AES Reports Third Quarter Financial Results; Completes 1.2 GW of Construction and Adds 2.2 GW of Renewables PPAs and Data Center Load Growth at US Utilities

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 September 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 September 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 September 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 September 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 September 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 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 September 30, 2024.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EBITDA guidance without unreasonable effort.

10

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 September 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 September 30,

Nine Months Ended September 30,

2024

2023

2024

2023

(in millions, except per share amounts)

Revenue:

Non-Regulated

$           2,352

$          2,571

$           6,654

$           7,051

Regulated

937

863

2,662

2,649

Total revenue

3,289

3,434

9,316

9,700

Cost of Sales:

Non-Regulated

(1,794)

(1,813)

(5,198)

(5,392)

Regulated

(773)

(703)

(2,224)

(2,298)

Total cost of sales

(2,567)

(2,516)

(7,422)

(7,690)

Operating margin

722

918

1,894

2,010

General and administrative expenses

(57)

(64)

(198)

(191)

Interest expense

(379)

(326)

(1,125)

(966)

Interest income

119

144

312

398

Loss on extinguishment of debt

(1)

—

(11)

(1)

Other expense

(31)

(12)

(153)

(38)

Other income

64

12

120

36

Gain (loss) on disposal and sale of business interests

(1)

—

43

(4)

Asset impairment expense

(79)

(158)

(355)

(352)

Foreign currency transaction gains (losses)

(28)

(100)

2

(209)

INCOME FROM CONTINUING OPERATIONS BEFORE TAXES AND EQUITY IN EARNINGS OF

AFFILIATES

329

414

529

683

Income tax expense

(103)

(109)

(52)

(179)

Net equity in losses of affiliates

(9)

(14)

(21)

(43)

INCOME FROM CONTINUING OPERATIONS

217

291

456

461

Loss from disposal of discontinued businesses

(7)

—

(7)

—

NET INCOME

210

291

449

461

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

292

(60)

670

(118)

NET INCOME ATTRIBUTABLE TO THE AES CORPORATION

$              502

$             231

$           1,119

$              343

AMOUNTS ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS:

Income from continuing operations, net of tax

$              509

$             231

$           1,126

$              343

Loss from discontinued operations, net of tax

(7)

—

(7)

—

NET INCOME ATTRIBUTABLE TO THE AES CORPORATION

$              502

$             231

$           1,119

$              343

BASIC EARNINGS PER SHARE:

Income from continuing operations attributable to The AES Corporation common stockholders, net of tax

$             0.72

$            0.34

$             1.60

$             0.51

Loss from discontinued operations attributable to The AES Corporation common stockholders, net of tax

(0.01)

—

(0.01)

—

NET INCOME ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS

$             0.71

$            0.34

$             1.59

$             0.51

DILUTED EARNINGS PER SHARE:

Income from continuing operations attributable to The AES Corporation common stockholders, net of tax

$             0.72

$            0.32

$             1.58

$             0.48

Loss from discontinued operations attributable to The AES Corporation common stockholders, net of tax

(0.01)

—

(0.01)

—

NET INCOME ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS

$             0.71

$            0.32

$             1.57

$             0.48

DILUTED SHARES OUTSTANDING

713

712

713

712

THE AES CORPORATION

Strategic Business Unit (SBU) Information

(Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions)

2024

2023

2024

2023

REVENUE

Renewables SBU

$                  726

$                  708

$               1,941

$               1,744

Utilities SBU

961

880

2,730

2,703

Energy Infrastructure SBU

1,623

1,861

4,706

5,239

New Energy Technologies SBU

1

—

1

75

Corporate and Other

33

29

106

96

Eliminations

(55)

(44)

(168)

(157)

Total Revenue

$               3,289

$               3,434

$               9,316

$               9,700

THE AES CORPORATION

Condensed Consolidated Balance Sheets (Unaudited)

September 30,
2024

December 31,
2023

(in millions, except share

and per share data)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$                 1,919

$                 1,426

Restricted cash

563

370

Short-term investments

62

395

Accounts receivable, net of allowance of $32 and $15, respectively

1,868

1,420

Inventory

646

712

Prepaid expenses

134

177

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

1,460

1,387

Current held-for-sale assets

3,874

762

Total current assets

10,526

6,649

NONCURRENT ASSETS

Property, plant and equipment, net of accumulated depreciation of $8,505 and $8,602, respectively

