EX-99.1 2 a06-23181_1ex99d1.htm EX-99

Exhibit 99.1

 

 

The Global Power Company

 

NEWS RELEASE

 

 

Media Contact: Robin Pence 703-682-6552

 

 

Investor Contact: Scott Cunningham 703-682-6336


AES REPORTS RECORD THIRD QUARTER REVENUES AND CASH FLOW
Brazil Restructuring Allowing AES to Receive Future Brazil Dividends
Results in Non-Cash Charge of $500 Million


ARLINGTON, VA., November 6, 2006 The AES Corporation (NYSE:AES) today reported record revenues and net cash from operating activities for the third quarter of 2006. Revenues increased 14% to $3.15 billion, compared to $2.76 billion in the third quarter of 2005, while net cash from operating activities increased 35% to $837 million, compared to $619 million last year.

During the quarter, the Company completed a portion of a broad financial restructuring of its Brazil businesses by selling part of its interest in Eletropaulo, a regulated utility. AES voting control was unaffected by the sale, and the proceeds were used in early October to repay in full $608 million in debt and accrued interest owed to the Brazilian National Development Bank (BNDES). Refinancing of the remaining holding company debt is expected to be completed later in the fourth quarter. The restructuring resulted in a $500 million after-tax, non-cash charge, or $0.76 diluted loss per share impact, resulting in a third quarter 2006 GAAP loss and reducing year to date GAAP earnings. Included in the non-cash charge is a $0.07 per share favorable adjusted earnings per share benefit. The charge and estimated impact was previously disclosed on the Company’s second quarter 2006 earnings conference call on August 7, 2006. The loss related primarily to the non-cash realization of cumulative currency translation losses associated with the Eletropaulo share sale.

On a GAAP basis, which includes the one-time charge, the third quarter 2006 net loss was $340 million, or $0.52 diluted loss per share, while the net loss from continuing operations was $353 million, or $0.54 diluted loss per share. Adjusted earnings per share (a non-GAAP financial measure) was a positive $0.34 per share for the quarter. These results compare to third quarter 2005 net income of $244 million, or $0.37 diluted earnings per share, net income from continuing operations of $214 million, or $0.32 diluted earnings per share, and adjusted earnings per share of $0.31.

1




For the nine months ending September 30, 2006 compared to the same 2005 period:

·                  Revenues increased 14% to $9.17 billion from last year’s $8.05 billion.

·                  Net cash from operating activities increased 24% to $1.81 billion from last year’s $1.46 billion.

·                  Net income was $180 million, or $0.27 diluted earnings per share, versus $453 million, or $0.68 diluted earnings per share.

·                  Net income from continuing operations was $213 million, or $0.32 diluted earnings per share, compared to $423 million, or $0.64 diluted earnings per share.

·                  Adjusted earnings per share were $1.05 compared to $0.59.

“This successful restructuring of our Brazil holding company allows us to reduce subsidiary debt and to receive future dividends from these businesses,” said Paul Hanrahan, President and Chief Executive Officer. “During the quarter, we continued to grow our business. We signed a long-term power purchase agreement and began construction in Texas of our largest wind project to date. We also signed a new power purchase agreement for a coal and biomass-fired power plant in Canada and continued to add quality projects to our business development pipeline.”

Prior period results reflect the decision in the second quarter of this year to dispose of two businesses and account for them as discontinued operations.

The Company reported the following highlights for the third quarter of 2006:

·                  The 14% revenue increase (approximately 12% excluding estimated foreign currency translation impacts) reflects higher prices in all segments, higher demand in Contract Generation and Regulated Utilities and consolidation of Itabo in Contract Generation.

·                  Gross margin increased 9% over the prior year due to higher demand, consolidation of Itabo and favorable foreign exchange rates in Brazil. Gross margin as a percent of revenue declined 160 basis points to 30.9% driven by higher fuel and maintenance costs in both Contract Generation and Competitive Supply.

·                  General and administrative expense increased $17 million, largely from higher business development spending and increased corporate staffing. The Company continues to strengthen its finance function in areas such as accounting and tax.

·                  The $500 million after-tax, non-cash Brazil restructuring charge includes $537 million recorded as loss on sale of subsidiary stock, $18 million of foreign currency transaction losses related to a transaction-related hedge, $121 million in favorable tax benefits, and $66 million of minority interest expense.

