EX-99.2 3 ex99_2.htm EXHIBIT 99.2 - CONSOLIDATED REPORT TO THE FINANCIAL COMMUNITY ex99_2.htm
Exhibit 99.2
                                                                                                                                                                                        
Consolidated Report to the Financial Community
Third Quarter 2007
(Released October 30, 2007) (Unaudited) 
 
           
 HIGHLIGHTS    After-Tax EPS Variance Analysis 3rd Qtr.  
       3Q 2006 Basic EPS - GAAP Basis
 $1.41
  
▪
 Normalized non-GAAP* earnings, excluding special items,   
Special Items - 2006
   0.01
  
  were $1.32 per share for the third quarter of 2007, compared        3Q 2006 Normalized Earnings - Non-GAAP Basis*
 $1.42
  
  with $1.42 per share for the third quarter of 2006. GAAP   
Distribution Deliveries
  (0.03)
  
  earnings for the third quarter of 2007 were $1.36 per share    
Met-Ed and Penelec Distribution Rate Decrease
  (0.07)
  
  compared with $1.41 per share in the prior year.  
Generation Revenues
    0.20
  
     
Purchased Power                
  (0.11)
  
 3Q 2007 Results vs. 3Q 2006  
  
Sale of Emission Allowances - 2006
  (0.06)
  
     
Pensions and Other Post-retirement Benefits
     0.06  
 ▪
 Electric distribution deliveries declined slightly primarily due  
Depreciation
  (0.02)
  
  to milder weather in the eastern portion of our service area   
General Taxes
  (0.02)
  
  compared to the previous year. Residential  and industrial  
Investment Income - NDT and COLI
  (0.04)
  
  deliveries decreased 2% and 1%, respectively, while    
Financing Costs
 (0.03)
  
  commercial deliveries increased 1%. The change in  
Income Tax Benefit - 2006
  (0.05)
  
  customer class and geographic sales mix, along with the  
Reduced Common Shares
    0.08
  
  slight overall decrease in  distribution  deliveries,  reduced  
Other
  (0.01)
  
  earnings by $0.03 per share, while the impact of the  
 3Q 2007 Normalized Earnings-Non-GAAP Basis*
  $1.32  
  distribution rate decrease at Metropolitan Edison Company  
Special Items - 2007
     0.04  
  (Met-Ed) and Pennsylvania Electric Company (Penelec),    3Q 2007Basic EPS - GAAP Basis  $1.36  
  effective January 2007, reduced earnings by $0.07 per share.        
 
 ▪
Total electric generation sales increased 1%, as an increase of 0.9 million megawatt hours (MWh) or 16% in wholesale sales was partially offset by a 0.6 million MWh or 2% reduction in retail generation sales.  Generation revenues, excluding power sourced from third-party auction suppliers for our Jersey Central Power & Light Company (JCP&L) and Pennsylvania Power Company (Penn Power) customers, increased earnings by $0.20 per share.  This increase was attributable to higher wholesale and retail prices, as well as higher sales volumes.
   
  ▪
Higher purchased power expense, excluding JCP&L and Penn Power purchases from third-party auction suppliers, reduced earnings by $0.11 per share due to replacement power purchases for the 25-day outage at the Perry Nuclear Power Plant and higher market prices.
   
 ▪
The absence of any material sales of emission allowances in the third quarter of 2007, compared to the same period last year, reduced earnings by $0.06 per share.
   
 ▪
Reduced pension and other post-retirement benefit costs increased earnings by $0.06 per share, mainly due to retiree health care design changes and the impact of the $300-million voluntary contribution to the pension plan made in January 2007.
   
 ▪
 Incremental property additions increased depreciation expense by $0.02 per share.
 
 
 
 
 ▪
Higher general taxes reduced earnings by $0.02 per share, primarily due to increased property taxes and Pennsylvania gross receipts taxes.
   
  ▪
Decreased investment income related to nuclear decommissioning trusts and corporate-owned life insurance reduced earnings by $0.04 per share.
   
 ▪
Increased financing costs lowered earnings by $0.03 per share, primarily attributable to the interim financing of the accelerated share repurchase program and the January 2007 pension plan contribution.
   
 ▪
A $0.05 per share reduction in earnings resulted from an income tax benefit that increased earnings in the third quarter last year. The benefit principally related to the 2005 estimated manufacturing deduction in connection with the filing of the 2005 federal income tax return in September 2006.
   
 ▪
The reduction in shares outstanding due to the accelerated repurchases of 10.6 million and 14.4 million common shares in August 2006 and March 2007, respectively, enhanced earnings by $0.08 per share.
   
 ▪
During the quarter, a $0.04 per share increase in earnings was recognized from gains related to the sale of a portion of our ownership interest in First Communications.
   
 2007 Earnings Guidance 
   
 ▪
Normalized non-GAAP earnings guidance for 2007, excluding special items, has been revised to $4.15 to $4.25 per share  from our previous non-GAAP guidance of $4.05 to $4.25 per share. The increase toward the top half of the prior guidance reflects the strong performance during the first nine months of the year. Year-to-date normalized non-GAAP earnings through September now stand at $3.33 per share.
   
 
 
* The 2007 GAAP to non-GAAP reconciliation statements can be found on page 10 of this report and all GAAP to non-GAAP reconciliation statements are available on the Investor Information section of FirstEnergy Corp.'s Web site at www.firstenergycorp.com/ir.
 
For additional information, please contact:
 Ronald E. Seeholzer  Kurt E. Turosky  Rey Y. Jimenez
 Vice President, Investor Relations  Director, Investor Relations  Principal, Investor Relations
 (330) 384-5783  (330) 384-5500  (330) 761-4239
 
 
Consolidated Report to the Financial Community –3rd Quarter 2007                                                                                                                                                         2
 
 

FirstEnergy Corp.
Consolidated Statements of Income
(Unaudited)
(In millions, except for per share amounts)
 
       
 Three Months Ended Sept. 30,      
    
     Nine Months Ended Sept. 30,      
  
   
 
  
2007
    
2006
    
Change
    
2007
    
2006
    
Change
  
 
  
Revenues
                                
 
  
 (1)
  
Electric sales
   $
3,394
     $
3,115
     $
279
     $
9,062
     $
8,179
     $
883
  
 (2)
  
FE Facilities
    
-
      
10
       (10 )    
-
      
48
       (48 )
 (3)
  
