-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O9Vy+hw7szf9qOYQpAI2RCgk4QcDFcpE/1yhH7LllA+SMw2pR/hNt/ouBY8i1mCJ eMEBg5noo//DseMPLlRZ9A== 0000874761-97-000043.txt : 19971115 0000874761-97-000043.hdr.sgml : 19971115 ACCESSION NUMBER: 0000874761-97-000043 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AES CORPORATION CENTRAL INDEX KEY: 0000874761 STANDARD INDUSTRIAL CLASSIFICATION: COGENERATION SERVICES & SMALL POWER PRODUCERS [4991] IRS NUMBER: 541163725 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12291 FILM NUMBER: 97717105 BUSINESS ADDRESS: STREET 1: 1001 N 19TH ST STREET 2: STE 2000 CITY: ARLINGTON STATE: VA ZIP: 22209 BUSINESS PHONE: 7035221315 10-Q 1 QUARTERLY REPORT FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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 September 30, 1997 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 (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 54-1163725 (IRS Employer Identification No.) 1001 North 19th Street Arlington, Virginia 22209 (Address of principal executive office) Telephone Number (703) 522-1315 (Registrant's telephone number, including area code) 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 total number of shares of the registrant's Common Stock, $.01 par value, outstanding on October 31, 1997 was 174,645,911. THE AES CORPORATION INDEX Page PART I. FINANCIAL INFORMATION Item 1. Interim Financial Statements: Consolidated Statements of Operations ................................ 1 Consolidated Balance Sheets .......................................... 2 Consolidated Statements of Cash Flow ................................... 4 Notes to Consolidated Financial Statements ............................. 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations .......................... 10 PART II. OTHER INFORMATION Item 1. Legal Proceedings ............................................. 17 Item 2. Changes in Securities ......................................... 17 Item 3. Defaults Upon Senior Securities ............................... 18 Item 4. Submission of Matters to a Vote of Security Holders ........... 18 Item 5. Other Information ............................................. 18 Item 6. Exhibits and Reports on Form 8-K .............................. 18 Signature .............................................................. 20 PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements. THE AES CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE PERIODS ENDED SEPTEMBER 30, 1996 AND 1997
- --------------------------------------------------------------------------------------------- (Unaudited) Three Three Nine Nine Months Months Months Months Ended Ended Ended Ended 9/30/96 9/30/97 9/30/96 9/30/97 - --------------------------------------------------------------------------------------------- ($ in millions, except per share amounts) ....................................................... REVENUES: Sales and services .................................... $ 205 $ 358 $ 551 $ 880 OPERATING COSTS AND EXPENSES: Cost of sales and services ............................ 122 246 321 576 Selling, general and administrative expenses .......... 8 10 23 25 Provision to reduce contract receivable ............... -- 9 -- 19 ----- ----- ----- ----- Total operating costs and expenses .................... 130 265 344 620 ----- ----- ----- ----- OPERATING INCOME ...................................... 75 93 207 260 OTHER INCOME AND (EXPENSE): Interest expense ...................................... (38) (62) (97) (154) Interest income ....................................... 6 10 16 28 Equity in earnings of affiliates (net of income tax) 9 28 16 58 INCOME BEFORE INCOME TAXES, MINORITY INTEREST, AND EXTRAORDINARY ITEM ........................... 52 69 142 192 Income taxes .......................................... 16 15 47 50 Minority interest ..................................... 4 4 6 10 ----- ----- ----- ----- INCOME BEFORE EXTRAORDINARY ITEM ...................... 32 50 89 132 Extraordinary item - Net loss on extinguishment of debt (Less applicable income taxes of $2 million) .......... -- (3) -- (3) ----- ----- ----- ----- NET INCOME ............................................ $ 32 $ 47 $ 89 $129 ===== ===== ===== ===== NET INCOME PER SHARE: Before extraordinary loss ............................. $0.21 $0.28 $0.58 $0.78 Extraordinary loss .................................... -- (0.02) -- (0.02) ----- ----- ----- ----- NET INCOME PER SHARE .................................. $0.21 $0.26 $0.58 $0.76 ===== ===== ===== ===== See Notes to Consolidated Financial Statements
-1- THE AES CORPORATION CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1996 AND SEPTEMBER 30, 1997 - -------------------------------------------------------------------------------- (Unaudited) 12/31/96 9/30/97 - -------------------------------------------------------------------------------- ($ in millions) ASSETS CURRENT ASSETS: Cash and cash equivalents ....................... $ 185 $ 358 Short-term investments .......................... 20 27 Accounts receivable, less provision to reduce contract receivable of (1996-$20, 1997-$39) 95 206 Inventory ....................................... 81 69 Receivable from affiliates ...................... 9 13 Deferred income taxes ........................... 65 49 Prepaid expenses and other current assets ....... 47 77 ------- ------- Total current assets ............................ 502 799 PROPERTY, PLANT AND EQUIPMENT: Land ............................................ 30 33 Electric generation and distribution assets ..... 1,898 2,563 Accumulated depreciation and amortization ....... (282) (336) Construction in progress ........................ 574 800 ------- ------- Property, plant and equipment, net .............. 2,220 3,060 OTHER ASSETS: Electricity concession agreements ............... 30 229 Deferred costs, net ............................. 47 89 Project development costs ....................... 53 100 Investments in and advances to affiliates ....... 491 1,835 Debt service reserves and other deposits ........ 175 173 Goodwill and other intangible assets, net ....... 22 26 Other assets .................................... 82 257 ------- ------- Total other assets .............................. 900 2,709 ------- ------- TOTAL ........................................... $ 3,622 $ 6,568 ======= ======= See Notes to Consolidated Financial Statements -2- THE AES CORPORATION CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1996 AND SEPTEMBER 30, 1997 - -------------------------------------------------------------------------------- (Unaudited) 12/31/96 9/30/97 - -------------------------------------------------------------------------------- ($ in millions) LIABILITIES & STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable ................................... $ 64 $ 74 Accrued interest ................................... 25 39 Accrued and other liabilities ...................... 95 183 Other notes payable - current portion .............. 88 -- Project financing debt - current portion ........... 110 533 ------ ------ Total current liabilities .......................... 382 829 LONG-TERM LIABILITIES: Project financing debt ............................. 