0001031296-15-000022.txt : 20150501 0001031296-15-000022.hdr.sgml : 20150501 20150501071321 ACCESSION NUMBER: 0001031296-15-000022 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20150501 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20150501 DATE AS OF CHANGE: 20150501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRSTENERGY CORP CENTRAL INDEX KEY: 0001031296 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 341843785 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-21011 FILM NUMBER: 15821845 BUSINESS ADDRESS: STREET 1: 76 SOUTH MAIN ST CITY: AKRON STATE: OH ZIP: 44308-1890 BUSINESS PHONE: 330-761-7837 MAIL ADDRESS: STREET 1: 76 SOUTH MAIN ST CITY: AKRON STATE: OH ZIP: 44308-1890 8-K 1 a8-kq12015earningsrelease.htm 8-K 8-K Q1 2015 Earnings Release








UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) May 1, 2015


Commission
 
Registrant; State of Incorporation;
 
I.R.S. Employer
File Number
 
Address; and Telephone Number
 
Identification No.
 
 
 
 
 
333-21011
 
FIRSTENERGY CORP.
 
34-1843785
 
 
(An Ohio Corporation)
 
 
 
 
76 South Main Street
 
 
 
 
Akron, OH  44308
 
 
 
 
Telephone (800)736-3402
 
 
 
 
 
 
 














Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




Item 2.02 Results of Operations and Financial Condition

On May 1, 2015, FirstEnergy Corp. (FirstEnergy) issued two public documents regarding, among other things, results for the first quarter ended March 31, 2015. FirstEnergy’s Press Release and Consolidated Report to the Financial Community, which are attached as Exhibits 99.1 and 99.2 hereto and incorporated by reference, contain non-GAAP financial measures. Pursuant to the requirements of Regulation G and Item 10(e)(i) of Regulation S-K, FirstEnergy has provided quantitative reconciliations within the Press Release and Consolidated Report to the Financial Community of the non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States (GAAP). The information in the Press Release and the Consolidated Report to the Financial Community and the information contained in this Item 2.02 and in Items 7.01 and 9.01 below shall not be deemed filed for purposes of the Securities Exchange Act of 1934, nor shall such information and Exhibits 99.1 and 99.2 be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such a filing.

The Press Release and Consolidated Report to the Financial Community contain references to non-GAAP financial measures including, among others, Operating earnings, Adjusted Equity, Adjusted Debt, and Adjusted Capitalization. In addition, Basic EPS and Basic EPS-Operating, each calculated on a segment basis, are also non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Operating earnings are not calculated in accordance with GAAP because they exclude the impact of “special items”. Basic EPS for each segment is calculated by dividing segment net income (loss) on a GAAP basis by the basic weighted average shares outstanding for the period. Basic EPS-Operating for each segment is calculated by dividing segment Operating earnings (losses), which exclude special items as discussed above, by the basic weighted average shares outstanding for the period. Management uses non-GAAP financial measures such as Operating earnings to evaluate the company’s performance and manage its operations and frequently references these non-GAAP financial measures in its decision-making, using them to facilitate historical and ongoing performance comparisons. Additionally, management uses Basic EPS and Basic-EPS Operating by segment to further evaluate FirstEnergy’s performance by segment and references these non-GAAP financial measures in its decision-making. Management believes that the non-GAAP financial measures of “Operating earnings,” “Basic EPS” and “Basic EPS-Operating” provide consistent and comparable measures of performance of its businesses to help shareholders understand performance trends. Management uses Adjusted Equity, Adjusted Debt, and Adjusted Capitalization to calculate and monitor its compliance with the debt to total capitalization financial covenant under the FirstEnergy credit facility and term loan. These financial measures, as calculated in accordance with the FirstEnergy credit facility and term loan, help shareholders understand FirstEnergy's compliance with, and incremental debt capacity under, the debt to total capitalization financial covenant. The financial covenant requires FirstEnergy to maintain a consolidated debt to total capitalization ratio of no more than 65%, measured at the end of each fiscal quarter. All of these non-GAAP financial measures are intended to complement, and are not considered as alternatives to, the most directly comparable GAAP financial measures. Also, the non-GAAP financial measures may not be comparable to similarly titled measures used by other entities.

Item 7.01 Regulation FD Disclosure

On May 1, 2015, FirstEnergy posted to its website at www.firstenergycorp.com/ir the investor FactBook, which has been, among other things, updated in certain respects with information as of the first quarter ended March 31, 2015.

Item 9.01 Financial Statements and Exhibits
(d)
Exhibits
Exhibit No.
 
Description
99.1
 
Press Release issued by FirstEnergy Corp., dated May 1, 2015
99.2
 
Consolidated Report to the Financial Community, dated May 1, 2015


2



Forward-Looking Statements: This Form 8-K includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties. These statements include declarations regarding management's intents, beliefs and current expectations. These statements typically contain, but are not limited to, the terms “anticipate,” “potential,” “expect,” "forecast," "target," "will," "intend," “believe,” "project," “estimate" and similar words. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, which may include the following: the speed and nature of increased competition in the electric utility industry, in general, and the retail sales market in particular; the ability to experience growth in the Regulated Distribution and Regulated Transmission segments and to successfully implement our revised sales strategy for the Competitive Energy Services segment; the accomplishment of our regulatory and operational goals in connection with our transmission investment plan, pending transmission rate case and the effectiveness of our repositioning strategy to reflect a more regulated business profile; changes in assumptions regarding economic conditions within our territories, assessment of the reliability of our transmission system, or the availability of capital or other resources supporting identified transmission investment opportunities; the impact of the regulatory process on the pending matters at the federal level and in the various states in which we do business including, but not limited to, matters related to rates and the Electric Security Plan IV in Ohio; the impact of the federal regulatory process on the Federal Energy Regulatory Commission (FERC)-regulated entities and transactions, in particular FERC regulation of wholesale energy and capacity markets, including PJM Interconnection, L.L.C. (PJM) markets and FERC-jurisdictional wholesale transactions; FERC regulation of cost-of-service rates, including FERC Opinion No. 531's revised Return on Equity methodology for FERC jurisdictional wholesale generation and transmission utility service; and FERC’s compliance and enforcement activity, including compliance and enforcement activity related to North American Electric Reliability Corporation’s mandatory reliability standards; the uncertainties of various cost recovery and cost allocation issues resulting from American Transmission Systems Incorporated's realignment into PJM; economic or weather conditions affecting future sales and margins such as a polar vortex or other significant weather events, and all associated regulatory events or actions; changing energy, capacity and commodity market prices including, but not limited to, coal, natural gas and oil, and their availability and impact on retail margins; the continued ability of our regulated utilities to recover their costs; costs being higher than anticipated and the success of our policies to control costs and to mitigate low energy, capacity and market prices; other legislative and regulatory changes, and revised environmental requirements, including, but not limited to, proposed greenhouse gases emission and water discharge regulations and the effects of the United States Environmental Protection Agency's coal combustion residuals regulations, Cross-State Air Pollution Rule, Mercury and Air Toxics Standards, including our estimated costs of compliance, and Clean Water Act 316(b) water intake regulation; the uncertainty of the timing and amounts of the capital expenditures that may arise in connection with any litigation, including New Source Review litigation, or potential regulatory initiatives or rulemakings (including that such initiatives or rulemakings could result in our decision to deactivate or idle certain generating units); the uncertainties associated with the deactivation of certain older regulated and competitive fossil units, including the impact on vendor commitments, and the timing thereof as they relate to the reliability of the transmission grid; the impact of other future changes to the operational status or availability of our generating units; adverse regulatory or legal decisions and outcomes with respect to our nuclear operations (including, but not limited to the revocation or non-renewal of necessary licenses, approvals or operating permits by the Nuclear Regulatory Commission or as a result of the incident at Japan's Fukushima Daiichi Nuclear Plant); issues arising from the indications of cracking in the shield building at Davis-Besse; the risks and uncertainties associated with litigation, arbitration, mediation and like proceedings, including, but not limited to, any such proceedings related to vendor commitments; the impact of labor disruptions by our unionized workforce; replacement power costs being higher than anticipated or not fully hedged; the ability to comply with applicable state and federal reliability standards and energy efficiency and peak demand reduction mandates; changes in customers' demand for power, including, but not limited to, changes resulting from the implementation of state and federal energy efficiency and peak demand reduction mandates; the ability to accomplish or realize anticipated benefits from strategic and financial goals, including, but not limited to, the ability to continue to reduce costs and to successfully execute our financial plans designed to improve our credit metrics and strengthen our balance sheet through, among other actions, our previously-implemented dividend reduction, our cash flow initiative project and our other proposed capital raising initiatives; our ability to improve electric commodity margins and the impact of, among other factors, the increased cost of fuel and fuel transportation on such margins; changing market conditions that could affect the measurement of certain liabilities and the value of assets held in our Nuclear Decommissioning Trusts, pension trusts and other trust funds, and cause us and/or our subsidiaries to make additional contributions sooner, or in amounts that are larger than currently anticipated; the impact of changes to material accounting policies; the ability to access the public securities and other capital and credit markets in accordance with our announced financial plans, the cost of such capital and overall condition of the capital and credit markets affecting us and our subsidiaries; actions that may be taken by credit rating agencies that could negatively affect us and/or our subsidiaries' access to financing, increase the costs thereof, and increase requirements to post additional collateral to support outstanding commodity positions, letters of credit and other financial guarantees; changes in national and regional economic conditions affecting us, our subsidiaries and/or our major industrial and commercial customers, and other counterparties with which we do business, including fuel suppliers; the impact of any changes in tax laws or regulations or adverse tax audit results or rulings; issues concerning the stability of domestic and foreign financial institutions and counterparties with which we do business; the risks associated with cyber-attacks on our electronic data centers that could compromise the information stored on our networks, including proprietary information and customer data; and the risks and other factors discussed from time to time in our United States Securities and Exchange Commission filings, and other similar factors.

Dividends declared from time to time on FirstEnergy Corp.'s common stock during any period may in the aggregate vary from prior periods due to circumstances considered by FirstEnergy Corp.'s Board of Directors at the time of the actual declarations. A security

3


rating is not a recommendation to buy or hold securities and is subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating.

The foregoing review of factors should not be construed as exhaustive. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor assess the impact of any such factor on FirstEnergy's business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. FirstEnergy expressly disclaims any current intention to update, except as required by law, any forward-looking statements contained herein as a result of new information, future events or otherwise.


4


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



May 1, 2015


 
 FIRSTENERGY CORP.
 
 Registrant
 
 
 
 
 By:  
/s/ K. Jon Taylor
 
K. Jon Taylor
Vice President, Controller and
Chief Accounting Officer



5


Exhibit Index

Exhibit No.
 
Description
99.1
 
Press Release issued by FirstEnergy Corp., dated May 1, 2015
99.2
 
Consolidated Report to the Financial Community, dated May 1, 2015


6
 EX-99.1 2 ex991fe-03312015.htm EXHIBIT 99.1 EX 99.1 FE- 03.31.2015


Exhibit 99.1


FirstEnergy Corp.                        For Release: May 1, 2015
76 South Main Street
Akron, Ohio 44308
www.firstenergycorp.com    

News Media Contact:                    Investor Contact:
Tricia Ingraham                        Irene Prezelj
(330) 384-5247                        (330) 384-3859


FirstEnergy Announces First Quarter Results
Reaffirms 2015 Earnings Guidance

Akron, Ohio - FirstEnergy Corp. (NYSE: FE) today reported first quarter 2015 operating (non-GAAP) earnings* of $0.62 per basic share of common stock. These results exclude the impact of the special items listed below. GAAP earnings in the quarter were $222 million, or $0.53 per basic and diluted share of common stock, on revenue of $3.9 billion.
In the first quarter of 2014, operating (non-GAAP) earnings were $0.39 per basic share of common stock, while GAAP earnings were $208 million, or $0.50 per basic share of common stock ($0.49 diluted), on revenue of $4.2 billion.
FirstEnergy also reaffirmed full-year 2015 operating (non-GAAP) earnings guidance of $2.40 to $2.70 per basic share, and provided a second quarter 2015 guidance range of $0.42 to $0.50 per basic share.
“Our strong results this quarter reflect the benefits of our transmission investments, colder weather, and our more conservative competitive strategy,” said Charles E. Jones, FirstEnergy president and chief executive officer. “We continue to position the company for stable, customer-driven, regulated growth. We have also launched an initiative to reduce our O&M expenses and capital expenditures with a targeted improvement of $200 million by 2017. This plan is designed to appropriately address our cost structure and improve our balance sheet over time, while maintaining strong service for our customers and preserving jobs, employee benefits and wages.”
First quarter 2015 operating earnings in the Regulated Distribution business decreased slightly compared to the same period in 2014, as increased benefit costs and depreciation expenses offset higher distribution revenues. Total distribution deliveries increased less than 1 percent compared to the first quarter of 2014, reflecting colder weather and growth in customer base, offset by the impact of lower average residential customer use associated with energy efficiency. Residential sales were flat compared to the first quarter of 2014, while commercial and industrial deliveries each increased by less than 1 percent.


1


In the Regulated Transmission business, first quarter 2015 operating earnings increased as a result of higher transmission revenues related to the company’s Energizing the Future transmission investment program, including rate base recovery associated with the new forward-looking rate structure at the company’s American Transmission Systems, Incorporated, subsidiary, which began in January. Revenue growth was partially offset by higher depreciation, tax and interest expense.

Stronger operating earnings in the company’s Competitive Energy Services segment compared to the first quarter of 2014 were driven by higher commodity margin. In the second quarter of 2014, the company began to implement a more conservative strategy in this business, which includes reducing exposure to weather-sensitive load and more effectively hedging its generation. First quarter 2015 commodity margin reflects the benefits of this repositioning, as well as improved plant availability and higher capacity revenues. Operating results also benefited from lower general taxes, partially offset by higher depreciation costs.