Other
    
247
      
239
      
8
      
661
      
594
      
67
  
 (4)
  
Total Revenues
    
3,641
      
3,364
      
277
      
9,723
      
8,821
      
902
  
   
Expenses
                                                
 (5)
  
Fuel
    
327
      
344
       (17 )    
887
      
929
       (42 )
 (6)
  
Purchased power
    
1,168
      
973
      
195
      
2,914
      
2,377
      
537
  
 (7)
  
Other operating expenses
    
756
      
748
      
8
      
2,255
      
2,180
      
75
  
 (8)
  
FE Facilities
    
-
      
10
       (10 )    
-
      
50
       (50 )
 (9)
  
Provision for depreciation
    
162
      
153
      
9
      
477
      
445
      
32
  
 (10)
  
Amortization of regulatory assets
    
288
      
243
      
45
      
785
      
665
      
120
  
 (11)
  
Deferral of new regulatory assets
     (107 )     (153 )    
46
       (399 )     (379 )     (20 )
 (12)
  
General taxes
    
197
      
187
      
10
      
589
      
553
      
36
  
 (13)
  
Total Expenses
    
2,791
      
2,505
      
286
      
7,508
      
6,820
      
688
  
 (14)
  
Operating Income
    
850
      
859
       (9 )    
2,215
      
2,001
      
214
  
   
Other Income (Expense)
                                                
 (15)
  
Investment income
    
30
      
46
       (16 )    
93
      
120
       (27 )
 (16)
  
Interest expense
     (203 )     (185 )     (18 )     (593 )     (528 )     (65 )
 (17)
  
Capitalized interest
    
9
      
7
      
2
      
21
      
21
      
-
  
 (18)
  
Subsidiaries' preferred stock dividends
    
-
       (2 )    
2
      
-
       (6 )    
6
  
 (19)
  
Total Other Income (Expense)
     (164 )     (134 )     (30 )     (479 )     (393 )     (86 )
 (20)
  
Income From Continuing Operations
                                                
   
Before Income Taxes
    
686
      
725
       (39 )    
1,736
      
1,608
      
128
  
 (21)
  
Income taxes
    
273
      
273
      
-
      
695
      
625
      
70
  
 (22)
  
Income From Continuing Operations
    
413
      
452
       (39 )    
1,041
      
983
      
58
  
 (23)
  
Discontinued operations
    
-
      
2
       (2 )    
-
       (4 )    
4
  
 (24)
  
Net Income
   $
413
     $
454
     $ (41 )   $
1,041
     $
979
     $
62
  
   
Basic Earnings Per Common Share:
                                                
 (25)
  
Income from continuing operations
   $
1.36
     $
1.40
     $ (0.04 )   $
3.39
     $
3.00
     $
0.39
  
 (26)
  
Discontinued operations
    
-
      
0.01
       (0.01 )    
-
       (0.01 )    
0.01
  
 (27)
  
Basic Earnings Per Common Share
   $
1.36
     $
1.41
     $ (0.05 )   $
3.39
     $
2.99
     $
0.40
  
 (28)
  
Weighted Average Number of
                                                
   
Basic Shares Outstanding
    
304
      
322
       (18 )    
307
      
326
       (19 )
   
Diluted Earnings Per Common Share:
                                                
 (29)
  
Income from continuing operations
   $
1.34
     $
1.39
     $ (0.05 )   $
3.35
     $
2.98
     $
0.37
  
 (30)
  
Discontinued operations
    
-
      
0.01
       (0.01 )    
-
       (0.01 )    
0.01
  
 (31)
  
Diluted Earnings Per Common Share
   $
1.34
     $
1.40
     $ (0.06 )   $
3.35
     $
2.97
     $
0.38
  
 (32)
  
Weighted Average Number of
                                                
   
Diluted Shares Outstanding
    
307
      
325
       (18 )    
311
      
329
       (18 )
 

 
Consolidated Report to the Financial Community - 3rd Quarter 2007                                                                                   3

FirstEnergy Corp.
Consolidated Income Segments
(Unaudited)
(In millions)
 
 
 
  
Three Months Ended September 30, 2007
  
 
 
  
 
    
 
    
Ohio
    
 
    
 
    
 
  
 
 
  
Energy
    
Competitive
    
Transitional
    
 
    
 
    
 
  
 
 
  
Delivery
    
Energy
    
Generation
    
 
    
Reconciling
    
 
  
 
 
  
Services (a)
    
Services (b)
    
Services (c)
    
Other (d)
    
Adjustments
    
Consolidated
  
 
 Revenues
  
 
    
 
    
 
    
 
    
 
    
 
  
 (1)
Electric sales
   $
2,340
     $
338
     $
716
     $
-
     $
-
     $
3,394
  
 (2)
FE Facilities
    
-
      
-
      
-
      
-
      
-
      
-
  
 (3)
Other
    
180
      
32
      
7
      
9
      
19
      
247
  
 (4)
Internal revenues
    
-
      
806
      
-
      
-
       (806 )    
-
  
 (5)
 Total Revenues
    
2,520
      
1,176
      
723
      
9
       (787 )    
3,641
  
 
 
                                                
 
 Expenses
                                                
 (6)
Fuel
    
2
      
325
      
-
      
-
      
-
      
327
  
 (7)
Purchased power
    
1,114
      
229
      
631
      
-
       (806 )    
1,168
  
 (8)
Other operating expenses
    
436
      
264
      
80
      
3
       (27 )    
756
  
 (9)
FE Facilities
    
-
      
-
      
-
      
-
      
-
      
-
  
 (10)
Provision for depreciation
    
102
      
51
      
-
      
1
      
8
      
162
  
 (11)
Amortization of regulatory assets
    
279
      
-
      
9
      
-
      
-
      
288
  
 (12)
Deferral of new regulatory assets
     (82 )    
-
       (25 )    
-
      
-
       (107 )
 (13)
General taxes
    
166
      
26
      
1
      
1
      
3
      
197
  
 (14)
 Total Expenses
    
2,017
      
895
      
696
      
5
       (822 )    
2,791
  
(15)
 Operating Income
    
503
      
281
      
27
      
4
      
35
      
850
  
 
 
                                                
 
 Other Income (Expense)
                                                
 (16)
Investment income
    
58
      
5
      
-
      
1
       (34 )    
30
  
 (17)
Interest expense
     (120 )     (44 )    
-
       (1 )     (38 )     (203 )
 (18)
Capitalized interest
    
