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.
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For the fiscal year ended December 31, 2001
--------------------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
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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 NONBARGAINING 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 NONBARGAINING EMPLOYEES
REPORT ON AUDITS OF FINANCIAL STATEMENTS
for the years ended
December 31, 2001 and 2000
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR NONBARGAINING EMPLOYEES
INDEX OF FINANCIAL STATEMENTS
---------
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 Nonbargaining Employees:
We have audited the accompanying statements of net assets available for plan
benefits of GPU Companies Employee Savings Plan for Nonbargaining Employees (the
"Plan") as of December 31, 2001 and 2000, and the related statements of changes
in net assets available for 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 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 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 NONBARGAINING EMPLOYEES
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 $468,047,155 $534,683,275
Participant loans receivable 4,194,370 4,805,542
----------- -----------
Net assets available for plan
benefits $472,241,525 $539,488,817
=========== ===========
The accompanying notes are an integral
part of the financial statements.
2
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR NONBARGAINING EMPLOYEES
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 $539,488,817 $670,403,859
----------- -----------
Additions to net assets attributed to:
Contributions:
Participants' 10,545,241 14,537,075
Employer's 4,967,289 6,662,394
Rollovers 49,831 96,933
Transfers from affiliated
savings plans 2,510,906 1,693,354
Interest on loans 330,720 440,520
Investment income 9,472,119 31,141,869
----------- -----------
Total additions 27,876,106 54,572,145
----------- -----------
Deductions from net assets attributed to:
Net depreciation in fair
value of investments 53,670,113 47,510,356
Distributions and withdrawals 41,453,285 137,976,831
----------- -----------
Total deductions 95,123,398 185,487,187
----------- -----------
Net decrease (67,247,292) (130,915,042)
----------- -----------
Net Asset Balances, end of year $472,241,525 $539,488,817
=========== ===========
* Certain amounts have been reclassified to conform to the current year
presentation.
The accompanying notes are an integral
part of the financial statements.
3
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR NONBARGAINING EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
---------
1. General Description of the Plan:
-------------------------------
The following description of the GPU Companies Employee Savings Plan for
Nonbargaining Employees (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:
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The Plan is a defined contribution plan. In general, all nonbargaining
employees of GPU Companies (Companies) 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 contributions and employee savings
features. Participants may "rollover" distributions received from other
qualified plans to the 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 Companies provide a matching contribution to the Plan, on behalf of
each participant, in an amount up to 100% of a participant's aggregate
contributions up to 4% of the participant's base salary.
Administration of Plan Assets:
-----------------------------
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.
Continued
4
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR NONBARGAINING EMPLOYEES
NOTES TO FINANCIAL STATEMENTS, Continued
-------
1. General Description of the Plan, continued:
-------------------------------
Administrative Expenses:
-----------------------
The Companies absorb 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.
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: This 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 this 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 NONBARGAINING EMPLOYEES
NOTES TO FINANCIAL STATEMENTS, Continued
-------
1. General Description of the Plan, 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) is the brokerage option
------------------
of the Savings Plan and is a way to invest a portion of your Savings Plan
account in a wide variety of mutual funds. The 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 NONBARGAINING EMPLOYEES
NOTES TO FINANCIAL STATEMENTS, Continued
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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 1,825 1,834
20 Diversified Bond 846 723
30 Conservative Growth 232 190
35 S&P 500 Index 2,063 2,326
40 Moderate Growth 1,678 1,875
45 Fidelity Puritan 488 424
50 Aggressive Growth 596 608
55 Fidelity Independence* 870 974
60 Small Capital Equity 712 713
65 Fidelity OTC 710 811
70 International Equity 403 468
75 Fidelity Overseas 337 373
80 FirstEnergy Stock** 633 758
85 Mutual Fund Window 186 206
The total number of participants in the Plan at December 31, 2001 and 2000
was 3,634 and 3,912, 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
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.
Continued
7
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR NONBARGAINING EMPLOYEES
NOTES TO FINANCIAL STATEMENTS, Continued
-------
1. General Description of the Plan, continued:
-------------------------------
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 has
not otherwise begun, it must begin by April 1st following the year in which
the participant attained 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
employee 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.
Plan Termination:
----------------
The GPU Companies reserve the right at any time to modify, suspend, amend
or terminate the Plan. However, the GPU Companies 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.
Continued
8
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR NONBARGAINING EMPLOYEES
NOTES TO FINANCIAL STATEMENTS, Continued
-------
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 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.
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.
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.
Continued
9
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR NONBARGAINING EMPLOYEES
NOTES TO FINANCIAL STATEMENTS, Continued
-------
3. Investments:
-----------
The investments reflected in the December 31, 2001 and 2000 Statements of
Net Assets Available for Plan Benefits represent the Plan's 63.15% and
65.00% 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 117,554,463 * 133,738,773 *
Fidelity Puritan Fund 37,555,463 * 37,530,036
Total investments at fair value $741,164,951 $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 NONBARGAINING EMPLOYEES
NOTES TO FINANCIAL STATEMENTS, Continued
-------
3. Investments, 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
--------- ---------
Interest Income 24.30% 19.25%
Diversified Bond 4.82% 2.72%
Conservative Growth 1.28% 0.79%
S&P 500 Index 21.32% 23.87%
Moderate Growth 16.42% 16.98%
Fidelity Puritan 5.13% 4.48%
Aggressive Growth 2.92% 2.81%
Fidelity Independence* 8.65% 11.87%
Small Capital Equity 3.65% 3.26%
Fidelity OTC 4.49% 5.70%
International Equity 0.95% 1.13%
Fidelity Overseas 0.94% 1.14%
FirstEnergy Stock** 2.18% 2.19%
Mutual Fund Window 2.95% 3.81%
* 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.
The net investment gains 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)
=========== ===========
Continued
11
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR NONBARGAINING EMPLOYEES
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 June 19, 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, 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 Nonbargaining Employees
Date: June 21, 2002 By: /s/ Richard J. LaFleur
----------------------------------------
Richard J. LaFleur
Chairman, Savings Plan Committee