Attached files
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8-K - 8-K - FIRSTENERGY CORP | a8-kdated10292015.htm |
EX-99.1 - EXHIBIT 99.1 - FIRSTENERGY CORP | ex991fe-09302015.htm |
Exhibit 99.2
Consolidated Report to the Financial Community
Third Quarter 2015
(Released October 29, 2015) (Unaudited)
HIGHLIGHTS
GAAP earnings for the third quarter of 2015 were $0.94 per basic share, compared with third quarter 2014 earnings of $0.79 per basic share. Operating (non-GAAP) earnings*, excluding special items, were $0.98 per basic share for the third quarter of 2015, compared with third quarter 2014 Operating (non-GAAP) earnings of $0.89 per basic share.
Competitive | FirstEnergy | ||||||||||||
EPS Variance Analysis | Regulated | Regulated | Energy | Corporate / | Corp. | ||||||||
(in millions, except per share amounts) | Distribution | Transmission | Services | Other | Consolidated | ||||||||
3Q 2014 Net Income - GAAP | $227 | $55 | $66 | $(15) | $333 | ||||||||
3Q 2014 Basic EPS* (avg. shares outstanding 420M) | $0.54 | $0.13 | $0.16 | $(0.04) | $0.79 | ||||||||
Special Items - 2014 | 0.02 | — | 0.09 | (0.01) | 0.10 | ||||||||
3Q 2014 Basic EPS - Operating (Non-GAAP) Earnings* | $0.56 | $0.13 | $0.25 | $(0.05) | $0.89 | ||||||||
Distribution Deliveries | 0.07 | — | — | — | 0.07 | ||||||||
PA Rate Case | 0.05 | — | — | — | 0.05 | ||||||||
NJ Rate Case | (0.03) | — | — | — | (0.03) | ||||||||
Transmission Revenues | — | 0.08 | — | — | 0.08 | ||||||||
CES Commodity Margin | — | — | 0.15 | — | 0.15 | ||||||||
O&M Expenses | (0.02) | — | (0.05) | (0.02) | (0.09) | ||||||||
Depreciation | (0.02) | (0.01) | — | — | (0.03) | ||||||||
Pension/OPEB | (0.01) | — | (0.01) | — | (0.02) | ||||||||
General Taxes | — | (0.01) | 0.01 | — | — | ||||||||
Interest Expense | — | (0.01) | — | (0.01) | (0.02) | ||||||||
Capitalized Financing Costs | — | (0.01) | — | — | (0.01) | ||||||||
Effective Income Tax Rate | (0.02) | — | (0.01) | (0.04) | (0.07) | ||||||||
Other | 0.01 | — | — | — | 0.01 | ||||||||
3Q 2015 Basic EPS - Operating (Non-GAAP) Earnings* | $0.59 | $0.17 | $0.34 | $(0.12) | $0.98 | ||||||||
Special Items - 2015 | (0.03) | — | (0.01) | — | (0.04) | ||||||||
3Q 2015 Basic EPS* (avg. shares outstanding 423M) | $0.56 | $0.17 | $0.33 | $(0.12) | $0.94 | ||||||||
3Q 2015 Net Income - GAAP | $234 | $70 | $140 | $(49) | $395 | ||||||||
*Per share amounts for the special items and earnings drivers above and throughout this report are based on the after tax effect of each item divided by the weighted average basic shares outstanding for the period. | |||||||||||||
*Operating earnings excludes special items as described below, and is a non-GAAP financial measure. Management uses Operating earnings by segment to evaluate the company’s performance and manage its operations and frequently references this non-GAAP financial measure in its decision making, using it to facilitate historical and ongoing performance comparisons. Additionally, management uses Basic EPS and Basic EPS-Operating, each on a segment basis, to further evaluate the Company's performance by segment and references these non-GAAP financial measures in its decision making. Basic EPS for each segment is calculated by dividing segment net income (loss) on a GAAP basis by the basic weighted average shares outstanding for the period. Basic EPS-Operating for each segment is calculated by dividing segment Operating earnings (losses), which exclude specials items as discussed below, by the basic weighted average shares outstanding for the period. Management believes that the non-GAAP financial measures of “Operating earnings”, "Basic EPS" and "Basic EPS-Operating" by segment provide a consistent and comparable measure of performance of its businesses to help shareholders understand performance trends. Generally, a non-GAAP financial measure is a numerical measure of a company's historical or future financial performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States (GAAP). These non-GAAP financial measures are intended to complement, and are not considered as an alternative to, the most directly comparable GAAP financial measure. Also, the non-GAAP financial measures may not be comparable to similarly titled measures used by other entities. The 2015 and 2014 GAAP to Operating earnings reconciliations can be found on pages 23-34 of this report and all GAAP to Operating earnings reconciliations are available on FirstEnergy Corp.’s Investor Information website at www.firstenergycorp.com/ir. Quarter over quarter earnings drivers, as summarized in this report, are consistent with management's analysis of each segment's historical and ongoing performance comparisons and exclude the impact of special items, as well as other items that do not impact earnings, including but not limited to the cost recovery of regulatory assets.
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 1
Special Items - The following special items were recognized during the third quarter of 2015 and 2014:
Competitive | FirstEnergy | ||||||||||||
Regulated | Regulated | Energy | Corporate / | Corp. | |||||||||
Special Items - 3Q 2015 | Distribution | Transmission | Services | Other | Consolidated | ||||||||
Regulatory charges | $0.01 | $— | $— | $— | $0.01 | ||||||||
Trust securities impairment | 0.01 | — | 0.06 | — | 0.07 | ||||||||
Merger accounting - commodity contracts | — | — | 0.02 | — | 0.02 | ||||||||
Impact of non-core asset sales/impairments | 0.01 | — | 0.01 | — | 0.02 | ||||||||
Retail repositioning charges | — | — | 0.01 | — | 0.01 | ||||||||
Mark-to-market adjustments | — | — | (0.09) | — | (0.09) | ||||||||
Special Items - 2015 | $0.03 | $— | $0.01 | $— | $0.04 | ||||||||
Competitive | FirstEnergy | ||||||||||||
Regulated | Regulated | Energy | Corporate / | Corp. | |||||||||
Special Items - 3Q 2014 | Distribution | Transmission | Services | Other | Consolidated | ||||||||
Regulatory charges | $0.02 | $— | $— | $— | $0.02 | ||||||||
Trust securities impairment | — | — | 0.01 | — | 0.01 | ||||||||
Merger accounting - commodity contracts | — | — | 0.02 | — | 0.02 | ||||||||
Impact of non-core asset sales/impairments | — | — | 0.01 | — | 0.01 | ||||||||
Retail repositioning charges | — | — | 0.02 | — | 0.02 | ||||||||
Mark-to-market adjustments | — | — | 0.03 | — | 0.03 | ||||||||
Litigation resolution | — | — | — | (0.01) | (0.01) | ||||||||
Special Items - 2014 | $0.02 | $— | $0.09 | $(0.01) | $0.10 | ||||||||
2015 Earnings Guidance
Operating (non-GAAP) earnings guidance for 2015, excluding special items, is revised to $2.67-$2.75 per basic share. Earnings guidance for the 2015 individual business segments was adjusted from $1.74-$1.90 per basic share to $1.82-$1.86 per basic share for Regulated Distribution; from $0.63-$0.67 per basic share to $0.70-$0.72 per basic share for Regulated Transmission; from $0.45-$0.55 per basic share to $0.59-$0.61 per basic share for Competitive Energy Services and from ($0.42) per basic share to ($0.44) per basic share for Corporate / Other.
Estimate for Year 2015 | Q4 of 2015 | |||||||||||||
(In millions, except per share amounts) | Regulated Distribution | Regulated Transmission | Competitive Energy Services | Corporate / Other | FirstEnergy Corp. Consolidated | FirstEnergy Corp. Consolidated* | ||||||||
2015F Net Income (Loss) - GAAP | $550 - $650 | $295 - $305 | $65 - $115 | $(185) | $725 - $885 | $(80) - $80 | ||||||||
2015F Basic EPS (avg. shares outstanding 422M) | $1.31 - $1.54 | $0.70 - $0.72 | $0.15 - $0.28 | $(0.44) | $1.72 - $2.10 | ($0.19) - $0.19 | ||||||||
Excluding Special Items: | ||||||||||||||
Regulatory charges | 0.07 | — | — | — | 0.07 | 0.02 | ||||||||
Trust securities impairment | 0.01 | — | 0.10 | — | 0.11 | — | ||||||||
Plant deactivation costs | — | — | 0.04 | — | 0.04 | — | ||||||||
Merger accounting - commodity contracts | — | — | 0.07 | — | 0.07 | 0.02 | ||||||||
Non-core asset sales/impairments | 0.01 | — | 0.04 | — | 0.05 | — | ||||||||
Retail repositioning charges | — | — | 0.04 | — | 0.04 | 0.02 | ||||||||
Mark-to-market adjustments | ||||||||||||||
Pension/OPEB actuarial assumptions1 | 0.23 - 0.42 | — | 0.14 - 0.25 | — | 0.37 - 0.67 | 0.37 - 0.67 | ||||||||
Other | — | — | (0.10) | — | (0.10) | — | ||||||||
Total Special Items | 0.32 - 0.51 | — | 0.33 - 0.44 | — | 0.65 - 0.95 | 0.43 - 0.73 | ||||||||
2015F Basic EPS - Operating (Non-GAAP) (avg. shares outstanding 422M) | $1.82 - $1.86 | $0.70 - $0.72 | $0.59 - $0.61 | $(0.44) | $2.67 - $2.75 | $0.54 - $0.62 | ||||||||
1 Based on current discount rates ranging from 4.25% to 4.50% and actual losses on plan assets through September 30, 2015 of (3.50%). | ||||||||||||||
*Average of 423M shares outstanding for the 4th quarter of 2015 |
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 2
3Q 2015 Results vs 3Q 2014 - By Segment
Regulated Distribution
Regulated Distribution - GAAP earnings for the third quarter of 2015 were $234 million, or $0.56 per basic share, compared with third quarter 2014 earnings of $227 million, or $0.54 per basic share. Operating (non-GAAP) earnings, excluding special items, were $0.59 per basic share for the third quarter of 2015 compared with $0.56 per basic share for the third quarter of 2014. | |||||||
EPS Variance Analysis | |||||||
(In millions, except per share amounts) | |||||||
3Q 2014 Net Income - GAAP | $227 | ||||||
3Q 2014 Basic EPS (avg. shares outstanding 420M) | $0.54 | ||||||
Special Items - 2014 | 0.02 | ||||||
3Q 2014 Basic EPS - Operating (Non-GAAP) Earnings | $0.56 | ||||||
Distribution Deliveries | 0.07 | ||||||
PA Rate Case | 0.05 | ||||||
NJ Rate Case | (0.03) | ||||||
O&M Expenses | (0.02) | ||||||
Depreciation | (0.02) | ||||||
Pension/OPEB | (0.01) | ||||||
Effective Income Tax Rate | (0.02) | ||||||
Other | 0.01 | ||||||
3Q 2015 Basic EPS - Operating (Non-GAAP) Earnings | $0.59 | ||||||
Special Items - 2015 | (0.03) | ||||||
3Q 2015 Basic EPS (avg. shares outstanding 423M) | $0.56 | ||||||
3Q 2015 Net Income - GAAP | $234 | ||||||
3Q 2015 vs 3Q 2014 Earnings Drivers, Excluding Special Items
• | Distribution Deliveries - Total electric distribution deliveries increased 1,048,000 megawatt-hours (MWH), or 2.8%, and increased earnings $0.07 per share. Residential sales increased 1,178,000 MWH or 9.0%, and sales to commercial customers increased 294,000 MWH, or 2.6%. Cooling-degree-days were 36% above the same period last year and 13% above normal. Higher deliveries to both residential and commercial customers were primarily due to increased weather-related usage as described above, and are partially offset by declining average customer usage due in part to the impact of energy efficiency mandates. Deliveries to industrial customers decreased 421,000 MWH, or 3.2%, primarily due to lower usage in the steel, coal mining and electrical equipment and manufacturing sectors, partially offset by increased usage from shale gas and automotive sectors. |
• | Pennsylvania Rate Case - Earnings increased $0.05 per share due to approved base distribution rate increases, net of incremental operating expenses, effective May 3, 2015. |
• | New Jersey Rate Case - Earnings decreased $0.03 per share due to an approved distribution rate decrease, including the recovery of 2011 and 2012 storm costs, effective April 1, 2015. |
• | O&M Expense - Higher O&M expense decreased earnings $0.02 per share, primarily due to increased labor and employee benefit expenses. |
• | Depreciation - Higher depreciation expense reduced earnings $0.02 per share, due to a higher asset base. |
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Consolidated Report to the Financial Community - 3rd Quarter 2015 3
• | Pension/OPEB - Higher pension/OPEB expense reduced earnings $0.01 per share, primarily due to lower amortization of OPEB prior service credits. |
• | Effective Income Tax Rate - A higher effective income tax rate (36.9% in Q3 2015 vs 35.2% in Q3 2014) decreased earnings $0.02 per share. The effective tax rate was 36.9% for the first nine months of 2015 compared to 35.2% for the same period last year. |
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Consolidated Report to the Financial Community - 3rd Quarter 2015 4
Regulated Transmission
Regulated Transmission - GAAP and Operating (non-GAAP) earnings for the third quarter of 2015 were $70 million, or $0.17 per basic share, compared with third quarter 2014 GAAP and Operating (non-GAAP) earnings of $55 million, or $0.13 per basic share. | |||||||
EPS Variance Analysis | |||||||
(In millions, except per share amounts) | |||||||
3Q 2014 Net Income - GAAP | $55 | ||||||
3Q 2014 Basic EPS (avg. shares outstanding 420M) | $0.13 | ||||||
Special Items - 2014 | — | ||||||
3Q 2014 Basic EPS - Operating (Non-GAAP) Earnings | $0.13 | ||||||
Transmission Revenues | 0.08 | ||||||
Depreciation | (0.01) | ||||||
General Taxes | (0.01) | ||||||
Interest Expense | (0.01) | ||||||
Capitalized Financing Costs | (0.01) | ||||||
3Q 2015 Basic EPS - Operating (Non-GAAP) Earnings | $0.17 | ||||||
Special Items - 2015 | — | ||||||
3Q 2015 Basic EPS (avg. shares outstanding 423M) | $0.17 | ||||||
3Q 2015 Net Income - GAAP | $70 | ||||||
• | Transmission Revenues - Higher transmission revenues increased earnings $0.08 per share, primarily due to revenue increases at American Transmission Systems, Incorporated (ATSI), reflecting incremental cost of service and rate base recovery associated with its "forward-looking" rate structure beginning January 2015. |
• | Depreciation and General Taxes - Higher depreciation and general tax expense decreased earnings $0.02 per share, due primarily to a higher asset base at ATSI. These expenses are recovered through ATSI's "forward-looking" rate. |
• | Interest Expense - Higher interest expense decreased earnings $0.01 per share, primarily due to increased long-term debt at ATSI associated with a debt issuance of $400 million in September 2014. |
• | Capitalized Financing Costs - Lower capitalized financing costs decreased earnings $0.01 per share, primarily due to lower construction work in progress. |
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Consolidated Report to the Financial Community - 3rd Quarter 2015 5
Competitive Energy Services
Competitive Energy Services (CES) - GAAP earnings for the third quarter of 2015 were $140 million, or $0.33 per basic share, compared with third quarter 2014 earnings of $66 million, or $0.16 per basic share. Operating (non-GAAP) earnings, excluding special items, for the third quarter of 2015 were $0.34 per basic share, compared with third quarter 2014 Operating (non-GAAP) earnings of $0.25 per basic share. | |||||||
EPS Variance Analysis | |||||||
(In millions, except per share amounts) | |||||||
3Q 2014 Net Income - GAAP | $66 | ||||||
3Q 2014 Basic EPS (avg. shares outstanding 420M) | $0.16 | ||||||
Special Items - 2014 | 0.09 | ||||||
3Q 2014 Basic EPS - Operating (Non-GAAP) Earnings | $0.25 | ||||||
CES Commodity Margin | 0.15 | ||||||
O&M Expenses | (0.05) | ||||||
Pension/OPEB | (0.01) | ||||||
General Taxes | 0.01 | ||||||
Effective Income Tax Rate | (0.01) | ||||||
3Q 2015 Basic EPS - Operating (Non-GAAP) Earnings | $0.34 | ||||||
Special Items - 2015 | (0.01) | ||||||
3Q 2015 Basic EPS (avg. shares outstanding 423M) | $0.33 | ||||||
3Q 2015 Net Income - GAAP | $140 | ||||||
3Q 2015 vs 3Q 2014 Earnings Drivers, Excluding Special Items
CES commodity margin increased earnings $0.15 per share due to a combination of higher capacity revenues, increased wholesale sales and lower purchased power, partially offset by a contract sales decrease of 7.4 million MWH associated with CES' revised retail sales strategy.
