-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OEYn/6AmjyPbup2qzSeceo9930OyYz61nGbkRkhwa9ZdSpK7KMoTiPynGLXKr9t5 eimw0ogzzBoRxjRiQO8QiQ== 0001031296-03-000153.txt : 20030630 0001031296-03-000153.hdr.sgml : 20030630 20030630154244 ACCESSION NUMBER: 0001031296-03-000153 CONFORMED SUBMISSION TYPE: 11-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20021230 FILED AS OF DATE: 20030630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRSTENERGY CORP CENTRAL INDEX KEY: 0001031296 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 341843785 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-21011 FILM NUMBER: 03764301 BUSINESS ADDRESS: STREET 1: 76 SOUTH MAIN ST CITY: AKRON STATE: OH ZIP: 44308-1890 BUSINESS PHONE: 3303845100 MAIL ADDRESS: STREET 1: 76 SOUTH MAIN ST CITY: AKRON STATE: OH ZIP: 44308-1890 11-K/A 1 fe.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 - ------------------------------------------------------------------------------- FORM 11-K/A AMENDMENT No. 1 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, 2002 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 FirstEnergy Corp. Savings Plan Report on Audits of Financial Statements and Supplemental Schedules December 30, 2002 and 2001 FirstEnergy Corp. Savings Plan Index December 30, 2002 and 2001 - ------------------------------------------------------------------------------- Page Report of Independent Auditors 1 Statements of Net Assets Available for Plan Benefits at December 30, 2002 and 2001 2 Statements of Changes in Net Assets Available for Plan Benefits for the Years Ended December 30, 2002 and 2001 3 Notes to Financial Statements 4-12 Supplemental Schedules: Schedule H, Line 4i - Schedule of Assets (Held at End of Year) for the Year Ended December 30, 2002 13 Schedule H, Line 4k - Schedule of Reportable Transactions for the Year Ended December 30, 2002 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 Auditors To the Participants and Savings Plan Committee of the FirstEnergy Corp. Savings Plan 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, 2002 and 2001, 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. These supplemental schedules are the responsibility of the Plan's management. The 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. /s/ PricewaterhouseCoopers LLP Cleveland, OH June 20, 2003 FirstEnergy Corp. Savings Plan Statements of Net Assets Available for Plan Benefits At December 30, 2002 and 2001 - ----------------------------------------------------------------------------- Assets 2002 2001 ------ ---- ---- Cash and cash equivalents ................ $ 2,122,300 $ 2,343,342 FirstEnergy common stock ................. 413,047,769 457,493,010 Capital preservation investments ......... 197,456,856 163,168,296 Domestic equity stocks ................... 238,326,911 299,137,692 International equity stocks .............. 35,268,919 40,982,416 Other equities ........................... 18,893,250 23,568,020 Bonds .................................... 29,884,888 13,963,399 Participant loans ........................ 19,762,708 18,125,574 Interest receivable ...................... 940,951 868,023 Employee contributions receivable ........ 2,209,914 1,758,988 Pending sale transactions ................ 830,930 55,538 ------------ -------------- Total assets .......................... 958,745,396 1,021,464,298 Liabilities Pending purchase transactions ............ 138,287 345,932 ESOP loan balance ........................ 125,850,000 149,550,000 Accrued fees ............................. 18,846 505 ------------ -------------- Total liabilities ..................... 126,007,133 149,896,437 ------------ -------------- Net assets available for plan benefits ... $832,738,263 $ 871,567,861 ============ ============== The accompanying notes are an integral part of these financial statements. 2 FirstEnergy Corp. Savings Plan Statements of Changes in Net Assets Available for Plan Benefits For the Years Ended December 30, 2002 and 2001 - ----------------------------------------------------------------------------- 2002 2001 ---- ---- Additions: Contributions: Employee ............................ $ 51,490,830 $ 45,395,654 Employer ............................ 24,200,635 20,272,285 ------------- ------------ Total contributions ............... 75,691,465 65,667,939 Investment (loss) income: Interest and dividends .............. 33,601,245 34,356,550 Net depreciation in fair value of investments .................... (113,347,156) (18,006,428) ------------- ------------ Total investment (loss) income .. (79,745,911) 16,350,122 Conversion transfers, net ............. 