·                  Income tax for the 2006 period includes a $20 million unfavorable adjustment due to the recent identification and correction of an error on the 2004 income tax return.

2




·                  Net income for the third quarter includes $13 million associated with discontinued operations including a $5 million gain on the previously announced sale of our Indian Queens business in the U.K. and operating earnings from the discontinued operations.

·                  Free cash flow (a non-GAAP financial measure) increased to $664 million from $380 million in the third quarter of 2005. See the attached Non-GAAP Measures for further information on adjusted earnings per share and free cash flow.

The Company also reported the following segment highlights for the third quarter:

·                  Regulated Utilities segment revenues increased 13%, or approximately 7% excluding estimated foreign currency translation impacts, primarily driven by higher prices and demand in Latin America. Gross margin increased 29%, largely resulting from the increased revenues, while gross margin as a percent of revenue improved to 28.0% primarily due to lower transmission costs in Latin America and a favorable business tax settlement in Cameroon.  Eletropaulo recorded an increase in labor contingencies which was offset by a correction to depreciation expense.

·                  Contract Generation segment revenues increased 20%. Foreign currency translation was not a significant factor in the quarter. The increase largely relates to consolidation of Itabo, a Dominican Republic business previously carried as an equity investment, and higher demand.  Gross margin was consistent with the prior quarter as higher emission allowance sales in Europe were offset by higher maintenance costs in Latin America and North America. Gross margin as a percent of revenue fell to 36.1% due to higher fuel costs and maintenance expenses.

·                  Competitive Supply segment revenues grew 3%, or approximately 4% excluding the estimated impacts of foreign currency translation, primarily reflecting higher prices in Argentina and New York. Gross margin fell 20% and gross margin as a percent of revenues declined to 25.4% largely due to outage related costs in North America.

The Company revised its guidance for earnings from continuing operations to $0.28 per share from $1.05 per share previously, largely reflecting the Brazil restructuring charge impacts in the third and fourth quarters. It increased its adjusted earnings per share guidance to $1.09 per share, which includes an estimated $0.05 per share non-recurring benefit from the Brazil restructuring, from $1.01 per share previously. The updated guidance also includes expected costs associated with certain fourth quarter debt refinancing transactions. The operating scenario underlying this guidance assumes a number of factors, including effective tax rate, foreign exchange rates, commodity prices, interest rates, tariff increases, new investments, and other significant factors, which could make actual results vary from the guidance.

3




During the quarter, the Company continued to build a strong business development pipeline that includes projects focusing on platform expansion and greenfield investments that generally follow the long-term contract generation business model, complemented by continued growth in the alternative energy business. As of September 30, 2006, the Company had almost 2,400 MW of new generation capacity under construction or in advanced engineering and design in Bulgaria, Chile, Panama, Spain, and the U.S. including fossil fuel and renewable energy projects. During the quarter the Company also acquired 73 MW of wind generation assets in California.

Attachments: Condensed Consolidated Statements of Operations, Segment Information, Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Cash Flows, Non-GAAP Measures, Parent Financial Information, and 2006 Financial Guidance Update.

Conference Call Information: AES will host a conference call today at 10:00 am Eastern Standard Time (EST). The call may be accessed via a live webcast which will be available at www.aes.com or by telephone in listen-only mode at 1-800-690-3108. International callers should dial 1-973-935-8753. Please call at least ten minutes before the scheduled start time. You will be requested to provide your name and affiliation. The AES Third Quarter 2006 Financial Review presentation will be available prior to the call at www.aes.com on the home page and also by selecting “Investor Information” and then “Quarterly Financial Results.”

A webcast replay, as well as a replay in downloadable MP3 format, will be accessible at www.aes.com beginning shortly after the completion of the call. A telephonic replay will be available at approximately 12:00 noon EST by dialing 1-877-519-4471 or 1-973-341-3080 for international callers. The system will ask for a reservation number; please enter 8007471 followed by the pound key (#). The telephonic replay will be available until Monday, November 20, 2006.

