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 |
FIRSTENERGY CORP. | |
Registrant | |
By: | /s/ Jason J. Lisowski |
Jason J. Lisowski Vice President, Controller and Chief Accounting Officer |
FirstEnergy Corp. | For Release: July 31, 2018 | |
76 South Main Street | ||
Akron, Ohio 44308 | ||
www.firstenergy.com | ||
News Media Contact: | Investor Contact: | |
Tricia Ingraham | Irene Prezelj | |
(330) 384-5247 | (330) 384-3859 |
Consolidated GAAP Earnings Per Share (EPS) to Operating (Non-GAAP) EPS* Reconciliation | |||||||||||||
Second Quarter | Year-To-Date | 2018 Estimates | |||||||||||
2018 | 2017 | 2018 | 2017 | Third Quarter | Full Year | ||||||||
Basic EPS (GAAP) | $ 0.28 | $ 0.39 | $ 2.86 | $ 0.86 | $ 0.57 - $ 0.67 | $ 3.74 - $4.04 | |||||||
Excluding Special Items*: | |||||||||||||
Regulatory charges | (0.17) | 0.01 | (0.16) | 0.03 | 0.01 | (0.14) | |||||||
Mark-to-market adjustments | 0 | 0 | (0.01) | 0 | 0 | (0.01) | |||||||
Exit of competitive generation | 0.01 | 0.11 | (1.88) | 0.22 | 0 | (1.87) | |||||||
Debt redemption costs | 0.21 | 0 | 0.21 | 0 | 0 | 0.21 | |||||||
Tax reform | 0.02 | 0 | 0.02 | 0 | 0 | 0.02 | |||||||
Impact of full dilution to 538M shares | 0.27 | (0.07) | 0.25 | (0.15) | 0.07 | 0.30 | |||||||
Total Special Items* | 0.34 | 0.05 | (1.57) | 0.10 | 0.08 | (1.49) | |||||||
Operating (non-GAAP) EPS | $ 0.62 | $ 0.44 | $ 1.29 | $ 0.96 | $0.65 - $0.75 | $2.25 - $2.55 | |||||||
Per share amounts for the special items and earnings drivers above are based on the after-tax effect of each item divided by number of shares outstanding assuming full impact of dilution from the $2.5 billion equity issuance in January 2018 (538M fully diluted shares). The current and deferred income tax effect was calculated by applying the subsidiaries’ statutory tax rate to the pretax amount if deductible/taxable. The income tax rates range from 21% to 29%, and 35% to 38% in the second quarter and first half of 2018 and 2017, respectively. |
FirstEnergy | ||||||||||
EPS Variance Analysis | Regulated | Regulated | Corporate / | Corp. | ||||||
(in millions, except per share amounts) | Distribution | Transmission | Other** | Consolidated | ||||||
2Q 2017 Net Income (Loss) attributable to Common Stockholders (GAAP) | $205 | $92 | $(123) | $174 | ||||||
2Q 2017 Basic Earnings (Loss) Per Share* (avg. shares outstanding 444M) | $0.46 | $0.21 | $(0.28) | $0.39 | ||||||
Special Items - 2017*** | ||||||||||
Impact of full dilution to 538M shares | (0.08) | (0.04) | 0.05 | (0.07) | ||||||
Regulatory charges | 0.01 | — | — | 0.01 | ||||||
Exit of competitive generation | — | — | 0.11 | 0.11 | ||||||
Total Special Items - 2Q 2017 | (0.07) | (0.04) | 0.16 | 0.05 | ||||||
2Q 2017 Operating Earnings (Loss) Per Share - Non-GAAP* (538M fully diluted shares) | $0.39 | $0.17 | $(0.12) | $0.44 | ||||||
Distribution Deliveries | 0.09 | — | — | 0.09 | ||||||
Transmission Margin | — | 0.02 | — | 0.02 | ||||||
Commodity Margin | 0.01 | — | 0.02 | 0.03 | ||||||
Net Operating and Miscellaneous Expenses | 0.08 | — | (0.01) | 0.07 | ||||||
Depreciation | (0.02) | — | — | (0.02) | ||||||
General Taxes | (0.01) | — | — | (0.01) | ||||||
Net Financing Costs | 0.01 | — | (0.01) | — | ||||||
2Q 2018 Operating Earnings (Loss) Per Share - Non-GAAP* (538M fully diluted shares) | $0.55 | $0.19 | $(0.12) | $0.62 | ||||||
Special Items - 2018*** | ||||||||||
Regulatory charges | 0.17 | — | — | 0.17 | ||||||
Exit of competitive generation | — | — | (0.01) | (0.01) | ||||||
Debt redemption costs | — | — | (0.21) | (0.21) | ||||||
Tax reform | (0.02) | — | — | (0.02) | ||||||
Impact of full dilution to 538M shares | 0.09 | 0.03 | (0.39) | (0.27) | ||||||
Total Special Items - 2Q 2018 | 0.24 | 0.03 | (0.61) | (0.34) | ||||||
2Q 2018 Basic Earnings (Loss) Per Share* (avg. shares outstanding 477M) | $0.79 | $0.22 | $(0.73) | $0.28 | ||||||
2Q 2018 Net Income (Loss) attributable to Common Stockholders (GAAP) | $377 | $104 | $(347) | $134 | ||||||
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 number of shares outstanding for the period assuming full impact of dilution from the $2.5 billion equity issuance in January 2018 (538M fully diluted shares). The current and deferred income tax effect was calculated by applying the subsidiaries' statutory tax rate to the pre-tax amount if deductible/taxable. The income tax rates range from 21% to 29% and 35% to 38% in the second quarter of 2018 and 2017, respectively. |
Estimate for Year 2018* | Estimate for Q3 of 2018* | |||||||||||||||
(In millions, except per share amounts) | Regulated Distribution | Regulated Transmission | Corporate / Other | FirstEnergy Corp. Consolidated | FirstEnergy Corp. Consolidated | |||||||||||
2018F Net Income attributable to Common Stockholders (GAAP) | $1,215 - $1,310 | $370 - $410 | $205 - $215 | $1,790 - $1,935 | $270 - $320 | |||||||||||
2018F Basic Earnings Per Share (avg. shares outstanding 479M) | $2.53 - $2.73 | $0.78 - $0.86 | $0.43 - $0.45 | $3.74 - $4.04 | $0.57 - $0.67 | |||||||||||
Excluding Special Items: | ||||||||||||||||
Regulatory charges | (0.14) | — | — | (0.14) | 0.01 | |||||||||||
Mark-to-market adjustments | — | — | (0.01) | (0.01) | — | |||||||||||
Exit of competitive generation | — | — | (1.87) | (1.87) | — | |||||||||||
Debt redemption costs | — | — | 0.21 | 0.21 | — | |||||||||||
Tax reform | 0.02 | — | — | 0.02 | — | |||||||||||
Impact of full dilution to 538M shares | (0.30) | (0.09) | 0.69 | 0.30 | 0.07 | |||||||||||
Total Special Items** | $(0.42) | $(0.09) | $(0.98) | $(1.49) | $0.08 | |||||||||||
2018F Operating Earnings (Loss) Per Share - Non-GAAP (538M fully diluted shares) | $2.11 - $2.31 | $0.69 - $0.77 | $(0.55) - $(0.53) | $2.25 - $2.55 | $0.65 - $0.75 | |||||||||||
* Per share amounts for the special items above are based on the after-tax effect of each item divided by the number of shares outstanding for the period assuming full impact of dilution from the $2.5 billion equity issuance in January 2018 (538M fully diluted shares). The current and deferred income tax effect was calculated by applying the subsidiaries' statutory tax rate to the pre-tax amount if deductible/taxable. The income tax rates range from 21% to 29%. ** See page 30 for descriptions regarding special items. |
Regulated Distribution - GAAP earnings for the second quarter of 2018 were $377 million, or $0.79 per basic share, compared with second quarter 2017 GAAP earnings of $205 million, or $0.46 per basic share. Operating (non-GAAP) earnings, excluding special items, were $0.55 per share for the second quarter of 2018 compared with $0.39 per share for the second quarter of 2017. | |||||||
EPS Variance Analysis | |||||||
(In millions, except per share amounts) | |||||||
2Q 2017 Net Income attributable to Common Stockholders (GAAP) | $205 | ||||||
2Q 2017 Basic Earnings Per Share (avg. shares outstanding 444M) | $0.46 | ||||||
Special Items - 2017* | (0.07) | ||||||
2Q 2017 Operating Earnings Per Share - Non-GAAP (538M fully diluted shares) | $0.39 | ||||||
Distribution Deliveries | 0.09 | ||||||
Regulated Commodity Margin | 0.01 | ||||||
Net Operating and Miscellaneous Expenses | 0.08 | ||||||
Depreciation | (0.02) | ||||||
General Taxes | (0.01) | ||||||
Net Financing Costs | 0.01 | ||||||
2Q 2018 Operating Earnings Per Share - Non-GAAP (538M fully diluted shares) | $0.55 | ||||||
Special Items - 2018* | 0.24 | ||||||
2Q 2018 Basic Earnings Per Share (avg. shares outstanding 477M) | $0.79 | ||||||
2Q 2018 Net Income attributable to Common Stockholders (GAAP) | $377 | ||||||
*See pages 19-30 for additional details on Special Items. |
• | Distribution Deliveries - Total distribution deliveries increased earnings $0.09 per share primarily due to higher weather-related and industrial usage, and the true-up of prior deferrals resulting from rate orders issued in the second quarter of 2018. Total deliveries increased 1,374,000 megawatt-hours (MWH), or 4.0%. Sales to residential customers increased 959,000 MWH, or 8.6%, and sales to commercial customers increased 160,000 MWH, or 1.6%. Cooling-degree-days were 22% above the same period last year and 30% above normal and heating-degree-days were 33% above the same period last year and 5% above normal. Sales to industrial customers increased 255,000 MWH, or 2.0%, primarily due to higher usage in the shale gas and steel sectors. |
• | Commodity Margin - Higher commodity margin at Monongahela Power Company (MP) increased earnings $0.01 per share, primarily due to higher weather-related usage in West Virginia. |
• | Net Operating and Miscellaneous Expenses - Lower expenses increased earnings $0.08 per share, primarily due to lower pension and OPEB costs and a favorable court ruling regarding the recoverability of renewable energy credits (RECs) in Ohio. |
• | Depreciation - Higher depreciation expense reduced earnings $0.02 per share, primarily due to a higher asset base. |
• | General Taxes - Higher general taxes reduced earnings $0.01 per share, primarily due to higher revenue-related taxes. |
• | Net Financing Costs - Lower net financing costs increased earnings $0.01 per share, primarily reflecting lower interest expense as a result of various debt maturities. |
• | Special Items - In the second quarter of 2018 and 2017, Regulated Distribution special items totaled $(0.24) per share and $(0.07) per share, respectively, in each quarter, as summarized in the following tables. Additional details regarding special items can be found on page 30. |
Regulated Distribution Special Items - 2Q 2018 | EPS | |||||
Regulatory charges | $ | (0.17 | ) | |||
Tax reform | 0.02 | |||||
Impact of full dilution to 538M shares | (0.09 | ) | ||||
$ | (0.24 | ) | ||||