1,558 2,814 Revolving bank loan ................................ 125 -- Other notes payable ................................ 325 573 Deferred income taxes .............................. 243 231 Other long-term liabilities ........................ 55 48 ------ ------ Total long-term liabilities ........................ 2,306 3,666 MINORITY INTEREST .................................. 213 379 COMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY TRUST HOLDING SOLELY JUNIOR SUBORDINATED DEBENTURES OF AES ... -- 250 STOCKHOLDERS' EQUITY: Common stock........................................ 2 2 Additional paid-in capital ......................... 359 1,018 Retained earnings .................................. 396 525 Cumulative foreign currency translation adjustment . (33) (100) Less treasury stock at cost ........................ (3) (1) ------ ------ Total stockholders' equity ......................... 721 1,444 ------ ------ TOTAL .............................................. $3,622 $6,568 ====== ====== See Notes to Consolidated Financial Statements -3- THE AES CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 - -------------------------------------------------------------------------------- (Unaudited) Nine Nine Months Months Ended Ended 09/30/96 09/30/97 - -------------------------------------------------------------------------------- ($ in millions) OPERATING ACTIVITIES: Net Income .....................................$ 89 $ 129 Adjustments to net income: Depreciation, depletion and amortization ... 43 53 Provision for deferred taxes ............... 30 19 Undistributed earnings of affiliates ....... (6) (39) Other ...................................... (4) 11 Change in working capital ...................... (5) (56) ------ ------- Net cash provided/ (used) by operating activities ............... 147 117 INVESTING ACTIVITIES: Property additions ........................... (324) (350) Acquisitions, net of cash acquired ........... (131) (1,066) Sale/(purchase) of short-term investments .... 38 (7) Affiliate advances and investments ........... (411) (682) Project development costs .................... (13) (16) Debt service reserves and other assets ....... (64) (6) ------ ------- Net cash used in investing activities .......... (905) (2,127) FINANCING ACTIVITIES: Borrowings/(repayments) under the revolver ... 164 (213) Issuance of company - obligated mandatorily redeemable preferred securities ("TECONS") . -- 242 Issuance of project financing debt ........... 404 1,291 Issuance of senior subordinated notes ........ 243 511 Repayments of senior subordinated notes ...... -- (275) Repayments of project financing debt ......... (51) (127) Minority partner payments .................... 2 260 Issuance of common stock ..................... -- 494 ------ ------- Net cash provided by financing activities ...... 762 2,183 Increase/(decrease) in cash and cash equivalents 4 173 Cash and cash equivalents, beginning ........... 239 185 ------ ------- Cash and cash equivalents, ending ..............$ 243 $ 358 ====== ======= Supplemental interest and income taxes disclosures: Cash payments for interest .....................$ 86 $ 139 Cash payments for income taxes ................. 17 30 Supplemental noncash disclosures: Deferred purchase price of CEMIG shares ........ -- $ 528 Common stock issued for amalgamation of AES Chig -- 157 See notes to consolidated financial statements -4- PART I NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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. Under the equity method, the Company's investment is recorded at cost and is adjusted to recognize its proportional share of all earnings or losses of the entity. Distributions received reduce the carrying amount of the Company's investment. In the Company's opinion, all adjustments necessary for a fair presentation of the unaudited results of operations for the three and nine months ended September 30, 1996 and 1997, respectively, are included. All such adjustments are accruals of a normal and recurring nature. The results of operations for the period ended September 30, 1997 are not necessarily indicative of the results of operations to be expected for the full year. The 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, 1996. Because the Company intends to sell its investment in Hazelwood, the balance is classified as an asset held for sale and is included in other assets. 2. Net Income Per Share Net income per share is based on the weighted average number of shares of common stock and common stock equivalents outstanding, after giving effect to stock splits. Common stock equivalents include dilutive stock options, warrants, and deferred compensation arrangements. The effect of such common stock equivalents on net income per share is computed using the treasury stock method. The shares used in computing net income per share were 154.9 million and 178.2 million for the quarters ended September 30, 1996 and 1997, respectively, and 153.1 million and 169.0 million for the nine months ended September 30, 1996 and 1997, respectively. SFAS No. 128, "Earnings per Share" becomes effective December 15, 1997, and will be adopted by the Company at December 31, 1997. Early adoption is not permitted, however, pro forma basic and diluted earnings per share as computed in accordance with SFAS No. 128 would have been as follows: -5- Nine Nine Quarter Quarter Months Months Ended Ended Ended Ended 09/30/96 09/30/97 09/30/96 09/30/97 -------- -------- -------- -------- Basic earnings per share before extraordinary item .......... $ 0.21 $ 0.29 $ 0.59 $ 0.81 Basic earnings per share ........ $ 0.21 $ 0.27 $ 0.59 $ 0.79 Diluted earnings per share before extraordinary item .......... $ 0.21 $ 0.28 $ 0.58 $ 0.77 Diluted earnings per share ...... $ 0.21 $ 0.26 $ 0.58 $ 0.75 3. Inventory Inventory, valued at the lower of cost (principally first in, first out method) or market, consists of coal and other raw materials used in generating electricity and steam, and spare parts, materials and supplies. Inventory at December 31, 1996 and September 30, 1997 consisted of the following (in millions): 1996 1997 ---- ---- Coal, oil and other raw materials . $57 $58 Spare parts, materials and supplies 24 11 --- --- Total ............................. $81 $69 === === 4. Acquisitions In August 1996, the Company, through a subsidiary, acquired a controlling interest in three power plants totaling 1,281 megawatts and a coal mine through the purchase of an 81% share of Tiszai Eromu Rt. ("Tiszai") an electricity generation company in Hungary for $110 million, and in December 1996 acquired an additional 13% for $17 million. Also in August 1996, the Company acquired, through a subsidiary, a majority controlling interest in a 4,000 megawatt coal-fired facility in Kazakstan, ("Ekibastuz") for approximately $3 million. For further discussion of these acquisitions, see Item 2, Discussion and Analysis of Financial Condition and Results of Operations of the Company's Quarterly Report filed with the Commission on Form 10-Q for the period ended September 30, 1996. In January 1997, the Company, through a subsidiary, acquired an additional 2.4% of Light for