-----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, I90AAsFyb13AVVr4DAunVaKqzgOC7tps7PEBECdEn3hRMs+fxVAgDliKvh2jXxl4 ojmF/+6n9iKNCWaS8E8w5Q== 0001407702-10-000005.txt : 20100624 0001407702-10-000005.hdr.sgml : 20100624 20100624170542 ACCESSION NUMBER: 0001407702-10-000005 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20091231 FILED AS OF DATE: 20100624 DATE AS OF CHANGE: 20100624 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 SEC ACT: 1934 Act SEC FILE NUMBER: 333-21011 FILM NUMBER: 10915516 BUSINESS ADDRESS: STREET 1: 76 SOUTH MAIN ST CITY: AKRON STATE: OH ZIP: 44308-1890 BUSINESS PHONE: 330-761-7837 MAIL ADDRESS: STREET 1: 76 SOUTH MAIN ST CITY: AKRON STATE: OH ZIP: 44308-1890 11-K 1 form11_k.htm FORM 11-K FIRSTENERGY CORP., SAVINGS PLAN YEAR ENDED DECEMBER 31, 2009 form11_k.htm
 

UNITED STATES
                                                    SECURITIES AND EXCHANGE COMMISSION
                                         Washington, D.C.  20549
 
                                     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
                                                       For the fiscal years ended December 31, 2009 and 2008
 
                               OR
 
                               { }                TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
                                      EXCHANGE ACT OF 1934
                                       For the transition period  from _________ to  __________.
 
                                           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
Table of Contents
   
 
Page
   
   
Report of Independent Registered Public Accounting Firm
1
   
Financial Statements:
 
   Statements of Net Assets Available for Benefits as of
 
  December 31, 2009 and 2008
2
   
   Statements of Changes in Net Assets Available for Benefits
 
   for the Years Ended December 31, 2009 and 2008
3
   
    Notes to Financial Statements
4-14
   
Supplemental Schedule:
 
    Schedule H, line 4i – Schedule of Assets (Held at End of Year)
15








All other schedules of additional financial information 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 United States Department of Labor.



 
 

 


Report of Independent Registered Public Accounting Firm


To the Participants and Savings Plan Committee of the
FirstEnergy Corp. Savings Plan
Akron, Ohio

We have audited the accompanying statements of net assets available for benefits of FirstEnergy Corp. Savings Plan as of December 31, 2009 and 2008 and the related statements of changes in net assets available for benefits for the years then ended. 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 in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of FirstEnergy Corp. Savings Plan as of December 31, 2009 and 2008 and the changes in its net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole.  The supplemental schedule of assets (held at end of year) as of December 31, 2009, is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the United States Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.< /font>



/s/ BOBER, MARKEY, FEDOROVICH & COMPANY
Akron, Ohio

June 24, 2010
 
 
 
 
 
 



 
  1

 
FirstEnergy Corp. Savings Plan

Statements of Net Assets Available for Benefits
As of December 31, 2009 and 2008


   
December 31,
 
December 31,
Assets
 
2009
 
2008
             
Investments, at fair value
 
$
2,199,542,510
 
$
1,931,654,151
             
Receivables:
           
   Accrued interest and dividends
   
450,764
   
2,191,379
   Employer contributions
   
25,398,963
   
25,983,672
   Employee contributions
   
455,901
   
-
      Total receivables
   
26,305,628
   
28,175,051
      Total assets
   
2,225,848,138
   
1,959,829,202
             
Liabilities
           
             
Administrative expenses payable
   
577,345
   
295,315
Due to broker for securities purchased
   
81,123
   
2,310,266
      Total liabilities
   
658,468
   
2,605,581
             
Net assets available for benefits, at fair value
   
2,225,189,670
   
1,957,223,621
             
Adjustment from fair value to contract value for
           
   fully benefit-responsive investment contracts
   
(7,181,946)
   
8,046,389
             
Net assets available for benefits
 
$
2,218,007,724
 
$
1,965,270,010







The accompanying notes are an integral part of these financial statements.
 

