8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): August 9, 2007

THE AES CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE	001-12291	54-1163725
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

4300 Wilson Boulevard, Suite 1100
Arlington, Virginia	22203
(Address of principal executive offices)	(zip code)

Registrant’s telephone number, including area code:

(703) 522-1315

NOT APPLICABLE

(Former Name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o               Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o               Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o               Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o               Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02  Results of Operations and Financial Condition.

On August 9, 2007, The AES Corporation issued a press release announcing its financial results for the quarter ending June 30, 2007.  A copy of the press release is being furnished as Exhibit 99.1 attached hereto and is incorporated by reference herein.  Such information is furnished pursuant to Item 2.02 and shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Current Report on Form 8-K shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act regardless of any general incorporation language in such filing.

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Item 9.01  Financial Statements and Exhibits

(d)           Exhibits

Exhibit No.	Description
99.1	Press Release issued by The AES Corporation, dated August 9, 2007.

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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 of the undersigned hereunto duly authorized.

	THE AES CORPORATION
Date: August 9, 2007	By:	/s/ Mary Wood
		Name:      Mary Wood
		Title:        Vice President and Corporate Controller

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EXHIBIT INDEX

No.		Description
99.1	Press Release issued by The AES Corporation, dated August 9, 2007.

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EX-99.1

Media Contact Robin Pence 703 682 6552

Investor Contact Ahmed Pasha 703 682 6451

AES Reports Strong Second Quarter Results

Arlington, VA, August 9, 2007 — The AES Corporation (NYSE:AES) today reported strong results for the quarter ending June 30, 2007.  Revenues increased 17% to $3.3 billion compared to $2.9 billion for the second quarter of 2006, while net cash from operating activities increased 19% to $526 million compared to $442 million last year.

Second quarter income from continuing operations was $279 million or $0.41 per diluted share versus $193 million or $0.29 per diluted share in second quarter 2006.  Second quarter net income was $247 million or $0.36 per diluted share versus net income of $175 million, or $0.26 in second quarter 2006.  Adjusted earnings per share (a non-GAAP financial measure) was $0.41 versus $0.28 in second quarter 2006.  This increase in adjusted earnings reflects the positive impacts of: a net positive per share impact of $0.15 due to one-time benefits from a gain associated with the acquisition of lessor interests and tax recoveries at certain subsidiaries; improvements in gross margin; decreases in net interest expense.  Offsetting these positive impacts were: a higher effective tax rate; higher minority interest expense; and emissions sales that were lower by $24 million, or $0.03 impact per share.

During the quarter, the Company continued to expand its alternative energy business around the globe. The Company acquired two wind farm projects totaling 186 MW in the United States and acquired a 49% stake in a joint venture to construct and operate 225 MW of wind projects in China. The Company also completed the construction of its 233 MW Buffalo Gap II wind farm in Texas. In its core power business, the Company commenced construction of its first project in Jordan, a 370 MW gas-fired power plant located outside of Amman, and acquired a 51% stake in a 390 MW pipeline of hydroelectric projects in Turkey.

“We had a strong quarter in terms of both our operational results and building our growth pipeline,” said Paul Hanrahan, AES President and CEO.  ”We continued to develop our alternative energy business and, with more than 1,000 MW of wind facilities in operations, we are on track to triple our wind generation capacity by 2011.  We are also making good progress growing our traditional business, with expansions into the high growth markets of Turkey and the Middle East.”

Second Quarter 2007 Consolidated Highlights

·During the quarter, revenues increased by $482 million to $3.3 billion, reflecting: higher prices in all segments, particularly at our generating plants in Chile and New York; favorable foreign currency translation, primarily in Latin America; the acquisition of two petroleum coke-fired plants in Mexico (TEG and TEP); and the consolidation of Itabo, one of the Company’s businesses in the Dominican Republic.

·Gross margin increased by $21 million to $888 million, primarily due to: higher prices in New York and in Latin America; favorable foreign currency translation; and contributions from TEG and TEP in Mexico and from Itabo in the Dominican Republic.  This was partially offset by a cumulative charge of $48 million relating to transmission fees accumulated from 2004 through 2007 at Tiete in Brazil, increased purchased energy and fuel costs at Uruguaiana in Brazil and lower emission sales of $24 million.

·General and administrative expense increased $30 million to $88 million, largely from increased business development activities to support our growth initiatives, higher spending related to the strengthening of our financial organization and the completion of our May restatement.