Regulated Distribution Special Items - 2Q 2017 | EPS | |||||
Impact of full dilution to 538M shares | $ | (0.08 | ) | |||
Regulatory charges | 0.01 | |||||
$ | (0.07 | ) | ||||
Regulated Transmission - GAAP earnings for the second quarter of 2018 were $104 million, or $0.22 per basic share, compared with second quarter 2017 GAAP earnings of $92 million, or $0.21 per basic share. Operating (non-GAAP) earnings, excluding special items, were $0.19 per share for the second quarter of 2018 compared with $0.17 per share for the second quarter of 2017. | |||||||
EPS Variance Analysis | |||||||
(In millions, except per share amounts) | |||||||
2Q 2017 Net Income attributable to Common Stockholders (GAAP) | $92 | ||||||
2Q 2017 Basic Earnings Per Share (avg. shares outstanding 444M) | $0.21 | ||||||
Special Items - 2017* | (0.04) | ||||||
2Q 2017 Operating Earnings Per Share - Non-GAAP (538M fully diluted shares) | $0.17 | ||||||
Transmission Margin | 0.02 | ||||||
2Q 2018 Operating Earnings Per Share - Non-GAAP (538M fully diluted shares) | $0.19 | ||||||
Special Items - 2018* | 0.03 | ||||||
2Q 2018 Basic Earnings Per Share (avg. shares outstanding 477M) | $0.22 | ||||||
2Q 2018 Net Income attributable to Common Stockholders (GAAP) | $104 | ||||||
*See pages 19-30 for additional details on Special Items. | |||||||
• | Transmission Margin - Higher transmission margin increased earnings $0.02 per share, primarily due to the implementation of approved settlement rates at Jersey Central Power & Light (JCP&L) and higher rate base at Mid-Atlantic Interstate Transmission, LLC (MAIT) and American Transmission Systems, Incorporated (ATSI). |
• | Special Items - In the second quarter of 2018 and 2017, Regulated Transmission special items were $(0.03) per share and ($0.04) per share, respectively, associated with the impact of full dilution to 538 million shares. Descriptions of special items can be found on page 30. |
Corporate / Other - GAAP losses for the second quarter of 2018 were $(347) million, or $(0.73) per basic share, compared with second quarter 2017 GAAP losses of $(123) million, or $(0.28) per basic share. Operating (non-GAAP) losses, excluding special items, were $(0.12) per share for the second quarter of 2018 and 2017. | |||||||
EPS Variance Analysis | |||||||
(In millions, except per share amounts) | |||||||
2Q 2017 Net Loss attributable to Common Stockholders (GAAP) | $(123) | ||||||
2Q 2017 Basic Loss Per Share (avg. shares outstanding 444M) | $(0.28) | ||||||
Special Items - 2017* | 0.16 | ||||||
2Q 2017 Operating Loss Per Share - Non-GAAP (538M fully diluted shares) | $(0.12) | ||||||
Commodity Margin | 0.02 | ||||||
Net Operating and Miscellaneous Expenses | (0.01) | ||||||
Net Financing Costs | (0.01) | ||||||
2Q 2018 Operating Loss Per Share - Non-GAAP (538M fully diluted shares) | $(0.12) | ||||||
Special Items - 2018* | (0.61) | ||||||
2Q 2018 Basic Loss Per Share (avg. shares outstanding 477M) | $(0.73) | ||||||
2Q 2018 Net Loss attributable to Common Stockholders (GAAP) | $(347) | ||||||
*See pages 19-30 for additional details on Special Items. | |||||||
• | Commodity Margin - Higher commodity margin from the Pleasants Power Station increased results $0.02 per share, primarily as a result of higher market prices in the second quarter of 2018. |
• | Net Operating and Miscellaneous Expenses - Higher expenses decreased results $0.01 per share. |
• | Net Financing Costs - Higher net financing costs decreased results $0.01 per share, primarily due to the issuance of $3 billion of FE Corp. senior notes in June 2017, partially offset by debt redemptions at AE Supply and Allegheny Generating Company (AGC) during the second quarter of 2018. |
• | Special Items - In the second quarter of 2018 and 2017, Corporate / Other special items totaled $0.61 per share and $0.16 per share, respectively, as summarized in the following table on page 8. Descriptions of special items can be found on page 30. |
Corporate / Other Special Items - 2Q 2018 | EPS | |||||
Exit of competitive generation | $ | 0.01 | ||||
Debt redemption costs | 0.21 | |||||
Impact of full dilution to 538M shares | 0.39 | |||||
$ | 0.61 | |||||
Corporate / Other Special Items - 2Q 2017 | EPS | |||||
Impact of full dilution to 538M shares | $ | 0.05 | ||||
Exit of competitive generation | 0.11 | |||||
$ | 0.16 | |||||
Irene M. Prezelj | Jake M. Mackin | |
Vice President, Investor Relations | Manager, Investor Relations | |
(330) 384-3859 | (330) 384-4829 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||
(1 | ) | Regulated distribution | $ | 2,352 | $ | 2,271 | $ | 81 | $ | 4,928 | $ | 4,771 | $ | 157 | |||||||||||||||
(2 | ) | Regulated transmission | 341 | 327 | 14 | 664 | 640 | 24 | |||||||||||||||||||||
(3 | ) | Corporate / Other | 11 | 26 | (15 | ) | 88 | 68 | 20 | ||||||||||||||||||||
(4 | ) | Total Revenues | 2,704 | 2,624 | 80 | 5,680 | 5,479 | 201 | |||||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||||||||
(5 | ) | Fuel | 177 | 163 | 14 | 364 | 367 | (3 | ) | ||||||||||||||||||||
(6 | ) | Purchased power | 698 | 650 | 48 | 1,523 | 1,441 | 82 | |||||||||||||||||||||
(7 | ) | Other operating expenses | 705 | 675 | 30 | 1,667 | 1,332 | 335 | |||||||||||||||||||||
(8 | ) | Provision for depreciation | 299 | 254 | 45 | 593 | 504 | 89 | |||||||||||||||||||||
(9 | ) | Amortization (deferral) of regulatory assets, net | (107 | ) | 78 | (185 | ) | (255 | ) | 161 | (416 | ) | |||||||||||||||||
(10 | ) | General taxes | 245 | 230 | 15 | 504 | 472 | 32 | |||||||||||||||||||||
(11 | ) | Total Operating Expenses | 2,017 | 2,050 | (33 | ) | 4,396 | 4,277 | 119 | ||||||||||||||||||||
(12 | ) | Operating Income | 687 | 574 | 113 | 1,284 | 1,202 | 82 | |||||||||||||||||||||
Other Income (Expense) | |||||||||||||||||||||||||||||
(13 | ) | Miscellaneous income, net | 48 | 11 | 37 | 115 | 25 | 90 | |||||||||||||||||||||
(14 | ) | Interest expense | (369 | ) | (248 | ) | (121 | ) | (619 | ) | (493 | ) | (126 | ) | |||||||||||||||
(15 | ) | Capitalized financing costs | 16 | 14 | 2 | 31 | 26 | 5 | |||||||||||||||||||||
(16 | ) | Total Other Expense | (305 | ) | (223 | ) | (82 | ) | (473 | ) | (442 | ) | (31 | ) | |||||||||||||||
(17 | ) | Income Before Income Taxes | 382 | 351 | 31 | 811 | 760 | 51 | |||||||||||||||||||||
(18 | ) | Income taxes | 115 | 132 | (17 | ) | 367 | 284 | 83 | ||||||||||||||||||||
(19 | ) | Income From Continuing Operations | 267 | 219 | 48 | 444 | 476 | (32 | ) | ||||||||||||||||||||
(20 | ) | Discontinued operations (net of income taxes) | 32 | (45 | ) | 77 | 1,224 | (97 | ) | 1,321 | |||||||||||||||||||
(21 | ) | Net Income | $ | 299 | $ | 174 | $ | 125 | $ | 1,668 | $ | 379 | $ | 1,289 | |||||||||||||||
(22 | ) | Income Allocated to Preferred Stockholders | 165 | — | 165 | 304 | — | 304 | |||||||||||||||||||||
(23 | ) | Net Income Attributable to Common Stockholders | $ | 134 | $ | 174 | $ | (40 | ) | $ | 1,364 | $ | 379 | $ | 985 | ||||||||||||||
Earnings Per Share of Common Stock | |||||||||||||||||||||||||||||
(24 | ) | Basic - Continuing Operations | $ | 0.22 | $ | 0.49 | $ | (0.27 | ) | $ | 0.29 | $ | 1.07 | $ | (0.78 | ) | |||||||||||||
(25 | ) | Basic - Discontinued Operations | 0.06 | (0.10 | ) | 0.16 | 2.57 | (0.21 | ) | 2.78 | |||||||||||||||||||
(26 | ) | Basic - Net Income Attributable to Common Stockholders | $ | 0.28 | $ | 0.39 | $ | (0.11 | ) | $ | 2.86 | $ | 0.86 | $ | 2.00 | ||||||||||||||
(27 | ) | Diluted - Continuing Operations | $ | 0.22 | $ | 0.49 | $ | (0.27 | ) | $ | 0.29 | $ | 1.07 | $ | (0.78 | ) | |||||||||||||
(28 | ) | Diluted - Discontinued Operations | 0.06 | (0.10 | ) | 0.16 | 2.56 | (0.22 | ) | 2.78 | |||||||||||||||||||
(29 | ) | Diluted - Net Income Attributable to Common Stockholders | $ | 0.28 | $ | 0.39 | $ | (0.11 | ) | $ | 2.85 | $ | 0.85 | $ | 2.00 | ||||||||||||||
Weighted Average Number of Common | |||||||||||||||||||||||||||||
Shares Outstanding | |||||||||||||||||||||||||||||
(30 | ) | Basic | 477 | 444 | 33 | 477 | 443 | 34 | |||||||||||||||||||||
(31 | ) | Diluted | 479 | 445 | 34 | 478 | 444 | 34 | |||||||||||||||||||||
Three Months Ended June 30, 2018 | |||||||||||||||||||
Regulated | Regulated | Corporate / | FirstEnergy | ||||||||||||||||
Distribution (a) | Transmission (b) | Other (c) | Consolidated | ||||||||||||||||
Revenues | |||||||||||||||||||
(1 | ) | Electric sales | $ | 2,291 | $ | 336 | $ | 31 | $ | 2,658 | |||||||||
(2 | ) | Other | 61 | 5 | (20 | ) | 46 | ||||||||||||
(3 | ) | Total Revenues | 2,352 | 341 | 11 | 2,704 | |||||||||||||
Operating Expenses | |||||||||||||||||||
(4 | ) | Fuel | 128 | — | 49 | 177 | |||||||||||||
(5 | ) | Purchased power | 699 | — | (1 | ) | 698 | ||||||||||||
(6 | ) | Other operating expenses | 666 | 60 | (21 | ) | 705 | ||||||||||||
(7 | ) | Provision for depreciation | 200 | 62 | 37 | 299 | |||||||||||||
(8 | ) | Deferral of regulatory assets, net | (107 | ) | — | — | (107 | ) | |||||||||||
(9 | ) | General taxes | 184 | 48 | 13 | 245 | |||||||||||||
(10 | ) | Total Operating Expenses | 1,770 | 170 | 77 | 2,017 | |||||||||||||
(11 | ) | Operating Income (Loss) | 582 | 171 | (66 | ) | 687 | ||||||||||||
Other Income (Expense) | |||||||||||||||||||
(12 | ) | Miscellaneous income (expense), net | 56 | 3 | (11 | ) | 48 | ||||||||||||
(13 | ) | Interest expense | (129 | ) | (42 | ) | (198 | ) | (369 | ) | |||||||||
(14 | ) | Capitalized financing costs | 6 | 10 | — | 16 | |||||||||||||
(15 | ) | Total Other Expense | (67 | ) | (29 | ) | (209 | ) | (305 | ) | |||||||||
(16 | ) | Income (Loss) Before Income Taxes (Benefits) | 515 | 142 | (275 | ) | 382 | ||||||||||||
(17 | ) | Income taxes (benefits) | 138 | 38 | (61 | ) | 115 | ||||||||||||
(18 | ) | Income (Loss) From Continuing Operations | 377 | 104 | (214 | ) | 267 | ||||||||||||