3
      
5
      
-
      
-
      
1
      
9
  
 (19)
Subsidiaries' preferred stock dividends
    
-
      
-
      
-
      
-
      
-
      
-
  
 (20)
 Total Other Income (Expense)
     (59 )     (34 )    
-
      
-
       (71 )     (164 )
 (21)
 Income From Continuing Operations
                                          
 
   Before Income Taxes
    
444
      
247
      
27
      
4
       (36 )    
686
  
 (22)
Income taxes
    
175
      
99
      
11
       (2 )     (10 )    
273
  
                                                   
 (23)
 Income From Continuing Operations 
    
269
      
148
      
16
      
6
       (26 )    
413
  
 (24)
Discontinued operations
    
-
      
-
      
-
      
-
      
-
      
-
  
 (25)
 Net Income
   $
269
     $
148
     $
16
     $
6
     $ (26 )   $
413
  
 
 
                                                
 (a)
Consists of regulated transmission and distribution operations, including transition cost recovery, and provider of last resort generation service                         
 
for FirstEnergy's Pennsylvania and New Jersey electric utility subsidiaries.                         
 (b)
Consists of unregulated generation and commodity operations, including competitive electric sales, and generation sales to affiliated electric utilities.      
 (c) Represents provider of last resort generation service by FirstEnergy's Ohio electric utility subsidiaries.
 (d) Primarily consists of telecommunications services.
 
          
 
 


 
Consolidated Report to the Financial Community – 3rd Quarter 2007                                                                                                                                                                        4


FirstEnergy Corp.
Consolidated Income Segments
(Unaudited)
(In millions)
 
       
                Three Months Ended September 30, 2006
  
 
  
 
  
 
    
 
    
Ohio
    
 
    
 
    
 
  
 
  
 
  
Energy
    
Competitive
    
Transitional
    
 
    
 
    
 
  
 
  
 
  
Delivery
    
Energy
    
Generation
    
 
    
Reconciling
    
 
  
 
  
 
  
Services (a)
    
Services (b)
    
Services (c)
    
Other (d)
    
Adjustments
    
Consolidated
  
     Revenues                                    
 (1)
  
Electric sales
   $
2,120
     $
313
     $
682
     $
-
     $
-
     $
3,115
  
 (2)
  
FE Facilities
    
-
      
-
      
-
      
10
      
-
      
10
  
 (3)
  
Other
    
186
      
40
      
8
      
14
       (9 )    
239
  
 (4)
  
Internal revenues
    
-
      
762
      
-
      
-
       (762 )    
-
  
 (5)
  
Total Revenues
    
2,306
      
1,115
      
690
      
24
       (771 )    
3,364
  
                                                     
    
Expenses
                                                
 (6)
  
Fuel
    
2
      
342
      
-
      
-
      
-
      
344
  
 (7)
  
Purchased power
    
958
      
173
      
604
      
-
       (762 )    
973
  
 (8)
  
Other operating expenses
    
468
      
218
      
76
      
1
       (15 )    
748
  
 (9)
  
FE Facilities
    
-
      
-
      
-
      
10
      
-
      
10
  
 (10)  
Provision for depreciation
    
97
      
49
      
-
      
1
      
6
      
153
  
 (11)  
Amortization of regulatory assets
    
237
      
-
      
6
      
-
      
-
      
243
  
 (12)  
Deferral of new regulatory assets
     (107 )    
-
       (46 )    
-
      
-
       (153 )
 (13)  
General taxes
    
157
      
21
      
5
       (1 )    
5
      
187
  
 (14)  
Total Expenses
    
1,812
      
803
      
645
      
11
       (766 )    
2,505
  
    
  
                                                
 (15)  
Operating Income
    
494
      
312
      
45
      
13
       (5 )    
859
  
    
 
                                                
    
Other Income (Expense)
                                                
 (16)  
Investment income
    
80
      
18
      
-
      
-
       (52 )    
46
  
 (17)  
Interest expense
     (109 )     (52 )    
-
       (2 )     (22 )     (185 )
 (18)  
Capitalized interest
    
4
      
3
      
-
      
-
      
-
      
7
  
 (19)  
Subsidiaries' preferred stock dividends
     (2 )    
-
      
-
      
-
      
-
       (2 )
 (20)  
Total Other Income (Expense)
     (27 )     (31 )    
-
       (2 )     (74 )     (134 )
                                                     
 (21)    Income From Continuing Operations                                                
    
Before Income Taxes
    
467
      
281
      
45
      
11
       (79 )    
725
  
 (22)  
Income taxes
    
187
      
112
      
18
       (14 )     (30 )    
273
  
 (23)  
Income From Continuing Operations
    
280
      
169
      
27
      
25
       (49 )    
452
  
 (24)  
Discontinued operations
    
-
      
-
      
-
      
2
      
-
      
2
  
 (25)  
Net Income
   $
280
     $
169
     $
27
     $
27
     $ (49 )   $
454
  
                                                     
 (a)
  Consists of regulated transmission and distribution operations, including transition cost recovery, and provider of last resort generation service for                      
 
 FirstEnergy's Pennsylvania and New Jersey electric utility subsidiaries.             
                        
 (b)
   Consists of unregulated generation and commodity operations, including competitive electric sales, and generation sales to affiliated electric utilities.                 
 (c)
   Represents provider of last resort generation service by FirstEnergy's Ohio electric utility subsidiaries.  
 (d)
  Consists of telecommunications services and non-core businesses divested in 2006 (Facilities Services Group and MYR).   

