- 2008 first-quarter earnings: $1.43 per share GAAP, $1.02 per share
ongoing
- Tractebel Energy Marketing settlement increases GAAP earnings for quarter
- Ongoing earnings for quarter aided by approved rate increases, recovery
of Oklahoma ice storm costs
- Company reaffirms ongoing earnings guidance range for 2008 of $3.10 to
$3.30 per share
COLUMBUS, Ohio, April 24 /PRNewswire-FirstCall/ --
AMERICAN ELECTRIC POWER
Preliminary, unaudited results
1st quarter ended March 31
2007 2008 Variance
Revenue ($ in billions) 3.2 3.5 0.3
Earnings ($ in millions):
GAAP 271 573 302
Ongoing 271 410 139
EPS ($):
GAAP 0.68 1.43 0.75
Ongoing 0.68 1.02 0.34
EPS based on 397mm shares in Q1 2007, 401mm in Q1 2008
American Electric Power (NYSE: AEP) today reported 2008 first-quarter
earnings, prepared in accordance with Generally Accepted Accounting
Principles (GAAP), of $573 million, or $1.43 per share, compared with $271
million, or $0.68 per share, for first-quarter 2007. Ongoing earnings
(earnings excluding special items) for first-quarter 2008 were $410
million, or $1.02 per share, compared with $271 million, or $0.68 per
share, for first-quarter 2007.
GAAP earnings for first-quarter 2008 were $163 million higher than
ongoing earnings primarily because of a settlement reached with Tractebel
Energy Marketing Inc. in January 2008 resolving all litigation regarding a
power purchase and sale agreement. A full reconciliation of GAAP earnings
to ongoing earnings for the quarter is included in tables at the end of
this news release.
"We had a very strong first quarter, which demonstrates the strength of
our operations as well as our ongoing successes in regulatory proceedings,"
said Michael G. Morris, AEP's chairman, president and chief executive
officer. "We received approval to recover costs associated with severe ice
storms that hit our customers in Oklahoma in January and December 2007, and
we're seeing the benefit of rate increases approved for our Ohio Companies
and for our utilities in Virginia, West Virginia, Oklahoma and Texas."
In a recent development, the Ohio House of Representatives passed its
version of Ohio electricity legislation Tuesday, modifying a Senate version
passed in 2007. The House version allows utilities to set prices by filing
an Electric Security Plan along with the ability to simultaneously file a
market rate option. The Public Utilities Commission of Ohio would have
authority to approve or modify the utility's request to set prices. Both
alternatives would involve earnings tests monitored by the commission.
The Ohio Senate approved the House version Wednesday, sending the
legislation to the governor. The legislation must be signed by the governor
to become law. Without new legislation, electricity prices in Ohio will go
to market rates Jan. 1, 2009.
"The Ohio legislation provides a workable approach for the state,
including preserving a market rate mechanism as well as a mechanism for
future investment in Ohio," Morris said.
EARNINGS GUIDANCE
AEP reaffirmed its previous ongoing earnings guidance range for 2008 of
between $3.10 and $3.30 per share. In providing ongoing earnings guidance,
there could be differences between ongoing earnings and GAAP earnings for
matters such as, but not limited to, divestitures or changes in accounting
principles. AEP management is not able to estimate the impact, if any, on
GAAP earnings of these items. Therefore, AEP is not able to provide a
corresponding GAAP equivalent for earnings guidance.
SUMMARY ONGOING RESULTS BY SEGMENT
$ in millions except EPS
Q1 07 Q1 08 Variance
Utility Operations 253 410 157
Ongoing EPS 0.63 1.02 0.39
MEMCO 15 7 (8)
Ongoing EPS 0.04 0.02 (0.02)
Generation and Marketing (1) 1 2
Ongoing EPS 0.00 0.00 0.00
All Other 4 (8) (12)
Ongoing EPS 0.01 (0.02) (0.03)
Ongoing Earnings 271 410 139
Ongoing EPS 0.68 1.02 0.34
EPS based on 397mm shares in Q1 2007, 401mm in Q1 2008
Ongoing earnings from Utility Operations increased $157 million during
first-quarter 2008 from the same period last year, driven by higher margins
from retail sales, where load growth and increased rates were factors;
improved off-system sales; and lower operating expenses. Operating expenses
for the quarter were lower primarily because of the creation of a
regulatory asset to recover storm expenses incurred in January and December
2007 by AEP's Public Service Company of Oklahoma (PSO) utility subsidiary.