 

 
FirstEnergy Corp. Savings Plan

Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 2009 and 2008

 
 
   
Year Ended
   
Year Ended
 
   
December 31, 2009
   
December 31, 2008
 
             
Additions:
           
Contributions
           
Employee
  $ 101,221,145     $ 103,080,692  
Employer
    53,982,221       52,006,062  
Total contributions
    155,203,366       155,086,754  
                 
 Investment income:
               
Interest and dividends
    54,821,802       68,037,475  
                 
Total additions
    210,025,168       223,124,229  
                 
Deductions:
               
Distributions to participants
    (179,525,418 )     (139,194,952 )
ESOP interest
    -       (77,241 )
Fees
    (1,446,217 )     (1,742,755 )
Total deductions
    (180,971,635 )     (141,014,948 )
                 
Net appreciation (depreciation) in fair value of investments
    223,684,181       (698,316,131 )
                 
Increase (decrease) in net assets available for benefits
    252,737,714       (616,206,850 )
                 
Net assets available for benefits, beginning of year
    1,965,270,010       2,581,476,860  
                 
Net assets available for benefits, end of year
  $ 2,218,007,724     $ 1,965,270,010  

 
 
 




 
The accompanying notes are an integral part of these financial statements.
 
3

 
 
 
FirstEnergy Corp. Savings Plan

Notes to Financial Statements
December 31, 2009 and 2008

 
1.  
Description of the Plan

The FirstEnergy Corp. Savings Plan (Plan) provides eligible employees (Participants) of FirstEnergy Corp. 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. Through April 2008, the Companies matched employee contributions primarily with shares of FirstEnergy common stock (see Note 7) held in the Employee Stock Ownership Plan (ESOP). Most union Participants of the former GPU, Inc. were matched in cash. In May 2008, the Companies began making cash contributions to the Plan to meet the Companies’ matching contribution obligation.  Cash contributions are made to the FirstEnergy Contributions Stock Fund (Stock Fund) and units of the Stock Fund are then used to satisfy the matching contribution obligation. Certain GPU union Participants continued to receive their matching contributions in cash. Participants may invest their contributions in any investment options provided under the Plan. Contributions made to Participants’ 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 and bonus plan under Section 401(a) of the Internal Revenue Code of 1986, as amended (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.

Employees may participate in one or more of the Funds through deferral of compensation. The choice of Participants’ investments into the funds (except the Companies' matching contributions in the form of FirstEnergy common stock) is the responsibility of the individual Participant. Transfers between funds are the responsibility of the Participant and may be made on a daily basis subject to Plan provisions, Internal Revenue Service (IRS) and ERISA regulations. Participants are also permitted to direct investment holdings into a self-managed brokerage account option.  The Participant has full investment responsibility over the amounts held in this option.
 
Generally, every regular FirstEnergy employee is eligible to become a participant in the Plan immediately upon employment.

Under the automatic enrollment feature for newly-hired, eligible employees of the Companies, contributions are set at 3% with a graduated increase of 1% per year up to 6% over time when no election out of the automatic enrollment is made by the employee. Certain GPU union Participants are automatically enrolled at 2%, without escalation. Non-spousal beneficiaries may rollover their account to another qualified plan without penalty.

Securities in the ESOP Account
The ESOP purchased a total of 10,654,114 shares of Ohio Edison Company (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 (Merger) that created
 
 
 
4

 
 
 
FirstEnergy Corp. Savings Plan

Notes to Financial Statements
December 31, 2009 and 2008

 
FirstEnergy, shares of OE common stock were converted into shares of FirstEnergy common stock on a one-for-one basis.
 
The Plan borrowed $200 million (ESOP Loan) at a rate of 10% from OE to fund the purchase of the stock. In October 2005, the ESOP Loan was refinanced at a rate of 4.4%. The Plan recognized and capitalized interest expense of $5,070,830 on the original ESOP loan obligation for the period December 31, 2004 through October 31, 2005. Principal payments of $16,480,208 were due each December 31 through 2008, with interest payable annually. Principal payments could be made sooner if additional shares of FirstEnergy common stock were needed for distributions to Participants. The ESOP Loan was paid in full on April 30, 2008.

On June 20, 2008 the Plan received notification from the United States Department of Labor (DOL) that it had concluded its audit of the Plan for years 2001 through 2004. The DOL concluded that FirstEnergy, in its capacity as the lender, committed a prohibited transaction as part of the 2005 refinancing of the ESOP loan with the borrower, State Street Bank and Trust Company (State Street), acting in its capacity as trustee of the Plan. The DOL noted that this alleged prohibited transaction was corrected by FirstEnergy and State Street with the execution of the Amended and Restated Promissory Note and the Amended and Restated Loan Agreement, and that it would take no action on the matter. Furthermore, FirstEnergy and State Street do not believe a prohibited transaction occurred and will dispute any contention by the IRS that they engaged in a proh ibited transaction. Therefore, no estimated potential liability has been recorded related to this matter.

