The increase in ongoing earnings reflects the strong performance by the company’s wholesale business and the impact of the return to service of the company’s Cook Nuclear Plant.
Results for the first quarter were:
| First quarter ended March 31 | |||
| 2001 | 2000 | Variance | |
| Revenue ($ in billions) | 13.5 | 6.1 | 7.4 |
| Earnings ($ in millions): | |||
| Ongoing | 220.5 | 117.0 | 103.5 |
| As reported | 266.1 | 139.6 | 126.5 |
| EPS ($): | |||
| Ongoing | 0.68 | 0.36 | 0.32 |
| As reported | 0.83 | 0.43 | 0.40 |
“Our strategic emphasis is on the wholesale business and our wholesale organization continued its impressive performance,” said E. Linn Draper Jr., AEP’s chairman, president and chief executive officer. “The earnings contribution from wholesale increased 152 percent, or $0.32 per share, over the same quarter last year.”
AEP’s wholesale business, which consists of wholesale sales in the United States, the generation component of domestic retail sales, worldwide trading and other related businesses, contributed $0.53 per share in the quarter, up from $0.21 in first quarter 2000. Wholesale electric domestic trading volume for the quarter was 139 million megawatt-hours, a 58 percent increase from the first-quarter 2000 volume of 87.9 million megawatt-hours.
Lower year-to-year costs associated with the Cook restart, included in the wholesale results, improved first-quarter earnings by $0.19 per share. Cook Unit 2 returned to service in June and Unit 1 was restarted in late December.
“The return of Cook boosts the bottom line in two ways,” Draper said. “First, the costs associated with restart are behind us. Second, Cook’s 2,110 megawatts of power - enough to supply more than 2 million average homes - give us more energy to sell. Both Cook units have performed well since they returned to service, and we’re looking forward to having both units available for summer peak energy sales for the first time since 1997.”
AEP’s energy delivery business, which consists of domestic electric transmission and distribution, contributed $0.47 per share in the quarter, compared with $0.48 in first quarter 2000. Increased revenue from load growth was more than offset by timing differences associated with operating expenses.
AEP’s other investments, primarily the ownership of international wires businesses, contributed $0.05 per share for the quarter, unchanged from first quarter 2000.
Among the special items accounting for the difference between as-reported and ongoing earnings is the sale of AEP’s 500-megawatt Frontera power plant in Texas to TECO Power Services, a subsidiary of TECO Energy Inc. (NYSE: TE). The sale contributed $0.14 per share to AEP’s first-quarter as-reported earnings. AEP also sold its 50 percent interest in Yorkshire Power Group, a retail electricity and gas supplier and electricity distributor in the United Kingdom, to Innogy Holdings plc. Net proceeds of $265 million from the Frontera sale and $383 million from the Yorkshire sale were used to pay down short-term debt.
“We are revising our earnings estimates for the year,” Draper said. “We still anticipate operating and maintenance expenses will be flat for the year and expect ongoing earnings for 2001 to be between $3.50 and $3.60 per share, a 10 cent increase from earlier estimates and more than 25 percent above last year’s ongoing results.”
AEP’s first-quarter earnings data is presented in a different format than in past years. The company is reporting earnings contributions from separate business lines, which allows shareholders to better analyze the company’s performance.
AEP has reclassified certain settled forward energy transactions of its trading operation from a net to a gross basis. The reclassification is intended to reflect the scope and nature of the company’s energy purchases and sales. As a result, $9.6 billion was reclassified from revenues to purchased power expense in the first quarter of 2001 and $3.1 billion in the first quarter of 2000. AEP continues to report all financially net settled trading transactions, such as swaps, futures and unexercised options, on a net basis, reflecting the financial nature of these transactions.
AEP’s first-quarter conference call with analysts will be broadcast live over the Internet at 9:30 a.m. EDT today. The webcast is at http://www.videonewswire.com/AEP/042401/
For those unable to listen during the live webcast, the call will be archived for replay on AEP’s web site, http://www.aep.com. To access the replay, click on “Investor Relations.” Once in “Investor Relations,” go to “Company Updates” and click on “Conference Call Webcast.”
American Electric Power is a multinational energy company based in Columbus, Ohio. AEP owns and operates more than 38,000 megawatts of generating capacity, making it one of America’s largest generators of electricity. The company is also a leading wholesale energy marketer and trader, ranking second in the U.S. in electricity volume. AEP provides retail electricity to more than 7 million customers worldwide and has more than $45 billion in assets, primarily in the U.S. with holdings in select international markets. Wholly owned subsidiaries are involved in power engineering and construction services, energy management and telecommunications.
News releases and other information about AEP can be found on the World Wide Web at http://www.aep.com.
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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
Media:
Pat D. Hemlepp
Director, Corporate Media Relations
614/223-1620
Analysts:
Thomas Hughes
Vice President, Investor Relations
614/223-2852
or
Bette Jo Rozsa
Managing Director, Investor Relations
614/223-2840
Pat D. Hemlepp
Director, Corporate Media Relations
614/223-1620
Analysts:
Thomas Hughes
Vice President, Investor Relations
614/223-2852
or
Bette Jo Rozsa
Managing Director, Investor Relations
614/223-2840