10-Q/APeriod: Q3 FY2006

FIRSTENERGY CORP Quarterly Report (Amendment) for Q3 Ended Nov 1, 2006

Filed November 1, 2006For Securities:FE

Summary

FirstEnergy Corp. filed an amended quarterly report (10-Q/A) for the period ended March 31, 2006. The primary purpose of this amendment was to correct a misclassification in the Consolidated Statements of Cash Flows. Specifically, a $78 million cash receipt from the liquidation of temporary cash investments by Pennsylvania Power Company was incorrectly reported under operating activities instead of investing activities. This reclassification reduced reported operating cash flows by $78 million and increased investing cash flows by the same amount, with no impact on the net change in cash or the income statement. Financially, FirstEnergy reported net income of $221 million, or $0.67 per share, an increase from $160 million, or $0.49 per share, in the prior year's first quarter. This improvement was driven by higher electric sales revenues, reduced financing costs, and lower transition cost amortization. Total revenues rose to $2.84 billion from $2.75 billion, reflecting increased electric generation and sales. Despite a slight decrease in distribution deliveries due to milder weather, the company's generating fleet achieved a record output.

Key Highlights

  • 1Net income increased to $221 million ($0.67/share) in Q1 2006 from $160 million ($0.49/share) in Q1 2005.
  • 2Total revenues grew to $2.84 billion from $2.75 billion year-over-year.
  • 3The company's generating fleet produced a record 20.1 billion KWH in Q1 2006.
  • 4A correction was made to the Consolidated Statements of Cash Flows, reclassifying $78 million from operating to investing activities.
  • 5FirstEnergy entered into agreements to purchase 330 MW of wind power, expected to be operational in 2007.
  • 6Regulatory filings in Pennsylvania for Met-Ed and Penelec proposed significant revenue increases related to transmission and generation costs.
  • 7The company is managing various regulatory and legal matters across its operating states, including ongoing reviews of reliability standards and response to power outage-related litigation.

Frequently Asked Questions

The primary reason for filing this amended report (10-Q/A) was to correct a misclassification in the Consolidated Statements of Cash Flows. A $78 million cash receipt from the liquidation of temporary cash investments by Pennsylvania Power Company was incorrectly categorized under operating activities and has been reclassified to investing activities.

FirstEnergy's financial performance improved in the first quarter of 2006 compared to the same period in 2005. Net income increased to $221 million ($0.67 per share) from $160 million ($0.49 per share), driven by higher electric sales revenues, reduced financing costs, and lower transition cost amortization.

The increase in net income was primarily driven by higher electric sales revenues, which benefited from increased generation and sales volumes, and improved pricing due to rate stabilization and fuel recovery charges. Additionally, reduced financing costs and lower amortization of transition costs contributed to the improved bottom line.

Yes, FirstEnergy entered into multi-year agreements to purchase 330 MW of wind power, with projects expected to be operational in 2007. The company also detailed significant regulatory filings in Pennsylvania for Met-Ed and Penelec proposing revenue increases and is actively involved in managing regulatory and legal matters across its service territories.