1. Consolidated Statements of Operations
In millions, except per share data, for the years ended December 31
2005 2006 2007
(Restated) (Restated)
Revenues Regulated $5,584 $6,154 $6,867
Non-Regulated 4,663 5,422 6,721
Total Revenues $10,247 $11,576 $13,588
Cost of Sales Regulated ($4,003) ($4,075) ($4,747)
Non-Regulated (3,374) (4,067) (5,432)
Total Cost of Sales ($7,377) ($8,142) ($10,179)
Gross Margin $2,870 $3,434 $3,409
General & Administrative Expenses (221) (301) (379)
Interest Expense (1,828) (1,769) (1,788)
Interest Income 381 434 500
Other Income (Expense), Net 48 (336) 103
(Loss) Gain on Sale of Investments - 98 134
Loss on Sale of Subsidiary Stock - (535) -
Impairment Expense (16) (17) (408)
Foreign Currency Transaction (Losses) Gains, Net (143) (80) 24
Other Non-Operating Expense - - (57)
Income Before Income Taxes, Equity in Earnings of
Affiliates & Minority Interest $1,091 $928 $1,538
Income Tax Expense (473) (362) (685)
Net Equity in Earnings of Affiliates 66 73 76
Minority Interest Expense (319) (463) (434)
Income from Continuing Operations $365 $176 $495
Income from Operations of Discontinued Businesses 188 107 71
Gain (Loss) on Sale of Discontinued Businesses - (57) (661)
Extraordinary Item - 21 -
Cumulative Effect of Change in Accounting Principle (4) - -
Net Income (Loss) $549 $247 ($95)
Basic Earnings Income from Continuing Operations $0.56 $0.27 $0.74
Per Share Discontinued Operations 0.29 0.07 (0.88)
Extraordinary Item - 0.03 -
Cumulative Effect of Change in Accounting Principle (0.01) - -
Basic Earnings (Loss) Per Share $0.84 $0.37 ($0.14)
Basic Shares Outstanding 654 661 668
Diluted Earnings Income from Continuing Operations $0.56 $0.27 $0.73
Per Share Discontinued Operations 0.28 0.07 (0.87)
Extraordinary Item - 0.03 -
Cumulative Effect of Change in Accounting Principle (0.01) - -
Diluted Earnings (Loss) Per Share $0.83 $0.37 ($0.14)
Diluted Shares Outstanding 665 672 678
Adjusted EPS Diluted EPS from Continuing Operations $0.56 $0.27 $0.73
Reconciliation 1 FAS 133 Mark to Market (Gains) Losses 0.03 (0.05) 0.03
Currency Transaction (Gains) Losses 0.05 0.01 -
Net Asset (Gains) Losses & Impairments 0.00 0.68 0.18
Debt Retirement (Gains) Losses 0.00 0.03 0.08
Adjusted EPS $0.64 $0.94 $1.02
Supplemental Depreciation and Amortization from Continuing Operations $770 $835 $932
Disclosure
1
A non-GAAP financial measure. See quot;Reconciliation of Non-GAAP Financial Measuresquot; for definition.
