-------------------------------------------------
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 333-21011
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
CENTERIOR ENERGY CORPORATION 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
FINANCIAL STATEMENTS
OF THE
CENTERIOR ENERGY CORPORATION EMPLOYEE SAVINGS PLAN
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
Centerior Energy Corporation
Employee Savings Plan
Index
Report of Independent Public Accountants 2
Financial Statements:
Statements of Net Assets Available for Plan Benefits
as of December 31, 1997 and 1996 3
Statements of Changes in Net Assets Available for
Plan Benefits for the Years Ended December 31, 1997
and 1996 5
Notes to the Financial Statements 7
Supplemental Schedules:
Schedule I - Schedule of Assets Held for Investment
Purposes as of December 31, 1997 14
Schedule II - Schedule of Reportable Transactions,
for the Year ended December 31, 1997 17
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To: The Plan Administrator of the Centerior Energy Corporation
Savings Plan
We have audited the accompanying statements of net assets
available for plan benefits of the Centerior Energy Corporation
Employee Savings Plan (the Plan) as of December 31, 1997 and
1996, and the related statements of changes in net assets
available for plan benefits for the years then ended. These
financial statements and the schedules referred to below are the
responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements and schedules
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 years then ended, in conformity with generally
accepted accounting principles.
Our audit was 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 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 statements of net assets available for plan
benefits and the statements of changes in net assets available
for plan benefits is presented for the purpose 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.
ARTHUR ANDERSEN LLP
Cleveland, Ohio
June 29, 1998
<TABLE>
CENTERIOR ENERGY CORPORATION
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1997
<CAPTION>
FirstEnergy Fixed Global Aggressive
Stock Equity Income Balanced Equity Growth Growth
ASSETS Fund Fund Fund Fund Fund Fund Fund Loans Total
- - ------ ---------- -------- --------- -------- -------- -------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments, at
market value:
FirstEnergy -
common stock $53,021,135 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $53,021,135
Equity Fund -
diversified
common stock
fund 0 98,391,202 0 0 0 0 0 0 98,391,202
Investments in
mutual funds 0 0 0 20,856,058 34,899,154 10,945,161 9,274,346 0 75,974,719
Loans receivable
from participants 0 0 0 0 0 0 0 5,482,804 5,482,804
Investments , at
contract value:
Funds on deposit
with insurance
companies and
banks 0 0 78,435,754 0 0 0 0 0 78,435,754
----------- ------------ ----------- ----------- ----------- ----------- ---------- ---------- ------------
Total investments 53,021,135 98,391,202 78,435,754 20,856,058 34,899,154 10,945,161 9,274,346 5,482,804 311,305,614
----------- ------------ ----------- ----------- ----------- ----------- ---------- ---------- ------------
Receivables:
Transfers
receivable 0 0 269,614 0 0 0 0 0 269,614
Investment
income and
other
receivables 1,748 175,055 33,584 1,098,171 41,108 99,172 42,407 0 1,491,245
----------- ------------ ----------- ----------- ----------- ----------- ---------- ---------- ------------
Total receivables 1,748 175,055 303,198 1,098,171 41,108 99,172 42,407 0 1,760,859
----------- ------------ ----------- ----------- ----------- ----------- ---------- ---------- ------------
Cash and
temporary cash
investments 228,464 5,103,702 260,438 0 0 0 0 16,400 5,609,004
----------- ------------ ----------- ----------- ----------- ----------- ---------- ---------- ------------
Total assets 53,251,347 103,669,959 78,999,390 21,954,229 34,940,262 11,044,333 9,316,753 5,499,204 318,675,477
----------- ------------ ----------- ----------- ----------- ----------- ---------- ---------- ------------
LIABILITIES
- - -----------
Transfers payable 0 75,227 0 11,700 41,108 99,172 42,407 0 269,614
Liabilities
for investment
purchases and
other 502,166 178,555 318,485 1,086,471 0 0 0 0 2,085,677
----------- ------------ ----------- ----------- ----------- ----------- ---------- ---------- ------------
Total Liabilities 502,166 253,782 318,485 1,098,171 41,108 99,172 42,407 0 2,355,291
----------- ------------ ----------- ----------- ----------- ----------- ---------- ---------- ------------
Net assets
available for
Plan benefits $52,749,181 $103,416,177 $78,680,905 $20,856,058 $34,899,154 $10,945,161 $9,274,346 $5,499,204 $316,320,186
