Significant Accounting Matters

9 Months Ended

Sep. 30, 2019

SIGNIFICANT ACCOUNTING MATTERS

The disclosures in this note apply to all Registrants unless indicated otherwise.

General

The unaudited condensed financial statements and footnotes were prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete annual financial statements.

In the opinion of management, the unaudited condensed interim financial statements reflect all normal and recurring accruals and adjustments necessary for a fair statement of the net income, financial position and cash flows for the interim periods for each Registrant. Net income for the three and nine months ended September 30, 2019 is not necessarily indicative of results that may be expected for the year ending December 31, 2019. The condensed financial statements are unaudited and should be read in conjunction with the audited 2018 financial statements and notes thereto, which are included in the Registrants’ Annual Reports on Form 10-K as filed with the SEC on February 21, 2019.

Earnings Per Share (EPS) (Applies to AEP)

Basic EPS is calculated by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS is calculated by adjusting the weighted average outstanding common shares, assuming conversion of all potentially dilutive stock awards.

The following tables present AEP’s basic and diluted EPS calculations included on the statements of income:



	Three Months Ended September 30,
	2019					2018
	(in millions, except per share data)
			$/share					$/share
Earnings Attributable to AEP Common Shareholders	$	733.5				$	577.6

Weighted Average Number of Basic Shares Outstanding	493.8		$	1.49		493.0		$	1.17
Weighted Average Dilutive Effect of Stock-Based Awards	1.7		(0.01		)	0.9		—
Weighted Average Number of Diluted Shares Outstanding	495.5		$	1.48		493.9		$	1.17



	Nine Months Ended September 30,
	2019					2018
	(in millions, except per share data)
			$/share					$/share
Earnings Attributable to AEP Common Shareholders	$	1,767.6				$	1,560.4

Weighted Average Number of Basic Shares Outstanding	493.6		$	3.58		492.6		$	3.17
Weighted Average Dilutive Effect of Stock-Based Awards	1.5		(0.01		)	0.9		(0.01		)
Weighted Average Number of Diluted Shares Outstanding	495.1		$	3.57		493.5		$	3.16

Equity Units issued in March 2019 are potentially dilutive securities but were excluded from the calculation of diluted EPS for the three and nine months ended September 30, 2019, as the dilutive stock price threshold was not met. See Note 13 - Financing Activities for more information related to Equity Units.

There were no antidilutive shares outstanding as of September 30, 2019 and 2018.

Restricted Cash (Applies to AEP, AEP Texas, APCo and OPCo)

Restricted Cash primarily included funds held by trustee for the payment of securitization bonds and contractually restricted deposits held for the future payment of the remaining construction activities at Santa Rita East.

Reconciliation of Cash, Cash Equivalents and Restricted Cash

The following tables provide a reconciliation of Cash, Cash Equivalents and Restricted Cash reported within the balance sheets that sum to the total of the same amounts shown on the statements of cash flows:



	September 30, 2019
	AEP		AEP Texas		APCo		OPCo
	(in millions)
Cash and Cash Equivalents	$	348.8	$	0.1	$	3.5	$	4.7
Restricted Cash	141.0		114.3		17.1		—
Total Cash, Cash Equivalents and Restricted Cash	$	489.8	$	114.4	$	20.6	$	4.7



	December 31, 2018
	AEP		AEP Texas		APCo		OPCo
	(in millions)
Cash and Cash Equivalents	$	234.1	$	3.1	$	4.2	$	4.9
Restricted Cash	210.0		156.7		25.6		27.6
Total Cash, Cash Equivalents and Restricted Cash	$	444.1	$	159.8	$	29.8	$	32.5