EXHIBIT 99.1
AES REPORTS STRONG FIRST-QUARTER RESULTS AND REAFFIRMS 2004
EARNINGS GUIDANCE
Operating Income Increased 18% to $618 Million on Sales of $2.3 Billion
ARLINGTON, VA, April 28, 2004 -- The AES Corporation (NYSE: AES) today reported
first quarter results that included an increase of 18% in operating income to
$618 million on sales of $2.3 billion. AES also reaffirmed its 2004 earnings
guidance. The table below summarizes sales, operating income, income from
continuing operations, diluted earnings per share from continuing operations,
adjusted earnings per share*, and net income for the first quarter of 2004 and
2003.
($ millions except per share) First Quarter First Quarter
2004 2003
Sales $2,257 $1,911
Operating Income $618 $523
Income From Continuing Operations $74 $131
Diluted Earnings Per Share From
Continuing Operations $0.12 $0.23
Adjusted Earnings Per Share* $0.17 $0.13
Net Income $48 $93
* non-GAAP financial measure - see definition below
Commenting on the results, President and Chief Executive Officer Paul Hanrahan
said, "We achieved broad-based, strong and encouraging sales and operating
income growth during the quarter across our diversified portfolio of generation
and distribution businesses. Our continued focus on operations, combined with
stronger macroeconomic fundamentals, are both reflected in this quarter's
results, and we continue to see additional opportunity ahead. I'm also
encouraged by the progress and rational responses of regulatory authorities on
tariff increases. We continued to reduce parent debt with additional repayments
and repurchases this quarter totaling $351 million."
Adjusted earnings per share (a non-GAAP financial measure) is defined as diluted
earnings per share from continuing operations excluding gains or losses
associated with (a) early retirement of debt, (b) mark-to-market amounts related
to FAS 133 derivative transactions, (c) foreign currency transaction impacts on
net debt, and (d) significant asset impairments. AES believes that adjusted
earnings per share better reflect the
underlying business performance of the Company, and are considered in the
Company's internal evaluation of financial performance. Factors in this
determination include the variability associated with mark-to-market gains or
losses related to certain derivative transactions, and periodic strategic
decisions to dispose of certain assets which may influence results in a given
quarter. For the first quarter of 2004, adjusted earnings per share were $0.17,
an increase of 31% over adjusted earnings per share of $0.13 for the first
quarter of 2003.
Business Segment Results
Sales increased in all four business segments and the segment contribution to
gross margin increased in the three largest segments.
o In Contract Generation, AES's largest segment, sales grew 21% to $868
million and gross margin improved 24% to $359 million in the first quarter
of 2004. Increases were due primarily to the addition of new generation
plants and improved operating results at Gener in Chile, Kilroot in
Northern Ireland and generation businesses in Brazil.
o Large Utilities sales increased 17% to $818 million and gross margin
improved 18% to $194 million for 2004. Increases were primarily driven by
tariff increases at EDC and Eletropaulo along with lower fuel costs,
reduced operating costs and favorable currency effects.
o The Growth Distribution segment sales increased 24% to $328 million and
gross margin increased 26% to $63 million, respectively, benefiting from
improved tariffs and operating results, together with favorable currency
effects and improved margins at distribution businesses in El Salvador.
o Sales in Competitive Supply increased 6% to $243 million while gross margin
declined 7% to $64 million, primarily as a result of lower capacity
revenues and higher coal costs in New York during the first quarter of
2004.
Overall, consolidated sales increased 18% to $2.3 billion for 2004 and total
gross margin from the four operating segments increased 19% over 2003 to $680
million. Of the first quarter 2004 total segment gross margin, 53% was from
Contract Generation, 29% from Large Utilities, 9% from Growth Distribution and
9% from Competitive Supply.
AES Reaffirms 2004 Forward-Looking Earnings Guidance
AES reaffirmed its 2004 diluted earnings per share from continuing operations
guidance of $0.62, excluding the $0.03 per share cost associated with the
previously disclosed Gener debt transaction costs. Noting the Company's
favorable earnings outlook, Hanrahan said, "We remain optimistic about the
outlook for sales and earnings growth in 2004 and beyond, as we continue to
drive performance through productivity improvement, continued deleveraging, and
disciplined growth."
