SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K/A No. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 29, 1997
FirstEnergy Corp.
(Exact name of Registrant as specified in its charter)
Ohio 333-21011 34-1843785
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation) File Number) Identification No.)
76 South Main Street, Akron, Ohio 44308
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 330-384-5100
Item 7. Financial Statements
The unaudited pro forma financial statements are amendments
of unaudited pro forma financial statements reported on Form 8-K
filed by FirstEnergy Corp. on November 10, 1997. They are based
on actual results of operations of Ohio Edison Company and
Centerior Energy Corporation (Centerior) as of September 30,
1997, adjusted for the purchase accounting adjustments reflecting
the fair value analysis of the Centerior net assets which were
acquired in the merger.
The unaudited pro forma balance sheet of FirstEnergy as of
September 30, 1997, set forth below, gives effect to the Merger
as if it had been consummated on that date. The unaudited pro
forma statements of income of FirstEnergy for the nine month
periods ended September 30, 1997 and 1996 and the year ended
December 31, 1996 set forth below, give effect to the Merger as
if it had been consummated on January 1, 1997 and 1996,
respectively. These statements are prepared using purchase
accounting with the assumptions specified in the notes thereto.
Purchase accounting adjustments are estimates and therefore
subject to change within one year of consummation of the Merger.
The following unaudited pro forma financial information has
been prepared from, and should be read in conjunction with, the
historical consolidated financial statements and related notes
thereto of Ohio Edison and Centerior. The following information
does not reflect any potential cost reductions or synergies
associated with the Merger and is not necessarily indicative of
the financial position or operating results that would have
occurred had the Merger been consummated on the date as of which,
or at the beginning of the periods for which, the Merger is being
given effect, nor is it necessarily indicative of future
financial position or operating results.
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<TABLE>
FIRSTENERGY CORP.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1997
(IN MILLIONS)
<CAPTION>
Pro Forma Pro Forma
Ohio Edison Centerior Adjustments Combined
----------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Assets
Utility plant, net of depreciation $5,180 $ 6,752 $ (2,569)(3a) $9,363
Other property and investments 1,158 1,123 2,281
Current assets 488 512 (12)(3b) 988
Regulatory assets 1,628 2,237 (794)(3a) 3,071
Goodwill 0 0 2,029 (3c) 2,029
Other deferred charges 267 195 (95)(3f)(3l) 367
------ ------- -------- -------
Total Assets $8,721 $10,819 $(1,441) $18,099
====== ======= ======= =======
Capitalization and Liabilities
Common shareholders' equity:
Common stock and other paid-in capital $2,102 $2,321 $ (739)(3d) $3,684
Retained earnings (deficit) 630 (347) 347 (3d) 630
Unallocated ESOP common shares (149) 0 0 (149)
------ ------ ------- ------
Total common shareholders' equity 2,583 1,974 (392) 4,165
Preferred stock:
Not subject to mandatory redemption 161 0 (161)(3e) 0
Subject to mandatory redemption 15 0 (15)(3e) 0
Preferred stock of consolidated subsidiaries:
Not subject to mandatory redemption 51 448 161(3e) 660
Subject to mandatory redemption 15 173 27(3e)(3f) 215
Ohio Edison obligated mandatorily redeemable
preferred securities of subsidiary trust hold-
ing solely Ohio Edison subordinated debentures 120 0 120
Long-term debt 2,402 4,304 167 (3f) 6,873
------ ------- ------- --------
Total capitalization 5,347 6,899 (213) 12,033
Current liabilities 1,164 837 69 (3b)(3m) 2,070
Accumulated deferred income taxes 1,717 1,904 (1,326)(3k) 2,295
Accumulated deferred investment tax credits 189 243 (113)(3k) 319
Other liabilities 304 936 142 (3g)(3l) 1,382
------ ------- ------- -------
Total Capitalization and Liabilities $8,721 $10,819 $(1,441) $18,099
====== ======= ======= =======
</TABLE>
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<TABLE>
FIRSTENERGY CORP.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1997
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
Pro Forma Pro Forma
Ohio Edison Centerior Adjustments Combined
