ML20100N245
| ML20100N245 | |
| Person / Time | |
|---|---|
| Site: | Beaver Valley, Perry, 05000000 |
| Issue date: | 12/31/1984 |
| From: | Rogers J OHIO EDISON CO., PENNSYLVANIA POWER CO. |
| To: | |
| Shared Package | |
| ML20100N233 | List: |
| References | |
| NUDOCS 8504180519 | |
| Download: ML20100N245 (44) | |
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W OH/OEDISON w ,, u,.- Annual Report 1984 V
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0504180519 850412 PDR ADOCK 05000412 I
Ohio Edisen l \
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The Ohio Edison System is the 18th largest investor owned electric system in the United States, based on total kilowatt hour sales.
It includes the Ohio Edison Company, headquartered in Akron, Ohio, and the Pennsylvania Power Company,in New Cr_stle, Pennsylvania. Together, the Com-panies provide electric service to more than ,
978,000 customers within an area of approx- !
Imately 9,000 square miles in central and northeastem Ohio and westem Pennsylvania.
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l Contents 2 President's Message 4 Electric Sales Reflect Economic Recovery and Growth 17 FinancialReview 40 StockholderInformation 41 Directors. Officers and Division Managers On the cover A unique view of new environmental control equipment at the coal-fired W.H. Sammis Plant.
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Financial Highlights For the Wars Ended December 31 1984 1983 Change (in millions, except per share amounts)
Kilowatt. Hour Sales 26,764.2 24,345.4 +9.9%
Operating Revenues $1,637.1 $1,515.9 +8.0%
Fuel Expense 422.8 420.3 +0.6%
Operating income 342.7 302.8 + 13.2%
Allowance for Funds Used During Construction, Net 256.9 203.7 _ + 26.1 %
Interest and Other Charges 371.6 319.8 - - 16.2 %
Net income 339.3 + 24.6%
~
272.4 j Earnings on Common Stock 290.7 227.8 + 27.6 %
Earnings Per Common Share $2.50 $2.22 + 12.6%
- Dividends Per Common Share * $1.84 $1.80 +2.2%
Dividends on CapitalStock $263.0 $230.8 + 14.0%
- Capital Expenditures
Constructionof Facilities $800.4 $690.8 i
Nuclear Fuel 60.8 55.0 i Capital Leases 6.9 25.3
- $868.1 $771.1 + 12.6%
- Internally Generated Funds 222.1 217.3 +2.2%
Net Financing Activities 581.6 496.6 + 17.1 %
Return on Average Common Equity 15.9 % 14.2 %
'The quartetty dividend was increased to 47 cents per share (31.88 on an annual basis) beginning with the dMdend payable on March 29,196E s
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t L Opertting Revenues Esmings Per Share Retum on Average Common Equity (in blhons of dollars) (In dollars) (In percent) 18 3.00 18 s
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- = 2.50 15 M umme E E 12 2 00 12 m
.9 1.50 9 6 1.00 6
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!- 80 81 82 83 84 80 81 82 83 84 80 81 82 83 84 7
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President's We are especially pleased with theso financial Message results considering the difficult operating,
. environmental, regulatory and financia! prob-lems we have had to overcome since the 7
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late 1970s.
Even with many of these problems behind us, s e and our good financial performance in 1984,
' J we don't expect smooth sailing ahead. We still have tough problems to deal witn, includ-ing those related to nuclear power and the possibility of new " acid rain" legislation.
Nuclear Power's Future Nuclear power will have an important part in this country's energy future. But for now, controversy has placed seemingly endless
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regulatory and legislative roadblocks in front
- of utilities building or operating plants. These i
roadblocks have caused construction delays 1 and higher financing costs, forcing some I
i utilities to abandon projects well along in construction.
M While this situation certainly gives cause for
. concern with regard to our own nuclear i
program, the picture does have a brighter side. In 1984, seven new nuclear units The Company's overall financial performance received operating licenses. Already,90 in 1984 was our best in nearly a decade. nuclear units, including Unit 1 of the Beaver With a healthier local economy, sales to Valley Power Station in which we share industrial customers increased 9.2 percent ownership, are meeting 13 percent of the over 1983. Our sales to commercial and nation's total demand for electricity.
residential customers were also up. And We expect Unit 1 at the Perry Nuclear Power l power sales to other electric companies Plant to join that list around the end of this year.
increased 57.4 percent to a record high. Not only has it met all Nuclear Regulatory In all, total kilowatt-hour sales were 9.9 per- Commission requirements to date, but the cent higher than in 1983, reaching nearly 27 Commission hac recognized the quality con-billion kilowatt-hours. trol program as a strength of the Perry project.
, Because of the stronger sales and new Although the schedule is tight, The Cleveland l electric rates, revenues Mr the year were Electric illuminating Company, which is i more than $1.6 billion,8 percent better than heading up construction of Perry, reports in 1983; earnings climbed to $2.50 per share that the unit's systems will be tested and of common stock, an increase of nearly ready for fuel loading this summer. To help 13 percent. assure completion of Perry Unit 1 on schedule, work on the second unit has been reduced and relates mainly to facilities shared by both units.
Ohio Edison and Penn Power will own about 35 percent of the power from the Perry units.
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- -- . The Duquesne Light Company is moving for-ward with Beaver Valley Unit 2, but emphasis L has shifted toward completion and testing
[ of systems for operation near the end of v 1987. Ohio Edison's share of the unit is about L 42 percent.
- During the past 12 months, new total project E budgets were announced. The budget for
$ Perry Unit 1, including common facilities shared with Perry Unit 2, was raised from
$2.8 billion to $3.9 billion. The budget for i Beaver Valley Unit 2 was revised from $3.1 5 billion to $3.9 billion.
f As a back-up source of funds, should it be needed, we arranged a $500 million, six-year f
C credit agreement with 21 major banks. This s credit arrangement gives the Company more
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flexibility in the timing of future security sales at lower interest rates. And, it further sepa-
- rates us from those utilities having trouble
( raising money to finish their nuclear projects.
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" Acid Rain" Controversy Turning to the problem of " acid rain," there is continued pressure on Congress to pass As covered later in this report, we are focus-laws requiring costly controls. Special inter- ing a great deal of our attention on area ':*
est groups have made " acid rain" a sensitive development and marketing strategies to political issue by relying on a campaign that's stimulate sales growth. Our goal is to add G long on rhetoric and short on proof. Their 695 million kilowatt-hours of new business i unproven charges about coal-burning plants in 1985. We will also continue our aggres- J being the major cause of the " acid rain" sive pursuit of power sales to other electric l5 problem are preying on the anxieties of
'. people and include demands for huge companies. .;
I believe these efforts and our recent per- :
expenditures on new control equipment. formance will help preserve the quality of i No one can legitimately accuse us of being your investment in the Company. ,
indifferent to protecting the environment. My optimism is supported by our employees' i We've just completed $510 million of track record. Their resourcefulness and
- environmentalimprovements at six of our determination have played an important part w power plants. in moving the Company forward. I thank A major part of that program was at the W.H. them for their hard work. And, a special
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Sammis Plant, where we spent nearly $409 word of thanks to you for your understanding 1 million on elaborate air quality control sys- and support. 11 tems. All of our power plants now meet cur- ~.
rent clean-air standards. , yd But before a new round of expensive projects b -
7 is required to satis'y " acid rain" lobbies, .'
there should be reasonable assurance of Justin T. Rogers, Jr. Y
_ real benefits. So far, that assurance is miss- President J ing, and we're doing everything we can t March 1,1985 convince Congress to recognize this fact. ~
v 1
Optimism for the Future [
These concerns notwithstanding, there is i reason to be optimistic about the future. g Along with the steady improvement in sys-tem operations and the reduction in the size i of our construction program, we see con- 14 tinued moderate growth in the local economy 7 and a resulting increace in electric sales. ;;
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Electric Sales Reflect Electric sales increased 9.9 pe snt in Economic Recovery and Growth 1984 as business in our area continued to accelerate.
One of our largest customer groups, the auto industry, made dramatic gains. With domestic car prcduction up 44.1 percent nationally, there was significant activity among the many auto-related companies we serve. As a result, our sales to these companies increased 8.7 percent over 1983.
But improving car sales is only part of the story. With more computerized operations T tal System Electric Sales 30 and robots on the assembly line, the auto (In bdhons of KWM) gg industry serves as a good example of how 2s g g Midwest industries are using electricity and e
20 high technology to stay compu.ove.
Area steel companies have also been stream-
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[ lining their operations and making more use a 30 of efficient electric furnaces, especially in the f production of high-quality and specialty steel.
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In Youngstown, LTV Steel Company added 80 ai 82 83 u a $75 million modern rotary furnace at its Campbell Works seamless piping mill. At U.S. Steel Corporation's Lorain facility, about T
/j7[ .7 jf $140 million was spent on a new continuous r-v 7 ~ M, j y f - -
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caster mill.
Although steel manufacturing is well below
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its peak years, there has been renewed
- H M -/ activity. Our electric sales to this industry
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were up 2.7 percent over 1983.
g' s As the auto and steel industries continue to rw w-
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{\ mY..' ? l l 6 $ h challenge of foreign producers, we expect 1,
q , b. ! E ,, j them to continue as a strong long-term market for us.
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y_ ) ; There are also signs of new economic "j 'g ,.
growth. Locally, companies made major investments for new or larger facilities that
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totalled $280 million.
W One of the most promising opportunities for
, j - ! I g 'O, business expansion Demand forisrubber, the polymer plastics andindustry.
. other s"
- f- polymer compounds has oeen steadily a increasing.
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k Four of the most familiar names in tires-Firestone, General, Goodrich and Goodyear
-have international headquarters in Akron.
9.' They also have major research facilities here and are front-runners in the development and production of polymer products. Also, C #^ The University of Akron with its Institute of
, Polymer Science has gained worldwide f-
, recognition for polymer studies, teaching
/ ._ staff and research facilities.
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With such a solid foundation in polymers, plus the many other local companies gaining l a larger share of the market, our service area has a head start in this growing industry.
Promoting Economic Expansion Local communities are more aggressively pursuing new business. They have well-trained people and sound strategies for pro-rrating the many benefits of moving to this area. To boost their efforts, we work with com-munity leaders and hold training programs on how to attract new business.
System Industrial Sales
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For businesses considering expansion or i M '. w .:y ;:. E.-:.-a g- M M ,f , relocation, northeastern Ohio and western
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Pennsylvania offer many economic advan-r + m x2 m a tages. The area is centrally located within 7
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$ 500 miles of over 100 million people Excel- advantage of the plan, adding automobile
- lent highway and rail transportation systems parts manufacturing, a meat processing line
[ tie our service area with maior population and other operations They art providing 475 centers A skilled work force, quality educa- lobs and should increase our annual revenues tion and job training opportunities offer com- by about $4 4 milhon.