=========== ============ =========== =========== =========== =========== ========== ========== ============
<FN>
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
CENTERIOR ENERGY CORPORATION
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1996
<CAPTION>
Centerior Fixed Global
Stock Equity Income Balanced Equity
ASSETS Fund Fund Fund Fund Fund Loans Total
- - ------ ----------- --------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Investments, at market value:
Centerior - common stock $42,047,410 $ 0 $ 0 $ 0 $ 0 $ 0 $42,047,410
Equity Fund - diversified
common stock fund 0 76,970,745 0 0 0 0 76,970,745
Investments in mutual funds 0 761,105 0 16,041,842 32,039,829 0 48,842,776
Loans receivable from
participants 0 0 0 0 0 5,931,565 5,931,565
Investments , at contract value:
Funds on deposit with
insurance companies and
banks 0 0 78,521,336 0 0 0 78,521,336
----------- ----------- ----------- ----------- ----------- ---------- ------------
Total investments 42,047,410 77,731,850 78,521,336 16,041,842 32,039,829 5,931,565 252,313,832
----------- ----------- ----------- ----------- ----------- ---------- ------------
Receivables:
Transfers receivable 0 1,005 3,472 11,429 483 0 16,389
Investment income receivable 16,985 147,842 3,157 115,450 0 0 283,434
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total receivables 16,985 148,847 6,629 126,879 483 0 299,823
----------- ----------- ----------- ----------- ----------- ----------- -----------
Cash and temporary cash
investments 126,301 3,152,788 286,134 0 0 0 3,565,223
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total assets 42,190,696 81, 033,485 78,814,099 16,168,721 32,040,312 5,931,565 256,178,878
----------- ----------- ----------- ----------- ----------- ----------- -----------
LIABILITIES
- - -----------
Transfers payable 16,389 0 0 0 0 0 16,389
Liabilities for investment
purchases and other 500,000 119,916 3,472 126,818 483 4,643 755,332
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Liabilities 516,389 119,916 3,472 126,818 483 4,643 771,721
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net assets available for
Plan benefits $41,674,307 $80,913,569 $78,810,627 $16,041,903 $32,039,829 $5,926,922 $255,407,157
=========== =========== =========== =========== =========== =========== ============
<FN>
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
CENTERIOR ENERGY CORPORATION
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
For the Year Ended December 31, 1997
<CAPTION>
FirstEnergy Fixed Global Aggressive
Stock Equity Income Balanced Equity Growth Growth
ASSETS Fund Fund Fund Fund Fund Fund Fund Loans Total
- - ------ ---------- ---------- ---------- --------- ---------- ---------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 1,619,283 $ 4,921,457 $ 3,095,822 $ 1,469,092 $ 2,610,002 $ 694,438 $ 810,531 $ 0 $ 15,220,625
Employer 646,542 1,749,104 1,113,405 517,034 878,318 214,629 249,634 0 5,368,666
Rollover 493 16,701 493 7,364 9,337 0 0 0 34,388
Investment Income:
Dividends 3,072,027 1,150,076 0 1,576,047 2,507,654 992,609 0 0 9,298,413
Interest 12,751 132,833 688,164 3,540 1,069 61 1,131 510,234 1,349,783
Net realized gain
and unrealized
appreciation
in market value of
investments 15,538,228 26,070,741 4,188,242 2,248,038 2,091,572 217,840 524,717 0 50,879,378
Transfers (to)/
from other funds
(net) (6,947,305) (4,606,207) (3,055,536) 431,293 (3,072,329) 9,171,296 8,078,788 0 0
Administrative
expenses (64,295) (556,042) (224,950) 0 0 0 0 0 (845,287)
Loan activity:
Borrowings (332,300) (846,122) (729,420) (183,413) (279,738) (85,242) (70,145) 2,526,380 0
Repayment of
borrowings 0 0 2,731,378 0 0 0 0 (2,731,378) 0
Interest payments 0 0 510,234 0 0 0 0 (510,234) 0
----------- ----------- ---------- ---------- ---------- ----------- ---------- --------- -----------
13,545,424 28,032,541 8,317,832 6,068,995 4,745,885 11,205,631 9,594,656 (204,998) 81,305,966
Less - Amounts
withdrawn by
participants 2,470,550 5,529,933 8,447,554 1,254,840 1,886,560 260,470 320,310 222,720 20,392,937
----------- ----------- ---------- ---------- ---------- ----------- --------- --------- -----------
Net increase
(decrease) 11,074,874 22,502,608 (129,722) 4,814,155 2,859,325 10,945,161 9,274,346 (427,718) 60,913,029
Net assets
available for
Plan benefits:
Beginning of
year 41,674,307 80,913,569 78,810,627 16,041,903 32,039,829 0 0 5,926,922 255,407,157
----------- ------------ ----------- ----------- ----------- ----------- ---------- ---------- ------------
End of year $52,749,181 $103,416,177 $78,680,905 $20,856,058 $34,899,154 $10,945,161 $9,274,346 $5,499,204 $316,320,186