Ongoing earnings from MEMCO barge operations were lower in the quarter
than in the prior period primarily because of high water and reduced
northbound loadings. Operating costs during the current quarter were higher
because of sustained high-water conditions on all major rivers, which
reduced tow sizes, restricted operating hours and increased fuel
consumption. Northbound loadings continue to be depressed as a result of
reduced imports through the Gulf of Mexico.
The increase in ongoing earnings from Generation and Marketing is
primarily attributed to improved results from AEP's wind farms. Generation
and Marketing includes AEP's non-regulated generating, marketing and risk
management activities, primarily in the Electricity Reliability Council of
Texas (ERCOT).
All Other, which includes the Parent Company and other investments, was
down $12 million in first-quarter 2008 when compared to the same period of
2007. The decline was caused by increased interest expense on short-term
debt in first-quarter 2008 compared to a prior period that included a gain
on the sale of an investment.
ONGOING RESULTS FROM UTILITY OPERATIONS
$ in millions except EPS
Q1 07 Q1 08 Variance
East Regulated Integrated Utilities 604 594 (10)
Ohio Companies 603 696 93
West Regulated Integrated Utilities 200 223 23
Texas Wires 114 122 8
Off-System Sales 181 221 40
Transmission Revenue - 3rd Party 72 80 8
Other Operating Revenue 140 145 5
Utility Gross Margin 1,914 2,081 167
Operations & Maintenance (828) (747) 81
Depreciation & Amortization (383) (355) 28
Taxes Other Than Income Taxes (184) (194) (10)
Interest Expense & Preferred Dividend (179) (210) (31)
Other Income & Deductions 39 42 3
Income Taxes (126) (207) (81)
Utility Operations Ongoing Earnings 253 410 157
Ongoing EPS 0.63 1.02 0.39
EPS based on 397mm shares in Q1 2007, 401mm in Q1 2008
Retail Sales - The improvement in retail gross margins reflects load
growth, and increased rates in the Ohio Companies and in AEP's utilities in
Virginia, West Virginia, Oklahoma and Texas.
Off-System Sales - Gross margins from Off-System Sales increased $40
million in first-quarter 2008 from the prior period primarily because of
greater physical sales in the East, resulting from higher volumes and
prices than in the same period for 2007, when plant maintenance activities
resulted in lower sales volumes.
Transmission Revenues - The improvement in Transmission Revenues, when
compared to the prior period, is primarily attributed to increased revenue
in the ERCOT and Southwest Power Pool regions.
Operations & Maintenance Expense - The $81 million decrease in O&M
expenses in first-quarter 2008, when compared to the prior period, is
primarily attributed to the recovery of ice storm restoration expenses by
AEP's PSO utility subsidiary related to storms experienced in January and
December 2007.
Depreciation & Amortization - Lower depreciation expense in Indiana,
Michigan, Virginia, Oklahoma and Texas, attributed to rate proceedings in
2007 that changed depreciation rates, and lower amortization expense at the
Ohio Companies decreased Depreciation & Amortization in first-quarter 2008
when compared to the prior period. These decreases were partially offset by
higher depreciation expense because of increased plant asset balances.
Taxes Other Than Income Taxes - The increase in Taxes Other Than Income
Taxes, when compared with the same period last year, is primarily because
of higher property taxes.
Interest Expense & Preferred Dividends - The increase in Interest
Expense for first-quarter 2008 is primarily because of increased long-term
debt and higher interest rates on variable-rate debt.
Other Income & Deductions - The increase in Other Income & Deductions
in first-quarter 2008 is primarily because of accrued interest income
related to a claim for a federal tax refund and higher carrying-cost
income. These increases were mostly offset by the 2007 completion of
payments received from Centrica as part of a multi-year earnings-sharing
agreement established in 2002 when AEP sold its Texas retail electricity
providers to Centrica. The final payment of $20 million was received in
first-quarter 2007 and included in Other Income & Deductions for that
period.
WEBCAST
American Electric Power's quarterly conference call with financial
analysts will be broadcast live over the Internet at 9 a.m. EDT today at
http://www.aep.com/go/webcasts . The webcast will include audio of the
conference call and visuals of charts and graphics referred to by AEP
management during the call. The charts and graphics will be available for
download at http://www.aep.com/go/webcasts .
