SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(Mark One)
{X} ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED) for the fiscal year ended December 30, 2001
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED) for the transition period
from _________ to 5313 __________.
Commission file number 333-21011
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
FIRSTENERGY CORP. SAVINGS PLAN
B. Name of issuer of the securities held pursuant to
the plan and the address of its principal executive
office:
FIRSTENERGY CORP.
76 SOUTH MAIN STREET
AKRON, OH 44308
We consent to the incorporation by reference in the Company's previously filed
Registration Statement (File No. 333-21011) of our report dated June 7, 2002, on
the audits of the FirstEnergy Corp.
FirstEnergy Corp.
Savings Plan
Report on Audits of Financial Statements
and Supplemental Schedules
December 30, 2001 and 2000
F/FirstEnergy/2001Savingsfs
..
FirstEnergy Corp. Savings Plan
Index
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December 30, 2001 and 2000
Page
Report of Independent Accountants ..................................... 1
Statements of Net Assets Available for Plan Benefits at
December 30, 2001 and 2000 ....................................... 2
Statements of Changes in Net Assets Available for Plan Benefits
for the years ended December 30, 2001 and 2000 ................... 3
Notes to Financial Statements ......................................... 4-12
Supplemental Schedules:
Schedule of Assets (Held at End of Year)
December 30, 2001 .................................................. 13
Schedule of Reportable Transactions for the year
ended December 30, 2001 ........................................ 14
All other supplemental schedules are omitted as they are not applicable or are
not required based on the disclosure requirements of the Employee Retirement
Income Security Act of 1974 and applicable regulations issued by the Department
of Labor.
Report of Independent Accountants
To the Participants and the
Savings Plan Committee
In our opinion, the accompanying statements of net assets available for plan
benefits and the related statements of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
plan benefits of the FirstEnergy Corp. Savings Plan (the "Plan") at December 30,
2001 and 2000, and the changes in net assets available for plan benefits for the
years then ended in conformity with accounting principles generally accepted in
the United States of America. These financial statements are the responsibility
of the Plan's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
(held at end of year) and reportable transactions are presented for the purpose
of additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedules are the
responsibility of the Plan's management. These supplemental schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
June 7, 2002
FirstEnergy Corp. Savings Plan
Statements of Net Assets Available for Plan Benefits
December 30, 2001 and 2000
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Assets 2001 2000
Cash and cash equivalents ................ $ 2,343,342 $ 2,315,579
FirstEnergy common stock ................. 457,493,010 409,819,702
Capital preservation investments ......... 163,168,296 146,804,260
Domestic equity stocks ................... 299,137,692 320,407,833
International equity stocks .............. 40,982,416 54,495,835
Other equities ........................... 23,568,020 27,790,987
Balanced fund securities ................. - 30,293,989
Bonds .................................... 13,963,399 -
Participant loans ........................ 18,125,574 16,354,465
Interest receivable ...................... 868,023 2,111,011
Employer contributions receivable ........ - 17,973,917
Employee contributions receivable ........ 1,758,988 1,662,770
Pending sale transactions ................ 55,538 22,398
-------------- --------------
Total assets .......................... 1,021,464,298 1,030,052,746
Liabilities
Pending purchase transactions ............ 345,932 249,059
ESOP loan balance ........................ 149,550,000 168,250,000
Interest payable ......................... 505 17,513,680
-------------- --------------
Total liabilities ..................... 149,896,437 186,012,739
-------------- --------------
Net assets available for plan benefits ... $ 871,567,861 $ 844,040,007
============== ==============
The accompanying notes are an integral part of these financial statements.
