AES Reports Earnings of $0.42 Per Share from Continuing Operations for First Nine Months of 2003, Third Quarter $0.07 Per Share.Energy Editors/Business Editors ARLINGTON Arlington, county, United States Arlington, county (1990 pop. 170,936), N Va., across the Potomac River from Washington, D.C. Arlington is a residential and commercial suburb of Washington. , Va.--(BUSINESS WIRE)--Oct. 30, 2003 Revenues Increase 11% to $6.3 billion year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. $605 million of Corporate Debt Reduced during the Quarter The AES Corporation AES Corporation AES (NYSE) is a Fortune 1000 company that generates and distributes electrical power. It was founded on January 28, 1981 by Roger Sant from the US Federal Energy Administration and Dennis Bakke from the Office of Management and Budget. (NYSE NYSE See: New York Stock Exchange : AES) announced today that income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the nine months ended September September: see month. 30, 2003 was $247 million, or $0.42 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, up from a loss of $(211) million, or $(0.39) per diluted share, for the nine months ended September 30, 2002. Income from continuing operations for the quarter ended September 30, 2003, was $46 million, or $0.07 per diluted share, up from a loss of $(207) million, or $(0.38) per diluted share for the third quarter of 2002. Revenues for the nine months ended September 30, 2003 were $6.3 billion, up from $5.7 billion for the nine months ended September 30, 2002. Revenues for the quarter ended September 30, 2003 were $2.3 billion, up from $1.9 billion for the quarter ended September 30, 2002. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the nine months ended September 30, 2003 was $1.5 billion, up from $1.3 billion for the nine months ended September 30, 2002. Operating income for the quarter ended September 30, 2003 was $541 million, up from $370 million for the quarter ended September 30, 2002. Included in operating income for the third quarter of 2003 and 2002 were charges (before income taxes) related to the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: construction projects of $75 million and $168 million, respectively. AES also announced that consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: net cash provided by operating activities for the first nine months of 2003 was $1.1 billion and $349 million for the third quarter of 2003. Additionally, its subsidiary distributions to parent and qualified holding companies for the first nine months of 2003 totaled $799 and $319 million for the third quarter of 2003. Net income for the nine months ended September 30, 2003 was $41 million, or $0.07 per diluted share compared to a loss of $(743) million, or $(1.38) per diluted share, for the nine months ended September 30, 2002. Net income for the quarter ended September 30, 2003 was $76 million, or $0.12 per diluted share compared to a loss of $(315) million, or $(0.58) per diluted share for the third quarter of 2002. The results for all periods include amounts related to discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , including Drax Drax could refer to:
Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. Hanrahan, Chief Executive Officer, stated, "I am pleased with our results this quarter. We are beginning to see the positive financial impacts of our efforts to improve operating performance at our businesses as well as the effects of our corporate debt reduction efforts. Additionally, we continue to see possibilities for attractive growth globally. The financial closing this quarter of our new 1200 mw contract generation power facility in Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe. is one example of the select opportunities we are pursuing." Barry Barry, Welsh Barri, town (1991 pop. 45,053) and port, Vale of Glamorgan, S Wales, on the Bristol Channel. Once a major coal-exporting port, its more diversified export products include cement, flour, and steel products. Sharp, Chief Financial Officer, stated, "Our operating income, earnings per share and cash flow results continue to be in line with our expectations. We are also pleased with the continued progress we made in reducing our corporate level debt. During the quarter we reduced parent debt by $605 million, resulting in cumulative corporate debt reduction of $1,028 million since the beginning of 2003. During the quarter we also completed the final component of our recent corporate refinancing Refinancing An extension and/or increase in amount of existing debt. efforts with the successful execution of our $950 million term loan and revolver revolver: see small arms. revolver Pistol with a revolving cylinder that provides multishot action. Some early versions, known as pepperboxes, had several barrels, but as early as the 17th century pistols were being made with a revolving chamber to financings." Conference Call Information This information will be discussed on a conference call to be held on Thursday Thursday: see week. , October October: see month. 30, 2003, at 9:00 am (Eastern Time). You may access the call via a live web cast which will be available online at http://www.aes.com under the Investor Relations Investor relations The process by which the corporation communicates with its investors. section. This web cast will be available online until Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , November November: see month. 7, 2003. A telephonic replay of the call will also be available from approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 12:00 pm on Thursday, October 30, until 6:00 pm on Friday, November 7 (Eastern Time). Please dial (877) 519 4471. The system will ask for a reservation A clause in a deed of real property whereby the grantor, one who transfers property, creates and retains for the grantor some right or interest in the estate granted, such as rent or an Easement ,a right of use over the land of another. number; please enter 4186015 followed by the pound key (#). International callers should dial (973) 341 3080. "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " Statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995: This news release may contain "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " regarding The AES Corporation's business. These statements are not historical facts, but statements that involve risks and uncertainties. Actual results could differ materially from those projected in these forward-looking statements. For a discussion of such risks and uncertainties, see "Risk Factors" in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the most recently ended fiscal year. AES is a leading global power company comprised of contract generation, competitive supply, large utilities and growth distribution businesses. The company's generating assets include interests in 118 facilities totaling over 45 gigawatts of capacity, in 28 countries. AES's electricity distribution network sells 89,614 gigawatt gig·a·watt n. Abbr. GW One billion (109) watts. hours per year to over 11 million end-use customers. For more general information visit our web site at www.aes.com or contact investor relations at investing@aes.com.