·      Interest expense, net of interest income, decreased by $75 million, primarily due to increased interest income on investments and favorable foreign currency translation in Brazil and the benefits of debt retirement and refinancing activities primarily in Brazil.

·Other income, net of other expense, increased by $245 million, primarily due to a non-cash gain of $137 million related to a previously disclosed acquisition of lessor interests, which is accounted for as a contract settlement in New York. The Company also recognized gross receipts tax recoveries of $93 million at two of its Latin American subsidiaries.

·Minority interest expense increased by $66 million due to the Company’s 2006 Brazil restructuring which resulted in lower ownership of Eletropaulo in Brazil.

·The effective tax rate during the quarter was 35% compared to 20% in 2006. This increase was primarily due to appreciation of the Brazilian real at certain of the Company’s Brazilian subsidiaries which increased the 2007 effective tax rate and the release of a valuation allowance at Eletropaulo in Brazil in the second quarter of 2006 which reduced the 2006 effective tax rate.

·Income from continuing operations for the second quarter of 2007 was $279 million, or $0.41 diluted earnings per share, versus $193 million, or $0.29 diluted earnings per share, for the second quarter of 2006.  Adjusted earnings per share (a non-GAAP financial measure) for the second quarter of 2007 was $0.41, compared to $0.28 in second quarter 2006.

·During the quarter, operating cash flow increased by $84 million to $526 million This increase was primarily due to decreases in net working capital and the contributions from new businesses.

·Free cash flow (a non-GAAP financial measure) decreased by $43 million to $220 million due to increased maintenance capital expenditures, including environmental projects at IPL in Indiana and Kilroot in Northern Ireland.

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Second Quarter 2007 Segment Highlights

·Latin America Generation revenue increased by $203 million to $823 million, primarily due to higher contract and spot prices at Gener in Chile, higher inter-company sales at Tiete in Brazil and the consolidation of Itabo in the Dominican Republic. Gross margin remained flat at Gener, primarily due to higher fuel costs. Gross margin decreased by $55 million to $200 million, primarily due to the cumulative charge of $48 million at Tiete in Brazil and increased purchased electricity and fuel costs at Uruguaiana in Brazil.

·Latin America Utility revenue increased by $151 million to $1.3 billion, primarily due to the positive impact of foreign currency translation in Brazil and higher volumes at Eletropaulo.  Gross margin increased by $22 million to $289 million, primarily due to favorable foreign currency translation.

·North America Generation revenue increased by $87 million to $546 million, primarily due to the acquisition of TEG and TEP in Mexico and higher spot prices at Eastern Energy in New York.  Gross margin increased by $48 million to $181 million, primarily due to the higher spot prices at Eastern Energy and the acquisition of TEG and TEP.  These gains were partially offset by lower emission sales in New York.

·North America Utility revenue increased by $8 million to $259 million, primarily due to higher volumes at IPL in Indiana, partially offset by lower fuel cost recovery revenue and lower emission sales.  Gross margin increased by $19 million to $78 million, primarily due to higher volume and lower maintenance costs associated with generating unit overhauls in second quarter of 2006 at IPL

·Europe & Africa Generation revenue increased by $28 million to $214 million, primarily due to higher volume at Tisza II in Hungary and in Kazakhstan and favorable foreign currency translation. These gains were partially offset by lower emission sales in Hungary and the Czech Republic.  Gross margin decreased by $12 million to $43 million, primarily due to lower emission sales and a planned outage at Kilroot in Northern Ireland.

·Europe & Africa Utility revenue increased by $23 million to $159 million, primarily due to higher volume and tariff rates in Ukraine and foreign currency translation gains. Gross margin decreased by $5 million to $24 million, primarily due to reduced rainfall in Cameroon which led to increased fuel costs at SONEL and higher fixed costs related to increased staffing and higher depreciation also at SONEL in Cameroon.

·Asia Generation revenue increased by $11 million to $251 million, primarily due to higher volume in Pakistan and Sri Lanka, partially offset by lower volumes at Barka in Oman. Gross margin increased by $4 million to $60 million, primarily due to higher volumes in Pakistan.

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Non-GAAP Financial Measures

See Non-GAAP Financial Measures for definitions of adjusted earnings per share and free cash flow and reconciliations to the most comparable GAAP financial measure.