18,949,093 100,958 ------------- ------------ Total additions .............. 14,894,647 82,119,019 Deductions: Distributions to Participants ......... (35,304,079) (37,084,543) ESOP interest ......................... (14,955,570) (16,825,000) Fees .................................. (677,964) (579,137) ESOP transfers to other benefit plan .. (2,786,632) (102,485) ------------- ------------ Total deductions ............. (53,724,245) (54,591,165) ------------- ------------ (Decrease) increase in net assets ......... (38,829,598) 27,527,854 Net assets available for plan benefits, beginning of year ....................... 871,567,861 844,040,007 ------------- ------------ Net assets available for plan benefits, end of year ............................. $ 832,738,263 $871,567,861 ============= ============ The accompanying notes are an integral part of these financial statements. 3 FirstEnergy Corp. Savings Plan Notes to Financial Statements December 30, 2002 and 2001 - ----------------------------------------------------------------------------- 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 currently match employee contributions with shares of FirstEnergy common stock (see Note 7) held in the Employee Stock Ownership Plan ("ESOP"). However, according to the Plan, the Companies can alternatively make the contributions in cash. 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 1986, 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 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 ("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 4 FirstEnergy Corp. Savings Plan Notes to Financial Statements December 30, 2002 and 2001 - ----------------------------------------------------------------------------- common stock acquired with the proceeds of the ESOP Loan. The ESOP Loan is expected to be 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, 2002 and 2001, the ESOP Loan balance was $125,850,000 and $149,550,000, respectively. Requirements for maturing long-term debt are as follows: 2003 ........... $29,300,000 2004 ........... 35,700,000 2005 ........... 60,850,000 ------------ $125,850,000 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 $14,955,000 in 2002 and $35,100,000 in 2001, which released 353,756 shares in 2002 and 812,272 shares in 2001. In December 2002, a principal payment of $23,700,000 was made which led to the release of 560,617 shares. In December 2001, a principal payment of $18,700,000 was made which led to the release of 442,343 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 FirstEnergy common stock when contributed. During 2002 and 2001, there were 688,740 and 548,888 ESOP shares, respectively contributed to Participants' accounts. In 2002 and 2001, respectively, 207,989 and 197,077 ESOP shares were realized related to the reinvestment of dividends on the ESOP shares. At December 30, 2002 and December 30, 2001, there were 3,646,967 and 4,561,340 shares, respectively, held in the ESOP Unallocated Fund at market values of $120,240,502 and $159,555,675, respectively, and 5,690,142 and 5,041,555 shares, respectively, held in the ESOP Allocated Fund at market values of $187,604,005 and $176,352,004. 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 fund 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, 2002 and 2001 - ----------------------------------------------------------------------------- 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. The market value of the Paysop Fund was $3,114,477 and $3,301,054 at December 30, 2002 and 2001, respectively. 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 market value of the Fund is measured at the market value per share determined by the investment manager except for funds A, B, L and N. See footnote 4 for the methodology used to determine fair value for each of these funds. 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. The Companies pay all expenses associated with administering the Plan, including State Street Bank & Trust Company ("Trustee") fees and brokerage commission on purchases and transfers between the funds. 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, 2002: 6 FirstEnergy Corp. Savings Plan Notes to Financial Statements December 30, 2002 and 2001 - ----------------------------------------------------------------------------- Fund A - Company Common Stock Fund This Fund consists entirely of shares of FirstEnergy 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. 