-- 2008 second-quarter earnings $0.70 per share GAAP and ongoing
-- Earnings improved over prior period despite milder weather in eastern
service territories, impact of flooding on barge operations
-- Wholesale activities, utility rate increases key contributors in quarter
-- AEP reaffirms 2008 ongoing guidance range of between $3.10 and $3.30 per
share
COLUMBUS, Ohio, July 31 /PRNewswire-FirstCall/ --
AMERICAN ELECTRIC POWER
Preliminary, unaudited results
2nd quarter ended 6 months ended
June 30 June 30
2007 2008 Variance 2007 2008 Variance
Revenue ($ in billions) 3.1 3.5 0.4 6.3 7.0 0.7
Earnings ($ in millions):
GAAP 180 281 101 451 854 403
Ongoing 257 280 23 528 690 162
EPS ($):
GAAP 0.45 0.70 0.25 1.13 2.13 1.00
Ongoing 0.64 0.70 0.06 1.33 1.72 0.39
EPS based on 399mm shares in Q2 2007, 402mm in Q2 2008, 398mm in 6 mo.
2007 and 401mm in 6 mo. 2008
American Electric Power (NYSE: AEP) today reported 2008 second-quarter
earnings, prepared in accordance with Generally Accepted Accounting
Principles (GAAP), of $281 million, or $0.70 per share, compared with $180
million, or $0.45 per share, for second-quarter 2007. Ongoing earnings
(earnings excluding special items) for second-quarter 2008 were $280
million, or $0.70 per share, compared with $257 million, or $0.64 per
share, for second-quarter 2007.
GAAP earnings for second-quarter 2008 were $1 million higher than
ongoing earnings, primarily because of an adjustment to discontinued
operations in the United Kingdom. A full reconciliation of GAAP earnings to
ongoing earnings for the quarter and year to date is included in tables at
the end of this news release.
"Our ongoing earnings for the second quarter were better than in the
same period last year, even with milder weather in our eastern states and
high water on the Ohio and Mississippi rivers that made operations
difficult for our MEMCO barges," said Michael G. Morris, AEP's chairman,
president and chief executive officer. "Improved results from our
activities in wholesale markets -- from our Generation and Marketing unit
and our traditional off-system sales of power -- contributed to our
earnings improvement, as did our continued success in regulatory efforts to
adjust utility rates to reflect the increased costs of providing service to
our customers."
EARNINGS GUIDANCE
AEP reaffirmed its 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
Q2 07 Q2 08 Vari- 6 mo. 6 mo. Vari-
ance 07 08 ance
Utility Operations 238 263 25 491 673 182
Ongoing EPS 0.60 0.66 0.06 1.24 1.67 0.43
MEMCO 7 3 (4) 22 10 (12)
Ongoing EPS 0.02 0.01 (0.01) 0.06 0.03 (0.03)
Generation and Marketing 15 26 11 14 27 13
Ongoing EPS 0.03 0.06 0.03 0.03 0.07 0.04
All Other (3) (12) (9) 1 (20) (21)
Ongoing EPS (0.01) (0.03) (0.02) 0.00 (0.05) (0.05)
Ongoing Earnings 257 280 23 528 690 162
Ongoing EPS 0.64 0.70 0.06 1.33 1.72 0.39
EPS based on 399mm shares in Q2 2007, 402mm in Q2 2008, 398mm in 6 mo.
2007 and 401mm in 6 mo. 2008
Ongoing earnings from Utility Operations increased by $25 million
during second-quarter 2008 compared with the second quarter of 2007.
Increased rates from retail and municipal and cooperative customers and
higher gross margins from off-system sales were somewhat offset by higher
expenses, including for fuel, than those recorded in the same period in
2007.
AEP's MEMCO barge operations reported lower ongoing earnings than in
the same period in 2007 because of continued high water conditions from
flooding on the Ohio and Mississippi rivers and reduced northbound
loadings. Operating costs during the current quarter were higher because
sustained high-water conditions reduced tow sizes, restricted operating
hours and increased fuel consumption. A reduction in imports through the
Gulf of Mexico, a result of the slowing United States economy and weak U.S.
dollar, continued to depress northbound loadings.