2
FirstEnergy Corp. Savings Plan
Statements of Net Assets Available for Plan Benefits
December 30, 2001 and 2000
-----------------------------------------------------------------------------------------------------
2001 2000
Additions:
Contributions:
Employee ................................................. $ 45,395,654 $ 39,255,536
Employer ................................................. 20,272,285 17,973,917
------------- -------------
Total contributions .................................... 65,667,939 57,229,453
Investment income:
Interest and dividends ................................... 34,356,550 42,264,160
Net (depreciation) appreciation in fair value
of investments ......................................... (18,006,428) 66,455,467
------------- -------------
Total investment income ............................. 16,350,122 108,719,627
Conversion transfers, net .................................. 100,958 38,424,284
------------- -------------
Total additions ................................... 82,119,019 204,373,364
Deductions:
Distributions to Participants .............................. (37,084,543) (48,430,603)
ESOP interest .............................................. (16,825,000) (18,275,000)
Fees ....................................................... (579,137) (922,790)
ESOP transfers to other benefit plan ....................... (102,485) -
------------- -------------
Total deductions .................................. (54,591,165) (67,628,393)
------------- -------------
Increase in net assets ....................................... 27,527,854 136,744,971
Net assets available for plan benefits, beginning of year .... 844,040,007 707,295,036
------------- -------------
Net assets available for plan benefits, end of year .......... $ 871,567,861 $ 844,040,007
============= =============
The accompanying notes are an integral part of these financial statements.
3
FirstEnergy Corp. Savings Plan
Notes to Financial Statements
December 30, 2001 and 2000
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1. Description of the Plan
The FirstEnergy Corp. Savings Plan (the "Plan") provides eligible
employees of FirstEnergy Corp. ("FirstEnergy" or "FE") and its
subsidiaries, collectively referred to as the "Companies" a mechanism
through which they can save and invest part of their income on a tax
deferred basis at regular intervals. Additionally, the Companies may
match employee contributions with shares of FirstEnergy common stock (see
Note 7) held in the Employee Stock Ownership Plan ("ESOP"). Employees may
invest their contributions in other investment options (the "Funds") and
all contributions made to employees' accounts are fully and immediately
vested in the Plan. The purpose of the Plan is to encourage employees to
adopt a regular savings program and to provide additional security for
retirement. The following is a brief description of the Plan and is
provided for general information purposes only. Employees should refer to
the Plan documents for more complete information.
The Plan is a qualified profit-sharing plan under Section 401(a) of the
Internal Revenue Code of 1954, as amended (the "Code"), and provides for
salary reduction contributions under Section 401(k) of the Code. In
general, plans established pursuant to Section 401(k) of the Code permit
eligible employees to defer current federal and, subject to applicable
laws, state and local income taxes on the portion of their current
compensation represented by the amount of the salary reduction elected.
The amounts, as elected by the employees, are contributed to the Plan by
the Companies through payroll deductions.
The Plan is subject to Title I of the Employee Retirement Income Security
Act of 1974 ("ERISA") but not Title IV as it is an "individual account
plan". Title I establishes reporting and disclosure requirements, minimum
standards for participation, vesting and benefit accrual, prohibitions
governing the conduct of fiduciaries and provides that ERISA pre-empts
other federal, state and local statutes relating to employee benefits.
The protective benefits of Title IV which relate to insuring pension
benefits by the Pension Benefit Guaranty Corporation are not applicable
to individual account plans.
Every permanent FirstEnergy Corp. employee is eligible to become a
participant in the Plan, herein referred to as employee or Participant
immediately at commencement of employment.
Employees may participate in one or more of the Funds through deferral of
compensation. The choice of investments (except the Companies' matching
contributions, which are in the form of FirstEnergy common stock) is the
responsibility of the individual employee. Transfers between funds are
the responsibility of the employee and may be made on a daily basis.
Securities in the ESOP Account
The ESOP purchased a total of 10,654,114 shares of Ohio Edison ("OE")
common stock from November 1990 to December 1991 for the purpose of
funding the Companies' matching contribution to the Plan. On November 8,
1997, pursuant to the merger of OE and Centerior Energy Corporation that
created FirstEnergy Corp. ("Merger"), shares of OE common stock were
converted into shares of FirstEnergy common stock on a one-for-one basis.