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 market value of the Capital Preservation Fund is measured at the contract value as determined by the insurers and banks. 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. 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. 7 FirstEnergy Corp. Savings Plan Notes to Financial Statements December 30, 2002 and 2001 - ----------------------------------------------------------------------------- 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. 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. 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. 8 FirstEnergy Corp. Savings Plan Notes to Financial Statements December 30, 2002 and 2001 - ----------------------------------------------------------------------------- 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 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, 2002 and 2001: 2002 2001 ESOP Unallocated Fund - FE Common Stock $120,240,502 $159,555,675 ESOP Allocated Fund - FE Common Stock 187,604,005 176,352,004 Company Common Stock Fund - FE Common Stock 102,088,785 118,284,278 Capital Preservation Fund 197,456,856 163,168,296 S&P 500 Index Fund 121,527,709 148,298,557 Armada Equity Growth Fund 59,553,514 90,698,078 9 FirstEnergy Corp. Savings Plan Notes to Financial Statements December 30, 2002 and 2001 - ----------------------------------------------------------------------------- The net depreciation of the Plan's investments for 2002 and 2001 was as follows: 2002 2001 Bonds ..................... $ 328,438 $ (233,937) Domestic stocks ........... (80,716,515) (54,987,797) International stocks ...... (6,013,812) (6,970,511) FirstEnergy common stock .. (26,945,267) 44,185,817 ------------- ------------ Total $(113,347,156) $(18,006,428) ============= ============ 6. Non-Participant Directed Investments Net assets available for plan benefits and changes in net assets available for plan benefits relating to non-participant directed investments at December 30, 2002 and 2001 and for the years then ended are as follows:
2002 2001 Assets: FE common stock $ 166,624,040 $152,364,318 -------------- ------------ Net assets available for plan benefits $ 166,624,040 $152,364,318 ============= ============ Changes in net assets available for plan benefits: Employer contributions $ 24,200,635 $ 20,272,285 Interest and dividends 7,020,227 6,136,129 Net (depreciation) appreciation in fair value of investments 3,077,491 19,778,176 Distributions to Participants (5,782,225) (5,092,242) Transfers, net (12,359,514) (7,794,304) Conversions (1,896,090) - Expenses (802) (2,350) ------------- ------------ Increase in net assets available for plan benefits $ 14,259,722 $ 33,297,694 ============= ============
10 FirstEnergy Corp. Savings Plan Notes to Financial Statements December 30, 2002 and 2001 - ----------------------------------------------------------------------------- 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. No such contributions were made in 2002 or 2001. 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 portfolio. The first participants to elect this option became eligible in 2002. Employee Contributions During 2001, employees could invest between 1% and 16% of their salary in the Plan. Effective January 1, 2002, the maximum contribution rate was increased from 16% to 20%. 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 $11,000 for 2002 and $10,500 for 2001. Participants who are at least 50 years of age can elect to defer an additional $1,000 annually. 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 the Trustee. 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). 8. Tax Considerations The Plan is exempt from federal, state and local income taxes. The Plan received a favorable determination letter, which was dated March 24, 2003. The federal, state and local income tax 11 FirstEnergy Corp. Savings Plan Notes to Financial Statements December 30, 2002 and 2001 - ----------------------------------------------------------------------------- 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. 