Did AEP raise its full-year 2005 earnings guidance?

No, AEP reaffirmed its previous ongoing earnings guidance range for 2005 of between $2.30 and $2.50 per share. They noted that portions of the favorable first-quarter items had already been included in this guidance, and due to uncertainties related to regulatory processes and other factors, they are not revising the guidance at this time.

Why did AEP provide separate GAAP and 'ongoing' earnings figures?

AEP uses 'ongoing earnings,' which are GAAP earnings adjusted for certain items, as its primary performance measurement for communicating with analysts and investors. Management believes this provides a more meaningful representation of the company's performance, and it is also used internally for performance measurement and reporting.

What is the difference between GAAP earnings and ongoing earnings mentioned in the report?

The difference is primarily due to specific items. For Q1 2005, GAAP earnings were expected to be $0.02 per share higher than ongoing earnings. This was due to a $45 million payment from Centrica for prior period earnings sharing and contract issue settlements, which was partially offset by an unfavorable adjustment related to Texas stranded costs.

AEP 8-K: Earnings & Results & Regulation FD

Q: What is the primary reason for the improved earnings in the first quarter of 2005?

The improved earnings are largely due to a $70 million payment received from Centrica related to an earnings-sharing agreement from the 2002 sale of Texas retail electricity providers, and the recovery of certain regional transmission organization and environmental costs allowed by Ohio rate stabilization plans.

Summary

American Electric Power Company, Inc. (AEP) issued a Form 8-K on April 21, 2005, to report its expected first-quarter 2005 earnings. The company anticipates GAAP earnings per share of approximately $0.90 and ongoing earnings per share of approximately $0.88. This represents a significant improvement compared to the first quarter of 2004, where GAAP earnings were $0.71 and ongoing earnings were $0.73 per share. The earnings increase is attributed to several key factors, including a $70 million payment from Centrica related to an earnings-sharing mechanism from the 2002 sale of Texas retail electricity providers, and the recovery of certain costs allowed by Ohio rate stabilization plans. While AEP reaffirmed its full-year 2005 ongoing earnings guidance, it noted that some of the favorable first-quarter items had been factored into this guidance, and the company did not provide a corresponding GAAP earnings forecast for the full year due to ongoing uncertainties.

Key Highlights

1AEP expects Q1 2005 GAAP EPS of approximately $0.90, up from $0.71 in Q1 2004.
2AEP expects Q1 2005 ongoing EPS of approximately $0.88, up from $0.73 in Q1 2004.
3A significant driver for the improved earnings was a $70 million payment from Centrica related to a Texas retail electricity provider sale earnings-sharing agreement.
4Recoverable costs allowed by Ohio rate stabilization plans also contributed positively to Q1 2005 earnings.
5AEP reaffirmed its full-year 2005 ongoing earnings guidance range of $2.30 to $2.50 per share.
6The company did not provide a full-year GAAP earnings guidance due to the difficulty in estimating the impact of various potential items.
7AEP scheduled a conference call for April 28, 2005, to discuss Q1 2005 earnings.

AMERICAN ELECTRIC POWER CO INC 8-K Report, Financial Results (Apr 21, 2005)

Summary

Key Highlights

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