American Electric Power Retirement Savings Plan
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
11-K
(Mark
One)
[
X ]
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For
the
fiscal year ended December 31, 2005
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For
the
transition period from
to
AMERICAN
ELECTRIC POWER SYSTEM
RETIREMENT
SAVINGS PLAN
(Full
title of the plan)
AMERICAN
ELECTRIC POWER COMPANY, INC.
1
Riverside Plaza, Columbus, Ohio 43215
(Name
of
issuer of the securities held
pursuant
to the plan and the address
of
its
principal executive office)
AMERICAN
ELECTRIC POWER SYSTEM RETIREMENT SAVINGS PLAN
TABLE
OF CONTENTS
|
|
PAGES
|
|
|
3
|
|
|
|
|
|
4
|
|
|
|
FINANCIAL
STATEMENTS:
|
|
|
|
5
|
|
|
6
|
|
|
7-10
|
|
|
|
SUPPLEMENTAL
SCHEDULE:
|
|
|
|
|
11-12
|
|
|
|
EXHIBITS:
|
|
|
|
|
13
|
|
|
14
|
AMERICAN
ELECTRIC POWER SYSTEM RETIREMENT SAVINGS PLAN
Pursuant
to
the requirements of the Securities Exchange Act of 1934, the Benefits Finance
Committee has duly caused this annual report to be signed by the undersigned
thereunto duly authorized.
By: /s/
J.
Steven
Kiser
J.
Steven Kiser, Secretary
Date: June
29, 2006
American
Electric Power Service Corporation, as Plan Administrator:
We
have
audited the accompanying statements of net assets available for benefits of
the
American Electric Power System Retirement Savings Plan (the “Plan”) as of
December 31, 2005 and 2004, and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements
are
the responsibility of the Plan's management. Our responsibility is to express
an
opinion on these financial statements based on our audits.
We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Plan is not required to have,
nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Plan’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining,
on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by Plan management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In
our
opinion, such financial statements present fairly, in all material respects,
the
net assets available for benefits of the Plan as of December 31, 2005 and 2004,
and the changes in net assets available for benefits for the years then ended
in
conformity with accounting principles generally accepted in the United States
of
America.
Our
audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in
the
Table of Contents is presented for the purpose of additional analysis and is
not
a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act
of
1974. This supplemental schedule is the responsibility of the Plan's management.
The supplemental schedule has been subjected to the auditing procedures applied
in the audit of the basic 2005 financial statements and, in our opinion, is
fairly stated in all material respects when considered in relation to the basic
2005 financial statements taken as a whole.
Columbus,
Ohio
June
29,
2006
AMERICAN
ELECTRIC POWER SYSTEM RETIREMENT
SAVINGS PLAN
1.
PLAN DESCRIPTION
The
following description of the American Electric Power System Retirement Savings
Plan (the “Plan”) is provided for general information purposes only.
Participants should refer to the Plan documents for more complete
information.
The
Plan
is a defined contribution plan that became effective and commenced operations
on
January 1, 1978. The Plan covers eligible regularly scheduled full-time and
part-time employees of the participating subsidiaries of American Electric
Power
Company, Inc. (“AEP” or the “Company”). Eligible employees may enroll in the
Plan upon commencement of employment. The Plan is subject to the provisions
of
the Employee Retirement Income Security Act of 1974 (“ERISA”). Generally,
eligible employees participating in the Plan may make contributions in 1%
increments up to 30% of their eligible pay (within IRS limits). Participants
who
are age 50 and older are able to save additional pre-tax dollars; the catch-up
contribution limit was $4,000 and $3,000 for 2005 and 2004, respectively. The
Company contributes to the Plan, on behalf of each participant, an amount equal
to 75% of the participant’s contributions up to 6% of the participant’s eligible
compensation for each payroll period, subject to certain limitations. All
contributions are deposited to the American Electric Power System Retirement
Savings Plan Trust after each pay period. The Plan, in a manner consistent
with
the requirements under section 401 et seq., of the Internal Revenue Code,
restricts the amount that certain participants who are deemed highly compensated
may contribute to the Plan. Participants are allowed to change investment
elections, change investment percentages in the funds, or move existing fund
balances on a daily basis. Participants are immediately vested in their pre-tax,
after-tax and the Company matching contributions, including earnings
thereon.
