Significant Accounting Matters

6 Months Ended

Jun. 30, 2021

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 six months ended June 30, 2021 is not necessarily indicative of results that may be expected for the year ending December 31, 2021. The condensed financial statements are unaudited and should be read in conjunction with the audited 2020 financial statements and notes thereto, which are included in the Registrants’ Annual Reports on Form 10-K as filed with the SEC on February 25, 2021.

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 table presents AEP’s basic and diluted EPS calculations included on the statements of income:


	Three Months Ended June 30,
	2021				2020
	(in millions, except per share data)
			$/share				$/share


Earnings Attributable to AEP Common Shareholders	$	578.2			$	520.8

Weighted-Average Number of Basic AEP Common Shares Outstanding	499.9		$	1.16	495.7		$	1.05
Weighted-Average Dilutive Effect of Stock-Based Awards	1.1		(0.01)		1.6		—
Weighted-Average Number of Diluted AEP Common Shares Outstanding	501.0		$	1.15	497.3		$	1.05


	Six Months Ended June 30,
	2021				2020
	(in millions, except per share data)
			$/share				$/share


Earnings Attributable to AEP Common Shareholders	$	1,153.2			$	1,016.0

Weighted-Average Number of Basic AEP Common Shares Outstanding	498.5		$	2.31	495.1		$	2.05
Weighted-Average Dilutive Effect of Stock-Based Awards	1.1		—		1.9		(0.01)
Weighted-Average Number of Diluted AEP Common Shares Outstanding	499.6		$	2.31	497.0		$	2.04

Equity Units are potentially dilutive securities but were excluded from the calculation of diluted EPS for the three and six months ended June 30, 2021 and 2020, as the dilutive stock price thresholds were not met. See Note 12 - Financing Activities for more information related to Equity Units.

There were 0 and 156 thousand antidilutive shares outstanding as of June 30, 2021 and 2020, respectively. The

antidilutive shares were excluded from the calculation of diluted EPS.

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

Restricted Cash primarily includes funds held by trustees for the payment of securitization bonds.

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:


	June 30, 2021
	AEP		AEP Texas		APCo
	(in millions)
Cash and Cash Equivalents	$	312.7	$	0.1	$	3.9
Restricted Cash	47.0		27.9		19.1
Total Cash, Cash Equivalents and Restricted Cash	$	359.7	$	28.0	$	23.0


	December 31, 2020
	AEP		AEP Texas		APCo
	(in millions)
Cash and Cash Equivalents	$	392.7	$	0.1	$	5.8
Restricted Cash	45.6		28.7		16.9
Total Cash, Cash Equivalents and Restricted Cash	$	438.3	$	28.8	$	22.7