-----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, NJRlirqE+Vb5+QrnzDi5TaxBeLsk+QqwTNbtMIZUrRBFnWcZ0Kxh/DOa0eH87N+/ x2yG78aoZRGxiysOUep5jA== 0001005150-98-000506.txt : 19980518 0001005150-98-000506.hdr.sgml : 19980518 ACCESSION NUMBER: 0001005150-98-000506 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 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: 98624669 BUSINESS ADDRESS: STREET 1: 1001 N 19TH ST STREET 2: STE 2000 CITY: ARLINGTON STATE: VA ZIP: 22209 BUSINESS PHONE: 7035221315 10-Q 1 FORM 1O-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 MARCH 31, 1998 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 54-1163725 (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 1001 NORTH 19TH STREET, ARLINGTON, VIRGINIA 22209 (Address of Principal Executive Offices) (Zip Code) (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 number of shares outstanding of Registrant's Common Stock, par value $0.01 per share, at April 30, 1998, was 175,492,530. ================================================================================ THE AES CORPORATION INDEX
Page PART I. FINANCIAL INFORMATION Item 1. Interim Financial Statements: Consolidated Statements of Operations 1 Consolidated Balance Sheets 2 Consolidated Statements of Cash Flow 4 Notes to Consolidated Financial Statements 5 Item 2. Discussion and Analysis of Financial Condition and Results of Operations 7 Item 3. Quantitative and Qualitative Disclosures About Market Risk 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings 12 Item 2. Changes in Securities and Use of Proceeds 12 Item 3. Defaults Upon Senior Securities 12 Item 4. Submission of Matters to a Vote of Security Holders 12 Item 5. Other Information 12 Item 6. Exhibits and Reports on Form 8-K 12 Signatures 16
PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. THE AES CORPORATION - ------------------- CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE PERIODS ENDED MARCH 31, 1997 AND 1998
- ------------------------------------------------------------------------------------------------------------ (UNAUDITED) THREE THREE MONTHS MONTHS ENDED ENDED 3/31/97 3/31/98 - ------------------------------------------------------------------------------------------------------------ ($ in millions, except per share amounts) REVENUES: Sales and services $ 261 $ 575 OPERATING COSTS AND EXPENSES: Cost of sales and services 167 397 Selling, general and administrative expenses 9 15 Provision to reduce contract receivables 7 15 -------------- -------------- TOTAL OPERATING COSTS AND EXPENSES 183 427 -------------- -------------- OPERATING INCOME 78 148 OTHER INCOME AND (EXPENSE): Interest expense (44) (101) Interest income 8 14 Foreign currency exchange loss -- (2) Equity in earnings (before income tax) 19 57 -------------- -------------- INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 61 116 Income taxes 19 33 Minority interest 2 18 -------------- -------------- NET INCOME $ 40 $ 65 ============== ============== BASIC EARNINGS PER SHARE: $ 0.26 $ 0.37 ============== ============== DILUTED EARNINGS PER SHARE: $ 0.25 $ 0.37 ============== ==============
See Notes to Consolidated Financial Statements 1 THE AES CORPORATION - ------------------- CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1997 AND MARCH 31, 1998
- -------------------------------------------------------------------------------------------------------------------- (UNAUDITED) 12/31/97 3/31/98 - -------------------------------------------------------------------------------------------------------------------- ($ in millions) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 302 $ 317 Short-term investments 127 99 Accounts receivable, less provision to reduce contract receivables (1997-$37 and 1998-$52) 323 365 Inventory 95 95 Asset held for sale 139 - Receivable from affiliates 23 16 Deferred income taxes 47 37 Prepaid expenses and other current assets 134 131 ----------- ----------- TOTAL CURRENT ASSETS 1,190 1,060 PROPERTY, PLANT AND EQUIPMENT: Land 29 37 Electric generation and distribution assets 3,809 4,120 Accumulated depreciation and amortization (373) (410) Construction in progress 684 549 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT, NET 4,149 4,296 OTHER ASSETS: Deferred financing costs, net 122 120 Project development costs 87 92 Investments in and advances to affiliates 1,863 1,942 Debt service reserves and other deposits 236 180 Electricity sales concessions and contracts 1,179 1,189 Goodwill 23 22 Other assets 60 94 ----------- ----------- TOTAL OTHER ASSETS 3,570 3,639 ----------- ----------- TOTAL $ 8,909 $ 8,995 =========== ===========
See Notes to Consolidated Financial Statements 2 THE AES CORPORATION - ------------------- CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1997 AND MARCH 31, 1998
- -------------------------------------------------------------------------------------------------------------- (UNAUDITED) 12/31/97 3/31/98 - -------------------------------------------------------------------------------------------------------------- ($ in millions) LIABILITIES & STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 205 $ 187 Accrued interest 68 72 Accrued and other liabilities 335 292 Other notes payable - current portion - 23 Project financing debt - current portion 596 177 -------- --------- TOTAL CURRENT LIABILITIES 1,204 751 LONG-TERM LIABILITIES: Project financing debt 3,489 3,607 Revolving bank loan 27 225 Other notes payable 1,069 1,077 Deferred income taxes 273 351 Other long-term liabilities 291 268 -------- --------- TOTAL LONG-TERM LIABILITIES 5,149 5,528 MINORITY INTEREST 525 653 COMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY TRUSTS HOLDING SOLELY JUNIOR SUBORDINATED DEBENTURES OF AES 550 550 STOCKHOLDERS' EQUITY: Common stock 2 2 Additional paid-in capital 1,030 1,037 Retained earnings 581 646 Cumulative foreign currency translation adjustment (131) (171) Less treasury stock at cost (1) (1) -------- --------- TOTAL STOCKHOLDERS' EQUITY 1,481 1,513 -------- --------- TOTAL $ 8,909 $ 8,995 ======== =========
See Notes to Consolidated Financial Statements 3 CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998
