SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934 [Fee Waived]
For the Fiscal Year Ended December 31, 2001 Commission File Number 0-1928
Full Title of the Plan:
THE AES CORPORATION PROFIT SHARING AND
STOCK OWNERSHIP PLAN
Name of Issuer of the Securities Held Pursuant to the
Plan and the Address of its Principal Executive
Office:
THE AES CORPORATION
1001 North 19th Street
Arlington, VA 22209
Page 1 of [13] sequentially numbered pages.
The Exhibit Index is on Page [12].
THE AES CORPORATION PROFIT SHARING AND
STOCK OWNERSHIP PLAN
FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31,
2001 AND 2000, SUPPLEMENTAL SCHEDULE FOR THE
YEAR ENDED DECEMBER 31, 2001, AND
INDEPENDENT AUDITORS' REPORT
THE AES CORPORATION PROFIT SHARING AND
STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
--------------------------------------------------------------------------------
PAGE
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2001 AND 2000:
Statements of Net Assets Available for Participants' Benefits 2
Statements of Changes in Net Assets Available for Participants' Benefits 3
Notes to Financial Statements 4-9
SUPPLEMENTAL SCHEDULE FOR THE YEAR ENDED
DECEMBER 31, 2001:
Schedule of Assets Held for Investment Purposes 10
INDEPENDENT AUDITORS' REPORT
The AES Corporation Profit Sharing and
Stock Ownership Plan:
We have audited the accompanying statements of net assets available for
participants' benefits of The AES Corporation Profit Sharing and Stock Ownership
Plan (the Plan) as of December 31, 2001 and 2000, and the related statements of
changes in net assets available for participants' benefits for the years then
ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for participants' benefits of the Plan as of
December 31, 2001 and 2000, and the changes in net assets available for
participants' benefits for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
As discussed in Note 10, on June 7, 2002, the net assets available for
participants' benefits had decreased by approximately $100 million, compared to
December 31, 2001, primarily as a result of a decline in the share price of The
AES Corporation common stock.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
Table of Contents is presented for the purpose of additional analysis and is not
a required part of the basic financial statements, but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The schedule is the responsibility of the Plan's management. Such
supplemental schedule has been subjected to the auditing procedures applied in
our audit of the basic 2001 financial statements and, in our opinion, is fairly
stated in all material respects when considered in relation to the basic 2001
financial statements taken as a whole.
/s/ Deloitte & Touche LLP
McLean, Virginia
June 7, 2002
THE AES CORPORATION PROFIT SHARING AND
STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PARTICIPANTS' BENEFITS
DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------
ASSETS 2001 2000
Cash $ 609,213 $ 5,530,158
------------- ------------
Investments, at fair value (Notes 2 and 3):
Common stock - The AES Corporation 132,378,872 416,334,066
Self-direct option - common stock 5,139,215 4,480,245
Money market funds 20,613,325 30,000,191
Mutual funds 24,233,513 27,376,843
------------- ------------
Total investments, at fair value 182,364,925 478,191,345
------------- ------------
Participant loans (Note 6) 4,254,658 4,225,453
------------- ------------
Total cash and investments 187,228,796 487,946,956
------------- ------------
RECEIVABLES:
Employer contributions 2,188,832 4,307,782
Participant contributions 751,232 651,491
------------- ------------
Total receivables 2,940,064 4,959,273
------------- ------------
NET ASSETS AVAILABLE FOR PARTICIPANTS'
BENEFITS $190,168,860 $492,906,229
============= ============
See notes to financial statements.
2
THE AES CORPORATION PROFIT SHARING AND
STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PARTICIPANTS' BENEFITS
YEARS ENDED DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------
2001 2000
ADDITIONS TO NET ASSETS:
Investment income:
Net (depreciation) appreciation in fair value of
investments (Note 5) $ (306,210,493) $128,851,046
Interest and dividends
705,830 5,100,465
Contributions:
Employer 7,824,549 8,080,784
Participant 11,839,634 10,312,435
------------- ------------
Total additions (285,840,480) 152,344,730
DEDUCTIONS FROM NET ASSETS:
Withdrawals and distributions (16,896,889) (27,247,165)
------------- ------------
NET (DECREASE) INCREASE (302,737,369) 125,097,565
NET ASSETS AVAILABLE FOR PARTICIPANTS'
BENEFITS:
Beginning of year 492,906,229 367,808,664
------------- ------------
End of year $ 190,168,860 $492,906,229
============= ============
See notes to financial statements.
