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, 1997.
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 1-2578
A. Full title of the plan and the address of the plan,
if different from that of the issuer named below:
OHIO EDISON SYSTEM SAVINGS PLAN
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
Required Information
1. Financial statements with respect to the Ohio Edison
System Savings Plan as of December 31, 1997 and 1996, prepared in
accordance with the financial reporting requirements of the
Employee Retirement Income Security Act of 1974, as amended,
together with the report and consent of independent accountants.
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
REPORT ON AUDITS OF FINANCIAL STATEMENTS
----------------------------------------
AND SUPPLEMENTAL SCHEDULES
--------------------------
AS OF DECEMBER 31, 1997 AND 1996
--------------------------------
AND FOR THE YEAR ENDED DECEMBER 31, 1997
----------------------------------------
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
--------------------------------------------------------
PAGE
----
REPORT OF INDEPENDENT ACCOUNTANTS 2
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 1997 AND 1996 3-6
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN
BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1997 7-8
NOTES TO FINANCIAL STATEMENTS 9-14
SUPPLEMENTAL SCHEDULES:
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT
PURPOSES AS OF DECEMBER 31, 1997 15
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS FOR
THE YEAR ENDED DECEMBER 31, 1997 16
ALL OTHER SCHEDULES ARE OMITTED SINCE THEY ARE NOT APPLICABLE OR
ARE NOT REQUIRED BASED ON THE DISCLOSURE REQUIREMENTS OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 AND APPLICABLE
REGULATIONS ISSUED BY THE DEPARTMENT OF LABOR.
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Savings Plan Committee of the
Ohio Edison System Savings Plan
We have audited the accompanying statements of net assets
available for plan benefits of the Ohio Edison System Savings
Plan (the "Plan") as of December 31, 1997 and 1996, and the
related statement of changes in net assets available for plan
benefits for the year ended December 31, 1997. These financial
statements are the responsibility of the Savings Plan Committee.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. 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 that
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, 1997
and 1996, and the changes in net assets available for plan
benefits for the year ended December 31, 1997 in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental
schedules of assets held for investment purposes and reportable
transactions, as of and for the year ended December 31, 1997,
are presented for purposes of additional analysis and are not a
required part of the basic financial statements but are
supplementary information required by the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. The Fund
Information in the statement of net assets available for plan
benefits and the statement of changes in net assets available for
plan benefits is presented for purposes of additional analysis
rather than to present the net assets available for plan benefits
and changes in net assets available for plan benefits of each
fund. The supplemental schedules and Fund Information have been
subjected to the auditing procedures applied in the audit of the
basic financial statements and, in our opinion, are fairly stated
in all material respects in relation to the basic financial
statements taken as a whole.
COOPERS & LYBRAND L.L.P.
Cleveland, Ohio
June 25, 1998
<TABLE>
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------
As of December 31, 1997
<CAPTION>
COMPANY CAPITAL ESOP ESOP
COMMON STOCK PRESERVATION S&P 500 UNALLOCATED ALLOCATED SMALL CAP BALANCED
FUND FUND INDEX FUND FUND FUND FUND FUND
------------ ------------ ---------- ------------ ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