- -------------------------------------------------------------------------------------------------------------- (UNAUDITED) Three Three Months Months Ended Ended 3/31/97 3/31/98 - -------------------------------------------------------------------------------------------------------------- ($ in millions) OPERATING ACTIVITIES: Net Income $ 40 $ 65 Adjustments to net income: Depreciation and amortization 15 45 Provision for deferred taxes 5 20 Undistributed earnings of affiliates (16) (48) Other (12) 15 Change in working capital (22) (89) ------ ------- Net cash provided by operating activities 10 8 INVESTING ACTIVITIES: Property additions (97) (156) Acquisitions, net of cash acquired -- (76) Proceeds from the sales of equity investments -- 254 Sale/(purchase) of short-term investments (6) 28 Affiliate advances and equity investments (90) (1) Project development costs (6) (5) Debt service reserves and other assets (39) 56 ------- ------- Net cash provided by (used in) investing activities (238) 100 FINANCING ACTIVITIES: Borrowings/(repayments) under the revolver (213) 221 Issuance of project financing debt and other coupon bearing securities 540 140 Repayments of project financing debt and other coupon bearing securities (12) (441) Payments for deferred financing costs -- (5) Other liabilities -- (15) Contributions by minority interests 2 -- Sale of common stock 149 7 ------- ------- Net cash provided by (used in) financing activities 466 (93) Increase in cash and cash equivalents 238 15 Cash and cash equivalents, beginning 185 302 ======= ======== Cash and cash equivalents, ending $ 423 $ 317 ======= ======== Supplemental interest and income taxes disclosures: Cash payments for interest $ 38 $ 97 Cash payments for income taxes 11 13
See Notes to Consolidated Financial Statements 4 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. 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, 1997 and 1998, respectively, are included. All such adjustments are accruals of a normal and recurring nature. The results of operations for the period ended March 31, 1998 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, 1997. 2. Net Income Per Share Basic and diluted net income per share computations are based on the weighted average number of shares of common stock and potential common stock outstanding during the period, after giving effect to stock splits. 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 SFAS (Statement of Financial Accounting Standards) No. 128, Earnings Per Share. Comparative earnings per share data have been restated for prior periods. The number of shares used in computing basic earnings per share were 155.5 million and 175.1 million for the quarters ended March 31, 1997 and 1998, respectively. The number of shares used in computing diluted earnings per share were 159.6 and 186.3 for the quarters ended March 31, 1997 and 1998, respectively. 3. Inventory Inventory, valued at the lower of cost (principally first in, first out method) or market, consists of coal, raw materials, spare parts, and supplies. Inventory at December 31, 1997 and March 31, 1998 consisted of the following (in millions): 1997 1998 ---- ---- Coal, oil and other raw materials $ 58 $ 57 Spare parts, materials and supplies 37 38 ---- ---- Total $ 95 $ 95 ==== ==== 5 4. 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 condensed income statement information 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 three months ended March 31, 1997 and condensed income statement information of NIGEN Ltd., Medway Power Ltd., Light, CEMIG (a 9.45% owned Brazilian affiliate), and Kingston (a 50% owned Canadian affiliate) for the three months ended March 31, 1998. 3/31/97 3/31/98 ------- ------- Revenues $313 $1,200 Operating Income 93 358 Net Income 41 274 5. Litigation The Company is involved in certain legal proceedings in the normal course of business. 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. 6. Acquisitions In February 1998, the Company acquired approximately 80% of Compania de Luz Electrica de Santa Ana ("CLESA") , an electricity distribution company in El Salvador, for approximately $96 million. The acquisition was accounted for as a purchase. The purchase price allocation has been prepared on a preliminary basis subject to adjustments resulting from additional facts that may come to light when the engineering, environmental, and legal analysis are completed during the allocation period. Subsequent to the first quarter of 1997, the Company completed its acquisitions of EDEN and EDES (May 1997), Los Mina and Indian Queens (June 1997), and Sul and Altai (October 1997) and its equity investments in Kingston and CEMIG (June 1997), all of which were accounted for as purchases. The accompanying statements of operations include the operating results and equity earnings for all of the acquired companies from the dates of the acquisitions and investments. The following table presents supplemental unaudited pro forma operating information as if each of the acquisitions and investments had occurred at the beginning of the periods presented (in millions, except per share amounts): Quarter Quarter Ended Ended 3/31/97 3/31/98 ------- -------- Revenues $458 $581 Net Income 24 65 Basic Earnings Per Share 0.14 0.37 Diluted Earnings Per Share 0.14 0.37 6 7. Comprehensive Income The Company has adopted SFAS No. 130, Reporting Comprehensive Income. The components of other comprehensive income include $19 million and $40 million of foreign currency translation adjustment losses for the quarters ended March 31, 1997 and 1998, respectively. Comprehensive income is $21 million and $25 million for the quarters ended March 31, 1997 and 1998, respectively. 