ML20084C095
| ML20084C095 | |
| Person / Time | |
|---|---|
| Site: | Davis Besse  |
| Issue date: | 12/31/1983 |
| From: | Johnson W, Williamson J TOLEDO EDISON CO. |
| To: | |
| Shared Package | |
| ML20084C094 | List: |
| References | |
| NUDOCS 8404270076 | |
| Download: ML20084C095 (22) | |
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HIGHLIGHTS 1983 losa change Earnings Per Common Share $3.50 $3.18 + 32c Dividends Declared Per Common Share 2.46 2.38 + 8e (current quarterly rate is 03c - equivalent to $2.52 per year) Return on Average Common Equity 14.57 13.37 Financial Results (millions of dollars) Income from operations 63 57 + 119 Allowance for equity funds used during construction 65 49 + 337 Net income. 128 106 +21% Operating Results (millions of kilowatt-hours) Sales Retail customers 6811 6523 + 49 Wholesale customers 320 395 - 10% System Performance Nuclear generation . 2383 1569 + 52% Fossil generation . 4683 5306 - 12% Employees 2405 2458 - 2% Earnings per Common Share Dividends Declared per Common Share Dollars / Share Dollars / Share 3.75 , 2.60 ; _s.
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'70 '8 i '83 '73 '78 '83 ABOUT TOLEDO EDISON The Toledo Edison Company is r. public utility estimated population of 750,000, the company also whose primary activities are the generation, provides relatively small amounts of natural gas transmission, distribution and sale of electric and steam heating services. Toledo Edison is energy in Toledo and northwestern Ohio. Servic- owned by over 100,000 shareholders in all 50 ing approximately 2,500 square miles with an states and worldwide.
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TO OUR SHAREOWNERS: K J
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Jolm P Willuunson Wendell A. Jolmson It is a pleasure to report a sig.
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nificant earnings gtdn, especially " ". " """ """ -".# in the second half of 1983. Shareowners and customers that as further evidence of a direct fuel adjustment period. This camo e alike are benefiting from the correlation between industrial elec- at a time when it could be most . results of our successful, on-going tric consumption and the economic beneficial- right beforo the winter cost reduction and control efforts. health of the community. heating season. ?- And an upturn occurred in kilo-
'Ibtal 1983 kilowatt-hour sales Of particular significance in watt-hour sales due to the improv- rose 3 percent. This was the first this commission decision was the ing economy and a return to more overall cales increase in the last partial allowance of carrying normal weather patterns. four years. Sales to municipal cus- charges on Construction Work in The price per kilowatt-hour of tomers decreased as a result of Pmgress (CWIP) for the Perry No.1 electricity to our customers was their increased purchases of power generating addition project as part reduced significantly. Our power from other government entities. of the basic price increase. The first generation facthties, particularly Residential and commercial Parry Unit is now over 90 percent : ..
nuclear, set new records for pro- kilowatt hour sales showed only a complete. Work on a second unit, duction and efficiency. slight annual increase. The first about 40 percent complete, is being The dividend rate was in. half of the year saw exceptionally minimized pending completion of - creased two cents, to 63 cents per mild temperatures and low saler, the first unit and future evaluation common share, by your board of However, the weather returned to of capacity timing needs. Your directors in December.This was the more normal patterns in the sum. company has a 20 percent owner- : 21st increase declared in thelast 23 mer and fall, with December tem. ship share in the two units, which years. The new rate is equivalent to Peratures being very cold. are being built by Cleveland Elec-
$2.52 cn an annualized basis.1983 e Hluminaung Company on We decreased our prices to " " "I " * "
also was the 62nd consecutivo year customers during the year. Most of of dividend payments. n Omup (CAA % this is attributable to a 50 percent also have about a 20 percent owner-Earnings rose to $3,50 per decrease in the " fuel charge,, por- ship sharc in th3 Beaver Valley Unit common share from the $3.18 of the tion of our customers bills in August. This reflected our lower No. 2, now about 80 percent com-previous ycar, a lo pe rcent i ncrease. plete and under the construction ' ' Irading the way to a o percent fuel costs over the prior six month supervision of Duquesne Light increase in industrial kilowatt. Period. It resulted primarily from Company, hour sales were the substantial the low-cost generation of the Davis-Besse Nuclear Station, along Our Davis Besse station set a gains registered by automotive-with continued efficient produc. new record for annual production related customers. Their power use in 1982. The nuclear unit pmvided was up 18 percent for the year- tion fmm our coal-fired Bay Shore Station. over 5.2 billion kilowatt hours, a The improving economy also six-year high. In 1983 the unit means employment in our eight- Also in August, the Public rated in the upper one-third for y county servicc area has been on the Utilities Commission of Ohio production of all of the nuclear rise. Dy late 1983, total employment approved a partially offsetting units in the country. Of the com-increase in our base prices. The was at its highest level in four pany's total electricity output,31 years. commission approved a 5 percent, percent was from the nuclear sta- : Iocally, two major automotive, or $23 million, annual increase in tion. With the consequent lowering related employers are operating at retail electric rates. of costs and prices, it is not difficult pre-recessionary levels. They've The net effect of the two deci- to point out to customers the advan-invested in retooling their existing sions was that our average total tages of nuclear generation. We northwest Ohio plants and have price per kilowatt hour decreased look forward to continued efficient called back laid off workers. We see about to percent for the six month service in 1984. 1
Coal fired units provided directors The boant also elected generatmg usats under construe-about on percent of cornpany !.yman C. l'htlhps vice president. ' tion. aint won' titreeted to charge generated Ix)wer in 1983, a depend- corp > rate plantung atul mimtnts- ofi the investinent only ag:unnt ablo complement to our nuclear tration. lie luts the mhhul sosixm- Mlutreowners the truultant we ite-generating source. wlbtitties of tulantnistration of of f couhi exceed the balance in its pet sonin't. procurement, inutus- 10artungs iteinvented Account tuul We'll contmue fine tuning the procedures and equipment at our trial neeurity, tran8portation, probably result in a ennnequent buthhng and of fice m'rvicew, aint mispension of divulemi paymentM generating stations to keep tlwir busumss unalysis atul planta:Lg an F;ven a forced suspension in con-performanco at peak efficiency. we!! as corporati planning strut tion ot a unit could ersult tu a Our coal fited uruts, in particular, nuluction in the accrual 10. Allow-tutvo been the recipients of nuiny activities. F' rank W Kenth. vice presutent, ance for F'usuis Used thuing Con-anodtficattons in recent years, most struction ciedits aint a possiblo of which are designed to mininaze adininist ratton. r etired af ter :10 incritorious years w tth the s eduction or terinination of divi-any harinf ul environmental dend guayinents F:ither of these impact. cornpany 19H3 was a gratifying year, events roubt, in turn, prechule a improving air quality in the , coinpally lioin Nelhing additlorial reason we ha"e already nuule sub. tomer prices were down. And wo equity and debt secue stien Th t m. stantial environ mental equipment continued monitormg asui evaluat- Hern, could result in a coinpany investments at our Acme and llay ing the CApCO generating unit being usuible to obtain futuin Nuff t-Shore Stationc in 'Ibledo. Wo Imvo 'ets utill unider conNtruction. also changed to