Highlights
- 2014 Achievements
- Announced or closed ten transactions
for $1.8 billion in equity proceeds from asset sales
- Brought in four strategic partners to
invest $1.9 billion in the Company's subsidiaries
- Broke ground on six new projects,
totaling 2,226 MW, expected to come on-line through 2018
- Doubled quarterly dividend, to $0.10
per share, beginning in the first quarter of 2015
- Proportional Free Cash Flow of $891
million, at the low end of guidance range due to higher working
capital requirements and increased receivables, which the Company
expects to recover in 2015
- 2015 Guidance
- Lowered 2015 Adjusted EPS guidance
range by $0.05, to $1.25-$1.35, reflecting the $0.18 impact from
currency and commodity movements, Brazil hydrology and other
factors, including contract negotiations at Maritza in Bulgaria,
offset by revenue improvements, cost savings initiatives, proactive
hedging, capital allocation and tax opportunities at certain
businesses
- Reaffirmed 2015 Proportional Free Cash
Flow guidance range of $1,000-$1,350 million
The AES Corporation (NYSE:AES) today reported Adjusted Earnings
Per Share (Adjusted EPS, a non-GAAP financial measure) of $1.30 for
full year 2014, an increase of $0.01 from full year 2013. The
Company benefited from improved operating performance at its Andes
and Brazil Strategic Business Units (SBUs). The Company also
benefited from its capital allocation decisions, including share
repurchases and debt prepayment, as well as lower global general
and administrative expenses. These positive drivers were largely
offset by the increase in the Company's adjusted effective tax
rate, to 30% versus 21% in 2013, which had a negative impact of
$0.14 per share.
Full year 2014 Diluted Earnings Per Share from Continuing
Operations increased to $1.09 from $0.38, driven primarily by gains
on asset sales, lower impairment expenses and lower general and
administrative expenses. The Company's GAAP tax rate was 27% in
2014 versus 33% in 2013.
"Despite the volatile global macro environment, we will
capitalize on our accomplishments in 2014 and continue to execute
on our strategy. Today we announced a new $400 million share
repurchase authorization, which combined with the recent doubling
of our dividend, reflects our confidence in our ability to continue
generating strong and growing cash flow," said Andrés Gluski, AES
President and Chief Executive Officer. "Over the last three years
we have positioned AES for the future, by bringing in $2.5 billion
from strategic and financial partners, exiting 10 countries and
raising $3 billion in equity proceeds from asset sales. We have
invested our discretionary cash in de-leveraging, share
repurchases, dividends and funding 70% of our equity commitment for
more than 7,000 MW under construction, which will drive our
earnings and cash flow growth over the next four years."
"We delivered on our 2014 Adjusted EPS guidance and while we
expect macro headwinds to have an impact on our 2015 results, we
are taking advantage of various opportunities that will mitigate
the impact. Therefore, we are modestly lowering our Adjusted EPS
outlook," said Tom O'Flynn, AES Executive Vice President and Chief
Financial Officer. "Admittedly, our 2014 Proportional Free Cash
Flow was disappointing, due to higher working capital requirements
and increased receivables. However, we are reaffirming our 2015
Proportional Free Cash Flow guidance, as we continue to expect
recovery of working capital and receivables, as well as
contributions from new businesses coming on-line during the year.
As we have demonstrated, we will continue to invest our strong cash
flow, which we expect to grow 10% to 15% annually, to maximize
shareholder returns."
Table 1: Key Financial Results
$ in Millions, Except Per Share Amounts
Fourth
Quarter Full Year Full
Year 2014 Guidance 2014 2013 2014
2013 Adjusted EPS1 $ 0.41 $ 0.29 $ 1.30 $ 1.29
$1.25-$1.31 Diluted EPS from Continuing Operations $ 0.29 $ (0.23 )
$ 1.09 $ 0.38 N/A Proportional Free Cash Flow1, 2 $ 287 $ 348 $ 891
$ 1,271 $900-$1,000 million Consolidated Net Cash Provided by
Operating Activities $ 575 $ 675
$ 1,791 $ 2,715 $1,450-$1,550
million 1 A non-GAAP financial measure. See “Non-GAAP
Financial Measures” for definitions and reconciliations to the most
comparable GAAP financial measures . 2 Defined as Proportional Net
Cash Provided by Operating Activities, less Maintenance Capex,
which includes non-recoverable environmental capex.
Discussion of Operating Drivers of Adjusted Pre-Tax
Contribution (Adjusted PTC, a non-GAAP financial measure) and
Adjusted EPS
The Company manages its portfolio in six market-oriented
Strategic Business Units (SBUs): US (United States), Andes (Chile,
Colombia and Argentina), Brazil, MCAC (Mexico, Central America and
the Caribbean), Europe, and Asia.
Table 2: Adjusted
PTC1 by SBU and Adjusted EPS1
$ in Millions, Except Per Share Amounts
Fourth
Quarter Year-to-date December 31,
2014 2013 Variance 2014
2013 Variance US $ 134 $ 112 $ 22 $ 445
$ 440 $ 5 Andes $ 144 $ 75 $ 69 $ 421 $ 353 $ 68 Brazil $ 58 $ 8 $
50 $ 242 $ 212 $ 30 MCAC $ 68 $ 83 $ (15 ) $ 352 $ 339 $ 13 Europe
$ 81 $ 111 $ (30 ) $ 348 $ 345 $ 3 Asia $ 13
$ 41 $ (28 ) $ 46
$ 142 $ (96 )
Total SBUs $ 498 $ 430 $ 68 $
1,854 $ 1,831 $ 23 Corporate and Other $ (114 )
$ (169 ) $ 55 $ (533 ) $
(624 ) $ 91
Total AES Adjusted
PTC1,2
$ 384 $ 261 $ 123
$ 1,321 $ 1,207 $ 114
Adjusted Effective Tax Rate 25 % 18 % 30 % 21 % Diluted Share Count
714 744 724 748
Adjusted EPS1 $
0.41 $ 0.29
$ 0.12 $ 1.30
$ 1.29 $
0.01 1 A non-GAAP financial measure. See
“Non-GAAP Financial Measures” for definitions and reconciliations
to the most comparable GAAP financial measures. 2 Includes $17
million and $3 million of after-tax adjusted equity in earnings for
fourth quarter 2014 and fourth quarter 2013, respectively. Includes
$53 million and $47 million of after-tax adjusted equity in
earnings for full year 2014 and full year 2013, respectively.
For the three months ended December 31, 2014, Adjusted EPS
increased $0.12 to $0.41, as the Company benefited from higher
contributions from its US, Brazil and Andes SBUs. The Company also
benefited from its capital allocation decisions, including share
repurchases and debt prepayment, as well as lower corporate general
and administrative expenses. The Company's effective tax rate
during the quarter was 25%, which was slightly better than
expected, but higher when compared to the rate in the fourth
quarter of 2013, which was 18%.
Fourth quarter 2014 Adjusted PTC increased $123 million. Key
operating drivers of Adjusted PTC included:
- US: An increase of $22 million,
primarily driven by lower maintenance and pension costs at
IPL.
- Andes: An increase of $69
million, largely due to interest recognized on receivables in
Argentina, as well as improved hydrological conditions at Chivor in
Colombia.