- --------------------------
CASH/CASH EQUIVALENTS $ 934,066 $ 0 $ 0 $ 15,749,218 $ 0 $ 16,512 $ 15,490
COMPANY COMMON STOCK 31,315,281 0 0 231,599,481 65,434,797 0 0
GUARANTEED INSURANCE
CONTRACTS 0 60,866,616 0 0 0 0 0
COLLATERALIZED MORTGAGE OBLIG. 0 8,954,467 0 0 0 0 0
DOMESTIC EQUITY STOCKS 0 0 90,394,189 0 0 0 0
INTERNATIONAL EQUITY STOCKS 0 0 0 0 0 0 0
SMALL-CAP STOCKS 0 0 0 0 0 8,510,488 0
OTHER EQUITIES 0 0 0 0 0 0 0
BALANCED FUND SECURITIES 0 0 0 0 0 0 4,654,821
PARTICIPANT LOANS 0 0 0 0 0 0 0
INTEREST & DIVIDENDS
RECEIVABLE 18,314 378,853 0 74,250 0 0 0
EMPLOYER CONTRIBUTIONS
RECEIVABLE 0 0 0 4,161,429 0 0 0
----------- ----------- ----------- ------------ ----------- ---------- ----------
TOTAL ASSETS 32,267,661 70,199,936 90,394,189 251,584,378 65,434,797 8,527,000 4,670,311
LIABILITIES
- --------------------------
ACCRUED INTRA-FUND TRANSFERS 0 0 0 8,874,425 (8,874,425) 0 0
LOAN PAYABLE 0 0 0 199,850,000 0 0 0
ACCRUED FEES 13,527 23,371 25,557 0 8,588 5,766 3,113
ACCRUED INTEREST EXPENSE 0 0 0 19,985,000 0 0 0
----------- ----------- ----------- ------------ ----------- ---------- ----------
TOTAL LIABILITIES 13,527 23,371 25,557 228,709,425 (8,865,837) 5,766 3,113
----------- ----------- ----------- ------------ ----------- ---------- ----------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $32,254,134 $70,176,565 $90,368,632 $ 22,874,953 $74,300,634 $8,521,234 $4,667,198
=========== =========== =========== ============ =========== ========== ==========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------
As of December 31, 1997
(Continued)
<CAPTION>
INTERNATIONAL
SELF MANAGED INDEX LOAN PAYSOP
FUND FUND FUND FUND TOTAL
----------- -------------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
- --------------------------
CASH/CASH EQUIVALENTS $ 0 $ 13,802 $ 0 $ 235,360 $ 16,964,448
COMPANY COMMON STOCK 0 0 0 3,652,576 332,002,135
GUARANTEED INSURANCE CONTRACTS 0 0 0 0 60,866,616
COLLATERALIZED MORTGAGE OBLIG. 0 0 0 0 8,954,467
DOMESTIC EQUITY STOCKS 0 0 0 0 90,394,189
INTERNATIONAL EQUITY STOCKS 0 7,317,668 0 0 7,317,668
SMALL-CAP STOCKS 0 0 0 0 8,510,488
OTHER EQUITIES 3,413,219 0 0 0 3,413,219
BALANCED FUND SECURITIES 0 0 0 0 4,654,821
PARTICIPANT LOANS 0 0 6,367,734 0 6,367,734
INTEREST & DIVIDENDS RECEIVABLE 0 0 0 1,078 472,495
EMPLOYER CONTRIBUTIONS RECEIVABLE 0 0 0 0 4,161,429
----------- -------------- ----------- ------------ ------------
TOTAL ASSETS 3,413,219 7,331,470 6,367,734 3,889,014 544,079,709
LIABILITIES
- --------------------------
ACCRUED INTRA-FUND TRANSFERS 0 0 0 0 0
LOAN PAYABLE 0 0 0 0 199,850,000
ACCRUED FEES 0 5,963 0 0 85,885
ACCRUED INTEREST EXPENSE 0 0 0 0 19,985,000
----------- -------------- ----------- ----------- ------------
TOTAL LIABILITIES 0 5,963 0 0 219,920,885
----------- -------------- ------------ ----------- ------------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $ 3,413,219 $ 7,325,507 $ 6,367,734 $ 3,889,014 $324,158,824
=========== =========== =========== =========== ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------
As of December 31, 1996
<CAPTION>
COMPANY CAPITAL ESOP ESOP
COMMON STOCK PRESERVATION S&P 500 UNALLOCATED ALLOCATED SMALL CAP BALANCED
FUND FUND INDEX FUND FUND FUND FUND FUND
----------- ------------ ---------- ----------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
- --------------------------
CASH/CASH EQUIVALENTS $ 953,160 $ 0 $ 0 $ 15,277,893 $ 702,333 $ 0 $ 0
COMPANY COMMON STOCK 23,915,654 0 0 192,440,635 42,593,000 0 0
GUARANTEED INSURANCE CONTRACTS 0 60,061,245 0 0 0 0 0
COLLATERALIZED MORTGAGE OBLIG. 0 9,953,100 0 0 0 0 0
DOMESTIC EQUITY STOCKS 0 0 66,309,427 0 0 0 0
INTERNATIONAL EQUITY STOCKS 0 0 0 0 0 0 0
SMALL-CAP STOCKS 0 0 0 0 0 3,558,695 0
OTHER EQUITIES 0 0 0 0 0 0 0
BALANCED FUND SECURITIES 0 0 0 0 0 0 3,256,716
PARTICIPANT LOANS 0 0 0 0 0 0 0
INTEREST & DIVIDENDS RECEIVABLE 404,030 366,110 0 54,864 2,901 0 0
EMPLOYER CONTRIBUTIONS
RECEIVABLE 0 0 0 3,949,910 0 0 0