(19 | ) | Discontinued operations (net of income taxes) | — | — | 32 | 32 | |||||||||||||
(20 | ) | Net Income (Loss) | $ | 377 | $ | 104 | $ | (182 | ) | $ | 299 | ||||||||
(21 | ) | Income Allocated to Preferred Stockholders | — | — | 165 | 165 | |||||||||||||
(22 | ) | Net Income (Loss) Attributable to Common Stockholders | $ | 377 | $ | 104 | $ | (347 | ) | $ | 134 | ||||||||
(a) | Revenues are primarily derived from the delivery of electricity within FE'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 and the deferral and amortization of certain fuel costs. | ||||||||||||||||||
(b) | Revenues are primarily derived from rates that recover costs and provide a return on transmission capital investment. Except for the recovery of the PATH abandoned project regulatory asset, these revenues are primarily for transmission services provided pursuant to the PJM Tariff to Load Serving Entities (LSEs). The segment's results also reflect the net transmission expenses related to the delivery of electricity on FE's transmission facilities. | ||||||||||||||||||
(c) | Contains corporate support not charged to FE's subsidiaries, interest expense on stand-alone holding company debt, corporate income taxes and other businesses that do not constitute an operating segment, and discontinued operations are categorized as Corporate/Other. | ||||||||||||||||||
Three Months Ended June 30, 2017 | ||||||||||||||||||||
Regulated | Regulated | Corporate / | FirstEnergy | |||||||||||||||||
Distribution (a) | Transmission (b) | Other (c) | Consolidated | |||||||||||||||||
Revenues | ||||||||||||||||||||
(1 | ) | Electric sales | $ | 2,206 | $ | 323 | $ | 32 | $ | 2,561 | ||||||||||
(2 | ) | Other | 65 | 4 | (6 | ) | 63 | |||||||||||||
(3 | ) | Total Revenues | 2,271 | 327 | 26 | 2,624 | ||||||||||||||
Operating Expenses | ||||||||||||||||||||
(4 | ) | Fuel | 121 | — | 42 | 163 | ||||||||||||||
(5 | ) | Purchased power | 646 | — | 4 | 650 | ||||||||||||||
(6 | ) | Other operating expenses | 634 | 50 | (9 | ) | 675 | |||||||||||||
(7 | ) | Provision for depreciation | 179 | 54 | 21 | 254 | ||||||||||||||
(8 | ) | Amortization of regulatory assets, net | 75 | 3 | — | 78 | ||||||||||||||
(9 | ) | General taxes | 175 | 43 | 12 | 230 | ||||||||||||||
(10 | ) | Total Operating Expenses | 1,830 | 150 | 70 | 2,050 | ||||||||||||||
(11 | ) | Operating Income (Loss) | 441 | 177 | (44 | ) | 574 | |||||||||||||
Other Income (Expense) | ||||||||||||||||||||
(12 | ) | Miscellaneous income (expense), net | 14 | — | (3 | ) | 11 | |||||||||||||
(13 | ) | Interest expense | (134 | ) | (39 | ) | (75 | ) | (248 | ) | ||||||||||
(14 | ) | Capitalized financing costs | 5 | 7 | 2 | 14 | ||||||||||||||
(15 | ) | Total Other Expense | (115 | ) | (32 | ) | (76 | ) | (223 | ) | ||||||||||
(16 | ) | Income (Loss) Before Income Taxes (Benefits) | 326 | 145 | (120 | ) | 351 | |||||||||||||
(17 | ) | Income taxes (benefits) | 121 | 53 | (42 | ) | 132 | |||||||||||||
(18 | ) | Income (Loss) From Continuing Operations | 205 | 92 | (78 | ) | 219 | |||||||||||||
(19 | ) | Discontinued operations (net of income taxes) | — | — | (45 | ) | (45 | ) | ||||||||||||
(20 | ) | Net Income (Loss) | $ | 205 | $ | 92 | $ | (123 | ) | $ | 174 | |||||||||
(21 | ) | Income Allocated to Preferred Stockholders | — | — | — | — | ||||||||||||||
(22 | ) | Net Income (Loss) Attributable to Common Stockholders | $ | 205 | $ | 92 | $ | (123 | ) | $ | 174 | |||||||||
(a) | Revenues are primarily derived from the delivery of electricity within FE'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 and the deferral and amortization of certain fuel costs. | |||||||||||||||||||
(b) | Revenues are primarily derived from rates that recover costs and provide a return on transmission capital investment. Except for the recovery of the PATH abandoned project regulatory asset, these revenues are primarily for transmission services provided pursuant to the PJM Tariff to Load Serving Entities (LSEs). The segment's results also reflect the net transmission expenses related to the delivery of electricity on FE's transmission facilities. | |||||||||||||||||||
(c) | Contains corporate support not charged to FE's subsidiaries, interest expense on stand-alone holding company debt, corporate income taxes and other businesses that do not constitute an operating segment, and discontinued operations are categorized as Corporate/Other. | |||||||||||||||||||
Changes Between the Three Months Ended June 30, 2018 and the Three Months Ended June 30, 2017 | ||||||||||||||||||||
Regulated | Regulated | Corporate / | FirstEnergy | |||||||||||||||||
Distribution (a) | Transmission (b) | Other (c) | Consolidated | |||||||||||||||||
Revenues | ||||||||||||||||||||
(1 | ) | Electric sales | $ | 85 | $ | 13 | $ | (1 | ) | $ | 97 | |||||||||
(2 | ) | Other | (4 | ) | 1 | (14 | ) | (17 | ) | |||||||||||
(3 | ) | Total Revenues | 81 | 14 | (15 | ) | 80 | |||||||||||||
Operating Expenses | ||||||||||||||||||||
(4 | ) | Fuel | 7 | — | 7 | 14 | ||||||||||||||
(5 | ) | Purchased power | 53 | — | (5 | ) | 48 | |||||||||||||
(6 | ) | Other operating expenses | 32 | 10 | (12 | ) | 30 | |||||||||||||
(7 | ) | Provision for depreciation | 21 | 8 | 16 | 45 | ||||||||||||||
(8 | ) | Amortization (deferral) of regulatory assets, net | (182 | ) | (3 | ) | — | (185 | ) | |||||||||||
(9 | ) | General taxes | 9 | 5 | 1 | 15 | ||||||||||||||
(10 | ) | Total Operating Expenses | (60 | ) | 20 | 7 | (33 | ) | ||||||||||||
(11 | ) | Operating Income (Loss) | 141 | (6 | ) | (22 | ) | 113 | ||||||||||||
Other Income (Expense) | ||||||||||||||||||||
(12 | ) | Miscellaneous income (expense), net | 42 | 3 | (8 | ) | 37 | |||||||||||||
(13 | ) | Interest expense | 5 | (3 | ) | (123 | ) | (121 | ) | |||||||||||
(14 | ) | Capitalized financing costs | 1 | 3 | (2 | ) | 2 | |||||||||||||
(15 | ) | Total Other Expense | 48 | 3 | (133 | ) | (82 | ) | ||||||||||||
(16 | ) | Income (Loss) Before Income Taxes (Benefits) | 189 | (3 | ) | (155 | ) | 31 | ||||||||||||
(17 | ) | Income taxes (benefits) | 17 | (15 | ) | (19 | ) | (17 | ) | |||||||||||
(18 | ) | Income (Loss) From Continuing Operations | 172 | 12 | (136 | ) | 48 | |||||||||||||
(19 | ) | Discontinued operations (net of income taxes) | — | — | 77 | 77 | ||||||||||||||
(20 | ) | Net Income (Loss) | $ | 172 | $ | 12 | $ | (59 | ) | $ | 125 | |||||||||
(21 | ) | Income Allocated to Preferred Stockholders | — | — | 165 | 165 | ||||||||||||||
(22 | ) | Net Income (Loss) Attributable to Common Stockholders | $ | 172 | $ | 12 | $ | (224 | ) | $ | (40 | ) | ||||||||
(a) | Revenues are primarily derived from the delivery of electricity within FE'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 and the deferral and amortization of certain fuel costs. | |||||||||||||||||||
(b) | Revenues are primarily derived from rates that recover costs and provide a return on transmission capital investment. Except for the recovery of the PATH abandoned project regulatory asset, these revenues are primarily for transmission services provided pursuant to the PJM Tariff to Load Serving Entities (LSEs). The segment's results also reflect the net transmission expenses related to the delivery of electricity on FE's transmission facilities. | |||||||||||||||||||
(c) | Contains corporate support not charged to FE's subsidiaries, interest expense on stand-alone holding company debt, corporate income taxes and other businesses that do not constitute an operating segment, and discontinued operations are categorized as Corporate/Other. | |||||||||||||||||||
Six Months Ended June 30, 2018 | |||||||||||||||||||
Regulated | Regulated | Corporate / | FirstEnergy | ||||||||||||||||
Distribution (a) | Transmission (b) | Other (c) | Consolidated | ||||||||||||||||
Revenues | |||||||||||||||||||
(1 | ) | Electric sales | $ | 4,799 | $ | 655 | $ | 125 | $ | 5,579 | |||||||||
(2 | ) | Other | 129 | 9 | (37 | ) | 101 | ||||||||||||
(3 | ) | Total Revenues | 4,928 | 664 | 88 | 5,680 | |||||||||||||
Operating Expenses | |||||||||||||||||||
(4 | ) | Fuel | 267 | — | 97 | 364 | |||||||||||||
(5 | ) | Purchased power | 1,518 | — | 5 | 1,523 | |||||||||||||
(6 | ) | Other operating expenses | 1,564 | 114 | (11 | ) | 1,667 | ||||||||||||
(7 | ) | Provision for depreciation | 396 | 123 | 74 | 593 | |||||||||||||
(8 | ) | Amortization (deferral) regulatory assets, net | (259 | ) | 4 | — | (255 | ) | |||||||||||
(9 | ) | General taxes | 379 | 95 | 30 | 504 | |||||||||||||
(10 | ) | Total Operating Expenses | 3,865 | 336 | 195 | 4,396 | |||||||||||||
(11 | ) | Operating Income (Loss) | 1,063 | 328 | (107 | ) | 1,284 | ||||||||||||
Other Income (Expense) | |||||||||||||||||||
(12 | ) | Miscellaneous income (expense), net | 112 | 7 | (4 | ) | 115 | ||||||||||||
(13 | ) | Interest expense | (257 | ) | (81 | ) | (281 | ) | (619 | ) | |||||||||
(14 | ) | Capitalized financing costs | 12 | 19 | — | 31 | |||||||||||||
(15 | ) | Total Other Expense | (133 | ) | (55 | ) | (285 | ) | (473 | ) | |||||||||
(16 | ) | Income (Loss) Before Income Taxes | 930 | 273 | (392 | ) | 811 | ||||||||||||
(17 | ) | Income taxes | 231 | 70 | 66 | 367 | |||||||||||||
(18 | ) | Income (Loss) From Continuing Operations | 699 | 203 | (458 | ) | 444 | ||||||||||||
(19 | ) | Discontinued operations (net of income taxes) | — | — | 1,224 | 1,224 | |||||||||||||
(20 | ) | Net Income | $ | 699 | $ | 203 | $ | 766 | $ | 1,668 | |||||||||
(21 | ) | Income Allocated to Preferred Stockholders | — | — | 304 | 304 | |||||||||||||
(22 | ) | Net Income Attributable to Common Stockholders | $ | 699 | $ | 203 | $ | 462 | $ | 1,364 | |||||||||