The call will be archived on http://www.aep.com/go/webcasts for use by
those unable to listen during the live webcast. Archived calls also are
available as podcasts.
Minimum requirements to listen to broadcast: The Windows Media Player
software, free from http://windowsmedia.com/download, and at least a 56Kbps
connection to the Internet.
American Electric Power is one of the largest electric utilities in the
United States, delivering electricity to more than 5 million customers in
11 states. AEP ranks among the nation's largest generators of electricity,
owning more than 38,000 megawatts of generating capacity in the U.S. AEP
also owns the nation's largest electricity transmission system, a nearly
39,000-mile network that includes more 765-kilovolt extra-high voltage
transmission lines than all other U.S. transmission systems combined. AEP's
transmission system directly or indirectly serves about 10 percent of the
electricity demand in the Eastern Interconnection, the interconnected
transmission system that covers 38 eastern and central U.S. states and
eastern Canada, and approximately 11 percent of the electricity demand in
ERCOT, the transmission system that covers much of Texas. AEP's utility
units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and
West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan
Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern
Electric Power Company (in Arkansas, Louisiana and east Texas). AEP's
headquarters are in Columbus, Ohio.
AEP's earnings are prepared in accordance with accounting principles
generally accepted in the United States and represent the company's
earnings as reported to the Securities and Exchange Commission. AEP's
management believes that the company's ongoing earnings, or GAAP earnings
adjusted for certain items as described in the news release and charts,
provide a more meaningful representation of the company's performance. AEP
uses ongoing earnings as the primary performance measurement when
communicating with analysts and investors regarding its earnings outlook
and results. The company also uses ongoing earnings data internally to
measure performance against budget and to report to AEP's board of
directors.
This report made by American Electric Power and its Registrant
Subsidiaries contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934. Although the
registrants believe that their expectations are based on reasonable
assumptions, any such statements may be influenced by factors that could
cause actual outcomes and results to be materially different from those
projected. Among the factors that could cause actual results to differ
materially from those in the forward-looking statements are: electric load
and customer growth; weather conditions, including storms; available
sources and costs of, and transportation for, fuels and the
creditworthiness and performance of fuel suppliers and transporters;
availability of generating capacity and the performance of AEP's generating
plants; AEP's ability to recover regulatory assets and stranded costs in
connection with deregulation; AEP's ability to recover increases in fuel
and other energy costs through regulated or competitive electric rates;
AEP's ability to build or acquire generating capacity (including the
company's ability to obtain any necessary regulatory approvals and permits)
when needed at acceptable prices and terms and to recover those costs
through applicable rate cases or competitive rates; new legislation,
litigation and government regulation including requirements for reduced
emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter
and other substances; timing and resolution of pending and future rate
cases, negotiations and other regulatory decisions (including rate or other
recovery of new investments in generation, distribution and transmission
service and environmental compliance); resolution of litigation (including
disputes arising from the bankruptcy of Enron Corp. and related matters);
AEP's ability to constrain operation and maintenance costs; the economic
climate and growth in AEP's service territory and changes in market demand
and demographic patterns; inflationary and interest rate trends; volatility
in the financial markets, particularly developments affecting the
availability of capital on reasonable terms and developments impairing
AEP's ability to refinance existing debt at attractive rates; AEP's ability
to develop and execute a strategy based on a view regarding prices of
electricity, natural gas and other energy-related commodities; changes in
the creditworthiness of the counterparties with whom AEP has contractual
arrangements, including participants in the energy trading market; actions
of rating agencies, including changes in the ratings of debt; volatility
and changes in markets for electricity, natural gas, coal, nuclear fuel and
other energy-related commodities; changes in utility regulation, including
the potential for new legislation in Ohio and the allocation of costs
within regional transmission organizations; accounting pronouncements
periodically issued by accounting standard-setting bodies; the impact of
volatility in the capital markets on the value of the investments held by
AEP's pension, other postretirement benefit plans and nuclear
decommissioning trust; prices for power that AEP generates and sells at
wholesale; changes in technology, particularly with respect to new,
developing or alternative sources of generation; other risks and unforeseen
events, including wars, the effects of terrorism (including increased
security costs), embargoes and other catastrophic events.
