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
OR
For the transition period from to
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Commission file number 333-21011
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GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR EMPLOYEES REPRESENTED BY IBEW LOCAL 777
(FORMALLY METROPOLITAN EDISON COMPANY
EMPLOYEE SAVINGS PLAN FOR BARGAINING UNIT EMPLOYEES)
c/o FirstEnergy Corp.
76 South Main Street
Akron, Ohio 44308
(Full Title of the Plan and the Address of the Plan)
FirstEnergy Corp. (by way of merger with GPU, Inc.
which became effective on November 7, 2001)
76 South Main Street
Akron, Ohio 44308
(Name of Issuer of the securities held pursuant to the
Plan and address of its principal executive office)
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR EMPLOYEES REPRESENTED BY
IBEW LOCAL 777
REPORT ON AUDITS OF FINANCIAL STATEMENTS
for the years ended
December 31, 2001 and 2000
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR EMPLOYEES REPRESENTED BY IBEW LOCAL 777
Pages
Independent Auditors' Report 1
Financial Statements:
Statements of Net Assets Available for Plan
Benefits as of December 31, 2001 and 2000 2
Statements of Changes in Net Assets Available
for Plan Benefits for the years ended
December 31, 2001 and 2000 3
Notes to Financial Statements 4-12
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INDEPENDENT AUDITORS' REPORT
To the Savings Plan Committee of the
GPU Companies Employee Savings Plan
For Employees Represented by IBEW Local 777:
We have audited the accompanying statements of net assets available for plan benefits of GPU Companies Employee Savings Plan for Employees Represented by IBEW Local 777 (the "Plan") as of December 31, 2001 and 2000, and the related statements of changes in net assets available for plan 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 auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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 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 plan benefits of the Plan as of December 31, 2001 and 2000, and the changes in net assets available for plan benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Milligan & Company, LLC
April 11, 2002
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR EMPLOYEES REPRESENTED BY IBEW LOCAL 777
STATEMENTS OF NET ASSETS
AVAILABLE FOR PLAN BENEFITS
2001 2000
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Investment in GPU Companies
Master Savings Plan Trust
at fair value $55,159,873 $65,104,570
Participant loans receivable 725,649 806,358
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Net assets available for plan
benefits $55,885,522 $65,910,928
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The accompanying notes are an integral part of the financial statements.
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR EMPLOYEES REPRESENTED BY IBEW LOCAL 777
STATEMENTS OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
2001 2000*
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Net Asset Balances, beginning of year $65,910,928 $85,631,730
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Additions to net assets attributed to:
Contributions:
Participants' 2,490,071 2,746,405
Employer's 756,133 753,502
Rollovers - 4,071
Interest on loans 59,362 70,079
Investment income 958,537 3,635,381
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Total additions 4,264,103 7,209,438
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Deductions from net assets attributed to:
Net depreciation in fair
value of investments 5,970,638 5,248,404
Distributions and withdrawals 8,191,403 21,341,649
Transfers to affiliated
savings plans 127,468 340,187
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Total deductions 14,289,509 26,930,240
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Net decrease (10,025,406) (19,720,802)
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Net Asset Balances, end of year $ 55,885,522 $ 65,910,928
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* Certain amounts have been reclassified to conform to current year presentation.
The accompanying notes are an integral part of the financial statements.
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR EMPLOYEES REPRESENTED BY IBEW LOCAL 777
The following description of the GPU Companies Employee Savings Plan for Employees Represented by IBEW Local 777 (Plan) provides only general information on the provisions of the Plan in effect as of December 31, 2001. Participants should refer to the Benefits Handbook, Plan document, and prospectus for a more complete description of the Plan's provisions.
The Plan is a defined contribution plan. In general, all GPU employees represented by IBEW Local 777 (Company) are eligible to participate in the Plan if he/she is employed on a full-time basis or if the employee has completed at least 1,000 hours of service in a consecutive twelve-month period.
The Plan is intended to qualify as a cash or deferred profit-sharing plan under Sections 401(a) and 401(k) of the Internal Revenue Code. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). A participant is eligible to transfer his/her account to an affiliated savings plan upon a change in his/her employment status.
The Plan contains additional employer contribution and employee savings features. Participants may "rollover" distributions received from other qualified plans to the Savings Plan.
The Plan provides two contribution options to a participant. Subject to certain limitations set forth in the Plan, the participant may elect (1) to have his/her base compensation reduced by an amount equal to any whole percentage (before-tax 401(k) contributions), which is contributed on behalf of the employee by the Company; and/or (2) to contribute by payroll deduction any whole percentage of base compensation (after-tax).
The Company provides a matching contribution to the Plan on behalf of each participant, except certain temporary employees as defined in the Plan document. Effective May 1, 2001 the Company matched 75%, up from 70% prior to May 1, 2001, of a participant's aggregate contributions up to 4% of the participant's base compensation.