American
Electric Power Service Corporation (“AEPSC”) is the plan administrator (Plan
Administrator) and plan sponsor. AEPSC is a wholly-owned subsidiary of AEP.
Fidelity Management Trust Company (“Fidelity” or “Trustee”) is the trustee for
all funds and is the record keeper for the entire Plan.
In
July
2006, Fidelity Management Trust Company is being replaced by JPMorgan Chase
Bank
N.A. as custodian and trustee and JP Morgan Retirement Plan Services LLC as
recordkeeper with respect to the Plan. When this transition occurs, the
investment options offered by the Plan will change to a series of separately
managed accounts, interests in commingled and collective trusts and
self-directed mutual fund brokerage accounts for which JP Morgan affiliates
will
provide custody, trustee, recordkeeping and other services.
Effective
January 1, 2002, the AEP Stock Fund, a Plan investment option, was converted
to
an Employee Stock Ownership Plan (“ESOP”). As a result, participants can elect
to have dividends generated from their AEP Stock Fund holdings paid out in
cash,
rather than automatically reinvested in the fund. The dividend payouts are
made
each December and are treated as ordinary income for tax purposes. The 10
percent early withdrawal penalty for individuals under age 59-1/2 does not
apply
to these dividend payouts.
Participants
may transfer the value of their own cumulative contributions, in any whole
percentage or dollar amount, among investments, and change their investment
elections on a daily basis. Participants may change their payroll contribution
elections coinciding with company payroll periods. Excluding their pre-tax
contributions, participants may make an unlimited number of withdrawals of
their
interest in the Plan, including company matching contributions, which are
immediately vested. Pre-tax contributions are not eligible for withdrawal by
participants not yet age 59-1/2, except under hardship as defined by the Plan
or
severance of employment.
Participants
may borrow from their savings plan accounts, a minimum of $1,000 but no more
than the lesser of $50,000 or 50% of their account balance. Loan terms range
from 12 months to 60 months (or up to 180 months for certain residential loans),
or any monthly increment in-between. Interest rates, fixed for the life of
the
loan, are calculated by adding 1% to the prime rate, as reported in the Eastern
edition of the Wall Street Journal, in effect as of the first business day
of
the calendar quarter in which the loan is taken. Active employees make principal
and interest payments through payroll deductions.
Retirees/surviving
spouses make monthly payments using a coupon book. Participant loans and the
accrued interest are collateralized by the account balance, and upon default,
the outstanding balance is subjected to income taxes and possibly penalty taxes.
2.
ACCOUNTING POLICIES
The
accompanying financial statements are prepared on the accrual basis of
accounting.
Investments
have been recorded based on the trade-date and are reported in the Statements
of
Net Assets Available for Benefits at fair value or contract value. The AEP
Stock
Fund investments are valued at year-end quoted AEP common stock closing prices.
The year-end valuations for the various Fidelity funds are based on the closing
market prices for the underlying securities as provided by the Trustee. The
Managed Income Fund contracts are valued at book value, which is equal to cost
(contributions), plus interest, less withdrawals. All participant loans are
valued at cost, which approximates fair value at the time the loan is processed.
Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date. These amounts are reinvested by the Trustee in the same funds
that generated such income with the exception of the AEP Stock Fund, which
pays
out or reinvests dividends at the participants’ discretion. Administrative and
Management Fees include short-term redemption fees for certain funds and
management fees for the Managed Income Fund. Fees paid to Fidelity totaled
$904,495 and $842,014 for 2005 and 2004, respectively. Other Plan administration
expenses are paid by the employer and not included in the accompanying statement
of changes in net assets available for benefits.
Distributions
are recorded when paid. There were no amounts due to participants who requested
distributions from the Plan as of December 31, 2005 and 2004.
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of net assets
available for benefits and changes therein. Actual results could differ from
those estimates.
Investment
securities, in general, are exposed to various risks, such as interest
rate,
credit, and overall market volatility. Due to the level of risk associated
with
certain investment securities, it is reasonably possible that changes in
the
values of investment securities will occur in the near term and that such
changes could materially affect the amounts reported in the financial
statements.
3.
