The AES Corporation (AES) has reported revenues of $16.1 billion for the year-end 2008, compared with the revenues of $13.5 billion in the previous year-end. It has also reported a net income of $1.23 billion, or $1.82 per share, for the year-end 2008, compared with the net loss of $95 million, or $0.14 loss per share, in the previous year-end.

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.

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

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)

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 around $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 around $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.