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SECURITES 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, 1998 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
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Page 1 of 20 sequentially numbered pages.
The Exhibit Index is on Page 19.
<PAGE>
THE AES CORPORATION PROFIT SHARING AND
STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
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Page
----
INDEPENDENT AUDITORS' REPORT 3
FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997:
Statements of Net Assets Available for Participants' Benefits 4
Statements of Changes in Net Assets Available for Participants' Benefits 5
Notes to Financial Statements 6-15
SUPPLEMENTAL SCHEDULES FOR THE YEAR ENDED
DECEMBER 31, 1998:
Item 27a - Assets Held for Investment Purposes 16
Item 27d - Schedule of Reportable Transactions 17
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<PAGE>
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, 1998 and 1997, 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 generally accepted auditing
standards. 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, 1998 and 1997, and the changes in net assets available for
participants' benefits for the years then ended in conformity with generally
accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
Table of Contents are presented for the purpose of additional analysis and are
not a required part of the basic financial statements, but are 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 schedules are the responsibility of the Plan's management. Such
supplemental schedules have been subjected to the auditing procedures applied in
our audit of the basic 1998 financial statements and, in our opinion, are fairly
stated in all material respects when considered in relation to the basic 1998
financial statements taken as a whole.
/s/ Deloitte & Touche LLP
Washington, D.C.
June 11, 1999
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<PAGE>
THE AES CORPORATION PROFIT SHARING AND
STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PARTICIPANTS' BENEFITS
DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS 1998 1997
---- ----
<S> <C> <C>
Cash $ 983,904 $ 1,308,815
Investments, at fair value (Notes 2 and 3):
Common stock - The AES Corporation 216,603,286 215,485,642
Money market funds 13,843,947 17,562,881
Mutual funds 20,732,481 26,499,187
------------ ------------
Total investments, at fair value 251,179,714 259,547,710
Participant loans (Note 6) 3,934,613 3,963,190
------------ ------------
Total cash and investments 256,098,231 264,819,715
------------ ------------
RECEIVABLES:
Employer contributions 1,897,795 2,337,715
Participant contributions 319,919 476,346
------------ ------------
Total receivables 2,217,714 2,814,061
------------ ------------
NET ASSETS AVAILABLE FOR PARTICIPANTS'
BENEFITS $258,315,945 $267,633,776
============ ============
</TABLE>
See notes to financial statements.
-4-
<PAGE>
THE AES CORPORATION PROFIT SHARING AND
STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PARTICIPANTS'
BENEFITS
YEARS ENDED DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
ADDITIONS TO NET ASSETS:
Investment income:
Net (depreciation) appreciation in fair value of
investments (Note 4) $ (2,921,855) $ 109,439,232
Interest and dividends 2,464,037 3,558,652
Contributions:
Employer 3,330,620 3,979,515
Participant 2,973,123 4,236,158
------------- -------------
Total additions 5,845,925 121,213,557
DEDUCTIONS FROM NET ASSETS:
Withdrawals and distributions (15,163,756) (23,680,151)
------------- -------------
NET (DECREASE) INCREASE (9,317,831) 97,533,406
NET ASSETS AVAILABLE FOR PARTICIPANTS'
BENEFITS:
Beginning of year 267,633,776 170,100,370
------------- -------------
End of year $ 258,315,945 $ 267,633,776
============= =============
See notes to financial statements.
</TABLE>
-5-
<PAGE>
THE AES CORPORATION PROFIT SHARING AND
STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
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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. All regularly scheduled
full-time and part-time employees are eligible to participate in the Plan on
the entry date following employment. The Plan is subject to the provisions
of the Employee Retirement Income Security Act of 1974 (ERISA). As of
December 31, 1998 the majority of the Plan's assets, approximately 84%, 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. During 1998
and 1997, The AES Corporation (the Company) matched participant pre-tax
contributions up to 5.0% of compensation, as defined by the Plan Agreement,
on a dollar for dollar basis. Matching contributions made by the Company are
paid in common stock of The AES Corporation. Participants may also make
after-tax contributions of up to 10% of compensation.
