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):
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
X EXCHANGE ACT OF 1934.
---
For the fiscal year ended December 31, 2001
--------------------------------
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
------------------
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR EMPLOYEES REPRESENTED BY IBEW SYSTEM COUNCIL U-3
(FORMALLY JERSEY CENTRAL POWER & LIGHT 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 SYSTEM COUNCIL U-3
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 SYSTEM COUNCIL U-3
INDEX
-------
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
INDEPENDENT AUDITORS' REPORT
To the Savings Plan Committee of the
GPU Companies Employee Savings Plan
For Employees Represented by IBEW System Council U-3:
We have audited the accompanying statements of net assets available for plan
benefits of GPU Companies Employee Savings Plan for Employees Represented by
IBEW System Council U-3(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 SYSTEM COUNCIL U-3
STATEMENTS OF NET ASSETS
AVAILABLE FOR PLAN BENEFITS
December 31, 2001 and 2000
-------
2001 2000
---- ----
Investment in GPU Companies
Master Savings Plan Trust
at fair value $123,882,487 $141,638,906
Participant loans receivable 3,211,381 2,840,925
----------- -----------
Net assets available for
plan benefits $127,093,868 $144,479,831
=========== ===========
The accompanying notes are an integral part of the financial statements.
2
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR EMPLOYEES REPRESENTED BY IBEW SYSTEM COUNCIL U-3
STATEMENTS OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
for the years ended December 31, 2001 and 2000
-------
2001 2000*
---- -----
Net Asset Balances, beginning of year $144,479,831 $155,882,122
----------- -----------
Additions to net assets attributed to:
Contributions:
Participants' 7,038,798 8,403,552
Employer's 2,173,911 2,381,311
Rollovers 16,674 56,880
Interest on loans 244,663 225,994
Investment income 2,035,981 9,998,559
------------- -------------
Total additions 11,510,027 21,066,296
------------ ------------
Deductions from net assets attributed to:
Net depreciation in fair
value of investments 16,269,170 15,395,422
Transfers to affiliated savings plans 2,527,143 1,449,729
Distributions and Withdrawals 10,099,677 15,623,436
------------ ------------
Total deductions 28,895,990 32,468,587
------------ ------------
Net decrease (17,385,963) (11,402,291)
----------- -----------
Net Asset Balances, end of year $127,093,868 $144,479,831
=========== ===========
*Certain amounts have been reclassified to conform to current year presentation.
The accompanying notes are an integral part of the financial statements.
3
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR EMPLOYEES REPRESENTED BY IBEW SYSTEM COUNCIL U-3
NOTES TO FINANCIAL STATEMENTS
--------
1. General Description of the Plan:
-------------------------------
The following description of the GPU Companies Employee Savings Plan for
Employees Represented by IBEW System Council U-3 (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.
General:
-------
The Plan is a defined contribution plan. In general, all GPU employees
represented by IBEW System Council U-3 (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.
Contributions:
-------------
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).
Matching Program:
----------------
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 November 1, 2001 the Company matched 80%, up from 75%
prior to November 1, 2001, of a participant's aggregate contributions up
to 4% of the participant's base compensation.
Administration of Plan Assets:
-----------------------------
The Plan's assets, which consist principally of stocks, mutual funds 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.
Continued
4
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR EMPLOYEES REPRESENTED BY IBEW SYSTEM COUNCIL U-3
NOTES TO FINANCIAL STATEMENTS, Continued
--------
1. General Description of the Plan, continued:
-------------------------------
Administrative Expenses:
-----------------------
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 System Companies Master
Trust ("Trust"). Investment gains in the Trust are shown net of these
Investment and Trustee Fees.
Investment Funds:
----------------
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:
- Fidelity Puritan Fund: This fund seeks to obtain a balance between
-----------------------
capital appreciation, preservation of capital, and generation of
income.
- Fidelity Independence Fund*: This fund seeks to provide the opportunity
---------------------------
for significant capital appreciation.
- Fidelity OTC Portfolio Fund: This fund seeks long-term capital
------------------------------
appreciation by investing in securities that are traded in the
over-the-counter (OTC) securities market.
- Fidelity Overseas Fund: The fund seeks long-term capital appreciation,
----------------------
primarily through investments in foreign securities.
