2. Safe Harbor Disclosure
Contains Forward Looking Statements
Certain statements in the following presentation regarding AES’s business operations may
constitute “forward-looking statements.” Such forward-looking statements include, but are not
limited to, those related to future earnings growth and financial and operating performance.
Forward-looking statements are not intended to be a guarantee of future results, but instead
constitute AES’s current expectations based on reasonable assumptions. Forecasted financial
information is based on certain material assumptions. These assumptions include, but are not
limited to, continued normal or better levels of operating performance and electricity demand at
our distribution companies and operational performance at our generation businesses consistent
with historical levels, as well as achievements of planned productivity improvements and
incremental growth from investments at investment levels and rates of return consistent with
prior experience. For additional assumptions see the Appendix to this presentation. Actual
results could differ materially from those projected in our forward-looking statements due to
risks, uncertainties and other factors. Important factors that could affect actual results are
discussed in AES’s filings with the Securities and Exchange Commission including but not
limited to the risks discussed under Item 1A “Risk Factors” in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2007, as well as our other SEC filings. AES
undertakes no obligation to update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise.
2
3. Overview
Contains Forward Looking Statements
Review of key points in current economic environment
2008 & 2009 guidance
Construction update
Third Quarter 2008 results
Detail on Third Quarter results & 2008 guidance
Update on financial operations
Debt profile
3
5. 2009 Guidance Update & Sensitivities
Contains Forward Looking Statements
2009 Adjusted EPS1 Lowered by $0.05 to $1.15-$1.20
Interest 100 bps move in interest rates is equal to $0.02-$0.03 p.a.
Rates change in EPS
10% appreciation in USD against major currencies2 is equal to
Currencies
negative $0.08 in EPS
$10 move in coal3 (negative correlation) is equal to EPS
impact of $0.04-$0.05
$10 move in oil2 (positive correlation) is equal to EPS impact of
Commodity
Sensitivity $0.02
$1 move in natural gas3 (positive correlation) is equal to EPS
impact of $0.03
1. A non-GAAP financial measure. See Appendix.
2. Currency sensitivities are based on a basket of currencies including, but not limited to, Brazilian Real (BRL), Chilean Peso (CLP), Euro, Argentine Peso (ARP)
and Philippine Peso (PHP). Average rates for 2009 are based on the current spot prices as of 11/5/2008: BRL 2.13, CLP 632, Euro 1.29, ARP 3.30 and PHP
48.0.
3. Average commodity rates for 2009 are budgeted as follows: Central Appalachian Coal $83/ton and Newcastle $103/ton; Brent oil $70/ton; and Natural gas HH
$7.065/mmBTU.
Note: Commodity price sensitivities assume movement in only one commodity price (all others unchanged).
5
6. We Will Complete Projects Already Under
Construction Which Have Built-in Growth
Contains Forward Looking Statements
Core Power Renewables
Chile Jordan Chile Bulgaria Chile Chile Chile Chile UK Cameroon China Turkey Panama
I.C.