In addition, the Company may make profit sharing contributions to the Plan
that are allocated to the participants accounts on the basis of each
participant's base compensation, as defined by the Plan Agreement.
Profit-sharing contributions are made in the Company's common stock. During
1998 and 1997, the Company contributed 5.0% and 6.5% of base 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. 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 mutual funds including Alliance Quasar Fund and
Pimco Total Return Fund and in the following eight Merrill Lynch funds:
Growth Fund, Global Allocation Fund, Federal Securities Trust Fund, Capital
Fund, Basic Value Fund, Retirement Preservation Trust Fund, Equity Index
Trust I Fund, Hotchkis & Wiley International 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. Investment options are selected by the
administrative committee of the Plan.
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<PAGE>
Vesting - Participants are immediately vested in their pre-tax and post-tax
contributions and Company matching contributions plus actual earnings
thereon. Vesting in 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 is payable to
participants upon retirement 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.
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, 1998 and 1997. 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.
At December 31, 1998 and 1997, the quoted market value of the Company's
common stock was $47.38 and $46.63 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.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles 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, 1998 and 1997.
-7-
<PAGE>
<TABLE>
<CAPTION>
December 31, December 31,
1998 1997
---- ----
<S> <C> <C>
Cash $ 983,904 $ 1,308,815
Investments at quoted market value:
The AES Corporation common stock 216,603,286* 215,485,642*
Money market funds:
Merrill Lynch Retirement Preservation Fund 12,737,215 17,508,574*
Other 1,106,732 54,307
Mutual funds:
Merrill Lynch Growth Fund 8,124,546 13,762,550*
Merrill Lynch Basic Value Fund 5,782,622 5,867,330
Other 6,825,313 6,869,307
Participant loans 3,934,613 3,963,190
------------ ------------
Total cash and investments $256,098,231 $264,819,715
============ ============
</TABLE>
The above investments indicated with an "*" represent 5% or more of the
Plan's net assets as of December 31, 1998 and 1997, respectively.
4. NET (DEPRECIATION) APPRECIATION IN FAIR VALUE OF INVESTMENTS
During the years ended December 31, 1998 and 1997, the Plan's investments
(including investments bought, sold, as well as held during the period)
(depreciated) appreciated in value by $(2,921,855) and $109,439,232,
respectively, as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1998 December 31, 1997
----------------- -----------------
<S> <C> <C>
The AES Corporation common stock $ 600,668 $107,491,971
Mutual funds (3,522,523) 1,947,261
------------ ------------
Net (depreciation) appreciation in
fair value $ (2,921,855) $109,439,232
============ ============
</TABLE>
-8-
<PAGE>
5. INFORMATION REGARDING NET ASSETS AVAILABLE FOR PARTICIPANTS' BENEFITS
BY FUND
For the year ended December 31, 1998
<TABLE>
<CAPTION>
MERRILL LYNCH FUNDS
-----------------------------------------------------------
AES GLOBAL FEDERAL
COMMON GROWTH ALLOCATION SECURITIES CAPITAL
STOCK FUND FUND TRUST FUND FUND
----- ---- ---- ---------- ----
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS:
Investment Income:
Interest and dividends $ 137,266 $ 238,891 $ 258,885 $ 139,204 $ 173,801
Net appreciation
(depreciation)in fair
