Item 1. BUSINESS
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GENERAL
AEP was incorporated under the laws of the State of New York in 1906 and reorganized in 1925. It is a public utility holding company which owns, directly or indirectly, all of the outstanding common stock of its domestic electric utility subsidiaries and varying percentages of other subsidiaries. Substantially all of the operating revenues of AEP and its subsidiaries are derived from the furnishing of electric service. In addition, in recent years AEP has been pursuing various unregulated business opportunities worldwide as discussed in New Business Development.
The service area of AEP's domestic electric utility subsidiaries covers portions of the states of Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia. The generating and transmission facilities of AEP's subsidiaries are physically interconnected, and their operations are coordinated, as a single integrated electric utility system. Transmission networks are interconnected with extensive distribution facilities in the territories served. The electric utility subsidiaries of AEP, which do business as "American Electric Power," have traditionally provided electric service, consisting of generation, transmission and distribution, on an integrated basis to their retail customers.
At December 31, 2000, the subsidiaries of AEP had a total of 26,376 employees. AEP, as such, has no employees. The operating subsidiaries of AEP are:
APCo (organized in Virginia in 1926) is engaged in the generation, sale, purchase, transmission and distribution of electric power to approximately 909,000 retail customers in the southwestern portion of Virginia and southern West Virginia, and in supplying electric power at wholesale to other electric utility companies and municipalities in those states and in Tennessee. At December 31, 2000, APCo and its wholly owned subsidiaries had 2,846 employees. Among the principal industries served by APCo are coal mining, primary metals, chemicals and textile mill products. In addition to its AEP System interconnections, APCo also is interconnected with the following unaffiliated utility companies: Carolina Power & Light Company, Duke Energy Corporation and VEPCo. A comparatively small part of the properties and business of APCo is located in the northeastern end of the Tennessee Valley. APCo has several points of interconnection with TVA and has entered into agreements with TVA under which APCo and TVA interchange and transfer electric power over portions of their respective systems.
CPL (organized in Texas in 1945) is engaged in the generation, sale, purchase, transmission and distribution of electric power to approximately 680,000 customers in southern Texas, and in supplying electric power at wholesale to other utilities, municipalities and rural electric cooperatives. At December 31, 2000, CPL had 1,444 employees. Among the principal industries served by CPL are oil and gas extraction, food processing, apparel, metal refining, chemical and petroleum refining, plastics, and machinery equipment.
CSPCo (organized in Ohio in 1937, the earliest direct predecessor company having been organized in 1883) is engaged in the generation, sale, purchase, transmission and distribution of electric power to approximately 668,000 customers in Ohio, and in supplying electric power at wholesale to other electric utilities and to municipally owned distribution systems within its service area. At December 31, 2000, CSPCo had 1,264 employees. CSPCo's service area is comprised of two areas in Ohio, which include portions of twenty-five counties. One area includes the City of Columbus and the other is a predominantly rural area in south central Ohio. Approximately 80% of CSPCo's retail revenues are derived from the Columbus area. Among the principal industries served are food processing, chemicals, primary metals, electronic machinery and paper products. In addition to its AEP
System interconnections, CSPCo also is interconnected with the following unaffiliated utility companies: CG&E, DP&L and Ohio Edison Company.
I&M (organized in Indiana in 1925) is engaged in the generation, sale, purchase, transmission and distribution of electric power to approximately 565,000 customers in northern and eastern Indiana and southwestern Michigan, and in supplying electric power at wholesale to other electric utility companies, rural electric cooperatives and municipalities. At December 31, 2000, I&M had 2,965 employees. Among the principal industries served are primary metals, transportation equipment, electrical and electronic machinery, fabricated metal products, rubber and miscellaneous plastic products and chemicals and allied products. Since 1975, I&M has leased and operated the assets of the municipal system of the City of Fort Wayne, Indiana. In addition to its AEP System interconnections, I&M also is interconnected with the following unaffiliated utility companies: Central Illinois Public Service Company, CG&E, Commonwealth Edison Company, Consumers Energy Company, Illinois Power Company, Indianapolis Power & Light Company, Louisville Gas and Electric Company, Northern Indiana Public Service Company, PSI Energy Inc. and Richmond Power & Light Company.
KEPCo (organized in Kentucky in 1919) is engaged in the generation, sale, purchase, transmission and distribution of electric power to approximately 172,000 customers in an area in eastern Kentucky, and in supplying electric power at wholesale to other utilities and municipalities in Kentucky. At December 31, 2000, KEPCo had 451 employees. In addition to its AEP System interconnections, KEPCo also is interconnected with the following unaffiliated utility companies: Kentucky Utilities Company and East Kentucky Power Cooperative Inc. KEPCo is also interconnected with TVA.
