___________________________________________________________________
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 30, 1998.
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:
FIRSTENERGY CORP. 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
<PAGE>
Required Information
1. Financial statements with respect to the FirstEnergy Corp.
Savings Plan as of December 30, 1998 and December 31, 1997, 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.
<PAGE>
FIRSTENERGY CORP. SAVINGS PLAN
------------------------------
REPORT ON AUDITS OF FINANCIAL STATEMENTS
----------------------------------------
AND SUPPLEMENTAL SCHEDULES
--------------------------
AS OF DECEMBER 30, 1998 AND DECEMBER 31 1997
--------------------------------------------
AND FOR THE YEAR ENDED DECEMBER 30, 1998
----------------------------------------
<PAGE>
FIRSTENERGY CORP. 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 30, 1998 AND DECEMBER 31 1997 3-6
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS 7-8
FOR THE YEAR ENDED DECEMBER 30, 1998
NOTES TO FINANCIAL STATEMENTS 9-14
SUPPLEMENTAL SCHEDULES:
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF
DECEMBER 30, 1998 15
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR
ENDED DECEMBER 30, 1998 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.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Savings Plan Committee of the
FirstEnergy Corp. System Savings Plan
In our opinion, the accompanying statements of net assets available for
benefits and the related statements of changes in net assets available
for benefits present fairly, in all material respects, the net assets
available for benefits of the FirstEnergy Corp. Savings Plan (the
`Plan') at December 30, 1998 and December 31, 1997, and the changes in
net assets available for benefits for the year ended December 30, 1998
in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Plan's management;
our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards
which 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,
assessing the accounting principles used and significant estimates made
by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
the opinion expressed above.
Our audits were conducted 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 30, 1998, are presented for the
purpose 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 supplemental schedules are the responsibility of the Plan's
management. The supplemental schedules have been subjected to the
auditing procedures applied in the audits 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.
/s/ PricewaterhouseCoopers LLP
Cleveland, Ohio
June 25, 1999
- 2 -
<PAGE>
<TABLE>
FIRSTENERGY CORP. SAVINGS PLAN
------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
--------------------------------------------------
As of December 30, 1998
<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 $ 1,730,102 $ 0 $ 0 $ 15,664,936 $ 0 $ 0 $ 0
COMPANY COMMON STOCK 67,779,054 0 0 242,308,730 84,232,917 0 0
STABLE VALUE INVESTMENTS 0 134,227,777 0 0 0 0 0
DOMESTIC EQUITY STOCKS 0 0 121,238,767 0 0 0 0
INTERNATIONAL EQUITY STOCKS 0 0 0 0 0 0 0
SMALL CAP STOCKS 0 0 0 0 0 21,288,297 0
OTHER EQUITIIES 0 0 0 0 0 0 0
BALANCED FUND SECURITIES 0 0 0 0 0 0 0
PARTICIPANT LOANS 0 0 0 0 0 0 24,057,942
INTEREST & DIVIDENDS RECEIVABLE 10,559 577,852 0 71,995 0 0 0
EMPLOYER CONTRIBUTIONS RECEIVABLE 0 0 0 10,020,064 0 0 0
DIVIDENDS RECEIVABLE 848,989 0 0 0 0 0 0
----------- ------------ ------------ ------------ ------------ ----------- -----------
TOTAL ASSETS 70,368,704 134,805,629 121,238,767 268,065,725 84,232,917 21,288,297 24,057,942