value of investments 600,668 (3,255,462) (256,179) 6,433 (60,936)
------------- ------------- ------------- ------------- -------------
Total investment
income (loss) 737,934 (3,016,571) 2,706 145,637 112,865
------------- ------------- ------------- ------------- -------------
Contributions:
Employer 3,330,620 -- -- -- --
Participants 1,277,000 735,072 176,642 146,021 179,337
------------- ------------- ------------- ------------- -------------
Total contributions 4,607,620 735,072 176,642 146,021 179,337
------------- ------------- ------------- ------------- -------------
TOTAL ADDITIONS 5,345,554 (2,281,499) 179,348 291,658 292,202
DEDUCTIONS FROM
NET ASSETS:
(Transfers out) transfers in (1,345,971) (2,957,838) (518,285) (61,007) (379,232)
Withdrawals and
distributions (3,321,859) (398,667) (103,065) (105,046) (140,914)
------------- ------------- ------------- ------------- -------------
TOTAL DEDUCTIONS (4,667,830) (3,356,505) (621,350) (166,053) (520,146)
------------- ------------- ------------- ------------- -------------
NET INCREASE (DECREASE) 677,724 (5,638,004) (442,002) 125,605 (227,944)
NET ASSETS AVAILABLE
FORPARTICIPANTS'
BENEFITS,BEGINNING
OF YEAR 217,823,357 13,762,550 2,448,229 1,845,471 2,296,236
------------- ------------- ------------- ------------- -------------
NET ASSETS AVAILABLE
FOR PARTICIPANTS'
BENEFITS, END OF YEAR $ 218,501,081 $ 8,124,546 $ 2,006,227 $ 1,971,076 $ 2,068,292
============= ============= ============= ============= =============
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
MERRILL LYNCH FUNDS
----------------------------------------------------------------- PIMCO
BASIC RETIREMENT EQUITY HOTCHKIS TOTAL
VALUE PRESERVATION INDEX & WILEY RETURN
FUND TRUST TRUST I INT'L FUND FUND
---- ----- ------- ---------- ----
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS:
Investment Income:
Interest and dividends $ 539,305 $ 914,929 $ 2,961 $ 5,072 $ 25,766
Net appreciation
(depreciation)in fair
value of investments 53,912 -- 86,802 (13,505) (3,763)
------------ ------------ ------------ ------------ ------------
Total investment
income (loss) 593,217 914,929 89,763 (8,433) 22,003
------------ ------------ ------------ ------------ ------------
Contributions:
Employer -- -- -- -- --
Participants 428,016 504,834 41,141 6,391 10,438
------------ ------------ ------------ ------------ ------------
Total contributions 428,016 504,834 41,141 6,391 10,438
------------ ------------ ------------ ------------ ------------
TOTAL ADDITIONS 1,021,233 1,419,763 130,904 (2,042) 32,441
DEDUCTIONS FROM
NET ASSETS:
(Transfers out) transfers in (771,167) 4,014,641 922,916 110,156 278,734
Withdrawals and
distributions (334,774) (10,205,763) (1,395) -- --
------------ ------------ ------------ ------------ ------------
TOTAL DEDUCTIONS (1,105,941) (6,191,122) 921,521 110,156 278,734
------------ ------------ ------------ ------------ ------------
NET INCREASE (DECREASE) (84,708) (4,771,359) 1,052,425 108,114 311,175
NET ASSETS AVAILABLE
FORPARTICIPANTS'
BENEFITS,BEGINNING
OF YEAR 5,867,330 17,508,574 54,307 4,902 10,102
------------ ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE
FOR PARTICIPANTS'
BENEFITS, END OF YEAR $ 5,782,622 $ 12,737,215 $ 1,106,732 $ 113,016 $ 321,277
============ ============ ============ ============ ============
</TABLE>
-10-
<PAGE>
<TABLE>
<CAPTION>
ALLIANCE
QUASAR PARTICIPANT
FUND LOANS OTHER TOTAL
---- ----- ----- -----
<S> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS:
Investment Income:
Interest and dividends $ 13,575 $ -- $ 14,382 $ 2,464,037
Net appreciation
