AES Reports Record Sales with Data Center Hyperscalers

¹

Adjusted EPS is a non-GAAP financial measure.  See attached "Non-GAAP Measures" for definition of Adjusted EPS and a description of the adjustments to reconcile Adjusted EPS to Diluted EPS for the quarter ended June 30, 2024.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EPS guidance without unreasonable effort.

²

Adjusted EBITDA is a non-GAAP financial measure.  See attached "Non-GAAP Measures" for definition of Adjusted EBITDA and a description of the adjustments to reconcile Adjusted EBITDA to Net Income (Loss) for the quarter ended June 30, 2024.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EBITDA guidance without unreasonable effort.

³

Pre-tax effect of Production Tax Credits, Investment Tax Credits, and depreciation tax deductions allocated to tax equity investors, as well as the tax benefit recorded from tax credits retained or transferred to third parties.

⁴

Adjusted EBITDA is a non-GAAP financial measure.  See attached "Non-GAAP Measures" for definition of Adjusted EBITDA and a description of the adjustments to reconcile Adjusted EBITDA to Net Income for the quarter ended June 30, 2024.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EBITDA guidance without unreasonable effort.

⁵

Pre-tax effect of Production Tax Credits, Investment Tax Credits, and depreciation tax deductions allocated to tax equity investors, as well as the tax benefit recorded from tax credits retained or transferred to third parties.

⁶

Adjusted EBITDA is a non-GAAP financial measure.  See attached "Non-GAAP Measures" for definition of Adjusted EBITDA and a description of the adjustments to reconcile Adjusted EBITDA to Net Income for the quarter ended June 30, 2024.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EBITDA guidance without unreasonable effort.

⁷

Adjusted EPS is a non-GAAP financial measure.  See attached "Non-GAAP Measures" for definition of Adjusted EPS and a description of the adjustments to reconcile Adjusted EPS to Diluted EPS for the quarter ended June 30, 2024.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EPS guidance without unreasonable effort.

⁸

Pre-tax effect of Production Tax Credits, Investment Tax Credits, and depreciation tax deductions allocated to tax equity investors, as well as the tax benefit recorded from tax credits retained or transferred to third parties.

⁹

Adjusted EPS is a non-GAAP financial measure.  See attached "Non-GAAP Measures" for definition of Adjusted EPS and a description of the adjustments to reconcile Adjusted EPS to Diluted EPS for the quarter ended June 30, 2024.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EPS guidance without unreasonable effort.

THE AES CORPORATION

Condensed Consolidated Statements of Operations (Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

(in millions, except per share amounts)

Revenue:

Non-Regulated

$           2,070

$          2,193

$           4,302

$           4,480

Regulated

872

834

1,725

1,786

Total revenue

2,942

3,027

6,027

6,266

Cost of Sales:

Non-Regulated

(1,671)

(1,782)

(3,404)

(3,579)

Regulated

(718)

(747)

(1,451)

(1,595)

Total cost of sales

(2,389)

(2,529)

(4,855)

(5,174)

Operating margin

553

498

1,172

1,092

General and administrative expenses

(66)

(72)

(141)

(127)

Interest expense

(389)

(310)

(746)

(640)

Interest income

88

131

193

254

Loss on extinguishment of debt

(9)

—

(10)

(1)

Other expense

(84)

(12)

(122)

(26)

Other income

21

14

56

24

Gain (loss) on disposal and sale of business interests

1

(4)

44

(4)

Asset impairment expense

(230)

(174)

(276)

(194)

Foreign currency transaction gains (losses)

38

(67)

30

(109)

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES AND
EQUITY IN EARNINGS OF AFFILIATES

(77)

4

200

269

Income tax benefit (expense)

35

2

51

(70)

Net equity in earnings (losses) of affiliates

3

(25)

(12)

(29)

NET INCOME (LOSS)

(39)

(19)

239

170

Less: Net loss (income) attributable to noncontrolling interests and redeemable stock of subsidiaries

224

(20)

378

(58)

NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION

$              185

$              (39)

$              617

$              112

BASIC EARNINGS PER SHARE:

NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS

$             0.27

$           (0.06)

$             0.88

$             0.17

DILUTED EARNINGS PER SHARE:

NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS

$             0.27

$           (0.06)

$             0.87

$             0.16

DILUTED SHARES OUTSTANDING

713

669

713

712

THE AES CORPORATION

Strategic Business Unit (SBU) Information

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

REVENUE

Renewables SBU

$                  596

$                  541

$               1,215

$               1,036

Utilities SBU

896

852

1,769

1,823

Energy Infrastructure SBU

1,469

1,654

3,083

3,378

New Energy Technologies SBU

—

1

—

75

Corporate and Other

40

40

73

67

Eliminations

(59)