Safe Harbor Disclosure:  This news release contains forward-looking statements within the meaning of the Securities Act of 1933 and of the Securities Exchange Act of 1934.  Such forward-looking statements include, but are not limited to, those related to future earnings, growth and financial and operating performance.  Forward-looking statements are not intended to be a guarantee of future results, but instead constitute AES’s current expectations based on reasonable assumptions.  Forecasted financial information is based on certain material assumptions.  These assumptions include, but are not limited to, continued normal levels of operating performance and electricity volume at our distribution companies and operational performance at our contract generation businesses consistent with historical levels, as well as achievements of planned productivity improvements and incremental growth investments at normalized investment levels and rates of return consistent with prior experience.

4




Actual results could differ materially from those projected in our forward-looking statements due to risks, uncertainties and other factors. Important factors that could affect actual results are discussed in AES’s filings with the Securities and Exchange Commission, including, but not limited to, the risks discussed under Item 1A “Risk Factors” in AES’s 2005 Annual Report on Form 10-K.  Readers are encouraged to read AES’s filings to learn more about the risk factors associated with AES’s business.  AES undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About AES: AES is one of the world’s largest global power companies, with 2005 revenues of $11 billion.  With operations in 26 countries on five continents, AES’s generation and distribution facilities have the capacity to serve 100 million people worldwide.  Our 14 regulated utilities amass annual sales of over 82,000 GWh and our 122 generation facilities have the capacity to generate approximately 44,000 megawatts.  Our global workforce of 30,000 people is committed to operational excellence and meeting the world’s growing power needs.  To learn more about AES, please visit www.aes.com or contact AES media relations at media@aes.com.

###

 

5




THE AES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

($ in millions, except per share amounts)

 

2006

 

2005

 

2006

 

2005

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

3,150

 

$

2,759

 

$

9,170

 

$

8,051

 

Cost of sales

 

(2,176

)

(1,862

)

(6,326

)

(5,805

)

GROSS MARGIN

 

974

 

897

 

2,844

 

2,246

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

(66

)

(49

)

(180

)

(143

)

Interest expense

 

(488

)

(448

)

(1,362

)

(1,389

)

Interest income

 

119

 

96

 

325

 

278

 

Other (expense) income, net

 

(41

)

(11

)

(138

)

41

 

Gain on sale of investments

 

 

 

87

 

 

Loss on sale of subsidiary stock

 

(537

)

 

(537

)

 

Foreign currency transaction (losses) gains on net monetary position

 

(56

)

(21

)

(77

)

(54

)

Equity in earnings of affiliates

 

28

 

20

 

87

 

66

 

(LOSS) INCOME BEFORE INCOME TAXES AND MINORITY INTEREST

 

(67

)

484

 

1,049

 

1,045

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

(74

)

(173

)

(370

)

(400

)

Minority interest expense

 

(212

)

(97

)

(466

)

(222

)

(LOSS) INCOME FROM CONTINUING OPERATIONS

 

(353

)

214

 

213

 

423

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations of discontinued businesses, net of tax

 

8

 

30

 

(59

)

30

 

Gain on sale of discontinued business, net of tax

 

5

 

 

5

 

 

Extraordinary item, net of tax

 

 

 

21

 

 

NET (LOSS) INCOME

 

$

(340

)

$

244

 

$

180

 

$

453

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DILUTED EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

(Loss) Income from continuing operations

 

$

(0.54

)

$

0.32

 

$

0.32

 

$

0.64

 

Discontinued operations

 

0.02

 

0.05

 

(0.08

)

0.04

 

Extraordinary items

 

 

 

0.03

 

 

 

 

 

 

 

 

 

 

 

 

DILUTED (LOSS) EARNINGS PER SHARE

 

$

(0.52

)

$

0.37

 

$

0.27

 

$

0.68

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding (in millions)

 

658

 

677

 

670

 

664

 

 

 

 

 

 

 

 

 

 

 

 




 

THE AES CORPORATION
SEGMENT INFORMATION (unaudited)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

($ in millions)

 

2006

 

2005

 

2006

 

2005

 

 

 

 

 

 

 

 

 

 

 

BUSINESS SEGMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

 

 

 

 

 

 

 

 

Regulated Utilities

 

$

1,565

 

$

1,387

 

$

4,541

 

$

4,142

 

Contract Generation

 

1,250

 

1,046

 

3,600

 

3,019

 

Competitive Supply

 

335

 

326

 

1,029

 

890

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

3,150

 

$

2,759

 

$

9,170

 

$

8,051

 

 

 

 

 

 

 

