Summary
FirstEnergy Corp. (FE) in its 2011 10-K filing presents a complex organizational structure with numerous subsidiaries operating across multiple states, primarily in the electric utility sector. The company's core business involves the generation, transmission, and distribution of electricity, serving approximately 6 million customers across 67,000 square miles in Ohio, Pennsylvania, West Virginia, Maryland, and New Jersey. The report highlights the company's significant investments in infrastructure and its ongoing efforts to comply with evolving environmental regulations, including planned retirements of older coal-fired plants due to the MATS rules. Financially, the company reported earnings available to FirstEnergy Corp. of $885 million in 2011, a notable increase from $742 million in 2010, although earnings per share decreased. The significant event of 2011 was the completion of the merger with Allegheny Energy, Inc., which substantially increased FE's customer base and generating capacity and is expected to yield significant cost savings and operational efficiencies. The company maintains strong liquidity with substantial available credit facilities. Investors should note the company's significant capital expenditure plans for 2012 and beyond, primarily focused on reliability, operational improvements, and environmental compliance.
Financial Highlights
48 data points| Revenue | $16.11B |
| Operating Expenses | $14.43B |
| Operating Income | $1.68B |
| Interest Expense | $1.01B |
| Net Income | $885.00M |
| EPS (Basic) | $2.22 |
| EPS (Diluted) | $2.21 |
| Shares Outstanding (Basic) | 399.00M |
| Shares Outstanding (Diluted) | 401.00M |
Key Highlights
- 1Completion of the Allegheny Energy (AE) merger in February 2011, significantly expanding FirstEnergy's customer base and generating capacity, and realizing substantial merger benefits and cost savings.
- 2Successful integration of ATSI into PJM on June 1, 2011, consolidating all of FirstEnergy's generation, transmission, and distribution facilities within a single regional transmission system.
- 3Announcement of planned retirement of nine older coal-fired power plants (3,349 MW total capacity) by September 1, 2012, due to environmental regulations (MATS) and other factors. This move is expected to result in nearly 100% of the company's generation output coming from low or non-emitting facilities.
- 4Strong liquidity position with approximately $4.39 billion in available liquidity as of January 31, 2012, supported by $5.0 billion in revolving credit facilities.
- 5Capital expenditures for 2012 are forecasted at $2.1 billion (excluding nuclear fuel), a decrease from 2011, reflecting the completion of major projects like the TrAIL transmission line.
- 6Ongoing focus on environmental compliance, with significant investments made in diversifying the generation fleet and improving its environmental performance, including an estimated $1.3 - $1.7 billion to bring remaining units into compliance with MATS.
- 7Management identified several key risks, including operational reliability of power plants and transmission equipment, changes in commodity prices, financial derivative reforms (Dodd-Frank), and evolving environmental regulations.