----------- ----------- ---------- ------------ ----------- ---------- ----------
TOTAL ASSETS 25,272,844 70,380,455 66,309,427 211,723,302 43,298,234 3,558,695 3,256,716
LIABILITIES
- --------------------------
ACCRUED INTRA-FUND TRANSFERS 0 0 0 8,874,426 (8,874,426) 0 0
LOAN PAYABLE 0 0 0 199,850,000 0 0 0
ACCRUED FEES 32,313 70,028 14,396 0 0 3,984 (8,359)
ACCRUED INTEREST EXPENSE 0 0 0 19,985,000 0 0 0
----------- ----------- ----------- ------------ ----------- ---------- ----------
TOTAL LIABILITIES 32,313 70,028 14,396 228,709,426 (8,874,426) 3,984 (8,359)
----------- ----------- ----------- ------------ ----------- ---------- ----------
NET ASSETS (DEFICIENCY)
AVAILABLE FOR PLAN BENEFITS $25,240,531 $70,310,427 $66,295,031 $(16,986,124) $52,172,660 $3,554,711 $3,265,075
=========== =========== =========== ============ =========== ========== ==========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------
As of December 31, 1996
(Continued)
<CAPTION>
INTERNATIONAL
SELF MANAGED INDEX LOAN PAYSOP
FUND FUND FUND FUND TOTAL
------------ ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
- --------------------------
CASH/CASH EQUIVALENTS $ 0 $ 0 $ 0 $ 243,630 $ 17,177,016
COMPANY COMMON STOCK 0 0 0 3,082,762 262,032,051
GUARANTEED INSURANCE CONTRACTS 0 0 0 0 60,061,245
COLLATERALIZED MORTGAGE OBLIG. 0 0 0 0 9,953,100
DOMESTIC EQUITY STOCKS 0 0 0 0 66,309,427
INTERNATIONAL EQUITY STOCKS 0 7,256,711 0 0 7,256,711
SMALL-CAP STOCKS 0 0 0 0 3,558,695
OTHER EQUITIES 1,944,487 0 0 0 1,944,487
BALANCED FUND SECURITIES 0 0 0 0 3,256,716
PARTICIPANT LOANS 0 0 6,371,562 0 6,371,562
INTEREST & DIVIDENDS RECEIVABLE 0 0 0 857 828,762
EMPLOYER CONTRIBUTIONS RECEIVABLE 0 0 0 0 3,949,910
---------- ----------- ----------- ------------ ------------
TOTAL ASSETS 1,944,487 7,256,711 6,371,562 3,327,249 442,699,682
LIABILITIES
- --------------------------
ACCRUED INTRA-FUND TRANSFERS 0 0 0 0 0
LOAN PAYABLE 0 0 0 0 199,850,000
ACCRUED FEES 0 16,425 0 0 128,787
ACCRUED INTEREST EXPENSE 0 0 0 0 19,985,000
---------- ----------- ----------- ------------ ------------
TOTAL LIABILITIES 0 16,425 0 0 219,963,787
---------- ----------- ----------- ------------ ------------
NET ASSETS (DEFICIENCY) AVAILABLE
FOR PLAN BENEFITS $ 1,944,487 $ 7,240,286 $ 6,371,562 $ 3,327,249 $222,735,895
=========== =========== =========== ============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
--------------------------------------------------------------
For the Year Ended December 31, 1997
<CAPTION>
COMPANY CAPITAL ESOP ESOP
COMMON PRESERVATION S&P 500 UNALLOCATED ALL0CATED SMALL CAP BALANCED
STOCK FUND FUND INDEX FUND FUND FUND FUND FUND
---------- ----------- ---------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
EMPLOYEE CONTRIBUTIONS $ 689,675 $4,994,150 $ 5,570,226 $ 0 $ 0 $ 960,678 $ 634,649
EMPLOYER CONTRIBUTIONS 0 0 0 4,161,429 0 0 0
INTEREST INCOME & DIVIDENDS 1,658,775 4,456,621 0 12,381,238 3,431,582 0 0
INTEREST EXPENSE 0 0 0 (19,985,000) 0 0 0
FEES & ADJUSTMENTS (105,519) (209,103) (215,559) 0 (399) (25,808) (32,737)
EXCESS OF NET PROCEEDS FROM
SALES OF ASSETS OVER MARKET
VALUE AT BEGINNING OF YEAR:
AGGREGATE PROCEEDS 3,441,104 13,675,825 7,523,407 10,932,113 2,651,443 923,865 5,425,418
AGGREGATE COST 3,377,947 13,675,825 5,193,714 10,754,835 2,548,120 775,773 4,827,527
---------- ----------- ----------- ------------ ----------- --------- ----------
NET EXCESS (DEFICIENCY) 63,157 0 2,329,693 177,278 103,323 148,092 597,891
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION)
ON SECURITIES 6,694,875 0 19,812,181 47,855,994 15,880,728 1,626,864 8,116
DISTRIBUTIONS TO PARTICIPANTS (1,930,317) (5,890,574) (4,348,126) 0 (2,017,122) (225,605) (179,083)
NET INTRA-FUND PLAN TRANSFERS ( 57,043) (3,484,956) 925,186 (4,729,862) 4,729,862 2,482,302 373,287
---------- ----------- ----------- ------------ ----------- ---------- ----------
NET CHANGE IN PLAN EQUITY 7,013,603 (133,862) 24,073,601 39,861,077 22,127,974 4,966,523 1,402,123