(depreciation)in fair
value of investments (79,825) -- -- (2,921,855)
------------- ------------- ------------- -------------
Total investment
income (loss) (66,250) -- 14,382 (457,818)
------------- ------------- ------------- -------------
Contributions:
Employer -- -- -- 3,330,620
Participants 17,936 -- (549,705) 2,973,123
------------- ------------- ------------- -------------
Total contributions 17,936 -- (549,705) 6,303,743
------------- ------------- ------------- -------------
TOTAL ADDITIONS (48,314) -- (535,323) 5,845,925
DEDUCTIONS FROM
NET ASSETS:
(Transfers out) transfers in 129,680 (1,088,502) 1,665,875 --
Withdrawals and
distributions (308) 1,059,925 (1,611,890) (15,163,756)
------------- ------------- ------------- -------------
TOTAL DEDUCTIONS 129,372 (28,577) 53,985 (15,163,756)
------------- ------------- ------------- -------------
NET INCREASE (DECREASE) 81,058 (28,577) (481,338) (9,317,831)
NET ASSETS AVAILABLE
FORPARTICIPANTS'
BENEFITS,BEGINNING
OF YEAR 264,367 3,963,190 1,785,161 267,633,776
------------- ------------- ------------- -------------
NET ASSETS AVAILABLE
FOR PARTICIPANTS'
BENEFITS, END OF YEAR $ 345,425 $ 3,934,613 $ 1,303,823 $ 258,315,945
============= ============= ============= =============
</TABLE>
-11-
<PAGE>
- --------------------------------------------------------------------------------
For the year ended December 31, 1997
<TABLE>
<CAPTION>
MERRILL LYNCH FUNDS
--------------------------------------------------------------------------
AES GLOBAL FEDERAL
COMMON GROWTH ALLOCATION SECURITIES CAPITAL
STOCK FUND FUND TRUST FUND FUND
----- ---- ---- ---------- ----
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS:
Investment Income:
Interest and dividends $ 99,376 $ 1,172,837 $ 322,520 $ 160,528 $ 175,852
Net appreciation
(depreciation) in fair
value of investments 107,491,971 1,055,922 (78,188) 31,359 157,024
------------- ------------- ------------- ------------- -------------
Total investment
income (loss) 107,591,347 2,228,759 244,332 191,887 332,876
------------- ------------- ------------- ------------- -------------
Contributions:
Employer 3,979,515 -- -- -- --
Participants 1,281,086 781,677 258,187 125,414 220,064
------------- ------------- ------------- ------------- -------------
Total contributions 5,260,601 781,677 258,187 125,414 220,064
------------- ------------- ------------- ------------- -------------
TOTAL ADDITIONS 112,851,948 3,010,436 502,519 317,301 552,940
DEDUCTIONS FROM
NET ASSETS:
(Transfers out) transfers in (22,728,190) (1,286,305) (66,681) 409,847 262,352
Withdrawals and
distributions (2,689,301) (828,672) (91,110) (1,029,416) (77,311)
------------- ------------- ------------- ------------- -------------
TOTAL DEDUCTIONS (25,417,491) (2,114,977) (157,791) (619,569) 185,041
------------- ------------- ------------- ------------- -------------
NET INCREASE (DECREASE) 87,434,457 895,459 344,728 (302,268) 737,981
NET ASSETS AVAILABLE
FOR PARTICIPANTS'
BENEFITS,BEGINNING
OF YEAR 130,388,900 12,867,091 2,103,501 2,147,739 1,558,255
------------- ------------- ------------- ------------- -------------
NET ASSETS AVAILABLE
FOR PARTICIPANTS'
BENEFITS, END OF YEAR $ 217,823,357 $ 13,762,550 $ 2,448,229 $ 1,845,471 $ 2,296,236
============= ============= ============= ============= =============
</TABLE>
-12-
<PAGE>
<TABLE>
<CAPTION>
MERRILL LYNCH FUNDS
BASIC RETIREMENT EQUITY HOTCHKIS
VALUE PRESERVATION INDEX & WILEY
FUND TRUST TRUST I INT'L FUND
---- ----- ------- ----------
<S> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS:
Investment Income:
Interest and dividends $ 491,537 $ 1,121,813 $ -- $ 87