Favorable marketing contracts, higher gross margins at AEP's Oklaunion
power plant in Texas and improved earnings from AEP's wind farms increased
ongoing earnings for Generation and Marketing in the quarter when compared
with the prior period. Generation and Marketing includes AEP's
non-regulated generating, marketing and risk management activities,
primarily in the Electric Reliability Council of Texas (ERCOT) area.
All Other, which includes the parent company and other investments, was
lower for the quarter when compared with the prior period because of higher
interest expense from new hybrid debt and commercial paper at the parent
and lower interest income because of a decline in investment balances.
ONGOING RESULTS FROM UTILITY OPERATIONS
$ in millions except EPS
Q2 07 Q2 08 Vari- 6 mo. 6 mo. Vari-
East Regulated Integrated ance 07 08 ance
Utilities 453 528 75 1,057 1,122 65
Ohio Companies 610 551 (59) 1,213 1,247 34
West Regulated Integrated
Utilities 229 257 28 429 480 51
Texas Wires 131 134 3 244 256 12
Off-System Sales 203 243 40 384 464 80
Transmission Revenue - 3rd Party 71 82 11 143 162 19
Other Operating Revenue 148 144 (4) 289 289 0
Utility Gross Margin 1,845 1,939 94 3,759 4,020 261
Operations & Maintenance (770) (840) (70) (1,598) (1,587) 11
Depreciation & Amortization (365) (365) 0 (748) (720) 28
Taxes Other Than Income Taxes (187) (188) (1) (371) (382) (11)
Interest Expense & Preferred
Dividend (207) (218) (11) (386) (428) (42)
Other Income & Deductions 27 49 22 66 91 25
Income Taxes (105) (114) (9) (231) (321) (90)
Utility Operations Ongoing
Earnings 238 263 25 491 673 182
Ongoing EPS 0.60 0.66 0.06 1.24 1.67 0.43
EPS based on 399mm shares in Q2 2007, 402mm in Q2 2008, 398mm in 6 mo.
2007 and 401mm in 6 mo. 2008
Retail Sales -- Results for second-quarter 2008 were higher than in the
same period in 2007, primarily because of the impact of rate changes for
the Ohio Companies and for AEP's utilities in Virginia, West Virginia,
Oklahoma and Texas. Weather was milder than last year and reduced margins
by $20 million. In AEP's eastern territory, heating degree-days in the
second quarter were 22 percent below normal and 39 percent lower than in
the prior period; cooling degree-days in the second quarter were 2 percent
below normal and 26 percent lower than in the prior period. In AEP's
western territory, cooling degree-days in the second quarter were 3 percent
above normal and 8 percent higher than in the prior period.
Off-System Sales -- Gross margins from Off-System Sales for
second-quarter 2008 were $40 million higher than those in second-quarter
2007, primarily because of higher power prices and higher volumes.
Transmission Revenues -- Transmission Revenues for second-quarter 2008
increased $11 million from the same period in 2007, primarily from AEP's
transmission assets in the Southwest Power Pool and ERCOT regions.
Operations & Maintenance Expense -- Operations & Maintenance Expense
for the quarter increased $70 million from the same period last year,
primarily because of increased spending across all business functions for
maintenance and higher general expenses primarily related to employee
benefits.
Depreciation & Amortization -- Depreciation & Amortization for the
quarter was essentially flat with the same period in 2007. Lower
regulator-approved depreciation rates in Indiana, Michigan, Oklahoma and
Texas and lower Ohio regulatory asset amortization in the quarter were
offset by higher depreciable property balances and prior-year adjustments
related to the 2007 Virginia base rate case.
Interest Expense & Preferred Dividends -- The increase in Interest
Expense for second-quarter 2008 is primarily because of increased long-term
debt and higher interest rates on variable-rate debt.
Other Income & Deductions -- Other Income & Deductions increased in
second-quarter 2008, primarily because of interest income related to a
claim for a federal tax refund and higher carrying-cost income.
