SUPPLEMENTAL GUARANTOR INFORMATION

In 2007, FG completed a sale and leaseback transaction for a 93.83% undivided interest in Bruce Mansfield Unit 1. FES has fully and unconditionally and irrevocably guaranteed all of FG's obligations under each of the leases. The related lessor notes and pass through certificates are not guaranteed by FES or FG, but the notes are secured by, among other things, each lessor trust's undivided interest in Unit 1, rights and interests under the applicable lease and rights and interests under other related agreements, including FES' lease guaranty. This transaction is classified as an operating lease for FES and FirstEnergy and as a financing lease for FG.

The Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2016 and 2015, Condensed Consolidating Balance Sheets as of June 30, 2016 and December 31, 2015, and Condensed Consolidating Statements of Cash Flows for the six months ended June 30, 2016 and 2015, for FES (parent and guarantor), FG and NG (non-guarantor) are presented below. These statements are provided as FES fully and unconditionally guarantees outstanding registered securities of FG as well as FG's obligations under the facility lease for the Bruce Mansfield sale and leaseback that underlie outstanding registered pass-through trust certificates. Investments in wholly owned subsidiaries are accounted for by FES using the equity method. Results of operations for FG and NG are, therefore, reflected in FES’ investment accounts and earnings as if operating lease treatment was achieved. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions and the entries required to reflect operating lease treatment associated with the 2007 Bruce Mansfield Unit 1 sale and leaseback transaction.



FIRSTENERGY SOLUTIONS CORP.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)


For the Three Months Ended June 30, 2016	FES			FG			NG			Eliminations			Consolidated
	(In millions)
STATEMENTS OF OPERATIONS

REVENUES	$	1,061		$	400		$	473		$	(832	)	$	1,102

OPERATING EXPENSES:
Fuel	—			181			47			—			228
Purchased power from affiliates	950			—			49			(832		)	167
Purchased power from non-affiliates	266			—			—			—			266
Other operating expenses	119			88			148			14			369
Provision for depreciation	3			32			50			(1		)	84
General taxes	7			6			6			—			19
Impairment of assets	23			517			—			—			540
Total operating expenses	1,368			824			300			(819		)	1,673

OPERATING INCOME (LOSS)	(307		)	(424		)	173			(13		)	(571		)

OTHER INCOME (EXPENSE):
Investment income, including net income (loss) from equity investees	(163		)	7			22			153			19
Miscellaneous income	1			—			—			—			1
Interest expense — affiliates	(12		)	(2		)	—			13			(1		)
Interest expense — other	(13		)	(26		)	(13		)	15			(37		)
Capitalized interest	—			2			6			—			8
Total other income (expense)	(187		)	(19		)	15			181			(10		)

INCOME (LOSS) BEFORE INCOME TAXES (BENEFITS)	(494		)	(443		)	188			168			(581		)

INCOME TAXES (BENEFITS)	(56		)	(149		)	61			1			(143		)

NET INCOME (LOSS)	$	(438	)	$	(294	)	$	127		$	167		$	(438	)

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

NET INCOME (LOSS)	$	(438	)	$	(294	)	$	127		$	167		$	(438	)

OTHER COMPREHENSIVE INCOME (LOSS):
Pension and OPEB prior service costs	(3		)	(4		)	—			4			(3		)
Amortized gains on derivative hedges	(1		)	—			—			—			(1		)
Change in unrealized gains on available-for-sale securities	33			—			32			(32		)	33
Other comprehensive income (loss)	29			(4		)	32			(28		)	29
Income taxes (benefits) on other comprehensive income (loss)	12			(2		)	13			(11		)	12
Other comprehensive income (loss), net of tax	17			(2		)	19			(17		)	17
COMPREHENSIVE INCOME (LOSS)	$	(421	)	$	(296	)	$	146		$	150		$	(421	)



FIRSTENERGY SOLUTIONS CORP.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)


For the Six Months Ended June 30, 2016	FES			FG			NG			Eliminations			Consolidated
	(In millions)
STATEMENTS OF OPERATIONS

