Form U-13-60
Mutual and Subsidiary Service Companies
Revised February 7, 1980
ANNUAL REPORT
FOR THE PERIOD
Beginning January 1, 1997 and Ending December 31, 1997
TO THE
U. S. SECURITIES AND EXCHANGE COMMISSION
OF
American Electric Power Service Corporation
(Exact Name of Reporting Company)
A Subsidiary Service Company
Date of Incorporation December 17, 1937. If not Incorporated,
Date of Organization
State or Sovereign Power under which Incorporated or Organized
New York
Location of Principal Executive Offices of Reporting Company
1 Riverside Plaza, Columbus, Ohio 43215
Name, title, and address of officer to whom correspondence
concerning this report should be addressed:
1 Riverside Plaza
Gerald R. Knorr Assistant Controller Columbus, Ohio 43215
(Name) (Title) (Address)
Name of Principal Holding Company under which Reporting Company is
organized:
AMERICAN ELECTRIC POWER COMPANY, INC.
<PAGE>
1
INSTRUCTIONS FOR USE OF FORM U-13-60
1. Time of Filing.--Rule 94 provides that on or before the first
day of May in each calendar year, each mutual service company and
each subsidiary service company as to which the Commission shall
have made a favorable finding pursuant to Rule 88, and every
service company whose application for approval or declaration
pursuant to Rule 88 is pending shall file with the Commission an
annual report on Form U-13-60 and in accordance with the Instruc-
tions for that form.
2. Number of Copies.--Each annual report shall be filed in dupli-
cate. The company should prepare and retain at least one extra
copy for itself in case correspondence with reference to the
report becomes necessary.
3. Period Covered by Report.--The first report filed by any
company shall cover the period from the date the Uniform System of
Accounts was required to be made effective as to that company
under Rules 82 and 93 to the end of that calendar year. Sub-
sequent reports should cover a calendar year.
4. Report Format.--Reports shall be submitted on the forms pre-
pared by the Commission. If the space provided on any sheet of
such form is inadequate, additional sheets may be inserted of the
same size as a sheet of the form or folded to such size.
5. Money Amounts Displayed.--All money amounts required to be
shown in financial statements may be expressed in whole dollars,
in thousands of dollars or in hundred thousands of dollars, as
appropriate and subject to provisions of Regulation S-X
(S210.3-01(b)).
6. Deficits Displayed.--Deficits and other like entries shall be
indicated by the use of either brackets or a parenthesis with
corresponding reference in footnotes. (Regulation S-X,
S210.3-01(c)).
7. Major Amendments or Corrections.--Any company desiring to
amend or correct a major omission or error in a report after it
has been filed with the Commission shall submit an amended report
including only those pages, schedules, and entries that are to be
amended or corrected. A cover letter shall be submitted request-
ing the Commission to incorporate the amended report changes and
shall be signed by a duly authorized officer of the company.
8. Definitions.--Definitions contained in Instruction 01-8 to the
Uniform System of Accounts for Mutual Service Companies and Sub-
sidiary Service Companies, Public Utility Holding Company Act of
1935, as amended February 2, 1979 shall be applicable to words or
terms used specifically within this Form U-13-60.
9. Organization Chart.--The service company shall submit with
each annual report a copy of its current organization chart.
(Cont'd)
<PAGE>
1A
INSTRUCTIONS FOR USE OF FORM U-13-60
10. Methods of Allocation.--The service company shall submit with
each annual report a listing of the currently effective methods of
allocation being used by the service company and on file with the
Securities and Exchange Commission pursuant to the Public Utility
Holding Company Act of 1935.
11. Annual Statement of Compensation for Use of Capital Billed.--
The service company shall submit with each annual report a copy of
the annual statement supplied to each associate company in support
of the amount of compensation for use of capital billed during the
calendar year.
<PAGE>
2
LISTING OF SCHEDULES AND ANALYSIS OF ACCOUNTS
Page
Number
Schedule
Description of Schedules and Accounts or Account
Number
COMPARATIVE BALANCE SHEET Schedule I 4-5
SERVICE COMPANY PROPERTY Schedule II 6-7
ACCUMULATED PROVISION FOR
DEPRECIATION AND AMORTIZATION
OF SERVICE COMPANY PROPERTY Schedule III 8
INVESTMENTS Schedule IV 9
ACCOUNTS RECEIVABLE FROM ASSOCIATE
COMPANIES Schedule V 10
FUEL STOCK EXPENSES UNDISTRIBUTED Schedule VI 11
STORES EXPENSE UNDISTRIBUTED Schedule VII 12
MISCELLANEOUS CURRENT AND ACCRUED
ASSETS Schedule VIII 13
MISCELLANEOUS DEFERRED DEBITS Schedule IX 14
RESEARCH, DEVELOPMENT, OR DEMONSTRATION
EXPENDITURES Schedule X 15
PROPRIETARY CAPITAL Schedule XI 16
LONG-TERM DEBT Schedule XII 17
CURRENT AND ACCRUED LIABILITIES Schedule XIII 18
NOTES TO FINANCIAL STATEMENTS Schedule XIV 19
COMPARATIVE INCOME STATEMENT Schedule XV 20
ANALYSIS OF BILLING - ASSOCIATE
COMPANIES Account 457 21
ANALYSIS OF BILLING - NONASSOCIATE
COMPANIES Account 458 22
ANALYSIS OF CHARGES FOR SERVICE -
ASSOCIATE AND NONASSOCIATE COMPANIES Schedule XVI 23
SCHEDULE OF EXPENSE BY DEPARTMENT OR
SERVICE FUNCTION Schedule XVII 24-25
DEPARTMENTAL ANALYSIS OF SALARIES Account 920 26
OUTSIDE SERVICES EMPLOYED Account 923 27
EMPLOYEE PENSIONS AND BENEFITS Account 926 28
GENERAL ADVERTISING EXPENSES Account 930.1 29
MISCELLANEOUS GENERAL EXPENSES Account 930.2 30
RENTS Account 931 31
TAXES OTHER THAN INCOME TAXES Account 408 32
DONATIONS Account 426.1 33
OTHER DEDUCTIONS Account 426.5 34
NOTES TO STATEMENT OF INCOME Schedule XVIII 35
<PAGE>
3
LISTING OF INSTRUCTIONAL FILING REQUIREMENTS
Page
Number
Description of Reports or Statements
ORGANIZATION CHART 36
METHODS OF ALLOCATION 37
ANNUAL STATEMENT OF COMPENSATION FOR USE OF
CAPITAL BILLED 38
SIGNATURE CLAUSE 39
<PAGE>
4
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
SCHEDULE I - COMPARATIVE BALANCE SHEET
Give balance sheet of the company as of December 31 of the current and prior year.
ACCOUNT ASSETS AND OTHER DEBITS AS OF DECEMBER 31
CURRENT PRIOR
(In Thousands)
<S> <C> <C>
SERVICE COMPANY PROPERTY
101 Service company property (Schedule II) $229,154 $222,939
107 Construction work in progress (Schedule II) -- 229
Total Property 229,154 223,168
108 Less accumulated provision for depreciation and
amortization of service company property
(Schedule III) 77,370 84,693
Net Service Company Property 151,784 138,475
INVESTMENTS
123 Investments in associate companies (Schedule IV) -- --
124 Other investments (Schedule IV) 40,741 23,578
Total Investments 40,741 23,578
CURRENT AND ACCRUED ASSETS
131 Cash 9 17
134 Special deposits 100 132
135 Working funds 415 508
136 Temporary cash investments (Schedule IV) 200 --
141 Notes receivable 116 115
143 Accounts receivable 3,355 1,025
144 Accumulated provision for uncollectible
accounts -- --
146 Accounts receivable from associate
companies (Schedule V) 85,841 88,742
152 Fuel stock expenses undistributed (Schedule VI) -- --
154 Materials and supplies -- --
163 Stores expense undistributed (Schedule VII) -- --
165 Prepayments 508 1,880
174 Miscellaneous current and accrued
assets (Schedule VIII) 7 10
Total Current and Accrued Assets 90,551 92,429
DEFERRED DEBITS
181 Unamortized debt expense 5,168 5,844
184 Clearing accounts -- --
186 Miscellaneous deferred debits (Schedule IX) 6,341 6,924
188 Research, development, or demonstration
expenditures (Schedule X) -- --
190 Accumulated deferred income taxes 41,537 31,287
Total Deferred Debits 53,046 44,055
TOTAL ASSETS AND OTHER DEBITS $336,122 $298,537
Note: Unamortized Debt Expense includes unamortized loss on reacquired debt of
$5,105,171 at December 31, 1997 and $5,772,000 at December 31, 1996.
</TABLE>
<PAGE>
5
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
SCHEDULE I - COMPARATIVE BALANCE SHEET
ACCOUNT LIABILITIES AND PROPRIETARY CAPTIAL AS OF DECEMBER 31
CURRENT PRIOR
(In Thousands)
<S> <C> <C>
PROPRIETARY CAPITAL
201 Common stock issued (Schedule XI) $ 1,350 $ 1,350
211 Miscellaneous paid-in-capital (Schedule XI) -- --
215 Appropriated retained earnings (Schedule XI) -- --
216 Unappropriated retained earnings (Schedule XI) -- --
Total Proprietary Capital 1,350 1,350
LONG-TERM DEBT
223 Advances from associate companies (Schedule XII) 1,100 1,100
224 Other long-term debt (Schedule XII) 70,000 75,000
225 Unamortized premium on long-term debt -- --
226 Unamortized discount on long-term debt-debit -- --
Total Long-term Debt 71,100 76,100
OTHER NONCURRENT LIABILITIES
227 Obligations under capital leases - Noncurrent 46,363 32,670
224.6 Other 67,692 54,752
Total Other Noncurrent Liabilities 114,055 87,422
CURRENT AND ACCRUED LIABILITIES
231 Notes payable 11,529 3,318
232 Accounts payable 13,030 17,498
233 Notes payable to associate companies
(Schedule XIII) -- --
234 Accounts payable to associate companies
(Schedule XIII) 28,316 30,132
236 Taxes accrued 1,801 6,865
237 Interest accrued 370 401
238 Dividends declared -- --
241 Tax collections payable 3,927 3,101
242 Miscellaneous current and accrued liabilities
(Schedule XIII) 35,943 23,404
243 Obligations under capital leases - Current 14,111 10,601
Total Current and Accrued Liabilities 109,027 95,320
DEFERRED CREDITS
253 Other deferred credits 11,024 9,785
255 Accumulated deferred investment tax credits 1,054 1,105
Total Deferred Credits 12,078 10,890
282 ACCUMULATED DEFERRED INCOME TAXES 28,512 27,455
TOTAL LIABILITIES AND PROPRIETARY CAPITAL $336,122 $298,537
Note: Other long-term debt includes $5,000,000 due within one year
(See note 7, Schedule XIV).
"Other" Other noncurrent liabilities includes amounts due within one
year of $759,577 at December 31, 1997 and $671,000 at December 31, 1996.
</TABLE>
<PAGE>
6
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
SCHEDULE II - SERVICE COMPANY PROPERTY
BALANCE AT RETIREMENTS OTHER BALANCE AT
BEGINNING ADDITIONS OR CHANGES 1/ CLOSE OF
DESCRIPTION OF YEAR SALES YEAR
(In Thousands)
SERVICE COMPANY PROPERTY
Account
<S> <C> <C> <C> <C> <C>
301 ORGANIZATION $ -- $ -- $ -- $ -- $ --
303 MISCELLANEOUS
INTANGIBLE PLANT -- -- -- -- --
304 LAND AND LAND RIGHTS 5,108 -- -- -- 5,108
305 STRUCTURES AND
IMPROVEMENTS 140,719 -- -- -- 140,719
306 LEASEHOLD IMPROVEMENTS 234 260 -- 86 580
307 EQUIPMENT 2/ -- -- -- -- --
308 OFFICE FURNITURE AND
EQUIPMENT 1,019 -- -- -- 1,019
309 AUTOMOBILES, OTHER
VEHICLES AND RELATED
GARAGE EQUIPMENT -- -- -- -- --
310 AIRCRAFT AND AIRPORT
EQUIPMENT -- -- -- -- --
311 OTHER SERVICE COMPANY
PROPERTY 3/ 75,859 35,881 (30,012) -- 81,728
SUB-TOTAL 222,939 36,141 (30,012) 86 229,154
107 CONSTRUCTION WORK IN
PROGRESS 4/ 229 31 -- (260) --
TOTAL $223,168 $36,172 $(30,012) $(174) $229,154
1/ PROVIDE AN EXPLANATION OF THOSE CHANGES CONSIDERED MATERIAL:
The amount of $260,000 represents transfers from construction work in progress
to property in service during 1997. Another $86,000 represents assets obtained
from an affiliated company.