The Plan borrowed $200 million, referred to herein as the "ESOP Loan", at
a rate of 10% from OE to fund the purchase of the stock. The ESOP Loan is
collateralized by the unallocated FirstEnergy common stock acquired with
the proceeds of the ESOP Loan. The ESOP Loan is expected to be
4
FirstEnergy Corp. Savings Plan
Notes to Financial Statements
December 30, 2001 and 2000
--------------------------------------------------------------------------------
repaid by December 2005. Interest payments on the loan are made annually.
Additionally, principal payments may be made sooner if additional shares
of FirstEnergy common stock are needed for distributions to Participants.
At December 30, 2001 and 2000, the ESOP Loan balance was $149,550,000 and
$168,250,000, respectively.
Requirements for maturing long-term debt are as follows:
2002 ......... $ 23,700,000
2003 ......... 29,300,000
2004 ......... 35,700,000
2005 ......... 60,850,000
------------
$149,550,000
============
ESOP Allocation
As principal and interest payments are made on the ESOP Loan, shares of
FirstEnergy common stock are released from the ESOP Unallocated Fund to
the ESOP Allocated Fund where they are made available for contribution to
Participants' accounts. The Plan made interest payments of $35,100,000 in
2001 and $19,415,000 in 2000, which released 812,272 shares in 2001 and
477,625 shares in 2000. In December 2001, a principal payment of
$18,700,000 was made which led to the release of 442,343 shares. In
December 2000, a principal payment of $14,500,000 was made which led to
the release of 342,993 shares. In January 2000, a principal payment of
$11,400,000 was made leading to the release of 269,664 shares.
The Companies' matching contribution to each Participant's account is
computed the Thursday following the end of each pay period based on the
Companies' matching contribution percentages (see Note 7) and on the
quoted market price of the FirstEnergy common stock when contributed.
During 2001 and 2000, respectively, 548,888 and 618,381 ESOP shares were
contributed to Participants' accounts. In 2001 and 2000, respectively,
197,077 and 212,128 ESOP shares were realized related to the reinvestment
of dividends on the ESOP shares.
At December 30, 2001 and 2000, there were 4,561,340 and 5,815,955 shares
respectively, held in the ESOP Unallocated Fund at market values of
$159,555,675 and $183,566,080, respectively, and 4,540,151 and 3,951,907
shares, respectively, held in the ESOP Allocated Fund at market values of
$176,352,004 and $124,732,064. The market value of the ESOP common stock
is measured by the quoted market price.
PAYSOP
A component of the Plan consists of a qualified payroll-based tax credit
employee stock ownership plan (PAYSOP) under Section 401(a) and Section
501(a) of the Code.
Under the Economic Recovery Tax Act of 1981, effective January 1, 1983,
tax credits were based upon eligible employee compensation. The
regulation permitted the Companies to contribute to the Trust a maximum
of one-half of one percent of the aggregate compensation of eligible
employees and claim a tax credit on its consolidated federal income tax
return equal to this amount. The amounts allocated to eligible employees
were based upon the proportion of their wages and salaries (to a maximum
of $100,000) to the wages and salaries of total employees for the year.
5
FirstEnergy Corp. Savings Plan
Notes to Financial Statements
December 30, 2001 and 2000
--------------------------------------------------------------------------------
The Tax Reform Act of 1986 eliminated the PAYSOP tax credit with respect
to compensation earned in 1987 or later years. As a result, the Companies
have not contributed to the PAYSOP since the 1986 contribution other than
for the reimbursement of PAYSOP administrative expenses.
On November 8, 1997, pursuant to the Merger, shares of OE common stock
held in the PAYSOP were converted into shares of FirstEnergy common stock
on a one-for-one basis.
Dividends are paid annually to Participants in the PAYSOP. The market
value of the common stock in the PAYSOP is measured by the quoted market
price. As of February 11, 2002, dividends will be payable quarterly to
Participants and Participants will also have the option to reinvest
dividends back into the PAYSOP Fund.