THE AES CORPORATION
-------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED SEPTEMBER 30, 2003 AND 2002
----------------------------------------------------------------------
Quarter Quarter
Ended Ended
($ in millions, except per share amounts) 9/30/2003 9/30/2002
----------------------------------------------------------------------
REVENUES:
Sales and services $ 2,322 $ 1,896
OPERATING COSTS AND EXPENSES:
Cost of sales and services 1,668 1,357
Selling, general and administrative expenses 36 10
Other operating expense (income), net 2 (9)
Loss on write-down of assets 75 168
--------- ---------
Total operating costs and expenses 1,781 1,526
--------- ---------
OPERATING INCOME 541 370
OTHER INCOME AND (EXPENSE):
Interest expense, net (422) (399)
Other nonoperating income, net 9 14
Foreign currency transaction losses (39) (243)
Equity in earnings (losses) of affiliates (before
income tax) 12 (20)
--------- ---------
INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY
INTEREST 101 (278)
Income tax expense (benefit) 20 (91)
Minority interest expense 35 20
--------- ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS 46 (207)
Income (loss) from operations of discontinued
components (net of income tax (expense) benefit
of ($32) and $16, respectively) 30 (108)
--------- ---------
NET INCOME (LOSS) $ 76 $ (315)
========= =========
DILUTED EARNINGS PER SHARE:
Income from continuing operations $ 0.07 $ (0.38)
Discontinued operations 0.05 (0.20)
--------- ---------
Total $ 0.12 $ (0.58)
========= =========
Diluted weighted average shares outstanding (in
millions) 624 542
========= =========
THE AES CORPORATION
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CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
----------------------------------------------------------------------
Nine Nine
Months Months
Ended Ended
($ in millions, except per share amounts) 9/30/2003 9/30/2002
----------------------------------------------------------------------
REVENUES:
Sales and services $ 6,328 $ 5,706
OPERATING COSTS AND EXPENSES:
Cost of sales and services 4,596 4,169
Selling, general and administrative expenses 97 64
Other operating expense (income), net 25 (40)
Loss on write-down of assets 106 168
--------- ---------
Total operating costs and expenses 4,824 4,361
--------- ---------
OPERATING INCOME 1,504 1,345
OTHER INCOME AND (EXPENSE):
Interest expense, net (1,320) (1,105)
Other nonoperating income, net 108 36
Foreign currency transaction gains (losses) 114 (455)
Equity in earnings of affiliates (before income
tax) 57 35
Loss on sale or write-down of investments - (115)
--------- ---------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 463 (259)
Income tax expense (benefit) 128 (37)
Minority interest expense (income) 88 (11)
--------- ---------
INCOME FROM CONTINUING OPERATIONS 247 (211)
Loss from operations of discontinued components
(net of income tax benefit (expense) of $4 and
$(12), respectively) (204) (186)
--------- ---------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 43 (397)
Cumulative effect of accounting change (net of
income taxes of $1 and $72) (2) (346)
--------- ---------
NET INCOME (LOSS) $ 41 $ (743)
========= =========
DILUTED EARNINGS PER SHARE:
Income from continuing operations $ 0.42 $ (0.39)
Discontinued operations (0.35) (0.34)
Cumulative effect of accounting change - (0.65)
--------- ---------
Total $ 0.07 $ (1.38)
========= =========
Diluted weighted average shares outstanding (in
millions) 588 537
========= =========
Business Segment Results AES's business segments, which include Contract Generation, Large Utilities, Competitive Supply and Growth Distribution, generated combined income before income taxes, excluding the Corporate segment, of $214 million for the third quarter of 2003, as compared with a loss of $(202) million for the third quarter of 2002. Total income before income taxes, including the Corporate segment, was $66 million for the third quarter of 2003, as compared with a loss of $(298) million for the same period in 2002. On a geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. basis, income before income taxes from the business segments was generated $123 million from North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , $44 million from South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. , $43 million from Asia, $(54) million from Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and Africa, and $58 million from the Caribbean. All amounts have
been restated to reflect discontinued operations that have occurred in
the current and prior periods.