2. Consolidated Balance Sheets
In millions, as of December 31
2005 2006 2007
(Restated) (Restated)
Assets
Current Assets Cash & Cash Equivalents $1,169 $1,358 $2,058
Restricted Cash 437 548 522
Short-Term Investments 199 640 1,306
Accounts Receivable, Net 1,513 1,765 2,270
Inventory 414 445 480
Receivable from Affiliates 85 91 56
Deferred Income Taxes - Current 258 214 286
Prepaid Expenses 110 106 137
Other Current Assets 661 927 1,076
Current Assets of Held for Sale & Discontinued Businesses 448 484 145
Total Current Assets 5,294 6,578 8,336
Property, Plant & Land 831 921 1,052
Equipent Electric Generation & Distribution Assets 19,906 21,464 24,824
Accumulated Depreciation (5,540) (6,427) (7,591)
Construction in Progress 686 987 1,774
Property, Plant & Equipment, Net 15,883 16,945 20,059
Other Assets Deferred Financing Costs, Net 267 311 352
Investments in & Advances to Affiliates 660 591 730
Debt Service Reserves & Other Deposits 525 515 568
Goodwill, Net 1,408 1,414 1,416
Other Intangible Assets, Net 485 498 466
Deferred Income Taxes - Noncurrent 703 601 647
Other Assets 1,391 1,587 1,698
Long-Term Assets of Held for Sale & Discontinued Businesses 2,409 2,234 181
Total Other Assets 7,848 7,751 6,058
Total Assets $29,025 $31,274 $34,453
Liabilities & Stockholders' Equity
Current Liabilities Accounts Payable $999 $788 $1,073
Accrued Interest 372 404 255
Accrued & Other Liabilities 2,069 2,143 2,638
Recourse Debt - Current Position 200 - 223
Non-Recourse Debt - Current Position 1,356 1,402 1,142
Current Liabilities of Held for Sale & Discontinued Businesses 318 313 151
Total Current Liabilities 5,314 5,050 5,482
Long-Term Liabilities Non-Recourse Debt 10,308 9,840 11,297
Recourse Debt 4,682 4,790 5,332
Deferred Income Taxes - Noncurrent 772 809 1,197
Pension Liabilities & Other Post-Retirement Liabilities 829 844 921
Other Long-Term Liabilities 3,370 3,556 3,754
Long-Term Liabilities of Held for Sale & Discontinued Businesses 580 479 65
Total Long-Term Liabilities 20,541 20,318 22,566
Minority Interest 1,587 2,927 3,241
Stockholders' Equity Common Stock 7 7 7
Additional Paid-In Capital 6,566 6,659 6,776
Accumulated Deficit (1,340) (1,093) (1,241)
Accumulated Other Comprehensive Loss (3,650) (2,594) (2,378)
Total Stockholders' Equity 1,583 2,979 3,164
Total Liabilities & Stockholders' Equity $29,025 $31,274 $34,453
3. Consolidated Statements of Cash Flows
In millions, for the years ended December 31
2005 2006 2007
(Restated) (Restated)
Operating Activities Net Income (Loss) 549 247 (95)
Adjustments to Net Income (Loss):
Depreciation & Amortization 864 933 942
Loss from Sale of Investments & Impairment Expense 45 471 333
(Gain) Loss on Disposal & Impairment Write-Down - Discontinued Operations - 57 669
Provision for Deferred Taxes 120 (10) 210
Minority Interest Expense 348 482 452
Contingencies (9) 173 196
(Gain) Loss on the Extinguishment of Debt 1 148 92
Other 175 12 (34)
Changes in Operating Assets & Liabilities:
Decrease (Increase) in Accounts Receivable - 94 (306)
Increase in Inventory (58) (3) (26)
Decrease (Increase) in Prepaid Expenses & Other Current Assets 123 (69) 335
Decrease (Increase) in Other Assets 83 149 (134)
Decrease in Accounts Payable & Other Current Liabilities (124) (385) (398)
Increase in Other Liabilities 103 52 121
Net Cash Provided by Operating Activities $2,220 $2,351 $2,357
Investing Activities Capital Expenditures ($826) ($1,460) ($2,425)
Acquisitions - Net of Cash Acquired (85) (19) (315)
Proceeds from the Sales of Businesses 22 898 1,136
Proceeds from the Sales of Assets 26 24 16
Sale of Short-Term Investments 1,499 2,011 2,492
Purchase of Short-Term Investments (1,345) (2,359) (2,982)
Decrease (Increase) in Restricted Cash 94 (8) (28)
Purchase of Emission Allowances (19) (77) (13)
Proceeds from the Sales of Emission Allowances 42 82 17
(Decrease) Increase in Debt Service Reserves & Other Assets (93) 39 122
Purchase of Long-Term Available-for-Sale Securities - (52) (49)
Repayment of Affiliate Loan - - 55
Other Investing 32 14 4
Net Cash Used in Investing Activities ($653) ($907) ($1,970)
Financing Activities Borrowings (Repayments) Under the Revolving Credit Facilities, Net $53 $72 ($85)
Issuance of Recourse Debt 5 - 2,000
Issuance of Non-Recourse Debt 1,710 3,097 2,297
Repayments of Recourse Debt (259) (150) (1,315)
Repayments of Non-Recourse Debt (2,651) (4,059) (2,251)
Payments for Deferred Financing Costs (21) (86) (97)
Distributions to Minority Interests (186) (335) (699)
Contributions from Minority Interests 1 125 374
Issuance of Common Stock 26 78 58
Financed Capital Expenditures (1) (52) (35)
Other Financing (16) (7) (3)
Net Cash (Used in) Provided by Financing Activities ($1,339) ($1,317) $244
Effect of Exchange Rate Changes on Cash 13 62 69
Total Increase in Cash & Cash Equivalents $241 $189 $700
Cash & Cash Equivalents, Beginning 928 1,169 1,358
Cash & Cash Equivalents, Ending $1,169 $1,358 $2,058
Supplemental Cash Payments for Interest - Net of Amounts Capitalized 1,674 1,718 1,762
Disclosures Cash Payments for Income Taxes - Net of Refunds 268 479 621
Maintenance Capital Expenditures 635 867 878
Growth Capital Expenditures 192 645 1,582
1
Free Cash Flow 1,585 1,484 1,479
Schedule of Non- Assets Acquired in Acquisitions - - 434
Cash Investing & Non-Recourse Debt Assumed in Acquisitions - - 647
Financing Activities Liabilities Extinguished Due to Sale of Assets - 30 134
Liabilities Assumed in Acquisitions - - 37
1
A non-GAAP financial measure. See quot;Reconciliation of Non-GAAP Financial Measuresquot; for definition.