A summary by key component of commodity margin is as follows:
Commodity Margin EPS - 3Q15 vs 3Q14 | Rate | Volume | Total | |||||||||||
(a) Contract Sales | ||||||||||||||
- Direct Sales (LCI & MCI) | $ | 0.01 | $ | (0.39 | ) | $ | (0.38 | ) | ||||||
- Governmental Aggregation Sales | 0.03 | (0.07 | ) | (0.04 | ) | |||||||||
- Mass Market Sales | — | (0.07 | ) | (0.07 | ) | |||||||||
- POLR Sales | 0.01 | (0.13 | ) | (0.12 | ) | |||||||||
- Structured Sales | (0.02 | ) | 0.03 | 0.01 | ||||||||||
Subtotal - Contract Sales | $ | 0.03 | $ | (0.63 | ) | $ | (0.60 | ) | ||||||
(b) Wholesale Sales | 0.01 | 0.11 | 0.12 | |||||||||||
(c) PJM Capacity, FRR Auction Revenues | 0.25 | — | 0.25 | |||||||||||
(d) Fuel Expense | 0.02 | 0.04 | 0.06 | |||||||||||
(e) Purchased Power (net of financials) | 0.01 | 0.28 | 0.29 | |||||||||||
(f) Capacity Expense | (0.17 | ) | 0.14 | (0.03 | ) | |||||||||
(g) Net MISO - PJM Transmission Cost | — | 0.06 | 0.06 | |||||||||||
Net Change | $ | 0.15 | $ | — | $ | 0.15 | ||||||||
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 6
(a) | Contract Sales - CES' contract sales decreased 7.4 million MWH, or 31%, and reduced earnings $0.60 per share. Lower contract sales reflect CES' efforts to reposition its sales portfolio to more effectively hedge its generation. Beginning in the second quarter of 2014, CES reduced sales in certain channels to focus on a selective mix of retail and wholesale sales. Direct sales to large and medium commercial / industrial customers decreased 4.9 million MWH, or 47%. Governmental aggregation sales decreased 766,000 MWH, or 15%. Mass market sales decreased 758,000 MWH, or 46% and POLR sales decreased 1.5 million MWH, or 40%. Structured sales, which includes bilateral and muni/co-op sales, increased 434,000 MWH, or 13%. As of September 30, 2015, the total number of retail customers was 1.7 million, a decrease of approximately 600,000 customers since September 30, 2014. |
CES Contract Sales - 3Q15 vs 3Q14 | |||||||||||||||
(thousand MWH) | Retail | Non-Retail | |||||||||||||
Direct | Aggr. | Mass Market | POLR | Structured | Total | ||||||||||
Contract Sales Increase / (Decrease) | (4,856) | (766 | ) | (758) | (1,467) | 434 | (7,413) | ||||||||
(b) Wholesale Sales - Wholesale sales increased by 2.9 million MWH and increased earnings $0.12 per share.
(c) PJM Capacity Revenues (Base Residual (BRA) and Fixed Resource Requirement (FRR) Auctions) - Higher capacity revenues increased earnings $0.25 per share, resulting from higher capacity prices in the RTO and ATSI zones. Capacity prices by zone for the applicable planning periods are summarized below.
Planning Period | RTO | ATSI | MAAC | ||||||
Price Per Megawatt-Day | BRA | BRA | BRA | ||||||
June 2014 - May 2015 | $125.99 | $125.99 | $136.50 | ||||||
June 2015 - May 2016 | $136.00 | $357.00 | $167.46 | ||||||
(d) | Fuel Expense - Lower fuel expenses increased earnings $0.06 per share primarily due to decreased fossil generation output of 1.1 million MWH from economic dispatch of fossil units associated with low spot market energy prices. |
(e) Purchased Power (net of financials) - Lower purchased power volumes of 3.5 million MWH increased earnings $0.29 per share due to lower contract sales, partially offset by lower fossil generation, as discussed above.
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Consolidated Report to the Financial Community - 3rd Quarter 2015 7
(f) Capacity Expense - Higher capacity expense associated with contract sales decreased earnings $0.03 per share primarily due to higher capacity prices in the ATSI and RTO zones, partially offset by lower contract sales.
(g) Net MISO-PJM Transmission Cost - Lower transmission expenses and PJM ancillary charges increased earnings $0.06 per share primarily due to lower contract sales.
• | O&M Expenses - Higher O&M expenses decreased earnings $0.05 per share, primarily due to outage costs associated with the Beaver Valley Unit 2 nuclear refueling outage that began in September 2015 and higher employee benefit expenses. |
• | Pension/OPEB - Higher pension/OPEB expense reduced earnings $0.01 per share, primarily due to lower amortization of OPEB prior service credits. |
• | General Taxes - Lower general taxes increased earnings $0.01 per share as a result of lower retail sales. |
• | Effective Income Tax Rate - A higher effective income tax rate (36.6% in Q3 2015 vs 34.6% in Q3 2014) decreased earnings $0.01 per share. The effective tax rate was 36.5% for the first nine months of 2015 compared to 33.3% for the same period last year. |
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Consolidated Report to the Financial Community - 3rd Quarter 2015 8
Corporate / Other
Corporate / Other - GAAP and Operating (non-GAAP) losses for the third quarter of 2015 were ($49) million, or ($0.12) per basic share, compared with GAAP losses for the third quarter 2014 of ($15) million, or ($0.04) per basic share. Operating (non-GAAP) losses were ($0.05) in the third quarter of 2014. | |||||||
EPS Variance Analysis | |||||||
(In millions, except per share amounts) | |||||||
3Q 2014 Net Loss - GAAP | $(15) | ||||||
3Q 2014 Basic EPS (avg. shares outstanding 420M) | $(0.04) | ||||||
Special Items - 2014 | (0.01) | ||||||
3Q 2014 Basic EPS - Operating (Non-GAAP) Losses | $(0.05) | ||||||
O&M Expenses | (0.02) | ||||||
Interest Expense | (0.01) | ||||||
Effective Income Tax Rate | (0.04) | ||||||
3Q 2015 Basic EPS - Operating (Non-GAAP) Losses | $(0.12) | ||||||
Special Items - 2015 | — | ||||||
3Q 2015 Basic EPS (avg. shares outstanding 423M) | $(0.12) | ||||||
3Q 2015 Net Loss - GAAP | $(49) | ||||||
• | O&M Expense - Higher O&M expense decreased earnings $0.02 per share, primarily due to higher environmental remediation costs at legacy plants. |
• | Interest Expense - Higher interest expense decreased earnings $0.01 per share, due to increased short-term borrowings. |
• | Effective Income Tax Rate - A higher effective income tax rate decreased earnings $0.04 per share, primarily resulting from the absence of tax benefits recognized in 2014 associated with an IRS-approved change in accounting method that increased the tax basis in certain assets resulting in higher future tax deductions. |
For additional information, please contact:
Irene M. Prezelj | Meghan G. Beringer | Rey Y. Jimenez | Gina E. Caskey | |||
Vice President, Investor Relations | Director, Investor Relations | Manager, Investor Relations | Manager, Investor Relations | |||
(330) 384-3859 | (330) 384-5832 | (330) 761-4239 | (330) 384-3841 |
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 9
FirstEnergy Corp.
Consolidated Statements of Income (GAAP)
(In millions)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2015 | 2014 | Change | 2015 | 2014 | Change | ||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||
(1 | ) | Regulated distribution | $ | 2,624 | $ | 2,357 | $ | 267 | $ | 7,425 | $ | 6,972 | $ | 453 | |||||||||||||||
(2 | ) | Regulated transmission | 248 | 197 | 51 | 755 | 570 | 185 | |||||||||||||||||||||
(3 | ) | Competitive energy services | 1,468 | 1,599 | (131 | ) | 4,099 | 4,863 | (764 | ) | |||||||||||||||||||
(4 | ) | Corporate / Other | (217 | ) | (265 | ) | 48 | (794 | ) | (839 | ) | 45 | |||||||||||||||||
(5 | ) | Total Revenues | 4,123 | 3,888 | 235 | 11,485 | 11,566 | (81 | ) | ||||||||||||||||||||
Expenses | |||||||||||||||||||||||||||||
(6 | ) | Fuel | 482 | 544 | (62 | ) | 1,378 | 1,711 | (333 | ) | |||||||||||||||||||
(7 | ) | Purchased power | 1,209 | 1,188 | 21 | 3,311 | 3,726 | (415 | ) | ||||||||||||||||||||
(8 | ) | Other operating expenses | 850 | 858 | (8 | ) | 2,823 | 3,061 | (238 | ) | |||||||||||||||||||
(9 | ) | Provision for depreciation | 328 | 308 | 20 | 969 | 904 | 65 | |||||||||||||||||||||
(10 | ) | Amortization of regulatory assets, net | 110 | 35 | 75 | 201 | 27 | 174 | |||||||||||||||||||||
(11 | ) | General taxes | 236 | 239 | (3 | ) | 747 | 738 | 9 | ||||||||||||||||||||
(12 | ) | Total Expenses | 3,215 | 3,172 | 43 | 9,429 | 10,167 | (738 | ) | ||||||||||||||||||||
(13 | ) | Operating Income | 908 | 716 | 192 | 2,056 | 1,399 | 657 | |||||||||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||||||||
(14 | ) | Loss on debt redemptions | — | — | — | — | (8 | ) | 8 | ||||||||||||||||||||
(15 | ) | Investment income (loss) | (28 | ) | 16 | (44 | ) | (14 | ) | 67 | (81 | ) | |||||||||||||||||
(16 | ) | Interest expense | (285 | ) | (275 | ) | (10 | ) | (846 | ) | (802 | ) | (44 | ) | |||||||||||||||
(17 | ) | Capitalized financing costs | 26 | 28 | (2 | ) | 93 | 89 | 4 | ||||||||||||||||||||
(18 | ) | Total Other Expense | (287 | ) | (231 | ) | (56 | ) | (767 | ) | (654 | ) | (113 | ) | |||||||||||||||
(19 | ) | Income From Continuing Operations Before Income Taxes | 621 | 485 | 136 | 1,289 | 745 | 544 | |||||||||||||||||||||
(20 | ) | Income taxes | 226 | 152 | 74 | 485 | 226 | 259 | |||||||||||||||||||||
(21 | ) | Income From Continuing Operations | 395 | 333 | 62 | 804 | 519 | 285 | |||||||||||||||||||||
(22 | ) | Discontinued operations (net of income taxes) | — | — | — | — | 86 | (86 | ) | ||||||||||||||||||||
(23 | ) | Net Income | $ | 395 | $ | 333 | $ | 62 | $ | 804 | $ | 605 | $ | 199 | |||||||||||||||
(24 | ) | Earnings Per Share of Common Stock | |||||||||||||||||||||||||||
(25 | ) | Basic - Continuing Operations | $ | 0.94 | $ | 0.79 | $ | 0.15 | $ | 1.91 | $ | 1.24 | $ | 0.67 | |||||||||||||||
(26 | ) | Basic - Discontinued Operations | — | — | — | — | 0.20 | (0.20 | ) | ||||||||||||||||||||
(27 | ) | Basic - Net Earnings per Basic Share | $ | 0.94 | $ | 0.79 | $ | 0.15 | $ | 1.91 | $ | 1.44 | $ | 0.47 | |||||||||||||||
(28 | ) | Diluted - Continuing Operations | $ | 0.93 | $ | 0.79 | $ | 0.14 | $ | 1.90 | $ | 1.24 | $ | 0.66 | |||||||||||||||
(29 | ) | Diluted - Discontinued Operations | — | — | — | — | 0.20 | (0.20 | ) | ||||||||||||||||||||
(30 | ) | Diluted - Net Earnings per Diluted Share | $ | 0.93 | $ | 0.79 | $ | 0.14 | $ | 1.90 | $ | 1.44 | $ | 0.46 | |||||||||||||||
(31 | ) | Weighted Average Number of | |||||||||||||||||||||||||||
(32 | ) | Common Shares Outstanding | |||||||||||||||||||||||||||
(33 | ) | Basic | 423 | 420 | 3 | 422 | 419 | 3 | |||||||||||||||||||||
(34 | ) | Diluted | 424 | 421 | 3 | 423 | 420 | 3 | |||||||||||||||||||||
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 10
FirstEnergy Corp.
Statements of Income - By Segment (GAAP)
(In millions)
Three Months Ended September 30, 2015 | |||||||||||||||||||||||
Competitive | |||||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | FirstEnergy | |||||||||||||||||||
Distribution (a) | Transmission (b) | Services (c) | Other (d) | Consolidated | |||||||||||||||||||
Revenues | |||||||||||||||||||||||
(1 | ) | Electric sales | $ | 2,571 | $ | 248 | $ | 1,276 | $ | (41 | ) | $ | 4,054 | ||||||||||
(2 | ) | Other | 53 | — | 51 | (35 | ) | 69 | |||||||||||||||
(3 | ) | Internal | — | — | 141 | (141 | ) | — | |||||||||||||||
(4 | ) | Total Revenues | 2,624 | 248 | 1,468 | (217 | ) | 4,123 | |||||||||||||||
Expenses | |||||||||||||||||||||||
(5 | ) | Fuel | 140 | — | 342 | — | 482 | ||||||||||||||||
(6 | ) | Purchased power | 980 | — | 370 | (141 | ) | 1,209 | |||||||||||||||
(7 | ) | Other operating expenses | 542 | 42 | 336 | (70 | ) | 850 | |||||||||||||||
(8 | ) | Provision for depreciation | 174 | 41 | 98 | 15 | 328 | ||||||||||||||||
(9 | ) | Amortization of regulatory assets, net | 110 | — | — | — | 110 | ||||||||||||||||
(10 | ) | General taxes | 172 | 23 | 35 | 6 | 236 | ||||||||||||||||
(11 | ) | Total Expenses | 2,118 | 106 | 1,181 | (190 | ) | 3,215 | |||||||||||||||
(12 | ) | Operating Income | 506 | 142 | 287 | (27 | ) | 908 | |||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||
(13 | ) | Investment income (loss) | 8 | — | (27 | ) | (9 | ) | (28 | ) | |||||||||||||
(14 | ) | Interest expense | (149 | ) | (40 | ) | (48 | ) | (48 | ) | (285 | ) | |||||||||||
(15 | ) | Capitalized financing costs | 6 | 9 | 9 | 2 | 26 | ||||||||||||||||
(16 | ) | Total Other Expense | (135 | ) | (31 | ) | (66 | ) | (55 | ) | (287 | ) | |||||||||||
(17 | ) | Income Before Income Taxes | 371 | 111 | 221 | (82 | ) | 621 | |||||||||||||||
(18 | ) | Income taxes | 137 | 41 | 81 | (33 | ) | 226 | |||||||||||||||
(19 | ) | Net Income | $ | 234 | $ | 70 | $ | 140 | $ | (49 | ) | $ | 395 | ||||||||||
(a) | Revenues are primarily derived from the delivery of electricity within FirstEnergy Corp.'s (FirstEnergy) service areas, cost recovery of regulatory assets and the sale of electric generation service to retail customers who have not selected an alternative supplier (POLR or default service). Its results reflect the commodity costs of securing electric generation from affiliated and non-affiliated power suppliers and the deferral and amortization of certain fuel costs. | ||||||||||||||||||||||
(b) | Revenues are derived from rates charged to load serving entities and other transmission users that recover costs and provide a return on transmission capital investment owned and operated by certain of FirstEnergy's utilities and transmission companies. Its results reflect the net transmission expenses related to the delivery of the respective generation loads. | ||||||||||||||||||||||
(c) | Revenues are primarily derived from supplying electric power to end-use customers through retail and wholesale arrangements, including competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Maryland, Michigan and New Jersey, and the provision of partial POLR and default service for affiliated and non-affiliated utilities in Ohio, Pennsylvania and Maryland. | ||||||||||||||||||||||
(d) | Contains corporate support and other businesses that are below the quantifiable threshold for separate disclosure as a reportable segment and interest expense on stand-alone holding company debt and corporate income taxes. Additionally, reconciling adjustments for the elimination of inter-segment transactions are included in Corporate/Other. | ||||||||||||||||||||||
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 11
FirstEnergy Corp.