LIABILITIES
- --------------------------------
ACCRUED INTRA-FUND TRANSFERS 131 62,593 (145,299) 11,405,535 (11,405,535) 51,541 (11,414)
INVESTMENT PURCHASES PAYABLE 0 0 68,603 0 0 30,571 36,807
LOANS PAYABLE 0 0 0 199,850,000 0 0 0
ACCRUED INTEREST PAYABLE 0 92,049 0 19,985,000 0 0 9
ACCRUED FEES 75 0 0 0 0 0 0
----------- ------------ ------------ ------------ ------------ ----------- -----------
TOTAL LIABILITIES 206 154,642 (76,696) 231,240,535 (11,405,535) 82,112 25,393
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $70,368,498 $134,650,987 $121,315,463 $ 36,825,190 $ 95,638,452 $21,206,185 $24,032,549
=========== ============ ============ ============ ============ =========== ===========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
- 3 -
<PAGE>
<TABLE>
FIRSTENERGY CORP. SAVINGS PLAN
------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
--------------------------------------------------
As of December 30, 1998
(Continued)
<CAPTION>
SELF MANAGED EURO-PACIFIC ARMADA LOAN PAYSOP
FUND FUND FUND FUND FUND TOTAL
------------ ------------ ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
- ----------------------------
CASH/CASH EQUIVALENTS $ 0 $ 0 $ 0 $ 0 $ 228,804 $ 17,623,842
COMPANY COMMON STOCK 0 0 0 0 3,734,168 398,054,869
STABLE VALUE INVESTMENTS 0 0 0 0 0 134,227,777
DOMESTIC EQUITY STOCKS 0 0 90,268,288 0 0 211,507,055
INTERNATIONAL EQUITY STOCKS 0 31,177,872 0 0 0 31,177,872
SMALL CAP STOCKS 0 0 0 0 0 21,288,297
OTHER EQUITIES 7,001,911 0 0 0 0 7,001,911
BALANCED FUND SECURITIES 0 0 0 0 0 24,057,942
PARTICIPANT LOANS 0 0 0 11,303,759 0 11,303,759
INTEREST & DIVIDENDS RECEIVABLE 0 0 0 4,290 1,004 665,700
EMPLOYER CONTRIBUTIONS RECEIVABLE 0 0 0 0 0 10,020,064
DIVIDENDS RECEIVABLE 0 0 0 0 0 848,989
---------- ----------- ----------- ----------- ---------- ------------
TOTAL ASSETS 7,001,911 31,177,872 90,268,288 11,308,049 3,963,976 867,778,077
LIABILITIES
- ---------------------------------
ACCRUED INTRA-FUND TRANSFERS 0 23,113 14,854 4,481 0 0
INVESTMENT PURCHASES PAYABLE 0 12,202 4,455 0 55,899 208,537
LOANS PAYABLE 0 0 0 0 0 199,850,000
ACCRUED INTEREST PAYABLE 0 0 0 0 0 20,077,049
ACCRUED FEES 0 0 0 0 0 75
---------- ----------- ----------- ----------- ---------- ------------
TOTAL LIABILITIES 0 35,315 19,309 4,481 55,899 220,135,661
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $7,001,911 $31,142,557 $90,248,979 $11,303,568 $3,908,077 $647,642,416
========== =========== =========== =========== ========== ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
- 4 -
<PAGE>
<TABLE>
FIRSTENERGY CORP. 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>
- 5 -
<PAGE>
<TABLE>
FIRSTENERGY CORP. SAVINGS PLAN
------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
-------------------------------------------------------------
As of December 31, 1997
(Continued)
<CAPTION>
SELF MANAGED EURO-PACIFIC 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>
- 6 -
<PAGE>
<TABLE>
FIRSTENERGY CORP. SAVINGS PLAN
------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
-------------------------------------------------------------
For the Year Ended December 30, 1998
<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 $ 1,268,625 $ 5,796,356 $ 6,777,438 $ 0 $ 0 $ 1,900,437 $ 1,320,819
EMPLOYER CONTRIBUTIONS 2,963 6,136 0 10,020,064 0 3,529 3,607
INTEREST INCOME & DIVIDENDS 3,393,789 6,156,491 0 11,721,466 4,015,567 67,157 31,569
ESOP INTEREST 0 0 0 (19,985,000) 0 0 0
FEES (148,537) (210,383) (200,634) 0 7,030 (53,341) (55,577)
----------- ----------- ------------ ----------- ----------- ----------- -----------