Santa Amman Guacolda Maritza Nueva Guacolda Kilroot Huanghua
Project Angamos Campiche Dibamba Energy Changuinola I
Lidia East 3 East Ventanas 4 OCGT JV
JV1
% Owned 80 37 40 100 80 40 80 80 99 56 49 51 83
Heavy
Type Diesel Gas Coal Coal Coal Coal Coal Coal Diesel Wind Hydro Hydro
Fuel Oil
Gross MW 130 MW 380 MW 152 MW 670 MW 267 MW 152 MW 518 MW 270 MW 80 MW 86 MW 49 MW 62 MW 223 MW
Simple
Cycle: July Unit 1: 1H Unit 1: 1H
Expected
2008 2010 2011
Commercial
2H 2008 2H 2009 1H 2010 2H 2010 1H 2011 1H 2009 2009 2009 2H 2010 1H 2011
Operations Combined Unit 2: 2H Unit 2: 2H
Date Cycle: 2010 2011
1H 2009
Long-Term
Offtake NA NA
Contract
1. Joint Venture with I.C. Energy. I.C. Energy plants: Damlapinar Konya, Kepezkaya Konya and Kumkoy Samsun.
6
7. Third Quarter 2008:
Gross Margin, EPS & Cash On Track
Contains Forward Looking Statements
($ Millions Except Earnings per Share)
Gross Margin
$958
$847
Q3 2007 Q3 2008
(Restated)
Diluted EPS from
Adjusted EPS1
Continuing Operations
$0.25
$0.22
$0.17
$0.14
Q3 2007 Q3 2008 Q3 2007 Q3 2008
(Restated) (Restated)
Key earnings growth drivers were increased pricing and demand in Latin America
Q3 2008 Diluted EPS and Adjusted EPS include $0.09 of mark-to-market foreign currency transaction
losses associated with our net monetary positions primarily in the Philippines and Chile
1. A Non-GAAP financial measure. See Appendix.
7
8. Third Quarter 2008 Period Over Period
Earnings from Continuing Operations Bridge
Contains Forward Looking Statements
($ per Diluted Share)
$0.03
$0.14
($0.02) $0.02
($0.09)
$0.22
$0.14
Q3 2007 Operational Other Non- FX FX Tax Rate Q3 2008
GAAP EPS Improvements Operating Translation Transaction GAAP EPS
Items1
Operational improvements largely reflect contributions from Latin America
Foreign currency transaction losses primarily represent unrealized mark-to-market losses associated
with our net monetary positions in the Philippines and Chile
1. Includes impairments and FAS 133 mark-to-market fuel and Power Purchase Agreement (PPA) derivatives.
8
9. Third Quarter 2008 Period Over Period
Adjusted EPS1 Bridge
Contains Forward Looking Statements
($ per Diluted Share)
$0.03
$0.14
$0.02
($0.02)
($0.09)
$0.25
$0.17
Q3 2007 Operational Other Non- FX FX Tax Rate Q3 2008
Adjusted Improvements Operating Translation Transaction Adjusted
EPS1 EPS1
Items
Operational improvements largely reflect contributions from Latin American and European generation
businesses
Q3 2007 negatively impacted $0.07 by gas curtailments and unfavorable hydrology in Chile and
Argentina
1. A Non-GAAP financial measure. See Appendix for reconciliation.
9
10. Cash Flow Highlights
Contains Forward Looking Statements
($ Millions)
Consolidated Free Cash Flow1
Net Operating Cash Flow
$642
$784
$758 $590
Q3 2007 Q3 2008
Q3 2007 Q3 2008
(Restated)
(Restated)
$26 million increase in operating cash flow was largely driven by improved operations in Latin America
$52 million increase in consolidated free cash flow reflects a combination of higher operating cash flow
and lower maintenance capital expenditures
1. A Non-GAAP financial measure. See Appendix for reconciliation.
10
11. Manageable Debt Profile
Contains Forward Looking Statements
In Millions, as of Sept. 30, 2008
Maturity Schedule Subsid- Consol-
AES Corp
iaries idated
2009 2010
Cash & Cash
AES Corp1 154 419 455 1,252 1,707
Equivalents
Bank Lines of
Subsidiaries2 6933 1,0924 690 624 1,314
Credit
Consolidated 847 1,511 Restricted Cash - 552 552
Short-Term
- 1,4535 1,4535
Investments
Debt Service
- 610 610
Reserve Accounts
Total Liquidity 1,145 4,491 5,636
1.Recourse debt.
2.Non-recourse debt.
3.Includes: Brazil, including Eletropaulo, Tiete & Sul ($171 million), Kilroot in Northern Ireland ($85 million) and Puerto Rico ($60 million).
4.Includes: Brazil, including Eletropaulo, Tiete & Sul ($445 million), Chigen in China ($178 million) and Kilroot in Northern Ireland ($90 million).
5.Includes: $1,364 million in Brazil.
Note: The numbers presented above are consolidated. Because the Company’s individual subsidiaries rely primarily on non-recourse debt, they
may not have access to consolidated cash and will instead rely upon their individual ability to manage their obligations.