Statements of Income - By Segment (GAAP)
(In millions)
Three Months Ended September 30, 2014 | ||||||||||||||||||||||||
Competitive | ||||||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | FirstEnergy | ||||||||||||||||||||
Distribution (a) | Transmission (b) | Services (c) | Other (d) | Consolidated | ||||||||||||||||||||
Revenues | ||||||||||||||||||||||||
(1 | ) | Electric sales | $ | 2,304 | $ | 197 | $ | 1,361 | $ | (38 | ) | $ | 3,824 | |||||||||||
(2 | ) | Other | 53 | — | 45 | (34 | ) | 64 | ||||||||||||||||
(3 | ) | Internal | — | — | 193 | (193 | ) | — | ||||||||||||||||
(4 | ) | Total Revenues | 2,357 | 197 | 1,599 | (265 | ) | 3,888 | ||||||||||||||||
Expenses | ||||||||||||||||||||||||
(5 | ) | Fuel | 159 | — | 385 | — | 544 | |||||||||||||||||
(6 | ) | Purchased power | 873 | — | 508 | (193 | ) | 1,188 | ||||||||||||||||
(7 | ) | Other operating expenses | 473 | 38 | 432 | (85 | ) | 858 | ||||||||||||||||
(8 | ) | Provision for depreciation | 165 | 33 | 100 | 10 | 308 | |||||||||||||||||
(9 | ) | Amortization of regulatory assets, net | 33 | 3 | — | (1 | ) | 35 | ||||||||||||||||
(10 | ) | General taxes | 175 | 17 | 40 | 7 | 239 | |||||||||||||||||
(11 | ) | Total Expenses | 1,878 | 91 | 1,465 | (262 | ) | 3,172 | ||||||||||||||||
(12 | ) | Operating Income | 479 | 106 | 134 | (3 | ) | 716 | ||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||
(13 | ) | Investment income (loss) | 14 | — | 11 | (9 | ) | 16 | ||||||||||||||||
(14 | ) | Interest expense | (147 | ) | (35 | ) | (49 | ) | (44 | ) | (275 | ) | ||||||||||||
(15 | ) | Capitalized financing costs | 5 | 14 | 6 | 3 | 28 | |||||||||||||||||
(16 | ) | Total Other Expense | (128 | ) | (21 | ) | (32 | ) | (50 | ) | (231 | ) | ||||||||||||
(17 | ) | Income Before Income Taxes | 351 | 85 | 102 | (53 | ) | 485 | ||||||||||||||||
(18 | ) | Income taxes | 124 | 30 | 36 | (38 | ) | 152 | ||||||||||||||||
(19 | ) | Net Income | $ | 227 | $ | 55 | $ | 66 | $ | (15 | ) | $ | 333 | |||||||||||
(a) | Revenues are primarily derived from the delivery of electricity within FirstEnergy's service areas, cost recovery of regulatory assets and the sale of electric generation service to retail customers who have not selected an alternative supplier (POLR or default service). Its results reflect the commodity costs of securing electric generation from affiliated and non-affiliated power suppliers and the deferral and amortization of certain fuel costs. | |||||||||||||||||||||||
(b) | Revenues are derived from rates charged to load serving entities and other transmission users that recover costs and provide a return on transmission capital investment owned and operated by certain of FirstEnergy's utilities and transmission companies. Its results reflect the net transmission expenses related to the delivery of the respective generation loads. | |||||||||||||||||||||||
(c) | Revenues are primarily derived from supplying electric power to end-use customers through retail and wholesale arrangements, including competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Maryland, Michigan and New Jersey, and the provision of partial POLR and default service for affiliated and non-affiliated utilities in Ohio, Pennsylvania and Maryland. | |||||||||||||||||||||||
(d) | Contains corporate support and other businesses that are below the quantifiable threshold for separate disclosure as a reportable segment and interest expense on stand-alone holding company debt and corporate income taxes. Additionally, reconciling adjustments for the elimination of inter-segment transactions are included in Corporate/Other. | |||||||||||||||||||||||
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 12
FirstEnergy Corp.
Statements of Income - By Segment (GAAP)
(In millions)
Changes Between the Three Months Ended September 30, 2015 and the Three Months Ended September 30, 2014 Increase (Decrease) | ||||||||||||||||||||||||
Competitive | ||||||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | FirstEnergy | ||||||||||||||||||||
Distribution (a) | Transmission (b) | Services (c) | Other (d) | Consolidated | ||||||||||||||||||||
Revenues | ||||||||||||||||||||||||
(1 | ) | Electric sales | $ | 267 | $ | 51 | $ | (85 | ) | $ | (3 | ) | $ | 230 | ||||||||||
(2 | ) | Other | — | — | 6 | (1 | ) | 5 | ||||||||||||||||
(3 | ) | Internal revenues | — | — | (52 | ) | 52 | — | ||||||||||||||||
(4 | ) | Total Revenues | 267 | 51 | (131 | ) | 48 | 235 | ||||||||||||||||
Expenses | ||||||||||||||||||||||||
(5 | ) | Fuel | (19 | ) | — | (43 | ) | — | (62 | ) | ||||||||||||||
(6 | ) | Purchased power | 107 | — | (138 | ) | 52 | 21 | ||||||||||||||||
(7 | ) | Other operating expenses | 69 | 4 | (96 | ) | 15 | (8 | ) | |||||||||||||||
(8 | ) | Provision for depreciation | 9 | 8 | (2 | ) | 5 | 20 | ||||||||||||||||
(9 | ) | Amortization of regulatory assets, net | 77 | (3 | ) | — | 1 | 75 | ||||||||||||||||
(10 | ) | General taxes | (3 | ) | 6 | (5 | ) | (1 | ) | (3 | ) | |||||||||||||
(11 | ) | Total Expenses | 240 | 15 | (284 | ) | 72 | 43 | ||||||||||||||||
(12 | ) | Operating Income | 27 | 36 | 153 | (24 | ) | 192 | ||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||
(13 | ) | Investment income (loss) | (6 | ) | — | (38 | ) | — | (44 | ) | ||||||||||||||
(14 | ) | Interest expense | (2 | ) | (5 | ) | 1 | (4 | ) | (10 | ) | |||||||||||||
(15 | ) | Capitalized financing costs | 1 | (5 | ) | 3 | (1 | ) | (2 | ) | ||||||||||||||
(16 | ) | Total Other Expense | (7 | ) | (10 | ) | (34 | ) | (5 | ) | (56 | ) | ||||||||||||
(17 | ) | Income Before Income Taxes | 20 | 26 | 119 | (29 | ) | 136 | ||||||||||||||||
(18 | ) | Income taxes | 13 | 11 | 45 | 5 | 74 | |||||||||||||||||
(19 | ) | Net Income | $ | 7 | $ | 15 | $ | 74 | $ | (34 | ) | $ | 62 | |||||||||||
(a) | Revenues are primarily derived from the delivery of electricity within FirstEnergy's service areas, cost recovery of regulatory assets and the sale of electric generation service to retail customers who have not selected an alternative supplier (POLR or default service). Its results reflect the commodity costs of securing electric generation from affiliated and non-affiliated power suppliers and the deferral and amortization of certain fuel costs. | |||||||||||||||||||||||
(b) | Revenues are derived from rates charged to load serving entities and other transmission users that recover costs and provide a return on transmission capital investment owned and operated by certain of FirstEnergy's utilities and transmission companies. Its results reflect the net transmission expenses related to the delivery of the respective generation loads. | |||||||||||||||||||||||
(c) | Revenues are primarily derived from supplying electric power to end-use customers through retail and wholesale arrangements, including competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Maryland, Michigan and New Jersey, and the provision of partial POLR and default service for affiliated and non-affiliated utilities in Ohio, Pennsylvania and Maryland. | |||||||||||||||||||||||
(d) | Contains corporate support and other businesses that are below the quantifiable threshold for separate disclosure as a reportable segment and interest expense on stand-alone holding company debt and corporate income taxes. Additionally, reconciling adjustments for the elimination of inter-segment transactions are included in Corporate/Other. | |||||||||||||||||||||||
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 13
FirstEnergy Corp.
Statements of Income (Loss) - By Segment (GAAP)
(In millions)
Nine Months Ended September 30, 2015 | |||||||||||||||||||||||
Competitive | |||||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | FirstEnergy | |||||||||||||||||||
Distribution (a) | Transmission (b) | Services (c) | Other (d) | Consolidated | |||||||||||||||||||
Revenues | |||||||||||||||||||||||
(1 | ) | Electric sales | $ | 7,277 | $ | 755 | $ | 3,381 | $ | (129 | ) | $ | 11,284 | ||||||||||
(2 | ) | Other | 148 | — | 155 | (102 | ) | 201 | |||||||||||||||
(3 | ) | Internal | — | — | 563 | (563 | ) | — | |||||||||||||||
(4 | ) | Total Revenues | 7,425 | 755 | 4,099 | (794 | ) | 11,485 | |||||||||||||||
Expenses | |||||||||||||||||||||||
(5 | ) | Fuel | 406 | — | 972 | — | 1,378 | ||||||||||||||||
(6 | ) | Purchased power | 2,761 | — | 1,113 | (563 | ) | 3,311 | |||||||||||||||
(7 | ) | Other operating expenses | 1,677 | 112 | 1,282 | (248 | ) | 2,823 | |||||||||||||||
(8 | ) | Provision for depreciation | 516 | 116 | 293 | 44 | 969 | ||||||||||||||||
(9 | ) | Amortization of regulatory assets, net | 196 | 5 | — | — | 201 | ||||||||||||||||
(10 | ) | General taxes | 536 | 73 | 112 | 26 | 747 | ||||||||||||||||
(11 | ) | Total Expenses | 6,092 | 306 | 3,772 | (741 | ) | 9,429 | |||||||||||||||
(12 | ) | Operating Income (Loss) | 1,333 | 449 | 327 | (53 | ) | 2,056 | |||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||
(13 | ) | Loss on debt redemptions | — | — | — | — | — | ||||||||||||||||
(14 | ) | Investment income (loss) | 33 | — | (23 | ) | (24 | ) | (14 | ) | |||||||||||||
(15 | ) | Interest expense | (439 | ) | (119 | ) | (144 | ) | (144 | ) | (846 | ) | |||||||||||
(16 | ) | Capitalized financing costs | 21 | 36 | 29 | 7 | 93 | ||||||||||||||||
(17 | ) | Total Other Expense | (385 | ) | (83 | ) | (138 | ) | (161 | ) | (767 | ) | |||||||||||
(18 | ) | Income (Loss) From Continuing Operations Before Income Taxes (Benefits) | 948 | 366 | 189 | (214 | ) | 1,289 | |||||||||||||||
(19 | ) | Income taxes (benefits) | 350 | 135 | 70 | (70 | ) | 485 | |||||||||||||||
(20 | ) | Income (Loss) From Continuing Operations | 598 | 231 | 119 | (144 | ) | 804 | |||||||||||||||
(21 | ) | Discontinued operations (net of income taxes) | — | — | — | — | — | ||||||||||||||||
(22 | ) | Net Income (Loss) | $ | 598 | $ | 231 | $ | 119 | $ | (144 | ) | $ | 804 | ||||||||||
(a) | Revenues are primarily derived from the delivery of electricity within FirstEnergy's service areas, cost recovery of regulatory assets and the sale of electric generation service to retail customers who have not selected an alternative supplier (POLR or default service). Its results reflect the commodity costs of securing electric generation from affiliated and non-affiliated power suppliers and the deferral and amortization of certain fuel costs. | ||||||||||||||||||||||
(b) | Revenues are derived from rates charged to load serving entities and other transmission users that recover costs and provide a return on transmission capital investment owned and operated by certain of FirstEnergy's utilities and transmission companies. Its results reflect the net transmission expenses related to the delivery of the respective generation loads. | ||||||||||||||||||||||
(c) | Revenues are primarily derived from supplying electric power to end-use customers through retail and wholesale arrangements, including competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Maryland, Michigan and New Jersey, and the provision of partial POLR and default service for affiliated and non-affiliated utilities in Ohio, Pennsylvania and Maryland. | ||||||||||||||||||||||
(d) | Contains corporate support and other businesses that are below the quantifiable threshold for separate disclosure as a reportable segment and interest expense on stand-alone holding company debt and corporate income taxes. Additionally, reconciling adjustments for the elimination of inter-segment transactions are included in Corporate/Other. | ||||||||||||||||||||||
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 14
FirstEnergy Corp.
Statements of Income (Loss) - By Segment (GAAP)
(In millions)
Nine Months Ended September 30, 2014 | ||||||||||||||||||||||||
Competitive | ||||||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | FirstEnergy | ||||||||||||||||||||
Distribution (a) | Transmission (b) | Services (c) | Other (d) | Consolidated | ||||||||||||||||||||
Revenues | ||||||||||||||||||||||||
(1 | ) | Electric sales | $ | 6,822 | $ | 570 | $ | 4,099 | $ | (145 | ) | $ | 11,346 | |||||||||||
(2 | ) | Other | 150 | — | 140 | (70 | ) | 220 | ||||||||||||||||
(3 | ) | Internal | — | — | 624 | (624 | ) | — | ||||||||||||||||
(4 | ) | Total Revenues | 6,972 | 570 | 4,863 | (839 | ) | 11,566 | ||||||||||||||||
Expenses | ||||||||||||||||||||||||
(5 | ) | Fuel | 441 | — | 1,270 | — | 1,711 | |||||||||||||||||
(6 | ) | Purchased power | 2,600 | — | 1,750 | (624 | ) | 3,726 | ||||||||||||||||
(7 | ) | Other operating expenses | 1,580 | 103 | 1,625 | (247 | ) | 3,061 | ||||||||||||||||
(8 | ) | Provision for depreciation | 491 | 93 | 287 | 33 | 904 | |||||||||||||||||
(9 | ) | Amortization of regulatory assets, net | 18 | 9 | — | — | 27 | |||||||||||||||||
(10 | ) | General taxes | 528 | 52 | 133 | 25 | 738 | |||||||||||||||||
(11 | ) | Total Expenses | 5,658 | 257 | 5,065 | (813 | ) | 10,167 | ||||||||||||||||
(12 | ) | Operating Income (Loss) | 1,314 | 313 | (202 | ) | (26 | ) | 1,399 | |||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||
(13 | ) | Loss on debt redemption | — | — | (8 | ) | — | (8 | ) | |||||||||||||||
(14 | ) | Investment income (loss) | 44 | — | 46 | (23 | ) | 67 | ||||||||||||||||
(15 | ) | Interest expense | (445 | ) | (90 | ) | (143 | ) | (124 | ) | (802 | ) | ||||||||||||
(16 | ) | Capitalized financing costs | 12 | 38 | 28 | 11 | 89 | |||||||||||||||||
(17 | ) | Total Other Expense | (389 | ) | (52 | ) | (77 | ) | (136 | ) | (654 | ) | ||||||||||||
(18 | ) | Income (Loss) From Continuing Operations Before Income Taxes (Benefits) | 925 | 261 | (279 | ) | (162 | ) | 745 | |||||||||||||||
(19 | ) | Income taxes (benefits) | 326 | 92 | (102 | ) | (90 | ) | 226 | |||||||||||||||
(20 | ) | Income (Loss) From Continuing Operations | 599 | 169 | (177 | ) | (72 | ) | 519 | |||||||||||||||
(21 | ) | Discontinued operations (net of income taxes) | — | — | 86 | — | 86 | |||||||||||||||||
(22 | ) | Net Income (Loss) | $ | 599 | $ | 169 | $ | (91 | ) | $ | (72 | ) | $ | 605 | ||||||||||
(a) | Revenues are primarily derived from the delivery of electricity within FirstEnergy's service areas, cost recovery of regulatory assets and the sale of electric generation service to retail customers who have not selected an alternative supplier (POLR or default service). Its results reflect the commodity costs of securing electric generation from affiliated and non-affiliated power suppliers and the deferral and amortization of certain fuel costs. | |||||||||||||||||||||||
(b) | Revenues are derived from rates charged to load serving entities and other transmission users that recover costs and provide a return on transmission capital investment owned and operated by certain of FirstEnergy's utilities and transmission companies. Its results reflect the net transmission expenses related to the delivery of the respective generation loads. | |||||||||||||||||||||||
(c) | Revenues are primarily derived from supplying electric power to end-use customers through retail and wholesale arrangements, including competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Maryland, Michigan and New Jersey, and the provision of partial POLR and default service for affiliated and non-affiliated utilities in Ohio, Pennsylvania and Maryland. | |||||||||||||||||||||||
(d) | Contains corporate support and other businesses that are below the quantifiable threshold for separate disclosure as a reportable segment and interest expense on stand-alone holding company debt and corporate income taxes. Additionally, reconciling adjustments for the elimination of inter-segment transactions are included in Corporate/Other. | |||||||||||||||||||||||
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 15
FirstEnergy Corp.
