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 | ||||
(d) | Exhibits |
Exhibit No. | Description | |
99.1 | Press Release issued by FirstEnergy Corp., dated April 26, 2016 | |
99.2 | Consolidated Report to the Financial Community, dated April 26, 2016 |
FIRSTENERGY CORP. | |
Registrant | |
By: | /s/ K. Jon Taylor |
K. Jon Taylor Vice President, Controller and Chief Accounting Officer |
Exhibit No. | Description | |
99.1 | Press Release issued by FirstEnergy Corp., dated April 26, 2016 | |
99.2 | Consolidated Report to the Financial Community, dated April 26, 2016 |
Consolidated GAAP EPS to Operating (Non-GAAP) EPS* Reconciliation | ||||||
First Quarter | ||||||
2016 | 2015 | |||||
Basic Earnings Per Share (GAAP) | $0.78 | $0.53 | ||||
Excluding Special Items*: | ||||||
Regulatory charges | 0.09 | 0.02 | ||||
Trust securities impairment | 0.01 | 0.01 | ||||
Merger accounting - commodity contracts | 0.01 | 0.02 | ||||
Mark-to-market adjustments | (0.09) | — | ||||
Plant deactivation costs | — | 0.02 | ||||
Impact of non-core asset sales/impairments | — | 0.01 | ||||
Retail repositioning charges | — | 0.01 | ||||
Total Special Items* | 0.02 | 0.09 | ||||
Basic EPS - Operating (Non-GAAP) | $0.80 | $0.62 | ||||
* Per share amounts for the special items above are based on the after tax effect of each item, divided by the weighted average basic shares outstanding for the period. | ||||||
Competitive | FirstEnergy | ||||||||||||
EPS Variance Analysis | Regulated | Regulated | Energy | Corporate / | Corp. | ||||||||
(in millions, except per share amounts) | Distribution | Transmission | Services** | Other** | Consolidated | ||||||||
1Q 2015 Net Income (Loss) - GAAP | $208 | $72 | $(8) | $(50) | $222 | ||||||||
1Q 2015 Basic EPS* (avg. shares outstanding 421M) | $0.50 | $0.17 | $(0.02) | $(0.12) | $0.53 | ||||||||
Special Items - 2015 | 0.02 | — | 0.06 | 0.01 | 0.09 | ||||||||
1Q 2015 Basic EPS - Operating (Non-GAAP) Earnings* | $0.52 | $0.17 | $0.04 | $(0.11) | $0.62 | ||||||||
Distribution Deliveries - weather-related | (0.08) | — | — | — | (0.08) | ||||||||
PA Rate Case | 0.08 | — | — | — | 0.08 | ||||||||
NJ Rate Case | (0.03) | — | — | — | (0.03) | ||||||||
Transmission Revenues | — | 0.06 | — | — | 0.06 | ||||||||
Commodity Margin | (0.01) | — | 0.22 | — | 0.21 | ||||||||
Other Revenues | 0.03 | — | — | — | 0.03 | ||||||||
O&M Expenses | — | — | 0.02 | — | 0.02 | ||||||||
Depreciation | — | (0.01) | (0.01) | — | (0.02) | ||||||||
Pension/OPEB | (0.02) | — | (0.01) | — | (0.03) | ||||||||
General Taxes | — | (0.02) | — | — | (0.02) | ||||||||
Net Financing Costs | (0.01) | (0.02) | — | — | (0.03) | ||||||||
Effective Income Tax Rate | — | — | — | (0.01) | (0.01) | ||||||||
Other | — | — | 0.01 | (0.01) | — | ||||||||
1Q 2016 Basic EPS - Operating (Non-GAAP) Earnings* | $0.48 | $0.18 | $0.27 | $(0.13) | $0.80 | ||||||||
Special Items - 2016 | (0.09) | — | 0.07 | — | (0.02) | ||||||||
1Q 2016 Basic EPS* (avg. shares outstanding 424M) | $0.39 | $0.18 | $0.34 | $(0.13) | $0.78 | ||||||||
1Q 2016 Net Income - GAAP | $165 | $74 | $144 | $(55) | $328 | ||||||||
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. | |||||||||||||
Competitive | FirstEnergy | ||||||||||||
Regulated | Regulated | Energy | Corporate / | Corp. | |||||||||
Special Items - 1Q 2016 | Distribution | Transmission | Services | Other | Consolidated | ||||||||
Regulatory charges | $0.09 | $— | $— | $— | $0.09 | ||||||||
Trust securities impairment | — | — | 0.01 | — | 0.01 | ||||||||
Merger accounting - commodity contracts | — | — | 0.01 | — | 0.01 | ||||||||
Mark-to-market adjustments | — | — | (0.09) | — | (0.09) | ||||||||
Special Items - 2016 | $0.09 | $— | $(0.07) | $— | $0.02 | ||||||||
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 | $— | $0.06 | $0.01 | $0.09 | ||||||||
Regulated Distribution - GAAP earnings for the first quarter of 2016 were $165 million, or $0.39 per basic share, compared with first quarter 2015 GAAP earnings of $208 million, or $0.50 per basic share. Operating (non-GAAP) earnings, excluding special items, were $0.48 per basic share for the first quarter of 2016 compared with $0.52 per basic share for the first quarter of 2015. | |||||||
EPS Variance Analysis | |||||||
(In millions, except per share amounts) | |||||||
1Q 2015 Net Income - GAAP | $208 | ||||||
1Q 2015 Basic EPS (avg. shares outstanding 421M) | $0.50 | ||||||
Special Items - 2015 | 0.02 | ||||||
1Q 2015 Basic EPS - Operating (Non-GAAP) Earnings | $0.52 | ||||||
Distribution Deliveries - weather-related | (0.08) | ||||||
PA Rate Case | 0.08 | ||||||
NJ Rate Case | (0.03) | ||||||
Commodity Margin | (0.01) | ||||||
Other Revenues | 0.03 | ||||||
Pension/OPEB | (0.02) | ||||||
Net Financing Costs | (0.01) | ||||||
1Q 2016 Basic EPS - Operating (Non-GAAP) Earnings | $0.48 | ||||||
Special Items - 2016 | (0.09) | ||||||
1Q 2016 Basic EPS (avg. shares outstanding 424M) | $0.39 | ||||||
1Q 2016 Net Income - GAAP | $165 | ||||||
• | Distribution Deliveries - Total electric distribution deliveries decreased 3,161,000 megawatt-hours (MWH), or 7.8%, and decreased earnings $0.08 per share. Residential sales decreased 2,226,000 MWH or 13.4%, and sales to commercial customers decreased 572,000 MWH, or 5.1%, primarily due to decreased weather-related usage as heating-degree-days were 25% below the same period last year and 11% below normal. Deliveries to industrial customers decreased 363,000 MWH, or 2.8%, primarily due to lower usage in the steel and coal mining sectors, partially offset by increased usage from the shale gas sector. |
