Exhibit 99
AEP Reports Second-Quarter Ongoing EPS of $0.44,
Reaffirms 2003 Ongoing Guidance of $2.20 to $2.40 Per Share
COLUMBUS, Ohio, July 30 /PRNewswire-FirstCall/ -- American Electric Power
(NYSE: AEP) today reported 2003 second-quarter ongoing earnings of $0.44 per
share and remains on target to meet its earnings guidance for 2003 despite
unfavorable weather that reduced electricity demand. Ongoing earnings for
second-quarter 2002 were $0.56 per share.
The second-quarter 2003 per-share results reflect the dilutive effect of
additional shares outstanding, which reduced ongoing earnings by $0.09 per
share when compared to the prior period. Comparisons with the prior period
also are affected by the sale of SEEBOARD in the UK, which added $25 million,
or $0.08 per share, to ongoing earnings in last year's second quarter before
being divested in July 2002. Weather adversely affected ongoing earnings
$0.06 per share year-to-year for the quarter.
"Our ongoing earnings for the first six months of 2003 are $1.05 per
share, including a $0.14 per share dilutive effect of additional shares
outstanding in the period. This has us on pace for 2003 ongoing earnings in
the $2.20 to $2.40 per share range, as we anticipated prior to the start of
the year," said E. Linn Draper Jr., AEP's chairman, president and chief
executive officer.
Results were:
Second quarter Six months
ended June 30 ended June 30
2002 2003 Variance 2002 2003 Variance
Revenue ($ in billions) 3.6 3.7 0.1 6.6 7.7 1.1
Earnings ($ in millions):
Ongoing 181.6 174.9 (6.7) 371.0 393.1 22.1
As reported 61.9 175.3 113.4 (107.0) 615.4 722.4
EPS ($):
Ongoing 0.56 0.44 (0.12) 1.15 1.05 (0.10)
As reported 0.19 0.44 0.25 (0.33) 1.64 1.97
Ongoing and as-reported EPS for second-quarter 2003 are based on an
average of approximately 395 million shares outstanding, compared to an
average of approximately 326 million shares outstanding for the same period in
2002. Year-to-date 2003 ongoing and as-reported EPS are based on an average
of approximately 376 million shares outstanding, compared to an average
324 million shares outstanding for the same period in 2002.
AEP's as-reported earnings are prepared in accordance with Generally
Accepted Accounting Principles (GAAP) and represent the company's earnings as
reported to the Securities and Exchange Commission. AEP's management believes
that the company's ongoing earnings data, or as-reported earnings adjusted for
certain items as described in the news release and charts, provides 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.
The one item excluded from second-quarter 2003 ongoing earnings is a
$433,326 nonrecurring gain on the disposition of Nordic trading operations.
A full reconciliation of items contributing to the difference between ongoing
and as-reported earnings for this period and comparable prior periods is
included in the charts at the end of this news release.
ONGOING RESULTS BY SEGMENT
($ in millions except per share data;
EPS based on 326mm shares in 2002, 395mm shares in 2003)
Q2 2002 EPS Q2 2003 EPS
Utility operations 237 0.73 225 0.57
Investments (47) (0.14) (47) (0.12)
Parent company (8) (0.03) (3) (0.01)
Weather, the economy and outages at AEP's Donald C. Cook Nuclear Plant and
the partially owned South Texas Project Nuclear Plant were key factors in the
performance of AEP's utility operations.
"The Midwest weather was extraordinarily mild in the second quarter, with
average temperatures well below normal and significantly below last year,"
Draper said. "This reduced residential demand. Temperatures in our western
states were a bit above normal, but still below last year.
"We're also seeing continued pressure on industrial demand, evidence of a
slower-than-expected economic recovery. Industrial load was down almost
5 percent from last year's second quarter, continuing a decline that began in
2001," Draper said.
The Cook plant was forced out of service in late April because of a
massive influx of fish in the plant's cooling water system. Unit 1 returned
to service in late May, but Unit 2 continued into a planned 35-day refueling
outage and returned to service June 20. South Texas Project's Unit 1 was
taken out of service in mid-April when a small quantity of boric acid residue
was found inside the Unit 1 reactor containment building. South Texas Project
Nuclear Operating Co., the plant's manager, completed repairs in early July
and is seeking approval from the Nuclear Regulatory Commission for a late
summer restart. AEP owns 25.2 percent of South Texas Project. The outages at
the two nuclear plants resulted in higher fuel and purchased power costs in
the quarter for AEP.
"While the quarter and year-to-date results from utility operations, our
core businesses, and from investments are within our expectations, losses from
investments continue to reduce earnings," Draper said. "We did see some
improvements in the second quarter, specifically in our operations in the
United Kingdom, but this hasn't altered our plan to divest non-core assets."