Statements of Income (Loss) - By Segment (GAAP)
(In millions)
Changes Between the First Nine Months of 2015 and the First Nine Months of 2014 Increase (Decrease) | ||||||||||||||||||||||||
Competitive | ||||||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | FirstEnergy | ||||||||||||||||||||
Distribution (a) | Transmission (b) | Services (c) | Other (d) | Consolidated | ||||||||||||||||||||
Revenues | ||||||||||||||||||||||||
(1 | ) | Electric sales | $ | 455 | $ | 185 | $ | (718 | ) | $ | 16 | $ | (62 | ) | ||||||||||
(2 | ) | Other | (2 | ) | — | 15 | (32 | ) | (19 | ) | ||||||||||||||
(3 | ) | Internal revenues | — | — | (61 | ) | 61 | — | ||||||||||||||||
(4 | ) | Total Revenues | 453 | 185 | (764 | ) | 45 | (81 | ) | |||||||||||||||
Expenses | ||||||||||||||||||||||||
(5 | ) | Fuel | (35 | ) | — | (298 | ) | — | (333 | ) | ||||||||||||||
(6 | ) | Purchased power | 161 | — | (637 | ) | 61 | (415 | ) | |||||||||||||||
(7 | ) | Other operating expenses | 97 | 9 | (343 | ) | (1 | ) | (238 | ) | ||||||||||||||
(8 | ) | Provision for depreciation | 25 | 23 | 6 | 11 | 65 | |||||||||||||||||
(9 | ) | Amortization of regulatory assets, net | 178 | (4 | ) | — | — | 174 | ||||||||||||||||
(10 | ) | General taxes | 8 | 21 | (21 | ) | 1 | 9 | ||||||||||||||||
(11 | ) | Total Expenses | 434 | 49 | (1,293 | ) | 72 | (738 | ) | |||||||||||||||
(12 | ) | Operating Income (Loss) | 19 | 136 | 529 | (27 | ) | 657 | ||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||
(13 | ) | Loss on debt redemptions | — | — | 8 | — | 8 | |||||||||||||||||
(14 | ) | Investment income (loss) | (11 | ) | — | (69 | ) | (1 | ) | (81 | ) | |||||||||||||
(15 | ) | Interest expense | 6 | (29 | ) | (1 | ) | (20 | ) | (44 | ) | |||||||||||||
(16 | ) | Capitalized financing costs | 9 | (2 | ) | 1 | (4 | ) | 4 | |||||||||||||||
(17 | ) | Total Other Expense | 4 | (31 | ) | (61 | ) | (25 | ) | (113 | ) | |||||||||||||
(18 | ) | Income (Loss) From Continuing Operations Before Income Taxes (Benefits) | 23 | 105 | 468 | (52 | ) | 544 | ||||||||||||||||
(19 | ) | Income taxes (benefits) | 24 | 43 | 172 | 20 | 259 | |||||||||||||||||
(20 | ) | Income (Loss) From Continuing Operations | (1 | ) | 62 | 296 | (72 | ) | 285 | |||||||||||||||
(21 | ) | Discontinued operations (net of income taxes) | — | — | (86 | ) | — | (86 | ) | |||||||||||||||
(22 | ) | Net Income (Loss) | $ | (1 | ) | $ | 62 | $ | 210 | $ | (72 | ) | $ | 199 | ||||||||||
(a) | Revenues are primarily derived from the delivery of electricity within FirstEnergy's service areas, cost recovery of regulatory assets and the sale of electric generation service to retail customers who have not selected an alternative supplier (POLR or default service). Its results reflect the commodity costs of securing electric generation from affiliated and non-affiliated power suppliers and the deferral and amortization of certain fuel costs. | |||||||||||||||||||||||
(b) | Revenues are derived from rates charged to load serving entities and other transmission users that recover costs and provide a return on transmission capital investment owned and operated by certain of FirstEnergy's utilities and transmission companies. Its results reflect the net transmission expenses related to the delivery of the respective generation loads. | |||||||||||||||||||||||
(c) | Revenues are primarily derived from supplying electric power to end-use customers through retail and wholesale arrangements, including competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Maryland, Michigan and New Jersey, and the provision of partial POLR and default service for affiliated and non-affiliated utilities in Ohio, Pennsylvania and Maryland. | |||||||||||||||||||||||
(d) | Contains corporate support and other businesses that are below the quantifiable threshold for separate disclosure as a reportable segment and interest expense on stand-alone holding company debt and corporate income taxes. Additionally, reconciling adjustments for the elimination of inter-segment transactions are included in Corporate/Other. | |||||||||||||||||||||||
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 16
FirstEnergy Corp.
Financial Information
(In millions)
Condensed Consolidated Balance Sheets (GAAP) | |||||||||||
As of | As of | ||||||||||
Assets | Sep. 30, 2015 | Dec. 31, 2014 | |||||||||
Current Assets: | |||||||||||
Cash and cash equivalents | $ | 86 | $ | 85 | |||||||
Receivables | 1,772 | 1,779 | |||||||||
Other | 1,975 | 2,012 | |||||||||
Total Current Assets | 3,833 | 3,876 | |||||||||
Property, Plant and Equipment | 36,610 | 35,783 | |||||||||
Investments | 3,154 | 3,222 | |||||||||
Deferred Charges and Other Assets | 9,066 | 9,285 | |||||||||
Total Assets | $ | 52,663 | $ | 52,166 | |||||||
Liabilities and Capitalization | |||||||||||
Current Liabilities: | |||||||||||
Currently payable long-term debt | $ | 1,148 | $ | 804 | |||||||
Short-term borrowings | 1,933 | 1,799 | |||||||||
Accounts payable | 994 | 1,279 | |||||||||
Other | 1,801 | 1,679 | |||||||||
Total Current Liabilities | 5,876 | 5,561 | |||||||||
Capitalization: | |||||||||||
Total equity | 12,628 | 12,422 | |||||||||
Long-term debt and other long-term obligations | 19,093 | 19,176 | |||||||||
Total Capitalization | 31,721 | 31,598 | |||||||||
Noncurrent Liabilities | 15,066 | 15,007 | |||||||||
Total Liabilities and Capitalization | $ | 52,663 | $ | 52,166 | |||||||
General Information | ||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||
Debt redemptions | $ | (489 | ) | $ | (137 | ) | $ | (781 | ) | $ | (1,062 | ) | ||||||
New long-term debt issues | $ | 884 | $ | 641 | $ | 1,084 | $ | 3,778 | ||||||||||
Short-term borrowings increase (decrease) | $ | (975 | ) | $ | (702 | ) | $ | 134 | $ | (1,783 | ) | |||||||
Property additions | $ | 539 | $ | 664 | $ | 2,025 | $ | 2,473 | ||||||||||
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 17
FirstEnergy Corp.
Financial Information
(In millions)
Debt to Total Capitalization Ratio as Defined Under the FE Credit Facilities | ||||||||||||||||
As of September 30, | As of December 31, | |||||||||||||||
2015 | % Total | 2014 | % Total | |||||||||||||
Total Equity (GAAP) | $ | 12,628 | 35 | % | $ | 12,422 | 36 | % | ||||||||
Non-cash Charges / Non-cash Write Downs* | 1,930 | 5 | % | 1,935 | 5 | % | ||||||||||
Accumulated Other Comprehensive Income | (177 | ) | — | % | (246 | ) | (1 | )% | ||||||||
Adjusted Equity (Non-GAAP)** | 14,381 | 40 | % | 14,111 | 40 | % | ||||||||||
Long-term Debt and Other Long-term Obligations (GAAP) | 19,093 | 53 | % | 19,176 | 55 | % | ||||||||||
Currently Payable Long-term Debt (GAAP) | 1,148 | 3 | % | 804 | 2 | % | ||||||||||
Short-term Borrowings (GAAP) | 1,933 | 5 | % | 1,799 | 5 | % | ||||||||||
Reimbursement Obligations | 54 | — | % | 54 | — | % | ||||||||||
Guarantees of Indebtedness | 328 | 1 | % | 487 | 1 | % | ||||||||||
Less Securitization Debt | (931 | ) | (2 | )% | (1,005 | ) | (3 | )% | ||||||||
Adjusted Debt (Non-GAAP)** | 21,625 | 60 | % | 21,315 | 60 | % | ||||||||||
Adjusted Capitalization (Non-GAAP)** | $ | 36,006 | 100 | % | $ | 35,426 | 100 | % | ||||||||
*Includes after-tax non-cash charges and non-cash write downs, primarily associated with pensions and OPEB mark-to-market adjustments, impairment of long-lived assets and regulatory asset charges through September 30, 2015, as required by the FE Credit Facilities, as amended. | ||||||||||||||||
**Management uses Adjusted Equity, Adjusted Debt, and Adjusted Capitalization, each of which is a non-GAAP financial measure, to calculate and monitor its compliance with the debt to total capitalization financial covenant under the FE Credit Facilities. These financial measures, as calculated in accordance with the FE Credit Facilities, help shareholders understand FirstEnergy's compliance with, and provide a basis for understanding FirstEnergy's incremental debt capacity under the debt to total capitalization financial covenant. The financial covenant under the FE Credit Facilities require FirstEnergy to maintain a consolidated debt to total capitalization ratio of no more than 65%, measured at the end of each fiscal quarter. | ||||||||||||||||
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 18
FirstEnergy Corp.
Statements of Cash Flows and Liquidity
(In millions)
Condensed Consolidated Statements of Cash Flows (GAAP) | ||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||
September 30, | September 30, | |||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||
Cash flows from operating activities | ||||||||||||||||||
Net income | $ | 395 | $ | 333 | $ | 804 | $ | 605 | ||||||||||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||||||||||||
Depreciation and amortization (1) | 514 | 428 | 1,383 | 1,181 | ||||||||||||||
Deferred purchased power and other costs | (28 | ) | (42 | ) | (73 | ) | (89 | ) | ||||||||||
Deferred income taxes and investment tax credits, net | 209 | 168 | 428 | 327 | ||||||||||||||
Impairments of long-lived assets | 15 | — | 31 | — | ||||||||||||||
Investment impairments | 46 | 7 | 70 | 10 | ||||||||||||||
Deferred costs on sale leaseback transaction, net | 13 | 13 | 37 | 37 | ||||||||||||||
Retirement benefits | (2 | ) | (18 | ) | (18 | ) | (60 | ) | ||||||||||
Pension trust contributions | — | — | (143 | ) | — | |||||||||||||
Commodity derivative transactions, net | (57 | ) | 20 | (64 | ) | 60 | ||||||||||||
Loss on debt redemptions | — | — | — | 8 | ||||||||||||||
Lease payments on sale and leaseback transaction | — | — | (102 | ) | (100 | ) | ||||||||||||
Income from discontinued operations | — | — | — | (86 | ) | |||||||||||||
Changes in working capital and other | 222 | 206 | (36 | ) | (156 | ) | ||||||||||||
Cash flows provided from operating activities | 1,327 | 1,115 | 2,317 | 1,737 | ||||||||||||||
Cash flows provided from (used for) financing activities | (741 | ) | (361 | ) | (29 | ) | 444 | |||||||||||
Cash flows used for investing activities | (594 | ) | (721 | ) | (2,287 | ) | (2,290 | ) | ||||||||||
Net change in cash and cash equivalents | $ | (8 | ) | $ | 33 | $ | 1 | $ | (109 | ) | ||||||||
(1) Includes Amortization of Regulatory Assets, net, nuclear fuel, customer intangibles, debt related costs, deferred advertising costs and other assets. | ||||||||||||||||||
Liquidity position as of September 30, 2015 | ||||||||||
Company | Type | Maturity | Amount | Available | ||||||
FirstEnergy(1) | Revolving | March 2019 | $3,500 | $1,619 | ||||||
FirstEnergy Solutions Corp. (FES) / Allegheny Energy Supply Company, LLC (AE Supply) | Revolving | March 2019 | 1,500 | 1,452 | ||||||
FET(2) | Revolving | March 2019 | 1,000 | 950 | ||||||
(1) FirstEnergy Corp. and FEU subsidiary borrowers | Subtotal: | $6,000 | $4,021 | |||||||
(2) Includes FET, ATSI, and TrAILCo | Cash: | — | 59 | |||||||
Total: | $6,000 | $4,080 | ||||||||
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 19
FirstEnergy Corp.
Statistical Summary
Electric Distribution Deliveries | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
(MWH in thousand) | 2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||||||
Ohio | - Residential | 4,567 | 4,238 | 7.8 | % | 13,404 | 13,242 | 1.2 | % | ||||||||||||
- Commercial | 4,021 | 3,970 | 1.3 | % | 11,626 | 11,596 | 0.3 | % | |||||||||||||
- Industrial | 5,246 | 5,498 | -4.6 | % | 15,614 | 16,001 | -2.4 | % | |||||||||||||
- Other | 83 | 84 | -1.2 | % | 251 | 250 | 0.4 | % | |||||||||||||
Total Ohio | 13,917 | 13,790 | 0.9 | % | 40,895 | 41,089 | -0.5 | % | |||||||||||||
Pennsylvania | - Residential | 4,600 | 4,226 | 8.8 | % | 14,662 | 14,273 | 2.7 | % | ||||||||||||
- Commercial | 3,397 | 3,314 | 2.5 | % | 9,895 | 9,640 | 2.6 | % | |||||||||||||
- Industrial | 5,024 | 5,218 | -3.7 | % | 15,222 | 15,580 | -2.3 | % | |||||||||||||
- Other | 30 | 32 | -6.3 | % | 90 | 91 | -1.1 | % | |||||||||||||
Total Pennsylvania | 13,051 | 12,790 | 2.0 | % | 39,869 | 39,584 | 0.7 | % | |||||||||||||
New Jersey | - Residential | 3,111 | 2,781 | 11.9 | % | 7,743 | 7,282 | 6.3 | % | ||||||||||||
- Commercial | 2,530 | 2,419 | 4.6 | % | 7,036 | 6,882 | 2.2 | % | |||||||||||||
- Industrial | 570 | 578 | -1.4 | % | 1,683 | 1,741 | -3.3 | % | |||||||||||||
- Other | 22 | 22 | 0.0 | % | 64 | 65 | -1.5 | % | |||||||||||||
Total New Jersey | 6,233 | 5,800 | 7.5 | % | 16,526 | 15,970 | 3.5 | % | |||||||||||||
Maryland | - Residential | 766 | 710 | 7.9 | % | 2,597 | 2,523 | 2.9 | % | ||||||||||||
- Commercial | 545 | 521 | 4.6 | % | 1,615 | 1,572 | 2.7 | % | |||||||||||||
- Industrial | 421 | 421 | 0.0 | % | 1,220 | 1,186 | 2.9 | % | |||||||||||||
- Other | 4 | 4 | 0.0 | % | 12 | 12 | 0.0 | % | |||||||||||||
Total Maryland | 1,736 | 1,656 | 4.8 | % | 5,444 | 5,293 | 2.9 | % | |||||||||||||
West Virginia | - Residential | 1,261 | 1,172 | 7.6 | % | 4,300 | 4,296 | 0.1 | % | ||||||||||||
- Commercial | 970 | 945 | 2.6 | % | 2,834 | 2,799 | 1.3 | % | |||||||||||||
- Industrial | 1,460 | 1,427 | 2.3 | % | 4,410 | 4,159 | 6.0 | % | |||||||||||||
- Other | 7 | 7 | 0.0 | % | 21 | 21 | 0.0 | % | |||||||||||||
Total West Virginia | 3,698 | 3,551 | 4.1 | % | 11,565 | 11,275 | 2.6 | % | |||||||||||||
Total Residential | 14,305 | 13,127 | 9.0 | % | 42,706 | 41,616 | 2.6 | % | |||||||||||||
Total Commercial | 11,463 | 11,169 | 2.6 | % | 33,006 | 32,489 | 1.6 | % | |||||||||||||
Total Industrial | 12,721 | 13,142 | -3.2 | % | 38,149 | 38,667 | -1.3 | % | |||||||||||||
Total Other | 146 | 149 | -2.0 | % | 438 | 439 | -0.2 | % | |||||||||||||
Total Distribution Deliveries | 38,635 | 37,587 | 2.8 | % | 114,299 | 113,211 | 1.0 | % | |||||||||||||
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 20
FirstEnergy Corp.