approximately $82 million. In May 1997, AES completed its amalgamation with AES China Generating Co. Ltd. ("Chigen"). As a result of the amalgamation, the Company issued -6- approximately 5.0 million shares of AES Common Stock in exchange for all of the outstanding Chigen Class A Common Stock. Also in May 1997, through the Argentine privatization of ESEBA, a subsidiary of the Company acquired approximately 60% of EDEN and EDES, two integrated electricity companies serving certain portions of the province of Buenos Aires, for approximately $340 million. In June 1997, AES, through a consortium, acquired approximately 13% of CEMIG, an integrated electric utility servicing the Brazilian State of Minas Gerais for approximately $1 billion. These shares also represent a 33% voting interest in CEMIG. In June 1997, AES also completed its acquisition of the international assets of Destec Energy, Inc. for approximately $439 million. The purchase included five electric generating plants in construction or operation and a number of power projects in development. The plants acquired by AES (with ownership percentages in parenthesis) include a 110 MW gas-fired combined cycle plant in Kingston, Canada ("Kingston") (50%); a 405 MW gas-fired combined cycle plant in Terneuzen, Netherlands ("Elsta") (50%); a 140 MW gas-fired simple cycle plant in Cornwall, England ("Indian Queens") (100%); a 235 MW oil-fired simple cycle plant in Santo Domingo, Dominican Republic ("Los Mina") (100%); and a 1600 MW coal-fired plant in Victoria, Australia ("Hazelwood") (20%). For further discussion of these acquisitions, see Item 2, Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report and of the Company's Quarterly Reports filed with the Commission on Form 10-Q for the period ended March 31, 1997 and June 30, 1997. The acquisitions were accounted for as purchases. The purchase price allocations for EDEN, EDES, CEMIG, Los Mina, Indian Queens, Elsta, Kingston, and the Chigen amalgamation have been completed on a preliminary basis, subject to adjustments resulting from new and additional facts that may come to light when the engineering, environmental, and legal analyses are completed during the allocation period. The accompanying statements of operations include the operating results for Tisza, Ekibastuz, Chigen, EDEN, EDES, Los Mina, and Indian Queens, and equity earnings from Light, CEMIG, and Kingston from the dates of those acquisitions and investments. The following table presents supplemental unaudited pro forma operating results as if all of the acquisitions had occurred at the beginning of the periods presented (in millions, except per share amounts): Nine Nine Months Months Ended Ended 09/30/96 09/30/97 ------ ------ Revenues ........... $1,224(a) $1,007(a) Net Income ......... 94 133 Net Income Per Share $ 0.54 $ 0.81 (a) Includes $288 million of revenues for the nine months ended September 30, 1996, related to services performed under construction contracts from Elsta and Kingston. Both of these projects were significantly complete by the end of 1996, and as a result, revenues for services performed under these construction contracts were approximately $18 million for the first nine months ending September 30, 1997. -7- 5. Financing AES financed its acquisitions of CEMIG, EDEN, and EDES through: (i) $450 million in non-recourse bridge financing comprised of a $250 million bridge loan (the "CEMIG Bridge") to AES CEMIG Funding Corporation, a wholly-owned subsidiary of AES, and a $200 million bridge loan (the "ESEBA Bridge") to ESEBA Funding Corporation, a wholly-owned subsidiary of AES; (ii) a $200 million subordinated bridge loan to AES; (iii) non-recourse project debt; (iv) borrowings under the Company's credit facility and (v) cash on hand. In July 1997, the Company issued approximately $325 million of senior subordinated notes due 2007 with an 8 3/8% interest rate per annum in a private placement. The Company used the net proceeds of approximately $315 million to repay a portion of the amounts outstanding under the bridge loans described above and to redeem the Company's $75 million 9 3/4% senior subordinated notes due 2000. Also in July 1997, the Board of Directors authorized a two-for-one split of its Common Stock, effected in the form of a dividend, to shareholders of record on July 28, 1997 payable on August 28, 1997. Accordingly, all outstanding share and per share data in all periods presented have been restated to reflect the split. In the same month, the Company sold 9.0 million shares of its common stock at $39.88 per share. The Company used the net proceeds of approximately $350 million to repay a portion of the amounts outstanding under the ESEBA Bridge and the CEMIG Bridge described above. The ESEBA Bridge and the CEMIG Bridge have been refinanced and the amounts outstanding are currently $180 million and $220 million, respectively. 6. Investments in and Advances to Affiliates The following table presents summarized financial information (in millions) for equity method affiliates on a combined 100% basis. Amounts presented include the condensed income statement accounts of NIGEN Ltd. (a 47% owned UK affiliate), Medway Power Ltd. (a 25% owned UK affiliate) and Light (a 13.75% owned Brazilian affiliate) for the nine months ended September 30, 1996 and the condensed income statement accounts for NIGEN Ltd., Medway Power Ltd., Light, CEMIG (a 13.06% owned Brazilian affiliate), and Kingston (a 50% owned Canadian affiliate) for the nine months ended September 30, 1997. -8- 9/30/96 9/30/97 ------- ------- Revenues ........... $713 $2,315 Operating Income ... 183 494 Net Income ......... 86 371 7. Litigation The Company is involved in certain legal proceedings in the normal course of business. Reference is made to the Company's Quarterly Report filed with the Commission on Form 10-Q for the quarterly periods ended June 30 and March 31, 1997, and the Company's report on Form 8-K dated November 6, 1997, for material developments in the Company's legal proceedings. It is the opinion of the Company that none of the pending litigation is expected to have a material adverse effect on its results of operations or financial position. 