AES Announces Record Earnings of $311 Million for 1998.

ARLINGTON, Va.--(BUSINESS WIRE)--Feb. 4, 1999--

Earnings Per Share Up 50% From 1997

The AES Corporation (NYSE:AES) announced today that net income for 1998 increased for the thirteenth consecutive year.

Income, before extraordinary item, increased 63% over 1997 to $307 million. For the year, revenues increased 70% to $2.4 billion while operating income was up 99% to $733 million.

Basic earnings per share, before extraordinary item, increased 53% to $1.73 per share for 1998, from $1.13 per share for 1997 and diluted earnings per share, before extraordinary item, increased 51% to $1.67 per share in 1998, from $1.11 for 1997.

For the fourth quarter, revenues increased 22% to $646 million while operating income increased 101% to $217 million. Income before extraordinary item for the quarter, was $92 million, up 64% over 1997. Basic earnings per share, before extraordinary item, was $0.51, up 59%, and diluted earnings per share was $0.49, up 53%, over the fourth quarter of 1997.

AES also said today that it is likely there will be a negative impact on its 1999 earnings and financial position due to the effects of the recent currency devaluation in Brazil on its interests in four Brazilian electricity companies.

These businesses have concession agreements that contain provisions that AES believes allow for rate adjustments to reflect certain conditions and events such as an increase in US dollar purchased power costs, changes in local Brazilian inflation and unusual significant events that disrupt the economic equilibrium.

The certainty, timing and amounts of these rate increases at each company, and therefore the impact on AES's earnings, cannot be presently determined.

In addition to the potential effects of the devaluation on the operating income of each business, there is expected to be a non-cash charge, reflected as foreign currency transaction losses, associated with the impact of changes in the currency exchange value of the Brazilian reais on the foreign currency denominated debt (primarily U.S. dollars) within AES's Brazilian businesses.

The amount of the charge will not be known until the end of the first quarter. At December 31, 1998, one U.S. dollar could be exchanged for 1.21 Brazilian reais. If the February 3, 1999 exchange rate of 1.79 Brazilian reais to the dollar were to prevail until the end of the first quarter, AES estimates that its proportionate share of the after-tax charge would be approximately $105 million.

In addition, such devaluation would result in an increase of approximately $760 million in the balance of the cumulative foreign currency translation adjustment account reflected as a reduction of stockholders' equity on the balance sheet, as well as a corresponding reduction in the carrying value of the related assets.

These estimates do not reflect the possibility of additional fluctuations in the exchange rate prior to the end of the first quarter and do not include other non-debt-related impacts of devaluation on future earnings, nor the ability and success of AES's Brazilian businesses to mitigate this impact.

Dennis W. Bakke, Co-Founder, President and Chief Executive Officer of AES, commented, "1998 was a great year for AES with a significant increase in earnings as well as a dramatic increase in the number of electric customers we serve around the world. Our plants and distribution businesses ran well, we started up a number of new plants, we were successful with many new acquisitions and we continue to make progress in adhering to our core values and principles. On the negative side we began to feel some of the effects of the financial turmoil in Brazil."

Roger W. Sant, Co-Founder and Chairman of AES stated, "The global shift of the electric sector from government ownership and regulated monopolies to competitive companies, like AES, continues to accelerate. A look at the people of AES today and the places where they operate reflects the dramatic change in our industry. We are pleased by our role in the industry and our quest to supply electricity in a socially responsible way."

AES' business development successes in 1998 include the following:

-- In January, AES acquired the CLESA distribution company in El

Salvador for $96.5 million.

-- In January, AES won a bid to sell electricity from a 360 MW

gas-fired plant in Haripur, Bangladesh.

-- In April, AES Caracoles signed a 40 year concession agreement for

its 230 MW Caracoles project and has taken over the operation of

Quebrada de Ullum, an existing 45 MW hydroelectric plant in

Argentina.

-- In April, AES' affiliate, Light-Servicos de Electricidade,

acquired Eletropaulo Metropolitana, the distribution company

serving the city of Sao Paulo, Brazil.

-- In May, AES completed its purchase of three electric generating

stations from Southern California Edison.