(61)

(113)

(113)

Total Revenue

$               2,942

$               3,027

$               6,027

$               6,266

THE AES CORPORATION

Condensed Consolidated Balance Sheets (Unaudited)

June 30, 2024

December 31,
2023

(in millions, except share

and per share data)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$                 1,773

$                 1,426

Restricted cash

299

370

Short-term investments

61

395

Accounts receivable, net of allowance of $22 and $15, respectively

1,507

1,420

Inventory

661

712

Prepaid expenses

141

177

Other current assets, net of allowance of $0 and $14, respectively

1,458

1,387

Current held-for-sale assets

3,655

762

Total current assets

9,555

6,649

NONCURRENT ASSETS

Property, Plant and Equipment:

Land

488

522

Electric generation, distribution assets and other

29,467

30,190

Accumulated depreciation

(8,270)

(8,602)

Construction in progress

9,047

7,848

Property, plant and equipment, net

30,732

29,958

Other Assets:

Investments in and advances to affiliates

1,156

941

Debt service reserves and other deposits

76

194

Goodwill

348

348

Other intangible assets, net of accumulated amortization of $420 and $498, respectively

1,879

2,243

Deferred income taxes

435

396

Other noncurrent assets, net of allowance of $11 and $9, respectively

2,845

3,259

Noncurrent held-for-sale assets

712

811

Total other assets

7,451

8,192

TOTAL ASSETS

$               47,738

$               44,799

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Accounts payable

$                 1,869

$                 2,199

Accrued interest

242

315

Accrued non-income taxes

229

278

Supplier financing arrangements

553

974

Accrued and other liabilities

1,043

1,334

Recourse debt

890

200

Non-recourse debt, including $335 and $1,080, respectively, related to variable interest entities

2,176

3,932

Current held-for-sale liabilities

2,821

499

Total current liabilities

9,823

9,731

NONCURRENT LIABILITIES

Recourse debt

5,256

4,264

Non-recourse debt, including $2,087 and $1,715, respectively, related to variable interest entities

20,232

18,482

Deferred income taxes

1,588

1,245

Other noncurrent liabilities

2,452

3,114

Noncurrent held-for-sale liabilities

457

514

Total noncurrent liabilities

29,985

27,619

Commitments and Contingencies

Redeemable stock of subsidiaries

901

1,464

EQUITY

THE AES CORPORATION STOCKHOLDERS' EQUITY

Preferred stock (without par value, 50,000,000 shares authorized; 1,043,050 issued
and outstanding at December 31, 2023)

—

838

Common stock ($0.01 par value, 1,200,000,000 shares authorized; 859,584,456 issued
and 710,823,239 outstanding at June 30, 2024 and 819,051,591 issued and 669,693,234
outstanding at December 31, 2023)

9

8

Additional paid-in capital

7,067

6,355

Accumulated deficit

(769)

(1,386)

Accumulated other comprehensive loss

(1,409)

(1,514)

Treasury stock, at cost (148,761,217 and 149,358,357 shares at June 30, 2024 and December 31, 2023, respectively)

(1,807)

(1,813)

Total AES Corporation stockholders' equity

3,091

2,488

NONCONTROLLING INTERESTS

3,938

3,497

Total equity

7,029

5,985

TOTAL LIABILITIES AND EQUITY

$               47,738

$               44,799

THE AES CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

(in millions)

(in millions)

OPERATING ACTIVITIES:

Net income

$                    (39)

$                    (19)

$             239

$             170

Adjustments to net income:

Depreciation and amortization

308

277

620

550

Emissions allowance expense

24

50

71

139

Loss (gain) on realized/unrealized derivatives

(64)

71

(137)

38

Loss (gain) on disposal and sale of business interests

(1)

4

(44)

4

Impairment expense

230

179

276

199

Loss on realized/unrealized foreign currency

78

71

78

71

Deferred income tax expense (benefit)

(41)

(108)

181

(119)

Other

(131)

2

(27)

91

Changes in operating assets and liabilities:

(Increase) decrease in accounts receivable

(7)

122

(239)

60

(Increase) decrease in inventory

(41)

85

31

276

(Increase) decrease in prepaid expenses and other current assets

94

7

133

71

(Increase) decrease in other assets

138

24

47

74

Increase (decrease) in accounts payable and other current liabilities

(75)

(12)

(160)

(305)

Increase (decrease) in income tax payables, net and other tax payables

(137)

(78)

(464)

(85)

Increase (decrease) in other liabilities

56

(113)

