| ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES |
ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
FirstEnergy is a diversified energy company that holds, directly or indirectly, all of the outstanding common stock of its principal subsidiaries: OE, CEI, TE, Penn (a wholly owned subsidiary of OE), ATSI, JCP&L, Met-Ed, Penelec, FENOC, AE and its principal subsidiaries (AE Supply, AGC, MP, PE, WP, TrAIL and AESC), FES and its principal subsidiaries (FGCO and NGC), and FESC. AE merged with a subsidiary of FE on February 25, 2011, with AE continuing as the surviving corporation and becoming a wholly owned subsidiary of FE (See Note 2, Merger). FirstEnergy follows GAAP and complies with the related regulations, orders, policies and practices prescribed by the SEC, FERC, and, as applicable, the PUCO, the PPUC, the MDPSC, the NYPSC, the WVPSC, the VSCC and the NJBPU. The preparation of financial statements in conformity with GAAP requires management to make periodic estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. Actual results could differ from these estimates. The reported results of operations are not indicative of results of operations for any future period. FE and its subsidiaries have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. FE and its subsidiaries consolidate all majority-owned subsidiaries over which they exercise control and, when applicable, entities for which they have a controlling financial interest. Intercompany transactions and balances are eliminated in consolidation. FE and its subsidiaries consolidate a VIE when it is determined that it is the primary beneficiary (see Note 8, Variable Interest Entities). Investments in affiliates over which FE and its subsidiaries have the ability to exercise significant influence, but with respect to which they are not the primary beneficiary and do not exercise control, follow the equity method of accounting. Under the equity method, the interest in the entity is reported as an investment in the Consolidated Balance Sheets and the percentage share of the entity’s earnings is reported in the Consolidated Statements of Income and Comprehensive Income. These Notes to the Consolidated Financial Statements are combined for FirstEnergy, FES, OE, CEI, TE JCP&L, Met-Ed and Penelec. Certain prior year amounts have been reclassified to conform to the current year presentation, and the effects of the change in accounting for pensions and OPEB costs described further below have been retrospectively applied to all periods presented. Unless otherwise indicated, defined terms used herein have the meanings set forth in the accompanying Glossary of Terms. ACCOUNTING FOR THE EFFECTS OF REGULATION FirstEnergy accounts for the effects of regulation through the application of regulatory accounting to its operating utilities since their rates are established by a third-party regulator with the authority to set rates that bind customers, are cost-based and can be charged to and collected from customers. FirstEnergy records regulatory assets and liabilities that result from the regulated rate-making process that would not be recorded under GAAP for non-regulated entities. These assets and liabilities are amortized in the Consolidated Statements of Income concurrent with the recovery or refund through customer rates. FirstEnergy believes that it is probable that its regulatory assets and liabilities will be recovered and settled, respectively, through future rates. FirstEnergy and the Utilities net their regulatory assets and liabilities based on federal and state jurisdictions. Net regulatory assets on FirstEnergy's and the Utility Registrants' Consolidated Balance Sheets are comprised of the following: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Regulatory Assets (Liabilities) | | FirstEnergy | | OE | | CEI | | TE | | JCP&L | | Met-Ed | | Penelec | | | (In millions) | December 31, 2011 | | | | | | | | | | | | | | | Regulatory transition costs | | $ | 608 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 424 |
| | $ | 105 |
| | $ | 79 |
| Customer receivables for future income taxes | | 508 |
| | 42 |
| | 1 |
| | 2 |
| | 29 |
| | 129 |
| | 145 |
| Nuclear decommissioning, decontamination and spent fuel disposal costs | | (210 | ) | | — |
| | — |
| | — |
| | (44 | ) | | (99 | ) | | (67 | ) | Asset removal costs | | (240 | ) | | (34 | ) | | (60 | ) | | (23 | ) | | (147 | ) | | — |
| | — |
| PJM transmission costs | | 340 |
| | (3 | ) | | (3 | ) | | (1 | ) | | — |
| | 181 |
| | 63 |
| Deferred generation costs | | 382 |
| | 125 |
| | 224 |
| | 37 |
| | — |
| | (23 | ) | | (11 | ) | Distribution costs | | 267 |
| | 146 |
| | 73 |
| | 48 |
| | — |
| | — |
| | — |
| Other | | 375 |
| | 87 |
| | 60 |
| | 7 |
| | 146 |
| | 36 |
| | — |
| Net regulatory assets | | $ | 2,030 |
| | $ | 363 |
| | $ | 295 |
| | $ | 70 |
| | $ | 408 |
| | $ | 329 |
| | $ | 209 |
| | | | | | | | | | | | | | | | December 31, 2010 | | | | | | | | | | | | | | | Regulatory transition costs | | $ | 770 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 591 |
| | $ | 131 |
| | $ | 43 |
| Customer receivables for future income taxes | | 328 |
| | 52 |
| | 2 |
| | 1 |
| | 30 |
| | 113 |
| | 130 |
| Nuclear decommissioning, decontamination and spent fuel disposal costs | | (184 | ) | | — |
| | — |
| | — |
| | (31 | ) | | (92 | ) | | (61 | ) | Asset removal costs | | (237 | ) | | (24 | ) | | (47 | ) | | (19 | ) | | (147 | ) | | — |
| | — |
| PJM transmission costs | | 183 |
| | — |
| | — |
| | — |
| | — |
| | 131 |
| | 52 |
| Deferred generation costs | | 386 |
| | 125 |
| | 226 |
| | 35 |
| | — |
| | — |
| | — |
| Distribution costs | | 426 |
| | 216 |
| | 155 |
| | 55 |
| | — |
| | — |
| | — |
| Other | | 158 |
| | 34 |
| | 34 |
| | 1 |
| | 71 |
| | 13 |
| | (1 | ) | Net regulatory assets | | $ | 1,830 |
| | $ | 403 |
| | $ | 370 |
| | $ | 73 |
| | $ | 514 |
| | $ | 296 |
| | $ | 163 |
|
Additionally, FirstEnergy had $381 million of net regulatory liabilities as of December 31, 2011, including $366 million of net regulatory liabilities attributable to Allegheny that are primarily related to asset removal costs. Net regulatory liabilities are classified within Other Noncurrent Liabilities on the Consolidated Balance Sheets. Regulatory assets that do not earn a current return as of December 31, 2011 totaled approximately $413 million. Regulatory assets that do not earn a return are primarily comprised of certain regulatory transition and PJM transmission costs for Met-Ed and Penelec of $182 million and $115 million, respectively, that are expected to be recovered by 2020, and certain storm damage costs and pension and OPEB costs incurred by JCP&L of $122 million that are expected to be recovered by 2026. Transition Cost Amortization JCP&L’s and Met-Ed’s regulatory transition costs include the deferral of above-market costs for power supplied from NUGs of $142 million for JCP&L (recovered through NGC revenues) and $105 million for Met-Ed (recovered through CTC revenues). Projected above-market NUG costs are adjusted to fair value at the end of each quarter, with a corresponding offset to regulatory assets. Recovery of the remaining regulatory transition costs is expected to continue pursuant to various regulatory proceedings in New Jersey and Pennsylvania (see Note 15, Regulatory Matters). REVENUES AND RECEIVABLES The Utilities' principal business is providing electric service to customers in Ohio, Pennsylvania, West Virginia, New Jersey and Maryland. The Utilities’ retail customers are metered on a cycle basis. FES' and AE Supply's principal business is supplying electric power to end-use customers through retail and wholesale arrangements, including affiliated company power sales to meet a portion of the POLR and default service requirements of the Ohio and Pennsylvania Companies and competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Michigan, New Jersey and Maryland. Electric revenues are recorded based on energy delivered through the end of the calendar month. An estimate of unbilled revenues is calculated to recognize electric service provided from the last meter reading through the end of the month. This estimate includes many factors, among which are historical customer usage, load profiles, estimated weather impacts, customer shopping activity and prices in effect for each class of customer. In each accounting period, the Utilities, FES and AE Supply accrue the estimated unbilled amount receivable as revenue and reverse the related prior period estimate. Receivables from customers include distribution and retail electric sales to residential, commercial and industrial customers for the Utilities, and retail and wholesale sales to customers for FES and AE Supply. There were no material concentration of receivables as of December 31, 2011 and 2010 with respect to any particular segment of FirstEnergy’s customers. Billed and unbilled customer receivables as of December 31, 2011 and 2010 are shown below. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Customer Receivables | | FirstEnergy | | FES | | OE | | CEI | | TE(1) | | JCP&L | | Met-Ed | | Penelec | | | (In millions) | December 31, 2011 | | | | | | | | | | | | | | | | | Billed | | $ | 800 |
