COLUMBUS, Ohio, Oct. 31 /PRNewswire-FirstCall/ --
* 2008 third-quarter earnings $0.93 per share GAAP and ongoing
* Unfavorable weather key factor in decline from prior year
* AEP tightens 2008 ongoing guidance range to between $3.15 and $3.25 per
share
AMERICAN ELECTRIC POWER
Preliminary, unaudited results
3rd quarter ended 9 months ended
Sept. 30 Sept. 30
2007 2008 Variance 2007 2008 Variance
Revenue ($ in billions) 3.8 4.2 0.4 10.1 11.2 1.1
Earnings ($ in millions):
GAAP 407 374 (33) 858 1,228 370
Ongoing 462 374 (88) 990 1,064 74
EPS ($):
GAAP 1.02 0.93 (0.09) 2.15 3.06 0.91
Ongoing 1.16 0.93 (0.23) 2.48 2.65 0.17
EPS based on 399mm shares in Q3 2007, 402mm in Q3 2008, 398mm in 9 mo.
2007 and 402mm in 9 mo. 2008
American Electric Power (NYSE: AEP) today reported 2008 third-quarter
earnings, prepared in accordance with Generally Accepted Accounting Principles
(GAAP), of $374 million, or $0.93 per share, compared with $407 million, or
$1.02 per share, for third-quarter 2007. Ongoing earnings (earnings excluding
special items) for third-quarter 2008 were $374 million, or $0.93 per share,
compared with $462 million, or $1.16 per share, for third-quarter 2007.
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.
EARNINGS GUIDANCE
AEP tightened its ongoing earnings guidance range for 2008 to between
$3.15 and $3.25 per share from the previous range of $3.10 to $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.
"Our earnings for the first nine months of this year are well ahead of
where we were for the same period in 2007, and we have experienced very
balanced regulatory treatment in 2008," said Michael G. Morris, AEP chairman,
president and chief executive officer. "We remain confident in our earnings
projections for the year.
"But we are operating in very difficult conditions right now, with a
weakening economy and a global financial crisis that has limited access to
capital markets that are so vital to a capital-intensive industry like ours,
so we do have concerns about 2009 if the current economic conditions don't
improve in the coming months," Morris said. "We are taking sensible measures
to assure we have sufficient cash on hand to carry us through 2009."
SUMMARY ONGOING RESULTS BY SEGMENT
$ in millions except EPS
Q3 07 Q3 08 Variance 9 mo. 07 9 mo. 08 Variance
Utility Operations 443 357 (86) 934 1,030 96
Ongoing EPS 1.11 0.89 (0.22) 2.35 2.56 0.21
AEP River Operations 18 11 (7) 40 21 (19)
Ongoing EPS 0.05 0.03 (0.02) 0.09 0.05 (0.04)
Generation and Marketing 3 16 13 17 43 26
Ongoing EPS 0.01 0.04 0.03 0.04 0.11 0.07
All Other (2) (10) (8) (1) (30) (29)
Ongoing EPS (0.01) (0.03) (0.02) 0.00 (0.07) (0.07)
Ongoing Earnings 462 374 (88) 990 1,064 74
Ongoing EPS 1.16 0.93 (0.23) 2.48 2.65 0.17
EPS based on 399mm shares in Q3 2007, 402mm in Q3 2008, 398mm in 9 mo.
2007 and 402mm in 9 mo. 2008
Ongoing earnings from Utility Operations decreased by $86 million during
third-quarter 2008 from the same period in 2007 because of lower electricity
usage attributed to unfavorable weather, increased non-recovered fuel costs at
AEP's Ohio Companies and higher storm-related maintenance expense.
AEP River Operations' results were lower than in the same period last year
because of significant disruptions of operations caused by an oil spill in the
New Orleans harbor that limited ship arrivals and departures in late July and
August. Hurricanes Gustav and Ike disrupted Gulf of Mexico ship traffic in
September and caused severe flooding in the Mississippi and Illinois rivers as
remnants of the hurricanes moved north through the Midwest. These negative
market factors have been somewhat offset by increased coal exports and a
reduction in the nation's barge fleet because of higher barge construction
prices and scrap barge values.
Generation and Marketing benefited from higher gross margins from both its
marketing activities and the optimization of AEP's share of the Oklaunion
Power Station in Texas to improve its performance from third-quarter 2007.
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 and lower interest income from AEP affiliates.
ONGOING RESULTS FROM UTILITY OPERATIONS
$ in millions except EPS
9 mo. 9 mo.