 

 

 

 

GROSS MARGIN

 

 

 

 

 

 

 

 

 

Regulated Utilities

 

$

438

 

$

339

 

$

1,212

 

$

816

 

Contract Generation

 

451

 

452

 

1,301

 

1,197

 

Competitive Supply

 

85

 

106

 

331

 

233

 

 

 

 

 

 

 

 

 

 

 

Total gross margin

 

$

974

 

$

897

 

$

2,844

 

$

2,246

 

 

 

 

 

 

 

 

 

 

 

(LOSS) INCOME BEFORE INCOME TAXES AND MINORITY INTEREST

 

 

 

 

 

 

 

 

 

Regulated Utilities

 

$

(257

)

$

195

 

$

255

 

$

504

 

Contract Generation

 

302

 

347

 

1,020

 

811

 

Competitive Supply

 

56

 

86

 

295

 

193

 

Corporate

 

(168

)

(144

)

(521

)

(463

)

 

 

 

 

 

 

 

 

 

 

Total (loss) income before income taxes and minority interest

 

$

(67

)

$

484

 

$

1,049

 

$

1,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GEOGRAPHIC SEGMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

 

 

 

 

 

 

 

 

Latin America

 

$

1,842

 

$

1,606

 

$

5,243

 

$

4,635

 

North America

 

778

 

737

 

2,267

 

2,049

 

Europe & Africa

 

325

 

265

 

1,007

 

914

 

Asia & Middle East

 

205

 

151

 

653

 

453

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

3,150

 

$

2,759

 

$

9,170

 

$

8,051

 

 

 

 

 

 

 

 

 

 

 

GROSS MARGIN

 

 

 

 

 

 

 

 

 

Latin America

 

$

593

 

$

520

 

$

1,696

 

$

1,123

 

North America

 

239

 

265

 

672

 

691

 

Europe & Africa

 

74

 

40

 

273

 

215

 

Asia & Middle East

 

68

 

72

 

203

 

217

 

 

 

 

 

 

 

 

 

 

 

Total gross margin

 

$

974

 

$

897

 

$

2,844

 

$

2,246

 

 

 

 

 

 

 

 

 

 

 

(LOSS) INCOME BEFORE INCOME TAXES AND MINORITY INTEREST

 

 

 

 

 

 

 

 

 

Latin America

 

$

(123

)

$

351

 

$

709

 

$

737

 

North America

 

123

 

188

 

468

 

423

 

Europe & Africa

 

43

 

30

 

229

 

182

 

Asia & Middle East

 

57

 

58

 

163

 

165

 

Corporate

 

(167

)

(143

)

(520

)

(462

)

 

 

 

 

 

 

 

 

 

 

Total (loss) income before income taxes and minority interest

 

$

(67

)

$

484

 

$

1,049

 

$

1,045

 

 

 

 

 

 

 

 

 

 

 

 




 

THE AES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

 

 

September 30,

 

December 31,

 

($ in millions, except shares and par value)

 

2006

 

2005

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

Cash and cash equivalents

 

$

1,989

 

$

1,387

 

Restricted cash

 

460

 

418

 

Short term investments

 

569

 

199

 

Accounts receivable, net of reserves of $261 and $274, respectively

 

1,883

 

1,597

 

Inventory

 

507

 

458

 

Receivable from affiliates

 

5

 

2

 

Deferred income taxes - current

 

330

 

266

 

Prepaid expenses

 

154

 

119

 

Other current assets

 

947

 

752

 

Current assets of held for sale and discontinued businesses

 

34

 

34

 

Total current assets

 

6,878

 

5,232

 

 

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT

 

 

 

 

 

Land

 

936

 

858

 

Electric generation and distribution assets

 

23,449

 

22,235

 

Accumulated depreciation

 

(6,768

)

(6,041

)

Construction in progress

 

1,785

 

1,441

 

Property, plant and equipment, net

 

19,402

 

18,493

 

 

 

 

 

 

 

OTHER ASSETS

 

 

 

 

 

Deferred financing costs, net

 

319

 

293

 

Investment in and advances to affiliates

 

576

 

670

 

Debt service reserves and other deposits

 

621

 

568

 

Goodwill

 

1,412

 

1,406

 

Deferred income taxes - noncurrent

 

816

 

775

 