</TABLE>
<PAGE>
7
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
SCHEDULE II - CONTINUED
2/ SUBACCOUNTS ARE REQUIRED FOR EACH CLASS OF EQUIPMENT OWNED. THE SERVICE
COMPANY SHALL PROVIDE A LISTING BY SUBACCOUNT OF EQUIPMENT ADDITIONS
DURING THE YEAR AND THE BALANCE AT THE CLOSE OF THE YEAR:
BALANCE AT
SUBACCOUNT DESCRIPTION ADDITIONS CLOSE OF YEAR
None
TOTAL $ -0- $ -0-
3/ DESCRIBE OTHER SERVICE COMPANY PROPERTY:
Includes leased assets at December 31, 1997 ($81,705,000) which have been
capitalized in accordance with FASB Statement Nos. 13 and 71 and other owned
assets at December 31, 1997 ($23,000).
4/ DESCRIBE CONSTRUCTION WORK IN PROGRESS:
Improvements to Office Building at 230 N. Columbus St., Lancaster, Ohio
($223,000) and Office Building at 5088 Washington St., Cross Lanes, WVA
($37,000).
<PAGE>
8
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
SCHEDULE III
ACCUMULATED PROVISION FOR DEPRECIATION
AND AMORTIZATION OF SERVICE COMPANY PROPERTY
BALANCE AT ADDITIONS OTHER CHANGES BALANCE AT
DESCRIPTION BEGINNING CHARGED RETIREMENTS ADD (DEDUCT) CLOSE OF
OF YEAR TO 1/ YEAR
ACCOUNT 403
Account (In Thousands)
<S> <C> <C> <C> <C> <C>
301 ORGANIZATION $ -- $ -- $ -- $ -- $ --
303 MISCELLANEOUS
INTANGIBLE
PLANT -- -- -- -- --
304 LAND AND LAND
RIGHTS -- -- -- -- --
305 STRUCTURES AND
IMPROVEMENTS 51,739 3,959 -- -- 55,698
306 LEASEHOLD
IMPROVEMENTS 157 10 -- -- 167
307 EQUIPMENT -- -- -- -- --
308 OFFICE
FURNITURE AND
FIXTURES 227 41 -- -- 268
309 AUTOMOBILES,
OTHER VEHICLES
AND RELATED
GARAGE EQUIPMENT -- -- -- -- --
310 AIRCRAFT AND
AIRPORT EQUIPMENT -- -- -- -- --
311 OTHER SERVICE
COMPANY PROPERTY 32,570 14,517 25,850 -- 21,237
TOTAL $84,693 $18,527 $25,850 $ -0- $77,370
1/ PROVIDE AN EXPLANATION OF THOSE CHANGES CONSIDERED MATERIAL:
</TABLE>
<PAGE>
9
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
SCHEDULE IV - INVESTMENTS
INSTRUCTIONS: Complete the following schedule concerning investments.
Under Account 124, "Other Investments", state each investment
separately, with description, including, the name of issuing
company, number of shares or principal amount, etc.
Under Account 136, "Temporary Cash Investments", list each
investment separately.
BALANCE AT BALANCE AT
D E S C R I P T I O N BEGINNING CLOSE
OF YEAR OF YEAR
(In Thousands)
ACCOUNT 123 - INVESTMENT IN ASSOCIATE COMPANIES
None
ACCOUNT 124 - OTHER INVESTMENTS
Cash Surrender Value of Life
Insurance Policies (net of policy
loans and accrued interest) $ 5,529 $ 8,893
Umbrella Trust 17,920 31,718
Notes Receivable Constructive
Marketing Program 129 130
Sub-Total Other Investments 23,578 40,741
ACCOUNT 136 - TEMPORARY CASH INVESTMENTS
Ford Motor Credit -- 200
TOTAL $23,578 $40,941
<PAGE>
10
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
SCHEDULE V - ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES
INSTRUCTIONS: Complete the following schedule listing accounts receivable from
each associate company. Where the service company has provided
accommodation or convenience payments for associate companies, a
separate listing of total payments for each associate company by
subaccount should be provided.
BALANCE AT BALANCE AT
D E S C R I P T I O N BEGINNING CLOSE
OF YEAR OF YEAR
ACCOUNT 146 - ACCOUNTS RECEIVABLE FROM (In Thousands)
ASSOCIATE COMPANIES
<S> <C> <C>
Associate Companies
AEP Communications, Inc. $ 211 $ 137
AEP Communications, LLC -- 188
AEP Energy Services, Inc.
(formerly AEP Energy Solutions, Inc.) 955 241
AEP Generating Company 492 643
AEP Global Investments BV -- 1
AEP Investments, Inc. 4 2
AEP Pushan Power, LDC 37 25
AEP Resources, Inc. 175 906
AEP Resources Delaware -- 1
AEP Resources International, LTD 39 26
AEP Resources Project Management -- 1
AEP Resources Service Company 212 182
(formerly AEP Energy Services, Inc.
and then AEP Resources
Engineering & Services Company)
American Electric Power Company, Inc. 632 572
Appalachian Power Company 36,099 22,796
Appalachian/Ohio Power Joint Account (Amos) 36 726
Appalachian/Ohio Power Joint Account (Sporn) 1,134 1,025
Blackhawk Coal Company/Price River Coal Company 4 70
Cardinal Operating Company 1,583 564
Cedar Coal Co. 8 6
Central Appalachian Coal Company 1 1
Central Coal Company 3 2
Central Ohio Coal Company 150 194
Central Operating Company 34 33
Columbus Southern Power Company 14,775 18,231
Conesville Coal Preparation Company 105 50
SUB-TOTAL 56,689 46,623
ANALYSIS OF CONVENIENCE OR ACCOMMODATION PAYMENTS: TOTAL
PAYMENTS
BY COMPANY: (In Thousands)
Associate Companies
AEP Communications, Inc. $ 9
AEP Generating Company 18
AEP Investments, Inc. 3
AEP Resources, Inc. 5
AEP Resources International, LTD 2
AEP Resources Service Company 157
American Electric Power Company, Inc. 136
Appalachian Power Company 238,942
SUB-TOTAL PAYMENTS 239,272
(Cont'd)
</TABLE>
<PAGE>
10A
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
SCHEDULE V - ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES
INSTRUCTIONS: Complete the following schedule listing accounts receivable from
each associate company. Where the service company has provided
accommodation or convenience payments for associate companies, a
separate listing of total payments for each associate company by
subaccount should be provided.
BALANCE AT BALANCE AT
D E S C R I P T I O N BEGINNING CLOSE
OF YEAR OF YEAR
ACCOUNT 146 - ACCOUNTS RECEIVABLE FROM (In Thousands)
ASSOCIATE COMPANIES
<S> <C> <C>
Sub-Total Brought Forward 56,689 46,623
Franklin Real Estate Company 1 --
Indiana Michigan Power Company 11,247 19,851
Indiana Michigan Power/AEP Generating Joint
Account (Rockport) 414 637
Indiana Michigan Power Company-Water
Transportation 52 142
Kentucky Power Company 5,095 4,204
Kingsport Power Company 628 391
Ohio Power Company 12,746 11,864
Ohio Power Company-Cook Coal Terminal 19 57
Ohio Power Company (Gavin) 165 88
Simco, Inc. 2 1
Southern Appalachian Coal Company 1 2
Southern Ohio Coal Company 523 786
Wheeling Power Company 650 471
Windsor Coal Company 193 228
Statutory Subsidiaries
Indiana-Kentucky Electric Corporation 174 261
Ohio Valley Electric Corporation 143 235
TOTAL $88,742 $85,841
ANALYSIS OF CONVENIENCE OR ACCOMMODATION PAYMENTS: TOTAL
PAYMENTS
(In Thousands)
Sub-Total Brought Forward 239,272
Appalachian/Ohio Power Joint Account (Amos) 258
Appalachian/Ohio Power Joint Account (Sporn) 161
Blackhawk Coal Company/Price River Coal Company 80
Cardinal Operating Company 2,148
Cedar Coal Co. 43
Central Appalachian Coal Company 3
Central Coal Company 2
Central Ohio Coal Company 6,693
Central Operating Company 1,398
Colomet, Inc. 216
Columbus Southern Power Company 140,008
Conesville Coal Preparation Company 418
Franklin Real Estate 3
Indiana Michigan Power Company 119,436
Indiana Michigan Power/AEP Generating
Joint Account (Rockport) 283
SUB-TOTAL PAYMENTS 510,422
(Cont'd)
</TABLE>
<PAGE>
10B
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
SCHEDULE V - ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES
<TABLE>
<CAPTION>
INSTRUCTIONS: Complete the following schedule listing accounts receivable from
each associate company. Where the service company has provided
accommodation or convenience payments for associate companies, a
separate listing of total payments for each associate company by
subaccount should be provided.
BALANCE AT BALANCE AT
D E S C R I P T I O N BEGINNING CLOSE
OF YEAR OF YEAR
ACCOUNT 146 - ACCOUNTS RECEIVABLE FROM
ASSOCIATE COMPANIES
TOTAL
ANALYSIS OF CONVENIENCE OR ACCOMMODATION PAYMENTS: TOTAL
PAYMENTS
(In Thousands)
<S> <C>
Sub-Total Brought Forward 510,422
Indiana Michigan Power Company-Water Transportation 2,326
Kentucky Power Company 8,445
Kingsport Power Company 1,271
Ohio Power Company 93,500
Ohio Power Company-Cook Coal Terminal 96
Ohio Power Company (Gavin) 16
Simco, Inc. 11
Southern Appalachian Coal Company 4
Southern Ohio Coal Company-Martinka 40
Southern Ohio Coal Company-Meigs 16,867
Wheeling Power Company 585
Windsor Coal Company 521
Statutory Subsidiaries
Indiana-Kentucky Electric Corporation 2
Ohio Valley Electric Corporation 16
TOTAL PAYMENTS $634,122
FOR:
Interchange Power Pool and Transmission Agreement $393,979
Insurances 57,166
Employee Benefit Plans 66,080
State Taxes 600
Membership Dues 1,911
Legal Fees 116
Trustee Fees 1,246
Banking Fees 103
ECAR Assessment 395
External Audits 115
Telephone Services 464
Employee Relocation Costs 469
Outside Rating Services 127
Miscellaneous 262
TOTAL PAYMENTS $523,033
</TABLE>
<PAGE>
11
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
SCHEDULE VI - FUEL STOCK EXPENSES UNDISTRIBUTED
INSTRUCTIONS:
Report the amount of labor and expenses incurred with respect to
fuel stock expenses during the year and indicate amount attributable
to each associate company. Under the section headed "Summary" listed
below give an overall report of the fuel functions performed by the
service company.
__________________________________________________________________________
D E S C R I P T I O N LABOR EXPENSES TOTAL
(In Thousands)
ACCOUNT 152 - FUEL STOCK EXPENSES UNDISTRIBUTED
<S> <C> <C> <C>
Associate Companies
AEP Energy Services, Inc. $ 11 $ 9 $ 20
AEP Generating Company 11 6 17
AEP Resources, Inc. 24 10 34
Appalachian Power Company 934 520 1,454
Appalachian/Ohio Power Joint Account (Amos) 90 86 176
Appalachian/Ohio Power Joint Account (Sporn) 44 38 82
Blackhawk Coal Company 13 7 20
Cardinal Operating Company 268 161 429
Cedar Coal Co. 10 5 15
Central Appalachian Coal Company 1 1 2
Central Coal Company 5 3 8
Central Ohio Coal Company 756 452 1,208
Columbus Southern Power Company 534 299 833
Conesville Coal Preparation Company 265 148 413
Indiana Michigan Power Company 294 159 453
Indiana Michigan Power/AEP Generating Joint
Account (Rockport) 510 318 828
Indiana Michigan Power Company
-Water Transportation 380 263 643
Kentucky Power Company 277 148 425
Kingsport Power Company 3 1 4
Ohio Power Company 1,231 730 1,961
Ohio Power Company-Cook Coal Terminal 265 163 428
Simco 2 1 3
Southern Appalachian Coal Company 1 -- 1
Southern Ohio Coal Company 2,960 1,791 4,751
Wheeling Power Company 3 2 5
Windsor Coal Company 1,114 626 1,740
Statutory Subsidiaries
Indiana-Kentucky Electric Corporation 134 53 187
Ohio Valley Electric Corporation 162 63 225
TOTAL $10,302 $6,063 $16,365
</TABLE>
SUMMARY:
Managerial, engineering, technical and administrative services rendered to
AEP System coal mining companies, and coal procurement services rendered to
AEP System generating companies and other similar services.
<PAGE>
12
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
SCHEDULE VII - STORES EXPENSE UNDISTRIBUTED
INSTRUCTIONS:
Report the amount of labor and expenses incurred with respect to
stores expense during the year and indicate amount attributable to
each associate company.