Contract Generation
($ in millions) 3Q 3Q
2003 2002 Variance
---- ---- --------
Segment revenues $817 $599 $218
% of total revenues 35% 32% 3%
Gross margin $327 $242 $85
% of segment revenues 40% 40% --%
Income before income taxes $71 $144 $(73)
% of income before income taxes
from segments 33% 71% (38)%
Contract Generation consists of multiple power generation facilities located around the world that generally have contractually con·trac·tu·al adj. Of, relating to, or having the nature of a contract. con·trac  tu·al·ly adv.Adv. 1. limited their exposure to commodity price risks and electricity price volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the by entering into long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. (5 years or longer) power purchase agreements for 75% or more of their expected output capacity. For the third quarter of 2003, Contract Generation revenues were $817 million and represented 35% of total revenues, an increase of $218 million over the third quarter of 2002. The most significant contributions continued to be from North and South America, which in aggregate comprised 58% of Contract Generation revenue for the quarter as compared to 68% for the same period in 2002. Revenues were enhanced with the addition of recently completed commercial contract generation businesses totaling 1,451 mw (added subsequent to the third quarter of 2002), including Red Oak in New Jersey (832 mw gas), Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. (454 mw coal), Kelanitissa in Sri Lanka Sri Lanka (srē läng`kə) [Sinhalese,=resplendent land], formerly Ceylon, ancient Taprobane, officially Democratic Socialist Republic of Sri Lanka, island republic (2005 est. pop. (165 mw gas), Barka Barka may refer to:
Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. , Tiszai in Hungary Hungary, Hung. Magyarország, officially Republic of Hungary, republic (2005 est. pop. 10,007,000), 35,919 sq mi (93,030 sq km), central Europe. , Gener GENER. A son-in-law. Dig. 50, 16, 156. in Chile Chile (chĭl`ē, Span. chē`lā), officially Republic of Chile, republic (2005 est. pop. 15,981,000), 292,256 sq mi (756,945 sq km), S South America, west of the continental divide of the Andes Mts. and Tiete Tie·tê A river, about 805 km (500 mi) long, of southeast Brazil flowing generally northwest to the Paraná River. in Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. . These improvements were offset by declines at Shady Point in Oklahoma Oklahoma (ōkləhō`mə), state in SW United States. It is bordered by Missouri and Arkansas (E); Texas, partially across the Red R. (S, W); New Mexico, across the narrow edge of the Oklahoma Panhandle (W); and Colorado and Kansas (N). due to a step-down in the contracted capacity payment and at Lal Pir and Pak Gen in Pakistan Pakistan (păk`ĭstăn', päkĭstän`), officially Islamic Republic of Pakistan, republic (2005 est. pop. 162,420,000), 310,403 sq mi (803,944 sq km), S Asia. . The gross margin for the Contract Generation segment was $327 million for the quarter, an increase of 35% from the third quarter of 2002. Gross margin increases were attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to Tiete in Brazil and Gener in Chile. Additionally, new plants that came online subsequent to the third quarter of 2002 contributed to the increase. These increases were partially offset by declines in gross margin at Beaver beaver, either of two large aquatic rodents, Castor fiber and Castor canadensis, known for their engineering feats. They were once widespread in N and central Eurasia except E Siberia, and in North America from the arctic tree line to the S United Valley in Pennsylvania Pennsylvania (pĕnsəlvā`nyə), one of the Middle Atlantic states of the United States. It is bordered by New Jersey, across the Delaware River (E), Delaware (SE), Maryland (S), West Virginia (SW), Ohio (W), and Lake Erie and New York , Shady Point in Oklahoma and the Chigen plants in China. As a percentage of revenues, the gross margin for the Contract Generation segment was 40% in the third quarter of 2003 which is consistent with the third quarter of 2002. Contract Generation generated $71 million of income before income taxes (or 33% of the net total) for the third quarter of 2003, a decrease from $144 million in the third quarter of 2002. South America showed an increase due to Gener in Chile and Tiete in Brazil. North America experienced declines due to Beaver Valley in Pennsylvania, Warrior Warrior, river, Ala.: see Black Warrior. Run in Maryland Maryland (mâr`ələnd), one of the Middle Atlantic states of the United States. It is bounded by Delaware and the Atlantic Ocean (E), the District of Columbia (S), Virginia and West Virginia (S, W), and Pennsylvania (N). due to significant FAS 133 mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. gains in 2002, Shady Point in Oklahoma due to a step-down in the contracted capacity payment and Hawaii Hawaii, island, United States Hawaii, island (1990 pop. 120,217), 4,037 sq mi (10,456 sq km), largest and southernmost island of the state of Hawaii and coextensive with Hawaii co.; known as the Big Island. due to write-offs of deferred financing and swap breakage costs of $22 million related to their non-recourse debt Non-Recourse Debt A loan that is secured by some sort of collateral, usually property. The issuer can seize the collateral if the borrower defaults. Notes: These types of projects are characterized by high capital expenditures, long loan periods, and uncertain revenue refinancing. These declines were partially offset by increases in the Southland south·land or South·land n. A region in the south of a country or an area. south land·er n.Noun 1. plants in California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). . The Caribbean experienced an overall increase due to the start of commercial operations at Puerto Rico. Europe/Africa experienced a significant decrease due to the $76 million write-off of previously capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. costs of Bujugali, a construction project in Uganda Uganda (y  gän`də, gän`dä), officially Republic of Uganda, republic (2005 est. pop. that the company decided to terminate Terminate (terminat.exe) was a shareware modem terminal and host program for MS-DOS and compatible operating systems developed from the early to the late 1990s by the Dane Bo Bendtsen. The last release (5. during the third
quarter of 2003. Asia had increases due to the start of commercial
operations at Barka and Ras Laffan and improvements at Lal Pir and Pak
Gen in Pakistan.
