(Source: Business Wire)
The AES Corporation (NYSE: AES) today reported its second quarter results, with Adjusted Earnings Per Share increased by $0.03 to $0.28 and Diluted Earnings Per Share from Continuing Operations decreased by $0.86 to $0.45. Proportional Free Cash Flow increased by $313 million to $190 million and Consolidated Free Cash Flow increased by $237 million to $366 million. Consolidated Cash Flow from Operating Activities increased by $181 million to $495 million.
During the quarter, the Company benefited from its geographic and fuel diversity, with strong performance in Chile offsetting reduced demand and lower wholesale prices in North America. The Company's focus on improved operations, with increased production in Chile and the Philippines, reduced operating expenses and improved working capital also contributed to the quarterly results. In addition, the Company also benefited from a favorable settlement of a legal claim at a European affiliate and a lower effective tax rate, primarily related to a U.S. subsidiary tax restructuring.
"We are pleased with our performance during the first six months of the year, and we continue to make progress with our new businesses. Operational improvements at our Masinloc facility in the Philippines helped generate its first quarterly profit since last year's acquisition. We also completed construction on 374 MW, including Guacolda 3, the first coal-fired facility to be brought on-line in Chile in 12 years, as well as three other facilities in Chile, Northern Ireland and France," said Paul Hanrahan, President and Chief Executive Officer. "On the development front, the financial closings of the Armenia Mountain and St. Patrick wind projects demonstrate the strength of our renewables pipeline, an area that continues to present attractive investment opportunities."
In the U.S., the Company closed a $221 million long-term non-recourse financing of the 101 MW Armenia Mountain wind project in July. In France, the Company closed a â¬44 million financing for the 35 MW St. Patrick wind project in the second quarter.
"Based on our results for the first six months of 2009, we are increasing 2009 Adjusted Earnings Per Share guidance from a range of $0.97-$1.07 to a range of $1.05-$1.10. We are also raising the lower end of our Proportional Free Cash Flow guidance from $650 million to $750 million, resulting in a revised guidance range of $750 million to $850 million for 2009," said Victoria D. Harker, Executive Vice President and Chief Financial Officer.
Results for the quarter ended June 30, 2009 include the following:
Second Quarter 2009 Second Quarter 2008 YTD 6/30/09 Full Year2009 Guidance as of 5/27/09 Full Year 2009 Guidance as of 8/7/09 Consolidated Revenue $3.5 billion $4.1 billion $6.9 billion not provided not provided Consolidated Gross Margin $0.8 billion $1.0 billion $1.7 billion $3.2 - $3.4 billion $3.5 - $3.6 billion Proportional Gross Margin (a non-GAAP financial measure) $499 million $647 million $1.04 billion $2.05 - 2.15 billion $2.1 - 2.15 billion Consolidated Cash Flow from Operating Activities $495 million $314 million $871 million $2.0 - $2.2 billion $2.1 - $2.2 billion Proportional Cash Flow from Operating Activities (a non-GAAP financial measure) $284 million $8 million $608 million $1.2 - $1.35 billion $1.25 - $1.35 billion Consolidated Free Cash Flow (a non-GAAP financial measure) $366 million $129 million $586 million $1.3 - $1.5 billion $1.4 - $1.5 billion Proportional Free Cash Flow (a non-GAAP financial measure) $190 million ($123) million $394 million $650 - $850 million $750 - $850 million Subsidiary Distributions to the Parent Company (see definitions) $527 million $269 million $757 million $1.1 - $1.3 billion $1.2 - $1.3 billion Diluted Earnings Per Share from Continuing Operations $ 0.45 $ 1.31 $ 0.78 $ 1.03 - $1.13 $ 1.15 - $1.20 Diluted Earnings Per Share $ 0.45 $ 1.31 $ 0.78 not provided not provided Adjusted Earnings Per Share (a non-GAAP financial measure) $ 0.28 $ 0.25 $ 0.65 $ 0.97 - $1.07 $ 1.05 - $1.10 -------------------------------------------------------------------------------
Second Quarter 2009 Financial Highlights (comparison of Q2 2009 vs. Q2 2008):
Key drivers of the second quarter results described above include:
Consolidated Revenues decreased by $631 million to $3.5 billion, primarily due to unfavorable movements in foreign currency exchange rates of $520 million, of which approximately $344 million, or 66 percent, relates to the Brazilian Real which depreciated by 26 percent. The results also reflect lower revenue at the Company's generation businesses in Chile due to lower fuel prices.