The DOL also declared it would not pursue any action against the Plan with regard to its assertion that all the shares released from the ESOP Loan Suspense Account for the Plan were not allocated to Participants in accordance with the provisions of the Plan document. The DOL noted that the Plan provided evidence that it was being operated in accordance with the fiduciaries' interpretation of the Plan.

ESOP Allocation
As principal and interest payments were made on the ESOP Loan, shares of FirstEnergy common stock were released from the ESOP Unallocated Fund to the ESOP Allocated Fund where they were made available for contribution to Participants’ accounts. On April 30, 2008, the final principal payment of $5,310,675 and interest payment of $77,241 released the remaining 135,067 shares, which were allocated to Participants.

The Companies’ matching contribution to each Participant's account is computed each pay period based on the Companies' matching contribution percentages (see Note 7). The number of shares of FirstEnergy Common Stock Fund contributed to each Participant is based on the market price of the Stock Fund as determined at the end of each pay period.

As of December 31, 2009 and 2008 there were 5,613,734 and 5,162,700 shares, respectively, held in the ESOP Allocated Fund having market values of $260,757,956 and $250,803,979, respectively. The market value of the ESOP common stock is measured by the quoted market price.

All unallocated shares held by the ESOP as of December 31, 2007, were allocated to Participant accounts by May 2008. Since then, shares of FirstEnergy common stock are being purchased on the market and contributed to Participants' accounts as described above. The fair value of the FirstEnergy common stock shares contributed are valued at the closing price as reported by the New York Stock Exchange as of the date the contributions are credited to the Participants account. The contributions receivable in 2009 and 2008, included in the Statement of Net Assets Available for Benefits, represent funds provided by FirstEnergy to the ESOP in early 2010 and 2009, respectively, to purchase shares of FirstEnergy common stock for the respective 2009 and 2008 matching requirements.

 
 
 
 
5

 
 
 
FirstEnergy Corp. Savings Plan

Notes to Financial Statements
December 31, 2009 and 2008

 
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 Plan a maximum of one-half of one percent of the aggregate compensation of eligible employees and claim a tax credit on their consolidated federal income tax return equal to that 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 all employees for the year. The Tax Reform Act of 1986 eliminated the PAYSOP tax credit with respect to compensation earned in 1987 and later years. As a result, the Companies have not contributed to the PAYSOP since the 1986 contribution except for the reimbursement of PAYSOP administrative expenses.

Dividends are payable quarterly to Participants and Participants have the option to either reinvest dividends into the PAYSOP Fund or elect to have the dividends distributed quarterly through the Dividend Pass-Through feature of the Plan.  The market value of the FirstEnergy common stock in the PAYSOP Fund was $3,826,939 as of December 31, 2009 and $4,216,472 as of December 31, 2008.

Participant Loan Fund
Generally, the Plan allows Participants to borrow from their before-tax, after-tax and rollover accounts. 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% of their total account balance, excluding their Roth 401(k) balance, not exceeding $50,000 including loans outstanding and the highest unpaid loan balance over the previous 12 months. The interest rate for new loan issuances is adjusted each quarter to the prime rate plus 1% based on the prime rate on approximately the 15th day of the last month of the preceding quarter.  Interest rates on outstanding loan balances as of December 31, 2009 range from 4.25% to 10.5%.  Participants may have up to two loans outstanding at one time. The minimum loan amount is $1,000 and must be repaid within 6 to 60 months. If the loan is for the purchase of a principal residence, the loan repayment period can be extended up to 30 years.

2.  
Summary of Accounting Policies

The financial statements have been prepared on the accrual basis of accounting. Benefits are recorded when paid. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) 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.

Investment income consists of interest and dividend income. The net appreciation (depreciation) in the fair value of investments consists of realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is accrued on the ex-dividend date. Purchases and sales of securities are recorded on a trade-date basis. Realized gains and losses from security transactions are reported based on historical cost.