- Interest Income Fund: The return objective of this fund is to provide a
--------------------
higher rate of return over time than the rate of return offered by
money market funds. The Interest Income Fund invests in a diversified
portfolio of investment contracts issued by only high-quality financial
institutions as well as security-backed investment contracts supported
by high quality fixed income securities.
- Diversified Bond Fund: This fund seeks to match or exceed the returns
----------------------
of the Lehman Brothers Aggregate Index. The fund invests primarily in
government, corporate, mortgage-backed and asset-backed securities. The
fund invests in only high quality bonds, that is, those rated at least
BBB by Standard & Poor's or Baa3 by Moody's Investors Service.
- Conservative Growth Portfolio: The investment objective of the
-------------------------------
Portfolio is to provide income from fixed income securities and growth
of principal from stock funds. The Conservative Growth Portfolio has an
asset allocation target of 35% equities and 65% fixed income
securities.
* Name changed from Fidelity Retirement Growth Fund effective January 27,
2001.
Continued
5
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR EMPLOYEES REPRESENTED BY IBEW SYSTEM COUNCIL U-3
NOTES TO FINANCIAL STATEMENTS, Continued
--------
1. General Description of the Plan, continued:
-------------------------------
Investment Funds, continued:
----------------
- Moderate Growth Portfolio: The investment objective of this portfolio
-------------------------
is to provide growth from stock funds and income from fixed income
securities. The Moderate Growth Portfolio has an asset allocation
target of 60% equities and 40% fixed income securities.
- Aggressive Growth Portfolio: The investment objective of this portfolio
---------------------------
is to provide growth primarily from stock funds with a small income
component. The Aggressive Growth Portfolio has an asset allocation
target of 80% equities and 20% fixed income securities.
- S&P 500 Index Fund: This fund seeks to match the performance of the
-------------------
Standard & Poor's 500 Index. The Fund invests in all 500 stocks in the
S&P 500 Index in proportion to their weighting in the Index. The Fund
may also hold 2-5% of its value in futures contracts (an agreement to
buy or sell a specific security by a specific date at an agreed upon
price).
- International Equity Fund: This is an actively managed fund that seeks
--------------------------
to exceed the performance of the Morgan Stanley Capital International
Europe, Australia, and Far East (MSCI EAFE) Index (unhedged) by
investing in common stocks of companies headquartered outside the
United States.
- Small Cap Equity Fund: This is an actively managed fund that seeks to
---------------------
consistently exceed the total return performance of the Russell 2500
Stock Index while maintaining a similar level of risk. The fund
primarily invests in a portfolio of common stock of small to
medium-sized domestic companies, which offer above-average growth
potential.
- FirstEnergy Stock Fund*: This fund's goal is to provide long-term
-------------------------
growth through capital appreciation and dividend income. The
FirstEnergy Stock Fund invests almost exclusively in FirstEnergy
Corporation common stock. A small portion of assets is invested in
money market securities to meet the fund's liquidity needs. Dividends
paid on the FirstEnergy stock held in this fund are used to purchase
additional common shares.
- Mutual Fund Window: The Mutual Fund Window (MFW) offers approximately
------------------
3500 mutual funds from more than 200 mutual fund families and
approximately 600 no-transaction fee funds currently offered through
State Street Brokerage Services, Inc.
* GPU Stock Fund was converted to the FirstEnergy Stock Fund effective
November 7, 2001.
Continued
6
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR EMPLOYEES REPRESENTED BY IBEW SYSTEM COUNCIL U-3
NOTES TO FINANCIAL STATEMENTS, Continued
--------
1. General Description of the Plan, continued:
-------------------------------
Employee Participation in the Plan:
----------------------------------
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
---------------- ----------------------
2001 2000
---- ----
10 Interest Income 684 703
20 Diversified Bond 288 232
30 Conservative Growth 65 50
35 S&P 500 Index 972 1,069
40 Moderate Growth 682 741
45 Fidelity Puritan 243 219
50 Aggressive Growth 218 210
55 Fidelity Independence* 515 573
60 Small Capital Equity 248 240
65 Fidelity OTC 371 432
70 International Equity 140 155
75 Fidelity Overseas 127 153
80 FirstEnergy Stock** 298 285
85 Mutual Fund Window 52 54
The total number of participants in the Plan at December 31, 2001 and 2000
was 1,789 and 1,905, 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
7
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR EMPLOYEES REPRESENTED BY IBEW SYSTEM COUNCIL U-3
NOTES TO FINANCIAL STATEMENTS, Continued
--------
1. General Description of the Plan, continued:
-------------------------------
Participant Accounts:
--------------------
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.