- panies a valuable pool of people And in what is emerging as the most important enWe rates are also aelable b Ns' nesses hat sMt eng use to of@eak
- advantage of all, the area is rich in fresh eriods. For example, a steel company using water. a major requirement of many manu-a 10-megawatt electnc furnace to melt factunng processes.
scrap metal dunng off-peak hours can save t Stimulating Industrial Sales With energy costs a primary consideration In all, we added nearly 1 billion kilowatt-i for manufacturers in 1984 we estabhshed a hours of new business in 1984. representing
- special five-year pncing plan that encour- about $50 milhon in revenues. Our goal is to ages the growth of business. Companies add another $40 milhon of new business qualify if they meet certain requirements for in 1985 the size of the new or expanded facihty, the number of new people employed and the Expanding the Residential Market 9 amount of new demand for electricity. The Although many believe electric companies plan offers a significant savings in energy have no competition, a major share of the
- costs' home energy market-space and water
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mainly air conditioning and appliances, is almost entirely ours. l Because of the competitive choice between home heating systems, we have intensified our sales efforts to increase our share of this important market. We're vigorously promoting add-on heat pumps and dual-fuel systems that offer clean, efficient and comfortable electric heat.
To make electric heating more price compet-itive, we introduced " Power Commander," a new incentive plan that enables residential Elictric Heating Customers 100 Customers to save up to 50 percent of the
- cost ct electric home heating or water heat-m -- ing. As part of the " Power Commander" l mos *"" "" ~-- - - -
agreement, a Company-installed radio summ oneoson m receiver can temporarily interrupt service to the heating system. However, because the e interruptions would be brief, customers shouldn't experience any significant 20 inconvenience.
Last year,2,461 heating customers were 8 82 83 8' 8'
added, bringing the total to 84,910. We set a OT:l s es* '
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I D r Ew The total electric Cohseum is one of the targest sports ara entertainment f acihties in the country and nome for the Cdvailers ' basketball team and the
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goal of adding another 2,700 heating cus- million of 1984 revenues.
tomers in 1985. In addition to $5 m!! lion in we wiii continue pursuing this market and 1984 revenues, these heating sales enable have set a goal of $132 million for 1985 us to make better use of our generating units, especially at night when customer demand Power for the Future is lower. New electric appliances. heat pumps, electric furnaces in steel mills, robotics and comput-Sales to Other Utilities ers illustrate that electrtcity is the power of Another market that continues to grow is the the future.
sale of our power to other electric companies. From 1975 to 1983, electric use in the United Many companies often find their own gen- States has increased 25 percent, while use erating cost higher than we are able to offer. of other energy forms has dropped. This And the transmission network that makes trend will continue, particularly because of U S. electric service the most reliable in the limited gas and oil reserves. We expect world can also be used to sell power to that by the year 2005, our customers' peak buyers hundreds of miles away. demand will be 31 percent higher than the As a result, we have sold power to a number estimate for 1985. But economic conditions of companies including Potomac Electric or other circumstances could push this Power Company, General Public Utilities. figure higher.
Atlantic City Electric Company, the Michigan To have reliable supplies of power for growth, Pool and Ontario Hydro. Total kilowatt-hour Ohio Edison. Penn Power and three other sales to electric comoanies increased 57.4 utilities of the Central Area Power Coordina-percent over 1983 and represented $117.4 tion Group (CAPCO) are financing the
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A hard hitting advertising campaign heads our iatest m push to gain more ut the home heat ng ma'ke c
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construction of generating units at the Perry Nuclear Power Plant in North Perry, Ohio, and the Beaver Valley Power Station in Shippingport, Pennsylvania.
Nearest to completion is the 1,205-megawatt Perry Unit 1, scheduled to begin operating in late 1985. Ohio Edison and Penn Power own 35.24 percent of this unit being built by The Cleveland Electric illuminating Company.
Perry Unit 1 is in the final stages of federal licensing procedures. After a number of 5
reviews and inspections by the Nuclear g'im syn i,7 umitin Regulatory Commission (NRC), it has consistently received good marks for construction, quality assurance procedures M and safety systems.
g Beaver Valley Unit 2 is now scheduled to be 2 completed at about the end of 1987. Ohio Edison owns 41.88 percent of this 833-i --
megawatt unit being built by the Duquesne Light Company. Its sister facility, Unit 1, has eo ei e2 83 84 been producing power since 1976 and in
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s 1984 recorded an outstanding 93-percent ,
operating availability before refueling began l in October. l l
Building a nuclear plant requires top quality j design and construction and also extensive testing and inspection before the NRC approves a plant for commercial operation.
The CAPCO companies are committed to seeing that these requirements are met.
Also under construction by the CAPCO com-panies is Perry Unit 2, the status of which is currently under review. Until the review is syttym co,nstyction costs completed, however, there will be no schedule 800 or budget set for completing the unit.
- As the System's construction program moves wo ahead, our efforts to raise money to finance it continues. Two recent accomplishments, 400 early financing of the 1985 construction budget and a special arrangement for axT back-up funds, if needed, now enable us to be more selective in timing financings at 8, er o 84 se lower interest rates.
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Computer-aided design and drafting equipment has already more than doubled productmtv for engineenng dramngs used in the design of Compa 1y f acihites 14
Even more significantly, the need to finance There is, in fact, strong evidence that the projects is easing With the completion of acidity of rain is not increasing. And, perhaps our extensive environmental improvement more importantly, son < >nditions appear to program and new generating units scheduled cause more ac!dificr r i than any other to begin operating soon, our construction source. With such uncertainty, we oppose costs should drop steadily from the $800 the pressure being put on Congress to require million in 1984 to $425 million in 1989. that our industry sperd billions of dollars to
" correct" this ill-defined problem.
Environmental Laws Must Consider Costs Representing U S utilines at an international Complying with environmental laws carries meeting in Belgium. Omo Edison President an expensive price tag for us and our Justin T Rogers, Jr., summarized our position customers At our seven-unit W. H. Sammis " Depending upon the particular bill, the cost Plant alone, our cost was $409 million in all, to the electric utity industry is estimated at we've spent nearly $1 billion to meet envr up to $222 billion. With edreds of billions ronmental regulations. of dollars at stake, and serious aoub's about results, we feel that Congress must some But already, some environmental groups are how be convinced to base answers to ' acid demanding more. They're pushing for legisla- rain' questions on science, r.ot emotion tion to curb so-called " acid rain! Despite or politics '
mounting evidence that raises serious ques-tions about the cause and effect of acidity We recognize that concerns about " acid in rainfall, their demand is for still more rain" must be addressed But there is too costly controls. little hard evidence to accurately determine
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the cause and effect. We are, however, sup- some 1,300 families received credit toward l porting and participating in research to their energy bills. The Salvation Army and accurately identify the problem as well as other charitable organizations administer the most cost-effective remedy. " Project Reach.'
We also promote state and public financial Financial Help for Customers in Need assistance programs. Through such means Despite everything we're doing to keep our (
as the Home Energy Assistance Program electric service reasonably priced and to and Ohio Energy Credits Program, public stimulate new business, some people, often funds are available to help elderly, low-through no fault of their own, have trouble income and other needy customers.
paying their energy bills.
To give these people a helping hand, we spearheaded the " Project Reach" customer assistance program in the fall of 1984. It provides financial help to handicapped, low-income elderly and unemployed customers.
With an initial gift of $70,000, Ohio Edison and Penn Power sought the support of employees and customers by offering to contribute 50 cents, up to $120,000 annually, for every dollar they donate.
By the end of 1984, nearly $170,000 in con-tributions were collected or pledged and
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16
Financial Review 1
Contents l 18 Management's Discussion 19 Management Report l 20 Selected Financial Data 20 Common Stock information I 21 Consolidated Financial Statements 37 Auditors' Report 38 Consolidated Financial Statistics 39 Consolidated Operating Statistics l
l t
i 17
Management's Discussion and Analysis of Results of Operations and Financial Condition Results of Operations Scheduled and forced outages at the Company's W.H.
R:sults of operations for 1984 showed healthy improve- Sammis Plant were primariiy responsible for the 6.4%
m:nt by many financial indicators. Increases in eamings increase in maintenance costs experienced in 1984 on common stock and earnings per share of common compared to 1983. This is contrasted by the maintenance stock of 27.6% and 12.6%, respectively, were achieved cost reductions experienced at that plant in the prior year.
over 1983 levels. The increase in earnings per share of The outages at the W.H. Sammis Plant and the Companies' common stock resulted despite a significant increase in increased kilowatt hour sales resulted in an increase of the weighted average number of shares of common stock 13.3% in purchased and interchanged power during 1984.
outstanding in 1984. Return on average common equity The decrease in purchased and interchanged power in 1983 was 15.9% in 1984 compared to 14.2% and 13.5% in was the result of the improvement in generating unit 1983 and 1982, respectively. This significant financial availability experienced in that year compared to 1982.
performance was achieved primarily due to the improved The Companies' on-going construction programs, requiring cconomic conditions within the Companies service are and continued success in the bulk power sales market. the continuation of debt and equity financing, resulted in a higher level of interest expense and preferred dividend Indicative of ,mproved i economic conditions was a 9.2%
requirements in 1984. During 1984, the Companies increased ft increase in kilowatt-hour sales to the Companies, industrial their net long-term debt outstanding by $438,831,000, customers in 1984 compared to 1983. Kilowatt-hour sales consisting of $515,700,000 of new long-term debt with an to the Companies residential and commercial customers i effective annualinterest rate of 13.3% offset by long-term w:re up slightly, with increases of 1.5% and 0.1%, respect-debt maturities of $76,869,000 which carried an effective ively. In addition to the increased kilowatt-hour sales t annual interest rate of 7.0%. The Companies also raised customers, the Companies act.ieved a 57.4% increase in
$61,250,000 through the issuance of additional preferred sales to other utilities.
Copies' construction projects proceed and Also contributing to the 1984 earnings increase was a until the projects are placed in service and/or included in rate
$6,751,000 noncash adjustment to Penn Power's depreciation base, the total allowance for funds used during construction reserve, which increased eamings per share by $.06 during (AFUDC) will continue to increase in order to capitalize the the third quarter. This adjustment, which was ordered by appropriate financing costs which are not currently recovered the Pennsylvania Public Utility Commission (PPUC), through rates.
reflects previously recorded depreciation not recovered in retail rates but which will be recovered in future rates, and Information with respect to the estimated effects of inflation upon the Companies is given in Note 10.
is included in Miscellaneous income on the Consolidated Statements of income. Excluding the effect of this Capital Resources and Liquidity adjustment in 1984, the increases in 1984 earnings on The Companies' 1984 capital requirements for their construc-common stock and earnings per share would have been tion programs, capital leases and nuclear fuel, were approxi-24.6% and 9.9%, respectively, and the earned return on mately $868,000,000, of which approximately $582,000,000 average common equity would have been 15.5%. was financed externally. Over the last five years, construction increased operating revenues, resulting frorn rate increases costs were approximately $3,500,000,000, of which approxi-granted in 1984 in addition to a 9.9% increase in total mately $2,700,000,000 was provided from extemal sources.
kilowatt hour sales, were partially offset by decreases to N G854989 constmetion program is currently estimated to the Companies' fuel recovery rates in 1984 compared to be $2,600,000,000; the issuance of additional common stock 1983. Due to the nature of the Companies' fuel recovery and other securities will be necessary to fund a major portion clauses, a reduction in fuel recovery rates, while decreasing of this new construction. The Companies have additional total revenues, does not create a corresponding reduction cash requirements of approximately $79,000,000 in 1985 and in earnings; this results from the objective of matching $1,100,000,000 for the 1985-1989 period to meet maturities of fuel revenues and expenses accomplishea by the use of and sinking fund requirements for, long-term debt, long-term deferred fuel accounting. The direct correlation between obligations, and preferred and preference stock.
the fuel recovery rates charged to the Companies' cus- The Companies' current financing plans for 1985 include tomers and fuel prices is illustrated by the very slight the issuance of up to: 6,700,000 shares of common stock increase in fuel costs in 1984, despite an 8.6% increase in through the Dividend Reinvestment and Stock Purchase kilowatt hour output from the Companies' generating units Plan; 6,000,000 additional shares of common stock through compared to 1983. The reduced fuel rates charged to public or private sales; $100,000,000 of preferred stock; customers in 1984 were made possible due to lower prices $60,000,000 of pollution control notes; and $240,000,000 of paid for coal. A similar situation occurred in 1983 compared other long-term debt (of which $60,000,000 was issued or to 1982 due to the lower prices paid for coal in 1983. committed to be issued by the end of February 1985). Addi-tional investments in nuclear fuel of approximately $40,000,000 in 1985 will be made through the incurrence of additional long-term obligations.