In January, AEP said it would divest non-core assets and focus on the core
utility businesses. AEP has selected advisors to assist with developing a
plan of divestiture for its Louisiana Intrastate Gas holdings, coal mines and
independent power plants (IPPs). The company sold one of its IPPs, the
85-megawatt Newgulf plant in Texas, in May for $7 million. AEP continues to
review options for other non-core assets.
ONGOING RESULTS FROM UTILITY OPERATIONS
($ in millions except per share data;
EPS based on 326mm shares in 2002, 395mm shares in 2003)
Q2 2002 Q2 2003 Variance
Retail Margin - Regulated Integrated Utilities 679 615 (64)
Ohio Companies 463 448 (15)
Texas Wires 115 174 59
Texas Supply/REP 124 86 (38)
FERC Municipal and Co-op Customers 60 59 (1)
System Sales 118 119 1
Other Wholesale Transactions 8 (2) (10)
Transmission Revenue - 3rd Party 114 116 2
Other Operating Revenue 75 86 11
Total Gross Margin 1,756 1,701 (55)
Operations & Maintenance (754) (734) 20
Depreciation & Amortization (320) (313) 7
Taxes Other Than Federal Income Taxes (174) (162) 12
Capital Cost and Other (140) (157) (17)
Federal Income Taxes (131) (110) 21
Ongoing Net Earnings Utility Operations 237 225 (12)
Ongoing Earnings Per Share 0.73 0.57 (0.16)
The impact of weather, the continued weak economy and costs associated
with the Cook outage were primary factors in reduced earnings from regulated
integrated utilities.
The Ohio companies also recorded lower demand, again attributable to mild
weather and the economy, which reduced earnings.
The gain in earnings from Texas wires is primarily attributed to
$52.4 million in non-cash earnings associated with stranded cost recovery in
Texas, which reflects the difference between the actual price received from
the state-mandated auction of 15 percent of generation capacity and the
earlier estimate of market prices derived from the Public Utility Commission
of Texas (PUCT) model. It has been established as a regulatory asset that is
recoverable through the 2004 true-up process established by deregulation laws
in Texas. In 2002, these non-cash earnings were not recorded until the fourth
quarter.
The decline in earnings from Texas supply reflects the South Texas Project
outage, higher fuel costs and a separate provision for the potential
disallowance by the PUCT of fuel expenses. The Texas supply results include
the gross margin for output of generating units in the Electric Reliability
Council of Texas (ERCOT) and from "reliability must run" (RMR) contracts with
ERCOT for generating units scheduled to be mothballed by AEP. The 2002
results also included margins from two retail electricity providers that were
sold to Centrica in December 2002.
Earnings from FERC municipal and co-op customers, system sales and
third-party transmission were essentially flat from period to period.
The transition electric trading book, associated with AEP's decision to
exit from markets where it doesn't own assets, is included in other wholesale
transactions. The 2003 results, which reflect AEP's "flattened" positions in
those markets, are compared to gains in second-quarter 2002 when AEP was an
active participant.
ONGOING RESULTS FROM INVESTMENTS
($ in millions except per share data;
EPS based on 326mm shares in 2002, 395mm shares in 2003)
Q2 2002 Q2 2003 Variance
AEP Energy Services,
includes Gas HoldCo (HPL & LIG) (32) (24) 8
MEMCO 2 1 (1)
AEP Coal (1) (1) 0
UK Generation, includes European
and Nordic Trading net earnings (12) 3 15
Independent Power Plants and Wind Farms (4) (2) 2
AEP Resources - Other (20) (11) 9
SEEBOARD (sale closed 7/29/2002) 25 -- (25)
CitiPower (sale closed 8/30/2002) 0 -- 0
AEP Communications (9) (4) 5
CSW International (1) 0 1
Other 5 (9) (14)
Ongoing Total Investments (47) (47) 0
Ongoing Earnings Per Share (0.14) (0.12) 0.02
A profitable quarter by UK generation and reduced losses in other areas
helped AEP offset the prior-period earnings contribution from SEEBOARD, a UK
regional electric company sold by AEP in July 2002.
"The improved performance by our UK operations was driven primarily by a
strong quarter from our coal and freight procurement group and reduced
interest expense, as the debt associated with the UK plants was retired in
early April," Draper said. "We have seen better mid-term power prices, but
significant liquidity issues in the UK market and the uncertain environmental
regulations are still concerns, so we expect this market to remain a difficult
one in the foreseeable future."
AEP Energy Services, which includes the company's gas business,
experienced a $24 million loss for the quarter as compared to a loss of
$32 million during the comparable period in 2002.
American Electric Power owns and operates more than 42,000 megawatts of
generating capacity in the United States and select international markets and
is the largest electricity generator in the U.S. AEP is also one of the
largest electric utilities in the United States, with almost 5 million
customers linked to AEP's 11-state electricity transmission and distribution
grid. The company is based in Columbus, Ohio.