Vesting:
-------
Participants are 100% vested at all times in their Plan accounts.
Distributions and Withdrawals:
-----------------------------
A participant's Plan account balances become distributable upon
termination of the participant's employment for any reason. 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 age 70 1/2.
Distributions generally are 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.
Loans to Participants:
---------------------
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 9.20% for the period January 1 through June 30, 2001
and 7.685% for the period July 1 through December 31, 2001.
Continued
8
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR EMPLOYEES REPRESENTED BY IBEW SYSTEM COUNCIL U-3
NOTES TO FINANCIAL STATEMENTS, Continued
--------
1. General Description of the Plan, continued:
-------------------------------
Plan Termination:
----------------
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.
2. Summary of Significant Accounting Policies:
------------------------------------------
Basis of Accounting:
-------------------
The financial statements of the plan are prepared under the accrual method
of accounting.
Valuation of Investments:
------------------------
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
Trusts 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 is 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
(investment custodian bank) and insurance contracts are valued at cost
plus accrued interest, which approximates market.
Use of Estimates:
----------------
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
9
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR EMPLOYEES REPRESENTED BY IBEW SYSTEM COUNCIL U-3
NOTES TO FINANCIAL STATEMENTS, Continued
--------
2. Summary of Significant Accounting Policies, continued:
------------------------------------------
Reclassifications:
------------------
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.
3. Investments:
-----------
The investments reflected in the December 31, 2001 and 2000 Statements of
Net Assets Available for Plan Benefits represent the Plan's 16.71% and
17.22% 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
---- ----
Aggressive Growth Portfolio $ 19,770,358 $ 22,079,147
Fidelity Independence Fund** 75,069,658* 112,053,343*
Small Capital 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
----------- -----------
Total investments at fair value $741,164,693 $822,605,785
=========== ===========
Total investments at cost $749,027,738 $769,489,747
=========== ===========
* 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
November 7, 2001.
Continued
10
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR EMPLOYEES REPRESENTED BY IBEW SYSTEM COUNCIL U-3
NOTES TO FINANCIAL STATEMENTS, Continued
--------
3. Investments:
-----------
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
--------- ---------
Interest Income 22.56% 17.65%
Diversified Bond 4.05% 2.19%
Conservative Growth 0.48% 0.43%
S&P 500 Index 22.34% 24.02%
Moderate Growth 13.69% 13.62%
Fidelity Puritan 5.27% 4.66%
Aggressive Growth 2.82% 2.77%
Fidelity Independence* 14.83% 19.51%
Small Capital Equity 2.35% 1.99%
Fidelity OTC 5.33% 6.81%
International Equity 0.72% 0.76%
Fidelity Overseas 0.87% 1.25%
FirstEnergy Stock** 3.08% 2.38%
Mutual Fund Window 1.61% 1.96%
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
---- ----
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)
----------- -----------
Net investment losses $(72,300,843) $(25,438,934)
=========== ===========
* Name changed to Fidelity Retirement Growth Fund effective January 27,
2001.
** GPU Stock Fund was converted to the FirstEnergy Stock Fund effective
November 7, 2001.
Continued
11
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR EMPLOYEES REPRESENTED BY IBEW SYSTEM COUNCIL U-3
NOTES TO FINANCIAL STATEMENTS, Concluded
--------
4. Party-In-Interest Transactions:
------------------------------
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.
5. Tax Status:
----------
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.
6. Plan Amendments:
---------------
The Plan was amended and restated in order to incorporate increased
matching contributions, effective January 1, 2001 and November 1, 2001.
The Company agreed to increase the match from 70% to 75% of an employee's
contributions up to 4% of base compensation for the period of January 1,
2001 through October 31, 2001 and additionally, increased the match to 80%
of an employee's contributions up to 4% of base compensation, for the
period thereafter.
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.
12
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 System Council U-3
Date: June 21, 2002 By: /s/ Richard J. LaFleur
----------------------------------------
Richard J. LaFleur
Chairman, Savings Plan Committee