D E S C R I P T I O N LABOR EXPENSES TOTAL
(In Thousands)
ACCOUNT 163 - STORES EXPENSE UNDISTRIBUTED
<S> <C> <C> <C>
Associate Companies
AEP Energy Services $ 10 $ 5 $ 15
AEP Generating Company 223 157 380
AEP Resources Service Company 2 3 5
Appalachian Power Company 1,310 1,259 2,569
Appalachian/Ohio Power Joint Account (Amos) 2 82 84
Appalachian/Ohio Power Joint Account (Sporn) 1 56 57
Cardinal Operating Company 2 81 83
Cedar Coal Co. -- 5 5
Central Ohio Coal Company 3 112 115
Columbus Southern Power Company 714 615 1,329
Conesville Coal Preparation Company -- 10 10
Indiana Michigan Power Company 951 863 1,814
Indiana Michigan Power/AEP Generating
Joint Account (Rockport) 2 72 74
Indiana Michigan Power Company
-Water Transportation 1 29 30
Kentucky Power Company 224 263 487
Kingsport Power Company 73 64 137
Ohio Power Company 1,277 1,295 2,572
Ohio Power Company-Cook Coal Terminal -- 16 16
Ohio Power Company (Gavin) 1 11 12
Southern Ohio Coal Company 5 172 177
Wheeling Power Company 53 42 95
Windsor Coal Company 2 70 72
Statutory Subsidiaries
Indiana-Kentucky Electric Corporation -- 4 4
TOTAL $4,856 $5,286 $10,142
</TABLE>
<PAGE>
13
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
SCHEDULE VIII
MISCELLANEOUS CURRENT AND ACCRUED ASSETS
INSTRUCTIONS:
Provide detail of items in this account. Items less than $10,000
may be grouped, showing the number of items in each group.
BALANCE AT BALANCE AT
D E S C R I P T I O N BEGINNING CLOSE
OF YEAR OF YEAR
(In Thousands)
ACCOUNT 174 - MISCELLANEOUS CURRENT AND
ACCRUED ASSETS
Payroll Adjustments $10 $7
TOTAL $10 $7
<PAGE>
14
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
SCHEDULE IX - MISCELLANEOUS DEFERRED DEBITS
INSTRUCTIONS:
Provide detail of items in this account. Items less than $10,000
may be grouped by class showing the number of items in each class.
BALANCE AT BALANCE AT
D E S C R I P T I O N BEGINNING CLOSE
OF YEAR OF YEAR
(In Thousands)
ACCOUNT 186 - MISCELLANEOUS DEFERRED DEBITS
Regulatory Asset-Postretirement Benefits $1,945 $1,621
Regulatory Asset-Postemployment Benefits 536 1,881
Regulatory Asset-Taxes 286 211
Unbilled Charges 3,467 2,628
Deferred Employee Moving Expenses 690 --
TOTAL $6,924 $6,341
<PAGE>
15
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
SCHEDULE X
RESEARCH, DEVELOPMENT OR DEMONSTRATION EXPENDITURES
INSTRUCTIONS:
Provide a description of each material research, development, or
demonstration project which incurred costs by the service corporation
during the year.
D E S C R I P T I O N AMOUNT
(In Thousands)
ACCOUNT 188 - RESEARCH, DEVELOPMENT, OR DEMONSTRATION
EXPENDITURES
Transmission, Distribution & UHV Systems $ 267
Advanced Pressurized Water Reactor Design 252
Ash Marketing 12
Coal-Fired Generation 1,316
General Activities 243
TOTAL $2,090
<PAGE>
16
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
SCHEDULE XI - PROPRIETARY CAPITAL
NUMBER OF PAR OR STATED OUTSTANDING CLOSE OF PERIOD
ACCOUNT NUMBER CLASS OF STOCK SHARES VALUE
AUTHORIZED PER SHARE NO. OF SHARES TOTAL AMOUNT
<S> <C> <C> <C> <C>
201 COMMON STOCK ISSUED 20,000 $100 13,500 $1,350,000
INSTRUCTIONS: Classify amounts in each account with brief explanation, disclosing the general
nature of transactions which gave rise to the reported amounts.
D E S C R I P T I O N AMOUNT
ACCOUNT 211 - MISCELLANEOUS PAID-IN CAPITAL
None
ACCOUNT 215 - APPROPRIATED RETAINED EARNINGS
None
TOTAL $ -0-
<CAPTION>
INSTRUCTIONS: Give particulars concerning net income or (loss) during the year, distinguishing
between compensation for the use of capital owed or net loss remaining from servicing
nonassociates per the General Instructions of the Uniform System of
Accounts. For dividends paid during the year in cash or otherwise, provide rate
percentage, amount of dividend, date declared and date paid.
BALANCE AT NET INCOME BALANCE AT
D E S C R I P T I O N BEGINNING OR DIVIDENDS CLOSE
OF YEAR (LOSS) PAID OF YEAR
<S> <C> <C> <C> <C>
ACCOUNT 216 - UNAPPROPRIATED RETAINED EARNINGS
None
TOTAL $ -0- $ -0- $ -0- $ -0-
</TABLE>
<PAGE>
17
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
SCHEDULE XII - LONG-TERM DEBT
INSTRUCTIONS: Advances from associate companies should be reported separately for advances on notes,
and advances on open account. Names of associate companies from which advances were received
shall be shown under the class and series of obligation column. For Account 224 - Other long-
term debt provide the name of creditor company or organization, terms of the obligation, date of
maturity, interest rate, and the amount authorized and outstanding.
TERMS OF OBLIG DATE BALANCE AT ADDITIONS DEDUCTIONS BALANCE AT
N A M E O F CLASS & SERIES OF INTEREST AMOUNT BEGINNING 1/ CLOSE
C R E D I T O R OF OBLIGATION MATURITY RATE AUTHORIZED OF YEAR OF YEAR
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
ACCOUNT 223 - ADVANCES
FROM ASSOCIATE COMPANIES:
Advance on Open Account
American Electric Power
Company, Inc. NONE $ 1,100 $ 1,100 $ -- $ -- $ 1,100
ACCOUNT 224 - OTHER LONG-
TERM DEBT:
PNC National Association,
Pittsburgh 10/14/98 5.293 10,000 10,000 -- -- 10,000
Connecticut Bank & Trust Company
(as Trustee),
--Series D Mortgage Notes 12/15/99 9.000 20,000 7,500 -- 2,500 5,000
--Series E Mortgage Notes 12/15/08 9.600 70,000 57,500 -- 2,500 55,000
Sub-Total 100,000 75,000 -- 5,000 70,000
TOTAL $101,100 $76,100 $ -- $ 5,000 $71,100
1/ GIVE AN EXPLANATION OF DEDUCTIONS:
Loan payments. See Note 7, Schedule XIV, for further explanation of dates of maturity.
</TABLE>
<PAGE>
18
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
SCHEDULE XIII - CURRENT AND ACCRUED LIABILITIES
<TABLE>
<CAPTION>
INSTRUCTIONS: Provide balance of notes and accounts payable to each associate
company. Give description and amount of miscellaneous current
and accrued liabilities. Items less than $10,000 may be grouped,
showing the number of items in each group.
BALANCE AT BALANCE AT
D E S C R I P T I O N BEGINNING CLOSE
OF YEAR OF YEAR
(In Thousands)
<S> <C> <C>
ACCOUNT 233 - NOTES PAYABLE TO ASSOCIATE COMPANIES
None
TOTAL $ -0- $ -0-
(In Thousands)
ACCOUNT 234 - ACCOUNTS PAYABLE TO ASSOCIATE
COMPANIES
Cedar Coal Co. $ -- $ 11
Colomet -- 200
Columbus Southern Power Company -- 44
Indiana Michigan Power Company 3,841 5
Indiana Michigan Power Company -
Water Transportation 44 --
Kentucky Power Company 856 --
Ohio Power Company 25,356 28,012
Southern Ohio Coal Company -- 30
Miscellaneous - 13 items in 1996;
7 items in 1997 35 14
TOTAL $30,132 $28,316
(In Thousands)
ACCOUNT 242 - MISCELLANEOUS CURRENT AND
ACCRUED LIABILITIES
Accrued Vacation Pay $14,326 $16,870
Accrued Incentive Pay 6,950 14,963
Accrued Workers' Compensation 327 533
AEP System Stock Purchase Plan 88 1
Payroll Withholdings 250 345
Accrued Rent on John E. Dolan
Engineering Laboratory 1,187 1,143
Accrued Rent for Office Space at Market
Square, Washington, D.C. 85 73
Accrued Severance-Group Medical 191 79
Ohio Personal Property -- 105
Ohio Real Estate -- 1,831
TOTAL $23,404 $35,943
</TABLE>
<PAGE>
19
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes
regarding the financial statements or any account
thereof. Furnish particulars as to any significant
contingent assets or liabilities existing at the
end of the year. Notes relating to financial
statements shown elsewhere in this report may be
indicated here by reference.
1. SIGNIFICANT ACCOUNTING POLICIES:
Organization
American Electric Power Service Corporation (the Company
or AEPSC) is a wholly-owned subsidiary of American Electric
Power Company, Inc. (AEP Co., Inc.), a public utility holding
company. The Company provides certain managerial and profess-
ional services including administrative and engineering ser-
vices to the affiliated companies in the American Electric
Power (AEP) System and periodically to unaffiliated companies.
Regulation and Basis of Accounting
As a subsidiary of AEP Co., Inc., AEPSC is subject to
regulation by the Securities and Exchange Commission (SEC)
under the Public Utility Holding Company Act of 1935 (1935 Act).
The Company's accounting conforms to the Uniform System of
Accounts for Mutual and Subsidiary Service Companies
prescribed by the SEC pursuant to the 1935 Act. As a cost-
based rate-regulated entity, AEPSC's financial statements
reflect the actions of the regulators that result in the
recognition of revenues and expenses in different time periods
than enterprises that are not rate regulated. In accordance
with Statement of Financial Accounting Standards (SFAS) No.
71, Accounting for the Effects of Certain Types of Regulation
(SFAS 71), the financial statements include assets (deferred
expenses) and liabilities (deferred income) recorded in
accordance with regulatory actions to match expenses and
revenues in cost-based rates. Regulatory assets are expected
to be recovered in future periods through billings to affil-
iated companies and the regulatory liabilities are expected
to reduce future billings.
(Cont'd)
<PAGE>
19A
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes
regarding the financial statements or any account
thereof. Furnish particulars as to any significant
contingent assets or liabilities existing at the
end of the year. Notes relating to financial
statements shown elsewhere in this report may be
indicated here by reference.
Regulatory assets and liabilities are comprised of the
following:
December 31,
1997 1996
Regulatory Assets: (In Thousands)
Unamortized Loss on Reacquired
Debt $5,105 $5,772
Postretirement Benefits 1,621 1,945
Postemployment Benefits 1,881 536
Total Regulatory Assets $8,607 $8,253
Regulatory Liabilities:
Deferred Amounts Due to
Affiliates for Income
Tax Benefits (Net) $7,241 $7,317
Deferred Investment Tax Credits 1,054 1,105
Total Regulatory Liabilities $8,295 $8,422
Use of Estimates
The preparation of these financial statements in conformity
with generally accepted accounting principles requires in
certain instances the use of management's estimates. Actual
results could differ from those estimates.
Income and Expenses
Services rendered to both affiliated and unaffiliated com-
panies are provided at cost. The charges for services include
no compensation for the use of equity capital, all of which is
furnished by AEP Co., Inc. The costs of the services are
determined on a direct charge basis to the extent practicable
and on reasonable bases of proration for indirect costs.
(Cont'd)
<PAGE>
19B
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes
regarding the financial statements or any account
thereof. Furnish particulars as to any significant
contingent assets or liabilities existing at the
end of the year. Notes relating to financial
statements shown elsewhere in this report may be
indicated here by reference.
Income Taxes
The Company follows the liability method of accounting for
income taxes as prescribed by SFAS 109, Accounting for Income
Taxes. Under the liability method, deferred income taxes are
provided for all temporary differences between book cost and
tax basis of assets and liabilities which will result in a
future tax consequence. Where the flow-through method of
accounting for temporary differences is reflected in billings,
regulatory assets and liabilities are recorded in accordance
with SFAS 71.
Investment Tax Credits
Investment tax credits utilized in prior years' federal
income tax returns were deferred and are being amortized
over the life of the related investment in accordance with
regulatory treatment.
Property
Property is stated at original cost. Land, structures and
structural improvements are generally subject to first
mortgage liens. Depreciation is provided on a straight-
line basis over the estimated useful lives of the property.
Investments
Investments include the cash surrender value of corporate
owned life insurance policies net of policy loans and interest
accrued on the loans.
Debt
With SEC staff approval gains and losses on reacquired debt
are deferred and amortized over the term of the replacement debt.
Debt issuance expenses are amortized over the term of the
related debt, with the amortization included in interest
charges.