Other
The Company has adopted FASB's Interpretation No. 46 (Revised December 2003)
(FIN 46R) regarding the consolidation of variable interest entities as of March
31, 2004. The Company continues to analyze recent interpretations of the
pronouncement as they relate to variable interests, including certain power
sales agreements, which if applicable, could lead to the deconsolidation of the
associated entities. We will report our results consistent with FIN 46R within
the first quarter 10Q filing. As the Company adopted FIN 46R on March 31, 2004,
the outcome of any potential deconsolidation impacts, if any, will not affect
the AES income statement for the three months ended March 31, 2004 and would
only have an impact on certain balance sheet amounts and classifications. In
future periods adoption of FIN 46R could reduce reported sales and costs of
certain entities. This would not affect reported income from continuing
operations or diluted earnings per share.
About AES
AES is a leading global power company, with 2003 sales of $8.4 billion. AES
operates in 27 countries, generating 45,000 megawatts of electricity through 113
power facilities and delivering electricity through 17 distribution companies.
Our 30,000 people are committed to operational excellence and meeting the
world's growing power needs. To learn more about AES, please visit www.aes.com
or contact AES investor relations at invest@aes.com.
# # #
Attachments: Consolidated Statements of Operation, Condensed Consolidated
Balance Sheet, Condensed Consolidated Statement of Cash Flows, Segment
Information, Geographic Information, Parent Financial Information and
Reconciliation of Adjusted Earnings Per Share.
Conference Call Information: AES will host a conference call today to discuss
these results. The call will be held at 8:00 am Eastern Daylight Time (EDT). The
call may be accessed via a live webcast which will be available at www.aes.com,
or by telephone in listen-only mode at 1-888-694-4641. International callers
should dial 1-973-935-8512. Please call at least five minutes before the
scheduled start time. You will be requested to provide your name, e-mail
address, and affiliation. The Company's First-Quarter 2004 Financial Review
Presentation is also available at www.aes.com. A replay of the conference call
will be available at www.aes.com, or by telephone until 6:00pm on Friday, May 7,
2004. Callers should dial 1-877-519-4471 and when prompted provide reservation
number 4606100, followed by the pound (#) key. International dialers should dial
1-973-341-3080.
Safe Harbor Disclosure: This news release contains forward-looking statements
within the meaning of the Securities Act of 1933 and of the Securities Exchange
Act of 1934. Such forward-looking statements include, but are not limited to,
those related to future earnings, growth and financial and operating
performance. Forward-looking statements are not intended to be a guarantee of
future results, but instead constitute AES's current expectations based on
reasonable assumptions. Forecasted financial information is based on certain
material assumptions. These assumptions include, but are not limited to,
continued normal levels of operating performance and electricity demand at our
distribution companies and operational performance at our contract generation
businesses consistent with historical levels. 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's filings with the Securities and Exchange
Commission, including, but not limited to the risks discussed under the caption
"Cautionary Statements and Risk Factors" in AES's most recent annual report on
Form 10-K. Readers are encouraged to read AES's filings to learn more about the
risk factors associated with AES's business. AES undertakes no obligation to
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
AES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Quarter Ended
March 31,
($ in millions, except per share amounts) 2004 2003
---------------------------------
REVENUES
Sales and services $2,257 $1,911
OPERATING COSTS AND EXPENSES
Cost of sales and services 1,577 1,337
Corporate and business development expenses 48 29
Other operating expense, net 14 22
--------------- ---------------
Total operating costs and expenses 1,639 1,388
--------------- ---------------
OPERATING INCOME 618 523
OTHER INCOME AND (EXPENSE)
Interest expense, net (424) (431)
Other nonoperating expense, net - 15
Foreign currency transaction (losses) gain (8) 82
Loss on sale of investments (1) -
Equity in earnings of affiliates 16 24
--------------- ---------------
INCOME BEFORE INCOME TAXES AND
MINORITY INTEREST 201 213
Income tax expense 64 61
Minority interest expense, net 63 21
--------------- ---------------
INCOME FROM CONTINUING OPERATIONS 74 131
Loss from operations of discontinued components (net
of income tax expense of $2 and tax benefit of $4, respectively) (26) (36)
--------------- ---------------
INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 48 95
Cumulative effect of accounting change (net of income tax benefit of $1) - (2)