Consolidated Gross Margin decreased by $182 million to $847 million, primarily due to unfavorable foreign currency exchange rates of approximately $101 million and a reduction in non-cash mark-to-market derivative gains of approximately $84 million, primarily related to North America subsidiaries. The 2009 quarterly results do not include the contribution from the Northern Kazakhstan businesses sold in May 2008. These decreases were offset in part by improved operations at our Latin America and Asia generation businesses.
Proportional Gross Margin (a non-GAAP financial measure, see Appendix for definition and reconciliation) declined by $148 million to $499 million, primarily due to a reduction in non-cash mark-to-market derivative gains of approximately $84 million. This reduction was primarily attributable to North America subsidiaries, unfavorable foreign currency exchange rates of approximately $43 million, and the lack of contribution from the Northern Kazakhstan businesses sold in 2008, offset in part by improved production at Gener in Chile and Masinloc in the Philippines.
Consolidated Cash Flow from Operating Activities increased by $181 million to $495 million, primarily due to improved working capital at our Latin America generation businesses, lower corporate overhead and development costs and receipt in April of the $80 million fee related to the management of Northern Kazakhstan assets.
Proportional Cash Flow from Operating Activities (a non-GAAP financial measure, see Appendix for definition and reconciliation) increased by $276 million to $284 million, primarily due to an improvement in working capital at Latin America generation businesses, lower corporate expenses and receipt in April of the $80 million fee related to the management of Northern Kazakhstan assets. Proportional Cash Flow from Operating Activities reflects the economic interest of AES in the consolidated results.
Consolidated Free Cash Flow (a non-GAAP financial measure, see Appendix for definition and reconciliation) increased by $237 million to $366 million. The 2009 results reflect both higher Consolidated Cash Flow from Operating Activities and lower maintenance capital expenditures.
Proportional Free Cash Flow (a non-GAAP financial measure, see Appendix for definition and reconciliation) increased by $313 million to $190 million. The 2009 results reflect both higher Consolidated Operating Cash Flow and lower maintenance capital expenditures. Proportional Free Cash Flow reflects the economic interest of AES in the consolidated results.
Diluted Earnings from Continuing Operations of $0.45 per share, compared to $1.31 per share in 2008. The 2009 result includes a $98 million or $0.14 gain related to the final settlement of the Northern Kazakhstan assets sold in 2008. The 2008 result primarily includes a net gain from sale of Northern Kazakhstan assets of $1.05 per share.
Adjusted Earnings Per Share (a non-GAAP financial measure, see Appendix for definition and reconciliation) of $0.28, compared to $0.25 in 2008. The 2009 results include $0.05 gain related to the settlement of a claim at a European subsidiary. Second quarter 2009 results also benefited from lower tax rates related to a tax restructuring involving a U.S. subsidiary. The 2009 quarterly results were adversely affected by $0.06 due to unfavorable exchange rates. The 2008 Adjusted Earnings Per Share include an $0.08 gain resulting from a settlement of a liability at one of our Latin America subsidiaries.
Q2 2009 Q2 2008 Diluted Earnings Per Share from Continuing Operations $ 0.45 $ 1.31 FAS 133 Mark-to-Market (Gains)/Losses $ 0.01 ($0.08 ) Currency Transaction (Gains)/Losses ($0.04 ) $ 0.07 Disposition/Acquisition (Gains)/Losses ($0.14 ) ($1.31 ) Impairment Losses - $ 0.01 Debt Retirement (Gains)/Losses - $ 0.25 Adjusted Earnings Per Share $ 0.28 $ 0.25 -------------------------------------------------------------------------------
See Appendix for more detail
Year-to-Date 2009 Financial Highlights (comparison of Q2 YTD 2009 vs. Q2 YTD 2008):
Key drivers of the year-to-date results described above include:
Consolidated Revenues decreased by $1.3 billion to $6.9 billion, primarily due to unfavorable movements in foreign currency exchange rates of $1.1 billion. Approximately $751 million, or 68 percent, of the unfavorable movements relate to the Brazilian Real, which depreciated by 30 percent. The results also reflect lower revenue at the Company's generation businesses in Chile due to the impact of lower fuel prices.
