DELAWARE

001-12291

54-1163725

(State of Incorporation)

(Commission File No.)

(IRS Employer Identification No.)

Quarter Ended
December 31,

Year Ended
December 31,

($ in millions, except per share amounts)

2004

2003

2004

2003

Revenues

$

2,528

$

2,281

$

9,471

$

8,415

Cost of sales

(1,819

)

(1,637

)

(6,703

)

(5,982

)

GROSS MARGIN

709

644

2,768

2,433

General and administrative expenses

(51

)

(60

)

(181

)

(157

)

Other operating expense, net

(25

)

(17

)

(30

)

(46

)

Goodwill impairment expense

—

(11

)

—

(11

)

Asset impairment expense

(40

)

(42

)

(40

)

(148

)

OPERATING INCOME

593

514

2,517

2,071

Interest expense

(486

)

(468

)

(1,909

)

(1,986

)

Interest income

91

73

282

280

Other nonoperating income (expense), net

61

(5

)

41

107

Foreign currency transaction (losses) gain

(39

)

(27

)

(118

)

127

Loss on sale of investments

—

(53

)

(1

)

(53

)

Equity in earnings of affiliates

15

37

72

94

INCOME BEFORE INCOME TAXES AND MINORITY INTEREST

235

71

884

640

Income tax expense

(55

)

(34

)

(256

)

(194

)

Minority interest expense, net

(78

)

(33

)

(252

)

(110

)

INCOME FROM CONTINUING OPERATIONS

102

4

376

336

Income (loss) from operations of discontinued components (net of income tax benefit of $18, $72, $26, and $72, respectively)

67

(490

)

19

(780

)

INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE

169

(486

)

395

(444

)

Cumulative effect of accounting change (net of income tax expense of $23 and $22, respectively)

—

43

—

41

NET INCOME (LOSS)

$

169

$

(443

)

$

395

$

(403

)

DILUTED EARNINGS (LOSS) PER SHARE

Income from continuing operations

$

0.16

$

0.01

$

0.58

$

0.56

Discontinued operations

0.10

(0.79

)

0.03

(1.30

)

Cumulative effect of accounting change

—

0.07

—

0.07

Total

$

0.26

$

(0.71

)

$

0.61

$

(0.67

)

Diluted weighted average shares outstanding (in millions)

654

628

646

598

Quarter Ended
December 31,

Year Ended
December 31,

($ in millions)

2004

2003

2004

2003

BUSINESS SEGMENTS

REVENUES

Contract Generation

$

905

$

840

$

3,547

$

3,108

Competitive Supply

264

225

1,020

880

Large Utilities

1,009

913

3,599

3,301

Growth Distribution

350

303

1,305

1,126

Total revenues

$

2,528

$

2,281

$

9,471

$

8,415

GROSS MARGIN

Contract Generation

$

378

$

364

$

1,435

$

1,267

Competitive Supply

55

47

236

220

Large Utilities

248

191

883

763

Growth Distribution

28

42

214

183

Total gross margin

$

709

$

644

$

2,768

$

2,433

INCOME BEFORE INCOME TAXES AND MINORITY INTEREST

Contract Generation

$

173

$

185

$

782

$

599

Competitive Supply

10

(8

)

150

140

Large Utilities

145

89

474

380

Growth Distribution

87

8

173

115

Corporate

(180

)

(203

)

(695

)

(594

)

Total income before income taxes and minority interest

$

235

$

71

$

884

$

640

GEOGRAPHIC SEGMENTS

REVENUES

North America

$

549

$

525

$

2,215

$

2,159

Caribbean

438

421

1,636

1,528

South America

1,075

930

3,885

3,308

Europe/Africa

280

252

1,028

915

Asia

186

153

707

505

Total revenues

$

2,528

$

2,281

$

9,471

$

8,415

INCOME BEFORE INCOME TAXES AND MINORITY INTEREST

North America

$

101

$

121

$

488

$

474

Caribbean

52

57

202

216

South America

205

53

508

329

Europe/Africa

40

24

183

55

Asia

17

19

198

160

Corporate

(180

)

(203

)

(695

)

(594

)