Kingsport Power Company (organized in Virginia in 1917) provides electric service to approximately 45,000 customers in Kingsport and eight neighboring communities in northeastern Tennessee. Kingsport Power Company has no generating facilities of its own. It purchases electric power distributed to its customers from APCo. At December 31, 2000, Kingsport Power Company had 62 employees.
OPCo (organized in Ohio in 1907 and re-incorporated in 1924) is engaged in the generation, sale, purchase, transmission and distribution of electric power to approximately 696,000 customers in the northwestern, east central, eastern and southern sections of Ohio, and in supplying electric power at wholesale to other electric utility companies and municipalities. At December 31, 2000, OPCo and its wholly owned subsidiaries had 3,532 employees. Among the principal industries served by OPCo are primary metals, rubber and plastic products, stone, clay, glass and concrete products, petroleum refining and chemicals. In addition to its AEP System interconnections, OPCo also is interconnected with the following unaffiliated utility companies: CG&E, The Cleveland Electric Illuminating Company, DP&L, Duquesne Light Company, Kentucky Utilities Company, Monongahela Power Company, Ohio Edison Company, The Toledo Edison Company and West Penn Power Company.
PSO (organized in Oklahoma in 1913) is engaged in the generation, sale, purchase, transmission and distribution of electric power to approximately 499,000 customers in eastern and southwestern Oklahoma, and in supplying electric power at wholesale to other utilities, municipalities and rural electric cooperatives. At December 31, 2000, PSO had 1,005 employees. Among the principal industries served by PSO are natural gas and oil production, oil refining, steel processing, aircraft maintenance, paper manufacturing and timber products, glass, chemicals, cement, plastics, aerospace manufacturing, telecommunications, and rubber goods.
SWEPCo (organized in Oklahoma in 1912) is engaged in the generation, sale, purchase, transmission and distribution of electric power to approximately 428,000 customers in northeastern Texas, northwestern Louisiana, and western Arkansas, and in supplying electric power at wholesale to other utilities, municipalities and
rural electric cooperatives. At December 31, 2000, SWEPCo had 1,243 employees. Among the principal industries served by SWEPCo are natural gas and oil production, petroleum refining, manufacturing of pulp and paper, chemicals, food processing, and metal refining. The territory served by SWEPCo also includes several military installations, colleges, and universities.
Wheeling Power Company (organized in West Virginia in 1883 and reincorporated in 1911) provides electric service to approximately 42,000 customers in northern West Virginia. Wheeling Power Company has no generating facilities of its own. It purchases electric power distributed to its customers from OPCo. At December 31, 2000, Wheeling Power Company had 75 employees.
WTU (organized in Texas in 1927) is engaged in the generation, sale, purchase, transmission and distribution of electric power to approximately 190,000 customers in west and central Texas, and in supplying electric power at wholesale to other utilities, municipalities and rural electric cooperatives. At December 31, 2000, WTU had 718 employees. The principal industry served by WTU is agriculture. The territory served by WTU also includes several military installations and correctional facilities.
Another principal electric utility subsidiary of AEP is AEGCo, which was organized in Ohio in 1982 as an electric generating company. AEGCo sells power at wholesale to I&M and KEPCo. AEGCo has no employees.
See Item 2
Item 2. PROPERTIES
At December 31, 2000, the subsidiaries of AEP owned (or leased where indicated) generating plants with the net power capabilities (winter rating) shown in the following table:
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(a) Unit 1 of the Rockport Plant is owned one-half by AEGCo and one-half by I&M. Unit 2 of the Rockport Plant is leased one-half by AEGCo and one-half by I&M. The leases terminate in 2022 unless extended. (b) Unit 3 of the John E. Amos Plant is owned one-third by APCo and two-thirds by OPCo. (c) CPL, PSO, and WTU jointly own the Oklaunion power station. Their respective ownership interests are reflected in this table. (d) Reflects CPL's interest in STP. (e) CSPCo owns generating units in common with CG&E and DP&L. Its ownership interest of 1,330 MW is reflected in this table. (f) The scrubber facilities at OPCo's General James M. Gavin Plant are leased. The lease terminates in 2010 unless extended. (g) PSO and WTU have 25 MW and 10 MW respectively of facilities designed primarily to burn oil. WTU has one 6 MW wind farm facility.
In addition to the generating facilities described above, AEP has ownership interests in other electrical generating facilities, both foreign and domestic. Information concerning these facilities at December 31, 2000 is listed below.