Consolidated Gross Margin decreased by $341 million to $1.7 billion, primarily due to unfavorable foreign currency exchange rates of approximately $238 million and unfavorable, non-cash, mark-to-market, derivative adjustments of approximately $91 million, primarily attributable to North America subsidiaries. The 2009 year-to-date results do not include the contribution from the Northern Kazakhstan businesses sold in May 2008. These decreases were offset in part by improved operations at the Company's Latin America and Asia generation businesses.
Proportional Gross Margin (a non-GAAP financial measure, see Appendix for definition and reconciliation) declined by $300 million to $1.0 billion, primarily due to (i) lower electricity prices and volumes at the Company's generation businesses in Argentina and New York, (ii) unfavorable mark-to-market derivative adjustments at North America subsidiaries, (iii) unfavorable foreign currency exchange rates, and (iv) loss of the contribution from the Northern Kazakhstan businesses sold in 2008. These were offset in part by improved operations in Chile and the Philippines.
Consolidated Cash Flow from Operating Activities increased by $87 million to $871 million, primarily due to improved working capital at our Latin America and Asia generation businesses, reduced corporate expenses and receipt in April of the $80 million fee related to management of Northern Kazakhstan assets. The increase was offset in part by lower cash flow from operating activities at Latin America utilities.
Proportional Cash Flow from Operating Activities (a non-GAAP financial measure, see Appendix for definition and reconciliation) increased by $312 million to $608 million, primarily due to improved working capital at the Company's Latin America and Asia generation businesses, reduced corporate expenses and receipt in April of the $80 million fee related to management of Northern Kazakhstan assets. Proportional Cash Flow from Operating Activities reflects the economic interest of AES in the consolidated results.
Consolidated Free Cash Flow (a non-GAAP financial measure, see Appendix for definition and reconciliation) increased by $166 million to $586 million. The 2009 results reflect both higher Consolidated Operating Cash Flow and lower maintenance capital expenditures.
Proportional Free Cash Flow (a non-GAAP financial measure, see Appendix for definition and reconciliation) increased by $354 million to $394 million. Proportional Free Cash Flow reflects the economic interest of AES in the consolidated results.
Diluted Earnings from Continuing Operations of $0.78 per share, compared to $1.65 per share in 2008. The 2009 result includes a $98 million or $0.15 gain related to the final settlement of the Northern Kazakhstan assets sold in 2008. The 2008 result includes a net gain from sale of Northern Kazakhstan assets of $1.05.
Adjusted Earnings Per Share (a non-GAAP financial measure, see Appendix for definition and reconciliation) of $0.65, compared to $0.60 per share in 2008. The 2009 result excludes a $98 million or $0.15 gain related to the final settlement of the Northern Kazakhstan assets sold in 2008, $0.01 of non-cash, unrealized foreign currency transaction gains and $0.03 of non-cash mark-to-market derivative losses.
Other Key Highlights:
Since the first quarter of 2009, commenced commercial operation of 374 MW of generation capacity, including the 130 MW Santa Lidia diesel facility and 152 MW coal facility Guacolda 3 in Chile, the 80 MW Kilroot peaker expansion in Northern Ireland and 12 MW of Innovent wind projects in France.
In May, Kazakhmys PLC, which purchased the Northern Kazakhstan businesses in 2008, provided an irrevocable standby letter of credit to AES of $102 million to secure the final payment to be received from Kazakhmys in January 2010.
In June, completed â¬44 million project financing for the 35 MW St. Patrick wind project in France and in July, secured $221 million project financing and began construction of the 101 MW Armenia Mountain wind project in Pennsylvania.
