paulo, Brazil. The additional investment increased the Company's direct
ownership interest in Eletropaulo to approximately 66.3% percent of its
preferred stock. Additionally, the Company owns a 13.8% interest in the common
stock of Eletropaulo through its interest in Light Servicos de Eletricidade S.A.
(Light), which owns 77.8% of the common stock of Eletropaulo. After completion
of this transaction AES owns, directly and indirectly, 45.4% of Eletropaulo.
Equity ownership percentages for these investments are presented below:
Equity Ownership At
March 31, December 31,
Affiliate Country 2000 1999
- --------- -------------- --------- -------------------
Cemig Brazil 9.45% 9.45%
Elsta Netherlands 50.00 50.00
Kingston Canada 50.00 50.00
Light Brazil 17.68 17.68
Medway Power, Ltd. United Kingdom 25.00 25.00
NIGEN United Kingdom 46.17 46.17
Northern/AES Energy United States 50.00 50.00
OPGC India 49.00 49.00
Chigen affiliates China 30.00 30.00
-7-
The following table presents summarized unaudited financial information (in
millions) for the equity method affiliates on a combined 100% basis.
Quarters Ended March 31,
------------------------
2000 1999
---- ----
Revenues $ 1,011 $ 970
Operating Income 321 275
Net Income 237 (521)
On April 28, 2000, the Company announced its intent to launch a tender
offer required by Brazilian law for all outstanding preferred shares of
Eletropaulo, related to its purchase of preferred shares of Eletropaulo in
January 2000. The offer price for the shares will be approximately $72.18 per
1,000 shares, to be paid in four annual installments commencing with a
payment of 18.5% at closing. If all holders of the preferred shares elect to
accept this offer, the Company would acquire 20.4% of Eletropaulo's total
capital via this tender, for an aggregate price of approximately $610 million.
On May 12, 2000, the Company announced the acquisition of 100% of
Tractebel Power Ltd (TPL) for $67 million together with an obligation to
repay existing debt of $15 million. TPL owns 46% of NIGEN. With the
completion of this transaction, the Company will own approximately 92% of
NIGEN's common stock and will begin to consolidate its operations.
5. Litigation
In September 1999, an appellate judge in the Minas Gerais, Brazil state
court system granted a temporary injunction that suspends the effectiveness of a
shareholders' agreement for 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 1999, the same appellate court judge reversed this
decision and reinstated the effectiveness of the shareholders' agreement, but
did not restore the super majority voting rights that benefited the Company.
In February 2000, as a result of a new motion filed by the State of Minas
Gerais, the appellate court reversed such modification and confirmed the
temporary injunction suspending the effectiveness of the shareholders
agreement.
In March 2000, the Minas Gerais state trial court determined that the
shareholders' agreement is invalid on the grounds that it violated the State
of Minas Gerais constitution because it transferred control without the
approval of the state's legislative assembly. The Company intends to appeal
this decision, and vigorously pursue its legal rights in this matter and to
restore all of its rights under the shareholders' agreement.
On April 14, 2000, the Company received a request for information
pursuant to Section 114 of the Clean Air Act from the U.S. Environmental
Protection Agency (EPA) seeking detailed operating and maintenance history
data for the Cayuga and Somerset Plants, which were recently acquired from
NGE Generating Company. The EPA has commenced an industry-wide investigation
of coal-fired electric power generators to determine compliance with
environmental requirements under the Clean Air Act associated with repairs,
maintenance, modifications and operational changes made to coal-fired
facilities over the years. The EPA's focus is on whether the changes were
subject to new source review or new source performance standards, and whether
best available control technology was or should have been used. The EPA is
requesting information similar to that previously requested by the New York
State Department of Environmental Conservation for the two plants and the
Westover and Greenidge plants
-8-
and from the New York State Attorney General with respect to only the
Westover and Greenidge Plants. The Company is cooperating with the request
and will provide the appropriate documentation.