higher-cost, low H!uucowm'rn can be assun d that struction contu of other unttn, sulfur coal sources for our boilers. tho same scrut my atul t hought t hat ""I"un tlm company was ablo to Your matutgement team believ"" t imo our pst yem's smwm obtain the nerensary finanetng by the company probably should be other meann Thereforo,indittetann minimally affected atul, in fact, wdl W whed to all of om fdme aint regulatorn need to ho smuto efforts will be less af fected than anont very aware of the herloun conme-other utilitten in this part of the llut wo entered 198 4 v ith what enwn of my actions to "piutect country by proposed acht rain could best be termed Cautious opfl. cuggm y9.. g , w u gd aggcct utig, legislation mism. For even the most prudent ity construction amt f thaticing decisions and the highest unality programn ami, ultitantely, ado-Cost control programs work are no guaranteo against p,y agg g,1bNhty of cuMomer lowered costs in 10H3. For in. mlversity. tu the last few months g pywg, 9 ,g 9 ggg stance, our operating expensen for we havo mvn how capricious uno of the year showed only a slight regulatory standarda can make a W" at '!bledo 10dinton are not increano and maintenance mockery of the carefully balanced wavering in any of our ronvictionn relationship between utilities, llut an one of the mont heavily expensm actually decreased by to percent. We achieved thin by caro- shareownern and customern. regulated of American nulustrien, fully evaluating even the most nu o our Mo iN hoyomt our Providing future capacity *"" " " " ** " *' "
- mutino pn>jects for ways to reduce involves risks, particularly finan- b can only ank ex pensen' tious optiminm. %o cial risks these dayn New capacity that authorit ten carefully weigh all Cost control continuen to be additions have becomo needlennly g, 79,etunntonn of their actionn truly an all around effort. All of expensive. The regulatory pnrena W Um yem smd, v ddly wnh our employeen deserve a great deal han created many uncertaintlen, respect to utilitten of credit for making the cost- driven up countruction conta and reduction pmgram work. Partially contributed to lowered bond rat-thmugh their hard work naut sac- ingn niul higher firmncing conta Cordially, rifices, including wago invas, wo Yet new capacity in vital for new ,
were able to experience an jobs and businonnen Sinco thin f improved financia' condition com- capacity benefitn nucloty an a h (A4w, - pared to the previous year. whole, it stands to reason t hat elec- / tric customern, who benefit from f Management was strength. ,lohn P Wdhamnon ened and re aligned in 10H3. the power supply, ntumM nhare tho Donald O. Nicholson was elected rink. Ilut there are thono who riuo m m cu.1 t m e.. < m .4 nenior vice president, finance. Ile bouevo that tho investment rink continues to direct the extennivo shoukt fallonly on tho nhouhlern of financing of our construction pim utility "companlen" and their gram and han the additional responsibilitics fer accounting arut nharenwnorn Thin in patently unfair and a n'al throa* to our ghg f Wd treasury activitien. I aul M. Smart nation'a ability to power its joined the company as senior vico economic future. president, with primo respimnibal- l'or examplo, if a regulated ity for corporato development. Ilo eompany nuch an ourn woro l '"" k' d '""i ' 'd "M * * " H " ' waa recently elected to tho board of required to cancol any of its 2
HOAIID OF DillECTORS INSI'ECTS GEN Ell ATINO l'lu).IECT j N' ,'
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ECONOMIC ACTIVITY ON THE UPSWING
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s Northwest Ohio has been experieneing Toledo's largest employer, American Motors-Jeep renew e4 bueiness investm ent. Construction activity (below right), reinvested substantially in production (below left) in downtown Toledo will letd to new office facilities and recently returned to full employment for spaca anct hotel and conver tion facilit!ea. It will also the first time in four years. bring added tax revenue a:1d jobs. Portside Market-plact (top), along the Mau. nee River, is scheduled to c pen in May 1984. Its many restaurants and shops p -
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{ Financial Analysis , tric utilitie 41es of power under these contracts Results of Operations declined in 1983 because many neighboring utilities - -- had more of their own low-cost generation available. Earnings per common share were $3.50 in 1983,10 percent higher than last year. The result- Operation and maintenance expenses were ing return on average shareowner's investment of 14.5 reduced reflecting an intense cost reduction pro-percent is the highest return achieved since 1975, gram during 1983. A well planned and efficiently executed maintenance schedule helped to minimize
'Ibtal revenues increased in 1983 due to higher the costs associated with the Davis-Besse Nuclear kilowatt-hour sales to our retail electric customers we a n m mHng and mahnance stage, and the full-year effect of our June 1982 price which started in late July 1983. The outage schedule increase. Sales to electric wholesale customers included inspection and testing of various compo-declined m 1983 as our municipal customers nents, routine major maintenance and government purchased a portion of their electric needs fmm required changes. The station returned to service in other suppliers. early October.
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The Public Utilities Commission of Ohio Depreciation expense increased, due mainly to granted us an annual increase of $23 million in the increased production from the Davis-Besse unit our retail electric rates in August 1983. Appmxi- and the resultant unit-of-production depreciation mately $12 million of the rate increase was due to the Provision. An increase in depreciable plant assets inclusion of $63 million of Construction Work In ascn u umast Pmgress (CWIP) in our rate base. The CWIP included " in rate base was primarily due to the Perry Nuclear State and local taxes increased due to a higher Unit. In addition, the PUCO allowed us to continue mPway sw Mse e rate m immM rew to amortize over ten years our share of the costs of nues and to higher property taxes resulting from the four nuclear generating units cancelled by the increases in plant assets. In May 1983, the Ohio . Central Area Power Coordination Group (CAPCO)in Pubhc utility tax was temporarily mereased from 80 (sw Note 6). 4.75 percent to 5.28 percent. The effects of this tem-porary increase expire in April 1984. We are barred We requested a 50 percent reduction in the 8 *** "E **** ** "# fuel component of our electric rates and received asWmus. g medme mst b us is $2.5 mWm, of ,: PUCO approvalin August 1983. This reduction was which $1.7 million was charged to expense m 1983. attributed largely to the good operating perfor- The increase in federal income taxes resulted from mance of our Davis-Besse Nuclear Unit combined higher taxable earnings. with continued efficient production fmm our coal-fired Bay Shore Station. The net result of this, com- Allowance for Debt and Eqaity Funds Used Dur-bmed with the rate increase described above, was a ing Construction (collectively known as AFUDC) reduction of our rates by approximately 10 percent. increased substantially due to a higher CWIP base = The next revision of the fuel component will be in and higher average AFUDC rates. Through AFUDC, February 1984. we capitalized a substantial amount of the financing costs associated with our continuing construction We filed a price increase request in November Pmgram, including a return on equity funds used. 1983 with the PUCO for a $61 million increase in retail electric rates. Continuing high financing costs Iong-term financings in 1983 resulted in associated with our construction program make increased interest and preferred stock dividend pay- 6 these added revenues necessary. The PUCO will ments, as well as more common shares outstanding. pmbably rui? on this matter m the summer of 1984. These financings, which were necessary to fund our construction program, also affected our earnings.