=========== ============ =========== =========== =========== =========== ========== ========== ============
<FN>
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
CENTERIOR ENERGY CORPORATION
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
For the Year Ended December 31, 1996
<CAPTION>
Centerior Fixed Global
Stock Equity Income Balanced Equity
ASSETS Fund Fund Fund Fund Fund Loans Total
- - ------ ---------- -------- --------- --------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 2,095,039 $ 4,939,720 $ 3,493,006 $ 1,711,183 $ 2,836,995 $ 0 $ 15,075,943
Employer 851,829 1,821,487 1,302,987 601,912 950,699 0 5,528,914
Rollover 198,777 142,398 73,151 58,245 182,437 0 655,008
Investment Income:
Dividends 3,165,795 1,407,169 0 426,229 531,092 0 5,530,285
Interest 16,247 171,993 672,573 988 2,477 523,481 1,387,759
Net realized gain
and unrealized
appreciation
in market value
of investments 7,152,665 11,995,628 4,200,073 823,902 3,838,456 0 28,010,724
Transfers (to)/
from other
funds (net) (6,870,606) 3,239,431 (2,720,153) 1,641,671 4,709,657 0 0
Administrative
expenses (27,615) (454,289) (158,961) 0 0 0 (640,865)
Loan activity:
Borrowings (466,965) (970,442) (917,769) (243,063) (393,614) 2,991,853 0
Repayment of
borrowings 0 0 2,725,386 0 0 (2,725,386) 0
Interest payments 0 0 523,481 0 0 (523,481) 0
----------- ----------- ----------- ---------- ----------- ----------- ------------
6,115,166 22,293,095 9,193,774 5,021,067 12,658,199 266,467 55,547,768
Less - Amounts
withdrawn by
participants 2,551,876 4,818,075 7,494,234 1,176,924 2,077,953 143,937 18,262,999
----------- ----------- ----------- ---------- ----------- ----------- ------------
Net increase 3,563,290 17,475,020 1,699,540 3,844,143 10,580,246 122,530 37,284,769
Net assets
available for
Plan benefits:
Beginning of
year 38,111,017 63,438,549 77,111,087 12,197,760 21,459,583 5,804,392 218,122,388
----------- ----------- ----------- ----------- ----------- ---------- ------------
End of year $41,674,307 $80,913,569 $78,810,627 $16,041,903 $32,039,829 $5,926,922 $255,407,157
=========== =========== =========== =========== =========== ========== ============
<FN>
The accompanying notes are an integral part of this statement.
</TABLE>
EMPLOYEE SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 - GENERAL DESCRIPTION OF THE PLAN
- - ----------------------------------------
The Centerior Energy Corporation (Centerior) Employee Savings
Plan (Plan) was approved by the Centerior Board of Directors in
1986 and went into effect as of January 1, 1987. The purpose of
the Plan is to afford eligible employees an opportunity to make
systematic savings through payroll deductions, to invest such
savings in a manner which will assist them in meeting their
savings and investment needs, and to facilitate their becoming
share owners of the Company. Participation in the Plan is
voluntary.
An eligible employee is any part-time, temporary, full-time
probationary or full-time regular employee of Centerior,
Centerior Service Company (CSC), The Cleveland Electric
Illuminating Company (CEI), The Toledo Edison Company (TE) or any
other Centerior affiliate that adopts the Plan according to its
terms, and is at least age 18. On November 8, 1997, Centerior
and the Ohio Edison Company merged to create FirstEnergy Corp.
("Merger"). Effective with the Merger, CEI and TE became
electric utility operating subsidiaries of FirstEnergy Corp.
("FirstEnergy") and Centerior and the Centerior Service Company
ceased to exist. Pursuant to the terms of the merger agreement
each outstanding share of Centerior Energy Corporation common
stock (includes certain shares held by the Plan) was converted
into .525 of a share of FirstEnergy common stock on the merger
date.
FirstEnergy may close contributions into the Plan at any time. A
discontinuance of employer matching contributions into the Plan
would constitute a closing of both participant contributions and
employer matching contributions into the Plan. FirstEnergy may
either continue the operation of the Plan with respect to the
interests of participants then in the Plan or terminate the Plan.
If the Plan is terminated, all assets in the Trust will be
distributed among the participants in proportion to their
respective interests without any forfeitures.
The Plan is subject to the reporting, disclosure, participation,
vesting and fiduciary responsibility provisions of Title I of the
Employee Retirement Income Security Act of 1974 (ERISA), but is
not subject to the funding provisions of Title I and the plan
termination insurance provisions of Title IV of ERISA.
All Plan activity, including fund account balances, transfers and
withdrawals, is updated each business day by the Trustee.
