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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, 1999 Commission File Number 0-1928
Full Title of the Plan:
THE AES CORPORATION PROFIT SHARING AND
STOCK OWNERSHIP PLAN
Nameof 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 [14] sequentially numbered pages.
The Exhibit Index is on Page [13].
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THE AES CORPORATION PROFIT SHARING AND
STOCK OWNERSHIP PLAN
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TABLE OF CONTENTS
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Page
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INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 1999 AND 1998:
Statements of Net Assets Available for Participants' Benefits 2
Statements of Changes in Net Assets Available for Participants' Benefits 3
Notes to Financial Statements 4-7
SUPPLEMENTAL SCHEDULES FOR THE YEAR ENDED
DECEMBER 31, 1999:
Schedule of Assets Held for Investment Purposes 8
Schedule of Reportable Transactions 9
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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, 1999 and 1998, 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, 1999 and 1998, 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.
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 1999 financial statements and, in our opinion, are fairly
stated in all material respects when considered in relation to the basic 1999
financial statements taken as a whole.
/s/ Deloitte & Touche LLP
McLean, Virginia.
June 14, 2000
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THE AES CORPORATION PROFIT SHARING AND
STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PARTICIPANTS' BENEFITS
DECEMBER 31, 1999 AND 1998
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<CAPTION>
ASSETS 1999 1998
<S> <C> <C>
Cash $ 932,707 $ 983,904
Investments, at fair value (Notes 2 and 3):
Common stock - The AES Corporation 296,310,284 216,603,286
Money market funds 34,920,889 13,843,947
Mutual funds 28,325,456 20,732,481
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Total investments, at fair value 360,489,336 251,179,714
Participant loans (Note 5) 4,226,729 3,934,613
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Total cash and investments 364,716,065 256,098,231
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RECEIVABLES:
Employer contributions 2,550,019 1,897,795
Participant contributions 542,580 319,919
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Total receivables 3,092,599 2,217,714
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NET ASSETS AVAILABLE FOR PARTICIPANTS'
BENEFITS $367,808,664 $258,315,945
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See notes to financial statements.
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THE AES CORPORATION PROFIT SHARING AND
STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PARTICIPANTS'
BENEFITS
YEARS ENDED DECEMBER 31, 1999 AND 1998
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<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ADDITIONS TO NET ASSETS:
Investment income:
Net appreciation (depreciation) in fair value of
investments (Note 4) $112,428,820 $ (2,921,855)
Interest and dividends 3,308,878 2,464,037
Contributions:
Employer 5,333,419 3,330,620
Participant 7,847,485 2,973,123
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Total additions 128,918,602 5,845,925
DEDUCTIONS FROM NET ASSETS:
Withdrawals and distributions (19,425,883) (15,163,756)
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NET INCREASE (DECREASE) 109,492,719 (9,317,831)
NET ASSETS AVAILABLE FOR PARTICIPANTS'
BENEFITS:
Beginning of year 258,315,945 267,633,776
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End of year $367,808,664 $258,315,945
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</TABLE>
See notes to financial statements.
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THE AES CORPORATION PROFIT SHARING AND
STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
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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 U.S. domestic employees and employees of Chigen
Inc., a wholly owned subsidiary of The AES Corporation, are eligible to
participate in the Plan on the date of employment. The Plan is subject to
the provisions of the Employee Retirement Income Security Act of 1974
(ERISA). As of December 31, 1999, the majority of the Plan's assets,
approximately 81%, 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
1999 and 1998, 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, unless otherwise provided under the Plan, the Company may make
profit sharing contributions to the Plan that are allocated to the
participants accounts on the basis of the participant's base compensation,
as defined by the Plan Agreement. Profit-sharing contributions are made in
the Company's common stock. During 1999 and 1998, the Company contributed
4.5% and 5.0% 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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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 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, 1999 and 1998. 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, 1999 and 1998, the quoted market value of the Company's
common stock was $74.75 and $47.38 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.
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.
BY FUND INFORMATION - The Plan has adopted SOP 99-3, ACCOUNTING AND
REPORTING OF CERTAIN CONTRIBUTION PLAN INVESTMENTS AND OTHER DISCLOSURE
MATTERS, which changes the required disclosures for plans with
participant-directed investment programs. As a result, the by fund
disclosures of participant-directed investment programs have been
eliminated in the financial statements.
NEW ACCOUNTING PRONOUNCEMENT - In July 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 133,
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND
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HEDGING ACTIVITIES (SFAS No. 133), which establishes the accounting
definition of a derivative and specifies measurements, recognition, and
disclosures of changes in fair value of derivatives (hedges) held by a
Company. SFAS No. 133 will be adopted by the Plan in the year 2001, and the
Plan's administrator has not determined what impact, if any, it will have
on its net assets available for participants' benefits and changes in net
assets available for participants' benefits when such statement is adopted.
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, 1999 and 1998.