| | $ | 220 |
| | $ | 67 |
| | $ | 40 |
| | $ | 24 |
| | $ | 117 |
| | $ | 79 |
| | $ | 72 |
| Unbilled | | 725 |
| | 204 |
| | 96 |
| | 52 |
| | 25 |
| | 118 |
| | 60 |
| | 54 |
| Total | | $ | 1,525 |
| | $ | 424 |
| | $ | 163 |
| | $ | 92 |
| | $ | 49 |
| | $ | 235 |
| | $ | 139 |
| | $ | 126 |
| December 31, 2010 | | | | | | | | | | | | | | | | | Billed | | $ | 752 |
| | $ | 196 |
| | $ | 81 |
| | $ | 95 |
| | $ | — |
| | $ | 178 |
| | $ | 101 |
| | $ | 82 |
| Unbilled | | 640 |
| | 170 |
| | 96 |
| | 89 |
| | — |
| | 145 |
| | 78 |
| | 67 |
| Total | | $ | 1,392 |
| | $ | 366 |
| | $ | 177 |
| | $ | 184 |
| | $ | — |
| | $ | 323 |
| | $ | 179 |
| | $ | 149 |
|
| | (1) | During 2011, TE's accounts receivable financing arrangement with Centerior Funding Corporation was terminated. |
EARNINGS PER SHARE OF COMMON STOCK Basic earnings per share of common stock are computed using the weighted average number of common shares outstanding during the relevant period as the denominator. The denominator for diluted earnings per share of common stock reflects the weighted average of common shares outstanding plus the potential additional common shares that could result if dilutive securities and other agreements to issue common stock were exercised. The following table reconciles basic and diluted earnings per share of common stock: | | | | | | | | | | | | | | Reconciliation of Basic and Diluted Earnings per Share of Common Stock | | 2011 | | 2010 | | 2009 | | | (In millions, except per share amounts) | Weighted average number of basic shares outstanding(1) | | 399 |
| | 304 |
| | 304 |
| Assumed exercise of dilutive stock options and awards(2) | | 2 |
| | 1 |
| | 2 |
| Weighted average number of diluted shares outstanding(1) | | 401 |
| | 305 |
| | 306 |
| | | | | | | | Earnings available to FirstEnergy Corp. | | $ | 885 |
| | $ | 742 |
| | $ | 872 |
| | | | | | | | Basic earnings per share of common stock | | $ | 2.22 |
| | $ | 2.44 |
| | $ | 2.87 |
| Diluted earnings per share of common stock | | $ | 2.21 |
| | $ | 2.42 |
| | $ | 2.85 |
|
| | (1) | Includes 113 million shares issued to AE shareholders for the periods subsequent to the merger date (see Note 2, Merger). |
| | (2) | The number of potentially dilutive securities not included in the calculation of diluted shares outstanding due to their antidilutive effect were not significant for the years ending December 31, 2011, 2010 or 2009. |
PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment reflects original cost (net of any impairments recognized), including payroll and related costs such as taxes, employee benefits, administrative and general costs, and interest costs incurred to place the assets in service. The costs of normal maintenance, repairs and minor replacements are expensed as incurred. FirstEnergy recognizes liabilities for planned major maintenance projects as they are incurred. Property, plant and equipment balances as of December 31, 2011 and 2010 were as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2011 | | December 31, 2010 | Property, Plant and Equipment | | Unregulated | | Regulated | | Total | | Unregulated | | Regulated | | Total | | | (In millions) | In service | | $ | 15,472 |
| | $ | 24,650 |
| | $ | 40,122 |
| | $ | 12,104 |
| | $ | 18,172 |
| | $ | 30,276 |
| Less - Accumulated depreciation | | (4,424 | ) | | (7,415 | ) | | (11,839 | ) | | (4,255 | ) | | (7,028 | ) | | (11,283 | ) | Net plant in service | | $ | 11,048 |
| | $ | 17,235 |
| | $ | 28,283 |
| | $ | 7,849 |
| | $ | 11,144 |
| | $ | 18,993 |
|
FirstEnergy provides for depreciation on a straight-line basis at various rates over the estimated lives of property included in plant in service. The respective annual composite rates for FirstEnergy’s subsidiaries’ electric plant in 2011, 2010 and 2009 are shown in the following table: | | | | | | | | | | | | | Annual Composite Depreciation Rate | | | 2011 | | 2010 | | 2009 | FGCO | | 3.1 | % | | 4.0 | % | | 4.6 | % | NGC | | 3.2 | % | | 3.1 | % | | 3.0 | % | OE | | 2.9 | % | | 2.9 | % | | 3.1 | % | CEI | | 3.2 | % | | 3.2 | % | | 3.3 | % | TE | | 3.2 | % | | 3.3 | % | | 3.3 | % | JCP&L | | 2.8 | % | | 2.4 | % | | 2.4 | % | Met-Ed | | 2.5 | % | | 2.5 | % | | 2.5 | % | Penelec | | 2.3 | % | | 2.5 | % | | 2.6 | % | ATSI | | 2.4 | % | | 2.4 | % | — | 2.4 | % | Penn | | 2.2 | % | | 2.2 | % | | 2.4 | % | AE Supply | | 3.4 | % | | | | | MP | | 2.5 | % | | | | | PE | | 2.8 | % | | | | | WP | | 2.5 | % | | | | | TrAIL | | 2.7 | % | | | | |
Jointly Owned Plants
FirstEnergy, through its subsidiary, AGC, owns an undivided 40% interest (1,109 MWs) in a 2,773 MW pumped storage, hydroelectric station in Bath County, Virginia, operated by the 60% owner, Virginia Electric and Power Company, a non-affiliated utility. Net Property, Plant and Equipment includes $468 million relating to this facility as of December 31, 2011. Asset Retirement Obligations FirstEnergy recognizes an ARO for the future decommissioning of its nuclear power plants and future remediation of other environmental liabilities associated with all of its long-lived assets. The ARO liability represents an estimate of the fair value of FirstEnergy’s current obligation related to nuclear decommissioning and the retirement or remediation of environmental liabilities of other assets. A fair value measurement inherently involves uncertainty in the amount and timing of settlement of the liability. FirstEnergy uses an expected cash flow approach to measure the fair value of the nuclear decommissioning and environmental remediation ARO. This approach applies probability weighting to discounted future cash flow scenarios that reflect a range of possible outcomes. The scenarios consider settlement of the ARO at the expiration of the nuclear power plant’s current license, settlement based on an extended license term and expected remediation dates. The fair value of an ARO is recognized in the period in which it is incurred. The associated asset retirement costs are capitalized as part of the carrying value of the long-lived asset and are depreciated over the life of the related asset.
ASSET IMPAIRMENTS Long-lived Assets FirstEnergy reviews long-lived assets, including regulatory assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such an asset may not be recoverable. The recoverability of the long-lived asset is measured by comparing the long-lived asset’s carrying value to the sum of undiscounted future cash flows expected to result from the use and eventual disposition of the asset. If the carrying value is greater than the undiscounted future cash flows of the long-lived asset, impairment exists and a loss is recognized for the amount by which the carrying value of the long-lived asset exceeds its estimated fair value. Impairments of long-lived assets recognized for the year ended December 31, 2011, are described further in Note 11, Impairment of Long-Lived Assets. Goodwill In a business combination, the excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed is recognized as goodwill. Goodwill is evaluated for impairment at least annually and more frequently if indicators of impairment arise. In accordance with the accounting standards, if the fair value of a reporting unit is less than its carrying value (including goodwill), the goodwill is tested for impairment. Impairment is indicated and a loss is recognized if the implied fair value of a reporting unit's goodwill is less than the carrying value of its goodwill. With the completion of the AE merger in the first quarter of 2011, FirstEnergy reorganized its management structure, which resulted in changes to its operating segments (see Note 19, Segment Information). FirstEnergy's goodwill from the merger of $866 million was assigned to the Competitive Energy Services segment based on expected synergies from the merger. FirstEnergy's reporting units are consistent with its operating segments, and consist of Regulated Distribution, Regulated Independent Transmission and Competitive Energy Services. Goodwill is allocated to these operating segments based on the original purchase price allocation for acquisitions within the various reporting units. As of December 31, 2011, goodwill balances for Regulated Distribution and Competitive Energy Services were $5,551 million and $890 million, respectively. No goodwill has been allocated to the Regulated Independent Transmission segment. Annual impairment testing is conducted during the third quarter of each year and for 2011 and 2010 the analysis indicated no impairment of goodwill. For purposes of annual testing the estimated fair values of Regulated Distribution and Competitive Energy Services were determined using a discounted cash flow approach. The discounted cash flow model of the Regulated Distribution and Competitive Energy Services segments reporting units is based on the forecasted operating cash flow for the current year, projected operating cash flows (determined using forecasted amounts as well as an estimated growth rate) and a terminal value. Discounted cash flows consist of the operating cash flows for each reporting unit less an estimate for capital expenditures. The key assumptions incorporated