8. Subsequent Events In October 1997, a subsidiary of AES acquired approximately 90% of Companhia Centro-Oeste de Distribuica de Energia Eletrica ("CCODEE"), a distribution company serving the central and western sections of Rio Grande do Sul in Brazil, for a total purchase price of approximately $1.37 billion. In the same month, another subsidiary of AES, through a joint venture, completed the acquisition and take-over of two hydro-electric stations, and four combined heat and power stations in the province of East Kazakstan for a total purchase price of approximately $27 million. For further discussion of these acquisitions, see Item 2 Discussion and Analysis of Financial Conditions and Results of Operations. In October 1997, the Company issued approximately $500 million of subordinated notes and debentures in a private placement (the "Note and Debenture Offerings"), which consisted of $375 million of senior subordinated debentures due 2007 with an 8.5% interest rate per annum and $125 million of senior subordinated notes due 2027 with an 8 7/8% interest per annum. Also in October 1997, the Company issued approximately $300 million of term convertible preferred securities ("TECONS") with a dividend yield of 5 1/2% (the "Term Convertible Offering"). For further discussion of these offerings, see Part II Other Information, Item 2 Changes in Securities of this Quarterly Report. -9- ITEM 2. DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General AES is a global power company committed to supplying electricity to customers worldwide in a socially responsible way. The Company was one of the original entrants in the independent power market and today is one of the world's largest independent power companies, based on net equity ownership of generating capacity (in megawatts) in operation or under construction. AES markets power principally from electricity generating facilities that it develops, acquires, owns and operates. Over the last five years, the Company has experienced significant growth. This growth has resulted primarily from the development and construction of new plants ("greenfield development") and also from the acquisition of existing generating plants and distribution companies, through competitively bid privatization initiatives outside of the United States, or negotiated acquisitions. AES operates and owns (entirely or in part), through subsidiaries and affiliates, power plants in ten countries with a capacity of approximately 18,538 MW (including 4,000 MW attributable to Ekibastuz which currently has a capacity factor of up to approximately 20%). AES is also constructing eleven additional power plants in seven countries with a capacity of approximately 4,921 MW. The Company's total ownership in plants in operation and under construction aggregates approximately 23,459 MW and its net equity ownership in such plants is approximately 11,882 MW. In addition, AES has numerous projects in advanced stages of development, including seven projects with design capacity of approximately 3,398 MW that have executed or been awarded power sales agreements. The Company is also engaged (entirely or in part) in electric power distribution businesses in Latin America through its subsidiaries and affiliates. These subsidiaries and affiliates serve approximately 8 million commercial, industrial and residential customers using approximately 63,000 gigawatt hours of electric power per year. As a result of the Company's significant growth in recent years, the Company's operations have become more diverse with regard to both geography and fuel source and it has reduced its dependence upon any single project or customer. During 1996, four of the Company's projects individually contributed more than 10% of the Company's total revenues; Shady Point which represented approximately 20%, San Nicolas which represented approximately 16%, Thames which represented approximately 16% and AES Hawaii which represented approximately 15%. -10- Certain subsidiaries and affiliates of the Company (domestic and non-U.S.) have signed long-term contracts for the sale of electricity and are in various stages of developing the related greenfield projects. Because these potential projects have yet to begin construction or procure committed long-term financing, there exist substantial risks to their successful completion, including, but not limited to, those 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 milestones. As of September 30, 1997, capitalized costs for projects under development were $100 million. The Company believes that the costs are recoverable; however, no assurance can be given that changes in circumstances related to individual projects will not occur or that any of these projects will be completed and reach commercial operation. The Company's 4,000 megawatt mine-mouth, coal-fired power facility in Kazakstan has sold electricity to the government-owned distribution company under a power sales contract while also making direct sales to certain industrial and commercial customers. Through September 30, 1997, approximately $61 million (excluding VAT) was billed under the power sales contract for electricity, of which the purchaser has paid approximately $5 million. The Company recorded a provision of approximately $20 million at December 31, 1996 and an additional provision of approximately $19 million during the first nine months of 1997 to reduce the carrying value of the contract receivable as of September 30, 1997 to $17 million. As of September 30, 1997, the net assets of this project were $42 million, a portion of which was represented by the government related contract receivable referred to above. There can be no assurance as to the ultimate collectability of amounts owed to AES as of September 30, 1997 or additional amounts related to future deliveries of electricity under the power sales contract, if any, or the recoverability of the Company's investment or additional amounts the company may invest in the project. Acquisitions In September 1997, an AES subsidiary began construction on the AES Parana project, an 830 MW gas-fired, combined cycle power plant. AES Parana will be located in San Nicolas, Argentina, adjacent to Central Termica San Nicolas, in which AES owns a controlling interest. AES Parana is in the process of arranging for project financing for the facility. Total capital cost is estimated at $440 million, and the project is expected to be on line in the year 2000. Also in September 1997, an AES subsidiary raised A$103.5 million (approximately US$75.5 million) of non-recourse project financing for its 288 MW kerosene-fired simple cycle power plant in Townsville, Queensland, Australia. Construction of the plant is expected to begin in the fourth quarter of 1997 and is scheduled to be completed in early 1999. -11- In October 1997, a subsidiary of AES acquired approximately 90% of the common shares of CCODEE, the electric distribution company serving the central and western sections of the State of Rio Grande do Sul in Brazil, for a total purchase price of approximately $1.37 billion. The acquisition was financed with the proceeds of (i) $250 million of revolving credit borrowings under the Company's senior credit facility (the commitments under which were temporarily increased from $425 million to $600 million), (ii) $550 million of short term loans under a bridge loan facility (the "CEEE Bridge Loan") provided by affiliates of J.P. Morgan Securities, Inc., Donaldson, Lufkin & Jenrette Securities, Inc., Salomon Brothers Inc. and Unterberg Harris (which was subsequently repaid from the proceeds of the Company's Notes and Debenture Offerings and the Term Convertible Offering), and (iii) $630 million of non-recourse financing provided by Bank Boston and ANZ Investment Bank as co-arrangers. AES purchased the shares of CCODEE from the State of Rio Grande do Sul in a partial privatization of Companhia Estadual de Energia Eletrica ("CEEE"), the integrated utility of Rio Grande do Sul. All of the remaining shares of CCODEE will be offered to its employees. CCODEE currently serves approximately 800,000 customers, or approximately 31.3% of the population of the State of Rio Grande do Sul, through sales of 5,772 gigawatt hours of electricity. Also in