2. Summary of Accounting Policies
The financial statements have been prepared on the accrual basis of
accounting.
The Plan presents, in the Statements of Changes in Net Assets Available
for Plan Benefits, the net appreciation (depreciation) in the fair value
of its investments, which consists of realized gains or losses and
unrealized appreciation or depreciation. All investment management fees
are deducted from investment income.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts
recorded in the financial statements and accompanying notes. Actual
results may differ from these estimates.
Certain prior year amounts have been reclassified to conform to the
current year's presentation.
3. Plan Termination
Although the Companies have not expressed any intent to do so, the
Companies reserve the right to discontinue or terminate the Plan at any
time. If the Plan should be terminated, in whole or in part, Participants
will be entitled to withdraw the full value of their accounts, to the
extent allowed by law.
4. Descriptions of Funds
The following are brief descriptions of the Funds currently available to
Participants at December 30, 2001:
Fund A - Company Common Stock Fund
This Fund consists entirely of shares of FirstEnergy Corp. common stock.
The Fund provides an opportunity for employees to increase their common
ownership stake in FirstEnergy. The objective for this Fund is the growth
of capital through both appreciation and dividend income. The Fund also
holds the Companies' pre-ESOP matching contribution in FirstEnergy common
stock. The common stock is purchased by the Trustee on the open market.
The market value of the common stock is measured by the quoted market
price.
6
FirstEnergy Corp. Savings Plan
Notes to Financial Statements
December 30, 2001 and 2000
--------------------------------------------------------------------------------
Fund B - Capital Preservation Fund
This Fund consists of guaranteed fixed income contracts issued by
insurance companies and banks, collateralized mortgage obligations, and
short-term money market instruments. These contracts guarantee interest
for a fixed period and the principal amount of all investments. The
average yield of the contracts was 5.97 % and 6.21% for the years 2001
and 2000, respectively. The crediting interest rate as of December 30,
2001 and 2000 was 5.51% and 6.25%, respectively. The market value of the
Capital Preservation Fund is measured at the contract value as determined
by the insurers and banks and no valuation reserve in relation to the
contract value is deemed necessary.
Fund C - S&P 500 Index Fund
This Fund is a common/collective trust investing in the S&P 500 stocks.
The objective of this Fund is the growth of capital through both
appreciation and dividend income. The market value of the S&P 500 Index
Fund is based on the market value per share determined by the Trustee.
Fund D - Small Cap Value Fund
This Fund invests primarily in securities of well-financed small cap
companies at a substantial discount to what the manager believes are
takeover values. The manager is EQSF Advisors, Inc. and the mutual fund
name is Third Avenue Value. The objective of the Fund is to match or
exceed the returns of the Russell 2000 Value Index over time.
Fund E - Large Cap Value Fund
The Fund seeks long-term capital appreciation and income by focusing on
domestic large company equities that are selling at modest prices to
earnings multiples. Shares are usually held for the long-term. Only
extreme valuations or major changes to a company's fundamentals will
trigger a sale. The portfolio manager is Davis Selected Advisors, L.P.
and the mutual fund name is Selected American Fund. The performance
objective is to match or exceed the S&P/Barra Large Cap Value Index over
time.
Fund F - Mid Cap Value Fund
The Fund seeks long-term capital appreciation by investing in mid-sized
companies that are less closely monitored by the investment community as
evidenced by low institutional ownership and analyst coverage. The goal
is to find well-managed companies that have sustainable growth prospects
but that are selling at prices below their private market value. The
manager believes that these factors may cause shares to be undervalued.
The manager may sell a stock when its price no longer compares favorably
with the company's private market value. The portfolio manager is Strong
Capital Management and the mutual fund name is Strong Opportunity Fund.