8. Top 10 Subsidiary Distributions
In millions, for the years ended December 31
2004 2005 2006 2007
IPALCO $177 IPALCO $208 Eastern Energy $162 IPALCO $170
Gener 151 EDC 107 IPALCO 142 New York 122
EDC 1 EDC 1
Eastern Energy 94 Eastern Energy 85 100 97
EDC 1 77 Shady Point 57 Gener 81 Brasiliana 90
Shady Point 76 Hawaii 46 Hungary 37 Kilroot 69
Hawaii 47 Ras Laffan 45 Hawaii 35 Hawaii 49
Ebute 33 Gener 36 Alicura 33 Cartagena 42
Southland 28 Alicura 30 CAESS & EEO 31 Shady Point 38
Barka 21 Southland 29 Shady Point 30 Ekibastuz 37
CTSN (San Nicolas) 21 Global Insurance 25 Deepwater 29 Gener 36
Subtotal - Top 10 $725 Subtotal - Top 10 $668 Subtotal - Top 10 $680 Subtotal - Top 10 $750
Other Businesses 279 Other Businesses 325 Other Businesses 291 Other Businesses 349
Total $1,004 Total $993 Total $971 Total $1,099
1
A business AES sold in May 2007.
9. Reconciliation of Non-GAAP Financial Measures
In millions, except per share data, for the years ended December 31
2005 2006 2007
(Restated) (Restated)
Reconciliation of Maintenance Capital Expenditures $635 $867 $878
Capital Expenditures Growth Capital Expenditures 192 645 1,582
Capital Expenditures $827 $1,512 $2,460
Reconciliation of Net Cash Provided by Operating Activities $2,220 $2,351 $2,357
1
Free Cash Flow Maintenance Capital Expenditures 635 867 878
Free Cash Flow $1,585 $1,484 $1,479
Reconciliation of Adjusted Diluted Earnings Per Share from Continuing Operations $0.56 $0.27 $0.73
2
Earnings Per Share FAS 133 Mark to Market (Gains) Losses 0.03 (0.05) 0.03
Currency Transaction (Gains) Losses 0.05 0.01 -
Net Asset (Gains) Losses & Impairments 0.00 0.68 0.18
Debt Retirement (Gains) Losses 0.00 0.03 0.08
Adjusted Earnings Per Share $0.64 $0.94 $1.02
Reconciliation of Subsidiary Distributions to Parent $993 $971 $1,099
3
Subsidiary Distributions Returns of Capital to Parent 57 72 106
Total Subsidiary Distributions & Returns of Capital to Parent $1,050 $1,043 $1,205
1
Free cash flow 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.
2
Adjusted earnings per share 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.
3
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 the 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.