October 1997, a joint venture named Tau Power that is 85% owned by AES and 15% owned by Israel-based Suntree Power completed the acquisition and takeover of two hydro-electric stations ("GES") and four combined heat and power stations ("TETS") in the province of East Kazakstan. The total electric capacity of the stations included in the agreement is 1,384 MW, with additional thermal capacity of over 1,000 MW electric equivalent. The power stations included in the agreement signed are: the 332 MW Ust-Kamenogorsk GES, the 702 MW Shulbinsk GES, the 240 MW Ust-Kamenogorsk TETS, the 50 MW Leniogorsk TETS, the 50 MW Sogransk TETS and the 10 MW Semipalatinsk TETS. As part of the transaction AES obtained ownership and control of the retail sales department of the former utility and will assume the existing power supply contracts (generally short-term) with the 50 largest customers in East Kazakhstan, including the distribution companies. Tau Power paid 20.7 million for the concession on the GES, with an additional payment of $2.5 million for the shares of the TETS. The Company will also repay back wages of approximately $4 million to the workers during the first year of operation and provide for working capital. -12- Third Quarter 1997 and 1996 Results of Operations Revenues increased 75% or approximately $153 million, to $358 million from the third quarter of 1996 to the third quarter of 1997. The increase in revenues was primarily due to the acquisition of Tiszai and Ekibastuz in August 1996, EDEN, and EDES in May 1997, and Los Mina in June 1997. Cost of sales and services increased 102% or approximately $124 million, to $246 million from the third quarter of 1996 to the third quarter of 1997. The increase in costs of sales and services was primarily due to the acquisition of Tiszai in August 1996, EDEN and EDES in May 1997 and Los Mina in June 1997. Gross margin, which represents total revenues reduced by cost of sales and services (before consideration of the provision to reduce contract receivable), increased 35%, or approximately $29 million, to $112 million during the same period. The increase in gross margin was primarily due to the acquisitions discussed above. Excluding any results from Ekibastuz, gross margin as a percentage of total revenues decreased to 31% for the third quarter of 1997 from 40% for the same period of 1996 primarily due to lower gross margin percentages at Tiszai, EDEN, EDES, and Los Mina offset in part by improved performance at San Nicolas due to continued cost reduction efforts at the plant. Revenues increased 60%, or approximately $329 million to $880 million from the first nine months of 1996 to the first nine months of 1997. Costs of sales and services increased 79%, or approximately $255 million to $576 million from the first nine months of 1996 to the same period of 1997. Gross margin increased 32%, or approximately $74 million to $304 million from the first nine months of 1996 to the same period of 1997. These increases were primarily due to the acquisition of Tiszai and Ekibastuz in August 1996, EDEN and EDES in May 1997 and Los Mina in June 1997. Gross margin as a percentage of total revenues decreased to 35% for the first nine months of 1997 from 42% for the same period of 1996 primarily due to lower gross margin percentages at Tiszai, EDEN, EDES and Los Mina, offset in part by a higher gross margin percentage at San Nicolas due to continued cost reduction efforts at the plant. Selling, general and administrative expenses increased 25%, or approximately $2 million to $10 million from the third quarter of 1996 to the third quarter of 1997, and as a percentage of total revenue, were 4% in 1996 and 3% in 1997. For the first nine months of 1997, selling, general and administrative expenses increased 9%, or approximately $2 million, to $25 million, and as a percentage of total revenues, were 4% in 1996 and 3% of revenues in 1997. The Company's selling, general and administrative costs do not necessarily vary with changes in revenues. Operating income increased 24%, or approximately $18 million, to $93 million from the third quarter of 1996 to the third quarter of 1997, and increased 26%, or approximately $53 million, to $260 million from the first nine months of 1996 to the same period of 1997. These increases were the result of the factors discussed above. -13- Interest expense increased 63%, or approximately $24 million, to $62 million from the third quarter of 1996 to the third quarter of 1997. The increase resulted from the additional interest expense associated with the $325 million 8 3/8% Senior Subordinated Notes, the $250 million 5 3/8% TECONS, the project financing debt associated with the Company's investments in Light, CEMIG, EDEN, EDES, and bridge loans associated with the acquisitions of EDEN, EDES, and CEMIG, offset slightly by declining balances related to project financing debt of existing projects and the retirement of the $75 million, 9 3/4% Senior Subordinated Notes in July 1997. Interest expense increased 59%, or approximately $57 million, to $154 million from the first nine months of 1996 to the same period of 1997. The increase resulted from the additional interest expense associated with the $250 million 10 1/4% Senior Subordinated Notes, the $250 million 5 3/8% TECONS, the $325 million 8 3/8% Senior Subordinated Notes, project financing debt associated with the Company's investments in Light, CEMIG, EDEN, EDES, and bridge loans associated with the acquisition of EDEN, EDES, and CEMIG, offset slightly by declining balances related to project financing debt of existing projects, the retirement of the $75 million 9 3/4% Senior Subordinated Notes in July 1997, and the redemption of the $50 million, 6 1/2% Convertible Debentures in August 1996. Interest income increased 67%, or approximately $4 million, to $10 million from the third quarter of 1996 to the third quarter of 1997, and increased 75%, or approximately $12 million, to $28 million from the first nine months of 1996 to the same period of 1997. These increases were primarily due to the short-term investment of proceeds from the Company's offering of approximately 5.1 million shares of common stock in March 1997, and from the $180 million 10 1/8% Notes due 2006 issued by Chigen in December 1996. Additional interest income was also earned on debt service reserves established as part of the project financing arrangement associated with the Company's equity investment in Light. Equity in earnings of affiliates (after income taxes) increased 211% or approximately $19 million, to $28 million from the third quarter of 1996 to the same period of 1997, and increased 263% or approximately $42 million, to $58 million from the first nine months of 1996 to the same period of 1997. These increases were primarily due to earnings from the Company's investment in Light in June 1996 and CEMIG in June 1997. Income taxes decreased 6% or approximately $1 million, to $15 million from the third quarter of 1996 to the third quarter of 1997, and increased 6% or approximately $3 million, to $50 million from the first nine months of 1996 to the same period of 1997. The decrease for the quarter was primarily due to the additional interest expense of