(a) | Revenues are primarily derived from the delivery of electricity within FE'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 and the deferral and amortization of certain fuel costs. | ||||||||||||||||||
(b) | Revenues are primarily derived from rates that recover costs and provide a return on transmission capital investment. Except for the recovery of the PATH abandoned project regulatory asset, these revenues are primarily for transmission services provided pursuant to the PJM Tariff to Load Serving Entities (LSEs). The segment's results also reflect the net transmission expenses related to the delivery of electricity on FE's transmission facilities. | ||||||||||||||||||
(c) | Contains corporate support not charged to FE's subsidiaries, interest expense on stand-alone holding company debt, corporate income taxes and other businesses that do not constitute an operating segment, and discontinued operations are categorized as Corporate/Other. | ||||||||||||||||||
Six Months Ended June 30, 2017 | ||||||||||||||||||||
Regulated | Regulated | Corporate / | FirstEnergy | |||||||||||||||||
Distribution (a) | Transmission (b) | Other (c) | Consolidated | |||||||||||||||||
Revenues | ||||||||||||||||||||
(1 | ) | Electric sales | $ | 4,640 | $ | 631 | $ | 91 | $ | 5,362 | ||||||||||
(2 | ) | Other | 131 | 9 | (23 | ) | 117 | |||||||||||||
(3 | ) | Total Revenues | 4,771 | 640 | 68 | 5,479 | ||||||||||||||
Operating Expenses | ||||||||||||||||||||
(4 | ) | Fuel | 262 | — | 105 | 367 | ||||||||||||||
(5 | ) | Purchased power | 1,436 | — | 5 | 1,441 | ||||||||||||||
(6 | ) | Other operating expenses | 1,268 | 95 | (31 | ) | 1,332 | |||||||||||||
(7 | ) | Provision for depreciation | 357 | 105 | 42 | 504 | ||||||||||||||
(8 | ) | Amortization of regulatory assets, net | 156 | 5 | — | 161 | ||||||||||||||
(9 | ) | General taxes | 359 | 85 | 28 | 472 | ||||||||||||||
(10 | ) | Total Operating Expenses | 3,838 | 290 | 149 | 4,277 | ||||||||||||||
(11 | ) | Operating Income (Loss) | 933 | 350 | (81 | ) | 1,202 | |||||||||||||
Other Income (Expense) | ||||||||||||||||||||
(12 | ) | Miscellaneous income (expense), net | 29 | — | (4 | ) | 25 | |||||||||||||
(13 | ) | Interest expense | (272 | ) | (78 | ) | (143 | ) | (493 | ) | ||||||||||
(14 | ) | Capitalized financing costs | 11 | 13 | 2 | 26 | ||||||||||||||
(15 | ) | Total Other Expense | (232 | ) | (65 | ) | (145 | ) | (442 | ) | ||||||||||
(16 | ) | Income (Loss) Before Income Taxes (Benefits) | 701 | 285 | (226 | ) | 760 | |||||||||||||
(17 | ) | Income taxes (benefits) | 259 | 105 | (80 | ) | 284 | |||||||||||||
(18 | ) | Income (Loss) From Continuing Operations | 442 | 180 | (146 | ) | 476 | |||||||||||||
(19 | ) | Discontinued operations (net of income taxes) | — | — | (97 | ) | (97 | ) | ||||||||||||
(20 | ) | Net Income (Loss) | $ | 442 | $ | 180 | $ | (243 | ) | $ | 379 | |||||||||
(21 | ) | Income Allocated to Preferred Stockholders | — | — | — | — | ||||||||||||||
(22 | ) | Net Income (Loss) Attributable to Common Stockholders | $ | 442 | $ | 180 | $ | (243 | ) | $ | 379 | |||||||||
(a) | Revenues are primarily derived from the delivery of electricity within FE'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 and the deferral and amortization of certain fuel costs. | |||||||||||||||||||
(b) | Revenues are primarily derived from rates that recover costs and provide a return on transmission capital investment. Except for the recovery of the PATH abandoned project regulatory asset, these revenues are primarily for transmission services provided pursuant to the PJM Tariff to Load Serving Entities (LSEs). The segment's results also reflect the net transmission expenses related to the delivery of electricity on FE's transmission facilities. | |||||||||||||||||||
(c) | Contains corporate support not charged to FE's subsidiaries, interest expense on stand-alone holding company debt, corporate income taxes and other businesses that do not constitute an operating segment, and discontinued operations are categorized as Corporate/Other. | |||||||||||||||||||
Changes Between the First Six Months of 2018 and the First Six Months of 2017 | ||||||||||||||||||||
Regulated | Regulated | Corporate / | FirstEnergy | |||||||||||||||||
Distribution (a) | Transmission (b) | Other (c) | Consolidated | |||||||||||||||||
Revenues | ||||||||||||||||||||
(1 | ) | Electric sales | $ | 159 | $ | 24 | $ | 34 | $ | 217 | ||||||||||
(2 | ) | Other | (2 | ) | — | (14 | ) | (16 | ) | |||||||||||
(3 | ) | Total Revenues | 157 | 24 | 20 | 201 | ||||||||||||||
Operating Expenses | ||||||||||||||||||||
(4 | ) | Fuel | 5 | — | (8 | ) | (3 | ) | ||||||||||||
(5 | ) | Purchased power | 82 | — | — | 82 | ||||||||||||||
(6 | ) | Other operating expenses | 296 | 19 | 20 | 335 | ||||||||||||||
(7 | ) | Provision for depreciation | 39 | 18 | 32 | 89 | ||||||||||||||
(8 | ) | Amortization (deferral) of regulatory assets, net | (415 | ) | (1 | ) | — | (416 | ) | |||||||||||
(9 | ) | General taxes | 20 | 10 | 2 | 32 | ||||||||||||||
(10 | ) | Total Operating Expenses | 27 | 46 | 46 | 119 | ||||||||||||||
(11 | ) | Operating Income (Loss) | 130 | (22 | ) | (26 | ) | 82 | ||||||||||||
Other Income (Expense) | ||||||||||||||||||||
(12 | ) | Miscellaneous income (expense), net | 83 | 7 | — | 90 | ||||||||||||||
(13 | ) | Interest expense | 15 | (3 | ) | (138 | ) | (126 | ) | |||||||||||
(14 | ) | Capitalized financing costs | 1 | 6 | (2 | ) | 5 | |||||||||||||
(15 | ) | Total Other Expense | 99 | 10 | (140 | ) | (31 | ) | ||||||||||||
(16 | ) | Income (Loss) Before Income Taxes (Benefits) | 229 | (12 | ) | (166 | ) | 51 | ||||||||||||
(17 | ) | Income taxes | (28 | ) | (35 | ) | 146 | 83 | ||||||||||||
(18 | ) | Income (Loss) From Continuing Operations | 257 | 23 | (312 | ) | (32 | ) | ||||||||||||
(19 | ) | Discontinued operations (net of income taxes) | — | — | 1,321 | 1,321 | ||||||||||||||
(20 | ) | Net Income (Loss) | $ | 257 | $ | 23 | $ | 1,009 | $ | 1,289 | ||||||||||
(21 | ) | Income Allocated to Preferred Stockholders | — | — | 304 | 304 | ||||||||||||||
(22 | ) | Net Income (Loss) Attributable to Common Stockholders | $ | 257 | $ | 23 | $ | 705 | $ | 985 | ||||||||||
(a) | Revenues are primarily derived from the delivery of electricity within FE'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 and the deferral and amortization of certain fuel costs. | |||||||||||||||||||
(b) | Revenues are primarily derived from rates that recover costs and provide a return on transmission capital investment. Except for the recovery of the PATH abandoned project regulatory asset, these revenues are primarily for transmission services provided pursuant to the PJM Tariff to Load Serving Entities (LSEs). The segment's results also reflect the net transmission expenses related to the delivery of electricity on FE's transmission facilities. | |||||||||||||||||||
(c) | Contains corporate support not charged to FE's subsidiaries, interest expense on stand-alone holding company debt, corporate income taxes and other businesses that do not constitute an operating segment, and discontinued operations are categorized as Corporate/Other. | |||||||||||||||||||
Condensed Consolidated Balance Sheets (GAAP) | |||||||||||
As of | As of | ||||||||||
Assets | Jun. 30, 2018 | Dec. 31, 2017 | |||||||||
Current Assets: | |||||||||||
Cash and cash equivalents | $ | 256 | $ | 588 | |||||||
Receivables | 1,495 | 1,452 | |||||||||
Other | 612 | 464 | |||||||||
Total Current Assets | 2,363 | 2,504 | |||||||||
Property, Plant and Equipment | 29,021 | 28,176 | |||||||||
Investments | 1,313 | 1,328 | |||||||||
Deferred Charges and Other Assets | 6,274 | 6,355 | |||||||||
Assets - Discontinued Operations | — | 3,894 | |||||||||
Total Assets | $ | 38,971 | $ | 42,257 | |||||||
Liabilities and Capitalization | |||||||||||
Current Liabilities: | |||||||||||
Currently payable long-term debt | $ | 1,132 | $ | 558 | |||||||
Short-term borrowings | 1,664 | 300 | |||||||||
Accounts payable | 909 | 827 | |||||||||
Other | 1,363 | 1,455 | |||||||||
Total Current Liabilities | 5,068 | 3,140 | |||||||||
Capitalization: | |||||||||||
Total equity | 7,699 | 3,925 | |||||||||
Long-term debt and other long-term obligations | 16,461 | 18,816 | |||||||||
Total Capitalization | 24,160 | 22,741 | |||||||||
Noncurrent Liabilities | 9,743 | 12,004 | |||||||||
Liabilities - Discontinued Operations | — | 4,372 | |||||||||
Total Liabilities and Capitalization | $ | 38,971 | $ | 42,257 | |||||||
General Information | ||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||
Long-term debt redemptions | $ | (775 | ) | $ | (524 | ) | $ | (2,251 | ) | $ | (735 | ) | ||||||
New long-term debt issuances | $ | 450 | $ | 3,250 | $ | 450 | $ | 3,500 | ||||||||||
New preferred stock issuances | $ | — | $ | — | $ | 1,616 | $ | — | ||||||||||
New common stock issuances | $ | — | $ | — | $ | 850 | $ | — | ||||||||||
Short-term borrowings increase (decrease) | $ | 464 | $ | (2,525 | ) | $ | 1,364 | $ | (2,450 | ) | ||||||||
Property additions | $ | 724 | $ | 666 | $ | 1,307 | $ | 1,254 | ||||||||||
Liquidity position as of June 30, 2018 | ||||||||||
Company | Type | Maturity | Amount | Available | ||||||
FirstEnergy(1) | Revolving | December 2021 | $4,000 | $2,326 | ||||||
FET / ATSI / TrAIL / MAIT | Revolving | December 2021 | 1,000 | 1,000 | ||||||
(1) FirstEnergy Corp. and FEU subsidiary borrowers | Subtotal: | $5,000 | $3,326 | |||||||
Cash and cash equivalents: | — | 256 | ||||||||
Total: | $5,000 | $3,582 | ||||||||
Debt to Total Capitalization Ratio as Defined Under the FE Credit Facility | ||||||||||||||||
As of June 30, | As of December 31, | |||||||||||||||
2018 | % Total | 2017 | % Total | |||||||||||||
Total Equity (GAAP) | $ | 7,699 | 22 | % | 3,925 | 12 | % | |||||||||
Non-cash Charges / Non-cash Write Downs* | 8,264 | 24 | % | 8,264 | 24 | % | ||||||||||