in the discounted cash flow approach include growth rates, projected operating income, changes in working capital, projected capital expenditures, planned funding of pension plans, anticipated funding of nuclear decommissioning trusts, expected results of future rate proceedings (applicable to Regulated Distribution segment only) and a discount rate equal to assumed long-term cost of capital. Cash flows may be adjusted to exclude certain non-recurring or unusual items. Reporting unit income was the starting point for determining operating cash flow and there were no non-recurring or unusual items excluded from the calculations of operating cash flow in any of the periods included in the determination of fair value. This approach involves management judgment and estimates that are used in relation to changing market conditions and business environment; unanticipated changes in assumptions could have a significant effect on FirstEnergy's evaluation of goodwill. At the time FirstEnergy conducted the annual impairment testing in 2011, fair value would have to have declined in excess of 44% and 53% for the Regulated Distribution and Competitive Energy Services segments, respectively, to indicate a potential goodwill impairment. Fair value would have to have declined by more than 20% for CEI, 16% for TE, 38% for JCP&L, 62% for Met-Ed, 58% for Penelec and 62% for FES to indicate a potential goodwill impairment. Total goodwill recognized by segment in FirstEnergy's Consolidated Balance Sheet is as follows: | | | | | | | | | | | | | | | | | | | | | | Goodwill | | Regulated Distribution | | Competitive Energy Services | | Regulated Independent Transmission | | Other/Corporate | | Consolidated | Balance as of December 31, 2010 | | $ | 5,551 |
| | $ | 24 |
| | $ | — |
| | $ | — |
| | $ | 5,575 |
| Merger with Allegheny | | — |
| | 866 |
| | — |
| | — |
| | 866 |
| Balance as of December 31, 2011 | | $ | 5,551 |
| | $ | 890 |
| | $ | — |
| | $ | — |
| | $ | 6,441 |
|
Total goodwill recognized by FES and the Utility Registrants are as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | Goodwill | | FES | | CEI | | TE | | JCP&L | | Met-Ed | | Penelec | Balance as of December 31, 2011 and 2010 | | $ | 24 |
| | $ | 1,689 |
| | $ | 501 |
| | $ | 1,811 |
| | $ | 416 |
| | $ | 769 |
|
FirstEnergy, FES and the Utility Registrants, with the exception of Met-Ed, have no accumulated impairment charge as of December 31, 2011. Met-Ed has an accumulated impairment charge of $355 million, which was recorded in 2006. Investments At the end of each reporting period, FirstEnergy evaluates its investments for impairment. Investments classified as available-for-sale securities are evaluated to determine whether a decline in fair value below the cost basis is other than temporary. FirstEnergy first considers its intent and ability to hold the investment until recovery and then considers, among other factors, the duration and the extent to which the security’s fair value has been less than its cost and the near-term financial prospects of the security issuer when evaluating investments for impairment. If the decline in fair value is determined to be other than temporary, the cost basis of the investment is written down to fair value. FirstEnergy recognizes in earnings the unrealized losses on available-for-sale securities held in its nuclear decommissioning trusts since the trust arrangements, as they are currently defined, do not meet the required ability and intent to hold criteria in consideration of other-than-temporary impairment. In 2011, 2010 and 2009, FirstEnergy recognized $19 million, $33 million and $62 million, respectively, of other-than-temporary impairments. The fair values of FirstEnergy’s investments are disclosed in Note 9, Fair Value Measurements. ACCUMULATED OTHER COMPREHENSIVE INCOME AOCI, net of tax, included on FirstEnergy’s, FES’ and the Utility Registrants’ Consolidated Balance Sheets as of December 31, 2011 and 2010, is comprised of the following: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Accumulated Other Comprehensive Income | | FirstEnergy | | FES | | OE | | CEI | | TE | | JCP&L | | Met-Ed | | Penelec | | | (In millions) | Net liability for unfunded retirement benefits | | $ | 446 |
| | $ | 52 |
| | $ | 54 |
| | $ | 27 |
| | $ | 12 |
| | $ | 40 |
| | $ | 28 |
| | $ | 37 |
| Unrealized gain on investments | | 19 |
| | 16 |
| | — |
| | — |
| | 3 |
| | — |
| | — |
| | — |
| Unrealized gain (loss) on derivative hedges | | (39 | ) | | 8 |
| | — |
| | — |
| | — |
| | (1 | ) | | — |
| | — |
| Balance, December 31, 2011 | | $ | 426 |
| | $ | 76 |
| | $ | 54 |
| | $ | 27 |
| | $ | 15 |
| | $ | 39 |
| | $ | 28 |
| | $ | 37 |
| | | | | | | | | | | | | | | | | | Net liability for unfunded retirement benefits | | $ | 472 |
| | $ | 55 |
| | $ | 82 |
| | $ | 34 |
| | $ | 15 |
| | $ | 52 |
| | $ | 38 |
| | $ | 50 |
| Unrealized gain on investments | | 7 |
| | 6 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Unrealized gain (loss) on derivative hedges | | (54 | ) | | 1 |
| | — |
| | — |
| | — |
| | (1 | ) | | (1 | ) | | — |
| Balance, December 31, 2010 | | $ | 425 |
| | $ | 62 |
| | $ | 82 |
| | $ | 34 |
| | $ | 15 |
| | $ | 51 |
| | $ | 37 |
| | $ | 50 |
|
OCI reclassified to net income during the three years ended December 31, 2011, 2010 and 2009 is shown in the following table. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | FirstEnergy | | FES | | OE | | CEI | | TE | | JCP&L | | Met-Ed | | Penelec | | | (In millions) | 2011 | | | | | | | | | | | | | | | | | Pensions and OPEB | | $ | 169 |
| | $ | 18 |
| | $ | 28 |
| | $ | 12 |
| | $ | 5 |
| | $ | 25 |
| | $ | 17 |
| | $ | 23 |
| Gain on investments | | 157 |
| | 51 |
| | 6 |
| | — |
| | 2 |
| | 27 |
| | 49 |
| | 23 |
| Loss on derivative hedges | | (26 | ) | | (26 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | | 300 |
| | 43 |
| | 34 |
| | 12 |
| | 7 |
| | 52 |
| | 66 |
| | 46 |
| Income taxes related to reclassification to net income | | 118 |
| | 16 |
| | 12 |
| | 4 |
| | 3 |
| | 21 |
| | 27 |
| | 19 |
| Reclassification to net income | | $ | 182 |
| | $ | 27 |
| | $ | 22 |
| | $ | 8 |
| | $ | 4 |
| | $ | 31 |
| | $ | 39 |
| | $ | 27 |
| 2010 | | | | | | | | | | | | | | | | | Pensions and OPEB | | $ | 87 |
| | $ | 46 |
| | $ | 23 |
| | $ | 2 |
| | $ | 3 |
| | $ | 5 |
| | $ | 8 |
| | $ | 15 |
| Gain on investments | | 54 |
| | 50 |
| | 2 |
| | — |
| | 2 |
| | — |
| | — |
| | — |
| Loss on derivative hedges | | (35 | ) | | (24 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | | 106 |
| | 72 |
| | 25 |
| | 2 |
| | 5 |
| | 5 |
| | 8 |
| | 15 |
| Income taxes related to reclassification to net income | | 40 |
| | 26 |
| | 9 |
| | — |
| | 2 |
| | 3 |
| | 3 |
| | 6 |
| Reclassification to net income | | $ | 66 |
| | $ | 46 |
| | $ | 16 |
| | $ | 2 |
| | $ | 3 |
| | $ | 2 |
| | $ | 5 |
| | $ | 9 |
| 2009 | | | | | | | | | | | | | | | | | Pensions and OPEB | | $ | 68 |
| | $ | 37 |
| | $ | 17 |
| | $ | 2 |
| | $ | 4 |
| | $ | 8 |
| | $ | 7 |
| | $ | 12 |
| Gain on investments | | 157 |
| | 139 |
| | 10 |
| | — |
| | 7 |
| | — |
| | — |
| | — |
| Loss on derivative hedges | | (67 | ) | | (27 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | | 158 |
| | 149 |
| | 27 |
| | 2 |
| | 11 |
| | 8 |
| | 7 |
| | 12 |
| Income taxes related to reclassification to net income | | 60 |
| | 56 |
| | 10 |
| | 1 |
| | 4 |
| | 3 |
| | 3 |
| | 5 |
| Reclassification to net income | | $ | 98 |
| | $ | 93 |
| | $ | 17 |
| | $ | 1 |
| | $ | 7 |
| | $ | 5 |
| | $ | 4 |
| | $ | 7 |
|
NEW ACCOUNTING PRONOUNCEMENTS During the year, there have been various new accounting pronouncements that are not expected to have a material effect on FirstEnergy's financial statements. CHANGE IN PENSIONS AND OPEB ACCOUNTING POLICY Effective in 2011, FirstEnergy elected to change its method of recognizing actuarial gains and losses for its defined benefit pension and OPEB plans. Previously, FirstEnergy recognized the net actuarial gains and losses as a component of AOCI and amortized the gains and losses into income over the remaining service life of affected employees within the related plans to the extent such gains and losses were outside a corridor of the greater of 10% of the market-related value of plan assets or 10% of the plans' projected benefit obligation.
FirstEnergy has elected to immediately recognize the change in the fair value of plan assets and net actuarial gains and losses annually in the fourth quarter of each fiscal year and whenever a plan is determined to qualify for a remeasurement. The remaining components of pensions and OPEB expense, primarily service costs, interest on obligations, assumed return on assets and prior service costs, will be recorded on a quarterly basis.
While FirstEnergy's historical policy of recognizing pensions and OPEB expense was considered acceptable under GAAP, FirstEnergy believes that the new policy is preferable as it eliminates the delay in recognizing gains and losses to earnings. The change will also improve transparency to FirstEnergy's operational results and benefits plan performance by immediately recognizing deviations from expected actuarial assumptions in the year they are incurred.