Competitive Supply
($ in millions) 3Q 3Q
2003 2002 Variance
---- ---- --------
Segment revenues $288 $216 $72
% of total revenues 12% 11% 1%
Gross margin $53 $50 $3
% of segment revenues 18% 23% (5)%
Income (loss) before income taxes $20 $(152) $172
% of income before income taxes
from segments 9% (75)% 84%
Competitive Supply consists primarily of the power plants selling electricity directly to wholesale customers in competitive markets and, as a result, the profitability of such plants are generally more sensitive to fluctuations in the market price of electricity, natural gas and coal, in particular. For the third quarter of 2003, Competitive Supply revenues were $288 million and represented 12% of total revenues for the quarter. The most significant contributions were from the competitive markets of the U.S. which comprised 61% of Competitive Supply revenue for the quarter compared to 55% for the same quarter of 2002. Competitive market prices increased quarter over quarter in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , which resulted in increased revenue in the New York plants. Additionally, other plants showed revenue improvements, including Alicura and CTSN CTSN Crimson Tide Sports Network CTSN Seaman, Cryptologic Technician Striker (Naval Rating) in Argentina Argentina (ärjəntē`nə, Span. ärhāntē`nä), officially Argentine Republic, republic (2005 est. pop. 39,538,000), 1,072,157 sq mi (2,776,889 sq km), S South America. . An increase in revenue also resulted from the start of commercial operations at Granite granite, coarse-grained igneous rock of even texture and light color, composed chiefly of quartz and feldspars. It usually contains small quantities of mica or hornblende, and minor accessory minerals may be present. Ridge ridge (rij) a linear projection or projecting structure; a crest. dental ridge any linear elevation on the crown of a tooth. dermal ridges cristae cutis. in New Hampshire New Hampshire, one of the New England states of the NE United States. It is bordered by Massachusetts (S), Vermont, with the Connecticut R. forming the boundary (W), the Canadian province of Quebec (NW), and Maine and a short strip of the Atlantic Ocean (E). (720 mw gas) and Wolf Hollow hollow 1. a depression. 2. contains a cavity. hollow back backbone has a downward curvature in the center. hollow horn a mythical disease of cattle in primitive communities; treated by removal of the horns. in Texas (730 mw gas). These increases were partially offset by decreased revenues from Deepwater Deepwater or Deep Water may refer to:
n. 1. A quantity or portion of something lacking after delivery or storage. 2. A temporary suspension of operation, especially of electric power. during the third quarter of 2003 and from Ottana Ottana is a comune (municipality) in the Province of Nuoro in the Italian region Sardinia, located about 110 km north of Cagliari and about 25 km southwest of Nuoro. As of 31 December 2004, it had a population of 2,490 and an area of 45.2 km². in Italy Italy (ĭt`əlē), Ital. Italia, officially Italian Republic, republic (2005 est. pop. 58,103,000), 116,303 sq mi (301,225 sq km), S Europe. . Gross margin as a percentage of revenues for the Competitive Supply segment was 18% in the third quarter of 2003, a decrease from 23% in the third quarter of 2002. Overall, the gross margin for Competitive Supply increased to $53 million from $50 million. Margins and margin percentages were lower at Deepwater in Texas and Granite Ridge in New Hampshire. These decreases were partially offset by increased margins and margin percentages at the New York plants in North America, CTSN and Alicura in South America and Altai Altai or Altay (both: ăltī`, äl–, ăl`tī, Rus. əltī`), geologically complex mountain system of central Asia; largely in the Altai Republic, Russia, and in Kazakhstan, but extending into W in Asia. Competitive Supply generated $20 million of income before taxes (or 9% of the net total) for the third quarter of 2003, which represents a $172 million improvement over the same period in 2002. The increase is primarily due to the write-off of $168 million of construction costs associated with Greystone, a project in Tennessee Tennessee, state, United States Tennessee (tĕn`əsē', tĕn'əsē`), state in the south-central United States. , in the third quarter of 2002. Operationally, during 2003 increases at CTSN in Argentina and the New York plants were partially offset by decreases at Granite Ridge in New Hampshire, Parana in Argentina and Deepwater in Texas.