'Ibtal kilowatt-hou?e sales increased by 3.1 per-cent over 1982. Industrial sales showed a healthy 76.5 percent of 1983 common stock dividends increase indicating that our service area is recover- are not taxable as current income for federal mcome '
ing from the recession. Leading the way in the tax purposes and will be considered a return of mdustrial category were increases in sales to motor g~ vehicle manufacturers, petroleum refineries and foundries. The increase in industrial sales was due Note 11 explains the effect of inflation on our to a surge in manufacturing output. Favorable Perations. weather conditions also contributed to the increase. Liquidity and Capital Resources Fuel and net purchased power decreased in 1983. Greater use of low-cost nuclear fuel resulted in We are engaged in a major nuclear construction a decrease in fuel expense. This wu partially offset program that has been, and will continue to be, mod-by a decline in short-term power sales to other elec- ified as necessary for changing economic conditions. 7
Construction expenditures totaled $294 million for industry will pr*ubablyincrease our external financ-1983. Most of this was due to the continuing construc- mg costs and may result in increased levels of short-tion on three CAPCO nuclear generating units: Perry term debt. A reversal of our 1981 extraordinary gain l No.1, Perry No. 2, and Beaver Valley No. 2. (See Note 2 (see Note 1) should not affect our ability to issue for additional discussion regarding Perry No. 2.) first mortgage bonds. Ilowever, this charge could ' These tr uts are currently planned to be in commercial reduce the amotmt of preferred stock issuable dur-service between 1985 and 1988. Ilowever, an on-going ing the subsequent twelve month period. review of the construction schedule of Perry No. 2 continues by the members of the CAPCO group. Our The amount of cash that is provided from inter-ownership share in each of these units is just under nal operations depends primarily upon the level of 20 percent (see Note 5). electricity sales, the timing and amount of rate increases and our ability to reduce or contain cash expenses. Although our net income has increased in Public and private security markets continue to 1983, a substantial portion of that increase is be a major source of our financing. Iong-term exter- attributable to AFUDC, a non-cash income credit. We nal financings pmvided $231 million in 1983. Of expect this condition to continue until the generat-this, we used about $161 million to fund the con- ing units tmder construction are completed and struction pmgram, $43 million to pay off the short- included in our rate base. term debt that existed at the start of 1983, about $14 million to invest in short-term investments at year end and the balance to pay off maturing long-term Our 1984 construction expenditures are obligations. estimated to be $328 million. Most of this will be invested in the three CAPCO tmits discussed above. Funding of our construction pmgram in the Net pmceeds from long-term debt, preferred and future is dependent on obtaining external financing common stock issues are expected to pmvide about at reasonable terms and the amount of cash provided $211 million in external financing for the construc-from internal operations. Our ability to obtain exter- tion program. In addition, we will need $21 million nal financing and the cost of such funds depends for long-term debt maturities and preferred stock upon financial market conditions, earnings suffi- sinking fund requirements in 1984. cient to maintain debt and preferred stock coverage ratios, and changes in our construction program In 1984, nuclear fuel acquisition and related and credit ratings, among other factors. Rating costs will require an estimated $31 million. This esti-agencies lowered our security ratings in 1983, mak- mate excludes financing costs. Nuclear fuel financ-ing the cost of raising new capital more expensive. ing arrangements are in place covering these Recent adverse developments in the nuclear power expenditures (see Note 8). AUDITORS' REPORT
'Ib The Shareowners and Board of Directors of The 'Ibledo Edison Company We have examined the balance sheets and state- In our opinion, subject to the effect on the finan-ments of capitalization of The 'Ibledo Edison Company cial statements of such adjustments, if any, as might (an Ohio corporation) as of December 31,1983 and have been required had the outcome of the uncer-1982, and the related statements of results of opera- . tainty discussed in the preceding paragraph been tions, earnings reinvested and source of funds known, the financial statements referred to above pre-invested in plant and facilities for each of the three _ sent fairly the financial position of The 'Ibledo Edison years in the period ended December 31,1983. Our Company as of December 31,1983 and 1982, and the examinations were made in accordance with generally results of its operations and the source of funds accepted auditing standards and, accordingly, invested in plant and facilities for each of the three included such tests of the accounting records and years in the period ended December 31,1983, all in such other auditing pmcedures as we considered nec- conformity with generally accepted accounting prin-essary in the circumstances. ciples applied on a consistent basis.
As discussed further in Note 1, the PUCO has ordered that the extraordinary gain on an exchange of common stock for bonds recognized in 1981 be reversed and amortized over twenty years. The Com- Arthur Andersen & Co. pany has appealed this decision and cannot predict 'lbledo, Ohio, the outcome of this matter, January 30,1984. 8
Rzulto cf Oparatirno For the years ended December 31 (thousands of dollars) 1983 1982 1981 REVENUES AND OTRER INCOME Electricity sales to retail customers 478 547 452 687 413 436 Electricity sales to wholesale customers 16 824 20 508 21 417 Gas and steam heating sales 9 245 8 530 7 431 Other income . 1617 1 017 8 852 506 233 482 742 451 136 EXPENSES Fuel and net purchased power 125 975 127 658 122 442 Operating and administrative 77 632 75 834 63 976 Maintenance of equipment and facilities 32 734 38 839 31 908 Depreciation and amortization . . 51 138 43 838 43 427 State and local taxes 45 210 41 260 36 699 Debt interest 108 612 94 713 86 310 Allowance for debt funds used during construction . (30 443) (22 505) (15 491) 410 858 399 637 369 271 Iniome Before Federal Income Taxes . . 95 375 83 105 81 865 Federalincome taxes . . . . 32 616 26 277 31 226 In:ome From Operations . . . 62 759 56 828 50 639 Allowance for equity funds used during construction . 65 585 48 706 32 498 N;t Income 128 344 105 534
. . . . 83 137 Preferred stock dividends . 30 129 26 221 23 542 Earnings Before Extraordinary Item . 98 215 79 313 59 595 Extraordinary gain (exchange of common stock for bonds) - -
10 807 EARNINGS ON COMMON STOCK . . . . 98 215 79 313 70 402 Average Number of Common Shares Outstanding (thousands) 28 040 24 917 21 507 EARNINGS PER COMMON SHARE Before extraordinary gain . . . . $3.50 $3.18 $2.77 After extraordinary gain . . . $3.50 $3.18 $3.27 RETURN ON AVERAGE COMMON EQUITY (before extraordinary gain) . 14.5% _ 13.3% 11.6% The notes on pages 13 tPmgh 18 are an integral part of this statement. 9
Balann Shoct December 31, (thousands of dollars) 1983 1982 Property, Plant and Equipment Plant in service 1 358 467 1 306 677 Iess accumulated pmvision for depreciation 324 826 285 453 1 033 641 1 021 224 Construction work in pmgress 1 118 802 878 535 Nuclear fuel in service, at amortized cost 22 904 18 390 2 175 347 1 918 149 Current Assets Cash and temporary cash investments 16 005 1 639 Accounts receivable - net 51 225 3 44 550 Fossil fuel, at average cost . . 25 145 36 818 Materials and supplies, at average cost 11 457 10 680 Prepaid taxes . . 16 495 14 330 Special deposits and other . 15 396 9 126 135 723 117 143 Oiher Assets Pmperty taxes - subsequent years 20 984 20 947 Deferred charges - cancelled generating projects . . 38 074 42 902 Quarto coal costs 11 678 11 618 Miscellaneous . 19 972 14 064 90 708 89 531 lbtal Assets 2 401 778 2 124 823 Capitalization Common shareowners' equity . 715 584 617 127 Cumulative preferred stock . . . 200 000 170 000 Cumulative preferred stock with mandatory redemption pmvisions 94 002 95 027 Irng-term debt . . . .. ... 984 976 875 859 1 994 562 1 758 013 Nuclear Fuel Obligations Nuclear fuel trust . . . . . 41 513 34 780 Nuclear fuellease . 14 715 10 309 56 228 45 089 Current Liabilities Short-term notes payable .... . 43 000 Iong-term obligations due within one year 29 508 13 184 Accounts payable . ... . . 44 152- 31 354 Accrued taxes ... . . 48 665 46 231 Accrued intert.st . . . . . . 23 489 20 556 Dividends declared .. . . . ... 26 505 22 798 Accrued expense..: and other . . 8 903 7 979 181 222 185 102 Accumulated Provisions and Other Deferred federalincome taxes Accelerated depreciation and amortization . . . 77 426 ~66 488 Cancelled generating projects .. . .. . . 14 005 16 714 Property taxes and other .
.. 21 570 14 755 Investment tax credits . .
40 164 30 963 Deferred credits and other .
. 15 701 7 699 169 766 136 619 lbtal Capitalisation and Liabilities . . 2 401 778 2 124 823.