Q3 07 Q3 08 Variance 07 08 Variance
East Regulated Integrated
Utilities 534 499 (35) 1,592 1,621 29
Ohio Companies 629 577 (52) 1,842 1,823 (19)
West Regulated Integrated
Utilities 336 341 5 765 820 55
Texas Wires 152 153 1 396 410 14
Off-System Sales 329 322 (7) 713 786 73
Transmission Revenue - 3rd
Party 81 85 4 225 247 22
Other Operating Revenue 126 150 24 413 440 27
Utility Gross Margin 2,187 2,127 (60) 5,946 6,147 201
Operations & Maintenance (771) (848) (77) (2,369) (2,435) (66)
Depreciation & Amortization (374) (379) (5) (1,122) (1,099) 23
Taxes Other Than Income
Taxes (189) (187) 2 (560) (569) (9)
Interest Expense &
Preferred Dividend (213) (225) (12) (599) (653) (54)
Other Income & Deductions 27 47 20 93 138 45
Income Taxes (224) (178) 46 (455) (499) (44)
Utility Operations
Ongoing Earnings 443 357 (86) 934 1,030 96
Ongoing EPS 1.11 0.89 (0.22) 2.35 2.56 0.21
EPS based on 399mm shares in Q3 2007, 402mm in Q3 2008, 398mm in 9 mo.
2007 and 402mm in 9 mo. 2008
Retail Sales - Results for third-quarter 2008 were lower than in the same
period in 2007, primarily because of lower customer usage, unfavorable weather
(including the impact of Hurricane Ike) and lower fuel margins at AEP's Ohio
Companies. Cooling degree-days were 5 percent lower than normal in AEP's
Eastern states and 11 percent lower than normal in the West. When compared
with the same period last year, cooling degree-days for third-quarter 2008
were 19 percent lower in the East and 11 percent lower in the West. These
unfavorable variances were somewhat offset by the impact of rate changes,
primarily 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 for third-quarter
2008 were essentially unchanged from the same period in 2007. Margins in the
East increased from third-quarter 2007 because of higher prices. Margins in
the West were lower in third-quarter 2008 because of favorable events recorded
in the same period in 2007.
Other Operating Revenue - The increase in Other Operating Revenue from the
same period in 2007 is because of higher pole-attachment rental revenue and
third-party engineering and construction work.
Operations & Maintenance Expense - Operations & Maintenance Expense for
the quarter increased $77 million from the same period last year, primarily
because of increases in storm restoration costs from the prior period as well
as some additional maintenance and reliability expenses.
Depreciation & Amortization - The increase in Depreciation & Amortization
from third-quarter 2007 is because of higher depreciable property balances.
Interest Expense & Preferred Dividends - The increase in Interest Expense
for third-quarter 2008 is primarily because of increased long-term debt
borrowings and higher interest rates on variable-rate debt.
Other Income & Deductions - Other Income & Deductions increased in third-
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 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 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 AEP and each of its
Registrant Subsidiaries 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 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
or contraction 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 impacting 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 markets; 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 and the impact
on future funding requirements; prices for power that AEP generates and sells
at wholesale; changes in technology, particularly with respect to new,
developing or alternative sources of generation; and 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 3rd Quarter 2008
Actual vs 3rd Quarter 2007 Actual
2007 Actual 2008 Actual
($ millions) EPS ($ millions) EPS
UTILITY OPERATIONS:
Gross Margin:
1 East Regulated Integrated
Utilities 534 499
2 Ohio Companies 629 577
3 West Regulated Integrated
Utilities 336 341
4 Texas Wires 152 153
5 Off-System Sales 329 322
6 Transmission Revenue - 3rd
Party 81 85
7 Other Operating Revenue 126 150
8 Utility Gross Margin 2,187 2,127
9 Operations & Maintenance (771) (848)
10 Depreciation & Amortization (374) (379)
11 Taxes Other than Income Taxes (189) (187)
12 Interest Exp & Preferred
Dividend (213) (225)
13 Other Income & Deductions 27 47
14 Income Taxes (224) (178)
15 Utility Operations Ongoing
Earnings 443 1.11 357 0.89
NON-UTILITY OPERATIONS:
16 AEP River Operations 18 0.05 11 0.03
17 Generation & Marketing 3 0.01 16 0.04
18 Parent & Other Ongoing
Earnings (2) (0.01) (10) (0.03)
19 ONGOING EARNINGS 462 1.16 374 0.93
Note: For analysis purposes, certain financial statement amounts have been
reclassified for this effect on earnings presentation.
American Electric Power
Financial Results for the 3rd Quarter 2008
Reconciliation of Ongoing to Reported Earnings
2008
AEP Generation Parent
River and & All
Utility Operations Marketing Other Total EPS
($ millions)
Ongoing Earnings 357 11 16 (10) 374 $0.93
Total Special Items - - - - - $-
Reported Earnings 357 11 16 (10) 374 $0.93
Financial Results for the 3rd Quarter 2007
Reconciliation of Ongoing to Reported Earnings
2007
AEP Generation Parent
River and & All
Utility Operations Marketing Other Total EPS
($ millions)
Ongoing Earnings 443 18 3 (2) 462 $1.16
Other
New Source Review (55) - - - (55) (0.14)
Total Special Items (55) - - - (55) $(0.14)
Reported Earnings 388 18 3 (2) 407 $1.02
American Electric Power
Summary of Selected Sales Data
For Domestic Operations
(Data based on preliminary, unaudited results)
3 Months Ended September 30,
2007 2008 Change
ENERGY & DELIVERY SUMMARY
Retail - Domestic Electric (in
millions of kWh):
Residential 13,749 12,754 -7.2%
Commercial 11,164 10,794 -3.3%
Industrial 14,697 14,761 0.4%
Miscellaneous 686 668 -2.6%
Total Domestic Retail (a) 40,296 38,977 -3.3%
Wholesale - Domestic Electric (in
millions of kWh): (b) 13,493 13,130 -2.7%
Texas Wires Delivery (in millions of
kWh): 7,721 7,961 3.1%
EAST REGION WEATHER SUMMARY
(in degree days):
Actual - Heating (c ) 2 - -100.0%
- Cooling (d) 808 651 -19.4%
Normal - Heating (c ) 7 -100.0% *
- Cooling (d) 687 -5.2% *
PSO/SWEPCo WEATHER SUMMARY
(in degree days):
Actual - Heating (c ) - - 0.0%
- Cooling (d) 1,406 1,250 -11.1%
Normal - Heating (c ) 2 -100.0% *
- Cooling (d) 1,402 -10.8% *
* 2008 Actual vs. Normal
(a) The energy summary represents load supplied by AEP.