3
THE AES CORPORATION PROFIT SHARING AND
STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------
1. PLAN DESCRIPTION
The AES Corporation Profit Sharing and Stock Ownership Plan (the Plan) was
established on April 1, 1989, as the successor plan to the Applied Energy
Services, Inc. Employee Profit Sharing Plan, the Applied Energy Services, Inc.
Employee Stock Ownership Plan, the AES Deepwater Division Employee Profit
Sharing Plan, the AES Beaver Valley Division Employee Profit Sharing Plan, and
the BV Partners Employee Profit Sharing Plan.
The following description of the Plan provides only general information.
Participants should refer to the Summary Plan Description for a more complete
description of the Plan's provisions.
GENERAL - The Plan is a defined contribution plan that covers eligible regularly
scheduled full-time and part-time employees of The AES Corporation (the Company)
and its participating subsidiaries. Eligible employees may enroll in the Plan
upon commencement of employment. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA). As of December 31,
2001, the majority of the Plan's assets, approximately 70%, was common stock of
The AES Corporation.
CONTRIBUTIONS - Participants may make pre-tax contributions to the Plan up to an
annual maximum determined by the Internal Revenue Service. Participants may also
make after-tax contributions to the Plan. During 2001 and 2000, the Company
matched participant pre-tax and after-tax contributions up to 5.0% of
compensation, as defined by the Plan, on a dollar for dollar basis. Matching
contributions made by the Company are paid in common stock of The AES
Corporation.
In addition, unless otherwise provided under the Plan, the Company may make
profit sharing contributions to the Plan that are allocated to a participant's
account on the basis of the participant's compensation, as defined by the Plan.
Profit-sharing contributions are made in the Company's common stock. During 2001
and 2000, the Company contributed 1.5% and 5.5%, respectively, of compensation
as profit sharing allocations.
PARTICIPANT ACCOUNTS - Each participant's account is credited with the
participant's and the employer's contributions and an allocation of the Plan's
earnings or losses. Allocations are based on the balance of each investment type
in the participant's account. The benefit to which a participant is entitled is
the benefit that can be provided from the participant's account.
Participants can choose to invest their contributions in common stock of The AES
Corporation and various money market and mutual funds including Franklin
Small-Mid Cap Growth Fund, Van Kampen Growth & Income Fund, Massachusetts
Investment Growth Stock Fund, ING Pilgrim International Value, AIM Global
Financial Services, PIMCO Innovation Fund, ING Pilgrim Small Cap Opportunities,
Eaton Vance Worldwide Health Sciences, Mercury International Value Fund, PIMCO
Total Return Fund, State Street Aurora Fund, Van Kampen Emerging Growth Fund,
Alliance Quasar Fund, Calvert Income Fund, Eaton Vance Income Fund of Boston,
Calvert Social Investment Fund Equity, PIMCO Renaissance Fund, MFS Utilities
Fund and in the following Merrill Lynch funds: Equity Index Trust I, Retirement
Preservation Trust, Balanced Capital Fund, Basic Value Fund, US
4
Government Mortgage Fund, Fundamental Growth Fund, Global Smallcap Fund, Global
Allocation Fund, or in any combination thereof in increments of 10% at their
discretion. Participants can allocate their investment among the common stock of
The AES Corporation or any of the funds at their discretion. Such investment
options are selected by the administrative committee of the Plan.
Effective June 1, 2000, the Plan was amended to allow participants the
opportunity to direct all or a portion of their account balance through a
self-directed brokerage account which allows participants the option to purchase
certain investments outside those selected by the administrative committee of
the Plan.
VESTING - Participants are immediately vested in their pre-tax, after-tax and
matching contributions, including earnings thereon. Vesting in employer profit
sharing contributions is based on years of continuous service. A participant
vests 20% per year and is fully vested after five years of credited service.
