SEC Comment Letter for FIRSTENERGY CORP (FE) (CIK 0001031296) (FE) — Oct 24, 2006
FIRSTENERGY CORP (FE) (CIK 0001031296)
Date: Oct. 24, 2006 · CIK: 0001031296 · Accession: 0000000000-06-051572
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-21011
Referenced dates: September 8, 2006
Letter
Mail Stop 3561 October 23, 2006 Mr. Harvey L. Wagner Vice President, Controller, and Chief Accounting Officer FirstEnergy Corporation 76 South Main Street Akron, Ohio 44308
Re: FirstEnergy Corporation Form 10-K for Fiscal Ye ar Ended December 31, 2005 Filed March 2, 2006 Forms 10-Q for Fiscal Quarters Ended March 31, 2006 an d June 30, 2006 File No. 333-21011
Dear Mr. Wagner:
We reviewed your responses to our prior comments on the above referenced filings as set forth in your letter dated Se ptember 21, 2006. Our review resulted in the following additional comment.
Form 10-K for Fiscal Year Ended December 31, 2005
Exhibit 13
Management’s Discussion and Analysis of Results of Operations and Financial Condition, page 4
Executive Summary, page 4 1. We have reviewed your response to co mment 3 in our letter dated September 8, 2006. Please confirm that you will revise your disclosure in future filings to disclose the information you present in the first sub-response to comment 3. Further, you state that you have neve r used the non-GAAP measures in an attempt to smooth earnings, thereby s uggesting that Question 8 of the “Frequently Asked Questions Regardi ng the Use of Non-GAAP Financial Measures” is inapplicable. Similarly, you indicate that all items excluded
Mr. Wagner FirstEnergy Corporation October 23, 2006 Page 2 of 2 from net income in arriving at “ear nings before unusual items” are non- recurring. Please note that we view items such as asset impairments collectively in relation to each othe r in determining whether they are recurring. As such, we consider many of these items, such as asset impairments, rate settlements, plant outages, and tax adjustments, to be recurring in nature . As you have excluded items of a recurring nature in arriving at both “earnings before unusual items” and “cash earnings,” we believe Question 8 is applicable. As such, please show us how your revised disclosures, which should fully discu ss each bullet point of Question 8, will read in future filings. While you indicate management frequently references non-GAAP measures in decision-making, en sure you explain in greater detail how you use the non-GAAP measures to conduct or evaluate your business. For example, are such performance measures used in budgetary, compensatory or resource allocat ion decisions? If you do not use the measures in managing your business, please revise to remove such measures from your filing. Finally, please tell us in detail how you use “cash earnings” to measure performance since it appear s to be more akin to a liquidity measure.
* * * *
As appropriate, please respond to this comm ent within 10 business days or tell us when you will provide us with a response. Pl ease furnish a response letter that keys your response to our comment and provides any requested information. Detailed response letters greatly facilitate our review. Pleas e file your response letter on EDGAR. Please understand that we may have additional comm ents after reviewing your response to our comment.
You may contact Staff Accountant Sarah Goldberg at (202) 551-3340 if you have questions regarding comments on the financial statements and related matters. Please contact me at (202) 551-3849 with any other questions.
S i n c e r e l y ,
J i m A l l e g r e t t o Senior Assistant Chief Accountant
Show Raw Text
Mail Stop 3561
October 23, 2006
Mr. Harvey L. Wagner
Vice President, Controller, and Chief Accounting Officer
FirstEnergy Corporation
76 South Main Street
Akron, Ohio 44308
Re: FirstEnergy Corporation
Form 10-K for Fiscal Ye ar Ended December 31, 2005
Filed March 2, 2006
Forms 10-Q for Fiscal Quarters Ended
March 31, 2006 an d June 30, 2006
File No. 333-21011
Dear Mr. Wagner:
We reviewed your responses to our prior comments on the above referenced
filings as set forth in your letter dated Se ptember 21, 2006. Our review resulted in the
following additional comment.
Form 10-K for Fiscal Year Ended December 31, 2005
Exhibit 13
Management’s Discussion and Analysis of Results of Operations and Financial
Condition, page 4
Executive Summary, page 4
1. We have reviewed your response to co mment 3 in our letter dated September
8, 2006. Please confirm that you will revise your disclosure in future filings
to disclose the information you present in the first sub-response to comment 3.
Further, you state that you have neve r used the non-GAAP measures in an
attempt to smooth earnings, thereby s uggesting that Question 8 of the
“Frequently Asked Questions Regardi ng the Use of Non-GAAP Financial
Measures” is inapplicable. Similarly, you indicate that all items excluded
Mr. Wagner
FirstEnergy Corporation
October 23, 2006 Page 2 of 2
from net income in arriving at “ear nings before unusual items” are non-
recurring. Please note that we view items such as asset impairments
collectively in relation to each othe r in determining whether they are
recurring. As such, we consider many of these items, such as asset impairments, rate settlements, plant outages, and tax adjustments, to be
recurring in nature . As you have excluded items of a recurring nature in
arriving at both “earnings before unusual items” and “cash earnings,” we believe Question 8 is applicable. As such, please show us how your revised
disclosures, which should fully discu ss each bullet point of Question 8, will
read in future filings. While you indicate management frequently references
non-GAAP measures in decision-making, en sure you explain in greater detail
how you use the non-GAAP measures to conduct or evaluate your business.
For example, are such performance measures used in budgetary, compensatory or resource allocat ion decisions? If you do not use the
measures in managing your business, please revise to remove such measures from your filing. Finally, please tell us in detail how you use “cash earnings” to measure performance since it appear s to be more akin to a liquidity
measure.
* * * *
As appropriate, please respond to this comm ent within 10 business days or tell us
when you will provide us with a response. Pl ease furnish a response letter that keys your
response to our comment and provides any requested information. Detailed response
letters greatly facilitate our review. Pleas e file your response letter on EDGAR. Please
understand that we may have additional comm ents after reviewing your response to our
comment.
You may contact Staff Accountant Sarah Goldberg at (202) 551-3340 if you have
questions regarding comments on the financial statements and related matters. Please
contact me at (202) 551-3849 with any other questions.
S i n c e r e l y ,
J i m A l l e g r e t t o
Senior Assistant Chief Accountant