Delivery of energy by Texas Wires supplied by others is not included.
(b) Includes Off-System Sales, Texas Supply, Municipalities and
Cooperatives, Unit Power, and Other Wholesale Customers.
(c )Heating Degree Days temperature base is 55 degrees
(d) Cooling Degree Days temperature base is 65 degrees
American Electric Power
Financial Results for YTD September
2008 Actual vs YTD September 2007
Actual
2007 Actual 2008 Actual
($ millions) EPS ($ millions) EPS
UTILITY OPERATIONS:
Gross Margin:
1 East Regulated Integrated
Utilities 1,592 1,621
2 Ohio Companies 1,842 1,823
3 West Regulated Integrated
Utilities 765 820
4 Texas Wires 396 410
5 Off-System Sales 713 786
6 Transmission Revenue - 3rd
Party 225 247
7 Other Operating Revenue 413 440
8 Utility Gross Margin 5,946 6,147
9 Operations & Maintenance (2,369) (2,435)
10 Depreciation & Amortization (1,122) (1,099)
11 Taxes Other than Income Taxes (560) (569)
12 Interest Exp & Preferred
Dividend (599) (653)
13 Other Income & Deductions 93 138
14 Income Taxes (455) (499)
15 Utility Operations Ongoing
Earnings 934 2.35 1,030 2.56
NON-UTILITY OPERATIONS:
16 AEP River Operations 40 0.09 21 0.05
17 Generation & Marketing 17 0.04 43 0.11
18 Parent & Other Ongoing Earnings (1) - (30) (0.07)
19 ONGOING EARNINGS 990 2.48 1,064 2.65
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 Ongoing to Reported Earnings
2008
AEP Generation Parent
River and & All
Utility Operations Marketing Other Total EPS
($ millions)
Ongoing Earnings 1,030 21 43 (30) 1,064 $2.65
Dispositions:
Tractebel Settlement - - - 163 163 $0.41
Gain on Sale of UK
Operations - - - 1 1 $-
Total Special Items - - - 164 164 $0.41
Reported Earnings 1,030 21 43 134 1,228 $3.06
Financial Results for Year-to-Date 2007
Reconciliation of Ongoing to Reported Earnings
2007
AEP Generation Parent
River and & All
Utility Operations Marketing Other Total EPS
($ millions)
Ongoing Earnings 934 40 17 (1) 990 $2.48
Dispositions:
Gain on Sale of UK
Operations - - - 2 2 $-
Other
Virginia Re-Regulation
SFAS 71 (79) - - - (79) $(0.20)
New Source Review (55) - - - (55) $(0.13)
Total Special Items (134) - - 2 (132) $(0.33)
Reported Earnings 800 40 17 1 858 $2.15
American Electric Power
Summary of Selected Sales Data
For Domestic Operations
(Data based on preliminary, unaudited results)
9 Months Ended September 30,
2007 2008 Change
ENERGY & DELIVERY SUMMARY
Retail - Domestic Electric (in
millions of kWh):
Residential 38,015 37,084 -2.4%
Commercial 30,750 30,249 -1.6%
Industrial 43,110 44,171 2.5%
Miscellaneous 1,932 1,916 -0.8%
Total Domestic Retail (a) 113,807 113,420 -0.3%
Wholesale - Domestic Electric (in
millions of kWh): (b) 31,648 35,728 12.9%
Texas Wires Delivery (in millions of
kWh): 20,297 20,916 3.0%
EAST REGION WEATHER SUMMARY (in
degree days):
Actual - Heating (c ) 2,041 1,960 -4.0%
- Cooling (d) 1,189 924 -22.3%
Normal - Heating (c ) 1,950 0.5% *
- Cooling (d) 969 -4.6% *
PSO/SWEPCo WEATHER SUMMARY (in degree
days):
Actual - Heating (c ) 994 989 -0.5%
- Cooling (d) 2,084 1,951 -6.4%
Normal - Heating (c ) 967 2.3% *
- Cooling (d) 2,074 -5.9% *
* 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
