10-KPeriod: FY2010

FIRSTENERGY CORP Annual Report, Year Ended Dec 31, 2010

Filed February 16, 2011For Securities:FE

Summary

FirstEnergy Corp. (FE) and its subsidiaries are reporting on their fiscal year ending December 31, 2010. A significant development during the year was the announcement of a proposed merger with Allegheny Energy, Inc., which was expected to close in the first quarter of 2011. This merger would create a larger entity with a substantial customer base and generation capacity across multiple states. The company's financial performance in 2010 saw a decrease in earnings per share compared to 2009, attributed to various factors including impairments on long-lived assets, regulatory charges, and merger-related transaction costs. Despite these challenges, FirstEnergy maintained a strong liquidity position and focused on operational efficiencies and strategic integration for future growth. The company's diversified generation portfolio, including nuclear, coal, and renewable sources, positions it to navigate evolving environmental regulations.

Financial Highlights

48 data points
Beta

Revenue

$13.34B

Net Income

$742.00M

5.6% Net Margin

EPS (Diluted)

$2.42

Total Assets

$35.53B

Cash & Equivalents

$1.02B

Free Cash Flow

$3.08B

Financial Statements
Beta
Revenue$13.34B
Operating Expenses$11.60B
Operating Income$1.74B
Net Income$742.00M
EPS (Basic)$2.44
EPS (Diluted)$2.42
Shares Outstanding (Basic)304.00M
Shares Outstanding (Diluted)305.00M

Key Highlights

  • 1Proposed merger with Allegheny Energy, Inc. expected to create a larger, more diversified utility company.
  • 22010 earnings per share decreased compared to 2009 due to asset impairments, regulatory charges, and merger costs.
  • 3Strong liquidity position maintained with access to over $3.2 billion in credit facilities.
  • 4Completion of a significant $1.8 billion environmental retrofit at the W.H. Sammis Plant.
  • 5Operational changes implemented at several smaller coal-fired units in response to economic conditions and environmental regulatory uncertainty.
  • 6Continued investment in smart grid technologies through DOE grants, totaling $57.4 million.
  • 7Focus on integrating ATSI's transmission assets into the PJM RTO by June 1, 2011.

Frequently Asked Questions

As of the filing date (February 16, 2011), FirstEnergy and Allegheny anticipated completing the merger in the first quarter of 2011. Several key regulatory approvals had been received, including from the SEC, FERC, and state commissions in West Virginia, Maryland, and New Jersey. The final pending approval was from the Pennsylvania Public Utility Commission (PPUC). Despite the anticipation, the company noted that there could be no assurance of the timing or ultimate ability to obtain all necessary approvals on satisfactory terms.

The decrease in earnings per share in 2010 compared to 2009 was primarily driven by several factors: $384 million in impairment charges related to operational changes at smaller coal-fired units due to economic conditions and environmental regulatory uncertainty, a $167 million reduction in net income from the sale of an OVEC participation interest, lower investment income from nuclear decommissioning trusts, and $47 million in merger transaction costs. These were partially offset by an increase in sales margins and other operational efficiencies.

FirstEnergy is actively managing its environmental exposures through significant investments in pollution control equipment, such as the $1.8 billion environmental retrofit at the W.H. Sammis Plant to reduce SO2 and NOx emissions. The company is also focusing on improving its generation fleet's environmental profile, with a goal of 70% of its generation being non-emitting or low-emitting by the end of 2011. Furthermore, FirstEnergy is monitoring and assessing the potential impact of evolving federal and state environmental regulations, including those related to greenhouse gas emissions and coal combustion residuals, and is engaging with policymakers to develop reasonable requirements.

For 2011, FirstEnergy projected capital expenditures of approximately $1.4 billion (excluding nuclear fuel). For 2012 and 2013, the company anticipated average annual baseline capital expenditures of approximately $1.2 billion. These expenditures are primarily directed towards maintaining reliability, improving operations, and supporting current environmental and energy efficiency directives, including investments in transmission expansion and advanced metering initiatives.