NET ASSETS (DEFICIENCY)
AVAILABLE FOR PLAN BENEFITS -
BEGINNING OF YEAR 25,240,531 70,310,427 66,295,031 (16,986,124) 52,172,660 3,554,711 3,265,075
----------- ----------- ----------- ------------ ----------- ---------- ----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS - END OF YEAR $32,254,134 $70,176,565 $90,368,632 $ 22,874,953 $74,300,634 $8,521,234 $4,667,198
=========== =========== =========== ============ =========== ========== ==========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
OHIO EDISON SYSTEM SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
For the Year Ended December 31, 1997
(Continued)
<CAPTION>
INTERNATIONAL
SELF MANAGED INDEX LOAN PAYSOP
FUND FUND FUND FUND TOTAL
------------ ------------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
EMPLOYEE CONTRIBUTIONS $ 0 $ 1,090,662 $ 0 $ 0 $ 13,940,040
EMPLOYER CONTRIBUTIONS 0 0 0 0 4,161,429
INTEREST INCOME & DIVIDENDS 104,297 0 577,698 202,185 22,812,396
INTEREST EXPENSE 0 0 0 0 (19,985,000)
FEES & ADJUSTMENTS 0 (21,513) (27,919) 0 (638,557)
EXCESS OF NET PROCEEDS FROM
ASSETS OVER MARKET VALUE
SALES OF AT BEGINNING OF
YEAR:
AGGREGATE PROCEEDS 4,496,775 1,932,243 0 217,898 51,220,091
AGGREGATE COST 4,325,588 1,875,084 0 218,138 47,572,551
---------- ---------- ----------- ------------ ------------
NET EXCESS (DEFICIENCY) 171,187 57,159 0 (240) 3,647,540
NET CHANGE IN UNREALIZED
APPRECIATION
(DEPRECIATION)ON
SECURITIES 287,863 39,470 0 787,196 92,993,287
DISTRIBUTIONS TO
PARTICIPANTS 0 (379,278) (110,725) (427,376) (15,508,206)
NET INTRA-FUND PLAN
TRANSFERS 905,385 (701,279) (442,882) 0 0
---------- ---------- ----------- ------------ ------------
NET CHANGE IN PLAN EQUITY 1,468,732 85,221 (3,828) 561,765 101,422,929
NET ASSETS (DEFICIENCY)
AVAILABLE FOR PLAN
BENEFITS - BEGINNING
OF YEAR 1,944,487 7,240,286 6,371,562 3,327,249 222,735,895
---------- ---------- ----------- ------------ ------------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS -
END OF YEAR $3,413,219 $ 7,325,507 $ 6,367,734 $ 3,889,014 $324,158,824
========== =========== =========== ============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
December 31, 1997 and 1996
--------------------------
1. Description of the Plan
-----------------------
The Ohio Edison System Savings Plan (the "Plan") provides
eligible employees of Ohio Edison Company ("OE") and its wholly-
owned subsidiary, Pennsylvania Power Company ("Penn Power"), both
utility operating subsidiaries of FirstEnergy Corp.
("FirstEnergy")(see Note 8), a mechanism through which they can
save and invest part of their income on a tax deferred basis at
regular intervals. Additionally, OE and Penn Power (the
"Companies") may match employee contributions with shares of
FirstEnergy common stock (see Note 4) held in the Employee Stock
Ownership Plan ("ESOP"). Employees may invest their contributions
in other investment options (the "Funds") and all contributions
made to employees' accounts are fully and immediately vested in
the Plan. The purpose of the Plan is to encourage employees to
adopt a regular savings program and to provide additional
security for retirement. The following is a brief description of
the Plan and is provided for general information purposes only.
Employees should refer to the Plan documents for more complete
information.
The Plan is a qualified profit-sharing plan under Section
401(a) of the Internal Revenue Code of 1954, as amended (the
"Code"), and provides for salary reduction contributions under
Section 401(k) of the Code. In general, plans established
pursuant to Section 401(k) of the Code permit eligible employees
to defer current federal and, subject to applicable laws, state
and local income taxes on the portion of their current
compensation represented by the amount of the salary reduction
elected. The amounts, as elected by the employees, are
contributed to the Plan by the Companies through payroll
deductions.