Participants can get up-to-date reports on their accounts via the
telephone information access system of the Trustee. All
participants share in the investment management costs and certain
administrative costs of the Plan.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNT POLICIES
- - ------------------------------------------------
Basis of Accounting
- - -------------------
The financial statements of the plan are prepared on the accrual
basis of accounting.
Use of Estimates
- - ----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Valuation of Investments
- - ------------------------
The FirstEnergy Stock Fund, and the Centerior Stock Fund prior to
the Merger, is valued at the average of the high and low sales
prices of the common stock as reported on Network A of The
Consolidated Transaction reporting system and as listed by The
Wall Street Journal on the last business day of the year.
The Equity Fund invests in a diversified common stock fund and a
money market fund managed by National City Bank, Cleveland, Ohio.
The fund is valued at market prices on the last business day of
the year.
Fixed Income Fund investments in 1997 and 1996 consisted of
interest-bearing contracts with insurance companies and
investments in Society National Bank's ("Society") EB MaGIC Fund
and Fifth Third Bank's Guaranteed Insurance Contract fund (5/3
Bank's GIC Fund). These investments are fully benefit-responsive
and stated at contract value, which equals principal plus accrued
interest. Contract value approximated market value at December
31, 1997 and 1996. The EB MaGIC Fund and 5/3 Bank's GIC Fund are
collective funds which invest primarily in insurance and other
investment contracts. Investment income earned for the EB MaGIC
Fund and 5/3 Bank's GIC Fund is reported as net realized gain and
unrealized appreciation in the Statement of Changes in Net Assets
Available for Plan Benefits.
The Balanced, Global Equity, Growth and Aggressive Growth Funds
are invested in diversified mutual funds, the Dodge & Cox
Balanced Fund, the American Funds' New Perspective Fund, the Van
Kampen American Capital Emerging Growth Fund, and the Stein Roe
Capital Opportunities Fund, respectively. The investments are
valued at market prices on the last business day of the year.
Investment Gains (Losses), Appreciation (Depreciation) and Income
- - -----------------------------------------------------------------
The net realized gain (loss) and unrealized appreciation
(depreciation) amounts shown in the Statements of Changes in Net
Assets Available for Plan Benefits for 1997 and 1996 were
calculated using the current value methodology for costing
investments. Current value represents the market value of
investments held at the beginning of the year plus the purchase
price for investments acquired during the current year.
The realized gains and losses on the distribution or sale of
shares in the FirstEnergy Stock, Equity, Balanced, Global Equity,
Growth and Aggressive Growth Funds represent the difference
between the market value of the shares on the date of
distribution or sale and the cost of the shares using the
current value methodology described above. The realized gain or
loss on the sale of securities in the FirstEnergy Stock Fund is
included in the amounts withdrawn or transferred by participants
which caused the sale. The net realized gain or loss on the sale
of investment securities in the Equity, Balanced, Global Equity,
Growth and Aggressive Growth Funds will contribute to the annual
increase (decrease) in the respective Fund's net assets available
for Plan benefits.
Dividend income within the FirstEnergy Stock Fund and the Equity
Fund is recorded on the ex-dividend dates. Income from all other
investments is recorded as earned.
The Plan provides that the market value of all investments shall
be determined at the market close each business day of the
Trustee. Unrealized appreciation or depreciation, equal to the
difference between the cost and the daily market value of the
investments, is recognized in determining the value of each fund.
Expenses of the Plan
- - --------------------
Expenses of the Plan incurred by the Trustee to buy and sell
securities are included as a cost of those securities. Fund
earnings for the Balanced, Global Equity, Growth and Aggressive
Growth Funds are net of the charges assessed for mutual fund
investment management fees. All participants share in the
investment management costs and certain administrative costs of
the Plan.
The annual investment management and administrative fees assessed
on total assets under management at the end of the last two years
were as follows:
December 31,
-------------
1997 1996
---- ----
FirstEnergy Stock Fund 0.10% -
Centerior Stock Fund - 0.10%
Equity Fund 0.60 0.60
Fixed Income Fund 0.25 0.25
Balanced Fund 0.55 1.01
Global Equity Fund 0.79 0.82
Growth Fund 1.05 -
Aggressive Growth Fund 1.17 -
NOTE 3 - CONTRIBUTIONS
- - ----------------------
The Plan consists of three parts (Parts) - the After Tax Part,
the Before Tax Part and the Rollover Part. The maximum
participant contribution into both the After Tax Part and the
Before Tax part is 16% of pay: up to 6% as a Basic Contribution
and up to 10% as a Supplemental Contribution. The minimum
contribution is 1% of pay. Pay includes only straight-time
hourly wages or salary paid for regularly scheduled straight-time
hours. A participant may allocate contributions in increments of
1% into the FirstEnergy Stock, Equity, Fixed Income, Balanced,
Global Equity, Growth and Aggressive Growth Funds which total
100% or may allocate all contributions into any one Fund.