Fund G - Mid Cap Growth Fund
The Fund seeks long-term capital appreciation by investing in mid cap
companies that are leaders in attractive growth markets and in securities
of higher risk accelerating growth companies. These securities are driven
by product cycles, favorable sector conditions or other company specific
factors expected to produce rapid sales and earnings growth. The Fund's
investments are usually bought and sold relatively frequently. The
portfolio manager is Invesco Funds Group, Inc. and the mutual fund name
is Invesco Dynamics Fund.
7
FirstEnergy Corp. Savings Plan
Notes to Financial Statements
December 30, 2001 and 2000
--------------------------------------------------------------------------------
Fund H - Small Cap Growth Fund
The Fund seeks long term capital appreciation by investing in small
companies that are positioned for above-average growth in revenues,
earnings or assets. Both qualitative and quantitative analysis is used to
evaluate companies for distinct and sustainable competitive advantages
which are likely to lead to growth in earnings and share price. The
portfolio manager is Franklin Advisers, Inc. The mutual fund name is
Franklin Small/Mid Cap Growth Fund.
Fund I - Bond Fund
The Fund seeks to maximize total return consistent with the preservation
of capital by investing at least 65% of its assets in a diversified
portfolio of intermediate term fixed income investments of varying
maturities. The Fund invests primarily in investment grade debt but may
invest up to 10% of its assets in high yield securities rated B or
higher. The Fund may invest up to 20% of assets in securities denominated
in foreign currencies. The portfolio manager is PIMCO and the mutual fund
name is PIMCO Total Return Fund.
Fund J -Self Managed Fund
Participants may invest in a self managed brokerage account available
through State Street Brokerage Services, Inc. Options include mutual
funds along with any security that is listed on the NYSE, ASE and NASDAQ.
Fund K - EuroPacific Fund
This Fund is an actively managed portfolio of foreign common stocks
managed by Capital Research & Management Co. The objective of the Fund is
the growth of capital through appreciation. The market value of the Fund
is measured at the market value per share determined by the investment
manager.
Fund L - Loan Fund
The Plan allows Participants to borrow from their before-tax, after-tax
and rollover accounts for certain approved purposes. When loans are made,
they are recorded as interfund transfers. The repayments of principal and
interest are credited to the Participants' account balances within the
respective funds. The employee repays the loan and all related interest
through payroll deductions.
Participants may borrow up to 50 percent of their total account balance
or 100 percent of their before-tax account, whichever is less. The
interest rate charged is based on the prime rate plus 1 percent.
Participants may have up to two loans outstanding at one time. The
minimum loan amount is $1,000 and must be repaid within 6 and 60 months.
If the loan is for the purchase of a principal residence, the loan
repayment period can be extended to 30 years. The maximum loan amount is
$50,000.
Fund M - Armada Equity Growth Fund
This is an actively managed Fund specializing in large capitalization
growth-oriented stock issues managed by National City Bank. The objective
of the Fund is the growth of capital through appreciation.
Fund N - DQE Frozen Stock Fund
This Fund consists entirely of shares of Duquesne Light Company ("DQE")
common stock. These investments were transferred from the former Beaver
Valley Power Station 401(k) Plan. The
8
FirstEnergy Corp. Savings Plan
Notes to Financial Statements
December 30, 2001 and 2000
--------------------------------------------------------------------------------
market value of the common stock is measured by the quoted market price.
The Fund is frozen to contributions from Participants and allows
withdrawals by Participants in accordance with the Plan document.
5. Investments
The Plan's investments are maintained in investment funds and shares of
common stock of FirstEnergy and DQE, as described in Note 4.
Investment securities are exposed to various risks such as interest rate,
market and credit risks. Market values of securities fluctuate based on
the magnitude of changing market conditions; significant changes in
market conditions could materially affect plan investments.