Statistical Summary
Weather | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2015 | 2014 | Normal | 2015 | 2014 | Normal | ||||||||||
Composite Heating-Degree-Days | 28 | 84 | 79 | 3,878 | 3,941 | 3,460 | |||||||||
Composite Cooling-Degree-Days | 745 | 546 | 657 | 1,083 | 815 | 919 | |||||||||
Shopping Statistics (Based on MWH) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||
2015 | 2014 | 2015 | 2014 | |||||||
OE | 80% | 80% | 79% | 80% | ||||||
Penn | 62% | 65% | 60% | 67% | ||||||
CEI | 84% | 84% | 83% | 85% | ||||||
TE | 76% | 78% | 75% | 77% | ||||||
JCP&L | 47% | 49% | 49% | 52% | ||||||
Met-Ed | 67% | 70% | 66% | 69% | ||||||
Penelec | 71% | 72% | 70% | 71% | ||||||
PE(1) | 50% | 50% | 48% | 47% | ||||||
WP | 62% | 65% | 61% | 64% | ||||||
(1) Represents Maryland only. | ||||||||||
Competitive Operating Statistics (1) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||
2015 | 2014 | 2015 | 2014 | ||||||||
Generation Capacity Factors: | |||||||||||
Nuclear | 97% | 98% | 89% | 85% | |||||||
Fossil - Baseload | 72% | 81% | 63% | 77% | |||||||
Fossil - Load Following | 51% | 55% | 46% | 62% | |||||||
Generation Fuel Rate: | |||||||||||
Nuclear | $6.91 | $7.13 | $7.05 | $7.59 | |||||||
Fossil | $25 | $26 | $26 | $27 | |||||||
Total Fleet | $17 | $18 | $17 | $19 | |||||||
Generation Output Mix: | |||||||||||
Nuclear | 45% | 43% | 46% | 40% | |||||||
Fossil - Baseload | 41% | 43% | 40% | 44% | |||||||
Fossil - Load Following | 6% | 6% | 7% | 8% | |||||||
Peaking/CT/Hydro | 8% | 8% | 7% | 8% | |||||||
(1) Excludes RMR and units deactivated in April 2015 | |||||||||||
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 21
FirstEnergy Corp.
Competitive Energy Services - Sources & Uses
Statistical Summary
Competitive Energy Services - Sources and Uses (MWH in thousands) | ||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
Contract Sales | 2015 | 2014 | Change | 2015 | 2014 | Change | ||||||||||||||||
POLR | ||||||||||||||||||||||
- OH | 960 | 1,207 | (247 | ) | 3,368 | 3,650 | (282 | ) | ||||||||||||||
- PA | 907 | 1,930 | (1,023 | ) | 4,999 | 6,444 | (1,445 | ) | ||||||||||||||
- MD | 301 | 498 | (197 | ) | 1,543 | 1,827 | (284 | ) | ||||||||||||||
Total POLR | 2,168 | 3,635 | (1,467 | ) | 9,910 | 11,921 | (2,011 | ) | ||||||||||||||
Structured Sales | ||||||||||||||||||||||
- Bilaterals | 3,187 | 2,321 | 866 | 7,685 | 6,105 | 1,580 | ||||||||||||||||
- Muni/Co-op | 706 | 1,138 | (432 | ) | 2,105 | 3,509 | (1,404 | ) | ||||||||||||||
Total Structured Sales | 3,893 | 3,459 | 434 | 9,790 | 9,614 | 176 | ||||||||||||||||
Direct - LCI | ||||||||||||||||||||||
- OH | 2,425 | 5,114 | (2,689 | ) | 8,427 | 18,041 | (9,614 | ) | ||||||||||||||
- PA | 1,689 | 2,640 | (951 | ) | 5,467 | 8,818 | (3,351 | ) | ||||||||||||||
- NJ | 105 | 298 | (193 | ) | 604 | 961 | (357 | ) | ||||||||||||||
- MI | 554 | 784 | (230 | ) | 1,754 | 2,205 | (451 | ) | ||||||||||||||
- IL | 324 | 496 | (172 | ) | 913 | 1,684 | (771 | ) | ||||||||||||||
- MD | 38 | 190 | (152 | ) | 174 | 586 | (412 | ) | ||||||||||||||
Total Direct - LCI | 5,135 | 9,522 | (4,387 | ) | 17,339 | 32,295 | (14,956 | ) | ||||||||||||||
Direct - MCI | ||||||||||||||||||||||
- OH | 293 | 455 | (162 | ) | 951 | 1,519 | (568 | ) | ||||||||||||||
- PA | 95 | 359 | (264 | ) | 497 | 1,089 | (592 | ) | ||||||||||||||
- IL | 12 | 52 | (40 | ) | 53 | 149 | (96 | ) | ||||||||||||||
- NJ | 5 | 7 | (2 | ) | 18 | 12 | 6 | |||||||||||||||
- MD | 1 | 2 | (1 | ) | 2 | 5 | (3 | ) | ||||||||||||||
Total Direct - MCI | 406 | 875 | (469 | ) | 1,521 | 2,774 | (1,253 | ) | ||||||||||||||
Governmental Aggregation | ||||||||||||||||||||||
- OH | 3,811 | 3,776 | 35 | 11,096 | 11,612 | (516 | ) | |||||||||||||||
- IL | 415 | 1,211 | (796 | ) | 1,173 | 3,790 | (2,617 | ) | ||||||||||||||
- NJ | — | 5 | (5 | ) | 9 | 11 | (2 | ) | ||||||||||||||
Total Aggregation | 4,226 | 4,992 | (766 | ) | 12,278 | 15,413 | (3,135 | ) | ||||||||||||||
Mass Market | ||||||||||||||||||||||
- OH | 180 | 451 | (271 | ) | 704 | 1,444 | (740 | ) | ||||||||||||||
- PA | 700 | 1,127 | (427 | ) | 2,439 | 3,609 | (1,170 | ) | ||||||||||||||
- IL | 12 | 51 | (39 | ) | 43 | 128 | (85 | ) | ||||||||||||||
- MD | 12 | 34 | (22 | ) | 55 | 111 | (56 | ) | ||||||||||||||
- NJ | 2 | 1 | 1 | 5 | 2 | 3 | ||||||||||||||||
Total Mass Market | 906 | 1,664 | (758 | ) | 3,246 | 5,294 | (2,048 | ) | ||||||||||||||
Total Contract Sales | 16,734 | 24,147 | (7,413 | ) | 54,084 | 77,311 | (23,227 | ) | ||||||||||||||
Wholesale Sales | ||||||||||||||||||||||
- Spot | 3,156 | 236 | 2,920 | 4,023 | 268 | 3,755 | ||||||||||||||||
Total Wholesale Sales | 3,156 | 236 | 2,920 | 4,023 | 268 | 3,755 | ||||||||||||||||
Purchased Power | ||||||||||||||||||||||
- Bilaterals | 362 | 414 | (52 | ) | 1,452 | 1,619 | (167 | ) | ||||||||||||||
- Spot | 1,153 | 4,590 | (3,437 | ) | 7,474 | 22,515 | (15,041 | ) | ||||||||||||||
Total Purchased Power | 1,515 | 5,004 | (3,489 | ) | 8,926 | 24,134 | (15,208 | ) | ||||||||||||||
Generation Output | ||||||||||||||||||||||
- Fossil | 10,697 | 11,816 | (1,119 | ) | 27,437 | 33,804 | (6,367 | ) | ||||||||||||||
- Nuclear | 8,661 | 8,781 | (120 | ) | 23,632 | 22,645 | 987 | |||||||||||||||
- RMR / Deactivated Units (1) | — | 62 | (62 | ) | 758 | 830 | (72 | ) | ||||||||||||||
Total Generation Output | 19,358 | 20,659 | (1,301 | ) | 51,827 | 57,279 | (5,452 | ) | ||||||||||||||
(1) Includes RMR and units deactivated in April 2015 |
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 22
FirstEnergy Corp.
Consolidated GAAP to Non-GAAP Reconciliation
(In millions)
Three Months Ended September 30, 2015 | Three Months Ended September 30, 2014 | |||||||||||||||||||||||||||
GAAP | Special Items | Operating -Non-GAAP | GAAP | Special Items | Operating -Non-GAAP | |||||||||||||||||||||||
(1 | ) | Revenues | $ | 4,123 | $ | (1 | ) | (a,b) | $ | 4,122 | $ | 3,888 | $ | 3 | (a) | $ | 3,891 | |||||||||||
Expenses | ||||||||||||||||||||||||||||
(2 | ) | Fuel | 482 | (11 | ) | (c) | 471 | 544 | (10 | ) | (c) | 534 | ||||||||||||||||
(3 | ) | Purchased power | 1,209 | — | 1,209 | 1,188 | 1 | (a) | 1,189 | |||||||||||||||||||
(4 | ) | Other operating expenses | 850 | 31 | (a,b,d,e,g) | 881 | 858 | (40 | ) | (a,d,e,g,h) | 818 | |||||||||||||||||
(5 | ) | Provision for depreciation | 328 | — | 328 | 308 | — | 308 | ||||||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | 110 | — | 110 | 35 | — | 35 | ||||||||||||||||||||
(7 | ) | General taxes | 236 | — | 236 | 239 | (1 | ) | (b) | 238 | ||||||||||||||||||
(8 | ) | Total Expenses | 3,215 | 20 | 3,235 | 3,172 | (50 | ) | 3,122 | |||||||||||||||||||
(9 | ) | Operating Income | 908 | (21 | ) | 887 | 716 | 53 | 769 | |||||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||||||
(10 | ) | Investment income (loss) | (28 | ) | 52 | (e,f) | 24 | 16 | 11 | (e,f) | 27 | |||||||||||||||||
(11 | ) | Interest expense | (285 | ) | — | (285 | ) | (275 | ) | — | (275 | ) | ||||||||||||||||
(12 | ) | Capitalized financing costs | 26 | — | 26 | 28 | — | 28 | ||||||||||||||||||||
(13 | ) | Total Other Expense | (287 | ) | 52 | (235 | ) | (231 | ) | 11 | (220 | ) | ||||||||||||||||
(14 | ) | Income Before Income Taxes | 621 | 31 | 652 | 485 | 64 | 549 | ||||||||||||||||||||
(15 | ) | Income taxes | 226 | 11 | 237 | 152 | 24 | 176 | ||||||||||||||||||||
(16 | ) | Net Income | $ | 395 | $ | 20 | $ | 415 | $ | 333 | $ | 40 | $ | 373 | ||||||||||||||
The above GAAP to Non-GAAP Reconciliation provides additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. See page 33 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||||||||
(a) | Regulatory charges: 2015 ($0.01 per share), $1 million included in "Revenues"; and ($10) million included in "Other operating expenses". 2014 ($0.02 per share), $3 million included in "Revenues"; $1 million included in "Purchased power"; and ($9) million included in "Other operating expenses". | |||||||||||||||||||||||||||
(b) | Plant deactivation costs: 2015, ($2) million included in "Revenues"; and ($4) million included in "Other operating expenses". 2014, ($1) million included in "General taxes". | |||||||||||||||||||||||||||
(c) | Merger accounting - commodity contracts: 2015 ($0.02 per share), ($11) million included in "Fuel". 2014 ($0.02 per share), ($10) million included in "Fuel". | |||||||||||||||||||||||||||
(d) | Mark-to-market adjustments: 2015 (($0.09) per share), $57 million included in "Other operating expenses". 2014 ($0.03 per share), ($23) million included in "Other operating expenses". | |||||||||||||||||||||||||||
(e) | Impact of non-core asset sales/impairments: 2015 ($0.02 per share), ($8) million included in "Other operating expenses"; and $5 million included in "Investment income (loss)". 2014 ($0.01 per share), ($1) million included in "Other operating expenses"; and $4 million included in "Investment income (loss)". | |||||||||||||||||||||||||||
(f) | Trust securities impairment: 2015 ($0.07 per share), $47 million included in "Investment income (loss)". 2014 ($0.01 per share), $7 million included in "Investment income (loss)". | |||||||||||||||||||||||||||
(g) | Retail repositioning charges: 2015 ($0.01 per share), ($4) million included in "Other operating expenses". 2014 ($0.02 per share), ($13) million included in "Other operating expenses". | |||||||||||||||||||||||||||
(h) | Litigation resolution: 2014 (($0.01) per share), $6 million included in "Other operating expenses". | |||||||||||||||||||||||||||
Per share amounts included above are based on the after tax effect of the above special items divided by the weighted average shares outstanding of 423 million shares in the third quarter of 2015 and 420 million shares in the third quarter of 2014. | ||||||||||||||||||||||||||||
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 23
FirstEnergy Corp.
Consolidated
GAAP to Non-GAAP Reconciliation
(In millions)
Nine Months Ended September 30, 2015 | Nine Months Ended September 30, 2014 | |||||||||||||||||||||||||||
GAAP | Special Items | Operating -Non-GAAP | GAAP | Special Items | Operating -Non-GAAP | |||||||||||||||||||||||
(1 | ) | Revenues | $ | 11,485 | $ | (3 | ) | (a,b,e) | $ | 11,482 | $ | 11,566 | $ | 4 | (a) | $ | 11,570 | |||||||||||
Expenses | ||||||||||||||||||||||||||||
(2 | ) | Fuel | 1,378 | (47 | ) | (b,c) | 1,331 | 1,711 | (122 | ) | (b,c) | 1,589 | ||||||||||||||||
(3 | ) | Purchased power | 3,311 | — | 3,311 | 3,726 | 1 | (a) | 3,727 | |||||||||||||||||||
(4 | ) | Other operating expenses | 2,823 | (21 | ) | (a,b,d,e,g) | 2,802 | 3,061 | (175 | ) | (a,b,c,d,e,g,i) | 2,886 | ||||||||||||||||
(5 | ) | Provision for depreciation | 969 | — | 969 | 904 | — | 904 | ||||||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | 201 | (2 | ) | (a) | 199 | 27 | (1 | ) | (a) | 26 | ||||||||||||||||
(7 | ) | General taxes | 747 | (1 | ) | (b) | 746 | 738 | (2 | ) | (b) | 736 | ||||||||||||||||
(8 | ) | Total Expenses | 9,429 | (71 | ) | 9,358 | 10,167 | (299 | ) | 9,868 | ||||||||||||||||||
(9 | ) | Operating Income | 2,056 | 68 | 2,124 | 1,399 | 303 | 1,702 | ||||||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||||||
(10 | ) | Loss on debt redemption | — | — | — | (8 | ) | 8 | (h) | — | ||||||||||||||||||
(11 | ) | Investment income (loss) | (14 | ) | 82 | (e,f) | 68 | 67 | 22 | (e,f) | 89 | |||||||||||||||||
(12 | ) | Interest expense | (846 | ) | — | (846 | ) | (802 | ) | — | (802 | ) | ||||||||||||||||
(13 | ) | Capitalized financing costs | 93 | — | 93 | 89 | — | 89 | ||||||||||||||||||||
(14 | ) | Total Other Expense | (767 | ) | 82 | (685 | ) | (654 | ) | 30 | (624 | ) | ||||||||||||||||
(15 | ) | Income From Continuing Operations Before Income Taxes | 1,289 | 150 | 1,439 | 745 | 333 | 1,078 | ||||||||||||||||||||
(16 | ) | Income taxes | 485 | 54 | 539 | 226 | 123 | 349 | ||||||||||||||||||||
(17 | ) | Income From Continuing Operations | 804 | 96 | 900 | 519 | 210 | 729 | ||||||||||||||||||||
(18 | ) | Discontinued operations (net of income taxes) | — | — | — | 86 | (78 | ) | (e) | 8 | ||||||||||||||||||
(19 | ) | Net Income | $ | 804 | $ | 96 | $ | 900 | $ | 605 | $ | 132 | $ | 737 | ||||||||||||||
The above GAAP to Non-GAAP Reconciliation provides additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. See page 34 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||||||||
(a) | Regulatory charges: 2015 ($0.05 per share), $2 million included in "Revenues"; ($35) million included in "Other operating expenses"; and ($2) million included in "Amortization of regulatory assets, net". 2014 ($0.05 per share), $4 million included in "Revenues"; $1 million included in "Purchased power"; ($30) million included in "Other operating expenses"; and ($1) million included in "Amortization of regulatory assets, net". | |||||||||||||||||||||||||||
(b) | Plant deactivation costs: 2015 ($0.04 per share), ($2) million included in "Revenues"; ($12) million included in "Fuel"; ($10) million included in "Other operating expenses"; and ($1) million included in "General taxes". 2014 ($0.17 per share), ($91) million included in "Fuel"; ($24) million included in "Other operating expenses"; and ($2) million included in "General taxes". | |||||||||||||||||||||||||||
(c) | Merger accounting - commodity contracts: 2015 ($0.05 per share), ($35) million included in "Fuel". 2014 ($0.05 per share), ($31) million included in "Fuel"; and $1 million included in "Other operating expenses". | |||||||||||||||||||||||||||
(d) | Mark-to-market adjustments: 2015 (($0.10) per share), $64 million included in "Other operating expenses. 2014 ($0.10 per share), ($68) million included in "Other operating expenses". | |||||||||||||||||||||||||||
(e) | Impact of non-core asset sales/impairments: 2015 ($0.05 per share), ($3) million included in "Revenues"; ($24) million included in "Other operating expenses"; and $11 million included in "Investment income (loss)". 2014 (($0.16) per share), ($1) million included in "Other operating expenses"; $12 million included in "Investment income (loss)"; and ($78) million included in "Discontinued operations (net of income taxes)". | |||||||||||||||||||||||||||
(f) | Trust securities impairment: 2015 ($0.11 per share), $71 million included in "Investment income (loss)". 2014 ($0.02 per share), $10 million included in "Investment income (loss)". | |||||||||||||||||||||||||||
(g) | Retail repositioning charges: 2015 ($0.02 per share), ($16) million included in "Other operating expenses". 2014 ($0.09 per share), ($59) million included in "Other operating expenses". | |||||||||||||||||||||||||||
(h) | Loss on debt redemptions: 2014 ($0.01 per share), $8 million included in "Loss on debt redemptions". | |||||||||||||||||||||||||||
(i) | Litigation resolution: 2014 (($0.01) per share), $6 million included in "Other operating expenses". | |||||||||||||||||||||||||||
Per share amounts included above are based on the after tax effect of the above special items divided by the weighted average shares outstanding of 422 million shares in the first nine months of 2015 and 419 million shares in the first nine months of 2014. | ||||||||||||||||||||||||||||
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 24
FirstEnergy Corp.