• | Pennsylvania Rate Case - Earnings increased $0.08 per share due to approved distribution rate increases, net of incremental operating expenses, effective May 3, 2015. |
• | New Jersey Rate Case - Earnings decreased $0.03 per share due to an approved distribution rate decrease, including the recovery of 2011 and 2012 storm costs, effective April 1, 2015. |
• | Regulated Commodity Margin - Lower regulated commodity margin decreased earnings $0.01 per share resulting from lower sales, primarily due to heating degree days that were 25% below the same period of 2015. |
• | Other Revenues - Other revenues increased earnings $0.03 per share due to the sale of oil and gas rights. |
• | Pension/OPEB - Higher pension/OPEB expense reduced earnings $0.02 per share. |
• | Net Financing Costs - Higher net financing costs decreased earnings $0.01 per share, due to lower capitalized financing costs and higher interest expense associated with debt issuances at Jersey Central Power & Light Company (JCP&L) of $250 million and West Penn Power Company (WPP) of $150 million in August and September of 2015, respectively. |
Regulated Transmission - GAAP earnings and Operating (non-GAAP) earnings for the first quarter of 2016 were $74 million, or $0.18 per basic share, compared with first quarter 2015 GAAP earnings and Operating (non-GAAP) earnings of $72 million, or $0.17 per basic share. | |||||||
EPS Variance Analysis | |||||||
(In millions, except per share amounts) | |||||||
1Q 2015 Net Income - GAAP | $72 | ||||||
1Q 2015 Basic EPS (avg. shares outstanding 421M) | $0.17 | ||||||
Special Items - 2015 | — | ||||||
1Q 2015 Basic EPS - Operating (Non-GAAP) Earnings | $0.17 | ||||||
Transmission Revenues | 0.06 | ||||||
Depreciation | (0.01) | ||||||
General Taxes | (0.02) | ||||||
Net Financing Costs | (0.02) | ||||||
1Q 2016 Basic EPS - Operating (Non-GAAP) Earnings | $0.18 | ||||||
Special Items - 2016 | — | ||||||
1Q 2016 Basic EPS (avg. shares outstanding 424M) | $0.18 | ||||||
1Q 2016 Net Income - GAAP | $74 | ||||||
• | Transmission Revenues - Higher transmission revenues increased earnings $0.06 per share, primarily due to revenue increases at American Transmission Systems, Incorporated (ATSI), reflecting recovery of incremental operating expenses and a higher rate base, partially offset by a lower ROE, effective January 1, 2016, under a comprehensive settlement approved by the Federal Energy Regulatory Commission (FERC) in October 2015. |
• | Depreciation and General Taxes - Higher depreciation and general tax expense decreased earnings $0.03 per share, due primarily to a higher asset base at ATSI. These expenses are recovered through ATSI's formula rate. |
• | Net Financing Costs - Higher net financing costs decreased earnings $0.02 per share, due to lower capitalized financing costs from lower construction work in progress balances and higher interest expense due to a long-term debt issuance at ATSI of $150 million in October 2015. |
Competitive Energy Services (CES) - GAAP earnings for the first quarter of 2016 were $144 million, or $0.34 per basic share, compared with first quarter 2015 GAAP losses of ($8) million, or ($0.02) per basic share. Operating (non-GAAP) earnings, excluding special items, for the first quarter of 2016 were $0.27 per basic share, compared with first quarter 2015 Operating (non-GAAP) earnings of $0.04 per basic share. | |||||||
EPS Variance Analysis | |||||||
(In millions, except per share amounts) | |||||||
1Q 2015 Net Income (Loss) - GAAP | $(8) | ||||||
1Q 2015 Basic EPS (avg. shares outstanding 421M) | $(0.02) | ||||||
Special Items - 2015 | 0.06 | ||||||
1Q 2015 Basic EPS - Operating (Non-GAAP) Earnings | $0.04 | ||||||
Commodity Margin | 0.22 | ||||||
O&M Expenses | 0.02 | ||||||
Depreciation | (0.01) | ||||||
Pension/OPEB | (0.01) | ||||||
Other | 0.01 | ||||||
1Q 2016 Basic EPS - Operating (Non-GAAP) Earnings | $0.27 | ||||||
Special Items - 2016 | 0.07 | ||||||
1Q 2016 Basic EPS (avg. shares outstanding 424M) | $0.34 | ||||||
1Q 2016 Net Income - GAAP | $144 | ||||||
Commodity Margin EPS - 1Q16 vs 1Q15 | Rate | Volume | Total | |||||||||||
(a) Contract Sales | ||||||||||||||
- Direct Sales (LCI & MCI) | $ | — | $ | (0.28 | ) | $ | (0.28 | ) | ||||||
- Governmental Aggregation Sales | 0.03 | (0.10 | ) | (0.07 | ) | |||||||||
- Mass Market Sales | — | (0.07 | ) | (0.07 | ) | |||||||||
- POLR Sales | 0.02 | (0.19 | ) | (0.17 | ) | |||||||||
- Structured Sales | (0.01 | ) | 0.05 | 0.04 | ||||||||||
Subtotal - Contract Sales | $ | 0.04 | $ | (0.59 | ) | $ | (0.55 | ) | ||||||
(b) Wholesale Sales | (0.01 | ) | 0.10 | 0.09 | ||||||||||
(c) PJM Capacity, FRR Auction Revenues | 0.24 | — | 0.24 | |||||||||||
(d) Fuel Expense | 0.05 | 0.11 | 0.16 | |||||||||||
(e) Purchased Power (net of financials) | 0.07 | 0.18 | 0.25 | |||||||||||
(f) Capacity Expense | (0.16 | ) | 0.09 | (0.07 | ) | |||||||||
(g) Net MISO - PJM Transmission Cost | 0.02 | 0.08 | 0.10 | |||||||||||
Net Change | $ | 0.25 | $ | (0.03 | ) | $ | 0.22 | |||||||
(a) | Contract Sales - CES' contract sales decreased 6.7 million MWH, or 32%, and reduced earnings $0.55 per share. Lower contract sales reflect CES' efforts to reposition its sales portfolio to more effectively hedge its generation. Direct sales to large and medium commercial / industrial customers decreased 3.5 million MWH, or 48%. Governmental aggregation sales decreased 1.0 million MWH, or 22%. Mass market sales decreased 732,000 MWH, or 51% and POLR sales decreased 2.3 million MWH, or 47%. Structured sales, which includes bilateral and muni/co-op sales, increased 807,000 MWH, or 26%. As of March 31, 2016, the total number of retail customers was 1.6 million, a decrease of approximately 400,000 customers since March 31, 2015. |
