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 (FEE REQUIRED) for the
fiscal year ended December 31, 2002
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED) for the transition period
from _________ to 5313 __________.
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:
GPU COMPANIES EMPLOYEE SAVINGS PLAN FOR NONBARGAINING EMPLOYEES
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
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR NONBARGAINING EMPLOYEES
REPORT ON AUDITS OF FINANCIAL STATEMENTS
for the years ended
December 31, 2002 and 2001
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, 2002 and 2001 ....... 2
Statements of Changes in Net Assets Available
for Plan Benefits for the years ended
December 31, 2002 and 2001 ...................... 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, 2002 and 2001, 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, 2002 and 2001, 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.
/s/ Milligan & Company, LLC
April 25, 2003
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR NONBARGAINING EMPLOYEES
STATEMENTS OF NET ASSETS
AVAILABLE FOR PLAN BENEFITS
December 31, 2002 and 2001
__________
2002 2001
---- ----
Investment in GPU Companies
Master Savings Plan Trust,
at fair value $391,290,756 $468,047,155
Investment in FirstEnergy Stock
Held in FirstEnergy Savings
Plan Trust, at fair value 4,787,047 --
Participant loans receivable 3,142,734 4,194,370
------------ ------------
Net assets available for plan
benefits $399,220,537 $472,241,525
============ ============
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, 2002 and 2001
-------------
2002 2001
---- ----
Net Asset Balances, beginning of year $472,241,525 $539,488,817
------------ ------------
Additions to net assets attributed to:
Contributions:
Participants' 10,720,621 10,545,241
Employer's - Cash 343,942 4,967,289
Employer's - Stock 4,736,811 --
Rollovers 37,697 49,831
Transfers from affiliated
savings plans 483,426 2,510,906
Interest on loans 273,543 330,720
Investment income 7,952,912 9,472,119
------------ ------------
Total additions 24,548,952 27,876,106
------------ ------------
Deductions from net assets attributed to:
Net depreciation in fair
value of investments 48,701,519 53,670,113
Distributions and withdrawals 48,868,421 41,453,285
------------ ------------
Total deductions 97,569,940 95,123,398
------------ ------------
Net decrease ( 73,020,988) (67,247,292)
------------ ------------
Net Asset Balances, end of year $399,220,537 $472,241,525
============ ============
The accompanying notes are an integral part of the financial statements.
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, 2002. 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 nonbargaining
employees of the former GPU Companies employed by FirstEnergy 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 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 matching contributions in the form of FirstEnergy
Common stock 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. The change from cash contributions to
FirstEnergy Common stock became effective January 1, 2002.
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:
o Fidelity Puritan Fund: This fund seeks to obtain a balance between capital
---------------------
appreciation, preservation of capital, and generation of income.
o Fidelity Independence Fund*: This fund seeks to provide the opportunity
---------------------------
for significant capital appreciation.
o 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.
o Fidelity Overseas Fund: This fund seeks long-term capital appreciation,
----------------------
primarily through investments in foreign securities.
o 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.
o 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.
o 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:
-------------------------------
Investment Funds, continued:
----------------------------
o 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.
o 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.
o 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).
o 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.
o 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.
o 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.
o 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
-------
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, 2002 and 2001 was as follows:
NUMBER OF PARTICIPANTS
----------------------
FUND #/FUND NAME 2002 2001
---------------- ---- ----
10 Interest Income 1,781 1,825
20 Diversified Bond 913 846
30 Conservative Growth 237 232
35 S&P 500 Index 1,796 2,063
40 Moderate Growth 1,457 1,678
45 Fidelity Puritan 475 488
50 Aggressive Growth 538 596
55 Fidelity Independence* 722 870
60 Small Capital Equity 677 712
65 Fidelity OTC 572 710
70 International Equity 356 403
75 Fidelity Overseas 299 337
80 FirstEnergy Stock** 2,030 633
85 Mutual Fund Window 171 186
The total number of participants in the Plan at December 31, 2002 and
2001was 3,334 and 3,634, 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 6.85% for the period January 1 through June 30, 2002 and
5.79% for the period July 1 through December 31, 2002. The interest
rates for loans four years and ten months or less were 6.38% for the
period January 1 through June 30, 2002 and 5.75% for the period July 1
through December 31, 2002.
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 and the FirstEnergy 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 Trusts for the years ended December 31, 2002
and 2001, 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 Trusts.
The fair market value of assets held by the Trusts 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.
