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, Va.--(BUSINESS WIRE)--Oct. 30, 2003 Revenues Increase 11% to $6.3 billion year-to-date $605 million of Corporate Debt Reduced during the Quarter The AES Corporation (NYSE: AES) announced today that income from continuing operations for the nine months ended September 30, 2003 was $247 million, or $0.42 per diluted 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 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 of terminated construction projects of $75 million and $168 million, respectively. AES also announced that consolidated 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, including Drax, because of the Company's decision during the third quarter of 2003 to withdraw its support for a restructuring at that business. Paul 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 is one example of the select opportunities we are pursuing." Barry 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 efforts with the successful execution of our $950 million term loan and revolver financings." Conference Call Information This information will be discussed on a conference call to be held on Thursday, October 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 section. This web cast will be available online until Friday, November 7, 2003. A telephonic replay of the call will also be available from approximately 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 number; please enter 4186015 followed by the pound key (#). International callers should dial (973) 341 3080. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This news release may contain "forward-looking statements" 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 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 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
-------------------
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 basis, income before income taxes from the business segments was generated $123 million from North America, $44 million from South America, $43 million from Asia, $(54) million from Europe 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 limited their exposure to commodity price risks and electricity price volatility by entering into long-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 (454 mw coal), Kelanitissa in Sri Lanka (165 mw gas), Barka in Oman (427 mw gas), Ras Laffan in Qatar (750 mw gas) and Andres in the Dominican Republic (310 mw gas). Revenues also improved at Los Mina in the Dominican Republic, Merida III in Mexico, Tiszai in Hungary, Gener in Chile and Tiete in Brazil. These improvements were offset by declines at Shady Point in Oklahoma due to a step-down in the contracted capacity payment and at Lal Pir and Pak Gen in Pakistan. 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 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 Valley in Pennsylvania, 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 Run in Maryland due to significant FAS 133 mark-to-market gains in 2002, Shady Point in Oklahoma due to a step-down in the contracted capacity payment and Hawaii due to write-offs of deferred financing and swap breakage costs of $22 million related to their non-recourse debt refinancing. These declines were partially offset by increases in the Southland plants in California. 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 $76 million write-off of previously capitalized costs of Bujugali, a construction project in Uganda that the company decided to terminate during the third quarter of 2003. Asia had increases due to the start of commercial operations at Barka and Ras Laffan and improvements at Lal Pir and Pak Gen in Pakistan.
Competitive Supply
($ 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, which resulted in increased revenue in the New York plants. Additionally, other plants showed revenue improvements, including Alicura and CTSN CTSN - Seaman, Cryptologic Technician Striker (Naval Rating) in Argentina. An increase in revenue also resulted from the start of commercial operations at Granite Ridge in New Hampshire (720 mw gas) and Wolf Hollow in Texas (730 mw gas). These increases were partially offset by decreased revenues from Deepwater in Texas due to an outage during the third quarter of 2003 and from Ottana in Italy. 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 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 $168 million of construction costs associated with Greystone, a project in Tennessee, in the third quarter of 2002. Operationally, during 2003 increases at CTSN in Argentina and the New York plants were partially offset by decreases at Granite Ridge in New Hampshire, Parana in Argentina and Deepwater in Texas.
Large Utilities
($ 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 in Indiana, EDC in Venezuela and Eletropaulo 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 compared to the same quarter of 2002. EDC's revenues increased due to higher demand and a tariff increase offset by devaluation 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 in the third quarter of 2003 compared to 2002. IPALCO experienced a lower margin and margin percentage due to milder weather and higher operating and maintenance costs in 2003. Overall, gross margin for Large Utilities increased to $244 million for the third quarter of 2003 from $199 million in the third quarter of 2002. 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, Sul in Brazil and Clesa and Caess in El Salvador. These were partially offset by reductions at Ede Este 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 $(19) million for the third quarter of 2002. Income before income taxes increased at Sul in Brazil and Caess in El Salvador. These increases were partially offset by lower operating margins at Ede Este in the Dominican Republic, Sonel in Cameroon and Eden & Edes in Argentina.
THE AES CORPORATION --- Supplemental Data
-----------------------------------------
($ 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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