Allegheny Power 2011 Annual Report Download - page 20

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5
OVERVIEW
Earnings available to FirstEnergy Corp. in 2011 were $885 million, or $2.22 per basic share of common stock ($2.21 diluted),
compared with $742 million, or $2.44 per basic share of common stock ($2.42 diluted), in 2010 and $872 million, or $2.87 per basic
share ($2.85 diluted), in 2009.
Change in Earnings Per Basic Share From Prior Year
Earnings Per Basic Share — Prior Year
Segment operating results(1)-
Regulated Distribution
Competitive Energy Services
Regulated Independent Transmission
Non-core asset sales/impairments
Generating plant impairments
Trust securities impairments
Litigation resolution
Regulatory charges
Mark-to-market adjustments-
Pension and OPEB actuarial assumptions
All other
Organizational restructuring - 2009
Debt redemption premiums
Merger-related costs
Merger Accounting - commodity contracts
Net merger accretion(1)(2)(3)
Income tax resolution / retiree drug subsidy
Settlement of uncertain tax positions
Depreciation
Interest expense, net of amounts capitalized
Investment income
Change in effective tax rate
Other
Earnings Per Basic Share
2011
$ 2.44
0.05
(0.15)
(0.06)
0.67
0.08
0.02
(0.07)
0.03
(0.47)
0.02
—
(0.01)
(0.29)
(0.26)
0.54
(0.03)
(0.05)
(0.09)
(0.14)
(0.03)
0.04
(0.02)
$ 2.22
2010
$ 2.87
0.04
0.10
0.12
(0.37)
(0.78)
0.03
0.01
0.45
0.30
0.35
0.14
0.32
(0.16)
—
—
(0.57)
(0.11)
(0.02)
0.04
(0.19)
(0.17)
0.04
$ 2.44
(1) Excludes amounts that are shown separately
(2) Includes dilutive effect of shares issued in connection with the Allegheny merger
(3) Includes 10 months of Allegheny results in 2011
Merger
On February 25, 2011, the merger between FirstEnergy and AE closed. Pursuant to the terms of the Agreement and Plan of Merger
between FirstEnergy, Merger Sub and AE, Merger Sub merged with and into AE with AE continuing as the surviving corporation
and a wholly owned subsidiary of FirstEnergy. As part of the merger, AE shareholders received 0.667 of a share of FirstEnergy
common stock for each AE share outstanding as of the merger completion date and all outstanding AE equity-based employee
compensation awards were converted into FirstEnergy equity-based awards on the same basis.
In connection with the merger, FirstEnergy recorded merger transaction costs of approximately $91 million ($73 million net of tax
and $65 million ($47 million net of tax) during 2011 and 2010, respectively. These costs are included in “Other operating expenses”
in the Consolidated Statements of Income. In addition, during 2011, $93 million of pre-tax merger integration costs and $36 million
of pre-tax charges from merger settlements approved by regulatory agencies were recognized. Charges resulting from merger
settlements are not expected to be material in future periods.
FirstEnergy exceeded its 2011 merger benefits target. During 2011, FirstEnergy completed savings initiatives that allowed the
company to capture pre-tax annualized merger benefits of approximately $267 million compared to the annual target of $210 million.