Segments

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

SEGMENTS

SEGMENTS

The segment reporting structure uses the Company’s management reporting structure as its foundation to reflect how the Company manages the businesses internally and is mainly organized by geographic regions, which provides a socio-political-economic understanding of our business. The management reporting structure is organized by four SBUs led by our President and Chief Executive Officer: US and Utilities, South America, MCAC, and Eurasia SBUs. Using the accounting guidance on segment reporting, the Company determined that its four operating segments are aligned with its four reportable segments corresponding to its SBUs.

Corporate and Other — Included in “Corporate and Other” are the results of the AES self-insurance company and certain equity affiliates, corporate overhead costs which are not directly associated with the operations of our four reportable segments, and certain intercompany charges such as self-insurance premiums which are fully

eliminated in consolidation.

The Company uses Adjusted PTC as its primary segment performance measure. Adjusted PTC, a non-GAAP measure, is defined by the Company as pre-tax income from continuing operations attributable to The AES Corporation excluding gains or losses of the consolidated entity due to (a) unrealized gains or losses related to derivative transactions and equity securities; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits and costs associated with dispositions and acquisitions of business interests, including early plant closures, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; (e) gains, losses and costs due to the early retirement of debt; and (f) costs directly associated with a major restructuring program, including, but not limited to, workforce reduction efforts, relocations, and office consolidation. Adjusted PTC also includes net equity in earnings of affiliates on an after-tax basis adjusted for the same gains or losses excluded from consolidated entities. The Company has concluded that Adjusted PTC better reflects the underlying business performance of the Company and is the most relevant measure considered in the Company’s internal evaluation of the financial performance of its segments. Additionally, given its large number of businesses and complexity, the Company concluded that Adjusted PTC is a more transparent measure that better assists investors in determining which businesses have the greatest impact on the Company’s results.

Revenue and Adjusted PTC are presented before inter-segment eliminations, which includes the effect of intercompany transactions with other segments except for interest, charges for certain management fees, and the write-off of intercompany balances, as applicable. All intra-segment activity has been eliminated within the segment. Inter-segment activity has been eliminated within the total consolidated results.

The following tables present financial information by segment for the periods indicated (in millions):

	Three Months Ended June 30,						Six Months Ended June 30,
Total Revenue	2020			2019			2020			2019
US and Utilities SBU	$	913		$	976		$	1,884		$	1,995
South America SBU	711			765			1,423			1,610
MCAC SBU	381			478			813			928
Eurasia SBU	214			265			439			604
Corporate and Other	114			16			142			25
Eliminations	(116		)	(17		)	(146		)	(29		)
Total Revenue	$	2,217		$	2,483		$	4,555		$	5,133

	Three Months Ended June 30,						Six Months Ended June 30,
Total Adjusted PTC	2020			2019			2020			2019
Income from continuing operations before taxes and equity in earnings of affiliates	$	105		$	118		$	425		$	472
Add: Net equity in earnings (losses) of affiliates	8			5			6			(1		)
Less: Income from continuing operations before taxes, attributable to noncontrolling interests	(118		)	(71		)	(237		)	(180		)
Pre-tax contribution	(5		)	52			194			291
Unrealized derivative and equity securities losses (gains)	14			6			(2		)	9
Unrealized foreign currency losses (gains)	(12		)	7			(3		)	18
Disposition/acquisition losses	29			5			30			14
Impairment expense	168			121			221			123
Loss on extinguishment of debt	44			49			48			57
Total Adjusted PTC	$	238		$	240		$	488		$	512

	Three Months Ended June 30,						Six Months Ended June 30,
Total Adjusted PTC	2020			2019			2020			2019
US and Utilities SBU	$	57		$	118		$	128		$	240
South America SBU	140			106			259			221
MCAC SBU	66			63			144			113
Eurasia SBU	49			39			93			95
Corporate and Other	(85		)	(84		)	(143		)	(156		)
Eliminations	11			(2		)	7			(1		)
Total Adjusted PTC	$	238		$	240		$	488		$	512

Total Assets	June 30, 2020		December 31, 2019
US and Utilities SBU	$	14,236	$	13,334
South America SBU	11,408		11,314
MCAC SBU	4,993		4,770
Eurasia SBU	3,587		3,990
Corporate and Other	342		240
Total Assets	$	34,566	$	33,648