AEP Reports 2012 Fourth-Quarter and Year-End Earnings

            AEP Reports 2012 Fourth-Quarter and Year-End Earnings

PR Newswire

COLUMBUS, Ohio, Feb. 15, 2013

COLUMBUS, Ohio, Feb. 15, 2013 /PRNewswire/ --

  oFourth-quarter earnings $0.05 per share GAAP and $0.50 per share
    operating; difference primarily due to Ohio plant impairments and
    restructuring charges
  o2012 year-end earnings $2.60 per share GAAP and $3.09 per share operating
  oContinued discipline around controlling costs
  oJohn W. Turk Jr. coal-fueled generation plant on line in December 2012

AMERICAN ELECTRIC POWER

Preliminary, unaudited results
                       Fourth quarter ended Dec. 31 Year-to-date ended Dec. 31
                       2012     2011    Variance    2012    2011    Variance
Revenue ($ in          3.6      3.4     0.2         14.9    15.1    (0.2)
billions)
Earnings ($ in
millions):
             GAAP      21       308     (287)       1,259   1,941   (682)
             Operating 242      194     48          1,497   1,504   (7)
EPS ($):
             GAAP      0.05     0.64    (0.59)      2.60    4.02    (1.42)
             Operating 0.50     0.40    0.10        3.09    3.12    (0.03)
EPS based on 485mm shares Q4 2012, 483mm in Q4 2011, 485mm in YTD 2012 and
482mm in YTD 2011

American Electric Power (NYSE: AEP) today reported fourth-quarter 2012
earnings, prepared in accordance with Generally Accepted Accounting Principles
(GAAP), of $21 million or $0.05 per share, compared with $308 million or $0.64
per share in 2011. Operating earnings (excluding special items) for
fourth-quarter 2012 were $242 million or $0.50 per share, compared with
fourth-quarter 2011 operating earnings of $194 million or $0.40 per share.

GAAP earnings for year-end 2012 were $1.259 billion or $2.60 per share,
compared with $1.941 billion or $4.02 per share in 2011. Operating earnings
for 2012 were $1.497 billion or $3.09 per share, compared with $1.504 billion
or $3.12 per share in 2011.

For the year, operating earnings were $238 million or $0.49 per share higher
than GAAP earnings due to the following items (net of tax): Ohio plant
impairments of $184 million, or $0.38 per share; a $9 million adjustment
associated with the Texas cost cap on the construction of the John W. Turk Jr.
(Turk) coal-fueled power plant, or $0.02 per share; and a $30 million charge
associated with AEP's cost restructuring efforts, or $0.06 per share. In
addition, in 2012, AEP recognized a $15 million tax provision, or $0.03 per
share, associated with UK windfall taxes. All of the differences between 2012
operating and GAAP earnings occurred in fourth-quarter 2012 with the exception
of the Turk adjustment, which occurred in third-quarter 2012, and $8 million
of the restructuring charge recorded in second-quarter 2012.

A full reconciliation of 2012 and 2011 GAAP earnings with operating earnings
for the quarter and year to date is included in tables at the end of this news
release.

"In spite of considerable challenges in 2012, including extended regulatory
uncertainty in Ohio, lagging demand growth and several unprecedented storms,
we provided solid financial results for our shareholders and safely delivered
reliable, affordable electricity for the benefit of our customers," said
Nicholas K. Akins, president and chief executive officer. "I'm particularly
proud that our employees remained focused throughout the year and completed
2012 with no fatalities and record-low injury rates, while maintaining
effective cost controls.

"Our operating earnings for the fourth quarter and the year were in line with
results from last year despite sluggish demand growth and the negative impact
of customer switching in Ohio. AEP shareholders received an 8.22 percent total
shareholder return in 2012, including dividends – well above the total
shareholder return of negative 0.55 percent for the S&P 500 Electric Utilities
Index," Akins said. "We took advantage of available, low-priced debt capital
and replaced all of our parent debt at more attractive rates. We further
strengthened our financial position by reducing our post-employment benefit
liability and increasing the funding of our qualified pension plan to 92
percent.