<TABLE>
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DECEMBER 31, 1999 DECEMBER 31, 1998
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Cash $ 932,707 $ 983,904
Investments at quoted market value:
The AES Corporation common stock 296,310,284* 216,603,286*
Money market funds:
Merrill Lynch Retirement Preservation Fund 29,802,302* 12,737,215
Other 5,118,586 1,106,732
Mutual funds:
Merrill Lynch Growth Fund 10,532,461 8,124,546
Merrill Lynch Basic Value Fund 7,588,919 5,782,622
Other 10,204,077 6,825,313
Participant loans 4,226,729 3,934,613
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Total cash and investments $364,716,065 $256,098,231
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</TABLE>
The above investments indicated with an "*" represent 5% or more of the
Plan's net assets as of December 31, 1999 and 1998, respectively.
4. NET APPRECIATION (DEPRECIATION) IN FAIR VALUE OF INVESTMENTS
During the years ended December 31, 1999 and 1998, the Plan's investments
(including investments bought, sold, as well as held during the period)
appreciated (depreciated) in value by $112,428,820 and $(2,921,855),
respectively, as follows:
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YEAR ENDED YEAR ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
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The AES Corporation common stock $109,630,227 $ 600,668
Mutual funds 2,798,593 (3,522,523)
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Net appreciation (depreciation) in fair value $112,428,820 $(2,921,855)
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5. 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 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%,
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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.
6. 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.
7. 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.
8. 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 amendments were made to the Plan during 1998.
The Company amended the Plan, effective May 14, 1999, to reflect the
acquisition of 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. The amendment allowed employees covered by the
collective bargaining agreement (NY Union Participants) to become eligible
to participate in the Plan solely for purposes of making elective
contributions and not to be eligible for employer profit-sharing
contributions. The amendment also included specifications related to
participants (other than a NY Union Participant) who were formerly
employed by NYSEG.
Pursuant to the acquisition of New Energy Ventures, Inc. ("New Energy"),
the Plan was amended, effective August 1, 1999, to grant employees of New
Energy service credit under the Plan. Participants who were formerly
employed by New Energy shall be credited with years of vesting service
measured from their original date of hire with New Energy.
Effective November 1, 1999, the Company amended the Plan to increase the
flexibility of the Plan's loan provisions by allowing participants to have
multiple loans. The Plan was also amended to prohibit former employees to
the availability of loans except to the extent required by law.
* * * * * *
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THE AES CORPORATION PROFIT SHARING AND
STOCK OWNERSHIP PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1999
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(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 DATE COST VALUE
<S> <C> <C> <C> <C>
Cash - $ 932,707 $ 932,707
* The AES Corporation Common stock - $74.75 per share, 3,964,017 shares 43,732,047 296,310,284
* Merrill Lynch Retirement Preservation Trust Fund - 29,802,302 shares 29,802,286 29,802,302
* Merrill Lynch Growth Fund - 384,116 shares 8,374,670 10,532,461
* Merrill Lynch Global Allocation Fund - 226,428 shares 3,192,403 3,174,517
* Merrill Lynch Federal Securities Trust Fund - 251,385 shares 2,429,979 2,342,904
* Merrill Lynch Capital Fund - 81,663 shares 2,674,346 2,618,946
* Merrill Lynch Basic Value Fund - 198,923 shares 6,764,411 7,588,919
* Merrill Lynch Equity Index Trust Fund - 50,579 shares 4,408,735 5,118,586
* Merrill Lynch Hotchkis & Wiley International Fund - 20,121 shares 523,684 531,205
Merrill Lynch Pimco Total Return Fund -76,737 shares 790,905 759,694
Merrill Lynch Alliance Quasar Fund - 27,507 shares 749,640 776,811
Participant loans
* (Interest 6.5 % - 12%) - 4,226,729 4,226,729
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TOTAL $108,602,542 $364,716,065
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(*) Transactions in these investments are considered to be
party-in-interest transactions under Department of Labor
regulations.
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THE AES CORPORATION PROFIT SHARING AND
STOCK OWNERSHIP PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
DECEMBER 31, 1999
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(a) (b) (c) (d) (g) (h) (i)
CURRENT VALUE
OF ASSET ON
IDENTITY OF DESCRIPTION PURCHASE SELLING COST OF TRANSACTION NET
PARTY INVOLVED OF ASSET PRICE PRICE ASSET DATE GAIN/(LOSS)
<S> <C> <C> <C> <C> <C> <C>
The AES Corporation Common Stock - 266 purchases $ 16,714,023 $ - $ 16,714,023 $ - $ -
Merrill Lynch Retirement Preservation Trust -
339 purchases 43,347,173 - 43,347,173 - -
The AES Corporation Common Stock - 235 sales 19,074,110 46,314,902 19,074,110 46,314,902 27,240,792
Merrill Lynch Retirement Preservation Trust -
158 sales 26,282,086 26,282,086 26,282,086 26,282,086 -
</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, 1999.
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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
Vice President and
Chief Financial Officer
Date: June 26, 2000
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EXHIBIT INDEX
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EXHIBIT 23.1 PAGE
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Independent Auditors' Consent 12
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