Allegheny Power 2015 Annual Report Download - page 79

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62
ReportofIndependentRegisteredPublicAccountingFirm
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TotheStockholdersandBoardofDirectorsofFirstEnergyCorp.:
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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
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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.