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AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
AES 3Q 08 Review
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AES 3Q 08 Review

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  1. The AES Corporation Third Quarter 2008 Financial Review November 7, 2008 1
  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
  4. 2008 Guidance Update Contains Forward Looking Statements 2008 2008 YTD Q4 Updated Prior Q3 2008 2008 Guidance1 Guidance Adjusted Earnings per Share2 $0.81 $0.26 $1.07 $1.16 Net Operating Cash Flow $1.6 bn $0.6 bn $2.2 bn $2.2 bn Consolidated Free Cash Flow2 $1.1 bn $0.3 bn $1.4 bn $1.4 bn $0.3-$0.4 $1.0-$1.1 $1.0-$1.1 Subsidiary Distributions3 $0.7 bn bn bn bn 1. Guidance previously updated on August 8, 2008. 2. A non-GAAP financial measure. See Appendix for reconciliation. 3. See Appendix. 4
  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
  13. Appendix Contains Forward Looking Statements Detailed update on 2008 guidance elements (Slide 14-15) YTD Financial results (Slide 16-18) Parent Company cash flows (Slide 19-22) Quarterly segment analysis (Slide 23-29) Reconciliation of Adjusted EPS (Slide 30) Assumptions & Definitions (Slide 31-32) 13
  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”. 30
  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. 31
  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 32

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