The fair value of the Funds is measured at the market value per share determined by the investment manager except for the FirstEnergy Common Stock Fund, the Capital Preservation Fund and the Loan Fund. The market value of the FirstEnergy Common Stock Fund is measured by the quoted market price. See Note 10 for the
 
 
6

 
 
 
FirstEnergy Corp. Savings Plan

Notes to Financial Statements
December 31, 2009 and 2008

 
methodology used to determine fair value for the Capital Preservation Fund and Note 1 for a description of the Participant Loan Fund.
 
Expenses for the administration of the Plan are paid for by the Plan unless otherwise paid by the Companies.
 
In 2009, the Plan adopted amended subsequent event guidance issued by the Financial Accounting Standards Board (FASB). In accordance with this guidance, the Plan has evaluated subsequent events through the date the financial statements are issued.

3.  
New Accounting Standards and Interpretations

In 2010, the FASB amended the Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards Codification (ASC) to require additional disclosures about: 1) transfers of Level 1 and Level 2 fair value measurements, including the reason for transfers; 2) purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements; 3) additional disaggregation to include fair value measurement disclosures for each class of assets and liabilities; and 4) disclosure of inputs and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements.  The amendment is effective for fiscal years beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair val ue measurements, which is effective for fiscal years beginning after December 15, 2010.  The Plan does not expect this standard to have a material effect upon its financial statements.

4.  
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.

5.  
Investments

The Plan’s investments as of December 31, 2009 and 2008 were maintained in investment funds, Participant loans and shares of FirstEnergy common stock.

 
The following presents the fair value of investments in the Plan as of December 31:
 
 
   
2009
   
2008
 
Cash and cash equivalents
  $ 5,456,702     $ 7,558,298  
FirstEnergy common stock
    421,933,824       424,838,864  
Capital preservation investments
    564,502,152       564,289,497  
Domestic equity stocks
    553,464,774       421,648,496  
International equity stocks
    174,037,199       120,037,805  
Other equities
    57,345,649       42,970,093  
Balanced funds
    256,945,761       213,311,302  
Bond funds
    123,903,933       96,887,244  
Participant loans
    41,952,516       40,112,552  
      Total investments at fair value
  $ 2,199,542,510     $ 1,931,654,151  
 
 
 
 
 
 
 
7

 
 
 
FirstEnergy Corp. Savings Plan

Notes to Financial Statements
December 31, 2009 and 2008

 
The net investment income is as follows:
 
 
   
Year Ended
   
Year Ended
 
   
December 31,
   
December 31,
 
   
2009
   
2008
 
             
Dividends and interest income
  $ 54,821,802     $ 68,037,475  
Net appreciation (depreciation) in fair value of investments:
               
  Bond funds
    6,817,594       (5,488,991 )
  Domestic stocks
    145,804,117       (311,721,817 )
  International stocks
    44,089,490       (99,007,058 )
  Balanced funds
    46,040,786       (79,190,836 )
  FirstEnergy common stock
    (19,067,806 )     (202,907,429 )
      Net appreciation (depreciation)
    223,684,181       (698,316,131 )
Net investment income (loss)
  $ 278,505,983     $ (630,278,656 )
 
 
 
 
The following presents the fair value of investments that represent 5% or more of the Plan’s net assets as of December 31:
 
 
   
2009
   
2008
 
             
FirstEnergy Common Stock
  $ 421,933,824     $ 424,838,864  
                 
Capital Preservation Fund
  $ 564,502,152     $ 564,289,497  
                 
S&P 500 Index Fund
  $ 250,250,980     $ 207,290,895  
                 
EuroPacific Growth Fund
  $ 153,550,376     $ 113,190,715  
                 
PIMCO Bond Fund
  $ 123,903,933       N/A  
 
 
6.  
Fair Value

In 2009, the Plan adopted amended FASB accounting guidance applicable to the Fair Value Measurements and Disclosures Topic of the FASB ASC. The guidance is to determine whether there has been a significant decrease in the volume and level of activity for an asset or liability when compared to normal market activity for such asset or liability (or similar assets and liabilities) and to identify circumstances that indicate a transaction with regards to such an asset or liability is not orderly. The guidance also expands the disclosures and requires that the major categories of debt and equity securities in the fair value table be determined on the basis of the nature and risks of the investments. There was no impact of the adoption on the statements of net assets available for benefits and the statements of changes in net assets available for bene fits.