18
= At December 31,1984, the Companies had approximately ance period, is required when the project is placed in service.
- $121,000,000 of cash and temporary cash investments, and However, during the revenue offset period, AFUDC will be approximately $241,000,000 of funds held in escrow from accumulated on that portion of plant in service not included previous pollution control financings. The Companies also in the rate base valuation and will subsequently be recovered have $50,000,000 of short-term bank lines of credit available from customers in future periods.
to them for interim financing purposes. In January 1985, the The Companies currently have rate cases pending before the Company arranged a bank revolving credit agreement providing PUCO and the PPUC which, if granted in full, are designed to for borrowings of up to $500,000,000. The agreement will increase annual revenues by approximately $135,000,000 cxtend to the end of 1987 at which time any outstanding and $20,000,000, respectively. Penn Pbwer filed its rate borrowings may be converted to an amortizable term loan for increase request in October 1984, and the Company's an additional three-year period. This agreement will benefit application was filed in January 1985. Rate orders are both customers and stockholders because it will give the anticipated during the third and fourth quarters of 1985, e Company more flexibility in the timing and terms of future respectively.
securities issues.
. The Company was granted a retail base rate increase, cffective August 1,1984, which was designed to produce Management Report additional annual revenues of approximately $35,400,000; the Company requested $127,200,000 in its rate filing made in The consolidated financial statements were prepared by October 1983. The Public Utilities Commission of Ohio the management of Ohio Edison Company, who take (PUCO) allowed $115,000,000 of construction work in responsibility for their integrity and objectivity. The progress (CWIP) to be included in the Company's rate base, statements were prepared in conformity with generally thereby permitting the Company to recover financing costs accepted accounting principles and are consistent with related to certain construction projects on a current basis; other financial information appearing elsewhere in this however, no allowance was provided for current recovery of report. Arthur Andersen & Co., independent public financing costs applicable to Perry Unit 1, a nuclear generating accountants, have expressed an opinion on the Company's
, unit scheduled for operation in late 1985. The PUCO cited the financial statements, as shown on page 37.
delays which had taken place with respect to the completion The Company's internal auditors, who are responsible to date for the Unit and alleged that the Unit would not be in the Audit Committee of the Board of Directors, review the service during the period that the new rates would be in results and performance of operating units within the cffect. The Company had been recovering financing costs Company for adequacy, effectiveness and reliability of applicable to $126,300,000 of its investment in that Unit accounting and reporting systems, as well as managerial under the prior rates approved by the PUCO. Penn Pbwer and operating controls.
requested a rate increase of $19,900,000 in its rate filing in July 1983, of which the PPUC granted a $15,400,000 retail The Audit Committee consists of four non-employee base rate increase effective April 11,1984. directors whose duties include: consideration of the adequacy of the internal controls of the Company and the
' Those rate increases, plus a January 1984 PUCO order objectivity of financial reporting; inquiry into the number, 4
concerning the Company's electric fuel component rate extent, adequacy and validity of regular and special audits which has allowed the Company the opportunity for recovery conducted by independent public accountants and the of curr nt and deferred Quarto coal costs as discussed in intemal auditors; the recommendation of independent Nota 7, have had a favorable effect on the Company's accountants to conduct the normal annual audit and intemal cash generation. The Company's deferred Quarto special purpose audits as may be required; and reporting 4
coal costs, amounting to $57,375,000 at December 31,1983, to the Board of Directors the Committee's findings and any have been reduced to $27,640,000 at December 31,1984-recommendation for changes in scope, methods, or in January 1985, the Governor of Ohio signed into law a procedures of the auditing functions.The Audit Committee - ,
CWIP bill that had been pending for several months. This law held three meetings during 1984.
- continues to give the PUCO discretionary authority to grant a rusonable allowance for CWIP in rate base under certain con- pf
[
ditions. While the law also continues to allow CWIP for other ,,
f) 044oC' M than pollution control projects to be considered for inclusion V. A. 0 woc W. A. Daniel 6I in rit) base, it has reduced to 10% of rate base (exclusive of Executive Vice President Comptroller CWIP) from 20% allowed under prior law, the amount of non. Chief FinancialOfficer
- pollution control CWIP includable in rate base. Fbilution con-trol CWlP may continue to be included up to 20% of rate i
base exclusive of CWIP. Also, if CWIP is allowed in rate base, a revenue offset period, similar in duration to the CWIP allow-i
^
19
Orno Ed sod Company
. Sel:ct:d Fin:ncial Data .j i
1984 1983 1982 1981 1980 l (In thousands, except per share amounts)
Operating Revenues $1,637,104 $1,515,852 $1,429,626 $1,279,649 $1,080,869 Operating Income 342,713 302,751 269,640 252,381 169,383 Income Before Extraordinary items 339,333 272,400 195,571 183,020 135,150 Net income 339,333 272,400 215,729 197,062 135,150 Eunings on Common Stock 290,694 227,B43 181,496 163,892 101,403 Eunings per Share of Common Stock (based on weighted average number of shares outstanding during the year) i Before Extraordinary items 2.50 2.22 1.89 2.10 1.52 j Earnings on Common Stock 2.50 2.22 2.13 2.30 1.52 l Dividends Declared per Share of Common Stock 1.84 1.80 1.76 1.76 1.76 Total Assets at December 31 6,690,098 5,960,374 5,247,138 4,460,274 3,979,965 l Pr:ferred and Preference Stock Subject to i Mandatory Redemption 158,483 158,112 152,560 151,141 156,450 ;
long-Term Debt 2,449,502 2,132,137 2,005.436 1,759,771 1,594,384 Long-Term Obligations 822,234 759,843 656,655 447,484 265,000 I Common Stock Data The Company's Common Stock is listed on the New Wrk and Midwest Stock Exchanges and is traded on other registered exchanges.
Price Range of Common stock 1984 1983 First Ouarter High-Low 13-3/4 11-3/4 15-7/8 13-7/8 Second Quader High-Low 12 9-3/8 16-1/8 14-3/8 4
Third Quarter High-Low 12-1/8 9-7/8 15-1/4 14 Fourth Quarter High-Low 14-1/8 11-5/8 16 11-7/8 early High-Low 14-1/8 9-3/8 16-1/8 11-7/8 Prices are as quoted on the New Wrk Stock Exchange Composite Transactions.
l Classification of Holders of Common Stock l
as of December 31,1984 Holders of Record Shares Held l Number % Number %
Individuals 185,858 88.70 56,771,012 46.44 I Fiduciaries 19,263 9.19 4,492,592 3.68 Brokers 70 0.03 1,334.450 1.09 Nominees 419 0.20 56,867,993 46.52 Banks & FinancialInstitutions 21 0.01 44,223 0.04 Insurance Companies & Other Corporations 1,982 0.95 1,549,572 1.27 Charitable, Religious & Educational Institutions 470 0.23 247,786 0.20 Pensions, Profit Sharing & Other Investment Trusts 1,446 0.69 929,008 0.76 Total 209,529 100.00 122,236,636 100.00 As of January 31,1985, there were 209,225 holders Quarterly dividends of 46e and 45e per share were paid on the cf 122,489,026 shares of the Company's Common Stock. Company a Common Stock during 1984 and 1983, respectively.
Information regarding retained earnings available for payment of cash dividends is given in Note 4b.
20
Ohio Edeco Conpiny Consolidated Statements of income Fct the Wars Erxled December 31 1984 1983 1982 (In thousands, except per share arnounts)
Operahng Revenues $1,637,104 $1,515,852 $1,429,626 Operahng Expenses and Taxes:
Oper1 tion-Fuel 422,805 420,336 432,749 Purchased and interchanged power, net 56,659 50,026 52,607 Other operation expenses 267,288 234,526 221,129 Total operation . 746,752 704,888 706,485
. Maintenance 129,313 121,544 139,615 Provision for depreciation and amortization 131,340 124,572 105,072 General taxes . 136,880 126,818 114,569 Income taxes 150,106 135,279 94,245 Total operating expenses and taxes 1,294,391 1,213,101 1,159,986 Operahng income 342,713 302,751 269,640 Other income and Deduchons:
Allowance for equity funds used during construction 152,567 121,814 84,210 Miscillaneous, net 28,928 20,812 16,871 income taxes-credit 82,383 64,923 59,166 Total other income and deductions 263,878 207,549 160,247 TotalIncome 606,591 510,300 429,887 Net Interest and Other CharEes.
Interest on long-term debt 267,391 233,626 211,765 Inter:st on long-term obligations 89,780 73,177 80,092 Al!owance for borrowed funds used during construction, net of deferred income taxes (104,351) (81.901) (76,088)
Other interest expense 5,473 5,702 12,449 Subsidiary's preferred stock dividend requirements 8,%5 7,296 6,098 N;t interest and other charges 267,258 237,900 234,316 income Before Extraonhnary item 339,333 272,400 195,571 Extraordmary item-Gain on exchange of common stock for first mortgage bonds (Note 8) - -
.20,158
, ' Net income 339,333 272,400 215,729 Preferred and Preference Stock Divklend Requirements 48,639 44,557 34,233 Earnmes on Common Stock $ 290,694 $ 227,843 $ 181,496 Weighted Average Number of Shares of Common Stock Outstanding 116,171 102,414 85,241 Earness Per Share of Common Stock (based on weighted average number of shares outstanding during the year): '
Before extraordinary item (after preferred and pr:ference stock dividend requirements) $2.50 $2.22 $1.89 Extraordinary item - -
.24 Earnings on common stock $2.50 $2.22 $2.13 Dividends Declared Per Share of Common Stock $1.84 $1.80 -
$1.76 l The ccompanying Notes to Consolidated Financial Statements are an integral part of these statements.
l i
21
6 bio Ecson Company Consolid:t :d Balanco Sheets ;
At December 31 1984 1983
' Assets (In thousands)
Utility Plant:
In service, at original cost $4,043,391 $3,700,313 Less-Accumulated provision for depreciation 1,161,565 1,062,173 2,881,826 2,638,140 Construction work in progress-Electric plant . 2,785,977 2,351,089
- Nuclear fuel ' 277,746 216,905 3,063,723 2,567,994 5,945,549 5,206,134 Other Property and investments '69,560 63,614 Current Assets:
Cash 5,147 2,781 Temporary cash investments, at cost, which approximates market value 115,930 112,993 Receivables- -
Customers (less accumulated provisions of $1,310,000 and
$1,541.000, respectively, for uncollectible accounts) 135,322 132,968 Other 20,169 19,416 Materials and supplies, at average cost-Fuei 87,499 69,047 ,
Other 44,822 45,657 Prepayments 46,990 41,184 455.8'19 424,046 Deferred Charges.