- Brazil: An increase of $50
million, due to the recognition of a regulatory liability in the
fourth quarter of 2013 for potential customer refunds at
Eletropaulo and higher margins at Sul in 2014, partially offset by
spot prices at Tiete, as a result of poor hydrological
conditions.
- MCAC: A decrease of $15 million,
primarily driven by lower gas sales and frequency regulation
revenue due to a regulatory change in the Dominican Republic,
partially offset by improved hydrological conditions in
Panama.
- Europe: A decrease of $30
million, driven by outages and related costs at Maritza in Bulgaria
and Kilroot in the United Kingdom, partially offset by
contributions from IPP4 Jordan, which came on-line in July.
- Asia: A decrease of $28 million,
due primarily to higher spot prices at Masinloc in the Philippines
in fourth quarter of 2013, as well as the sale of 45% of our
interest in Masinloc in July.
- Corporate and Other: An
improvement of $55 million, primarily due to lower interest expense
on recourse debt and lower general and administrative
expenses.
For the year ended December 31, 2014, Adjusted EPS
increased $0.01 to $1.30, as described above. For the year ended
December 31, 2014, Adjusted PTC increased $114 million. Key
operating drivers of Adjusted PTC included:
- US: An increase of $5 million,
driven by lower maintenance and pension costs at IPL and higher
contributions from wind businesses, partially offset by gains on
the termination of the Beaver Valley PPA in the first quarter of
2013.
- Andes: An increase of $68
million, primarily due to higher interest recognized on receivables
in Argentina in 2014 and higher generation and prices at Chivor in
Colombia, due to improved hydrological conditions.
- Brazil: An increase of $30
million, driven by the reversal of interest and penalties related
to a contingency and favorable margins at Sul, as well as the
recognition of a regulatory liability in 2013 for potential
customer refunds at Eletropaulo. This increase was partially offset
by higher spot purchases at Tiete as a result of poor hydrological
conditions.
- MCAC: An increase of $13
million, due to government compensation for spot purchases as a
result of dry hydrological conditions in Panama and higher spot
sales and better availability in the Dominican Republic. These
positive drivers were partially offset by the 2013 Esti tunnel
settlement in Panama and lower third party gas sales in the
Dominican Republic.
- Europe: An increase of $3
million, due primarily to a favorable reversal of a liability in
Kazakhstan.
- Asia: A decrease of $96 million,
primarily due to the following at Masinloc in the Philippines:
outages, the sale of a minority interest in July 2014 and the
one-time retrospective recalculation of November and December 2013
spot prices that occurred in 2014.
- Corporate and Other: An
improvement of $91 million, driven by lower interest expense on
recourse debt and lower general and administrative expenses.
Discussion of Diluted Earnings per Share from Continuing
Operations
Fourth quarter 2014 Diluted Earnings Per Share from Continuing
Operations increased $0.52 to $0.29, principally due to lower
impairment expenses and gains on asset sales. For the year ended
December 31, 2014, Diluted Earnings per Share from Continuing
Operations increased $0.71 to $1.09, as described above.
Discussion of Cash Flow
Fourth quarter 2014 Proportional Free Cash Flow (a non-GAAP
financial measure) was $287 million, a decrease of $61 million from
fourth quarter 2013, primarily driven by the impact of poor
hydrology at Tiete in Brazil and increased receivables in Bulgaria.
These negative drivers were partially offset by lower Parent
interest expense and lower corporate general and administrative
expenses.
Fourth quarter 2014 Consolidated Net Cash Provided by Operating
Activities decreased $100 million to $575 million, largely driven
by the impact of poor hydrology on Tiete in Brazil.
For the year ended December 31, 2014, Proportional Free
Cash Flow was $891 million, a decrease of $380 million from the
year ended December 31, 2013, primarily driven by $200 million in
lower contributions, as a result of the sale of the Company's
businesses in Cameroon and payments received in 2013 related to an
amendment to a fuel contract in the Dominican Republic and the
Beaver Valley PPA termination. 2014 results also reflect
unanticipated higher working capital requirements in Brazil and
Chile, as well as higher receivables in Bulgaria, the majority of
which the Company expects to reverse in 2015.
For the year ended December 31, 2014, Consolidated Net Cash
Provided by Operating Activities was $1.8 billion, a decrease of
$924 million from the year ended December 31, 2013, primarily
due to the same drivers as Proportional Free Cash Flow, as
described above.
Table 3: 2015 Guidance and Longer-Term
Expectations
Adjusted EPS
Proportional Free Cash
Flow
Consolidated Net Cash
Provided by Operating
Activities
($ Per Share or % Growth) ($ in Millions or %
Growth) ($ in Millions)
Prior
Guidance/Expectations
Current
Guidance/Expectations
Prior
Guidance/Expectations
Current
Guidance/Expectations
Prior
Guidance/Expectations
Current
Guidance/Expectations
2015 $1.30-$1.401 $1.25-$1.35
$1,000-
$1,3501
$1,000-
$1,350, no
change
$2,000-
$2,8001
$1,900-$2,700
2016
Flat to modest
growth1
Flat to modest
growth off
revised 2015
base
10%-15%
growth per
year, on
average1
10%-15%
growth per
year, on
average, no
change
N/A N/A
2017-2018
6%-8%
growth2
6%-8%
growth off
revised 2016
expectation
N/A
N/A 1 As of November 6, 2014. 2 As of December 15,
2014.
- 2015 Guidance
- The Company lowered its Adjusted EPS
guidance range by $0.05, to $1.25-$1.35, reflecting:
- Currency and commodity forward curves
as of December 31, 2014 versus October 15, 2014 in its prior
guidance, with an expected negative impact of $0.06 per share, net
of hedging benefits of $0.04 per share;
- Current outlook for hydrological
conditions in Brazil, with an expected negative impact of $0.05 per
share; and
- Other factors, with an expected
negative impact of $0.03 per share, including ongoing negotiations
of the PPA for the Company's Maritza plant in Bulgaria.
- The headwinds described above have been
partially offset by $0.09 per share as a result of steps the
Company is taking, such as: cost savings initiatives and revenue
improvements, including higher earnings from Mong Duong in Vietnam;
benefits of capital allocation, including share repurchases; and
tax opportunities at certain businesses.
- The Company reaffirmed its Proportional
Free Cash Flow guidance range of $1,000-$1,350 million.
- Year-over-year growth is expected to be
driven by the recovery of higher working capital and receivables in
Brazil, Bulgaria and Chile from 2014, as well as contributions from
projects coming on-line in 2015.
- 2016-2018 Expectations
- The Company reaffirmed its growth
expectations for Adjusted EPS, but off the lower 2015 base. The
revised growth expectations assume:
- Currency and commodity forward curves
as of December 31, 2014 versus October 15, 2014 in its prior
expectations; and
- Other factors, including ongoing
negotiations of the PPA for the Company's Maritza plant in
Bulgaria.
- The headwinds described above have been
partially offset by steps the Company is taking, such as: cost
savings initiatives and revenue improvements, including higher
earnings from Mong Duong in Vietnam; and benefits of capital
allocation.
- The Company continues to expect 10%-15%
average annual growth in its Proportional Free Cash Flow for
2016-2018, off its 2015 guidance.
Additional Highlights
- In 2014, the Company announced that its
Board of Directors approved a 100% increase in its quarterly
dividend, to $0.10 per share, beginning in the first quarter of
2015.