 
 
 
 
 
 
 
Consolidated GAAP EPS to Operating (Non-GAAP) EPS* Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First Quarter
 
2015 Estimates
 
 
 
 
 
2015
2014
 
Full Year
Second Quarter
 
 
Basic Earnings Per Share (GAAP)
 
$0.53
$0.50
 
$2.17 - $2.47
$0.37 - $0.45
 
 
Excluding Special Items*:
 
 
 
 
 
 
 
 
 
Mark-to-market adjustments
 
—
(0.03)
 
—
—
 
 
 
Regulatory charges
 
0.02
0.02
 
0.07
0.02
 
 
 
Trust securities impairment
 
0.01
—
 
0.01
—
 
 
 
Loss on debt redemptions
 
—
0.01
 
—
—
 
 
 
Impact of non-core asset sales/impairments
 
0.01
(0.18)
 
0.02
—
 
 
 
Plant deactivation costs
 
0.02
0.05
 
0.02
—
 
 
 
Retail repositioning charges
 
0.01
—
 
0.04
0.01
 
 
 
Merger accounting - commodity contracts
 
0.02
0.02
 
0.07
0.02
 
 
 
Total Special Items*
 
0.09
(0.11)
 
0.23
0.05
 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS - Operating (Non-GAAP)
 
$0.62
$0.39
 
$2.40 - $2.70
$0.42 - $0.50
 
 
 
 
 
 
 
 
 
 


Non-GAAP financial measures
*Operating earnings exclude special items as described herein, and is a non-GAAP financial measure. Management uses operating earnings and operating earnings by segment to evaluate the company’s performance and manage its operations and frequently references these non-GAAP financial measures in its decision making, using them to facilitate historical and ongoing performance comparisons. Management believes that the non-GAAP financial measure of “operating earnings” provides a consistent and comparable measure of performance of its business to help shareholders understand performance trends. Generally, a non-GAAP financial measure is a numerical measure of a company's historical or future financial performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States (GAAP). This non-GAAP financial measure is intended to complement, and is not considered as an alternative to, the most directly comparable GAAP financial measure. Also, this non-GAAP financial measure may not be comparable to similarly titled measures used by other entities. Per share amounts for the special items above are based on the after tax effect of each item divided by the weighted average shares outstanding for the period.



2


Consolidated Report and Teleconference

FirstEnergy’s Consolidated Report to the Financial Community, which provides highlights on company developments and financial results for the first quarter, is posted on the company’s Investor Information website - www.firstenergycorp.com/ir. To access the report, click on First Quarter 2015 Consolidated Report to the Financial Community. The company’s investor FactBook will also be posted to its Investor Information website this morning.

The company invites investors, customers and other interested parties to listen to a live Internet webcast of its teleconference for financial analysts at 9:00 a.m. EDT today. FirstEnergy management will present an overview of the company’s financial and operating results, followed by a question-and-answer session. The teleconference can be accessed on the company’s website by selecting the Q1 2015 Earnings Conference Call link. The webcast will be archived on the website.

FirstEnergy is a diversified energy company dedicated to safety, reliability and operational excellence. Its 10 electric distribution companies form one of the nation's largest investor-owned electric systems, serving customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland and New York. Its generation subsidiaries control nearly 17,000 megawatts of capacity from a diversified mix of scrubbed coal, non-emitting nuclear, natural gas, hydro and other renewables. Follow FirstEnergy on Twitter @FirstEnergyCorp.

Forward-Looking Statements: This news release includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties. These statements include declarations regarding management's intents, beliefs and current expectations. These statements typically contain, but are not limited to, the terms “anticipate,” “potential,” “expect,” "forecast," "target," "will," "intend," “believe,” "project," “estimate" and similar words. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, which may include the following: the speed and nature of increased competition in the electric utility industry, in general, and the retail sales market in particular; the ability to experience growth in the Regulated Distribution and Regulated Transmission segments and to successfully implement our revised sales strategy for the Competitive Energy Services segment; the accomplishment of our regulatory and operational goals in connection with our transmission investment plan, pending transmission rate case and the effectiveness of our repositioning strategy to reflect a more regulated business profile; changes in assumptions regarding economic conditions within our territories, assessment of the reliability of our transmission system, or the availability of capital or other resources supporting identified transmission investment opportunities; the impact of the regulatory process on the pending matters at the federal level and in the various states in which we do business including, but not limited to, matters related to rates and the Electric Security Plan IV in Ohio; the impact of the federal regulatory process on the Federal Energy Regulatory Commission (FERC)-regulated entities and transactions, in particular FERC regulation of wholesale energy and capacity markets, including PJM Interconnection, L.L.C. (PJM) markets and FERC-jurisdictional wholesale transactions; FERC regulation of cost-of-service rates, including FERC Opinion No. 531's revised Return on Equity methodology for FERC jurisdictional wholesale generation and transmission utility service; and FERC’s compliance and enforcement activity, including compliance and enforcement activity related to North American Electric Reliability Corporation’s mandatory reliability standards; the uncertainties of various cost recovery and cost allocation issues resulting from American Transmission Systems Incorporated's realignment into PJM; economic or weather conditions affecting future sales and margins such as a polar vortex or other significant weather events, and all associated regulatory events or actions; changing energy, capacity and commodity market prices including, but not limited to, coal, natural gas and oil, and their availability and impact on retail margins; the continued ability of our regulated utilities to recover their costs; costs being higher than anticipated and the success of our policies to control costs and to mitigate low energy, capacity and market prices; other legislative and regulatory changes, and revised environmental requirements, including, but not limited to, proposed greenhouse gases emission and water discharge regulations and the effects of the United States Environmental Protection Agency's coal combustion residuals regulations, Cross-State Air Pollution Rule, Mercury and Air Toxics Standards,

3


including our estimated costs of compliance, and Clean Water Act 316(b) water intake regulation; the uncertainty of the timing and amounts of the capital expenditures that may arise in connection with any litigation, including New Source Review litigation, or potential regulatory initiatives or rulemakings (including that such initiatives or rulemakings could result in our decision to deactivate or idle certain generating units); the uncertainties associated with the deactivation of certain older regulated and competitive fossil units, including the impact on vendor commitments, and the timing thereof as they relate to the reliability of the transmission grid; the impact of other future changes to the operational status or availability of our generating units; adverse regulatory or legal decisions and outcomes with respect to our nuclear operations (including, but not limited to the revocation or non-renewal of necessary licenses, approvals or operating permits by the Nuclear Regulatory Commission or as a result of the incident at Japan's Fukushima Daiichi Nuclear Plant); issues arising from the indications of cracking in the shield building at Davis-Besse; the risks and uncertainties associated with litigation, arbitration, mediation and like proceedings, including, but not limited to, any such proceedings related to vendor commitments; the impact of labor disruptions by our unionized workforce; replacement power costs being higher than anticipated or not fully hedged; the ability to comply with applicable state and federal reliability standards and energy efficiency and peak demand reduction mandates; changes in customers' demand for power, including, but not limited to, changes resulting from the implementation of state and federal energy efficiency and peak demand reduction mandates; the ability to accomplish or realize anticipated benefits from strategic and financial goals, including, but not limited to, the ability to continue to reduce costs and to successfully execute our financial plans designed to improve our credit metrics and strengthen our balance sheet through, among other actions, our previously-implemented dividend reduction, our cash flow initiative project and our other proposed capital raising initiatives; our ability to improve electric commodity margins and the impact of, among other factors, the increased cost of fuel and fuel transportation on such margins; changing market conditions that could affect the measurement of certain liabilities and the value of assets held in our Nuclear Decommissioning Trusts, pension trusts and other trust funds, and cause us and/or our subsidiaries to make additional contributions sooner, or in amounts that are larger than currently anticipated; the impact of changes to material accounting policies; the ability to access the public securities and other capital and credit markets in accordance with our announced financial plans, the cost of such capital and overall condition of the capital and credit markets affecting us and our subsidiaries; actions that may be taken by credit rating agencies that could negatively affect us and/or our subsidiaries' access to financing, increase the costs thereof, and increase requirements to post additional collateral to support outstanding commodity positions, letters of credit and other financial guarantees; changes in national and regional economic conditions affecting us, our subsidiaries and/or our major industrial and commercial customers, and other counterparties with which we do business, including fuel suppliers; the impact of any changes in tax laws or regulations or adverse tax audit results or rulings; issues concerning the stability of domestic and foreign financial institutions and counterparties with which we do business; the risks associated with cyber-attacks on our electronic data centers that could compromise the information stored on our networks, including proprietary information and customer data; and the risks and other factors discussed from time to time in our United States Securities and Exchange Commission filings, and other similar factors. Dividends declared from time to time on FirstEnergy Corp.'s common stock during any period may in the aggregate vary from prior periods due to circumstances considered by FirstEnergy Corp.'s Board of Directors at the time of the actual declarations. A security rating is not a recommendation to buy or hold securities and is subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating. The foregoing review of factors should not be construed as exhaustive. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor assess the impact of any such factor on FirstEnergy's business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. FirstEnergy expressly disclaims any current intention to update, except as required by law, any forward-looking statements contained herein as a result of new information, future events or otherwise.



(050115)


4
 EX-99.2 3 ex992fe-03312015.htm EXHIBIT 99.2 EX 99.2 FE- 03.31.2015


Exhibit 99.2

Consolidated Report to the Financial Community                                                                           
First Quarter 2015
 
(Released May 1, 2015)          (Unaudited)

HIGHLIGHTS  
GAAP earnings for the first quarter of 2015 were $0.53 per basic share, compared with first quarter 2014 earnings of $0.50 per basic share. Operating (non-GAAP) earnings*, excluding special items, were $0.62 per basic share for the first quarter of 2015, compared with first quarter 2014 Operating (non-GAAP) earnings of $0.39 per basic share.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Competitive
 
 
 
FirstEnergy
 
 
 
EPS Variance Analysis
 
Regulated
 
Regulated
 
Energy
 
Corporate /
 
Corp.
 
 
 
(in millions, except per share amounts)
 
Distribution
 
Transmission
 
Services
 
Other
 
Consolidated
 
 
 
1Q 2014 Net Income (Loss) - GAAP
 
$214
 
$51
 
$(38)
 
$(19)
 
$208
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1Q 2014 Basic EPS* (avg. shares outstanding 419)
 
$0.51
 
$0.12
 
$(0.09)
 
$(0.04)
 
$0.50
 
 
 
Special Items - 2014
 
0.02
 
—
 
(0.13)
 
—
 
(0.11)
 
 
 
1Q 2014 Basic EPS - Operating (Non-GAAP) Earnings*
 
$0.53
 
$0.12
 
$(0.22)
 
$(0.04)
 
$0.39
 
 
 
Distribution Revenues
 
0.01
 
—
 
—
 
—
 
0.01
 
 
 
Transmission Revenues
 
—
 
0.09
 
—
 
—
 
0.09
 
 
 
CES Commodity Margin
 
—
 
—
 
0.24
 
—
 
0.24
 
 
 
O&M Expenses
 
—
 
—
 
0.01
 
—
 
0.01
 
 
 
Depreciation
 
(0.01)
 
(0.01)
 
(0.01)
 
—
 
(0.03)
 
 
 
Pension/OPEB
 
(0.01)
 
—
 
—
 
—
 
(0.01)
 
 
 
General Taxes
 
—
 
(0.01)
 
0.02
 
—
 
0.01
 
 
 
Interest Expense
 
—
 
(0.02)
 
—
 
—
 
(0.02)
 
 
 
Effective Income Tax Rate
 
—
 
—
 
—
 
(0.08)
 
(0.08)
 
 
 
Other
 
—
 
—
 
0.01
 
—
 
0.01
 
 
 
1Q 2015 Basic EPS - Operating (Non-GAAP) Earnings*
 
$0.52
 
$0.17
 
$0.05
 
$(0.12)
 
$0.62
 
    
 
Special Items - 2015
 
(0.02)
 
—
 
(0.07)
 
—
 
(0.09)
 
 
 
1Q 2015 Basic EPS* (avg. shares outstanding 421)
 
$0.50
 
$0.17
 
$(0.02)
 
$(0.12)
 
$0.53
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1Q 2015 Net Income (Loss) - GAAP
 
$208
 
$72
 
$(9)
 
$(49)
 
$222
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per share amounts for the special items and earnings drivers above and throughout this report are based on the after tax effect of each item divided by the weighted average basic shares outstanding for the period.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

*Operating earnings excludes special items as described below, and is a non-GAAP financial measure. Management uses Operating earnings by segment to evaluate the company’s performance and manage its operations and frequently references this non-GAAP financial measure in its decision making, using it to facilitate historical and ongoing performance comparisons. Additionally, management uses Basic EPS and Basic EPS-Operating, each on a segment basis, to further evaluate the Company's performance by segment and references these non-GAAP financial measures in its decision making. Basic EPS for each segment is calculated by dividing segment net income (loss) on a GAAP basis by the basic weighted average shares outstanding for the period. Basic EPS-Operating for each segment is calculated by dividing segment Operating earnings (losses), which exclude specials items as discussed below, by the basic weighted average shares outstanding for the period. Management believes that the non-GAAP financial measures of “Operating earnings”, "Basic EPS" and "Basic EPS-Operating" by segment provide a consistent and comparable measure of performance of its businesses to help shareholders understand performance trends. Generally, a non-GAAP financial measure is a numerical measure of a company's historical or future financial performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States (GAAP). These non-GAAP financial measures are intended to complement, and are not considered as an alternative to, the most directly comparable GAAP financial measure. Also, the non-GAAP financial measures may not be comparable to similarly titled measures used by other entities. The 2015 and 2014 GAAP to Operating earnings reconciliations can be found on pages 18-23 of this report and all GAAP to Operating earnings reconciliations are available on FirstEnergy Corp.’s Investor Information website at www.firstenergycorp.com/ir. Quarter over quarter earnings drivers, as summarized in this report, are consistent with management's analysis of each segment's historical and ongoing performance comparisons and exclude the impact of special items, as well as other items that do not impact earnings, including but not limited to the cost recovery of regulatory assets.