The Plan is subject to Title I of the Employee Retirement
Income Security Act of 1974 (ERISA) but not Title IV because it
is an "individual account plan". Title I establishes reporting
and disclosure requirements, minimum standards for participation,
vesting and benefit accrual, prohibitions governing the conduct
of fiduciaries and provides that ERISA preempts other federal,
state and local statutes relating to employee benefits. The
protective benefits of Title IV which relate to insuring pension
benefits by the Pension Benefit Guaranty Corporation are not
applicable to individual account plans.
Every OE and Penn Power employee is eligible to become a
participant in the Plan, herein referred to as "employee" or
"Member", immediately at commencement of employment
Employees may participate in one or more of the Funds
through deferral of compensation. The choice of investments
(except the Companies' matching contributions, which are in the
form of FirstEnergy common stock) are the responsibility of the
individual employee. Transfers between funds are the
responsibility of the employee and may be made on a daily basis.
Securities in the ESOP Account
- ------------------------------
The ESOP purchased a total of 10,654,114 shares of OE common
stock from November 1990 to December 1991 for the purpose of
funding the Companies' matching contribution to the Plan. On
November 8, 1997, pursuant to the merger of OE and Centerior
Energy Corporation that created FirstEnergy ("Merger"), shares of
OE common stock were converted into shares of FirstEnergy common
stock on a one-for-one basis.
The Plan borrowed $200 million, referred to herein as the
"ESOP Loan", at a rate of 10% from OE to fund the purchase of the
stock. The ESOP Loan is collateralized by the unallocated
FirstEnergy common stock acquired with the proceeds of the ESOP
Loan. The ESOP Loan is expected to be repaid by December 2005.
Interest payments on the loan are made annually. Additionally,
principal payments may be made sooner if additional shares of
FirstEnergy common stock are needed for distributions to Members.
At December 31, 1997 the outstanding ESOP Loan balance was
$199,850,000.
Requirements for maturing long-term debt are as follows:
1998 $ 5,700,000
1999 11,400,000
2000 14,500,000
2001 18,700,000
2002 23,700,000
2003 and thereafter $125,850,000
------------
$199,850,000
============
ESOP Allocation
- ---------------
Each Member's ESOP allocation is computed the Thursday
following the end of each pay period based on the Companies'
matching contribution (see Note 4) and on the quoted market
price of the FirstEnergy common stock when allocated to the
participant's account.
As principal and interest payments are made on the ESOP
Loan, shares of the FirstEnergy common stock are released from
the ESOP Unallocated Fund and transferred to the ESOP
Allocated Fund where they are made available for distribution
to Members.
During 1997 and 1996, respectively, 295,247 and 301,460
ESOP shares were allocated to Members. An additional
allocation of 139,159 and 128,331 ESOP shares in 1997 and
1996, respectively, were made relative to reinvestments of
dividends on the ESOP shares. These shares were subsequently
released from the ESOP Unallocated Fund in January 1998 and
February 1997 when the Plan made interest payments of
$19,985,000 in each year, which released 472,740 shares in
each year to the ESOP Allocated Fund for distribution to
Members.
As of December 31, 1997 and 1996, there were 7,986,189
and 8,458,929, shares respectively, held in the ESOP
Unallocated Fund at market values of $231,599,481 and
$192,440,635, respectively, and 2,256,372 and 1,872,220
shares, respectively, held in the ESOP Allocated Fund at
market values of $65,434,797 and $42,593,000. The market
value of the ESOP common stock is measured by the quoted
market price.
PAYSOP
- ------
A component of the Plan consists of a qualified payroll-
based tax credit employee stock ownership plan (PAYSOP) under
Section 401(a) and Section 501(a) of the Code.
Under the Economic Recovery Tax Act of 1981, effective
January 1, 1983, tax credits were based upon eligible employee
compensation. The regulation permitted the Companies to
contribute to the Trust a maximum of one-half of one percent
of the aggregate compensation of eligible employees and claim
a tax credit on its consolidated Federal income tax return
equal to this amount. The amounts allocated to eligible
employees were based upon the proportion of their wages and
salaries (to a maximum of $100,000) to the wages and salaries
of eligible employees for the year.
The Tax Reform Act of 1986 eliminated the PAYSOP tax
credit with respect to compensation earned in 1987 or later
years. As a result, the Companies have not contributed to the
PAYSOP after the 1986 contribution other than the
reimbursement of PAYSOP administrative expenses.
On November 8, 1997, pursuant to the Merger, shares of OE
common stock held in the PAYSOP were converted into shares of
FirstEnergy common stock on a one-for-one basis.
Dividends are paid annually to Members in the PAYSOP. The
market value of the common stock in the PAYSOP is measured by
the quoted market price.
