COLUMBUS, Ohio, April 23, 2002 - American Electric Power’s (NYSE: AEP) strategic blend of higher-growth wholesale energy businesses and stable, but lower growth, regulated energy businesses positions the company for sustainable growth, E. Linn Draper Jr., AEP’s chairman, president and chief executive officer, told shareholders attending the company’s annual meeting today.
“Our balanced portfolio of assets and businesses served us well last year and will continue doing so,” Draper said. “AEP’s business model, combining the stable regulated business and the higher-growth wholesale business, positions us to deliver 6 to 8 percent earnings growth over time.”
AEP’s strategy is focused on growing its successful wholesale energy business, which includes procuring, storing and transporting fuel; generating power, and trading and marketing energy. The company’s regulated business - composed primarily of electricity transmission and distribution operations - provides a predictable earnings stream and cash flows.
AEP is replicating its successful U.S. wholesale model in Europe, Draper said. The company’s European operations now include power, natural gas and coal trading and marketing in the United Kingdom and northwestern continental Europe.
AEP projects ongoing earnings of $3.60 to $3.75 per share in 2002, up from $3.38 per share in 2001. Draper acknowledged that growing earnings will be more challenging this year.
“Today’s market features lower power and gas prices than in 2001 as well as less volatility in our wholesale business,” he said. “There’s also uncertainty about the speed of economic recovery, and we’re just coming out of an unseasonably warm winter.
“But we are meeting our challenges head-on and we do look forward to meeting our financial targets for the year.”
Systems and processes are in place to minimize risk to AEP, Draper emphasized. “We have great confidence in our risk management capabilities, given that 2001 really put them to the test with the California energy crisis and Enron’s fall - and we passed with flying colors. But we believe there is always room for improvement.”
AEP’s independent accounting, finance, risk management and fundamental analysis functions give the company an inherent system of corporate checks and balances, he noted.
Maintaining credit quality and reducing leverage are priorities this year, Draper said. AEP expects to achieve the latter goal by repaying debt through divesting non-strategic assets, issuing up to $1 billion in equity and focusing on cash flow improvement.
In business items, shareholders approved Deloitte & Touche LLP as independent auditors for 2002 and elected 13 directors to hold office until the next annual meeting or until election of successors. Directors elected to the board are:
- Draper, 60, of Columbus, Ohio.
- E.R. Brooks, 64, of Granbury, Texas.
- Donald M. Carlton, 64, of Austin, Texas.
- John P. DesBarres, 62, of Park City, Utah.
- Robert W. Fri, 66, of Washington, D.C.
- William R. Howell, 66, of Dallas.
- Lester A. Hudson Jr., 62, of Greenville, S.C.
- Leonard J. Kujawa, 69, of Atlanta.
- Richard L. Sandor, 60, of Chicago.
- Thomas V. Shockley III, 56, of Columbus, Ohio.
- Donald G. Smith, 66, of Roanoke, Va.
- Linda Gillespie Stuntz, 47, of Washington, D.C.
- Kathryn D. Sullivan, 50, of Columbus, Ohio.
James L. Powell, 72, retired from the board. Powell had been an AEP director since 2000 and, prior to that, had served as a director of Central and South West Corporation since 1987.
American Electric Power is a multinational energy company with a balanced portfolio of energy assets. AEP, the United States’ largest electricity generator, owns and operates more than 42,000 megawatts of generating capacity in the U.S. and select international markets. AEP is a leading wholesale energy marketer, ranking among North America’s top providers of wholesale power and natural gas with a growing wholesale presence in European markets. In addition to electricity generation, AEP owns and operates natural gas pipeline systems, natural gas storage, coal mines, and the fourth-largest inland barge company in the U.S. AEP is also one of the largest electric utilities in the United States, with almost 5 million customers linked to AEP’s wires. The company is based in Columbus, Ohio.
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.
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American Electric Power