If the New York State Attorney General, the New York State Department of
Environmental Conservation or the EPA does file an enforcement action against
the Somerset, Cayuga, Westover, or Greenidge Plants, then penalties may be
imposed and further emission reductions might be necessary at these plants. The
Company is unable to estimate the impact, if any, of these investigations on its
financial condition or results of future operations.
In April 2000, the United Kingdom's (UK) Office of Gas and Electricity
Markets (OFGEM) referred three subsidiaries of the Company, AES Drax, AES
Barry and AES Indian Queens, to the UK Competition commission as a result of
these subsidiaries' refusal to agree to the insertion of a new condition into
their generation licenses, known as good behavior clauses. The procedure for
implementing the proposed condition required OFGEM to seek the consent of our
subsidiaries to modify their generation licenses. The Company's subsidiaries
refused to grant their consent because it would grant the regulator the power
of arbitrarily determine whether an electric generator possessed market
power. The Company intends to vigorously contest any attempt by OFGEM and the
Competition Commission to require the good behavior clause to be inserted
into the Company's generation licenses.
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 is expected to have a material adverse impact on its results of
operations or financial position.
6. Comprehensive Income (Loss)
The Company has adopted SFAS No. 130, Reporting Comprehensive Income.
The components of other comprehensive income include $37 million of foreign
currency translation adjustment gains and $742 million of foreign currency
translation adjustment losses for the quarters ended March 31, 2000 and 1999,
respectively. Comprehensive income (losses) is $211 million and $(755)
million for the quarters ended March 31, 2000 and 1999, respectively.
7. Segments
Information about the Company's operations by segment are as follows (in
millions):
Equity
Gross Earnings
Revenue (1) Margin / (Loss)
----------- ------ --------
Quarter Ended March 31, 2000
Generation $ 908 $ 348 $ 26
Distribution 568 70 92
------ ------ ------
Total $1,476 $ 418 $ 118
====== ====== ======
Quarter Ended March 31, 1999
Generation $ 391 $ 166 $ 15
Distribution 247 54 (106)
------ ------ ------
Total $ 638 $ 220 $ (91)
====== ====== ======
(1) Intersegment revenues for the quarters ended March 31, 2000 and 1999 were
$23 million and $24 million, respectively.
There have been no changes in the basis of segmentation since December 31, 1999.
-9-
8. Subsequent Events
On May 11, 2000, the Company announced that an underwritten offering of
10,750,000 shares of common stock (not including the underwriters' overallotment
option) was priced at $74.00 per share for expected gross proceeds of $795.5
million. A private placement of trust convertible preferred securities was
priced to yield 6%, with an effective conversion price of $92.50 per share.
The gross proceeds to the Company from the convertibles transaction are
expected to be approximately $400 million (not including the purchasers'
overallotment option). Net proceeds to the Company of the offerings are
expected to be approximately $1,160 million (not including the overallotment
options). The trust convertible preferred securities have not been registered
under the Securities Act of 1933, as amended, and may not be offered or sold
in the United States absent registration or an applicable exemption from
registration requirements.
ITEM 2. DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
OVERVIEW
EXISTING OPERATIONS. The AES Corporation and its subsidiaries and
affiliates (collectively "AES" or the "Company") are a global power company
committed to serving the world's needs for electricity in a socially responsible
way. AES's electricity "generation" business consists of sales to wholesale
customers (generally electric utilities, regional electric companies or
wholesale commodity markets known as "power pools") for further resale to end
users. AES also sells electricity directly to end-users such as commercial,
industrial, governmental and residential customers through its "distribution"
business.
AES's generation business represented 62% of total revenues for the three
months ended March 31, 2000 compared to 61% for the three months ended March 31,
1999. Sales within the generation business are made under long-term contracts
from power plants owned by the Company's subsidiaries and affiliates, as well as
directly into power pools. The Company owns new plants constructed for such
purposes ("greenfield" plants) as well as older power plants acquired through
competitively bid privatization initiatives or negotiated acquisitions.