INVESTMENT CONTRACT VALUATION
The
Plan
has a Managed Income Fund with Fidelity as trustee, which invests primarily
in
fully benefit responsive investment contracts. Fidelity maintains the assets
in
a custodian account. There are no reserves against contract value for credit
risk of the contract issuer or otherwise. The account is credited with earnings
on the underlying investments and charged for Plan withdrawals (credited
interest rates ranged from 5.65% to 3.76% at both December 31, 2005 and
2004). The average yield was 3.87% and 4.16% for fiscal years ending December
31, 2005 and 2004, respectively. The investment is recorded in the financial
statements based on the contract value of the underlying investment contracts
as
reported to the Plan by Fidelity. Contract value represents contributions made
under the contract, plus earnings, less withdrawals.
4.
INVESTMENTS EXCEEDING 5% OF PLAN NET ASSETS
Investments
exceeding five percent of net assets as of December 31, 2005 and 2004
were:
|
|
FAIR
VALUE
|
|
|
|
2005
|
|
2004
|
|
AEP
Common Stock
|
|
$
|
517,452,122
|
|
$
|
488,809,605
|
|
|
|
|
|
|
|
|
|
Fidelity
Blue Chip Growth Fund
|
|
$
|
245,710,255
|
|
$
|
260,990,466
|
|
|
|
|
|
|
|
|
|
Fidelity
US Equity Index Commingled Pool
|
|
$
|
211,263,445
|
|
$
|
213,447,570
|
|
|
|
|
|
|
|
|
|
Morgan
Guaranty Act Contract
|
|
$
|
206,692,392
|
|
$
|
174,785,820
|
|
|
|
|
|
|
|
|
|
Bank
of America Contract
|
|
$
|
206,691,132
|
|
$
|
174,783,709
|
|
|
|
|
|
|
|
|
|
State
Street Bank & Trust Company Contract
|
|
$
|
206,691,243
|
|
$
|
174,783,455
|
|
|
|
|
|
|
|
|
|
Rabobank
Nederland Contract
|
|
$
|
206,684,414
|
|
$
|
174,775,218
|
|
|
|
|
|
|
|
|
|
Fidelity
Low-Priced Stock Fund
|
|
$
|
152,202,523
|
|
$
|
138,270,884
|
|
|
|
|
|
|
|
|
|
5.
NET APPRECIATION IN FAIR VALUE OF INVESTMENTS
During
2005 and 2004, the Plan's investments (including investments purchased, sold
as
well as held during the year) appreciated in value as follows:
|
|
December
31
|
|
|
|
2005
|
|
2004
|
|
Investment
at Fair Value:
|
|
|
|
|
|
American
Electric Power Company, Inc. - Common
Stock
|
|
$
|
39,600,019
|
|
$
|
57,775,118
|
|
|
|
|
|
|
|
|
|
Investments
at Estimated Fair Value:
|
|
|
|
|
|
|
|
Registered
Investment Companies and Group
Annuity, Bank Investment and Other
Fixed Income Contracts
|
|
|
48,173,123
|
|
|
84,821,282
|
|
Total
Net Appreciation
|
|
$
|
87,773,142
|
|
$
|
142,596,400
|
|
6.
FEDERAL INCOME TAX
The
Internal Revenue Service (IRS) has determined that the Plan meets the
requirements of Section 401(a) of the Internal Revenue Code (the Code);
therefore, the Plan’s Trust is exempt from federal income tax pursuant to
Section 501(a) of the Code.
The
Plan
obtained its latest determination letter on February 15, 2005, in which the
IRS
stated that the Plan, as then designed, was in compliance with the applicable
requirements of the Code; provided however, the letter merely acknowledges
receipt of (without approving) the provisions intended to satisfy the
requirements of the Code, as amended by the Economic Growth and Tax Relief
Reconciliation Act of 2001 (“EGTRRA”) and it contemplates that AEP will make
some additional changes to the plan documents that were proposed in
correspondence sent to the IRS in connections with its determination letter
application. Those changes were made pursuant to documents signed on May 11,
2005. The Company may timely further amend the Plan so that it remains in
compliance with the requirements of the Internal Revenue Code. Therefore, no
provision for income taxes has been included in the Plan’s financial
statements.
Under
current income tax laws and regulations, participants are not subject to federal
income tax on the employer contributions to their accounts or on the accumulated
earnings on employee and Company contributions until such amounts are
distributed to participants. Employees have the option to make contributions
to
the Plan on a pre-tax basis, in which case federal income tax is deferred until
such amounts are distributed.
7. PLAN
TERMINATION
Although
it has not expressed any intent to do so, the Company has the right under the
Plan to discontinue its contributions at any time and to terminate the Plan
subject to the provisions of ERISA. In the event of Plan termination,
participants remain 100 percent vested in their accounts.