REVENUES	$	2,216		$	815		$	1,004		$	(1,734	)	$	2,301

OPERATING EXPENSES:
Fuel	—			300			93			—			393
Purchased power from affiliates	1,877			—			106			(1,734		)	249
Purchased power from non-affiliates	643			—			—			—			643
Other operating expenses	123			159			301			26			609
Provision for depreciation	6			63			100			(2		)	167
General taxes	15			16			14			—			45
Impairment of assets	23			517			—			—			540
Total operating expenses	2,687			1,055			614			(1,710		)	2,646

OPERATING INCOME (LOSS)	(471		)	(240		)	390			(24		)	(345		)

OTHER INCOME (EXPENSE):
Investment income, including net income (loss) from equity investees	86			13			39			(106		)	32
Miscellaneous income	3			—			—			—			3
Interest expense — affiliates	(21		)	(4		)	(2		)	24			(3		)
Interest expense — other	(26		)	(52		)	(24		)	29			(73		)
Capitalized interest	—			4			14			—			18
Total other income (expense)	42			(39		)	27			(53		)	(23		)

INCOME (LOSS) BEFORE INCOME TAXES (BENEFITS)	(429		)	(279		)	417			(77		)	(368		)

INCOME TAXES (BENEFITS)	(122		)	(88		)	147			2			(61		)

NET INCOME (LOSS)	$	(307	)	$	(191	)	$	270		$	(79	)	$	(307	)

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

NET INCOME (LOSS)	$	(307	)	$	(191	)	$	270		$	(79	)	$	(307	)

OTHER COMPREHENSIVE INCOME (LOSS):
Pensions and OPEB prior service costs	(7		)	(7		)	—			7			(7		)
Amortized gains on derivative hedges	(1		)	—			—			—			(1		)
Change in unrealized gains on available-for-sale securities	56			—			55			(55		)	56
Other comprehensive income (loss)	48			(7		)	55			(48		)	48
Income taxes (benefits) on other comprehensive income (loss)	19			(3		)	21			(18		)	19
Other comprehensive income (loss), net of tax	29			(4		)	34			(30		)	29
COMPREHENSIVE INCOME (LOSS)	$	(278	)	$	(195	)	$	304		$	(109	)	$	(278	)



FIRSTENERGY SOLUTIONS CORP.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)


For the Three Months Ended June 30, 2015	FES			FG			NG			Eliminations			Consolidated
	(In millions)
STATEMENTS OF OPERATIONS

REVENUES	$	1,074		$	346		$	456		$	(757	)	$	1,119

OPERATING EXPENSES:
Fuel	—			150			41			—			191
Purchased power from affiliates	768			—			66			(757		)	77
Purchased power from non-affiliates	392			—			—			—			392
Other operating expenses	86			75			164			12			337
Provision for depreciation	2			32			47			—			81
General taxes	11			7			7			—			25
Impairment of assets	16			—			—			—			16
Total operating expenses	1,275			264			325			(745		)	1,119

OPERATING INCOME (LOSS)	(201		)	82			131			(12		)	—

OTHER INCOME (EXPENSE):
Investment income, including net income from equity investees	119			5			3			(126		)	1
Miscellaneous income	1			3			—			—			4
Interest expense — affiliates	(7		)	(2		)	(1		)	8			(2		)
Interest expense — other	(13		)	(26		)	(12		)	14			(37		)
Capitalized interest	—			2			7			—			9
Total other income (expense)	100			(18		)	(3		)	(104		)	(25		)

INCOME (LOSS) BEFORE INCOME TAXES (BENEFITS)	(101		)	64			128			(116		)	(25		)

INCOME TAXES (BENEFITS)	(80		)	28			47			1			(4		)

NET INCOME (LOSS)	$	(21	)	$	36		$	81		$	(117	)	$	(21	)

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

NET INCOME (LOSS)	$	(21	)	$	36		$	81		$	(117	)	$	(21	)