- ----------------------------- (a) During 2001, additional development at the Sweeny facility is expected to add approximately 120 MW to current capacity.
See Item 1 under Fuel Supply, for information concerning coal reserves owned or controlled by subsidiaries of AEP.
The following table sets forth the total overhead circuit miles of transmission and distribution lines of the AEP System and its operating companies and that portion of the total representing 765,000-volt lines:
- ---------------------- (a) Includes 766 miles of 345,000-volt jointly owned lines. (b) Includes 73 miles of transmission lines not identified with an operating company.
TITLES
The AEP System's electric generating stations are generally located on lands owned in fee simple. The greater portion of the transmission and distribution lines of the System has been constructed over lands of private owners pursuant to easements or along public highways and streets pursuant to appropriate statutory authority. The rights of the System in the realty on which its facilities are located are considered by it to be adequate for its use in the conduct of its business. Minor defects and irregularities customarily found in title to properties of like size and character may exist, but such defects and irregularities do not materially impair the use of the properties affected thereby. System companies generally have the right of eminent domain whereby they may, if necessary, acquire, perfect or secure titles to or easements on privately-held lands used or to be used in their utility operations.
Substantially all the physical properties of the AEP System operating companies are subject to the lien of the mortgage and deed of trust securing the first mortgage bonds of each such company.
SYSTEM TRANSMISSION LINES AND FACILITY SITING
Legislation in the states of Arkansas, Indiana, Kentucky, Michigan, Ohio, Texas, Virginia, and West Virginia requires prior approval of sites of generating facilities and/or routes of high-voltage transmission lines. Delays and additional costs in constructing facilities have been experienced as a result of proceedings conducted pursuant to such statutes, as well as in proceedings in which operating companies have sought to acquire rights-of-way through condemnation, and such proceedings may result in additional delays and costs in future years.
PEAK DEMAND
The east zone system is interconnected through 121 high-voltage transmission interconnections with 25 neighboring electric utility systems. The all-time and 2000 one-hour peak system demands were 25,940,000 and 23,223,000 kilowatts, respectively (which included 7,314,000 and 5,341,000 kilowatts, respectively, of scheduled deliveries to unaffiliated systems which the system might, on appropriate notice, have elected not to schedule for delivery) and occurred on June 17, 1994 and August 7, 2000, respectively. The net dependable capacity to serve the system load on such date, including power available under contractual obligations, was 23,457,000 and 23,790,000 kilowatts, respectively. The all-time and 2000 one-hour internal peak demands were 19,952,000 and 19,167,000 kilowatts, respectively, and occurred on July 30, 1999 and January 28, 2000, respectively. The net dependable capacity to serve the system load on such date, including power dedicated under contractual arrangements, was 23,829,000 and 24,036,000 kilowatts, respectively. The all-time one-hour integrated and internal net system peak demands and 2000 peak demands for the east zone generating subsidiaries are shown in the following tabulation:
The all-time and 2000 one-hour internal peak demand for the west zone system was 14,234,000 kilowatts on August 31, 2000. The all-time one-hour internal net system peak demands and 2000 peak demands for the west zone generating subsidiaries are shown in the following tabulation:
HYDROELECTRIC PLANTS
AEP has 18 facilities, of which 16 are licensed through FERC. The new license for the Elkhart hydroelectric plant in Indiana was issued January 11, 2001 and extends for a period of thirty years. The license for the Mottville hydroelectric plant in Michigan expires in 2003. A notice of intent to relicense was filed in 1998. The application for new license will be filed in 2001.
COOK NUCLEAR PLANT AND STP
The following table provides operating information relating to the Cook Plant and STP.
- --------------------- (a) Reflects total plant. (b) For economic or other reasons, operation of the Cook Plant and STP for the full term of their operating licenses cannot be assured. (c) The Cook Plant was shut down in September 1997 to respond to issues raised regarding the operability of certain safety systems. The restart of both units of the Cook Plant was completed with Unit 2 reaching 100% power on July 5, 2000 and Unit 1 achieving 100% power on January 3, 2001.
Costs associated with the operation (excluding fuel), maintenance and retirement of nuclear plants continue to be of greater significance and less predictable than costs associated with other sources of generation, in large part due to changing regulatory requirements and safety standards, availability of nuclear waste disposal facilities and
experience gained in the construction and operation of nuclear facilities. I&M and CPL may also incur costs and experience reduced output at Cook Plant and STP, respectively, because of the design criteria prevailing at the time of construction and the age of the plant's systems and equipment. Nuclear industry-wide and Cook Plant and STP initiatives have contributed to slowing the growth of operating and maintenance costs at these plants. However, the ability of I&M and CPL to obtain adequate and timely recovery of costs associated with the Cook Plant and STP, respectively, including replacement power, any unamortized investment at the end of the useful life of the Cook Plant and STP (whether scheduled or premature), the carrying costs of that investment and retirement costs, is not assured. See Competition and Business Change.