EXCESS (DEFICIENCY) OF NET
PROCEEDS FROM SALES OF
ASSETS OVER MARKET VALUE AT
BEGINNING OF YEAR 414,639 0 1,084,559 0 276,076 (617,538) 401
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION)
ON SECURITIES 4,655,262 0 25,565,114 19,583,675 13,198,338 (2,100,309) 1,609,397
DISTRIBUTIONS TO PARTICIPANTS (4,118,122) (11,735,280) (5,762,301) 0 (3,549,161) (861,815) (896,363)
NET INTRA-FUND PLAN TRANSFERS (61,880) 1,995,332 3,482,655 (7,389,968) 7,389,968 (2,732,682) 461,512
TRANSFERS FROM CENTERIOR 32,707,625 62,465,770 0 0 0 17,079,513 16,889,986
----------- ------------ ------------ ------------ ----------- ----------- -----------
NET CHANGE IN PLAN ASSETS 38,114,364 64,474,422 30,946,831 13,950,237 21,337,818 12,684,951 19,365,351
NET ASSETS AVAILABLE FOR PLAN
BENEFITS - BEGINNING OF YEAR 32,254,134 70,176,565 90,368,632 22,874,953 74,300,634 8,521,234 4,667,198
----------- ------------ ------------ ------------ ----------- ----------- -----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS - END OF YEAR $70,368,498 $134,650,987 $121,315,463 $ 36,825,190 $95,638,452 $21,206,185 $24,032,549
=========== ============ ============ ============ =========== =========== ===========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
- 7 -
<PAGE>
<TABLE>
FIRSTENERGY CORP. SAVINGS PLAN
------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
-------------------------------------------------------------
For the Year Ended December 30, 1998
(Continued)
<CAPTION>
SELF MANAGED EURO-PACIFIC ARMADA LOAN PAYSOP
FUND FUND FUND FUND FUND TOTAL
------------ ------------ ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
EMPLOYEE CONTRIBUTIONS $ 0 $ 1,656,453 $ 1,390,447 $ 0 $ 0 $ 20,110,575
EMPLOYER CONTRIBUTIONS 0 5,360 122,973 0 0 10,164,632
INTEREST INCOME & DIVIDENDS 1,126,954 1,257,246 3,571,192 816,893 190,169 32,348,493
ESOP INTEREST 0 0 0 0 0 (19,985,000)
FEES 0 (16,384) (6,214) 0 0 (684,040)
---------- ----------- ----------- ----------- ---------- ------------
EXCESS (DEFICIENCY) OF NET
PROCEEDS FROM ASSETS OVER
MARKET VALUE SALES AT
BEGINNING OF YEAR 0 (219,872) (281,932) 0 11,991 668,324
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION)
ON SECURITIES 0 (96,942) 5,806,680 0 376,073 68,597,288
DISTRIBUTIONS TO PARTICIPANTS 0 (972,345) (1,990,658) (373,517) (559,170) (30,818,732)
NET INTRA-FUND TRANSFERS 2,461,738 (3,387,561) (2,941,020) 721,906 0 0
TRANSFERS FROM CENTERIOR 0 25,591,095 84,577,511 3,770,552 0 243,082,052
---------- ----------- ----------- ----------- ---------- ------------
NET CHANGE IN PLAN ASSETS 3,588,692 23,817,050 90,248,979 4,935,834 19,063 323,483,592
NET ASSETS AVAILABLE FOR PLAN
BENEFITS - BEGINNING OF YEAR 3,413,219 7,325,507 0 6,367,734 3,889,014 324,158,824
---------- ----------- ----------- ----------- ---------- ------------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS - END OF YEAR $7,001,911 $31,142,557 $90,248,979 $11,303,568 $3,908,077 $647,642,416
========== =========== =========== =========== ========== ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
- 8 -
<PAGE>
FIRSTENERGY CORP. SAVINGS PLAN
------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
December 30, 1998 and December 31, 1997
---------------------------------------
1. Description of the Plan
-----------------------
The FirstEnergy Corp. Savings Plan (the "Plan") provides eligible
employees of FirstEnergy Corp. ("FE") and its subsidiaries, a mechanism
through which they can save and invest part of their income on a tax
deferred basis at regular intervals. Additionally, FE 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.