The following presents the market value of investments that represent 5
percent or more of the Plan's Net Assets Available for Plan Benefits at
December 30, 2001 and 2000:
2001 2000
------------- -------------
ESOP Unallocated Fund ................ $ 159,555,675 $ 183,566,080
ESOP Allocated Fund .................. 176,352,004 124,732,064
Company Common Stock Fund ............ 118,284,278 98,381,786
Capital Preservation Fund ............ 163,168,296 146,804,260
S&P 500 Index Fund ................... 148,298,557 162,252,698
EuroPacific Fund ..................... 40,982,416 54,495,835
Armada Equity Growth Fund ............ 90,698,078 127,188,018
The net (depreciation) appreciation of the Plan's investments for 2001 and
2000 was as follows:
2001 2000
Equities ............................ $ (21,402,157) $(12,016,298)
Bonds ............................... (233,937) -
Domestic stocks ..................... (33,585,640) (19,228,615)
International stocks ................ (6,970,511) (18,567,594)
FirstEnergy Corp. common stock ...... 44,185,817 116,267,974
------------- ------------
Total $ (18,006,428) $ 66,455,467
============= ============
9
FirstEnergy Corp. Savings Plan
Notes to Financial Statements
December 30, 2001 and 2000
--------------------------------------------------------------------------------
6. Participant Investments That Are Non-Participant Directed
Net assets available for plan benefits and changes in net assets
available for plan benefits relating to non-participant directed
investments at December 30, 2001 and 2000 and for the years then ended
are as follows:
2001 2000
------------- -------------
Assets:
FE common stock .................................... $ 152,364,318 $ 119,066,624
------------- -------------
Net assets available for plan benefits ......... $ 152,364,318 $ 119,066,624
============= =============
Changes in net assets available for plan benefits:
Employer contributions ............................. $ 20,272,285 $ 17,973,917
Interest and dividends ............................. 6,136,129 5,284,080
Net appreciation in fair value
of investments ................................. 19,778,176 37,054,606
Distributions to Participants ...................... (5,092,242) (3,825,551)
Transfers, net ..................................... (7,794,304) (9,432,685)
Expenses ........................................... (2,350) (3,083)
------------- -------------
Increase in net assets available for plan benefits .. $ 33,297,694 $ 47,051,284
============= =============
7. Contributions
Employer Contributions
The Companies pay a matching contribution of 50% on the first 6% of
compensation contributed by an employee. In addition, the Companies may
designate a number of performance objectives and contribute for each
objective achieved, an additional $.05, up to a maximum of $.25, on each
$1.00 of the first 6% of compensation contributed by an employee. The
Companies' contributions are always invested in FirstEnergy common stock.
The Companies' contributions have been pre-funded by the FirstEnergy
common stock held by the ESOP Unallocated Fund. These shares of
FirstEnergy common stock earn dividend income and are subject to
unrealized appreciation and depreciation as the market value of the
FirstEnergy common stock fluctuates. The dividend income serves to pay
the ESOP Loan and related interest, which results in the release of
shares to the ESOP Allocated Fund as the Companies' matching
contribution. To the extent dividend income is not sufficient to pay the
ESOP Loan and interest, the Companies will contribute cash which is
reflected as employer contributions in the Statements of Changes in Net
Assets Available for Plan Benefits.
10
FirstEnergy Corp. Savings Plan
Notes to Financial Statements
December 30, 2001 and 2000
--------------------------------------------------------------------------------
Employee Contributions
During 2001 and 2000, employees could invest between 1% and 16% of their
salary in the Plan. Employee contributions may be made on a before-tax
and/or after-tax basis. Under the before-tax option, deposits are
deducted from current taxable income but are taxable when they are
withdrawn from the Plan. The Tax Reform Act of 1986 limited the maximum
annual before-tax contribution to $10,500 for 2001 and 2000. Prior to age
59-1/2, an active employee may withdraw before-tax deposits only under
certain hardship conditions as defined in the Plan document.
Employees may make rollover contributions to the Plan of funds held in
other tax-qualified plans which the employee was a participant of prior
to becoming employed by the Companies. The rollover contributions must be
the result of a qualified total distribution from another tax-qualified
plan and must be contributed to the Plan within 60 days after
distribution to the employee.