CES Contract Sales - 1Q16 vs 1Q15 | |||||||||||||||
(thousand MWH) | Retail | Non-Retail | |||||||||||||
Direct | Aggr. | Mass Market | POLR | Structured | Total | ||||||||||
Contract Sales Increase / (Decrease) | (3,455) | (1,029 | ) | (732) | (2,270) | 807 | (6,679) | ||||||||
Planning Period | RTO | ATSI | MAAC | ||||||
Price Per Megawatt-Day | BRA | BRA | BRA | ||||||
June 2014 - May 2015 | $125.99 | $125.99 | $136.50 | ||||||
June 2015 - May 2016 | $136.00 | $357.00 | $167.46 | ||||||
(d) | Fuel Expense - Lower fuel expenses increased earnings $0.16 per share due to decreased fossil generation output of 2.5 million MWH primarily as a result of lower economic dispatch of units associated with low wholesale spot market energy prices and a lower unit rate on fuel contracts. |
• | O&M Expenses - Lower O&M expenses increased earnings $0.02 per share, primarily due to decreased planned nuclear outage and retail-related costs, partially offset by increased fossil outage costs. |
• | Depreciation Expense - Higher depreciation expense decreased earnings $0.01 per share due to an increased asset base. |
• | Pension/OPEB - Higher pension/OPEB expense reduced earnings $0.01 per share. |
Corporate / Other GAAP losses for the first quarter of 2016 were ($55) million, or ($0.13) per basic share, compared with GAAP losses for the first quarter 2015 of ($50) million, or ($0.12) per basic share. Operating (non-GAAP) losses, excluding special items, were ($0.13) per basic share in the first quarter of 2016 compared to ($0.11) in the first quarter of 2015. | |||||||
EPS Variance Analysis | |||||||
(In millions, except per share amounts) | |||||||
1Q 2015 Net Loss - GAAP | $(50) | ||||||
1Q 2015 Basic EPS (avg. shares outstanding 421M) | $(0.12) | ||||||
Special Items - 2015 | 0.01 | ||||||
1Q 2015 Basic EPS - Operating (Non-GAAP) Losses | $(0.11) | ||||||
Effective Income Tax Rate | (0.01) | ||||||
Other | (0.01) | ||||||
1Q 2016 Basic EPS - Operating (Non-GAAP) Losses | $(0.13) | ||||||
Special Items - 2016 | — | ||||||
1Q 2016 Basic EPS (avg. shares outstanding 424M) | $(0.13) | ||||||
1Q 2016 Net Loss - GAAP | $(55) | ||||||
• | Effective Income Tax Rate - A higher consolidated effective income tax rate decreased earnings $0.01 per share. |
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 |
Three Months Ended March 31 | |||||||||||||||||
2016 | 2015 | Change | |||||||||||||||
Revenues | |||||||||||||||||
(1 | ) | Regulated distribution | $ | 2,521 | $ | 2,562 | $ | (41 | ) | ||||||||
(2 | ) | Regulated transmission | 275 | 238 | 37 | ||||||||||||
(3 | ) | Competitive energy services | 1,304 | 1,435 | (131 | ) | |||||||||||
(4 | ) | Corporate / Other | (231 | ) | (338 | ) | 107 | ||||||||||
(5 | ) | Total Revenues | 3,869 | 3,897 | (28 | ) | |||||||||||
Operating Expenses | |||||||||||||||||
(6 | ) | Fuel | 381 | 513 | (132 | ) | |||||||||||
(7 | ) | Purchased power | 1,124 | 1,113 | 11 | ||||||||||||
(8 | ) | Other operating expenses | 918 | 1,057 | (139 | ) | |||||||||||
(9 | ) | Provision for depreciation | 329 | 319 | 10 | ||||||||||||
(10 | ) | Amortization of regulatory assets, net | 61 | 32 | 29 | ||||||||||||
(11 | ) | General taxes | 280 | 269 | 11 | ||||||||||||
(12 | ) | Total Operating Expenses | 3,093 | 3,303 | (210 | ) | |||||||||||
(13 | ) | Operating Income | 776 | 594 | 182 | ||||||||||||
Other Income (Expense) | |||||||||||||||||
(14 | ) | Investment income | 28 | 17 | 11 | ||||||||||||
(15 | ) | Interest expense | (288 | ) | (279 | ) | (9 | ) | |||||||||
(16 | ) | Capitalized financing costs | 25 | 34 | (9 | ) | |||||||||||
(17 | ) | Total Other Expense | (235 | ) | (228 | ) | (7 | ) | |||||||||
(18 | ) | Income Before Income Taxes | 541 | 366 | 175 | ||||||||||||
(19 | ) | Income taxes | 213 | 144 | 69 | ||||||||||||
(20 | ) | Net Income | $ | 328 | $ | 222 | $ | 106 | |||||||||
Earnings Per Share of Common Stock | |||||||||||||||||
(21 | ) | Basic | $ | 0.78 | $ | 0.53 | $ | 0.25 | |||||||||
(22 | ) | Diluted | $ | 0.77 | $ | 0.53 | $ | 0.24 | |||||||||
Weighted Average Number of Common | |||||||||||||||||
Shares Outstanding | |||||||||||||||||
(23 | ) | Basic | 424 | 421 | 3 | ||||||||||||
(24 | ) | Diluted | 426 | 423 | 3 | ||||||||||||
Three Months Ended March 31, 2016 | |||||||||||||||||||||||
Competitive | |||||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | FirstEnergy | |||||||||||||||||||
Distribution (a) | Transmission (b) | Services (c) | Other (d) | Consolidated | |||||||||||||||||||
Revenues | |||||||||||||||||||||||
(1 | ) | Electric sales | $ | 2,442 | $ | 275 | $ | 1,101 | $ | (46 | ) | $ | 3,772 | ||||||||||
(2 | ) | Other | 79 | — | 51 | (33 | ) | 97 | |||||||||||||||
(3 | ) | Internal | — | — | 152 | (152 | ) | — | |||||||||||||||
(4 | ) | Total Revenues | 2,521 | 275 | 1,304 | (231 | ) | 3,869 | |||||||||||||||
Expenses | |||||||||||||||||||||||
(5 | ) | Fuel | 139 | — | 242 | — | 381 | ||||||||||||||||
(6 | ) | Purchased power | 926 | — | 350 | (152 | ) | 1,124 | |||||||||||||||
(7 | ) | Other operating expenses | 648 | 36 | 321 | (87 | ) | 918 | |||||||||||||||