32,354

29,958

Investments in and advances to affiliates

1,162

941

Debt service reserves and other deposits

77

194

Goodwill

348

348

Other intangible assets, net of accumulated amortization of $426 and $498, respectively

1,928

2,243

Deferred income taxes

421

396

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

2,593

3,259

Noncurrent held-for-sale assets

670

811

Total other assets

7,199

8,192

TOTAL ASSETS

$               50,079

$               44,799

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Accounts payable

$                 1,965

$                 2,199

Accrued interest

328

315

Accrued non-income taxes

257

278

Supplier financing arrangements

698

974

Accrued and other liabilities

1,182

1,334

Recourse debt

1,709

200

Non-recourse debt, including $416 and $1,080, respectively, related to variable interest entities

3,237

3,932

Current held-for-sale liabilities

2,999

499

Total current liabilities

12,375

9,731

NONCURRENT LIABILITIES

Recourse debt

4,840

4,264

Non-recourse debt, including $1,947 and $1,715, respectively, related to variable interest entities

19,666

18,482

Deferred income taxes

1,696

1,245

Other noncurrent liabilities

2,501

3,114

Noncurrent held-for-sale liabilities

457

514

Total noncurrent liabilities

29,160

27,619

Commitments and Contingencies

Redeemable stock of subsidiaries

905

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; 859,709,987 issued and 711,027,043

outstanding at September 30, 2024 and 819,051,591 issued and 669,693,234 outstanding at December 31, 2023)

9

8

Additional paid-in capital

6,949

6,355

Accumulated deficit

(267)

(1,386)

Accumulated other comprehensive loss

(1,595)

(1,514)

Treasury stock, at cost (148,682,944 and 149,358,357 shares at September 30, 2024 and December 31, 2023,

 respectively)

(1,806)

(1,813)

Total AES Corporation stockholders' equity

3,290

2,488

NONCONTROLLING INTERESTS

4,349

3,497

Total equity

7,639

5,985

TOTAL LIABILITIES AND EQUITY

$               50,079

$               44,799

THE AES CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2024

2023

2024

2023

(in millions)

(in millions)

OPERATING ACTIVITIES:

Net income

$                    210

$                    291

$             449

$             461

Adjustments to net income:

 Depreciation and amortization

306

286

926

836

 Emissions allowance expense

73

72

144

211

 Loss (gain) on realized/unrealized derivatives

(57)

41

(194)

79

 Loss (gain) on disposal and sale of business interests

1

—

(43)

4

 Impairment expense

79

159

355

358

 Loss on realized/unrealized foreign currency

14

113

92

184

 Deferred income tax expense (benefit), net of tax credit transfers

242

17

423

(102)

 Other

108

27

81

118

Changes in operating assets and liabilities:

 (Increase) decrease in accounts receivable

(337)

(44)

(576)

16

 (Increase) decrease in inventory

27

(23)

58

253

 (Increase) decrease in prepaid expenses and other current assets

(13)

5

120

76

 (Increase) decrease in other assets

130

(78)

177

(4)

 Increase (decrease) in accounts payable and other current liabilities

194

118

34

(187)

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

(50)

18

(514)

(67)

 Increase (decrease) in other liabilities

58

120

132

73

Net cash provided by operating activities

985

1,122

1,664

2,309

INVESTING ACTIVITIES:

Capital expenditures

(1,832)

(1,899)

(5,665)

(5,295)

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

(6)

(21)

(79)

(311)

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

—

—

11

98

Sale of short-term investments

197

296

731

1,002

Purchase of short-term investments

(121)

(144)

(725)

(764)

Contributions and loans to equity affiliates

(21)

(35)

(71)

(147)

Purchase of emissions allowances

(66)

(46)

(157)

(161)

Other investing

(16)

(74)

(134)

(95)

Net cash used in investing activities

(1,865)

(1,923)

(6,089)

(5,673)

FINANCING ACTIVITIES:

Borrowings under the revolving credit facilities

1,649

1,418

5,652

3,939

Repayments under the revolving credit facilities

(1,469)

(599)

(4,051)

(2,730)

Commercial paper borrowings (repayments), net

(79)

87

611

604

Issuance of recourse debt

—

—

950

1,400

Issuance of non-recourse debt

1,401

327

5,199

1,784

Repayments of non-recourse debt

(585)

(318)

(3,311)

(1,262)

Payments for financing fees

(13)

(9)

(88)

(76)