Deferred Quarto coal and other energy costs (Note 7) 38,542 67,254 -1 Property taxes 57,601 52,575 'l Unamortized costs of terminated construction projects (Note 2) 84,378 94,747 i Other 38,589 52,004 ;
219,110 266,580 56,690,098 $5,960,374
. Capitalizabon and Liabilities "
Capstalezabon (See Consolidatec Statements of Capitalization): ?
Common stockholders
- equity , $1,947,357 $1,711,974 Pr:ferred stock-Not subject to mandatory redemption 363,585 352,335 Subject to mandatory redemption 56,000. t50,000 Pr:ference stock-Not subject to mandatory redemption 50,000 50,000 Subject to mandatory redemption 45,922 50,641 Pr:ferred stock of consolidated subsidiary-Not subject to mandatory redemption 41,905 41,905 Subject to inandatory redemption 56,561 47,471 l Long-term debt 2,449,502 2,132,137 i 5,010,832 4,406,453 Long-Term Obligabons.
Construction energy trust (Note 5). 500,000 500,0'00 i 290,323 '
Nuclear fuel (Note 5) 219,364 Capitalleases(Note 3) 31,911 40,479 822,234 759,843 Current Liabilibes: ,.
Currently payable preferred and preference stock, long-term debt and long-term obligations 79,124 94,532 Notes payable to banks (Note 6) - -
Accounts payable 171,796 -) 154,727 Accrued taxes 52,915 '
52,564 Accrtied interest 83,107 67,891 Other 61,975 44,072 448,917 413,786 Deferred Credits. -
Accumulated deferred income taxes 178,440 158,437 Accumulated deferred investment tax credits , 145,409 107,390 Property taxes 57,601 52,575 Energy costs recovered in advance , 9,094 33,335 Other 17,571 28,545 408,115 >- 380,282-Commitments, Guarantees and Conhneenoes (Notes 3 and 7) 56,690,098 $5,960,374 The w.v..W,g Notes to Consohdated Financial Statements are an integral pad of these balance sheets.
22 yj
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+ ONo Eccon Company Consolid ted Stat ments of Capitalization N December 31 1984 1983 Cmunen StocMunders' Equity- (in thousands) s Common stxk, $9 par value, authormed 155,000.000 shares-
! 122236/D$ and 108.460,054 shares outstandng, respectrwely (Note da) $1.100,130 $ 976.140 Other pautoricapital 529.596 494,520 Retainec'sanwngs (Note 4b) 317,631 241.314 Tutai common s'ackholders' equity 1,947,357 1.711.974 Optional Redemption Price Nun,ber of SharesOutstandng pgg,,g,,,
1984 1983 Per Share (in Thousands)
Preferred Stock (Note 4ck Cumulettve, $100 par value- Authoreed 6,000,000 shares Not Siblect to Mandatory Redemption:
' 3.90 % -7 24 % 973.350 973,350 $103.3&108.00 $102,034 97,335 97.335 7.36 % ;8.20'4 800.000 800,000 $104.68105.35 84,046 80,000 80,000 8645-9.12% 850,000 850.000 $106.48-106.84 90,670 85,000 85.000 Total not subject to mandatory redemption 2.623.350 2.623.350 $276,750 262.335 262,335 hjet to Mandatory Redemption (Note 4d)-
10.48 % -10.76 % 576.810 615.000 $107.86-111.87 $ 63.338 57,681 61,500 Redemplean within one year (1,681) (1,500)
Total subject to mandatory redemption 56,000 60.000 Cumulative, $25 par value-Authorized 8,000,000 shares Nc4 Subject to Mandatory Rederrption:
$3.50 Seres 2.000.000 2.000,000 $28.75 $ 57.500 50,000 50,000 Series A 2.050.000 -
$25.00 51250 51,250 -
4.050.000 2.000,000 $108.750 101,250 50.000 Preference Stock (Note 4c)-
Cumulative, no par value-Authorized 8.000,000 shares Not Subject to Mandatory Redemption:
$3.92 Senes 2.000.000 2,000.000 $31.42 $ 62,840 50,000 50.000 Subject to Mandatory Redemption (Note de):
$95.00-$102.50 Senes 26,100 27.000 $1.070.00h t,078.50 $ 27,999 26,100 27,000
$1.80 Seres 1,589,096 1.622,546 $15.58 24.750 24,035 24.541 Redemption within one year (4.213) (900)
Total stepect to mandatory redemption 1.615.196 1,649.546 $ 52.749 45.922 50.641 Preferred Stock of Corwaad m=y (Note 4ct Curn.slative, $100 par value- Authonzed 950.000 shares Not Subject to Mandatory Redemption-4 24 % -9.16 % 419.049 419.049 $102.98-106.87 $ 43.954 41,905 41.905 Subject to Mandatory Redemption (Note 4d):
8 24 % -15.00 % 570.616 d 1.708 $103.2S114 62 $ 62,302 57,061 47,971 Redemption within one year (500) (500)
Total subject to mandatory redemption 56,561 47,471 inng-Term Debt (Note 4f):
First mortgage bonds:
Ohio Edison Company-9.15% weighted average interest rate, due 198F1989 160.679 186,455 15.51 % weghted average interest rate, due 1990-1994 398,252 218.252 1007% weighted average interest rate, due 1995-1999 129,345 129.345 8 50% weighted everage interest rate, due 2000-2004 197,876 197,876 9 09% weghted average interest rate, due 2005-2009 274,310 274,310 13.44 % weighted average interest rate, due 2010-2014 200.000 150.000 1,360,462 1.156,238 Pennsylvarna ibwer Company-10.61% weighted average interest rate, due 1985-2008 279.000 259.000 Total first mortgage bonds 1,639,462 1,415,238 i
Secured notes and otalgations:
Ohio Edson Company-9.73% weighted average interest rate, due 1985-2014 484.172 282,215 Amount held by Tustee (106,138) (985) 378,034 281.230 Ohio Edson Finance N V-17.38% weghted average interest rate, due 1987-1988 150,000 150.000 Pernsylvarua Fbwer Company-9.48% weighted average interest rate, due 1985-2014 80.311 67.661 Amount held by Trustee (13.305) (2,572) 67,006 65,089 g .ecured notes and obhgations 595,040 496.319 Unseuad notes of Ohio Edson Cortpany,11.36% weghted average interest rate, due 1986-2014 402,000 402.000 An arit held by Trustee (114.823) (93.555)
Total unsecured notes a ')hio Edison Company 287,177 308.445
' Net unamortized escount on debt (18.987) (11.128) long term debt (Le within one year (53,190) - (76.737)
Totallong-term debt 2.449,502 2,132,137 TotalCageems,=han $5,010.832 $4.406.463 The aw.er g Notes w to Consolidated Financial Statements are an integral part of these statements.
23 l
Oh;o Edisco Company Consolidated Stat:m:nts of R:tained Eamings l
For the Wars Ended December 31 1984 1983 1982 (in thousands)
Balance at beginning of period $241,314 $200,439 $171,191 Net income 339,333 272,400 215,729 580,647 472,839 386,920 i Deduct:
Cash dividends on preferred and preference stock 49,100 45,468 34,488 Cash dividends on common stock 213,916 185,309 151,289 Capital stock expense -
748 704 263,016 231,525 186,481 l Balance at end of period (Note 4b) $317,631 $241,314 $200,439 l l
Consolidated Statements of Capital Stock and Other Paid in Capital Preferred and Preference Stock Not Subject to Subject to Common Stock Mandatory Redemption Mandatory Redemption Number Par Other Paid- Number Par or Number Par or of Shares Value in Capital of Shares Stated Value of Shares Stated Value (Dollars in thousands)
Balance, January 1,1982 78.675,703 $708,081 $349,772 3,042,399 $304,240 2,960,844 $152,917 ,
Sale of Cornmon Stock 10,000,000 90,000 42,000 - - -
Dividend Reinvestment Plan 4,644.622 41,802 17.647 - - - -
Exchange of Common Stock for First Mortgage Bonds 2,650,600 23,855 9,463 - - - -
Conversion of $1.80 Preference Stock 110,919 999 610 - -
(110,919) (1,678)
Sale of $3.92 Series of Preference Stock - -
2,940 2,000,000 50,000 - -
Sale of 15% Series of Preferred Stock - - - - - 80,000 8,000 Preferred Stock Sinking Fund Redemptions-8.24% Series - - - - -
(5,000) (500) i 10.48% Series - -
284 - -
(13,130) (1,313) j 10.76% Series - -
435 - -
(20,000) (2,000) .
11.00% Series - -
44 - -
(4,033) (403)
Balance, December 31,1982 96,081,844 864,737 423,195 5,042,399 354,240 2,887,762 155,023 l Sale of Common Stock 5,000,000 45,000 33,350 - - - -
i Dividend Reinvnstment Plan 7,138,575 64,247 33,056 - - - -
Conversion of $1.80 Preference Stock 239,635 2,156 1,332 - - (239,635) (3,624)
Sale of $3.50 Series of Class A Preferred Stock - -
3,140 2,000,000 50,000 - -
Sale of 11.5% Preferred Stock - - - - - 150,000 15,000 Preferred Stock Sinking Fund Redemptions- l i
8.24% Series - - - - -
(5,000) (500) l 10.48% Series - -
270 - -
(24,630) (2,463) 10.76% Series - -
160 - -
(20,000) (2,000) 11.00% Series - -
17 - -
(4 243) (424)
Balance, December 31,1983 108,460,054 976,140 494,520 7,042,399 404,240 2,744,254 161,012 Sale of Common Stock 3,673,400 33,061 13.599 - - - -
Dividend Reinvestment Plan 10,067,071 90,604 23,333 - - - -
Employee Stock Ownership Plan 2,661 24 12 - - - -
Conversion of $1.80 Preference Stock 33,450 301 187 - -
(33,450) (506) ,
Capital Stock Expense - -
(2,548) - - - -
i' Sale of Series A Class A Preferred Stock - - - 2,050,000 51,250 - -
Sale of 13% Preferred Stock - - - - -
100,000 10,000 Preferred and Preference Stock Sinking Fund Redemptions-8.24% Series - - - - -
(5,000) (500) 10.48% Series -- -
252 - -
(18,190) (1,819) I 10.76% Series - -
218 - -
(20,000) (2,000) 11.00% Series - -
23 - -
(4,092) (409)
$102.50 Series - - - - -
(900) (900)
Balance December 31,1984 122.236,636 $1,100,130 $529.596 9,092,399 $455,490 2.762,622 $164,878 j The accompanying Notes to Conschdated Financial Statements are an integral part of these statements.
