COLUMBUS, Ohio, Jan. 28, 1998 -- American Electric Power Co. (NYSE: AEP) today reported that, before an extraordinary item, net income for the year ended Dec. 31, 1997, increased 5.6 percent to $620.4 million, or $3.28 a share, from $587.4 million, or $3.14 a share, in 1996. Operating revenues increased 5.3 percent to $6.16 billion from $5.85 billion.
The third quarter extraordinary item was the United Kingdom's one-time windfall tax on privatized utilities, which reduced AEP's share of Yorkshire Electricity Group's earnings for the year by $109.4 million. The windfall tax was based on a retroactive revaluation of the original privatization price. After the windfall tax, earnings for the year decreased 13.0 percent to $511.0 million, or $2.70 a share.
For the fourth quarter, net income decreased 4.8 percent to $126.1 million, or 66 cents a share, compared with $132.4 million, or 71 cents a share, for the same period a year earlier. Operating revenues increased 17.8 percent to $1.70 billion from $1.45 billion.
"Our 1997 earnings improved in spite of mild temperatures in the first and second quarters that reduced residential energy usage for the year," said E. Linn Draper Jr., AEP chairman, president and chief executive officer. The improvement is mainly attributable to earnings from AEP's April 1997 investment in Yorkshire Electricity.
"AEP's share of Yorkshire Electricity's earnings increased non-operating income by $50 million, including $26 million of third quarter income tax benefits related to a U.K. corporate income tax rate reduction and U.S. tax credits," Draper said.
Total operating revenues for the year rose despite the decline in residential sales. "Wholesale energy sales for the year were up 38 percent as a result of new power marketing transactions and coal conversion services," Draper said. "Also contributing to the increased revenues and earnings were increased transmission service sales."
Fourth quarter net income declined as a result of increased operation and maintenance costs and reduced margins on wholesale sales. "Wholesale energy sales were up 80 percent, but increased competitive pressures in the wholesale energy market and the temporary unavailability of nuclear generating capacity led to a decline in fourth quarter earnings," Draper said
AEP, a global energy company, is one of the United States' largest investor-owned utilities, providing energy to 2.9 million customers in Ohio, Indiana, Michigan, West Virginia, Virginia, Tennessee and Kentucky. AEP has holdings in the United States, the United Kingdom and China. Wholly owned subsidiaries provide power engineering, consulting and management services around the world. The company is based in Columbus, Ohio.
| | 3 Months Ended Dec. 31, |
| | 1997 | 1996 | Change | Percent |
| | (in millions, except per share amounts) |
| |
| OPERATING REVENUES | $1,703.1 | $1,446.1 | $ 257.0 | 17.8% |
| |
| OPERATING EXPENSES: | |
| Fuel | 434.6 | 408.2 | 26.4 | 6.5% |
| Purchased Power | 259.3 | 16.2 | 243.1 | N.M. |
| Other Operation and Maintenance | 457.9 | 435.3 | 22.6 | 5.2% |
| Depreciation and Amortization | 143.2 | 150.5 | (7.3) | (4.9)% |
| Taxes Other Than Federal Income Taxes | 117.9 | 121.8 | (3.9) | (3.2)% |
| Federal Income Taxes | 74.1 | 78.6 | (4.5) | (5.7)% |
| |
| TOTAL OPERATING EXPENSES | 1,487.0 | 1,210.6 | 276.4 | 22.8% |
| |
| OPERATING INCOME | 216.1 | 235.5 | (19.4) | (8.2)% |
| |
| Nonoperating Income | 16.5 (a) | (1.4) | 17.9 | N.M. |
| Interest Charges & Preferred Stock Dividends | 107.7 | 101.7 | 6.0 | 5.9% |
| |
| INCOME BEFORE EXTRAORDINARY ITEM | 124.9 | 132.4 | (7.5) | (5.7)% |
| |
| Extraordinary Item - U.K. Windfall Tax | 1.2 | 0.0 | 1.2 | N.M. |
| |
| NET INCOME | $126.1 | $132.4 | $ (6.3) | (4.8)% |
| |
| Average Shares Outstanding | 189.7 | 187.9 | 1.8 | 1.0% |
| |
| EARNINGS PER SHARE | $0.66 | $0.71 | $(0.05) | (7.0)% |
| |
| Cash Dividends Paid Per Share | $0.60 | $0.60 | $0.00 | 0.0% |
| |
| |
| ENERGY SALES (in millions of kilowatthours): | |
| Retail: | |
| Residential | 7,951 | 7,657 | 294 | 3.8% |
| Commercial | 5,634 | 5,434 | 200 | 3.7% |
| Industrial | 11,983 | 11,420 | 563 | 4.9% |
| Miscellaneous | 332 | 328 | 4 | 1.2% |
| Total Retail | 25,900 | 24,839 | 1,061 | 4.3% |
| Wholesale (Sales for Resale) | 16,304 | 9,076 | 7,228 | 79.6% |
| |
| TOTAL ENERGY SALES | 42,204 | 33,915 | 8,289 | 24.4% |
| |
| |
(a) Includes the Company's share of Yorkshire Electricity's earnings.