Effective July 31, 1998, the FirstEnergy Corp. Savings Plan Committee
approved a change in the name of the Plan from Ohio Edison System Savings
Plan to FirstEnergy Corp. Savings Plan. Additionally, the Plan changed
it's year-end from December 31 to December 30. This change did not have a
significant impact to the Plan. 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 FirstEnergy Corp. employee is eligible to become a participant
in the Plan, herein referred to as "employee" or "Member", immediately at
commencement of employment. Non-represented employees of Cleveland
Electric Illuminating, Toledo Edison and former employees of Centerior
were converted from The Centerior Energy Corporation Employee Savings Plan
to the FirstEnergy Corp. Savings Plan effective 7/1/98. This merger
increased Net Assets Available for Plan Benefits by $238,925,159.
Represented employees of these Companies were converted to the Plan on
12/31/98. See Note 8 for details.
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.
- 9 -
<PAGE>
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 30, 1998 the outstanding ESOP Loan balance was
$199,850,000.
Requirements for maturing long-term debt are as follows:
1999 $ 17,100,000
2000 14,500,000
2001 18,700,000
2002 23,700,000
2003 29,300,000
2004 and thereafter 96,550,000
------------
$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 1998 and 1997, respectively, 277,103 and 295,247 ESOP
shares were allocated to Members. An additional allocation of 123,899
and 139,159 ESOP shares in 1998 and 1997, respectively, were made
relative to reinvestments of dividends on the ESOP shares. These shares
were subsequently released from the ESOP Unallocated Fund in December
1998 and January 1998 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. In 1998, a
principal payment of $5,700,000 was also made leading to an additional
release of shares of 131,832.
As of December 30, 1998 and December 31, 1997, there were
7,513,449 and 7,986,189, shares respectively, held in the ESOP
Unallocated Fund at market values of $242,308,730 and $231,599,481,
respectively, and 2,611,873 and 2,256,372 shares, respectively, held in
the ESOP Allocated Fund at market values of $84,232,917 and
$65,434,797. The market value of the ESOP common stock is measured by
the quoted market price.
- 10 -
<PAGE>
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.
- 11 -
<PAGE>
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 1998 employees could invest between 1% and 16% 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 $10,000 for 1998 and $9,500 for 1997.
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 , H or I (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 30, 1998, the Plan has received applications for
withdrawals in the amount of $34,510 which were not paid at year-end.
Pursuant to 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 30, 1998:
- 12 -
<PAGE>
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 6.37% and 6.55% for the fiscal years 1998 and 1997,
respectively. The crediting interest rate as of December 30, 1998 and
December 31, 1997 was 5.91% and 6.53%, 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.
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 Growth 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 - American EuroPacific Fund: This Fund is an actively
----------------------------------
managed portfolio of foreign common stocks managed by Capital Research
& Management Co. The objective of the fund is the growth of capital
through appreciation. The market value of the Fund is measured at the
market value per share determined by the investment manager.
Fund H - Loan Fund: The Plan allows participants to borrow from
------------------
their before-tax, after-tax and rollover 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.
Fund I - Armada Equity Growth Fund: This is an actively managed
----------------------------------
Fund specializing in large capitalization growth-oriented stock issues
managed by National City Bank. The objective of the Fund is the growth
of capital through appreciation.
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
- 13 -
<PAGE>
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 was amended and restated as the FirstEnergy Corp. Savings
Plan effective 7/1/98. A determination letter from the Internal Revenue
Service has not yet been applied for.