Accumulated Other Comprehensive Income | (73 | ) | — | % | (142 | ) | — | % | ||||||||
Adjusted Equity (Non-GAAP)** | 15,890 | 46 | % | 12,047 | 36 | % | ||||||||||
Long-term Debt and Other Long-term Obligations (GAAP) | 16,461 | 47 | % | 18,816 | 61 | % | ||||||||||
Currently Payable Long-term Debt (GAAP) | 1,132 | 3 | % | 558 | 3 | % | ||||||||||
Short-term Borrowings (GAAP) | 1,664 | 5 | % | 300 | 1 | % | ||||||||||
Reimbursement Obligations | 10 | — | % | 10 | — | % | ||||||||||
Guarantees of Indebtedness | 235 | 1 | % | 275 | 1 | % | ||||||||||
Less Securitization Debt | (719 | ) | (2 | )% | (749 | ) | (2 | )% | ||||||||
Adjusted Debt (Non-GAAP)** | 18,783 | 54 | % | 19,210 | 64 | % | ||||||||||
Adjusted Capitalization (Non-GAAP)** | $ | 34,673 | 100 | % | $ | 31,257 | 100 | % | ||||||||
*Includes after-tax non-cash charges and non-cash write downs, primarily associated with the impairment of assets and related charges at the competitive energy business, pension and OPEB mark-to-market adjustments, and regulatory asset charges through June 30, 2018, as permitted by FE's current syndicated revolving credit facility (FE Credit Facility). | ||||||||||||||||
**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 and term loans. These financial measures, as calculated in accordance with the FE Credit Facility and term loans, help shareholders understand FE's compliance with, and provide a basis for understanding FE's incremental debt capacity under the debt to total capitalization financial covenants. The financial covenants under the FE Credit Facility and term loans require FE to maintain a consolidated debt to total capitalization ratio of no more than 65%, measured at the end of each fiscal quarter. | ||||||||||||||||
Additionally under the FE Credit Facility, FE is also required to maintain a minimum interest coverage ratio of 2.00 to 1.00 beginning January 1, 2018 until December 31, 2018, 2.25 to 1.00 beginning January 1, 2019 until December 31, 2019, and 2.50 to 1.00 beginning January 1, 2020 until December 31, 2021. As of June 30, 2018, FE's interest coverage ratio was 4.17, which exceeded the minimum interest coverage ratio 2.00 to 1.00 in effect on that date. | ||||||||||||||||
Condensed Consolidated Statements of Cash Flows (GAAP) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||
Cash flows from operating activities | |||||||||||||||||||
Net income | $ | 299 | $ | 174 | $ | 1,668 | $ | 379 | |||||||||||
Adjustments to reconcile net income to net cash from operating activities: | |||||||||||||||||||
Gain on deconsolidation, net of tax | — | — | (1,239 | ) | — | — | |||||||||||||
Depreciation and amortization (1) | 324 | 413 | 604 | 829 | |||||||||||||||
Deferred income taxes and investment tax credits, net | 49 | 110 | 327 | 224 | |||||||||||||||
Impairments of assets | — | 131 | — | 131 | |||||||||||||||
Retirement benefits, net of payments | (51 | ) | 7 | (97 | ) | 17 | |||||||||||||
Pension trust contributions | — | — | (1,250 | ) | — | ||||||||||||||
Unrealized (gain) loss on derivative transactions | — | 6 | (10 | ) | 53 | ||||||||||||||
Changes in working capital and other | (29 | ) | (144 | ) | (291 | ) | (151 | ) | |||||||||||
Cash flows provided from (used for) operating activities | 592 | 697 | (288 | ) | 1,482 | ||||||||||||||
Cash flows provided from (used for) financing activities | (145 | ) | 2 | 1,534 | (56 | ) | |||||||||||||
Cash flows used for investing activities | (422 | ) | (736 | ) | (1,565 | ) | (1,515 | ) | |||||||||||
Net change in cash, cash equivalents and restricted cash | $ | 25 | $ | (37 | ) | $ | (319 | ) | $ | (89 | ) | ||||||||
(1) Includes amortization of regulatory assets, net, nuclear fuel, intangible assets, and deferred debt-related costs. | |||||||||||||||||||
Electric Distribution Deliveries | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||
(MWH in thousand) | 2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||
Ohio | - Residential | 3,946 | 3,613 | 9.2 | % | 8,606 | 7,951 | 8.2 | % | ||||||||||||
- Commercial | 3,628 | 3,564 | 1.8 | % | 7,300 | 7,190 | 1.5 | % | |||||||||||||
- Industrial | 5,132 | 5,100 | 0.6 | % | 10,286 | 10,152 | 1.3 | % | |||||||||||||
- Other | 83 | 80 | 3.8 | % | 165 | 164 | 0.6 | % | |||||||||||||
Total Ohio | 12,789 | 12,357 | 3.5 | % | 26,357 | 25,457 | 3.5 | % | |||||||||||||
Pennsylvania | - Residential | 4,118 | 3,770 | 9.2 | % | 9,473 | 8,744 | 8.3 | % | ||||||||||||
- Commercial | 2,970 | 2,915 | 1.9 | % | 6,167 | 5,939 | 3.8 | % | |||||||||||||
- Industrial | 5,508 | 5,325 | 3.4 | % | 10,884 | 10,621 | 2.5 | % | |||||||||||||
- Other | 23 | 25 | -8.0 | % | 48 | 52 | -7.7 | % | |||||||||||||
Total Pennsylvania | 12,619 | 12,035 | 4.9 | % | 26,572 | 25,356 | 4.8 | % | |||||||||||||
New Jersey | - Residential | 2,124 | 2,046 | 3.8 | % | 4,348 | 4,194 | 3.7 | % | ||||||||||||
- Commercial | 2,181 | 2,184 | -0.1 | % | 4,364 | 4,304 | 1.4 | % | |||||||||||||
- Industrial | 552 | 578 | -4.5 | % | 1,139 | 1,098 | 3.7 | % | |||||||||||||
- Other | 23 | 22 | 4.5 | % | 45 | 43 | 4.7 | % | |||||||||||||
Total New Jersey | 4,880 | 4,830 | 1.0 | % | 9,896 | 9,639 | 2.7 | % | |||||||||||||
Maryland | - Residential | 682 | 624 | 9.3 | % | 1,722 | 1,532 | 12.4 | % | ||||||||||||
- Commercial | 511 | 504 | 1.4 | % | 1,042 | 1,009 | 3.3 | % | |||||||||||||
- Industrial | 415 | 413 | 0.5 | % | 790 | 785 | 0.6 | % | |||||||||||||
- Other | 4 | 4 | 0.0 | % | 8 | 8 | 0.0 | % | |||||||||||||
Total Maryland | 1,612 | 1,545 | 4.3 | % | 3,562 | 3,334 | 6.8 | % | |||||||||||||
West Virginia | - Residential | 1,204 | 1,062 | 13.4 | % | 2,924 | 2,562 | 14.1 | % | ||||||||||||
- Commercial | 907 | 872 | 4.0 | % | 1,850 | 1,759 | 5.2 | % | |||||||||||||
- Industrial | 1,594 | 1,530 | 4.2 | % | 3,176 | 3,007 | 5.6 | % | |||||||||||||
- Other | 7 | 7 | 0.0 | % | 15 | 14 | 7.1 | % | |||||||||||||
Total West Virginia | 3,712 | 3,471 | 6.9 | % | 7,965 | 7,342 | 8.5 | % | |||||||||||||
Total Residential | 12,074 | 11,115 | 8.6 | % | 27,073 | 24,983 | 8.4 | % | |||||||||||||
Total Commercial | 10,197 | 10,039 | 1.6 | % | 20,723 | 20,201 | 2.6 | % | |||||||||||||
Total Industrial | 13,201 | 12,946 | 2.0 | % | 26,275 | 25,663 | 2.4 | % | |||||||||||||
Total Other | 140 | 138 | 1.4 | % | 281 | 281 | 0.0 | % | |||||||||||||
Total Distribution Deliveries | 35,612 | 34,238 | 4.0 | % | 74,352 | 71,128 | 4.5 | % | |||||||||||||
Weather | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2018 | 2017 | Normal | 2018 | 2017 | Normal | ||||||||||
Composite Heating-Degree-Days | 599 | 450 | 569 | 3,348 | 2,790 | 3,328 | |||||||||
Composite Cooling-Degree-Days | 357 | 293 | 274 | 360 | 294 | 276 | |||||||||
Shopping Statistics (Based on MWH) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||
2018 | 2017 | 2018 | 2017 | |||||||
OE | 85% | 83% | 84% | 81% | ||||||
Penn | 69% | 71% | 67% | 68% | ||||||
CEI | 88% | 89% | 88% | 88% | ||||||
TE | 91% | 88% | 90% | 88% | ||||||
JCP&L | 52% | 53% | 52% | 52% | ||||||
Met-Ed | 69% | 72% | 67% | 69% | ||||||
Penelec | 71% | 73% | 69% | 71% | ||||||
PE(1) | 52% | 54% | 47% | 49% | ||||||
WP | 67% | 67% | 66% | 66% | ||||||
(1) Represents Maryland only. | ||||||||||
Three Months Ended June 30, 2018 | Three Months Ended June 30, 2017 | |||||||||||||||||||||
GAAP | Special Items | GAAP | Special Items | |||||||||||||||||||
(1 | ) | Revenues | $ | 2,704 | $ | 1 | (b) | $ | 2,624 | $ | — | |||||||||||
Operating Expenses | ||||||||||||||||||||||
(2 | ) | Fuel | 177 | — | 163 | — | ||||||||||||||||
(3 | ) | Purchased power | 698 | — | 650 | — | ||||||||||||||||
(4 | ) | Other operating expenses | 705 | 25 | (a,b) | 675 | (31 | ) | (a,b) | |||||||||||||
(5 | ) | Provision for depreciation | 299 | (16 | ) | (b) | 254 | — | ||||||||||||||
(6 | ) | Amortization (deferral) of regulatory assets, net | (107 | ) | 52 | (a) | 78 | — | ||||||||||||||
(7 | ) | General taxes | 245 | — | 230 | — | ||||||||||||||||
(8 | ) | Total Operating Expenses | 2,017 | 61 | 2,050 | (31 | ) | |||||||||||||||
(9 | ) | Operating Income | 687 | (60 | ) | 574 | 31 | |||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||
(10 | ) | Miscellaneous income, net | 48 | (1 | ) | (b) | 11 | — | ||||||||||||||
(11 | ) | Interest expense | (369 | ) | 116 | (c) | (248 | ) | — | |||||||||||||
(12 | ) | Capitalized financing costs | 16 | — | 14 | — | ||||||||||||||||
(13 | ) | Total Other Expense | (305 | ) | 115 | (223 | ) | — | ||||||||||||||
(14 | ) | Income Before Income Taxes | 382 | 55 | 351 | 31 | ||||||||||||||||
(15 | ) | Income taxes | 115 | (12 | ) | (d) | 132 | 12 | ||||||||||||||
(16 | ) | Income From Continuing Operations | 267 | 67 | 219 | 19 | ||||||||||||||||
(17 | ) | Discontinued operations (net of income taxes) | 32 | (32 | ) | (b) | (45 | ) | 45 | (b) | ||||||||||||
(18 | ) | Net Income | $ | 299 | $ | 35 | $ | 174 | $ | 64 | ||||||||||||
The above special items, if any, provide 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. Additionally, the table above summarizes the pre-tax impact of each special item and the cumulative impact to income taxes (benefits) based on the current and deferred income tax expense associated with each special item. See page 27 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||
(a) | Regulatory charges: 2018 (($0.17) per share), $70 million included in "Other operating expenses", $52 million included in "Amortization (deferral) of regulatory assets, net". 2017 ($0.01 per share), ($8) million included in "Other operating expenses". | |||||||||||||||||||||