American Electric Power's quarterly earnings conference call with
financial analysts will be broadcast live over the Internet at 9:30 a.m. EDT
today. Audio will be available at
http://www.firstcallevents.com/service/ajwz384686832gf12.html or
http://www.aep.com/go/webcasts.
The call will be archived on http://www.aep.com for use by those unable to
listen during the live webcast.
Minimum requirements to listen to broadcast: The Windows Media Player
software, free from
http://www.microsoft.com/windows/windowsmedia/EN/default.asp, and at least a
28.8Kbps connection to the Internet. If you experience problems listening to
the broadcast, send an e-mail to webcastsupport@tfprn.com.
The comments set forth above include forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, including (1)
statements concerning the Company's plans, objectives, expected performance
and expenditures and (2) other statements that are other than statements of
historical fact. These forward-looking statements reflect assumptions, and
involve a number of risks and uncertainties. Among the factors that could
cause actual results to differ materially from forward-looking statements are
electric load and customer growth, abnormal weather conditions, availability
of generating capacity, the ability to recover net regulatory assets and other
stranded costs in connection with deregulation of generation, the outcome of
environmental regulation and litigation, the impact of fluctuation in
commodity prices and interest rates, and other risks and unforeseen events
over which the Company has no control. The reader is also directed to the
Company's periodic filings with the Securities and Exchange Commission for
additional factors that may impact the Company's results of operations and
financial condition. Furthermore, historical results may not be indicative of
the Company's future performance.
American Electric Power
Financial Results for 2nd Quarter 2003 Actual vs 2nd Quarter 2002 Actual
2002 Actual 2003 Actual
($ millions) EPS ($ millions) EPS
UTILITY OPERATIONS:
Gross Margin:
1 Retail Margin - Regulated
Integrated Utilities 679 615
2 Ohio Cos. 463 448
3 Texas Wires 115 174
4 Texas Supply / REP 124 86
5 FERC Municipal and Co-op Customers 60 59
6 System Sales 118 119
7 Other Wholesale Transactions 8 (2)
8 Transmission Revenue - 3rd Party 114 116
9 Other Operating Revenue 75 86
10 Total Gross Margin 1,756 1,701
11 Operations & Maintenance (754) (734)
12 Depreciation & Amortization (320) (313)
13 Taxes Other than FIT (174) (162)
14 Capital Cost and Other (140) (157)
15 Federal Income Taxes (131) (110)
16 Net Earnings Utility
Operations 237 0.73 225 0.57
INVESTMENTS:
17 AEPES, inclds Gas HoldCo
(HPL & LIG) (32) (24)
18 MEMCO 2 1
19 AEP Coal (1) (1)
20 UK Generation, inclds European
and Nordic Trading (12) 3
21 IPPs and Wind Farms (4) (2)
22 AEP Resources - Other (20) (11)
23 SEEBOARD (Sale closed 7/29/2002) 25 --
24 CitiPower (Sale closed 8/30/2002) 0 --
25 AEP Communications (9) (4)
26 CSW International (1) 0
27 Other 5 (9)
28 Total Investments (47) (0.14) (47) (0.12)
29 Parent Company (8) (0.03) (3) (0.01)
30 ON-GOING EARNINGS 182 0.56 175 0.44
Note: For analysis purposes, certain financial statement amounts have
been reclassified for this effect on earnings presentation.
American Electric Power
Financial Results for 2nd Quarter 2003 Actual vs 2nd Quarter 2002 Actual
2002 Actual 2003 Actual
($ millions) EPS ($ millions) EPS
On-going Earnings 181.6 0.56 174.9 0.44
Special Items:
Gain on Disposition of Nordic 0.4 --
Impairment of Investment - SEEBOARD (22.0) (0.07)
Impairment of Investment - CitiPower (97.7) (0.30)
Total Special Items (119.7) (0.37) 0.4 --
Reported Earnings 61.9 0.19 175.3 0.44
American Electric Power
Summary of Selected Sales Data
For Domestic and Trading Operations
(Data based on preliminary, unaudited results)
3 Months Ended June 30,
2002** 2003** Change
ENERGY SUMMARY
Retail - Domestic Electric (in millions of kWh):
Residential 9,394 8,694 -7.5%
Commercial 8,785 8,850 0.7%
Industrial 13,734 13,076 -4.8%
Miscellaneous 543 734 35.2%
Total Domestic Retail 32,456 31,354 -3.4%
Wholesale - Domestic Electric
(in millions of kWh): 16,331 20,450 25.2%
WEATHER SUMMARY (in degree days):
Actual - Heating 374 340 -9.1%
- Cooling 441 304 -31.1%
Normal - Heating 361 -5.8%*
- Cooling 365 -16.7%*
* 2003 Actual vs. Normal
** Excludes energy transported on behalf of non-affiliated REP's in Texas;
energy sold to affiliated REP's in Texas is included in wholesale
sales.