In June, the Supreme Court of Chile invalidated an environmental permit granted by the Chilean regulatory authorities for the 270 MW Campiche coal-fired power plant. The Company indirectly owns a 71 percent interest in Campiche through its subsidiary Gener. As a result of the Supreme Court's ruling against the local permitting authority, Gener has stopped work on Campiche, which was previously expected to commence commercial operations in the second quarter of 2011. Construction on the project would resume when a solution has been implemented which complies with all applicable laws. Based on the cash investment through June 30, 2009 and potential termination costs, Gener's total exposure to the project is approximately $186 million.
2009 Guidance
Based on the Company's performance through the first half of 2009 and the current outlook for the remainder of the year, the Company is increasing its full year earnings guidance and the midpoint of its cash flow guidance. The revised guidance is based on currency and commodity movements which have had a net $0.05 favorable impact on Adjusted Earnings Per Share guidance, a lower effective tax rate which has a $0.03 favorable impact, and a $0.05 gain related to settlement of a claim recorded at one of its European affiliates during the second quarter of 2009. These favorable impacts are projected to be offset by unfavorable impacts of $0.05-$0.10 related to outages and lower wholesale prices in North America, lower volume and realized foreign currency transaction losses projected to be incurred in remainder of the year.
Summary of some of the key 2009 guidance elements include:
Increased Adjusted Earnings Per Share (a non-GAAP financial measure) guidance from $0.97-$1.07 to $1.05-$1.10.
Increased Diluted Earnings per Share from Continuing Operations from $1.03-$1.13 to $1.15-$1.20.
Increased the lower end of its full year 2009 Proportional Free Cash Flow (a non-GAAP financial measure) guidance by $100 million and updated its full year guidance from $650-$850 million to $750-$850 million.
Increased the lower end of its full year 2009 Subsidiary Distributions guidance by $100 million and updated its full year guidance from $1,100-$1,300 million to $1,200-$1,300 million.
Non-GAAP Financial Measures
See Non-GAAP Financial Measures for definitions of Adjusted Earnings Per Share, Proportional Gross Margin, Proportional Operating Cash Flow, Free Cash Flow, Proportional Free Cash Flow and Parent Company Liquidity, as well as reconciliations to the most comparable GAAP financial measure.
Attachments
Consolidated Statements of Operations, Segment Information, Consolidated Balance Sheets, Consolidated Statements of Cash Flows, Non-GAAP Financial Measures, Parent Financial Information and 2009 Financial Guidance.
Conference Call Information
AES will host a conference call on Friday, August 7, 2009 at 10:00 a.m. Eastern Daylight Time (EDT). Interested parties may listen to the teleconference by dialing 1-866-229-5768 at least ten minutes before the start of the call. International callers should dial +1-973-200-3007. The reservation number for this call is 23935807. Internet access to the conference call and presentation materials will be available on the AES website at www.aes.com by selecting "Investor Information" and then "Quarterly Financial Reports."
A telephonic replay of the call will be available from approximately 1:00 p.m. EDT on Friday, August 7, 2009 through Friday, August 28, 2009. Callers in the U.S. please dial 1-800-642-1687. International callers should dial +1-706-645-9291. The system will ask for a reservation number; please enter 23935807 followed by the pound key (#). 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 500 global power company with generation and distribution businesses. Through our diverse portfolio of thermal and renewable fuel sources, we provide affordable and sustainable energy to 29 countries. Our workforce of 25,000 people is committed to operational excellence and meeting the world's changing power needs. Our 2008 revenues were $16 billion and we own and manage $35 billion in total assets. BusinessWeek named AES to its 2009 "BW 50 Best Performers" list. To learn more, please visit www.aes.com.
