10-QPeriod: Q3 FY2002

FIRSTENERGY CORP Quarterly Report for Q3 Ended Sep 30, 2002

Filed November 14, 2002For Securities:FE

Summary

FIRSTENERGY CORP. (FE) reported strong financial performance for the nine months ended September 30, 2002, with net income increasing significantly compared to the prior year. This growth was primarily driven by the inclusion of results from the former GPU companies following the November 2001 merger, which significantly expanded the company's operational footprint and asset base. The company is actively managing its diverse portfolio, which includes regulated utility operations and competitive energy services, while navigating the evolving regulatory landscape of the energy industry. Key financial drivers included higher revenues from both regulated and competitive segments, although the regulated services segment saw some impact from customer shopping and economic conditions in its service territories. The company is also addressing challenges such as the extended outage at the Davis-Besse nuclear plant and managing regulatory matters in key states like Ohio, New Jersey, and Pennsylvania. Overall, FirstEnergy demonstrated resilience and growth, bolstered by strategic integration and ongoing operational management.

Key Highlights

  • 1Net income for the nine months ended September 30, 2002, was $660.1 million, a substantial increase from $477.8 million in the same period of 2001, partly due to accounting changes.
  • 2The company is actively managing its business segments, with regulated services forming the primary base and competitive services contributing to a more diversified revenue stream.
  • 3Significant one-time charges and credits impacted net income, including costs related to the Davis-Besse nuclear plant outage and accounting adjustments from the GPU merger.
  • 4Total revenues saw a substantial increase, driven largely by the consolidation of former GPU companies, with electricity utilities and unregulated businesses contributing to the growth.
  • 5FirstEnergy is undertaking capital expenditures totaling approximately $3.2 billion from 2002-2006 for property additions and improvements, with $920 million planned for 2002.
  • 6The company is navigating state regulatory matters related to electric industry deregulation in Ohio, New Jersey, and Pennsylvania, including stranded cost recovery and customer choice programs.
  • 7Discussions are ongoing regarding the potential sale of four coal-fired power plants previously slated for sale to NRG Energy, which was canceled.
  • 8The company's goodwill balance stood at approximately $5.8 billion as of September 30, 2002, primarily relating to its regulated services segment.

Frequently Asked Questions

For the nine months ended September 30, 2002, FirstEnergy reported a net income of $660.1 million, or $2.25 per basic share, a significant increase from $477.8 million, or $2.19 per basic share, in the same period of 2001. This increase reflects the full consolidation of former GPU entities and other operational factors.

The merger with GPU, Inc., effective November 7, 2001, significantly expanded FirstEnergy's operations and asset base. The financial results for the nine months ended September 30, 2002, include the contributions of the former GPU companies, leading to higher revenues and net income compared to the prior year when these entities were not fully consolidated for the entire period.

The company is managing the extended outage at its Davis-Besse nuclear plant, which incurred significant costs and impacted earnings per share. Additionally, FirstEnergy is addressing regulatory matters in its key operating states, particularly concerning electricity industry deregulation and stranded cost recovery.

FirstEnergy has a robust capital expenditure plan, forecasting approximately $3.2 billion for property additions and improvements from 2002 through 2006, with about $920 million allocated for the year 2002. These investments are crucial for maintaining and upgrading its utility infrastructure and supporting its various business segments.