(Cont'd)
<PAGE>
19C
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes
regarding the financial statements or any account
thereof. Furnish particulars as to any significant
contingent assets or liabilities existing at the
end of the year. Notes relating to financial
statements shown elsewhere in this report may be
indicated here by reference.
2. COMMITMENTS AND CONTINGENCIES:
The Company is involved in a number of legal proceedings
and claims. While management is unable to predict the outcome
of litigation, any potential liability which may result
therefrom would be recoverable from affiliated client companies.
3. BENEFIT PLANS:
AEPSC participates in the AEP System pension plan, a
trusteed, noncontributory defined benefit plan covering all
employees meeting eligibility requirements. Benefits are
based on service years and compensation levels. Pension
costs are allocated by first charging each System company
with its service cost and then allocating the remaining
pension cost in proportion to its share of the projected
benefit obligation. The funding policy is to make annual
trust fund contributions equal to the net periodic pension
cost up to the maximum amount deductible for federal income
taxes, but not less than the minimum required contribution
in accordance with the Employee Retirement Income Security
Act of 1974. Net pension plan costs for the years ended
December 31, 1997 and 1996 were $4.0 million and $3.7 million,
respectively.
Postretirement benefits other than pensions (OPEB) are
provided for retired employees under an AEP System plan.
Substantially all employees are eligible for health care and
life insurance if they retire from active service after reach-
ing age 55 and have at least 10 service years. The funding
policy for AEP's OPEB plan is to make contributions to an
external Voluntary Employees Beneficiary Association trust
fund equal to the incremental OPEB costs (i.e., the amount
that the total post-retirement benefits cost under SFAS 106,
Employers' Accounting for Postretirement Benefits Other Than
Pensions, exceeds the pay-as-you-go amount). Contributions
were $5.4 million in 1997 and $4.0 million in 1996. OPEB
costs are determined by the application of AEP System
actuarial assumptions to each company's employee complement.
The annual accrued costs, which includes the recognition of
(Cont'd)
<PAGE>
19D
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes
regarding the financial statements or any account
thereof. Furnish particulars as to any significant
contingent assets or liabilities existing at the
end of the year. Notes relating to financial
statements shown elsewhere in this report may be
indicated here by reference.
one-twentieth of the prior service transition obligation,
were $8.7 million in 1997 and $6.9 million in 1996.
An employee savings plan is offered which allows
participants to contribute up to 17% of their salaries into various
investment alternatives, including AEP Co., Inc. common stock.
An employer matching contribution, equaling one-half of the
employees' contribution to the plan up to a maximum of 3% of
the employees' base salary, is invested in AEP Co., Inc.
common stock. The Company's annual contribution totaled $4.6
million in 1997 and $4.3 million in 1996.
4. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The carrying amount of cash, special deposits, accounts
receivable and accounts payable approximates fair value
because of the short-term maturities of these instruments.
At December 31, 1997 and 1996 the fair value of long-term
debt was $87 million and $91 million, respectively, based
on quoted market prices for similar issues and current
interest rates offered for debt of the same remaining
maturities. The carrying amount for long-term debt was $71
million and $76 million at December 31, 1997 and 1996,
respectively.
5. FEDERAL INCOME TAXES:
The details of federal income taxes as reported are as
follows:
Year Ended December 31,
1997 1996
(In Thousands)
Current (net)................... $ 6,296 $ 7,192
Deferred (net).................. (9,327) (10,615)
Deferred Investment Tax Credits
(net)........................ (51) (47)
Total Federal Income Tax
Credit..................... $(3,082) $( 3,470)
(Cont'd)
<PAGE>
19E
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes
regarding the financial statements or any account
thereof. Furnish particulars as to any significant
contingent assets or liabilities existing at the
end of the year. Notes relating to financial
statements shown elsewhere in this report may be
indicated here by reference.
Federal income taxes as reported are different than the pre-
tax book loss multiplied by the statutory federal income tax
rate predominantly due to non-taxable income related to
corporate owned life insurance and amortization of deferred
investment tax credits.
The following tables show the elements of the net deferred
tax asset or liability and the significant temporary differ-
ences giving rise to such deferrals:
December 31,
1997 1996
(In Thousands)
Deferred Tax Assets $ 41,537 $ 31,287
Deferred Tax Liabilities (28,512) (27,455)
Net Deferred Tax Asset $(13,025) $ 3,832
Property Related Temporary Differences $(26,197) $(25,673)
Accrued Pension Expense 14,013 12,704
Accrued Vacation Pay 4,612 5,084
Deferred and Accrued Compensation 13,682 5,751
Amounts Due to Affiliates for
Future Income Tax 2,519 2,561
All Other (net) 4,396 3,405
Total Net Deferred Tax
Asset $ 13,025 $ 3,832
The Company joins in the filing of a consolidated federal
income tax return with its affiliates in the AEP System. The
allocation of the AEP System's current consolidated federal
income tax to the System companies is in accordance with SEC
rules under the 1935 Act. These rules permit the allocation
of the benefit of current tax losses utilized to the System
companies giving rise to them in determining their current
tax expense. The tax loss of the System parent company, AEP
Co., Inc., is allocated to its subsidiaries with taxable
income. With the exception of the loss of the parent company,
the method of allocation approximates a separate return result
for each company in the consolidated group.
(Cont'd)
<PAGE>
19F
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes
regarding the financial statements or any account
thereof. Furnish particulars as to any significant
contingent assets or liabilities existing at the
end of the year. Notes relating to financial
statements shown elsewhere in this report may be
indicated here by reference.
The AEP System has settled with the United States Internal
Revenue Service (IRS) all issues from the audits of the
consolidated federal income tax returns for the years prior
to 1991. Returns for the years 1991 through 1996 are presently
open and under audit by the IRS. During the audit the IRS
agents requested a ruling from their National Office that
certain interest deductions relating to corporate owned life
insurance (COLI) claimed by the Company should not be allowed.
The COLI program was established in 1990 as part of the
Company's strategy to fund and reduce the cost of medical
benefits for retired employees. AEP filed a brief with the
IRS National Office refuting the agents' position. Although
no adjustments have been proposed, a disallowance of the COLI
interest deductions through December 31, 1997 would total
approximately $34 million (including interest). Management
believes it has meritorious defenses and will vigorously
contest any proposed adjustments. No provisions for this
amount have been recorded. In the event the Company is
unsuccessful it would be recovered through billings to
affiliated companies.
6. LEASES:
Leases of structures, improvements, office furniture and
miscellaneous equipment are for periods of up to 30 years and
require payments of related property taxes, maintenance and
operating costs. The majority of the leases have purchase or
renewal options and will be renewed or replaced by other
leases.
The components of rental costs are as follows:
Year Ended December 31,
1997 1996
(In Thousands)
Operating Leases.................$10,769 $ 6,033
Amortization of Capital Leases... 12,807 13,755
Interest on Capital Leases....... 5,073 2,966
Total Rental Costs...........$28,649 $22,754
(Cont'd)
<PAGE>
19G
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes
regarding the financial statements or any account
thereof. Furnish particulars as to any significant
contingent assets or liabilities existing at the
end of the year. Notes relating to financial
statements shown elsewhere in this report may be
indicated here by reference.
Properties under capital leases and related obligations
recorded on the Balance Sheets are as follows:
December 31,
1997 1996
(In Thousands)
Properties Under Capital Leases:
Structures and Improvements...... $11,750 $11,750
Office Furniture and Miscellaneous
Equipment...................... 69,955 64,086
81,705 75,836
Accumulated Amortization........... 21,231 32,565
Net Properties Under Capital
Leases......................... $60,474 $43,271
Capital Lease Obligations: *
Noncurrent Liability............. $46,363 $32,670
Liability Due Within One Year. 14,111 10,601
Total Capital Lease Obligations $60,474 $43,271
* Represents the present value of future minimum lease
payments.
Properties under operating leases and related obligations
are not included in the Balance Sheets.
(Cont'd)
<PAGE>
19H
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes
regarding the financial statements or any account
thereof. Furnish particulars as to any significant
contingent assets or liabilities existing at the
end of the year. Notes relating to financial
statements shown elsewhere in this report may be
indicated here by reference.
Future minimum lease rentals consisted of the following at
December 31, 1997:
Noncancelable
Capital Operating
Leases Leases
(In Thousands)
1998............................. $18,996 467
1999............................. 16,539 398
2000............................. 13,479 157
2001............................. 9,602 167
2002............................. 5,296 167
Later Years...................... 21,392 180
Total Future Minimum Lease
Rentals........................ 85,304 $1,536
Less Estimated Interest Element.. 24,830
Estimated Present Value of Future
Minimum Lease Rentals.......... $60,474
7. LONG-TERM DEBT:
Long-term debt was outstanding as follows:
December 31,
Interest 1997 1996
Rate (In Thousands)
Notes Payable to Banks:
Due October 1998.......... 5.29% $10,000 $10,000
Mortgage Notes:
Series D(a)............... 9.00% 5,000 7,500
Series E(b)............... 9.60% 55,000 57,500
Advances from Parent Company. (c) 1,100 1,100
71,100 76,100
Less Portion Due Within One Year 15,000 5,000
Total...................... $56,100 $71,100
(a) Due in annual installments of $2,500,000 until
December 1999.
(b) Due in annual installments of $2,500,000 until
December 1999, $2,000,000 from 2000-2007 and the
balance in December 2008.
(Cont'd)
<PAGE>
19I
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes
regarding the financial statements or any account
thereof. Furnish particulars as to any significant
contingent assets or liabilities existing at the
end of the year. Notes relating to financial
statements shown elsewhere in this report may be
indicated here by reference.
(c) The advances from parent company are non-interest
bearing and have no due date.