American Electric Power
Financial Results for 1st Quarter 2008 Actual vs 1st Quarter 2007 Actual
2007 Actual 2008 Actual
($ millions) EPS ($ millions) EPS
UTILITY OPERATIONS:
Gross Margin:
1 East Regulated Integrated
Utilities 604 594
2 Ohio Companies 603 696
3 West Regulated Integrated
Utilities 200 223
4 Texas Wires 114 122
5 Off-System Sales 181 221
6 Net Transmission Revenue
- 3rd Party 72 80
7 Other Operating Revenue 140 145
8 Utility Gross Margin 1,914 2,081
9 Operations & Maintenance (828) (747)
10 Depreciation & Amortization (383) (355)
11 Taxes Other than Income Taxes (184) (194)
12 Interest Exp & Preferred
Dividend (179) (210)
13 Other Income & Deductions 39 42
14 Income Taxes (126) (207)
15 Utility Operations
On-Going Earnings 253 0.63 410 1.02
NON-UTILITY OPERATIONS:
16 MEMCO 15 0.04 7 0.02
17 Generation & Marketing (1) - 1 -
18 Parent & Other On-Going
Earnings 4 0.01 (8) (0.02)
19 ON-GOING EARNINGS 271 0.68 410 1.02
Note: For analysis purposes, certain financial statement amounts have been
reclassified for this effect on earnings presentation.
American Electric Power
Financial Results for the 1st Quarter 2008
Reconciliation of On-going to Reported Earnings
2008
Generation Parent
and & All
Utility MEMCO Marketing Other Total EPS
($ millions)
On-going Earnings 410 7 1 (8) 410 $1.02
Dispositions:
Tractebel Settlement - - - 163 163 $0.41
Total Special Items - - - 163 163 $0.41
Reported Earnings 410 7 1 155 573 $1.43
Financial Results for the 1st Quarter 2007
Reconciliation of On-going to Reported Earnings
2007
Generation Parent
and & All
Utility MEMCO Marketing Other Total EPS
($ millions)
On-going Earnings 253 15 (1) 4 271 $0.68
Total Special Items - - - - - $-
Reported Earnings 253 15 (1) 4 271 $0.68
American Electric Power
Summary of Selected Sales Data
For Domestic Operations
(Data based on preliminary, unaudited results)
3 Months Ended March 31,
2007 2008 Change
ENERGY & DELIVERY SUMMARY
Retail - Domestic Electric (in millions
of kWh):
Residential 14,139 14,500 2.6%
Commercial 9,359 9,547 2.0%
Industrial 13,565 14,350 5.8%
Miscellaneous 614 609 -0.8%
Total Domestic Retail (a) 37,677 39,006 3.5%
Wholesale - Domestic Electric (in
millions of kWh): (b) 8,778 11,666 32.9%
Texas Wires Delivery (in millions of kWh): 5,831 5,823 -0.1%
EAST REGION WEATHER SUMMARY (in degree days):
Actual - Heating (c) 1,816 1,824 0.4%
- Cooling (d) 14 - -100.0%
Normal - Heating (c) 1,767 3.2% *
- Cooling (d) 3 -100.0% *
PSO/SWEPCo WEATHER SUMMARY (in degree days):
Actual - Heating (c) 902 949 5.2%
- Cooling (d) 56 26 -53.6%
Normal - Heating (c) 931 1.9% *
- Cooling (d) 20 30.0% *
* 2008 Actual vs. Normal
(a) The energy summary represents load supplied by AEP. Delivery of energy
by Texas Wires supplied by others is not included.
(b) Includes Off-System Sales, Texas Supply, Municipalities and
Cooperatives, Unit Power, and Other Wholesale Customers.
(c) Heating Degree Days temperature base is 55 degrees (d) Cooling Degree
Days temperature base is 65 degrees
(d) Cooling Degree Days temperature base is 65 degrees
SOURCE American Electric Power
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Related links:
http://www.aep.com
http://www.aep.com/go/webcasts
http://www.prnewswire.com/comp/042050.html /
CONTACT:
Media, Pat D. Hemlepp, Director, Corporate
Media Relations, +1-614-716-1620, or Analysts, Bette Jo Rozsa,
Managing Director, Investor Relations, +1-614-716-2840, both of
American Electric Power
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