SEC Comment Letter for FIRSTENERGY CORP (FE) (CIK 0001031296) (FE) — Dec 12, 2006
FIRSTENERGY CORP (FE) (CIK 0001031296)
Date: Dec. 12, 2006 · CIK: 0001031296 · Accession: 0000000000-06-060621
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-21011
Referenced dates: November 6, 2006
Letter
Mail Stop 3561 December 5, 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, J une 30, 2006 and September 30, 2006 File No. 333-21011
Dear Mr. Wagner:
We reviewed your response to our prior comment on the above referenced filings as set forth in your letter dated November 6, 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 1 in our lette r dated October 23, 2006. Please be advised that using a non-GAAP measure requires substantive economic consequences such as alloca ting resources, determining compensation incentives or other management action that re sult in the use of cash or other assets based on the information conveyed by the non-GAAP measure. In this regard, please explain to us in greater detail how you use both “earnings before unusual items” and “cash earnings.” You may want to provide specific examples. In
Mr. Wagner FirstEnergy Corporation December 5, 2006 Page 2 of 2 particular, we are interested to unde rstand how you use such measures “as budgetary controls” and how “earnings before unusual items” “influences resource allocation issues.” Specifically tell us whether these measures are used in setting budgets or give us an exam ple of how use of the measure affects resource allocation. Furthermore, we do not concur that disclosing the differences in the non-GAAP measure compensates fo r the limitation since removal of the non-GAAP statistic would accomplish the same result. You may want to revise your discussion or eliminate presenting non-GAAP measures. Furthermore, there is no proposed discussion of the “cash earnings” measure. Please note that Question 8 of our “Frequently Asked Questions Regarding the Use of Non-GAAP Financial Measures” applies to all non-GAAP performan ce measures that exclude any recurring items such as deprecation and amortization. As your non-GAAP performance measure “cash earnings” ex cludes recurring items, you should provide disclosure which fully discusses each bullet point of Question 8, regardless of whether the excluded items ar e identified as unusual or otherwise. Please show us how your revised disclosure will read in future filings.
* * * *
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
December 5, 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, J une 30, 2006 and September 30, 2006
File No. 333-21011
Dear Mr. Wagner:
We reviewed your response to our prior comment on the above referenced filings
as set forth in your letter dated November 6, 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 1 in our lette r dated October 23,
2006. Please be advised that using a non-GAAP measure requires substantive
economic consequences such as alloca ting resources, determining compensation
incentives or other management action that re sult in the use of cash or other assets
based on the information conveyed by the non-GAAP measure. In this regard, please explain to us in greater detail how you use both “earnings before unusual
items” and “cash earnings.” You may want to provide specific examples. In
Mr. Wagner
FirstEnergy Corporation
December 5, 2006 Page 2 of 2
particular, we are interested to unde rstand how you use such measures “as
budgetary controls” and how “earnings before unusual items” “influences
resource allocation issues.” Specifically tell us whether these measures are used
in setting budgets or give us an exam ple of how use of the measure affects
resource allocation. Furthermore, we do not concur that disclosing the differences in the non-GAAP measure compensates fo r the limitation since removal of the
non-GAAP statistic would accomplish the same result. You may want to revise
your discussion or eliminate presenting non-GAAP measures. Furthermore, there
is no proposed discussion of the “cash earnings” measure. Please note that
Question 8 of our “Frequently Asked Questions Regarding the Use of Non-GAAP Financial Measures” applies to all non-GAAP performan ce measures that exclude
any recurring items such as deprecation and amortization. As your non-GAAP
performance measure “cash earnings” ex cludes recurring items, you should
provide disclosure which fully discusses each bullet point of Question 8, regardless of whether the excluded items ar e identified as unusual or otherwise.
Please show us how your revised disclosure will read in future filings.
* * * *
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