(b) | Exit of competitive generation: 2018 ($0.01 per share), $1 million included in "Revenues"; ($45) million included in "Other operating expenses"; ($1) million included in "Miscellaneous income, net"; ($16) million included in "Provision for depreciation", ($32) million included in "Discontinued operations (net of income taxes)". 2017 ($0.11 per share), ($23) million included in "Other operating expenses"; $45 million included in "Discontinued operations (net of income taxes)". | |||||||||||||||||||||
(c) | Debt redemption costs: 2018 ($0.21 per share), $116 million included in "Interest expense". | |||||||||||||||||||||
(d) | Tax Reform: 2018 ($0.02 per share), $12 million included in "Income taxes". | |||||||||||||||||||||
See page 30 for additional descriptions related to special items. | ||||||||||||||||||||||
Per share amounts included above are based on the after-tax effect of the above special items as discussed on page 1 divided by 538 million fully diluted shares. | ||||||||||||||||||||||
Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | |||||||||||||||||||||
GAAP | Special Items | GAAP | Special Items | |||||||||||||||||||
(1 | ) | Revenues | $ | 5,680 | $ | 1 | (c) | $ | 5,479 | $ | — | |||||||||||
Operating Expenses | ||||||||||||||||||||||
(2 | ) | Fuel | 364 | — | 367 | — | ||||||||||||||||
(3 | ) | Purchased power | 1,523 | — | 1,441 | — | ||||||||||||||||
(4 | ) | Other operating expenses | 1,667 | (19 | ) | (a,b,c,e) | 1,332 | (67 | ) | (a,c) | ||||||||||||
(5 | ) | Provision for depreciation | 593 | (32 | ) | (c) | 504 | — | ||||||||||||||
(6 | ) | Amortization (deferral) of regulatory assets, net | (255 | ) | 52 | (a) | 161 | — | ||||||||||||||
(7 | ) | General taxes | 504 | — | 472 | — | ||||||||||||||||
(8 | ) | Total Operating Expenses | 4,396 | 1 | 4,277 | (67 | ) | |||||||||||||||
(9 | ) | Operating Income | 1,284 | — | 1,202 | 67 | ||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||
(10 | ) | Miscellaneous income, net | 115 | (1 | ) | (c) | 25 | — | ||||||||||||||
(11 | ) | Interest expense | (619 | ) | 119 | (d) | (493 | ) | — | |||||||||||||
(12 | ) | Capitalized financing costs | 31 | — | 26 | — | ||||||||||||||||
(13 | ) | Total Other Expense | (473 | ) | 118 | (442 | ) | — | ||||||||||||||
(14 | ) | Income Before Income Taxes | 811 | 118 | 760 | 67 | ||||||||||||||||
(15 | ) | Income taxes | 367 | (131 | ) | (e) | 284 | 24 | ||||||||||||||
(16 | ) | Income From Continuing Operations | 444 | 249 | 476 | 43 | ||||||||||||||||
(17 | ) | Discontinued operations (net of income taxes) | 1,224 | (1,224 | ) | (c) | (97 | ) | 97 | (c) | ||||||||||||
(18 | ) | Net Income | $ | 1,668 | $ | (975 | ) | $ | 379 | $ | 140 | |||||||||||
The above special items, if any, provide 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. Additionally, the table above summarizes the pre-tax impact of each special item and the cumulative impact to income taxes (benefits) based on the current and deferred income tax expense associated with each special item. See page 28 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||
(a) | Regulatory charges: 2018 (($0.16) per share), $63 million included in "Other operating expenses", $52 million included in "Amortization (deferral) of regulatory assets, net". 2017 ($0.03 per share), ($17) million included in "Other operating expenses". | |||||||||||||||||||||
(b) | Mark-to-market adjustments: 2018 (($0.01) per share), $5 million included in "Other operating expenses". | |||||||||||||||||||||
(c) | Exit of competitive generation: 2018 (($1.88) per share), $1 million included in "Revenues"; ($32) million included in "Provision for depreciation"; ($87) million included in "Other operating expenses"; ($1) million included in "Miscellaneous income, net"; ($1,224) million included in "Discontinued operations (net of income taxes)". 2017 ($0.12 per share), ($50) million included in "Other operating expenses"; $97 million included in "Discontinued operations (net of income taxes)". | |||||||||||||||||||||
(d) | Debt redemption costs: 2018 ($0.21 per share), $119 million included in "Interest expense". | |||||||||||||||||||||
(e) | Tax Reform: 2018 ($0.02 per share), $12 million included in "Income taxes". | |||||||||||||||||||||
See page 30 for additional descriptions related to special items. | ||||||||||||||||||||||
Per share amounts included above are based on the after-tax effect of the above special items as discussed on page 1 divided by 538 million fully diluted shares. | ||||||||||||||||||||||
Three Months Ended June 30, 2018 | Three Months Ended June 30, 2017 | |||||||||||||||||||||
GAAP | Special Items | GAAP | Special Items | |||||||||||||||||||
(1 | ) | Revenues | $ | 2,352 | $ | — | $ | 2,271 | $ | — | ||||||||||||
Operating Expenses | ||||||||||||||||||||||
(2 | ) | Fuel | 128 | — | 121 | — | ||||||||||||||||
(3 | ) | Purchased power | 699 | — | 646 | — | ||||||||||||||||
(4 | ) | Other operating expenses | 666 | 70 | (a) | 634 | (8 | ) | (a) | |||||||||||||
(5 | ) | Provision for depreciation | 200 | — | 179 | — | ||||||||||||||||
(6 | ) | Amortization (deferral) of regulatory assets, net | (107 | ) | 52 | (a) | 75 | — | ||||||||||||||
(7 | ) | General taxes | 184 | — | 175 | — | ||||||||||||||||
(8 | ) | Total Operating Expenses | 1,770 | 122 | 1,830 | (8 | ) | |||||||||||||||
(9 | ) | Operating Income | 582 | (122 | ) | 441 | 8 | |||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||
(10 | ) | Miscellaneous income, net | 56 | — | 14 | — | ||||||||||||||||
(11 | ) | Interest expense | (129 | ) | — | (134 | ) | — | ||||||||||||||
(12 | ) | Capitalized financing costs | 6 | — | 5 | — | ||||||||||||||||
(13 | ) | Total Other Expense | (67 | ) | — | (115 | ) | — | ||||||||||||||
(14 | ) | Income Before Income Taxes | 515 | (122 | ) | 326 | 8 | |||||||||||||||
(15 | ) | Income taxes | 138 | (39 | ) | (b) | 121 | 3 | ||||||||||||||
(16 | ) | Income From Continuing Operations | 377 | (83 | ) | 205 | 5 | |||||||||||||||
(17 | ) | Discontinued operations (net of income taxes) | — | — | — | — | ||||||||||||||||
(18 | ) | Net Income | $ | 377 | $ | (83 | ) | $ | 205 | $ | 5 | |||||||||||
The above special items, if any, provide 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. Additionally, the table above summarizes the pre-tax impact of each special item and the cumulative impact to income taxes (benefits) based on the current and deferred income tax expense associated with each special item. See page 27 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||
(a) | Regulatory charges: 2018 (($0.17) per share), $70 million included in "Other operating expenses", $52 million included in "Amortization (deferral) of regulatory assets, net". 2017 ($0.01 per share), ($8) million included in "Other operating expenses". | |||||||||||||||||||||
(b) | Tax Reform: 2018 ($0.02 per share), $12 million included in "Income taxes". | |||||||||||||||||||||
See page 30 for additional descriptions related to special items. | ||||||||||||||||||||||
Per share amounts included above are based on the after-tax effect of the above special items as discussed on page 1 divided by 538 million fully diluted shares. | ||||||||||||||||||||||
Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | |||||||||||||||||||||
GAAP | Special Items | GAAP | Special Items | |||||||||||||||||||
(1 | ) | Revenues | $ | 4,928 | $ | — | $ | 4,771 | $ | — | ||||||||||||
Operating Expenses | ||||||||||||||||||||||
(2 | ) | Fuel | 267 | — | 262 | — | ||||||||||||||||
(3 | ) | Purchased power | 1,518 | — | 1,436 | — | ||||||||||||||||
(4 | ) | Other operating expenses | 1,564 | 63 | (a) | 1,268 | (17 | ) | (a) | |||||||||||||
(5 | ) | Provision for depreciation | 396 | — | 357 | — | ||||||||||||||||
(6 | ) | Amortization (deferral) of regulatory assets, net | (259 | ) | 52 | (a) | 156 | — | ||||||||||||||
(7 | ) | General taxes | 379 | — | 359 | — | ||||||||||||||||
(8 | ) | Total Operating Expenses | 3,865 | 115 | 3,838 | (17 | ) | |||||||||||||||
(9 | ) | Operating Income | 1,063 | (115 | ) | 933 | 17 | |||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||
(10 | ) | Miscellaneous income, net | 112 | — | 29 | — | ||||||||||||||||
(11 | ) | Interest expense | (257 | ) | — | (272 | ) | — | ||||||||||||||
(12 | ) | Capitalized financing costs | 12 | — | 11 | — | ||||||||||||||||
(13 | ) | Total Other Expense | (133 | ) | — | (232 | ) | — | ||||||||||||||
(14 | ) | Income Before Income Taxes | 930 | (115 | ) | 701 | 17 | |||||||||||||||
(15 | ) | Income taxes | 231 | (38 | ) | (b) | 259 | 6 | ||||||||||||||
(16 | ) | Income From Continuing Operations | 699 | (77 | ) | 442 | 11 | |||||||||||||||
(17 | ) | Discontinued operations (net of income taxes) | — | — | — | — | ||||||||||||||||
(18 | ) | Net Income | $ | 699 | $ | (77 | ) | $ | 442 | $ | 11 | |||||||||||
The above special items, if any, provide 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. Additionally, the table above summarizes the pre-tax impact of each special item and the cumulative impact to income taxes (benefits) based on the current and deferred income tax expense associated with each special item. See page 28 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||
(a) | Regulatory charges: 2018 (($0.16) per share), $63 million included in "Other operating expenses", $52 million included in "Amortization (deferral) of regulatory assets, net". 2017 ($0.03 per share), ($17) million included in "Other operating expenses". | |||||||||||||||||||||
(b) | Tax Reform: 2018 ($0.02 per share), $12 million included in "Income taxes". | |||||||||||||||||||||
See page 30 for additional descriptions related to special items. | ||||||||||||||||||||||
Per share amounts included above are based on the after-tax effect of the above special items as discussed on page 1 divided by 538 million fully diluted shares. | ||||||||||||||||||||||
