SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
April 1, 1997
Date of Report (Date of Earliest Event Reported)
American Electric Power Company, Inc.
(Exact Name of Registrant as Specified in its Charter)
New York 1-3525 13-4922640
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
1 Riverside Plaza
Columbus, Ohio 43215
(Address of principal executive offices, including zip code)
(614) 223-1000
(Registrant's Telephone Number, including area code)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired.
The audited financial statements of Yorkshire Electricity Group plc
(Yorkshire Electricity) for the most recent fiscal year, together
with the report of the auditors, as well as unaudited interim
financial statements for September 30, 1996 and 1995 are included
in Yorkshire Electricity's Report and Financial Statements for the
year ended 31 March 1996 which is attached hereto as Exhibit 99 and
are incorporated herein by reference.
(b) Pro forma financial information.
Description of the transaction
The following discussion describes the pro forma effects on the
historical consolidated financial statements of American Electric
Power Company, Inc. (AEP) of the acquisition of Yorkshire
Electricity by Yorkshire Power Group Limited (Yorkshire Power), a
joint venture formed by subsidiaries of AEP and Public Service
Company of Colorado (PSCo). The acquisition of Yorkshire
Electricity was made by Yorkshire Holdings plc (Yorkshire
Holdings), a wholly-owned subsidiary of the joint venture. The
total consideration paid by Yorkshire Holdings to acquire Yorkshire
Electricity is estimated to be approximately $2.4 billion (1.5
billion pounds sterling). The funds for the acquisition were
obtained from AEP's and PSCo's subsidiaries' investment in
Yorkshire Power of approximately $360 million (220 million pounds
sterling) each, with the remainder obtained by Yorkshire Power
through the issuance of non-recourse debt. Yorkshire Power, in
turn, funded Yorkshire Holdings for the purpose of the acquisition.
AEP's subsidiary initially funded its equity investment in
Yorkshire Power with a $50 million cash investment from AEP, $10
million of short-term borrowing and a $300 million adjustable rate
term loan under a long-term revolving credit agreement with Bank of
New York as agent. AEP's investment in Yorkshire Power will be
accounted for under the equity method of accounting.
A limited number of adjustments are required to reflect the pro
forma effects of the transaction; therefore, the information is
being furnished in a narrative format as permitted by Article 11 of
Regulation S-X.
Periods presented
Unaudited pro forma income statement information is provided for
the twelve months ended December 31, 1996, and for the three months
ended March 31, 1997, as if the transaction had been consummated on
January 1, 1996, and January 1, 1997, respectively. Unaudited pro
forma balance sheet information is provided as of March 31, 1997,
as if the transaction had been consummated on such date. Pro forma
income statement adjustments related to Yorkshire Power for the
year ended December 31, 1996, reflect the twelve months ended
December 31, 1996, and for the quarter ended March 31, 1997,
reflect the three months ended December 31, 1996. Consequently,
the pro forma income statement adjustments for the three month
period ended March 31, 1997, are reflected in both periods.
Effects of pro forma adjustments on AEP's statements of income
The pro forma items necessary to reflect the acquisition of
Yorkshire Electricity on AEP's statement of income include the
recognition of equity in the estimated earnings of Yorkshire Power,
an adjustment for interest expense on debt associated with AEP's
investment in Yorkshire Power, and related income taxes. The
estimated earnings of Yorkshire Power include the historical
earnings of Yorkshire Electricity adjusted for the effects of
purchase accounting (including increased depreciation on the
revalued fixed assets and the amortization of goodwill), interest
expense on debt issued by Yorkshire Power in connection with the
acquisition, and related income taxes. AEP's equity in the
resulting earnings is 50%, the same as its ownership interest in
Yorkshire Power.
Yorkshire Electricity's historical earnings, based on United
Kingdom generally accepted accounting principles, totaled 102.4
million pounds sterling ($159.8 million) for the twelve months
ended December 31, 1996 and 19.6 million pounds sterling ($32.1
million) for the three months ended December 31, 1996. Included in
Yorkshire Electricity's earnings is the effect of a nonrecurring
adjustment related to the write-off of certain computer development
costs which totaled 22.2 million pounds sterling (net of tax) for
the twelve months and three months ended December 31, 1996.
The estimated effect of purchase accounting by Yorkshire Power and
the conversion to United States generally accepted accounting
principles would increase AEP's net income on a pro forma basis by
approximately $19.4 million and $0.7 million for the twelve months
ended December 31, 1996 and three months ended March 31, 1997,
respectively. AEP's pro forma share of Yorkshire Power's earnings
for the twelve months ended December 31, 1996 and three months
ended March 31, 1997 would include, among other things, (a)
increased depreciation of $5.2 million and $1.4 million,
respectively, due to the revaluation of assets; (b) the
amortization of goodwill of $21.1 million and $5.4 million,
respectively; and (c) interest expense of $62.4 million and $16.4
million, respectively, on the non-recourse debt issued by Yorkshire
Power in connection with the acquisition. (All dollar amounts have
been converted using the average exchange rates for the twelve
month period and three month period of $1.561/pound sterling and
$1.636/pound sterling, respectively.)
The following table shows the effect of the aforementioned pro
forma adjustments on AEP's net income and earnings per share.
Twelve Months Ended Three Months Ended
December 31, 1996 March 31, 1997
Net Earnings Net Earnings
Income Per Share* Income Per Share*
(millions) (millions)
(unaudited) (unaudited)
AEP $587.4 $3.14 $172.6 $0.92
Pro forma adjustments:
Equity in Earnings
Of Yorkshire Power** 19.4 0.7
Interest expense, net of tax (11.3) (2.9)
Pro forma result $595.5 $3.18 $170.4 $0.90
* Based on the average number of common shares outstanding of 187,321,000 and
188,347,000 for the twelve months ended December 31, 1996, and three months ended
March 31, 1997, respectively.
** Includes $12.3 million, net of tax ($0.07 per share) for the twelve months
ended December 31, 1996 and three months ended March 31, 1997 for a nonrecurring
write-off by Yorkshire Electricity of certain computer development costs.
Effects of pro forma adjustments on AEP's balance sheet
The only pro forma adjustments needed to reflect the acquisition of
Yorkshire Electricity on AEP's balance sheet are the incorporation
of AEP's investment in Yorkshire Power of $360 million and the
inclusion of the associated short-term and long-term debt. There
is no pro forma impact on total common shareholders' equity. At
March 31, 1997, AEP's unaudited balance sheet reported total assets
of $15,905.7 million, other property and investments of $917.5
million, cash and cash equivalents of $86.1 million, short-term
debt of $334.3 million and long-term debt of $4,786.6 million.
After adjusting for AEP's estimated investment in Yorkshire Power,
the pro forma March 31, 1997 balance sheet would report total
assets of $16,215.7 million, other property and investments of
$1,277.5 million, cash and cash equivalents of $36.1 million,
short-term debt of $344.3 million and long-term debt of $5,086.6
million.
(c) Exhibits
The following exhibits are filed herewith:
Exhibit 23 Consent of Independent Public Accountants.
Exhibit 99 Yorkshire Electricity's Report and Financial
Statements for the year ended 31 March 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
AMERICAN ELECTRIC POWER COMPANY, INC.
By: /S/G.P. Maloney
G.P. Maloney
Vice President
and Secretary
Dated: June 13, 1997