(8 | ) | Provision for depreciation | 169 | 43 | 102 | 15 | 329 | ||||||||||||||||
(9 | ) | Amortization of regulatory assets, net | 59 | 2 | — | — | 61 | ||||||||||||||||
(10 | ) | General taxes | 185 | 41 | 39 | 15 | 280 | ||||||||||||||||
(11 | ) | Total Expenses | 2,126 | 122 | 1,054 | (209 | ) | 3,093 | |||||||||||||||
(12 | ) | Operating Income (Loss) | 395 | 153 | 250 | (22 | ) | 776 | |||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||
(13 | ) | Investment income | 11 | — | 15 | 2 | 28 | ||||||||||||||||
(14 | ) | Interest expense | (147 | ) | (43 | ) | (47 | ) | (51 | ) | (288 | ) | |||||||||||
(15 | ) | Capitalized financing costs | 4 | 7 | 11 | 3 | 25 | ||||||||||||||||
(16 | ) | Total Other Expense | (132 | ) | (36 | ) | (21 | ) | (46 | ) | (235 | ) | |||||||||||
(17 | ) | Income (Loss) Before Income Taxes (Benefits) | 263 | 117 | 229 | (68 | ) | 541 | |||||||||||||||
(18 | ) | Income taxes (benefits) | 98 | 43 | 85 | (13 | ) | 213 | |||||||||||||||
(19 | ) | Net Income (Loss) | $ | 165 | $ | 74 | $ | 144 | $ | (55 | ) | $ | 328 | ||||||||||
(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. | ||||||||||||||||||||||
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 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 | ) | Investment income | 13 | — | 12 | (8 | ) | 17 | ||||||||||||||||
(14 | ) | Interest expense | (144 | ) | (39 | ) | (48 | ) | (48 | ) | (279 | ) | ||||||||||||
(15 | ) | Capitalized financing costs | 8 | 14 | 10 | 2 | 34 | |||||||||||||||||
(16 | ) | Total Other Expense | (123 | ) | (25 | ) | (26 | ) | (54 | ) | (228 | ) | ||||||||||||
(17 | ) | Income (Loss) Before Income Taxes (Benefits) | 330 | 114 | (12 | ) | (66 | ) | 366 | |||||||||||||||
(18 | ) | Income taxes (benefits) | 122 | 42 | (4 | ) | (16 | ) | 144 | |||||||||||||||
(19 | ) | Net Income (Loss) | $ | 208 | $ | 72 | $ | (8 | ) | $ | (50 | ) | $ | 222 | ||||||||||
(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. | |||||||||||||||||||||||
Changes Between the First Three Months of 2016 and the First Three Months of 2015 Increase (Decrease) | ||||||||||||||||||||||||
Competitive | ||||||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | FirstEnergy | ||||||||||||||||||||
Distribution (a) | Transmission (b) | Services (c) | Other (d) | Consolidated | ||||||||||||||||||||
Revenues | ||||||||||||||||||||||||
(1 | ) | Electric sales | $ | (75 | ) | $ | 37 | $ | (24 | ) | $ | (1 | ) | $ | (63 | ) | ||||||||
(2 | ) | Other | 34 | — | 1 | — | 35 | |||||||||||||||||
(3 | ) | Internal revenues | — | — | (108 | ) | 108 | — | ||||||||||||||||
(4 | ) | Total Revenues | (41 | ) | 37 | (131 | ) | 107 | (28 | ) | ||||||||||||||
Expenses | ||||||||||||||||||||||||
(5 | ) | Fuel | (7 | ) | — | (125 | ) | — | (132 | ) | ||||||||||||||
(6 | ) | Purchased power | (49 | ) | — | (48 | ) | 108 | 11 | |||||||||||||||
(7 | ) | Other operating expenses | 51 | 1 | (198 | ) | 7 | (139 | ) | |||||||||||||||
(8 | ) | Provision for depreciation | (3 | ) | 6 | 6 | 1 | 10 | ||||||||||||||||
(9 | ) | Amortization of regulatory assets, net | 30 | (1 | ) | — | — | 29 | ||||||||||||||||
(10 | ) | General taxes | (5 | ) | 17 | (2 | ) | 1 | 11 | |||||||||||||||
(11 | ) | Total Expenses | 17 | 23 | (367 | ) | 117 | (210 | ) | |||||||||||||||
(12 | ) | Operating Income (Loss) | (58 | ) | 14 | 236 | (10 | ) | 182 | |||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||
(13 | ) | Investment income | (2 | ) | — | 3 | 10 | 11 | ||||||||||||||||
(14 | ) | Interest expense | (3 | ) | (4 | ) | 1 | (3 | ) | (9 | ) | |||||||||||||
(15 | ) | Capitalized financing costs | (4 | ) | (7 | ) | 1 | 1 | (9 | ) | ||||||||||||||
(16 | ) | Total Other Expense | (9 | ) | (11 | ) | 5 | 8 | (7 | ) | ||||||||||||||
(17 | ) | Income (Loss) From Before Income Taxes (Benefits) | (67 | ) | 3 | 241 | (2 | ) | 175 | |||||||||||||||
(18 | ) | Income taxes (benefits) | (24 | ) | 1 | 89 | 3 | 69 | ||||||||||||||||
(19 | ) | Net Income (Loss) | $ | (43 | ) | $ | 2 | $ | 152 | $ | (5 | ) | $ | 106 | ||||||||||
(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. | |||||||||||||||||||||||
Condensed Consolidated Balance Sheets (GAAP) | |||||||||||
As of | As of | ||||||||||
Assets | Mar. 31, 2016 | Dec. 31, 2015 | |||||||||
Current Assets: | |||||||||||
Cash and cash equivalents | $ | 146 | $ | 131 | |||||||
Receivables | 1,594 | 1,595 | |||||||||
Other | 1,490 | 1,314 | |||||||||
Total Current Assets | 3,230 | 3,040 | |||||||||
Property, Plant and Equipment | 37,644 | 37,214 | |||||||||
Investments | 2,886 | 2,788 | |||||||||
Deferred Charges and Other Assets | 8,935 | 9,052 | |||||||||
Total Assets | $ | 52,695 | $ | 52,094 | |||||||
Liabilities and Capitalization | |||||||||||
Current Liabilities: | |||||||||||
Currently payable long-term debt | $ | 1,355 | $ | 1,166 | |||||||
Short-term borrowings | 2,125 | 1,708 | |||||||||
Accounts payable | 1,000 | 1,075 | |||||||||
Other | 1,909 | 1,653 | |||||||||
Total Current Liabilities | 6,389 | 5,602 | |||||||||
Capitalization: | |||||||||||
Total equity | 12,464 | 12,422 | |||||||||
Long-term debt and other long-term obligations | 18,878 | 19,099 | |||||||||
Total Capitalization | 31,342 | 31,521 | |||||||||
Noncurrent Liabilities | 14,964 | 14,971 | |||||||||
Total Liabilities and Capitalization | $ | 52,695 | $ | 52,094 | |||||||
General Information | ||||||||||
Three Months Ended March 31 | ||||||||||
2016 | 2015 | |||||||||
Debt redemptions | $ | (31 | ) | $ | (48 | ) | ||||
Short-term borrowings increase | $ | 425 | $ | 760 | ||||||