=============== ===============
NET INCOME $48 $93
=============== ===============
DILUTED EARNINGS PER SHARE:
Income from continuing operations $0.12 $0.23
Discontinued operations (0.04) (0.06)
Cumulative effect of accounting change - -
--------------- ---------------
Total $0.08 $0.17
=============== ===============
Diluted weighted average shares outstanding (in millions) 633 567
=== ===
AES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
March 31, December 31,
($ in millions, except per share amounts) 2004 2003
-----------------------------
Assets
Current Assets:
Cash and cash equivalents $1,120 $1,737
Restricted cash 725 288
Short term investments 201 189
Accounts receivable, net of reserves of $275 and $291, respectively 1,204 1,211
Inventory 357 376
Receivable from affiliates 3 3
Deferred income taxes - current 150 136
Prepaid expenses 103 64
Other current assets 695 677
Current assets of held for sale and discontinued businesses 223 205
-------------- --------------
Total current assets 4,781 4,886
Property, Plant and Equipment:
Land 739 733
Electric generation and distribution assets 21,067 21,087
Accumulated depreciation (4,745) (4,593)
Construction in progress 1,389 1,278
-------------- --------------
Property, plant and equipment, net 18,450 18,505
Other assets:
Deferred financing costs, net 455 430
Investment in and advances to affiliates 665 648
Debt service reserves and other deposits 539 534
Goodwill, net 1,381 1,378
Deferred income taxes - noncurrent 788 781
Long-term assets of held for sale and discontinued businesses 746 750
Other assets 1,945 1,992
-------------- --------------
Total other assets 6,519 6,513
-------------- --------------
Total Assets $29,750 $29,904
============== ==============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $1,127 $1,122
Accrued interest 366 561
Accrued and other liabilities 1,315 1,259
Current liabilities of held for sale and discontinued businesses 728 699
Recourse debt-current portion 1 77
Non-recourse debt-current portion 2,468 2,769
-------------- --------------
Total current liabilities 6,005 6,487
Long-term liabilities:
Recourse debt 5,587 5,862
Non-recourse debt 10,687 10,930
Deferred income taxes 1,048 1,051
Long-term liabilities of held for sale and discontinued businesses 91 94
Pension liabilities 924 947
Other long-term liabilities 3,150 3,083
-------------- --------------
Total long-term liabilities 21,487 21,967
Minority Interest, including discontinued businesses of $12 and $12, respectively 1,168 805
Stockholders' equity:
Common stock 6 6
Additional paid-in capital 5,363 5,737
Accumulated deficit (1,055) (1,103)
Accumulated other comprehensive loss (3,224) (3,995)
-------------- --------------
Total stockholders' equity 1,090 645
-------------- --------------
Total Liabilities and Stockholders' Equity $29,750 $29,904
============== ==============
AES CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
March 31, March 31,
($ in millions) 2004 2003
------------------------------
Operations
Net income $48 $93
Adjustments:
Depreciation and amortization-- continuing and discontinued operations 200 184
Cumulative effect of change in accounting principle - 3
Other non-cash (benefits)/charges 226 (54)
Working capital, (net) (72) 220
--------------- --------------
Net cash provided by operating activities 402 446
Investing activities
Property additions (190) (265)
Proceeds from the sales of assets 27 585
Increase in restricted cash and other (453) (134)
--------------- --------------
Net cash used in investing activities (616) 186
Financing activities
Borrowings (repayments) under the revolving credit facilities, net - 8
Issuance of non-recourse debt and other coupon bearing securities 1,133 269
Repayments of non-recourse debt and other coupon bearing securities (1,473) (493)
Payments for deferred financing costs (40) (15)
Issuance of common stock, net 2 0
Other financing (9) 6
--------------- --------------
Net cash used in financing activities (387) (225)
Effect of exchange rate changes on cash (15) (1)
--------------- --------------
Total (decrease) increase in cash and cash equivalents (616) 406
Increase in cash and cash equivalents of discontinued operations and
businesses held for sale (1) (18)
Cash and cash equivalents, beginning 1,737 792
--------------- --------------
Cash and cash equivalents, ending $1,120 $1,180
=============== ==============
AES CORPORATION
SEGMENT INFORMATION
Quarter Ended
March 31,
($ in millions) 2004 2003
--------------------------------
BUSINESS SEGMENTS
REVENUES
Contract Generation $868 $716
Competitive Supply 243 229
Large Utilities 818 702
Growth Distribution 328 264
-------------- ---------------
Total sales 2,257 1,911
GROSS MARGIN
Contract Generation $359 $290
Competitive Supply 64 69
Large Utilities 194 165
Growth Distribution 63 50
-------------- ---------------
Total gross margin 680 574
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST
Contract Generation $190 $169
Competitive Supply 55 70
Large Utilities 117 73
