What is the best format & settings to edit video in FCP?

My organization uses a HD Panasonic Camera to record video, which is recorded in .MTS. Our editing software (FCP 7) is installed on a Mac and I am unable to view or edit the original video until I convert it into a different format using iSkysoft iMedia Converter. Recently I have been converting it into what I think is similar settings to the original file (.MOV, Xvid, 1280x720, 30 fps, 1200 kbps). Are these settings appropriate for editing video? If not, could you please offer advice as to what settings I should convert the video into.
Thank you for your help.
(This post is relative to a similar question I asked earlier today, but this post is for future reference so I start projects on the right foot).

WHich Panasonic HD camera. MTS means that it is an AVCHD camera. And no, you can't edit those directly, but FCP has an import tool for tapeless media called LOG AND TRANSFER (in the FILE menu). You use that to import the footage from that camera. It will convert the footage to ProRes or Apple INtermediate codec. THOSE are the formats you need to convert to. What is found in the EASY SETUP list. Not just any QT will work...not every QT format is editable.
What you need to do is backup the entire SD card to a drive, or import from the SD card. But the full card structure needs to be present in order for FCP to do this.
If Log and Transfer doesn't work, then you use CLIPWRAP to convert to ProRes.
Shane

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