- In 2014, the Company repurchased 22
million shares, or 3% of shares outstanding, for $308 million at an
average price of $14.06 per share.
- Since September 2011, the Company has
repurchased 78 million shares, or 10% of shares outstanding, for
$984 million at an average price of $12.69.
- Since the Company's third quarter
earnings call on November 6, 2014, the Company has repurchased 11
million shares for $150 million, at an average price of $13.45.
This includes $24 million repurchased in 2015.
- In 2014, the Company announced or
closed ten asset sale transactions for $1.8 billion in equity
proceeds to AES upon closing.
- Since September 2011, the Company has
announced or closed 29 asset sales representing approximately $3
billion in equity proceeds to AES and the exit from operations in
10 countries.
- In 2014, the Company brought in four
strategic partners to invest $1.9 billion in its subsidiaries.
- Since September 2011, the Company has
raised a $2.5 billion in proceeds to AES, by building strategic
partnerships at the project and business level. Through these
partnerships, the Company aims to optimize its risk-adjusted
returns from its existing businesses and growth projects.
- In 2014, the Company reduced its global
G&A by $57 million, achieving its cumulative annual cost
savings target of $200 million, one year early.
- The Company is on schedule to complete
7,141 MW of capacity under construction and expected to come
on-line through 2018.
Non-GAAP Financial Measures
See Non-GAAP Financial Measures for definitions of Adjusted
Earnings Per Share, Adjusted Pre-Tax Contribution, Proportional
Free Cash Flow, as well as reconciliations to the most comparable
GAAP financial measure.
Attachments
Consolidated Statements of Operations, Consolidated Balance
Sheets, Segment Information, Consolidated Statements of Cash Flows,
Non-GAAP Financial Measures, Parent Financial Information, 2014
Financial Guidance Elements and 2015 Financial Guidance
Elements.
Conference Call Information
AES will host a conference call on Thursday, February 26,
2015 at 9:00 a.m. Eastern Standard Time (EST). Interested parties
may listen to the teleconference by dialing 1-877-201-0168 at least
ten minutes before the start of the call. International callers
should dial +1-647-788-4901. The conference ID for this call is
54906603. Internet access to the conference call and presentation
materials will be available on the AES website
at www.aes.com by selecting “Investors” and then
“Presentations and Webcasts.”
A webcast replay, as well as a replay in downloadable MP3
format, will be accessible at www.aes.com beginning
shortly after the completion of the call.
About AES
The AES Corporation (NYSE:AES) is a Fortune 200 global power
company. We provide affordable, sustainable energy to 18 countries
through our diverse portfolio of distribution businesses as well as
thermal and renewable generation facilities. Our workforce of
18,500 people is committed to operational excellence and meeting
the world’s changing power needs. Our 2014 revenues were $17
billion and we own and manage $39 billion in total assets. To
learn more, please visit www.aes.com. Follow AES on Twitter
@TheAESCorp.
Safe Harbor Disclosure
This news release contains forward-looking statements within the
meaning of the Securities Act of 1933 and of the Securities
Exchange Act of 1934. 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’ current expectations based on reasonable
assumptions. Forecasted financial information is based on certain
material assumptions. These assumptions include, but are not
limited to, our accurate projections of future interest rates,
commodity price and foreign currency pricing, continued normal
levels of operating performance and electricity volume 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 investments at normalized investment levels and rates of
return consistent with prior experience.
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’ filings with the Securities and Exchange
Commission (the “SEC”), including, but not limited to, the risks
discussed under Item 1A “Risk Factors” and Item 7:
Management’s Discussion & Analysis in AES’ 2014 Annual
Report on Form 10-K and in subsequent reports filed with the SEC.
Readers are encouraged to read AES’ filings to learn more about the
risk factors associated with AES’ business. AES undertakes no
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or
otherwise.
Any Stockholder who desires a copy of the Company’s 2014 Annual
Report on Form 10-K dated on or about February 25, 2015 with
the SEC may obtain a copy (excluding Exhibits) without charge by
addressing a request to the Office of the Corporate Secretary, The
AES Corporation, 4300 Wilson Boulevard, Arlington, Virginia 22203.
Exhibits also may be requested, but a charge equal to the
reproduction cost thereof will be made. A copy of the Form 10-K may
be obtained by visiting the Company’s website
at www.aes.com.
THE AES CORPORATION
Condensed Consolidated Statements of
Operations
(Unaudited)
Year Ended December 31, 2014
2013 2012 (in millions, except per share
amounts) Revenue: Regulated $ 8,874 $ 8,056 $ 8,977
Non-regulated 8,272 7,835 8,187 Total revenue
17,146 15,891 17,164 Cost of sales: Regulated
(7,530 ) (6,837 ) (7,594 ) Non-regulated (6,528 ) (5,807 ) (5,987 )
Total cost of sales (14,058 ) (12,644 ) (13,581 ) Operating margin
3,088 3,247 3,583 General and administrative
expenses (187 ) (220 ) (274 ) Interest expense (1,471 ) (1,482 )
(1,544 ) Interest income 365 275 348 Loss on extinguishment of debt
(261 ) (229 ) (8 ) Other expense (68 ) (76 ) (82 ) Other income 124
125 98 Gain on disposal and sale of investments 358 26 219 Goodwill
impairment expense (164 ) (372 ) (1,817 ) Asset impairment expense
(91 ) (95 ) (73 ) Foreign currency transaction gains (losses) 11
(22 ) (170 ) Other non-operating expense (128 ) (129 ) (50 ) INCOME
FROM CONTINUING OPERATIONS BEFORE TAXES AND EQUITY IN EARNINGS OF
AFFILIATES 1,576 1,048 230 Income tax expense (419 ) (343 ) (685 )
Net equity in earnings of affiliates 19 25 35
INCOME (LOSS) FROM CONTINUING OPERATIONS 1,176 730 (420 ) Income
(loss) from operations of discontinued businesses, net of income
tax (benefit) expense of $23, $24, and $26, respectively 27 (27 )
47 Net gain (loss) from disposal and impairments of discontinued
operations, net of income tax (benefit) expense of $4, $(15), and
$68, respectively (56 ) (152 ) 16 NET INCOME (LOSS) 1,147
551 (357 ) Noncontrolling interests: Less: (Income) from continuing
operations attributable to noncontrolling interests (387 ) (446 )
(540 ) Less: (Income) loss from discontinued operations
attributable to noncontrolling interests 9 9 (15 )