POTENTIAL UNINSURED LOSSES
Some potential losses or liabilities may not be insurable or the amount of insurance carried may not be sufficient to meet potential losses and liabilities, including liabilities relating to damage to the Cook Plant or STP and costs of replacement power in the event of a nuclear incident at the Cook Plant or STP. Future losses or liabilities which are not completely insured, unless allowed to be recovered through rates, could have a material adverse effect on results of operations and the financial condition of AEP, CPL, I&M and other AEP System companies.
Reference is made to the footnote to the financial statements entitled Commitments and Contingencies that is incorporated by reference in Item 8 for information with respect to nuclear incident liability insurance.
Item 3.
Item 3. LEGAL PROCEEDINGS
Federal EPA Notice of Violation to OPCo: On August 31, 2000, Region V, Federal EPA, issued a Notice of Violation (NOV) to OPCo's Gavin Plant in connection with stack emissions. Among other alleged violations, the NOV alleges violation of the Federal EPA-approved Ohio air pollution nuisance rule. AEP has submitted a request for a conference to discuss the NOV with Region V representatives.
Municipal Franchise Fee Litigation: CPL has been involved in litigation regarding municipal franchise fees in Texas as a result of a class action suit filed by the City of San Juan, Texas in 1996. The City of San Juan claims CPL underpaid municipal franchise fees and seeks damages of up to $300 million plus attorney's fees. CPL filed a counterclaim for overpayment of franchise fees.
During 1997, 1998 and 1999 the litigation moved procedurally through the Texas Court System and was sent to mediation without resolution.
In 1999 a class notice was mailed to each of the cities served by CPL. Over 90 of the 128 cities declined to participate in the lawsuit. However, CPL has pledged that if any final, non-appealable court decision awards a judgment against CPL for a franchise underpayment, CPL will extend the principles of that decision, with regard to any franchise underpayment, to the cities that declined to participate in the litigation. In December 1999, the court ruled that the class of plaintiffs would consist of approximately 30 cities. A trial date for June 2001 has been set.
Although management believes that it has substantial defenses to the cities' claims and intends to defend itself against the cities' claims and pursue its counterclaim vigorously, management cannot predict the outcome of this litigation or its impact on results of operations, cash flows or financial condition.
COLI Litigation: On February 20, 2001, the U.S. District Court for the Southern District of Ohio ruled against AEP in its suit against the United States over deductibility of interest claimed by AEP in its consolidated federal income tax return related to its COLI program. AEP had filed suit to resolve the IRS' assertion that interest deductions for AEP's COLI program should not be allowed. In 1998 and 1999 AEP paid the disputed taxes and interest attributable to COLI interest deductions for taxable years 1991-98 to avoid the potential assessment by the IRS of additional interest on the contested tax. The payments were included in other assets pending
the resolution of this matter. As a result of the U.S. District Court's decision to deny the COLI interest deductions, net income was reduced in 2000 as follows:
The Company plans to appeal the decision.
See Item 1 for a discussion of certain environmental matters.
Reference is made to the footnote to the financial statements entitled Commitments and Contingencies incorporated by reference in Item 8 for further information with respect to other legal proceedings.
Item 4.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
AEP, APCO, CPL, I&M, OPCO AND SWEPCO. None.
AEGCO, CSPCO, KEPCO, PSO AND WTU. Omitted pursuant to Instruction I(2)(c).
EXECUTIVE OFFICERS OF THE REGISTRANTS
AEP. The following persons are, or may be deemed, executive officers of AEP. Their ages are given as of March 1, 2001.