Continued
9
GPU COMPANIES EMPLOYEE SAVINGS PLAN
FOR NONBARGAINING EMPLOYEES
NOTES TO FINANCIAL STATEMENTS, Continued
-------
3. Investments:
The investments reflected in the December 31, 2002 and 2001 Statements
of Net Assets Available for Plan Benefits represent the Plan's 61.34%
and 63.15% share, respectively, of total investments held in the GPU
Companies Master Savings Plan Trust at December 31, 2002 and 2001.
At December 31, 2002 and 2001, the total fair value of investments held
in the GPU Companies Master Savings Plan Trust are summarized as
follows:
2002 2001
---- ----
Aggressive Growth Portfolio $ 15,075,559 $ 19,770,358
Fidelity Independence Fund** 54,529,824 * 75,069,658 *
Small Capital Equity Fund 18,868,634 24,511,906
Fidelity OTC Portfolio Fund 22,411,142 34,321,061
International Equity Fund 5,502,632 7,003,697
Fidelity Overseas Fund 5,041,915 6,803,090
FirstEnergy Stock Fund*** 15,930,595 17,901,466
Mutual Fund Window 13,681,051 17,897,551
Interest Income Fund 197,678,658 * 181,148,895 *
Diversified Bond Fund 45,932,468 * 32,978,648
Conservative Growth Portfolio 9,891,068 8,487,277
S&P 500 Index Fund 110,297,502 * 160,161,418 *
Moderate Growth Portfolio 91,323,742 * 117,554,463 *
Fidelity Puritan Fund 31,773,503 37,555,463 *
------------ ------------
Total investments at fair value $637,938,293 $741,164,951
============ ============
Total investments at cost $696,561,399 $749,027,738
============ ============
* 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. In addition to those investments held in the Trust,
$4,787,048 of FirstEnergy Stock was held outside of the Trust on behalf
of the GPU Companies Employee Savings Plan for Nonbargaining Employees.
These investments at cost totaled $4,736,811.
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, 2002 and 2001
the Plan's investments were allocated as follows:
2002 2001
% BY FUND % BY FUND
--------- ---------
Interest Income 30.88% 24.30%
Diversified Bond 7.54% 4.82%
Conservative Growth 1.54% 1.28%
S&P 500 Index 17.22% 21.32%
Moderate Growth 14.91% 16.42%
Fidelity Puritan 5.07% 5.13%
Aggressive Growth 2.46% 2.92%
Fidelity Independence* 7.20% 8.65%
Small Capital Equity 3.22% 3.65%
Fidelity OTC 3.34% 4.49%
International Equity 0.87% 0.95%
Fidelity Overseas 0.80% 0.94%
FirstEnergy Stock** 2.32% 2.18%
Mutual Fund Window 2.63% 2.95%
* 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 losses in the GPU Master Savings Plan Trust for the years
ended December 31, 2002 and 2001 were as follows:
2002 2001
---- ----
Dividends $ 1,318,162 $ 3,031,891
Interest income 10,719,496 11,395,260
Net depreciation in fair
value of investments (78,302,402) (86,727,994)
------------ ------------
Net investment losses $(66,264,744) $(72,300,843)
============ ============
The FirstEnergy stock held outside the Trust earned dividend income of
$65,247 and depreciated in value by $15,010 for the year ended December
31, 2002.
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
reflected in the Plan's financial statements.
6. Plan Amendments:
---------------
The Plan was amended, effective January 1, 2002, to reflect a change in
the Plan's matching program. Participant contributions are being
matched with FirstEnergy common stock rather than with cash
contributions.
The Plan was amended, effective October 1, 2001 to incorporate
FirstEnergy Merger Provisions. On the effective date 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 with
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
EXHIBIT INDEX
FirstEnergy Corp.
GPU COMPANIES
EMPLOYEE SAVINGS PLAN FOR NONBARGAINING EMPLOYEES
Exhibit
Number
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23 Consent of Independent Accountants
99 Certification letter from Chairman of the Savings Plan Committee
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Savings Plan Committee, the administrator of the GPU Companies Employee Savings
Plan for Nonbargaining Employees, has duly caused this annual report to be
signed on its behalf by the undersigned hereunto duly authorized.
FirstEnergy Corp.
GPU Companies Employee Savings Plan
for Nonbargaining Employees
Date: June 20, 2003 By: /s/ Stephen J. Mileski
----------------------------------
Stephen J. Mileski
Chairman, Savings Plan Committee