Total net income attributable to noncontrolling interests (378 )
(437 ) (555 ) NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION
$ 769 $ 114 $ (912 ) AMOUNTS ATTRIBUTABLE TO THE AES
CORPORATION COMMON STOCKHOLDERS: Income (loss) from continuing
operations, net of tax $ 789 $ 284 $ (960 ) Income (loss) from
discontinued operations, net of tax (20 ) (170 ) 48 Net
income (loss) $ 769 $ 114 $ (912 ) BASIC EARNINGS PER
SHARE: Income (loss) from continuing operations attributable to The
AES Corporation common stockholders, net of tax $ 1.10 $ 0.38 $
(1.27 ) Income (loss) from discontinued operations attributable to
The AES Corporation common stockholders, net of tax (0.03 ) (0.23 )
0.06 NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION
COMMON STOCKHOLDERS $ 1.07 $ 0.15 $ (1.21 ) DILUTED
EARNINGS PER SHARE: Income (loss) from continuing operations
attributable to The AES Corporation common stockholders, net of tax
$ 1.09 $ 0.38 $ (1.27 ) Income (loss) from discontinued operations
attributable to The AES Corporation common stockholders, net of tax
(0.03 ) (0.23 ) 0.06 NET INCOME (LOSS) ATTRIBUTABLE TO THE
AES CORPORATION COMMON STOCKHOLDERS $ 1.06 $ 0.15 $
(1.21 ) DIVIDENDS DECLARED PER COMMON SHARE $ 0.25 $ 0.17
$ 0.08
THE AES CORPORATION
Condensed Consolidated Statements of
Operations
(Unaudited)
Three Months Ended December 31, 2014
2013 (in millions, except per share
amounts) Revenue: Regulated $ 2,238 $ 1,881 Non-Regulated 1,894
1,919 Total revenue 4,132 3,800 Cost of
Sales: Regulated (1,798 ) (1,755 ) Non-Regulated (1,626 ) (1,375 )
Total cost of sales (3,424 ) (3,130 ) Operating margin 708
670 General and administrative expenses (39 ) (60 ) Interest
expense (385 ) (417 ) Interest income 160 62 Loss on extinguishment
of debt (65 ) (17 ) Other expense (31 ) (18 ) Other income 68 19
Loss on disposal and sale of investments (5 ) — Goodwill impairment
expense (10 ) (314 ) Asset impairment expense (1 ) (31 ) Foreign
currency transaction gains (losses) 102 (6 ) Other non-operating
expense (68 ) (7 ) INCOME FROM CONTINUING OPERATIONS BEFORE TAXES
AND EQUITY IN EARNINGS OF AFFILIATES 434 (119 ) Income tax expense
(116 ) (58 ) Net equity in earnings of affiliates (20 ) 4
INCOME (LOSS) FROM CONTINUING OPERATIONS 298 (173 ) Income (loss)
from operations of discontinued businesses, net of income tax
(benefit) expense of $1, and $0, respectively — 10 Net gain (loss)
from disposal and impairments of discontinued businesses, net of
income tax (benefit) expense of $22, and $(13), respectively —
(41 ) NET INCOME (LOSS) 298 (204 ) Noncontrolling interests:
Less: (Income) loss from continuing operations attributable to
noncontrolling interests (92 ) 3 Less: (Income) loss from
discontinued operations attributable to noncontrolling interests —
(5 ) Total net income attributable to noncontrolling
interests (92 ) (2 ) NET INCOME (LOSS) ATTRIBUTABLE TO THE AES
CORPORATION $ 206 $ (206 ) AMOUNTS ATTRIBUTABLE TO THE AES
CORPORATION COMMON STOCKHOLDERS: Income (loss) from continuing
operations, net of tax $ 206 $ (170 ) Income (loss) from
discontinued operations, net of tax — (36 ) Net income
(loss) $ 206 $ (206 ) BASIC EARNINGS PER SHARE: Income
(loss) from continuing operations attributable to The AES
Corporation common stockholders, net of tax $ 0.29 $ (0.23 ) Income
(loss) from discontinued operations attributable to The AES
Corporation common stockholders, net of tax — (0.05 ) NET
INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON
STOCKHOLDERS $ 0.29 $ (0.28 ) DILUTED EARNINGS PER SHARE:
Income (loss) from continuing operations attributable to The AES
Corporation common stockholders, net of tax $ 0.29 $ (0.23 ) Income
(loss) from discontinued operations attributable to The AES
Corporation common stockholders, net of tax — (0.05 ) NET
INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON
STOCKHOLDERS $ 0.29 $ (0.28 ) DIVIDENDS DECLARED PER COMMON
SHARE $ 0.15 $ 0.09
THE AES
CORPORATION Strategic Business Unit (SBU) Information
(Unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
2014 2013 2014 2013 (in
millions) REVENUE US $ 930 $ 920 $ 3,826 $ 3,630 Andes
594 595 2,642 2,639 Brazil 1,483 1,081 6,009 5,015 MCAC 659 667
2,682 2,713 EMEA 372 377 1,439 1,347 Asia 102 162 558 550
Corporate, Other and Inter-SBU eliminations (8 ) (2 ) (10 ) (3 )
Total
Revenue $ 4,132 $ 3,800 $ 17,146 $ 15,891
THE AES CORPORATION
Condensed Consolidated Balance
Sheets
(Unaudited)
December 31, 2014 December
31, 2013
(in millions, except share and per
share data)
ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,539 $
1,642 Restricted cash 283 597 Short-term investments 709 668
Accounts receivable, net of allowance for doubtful accounts of $96
and $134, respectively 2,709 2,363 Inventory 702 684 Deferred
income taxes 275 166 Prepaid expenses 175 179 Other current assets
1,434 976 Current assets of discontinued operations and
held-for-sale assets — 464 Total current assets 7,826
7,739 NONCURRENT ASSETS Property, Plant and
Equipment: Land 870 922 Electric generation, distribution assets
and other 30,459 30,596 Accumulated depreciation (9,962 ) (9,604 )
Construction in progress 3,784 3,198 Property, plant
and equipment, net 25,151 25,112 Other Assets:
Investments in and advances to affiliates 537 1,010 Debt service
reserves and other deposits 411 541 Goodwill 1,458 1,622 Other
intangible assets, net of accumulated amortization of $158 and
$153, respectively 281 297 Deferred income taxes 662 666 Other
noncurrent assets 2,640 2,170 Noncurrent assets of discontinued
operations and held-for-sale assets — 1,254 Total
other assets 5,989 7,560 TOTAL ASSETS $ 38,966
$ 40,411
LIABILITIES AND EQUITY CURRENT LIABILITIES
Accounts payable $ 2,278 $ 2,259 Accrued interest 260 263 Accrued
and other liabilities 2,326 2,114 Non-recourse debt, including $240
and $267, respectively, related to variable interest entities 1,982
2,062 Recourse debt 151 118 Current liabilities of discontinued
operations and held-for-sale businesses — 837 Total
current liabilities 6,997 7,653 NONCURRENT
LIABILITIES Non-recourse debt, including $1,030 and $979,
respectively, related to variable interest entities 13,618 13,318
Recourse debt 5,107 5,551 Deferred income taxes 1,277 1,119 Pension
and other post-retirement liabilities 1,342 1,310 Other noncurrent
liabilities 3,222 3,299 Noncurrent liabilities of discontinued
operations and held-for-sale businesses — 432 Total
noncurrent liabilities 24,566 25,029 Cumulative
preferred stock of subsidiaries 78 78 EQUITY THE AES CORPORATION
STOCKHOLDERS’ EQUITY Common stock ($0.01 par value, 1,200,000,000
shares authorized; 814,539,146 issued and 703,851,297 outstanding