AES's distribution business represented 38% of total revenues for the three
months ended March 31, 2000 compared to 39% for the three months ended March 31,
1999. Electricity sales by AES's distribution businesses, including affiliates,
are generally made pursuant to the provisions of long-term electricity sale
concessions granted by the appropriate governmental authorities. 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.
-10-
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. Successful completion depends upon overcoming substantial risks,
including, but not limited to, risks 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. At March 31,
2000, capitalized costs for projects under development and in early stage
construction were approximately $72 million. The Company believes that these
costs are recoverable; however, no assurance can be given that individual
projects will be completed and reach commercial operation.
The Company has been actively involved in the acquisition and operation of
electricity assets in countries that are restructuring and deregulating the
electricity industry. Some of these acquisitions have been made from other
electricity companies that have chosen to exit the electricity generation
business. In such situations, sellers generally seek to complete competitive
solicitations in less than one year, which is much faster than the time incurred
to complete greenfield developments, and require payment in full on transfer.
AES believes that its experience in competitive markets and its worldwide
integrated group structure (with its significant geographic coverage and
presence) enable it to react quickly and creatively in such situations.
The financing for such acquisitions, in contrast to that for greenfield
development, often must be arranged quickly and therefore may preclude the
Company from arranging non-recourse project financing (the Company's
historically preferred financing method, which is discussed further under
"Capital Resources, Liquidity and Market Risk" in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999). Moreover, acquisitions that are
large, that occur simultaneously with one another or those occurring
simultaneously with commencing construction on several greenfield developments
would potentially require the Company to obtain substantial additional
financing, including both debt and equity. As a result, and in order to enhance
its financial capabilities to respond to these more accelerated opportunities,
on March 31, 2000 the Company executed an $850 million credit agreement which
replaced its existing $600 million revolving bank loan and its existing $250
million letter of credit facility.
FIRST QUARTER 2000 AND 1999 RESULTS OF OPERATIONS
REVENUES. Revenues increased $838 million, or 131%, to $1.48 billion for
the first quarter of 2000 compared to the same period in 1999. The increase in
revenues is due primarily to the acquisition of both new generation and
distribution businesses, as well as from the commercial operation of Greenfield
projects.
Generation revenues increased $517 million, or 132%, to $908 million for
the first quarter of 2000 compared to the same period in 1999. The increase in
generation revenue is primarily due to the acquisition of new businesses
including certain of the New York plants, Drax and Tiete.
Distribution revenues increased $321 million, or 130%, to $568 million for
the first quarter of 2000 compared to the same period in 1999. The increase in
distribution revenue is primarily due to the acquisition of new businesses
including NewEnergy, CILCORP, CESCO and EDE Este.
-11-
GROSS MARGIN. Gross margin, which represents total revenues reduced by cost
of sales, increased $199 million, or 90%, to $419 million for the first quarter
of 2000 compared to the same period in 1999. Gross margin as a percentage of
revenues decreased to 28% for the first quarter of 2000 from 34% for the same
period in 1999. The decrease in gross margin as a percentage of revenues is due
to the decline in both generation and distribution gross margins.
The generation gross margin increased $182 million, or 110%, to $348
million for the first quarter of 2000 as compared to the same period in 1999.
The generation gross margin as a percentage of revenues decreased to 38% for the
first quarter of 2000 compared to 42% for the same period in 1999. The increase
in gross margin is due to new acquisitions. The overall decrease in gross
margins as a percentage of revenues is due primarily to lower margins at certain
of our newly acquired businesses.
The distribution gross margin increased $16 million, or 30%, to $70 million
for the first quarter of 2000 as compared to the same period in 1999. The
distribution gross margin as a percentage of revenues decreased to 12% for the
first quarter of 2000 compared to 22% for the same period in 1999. The increase
in gross margins is due to new acquisitions. The overall decrease in gross
margins as a percentage of revenues is due primarily to losses at NewEnergy and
CESCO, both of which were acquired in mid-1999.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $13 million, or 81%, to $29 million for the
first quarter of 2000 as compared to the same period in 1999. Selling, general
and administrative costs as a percentage of revenues decreased to 2% from 3% for
the first quarter of 2000. The overall increase is due to an increase in
corporate overhead and an increase in business development activities.