24
~ E73olgason Compan/
Consolid ted St:.t:m:nts of Soure:s of Funds for Property Additions Foi the Wars Ended Decernber 31 1984 1983- 1982 Internally generated funds- (In thousands)
Income before extraordinary item $339,333 $272,400 $195,571 Principal noncash items-Depreciation and amortization 142,260 139,078 107,025 Deferred income taxes, net 113,551 80.814 91,832 Investment tax credits, net 38,026 53,670 7,312
~ Allowance for equity funds used during construction (152,567) (121,814) (84,210)
Deferred fuel and energy costs, net 4,471 23,009 4,609 485,074 448,057 322.139 Less-Dividends on common stock 213,916 185,309 151,289 Dividends on preferred and preference stock 49,100 45,468 34,488 222,058 217,280 136,362 Finincing activities-Common stock 160,633 175,653 224,767 Pr:ferred and preference stock 61,250 - 68,140 60,940 Long-term debt 375,154 252,800 295,833 Long-term obligations 82,329 88,224 209,171 Repayment of preferred and preference stock, long-term debt and long-term obligations (97,790) (88,191) (43,295)
Not:s payable to banks - -
(74,400)
Sale of tax benefits - -
10.480 581,576 496,626 683,496 Net change in current assets and current liabilities excluding not ts payable to banks and currently payable preferred and przf;re, ce stock, long-term debt and long-term obligations-Cash and temporary investments (5,303) (51,462) (48,266)
Receivables (3,107) (11,475) (9,( '3)
Materials and supplies (17,617) 22,446 (12.045)
Accounts payable 17,069 20,951 (8,942)
Accrued taxes 351 1,449 4,041 Accrued interest 15,216 10,155 17,754 Miscellaneous, nel 12,097 12,463 (16,082) 18,706 4,527 (72,603)
Other, net-Allowance for equity funds used during construction 152,567 121,814 84,210 Sale of utility property - -
13,568 D f;rred income taxes on allowance for borrowed funds used during construction (92,502) (76,982) (67,127)
Miscellaneous, net (14,306) 7,866 (3,673) 45,759 52,698 26,978 Total Sources of Funds for Property Additions $868,099 $771,131 ' $774,233 Property Additions-Electric plant $799,572 $689,646 $648,633 Nuclear fuel 60,842 55,032 124,292 Capitalleases 6,855 25,333 -
- Nonutility property 830. 1,120 1,308
$868,099 $771.131 $774,233 The accornpanying Notes to consoldated Financial statements are an integral part of these statements.
25
Ohio Edison Company Consolidated St:.t:ments cf Txo For the Years Ended December 31 1984 1983 1982 General Taxes: (in thousands)
State gross receipts $ 71,044 $ 65,495 $ 56,808 Real and personal property 48,717 47,099 45,028 Social security and unemployment 12,649 10.097 8,990 Miscellaneous - 4,470 4,127 3,743 Total general taxes $136,880 $126,818 $114,569 Prwision for income Taxes:
Currently payable-Federal $ 5,778 $ 10,119 $ 324 State 2,616 2,507 2.532 Foreign 254 228 206 8,648 12.854 3,062 j Deferred, net (see below)- i Federal . 108,154 75,947 88,666 ;
State 5,397 4.867 3,166 113,551 80,814 91,832 investment tax credits, net of amortization 38,026 53,670 7,312 Total provision for income taxes $160,225 $147,338 $102,206 Income Statement Classification of Prwision for income Taxes:
Operating expenses $150,106 $135,279 $ 94,245 Oth rincome (82,383) (64,923) (59,166)
Allowance for borrowed funds used during construction 92,502 76,982 67,127 Total provision for income taxes $160,225 $147,338 $102.206 Sources of Deferred Tax Expense:
Allowance for borrowed funds used during construction, which is credited to plant $ 92,502 $ 76,982 $ 67,127 Excess of tax over book depreciation, net 25,045 23,081 17,387 Pensions and taxes charged to utility plant, net 4,923 4,153 2,675 Diferred fuel and energy costs, net (1,805) (10,202) 7,000 Deferred interest on leased nuclear fuel, net (5,824) (3,165) (2,840)
Cost of terminated construction projects, net (3,952) (3,258) 384 Othir, net 2,662 (6,777) 99 Total deferred tax expense, net $113,551 $ 80,814 $ 91,832 Reconcilsation of Federal Income Tax Expense at Statutory Rate to Total Prwision for income Taxes:
Book income before provision for income taxes $499,558 $419,738 $317,935 Federal income tax expense at statutory rate $229,797 $193,079 $146,250 Incr ases (reductions)in taxes resulting from:
Allowance for equity funds used during construction, which does not constitute taxable income (70,181) (56,034) (38,737)
Excess of book over tax depreciation 10,163 9.115 4,026 !
Gain on exchange of common stock for first mortgage '
bonds, which does not constitute taxable income (9,273) )
Other, net (9,554) 1,178 (60) l Total provision for income taxes $160,225 $147,338 $102.206 I The occompanying Notes to Consohdated Financial statements are an integral part of these statements.
I i-l 26
Notes t3 Consolid:ted Fin:nci:1 St:t:ments 1 Summary of Significant Accounting Policies: Utility Plant and Depreciation-The consolidated financial statements include Ohio Edison Utility plant reflects the original cost of construction, includ-Company (Company) and its wholly owned subsidiaries, ing payroll and related costs such as taxes, pensions and Pennsylvania Pbwer Company (Penn Pbwer) and Ohio Edison other fringe benefits, administrative and general costs and Finance N.V. All significant intercompany transactions have allowance for funds used during construction (see AFUDC).
been eliminated. The Company and Penn Power (Companies)
The Companies provide for depreciation on a straight-line follow the accounting policies and practices presenbed by basis at various rates over the estimated lives of preperty The Public Utilities Commission of Ohio (PUCO), the included in plant in service. The annual composite rates for
- Pennsylvania Public Utility Commission (PPUC) and the electric plant were 3.5% in 1984,3.4% in 1983 and 3.3% in Federal Energy Regulatory Commission (FERC).
1982. The Company's depreciation rates include provisions Remnues- for the estimated decommissioning costs for its only nuclear The Companies' residential and commercial customers are generating unit in service. Penn Pbwer provides for the cost metered on a cycle basis. Revenue is recognized for electric of decommissioning radioactive components only, in service based on meters read through the end of the month, accordance with a PPUC rate order.
Deferred Fueland Energy Costs- Common Ownership of Generating Facilities-The Company recovers fuel-related costs from its retail The Companies and other Central Area Pbwer Coordination customers through an electric fuel component (EFC). The Group (CAPCO) companies own, as tenants in common, EFC is an estimated fixed rate per kilowatt-hour included on various power generating facilities. Each of the companies is customer bills for a six-month period and is based upon fuel- obligated to pay a share of the construction costs of any related costs for the preceding six-month period. Any over or jointly owned facility in the same proportion as its ownership under collection resulting from the operation of the EFC is interest. The Companies' portions of operating expenses included as an adjustment to the EFC rate in a subsequent associated with these jointly owned facilities are included in six-month period. Accordingly, the Company defers the the corresponding operating expenses on the Consolidated difference between actual fuel-related costs incurred and Statements of income. The amounts reflected on the the amounts currently recovered from its customers. Consolidated Balance Sheet under utility plant at December Penn Power recovers fuel and energy costs from its retail 31,1984, include the following:
customers through an annual "levelized" energy cost rate (ECR). The ECR, which includes adjustment for any over or cene<aw.a unas uiu, nani in sense U "U 57 oemeaaton emwess UIwerest under collection from customers, is recalculated each year. on mc.mame Accordingly, Penn Fbwer defers the difference between actual energy costs and the amounts currently recovered L",C',',,, ,2 ano es $ $ *7 Beaver vaney ei o) 544.071
$5 1
127.772 E
69.006 52 50 %
('",,*j' ,f* 5)
~
4 from its customers. Z ,$2Q Reference is made to Note 7 with respect to accounting for M $UM.586 $295.M0 $2.619.989 the cost of coal received from Quarto Mining Company ouncodes a==n iacmiies auncata ro sea = vaney e2 (Quarto). All nuclear fuel in process relates to the CAPCO units but is not segregated among them.
Nuclear Fuel-The Companies amortize the cost of nuclear fuel based on the rate of consumption. The Companies also make provision for future disposal costs associated with the nuclear fuel.
27
Not:s to Consolidated Financial Statements-(Continued)
Allowance for Funds Used During Construction (AFUDC)- The Companies defer investment tax credits utilized and AFUDC represents the net financing costs capitalized to amortize those credits to income over the estimated life of construction work in progress during the construction period. the related property. At December 31,1984, approximately AFUDC is not capitalized on that portion of any construction $46,000,000 of unused investment tax credits were available project included in rate base. The borrowed funds portion to offset future Federal income taxes payable. These credits r flects capitalized interest payments and the equity funds expire at the end of the following years:
portion represents the noncash capitalization of imputed equity costs which are charged to construction. The 1%6 $2,M,M Company also charged AFUDC to certain projects which 1%7 2,M,M were completed but not yet included in rate base during 1%8 12,M,M 1983 and 1984, in accordance with a PUCO order. AFUDC 1999 30,000,000 varies according to changes in the level of construction work $46,000,000 in progress and in the cost of capital. The Companies com-puta AFUDC utilizing a net of tax rate, which is consistent Retirement Benefits-with the rate treatment. The AFUDC rate related to assets The Companies' trusteed, noncontributory pension plans financed only through the incurrence of long-term obligations cover almost all full-time employees. Upon retirement ;
(see Note 5)is based on actual interest accrued on the obli- employees receive a monthly pension based on length of gations during the period. The annual rates used by the service and compensation. Pension costs for 1984,1983 Company for all other construction projects were 10.70%, and 1982 were $20,483,000, $16,904,000 and $15,448,000, 10.90% and 10.32% during 1984,1983 and 1982, respec- respectively. Of those amounts, $14,369,000, $11,913,000 tively. Penn Power's rates applicable to such projects were and $10,350,000, respectively, were charged to operating 9.45% in 1984 and 9.25% in 1983 and 1982. expenses; the balances were charged primarily to construc-
" ** * " "" 9 Income Taxes-s e' cosm m an a& anal bass wer approximately 35 Details of the total provision for income taxes are shown on the Consolidated Statements of Taxes. The deferred income
- " "" '"" ## ," P" fund pension costs accrued. A comparison of accumulated taxes result from timing differences in the recognition of plan benefits and plan net assets from the two latest actuan,al revenues and expenses for tax and accounting purposes.
reports is as follows:
The Companies allocate the income tax benefit which results from interest expense related to construction work in progress ^U""' 30- 1984 1983 to income taxes-credit included under other income and Actuarial present value of deductions on the Consolidated Statements of Income. accumjted plan benems:
g $194,518,000 $176.732,000 For income tax purposes, the Companies claim liberalized Nonvested 20.987,000 16,939.000 depreciation and, consistent with the rate treatment, $215.505.000 $193.671.000 generally provide deferred income taxes. The Companies Net assets available for benefits $316.537.000 $314.323.000 expect that deferred taxes which have not been provided will Assumed rate of return for actuarial be coUected from their customers when the taxes become present value of accurnulated plan payable, based upon the established rate making practices benefits 8% 8%
of the PUCO, the PPUC and the FERC. As of December 31 1984, the cumulative net income tax timing differences for The above total actuan.a l present value of accumulated plan which deferred income taxes have not been provided were n s deds pense MeMs appkade M Mgde approximately $700,000,000. employees based upon present salary levels and past years of service accumulated through the valuation date. Th,s i i,s Proceeds from the sales of certain tax benefits in the generally accepted, reporting procedure currently set accordance with provisions of the Economic Recovery Tax forth by the Financial Accounting Standards Board. The Act of 1981 are being amortized over the life of the related Companies' annual contributions to the plans, however, property. Proceeds attributable to investment ttx credits were consider estimated ultimate salary increases due to inflation recorded as additional deferred investment tax credits; the and other factors and the estimated total service expected remaining amounts were recorded as reductions to utility to be accumulated by employees. This is a widely recognized plant in service. fundirg technique and is consistent with the recommendation of the Companies' actuary. In addition, the actuary recom-mended, and the Companies utilized, a discount rate of 7%
for funding purposes. Differences between funding bases and reporting requirements can have a significant effect on the comparisons above.