Regulated Distribution
GAAP to Non-GAAP Reconciliation
(In millions)
Three Months Ended September 30, 2015 | Three Months Ended September 30, 2014 | |||||||||||||||||||||||||||
GAAP | Special Items | Operating -Non-GAAP | GAAP | Special Items | Operating - Non-GAAP | |||||||||||||||||||||||
(1 | ) | Revenues | $ | 2,624 | $ | 1 | (a) | $ | 2,625 | $ | 2,357 | $ | 3 | (a) | $ | 2,360 | ||||||||||||
Expenses | ||||||||||||||||||||||||||||
(2 | ) | Fuel | 140 | — | 140 | 159 | — | 159 | ||||||||||||||||||||
(3 | ) | Purchased power | 980 | — | 980 | 873 | 1 | (a) | 874 | |||||||||||||||||||
(4 | ) | Other operating expenses | 542 | (18 | ) | (a,c) | 524 | 473 | (10 | ) | (a,c) | 463 | ||||||||||||||||
(5 | ) | Provision for depreciation | 174 | — | 174 | 165 | — | 165 | ||||||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | 110 | — | 110 | 33 | — | 33 | ||||||||||||||||||||
(7 | ) | General taxes | 172 | — | 172 | 175 | — | 175 | ||||||||||||||||||||
(8 | ) | Total Expenses | 2,118 | (18 | ) | 2,100 | 1,878 | (9 | ) | 1,869 | ||||||||||||||||||
(9 | ) | Operating Income | 506 | 19 | 525 | 479 | 12 | 491 | ||||||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||||||
(10 | ) | Investment income (loss) | 8 | 6 | (b) | 14 | 14 | 1 | (b) | 15 | ||||||||||||||||||
(11 | ) | Interest expense | (149 | ) | — | (149 | ) | (147 | ) | — | (147 | ) | ||||||||||||||||
(12 | ) | Capitalized financing costs | 6 | — | 6 | 5 | — | 5 | ||||||||||||||||||||
(13 | ) | Total Other Expense | (135 | ) | 6 | (129 | ) | (128 | ) | 1 | (127 | ) | ||||||||||||||||
(14 | ) | Income Before Income Taxes | 371 | 25 | 396 | 351 | 13 | 364 | ||||||||||||||||||||
(15 | ) | Income taxes | 137 | 9 | 146 | 124 | 4 | 128 | ||||||||||||||||||||
(16 | ) | Net Income | $ | 234 | $ | 16 | $ | 250 | $ | 227 | $ | 9 | $ | 236 | ||||||||||||||
The above GAAP to Non-GAAP Reconciliation provides additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. See page 33 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||||||||
(a) | Regulatory charges: 2015 ($0.01 per share), $1 million included in "Revenues"; and ($10) million included in "Other operating expenses". 2014 ($0.02 per share), $3 million included in "Revenues"; $1 million included in "Purchased power"; and ($9) million included in "Other operating expenses". | |||||||||||||||||||||||||||
(b) | Trust securities impairment: 2015 ($0.01 per share), $6 million included in "Investment income (loss)". 2014, ($1) million included in "Investment income (loss)". | |||||||||||||||||||||||||||
(c) | Impact of non-core asset sales/impairments: 2015 ($0.01 per share), ($8) million included in "Other operating expenses". 2014, ($1) million included in "Other operating expenses". | |||||||||||||||||||||||||||
Per share amounts included above are based on the after tax effect of the above special items divided by the weighted average shares outstanding of 423 million shares in the third quarter of 2015 and 420 million shares in the third quarter of 2014. | ||||||||||||||||||||||||||||
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 25
FirstEnergy Corp.
Regulated Distribution
GAAP to Non-GAAP Reconciliation
(In millions)
Nine Months Ended September 30, 2015 | Nine Months Ended September 30, 2014 | |||||||||||||||||||||||||||
GAAP | Special Items | Operating -Non-GAAP | GAAP | Special Items | Operating - Non-GAAP | |||||||||||||||||||||||
(1 | ) | Revenues | $ | 7,425 | $ | 2 | (a) | $ | 7,427 | $ | 6,972 | $ | 4 | (a) | $ | 6,976 | ||||||||||||
Expenses | ||||||||||||||||||||||||||||
(2 | ) | Fuel | 406 | — | 406 | 441 | — | 441 | ||||||||||||||||||||
(3 | ) | Purchased power | 2,761 | — | 2,761 | 2,600 | 1 | (a) | 2,601 | |||||||||||||||||||
(4 | ) | Other operating expenses | 1,677 | (42 | ) | (a,c) | 1,635 | 1,580 | (31 | ) | (a,c) | 1,549 | ||||||||||||||||
(5 | ) | Provision for depreciation | 516 | — | 516 | 491 | — | 491 | ||||||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | 196 | (2 | ) | (a) | 194 | 18 | (1 | ) | (a) | 17 | ||||||||||||||||
(7 | ) | General taxes | 536 | — | 536 | 528 | — | 528 | ||||||||||||||||||||
(8 | ) | Total Expenses | 6,092 | (44 | ) | 6,048 | 5,658 | (31 | ) | 5,627 | ||||||||||||||||||
(9 | ) | Operating Income (Loss) | 1,333 | 46 | 1,379 | 1,314 | 35 | 1,349 | ||||||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||||||
(10 | ) | Loss on debt redemption | — | — | — | — | — | — | ||||||||||||||||||||
(11 | ) | Investment income (loss) | 33 | 8 | (b) | 41 | 44 | 1 | (b) | 45 | ||||||||||||||||||
(12 | ) | Interest expense | (439 | ) | — | (439 | ) | (445 | ) | — | (445 | ) | ||||||||||||||||
(13 | ) | Capitalized financing costs | 21 | — | 21 | 12 | — | 12 | ||||||||||||||||||||
(14 | ) | Total Other Expense | (385 | ) | 8 | (377 | ) | (389 | ) | 1 | (388 | ) | ||||||||||||||||
(15 | ) | Income From Continuing Operations Before Income Taxes | 948 | 54 | 1,002 | 925 | 36 | 961 | ||||||||||||||||||||
(16 | ) | Income taxes | 350 | 20 | 370 | 326 | 12 | 338 | ||||||||||||||||||||
(17 | ) | Income From Continuing Operations | 598 | 34 | 632 | 599 | 24 | 623 | ||||||||||||||||||||
(18 | ) | Discontinued operations (net of income taxes) | — | — | — | — | — | — | ||||||||||||||||||||
(19 | ) | Net Income | $ | 598 | $ | 34 | $ | 632 | $ | 599 | $ | 24 | $ | 623 | ||||||||||||||
The above GAAP to Non-GAAP Reconciliation provides additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. See page 34 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||||||||
(a) | Regulatory charges: 2015 ($0.05 per share), $2 million included in "Revenues"; ($34) million included in "Other operating expenses"; and ($2) million included in "Amortization of regulatory assets, net". 2014 ($0.05 per share), $4 million included in "Revenues"; $1 million included in "Purchased power"; ($30) million included in "Other operating expenses"; and ($1) million included in "Amortization of regulatory assets, net". | |||||||||||||||||||||||||||
(b) | Trust securities impairment: 2015 ($0.01 per share), $8 million included in "Investment income (loss)". 2014 $1 million included in "Investment income (loss)". | |||||||||||||||||||||||||||
(c) | Impact of non-core asset sales/impairments: 2015 ($0.01 per share), ($8) million included in "Other operating expenses". 2014, ($1) million included in "Other operating expenses". | |||||||||||||||||||||||||||
Per share amounts included above are based on the after tax effect of the above special items divided by the weighted average shares outstanding of 422 million shares in the first nine months of 2015 and 419 million shares in the first nine months of 2014. | ||||||||||||||||||||||||||||
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 26
FirstEnergy Corp.
Regulated Transmission
GAAP to Non-GAAP Reconciliation
(In millions)
Three Months Ended September 30, 2015 | Three Months Ended September 30, 2014 | |||||||||||||||||||||||||||
GAAP | Special Items | Operating -Non-GAAP | GAAP | Special Items | Operating - Non-GAAP | |||||||||||||||||||||||
(1 | ) | Revenues | $ | 248 | $ | — | $ | 248 | $ | 197 | $ | — | $ | 197 | ||||||||||||||
Expenses | ||||||||||||||||||||||||||||
(2 | ) | Fuel | — | — | — | — | — | — | ||||||||||||||||||||
(3 | ) | Purchased power | — | — | — | — | — | — | ||||||||||||||||||||
(4 | ) | Other operating expenses | 42 | — | 42 | 38 | — | 38 | ||||||||||||||||||||
(5 | ) | Provision for depreciation | 41 | — | 41 | 33 | — | 33 | ||||||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | — | — | — | 3 | — | 3 | ||||||||||||||||||||
(7 | ) | General taxes | 23 | — | 23 | 17 | — | 17 | ||||||||||||||||||||
(8 | ) | Total Expenses | 106 | — | 106 | 91 | — | 91 | ||||||||||||||||||||
(9 | ) | Operating Income | 142 | — | 142 | 106 | — | 106 | ||||||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||||||
(10 | ) | Investment income (loss) | — | — | — | — | — | — | ||||||||||||||||||||
(11 | ) | Interest expense | (40 | ) | — | (40 | ) | (35 | ) | — | (35 | ) | ||||||||||||||||
(12 | ) | Capitalized financing costs | 9 | — | 9 | 14 | — | 14 | ||||||||||||||||||||
(13 | ) | Total Other Expense | (31 | ) | — | (31 | ) | (21 | ) | — | (21 | ) | ||||||||||||||||
(14 | ) | Income Before Income Taxes | 111 | — | 111 | 85 | — | 85 | ||||||||||||||||||||
(15 | ) | Income taxes | 41 | — | 41 | 30 | — | 30 | ||||||||||||||||||||
(16 | ) | Net Income | $ | 70 | $ | — | $ | 70 | $ | 55 | $ | — | $ | 55 | ||||||||||||||
The above GAAP to Non-GAAP Reconciliation provides additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. See page 33 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||||||||
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 27
FirstEnergy Corp.
Regulated Transmission
GAAP to Non-GAAP Reconciliation
(In millions)
Nine Months Ended September 30, 2015 | Nine Months Ended September 30, 2014 | |||||||||||||||||||||||||||
GAAP | Special Items | Operating -Non-GAAP | GAAP | Special Items | Operating - Non-GAAP | |||||||||||||||||||||||
(1 | ) | Revenues | $ | 755 | $ | — | $ | 755 | $ | 570 | $ | — | $ | 570 | ||||||||||||||
Expenses | ||||||||||||||||||||||||||||
(2 | ) | Fuel | — | — | — | — | — | — | ||||||||||||||||||||
(3 | ) | Purchased power | — | — | — | — | — | — | ||||||||||||||||||||
(4 | ) | Other operating expenses | 112 | — | 112 | 103 | — | 103 | ||||||||||||||||||||
(5 | ) | Provision for depreciation | 116 | — | 116 | 93 | — | 93 | ||||||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | 5 | — | 5 | 9 | — | 9 | ||||||||||||||||||||
(7 | ) | General taxes | 73 | — | 73 | 52 | — | 52 | ||||||||||||||||||||
(8 | ) | Total Expenses | 306 | — | 306 | 257 | — | 257 | ||||||||||||||||||||
(9 | ) | Operating Income (Loss) | 449 | — | 449 | 313 | — | 313 | ||||||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||||||
(10 | ) | Loss on debt redemption | — | — | — | — | — | — | ||||||||||||||||||||
(11 | ) | Investment income (loss) | — | — | — | — | — | — | ||||||||||||||||||||
(12 | ) | Interest expense | (119 | ) | — | (119 | ) | (90 | ) | — | (90 | ) | ||||||||||||||||
(13 | ) | Capitalized financing costs | 36 | — | 36 | 38 | — | 38 | ||||||||||||||||||||
(14 | ) | Total Other Expense | (83 | ) | — | (83 | ) | (52 | ) | — | (52 | ) | ||||||||||||||||
(15 | ) | Income From Continuing Operations Before Income Taxes | 366 | — | 366 | 261 | — | 261 | ||||||||||||||||||||
(16 | ) | Income taxes | 135 | — | 135 | 92 | — | 92 | ||||||||||||||||||||
(17 | ) | Income (Loss) From Continuing Operations | 231 | — | 231 | 169 | — | 169 | ||||||||||||||||||||
(18 | ) | Discontinued operations (net of income taxes) | — | — | — | — | — | — | ||||||||||||||||||||
(19 | ) | Net Income | $ | 231 | $ | — | $ | 231 | $ | 169 | $ | — | $ | 169 | ||||||||||||||
The above GAAP to Non-GAAP Reconciliation provides additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. See page 34 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||||||||
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 28
FirstEnergy Corp.
Competitive Energy Services
GAAP to Non-GAAP Reconciliation
(In millions)
Three Months Ended September 30, 2015 | Three Months Ended September 30, 2014 | |||||||||||||||||||||||||||
GAAP | Special Items | Non-GAAP | GAAP | Special Items | Non-GAAP | |||||||||||||||||||||||
(1 | ) | Revenues | $ | 1,468 | $ | (2 | ) | (a) | $ | 1,466 | $ | 1,599 | $ | — | $ | 1,599 | ||||||||||||
Expenses | ||||||||||||||||||||||||||||
(2 | ) | Fuel | 342 | (11 | ) | (b) | 331 | 385 | (10 | ) | (b) | 375 | ||||||||||||||||
(3 | ) | Purchased power | 370 | — | 370 | 508 | — | 508 | ||||||||||||||||||||
(4 | ) | Other operating expenses | 336 | 49 | (a,c,f) | 385 | 432 | (36 | ) | (c,f) | 396 | |||||||||||||||||
(5 | ) | Provision for depreciation | 98 | — | 98 | 100 | — | 100 | ||||||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | — | — | — | — | — | — | ||||||||||||||||||||
(7 | ) | General taxes | 35 | — | 35 | 40 | (1 | ) | (a) | 39 | ||||||||||||||||||
(8 | ) | Total Expenses | 1,181 | 38 | 1,219 | 1,465 | (47 | ) | 1,418 | |||||||||||||||||||
(9 | ) | Operating Income | 287 | (40 | ) | 247 | 134 | 47 | 181 | |||||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||||||
(10 | ) | Investment income (loss) | (27 | ) | 46 | (d,e) | 19 | 11 | 10 | (d,e) | 21 | |||||||||||||||||
(11 | ) | Interest expense | (48 | ) | — | (48 | ) | (49 | ) | — | (49 | ) | ||||||||||||||||
(12 | ) | Capitalized financing costs | 9 | — | 9 | 6 | — | 6 | ||||||||||||||||||||
(13 | ) | Total Other Expense | (66 | ) | 46 | (20 | ) | (32 | ) | 10 | (22 | ) | ||||||||||||||||
(14 | ) | Income Before Income Taxes | 221 | 6 | 227 | 102 | 57 | 159 | ||||||||||||||||||||
(15 | ) | Income taxes | 81 | 2 | 83 | 36 | 19 | 55 | ||||||||||||||||||||
(16 | ) | Net Income | $ | 140 | $ | 4 | $ | 144 | $ | 66 | $ | 38 | $ | 104 | ||||||||||||||
The above GAAP to Non-GAAP Reconciliation provides additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. See page 33 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||||||||
(a) | Plant deactivation costs: 2015, ($2) million included in "Revenues"; and ($4) million in "Other operating expenses". 2014, ($1) million included in "General taxes". | |||||||||||||||||||||||||||
(b) | Merger accounting - commodity contracts: 2015 ($0.02 per share), ($11) million included in "Fuel". 2014 ($0.02 per share), ($10) million included in "Fuel". | |||||||||||||||||||||||||||
(c) | Mark-to-market adjustments: 2015 (($0.09) per share), $57 million included in "Other operating expenses". 2014 ($0.03 per share), ($23) million included in "Other operating expenses". | |||||||||||||||||||||||||||
(d) | Impact of non-core asset sales/impairments: 2015 ($0.01 per share), $5 million included in "Investment income (loss)". 2014, ($0.01 per share), $4 million included in "Investment income (loss)". | |||||||||||||||||||||||||||
(e) | Trust securities impairment: 2015 ($0.06 per share), $41 million included in "Investment income (loss)". 2014 ($0.01 per share), $6 million included in "Investment income (loss)". | |||||||||||||||||||||||||||
(f) | Retail repositioning charges: 2015 ($0.01 per share), ($4) million included in "Other operating expenses". 2014 ($0.02 per share), ($13) million included in "Other operating expenses". | |||||||||||||||||||||||||||
Per share amounts included above are based on the after tax effect of the above special items divided by the weighted average shares outstanding of 423 million shares in the third quarter of 2015 and 420 million shares in the third quarter of 2014. | ||||||||||||||||||||||||||||
_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 3rd Quarter 2015 29
FirstEnergy Corp.