WEBCAST
American Electric Power's quarterly conference call with financial
analysts will be broadcast live over the Internet at 10 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
(including the costs of projects that are canceled) 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 implementation of
the recently passed utility law 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 2nd Quarter 2008 Actual vs 2nd Quarter 2007 Actual
2007 Actual 2008 Actual
($ millions) EPS ($ millions) EPS
UTILITY OPERATIONS:
Gross Margin:
1 East Regulated Integrated
Utilities 453 528
2 Ohio Companies 610 551
3 West Regulated Integrated
Utilities 229 257
4 Texas Wires 131 134
5 Off-System Sales 203 243
6 Net Transmission Revenue - 3rd
Party 71 82
7 Other Operating Revenue 148 144
8 Utility Gross Margin 1,845 1,939
9 Operations & Maintenance (770) (840)
10 Depreciation & Amortization (365) (365)
11 Taxes Other than Income Taxes (187) (188)
12 Interest Exp & Preferred
Dividend (207) (218)
13 Other Income & Deductions 27 49
14 Income Taxes (105) (114)
15 Utility Operations On-Going
Earnings 238 0.60 263 0.66
NON-UTILITY OPERATIONS:
16 MEMCO 7 0.02 3 0.01
17 Generation & Marketing 15 0.03 26 0.06
18 Parent & Other On-Going
Earnings (3) (0.01) (12) (0.03)
19 ON-GOING EARNINGS 257 0.64 280 0.70
Note: For analysis purposes, certain financial statement amounts have been
reclassified for this effect on earnings presentation.
American Electric Power
Financial Results for the 2nd Quarter 2008
Reconciliation of On-going to Reported Earnings
2008
Generation Parent
and & All
Utility MEMCO Marketing Other Total EPS
($ millions)
On-going Earnings 263 3 26 (12) 280 $0.70
Dispositions:
Gain on Sale of
UK Operations - - - 1 1 $-
Total Special Items - - - 1 1 $-
Reported Earnings 263 3 26 (11) 281 $0.70
Financial Results for the 2nd Quarter 2007
Reconciliation of On-going to Reported Earnings
2007
Generation Parent
and & All
Utility MEMCO Marketing Other Total EPS
($ millions)
On-going Earnings 238 7 15 (3) 257 $0.64
Dispositions:
Gain on Sale of
UK Operations - - - 2 2 $0.01
Other
Virginia Re-Regulation
SFAS 71 (79) - - - (79) (0.20)
Total Special Items (79) - - 2 (77) $(0.19)
Reported Earnings 159 7 15 (1) 180 $0.45
American Electric Power
Summary of Selected Sales Data
For Domestic Operations
(Data based on preliminary, unaudited results)
3 Months Ended June 30,
2007 2008 Change
ENERGY & DELIVERY SUMMARY
Retail - Domestic Electric (in
millions of kWh):
Residential 10,127 9,829 -2.9%
Commercial 10,227 9,909 -3.1%
Industrial 14,848 15,060 1.4%
Miscellaneous 632 639 1.1%
Total Domestic Retail (a) 35,834 35,437 -1.1%
Wholesale - Domestic Electric (in
millions of kWh): (b) 9,376 10,932 16.6%
Texas Wires Delivery (in millions of
kWh): 6,746 7,132 5.7%
EAST REGION WEATHER SUMMARY (in
degree days):
Actual - Heating (c) 222 136 -38.7%
- Cooling (d) 367 272 -25.9%
Normal - Heating (c) 175 -22.3% *
- Cooling (d) 278 -2.2% *
PSO/SWEPCo WEATHER SUMMARY (in degree
days):
Actual - Heating (c) 92 40 -56.5%
- Cooling (d) 622 675 8.5%
Normal - Heating (c) 35 14.3% *
- Cooling (d) 652 3.5% *
* 2008 Actual vs. Normal
(a) The energy summary represents load supplied by AEP.
Delivery of energy by Texas Wires supplied by others is not included.