28 e
The Companies provide a minimum amount of noncontrib- Certain leases entered into prior to January 1,1983, which utory life insurance to retired employees in addition to would be reflected as capital leases on the Consolidated optional contributory insurance features. Health care Balance Sheets, have not yet been capitalized as permitted benefits, which include certain employee deductibles by Statement of Financial Accounting Standards No. 71 c nd co-payments, are also available to retired employees, (SFAS No. 71). If they had been capitalized, total assets their depencants and, under certain circumstances, to and liabilities would have increased by $37,665,000 and their survivors. The Companies pay insurance premiums $40,431,000 at December 31,1984 and 1983, respectively.
to cov r a portion of these benefits in excess of set limits; Also in accordance with SFAS No. 71, the December 31, til amounts up to the limits are paid by the Companies. 1983 Consolidated Balance Sheet and the Consolidated Expenses associated with health care and life insurance Statement of Sources of Funds for Property Additions for benefits for retirees amounted to $3,597,000 in 1984 and are 1983 have been restated to include capital leases entered charged to income during the applicable payment periods, into during 1983.
2 Terminated Construction Projects: The future minimum rental commitments as of December 31, in January 1980, the Companies and all other CAPCO 1984, for leases reported as capital ieases and noncancel-companies terminated plans to construct four nuclear able operating leases are:
generating units. Costs (including settlement of all asserted P 9 claims resulting from termination) unrecovered by the @aP ej a Company and Penn Power as of December 31,1984, applic-able to these units amounted to approximately $69,560,000 1985 $ 14,104,000 $ 10,421,000 and $14,818,000, respectively. The Company is recovering _ 1986 13,138,000 9,689,000
' , ' ~
these costs frorn its PUCO jurisdictional customers through 1987 -
7,051,000 7,775,000 an increment to the allowed rate of return in rate cases and 1988 5,883,000 7,218,000 Penn Pbwer (and the Company with respect to its FERC juris. 1989 4,983,000 6,671,000 dictional customers)is recovering these costs as an operating Years thereafter 75,730,000 105,680,000 cxpenso allowance. Neither company is earning a return on Total minimum lease th3 unamortized investment. The remaining periods of re- payments 1L,889,000 $147,454,000 covery for the Company and Penn Power are approximately 8 and 9 years, respectively. l.ess: Amount representing estimated executory costs 3 Leases: (such as taxes, mainte-The Companies lease a portion of their nuclear fuel require-nance and insurance) ments, certain transmission facilities, computer equipment, included in total minimum offic2 space and other property and equipment under lease payments 22,948,000 cancelable and noncancelable leases. Consistent with the regulatory treatment, the rental payments for capital and Net minimum lease operating leases are charged to operating expenses on the payments 97,941,000 Consolidated Statements of income. Such costs for the three less: Amount representing years ended December 31,1984, are summarized as foilows: interest 56,583,000 1984 1983 1982 Present value of net minimum lease payments $ 41,358,000 (In thousands)
Int rest on capitalized leases $13,524 $10,325 $-
Amortization of capital leases 15,283 12,808 -
All other leases 12,120 11,645 20,776 Total rental payments $40,927 $34,778 $20,776 29
N ta13 C:n:clid .ted Fin:nci:1 St:t:m:nts-(Continued) 4 Capitalization: Statements of Capitalization will decline to eventual (a) Common Stock- minimums per share according to the Charter provisions Through the Dividend Reinvestment and Stock Purchase that establish each series.
Plan, holders of common, preferred and preference stock The Convertible Adjustable Series A Preferred Stock is con-can acquire additional shares of the Company s common vertible into the Company's common stock only during a stock by automatically reinvesting all or a portion of their specified period each quarter and may be converted, based dividends and by making optional cash payments.
upon market price at the time of conversion, to not more Purchases are made at a pnce equal to 100% of the than 6.15 shares nor less than 2.08 shares of common average closing pnce for the Company s common stock for stock for each share of preferred stock surrendered for cach of the five New York Stock Exchange trading days conversion. The Company may, at its option, elect to pur-cnding on the investment date. At December 31,1984, the chase for cash,in lieu of delivery of common stock, any Company had 5,823,487 shares of common stock reserved Convertible Adjustable Series A Preferred Stock surrendered for issuance under this plan, 1,326,600 shares reserved for for conversion, subject to certain limitations.
issuance under a continuous shelf registration program, 1,589,096 shares reserved for possible conversion of the (d) Preferred Stock Subject to Mandatory Redemption-
$1.80 Preference Stock,5,000,000 shares reserved for pos- The Company's 10.48% Series and 10.76% Series each sible conversion of the Convertible Adjustable Series A include provisions for a mandatory sinking fund to retire a Pr:ferred Stock and 497,339 shares reserved for issuance minimum of 20,000 shares every year on December 1, and through the payroll-based employee stock ownership plan. January 1, respectively,. at $100 per share plus accrued (b) Retained Earnings- dividends. Penn Power's 8.24% Series and 11% Series each include provisions for a mandatory sinking fund to Under the Company's indenture, the Company's consoli-retire a minimum of 5,000 shares and 4,000 shares, dated retained earnings unrestricted for payment of cash dividends on the Company's common stock were respectively, every year on December 1, and January 1,
$245,584,000 at December 31,1984. respectively, at $100 per share plus accrued dividends.
Penn Power s 15% Series and 11.50% Series each include (c) Preferred and Preference Stock- provisions for a mandatory sinking fund to retire a minimum At the Companies' option, all preferred and preference of 3,200 shares and 15,000 shares, respectively, on July stock may be redeemed in whole, or in part, at any time 15 of each year, beginning in 1988 and 1989, respectively, upon not less than 30 nor more than 60 days notice, unless at $100 per share plus accrued dividends. Penn Power's otherwise noted. Redemption of all preferred and pref- 13.00% Series includes a provision for a mandatory sinking trence stock issued within the past five years is subject to fund to retire a minimum of 5,000 shares on July 1 of each certain restrictions regarding refunding operations. The year beginning in 1990, at $100 per share plus accrued optional redemption prices shown on the Consolidated dividends. Penn Power's 10.50% Series includes a pro-vision for mandatory redemption of the entire series on April 1,2040, at $100 per share plus accrued dividends.
The sinking fund requirements for the next five years are:
1985 $2,181,000 1986 4,900,000 1987 4,900,000 1988 5,220,000 1989 6,720,000 i
l t
l
(:) Preference Stock Subject to Mandatory Redemption- The weighted average interest rates shown on the The $102.50 Series includes a provision for a mandatory Consolidated Statements of Capitalization relate to long-sinking fund to retire a minimum of 900 shares on July 1 in term debt outstanding at December 31,1984.
c.ach year at $1,000 per share plus accrued dividends. The Total secured and unsecured notes outstanding at
$95.00 Series and $1.80 Series each include provisions for December 31,1984, and December 31,1983, exclude a m2ndatory sinking fund to retire a minimum of 1,800 and
$234,266,000 and $97,112,000, respectively, of certain 100,000 shares, respectively, on July 1 and October 1, pollution centrol notes, the proceeds of which were then rrspectively, in each year beginning in 1985, at $1,000 and in escrow pending their disbursement for construction of
$15.125 per share, respectively, plus accrued dividends.
pollution control facilities. The Companies' obligations Th annual sinking fund requirements are $4,213,000 for to repay certain pollution control revenue bonds are 1985 through 1989.
secured by several series of first mortgage bonds. Certain Tha $1.80 Series is convertible at any time into common unsecured notes are entitled to the benefit of irrevocable stock at a price of $15.125 per share. Holders receive one bank letters of credit of $213,885,000. To the extent that sh re of common stock for each share of $1.80 Preference drawings are made under those letters of credit to pay Stock converted, subject to adjustment under certain principal of, or interest on, the pollution control revenue conditions. bonds, the Company is entitled to a credit on the notes.
(f) Long-Term Debt- The Company pays an annual fee of 5/8% to 7/8% of the am un s of me Ws d Mt m N issdng bads and is Th; mortgages and their supplements, which secure all of ths Companies' first mortgage bonds, serve as direct first o a e anks W an@aMngs eun h mortgage liens on substantially all property and franchises, oth:r than specifically excepted property, owned by the 5 Longterm Obligations:
Comp:nies. Ohio Edison Energy Trust (OEET)-
Based on the amount of bonds authenticated by the OEET, which finances part of the Company's investment Trustees through December 31,1984, the Companies, in Beaver Valley Unit 2, has two lines of revolving credit annual sinking and improvement fund requirements for all available to it for $400,000,000 ar.J $100,000,000. The bonds issued under the mortgages amount to $26,767,000. latter credit also serves as a standby facility in connection Tha Company expects to deposit funds in 1985 which with OEET commercial paper sales; total borrowings under will be withdrawn upon the surrender for cancellation of that credit and commercial paper outstand;ng may not a lik3 principal amount of bonds, which are specifically exceed $100,000,000 at any time.
auth:nticated for such purposes against unfunded property The Company has transferred its interest in Beaver Valley additions or against previously retired bonds. This method Unit 2 (exclusive of common facilities and transmission can rtsult in minor increases in the amount of the annual facilities) to OEET, where the assets are used to secure sinking fund requirements. Ptan Power expects to satisfy OEET borrowings. Under the agreement, the Company its requirements in 1985 by certifying unfunded property presently anticipates payments of $100,000,000 in 1986 additions of 166-2/3% of the requiroj amount. and $80,000,000 in each year 1987 through 1989.
As of December 31,1984, the Companies' sinking fund requir:,ments for certain series of first mortgage bonds and maturing long-term debt for the next five years are:
1985 $ 53,190,000 1986 36,131,000 1987 161,137,000 1988 171,746,000 1989 94,695,000 31 L
N:ta to C:nnlid:t d Fin nci:1 St:t;m:nts-(Continued)
The Company accrues interest applicable to OEET which is The Companies accrue interest applicable to the nuclear subsequently capitalized, net of income tax effect. Interest fuel obligations (for fuel which is not included in utility plant on borrowings under the $400,000,000 line of credit includes in service) which is subsequently capitalized, net of a commitment fee of 1/2% on the unused portion of this income tax effect. No direct borrowings have been or are lini No direct borrowings have been or are expected to be expected to be made against the lines of credit available to made against the $100,000,000 line of credit, but OEET has the fuel corporations; the fuel corporations have issued issued and has outstanding commercial paper supported by and have outstanding commercial paper supported by the this facility. To the extent that borrowings are less than the lines of credit. To the extent that borrowings are less than
$100,000,000 available under this line of credit, the Company the $303,000,000 available under these credit lines, the must pay a commitment fee of 1/2% Under the standby fuel corporations must pay commitment fees of 1/8% to support, an irrevocable bank letter of credit has been issued 1/2% on the available portions of the lines of credit. They upon which OEET pays a fee of 1/8% of the amount of com- also pay fees of 5/8% to 7/8% for the letters of credit on m rcial paper notes outstanding. The effective average the aggregate amount of outstanding commercial paper.
annual interest rates on OEET borrowings were 11.8%, Interest rates on CAET purchase commitments vary from 10.7% and 14.8% during 1984,1983 and 1982, respectively. 1-1/8% to 11/2% over the interest rate applicable to certain dealer placed commercial paper. The effective Nuclear Fuel Financing-average annual interest rates applicable to nuclear fuel Ohio Edison Fuel Corporation and Pennsylvania Power Fuel gadons were Wo, Ma and 12Mo Mng N, Corporation (corporations in which the Companies have no 1983 and 1982, respectively.
ownership interest) provide funds for the procurement of nuclear fuel on behalf of the Companies. The Companies The Companies presently expect to make payments also participate in arrangements wherein the Central Area applicable to these obligations during the next five years Energy Trust (CAET) finances the acquisition of nuclear as follows:
material that will ultimately be used to fuei various CAPCO g:nerating units. Under ordinary circumstances, the 1985 $10,093,000 Companies will make payments for the nuclear fuel as it 1986 35,521,000 is consumed. Financing on behalf of the Companies of 1987 36,574,000 up to $303,000,000 is currently available through the fuel 1988 60,263,000 corporations, either through revolving credit arrangements 1989 46,334,000 or the issuance of commercial paper, which is supported by bank letters of credit, or a combination of both. 6 Bank Lines of Credit and Revolving Credit Agreement:
Financing of up to $137,000,000 is available to CAET on The Companies have lines of credit with domestic banks behalf of th1 Companies, subject to certain limitaticas. that provide for borrowings of up to $50,000,000 at the pre-vailing prime or similar interest rate. Short term borrowings may be made under these lines of credit on the Companies' unsecured notes. All of the current lines expire December 31,1985; however, all unused lines may be cancelled by the banks.