"We made significant progress reducing regulatory uncertainty. With the
receipt of an Electric Security Plan order in Ohio, we have a clear path for
corporate restructuring in the state. We've filed for corporate separation and
transfer of our Ohio generation assets to our competitive generation entity
and other operating companies and expect to fully separate our Ohio generation
from our Ohio utility operations at the end of 2013," Akins said.

"We delivered earnings improvement each quarter in 2012 from our transmission
business, and we benefited from successful rate proceedings in several
jurisdictions. We also continued our legacy of generation leadership by
bringing on line two new power plants in 2012, the 580-megawatt combined-cycle
natural gas Dresden Plant and the 600-megawatt Turk Plant, the first
ultra-supercritical coal plant in the United States," Akins said.

EARNINGS GUIDANCE

Simultaneous with today's earnings release, management established 2013
operating earnings guidance of $3.05 to $3.25 per share. In providing
operating earnings guidance, there could be differences between operating
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 OF RESULTS BY SEGMENT

$ in millions
GAAP Earnings          4Q 12   4Q 11   Variance   YTD 12   YTD 11   Variance
 Utility Operations  79      289     (210)      1,296    1,914    (618)
 Transmission        12      11      1          43       30       13
Operations
 AEP River           4       22      (18)       15       45       (30)
Operations
 Generation and      3       (6)     9          7        14       (7)
Marketing
 All Other           (77)    (8)     (69)       (102)    (62)     (40)
 Total GAAP     21      308     (287)      1,259    1,941    (682)
Earnings
Operating Earnings     4Q 12   4Q 11   Variance   YTD 12   YTD 11   Variance
 Utility Operations  283     175     108        1,517    1,455    62
 Transmission        13      11      2          44       30       14
Operations
 AEP River           4       22      (18)       15       45       (30)
Operations
 Generation and      3       (6)     9          7        14       (7)
Marketing
 All Other           (61)    (8)     (53)       (86)     (40)     (46)
 Total          242     194     48         1,497    1,504    (7)
Operating Earnings
 A full reconciliation of GAAP earnings with operating earnings is
included in tables at the end of this news release.

Operating earnings from Utility Operations for fourth-quarter 2012 and the
year increased in comparison with the same periods in 2011 by $108 million and
$62 million, respectively. This reflects the positive impact of successful
rate proceedings and lower spending as a result of cost-containment efforts,
offset by lost earnings due to customer switching in Ohio, higher storm
restoration costs and milder temperatures in relation to last year. The
difference between GAAP and operating earnings for the fourth quarter and the
year relates primarily to the Ohio plant impairments and restructuring costs
discussed above.

Operating earnings from AEP River Operations for fourth-quarter 2012 and the
year were $18 million and $30 million lower, respectively, than for the same
periods in 2011 primarily due to the 2012 drought, which had significant
impacts on river conditions and crop yields, resulting in reduced grain
exports.

Operating earnings from All Other during fourth-quarter 2012 and the year
decreased primarily due to costs associated with the early retirement of
parent debt in fourth-quarter 2012. The difference between GAAP and operating
earnings for fourth-quarter 2012 and the year relates to the previously
discussed UK windfall tax provision recorded in fourth-quarter 2012.

OPERATING MARGIN FROM UTILITY OPERATIONS

$ in millions
                       4Q 12   4Q 11   Variance   YTD 12   YTD 11   Variance
East Regulated         751     617     134        2,991    2,749    242
Integrated Utilities
Ohio Power Company     605     558     47         2,456    2,657    (201)
West Regulated         291     297     (6)        1,396    1,408    (12)
Integrated Utilities
Texas Wires            149     146     3          642      648      (6)
Off-System Sales       49      50      (1)        324      343      (19)
Transmission Revenue - 133     106     27         500      417      83
3rd Party
Other Operating        121     121     0          506      523      (17)
Revenue
 Utility Margin    2,099   1,895   204        8,815    8,745    70
 Margin represents total revenues less the related direct cost of fuel,
including consumption of chemicals and emissions
 allowances and purchased power.