8.
RELATED-PARTY TRANSACTIONS
Certain
Plan investments are shares of mutual funds managed by Fidelity Investments.
Fidelity is the trustee as defined by the Plan and, therefore, these
transactions qualify as party-in-interest transactions.
9.
LEGAL ISSUES
In
the
fourth quarter of 2002 and the first quarter of 2003, three putative class
action lawsuits were filed on behalf of the Plan against American Electric
Power
Company, Inc., certain AEP executives, and AEP’s ERISA Plan Administrator
alleging violations of ERISA in the selection of AEP stock as an investment
alternative and in the allocation of assets to AEP stock. The ERISA actions
are
pending in Federal District Court, Columbus, Ohio. In these actions, the
plaintiffs seek equitable relief and recovery of an unstated amount of
compensatory damages, attorney fees and costs. The Defendants have filed a
motion to dismiss these actions, which the Court denied. The cases are in the
discovery stage. The Court has scheduled a hearing on class certification for
late June 2006. The Defendants intend to continue to vigorously defend against
these claims. The ultimate outcome of these cases cannot be determined at this
stage of the proceedings.
|
|
|
Number
of SHARES/UNITS
|
|
|
FAIR/CONTRACT
VALUE
|
|
|
COST
|
MANAGED
INCOME FUND: |
|
|
|
|
|
|
|
|
|
Fixed
Income Contract - Bank of America variable annual yield (3.76%
at
December 31, 2005) with an indeterminate maturity
date
|
|
|
|
$
|
206,691,132
|
|
$
|
206,691,132
|
|
Commingled
Pool - Key Bank EPL variable annual yield (4.43% at December
31, 2005) with an indeterminate maturity date
|
|
|
|
|
83,387,346
|
|
|
83,387,346
|
|
Group
Annuity Contract - Monumental Life Insurance Company 5.65%
effective annual yield with an indeterminate maturity date
|
|
|
|
|
6,375,569
|
|
|
6,375,569
|
|
Group
Annuity Contract - Morgan Guaranty Act variable annual yield
(3.76% at December 31, 2005) with an indeterminate maturity
date
|
|
|
|
|
206,692,392
|
|
|
206,692,392
|
|
Group
Annuity Contract - Rabobank Nederland variable annual yield
(3.76% at December 31, 2005) with an indeterminate maturity
date
|
|
|
|
|
206,684,414
|
|
|
206,684,414
|
|
Group
Annuity Contract - Security Life of Denver Insurance Company
5.25% effective annual yield with an indeterminate maturity
date
|
|
|
|
|
13,632,061
|
|
|
13,632,061
|
|
Group
Annuity Contract - State Street Bank & Trust Company
variable annual
yield (3.76% at December 31, 2005) with an indeterminate
maturity date
|
|
|
|
|
206,691,243
|
|
|
206,691,243
|
|
Group
Annuity Contract - Travelers Insurance Co. 4.67% effective
annual yield with an indeterminate maturity date
|
|
|
|
|
10,196,989
|
|
|
10,196,989
|
|
Subtotal
|
|
|
|
|
940,351,146
|
|
|
940,351,146
|
|
Fidelity
Institutional Cash Portfolio Fund
|
|
9,671,011
|
units
|
|
9,671,011
|
|
|
9,671,011
|
|
TOTAL
- MANANAGED INCOME FUND
|
|
|
|
$
|
950,022,157
|
|
$
|
950,022,157
|
AMERICAN
ELECTRIC POWER SYSTEM RETIREMENT
SAVINGS PLAN
SUPPLEMENTAL
SCHEDULE OF ASSETS HELD AS OF DECEMBER 31, 2005
(continued)
|
|
Number
of SHARES/UNITS
|
|
|
FAIR/CONTRACT
VALUE