11
12. Consolidated Debt Is Well-Hedged
Contains Forward Looking Statements
Debt v. Functional Currency Fixed v. Floating Rate Debt
$18.6 Billion1 $18.6 Billion1
Same Currency Debt Floating Rate Debt
$17,402 million $3,853 million
93%
21%
79%
7%
Fixed Rate Debt2
Cross Currency Debt
$14,791 million
$1,242 million
Wherever possible, the debt denomination matches the functional currency, creating a natural
hedge between debt payments and revenue
AES targets a net floating rate debt level in the range of 15-25%
1. As of September 30, 2008.
2. Fixed rate debt includes variable rate debt swapped to fixed.
12
14. 2008 Guidance Update
Contains Forward Looking Statements
11/7/2008 Revised 2008 8/8/2008 Previous 2008
Guidance Guidance
Income Statement Elements
Gross Margin $3.7-$3.8 billion $3.7-$3.8 billion
Income Before Tax & Minority Interest1 $3.1-$3.2 billion $3.1-$3.2 billion
Diluted Earnings Per Share from Continuing Operations1 $2.07 $2.22
Adjusted Earnings Per Share Factors2 ($1.00)3 ($1.06)4
Adjusted Earnings Per Share2 $1.07 $1.16
Cash Flow Elements
Net Cash from Operating Activities $2.2 billion $2.2 billion
Maintenance Capital Expenditures $0.8 billion $0.8 billion
Free Cash Flow6 $1.4 billion $1.4 billion
Growth Capital Expenditures $2.4-$2.5 billion $2.4-$2.5 billion
Subsidiary Distributions4 $1.0-$1.1 billion $1.0-$1.1 billion
1. Includes net gain of approximately $908 million or $1.31 per share primarily from sale of two indirectly owned subsidiaries in Kazakhstan.
2. A non-GAAP financial measure. See “Definitions”.
3. Adjustment factors include: net gain of approximately $908 million or $1.31 per share from sale of two indirectly owned subsidiaries in Kazakhstan; tax expense of
approximately $131 million or $0.19 per share related to the repatriation of a portion of the Kazakhstan sale proceeds; approximately $69 million or $0.06 in losses
on the retirement of debt at the Parent in connection with a refinancing in May 2008 and at one of our North American subsidiaries associated with a $375 million
refinancing in April 2008; South Africa peaker development cost write-off of $11 million or $0.02 per share; and loss on sale of a portion of its interest in a Latin
American subsidiary of $25 million or $0.04 per share.
4. Adjustment factors include: net gain of approximately $908 million or $1.31 per share from sale of two indirectly owned subsidiaries in Kazakhstan; tax expense of
approximately $131 million or $0.19 per share related to the repatriation of a portion of the Kazakhstan sale proceeds; and approximately $69 million or $0.06 in
losses on the retirement of debt at the Parent in connection with a refinancing in May 2008 and at one of our North American subsidiaries associated with a $375
million refinancing in April 2008.
5. Non-GAAP financial measure as reconciled in the table. Maintenance capital expenditures reflect total capital expenditures of $3.2 to $3.3 billion less growth
capital expenditures of $2.4 to $2.5 billion including certain growth projects not yet awarded.
6. See “Definitions”.
14
15. 2009 Guidance Update
Contains Forward Looking Statements
11/7/2008 Revised 2009 3/17/2008 Previous 2009
Guidance Guidance
Diluted Earnings Per Share from Continuing Operations $1.09-$1.14 $1.20-$1.25
Adjusted Earnings Per Share Factors1 $0.06 -
Adjusted Earnings Per Share1 $1.15-$1.20 $1.20-$1.25
Subsidiary Distributions2 $1.1-$1.3 billion $1.1-$1.3 billion
1. A non-GAAP financial measure. See “Definitions”.
2. See “Definitions”.
15
16. Third Quarter 2008 YTD Period Over Period
Earnings from Continuing Operations Bridge
Contains Forward Looking Statements
($ per Diluted Share)
$1.05
$0.07
$0.07 $0.01
$0.21 $1.87
($0.12)
($0.15)
$0.73
$0.58
Q3 YTD NY Lease/ Q3 YTD Operational Other Non- FX FX Tax Rate Portfolio Q3 YTD
2007 GAAP LatAm Tax 2007 EPS, Improvements Operating Translation Transaction Management2 2008 GAAP
EPS Asset Excluding Items1 EPS
Recovery for NY &
in 2007 LatAm Tax
Operational improvements primarily reflect improved operations at our Latin American and European
generation businesses
YTD results show significant improvement period over period after excluding both $0.15 of one-time
gains in 2007 and net Portfolio Management adjustments of $1.05 in 2008
1. Includes FAS 133 mark-to-market fuel and PPA derivative adjustments, including $0.07 net gain Q3 YTD 2008 related primarily to Hawaii and Gener.