 
 
Consolidated Report to the Financial Community – 3rd Quarter 2007                                                             5

FirstEnergy Corp.
Consolidated Income Segments
(Unaudited)
(In millions)
 
 
  
 
  
    Three Months Ended Sept. 30, 2007 vs. Three Months Ended Sept. 30, 2006
  
 
  
  
  
 
    
 
    
Ohio
    
 
    
 
    
 
  
 
  
 
  
Energy
    
Competitive
    
Transitional
    
 
    
 
    
 
  
 
  
 
  
Delivery
    
Energy
    
Generation
    
 
    
Reconciling
    
 
  
 
  
 
  
Services (a)
    
Services (b)
    
Services (c)
    
Other (d)
    
Adjustments
    
Consolidated
  
 
  
Revenues
                                    
 (1)
  
Electric sales
   $
220
     $
25
     $
34
     $
-
     $
-
     $
279
  
 (2)
FE Facilities
    
-
      
-
      
-
       (10 )    
-
       (10 )
 (3)
  
Other
     (6 )     (8 )     (1 )     (5 )    
28
      
8
  
 (4)
  
Internal revenues
    
-
      
44
      
-
      
-
       (44 )    
-
  
 (5)
  
Total Revenues
    
214
      
61
      
33
       (15 )     (16 )    
277
  
    
Expenses
                                                
 (6)
  
 Fuel
    
-
       (17 )    
-
      
-
      
-
       (17 )
 (7)
  
Purchased power
    
156
      
56
      
27
      
-
       (44 )    
195
  
 (8)
  
Other operating expenses
     (32 )    
46
      
4
      
2
       (12 )    
8
  
 (9)
  
FE Facilities
    
-
      
-
      
-
       (10 )    
-
       (10 )
 (10)
  
Provision for depreciation
    
5
      
2
      
-
      
-
      
2
      
9
  
 (11)
  
Amortization of regulatory assets
    
42
      
-
      
3
      
-
      
-
      
45
  
 (12)
Deferral of new regulatory assets
    
25
      
-
      
21
      
-
      
-
      
46
  
 (13)
  
General taxes
    
9
      
5
       (4 )    
2
       (2 )    
10
  
 (14)
  
Total Expenses
    
205
      
92
      
51
       (6 )     (56 )    
286
  
    
  
                                                
 (15)
  
Operating Income
    
9
       (31 )     (18 )     (9 )    
40
       (9 )
    
  
                                                
    
Other Income (Expense)
                                                
 (16)
  
Investment income
     (22 )     (13 )    
-
      
1
      
18
       (16 )
 (17)
  
Interest expense
     (11 )    
8
      
-
      
1
       (16 )     (18 )
 (18)
  
Capitalized interest
     (1 )    
2
      
-
      
-
      
1
      
2
  
 (19)
  
Subsidiaries' preferred stock dividends
    
2
      
-
      
-
      
-
      
-
      
2
  
 (20)
  
Total Other Income (Expense)
     (32 )     (3 )    
-
      
2
      
3
       (30 )
    
  
                                                
 (21)
  
Income From Continuing Operations
                                                
    
Before Income Taxes
     (23 )     (34 )     (18 )     (7 )    
43
       (39 )
 (22)
  
Income taxes
     (12 )     (13 )     (7 )    
12
      
20
      
-
  
 (23)
  
Income From Continuing Operations 
     (11 )     (21 )     (11 )     (19 )    
23
       (39 )
 (24)
  
Discontinued operations
    
-
      
-
      
-
       (2 )    
-
       (2 )
 (25)
  
Net Income
   $ (11 )   $ (21 )   $ (11 )   $ (21 )   $
23
     $ (41 )
                                                     
 (a)
   Consists of regulated transmission and distribution operations, including transition cost recovery, and provider of last resort generation service for FirstEnergy's                       
   
Pennsylvania and New Jersey electric utility subsidiaries.                       
  
 (b)
    Consists of unregulated generation and commodity operations, including competitive electric sales, and generation sales to affiliated electric utilities.                      
 (c)
    Represents provider of last resort generation service by FirstEnergy's Ohio electric utility subsidiaries.
 (d)
   Consists of telecommunications services and non-core businesses divested in 2006 (Facilities Services Group and MYR).


 

Consolidated Report to the Financial Community - 3rd Quarter 2007                                                                                     6

 
FirstEnergy Corp.
Financial Statements
(Unaudited)
(In millions)
 
 
 
Condensed Consolidated Balance Sheets
        
               
     
As of
Sept. 30,
2007
    
As of
 Dec. 31,
 2006
  
 
Assets
            
 
Current Assets:
            
 
Cash and cash equivalents
   $
30
     $
90
  
 
Receivables
    
1,626
      
1,267
  
 
Other
    
750
      
726
  
 
Total Current Assets
    
2,406
      
2,083
  
                   
 
Property, Plant and Equipment
    
15,038
      
14,667
  
 
Investments
    
3,665
      
3,534
  
 
Deferred Charges and Other Assets
    
10,544
      
10,912
  
 
Total Assets
   $
31,653
     $
31,196
  
                   
 
Liabilities and Capitalization
                
 
Current Liabilities:
                
 
Currently payable long-term debt
   $
2,265
     $
1,867
  
 
Short-term borrowings
    
573
      
1,108
  
 
Accounts payable
    
760
      
726
  
 
Other
    
1,780
      
1,554
  
 
Total Current Liabilities
    
5,378
      
5,255
  
                   
 
Capitalization:
                
 
Common stockholders' equity (a)
    
8,768
      
9,035
  
 
Long-term debt and other long-term obligations
    
8,617
      
8,535
  
 
Total Capitalization
    
17,385
      
17,570
  
 
Noncurrent Liabilities
    
8,890
      
8,371
  
 
Total Liabilities and Capitalization
   $
31,653
     $
31,196
  
                   
 
 (a) Reduction reflects $900 million common share repurchase in 2007.
          
 

 
General Information
  
Three Months Ended Sept. 30, 
  
Nine Months Ended Sept. 30, 
                         
   
2007 
  
2006 
  
2007 
  
2006 
                         
Debt and equity securities redemptions
   $ (176 )   $ (1,185 )   $ (1,565 )   $ (1,700 )
New long-term debt issues
   $
300
     $
182
     $
1,100
     $
1,235
  
Short-term debt increase/(decrease)
   $ (1,843 )   $
111
     $ (535 )   $
482
  
Capital expenditures
   $ (430 )   $ (251 )   $ (1,127 )   $ (990 )
 
 

 
Adjusted Capitalization (Including Off-Balance Sheet Items) - Rating Agency View
              
     
As of September 30,       
     
2007 
  
% Total 
  
2006
    
% Total 
 
Total common equity
   $
8,768
       40 %   $
9,208
       42 %
 
Preferred stock
    
-
      
-
      
80
       0 %
 
Long-term debt (a)
    
10,478
       48 %    
9,994
       46 %
 
Short-term debt
    
573
       3 %    
1,213
       6 %
 
Off-balance sheet debt equivalents:
                                
 
Sale-leaseback net debt equivalents (b)
    
2,032
       9 %    
1,255
       6 %
 
Total
   $
21,851
       100 %   $
21,750
       100 %
                                   
 
(a) Includes amount due to be paid within one year and excludes JCP&L securitization debt of $404 million and $434 million in 2007 and 2006,
 
 
  respectively.
                                