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's 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's filings with the Securities and Exchange Commission, including, but not limited to, the risks discussed under Item 1A "Risk Factors" in AES's 2008 Annual Report on Form 10-K. Readers are encouraged to read AES's filings to learn more about the risk factors associated with AES's business. AES undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
THE AES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three Months Ended Six Months Ended June 30, June 30, ($ in millions, except per share amounts) 2009 2008 2009 2008 Revenues $ 3,495 $ 4,126 $ 6,873 $ 8,207 Cost of sales (2,648 ) (3,097 ) (5,143 ) (6,136 ) GROSS MARGIN 847 1,029 1,730 2,071 General and administrative expenses (88 ) (99 ) (173 ) (197 ) Interest expense (383 ) (469 ) (774 ) (904 ) Interest income 90 133 188 249 Other expense (30 ) (85 ) (52 ) (110 ) Other income 22 150 244 195 Gain on sale of investments 102 908 115 912 Impairment expense (1 ) (25 ) (1 ) (72 ) Foreign currency transaction gains (losses) on net monetary position 27 (85 ) (12 ) (63 ) Other non-operating expense - - (10 ) - INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF AFFILIATES 586 1,457 1,255 2,081 Income tax expense (105 ) (318 ) (280 ) (557 ) Net equity in earnings of affiliates 50 20 57 42 INCOME FROM CONTINUING OPERATIONS 531 1,159 1,032 1,566 Income from operations of discontinued businesses, net of tax - 1 - 3 Loss from disposal of discontinued businesses, net of tax - - - (1 ) NET INCOME 531 1,160 1,032 1,568 Less: Net income attributable to noncontrolling interests (228 ) (257 ) (511 ) (432 ) NET INCOME ATTRIBUTABLE TO THE AES CORPORATION $ 303 $ 903 $ 521 $ 1,136 DILUTED EARNINGS PER SHARE: Income from continuing operations attributable to The AES Corporation common stockholders, net of tax $ 0.45 $ 1.31 $ 0.78 $ 1.65 Discontinued operations attributable to The AES Corporation common stockholders, net of tax - - - - NET INCOME ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS $ 0.45 $ 1.31 $ 0.78 $ 1.65 AMOUNTS ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS: Income from continuing operations, net of tax $ 303 $ 902 $ 521 $ 1,134 Discontinued operations, net of tax - 1 - 2 NET INCOME $ 303 $ 903 $ 521 $ 1,136 -------------------------------------------------------------------------------
THE AES CORPORATION SEGMENT INFORMATION (unaudited) Three Months Ended Six Months Ended June 30, June 30, ($ in millions) 2009 2008 2009 2008 REVENUES Latin America - Generation $ 895 $ 1,177 $ 1,786 $ 2,383 Latin America - Utilities 1,367 1,577 2,581 3,040 North America - Generation 475 538 977 1,089 North America - Utilities 261 267 551 516 Europe - Generation 152 268 356 572 Asia - Generation 337 301 584 613 Corporate and Other 8 (2 ) 38 (6 ) Total Revenue $ 3,495 $ 4,126 $ 6,873 $ 8,207 GROSS MARGIN Latin America - Generation $ 335 $ 319 $ 707 $ 718 Latin America - Utilities 175 254 346 479 North America - Generation 122 242 242 402 North America - Utilities 51 61 121 113 Europe - Generation 27 64 95 179 Asia - Generation 77 40 124 88 Corporate and Other 60 49 95 92 Total Gross Margin $ 847 $ 1,029 $ 1,730 $ 2,071 INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF AFFILIATES Latin America - Generation $ 321 $ 215 $ 689 $ 560 Latin America - Utilities 144 319 404 499 North America - Generation 64 191 115 281 North America - Utilities 17 15 56 36 Europe - Generation 102 986 246 1,089 Asia - Generation 43 (26 ) 47 (3 ) Corporate and Other (105 ) (244 ) (302 ) (382 ) Total Income from Continuing Operations before Income Taxes and Equity in Earnings of Affiliates $ 586 $ 1,456 $ 1,255 $ 2,080 -------------------------------------------------------------------------------