Competitive Energy Services
GAAP to Non-GAAP Reconciliation
(In millions)
Nine Months Ended September 30, 2015 | Nine Months Ended September 30, 2014 | |||||||||||||||||||||||||||
GAAP | Special Items | Operating -Non-GAAP | GAAP | Special Items | Operating - Non-GAAP | |||||||||||||||||||||||
(1 | ) | Revenues | $ | 4,099 | $ | (5 | ) | (b,e) | $ | 4,094 | $ | 4,863 | $ | — | $ | 4,863 | ||||||||||||
Expenses | ||||||||||||||||||||||||||||
(2 | ) | Fuel | 972 | (47 | ) | (b,c) | 925 | 1,270 | (122 | ) | (b,c) | 1,148 | ||||||||||||||||
(3 | ) | Purchased power | 1,113 | — | 1,113 | 1,750 | — | 1,750 | ||||||||||||||||||||
(4 | ) | Other operating expenses | 1,282 | 21 | (a,b,d,e,g) | 1,303 | 1,625 | (150 | ) | (b,c,d,g) | 1,475 | |||||||||||||||||
(5 | ) | Provision for depreciation | 293 | — | 293 | 287 | — | 287 | ||||||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | — | — | — | — | — | — | ||||||||||||||||||||
(7 | ) | General taxes | 112 | (1 | ) | (b) | 111 | 133 | (2 | ) | (b) | 131 | ||||||||||||||||
(8 | ) | Total Expenses | 3,772 | (27 | ) | 3,745 | 5,065 | (274 | ) | 4,791 | ||||||||||||||||||
(9 | ) | Operating Income (Loss) | 327 | 22 | 349 | (202 | ) | 274 | 72 | |||||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||||||
(10 | ) | Loss on debt redemptions | — | — | — | (8 | ) | 8 | (h) | — | ||||||||||||||||||
(11 | ) | Investment income (loss) | (23 | ) | 74 | (e,f) | 51 | 46 | 21 | (e,f) | 67 | |||||||||||||||||
(12 | ) | Interest expense | (144 | ) | — | (144 | ) | (143 | ) | — | (143 | ) | ||||||||||||||||
(13 | ) | Capitalized financing costs | 29 | — | 29 | 28 | — | 28 | ||||||||||||||||||||
(14 | ) | Total Other Expense | (138 | ) | 74 | (64 | ) | (77 | ) | 29 | (48 | ) | ||||||||||||||||
(15 | ) | Income (Loss) From Continuing Operations Before Income Taxes (Benefits) | 189 | 96 | 285 | (279 | ) | 303 | 24 | |||||||||||||||||||
(16 | ) | Income taxes (benefits) | 70 | 34 | 104 | (102 | ) | 110 | 8 | |||||||||||||||||||
(17 | ) | Income (Loss) From Continuing Operations | 119 | 62 | 181 | (177 | ) | 193 | 16 | |||||||||||||||||||
(18 | ) | Discontinued operations (net of income taxes) | — | — | — | 86 | (78 | ) | (e) | 8 | ||||||||||||||||||
(19 | ) | Net Income (Loss) | $ | 119 | $ | 62 | $ | 181 | $ | (91 | ) | $ | 115 | $ | 24 | |||||||||||||
The above GAAP to Non-GAAP Reconciliation provides additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. See page 34 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||||||||
(a) | Regulatory charges: 2015, ($1) million included in "Other operating expenses". | |||||||||||||||||||||||||||
(b) | Plant deactivation costs: 2015 ($0.04 per share), ($2) million in "Revenues"; ($12) million included in "Fuel"; ($10) million included in "Other operating expenses"; and ($1) million included in "General taxes". 2014 ($0.17 per share), ($91) million included in "Fuel"; ($24) million included in "Other operating expenses"; and ($2) million included in "General taxes". | |||||||||||||||||||||||||||
(c) | Merger accounting - commodity contracts: 2015 ($0.05 per share), ($35) million included in "Fuel". 2014 ($0.05 per share), ($31) million included in "Fuel"; and $1 million included in "Other operating expenses". | |||||||||||||||||||||||||||
(d) | Mark-to-market adjustments: 2015 (($0.10) per share), $64 million included in "Other operating expenses". 2014, ($0.10 per share), ($68) million included in "Other operating expenses". | |||||||||||||||||||||||||||
(e) | Impact of non-core asset sales/impairments: 2015 ($0.04 per share), ($3) million included in "Revenues"; ($16) million included in "Other operating expenses", and $11 million included in "Investment income (loss)". 2014 (($0.16) per share), $12 million included in "Investment income (loss)"; and ($78) million included in "Discontinued operations (net of income taxes)". | |||||||||||||||||||||||||||
(f) | Trust securities impairment: 2015 ($0.10 per share), $63 million included in "Investment income (loss)". 2014 ($0.02 per share), $9 million included in "Investment income (loss)". | |||||||||||||||||||||||||||
(g) | Retail repositioning charges: 2015 ($0.02 per share), ($16) million included in "Other operating expenses". 2014 ($0.09 per share), ($59) million included in "Other operating expenses". | |||||||||||||||||||||||||||
(h) | Loss on debt redemptions: 2014 ($0.01 per share), $8 million included in "Loss on debt redemptions". | |||||||||||||||||||||||||||
Per share amounts included above are based on the after tax effect of the above special items divided by the weighted average shares outstanding of 422 million shares in the first nine months of 2015 and 419 million shares in the first nine months of 2014. | ||||||||||||||||||||||||||||
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Consolidated Report to the Financial Community - 3rd Quarter 2015 30
FirstEnergy Corp.
Corporate / Other
GAAP to Non-GAAP Reconciliation
(In millions)
Three Months Ended September 30, 2015 | Three Months Ended September 30, 2014 | |||||||||||||||||||||||||||
GAAP | Special Items | Operating - Non-GAAP | GAAP | Special Items | Operating - Non-GAAP | |||||||||||||||||||||||
(1 | ) | Revenues | $ | (217 | ) | $ | — | $ | (217 | ) | $ | (265 | ) | $ | — | $ | (265 | ) | ||||||||||
Expenses | ||||||||||||||||||||||||||||
(2 | ) | Fuel | — | — | — | — | — | — | ||||||||||||||||||||
(3 | ) | Purchased power | (141 | ) | — | (141 | ) | (193 | ) | — | (193 | ) | ||||||||||||||||
(4 | ) | Other operating expenses | (70 | ) | — | (70 | ) | (85 | ) | 6 | (a) | (79 | ) | |||||||||||||||
(5 | ) | Provision for depreciation | 15 | — | 15 | 10 | — | 10 | ||||||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | — | — | — | (1 | ) | — | (1 | ) | ||||||||||||||||||
(7 | ) | General taxes | 6 | — | 6 | 7 | — | 7 | ||||||||||||||||||||
(8 | ) | Total Expenses | (190 | ) | — | (190 | ) | (262 | ) | 6 | (256 | ) | ||||||||||||||||
(9 | ) | Operating Loss | (27 | ) | — | (27 | ) | (3 | ) | (6 | ) | (9 | ) | |||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||||||
(10 | ) | Investment income (loss) | (9 | ) | — | (9 | ) | (9 | ) | — | (9 | ) | ||||||||||||||||
(11 | ) | Interest expense | (48 | ) | — | (48 | ) | (44 | ) | — | (44 | ) | ||||||||||||||||
(12 | ) | Capitalized financing costs | 2 | — | 2 | 3 | — | 3 | ||||||||||||||||||||
(13 | ) | Total Other Expense | (55 | ) | — | (55 | ) | (50 | ) | — | (50 | ) | ||||||||||||||||
(14 | ) | Loss Before Income Tax Benefits | (82 | ) | — | (82 | ) | (53 | ) | (6 | ) | (59 | ) | |||||||||||||||
(15 | ) | Income tax benefits | (33 | ) | — | (33 | ) | (38 | ) | 1 | (a) | (37 | ) | |||||||||||||||
(16 | ) | Net Loss | $ | (49 | ) | $ | — | $ | (49 | ) | $ | (15 | ) | $ | (7 | ) | $ | (22 | ) | |||||||||
The above GAAP to Non-GAAP Reconciliation provides additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. See page 33 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||||||||
(a) | Litigation resolution: 2014 (($0.01) per share), $6 million included in "Other operating expenses". Income taxes include the difference between Consolidated and segment tax rates on pre-tax special items. | |||||||||||||||||||||||||||
Per share amounts included above are based on the after tax effect of the above special items divided by the weighted average shares outstanding of 423 million shares in the third quarter of 2015 and 420 million shares in the third quarter of 2014. | ||||||||||||||||||||||||||||
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Consolidated Report to the Financial Community - 3rd Quarter 2015 31
FirstEnergy Corp.
Corporate / Other
GAAP to Non-GAAP Reconciliation
(In millions)
Nine Months Ended September 30, 2015 | Nine Months Ended September 30, 2014 | |||||||||||||||||||||||||||
GAAP | Special Items | Operating - Non-GAAP | GAAP | Special Items | Operating - Non-GAAP | |||||||||||||||||||||||
(1 | ) | Revenues | $ | (794 | ) | $ | — | $ | (794 | ) | $ | (839 | ) | $ | — | $ | (839 | ) | ||||||||||
Expenses | ||||||||||||||||||||||||||||
(2 | ) | Fuel | — | — | — | — | — | — | ||||||||||||||||||||
(3 | ) | Purchased power | (563 | ) | — | (563 | ) | (624 | ) | — | (624 | ) | ||||||||||||||||
(4 | ) | Other operating expenses | (248 | ) | — | (248 | ) | (247 | ) | 6 | (a) | (241 | ) | |||||||||||||||
(5 | ) | Provision for depreciation | 44 | — | 44 | 33 | — | 33 | ||||||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | — | — | — | — | — | — | ||||||||||||||||||||
(7 | ) | General taxes | 26 | — | 26 | 25 | — | 25 | ||||||||||||||||||||
(8 | ) | Total Expenses | (741 | ) | — | (741 | ) | (813 | ) | 6 | (807 | ) | ||||||||||||||||
(9 | ) | Operating Loss | (53 | ) | — | (53 | ) | (26 | ) | (6 | ) | (32 | ) | |||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||||||
(10 | ) | Loss on debt redemptions | — | — | — | — | — | — | ||||||||||||||||||||
(11 | ) | Investment income (loss) | (24 | ) | — | (24 | ) | (23 | ) | — | (23 | ) | ||||||||||||||||
(12 | ) | Interest expense | (144 | ) | — | (144 | ) | (124 | ) | — | (124 | ) | ||||||||||||||||
(13 | ) | Capitalized financing costs | 7 | — | 7 | 11 | — | 11 | ||||||||||||||||||||
(14 | ) | Total Other Expense | (161 | ) | — | (161 | ) | (136 | ) | — | (136 | ) | ||||||||||||||||
(15 | ) | Loss From Continuing Operations Before Income Taxes | (214 | ) | — | (214 | ) | (162 | ) | (6 | ) | (168 | ) | |||||||||||||||
(16 | ) | Income tax benefits | (70 | ) | — | (70 | ) | (90 | ) | 1 | (a) | (89 | ) | |||||||||||||||
(17 | ) | Loss From Continuing Operations | (144 | ) | — | (144 | ) | (72 | ) | (7 | ) | (79 | ) | |||||||||||||||
(18 | ) | Discontinued operations (net of income taxes) | — | — | — | — | — | — | ||||||||||||||||||||
(19 | ) | Net Loss | $ | (144 | ) | $ | — | $ | (144 | ) | $ | (72 | ) | $ | (7 | ) | $ | (79 | ) | |||||||||
The above GAAP to Non-GAAP Reconciliation provides additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. See page 34 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||||||||
(a) | Litigation resolution: 2014 (($0.01) per share), $6 million included in "Other operating expenses". Income taxes include the difference between Consolidated and segment tax rates on pre-tax special items. | |||||||||||||||||||||||||||
Per share amounts included above are based on the after tax effect of the above special items divided by the weighted average shares outstanding of 422 million shares in the first nine months of 2015 and 419 million shares in the first nine months of 2014. | ||||||||||||||||||||||||||||
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Consolidated Report to the Financial Community - 3rd Quarter 2015 32
FirstEnergy Corp.
EPS Reconciliations
Earnings Per Share (EPS) | |||||||||||||||||||||||
(Reconciliation of GAAP to Operating (Non-GAAP) Earnings) | |||||||||||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||||||||
Three Months Ended September 30, 2015 | Competitive | FirstEnergy | |||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | Corp. | |||||||||||||||||||
Distribution | Transmission | Services | Other | Consolidated | |||||||||||||||||||
3Q 2015 Net Income - GAAP | $ | 234 | $ | 70 | $ | 140 | $ | (49 | ) | $ | 395 | ||||||||||||
3Q 2015 Basic EPS (avg. shares outstanding 423M) | $ | 0.56 | $ | 0.17 | $ | 0.33 | $ | (0.12 | ) | $ | 0.94 | ||||||||||||
Excluding Special Items: | |||||||||||||||||||||||
Regulatory charges | 0.01 | — | — | — | 0.01 | ||||||||||||||||||
Trust securities impairment | 0.01 | — | 0.06 | — | 0.07 | ||||||||||||||||||
Merger accounting - commodity contracts | — | — | 0.02 | — | 0.02 | ||||||||||||||||||
Impact of non-core asset sales/impairments | 0.01 | — | 0.01 | — | 0.02 | ||||||||||||||||||
Retail repositioning charges | — | — | 0.01 | — | 0.01 | ||||||||||||||||||
Mark-to-market adjustments | — | — | (0.09 | ) | — | (0.09 | ) | ||||||||||||||||
Total Special Items | $ | 0.03 | $ | — | $ | 0.01 | $ | — | $ | 0.04 | |||||||||||||
Basic EPS - Operating (Non-GAAP) | $ | 0.59 | $ | 0.17 | $ | 0.34 | $ | (0.12 | ) | $ | 0.98 | ||||||||||||
Three Months Ended September 30, 2014 | Competitive | FirstEnergy | |||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | Corp. | |||||||||||||||||||
Distribution | Transmission | Services | Other | Consolidated | |||||||||||||||||||
3Q 2014 Net Income - GAAP | $ | 227 | $ | 55 | $ | 66 | $ | (15 | ) | $ | 333 | ||||||||||||
3Q 2014 Basic EPS (avg. shares outstanding 420M) | $ | 0.54 | $ | 0.13 | $ | 0.16 | $ | (0.04 | ) | $ | 0.79 | ||||||||||||
Excluding Special Items: | |||||||||||||||||||||||
Regulatory charges | 0.02 | — | — | — | 0.02 | ||||||||||||||||||
Trust securities impairment | — | — | 0.01 | — | 0.01 | ||||||||||||||||||
Merger accounting - commodity contracts | — | — | 0.02 | — | 0.02 | ||||||||||||||||||
Impact of non-core asset sales/impairments | — | — | 0.01 | — | 0.01 | ||||||||||||||||||
Retail repositioning charges | — | — | 0.02 | — | 0.02 | ||||||||||||||||||
Mark-to-market adjustments | — | — | 0.03 | — | 0.03 | ||||||||||||||||||
Litigation resolution | — | — | — | (0.01 | ) | (0.01 | ) | ||||||||||||||||
Total Special Items | $ | 0.02 | $ | — | $ | 0.09 | $ | (0.01 | ) | $ | 0.10 | ||||||||||||
Basic EPS - Operating (Non-GAAP) | $ | 0.56 | $ | 0.13 | $ | 0.25 | $ | (0.05 | ) | $ | 0.89 | ||||||||||||
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Consolidated Report to the Financial Community - 3rd Quarter 2015 33
FirstEnergy Corp.