Noncurrent assets of held for sale and discontinued businesses

 

94

 

265

 

Other assets

 

1,818

 

1,730

 

Total other assets

 

5,656

 

5,707

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

31,936

 

$

29,432

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

Accounts payable

 

$

1,071

 

$

1,093

 

Accrued interest

 

509

 

381

 

Accrued and other liabilities

 

2,302

 

2,101

 

Current liabilities of held for sale and discontinued businesses

 

49

 

51

 

Recourse debt - current portion

 

 

200

 

Non-recourse debt - current portion

 

2,022

 

1,580

 

Total current liabilities

 

5,953

 

5,406

 

 

 

 

 

 

 

LONG-TERM LIABILITIES

 

 

 

 

 

Non-recourse debt

 

10,604

 

11,093

 

Recourse debt

 

4,783

 

4,682

 

Deferred income taxes - noncurrent

 

735

 

721

 

Long-term liabilities of held for sale and discontinued businesses

 

56

 

136

 

Pension liabilities and other post-retirement liabilities

 

879

 

855

 

Other long-term liabilities

 

3,313

 

3,279

 

Total long-term liabilities

 

20,370

 

20,766

 

 

 

 

 

 

 

Minority Interest (including discontinued operations of $7 and $7, respectively)

 

2,940

 

1,611

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

Common stock ($.01 par value, 1,200,000,000 shares authorized; 663,424,313 and 655,882,836 shares issued and outstanding, respectively)

 

7

 

7

 

Additional paid-in capital

 

6,581

 

6,517

 

Accumulated deficit

 

(1,034

)

(1,214

)

Accumulated other comprehensive loss

 

(2,881

)

(3,661

)

Total stockholders’ equity

 

2,673

 

1,649

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

31,936

 

$

29,432

 

 

 

 

 

 

 

 




 

THE AES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

 

 

Nine Months Ended

 

 

 

September 30,

 

($ in millions)

 

2006

 

2005

 

 

 

 

 

 

 

OPERATING ACTIVITIES

 

 

 

 

 

Net cash provided by operating activities

 

$

1,814

 

$

1,464

 

INVESTING ACTIVITIES

 

 

 

 

 

Capital expenditures

 

(1,045

)

(799

)

Acquisitions, net of cash acquired

 

(22

)

(85

)

Proceeds from the sale of business

 

817

 

 

Proceeds from the sale of assets

 

10

 

21

 

Sale of short-term investments

 

1,161

 

1,101

 

Purchase of short-term investments

 

(1,463

)

(1,053

)

(Increase) decrease in restricted cash

 

(51

)

17

 

Proceeds from the sale of emission allowances

 

75

 

30

 

Purchase of emission allowances

 

(30

)

(2

)

Decrease in debt service reserves and other assets

 

1

 

88

 

Purchase of long-term available for sale securities

 

(52

)

 

Other investing

 

(16

)

(15

)

Net cash used in investing activities

 

(615

)

(697

)

FINANCING ACTIVITIES

 

 

 

 

 

Borrowings under the revolving credit facilities, net

 

104

 

 

Issuance of recourse debt

 

 

6

 

Issuance of non-recourse debt

 

1,572

 

1,509

 

Repayments of recourse debt

 

(150

)

(258

)

Repayments of non-recourse debt

 

(1,978

)

(2,064

)

Payments of deferred financing costs

 

(64

)

(10

)

Distributions to minority interests

 

(210

)

(126

)

Contributions from minority interests

 

117

 

9

 

Issuance of common stock

 

59

 

20

 

Financed capital expenditures

 

(54

)

 

Other financing

 

(7

)

(4

)

Net cash used in financing activities

 

(611

)

(918

)

Effect of exchange rate changes on cash

 

14

 

32

 

Total increase (decrease) in cash and cash equivalents

 

602

 

(119

)

Cash and cash equivalents, beginning

 

1,387

 

1,272

 

Cash and cash equivalents, ending

 

$

1,989

 

$

1,153

 

 




THE AES CORPORATION

NON-GAAP MEASURES (unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

($ per share)

 

2006

 

2005

 

2006

 

2005

 

 

 

 

 

 

 

 

 

 

 

Diluted (Loss) Earnings Per Share From Continuing Operations

 

$

(0.54

)

$

0.32

 

$

0.32

 

$

0.64

 