2. Summary of Accounting Policies
------------------------------
The excess (deficiency) of net proceeds over market value
under the Plan is recognized upon the sale of investments
generally in connection with the termination or withdrawal
from the Plan by Members. Unrealized appreciation or
depreciation, equal to the difference between the cost and the
market value of investments at the applicable valuation date,
is recognized in determining the value of Member accounts. The
excess (deficiency) of net proceeds over market value
calculation methodology is based on the revalued cost of
assets instead of historical cost. The revalued cost is the
market value of an asset at the beginning of the Plan year or
at the time of purchase during the year.
The financial statements have been prepared on the
accrual basis of accounting and all investment management fees
are deducted from investment returns.
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts recorded in the financial statements and accompanying
notes. Actual results may differ from these estimates.
3. Plan Termination
----------------
Although the Companies expect that the Plan will be
permanent, the Companies reserve the right to discontinue or
terminate the Plan at any time. If the Plan should be
terminated, in whole or in part, Members will be entitled to
withdraw the full value of their accounts, to the extent
allowed by law.
4. Contributions
-------------
Employer Contributions
- ----------------------
The Companies pay a matching contribution of 50% on the
first 6% of compensation contributed by an employee. In
addition, the Companies may designate a number of performance
objectives and contribute an additional 5% for each objective
achieved, up to a maximum of 25%. The Companies'
contributions are always invested in FirstEnergy common stock.
The Companies' contributions have been pre-funded by the
FirstEnergy common stock held by the ESOP Unallocated Fund.
These shares of FirstEnergy common stock earn dividend income
and are subject to unrealized appreciation and depreciation as
the market value of the FirstEnergy common stock fluctuates.
The dividend income serves to pay the ESOP loan and related
interest, which results in the release of shares to the ESOP
Allocated Fund as the Companies' matching contribution. To
the extent dividend income is not sufficient to pay the ESOP
loan and interest, the Companies will contribute cash which is
reflected as employer contributions in the statement of
changes in net assets available for plan benefits.
Employee Contributions
- ----------------------
During 1997 employees could invest between 1% and 15% of
their salary in the Plan. Employee contributions may be made
on a before-tax and/or after-tax basis. Under the before-tax
option, deposits are deducted from currently taxable income
but are taxable when they are withdrawn from the Plan. The Tax
Reform Act of 1986 limits the maximum annual before-tax
contribution to $9,500 for 1997 and 1996. Prior to age 59-1/2,
an active employee may withdraw before-tax deposits only under
certain hardship conditions (see Note 7).
Employees may make rollover contributions to the Plan of
funds held in other tax-qualified plans which the employee was
a member of prior to becoming employed by the Companies. The
rollover contributions must be the result of a qualified total
distribution from another tax-qualified plan and must be
contributed to the Plan within 60 days after distribution to
the employee.
Both employer and employee contributions under the Plan
are held in a trust fund (Trust) with an independent trustee
(State Street Bank & Trust Company). Employees may choose to
invest their contributions in Funds A, B, C, D, F, G or H (see
Note 6) which are offered by the Plan. Employees may also
elect to borrow from their before-tax accounts for certain
approved purposes (Fund E).
5. Reconciliation to Form 5500
---------------------------
At December 31, 1997, the Plan has received applications
for withdrawals in the amount of $1,006 which were not paid at
year end. Pursuant to recent professional guidance, no payable
has been recorded in the statement of net assets available for
plan benefits at year end. However, the Department of Labor
requires Form 5500 to include these pending withdrawals as
liabilities.
6. Descriptions of Funds
---------------------
The following is a brief description of the Funds
currently available to Members at December 31, 1997:
Fund A - Company Common Stock Fund: This Fund consists
-----------------------------------
entirely of shares in FirstEnergy Corp. common stock. The
Fund provides an opportunity for employees to increase their
common ownership stake in FirstEnergy. The objective for this
Fund is the growth of capital through both appreciation and
current income. The Fund also holds the Companies' pre-ESOP
matching contribution in FirstEnergy common stock. The common
stock is purchased by the Trustee on the open market. The
market value of the common stock is measured by the quoted
market price.
Fund B - Capital Preservation Fund: This Fund consists
-----------------------------------
of guaranteed fixed income contracts issued by insurance
companies and banks, collateralized mortgage obligations, and
short-term money market instruments. These contracts
guarantee interest for a fixed period and the principal amount
of all investments. The average yield of the contracts was
6.55% and 6.50% for the fiscal years 1997 and 1996,
respectively. The crediting interest rate as of December 31,
1997 and 1996 was 6.53% and 6.57%, respectively. The market
value of the Capital Preservation Fund is measured at the
contract value as determined by the insurers and banks and no
valuation reserves in relation to the contract value is deemed
necessary. The fair value of the investments held in the Fund
at December 31, 1997 and 1996 were $71,213,091 and
$71,112,179, respectively.
