File No. 70-9353
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
__________________________________
AMENDMENT NO. 4
TO
FORM U-1
__________________________________
APPLICATION OR DECLARATION
under the
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
* * *
AMERICAN ELECTRIC POWER COMPANY, INC.
AEP RESOURCES, INC.
AEP ENERGY SERVICES, INC.
1 Riverside Plaza, Columbus, Ohio 43215
(Name of company or companies filing this statement
and addresses of principal executive offices)
* * *
AMERICAN ELECTRIC POWER COMPANY, INC.
1 Riverside Plaza, Columbus, Ohio 43215
(Name of top registered holding company
parent of each applicant or declarant)
* * *
Susan Tomasky, General Counsel
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
Jeffrey D. Cross, General Counsel
AEP RESOURCES, INC.
1 Riverside Plaza, Columbus, Ohio 43215
(Names and addresses of agents for service)
American Electric Power Company, Inc. ("AEP"), a holding
company registered under the Public Utility Holding Company Act of
1935, as amended ("1935 Act"), AEP Energy Services, Inc. ("AEPES")
and AEP Resources, Inc. ("Resources"), wholly-owned non-utility
subsidiaries of AEP, hereinafter sometimes collectively referred to
as "Applicants", hereby amend their Application or Declaration on
Form U-1 in File No. 70-9353 as follows:
1. By amending and restating the third paragraph of Item
1.C:
"Borrowings (incurred by Resources, AEPES, any existing
or new, direct or indirect subsidiary of Resources or AEPES
and guaranteed by AEP) would be evidenced by notes having
maturities of not greater than fifteen years from the date of
issue and an average life of not greater than ten years from
the date of issue, and bear interest at either a fixed rate
not greater than 300 basis points over the yield to maturity
on a U.S. Treasury note having a remaining term approximately
equal to the average life of such note, or at a floating rate
not greater than 100 basis points over the reference rate
(e.g., prime commercial lending rate, LIBOR, etc.) used as the
basis for determining such rate. Such notes may include terms
that would require the payment of a premium upon prepayment.
The total of (i) any AEP financings for which approval is
requested above and (ii) any financings performed on an exempt
basis under Rule 52 will not exceed the Investment Limitation;
i.e., $800 million. Any debt security issued to AEP to
evidence loans by AEP will comply with the requirements of
Rule 52(b)(2)."
2. By amending and restating Item 4. REGULATORY APPROVALS:
"Applicants will obtain any required state commission
approvals prior to the acquisition of Energy Assets. The pre-
notification requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 may apply to certain acquisitions of
Energy Assets or companies owning Energy Assets, depending
upon, among other factors, the dollar amount of any such
transaction. Also, the FERC may have jurisdiction over
acquisitions of companies owning Energy Assets under Section
203 of the Federal power Act if such companies engage in
electric power marketing or under Section 7 of the Natural Gas
Act."
3. By amending and restating Item 5. PROCEDURE:
"The Commission is requested to publish a notice under
Rule 23 with respect to the filing of this Application or
Declaration as soon as practicable. Applicants request that
the Commission's Order be issued as soon as the rules allow,
and that there should not be a 30-day waiting period between
issuance of the Commission's order and the date on which the
order is to become effective. AEP requests that the
Commission reserve jurisdiction over the issuance and the sale
of securities by AEP or any Special Purpose Finance Subsidiary
(other than shares of common stock, guarantees or short-term
debt) pending completion of the file. Applicants hereby waive
a recommended decision by a hearing officer or any other
responsible officer of the Commission and consents that the
Division of Investment Management may assist in the
preparation of the Commission's decision and/or order, unless
the Division opposes the matters proposed herein."
4. By filing the following exhibits and financial
statements:
Exhibit F Opinion of Counsel
Balance Sheets as of June 30, 1998 and Statements of Income
and Retained Earnings for the twelve months ended June 30, 1998, of
AEP and its subsidiaries consolidated, together with journal
entries reflecting the proposed transaction.
Balance Sheets as of June 30, 1998 and Statements of Income
and Retained Earnings for the twelve months ended June 30, 1998, of
AEPES and Resources and their subsidiaries consolidated, together
with journal entries reflecting the proposed transaction
(confidential exhibit).
SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned companies have duly caused
this statement to be signed on their behalf by the undersigned
thereunto duly authorized.
AMERICAN ELECTRIC POWER COMPANY, INC.
AEP ENERGY SERVICES, INC.
AEP RESOURCES, INC.
By_/s/A. A. Pena____________________
Treasurer
Dated: October 28, 1998
Exhibit F
614/223-1648
Securities and Exchange Commission
Office of Public Utility Regulation
450 Fifth Street, N.W.
Washington, D.C. 20549
October 28, 1998
Re: American Electric Power Company, Inc.
SEC File No. 70-9353
Gentlemen:
With respect to the Application or Declaration on Form U-1 of
American Electric Power Company, Inc. ("AEP") relating to the
issuance of securities and guarantee by AEP of certain borrowings
to be issued by AEP Resources, Inc. and AEP Energy Services, Inc.