consolidated subsidiaries which were used to finance investments recorded under the equity method. The increase for the first nine months resulted primarily from an increase in the Company's estimated effective income tax rate from approximately 39% in 1996 to 40% in 1997 and higher income before taxes offset in part by the additional interest expense of consolidation subsidiaries which were used to finance investments recorded under the equity method. -14- Cash Flows, Liquidity and Capital Resources At September 30, 1997 cash and cash equivalents totaled approximately $358 million, as compared to $185 million at the beginning of the year. The $173 million increase in cash resulted from a use of $2,127 million for investing activities which were funded by $2,183 million from financing activities and $117 million provided by operating activities. Significant investing activities included project construction at AES Barry, AES Lal Pir, AES Pak Gen and AES Warrior Run; an additional purchase of Light shares (2.4%); acquisition of a 60% interest in each of EDEN and EDES; acquisition of a collective 14.41% interest in CEMIG with the Southern Company and The Opportunity Fund, funding the acquisition of Destec's international assets, and the funding of debt service reserves related to AES Chigen. Furthermore, the net source of cash from financing activities was primarily the result of issuing TECONS and common stock with net proceeds of $736 million (excluding stock option exercises), borrowing $1,291 million of project financing debt, issuing $511 million of senior subordinated notes, and contributions from minority partners of $260 million, offset by repayments of $127 million of project financing debt and $213 million of repayments under the Revolver. Unrestricted net cash flow of the parent company totaled approximately $226 million for the four quarters ended September 30, 1997. The increase in electric generation and distribution assets of $665 million, to $2,563 million from December 31, 1996 to September 30, 1997 was due primarily to the EDEN, EDES, Los Mina and Indian Queens acquisitions, and purchase price allocations made for the amalgamation of AES Chigen. The increase in construction in progress of $226 million, to $800 million from December 31, 1996 to September 30, 1997 was due primarily to the start of construction at the AES Barry and AES Mt. Stuart facilities, and continued construction of the AES Warrior Run, AES Lal Pir, and AES Pak Gen facilities and several facilities at AES Chigen. The increase in investments in and advances to affiliates of $1,344 million, to $1,835 million was primarily due to the CEMIG, Kingston, and Elsta acquisitions, purchase price allocations made for the amalgamation of AES Chigen, and the additional purchase of Light shares. The increase in electricity concession agreements is associated with the Company's acquisition of EDEN and EDES in May 1997. The increase in other assets was primarily due to the acquisition of an equity interest in Hazelwood, which the Company intends to sell. The increase in both the current portion of project financing debt of $422 million, to $532 million and long-term portion of project financing debt of $1,256 million, to $2,814 million from December 31, 1996 to September 30, 1997 was primarily due to the financing of the EDEN, EDES, CEMIG, and Indian Queens, offset in part by payments on other project financing debt. The long-term portion of project financing debt was further increased by borrowings of approximately $180 million at AES Chigen. -15- The increase in additional paid-in capital of $659 million, to $1,018 million from December 31, 1996 to September 30, 1997 was primarily due to the issuance of 5.1 million shares of AES Common Stock in March, 9.0 million shares in July amounting to net proceeds of $494 million, combined with the issuance of approximately 4.8 million shares of AES Common Stock with a value of $142 million associated with the amalgamation of AES Chigen in May 1997. In July 1997, the Company issued approximately $325 million of Senior Subordinated Notes due 2007 with an 8 3/8% interest rate per annum in a private placement, and approximately $359 million of its common stock at a price of $39.88 per share in a public offering. Foreign Currency Exchange Rate Adjustments Through its equity investments in foreign affiliates and subsidiaries, AES operates in jurisdictions dealing in 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 $100 million in cumulative foreign currency translation adjustment losses at September 30, 1997. -16- PART II--OTHER INFORMATION Item 1. Legal Proceedings. The Company is involved in certain legal proceedings in the normal course of business. Reference is made to the Company's Quarterly Report filed with the Commission on Form 10-Q for the quarterly periods ended June 30 and March 31, 1997, and the Company's Current Report on Form 8-K dated November 6, 1997, for material developments in the Company's legal proceedings. It is the opinion of the Company that none of the pending litigation is expected to have a material adverse effect on its results of operations or financial position. Item 2. Changes in Securities. In July 1997, the Company issued approximately $325 million of senior subordinated notes due 2007 with an 8 3/8% interest rate per annum in a private placement, and approximately $359 million of its common stock at a price of $39.88 per share in a public offering. In October 1997, the Company issued approximately $375 million of senior subordinated notes due 2007 with an 8 1/2% interest rate per annum, and approximately $125 million of senior subordinated debentures due 2027 with an 8 7/8% interest rate per annum in a private offering. The Company used the net proceeds of approximately $485 million to repay indebtedness incurred in connection with its acquisition of CCODEE, and for general corporate purposes. Also in October, in connection with the acquisition of the shares of CCODEE, AES Trust II, a wholly-owned subsidiary of AES, sold six million of its $2.75 Term Convertible Securities, Series B ("TECONS"), liquidation amount $50 per security, for $50.00 per TECONS (for an aggregate of $300 million) in a private placement pursuant to Rule 144 and Regulation S under the Securities Act of 1933, as amended. J.P. Morgan Securities Inc., Donaldson, Lufkin & Jenrette Securities Corporation and Unterberg Harris acted as initial purchasers (the "Initial Purchasers") in the private placement. The Initial Purchasers were paid by the Company, as compensation for their services, $1.375 per TECONS (or $8.250 million in the aggregate). Each TECONS is convertible at any time prior to the close of business on September 30, 2012 (or, in the case of TECONS called for redemption, prior to the close of business on the business day prior to the applicable redemption date) at the option of the holder into shares of common stock, par value $.01 per share, of AES (the "AES Common Stock") at the rate of 0.8914 shares of AES Common Stock for each TECONS, subject to adjustment in certain circumstances. -17- Item 3. Defaults Upon Senior Securities. None Item 4. Submission of Matters to a Vote of Security Holders. None Item 5. Other