10-K/APeriod: FY2003

FIRSTENERGY CORP Annual Report (Amendment), Year Ended Dec 31, 2003

Filed June 25, 2004For Securities:FE

Summary

This Form 10-K/A filing from FirstEnergy Corp. and its subsidiaries, dated June 25, 2004, provides an update primarily concerning controls and procedures. While FirstEnergy Corp. is an accelerated filer, its subsidiaries are not. The aggregate market value of FirstEnergy Corp.'s common stock held by non-affiliates was significant as of June 30, 2003, at over $11.4 billion. A key disclosure relates to a material weakness identified in the fourth quarter of 2003 concerning the classification of expenses versus capital expenditures due to issues with a new Enterprise Resource Planning (ERP) system implementation and associated employee training. Measures were implemented to correct this weakness, including enhanced training, improved system update procedures, and reconfiguration of the work management system, leading to the conclusion that disclosure controls and procedures remain effective. The filing also references incorporated documents such as the 2003 Annual Report and the 2004 Proxy Statement for more comprehensive financial and operational details.

Key Highlights

  • 1FirstEnergy Corp. is designated as an accelerated filer, indicating a certain level of financial reporting history and market capitalization.
  • 2The aggregate market value of FirstEnergy Corp.'s common stock held by non-affiliates was substantial at $11.4 billion as of June 30, 2003.
  • 3A material weakness in internal controls was identified during Q4 2003 related to the misclassification of expenses as capital expenditures, stemming from issues with a new ERP system.
  • 4The company has implemented corrective actions, including enhanced employee training, improved system update protocols, and system reconfiguration, to address the identified material weakness.
  • 5Despite the material weakness, the CEO and CFO concluded that disclosure controls and procedures are effective due to the timely corrective measures taken.
  • 6Financial results for specific subsidiaries (JCP&L, Penelec, and TE) were restated due to the identified accounting issues.
  • 7The filing clarifies that information related to any of the seven FirstEnergy subsidiary registrants is also attributed to FirstEnergy.

Frequently Asked Questions

The primary focus of this amended filing (10-K/A) is to provide an update on the company's controls and procedures, specifically addressing a material weakness identified in the fourth quarter of 2003 related to the classification of expenses and capital expenditures due to issues with a new Enterprise Resource Planning (ERP) system. Corrective actions were implemented, and the company's management concluded that disclosure controls and procedures remain effective.

The material weakness involved expenses being improperly recorded as capital expenditures due to issues with a new ERP system, specifically untimely table updates and inconsistent cost allocation. This is important for investors as it can impact the accuracy of financial statements, particularly the balance sheet (asset values) and income statement (expense recognition). The fact that it led to restatements for some subsidiaries highlights the potential for financial reporting errors.

FirstEnergy has taken several steps to correct the material weakness. These include increasing training for field employees on proper accounting for projects, establishing procedures to ensure timely updates to the automated work management system, and reconfiguring the system to better identify the proper allocation of capital and expense projects.

Being an 'accelerated filer' means FirstEnergy Corp. meets certain criteria (generally related to public float of its stock, filing history, and size) that allow the SEC to expect more frequent and timely financial reporting. For investors, this designation typically implies a more mature and scrutinized company with a substantial market presence.