Three Months Ended June 30, 2018 | Three Months Ended June 30, 2017 | |||||||||||||||||||
GAAP | Special Items | GAAP | Special Items | |||||||||||||||||
(1 | ) | Revenues | $ | 341 | $ | — | $ | 327 | $ | — | ||||||||||
Operating Expenses | ||||||||||||||||||||
(2 | ) | Fuel | — | — | — | — | ||||||||||||||
(3 | ) | Purchased power | — | — | — | — | ||||||||||||||
(4 | ) | Other operating expenses | 60 | — | 50 | — | ||||||||||||||
(5 | ) | Provision for depreciation | 62 | — | 54 | — | ||||||||||||||
(6 | ) | Amortization of regulatory assets, net | — | — | 3 | — | ||||||||||||||
(7 | ) | General taxes | 48 | — | 43 | — | ||||||||||||||
(8 | ) | Total Operating Expenses | 170 | — | 150 | — | ||||||||||||||
(9 | ) | Operating Income | 171 | — | 177 | — | ||||||||||||||
Other Income (Expense) | ||||||||||||||||||||
(10 | ) | Miscellaneous income, net | 3 | — | — | — | ||||||||||||||
(11 | ) | Interest expense | (42 | ) | — | (39 | ) | — | ||||||||||||
(12 | ) | Capitalized financing costs | 10 | — | 7 | — | ||||||||||||||
(13 | ) | Total Other Expense | (29 | ) | — | (32 | ) | — | ||||||||||||
(14 | ) | Income Before Income Taxes | 142 | — | 145 | — | ||||||||||||||
(15 | ) | Income taxes | 38 | — | 53 | — | ||||||||||||||
(16 | ) | Income From Continuing Operations | 104 | — | 92 | — | ||||||||||||||
(17 | ) | Discontinued operations (net of income taxes) | — | — | — | — | ||||||||||||||
(18 | ) | Net Income | $ | 104 | $ | — | $ | 92 | $ | — | ||||||||||
The above special items, if any, provide 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. Additionally, the table above summarizes the pre-tax impact of each special item and the cumulative impact to income taxes (benefits) based on the current and deferred income tax expense associated with each special item. See page 27 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||
See page 30 for additional descriptions related to special items. | ||||||||||||||||||||
Per share amounts included above are based on the after-tax effect of the above special items as discussed on page 1 divided by 538 million fully diluted shares. | ||||||||||||||||||||
Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | |||||||||||||||||||||
GAAP | Special Items | GAAP | Special Items | |||||||||||||||||||
(1 | ) | Revenues | $ | 664 | $ | — | $ | 640 | $ | — | ||||||||||||
Operating Expenses | ||||||||||||||||||||||
(2 | ) | Fuel | — | — | — | — | ||||||||||||||||
(3 | ) | Purchased power | — | — | — | — | ||||||||||||||||
(4 | ) | Other operating expenses | 114 | — | 95 | — | ||||||||||||||||
(5 | ) | Provision for depreciation | 123 | — | 105 | — | ||||||||||||||||
(6 | ) | Amortization of regulatory assets, net | 4 | — | 5 | — | ||||||||||||||||
(7 | ) | General taxes | 95 | — | 85 | — | ||||||||||||||||
(8 | ) | Total Operating Expenses | 336 | — | 290 | — | ||||||||||||||||
(9 | ) | Operating Income | 328 | — | 350 | — | ||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||
(10 | ) | Miscellaneous income, net | 7 | — | — | — | ||||||||||||||||
(11 | ) | Interest expense | (81 | ) | — | (78 | ) | — | ||||||||||||||
(12 | ) | Capitalized financing costs | 19 | — | 13 | — | ||||||||||||||||
(13 | ) | Total Other Expense | (55 | ) | — | (65 | ) | — | ||||||||||||||
(14 | ) | Income Before Income Taxes | 273 | — | 285 | — | ||||||||||||||||
(15 | ) | Income taxes | 70 | — | 105 | — | ||||||||||||||||
(16 | ) | Income From Continuing Operations | 203 | — | 180 | — | ||||||||||||||||
(17 | ) | Discontinued operations (net of income taxes) | — | — | — | — | ||||||||||||||||
(18 | ) | Net Income | $ | 203 | $ | — | $ | 180 | $ | — | ||||||||||||
The above special items, if any, provide 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. Additionally, the table above summarizes the pre-tax impact of each special item and the cumulative impact to income taxes (benefits) based on the current and deferred income tax expense associated with each special item. See page 28 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||
See page 30 for additional descriptions related to special items. | ||||||||||||||||||||||
Per share amounts included above are based on the after-tax effect of the above special items as discussed on page 1 divided by 538 million fully diluted shares. | ||||||||||||||||||||||
Three Months Ended June 30, 2018 | Three Months Ended June 30, 2017 | |||||||||||||||||||||
GAAP | Special Items | GAAP | Special Items | |||||||||||||||||||
(1 | ) | Revenues | $ | 11 | $ | 1 | (a) | $ | 26 | $ | — | |||||||||||
Operating Expenses | ||||||||||||||||||||||
(2 | ) | Fuel | 49 | — | 42 | — | ||||||||||||||||
(3 | ) | Purchased power | (1 | ) | — | 4 | — | |||||||||||||||
(4 | ) | Other operating expenses | (21 | ) | (45 | ) | (a) | (9 | ) | (23 | ) | (a) | ||||||||||
(5 | ) | Provision for depreciation | 37 | (16 | ) | (a) | 21 | — | ||||||||||||||
(6 | ) | Amortization of regulatory assets, net | — | — | — | — | ||||||||||||||||
(7 | ) | General taxes | 13 | — | 12 | — | ||||||||||||||||
(8 | ) | Total Operating Expenses | 77 | (61 | ) | 70 | (23 | ) | ||||||||||||||
(9 | ) | Operating Loss | (66 | ) | 62 | (44 | ) | 23 | ||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||
(10 | ) | Miscellaneous expense, net | (11 | ) | (1 | ) | (a) | (3 | ) | — | ||||||||||||
(11 | ) | Interest expense | (198 | ) | 116 | (b) | (75 | ) | — | |||||||||||||
(12 | ) | Capitalized financing costs | — | — | 2 | — | ||||||||||||||||
(13 | ) | Total Other Expense | (209 | ) | 115 | (76 | ) | — | ||||||||||||||
(14 | ) | Loss Before Income Tax Benefits | (275 | ) | 177 | (120 | ) | 23 | ||||||||||||||
(15 | ) | Income tax benefits | (61 | ) | 27 | (42 | ) | 9 | ||||||||||||||
(16 | ) | Loss From Continuing Operations | (214 | ) | 150 | (78 | ) | 14 | ||||||||||||||
(17 | ) | Discontinued operations (net of income taxes) | 32 | (32 | ) | (a) | (45 | ) | 45 | (a) | ||||||||||||
(18 | ) | Net Loss | $ | (182 | ) | $ | 118 | $ | (123 | ) | $ | 59 | ||||||||||
The above special items, if any, provide 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. Additionally, the table above summarizes the pre-tax impact of each special item and the cumulative impact to income taxes (benefits) based on the current and deferred income tax expense associated with each special item. See page 27 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||
(a) | Exit of competitive generation: 2018 ($0.01 per share), $1 million included in "Revenues"; ($45) million included in "Other operating expenses"; ($16) million included in "Provision for depreciation", ($1) million included in "Miscellaneous expense, net"; ($32) million included in "Discontinued operations (net of income taxes)". 2017 ($0.11 per share), ($23) million included in "Other operating expenses"; $45 million included in "Discontinued operations (net of income taxes)". | |||||||||||||||||||||
(b) | Debt redemption costs: 2018 ($0.21 per share), $116 million included in "Interest expense". | |||||||||||||||||||||
See page 30 for additional descriptions related to special items. | ||||||||||||||||||||||
Per share amounts included above are based on the after-tax effect of the above special items as discussed on page 1 divided by 538 million fully diluted shares. | ||||||||||||||||||||||
Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | |||||||||||||||||||||
GAAP | Special Items | GAAP | Special Items | |||||||||||||||||||
(1 | ) | Revenues | $ | 88 | $ | 1 | (b) | $ | 68 | $ | — | |||||||||||
Operating Expenses | ||||||||||||||||||||||
(2 | ) | Fuel | 97 | — | 105 | — | ||||||||||||||||
(3 | ) | Purchased power | 5 | — | 5 | — | ||||||||||||||||
(4 | ) | Other operating expenses | (11 | ) | (82 | ) | (a,b) | (31 | ) | (50 | ) | (b) | ||||||||||
(5 | ) | Provision for depreciation | 74 | (32 | ) | (b) | 42 | — | ||||||||||||||
(6 | ) | Amortization of regulatory assets, net | — | — | — | — | ||||||||||||||||
(7 | ) | General taxes | 30 | — | 28 | — | ||||||||||||||||
(8 | ) | Total Operating Expenses | 195 | (114 | ) | 149 | (50 | ) | ||||||||||||||
(9 | ) | Operating Loss | (107 | ) | 115 | (81 | ) | 50 | ||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||
(10 | ) | Miscellaneous expense, net | (4 | ) | (1 | ) | (b) | (4 | ) | — | ||||||||||||
(11 | ) | Interest expense | (281 | ) | 119 | (c) | (143 | ) | — | |||||||||||||
(12 | ) | Capitalized financing costs | — | — | 2 | — | ||||||||||||||||
(13 | ) | Total Other Expense | (285 | ) | 118 | (145 | ) | — | ||||||||||||||
(14 | ) | Loss Before Income Taxes (Benefits) | (392 | ) | 233 | (226 | ) | 50 | ||||||||||||||
(15 | ) | Income taxes (benefits) | 66 | (93 | ) | (b) | (80 | ) | 18 | |||||||||||||
(16 | ) | Loss From Continuing Operations | (458 | ) | 326 | (146 | ) | 32 | ||||||||||||||
(17 | ) | Discontinued operations (net of income taxes) | 1,224 | (1,224 | ) | (b) | (97 | ) | 97 | (b) | ||||||||||||
(18 | ) | Net Income (Loss) | $ | 766 | $ | (898 | ) | $ | (243 | ) | $ | 129 | ||||||||||
The above special items, if any, provide 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. Additionally, the table above summarizes the pre-tax impact of each special item and the cumulative impact to income taxes (benefits) based on the current and deferred income tax expense associated with each special item. See page 28 for GAAP to Operating (non-GAAP) EPS Reconciliation. | ||||||||||||||||||||||
(a) | Mark-to-market adjustments: 2018 (($0.01) per share), $5 million included in "Other operating expenses". | |||||||||||||||||||||
