8-KFinancial Events

FIRSTENERGY CORP 8-K Report, Financial Restatement (Nov 2, 2006)

Filed November 2, 2006For Securities:FE

Summary

FirstEnergy Corp. (FE) filed an 8-K on November 2, 2006, to announce that its Audit Committee determined that previously issued unaudited consolidated statements of cash flows for the three and six months ended March 31, 2006, and June 30, 2006, respectively, should not be relied upon. The issue stemmed from a misclassification of $78 million in cash investments, restricted as of December 31, 2005, related to long-term debt repayment. This amount was incorrectly reported as operating cash flow instead of investing cash flow. Importantly, the company emphasized that this misclassification did not affect the Consolidated Statements of Income, Comprehensive Income, or Balance Sheets for the affected periods, meaning revenues, net income, earnings per share, and total assets remain unchanged. Furthermore, FirstEnergy affirmed that there is no impact on its forecasted cash from operations for the full year 2006. The company, along with its subsidiaries Ohio Edison Company and Pennsylvania Power Company, has filed amended financial statements (Forms 10-Q/A) on November 1, 2006, to correct this classification.

Key Highlights

  • 1FirstEnergy Corp. identified a misclassification in its unaudited consolidated statements of cash flows for Q1 and Q2 2006.
  • 2The misclassification involved $78 million in restricted cash investments erroneously categorized as operating cash flow instead of investing cash flow.
  • 3Key financial metrics such as revenues, net income, EPS, and total assets for the affected periods are confirmed to be unaffected.
  • 4FirstEnergy's forecasted cash from operations for the full year 2006 remains unchanged by this issue.
  • 5Amended financial statements (Forms 10-Q/A) correcting the cash flow classification were filed on November 1, 2006.
  • 6The Audit Committee and PricewaterhouseCoopers LLP were involved in the review and conclusion regarding the non-reliance on the previously issued statements.

Frequently Asked Questions

The unaudited consolidated statements of cash flows for the three months ended March 31, 2006, and the six months ended June 30, 2006, for FirstEnergy Corp., Ohio Edison Company, and Pennsylvania Power Company are affected. These were originally filed in their respective Forms 10-Q for those quarters.

No, the company explicitly stated that the Consolidated Statements of Income and Comprehensive Income, as well as the Consolidated Balance Sheets, were not affected. Therefore, revenues, net income, and earnings per share for the affected periods remain unchanged.

No, FirstEnergy confirmed that there is no effect on its forecasted cash from operations for the year 2006.

FirstEnergy, along with its subsidiaries Ohio Edison Company and Pennsylvania Power Company, has filed amended financial statements on Forms 10-Q/A on November 1, 2006, to reflect the correct classification of the cash flows.