_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    1



Special Items - The following special items were recognized during the first quarter of 2015 and 2014:
 
 
 
 
 
 
 
 
Competitive
 
 
 
FirstEnergy
 
 
 
 
 
Regulated
 
Regulated
 
Energy
 
Corporate /
 
Corp.
 
 
 
Special Items - 1Q 2015
 
Distribution
 
Transmission
 
Services
 
Other
 
Consolidated
 
 
 
Regulatory charges
 
$0.02
 
$—
 
$—
 
$—
 
$0.02
 
 
 
Trust securities impairment
 
—
 
—
 
0.01
 
—
 
0.01
 
 
 
Plant deactivation costs
 
—
 
—
 
0.02
 
—
 
0.02
 
 
 
Merger accounting - commodity contracts
 
—
 
—
 
0.02
 
—
 
0.02
 
 
 
Impact of non-core asset sales/impairments
 
—
 
—
 
0.01
 
—
 
0.01
 
 
 
Retail repositioning charges
 
—
 
—
 
0.01
 
—
 
0.01
 
 
 
Special Items - 2015
 
$0.02
 
$—
 
$0.07
 
$—
 
$0.09
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Competitive
 
 
 
FirstEnergy
 
 
 
 
 
Regulated
 
Regulated
 
Energy
 
Corporate /
 
Corp.
 
 
 
Special Items - 1Q 2014
 
Distribution
 
Transmission
 
Services
 
Other
 
Consolidated
 
 
 
Regulatory charges
 
$0.02
 
$—
 
$—
 
$—
 
$0.02
 
 
 
Plant deactivation costs
 
—
 
—
 
0.05
 
—
 
0.05
 
 
 
Merger accounting - commodity contracts
 
—
 
—
 
0.02
 
—
 
0.02
 
 
 
Impact of non-core asset sales/impairments
 
—
 
—
 
(0.18)
 
—
 
(0.18)
 
 
 
Loss on debt redemptions
 
—
 
—
 
0.01
 
—
 
0.01
 
 
 
Mark-to-market adjustments
 
—
 
—
 
(0.03)
 
—
 
(0.03)
 
 
 
Special Items - 2014
 
$0.02
 
$—
 
$(0.13)
 
$—
 
$(0.11)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2015 Earnings Guidance
Operating (non-GAAP) earnings guidance for 2015, excluding special items, is reaffirmed at $2.40 - $2.70 per basic share. Operating (non-GAAP) earnings guidance for the second quarter of 2015, excluding special items, is $0.42 - $0.50 per basic share.
 
 
 
Estimate for Year 2015
 
Q2 of 2015
 
 
(In millions, except per share amounts)
 
Regulated Distribution
 
Regulated Transmission
 
Competitive Energy Services
 
Corporate / Other
 
FirstEnergy Corp. Consolidated
 
FirstEnergy Corp. Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015F Net Income (Loss) - GAAP
 
$705 - $775
 
$265 - $280
 
$120 - $160
 
$(175)
 
$915 - $1,040
 
$155 - $190
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015F Basic EPS (avg. shares outstanding 422)
 
$1.67 - $1.83
 
$0.63 - $0.67
 
$0.29 - $0.39
 
$(0.42)
 
$2.17 - $2.47
 
$0.37 - $0.45
 
Excluding Special Items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Regulatory charges
 
0.07
 
—
 
—
 
—
 
0.07
 
0.02
 
 
Trust securities impairment
 
—
 
—
 
0.01
 
—
 
0.01
 
—
 
 
Plant deactivation costs
 
—
 
—
 
0.02
 
—
 
0.02
 
—
 
 
Merger accounting - commodity contracts
 
—
 
—
 
0.07
 
—
 
0.07
 
0.02
 
 
Non-core asset sales/impairments
 
—
 
—
 
0.02
 
—
 
0.02
 
—
 
 
Retail repositioning charges
 
—
 
—
 
0.04
 
—
 
0.04
 
0.01
 
 
Total Special Items
 
0.07
 
—
 
0.16
 
—
 
0.23
 
0.05
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015F Basic EPS - Operating (Non-GAAP) (avg. shares outstanding 422)
 
$1.74 - $1.90
 
$0.63 - $0.67
 
$0.45 - $0.55
 
$(0.42)
 
$2.40 - $2.70
 
$0.42 - $0.50
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    2


1Q 2015 Results vs 1Q 2014 - By Segment
Regulated Distribution
Regulated Distribution - GAAP earnings for the first quarter of 2015 were $208 million, or $0.50 per basic share, compared with first quarter 2014 earnings of $214 million, or $0.51 per basic share. Operating (non-GAAP) earnings, excluding special items, were $0.52 per basic share for the first quarter of 2015, compared with first quarter 2014 Operating (non-GAAP) earnings of $0.53 per basic share.
 
 
 
 
 
 
 
 
EPS Variance Analysis
 
 
 
 
 
(In millions, except per share amounts)
 
 
 
 
 
1Q 2014 Net Income - GAAP
 
$214
 
 
 
 
 
 
 
 
 
1Q 2014 Basic EPS (avg. shares outstanding 419M)
 
$0.51
 
 
 
Special Items - 2014
 
0.02
 
 
 
1Q 2014 Basic EPS - Operating (Non-GAAP) Earnings
 
$0.53
 
 
 
Distribution Revenues
 
0.01
 
 
 
Depreciation
 
(0.01)
 
 
 
Pension/OPEB
 
(0.01)
 
 
 
1Q 2015 Basic EPS - Operating (Non-GAAP) Earnings
 
$0.52
 
 
 
Special Items - 2015
 
(0.02)
 
 
 
1Q 2015 Basic EPS (avg. shares outstanding 421M)
 
$0.50
 
 
 
 
 
 
 
 
 
1Q 2015 Net Income - GAAP
 
$208
 
 
 
 
 
 
 
1Q 2015 vs 1Q 2014 Earnings Drivers, Excluding Special Items
•
Distribution Revenues - Total distribution revenues increased earnings $0.01 per share, as a result of higher rates on the Ohio Delivery Capital Recovery rider, and the impact of higher shared savings from exceeding energy efficiency mandates in Ohio. Total electric distribution deliveries increased 139,000 megawatt-hours (MWH), or 0.3%. Residential sales were flat, while sales to commercial customers increased 104,000 MWH, or 0.9%. Distribution deliveries to residential and commercial customers reflect increased weather-related usage from heating-degree-days that were 2% above the same period last year and 21% above normal, with the residential class offset by lower average customer usage resulting from increasing energy efficiency mandates. Sales to industrial customers increased 40,000 MWH, or 0.3%.
•
Depreciation - Higher depreciation expense reduced earnings $0.01 per share, due to a higher asset base.
•
Pension/OPEB - Higher pension/OPEB expense reduced earnings $0.01 per share, primarily due to lower amortization of OPEB prior service credits.


.



_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    3


Regulated Transmission
Regulated Transmission - GAAP and Operating (non-GAAP) earnings for the first quarter of 2015 were $72 million, or $0.17 per basic share, compared with first quarter 2014 GAAP and Operating (non-GAAP) earnings of $51 million, or $0.12 per basic share.
 
 
 
 
 
 
 
 
EPS Variance Analysis
 
 
 
 
 
(In millions, except per share amounts)
 
 
 
 
 
1Q 2014 Net Income - GAAP
 
$51
 
 
 
 
 
 
 
 
 
1Q 2014 Basic EPS (avg. shares outstanding 419M)
 
$0.12
 
 
 
Special Items - 2014
 
—
 
 
 
1Q 2014 Basic EPS - Operating (Non-GAAP) Earnings
 
$0.12
 
 
 
Transmission Revenues
 
0.09
 
 
 
Depreciation
 
(0.01)
 
 
 
General Taxes
 
(0.01)
 
 
 
Interest Expense
 
(0.02)
 
 
 
1Q 2015 Basic EPS - Operating (Non-GAAP) Earnings
 
$0.17
 
 
 
Special Items - 2015
 
—
 
 
 
1Q 2015 Basic EPS (avg. shares outstanding 421M)
 
$0.17
 
 
 
 
 
 
 
 
 
1Q 2015 Net Income - GAAP
 
$72
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1Q 2015 vs 1Q 2014 Earnings Drivers, Excluding Special Items
•
Transmission Revenues - Higher transmission revenues increased earnings $0.09 per share, primarily due to revenue requirement increases reflecting incremental cost of service at both American Transmission Systems, Incorporated (ATSI) and Trans-Allegheny Interstate Line Company (TrAILCo), and rate base recovery at ATSI associated with its "forward looking" rate structure beginning January 2015, that is subject to review and refund.
•
Depreciation and General Taxes - Higher depreciation and general tax expense decreased earnings $0.02 per share, due to a higher asset base primarily at ATSI. These expenses are recovered through ATSI's "forward looking" rate.
•
Interest Expense - Higher interest expense decreased earnings $0.02 per share, primarily due to increased long-term debt at FirstEnergy Transmission, LLC (FET) issued in May 2014 and ATSI in September 2014.



_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    4


Competitive Energy Services
Competitive Energy Services (CES) - GAAP losses for the first quarter of 2015 were ($9) million, or ($0.02) per basic share, compared with first quarter 2014 losses of ($38) million, or ($0.09) per basic share. Operating (non-GAAP) earnings, excluding special items, for the first quarter of 2015 were $0.05 per basic share, compared with first quarter 2014 Operating (non-GAAP) losses of ($0.22) per basic share.
 
 
 
 
 
 
 
 
EPS Variance Analysis
 
 
 
 
 
(In millions, except per share amounts)
 
 
 
 
 
1Q 2014 Net Loss - GAAP
 
$(38)
 
 
 
 
 
 
 
 
 
1Q 2014 Basic EPS (avg. shares outstanding 419M)
 
$(0.09)
 
 
 
Special Items - 2014
 
(0.13)
 
 
 
1Q 2014 Basic EPS - Operating (Non-GAAP) Losses
 
$(0.22)
 
 
 
CES Commodity Margin
 
0.24
 
 
 
O&M Expenses
 
0.01
 
 
 
Depreciation
 
(0.01)
 
 
 
General Taxes
 
0.02
 
 
 
Other
 
0.01
 
 
 
1Q 2015 Basic EPS - Operating (Non-GAAP) Earnings
 
$0.05
 
 
 
Special Items - 2015
 
(0.07)
 
 
 
1Q 2015 Basic EPS (avg. shares outstanding 421M)
 
$(0.02)
 
 
 
 
 
 
 
 
 
1Q 2015 Net Loss - GAAP
 
$(9)
 
 
 
 
 
 
 
 
 
 
 
 
 
1Q 2015 vs 1Q 2014 Earnings Drivers, Excluding Special Items
CES commodity margin increased earnings $0.24 per share, primarily from the absence of the extreme market conditions and unplanned outages in January 2014 resulting in higher costs to serve customers. In addition, higher capacity revenues increased commodity margin as a result of higher capacity auction prices. Subsequent to the first quarter of 2014, CES began to reduce its exposure to weather-sensitive loads and more effectively hedge its generation. As a result of that change in strategy, CES was able to successfully mitigate the extreme weather conditions that occurred in February 2015 by more effectively using its generation to supply higher customer usage as compared to the first quarter of 2014 when CES purchased power at higher prices to supply increased customer usage.













_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    5


A summary by key component of commodity margin is as follows:

        
 
 
 
 
 
 
 
 
 
 
Commodity Margin EPS - 1Q15 vs 1Q14
 
Rate
 
Volume
 
Total
 
 
(a) Contract Sales
 
 
 
 
 
 
 
 
   - Direct Sales (LCI & MCI)
 
$
0.03

 
$
(0.45
)
 
$
(0.42
)
 
 
   - Governmental Aggregation Sales
 
0.05

 
(0.10
)
 
(0.05
)
 
 
   - Mass Market Sales
 
—

 
(0.07
)
 
(0.07
)
 
 
   - POLR Sales
 
0.01

 
—

 
0.01

 
 
   - Structured Sales
 
0.09

 
(0.03
)
 
0.06

 
 
        Subtotal - Contract Sales
 
$
0.18

 
$
(0.65
)
 
$
(0.47
)
 
 
(b) PJM Capacity, FRR Auction Revenues
 
0.10

 
(0.01
)
 
0.09

 
 
(c) Fuel Expense
 
0.01

 
0.09

 
0.10

 
 
(d) Purchased Power (net of financials)
 
0.01

 
0.58

 
0.59

 
 
(e) Capacity Expense
 
(0.14
)
 
0.04

 
(0.10
)
 
 
(f) Net MISO - PJM Transmission Cost
 
(0.06
)
 
0.09

 
0.03

 
 
       Net Change
 
$
0.10

 
$
0.14

 
$
0.24

 
 
 
 
 
 
 
 
 
 

(a)
Contract Sales - CES' contract sales decreased 7.7 million MWH, or 27%, and reduced earnings $0.47 per share. Lower contract sales reflect CES' efforts to reposition its sales portfolio to more effectively hedge its generation. CES has eliminated sales efforts in certain channels to focus on a selective mix of retail and wholesale sales. Direct sales to large and medium commercial / industrial customers decreased 5.6 million MWH, or 44%. Governmental aggregation sales decreased 1.2 million MWH, or 20%, due to lower sales in Illinois and Ohio, along with lower structured sales of 0.3 million MWH. As of March 31, 2015, the total number of retail customers was 2.0 million, a decrease of approximately 750,000 customers since March 31, 2014.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CES Contract Sales - 1Q15 vs 1Q14
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(thousand MWH)
 
Retail
 
Non-Retail
 
 
 
 
 
 
Direct
 
Aggr.
 