The notes on pages 13 through 18 are an integral part of this statement. 10
Capitalizati n
. December 31, (thousands of dollars) 1983 1982 Common Shareowners' Equity Common stock, $5 par value, (in thousands) 40,000 shares authorized, (Outstanding shares - 29,669 and 26,223). 148 343 131 116 Premium on capital stock 379 766 325 540 Earnings reinvested in the business 187 475 160 471 715 584 617 127 Cumulative Preferred Stock Annual 1983 Current Dividend Shares Outstanding Redemption Rate (thousands) Price Not subject to mandatory redemption, $100 par value
$ 4.25 - $ 4.56 310 $101-$105 31 000 31 000
$ 7.76 - $10.00 590 $103-$106 59 000 59 000 Not subject to mandatory redemption, $25 par value
$ 4.28 800 $ 32 20 000 20 000 2.21 1000 27 25 000 25 000 2.37 1 400 29 35 000 35 000 r 3.47 1 200 31 30 000 -
200 000 170 000 Subject to mandatory redemption provisions, $100 par value
$11.00 60 $111 . 6 002 7027 9.38 250 107 25 000 25 000 13.25 130 111 . 13 000 13 000 12.65 200 113 . 20 000 20 000 14.80 300 115 30 000 30 000 94 002 95 027 Long-Term Debt First Mortgage Bonds, excluding current maturities Maturities Interest Rates 1984 3%% . . .
14 000 1985 9.35% . . 50 000 50 000 1986 3%% . .. . . . . 15 000 15 000 1988 4% . . . . . 15 000 15 000 1990 -1993 13%- 16%% . . . . . 265 000 195 000 1997 -2000 6% - 10% . . . 66 378 66 378 2002 -2006 7% - 9.65% . .. .. 111 725 111 725 2008 -2013 9% - 15% . . 246 900 186 900 Discount in process of amortization . . . (727) (544) 769 276 653 459 Other Iong 'Ibrm Debt, excluding current maturities Notes,8.75%, due 1985 - 1997 . ... . 96 800 103 400 Term bank loan, average interest rate 10.08%, due 1987 - 1989 . . 50 000 50 000 Pollution control notes, 5.71 - 7%%, due 1985 - 2009 . . . 37 400 37 50m Pollution control loan agreement, 9.93 - 10%, due 1990 - 2010 . . . 31 500 31 500 984 976 875 859
'Ibtal Capitalisation. . . . . . .. .. .1 994 562 1 758 013
' The notes on pages 13 through 18 are an integral part of this statement.
11 -
Earnings Roinvastad For the years ended December 31 (thousands of dollars) 1983 1982 1981 Balance, at the beginning of year 160 471 142 220 122 743 Add - Net Income 128 344 105 534 83 137 Extraordinary gain . . . 10 80/ Deduct - Preferred stock dividends declared . 30 803 26 766 24 222 Common stock dividends declared 70 537 60 517 50 245 Earnings Reinvested During The Year 27 004 18 251 19 477 Balance, at the erid of year 187 475 160 471 142 220 Source of Funds Invested in Plant and Facilities For the years ended December 31, (thousands of dollars) 1983 1982 1981 Provided From Internal Sources Net Income . , , . 128 344 105 534 83 137 Principal non-cash items: Depreciation and amortization . 51 138 43 838 43 427 Deferred federalincome taxes . 18 523 13 380 13 295
- Investment tax credits - net . . 9 201 13 393 9 466
'Ibtal allowance for funds used during construction (96 028) (71 211) (47 989)
Other - net . . . . . 1818 1834 1 400 Funds provided from operations . . 112 996 106 768- 102 736 Dividends . . . . . . (101 340) (87 283) (74 467) Reinvested funds provided from operations . 11 656 19 485 _28 269 Net change in current assets and liabilities, and other accounts 26 634 (9 998) 3 609
'Ibtal allowance for funds used during construction . 96 028 71 211 47 989 Provided from internal sources . 134 318 80 698 79 867.
Provided From External Financing. Sala of Securities: Common stock . . . . . . . . 71 453 48 700 51 706 Preferred stock . . . . . . . . . . 30 000 20 000 30 000 First mortgage bonds . . . 130 000 120 000_ 70 000 Conversion of short-term debt to a term bank loan .- - 50 000 Net change in short-term borrowings . . . . . (43 000) 20 500 (66 500) Net change in temporary cash investments ~ . . -(14 178) 2 533 4 482 Redemption oflong-term debt and preferred stock . . . . (7 625) (40 473) (15 840)
' Net change in nuclear fuel obligations . . . . 13 364 44 838 (2 797)
Pmvided from external financing . . . 180 014 -216 098' 121 051-Total Sources Of Funds . . . . . . 314 332 296 796 200 918 Construction Expenditures . . . . . . . . -294 010 . 248 515 200 918 Increase in Capitalized Nuclear Fuel - . . . . . . :20 322 48 281_ - INVESTED IN PLANT AND FACILITIES ~ . . . . . . 314 332 '296 700 200 918
' The notes on pages 13 through 18 are an integral part of these statements.
.12
)
1
C 3 r Summary of Significant Accounting Policies 4 2, y i General Depreciation and Maintenance The r ompany provides for the depreciation of the
- Our accountuig records are nuuntamen m accord
- ance with the Unif orm System of Accounts an pre- or iginal cost of properties. except for t he Davis-13 esse scribed by The Federal Energy Hegulatory O >numssion Nuclear Power Station. over t heir est miated usef ul hves (FERC) and adopted by The Pubhe Utihties ('omnussion on a st raight-ime basm Depreciation expense on t he of Olno i PUCO i Davis-Hesse Nuclear Power Station is based on the umt- -
ot-production method This meludes a provision for our Revenues share of the total estunated den unnussionnig costs of Customers a re billed on a m< mt blv ey< le basis. $53 milhon The st raight-hne provisions f or deprecia-based on rates autluirized by the PUU() that are applied tion averaged a 6 percent m 1983.3 5 percent m 19H2 _ - to electricity consumption The larger mdustrial and and a 4 percent m 1981 :; wholeside customers are billed on a mont h end meter- JI reading basis Maintenance expense meludts repairo of property and renewal of nunor items Costs <it replacements and ; Fuel those renewal items that are umts ut property are _ darged to the util ty plant accounts For retired prop-The company collects estimated fuel costs over sub- sequent six-month time periods through a fuel recov- erty. we take its cost plus removal cost. net of salvage. . ery rate The rate is base 1 on actual and partially nd ch rge it to accumulated provision for depreciation. projected costs and generation The PUCO reviews and approves the projected rate and historical performance Ta m The difference betwwn attual a nd estimated fuel The company provides for deferred federal income charges are deferred until they are applied to the cus. taxes as required on the differences between straight- s tomer's b1R This enables us to better match fuel line depreciation and tax depreciation amounts for --- expenses with f uel adjusteu revenues property additions since December 31.1973 For tax purposes. all interest costs are deducted as they occur, . The company charges the cost of nuclear fuel to except for the amounts required to be capitalized for i fuel expense based on the rate of consumption. In addi- real property Other depreciation timing dif ferences 5-tion, the estimated nuclear fuel disposal costs are are considered in rates in the year that they affect taxes 7" meluded in fuel expense. The company contracted with payable. We beheve such taxes can be recovered in the Department of Energy (DOE) for permanent dis' future revenues based on PUCO and Oluo Supreme : posal of spent nuclear fuel For fuel used before 1983. Court decisions ij we owe the DOE $8.9 milhon, which will be paid on or after June 1985. We have already collected $4.6 million For certam property, the company receives invest-from our customers and have requested additional reve~ inent tax credits that are deferred and added to income nues of $4 3 million in our current PUCO rate case For over the hfe of that property Unrealized mvestment tax - . fuel used after April 1983. we are currently collecting credits from 1980 to 1983 total $33.1 million. We will the fee from our customers and paying the DOE- record them as thny are used in future years. E"- E - Retirement Income Plan Property, Plant and Equipment Our retirement mcome plan is non-contiibutory Property. plant and equipment is stated at original -l and covers all employee groups. The company funds cost Included in the costs of construction are such - each year's cost and amortizes unfunded past service items as related paymil taxes, pensions. fringe benefits, costs over a 30-year period. Pension cost is based on