WITHDRAWALS AND DISTRIBUTIONS - The value of participants' contributions plus
the value of all vested Company contributions are payable to participants upon
retirement, death, or upon termination of employment with the Company. At each
participant's election, the entire distribution may be made as a single lump sum
payable in common stock of The AES Corporation, cash, or a combination of both.
The participants also have the option of receiving the value of their Plan
account in substantially equal cash installments over a twenty-year period.
FORFEITURES - Participants who leave the Company who have not completed five
years of credited service forfeit the value of the Company's profit sharing
contributions in which they are not then vested. Forfeitures are applied to
reduce the Company's contributions in subsequent years.
ADMINISTRATION - The Plan is administered by an Administrative Committee
appointed by the Board of Directors of the Company. Merrill Lynch Trust Company
is the Plan Trustee. Administrative, legal, and all other expenses of the Plan
are paid by the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL - The Plan's financial statements are prepared on the accrual basis of
accounting. Participant benefits are recorded when paid.
VALUATION OF INVESTMENTS - All money market and other mutual funds are stated at
their quoted market prices at December 31, 2001 and 2000. All participant loans
are valued at cost, which approximates fair value.
The Company's stock is traded on the New York Stock Exchange (NYSE). The Plan's
investment in the Company's stock is stated at quoted market value. On April 17,
2000, the Board of Directors authorized a two-for-one stock split, effected in
the form of a stock dividend, payable to stockholders of record on May 1, 2000.
At December 31, 2001 and 2000, the quoted market value of the Company's common
stock was $16.35 and $55.38 per share, respectively.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
Investment securities, in general, are exposed to various risks, such as
interest rate, credit, and overall market volatility. Due to the level of risk
associated with certain investment securities, it is reasonably possible that
changes in the values of investment securities will occur in the near term and
that such changes could materially affect the amounts reported in the statements
of net assets available for plan benefits.
5
USE OF ESTIMATES - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires the Plan to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of additions and deductions during the reporting period.
Actual results could differ from those estimates.
3. INVESTMENTS
The participants' and the Company's contributions to the Plan and Plan earnings
are invested in various money market, mutual funds or Company stock at the
direction of the participants. The following tables present the fair values of
investments as of December 31, 2001 and 2000.
DECEMBER 31, DECEMBER 31,
2001 2000
-------------------- --------------------
Cash $ 609,213 $ 5,530,158
Investments at quoted market value:
The AES Corporation common stock 132,378,872* 416,334,066*
Self Direct Option common stock 5,139,215 4,480,245
Money market funds:
Merrill Lynch Retirement Preservation Fund 15,631,216* 24,367,278
Merrill Lynch Equity Index Trust I Fund 4,982,109 5,632,913
Mutual funds:
Merrill Lynch Fundamental Growth Fund 5,587,641 8,319,863
Merrill Lynch Basic Value Fund 5,620,431 6,719,297
Merrill Lynch Global Allocation Fund 3,079,444 3,299,953
Merrill Lynch US Government Mortgage Fund 2,296,785 2,480,554
Other 7,649,212 6,557,176
Participant loans 4,254,658 4,225,453
-------------- ------------
Total cash and investments $187,228,796 $487,946,956
============== ============
The above investments indicated with an "*" represent 5% or more of the Plan's
net assets as of December 31, 2001 and 2000, respectively.
4. THE AES CORPORATION COMMON STOCK
Contributions made by the Company are paid in common stock of The AES
Corporation and are therefore considered nonparticipant-directed investments in
accordance with Statement of Position 99-3 "Accounting for and Reporting of
Certain Defined Contribution Plan Investments and Other Disclosure Matters."