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(a) All of the executive officers listed above have been employed by the Service Corporation or System companies in various capacities (AEP, as such, has no employees) during the past five years, except for Messrs. Addis and Shockley and Ms. Tomasky. Prior to joining the Service Corporation in February 1997 in his present position, Mr. Addis was Executive Vice President (1992-1993) and President (1993-January 1997) of Louis Dreyfus Electric Power, Inc. and President of Duke/Louis Dreyfus LLC (1995-January 1997). Mr. Addis became an executive officer of AEP effective January 1, 2000. Prior to joining the Service Corporation in July 1998 as Senior Vice President, Ms. Tomasky was a partner with the law firm of Hogan & Hartson (August 1997-July 1998) and General Counsel of the Federal Energy Regulatory Commission (May 1993-August 1997). Ms. Tomasky became an executive officer of AEP effective with her promotion to Executive Vice President on January 26, 2000. Prior to joining the Service Corporation in his current position upon the merger with CSW, Mr. Shockley was President and Chief Operating Officer of CSW (1997-2000) and Senior Vice President of CSW (1980-1997). All of the above officers are appointed annually for a one-year term by the board of directors of AEP, the board of directors of the Service Corporation, or both, as the case may be.
APCO, CPL, I&M, OPCO AND SWEPCO. The names of the executive officers of APCo, CPL, I&M, OPCo and SWEPCo, the positions they hold with these companies, their ages as of March 1, 2001, and a brief account of their business experience during the past five years appear below. The directors and executive officers of APCo, CPL, I&M, OPCo and SWEPCo are elected annually to serve a one-year term.
- ----------------- (a) Dr. Draper is a director of BCP Management, Inc., which is the general partner of Borden Chemicals and Plastics L.P., and Mr. Lhota is a director of Huntington Bancshares Incorporated and State Auto Financial Corporation. (b) Dr. Draper, Messrs. Fayne, Lhota, Shockley and Vipperman and Ms. Tomasky are directors of AEGCo, CSPCo, KEPCo, PSO and WTU. Dr. Draper and Mr. Shockley are also directors of AEP.
PART II
Item 5.
Item 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
AEP. AEP Common Stock is traded principally on the New York Stock Exchange. The following table sets forth for the calendar periods indicated the high and low sales prices for the Common Stock as reported on the New York Stock Exchange Composite Tape and the amount of cash dividends paid per share of Common Stock.
At December 31, 2000, AEP had approximately 160,000 shareholders of record.
AEGCO, APCO, CPL, CSPCO, I&M, KEPCO, OPCO, PSO, SWEPCO AND WTU. The common stock of these companies is held solely by AEP. The amounts of cash dividends on common stock paid by these companies to AEP during 2000 and 1999 are incorporated by reference to the material under Statement of Retained Earnings in the 2000 Annual Reports.
Item 6.
Item 6. SELECTED FINANCIAL DATA
AEGCo, CSPCo, KEPCo, PSO AND WTU. Omitted pursuant to Instruction I(2)(a).
AEP, APCo, CPL, I&M, OPCo AND SWEPCo. The information required by this item is incorporated herein by reference to the material under Selected Consolidated Financial Data in the 2000 Annual Reports.
Item 7.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
AEGCo, CSPCo, KEPCo, PSO AND WTU. Omitted pursuant to Instruction I(2)(a). Management's narrative analysis of the results of operations and other information required by Instruction I(2)(a) is incorporated herein by reference to the material under Management's Narrative Analysis of Results of Operations in the 2000 Annual Reports.
AEP, APCo, CPL, I&M, OPCo AND SWEPCo. The information required by this item is incorporated herein by reference to the material under Management's Discussion and Analysis of Results of Operations and Management's Discussion and Analysis of Financial Condition, Contingencies and Other Matters in the 2000 Annual Reports.
Item 7A.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
AEGCo, AEP, APCo, CPL, CSPCo, I&M, KEPCo, OPCo, PSO, SWEPCo AND WTU. The information required by this item is incorporated herein by reference to the material under Management's Discussion and Analysis of Financial Condition, Contingencies and Other Matters in the 2000 Annual Reports.
Item 8.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
AEGCo, AEP, APCo, CPL, CSPCo, I&M, KEPCo, OPCo, PSO, SWEPCo AND WTU. The information required by this item is incorporated herein by reference to the financial statements and supplementary data described under Item 14 herein.
Item 9.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
AEGCo, AEP, APCo, CSPCo, I&M, KEPCo AND OPCo. None.
CPL, PSO, SWEPCo AND WTU. The information required by this item is incorporated herein by reference to each company's Current Report on Form 8-K dated July 5, 2000.
PART III
Item 10.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
AEGCo, CSPCo, KEPCo, PSO AND WTU. Omitted pursuant to Instruction I(2)(c).
AEP. The information required by this item is incorporated herein by reference to the material under Nominees for Director of the definitive proxy statement of AEP for the 2001 annual meeting of shareholders, to be filed within 120 days after December 31, 2000. Reference also is made to the information under the caption Executive Officers of the Registrants in Part I of this report.