N.M. = Not Meaningful |
| | 12 Months Ended Dec. 31, |
| | 1997 | 1996 | Change | Percent |
| | (in millions, except per share amounts) |
| |
| OPERATING REVENUES | $6,161.4 | $5,849.2 | $312.2 | 5.3% |
| |
| OPERATING EXPENSES: | |
| Fuel | 1,627.1 | 1,600.6 | 26.5 | 1.7% |
| Purchased Power | 416.3 | 86.1 | 330.2 | 383.5% |
| Other Operation and Maintenance | 1,710.6 | 1,712.9 | (2.3) | (0.1)% |
| Depreciation and Amortization | 591.1 | 600.8 | (9.7) | (1.6)% |
| Taxes Other Than Federal Income Taxes | 490.6 | 498.6 | (8.0) | (1.6)% |
| Federal Income Taxes | 341.2 | 342.2 | (1.0) | (0.3)% |
| |
| TOTAL OPERATING EXPENSES | 5,176.9 | 4,841.2 | 335.7 | 6.9% |
| |
| OPERATING INCOME | 984.5 | 1,008.0 | (23.5) | (2.3)% |
| |
| Nonoperating Income | 59.5 (a) | 2.2 | 57.3 | N.M. |
| Interest Charges & Preferred Stock Dividends | 423.6 | 422.8 | 0.8 | 0.2% |
| |
| INCOME BEFORE EXTRAORDINARY ITEM | 620.4 | 587.4 | 33.0 | 5.6% |
| |
| Extraordinary Loss - U.K. Windfall Tax | (109.4) | 0.0 | (109.4) | N.M. |
| |
| NET INCOME | $511.0 | $587.4 | $(76.4) | (13.0)% |
| |
| Average Shares Outstanding | 189.0 | 187.3 | 1.7 | 0.9% |
| |
| EARNINGS PER SHARE: | |
| Income Before Extraordinary Item | $3.28 | $3.14 | $0.14 | 4.5% |
| Extraordinary Loss - U.K. Windfall Tax | (0.58) | 0.00 | (0.58) | N.M. |
| Net Income | $2.70 | $3.14 | $(0.44) | (14.0)% |
| |
| Cash Dividends Paid Per Share | $2.40 | $2.40 | $0.00 | 0.0% |
| |
| |
| ENERGY SALES (in millions of kilowatthours): | |
| Retail: | |
| Residential | 30,283 | 30,853 | (570) | (1.8)% |
| Commercial | 22,720 | 22,558 | 162 | 0.7% |
| Industrial | 46,282 | 45,395 | 887 | 2.0% |
| Miscellaneous | 1,265 | 1,264 | 1 | 0.1% |
| Total Retail | 100,550 | 100,070 | 480 | 0.5% |
| Wholesale (Sales for Resale) | 44,873 | 32,503 | 12,370 | 38.1% |
| |
| TOTAL ENERGY SALES | 145,423 | 132,573 | 12,850 | 9.7% |
| |
| |
(a) Includes the Company's share of Yorkshire Electricity's earnings.
N.M. = Not Meaningful |
For More Information, Contact:
Media:
Pat D. Hemlepp
Manager, Media Relations
614/223-1620
Analysts:
John S. Bilacic
Manager, Investor Relations
614/223-2847