at December 31, 2014 and 813,316,510 issued and 722,508,342
outstanding at December 31, 2013) 8 8 Additional paid-in capital
8,409 8,443 Retained earnings (accumulated deficit) 512 (150 )
Accumulated other comprehensive loss (3,286 ) (2,882 ) Treasury
stock, at cost (110,687,849 shares at December 31, 2014 and
90,808,168 shares at December 31, 2013) (1,371 ) (1,089 ) Total AES
Corporation stockholders’ equity 4,272 4,330 NONCONTROLLING
INTERESTS 3,053 3,321 Total equity 7,325 7,651
TOTAL LIABILITIES AND EQUITY $ 38,966 $ 40,411
THE AES CORPORATION
Condensed Consolidated Statements of
Cash Flows
(Unaudited)
Three Months Ended
December 31,
Year Ended December 31, 2014
2013 2014 2013 OPERATING ACTIVITIES:
(in millions) (in millions) Net income (loss) $ 298 $
(204 ) $ 1,147 $ 551 Adjustments to net income (loss): Depreciation
and amortization 308 312 1,245 1,294 Loss (gain) on sale of
businesses 5 — (358 ) (26 ) Impairment expenses 79 352 383 661
Deferred income taxes (36 ) (76 ) 47 (158 ) Provisions for
contingencies 7 11 (34 ) 44 Loss on the extinguishment of debt 65
17 261 229 (Gain) loss on sale of assets (39 ) 10 (20 ) 40 Loss
(gain) on disposals and impairments - discontinued operations (1 )
55 50 163 Other (43 ) 19 92 (7 ) Changes in operating assets and
liabilities: (Increase) decrease in accounts receivable (26 ) 11
(520 ) 146 (Increase) decrease in inventory 27 22 (48 ) 16
(Increase) decrease in prepaid expenses and other current assets
(61 ) (45 ) (73 ) 358 (Increase) decrease in other assets (284 ) 46
(723 ) (103 ) Increase (decrease) in accounts payable and other
current liabilities (71 ) (147 ) (85 ) (725 ) Increase (decrease)
in income tax payables, net and other tax payables 150 161 (89 ) 95
Increase (decrease) in other liabilities 197 131 516
137 Net cash provided by operating activities 575
675 1,791 2,715 INVESTING ACTIVITIES:
Capital expenditures (627 ) (658 ) (2,016 ) (1,988 ) Acquisitions,
net of cash acquired — (4 ) (728 ) (7 ) Proceeds from the sale of
businesses, net of cash sold 139 3 1,807 170 Proceeds from the sale
of assets 9 10 38 62 Sale of short-term investments 1,168 986 4,503
4,361 Purchase of short-term investments (1,237 ) (805 ) (4,623 )
(4,443 ) Decrease (increase) in restricted cash, debt service
reserves and other assets 257 (31 ) 419 44 Affiliate advances and
equity investments (4 ) (7 ) (4 ) (7 ) Proceeds from government
grants for asset construction — 1 — 2 Other investing 3 (2 )
(52 ) 32 Net cash used in investing activities (292 ) (507 )
(656 ) (1,774 ) FINANCING ACTIVITIES: Borrowings under revolving
credit facilities 77 75 836 1,139 Issuance of recourse debt — —
1,525 750 Issuance of non-recourse debt 1,926 1,195 4,179 4,277
Repayments under revolving credit facilities (89 ) (75 ) (834 )
(1,161 ) Repayments of recourse debt (98 ) (2 ) (2,117 ) (1,210 )
Repayments of non-recourse debt (1,842 ) (1,102 ) (3,481 ) (3,390 )
Payments for financing fees (47 ) (28 ) (158 ) (176 ) Distributions
to noncontrolling interests (108 ) (172 ) (485 ) (557 )
Contributions from noncontrolling interests 112 53 226 210
Dividends paid on AES common stock (36 ) (30 ) (144 ) (119 )
Payments for financed capital expenditures (168 ) (155 ) (528 )
(591 ) Purchase of treasury stock (168 ) (259 ) (308 ) (322 ) Other
financing 23 (1 ) 27 14 Net cash used in
financing activities (418 ) (501 ) (1,262 ) (1,136 ) Effect of
exchange rate changes on cash 4 (22 ) (51 ) (59 ) (Increase)
decrease in cash of discontinued and held-for-sale assets —
(27 ) 75 (4 ) Total (decrease) increase in cash and cash
equivalents (131 ) (382 ) (103 ) (258 ) Cash and cash equivalents,
beginning 1,670 2,024 1,642 1,900 Cash
and cash equivalents, ending $ 1,539 $ 1,642 $ 1,539
$ 1,642 SUPPLEMENTAL DISCLOSURES: Cash payments for
interest, net of amounts capitalized $ 449 475 1,351 1,398 Cash
payments for income taxes, net of refunds $ 79 64 480 570 SCHEDULE
OF NONCASH INVESTING AND FINANCING ACTIVITIES: Assets received upon
sale of subsidiaries $ — — 44 — Assets acquired through capital
lease and other liabilities $ 36 22 49 34 Dividends declared but
not yet paid $ 54 34 72 54
THE AES CORPORATION
NON-GAAP FINANCIAL MEASURES
(Unaudited)
RECONCILIATION OF ADJUSTED PRE-TAX
CONTRIBUTION (PTC) AND ADJUSTED EPS
Adjusted Pre-Tax Contribution (“Adjusted PTC”) and Adjusted
Earnings Per Share (“Adjusted EPS”) are non-GAAP supplemental
measures that are used by management and external users of our
consolidated financial statements such as investors, industry
analysts and lenders. We define Adjusted PTC as pre-tax
income from continuing operations attributable to AES excluding
gains or losses of the consolidated entity due to (a) unrealized
gains or losses related to derivative transactions, (b) unrealized
foreign currency gains or losses, (c) gains or losses due to
dispositions and acquisitions of business interests, (d) losses due
to impairments, and (e) costs due to the early retirement of debt.
Adjusted PTC also includes net equity in earnings of affiliates on
an after-tax basis. We define Adjusted EPS as diluted
earnings per share from continuing operations excluding gains or
losses of the consolidated entity due to (a) unrealized gains or
losses related to derivative transactions, (b) unrealized foreign
currency gains or losses, (c) gains or losses due to dispositions
and acquisitions of business interests, (d) losses due to
impairments, and (e) costs due to the early retirement of debt.
The GAAP measure most comparable to Adjusted PTC is income
from continuing operations attributable to AES. The GAAP measure
most comparable to Adjusted EPS is diluted earnings per share from
continuing operations. We believe that Adjusted PTC and Adjusted
EPS better reflect the underlying business performance of the
Company and are considered in the Company’s internal evaluation of
financial performance. Factors in this determination include the
variability due to unrealized gains or losses related to derivative
transactions, unrealized foreign currency gains or losses, losses
due to impairments and strategic decisions to dispose of or acquire
business interests or retire debt, which affect results in a given
period or periods. In addition, for Adjusted PTC, earnings before
tax represents the business performance of the Company before the
application of statutory income tax rates and tax adjustments,
including the effects of tax planning, corresponding to the various
jurisdictions in which the Company operates. Adjusted PTC and
Adjusted EPS should not be construed as alternatives to income from
continuing operations attributable to AES and diluted earnings per
share from continuing operations, which are determined in
accordance with GAAP.