Retail Sales – Retail margins for fourth-quarter 2012 and the year were $178
million and $23 million higher, respectively, than for the same periods in
2011. In the fourth quarter of 2012, we experienced colder weather in our
eastern service territories compared with the same period last year and the
continuing favorable impact of rate decisions, offset by lost margins from
customer switching in Ohio. The increase for the year is a result of the
continued favorable impact of rate decisions, offset by customer switching in
Ohio and unfavorable weather conditions in the first nine months of 2012
compared with 2011. Retail Sales includes the East Regulated Integrated
Utilities, Ohio Power Company, West Regulated Integrated Utilities and Texas
Wires.

Off-System Sales – Margins from Off-System Sales were lower in fourth-quarter
2012 and the year compared with the same periods in 2011 primarily because of
lower power prices.

Transmission Revenue – 3^rd Party – Transmission Revenue for fourth-quarter
2012 and the year was $27 million and $83 million higher, respectively, than
the same periods in 2011, primarily as a result of increased revenues in ERCOT
and PJM, including revenues associated with customer switching.

Other Operating Revenue – Other Operating Revenue for fourth-quarter 2012 and
the year were comparable with the same periods last year.

SELECT OTHER OPERATING EXPENSES - UTILITY OPERATIONS

The following Utility Operations expense categories had significant
fluctuations in 2012 compared with 2011 (dollars in millions):

                                   4Q 12 4Q 11 Variance YTD 12 YTD 11 Variance
Operations and Maintenance Expense 938   980   (42)     3,311  3,544  (233)
Depreciation and Amortization      416   387   29       1,734  1,613  121
Other Income & Deductions          31    51    (20)     139    239    (100)

Operations and Maintenance expense in fourth-quarter 2012 and the year was $42
million and $233 million less, respectively, when compared with the same
periods in 2011, primarily as a result of controlled spending measures,
partially offset by higher storm restoration costs.

Depreciation and Amortization expense in fourth-quarter 2012 and the year
increased $29 million and $121 million, respectively, when compared with the
same periods in 2011, because of higher depreciation related to shortened
plant lives for certain generating plants and higher amortization expense
associated with regulatory assets.

Other Income & Deductions decreased in fourth-quarter 2012 and the year by $20
million and $100 million, respectively, when compared with the same periods in
2011, due to carrying cost income associated with the Texas capacity auction
true-up that was recognized in July 2011 when the Supreme Court of Texas
overturned a 2006 Texas commission order. The capacity auction true-up amount,
including accrued interest, was securitized in first-quarter 2012.

WEBCAST

American Electric Power's company update and quarterly earnings meeting with
financial analysts and investors will be broadcast live over the Internet at 8
a.m. EST today at http://www.aep.com/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/webcasts.

The call will be archived on http://www.aep.com/webcastsfor those unable to
listen during the live webcast. Archived calls also are available as podcasts.

---

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 nearly
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 operating 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 operating earnings as
the primary performance measurement when communicating with analysts and
investors regarding its earnings outlook and results. The company also uses
operating 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: the economic climate, growth or
contraction within and changes in market demand and demographic patterns in
AEP's service territory; inflationary or deflationary 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 finance new capital projects and refinance existing debt at
attractive rates; the availability and cost of funds to finance working
capital and capital needs, particularly during periods when the time lag
between incurring costs and recovery is long and the costs are material;
electric load, customer growth and the impact of retail competition,
particularly in Ohio; weather conditions, including storms and drought
conditions, and AEP's ability to recover significant storm restoration costs
through applicable rate mechanisms; available sources and costs of, and
transportation for, fuels and the creditworthiness and performance of fuel
suppliers and transporters; availability of necessary generating capacity and
the performance of AEP's generating plants; 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 and transmission
lines and facilities (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 cancelled)
through applicable rate cases or competitive rates; new legislation,
litigation and government regulation, including oversight of nuclear
generation, energy commodity trading and new or heightened requirements for
reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate
matter and other substances, or additional regulation of fly ash and similar
combustion products that could impact the continued operation and cost
recovery of AEP's plants and related assets; evolving public perception of the
risks associated with fuels used before, during and after the generation of
electricity, including nuclear fuel; a reduction in the federal statutory tax
rate that could result in an accelerated return of deferred federal income
taxes to customers; 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; AEP's ability to constrain
operation and maintenance costs; AEP's ability to develop and execute a
strategy based on a view regarding prices of electricity, coal, natural gas
and other energy-related commodities; prices and demand for power that AEP
generates and sells at wholesale; changes in technology, particularly with
respect to new, developing or alternative sources of generation; AEP's ability
to recover through rates or market prices any remaining unrecovered investment
in generating units that may be retired before the end of their previously
projected useful lives; volatility and changes in markets for electricity,
coal, natural gas and other energy-related commodities; changes in utility
regulation, including the implementation of Electric Security Plans and the
transition to market and expected legal separation for generation in Ohio and
the allocation of costs within regional transmission organizations, including
PJM and SPP; AEP's ability to successfully manage negotiations with
stakeholders and obtain regulatory approval to terminate the Interconnection
Agreement; 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 AEP
debt; the impact of volatility in the capital markets on the value of the
investments held by AEP's pension, other postretirement benefit plans, captive
insurance entity and nuclear decommissioning trust and the impact on future
funding requirements; accounting pronouncements periodically issued by
accounting standard-setting bodies; and other risks and unforeseen events,
including wars, the effects of terrorism (including increased security costs),
embargoes, cyber security threats and other catastrophic events.