("Borrowings"), I wish to advise you as follows:
I am of the opinion that, in the event that the proposed
transactions are consummated (i) in accordance with said
Application or Declaration, as the same may be amended, and (ii)
in accordance with all of the requisite approvals and
authorization, regulatory, corporate, or otherwise:
(a) all state laws applicable to the proposed transactions
will have been complied with; and
(b) The Borrowings will be a valid and binding obligation
of AEP in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the
enforceability of creditors' rights generally and by
general principles of equity; and
(b) consummation of the proposed transactions will not
violate the legal rights of the holders of any
securities issued by AEP or any associate company
thereof.
I hereby consent to the filing of this opinion as an exhibit to
the above-mentioned Application or Declaration, as amended.
Very truly yours,
/s/ Thomas G. Berkemeyer
Thomas G. Berkemeyer
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
PAGE 1
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(in thousands)
<CAPTION>
Pro Forma
Per Books Adjustments Pro Forma
<S> <C> <C> <C>
ASSETS
ELECTRIC UTILITY PLANT:
Production. . . . . . . . . . . . . . . . . . . $ 9,531,018 $ 9,531,018
Transmission. . . . . . . . . . . . . . . . . . 3,547,449 3,547,449
Distribution. . . . . . . . . . . . . . . . . . 4,691,746 4,691,746
General
(including mining assets & nuclear fuel). . . 1,606,781 1,606,781
Construction Work In Progress . . . . . . . . . 431,457 431,457
Total Electric Utility Plant. . . . . . 19,808,451 19,808,451
Accumulated Depreciation
and Amortization. . . . . . . . . . . . . . . 8,179,113 8,179,113
NET ELECTRIC UTILITY PLANT. . . . . . . 11,629,338 11,629,338
OTHER PROPERTY AND INVESTMENTS. . . . . . . . . . 1,499,427 $ 800,000 2,299,427
CURRENT ASSETS:
Cash and Cash Equivalents . . . . . . . . . . . 175,338 (185,000) (9,662)
Accounts Receivable (net) . . . . . . . . . . . 867,505 867,505
Fuel. . . . . . . . . . . . . . . . . . . . . . 245,753 245,753
Materials and Supplies. . . . . . . . . . . . . 273,802 273,802
Accrued Utility Revenues. . . . . . . . . . . . 197,280 197,280
Energy Marketing and Trading Contracts. . . . . 785,777 785,777
Prepayments . . . . . . . . . . . . . . . . . . 95,577 95,577
TOTAL CURRENT ASSETS. . . . . . . . . . 2,641,032 (185,000) 2,456,032
REGULATORY ASSETS . . . . . . . . . . . . . . . . 1,818,641 1,818,641
DEFERRED CHARGES. . . . . . . . . . . . . . . . . 223,797 223,797
TOTAL . . . . . . . . . . . . . . . . $17,812,235 $ 615,000 $18,427,235
The Pro Forma Adjustments are shown on Page 3 of these Financial Statements.
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FINANCIAL STATEMENTS
PAGE 2
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(in thousands)
<CAPTION>
Pro Forma
Per Books Adjustments Pro Forma
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common Stock. . . . . . . . . . . . . . . . . . $ 1,299,147 $ 1,299,147
Paid-in Capital . . . . . . . . . . . . . . . . 1,815,409 1,815,409
Retained Earnings . . . . . . . . . . . . . . . 1,645,466 1,645,466
Total Common Shareholders' Equity . . . 4,760,022 4,760,022
Cumulative Preferred Stocks of Subsidiaries:
Not Subject to Mandatory Redemption . . . . . 46,350 46,350
Subject to Mandatory Redemption . . . . . . . 127,605 127,605
Long-term Debt. . . . . . . . . . . . . . . . . 5,133,689 $ 900,000 6,033,689
TOTAL CAPITALIZATION. . . . . . . . . . 10,067,666 900,000 10,967,666
OTHER NONCURRENT LIABILITIES. . . . . . . . . . . 1,326,752 1,326,752
CURRENT LIABILITIES:
Long-term Debt Due Within One Year. . . . . . . 423,109 (285,000) 138,109
Short-term Debt . . . . . . . . . . . . . . . . 506,275 506,275
Accounts Payable. . . . . . . . . . . . . . . . 512,015 512,015
Taxes Accrued . . . . . . . . . . . . . . . . . 302,843 302,843
Interest Accrued. . . . . . . . . . . . . . . . 72,126 72,126
Obligations Under Capital Leases. . . . . . . . 103,050 103,050
Energy Marketing and Trading Contracts. . . . . 771,829 771,829
Other . . . . . . . . . . . . . . . . . . . . . 380,908 380,908
TOTAL CURRENT LIABILITIES . . . . . . . 3,072,155 (285,000) 2,787,155
DEFERRED INCOME TAXES . . . . . . . . . . . . . . 2,543,549 2,543,549
DEFERRED INVESTMENT TAX CREDITS . . . . . . . . . 364,753 364,753
DEFERRED GAIN ON SALE AND LEASEBACK -
ROCKPORT PLANT UNIT 2 . . . . . . . . . . . . . 226,681 226,681
DEFERRED CREDITS. . . . . . . . . . . . . . . . . 210,679 210,679
TOTAL . . . . . . . . . . . . . . . . $17,812,235 $ 615,000 $18,427,235
The Pro Forma Adjustments are shown on Page 3 of these Financial Statements.