Mass Market
 
POLR
 
Structured
 
Total
 
 
Contract Sales Increase / (Decrease)
 
(5,592)
 
(1,171
)
 
(691)
 
(5)
 
(256)
 
(7,715)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(b) PJM Capacity Revenues (Base Residual (BRA) and Fixed Resource Requirement (FRR) Auctions) - Higher capacity revenues increased earnings $0.09 per share, primarily resulting from higher capacity prices in the RTO and ATSI zones.
 
Planning Period
 
RTO
 
ATSI
 
MAAC
 
 
 
Price Per Megawatt-Day
 
BRA
 
BRA
 
BRA
 
 
 
June 2013 - May 2014
 
$27.73
 
$27.73
 
$226.15
 
 
 
June 2014 - May 2015
 
$125.99
 
$125.99
 
$136.50
 
 
 
 
 
 
 
 
 
 
 
 

_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    6


(c)
Fuel Expense - Lower fuel expenses increased earnings $0.10 per share primarily due to decreased generation output. Fossil generation output decreased 3.0 million MWH, due to lower economic dispatch of units, while higher capacity factors at the nuclear plants in the first quarter of 2015 resulted in a 1.1 million MWH increase in output.
(d) Purchased Power (net of financials) - Lower contract sales, partially offset by lower economic dispatch of fossil units, resulted in a decrease of 6.8 million MWH and increased earnings $0.59 per share.
(e) Capacity Expense - Increased capacity expense associated with contract sales decreased earnings $0.10 per share, primarily due to higher capacity prices in the ATSI and RTO zones, partially offset by lower contract sales.
(f) Net MISO-PJM Transmission Cost - Lower transmission expenses increased earnings $0.03 per share primarily due to lower contract sales and lower PJM ancillary charges from the absence of extreme market conditions experienced during January 2014, net of associated pass-through revenues recognized in the first quarter of 2014.
•
O&M Expenses - Lower O&M expenses increased earnings $0.01 per share, primarily due to lower retail and marketing related expenses.
•
Depreciation - Higher depreciation expense decreased earnings $0.01 per share, due to an increased asset base primarily resulting from in-servicing Davis-Besse steam generators in May 2014.
•
General Taxes - Lower general taxes increased earnings $0.02 per share, as a result of lower retail sales and lower property taxes.










_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    7


Corporate / Other
Corporate / Other - GAAP and Operating (non-GAAP) losses for the first quarter of 2015 were ($49) million, or ($0.12) per basic share, compared with GAAP and Operating (non-GAAP) losses for the first quarter 2014 of ($19) million, or ($0.04) per basic share.
 
 
 
 
 
 
 
 
EPS Variance Analysis
 
 
 
 
 
(In millions, except per share amounts)
 
 
 
 
 
1Q 2014 Net Loss - GAAP
 
$(19)
 
 
 
 
 
 
 
 
 
1Q 2014 Basic EPS (avg. shares outstanding 419M)
 
$(0.04)
 
 
 
Special Items - 2014
 
—
 
 
 
1Q 2014 Basic EPS - Operating (Non-GAAP) Losses
 
$(0.04)
 
 
 
Effective Income Tax Rate
 
(0.08)
 
 
 
1Q 2015 Basic EPS - Operating (Non-GAAP) Losses
 
$(0.12)
 
 
 
Special Items - 2015
 
—
 
 
 
1Q 2015 Basic EPS (avg. shares outstanding 421M)
 
$(0.12)
 
 
 
 
 
 
 
 
 
1Q 2015 Net Loss - GAAP
 
$(49)
 
 
 
 
 
 
 
1Q 2015 vs 1Q 2014 Earnings Drivers, Excluding Special Items
•
Effective Income Tax Rate - A higher consolidated effective income tax rate in the first quarter of 2015 compared to the first quarter of 2014 (38.8% vs 30.3%) decreased earnings $0.08 per share, primarily from tax benefits recognized in the first quarter of 2014 associated with the elimination of certain future tax liabilities associated with basis differences resulting, in part, from changes in state tax allocation factors.    













For additional information, please contact:
Irene M. Prezelj
 
Meghan G. Beringer    
 
Rey Y. Jimenez
 
Gina E. Caskey
Vice President, Investor Relations
 
Director, Investor Relations
 
Manager, Investor Relations
 
Manager, Investor Relations
(330) 384-3859
 
(330) 384-5832
 
(330) 761-4239
 
(330) 384-3841

_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    8


FirstEnergy Corp.
Consolidated Statements of Income (GAAP)
(In millions)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
 
 
 
 
 
2015
 
2014
 
Change
 
 
 
Revenues
 
 
 
 
 
 
 
 
(1
)
 
Regulated distribution
 
$
2,562

 
$
2,550

 
$
12

 
 
(2
)
 
Regulated transmission
 
238

 
182

 
56

 
 
(3
)
 
Competitive energy services
 
1,435

 
1,771

 
(336
)
 
 
(4
)
 
Corporate / Other
 
(338
)
 
(321
)
 
(17
)
 
 
(5
)
Total Revenues
 
3,897

 
4,182

 
(285
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
(6
)
 
Fuel
 
513

 
617

 
(104
)
 
 
(7
)
 
Purchased power
 
1,113

 
1,455

 
(342
)
 
 
(8
)
 
Other operating expenses
 
1,057

 
1,182

 
(125
)
 
 
(9
)
 
Provision for depreciation
 
319

 
294

 
25

 
 
(10
)
 
Amortization (deferral) of regulatory assets, net
 
32

 
(28
)
 
60

 
 
(11
)
 
General taxes
 
269

 
271

 
(2
)
 
 
(12
)
Total Expenses
 
3,303

 
3,791

 
(488
)
 
 
(13
)
Operating Income
 
594

 
391

 
203

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Income (Expense)
 
 
 
 
 
 
 
 
(14
)
 
Loss on debt redemptions
 
—

 
(7
)
 
7

 
 
(15
)
 
Investment income
 
17

 
22

 
(5
)
 
 
(16
)
 
Interest expense
 
(279
)
 
(265
)
 
(14
)
 
 
(17
)
 
Capitalized financing costs
 
34

 
29

 
5

 
 
(18
)
Total Other Expense
 
(228
)
 
(221
)
 
(7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
(19
)
Income From Continuing Operations Before Income Taxes
 
366

 
170

 
196

 
 
(20
)
 
Income taxes
 
144

 
48

 
96

 
 
(21
)
Income From Continuing Operations
 
222

 
122

 
100

 
 
(22
)
 
Discontinued operations (net of income taxes)
 
—

 
86

 
(86
)
 
 
(23
)
Net Income
 
$
222

 
$
208

 
$
14

 
 
 
 
 
 
 
 
 
 
 
 
 
(24
)
Earnings Per Share of Common Stock
 
 
 
 
 
 
 
 
(25
)
 
Basic - Continuing Operations
 
$
0.53

 
$
0.29

 
$
0.24

 
 
(26
)
 
Basic - Discontinued Operations
 
—

 
0.21

 
(0.21
)
 
 
(27
)
 
Basic - Net Earnings per Basic Share
 
$
0.53

 
$
0.50

 
$
0.03

 
 
 
 
 
 
 
 
 
 
 
 
 
(28
)
 
Diluted - Continuing Operations
 
$
0.53

 
$
0.29

 
$
0.24

 
 
(29
)
 
Diluted - Discontinued Operations
 
—

 
0.20

 
(0.20
)
 
 
(30
)
 
Diluted - Net Earnings per Diluted Share
 
$
0.53

 
$
0.49

 
$
0.04

 
 
 
 
 
 
 
 
 
 
 
 
 
(31
)
Weighted Average Number of
 
 
 
 
 
 
 
 
(32
)
Common Shares Outstanding
 
 
 
 
 
 
 
 
(33
)
 
Basic
 
421

 
419

 
2

 
 
(34
)
 
Diluted
 
423

 
420

 
3

 
 
 
 
 
 
 
 
 
 
 
 

_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    9


FirstEnergy Corp.
Statements of Income (Loss) - By Segment (GAAP)
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Competitive
 
 
 
 
 
 
 
 
Regulated
 
Regulated
 
Energy
 
Corporate /
 
FirstEnergy
 
 
 
 
Distribution (a)
 
Transmission (b)
 
Services (c)
 
Other (d)
 
Consolidated
 
 
Revenues
 
 
 
 
 
 
 
 
 
 
(1
)
 
Electric sales
$
2,517

 
$
238

 
$
1,125

 
$
(45
)
 
$
3,835

 
(2
)
 
Other
45

 
—

 
50

 
(33
)
 
62

 
(3
)
 
Internal
—

 
—

 
260

 
(260
)
 
—

 
(4
)
Total Revenues
2,562

 
238

 
1,435

 
(338
)
 
3,897

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
(5
)
 
Fuel
146

 
—

 
367

 
—

 
513

 
(6
)
 
Purchased power
975

 
—

 
398

 
(260
)
 
1,113

 
(7
)
 
Other operating expenses
597

 
35

 
519

 
(94
)
 
1,057

 
(8
)
 
Provision for depreciation
172

 
37

 
96

 
14

 
319

 
(9
)
 
Amortization (deferral) of regulatory assets, net
29

 
3

 
—

 
—

 
32

 
(10
)
 
General taxes
190

 
24

 
41

 
14

 
269

 
(11
)
Total Expenses
2,109

 
99

 
1,421

 
(326
)
 
3,303

 
(12
)
Operating Income (Loss)
453

 
139

 
14

 
(12
)
 
594

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Income (Expense)
 
 
 
 
 
 
 
 
 
 
(13
)
 
Loss on debt redemptions
—

 
—

 
—

 
—

 
—

 
(14
)
 
Investment income
13

 
—

 
11

 
(7
)
 
17

 
(15
)
 
Interest expense
(144
)
 
(39
)
 
(48
)
 
(48
)
 
(279
)
 
(16
)
 
Capitalized financing costs
8

 
14

 
10

 
2

 
34

 
(17
)
Total Other Expense
(123
)
 
(25
)
 
(27
)
 
(53
)
 
(228
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(18
)
Income (Loss) From Continuing Operations Before Income Taxes (Benefits)
330

 
114

 
(13
)
 
(65
)
 
366

 
(19
)
 
Income taxes (benefits)
122

 
42

 
(4
)
 
(16
)
 
144

 
(20
)
Income (Loss) From Continuing Operations
208

 
72

 
(9
)
 
(49
)
 
222

 
(21
)
 
Discontinued operations (net of income taxes)
—

 
—

 
—

 
—

 
—

 
(22
)
Net Income (Loss)
$
208

 
$
72

 
$
(9
)
 
$
(49
)
 
$
222

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)

Revenues are primarily derived from the delivery of electricity within FirstEnergy Corp.'s (FirstEnergy) service areas, cost recovery of regulatory assets and the sale of electric generation service to retail customers who have not selected an alternative supplier (POLR or default service). Its results reflect the commodity costs of securing electric generation from affiliated and non-affiliated power suppliers and the deferral and amortization of certain fuel costs.
 
(b)

Revenues are derived from rates charged to load serving entities and other transmission users that recover costs and provide a return on transmission capital investment owned and operated by certain of FirstEnergy's utilities and transmission companies. Its results reflect the net transmission expenses related to the delivery of the respective generation loads.
 
(c)

Revenues are primarily derived from supplying electric power to end-use customers through retail and wholesale arrangements, including competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Maryland, Michigan and New Jersey, and the provision of partial POLR and default service for affiliated and non-affiliated utilities in Ohio, Pennsylvania and Maryland.
 
(d)

Contains corporate support and other businesses that are below the quantifiable threshold for separate disclosure as a reportable segment and interest expense on stand-alone holding company debt and corporate income taxes. Additionally, reconciling adjustments for the elimination of inter-segment transactions are included in Corporate/Other.
 
 
 
 

_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    10


FirstEnergy Corp.
Statements of Income (Loss) - By Segment (GAAP)
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Competitive
 
 
 
 
 
 
 
 
 
Regulated
 
Regulated
 
Energy
 
Corporate /
 
FirstEnergy
 
 
 
 
 
Distribution (a)
 
Transmission (b)
 
Services (c)
 
Other (d)
 
Consolidated
 
 
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
(1
)
 
Electric sales
$
2,501

 
$
182

 
$
1,474

 
$
(56
)
 
$
4,101

 
 
(2
)
 
Other
49

 
—

 
48

 
(16
)
 
81

 
 
(3
)
 
Internal
—

 
—

 
249

 
(249
)
 
—

 
 
(4
)
Total Revenues
2,550

 
182

 
1,771

 
(321
)
 
4,182

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
 
(5
)
 
Fuel
153

 
—

 
464

 
—

 
617

 
 
(6
)
 
Purchased power
981

 
—

 
723

 
(249
)
 
1,455

 
 
(7
)
 
Other operating expenses
627

 
34

 
609

 
(88
)
 
1,182

 
 
(8
)
 
Provision for depreciation
162

 
30

 
91

 
11

 
294

 
 
(9
)
 
Amortization (deferral) of regulatory assets, net
(31
)
 
3

 
—

 
—

 
(28
)
 
 
(10
)
 
General taxes
187

 
17

 
54

 
13

 
271

 
 
(11
)
Total Expenses
2,079

 
84

 
1,941

 
(313
)
 
3,791

 
 
(12
)
Operating Income (Loss)
471

 
98

 
(170
)
 
(8
)
 
391

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Income (Expense)
 
 
 
 
 
 
 
 
 
 
 
(13
)
 
Loss on debt redemption
—

 
—

 
(7
)
 
—

 
(7
)
 
 
(14
)
 
Investment income
15

 
—

 
14

 
(7
)
 
22

 
 
(15
)
 
Interest expense
(151
)
 
(25
)
 
(46
)
 
(43
)
 
(265
)
 
 
(16
)
 
Capitalized financing costs
4

 
8

 
12

 
5

 
29

 
 
(17
)
Total Other Expense
(132
)
 
(17
)
 
(27
)
 
(45
)
 
(221
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(18
)
Income (Loss) From Continuing Operations Before Income Taxes (Benefits)
339

 
81

 
(197
)
 
(53
)
 
170

 
 
(19
)
 
Income taxes (benefits)
125

 
30

 
(73
)
 
(34
)
 
48

 
 
(20
)
Income (Loss) From Continuing Operations
214

 
51

 
(124
)
 
(19
)
 
122

 
 
(21
)
 
Discontinued operations (net of income taxes)
—

 
—

 
86

 
—

 
86

 
 
(22
)
Net Income (Loss)
$
214

 
$
51

 
$
(38
)
 
$
(19
)
 
$
208

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)

Revenues are primarily derived from the delivery of electricity within FirstEnergy's service areas, cost recovery of regulatory assets and the sale of electric generation service to retail customers who have not selected an alternative supplier (POLR or default service). Its results reflect the commodity costs of securing electric generation from affiliated and non-affiliated power suppliers and the deferral and amortization of certain fuel costs.
 