American Electric Power
Financial Results for June 2003 YTD Actual vs June 2002 YTD Actual
2002 Actual 2003 Actual
($ millions) EPS ($ millions) EPS
UTILITY OPERATIONS:
Gross Margin:
1 Retail Margin - Regulated
Integrated Utilities 1,354 1,293
2 Ohio Cos. 923 928
3 Texas Wires 215 331
4 Texas Supply / REP 257 174
5 FERC Municipal and Co-op Customers 117 128
6 System Sales 143 244
7 Other Wholesale Transactions 64 (5)
8 Transmission Revenue - 3rd Party 195 229
9 Other Operating Revenue 148 169
10 Total Gross Margin 3,416 3,491
11 Operations & Maintenance (1,428) (1,404)
12 Depreciation & Amortization (623) (607)
13 Taxes Other than FIT (369) (363)
14 Capital Cost and Other (287) (320)
15 Federal Income Taxes (244) (263)
16 Net Earnings Utility
Operations 465 1.44 534 1.42
INVESTMENTS:
17 AEPES, inclds Gas HoldCo
(HPL & LIG) (80) (39)
18 MEMCO 5 2
19 AEP Coal (3) (3)
20 UK Generation, inclds European
and Nordic Trading 11 (37)
21 IPPs and Wind Farms (5) (9)
22 AEP Resources - Other (30) (18)
23 SEEBOARD (Sale closed 7/29/2002) 58 --
24 CitiPower (Sale closed 8/30/2002) (11) --
25 AEP Communications (19) (4)
26 CSW International (4) (3)
27 Other 0 (12)
28 Total Investments (78) (0.24) (123) (0.32)
29 Parent Company (16) (0.05) (18) (0.05)
30 ON-GOING EARNINGS 371 1.15 393 1.05
Note: For analysis purposes, certain financial statement amounts have been
reclassified for this effect on earnings presentation.
American Electric Power
Financial Results for June 2003 YTD Actual vs June 2002 YTD Actual
2002 Actual 2003 Actual
($ millions) EPS ($ millions) EPS
On-going Earnings 371.0 1.15 393.1 1.05
Special Items:
SFAS 143 Asset Retirement Obligation 241.8 0.64
Net Proceeds from Sale of Mutual
Energy (back office operations) 25.6 0.07
Adjustment to South Coast Impairment 6.0 0.02
Adjustment to sale of water
heater rental program (2.5) (0.01)
Cessation of EITF 98-10
re: MTM accounting (49.0) (0.13)
Gain on Disposition of Nordic 0.4 --
SFAS 142 Goodwill Transition
Impairment - SEEBOARD (323.0) (1.00)
SFAS 142 Goodwill Transition
Impairment - CitiPower (27.3) (0.09)
SFAS 142 Goodwill Impairment -
AEP Gas Power GP, LLC (8.0) (0.02)
Impairment of Investment - SEEBOARD (22.0) (0.07)
Impairment of Investment - CitiPower (97.7) (0.30)
Total Special Items (478.0) (1.48) 222.3 0.59
Reported Earnings (107.0) (0.33) 615.4 1.64
American Electric Power
Summary of Selected Sales Data
For Domestic and Trading Operations
(Data based on preliminary, unaudited results)
6 Months Ended June 30,
2002** 2003** Change
ENERGY SUMMARY
Retail - Domestic Electric
(in millions of kWh):
Residential 22,376 22,207 -0.8%
Commercial 17,679 17,741 0.4%
Industrial 27,133 25,688 -5.3%
Miscellaneous 1,168 1,429 22.3%
Total Domestic Retail 68,356 67,065 -1.9%
Wholesale - Domestic Electric
(in millions of kWh): 29,403 36,716 24.9%
WEATHER SUMMARY (in degree days):
Actual - Heating 2,117 2,431 14.8%
- Cooling 453 309 -31.8%
Normal - Heating 2,338 4.0% *
- Cooling 377 -18.0% *
* 2003 Actual vs. Normal
** Excludes energy transported on behalf of non-affiliated REP's in Texas;
energy sold to affiliated REP's in Texas are included in wholesale
sales.
SOURCE American Electric Power
/CONTACT: Media - Melissa McHenry, Manager, Corporate Media Relations,
+1-614-716-1120, or Analysts - Bette Jo Rozsa, Managing Director, Investor
Relations, +1-614-716-2840, both of American Electric Power/
/Company News On-Call: http://www.prnewswire.com/comp/042050.html /
/Web site: http://www.aep.com /
(AEP)
CO: American Electric Power
ST: Ohio, Texas
IN: OIL UTI
SU: ERN CCA