8. Subsequent Events In May 1998, Energia Global International, Ltd. purchased 20% of AES's interest in CLESA from AES for approximately $8 million under an option agreement negotiated during the Company's February 1998 acquisition of approximately 80% of CLESA. ITEM 2. DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. INTRODUCTION The AES Corporation and its subsidiaries and affiliates (collectively "AES" or the "Company") are helping to meet the world's needs by providing electricity to customers in many countries in a socially responsible way. Until recently, the Company's sales of electricity were made almost exclusively to customers (generally electric utilities or regional electric companies) on a wholesale basis for further resale to end users. This is often referred to as the electricity "generating" business. Sales by these generating companies are usually made under long-term contracts from power plants owned by the Company. The Company's ownership portfolio of power facilities includes new plants constructed for such purposes ("greenfield" plants) as well as existing power plants acquired through competitively bid privatization initiatives and negotiated acquisitions. AES now operates and owns (entirely or in part) a diverse portfolio of electric power plants (including those within the integrated distribution companies discussed below) with a total capacity of 17,681 megawatts ("MW"). Of the total, 1,069 MW (six plants) are located in the United States, 1,588 MW (four plants) are in the United Kingdom, 885 MW (six plants) are in Argentina, 603 MW (seven plants) are in China, 1,281 MW (three pants) are in Hungary, 5,856 MW (thirty-nine plants) are in Brazil, 5,384 MW (seven plants) are in Kazakhstan (including 4,000 MW attributable to Ekibastuz which currently has a capacity factor of approximately 20%), 210 MW (one plant) are in the Dominican Republic, 110 MW (one plant) are in Canada, and 695 MW (two plants) are in Pakistan. AES also is currently in the process of adding approximately 5,931 MW to its operating portfolio by constructing several new plants. These include a 180 MW coal-fired plant in the United States, four coal-fired plants in China totaling 2,314 MW, one natural gas-fired and two hydro plants in Brazil totaling 1,200 MW, a 230 MW natural gas-fired plant in the United Kingdom, a 405 MW natural gas-fired plant in the Netherlands, a 288 MW kerosene-fired plant in Australia, an 830 MW natural gas-fired plant in Argentina and a 484 MW natural gas-fired plant in Mexico. 7 As a result, AES's total of 87 power plants in operation or under construction approximates 23,612 MW, and net equity ownership (total MW adjusted for the Company's ownership percentage) represents approximately 12,333 MW. Beginning in 1996, AES has also acquired interests (both majority and minority) in companies that sell electricity directly to commercial, industrial, governmental and residential customers. This is often referred to as the electricity "distribution" business. Electricity sales by AES's distribution businesses are generally made pursuant to the provisions of long-term electricity sale concessions granted by the appropriate governmental authority as part of the original privatization of each distribution company. 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. Each distribution company also purchases, in varying proportions, electricity from third party wholesale suppliers, including in certain cases, other subsidiaries of the Company. AES has majority ownership in two distribution companies in Argentina, one in Brazil and one in El Salvador, and less than majority ownership in three additional distribution companies in Brazil (including Metropolitana which was acquired by Light in April 1998). These seven companies serve a total of approximately 12.5 million customers with sales exceeding 98,000 gigawatt hours. On a net equity basis, AES's ownership represents approximately 2.4 million customers and sales exceeding 19,000 gigawatt hours. AES does not limit its investments solely to the most developed countries or economies, or only to those countries with investment grade sovereign credit ratings. In certain locations, particularly developing countries or countries that are in a transition from centrally planned to market oriented economies, the electricity purchasers, both wholesale and retail, may experience difficulty in meeting contractual payment obligations, and in such situations, that customer may be subject to contractually imposed interest or penalty charges. The prolonged failure of any of the Company's significant customers to fulfill its contractual payment obligations could have a substantial negative impact on AES's results of operations. Beginning in August 1996 and continuing through March 31, 1998, AES has recorded a provision of $35 million associated with aggregate outstanding receivables (excluding VAT) of $62 million at March 31, 1998 related to the operations of the Ekibastuz power plant in Kazakhstan. Approximately $35 million of the aggregate balance (excluding VAT), before considering the provision, is due from a government-owned distribution company. There can be no assurance of the ultimate collectibility of these amounts owned to Ekibastuz, or as a result, the recoverability of the related net assets (totaling $66 million at March 31, 1998) or additional amounts the Company may invest. As of May 15, 1998, the Pakistani Ministry of Water and Power ("WAPDA"), the Company's customer at its Lal Pir and Pak Gen plants, is late on making certain contractually obligated payments and is incurring additional interest charges as a result. Such late payments will become an event of default under the applicable power purchase agreement if not cured by WAPDA within the appropriate period of time. The Company believes that it is entitled to full payment under each contract. Certain subsidiaries and affiliates of the Company (domestic and non-U.S.) have signed long-term contracts or similar arrangements for the sale of electricity and are in various stages of developing the related greenfield power plants. 