74

(47)

Net cash provided by operating activities

392

562

679

1,187

INVESTING ACTIVITIES:

Capital expenditures

(1,685)

(1,845)

(3,833)

(3,396)

Acquisitions of business interests, net of cash and restricted cash acquired

(16)

(290)

(73)

(290)

Proceeds from the sale of business interests, net of cash and restricted cash sold

—

—

11

98

Sale of short-term investments

393

350

534

706

Purchase of short-term investments

(460)

(202)

(604)

(620)

Contributions and loans to equity affiliates

(29)

(92)

(50)

(112)

Purchase of emissions allowances

(35)

(37)

(91)

(115)

Other investing

(6)

(10)

(118)

(21)

Net cash used in investing activities

(1,838)

(2,126)

(4,224)

(3,750)

FINANCING ACTIVITIES:

Borrowings under the revolving credit facilities

2,262

1,106

4,003

2,521

Repayments under the revolving credit facilities

(1,545)

(1,076)

(2,582)

(2,131)

Commercial paper borrowings (repayments), net

(29)

167

690

517

Issuance of recourse debt

950

900

950

1,400

Issuance of non-recourse debt

1,667

767

3,798

1,457

Repayments of non-recourse debt

(1,811)

(284)

(2,726)

(944)

Payments for financing fees

(44)

(49)

(75)

(67)

Purchases under supplier financing arrangements

222

289

708

818

Repayments of obligations under supplier financing arrangements

(539)

(275)

(1,055)

(862)

Distributions to noncontrolling interests

(105)

(100)

(128)

(147)

Contributions from noncontrolling interests

71

—

97

18

Sales to noncontrolling interests

198

189

323

189

Dividends paid on AES common stock

(122)

(111)

(238)

(222)

Payments for financed capital expenditures

(12)

(3)

(19)

(7)

Other financing

(10)

(7)

13

(11)

Net cash provided by financing activities

1,153

1,513

3,759

2,529

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(28)

(19)

(43)

(37)

Increase in cash, cash equivalents and restricted cash of held-for-sale businesses

(86)

3

(13)

(6)

Total increase (decrease) in cash, cash equivalents and restricted cash

(407)

(67)

158

(77)

Cash, cash equivalents and restricted cash, beginning

1,980

2,077

1,990

2,087

Cash, cash equivalents and restricted cash, ending

$                 1,573

$                 2,010

$          2,148

$          2,010

SUPPLEMENTAL DISCLOSURES:

Cash payments for interest, net of amounts capitalized

$                    411

$                    260

$             765

$             512

Cash payments for income taxes, net of refunds

141

147

209

200

SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

Conversion of Corporate Units to shares of common stock

$                    838

$                      —

$             838

$               —

Liabilities derecognized due to sale of Warrior Run receivables

273

$                      —

273

—

Noncash recognition of new operating and financing leases

56

$                      63

180

82

Noncash contributions from noncontrolling interests

25

$                      30

25

30

Initial recognition of contingent consideration for acquisitions

5

218

14

218

Three Months Ended June 30,

Six Months Ended June 30,

Reconciliation of Adjusted EBITDA (in millions)

2024

2023

2024

2023

Net income (loss)

$                 (39)

$                 (19)

$                 239

$                 170

Income tax expense (benefit)

(35)

(2)

(51)

70

Interest expense

389

310

746

640

Interest income

(88)

(131)

(193)

(254)

Depreciation and amortization

308

277

620

550

EBITDA

$                 535

$                 435

$              1,361

$              1,176

Less: Adjustment for noncontrolling interests and redeemable stock of subsidiaries ⁽¹⁾

(80)

(155)

(242)

(325)

Less: Income tax expense (benefit), interest expense (income) and depreciation
and amortization from equity affiliates

28

27

61

66

Interest income recognized under service concession arrangements

16

18

33

36

Unrealized derivatives, equity securities, and financial assets and liabilities losses (gains)

(53)

32

(138)

(7)

Unrealized foreign currency losses

12

32

3

64

Disposition/acquisition losses

62

16

19

13

Impairment losses

114

164

140

173

Loss on extinguishment of debt and troubled debt restructuring

18

—

50

1

Adjusted EBITDA

$                 652

$                 569

$              1,287

$              1,197

Tax attributes

191

38

419

51

Adjusted EBITDA with Tax Attributes ⁽²⁾

$                 843

$                 607

$              1,706

$              1,248

⁽¹⁾

The allocation of earnings and losses to tax equity investors from both consolidated entities and equity affiliates is removed from Adjusted EBITDA.