Participants make a single election for investment mix for their
contributions into both the After Tax and Before Tax parts.
Participants may change their contributions as often as once a
month and may change their investment mix, transfer between funds
or withdraw as often as once every 30 calendar days. A
participant's withdrawal of post-December 31, 1986 After Tax
contributions is penalized by requiring a six-month waiting
period for future participant contributions to the After Tax part
of the Plan, except in certain cases of hardship and during
certain open enrollment periods.
The After Tax part receives participant contributions after they
are taxed as pay. The Before Tax part receives contributions
before they are taxed as pay, as participants may instruct their
employer to deposit their contributions into the Trust in
exchange for the election to have their pay reduced by the same
amount. Participant contributions of pay under the Plan as
Before Tax contributions reduce a participant's taxable income
for federal and Ohio income tax purposes in the year of
contribution. Participant contributions into both the After Tax
Part and the Before Tax part are subject to certain Internal
Revenue Service (IRS) limitations.
The employer of each participant contributes an amount equal to
50% of the participant's eligible Basic Contributions, which is
allocated on the same percentage basis and to the same Funds as
the participant's Basic Contributions. All employer matching
contributions are deposited solely into the Before Tax part of
the Plan and vest immediately.
Employees retiring on or after July 1, 1993 are allowed to
directly transfer or rollover all or any part of their qualified
lump sum pension benefit from their respective Centerior pension
plan into the Rollover part of the Plan. The rollover can be
invested in the same investment Funds of the Plan, but the
accounts are segregated from existing After Tax part and Before
Tax Part accounts. The minimum rollover required is $3,500.
Participants, including those who have terminated employment but
maintained account balances, may transfer any or all of their
contributions and the earnings thereon and employer matching
contributions and the earnings thereon among the various Funds in
the same Part. Any integral increment of 1% may be transferred.
A participant's interests from a plan of a previous employer that
is qualified under Internal Revenue Code (IRC) Section 401(k) can
be transferred into the Plan.
NOTE 4 - INVESTMENTS
- - --------------------
Effective with the Merger, contributions into the FirstEnergy
Stock Fund and the earnings thereon are invested by the Trustee
in FirstEnergy common stock. At the direction of FirstEnergy,
the common stock is either purchased in the open market at
prevailing prices or purchased from FirstEnergy at the market
value on the date of the purchase. Prior to the Merger,
contributions into the Centerior Stock Fund and the earnings
thereon were invested by the Trustee in Centerior common stock,
which was purchased at the direction of Centerior on either the
open market or from Centerior. Pursuant to the Merger agreement,
each share of Centerior common stock (including the shares held
in the Centerior Stock Fund) was converted into 0.525 shares of
FirstEnergy common stock on the Merger date.
Contributions into the Equity Fund and the earnings thereon are
deposited by the Trustee in a diversified common stock fund.
These deposits are then invested by National City Bank primarily
in the common stocks of a large number of publicly owned
companies, excluding FirstEnergy.
Contributions into the Fixed Income Fund and the earnings thereon
are invested by the Trustee in Society's EB MaGIC Fund and in 5/3
Bank's GIC Fund in 1997 and 1996, and in interest-bearing
contracts with insurance companies prior to July 1997. Group
fixed-term contracts with insurance companies earned interest at
an annual rate of 7% in 1997 and a range of 7% to 8.65% in 1996.
The earned interest rates for the EB MaGIC Fund and 5/3 Bank's
GIC Fund vary as each fund's various investment contracts with
insurance companies expire and new ones are added. The EB MaGIC
Fund's average annual earned interest rate at December 31, 1997
and 1996 was 6.53% and 6.52%, respectively. The average annual
earned interest rate for 5/3 Bank's GIC Fund at December 31, 1997
and 1996 was 6.08% and 5.65%. By agreement between the parties,
the investment contract with the Life Insurance Company of
Georgia having a June 1999 maturity date was prematurely ended in
June 1997. The proceeds were invested in the EB MaGIC Fund.
Contributions into the Balanced Fund and the earnings thereon are
deposited by the Trustee in a diversified mutual fund with the
investment objectives of long-term growth of capital, reasonable
income and conservation of capital. Through February 1, 1997,
the Balanced Fund investment was in the Phoenix Balanced Fund.
The Dodge & Cox Balanced Fund replaced the Phoenix Balanced Fund
as the Balanced Fund's diversified mutual fund effective February
1, 1997.
Contributions into the Global Equity Fund and the earnings
thereon are deposited by the Trustee in a diversified mutual fund
with the investment objective of long-term growth of capital
through world-wide investments. The Global Equity Fund
investment is currently in the American Funds' New Perspective
Fund.
