Slide 1: AES Corporation Second and Third Quarter 2005 Financial Review
AES Corporation Second and Third Quarter 2005 Financial Review January 19, 2006 The Global Power Company
Slide 2: Safe Harbor Disclosure
AS Safe Harbor Disclosure ‘The Global Power Company Certain statements in the following presentation regarding AES's business operations may constitute “forward looking statements.” Such forward-looking statements include, but are not limited to, those related to future earings, growth and financial
Slide 3: Nine Months Revenue Comparison
(S Millions except earnings per share and percent) Revenue Comparison Revenues ‘Gross Margin a5 % of Sales Income Before Income ‘Taxes and Minonty Interest (1BTEM)) Diluted EPS from Continuing Operations: Adjusted EPS @ Return on Invested Capital (ROIC)@ © Restated Nine Months Ended September 30, 20
Slide 4: Adjusted Earnings Per Share Reconciliation
{$ Per Share) Nine Months Ended Third Quarter Second Quarter First Quarter September 30, 2005” 204° 2005 2004” 20052004” 2005*"=2004° Adjusted Earnings Per Share $035 $0.14 $041 $020 $018 $0.18 $064 $0.49 FAS 133 Marleto-Market Gains/Losses)® 9.01 (0.01) (0.01) (001) -~ — (0.05) (0.01) (0.07) Curren
Slide 5: Guidance Update
Guidance Element Revenue Growth Gross Margin Change (As % of Revenues) Business Segment Income Before Taxes and Minority Interest (IBT&MI) (Excludes Corporate Costs of $650 Million) Allocated by Segment as a % of Total + Regulated Utilities + Contract Generation + Competitive Supply Adjusted EPS @ A
Slide 6: Cash Flow and Debt Guidance
Contains Forward Looking Statements Updated Guidance —_ Prior Guidance Guidance Element Net Cash From Operating Activities $1.9-20billion Maintenance Capital Expenditures $600 - 700 million Free Cash Flow © $1.2- 1.3 billion Subsidiary Distributions © $993 milion Parent Debt Repayment ® ‘$600 milion
Slide 7: 2005 Subsidiary Distributions Guidance
{SMillions) 2005 Subsidiary Distributions Guidance (Current/Prior) North Latin Europe, Middle America | America Asia East & Africa Total Regulated ‘Glin $123/120 fh $28/30 $359161 Contract e == Generation See 158/145 4651480 Competitive Sieniy 104nio1 47140 188 169/169 Total" ‘seaeiss7 | $2067210 $5
Slide 8: New Reporting Format vs Prior Reporting Format
New Reporting Format Prior Reporting Format Business Segments ‘Contract Generation Contract Generation Compettive Supply Compettive Supply Regulated Usiitios —— Large Utiities Growth Distribution Geographic Segments North America Asia North America Caribbean USPuerto Rico China USIPuerto Rico Colomb
Slide 9: Second Quarter Revenue Comparison
2008 200800 Revenues $2,668 $2,262 Gross Margin® 9526 $656 a8 % of Sales 197% 290% Income Before Income Taxes and Minonty Interest (ETeM)@O $186 $191 Diluted EPS from Continuing Operations 9013 $016 Adjusted EPS OME $011 $0.20 Return on Invested Capital ROI) 14% © Restated © Includes the roactofa $1
Slide 10: Second Quarter Cash Flow Summary
(S Millions) 10 Second Quarter 2005 2004 ‘Subsidiary-Only_ ‘Subsidiary Net Cash from Operating Activities $497 $404 Consolidated Net Cash from Operating Activities $329 $212 Free Cash Flow‘) $183 $100 Parent-On! ‘Subsidiary Distributions $170 $302 Return of Capital from Subsidiaries ) $50 - Recourse
Slide 11: Segment Results: Second Quarter
{SWMillions except as noted) Second Second " Quarter Quarter h 2005 2004’ Change Revenues $1,395 $1,146 22% Gross Margin $114 $278 (59%) as % of Sales 8.2% 24.3% (1610) bp. IBT&MI $87 $116 (25%) Revenue Comparison (QOQ) % Change Volume/Price/Mix 8% Currency (Net) 14% Total 22% Restated 2Q05 and 3Q05
Slide 12: Segment Results: Second Quarter
{SWMillions except as noted) 12 Second Second Quarter Quarter h 2005 © _2004'’ Change Revenues $988 $868 14% Gross Margin $353 $325 9% as%ofSales 35.7% 37.4% (170) b.p. IBT&MI $212 $199 7% Revenue Comparison (QOQ) % Change Volume/Price/Mix 12% Currency (Net) 2% Total 14% Restated 2Q05 and 3Q05 Finan
Slide 13: Segment Results: Second Quarter