Long-term debt outstanding at December 31, 1997 is payable
as follows:
Principal
Amount
(In Thousands)
1998...................................... $15,000
1999...................................... 5,000
2000...................................... 2,000
2001...................................... 2,000
2002...................................... 2,000
Later Years............................... 45,100
Total................................... $71,100
<PAGE>
20
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
SCHEDULE XV
STATEMENT OF INCOME
ACCOUNT D E S C R I P T I O N CURRENT YEAR PRIOR YEAR
(In Thousands)
<S> <C> <C>
INCOME
457 Services rendered to associate companies $455,856 $393,743
458 Services rendered to nonassociate
companies 209 501
421 Miscellaneous income or loss 405 321
Total Income 456,470 394,565
EXPENSE
920 Salaries and wages 228,151 199,116
921 Office supplies and expenses 40,130 27,721
922 Administrative expense transferred
- credit (1,060) (889)
923 Outside services employed 84,671 61,486
924 Property insurance 123 104
925 Injuries and damages 1,184 1,673
926 Employee pensions and benefits 39,288 49,869
928 Regulatory commission expense -- --
930.1 General advertising expenses -- --
930.2 Miscellaneous general expenses 1,473 1,287
931 Rents 28,010 23,536
932 Maintenance of structures and equipment 3,356 4,609
403 Depreciation and amortization expense 4,006 4,008
408 Taxes other than income taxes 18,796 14,757
409 Income taxes 7,244 7,312
410 Provision for deferred income taxes 13,896 10,746
411 Provision for deferred income taxes
- credit (23,223) (21,361)
411.5 Investment tax credit (51) (47)
426.1 Donations 1,236 1,288
426.5 Other deductions 1,863 1,452
427 Interest on long-term debt 6,693 7,198
430 Interest on debt to associate companies -- --
431 Other interest expense 684 700
Total Expense 456,470 394,565
Net Income or (Loss) $ -0- $ -0-
</TABLE>
<PAGE>
21
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
ANALYSIS OF BILLING
ASSOCIATE COMPANIES
ACCOUNT 457
DIRECT INDIRECT COMPENSATION TOTAL
NAME OF ASSOCIATE COMPANY COSTS COSTS FOR USE OF AMOUNT
CHARGED CHARGED CAPITAL BILLED
457-1 457-2 457-3
(In Thousands)
<S> <C> <C> <C> <C>
Associate Companies
AEP Communications, Inc. $ 1,458 $ 250 $ -- $ 1,708
AEP Communications, LLC 146 42 -- 188
AEP Energy Services, Inc. 4,514 663 -- 5,177
AEP Generating Company 4,230 468 8 4,706
AEP Investments, Inc. 29 5 -- 34
AEP Pushan Power, LDC 644 60 -- 704
AEP Resources, Inc. 6,980 804 1 7,785
AEP Resources Delaware, Inc. 5 1 -- 6
AEP Resources International, Limited 190 20 1 211
AEP Resources Project Mgmt. Co., LTD 6 1 -- 7
AEP Resources Service Company 2,002 299 6 2,307
American Electric Power Company, Inc. 1,835 280 2 2,117
Appalachian Power Company 91,366 11,772 118 103,256
Appalachian/Ohio Power Joint
Account (Amos) 10,500 1,388 3 11,891
Appalachian/Ohio Power Joint
Account (Sporn) 8,821 999 3 9,823
Blackhawk Coal Company 18 4 -- 22
Cardinal Operating Company 6,995 1,066 6 8,067
Cedar Coal Co. 35 5 -- 40
Central Appalachian Coal Company 2 -- -- 2
Central Coal Company 7 1 -- 8
Central Ohio Coal Company 1,423 224 4 1,651
Central Operating Company 264 37 -- 301
Columbus Southern Power Company 55,325 6,682 65 62,072
Conesville Coal Preparation Company 408 72 1 481
Indiana Michigan Power Company 59,068 6,994 134 66,196
Indiana Michigan Power Company-
Water Transportation 914 142 2 1,058
Indiana Michigan Power/AEP Generating
Joint Account (Rockport) 6,869 1,062 7 7,938
Kentucky Power Company 24,563 3,481 25 28,069
Kingsport Power Company 3,003 343 4 3,350
Ohio Power Company 97,505 12,020 114 109,639
Ohio Power Company-Cook Coal Terminal 513 83 1 597
Ohio Power Company (Gavin) 1,886 245 5 2,136
Simco, Inc. 2 1 -- 3
Southern Appalachian Coal Company 2 -- -- 2
Southern Ohio Coal Company 5,498 918 12 6,428
Wheeling Power Company 3,127 319 4 3,450
Windsor Coal Company 1,881 321 3 2,205
Unbilled Revenues 243 (2) -- 241
SUB-TOTAL 402,277 51,070 529 453,876
</TABLE>
(Cont'd)
<PAGE>
21A
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
ANALYSIS OF BILLING
ASSOCIATE COMPANIES
ACCOUNT 457
DIRECT INDIRECT COMPENSATION TOTAL
NAME OF ASSOCIATE COMPANY COSTS COSTS FOR USE OF AMOUNT
CHARGED CHARGED CAPITAL BILLED
457-1 457-2 457-3
(In Thousands)
<S> <C> <C> <C> <C>
Sub-Total Brought Forward 402,277 51,070 529 453,876
Statutory Subsidiaries
Indiana-Kentucky Electric Corporation 720 140 3 863
Ohio Valley Electric Corporation 935 180 2 1,117
TOTAL $403,932 $51,390 $534 $455,856
</TABLE>
<PAGE>
22
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
ANALYSIS OF BILLING
NONASSOCIATE COMPANIES
ACCOUNT 458
DIRECT INDIRECT COMPENSATION EXCESS TOTAL
NAME OF NONASSOCIATE COMPANY COST COST FOR USE TOTAL OR AMOUNT
CHARGED CHARGED CAPITAL COST DEFICIENCY BILLED
458-1 458-2 458-3 458-4
(In Thousands)
<S> <C> <C> <C> <C>
East Central Area Reliability $157 $28 $-- $185 $-- $185
ABB Systems Control, Inc. 4 1 -- 5 -- 5
American Municipal Power-Ohio, Inc. 4 1 -- 5 -- 5
Cincinnati Gas & Electric (Zimmer
Service Agreement) 4 1 -- 5 -- 5
Mid-Atlantic Area Coordination 2 -- -- 2 -- 2
Cinergy Corporation 1 -- -- 1 -- 1
Dayton Power and Light Company 1 -- -- 1 -- 1
Duke Power Company 1 -- -- 1 -- 1
Louisville Gas & Electric Company 1 -- -- 1 -- 1
Northwest Power Coordinating Council 1 -- -- 1 -- 1
Ohio Edison Company 1 -- -- 1 -- 1
West Penn Power Company 1 -- -- 1 -- 1
TOTAL $178 $31 $-0- $209 $-0- $209
INSTRUCTION: Provide a brief description of the services rendered to each nonassociate company:
Engineering and computer services.
</TABLE>
<PAGE>
23
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
SCHEDULE XVI
ANALYSIS OF CHARGES FOR SERVICE
ASSOCIATE AND NONASSOCIATE COMPANIES
ASSOCIATE COMPANY CHARGES NONASSOCIATE COMPANY CHARGES
DESCRIPTION OF ITEMS DIRECT INDIRECT DIRECT INDIRECT
COST COST TOTAL COST COST TOTAL
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
920 SALARIES AND WAGES $222,415 $ 5,606 $228,021 $127 $ 3 $130
921 OFFICE SUPPLIES AND EXPENSES 23,384 16,736 40,120 -- 10 10
922 ADMINISTRATIVE EXPENSE TRANSFERRED-CREDIT (1,060) -- (1,060) -- -- --
923 OUTSIDE SERVICES EMPLOYED 82,649 2,013 84,662 8 1 9
924 PROPERTY INSURANCE 48 75 123 -- -- --
925 INJURIES AND DAMAGES 1,178 5 1,183 1 -- 1
926 EMPLOYEE PENSIONS AND BENEFITS 37,874 1,390 39,264 22 2 24
928 REGULATORY COMMISSION EXPENSE -- -- -- -- -- --
930.1 GENERAL ADVERTISING EXPENSES -- -- -- -- -- --
930.2 MISCELLANEOUS GENERAL EXPENSES 1,426 47 1,473 -- -- --
931 RENTS 15,838 12,154 27,992 11 7 18
932 MAINTENANCE OF STRUCTURES AND EQUIPMENT 2,142 1,212 3,354 1 1 2
403 DEPRECIATION AND AMORTIZATION EXPENSE 331 3,673 4,004 -- 2 2
408 TAXES OTHER THAN INCOME TAXES 16,217 2,569 18,786 8 2 10
409 INCOME TAXES 7,243 1 7,244 -- -- --
410 PROVISION FOR DEFERRED INCOME TAXES 13,896 -- 13,896 -- -- --
411 PROVISION FOR DEFERRED INCOME TAXES-CREDIT (23,223) -- (23,223) -- -- --
411.5 INVESTMENT TAX CREDIT (51) -- (51) -- -- --
426.1 DONATIONS 1,236 -- 1,236 -- -- --
426.5 OTHER DEDUCTIONS 1,863 -- 1,863 -- -- --
427 INTEREST ON LONG-TERM DEBT 1,044 5,646 6,690 -- 3 3
431 OTHER INTEREST EXPENSE 56 628 684 -- -- --
INSTRUCTION: Total cost of service will equal for
associate and nonassociate companies the total
amount billed under their separate analysis of
billing schedules.
TOTAL EXPENSES = 404,506 51,755 456,261 178 31 209
421 MISCELLANEOUS INCOME (40) (365) (405) -- -- --
TOTAL EXPENSES = $404,466 $51,390 $455,856 $178 $31 $209
COMPENSATION FOR USE OF EQUITY CAPITAL = -- -- -- -- -- --
430 INTEREST ON DEBT TO ASSOCIATE COMPANIES= -- -- -- -- -- --
TOTAL COST OF SERVICE = $404,466 $51,390 $455,856 $178 $31 $209
(Cont'd)
</TABLE>
<PAGE>
23A
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
SCHEDULE XVI
ANALYSIS OF CHARGES FOR SERVICE
ASSOCIATE AND NONASSOCIATE COMPANIES
TOTAL CHARGES FOR SERVICE
DESCRIPTION OF ITEMS DIRECT INDIRECT
COST COST TOTAL
(In Thousands)
<S> <C> <C> <C> <C>
920 SALARIES AND WAGES $222,542 $ 5,609 $228,151
921 OFFICE SUPPLIES AND EXPENSES 23,384 16,746 40,130
922 ADMINISTRATIVE EXPENSE TRANSFERRED-CREDIT (1,060) -- (1,060)
923 OUTSIDE SERVICES EMPLOYED 82,657 2,014 84,671
924 PROPERTY INSURANCE 48 75 123
925 INJURIES AND DAMAGES 1,179 5 1,184
926 EMPLOYEE PENSIONS AND BENEFITS 37,896 1,392 39,288
928 REGULATORY COMMISSION EXPENSE -- -- --
930.1 GENERAL ADVERTISING EXPENSES -- -- --
930.2 MISCELLANEOUS GENERAL EXPENSES 1,426 47 1,473
931 RENTS 15,849 12,161 28,010
932 MAINTENANCE OF STRUCTURES AND EQUIPMENT 2,143 1,213 3,356
403 DEPRECIATION AND AMORTIZATION EXPENSE 331 3,675 4,006
408 TAXES OTHER THAN INCOME TAXES 16,225 2,571 18,796
409 INCOME TAXES 7,243 1 7,244
410 PROVISION FOR DEFERRED INCOME TAXES 13,896 -- 13,896
411 PROVISION FOR DEFERRED INCOME TAXES-CREDIT (23,223) -- (23,223)
411.5 INVESTMENT TAX CREDIT (51) -- (51)
426.1 DONATIONS 1,236 -- 1,236
426.5 OTHER DEDUCTIONS 1,863 -- 1,863
427 INTEREST ON LONG-TERM DEBT 1,044 5,649 6,693
431 OTHER INTEREST EXPENSE 56 628 684
INSTRUCTION: Total cost of service will equal for
associate and nonassociate companies the total
amount billed under their separate analysis of
billing schedules.