THE AES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) June 30, December 31, ($ in millions, except shares and par value) 2009 2008 ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,735 $ 903 Restricted cash 444 729 Short-term investments 1,152 1,382 Accounts receivable, net of allowance for doubtful accounts of $260 and $254, respectively 2,293 2,233 Inventory 577 564 Receivable from affiliates 21 31 Deferred income taxes - current 201 180 Prepaid expenses 350 177 Other current assets 1,249 1,117 Total current assets 8,022 7,316 NONCURRENT ASSETS Property, Plant and Equipment: Land 1,024 854 Electric generation, distribution assets, and other 26,427 24,654 Accumulated depreciation (8,368 ) (7,515 ) Construction in progress 3,971 3,410 Property, plant and equipment, net 23,054 21,403 Other assets: Deferred financing costs, net of accumulated amortization of $273 and $272, respectively 392 366 Investment in and advances to affiliates 1,043 901 Debt service reserves and other deposits 655 636 Goodwill 1,430 1,421 Other intangible assets, net of accumulated amortization of $191 and $185, respectively 486 500 Deferred income taxes - noncurrent 633 567 Other assets 1,703 1,696 Total other assets 6,342 6,087 TOTAL ASSETS $ 37,418 $ 34,806 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable $ 1,038 $ 1,042 Accrued interest 270 252 Accrued and other liabilities 2,705 2,660 Non-recourse debt - current 1,384 1,074 Recourse debt - current - 154 Total current liabilities 5,397 5,182 LONG-TERM LIABILITIES Non-recourse debt - noncurrent 12,321 11,869 Recourse debt - noncurrent 5,515 4,994 Deferred income taxes - noncurrent 1,237 1,132 Pension and other post-retirement liabilities 1,110 1,017 Other long-term liabilities 3,547 3,525 Cumulative preferred stock of subsidiaries 60 60 Total long-term liabilities 23,730 22,537 Commitments and contingent liabilities EQUITY THE AES CORPORATION STOCKHOLDERS' EQUITY Common stock ($.01 par value, 1,200,000,000 shares authorized; 676,362,823 issued and 666,828,233 outstanding at June 30, 2009; 673,478,012 issued and 662,786,745 outstanding at December 31, 2008) 7 7 Additional paid-in capital 6,845 6,832 Retained earnings (accumulated deficit) 513 (8 ) Accumulated other comprehensive loss (2,847 ) (3,018 ) Treasury stock, at cost (9,534,590 and 10,691,267 shares at June 30, 2009 and December 31, 2008, respectively) (126 ) (144 ) Total The AES Corporation stockholders' equity 4,392 3,669 NONCONTROLLING INTERESTS 3,839 3,358 Total equity 8,231 7,027 TOTAL LIABILITIES AND EQUITY $ 37,418 $ 34,806 -------------------------------------------------------------------------------
THE AES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Three Months Ended Six Months Ended June 30, June 30, ($ in millions) 2009 2008 2009 2008 OPERATING ACTIVITIES Net income $ 531 $ 1,160 $ 1,032 $ 1,568 Adjustments to net income: Depreciation and amortization 253 256 498 500 Loss from sale of investments and impairment expense (91 ) (895 ) (103 ) (850 ) Provision for deferred taxes (86 ) 156 (111 ) 208 Accrual/(settlement) of non-cash contingencies 48 (76 ) (54 ) (35 ) (Gain) loss on extinguishment of debt (17 ) 55 (3 ) 55 Other (37 ) (63 ) 4 (120 ) Changes in operating assets and liabilities: Increase in accounts receivable (83 ) (8 ) (3 ) (243 ) Increase in inventory (58 ) (58 ) (11 ) (79 ) Decrease (increase) in prepaid expenses and other current assets 136 (91 ) 31 (217 ) Increase in other assets (66 ) (86 ) (139 ) (121 ) Decrease in accounts payable and accrued liabilities (100 ) (90 ) (292 ) (15 ) Increase (decrease) in income taxes receivables and payables, net 63 (17 ) 54 89 Increase (decrease) in other long-term liabilities 2 71 (32 ) 44 Net cash provided by operating activities 495 314 871 784 INVESTING ACTIVITIES Capital expenditures (619 ) (752 ) (1,193 ) (1,385 ) Acquisitions -- net of cash acquired - (951 ) - (1,137 ) Proceeds from the sales of