Three Months Ended
December 31, 2014
Three Months Ended
December 31, 2013
Net of
NCI(1)
Per Share
(Diluted) Net
of NCI(1) and
Tax
Net of
NCI(1)
Per Share
(Diluted) Net
of NCI(1) and
Tax
Income (loss) from continuing operations
attributable to AES and Diluted EPS $ 206
$ 0.29 $ (170 ) $
(0.23 ) Add back income tax expense from continuing
operations attributable to AES 90 60 Pre-tax
contribution
$ 296 $ (110 )
Adjustments Unrealized derivative (gains)/ losses(1) $ (114
) $ (0.10 ) $ (11 ) $ (0.02 ) Unrealized foreign currency
transaction (gains)/ losses(2) 15 0.04 13 0.01 Disposition/
acquisition (gains) / losses 5 (0.08 ) (3) — — Impairment (gains)/
losses 121 0.20 (4) 351 0.52 (5) Loss on extinguishment of debt 61
0.06 (6) 18 0.01 (7)
Adjusted
pre-tax contribution and Adjusted EPS $
384 $ 0.41
$ 261 $ 0.29
(1) Unrealized derivative (gains)
losses were net of income tax per share of $(0.06) and $0.00 in the
three months ended December 31, 2014 and 2013, respectively. (2)
Unrealized foreign currency transaction (gains) losses were net of
income tax per share of $(0.02) and $0.01 in the three months ended
December 31, 2014 and 2013, respectively. (3) Amount primarily
relates to the loss from the sale of Ebute of $6 million ($6
million, or $0.01 per share, net of income tax per share of $0.00),
the loss from the liquidation of AgCert International of $1 million
(net benefit of $18 million, or $0.03 per share, including income
tax per share of $0.03), the tax benefit of $28 million ($0.04 per
share) related to the Silver Ridge Power transaction, the tax
benefit of $18 million ($0.03 per share) associated with the
agreement executed in December 2014 to sell a noncontrolling
interest in IPALCO, and the tax expense of $5 million ($0.01 per
share) associated with the sale of a noncontrolling interest in our
Dominican Republic businesses. (4) Amount primarily relates to
other-than-temporary impairments of our equity method investment at
Entek of $69 million ($75 million, or $0.10 per share, net of
income tax per share of $0.01) and at Elsta of $41 million ($31
million, or $0.04 per share, net of income tax per share of $0.01)
as well as the goodwill impairment at Buffalo Gap of $10 million
($10 million, or $0.01 per share, net of income tax per share of
$0.00). (5) Amount primarily relates to the goodwill impairments at
DPL of $307 million ($307 million, or $0.41 per share, net of
income tax per share of $0.00) and at Mountain View of $7 million
($7 million, or $0.01 per share, net of income tax per share of
$0.00). Amount also includes other-than-temporary impairment of our
equity method investment at Elsta $7 million ($39 million, or $0.05
per share, net of income tax per share of $(0.04)), at DPL of $26
million ($17 million, or $0.02 per share, net of income tax per
share of $0.01), at El Salvador for $4 million ($4 million, or
$0.01 per share, net of income tax per share of $0.00). (6) Amount
primarily Amount primarily relates to the loss on early retirement
of debt at the DPL of $31 million ($20 million, or $0.03 per share,
net of income tax per share of $0.02), at Electrica Angamos of $20
million ($11 million, or $0.02 per share, net of noncontrolling
interest of $6 million and of income tax per share of $0.00), at
Parent Company of $11 million ($6 million, or $0.01 per share, net
of income tax per share of $0.01) and at Warrior Run of $7 million
($5 million, or $0.01 per share, net of income tax per share of
$0.00). (7) Amount primarily relates to the loss on retirement of
debt at Changuinola of $14 million ($10 million, or $0.01 per
share, net of income tax per share of $0.01).
THE AES CORPORATION
NON-GAAP FINANCIAL MEASURES
(Unaudited)
RECONCILIATION OF ADJUSTED PRE-TAX
CONTRIBUTION (PTC) AND ADJUSTED EPS
Year Ended December 31,
2014
Year Ended December 31,
2013
Net of
NCI(1)
Per Share
(Diluted) Net
of NCI(1) and
Tax
Net of
NCI(1)
Per Share
(Diluted) Net
of NCI(1) and
Tax
Income (loss) from continuing operations attributable to
AES and Diluted EPS $ 789 $ 1.09
$ 284 $ 0.38 Add back income tax
expense from continuing operations attributable to AES 228
156 Pre-tax contribution
$ 1,017 $
440 Adjustments Unrealized derivative (gains)/
losses(1) $ (135 ) $ (0.12 ) $ (57 ) $ (0.05 ) Unrealized foreign
currency transaction (gains)/ losses(2) 110 0.14 41 0.02
Disposition/ acquisition (gains) (361 ) (0.59 ) (3) (30 ) (0.03 )
(4) Impairment losses 416 0.53 (5) 588 0.75 (6) Loss on
extinguishment of debt 274 0.25 (7) 225 0.22
(8)
Adjusted pre-tax contribution and Adjusted EPS
$ 1,321 $ 1.30 $
1,207 $ 1.29 (1)
Unrealized derivative (gains) losses were
net of income tax per share of $(0.07) and $(0.02) in 2014 and 2013
respectively.
(2) Unrealized foreign currency transaction (gains) losses were net
of income tax per share of $0.02 and $0.02 in 2014 and 2013
respectively. (3) Amount primarily relates to the gain from the
sale of a noncontrolling interest in Masinloc of $283 million ($283
million, or $0.39 per share, net of income tax per share of $0.00),
the gain from the sale of the UK wind projects of $78 million ($78
million, or $0.11 per share, net of income tax per share of $0.00),
the loss from the sale of Ebute of $6 million ($6 million, or $0.01
per share, net of income tax per share of $0.00), the loss from the
liquidation of AgCert International of $1 million (net benefit of
$18 million, or $0.03 per share, including income tax per share of
$0.03), the tax benefit of $24 million ($0.03 per share) related to
the Silver Ridge Power transaction, the tax benefit of $18 million
($0.02 per share) associated with the agreement executed in
December 2014 to sell a noncontrolling interest in IPALCO, and the
tax benefit of $7 million ($0.01 per share) associated with the
sale of a noncontrolling interest in our Dominican Republic
businesses. (4) Amount primarily relates to the gain from the sale
of the remaining 20% of our interest in Cartagena for $20 million
($15 million, or $0.02 per share, net of income tax per share of
$0.01) as well as the gain from the sale of Trinidad for $3 million
($4 million, or $0.01 per share, net of income tax per share of
$0.00). (5) Amount primarily relates to the goodwill impairments at
DPLER of $136 million ($136 million, or $0.19 per share, net of
income tax per share of $0.00), and at Buffalo Gap of $28 million
($28 million, or $0.04 per share, net of income tax per share of
$0.00), and asset impairments at Ebute of $67 million ($64 million,
or $0.09 per share, net of noncontrolling interest of $3 million
and of income tax per share of $0.00), at DPL of $12 million ($7
million, or $0.01 per share, net of income tax per share of $0.01),
at Newfield of $12 million ($6 million, or $0.01 per share, net of
noncontrolling interest of $6 million and of income tax per share
of $0.00), and at Elsta of $41 million ($31 million, or $0.04 per
share, net of income tax per share of $0.01), as well as the
other-than-temporary impairments of our equity method investment at
Silver Ridge Power of $42 million ($27 million, or $0.04 per share,
net of income tax per share of $0.02), and at Entek of $86 million
($86 million, or $0.12 per share, net of income tax per share of
$0.00). (6) Amount primarily relates to the goodwill impairments at
DPL of $307 million ($307 million, or $0.41 per share, net of
income tax per share of $0.00), at Ebute of $58 million ($58
million, or $0.08 per share, net of income tax per share of $0.00)
and at Mountain View of $7 million ($7 million, or $0.01 per share,
net of income tax per share of $0.00). Amount also includes an
other-than-temporary impairment of our equity method investment at
Elsta of $129 million ($128 million, or $0.17 per share, net of
income tax per share of $0.00) and asset impairments at Beaver
Valley of $46 million ($30 million, or $0.04 per share, net of
income tax per share of $0.02), at DPL of $26 million ($17 million,
or $0.02 per share, net of income tax per share of $0.01), at Itabo
(San Lorenzo) of $16 million ($6 million, or $0.01 per share, net
of noncontrolling interest of $8 million and of income tax per
share of $0.00), at El Salvador for $4 million ($4 million, or
$0.01 per share, net of income tax per share of $0.00). (7) Amount
primarily relates to the loss on early retirement of debt at the
Parent Company of $200 million ($130 million, or $0.18 per share,
net of income tax per share of $0.10), at DPL of $31 million ($20
million, or $0.03 per share, net of income tax per share of $0.02),
at Electrica Angamos of $20 million ($11 million, or $0.02 per
share, net of noncontrolling interest of $6 million and of income
tax per share of $0.00), at UK wind projects of $18 million ($15
million, or $0.02 per share, net of income tax per share of $0.00),
at Warrior Run of $8 million ($5 million, or $0.01 per share, net
of income tax per share of $0.00) and at Gener of $7 million ($4
million, or $0.01 per share, net of noncontrolling interest of $2
million and of income tax per share of $0.00). (8) Amount primarily
relates to the loss on early retirement of debt at Parent Company
of $165 million ($107 million, or $0.14 per share, net of income
tax per share of $0.08), at Masinloc of $43 million ($39 million,
or $0.05 per share, net of income tax per share of $0.00) and
Changuinola of $14 million ($10 million, or $0.01 per share, net of
income tax per share of $0.01).