2. Portfolio Management adjustments of $1.05 reflect a $908 million or $1.31 net gain on sale of Northern Kazakhstan businesses, offset in part by a
$144 million or ($0.21) tax expense associated with the repatriation of approximately $636 million of Kazakhstan sale proceeds and $55 million or
($0.05) of corporate debt refinancing charges.
16
17. Third Quarter 2008 YTD Period Over Period
Adjusted EPS1 Bridge
Contains Forward Looking Statements
($ per Diluted Share)
$0.07
$0.21
$0.01
($0.02)
($0.12) ($0.02)
($0.15)
$0.83
$0.81
$0.68
Q3 YTD NY Lease/ Q3 YTD Operational Other Non- FX FX Tax Rate Portfolio Q3 YTD
2007 LatAm Tax 2008 EPS, Improvements Operating Translation Transaction Management 2008
Adjusted Asset Excluding Items2 Adjusted
EPS1 Recovery for NY & EPS1
in 2007 LatAm Tax
Operational improvements primarily reflect improved operations at our Latin American and European generation businesses
Foreign currency transaction losses ($0.12) are attributable primarily to the impact of a stronger US dollar on our businesses in the
Philippines (Masinloc – Philippine peso functional currency with US dollar denominated debt) and Chile (Gener – US dollar functional
currency with peso denominated receivables)
The $0.02 loss in Portfolio Management reflects tax expense associated with the repatriation of a portion of the Kazakhstan
sale proceeds
1. A non-GAAP financial measure. See “Definitions”.
2. Excludes net period over period adjustments of $0.08 corresponding to $0.07 of mark-to-market derivative gains Q3 YTD 2008 (primarily at Hawaii
and Gener) and a $0.01 loss in Q2 2008 associated with debt refinancing charges at IPALCO, an Indiana utility; negative balance reflects increased
interest expense, $0.02 of which is attributable to higher average debt balances at Corporate.
17
18. Year-to-Date Cash Flow Highlights
Contains Forward Looking Statements
($ Millions)
Consolidated Free Cash Flow1
Net Operating Cash Flow
Contribution from EDC, a
Business AES Sold in Q2 2007
$151
$107
$1,721 $1,575
$1,086 $1,070
YTD Q3 2007 YTD Q3 2008 YTD Q3 2007 YTD Q3 2008
(Restated) (Restated)
Decrease in net operating cash flow primarily reflects sale of EDC in May 2007 combined with
increased net working capital requirements in Asia due to higher commodity prices
Decrease in free cash flow reflects lower operating cash flow offset in part by reduced maintenance
capex
1. A Non-GAAP financial measure. See “Definitions”.
18
19. Parent Sources and Uses of Liquidity
Contains Forward Looking Statements
($ Millions)
Third Quarter Year-to-Date
2008 2007 2008 2007
Sources
Total Subsidiary Distributions1 184 361 674 757
(7) 54 1,086 788
Proceeds from Asset Sales, Net
- - 616 -
Refinancing Proceeds, Net
- - - -
Increased Credit Facility Commitments
1 5 16 30
Issuance of Common Stock, Net
24 35 106 84
Total Returns of Capital Distributions and Project Financing Proceeds
Beginning Liquidity2 1,510 1,378 2,153 1,146
1,712 1,833 4,651 2,805
Total Sources
Uses
- - (1,037) -
Repayments of Debt
(143) - (143) -
Repurchase of Equity
(292) (174) (1,691) (852)
Investments in Subsidiaries, Net
(92) (89) (340) (255)
Cash for Development, Selling, General and Administrative and Taxes
(64) (83) (318) (298)
Cash Payments for Interest
24 28 23 115
Changes in Letters of Credit and Other, Net
Ending Liquidity2 (1,145) (1,515) (1,145) (1,515)
(1,712) (1,833) (4,651) (2,805)
