Allegheny Power 2015 Annual Report Download - page 78



62
ReportofIndependentRegisteredPublicAccountingFirm

TotheStockholdersandBoardofDirectorsofFirstEnergyCorp.:

Inouropinion,theaccompanyingconsolidatedbalancesheetsandtherelatedconsolidatedstatementsofincome,comprehensive
income,commonstockholders’equity,andcashflows,presentfairly,inallmaterialrespects,thefinancialpositionofFirstEnergy
Corp.anditssubsidiariesatDecember31,2015and2014,andtheresultsoftheiroperationsandtheircashflowsforeachofthe
threeyearsintheperiodendedDecember31,2015inconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStates
ofAmerica.Inaddition,inouropinion,thefinancialstatementschedulelistedintheindexappearingunderItem15(a)(2)presents
fairly,inallmaterialrespects,theinformationsetforththereinwhenreadinconjunctionwiththerelatedconsolidatedfinancial
statements.Alsoinouropinion,theCompanymaintained,inallmaterialrespects,effectiveinternalcontroloverfinancialreportingas
ofDecember31,2015,basedoncriteriaestablishedinInternalControlIntegratedFramework(2013)issuedbytheCommitteeof
SponsoringOrganizationsoftheTreadwayCommission(COSO).TheCompany'smanagementisresponsibleforthesefinancial
statementsandfinancialstatementschedule,formaintainingeffectiveinternalcontroloverfinancialreportingandforitsassessment
oftheeffectivenessofinternalcontroloverfinancialreporting,includedintheaccompanyingManagement’sReportonInternal
ControloverFinancialReporting.Ourresponsibilityistoexpressopinionsonthesefinancialstatements,onthefinancialstatement
schedule,andontheCompany'sinternalcontroloverfinancialreportingbasedonourintegratedaudits.Weconductedourauditsin
accordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates).Thosestandardsrequirethatwe
planandperformtheauditstoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement
andwhethereffectiveinternalcontroloverfinancialreportingwasmaintainedinallmaterialrespects.Ourauditsofthefinancial
statementsincludedexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthefinancialstatements,
assessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,andevaluatingtheoverallfinancial
statementpresentation.Ourauditofinternalcontroloverfinancialreportingincludedobtaininganunderstandingofinternalcontrol
overfinancialreporting,assessingtheriskthatamaterialweaknessexists,andtestingandevaluatingthedesignandoperating
effectivenessofinternalcontrolbasedontheassessedrisk.Ourauditsalsoincludedperformingsuchotherproceduresaswe
considerednecessaryinthecircumstances.Webelievethatourauditsprovideareasonablebasisforouropinions.
AsdiscussedinNote1totheconsolidatedfinancialstatements,in2015theCompanychangedthemannerinwhichdeferredtax
assetsandliabilities,alongwithanyrelatedvaluationallowance,areclassifiedonthebalancesheet.
Acompany’sinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityof
financialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (i)pertain to the
maintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofthe
company(ii)providereasonableassurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatements
inaccordancewithgenerallyacceptedaccountingprinciples,andthatreceiptsandexpendituresofthecompanyarebeingmadeonly
inaccordancewithauthorizationsofmanagementanddirectorsofthecompanyand(iii)providereasonableassuranceregarding
preventionortimelydetectionofunauthorizedacquisition,use,ordispositionofthecompany’sassetsthatcouldhaveamaterial
effectonthefinancialstatements.
Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Also,projections
ofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchanges
inconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.


/s/PricewaterhouseCoopersLLP

PricewaterhouseCoopersLLP
Cleveland,Ohio
February16,2016


63
FIRSTENERGYCORP.
CONSOLIDATEDSTATEMENTSOFINCOME
FortheYearsEndedDecember31,
(Inmillions)201520142013
REVENUES:
Electricutilities $ 10,636 $ 9,871 $ 9,451
Unregulatedbusinesses4,3905,1785,441
Totalrevenues*15,02615,04914,892
OPERATINGEXPENSES:
Fuel1,8552,2802,496
Purchasedpower4,3184,7163,963
Otheroperatingexpenses3,7493,9623,593
PensionandOPEBmarktomarketadjustment242835(256)
Provisionfordepreciation1,2821,2201,202
Amortizationofregulatoryassets,net26812539
Generaltaxes978962978
Impairmentoflonglivedassets42 — 795
Totaloperatingexpenses12,73413,98713,310
OPERATINGINCOME2,2921,0621,582
OTHERINCOME(EXPENSE):
Lossondebtredemptions — (8) (132)
Investmentincome(loss)(22) 7233
Impairmentofequitymethodinvestment(362) — —
Interestexpense(1,132) (1,073) (1,016)
Capitalizedfinancingcosts117118103
Totalotherexpense(1,399) (891) (1,012)
INCOMEFROMCONTINUINGOPERATIONSBEFOREINCOMETAXES(BENEFITS)893171570
INCOMETAXES(BENEFITS)315(42) 195
INCOMEFROMCONTINUINGOPERATIONS578213375
Discontinuedoperations(netofincometaxesof$0,$69and$9,respectively)(Note19) — 8617
NETINCOME$ 578 $ 299 $ 392
EARNINGSPERSHAREOFCOMMONSTOCK:
BasicContinuingOperations $ 1.37 $ 0.51 $ 0.90
BasicDiscontinuedOperations(Note19) — 0.200.04
BasicNetIncome $ 1.37 $ 0.71 $ 0.94
DilutedContinuingOperations $ 1.37 $ 0.51 $ 0.90
DilutedDiscontinuedOperations(Note19) — 0.200.04
DilutedNetIncome $ 1.37 $ 0.71 $ 0.94
WEIGHTEDAVERAGENUMBEROFSHARESOUTSTANDING:
Basic422420418
Diluted424421419
DIVIDENDSDECLAREDPERSHAREOFCOMMONSTOCK$ 1.44 $ 1.44 $ 1.65

* Includesexcisetaxcollectionsof$416million,$420millionand$458millionin2015,2014and2013,respectively.

TheaccompanyingCombinedNotestoConsolidatedFinancialStatementsareanintegralpartofthesefinancialstatements.