This change in accounting policy has been applied retrospectively, adjusting all prior periods presented. Applying this change retrospectively increased property, plant and equipment as a result of capitalizing a portion of the pension and OPEB costs now recognized for each year in addition to additional depreciation expense. As a result of increasing those asset balances, FirstEnergy recognized additional affiliated company asset transfers associated with ATSI and the Generation Asset Transfer, and further impairments of certain long-lived assets in those periods. Additionally, the allocation of related pension and OPEB costs from FESC and AESC to FES and the Utility Registrants resulted in affiliated noncurrent liabilities as of December 31, 2011 of $331 million-FES, $80 million-OE, $56 million-CEI, $32 million-TE, $76 million-JCP&L, $40 million-Met-ED and $40 million-Penelec. The impact of this accounting policy change on the financial statements is summarized below: | | | | | | | | | | | | | | | | | | | | | | | | | FirstEnergy | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF INCOME | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In millions, except per share amounts) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Other operating expense | $ | 2,850 |
| | $ | (154 | ) | | $ | 2,696 |
| | $ | 2,697 |
| | $ | (146 | ) | | $ | 2,551 |
| Pensions and OPEB mark-to-market adjustment | — |
| | 190 |
| | 190 |
| | — |
| | 321 |
| | 321 |
| Provision for depreciation | 746 |
| | 22 |
| | 768 |
| | 736 |
| | 21 |
| | 757 |
| Impairment of long-lived assets | 384 |
| | 4 |
| | 388 |
| | 6 |
| | — |
| | 6 |
| Capitalized interest | 165 |
| | — |
| | 165 |
| | 130 |
| | 1 |
| | 131 |
| Income before income taxes | 1,242 |
| | (62 | ) | | 1,180 |
| | 1,235 |
| | (195 | ) | | 1,040 |
| Income taxes | 482 |
| | (20 | ) | | 462 |
| | 245 |
| | (61 | ) | | 184 |
| Net Income | 760 |
| | (42 | ) | | 718 |
| | 990 |
| | (134 | ) | | 856 |
| Earnings available to FirstEnergy Corp. | 784 |
| | (42 | ) | | 742 |
| | 1,006 |
| | (134 | ) | | 872 |
| Basic earnings per share of common stock | $ | 2.58 |
| | $ | (0.14 | ) | | $ | 2.44 |
| | $ | 3.31 |
| | $ | (0.44 | ) | | $ | 2.87 |
| Diluted earnings per share of common stock | $ | 2.57 |
| | $ | (0.15 | ) | | $ | 2.42 |
| | $ | 3.29 |
| | $ | (0.44 | ) | | $ | 2.85 |
| | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In millions) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Net Income | $ | 760 |
| | $ | (42 | ) | | $ | 718 |
| | $ | 990 |
| | $ | (134 | ) | | $ | 856 |
| Pension and other postretirement benefits | (258 | ) | | 38 |
| | (220 | ) | | 15 |
| | 260 |
| | 275 |
| Income taxes (benefits) on other comprehensive income | (90 | ) | | 16 |
| | (74 | ) | | 27 |
| | 101 |
| | 128 |
| Comprehensive income | 636 |
| | (20 | ) | | 616 |
| | 955 |
| | 25 |
| | 980 |
| Comprehensive income attributable to FirstEnergy Corp. | 660 |
| | (20 | ) | | 640 |
| | 971 |
| | 25 |
| | 996 |
| | | | | | | | | | | | | CONSOLIDATED BALANCE SHEETS | As of December 31, 2010 | | | | | | | (In millions) | As | | Effect of | | As | | | | | | | | Reported | | Change | | Revised | | | | | | | Property, plant & equipment - In service | $ | 29,451 |
| | $ | 825 |
| | $ | 30,276 |
| | | | | | | Accumulated provision for depreciation | 11,180 |
| | 103 |
| | 11,283 |
| | | | | | | Total property, plant, and equipment | 18,271 |
| | 722 |
| | 18,993 |
| | | | | | | Regulatory assets | 1,826 |
| | 4 |
| | 1,830 |
| | | | | | | Total assets | 34,805 |
| | 726 |
| | 35,531 |
| | | | | | | Accumulated other comprehensive income (loss) | (1,539 | ) | | 1,964 |
| | 425 |
| | | | | | | Retained earnings | 4,609 |
| | (1,525 | ) | | 3,084 |
| | | | | | | Total common stockholders' equity | 8,545 |
| | 439 |
| | 8,984 |
| | | | | | | Total equity | 8,513 |
| | 439 |
| | 8,952 |
| | | | | | | Total capitalization | 21,092 |
| | 439 |
| | 21,531 |
| | | | | | | Accrued taxes | 326 |
| | 6 |
| | 332 |
| | | | | | | Accumulated deferred income taxes | 2,879 |
| | 281 |
| | 3,160 |
| | | | | | | Total liabilities and capitalization | 34,805 |
| | 726 |
| | 35,531 |
| | | | | | | | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In millions) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Retained Earnings- | | | | | | | | | | | | Beginning Balance | $ | 4,495 |
| | $ | (1,483 | ) | | $ | 3,012 |
| | $ | 4,159 |
| | $ | (1,349 | ) | | $ | 2,810 |
| Earnings available to Parent | 784 |
| | (42 | ) | | 742 |
| | 1,006 |
| | (134 | ) | | 872 |
| Ending Balance | 4,609 |
| | (1,525 | ) | | 3,084 |
| | 4,495 |
| | (1,483 | ) | | 3,012 |
| | | | | | | | | | | | | Accumulated Comprehensive Income (Loss)- | | | | | | | | | | | | Beginning Balance | $ | (1,415 | ) | | $ | 1,942 |
| | $ | 527 |
| | $ | (1,380 | ) | | $ | 1,783 |
| | $ | 403 |
| Pension and other postretirement benefits, net of taxes | (151 | ) | | 22 |
| | (129 | ) | | (19 | ) | | 159 |
| | 140 |
| Ending Balance | (1,539 | ) | | 1,964 |
| | 425 |
| | (1,415 | ) | | 1,942 |
| | 527 |
| | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF CASH FLOW | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In millions) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Cash flows provided by operating activities: | | | | | | | | | | | | Net income | $ | 760 |
| | $ | (42 | ) | | $ | 718 |
| | $ | 990 |
| | $ | (134 | ) | | $ | 856 |
| Provision for depreciation | 746 |
| | 22 |
| | 768 |
| | 736 |
| | 21 |
| | 757 |
| Deferred income taxes and investment tax credits, net | 470 |
| | (20 | ) | | 450 |
| | 384 |
| | (61 | ) | | 323 |
| Pensions and OPEB mark-to-market adjustment | — |
| | 190 |
| | 190 |
| | — |
| | 321 |
| | 321 |
| Accrued compensation and retirement benefits | 89 |
| | (154 | ) | | (65 | ) | | 22 |
| | (146 | ) | | (124 | ) | Impairments of long-lived assets | 384 |
| | 4 |
| | 388 |
| | 6 |
| | — |
| | 6 |
| Other operating activities | 45 |
| | — |
| | 45 |
| | 30 |
| | (1 | ) | | 29 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | FES | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In millions) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Other operating expense | $ | 1,280 |
| | $ | (50 | ) | | $ | 1,230 |
| | $ | 1,183 |
| | $ | (40 | ) | | $ | 1,143 |
| Pensions and OPEB mark-to-market adjustment | — |
| | 107 |
| | 107 |
| | — |
| | 150 |
| | 150 |
| Provision for depreciation | 243 |
| | 3 |
| | 246 |
| | 259 |
| | 3 |
| | 262 |
| Impairment of long-lived assets | 384 |
| | 4 |
| | 388 |
| | 6 |
| | — |
| | 6 |
| Income before income taxes | 420 |
| | (64 | ) | | 356 |
| | 892 |
| | (113 | ) | | 779 |
| Income taxes | 151 |
| | (26 | ) | | 125 |
| | 315 |
| | (34 | ) | | 281 |
| Net Income | 269 |
| | (38 | ) | | 231 |
| | 577 |
| | (79 | ) | | 498 |
| Pension and other postretirement benefits | (58 | ) | | 28 |
| | (30 | ) | | 14 |
| | 54 |
| | 68 |
| Income taxes (benefits) on other comprehensive income | (11 | ) | | 14 |
| | 3 |
| | (6 | ) | | 20 |
| | 14 |
| Comprehensive income | 252 |
| | (24 | ) | | 228 |
| | 566 |
| | (45 | ) | | 521 |
| | | | | | | | | | | | | CONSOLIDATED BALANCE SHEETS | As of December 31, 2010 | | | (In millions) | As | | Effect of | | As | | | | | | | | Reported | | Change | | Revised | | | | | | | Property, plant & equipment - In service | $ | 11,321 |
| | $ | 106 |
| | $ | 11,427 |
| | | | | | | Accumulated provision for depreciation | 4,024 |
| | 14 |
| | 4,038 |
| | | | | | | Total property, plant, and equipment | 7,297 |