Total Uses
1. See “Definitions”.
2. A non-GAAP financial measure. See “Definitions”.
19
20. Third Quarter/YTD Subsidiary Distributions1
Contains Forward Looking Statements
($ Millions)
Third Quarter 2008/YTD Subsidiary Distributions1
North Latin Europe
Other2
Asia Total
America America & Africa
Utilities 31 / 93 -/4 1/1 -/- 32 / 98
Generation 87 / 248 22 / 129 23 / 113 1 / 28 133 / 518
Other 19 / 58 19 / 58
Total 118 / 341 22 / 133 24 / 114 1 / 28 19 / 58 184 / 674
Top 10 Subsidiary Distributions1
Third Quarter 2008 YTD
Business Amount Business Amount Business Amount Business Amount
Eastern Energy, Elsta, Eastern Energy,
50 6 153 Panama 34
USA Netherlands USA
Shady Point,
IPALCO, USA 31 Hawaii, USA 6 IPALCO, USA 93 28
USA
Southland,
Hungary 17 5 Gener, Chile 48 Kilroot, UK 25
USA
Cartagena, Global
Panama 17 Itabo, DR 5 48 23
Spain Insurance
Warrior Run, Shady Point, Warrior Run,
8 5 Andres, DR 42 22
USA USA USA
1. See “Definitions”.
2. Other includes wind and other alternative energy projects.
20
21. Reconciliation of Third Quarter
Cash Flow Items
Contains Forward Looking Statements
($ Millions)
Third Quarter YTD Full Year
2007 2007
2008 2008 2008
(Restated) (Restated)
Capital Expenditures
Maintenance Capital Expenditures $142 $168 $505 $679 $800
Growth Capital Expenditures 437 464 1,510 1,077 2,400-2,500
Capital Expenditures $579 $632 $2,015 $1,756 3,200-3,300
Third Quarter YTD Full Year
2007 2007
2008 2008 2008
(Restated) (Restated)
Reconciliation of Free Cash Flow
Net Cash from Operating
$784 $758 $1,575 $1,872 $2,200
Activities
Less: Maintenance Capital
142 168 505 679 800
Expenditures
Free Cash Flow1 $642 $590 $1,070 $1,193 $1,400
1. A Non-GAAP financial measure. See “Definitions”.
21
22. Reconciliation of Subsidiary Distributions
and Parent Liquidity
Contains Forward Looking Statements
($ Millions)
Quarter Ended
Sept. 30, June 30, Mar. 31, Dec. 31,
2008 2008 2008 2007
Total Subsidiary Distributions1 184 269 221 343
Total Return of Capital Distributions 24 81 1 21
Total Subsidiary Distributions &
208 350 222 364
Returns of Capital to Parent
Balance as of
Sept. 30, June 30, Mar. 31, Dec. 31,
Liquidity2
Parent Company 2008 2008 2007 2007
Cash at Parent & QHCs2,3 455 695 737 1,315
Availability Under Revolver 690 815 786 838
Ending Liquidity 1,145 1,510 1,523 2,153
1. See “Definitions”.
2. A Non-GAAP financial measure. See “Definitions”.
3. Qualified Holding Company. See “Assumptions”.
22
23. Third Quarter Segment Highlights
Latin America Generation
Contains Forward Looking Statements
($ Millions)
Third Quarter Segment Highlights
2007 % Latin America Generation revenue increased by
2008
(Restated) Change $278 million to $1.2 billion, primarily due to higher
contract and spot prices at Gener of $92 million,
Revenues $1,196 $918 30% higher volumes at our businesses in Argentina and
the Dominican Republic of $77 million, higher spot
prices at our businesses in the Dominican
Gross Margin $385 $184 109% Republic of $54 million and favorable foreign
currency translation of $39 million in Brazil and
Argentina.
IBTEE&MI $350 $135 159%
Gross margin increased by $201 million to $385
million, primarily due to higher contract and spot
Gross prices at Gener of $75 million, higher spot prices
% Change Comparison Revenue and volume at our businesses in Argentina, the
Margin
Dominican Republic and Panama of $100 million,
higher contract prices at Tiete in Brazil of $24
Volume/Price/Mix 28% 102% million and favorable foreign currency translation
of $25 million. These increases were partially
New Businesses/Projects - - offset by higher fixed costs at Gener and our
businesses in Argentina of $20 million.
Currency (Net) 2% 7% IBTEE&MI increased by $215 million to $350
million, primarily due to the improvement in gross
Total 30% 109% margin.
23
24. Third Quarter Segment Highlights
Latin America Utilities
Contains Forward Looking Statements
($ Millions)
Third Quarter Segment Highlights
2007 % Latin America Utilities revenue increased by $306
2008
(Restated) Change million to $1.6 billion, primarily due to favorable
foreign currency translation of $193 million and
Revenues $1,618 $1,312 23% increased volume of $68 million at Eletropaulo and
Sul in Brazil.
