Segments

3 Months Ended

Jun. 30, 2011

12. SEGMENTS

The management reporting structure is organized along our two lines of business (Generation and Utilities) and three regions: (1) Latin America & Africa; (2) North America; and (3) Europe, Middle East & Asia (collectively “EMEA”), each managed by a regional president. The segment reporting structure uses the Company's management reporting structure as its foundation to reflect how the Company manages the business internally. The Company applied the segment reporting accounting guidance, which provides certain quantitative thresholds and aggregation criteria, and concluded it has the following six reportable segments:

• Latin America—Generation;

• Latin America—Utilities;

• North America—Generation;

• North America—Utilities;

• Europe—Generation; and

• Asia—Generation.

Corporate and Other—The Company's Europe Utilities, Africa Utilities, Africa Generation, Wind Generation operating segments and other climate solutions and renewables projects are reported within “Corporate and Other” because they do not meet the criteria to allow for aggregation with another operating segment or the quantitative thresholds that would require separate disclosure under segment reporting accounting guidance. None of these operating segments are currently material to our presentation of reportable segments, individually or in the aggregate. AES Solar and certain other unconsolidated businesses are accounted for using the equity method of accounting; therefore, their operating results are included in “Net Equity in Earnings of Affiliates” on the face of the Consolidated Statements of Operations, not in revenue or gross margin. “Corporate and Other” also includes costs related to corporate overhead costs which are not directly associated with the operations of our six reportable segments and other intercompany charges such as self-insurance premiums which are fully eliminated in consolidation.

The Company uses Adjusted Gross Margin, a non-GAAP measure, to evaluate the performance of its segments. Adjusted Gross Margin is defined by the Company as: Gross Margin plus depreciation and amortization less general and administrative expenses.

Segment revenue includes inter-segment sales related to the transfer of electricity from generation plants to utilities within Latin America. No material inter-segment revenue relationships exist between other segments. Corporate allocations include certain self insurance activities which are reflected within segment Adjusted Gross Margin. All intra-segment activity has been eliminated with respect to revenue and Adjusted Gross Margin within the segment. Inter-segment activity has been eliminated within the total consolidated results. All balance sheet information for businesses that were discontinued or classified as held for sale as of June 30, 2011 is segregated and is shown in the line “Discontinued Businesses” in the accompanying segment tables.

Information about the Company's operations by segment for the three and six months ended June 30, 2011 and 2010 was as follows:

Three Months Ended	Total Revenue				Intersegment				External Revenue
June 30,	2011		2010		2011		2010		2011		2010

	(in millions)

Latin America - Generation	$	1,377	$	1,084	$	(263)	$	(256)	$	1,114	$	828
Latin America - Utilities		2,013		1,770		-		-		2,013		1,770
North America - Generation		372		369		(4)		-		368		369
North America - Utilities		280		275		-		-		280		275
Europe - Generation		328		260		-		-		328		260
Asia - Generation		162		179		-		-		162		179
Corp/Other & eliminations		12		(14)		267		256		279		242
Total Revenue	$	4,544	$	3,923	$	-	$	-	$	4,544	$	3,923

Six Months Ended	Total Revenue				Intersegment				External Revenue
June 30,	2011		2010		2011		2010		2011		2010

	(in millions)

Latin America - Generation	$	2,508	$	2,067	$	(514)	$	(511)	$	1,994	$	1,556
Latin America - Utilities		3,917		3,535		-		-		3,917		3,535
North America - Generation		744		760		(4)		-		740		760
North America - Utilities		569		563		-		-		569		563
Europe - Generation		728		582		(1)		-		727		582
Asia - Generation		277		355		-		-		277		355
Corp/Other & eliminations		65		(19)		519		511		584		492
Total Revenue	$	8,808	$	7,843	$	-	$	-	$	8,808	$	7,843

Three Months Ended	Total Adjusted Gross Margin				Intersegment				External Adjusted Gross Margin
June 30,	2011		2010		2011		2010		2011		2010

	(in millions)

Latin America - Generation	$	518	$	466	$	(248)	$	(253)	$	270	$	213
Latin America - Utilities		363		320		253		256		616		576
North America - Generation		131		122		(1)		3		130		125
North America - Utilities		89		93		1		1		90		94
Europe - Generation		93		91		1		2		94		93
Asia - Generation		53		84		-		1		53		85
Corp/Other & eliminations		(14)		(2)		(6)		(10)		(20)		(12)
Reconciliation to Income from Continuing Operations before Taxes
Depreciation and amortization										(311)		(273)
Interest expense										(396)		(389)
Interest income										97		101
Other expense										(38)		(48)
Other income										34		68
Gain on sale of investments										1		-
Asset impairment expense										(33)		(1)
Foreign currency transaction gains (losses) on net monetary position										38		(71)
Other non-operating expense										-		(5)
Income from continuing operations before taxes and equity in earnings of affiliates									$	625	$	556

Six Months Ended	Total Adjusted Gross Margin				Intersegment				External Adjusted Gross Margin
June 30,	2011		2010		2011		2010		2011		2010

	(in millions)

Latin America - Generation	$	988	$	860	$	(487)	$	(504)	$	501	$	356
Latin America - Utilities		704		619		498		511		1,202		1,130
North America - Generation		257		260		3		7		260		267
North America - Utilities		179		206		1		1		180		207
Europe - Generation		199		216		2		3		201		219
Asia - Generation		98		153		1		2		99		155
Corp/Other & eliminations		25		7		(18)		(20)		7		(13)
Reconciliation to Income from Continuing Operations before Taxes
Depreciation and amortization										(607)		(539)
Interest expense										(747)		(770)
Interest income										192		209
Other expense										(55)		(60)
Other income										50		77
Gain on sale of investments										7		-
Asset impairment expense										(33)		(1)
Foreign currency transaction gains (losses) on net monetary position										71		(122)
Other non-operating expense										-		(5)
Income from continuing operations before taxes and equity in earnings of affiliates									$	1,328	$	1,110

Assets by segment as of June 30, 2011 and December 31, 2010 were as follows:

	Total Assets
	June 30, 2011		December 31, 2010

	(in millions)
Assets
Latin America - Generation	$	10,584	$	10,373
Latin America - Utilities		10,344		10,081
North America - Generation		4,403		4,681
North America - Utilities		3,182		3,139
Europe - Generation		4,643		4,178
Asia - Generation		1,702		1,762
Discontinued businesses		226		258
Corp/Other & eliminations		7,551		6,039
Total Assets	$	42,635	$	40,511