Total income before income taxes and minority interest

$

235

$

71

$

884

$

640

December 31,

($ in millions, except per share amounts)

2004

2003

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

1,408

$

1,737

Restricted cash

395

288

Short term investments

141

189

Accounts receivable, net of reserves of $303 and $291, respectively

1,394

1,211

Inventory

418

376

Receivable from affiliates

8

3

Deferred income taxes - current

158

137

Prepaid expenses

93

64

Other current assets

895

677

Current assets of held for sale and discontinued businesses

—

205

Total current assets

4,910

4,887

PROPERTY, PLANT AND EQUIPMENT

Land

788

733

Electric generation and distribution assets

22,434

20,918

Accumulated depreciation and amortization

(5,353

)

(4,527

)

Construction in progress

919

1,278

Property, plant and equipment, net

18,788

18,402

OTHER ASSETS

Deferred financing costs, net

513

430

Investment in and advances to affiliates

657

648

Debt service reserves and other deposits

737

617

Goodwill, net

1,378

1,378

Deferred income taxes - noncurrent

809

785

Long-term assets of held for sale and discontinued businesses

—

750

Other assets

1,848

1,976

Total other assets

5,942

6,584

TOTAL ASSETS

$

29,640

$

29,873

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

Accounts payable

$

1,136

$

1,225

Accrued interest

335

561

Accrued and other liabilities

1,477

1,156

Current liabilities of held for sale and discontinued businesses

3

699

Recourse debt-current portion

142

77

Non-recourse debt-current portion

1,618

2,769

Total current liabilities

4,711

6,487

LONG-TERM LIABILITIES

Non-recourse debt

11,813

10,930

Recourse debt

5,010

5,862

Deferred income taxes

865

1,041

Long-term liabilities of held for sale and discontinued businesses

—

94

Pension liabilities

902

947

Other long-term liabilities

3,225

3,062

Total long-term liabilities

21,815

21,936

Minority Interest, including discontinued businesses of $- and $12, respectively

1,377

845

STOCKHOLDERS’ EQUITY

Common stock

7

6

Additional paid-in capital

5,516

5,737

Accumulated deficit

(708

)

(1,103

)

Accumulated other comprehensive loss

(3,078

)

(4,035

)

Total stockholders’ equity

1,737

605

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

29,640

$

29,873

Year Ended
December 31,

($ in millions)

2004

2003

OPERATING ACTIVITIES

Net income (loss)

$

395

$

(403

)

Adjustments:

Depreciation and amortization — continuing and discontinued operations

834

781

Other non-cash charges

460

755

(Increase) decrease in working capital

(121

)

443

Net cash provided by operating activities

1,568

1,576

INVESTING ACTIVITIES

Property additions and project development costs

(898

)

(1,228

)

Net proceeds from the sale of assets

63

1,086

Sale of short-term investments, net of purchases

55

13

Affiliate advances and equity investments

5

—

(Increase) in restricted cash

(32

)

(214

)

(Increase) in debt service reserves and other assets

(151

)

(26

)

Other investing

(28

)

(14

)

Net cash used in investing activities

(986

)

(383

)

FINANCING ACTIVITIES

(Repayments) under the revolving credit facilities, net

—

(228

)

Issuance of non-recourse debt and other coupon bearing securities

2,940

4,614

Repayments of non-recourse debt and other coupon bearing securities

(3,674

)

(4,916

)

Payments for deferred financing costs

(109

)

(146

)

Distributions to minority interests, net

(111

)

(12

)

Proceeds from sale of common stock

16

337

Other financing

2

(2

)

Net cash used in financing activities

(936

)

(353

)

Effect of exchange rate changes on cash

21

39

Total (decrease) increase in cash and cash equivalents

(333

)

879

Decrease in cash and cash equivalents of discontinued operations and businesses held for sale

4

66

Cash and cash equivalents, beginning

1,737

792

Cash and cash equivalents, ending

$

1,408

$

1,737

THE AES CORPORATION

Date: February 3, 2005

By:

/s/ Vincent W. Mathis

Name:

Vincent W. Mathis

Title:

Assistant General Counsel

No.

Description

99.1

Press Release dated February 3, 2005