American Electric Power
Financial Results for the 4th Quarter 2012
Reconciliation of GAAP to Operating Earnings
                   2012
                                                      Generation  Parent
                   Utility  Transmission  AEP River   and         & All   Total  EPS
                                          Operations  Marketing
                                                                  Other
                   ($ millions)
                                                                                 $  
GAAP Earnings      79       12            4           3           (77)    21     
                                                                                 0.05
Special Items
  Restructuring                                                                 $  
  Program        a 20       1             -           -           1       22     
                                                                                 0.04
  Ohio Plant    c 184      -             -           -           -       184    0.38
  Impairments
  UK Windfall   e -        -             -           -           15      15     0.03
  Taxes
  Total Special                                                                  $  
  Items            204      1             -           -           16      221    
                                                                                 0.45
  Operating                                                                      $  
  Earnings         283      13            4           3           (61)    242    
                                                                                 0.50
Financial Results for the 4th Quarter 2011
Reconciliation of GAAP to Operating Earnings
                   2011
                                          AEP River   Generation  Parent
                   Utility  Transmission  Operations  and         & All   Total  EPS
                                                      Marketing   Other
                   ($ millions)
                                                                                 $  
GAAP Earnings      289      11            22          (6)         (8)     308    
                                                                                 0.64
Special Items
  Texas
  Capacity
  Auction, Tax
  Normalization                                                                 $  
  & Carrying     d (133)    -             -           -           -       (133)  
  Charges                                                                        (0.28)
  Carbon                                                                        $  
  Capture &      a (18)     -             -           -           -       (18)   
  Storage                                                                        (0.04)
  Turk                                                                          $  
  Impairment     c 32       -             -           -           -       32     
                                                                                 0.07
                                                                                 $  
  Other         e 5        -             -           -           -       5      
                                                                                 0.01
  Total Special                                                                  $  
  Items            (114)    -             -           -           -       (114)  
                                                                                 (0.24)
  Operating                                                                      $  
  Earnings         175      11            22          (6)         (8)     194    
                                                                                 0.40
a Reflected in Maintenance and Other
  Operation, and Income Tax Expense
b Reflected in Loss(Gain) of Sale of
  Property, and Income Tax Expense
c Reflected in Asset Impairments and Other Related
  Charges and Income Tax Expense
  Reflected in Interest Income,
d Extraordinary Item and Income Tax
  Expense
  Reflected in
e Income Tax
  Expense



American Electric Power
Summary of Selected Sales Data
(Data based on preliminary, unaudited results)
                                             Three Months Ending December 31,
ENERGY & DELIVERY SUMMARY                    2012            2011      Change
Retail Electric (in millions of kWh):
 Residential                               13,163          12,965    1.5%
 Commercial                                12,020          11,935    0.7%
 Industrial                                14,356          14,979    (4.2%)
 Miscellaneous                             748             745       0.4%
 Total Retail (a)                          40,287          40,624    (0.8%)
Wholesale Electric (in millions of kWh):     11,483          7,987     43.8%
(b)
Total KWHs                                   51,770          48,611    6.5%
(a) Represents energy delivered to
distribution customers
(b) Includes Off-System Sales, Municipalities and
Cooperatives, Unit Power, and
 Other Wholesale Customers.