| | 92 |
| | 7,389 |
| | | | | | | Total assets | 12,063 |
| | 92 |
| | 12,155 |
| | | | | | | Common stock | 1,490 |
| | 77 |
| | 1,567 |
| | | | | | | Accumulated other comprehensive income (loss) | (120 | ) | | 182 |
| | 62 |
| | | | | | | Retained earnings | 2,418 |
| | (428 | ) | | 1,990 |
| | | | | | | Total equity | 3,788 |
| | (169 | ) | | 3,619 |
| | | | | | | Total capitalization | 6,969 |
| | (169 | ) | | 6,800 |
| | | | | | | Accumulated deferred income taxes | 58 |
| | 9 |
| | 67 |
| | | | | | | Other noncurrent liabilities | 244 |
| | 252 |
| | 496 |
| | | | | | | Total liabilities and capitalization | 12,063 |
| | 92 |
| | 12,155 |
| | | | | | | | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In millions) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Retained Earnings- | | | | | | | | | | | | Beginning Balance | 2,149 |
| | (390 | ) | | 1,759 |
| | 1,572 |
| | (311 | ) | | 1,261 |
| Net income | 269 |
| | (38 | ) | | 231 |
| | 577 |
| | (79 | ) | | 498 |
| Ending Balance | 2,418 |
| | (428 | ) | | 1,990 |
| | 2,149 |
| | (390 | ) | | 1,759 |
| | | | | | | | | | | | | Accumulated Comprehensive Income (Loss)- | | | | | | | | | | | | Beginning Balance | (103 | ) | | 168 |
| | 65 |
| | (92 | ) | | 134 |
| | 42 |
| Pension and other postretirement benefits, net of taxes | (36 | ) | | 14 |
| | (22 | ) | | 6 |
| | 34 |
| | 40 |
| Ending Balance | (120 | ) | | 182 |
| | 62 |
| | (103 | ) | | 168 |
| | 65 |
| | | | | | | | | | | | | Common Stock- | | | | | | | | | | | | Beginning Balance | 1,468 |
| | 77 |
| | 1,545 |
| | 1,464 |
| | 77 |
| | 1,541 |
| Ending Balance | 1,490 |
| | 77 |
| | 1,567 |
| | 1,468 |
| | 77 |
| | 1,545 |
| | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF CASH FLOW | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In millions) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Cash flows provided by operating activities: | | | | | | | | | | | | Net income | $ | 269 |
| | $ | (38 | ) | | $ | 231 |
| | $ | 577 |
| | $ | (79 | ) | | $ | 498 |
| Provision for depreciation | 243 |
| | 3 |
| | 246 |
| | 259 |
| | 3 |
| | 262 |
| Deferred income taxes and investment tax credits, net | 176 |
| | (26 | ) | | 150 |
| | 220 |
| | (34 | ) | | 186 |
| Pensions and OPEB mark-to-market adjustment | — |
| | 107 |
| | 107 |
| | — |
| | 150 |
| | 150 |
| Accrued compensation and retirement benefits | 25 |
| | (50 | ) | | (25 | ) | | 6 |
| | (40 | ) | | (34 | ) | Impairments of long-lived assets | 384 |
| | 4 |
| | 388 |
| | 6 |
| | — |
| | 6 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | OE | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In millions) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Other operating expense | $ | 364 |
| | $ | (22 | ) | | $ | 342 |
| | $ | 461 |
| | $ | (22 | ) | | $ | 439 |
| Pensions and OPEB mark-to-market adjustment | — |
| | 24 |
| | 24 |
| | — |
| | 26 |
| | 26 |
| Provision for depreciation | 88 |
| | 3 |
| | 91 |
| | 89 |
| | 3 |
| | 92 |
| Income before income taxes | 238 |
| | (5 | ) | | 233 |
| | 188 |
| | (7 | ) | | 181 |
| Income taxes | 81 |
| | (3 | ) | | 78 |
| | 66 |
| | (4 | ) | | 62 |
| Net Income | 157 |
| | (2 | ) | | 155 |
| | 122 |
| | (3 | ) | | 119 |
| Pension and other postretirement benefits | (27 | ) | | (4 | ) | | (31 | ) | | 46 |
| | 7 |
| | 53 |
| Income taxes (benefits) on other comprehensive income | (11 | ) | | 2 |
| | (9 | ) | | 16 |
| | 3 |
| | 19 |
| Comprehensive income | 141 |
| | (8 | ) | | 133 |
| | 143 |
| | 1 |
| | 144 |
| | | | | | | | | | | | | CONSOLIDATED BALANCE SHEETS | As of December 31, 2010 | | | | | | | (In millions) | As | | Effect of | | As | | | | | | | | Reported | | Change | | Revised | | | | | | | Utility plant - In service | $ | 3,137 |
| | $ | 85 |
| | $ | 3,222 |
| | | | | | | Accumulated provision for depreciation | 1,208 |
| | 10 |
| | 1,218 |
| | | | | | | Total property, plant, and equipment | 1,929 |
| | 75 |
| | 2,004 |
| | | | | | | Regulatory assets | 400 |
| | 3 |
| | 403 |
| | | | | | | Total assets | 3,686 |
| | 78 |
| | 3,764 |
| | | | | | | Common Stock | 952 |
| | (39 | ) | | 913 |
| | | | | | | Accumulated other comprehensive income (loss) | (179 | ) | | 261 |
| | 82 |
| | | | | | | Retained earnings | 142 |
| | (254 | ) | | (112 | ) | | | | | | | Total common stockholder's equity | 915 |
| | (32 | ) | | 883 |
| | | | | | | Total equity | 921 |
| | (32 | ) | | 889 |
| | | | | | | Total capitalization | 2,073 |
| | (32 | ) | | 2,041 |
| | | | | | | Accrued taxes | 79 |
| | 1 |
| | 80 |
| | | | | | | Accumulated deferred income taxes | 696 |
| | 41 |
| | 737 |
| | | | | | | Other noncurrent liabilities | 197 |
| | 68 |
| | 265 |
| | | | | | | Total liabilities and capitalization | 3,686 |
| | 78 |
| | 3,764 |
| | | | | | | | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In millions) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Retained Earnings- | | | | | | | | | | | | Beginning Balance | $ | 30 |
| | $ | (252 | ) | | $ | (222 | ) | | $ | 254 |
| | $ | (249 | ) | | $ | 5 |
| Earnings available to Parent | 157 |
| | (2 | ) | | 155 |
| | 122 |
| | (3 | ) | | 119 |
| Ending Balance | 142 |
| | (254 | ) | | (112 | ) | | 30 |
| | (252 | ) | | (222 | ) | | | | | | | | | | | | | Accumulated Comprehensive Income (Loss)- | | | | | | | | | | | | Beginning Balance | $ | (163 | ) | | $ | 267 |
| | $ | 104 |
| | $ | (184 | ) | | $ | 263 |
| | $ | 79 |
| Pension and other postretirement benefits, net of taxes | (16 | ) | | (6 | ) | | (22 | ) | | 26 |
| | 4 |
| | 30 |
| Ending Balance | (179 | ) | | 261 |
| | 82 |
| | (163 | ) | | 267 |
| | 104 |
| | | | | | | | | | | | | Common Stock- | | | | | | | | | | | | Beginning Balance | $ | 1,155 |
| | $ | (39 | ) | | $ | 1,116 |
| | $ | 1,224 |
| | $ | (39 | ) | | $ | 1,185 |
| Ending Balance | 952 |
| | (39 | ) | | 913 |
| | 1,155 |
| | (39 | ) | | 1,116 |
| | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF CASH FLOW | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In millions) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Cash flows provided by operating activities: | | | | | | | | | | | | Net income | $ | 157 |
| | $ | (2 | ) | | $ | 155 |
| | $ | 122 |
| | $ | (3 | ) | | $ | 119 |
| Provision for depreciation | 88 |
| | 3 |
| | 91 |
| | 89 |
| | 3 |
| | 92 |
| Deferred income taxes and investment tax credits, net | 46 |
| | (3 | ) | | 43 |
| | 41 |
| | (4 | ) | | 37 |
| Pensions and OPEB mark-to-market adjustment | — |
| | 24 |
| | 24 |
| | — |
| | 26 |
| | 26 |
| Accrued compensation and retirement benefits | (23 | ) | | (22 | ) | | (45 | ) | | (14 | ) | | (22 | ) | | (36 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | CEI | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In thousands) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Other operating expense | $ | 130,018 |
| | $ | (14,952 | ) | | $ | 115,066 |
| | $ | 161,407 |
| | $ | (12,840 | ) | | $ | 148,567 |
| Pensions and OPEB mark-to-market adjustment | — |
| | 11,945 |
| | 11,945 |
| | — |
| | 38,329 |
| | 38,329 |
| Provision for depreciation | 72,753 |
| | 2,154 |
| | 74,907 |
| | 71,908 |
| | 1,975 |
| | 73,883 |
| Capitalized interest | 82 |
| | (19 | ) | | 63 |
| | 173 |
| | 88 |
| | 261 |
| Income before income taxes | 111,848 |
| | 834 |
| | 112,682 |
| | (21,175 | ) | | (27,376 | ) | | (48,551 | ) | Income taxes | 38,673 |
| | (3,546 | ) | | 35,127 |
| | (10,183 | ) | | (9,611 | ) | | (19,794 | ) | Net Income | 73,175 |
| | 4,380 |
| | 77,555 |