-- In June, AES raised $173 million of non-recourse project

financing for the AES Merida III 484 MW gas-fired combined cycle

power plant in the City of Merida, Yucatan, Mexico.

-- In June, AES won a bid to sell electricity from a 450 MW

gas-fired plant, Meghnaghat, in Bangladesh.

-- In June, AES completed the $350 million acquisition of Edelap, an

electric distribution company in the province of Buenos Aires,

Argentina.

-- In August, AES won a bid to acquire six coal-fired, electric

generating plants from NGE Generation, Inc., an affiliate of New

York State Electric & Gas Corporation ("NYSEG") for approximately

$950 million.

-- In October, AES signed a Shareholders Agreement with the

Government of Orissa as part of the process to acquire a 49%

share in the Orissa Power Generation Corporation ("OPGC") for

approximately $144 million.

-- In October, AES won a bid to acquire a 75 percent interest in

Telasi, the electricity distribution company of Tbilisi, Georgia,

for approximately $25.5 million.

-- In November, AES won a bid to acquire 49% of Empresa de

Generacion Chiriqui S.A. (EGE Chiriqui) and 49% of Empresa de

Generacion Bayano (EGE Bayano), two hydroelectric generation

companies in Panama, for $91 million.

-- In November, AES was selected by the Government of Sri Lanka as

the preferred bidder to develop a 160MW combined-cycle power

plant at Kelanitissa.

The AES Corporation, is a leading global power company that currently owns or has an interest in ninety three power facilities, totaling over 27,000 MW, in the United States, Canada, Australia, Argentina, Brazil, Dominican Republic, India, Pakistan, the Netherlands, Hungary, Kazakhstan, Mexico, China, and the United Kingdom.

AES also distributes electricity to over 13 million customers in Brazil, Argentina, El Salvador and Georgia. In addition to having assets in excess of $10 billion, the Company has more than $5 billion of projects in construction or late stages of development. The AES Corporation is dedicated to providing safe, clean, low-cost electricity worldwide in a socially responsible way.

Certain statements in this press release contain "forward looking statements" under the Private Securities Litigation Reform Act of 1995, particularly those associated with the expected and potential effect of the Brazilian reais devaluation on the Company's future results of operation.

Assumptions, expectations or beliefs about future events may vary materially from actual results. Some of the factors that could cause actual results to differ include (i) future currency exchange rate fluctuations, (ii) actions by Brazilian state and federal governments and the courts in connection with the enforcement of concession agreements, (iii) the impact of local economic and financing conditions on AES's Brazilian businesses, including the impact on these businesses' ability to refinance existing indebtedness.

For a broader discussion of the risks associated with AES's businesses, please read AES's quarterly, annual and special reports filed with the Securities and Exchange Commission.

For more general information visit our web site at www.aesc.com or contact investor relations at [e-mail]. The list aes-pr-announce is an automated mailing list and can be found on the investing page of our web site. Those who subscribe to this list will receive updates when AES issues a press release. -0-

THE AES CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS ENDED DECEMBER 31, 1998 AND 1997
----------------------------------------------------------------------
                 Three              Three              Change
                 Months      %      Months     %       From
                 Ended      of      Ended     of     Previous     %
                12/31/98   Sales   12/31/97   Sales    Year    Change
----------------------------------------------------------------------
($ in millions,
 except per
 share amounts)

REVENUES:
Sales and
 services        $ 646     100%    $ 531      100%     $ 115      22%

OPERATING COSTS
 AND EXPENSES:
Cost of sales
 and services      405      63%      405       76%         -       -
Selling, general
 and administrative
 expenses           14       2%       20        4%         6      30%
Provision to
 reduce
 contract
 receivables        10       1%       (2)       -        (12)   -600%
                  ----              ----                ----

Total operating
 costs and
 expenses          429      66%      423       80%        (6)     -1%
                  ----              ----                ----

OPERATING INCOME   217      34%      108       20%       109     101%

OTHER INCOME AND
 (EXPENSE):
Interest expense  (140)    -22%      (97)     -18%       (43)    -44%
Interest income     20       3%       13        2%         7      54%
Equity in earnings
 of affiliates
 (before income
 tax)               73      11%       56       11%        17      30%
                  ----              ----                ----