Penn Power maintains cash balances on deposit with banks to provide operating funds, to assure availability of
$8,000,000 of the lines of credit and for other banking arrangements. Such compensating balances, net of
" float," are expected to be maintained at an average of approximately $700,000 and are not subject to any O
32
a contr:ctual restriction against withdrawal. Penn Power is As of December 31,1984, the Company and Penn Power required to pay commitment fees that vary from a flat rate had invested approximately $348,700,000 and $57,300,000, of 3/8% to a variable rate of 5% of the applicable prime respectively, applicable to Perry Unit 2. Delays in the com-int:r st rate to assure the a .ilability of $16,000,000 of the pletion of the Unit can be expected to increase its total linis of credit. cost by amounts which are not presently determinable. If a decision were made to terminate Unit 2, certain costs in J:nuary 1985, the Company arranged a bank revolving are cumnW assignedo Und 2 wM M reassigned, w
credit agreement providing for borrowings of up to where appropriate, to Unit 1. However, cancellation charges
$500,000,000. Interest rates on borrowings under the payable to contractors and other costs of termination could Cgreement will vary depending upon the amount of the be incurred.
current borrowing, total borrowings then outstanding and, at th) option of the Company, may be based upon the pre- Pending completion of the CAPCO review, the Company is vailing prime rate or certain other interest measurements. unable to predict whether the construction on Perry Unit 2 Th3 Company must pay commitment fees of 1/2% on the will continue or, if continued, on what basis such continua- r tverage daily unused portion of the credit agreement. In tion will proceed. If construction of Perry Unit 2 is termi-ctrt in circumstances, borrowings under the agreement nated, the Company cannot now predict whether its invest-ara required to be secured by the Company's first mortgage ment in Perry Unit 2 applicable to its PUCO jurisdictional bonds. At the Company's option, all obligations outstanding customers will be recoverable. If no means of recovery of at December 31,1987, may be converted into an amortiz- the costs of Unit 2,in the case of termination, were avail-abla three-year term loan. able to the Company from its PUCO jurisdictional cus-tomers and no other basis for recovery could be found or 7 Commitments, Guarantees and Contingencies: anticipated, the Company would be required to write off the Construction Program- portion of its investment applicable to its PUCO jurisdic-Th3 Companies' current budget forecasts reflect expendi- tional customers. Based upon the Company's investment tur:s of approximately $2,600,000,000 for property in Unit 2 as of December 31,1984, the Company estimates additions and improvements from 1985-1989, of which that this write-off could be in the range of $205,000,000, approximately $740,000,000 is applicable to 1985. In net of income tax etfect. The Company does not presently addition, the Companies expect to invest approximately anticipate that a write-off of even this magnitude,if re-
, $256,000,000 for nuclear fuel during the 1985-1989 period, quired, would affect its ability to pay common stock divi-of which approximately $40,000,000 is applicable to 1985. dends at current levels, and studies being conducted indi-Th3 major portion of the Companies' construction cate that the magnitude of any such write-off could be activities during this five-year period relates to the CAPCO much smaller. If, despite its best current information, a companies' program for the joint development of power much larger write-off were required, depending upon the gin: ration and transmission facilities. timing involved, such a write-off could temporarily affect Thn CAPCO companies are continuing to review the status the Company's ability to pay common stock dividends at of Perry Unit 2. Until this review has been completed, there current levels. Based on past experience, Penn Power will be no defined schedule for the completion of Unit 2, would expect to recover its investment in Unit 2 through its Pbssible alternatives being reviewed with respect to Unit 2 rates if the Unit were terminated. This is also true for the include temporary cessation of work on the Unit and termi. Company with respect to its FERC jurisdictional customers.
n tion of the Unit. Presently, the only significant work being performed on Unit 2 is that necessary to enable Unit 1 to be pliced in service. This work is expected to be completed sometime in 1985. Whether under those circumstances it would still be appropriate to continue capitalizing AFUDC (as described in Note 1) to Unit 2 is uncertain at this time.
Accordingly, if the CAPCO companies do not decide to r: sum) significant construction, the Companies may not be abl3 to include the AFUDC in net income. Instead, a r: serv) may be provided for AFUDC capitalized to Unit 2 prospectively. Currently, the Companies' AFUDC for Unit 2 is being included in net income at the rate of approximately
$3,600,000 per month.
+
33
N3t:013 C:ns: lid:t d Fin:nci:1 Stct:m:nt -(Continued)
Quarto Project- recovery of the deferred costs, which amounted to Th3 Companies, together with the other CAPCO companies, $27,640,000 at December 31,1984. Although unable to h ve entered into a long-term coal supply contract with predict the ultimate level of recovery, the Company believes Quarto. The CAPCO companies have also agreed to guarantee that the PUCO's formula recovery method provides a severally, and not jointly, their proportionate shares of sufficient basis to recover the deferred costs and future Quarto's debt and lease obligations incurred while developing costs of Quarto coal under the jurisdiction of the PUCO.
cnd equipping the mines. As of December 31,1984, the Compantos' share of the guarantee was $209,717,000. Although the PPUC issued an order which found that Penn Power was not imprudent in initiating and continuing the Under the terms of the coal supply contract, which expires Quarto project, it prescribed a method for recovery of the December 31,1999, the Companies must reimburse Quarto current cost of Quarto coal and the deferred Quarto coal for their shares of the cost of operating the Quarto mines, costs (amounting to $9,916,000 at December 31,1984) including those costs associated with mine construction, which could result in a substantial underrecovery of Quarto whether or not they receive coal from Quarto. These pay- coal costs. Penn Power has appealed the order to the ments will permit Quarto, over the life of the contract, to Commonwealth Court of Pennsylvania. If the PPUC method meet the debt and lease obligations it incurred while stands and no other means of recovery could be found or developing and equipping the mines. The Companies' total anticipated, a loss equivalent to the amount not recoverable payments under this contract, including amounts related to would be incurred. Although unable to predict the final mine construction costs, amounted to $103,464,000, resolution of this matter, management believes that its
$92,644,000 and $80,709,000 during 1984,1983, and 1982, ultimate disposition will not have a ma:erial adverse ef fect rzspectively. Under the coal supply contract, the Com- upon the Company's consolidated results of operations.
panies' future minimum payments related solely to mine construction costs are. Environmental Matters-1985 $ 25,122,000 Companies with regard to air and water quality and other 1986 24,504,000 environmental matters. The Companies estimate that 1987 23,886,000 compliance requires additional capital expenditures of 1988 23,269,000 approximately $125,000,000, which is included in the 1989 22.659,000 construction estimate given above under " Construction Years thereafter 197,166,000 Program" for 1985 through 1989.
On December 5,1984, the Federal Environmental Protec-Following the end of the development period, the Company tion Agency (EPA) denied a petition from the Common-was ordered by the PUCO, and Penn Power was ordered by th3 PPUC, to defer recovery of the cost of Quarto coalin
, wealth of Pennsylvania and the states of New York and cxc:ss of generally prevailing market prices, pending Maine, which sought to force the EPA to make findings further proceedings. As a result of those orders, the under Section 126 of the Clean Air Act. Section 126 pro-Companies began deferring a portion of the cost of Quart vides a remedy for a downwind state that can show coal, rather than including such costs in their respective adverse impact because air pollution in an upwind state fu;l adjustment clauses. The Company has subsequently causes nonattainment of air quality standards in the down-received PUCO orders which provide an opportunity for w nd state. The petition complained of excessive particu-late and sulfur dioxide (SO,) emissions from a number of sources in Ohio and other states, including potentially all of the Companies
- Ohio plants. Seven northeastem states have appealed the EPA's decision to the U.S. Court of Appeals for the District of Columbia, asking that the deci-sion be reviewed, reversed, modified or set aside. The l
34 I _
Company, along with other electric utilities and otherc, 9 Summary of Quarterly Financial Data:
has petitioned to intervene in the case. The Company is The following summarizes certain consolidated operating unable to predict the outcome of these proceedings. results for the four quarters of 1984 and 1983.
As a part of the reauthorization of the Clean Air Act,legisla. Three Months Ended March June september December tion has been introduced in Congress to address the so- NnaudM 3t 1984 30.1984 30.1 W 31.1984 called " acid rain" problem. Various bills introduced thus on thousands, except per share amounts) f1r would require reductions in SO, emissions from utility Operabng Remnues $420.453 $391.548 $416. N $408.309 9
pow;r plants and other sources located in several states, *$"xes 330.524 309.150 326.981 327.736 including Ohio and Pennsylvania. The Company is unable G erating income 89.929 82.398 89.813 80.573 to predict whether the proposed bills wil' > enacted and, Other income and if so, to what extent, if any, the SO, emissa 11imits at the Deductions 56.757 61.332 74.141 71.648 Companies' plants would be affected. Substantial changes Net Interest and in ths SO, emission limits could result in the need for _other Charges 62.729 64.386 66.820 73.323 changes in coal supply, significant capital investments in Net income $ 83.957 $ 79.344 $ 97.134 $ 78.898
. flus gas desulfurization equipment or the closing of some Earnings on Common stock $ 72.429 $ 67.827 $ 84.563 $ 65.875 coal-fired generating capacity to assure compliance. If Weighted Average Number flu 3 gas desulfurization equipment were to be installed en of shares of Common all of their generating units to achieve compliance, a cir. stock Outstanding 110.539 115.164 117.938 121.044 cumstance that may be physically impossible because of Earnings per share space limitations at certain of their plants, the Companies of Common stock $.66 $.59 $.72 $.54 cstimate that the capital costs associated with such insta!-
lation could exceed $1,000,000,000. The Companies expect that any such capital costs, as well as any increased oper. March June september December Three Months Ended 31.1983 30.1983 30.1983 31,1983 ating costs associated with such equipment, would ulti-mat:ly be recovered from their customers. On thousands, except per share amounts)
Operating Revenues $378,157 $364,478 $386.400 $386.817 in October 1983, the U.S. Court of Appeals for the District Operating Expenses of Columbia reversed several significant portions of the and Taxes 302.1u4 296.956 308.288 305.753 EPA's regulations on the methods used by the EPA to deter- Operating income 76,053 67,522 78.112 81,064 mind the amount of stack height credit for establishing indi. Other income and vidual source emission limitations. In Ju:y 1984, the U.S. g f,'7,s
, and Supr:me Court denied a utility industry request to eview Other Charges 59.472 57,578 60.017 60.833 tha Court of Appeals' decision. On November 8,1984, the Net income $ 64.111 $ 60.004 $ 72.763 $ 75.522 EPA proposed new stack height regulations to conform Earnings on Common stock $ 54.091 $ 48.708 $ 61.117 $ 63.927 with the court's decision. Such changes could result in more stringent emission limitations for some existing Weighted Average Number plants and increased capital costs and operating expenses. *"
{,' 96.841 100.244 105.312 107.261 The Companies are studying the proposed new regulations and ara currently unable to predict their ultimate effect if Earnings per share f Cornrnon stock $.56 $.49 $.58 $.60 adopted as proposed.