THE AES CORPORATION
NON-GAAP FINANCIAL MEASURES
(Unaudited)
Three Months Ended Twelve
Months Ended December 31, December
31, 2014 2013 2014
2013 (in millions) Calculation of
Maintenance Capital Expenditures for Free Cash Flow (1)
Reconciliation Below: Maintenance Capital
Expenditures $207 $235 $666 $760 Environmental Capital Expenditures
$69 $66 $241 $211 Growth Capital Expenditures $519 $513
$1,637 $1,608
Total Capital
Expenditures $795 $814
$2,544 $2,579 Reconciliation
of Proportional Operating Cash Flow(2) Consolidated Operating
Cash Flow $575 $675 $1,791 $2,715 Less: Proportional Adjustment
Factor $108 $140 $359 $834
Proportional Operating Cash Flow (2)
$467
$535 $1,432 $1,881
Reconciliation of Free Cash Flow(1) Consolidated
Operating Cash Flow $575 $675 $1,791 $2,715 Less:
Maintenance Capital Expenditures, net of reinsurance proceeds $207
$235 $666 $760 Less: Non-recoverable Environmental Capital
Expenditures $26 $32 $78 $101
Free
Cash Flow(1)
$342 $408
$1,047 $1,854 Reconciliation
of Proportional Free Cash Flow(1),(2) Proportional Operating
Cash Flow
$467 $535 $1,432 $1,881
Less: Proportional Maintenance Capital Expenditures, net of
reinsurance proceeds and Proportional Non-recoverable Environmental
Capital Expenditures $180 $187 $541
$610
Proportional Free Cash Flow(1),(2)
$287
$348 $891 $1,271
(1) Free cash flow (a non-GAAP financial
measure) is defined as net cash from operating activities less
maintenance capital expenditures (including non-recoverable
environmental capital expenditures), net of reinsurance proceeds
from third parties. 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) AES
is a holding company that derives its income and cash flows from
the activities of its subsidiaries, some of which may not be
wholly-owned by the Company. Accordingly, the Company has presented
certain financial metrics which are defined as Proportional (a
non-GAAP financial measure). Proportional metrics present the
Company's estimate of its share in the economics of the underlying
metric. The Company believes that the Proportional metrics are
useful to investors because they exclude the economic share in the
metric presented that is held by non-AES shareholders. For example,
Net Cash from Operating Activities (Operating Cash Flow) is a GAAP
metric which presents the Company's cash flow from operations on a
consolidated basis, including operating cash flow allocable to
noncontrolling interests. Proportional Operating Cash Flow removes
the share of operating cash flow allocable to noncontrolling
interests and therefore may act as an aid in the valuation of the
Company. Proportional metrics are reconciled to the nearest GAAP
measure. Certain assumptions have been made to estimate our
proportional financial measures. These assumptions include: (i) the
Company's economic interest has been calculated based on a blended
rate for each consolidated business when such business represents
multiple legal entities; (ii) the Company's economic interest may
differ from the percentage implied by the recorded net income or
loss attributable to noncontrolling interests or dividends paid
during a given period; (iii) the Company's economic interest for
entities accounted for using the hypothetical liquidation at book
value method is 100%; (iv) individual operating performance of the
Company's equity method investments is not reflected and (v)
inter-segment transactions are included as applicable for the
metric presented.
The AES Corporation Parent
Financial Information
Parent only data: last four quarters
(in millions)
4 Quarters
Ended
Total subsidiary
distributions & returns of capital to Parent
December
31, 2014
September
30, 2014
June 30,
2014
March 31,
2014
Actual Actual Actual
Actual Subsidiary distributions(1) to Parent & QHCs $
1,151 $ 1,139 $ 1,192 $ 1,290 Returns of capital distributions to
Parent & QHCs 85 96 65
40
Total subsidiary distributions & returns of
capital to Parent $ 1,236 $
1,235 $ 1,257 $
1,330 Parent only data: quarterly ($ in
millions)
Quarter Ended
Total subsidiary
distributions & returns of capital to Parent
December
31, 2014
September
30, 2014
June 30,
2014
March 31,
2014
Actual Actual Actual
Actual Subsidiary distributions to Parent & QHCs $ 414 $
295 $ 210 $ 232 Returns of capital distributions to Parent &
QHCs 18 31 26 9
Total subsidiary distributions & returns of capital to
Parent $ 432 $ 326
$ 236 $ 241
Parent Company
Liquidity (2)
($ in millions)
Balance at
December
31, 2014
September
30, 2014
June 30,
2014
March 31,
2014
Actual Actual Actual
Actual Cash at Parent & Cash at QHCs (3) $ 507 $ 229 $
15 $ 26 Availability under credit facilities 739
799 679 799
Ending
liquidity $ 1,246 $ 1,028
$ 694 $ 825
(1)
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 the 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.
(2)
Parent Company Liquidity is defined as
cash at the Parent Company plus availability under corporate credit
facilities plus cash at qualified 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.
(3)
The cash held at 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 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.