INCOME BEFORE
 INCOME TAXES,
 MINORITY INTEREST,
 AND EXTRAORDINARY
 ITEM              170      26%       80       15%        90     113%

Income taxes        46       7%       15        3%       (31)   -207%
Minority interest   32       5%        9        1%       (23)   -256%
                  ----              ----                ----

INCOME BEFORE
 EXTRAORDINARY
 ITEM               92      14%       56       11%        36      64%

Extraordinary item -
 net gain on
 extinguishment of
 debt (less
 applicable income
 taxes of
 $0.3 million)       2       -         -        -          2       -
                  ----              ----                ----

NET INCOME        $ 94      14%     $ 56      11%       $ 38      68%
                  ====              ====                ====

BASIC EARNINGS
 PER SHARE:
   Before
    extraordinary
    item        $ 0.51            $ 0.32             $ 0.19
   Extraordinary
    item          0.01                 -               0.01
                  ----              ----               ----
BASIC EARNINGS
 PER SHARE      $ 0.52            $ 0.32             $ 0.20
                  ====              ====               ====

DILUTED EARNINGS
 PER SHARE:
   Before
    extraordinary
    item        $ 0.49            $ 0.32             $ 0.17
   Extraordinary
    item          0.01                 -               0.01
                  ----              ----               ----
DILUTED EARNINGS
 PER SHARE      $ 0.50            $ 0.32             $ 0.18
                  ====              ====               ====


THE AES CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS ENDED DECEMBER 31, 1998 AND 1997

----------------------------------------------------------------------
                                                        Change
                    Year       %      Year        %      From
                   Ended      of      Ended      of    Previous    %
                 12/31/98    Sales   12/31/97   Sales    Year   Change
----------------------------------------------------------------------
($ in millions,
 except per
 share amounts)

REVENUES:
Sales and
 services          $2,398     100%    $1,411    100%    $  987     70%

OPERATING
 COSTS
 AND EXPENSES:
Cost of sales
 and services       1,587      66%       981     70%      (606)   -62%
Selling, general
 and administrative
 expenses              56       2%        45      3%       (11)   -24%
Provision to
 reduce
 contract
 receivables           22       1%        17      1%        (5)   -29%
                   ------             ------            ------

Total operating
 costs and
 expenses           1,665      69%     1,043     74%      (622)   -60%
                   ------             ------            ------

OPERATING INCOME      733      31%       368     26%       365     99%

OTHER INCOME AND
 (EXPENSE):
Interest expense     (486)    -20%      (251)   -17%      (235)   -94%
Interest income        67       3%        41      3%        26     63%
Equity in net
 earnings of
 affiliates
 (before income
 taxes)               232      10%       126      7%       106     84%
                   ------             ------            ------

INCOME BEFORE
 INCOME TAXES,
 MINORITY
 INTEREST, AND
 EXTRAORDINARY
 ITEM                 546      24%       284     19%       262     92%

Income taxes          145       7%        77      5%       (68)   -88%
Minority interest      94       4%        19      1%       (75)  -395%
                   ------             ------            ------

INCOME BEFORE
 EXTRAORDINARY
 ITEM                 307      13%       188     13%       119     63%

Extraordinary
 item - net gain
 (loss) on
 extinguishment
 of debt
 (less applicable
 income taxes of
 $2 million for
 both years)            4       -         (3)     -          7    233%
                   ------             ------            ------

NET INCOME         $  311      13%    $  185     13%    $  126     68%
                   ======             ======            ======

BASIC EARNINGS
 PER SHARE:
   Before
    extraordinary
    item           $ 1.73             $ 1.13            $ 0.60
   Extraordinary
    item             0.02              (0.02)             0.04
                   ------             ------            ------
BASIC EARNINGS
 PER SHARE         $ 1.75             $ 1.11            $ 0.64
                   ======             ======            ======

DILUTED EARNINGS
 PER SHARE:
   Before
    extraordinary
    item           $ 1.67            $ 1.11            $ 0.56
   Extraordinary
    item             0.02             (0.02)             0.04
                   ------             ------            ------
DILUTED EARNINGS
 PER SHARE         $ 1.69            $ 1.09            $ 0.60
                   ======             ======            ======