Management believes 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: On December 31, 1998 union participants in the Centerior
------
Energy Corporation Employee Savings Plan were merged into the
FirstEnergy Corp. Savings Plan. Assets with a value of $341,907,240
were transferred to the Plan effective on that day.
- 14 -
<PAGE>
<TABLE>
FIRSTENERGY CORP. SAVINGS PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
As of December 30, 1998
<CAPTION>
Description Current
Identity of Issue Maturity Cost Value
- ------------------------ ----------------- ------------ ------------
<S> <S> <C> <C>
State Street STIF Fund Money Market Fund $ 17,623,842 $ 17,623,842
Total Cash & Cash
Equivalents
ESOP Unallocated Fund OEC Common Stock $141,044,852 $242,308,730
ESOP Allocated Fund OEC Common Stock $ 49,491,505 $ 84,232,917
PAYSOP Fund OEC Common Stock $ 1,936,155 $ 3,734,168
Company Stock Fund OEC Common Stock $ 51,730,554 $ 67,779,054
International Index Fund EAFE Index Stocks $ 31,274,820 $ 31,177,872
(Common/Collective
Trust)
S&P 500 Index Fund S&P 500 Stocks $ 52,373,638 $121,238,767
(Common/Collective
Trust)
Small Cap Fund Small Cap Domestic
Stocks $ 21,735,361 $ 21,288,295
(Common/Collective
Trust)
Balanced Fund Equities,
Fixed Income $ 22,433,861 $ 24,057,942
Armada Fund Equities $ 84,461,982 $ 90,268,288
Self Managed Fund Equities $ 7,001,911 $ 7,001,911
Capital Preservation Fund
State Street Bank Stable
Income Fund GICs, CMOs $134,227,777 $134,227,777
</TABLE>
- 15 -
<PAGE>
<TABLE>
FIRSTENERGY CORP. SAVINGS PLAN
Item 27d - Schedule of Reportable Transactions
For the Year Ended December 30, 1998
<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 93 $13,250,673 154 $12,478,289 $12,478,289 $ -
FirstEnergy Corp. 207 $71,211,750 112 $33,859,148 $33,156,442 $ 702,706
S&P 500 Index 127 $14,064,894 122 $ 9,918,135 $ 8,833,576 $1,084,559
EuroPacific Fund 102 $36,450,368 148 $ 4,974,769 $ 5,194,641 $ (219,872)
Balanced Fund 128 $20,095,932 102 $ 2,417,868 $ 2,417,467 $ 401
Small Cap Fund 111 $20,823,398 133 $ 5,344,389 $ 5,961,927 $ (617,538)
Capital Preservation 137 $67,199,508 163 $17,720,585 $17,720,585 $ -
EB Magic Fund 1 $62,465,770 33 $48,283,994 $48,283,994 $ -
Armada Fund 46 $91,314,046 68 $ 6,570,511 $ 6,852,443 $ (281,932)
</TABLE>
- 16 -
<PAGE>
Exhibit A
Consent of Independent Accountants
We consent to the incorporation by reference in the Company's
previously filed Registration Statement (File No. 333-21011) of our
report dated June 26, 1999, on the audits of the FirstEnergy Corp.
Savings Plan as of December 30, 1998 and December 31, 1997 and for the
year ended December 30, 1998 which report is included in this Annual
Report on Form 11-K of FirstEnergy Corp.
/s/ PricewaterhouseCoopers LLP
Cleveland, Ohio
June 25, 1999
- 17 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Savings Plan Committee, the administrator of the FirstEnergy
Corp. Savings Plan, has duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
FIRSTENERGY CORP.
SAVINGS PLAN
June 25, 1999
- -------------
Date
By: /s/ James A. Bowers
-------------------
James A. Bowers
Chairman
Savings Plan Committee
-18 -
<PAGE>
June 25, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: FirstEnergy Corp. 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 FirstEnergy Corp. 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
Secretary
- 19 -
