FirstEnergy Corp. For Release: October 21, 2004
76 South Main Street
Akron, Ohio 44308
www.firstenergycorp.com
News Media Contact: Investor Contact:
Keith Hancock Kurt Turosky
(330) 384-5247 (330) 384-5500
FIRSTENERGY REPORTS HIGHER THIRD QUARTER EARNINGS
FirstEnergy Corp. (NYSE: FE) today reported that third quarter 2004
earnings on a GAAP basis were $298.6 million, or basic and diluted earnings of
$0.91 per share of common stock. On a non-GAAP(*) basis, earnings were $319.1
million, or basic and diluted earnings of $0.97 per share of common stock,
excluding unusual charges related to the sale and impairment of non-core assets
and severance costs associated with the reorganization of the company's nuclear
operations.
That compares with GAAP earnings of $152.7 million, or basic earnings
of $0.51 per share ($0.50 diluted) of common stock in the third quarter of 2003,
including the impact of the Davis-Besse extended outage and other unusual
charges. Excluding these items, last year's earnings were $280.2 million, or
basic earnings of $0.94 per share ($0.93 diluted) of common stock on a non-GAAP
basis.
Total revenues for the third quarter of 2004 were $3.5 billion, up from
$3.4 billion in 2003.
"Our third quarter earnings reflect the strong progress we've made this
year, particularly in the areas of electricity distribution, generating plant
performance and our debt-reduction program," said President and Chief Executive
Officer Anthony J. Alexander. "The impact of milder weather on sales was offset
in part by operational improvements and cost-savings efforts that continue to be
achieved throughout the organization."
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Third Quarter 2004 Non-GAAP Reconciliation
After-tax Amount Basic
(Millions) Earnings Per
Share
---------------- ------------
Earnings Before Unusual Items (Non-GAAP) $319.1 $ 0.97
Non-Core Asset Sales/Impairments (16.7) (0.05)
Nuclear Operations Severance Costs (3.8) (0.01)
------ ------
Net Income (GAAP) $298.6 $ 0.91
Third Quarter 2003 Non-GAAP Reconciliation
After-tax Amount Basic
(Millions) Earnings Per
Share
---------------- ------------
Earnings Before Davis-Besse Impact
and Other Unusual $280.2 $ 0.94
Items (Non-GAAP)
Goodwill Impairment (78.2) (0.26)
Davis-Besse Impact (42.6) (0.14)
JCP&L Rate Case Disallowance (7.7) (0.03)
Discontinued Operations 1.0 --
------ ------
Net Income (GAAP) $152.7 $ 0.51
FirstEnergy continues to pursue its strategy of selling non-core assets
throughout 2004. Sales of such assets in the third quarter and sales currently
anticipated in the fourth quarter resulted in a charge of $0.05 per share of
common stock during the quarter from losses and impairments recorded for such
activities.
FirstEnergy's debt paydown and refinancing program resulted in a
decrease of approximately $982 million in debt during the first nine months of
2004, producing annualized savings of approximately $78 million. The company
remains on track to achieve its goal of reducing debt by at least $1 billion
this year. At the end of the third quarter, the total capacity of FirstEnergy's
primary credit facilities and those of its subsidiaries stood at $2.3 billion.
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For the first nine months of 2004, earnings on a GAAP basis were $676.7
million, or basic earnings of $2.07 per share ($2.06 diluted) of common stock.
Excluding unusual items, earnings on a non-GAAP basis were $753.1 million, or
basic earnings of $2.30 per share ($2.29 diluted).
That compares with earnings on a GAAP basis of $313.3 million for the
first nine months of 2003, or basic earnings of $1.06 per share ($1.05 diluted)
of common stock. Excluding discontinued operations, the cumulative effect of an
accounting change and other unusual charges, non-GAAP earnings were $601.7
million, or basic earnings of $2.03 per share ($2.02 diluted).
Revenues for the first nine months of 2004 were $9.9 billion, compared
with $9.5 billion for the same period last year.
First Nine Months 2004 Non-GAAP Reconciliation
After-tax Basic
Amount Earnings
(Millions) Per Share
---------- ---------
Earnings Before Davis-Besse $753.1 $ 2.30
Impact and Other
Unusual Items (Non-GAAP)
Davis-Besse Impact (38.3) (0.12)
Non-Core Asset Sales/Impairments (23.7) (0.07)
Lawsuits Settlement (10.6) (0.03)
Nuclear Operations Severance Costs (3.8) 0.01)
------- ------
Net Income (GAAP) $676.7 $ 2.07
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First Nine Months 2003 Non-GAAP Reconciliation
After-Tax Basic
Amount Earnings Per
(Millions) Share
---------- ------------
Earnings Before Davis-Besse Impact $601.7 $ 2.03
and Other Unusual
Items (Non-GAAP)
Cumulative Effect of Accounting Change 102.1 0.35
Goodwill Impairment (78.2) (0.26)
JCP&L Rate Case Disallowance (103.2) (0.35)
Davis-Besse Impact (132.0) (0.45)
Discontinued Operations (65.2) (0.22)
Other Unusual Items (11.9) (0.04)
------ ------
Net Income (GAAP) $313.3 $ 1.06
Milder weather during the third quarter of 2004 led to overall flat
kilowatt-hour deliveries compared with the year-prior quarter, including a
negative impact on residential customers because of lower air-conditioner use.
Despite the milder weather, generation sales were 5% higher during the third
quarter of 2004 compared with last year's third quarter due to increased sales
in the wholesale market. FirstEnergy's generation fleet continued to show
improved performance, enabling the company to take advantage of spot market
sales. Its generating plants posted a record output for the quarter and for the
first nine months of 2004 of 19.8 billion and 57.2 billion kilowatt-hours,
respectively.
FirstEnergy's Consolidated Report to the Financial Community - which
provides highlights on company developments and financial results for the third
quarter of 2004 - is posted on the company's Internet site -
www.firstenergycorp.com/ir. To access the report, click on Consolidated Report
to the Financial Community.
FirstEnergy is a diversified energy company headquartered in Akron,
Ohio. Its subsidiaries and affiliates are involved in the generation,
transmission and distribution of electricity; marketing of natural gas; and
energy management and other energy-related services.
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(*) 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).
Forward-Looking Statement: 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 typically contain,
but are not limited to, the terms "anticipate", "potential", "expect",
"believe", "estimate" and similar words. Actual results may differ materially
due to the speed and nature of increased competition and deregulation in the
electric utility industry, economic or weather conditions affecting future sales
and margins, changes in markets for energy services, changing energy and
commodity market prices, replacement power costs being higher than anticipated
or inadequately hedged, maintenance costs being higher than anticipated,
legislative and regulatory changes (including revised environmental
requirements), adverse regulatory or legal decisions and the outcome of
governmental investigations (including revocation of necessary licenses or
operating permits), availability and cost of capital, the continuing
availability and operation of generating units, the inability to accomplish or
realize anticipated benefits of strategic goals, the ability to improve electric
commodity margins and to experience growth in the distribution business, the
ability to access the public securities markets, further investigation into the
causes of the August 14, 2003 regional power outage and the outcome, cost and
other effects of present and potential legal and administrative proceedings and
claims related to that outage, the final outcome in the proceeding related to
the Company's Application for a Rate Stabilization Plan, the risks and other
factors discussed from time to time in the Company's Securities and Exchange
Commission filings, including its annual report on Form 10-K (as amended) for
the year ended December 31, 2003, and its Form 10-Q for the quarter ended June
30, 2004, and other similar factors. The Company expressly disclaims any current
intention to update any forward-looking statements contained in this document as
a result of new information, future events, or otherwise.
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