 
(b) Associated with 1987 and 2007 sale and leaseback transactions.             
 
 
 
 
Consolidated Report to the Financial Community – 3rd Quarter 2007                                                             7
FirstEnergy Corp.
Financial Statements
(Unaudited)
(In millions)
 
Condensed Consolidated Statements of Cash Flows
                        
      
Three Months Ended Sept. 30,
    
Nine Months Ended Sept. 30,
  
      
2007
    
2006
    
2007
    
2006
  
Cash flows from operating activities:
                        
Net income
   $
413
     $
454
     $
1,041
     $
979
  
Adjustments to reconcile net income to net cash from operating activities:
                  
      Depreciation, amortization, and deferral of regulatory assets    
343
      
244
      
863
      
731
  
      Deferred purchased power and other costs     (80 )     (84 )     (265 )     (323 )
      Deferred income taxes and investment tax credits*     (243 )    
4
       (158 )    
36
  
      Deferred rents and lease market valuation liability    
51
      
51
       (41 )     (54 )
      Electric service prepayment programs     (16 )     (16 )     (52 )     (45 )
      Cash collateral, net     (31 )     (43 )     (50 )     (98 )
      Pension trust contribution    
-
      
-
       (300 )    
-
  
      Change in working capital and other*    
583
      
148
      
113
      
17
  
Cash flows provided from operating activities
    
1,020
      
758
      
1,151
      
1,243
  
                                    
Cash flows used for financing activities
     (1,896 )     (1,062 )     (1,442 )     (444 )
                                    
Cash flows provided from (used for) investing activities
    
869
       (238 )    
231
       (822 )
Net decrease in cash and cash equivalents
   $ (7 )   $ (542 )   $ (60 )   $ (23 )
                                    
* The Bruce Mansfield sale and leaseback transaction reduced deferred income taxes by $187 million and increased accrued taxes included in working capital
   changes by the same amount in the 2007 periods.
  
 
 
Deferrals and Amortizations
  
 
    
Three Months Ended Sept. 30,
    
Nine Months Ended Sept. 30,
  
    
2007
    
2006
    
Change
    
2007
    
2006
    
Change
  
Ohio Regulatory Assets         
  
 
                                  
 
  
Deferred Balance - Beginning
   $
1,826
     $
1,882
           $
1,844
     $
1,924
    
 
  
                                          
 
  
    Deferral of shopping incentives    
-
      
-
     $
-
      
-
      
3
     $ (3 )
    Interest on shopping incentives    
9
      
11
       (2 )    
28
      
32
       (4 )
    Deferral of MISO costs and interest    
7
      
4
      
3
      
45
      
11
      
34
  
    Deferral of RCP distribution reliability costs    
52
      
40
      
12
      
143
      
121
      
22
  
    Deferral of RCP fuel costs    
21
      
43
       (22 )    
62
      
94
       (32 )
    Deferral of other regulatory assets    
6
      
1
      
5
      
17
      
7
      
10
  
Current period deferrals
   $
95
     $
99
     $ (4 )   $
295
     $
268
     $
27
  
                                                  
Amortization          
  
 
    Ohio transition costs amortization   $ (83 )   $ (77 )   $ (6 )   $ (222 )   $ (211 )   $ (11 )
    Shopping incentives amortization     (34 )     (34 )    
-
       (94 )     (93 )     (1 )
    MISO costs amortization     (9 )     (5 )     (4 )     (20 )     (15 )     (5 )
    Other     (7 )     (8 )    
1
       (15 )     (16 )    
1
  
Current period amortization
   $ (133 )   $ (124 )   $ (9 )   $ (351 )   $ (335 )   $ (16 )
                                                  
Deferred Balance - Ending
   $
1,788
     $
1,857
           $
1,788
     $
1,857
    
 
  
                                                  
Pennsylvania Deferred PJM Costs           
Beginning Balance
   $
216
     $
57
           $
157
     $
-
        
       Deferrals    
13
      
54
     $ (41 )    
81
      
111
     $ (30 )
       Interest    
1
      
-
      
1
      
3
      
-
      
3
  
       Amortizations     (3 )    
-
       (3 )     (14 )    
-
       (14 )
Ending Balance
   $
227
     $
111
           $
227
     $
111
        
                                                  
New Jersey Deferred Energy Costs            
Beginning Balance
   $
392
     $
638
           $
369
     $
541
        
    Deferral of energy costs     (62 )     (298 )   $
236
       (39 )     (201 )   $
162
  
Ending Balance
   $
330
     $
340
           $
330
     $
340
        
 

 
Consolidated Report to the Financial Community – 3rd Quarter 2007                                                             8

FirstEnergy Corp.
Statistical Summary
(Unaudited)
 
ELECTRIC SALES STATISTICS
  
Three Months Ended September 30,
    
Nine Months Ended September 30,
  
(in millions of kWhs)
  