Attachments

Condensed Consolidated Statements of Operations, Segment Information, Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Cash Flows, Non-GAAP Financial Measures, Parent Financial Information.

Conference Call Information

AES will host a conference call on Friday, August 10th, 2007 at 10:00 a.m. Eastern Daylight Time (EDT). The call may be accessed via a live webcast which will be available at www.aes.com by selecting “Investor Information” and then “Quarterly Financial Results” or by telephone in listen-only mode at (888)-694-4641. International callers should dial (973)-582-2734. Please call at least ten minutes before the scheduled start time. You will be requested to provide your name and affiliation. The AES Financial Review presentation will be available prior to the call at www.aes.com by selecting “Investor Information” and then “Quarterly Financial Results.”

A telephonic replay will be available at approximately 12:00 p.m. EDT by dialing (877)-519-4471 or (973)-341-3080 for international callers. The system will ask for a reservation number; please enter 9121417 followed by the pound key (#). The telephonic replay will be available until August 31, 2007. 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.

- more -

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About AES

AES is one of the world’s largest global power companies, with 2006 revenues of $11.6 billion. With operations in 28 countries on five continents, AES’s generation and distribution facilities have the capacity to serve 100 million people worldwide. Our 13 regulated utilities amass annual sales of over 73,000 GWh and our 117 generation facilities have the capacity to generate approximately 40,000 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.

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 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.

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 2006 Annual Report on Form 10-K/A.  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.

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THE AES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
($ in millions, except per share amounts)	2007			2006 (Restated)			2007 (Restated)			2006 (Restated)
Revenues	$	3,344		$	2,862		$	6,453		$	5,668
Cost of sales	(2,456		)	(1,995		)	(4,709		)	(3,896		)
GROSS MARGIN	888			867			1,744			1,772
General and administrative expenses	(88		)	(58		)	(171		)	(114		)
Interest expense	(411		)	(432		)	(833		)	(850		)
Interest income	141			87			241			201
Other expense	(24		)	(31		)	(65		)	(109		)
Other income	262			24			299			43
Gain on sale of investments	9			2			10			89
Asset impairment expense	—			(16		)	—			(16		)
Foreign currency transaction losses on net monetary position	(4		)	(4		)	(4		)	(27		)
Equity in earnings of affiliates	21			11			41			46
Other non-operating expense	(6		)	—			(45		)	—
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST	788			450			1,217			1,035
Income tax expense	(274		)	(88		)	(455		)	(275		)
Minority interest expense	(235		)	(169		)	(371		)	(243		)
INCOME FROM CONTINUING OPERATIONS	279			193			391			517
Income from operations of discontinued businesses, net of tax	9			27			71			45
Loss from disposal of discontinued businesses, net of tax	(41		)	(66		)	(677		)	(66		)
Extraordinary item, net of tax	—			21			—			21
NET INCOME (LOSS)	$	247		$	175		$	(215	)	$	517
DILUTED EARNINGS (LOSS) PER SHARE
Income from continuing operations	$	0.41		$	0.29		$	0.58		$	0.77
Discontinued operations	(0.05		)	(0.06		)	(0.90		)	(0.03		)
Extraordinary items	—			0.03			—			0.03
DILUTED EARNINGS (LOSS) PER SHARE	$	0.36		$	0.26		$	(0.32	)	$	0.77
Diluted weighted average shares outstanding (in millions)	692			669			678			684

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THE AES CORPORATION

SEGMENT INFORMATION (unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
($ in millions)	2007			2006 (Restated)			2007 (Restated)			2006 (Restated)
REVENUES
Latin America Generation	$	823		$	620		$	1,561		$	1,220
Latin America Utilities	1,307			1,156			2,484			2,260
North America Generation	546			459			1,056			954
North America Utilities	259			251			522			506
Europe & Africa Generation	214			186			466			394
Europe & Africa Utilities	159			136			325			288
Asia Generation	251			240			451			420
Corp/Other & eliminations	(215		)	(186		)	(412		)	(374		)
Total revenues	$	3,344		$	2,862		$	6,453		$	5,668
GROSS MARGIN
Latin America Generation	$	200		$	255		$	450		$	514
Latin America Utilities	289			267			499			496
North America Generation	181			133			335			309
North America Utilities	78			59			159			123
Europe & Africa Generation	43			55			133			135
Europe & Africa Utilities	24			29			41			65
Asia Generation	60			56			106			105
Corp/Other & eliminations	13			13			21			25
Total gross margin	$	888		$	867		$	1,744		$	1,772
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST
Latin America Generation	$	293		$	203		$	507		$	441
Latin America Utilities	230			165			396			293
North America Generation	269			65			354			275
North America Utilities	52			29			102			63
Europe & Africa Generation	40			54			111			139
Europe & Africa Utilities	22			26			34			59
Asia Generation	47			42			76			73
Corp/Other & eliminations	(165		)	(134		)	(363		)	(308		)
Total income before income taxes and minority interest	$	788		$	450		$	1,217		$	1,035