TOTAL EXPENSES = 404,684 51,786 456,470
421 MISCELLANEOUS INCOME (40) (365) (405)
TOTAL EXPENSES = $404,644 $51,421 $456,065
COMPENSATION FOR USE OF EQUITY CAPITAL = -- -- --
430 INTEREST ON DEBT TO ASSOCIATE COMPANIES= -- -- --
TOTAL COST OF SERVICE = $404,644 $51,421 $456,065
</TABLE>
<PAGE>
24
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
SCHEDULE XVII
SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
CORPORATE CORPORATE
D E S C R I P T I O N O F I T E M S TOTAL ACCOUNTING CORPORATE COMMUNI- DEVELOP-
AMOUNT OVERHEAD SERVICES ACCOUNTING CATIONS MENT
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
920 SALARIES AND WAGES $228,151 $ 6,187 $ 9,433 $4,214 $3,900 $2,998
921 OFFICE SUPPLIES AND EXPENSES 40,130 13,980 617 209 1,035 932
922 ADMINISTRATIVE EXPENSE TRANSFERRED -
CREDIT (1,060) -- (1) (9) (189) (6)
923 OUTSIDE SERVICES EMPLOYED 84,671 2,172 1,141 309 413 132
924 PROPERTY INSURANCE 123 75 -- -- -- --
925 INJURIES AND DAMAGES 1,184 21 36 14 13 8
926 EMPLOYEE PENSIONS AND BENEFITS 39,288 2,617 1,844 633 541 548
928 REGULATORY COMMISSION EXPENSE -- -- -- -- -- --
930.1 GENERAL ADVERTISING EXPENSES -- -- -- -- -- --
930.2 MISCELLANEOUS GENERAL EXPENSES 1,473 29 3 -- 152 --
931 RENTS 28,010 2,095 768 167 117 26
932 MAINTENANCE OF STRUCTURES AND EQUIPMENT 3,356 931 -- -- 1 --
403 DEPRECIATION AND AMORTIZATION EXPENSE 4,006 4,006 -- -- -- --
408 TAXES OTHER THAN INCOME TAXES 18,796 3,133 696 256 218 102
409 INCOME TAXES 7,244 1 -- -- -- --
410 PROVISION FOR DEFERRED INCOME TAXES 13,896 -- -- -- -- --
411 PROVISION FOR DEFERRED INCOME TAXES -
CREDIT (23,223) -- -- -- -- --
411.5 INVESTMENT TAX CREDIT (51) -- -- -- -- --
426.1 DONATIONS 1,236 67 -- -- 11 --
426.5 OTHER DEDUCTIONS 1,863 6 1 9 186 6
427 INTEREST ON LONG-TERM DEBT 6,693 6,156 -- -- -- --
430 INTEREST ON DEBT TO ASSOCIATE COMPANIES -- -- -- -- -- --
431 OTHER INTEREST EXPENSE 684 680 -- -- -- --
INSTRUCTION: Indicate each department or
service function. (see Instruction 01-3
General Structure of Accounting System:
Uniform System of Accounts)
TOTAL EXPENSES = $456,470 $42,154 $14,538 $5,802 $6,398 $4,746
</TABLE>
<PAGE>
25
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
SCHEDULE XVII
SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
D E P A R T M E N T O R S E R V I C E F U N C T I O N
CORPORATE ENERGY ENERGY AEP ENERGY ENVIRON- FOSSIL &
ACCOUNT PLANNING & CORPORATE DELIVERY DISTRI- ENERGY TRANS- MENTAL EXECUTIVE HYDRO
NUMBER BUDGETING SERVICES SUPPORT BUTION SERVICES MISSION SERVICES GROUP FINANCE PRODUCTION
(In Thousands)
<S> <C> <C. <C> <C> <C> <C> <C> <C> <C> <C>
920 $2,240 $ 976 $12,556 $ 7,142 $5,301 $12,830 $4,566 $11,145 $1,707 $ 8,174
921 (81) 31 1,974 691 316 703 392 1,918 252 632
922 -- -- (2) -- -- (5) (6) (796) (6) (1)
923 (2,159) 5 1,573 2,593 998 2,146 392 3,842 266 898
924 -- -- -- -- -- -- -- 48 -- --
925 6 3 65 25 13 70 16 41 5 31
926 302 164 1,920 1,104 691 2,012 757 1,998 217 1,280
928 -- -- -- -- -- -- -- -- -- --
930.1 -- -- -- -- -- -- -- -- -- --
930.2 -- 1 66 5 14 18 32 416 40 3
931 (23) 7 1,712 504 610 576 175 623 110 124
932 -- -- 389 -- 47 4 88 6 -- 1
403 -- -- -- -- -- -- -- -- -- --
408 112 67 777 437 306 817 307 614 93 503
409 -- -- -- -- -- -- -- -- -- --
410 -- -- -- -- -- -- -- -- -- --
411 -- -- -- -- -- -- -- -- -- --
411.5 -- -- -- -- -- -- -- -- -- --
426.1 -- -- -- -- -- -- 5 1,000 -- 1
426.5 -- -- 2 -- 12 5 2 1,556 6 1
427 -- -- -- -- -- -- -- -- 537 --
430 -- -- -- -- -- -- -- -- -- --
431 -- -- -- -- -- -- -- -- -- --
$ 397 $1,254 $21,032 $12,501 $8,308 $19,176 $6,726 $22,411 $3,227 $11,647
(Cont'd)
</TABLE>
<PAGE>
25A
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
SCHEDULE XVII
SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
D E P A R T M E N T O R S E R V I C E F U N C T I O N
INFOR- NORTHERN NORTHERN POWER
ACCOUNT FUEL HUMAN MATION INTERNAL CONSUMER RSO RSO NUCLEAR GENERATION
NUMBER SUPPLY RESOURCES SERVICES AUDITS LEGAL SERVICES PRODUCTION SUPPORT GENERATION ENGINEERING
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
920 $6,593 $13,757 $21,130 $3,208 $4,544 $ 5,880 $14,075 $5,482 $1,483 $22,090
921 495 2,287 1,745 354 320 1,671 2,729 868 67 1,536
922 (28) -- -- (1) (1) -- -- -- -- (5)
923 498 2,324 55,396 177 189 7,399 69 272 740 1,487
924 -- -- -- -- -- -- -- -- -- --
925 19 57 73 11 14 24 76 30 3 79
926 901 4,168 3,318 513 666 873 1,694 1,051 114 3,550
928 -- -- -- -- -- -- -- -- -- --
930.1 -- -- -- -- -- -- -- -- -- --
930.2 30 72 10 -- 1 390 7 11 -- 89
931 89 1,640 14,882 64 311 513 219 178 182 723
932 -- 3 1,618 -- -- 11 64 6 -- 143
403 -- -- -- -- -- -- -- -- -- --
408 336 863 1,432 201 211 367 1,025 370 55 1,446
409 -- -- -- -- -- -- -- -- -- --
410 -- -- -- -- -- -- -- -- -- --
411 -- -- -- -- -- -- -- -- -- --
411.5 -- -- -- -- -- -- -- -- -- --
426.1 49 67 -- -- -- 22 10 -- -- --
426.5 36 2 -- 1 1 20 -- 1 2 4
427 -- -- -- -- -- -- -- -- -- --
430 -- -- -- -- -- -- -- -- -- --
431 -- -- -- -- -- -- -- -- -- --
$9,018 $25,240 $99,604 $4,528 $6,256 $17,170 $19,968 $8,269 $2,646 $31,142 (Cont'd)
RSO = Regional Service Organization
</TABLE>
<PAGE>
25B
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
SCHEDULE XVII
SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
D E P A R T M E N T O R S E R V I C E F U N C T I O N
PROCUREMENT SOUTHERN SOUTHERN
ACCOUNT & SUPPLY RSO RSO SYSTEM
NUMBER CHAIN RATES PRODUCTION SUPPORT PLANNING TAX
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
920 $5,057 $2,278 $15,314 $4,818 $7,021 $ 2,052
921 238 72 1,780 1,992 235 140
922 -- (4) -- -- -- --
923 205 99 63 408 371 253
924 -- -- -- -- -- --
925 17 6 279 90 33 6
926 831 306 2,355 1,039 994 287
928 -- -- -- -- -- --
930.1 -- -- -- -- -- --
930.2 2 -- 7 12 -- 63
931 421 36 110 579 409 63
932 -- -- 13 31 -- --
403 -- -- -- -- -- --
408 322 114 1,093 353 379 1,791
409 -- -- -- -- -- 7,243
410 -- -- -- -- -- 13,896
411 -- -- -- -- -- (23,223)
411.5 -- -- -- -- -- (51)
426.1 -- -- 4 -- -- --
426.5 -- 4 -- -- -- --
427 -- -- -- -- -- --
430 -- -- -- -- -- --
431 -- -- -- -- -- 4
$7,093 $2,911 $21,018 $9,322 $9,442 $ 2,524
RSO = Regional Service Organization
</TABLE>
<PAGE>
26
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
DEPARTMENTAL ANALYSIS OF SALARIES
ACCOUNT 920
DEPARTMENTAL SALARY EXPENSE NUMBER
NAME OF DEPARTMENT INCLUDED IN AMOUNTS BILLED TO PERSONNEL
Indicate each department or TOTAL PARENT OTHER NON END OF
service function. AMOUNT COMPANY ASSOCIATES ASSOCIATES YEAR
(In Thousands)
<S> <C> <C> <C> <C> <C>
Service Groups (Overheads) $ 6,187 $ 32 $ 6,152 $ 3 167
Accounting Services 9,433 1 9,432 -- 242
Corporate Accounting 4,214 105 4,109 -- 60
Corporate Communications 3,900 100 3,800 -- 52
Corporate Development 2,998 88 2,910 -- 47
Corporate Planning & Budgeting 2,240 33 2.207 -- 21
Corporate Services 976 -- 976 -- 17
Energy Delivery Support 12,556 -- 12,556 -- 157
Energy Distribution 7,142 -- 7,142 -- 92
Energy Services 5,301 35 5,265 1 63
Energy Transmission 12,830 -- 12,825 5 185
Environmental Services 4,566 -- 4,566 -- 74
Executive Group 11,145 275 10,856 14 107
Finance 1,707 263 1,444 -- 25
Fossil & Hydro Production 8,174 -- 8,174 -- 105
Fuel Supply & Business Support 6,593 -- 6,593 -- 73
Human Resources 13,757 14 13,743 -- 155
Information Services 21,130 2 21,026 102 372
Internal Audits 3,208 -- 3,208 -- 44
Legal 4,544 214 4,330 -- 41
Marketing Services 5,880 97 5,783 -- 79
Northern RSO Production 14,075 -- 14,075 -- 263
Northern RSO Support 5,482 -- 5,482 -- 280
Nuclear Generation 1,483 10 1,473 -- 2
Power Generation Engineering 22,090 -- 22,087 3 327
Procurement & Supply Chain 5,057 -- 5,057 -- 86
Rates 2,278 21 2,257 -- 25
Southern RSO Production 15,314 -- 15,314 -- 46
Southern RSO Support 4,818 -- 4,818 -- 67
System Planning 7,021 1 7,017 3 83
Tax 2,052 7 2,045 -- 25
TOTAL $228,151 $1,298 $226,722 $131 3,382
</TABLE>
<PAGE>
27
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS:
Provide a list, by vendor, of outside services employed. If the
aggregate amounts paid to any one vendor is less than $100,000, only
the aggregate number and total amount of all such payments need be
shown. Provide a brief one line description for the largest invoice
paid to each vendor listed.
RELATIONSHIP
"A"=ASSOCIATE
FROM WHOM PURCHASED "NA"=NON AMOUNT
ASSOCIATE
(In Thousands)
ABB Power T&D Company, Inc. NA $ 1,167
Software license fee applicable to AEP's System Control Center.
Abby Lane/Dana Temporaries, Inc. NA 120
Temporary office help.
Accountemps NA 123
Temporary office help.
ACRT, Inc. NA 227
Professional services fees for maintenance survey.
Advantis NA 129
Professional services fees for computer programmers/systems analysts.
Aerotek, Inc. NA 685
Professional services fees for computer programmers/systems analysts.
America's Registry, Inc. NA 2,334
Professional services fees for computer programmers/systems analysts.
Analysts International Corporation NA 795
Professional services fees for computer programmers/systems analysts.
Andersen Consulting, LLP NA 364
Software license & maintenance fees.
Applied Performance Technologies, Inc. NA 235
Professional services fees for computer programmers/systems analysts.
Arbor Software NA 187
Fees for decision support software.
(Cont'd)
<PAGE>
27A
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS:
Provide a list, by vendor, of outside services employed. If the
aggregate amounts paid to any one vendor is less than $100,000, only
the aggregate number and total amount of all such payments need be
shown. Provide a brief one line description for the largest invoice
paid to each vendor listed.
RELATIONSHIP
"A"=ASSOCIATE
FROM WHOM PURCHASED "NA"=NON AMOUNT
ASSOCIATE
(In Thousands)
Arrington Group NA 207
Professional services fees and materials.
ASAP Software Express, Inc. NA 1,676
PC software and license fees.
BBA Energy Services NA 269
Materials for the Transmission Line Mechanic Learning Guide.
BBI Marketing Services, Inc. NA 189
Appliance protection new product test.
BGS Systems, Inc. NA 169
PC software and license fees.
BSG Alliance/It, Inc. NA 124
Professional services fees for the IS Web project.
Banctec Systems, Inc. NA 220
Professional services fees for system analyst.
CDI Corporation NA 743
Professional services fees for design and drafting services.
CSC Consulting, Inc. NA 5,079
Professional services fees for computer programmers/systems analysts.
CSC Index, Inc. NA 574
Professional services fees for computer programmers and expenses.
Candle Corporation NA 574
Professional license for AF/remote.
(Cont'd)
<PAGE>
27B
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS:
Provide a list, by vendor, of outside services employed. If the
aggregate amounts paid to any one vendor is less than $100,000, only
the aggregate number and total amount of all such payments need be
shown. Provide a brief one line description for the largest invoice
paid to each vendor listed.
RELATIONSHIP
"A"=ASSOCIATE
FROM WHOM PURCHASED "NA"=NON AMOUNT
ASSOCIATE
(In Thousands)
CAP Gemini America NA 1,084
Professional services fees for computer programmers/systems analysts.
Cegelec ESCA Corporation NA 200
Professional services fees for time and materials regarding the Open Access
Sametime Information System Project.
Center on Education & Training for Employment NA (189)
Professional services fees for development and
delivery of training programs.
Cinergy Corporation/Midwest ISO NA 156
Professional fees for consulting, legal, meeting, project management and
other expenses for Midwest ISO.
Claremont Technology Group, Inc. NA 1,694
Professional services fees for computer programmers/systems analysts.
Clean Air Capital Markets Limited Partnership NA 163
Consulting services related to allowance tracking.
Computer Associates International, Inc. NA 1,067
Software license and maintenance fees.
Computer Project Resources, Inc. NA 108
Professional services fees for computer programmers/systems analysts.
ComputerPeople, Inc. NA 5,203
Professional services fees for computer programmers/systems analysts.
Compuware Corporation NA 1,983
Software license fees for PCs and database servers.
C. W. Costello and Associates, Inc. NA 794
Professional services fees for computer programmers/systems analysts.
(Cont'd)
<PAGE>
27C
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS:
Provide a list, by vendor, of outside services employed. If the
aggregate amounts paid to any one vendor is less than $100,000, only
the aggregate number and total amount of all such payments need be
shown. Provide a brief one line description for the largest invoice
paid to each vendor listed.
RELATIONSHIP
"A"=ASSOCIATE
FROM WHOM PURCHASED "NA"=NON AMOUNT
ASSOCIATE
(In Thousands)
Coughlin Associates NA 212
Retainer and placement fees for executive search.
A. C. Coy Company NA 330
Professional services fees for computer programmers/systems analysts.
Crowe Chizek NA 234
Professional services fees for computer programmers/systems analysts.
DDI Customer Service, Inc. NA 322
Professional services fees for consulting, materials and delivery charges
for workshop on skills for high performance workforce training system.
DP Initiatives, Inc. NA 274
Professional services fees for computer programmers/systems analysts.
DataSystems Group, Inc. NA 931
Professional services fees and reimbursable expenses related to the
development and implementation of a customer asset management system.
Dawson Personnel Systems NA 131
Temporary office help.
Decision Support Technology, Inc. NA 452
Professional services fees and reimbursable expenses for
computer programmers/systems analysts.