THE AES CORPORATION
2014 FINANCIAL GUIDANCE
ELEMENTS(1)
2014 Financial Guidance (as
of 11/6/14) Consolidated Proportional
Income Statement Guidance Adjusted Earnings Per Share
$1.25-$1.31
Cash Flow Guidance Net Cash Provided by
Operating Activities $1,800-$2,200 million Free Cash Flow (4)
$900-$1,000 million
Reconciliation of Free Cash Flow
Guidance Net Cash from Operating Activities $1,800-$2,200
million $1,450-$1,550 million Less: Maintenance Capital
Expenditures $650-$850 million $450-$650 million Free Cash Flow (4)
$1,050-$1,450 million $900-$1,000 million (1) 2014 Guidance
is based on expectations for future foreign exchange rates and
commodity prices as of October 15, 2014. (2) AES is a
holding company that derives its income and cash flows from the
activities of its subsidiaries, some of which may not be
wholly-owned by the Company. Accordingly, the Company has presented
certain financial metrics which are defined as Proportional (a
non-GAAP financial measure). Proportional metrics present the
Company's estimate of its share in the economics of the underlying
metric. The Company believes that the Proportional metrics are
useful to investors because they exclude the economic share in the
metric presented that is held by non-AES shareholders. For example,
Net Cash from Operating Activities (Operating Cash Flow) is a GAAP
metric which presents the Company's cash flow from operations on a
consolidated basis, including operating cash flow allocable to
noncontrolling interests. Proportional Operating Cash Flow removes
the share of operating cash flow allocable to noncontrolling
interests and therefore may act as an aid in the valuation of the
Company. Proportional metrics are reconciled to the nearest GAAP
measure. Certain assumptions have been made to estimate our
proportional financial measures. These assumptions include: (i) the
Company's economic interest has been calculated based on a blended
rate for each consolidated business when such business represents
multiple legal entities; (ii) the Company's economic interest may
differ from the percentage implied by the recorded net income or
loss attributable to noncontrolling interests or dividends paid
during a given period; (iii) the Company's economic interest for
entities accounted for using the hypothetical liquidation at book
value method is 100%; (iv) individual operating performance of the
Company's equity method investments is not reflected and (v)
inter-segment transactions are included as applicable for the
metric presented. (3) Adjusted Earnings Per Share (a
non-GAAP financial measure) is defined as diluted earnings per
share from continuing operations excluding gains or losses of the
consolidated entity due to (a) unrealized gains or losses related
to derivative transactions, (b) unrealized foreign currency gains
or losses, (c) gains or losses due to dispositions and acquisitions
of business interests, (d) losses due to impairments, and (e) costs
due to the early retirement of debt. The GAAP measure most
comparable to Adjusted EPS is diluted earnings per share from
continuing operations. 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 due to unrealized gains or losses related to derivative
transactions, unrealized foreign currency gains or losses, losses
due to impairments and strategic decisions to dispose or acquire
business interests or retire debt, which affect results in a given
period or periods. Adjusted Earnings Per Share should not be
construed as an alternative to diluted earnings per share from
continuing operations, which is determined in accordance with GAAP.
(4) Free Cash Flow is reconciled above. Free Cash Flow (a
non-GAAP financial measure) is defined as net cash from operating
activities less maintenance capital expenditures (including
non-recoverable environmental capital expenditures), net of
reinsurance proceeds from third parties. 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.
THE AES CORPORATION
2015 FINANCIAL GUIDANCE
ELEMENTS(1),(2),(3)
2015 Financial Guidance
As of 11/6/14(1) As of 2/26/15(2)
Consolidated Proportional Consolidated
Proportional Income Statement Guidance Adjusted
Earnings Per Share $1.25-$1.35 $1.25-$1.35
Cash Flow
Guidance Net Cash Provided by Operating Activities
$2,000-
$2,800 million
$2,000-
$2,800 million
Free Cash Flow (4)
$1,000-
$1,350 million
$1,000-
$1,350 million
Reconciliation of Free Cash Flow Guidance
Net Cash from Operating Activities
$2,000-
$2,800 million
$1,650-$2,000
million
$2,000-$2,800
million
$1,650-$2,000
million
Less: Maintenance Capital Expenditures
$700-$1,000
million
$500-$800
million
$700-$1,000
million
$500-$800
million
Free Cash Flow (4)
$1,150-$1,950
million
$1,000-$1,350
million
$1,150-$1,950
million
$1,000-$1,350
million
(1) Based on expectations for future foreign exchange rates
and commodity prices as of October 15, 2014. (2) Based on
expectations for future foreign exchange rates and commodity prices
as of December 31, 2014. (3) AES is a holding company that
derives its income and cash flows from the activities of its
subsidiaries, some of which may not be wholly-owned by the Company.
Accordingly, the Company has presented certain financial metrics
which are defined as Proportional (a non-GAAP financial measure).
Proportional metrics present the Company's estimate of its share in
the economics of the underlying metric. The Company believes that
the Proportional metrics are useful to investors because they
exclude the economic share in the metric presented that is held by
non-AES shareholders. For example, Net Cash from Operating
Activities (Operating Cash Flow) is a GAAP metric which presents
the Company's cash flow from operations on a consolidated basis,
including operating cash flow allocable to noncontrolling
interests. Proportional Operating Cash Flow removes the share of
operating cash flow allocable to noncontrolling interests and
therefore may act as an aid in the valuation of the Company.
Proportional metrics are reconciled to the nearest GAAP measure.
Certain assumptions have been made to estimate our proportional
financial measures. These assumptions include: (i) the Company's
economic interest has been calculated based on a blended rate for
each consolidated business when such business represents multiple
legal entities; (ii) the Company's economic interest may differ
from the percentage implied by the recorded net income or loss
attributable to noncontrolling interests or dividends paid during a
given period; (iii) the Company's economic interest for entities
accounted for using the hypothetical liquidation at book value
method is 100%; (iv) individual operating performance of the
Company's equity method investments is not reflected and (v)
inter-segment transactions are included as applicable for the
metric presented. (4) Adjusted Earnings Per Share (a
non-GAAP financial measure) is defined as diluted earnings per
share from continuing operations excluding gains or losses of the
consolidated entity due to (a) unrealized gains or losses related
to derivative transactions, (b) unrealized foreign currency gains
or losses, (c) gains or losses due to dispositions and acquisitions
of business interests, (d) losses due to impairments, and (e) costs
due to the early retirement of debt. The GAAP measure most
comparable to Adjusted EPS is diluted earnings per share from
continuing operations. 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 due to unrealized gains or losses related to derivative
transactions, unrealized foreign currency gains or losses, losses
due to impairments and strategic decisions to dispose or acquire
business interests or retire debt, which affect results in a given
period or periods. Adjusted Earnings Per Share should not be
construed as an alternative to diluted earnings per share from
continuing operations, which is determined in accordance with GAAP.
In providing its full year 2015 Adjusted EPS guidance, the Company
notes that there could be differences between expected reported
earnings and estimated operating earnings for matters such as, but
not limited to: (a) unrealized gains or losses related to
derivative transactions; (b) unrealized foreign currency gains or
losses; (c) gains or losses due to dispositions and acquisitions of
business interests; (d) losses due to impairments; and (e) costs
due to the early retirement of debt. At this time, management is
not able to estimate the aggregate impact, if any, of these items
on reported earnings for the year. Accordingly, the Company is not
able to provide a corresponding GAAP equivalent for its Adjusted
EPS guidance. (5) Free Cash Flow is reconciled above. Free
Cash Flow (a non-GAAP financial measure) is defined as net cash
from operating activities less maintenance capital expenditures
(including non-recoverable environmental capital expenditures), net
of reinsurance proceeds from third parties. 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.
AES CorporationInvestor Contact:Ahmed Pasha, 703-682-6451orMedia
Contact:Amy Ackerman, 703-682-6399
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