Information. None Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. Exhibit Document Number 4.........Indenture for the $325 million aggregate principal amount of 8 3/8% Senior Subordinated Notes due 2007 dated as of July 17, 1997 (pursuant to the exception contained in Item 601(b)(4)(iii) of Regulation S-K for nonregistered securities not exceeding 10 percent of the Registrant's total assets, the Company is not filing the Indenture as an exhibit to this Quarterly Report on Form 10-Q but agrees to furnish a copy of the Indenture to the Commission upon request) 10........Agreement for the Purchase and Sale of Shares of Companhia Centro-Oeste de Distribuicao de Energia Eletrica ("CCODEE"), translated from Portuguese 11........Consolidated Statements Regarding Computation of Earnings Per Share 27....... Financial Data Schedule, which is submitted electronically to the Securities and Exchange Commission for information only and not filed. -18- (b) Reports on Form 8-K. During the quarter ended September 30, 1997, the Company filed the following: (i) Form 8-K, (Item 2, Acquisition or Disposition of Assets, Item 5, Other Events and Item 7, Financial Statement and Exhibits) dated July 3, 1997 related to financing for the Company's Destec, CEMIG and ESEBA acquisitions and the Company's consolidated financial statements. (ii) Form 8-K, (Item 5, Other Events) dated July 3, 1997 with respect to the Company's commencement of a private offering of $275 million of Senior Subordinated Notes due 2007. (iii) Form 8-K, (Item 2, Acquisition or Disposition of Assets and Item 7, Financial Statement and Exhibits) dated July 14, 1997 reporting on the Company's completion of its acquisition of the international assets of Destec Energy, Inc. (iv) Form 8-K, (Item 5, Other Events and Item 7, Financial Statement and Exhibits) dated July 15, 1997 filing the Company's press releases announcing an increase in the size of the offering of Senior Subordinated Notes due 2007 to $325 million and announcing the Company's earnings for the second quarter of 1997. (v) Form 8-K, (Item 2, Acquisition or Disposition of Assets and Item 7, Financial Statement and Exhibits) dated July 16, 1997 reporting on the Company's acquisition of CEMIG and providing CEMIG's financial statements. (vi) Form 8-K, (Item 7, Financial Statement and Exhibits) dated August 5, 1997 amending the Independent Auditors' Report filed in the Company's report to the Commission on Form 8-K dated July 3, 1997. (vii) Form 8-K, (Item 5, Other Events and Item 7, Financial Statement and Exhibits) dated August 18, 1997 related to the Company's 2 for 1 stock split in the form of a dividend. -19- SIGNATURE 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) By/s/ BARRY J. SHARP - ----------------------------- BARRY J. SHARP Vice President and Chief Financial Officer Dated: November 13, 1997 -20- EXHIBIT INDEX Exhibit Document Number 10........Agreement for the Purchase and Sale of Shares of Companhia Centro-Oeste de Distribuicao de Energia Eletrica ("CCODEE"), translated from Portuguese 11.........Consolidated Statements Regarding Computation of Earnings Per Share 27.........Financial Data Schedule, which is submitted electronically to the Securities and Exchange Commission for information only and not filed. -21- EX-10 2 EXHIBIT 10 (Unofficial Translation) CONTRACT OF PURCHASE AND SALE OF STOCK COMPANHIA CENTRO-OESTE DE DISTRIBUICAO DE ENERGIA ELETRICA This document is herewith signed in due form of law by: on the one hand: the COMPANHIA ESTADUAL DE ENERGIA ELETRICA - CEEE, the public services utility company for the generation, transmission and distribution of electric power, with head offices in Porto Alegre, Rio Grande do Sul State, at Centro Administrativo Engenheiro Noe de Mello Freitas, in Avenida Joaquim Porto Villanova, 201, Building "C", Bairro Jardim Carvalho, registered on the Treasury Ministry Corporate Tax-Payers' Roll under CGC/MF N(0) 92.715.812/0001-31, represented herein by its Financial Director, Mr. Jairo da Silva Dutra, and hereinafter called the SELLER; having as intervening party, the Secretariat of Energy, Mines and Communications and the Director Counsel of Reforming Program of the Estate; the STATE OF RIO GRANDE DO SUL, an institution set up under Brazilian Internal Public Law, with head offices in the City of Porto Alegre, Estate of Rio Grande do Sul, in Palacio Pyratini, at Praca Marechal Deodoro, registered on the Treasury Ministry Corporate Tax-Payers' Roll under CGC/MF N(0) 90.010.900/0001-00, represented herein by the State Governor, Mr. Antonio Britto, and hereinafter called the INTERVENOR; and, on the other hand: AES GUAIBA EMPREENDIMENTOS LTDA., a company organized and existing under the laws of the Federative Republic of Brazil, with head offices in the City and State of Sao Paulo, at Avenida Roque Petroni Junior, 999, 2nd floor, suite "D", registered on the Treasury Ministry Corporate Tax-Payers' Roll under CGC/MF N(0) 02.126.176/0001-10, represented herein by its General Manager, Mr. Luiz David Travesso, Brazilian citizen, married, engineer, bearer at Identity Card RG under n(0) 8.857.240 (SSP/SP), enrolled with the CPF/MF under n(0)082.892.468-62, hereinafter called the PURCHASER; Whereas COMPANHIA CENTRO-OESTE DE DISTRIBUICAO DE ENERGIA ELETRICA was set up as a result of the corporate and asset restructuring of the SELLER as authorized by State Law n(0) 10,900 issued on 26 December 1996; Whereas the common shares representing stock control of COMPANHIA CENTRO-OESTE DE DISTRIBUICAO DE ENERGIA ELETRICA owned by the STATE were sold at a special public Auction for the highest bid (Auction) held on October 21, 1997 in compliance with the legislation applicable thereto and the terms of PUBLICATION N(0) COD-05/97 prepared by the Steering Committee of the State Reform Program (PUBLICATION), which forms an integral part of this Contract; Whereas the PURCHASER was the winning bidder in the above-mentioned Auction and thus became the majority shareholder in COMPANHIA CENTRO-OESTE DE DISTRIBUICAO DE ENERGIA ELETRICA; The Parties herewith resolve to sign this CONTRACT OF PURCHASE AND SALE OF SHARES, which will be regulated by the following clauses and conditions: CLAUSE ONE - PURPOSE OF THE CONTRACT The SELLER is the owner with clear and unencumbered title, free of third party rights or restrictions of any type, of 487,585,814 (four hundred and eighty seven million, five hundred and eighty five thousand and eight hundred and fourteen) common shares issued by COMPANHIA CENTRO-OESTE DE DISTRIBUICAO DE ENERGIA ELETRICA, corresponding to around 90.91% (ninety point nine one per cent) of the voting capital, with such stocks hereinafter called the SHARES. By this deed the SELLER sells to the PURCHASER all the above-mentioned SHARES for the price of R$ 1,510,000,000.00 which is herewith paid by the PURCHASER to the SELLER in Brazilian currency, by means of release of resources with Camara de Liquidacao e Custodia S/A - CLC. CLAUSE TWO - RESPONSIBILITY FOR HIDDEN LIABILITIES, INSUFFICIENT ASSETS AND SUBSEQUENT CONTINGENCIES As the Seller of the common shares of COMPANHIA CENTRO-OESTE, COMPANHIA ESTADUAL DE ENERGIA ELETRICA - CEEE undertakes responsibility for settling debts arising from