Property additions | $ | 698 | $ | 668 | ||||||
Debt to Total Capitalization Ratio as Defined Under the FE Credit Facilities | ||||||||||||||||
As of March 31 | As of December 31 | |||||||||||||||
2016 | % Total | 2015 | % Total | |||||||||||||
Total Equity (GAAP) | $ | 12,464 | 35 | % | $ | 12,422 | 35 | % | ||||||||
Non-cash Charges / Non-cash Write Downs* | 2,077 | 6 | % | 2,077 | 6 | % | ||||||||||
Accumulated Other Comprehensive Income | (179 | ) | (1 | )% | (171 | ) | (1 | )% | ||||||||
Adjusted Equity (Non-GAAP)** | 14,362 | 40 | % | 14,328 | 40 | % | ||||||||||
Long-term Debt and Other Long-term Obligations (GAAP) | 18,878 | 52 | % | 19,099 | 54 | % | ||||||||||
Currently Payable Long-term Debt (GAAP) | 1,355 | 4 | % | 1,166 | 3 | % | ||||||||||
Short-term Borrowings (GAAP) | 2,125 | 6 | % | 1,708 | 5 | % | ||||||||||
Reimbursement Obligations | 54 | — | % | 54 | — | % | ||||||||||
Guarantees of Indebtedness | 325 | 1 | % | 328 | 1 | % | ||||||||||
Less Securitization Debt | (887 | ) | (3 | )% | (919 | ) | (3 | )% | ||||||||
Adjusted Debt (Non-GAAP)** | 21,850 | 60 | % | 21,436 | 60 | % | ||||||||||
Adjusted Capitalization (Non-GAAP)** | $ | 36,212 | 100 | % | $ | 35,764 | 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, 2016, as required by the FE Credit Facilities, as amended. | ||||||||||||||||
**Management uses Adjusted Equity, Adjusted Debt, and Adjusted Capitalization, each of which is a non-GAAP financial measure, to calculate and monitor its compliance with the debt to total capitalization financial covenant under the FE Credit Facilities. These financial measures, as calculated in accordance with the FE Credit Facilities, help shareholders understand FirstEnergy's compliance with, and provide a basis for understanding FirstEnergy's incremental debt capacity under the debt to total capitalization financial covenant. The financial covenant under the FE Credit Facilities require FirstEnergy to maintain a consolidated debt to total capitalization ratio of no more than 65%, measured at the end of each fiscal quarter. | ||||||||||||||||
Condensed Consolidated Statements of Cash Flows (GAAP) | ||||||||||
Three Months Ended | ||||||||||
March 31 | ||||||||||
2016 | 2015 | |||||||||
Cash flows from operating activities | ||||||||||
Net income | $ | 328 | $ | 222 | ||||||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||||
Depreciation and amortization (1) | 455 | 425 | ||||||||
Deferred purchased power and other costs | (10 | ) | (31 | ) | ||||||
Deferred income taxes and investment tax credits, net | 206 | 127 | ||||||||
Deferred costs on sale leaseback transaction, net | 12 | 12 | ||||||||
Retirement benefits | 16 | (4 | ) | |||||||
Pension trust contributions | (160 | ) | (143 | ) | ||||||
Commodity derivative transactions, net | (64 | ) | 2 | |||||||
Changes in working capital and other | (145 | ) | (417 | ) | ||||||
Cash flows provided from operating activities | 638 | 193 | ||||||||
Cash flows provided from financing activities | 242 | 560 | ||||||||
Cash flows used for investing activities | (865 | ) | (748 | ) | ||||||
Net change in cash and cash equivalents | $ | 15 | $ | 5 | ||||||
(1) Includes Amortization of Regulatory Assets, net, nuclear fuel, customer intangible assets, debt related costs, deferred advertising costs and other assets. | ||||||||||
Liquidity position as of March 31, 2016 | ||||||||||
Company | Type | Maturity | Amount | Available | ||||||
FirstEnergy(1) | Revolving | March 2019 | $3,500 | $1,369 | ||||||
FirstEnergy Solutions Corp. (FES) / Allegheny Energy Supply Company, LLC (AE Supply) | Revolving | March 2019 | 1,500 | 1,452 | ||||||
FET(2) | Revolving | March 2019 | 1,000 | 1,000 | ||||||
(1) FirstEnergy Corp. and FEU subsidiary borrowers | Subtotal: | $6,000 | $3,821 | |||||||
(2) Includes FET, ATSI, and TrAILCo | Cash: | — | 146 | |||||||
Total: | $6,000 | $3,967 | ||||||||
Electric Distribution Deliveries | Three Months Ended March 31 | |||||||||||
(MWH in thousand) | 2016 | 2015 | Change | |||||||||
Ohio | - Residential | 4,456 | 5,096 | -12.6 | % | |||||||
- Commercial | 3,711 | 3,905 | -5.0 | % | ||||||||
- Industrial | 5,011 | 5,186 | -3.4 | % | ||||||||
- Other | 85 | 85 | 0.0 | % | ||||||||
Total Ohio | 13,263 | 14,272 | -7.1 | % | ||||||||
Pennsylvania | - Residential | 5,087 | 5,987 | -15.0 | % | |||||||
- Commercial | 3,242 | 3,435 | -5.6 | % | ||||||||
- Industrial | 5,010 | 5,135 | -2.4 | % | ||||||||
- Other | 30 | 30 | 0.0 | % | ||||||||
Total Pennsylvania | 13,369 | 14,587 | -8.3 | % | ||||||||
New Jersey | - Residential | 2,154 | 2,449 | -12.0 | % | |||||||
- Commercial | 2,162 | 2,278 | -5.1 | % | ||||||||
- Industrial | 547 | 553 | -1.1 | % | ||||||||
- Other | 21 | 21 | 0.0 | % | ||||||||
Total New Jersey | 4,884 | 5,301 | -7.9 | % | ||||||||
Maryland | - Residential | 971 | 1,139 | -14.7 | % | |||||||
- Commercial | 519 | 555 | -6.5 | % | ||||||||
- Industrial | 386 | 364 | 6.0 | % | ||||||||
- Other | 4 | 4 | 0.0 | % | ||||||||
Total Maryland | 1,880 | 2,062 | -8.8 | % | ||||||||
West Virginia | - Residential | 1,668 | 1,891 | -11.8 | % | |||||||
- Commercial | 926 | 959 | -3.4 | % | ||||||||
- Industrial | 1,423 | 1,502 | -5.3 | % | ||||||||
- Other | 7 | 7 | 0.0 | % | ||||||||
Total West Virginia | 4,024 | 4,359 | -7.7 | % | ||||||||
Total Residential | 14,336 | 16,562 | -13.4 | % | ||||||||
Total Commercial | 10,560 | 11,132 | -5.1 | % | ||||||||
Total Industrial | 12,377 | 12,740 | -2.8 | % | ||||||||