⁽²⁾

Adjusted EBITDA with Tax Attributes includes the impact of the share of the ITCs, PTCs, and depreciation deductions allocated to tax equity investors under the HLBV accounting method and recognized as Net loss attributable to noncontrolling interests and redeemable stock of subsidiaries on the Condensed Consolidated Statements of Operations. It also includes the tax benefit recorded from tax credits retained or transferred to third parties. The tax attributes are related to the Renewables and Utilities SBU.

Reconciliation of Numerator Used for Adjusted EPS

Three Months Ended June 30, 2024

(in millions, except per share data)

Income

Shares

$ per Share

GAAP DILUTED EARNINGS PER SHARE

Income available to The AES Corporation common stockholders

$                191

713

$               0.27

Add back: Adjustment to redemption value of redeemable stock of subsidiaries

(6)

—

(0.01)

NON-GAAP DILUTED EARNINGS PER SHARE

$                185

713

$               0.26

THE AES CORPORATION

NON-GAAP FINANCIAL MEASURES

 (Unaudited)

RECONCILIATION OF ADJUSTED EBITDA, ADJUSTED PTC AND ADJUSTED EPS

Reconciliation of Denominator Used For Adjusted EPS

Three Months Ended June 30, 2023

(in millions, except per share data)

Loss

Shares

$ per Share

GAAP DILUTED LOSS PER SHARE

Loss from continuing operations attributable to The AES Corporation common stockholders

$              (39)

669

$           (0.06)

EFFECT OF DILUTIVE SECURITIES

Stock options

—

1

—

Restricted stock units

—

2

—

Equity units

—

40

0.01

NON-GAAP DILUTED LOSS PER SHARE

$              (39)

712

$           (0.05)

Three Months Ended
June 30, 2024

Three Months Ended
June 30, 2023

Six Months Ended
June 30, 2024

Six Months Ended
June 30, 2023

Net of NCI ⁽¹⁾

Per Share
(Diluted)
Net of NCI ⁽¹⁾

Net of NCI ⁽¹⁾

Per Share
(Diluted)
Net of NCI ⁽¹⁾

Net of NCI ⁽¹⁾

Per Share
(Diluted)
Net of NCI ⁽¹⁾

Net of NCI ⁽¹⁾

Per Share
(Diluted)
Net of NCI ⁽¹⁾

(in millions, except per share amounts)

Income from continuing operations, net of tax, attributable to AES and Diluted EPS

$      185

$     0.26

$       (39)

$    (0.05)

$     617

$     0.87

$      112

$     0.16

Add: Income tax expense (benefit) from continuing operations attributable to AES

(67)

(16)

(86)

35

Pre-tax contribution

$      118

$       (55)

$     531

$      147

Adjustments

Unrealized derivatives, equity securities, and financial assets and liabilities losses (gains)

$       (53)

$    (0.07)

(2)

$        33

$     0.05

(3)

$    (138)

$    (0.19)

(4)

$         (6)

$    (0.01)

(5)

Unrealized foreign currency losses

12

0.01

33

0.04

(6)

3

—

64

0.09

(7)

Disposition/acquisition losses

62

0.08

(8)

16

0.02

19

0.03

(9)

13

0.02

Impairment losses

114

0.16

(10)

164

0.23

(11)

140

0.20

(12)

173

0.24

(11)

Loss on extinguishment of debt and troubled debt restructuring

20

0.03

(13)

—

—

54

0.07

(14)

4

0.01

Less: Net income tax benefit

(0.09)

(15)

(0.08)

(16)

(0.09)

(15)

(0.08)

(16)

Adjusted PTC and Adjusted EPS

$      273

$     0.38

$      191

$     0.21

$     609

$     0.89

$      395

$     0.43

⁽¹⁾

NCI is defined as Noncontrolling Interests.

⁽²⁾

Amount primarily relates to unrealized gains on foreign currency derivatives at Corporate of $34 million, or $0.05 per share, and unrealized gains on cross currency swaps in Brazil of $25 million, or $0.03 per share.

⁽³⁾

Amount primarily relates to recognition of unrealized losses due to the termination of a PPA of $72 million, or $0.10 per share, partially offset by unrealized derivative gains at the Energy Infrastructure SBU of $37 million, or $0.05 per share.

⁽⁴⁾

Amount primarily relates to net unrealized derivative gains at the Energy Infrastructure SBU of $59 million, or $0.08 per share, unrealized gains on foreign currency derivatives at Corporate of $37 million, or $0.05 per share, and unrealized gains on cross currency swaps in Brazil of $28 million, or $0.04 per share.