management and general overheads and allowance estimated salary levels and service years of employees for debt and equity funds used during construction at their retirement. Total pension costs were: $4.5 mil- ( AFUDC). AFUDC represents the estimated composite " lion in 1983, $4.4 million in 1982; and $3.7 million in debt interest and equity costs of capital funds used to . i 1981. Exparience gains and losses are amortized over finance construction. These costs are charged to prop- -; 15 years. erty, plant and equipment and credited to income as :. The actuarial present value of total vested and AFUDC on the Results of Operations statement. Our nonvested plan benefits is based on salary levels and AFUDC rates, net-of-tax. ranged from 10 percent to years of employees' service as of January 1 for each 10% percent in 1983,9 % percent to 10% percent in 1982, year. These were: $42 million and $6 million in 1983; and 8W percent to 8% percent in 1981. and $39 million and $6 million in 1982. The weighted . . average assumed rate of return used in determining =: ? these values was 8 percent for both 1983 and 1982. Reclassifications ; . Market value of net assets available for benefits Certain reclassifications have been made in the
- amounted to $75 million as of January 1,1983 and $58 prior years' amounts to make them comparable with million as of January 1,1982. 1983 classifications. - =
13 I
- , -h
N: tea to Finantial Statomsnta December 31,1983 (1) Possible Charge Against Earnings As part of the June 1982 and August 1983 rate case In November 1981, we exchanged 946,293 shares of decisions, the PUCO prescribed an accounting method common stock for $25.6 million of out3tanding bonds different from the one used for this gain. The PUCO owned by an investment banking firm. The stock's required that this gain be treated as a deferred credit exchange value was $16.025 per share. This exchange and amortized over 20 years. We opposed this decision pmvided a non-taxable extraordinary gain of $10.8 mil- and have it on appeal to the Ohio Supreme Court. lion. This is the difference between the value of the stock traded and the principal amount of the bonds redeemed An unfavorable decision would result in a reversal of plus their accrued interest. the extraordinary gain. This would involve an extraordi- l nary charge against current earnings of $9.5 million, or i 32 cents per share, based on the number of common ' shares outstanding at December 31,1983. (0) Petition on Perry No. 2 Construction If the construction of Perry No. 2 is not completed and we are not provided a means to recover our invest-In September 1983, the Ohio Office of Consumers' ment in the unit, we could be required to immediately Counsel (OCC) and several other parties filed a petition write off that investment including any cancellation with the PUCO and the Power Siting Board of Ohio (the charges against current earnings. Our investment in board) asking that the PUCO and the board investigate Perry No. 2 approximated $203 million at December 31, th3 need for the 1,205 megawatt Perry No. 2. The peti- 1983. Our net-of-tax write off at December 31,1983 tion also astred the PUCO and the board to order the Ohio would be $135 million, which would reduce Earnings CAPCO companies to stop construction of Perry No. 2 Reinvested from $187 million to $52 million. This reduc-and prevent them from accruing further AFUDC on that tion in Earnings Reinvested would have to be replaced unit. Finally, the petition asked the PUCO and the board with additional common equity funds. The amount of not to approve the issuance of securities to finance cancellation charges and other costs payable if work on further construction of Perry No. 2. The petition alleges Perry No. 2 were to be stopped is not presently determin-that the completion of Perry No. 2 will result in an able, but could be substantial. AFUDC related to Perry unreasonable level of excess capacity and that the result- No. 2, which accrues in increasing amounts, was $16 ing rates charged to customers would be excessive. million in 1983. Any termination of the accrual of such AFUDC before Perry No. 2 is included in rate base would reduce earnings by the amount of AFUDC that would otherwise have been accrued. (!) Federal Income Tax Details Supplementary information regarding federal income , taxes is set forth in the following tables: (thousands of dollars) (thousands of dollars) For the years ended December 31. 1983 1982 1981 For the years ended December 31. 1983 1982 1981 FEDERAL INCOME TAX EXPENSE FEDERAL INCOME TAX EXPENSE
- WAS COMPUTED AS FOLIDWS: DETAILS ARE AS FOLIDWS:
'Ihx at statutory rates on Currently payable . . 2441 1930' 7 477 pre-tax income . . 74 042 60 633 57 578 h taxes to . Deferred . 13127 14 334 10119 Allowance for funds used Amortized . . .
(1439) (940) (653) during construction . (42 270) (32521). (22 075) Prior year adjustment .. (65) (2357) 233 Wtraordinary gain fmm Deferred taxes - exchange of common Accelerated depreciation (net) 11 179 11 806 12377 stock for bonds . . (4 971) Cancelled generating pmjects (1809) 468 (1 118)
- Pme Deferred fuel costs '3 276 - 1886 2 435 ethod d oth r depmciation differences . 3 286 428 2 375 Other pmvisions , , 5906 (350) 356 Miscellaneous .. . (2442) '(2 263) (1681) .Ibtal federal
'Ibtal federalincome tax income tax expense . . 32616 26 277 -31 226 expense '32616 26 277 31226 14 c_
(?) Cuarto Coal Arrangements b. Coal Cost Deferral o Coal Supply Contracts At present, the averege cost of Quarto coal is higher The CAPCO companies have made long-term than other coal currently avaihble. Prior to July 30, arrangements with Quarto Mining Company (Quarto) 1982, the PUCO had ordered tu not to charge customers to supply coal to the Mansfield units. The CAPCO com- more than market prices. We deferred the difference panies each have agreed to guarantee their respective between market price and actual cost. Beginning on shares of Quarto's debt and lease commitments incurred July 30,1982, the PUCO permitted us to recover addi-to develop and equip the mines. As of December 31,1983, tional Quarto coal costs plus a portion of cost deferrals our share of the guarantees was $27.8 million. Our share under a revised market price formula. We had recovered of these commitments incurred prior to 1983 is 6.89 per- $3.0 million of deferred Quarto coal costs in rates cent. Our share of commitments incurred after Decem- through July 1983. In August 1983, the PUCO ordered bar 31,1982 will increase in steps from 6.89 percent to us to discontinue recovery of Quarto coal costs in excess 12.4 percent in 1986. of market price, pending further consideration of this matter. Accordingly, we resumed the deferral of the dif. Our coal supply contract with Quarto expires ference between market price and actual cost. December 31,1999. Under its terms, the pricing provi-sions reflect Quarto's production costs and deferred A January 1984 PUCO order permits us to recover mine development charges. Our total purchases under specified Quarto coal costs plus a portion of cost defer-these contracts amounted to $14.5 million in 1983, $12.4 rals within a specified six-year period using a "new million in 1982 and $15.5 million in 1981. market price" formula. In the event that we do not recover at least one-sixth of our deferred fuel costs of Under these arrangements, we expect our minimum 811.7 million as of December 31,1983 in any of the next yearly payments for fixed charges on debt and lease six years beginning in 1984, the amount of previous cost commitments to decline from $6.6 million in 1983 to defe rals not so recovered in that year shall be written
$5.8 million in 1988. off w expense. The "new market price" formula also pro-vides for the recovery of current Quarto coal costs to the extent that such costs do not exceed 125 percent of market price. Quarto coal costs in excess of 125 percent of market price must be written off to expense. We believe current and deferred costs will be recoverable within the periods specified by the PUCO.