Contributions into the Growth Fund and earnings thereon are
deposited by the Trustee into the Van Kampen American Capital
Emerging Growth Fund, a diversified mutual fund with the
investment objective of long-term capital appreciation by
investing primarily in the common stocks of small and mid-sized
companies.
Contributions into the Aggressive Growth Fund and the earnings
thereon are deposited by the Trustee into the Stein Roe Capital
Opportunities Fund, a diversified mutual fund with the investment
objective of long-term capital appreciation by investing in
aggressive growth companies.
Investments that represent 5% or more of the Plan's net assets at
the end of the last two years were as follows:
December 31,
------------------------
1997 1996
FirstEnergy common stock,
1,828,315 shares and -0-,
respectively $ 53,021,135 $ 0
Centerior common stock, -0- and
3,911,387 shares, respectively 0 42,047,410
EB MaGIC Fund 72,019,901 62,429,631
Dodge & Cox Balanced Fund,
312,310 and -0- shares,
respectively 20,856,058 0
Phoenix Balanced Fund, -0- and
1,009,556 shares, respectively 0 16,041,842
American Funds' New Perspective
Fund, 1,801,712 and 1,763,337
shares, respectively 34,899,154 32,039,829
------------ ------------
Total $180,796,248 $152,558,712
============ ============
See Schedule I for a complete list of investments held at
December 31, 1997 for each of the seven Funds.
The Trustee can temporarily keep money in any of the Funds in
short-term investments or in cash to have cash available to meet
participants' distribution requests or until the Trustee invests
it.
See Schedule II for a summary of reportable (significant)
transactions for 1997.
NOTE 5 - WITHDRAWALS PAYABLE TO PARTICIPANTS
- - --------------------------------------------
Subject to certain limitations under the Plan, participants may
elect to withdraw their contributions and employer matching
contributions and any related gains and earnings on these
contributions.
Withdrawals payable to participants at the end of the last two
years were as follows:
December 31,
------------------------
1997 1996
---- ----
FirstEnergy Stock Fund $ 40,103 $ 0
Centerior Stock Fund 0 32,427
Equity Fund 60,759 75,055
Fixed Income Fund 224,619 173,333
Balanced Fund 28,534 4,186
Global Equity Fund 38,714 54,314
Growth Fund 446 0
Aggressive Growth Fund 0 0
-------- --------
Total $393,175 $339,315
======== ========
NOTE 6 - LOANS TO PARTICIPANTS
- - ------------------------------
Participants are eligible to apply for a loan to borrow from
their vested available investment accounts having a balance of at
least $2,000. To be eligible, participants must receive a
regular paycheck from which repayments can be withheld to repay
the borrowing and pay interest to their own accounts. Eligible
participants may borrow up to the lesser of 50% of their vested
account balances or $50,000. Loans from the Rollover Part are
not permitted. A participant may elect a repayment period of one
to 60 months. All loan repayments are made to the Fixed Income
Fund. A fixed rate of interest applies to all loans. The
interest rate is The Chase Manhattan Bank prime rate plus 1%.
NOTE 7 - TAX STATUS OF THE PLAN
- - -------------------------------
Centerior received a determination letter from the IRS dated
November 13, 1996 to the effect that the Plan is a qualified
defined contribution plan under Section 401 of the IRC and that
the Trust is exempt from income taxes under Section 501 thereof.
The effect of such qualification and exemption is that the
participating employees are not subject to federal income taxes
on employer contributions or any income accruing to their
accounts until distributions are made from the accounts. When a
distribution is made, the excess of the amount distributed over
the participating employee's own After Tax contributions is
taxable income to the employee. Distributions from both the
Before Tax Part and the rollover Part are subject to federal
income tax.
Since receiving the last determination letter, the Plan has been
amended to include the Growth and Aggressive Growth Funds.
However, the Plan's legal counsel believes that the Plan is
currently designed and being operated in compliance with the
applicable requirements of the IRC.
NOTE 8 - RECONCILIATION OF THE FINANCIAL STATEMENTS TO FORM 5500
- - ----------------------------------------------------------------
The following is a reconciliation of net assets available for
benefits according to the financial statements to Form 5500:
December 31,
------------------------------
1997 1996
---- ----
Net assets available for benefits
per the financial statements $316,320,186 $255,407,157
Amounts allocated to withdrawing
participants (393,175) (339,315)
------------ ------------
Net assets available for benefits
per Form 5500 $315,927,011 $255,067,842
============ ============
The following is a reconciliation of benefits paid to
participants according to the financial statements to Form 5500:
Year Ended
December 31,
1997
------------
Benefits paid to participants per the
financial statements $20,392,937
Add: Amounts allocated to withdrawing
participants at December 31, 1997 393,175
Less: amounts allocated to withdrawing
participants at December 31, 1996 339,315
-----------
Benefits paid to participants per Form 5500 $20,446,797
===========
Amounts allocated to withdrawing participants are recorded on
Form 5500 for benefit claims that have been processed and
approved for payment prior to December 31 but not yet paid as of
that date.