Fund C - S&P 500 Index Fund: This Fund is a
----------------------------
common/collective trust investing in the S&P 500 stocks. The
objective of this Fund is the growth of capital through both
appreciation and investment income. The market value of the
S&P 500 Index Fund is based on the market value per share
determined by the Trustee.
Fund D - Small Cap Fund: This Fund invests in securities
------------------------
of small companies, generally with capitalizations of $500
million or less, that pay most of their earnings in dividends.
The Fund is well diversified and holds approximately 400
stocks. The objective of the Fund is to match or exceed the
returns of the Russell 2000 Index with lower risk.
Fund E - Balanced Fund: This Fund invests in a
-----------------------
diversified portfolio of stocks, bonds and cash equivalents.
The objective of the fund is to earn, on an annualized basis,
three percent over the return of Long-Term U.S. Government
Bonds. The performance objective is to be achieved over a 5
year market cycle.
Fund F - Self Managed Fund: Members may invest in a
---------------------------
self-managed brokerage account option available through State
Street Brokerage Services, Inc. Options include mutual funds
along with any security that is listed on the NYSE, ASE and
NASDAQ.
Fund G - International Index Fund: This Fund consists of
----------------------------------
foreign equities and is designed to produce returns similar to
those of the Morgan Stanley Capital International Europe,
Australia, Far East (MSCI EAFE) Index. The objective of the
Fund is the growth of capital through appreciation. The marke
value of the International Index Fund is measured at the
market value per share determined by the Trustee.
Fund H - Loan Fund: The Plan allows participants to
-------------------
borrow from their before-tax account for certain approved
purposes. When loans are made, they are recorded as interfund
transfers. The repayments of principal and interest are
credited to the participants' account balances within the
respective funds. The employee repays the loan and all
related interest through payroll deductions.
Participants may borrow up to 50 percent of their total
account balance or 100 percent of their before-tax account,
whichever is less. The interest rate charged is based on the
prime rate plus 1 percent. They may have up to two loans
outstanding at one time. The minimum loan amount is $1,000
and must be repaid between 6 and 60 months. If the loan is
for the purchase of a principal residence, the loan repayment
period can be extended to 15 years. The maximum loan amount
is $50,000.
7. Tax Considerations
------------------
The Plan received a determination letter from the
Internal Revenue Service ("IRS") dated April 3, 1996 regarding
amendments through November 15, 1994 that the Plan is
qualified under the appropriate sections of the Code.
The Plan is exempt from Federal, state and local income
taxes. The Federal, state and local income tax treatments of
distributions from the Plan depend upon when they are made and
their form. The withdrawal of the principal amount of a
Member's after-tax contribution is not, however, subject to
tax. For tax years beginning after December 31, 1986, the Tax
Reform Act of 1986 requires that an additional tax of 10% be
applied to employee withdrawals from the Plan prior to death,
disability, attainment of age 59-1/2, or under certain other
limited circumstances.
In the case of withdrawals by a Member employed by the
Companies prior to the attainment of age 59-1/2, the excess of
the value of the withdrawal over the total amount of the
Member's after-tax contributions, is taxable at ordinary
income tax rates. The value of the Company common stock
withdrawn is considered to be its fair market value on the
date it is withdrawn.
In the case of a distribution that qualifies as a lump-
sum distribution upon a Member's termination of employment
with either of the Companies or after attaining the age of 59-
1/2, only the excess of the value of the lump sum distribution
over the amount of the Member's after-tax contributions to the
Plan (less withdrawals) is taxable at ordinary income tax
rates. In determining the value of the lump-sum distribution,
the FirstEnergy common stock distributed in-kind or in cash
shall be valued at its original cost to the Trustee.
8. Subsequent Event
-----------------
Merger: As a result of the merger with Centerior Energy
-------
Corporation that created FirstEnergy Corp., as discussed in
Note 1, the Plan will be renamed the FirstEnergy Savings Plan.
Furthermore, beginning July 1, 1998, non-union participants
and all retirees in the Centerior Energy plan will be merged
into the FirstEnergy Savings Plan. The remaining participants
in the Centerior Plan will be merged into the new plan
beginning January 1, 1999.
Employee Contributions: As of January 1, 1998 the Plan
-----------------------
participants will be able to invest up to 16% of their salary
in the Plan.