2007
  
2006
  
Change
    
2007
  
2006
  
Change
  
                                 
Electric Generation Sales
                            
Retail - Regulated 
  
            25,659
  
             26,281
  
-2.4
 %  
            73,653
  
            72,878
  
1.1
 %
Retail - Competitive
  
              3,449
  
              3,442
  
0.2
 %  
              9,940
  
               8,901
  
11.7
 %
 
Total Retail 
  
             29,108
  
            29,723
  
-2.1
 %   
            83,593
  
             81,779
  
2.2
 %
Wholesale
    
               6,148
  
              5,296
  
16.1
 %   
              17,571
  
             17,279
  
1.7
 %
Total Electric Generation Sales
  
     35,256
  
      35,019
  
0.7
 %   
     101,164
  
     99,058
  
2.1
 %
                                 
Electric Distribution Deliveries
                            
Ohio
  
- Residential
  
              4,676
  
              4,642
  
0.7
 %  
             13,342
  
             12,666
  
5.3
 %
   
- Commercial
  
              4,028
  
              3,985
  
1.1
 %   
              11,497
  
               11,145
  
3.2
 %
   
- Industrial
  
              6,073
  
                 6,111
  
-0.6
 %   
              17,661
  
             17,673
  
-0.1
 %
   
- Other
  
                    93
  
                    95
  
-2.1
 %   
                  278
  
                  280
  
-0.7
 %
   
Total Ohio
  
      14,870
  
      14,833
  
0.2
 %   
     42,778
  
      41,764
  
2.4
 %
                                 
Pennsylvania
- Residential
  
              2,987
  
              2,987
  
-
    
              8,855
  
              8,444
  
4.9
 %
   
- Commercial
  
              2,997
  
              2,930
  
2.3
 %   
              8,499
  
               8,182
  
3.9
 %
   
- Industrial
  
              2,622
  
               2,671
  
-1.8
 %   
              7,730
  
              7,845
  
-1.5
 %
   
- Other
  
                    20
  
                    20
  
-
    
                     61
  
                    62
  
-1.6
 %
   
Total Pennsylvania
  
       8,626
  
       8,608
  
0.2
 %   
      25,145
  
     24,533
  
2.5
 %
                                 
New Jersey
- Residential
  
              2,878
  
              3,092
  
-7.0
 %   
               7,617
  
              7,447
  
2.3
 %
   
- Commercial
  
               2,732
  
              2,708
  
0.8
 %   
              7,444
  
              7,204
  
3.3
 %
   
- Industrial
  
                  739
  
                  749
  
-1.2
 %   
               2,166
  
               2,142
  
1.1
 %
   
- Other
  
                    23
  
                    22
  
4.5
 %   
                    66
  
                    65
  
1.5
 %
   
Total New Jersey
  
        6,372
  
        6,571
  
-3.0
 %   
      17,293
  
      16,858
  
2.6
 %
                                 
Total Residential 
  
              10,541
  
              10,721
  
-1.7
 %   
             29,814
  
            28,557
  
4.4
 %
Total Commercial 
  
              9,757
  
              9,623
  
1.4
 %   
            27,440
  
             26,531
  
3.4
 %
Total Industrial
    
              9,434
  
               9,531
  
-1.0
 %   
            27,557
  
            27,660
  
-0.4
 %
Total Other
    
                   136
  
                   137
  
-0.7
 %   
                  405
  
                  407
  
-0.5
 %
                             
Total Distribution Deliveries
  
     29,868
  
      30,012
  
-0.5
 %   
      85,216
  
      83,155
  
2.5
 %
                                 
Electric Sales Shopped
                            
Ohio
  
- Residential
  
                  635
  
                  672
  
-5.5
 %   
               1,687
  
               1,766
  
-4.5
 %
   
- Commercial
  
                  957
  
               1,045
  
-8.4
 %   
               2,712
  
               2,910
  
-6.8
 % 
   
- Industrial
  
                   719
  
                   761
  
-5.5
 %   
              2,048
  
              2,204
  
-7.1
 % 
   
Total Ohio
  
        2,311
  
       2,478
  
-6.7
 %   
       6,447
  
       6,880
  
-6.3
 % 
                                 
Pennsylvania
- Residential
  
                    33
  
                        -
  
                        -
    
                    44
  
                        1
  
                        -
  
   
- Commercial
  
                   182
  
                   143
  
27.3
 %   
                  446
  
                        1
  
                        -
  
   
- Industrial
  
                   513
  
                        -
  
                        -
    
               1,389
  
                  368
  
277.5
 % 
   
Total Pennsylvania
  
          728
  
           143
  
409.1
 %   
        1,879
  
          370
  
407.7
 % 
                                 
New Jersey
- Residential
  
                        -
  
                        -
  
                        -
    
                      -
  
                      -
  
-
  
   
- Commercial
  
                  603
  
                  555
  
8.6
 %   
               1,598
  
               1,449
  
10.3
 % 
   
- Industrial
  
                  567
  
                  555
  
2.2
 %   
                1,641
  
               1,578
  
4.0
 % 
   
Total New Jersey
  
        1,170
  
         1,110
  
5.4
 %   
       3,239
  
       3,027
  
7.0
 % 
                                 
Total Electric Sales Shopped
  
       4,209
  
        3,731
  
12.8
 %   
      11,565
  
      10,277
  
12.5
 % 
 
 
Operating Statistics
                          
       
Three Months Ended Sept. 30,   
      
Nine Months Ended Sept. 30,   
    
       
2007
  
2006
      
2007
  
2006
    
Capacity Factors:
                          
 
Fossil - Baseload
85%
  
86%
      
80%
  
90%
    
 
Fossil - Load Following
  
71%
  
72%
      
73%
  
69%
    
 
Peaking
    
4%
  
4%
      
2%
  
1%
    
 
Nuclear
    
89%
  
97%
      
89%
  
88%
    
Generation Output:
                          
 
Fossil - Baseload
  
40%
  
39%
      
39%
  
42%
    
 
Fossil - Load Following
  
22%
  
22%
      
23%
  
22%
    
 
Peaking
    
1%
  
1%
      
0%
  
0%
    
 
Nuclear
    
37%
  
38%
      
38%
  
36%
    
                             
       
Three Months Ended Sept. 30,  
  
Nine Months Ended Sept. 30,  
Weather
    
2007
  
2006
  
Normal
  
2007
  
2006
  
Normal
Composite Heating-Degree-Days
57
  
92
  
100
  
3,619
  
3,183
  
3,557
Composite Cooling-Degree-Days
  
683
  
678
  
647
  
969
  
885
  
906
 
 
 
 
 
Consolidated Report to the Financial Community – 3rd Quarter 2007                                                             9

 
FirstEnergy Corp.
2007 EPS Reconciliations
(Unaudited) 
(In millions, except for per share amounts)

 
Special Items
                         
   
   Three Months Ended Sept. 30,  
    
 Nine Months Ended Sept. 30,    
     
2007 
    
2006 
  
2007 
  
2006 
                             
Pre-tax Items - Income Increase (Decrease)
                      
Gain (Loss) on Non-Core Asset Sales of:
                          
 
Loss on sale on MYR 60% interest (a)
   $
-
       $
-
     $
-
     $ (5 )
 
Gain on sale of First Communications (h)
    
21
        
-
      
21
      
-
  
 
All other (a)(f)
    
-
        
-
      
-
      
6
  
Total Gain on Non-Core Asset Sales
    
21
        
-
      
21
      
1
  
Saxton decommissioning costs regulatory assets (b)
    
-
        
-
      
27
      
-
  
Trust securities impairment (c)
     (4 )      
-
       (16 )    
-
  
FE Facilities sales/impairment (d)(e)(g)
    
-
         (1 )    
-
       (13 )
PA NUG purchased power adjustment applicable to 2005 (i)
    