Continued
The Plan's assets, which consist principally of stocks and bonds are held by the Trustee of the Plan. Employer and participant contributions are held and managed by the Trustee, which invests cash received, reinvests interest and dividend income and makes distributions to participants.
The Company absorbs a small portion of administrative expenses. The majority of the administrative expenses, primarily Investment and Trustee Fees, are paid out of plan assets held in the GPU Companies Master Trust (Trust). Investment gains in the Trust are shown net of these Investment and Trustee Fees.
The Plan provides investment options that are participant-directed, which allows participants to choose among various investment alternatives. Participants may change their investment option at any time, subject to certain limitations.
Participants may elect to have their Plan accounts invested in one or more of the following investment options:
* Name changed from Fidelity Retirement Growth Fund effective January 27, 2001.
Continued
Continued
The number of participating employees with account balances invested in each investment option at December 31, 2001 and 2000 was as follows:
FUND #/FUND NAME NUMBER OF PARTICIPANTS
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2001 2000
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10 Interest Income 321 347
20 Diversified Bond 110 72
30 Conservative Growth 39 30
35 S&P 500 Index 378 434
40 Moderate Growth 293 327
45 Fidelity Puritan 94 83
50 Aggressive Growth 104 89
55 Fidelity Independence* 159 173
60 Small Capital Equity 111 100
65 Fidelity OTC 132 137
70 International Equity 68 66
75 Fidelity Overseas 49 51
80 FirstEnergy Stock** 123 131
85 Mutual Fund Window 19 30
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The total number of participants in the Plan at December 31, 2001 and 2000 was 745 and 811, respectively. This is less than the sum of the number of participants shown in the schedule above because many participants are investing in more than one option.
* Name changed from Fidelity Retirement Growth Fund effective January 27, 2001. ** GPU Stock Fund was converted to the FirstEnergy stock fund effective November 7, 2001.
Continued
Each participant's account is credited with the participant's own contributions and with the Company's matching contributions. Each account maintained for a participant reflects the number of unitized shares and their value for each mutual fund and for the FirstEnergy Stock Fund. Any portion of a participant's account balance invested in the Mutual Fund Window reflects the number of shares and their value for each mutual fund. All income, gain or loss attributable to the investment of the balance of any account maintained for a participant is recorded to that account.
Participants are 100% vested at all times in their Plan accounts.
A participant's Plan account balances become distributable upon termination of the participant's employment. Distributions of account balances in excess of $5,000 may be deferred, at the participant's election, up to age 70 1/2. If distribution of a participant's account balance has not otherwise started, it must begin by April 1st following the year in which the participant attained the age 70 1/2. Distributions generally are in the form of a single lump sum payment. The Plan permits withdrawals of account balances in the event of financial hardship or disability as defined in the Plan. A complete description of the Plan's terms and conditions for distributions and withdrawals can be found in the Plan document.
The Plan provides that loans may be made to a participant from the participant's account balance subject to certain conditions. The minimum amount of each loan is $1,000 with the maximum being $50,000, or certain lesser amounts as described in the Plan. Interest on the loan is credited to the participant's account. The loans are secured by the balance in the participant's account. Principal and interest are paid ratably through monthly payroll deductions. The rate is determined periodically by the Administrative Committee based on current commercial rates. The interest rates for loans in excess of four years and ten months were 8.22% for the period January 1 through June 30, 2001 and 7.08% for the period July 1 through December 31, 2001. The interest rates for loans four years and ten months or less were 9.206% for the period January 1 through June 30, 2001 and 7.685% for the period July 1 through December 31, 2001.
Continued
The Company reserves the right at any time to modify, suspend, amend or terminate the Plan. However, the Company cannot do so in such a manner that would cause or permit any part of the Plan's assets to be used for or diverted to purposes other than for the exclusive benefit of participants or their beneficiaries.
The financial statements of the plan are prepared under the accrual method of accounting.
The amounts shown herein as the investment in the GPU Companies Master
Savings Plan Trust reflect the fair value of the assets held in such Trust
and the Plan's relative interest in the Trusts. The Plan's participation is
measured at its value at the beginning of the valuation period plus net
external cash flow (contributions, distributions, etc.) experienced by the
Plan during the valuation period. Investment income, net realized gain
(loss) on investments and net unrealized appreciation (depreciation) of
investments are allocated to each participating plan based upon its
accumulated monthly balance for each investment option (see Note 3).
Investment income from the GPU Companies Master Savings Plan Trust for the years ended December 31, 2001 and 2000, 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 in the GPU Companies Master Savings Plan Trust.
The fair market value of assets held by the Trust are determined as follows: Stocks and bonds are valued at their closing quoted market prices on the last business day of the year. Short-term group trust funds and insurance contracts are valued at cost plus accrued interest which approximates market.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the plan administrator to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates.
Continued
Certain prior year amounts have been reclassified to conform to the year ended December 31, 2001 presentation. These changes had no impact on previously reported results of operations or net assets.