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THE AES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

	June 30,			December 31,
($ in millions, except shares and par value)	2007			2006 (Restated)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,478		$	1,379
Restricted cash	662			548
Short term investments	1,204			640
Accounts receivable, net of reserves of $242 and $233, respectively	2,036			1,769
Inventory	497			471
Receivable from affiliates	94			76
Deferred income taxes - current	251			208
Prepaid expenses	147			109
Other current assets	1,168			927
Current assets of held for sale and discontinued businesses	18			438
Total current assets	7,555			6,565
PROPERTY, PLANT AND EQUIPMENT
Land	996			928
Electric generation and distribution assets	24,216			21,835
Accumulated depreciation	(7,106		)	(6,545		)
Construction in progress	1,133			979
Property, plant and equipment, net	19,239			17,197
OTHER ASSETS
Deferred financing costs, net of accumulated amortization of $202 and $188, respectively	282			279
Investment in and advances to affiliates	721			595
Debt service reserves and other deposits	549			524
Goodwill, net	1,468			1,416
Other intangible assets, net of accumulated amortization of $201 and $172, respectively	341			298
Deferred income taxes - noncurrent	691			602
Other assets	1,739			1,634
Noncurrent assets of held for sale and discontinued businesses	37			2,091
Total other assets	5,828			7,439
TOTAL ASSETS	$	32,622		$	31,201
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	913		$	795
Accrued interest	299			404
Accrued and other liabilities	2,314			2,131
Non-recourse debt - current portion	1,515			1,411
Recourse debt - current portion	415			—
Current liabilities of held for sale and discontinued businesses	4			288
Total current liabilities	5,460			5,029
LONG-TERM LIABILITIES
Non-recourse debt	10,829			9,834
Recourse debt	4,380			4,790
Deferred income taxes - noncurrent	1,185			803
Pension liabilities and other post-retirement liabilities	898			844
Other long-term liabilities	3,544			3,554
Long-term liabilities of held for sale and discontinued businesses	2			434
Total long-term liabilities	20,838			20,259
Minority Interest (including discontinued businesses of $0 and $175, respectively)	3,263			2,948
STOCKHOLDERS’ EQUITY
Common stock ($.01 par value, 1,200,000,000 shares authorized; 668,336,299 and 665,126,309 shares issued and outstanding, respectively)	7			7
Additional paid-in capital	6,791			6,654
Accumulated deficit	(1,364		)	(1,096		)
Accumulated other comprehensive loss	(2,373		)	(2,600		)
Total stockholders’ equity	3,061			2,965
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	32,622		$	31,201

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THE AES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2007			2006 (Restated)			2007 (Restated)			2006 (Restated)
OPERATING ACTIVITIES
Net cash provided by operating activities	$	526		$	442		$	1,107		$	951
INVESTING ACTIVITIES
Capital expenditures	(714		)	(310		)	(1,190		)	(552		)
Acquisitions, net of cash acquired	(82		)	(13		)	(256		)	(13		)
Proceeds from the sales of businesses	781			124			781			234
Proceeds from the sales of assets	3			3			5			7
Sale of short-term investments	428			482			754			758
Purchase of short-term investments	(697		)	(497		)	(1,167		)	(945		)
Increase in restricted cash	(165		)	(71		)	(179		)	(124		)
Purchase of emission allowances	(1		)	(36		)	(2		)	(48		)
Proceeds from the sales of emission allowances	1			22			10			67
(Increase) decrease in debt service reserves and other assets	(8		)	(20		)	109			(10		)
Purchase of long-term available-for-sale securities	(15		)	(52		)	(23		)	(52		)
Other investing	(1		)	(12		)	11			(1		)
Net cash used in investing activities	(470		)	(380		)	(1,147		)	(679		)
FINANCING ACTIVITIES
(Repayments) borrowings under the revolving credit facilities, net	(369		)	132			(183		)	143
Issuance of non-recourse debt	428			871			798			1,200
Repayments of recourse debt	—			—			—			(150		)
Repayments of non-recourse debt	(227		)	(1,033		)	(597		)	(1,581		)
Payments for deferred financing costs	(17		)	(39		)	(21		)	(55		)
Distributions to minority interests	(212		)	(109		)	(266		)	(125		)
Contributions from minority interests	327			117			336			117
Issuance of common stock	15			20			29			28
Financed capital expenditures	(4		)	(17		)	(8		)	(17		)
Other financing	—			(3		)	1			(3		)
Net cash (used in) provided by financing activities	(59		)	(61		)	89			(443		)
Effect of exchange rate changes on cash	33			(9		)	50			27
Total increase (decrease) in cash and cash equivalents	30			(8		)	99			(144		)
Cash and cash equivalents, beginning	1,448			1,040			1,379			1,176
Cash and cash equivalents, ending	$	1,478		$	1,032		$	1,478		$	1,032