Gross Margin $232 $254 (9%) Gross margin decreased by $22 million to $232
million, primarily due to higher PIS/COFINS taxes
IBTEE&MI $186 $190 (2%) at Eletropaulo of $57 million, higher energy
purchases of $26 million due to higher volume,
higher fixed costs at Eletropaulo due to higher
provision for bad debts and lower loss recoveries
Gross of $42 million and higher labor and civil
% Change Comparison Revenue contingencies of $18 million, partially offset by
Margin
higher volume at Eletropaulo and Sul of $68
million and favorable foreign currency translation
Volume/Price/Mix 8% (20%) in Brazil of $27 million.
New Businesses/Projects - - IBTEE&MI decreased by $4 million to $186 million,
primarily due to the reduction in gross margin,
offset in part by a $15 million gain on sale of land
Currency (Net) 15% 11% at Eletropaulo.
Total 23% (9%)
24
25. Third Quarter Segment Highlights
North America Generation
Contains Forward Looking Statements
($ Millions)
Third Quarter Segment Highlights
2007 % North America Generation revenue increased by
2008
(Restated) Change $39 million to $615 million, primarily due to a $17 million
variance in the mark-to-market derivative adjustment at
Deepwater in Texas, higher revenue at Merida in
Revenues $615 $576 7% Mexico and in New York of $24 million, higher volume
due to no significant outages at Warrior Run in
Maryland in 2008 of $6 million and favorable foreign
Gross Margin $147 $207 (29%) currency impacts in our Mexican businesses of $6
million. These effects were partially offset by lower
volume in New York due to outages and lower market
IBTEE&MI $111 $95 17% capacity factors of $10 million.
Gross margin decreased by $60 million to $147 million,
Gross primarily due to a $57 million mark-to-market derivative
% Change Comparison Revenue loss on a coal supply contract in Hawaii, lower volumes
Margin in New York of $6 million and higher costs associated
with replacement power due to higher outages at TEG
Volume/Price/Mix 6% (29%) TEP in Mexico of $7 million. These effects were
partially offset by a variance in the mark-to-market
derivative adjustment of $17 million at Deepwater,
New Businesses/Projects - - higher margin at Warrior Run of $5 million and higher
gross margin at our businesses in New York of $4
million.
Currency (Net) 1% 0%
IBTEE&MI increased by $16 million to $111 million,
primarily due to $35 million of impairments at North
Total 7% (29%) America subsidiaries in 2007 and a $29 million legal
settlement at Southland, offset in part by the Hawaii
derivative loss.
25
26. Third Quarter Segment Highlights
North America Utilities
Contains Forward Looking Statements
($ Millions)
Third Quarter Segment Highlights
2007 % North America Utilities revenue increased by $14
2008
(Restated) Change million to $288 million, primarily due to a $15
million increase in rate adjustments at IPL in
Revenues $288 $274 5% Indiana related to recoverable environmental
investments and the pass through of higher fuel
and purchased power costs of $10 million. These
Gross Margin $82 $86 (5%) were partially offset by $10 million of lower retail
volumes, which were primarily driven by
unfavorable weather compared to prior year.
IBTEE&MI $50 $57 (12%)
Gross margin decreased by $4 million to $82
million, primarily due to a $5 million decrease in
Gross retail margin, related to unfavorable weather and
% Change Comparison Revenue an increase of $3 million in maintenance
Margin
expenses, offset in part by a $6 million increase in
rates tied to the recovery of approved
Volume/Price/Mix 5% (5%) environmental investments.
New Businesses/Projects - - IBTEE&MI decreased by $7 million to $50 million,
primarily due to the decrease in gross margin.
Currency (Net) - -
Total 5% (5%)
26
27. Third Quarter Segment Highlights
Europe & Africa Generation1
Contains Forward Looking Statements
($ Millions)
Third Quarter Segment Highlights
2007 % Europe & Africa Generation revenue increased by
2008
(Restated) Change $62 million to $278 million, primarily due to an
increase in capacity income, higher fuel pass-
Revenues $278 $216 29% through revenues and higher volume at Kilroot in
Northern Ireland of $47 million, an increase in
volume and rates of $35 million at our businesses
Gross Margin $49 $35 40% in Hungary and favorable foreign currency
exchange of $21 million at our businesses in
Hungary. This increase was partially offset by
IBTEE&MI $35 $28 25% lower revenue in our businesses in Kazakhstan of
$45 million due to the sale of certain business
units in second quarter 2008.
