10-QPeriod: Q3 FY2008

FIRSTENERGY CORP Quarterly Report for Q3 Ended Sep 30, 2008

Filed November 7, 2008For Securities:FE

Summary

FirstEnergy Corp. reported a net income of $471 million, or $1.55 per basic share ($1.54 diluted), for the third quarter of 2008, an increase from $413 million, or $1.36 per basic share ($1.34 diluted), in the third quarter of 2007. For the first nine months of 2008, net income was $1.01 billion, or $3.32 per basic share ($3.29 diluted), down from $1.04 billion, or $3.39 per basic share ($3.35 diluted), in the same period of 2007. The company highlighted its strong liquidity position, with over $4 billion in available liquidity as of October 31, 2008, and emphasized its focus on managing financial exposures amidst capital and credit market volatility. Despite recent market challenges, FirstEnergy has taken steps to strengthen its liquidity and is reviewing its 2009 plans to adjust operating and capital budgets in response to the economic climate. Regulatory developments in Ohio and Pennsylvania, including proposed rate changes and new energy efficiency mandates, are also key factors for investors to monitor.

Financial Highlights

23 data points
Beta

Revenue

$3.90B

Net Income

$471.00M

12.1% Net Margin

EPS (Diluted)

$1.54

Cash & Equivalents

$181.00M

Free Cash Flow

$1.11B

Financial Statements
Beta
Revenue$3.90B
Operating Expenses$3.06B
Operating Income$846.00M
Net Income$471.00M
EPS (Basic)$1.55
EPS (Diluted)$1.54
Shares Outstanding (Basic)304.00M
Shares Outstanding (Diluted)307.00M

Key Highlights

  • 1Third quarter 2008 net income increased to $471 million ($1.55 per basic share) from $413 million ($1.36 per basic share) in the prior year quarter.
  • 2FirstEnergy has access to over $4 billion in liquidity, with approximately $1.9 billion available as of October 31, 2008.
  • 3The company is actively managing its exposure to counterparty credit risk and market-related changes in its postretirement benefit and nuclear decommissioning trusts due to capital market volatility.
  • 4FirstEnergy is reviewing its 2009 plans to adjust operating and capital budgets in response to the economic climate, anticipating potential reductions in capital expenditures.
  • 5Significant regulatory activity is ongoing in Ohio (ESP and MRO filings) and Pennsylvania (Act 129 implementation), which could impact future revenues and operations.
  • 6Third quarter generation output reached a new record of 22.2 million megawatt-hours, driven by the nuclear fleet.
  • 7The company experienced storm expenses totaling approximately $30 million due to Hurricane Ike's impact.

Frequently Asked Questions

FirstEnergy's net income increased to $471 million in the third quarter of 2008 from $413 million in the third quarter of 2007. Earnings per basic share also increased to $1.55 from $1.36 year-over-year.

FirstEnergy reported strong liquidity with over $4 billion in access to funds, of which approximately $1.9 billion was available as of October 31, 2008. This includes cash, revolving credit facilities, and other financing arrangements, providing flexibility to meet anticipated obligations.

FirstEnergy is navigating significant regulatory proceedings, particularly in Ohio with the filing of an Energy Security Plan (ESP) and Market Rate Offer (MRO), and in Pennsylvania with the implementation of Act 129 concerning energy efficiency and smart meter deployment. These regulatory changes will shape future operational and financial performance.

The company is actively assessing its exposure to counterparty credit risk and market-related changes in its benefit trusts. Steps have been taken to strengthen liquidity, and management is reviewing 2009 budgets to reduce reliance on external capital, potentially by adjusting capital expenditures.