EPS Reconciliations
Earnings Per Share (EPS) | |||||||||||||||||||||||
(Reconciliation of GAAP to Operating (Non-GAAP) Earnings) | |||||||||||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||||||||
Nine Months Ended September 30, 2015 | Competitive | FirstEnergy | |||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | Corp. | |||||||||||||||||||
Distribution | Transmission | Services | Other | Consolidated | |||||||||||||||||||
2015 Net Income - GAAP | $ | 598 | $ | 231 | $ | 119 | $ | (144 | ) | $ | 804 | ||||||||||||
2015 Basic EPS (avg. shares outstanding 422M) | $ | 1.42 | $ | 0.55 | $ | 0.28 | $ | (0.34 | ) | $ | 1.91 | ||||||||||||
Excluding Special Items: | |||||||||||||||||||||||
Regulatory charges | 0.05 | — | — | — | 0.05 | ||||||||||||||||||
Trust securities impairment | 0.01 | — | 0.10 | — | 0.11 | ||||||||||||||||||
Plant deactivation costs | — | — | 0.04 | — | 0.04 | ||||||||||||||||||
Merger accounting - commodity contracts | — | — | 0.05 | — | 0.05 | ||||||||||||||||||
Impact of non-core asset sales/impairments | 0.01 | — | 0.04 | — | 0.05 | ||||||||||||||||||
Retail repositioning charges | — | — | 0.02 | — | 0.02 | ||||||||||||||||||
Mark-to-market adjustments | — | — | (0.10 | ) | — | (0.10 | ) | ||||||||||||||||
Total Special Items | $ | 0.07 | $ | — | $ | 0.15 | $ | — | $ | 0.22 | |||||||||||||
Basic EPS - Operating (Non-GAAP) | $ | 1.49 | $ | 0.55 | $ | 0.43 | $ | (0.34 | ) | $ | 2.13 | ||||||||||||
Nine Months Ended September 30, 2014 | Competitive | FirstEnergy | |||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | Corp. | |||||||||||||||||||
Distribution | Transmission | Services | Other | Consolidated | |||||||||||||||||||
2014 Net Income (Loss) - GAAP | $ | 599 | $ | 169 | $ | (91 | ) | $ | (72 | ) | $ | 605 | |||||||||||
2014 Basic EPS (avg. shares outstanding 419M) | $ | 1.43 | $ | 0.40 | $ | (0.22 | ) | $ | (0.17 | ) | $ | 1.44 | |||||||||||
Excluding Special Items: | |||||||||||||||||||||||
Regulatory charges | 0.05 | — | — | — | 0.05 | ||||||||||||||||||
Trust securities impairment | — | — | 0.02 | — | 0.02 | ||||||||||||||||||
Plant deactivation costs | — | — | 0.17 | — | 0.17 | ||||||||||||||||||
Merger accounting - commodity contracts | — | — | 0.05 | — | 0.05 | ||||||||||||||||||
Impact of non-core asset sales/impairments | — | — | (0.16 | ) | — | (0.16 | ) | ||||||||||||||||
Retail repositioning charges | — | — | 0.09 | — | 0.09 | ||||||||||||||||||
Mark-to-market adjustments | — | — | 0.10 | — | 0.10 | ||||||||||||||||||
Loss on debt redemptions | — | — | 0.01 | — | 0.01 | ||||||||||||||||||
Litigation resolution | — | — | — | (0.01 | ) | (0.01 | ) | ||||||||||||||||
Total Special Items | $ | 0.05 | $ | — | $ | 0.28 | $ | (0.01 | ) | $ | 0.32 | ||||||||||||
Basic EPS - Operating (Non-GAAP) | $ | 1.48 | $ | 0.40 | $ | 0.06 | $ | (0.18 | ) | $ | 1.76 | ||||||||||||
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Consolidated Report to the Financial Community - 3rd Quarter 2015 34
Recent Developments
Financial Matters
Dividend
On September 15, 2015, the Board of Directors of FirstEnergy declared an unchanged quarterly dividend of $0.36 cents per share of outstanding common stock. The dividend is payable December 1, 2015, to shareholders of record as of November 6, 2015.
Financing Activities
On August 17, 2015, The Potomac Edison Company (PE) issued $145 million of 4.47% first mortgage bonds due 2045. The proceeds were used to repay PE’s $145 million of 5.125% first mortgage bonds that matured on August 15, 2015.
On August 18, 2015, Jersey Central Power & Light Company (JCP&L) issued $250 million of 4.3% senior notes due 2026. The proceeds were used to repay a portion of short-term borrowings under the FirstEnergy regulated money pool and an external revolving credit facility.
On September 17, 2015, West Penn Power Company (WP) issued $150 million of 4.45% first mortgage bonds due 2045. The proceeds were used to repay short-term borrowings under the FirstEnergy regulated money pool and for other general corporate purposes.
On October 16, 2015, TrAILCo issued $75 million of 3.76% senior notes due 2025. The proceeds were used to fund capital expenditures and working capital needs.
On October 21, 2015, American Transmission Systems Incorporated (ATSI) issued in total $150 million of senior notes; $75 million of 4.0% senior notes due 2026 and $75 million of 5.23% senior notes due 2045. Proceeds were used to repay short-term borrowings under the FirstEnergy regulated money pool, fund capital expenditures and for other working capital needs.
Operational Matters
FirstEnergy Corporate Executive Promotions
On August 7, 2015, FirstEnergy announced management changes that expand the roles and responsibilities for key executives and support the company's focus on customer service and cost management. Announcements include:
• | James F. Pearson, formerly senior vice president and chief financial officer, was named executive vice president and chief financial officer of FirstEnergy Corp. |
• | James H. Lash, formerly president of FirstEnergy Generation, was named executive vice president of FirstEnergy Corp. and president, FirstEnergy Generation. |
• | Charles D. Lasky, formerly vice president, Fossil Fleet Operations, was elected to senior vice president, Human Resources. |
• | Donald A. Moul, formerly vice president of Commodity Operations, was promoted to senior vice president, Fossil Operations and Environmental. |
Beaver Valley Unit 2 Refueling Outage
On September 26, 2015, the 933-MW Beaver Valley Unit 2 began its scheduled refueling and maintenance outage. While the unit is offline, one-third of the 157 fuel assemblies will be replaced and numerous safety inspections conducted, including inspections of the unit’s reactor vessel head, turbine and electrical generator. In addition, preventative maintenance to ensure continued safe and reliable operations will be performed on major components including the plant’s three steam
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Consolidated Report to the Financial Community - 3rd Quarter 2015 35
generators, which convert super-heated water from the reactor to steam which turns the plant’s turbine to create electricity, as well as various pumps, motors, valves and the cooling tower.
Regulatory Matters
Powering Ohio’s Progress Update
On August 31, 2015, the evidentiary hearing for the Electric Security Plan IV commenced and in September 2015 the PUCO Staff filed testimony addressing various matters within the ESP IV filing. Hearings are expected to end on October 30, 2015, with Initial Briefs due November 30, 2015 and Reply Briefs due December 22, 2015. The plan, if approved as filed, would freeze base distribution rates through May 2019 while helping ensure continued availability of more than 3,200 MWs of FirstEnergy’s critical baseload generating assets primarily located in the state and serving the long-term energy needs of Ohio customers.
A final decision from the PUCO is anticipated early 2016.
ATSI Settlement Update
On July 20, 2015, ATSI and American Municipal Power, Inc., Buckeye Power, Inc., and the Industrial Energy Users-Ohio requested Federal Energy Regulatory Commission (FERC) approval of a comprehensive rate settlement agreement. The settlement establishes the forward looking formula rate structure and provides for certain changes to ATSI’s formula rate template and protocols, and includes the following ROE:
• | 12.38% from January 1, 2015 through June 30, 2015. |
• | 11.06% from July 1, 2015 through December 31, 2015. |
• | 10.38% beginning January 1, 2016. The 10.38% ROE will remain in effect unless changed pursuant to section 205 or 206 of the Federal Power Act provided the effective date for any change cannot be earlier than January 1, 2018. |
On August 26, 2015, the Settlement Judge certified the settlement to FERC as an uncontested settlement. The agreement currently is pending at FERC and ATSI anticipates that it will be approved later this year.
Pennsylvania Long Term Infrastructure Improvement Plans (LTIIPs)
On October 19, 2015, FirstEnergy's Pennsylvania utilities (Metropolitan Edison Company (ME), Pennsylvania Electric Company (PN), Pennsylvania Power Company (PP), WP) filed LTIIPs with the Pennsylvania Public Utility Commission (PAPUC) for infrastructure improvement over the five-year period from 2016 to 2020 for $245 million. The amounts submitted were as follows: WP $88.3 million; PN $56.7 million; PP $56.4 million; ME $43.4 million.
Upgrading the distribution system more quickly through an LTIIP is intended to enhance and modernize services to customers and maintain or improve overall system reliability and resiliency. Following PAPUC approval, the utilities will file to establish a Distribution System Improvement Charge (DSIC) Rider for quarterly recovery of approved costs.
West Virginia Expanded Net Energy Costs (ENEC) Case Update
On August 14, 2015, Monongahela Power Company (MP) and PE filed their annual ENEC case with the West Virginia Public Service Commission (WVPSC) proposing an approximate $165.1 million annual increase in rates, which is 12.5% overall increase over existing rates. The proposed increase is comprised of a $97 million under-recovered balance as of June 30, 2015, a projected $23.7 million under-recovery for the 2016 calendar year, and an under-recovered balance from
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Consolidated Report to the Financial Community - 3rd Quarter 2015 36
MP and PE's Temporary Transaction Surcharge (TTS) for Harrison Power Station of $44.4 million as of February 25, 2015.
On September 10, 2015, MP and PE filed an amendment addressing the results of the recent PJM Transitional Auctions for Capacity Performance, which resulted in a net decrease of $20.6 million from the initial requested increase of $165.1 million to $144.5 million. The hearing with the WVPSC is scheduled to begin on November 19, 2015 with an order expected to be issued before the end of 2015.
West Virginia Vegetation Management Update
On August 31, 2015, MP and PE filed their biennial petition for reconciliation of the Vegetation Management Program Surcharge and regular review of the program proposing an approximate $37.7 million annual increase in rates, which is a 2.8% increase over existing rates. The proposed increase is comprised of a $2.1 million under-recovered balance as of June 30, 2015, a projected $23.9 million in under-recovery for the 2016/2017 rate effective period, and recovery of previously authorized deferred vegetation management costs from April 14, 2014 through February 24, 2015 in the amount of $49.9 million. Rates are subject to the approval by the WVPSC and are expected to be effective January 1, 2016. WVPSC has scheduled a hearing on the matter for November 19-20, 2015.
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Consolidated Report to the Financial Community - 3rd Quarter 2015 37
Forward-Looking Statements: This Consolidated Report to the Financial Community includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties. These statements include declarations regarding management's intents, beliefs and current expectations. These statements typically contain, but are not limited to, the terms “anticipate,” “potential,” “expect,” "forecast," "target," "will," "intend," “believe,” "project," “estimate," "plan" and similar words. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, which may include the following: the speed and nature of increased competition in the electric utility industry, in general, and the retail sales market in particular; the ability to experience growth in the Regulated Distribution and Regulated Transmission segments and to successfully implement our revised sales strategy for the Competitive Energy Services segment; the accomplishment of our regulatory and operational goals in connection with our transmission investment plan, including but not limited to, our pending transmission rate case, the proposed transmission asset transfer, and the effectiveness of our repositioning strategy to reflect a more regulated business profile; changes in assumptions regarding economic conditions within our territories, assessment of the reliability of our transmission system, or the availability of capital or other resources supporting identified transmission investment opportunities; the impact of the regulatory process on the pending matters at the federal level and in the various states in which we do business including, but not limited to, matters related to rates and the Electric Security Plan IV in Ohio; the impact of the federal regulatory process on the Federal Energy Regulatory Commission (FERC)-regulated entities and transactions, in particular FERC regulation of wholesale energy and capacity markets, including PJM Interconnection, L.L.C. (PJM) markets and FERC-jurisdictional wholesale transactions; FERC regulation of cost-of-service rates, including FERC Opinion No. 531's revised Return on Equity methodology for FERC-jurisdictional wholesale generation and transmission utility service; and FERC’s compliance and enforcement activity, including compliance and enforcement activity related to North American Electric Reliability Corporation’s mandatory reliability standards; the uncertainties of various cost recovery and cost allocation issues resulting from American Transmission Systems, Incorporated's realignment into PJM; economic or weather conditions affecting future sales and margins such as a polar vortex or other significant weather events, and all associated regulatory events or actions; changing energy, capacity and commodity market prices including, but not limited to, coal, natural gas and oil, and their availability and impact on margins and asset valuations; the continued ability of our regulated utilities to recover their costs; costs being higher than anticipated and the success of our policies to control costs and to mitigate low energy, capacity and market prices; other legislative and regulatory changes, and revised environmental requirements, including, but not limited to, the effects of the United States Environmental Protection Agency's Clean Power Plan, coal combustion residuals regulations, Cross-State Air Pollution Rule and Mercury and Air Toxics Standards programs, including our estimated costs of compliance, Clean Water Act waste water effluent limitations for power plants, and Clean Water Act 316(b) water intake regulation; the uncertainty of the timing and amounts of the capital expenditures that may arise in connection with any litigation, including New Source Review litigation, or potential regulatory initiatives or rulemakings (including that such initiatives or rulemakings could result in our decision to deactivate or idle certain generating units); the uncertainties associated with the deactivation of certain older regulated and competitive fossil units, including the impact on vendor commitments, and as they relate to the reliability of the transmission grid, the timing thereof; the impact of other future changes to the operational status or availability of our generating units and any capacity performance charges associated with unit unavailability; adverse regulatory or legal decisions and outcomes with respect to our nuclear operations (including, but not limited to the revocation or non-renewal of necessary licenses, approvals or operating permits by the Nuclear Regulatory Commission or as a result of the incident at Japan's Fukushima Daiichi Nuclear Plant); issues arising from the indications of cracking in the shield building at Davis-Besse; the risks and uncertainties associated with litigation, arbitration, mediation and like proceedings, including, but not limited to, any such proceedings related to vendor commitments; the impact of labor disruptions by our unionized workforce; replacement power costs being higher than anticipated or not fully hedged; the ability to comply with applicable state and federal reliability standards and energy efficiency and peak demand reduction mandates; changes in customers' demand for power, including, but not limited to, changes resulting from the implementation of state and federal energy efficiency and peak demand reduction mandates; the ability to accomplish or realize anticipated benefits from strategic and financial goals, including, but not limited to, the ability to continue to reduce costs and to successfully execute our financial plans designed to improve our credit metrics and strengthen our balance sheet through, among other actions, our previously-implemented dividend reduction, our cash flow improvement plan and our other proposed capital raising initiatives; our ability to improve electric commodity margins and the impact of, among other factors, the increased cost of fuel and fuel transportation on such margins; changing market conditions that could affect the measurement of certain liabilities and the value of assets held in our Nuclear Decommissioning Trusts, pension trusts and other trust funds, and cause us and/or our subsidiaries to make additional contributions sooner, or in amounts that are larger than currently anticipated; the impact of changes to material accounting policies; the ability to access the public securities and other capital and credit markets in accordance with our financial plans, the cost of such capital and overall condition of the capital and credit markets affecting us and our subsidiaries; actions that may be taken by credit rating agencies that could negatively affect us and/or our subsidiaries' access to financing, increase the costs thereof, and increase requirements to post additional collateral to support outstanding commodity positions, letters of credit and other financial guarantees; changes in national and regional economic conditions affecting us, our subsidiaries and/or our major industrial and commercial customers, and other counterparties with which we do business, including fuel suppliers; the impact of any changes in tax laws or regulations or adverse tax audit results or rulings; issues concerning the stability of domestic and foreign financial institutions and counterparties with which we do business; the risks associated with cyber-attacks on our electronic data centers that could compromise the information stored on our networks, including proprietary information and customer data; and the risks and other factors discussed from time to time in our United States Securities and Exchange Commission filings, and other similar factors. Dividends declared from time to time on FirstEnergy Corp.'s common stock during any period may in the aggregate vary from prior periods due to circumstances considered by FirstEnergy Corp.'s Board of Directors at the time of the actual declarations. A security rating is not a recommendation to buy or hold securities and is subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating. The foregoing review of factors should not be construed as exhaustive. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor assess the impact of any such factor on FirstEnergy's business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. FirstEnergy expressly disclaims any current intention to update, except as required by law, any forward-looking statements contained herein as a result of new information, future events or otherwise.
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