10-K/APeriod: FY2019

FIRSTENERGY CORP Annual Report (Amendment), Year Ended Dec 31, 2019

Filed November 19, 2020For Securities:FE

Summary

FirstEnergy Corp.'s (FE) 2020 10-K filing reveals a significant shift in its internal control environment. While the company's financial statements present fairly its financial position and results of operations for the years ended December 31, 2019, 2018, and 2017, the auditors identified a material weakness in internal control over financial reporting as of December 31, 2019. This weakness stemmed from senior management failing to set an appropriate "tone at the top," leading to conduct inconsistent with company policies. This resulted in a restatement of management's prior conclusion on internal control effectiveness. The company also continues to navigate complex regulatory landscapes and the fallout from the FES and FENOC Chapter 11 bankruptcy filings. Significant restructuring and settlement agreements have been executed, impacting financial results and requiring careful monitoring. Despite these challenges, FirstEnergy's core utility operations in regulated transmission and distribution segments remain robust, forming the foundation of its financial performance.

Financial Highlights

48 data points
Beta

Revenue

$11.04B

Net Income

$912.00M

8.3% Net Margin

EPS (Diluted)

$1.68

Total Assets

$42.30B

Cash & Equivalents

$627.00M

Free Cash Flow

$2.47B

Financial Statements
Beta
Revenue$11.04B
Operating Expenses$8.53B
Operating Income$2.51B
Interest Expense$1.03B
Net Income$912.00M
EPS (Basic)$1.70
EPS (Diluted)$1.68
Shares Outstanding (Basic)535.00M
Shares Outstanding (Diluted)542.00M

Key Highlights

  • 1Material weakness in internal control over financial reporting identified due to senior management's failure to set an appropriate 'tone at the top'.
  • 2Restatement of management's prior conclusion on internal control effectiveness.
  • 3Ongoing resolution of FES and FENOC bankruptcy proceedings, including settlement agreements and asset transfers.
  • 4Continued focus on regulated utility operations (Distribution and Transmission) as the primary business segments.
  • 5Recognition of regulatory assets and liabilities related to the rate-making process.
  • 6The company generated positive net income from continuing operations in 2019 and 2018, though it experienced a loss in 2017.
  • 7Disclosure of significant subsequent events, including subpoenas and civil lawsuits related to Ohio House Bill 6 (HB 6) and potential securities law violations.

Frequently Asked Questions

The auditors identified a material weakness in internal control over financial reporting due to senior management's failure to set an appropriate 'tone at the top,' which led to conduct inconsistent with company policies. This resulted in a restatement of management's prior conclusion on internal control effectiveness.

FirstEnergy has been involved in settlement agreements, asset transfers, and the deconsolidation of these entities. The financial statements reflect outcomes related to these complex proceedings, including gains on disposal in prior years.

FirstEnergy's primary business segments are Regulated Distribution and Regulated Transmission. These segments represent the core of the company's operations and financial performance.

As a regulated utility, FirstEnergy accounts for the effects of regulation through regulatory accounting. Regulatory assets and liabilities arise from the rate-making process and are recognized when recovery or settlement through future rates is probable. These would not typically be recorded under GAAP for non-regulated entities.