| Exhibit 99.2 | ||
| FirstEnergy Corp. | For Release: January 26, 2012 | |
| 76 South Main Street | ||
| Akron, Ohio 44308 | ||
| www.firstenergycorp.com | ||
| News Media Contact: | Investor Contact: | |
| Tricia Ingraham | Irene Prezelj | |
| (330) 384-5247 | (330) 384-3859 |
FirstEnergy Improves Accounting Method for Retirement Benefits,
Provides 2011 Earnings Preview
Akron, Ohio – FirstEnergy Corp., (NYSE: FE) today announced it has adopted a new policy that changes the method of accounting for pensions and other post-retirement benefits (OPEB). The company also provided a preview of 2011 earnings. Fourth quarter and full-year 2011 results are scheduled to be reported on February 28, 2012.
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The new pension and OPEB accounting method, which is preferable under U.S. Generally Accepted Accounting Principles (GAAP), recognizes gains and losses in the year they are incurred, instead of amortizing them over time. The accounting change will be effective for 2011, and does not affect FirstEnergy’s cash flow, pension funding requirements, or its pension and OPEB liabilities.
“With this more transparent approach to financial reporting, our normalized earnings will more clearly reflect the ongoing operational performance of our business,” said Mark T. Clark, FirstEnergy executive vice president and chief financial officer.
FirstEnergy also made a voluntary contribution to its pension plan of $600 million earlier this month. The plan’s current funded status is 90 percent on an accumulated benefit obligation basis.
FirstEnergy said it expects to report full-year 2011 basic non-GAAP* earnings of $3.63 to $3.65 per share of common stock, up from its previous guidance of $3.30 to $3.50 per share. On a GAAP basis, the company expects full-year 2011 basic earnings of $2.44 to $2.46 per share.
These 2011 GAAP and non-GAAP earnings expectations include a $0.22 per share benefit as a result of the pension and OPEB accounting change. GAAP earnings expectations for 2011 also include a $0.73 per share decrease due to the mark-to-market impact of the new accounting method, and a charge of $0.38 per share related to the plant retirements that were announced earlier today.
Year-end 2011 common shareholders’ equity is expected to increase by approximately $530 million as a result of the pension and OPEB accounting change.
| Estimated 2011 Earnings Per Share, GAAP to Non-GAAP* Reconciliation | |
| 2011 | |
| Basic Earnings Per Share (GAAP) | $2.44 - $2.46 |
| Excluding Special Items: | |
| Merger-Related Costs | 0.36 |
| Regulatory Charges | 0.05 |
| Trust Securities Impairment | 0.03 |
| Income Taxes (Retiree Drug Subsidy) | 0.07 |
| Non-Core Asset Sales/Impairments | (0.77) |
| Generating Plant Charges | 0.38 |
Mark-To-Market Adjustments -- Pension/OPEB Actuarial Assumptions | 0.73 |
| All Other | 0.02 |
| Litigation Resolution | 0.06 |
| Merger Accounting- Commodity Contracts | 0.26 |
| Basic Earnings Per Share (Non-GAAP*) | $3.63 – $3.65 |
FirstEnergy is a diversified energy company dedicated to safety, reliability and operational excellence. Its 10 electric distribution companies comprise the nation’s largest investor-owned electric system. Its diverse generating fleet features non-emitting nuclear, scrubbed baseload coal, natural gas, and pumped-storage hydro and other renewables, and has a total generating capacity of nearly 23,000 megawatts.
(*) This news release contains non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company's historical or future financial performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States (GAAP). These non-GAAP financial measures are intended to complement, and not considered as an alternative to, the most directly comparable GAAP financial measure. Also, the non-GAAP financial measures may not be comparable to similarly titled measures used by other entities.
