FirstEnergy Corp.
(NYSE: FE) has posted a second-quarter loss of nearly $58 million,
is restating its results for 2002, and has revised its 2003 earnings
guidance downward.
FirstEnergy said the restatement of
earnings for 2002 and the first quarter of 2003 reflects
implementation of changed accounting treatments regarding the
recovery of transition assets in Ohio and the recognition of
above-market values of certain leased generation facilities.
FirstEnergy said the restatements are expected to reduce its
earnings per share by 23 cents to $1.92 for 2002, and are expected
to lower the company's 2003 earnings by 17 cents a share compared
with FirstEnergy's original earnings guidance.
In addition,
earnings through 2005 are expected to be lower than originally
estimated and earnings from 2006 through 2017 are expected to be
higher than they otherwise would have been as a result of the
restatement. For the period from 2002 to 2017, the cumulative impact
of the restatement will be an increase in net income of an expected
$381 million.
As for results in the latest second quarter,
FirstEnergy said the loss includes a non-cash charge from
discontinued operations of $67 million due to the company's
divestiture in April of Emdersa through the abandonment of
FirstEnergy's shares in Emdersa's parent company, GPU Argentina
Holdings Inc. FirstEnergy had acquired Emdersa through its 2001
merger with the former GPU Inc.
FirstEnergy said unusual
items affecting 2003 second-quarter results included a pre-tax
charge of $158.5 million, or 32 cents per share after-tax, based on
the New Jersey Board of Public Utilities' decision on Jersey Central
Power & Light's rate proceeding, which reduced the amount of
deferred energy and other costs that JCP&L can recover; pre-tax
charges totaling $18.8 million, or four cents per share after tax,
resulting from the impairment of a note receivable; and the sale in
June of a non-core asset, Northeast Ohio Natural Gas Corp.
Also hurting FirstEnergy's second-quarter results were
pre-tax costs associated with the effort to restart the troubled
Davis-Besse Nuclear Power Station. Those costs totaled $63 million
on a pre-tax basis, or 13 cents a share after tax, during the
period. Other factors that reduced FirstEnergy's second-quarter
results were an increase in nuclear operating expenses primarily
related to longer-than-anticipated refueling outages at the Perry
and Beaver Valley Unit 1 plants; a rise in pension and other
post-employment benefits; and an increase in depreciation and
amortization expenses.
In the second quarter of 2002,
FirstEnergy reported restated earnings of $216 million, or 74 cents
a share.
As a result of lower-than-expected results for the
quarter, FirstEnergy has revised downward its 2003 earnings
guidance. FirstEnergy now is estimating that its per-share earnings
including costs connected with the Davis-Besse outage as well as
various other charges will be in a range of $1.96 to $2.16.