INTEREST EXPENSE. Interest expense increased $136 million, or 102%, to $269
million for the first quarter of 2000 as compared to the same period in 1999.
Interest expense as a percentage of revenue decreased to 18% from 21% for the
first quarter of 2000 as compared to the same period in 1999. Interest expense
increased overall primarily due to the interest expense at new businesses,
financing of asset acquisitions as well as additional corporate interest costs
arising from the senior debt and convertible securities issued within the past
twelve months to finance new investments.
INTEREST AND OTHER INCOME. Interest and other income increased $12 million,
or 63%, to $31 million for the first quarter of 2000 as compared to the same
period in 1999. Interest and other income as a percentage of revenues decreased
to 2% from 3% for the first quarter of 2000. The increase is due, in part, to an
increase in interest income from additional funds available for investment as
well as other income recorded during the first quarter of 2000.
EQUITY IN EARNINGS (LOSS) OF AFFILIATES. Equity in earnings (loss) of
affiliates increased $209 million, or 230%, to $118 million compared to the same
period in 1999. The overall increase is a result of the increase in the equity
in earnings in both generation and distribution affiliates.
Equity in earnings of generation affiliates increased $11 million, or 73%,
to $26 million for the first quarter of 2000 as compared to the same period in
1999. The increase is primarily due to the Company's investment in OPGC.
Equity in earnings of distribution affiliates increased $198 million, or
187%, to $92 million for the first quarter of 2000 as compared to the same
period in 1999. The increase is due primarily to improved economic conditions
in Brazil and the corresponding leveling of the valuation of the Brazilian
Real. Foreign currency transactions did not have a material impact during the
first quarter of 2000.
-12-
Equity in earnings of distribution affiliates included foreign currency
transaction losses of $132 million in the first quarter of 1999.
INCOME TAXES. Income taxes (including income taxes on equity in
earnings) increased $77 million to $71 million for the first quarter of 2000
compared to a benefit of $(6) for the same period in 1999. The company's
effective tax rate was 28% and 32% for the first quarter of 2000 and 1999,
respectively. The decrease in the effective tax rate is due to the increase
in earnings of certain foreign businesses which are taxed at a rate lower
than the U.S. income tax rate.
MINORITY INTEREST. Minority interest remained consistent for the first
quarter of 2000 as compared to the same period in 1999. Increases from existing
businesses during the first quarter of 2000 were offset by losses at newly
acquired distribution businesses.
EXTRAORDINARY ITEM. On March 31, 2000, the Company renegotiated the
corporate revolving bank loan to incorporate the letter of credit facility.
Since the corporate revolving bank loan was not due until December 2000, the
Company wrote-off the related deferred financing costs resulting in an
extraordinary item for the early extinguishment of debt of $7 million, net of
tax.
FINANCIAL POSITION, CASH FLOWS AND FOREIGN CURRENCY EXCHANGE RATES
At March 31, 2000, cash and cash equivalents totaled $822 million as
compared to $669 million at December 31, 1999. The $153 million increase
resulted from a use of $859 million for investing activities, which was funded
by $763 of financing activities and $249 from operating activities. Significant
investing activity includes the increased investments in Electropaulo, additions
to property, plant and equipment 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 $1,047 million offset, in part, by
repayments on the revolver of $50 million and repayments of project finance
borrowings of $202 million. Unrestricted net cash flow of the parent company for
the four quarters ended March 31, 2000 totaled $387 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 $1,065 million in
cumulative foreign currency translation adjustment losses at March 31, 2000.
-13-
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 first quarter of 2000 set forth in the Company's
Annual Report filed with the Commission on Form 10-K for the year ended December
31, 1999.