Forward-Looking Statements: This news release includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties. These statements include declarations regarding management's intents, beliefs and current expectations. These statements typically contain, but are not limited to, the terms "anticipate," "potential," "expect," "believe," "estimate" and similar words. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual results may differ materially due to: the speed and nature of increased competition in the electric utility industry, the impact of the regulatory process on the pending matters in the various states in which we do business including, but not limited to, matters related to rates, the status of the PATH project in light of the PJM Interconnection, L.L.C. (PJM) direction to suspend work on the project pending review of its planning process, its re-evaluation of the need for the project and the uncertainty of the timing and amounts of any related capital expenditures, business and regulatory impacts from ATSI's realignment into PJM, economic or weather conditions affecting future sales and margins, changes in markets for energy services, changing energy and commodity market prices and availability, financial derivative reforms that could increase our liquidity needs and collateral costs, the continued ability of FirstEnergy's regulated utilities to collect transition and other costs, operation and maintenance costs being higher than anticipated, other legislative and regulatory changes, and revised environmental requirements, including possible GHG emission, water intake and coal combustion residual regulations, the potential impacts of the Cross-State Air Pollution Rule (CSAPR), which was stayed by the courts on December 30, 2011, and the effects of the EPA's recently released Mercury and Air Toxics Standards (MATS) rules, the uncertainty of the timing and amounts of the capital expenditures that may arise in connection with any NSR litigation or potential regulatory initiatives or rulemakings (including that such expenditures could result in our decision to shut down or idle certain generating units), the uncertainty associated with PJM's review of the company's plan to retire its older unscrubbed fossil units, adverse regulatory or legal decisions and outcomes with respect to our nuclear operations (including, but not limited to, the revocation or non-renewal of necessary licenses, approvals or operating permits by the NRC, including as a result of the incident at Japan's Fukushima Daiichi Nuclear Plant), issues that could result from our continuing investigation and analysis of the indications of cracking in the plant shield building at Davis-Besse, adverse legal decisions and outcomes related to Met-Ed's and Penelec's ability to recover certain transmission costs through their transmission service charge riders, the continuing availability of generating units and changes in their ability to operate at or near full capacity, replacement power costs being higher than anticipated or inadequately hedged, the ability to comply with applicable state and federal reliability standards and energy efficiency mandates, changes in customers' demand for power, including but not limited to, changes resulting from the implementation of state and federal energy efficiency mandates, the ability to accomplish or realize anticipated benefits from strategic goals and our ability to improve electric commodity margins and the impact of, among other factors, the increased cost of coal and coal transportation on such margins, the ability to experience growth in the distribution business, the changing market conditions that could affect the value of assets held in FirstEnergy's nuclear decommissioning trusts, pension trusts and other trust funds, and cause FirstEnergy to make additional contributions sooner, or in amounts that are larger than currently anticipated, the impact of changes to material accounting policies, the ability to access the public securities and other capital and credit markets in accordance with FirstEnergy's financing plan, the cost of such capital and overall condition of the capital and credit markets affecting FirstEnergy and its subsidiaries, changes in general economic conditions affecting FirstEnergy and its subsidiaries, interest rates and any actions taken by credit rating agencies that could negatively affect FirstEnergy's and its subsidiaries' access to financing or their costs and increase requirements to post additional collateral to support outstanding commodity positions, LOCs and other financial guarantees, the continuing uncertainty of the national and regional economy and its impact on the major industrial and commercial customers of FirstEnergy's subsidiaries, issues concerning the soundness of financial institutions and counterparties with which FirstEnergy and its subsidiaries do business, issues arising from the completed merger of FirstEnergy and Allegheny Energy, Inc. and the ongoing coordination of their combined operations including FirstEnergy's ability to maintain relationships with customers, employees or suppliers, as well as the ability to continue to successfully integrate the businesses and realize cost savings and any other synergies and the risk that the credit ratings of the combined company or its subsidiaries may be different from what the companies expect, the risks and other factors discussed from time to time in FirstEnergy's and its applicable subsidiaries' SEC filings, and other similar factors. The foregoing review of factors should not be construed as exhaustive. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor assess the impact of any such factor on FirstEnergy's business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. FirstEnergy expressly disclaims any current intention to update, except as required by law, any forward-looking statements contained herein as a result of new information, future events or otherwise.
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