Total Other | 147 | 147 | 0.0 | % | ||||||||
Total Distribution Deliveries | 37,420 | 40,581 | -7.8 | % | ||||||||
Weather | Three Months Ended March 31 | ||||||||
2016 | 2015 | Normal | |||||||
Composite Heating-Degree-Days | 2,536 | 3,362 | 2,841 | ||||||
Composite Cooling-Degree-Days | 2 | — | 2 | ||||||
Shopping Statistics (Based on MWH) | Three Months Ended March 31 | |||||
2016 | 2015 | |||||
OE | 78% | 77% | ||||
Penn | 60% | 56% | ||||
CEI | 83% | 82% | ||||
TE | 76% | 74% | ||||
JCP&L | 50% | 50% | ||||
Met-Ed | 66% | 63% | ||||
Penelec | 68% | 68% | ||||
PE(1) | 45% | 42% | ||||
WP | 63% | 59% | ||||
(1) Represents Maryland only. | ||||||
Competitive Operating Statistics | Three Months Ended March 31 | ||||||
2016 | 2015 | ||||||
Generation Capacity Factors: | |||||||
Nuclear | 88% | 91% | |||||
Fossil - Baseload | 45% | 63% | |||||
Fossil - Load Following | 41% | 48% | |||||
Generation Fuel Rate: | |||||||
Nuclear | $6.83 | $7.22 | |||||
Fossil | $25 | $28 | |||||
Total Fleet | $16 | $18 | |||||
Generation Output Mix: | |||||||
Nuclear | 52% | 47% | |||||
Fossil - Baseload | 33% | 39% | |||||
Fossil - Load Following | 7% | 7% | |||||
Peaking/CT/Hydro | 8% | 7% | |||||
Competitive Energy Services - Sources and Uses (MWH in thousands) | |||||||||||||
Three Months Ended March 31 | |||||||||||||
Contract Sales | 2016 | 2015 | Change | ||||||||||
POLR | 2,552 | 4,822 | (2,270 | ) | |||||||||
Structured Sales | 3,896 | 3,089 | 807 | ||||||||||
Direct - MCI / LCI | 3,794 | 7,249 | (3,455 | ) | |||||||||
Governmental Aggregation | 3,569 | 4,598 | (1,029 | ) | |||||||||
Mass Market | 703 | 1,435 | (732 | ) | |||||||||
Total Contract Sales | 14,514 | 21,193 | (6,679 | ) | |||||||||
Wholesale Spot Sales | 1,913 | 63 | 1,850 | ||||||||||
Purchased Power | |||||||||||||
- Bilaterals | 636 | 606 | 30 | ||||||||||
- Spot | 1,351 | 3,661 | (2,310 | ) | |||||||||
Total Purchased Power | 1,987 | 4,267 | (2,280 | ) | |||||||||
Generation Output | |||||||||||||
- Fossil | 7,294 | 9,146 | (1,852 | ) | |||||||||
- Nuclear | 7,750 | 7,952 | (202 | ) | |||||||||
- RMR / Deactivated Units (1) | — | 671 | (671 | ) | |||||||||
Total Generation Output | 15,044 | 17,769 | (2,725 | ) | |||||||||
(1) Includes RMR and units deactivated in April 2015 |
Three Months Ended March 31, 2016 | Three Months Ended March 31, 2015 | |||||||||||||||||||||||||||
GAAP | Special Items | Operating -Non-GAAP | GAAP | Special Items | Operating -Non-GAAP | |||||||||||||||||||||||
(1 | ) | Revenues | $ | 3,869 | $ | — | $ | 3,869 | $ | 3,897 | $ | 1 | (a) | $ | 3,898 | |||||||||||||
Expenses | ||||||||||||||||||||||||||||
(2 | ) | Fuel | 381 | (8 | ) | (c) | 373 | 513 | (22 | ) | (b,c) | 491 | ||||||||||||||||
(3 | ) | Purchased power | 1,124 | — | 1,124 | 1,113 | — | 1,113 | ||||||||||||||||||||
(4 | ) | Other operating expenses | 918 | 3 | (a,d) | 921 | 1,057 | (24 | ) | (a,d,g) | 1,033 | |||||||||||||||||
(5 | ) | Provision for depreciation | 329 | — | 329 | 319 | — | 319 | ||||||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | 61 | — | 61 | 32 | (1 | ) | (a) | 31 | ||||||||||||||||||
(7 | ) | General taxes | 280 | — | 280 | 269 | — | 269 | ||||||||||||||||||||
(8 | ) | Total Expenses | 3,093 | (5 | ) | 3,088 | 3,303 | (47 | ) | 3,256 | ||||||||||||||||||
(9 | ) | Operating Income | 776 | 5 | 781 | 594 | 48 | 642 | ||||||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||||||
(10 | ) | Investment income | 28 | 7 | (e,f) | 35 | 17 | 11 | (e,f) | 28 | ||||||||||||||||||
(11 | ) | Interest expense | (288 | ) | — | (288 | ) | (279 | ) | — | (279 | ) | ||||||||||||||||
(12 | ) | Capitalized financing costs | 25 | — | 25 | 34 | — | 34 | ||||||||||||||||||||
(13 | ) | Total Other Expense | (235 | ) | 7 | (228 | ) | (228 | ) | 11 | (217 | ) | ||||||||||||||||
(14 | ) | Income Before Income Taxes | 541 | 12 | 553 | 366 | 59 | 425 | ||||||||||||||||||||
(15 | ) | Income taxes | 213 | 3 | 216 | 144 | 21 | 165 | ||||||||||||||||||||
(16 | ) | Net Income | $ | 328 | $ | 9 | $ | 337 | $ | 222 | $ | 38 | $ | 260 | ||||||||||||||
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 24 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||||||||
(a) | Regulatory charges: 2016 ($0.09 per share), ($61) million included in "Other operating expenses". 2015 ($0.02 per share), $1 million included in "Revenues"; ($14) million included in "Other operating expenses"; and ($1) million included in "Amortization of regulatory assets, net". | |||||||||||||||||||||||||||
(b) | Plant deactivation costs: 2015 ($0.02 per share), ($11) million included in "Fuel". | |||||||||||||||||||||||||||
(c) | Merger accounting - commodity contracts: 2016 ($0.01 per share), ($8) million included in "Fuel". 2015 ($0.02 per share), ($11) million included in "Fuel". | |||||||||||||||||||||||||||
(d) | Mark-to-market adjustments: 2016 (($0.09) per share), $64 million included in "Other operating expenses". 2015, ($2) million included in "Other operating expenses". | |||||||||||||||||||||||||||
(e) | Impact of non-core asset sales/impairments: 2016, ($2) million included in "Investment income". 2015 ($0.01 per share), $4 million included in "Investment income". | |||||||||||||||||||||||||||
(f) | Trust securities impairment: 2016 ($0.01 per share), $9 million included in "Investment income". 2015 ($0.01 per share), $7 million included in "Investment income". | |||||||||||||||||||||||||||