After a participant's account is credited with the Company's contribution, each
participant can choose to direct his or her allocation in any investment option
offered under the Plan. Information about the net assets and the significant
components of the changes in net assets relating to The AES
6
Corporation common stock is as follows as of December 31, 2001 and 2000, and for
the years then ended:
2001 2000
Net assets:
Common Stock - The AES Corporation,
8,096,569 and 7,518,448 shares in 2001
and 2000, respectively $ 132,378,872 $ 416,334,066
Employer Contribution Receivable 2,188,832 4,307,782
--------------- ---------------
Net assets available for participants' benefits $ 134,567,704 $ 420,641,848
=============== ===============
Changes in net assets:
Net (depreciation) appreciation $ (301,662,422) $ 133,756,927
Interest 147,245 107,556
Employer contributions 7,824,549 8,080,423
Participant contributions 5,051,518 4,922,966
Benefits paid to participants (4,557,382) (4,645,026)
Transfers from (to) participant-directed investments 7,122,348 (20,441,301)
--------------- ---------------
Net change (286,074,144) 121,781,545
Common Stock - The AES Corporation, beginning of year(1) 420,641,848 298,860,303
--------------- ---------------
Common Stock - The AES Corporation, end of year(1) $ 134,567,704 $ 420,641,848
=============== ===============
(1) Includes the value of the AES Common Stock distributed to the Plan
subsequent to year- end to satisfy the employer contribution.
5. NET (DEPRECIATION) APPRECIATION IN FAIR VALUE OF INVESTMENTS
During the years ended December 31, 2001 and 2000, the Plan's investments
(including investments bought, sold, as well as held during the period)
(depreciated) appreciated in value by $(306,210,493) and $128,851,046,
respectively, as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2001 DECEMBER 31, 2000
----------------- -----------------
The AES Corporation common stock $(301,662,422) $133,756,927
Self Direct Option common stock (9,306) (293,764)
Money market funds (707,038) (564,385)
Mutual funds (3,831,727) (4,047,732)
--------------- ------------
Net (depreciation) appreciation in fair value $(306,210,493) $128,851,046
=============== ============
7
6. PARTICIPANT LOANS
Participants may obtain up to three loans from the Plan in aggregate amounts up
to the lesser of (a) $50,000 or (b) 50% of the participant's vested account
balance. Loans are repayable over periods up to five years (ten years for loans
to purchase a principal residence). The loans are collateralized by the balance
in the participant's account and bear a fixed interest rate, based on the
federal prime lending rate plus 1/2%, determined at the commencement of the
loan. Interest on all loans is allocated to the participant's account from which
the loan was funded. Principal and interest are paid ratably through monthly
payroll deductions. Interest rates on outstanding loans as of December 31, 2001
ranged from 6.5% to 12% with maturities from 2002 to 2012.
Former employees are prohibited from obtaining loans except to the extent
required by law.
7. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right to
terminate the Plan subject to the provisions of ERISA. In the event of a
termination, the assets of the Plan will first be used to pay the liabilities
(if any) of the Plan. The remaining assets will then be distributed to the
participants in proportion to their respective interest in the Funds.
8. INCOME TAXES
The Plan obtained its most recent determination letter on January 31, 1996,
pursuant to which the Internal Revenue Service (the IRS) determined that the
terms of the Plan, as submitted, were in compliance with the applicable
requirements of the Internal Revenue Code of 1986, as amended (the Code). The
Plan has subsequently been amended since receiving this determination letter. In
connection with these amendments, the Plan filed a request for determination
letter from the IRS on February 27, 2002, to ensure that the Plan, as amended,
continues to comply with all the applicable requirements of the Code. The
Company also believes that the Plan is being operated in compliance with all
applicable requirements of the Code. Therefore, no provision for income taxes
has been included in the Plan's financial statements.
9. PLAN AMENDMENTS
In accordance with the terms of the Plan, the Company is authorized to amend the
Plan. Since the adoption of the Plan, the Company has periodically amended the
Plan to comply with the requirements of the Internal Revenue Code of 1986, as
amended, as well as to implement design changes. No significant amendments were
made during the year ended December 31, 2000.
In the current year AES, in order to more efficiently provide retirement
benefits to AES employees, elected to merge The AES Corporation Employee
Stock Ownership Plan (ESOP) into the Plan. The ESOP had originally been
implemented to overcome tax deduction limitations that threatened to reduce
the level of retirement benefits. The Economic Growth and Tax Relief
Reconciliation Act of 2001 significantly expanded the amount of
tax-deductible contributions that the Corporation can contribute to its
retirement plans, thereby eliminating the primary reason for maintaining the
ESOP. As a result, the assets of the ESOP (approximately $10,347,169) as of
December 31, 2001, are expected to be transferred into the Plan during the
year ending December 31, 2002. In December 2001, a freeze was placed on the
ESOP to facilitate the merger of the plans.