Fair value is the price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between willing market participants on the measurement date. A fair value hierarchy has been established that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted market prices in active
 
 
 
 
8

 
 
FirstEnergy Corp. Savings Plan

Notes to Financial Statements
December 31, 2009 and 2008

 
markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are as follows:
      
Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those where transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 assets include registered investment companies, common stocks and real estate investment trusts. Registered investment companies and common stocks are stated at fair value as quoted on a recognized securities exchange and are valued at the last reported sales price on the last business day of the Plan year.  Real estate investment trusts market values are based on daily quotes available on public exchanges as with other publicly traded equity securities.

Level 2 – Pricing inputs are either directly or indirectly observable in the market as of the reporting date, other than quoted prices in active markets included in Level 1. Additionally, Level 2 includes those financial instruments that are valued using models or other valuation methodologies based on assumptions that are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Level 2 investments include common c ollective trusts and cash and cash equivalents assets. Common collective trusts are composed of a non-benefit-responsive investment fund and fully benefit-responsive investment contracts. The fair value of investments in the non-benefit-responsive investment fund is based upon the quoted redemption value of units owned by the Plan at year end. The fair value of fully benefit-responsive investment contracts is calculated using a discounted cash flow model which considers recent fee bids as determined by recognized dealers, discount rate, and the duration of the underlying portfolio securities. Common collective trusts are not available in an exchange and active market however, the fair value is determined based on the underlying investments as traded in an exchange and active market. The fair value of the stable value fund is based on the underlying investments. This fund invests in a portfolio of high-quality short- and intermediate-term U.S. bonds, including U.S. government treasuries, corporate debt securi ties, and other high-credit-quality asset-backed securities. The fair value of the wrapper contracts is based on the wrap contract fees provided by the insurance companies and are included in the stable value fund category.

Level 3 – Pricing inputs include inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. Participant loans are classified as Level 3 investments and are valued at their outstanding balances, which approximate fair value.

 
 
 
 
 
 
 

 
 
 
FirstEnergy Corp. Savings Plan

Notes to Financial Statements
December 31, 2009 and 2008

 
The following presents the Plan’s investments measured at fair value as of December 31:
 
 
   
December 31, 2009
 
   
Level 1
   
Level 2
   
Level 3
   
Total
 
 Assets                        
                         
Common Collective Trusts
                       
  Balanced funds
  $ -     $ 194,865,041     $ -     $ 194,865,041  
  Domestic equity stocks
    -       344,518,430       -       344,518,430  
  Capital preservation investments
    -       564,502,152       -       564,502,152  
Total Common Collective Trusts
    -       1,103,885,623       -       1,103,885,623  
                                 
Company Common Stock
    421,933,824       -       -       421,933,824  
                                 
Registered Investment Companies
                               
  Balanced funds
    62,080,720       -       -       62,080,720  
  Bond funds
    123,903,933       -       -       123,903,933  
  Brokerage account1
    -       57,345,649       -       57,345,649  
  Domestic equity stocks
    157,862,525       -       -       157,862,525  
  International equity stocks
    174,037,199       -       -       174,037,199  
Total Registered Investment Companies
    517,884,377       57,345,649       -       575,230,026  
                                 
Separate Account
                               
  Domestic equity stocks
    44,840,759       -       -       44,840,759  
  Cash and cash equivalents
    -       1,723,876       -       1,723,876  
  Other
    -       1,668,088       -       1,668,088  
  Real estate investment trusts
    4,574,972       -       -       4,574,972  
Total Separate Account
    49,415,731       3,391,964       -       52,807,695  
                                 
Cash and Cash Equivalents
    -       3,732,826       -       3,732,826  
                                 
Participant Loans
    -       -       41,952,516       41,952,516  
                                 
Total Assets
  $ 989,233,932     $ 1,168,356,062     $ 41,952,516     $ 2,199,542,510  
                                 
1 The brokerage account investments are directed by participants.
                         
 
 
 
 
 
10

 
 
FirstEnergy Corp. Savings Plan

Notes to Financial Statements
December 31, 2009 and 2008

 
 
 
   
December 31, 2008
 
   
Level 1
   
Level 2
   
Level 3
   
Total
 
 Assets                        
                         
Common Collective Trusts
                       
  Balanced funds
  $ -     $ 164,372,234     $ -     $ 164,372,234  
  Domestic equity stocks
    -       271,833,962       -       271,833,962  
  Capital preservation investments
    -       564,289,497       -       564,289,497  
Total Common Collective Trusts
    -       1,000,495,693       -       1,000,495,693  
                                 