 
(b)

Revenues are derived from rates charged to load serving entities and other transmission users that recover costs and provide a return on transmission capital investment owned and operated by certain of FirstEnergy's utilities and transmission companies. Its results reflect the net transmission expenses related to the delivery of the respective generation loads.
 
 
(c)

Revenues are primarily derived from supplying electric power to end-use customers through retail and wholesale arrangements, including competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Maryland, Michigan and New Jersey, and the provision of partial POLR and default service for affiliated and non-affiliated utilities in Ohio, Pennsylvania and Maryland.
 
 
(d)

Contains corporate support and other businesses that are below the quantifiable threshold for separate disclosure as a reportable segment and interest expense on stand-alone holding company debt and corporate income taxes. Additionally, reconciling adjustments for the elimination of inter-segment transactions are included in Corporate/Other.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    11


FirstEnergy Corp.
Statements of Income (Loss) - By Segment (GAAP)
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Changes Between the First Three Months of 2015 and the First Three Months of 2014
Increase (Decrease)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Competitive
 
 
 
 
 
 
 
 
 
Regulated
 
Regulated
 
Energy
 
Corporate /
 
FirstEnergy
 
 
 
 
 
Distribution (a)
 
Transmission (b)
 
Services (c)
 
Other (d)
 
Consolidated
 
 
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
(1
)
 
Electric sales
$
16

 
$
56

 
$
(349
)
 
$
11

 
$
(266
)
 
 
(2
)
 
Other
(4
)
 
—

 
2

 
(17
)
 
(19
)
 
 
(3
)
 
Internal revenues
—

 
—

 
11

 
(11
)
 
—

 
 
(4
)
Total Revenues
12

 
56

 
(336
)
 
(17
)
 
(285
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
 
(5
)
 
Fuel
(7
)
 
—

 
(97
)
 
—

 
(104
)
 
 
(6
)
 
Purchased power
(6
)
 
—

 
(325
)
 
(11
)
 
(342
)
 
 
(7
)
 
Other operating expenses
(30
)
 
1

 
(90
)
 
(6
)
 
(125
)
 
 
(8
)
 
Provision for depreciation
10

 
7

 
5

 
3

 
25

 
 
(9
)
 
Amortization (deferral) of regulatory assets, net
60

 
—

 
—

 
—

 
60

 
 
(10
)
 
General taxes
3

 
7

 
(13
)
 
1

 
(2
)
 
 
(11
)
Total Expenses
30

 
15

 
(520
)
 
(13
)
 
(488
)
 
 
(12
)
Operating Income (Loss)
(18
)
 
41

 
184

 
(4
)
 
203

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Income (Expense)
 
 
 
 
 
 
 
 
 
 
 
(13
)
 
Loss on debt redemptions
—

 
—

 
7

 
—

 
7

 
 
(14
)
 
Investment income
(2
)
 
—

 
(3
)
 
—

 
(5
)
 
 
(15
)
 
Interest expense
7

 
(14
)
 
(2
)
 
(5
)
 
(14
)
 
 
(16
)
 
Capitalized financing costs
4

 
6

 
(2
)
 
(3
)
 
5

 
 
(17
)
Total Other Expense
9

 
(8
)
 
—

 
(8
)
 
(7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(18
)
Income (Loss) From Continuing Operations Before Income Taxes (Benefits)
(9
)
 
33

 
184

 
(12
)
 
196

 
 
(19
)
 
Income taxes (benefits)
(3
)
 
12

 
69

 
18

 
96

 
 
(20
)
Income (Loss) From Continuing Operations
(6
)
 
21

 
115

 
(30
)
 
100

 
 
(21
)
 
Discontinued operations (net of income taxes)
—

 
—

 
(86
)
 
—

 
(86
)
 
 
(22
)
Net Income (Loss)
$
(6
)
 
$
21

 
$
29

 
$
(30
)
 
$
14

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)

Revenues are primarily derived from the delivery of electricity within FirstEnergy's service areas, cost recovery of regulatory assets and the sale of electric generation service to retail customers who have not selected an alternative supplier (POLR or default service). Its results reflect the commodity costs of securing electric generation from affiliated and non-affiliated power suppliers and the deferral and amortization of certain fuel costs.
 
 
(b)

Revenues are derived from rates charged to load serving entities and other transmission users that recover costs and provide a return on transmission capital investment owned and operated by certain of FirstEnergy's utilities and transmission companies. Its results reflect the net transmission expenses related to the delivery of the respective generation loads.
 
 
(c)

Revenues are primarily derived from supplying electric power to end-use customers through retail and wholesale arrangements, including competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Maryland, Michigan and New Jersey, and the provision of partial POLR and default service for affiliated and non-affiliated utilities in Ohio, Pennsylvania and Maryland.
 
 
(d)

Contains corporate support and other businesses that are below the quantifiable threshold for separate disclosure as a reportable segment and interest expense on stand-alone holding company debt and corporate income taxes. Additionally, reconciling adjustments for the elimination of inter-segment transactions are included in Corporate/Other.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    12


FirstEnergy Corp.
Financial Information
(In millions)
 
 
 
 
 
 
 
 
 
Condensed Consolidated Balance Sheets (GAAP)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of
 
As of
 
 
Assets
 
Mar. 31, 2015
 
Dec. 31, 2014
 
 
Current Assets:
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
90

 
$
85

 
 
 
Receivables
 
1,876

 
1,779

 
 
 
Other
 
2,045

 
2,012

 
 
Total Current Assets
 
4,011

 
3,876

 
 
 
 
 
 
 
 
 
 
Property, Plant and Equipment
 
36,117

 
35,783

 
 
Investments
 
3,258

 
3,222

 
 
Deferred Charges and Other Assets
 
9,135

 
9,285

 
 
Total Assets
 
$
52,521

 
$
52,166

 
 
 
 
 
 
 
 
 
 
Liabilities and Capitalization
 
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
 
 
Currently payable long-term debt
 
$
787

 
$
804

 
 
 
Short-term borrowings
 
2,559

 
1,799

 
 
 
Accounts payable
 
1,102

 
1,279

 
 
 
Other
 
1,814

 
1,679

 
 
Total Current Liabilities
 
6,262

 
5,561

 
 
 
 
 
 
 
 
 
 
Capitalization:
 
 
 
 
 
 
 
Total equity
 
12,350

 
12,422

 
 
 
Long-term debt and other long-term obligations
 
19,130

 
19,176

 
 
Total Capitalization
 
31,480

 
31,598

 
 
Noncurrent Liabilities
 
14,779

 
15,007

 
 
Total Liabilities and Capitalization
 
$
52,521

 
$
52,166

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
General Information
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
 
 
 
2015
 
2014
 
 
Debt redemptions
 
$
(48
)
 
$
(489
)
 
 
New long-term debt issues
 
$
—

 
$
1,467

 
 
Short-term borrowings increase (decrease)
 
$
760

 
$
(319
)
 
 
Property additions
 
$
668

 
$
821

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt to Total Capitalization Ratio as Defined Under the FE Credit Facility
 
 
 
 
 
 
 
As of March 31
 
As of December 31
 
 
 
 
2015
 
% Total
 
2014
 
% Total
 
 
Total Equity (GAAP)
 
$
12,350

 
35
 %
 
$
12,422

 
36
 %
 
 
Non-cash Charges / Non-cash Write Downs*
 
1,930

 
5
 %
 
1,935

 
5
 %
 
 
Accumulated Other Comprehensive Income
 
(230
)
 
(1
)%
 
(246
)
 
(1
)%
 
 
Adjusted Equity (Non-GAAP)**
 
14,050

 
39
 %
 
14,111

 
40
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term Debt and Other Long-term Obligations (GAAP)
 
19,130

 
54
 %
 
19,176

 
55
 %
 
 
Currently Payable Long-term Debt (GAAP)
 
787

 
2
 %
 
804

 
2
 %
 
 
Short-term Borrowings (GAAP)
 
2,559

 
7
 %
 
1,799

 
5
 %
 
 
Reimbursement Obligations
 
54

 
—
 %
 
54

 
—
 %
 
 
Guarantees of Indebtedness
 
482

 
1
 %
 
487

 
1
 %
 
 
Less Securitization Debt
 
(974
)
 
(3
)%
 
(1,005
)
 
(3
)%
 
 
Adjusted Debt (Non-GAAP)**
 
22,038

 
61
 %
 
21,315

 
60
 %
 
 
 
 
 
 


 
 
 


 
 
Adjusted Capitalization (Non-GAAP)**
 
$
36,088

 
100
 %
 
$
35,426

 
100
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
*Includes after-tax non-cash charges and non-cash write downs, primarily associated with pensions and OPEB mark-to-market adjustments, impairment of long-lived assets and regulatory asset charges through March 31, 2015, as required by the FE Credit Facility, as amended.
 
 
**Management uses Adjusted Equity, Adjusted Debt, and Adjusted Capitalization, each of which is a non-GAAP financial measure, to calculate and monitor its compliance with the debt to total capitalization financial covenant under the FE Credit Facility. These financial measures, as calculated in accordance with the FE Credit Facility, help shareholders understand FirstEnergy's compliance with, and provide a basis for understanding FirstEnergy's incremental debt capacity under the debt to total capitalization financial covenant. The financial covenant under the FE Credit Facility requires FirstEnergy to maintain a consolidated debt to total capitalization ratio of no more than 65%, measured at the end of each fiscal quarter.
 
 
 
 
 
 
 
 
 
 
 
 

_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    13


FirstEnergy Corp.
Statements of Cash Flows and Liquidity
(In millions)

 
 
 
 
 
 
 
 
Condensed Consolidated Statements of Cash Flows (GAAP)
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
March 31
 
 
 
 
2015
 
2014
 
 
Cash flows from operating activities
 
 
 
 
 
 
Net income
 
$
222

 
$
208

 
 
Adjustments to reconcile net income to net cash from operating activities:
 
 
 
 
 
 
Depreciation and amortization (1)
 
415

 
323

 
 
Deferred purchased power and other costs
 
(31
)
 
(34
)
 
 
Deferred income taxes and investment tax credits, net
 
127

 
181

 
 
Deferred costs on sale leaseback transaction, net
 
12

 
13

 
 
Retirement benefits
 
(4
)
 
(20
)
 
 
Pension trust contributions
 
(143
)
 
—

 
 
Commodity derivative transactions, net
 
2

 
(17
)
 
 
Loss on debt redemptions
 
—

 
7

 
 
Income from discontinued operations
 
—

 
(86
)
 
 
Changes in working capital and other
 
(407
)
 
(667
)
 
 
Cash flows provided from (used for) operating activities
 
193

 
(92
)
 
 
Cash flows provided from financing activities
 
560

 
498

 
 
Cash flows used for investing activities
 
(748
)
 
(515
)
 
 
Net change in cash and cash equivalents
 
$
5

 
$
(109
)
 
 
 
 
 
 
 
 
(1
)
Includes Amortization of Regulatory Assets, net, nuclear fuel, customer intangibles, deferred advertising costs and other assets.
 
 
 
 
 
 
 
 

 
Liquidity position as of March 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company
Type
Maturity
Amount
Available
 
 
FirstEnergy(1)
Revolving
March 2019
$3,500
$1,269
 
 
FirstEnergy Solutions Corp. (FES) / Allegheny Energy Supply Company, LLC (AE Supply)
Revolving
March 2019
1,500
1,177
 
 
FET(2)
Revolving
March 2019
1,000
950

 
 
  (1) FirstEnergy Corp. and FEU subsidiary borrowers
Subtotal:
$6,000
$3,396
 
 
  (2) Includes FET, ATSI, and TrAILCo
Cash:
—

48
 
 
 
Total:
$6,000
$3,444
 
 
 
 
 
 
 
 
 
 


_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    14


FirstEnergy Corp.
Statistical Summary

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electric Distribution Deliveries
 
Three Months Ended March 31,
 
 
(MWH in thousand)
 
2015
 
2014
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
Ohio
 - Residential
 
5,095

 
5,227

 
-2.5
 %
 
 
 
 - Commercial
 
3,905

 
3,911

 
-0.2
 %
 
 
 
 - Industrial
 
5,186

 
5,258

 
-1.4
 %
 
 
 
 - Other
 
85

 
82

 
3.7
 %
 
 
 
Total Ohio
 
14,271

 
14,478

 
-1.4
 %
 
 
Pennsylvania
 - Residential
 
5,987

 
5,863

 
2.1
 %
 
 
 
 - Commercial
 
3,435

 
3,317

 
3.6
 %
 
 
 
 - Industrial
 
5,135

 
5,132

 
0.1
 %
 
 
 
 - Other
 
30

 
30

 
0.0
 %
 
 
 
Total Pennsylvania
 
14,587

 
14,342

 
1.7
 %
 
 
New Jersey
 - Residential
 
2,450

 
2,424

 
1.1
 %
 
 
 
 - Commercial
 
2,278

 
2,297

 
-0.8
 %
 
 
 
 - Industrial
 
553

 
581

 
-4.8
 %
 
 
 
 - Other
 
21

 
21

 
0.0
 %
 
 
 