|
|
|
COST
|
AEP
STOCK FUND:
|
|
|
|
|
|
|
|
|
American
Electric Power Company, Inc. Common Stock $6.50
par value
|
|
13,951,257
|
Shares
|
$
|
517,452,122
|
|
$
|
449,014,903
|
Fidelity
Institutional Cash Portfolio Fund
|
|
2,206,530
|
Units
|
|
1,697,569
|
|
|
1,697,569
|
TOTAL
- AEP STOCK FUND
|
|
|
|
$
|
519,149,691
|
|
$
|
450,712,472
|
|
|
|
|
|
|
|
|
|
REGESTERED
INVESTMENT COMPANY:
|
|
|
|
|
|
|
|
|
Fidelity
Blue Chip Growth Fund
|
|
5,693,009
|
Units
|
$
|
245,710,255
|
|
$
|
217,259,515
|
Fidelity
Diversified International Fund
|
|
1,546,617
|
Units
|
|
50,326,914
|
|
|
42,396,477
|
Fidelity
Equity Income Fund
|
|
2,218,617
|
Units
|
|
117,098,588
|
|
|
99,259,154
|
Fidelity
Freedom 2000 Fund
|
|
569,497
|
Units
|
|
6,953,558
|
|
|
6,773,819
|
Fidelity
Freedom 2010 Fund
|
|
2,313,471
|
Units
|
|
32,504,269
|
|
|
31,129,913
|
Fidelity
Freedom 2020 Fund
|
|
2,467,133
|
Units
|
|
36,291,525
|
|
|
33,855,125
|
Fidelity
Freedom 2030 Fund
|
|
904,755
|
Units
|
|
13,589,423
|
|
|
11,794,788
|
Fidelity
Freedom 2040 Fund
|
|
639,529
|
Units
|
|
5,647,044
|
|
|
5,110,970
|
Fidelity
Freedom Income Fund
|
|
901,477
|
Units
|
|
10,249,797
|
|
|
10,021,547
|
Fidelity
Low-Priced Stock Fund
|
|
3,726,800
|
Units
|
|
152,202,523
|
|
|
122,739,827
|
Fidelity
OTC Portfolio
|
|
3,195,112
|
Units
|
|
120,743,274
|
|
|
118,287,458
|
Fidelity
Overseas Fund
|
|
1,157,782
|
Units
|
|
48,175,307
|
|
|
37,101,938
|
Fidelity
Puritan Fund
|
|
5,026,979
|
Units
|
|
94,155,319
|
|
|
88,815,816
|
Fidelity
Small Cap Stock Fund
|
|
1,286,395
|
Units
|
|
23,541,020
|
|
|
21,886,231
|
Fidelity
U.S. Equity Index Comingled Pool
|
|
5,383,880
|
Units
|
|
211,263,445
|
|
|
151,973,577
|
PIMCO
Total Return Institutional Fund
|
|
3,776,987
|
Units
|
|
39,553,367
|
|
|
40,210,304
|
T.
Rowe Price Mid-Cap Growth Fund
|
|
934,334
|
Units
|
|
50,584,817
|
|
|
44,582,902
|
T.
Rowe Price Mid-Cap Value Fund
|
|
2,127,500
|
Units
|
|
49,740,954
|
|
|
46,379,503
|
Fidelity
Retire Money Market Fund
|
|
1,344
|
Units
|
|
1,344
|
|
|
1,344
|
TOTAL
- REGISTERED INVESTMENT COMPANY
|
|
|
|
$ |
1,308,332,743
|
|
$ |
1,129,580,208
|
|
|
|
|
|
|
|
|
|
PARTICIPANT
LOANS
(interest rate ranging from 6.25% through
7.75%
maturing through December 2020)
|
|
|
|
|
55,014,826
|
|
|
55,014,826
|
|
|
|
|
|
|
|
|
|
TOTAL
INVESTMENTS
|
|
|
|
$
|
2,832,519,417
|
|
$
|
2,585,329,663
|
AMERICAN
ELECTRIC POWER SYSTEM RETIREMENT SAVINGS PLAN
Exhibit
Number
|
|
|
|
Description
|
23
|
|
|
|
Consent
of Independent Registered Public Accounting
Firm
|
EXHIBIT
23
AMERICAN
ELECTRIC POWER SYSTEM RETIREMENT SAVINGS PLAN
American
Electric Power Company, Inc.:
We
consent to the incorporation by reference in Registration Statement No.
333-128042 on Form S-8 and Post-Effective Amendment No. 3 to Registration
Statement No. 33-1052 of American Electric Power System Retirement Savings
Plan
on Form S-8 of our report dated June 29,
2006
appearing in this Annual Report on Form 11-K of American Electric Power System
Retirement Savings Plan for the year ended December 31, 2005.
DELOITTE
& TOUCHE LLP
Columbus,
Ohio
June
29,
2006