NOTE 9 - SUBSEQUENT EVENT
- - -------------------------
As a result of the merger with Ohio Edison Company 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
Plan will be merged into the new FirstEnergy Savings Plan
beginning January 1, 1999
<TABLE>
SCHEDULE I
CENTERIOR ENERGY CORPORATION
EMPLOYEE SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1997
<CAPTION>
Number
of Historical Market
Common Stock Shares Cost Value
- - ------------------------------------------------------------------
FIRSTENERGY STOCK FUND
- - ----------------------
<S> <C> <C> <C>
FirstEnergy 1,828,315 $50,043,655 $53,021,135
EQUITY
- - ------
Abbott Laboratories 18,000 757,260 1,179,000
Aluminum Company of
America 14,700 1,164,300 1,034,512
Allstate Corp 12,000 920,795 1,086,000
American International
Group Inc 11,400 273,646 1,239,750
Ameritech Corp 17,200 1,201,570 1,384,600
Automatic Data Processing
Inc 24,900 259,552 1,528,237
Baker Hughes Inc 37,000 1,390,904 1,614,125
BellSouth Corp 23,500 1,135,285 1,323,355
Boeing Co 29,000 1,709,866 1,419,202
Bristol-Myers Squibb Co 16,900 433,323 1,599,162
CVS Corporation 15,900 1,023,128 1,018,602
Caterpillar Inc 18,800 1,022,814 911,800
Centocor Inc 22,000 705,430 731,500
Cisco Systems Inc 18,450 321,553 1,028,588
Coca-Cola Co 14,000 794,535 933,632
Compaq Computer Corp 27,500 1,539,973 1,553,750
Comerica Inc 11,100 991,229 1,001,775
Costo Companies Inc 53,000 1,983,053 2,365,125
Dayton Hudson Corp 37,200 2,031,176 2,511,000
Deere & Co 26,500 1,470,968 1,485,375
Diebold Inc 26,400 1,130,659 1,336,500
Walt Disney Co 19,638 661,883 1,944,162
Du Pont E I De Nemours
& Company 15,000 997,463 900,945
Emerson Electric Co 30,800 990,039 1,738,290
Ericsson L M Tel Co ADR 42,900 1,859,565 1,600,728
Federated Department
Stores 19,800 947,925 852,647
Federal Home Loan Mortgage
Corp 22,700 950,000 951,993
Federal National Mortgage
Assoc 39,000 1,477,728 ,225,457
Gillette Co 12,900 816,695 1,295,650
Golden West Financial Corp 11,800 1,045,239 1,154,193
Halliburton Co 47,600 1,801,340 2,469,250
Healthsouth Corp 75,000 2,041,582 2,081,250
Hewlett Packard Co 24,500 1,399,345 1,528,188
Home Depot Inc 62,299 2,047,347 3,667,854
Honeywell Inc 12,000 761,114 822,000
Intel Corp 34,700 1,082,640 2,437,675
Johnson &
Johnson 6,700 315,134 441,362
Eli Lilly & Co 38,800 2,007,513 2,701,450
Lucent Technologies Inc 15,100 1,250,070 1,206,112
Merck & Co Inc 14,000 930,090 1,484,000
Microsoft Corp 26,700 1,297,754 3,450,975
Minnesota Mining & Mfg Co 8,500 320,833 697,536
Motorola Inc 14,000 1,035,965 800,632
Monsanto Co 41,400 1,820,641 1,738,800
Newell Co 25,500 1,053,487 1,083,750
Norwest Corp 36,000 1,056,893 1,395,000
Oracle Corp 45,450 1,246,088 1,014,126
Pepsico Inc 39,866 480,798 1,445,143
Pitney Bowes Inc 13,600 386,815 1,223,157
Praxair Inc Co 16,000 860,803 720,000
Procter & Gamble Co 15,800 660,282 261,045
Safeway Inc 27,400 1,481,175 1,733,050
Schering-Plough Corp 26,000 306,423 1,615,250
Schlumberger Ltd 45,200 1,807,529 3,638,600
Solutia Inc 8,280 170,219 220,977
State Street Corp 28,100 1,694,368 1,635,083
Sun Microsystems Inc 25,000 803,125 996,875
Tandy Corp 52,200 1,600,026 2,012,989
Texas Instruments Inc 20,400 903,875 918,000
Tidewater Inc 31,700 1,468,464 1,755,388
Time Warner Inc 42,700 2,297,029 2,647,400
Tricon Global Restaurants 4,906 48,619 142,583
Tyco International Ltd 50,000 2,051,158 2,253,150
United Health Care Corp 11,000 542,535 546,568
United Technologies Corp 10,900 790,986 793,662
Wal Mart Stores Inc 34,400 1,072,192 1,356,667
Walgreen Co 48,000 748,680 1,506,000
---------- ----------
73,650,493 98,391,202
---------- ----------
</TABLE>
<TABLE>
Schedule I (Continued)
CENTERIOR ENERGY CORPORATION
EMPLOYEE SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1997
<CAPTION>