Net appreciation
(depreciation) in fair
value of investments 775,641 -- 2,131 (185)
------------ ------------ ------------ ------------
Total investment
income (loss) 1,267,178 1,121,813 2,131 (98)
------------ ------------ ------------ ------------
Contributions:
Employer -- -- -- --
Participants 412,059 330,456 -- --
------------ ------------ ------------ ------------
Total contributions 412,059 330,456 -- --
------------ ------------ ------------ ------------
TOTAL ADDITIONS 1,679,237 1,452,269 2,131 (98)
DEDUCTIONS FROM
NET ASSETS:
(Transfers out) transfers in 805,114 22,252,801 -- 5,000
Withdrawals and
distributions (209,260) (19,579,544) 52,176 --
------------ ------------ ------------ ------------
TOTAL DEDUCTIONS 595,854 2,673,257 52,176 5,000
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) 2,275,091 4,125,526 54,307 4,902
NET ASSETS AVAILABLE
FOR PARTICIPANTS'
BENEFITS,BEGINNING
OF YEAR 3,592,239 13,383,048 -- --
------------ ------------ ------------ ------------
NET ASSETS AVAILABLE
FOR PARTICIPANTS'
BENEFITS, END OF YEAR $ 5,867,330 $ 17,508,574 $ 54,307 $ 4,902
============ ============ ============ ============
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
MERRILL LYNCH FUNDS
PIMCO
TOTAL ALLIANCE
RETURN QUASAR PARTICIPANT
FUND FUND LOANS OTHER TOTAL
---- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS:
Investment Income: $ 296 $ 425 $ -- $ 13,381 $ 3,558,652
Interest and dividends
Net appreciation
(depreciation) in fair
value of investments (194) 3,751 -- -- 109,439,232
------------- ------------- ------------- ------------- -------------
Total investment
income (loss)
102 4,176 -- 13,381 112,997,884
------------- ------------- ------------- ------------- -------------
Contributions:
Employer
Participants
-- -- -- -- 3,979,515
-- 146 -- 827,069 4,236,158
------------- ------------- ------------- ------------- -------------
Total contributions -- 146 -- 827,069 8,215,673
------------- ------------- ------------- ------------- -------------
TOTAL ADDITIONS 102 4,322 -- 840,450 121,213,557
DEDUCTIONS FROM
NET ASSETS:
(Transfers out) transfers in 10,000 260,045 (727,705) 803,722 --
Withdrawals and
distributions -- -- 772,287 -- (23,680,151)
------------- ------------- ------------- ------------- -------------
TOTAL DEDUCTIONS 10,000 260,045 44,582 803,722 (23,680,151)
------------- ------------- ------------- ------------- -------------
NET INCREASE (DECREASE) 10,102 264,367 44,582 1,644,172 97,533,406
NET ASSETS AVAILABLE
FOR PARTICIPANTS'
BENEFITS,BEGINNING
OF YEAR -- -- 3,918,608 140,989 170,100,370
------------- ------------- ------------- ------------- -------------
NET ASSETS AVAILABLE
FOR PARTICIPANTS'
BENEFITS, END OF YEAR $ 10,102 $ 264,367 $3,963,190 $1,785,161 $257,633,776
============== ============= ============= ============= ==============
</TABLE>
-14-
<PAGE>
6. PARTICIPANT LOANS
Participants may obtain 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 secured 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.
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 the Employee Retirement
Income Security Act of 1974 (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 and the Company anticipates obtaining a determination letter from the
IRS that the Plan, as amended, continues to comply with all 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. During
1997, the Company amended the Plan, effective May 1, 1997, to allow for the
immediate distribution of benefits to an alternate payee under a Qualified
Domestic Relations Order. No amendments were made to the Plan during 1998.