Deloitte & Touche LLP NA 191
Professional services fees and reimbursable expenses related to
reengineering of key accounting processes.
Development Center, Inc. NA 172
Professional services fees for computer programmers/systems analysts.
Diversified Software Systems, Inc. NA 124
Upgrade installed software license.
(Cont'd)
<PAGE>
27D
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS:
Provide a list, by vendor, of outside services employed. If the
aggregate amounts paid to any one vendor is less than $100,000, only
the aggregate number and total amount of all such payments need be
shown. Provide a brief one line description for the largest invoice
paid to each vendor listed.
RELATIONSHIP
"A"=ASSOCIATE
FROM WHOM PURCHASED "NA"=NON AMOUNT
ASSOCIATE
(In Thousands)
R. Dorsey + Company, Inc. NA 101
Professional services fees for computer programmers/systems analysts.
Dun and Bradstreet NA 219
Market spectrum renewal.
Edison Electric Institute NA 155
1997 Utility Solid Waste Activities Group membership dues.
Electric Power Research Institute NA 1,190
Funding for research and development.
Equifax NA 103
1997 software license fee.
Everest Data Research, Inc. NA 296
Professional services fees related to database management.
Excel Partners, Inc. NA 161
Professional services fees for computer programmers/systems analysts.
The Franklin Computer Services Group NA 276
Professional services fees for PC support services.
Gartner Group, Inc. NA 158
Professional services fees for research advisory services.
General Research NA 239
Professional services fees for computer programmers/systems analysts.
Thomas Glover Associates, Inc. NA 260
Professional services fees for computer programmers/systems analysts.
(Cont'd)
<PAGE>
27E
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS:
Provide a list, by vendor, of outside services employed. If the
aggregate amounts paid to any one vendor is less than $100,000, only
the aggregate number and total amount of all such payments need be
shown. Provide a brief one line description for the largest invoice
paid to each vendor listed.
RELATIONSHIP
"A"=ASSOCIATE
FROM WHOM PURCHASED "NA"=NON AMOUNT
ASSOCIATE
(In Thousands)
Grosh Consulting NA 505
Professional services fees for computer programmers/systems analysts.
HFS Mobility Services, Inc. NA 314
Services fees for the purchase and sale of the homes of relocated employees.
Hunton and Williams NA 103
Legal fees.
In-Plant Techniques Company NA 162
Photocopies.
Indecon, Inc. NA 2,129
Professional services fees for computer programmers/systems analysts.
Index Research and Advisory Services NA 1,216
Professional services fees for computer programmers/systems analysts.
Information Builders, Inc. NA 134
Computer software maintenance.
Information Industries, Inc. NA 331
Professional services fees for computer programmers/systems analysts.
Integrated Communication Systems, Inc. NA 226
Licensing fees and interface fees.
Interactive Business Systems, Inc. NA 650
Professional services fees for computer programmers/systems analysts.
International Business Machines Corporation NA 4,217
Professional services fees for computer programmers/systems analysts.
(Cont'd)
<PAGE>
27F
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS:
Provide a list, by vendor, of outside services employed. If the
aggregate amounts paid to any one vendor is less than $100,000, only
the aggregate number and total amount of all such payments need be
shown. Provide a brief one line description for the largest invoice
paid to each vendor listed.
RELATIONSHIP
"A"=ASSOCIATE
FROM WHOM PURCHASED "NA"=NON AMOUNT
ASSOCIATE
(In Thousands)
Intersolv, Inc. NA 133
PC software and license fees.
Keane, Inc. NA 118
Professional fees regarding productivity management assessment.
Linesoft Inc. NA 1,477
Software license fees related to transmission line design.
Manifest Solutions Corporation NA 358
Professional services fees and reimbursable expenses for computer
programmers/systems analysts.
Market Strategies, Inc. NA 311
Professional services fees in support of marketing activities.
Marriott Management Services Corp. NA 143
Fee for food service operations.
Mastech Corporation NA 235
Professional services fees for computer programmers/systems analysts.
Maxim Group NA 691
Professional services fees for computer programmers/systems analysts.
Maximation, Incorporated NA 1,299
Professional services fees for computer programmers/systems analysts.
MC 2 Cyberspace, LTD. NA 113
Professional services fees for computer programmers/systems analysts.
Mercer Management Consulting, Inc. NA 1,746
Professional services fees and reimbursable expenses for management
consulting services.
(Cont'd)
<PAGE>
27G
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS:
Provide a list, by vendor, of outside services employed. If the
aggregate amounts paid to any one vendor is less than $100,000, only
the aggregate number and total amount of all such payments need be
shown. Provide a brief one line description for the largest invoice
paid to each vendor listed.
RELATIONSHIP
"A"=ASSOCIATE
FROM WHOM PURCHASED "NA"=NON AMOUNT
ASSOCIATE
(In Thousands)
Mobius Management Systems, Inc. NA 440
Year 2000 software site license fee.
Newcourt Financial USA, Inc. NA 954
Computer software license fees.
NewMedia, Inc. NA 1,481
Professional services fees and reimbursable expenses for computer
programmers/systems analysts.
Novadigm, Inc. NA 244
Software license fees for server and clients.
Novatec Automations Systems NA 147
Professional services fees for computer programmers/systems analysts.
Office Team NA 117
Temporary office help.
The Ohio State University NA 780
Educational services for management development program.
Oracle Corporation NA 605
Technical support fee for client/server applications.
Origin Technology in Business, Inc. NA 1,652
Professional services fees for computer programmers/systems analysts.
PHH Homequity NA 1,210
Services fees for the purchase and sale of the homes of relocated employees.
Paros Business Partners, Inc. NA 311
Professional services fees for computer programmers/systems analysts.
(Cont'd)
<PAGE>
27H
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS:
Provide a list, by vendor, of outside services employed. If the
aggregate amounts paid to any one vendor is less than $100,000, only
the aggregate number and total amount of all such payments need be
shown. Provide a brief one line description for the largest invoice
paid to each vendor listed.
RELATIONSHIP
"A"=ASSOCIATE
FROM WHOM PURCHASED "NA"=NON AMOUNT
ASSOCIATE
(In Thousands)
PeopleSoft, Inc. NA 2,523
Software and software support services.
Preferred Technology Solutions, Inc. NA 153
Professional services fees for computer programmers/systems analysts.
Prima Consulting NA 133
Professional services fees for computer programmers/systems analysts.
Prism Solutions, Inc. NA 152
Temporary license fees.
Project Controls, Inc. NA 192
Professional services fees for computer programmers/systems analysts.
The ProTec Group, Inc. NA 889
Professional services fees for computer programmers/systems analysts.
Quick Solutions, Inc. NA 870
Professional services fees for computer programmers/systems analysts.
Registry, Inc. NA 200
Professional services fees for computer programmers/systems analysts.
Response Center NA (244)
Consulting services in support of consumer market planning.
Robert Half International, Inc. NA 812
Professional services fees for computer software programmers/information
technology specialists.
Charles Rose Consultants NA 150
Professional services fees and reimbursable expenses related to coal
sampling.
(Cont'd)
<PAGE>
27I
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS:
Provide a list, by vendor, of outside services employed. If the
aggregate amounts paid to any one vendor is less than $100,000, only
the aggregate number and total amount of all such payments need be
shown. Provide a brief one line description for the largest invoice
paid to each vendor listed.
RELATIONSHIP
"A"=ASSOCIATE
FROM WHOM PURCHASED "NA"=NON AMOUNT
ASSOCIATE
(In Thousands)
Thomas W. Ruff and Company NA 165
Services for installation and/or reconfiguration of VMI
and/or Heibert panel system.
S4 Consulting NA 310
Educational services for management development program.
Sales Management Systems, Inc. NA 383
Consulting/training services in support of business development program.
Sanwa Business Credit Corporation NA 370
Computer software license fee.
Sarcom Inc. NA 1,092
Hardware and software support for LAN-based PCs.
SE Technologies, Inc. NA 437
Professional services fees and reimbursable expenses for engineering
and design.
Siebel Systems, Inc. NA 1,298
Software license/consulting fees.
Smallworld Systems, Inc. NA 890
PC software & license fees.
Software AG NA 219
Software maintenance fees.
Software Architects, Inc. NA 373
Professional services fees and reimbursable expenses for computer
programmers/systems analysts.
Software Support Group NA 1,562
Professional services fees for computer programmers/systems analysts.
(Cont'd)
<PAGE>
27J
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS:
Provide a list, by vendor, of outside services employed. If the
aggregate amounts paid to any one vendor is less than $100,000, only
the aggregate number and total amount of all such payments need be
shown. Provide a brief one line description for the largest invoice
paid to each vendor listed.
RELATIONSHIP
"A"=ASSOCIATE
FROM WHOM PURCHASED "NA"=NON AMOUNT
ASSOCIATE
(In Thousands)
Source Services Corporation NA 108
Professional services fees for computer programmers/systems analysts.
Spencer Stuart, Inc. NA 137
Professional retainer.
Steptoe and Johnson NA 119
Legal services regarding COLI.
Sterling Software, Inc. NA 236
Software license fees and maintenance.
Storage Management Division/Sterling Software, Inc. NA 335
Software license fees.
Strategic Resources, Inc. NA 1,119
Professional services fees for computer programmers/systems analysts.
Swafford Consulting, Inc. NA 142
Professional services fees for computer programmers/systems analysts.
Tangram Enterprise Solutions NA 273
Upgrade fees.
Techmate, Inc. NA 241
Professional services fees for computer programmers/systems analysts.
Top Down Systems Corporation NA 109
Software license and maintenance fees.
Towers Perrin NA 108
Professional services fees for executive compensation consulting services.
(Cont'd)
<PAGE>
27K
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS:
Provide a list, by vendor, of outside services employed. If the
aggregate amounts paid to any one vendor is less than $100,000, only
the aggregate number and total amount of all such payments need be
shown. Provide a brief one line description for the largest invoice
paid to each vendor listed.
RELATIONSHIP
"A"=ASSOCIATE
FROM WHOM PURCHASED "NA"=NON AMOUNT
ASSOCIATE
(In Thousands)
Usertech NA 271
Professional services fees and expenses related to employee training.
Vinkad Services, Inc. NA 215
Professional services fees for computer programmers/systems analysts.
Workforce Transformation, Inc. NA 283
Development/redesign of training programs and materials.
Xenergy, Inc. NA 119
Professional services fees for computer programmers/systems analysts.
801 Vendors under $100,000 8,391
TOTAL $84,671
<PAGE>
28
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
EMPLOYEE PENSIONS AND BENEFITS
ACCOUNT 926
INSTRUCTIONS:
Provide a listing of each pension plan and benefit program provided
by the service company. Such listing should be limited to $25,000.
D E S C R I P T I O N AMOUNT
(In Thousands)
Medical Insurance $13,635
Deferred Compensation Benefits 551
Other Postretirement Benefits 5,739
Savings Plan 4,650
Supplemental Savings Plan 208
Supplemental Pension Plan (1,358)
Moving Expenses 3,321
Retirement Plan 5,015
Long-Term Disability 1,865
Group Life Insurance 2,809
Dental Insurance 1,060
Employee Educational Assistance 314
Miscellaneous 1,479
(Note: Certain line items include trustee fees.)
TOTAL $39,288
<PAGE>
29
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
GENERAL ADVERTISING EXPENSES
ACCOUNT 930.1
INSTRUCTIONS:
Provide a listing of the amount included in Account 930.1,
"General Advertising Expenses", classifying the items according
to the nature of the advertising and as defined in the account
definition. If a particular class includes an amount in excess
of $3,000 applicable to a single payee, show separately the name
of the payee and the aggregate amount applicable thereto.
D E S C R I P T I O N NAME OF PAYEE AMOUNT
None
TOTAL $ -0-
<PAGE>
30
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
MISCELLANEOUS GENERAL EXPENSES
ACCOUNT 930.2
INSTRUCTIONS:
Provide a listing of the amount included in Account 930.2,
"Miscellaneous General Expenses", classifying such expenses
according to their nature. Payments and expenses permitted by
Section 321 (b) (2) of the Federal Election Campaign Act, as
amended by Public Law 94-283 in 1976 (2 U.S.C.S 441 (b) (2))
shall be separately classified.
D E S C R I P T I O N AMOUNT
(In Thousands)
Directors' Fees and Expenses $ 5
Dues for Company Memberships 572
Other General Expenses 896
TOTAL $1,473
<PAGE>
31
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
RENTS
ACCOUNT 931
INSTRUCTIONS:
Provide a listing of the amount included in Account 931, "Rents",
classifying such expenses by major groupings of property, as defined
in the account definition of the Uniform System of Accounts.