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 March 31, 1998, capitalized costs for projects under development were approximately $92 million. The Company believes that these costs are recoverable, however, no assurance can be given that changes in circumstances related to individual development projects will not occur or that any of these projects will be completed and reach commercial operation. The Company wishes to caution readers that there are important factors and areas affecting the Company which involve risk and uncertainty. These factors are set forth in the Company's Annual Report on Form 10-K filed with the Commission for the year ended December 31, 1997 under the heading "Cautionary Statement and Risk Factors", and should be considered when reviewing the Company's business. Such factors are relied upon by AES in issuing any forward-looking statements and could affect AES's actual results and cause such results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, AES. Some or all of these factors may apply to the Company's businesses as currently maintained or to be maintained. ACQUISITIONS AND OTHER EVENTS In February 1998, the Company acquired approximately 80% of the outstanding shares of Compania de Luz Electrica de Santa Ana ("CLESA"), an electricity distribution company in El Salvador, for a purchase price of approximately $96 million. The shares were purchased from Comision Ejecutiva Hidroelectrica del Rio Lempa ("CEL"), a government-owned utility company, in an auction held in January 1998. In May 1998, Energia Global International, Ltd. purchased 20% of AES's interest in CLESA from AES for approximately $8 million, under an option agreement negotiated during the acquisition. CLESA serves 188,000 customers and borders Guatemala and Honduras to the north. CLESA purchases its electricity in the local spot market and from CEL under an annual contract. Also in February, the Company sold its 20% interest in Hazelwood Power Partners to National Power PLC for approximately $139 million. Hazelwood Power Partners operates a 1,600 MW coal-fired power plant in Victoria, Australia ("Hazelwood"). AES had acquired its interest in Hazelwood as part of its acquisition of the international businesses of Destec Energy, Inc. in June 1997. In January 1998, the Company announced that it was selected by the Government of Bangladesh's Ministry of Energy and Mineral Resources as the winning bidder to build, own and 8 operate a 360 MW (net) gas-fired combined cycle power plant at a site near Dhaka, Bangladesh ("Haripur"). Haripur is expected to commence commercial operations in the year 2000, and electricity will be sold to the Bangladesh Power Development Board under the terms of a 22-year power purchase agreement which is expected to be signed following the formal award. In January 1998 the Company, pursuant to an option agreement with one of its partners in CEMIG, sold approximately 28% of its 13.06% ownership interest in CEMIG for $115 million, approximating its carrying value. As a result of the sale, the Company's ownership percentage decreased to approximately 10%. The Company continues to exert significant influence, as its voting interests remain unchanged. In November 1997, AES won a bid to acquire three natural gas-fired, electric generating stations from Southern California Edison ("Edison") for approximately $781 million. The three plants, all located on the southern California coast, are Alamitos (2,083 MW), Redondo Beach (1,310 MW) and Huntington Beach (563 MW). Each of the plants has been designated a "must-run facility" and initially will operate in part under agreements with California's Independent System Operator that was established through electricity restructuring. Pursuant to California's electricity restructuring law, Edison will remain under contract to operate and maintain the facilities for two years. Completion of the acquisition is subject to a number of conditions, but is expected to occur during the second quarter of 1998. FIRST QUARTER 1998 AND 1997 RESULTS OF OPERATIONS Revenues increased 120%, or approximately $314 million, to $575 million from the first quarter of 1997 to the first quarter of 1998. The increase in revenues was due primarily to the acquisition of EDEN and EDES in May 1997, Altai and Sul in October 1997, and the commencement of commercial operations at Lal Pir in November 1997 and Pak Gen in February 1998. Cost of sales and services increased 138%, or approximately $230 million, to $397 million from the first quarter of 1997 to the first quarter of 1998. The increase in cost of sales and services was primarily due to the acquisitions of EDEN, EDES, Sul and Altai, and the start of commercial operations at Lal Pir and Pak Gen. Gross margin, which represents total revenues reduced by cost of sales and services (before consideration of the provision to reduce contract receivables), increased 89%, or approximately $84 million, to $178 million during the same period. The increase in gross margin was primarily due to the acquisitions and commencement of commercial operations as discussed above. Gross margin as a percentage of revenues (net of the provision to reduce contract receivables) decreased from 33% in the first quarter of 1997 to 28% in the first quarter of 1998. The decrease was primarily due to lower relative gross margin percentages of recently acquired businesses including EDEN, EDES, Sul and Altai. Selling, general and administrative expenses increased 67%, or approximately $6 million to $15 million from the first quarter of 1997 to the first quarter of 1998, and as a percentage of total revenue, were 3% for both quarters. The increase was primarily due to increased business development activities. The Company's selling, general and administrative costs do not necessarily vary with changes in revenues. Operating income increased 90%, or approximately $70 million, to $148 million from the first quarter of 1997 to the first quarter of 1998. The increase was the result of the factors discussed above. Interest expense increased 130%, or approximately $57 million, to $101 million from the first quarter of 1997 to the first quarter of 1998. The increase resulted from the additional interest expense associated with the senior subordinated notes, the TECONS and project financing debt issued in 1997 relating to the acquisitions during the year, offset slightly by declining balances of project financing 9 debt of existing projects and the retirement of the $75 million, 9.75% Senior Subordinated Notes in July 1997. Interest income increased 75%, or approximately $6 million, to $14 million from the first quarter of 1997 to the first quarter of 1998. The increase was due primarily to interest income associated with late payments on customer accounts at certain distribution subsidiaries, interest income on higher cash balances at other subsidiaries, and interest on debt service reserve accounts. Equity in earnings of affiliates (before income taxes) increased 200%, or