The investments reflected in the December 31, 2001 and 2000 Statements of Net Assets Available for Plan Benefits represent the Plan's 7.44% and 7.91% share, respectively, of total investments held in the GPU Companies Master Savings Plan Trust at December 31, 2001 and 2000.
At December 31, 2001 and 2000, the total fair value of investments held in the GPU Companies Master Savings Plan Trust are summarized as follows:
2001 2000
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Aggressive Growth Portfolio $ 19,770,358 $ 22,079,147
Fidelity Independence Fund** 75,069,658* 112,053,343*
Small Cap. Equity Fund 24,511,906 24,104,318
Fidelity OTC Portfolio Fund 34,321,061 49,366,914*
International Equity Fund 7,003,697 8,693,456
Fidelity Overseas Fund 6,803,090 9,775,960
FirstEnergy Stock Fund*** 17,901,466 19,223,632
Mutual Fund Window 17,897,551 25,793,558
Interest Income Fund 181,148,895* 158,303,350*
Diversified Bond Fund 32,978,648 20,306,629
Conservative Growth Portfolio 8,487,277 6,108,602
S&P 500 Index Fund 160,161,418* 195,528,067*
Moderate Growth Portfolio 117,554,205* 133,738,773*
Fidelity Puritan Fund 37,555,463* 37,530,036
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Total investments at fair value $741,164,693 $822,605,785
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Total investments at cost $749,027,738 $769,489,747
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* These investments represent 5% or more of the net assets available for benefits. ** Name changed from Fidelity Retirement Growth Fund effective January 27, 2001. *** GPU Stock Fund was converted to the FirstEnergy Stock Fund effective Novmeber 7, 2001.
Continued
Based on participant investment options at December 31, 2001 and 2000 the Plan's investments were allocated as follows:
2001 2000
% BY FUND % BY FUND
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Interest Income 23.34% 20.22%
Diversified Bond 4.24% 1.43%
Conservative Growth 1.24% 1.07%
S&P 500 Index 23.73% 26.67%
Moderate Growth 16.81% 16.89%
Fidelity Puritan 5.62% 4.52%
Aggressive Growth 2.34% 2.40%
Fidelity Independence* 9.32% 12.38%
Small Capital Equity 3.51% 2.74%
Fidelity OTC 3.32% 4.17%
International Equity 1.37% 1.47%
Fidelity Overseas 0.83% 1.10%
FirstEnergy Stock** 3.61% 3.22%
Mutual Fund Window 0.72% 1.72%
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The net investment losses in the GPU Master Savings Plan Trust for the years ended December 31, 2001 and 2000 were as follows:
2001 2000
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Dividends $ 3,031,891 $39,642,728
Interest income 11,395,260 10,904,328
Net depreciation in fair
value of investments (86,727,994) (75,985,990)
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Net investment losses $(72,300,843) $(25,438,934)
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* Name changed from Fidelity Retirement Growth Fund effective January 27, 2001. ** GPU Stock Fund was converted to the First Energy Stock Fund effective November 7, 2001.
Continued
Certain Plan investments are shares of mutual funds managed by State Street Bank. State Street Bank is the trustee as defined by the Plan. Therefore, these transactions qualify as party-in-interest transactions.
The Plan obtained its latest determination letter on February 4, 1998, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the plan administrator and the plan's tax counsel believes that the Plan is currently designed and being operated in compliance with applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan's financial statements.
Effective May 1, 2001, the Plan was amended and restated in order to incorporate an increased matching contribution. The Company agreed to increase the match from 70% to 75% of an employee's contributions up to 4% of base compensation.
The Plan was further amended, effective October 1, 2001 to incorporate FirstEnergy Merger Provisions. At the effective time of the merger between GPU Company and FirstEnergy Corporation, all shares of GPU Stock held in the GPU Stock Fund were automatically converted into the right to receive the merger consideration with respect to such shares. The merger consideration, which included both stock and cash in respect to the GPU Stock held in the GPU Stock Fund was reinvested in shares of FirstEnergy Corporation Stock. The effective date of the merger was November 7, 2001.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the plan) have duly caused this annual report to be signed by the undersigned thereunto duly authorized.
FirstEnergy Corp.
GPU Companies Employee Savings Plan
for Employees Represented by
IBEW Local 777
Date: June 21, 2002 By: /s/ Richard J. LaFleur
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Richard J. LaFleur
Chairman, Savings Plan Committee
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EXHIBIT INDEX
FirstEnergy Corp.
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR EMPLOYEES REPRESENTED BY IBEW LOCAL 777
Consent of Independent Accountants Exhibit 23
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of FirstEnergy Corp. on Form S-8 (File No. 333-72764) of our report dated April 11, 2002, on our audit of the financial statements of the GPU Companies Employee Savings Plan for Employees Represented by IBEW Local 777 as of December 31, 2001 and 2000 and for the years then ended, which report is included in this Annual Report on Form 11-K.
MILLIGAN & COMPANY, LLC
105 N. 22nd Street, 2nd Floor
Philadelphia, Pennsylvania
June 21, 2002