| | (10,992 | ) | | (17,765 | ) | | (28,757 | ) | Earnings available to Parent | 71,658 |
| | 4,380 |
| | 76,038 |
| | (12,706 | ) | | (17,765 | ) | | (30,471 | ) | Pension and other postretirement benefits | (26,955 | ) | | (13,487 | ) | | (40,442 | ) | | (1,378 | ) | | 47,566 |
| | 46,188 |
| Income taxes (benefits) on other comprehensive income | (11,926 | ) | | (2,806 | ) | | (14,732 | ) | | 1,923 |
| | 17,374 |
| | 19,297 |
| Comprehensive income | 58,146 |
| | (6,301 | ) | | 51,845 |
| | (14,293 | ) | | 12,427 |
| | (1,866 | ) | Comprehensive income available to Parent | 56,629 |
| | (6,301 | ) | | 50,328 |
| | (16,007 | ) | | 12,427 |
| | (3,580 | ) | | | | | | | | | | | | | CONSOLIDATED BALANCE SHEETS | As of December 31, 2010 | | | | | | | (In thousands) | As | | Effect of | | As | | | | | | | | Reported | | Change | | Revised | | | | | | | Utility plant - In service | $ | 2,396,893 |
| | $ | 63,224 |
| | $ | 2,460,117 |
| | | | | | | Accumulated provision for depreciation | 932,246 |
| | 12,371 |
| | 944,617 |
| | | | | | | Total property, plant, and equipment | 1,464,647 |
| | 50,853 |
| | 1,515,500 |
| | | | | | | Regulatory assets | 370,403 |
| | (574 | ) | | 369,829 |
| | | | | | | Total assets | 4,303,849 |
| | 50,279 |
| | 4,354,128 |
| | | | | | | Common Stock | 887,087 |
| | (23,715 | ) | | 863,372 |
| | | | | | | Accumulated other comprehensive income (loss) | (153,187 | ) | | 187,298 |
| | 34,111 |
| | | | | | | Retained earnings | 568,906 |
| | (187,230 | ) | | 381,676 |
| | | | | | | Total common stockholder's equity | 1,302,806 |
| | (23,647 | ) | | 1,279,159 |
| | | | | | | Total equity | 1,320,823 |
| | (23,647 | ) | | 1,297,176 |
| | | | | | | Total capitalization | 3,173,353 |
| | (23,647 | ) | | 3,149,706 |
| | | | | | | Accrued taxes | 84,668 |
| | 678 |
| | 85,346 |
| | | | | | | Accumulated deferred income taxes | 622,771 |
| | 24,521 |
| | 647,292 |
| | | | | | | Other noncurrent liabilities | 100,161 |
| | 48,727 |
| | 148,888 |
| | | | | | | Total liabilities and capitalization | 4,303,849 |
| | 50,279 |
| | 4,354,128 |
| | | | | | | | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In thousands) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Retained Earnings- | | | | | | | | | | | | Beginning Balance | $ | 597,248 |
| | $ | (191,610 | ) | | $ | 405,638 |
| | $ | 859,954 |
| | $ | (173,845 | ) | | $ | 686,109 |
| Earnings available to Parent | 71,658 |
| | 4,380 |
| | 76,038 |
| | (12,706 | ) | | (17,765 | ) | | (30,471 | ) | Ending Balance | 568,906 |
| | (187,230 | ) | | 381,676 |
| | 597,248 |
| | (191,610 | ) | | 405,638 |
| | | | | | | | | | | | | Accumulated Comprehensive Income (Loss)- | | | | | | | | | | | | Beginning Balance | $ | (138,158 | ) | | $ | 197,979 |
| | $ | 59,821 |
| | $ | (134,857 | ) | | $ | 167,787 |
| | $ | 32,930 |
| Pension and other postretirement benefits, net of taxes | (15,029 | ) | | (10,681 | ) | | (25,710 | ) | | (3,301 | ) | | 30,192 |
| | 26,891 |
| Ending Balance | (153,187 | ) | | 187,298 |
| | 34,111 |
| | (138,158 | ) | | 197,979 |
| | 59,821 |
| | | | | | | | | | | | | Common Stock- | | | | | | | | | | | | Beginning Balance | $ | 884,897 |
| | $ | (23,715 | ) | | $ | 861,182 |
| | $ | 878,785 |
| | $ | (23,715 | ) | | $ | 855,070 |
| Ending Balance | 887,087 |
| | (23,715 | ) | | 863,372 |
| | 884,897 |
| | (23,715 | ) | | 861,182 |
| | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF CASH FLOW | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In thousands) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Cash flows provided by operating activities: | | | | | | | | | | | | Net income | $ | 73,175 |
| | $ | 4,380 |
| | $ | 77,555 |
| | $ | (10,992 | ) | | $ | (17,765 | ) | | $ | (28,757 | ) | Provision for depreciation | 72,753 |
| | 2,154 |
| | 74,907 |
| | 71,908 |
| | 1,975 |
| | 73,883 |
| Deferred income taxes and investment tax credits, net | (20,068 | ) | | (3,546 | ) | | (23,614 | ) | | (51,839 | ) | | (9,611 | ) | | (61,450 | ) | Pensions and OPEB mark-to-market adjustment | — |
| | 11,945 |
| | 11,945 |
| | — |
| | 38,329 |
| | 38,329 |
| Accrued compensation and retirement benefits | 12,724 |
| | (14,952 | ) | | (2,228 | ) | | 8,514 |
| | (12,840 | ) | | (4,326 | ) | Other operating activities | 2,090 |
| | 19 |
| | 2,109 |
| | 8,820 |
| | (88 | ) | | 8,732 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | TE | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In thousands) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Other operating expense | $ | 108,072 |
| | $ | (6,177 | ) | | $ | 101,895 |
| | $ | 142,203 |
| | $ | (6,265 | ) | | $ | 135,938 |
| Pensions and OPEB mark-to-market adjustment | — |
| | 4,183 |
| | 4,183 |
| | — |
| | 14,360 |
| | 14,360 |
| Provision for depreciation | 31,613 |
| | 548 |
| | 32,161 |
| | 30,727 |
| | 454 |
| | 31,181 |
| Miscellaneous expense | (4,206 | ) | | (81 | ) | | (4,287 | ) | | (2,436 | ) | | 267 |
| | (2,169 | ) | Capitalized interest | 358 |
| | (54 | ) | | 304 |
| | 169 |
| | 114 |
| | 283 |
| Income before income taxes | 50,693 |
| | 1,311 |
| | 52,004 |
| | 31,917 |
| | (8,168 | ) | | 23,749 |
| Income taxes | 17,645 |
| | (1,889 | ) | | 15,756 |
| | 7,939 |
| | (2,592 | ) | | 5,347 |
| Net Income | 33,048 |
| | 3,200 |
| | 36,248 |
| | 23,978 |
| | (5,576 | ) | | 18,402 |
| Earnings available to Parent | 33,044 |
| | 3,200 |
| | 36,244 |
| | 23,957 |
| | (5,576 | ) | | 18,381 |
| Pension and other postretirement benefits | (655 | ) | | (6,295 | ) | | (6,950 | ) | | (7,880 | ) | | 16,958 |
| | 9,078 |
| Income taxes (benefits) on other comprehensive income | (1,144 | ) | | (277 | ) | | (1,421 | ) | | (6,630 | ) | | 6,097 |
| | (533 | ) | Comprehensive income | 33,668 |
| | (2,818 | ) | | 30,850 |
| | 7,547 |
| | 5,285 |
| | 12,832 |
| Comprehensive income available to Parent | 33,664 |
| | (2,818 | ) | | 30,846 |
| | 7,526 |
| | 5,285 |
| | 12,811 |
| | | | | | | | | | | | | CONSOLIDATED BALANCE SHEETS | As of December 31, 2010 | | | | | | | (In thousands) | As | | Effect of | | As | | | | | | | | Reported | | Change | | Revised | | | | | | | Utility plant - In service | $ | 947,203 |
| | $ | 15,225 |
| | $ | 962,428 |
| | | | | | | Accumulated provision for depreciation | 446,401 |
| | 4,130 |
| | 450,531 |
| | | | | | | Total property, plant, and equipment | 500,802 |
| | 11,095 |
| | 511,897 |
| | | | | | | Regulatory assets | 72,059 |
| | 529 |
| | 72,588 |
| | | | | | | Total assets | 1,614,306 |
| | 11,624 |
| | 1,625,930 |
| | | | | | | Other Paid-In Capital | 178,182 |
| | (15,161 | ) | | 163,021 |
| | | | | | | Accumulated other comprehensive income (loss) | (49,183 | ) | | 64,269 |
| | 15,086 |
| | | | | | | Retained earnings | 117,534 |
| | (75,034 | ) | | 42,500 |
| | | | | | | Total common stockholder's equity | 393,543 |
| | (25,926 | ) | | 367,617 |
| | | | | | | Total equity | 396,132 |
| | (25,926 | ) | | 370,206 |
| | | | | | | Total capitalization | 996,625 |
| | (25,926 | ) | | 970,699 |
| | | | | | | Accrued taxes | 24,401 |
| | 222 |
| | 24,623 |
| | | | | | | Accumulated deferred income taxes | 132,019 |
| | 8,696 |
| | 140,715 |
| | | | | | | Other noncurrent liabilities | 65,090 |
| | 28,632 |
| | 93,722 |
| | | | | | | Total liabilities and capitalization | 1,614,306 |
| | 11,624 |
| | 1,625,930 |
| | | | | | | | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In thousands) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Retained Earnings- | | | | | | | | | | | | Beginning Balance | $ | 214,490 |