(g) | 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 424 million shares in the first three months of 2016 and 421 million shares in the first three months of 2015. | ||||||||||||||||||||||||||||
Three Months Ended March 31, 2016 | Three Months Ended March 31, 2015 | |||||||||||||||||||||||||||
GAAP | Special Items | Operating -Non-GAAP | GAAP | Special Items | Operating - Non-GAAP | |||||||||||||||||||||||
(1 | ) | Revenues | $ | 2,521 | $ | — | $ | 2,521 | $ | 2,562 | $ | 1 | (a) | $ | 2,563 | |||||||||||||
Expenses | ||||||||||||||||||||||||||||
(2 | ) | Fuel | 139 | — | 139 | 146 | — | 146 | ||||||||||||||||||||
(3 | ) | Purchased power | 926 | — | 926 | 975 | — | 975 | ||||||||||||||||||||
(4 | ) | Other operating expenses | 648 | (61 | ) | (a) | 587 | 597 | (13 | ) | (a) | 584 | ||||||||||||||||
(5 | ) | Provision for depreciation | 169 | — | 169 | 172 | — | 172 | ||||||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | 59 | — | 59 | 29 | (1 | ) | (a) | 28 | ||||||||||||||||||
(7 | ) | General taxes | 185 | — | 185 | 190 | — | 190 | ||||||||||||||||||||
(8 | ) | Total Expenses | 2,126 | (61 | ) | 2,065 | 2,109 | (14 | ) | 2,095 | ||||||||||||||||||
(9 | ) | Operating Income | 395 | 61 | 456 | 453 | 15 | 468 | ||||||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||||||
(10 | ) | Investment income | 11 | 1 | (b) | 12 | 13 | 1 | (b) | 14 | ||||||||||||||||||
(11 | ) | Interest expense | (147 | ) | — | (147 | ) | (144 | ) | — | (144 | ) | ||||||||||||||||
(12 | ) | Capitalized financing costs | 4 | — | 4 | 8 | — | 8 | ||||||||||||||||||||
(13 | ) | Total Other Expense | (132 | ) | 1 | (131 | ) | (123 | ) | 1 | (122 | ) | ||||||||||||||||
(14 | ) | Income Before Income Taxes | 263 | 62 | 325 | 330 | 16 | 346 | ||||||||||||||||||||
(15 | ) | Income taxes | 98 | 22 | 120 | 122 | 6 | 128 | ||||||||||||||||||||
(16 | ) | Net Income | $ | 165 | $ | 40 | $ | 205 | $ | 208 | $ | 10 | $ | 218 | ||||||||||||||
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 24 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||||||||
(a) | Regulatory charges: 2016 ($0.09 per share), ($61) million included in "Other operating expenses". 2015 ($0.02 per share), $1 million included in "Revenues"; ($13) million included in "Other operating expenses"; and ($1) million included in "Amortization of regulatory assets, net". | |||||||||||||||||||||||||||
(b) | Trust securities impairment: 2016 $1 million included in "Investment income". 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 424 million shares in the first three months of 2016 and 421 million shares in the first three months of 2015. | ||||||||||||||||||||||||||||
Three Months Ended March 31, 2016 | Three Months Ended March 31, 2015 | |||||||||||||||||||||||||||
GAAP | Special Items | Operating -Non-GAAP | GAAP | Special Items | Operating - Non-GAAP | |||||||||||||||||||||||
(1 | ) | Revenues | $ | 275 | $ | — | $ | 275 | $ | 238 | $ | — | $ | 238 | ||||||||||||||
Expenses | ||||||||||||||||||||||||||||
(2 | ) | Fuel | — | — | — | — | — | — | ||||||||||||||||||||
(3 | ) | Purchased power | — | — | — | — | — | — | ||||||||||||||||||||
(4 | ) | Other operating expenses | 36 | — | 36 | 35 | — | 35 | ||||||||||||||||||||
(5 | ) | Provision for depreciation | 43 | — | 43 | 37 | — | 37 | ||||||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | 2 | — | 2 | 3 | — | 3 | ||||||||||||||||||||
(7 | ) | General taxes | 41 | — | 41 | 24 | — | 24 | ||||||||||||||||||||
(8 | ) | Total Expenses | 122 | — | 122 | 99 | — | 99 | ||||||||||||||||||||
(9 | ) | Operating Income | 153 | — | 153 | 139 | — | 139 | ||||||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||||||
(10 | ) | Investment income | — | — | — | — | — | — | ||||||||||||||||||||
(11 | ) | Interest expense | (43 | ) | — | (43 | ) | (39 | ) | — | (39 | ) | ||||||||||||||||
(12 | ) | Capitalized financing costs | 7 | — | 7 | 14 | — | 14 | ||||||||||||||||||||
(13 | ) | Total Other Expense | (36 | ) | — | (36 | ) | (25 | ) | — | (25 | ) | ||||||||||||||||
(14 | ) | Income Before Income Taxes | 117 | — | 117 | 114 | — | 114 | ||||||||||||||||||||
(15 | ) | Income taxes | 43 | — | 43 | 42 | — | 42 | ||||||||||||||||||||
(16 | ) | Net Income | $ | 74 | $ | — | $ | 74 | $ | 72 | $ | — | $ | 72 | ||||||||||||||
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 24 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||||||||
Three Months Ended March 31, 2016 | Three Months Ended March 31, 2015 | |||||||||||||||||||||||||||
GAAP | Special Items | Operating -Non-GAAP | GAAP | Special Items | Operating - Non-GAAP | |||||||||||||||||||||||
(1 | ) | Revenues | $ | 1,304 | $ | — | $ | 1,304 | $ | 1,435 | $ | — | $ | 1,435 | ||||||||||||||
Expenses | ||||||||||||||||||||||||||||
(2 | ) | Fuel | 242 | (8 | ) | (c) | 234 | 367 | (22 | ) | (b,c) | 345 | ||||||||||||||||
(3 | ) | Purchased power | 350 | — | 350 | 398 | — | 398 | ||||||||||||||||||||
(4 | ) | Other operating expenses | 321 | 64 | (d) | 385 | 519 | (11 | ) | (a,d,g) | 508 | |||||||||||||||||
(5 | ) | Provision for depreciation | 102 | — | 102 | 96 | — | 96 | ||||||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | — | — | — | — | — | — | ||||||||||||||||||||
(7 | ) | General taxes | 39 | — | 39 | 41 | — | 41 | ||||||||||||||||||||
(8 | ) | Total Expenses | 1,054 | 56 | 1,110 | 1,421 | (33 | ) | 1,388 | |||||||||||||||||||
(9 | ) | Operating Income | 250 | (56 | ) | 194 | 14 | 33 | 47 | |||||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||||||
(10 | ) | Investment income | 15 | 6 | (e,f) | 21 | 12 | 6 | (f) | 18 | ||||||||||||||||||