9. Conversion Transfers On April 30, 2002, the FirstEnergy Corp. 401(K) Retirement Savings Plan for IBEW Employees at the Beaver Valley Nuclear Power Plant was merged into the Plan. Net assets with a value of $18,949,093 were transferred to the Plan. 10. Subsequent Event Effective January 1, 2003, the GPU Non-Bargaining Savings Plan participants were transferred into the Plan. 11. Guaranteed Investment Contracts The Plan holds fully benefit-responsive guaranteed investment contracts ("GICs"), which are presented at contract value in the Statements of Net Assets Available for Plan Benefits as previously stated in Note 4. The fair values of the GICs at December 30, 2002 and 2001 were $209,520,197 and $169,892,523, respectively. The average yield of the contracts was 5.36% and 5.97% for the years 2002 and 2001, respectively. The crediting interest rate as of December 30, 2002 and 2001 was 4.87% and 5.51%, respectively. 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. The GICs in the Plan are of various types and have zero minimum crediting interest rates. There are fixed crediting interest rates and variable crediting interest rates that reset on a monthly or quarterly basis. 12 FirstEnergy Corp. Savings Plan Schedule H, Line 4i - Schedule of Assets (Held at End of Year) EIN: 34-1843785 PN: 002 For the Year Ended December 30, 2002 - ------------------------------------------------------------------------------
Fair Identity of Issue Description Cost Value ----------------- ----------- ---- ----- State Street STIF Fund Money Market Fund $ 2,122,300 $ 2,122,300 ESOP Unallocated Fund * FE Common Stock 68,462,023 120,240,502 ESOP Allocated Fund * FE Common Stock 108,340,100 187,604,005 PAYSOP Fund * FE Common Stock 1,641,227 3,114,477 Company Common Stock Fund * FE Common Stock 82,663,397 102,088,785 Capital Preservation Fund GICs, CMOs 197,456,856 197,456,856 ** S&P 500 Index Fund S&P 500 Stocks 125,117,165 121,527,709 (Common/Collective Trust) Small Cap Value Fund Domestic Small Cap Stocks 34,618,761 29,551,891 (Retail Mutual Fund) Large Cap Value Fund Large Cap Value Stocks 9,486,256 7,581,388 (Retail Mutual Fund) Mid Cap Value Fund Mid Cap Value Stocks 13,341,586 9,922,135 (Retail Mutual Fund) Mid Cap Growth Fund Mid Cap Growth Stocks 4,514,828 3,297,146 (Retail Mutual Fund) Small Cap Growth Fund Small Cap Growth Stocks 5,179,118 3,937,421 (Retail Mutual Fund) Bond Fund Bonds 29,809,903 29,884,888 (Retail Mutual Fund) Self Managed Fund Equities, Fixed Income 18,893,250 18,893,250 EuroPacific Fund International Stocks 46,399,250 35,268,919 (Mutual Fund) Loan Fund Participant Loans 19,762,708 19,762,708 Armada Equity Growth Fund Equities 88,103,746 59,553,514 (Mutual Fund) DQE Frozen Stock Fund DQE Common Stock 4,097,832 2,955,707 ------------ ------------ $860,010,306 $954,763,601 ============ ============ * Party-in-interest ** GIC's are carried at contract value which is cost.
13 FirstEnergy Corp. Savings Plan Schedule H, Line 4k - Schedule of Reportable Transactions - ------------------------------------------------------------------------------ EIN: 34-1843785 PN: 002 For the Year Ended December 30, 2002
Number of Total Number Total Description Purchase Value of of Sale Selling Cost of of Assets Transactions Purchase Transactions Price Assets Sold Gain ----------- ------------ -------- ------------ ------- ----------- ---- FirstEnergy Common Stock 427 $51,519,918 611 $80,305,993 $73,188,599 $ 7,117,394
14 EXHIBIT INDEX FIRSTENERGY CORP. SAVINGS PLAN Exhibit Number - ------ 23 Consent of Independent Accountants 99 Certification letter from Chairman of the Savings Plan Committee 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 20, 2003 - ------------- Date By: /s/ Stephen J. Mileski ---------------------- Stephen J. Mileski Chairman Savings Plan Committee EX-23 3 ex23.txt CONSENT Exhibit 23 Consent of Independent Accountants We hereby consent to the incorporation by reference in the Registration Statement on Form S-8(No. 333-21011) of FirstEnergy Corp. of our report dated June 20, 2003 relating to the financial statements of the FirstEnergy Corp. Savings Plan, which appears in this Form 11-K. /s/ PricewaterhouseCoopers LLP Cleveland,OH June 20, 2003 EX-99 4 ex99.txt CERTIFICATION Exhibit 99 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of FirstEnergy Corp. Savings Plan (the "Plan") on Form 11-K/A for the year ending December 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Stephen J. Mileski, Chairman of the Savings Plan Committee, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (1) The Report fully complies, in all material respects, with the requirements of section 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Plan. /s/ Stephen J. Mileski ----------------------------- Stephen J. Mileski Chairman of the Savings Plan Committee June 30, 2003 -----END PRIVACY-ENHANCED MESSAGE-----