Purchases under supplier financing arrangements

503

489

1,211

1,307

Repayments of obligations under supplier financing arrangements

(357)

(237)

(1,412)

(1,099)

Distributions to noncontrolling interests

(37)

(26)

(165)

(173)

Contributions from noncontrolling interests

40

45

137

63

Sales to noncontrolling interests

546

182

869

371

Dividends paid on AES common stock

(123)

(111)

(361)

(333)

Payments for financed capital expenditures

(10)

(1)

(29)

(8)

Other financing

(38)

(36)

(25)

(47)

Net cash provided by financing activities

1,428

1,211

5,187

3,740

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

(4)

(71)

(47)

(108)

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

(133)

(14)

(146)

(20)

Total increase in cash, cash equivalents and restricted cash

411

325

569

248

Cash, cash equivalents and restricted cash, beginning

2,148

2,010

1,990

2,087

Cash, cash equivalents and restricted cash, ending

$                 2,559

$                 2,335

$          2,559

$          2,335

SUPPLEMENTAL DISCLOSURES:

Cash payments for interest, net of amounts capitalized

$                    338

$                    223

$          1,103

$             735

Cash payments for income taxes, net of refunds

61

67

270

267

SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

Conversion of Corporate Units to shares of common stock

$                      —

$                      —

$             838

$               —

Liabilities derecognized due to sale of Warrior Run receivables

—

$                      —

273

—

Noncash recognition of new operating and financing leases

60

$                    105

240

187

Noncash contributions from noncontrolling interests

188

$                      30

213

60

Initial recognition of contingent consideration for acquisitions

—

(3)

14

215

Three Months Ended September 30,

Nine Months Ended September 30,

Reconciliation of Adjusted EBITDA (in millions)

2024

2023

2024

2023

Net income

$                 210

$                 291

$                 449

$                 461

Income tax expense (benefit)

103

109

52

179

Interest expense

379

326

1,125

966

Interest income

(119)

(144)

(312)

(398)

Depreciation and amortization

306

286

926

836

EBITDA

$                 879

$                 868

$              2,240

$              2,044

Less: Income from discontinued operations

7

—

7

—

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

(229)

(183)

(471)

(508)

Less: Income tax expense (benefit), interest expense (income) and depreciation and

amortization from equity affiliates

30

27

91

93

Interest income recognized under service concession arrangements

16

18

49

54

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

(47)

10

(185)

3

Unrealized foreign currency losses

7

97

10

161

Disposition/acquisition losses (gains)

(11)

8

8

21

Impairment losses

39

145

179

318

Loss on extinguishment of debt and troubled debt restructuring

1

—

51

1

Adjusted EBITDA

$                 692

$                 990

$              1,979

$              2,187

Tax attributes

476

18

895

69

Adjusted EBITDA with Tax Attributes ⁽²⁾

$              1,168

$              1,008

$              2,874

$              2,256

⁽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 (income) 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 SBUs.

Three Months Ended
September 30, 2024

Three Months Ended
September 30, 2023

Nine Months Ended
September 30, 2024

Nine Months Ended
September 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

$      509

$     0.72

$      231

$     0.32

$  1,126

$     1.58

$      343

$     0.48

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

82

101

(4)

136

Pre-tax contribution

$      591

$      332

$  1,122

$      479

Adjustments

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

$       (47)

$    (0.06)

⁽²⁾

$          9

$     0.01

$    (185)

$    (0.26)

⁽³⁾

$          3

$         —

⁽⁴⁾

Unrealized foreign currency losses

7

0.01

96

0.14

⁽⁵⁾

10

0.02

160

0.22

⁽⁶⁾

Disposition/acquisition losses (gains)

(11)

(0.02)

8

0.01

8

0.01

⁽⁷⁾

21

0.03

Impairment losses

39

0.05

⁽⁸⁾

145

0.21

⁽⁹⁾

179

0.25

⁽¹⁰⁾

318

0.45

⁽¹¹⁾

Loss on extinguishment of debt and troubled debt restructuring

3

—

3

—

57

0.08

⁽¹²⁾

7

0.01

Less: Net income tax expense (benefit)

0.01

(0.09)

⁽¹³⁾

(0.08)

⁽¹⁴⁾

(0.16)

⁽¹⁵⁾

Adjusted PTC and Adjusted EPS

$      582

$     0.71

$      593

$     0.60

$  1,191

$     1.60

$      988

$     1.03

⁽¹⁾

NCI is defined as Noncontrolling Interests.