(11 | ) | Interest expense | (47 | ) | — | (47 | ) | (48 | ) | — | (48 | ) | ||||||||||||||||
(12 | ) | Capitalized financing costs | 11 | — | 11 | 10 | — | 10 | ||||||||||||||||||||
(13 | ) | Total Other Expense | (21 | ) | 6 | (15 | ) | (26 | ) | 6 | (20 | ) | ||||||||||||||||
(14 | ) | Income (Loss) Before Income Taxes (Benefits) | 229 | (50 | ) | 179 | (12 | ) | 39 | 27 | ||||||||||||||||||
(15 | ) | Income taxes (benefits) | 85 | (19 | ) | 66 | (4 | ) | 14 | 10 | ||||||||||||||||||
(16 | ) | Net Income (Loss) | $ | 144 | $ | (31 | ) | $ | 113 | $ | (8 | ) | $ | 25 | $ | 17 | ||||||||||||
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 24 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". | |||||||||||||||||||||||||||
(c) | Merger accounting - commodity contracts: 2016 ($0.01 per share), ($8) million included in "Fuel". 2015 ($0.02 per share), ($11) million included in "Fuel". | |||||||||||||||||||||||||||
(d) | Mark-to-market adjustments: 2016 (($0.09) per share), $64 million included in "Other operating expenses". 2015 ($2) million included in "Other operating expenses". | |||||||||||||||||||||||||||
(e) | Impact of non-core asset sales/impairments: 2016 ($2) million included in "Investment income". | |||||||||||||||||||||||||||
(f) | Trust securities impairment: 2016 ($0.01 per share), $8 million included in "Investment income". 2015 ($0.01 per share), $6 million included in "Investment income". | |||||||||||||||||||||||||||
(g) | 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 424 million shares in the first three months of 2016 and 421 million shares in the first three months of 2015. | ||||||||||||||||||||||||||||
Three Months Ended March 31, 2016 | Three Months Ended March 31, 2015 | |||||||||||||||||||||||||||
GAAP | Special Items | Operating - Non-GAAP | GAAP | Special Items | Operating - Non-GAAP | |||||||||||||||||||||||
(1 | ) | Revenues | $ | (231 | ) | $ | — | $ | (231 | ) | $ | (338 | ) | $ | — | $ | (338 | ) | ||||||||||
Expenses | ||||||||||||||||||||||||||||
(2 | ) | Fuel | — | — | — | — | — | — | ||||||||||||||||||||
(3 | ) | Purchased power | (152 | ) | — | (152 | ) | (260 | ) | — | (260 | ) | ||||||||||||||||
(4 | ) | Other operating expenses | (87 | ) | — | (87 | ) | (94 | ) | — | (94 | ) | ||||||||||||||||
(5 | ) | Provision for depreciation | 15 | — | 15 | 14 | — | 14 | ||||||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | — | — | — | — | — | — | ||||||||||||||||||||
(7 | ) | General taxes | 15 | — | 15 | 14 | — | 14 | ||||||||||||||||||||
(8 | ) | Total Expenses | (209 | ) | — | (209 | ) | (326 | ) | — | (326 | ) | ||||||||||||||||
(9 | ) | Operating Loss | (22 | ) | — | (22 | ) | (12 | ) | — | (12 | ) | ||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||||||
(10 | ) | Investment income (loss) | 2 | — | 2 | (8 | ) | 4 | (a) | (4 | ) | |||||||||||||||||
(11 | ) | Interest expense | (51 | ) | — | (51 | ) | (48 | ) | — | (48 | ) | ||||||||||||||||
(12 | ) | Capitalized financing costs | 3 | — | 3 | 2 | — | 2 | ||||||||||||||||||||
(13 | ) | Total Other Expense | (46 | ) | — | (46 | ) | (54 | ) | 4 | (50 | ) | ||||||||||||||||
(14 | ) | Loss Before Income Taxes | (68 | ) | — | (68 | ) | (66 | ) | 4 | (62 | ) | ||||||||||||||||
(15 | ) | Income tax benefits | (13 | ) | — | (13 | ) | (16 | ) | 1 | (15 | ) | ||||||||||||||||
(16 | ) | Net Loss | $ | (55 | ) | $ | — | $ | (55 | ) | $ | (50 | ) | $ | 3 | $ | (47 | ) | ||||||||||
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 24 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||||||||
(a) | Impact of non-core asset sales/impairments: 2015 ($0.01 per share), $4 million included in "Investment income (loss)". | |||||||||||||||||||||||||||
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 424 million shares in the first three months of 2016 and 421 million shares in the first three months of 2015. | ||||||||||||||||||||||||||||
Earnings Per Share (EPS) | |||||||||||||||||||||||
(Reconciliation of GAAP to Operating (Non-GAAP) Earnings) | |||||||||||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||||||||
Three Months Ended March 31, 2016 | Competitive | FirstEnergy | |||||||||||||||||||||
Regulated | Regulated | Energy | Corporate / | Corp. | |||||||||||||||||||
Distribution | Transmission | Services | Other | Consolidated | |||||||||||||||||||
2016 Net Income - GAAP | $ | 165 | $ | 74 | $ | 144 | $ | (55 | ) | $ | 328 | ||||||||||||
2016 Basic EPS (avg. shares outstanding 424M) | $ | 0.39 | $ | 0.18 | $ | 0.34 | $ | (0.13 | ) | $ | 0.78 | ||||||||||||
Excluding Special Items: | |||||||||||||||||||||||
Regulatory charges | 0.09 | — | — | — | 0.09 | ||||||||||||||||||
Trust securities impairment | — | — | 0.01 | — | 0.01 | ||||||||||||||||||
Merger accounting - commodity contracts | — | — | 0.01 | — | 0.01 | ||||||||||||||||||
Mark-to-market adjustments | — | — | (0.09 | ) | — | (0.09 | ) | ||||||||||||||||
Total Special Items | $ | 0.09 | $ | — | $ | (0.07 | ) | $ | — | $ | 0.02 | ||||||||||||
Basic EPS - Operating (Non-GAAP) | $ | 0.48 | $ | 0.18 | $ | 0.27 | $ | (0.13 | ) | $ | 0.80 | ||||||||||||
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 | $ | (8 | ) | $ | (50 | ) | $ | 222 | |||||||||||
2015 Basic EPS (avg. shares outstanding 421M) | $ | 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 | $ | — | $ | 0.06 | $ | 0.01 | $ | 0.09 | |||||||||||||
Basic EPS - Operating (Non-GAAP) | $ | 0.52 | $ | 0.17 | $ | 0.04 | $ | (0.11 | ) | $ | 0.62 | ||||||||||||