businesses 2 1,093 2 1,093 Proceeds from the sales of assets (1 ) 72 4 80 Sale of short-term investments 1,270 1,607 2,269 2,888 Purchase of short-term investments (1,054 ) (1,514 ) (1,740 ) (2,887 ) Decrease (increase) in restricted cash 12 (52 ) 305 2 (Increase) decrease in debt service reserves and other assets (33 ) (47 ) 40 (60 ) Affiliate advances and equity investments (57 ) (51 ) (87 ) (148 ) Loan advances - (1 ) - (173 ) Other investing 19 71 16 92 Net cash (used in) investing activities (461 ) (525 ) (384 ) (1,635 ) FINANCING ACTIVITIES Borrowing (repayments) under the revolving credit facilities, net 122 21 (31 ) 199 Issuance of recourse debt 503 625 503 625 Issuance of non-recourse debt 572 1,307 816 1,566 Repayments of recourse debt (154 ) (1,037 ) (154 ) (1,037 ) Repayments of non-recourse debt (322 ) (576 ) (491 ) (674 ) Payments for deferred financing costs (31 ) (31 ) (53 ) (36 ) Distributions to noncontrolling interests (322 ) (240 ) (334 ) (244 ) Contributions from noncontrolling interests 1 157 74 161 Financed capital expenditures 25 (42 ) (24 ) (51 ) Other financing 24 13 25 17 Net cash provided by financing activities 418 197 331 526 Effect of exchange rate changes on cash 16 (15 ) 14 3 Total increase (decrease) in cash and cash equivalents 468 (29 ) 832 (322 ) Cash and cash equivalents, beginning 1,267 1,750 903 2,043 Cash and cash equivalents, ending $ 1,735 $ 1,721 $ 1,735 $ 1,721 -------------------------------------------------------------------------------
THE AES CORPORATION NON-GAAP FINANCIAL MEASURES (unaudited) Three Months Ended Six Months Ended June 30, June 30, ($ in millions, except per share amounts) 2009 2008 2009 2008 Reconciliation of Adjusted Earnings Per Share (1) Diluted EPS From Continuing Operations $ 0.45 $ 1.31 $ 0.78 $ 1.65 FAS 133 Mark to Market (Gains)/Losses 0.01 (0.08) 0.03 (0.08) Currency Transaction (Gains)/Losses (0.04) 0.07 (0.01) 0.04 Disposition/Acquisition (Gains)/Losses (0.14) (2) (1.31) (3) (0.17) (4) (1.31) ((3)) Impairment Losses - 0.01 (5) 0.02 (6) 0.05 ((7)) Debt Retirement (Gains)/Losses - 0.25 (8) - 0.25 ((8)) Adjusted Earnings Per Share (1) $ 0.28 $ 0.25 $ 0.65 $ 0.60 Capital Expenditures Operational Capital Expenditures (a) $ 112 $ 165 $ 250 $ 314 Environmental Capital Expenditures (b) 17 20 35 50 Maintenance Capital Expenditures (a + b) 129 185 285 364 Growth Capital Expenditures 465 609 932 1,072 Total Capital Expenditures $ 594 $ 794 $ 1,217 $ 1,436 Reconciliation of Free Cash Flow Net Cash from Operating Activities $ 495 $ 314 $ 871 $ 784 Less: Maintenance Capital Expenditures 129 185 285 364 Free Cash Flow (9) $ 366 $ 129 $ 586 $ 420 Reconciliation of Proportional Free Cash Flow Proportional Net Cash from Operating Activities $ 284 $ 8 $ 608 $ 296 Less: Proportional Maintenance Capital Expenditures 94 131 214 256 Proportional Free Cash Flow (9),(10) $ 190 $ (123) $ 394 $ 40 Reconciliation of Proportional Gross Margin Consolidated Gross Margin $ 847 $ 1,029 $ 1,730 $ 2,071 Less: Proportional Adjustment Factor 348 382 688 729 Proportional Gross Margin (10) $ 499 $ 647 $ 1,042 $ 1,342 Reconciliation of Proportional Net Cash from Operating Activities Consolidated Net Cash from Operating Activities $ 495 $ 314 $ 871 $ 784 Less: Proportional Adjustment Factor 211 306 263 488 Proportional Net Cash from Operating Activities $ 284 $ 8 $ 608 $ 296 -------------------------------------------------------------------------------
((1)) 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) mark-to-market amounts related to FAS 133 derivative transactions, (b) unrealized foreign currency gains or losses, (c) significant gains or losses due to dispositions and acquisitions of business interests, (d) significant losses due to impairments, and (e) costs due to the 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 theA service of YellowBrix, Inc.