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FINANCIAL STATEMENTS
PAGE 3
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
C0NSOLIDATED STATEMENT OF INCOME
Twelve Months Ended June 30, 1998
PRO FORMA ADJUSTMENTS
<CAPTION>
Debit Credit
(in thousands)
<S> <C> <C>
1) Cash and Cash Equivalents $300,000
Long-term Debt $300,000
To record the issuance of Long-term Debt -
Notes Payable.
2) Long-term Debt Due Within One Year 285,000
Cash and Cash Equivalents 285,000
To record the payment of the outstanding
balance of the Revolving Credit Agreement.
3) Cash and Cash Equivalents 600,000
Long-term Debt 600,000
To record the borrowing from the Revolving
Credit Agreement.
4) Other Property and Investments
Investments in Subsidiaries - Energy Assets 800,000
Cash and Cash Equivalents 800,000
To record the investment in Energy Assets
as described in the U-1 Application
"Summary of Proposed Transaction." This
investment is expected to be over a period
of time when cash is available from future
earnings.
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FINANCIAL STATEMENTS
PAGE 3A
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
PRO FORMA ADJUSTMENTS
[CAPTION]
<TABLE>
Increase
(Decrease)
(in thousands)
<S> <C>
Equity Earnings/Net Income of Subsidiaries Consolidated* = $ 80,000
Interest Expense Long-term Debt @ 6-3/8%** = 19,125
Interest Expense Revolving Credit @ 6%** = 36,000
Interest Expense Revolving Credit @ 6%** = (17,100)
Federal Income Tax = (13,308)
To reflect the proforma effects in equity in
earnings of subsidiaries associated with the
proposed transactions and the related proforma
effects on interest expense.
* Return on investment after income tax of 10% assumed solely
for the purpose of these proforma adjustments.
** Assumed solely for the purpose of these proforma adjustments.
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FINANCIAL STATEMENTS
PAGE 4
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
Twelve Months Ended June 30, 1998
(in thousands, except per share amounts)
<CAPTION>
Pro Forma
Per Books Adjustments Pro Forma
<S> <C> <C> <C>
OPERATING REVENUES. . . . . . . . . . . . . . . . $8,195,575 $ $8,195,575
OPERATING EXPENSES:
Fuel and Purchased Power. . . . . . . . . . . . 4,094,008 4,094,008
Other Operation . . . . . . . . . . . . . . . . 1,227,232 1,227,232
Maintenance . . . . . . . . . . . . . . . . . . 504,603 504,603
Depreciation and Amortization . . . . . . . . . 575,839 575,839
Taxes Other Than Federal Income Taxes . . . . . 488,146 488,146
Federal Income Taxes. . . . . . . . . . . . . . 331,404 - 331,404
TOTAL OPERATING EXPENSES. . . . . . . . . . 7,221,232 - 7,221,232
OPERATING INCOME . . . . . . . . . . . . . . . . 974,343 - 974,343
NONOPERATING INCOME . . . . . . . . . . . . . . . 50,079 93,308 143,387
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS . . . . . . . . . . . . 1,024,422 93,308 1,117,730
INTEREST CHARGES. . . . . . . . . . . . . . . . . 418,127 38,025 456,152
PREFERRED STOCK DIVIDEND
REQUIREMENTS OF SUBSIDIARIES. . . . . . . . . . 10,945 10,945
INCOME BEFORE EXTRAORDINARY ITEM. . . . . . . . . 595,350 55,283 650,633
EXTRAORDINARY LOSS - U.K. WINDFALL TAX. . . . . . (109,419) (109,419)
NET INCOME . . . . . . . . . . . . . . . . . . . $ 485,931 $ 55,283 $ 541,214
AVERAGE NUMBER OF SHARES OUTSTANDING. . . . . . . 189,896 189,896
EARNINGS PER SHARE:
Before Extra Ordinary Item . . . . . . . . . . $3.14 $3.43
Extraordinary Loss - U.K. Windfall Tax. . . . . (.58) (.58)
Net Income. . . . . . . . . . . . . . . . . . . $2.56 $2.85
CASH DIVIDENDS PAID PER SHARE . . . . . . . . . . $2.40 $2.40
The Pro Forma Adjustments are shown on Page 3A of these Financial Statements.
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FINANCIAL STATEMENTS
PAGE 5
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
TWELVE MONTHS ENDED JUNE 30, 1998
(in thousands)
<S> <C>
BALANCE AT BEGINNING OF PERIOD. . . . . . . . . . . . . . . . . . . . $1,615,039
NET INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 485,931
DEDUCTIONS:
Cash Dividends Declared . . . . . . . . . . . . . . . . . . . . . . 455,503
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
BALANCE AT END OF PERIOD. . . . . . . . . . . . . . . . . . . . . . . $1,645,466
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