----------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Operating revenues $1,851 $1,927 $(19)(3h) $3,759
------ ------ ---- ------
Fuel and purchased power 322 357 (6)(3h) 673
Other operation and maintenance expenses 500 554 (13)(3h) 1,041
------ ------ ---- ------
Total operation and maintenance expenses 822 911 (19) 1,714
Depreciation and amortization, net 319 263 (33)(3i) 549
General taxes 176 239 415
Income taxes 141 107 14 (3k) 262
------ ------ ---- -------
Total operating expense and taxes 1,458 1,520 (38) 2,940
------ ------ ---- ------
Operating income 393 407 19 819
Other income (expense) 40 (7) 33
------ ------ ---- ------
Total income 433 400 19 852
------ ------ ---- ------
Interest charges 178 256 434
Allowance for borrowed funds used during
construction and capitalized interest (2) (2) (4)
Subsidiaries' preferred stock dividend
requirements 12 40 10 (3j) 62
------ ------ ---- ------
Net interest and other charges 188 294 10 492
------ ------ ----- ------
Net income 245 106 9 360
Preferred stock dividend requirements 10 - (10)(3j) -
----- ------ ---- ------
Earnings on common stock $ 235 $ 106 $ 19 $ 360
===== ====== ==== ======
Average common shares outstanding 144 148 (70) 222
===== ====== ==== ======
Earnings per share of common stock $1.63 $ .71 $ 1.62
===== ====== ======
</TABLE>
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<TABLE>
FIRSTENERGY CORP.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
Pro Forma Pro Forma
Ohio Edison Centerior Adjustments Combined
----------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Operating revenues $1,858 $1,941 $(14)(3h) $3,785
------ ------ ---- ------
Fuel and purchased power 346 348 (3)(3h) 691
Other operation and maintenance expenses 491 595 (11)(3h) 1,075
------ ------ ---- ------
Total operation and maintenance expenses 837 943 (14) 1,766
Depreciation and amortization, net 285 259 (33)(3i) 511
General taxes 185 247 432
Income taxes 146 94 14 (3k) 254
------ ------ ---- ------
Total operating expense and taxes 1,453 1,543 (33) 2,963
------ ------ ---- ------
Operating income 405 398 19 822
Other income (expense) 25 (5) 20
------ ------ ---- ------
Total income 430 393 19 842
------ ------ ---- ------
Interest charges 178 254 432
Allowance for borrowed funds used during
construction and capitalized interest (3) (2) (5)
Subsidiaries' preferred stock dividend
requirements 12 42 10 (3j) 64
------ ------ ---- ------
Net interest and other charges 187 294 10 491
------ ------ ---- ------
Net income 243 99 9 351
Preferred stock dividend requirements 10 - (10) (3j) -
------ ------ ---- ------
Earnings on common stock $ 233 $ 99 $ 19 $ 351
====== ====== ==== ======
Average common shares outstanding 144 148 (70) 222
====== ====== ==== ======
Earnings per share of common stock $ 1.62 $ .67 $ 1.58
====== ====== ==== ======
</TABLE>
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<TABLE>
FIRSTENERGY CORP.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
Pro Forma Pro Forma
Ohio Edison Centerior Adjustments Combined
----------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Operating revenues $2,470 $2,553 $(17)(3h) $5,006
------ ------ ---- ------
Fuel and purchased power 457 465 (4)(3h) 918
Other operation and maintenance expenses 668 794 (14)(3h) 1,448
------ ------ ---- ------
Total operation and maintenance expenses 1,125 1,259 (18) 2,366
Depreciation and amortization, net 384 347 (44)(3i) 687
General taxes 242 320 1 (3h) 563
Income taxes 189 111 19 (3k) 319
------ ------ ---- ------
Total operating expense and taxes 1,940 2,037 (42) 3,935
------ ------ ---- ------
Operating income 530 516 25 1,071
Other income (expense) 37 (5) 32
------ ----- ---- ------
Total income 567 511 25 1,103
------ ----- ---- ------
Interest charges 240 337 577
Allowance for borrowed funds used during
construction and capitalized interest (3) (3) (6)
Subsidiaries' preferred stock dividend
requirements 15 56 12(3j) 83
------ ----- ---- ------
Net interest and other charges 252 390 12 654
------ ----- ----- ------
Net income 315 121 13 449
Preferred stock dividend requirements 12 - (12)(3j) -
------ ----- ---- ------
Earnings on common stock $ 303 $ 121 $ 25 $ 449
===== ===== ===== =====
Average common shares outstanding 144 148 (70) 222
===== ===== ===== =====
Earnings per share of common stock $2.10 $ .82 $2.02
===== ===== =====
</TABLE>
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FIRSTENERGY CORP.