Large Utilities
($ in millions) 3Q 3Q
2003 2002 Variance
---- ---- --------
Segment revenues $908 $783 $125
% of total revenues 39% 41% (2)%
Gross margin $244 $199 $45
% of segment revenues 27% 25% 2%
Income (loss) before income taxes $120 $(175) $295
% of income before income taxes
from segments 56% (87)% 143%
The Large Utilities segment is comprised of the large integrated utilities that serve nearly 7 million customers in North America, the Caribbean and South America. The Large Utility businesses include IPALCO IPALCO Indianapolis Power and Light Company in Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). , EDC EDC See: Export Development Corp. in Venezuela Venezuela (vĕnəzwā`lə, Span. vānāswā`lä), officially the Bolivarian Republic of Venezuela, republic (2005 est. pop. 25,375,000), 352,143 sq mi (912,050 sq km), N South America. and Eletropaulo AES Eletropaulo (also known simply as Eletropaulo) is a major Brazilian power distributor in the state of São Paulo. The company's full name is Eletropaulo Metropolitana Eletricidade de São Paulo. Eletropaulo has around 5 million customers. in Brazil. For the third quarter of 2003, revenues for Large Utilities were $908 million and represented 39% of total revenues for the quarter. Revenues for Large Utilities increased $125 million, or 16%, from the third quarter of 2002. Eletropaulo's revenues for the third quarter increased due to appreciation of the Brazilian Real The real (IPA: [xe'aw] or [ʁe'aɫ], symbol: R$, ISO 4217 code: BRL, plural: reais) is the currency of Brazil. It is also the name of the earliest Brazilian currency (see from the Colonial period to 1942. compared to the same quarter of 2002. EDC's revenues increased due to higher demand and a tariff tariff, tax on imported and, more rarely, exported goods. It is also called a customs duty. Tariffs may be distinguished from other taxes in that their predominant purpose is not financial but economic—not to increase a nation's revenue but to protect domestic increase offset by devaluation devaluation, decreasing the value of one nation's currency relative to gold or the currencies of other nations. It is usually undertaken as a means of correcting a deficit in the balance of payments. of the Venezuelan Bolivar. IPALCO had a slight decrease quarter over quarter due to milder weather in 2003. The gross margin as a percentage of revenues for the Large Utility segment was 27% for the third quarter of 2003 compared to 25% for the third quarter of 2002. Eletropaulo's gross margin increased mainly due to appreciation of the Brazilian Real. EDC's gross margin increased due to higher demand and increased tariffs This is a list of tariffs and trade legislation:
Large Utilities generated $120 million of income before income taxes (or 56% of the net total) for the third quarter of 2003, up from a loss of $(175) million for the same period in 2002. The increase relates primarily to the significant devaluation experienced in the third quarter of 2002 which resulted in foreign currency transaction losses of $244 million at Eletropaulo as compared to losses of $26 million in the third quarter of 2003.
Growth Distribution
($ in millions) 3Q 3Q
2003 2002 Variance
---- ---- --------
Segment revenues $309 $298 $11
% of total revenues 13% 16% (3)%
Gross margin $30 $48 $(18)
% of segment revenues 10% 16% (6)%
Income (loss) before income taxes $3 $(19) $22
% of income before income taxes
from segments 1% (9)% 10%
The Growth Distribution segment, serving nearly 5 million customers, consists of electricity distribution companies that are generally located in developing countries or regions where the demand for electricity is expected to grow at a rate higher than in more developed regions. For the third quarter of 2003, revenues were $309 million, a 3% increase over the third quarter of 2002, and represented 13% of total revenues for the quarter. The Caribbean and South America represent the most significant contributors with 74% of Growth Distribution revenues, while Europe/Africa contributes the remaining 26%. There were increases in revenues at Eden & Edes and Edelap in Argentina, Sonel in Cameroon Cameroon, country Cameroon (kăm'ər n`), Fr. Cameroun, officially Republic of Cameroon, republic (2005 est. pop. , Sul in Brazil and Clesa and Caess in El Salvador El Salvador (ĕl sälväthōr`), officially Republic of El Salvador, republic (2005 est. pop. 6,705,000), 8,260 sq mi (21,393 sq km), Central America. . These were
partially offset by reductions at Ede Este Este, Italian noble familyEste (ĕs`tā), Italian noble family, rulers of Ferrara (1240–1597) and of Modena (1288–1796) and celebrated patrons of the arts during the Renaissance. in the Dominican Republic. The gross margin as a percentage of revenues for the Growth Distribution segment was 10% in the third quarter of 2003, a decrease from 16% in the third quarter of 2002. Gross margin and gross margin percentages declined at Ede Este in the Dominican Republic and Sonel in Cameroon. These declines were partially offset by increased gross margins at Caess in El Salvador and Sul in Brazil. Overall, the gross margin for the Growth Distribution segment decreased to $30 million for the third quarter of 2003. Growth Distribution businesses generated $3 million of income before income taxes for the third quarter of 2003, an increase of $22 million from a loss before income taxes of $(19) million for the third quarter of 2002. Income before income taxes increased at Sul in Brazil and Caess in El Salvador. These increases were partially offset by lower operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: at Ede Este in the Dominican Republic, Sonel in Cameroon and Eden & Edes in Argentina.