Historical Market
Mutual Funds Cost Value
- - ----------------------------------- ------------ --------------
<S> <C> <C>
BALANCED FUND
- - -------------
Dodge & Cox Balanced Fund (312,310 shares) 19,578,565 20,856,058
GLOBAL EQUITY FUND
- - ------------------
American Funds' New Perspective Fund
(1,801,712 shares) 30,384,995 34,899,154
GROWTH FUND
- - -----------
Van Kampen American Capital Emerging
Growth Fund (290,323 shares) 10,753,735 10,945,161
AGGRESSIVE GROWTH FUND
- - ----------------------
Stein Roe Capital Opportunities Fund
(310,802 shares) 8,708,918 9,274,346
----------- ----------
69,426,213 75,974,719
----------- ----------
LOANS
- - -----
Loans Receivable from Participants 5,482,804 5,482,804
----------- ----------
Funds on Deposit with Insurance Companies
and Banks
- - -----------------------------------------
FIXED INCOME FUND
- - -----------------
Fifth Third Bank,
Guaranteed Insurance Contract Fund 6,415,853 6,415,853
EB MaGIC Fund 62,874,350 72,019,901
----------- ----------
69,290,203 78,435,754
----------- ----------
Total Assets Held for Investment
Purposes $267,893,368 311,305,614
============ ===========
</TABLE>
<TABLE>
SCHEDULE II
CENTERIOR ENERGY CORPORATION
EMPLOYEE SAVINGS PLAN
ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
INDIVIDUAL TRANSACTIONS AND ASSOCIATED TRANSACTIONS BY PERSON
FOR THE YEAR ENDED DECEMBER 31, 1997
<CAPTION>
Current Value
Party Involved/ Purchase Selling Cost of of Asset on Net Gain
Security Name Price Price Expenses Asset Transaction Date or Loss
- - --------------- ---------- --------- ---------- ---------- ---------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Phoenix Balanced Fund 0 16,212,397 0 15,435,289 16,212,397 777,108
EB MaGIC Fund 16,212,397 0 0 16,212,397 16,212,397 0
Dodge & Cox Balanced
Fund 16,045,012 0 0 16,045,012 16,045,012 0
EB MaGIC Fund 0 16,252,815 0 16,252,815 16,252,815 0
</TABLE>
<TABLE>
SCHEDULE II (Continued)
CENTERIOR ENERGY CORPORATION
EMPLOYEE SAVINGS PLAN
ITEM 27D PART 2 - SCHEDULE OF REPORTABLE TRANSACTIONS
CUMULATIVE TRANSACTIONS BY ISSUE
FOR THE YEAR ENDED DECEMBER 31, 1997
<CAPTION>
Disposed Acquired
------------------------------------ --------------------------
Gain or
Security Description Sales Proceeds Loss Purchases Cost
- - -------------------------- ----- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
Dodge & Cox Balanced Fund 80 $3,227,056 $173,368 146 $22,632,235
American Funds'
New Perspective Fund 120 7,096,221 543,773 123 7,863,975
Phoenix Balanced Fund 17 17,011,318 969,476 6 172,316
NCB Equity Fund 120 13,208,444 1,892,918 123 8,917,292
EB MaGIC Fund 137 17,227,151 1,076,690 116 22,632,651
Stein Roe
Capital Opportunities Fund 76 2,646,175 (40,711) 140 11,395,804
Van Kampen American Capital
Emerging Growth Fund 48 1,296,486 26,415 173 12,023,806
EB Money Market Fund 120 32,920,095 0 84 32,507,659
</TABLE
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the
incorporation of our report on the financial statements of the
Centerior Energy Corporation Employees Savings Plan dated June
29, 1998, included in this Form 11-K into FirstEnergy Corp.'s
filed Registration Statement, File No. 333-48651.
ARHTUR ANDERSEN LLP
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 Centerior
Energy Corporation Employee Savings Plan, has caused this annual report
to be signed on its behalf by the undersigned hereunto duly authorized.
CENTERIOR ENERGY CORPORATION
EMPLOYEE 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: Centerior Energy Corporation Employee 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 Centerior Energy Corporation
Employee 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,
FIRSTENERGY CORP.
By: /s/ N. C. Ashcom
----------------
N. C. Ashcom
Corporate Secretary
</TABLE>