Company Common Stock
    424,838,864       -       -       424,838,864  
                                 
Registered Investment Companies
                               
  Balanced funds
    48,939,068       -       -       48,939,068  
  Bond funds
    96,887,244       -       -       96,887,244  
  Brokerage account1
    -       42,970,093       -       42,970,093  
  Domestic equity stocks
    110,716,873       -       -       110,716,873  
  International equity stocks
    120,037,805       -       -       120,037,805  
Total Registered Investment Companies
    376,580,990       42,970,093       -       419,551,083  
                                 
Separate Account
                               
  Domestic equity stocks
    34,826,790       -       -       34,826,790  
  Other
    515,297       -       -       515,297  
  Real estate investment trusts
    3,755,575       -       -       3,755,575  
Total Separate Account
    39,097,662       -       -       39,097,662  
                                 
Cash and Cash Equivalents
    -       7,558,297       -       7,558,297  
                                 
Participant Loans
    -       -       40,112,552       40,112,552  
                                 
Total Assets
  $ 840,517,516     $ 1,051,024,083     $ 40,112,552     $ 1,931,654,151  
                                 
1 The brokerage account investments are directed by participants.
                         
 
 
The following table provides a reconciliation of changes in the fair value of Participant loans classified as Level 3 in the fair value hierarchy during 2009 and 2008:
 
 
 
2009
 
2008
 
Beginning balance
$ 40,112,552   $ 38,305,504  
  Issuances
  23,912,302     22,029,330  
  Settlements
  (22,072,338 )   (20,222,282 )
Ending balance
$ 41,952,516   $ 40,112,552  
 
 
 
11

 
 
FirstEnergy Corp. Savings Plan

Notes to Financial Statements
December 31, 2009 and 2008

 
7.  
Contributions

Employer Contributions
The Companies pay a matching contribution of 50% on the first 6% of compensation contributed by an employee, except for certain GPU union Participants who receive a match on the first 4% of eligible contributions. In addition, the Companies may designate a number of performance objectives and contribute a discretionary bonus match amount determined by the Companies if such performance objectives are met. However, certain GPU union Participants receive no bonus match. The Companies' contributions are invested in FirstEnergy common stock, except for those certain GPU union Participants that are matched in cash.

Through April 2008, the Companies' contributions were 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 served to pay the ESOP Loan and related interest, which resulted in the release of shares to the ESOP Allocated Fund as the Companies' matching contribution. To the extent dividend income was not sufficient to pay the ESOP Loan and interest, the Companies contributed cash, which is reflected as employer contributions in the Statements of Changes in Net Assets Available for Benefits.

In accordance with the Pension Protection Act of 2006, the Plan provides that all company matching contributions be immediately eligible for diversification. For further discussion, please see Note 1 above.

Employee Contributions
Employees can invest between 1% and 75% (21% for employees represented by IBEW Local 777 and 22% for employees represented by UWUA Local 180) 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 Economic Growth and Tax Relief Reconciliation Act of 2001 limited the maximum annual before-tax contribution to $16,500 for 2009 and $15,500 for 2008. Participants who are at least 50 years of age may elect to defer an additional $5,500 annually in 2009 and $5,000 in 2008. 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.  Beginning in 2008, Plan Participants can el ect to contribute to a Roth 401(k) as part of their Plan contributions.  These contributions are on an after-tax basis.

8.  
Tax Considerations

The Plan is exempt from federal, state and local income taxes. The Plan obtained its latest favorable determination letter on March 24, 2003, in which the IRS stated that the Plan, as then designed, was in compliance with the applicable requirements of the Code. The Plan has been amended and restated since receiving the determination letter. However, the Plan administrator and the Plan’s tax counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Code. 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 requir es 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 FirstEnergy’s common stock withdrawn is considered to be its fair value on the date it is withdrawn.
 
 
 
 
 
12

 
 
FirstEnergy Corp. Savings Plan

Notes to Financial Statements
December 31, 2009 and 2008

 
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 is measured at fair value on the date it is withdrawn.

9.  
Party-In-Interest Transactions

Certain plan investments are shares of mutual funds managed by State Street Global Advisors. State Street, a related company, is the trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions.

10.  
Guaranteed Investment Contracts

The Plan has an interest in fully benefit-responsive guaranteed investment contracts and synthetic guaranteed investment contracts (collectively, GICs) as part of the Capital Preservation Fund, which is part of the State Street Bank & Trust Company Stable Fixed Income Fund for Employee Benefit Trusts, a common collective trust. In accordance with the Plan Accounting – Defined Contribution Pension Plans Topic of FASB ASC, the investment contracts are generally measured at contract value rather than fair value to the extent they are fully benefit-responsive. Contract value represents contributions made under the contract, plus earnings, less Participant withdrawals and administrative expenses. Participants transact with their investment in the Fund at contract value as determined by the insurers and banks. No valuation reserve in relatio n to the contract value is deemed necessary.

The fair value of the traditional GICs included in the Fund is calculated under the discounted cash flows method using the interpolated swap rate applicable for each cash flow’s pay date. The fair value of the synthetic GICs represents the total fair value of the underlying assets plus the wrap value, which is calculated by using the discounted cash flows of the difference between the current wrap fee and the market indication wrap fee.

Certain events limit the ability of the Plan to transact with the issuer at contract value. These events include closings (location, subsidiary, division), layoffs, Plan termination, bankruptcy or reorganization, corporate merger, early retirement incentive program, or similar events. The Plan Administrator does not believe any such events, of the magnitude that would limit the Plan’s ability to transact at contract value, are probable. The GICs do not permit the issuers to terminate the contracts at an amount other than contract value.

The average yields of the contracts were 2.43% and 3.00% during the years ended December 31, 2009 and December 31, 2008, respectively. The crediting interest rates as of December 31, 2009 and 2008 were 2.88% and 3.49%, respectively.  There are fixed crediting interest rates and variable crediting interest rates that reset on a monthly or quarterly basis. The investment contracts have no minimum credit rating.

State Street made cash infusions into the Capital Preservation Fund and other of their stable value clients’ portfolios on January 31, 2008, and October 30, 2008, due to the credit and liquidity events and market volatility of mid to late 2007, which continued through 2008. The Capital Preservation Fund received approximately $9 million and $18.7 million, respectively, of such infusions. This was undertaken to enhance the market to book value ratio.

On October 30, 2008, State Street Global Advisors purchased certain asset-backed and mortgage backed securities from its stable value funds and separate accounts and made a cash contribution to those funds and separate accounts. This transaction was considered to be non-exempt by the DOL. The Plan and the Investment Committee of the Plan had no discretion or control over the transaction. No estimated potential
 
 
 
 
 
 
13

 
 
FirstEnergy Corp. Savings Plan

Notes to Financial Statements
December 31, 2009 and 2008

 
 
liability has been recorded related to this matter as of December 31, 2009 and 2008. In February 2010, Prohibited Transaction Exemption No. 2010-02 was granted by the DOL with regard to this transaction.

Effective January 1, 2010, the Capital Preservation Fund is no longer a part of the State Street Bank & Trust Company Stable Fixed Income Fund for Employee Benefit Trusts.  The assets of the fund are managed by PIMCO.

11.
Reconciliation of Financial Statements to Form 5500

The following is a reconciliation of net assets available for benefits and investment income per the financial statements to Form 5500:
 
 
   
December 31,
 
December 31,
 
   
2009
 
2008
 
           
Net assets available for benefits per the financial statements
  $ 2,218,007,724   $ 1,965,270,010  
Adjustment from contract value to fair value for fully-benefit
             
   responsive investment contracts
    7,181,946     (8,046,389 )
Net assets available for benefits per Form 5500
  $ 2,225,189,670   $ 1,957,223,621  
               
Total investment income (loss) per financial statements
  $ 278,505,983   $ (630,278,656 )
               
Adjustment from contract value to fair value for fully-benefit
             
   responsive investment contracts
    15,228,335     4,947,166  
Investment income (loss) per Form 5500
  $ 293,734,318   $ (625,331,490 )
 
 
 
 
14 

 
 
 
 
 
FIRSTENERGY CORP. SAVINGS PLAN
SCHEDULE H, LINE 4i
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2009
#34-1843785  Plan 002
                 
(a)
 
(b)
 
(c)
 
(d)
 
(e)
       
Description of investment,
       
       
including maturity date,
       
   
Identity of issue, borrower,
 
rate of interest, collateral,
     
Current
   
lessor or similar party
 
par or maturity value
 
Cost
 
value
                 
*
 
 State Street STIF
 
 Money market fund
 
 **
 
 $        3,732,826
                 
*
 
 FirstEnergy Common Stock
 
 FirstEnergy common stock
 
 **
 
       421,933,824
                 
*
 
 S&P 500 Index Fund
 
 S&P 500 stocks
 
 **
 
       250,250,980
                 
   
 Fidelity Puritan Fund
 
 Balanced fund
 
 **
 
         62,080,720
                 
   
 Selected American Fund
 
 Large cap value stocks
 
 **
 
         53,481,494
                 
   
 Mellon Russell MidCap Value Index Fund
 
 Mid cap value stocks
 
 **
 
         52,807,695
                 
   
 Artisan Mid Cap Fund
 
 Mid cap growth stocks
 
 **
 
         52,780,178
                 
   
 DFA Small Cap Value
 
 Small cap value stocks
 
 **
 
         51,600,853
                 
   
 BGI Russell 2000 Growth Fund
 
 Small cap growth stocks
 
 **
 
         24,013,095
                 
   
 PIMCO Total Return Fund
 
 Bonds
 
 **
 
       123,903,933
                 
   
 EuroPacific Growth Fund
 
 International stocks
 
 **
 
       153,550,376
                 
   
 BGI Retirement Fund
 
 Blend of stocks, fixed income
 
 **
 
         14,043,438
                 
   
 BGI 2010 Fund
 
 Blend of stocks, fixed income
 
 **
 
         27,368,484
                 
   
 BGI 2015 Fund
 
 Blend of stocks, fixed income
 
 **
 
         40,865,016
                 
   
 BGI 2020 Fund
 
 Blend of stocks, fixed income
 
 **
 
         44,854,940
                 
   
 BGI 2025 Fund
 
 Blend of stocks, fixed income
 
 **
 
         33,780,420
                 
   
 BGI 2030 Fund
 
 Blend of stocks, fixed income
 
 **
 
         18,144,792
                 
   
 BGI 2035 Fund
 
 Blend of stocks, fixed income
 
 **
 
           5,553,081
                 
   
 BGI 2040 Fund
 
 Blend of stocks, fixed income
 
 **
 
           3,594,115
                 
   
 BGI 2045 Fund
 
 Blend of stocks, fixed income
 
 **
 
           2,581,883
                 
   
 BGI 2050 Fund
 
 Blend of stocks, fixed income
 
 **
 
           4,078,871
                 
   
 Dodge & Cox International Fund
 
 International stocks
 
 **
 
         20,486,823
                 
   
 BGI Russell 1000 Growth Index Fund
 
 Large cap growth
 
 **
 
         70,254,356
                 
   
 Self Managed Fund
 
 Equities, fixed income
 
 **
 
         57,345,649
                 
*
 
 Capital Preservation Fund
 
 GICs, collateralized mortgage obligations
 
 **
 
       564,502,152
                 
*
 
 Participant Loans
 
Loans receivable with repayment
       
       
   interest of 4.25% to 10.5%
 
 $               -
 
         41,952,516
                 
       
 Totals
     
 $ 2,199,542,510
                 
* Parties-in-interest
             
            ** Information is not required pursuant to Form 5500 instructions
         
 
 
 
 
15 

 
 
 
EXHIBIT INDEX



FIRSTENERGY CORP. SAVINGS PLAN



Exhibit
Number


23         Consent of Independent Registered Public Accounting Firm

 
 
 
16

 
 
 
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
   
Dated:  June 24, 2010
 
   
   
By
/s/  Ralph W. Smith
 
Ralph W. Smith
 
Chairperson
 
Savings Plan Committee


 
 
 
 
 
 
17

 
EX-23 2 exhibit_23.htm CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM exhibit_23.htm
 
 
Exhibit 23



Consent of Independent Registered Public Accounting Firm



We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-146170, 333-110662, 333-101472, 333-89356, 333-72768, 333-72766, 333-67798, 333-56094, 333-81183, and 333-58279) of FirstEnergy Corp. of our report dated June 24, 2010, relating to the financial statements of the FirstEnergy Corp. Savings Plan, which appears in this Form 11-K.


/s/ BOBER, MARKEY, FEDOROVICH & COMPANY


Akron, Ohio
June 24, 2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
18

 

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