(b) | Exit of competitive generation: 2018 (($1.88) per share), $1 million included in "Revenues"; ($32) million included in "Provision for depreciation"; ($87) million included in "Other operating expenses"; ($1) million included in "Miscellaneous expense, net"; ($1,224) million included in "Discontinued operations (net of income taxes)". 2017 ($0.11 per share), ($50) million included in "Other operating expenses"; $97 million included in "Discontinued operations (net of income taxes)". | |||||||||||||||||||||
(c) | Debt redemption costs: 2018 ($.21 per share) $119 million included in "Interest expense". | |||||||||||||||||||||
See page 30 for additional descriptions related to special items. | ||||||||||||||||||||||
Per share amounts included above are based on the after-tax effect of the above special items as discussed on page 1 divided by 538 million fully diluted shares. | ||||||||||||||||||||||
Reconciliation of GAAP to Operating (Non-GAAP) Earnings | |||||||||||||||||||
FirstEnergy | |||||||||||||||||||
Regulated | Regulated | Corporate / | Corp. | ||||||||||||||||
Three Months Ended June 30, 2018 | Distribution | Transmission | Other | Consolidated | |||||||||||||||
2Q 2018 Net Income (Loss) attributable to Common Stockholders (GAAP) | $ | 377 | $ | 104 | $ | (347 | ) | $ | 134 | ||||||||||
2Q 2018 Basic Earnings (Loss) per share (avg. shares outstanding 477M) | $ | 0.79 | $ | 0.22 | $ | (0.73 | ) | $ | 0.28 | ||||||||||
Excluding Special Items: | |||||||||||||||||||
Impact of full dilution of 538M shares | (0.09 | ) | (0.03 | ) | 0.39 | 0.27 | |||||||||||||
Regulatory charges | (0.17 | ) | — | — | (0.17 | ) | |||||||||||||
Exit of competitive generation | — | — | 0.01 | 0.01 | |||||||||||||||
Debt redemption costs | — | — | 0.21 | 0.21 | |||||||||||||||
Tax reform | 0.02 | — | — | 0.02 | |||||||||||||||
Total Special Items | $ | (0.24 | ) | $ | (0.03 | ) | $ | 0.61 | $ | 0.34 | |||||||||
2Q 2018 Operating Earnings (Loss) Per Share (Non-GAAP) (538M fully diluted shares) | $ | 0.55 | $ | 0.19 | $ | (0.12 | ) | $ | 0.62 | ||||||||||
FirstEnergy | |||||||||||||||||||
Regulated | Regulated | Corporate / | Corp. | ||||||||||||||||
Three Months Ended June 30, 2017 | Distribution | Transmission | Other | Consolidated | |||||||||||||||
2Q 2017 Net Income (Loss) attributable to Common Stockholders (GAAP) | $ | 205 | $ | 92 | $ | (123 | ) | $ | 174 | ||||||||||
2Q 2017 Basic Earnings (Loss) per share (avg. shares outstanding 444M) | $ | 0.46 | $ | 0.21 | $ | (0.28 | ) | $ | 0.39 | ||||||||||
Excluding Special Items: | |||||||||||||||||||
Impact of full dilution to 538M shares | (0.08 | ) | (0.04 | ) | 0.05 | (0.07 | ) | ||||||||||||
Regulatory charges | 0.01 | — | — | 0.01 | |||||||||||||||
Exit of competitive generation | — | — | 0.11 | 0.11 | |||||||||||||||
Total Special Items | $ | (0.07 | ) | $ | (0.04 | ) | $ | 0.16 | $ | 0.05 | |||||||||
2Q 2017 Operating Earnings (Loss) Per Share (Non-GAAP) (538M fully diluted shares) | $ | 0.39 | $ | 0.17 | $ | (0.12 | ) | $ | 0.44 | ||||||||||
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 number of shares outstanding for the period assuming full impact of dilution from the $2.5 billion equity issuance in January 2018 (538M fully diluted shares). The current and deferred income tax effect was calculated by applying the subsidiaries' statutory tax rate to the pre-tax amount if deductible/taxable. The income tax rates range from 21% to 29% and 35% to 38% in the second quarter of 2018 and 2017, respectively. |
Reconciliation of GAAP to Operating (Non-GAAP) Earnings | |||||||||||||||||||
FirstEnergy | |||||||||||||||||||
Regulated | Regulated | Corporate / | Corp. | ||||||||||||||||
Six Months Ended June 30, 2018 | Distribution | Transmission | Other | Consolidated | |||||||||||||||
2018 Net Income attributable to Common Stockholders (GAAP) | $ | 699 | $ | 203 | $ | 462 | $ | 1,364 | |||||||||||
2018 Basic Earnings Per Share (avg. shares outstanding 477M) | $ | 1.47 | $ | 0.43 | $ | 0.96 | $ | 2.86 | |||||||||||
Excluding Special Items: | |||||||||||||||||||
Impact of full dilution to 538M shares | (0.17 | ) | (0.05 | ) | 0.47 | 0.25 | |||||||||||||
Regulatory charges | (0.16 | ) | — | — | (0.16 | ) | |||||||||||||
Mark-to-market adjustments | — | — | (0.01 | ) | (0.01 | ) | |||||||||||||
Exit of competitive generation | — | — | (1.88 | ) | (1.88 | ) | |||||||||||||
Debt redemption costs | — | — | 0.21 | 0.21 | |||||||||||||||
Tax Reform | 0.02 | — | — | 0.02 | |||||||||||||||
Total Special Items | $ | (0.31 | ) | $ | (0.05 | ) | $ | (1.21 | ) | $ | (1.57 | ) | |||||||
2018 Operating Earnings (Loss) Per Share (Non-GAAP) (538M fully diluted shares) | $ | 1.16 | $ | 0.38 | $ | (0.25 | ) | $ | 1.29 | ||||||||||
FirstEnergy | |||||||||||||||||||
Regulated | Regulated | Corporate / | Corp. | ||||||||||||||||
Six Months Ended June 30, 2017 | Distribution | Transmission | Other | Consolidated | |||||||||||||||
2017 Net Income (Loss) attributable to Common Stockholders (GAAP) | $ | 442 | $ | 180 | $ | (243 | ) | $ | 379 | ||||||||||
2017 Basic Earnings (Loss) Per Share (avg. shares outstanding 443M) | $ | 1.00 | $ | 0.41 | $ | (0.55 | ) | $ | 0.86 | ||||||||||
Excluding Special Items: | |||||||||||||||||||
Impact of full dilution to 538M shares | (0.17 | ) | (0.08 | ) | 0.10 | (0.15 | ) | ||||||||||||
Regulatory charges | 0.03 | — | — | 0.03 | |||||||||||||||
Exit of competitive generation | — | — | 0.22 | 0.22 | |||||||||||||||
Total Special Items | $ | (0.14 | ) | $ | (0.08 | ) | $ | 0.32 | $ | 0.10 | |||||||||
2017 Operating Earnings (Loss) Per Share (Non-GAAP) (538M fully diluted shares) | $ | 0.86 | $ | 0.33 | $ | (0.23 | ) | $ | 0.96 | ||||||||||
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 number of shares outstanding for the period assuming full impact of dilution from the $2.5 billion equity issuance in January 2018 (538M fully diluted shares). The current and deferred income tax effect was calculated by applying the subsidiaries' statutory tax rate to the pre-tax amount if deductible/taxable. The income tax rates range from 21% to 29% and 35% to 38% in the first half of 2018 and 2017, respectively. |
Reconciliation of 2Q 2017 Operating EPS to as previously reported in 2017 | ||||||
FirstEnergy | ||||||
Corp. | ||||||
Three Months Ended June 30, 2017 | Consolidated | |||||
2Q 2017 Net Income Attributable to Common Stockholders (GAAP) | $ | 174 | ||||
2Q 2017 Basic EPS (avg. shares outstanding 444M) | $ | 0.39 | ||||
Excluding Special Items as reported in 2Q 2017: | ||||||
Mark-to-market adjustments | 0.01 | |||||
Trust securities impairment | 0.01 | |||||
Regulatory charges | 0.01 | |||||
Asset impairment/Plant exit costs | 0.19 | |||||
Total Special Items | 0.22 | |||||
2Q 2017 Operating EPS (Non-GAAP) as reported in 2017 | 0.61 | |||||
Remove Competitive Operating Earnings now included in Discontinued Operations | (0.08 | ) | ||||
2Q 2017 Operating EPS (Non-GAAP) without competitive operating earnings | 0.53 | |||||
Impact of full dilution to 538M shares | (0.09 | ) | ||||
2Q 2017 Operating EPS (Non-GAAP) (538M fully diluted shares) | $ | 0.44 | ||||
Reconciliation of 2017 Operating EPS to as previously reported in 2017 | ||||||
FirstEnergy | ||||||
Corp. | ||||||
Six Months Ended June 30, 2017 | Consolidated | |||||
2017 Net Income Attributable to Common Stockholders (GAAP) | $ | 379 | ||||
2017 Basic EPS (avg. shares outstanding 443M) | $ | 0.86 | ||||
Excluding Special Items as reported in 2017: | ||||||
Mark-to-market adjustments | 0.08 | |||||
Trust securities impairment | 0.01 | |||||
Regulatory charges | 0.02 | |||||
Asset impairment/Plant exit costs | 0.42 | |||||
Total Special Items | 0.53 | |||||
2017 Operating EPS (Non-GAAP) as reported in 2017 | 1.39 | |||||
Remove Competitive Operating Earnings now included in Discontinued Operations | (0.23 | ) | ||||
2017 Operating EPS (Non-GAAP) without competitive operating earnings | 1.16 | |||||
Impact of full dilution to 538M shares | (0.20 | ) | ||||
2017 Operating EPS (Non-GAAP) (538M fully diluted shares) | $ | 0.96 | ||||
• | Regulatory charges - Primarily reflects the impact of regulatory agreements or orders requiring certain commitments and/or disallowing the recoverability of costs, net of related credits. |
• | Mark-to-market adjustments - Primarily reflects non-cash mark-to-market gains and losses on commodity contract positions. |
• | Exit of competitive generation - Primarily reflects charges or credits resulting from management's plan to exit competitive operations, including the impact of deconsolidating FES, its subsidiaries and FENOC, following their voluntary petitions for bankruptcy protection on March 31, 2018. |
• | Debt redemption costs - Primarily reflects costs associated with the redemption and early retirement of debt. |
• | Tax Reform - Primarily reflects changes resulting from the Tax Cuts and Jobs Act. |
• | Impact of full dilution to 538M shares - Represents the dilutive impact of increasing weighted average shares outstanding to 538 million to reflect the full impact of share dilution from the $2.5 billion equity issuance in January 2018, including preferred dividends and conversion of preferred stock to common shares. |
◦ | In the Corporate / Other segment, this includes the addback of preferred share dividends of $43 million in the first six months of 2018 and non-cash deemed dividends for the amortization of the beneficial conversion feature of $148 million and $261 million in the first three and six months of 2018, respectively. These amounts are considered a deduction to arrive at Net Income attributable to Common Stockholders under GAAP, and are added back to the calculation of Operating (Non-GAAP) earnings given the assumption that all preferred stock is converted. |
◦ | 2018F Operating (non-GAAP) earnings guidance excludes forecasted preferred share dividends of $86 million and non-cash deemed dividend amortization of $296 million. |