decisions handed down through to 11 August 1997, in court cases being heard as part of the labor claims brought against the Company by employees transferred to the above-mentioned COMPANHIA CENTRO-OESTE, even though the court rulings are effective after this date. The obligation to settle possible outstanding debts is limited to the period during which the employee worked at CEEE, meaning until 11 August 1997, with COMPANHIA CENTRO-OESTE being responsible for settling any debts arising from periods subsequent to 11 August 1997 through to the date of the effective payment of the debt. With the exception of the obligations undertaken as laid out above, the SELLER, as the owner of the shares sod hereunder, shall not be liable for any other hidden liabilities, insufficient assets or subsequent contingencies of COMPANHIA CENTRO-OESTE, regardless of whether or not they are mentioned in the PUBLICATION. CLAUSE THREE - SPECIAL OBLIGATIONS OF THE SELLER I - The SELLER agrees to sign the documents required to carry out and formally complete the sale to the PURCHASER of the SHARES covered by this CONTRACT. II - The SELLER agrees to assume responsibility for any obligations deriving from the SHARES covered by this Contract in existence up to the date of transfer thereof, but does not accept liability for obligations that may arise therefrom after this date. CLAUSE FOUR - SPECIAL OBLIGATIONS OF THE PURCHASER The PURCHASER and the heirs and successors thereto of any type, including through later assignment and transfer of the shares, will be jointly bound in an irrevocable and irretractable manner to comply strictly with the special obligations stipulated in Item 4.3. of PUBLICATION N(0) COD-05/97 and the Annexes thereto, which form an integral part of this Contract. CLAUSE FIVE - SUCCESSION The obligations stipulated in this Contract should be undertaken by any third party that acquires ownership of the SHARES acquired hereunder by the PURCHASER, representing stock control, under penalty of declaring the transfer of such shares thereto null and void. The PURCHASER also agree to note in the margin of the SHARE records in the Share Registration Book of COMPANHIA CENTRO-OESTE or on the respective certificates, the following words in Portuguese: The shares covered by these records (or Certificate) are subject to the provisions in the CUSTOMER OF PURCHASE AND SALE OF SHARES signed by the SELLER and AES GUAIBA EMPREENDIMENTOS LTDA., on October 27, 1997. CLAUSE SIX - IRREVOCABILITY The sale of SHARES covered by this Contract is irrevocable and irretractable, binding the Parties thereto and their successors of any type to compliance with the clauses agreed herein of any type, with specific execution. CLAUSE SEVEN - LAW COURTS The Parties elect the Law Courts of the City of Porto Alegre, capital of the State of Rio Grande do Sul, as competent to resolve any doubts or disputes arising from this Contract, waiving any other, no matter how privileged. Being in full and fair agreement, the Parties sign this deed in 3 (three) copies of identical form and content, in the presence of the undersigned witnesses. Porto Alegre, October 27, 1997. COMPANHIA ESTADUAL DE ENERGIA ELETRICA - CEEE ------------------------------------------- Pedro Bisch Neto, Director President. ------------------------------------------- Jairo da Silva Dutra, Financial Director. SECRETARIAT OF ENERGY, MINES AND COMMUNICATIONS ------------------------------------------- Assis Roberto de Souza, Secretary of the State. DIRECTOR COUNSEL OF REFORMING PROGRAM OF THE ESTATE ------------------------------------------- Assis Roberto de Souza, President. ------------------------------------------- Cezar Busatto, Counsellor of COD-PRE and Secretary of the Public Treasury. STATE OF RIO GRANDE DO SUL ------------------------------------------- Antonio Britto, State Governor. PURCHASER ------------------------------------------- Luiz David Travesso, General Manager. Witnesses: 1.________________________ 2.__________________________ Name: Helio Campos Name: Mario Rache Freitas CPF: 292.869.210-04 CPF: 333.959.690-53 EX-11 3 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS THE AES CORPORATION Exhibit 27 STATEMENTS REGARDING COMPUTATION OF EARNINGS PER SHARE FOR THE PERIODS ENDED SEPTEMBER 30, 1996 AND 1997
- --------------------------------------------------------------------------------------------- Three Three Nine Nine Months Months Months Months Ended Ended Ended Ended 9/30/96 9/30/97 9/30/96 9/30/97 - --------------------------------------------------------------------------------------------- ($ in millions, except per share amounts) PRIMARY Weighted Average Number of Shares of Common Stock Outstanding ............. 151.6 173.1 150.4 164.1 Net effect of Dilutive Stock Options and Warrants Based on the Treasury Stock Method Using Average Market Price ....... 2.8 4.6 2.2 4.4 Stock Units Allocated to the Deferred Compensation Plans for Executives and Directors ................ 0.5 0.5 0.5 0.5 ------- ------- ------- ------- Weighted average shares outstanding .......................... 154.9 178.2 153.1 169.0 ======= ======= ======= ======= Net Income Before Extraordinary Item ... $ 32 $ 50 $ 89 $ 132 Extraordinary Item ................ -- (3) -- (3) ------- ------- ------- ------- Net Income ............................. $ 32 $ 47 $ 89 $ 129 ======= ======= ======= ======= Per Share Amount Before Extraordinary I $ 0.21 $ 0.28 $ 0.58 $ 0.78 Extraordinary Item ................ -- (0.02) -- (0.02) ------- ------- ------- ------- Per Share Amount ....................... $ 0.21 $ 0.26 $ 0.58 $ 0.76 ======= ======= ======= ======= FULLY DILUTED Weighted Average Number of Shares of Common Stock Outstanding ............. 151.6 173.1 150.4 164.1 Net effect of Dilutive Stock Options and Warrants Based on the Treasury Stock Method Using Ending Market Price ........ 3.2 4.8 3.4 4.9 Stock Units Allocated to the Deferred Compensation Plans for Executives and Directors ................ 0.5 0.5 0.5 0.5 Effect of Convertible Debt - Based on the If-Converted Method ................. -- 6.9 -- 4.8 ------- ------- ------- ------- Weighted average shares outstanding .......................... 155.3 185.3 154.3 174.3 ======= ======= ======= ======= Net Income Before Extraordinary Item ... $ 32 $ 50 $ 89 $ 132 Additional Contribution to Net Income if Convertible Debt is fully converted ...... -- 1 -- 3 ------- ------- ------- ------- Adjusted Net Income Before Extraordinary Item .............................. $ 32 $ 51 $ 89 $ 135 Extraordinary Item ................ -- (3) -- (3) ------- ------- ------- ------- Adjusted Net Income .................... $ 32 $ 48 $ 89 $ 132 ======= ======= ======= ======= Per Share Amount Before Extraordinary I $ 0.21 $ 0.28 $ 0.58 $ 0.77 Extraordinary Item ................ -- (0.02) -- (0.02) ------- ------- ------- ------- Per Share Amount ....................... $ 0.21 $ 0.26 $ 0.58 $ 0.75 ======= ======= ======= =======
EX-27 4 ART. 5 FDS FOR 3RD QUARTER 10-Q
5 1,000,000 9-mos Dec-31-1997 Jan-01-1997 Sep-30-1997 358 27 245 (39) 69 799 3596 (336) 6568 833 3387 250 0 2 1442 6576 866 880 576 620 0 0 154 192 50 132 0 3 0 129 0.76 0.75
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