SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) April 18, 2003
Commission Registrant; State of Incorporation; I.R.S. Employer
File Number Address; and Telephone Number Identification No.
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333-21011 FIRSTENERGY CORP. 34-1843785
(An Ohio Corporation)
76 South Main Street
Akron, Ohio 44308
Telephone (800)736-3402
Item 5. Other Events
On April 18, 2003, FirstEnergy Corp. divested its ownership in GPU Empresa
Distribuidora Electrica Regional S.A. and affiliates (Emdersa) through the
abandonment of its shares in Emdersa's parent company, GPU Argentina Holdings,
Inc. The abandonment involved the tendering of FirstEnergy's shares in GPU
Argentina Holdings back to that company.
Since the merger with the former GPU, Inc. in November of 2001, FirstEnergy
has explored a variety of alternatives to divest Emdersa, an electric
distribution holding company in Argentina, which was acquired through the
merger. However, difficult economic conditions in Argentina have prevented
FirstEnergy from completing a sale transaction.
Prior to the abandonment, FirstEnergy recorded a foreign currency
translation adjustment (CTA) loss of $90 million through its other comprehensive
income (OCI) - a component of common shareholders' equity. The CTA reduced
FirstEnergy's common shareholders' equity and did not affect its net income.
As a result of the abandonment, FirstEnergy will recognize a one-time,
non-cash charge of $63 million, or $0.21 per share in the second quarter of
2003. This charge is the result of realizing the CTA losses through its current
period earnings ($90 million, or $0.30 per share), partially offset by the gain
recognized from eliminating its investment in Emdersa ($27 million, or $0.09 per
share). Since FirstEnergy had previously recorded $90 million of CTA adjustments
in OCI, the net effect of the $63 million charge will be an increase in common
shareholders' equity of $27 million.
The $63 million charge does not include the anticipated income tax benefits
related to the abandonment. These tax benefits will be fully reserved during the
second quarter. FirstEnergy anticipates tax benefits of approximately $129
million, of which $50 million would increase net income in the period in which
it becomes probable those benefits will be realized. The remaining $79 million
tax benefit would reduce goodwill recognized in connection with the acquisition
of GPU. When realized, the $129 million of tax benefits will represent positive
cash flow for FirstEnergy and increase common shareholders' equity by $50
million.
This Form 8-K includes forward-looking statements based on information
currently available to management. Such statements are subject to certain risks
and uncertainties. These statements typically contain, but are not limited to,
the terms "anticipate," "potential," "expect," "believe," "estimate" and similar
words. Actual results may differ materially due to the speed and nature of
increased competition and deregulation in the electric utility industry,
economic or weather conditions affecting future sales and margins, changes in
markets for energy services, changing energy market prices, legislative and
regulatory changes (including revised environmental requirements), availability
and cost of capital, inability to accomplish or realize anticipated benefits of
strategic goals and other similar factors.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
April 18, 2003
FIRSTENERGY CORP.
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Registrant
/s/ Jeffrey R. Kalata
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Jeffrey R. Kalata
Assistant Controller
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