(b) Includes Off-System Sales, Texas Supply, Municipalities and
Cooperatives, Unit Power, and Other Wholesale Customers.
(c) Heating Degree Days temperature base is 55 degrees
(d) Cooling Degree Days temperature base is 65 degrees
American Electric Power
Financial Results for YTD June 2008 Actual vs YTD June 2007 Actual
2007 Actual 2008 Actual
($ millions) EPS ($ millions) EPS
UTILITY OPERATIONS:
Gross Margin:
1 East Regulated Integrated
Utilities 1,057 1,122
2 Ohio Companies 1,213 1,247
3 West Regulated Integrated
Utilities 429 480
4 Texas Wires 244 256
5 Off-System Sales 384 464
6 Net Transmission Revenue - 3rd
Party 143 162
7 Other Operating Revenue 289 289
8 Utility Gross Margin 3,759 4,020
9 Operations & Maintenance (1,598) (1,587)
10 Depreciation & Amortization (748) (720)
11 Taxes Other than Income Taxes (371) (382)
12 Interest Exp & Preferred
Dividend (386) (428)
13 Other Income & Deductions 66 91
14 Income Taxes (231) (321)
15 Utility Operations On-Going
Earnings 491 1.24 673 1.67
NON-UTILITY OPERATIONS:
16 MEMCO 22 0.06 10 0.03
17 Generation & Marketing 14 0.03 27 0.07
18 Parent & Other On-Going
Earnings 1 - (20) (0.05)
19 ON-GOING EARNINGS 528 1.33 690 1.72
Note: For analysis purposes, certain financial statement amounts have been
reclassified for this effect on earnings presentation.
American Electric Power
Financial Results for Year-to-Date 2008
Reconciliation of On-going to Reported Earnings
2008
Generation Parent
and & All
Utility MEMCO Marketing Other Total EPS
($ millions)
On-going Earnings 673 10 27 (20) 690 $1.72
Dispositions:
Tractebel Settlement - - - 163 163 $0.41
Gain on Sale of
UK Operations - - 1 1 $-
Total Special Items - - - 164 164 $0.41
Reported Earnings 673 10 27 144 854 $2.13
Financial Results for Year-to-Date 2007
Reconciliation of On-going to Reported Earnings
2007
Generation Parent
and & All
Utility MEMCO Marketing Other Total EPS
($ millions)
On-going Earnings 491 22 14 1 528 $1.33
Dispositions:
Gain on Sale of
UK Operations - - - 2 2 $-
Other
Virginia Re-Regulation
SFAS 71 (79) - - - (79) $(0.20)
Total Special Items (79) - - 2 (77) $(0.20)
Reported Earnings 412 22 14 3 451 $1.13
American Electric Power
Summary of Selected Sales Data
For Domestic Operations
(Data based on preliminary, unaudited results)
6 Months Ended June 30,
2007 2008 Change
ENERGY & DELIVERY SUMMARY
Retail - Domestic Electric (in
millions of kWh):
Residential 24,267 24,329 0.3%
Commercial 19,586 19,456 -0.7%
Industrial 28,413 29,410 3.5%
Miscellaneous 1,245 1,248 0.2%
Total Domestic Retail (a) 73,511 74,443 1.3%
Wholesale - Domestic Electric (in
millions of kWh): (b) 18,154 22,597 24.5%
Texas Wires Delivery (in millions of
kWh): 12,577 12,955 3.0%
EAST REGION WEATHER SUMMARY (in
degree days):
Actual - Heating (c) 2,039 1,960 -3.9%
- Cooling (d) 382 272 -28.8%
Normal - Heating (c) 1,943 0.9% *
- Cooling (d) 281 -3.2% *
PSO/SWEPCo WEATHER SUMMARY (in degree
days):
Actual - Heating (c) 994 989 -0.5%
- Cooling (d) 678 700 3.2%
Normal - Heating (c) 966 2.4% *
- Cooling (d) 672 4.2% *
* 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
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, Analysts, Bette Jo Rozsa,
Managing Director, Investor Relations, +1-614-716-2840, both of
American Electric Power
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