American Electric Power
Financial Results for Year-to-Date 2012
Reconciliation of GAAP to Operating Earnings
                   2012
                                                      Generation  Parent
                   Utility  Transmission  AEP River   and         & All   Total  EPS
                                          Operations  Marketing
                                                                  Other
                   ($ millions)
                                                                                 $  
GAAP Earnings      1,296    43            15          7           (102)   1,259  
                                                                                 2.60
Special Items
  Restructuring a 28       1             -           -           1       30     0.06
  Program
  Turk Plant    c 9        -             -           -           -       9      0.02
  Impairment
  Ohio Plant    c 184      -             -           -           -       184    0.38
  Impairments
  UK Windfall   e -        -             -           -           15      15     0.03
  Taxes
  Total Special                                                                  $  
  Items            221      1             -           -           16      238    
                                                                                 0.49
  Operating                                                                      $  
  Earnings         1,517    44            15          7           (86)    1,497  
                                                                                 3.09
Financial Results for Year-to-Date 2011
Reconciliation of GAAP to Operating Earnings
                   2011
                                          AEP River   Generation  Parent
                   Utility  Transmission  Operations  and         & All   Total  EPS
                                                      Marketing   Other
                   ($ millions)
                                                                                 $  
GAAP Earnings      1,914    30            45          14          (62)    1,941  
                                                                                 4.02
Special Items
  Texas
  Capacity
  Auction, Tax
  Normalization
  & Carrying     d (558)    -             -           -           -       (558)  (1.16)
  Charges
  Sporn Unit 5  c 31       -             -           -           -       31     0.06
  Retirement
  Muskingum
  River Unit 5
  -
  Suspended
  Scrubber       c 27       -             -           -           -       27     0.06
  Project
  Turk          c 32       -             -           -           -       32     0.07
  Impairment
  Carbon
  Capture &      a 13       -             -           -           -       13     0.03
  Storage
  Litigation
  Settlement -   b -        -             -           -           22      22     0.05
  Enron
  Bankruptcy
  Other         a (4)      -             -           -           -       (4)    (0.01)
  Total Special                                                                  $  
  Items            (459)    -             -           -           22      (437)  
                                                                                 (0.90)
  Operating                                                                      $  
  Earnings         1,455    30            45          14          (40)    1,504  
                                                                                 3.12
a Reflected in Maintenance and Other
  Operation, and Income Tax Expense
b Reflected in Loss(Gain) of Sale of
  Property, and Income Tax Expense
c Reflected in Asset Impairments and Other Related
  Charges and Income Tax Expense
  Reflected in Interest Income,
d Extraordinary Item and Income Tax
  Expense
  Reflected in
e Income Tax
  Expense



American Electric Power
Summary of Selected Sales Data
(Data based on preliminary, unaudited results)
                                            Twelve Months Ending December 31,
ENERGY & DELIVERY SUMMARY                   2012             2011      Change
Retail Electric (in millions of kWh):
 Residential                              58,780           61,655    (4.7%)
 Commercial                               50,464           50,767    (0.6%)
 Industrial                               59,154           59,667    (0.9%)
 Miscellaneous                            3,072            3,100     (0.9%)
 Total Retail (a)                         171,470          175,189   (2.1%)
Wholesale Electric (in millions of kWh):    41,892           40,519    3.4%
(b)
Total KWHs                                  213,362          215,708   (1.1%)
(a) Represents energy delivered to
distribution customers
(b) Includes Off-System Sales, Municipalities and
Cooperatives, Unit Power, and
 Other Wholesale Customers.





SOURCE American Electric Power

Website: http://www.aep.com
Contact: MEDIA CONTACT: Melissa McHenry, Director, External Communications,
+1-614-716-1120; ANALYSTS CONTACT: Bette Jo Rozsa, Managing Director, Investor
Relations, +1-614-716-2840
 
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