{SWMillions except as noted) Second Quarter 2005 Revenues $285 Gross Margin $59 as% of Sales 20.7% IBT&MI $49 Revenue Comparison (Q0Q) Volume/Price/Mix Currency (Net) Total Restated, 13 Second Quarter % 2004"’ Change $248 15% $53 11% 21.4% (70)b.p. $39 26% % Change 14% 1% 15% 2Q05 and 3Q05 Financial
Slide 14: Third Quarter Revenue Comparison
44 (S Millions except earnings per share and percent) Third Third Quarter Quarter 2005. 200400 Change Revenues $2,782 $2,422 15% Gross Margin $899 $736 22% as % of Sales 323% 30.4% 190 bp. Income Before Income Taxes and Minority Interest (eTem) $484 $251 93% Diltted EPS from Continuing Operations @
Slide 15: Third Quarter Cash Flow Summary
(S Millions) 15 Third Quarter 2005 2004 ‘Subsidiary-Only_ ‘Subsidiary Net Cash from Operating Activities $728 $610 Consolidated Net Cash from Operating Activities $619 $504 Free Cash Flow‘) $380 $375 Parent-On! ‘Subsidiary Distributions $274 $22 Return of Capital from Subsidiaries ) s- $124 Recourse
Slide 16: Third Quarter Subsidiary Distributions
{SMillions) Third Quarter/Nine Months Ended September 30, 2005 Subsidiary Distributions North Latin Europe, Middle America | America Asia East & Africa | Total Regulated ‘Glin $2961 oh ea '$841208 Contract Generation | $68/178- et $613 $517121 s1asis24 Competitive Sieniy $5987 $129 $18 ‘65/109 Total
Slide 17: Segment Results: Third Quarter
{SWMillions except as noted) Third Third Quarter Quarter % 2005 2004 Change | Segment Highlights Revenues $1,408 $1,251 12% |. Revenues grew as a result of favorable Gross Margin $340 -—«-$301.~«=S« 13% | _ currency effects in Brazil more than offsetting unfavorable currency effects as%of Sales 24.2
Slide 18: Segment Results: Third Quarter
{SWMillions except as noted) Third Third Quarter Quarter % 2005 —-2004"” Change | Segment Highlights Revenues $1,046 $906 15% | + Revenues qrewas'a recur of Gross Margin $453 $371 22% increased contract pricing in Brazil and Chile, and favorable currency effects in as%ofSales 43.3% 40.9% 240b.p. Chi
Slide 19: Segment Results: Third Quarter
{SWMillions except as noted) Third Third Quarter Quarter % 2005 —-2004"’ Change Revenues $330 $265 25% Gross Margin $106 $64 66% as % of Sales 32.1% 24.2% 790b.p. IBT&MI $86 $44 95% Revenue Comparison (QOQ) % Change Volume/Price/Mix 23% Currency (Net) 2% Total 25% Restated 19 2Q05 and 3Q05 Financial
Slide 20: Appendix
Appendix 20 2Q05 and 3Q05 Financial Review www.aes.com
Slide 21: Restatement Summary Income Statement Effects 2002-2004
AS Restatement Summary Income The Gobal over Copany Statement Effects 2002-2004 {SMilions) Ter eros, ® Revenue was impacted by the deferral of revenue at Eletropauo and aa ae ee ee Sy ee ven ten oS a temo lke || eee tenes See eet ete es ae re re eee Soar Feito ple Deeper iad ® Depreciation expense w
Slide 22: Restatement Income from Continuing Operations Effects
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Slide 23: Adjusted Earnings Per Share Reconciliation
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Slide 24: Adjusted Earnings Per Share Reconciliation
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Slide 25: Restatement Asset Effects
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Slide 26: Liabilities and Stockholders' Equity Effects
(SMillions) Liabilities and Stockholders’ Equity Effects hoot Mach 31, Decerber 34, Decenber 31, aos 208 20 ea ibis art inary eet ‘pewouslyepared sss genanr gan Changes in bites andro rest "fomredatarert ds Deteed cane nes ‘tarot abaies ory terest ter changes abies, “Total changes bites and minority
Slide 27: Sarbanes-Oxley Section 404 Update
Sarbanes-Oxley Section 404 Update ‘The Global Power Company Stats of & |__atodatWeatness | Ramadiaton | Remediation Stops | Treome Tox Accounting | Underway [> Expanding ternatiac sta and oeral asesance and ronda tax aecounng vari é + impkenetng toro spteahta certs, dint anaaconct suber noe tc asset
Slide 28: Second Quarter Subsidiary Distributions
