The AES Corporation (AES)

Corporate and Other

“Corporate and Other” includes the net operating results from our Generation and Utilities businesses in Africa, Utilities businesses in Europe and AES Wind Generation and other renewables projects and costs associated with our development group. These operations are immaterial for the purposes of separate segment disclosure.

The following provides additional details about our utilities businesses in Africa and Europe, Africa generation and AES Wind Generation, which are reported within “Corporate and Other” for financial reporting purposes.

Europe Utilities. Our distribution businesses in the Ukraine and Kazakhstan together serve approximately 1.8 million customers.

Corporate and Other

Corporate and other includes general and administrative expenses, executive management, finance, legal, human resources, information systems which are not allocable to our business segments and the effects of eliminating transactions, such as self-insurance charges, between the operating segments and corporate. In addition, this includes net operating results from our generation and utilities businesses in Africa, utilities businesses in Europe and AES Wind Generation and other renewables projects and costs associated with our development group which are immaterial for the purposes of separate segment disclosure. For the years ended December 31, 2008, 2007 and 2006, “Corporate and other” was 2%, 2% and 1% of total revenue, respectively.

Corporate and other increased $4 million, or 2%, to $245 million in 2008 from $241 million in 2007. The increase was primarily due to increased fixed costs of $55 million at our Utilities businesses in Europe and Africa, higher spending of $16 million on SAP implementation projects and $27 million on the expansion of AES Wind Generation and our renewables initiatives, offset partially by increased rates and volume at Sonel, our Utility business in Cameroon, of $36 million, increased tariff rates of $23 million at our businesses in the Ukraine and a reduction in professional fees related to material weakness remediation efforts.

Corporate and other increased $132 million, or 121%, to $241 million in 2007 from $109 million in 2006. The increase was primarily due to increased non-fuel operating and maintenance costs as well as higher fuel usage at Sonel, higher spending in professional fees of approximately $24 million primarily to complete the restatement of our financial statements and for continued material weakness remediation efforts, higher spending due to headcount increases primarily related to the strengthening of our finance organization of approximately $15 million and increased spending of $18 million for our SAP implementation projects.

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Corporate and Other

Corporate and other include general and administrative expenses related to corporate staff functions and/or initiatives, executive management, finance, legal, human resources, information systems, and certain development costs which are not allocable to our business segments. In addition, this category includes the net operating results from our generation and utilities businesses in Africa, utilities businesses in Europe and AES Wind and other renewables projects and costs associated with our development group which are immaterial for the purposes of separate segment disclosure and the effects of eliminating transactions such as self-insurance charges, between the operating segments and corporate. For the three months ended March 31, 2009 and 2008, Corporate and other was approximately 1% of total revenue.

Corporate and other decreased $5 million, or 9%, to $50 million for the three months ended March 31, 2009 compared to the three months ended March 31, 2008. The decrease was primarily due to an $8 million decrease in corporate expenses driven by remediation costs incurred in 2008 and a current year decrease in development efforts, travel and staffing, partially offset by an increase in SAP implementation costs. The decrease in corporate expenses was partially offset by favorable operating results from our generation and utilities businesses in Africa and our utilities businesses in Europe.

Corporate and Other

        Corporate and Other includes general and administrative expenses related to corporate staff functions and initiatives—primarily executive management, finance, legal, human resources, information systems and certain development costs which are not allocable to our business segments; interest income and interest expense; and intercompany charges such as management fees and self insurance premiums which are fully eliminated in consolidation.

        In addition, Corporate and Other also includes the net operating results of AES Wind Generation, AES Solar, climate solutions, and certain other initiatives, which are not material to our presentation of reporting segments. See Note 15—Segment and Geographic Information in the Consolidated Financial Statements in Item 8 of this Form 10-K for information on revenue from external customers, gross margin and total assets by segment.

        In March 2008, we formed a joint venture called AES Solar LLC with Riverstone, a private equity firm to develop, own and operate solar installations. The joint venture is an unconsolidated entity and accounted for under the equity method of accounting. Since its launch, AES Solar has commenced commercial operations of 24 MW of solar projects in Spain and has development potential in three other countries.

        We own and operate 1,060 MW of wind generation capacity and operate an additional 215 MW capacity through operating and management agreements. Our wind business is located primarily in North America where we operate wind generation facilities that have generation capacity of 1,174 MW. Buffalo Gap III, a 170 MW capacity wind farm commenced commercial operations in August 2008.

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Table of Contents

        Set forth below is a list of AES Wind Generation facilities:

Corporate and Other

        Corporate and Other includes general and administrative expenses related to corporate staff functions and initiatives—primarily executive management, finance, legal, human resources, information systems and certain development costs which are not allocable to our business segments; interest income and interest expense; and intercompany charges such as management fees and self insurance premiums which are fully eliminated in consolidation.

        In addition, Corporate and Other also includes the net operating results of our Alternative Energy business which is not material to our presentation of reporting segments. See Note 22—Segment and Geographic Information in the Consolidated Financial Statements in Item 8 of this Form 10-K for information on revenue from external customers, gross margin and total assets by segment.

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We own and operate 725 MW of wind generation capacity and operate an additional 298 MW capacity through operating and management agreements.



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Our Alternative Energy businesses are located primarily in North America where we operate wind generation facilities that have generation capacity of 722 MW. Another U.S. facility, Buffalo Gap III with 170 MW capacity is under construction and expected to commence commercial operations in 2008.



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We also have ownership interests in development-stage companies in Scotland, France and Bulgaria.

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        Set forth below is a list of our Alternative Energy facilities: