Filed by FirstEnergy Corp. Pursuant to
Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Commission File No.: 333-21011
Subject Company: FirstEnergy Corp.
retiree
update
August 2000
Inside
2
What Electric Choice in Ohio Means to You
3
GPU Facts At A Glance
4
Diversified Energy Services
5
In Sympathy
6
Club News
Make a Difference by Helping Kids Read
FirstEnergy and GPU Agree to Merge
Dear Retiree:
A new chapter begins for our Company with the announcement that we have entered into a merger agreement with Morristown, New Jersey-based GPU, Inc. FirstEnergy, which will acquire all of the common stock of GPU, will remain headquartered in Akron. Our combination will add GPU Energy, which serves electric customers in Pennsylvania and New Jersey, to the FirstEnergy family of companies. The merger, which we hope to complete by mid-2001, will require, among other things, approvals from each company's shareholders and various regulatory agencies. Joining the companies will create a stronger enterprise with greater resources for providing more value to our customers and shareholders and more opportunities for employees. The merger will not affect your pension and health care benefits.
FirstEnergy will become a larger enterprise with more resources to meet
the challenges of our changing industry. I will be vice chairman, and
remain chief executive officer, and Fred D. Hafer, 59, GPU's chairman,
president and chief executive officer, will serve as chairman until his
retirement at age 62. Here are some other facts about the merger:
- By joining forces, we will become the sixth largest investor-owned
electric system in the nation, based on total customers served.
- We'll double our electric utility customer base in the region, serving
4.3 million customers within 37,200 square miles of Ohio, Pennsylvania
and New Jersey - comprising a wider, more diverse service area that
stretches from the Indiana border to the East Coast.
- We'll double the market for our electric generation, natural gas,
telecommunications and mechanical contracting and construction resources.
- Our combined mechanical contracting and construction business will be
the nation's fourth largest, with approximately $1 billion in annual
revenues and 3,800 employees.
- We anticipate that our combination will produce a number of other
benefits, including: cost savings from the combination of operations;
more efficient use of our generation assets; more opportunities to
increase revenues; and lower needs for new capital.
Through this merger, we will make a better future for ourselves in the
energy industry - a future that would not be as promising without your
past efforts. Thank you for your continued support.
Sincerely,
Pete Burg
Chairman and CEO
What Electric Choice in Ohio Means to You
Beginning January 1, 2001, all consumers in Ohio will be able to change
their electricity supplier under the state's new electric utility
restructuring law. Their local electric company will continue to deliver
the electricity and provide services such
as metering, billing, and maintenance.
Key provisions of the law include:
- A five-percent reduction in the generation portion of residential
customers' bills.
- A requirement that companies meet certain standards to be licensed by
the Public Utilities Commission of Ohio (PUCO) to sell electricity in
Ohio.
- Anti-"slamming" protection to ensure customers' electric suppliers
cannot be changed without their consent.
- A new billing statement that lists generation, transmission,
distribution,
transition and other customer charges separately.
- Recovery of transition costs, which are expenses incurred by electric
companies as a result of years of government regulations related to
requirements to serve customers.
Transition costs were reviewed and approved for recovery by the PUCO and,
for the most part, are already in the price of electricity. The new law
allows electric utilities to continue to recover the costs, but only up
to 10 years.
Additional information is being prepared that will help Ohio consumers determine if they'll save money by switching to another electricity supplier. A statewide promotional campaign - reinforced by local electric company communications efforts - is set to begin this fall.
FirstEnergy Transition Plan
As part of the restructuring process, FirstEnergy submitted a Transition
Plan to the PUCO.
Initially, more than 40 different consumer, environmental, power marketer
and industrial groups were granted intervenor status, meaning they could
challenge any part of our plan in public hearings held by the PUCO.
Through negotiation, however, we were able to satisfy the concerns of
most of the intervenors, and our amended Transition Plan was approved by
the PUCO on July 19, 2000.
Settling the Transition Plan offers us an opportunity to recover $6.9
billion in transition costs without facing substantial write-offs that
would have seriously affected our financial stability as well as our
ability to succeed in a more competitive energy market.
As part of our Transition Plan, we agreed to help jump-start competition
by providing generation to suppliers and shopping incentives to
customers. We will sell 1,120 megawatts of power to marketers, brokers,
and aggregators at set prices for sales to our retail customers through
2005. The shopping incentives for residential, commercial and industrial
customers are 45 percent, 30 percent and 15 percent, respectively, above
the price we will be offering to electricity suppliers.
Although we don't know what new suppliers will charge, our goal is to
stimulate shopping by having a sufficient difference between the shopping
credit and what new suppliers charge customers for generation. Any
remaining credit will be used to reduce the overall electric bill.
We plan to work hard to get customers to switch to our unregulated
FirstEnergy Services (FES) subsidiary, which will count toward the 20-
percent shopping target. FES offers unregulated electricity sales,
facility services, natural gas, and telecommunications services. In
2000, projected FES revenues are $1.3 billion; by 2005, $3 billion.
FirstEnergy Develops New Program
FirstEnergy has partnered with two local community colleges to implement
a new, two-year electric utility technology degree.
The Power Systems Institute (PSI), partnering with Lakeland Community
College, in Kirtland, and Stark State College of Technology, in Canton,
has designed a curriculum that will help prepare students for employment
in a variety of electrical fields, with emphasis on line work.
Students who successfully complete the two-year program will receive an
Associate of Technical Studies degree, with a focus on electric utility
technology. A maximum of 20 students per year, per school, will be
accepted into the PSI program.
If you have any family or friends who might be interested in this
program, have them call Rick Luse, director, Power Systems Institute,
FirstEnergy, 216-479-3018, for more details.
GPU Corporate Profile
GPU develops, owns and operates transmission and distribution facilities
globally, serving 4.8 million customers around the globe.
GPU Energy operates GPU's U.S. electric
companies - Jersey Central Power and Light (JCP & L), Metropolitan
Edison Company (Met-Ed) and Pennsylvania Electric Company (Penelec).
These operating companies have been supplying electricity to residents in
New Jersey
and Pennsylvania for more than a century. Today, GPU Energy annually
provides approximately 44 billion kilowatt-hours of electricity to more
than 2 million
customers in half the land areas of both states.
Additional information about GPU can be found online at www.gpu.com.
FirstEnergy and GPU: Facts At A Glance Period Ended June 30, 2000 FirstEnergy GPU New FirstEnergy U.S. Customers 2.2 million 2.1 million 4.3 million International Customers 0 2.7 million 2.7 million Total Customers 2.2 million 4.8 million 7.0 million U.S. Electric Utility Employees 9,800 4,900 14,700 U.S. Non-Electric Utility Employees 3,500 400* 3,900 International Employees 0 4,664 4,664 Total Employees 13,300 10,830 24,130 U.S. Service Area (Square Miles) 13,200 24,000 37,200 U.S. Generating Capacity (MW) 12,071 496 12,567 International Generating Capacity 0 1,557 1,557 Total Capacity 12,071 2,053 14,124 U.S. Peak Load (MW) 12,713 9,816 22,529 U.S. Transmission Line Miles 8,752 6,000 14,752 U.S. Transmission Interconnections 37 66 103 U.S. Distribution Line Miles 55,932 62,000 117,932 Financial Highlights 12 Months Ended June 30, 2000 Revenues $6.7 billion $5.3 billion $12.0 billion Net Income $582 million $431 million** Earnings Per Share $2.58 $3.52** Current Annual Dividends Per Share $1.50 $2.18 Common Shares Outstanding 228.6 million 122.9 million Capital Expenditures $717 million $541 million $1.3 billion U.S. Kilowatt-hours Sold 70.8 billion 45.3 billion 116.1 billion Financial Highlights At June 30, 2000 Total Assets $18.1 billion $20.5 billion $38.6 billion Total Common Equity $4.6 billion $3.2 billion * Approximate figure excludes contract union employees ** Excludes one-time write-offs Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 This publication contains forward-looking statements within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements with respect to revenues, earnings, performance, strategies, prospects and other aspects of the businesses of FirstEnergy Corp. and GPU, Inc. are based on current expectations that are subject to risks and uncertainties. A number of factors could cause actual results or outcomes to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, risks and uncertainties relating to: failure to obtain expected synergies from the merger, delays in obtaining or adverse conditions contained in any required regulatory approvals, changes in laws or regulations, economic or weather conditions affecting future sales and margins, changes in markets for energy services, changing energy market prices, availability and pricing of fuel and other energy commodities, legislative and regulatory changes (including revised environmental and safety requirements), availability and cost of capital and other similar factors. Readers are referred to FirstEnergy's and GPU's most recent reports filed with the Securities and Exchange Commission. Additional Information and Where to Find It In connection with the proposed merger, FirstEnergy Corp. and GPU, Inc. will file a joint proxy statement/prospectus with the SEC. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of the joint proxy statement/prospectus (when available) and other documents filed by FirstEnergy and GPU with the SEC at the SEC's Web site at http://www.sec.gov. Free copies of the joint proxy statement/prospectus, once available, and each company's other filings with the SEC may also be obtained from the respective companies. Free copies of FirstEnergy's filings may be obtained by directing a request to: FirstEnergy Corp., Investor Services, 76 S. Main St., Akron, Ohio 44308-1890, Telephone: 1-800-736-3402. Free copies of GPU filings may be obtained by directing a request to GPU, Inc., 310 Madison Avenue, Morristown, New Jersey 07962, Telephone: 1-973-401-8720. FirstEnergy, its directors, certain executive officers, and certain other employees (Thomas M. Welsh, manager of Communications, and Kurt E. Turosky, manager of Investor Relations) may be deemed under the rules of the SEC to be "participants in the solicitation" of proxies from the security holders of FirstEnergy in favor of the merger. FirstEnergy's directors, and executive officers beneficially own, in the aggregate, less than 1% of the outstanding shares of FirstEnergy common stock. Security holders of FirstEnergy may obtain additional information regarding the interests of the "participants in the solicitation" by reading the joint proxy statement/prospectus relating to the merger when it becomes available. GPU, its directors (Theodore H. Black, Fred D. Hafer (Chairman; CEO and President), Thomas B. Hagen, John M. Pietruski, Robert Pokelwaldt, Catherine A. Rein, Bryan S. Townsend, Carlisle A.H. Trost, Kenneth L. Wolfe and Patricia K. Woolf), certain executive officers (Ira H. Jolles (Senior Vice President and General Counsel), Bruce L. Levy (Senior Vice President and CFO) and Carole B. Snyder (Executive Vice President Corporate Affairs)) and certain other employees (Jeff Dennard (Director of Corporate Communications), Joanne Barbieri (Manager of Investor Relations) and Ned Raynolds (Manager of Financial Communications)) may be deemed under rules of the SEC to be "participants in the solicitation" of proxies from the security holders of GPU in favor of the merger. GPU's directors, and executive officers beneficially own, in the aggregate, less than 1% of the outstanding shares of GPU common stock. Security holders of GPU may obtain additional information regarding the interests of "participants in the solicitation" by reading the joint proxy statement/prospectus relating to the merger when it becomes available. Diversified Energy Services Since its creation in 1997, FirstEnergy has been transformed from an electric utility holding company into a diversified energy services enterprise equipped to meet all of our customers' energy needs. We are now involved in the exploration and production of oil and natural gas, and the transmission and marketing of natural gas to more than 43,000 customers inside and outside of our service area. In 2000, projected revenues are $419 million. Our resources include: - Interests in more than 7,700 oil and gas wells - Oil and natural gas drilling rights to more than 980,000 acres in the Appalachian Basin - Proved reserves of 450 billion cubic feet equivalent of natural gas and oil - about 90 percent of it is natural gas - 5,000 miles of pipeline In addition, FirstEnergy is the Midwest's largest provider of mechanical contracting, facilities management and energy management services, with sales exceeding $500 million annually. Our 11 Facilities Services Group companies employ approximately 3,400 people and provide a wide range of services, including heating, ventilating, air conditioning, refrigeration, process piping, plumbing and electrical and facility control systems. Natural Gas and Oil Operations FirstEnergy Trading Services, Inc., Akron, OH Great Lakes Energy Partners, L.L.C., Hartville, OH Marbel Energy Corporation, Lancaster, OH 980,000 acres where we have drilling rights Facilities Services Group Companies Ancoma, Inc., Rochester, NY Colonial Mechanical Corporation, Richmond, VA Dunbar Mechanical, Inc., Toledo, OH Edwards Electrical &Mechanical, Inc., Indianapolis, IN Elliott-Lewis Corporation, Philadelphia, PA The Hattenbach Company, Cleveland, OH L. H. Cranston and Sons, Inc., Timonium, MD Roth Bros., Inc., Youngstown, OH R.P.C. Mechanical, Inc., Cincinnati, OH Spectrum Control Systems, Inc.,Cincinnati, OH Webb Technologies, Inc., Norfolk, VA In sympathy Our sympathy to the families of these retirees who passed away. March CENTRAL REGION Elmer T. Culberson Appliance Serviceman-A Helen M. Helmetz Akron Credit & Collection Supervisor, Consumer Service Eastern Region Henry R. Stevens Surveyman-B EDGEWATER PLANT Richard Schofield Mechanic-B GENERAL OFFICE Melva Johnson General Report Clerk Margaret Perebzak Plant Accountant-B Kurt F. Richards Project Representative Community Development BRUCE MANSFIELD PLANT Florence Farrar Associate System Support Technician Northern Region Herbert A. Bang Trouble Lineman Michael L. Famageltto Mechanic-A Ernest B. Roth General Construction Mechanic Western Region Marcel Vernaz Shop Meter Mechanic April AVON LAKE PLANT Max C. Schmidt Plant Helper CENTRAL REGION Stanley G. Bradway Senior Specialist District Manager Charles W. Hall Fireman Engineer GENERAL OFFICE Eva L. Bunker Lab Technician-A NEW CASTLE PLANT Arthur L. Altman Custodian NORTHERN REGION Daniel H. Hespen Residential Marketing Rep. Albert J. Krupa Service Installer Gr. I Betty C. Long Secretary Ronald Mozeleski System Planning Engineer Howard E. Simcox General Meter Tester John H. Slivka General Supervisor - Structure & Subway SAMMIS PLANT Ralph Murray Mechanical Maintenance Foreman WESTERN REGION Leo V. Toska Shift Foreman May ASHTABULA PLANT George L. Herron Plant Head Control Operator Millard W. Vandermark Plant Head Control Operator CENTRAL REGION James Parti Shift Supervisor - Gorge Plant Zane Bly Truck Operator-A Raymond Haefka Garage Supervisor GENERAL OFFICE Margaret Long Senior Treasury Clerk NORTHERN REGION Ray D. Coleman Materials & Fleet Management James P. Curran Relief Trouble Dispatcher Carl M. Hanhilammi Service Line Mechanic Charles F. Pearn Shop Cable Splicer-A PENN POWER Chester Badger Line Supervisor Clare E. Brown General Coordinator - Operations WESTERN REGION Ervon W. Fick Site Facilities Specialist John D. Fulton, Sr. Line Department Vernon D. Kesling Instrumentation & Control Foreman Wanda Sobocinski Home Plan Representative June CENTRAL REGION George Costaras Substation Electrician-A EASTERN REGION Mary Hulea Janitress Helen Moore Accounting Clerk - Warren Division NORTHERN REGION Robert H. McKibben Engineer - Lines & Distribution WESTERN REGION Lane Elting Protective Systems Specialist William J. Mominee Head Boiler Operator Bay Shore Plant Santiago Sanchez Senior Yard Maintenance Man - Acme Plant Club News - For information about Penn Power retirees, check out: www.ccia.com/~cascade/. - Ohio Edison Marion area retirees meet the third Tuesday of each month at the Gateway Smorgasbord, in Marion. All FirstEnergy retirees, spouses and guests are welcome. - For the past 20 years, Ohio Edison Akron area retirees have met the second Friday of every month at the First Congregational Church, in Akron, 292 East Market Street. For more information about the luncheon meetings, call Dick Lang, 330-896-3117, or Bob Vogel, 330-688-5343. Congrats! Congratulations to the following people for winning the Cleveland Indians ticket contest announced in the previous Retiree Update: Stephen Biro Shaker Heights, Ohio William Fleming Parma, Ohio Paul Palagyi Conneaut, Ohio Bonnie Bing Wuertz Sandusky, Ohio Make a Difference by Helping Kids Read OhioReads is Governor Bob Taft's education initiative to improve the reading skills of Ohio's kindergarten through fourth-grade students so they can pass the reading portion of the Fourth Grade Proficiency Test. In 1999, 40 percent of the students failed. FirstEnergy is doing its part to help. Chairman and CEO Pete Burg is a member of the governor's OhioReads Business Advisory Council and almost100 FirstEnergy employees are currently volunteer tutors. As Company retirees, your participation in this worthwhile program also would be greatly appreciated. For more information on your community's OhioReads initiative, go online to www.ohioreads.org, or call Delores Jones, manager, Community Support, at 330-384-5022. Retiree Update is published for retirees of FirstEnergy and its operating companies and subsidiaries by the Communications Department. Send story ideas to Mark Durbin, editor, through e-mail, durbinm@firstenergycorp.com, or call Mark at 330-761-4365. |