‘The Global Power Company ($ Millions) Second Quarter Subsidiary Distributions Second Quarter Subsidiary Distributions North Latin Europe, Mile america | america asia | EastS-Atriea | Total Regulated Utilities $52 + ¢ 1 $63 Contract Gereration: $52 $11 c= $40 $103 Compettive $6 $8 $3 $14 Supply me T
Slide 29: Sources and Uses of Liquidity
{SMillions) Second Nine Months Ended Quarter ‘September 30, Sources 2005 2008 Total Subsidiary Distributions © $195 $170 $274 3639 Proceeds From Asset Sales, Net - 1 1 2 Refinancing Proceeds, Net = ee = s Increased Revover Commitments - - 200 200 Issuance of Common Stock, Net 8 8 4 Fs) Total Returns
Slide 30: Parent Debt at 6/30/05
{SMillions) Parent Debt (Including Letters of Credit) at 12/31/04 Scheduled Debt Matunties a Mandatory Debt Repayments ~ Discretionary Debt Repayments: Prepayment of Debt (112) Other ® 130 Parent Debt (Including Letters of Credit) at 6/30/05 $5,268 Loss: Letters of Crecit Outstanding at 6/20/05 (235
Slide 31: Parent Debt at 9/30/05
{SMillions) Parent Debt (Including Letters of Credit) at 12/31/04 Scheduled Debt Matunties a Mandatory Debt Repayments ~ Discretionary Debt Repayments: Prepayment of Debt (254) Other ® 259 Parent Debt (Including Letters of Credit) at 9/30105 $5,256 Less: Letters of Crecit Outstanding at 9/30/05 (369
Slide 32: Cash Flow Statement
($ Millions) Net Cash from Operating Activites Maintenance Capital Expenditures Growth Capital Expenditures Investment n Subsidiaries Returns of Capital from Subsidiaries ‘Net Proceeds ftom Asset Sales Proceeds from the Sale of Emission Allowances ‘Sale of Short Term Investments, Net of Purchases. C
Slide 33: Cash Flow Statement
($ Millions) Net Cash from Operating Activites Maintenance Capital Expenditures Growth Capital Expenditures Investment n Subsidiaries Returns of Capital from Subsidiaries ‘Net Proceeds ftom Asset Sales Proceeds from the Sale of Emission Allowances ‘Sale of Short Term Investments, Net of Purchases. C
Slide 34: Cash Flow Statement
{$ Millions) Net Cash from Operating Activities Maintenance Capital Expenditures Growth Capital Expenditures Investment n Subsidiaries Returns of Capital from Subsidiaries ‘Net Proceeds ftom Asset Sales Proceeds from the Sale of Emission Allowances ‘Sale of Short Term Investments, Net of Purchases.
Slide 35: Second and Third Quarter 2005 Reconciliation
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Slide 36: Assumptions
AS Assumptions ‘The Global Power Company 36 Forecasted financial information is based on certain material assumptions. These assumptions include, but are not limited to continued normal levels of operating performance and electricity demand at our distribution companies and operational performance a
Slide 37: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures ‘The Global Power Company Adjusted earnings per share (a non-GAAP financial measure), exclude from diluted earnings per share from continuing operations the effects of () gains or losses from mark-to-market accounting adjustments related to derivatives, (i) certain f
Slide 38: Reconciliation of Net Cash from Operating Activities
Reconciliation of Net Cash from Operating Activities ($ Millions) AES Corp & ‘Subsidiaries GHGs“ Eliminations Consolidated ‘Second Quarter 2005 $497 $2 (170) $329 ‘SixMonths Ended June 30, 2005 $1,169 $43 (365) sear Third Quarter 2005 $728 $165 $1274) $019 Nine Months Ended September 20, 2005 $1897
Slide 39: Net Operating Profit After Tax and ROIC
Net Operating Prom Aer Tax ere Repotedtrest Expense come Tax Expense Net Operating rom Aer Ta ttcve TaxRatoo oIc Tata capaatss Mecrtyeerest Sociol Esty Det Service Reser nd ctr Ceposts 61S oe Teta copa somo _ $2069 erage Capital sense (Net cpratg ott ate tr, ance. GAAP fens ease, Gta as rcome beer a
Slide 40: Searchable text section of graphics shown above
Searchable text section of graphics shown above AE S Corporation Second and Third Quarter 2005 Financial Review January 19, 2006 [LOGO] [LO GO] Safe Harbor Disclosure Certain statements in the following presentation regarding AES’s business operations may constitute “forward looking statements.” Suc