C) CAPCO Power Pooling Arrangements The company has entered with four other utilities based on our ownership share, is currently estimated at into a power-pooling arrangement (known as CAPCO), completion to be $1.8 billion. in the interest of reliability and economy. This involves substantial commitments for generation and transmis- We provide our own financing for this investment. tion facilities. " Expenses" in Results of Operations includes our share of direct expenses for operation of three CAPCO units CAPCO is currently building three nuclear gener- presently in service, ating units. We are obligated to pay for our share of each of these units under construction and related nuclear The following re; resents our ownership in each of fuelinventary. Our total investment in the three units, the CAPCO units at December 31,1983: Actual or Ownership Ownership Plant Accumulated Construction Gen. rating Unit (Scheduled) Share Megawatts Fuel In-Service Depreciation Work in Progress (thousands of dollars) Davi>Besse No.1 1977 48.62 % 428 Nuclear 429300 52700 21 200 Mansfield No. 2 1977 17.30% 135 Coal 69 900 11700 800 Man field No. 3 1980 19.91% 159 Coal 128 400 14 900 800 Under Construction-1%rry No.1 (1985)*** 19.91 % 240 Nuclear - - 462 400** Beaver Valley No. 2 (1986) 19.91 % 166 Nuclear 15700* - 381 900 Ibrry No. 2 (1988)*" 19.91 % 240 Nuclear - - 203 000
' Common facilities with Beaver Valley No.1 *2 Includes common facilities for I%rry No.1 and Perry No. 2 *** Currently, construction at the Perry site is being concentrated to complete basic construction of Perry No.1 in 1985 and to minimize expenditures on Perry No. 2 pending future rescheduling.
15
I c (0) Previously Cancelled Generating Projects amortization on our books and allowed a specific addi-In January 1980, the company, along with the other tional risk factor as additional return on common equity l CAPCO companies, cancelled the construction of four in our rates. This treatment was affirmed by the Ohio f nuclear generating units. All cancellation costs related Supreme Court. l to these units have now been paid. In our August 1983 rate order, the PUCO again pro-In April 1981, the PUCO approved rate recovery vided incremental revenues to recover these costs of these costs over a ten-year period as an operating through the method used to calculate the allowed rate of I expense. Since April 1981, we have been amortizing these return on common equity. The PUCO reaffirmed the con- ! costs to expense over that ten-year period. tinued amortization of these costs over a ten-year period i ending in 1991. 1 In June 1982, the PUCO disallowed recovery of these , costs as an operating expense, based upon a 1981 Ohio The amortization of these costs amounted to $4.9 i Supreme Court decision. This disallowance has been million in 1983, $4.7 million in 1982 and $3.3 million in appealed to the Ohio Supreme Court and the decision is 1981 and is classified in depreciation and amortization still pending. The PUCO did allow continued ten-year on the Results of Operations statements. (7) Capitalization c. Cumulative Preferred Stock With Mandatory
- a. Capital Stock Transactions Redemption For the years ended The company held 10,335 shares at December 31, December 31, 1983 1982 1981 1983, and 4,730 shares at December 31,1982 of the
$11.00 series as treasury stock.
CAPITAL S'IOCK S1IARES SOLD (RETIRED): Common stock The sinking fund requirements for the various Public sales 2 500 000 2200000 2053707 series of Cumulative Preferred Stock are: Exchange of common D dend stock for bonds . - - 946 293 Shareowner Dividend Reinvestment and $ 11.00 5000 1979 Stock Purchase Plan . 945474 574 680 300 201 9.38 16 650 1985
'Ibtal common shares 3 445474 2774 680 3300 201 h0 1480 12000 1987 Cumulative preferred stock Public sales $25 par
$4.28 series -
800 000 - The shares of the above series may be purchased at
$3.47 series 1200000 - - the sinking fund redemption price of $100 per share plus Cumulative preferred stock accrued and unpaid dividends. Future sinking fund with mandatory redemption redemption requirements are: $500,000 in 1984; Public sales, $100 par $2,165,000 in 1985; $3,831,000 in 1986 and $5,031,000
$14.80 series . - -
300 000 in 1987 and 1988. Retirement, $100 par d. Long Term Debt
$11.00 series (5 000) (5000) (5000) The annual interest requirement on long-term debt (thousands of dollars) outstanding at December 31,1983 is $109.2 million for -
PREMIUM ON CAPITAL STOCK: an average interest rate of 11.13 percent. This includes Balance, beginning of year 325 540 290 713 255 508 amortization of debt discount and expense bat excludes Premium, net of expense - interest on the nuclear fuel obligations. Common stock 52502 33783 35569 Preferred stock . 1724 1 044 (364) Sinking fund redemption requirements and sched-Balance, end of year . 379766 325 540 uled maturities for long-term debt, excluding nuclear 290713- ' fuel leases, through 1988 are as follows: Sinking Fund
- b. Cumulative Preferred Stock Redemption Scheduled -
Requirements Maturities We are authorized to issue 3,000,000 shares of $100 par and 8,000,000 shares of $25 par Cumulative Pre- (thousands of dollars) ferred Stock under our amended articles of incorpora- 1984 3 600 20700 tion. The annual dividend requirement on Cumulative 1985' 3600- 56700 Pref;rred Stock outstanding at December 31,1983 is 1986 3 450 21 700
$31.2 million for an average dividend rate of 10.61 1987 3 450 - 23367 1988 3 300 38 367 percent.
16
. . _ .. .. . .. __. .. - . . , , . - - . ,, . ~, ,. - . . . . .. - -
-w_-
4E _G F G In c.ddition, the first mortgage bond indenture pro- The mortgage securing first mortgage bonds issued - [ vides for a required annual payment after certain cred-its, as defined, to the Trustees as a Maintenance and by us constitutes a direct first mortgage lien on substan-tially all property and franchises owned by us. This does k ' R Replacement Fund. We have been satisfying the require- not include expressly excepted property, such as cash - p ments under the indenture by pledging more property and securities, accounts receivable, fuel, supplies and - additions which might have otherwise been used as the automotive equipment. basis for the issuance of additional bonds. n b (8) Nuclear Fuel Financings 3 In November 1982, the CAPCO companies created In September 1983, we capitalized our share of the Davis-the Central Area Energy Trust (the trust). The trust will oversee the financing of procurement, conversion and Besse No.1 fuel lease related to the portion of the nuclear fuel loaded into the reactor. This is in accord-E[ enrichment stages of nuclear fuel for the CAPCO units. ance with the provisions of PUCO orders. Total commit- %_ , Each company's role in the trust is independent of its ments under the lease arrangements were $123.2 million P ownership share of any CAPCO unit. Also, each com- at December 31,1983. $p pany's rights and requirements in connection with the F;_ trust are separate and distinct from the other com-panies. As of December 31,1983, we have an obhgation Financing under these agreements, including the trust, cf uP to $298 million is available. We expect our
$i=-'
of $41.5 million to the trust. This includes $4.7 million e
)
in capitalized interest incurred thmugh December 31, nuclear fuel leasing arrangements to be adequate
, 4 1983. The 1983 interest was calculated at an average rate through 1985. Estimated payments based on burn-up, _g of 10.6 percent. including interest, are: $12.1 million in 1984; $33.0 mil-lion in 1985; $42.0 million in 1986; $45.4 million in g&
In addition, the company has lease arrangements for 1987; and $69.4 million in 1988. ;-2 nuclear fuel to be loaded into the CAPCO nuclear units. g
-2 2"
(9) Short-Term Borrowing Arrangements We had $96.1 million in unused credit lines at whereby banks expect us to maintain average deposits December 31,1983 with various banks and pay commit- equal to 5 percent to 20 percent of the line of credit,
}
ment fees for about two-thirds of those lines. The rest are depending on the borrowed amount. The deposits provide , based on informal compensating balance arrangements, operating balances for us and are not legally restricted. Q Eit 3 .: (10) Selected Quarterly Data (Unaudited) The following quarterly results reflect all adjust-( ' ments (that are of a normal recurring nature) to ensure a -5 fair statement of results for such periods: 7]
.- l (thousands of dollars) (dollars per common share) $# -
Earnings Market Price
- S I Three months Revenues and Income before Net on Common Dividends : E ended Other Income Income Taxes Income Stock Earnings Paid High Iow g 1983 ;
March 31 129 457 20403 28845 22031 .84 .61 22b 20 ? .] June 30 126722 19 259 28 536 20 903 .78 .61 22 % 20 1 1 September 30 131 978 35167 40 064 32218 1.10 .61 21 % 19 December 31 118 076 20 546 30899 23063 .78 .61" 21 % 174 _ 4 1982 March 31 124 738 23841 [ 25 650 19683 .84 .59 17 % id% 2 June 30 112217 15983 24 078 17387 .72 .59 185 16 % r September 30 126914 27757 32108 25359 December 31 118 873 15524
.98 .59 19 % 16 i 23698 16884 .65 59 21 % 18 % -
- The Common Stock is listed on the New York Stock Exchange. The price quotations are imm The Wall Street Journal. t The number ofcommon stock shareholders as ofDecember 31,1983 and 1982 were 87,781 and 86,710, respectively. .
