SEC Comment Letter for FIRSTENERGY CORP (FE) (CIK 0001031296) (FE) — May 3, 2007
FIRSTENERGY CORP (FE) (CIK 0001031296)
Date: May 3, 2007 · CIK: 0001031296 · Accession: 0000000000-07-022317
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-21011
Letter
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549-3561 DIVISION OF CORPORATION FINANCE VIA FACSIMILE AND U.S. MAIL May 3, 2007 Mr. Harvey L. Wagner Vice President, Controller, and Chief Accounting Officer FirstEnergy Corporation 76 South Main Street Akron, Ohio 44308
Re: FirstEnergy Corporation, File No. 333-21011 Ohio Edison Company, File No. 1-2578 The Cleveland Electric Illumi nating Company, File No. 1-2323 The Toledo Edison Company, File No. 1-3583 Metropolitan Edison Company, File No. 1-446 Form 10-K for Fiscal Ye ar Ended December 31, 2006 Filed February 28, 2007
Dear Mr. Wagner:
We have reviewed your filings and have the following comments. We have limited our review to only your financial stat ements and related disclosures and do not intend to expand our review to other portions of your docum ent. Where indicated, we think you should revise your disclosures in futu re filings in response to these comments. If you disagree, we will consider your explanation as to why our comment is inapplicable or a revision is unnecessary. Please be as detailed as necessary in your explanation. In some of our comments, we may ask you to provi de us with information so we may better understand your disclosure. After reviewing th is information, we may or may not raise additional comments.
Please understand that the purpose of our re view process is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing. We look forward to working with you in these respects. We welcome any questions you may have about our comments or on any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Mr. Harvey L. Wagner May 3, 2007 Page 2 of 4 Form 10-K for Fiscal Year Ended December 31, 2006
Exhibit 13. FirstEnergy 2006 A nnual Report to Stockholders 1. To the extent applicable, please address the comments below on the consolidated financial statements and related disclosu res of the parent in the consolidated financial statements and related disclosure s of registrant subs idiaries included in the filing.
Consolidated Statements of Cash Flows, page 58 2. It appears that purchases and sales of debt and equity se curities are netted in the line item “cash investments and restricted funds” in cash flows from investing activities based on the disclosure in Note 5 on page 75. If so, with reference to paragraphs 11-13 of SFAS 95, please explain to us your basis for netting these items. 3. Please explain to us why the proceeds fr om the sale of nuclear decommissioning trust funds differ from the amounts di sclosed in the table on page 76.
Note 2. Summary of Significant Accounting Policies, page 59
(A) Accounting for the Effects of Regulation, page 59
Regulatory Assets, page 60 4. With respect to those regulatory assets not earning a return, please disclose the remaining recovery period. Refer to paragraph 20 of SFAS 71. Additionally, please note that we believe the best pract ices approach regarding regulatory assets is to affirmatively indicate whether a part icular regulatory asse t is earning a rate of return and the anticipated recovery period.
(F) Property, Plant and Equipment, page 62 5. Please separately disclose the balances fo r unregulated versus regulated in service property, plant and equipment and accumu lated provision for depreciation.
(H) Asset Impairments, page 63 6. You disclose on page 12 of the Met- Ed Annual Report that you recognized a goodwill impairment charge of $355 million in the fourth quarter of 2006. Yet, it does not appear that this im pairment charge is reflected in your consolidated results. Please advise. In doing so, please explain to us how you apply the relevant provisions of SFAS 131 in dete rmining your reporting units. Please also
Mr. Harvey L. Wagner May 3, 2007 Page 3 of 4 tell us how you identify and assign goodwill to reporting units for the purpose of testing goodwill for impairment. Please re fer to paragraphs 30-35 of SFAS 142.
Note 10. Regulatory Matters, page 80
(E) FERC Matters, page 86 7. We have noted that several other utili ties in your jurisdiction have recorded reserves related to potential SECA refunds. Please tell us whether you recorded a similar reserve and why or why not. If so, explain to us how you arrived at the amount. Refer to paragraph 11.a of SFA S 71 and paragraph 8 of SFAS 5.
Exhibit 13.1. Ohio Edison Company 2006 Annual Report to Stockholders
Consolidated Statements of Co mmon Stockholder’s Equity, page 25 8. Please explain to us why the income tax benefit allocated to the net liability for unfunded retirement benefits due to th e implementation of SFAS 158 significantly exceeds the net liability.
* * * *
Please respond to these comments within 10 business days or tell us when you will provide us with a response. Please furnish a response le tter that keys your responses to our comments and provides any requested information. Detailed response letters greatly facilitate our review. Please submit your response letter on EDGAR. Please understand that we may have additional comments after reviewing your responses to our comments.
We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes all in formation required under the Securities Exchange Act of 1934 and th at they have provided all information investors require for an informed invest ment decision. Since the company and its management are in possession of all facts re lating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that:
the company is responsible for the adequacy and accuracy of the disclosure in the filing;
staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
Mr. Harvey L. Wagner May 3, 2007 Page 4 of 4 the company may not assert staff comme nts as a defense in any proceeding initiated by the Commission or any person under the federal secu rities laws of the United States.