THE AES CORPORATION --- Supplemental Data
-----------------------------------------
($ in millions, except Total Assets in billions)
--------------------2002--------------------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year
-------- -------- -------- -------- --------
GEOGRAPHIC:
North America
Revenues $ 489 $ 490 $ 569 $ 538 $ 2,086
Income before Income
Taxes (4) $ 137 $ 138 $ 5 $ (4) $ 276
Caribbean (1)
Revenues $ 373 $ 365 $ 334 $ 383 $ 1,455
Income before Income
Taxes (4) $ 59 $ 73 $ 41 $ (62) $ 111
South America
Revenues $ 785 $ 707 $ 710 $ 685 $ 2,887
Income before Income
Taxes (4) $ (9) $ (264) $ (288) $ (957) $(1,518)
Europe/Africa
Revenues $ 217 $ 176 $ 195 $ 234 $ 822
Income before Income
Taxes (4) $ 53 $ 29 $ 17 $ 59 $ 158
Asia
Revenues $ 100 $ 108 $ 88 $ 96 $ 392
Income before Income
Taxes (4) $ 36 $ 39 $ 23 $ 18 $ 116
Corporate (3)
Income before Income
Taxes (4) $ (124) $ (117) $ (96) $ (144) $ (481)
SEGMENTS:
Contract Generation
Revenues $ 652 $ 632 $ 599 $ 668 $ 2,551
Gross Margin (2) $ 272 $ 260 $ 242 $ 291 $ 1,065
Income before Income
Taxes (4) $ 181 $ 144 $ 144 $ 148 $ 617
Competitive Supply
Revenues $ 198 $ 181 $ 216 $ 231 $ 826
Gross Margin (2) $ 33 $ 34 $ 50 $ 60 $ 177
Income before Income
Taxes (4) $ (62) $ (30) $ (152) $ (89) $ (333)
Large Utilities
Revenues $ 768 $ 863 $ 783 $ 736 $ 3,150
Gross Margin (2) $ 232 $ 186 $ 199 $ 70 $ 687
Income before Income
Taxes (4) $ 134 $ 50 $ (175) $ (951) $ (942)
Growth Distribution
Revenues $ 346 $ 170 $ 298 $ 301 $ 1,115
Gross Margin (2) $ 76 $ (95) $ 48 $ (14) $ 15
Income before Income
Taxes (4) $ 23 $ (149) $ (19) $ (54) $ (199)
Corporate (3)
Income before Income
Taxes (4) $ (124) $ (117) $ (96) $ (144) $ (481)
ADDITIONAL INFORMATION:
Revenues $ 1,964 $ 1,846 $ 1,896 $ 1,936 $ 7,642
Gross Margin (2) $ 613 $ 385 $ 539 $ 407 $ 1,944
Gross Margin
Percentage (2) 31% 21% 28% 21% 25%
Income before Income
Taxes (4) $ 152 $ (102) $ (298) $(1,090) $(1,338)
Total Assets (billions) $ 40 $ 39 $ 37 $ 34 $ 34
Depreciation and
Amortization $ 170 $ 171 $ 164 $ 167 $ 672
FAS 133 Gain (Loss)(5) $ 4 $ 43 $ - $ (45) $ 2
Foreign Exchange Gain
(Loss) from Brazil (5) $ (10) $ (85) $ (203) $ 46 $ (252)
Foreign Exchange Gain
(Loss) from
Argentina (5) $ (82) $ (52) $ - $ (5) $ (139)
Foreign Exchange Gain
(Loss) from
Venezuela $ 65 $ 25 $ 21 $ (72) $ 39
Foreign Exchange Gain
(Loss) from Dominican
Republic (5) $ (3) $ (2) $ (7) $ (12) $ (24)
-----------2003-----------
1st Qtr 2nd Qtr 3rd Qtr
-------- -------- --------
GEOGRAPHIC:
North America
Revenues $ 551 $ 515 $ 635
Income before Income Taxes (4) $ 117 $ 92 $ 123
Caribbean (1)
Revenues $ 400 $ 410 $ 423
Income before Income Taxes (4) $ 13 $ (18) $ 58
South America
Revenues $ 675 $ 796 $ 908
Income before Income Taxes (4) $ 57 $ 133 $ 44
Europe/Africa
Revenues $ 236 $ 209 $ 218
Income before Income Taxes (4) $ 56 $ 24 $ (54)
Asia
Revenues $ 107 $ 107 $ 138
Income before Income Taxes (4) $ 41 $ 37 $ 43
Corporate (3)
Income before Income Taxes (4) $ (137) $ (106) $ (148)
SEGMENTS:
Contract Generation
Revenues $ 716 $ 735 $ 817
Gross Margin (2) $ 290 $ 285 $ 327
Income before Income Taxes (4) $ 154 $ 124 $ 71
Competitive Supply
Revenues $ 236 $ 208 $ 288
Gross Margin (2) $ 68 $ 40 $ 53
Income before Income Taxes (4) $ 63 $ 31 $ 20
Large Utilities
Revenues $ 702 $ 777 $ 908
Gross Margin (2) $ 165 $ 164 $ 244
Income before Income Taxes (4) $ 69 $ 91 $ 120
Growth Distribution
Revenues $ 315 $ 317 $ 309
Gross Margin (2) $ 42 $ 24 $ 30
Income before Income Taxes (4) $ (2) $ 22 $ 3
Corporate (3)
Income before Income Taxes (4) $ (137) $ (106) $ (148)
ADDITIONAL INFORMATION:
Revenues $ 1,969 $ 2,037 $ 2,322
Gross Margin (2) $ 565 $ 513 $ 654
Gross Margin Percentage (2) 29% 25% 28%
Income before Income Taxes (4) $ 147 $ 162 $ 66
Total Assets (billions) $ 33 $ 34 $ 30
Depreciation and Amortization $ 175 $ 188 $ 203
FAS 133 Gain (Loss)(5) $ (9) $ (18) $ (11)
Foreign Exchange Gain (Loss) from
Brazil(5) $ 22 $ 82 $ (19)
Foreign Exchange Gain (Loss) from
Argentina(5) $ 33 $ 21 $ (22)
Foreign Exchange Gain (Loss) from
Venezuela(5) $ 4 $ (17) $ 10
Foreign Exchange Gain (Loss) from
Dominican Republic(5) $ (23) $ (13) $ (2)
(1) Includes Venezuela and Colombia.