Both employer and employee contributions under the Plan are held in a
trust fund with an independent trustee (State Street Bank & Trust
Company). Employees may choose to invest their contributions in Funds A,
B, C, D, E, F, G, H, I, J, K or M (see Note 4) which are offered by the
Plan. Employees may also elect to borrow from their before-tax accounts
for certain approved purposes (Fund L).
During 2000, non-union participants from the former Beaver Valley Power
Station 401(k) Plan were merged into the Plan (see Note 9). The
transferred assets include Duquesne Light Company common stock (Fund N).
8. Tax Considerations
The Plan was amended and restated as the FirstEnergy Corp. Savings Plan
effective July 1, 1998. The Companies have not yet applied for a
determination letter from the Internal Revenue Service.
Management believes the Plan is exempt from federal, state and local
income taxes. The federal, state and local income tax treatments of
distributions from the Plan depend upon when they are made and their
form. The withdrawal of the principal amount of a Participant's after-tax
contribution is not, however, subject to tax. For tax years beginning
after December 31, 1986, the Tax Reform Act of 1986 requires that an
additional tax of 10% be applied to employee withdrawals from the Plan
prior to death, disability, attainment of age 59-1/2, or under certain
other limited circumstances.
In the case of withdrawal by a Participant employed by the Companies
prior to the attainment of age 59-1/2, the excess of the value of the
withdrawal over the total amount of the Participant's after-tax
contributions, is taxable at ordinary income tax rates. The value of the
Companies common stock withdrawn is considered to be its fair value on
the date it is withdrawn.
In the case of a distribution that qualifies as a lump-sum distribution
upon a Participant's termination of employment with the Companies or
after attaining the age of 59-1/2, only the excess of the value of the
lump sum distribution over the amount of the Participant's after-tax
contributions to the Plan (less withdrawals) is taxable at ordinary
income tax rates. In determining the value of the lump-sum distribution,
the FirstEnergy common stock distributed in-kind or in cash shall be
valued at fair value on the date it is withdrawn.
11
FirstEnergy Corp. Savings Plan
Notes to Financial Statements
December 30, 2001 and 2000
--------------------------------------------------------------------------------
9. Conversion Transfers
On January 1, 2000, former Duquesne Light Company non-union participants
in the Beaver Valley Power Station 401(k) Plan were merged into the
FirstEnergy Corp. Savings Plan. Net assets with a value of $49,367,654
were transferred to the Plan.
Additional transfers to the Plan from other plans totaled $1,357,126
during 2000.
On July 3, 2000, FirstEnergy sold three power plants to Orion Company.
Total assets transferred out of the Plan were $12,300,496.
10. Subsequent Event
Effective January 1, 2002, the maximum contribution rate was increased
from 16% to 20%. Also effective on this date, Citistreet became
responsible for the administration of the Plan's beneficiary forms. In
addition, participant residential loans have been extended from 15 to 30
years.
Effective February 11, 2002, Participants who are at least 55 years of
age with ten years in the ESOP are provided the ability to diversify a
portion of their company matching funds. Also, Participants who are at
least 50 years of age can effect to defer an additional $1,000.
Participants can elect to receive the quarterly dividends on their shares
of FirstEnergy common stock in the PAYSOP and Company Stock Funds.
Effective March 31, 2002, former Duquesne Light Company union participants
in the FirstEnergy Corp. 401(k) Retirement Savings Plan for IBEW Represented
Employees at the Beaver Valley Nuclear Power Plant were merged into the
FirstEnergy Corp. Savings Plan.
