AES Meets Full Year 2008 Guidance For Consolidated Operating Cash Flow of $2.2 Billion And Free Cash Flow Of $1.4 Billion

The AES Corporation (NYSE: AES) today reported solid results for 2008 with a 19 percent increase in revenue and nine percent growth in gross margin. This strong performance resulted from improved operations in Latin America and Europe, reductions in operating costs across its global portfolio of generation and distribution businesses, as well as lower overhead costs.

"We achieved our full year cash flow expectations in a challenging environment,” said Paul Hanrahan, President and Chief Executive Officer. "In response to market conditions, we also took immediate steps to preserve liquidity by limiting our spending on new business development to a few select projects that could be financed in today’s markets. At the same time we improved the operations of our global business by focusing on increasing our revenues and cutting costs. We will continue to benefit from these actions throughout 2009.”

"We have been pleased with the results of this approach. In the fourth quarter, our parent company liquidity grew by $245 million to $1.4 billion. We also raised $1.4 billion of long-term non-recourse debt financing for 700 MW of thermal, wind and solar projects. These financings demonstrate the quality of our development projects.”

Results for the quarter and year-to-date ended December 31, 2008 include the following:

"We are benefiting from our decisions to act early in the credit crisis by refinancing $2 billion of recourse debt since the fourth quarter of 2007 and by improving covenant terms in our recourse debt agreements,” said Victoria D. Harker, Executive Vice President and Chief Financial Officer. "As a result, our parent company liquidity is nine times our 2009 recourse debt maturities, and we have improved our financial flexibility going forward.”

"To help provide additional transparency, we are expanding our disclosure to include proportional metrics. As such, our 2009 guidance reflects proportional gross margin in the range of $2.05 billion to $2.15 billion, and proportional free cash flow in the range of $650 million to $850 million.”

Full Year 2008 Financial Highlights (comparison of 2008 vs. 2007):

• Consolidated Revenues up 19% to $16.1 billion, primarily due to higher prices at our generation businesses across all regions and increased volume in Latin America, as well as favorable currency translation and recovery of pass-through expenses
• Consolidated Gross Margin up 9% to $3.7 billion, primarily due to improved performance at our generation businesses in Latin America and Europe, as well as favorable foreign currency translation
• Diluted Earnings Per Share from Continuing Operations up 150% to $1.80, including a $1.31 gain from sale of northern Kazakhstan businesses in May 2008; the 2008 result also includes $0.22 of foreign currency transaction losses, $0.03 of which is excluded from Adjusted Earnings Per Share (a non-GAAP financial measure, see Appendix for reconciliation)
• Net Income increased to $1.2 billion, or $1.82 per diluted share, from a Net Loss of $95 million or ($0.14) per share in 2007; the 2007 result reflects a loss on the sale of a Venezuelan subsidiary, C.A. La Electricidad de Caracas (EDC), which resulted in a non-cash, after-tax charge of $680 million (or $1.00 per diluted share)
• Adjusted Earnings Per Share (a non-GAAP financial measure, see Appendix for reconciliation) of $0.99, including, as noted above, $0.19 ($0.14 non-cash) of foreign currency transaction losses primarily in Chile and the Philippines
• Consolidated Operating Cash Flow of $2.2 billion, as compared to $2.4 billion in 2007. Period over period results were flat after excluding $151 million contribution from EDC, a business sold in May 2007
• Consolidated Free Cash Flow (a non-GAAP financial measure, see Appendix for reconciliation) of $1.4 billion, as compared to $1.5 billion in 2007. Period over period results remained flat after excluding $107 million contribution from EDC, a business sold in May 2007

Fourth Quarter 2008 Financial Highlights (comparisons of Q4 2008 vs. Q4 2007):

• Consolidated Revenues decreased $112 million or 3% to $3.5 billion, primarily due to approximately $473 million of unfavorable foreign currency translation largely offset by improved operations across all regions
• Consolidated Gross Margin decreased $135 million or 17% to $674 million, impacted by $91 million of foreign currency translation losses and $81 million of mark-to-market FAS 133 derivative losses and non-cash lease accounting adjustments at our businesses in Asia
• Net Loss from Continuing Operations of $65 million or $0.10 per share as compared to Net Income from Continuing Operations of $3 million or $0.00 per diluted share in fourth quarter 2007, including $0.13 of non-cash market-to-market FAS 133 derivative losses and $0.11 of foreign currency transaction losses, of which $0.03 is excluded from Adjusted Earnings Per Share (a non-GAAP financial measure)
• Net Loss of $47 million or $0.07 per share, including $18 million of income primarily associated with Jiaozuo, a discontinued business sold in December 2008, as compared to Net Income of $8 million or $0.01 per diluted share in fourth quarter 2007
• Adjusted Earnings Per Share (a non-GAAP financial measure, see Appendix for reconciliation) of $0.18, including, as noted above, $0.08 ($0.03 non-cash) of foreign currency transaction losses primarily associated with our business in Chile
• Consolidated Operating Cash Flow up 20% to $579 million, primarily driven by improved working capital management
• Consolidated Free Cash Flow (non-GAAP financial measure, see Appendix for reconciliation) up 11% to $314 million, reflecting the increase in Operating Cash Flow