 

 

 

 

 

 

 

 

 

 

FAS 133 Mark to Market (Gains)/Losses

 

0.02

 

(0.01

)

0.01

 

0.00

 

Currency Transaction (Gains)/Losses

 

0.02

 

 

0.01

 

(0.05

)

Net Asset (Gains)/Losses and Impairments

 

0.84

 

 

0.68

 

 

Debt Retirement (Gains)/Losses

 

 

 

0.03

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Earnings Per Share (1)

 

$

0.34

 

$

0.31

 

$

1.05

 

$

0.59

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures ($ Millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maintenance Capital Expenditures

 

$

173

 

$

239

 

$

539

 

$

509

 

Growth Capital Expenditures

 

306

 

31

 

560

 

290

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures

 

$

479

 

$

270

 

$

1,099

 

$

799

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Free Cash Flow ($ Millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Cash from Operating Activities

 

$

837

 

$

619

 

$

1,814

 

$

1,464

 

Less: Maintenance Capital Expenditures

 

173

 

239

 

539

 

509

 

 

 

 

 

 

 

 

 

 

 

Free Cash Flow (2)

 

$

664

 

$

380

 

$

1,275

 

$

955

 

 


(1)

Adjusted earnings per share (a non-GAAP financial measure) is defined as diluted earnings per share from continuing operations excluding gains or losses associated with (a) mark to market amounts related to FAS 133 derivative transactions, (b) foreign currency transaction impacts on the net monetary position related to Brazil, Venezuela, and Argentina, (c) significant asset gains or losses due to disposition transactions and impairments, and (d) costs related to the early retirement of recourse debt. AES believes that adjusted earnings per share better reflects the underlying business performance of the Company, and is considered in the Company’s internal evaluation of financial performance. Factors in this determination include the variability associated with mark-to-market gains or losses related to certain derivative transactions, currency transaction gains or losses, periodic strategic decisions to dispose of certain assets which may influence results in a given period, and the early retirement of corporate debt.

(2)

Results exclude businesses placed in discontinued operations effective June 30, 2006.

 




 

 

 

THE AES CORPORATION
PARENT FINANCIAL INFORMATION
Parent only data: last four quarters

 

 

4 Quarters Ended

 

($ in millions)

 

September 30,
2006
Actual

 

June 30,
2006
Actual

 

March 31,
2006
Actual

 

December 31,
2005
Actual

 

 

 

 

 

 

 

 

 

 

 

Total subsidiary distributions & returns of capital to Parent

 

 

 

 

 

 

 

 

 

Subsidiary distributions to Parent

 

$

1,014

 

$

937

 

$

930

 

$

988

 

Net distributions to/(from) QHCs (1)

 

 

 

 

5

 

Subsidiary distributions

 

1,014

 

937

 

930

 

993

 

 

 

 

 

 

 

 

 

 

 

Returns of capital distributions to Parent

 

68

 

34

 

42

 

44

 

Net returns of capital distributions to/(from) QHCs (1)

 

 

 

13

 

13

 

Returns of capital distributions

 

68

 

34

 

55

 

57

 

 

 

 

 

 

 

 

 

 

 

Combined distributions & return of capital received

 

1,082

 

971

 

985

 

1,050

 

Less: combined net distributions & returns of capital to/(from) QHCs (1)

 

 

 

(13

)

(18

)

Total subsidiary distributions & returns of capital to parent

 

$

1,082

 

$

971

 

$

972

 

$

1,032

 

 

 

 

 

 

 

 

 

 

 

 

Parent only data: quarterly

 

 

 

Quarter Ended

 

($ in millions)

 

September 30,
2006
Actual

 

June 30,
2006
Actual

 

March 31,
2006
Actual

 

December 31,
2005
Actual

 

 

 

 

 

 

 

 

 

 

 

Total subsidiary distributions & returns of capital to Parent

 

 

 

 

 

 

 

 

 

Subsidiary distributions to Parent

 

$

352

 

$

177

 

$

132

 

$

354

 

Net distributions to/(from) QHCs (1)

 

 

 

 

 

Subsidiary distributions

 

352

 

177

 

132

 

354

 

 

 

 

 

 

 

 

 

 

 

Returns of capital distributions to Parent

 

34

 

29

 

 

5

 

Net returns of capital distributions to/(from) QHCs (1)