8
10. SUBSEQUENT EVENTS
On June 7, 2002, the net assets available for participants' benefits had
decreased by approximately $100 million compared to December 31, 2001, primarily
as a result of a decline in the price of The AES Corporation common stock from
$16.35 per share as of December 31, 2001 to $3.90 per share as of June 7, 2002.
* * * * * *
9
THE AES CORPORATION PROFIT SHARING AND STOCK OWNERSHIP PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001
--------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
DESCRIPTION OF INVESTMENT
IDENTITY OF ISSUER, INCLUDING MATURITY DATE, RATE
BORROWER, LESSOR, OR OF INTEREST, COLLATERAL, PAR, CURRENT
SIMILAR PARTY OR MATURITY VALUE COST VALUE
Cash $ 609,213 $ 609,213
* THE AES CORPORATION Common stock per share, 8,096,567 shares 84,093,851 132,378,872
* MERRILL LYNCH Retirement Preservation Trust Fund, 15,631,216 shares 15,131,245 15,631,216
* MERRILL LYNCH Fundamental Growth Fund per share, 308,539 shares 8,089,896 5,587,641
* MERRILL LYNCH Global Allocation Fund per share, 239,645 shares 3,295,218 3,079,444
* MERRILL LYNCH US Govt Mortgage Fund per share, 231,530 shares 2,241,556 2,296,785
* MERRILL LYNCH Balanced Capital Fund per share, 80,443 shares 2,544,117 2,150,248
* MERRILL LYNCH Basic Value Fund per share, 191,955 shares 6,376,980 5,620,431
* MERRILL LYNCH Equity Index Trust Fund per share, 61,813 shares 5,499,903 4,982,109
* MERRILL LYNCH Global Small Cap Fund Class A, per share, 2,772 shares 45,371 47,299
Franklin Small Mid Cap Growth Fund, 2,083 shares 60,738 64,935
Van Kampen Growth and Income Fund, 13,072 shares 220,783 222,349
Massachusetts Investment Growth stock Fund, 5,180 shares 67,472 66,764
ING Pilgrim International Value Fund, 2,898 shares 40,091 37,268
AIM Global Financial Services Fund, 3,282 shares 74,121 74,737
Pimco Innovation Fund, 5,211 shares 126,905 117,830
ING Pilgrim Small Cap Opportunity Fund, 132 shares 4,053 4,017
Evergreen Worldwide Health Sciences, 28,575 shares 285,214 295,179
Mercury HW International Value Fund, 31,337 shares 755,492 610,128
Pimco Total Return Fund, 148,729 shares 1,534,960 1,555,705
State Street Aurora Fund, 16,305 shares 490,740 527,479
Van Kampen Emerging Growth Fund, 3,397 shares 154,123 143,758
Alliance Quasar Fund, 45,639 shares 1,185,886 947,700
Calvert Income Fund, 17,957 311,782 299,701
Eaton Vance Income of Boston Fund, 3,611 shares 21,976 21,957
Calvert Social Investment Equity Fund, 624 shares 19,240 19,367
Pimco Renaissance, 19,090 shares 371,699 392,866
MFS Utilities Fund, 5,725 shares 54,768 49,925
Self Direct Options 5,139,215
* Participant loans
(Interest 6.5 % - 12%, maturing from 2002 to 2012) 4,254,658 4,254,658
------------ -------------
TOTAL $137,962,051 $ 187,228,796
============ =============
(*) Transactions in these investments are considered to be
party-in-interest transactions under Department of Labor
regulations.
10
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this annual report to be signed on its behalf by
the undersigned thereunto duly authorized.
THE AES CORPORATION
BY: /s/
--------------------
Barry J. Sharp
Executive Vice President,
Chief Operating Officer, and
Chief Financial Officer
Date: June 28, 2002
11
EXHIBIT INDEX
EXHIBIT 23.1 PAGE
Independent Auditors' Consent 13
12