(2) Gross Margin is revenues reduced by cost of sales and services.
(3) Corporate consists of interest expense and selling, general and
administrative expenses. Revenue and Gross Margin for Corporate
equal zero.
(4) Amount is net of pre- tax minority interest.
(5) Amount is net of the income tax effect.
THE AES CORPORATION
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2003 AND DECEMBER 31, 2002
($ in millions) September December
30, 31,
2003 2002
--------- ---------
Assets:
Current assets:
Cash and cash equivalents $ 1,477 $ 797
Restricted cash 433 160
Short term investments 204 177
Accounts receivable, net of reserves of $360 and
$375, respectively 1,263 1,078
Inventory 399 366
Receivable from affiliates 16 25
Deferred income taxes - current 127 130
Prepaid expenses 85 64
Other current assets 769 923
Current assets of held for sale and discontinued
businesses 141 629
--------- ---------
Total current assets 4,914 4,349
Property, Plant and Equipment:
Land 754 699
Electric generation and distribution assets 20,883 18,313
Accumulated depreciation (4,739) (4,049)
Construction in progress 2,048 3,211
--------- ---------
Property, plant and equipment, net 18,946 18,174
Other assets:
Deferred financing costs, net 432 397
Project development costs 5 15
Investment in and advances to affiliates 675 678
Debt service reserves and other deposits 380 508
Goodwill, net 1,385 1,388
Deferred income taxes - noncurrent 999 939
Long-term assets of held for sale and
discontinued businesses 584 6,111
Other assets 2,095 1,671
--------- ---------
Total other assets 6,555 11,707
--------- ---------
Total Assets $ 30,415 $ 34,230
========= =========
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable $ 1,148 $ 1,107
Accrued interest 643 362
Accrued and other liabilities 1,384 1,118
Current liabilities of held for sale and
discontinued businesses 67 607
Recourse debt-current portion - 26
Non-recourse debt-current portion 4,303 3,291
--------- ---------
Total current liabilities 7,545 6,511
Long-term liabilities:
Recourse debt 5,280 5,778
Non-recourse debt 10,045 10,628
Deferred income taxes 838 981
Long-term liabilities of held for sale and
discontinued businesses 354 5,127
Pension liabilities 1,275 1,166
Other long-term liabilities 2,685 2,584
--------- ---------
Total long-term liabilities 20,477 26,264
Minority interest, including discontinued
operations of $41 in 2002 897 818
Company obligated convertible mandatorily
redeemable preferred securities of subsidiary
trusts holding solely junior subordinated
debentures of AES 809 978
Stockholders' equity (deficit):
Common stock 6 6
Additional paid-in capital 5,710 5,312
Accumulated deficit (659) (700)
Accumulated other comprehensive loss (4,370) (4,959)
--------- ---------
Total stockholders' equity (deficit) 687 (341)
--------- ---------
Total Liabilities and Stockholders' Equity
(Deficit) $ 30,415 $ 34,230
========= =========
THE AES CORPORATION
CAPITAL RESOURCES AND OTHER BALANCE SHEET DATA
($ in billions)
September December
30, 31,
Capitalization: 2003 2002
----------- ---------
Recourse debt $ 5.28 $ 5.80
Non-recourse debt 14.35 13.92
----------- ---------
Total debt 19.63 19.72
Preferred Securities 0.81 0.98
Minority Interest 0.90 0.82
Stockholders' equity 0.69 (0.34)
----------- ---------
Total capitalization $ 22.03 $ 21.18
=========== =========
Selected Balance Sheet Data by Geographic Region:
Property, Non-
Plant & Total recourse
September 30, 2003 Equipment Assets Debt
-------------------------------
North America $ 6.07 $ 7.52 $ 4.47
Caribbean 4.70 6.05 2.45
South America 5.14 10.15 5.30
Europe/Africa 1.41 2.67 0.80
Asia 1.62 2.47 1.33
Discontinued Operations - 0.73 -
Corporate 0.01 0.83 -
December 31, 2002
North America $ 6.12 $ 7.41 $ 4.26
Caribbean 5.13 6.54 2.90
South America 4.23 8.63 4.96
Europe/Africa 1.30 2.32 0.74
Asia 1.38 2.19 1.06
Discontinued Operations - 6.74 -
Corporate 0.01 0.40 -
Selected Balance Sheet Data by Line of Business:
Property, Total Non-
Plant & Assets recourse
September 30, 2003 Equipment Debt
-------------------------------
Contract Generation $ 9.09 $ 13.51 $ 7.61
Competitive Supply 2.38 3.14 1.00
Large Utilities 5.90 9.24 4.63
Growth Distribution 1.57 2.97 1.11
Discontinued Operations - 0.73 -
Corporate 0.01 0.83 -
December 31, 2002
Contract Generation $ 8.06 $ 12.09 $ 6.54
Competitive Supply 3.03 3.73 1.56
Large Utilities 5.64 8.45 4.65
Growth Distribution 1.43 2.82 1.17
Discontinued Operations - 6.74 -
Corporate 0.01 0.40 -
The AES Corporation
Parent Financial Information
----------------------------------------------------------------------
Parent only data: last four quarters
($ in millions)
4 Quarters Ended
December March June September December
31, 31, 30, 30, 31,
Total subsidiary 2002 2003 2003 2003 2003
distributions & returns Actual Actual Actual Actual Forecast