 

 

 

 

 

Returns of capital distributions

 

34

 

29

 

 

5

 

 

 

 

 

 

 

 

 

 

 

Combined distributions & return of capital received

 

386

 

206

 

132

 

359

 

Less: combined net distributions & returns of capital to/(from) QHCs (1)

 

 

 

 

 

Total subsidiary distributions & returns of capital to Parent

 

$

386

 

$

206

 

$

132

 

$

359

 

 

 

 

 

 

 

 

 

 

 

 

Liquidity (2)

 

 

 

Balance at

 

($ in millions)

 

September 30,
2006
Actual

 

June 30,
2006
Actual

 

March 31,
2006
Actual

 

December 31,
2005
Actual

 

 

 

 

 

 

 

 

 

 

 

Cash at Parent

 

$

172

 

$

71

 

$

148

 

$

262

 

Availability under revolver

 

764

 

567

 

898

 

356

 

Cash at QHCs (1)

 

37

 

7

 

17

 

6

 

Ending liquidity

 

$

973

 

$

645

 

$

1,063

 

$

624

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

(1)             The cash held at qualifying holding companies (QHCs) represents cash sent to subsidiaries of the company domiciled outside of the US.  Such subsidiaries had no contractual restrictions on their ability to send cash to AES, the Parent Company (Parent).  Cash at those subsidiaries was used for investment and related activities outside of the US.  These investments included equity investments and loans to other foreign subsidiaries as well as development and general costs and expenses incurred outside the US.  Since the cash held by these QHCs is available to the Parent, AES uses the combined measure of subsidiary distributions to Parent and QHCs as a useful measure of cash available to the Parent to meet its international liquidity needs.

(2)             AES believes that unconsolidated parent company liquidity is important to the liquidity position of AES as a parent company because of the non-recourse nature of most of AES’s  indebtedness.




 

THE AES CORPORATION
2006 FINANCIAL GUIDANCE UPDATE

 

 

 

Updated Guidance

 

Prior Guidance

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Statement Elements

 

 

 

 

 

Revenue Growth

 

9 to 10%

 

7 to 8%

 

(% change vs prior year)

 

 

 

 

 

 

 

 

 

 

 

Gross Margin

 

$3.5 to 3.6 billion

 

$3.5 to 3.6 billion

 

 

 

 

 

 

 

Income Before Tax and Minority Interest (4)

 

$1.1 to 1.2 billion

 

--

 

 

 

 

 

 

 

Diluted Earnings Per Share From Continuing Operations

 

$0.28

 

$1.05

 

 

 

 

 

 

 

Adjusted Earnings Per Share Factors (1)(5)

 

$0.81

 

($0.04)

 

 

 

 

 

 

 

Adjusted Earnings Per Share (1)(5)

 

$1.09

 

$1.01

 

 

 

 

 

 

 

Cash Flow Elements

 

 

 

 

 

 

 

 

 

 

 

Net Cash From Operating Activities

 

$2.3 to 2.4 billion

 

$2.2 to 2.3 billion

 

 

 

 

 

 

 

Maintenance Capital Expenditures

 

$800 to 900 million

 

$800 to 900 million

 

 

 

 

 

 

 

Free Cash Flow (1)

 

$1.4 to 1.6 billion

 

$1.3 to 1.5 billion

 

 

 

 

 

 

 

Subsidiary Distributions (2)

 

$1.0 billion

 

$1.0 billion

 

 

 

 

 

 

 

Parent Growth Investments (3)

 

$500 to 600 million

 

$500 to 600 million

 


(1)             Non-GAAP measure.  See Non-GAAP Measures.

(2)             Non-GAAP measure.  See Parent Financial Information.

(3)             Excludes other sources of funds.  Total 2006 property additions are estimated to be $1.6 to $1.7 billion, including certain growth projects not yet awarded. Maintenance capital expenditures are expected to be $800 million to $900 million and growth capital expenditures are expected to be $800 million to $900 million.

(4)             Includes estimated $630 million non-recurring Brazil restructuring charges.  Prior business segment income before tax and minority interest guidance is withdrawn.

(5)             Updated guidance includes approximately $0.05 per share Brazil restructuring non-recurring benefit.

Note:  Certain foreign exchange and interest rate sensitivities previously provided have not been updated.