APCo AND OPCo. The information required by this item is incorporated herein by reference to the material under Election of Directors of the definitive information statement of each company for the 2001 annual meeting of stockholders, to be filed within 120 days after December 31, 2000. Reference also is made to the information under the caption Executive Officers of the Registrants in Part I of this report.
CPL AND SWEPCo. The information required by this item is incorporated herein by reference to the material under Election of Directors of the definitive information statement of APCo for the 2001 annual meeting of stockholders, to be filed within 120 days after December 31, 2000. Reference also is made to the information under the caption Executive Officers of the Registrants in Part I of this report.
I&M. The names of the directors and executive officers of I&M, the positions they hold with I&M, their ages as of March 12, 2001, and a brief account of their business experience during the past five years appear below and under the caption Executive Officers of the Registrants in Part I of this report.
- ----------------- (a) Positions are with I&M unless otherwise indicated.
Item 11.
Item 11. EXECUTIVE COMPENSATION
AEGCo, CSPCo, KEPCo, PSO AND WTU. Omitted pursuant to Instruction I(2)(c).
AEP. The information required by this item is incorporated herein by reference to the material under Directors Compensation and Stock Ownership Guidelines, Executive Compensation and the performance graph of the definitive proxy statement of AEP for the 2001 annual meeting of shareholders to be filed within 120 days after December 31, 2000.
APCo AND OPCo. The information required by this item is incorporated herein by reference to the material under Executive Compensation of the definitive information statement of each company for the 2001 annual meeting of stockholders, to be filed within 120 days after December 31, 2000.
CPL, I&M AND SWEPCo. The information required by this item is incorporated herein by reference to the material under Executive Compensation of the definitive information statement of APCo for the 2001 annual meeting of stockholders, to be filed within 120 days after December 31, 2000.
The following table sets forth the aggregate cash and other compensation for services rendered for the fiscal years of 2000, 1999 and 1998 paid or awarded to the presidents of CPL and SWEPCo.
Summary Compensation Table
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(1) The awards reflected in this column are the value of restricted shares paid out under CSW's Long-Term Incentive Plan and, in the case of Mr. Madison, performance share units. Upon vesting, shares of AEP Common Stock were reissued without restrictions. The amounts reported in the Summary Compensation Table represent the market value of the shares at the date of grant.
(2) Detail of the 2000 amounts in the All Other Compensation column is shown below.
(3) Messrs. Sandoval and Madison resigned their positions on June 28, 2000, but remained employees of the AEP System.
Option Grants in 2000
- --------------------- (1) Options were granted on September 20, 2000, pursuant to the AEP 2000 Long-Term Incentive Plan. All options granted on this date have an exercise price equal to the closing price of AEP Common Stock on the New York Stock Exchange Composite Transactions Tape on September 20, 2000. These options will vest in equal increments, annually, over a three-year period beginning on January 1, 2002. Options also fully vest upon termination due to retirement after one year from the grant date or due to disability or death and expire five years thereafter, or on their scheduled expiration date if earlier. Options expire upon termination of employment for reasons other than retirement, disability or death, unless the Human Resources Committee determines that circumstances warrant continuation of the options for up to five years. Options are nontransferable. (2) A total of 6,046,000 options were granted in 2000. (3) Value was calculated using the Black-Scholes option valuation model. The actual value, if any, ultimately realized depends on the market value of AEP's Common Stock at a future date. Significant assumptions are shown below:
Aggregated Option Exercises in 2000 and Year-End Option Values
- --------------------- (1) Neither of these officers exercised options during 2000. (2) Based on the difference between the closing price of AEP Common Stock on the New York Stock Exchange Composite Transactions Tape on December 29, 2000 ($46.50) and the option exercise price. "In-the-money" means the market price of the stock is greater than the exercise price of the option on the date indicated.
Cash Balance Retirement Plan
CPL and SWEPCo maintain the Cash Balance Plan for eligible employees. In addition, these companies maintain the Special Executive Retirement Plan (SERP), a non-qualified plan that provides benefits that cannot be payable under the Cash Balance Plan because of maximum limitations imposed on such plans by the Internal Revenue Code. Under the cash balance formula, each participant has an account for recordkeeping purposes only, to which dollar amount credits are allocated annually based on a percentage of the participant's pay. Pay for the Cash Balance Plan includes base pay, bonuses, overtime, and commissions. The applicable percentage is determined by the age and years of vesting service the participant has as of December 31 of each year.
The following table shows the percentage used to determine dollar amount credits at the age and years of service indicated:
As of December 31, 2000, the sum of age plus years of service of Messrs. Sandoval and Madison were 78 and 81, respectively.