approximately $38 million, to $57 million from the first quarter of 1997 to the same period of 1998. The increase was due primarily to earnings from the Company's investment in CEMIG in June 1997. Income taxes increased 74%, or approximately $14 million, to $33 million from the first quarter of 1997 to the first quarter of 1998. The increase for the quarter was due primarily to higher income before taxes and an increase in the tax rate from 32% to 34% from the first quarter of 1997 to the first quarter of 1998. FINANCIAL POSITION, CASH FLOWS AND FOREIGN CURRENCY EXCHANGE RATES At March 31, 1998, cash and cash equivalents totaled approximately $317 million, as compared to $302 million at December 31, 1997. The $15 million increase in cash resulted from a use of $93 million for financing activities which were funded by $100 million from investing activities and $8 million provided by operating activities. Significant investing activities included project construction at Barry, Mt. Stuart, Pak Gen and Warrior Run, the acquisition of CLESA, and proceeds from the sales of the Company's 20% interest in Hazelwood and a portion of the Company's CEMIG investment. The net use of cash from financing activities was primarily the result of repayments of $441 million of project financing debt offset by borrowings of $221 million under the Revolver, and borrowing $140 million of project financing debt. Unrestricted net cash flow of the parent company totaled approximately $260 million for the four quarters ended March 31, 1998. The increase in electric generation and distribution assets of $311 million to $4,120 million from December 31, 1997 to March 31, 1998 was due primarily to the acquisition of CLESA and Pak Gen's commencement of operations. The decrease in construction in progress of $135 million to $549 million was due to construction completion at Pak Gen offset by the progress payments at the other facilities in construction. The decrease in the current portion of project financing debt of $419 million, to $177 million from December 31, 1997 to March 31, 1998 was primarily due to the repayment of the bridge loans associated with the acquisitions of CEMIG, EDEN and EDES with the proceeds from the sale of the Hazelwood interest and a portion of the Company's equity investment in CEMIG and borrowings under the Revolver. 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. 10 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 $171 million in cumulative foreign currency translation adjustment losses at March 31, 1998. 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 1998 set forth in the Company's Annual Report filed with the Commission on Form 10-K for the year ended December 31, 1997. 11 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is involved in certain legal proceedings in the normal course of business. 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 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 April 1998, a subsidiary of the Company signed a 40-year concession agreement for its 230 MW Caracoles project and took over the operation of Quebrada de Ullum, an existing 45 MW hydroelectric plant. The Caracoles project is located in San Juan Province, Argentina on the San Juan River where AES already owns and operates the Ullum 45 MW hydroelectric facility. The project is a mixed hydroelectric/irrigation system that, when completed, will consist of the existing Quebrada de Ullum plant and two newly constructed dams and their associated facilities. The Province of San Juan, with credit support from the Republic of Argentina, is providing the funds for the irrigation portion of the project. Also in April 1998, Light (a 14% owned affiliate of the Company) purchased a majority and controlling interest in the Sao Paulo, Brazil electricity distribution company Metropolitana. Metropolitana serves approximately 4.3 million customers with sales exceeding 34,000 gigawatt hours. As a member of the Light Consortium, AES has the ability to exercise significant influence in Metropolitana. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits. 3.1 Amended and Restated Certificate of Incorporation of The AES Corporation is incorporated herein by reference to Exhibits 3.1 and 3.2 to the Registration Statement on Form S-8 (Registration No. 333-26225). 3.2 By-Laws of The AES Corporation, as amended, are incorporated herein by reference to Exhibit 3.2 of the Registration Statement on Form S-4 (Registration No. 333-22513). 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 12 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. 13 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. 4.15 Other instruments defining the rights of holders of long-term indebtedness of the Registrant and its consolidated subsidiaries. 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). 10.9 Deferred Compensation Plan for Directors. 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. 14 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. 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 dated January 9, 1998 in connection with the Registrant's acquisition by a subsidiary of the Registrant of 90% of the common shares of Companhia Centro-oeste de Distribuicao de Energia Electrica (also known as "CCODEE" or "CEEE-D2" and now known as "AES Sul") including audited financial statements. 15 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, 1998 By: /s/ Barry J. Sharp ------------------------ Name: Barry J. Sharp Title: Senior Vice President and Chief Financial Officer 16 EXHIBIT INDEX Sequentially Exhibit Description of Exhibit Numbered Page - ------- ---------------------- ------------ 10.9 Deferred Compensation Plan for Directors. 11 Statement of Computation of Earnings Per Share. 