In addition, please be advise d that the Division of Enfo rcement has access to all information you provide to the staff of the Divi sion of Corporation Fi nance in our review of your filing or in response to our comments on your filing.
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) 551-3344 with any other questions.
S i n c e r e l y ,
William Thompson B r a n c h C h i e f
Show Raw Text
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-3561
DIVISION OF
CORPORATION FINANCE
VIA FACSIMILE AND U.S. MAIL
May 3, 2007
Mr. Harvey L. Wagner
Vice President, Controller, and Chief Accounting Officer
FirstEnergy Corporation
76 South Main Street
Akron, Ohio 44308
Re: FirstEnergy Corporation, File No. 333-21011
Ohio Edison Company, File No. 1-2578
The Cleveland Electric Illumi nating Company, File No. 1-2323
The Toledo Edison Company, File No. 1-3583
Metropolitan Edison Company, File No. 1-446
Form 10-K for Fiscal Ye ar Ended December 31, 2006
Filed February 28, 2007
Dear Mr. Wagner:
We have reviewed your filings and have the following comments. We have
limited our review to only your financial stat ements and related disclosures and do not
intend to expand our review to other portions of your docum ent. Where indicated, we
think you should revise your disclosures in futu re filings in response to these comments.
If you disagree, we will consider your explanation as to why our comment is inapplicable
or a revision is unnecessary. Please be as detailed as necessary in your explanation. In some of our comments, we may ask you to provi de us with information so we may better
understand your disclosure. After reviewing th is information, we may or may not raise
additional comments.
Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall
disclosure in your filing. We look forward to working with you in these respects. We
welcome any questions you may have about our comments or on any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Mr. Harvey L. Wagner
May 3, 2007
Page 2 of 4
Form 10-K for Fiscal Year Ended December 31, 2006
Exhibit 13. FirstEnergy 2006 A nnual Report to Stockholders
1. To the extent applicable, please address the comments below on the consolidated financial statements and related disclosu res of the parent in the consolidated
financial statements and related disclosure s of registrant subs idiaries included in
the filing.
Consolidated Statements of Cash Flows, page 58
2. It appears that purchases and sales of debt and equity se curities are netted in the
line item “cash investments and restricted funds” in cash flows from investing
activities based on the disclosure in Note 5 on page 75. If so, with reference to paragraphs 11-13 of SFAS 95, please explain to us your basis for netting these
items.
3. Please explain to us why the proceeds fr om the sale of nuclear decommissioning
trust funds differ from the amounts di sclosed in the table on page 76.
Note 2. Summary of Significant Accounting Policies, page 59
(A) Accounting for the Effects of Regulation, page 59
Regulatory Assets, page 60
4. With respect to those regulatory assets not earning a return, please disclose the
remaining recovery period. Refer to paragraph 20 of SFAS 71. Additionally, please note that we believe the best pract ices approach regarding regulatory assets
is to affirmatively indicate whether a part icular regulatory asse t is earning a rate
of return and the anticipated recovery period.
(F) Property, Plant and Equipment, page 62
5. Please separately disclose the balances fo r unregulated versus regulated in service
property, plant and equipment and accumu lated provision for depreciation.
(H) Asset Impairments, page 63
6. You disclose on page 12 of the Met- Ed Annual Report that you recognized a
goodwill impairment charge of $355 million in the fourth quarter of 2006. Yet, it
does not appear that this im pairment charge is reflected in your consolidated
results. Please advise. In doing so, please explain to us how you apply the relevant provisions of SFAS 131 in dete rmining your reporting units. Please also
Mr. Harvey L. Wagner
May 3, 2007
Page 3 of 4
tell us how you identify and assign goodwill to reporting units for the purpose of testing goodwill for impairment. Please re fer to paragraphs 30-35 of SFAS 142.
Note 10. Regulatory Matters, page 80
(E) FERC Matters, page 86
7. We have noted that several other utili ties in your jurisdiction have recorded
reserves related to potential SECA refunds. Please tell us whether you recorded a similar reserve and why or why not. If so, explain to us how you arrived at the
amount. Refer to paragraph 11.a of SFA S 71 and paragraph 8 of SFAS 5.
Exhibit 13.1. Ohio Edison Company 2006 Annual Report to Stockholders
Consolidated Statements of Co mmon Stockholder’s Equity, page 25
8. Please explain to us why the income tax benefit allocated to the net liability for unfunded retirement benefits due to th e implementation of SFAS 158 significantly
exceeds the net liability.
* * * *
Please respond to these comments within 10 business days or tell us when you
will provide us with a response. Please furnish a response le tter that keys your responses
to our comments and provides any requested information. Detailed response letters
greatly facilitate our review. Please submit your response letter on EDGAR. Please understand that we may have additional comments after reviewing your responses to our comments.
We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Exchange Act of 1934 and th at they have provided all information
investors require for an informed invest ment decision. Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that:
the company is responsible for the adequacy and accuracy of the disclosure in the
filing;
staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing; and
Mr. Harvey L. Wagner
May 3, 2007
Page 4 of 4
the company may not assert staff comme nts as a defense in any proceeding
initiated by the Commission or any person under the federal secu rities laws of the
United States.
In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filing or in response to our comments on your filing.
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) 551-3344 with any other questions.
S i n c e r e l y ,
William Thompson
B r a n c h C h i e f