At retirement or other termination of employment, an amount equal to the vested balance (including qualified and SERP benefit) then credited to the account is payable to the participant in the form of an immediate or deferred lump sum or annuity. Benefits (both from the Cash Balance Plan and the SERP) under the cash balance formula are not subject to reduction for Social Security benefits or other offset amounts. The estimated annual benefits payable to Messrs. Sandoval and Madison as a single life annuity at age 65 under the Cash Balance Plan and the SERP are $93,508 for Mr. Sandoval and $122,555 for Mr. Madision.
These amounts are based on the following assumptions:
- Salary used is base pay paid for calendar year 2000 assuming no future increases plus bonus at 2000 target level.
- Conversion of the lump-sum cash balance to a single life annuity at age 65, based on an interest rate of 5.78% and the 1983 Group Annuity Mortality Table.
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AEGCo, CSPCo, KEPCo, PSO AND WTU. Omitted pursuant to Instruction I(2)(c).
AEP. The information required by this item is incorporated herein by reference to the material under Share Ownership of Directors and Executive Officers of the definitive proxy statement of AEP for the 2001 annual meeting of shareholders to be filed within 120 days after December 31, 2000.
APCo AND OPCo. The information required by this item is incorporated herein by reference to the material under Share Ownership of Directors and Executive Officers in the definitive information statement of each company for the 2001 annual meeting of stockholders, to be filed within 120 days after December 31, 2000.
CPL AND SWEPCo. The information required by this item is incorporated herein by reference to the material under Share Ownership of Directors and Executive Officers in the definitive information statement of APCo for the 2001 annual meeting of stockholders, to be filed within 120 days after December 31, 2000.
I&M. All 1,400,000 outstanding shares of Common Stock, no par value, of I&M are directly and beneficially held by AEP. Holders of the Cumulative Preferred Stock of I&M generally have no voting rights, except with respect to certain corporate actions and in the event of certain defaults in the payment of dividends on such shares.
The table below shows the number of shares of AEP Common Stock and stock-based units that were beneficially owned, directly or indirectly, as of January 1, 2001, by each director and nominee of I&M as of March 12, 2001 and each of the executive officers of I&M named in the summary compensation table, and by all directors and executive officers of I&M as a group. It is based on information provided to I&M by such persons. No such person owns any shares of any series of the Cumulative Preferred Stock of I&M. Unless otherwise noted, each person has sole voting power and investment power over the number of shares of AEP Common Stock and stock-based units set forth opposite his name. Fractions of shares and units have been rounded to the nearest whole number.
- ------------------------- (a) Includes share equivalents held in the AEP Retirement Savings Plan (and for Mr. Shockley, the CSW Retirement Savings Plan) in the amounts listed below:
With respect to the share equivalents held in the AEP Retirement Savings Plan, such persons have sole voting power, but the investment/disposition power is subject to the terms of the Plan. (b) This column includes amounts deferred in stock units and held under AEP's officer benefit plans. (c) Includes the following numbers of shares held in joint tenancy with a family member: Dr. Draper, 5,588; Mr. Lhota, 2,180; and Mr. Vipperman, 76. (d) Does not include, for Messrs. Fayne, Lhota and Vipperman, 85,231 shares in the American Electric Power System Educational Trust Fund over which Messrs. Fayne, Lhota and Vipperman share voting and investment power as trustees (they disclaim beneficial ownership). The amount of shares shown for all directors and executive officers as a group includes these shares (e) Includes the following numbers of shares held by family members over which beneficial ownership is disclaimed: Mr. Shockley, 496. (f) Includes 49, 938 shares for Mr. Shockley attributable to options exercisable within 60 days. (g) Represents less than 1% of the total number of shares outstanding
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
AEP, APCo, CPL, I&M, OPCo AND SWEPCo. None.
AEGCo, CSPCo, KEPCo, PSO AND WTU. Omitted pursuant to Instruction I(2)(c).
PART IV
Item 14.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
1. FINANCIAL STATEMENTS:
The following financial statements have been incorporated herein by reference pursuant to Item 8.
(b) No Reports on Form 8-K were filed during the quarter ended December 31, 2000.
SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
AMERICAN ELECTRIC POWER COMPANY, INC.
BY: /S/ H. W. FAYNE --------------------------------------- (H. W. FAYNE, VICE PRESIDENT AND CHIEF FINANCIAL OFFICER)
Date: March 20, 2001
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. THE SIGNATURE OF THE UNDERSIGNED COMPANY SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE TO SUCH COMPANY AND ANY SUBSIDIARIES THEREOF.