⁽²⁾

Amount primarily relates to net unrealized derivative gains at the Energy Infrastructure SBU of $50 million, or $0.07 per share, and unrealized gains on commodity derivatives at AES Clean Energy of $17 million, or $0.02 per share, partially offset by unrealized losses on foreign currency derivatives at Corporate of $17 million, or $0.02 per share.

⁽³⁾

Amount primarily relates to net unrealized derivative gains at the Energy Infrastructure SBU of $109 million, or $0.15 per share, unrealized gains on commodity derivatives at AES Clean Energy of $33 million, or $0.05 per share, unrealized gains on cross currency swaps in Brazil of $28 million, or $0.04 per share, and unrealized gains on foreign currency derivatives at Corporate of $20 million, or $0.03 per share.

⁽⁴⁾

Amount primarily relates to recognition of unrealized derivative losses due to the termination of a PPA of $72 million, or $0.10 per share and unrealized derivative losses at AES Clean Energy of $20 million, or $0.03 per share, offset by unrealized derivative gains at the Energy Infrastructure SBU of $108 million, or $0.15 per share.

⁽⁵⁾

Amount primarily relates to unrealized foreign currency losses mainly associated with the devaluation of long-term receivables denominated in Argentine pesos of $60 million, or $0.08 per share, unrealized foreign currency losses at AES Andes of $21 million, or $0.03 per share, and unrealized foreign currency losses on debt in Brazil of $10 million, or $0.01 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 $109 million, or $0.15 per share, and unrealized foreign currency losses at AES Andes of $54 million, or $0.08 per share.

⁽⁷⁾

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.

⁽⁸⁾

Amount primarily relates to impairment at Brazil of $29 million, or $0.04 per share, and impairment at Mong Duong of $6 million, or $0.01 per share.

⁽⁹⁾

Amount primarily relates to asset impairments at TEG and TEP of $76 million and $58 million, respectively, or $0.19 per share.

⁽¹⁰⁾

Amount primarily relates to impairment at Brazil of $131 million, or $0.18 per share, and impairment at Mong Duong of $28 million, or $0.04 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, at TEG and TEP of $76 million and $58 million, respectively, or $0.19 per share, the GAF projects at AES Renewable Holdings of $18 million, or $0.03 per share, and at Jordan of $16 million, or $0.02 per share.

⁽¹²⁾

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.

⁽¹³⁾

Amount primarily relates to income tax benefits associated with the asset impairments at TEG and TEP of $34 million, or $0.05 per share and income tax benefits associated with unrealized foreign currency losses at AES Andes of $6 million, or $0.01 per share.

⁽¹⁴⁾

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.

⁽¹⁵⁾

Amount primarily relates to income tax benefits associated with the asset impairments at the Norgener coal-fired plant in Chile of $35 million, or $0.05 per share and at TEG and TEP of $34 million, or $0.05 per share, 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, and income tax benefits associated with unrealized foreign currency losses at AES Andes of $14 million, or $0.02 per share.

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

September
30, 2024

June 30, 2024

March 31,
2024

December 31,
2023

Actual

Actual

Actual

Actual

Subsidiary distributions¹ to Parent & QHCs

$             1,424

$             1,531

$             1,438

$            1,408

Returns of capital distributions to Parent & QHCs

80

140

139

194

Total subsidiary distributions & returns of capital to Parent

$             1,504

$             1,671

$             1,577

$            1,602

Parent only data: quarterly

(in millions)

Quarter Ended

Total subsidiary distributions & returns of capital to Parent

September
30, 2024

June 30, 2024

March 31,
2024

December 31,
2023

Actual

Actual

Actual

Actual

Subsidiary distributions¹ to Parent & QHCs

$                204

$                298

$                386

$               536

Returns of capital distributions to Parent & QHCs

—

1

1

78

Total subsidiary distributions & returns of capital to Parent

$                204

$                299

$                387

$               614

(in millions)

Balance at

September
30, 2024

June 30, 2024

March 31,
2024

December 31,
2023

Parent Company Liquidity²

Actual

Actual

Actual

Actual

Cash at Parent & Cash at QHCs³

$                    6

$                  53

$                  90

$                 33

Availability under credit facilities

335

736

642

1,376

Ending liquidity

$                341

$                789

$                732

$            1,409

⁽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.

⁽³⁾

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.