Gross
% Change Comparison Revenue Gross margin increased by $14 million to $49
Margin
million, primarily due to increases in capacity
income and volume at Kilroot of $14 million and
Volume/Price/Mix 21% 40% higher rates and volume in Hungary of $6 million.
This increase was partially offset by lower margin
New Businesses/Projects - - in our businesses in Kazakhstan of $9 million due
to sale of certain business units in second quarter
2008.
Currency (Net) 8% 0%
IBTEE&MI increased by $7 million to $35 million,
Total 29% 40% primarily due to the improvement in gross margin.
1. Includes CIS countries.
27
28. Third Quarter Segment Highlights
Europe & Africa Utilities1
Contains Forward Looking Statements
($ Millions)
Third Quarter Segment Highlights
2007 % Europe & Africa Utilities revenue increased by
2008
(Restated) Change $42 million to $197 million, primarily due to
increased tariff rates of $19 million at our
Revenues $197 $155 27% businesses in Ukraine and higher rates and
volume of $10 million and favorable foreign
currency translation of $9 million at Sonel in
Gross Margin $23 $22 5% Cameroon.
IBTEE&MI $15 $20 (25%) Gross margin increased by $1 million to $23
million, primarily due to an increase in higher rates
and volume at Sonel of $8 million and an increase
in rates at our businesses in Ukraine of $7 million
Gross and the impact of favorable foreign currency
% Change Comparison Revenue translation of $2 million at Sonel, offset by a $16
Margin
million increase in fixed costs at Sonel due to
higher provision for bad debts.
Volume/Price/Mix 19% (4%)
New Businesses/Projects - -
Currency (Net) 8% 9%
Total 27% 5%
1. Includes CIS countries.
28
29. Third Quarter Segment Highlights
Asia Generation1
Contains Forward Looking Statements
($ Millions)
Third Quarter Segment Highlights
2007 % Asia Generation revenue increased by $163
2008
(Restated) Change million to $398 million, primarily due to increased
volume at Lal Pir in Pakistan of $14 million,
Revenues $398 $235 69% increased tariffs as a result of higher fuel costs at
Lal Pir and Pak Gen in Pakistan of $98 million, $52
million of revenue generated from our new
Gross Margin $35 $47 (26%) business, Masinloc, in the Philippines, which was
acquired in April 2008, higher rates at Kelanitissa
in Sri Lanka of $25 million, partially offset by
IBTEE&MI ($24) $23 (204%) unfavorable foreign currency translation of $37
million at Lal Pir and Pak Gen.
Gross Gross margin decreased by $12 million to $35
% Change Comparison Revenue million, primarily due to increased fuel costs at Lal
Margin
Pir, Pak Gen and Chigen in China of $12 million
and ($5) million net gross margin attributable to
Volume/Price/Mix 61% (13%) higher fuel costs at Masinloc partially offset by
lower fixed costs of $7 million at Ras Laffan in
New Businesses/Projects 22% (10%) Qatar.
IBTEE&MI decreased by $47 million to ($24)
Currency (Net) (14%) (3%) million, primarily due primarily to interest expense
at Masinloc and the decrease in gross margin.
Total 69% (26%)
1. Includes the Middle East.
29
30. Reconciliation of Adjusted Earnings
per Share1
Contains Forward Looking Statements
Third Quarter YTD Full Year
2007 2007
2008 2008 2008 2009
(Restated) (Restated)
Diluted EPS from Continuing $1.09-
$0.22 $0.14 $1.87 $0.73 $2.07
Operations $1.14
FAS 133 Mark to Market
0.01 - (0.07) 0.01 (0.05) $0.06
(Gains)/Losses
Currency Transaction
- - - - - 0.02
(Gains)/Losses
Net Asset (Gains)/Losses and
0.02 0.03 (1.24) 0.09 (1.20) (0.02)