12
FirstEnergy Corp. Savings Plan
Schedule of Assets (Held at End of Year)
December 30, 2001
-----------------------------------------------------------------------------------------------------------------
Fair
Identity of Issue Description Cost Value
State Street STIF Fund Money Market Fund $ 2,343,342 $ 2,343,342
ESOP Unallocated Fund * FE Common Stock 85,626,924 159,555,675
ESOP Allocated Fund * FE Common Stock 95,125,586 176,352,004
PAYSOP Fund * FE Common Stock 1,582,021 3,301,053
Company Common Stock Fund * FE Common Stock 86,235,645 118,284,278
Capital Preservation Fund GICs, CMOs 163,168,296 163,168,296
S&P 500 Index Fund S&P 500 Stocks 116,282,245 148,298,557
(Common/Collective Trust)
Small Cap Value Fund Domestic Small Cap Stocks 31,493,129 32,100,492
(Retail Mutual Fund)
Large Cap Value Fund Large Cap Value Stocks 8,669,172 7,929,939
(Retail Mutual Fund)
Mid Cap Value Fund Mid Cap Value Stocks 10,398,430 9,769,677
(Retail Mutual Fund)
Mid Cap Growth Fund Mid Cap Growth Stocks 4,684,292 4,043,804
(Retail Mutual Fund)
Small Cap Growth Fund Small Cap Growth Stocks 3,855,284 3,581,813
(Retail Mutual Fund)
Bond Fund Bonds 14,184,654 13,963,399
(Retail Mutual Fund)
Self Managed Fund Equities, Fixed Income 23,568,020 23,568,020
EuroPacific Fund International Stocks 48,350,189 40,982,416
(Mutual Fund)
Armada Equity Growth Fund Equities 97,549,996 90,698,078
(Mutual Fund)
DQE Frozen Stock Fund * DQE Company Stock 3,154,580 2,715,332
------------- ---------------
$ 796,271,805 $ 1,000,656,175
============= ===============
* Party-in-interest
13
FirstEnergy Corp. Savings Plan
Schedule of Reportable Transactions
For the Year Ended December 30, 2001
------------------------------------------------------------------------------------------------------------------------------
Number of Total Number Total
Description Purchase Value of of Sale Selling Cost of
of Assets Transactions Purchase Transactions Price Assets Sold Gain
State Street STIF Fund 198 $ 34,837,893 271 $ 34,809,802 $ 34,809,802 $ -
FirstEnergy common stock 254 $ 50,145,816 436 $ 46,751,408 $ 44,302,762 $ 2,448,646
Capital Preservation Fund 143 $ 40,573,657 146 $ 24,209,621 $ 24,209,621 $ -
S&P 500 Index Fund 69 $ 43,903,234 183 $ 37,321,054 $ 27,181,826 $ 10,139,228
14
Exhibit A
Consent of Independent Accountants
We consent to the incorporation by reference in the Company's previously filed
Registration Statement (File No. 333-21011) of our report dated June 7, 2002, on
the audits of the FirstEnergy Corp. Savings Plan as of December 30, 2001 and
December 30, 2000 which report is included in this Annual Report on Form 11-K of
FirstEnergy Corp.
/s/ PricewaterhouseCoopers LLP
Cleveland,Ohio
June 21, 2002
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Savings Plan Committee, the administrator of the FirstEnergy Corp. Savings Plan,
has duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
FIRSTENERGY CORP.
SAVINGS PLAN
June 21, 2002
-------------
Date
By: /s/ Richard J. LaFleur
----------------------
Richard J. LaFleur
Chairman
Savings Plan Committee
June 21, 2002
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: FirstEnergy Corp. Savings Plan
Gentlemen:
We transmit herewith for electronic filing with the Securities and Exchange
Commission, pursuant to the Securities Act of 1934, as amended, an annual report
on Form 11-K of the FirstEnergy Corp. Savings Plan.
Please address any comments regarding the above to the undersigned at 76 S.
Main Street, Akron, OH 44308 (330) 384-5504.
Very truly yours,
FirstEnergy Corp.
By: /s/ N. C. Ashcom
----------------
N. C. Ashcom
Corporate Secretary