-
         (10 )    
-
       (10 )
 
Total-Pretax Items
   $
17
       $ (11 )   $
32
     $ (22 )
                                     
                                     
EPS Effect
   $
0.04
       $ (0.01 )   $
0.06
     $ (0.05 )
                                     
(a)
Included in "Other operating expenses"
        
(f)
  
Before first quarter 2006 tax benefit of $2.5 million
  
(b)
Included in "Deferral of new regulatory assets"
  
(g)
  
Non-tax deductible
  
(c)
Included in "Investment income"
        
(h)
  
Located in "Other Revenue"
  
(d)
Included in "FE Facilities expenses"
        
(i)
  
Located in "Purchased Power"
  
(e)
Included in "Discontinued Operations"
                                  
 

 
2007 Earnings Per Share (EPS)         
(Reconciliation of GAAP to Non-GAAP)         
                   
                   
   
ACTUAL
    
 ACTUAL
    
 NON-GAAP
  
   
Three Months
    
Nine Months
    
Guidance For
  
   
Ended Sept. 30
    
Ended Sept. 30
    
Year 2007
  
                   
Basic EPS (GAAP basis)   $
1.36
     $
3.39
      
$4.21 - $4.31
  
Excluding Special Items:
                        
   New regulatory asset authorized by PPUC
    
-
       (0.05 )     (0.05 )
   Gain on sale of non-core assets
     (0.04 )     (0.04 )     (0.04 )
   Trust securities impairment
    
-
      
0.03
      
0.03
  
Basic EPS (Non-GAAP basis)
   $
1.32
     $
3.33
      
$4.15 - $4.25
  

 
 
 
Consolidated Report to the Financial Community – 3rd Quarter 2007                                                             10

 
RECENT DEVELOPMENTS

Ohio Senate Bill 221 – Energy Plan Proposal
On September 25, 2007, Ohio Governor Strickland’s proposed energy plan for the State of Ohio was introduced as Senate Bill 221.  The principles of the proposed bill are similar to those outlined in the Governor’s “Energy, Jobs, and Progress for Ohio” plan announced on August 29.  The bill seeks to revise state energy policy to address electric service price regulation (market rate option or electric security plan), establish energy efficiency standards, adopt advanced energy portfolio standards (advanced energy technologies to provide 25% of standard service offer generation supply by 2025, with at least one-half coming from renewables), and create greenhouse gas emission reporting and carbon-control planning requirements.

Senate Bill 221 was referred to the Senate Energy & Public Utilities Committee, which has been conducting hearings on the bill with testimony from interested parties.  These include the Governor’s Energy Advisor, the Chairman of the Public Utilities Commission of Ohio (PUCO), consumer groups, and utility executives among others.  On October 4, FirstEnergy CEO Tony Alexander provided testimony to the Committee, citing several concerns with the current version of the bill, including its lack of context and clarity in establishing generation prices.  He recommended that the PUCO be provided clear statutory authority to negotiate rate plans and, in the event that negotiations do not result in rate plan agreements, that a competitive bid process be used to establish generation prices for customers who do not choose alternative suppliers.  He also proposed that the PUCO’s statutory authority include the flexibility to address recovery for societal programs such as energy efficiency, demand response, renewable power, and infrastructure improvements.  Several proposed amendments to the bill have been submitted, including those from Ohio's investor-owned electric utilities.  A substitute version of the bill, which incorporated certain of the proposed amendments, was introduced into the Senate Energy & Public Utilities Committee on October 25.

Ohio Competitive Generation Supply Plan Filing
On August 16, 2007, the PUCO held a technical conference for interested parties to gain a better understanding of the competitive generation supply plan filed with the PUCO by FirstEnergy subsidiaries Ohio Edison Company (OE), The Cleveland Electric Illuminating Company (CEI), and The Toledo Edison Company (TE) (collectively Ohio Companies) on July 10.  The proposal seeks approval to conduct a competitive bidding process to provide generation service, beginning January 1, 2009, to customers who choose not to purchase electricity from an alternative supplier.  Intervening parties filed their initial comments on the proposal on September 5, while the PUCO Staff filed its comments on September 21.  Parties then filed reply comments on October 12.  The proposal is pending before the PUCO.

Ohio Supreme Court Remand on Rate Certainty Plan
On August 29, 2007, the Supreme Court of Ohio upheld rulings by the PUCO approving several provisions of the Ohio Companies’ Rate Certainty Plan.  However, the Court remanded the portion of the order authorizing the Ohio Companies to collect deferred fuel costs through distribution rates back to the PUCO for further consideration.  Under the Court’s interpretation, recovery of generation service costs through distribution rates would be unlawful.  The Court didn’t dispute the Commission’s authority to allow recovery of the deferred fuel costs, just the recovery mechanism.  The PUCO’s order authorized the Ohio Companies to defer increased fuel costs incurred from January 1, 2006, through December 31, 2008, including interest on the deferred balances, and to recover these deferred costs over a 25-year period beginning in 2009.  On September 7, 2007, the Ohio Companies filed a motion for reconsideration with the Court to contest its interpretation.  The Court has not yet issued an order.  Separately, on September 10, the Ohio Companies filed an application on remand with the PUCO proposing that the increased fuel costs be recovered via two generation-related fuel cost recovery riders during the period of October 2007 through December 2008.  This matter is pending before the PUCO.

Ohio Companies’ Green Option for Customers Update
On August 15, 2007, the PUCO approved a stipulation that creates a green pricing option for FirstEnergy’s Ohio Companies’ customers and resolves the remand from the Supreme Court of Ohio related to the Rate Stabilization Plan.  The stipulation was filed on May 29 by FirstEnergy’s Ohio Companies, the PUCO Staff, and the Office of the Ohio Consumers’ Counsel.  The Green Resource Program enables customers to support the development of alternative energy resources through voluntary purchases of Renewable Energy Certificates (RECs).  The Ohio Companies acquired the right to purchase the RECs on behalf of participating customers through a PUCO-monitored competitive process.
 