27 Financial Data Schedule. EX-10.9 2 EXHIBIT 10.9 Exhibit 10.9 THE AES CORPORATION DEFERRED COMPENSATION PLAN FOR DIRECTORS ARTICLE I GENERAL PROVISIONS ------------------ Section 1.1. Establishment and Purpose. The AES Corporation ("Company") hereby amends and restates The AES Corporation Deferred Compensation Plan for Directors ("Plan") pursuant to which each director of the Company who is not an employee of the Company or any of its subsidiaries (a "Non-Employee Director") shall be eligible through an election to defer receipt of any compensation to be earned by such Non-Employee Director and to have Stock Units (as hereinafter defined) credited to an account established for such Non-Employee Director by the Company. The purpose of the Plan is to assist the Company in attracting, retaining and motivating highly qualified Non-Employee Directors and to promote identification of, and align Non-Employee Directors' interests more closely with, the interests of the stockholders of the Company. Section 1.2. Definitions. In addition to the terms previously or hereafter defined herein, the following terms when used herein shall have the meaning set forth below: "Board" shall mean the Board of Directors of the Company. "Committee" shall mean the committee of the Board appointed by the Board to administer the Plan. Unless otherwise determined by the Board, the Committee shall be the Compensation Committee of the Board. "Common Stock" shall mean the Company's common stock, par value $.01 per share. "Compensation" shall mean all remuneration paid to a Non-Employee Director for service as such that is not deferred hereunder. "Deferred Compensation" shall mean all remuneration paid to a Non-Employee Director for service as such that is deferred hereunder. "Fair Market Value" shall mean, as of any date, the mean of the highest and lowest sales prices for the Common Stock as reported in the New York Stock Exchange -- Composite Transactions reporting system for the date in question or, if no sales were effected on such date, on the next preceding date on which sales were effected. "Plan Year" shall mean the twelve-month period beginning January 1 and ending December 31 in any particular year. "Stock Unit" shall mean a credit that is equivalent to one share of Common Stock. Section 1.3. Administration. The Plan shall be administered by the Committee. The Committee shall serve at the pleasure of the Board. A majority of the Committee shall constitute a quorum, and the acts of a majority of the members of the Committee present at any meeting at which a quorum is present, or acts approved in writing by a majority of the members of the Committee, shall be deemed the acts of the Committee. The Committee is authorized to interpret and construe the Plan, to make all determinations and take all other actions necessary or advisable for the administration of the Plan, and to delegate to employees of the Company or any subsidiary the authority to perform administrative functions under the Plan; provided, however, that the Committee shall have no authority to determine the persons entitled to receive Common Stock or Stock Units under the Plan nor the timing, amount or price of Common Stock or Stock Units issued under the Plan. Section 1.4. Eligibility. An individual who is a Non-Employee Director shall be eligible to participate in the Plan. Section 1.5. Common Stock Subject to the Plan. The maximum number of shares of Common Stock that may be issued pursuant to the Plan is 3,750,000. Common Stock to be issued under the Plan may be either authorized and unissued shares of Common Stock or shares of Common Stock held in treasury by the Company. ARTICLE II ELECTIONS AND DISTRIBUTIONS --------------------------- Section 2.1. Elections to Defer Compensation. Any Non-Employee Director may elect to defer receipt of compensation otherwise payable to the Non-Employee Director for the Plan Year commencing January 1, 1998 and thereafter and to have such Deferred Compensation credited as Stock Units hereunder ("Stock Unit Election"). An election made by any Non-Employee Director prior to January 1, 1997, under the Plan as in effect prior to April 1, 1997, relating to Compensation otherwise payable to the Non-Employee Director in 1997 and prior years shall be given effect hereunder. If a Non-Employee Director makes a Stock Unit Election, an account established for the Non-Employee Director and maintained by the Company shall be credited with that number of Stock Units equal to the number of shares of Common Stock (including fractions of a share to two decimal places) that could have been purchased with the amount of Deferred Compensation subject to a Stock Unit Election based on the average closing price of the Common Stock on a national securities exchange for the 30-day period ending on the last trading day of the quarter with respect to which such Deferred Compensation is credited to the Non-Employee Director. Section 2.2. Terms and Conditions of Elections. A Stock Unit Election (an "Election") shall be subject to the following terms and conditions: a. An Election shall be in writing and shall be irrevocable; and b. With respect to the Plan Year commencing January 1, 1998 and subsequent Plan Years, an Election shall be effective for any Plan Year only if made on or prior to the June 30 immediately preceding the commencement of such Plan Year; and c. An Election shall remain in effect for all future Plan Years unless terminated or changed pursuant to an Election made on or prior to June 30 to take effect for the next Plan Year. Section 2.3. Adjustment of Stock Unit Accounts. a. Cash Dividends -- As of the date that any cash dividend is paid to stockholders of the Company, the Non-Employee Director's Stock Unit account shall be credited with additional Stock Units equal to the number of shares of Common Stock (including fractions of a share to two decimal places) that could have been purchased with the dividends paid on the number of shares of Common Stock equal to the number of Stock Units in such Non-Employee Director's account, based on the methodology described in Section 2.1 hereof. b. Stock Dividends -- In the event that a dividend shall be paid upon the Common Stock of the Company in shares of Common Stock, the number of Stock Units in each Non-Employee Director's Stock Unit account shall be adjusted by adding thereto additional Stock Units equal to the number of shares of Common Stock which would have been distributable on the Common Stock represented by Stock Units if such shares of Common Stock had been outstanding on the date fixed for determining the stockholders entitled to receive such stock dividend. c. Other Adjustments -- In the event that the outstanding shares of Common Stock of the Company