Total New Jersey
 
5,302

 
5,323

 
-0.4
 %
 
 
Maryland
 - Residential
 
1,139

 
1,105

 
3.1
 %
 
 
 
 - Commercial
 
555

 
530

 
4.7
 %
 
 
 
 - Industrial
 
364

 
350

 
4.0
 %
 
 
 
 - Other
 
4

 
4

 
0.0
 %
 
 
 
Total Maryland
 
2,062

 
1,989

 
3.7
 %
 
 
West Virginia
 - Residential
 
1,891

 
1,951

 
-3.1
 %
 
 
 
 - Commercial
 
959

 
973

 
-1.4
 %
 
 
 
 - Industrial
 
1,502

 
1,379

 
8.9
 %
 
 
 
 - Other
 
7

 
7

 
0.0
 %
 
 
 
Total West Virginia
 
4,359

 
4,310

 
1.1
 %
 
 
Total Residential
 
 
16,562

 
16,570

 
0.0
 %
 
 
Total Commercial
 
 
11,132

 
11,028

 
0.9
 %
 
 
Total Industrial
 
 
12,740

 
12,700

 
0.3
 %
 
 
Total Other
 
 
147

 
144

 
2.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
Total Distribution Deliveries
 
40,581

 
40,442

 
0.3
 %
 
 
 
 
 
 
 
 
 
 
 

_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    15


FirstEnergy Corp.
Statistical Summary




 
 
 
 
 
 
 
 
 
 
 
Weather
 
Three Months Ended March 31,
 
 
 
 
 
2015
 
2014
 
Normal
 
 
Composite Heating-Degree-Days
 
3,362

 
3,310

 
2,777

 
 
Composite Cooling-Degree-Days
 
—

 
—

 
2

 
 
 
 
 
 
 
 
 
 
 




 
 
 
 
 
 
 
 
Shopping Statistics (Based on MWH)
 
Three Months Ended March 31,
 
 
 
 
2015
 
2014
 
 
 
 
 
 
 
 
 
OE
 
77%
 
78%
 
 
Penn
 
56%
 
65%
 
 
CEI
 
82%
 
85%
 
 
TE
 
74%
 
77%
 
 
JCP&L
 
50%
 
53%
 
 
Met-Ed
 
63%
 
66%
 
 
Penelec
 
68%
 
69%
 
 
PE(1)
 
42%
 
41%
 
 
WP
 
59%
 
61%
 
 
(1) Represents Maryland only.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





 
 
 
 
 
 
 
 
 
 
Competitive Operating Statistics (1)
 
Three Months Ended March 31,
 
 
 
 
 
 
2015
 
2014
 
 
 
Generation Capacity Factors:
 
 
 
 
 
 
 
 
Nuclear
 
91%
 
78%
 
 
 
 
Fossil - Baseload
 
63%
 
84%
 
 
 
 
Fossil - Load Following
 
48%
 
67%
 
 
 
 
 
 
 
 
 
 
 
 
Generation Fuel Rate:
 
 
 
 
 
 
 
 
Nuclear
 
$7.22
 
$8.31
 
 
 
 
Fossil
 
$28
 
$29
 
 
 
 
Total Fleet
 
$18
 
$21
 
 
 
 
 
 
 
 
 
 
 
 
Generation Output Mix:
 
 
 
 
 
 
 
 
Nuclear
 
47%
 
36%
 
 
 
 
Fossil - Baseload
 
39%
 
47%
 
 
 
 
Fossil - Load Following
 
7%
 
9%
 
 
 
 
Peaking/CT/Hydro
 
7%
 
8%
 
 
 
 
 
 
 
 
 
 
 
 
(1) Excludes RMR and units deactivated in April 2015
 
 
 
 
 
 
 
 
 
 
 

_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    16


FirstEnergy Corp.
Competitive Energy Services - Sources & Uses
Statistical Summary
 
 
 
 
 
 
 
 
 
 
 
 
 
Competitive Energy Services - Sources and Uses (MWH in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
 
 
Contract Sales
 
 
2015
 
2014
 
Change
 
 
 
POLR
 
 
 
 
 
 
 
 
 
 
 
       - OH
 
 
1,372

 
1,358

 
14

 
 
 
       - PA
 
 
2,610

 
2,625

 
(15
)
 
 
 
       - MD
 
 
840

 
844

 
(4
)
 
 
 
 
Total POLR
 
 
4,822

 
4,827

 
(5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Structured Sales
 
 
 
 
 
 
 
 
 
 
       - Bilaterals
 
 
2,309

 
1,964

 
345

 
 
 
       - Muni/Co-op
 
 
780

 
1,381

 
(601
)
 
 
 
                 Total Structured Sales
 
 
3,089

 
3,345

 
(256
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct - LCI
 
 
 
 
 
 
 
 
 
 
       - OH
 
 
3,308

 
6,730

 
(3,422
)
 
 
 
       - PA
 
 
1,984

 
3,221

 
(1,237
)
 
 
 
       - NJ
 
 
303

 
337

 
(34
)
 
 
 
       - MI
 
 
622

 
756

 
(134
)
 
 
 
       - IL
 
 
320

 
607

 
(287
)
 
 
 
       - MD
 
 
81

 
182

 
(101
)
 
 
 
 
Total Direct - LCI
 
 
6,618

 
11,833

 
(5,215
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct - MCI
 
 
 
 
 
 
 
 
 
 
       - OH
 
 
350

 
568

 
(218
)
 
 
 
       - PA
 
 
248

 
385

 
(137
)
 
 
 
       - IL
 
 
26

 
52

 
(26
)
 
 
 
       - NJ
 
 
6

 
2

 
4

 
 
 
       - MD
 
 
1

 
1

 
—

 
 
 
 
Total Direct - MCI
 
 
631

 
1,008

 
(377
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregation
 
 
 
 
 
 
 
 
 
 
       - OH
 
 
4,133

 
4,337

 
(204
)
 
 
 
       - IL
 
 
460

 
1,432

 
(972
)
 
 
 
       - NJ
 
 
5

 
—

 
5

 
 
 
 
Total Aggregation
 
 
4,598

 
5,769

 
(1,171
)
 
 
 
Mass Market
 
 
 
 
 
 
 
 
 
 
       - OH
 
 
331

 
593

 
(262
)
 
 
 
       - PA
 
 
1,053

 
1,445

 
(392
)
 
 
 
       - IL
 
 
21

 
41

 
(20
)
 
 
 
       - MD
 
 
28

 
47

 
(19
)
 
 
 
       - NJ
 
 
2

 
—

 
2

 
 
 
 
Total Mass Market
 
 
1,435

 
2,126

 
(691
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Contract Sales
 
 
21,193

 
28,908

 
(7,715
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Wholesale Sales
 
 
 
 
 
 
 
 
 
       - Spot
 
63

 
11

 
52

 
 
 
                 Total Wholesale Sales
 
63

 
11

 
52

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Purchased Power
 
 
 
 
 
 
 
 
 
       - Bilaterals
 
 
606

 
706

 
(100
)
 
 
 
       - Spot
 
 
3,661

 
10,327

 
(6,666
)
 
 
 
                 Total Purchased Power
 
4,267

 
11,033

 
(6,766
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Generation Output
 
 
 
 
 
 
 
 
 
 
      - Fossil
 
 
9,146

 
12,154

 
(3,008
)

 
 
      - Nuclear
 
 
7,952

 
6,827

 
1,125

 
 
 
      - RMR / Deactivated Units (1)
 
 
671

 
429

 
242

 
 
 
 
Total Generation Output
 
17,769

 
19,410


(1,641
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)  Includes RMR and units deactivated in April 2015
 


_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    17


FirstEnergy Corp.
Consolidated
GAAP to Non-GAAP Reconciliation
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2015
 
Three Months Ended March 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP
 
Special Items
 
 Operating -Non-GAAP
 
GAAP
 
Special Items
 
 Operating -Non-GAAP
 
(1
)
Revenues
 
$
3,897

 
$
1

(a)
$
3,898

 
$
4,182

 
$
1

(a)
$
4,183

 
 
 
 
 
 
 

 
 
 
 
 

 
 
 
Expenses
 
 
 
 

 
 
 
 
 

 
 
(2
)
 
Fuel
 
513

 
(22
)
(b,c)
491

 
617

 
(34
)
(b,c)
583

 
(3
)
 
Purchased power
 
1,113

 
—


1,113

 
1,455

 
—


1,455

 
(4
)
 
Other operating expenses
 
1,057

 
(24
)
(a,d,g)
1,033

 
1,182

 
(3
)
(a,b,c,d)
1,179

 
(5
)
 
Provision for depreciation
 
319

 
—


319

 
294

 
—


294

 
(6
)
 
Amortization (deferral) of regulatory assets, net
 
32

 
(1
)
(a)
31

 
(28
)
 
(1
)
(a)
(29
)
 
(7
)
 
General taxes
 
269

 
—


269

 
271

 
(1
)
(b)
270

 
(8
)
Total Expenses
 
3,303

 
(47
)

3,256

 
3,791

 
(39
)

3,752

 
(9
)
Operating Income
 
594

 
48


642

 
391

 
40


431

 
 
 
 
 
 
 

 
 
 
 
 

 
 
 
Other Income (Expense)
 
 
 
 

 
 
 
 
 

 
 
(10
)
 
Loss on debt redemption
 
—

 
—


—

 
(7
)
 
7

(h)
—

 
(11
)
 
Investment income
 
17

 
11

(e,f)
28

 
22

 
4

(e,f)
26

 
(12
)
 
Interest expense
 
(279
)
 
—


(279
)
 
(265
)
 
—


(265
)
 
(13
)
 
Capitalized financing costs
 
34

 
—


34

 
29

 
—


29

 
(14
)
Total Other Expense
 
(228
)
 
11


(217
)
 
(221
)
 
11


(210
)
 
 
 
 
 
 
 
 

 
 
 
 
 

 
 
(15
)
Income From Continuing Operations Before Income Taxes
 
366

 
59


425

 
170

 
51


221

 
(16
)
 
Income taxes
 
144

 
21


165

 
48

 
19


67

 
(17
)
Income From Continuing Operations
 
222

 
38


260

 
122

 
32


154

 
(18
)
 
Discontinued operations (net of income taxes)
 
—

 
—


—

 
86

 
(78
)
(e)
8

 
(19
)
Net Income
 
$
222

 
$
38


$
260

 
$
208

 
$
(46
)

$
162

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The above GAAP to Non-GAAP Reconciliation provides additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. See page 23 for GAAP to Operating (non-GAAP) EPS Reconciliation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)

 
Regulatory charges: 2015 ($0.02 per share), $1 million included in Revenues; ($14) million included in "Other operating expenses"; ($1) million included in "Amortization (deferral) of regulatory assets, net". 2014 ($0.02 per share), $1 million included in Revenues; ($10) million included in "Other operating expenses"; ($1) million included in "Amortization (deferral) of regulatory assets, net".
 
(b)

 
Plant deactivation costs: 2015 ($0.02 per share), ($11) million included in "Fuel". 2014 ($0.05 per share), ($23) million included in "Fuel"; ($11) million included in "Other operating expenses"; ($1) million included in "General taxes".
 
(c)

 
Merger accounting - commodity contracts: 2015 ($0.02 per share), ($11) million included in "Fuel". 2014 ($0.02 per share), ($11) million included in "Fuel", $1 million included in "Other operating expenses".
 
(d)

 
Mark-to-market adjustments: 2015, ($2) million in "Other operating expenses. 2014 (($0.03) per share), $17 million included in "Other operating expenses".
 
(e)

 
Impact of non-core asset sales/impairments: 2015 ($0.01 per share), $4 million included in "Investment income". 2014 (($0.18) per share), $2 million included in "Investment income"; ($78) million included in "Discontinued operations (net of income taxes)".
 
(f)

 
Trust securities impairment: 2015 ($0.01 per share), $7 million included in "Investment income". 2014, $2 million included in "Investment income".
 
(g)

 
Retail repositioning charges: 2015 ($0.01 per share), ($8) million included in "Other operating expenses".
 
(h)

 
Loss on debt redemptions: 2014 ($0.01 per share), $7 million included in "Loss on debt redemptions".
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per share amounts included above are based on the after tax effect of the above special items divided by the weighted average shares outstanding of 421 million shares in the first three months of 2015 and 419 million shares in the first three months of 2014.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    18


FirstEnergy Corp.
Regulated Distribution
GAAP to Non-GAAP Reconciliation
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2015
 
Three Months Ended March 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP
 
Special Items
 
 Operating -Non-GAAP
 
GAAP
 
Special Items
 
 Operating - Non-GAAP
 
(1
)
Revenues
 
$
2,562

 
$
1

(a)
$
2,563

 
$
2,550

 
$
1

(a)
$
2,551

 
 
 
 
 
 
 

 
 
 
 
 

 
 
 
Expenses
 
 
 
 

 
 
 
 
 

 
 
(2
)
 
Fuel
 
146

 
—


146

 
153

 
—


153

 
(3
)
 
Purchased power
 
975

 
—


975

 
981

 
—


981

 
(4
)
 
Other operating expenses
 
597

 
(13
)
(a)
584

 
627

 
(10
)
(a)
617

 
(5
)
 
Provision for depreciation
 
172

 
—


172

 
162

 
—


162

 
(6
)
 
Amortization (deferral) of regulatory assets, net
 
29

 
(1
)
(a)
28

 
(31
)
 
(1
)
(a)
(32
)
 
(7
)
 
General taxes
 
190

 
—


190

 
187

 
—


187

 
(8
)
Total Expenses
 
2,109

 
(14
)

2,095

 
2,079

 
(11
)

2,068

 
(9
)
Operating Income
 
453

 
15


468

 
471

 
12


483

 
 
 
 
 
 
 

 
 
 
 
 

 
 
 
Other Income (Expense)
 
 
 
 

 
 
 
 
 

 
 
(10
)
 
Loss on debt redemption
 
—

 
—


—

 
—

 
—


—

 
(11
)
 
Investment income
 
13

 
1

(b)
14

 
15

 
—


15

 
(12
)
 
Interest expense
 
(144
)
 
—


(144
)
 
(151
)
 
—


(151
)
 
(13
)
 
Capitalized financing costs
 
8

 
—


8

 
4

 
—


4

 
(14
)
Total Other Expense
 
(123
)
 
1


(122
)
 
(132
)
 
—


(132
)
 
 
 
 
 
 
 
 

 
 
 
 
 

 
 
(15
)
Income From Continuing Operations Before Income Taxes
 
330

 
16


346

 
339

 
12


351

 
(16
)
 
Income taxes
 
122

 
6


128

 
125

 
4


129

 
(17
)
Income From Continuing Operations
 
208

 
10


218

 
214

 
8


222

 
(18
)
 
Discontinued operations (net of income taxes)
 
—

 
—


—

 
—

 
—


—

 
(19
)
Net Income
 
$
208

 
$
10


$
218

 
$
214

 
$
8


$
222

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The above GAAP to Non-GAAP Reconciliation provides additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. See page 23 for GAAP to Operating (non-GAAP) EPS Reconciliation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)

 
Regulatory charges: 2015 ($0.02 per share), $1 million included in Revenues; ($13) million included in "Other operating expenses"; and ($1) million included in "Amortization (deferral) of regulatory assets, net". 2014 ($0.02 per share), $1 million included in Revenues; ($10) million included in "Other operating expenses" and ($1) million included in "Amortization (deferral) of regulatory assets, net".
 
