7/21/1998

American Electric Power Reports Second Quarter Earnings

COLUMBUS, Ohio, July 21, 1998 -- American Electric Power Co. (NYSE:AEP) today reported net income for the second quarter of 1998 decreased 2.5 percent to $118.1 million, or 62 cents per share, from $121.1 million, or 64 cents a share in 1997. Net income was $268.7 million, or $1.41 per share, for the six months ended June 30, 1998, down 8.5 percent and 9.6 percent, respectively, compared with $293.7 million, or $1.56 a share, in 1997. For the 12 months ended June 30, income before an extraordinary item increased 1.2 percent to $595.3 million, or $3.14 a share, compared with $588.5 million, or $3.13 a share, for the same period a year earlier. The extraordinary item recorded in the third quarter of 1997 was the United Kingdom’s one-time windfall tax on privatized utilities, which reduced AEP’s share of Yorkshire Power Group’s earnings for the 12 months by $109.4 million. The windfall tax was based on a retroactive revaluation of the original privatization price. After the windfall tax, earnings for the 12 months decreased 17.4 percent to $485.9 million, or $2.56 a share. "Our second quarter 1998 net income declined primarily as a result of a write-down by Yorkshire Power Group of an investment in Ionica, a U.K. telecommunications company, and unplanned outages at some of our generating plants," said E. Linn Draper Jr., AEP chairman, president and chief executive officer. "The adverse impacts were partially offset by increased electricity demand by retail customers, reflecting warmer springtime temperatures. "Our wholesale marketing activity contributed significantly to second quarter earnings, despite tight energy supplies caused by the Cook Nuclear Plant outage and unplanned fossil plant outages, increased usage by residential customers and energy shortages in late June," Draper said. The decline in six months earnings was largely due to additional cost for repairs and restoration of service caused by two severe snowstorms, Yorkshire’s Ionica write-down, and the unavailability of nuclear generating capacity. The year-to-date results were favorably impacted by additional sales to commercial and industrial customers. Despite mild temperatures throughout most of the 12-month period, the Ionica loss and the unavailability of nuclear generating capacity, 12 month earnings before the extraordinary item improved due to increased commercial and industrial sales, and Yorkshire earnings and income tax benefits and adjustments. AEP, a global energy company, is one of the United States' largest investor-owned utilities, providing energy to 3 million customers in Indiana, Kentucky, Michigan, Ohio, Tennessee, Virginia and West Virginia. AEP has holdings in the United States, the United Kingdom, China and Australia. Wholly owned subsidiaries provide power engineering, energy consulting and energy management services around the world. The company is based in Columbus, Ohio. On Dec. 22, 1997, AEP announced a definitive merger agreement for a tax-free, stock-for-stock transaction with Central and South West Corp., a public utility holding company based in Dallas.

Follow the links below for the financial tables: Summary of Sales and Revenue Data Summary of Financial Results for periods ended June 30 Major Changes in Earnings per Share

For More Information, Contact: Media: Pat D. Hemlepp Manager, Media Relations 614/223-1620 Analysts: John S. Bilacic Manager, Investor Relations 614/223-2847

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