OTHER COMPREHENSIVE INCOME (LOSS):
Pension and OPEB prior service costs	(4		)	(4		)	—			4			(4		)
Amortized gains on derivative hedges	(1		)	—			—			—			(1		)
Change in unrealized gains on available for sale securities	(12		)	—			(12		)	12			(12		)
Other comprehensive loss	(17		)	(4		)	(12		)	16			(17		)
Income tax benefits on other comprehensive loss	(6		)	(2		)	(4		)	6			(6		)
Other comprehensive loss, net of tax	(11		)	(2		)	(8		)	10			(11		)
COMPREHENSIVE INCOME (LOSS)	$	(32	)	$	34		$	73		$	(107	)	$	(32	)



FIRSTENERGY SOLUTIONS CORP.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)


For the Six Months Ended June 30, 2015	FES			FG			NG			Eliminations			Consolidated
	(In millions)
STATEMENTS OF OPERATIONS

REVENUES	$	2,406		$	839		$	963		$	(1,712	)	$	2,496

OPERATING EXPENSES:
Fuel	—			330			91			—			421
Purchased power from affiliates	1,725			—			134			(1,712		)	147
Purchased power from non-affiliates	935			—			—			—			935
Other operating expenses	266			142			318			24			750
Provision for depreciation	5			62			95			(1		)	161
General taxes	26			15			13			—			54
Impairment of assets	16			—			—			—			16
Total operating expenses	2,973			549			651			(1,689		)	2,484

OPERATING INCOME (LOSS)	(567		)	290			312			(23		)	12

OTHER INCOME (EXPENSE):
Investment income, including net income from equity investees	360			8			17			(371		)	14
Miscellaneous income	1			3			—			—			4
Interest expense — affiliates	(13		)	(4		)	(2		)	15			(4		)
Interest expense — other	(26		)	(52		)	(25		)	29			(74		)
Capitalized interest	—			3			15			—			18
Total other income (expense)	322			(42		)	5			(327		)	(42		)

INCOME (LOSS) BEFORE INCOME TAXES (BENEFITS)	(245		)	248			317			(350		)	(30		)

INCOME TAXES (BENEFITS)	(221		)	95			117			3			(6		)

NET INCOME (LOSS)	$	(24	)	$	153		$	200		$	(353	)	$	(24	)

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

NET INCOME (LOSS)	$	(24	)	$	153		$	200		$	(353	)	$	(24	)

OTHER COMPREHENSIVE INCOME (LOSS):
Pension and OPEB prior service costs	(8		)	(8		)	—			8			(8		)
Amortized gains on derivative hedges	(2		)	—			—			—			(2		)
Change in unrealized gains on available-for-sale securities	(9		)	—			(9		)	9			(9		)
Other comprehensive loss	(19		)	(8		)	(9		)	17			(19		)
Income tax benefits on other comprehensive loss	(7		)	(3		)	(3		)	6			(7		)
Other comprehensive loss, net of tax	(12		)	(5		)	(6		)	11			(12		)
COMPREHENSIVE INCOME (LOSS)	$	(36	)	$	148		$	194		$	(342	)	$	(36	)

FIRSTENERGY SOLUTIONS CORP.

CONDENSED CONSOLIDATING BALANCE SHEETS



As of June 30, 2016	FES		FG		NG		Eliminations			Consolidated
	(In millions)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	2	$	—	$	—		$	2
Receivables-
Customers	225		—		—		—			225
Affiliated companies	333		323		286		(531		)	411
Other	28		2		7		—			37
Notes receivable from affiliated companies	385		1,467		768		(2,620		)	—
Materials and supplies	48		165		217		—			430
Derivatives	155		—		—		—			155
Collateral	20		—		—		—			20
Prepayments and other	64		17		—		—			81
	1,258		1,976		1,278		(3,151		)	1,361
PROPERTY, PLANT AND EQUIPMENT:
In service	121		5,665		8,588		(382		)	13,992
Less — Accumulated provision for depreciation	46		1,900		3,955		(195		)	5,706
	75		3,765		4,633		(187		)	8,286
Construction work in progress	3		269		789		—			1,061
	78		4,034		5,422		(187		)	9,347
INVESTMENTS:
Nuclear plant decommissioning trusts	—		—		1,510		—			1,510
Investment in affiliated companies	7,593		—		—		(7,593		)	—
Other	—		10		—		—			10
	7,593		10		1,510		(7,593		)	1,520