T Y P E O F P R O P E R T Y AMOUNT
(In Thousands)
Computers and Data Processing Equipment $14,464
Microwave and Telecommunication Equipment 1,300
Office Furniture and Equipment 1,636
Office and Parking 6,153
Software 3,917
Videotex and Timesharing 540
TOTAL $28,010
<PAGE>
32
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
TAXES OTHER THAN INCOME TAXES
ACCOUNT 408
INSTRUCTIONS:
Provide an analysis of Account 408, "Taxes Other Than Income
Taxes". Separate the analysis into two groups: (1) other than
U.S. Government taxes, and (2) U.S. Government taxes. Specify
each of the various kinds of taxes and show the amounts thereof.
Provide a subtotal for each class of tax.
K I N D O F T A X AMOUNT
(In Thousands)
1. Taxes Other Than U.S. Government Taxes
NY State Franchise $ 2
State Unemployment 191
Ohio Corporation Franchise 2,067
Ohio Real Estate Assessment 1,599
Ohio Intercounty Return of Taxable
Business Property 317
Miscellaneous Taxes 365
Sub-Total Taxes Other Than U.S. Government Taxes 4,541
2. U.S. Government Taxes
Federal Environmental Excise 4
Social Security 14,043
Federal Unemployment 208
Sub-Total U.S. Government Taxes 14,255
TOTAL $18,796
<PAGE>
33
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
DONATIONS
ACCOUNT 426.1
<TABLE>
<CAPTION>
INSTRUCTIONS: Provide a listing of the amount included in Account 426.1,
"Donations", classifying such expenses by its purpose. The
aggregate number and amount of all items of less than $3,000
may be shown in lieu of details.
NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT
(In Thousands)
<S> <C> <C>
ASME Professional Development Community $ 25
A. G. James Cancer Hospital Community 22
Ballet Metropolitan Community 7
Boy Scouts of America Community 19
Carnegie-Mellon University Matching Contribution 3
Case Western Reserve Educational 4
Center of Science & Industry Community 205
Children's Hospital Foundation Community 30
Cigre International Technical Committee Community 5
Columbus Association for the
Performing Arts Community 11
Columbus Speech & Hearing Center Community 4
Columbus State Community College Educational 4
Columbus Symphony Orchestra Community 13
Columbus Urban League Community 6
Columbus Zoo Community 10
Cornell University Educational 4
Decorators Show House Community 4
Franklin Historical Society Community 10
Franklin University Educational 4
Goodwill Rehabilitation Center Community 3
Grandview Heights High School Educational 4
Great Lakes Water Quality Community 8
Greater Columbus Habitat for Humanity Community 18
M. L. King Arts Complex Community 3
I Know I Can Educational 5
IEEE PICA 97 Educational 11
Lancaster Festival Inc. Community 4
Massachusetts Institute of Technology Educational 3
Mid-Ohio Food Bank Community 5
Muskingum College Educational 3
National Academy of Engineering Community 5
National Foundation Womans League Community 20
National Wild Turkey Foundation Community 10
Ohio Chamber of Commerce Community 10
Ohio Foundation of Independent
Colleges, Inc. Educational 27
Ohio Northern University Educational 3
Ohio River Valley Water
Sanitation Commission Community 15
The Ohio State University Educational 51
Ohio University Foundation Educational 4
Olivedale Senior Citizens of Fairfield
County, Inc. Community 5
Opera Columbus Community 9
SUB-TOTAL 616
(Cont'd)
</TABLE>
<PAGE>
33A
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
DONATIONS
ACCOUNT 426.1
<TABLE>
<CAPTION>
INSTRUCTIONS: Provide a listing of the amount included in Account 426.1,
"Donations", classifying such expenses by its purpose. The
aggregate number and amount of all items of less than $3,000
may be shown in lieu of details.
NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT
(In Thousands)
<S> <C> <C>
Sub-Total Brought Forward 616
Operation Feed Community 31
Resources for the Future Community 15
Science & Mathematics Network Educational 5
Seal of Ohio Girl Scout Council Community 13
Southern Governors Association Community 5
United Negro College Fund Educational 6
United States Chamber of Commerce Community 25
U.S. Navy Memorial Foundation Community 4
United Way Community 249
Utility Business Education Coalition Educational 5
Virginia Polytechnic Institute Educational 24
Virginia Tech Foundation, Inc. Matching Contribution 12
YWCA Capital Campaign Community 10
Wilds, The Community 5
Employees and Others (Salaries,
salary related expenses, overheads
and other expenses) Community 41
Miscellaneous - 300 items of less
than $3,000 Various 162
TOTAL $1,236
</TABLE>
<PAGE>
34
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
OTHER DEDUCTIONS
ACCOUNT 426.5
<TABLE>
<CAPTION>
INSTRUCTIONS: Provide a listing of the amount included in Account 426.5,
"Other Deductions", classifying such expenses according to
their nature.
D E S C R I P T I O N NAME OF PAYEE AMOUNT
(In Thousands)
<S> <C> <C>
Cash Contributions: American Council For Capital
Formation-Center For
Policy Research $ 2
American Legislative Exchange Council 10
American Nuclear Society 2
Brooking Institution 10
Business Government Relations Council 1
Central and South West Corporation 8
Citizens for Downtown's Future 50
Consumers United For Rail Equity 5
Electric Transportation Coalition 8
Greater Columbus Chamber of Commerce 15
Keeping Ohio Working 75
National Chamber Litigation Center, Inc. 5
National Governors Association 12
Ohio Chamber of Commerce 28
Points of Light Foundation 2
Repeal PUHCA Now Coalition 45
United States Chamber of Commerce 20
Service Fees: The Business Roundtable 39
The Capitol Connection 1
The Success Group, Inc. 51
R. Duffy Wall & Associates 30
Zap Power 20
Salaries, salary related
expenses, overheads, and
other expenses Employees and Others 1,424
TOTAL $1,863
</TABLE>
<PAGE>
35
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
SCHEDULE XVIII
NOTES TO STATEMENT OF INCOME
INSTRUCTIONS: The space below is provided for important notes
regarding the statement of income or any account
thereof. Furnish particulars as to any significant
increase in services rendered or expenses incurred
during the year. Notes relating to financial
statements shown elsewhere in this report may be
indicated here by reference.
See Notes to Financial Statements on Page 19.
<PAGE>
36
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
ORGANIZATION CHART
Chairman, Chief Executive Officer & President
AEP Energy Services
Corporate Development
Legal
Nuclear Generation
EVP - Administration/Accounting
Accounting Services
Corporate Accounting
Corporate Planning & Budgeting
Corporate Services
Human Resources
Information Services
Procurement and Supply Chain Services
Tax
EVP - Financial Officer
Finance
Internal Audits (NOTE)
System Planning
EVP - Energy Delivery and Customer Relations
Consumer Services
Corporate Communications
Rates
EVP - Energy Delivery
Energy Delivery Support
Energy Distribution
Energy Transmission
EVP - Power Generation
Environmental Services
Fossil and Hydro Production
Fuel Supply
Northern RSO Production
Northern RSO Support
Power Generation Engineering
Southern RSO Production
Southern RSO Support
NOTE: Internal Audits reports to the Audit Committee
of the Board of Directors of American Electric
Power Company, Inc. and administratively to the
Executive Vice President - Financial Officer.
<PAGE>
37
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
METHODS OF ALLOCATION
Service Billings
Kilowatt Hours Sales (KWH) Ratio
Client Load Ratio
Number of Electric Customers Ratio
Number of Client Employees Ratio
Number of Company Employees by Group Ratio
Plant Investment Ratio
Level of Construction Ratio
Level of Construction - Production Ratio
Level of Construction - Transmission Ratio
Level of Construction - Distribution Ratio
Tons of Coal Acquired Ratio
Computer Resource Unit Ratio
Coal Company Combination Ratio
Coal-Fired Kilowatt Hours Generation Ratio
Transmission and Sub-Transmission Pole Miles Ratio
Plant Megawatt Capability Ratio
Number of Stores Transactions Ratio
Data Processing Staff Job Hours Ratio
Fossil Plant Combination Ratio
Number of Invoices Processed Ratio
Total Annual Cost Ratio
Specific Identification Ratio
(based on known and pertinent factors)
Equal Share Ratio
Hydro Kilowatt Hours Generation Ratio
Number of Purchase Orders Written Ratio
Convenience Billings
Specific Identification Ratio
(based on known and pertinent factors)
Asset Ratio
Expense Budget Ratio
Contribution Ratio
Equal Share Ratio
Gross Annual Payroll Dollars Ratio
Coal Production Ratio
Kilowatt Hours Sales (KWH) Ratio
Number of Employees Ratio
Number of Customers Ratio
Number of Vehicles Ratio
<PAGE>
38
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED
April 27, 1998
Statement of the Amount of Interest on Borrowed
Capital and Compensation for the Use of Capital
Billed by American Electric Power Service Corporation
(AEPSC) for the Year Ended December 31, 1997
G. R. Knorr - Columbus
AEP System Accounting Managers and Corporate Planning and Budgeting
In accordance with Instruction 01-12 of the Uniform System of Accounts
prescribed by the Securities and Exchange Commission for Mutual Service
Companies and Subsidiary Service Companies under the Public Utility
Holding Company Act of 1935, as amended, this is an annual statement of
the amount of interest on borrowed capital and compensation for the use
of capital billed by AEPSC for the year ended December 31, 1997.
Exhibit A, attached hereto, shows your portion of the interest cost on
capital borrowed for working capital requirements. The method used to
allocate the cost to each System company was the Total Annual Cost Ratio
based on the total direct and indirect charges billed during the prior
year of 1996. The amount shown for each company equals the total charges
billed under Work Order No. 1200 during 1997.
In addition to the interest charges incurred for working capital, AEPSC
billed to all clients, as an indirect cost applicable to administrative
services, a total amount of $6,831,298.00 of interest cost and debt
expenses related to the mortgage notes on its headquarters building
located in Columbus, Ohio.
All interest charges incurred by AEPSC during 1997 were for borrowings
with unaffiliated companies. No amount was billed by AEPSC during 1997
as compensation for the use of equity capital, all of which is furnished
to AEPSC by its parent, American Electric Power Company, Inc.
G. R. Knorr
GRK rp
Attachment
cc: P. J. DeMaria
G. P. Maloney
L. V. Assante
I:\ADMIN\U1360\LETTER.WP
__________________________
Note: The above annual statement was provided to each associate
company within the AEP system. Please refer to the
"Analysis of Billing - Associate Companies" appearing on
page 21 of this report for a listing of the associated
companies billed and the respective amounts (Account
457-3).
<PAGE>
39
ANNUAL REPORT OF AMERICAN ELECTRIC POWER SERVICE CORPORATION
For the Year Ended December 31, 1997
SIGNATURE CLAUSE
Pursuant to the requirements of the Public Utility Holding Company
Act of 1935 and the rules and regulations of the Securities and
Exchange Commission issued thereunder, the undersigned company has
duly caused this report to be signed on its behalf by the under-
signed officer thereunto duly authorized.
American Electric Power Service Corporation
(Name of Reporting Company)
By: /s/ Gerald R. Knorr
(Signature of Signing Officer)
Gerald R. Knorr - Assistant Controller
(Printed Name and Title of Signing Officer)
Date: 4/30/98
<TABLE> <S> <C>
<ARTICLE> OPUR2
<MULTIPLIER> 1,000
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<NET-SERVICE-COMPANY-PROPERTY> 151,784
<TOTAL-INVESTMENTS> 40,741
<TOTAL-CURRENT-ASSETS> 90,551
<TOTAL-DEFERRED-DEBITS> 53,046
<OTHER-ASSETS-AND-DEBITS> 0
<TOTAL-ASSETS-AND-DEBITS> 336,122
<TOTAL-PROPRIETARY-CAPITAL> 1,350
<TOTAL-LONG-TERM-DEBT> 71,100
<NOTES-PAYABLE> 11,529
<NOTES-PAYABLE-ASSOCIATE-COMP> 0
<OTHER-CURR-AND-ACCRUED-LIAB> 211,553
<TOTAL-DEFERRED-CREDITS> 12,078
<DEFERRED-INCOME-TAX> 28,512
<TOT-LIABIL-AND-PROPRIET-CAP> 336,122
<SERVICES-ASSOCIATE-COMPANIES> 455,856
<SERVICES-NON-ASSOCIATE-COMP> 209
<MISC-INCOME-OR-LOSS> 405
<TOTAL-INCOME> 456,470
<SALARIES-AND-WAGES> 228,151
<EMPLOYEE-PENSION-AND-BENEFIT> 39,288
<OTHER-EXPENSES> 189,031
<TOTAL-EXPENSES> 456,470
<NET-INCOME> 0
<TOTAL-EXPENSES-DIRECT-COST> 404,684
<TOTAL-EXPENSES-INDIRECT-COST> 51,786
<TOT-EXP-DIRECT-AND-INDIRECT> 456,470
<PERSONNEL-END-OF-YEAR> 3,382