" The dividend declared in December 1983 and paid in January 1984 was increased to 63 cents per share.
17 - j z _ c i
(11) Effects of Changing Prices (Unaudited) The following financial information shows the During a period of inflation, issuers of debt experi-effects on our company of general inflation (Constant ence an economic gain. This is especially important for Dollar Accounting) and changes in prices of specific us due to the substantial amounts of debt issued to assets, namely property, plant and equipment (Current finance our construction program. This gain is shown Cost Accounting). in the following statement under the caption " Gain from decline in purchasing power of net amounts owed" Constant dollar amounts represent historical dollars : stated in terms of dollars of equal purchasing power, as The comparative Constant Dollar and Current Cost values of all items on the income statement, except depre-measured by the Consumer Price Index for All Urban Consumers (CPI). Current cost amounts reflect the ciation, represent the amounts recorded in the historical changes in specific prices of plant from the date the plant cost income statement. Income taxes are not adjusted was acquired to the present. The current cost of plant because current tax laws do not allow for the inflation estimates the probable cost of replacing existing plant effect on capital investment. We have calculated deprecia-assets and was determined by indexing the surviving tion provisions, for the current year, on the Constant plant by the Handy-Whitman Index of Public Utility Dollar and Current Cost amounts of property, plant and Construction Costs. equipment. We figured this by applying the ratio of the provision for depreciation over the average property, Because our rates are regulated, we cannot recover plant and equipment on the Historical Cost basis, to the through revenues any more than the original cost of indexed plant values. plant assets, even though the cost to replace such assets will substantially exceed the original cost. In 1983, the The following table shows the net effect of inflation added cost, due to inflation, of replacing our plant assets on common stock equity in 1983: is shown in the following statement under the caption: Co nt nt
" Inflation effect during 1983 on capital investment ."
Accounting Accounting (millions of dollars) Innation effect during 1983 on capital inv ?stment: - 171 Increase in specific prices to current costs . Effect of change in general price level . (147) [52) (72) Reduction to net recoverable cost . (32) Additional pmvision for depreciation . (28) (80) (80) 54 54 Gain from decline in purchasing power of net amounts owed (primarily debt)
'Ibtal effect of inflation on common stock equity. (26) (26)
The table below presents selected operating and reportable as an additional provision for depreciation financial data for the past five years adjusted for infla- were deducted from the reported amount of such income.- tion as measured by the CPI. Earnings on common stock We revised the 1982 data to reflect actual indices, and earnings per share are shown as if only the amount 1983 1982 1981 1980 1979 (millions of dollars except per share amounts) General Innation (constant dollars) 485 486 501 Operating Revenues . ..... 505 497 70 53 34 36 29 Earnings on Common Stock 1.89 1.70 2.52 2.14 1.59 Earnings per Common Share . 2.66 3.02 Dividends Declared per Common Share . . 2.46 2.46 2.52 18.00 21.84 17.82 18.69 23.18 Market Price per Common Share (year-end) . Specific Prices (current cost) 23 32 23 Earnings on Common Stock 66 49 2.37 1.96 1.30 1.66 1.39 Earnings per Common Share . . . .. Increase in General Price Level Over (Under) 84 77 Increase in Specific Prices (24) (42) 5 3951 3 555 3 177 2804 2390 Net Plant . GeneralInformation Gain Fmm Decline in Purchasing Power 54 45 93 113 102 of Net Amounts Owed . . . . . . 457 408 Net Assets at Net Recoverable Cost 702 610 532 Consumer Price Index 246 8 217.4
- Annual Average 298.5 289.1 272.4 304.1 292.4 281.5 258.4 229.6
- Year End 18
Finan2ial R0visw Revinues and Other Income (thousands of dollars) wtal Gas & Revenues htal Total Steam Other & Other Year Residential Commercial Industrial Other Retail Wholesale Electric lleating income Income 1983 161 275 105 482 169 672 42 118 478 547 16 824 495 371 9 245 1 617 506233 1982 153 662 101 789 158 930 38 306 452 687 20 508 473 195 8 530 1 017 482 742 1981 138 781 90 863 151 539 32 253 413 436 21 417 434 853 7 431 8 852 451 136 1980 126 085 80 836 137 860 28 458 373 239 21 647 394 886 6 982 879 402 747 1979 113 464 72 354 128 931 25 119 339 868 18 839 358 707 6 414 1 017 366 138 1973 40 696 27 390 43 632 10 426 122 144 4 271 126 415 2 732 227 129 374 Expenses (thousands of dollars) Fuel & Net Depreciation Federal f%rchased & State & Debt AFUDC - Expenses Income Income Year fbwer Operation Maintenance Amertszation Izral Taxes Interest Debt Defore FIT Before FIT Taxes 1983 125 975 77 632 32 734 51 138 45 210 108 612 (30 443) 410 858 95 375 32 616 I 1982 127 658 75 834 38 839 43 838 41 260 94 713 (22 505) 399 637 83 105 26 277 1981 122 442 63 976 31 908 43 427 36 699 86 310 (15 491) 369 271 81 865 31 226 1980 155 771 55 842 29 319 26 002 31 202 70 866 (15 148) 353 854 48 893 10 158 1979 146 869 44 691 21 137 29 117 29 760 52 584 ( 9 991) 314 167 51 971 16 888 1973 42 507 22 098 7 471 12 318 11 822 14 126 -
- 110 342 19 032 5 746 l l
l Income (thousands of dollars) Common Stock (dollars per share and %) Return
~ Income Preferred Earnings Average on From AFUDC- Net Stoc k on Shares Average Dividends Market Price Dook Year Operations Equity Income Dividends Common Outstanding Earnings Equity Declared liigh low Year End Value 1983 62 759 65 585 128 344 30 129 98 215 28 040 3.50 14.5 2.46 22.50 17.50 18.00 24.12 1982 56 828 48 700 105 534 26 221 79 313 24 917 3.18 13.3 2.38 21.13 15.75 21.00 23.53 1981 50 639 32 498 83 137 23 542 59 595** 21 507 2.77" 11.6 " 2.30 18.38 15.00 16.50. 23.46 1980 38 735 -28 443 67 178 18 021 49 157 19 226 2.56 10.5 2.20 20.75 15.00 15.88 23.77 1979 35 083 23 512 58 595 13 894 44 701 16 848 2.65 10.7 2.20 23.38 17.38 17.50 24.15 1973 13 286 10 282* 23 568 3 911 19 657 6 282 3.13 14.3 1.94 30.88 23.13 26.88 22.20
'In 1973, allowance for debt funds was included in allowance for equity funds
In 1981, excludes extraordinary gain from exchange of common stock for bonds (after gain, earnings on common - $70,402; earnings per sham - $3.27; return on average common equity - 13.5 percent).