(b)

 
Trust securities impairment: 2015 $1 million included in "Investment income".
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per share amounts included above are based on the after tax effect of the above special items divided by the weighted average shares outstanding of 421 million shares in the first three months of 2015 and 419 million shares in the first three months of 2014.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    19


FirstEnergy Corp.
Regulated Transmission
GAAP to Non-GAAP Reconciliation
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2015
 
Three Months Ended March 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP
 
Special Items
 
 Operating -Non-GAAP
 
GAAP
 
Special Items
 
 Operating - Non-GAAP
 
(1
)
Revenues
 
$
238

 
$
—

 
$
238

 
$
182

 
$
—

 
$
182

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
(2
)
 
Fuel
 
—

 
—

 
—

 
—

 
—

 
—

 
(3
)
 
Purchased power
 
—

 
—

 
—

 
—

 
—

 
—

 
(4
)
 
Other operating expenses
 
35

 
—

 
35

 
34

 
—

 
34

 
(5
)
 
Provision for depreciation
 
37

 
—

 
37

 
30

 
—

 
30

 
(6
)
 
Amortization (deferral) of regulatory assets, net
 
3

 
—

 
3

 
3

 
—

 
3

 
(7
)
 
General taxes
 
24

 
—

 
24

 
17

 
—

 
17

 
(8
)
Total Expenses
 
99

 
—

 
99

 
84

 
—

 
84

 
(9
)
Operating Income
 
139

 
—

 
139

 
98

 
—

 
98

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Income (Expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
(10
)
 
Loss on debt redemption
 
—

 
—

 
—

 
—

 
—

 
—

 
(11
)
 
Investment income
 
—

 
—

 
—

 
—

 
—

 
—

 
(12
)
 
Interest expense
 
(39
)
 
—

 
(39
)
 
(25
)
 
—

 
(25
)
 
(13
)
 
Capitalized financing costs
 
14

 
—

 
14

 
8

 
—

 
8

 
(14
)
Total Other Expense
 
(25
)
 
—

 
(25
)
 
(17
)
 
—

 
(17
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(15
)
Income From Continuing Operations Before Income Taxes
 
114

 
—

 
114

 
81

 
—

 
81

 
(16
)
 
Income taxes
 
42

 
—

 
42

 
30

 
—

 
30

 
(17
)
Income From Continuing Operations
 
72

 
—

 
72

 
51

 
—

 
51

 
(18
)
 
Discontinued operations (net of income taxes)
 
—

 
—

 
—

 
—

 
—

 
—

 
(19
)
Net Income
 
$
72

 
$
—

 
$
72

 
$
51

 
$
—

 
$
51

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The above GAAP to Non-GAAP Reconciliation provides additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. See page 23 for GAAP to Operating (non-GAAP) EPS Reconciliation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    20


FirstEnergy Corp.
Competitive Energy Services
GAAP to Non-GAAP Reconciliation
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2015
 
Three Months Ended March 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP
 
Special Items
 
 Operating -Non-GAAP
 
GAAP
 
Special Items
 
 Operating - Non-GAAP
 
(1
)
Revenues
 
$
1,435

 
$
—


1,435

 
$
1,771

 
$
—

 
$
1,771

 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 

 
 
 
 
 
 
 
 
(2
)
 
Fuel
 
367

 
(22
)
(b,c)
345

 
464

 
(34
)
(b,c)
430

 
(3
)
 
Purchased power
 
398

 
—


398

 
723

 
—

 
723

 
(4
)
 
Other operating expenses
 
519

 
(11
)
(a,d,h)
508

 
609

 
7

(b,c,d)
616

 
(5
)
 
Provision for depreciation
 
96

 
—


96

 
91

 
—

 
91

 
(6
)
 
Amortization (deferral) of regulatory assets, net
 
—

 
—


—

 
—

 
—

 
—

 
(7
)
 
General taxes
 
41

 
—


41

 
54

 
(1
)
(b)
53

 
(8
)
Total Expenses
 
1,421

 
(33
)

1,388

 
1,941

 
(28
)
 
1,913

 
(9
)
Operating Income (Loss)
 
14

 
33


47

 
(170
)
 
28

 
(142
)
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
Other Income (Expense)
 
 
 
 

 
 
 
 
 
 
 
 
(10
)
 
Loss on debt redemptions
 
—

 
—


—

 
(7
)
 
7

(g)
—

 
(11
)
 
Investment income
 
11

 
10

(e,f)
21

 
14

 
4

(e,f)
18

 
(12
)
 
Interest expense
 
(48
)
 
—


(48
)
 
(46
)
 
—

 
(46
)
 
(13
)
 
Capitalized financing costs
 
10

 
—


10

 
12

 
—

 
12

 
(14
)
Total Other Expense
 
(27
)
 
10


(17
)
 
(27
)
 
11

 
(16
)
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
(15
)
Income (Loss) From Continuing Operations Before Income Tax Benefits
 
(13
)
 
43


30

 
(197
)
 
39

 
(158
)
 
(16
)
 
Income tax benefits
 
(4
)
 
15


11

 
(73
)
 
15

 
(58
)
 
(17
)
Income (Loss) From Continuing Operations
 
(9
)
 
28


19

 
(124
)
 
24

 
(100
)
 
(18
)
 
Discontinued operations (net of income taxes)
 
—

 
—


—

 
86

 
(78
)
(e)
8

 
(19
)
Net Income (Loss)
 
$
(9
)
 
$
28


$
19

 
$
(38
)
 
$
(54
)
 
$
(92
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The above GAAP to Non-GAAP Reconciliation provides additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. See page 23 for GAAP to Operating (non-GAAP) EPS Reconciliation.
 
 
 
 
 
(a)
 
Regulatory charges: 2015, ($1) million included in "Other operating expenses".
 
(b)
 
Plant deactivation costs: 2015 ($0.02 per share), ($11) million included in "Fuel". 2014 ($0.05 per share), ($23) million included in "Fuel"; ($11) million included in "Other operating expenses"; ($1) million included in "General taxes".
 
(c)
 
Merger accounting - commodity contracts: 2015 ($0.02 per share), ($11) million included in "Fuel". 2014 ($0.02 per share), ($11) million included in "Fuel", $1 million included in "Other operating expenses".
 
(d)
 
Mark-to-market adjustments: 2015, ($2) million included in "Other operating expenses". 2014, (($0.03) per share), $17 million included in "Other operating expenses".
 
(e)
 
Impact of non-core asset sales/impairments: 2015 ($0.01 per share), $4 million included in "Investment income". 2014 (($0.18) per share), $2 million included in "Investment income " and ($78) million included in "Discontinued operations (net of income taxes)".
 
(f)
 
Trust securities impairment: 2015 ($0.01 per share), $6 million included in "Investment income". 2014, $2 million included in "Investment income".
 
(g)
 
Loss on debt redemptions: 2014 ($0.01 per share), $7 million included in "Loss on debt redemptions".
 
(h)
 
Retail repositioning charges: 2015 ($0.01 per share), ($8) million included in "Other operating expenses".
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per share amounts included above are based on the after tax effect of the above special items divided by the weighted average shares outstanding of 421 million shares in the first three months of 2015 and 419 million shares in the first three months of 2014.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    21


FirstEnergy Corp.
Corporate / Other
GAAP to Non-GAAP Reconciliation
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2015
 
Three Months Ended March 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP
 
Special Items
 
Operating -
 Non-GAAP
 
GAAP
 
Special Items
 
Operating -
 Non-GAAP
 
(1
)
Revenues
 
$
(338
)
 
$
—

 
$
(338
)
 
$
(321
)
 
$
—

 
$
(321
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
(2
)
 
Fuel
 
—

 
—

 
—

 
—

 
—

 
—

 
(3
)
 
Purchased power
 
(260
)
 
—

 
(260
)
 
(249
)
 
—

 
(249
)
 
(4
)
 
Other operating expenses
 
(94
)
 
—

 
(94
)
 
(88
)
 
—

 
(88
)
 
(5
)
 
Provision for depreciation
 
14

 
—

 
14

 
11

 
—

 
11

 
(6
)
 
Amortization of regulatory assets, net
 
—

 
—

 
—

 
—

 
—

 
—

 
(7
)
 
General taxes
 
14

 
—

 
14

 
13

 
—

 
13

 
(8
)
Total Expenses
 
(326
)
 
—

 
(326
)
 
(313
)
 
—

 
(313
)
 
(9
)
Operating Loss
 
(12
)
 
—

 
(12
)
 
(8
)
 
—

 
(8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Income (Expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
(10
)
 
Loss on debt redemptions
 
—

 
—

 
—

 
—

 
—

 
—

 
(11
)
 
Investment loss
 
(7
)
 
—

 
(7
)
 
(7
)
 
—

 
(7
)
 
(12
)
 
Interest expense
 
(48
)
 
—

 
(48
)
 
(43
)
 
—

 
(43
)
 
(13
)
 
Capitalized financing costs
 
2

 
—

 
2

 
5

 
—

 
5

 
(14
)
Total Other Expense
 
(53
)
 
—

 
(53
)
 
(45
)
 
—

 
(45
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(15
)
Loss From Continuing Operations Before Income Taxes
 
(65
)
 
—

 
(65
)
 
(53
)
 
—

 
(53
)
 
(16
)
 
Income tax benefits
 
(16
)
 
—

 
(16
)
 
(34
)
 
—

 
(34
)
 
(17
)
Loss From Continuing Operations
 
(49
)
 
—

 
(49
)
 
(19
)
 
—

 
(19
)
 
(18
)
 
Discontinued operations (net of income taxes)
 
—

 
—

 
—

 
—

 
—

 
—

 
(19
)
Net Loss
 
$
(49
)
 
$
—

 
$
(49
)
 
$
(19
)
 
$
—

 
$
(19
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The above GAAP to Non-GAAP Reconciliation provides additional transparency to our disclosures by providing specific line items to which the special items are recorded. Management consistently utilizes these reconciliations to assist in its analysis of historical and ongoing performance. See page 23 for GAAP to Operating (non-GAAP) EPS Reconciliation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    22


FirstEnergy Corp.
EPS Reconciliations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings Per Share (EPS)
 
(Reconciliation of GAAP to Operating (Non-GAAP) Earnings)
 
(In millions, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2015
 
 
 
 
 
Competitive
 
 
 
FirstEnergy
 
 
 
 
 
Regulated
 
Regulated
 
Energy
 
Corporate /
 
Corp.
 
 
 
 
 
Distribution
 
Transmission
 
Services
 
Other
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015 Net Income (Loss) - GAAP
 
$
208

 
$
72

 
$
(9
)
 
$
(49
)
 
$
222

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015 Basic EPS (avg. shares outstanding 421)
 
$
0.50

 
$
0.17

 
$
(0.02
)
 
$
(0.12
)
 
$
0.53

 
 
Excluding Special Items:
 
 
 
 
 
 
 
 
 
 
 
 
 
Regulatory charges
 
0.02

 
—

 
—

 
—

 
0.02

 
 
 
Trust securities impairment
 
—

 
—

 
0.01

 
—

 
0.01

 
 
 
Plant deactivation costs
 
—

 
—

 
0.02

 
—

 
0.02

 
 
 
Merger accounting - commodity contracts
 
—

 
—

 
0.02

 
—

 
0.02

 
 
 
Impact of non-core asset sales/impairments
 
—

 
—

 
0.01

 
—

 
0.01

 
 
 
Retail repositioning charges
 
—

 
—

 
0.01

 
—

 
0.01

 
 
 
Total Special Items
 
$
0.02

 
$
—

 
$
0.07

 
$
—

 
$
0.09

 
 
Basic EPS - Operating (Non-GAAP)
 
$
0.52

 
$
0.17

 
$
0.05

 
$
(0.12
)
 
$
0.62

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2014
 
 
 
 
 
Competitive
 
 
 
FirstEnergy
 
 
 
 
 
Regulated
 
Regulated
 
Energy
 
Corporate /
 
Corp.
 