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THE AES CORPORATION

NON-GAAP FINANCIAL MEASURES(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
($ in millions, except per share amounts)	2007			2006 (Restated)			2007 (Restated)		2006 (Restated)
Diluted EPS From Continuing Operations	$	0.41		$	0.29		$	0.58	$	0.77
FAS 133 Mark to Market (Gains)/Losses	—			(0.01		)	—		(0.01		)
Currency Transaction (Gains)/Losses	(0.01		)	—			—		—
Net Asset (Gains)/Losses and Impairments	0.01			—			0.06		(0.13		)
Debt Retirement (Gains)/Losses	—			—			—		0.04
Adjusted Earnings Per Share(1)	$	0.41		$	0.28		$	0.64	$	0.67
Capital Expenditures
Maintenance Capital Expenditures	$	306		$	179		$	510	$	379
Growth Capital Expenditures	412			148			688		190
Total Capital Expenditures	$	718		$	327		$	1,198	$	569
Reconciliation of Free Cash Flow
Net Cash from Operating Activities	$	526		$	442		$	1,107	$	951
Less: Maintenance Capital Expenditures	306			179			510		379
Free Cash Flow(2)	$	220		$	263		$	597	$	572

(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 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)Free cash flow (a non-GAAP financial measure) is defined as net cash from operating activities less maintenance capital expenditures.  AES believes that free cash flow is a useful measure for evaluating our financial condition because it represents the amount of cash provided by operations less maintenance capital expenditures as defined by our businesses, that may be available for investing or for repaying debt.

10

THE AES CORPORATION

PARENT FINANCIAL INFORMATION

Parent only data: last four quarters	4 Quarters Ended
($ in millions)	June 30,		March 31,		December 31,		September 30,
Total subsidiary distributions & returns of capital to Parent	2007		2007		2006		2006
	Actual		Actual		Actual		Actual
Subsidiary distributions (1) to Parent	$	1,058	$	976	$	971	$	1,014
Returns of capital distributions to Parent	92		87		72		68
Total subsidiary distributions & returns of capital to parent	$	1,150	$	1,063	$	1,043	$	1,082

Parent only data: quarterly	Quarter Ended
($ in millions)	June 30,		March 31,		December 31,		September 30,
Total subsidiary distributions & returns of capital to Parent	2007		2007		2006		2006
	Actual		Actual		Actual		Actual
Subsidiary distributions to Parent	$	259	$	137	$	311	$	352
Returns of capital distributions to Parent	34		15		9		34
Total subsidiary distributions & returns of capital to Parent	$	293	$	152	$	320	$	386

Liquidity (3)	Balance at
($ in millions)	June 30,		March 31,		December 31,		September 30,
	2007		2007		2006		2006
	Actual		Actual		Actual		Actual
Cash at Parent	$	395	$	54	$	237	$	172
Availability under revolver	973		804		889		764
Cash at QHCs (2)	10		20		20		37
Ending liquidity	$	1,378	$	878	$	1,146	$	973

(1)Subsidiary Distributions (a non-GAAP financial measure) is defined as cash distributions (primarily dividends and interest income) from subsidiary companies to the parent company and qualified holding companies. These cash flows are the source of cash flow to the parent.

(2)The cash held at qualifying holding companies (QHCs) (a non-GAAP financial measure) 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.

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

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