⁽⁵⁾

Amount primarily relates to unrealized derivative gains at the Energy Infrastructure SBU of $87 million, or $0.12 per share, partially offset by the recognition of unrealized losses due to the termination of a PPA of $72 million, or $0.10 per share.

⁽⁶⁾

Amount primarily relates to unrealized foreign currency losses mainly associated with the devaluation of long-term receivables denominated in Argentine pesos of $24 million, or $0.03 per share, and unrealized foreign currency losses at AES Andes due to the depreciating Colombian peso of $15 million, or $0.02 per share.

⁽⁷⁾

Amount primarily relates to unrealized foreign currency losses mainly associated with the devaluation of long-term receivables denominated in Argentine pesos of $49 million, or $0.07 per share, and unrealized foreign currency losses at AES Andes due to the depreciation Colombian peso of $31 million, or $0.04 per share.

⁽⁸⁾

Amount primarily relates to day-one losses at commencement of sales-type leases at AES Renewable Holdings of $63 million, or $0.09 per share.

⁽⁹⁾

Amount primarily relates to day-one losses at commencement of sales-type leases at AES Renewable Holdings of $63 million, or $0.09 per share, and the loss on partial sale of our ownership interest in Amman East and IPP4 in Jordan of $10 million, or $0.01 per share, partially offset by a gain on dilution of ownership in Uplight due to its acquisition of AutoGrid of $52 million, or $0.07 per share.

⁽¹⁰⁾

Amount primarily relates to impairment at Brazil of $103 million, or $0.14 per share.

⁽¹¹⁾

Amount primarily relates to asset impairments at the Norgener coal-fired plant in Chile of $136 million, or $0.19 per share, and the GAF Projects at AES Renewable Holdings of $18 million, or $0.03 per share for the three and six months ended June 30, 2023.

⁽¹²⁾

Amount primarily relates to impairment at Brazil of $103 million, or $0.14 per share, and impairment at Mong Duong of $22 million, or $0.03 per share.

⁽¹³⁾

Amount primarily relates to losses incurred at AES Andes due to early retirement of debt of $16 million, or $0.02 per share.

⁽¹⁴⁾

Amount primarily relates to losses incurred at AES Andes due to early retirement of debt $29 million, or $0.04 per share, and costs incurred due to troubled debt restructuring at Puerto Rico of $20 million, or $0.03 per share.

⁽¹⁵⁾

Amount primarily relates to income tax benefits associated with the tax over book investment basis differences related to the AES Brasil held-for-sale classification of $59 million, or $0.08 per share, for the three and six months ended June 30, 2024.

⁽¹⁶⁾

Amount primarily relates to income tax benefits associated with the asset impairment at the Norgener coal-fired plant in Chile of $33 million, or $0.05 per share, and income tax benefits associated with the recognition of unrealized losses due to the termination of a PPA of $18 million, or $0.02 per share, for the three and six months ended June 30, 2023.

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

June 30, 2024

March 31, 2024

December 31, 2023

September 30, 2023

Actual

Actual

Actual

Actual

Subsidiary distributions¹ to Parent & QHCs

$             1,531

$             1,438

$             1,408

$            1,625

Returns of capital distributions to Parent & QHCs

140

139

194

116

Total subsidiary distributions & returns of capital to Parent

$             1,671

$             1,577

$             1,602

$            1,741

Parent only data: quarterly

(in millions)

Quarter Ended

Total subsidiary distributions & returns of capital to Parent

June 30, 2024

March 31, 2024

December 31, 2023

September 30, 2023

Actual

Actual

Actual

Actual

Subsidiary distributions¹ to Parent & QHCs

$                298

$                386

$                536

$               311

Returns of capital distributions to Parent & QHCs

1

1

78

60

Total subsidiary distributions & returns of capital to Parent

$                299

$                387

$                614

$               371

(in millions)

Balance at

June 30, 2024

March 31, 2024

December 31, 2023

September 30, 2023

Parent Company Liquidity²

Actual

Actual

Actual

Actual

Cash at Parent & Cash at QHCs³

$                  53

$                  90

$                  33

$                 51

Availability under credit facilities

736

642

1,376

857

Ending liquidity

$                789

$                732

$             1,409

$               908

⁽¹⁾

Subsidiary distributions received by Qualified Holding Companies ("QHCs") excluded from Schedule 1. Subsidiary Distributions should not be construed as an alternative to Consolidated Net Cash Provided by Operating Activities, which is determined in accordance with US 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 Consolidated 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 available to the Parent Company, including cash at qualified holding companies (QHCs), plus available borrowings under our existing credit facility. 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' indebtedness.

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The cash held at QHCs represents cash sent to subsidiaries of the company domiciled outside of the US. Such subsidiaries have 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.