19
._~
Stitictirl R;vi3w Electric Sales (millions of kilowatt-hours) Electric Customers (end of year) Residential Usage Annual Price Annual KWH f%r Revenue Industrial Per KWH Itr War Residential Commercial Industrial Wholesale Other 1btal Hesidential Commeretal & Other lhtal Customer (Centat Customer 1943 1 915 1 341 3 127 320 428 7 131 242 959 23 694 3 864 270 517 7 900 8.44 665 1982 1 911 1 325 2 873 395 414 6 918 241 492 23 495 3 815 268 802 7 906 8.04 636 1981 1 919 1 294 3 080 449 409 7 151 241 663 23 573 3 844 209080 7 966 7.23 576 1980 1 971 1 282 3 165 560 410 7 388 240 142 23 532 3 818 267 492 8 232 6.40 527 1979 1 934 1 256 3 559 559 401 7 709 238 353 23 636 3 695 265 684 8 166 5.87 479 7 187 2.62 188 l 1973 1 552 1 085 3 249 356 349 6 591 218 105 21 399 4 119 243 623 1 Load (megawatts) Energy (millions of kilowatt-hours) Fuel Net Purthased Capability Imd Beeerve & Net FuelCoat Efficiency at Time IVak Factor Factor Generated Interchanged Ihr KWil BTUEvr War oftwak load ('O (9) Fbesil Nuclear 1btal Ibwer 1btal (Centsi KWH 1983 1 777 1 325 66 34 4 683 2 383 7 066 593 7 659 1.67 10 337 1982 1 790 1 355 62 32 5 306 1 569 6 875 510 7 385 1.80 10 220 1981 1 773 1 315 66 35 5 349 2 142 7 491 157 7 648 1.68 10 274 1980 1 760 1 310 68 34 5 529 1 031 6 560 1 352 7 912 1.65 10 246 1979 1 825 1 395 67 31 5 349 1 535 6 884 1 348 8 232 1.33 10 262 1973 1 358 1 246 64 9 5 376 - 5 376 1 670 7 O-16 .52 9 880 Investment (thousands of dollars) Accumulated Construction Annual Plant In Provisions Fbr Net Work In Nuclear Fuel 1btal Construction 1btal War Service Depmeintio i Plant Peugman In Servtco Plant Expendatures Assets 1983 1 358 467 324 826 1 033 641 1 118 802 22904 2 175 347 294 010 2 401 778 1982- 1 306 677 285 453 1 021 224 878 535 18 390 1 918 149 248 515 2 124 823 1981 1 261 174 252 310 1 008 864 656 999 10 951 1 676 814 200 918 1 869 967 1980 1 208 001 220 629 987 372 518 746 17 644 1 523 762 234 827 1 701 655 1979 979 809 201 895 777 914 519 464 11 786 1 309 164 239 010 1 467 512 1973 407 195 108 467 208 728 192 133 - 490 801 119 524 540 896 Capitalisation (thousands of dollars) Cumulatavo Preferred Common Cumulative . with I.ong. Shareowners Preferred Mandatory Term
%ar Equity 4 Stock % Redemption % Debt -% Tbtal 1983 715 584 36 - 200 000 10 94 002 5 984 976 49 1 994 562 1982 617 127 35 170 000 '10 95027 .5 875 859 50 1 758 013 1981 550 176 -35 150 000 10 95 500 6 762 584 49 1 558 260 1980 478993 34 150 000 11 66 500 5 708 295 50 1 403 788 1979 432 554 35 150 000 12 34 000 3 611 137 50 1 227 691 1973 145 665 31 71 000 15 - -
259 164 54 475 829 20 L . . .
Board of Directors Officers Richard P. Anderson (O) John P. Williamson Stock Transfer Agents Partner and General Manager Chairman and The %1edo Trust Comp.my The Andersons Chief Executive Officer %1edo. Oluo 43603 Samuel O. Carson (EXN' XS) Wendell A. Johnson h! organ Guaranty Wust Chairman President and Chief Company of New York bledo Trust Company and Operatmg Officer New York. N Y.10015
%1edo Trustcorporation, Inc. Anthony A. Bosch, Jr. Stock Registrars Richard P. Crouse Vit e President, Customer Services Ohio Citizens Bank Nedo, Ohio 43003 Vice President Nuclear Richard P. Crouse Morgan Guaranty hust Robert II. Davies (C' XOXS) Vice President. Nuclear Company of New York Senior Vice President John R. Dyer New York. N.Y 10015 Owens Ilhnois, Inc.
Vice President. Public lh lations Mortgage Trustee Chester Devenow (AxC) Dcmald G. Nicholson The Chase Manhattan Bank, N A r n and C ef Semor Vice Itesident. Fmance New York. N Y.10081 Sheller-Globe Corporation Lyman C. Phillips Auditors Vice President Corporate Planmng Arthur Andersen & Co. Elwood L. Elbernon (C) an A nun tration m Mahon hnw Chairman. President and Eledo, Ohio 43604 Chief Executive Lowell E. Hoe Dmner Bell Foods, Inc. Vice President. Energy Supply Exchange Listings Paul M. Smart Common Stanley W. Gustafson (Deceased) New York Stu k Exchange (TED) President Dana Corporation Senior Vice President, Corporate Development and Midwest St(x.k Exchange g s General Counsel Unlisted Trading Privileges ta Stratman Cooke Boston Stock Exchange Operating Officer Cmcinnati Stock Exchange Secretary Isabel F. Martin ( A) Philadelphia, Baltimore and Consultant Donald II. Saunders Washington Stock Exchange Tbledo Area United Way Treasurer Paul G. Busby Preferred - $25 par value - H 849. IMnald G. Nicholson Senior Vice President, Finance Contmiler
' w York Stock Exchange Henry A. Page, Jr. (ExN) Preferred - $100 par value - 4' .9 Director of Development 8 324,7.769 and 104 series The Medical College of Ohio American Stock Exchange at bled Executive Offices Lyman C. Phillips 300 Madison Avenue U "
Vice lYesident Corporate Tbledo. Ohio 43652 20% 9m - Due 2008 Planning and Administration Phone (419) 259-5000 8% - Due 2003,9 65% - Due 2000 Paul M. Smart Dividend Disbursing and Senior vice President on - Due 2000, nn, - Due 2009 Corporate Development and Reinvestment Agent The %lato Trust Company 9 35% - Due 1985* General Counsel Tbledo. Otuo 43603 New York Stock Exchange Willard I. Webb HI(A*XEXS) Chairman and Chief Executive Officer Ohio Citizens Bank Director Changes John P. Williamson tE* XS*) Chester Devenow, chairman and chief executive offi-Chairman and Chief . cer, Sheller-Globe Corporation, was elected to the board Executive Of ficer .. of directors in August,1983. Sheller Globe, a Tbledo-Robert O. Wingerter (NxO'XS) based company, is a major manufacturer of parts and Chairman, Executive Comnuttee ' assemblies for cars, trucks and off-highway equipment. Libbey-Owens-Ford Corr.pany Mr. Devenow is a graduate of New York University. Key to Directors, Committees IIe replaces Marvin 8. Kobacker, who was elected V director emeritus af ter 14 years of distinguished board (A) Audit Committee - service. (C) Compensation Committa (E) Executive Committee (N) Nominating Committee au E 8 mart, senior vice president, corporate devel-p opment, was elected to the board of directors in January (O) Operations Committa , 2934. (S) Strategic Plannmg A former senior partner with Fuller & itenry, with
- denotes committee chairman .. specialization in 'Ibledo Edison ngulatory matters Mr.
Smart continues as the company's general counsel, with added responsibilities for marketing, rates, area devel-Directors Emeriti opment, and research and development. Floyd M. Canter lie replaced board member Stanley W. Gustafson, William 8. Carlson who died shortly before year's end. We will miss Mr Gus-Virgil A. Oladieux tafson's talent, energy and keen advice. Marvin 8. Kobacker I
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