shall be changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation, whether through reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation, then there shall be substituted, for the shares of Common Stock represented by Stock Units, the number and kinds of shares of stock or other securities which would have been substituted therefor if such shares of Common Stock had been outstanding on the date fixed for determining the stockholders entitled to receive such changed or substituted stock or other securities. In the event there shall be any change, other than specified in this Section 2.3, in the number or kind of outstanding shares of Common Stock of the Company or of any stock or other securities into which such Common Stock shall be changed or for which it shall have been exchanged, an adjustment in the number of Stock Units or the Common Stock represented by such Stock Units, such adjustment shall be made by the Board and shall be effective and binding for all purposes of the Plan and on each outstanding Stock Unit account. In the event of any recapitalization in which shares of Common Stock are converted into, exchanged for or entitled to shares of a non-equity security of the Company, securities of another issuer or other non-stock consideration, all stock units shall be converted to cash based on the fair market value of the Common Stock immediately prior to the first public announcement of the recapitalization, or the effective date of the recapitalization, whichever occurs earlier, and such cash shall be distributed to all participants in the same manner as in the case of termination of this Plan pursuant to Section 3.2. Section 2.4. Distribution of Stock Units. Unless a Non-Employee Director has selected a different payment option as set forth below, as soon as practicable after the end of the calendar quarter following the date that such Non-Employee Director ceases (other than by reason of such Non-Employee Director's death) to be a Non-Employee Director (hereinafter, "retirement"), the Company shall issue (the "Initial Distribution") to such Non-Employee Director one-fifth (20.00%) of that number of shares of Common Stock equal to the whole number of Stock Units in such Non-Employee Director's Stock Unit account determined as of the close of the calendar quarter in which the Non-Employee Director ceased to be a Non-Employee Director; on the first, second and third anniversary of the Initial Distribution, the Company shall issue to such Non-Employee Director the same number of shares of Common Stock distributed in connection with the Initial Distribution. As soon as practicable after the fourth anniversary of the Initial Distribution, the Company shall (i) issue to such Non-Employee Director the balance of that number of shares of Common Stock equal to the whole number of Stock Units in such Non-Employee Director's Stock Unit account as of such anniversary date and (ii) distribute cash equal to any fractional Stock Units remaining in such account multiplied by the Fair Market Value of the Common Stock as of such fourth anniversary date. A Non-Employee Director may elect to receive the Common Stock represented by the Stock Units in such Non-Employee Director's Stock Unit account in a single payment on such date as the Non-Employee Director may specify or in annual installments (not to exceed ten) beginning after retirement from the Board by written notification to the Company of such elected payment option and may modify any such election by a subsequent written notification to the Company; provided, however, that the Company shall be required to give effect to any such written notification only if submitted to the Company no fewer than twelve months prior to such Non-Employee Director's retirement from the Board. Section 2.5. Special Election. Each Non-Employee Director serving as a member of the Board on May 1, 1997 may elect the manner in which the Non-Employee Director's Stock Unit account is to be distributed following the date of such Non-Employee Director's retirement. Such election must be made by May 1, 1997 and shall be effective only with respect to distributions made on or after May 1, 1998. Section 2.6. Distributions on Death. In the event of the death of a Non-Employee Director, whether before or after cessation of service as a Non-Employee Director, any Stock Units remaining in the Stock Unit account to which he or she was entitled shall be converted to Common Stock as of the last day of the calendar quarter in which the Non-Employee Director's death occurred. Fractional Stock Units shall be converted to cash based on the Fair Market Value of the Common Stock. The Company shall issue the Common Stock and distribute the cash as soon as practicable after the end of the calendar quarter in which the Non-Employee Director's death occurred in a lump sum to such person or persons or the supervisors thereof, including corporations, unincorporated associations or trusts, as the Non-Employee Director may have designated. All such designations shall be made in writing, signed by the Non-Employee Director and delivered to the Company. A Non-Employee Director may from time to time revoke or change any such designation by written notice to the Company. If there is no unrevoked designation on file with the Company at the time of the Non-Employee Director's death, or if the person or persons designated therein shall have all predeceased the Non-Employee Director or otherwise ceased to exist, such distributions shall be made to the Non-Employee Director's estate. Any distribution under this Section 2.6 shall be made as soon as practicable following notification to the Company of the Non-Employee Director's death. ARTICLE III MISCELLANEOUS PROVISIONS ------------------------ Section 3.1. Amendment and Discontinuance. The Board may alter, amend, suspend or discontinue the Plan, provided that no such action shall deprive any person without such person's consent of any rights theretofore granted pursuant hereto. The Board may, in its discretion, submit any proposed amendment to the Plan to the stockholders of the Company for approval and shall submit proposed amendments to the Plan to the stockholders of the Company for approval if such approval is required