10-QPeriod: Q1 FY2004

FIRSTENERGY CORP Quarterly Report for Q1 Ended Mar 31, 2004

Filed May 10, 2004For Securities:FE

Summary

FirstEnergy Corp. reported net income of $174 million, or $0.53 per share, for the first quarter of 2004, compared to $218 million, or $0.74 per share, in the same period of 2003. The year-over-year decrease in net income was primarily driven by lower revenues across several segments, including a significant drop in wholesale electric sales and a reduction in retail electric revenues due to customer switching and rate changes. These were partially offset by lower operating expenses, particularly in nuclear operating costs and reduced incremental maintenance costs at the Davis-Besse Plant, as well as lower net interest charges due to debt redemptions and refinancing activities. The company continues to manage its business with a focus on enhancing customer service, optimizing its generation portfolio, and managing commodity supplies and risks.

Key Highlights

  • 1Net income for Q1 2004 was $174 million, a decrease from $218 million in Q1 2003.
  • 2Earnings per share were $0.53 for Q1 2004, down from $0.74 in Q1 2003.
  • 3Total revenues decreased by $38 million, primarily due to lower electric sales.
  • 4Operating expenses and taxes decreased by $86 million, primarily due to reduced purchased power costs.
  • 5FirstEnergy has approximately $1.4 billion in available borrowing capacity under its credit facilities.
  • 6The company is focused on reliability initiatives, with NERC-endorsed plans expected to be completed by June 30, 2004.
  • 7Moody's downgraded FirstEnergy's debt ratings in February 2004, citing high leverage and regulatory uncertainty.

Frequently Asked Questions

In Q1 2004, FirstEnergy reported net income of $174 million ($0.53 per share), a decrease from $218 million ($0.74 per share) in Q1 2003. This decline was primarily driven by lower revenues across various segments, though partially offset by reduced operating expenses and lower interest charges.

The decrease in total revenues was primarily due to lower electric sales, including reduced wholesale electric sales and a decline in retail electric revenues. This decline in retail revenues was attributed to increased customer switching to alternative suppliers and rate changes impacting distribution revenues.

FirstEnergy maintained a strong liquidity position, with approximately $1.4 billion in available borrowing capacity under its credit facilities as of March 31, 2004. The company expects to meet its financial obligations through a combination of cash from operations and capital markets.

Yes, FirstEnergy is involved in various legal proceedings, including those related to past restatements, the August 2003 power outage, and the Davis-Besse Nuclear Power Station outage. Regulatory matters include ongoing reviews and filings related to reliability initiatives and state-specific deregulation plans, which could potentially lead to future expenditures.