 
 
 
 
Distribution
 
Transmission
 
Services
 
Other
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014 Net Income (Loss) - GAAP
 
$
214

 
$
51

 
$
(38
)
 
$
(19
)
 
$
208

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014 Basic EPS (avg. shares outstanding 419)
 
$
0.51

 
$
0.12

 
$
(0.09
)
 
$
(0.04
)
 
$
0.50


 
Excluding Special Items:
 
 
 
 
 
 
 
 
 
 
 
 
 
Regulatory charges
 
0.02

 
—

 
—

 
—

 
0.02


 
 
Plant deactivation costs
 
—

 
—

 
0.05

 
—

 
0.05


 
 
Merger accounting - commodity contracts
 
—

 
—

 
0.02

 
—

 
0.02


 
 
Impact of non-core asset sales/impairments
 
—

 
—

 
(0.18
)
 
—

 
(0.18
)

 
 
Loss on debt redemptions
 
—

 
—

 
0.01

 
—

 
0.01


 
 
Mark-to-market adjustments
 
—

 
—

 
(0.03
)
 
—

 
(0.03
)

 
 
Total Special Items
 
$
0.02

 
$
—

 
$
(0.13
)
 
$
—

 
$
(0.11
)

 
Basic EPS - Operating (Non-GAAP)
 
$
0.53

 
$
0.12

 
$
(0.22
)
 
$
(0.04
)
 
$
0.39


 
 
 
 
 
 
 
 
 
 
 
 
 
 


_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    23


Recent Developments

Financial Matters
Dividend
On March 17, 2015, the Board of Directors of FirstEnergy declared an unchanged quarterly dividend of $0.36 cents per share of outstanding common stock. The dividend is payable June 1, 2015, to shareholders of record as of May 7, 2015.

Board of Directors
On March 17, 2015, FirstEnergy announced that Dr. Jerry Sue Thornton, 68, was elected to the company's Board of Directors. Thornton is the former president of Cuyahoga Community College (TRI-C) in Cleveland, Ohio, and currently serves as president emeritus of TRI-C as well as chief executive officer of Dream Catcher Educational Consulting, which provides coaching and professional development for newly selected college and university presidents.
Catherine A. Rein and Wes M. Taylor will retire from the Board on May 19, 2015.
As previously announced, Anthony J. Alexander, executive chairman, will conclude his service to the company. Effective May 1, 2015, Mr. Alexander will step down from the Board and George M. Smart, currently the company's lead independent director, will return to his prior role as chairman of the Board. These changes will bring the size of FirstEnergy's Board to 13 members.

Operational Matters
Samuel L. Belcher Elected President and Chief Nuclear Officer of FirstEnergy Nuclear Operating Company (FENOC)
On March 3, 2015, Samuel L. Belcher, previously senior vice president and chief operating officer of FENOC, was elected as its president and chief nuclear officer. In his new position, Belcher provides overall guidance and strategy to the FENOC nuclear fleet and interface with industry leadership to drive high standards and best practices that enhance U.S. nuclear industry performance. A 23-year nuclear veteran, Belcher joined FENOC in December 2012 from Constellation Energy Nuclear Group, where he was senior vice president, Site Operations.
In a related move, Paul Harden, FENOC senior vice president of Fleet Engineering, was elected senior vice president and chief operating officer. Harden, who reports to Belcher, provides day-to-day leadership focused on safe and reliable performance of FENOC's fleet nuclear support groups and four nuclear units.

Perry Nuclear Power Plant Refueling Outage
On April 24, 2015, the 1,268-MW Perry Nuclear Power Plant returned to service following a scheduled refueling, maintenance and transformer replacement outage that began on March 9, 2015. While the unit was offline, 280 of the 748 fuel assemblies were replaced, and numerous safety inspections were conducted on the unit's reactor vessel, turbine and electrical generator.





_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    24


Beaver Valley Unit 1 Refueling Outage
On April 25, 2015, the 939-MW Beaver Valley Unit 1 began a scheduled refueling and maintenance outage. While the unit is offline, 61 of the 157 fuel assemblies will be replaced and numerous safety inspections will be conducted. In addition, preventative maintenance to ensure continued safe and reliable operations will be performed on major components including the plant’s three steam generators as well as various pumps, valves and the cooling tower.

Regulatory Matters

PJM Capacity Performance Proposal and Energy Market Reform
On December 12, 2014, PJM Interconnection, L.L.C. (PJM) submitted for Federal Energy Regulatory Commission (FERC) authorization important reforms to the PJM Reliability Pricing Model and related rules in the PJM Open Access Transmission Tariff (PJM Tariff) and related agreements to better ensure that committed capacity resources will be available and perform when called upon to meet the reliability needs of the PJM Region. PJM requested that these proposed revisions become effective on April 1, 2015.
On March 31, 2015, FERC Staff issued a letter to PJM indicating that PJM’s Capacity Performance proposal is deficient and requested that PJM respond to Staff questions concerning key aspects of the proposal by April 30, 2015. On April 10, 2015, PJM submitted its response to the deficiency letter, outlining further changes to the Capacity Performance proposal to address FERC Staff’s concerns. FERC's order on the Capacity Performance proposal remains pending.
Separately, on April 7, 2015, PJM filed with FERC a request for waiver of the PJM Tariff to delay the 2015 BRA from May, 2015 to as late as the week of August 10-14, 2015 to permit FERC to rule on Capacity Performance and related energy market reforms. On April 24, 2015, FERC issued an order granting the waiver.

FERC Order No. 745 - Demand Response
On January 14, 2015, PJM filed proposed PJM Tariff revisions describing PJM’s proposal to transition demand response (DR) from a supply side resource to a load (demand) side resource in the PJM capacity market under various scenarios. The proposal represented PJM's response to the D.C. Circuit Court's May 23, 2014, opinion finding that FERC does not have jurisdiction to regulate DR in the wholesale energy market. PJM requested an effective date for the proposed changes of April 1, 2015. On March 31, 2015, FERC issued an order rejecting PJM’s proposed amendments as premature.

Powering Ohio’s Progress
On March 23, 2015, the attorney examiner modified the procedural schedule for the Electric Security Plan IV that had originally been set on February 4, 2015, in order to provide parties sufficient time to conduct additional discovery and to evaluate and offer supplemental testimony addressing the PUCO's AEP Ohio Electric Security Plan Order issued on February 25, 2015. Evidentiary hearings are scheduled to begin on June 15, 2015.







_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    25


Pennsylvania Rate Settlements
On April 9, 2015, the Pennsylvania Public Utility Commission (PAPUC) approved distribution rate plans for FirstEnergy's Pennsylvania utilities (Pennsylvania Electric Company (Penelec), Pennsylvania Power Company (Penn Power), West Penn Power Company (West Penn), and Metropolitan Edison Company (Met-Ed)). The PAPUC adopted the Administrative Law Judges’ recommended decisions that approved settlements providing for an increase in annual distribution revenues of $292.8 million ($90.8 million for Penelec, $15.9 million for Penn Power, $96.8 million for West Penn, and $89.3 million for Met-Ed). The settlements will result in $87.7 million of additional annual operating expenses, including costs associated with service reliability enhancements to the distribution system; amortization of deferred storm costs and the remaining net book value of legacy meters; assistance for providing service to low-income customers; and the creation of a storm reserve for each utility. The new rates will be effective May 3, 2015.

New Jersey Rate Case
On March 26, 2015, the New Jersey Board of Public Utilities (NJBPU) entered a final Order in Jersey Central Power & Light Company's (JCP&L) base rate case proceeding, directing an annual revenue reduction of approximately $115 million, including recovery of 2011 storm costs. The NJBPU largely approved the ALJ's initial decision with the following adjustments: (i) a decrease in annual base rate revenues of $5.36 million associated with the NJBPU's modified Consolidated Tax Adjustment (CTA) policy that was approved in the Generic CTA proceeding; and (ii) lower carrying charges on the unamortized balance of 2011 storm costs, which resulted in a decrease in annual base rate revenues of approximately $2 million. On the same day, the NJBPU entered a final Order in a generic proceeding established to review JCP&L's major storm events of 2011 and 2012 and approved recovery of 2012 storm costs of $580 million, which resulted in an increase in annual revenues of approximately $81 million, including recovery of certain amounts through base rates and a separate rider to recover the deferred operation and maintenance costs over six years, subject to a carrying charge of 2.52%. The overall result of these final Orders is a reduction in JCP&L annual rate revenues of approximately $34 million, effective April 1, 2015. The NJBPU also directed JCP&L to complete certain studies, including a study related to reliability.





_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    26


Forward-Looking Statements: This Consolidated Report to the Financial Community includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties. These statements include declarations regarding management's intents, beliefs and current expectations. These statements typically contain, but are not limited to, the terms “anticipate,” “potential,” “expect,” "forecast," "target," "will," "intend," “believe,” "project," “estimate" and similar words. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, which may include the following: the speed and nature of increased competition in the electric utility industry, in general, and the retail sales market in particular; the ability to experience growth in the Regulated Distribution and Regulated Transmission segments and to successfully implement our revised sales strategy for the Competitive Energy Services segment; the accomplishment of our regulatory and operational goals in connection with our transmission investment plan, pending transmission rate case and the effectiveness of our repositioning strategy to reflect a more regulated business profile; changes in assumptions regarding economic conditions within our territories, assessment of the reliability of our transmission system, or the availability of capital or other resources supporting identified transmission investment opportunities; the impact of the regulatory process on the pending matters at the federal level and in the various states in which we do business including, but not limited to, matters related to rates and the Electric Security Plan IV in Ohio; the impact of the federal regulatory process on the Federal Energy Regulatory Commission (FERC)-regulated entities and transactions, in particular FERC regulation of wholesale energy and capacity markets, including PJM Interconnection, L.L.C. (PJM) markets and FERC-jurisdictional wholesale transactions; FERC regulation of cost-of-service rates, including FERC Opinion No. 531's revised Return on Equity methodology for FERC jurisdictional wholesale generation and transmission utility service; and FERC’s compliance and enforcement activity, including compliance and enforcement activity related to North American Electric Reliability Corporation’s mandatory reliability standards; the uncertainties of various cost recovery and cost allocation issues resulting from American Transmission Systems Incorporated's realignment into PJM; economic or weather conditions affecting future sales and margins such as a polar vortex or other significant weather events, and all associated regulatory events or actions; changing energy, capacity and commodity market prices including, but not limited to, coal, natural gas and oil, and their availability and impact on retail margins; the continued ability of our regulated utilities to recover their costs; costs being higher than anticipated and the success of our policies to control costs and to mitigate low energy, capacity and market prices; other legislative and regulatory changes, and revised environmental requirements, including, but not limited to, proposed greenhouse gases emission and water discharge regulations and the effects of the United States Environmental Protection Agency's coal combustion residuals regulations, Cross-State Air Pollution Rule, Mercury and Air Toxics Standards, including our estimated costs of compliance, and Clean Water Act 316(b) water intake regulation; the uncertainty of the timing and amounts of the capital expenditures that may arise in connection with any litigation, including New Source Review litigation, or potential regulatory initiatives or rulemakings (including that such initiatives or rulemakings could result in our decision to deactivate or idle certain generating units); the uncertainties associated with the deactivation of certain older regulated and competitive fossil units, including the impact on vendor commitments, and the timing thereof as they relate to the reliability of the transmission grid; the impact of other future changes to the operational status or availability of our generating units; adverse regulatory or legal decisions and outcomes with respect to our nuclear operations (including, but not limited to the revocation or non-renewal of necessary licenses, approvals or operating permits by the Nuclear Regulatory Commission or as a result of the incident at Japan's Fukushima Daiichi Nuclear Plant); issues arising from the indications of cracking in the shield building at Davis-Besse; the risks and uncertainties associated with litigation, arbitration, mediation and like proceedings, including, but not limited to, any such proceedings related to vendor commitments; the impact of labor disruptions by our unionized workforce; replacement power costs being higher than anticipated or not fully hedged; the ability to comply with applicable state and federal reliability standards and energy efficiency and peak demand reduction mandates; changes in customers' demand for power, including, but not limited to, changes resulting from the implementation of state and federal energy efficiency and peak demand reduction mandates; the ability to accomplish or realize anticipated benefits from strategic and financial goals, including, but not limited to, the ability to continue to reduce costs and to successfully execute our financial plans designed to improve our credit metrics and strengthen our balance sheet through, among other actions, our previously-implemented dividend reduction, our cash flow initiative project and our other proposed capital raising initiatives; our ability to improve electric commodity margins and the impact of, among other factors, the increased cost of fuel and fuel transportation on such margins; changing market conditions that could affect the measurement of certain liabilities and the value of assets held in our Nuclear Decommissioning Trusts, pension trusts and other trust funds, and cause us and/or our subsidiaries to make additional contributions sooner, or in amounts that are larger than currently anticipated; the impact of changes to material accounting policies; the ability to access the public securities and other capital and credit markets in accordance with our announced financial plans, the cost of such capital and overall condition of the capital and credit markets affecting us and our subsidiaries; actions that may be taken by credit rating agencies that could negatively affect us and/or our subsidiaries' access to financing, increase the costs thereof, and increase requirements to post additional collateral to support outstanding commodity positions, letters of credit and other financial guarantees; changes in national and regional economic conditions affecting us, our subsidiaries and/or our major industrial and commercial customers, and other counterparties with which we do business, including fuel suppliers; the impact of any changes in tax laws or regulations or adverse tax audit results or rulings; issues concerning the stability of domestic and foreign financial institutions and counterparties with which we do business; the risks associated with cyber-attacks on our electronic data centers that could compromise the information stored on our networks, including proprietary information and customer data; and the risks and other factors discussed from time to time in our United States Securities and Exchange Commission filings, and other similar factors. Dividends declared from time to time on FirstEnergy Corp.'s common stock during any period may in the aggregate vary from prior periods due to circumstances considered by FirstEnergy Corp.'s Board of Directors at the time of the actual declarations. A security rating is not a recommendation to buy or hold securities and is subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating. The foregoing review of factors should not be construed as exhaustive. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor assess the impact of any such factor on FirstEnergy's business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. FirstEnergy expressly disclaims any current intention to update, except as required by law, any forward-looking statements contained herein as a result of new information, future events or otherwise.



_____________________________________________________________________________________________________
Consolidated Report to the Financial Community - 1st Quarter 2015                    27
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