| | $ | (78,234 | ) | | $ | 136,256 |
| | $ | 190,533 |
| | $ | (72,658 | ) | | $ | 117,875 |
| Earnings available to Parent | 33,044 |
| | 3,200 |
| | 36,244 |
| | 23,957 |
| | (5,576 | ) | | 18,381 |
| Ending Balance | 117,534 |
| | (75,034 | ) | | 42,500 |
| | 214,490 |
| | (78,234 | ) | | 136,256 |
| | | | | | | | | | | | | Accumulated Comprehensive Income (Loss)- | | | | | | | | | | | | Beginning Balance | $ | (49,803 | ) | | $ | 70,287 |
| | $ | 20,484 |
| | $ | (33,372 | ) | | $ | 59,426 |
| | $ | 26,054 |
| Pension and other postretirement benefits, net of taxes | 535 |
| | (6,018 | ) | | (5,483 | ) | | (7,006 | ) | | 10,861 |
| | 3,855 |
| Ending Balance | (49,183 | ) | | 64,269 |
| | 15,086 |
| | (49,803 | ) | | 70,287 |
| | 20,484 |
| | | | | | | | | | | | | Other Paid-In Capital- | | | | | | | | | | | | Beginning Balance | $ | 178,181 |
| | $ | (15,161 | ) | | $ | 163,020 |
| | $ | 175,879 |
| | $ | (15,161 | ) | | $ | 160,718 |
| Ending Balance | 178,182 |
| | (15,161 | ) | | 163,021 |
| | 178,181 |
| | (15,161 | ) | | 163,020 |
| | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF CASH FLOW | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In thousands) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Cash flows provided by operating activities: | | | | | | | | | | | | Net income | $ | 33,048 |
| | $ | 3,200 |
| | $ | 36,248 |
| | $ | 23,978 |
| | $ | (5,576 | ) | | $ | 18,402 |
| Provision for depreciation | 31,613 |
| | 548 |
| | 32,161 |
| | 30,727 |
| | 454 |
| | 31,181 |
| Deferred income taxes and investment tax credits, net | 28,041 |
| | (1,889 | ) | | 26,152 |
| | 2,003 |
| | (2,592 | ) | | (589 | ) | Pensions and OPEB mark-to-market adjustment | — |
| | 4,183 |
| | 4,183 |
| | — |
| | 14,360 |
| | 14,360 |
| Accrued compensation and retirement benefits | 5,517 |
| | (6,177 | ) | | (660 | ) | | 3,489 |
| | (6,265 | ) | | (2,776 | ) | Other operating activities | (7,689 | ) | | 135 |
| | (7,554 | ) | | 7,135 |
| | (381 | ) | | 6,754 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | JCP&L | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In millions) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Other operating expense | $ | 344 |
| | $ | (21 | ) | | $ | 323 |
| | $ | 310 |
| | $ | (26 | ) | | $ | 284 |
| Pensions and OPEB mark-to-market adjustment | — |
| | 26 |
| | 26 |
| | — |
| | 37 |
| | 37 |
| Provision for depreciation | 108 |
| | 5 |
| | 113 |
| | 103 |
| | 5 |
| | 108 |
| Income before income taxes | 340 |
| | (10 | ) | | 330 |
| | 279 |
| | (16 | ) | | 263 |
| Income taxes | 148 |
| | (1 | ) | | 147 |
| | 109 |
| | (4 | ) | | 105 |
| Net Income | 192 |
| | (9 | ) | | 183 |
| | 170 |
| | (12 | ) | | 158 |
| Pension and other postretirement benefits | (19 | ) | | 2 |
| | (17 | ) | | (40 | ) | | 22 |
| | (18 | ) | Income taxes (benefits) on other comprehensive income | (9 | ) | | (1 | ) | | (10 | ) | | (14 | ) | | 10 |
| | (4 | ) | Comprehensive income | 182 |
| | (6 | ) | | 176 |
| | 144 |
| | — |
| | 144 |
| | | | | | | | | | | | | CONSOLIDATED BALANCE SHEETS | As of December 31, 2010 | | | | | | | (In millions) | As | | Effect of | | As | | | | | | | | Reported | | Change | | Revised | | | | | | | Utility plant - In service | $ | 4,563 |
| | $ | 220 |
| | $ | 4,783 |
| | | | | | | Accumulated provision for depreciation | 1,657 |
| | 25 |
| | 1,682 |
| | | | | | | Total property, plant, and equipment | 2,906 |
| | 195 |
| | 3,101 |
| | | | | | | Regulatory assets | 513 |
| | 1 |
| | 514 |
| | | | | | | Total assets | 6,317 |
| | 196 |
| | 6,513 |
| | | | | | | Accumulated other comprehensive income (loss) | (253 | ) | | 304 |
| | 51 |
| | | | | | | Retained earnings | 227 |
| | (250 | ) | | (23 | ) | | | | | | | Total common stockholder's equity | 2,619 |
| | 54 |
| | 2,673 |
| | | | | | | Total capitalization | 4,389 |
| | 54 |
| | 4,443 |
| | | | | | | Other | 26 |
| | 2 |
| | 28 |
| | | | | | | Accumulated deferred income taxes | 716 |
| | 77 |
| | 793 |
| | | | | | | Other noncurrent liabilities | 171 |
| | 63 |
| | 234 |
| | | | | | | Total liabilities and capitalization | 6,317 |
| | 196 |
| | 6,513 |
| | | | | | | | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In millions) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Retained Earnings- | | | | | | | | | | | | Beginning Balance | $ | 200 |
| | $ | (241 | ) | | $ | (41 | ) | | $ | 157 |
| | $ | (229 | ) | | $ | (72 | ) | Net Income | 192 |
| | (9 | ) | | 183 |
| | 170 |
| | (12 | ) | | 158 |
| Ending Balance | 227 |
| | (250 | ) | | (23 | ) | | 200 |
| | (241 | ) | | (41 | ) | | | | | | | | | | | | | Accumulated Comprehensive Income (Loss)- | | | | | | | | | | | | Beginning Balance | $ | (243 | ) | | $ | 301 |
| | $ | 58 |
| | $ | (217 | ) | | $ | 289 |
| | $ | 72 |
| Pension and other postretirement benefits, net of taxes | (10 | ) | | 3 |
| | (7 | ) | | (26 | ) | | 12 |
| | (14 | ) | Ending Balance | (253 | ) | | 304 |
| | 51 |
| | (243 | ) | | 301 |
| | 58 |
| | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF CASH FLOW | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In millions) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Cash flows provided by operating activities: | | | | | | | | | | | | Net income | $ | 192 |
| | $ | (9 | ) | | $ | 183 |
| | $ | 170 |
| | $ | (12 | ) | | $ | 158 |
| Provision for depreciation | 108 |
| | 5 |
| | 113 |
| | 103 |
| | 5 |
| | 108 |
| Deferred income taxes and investment tax credits, net | 32 |
| | (1 | ) | | 31 |
| | 43 |
| | (4 | ) | | 39 |
| Pensions and OPEB mark-to-market adjustment | — |
| | 26 |
| | 26 |
| | — |
| | 37 |
| | 37 |
| Accrued compensation and retirement benefits | 14 |
| | (21 | ) | | (7 | ) | | 13 |
| | (26 | ) | | (13 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | Met-Ed | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF INCOME | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In thousands) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Other operating expense | $ | 418,569 |
| | $ | (17,553 | ) | | $ | 401,016 |
| | $ | 277,024 |
| | $ | (17,889 | ) | | $ | 259,135 |
| Pensions and OPEB mark-to-market adjustment | — |
| | 6,993 |
| | 6,993 |
| | — |
| | 16,044 |
| | 16,044 |
| Provision for depreciation | 52,176 |
| | 3,616 |
| | 55,792 |
| | 51,006 |
| | 3,646 |
| | 54,652 |
| Miscellaneous income | 5,901 |
| | — |
| | 5,901 |
| | 4,033 |
| | 74 |
| | 4,107 |
| Capitalized interest | 653 |
| | — |
| | 653 |
| | 159 |
| | 22 |
| | 181 |
| Income before income taxes | 100,873 |
| | 6,944 |
| | 107,817 |
| | 84,117 |
| | (1,705 | ) | | 82,412 |
| Income taxes | 42,866 |
| | 4,867 |
| | 47,733 |
| | 28,594 |
| | 281 |
| | 28,875 |
| Net Income | 58,007 |
| | 2,077 |
| | 60,084 |
| | 55,523 |
| | (1,986 | ) | | 53,537 |
| Pension and other postretirement benefits | 289 |
| | (13,257 | ) | | (12,968 | ) | | (118 | ) | | 685 |
| | 567 |
| Income taxes (benefits) on other comprehensive income | (544 | ) | | (7,008 | ) | | (7,552 | ) | | 2,784 |
| | 286 |
| | 3,070 |
| Comprehensive income | 59,175 |
| | (4,172 | ) | | 55,003 |
| | 52,956 |
| | (1,587 | ) | | 51,369 |
| | | | | | | | | | | | | CONSOLIDATED BALANCE SHEETS | As of December 31, 2010 | | | | | | | (In thousands) | As | | Effect of | | As | | | | | | | | Reported | | Change | | Revised | | | | | | | Utility plant - In service | $ | 2,247,853 |
| | $ | 145,648 |
| | $ | 2,393,501 |
| | | | | | | Accumulated provision for depreciation | 846,003 |
| | 16,514 |
| | 862,517 |