of capital to Parent (1)
------------------------- -------- -------- -------- -------- --------
Subsidiary distributions
to Parent $ 804 $ 658 $ 773 $ 909 $ 1,037
Net distributions to/
(from) QHCs (2) 291 286 208 139 5
-------- -------- -------- -------- --------
Subsidiary distributions 1,095 944 981 1,048 1,042
Returns of capital
distributions to Parent 84 43 54 248 298
Net returns of capital
distributions to/(from)
QHCs (2) 0 0 6 (1) 6
-------- -------- -------- -------- --------
Returns of capital
distributions 84 43 60 247 304
Combined distributions &
return of capital
received 1,179 987 1,041 1,295 1,346
Less: combined net
distributions & returns
of capital to/(from)
QHCs (2) (291) (286) (214) (138) (11)
-------- -------- -------- -------- --------
Total subsidiary
distributions & returns
of capital to Parent $ 888 $ 701 $ 827 $ 1,157 $ 1,335
======== ======== ======== ======== ========
----------------------------------------------------------------------
Parent only data: quarterly
($ in millions)
Quarter Ended
September December March June September
Total subsidiary 30, 31, 31, 30, 30,
distributions & returns 2002 2002 2003 2003 2003
of capital to Parent Actual Actual Actual Actual Actual
------------------------- -------- -------- -------- -------- --------
Subsidiary distributions
to Parent $ 176 $ 149 $ 136 $ 312 $ 312
Net distributions to/
(from) QHCs (2) 76 100 44 (12) 7
-------- -------- -------- -------- --------
Subsidiary distributions
(3) 252 249 180 300 319
Returns of capital
distributions to Parent 4 23 2 24 199
Net returns of capital
distributions to/(from)
QHCs (2) 0 0 0 6 (7)
-------- -------- -------- -------- --------
Returns of capital
distributions 4 23 2 30 192
Combined distributions &
return of capital
received 256 272 182 330 511
Less: combined net
distributions & returns
of capital to/(from)
QHCs (2) (76) (100) (44) 6 0
-------- -------- -------- -------- --------
Total subsidiary
distributions & returns
of capital to Parent $ 180 $ 172 $ 138 $ 336 $ 511
======== ======== ======== ======== ========
Liquidity (4)
------------- Balance at
($ in millions) September December March June September
30, 31, 31, 30, 30,
2002 2002 2003 2003 2003
Actual Actual Actual Actual Actual
-------- -------- -------- -------- --------
Cash at Parent $ 384 $ 184 $ 395 $ 913 $ 528
Availability under
revolver 5 18 28 39 172
Cash at QHCs (2) 6 10 66 29 35
-------- -------- -------- -------- --------
Ending liquidity $ 395 $ 212 $ 489 $ 981 $ 735
======== ======== ======== ======== ========
During the third quarter of 2003 the AES Corporation reduced parent
and related debt by approximately $605 million (from $6,772 million to
$6,167 million). During the nine months ended September 30, 2003 the
AES Corporation reduced parent and related debt by approximately
$1,028 million (from $7,195 million to $6,167 million).
(1) Forecasted financial information is based on certain material
assumptions. Such assumptions include, but are not limited to the
following:
a. We assume continued normal levels of operating performance and
electricity demand at our distribution companies.
b. We assume operational performance at our contract generation
businesses consistent with historical levels and in accordance
with the provisions of the relevant contracts.
c. Our assumptions about asset sales include transactions that are
supported by signed agreements and that have been previously
announced.
(2) The cash held at qualifying holding companies (QHCs) 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. 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 qualifying holding companies is available to the
parent, AES uses the combined measure of subsidiary distributions
to parent and qualified holding companies as a useful measure of
cash available to the parent to meet its international liquidity
needs.
(3) Total subsidiary distributions for the nine months ended September
30, 2003 were $799 million.
(4) AES believes that unconsolidated parent company liquidity is
important to the liquidity position of AES as a Parent company
because of the non-recourse nature of most of AES's indebtedness.
Certain statements regarding AES's ("the Company's") business
operations may constitute "forward looking statements" as defined by
the Securities and Exchange Commission.
Such statements are not historical facts, but are predictions about
the future which inherently involve risks and uncertainties, which
could cause our actual results to differ from those contained in the
forward looking statement. We urge investors to read our descriptions
and discussions of these risks that are contained under the section
"Risk Factors" in the Company's Annual Report/Form 10K for the year
ended December 31, 2002.
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