in order for the Plan to comply with Rule 16b-3 of the Exchange Act (or any successor rule). Section 3.2. Termination of the Plan. This Plan shall terminate and full distribution shall be made from all participants' Deferred Compensation accounts upon any change of control of the Company. Either of the following shall be deemed to be a change of control: (a) the occurrence, without the prior approval of the Board, of the acquisition, directly or indirectly, by any person of 50% or more of the outstanding Common Stock; (b) the failure of the prior directors to constitute a majority of the Board at any time within two years following any electoral event. As used in this sentence and the preceding sentence, person shall mean a natural person, an entity (together with an affiliate thereof, as defined in Rule 405 under the Securities Act of 1933, as amended) or a group, as defined in Rule 13d-5 under the Securities Exchange Act of 1934, as amended; prior directors shall mean the persons serving on the Board immediately prior to any electoral event; and electoral event shall mean any contested election of directors or any tender or exchange offer for Common Stock by any person other than the Company or a majority-owned subsidiary thereof. The Board at any time, at its discretion, may terminate this Plan. If the Board terminates this Plan after any person or group of persons shall have acquired or proposed to acquire control of the Company control of the Board, full and prompt distribution shall be made from all Non-Employee Directors' Deferred Compensation accounts. Otherwise, distributions in respect of credits to Non-Employee Directors' Deferred Compensation accounts as of the date of termination shall be made in the manner and at the time prescribed in Sections 2.4, 2.5 and 2.6 herein. Section 3.3. Compliance with Governmental Regulations. Notwithstanding any provision of the Plan or the terms of any agreement entered into pursuant to the Plan, the Company shall not be required to issue any shares hereunder prior to registration of the shares subject to the Plan under the Securities Act of 1933 or the Exchange Act, if such registration shall be necessary, or before compliance by the Company or any participant with any other provisions of either of those acts or of regulations or rulings of the Securities and Exchange Commission thereunder, or before compliance with other federal and state laws and regulations and rulings thereunder, including the rules of the New York Stock Exchange, Inc. The Company shall use its best efforts to effect such registrations and to comply with such laws, regulations and rulings forthwith upon advice by its counsel that any such registration or compliance is necessary. Section 3.4. Compliance with Section 16. With respect to persons subject to Section 16 of the Exchange Act, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 (or its successor rule). To the extent that any provision of the Plan or any action by the Board of Directors or the Committee fails to so comply, it shall be deemed null and void to the extent permitted by law and to the extent deemed advisable by the Committee. Section 3.5. Non-Alienation of Benefits. No right or interest of a Non-Employee Director in a Stock Unit account under the Plan may be sold, assigned, transferred, pledged, encumbered or otherwise disposed of except as expressly provided in the Plan; and no interest or benefit of any Non-Employee Director under the Plan shall be subject to the claims of creditors of the Non-Employee Director. Section 3.6. Withholding Taxes. To the extent required by applicable law or regulation, each Non-Employee Director must arrange with the Company for the payment of any federal, state or local income or other tax applicable to the receipt of Common Stock or Stock Units under the Plan before the Company shall be required to deliver to the Non-Employee Director a certificate for Common Stock free and clear of all restrictions under the Plan. Section 3.7. Funding. No obligation of the Company under the Plan shall be secured by any specific assets of the Company, nor shall any assets of the Company be designated as attributable or allocated to the satisfaction of any such obligation. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of any unsecured creditor of the Company. Section 3.8. Governing Law. The Plan shall be governed by and construed and interpreted in accordance with the internal laws of the Commonwealth of Virginia. Section 3.9. Effective Date of Plan. The Plan as herein amended and restated shall be effective as of April 1, 1997. EX-11 3 EXHIBIT 11 THE AES CORPORATION EXHIBIT 11 - ------------------- STATEMENTS REGARDING COMPUTATION OF EARNINGS PER SHARE FOR THE PERIODS ENDED MARCH 31, 1997 AND 1998
- ------------------------------------------------------------------------------------------------------------ THREE THREE MONTHS MONTHS ENDED ENDED 3/31/97 3/31/98 - ------------------------------------------------------------------------------------------------ ($ in millions, except per share amounts) BASIC WEIGHTED AVERAGE SHARES OUTSTANDING 155.5 175.1 -------------- -------------- NET INCOME $ 40 $ 65 ============== ============== PER SHARE AMOUNT $ 0.26 $ 0.37 ============== ============== DILUTED - ------- Weighted Average Number of Shares of Common Stock Outstanding 155.5 175.1 Net effect of Dilutive Stock Options and Warrants Based on the Treasury Stock Method Using Ending Market Price 3.9 4.1 Stock Units Allocated to the Deferred Compensation Plans for Executives and Directors 0.2 0.2 Effect of Tecons - Based on the If-Converted Method 0.0 6.9 -------------- -------------- WEIGHTED AVERAGE SHARES OUTSTANDING 159.6 186.3 ============== ============== NET INCOME $ 40 $ 65 Additional Contribution to Net Income if Tecons is fully converted 0 3 -------------- -------------- ADJUSTED NET INCOME $ 40 $ 68 ============== ============== PER SHARE AMOUNT $ 0.25 $ 0.37 ============== ==============
EX-27 4 FDS --
5 1,000,000 US DOLLARS 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 1 317 99 417 (52) 95 1,060 4,706 (410) 8,995 751 4,909 550 0 2 1,511 8,995 570 575 397 427 0 15 101 116 33 65 0 0 0 65 0.37 0.37
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