Segments

3 Months Ended

Sep. 30, 2011

SEGMENTS

12. SEGMENTS

The Company's current 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.On September 6, 2011, the Company announced the appointment of Andrés Gluski as its President and Chief Executive Officer. Subsequently, on October 18, 2011, the Company announced a plan to redefine its operational management and organizational structure. The planned reporting structure will remain organized along two lines of business – Generation and Utilities, however, we are continuing to evaluate both the timing and impact, if any, that the realignment will have on our reportable segments. For the three and nine months ended September 30, 2011 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 September 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 nine months ended September 30, 2011 and 2010 was as follows:

Three Months Ended	Total Revenue				Intersegment				External Revenue
September 30,	2011		2010		2011		2010		2011		2010
	(in millions)
Latin America - Generation	$	1,302	$	1,111	$	(328)	$	(267)	$	974	$	844
Latin America - Utilities		1,930		1,757		-		-		1,930		1,757
North America - Generation		372		413		-		-		372		413
North America - Utilities		321		306		-		-		321		306
Europe - Generation		397		282		-		-		397		282
Asia - Generation		172		136		-		-		172		136
Corp/Other & eliminations		(113)		(15)		328		267		215		252
Total Revenue	$	4,381	$	3,990	$	-	$	-	$	4,381	$	3,990

Nine Months Ended	Total Revenue				Intersegment				External Revenue
September 30,	2011		2010		2011		2010		2011		2010
	(in millions)
Latin America - Generation	$	3,810	$	3,178	$	(842)	$	(778)	$	2,968	$	2,400
Latin America - Utilities		5,774		5,236		-		-		5,774		5,236
North America - Generation		1,116		1,173		(4)		-		1,112		1,173
North America - Utilities		890		869		-		-		890		869
Europe - Generation		1,125		864		(1)		-		1,124		864
Asia - Generation		449		491		-		-		449		491
Corp/Other & eliminations		(47)		(34)		847		778		800		744
Total Revenue	$	13,117	$	11,777	$	-	$	-	$	13,117	$	11,777

Three Months Ended	Total Adjusted Gross Margin				Intersegment				External Adjusted Gross Margin
September 30,	2011		2010		2011		2010		2011		2010
	(in millions)
Latin America - Generation	$	505	$	436	$	(313)	$	(262)	$	192	$	174
Latin America - Utilities		378		306		322		267		700		573
North America - Generation		145		146		3		5		148		151
North America - Utilities		113		118		-		-		113		118
Europe - Generation		128		71		2		2		130		73
Asia - Generation		35		51		-		1		35		52
Corp/Other & eliminations		(62)		12		(14)		(13)		(76)		(1)
Reconciliation to Income from Continuing Operations before Taxes
Depreciation and amortization										(313)		(271)
Interest expense										(432)		(381)
Interest income										103		96
Other expense										(76)		(23)
Other income										58		17
Goodwill impairment										(17)		(18)
Asset impairment expense										(163)		(296)
Foreign currency transaction (losses) gains on net monetary position										(92)		103
Other non-operating expense										(82)		(2)
Income from continuing operations before taxes and equity in earnings of affiliates									$	228	$	365

Nine Months Ended	Total Adjusted Gross Margin				Intersegment				External Adjusted Gross Margin
September 30,	2011		2010		2011		2010		2011		2010
	(in millions)
Latin America - Generation	$	1,493	$	1,296	$	(800)	$	(766)	$	693	$	530
Latin America - Utilities		1,035		888		820		778		1,855		1,666
North America - Generation		402		406		6		12		408		418
North America - Utilities		292		324		1		1		293		325
Europe - Generation		327		287		4		5		331		292
Asia - Generation		133		204		1		3		134		207
Corp/Other & eliminations		(37)		19		(32)		(33)		(69)		(14)
Reconciliation to Income from Continuing Operations before Taxes
Depreciation and amortization										(909)		(802)
Interest expense										(1,178)		(1,151)
Interest income										293		304
Other expense										(131)		(83)
Other income										108		94
Gain on sale of investments										7		-
Goodwill impairment										(17)		(18)
Asset impairment expense										(196)		(297)
Foreign currency transaction (losses) gains on net monetary position										(21)		(19)
Other non-operating expense										(82)		(7)
Income from continuing operations before taxes and equity in earnings of affiliates									$	1,519	$	1,445

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

	Total Assets
	September 30, 2011		December 31, 2010
	(in millions)
Assets
Latin America - Generation	$	10,545	$	10,373
Latin America - Utilities		8,938		9,872
North America - Generation		4,403		4,681
North America - Utilities		3,218		3,139
Europe - Generation		4,264		4,178
Asia - Generation		1,725		1,762
Discontinued businesses		407		468
Corp/Other & eliminations		7,383		6,038
Total Assets	$	40,883	$	40,511