Segments

3 Months Ended

Mar. 31, 2013

SEGMENTS

11. SEGMENTS

The segment reporting structure uses the Company's management reporting structure as its foundation to reflect how the Company manages the business internally with further aggregation by geographic regions to provide better socio-political-economic understanding of our business. The management reporting structure is organized along six strategic business units (“SBUs”) – led by our Chief Operating Officer (“COO”), who in turn reports to our Chief Executive Officer (“CEO”). Upon the application of the accounting guidance for segment reporting, the Company has identified eight reportable segments based on the six strategic business units:

• US – Generation;
• US – Utilities;
• Andes – Generation;
• Brazil – Generation;
• Brazil – Utilities;
• MCAC – Generation;
• EMEA – Generation; and
• Asia – Generation.

Corporate and Other—The Company's EMEA and MCAC Utilities operating segments 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 the 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 Adjusted pre-tax contribution (“Adjusted PTC”). “Corporate and Other” also includes corporate overhead costs which are not directly associated with the operations of our eight reportable segments and other intercompany charges such as self-insurance premiums which are fully eliminated in consolidation.

The Company uses Adjusted PTC as its primary segment performance measure.  Adjusted PTC, a non-GAAP measure, is defined by the Company as pre-tax income from continuing operations attributable to AES excluding unrealized gains or losses related to derivative transactions, unrealized foreign currency gains or losses, gains or losses due to dispositions and acquisitions of business interests, losses due to impairments and costs due to the early retirement of debt. The Company has concluded that Adjusted PTC best reflects the underlying business performance of the Company and is the most relevant measure considered in the Company's internal evaluation of the financial performance of its segments.  Additionally, given its large number of businesses and complexity, the Company concluded that Adjusted PTC is a more transparent measure that better assists the investor in determining which businesses have the greatest impact on the overall Company results.  

Total revenue includes inter-segment revenue related to the transfer of electricity from generation plants to utilities within Brazil. No material inter-segment revenue relationships exist between other segments. Corporate allocations include certain self-insurance activities which are reflected within segment adjusted PTC. All intra-segment activity has been eliminated with respect to revenue and adjusted PTC within the segment. Inter-segment activity has been eliminated within the total consolidated results. Asset information for businesses that were discontinued or classified as held for sale as of March 31, 2013 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 months ended March 31, 2013 and 2012 was as follows:

Revenue
Three Months Ended	Total Revenue				Intersegment				External Revenue
March 31,	2013		2012		2013		2012		2013		2012
	(in millions)
US - Generation	$	170	$	198	$	-	$	-	$	170	$	198
US - Utilities		722		732		-		-		722		732
Andes - Generation		691		734		-		(9)		691		725
Brazil - Generation		386		305		(280)		(282)		106		23
Brazil - Utilities		1,323		1,531		-		-		1,323		1,531
MCAC - Generation		458		393		(1)		(1)		457		392
EMEA - Generation		351		477		(8)		(9)		343		468
Asia - Generation		134		182		-		-		134		182
Corporate and Other		320		336		(1)		(1)		319		335
Total Revenue	$	4,555	$	4,888	$	(290)	$	(302)	$	4,265	$	4,586

Adjusted Pre-Tax Contribution(1)	Total Adjusted								External Adjusted
Three Months Ended	Pre-tax Contribution				Intersegment				Pre-tax Contribution
March 31,	2013		2012		2013		2012		2013		2012
	(in millions)
US - Generation	$	65	$	36	$	2	$	11	$	67	$	47
US - Utilities		70		57		-		-		70		57
Andes - Generation		80		111		3		(5)		83		106
Brazil - Generation		40		52		(67)		(68)		(27)		(16)
Brazil - Utilities		2		56		45		46		47		102
MCAC - Generation		48		71		3		2		51		73
EMEA - Generation		94		187		(2)		(14)		92		173
Asia - Generation		31		32		1		-		32		32
Corporate and Other		(165)		(189)		15		28		(150)		(161)
Total		265		413		-		-		265		413
Reconciliation to Income from Continuing Operations before Taxes and Equity earnings of Affiliates:
Non-GAAP Adjustments:
Unrealized derivative losses										(13)		(30)
Unrealized foreign currency gains (losses)										(27)		29
Disposition/acquisition gains										3		178
Impairment losses										(48)		(58)
Debt retirement losses										(43)		-
Pre-tax contribution										137		532
Add: income from continuing operations before taxes, attributable to noncontrolling interests										166		250
Less: Net equity in earnings of affiliates										4		13
Income from continuing operations before taxes and equity in earnings of affiliates									$	299	$	769

_____________________________

• Adjusted pre-tax contribution in each segment before intersegment eliminations includes the effect of intercompany transactions with other segments except for interest and charges for certain management fees.

Assets by segment as of March 31, 2013 and December 31, 2012 were as follows:

	Total Assets
	March 31, 2013		December 31, 2012
	(in millions)
Assets
US - Generation	$	3,184	$	3,259
US - Utilities		7,576		7,534
Andes - Generation		6,554		6,619
Brazil - Generation		1,867		1,590
Brazil - Utilities		8,424		8,120
MCAC - Generation		4,440		4,293
EMEA - Generation		4,568		4,578
Asia - Generation		2,702		2,625
Discontinued businesses		173		202
Corporate and Other & eliminations		3,230		3,010
Total assets	$	42,718	$	41,830