-14-
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See discussion of litigation and other proceedings in Part I, Note 5
to the consolidated financial statements.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
In March 2000, the Connecticut Department of Public Utilities
Commission approved terms of a partial prepayment of electricity by its
customer Connecticut Light & Power Company.
On April 19, 2000, the Company announced that all of the $2.6875
Term Convertible Securities, Series A, commonly referred to as TECONS, issued
by AES Trust I have been called for redemption on June 14, 2000. The
redemption price is 103.359% (or $51.6795 per $50 TECONS) plus accrued and
unpaid distributions thereon to the redemption date ($.55 per $50 TECONS).
The TECONS are convertible into common stock of the Company at any time prior
to the close of business on June 13, 2000 at a conversion rate of 1.3812
shares of common stock for each TECONS (equal to a conversion price of $36.20
per share of common stock).
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS.
3.1 Sixth 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 March 31, 2000 filed
May 15, 2000.
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.
-15-
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).
-16-
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 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.
10.18 Credit Agreement dated as of March 31, 2000 among AES, The Banks
Listed Therein, The Fronting Banks Listed Therein, Bank of
America, N.A, as Documentation Agent, Morgan Guarantee Trust
Company of New York, as Syndication Agent and Citibank, N.A.,
as Agent.
11 Statement of computation of earnings per share.
27 Financial Data Schedule.
(b) REPORTS ON FORM 8-K.
Registrant filed a Current Report on Form 8-K/A dated February 11,
2000 which is an amendment to Form 8-K dated November 30, 1999
containing the audited consolidated balance sheet as of November 30,
1999 for AES Drax Ltd.
-17-
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: May 15, 2000 By: /s/ Barry J. Sharp
------------------
Name: Barry J. Sharp
Title: Senior Vice President and
Chief Financial Officer
-18-
EXHIBIT INDEX
Sequentially
Exhibit Description of Exhibit Numbered Page
- ------- ---------------------- -------------
10.18 Credit Agreement dated as of March 31, 2000 among
AES, The Banks Listed Therein, The Fronting Banks
Listed Therein, Bank of America, N.A, as
Documentation Agent, Morgan Guarantee Trust Company of
New York, as Syndication Agent and Citibank, N.A., as
Agent.
11 Statement of Computation of Earnings Per Share.
27 Financial Data Schedule.
-i-
AES CORPORATION
STATEMENTS OF COMPUTATION OF EARNINGS PER SHARE
FOR THE PERIODS ENDING MARCH 31, 2000 AND 1999
(Unaudited)
Three Months Ended
March 31, 2000 March 31, 1999
-------------- --------------
($ in millions, except per share amounts)
BASIC
Weighted average shares outstanding 207.1 180.6
========= ==========
Income before extraordinary item $ 181.4 $ (13)
Extraordinary Item (7.00) --
--------- ----------
Net income $ 174.4 $ (13)
========= ==========
Basic earnings per share before
Extraordinary item $ 0.88 $ (0.07)
Extraordinary item (0.03) --
--------- ---------
Basic earnings per share $ 0.85 $ (0.07)
========= ==========
DILUTED
Weighted average number of shares of
common stock outstanding 207.1 180.6
Net effect of dilutive stock options and warrants
based on the treasury stock method using average
market price 5.0 --
Stock units allocated to the deferred compensation
plans for executives and directors 0.2 --
Effect of tecons-based on the
if-converted method 15.1 --
--------- ---------
Weighted average shares outstanding 227 180.6
========= ==========
Income before extraordinary item $ 181.4 $ (13)
Additional contribution to net income if tecons
fully converted 6.8 --
--------- ---------
Adjusted net income before extraordinary item 188.2 (13)
Extraordinary item (7)
========= ==========
Adjusted net income $ 181.2 $ (13)
========= ==========
Diluted earnings per share before extraordinary item 0.83 (0.07)
Extraordinary item (0.03) --
--------- ---------
Diluted earnings per share $ 0.80 $ (0.07)
========= ==========
ii