Funds: Effective January 1, 1998, the Plan changed its
------
investment options for two funds. The International Index
Fund was replaced by the EuroPacific Growth Fund, which seeks
long-term capital appreciation by investing in securities of
non-U.S. domiciled issuers located primarily in Europe and the
Pacific Basin. Additionally, the Balanced Fund was replaced
by the Balanced Growth Fund (Index), which is similar to the
Balanced Fund in risk but offers broader exposure to the U.S.
mid-cap and international equity markets. The Balanced Growth
Fund (Index) seeks to outperform a composite benchmark of the
Russell 3000 (50%), the MSCI EAFE Index (10%) and the Lehman
Brothers Aggregate Index (40%). Furthermore, as of January 1,
1998 the Plan's loan policies were modified to allow Plan
participants to borrow up to the lesser of 50% of their total
account balance (including before-tax, after-tax and rollover
contributions), or $50,000.
</TABLE>
<TABLE>
Ohio Edison Company
EIN 34-0437786
PN #002
OHIO EDISON SYSTEM SAVINGS PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
As of December 31, 1997
<CAPTION>
Description Market
Identity of Issue Maturity Cost Value
- ------------------------ ----------------- ---------- ---------
<S> <C> <C> <C>
State Street STIF Fund Money Market Fund $ 16,964,448 $ 16,964,448
ESOP Unallocated Fund FE Common Stock $149,919,277 $231,599,481
ESOP Allocated Fund FE Common Stock $ 42,816,276 $ 65,434,797
PAYSOP Fund FE Common Stock $ 2,103,668 $ 3,652,576
Company Stock Fund FE Common Stock $ 22,098,563 $ 31,315,281
International Index Fund EAFE Index Stocks $ 6,521,969 $ 7,317,668
(Common/Collective Trust)
S&P 500 Index Fund S&P 500 Stocks $ 42,798,544 $ 90,394,189
(Registered Investment Company)
Small Cap Fund Small Cap Domestic Stocks $ 6,298,983 $ 8,510,488
(Registered Investment Company)
Balanced Fund Equities, Fixed Income $ 4,646,704 $ 4,654,821
(Registered Investment Company)
Self Managed Fund Equities $ 3,413,219 $ 3,413,219
(Registered Investment Company)
Capital Preservation Fund
FHLMC 5.72% CMO, 04-15-2000 $ 5,021,508 $ 5,021,508
FNMA 6.11% CMO, 11-25-1998 $ 3,932,959 3,932,959
State Street Bank
Stable Income Fund GIC, 12-31-99 $ 60,866,616 60,866,616
------------
Total Capital Preservation Fund $ 69,821,083
======================================================================================================
</TABLE
</TABLE>
<TABLE>
======================================================================================================
Ohio Edison Company
EIN 34-0437786
PN #002
OHIO EDISON SYSTEM SAVINGS PLAN
Item 27d - Schedule of Reportable Transactions
For the Year Ended December 31, 1997
<CAPTION>
Descriptions Number of Total Number of Total
of Purchase Value of Sales Selling Cost of
Assets Transactions Purchase Transactions Price Assets Sold Gain/(Loss)
- ---------------------- ------------ ---------- ------------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
State Street STIF Fund 118 $20,465,892 257 $20,724,263 $20,724,263 $ 0
S&P 500 Index Fund 116 9,466,295 135 7,523,407 5,193,714 2,329,693
FirstEnergy Corp. 199 13,401,000 253 17,242,558 16,899,040 343,518
State Street Stable
Income Fund 124 13,482,563 193 13,675,825 13,675,825 0
</TABLE>
Exhibit A
Consent of Independent Accountants
We consent to the incorporation by reference in the Company's
previously filed Registration Statement (File No. 333-48651)
of our report dated June 25, 1998, on the audits of the Ohio
Edison System Savings Plan as of December 31, 1997 and 1996
and for the year ended December 31, 1997 which report is
included in this Annual Report on Form 11-K of FirstEnergy
Corp.
COOPERS & LYBRAND L.L.P.
Cleveland, Ohio
June 29, 1998
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Savings Plan Committee, the administrator of
the Ohio Edison System Savings Plan, has duly caused this
annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
OHIO EDISON SYSTEM
SAVINGS PLAN
June 29, 1998
- --------------------
Date
By: /s/ James A. Bowers
-------------------
James A. Bowers
Chairman
Savings Plan Committee
June 29, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Ohio Edison Company/Ohio Edison System Savings Plan
Gentlemen:
We transmit herewith for electronic filing with the
Securities and Exchange Commission, pursuant to the Securities
Act of 1934, as amended, an annual report on Form 11-K of the
Ohio Edison System Savings Plan.
Please address any comments regarding the above to the
undersigned at 76 S. Main Street, Akron, OH 44308 (330) 384-
5504.
Very truly yours,
OHIO EDISON COMPANY
By: /s/ N. C. Ashcom
----------------------
N. C. Ashcom
Secretary