AEP GENERATING COMPANY APPALACHIAN POWER COMPANY CENTRAL POWER AND LIGHT COMPANY COLUMBUS SOUTHERN POWER COMPANY KENTUCKY POWER COMPANY OHIO POWER COMPANY PUBLIC SERVICE COMPANY OF OKLAHOMA SOUTHWESTERN ELECTRIC POWER COMPANY WEST TEXAS UTILITIES COMPANY
BY: /S/ A. A. PENA ------------------------------------------- (A. A. PENA, VICE PRESIDENT AND TREASURER)
Date: March 20, 2001 PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. THE SIGNATURE OF EACH OF THE UNDERSIGNED SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE TO THE ABOVE-NAMED COMPANY AND ANY SUBSIDIARIES THEREOF.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. THE SIGNATURE OF THE UNDERSIGNED COMPANY SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE TO SUCH COMPANY AND ANY SUBSIDIARIES THEREOF.
INDIANA MICHIGAN POWER COMPANY
BY: /S/ A. A. PENA --------------------------------------------- (A. A. PENA, VICE PRESIDENT AND TREASURER)
Date: March 20, 2001
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. THE SIGNATURE OF EACH OF THE UNDERSIGNED SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE TO THE ABOVE-NAMED COMPANY AND ANY SUBSIDIARIES THEREOF.
[THIS PAGE INTENTIONALLY LEFT BLANK]
INDEX TO FINANCIAL STATEMENT SCHEDULES
S-1
INDEPENDENT AUDITORS' REPORT
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARIES:
We have audited the consolidated financial statements of American Electric Power Company, Inc. and its subsidiaries and the financial statements of certain of its subsidiaries, listed in Item 14 herein, as of December 31, 2000 and 1999, and for each of the three years in the period ended December 31, 2000, and have issued our reports thereon dated February 26, 2001; such financial statements and reports are included in the 2000 Annual Reports and are incorporated herein by reference. Our audits also included the financial statement schedules of American Electric Power Company, Inc. and its subsidiaries and of certain of its subsidiaries, listed in Item 14, except for the financial statement schedules of Central Power and Light Company and subsidiary, Public Service Company of Oklahoma and its subsidiaries, Southwestern Electric Power Company and subsidiaries, and West Texas Utilities Company for the years ended December 31, 1999 and 1998 and the financial information of Central and South West Corporation and its subsidiaries that is included in the financial statement schedule for American Electric Power Company, Inc. and its subsidiaries for the years ended December 31, 1999 and 1998. These financial statement schedules are the responsibility of the respective company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedules, when considered in relation to the corresponding basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP Columbus, Ohio February 26, 2001
S-2
- ---------------- (a) Recoveries on accounts previously written off. (b) Uncollectible accounts written off.
- ----------------- (a) Recoveries on accounts previously written off. (b) Uncollectible accounts written off.
- --------------------- (a) Recoveries on accounts previously written off. (b) Uncollectible accounts written off.
S-3
- -------------------- (a) Recoveries on accounts previously written off. (b) Uncollectible accounts written off.
- --------------------- (a) Recoveries on accounts previously written off. (b) Uncollectible accounts written off.
- --------------------- (a) Recoveries on accounts previously written off. (b) Uncollectible accounts written off.
S-4
- --------------------- (a) Recoveries on accounts previously written off. (b) Uncollectible accounts written off.
- --------------------- (a) Recoveries on accounts previously written off. (b) Uncollectible accounts written off.
- --------------------- (a) Recoveries on accounts previously written off. (b) Uncollectible accounts written off.
S-5
- --------------------- (a) Recoveries on accounts previously written off. (b) Uncollectible accounts written off.
S-6
EXHIBIT INDEX
Certain of the following exhibits, designated with an asterisk(*), are filed herewith. The exhibits not so designated have heretofore been filed with the Commission and, pursuant to 17 C.F.R. 229.10(d) and 240.12b-32, are incorporated herein by reference to the documents indicated in brackets following the descriptions of such exhibits. Exhibits, designated with a dagger (+), are management contracts or compensatory plans or arrangements required to be filed as an exhibit to this form pursuant to Item 14(c) of this report.
E-1
E-2
E-3
E-4
E-5
E-6
E-7
E-8
E-9
E-10
E-11
E-12
E-13
E-14
++Certain instruments defining the rights of holders of long-term debt of the registrants included in the financial statements of registrants filed herewith have been omitted because the total amount of securities authorized thereunder does not exceed 10% of the total assets of registrants. The registrants hereby agree to furnish a copy of any such omitted instrument to the SEC upon request.