Impairments
Debt Retirement (Gains)/Losses - - 0.25 - 0.25 -
$1.15-
Adjusted Earnings per Share1 $0.25 $0.17 $0.81 $0.83 $1.07
$1.20
1. A Non-GAAP financial measure. See “Definitions”.
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31. Assumptions
Contains Forward Looking Statements
Forecasted financial information is based on certain material assumptions. Such assumptions include,
but are not limited to: (a) no unforeseen external events such as wars, depressions, or economic or
political disruptions occur; (b) businesses continue to operate in a manner consistent with or better than
prior operating performance, including achievement of planned productivity improvements including
benefits of global sourcing, and in accordance with the provisions of their relevant contracts or
concessions; (c) new business opportunities are available to AES in sufficient quantity to achieve its
growth objectives; (d) no material disruptions or discontinuities occur in GDP, foreign exchange rates,
inflation or interest rates during the forecast period; and (e) material business-specific risks as described
in the Company’s SEC filings do not occur individually or cumulatively. In addition, benefits from global
sourcing include avoided costs, reduction in capital project costs versus budgetary estimates, and
projected savings based on assumed spend volume which may or may not actually be achieved. Also,
improvement in certain KPIs such as equivalent forced outage rate and commercial availability may not
improve financial performance at all facilities based on commercial terms and conditions. These benefits
will not be fully reflected in the Company’s consolidated financial results.
The cash held at qualifying holding companies (QHCs) represents cash sent to subsidiaries of the
Company domiciled outside of the U.S. 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 U.S. These investments included equity investments and loans to other
foreign subsidiaries as well as development and general costs and expenses incurred outside the U.S.
Since the cash held by these QHCs is available to the Parent, AES uses the combined measure of
subsidiary distributions to Parent and QHCs as a useful measure of cash available to the Parent to meet
its international liquidity needs. 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.
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32. Definitions
Contains Forward Looking Statements
Non-GAAP Financial Measures
Adjusted earnings per share – Adjusted earnings per share (a Non-GAAP financial measure) is defined as diluted earnings per
share from continuing operations excluding gains or losses associated with (a) mark-to-market amounts related to FAS 133
derivative transactions, (b) foreign currency transaction impacts on the net monetary position related to Brazil and Argentina,
(c) significant asset gains or losses due to disposition transactions and impairments, and (d) costs related to early retirement of
debt. AES believes that adjusted earnings per share better reflects the underlying business performance of the Company, and
is considered in the Company’s internal evaluation of financial performance. Factors in this determination include the variability
associated with mark-to-market gains or losses related to certain derivative transactions, currency gains and losses, periodic
strategic decisions to dispose of certain assets which may influence results in a given period, and the early retirement of debt.
Effective January 1, 2008, the Company now includes in its definition of adjusted earnings per share, costs associated with
early retirement of non-recourse debt, in addition to recourse debt. There would be no impact to 2007 reported adjusted EPS
as a result of this change
Free cash flow – Free cash flow (a Non-GAAP financial measure) is defined as net cash from operating activities less
maintenance capital expenditures (including environmental capital expenditures). AES believes that free cash flow is a useful
measure for evaluating our financial condition because it represents the amount of cash provided by operations less
maintenance capital expenditures as defined by our businesses, that may be available for investing or for repaying debt
Liquidity – Defined as cash at the Parent Company plus availability under corporate revolver plus cash at qualifying holding
companies (QHCs). 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
Subsidiary Distributions
Subsidiary Distributions should not be construed as an alternative to Net Cash Provided by Operating Activities which are
determined in accordance with GAAP. Subsidiary Distributions are important to the Parent Company because the Parent
Company is a holding company that does not derive any significant direct revenues from its own activities but instead relies on its
subsidiaries’ business activities and the resultant distributions to fund the debt service, investment and other cash needs of the
holding company. The reconciliation of difference between the Subsidiary Distributions and Net Cash Provided by Operating
Activities consists of cash generated from operating activities that is retained at the subsidiaries for a variety of reasons which are
both discretionary and non-discretionary in nature. These factors include, but are not limited to, retention of cash to fund capital
expenditures at the subsidiary, cash retention associated with non-recourse debt covenant restrictions and related debt service
requirements at the subsidiaries, retention of cash related to sufficiency of local GAAP statutory retained earnings at the
subsidiaries, retention of cash for working capital needs at the subsidiaries, and other similar timing differences between when the
cash is generated at the subsidiaries and when it reaches the Parent Company and related holding companies
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