10. Selected Financial Data
In millions, except per share data, for the years ended December 31
Statement of Operations Data 2007 2006 2005 2004 2003
(Restated) (Restated) (Restated) (Restated)
Revenues $13,588 $11,576 $10,247 $8,728 $7,676
Income from Continuing Operations 495 176 365 183 177
Discontinued Operations, Net of Tax (590) 50 188 132 (681)
Extraordinary Items, Net of Tax - 21 - - -
Cumulative Effect of Change in Accounting Principle, Net of Tax - - (4) - 41
Net (Loss) Income Available to Common Stockholders ($95) $247 $549 $315 ($463)
Basic (Loss) Income from Continuing Operations, Net of Tax $0.74 $0.27 $0.56 $0.29 $0.30
Earnings Per Discontinued Operations, Net of Tax (0.88) 0.07 0.29 0.20 (1.15)
Share Extraordinary Items, Net of Tax - 0.03 - - -
Cumulative Effect of Change in Accounting Principle, Net of Tax - - (0.01) - 0.07
Basic (Loss) Earnings Per Share ($0.14) $0.37 $0.84 $0.49 ($0.78)
Diluted (Loss) Income from Continuing Operations, Net of Tax $0.73 $0.27 $0.56 $0.29 $0.30
Earnings Per Discontinued Operations, Net of Tax (0.87) 0.07 0.28 0.20 (1.14)
Share Extraordinary Items, Net of Tax - 0.03 - - -
Cumulative Effect of Change in Accounting Principle, Net of Tax - - (0.01) - 0.07
Diluted (Loss) Earnings Per Share ($0.14) $0.37 $0.83 $0.49 ($0.77)
Balance Sheet Data 2007 2006 2005 2004 2003
(Restated) (Restated) (Restated) (Restated)
Total Assets $34,453 $31,274 $29,025 $28,449 $29,145
Non-Recourse Debt (Long-Term) $11,297 $9,840 $10,308 $10,571 $10,038
Non-Recourse Debt (Long-Term) - Discontinued Operations $33 $342 $467 $742 $719
Recourse Debt (Long-Term) $5,332 $4,790 $4,682 $5,010 $5,862
Accumulated Deficit ($1,241) ($1,093) ($1,340) ($1,889) ($2,204)
Stockholders' Equity (Deficit) $3,164 $2,979 $1,583 $997 ($99)
13. Income Before Income Taxes, Equity in Earnings of Affiliates &
Minority Interest(1)(2) $ in millions
$1,800
$1,538
$1,600
$1,400
$1,200
$1,091
$928
$1,000
$800
$600
$400
$200
$0
2005 2006 2007
(1)
2005 & 2006 Restated.
(2)
2006 results include Brazil restructuring impacts that are unfavorable to income before taxes, equity in earnings & minority interest by ($509) million and
unfavorable to diluted EPS from continuing operations by ($0.76) per share.
15. Adjusted EPS(1)(2)
$ per share
$1.20
$1.02
$1.00 $0.94
$0.80
$0.64
$0.60
$0.40
$0.20
$0.00
2005 2006 2007
(1)
2005 & 2006 based on restated diluted earnings per share.
(2)
A non-GAAP financial measure. See quot;Reconciliation of Non-GAAP Financial Measuresquot; for definition.
16. Net Cash Provided by Operating Activities and Free Cash Flow (1)(2)(3)
$ in millions
$2,400
$2,206
$2,087
$1,878 $599
$1,800 $632
$538
$235
$165
$64
$1,200
$1,372
$1,290
$1,276
$600
$0
2005 2006 2007
Free Cash Flow Environmental Capex Maintenance Capex
(1)
2005 & 2006 Restated.
(2)
A non-GAAP financial measure. See quot;Reconciliation of Non-GAAP Financial Measuresquot; for definition.
(3)
Excludes results from EDC, a Latin America utility business that was sold in May 2007.
17. Reconciliation of Cash Flow
In millions, except per share data, for the years ended December 31
2005 2006 2007
(Restated) (Restated)
Net Cash Provided by Operating Activities $2,220 $2,351 $2,357
EDC Impact 1 (342) (264) (151)
Net Cash Provided by Operating Activities, Excluding EDC $1,878 $2,087 $2,206
Maintenance Capital Expenditures $571 $867 $878
Maintenance Capital Expenditures, EDC 1 33 70 44
Free Cash Flow 2 $1,649 $1,484 $1,479
1, 2
Free Cash Flow, Excluding EDC $1,340 $1,290 $1,372
1
Unaudited.
2
A non-GAAP financial measure. See quot;Reconciliation of Non-GAAP Financial Measuresquot; for definition.
18. Non-Recourse Debt
$ in millions
$15,000
$12,439
$11,664
$12,000 $11,242
$9,000
$6,000
$3,000
$0
2005 2006 2007
19. Recourse Debt
$ in millions
$6,000
$5,555
$4,882 $4,790
$4,500
$3,000
$1,500
$0
2005 2006 2007