| | | | | | | Total property, plant, and equipment | 1,401,850 |
| | 129,134 |
| | 1,530,984 |
| | | | | | | Regulatory assets | 295,856 |
| | 52 |
| | 295,908 |
| | | | | | | Total assets | 3,044,670 |
| | 129,186 |
| | 3,173,856 |
| | | | | | | Accumulated other comprehensive income (loss) | (142,383 | ) | | 179,807 |
| | 37,424 |
| | | | | | | Retained earnings | 32,406 |
| | (138,967 | ) | | (106,561 | ) | | | | | | | Total common stockholder's equity | 1,087,099 |
| | 40,840 |
| | 1,127,939 |
| | | | | | | Total capitalization | 1,805,959 |
| | 40,840 |
| | 1,846,799 |
| | | | | | | Accrued taxes | 60,856 |
| | 482 |
| | 61,338 |
| | | | | | | Accumulated deferred income taxes | 473,009 |
| | 53,458 |
| | 526,467 |
| | | | | | | Other noncurrent liabilities | 53,689 |
| | 34,406 |
| | 88,095 |
| | | | | | | Total liabilities and capitalization | 3,044,670 |
| | 129,186 |
| | 3,173,856 |
| | | | | | | | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In thousands) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Retained Earnings- | | | | | | | | | | | | Beginning Balance | $ | 4,399 |
| | $ | (141,044 | ) | | $ | (136,645 | ) | | $ | (51,124 | ) | | $ | (139,058 | ) | | $ | (190,182 | ) | Net income | 58,007 |
| | 2,077 |
| | 60,084 |
| | 55,523 |
| | (1,986 | ) | | 53,537 |
| Ending Balance | 32,406 |
| | (138,967 | ) | | (106,561 | ) | | 4,399 |
| | (141,044 | ) | | (136,645 | ) | | | | | | | | | | | | | Accumulated Comprehensive Income (Loss)- | | | | | | | | | | | | Beginning Balance | $ | (143,551 | ) | | $ | 186,056 |
| | $ | 42,505 |
| | $ | (140,984 | ) | | $ | 185,657 |
| | $ | 44,673 |
| Pension and other postretirement benefits, net of taxes | 1,355 |
| | (6,249 | ) | | (4,894 | ) | | (2,902 | ) | | 399 |
| | (2,503 | ) | Ending Balance | (142,383 | ) | | 179,807 |
| | 37,424 |
| | (143,551 | ) | | 186,056 |
| | 42,505 |
| | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF CASH FLOW | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In thousands) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Cash flows provided by operating activities: | | | | | | | | | | | | Net income | $ | 58,007 |
| | $ | 2,077 |
| | $ | 60,084 |
| | $ | 55,523 |
| | $ | (1,986 | ) | | $ | 53,537 |
| Provision for depreciation | 52,176 |
| | 3,616 |
| | 55,792 |
| | 51,006 |
| | 3,646 |
| | 54,652 |
| Deferred income taxes and investment tax credits, net | 29,528 |
| | 4,867 |
| | 34,395 |
| | 66,965 |
| | 281 |
| | 67,246 |
| Pensions and OPEB mark-to-market adjustment | — |
| | 6,993 |
| | 6,993 |
| | — |
| | 16,044 |
| | 16,044 |
| Accrued compensation and retirement benefits | (2,474 | ) | | (17,553 | ) | | (20,027 | ) | | 5,876 |
| | (17,889 | ) | | (12,013 | ) | Other operating activities | 8,026 |
| | — |
| | 8,026 |
| | 5,022 |
| | (96 | ) | | 4,926 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | Penelec | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In thousands) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Other operating expense | $ | 268,614 |
| | $ | (21,648 | ) | | $ | 246,966 |
| | $ | 209,156 |
| | $ | (16,395 | ) | | $ | 192,761 |
| Pensions and OPEB mark-to-market adjustment | — |
| | 8,279 |
| | 8,279 |
| | — |
| | 33,983 |
| | 33,983 |
| Provision for depreciation | 61,141 |
| | 4,553 |
| | 65,694 |
| | 61,317 |
| | 4,320 |
| | 65,637 |
| Miscellaneous income | 5,928 |
| | 29 |
| | 5,957 |
| | 3,662 |
| | — |
| | 3,662 |
| Capitalized interest | 750 |
| | 20 |
| | 770 |
| | 98 |
| | 132 |
| | 230 |
| Income before income taxes | 100,665 |
| | 8,865 |
| | 109,530 |
| | 111,082 |
| | (21,776 | ) | | 89,306 |
| Income taxes | 41,173 |
| | 5,167 |
| | 46,340 |
| | 45,694 |
| | (7,186 | ) | | 38,508 |
| Net Income | 59,492 |
| | 3,698 |
| | 63,190 |
| | 65,388 |
| | (14,590 | ) | | 50,798 |
| Pension and other postretirement benefits | (5,749 | ) | | (14,672 | ) | | (20,421 | ) | | (51,421 | ) | | 50,601 |
| | (820 | ) | Income taxes (benefits) on other comprehensive income | (4,262 | ) | | (7,532 | ) | | (11,794 | ) | | (17,252 | ) | | 22,083 |
| | 4,831 |
| Comprehensive income | 58,070 |
| | (3,442 | ) | | 54,628 |
| | 31,281 |
| | 13,928 |
| | 45,209 |
| | | | | | | | | | | | | CONSOLIDATED BALANCE SHEETS | As of December 31, 2010 | | | | | | | (In thousands) | As | | Effect of | | As | | | | | | | | Reported | | Change | | Revised | | | | | | | Utility plant - In service | $ | 2,532,629 |
| | $ | 181,912 |
| | $ | 2,714,541 |
| | | | | | | Accumulated provision for depreciation | 935,259 |
| | 20,055 |
| | 955,314 |
| | | | | | | Total property, plant, and equipment | 1,597,370 |
| | 161,857 |
| | 1,759,227 |
| | | | | | | Regulatory assets | 163,407 |
| | 21 |
| | 163,428 |
| | | | | | | Total assets | 3,062,669 |
| | 161,878 |
| | 3,224,547 |
| | | | | | | Accumulated other comprehensive income (loss) | (163,526 | ) | | 213,908 |
| | 50,382 |
| | | | | | | Retained earnings | 60,993 |
| | (151,872 | ) | | (90,879 | ) | | | | | | | Total common stockholder's equity | 899,538 |
| | 62,036 |
| | 961,574 |
| | | | | | | Total capitalization | 1,971,800 |
| | 62,036 |
| | 2,033,836 |
| | | | | | | Accrued taxes | 5,075 |
| | 1,456 |
| | 6,531 |
| | | | | | | Accumulated deferred income taxes | 371,877 |
| | 65,655 |
| | 437,532 |
| | | | | | | Other noncurrent liabilities | 47,889 |
| | 32,731 |
| | 80,620 |
| | | | | | | Total liabilities and capitalization | 3,062,669 |
| | 161,878 |
| | 3,224,547 |
| | | | | | | | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In thousands) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Retained Earnings- | | | | | | | | | | | | Beginning Balance | $ | 91,501 |
| | $ | (155,570 | ) | | $ | (64,069 | ) | | $ | 76,113 |
| | $ | (140,980 | ) | | $ | (64,867 | ) | Net Income | 59,492 |
| | 3,698 |
| | 63,190 |
| | 65,388 |
| | (14,590 | ) | | 50,798 |
| Ending Balance | 60,993 |
| | (151,872 | ) | | (90,879 | ) | | 91,501 |
| | (155,570 | ) | | (64,069 | ) | | | | | | | | | | | | | Accumulated Comprehensive Income (Loss)- | | | | | | | | | | | | Beginning Balance | $ | (162,104 | ) | | $ | 221,048 |
| | $ | 58,944 |
| | $ | (127,997 | ) | | $ | 192,530 |
| | $ | 64,533 |
| Pension and other postretirement benefits, net of taxes | (1,382 | ) | | (7,140 | ) | | (8,522 | ) | | (34,177 | ) | | 28,518 |
| | (5,659 | ) | Ending Balance | (163,526 | ) | | 213,908 |
| | 50,382 |
| | (162,104 | ) | | 221,048 |
| | 58,944 |
| | | | | | | | | | | | | CONSOLIDATED STATEMENTS OF CASH FLOW | Year Ended December 31, 2010 | | Year Ended December 31, 2009 | (In thousands) | As | | Effect of | | As | | As | | Effect of | | As | | Reported | | Change | | Revised | | Reported | | Change | | Revised | Cash flows provided by operating activities: | | | | | | | | | | | | Net income | $ | 59,492 |
| | $ | 3,698 |
| | $ | 63,190 |
| | $ | 65,388 |
| | $ | (14,590 | ) | | $ | 50,798 |
| Provision for depreciation | 61,141 |
| | 4,553 |
| | 65,694 |
| | 61,317 |
| | 4,320 |
| | 65,637 |
| Deferred income taxes and investment tax credits, net | 133,885 |
| | 5,167 |
| | 139,052 |
| | 63,065 |
| | (7,186 | ) | | 55,879 |
| Pensions and OPEB mark-to-market adjustment | — |
| | 8,279 |
| | 8,279 |
| | — |
| | 33,983 |
| | 33,983 |
| Accrued compensation and retirement benefits | 8,206 |
| | (21,648 | ) | | (13,442 | ) | | 3,866 |
| | (16,395 | ) | | (12,529 | ) | Other operating activities | 4,909 |
| | (49 | ) | | 4,860 |
| | 3,236 |
| | (132 | ) | | 3,104 |
|
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