DEFERRED CHARGES AND OTHER ASSETS:
Accumulated deferred income tax benefits	254		127		—		(381		)	—
Customer intangibles	52		—		—		—			52
Property taxes	—		6		14		—			20
Derivatives	83		—		—		—			83
Other	22		336		—		19			377
	411		469		14		(362		)	532
	$	9,340	$	6,489	$	8,224	$	(11,293	)	$	12,760

LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES:
Currently payable long-term debt	$	—	$	396	$	68	$	(25	)	$	439
Short-term borrowings-
Affiliated companies	2,344		478		8		(2,620		)	210
Accounts payable-
Affiliated companies	633		172		155		(600		)	360
Other	19		95		—		—			114
Accrued taxes	11		43		50		(26		)	78
Derivatives	95		4		—		—			99
Other	70		61		9		33			173
	3,172		1,249		290		(3,238		)	1,473
CAPITALIZATION:
Total equity	5,357		2,751		4,807		(7,558		)	5,357
Long-term debt and other long-term obligations	692		1,924		837		(1,106		)	2,347
	6,049		4,675		5,644		(8,664		)	7,704
NONCURRENT LIABILITIES:
Deferred gain on sale and leaseback transaction	—		—		—		774			774
Accumulated deferred income taxes	5		—		787		(165		)	627
Retirement benefits	27		317		—		—			344
Asset retirement obligations	—		188		689		—			877
Derivatives	40		6		—		—			46
Other	47		54		814		—			915
	119		565		2,290		609			3,583
	$	9,340	$	6,489	$	8,224	$	(11,293	)	$	12,760

FIRSTENERGY SOLUTIONS CORP.

CONDENSED CONSOLIDATING BALANCE SHEETS



As of December 31, 2015	FES		FG		NG		Eliminations			Consolidated
	(In millions)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	2	$	—	$	—		$	2
Receivables-
Customers	275		—		—		—			275
Affiliated companies	433		403		461		(846		)	451
Other	36		4		19		—			59
Notes receivable from affiliated companies	406		1,210		805		(2,410		)	11
Materials and supplies	53		204		213		—			470
Derivatives	154		—		—		—			154
Collateral	70		—		—		—			70
Prepayments and other	48		18		—		—			66
	1,475		1,841		1,498		(3,256		)	1,558
PROPERTY, PLANT AND EQUIPMENT:
In service	93		6,367		8,233		(382		)	14,311
Less — Accumulated provision for depreciation	40		2,144		3,775		(194		)	5,765
	53		4,223		4,458		(188		)	8,546
Construction work in progress	30		249		878		—			1,157
	83		4,472		5,336		(188		)	9,703
INVESTMENTS:
Nuclear plant decommissioning trusts	—		—		1,327		—			1,327
Investment in affiliated companies	7,452		—		—		(7,452		)	—
Other	—		10		—		—			10
	7,452		10		1,327		(7,452		)	1,337

DEFERRED CHARGES AND OTHER ASSETS:
Accumulated deferred income tax benefits	300		16		—		(316		)	—
Customer intangibles	61		—		—		—			61
Goodwill	23		—		—		—			23
Property taxes	—		12		28		—			40
Derivatives	79		—		—		—			79
Other	29		312		14		12			367
	492		340		42		(304		)	570
	$	9,502	$	6,663	$	8,203	$	(11,200	)	$	13,168

LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES:
Currently payable long-term debt	$	—	$	229	$	308	$	(25	)	$	512
Short-term borrowings-
Affiliated companies	2,021		389		—		(2,410		)	—
Other	—		8		—		—			8
Accounts payable-
Affiliated companies	884		146		368		(856		)	542
Other	21		118		—		—			139
Accrued taxes	7		93		62		(86		)	76
Derivatives	103		1		—		—			104
Other	66		61		9		45			181
	3,102		1,045		747		(3,332		)	1,562
CAPITALIZATION:
Total equity	5,605		2,944		4,476		(7,420		)	5,605
Long-term debt and other long-term obligations	690		2,116		840		(1,136		)	2,510
	6,295		5,060		5,316		(8,556		)	8,115
NONCURRENT LIABILITIES:
Deferred gain on sale and leaseback transaction	—		—		—		791			791
Accumulated deferred income taxes	6		—		697		(103		)	600
Retirement benefits	27		305		—		—			332
Asset retirement obligations	—		191		640		—			831
Derivatives	37		1		—		—			38
Other	35		61		803		—			899
	105		558		2,140		688			3,491
	$	9,502	$	6,663	$	8,203	$	(11,200	)	$	13,168

FIRSTENERGY SOLUTIONS CORP.

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS



For the Six Months Ended June 30, 2016	FES			FG			NG			Eliminations			Consolidated
	(In millions)

NET CASH PROVIDED FROM (USED FOR) OPERATING ACTIVITIES	$	(336	)	$	308		$	596		$	(12	)	$	556
CASH FLOWS FROM FINANCING ACTIVITIES:
New Financing-
Short-term borrowings, net	322			89			8			(209		)	210
Redemptions and Repayments-
Long-term debt	—			(12		)	(245		)	12			(245		)
Other	—			(2		)	—			—			(2		)
Net cash provided from (used for) financing activities	322			75			(237		)	(197		)	(37		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions	(27		)	(126		)	(182		)	—			(335		)
Nuclear fuel	—			—			(188		)	—			(188		)
Sales of investment securities held in trusts	—			—			441			—			441
Purchases of investment securities held in trusts	—			—			(467		)	—			(467		)
Cash investments	11			—			—			—			11
Loans to affiliated companies, net	22			(257		)	37			209			11
Other	8			—			—			—			8
Net cash provided from (used for) investing activities	14			(383		)	(359		)	209			(519		)
Net change in cash and cash equivalents	—			—			—			—			—
Cash and cash equivalents at beginning of period	—			2			—			—			2
Cash and cash equivalents at end of period	$	—		$	2		$	—		$	—		$	2

FIRSTENERGY SOLUTIONS CORP.

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS



For the Six Months Ended June 30, 2015	FES			FG			NG			Eliminations			Consolidated
	(In millions)

NET CASH PROVIDED FROM (USED FOR) OPERATING ACTIVITIES	$	(600	)	$	275		$	680		$	(12	)	$	343
CASH FLOWS FROM FINANCING ACTIVITIES:
New Financing-
Short-term borrowings, net	674			62			—			(612		)	124
Redemptions and Repayments-
Long-term debt	(17		)	(12		)	(52		)	12			(69		)
Short-term borrowings, net	—			—			(28		)	28			—
Other	—			(2		)	—			—			(2		)
Net cash provided from (used for) financing activities	657			48			(80		)	(572		)	53

CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions	(2		)	(95		)	(167		)	—			(264		)
Nuclear fuel	—			—			(97		)	—			(97		)
Sales of investment securities held in trusts	—			—			376			—			376
Purchases of investment securities held in trusts	—			—			(404		)	—			(404		)
Loans to affiliated companies, net	(55		)	(234		)	(308		)	584			(13		)
Other	—			6			—			—			6
Net cash used for investing activities	(57		)	(323		)	(600		)	584			(396		)
Net change in cash and cash equivalents	—			—			—			—			—
Cash and cash equivalents at beginning of period	—			2			—			—			2
Cash and cash equivalents at end of period	$	—		$	2		$	—		$	—		$	2