 
Consolidated Report to the Financial Community –3rd Quarter 2007                                                                                                                                                                                          11
                                          
 
 
Penn Power Default Service Plan Update
On September 28, 2007, a Joint Petition for Settlement was filed with the Pennsylvania Public Utility Commission (PPUC) for approval of Pennsylvania Power Company’s (Penn Power’s) Interim Default Service Supply Plan for the three-year period covering June 1, 2008, through May 31, 2011.  For customers who choose not to shop, the Plan provides for Penn Power to obtain market-based generation supply via a Request for Proposal (RFP) by rate class for residential and commercial customers, with industrial customers being supplied through short-term markets.  The settlement agreement resolves all issues in the proceeding, except those regarding incremental uncollectible accounts expense, and is either supported, or not opposed, by all parties.  On September 11, a PPUC hearing was held on the uncollectible expense issue.   An Administrative Law Judge recommended decision is expected shortly with a PPUC Order expected on or about November 29, 2007.

Met-Ed and Penelec Commonwealth Court Appeals Update
On September 21 and October 5, 2007, response and reply briefs, respectively, were filed by the parties in the appeal of the PPUC’s January 2007 transition rate plan order to the Pennsylvania Commonwealth Court.  Metropolitan Edison Company (Met-Ed) and Pennsylvania Electric Company (Penelec) have appealed the PPUC’s decision on the denial of generation rate relief and on a consolidated income tax adjustment related to cost of capital, while other parties appealed the PPUC’s decision on transmission rate relief.  Oral arguments are expected to take place in late 2007 or early 2008.

Penelec Debt Offering
On August 30, 2007, Penelec issued $300 million of 6.05% Senior Unsecured Notes due 2017.  Proceeds from the transaction were used to repay short-term borrowings and to repurchase Penelec common stock from FirstEnergy Corp.

Transfer of Pollution Control Revenue Bonds
On October 4, 2007, FirstEnergy Solutions Corp.’s generation company subsidiaries (GenCos) closed on the issuance of $427 million of pollution control revenue bonds (PCRBs).  Proceeds from the issuance will be used to redeem, during the fourth quarter, an equal amount of outstanding PCRBs originally issued on behalf of the Ohio Companies.  This transaction brings the total amount of PCRBs transferred from the Ohio Companies and Penn Power to the GenCos to approximately $1.9 billion, with approximately $265 million remaining to be transferred.  The transfer of these PCRBs supports the intra-system generation asset transfer that was completed in 2005.

Nuclear Update
On August 21, 2007, FirstEnergy Nuclear Operating Company (FENOC) announced plans to expand used nuclear fuel storage capacity at the Perry Nuclear Power Plant.  The plan calls for installing above-ground, airtight steel and concrete cylindrical canisters, cooled by natural air circulation, to store used fuel assemblies.  Initially, six canisters will be installed, with the capability to add up to 74 canisters as needed.  Construction of the new fuel storage system, which is expected to cost approximately $30 million, is scheduled to begin in the spring of 2008, with completion planned for 2010.

On October 24, the 911-megawatt Beaver Valley Unit 1 returned to service following completion of its regularly scheduled refueling outage that began on September 24.

In late August, FENOC filed an application with the Nuclear Regulatory Commission (NRC) seeking renewal of the operating licenses for Beaver Valley Units 1 & 2 for an additional 20 years, which would extend the operating licenses to January 29, 2036, for Unit 1; and May 27, 2047, for Unit 2.  The NRC accepted the application for review on October 24.

Economic Development Award
For the fourth time in the last five years, Site Selection magazine has selected FirstEnergy as one of the top utilities in the country for helping to promote economic development in its service area.  The award is based upon economic development in four categories in 2006 – capital investment, job creation, capital investment per capita, and jobs per 10,000 in population – and gauges the ability of utility companies to help foster corporate investment in their service areas.  FirstEnergy’s work with state and local development agencies helped attract more than $1.6 billion in capital investment and helped create nearly 11,500 new jobs throughout Ohio, Pennsylvania and New Jersey in 2006.


Consolidated Report to the Financial Community –3rd Quarter 2007                                                                                                                                                                                          12



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 our, or our management’s, intents, beliefs and current expectations.  These statements typically contain, but are not limited to, the terms “anticipate,” “potential,” “expect,” “believe,” “estimate” and similar words.   Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievement expressed or implied by such forward-looking statements.  Actual results may differ materially due to the speed and nature of increased competition in the electric utility industry and legislative and regulatory changes affecting how generation rates will be determined following the expiration of existing rate plans in Ohio and Pennsylvania, economic or weather conditions affecting future sales and margins, changes in markets for energy services, changing energy and commodity market prices, replacement power costs being higher than anticipated or inadequately hedged, the continued ability of FirstEnergy’s regulated utilities to collect transition and other charges or to recover increased transmission costs, maintenance costs being higher than anticipated, other legislative and regulatory changes including revised environmental requirements, the uncertainty of the timing and amounts of the capital expenditures needed to, among other things, implement the Air Quality Compliance Plan (including that such amounts could be higher than anticipated) or levels of emission reductions related to the Consent Decree resolving the New Source Review litigation or other potential regulatory initiatives, adverse regulatory or legal decisions and outcomes (including, but not limited to, the revocation of necessary licenses or operating permits and oversight by the Nuclear Regulatory Commission including, but not limited to, the Demand for Information issued to FENOC on May 14, 2007) as disclosed in our SEC filings, the timing and outcome of various proceedings before the PUCO (including, but not limited to, the Distribution Rate Cases and the generation supply plan filing for the Ohio Companies and the successful resolution of the issues remanded to the PUCO by the Supreme Court of Ohio regarding the Rate Stabilization Plan and the Rate Certainty Plan, including the deferral of fuel costs) and the PPUC (including the resolution of the Petitions for Review filed with the Commonwealth Court of Pennsylvania with respect to the transition rate plan for Met-Ed and Penelec), the continuing availability of generating units and their ability to continue to operate at or near full capacity, the ability to comply with applicable state and federal reliability standards, the inability to accomplish or realize anticipated benefits from strategic goals (including employee workforce initiatives), the ability to improve electric commodity margins and to experience growth in the distribution business, the ability to access the public securities and other capital markets and the cost of such capital, the outcome, cost and other effects of present and potential legal and administrative proceedings and claims related to the August 14, 2003 regional power outage, the risks and other factors discussed from time to time in our SEC filings, and other similar factors.  The foregoing review of factors should not be construed as exhaustive.  New factors emerge from time to time, and it is not possible for us to predict all such factors, nor can we assess the impact of any such factor on our 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.  We expressly disclaim any current intention to update any forward-looking statements contained herein as a result of new information, future events, or otherwise.



Consolidated Report to the Financial Community –3rd Quarter 2007                                                                                                                                                                                          13