Growth Distribution 31 38
Corporate (192) (137)
-------------- ---------------
Total income before income taxes 201 213
- ---------------------------------------------------------------------------------------------------------------
GEOGRAPHIC SEGMENTS
REVENUES
North America $546 $546
Caribbean 390 347
South America 879 675
Europe/Africa 275 236
Asia 167 107
-------------- ---------------
Total sales 2,257 1,911
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST
North America $118 $119
Caribbean 61 57
South America 92 68
Europe/Africa 57 61
Asia 65 45
Corporate (192) (137)
-------------- ---------------
Total income before income taxes 201 213
The AES Corporation
Parent Financial Information
Parent only data: last four quarters
($ in millions) 4 Quarters Ended
June 30, September 30, December 31, March 31,
Total subsidiary distributions & returns of capital to Parent 2003 2003 2003 2004
Actual Actual Actual Actual
---------- ------------ ------------ ---------
Subsidiary distributions to Parent $ 773 $ 909 $ 1,008 $1,076
Net distributions to/(from) QHCs (1) 208 139 46 2
----------- ------------- ------------ ---------
Subsidiary distributions 981 1,048 1,054 1,078
Returns of capital distributions to Parent 54 248 242 244
Net returns of capital distributions to/(from) QHCs (1) 6 (1) 0 0
----------- ------------- ------------ ---------
Returns of capital distributions 60 247 242 244
Combined distributions & return of capital received 1,041 1,295 1,296 1,322
Less: combined net distributions & returns of capital to/(from) QHCs (1) (214) (138) (46) (2)
----------- ------------- ------------ ---------
Total subsidiary distributions & returns of capital to Parent $ 827 $ 1,157 $ 1,250 $1,320
=========== ============= ============ =========
Parent only data: quarterly
($ in millions) Quarter Ended
June 30, September 30, December 31, March 31,
Total subsidiary distributions & returns of capital to Parent 2003 2003 2003 2004
Actual Actual Actual Actual
----------- ------------- ------------ ---------
Subsidiary distributions to Parent $ 312 $ 312 $ 248 $ 204
Net distributions to/(from) QHCs (1) (12) 7 7 0
----------- ------------- ------------ ---------
Subsidiary distributions 300 319 255 204
Returns of capital distributions to Parent 24 199 17 4
Net returns of capital distributions to/(from) QHCs (1) 6 (7) 1 0
----------- ------------- ------------ ---------
Returns of capital distributions 30 192 18 4
Combined distributions & return of capital received 330 511 273 208
Less: combined net distributions & returns of capital to/(from) QHCs (1) 6 0 (8) 0
----------- ------------- ------------ ---------
Total subsidiary distributions & returns of capital to Parent $ 336 $ 511 $ 265 $ 208
=========== ============= ============ =========
Liquidity (2) Balance at
($ in millions) March 31, June 30, September 30, December 31, March 31,
2003 2003 2003 2003 2004
Actual Actual Actual Actual Actual
---------- --------- -------------- ----------- ---------
Cash at Parent $ 395 $ 923 $ 525 $ 865 $ 268
Availability under revolver 28 39 172 180 371
Cash at QHCs (1) 66 29 41 26 17
---------- --------- -------------- ----------- ---------
Ending liquidity $ 489 $ 991 $ 738 $ 1,071 $ 656
========== ========= ============== =========== =========
(1) The cash held at qualifying holding companies (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 qualifying holding companies is
available to the parent, AES uses the combined measure of subsidiary
distributions to parent and qualified holding companies as a useful
measure of cash available to the parent to meet its international
liquidity needs.
(2) 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.
AES CORPORATION
RECONCILIATION OF ADJUSTED EARNINGS PER SHARE (1)
Quarter Ended
March 31,
($ in millions) 2004 2003
---------------- ----------------
Adjusted Diluted EPS From Continuing Operations $0.17 $0.13
FAS 133 Mark-to-Market Gains/(Losses) (2) (0.04) (0.01)
Currency Transaction Gains/(Losses) - 0.10
Asset Impairment - (0.01)
Debt Retirement Gains/(Losses) (0.01) 0.02
Diluted EPS From Continuing Operations $0.12 $0.23
(1) Adjusted earnings per share (a non-GAAP financial measure) is defined as
diluted earnings per share from continuing operations excluding gains or
losses associated with (a) early retirement of debt, (b) mark-to-market
amounts related to FAS 133 derivative transactions, (c) foreign currency
transaction impacts on net debt, and (d) significant asset impairments.
AES believes that adjusted earnings per share better reflect the underlying
business performance of the Company, and are considered in the Company's
internal evaluation of financial performance. Factors in this determination
include the variability associated with mark-to-market gains or losses
related to certain derivative transactions, and periodic strategic
decisions to dispose of certain assets which may influence results in a
given quarter.
(2) Includes $(0.03) related to Gener debt restructuring costs included in
interest expense in the first quarter of 2004.