Key 2008 Highlights:

• Sold northern Kazakhstan businesses for total consideration of up to approximately $1.48 billion, resulting in a total gain of $905 million
• Acquired businesses with total electric generation capacity of 727 MW, including a coal-fired plant in the Philippines and a wind project in the US
• Formed AES Solar Energy, a joint venture with Riverstone Holdings LLC, to help fund up to $1 billion of equity in solar energy projects over time
• Expanded portfolio of renewable energy facilities in operation by completing construction of more than 265 MW of new wind and solar projects
• Raised $625 million of senior unsecured notes and paid down $985 million of corporate debt, reducing total recourse debt by $360 million and extending average maturity by more than a year
• Amended certain restrictive covenants in senior secured credit agreement and second lien bond indentures to increase financial flexibility
• Completed remediation of final two material weaknesses
• Raised more than $2 billion of long-term non-recourse debt on reasonable terms to fund acquisition and construction of more than 1,300 MW
• Started construction on nine projects totaling 1,339 MW, including 788 MW of coal-fired plants, 361 MW of wind generation, 166 MW of oil, and 24 MW of solar photovoltaic projects

2009 Financial Guidance:

For 2009, the Company updated the following guidance:

• Consolidated Operating Cash Flow at a range of $2.1 billion to $2.3 billion
• Consolidated Free Cash Flow (a non-GAAP financial measure, see Appendix for reconciliation) at a range of $1.4 billion to $1.6 billion
• Subsidiary Distributions (see Appendix for definition) of $1.1 billion to $1.3 billion reaffirmed
• Diluted Earnings Per Share from Continuing Operations of $0.87 to $0.97
• Adjusted Earnings Per Share (a non-GAAP financial measure, see Appendix for reconciliation), in the range of $0.97 to $1.07 (previously $1.15 to $1.20), primarily reflecting changes in assumptions about foreign currency exchange rates and commodity prices

The updated 2009 Guidance is based on expectations for future foreign exchange rates and commodity prices as of December 31, 2008. Since the beginning of the year through February 24, 2009, the Company estimates that movements in foreign exchange rates and commodity prices have had an unfavorable impact of roughly $0.07 on Earnings Per Share guidance.

See appendix for more details.

Non-GAAP Financial Measures

See Non-GAAP Financial Measures for definitions of Adjusted Earnings Per Share, Proportional Gross Margin, Proportional Operating Cash Flow, Free Cash Flow, Proportional Free Cash Flow and Parent Company Liquidity, as well as reconciliations to the most comparable GAAP financial measure.

Attachments

Consolidated Statements of Operations, Segment Information, Consolidated Balance Sheets, Consolidated Statements of Cash Flows, Non-GAAP Financial Measures, Parent Financial Information, 2009 Financial Guidance.

Conference Call Information

AES will host a conference call on Friday, February 27, 2009 at 10:00 a.m. Eastern Standard Time (EST). Interested parties may listen to the teleconference by dialing 1-866-229-5768 at least ten minutes before the start of the call. International callers should dial +1-973-200-3007. The reservation number for this call is 88006262. Internet access to the conference call and presentation materials will be available on the AES website at www.aes.com by selecting "Investor Information.”

A telephonic replay of the call will be available from approximately 1:00 p.m. EST on Friday, February 27, 2009 through Friday, March 20, 2009. Callers in the U.S. please dial 1-800-642-1687. International callers should dial +1-706-645-9291. The system will ask for a reservation number; please enter 88006262 followed by the pound key (#). A webcast replay, as well as a replay in downloadable MP3 format, will be accessible at www.aes.com beginning shortly after the completion of the call.

About AES

The AES Corporation (NYSE: AES) is a global power company with generation and distribution businesses. Through our diverse portfolio of thermal and renewable fuel sources, we provide affordable and sustainable energy in 29 countries. Our workforce of 25,000 people is committed to operational excellence and meeting the world's changing power needs. Our 2008 revenues were $16 billion and we own and manage more than $35 billion in total assets. To learn more, please visit www.aes.com.

Safe Harbor Disclosure

This news release contains forward-looking statements within the meaning of the Securities Act of 1933 and of the Securities Exchange Act of 1934. Such forward-looking statements include, but are not limited to, those related to future earnings, growth and financial and operating performance. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute AES’s current expectations based on reasonable assumptions. Forecasted financial information is based on certain material assumptions. These assumptions include, but are not limited to, our accurate projections of future interest rates, commodity price and foreign currency pricing, continued normal levels of operating performance and electricity volume at our distribution companies and operational performance at our generation businesses consistent with historical levels, as well as achievements of planned productivity improvements and incremental growth investments at normalized investment levels and rates of return consistent with prior experience.

Actual results could differ materially from those projected in our forward-looking statements due to risks, uncertainties and other factors. Important factors that could affect actual results are discussed in AES’s filings with the Securities and Exchange Commission, including, but not limited to, the risks discussed under Item 1A "Risk Factors” in AES’s 2008 Annual Report on Form 10-K. Readers are encouraged to read AES’s filings to learn more about the risk factors associated with AES’s business. AES undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.