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS
- ---------------------------------------------------------------
Note 1 - Reclassifications
Certain reclassifications have been made to the Centerior
unaudited historical financial statements to conform to the
presentation expected to be used by the merged companies.
Note 2- Exchange Ratios
Under the Merger Agreement, each outstanding share of Ohio
Edison Common Stock was converted into one share of FirstEnergy
Common Stock, and each outstanding share of Centerior Common
Stock was converted into 0.525 of a share of FirstEnergy Common
Stock. These conversion numbers were used in computing share and
per share amounts in the accompanying unaudited pro forma
combined condensed financial statements.
Note 3- Pro Forma Adjustments
(a) As required by Accounting Principles Board Opinion No.
16, pro forma adjustments have been recognized by FirstEnergy to
adjust Cleveland Electric (CEI) and Toledo Edison (Toledo)
utility plant to fair value. The major adjustment relates to the
nuclear generating units. Such adjustment has been based upon the
results of an independent appraisal and on the estimated
discounted future cash flows expected to be generated by their
nuclear generating units. The estimated cash flows are based upon
management's current view of the likely cost recovery associated
with the nuclear units. As a result of discontinuing Statement of
Financial Accounting Standards No. 71 for CEI and Toledo nuclear
assets and operations, a pro forma adjustment has been made to
reflect the write-off of certain regulatory assets prior to
consummation of the merger.
(b) A pro forma adjustment has been made to eliminate
accounts receivable and payable between Ohio Edison and Centerior
as of the balance sheet date.
(c) A pro forma adjustment has been made to recognize
goodwill in connection with the Merger. The goodwill represents
the excess of the purchase price over Centerior's net assets
after taking into account the pro forma adjustments. The carrying
cost for all other assets and liabilities (except as described in
(f), (g), (l), (m) and (k) below) is assumed to be equal to fair
market value. If it is determined, within one year, that the
ultimate fair market value of Centerior's net assets is more or
less than their estimated carrying value at the time of
consummation, goodwill would be adjusted accordingly. The
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NOTES (Cont'd)
-----
purchase price was based on the imputed value to holders of
Centerior Common Stock using a market value of Ohio Edison Common
Stock of $20.125 per share.
(d) Pro forma equity adjustments recognize the elimination
of Centerior's accumulated deficit as of the consummation of the
Merger and the purchase price computed as described in (c) above.
(e) Pro forma adjustments have been made to reclassify Ohio
Edison preferred stock outstanding to subsidiary preferred stock
outstanding on FirstEnergy's balance sheet.
(f) A pro forma adjustment has been made to recognize
Centerior's preferred stock of consolidated subsidiaries subject
to mandatory redemption and long-term debt at estimated fair
market value.
(g) A pro forma adjustment has been made to recognize
Centerior's net unamortized transition obligation related to
certain retirement benefits.
(h) Pro forma adjustments have been made to eliminate
revenue and expense transactions between Ohio Edison and
Centerior.
(i) Pro forma adjustments have been made to recognize
amortization of goodwill in connection with the Merger over a 40-
year period, offset by reductions in depreciation expense
resulting from the assumed revaluation of Centerior's assets
described in (a) above.
(j) A pro forma adjustment has been made to reclassify Ohio
Edison's preferred stock dividend requirements to subsidiaries'
preferred stock dividend requirements (a reduction to net income)
on FirstEnergy's statement of income.
(k) Pro forma adjustments have been made for the estimated
tax effects of the adjustments discussed in (a), (f), (g), (i),
(l), and (m).
(l) Pro forma adjustment for Beaver Valley Unit 2 deferred
rent liability to reflect remaining payments on a straight-line
basis.
(m) Pro forma adjustment for estimated severance and other
compensation costs payable.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
FIRSTENERGY CORP.
/s/Harvey L. Wagner
-------------------------
Harvey L. Wagner
Controller
Dated: January 22, 1998
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