10. SUBSEQUENT EVENTS
In May 1999, a subsidiary of the Company acquired six power plants from NGE
Generation, Inc., an affiliate of New York State Electric and Gas
Corporation (NYSEG). In connection with this acquisition, approximately 350
additional employees became eligible to participate in the Plan, including
certain employees covered by the collective bargaining agreement (NY Union
Participants). The benefits provided by the Plan to the NY Union
Participants are limited with respect to matching, profit-sharing, and
after-tax contributions. A more complete description of the Plan's
provisions can be obtained by referring to the Summary Plan Description.
* * * * * *
-15-
<PAGE>
THE AES CORPORATION PROFIT SHARING AND
STOCK OWNERSHIP PLAN
ITEM 27a - SUPPLEMENTAL SCHEDULE OF ASSETS HELD FOR
INVESTMENT PURPOSES
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER FAIR
OF SHARES COST VALUE
--------- ---- -----
<S> <C> <C> <C>
Cash -- $ 983,904 $ 983,904
The AES Corporation common stock -
at $47.38 per share (1) 4,572,101 46,414,485 216,603,286
Merrill Lynch Retirement Preservation Trust
Fund (1) 12,737,215 12,737,199 12,737,215
Merrill Lynch Growth Fund (1) 377,710 8,245,839 8,124,546
Merrill Lynch Global Allocation Fund (1) 159,098 2,240,498 2,006,227
Merrill Lynch Federal Securities Trust Fund (1) 201,336 1,956,599 1,971,076
Merrill Lynch Capital Fund (1) 60,107 1,929,380 2,068,292
Merrill Lynch Basic Value Fund (1) 152,094 4,803,983 5,782,622
Merrill Lynch Equity Index Trust I (1) 13,188 976,583 1,106,732
Hotchkis & Wiley International Fund (1) 4,855 122,804 113,016
Pimco Total Return Fund 30,482 325,235 321,277
Alliance Quasar Fund 13,817 403,579 345,425
Participant loans (Interest 6.5 % - 12%) (1) -- 3,934,613 3,934,613
------------ ------------
TOTAL $ 85,074,701 $256,098,231
============ ============
</TABLE>
- ---------
(1) Transactions in these investments are considered to be party-in-interest
transactions under Department of Labor regulations.
-16-
<PAGE>
THE AES CORPORATION PROFIT SHARING AND
STOCK OWNERSHIP PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL NUMBER OF
- ------------------------------ COST/BOOK PROCEEDS OF REALIZED
PURCHASES SALES DESCRIPTION VALUE SALE GAIN/(LOSS)
--------- ----- ----------- ----- ---- -----------
<S> <C> <C> <C> <C>
202 -- The AES Corporation
Common Stock $19,221,926 $ -- $ --
228 -- Merrill Lynch Retirement
Preservation Trust 15,152,739 -- --
-- 152 The AES Corporation
Common Stock 7,149,845 18,700,738 11,550,893
-- 139 Merrill Lynch Retirement
Preservation Trust 19,924,098 19,924,098 --
</TABLE>
NOTES: (1) The items listed above represent all transactions or series of
transactions that are reportable under Section 2520.103-6, as
amended, of the Department of Labor Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. All purchases are stated at cost.
(2) There were no single transactions in excess of 5% of Plan assets
for the year ended December 31, 1998.
-17-
<PAGE>
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
----------------------
Barry J. Sharp
Senior Vice President and
Chief Financial Officer
Date: June 28, 1999
-18-
<PAGE>
EXHIBIT INDEX
EXHIBIT 23.1 PAGE
----
Independent Auditors' Consent 20
-19-
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement No.
33-49262 of The AES Corporation on Form S-8 of our report dated June 11, 1999,
appearing in this Annual Report on Form 11-K of The AES Corporation Profit
Sharing and Stock Ownership Plan for the year ended December 31, 1998.
/s/ Deloitte & Touche LLP
Washington, DC
June 28, 1999
-20-