8 Extraordinary income:
During 1982, the Company exchanged 2,650,600 shares of its common stock for $53,432,000 principal amount of its outst nding first mortgage bonds which were subsequently r: tired. The exchange resulted in a nontaxable gain of
$20,158,000, which is included as an extraordinary item on the 1982 Consolidated Statement of income.
35
N:.t:s to Cons:lidat:d Financial Stat:m:nts-(Continued)
O 9., c_Cary Financial Data-Financial Reporting and financial information to disclose the estimated effects of in-Changing Prices (Unaudite@ flation and changes in prices on property, plant and equip-Statement of Financial Accounting Standards Na 33, ment. This data is presented in accordance with SFAS Na 33;
" Financial Reporting and Changing Prices"(SFAS Na 33), however, it is not intended as a substitute for earnings re-as amended, provides for the preparation of supplementary ported on a historical cost basis.
Results of Operations Mjusted for the Effects of Changing Prices for the War Ended December 31,1984 (Thousands or average 1984 dollars)
Historical income from continuing operations $290,694 Inflatiutary Effects on Common Equity- ;
Capitalinvestments Effects-Increa:,e in specific prices (current cost) of property held during the year (i) 137,599 Change in general price level on property held during the year (382.151)
Mjustment to net recoverable cost 219,340 Additional provision for depreciation (187,300)
(212,512)
Mvantage from the decrease in purchasirt power of net monetary liabilities 145.614 Net erosion of common stockholders' equity (66,898) J Income from continuing operations adjusted for changing prices (ii) $223,796 (i) At Cecember 31,1984, net property, plant and equipment, adjusted for changes in specific prices (current cost) was $10,273,343,000, while historical cost (net recoverable cost) was $5,954,129,000.
(ii) Income from continuing operations, adjusted for changes in specific prices (current cost) would be $103,394,000 if only the amount reportable as additional provision for depreciation was included in the adjustment.
Comparison of Supplementary Financial Data For the Wars Ended December 31 1984 1983 1982 1981 1980 (Dollars in thousands, except per share amounts)
Operating Revenues-Historical $1,637,104 $1,515.852 $1,429,626 $1,279,649 $1,080,869 Mjusted to average 1984 dollars $1,637,104 $1,580,427 $1,538,476 $1,461,505 $1,362,525 income (Less) from Continuing Operations-Historical $ 290,694 $ 227,843 $ 161,338 $ 149,850 $ 101,403 Adjusted for changing pric rs (average 1984 dollars) $ 223,796 $ 176,282 $ 120,357 5 62,139 $ (28,154) income (Laos) from Continuing Operations por Common Share-Httorical $2.50 $2.22 $1.89 $2.10 $1.52 Adjusted for chargng prices (average 1984 dollars) $1.93 $1,72 $1.41 $.87 $ (.42)
Retum from Continuing Operations on Average Common Equity-Historical 15.9 % 14.2 % 12.3 % 13.5 % 9.7 %
Mjusted for changing prices 12.2 % 10.5 % 8.3 % 4.9% (2.1)%
Effective income Tax Rate-Httorical 32.1 % 35.1 % 32.1 % 33.5 % 28.3 %
Mjusted for changing prices 37.0 % 40.8 % 38.1 % 49.4 % 82.4 %
Excess of increase in the Specific Imol of Prices on Property, Plant and Equipment Over General Price Changes (average 1984 dollars) $ (244,552) $ 111,220 $ 359,423 $ (42,055) $ (211,358)
Adventage Resulting fmm the Decrease in Purchasing Power of Net Monetary Liabilities (average 1984 dollars) $ 145,614 $ 126,879 $ 115,218 $ 246,718 $ 319,318 hr End Common Stockholders' Equity- .
Historical $1,947,357 $1,711,974 $1,488,371 $1,229.044 $1,067,524 Mjusted for changing prices (average 1984 dollars) $1,923,258 $1,754,121 $1,584,184 $1,360,143 $1,278,835 Cash Dividende Deciated por Common Share-Historical $1.84 $1.80 $1,76 $1.76 $1.76 Adjusted to average 1984 dollars $1.84 $1.87 $1.90 $2.00 $2.20 kr End Martiet Price por Common Share-Httorical $13.50 $12.25 $14.00 $11.625 $11.875 Mjusted to average 1984 dollars $13.31 $12.55 $14.90 $12.84 $14.30 Average Consumer Price index 311.1 298.4 289.1 272.4 246.8 I
36
. Auditors' Report The increase in specific prices of property held during the To the Stockholders and Board of Directors of Ohio Edison yeir tttempts to measure increasing asset values which Company:
approximate dollars that would have to be spent today t acquire property, plant and equipment identical to assets We have examined the consolidated balance sheets and consolidated statements of capitalization of Ohio Edison curr:ntly owned. The Companies use the Handy-Whitman Index cf Public Utility Construction Costs and the Bureau of Company (an Ohio corporation) and its subsidiary companies as of December 31,1984, and 1983, and the Labor and Statistics engineering indices to calculate the related consolidated statements of income, retained earnings, curr:nt cost of those assets.The indices are applied t capital stock and other paid-in capital, sources of funds for actu:1 dollars spent on large construction projects roperty additions and taxes for each of the three years in recording to the year of expenditure. For all other plant the period ended December 31,1984. Our examinations fzciliti:s, the current cost is determined based upon the were made in accordance with generally accepted auditing ynr the facilities were placed in service.
standards and, accordingly, included such tests of the Additional depreciation expense adjusted for the change in accounting records and such other auditing procedures as
- specific prices was determined using the same rates and we considered necessary in the circumstances.
m thods used for computing the historical cost provision f for depreciation. No inflation adjustment has been reflected As discussed more fully in Note 7 to the consolidated f nancial statements, the continued construction of Perry for income taxes, m conformity with the reporting requirrments of SFAS No. 33. Nuclear Unit No. 2 is currently being reviewed by the CAPCO companies. Possible alternatives being considered During periods of inflation, the Companies' net monetary include temporary cessation of work and termination of the liabilitirs (principally long term debt and preferred stock) Unit. Because the Company is unable to predict the results will be repaid with dollars having less purchasing power of the review,it cannot now predict if construction of Perry than dollars had when the original liability was incurred. Unit No. 2 will be terminated, and if terminated, whether This cconomic benefit is portrayed on the summary as the the investment applicable to its PUCO jurisdictional cus-advantage from the decrease in purchasing power of net tomers will be recoverable.
mon 2tary liabilities, which serves as an of fset to the in our opinion, subject to the effect on the consolidated inflationary offects of replacing the Companies property, plant and equipment. financial statements of such adjustment, if any, that might e h reW W N ohe N mW referred to in the preceding paragraph been known, the financial statements referred to above present fairly the financial position of Ohio Edison Company and its subsidiary companies as of December 31,1984, and 1983, and the results of its operations and the sources of funds for property additions for each of the three years in the period ended December 31,1984, in conformity with generally accepted accounting principles applied on a consistent basis after giving retroactive effect to the change, with which we concur,in the method of accounting for capitalleases as discussed in Note 3 to the consolidated financial statements.
M QuksG.
ARTHUR ANDERSEN & CO.
New York, N.Y.
February 8,1985 l
37 t
Consolidated Fin:nci:1 St:ti tics i
l 1984 1983 1982 1981 1980 1979 1974 l l
General Financialinformahon (Dollars in thousands, except per share amounts) l Total Operating Revenues $1,637,104 $1,515,852 $1,429,626 $1,279,649 $1,080,869 $ 994,585 $ 498.355 Operating income $ 342,713 $ 302,751 $ 269,640 $ 252,381 $ 169,383 $ 163,744 $ 71,095 Eamings on Common Stock $ 290,694 5 227,843 $ 181,496 $ 163,892 $ 101,403 $ 105.120 $ 51,035 Ratio of Eamings on Common Stock to Operating Revenues 17.8 % 15.0 % 12.7 % 12.8 % 9.4% 10.6 % 10.2 %
Times Interest Eamed Before income Tax 2.34 x 2.31 x 2.02 x 2.11 x 2.05 x 2.31 x 2.18 x Net Utility Plant at December 31 $5,945,549 $5,206,134 $4.522,733 $3,867,757 $3,435,267 $3.012.197 $1,615.265 Property Additions S 868,099 $ 771,131 $ 774.233 $ 568,044 $ 515,020 $ 476,746 $ 306,027 Capitalization at December 31:
Common Stockholders' Equity $1,947,357 $1,711,974 $1,488,371 $1,229.044 $1,067,524 $ 970,110 $ 484,713 Preferred and Preference Stock Not Subject to Mandatory Redemption 455,490 404,240 354,240 304,240 306,905 306,905 213,905 Preferred and Preference Stock Subject to Mandatory Redemption 158,483 158,112 152,560 151,141 156,450 150,850 -
Longterm Debt 2,449,502 2,132,137 2,005,436 1,759,771 1,594,384 1,410,782 867,796 Total Capitahzation $5,010,832 $4,406,463 $4,000,607 $3.444,196 $3.125,263 $2.838.647 $1,566,414 Capitalization Ratios at December 31:
Common Stockholders' Equity 38.9 % 38.9 % 37.2 % 35.7 % 34.2 % 34.2 % 30.9 %
Preferred and Preference S' , Not Subject to Mandatory Rewmption 9.1 9.1 8.9 8.8 9.8 10.8 13.7 Preferred and Preference Stocn Subject to Mandatory Redemption 3.1 3.6 3.8 4.4 5.0 5.3 -
Longterm Debt 48.9 48.4 50.1 51.1 51.0 49.7 55.4 Total Capitalization 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Longterm Obligations at December 31 $ 822,234 $ 759,843 $ 656,655 $ 447,484 $ 265.000 - -
Cost of Preferred & Preference Stock Outstanding at December 31 9.87 % 9.63 % 9.17 % 8.37 % 8.38 % 8.36 % 6.49 %
Cost of Longterm Debt Outstanding at December 31 11,52 % 10.82 % 10.69 % 9.99 % 9.16 % 8.13 % 7.17 %
Commort Stock Data .
E:rnings per Average Common Share $2,50 $2.22 $2.13 $2.30 $1.52 $1.80 $1.68 Return on Average Comrron Equity 15.9 % 14.2 % 13.5 % 14.6 % 9.7% 11.2 % 11.1 %
Dividends Paid fbr Share $1.84 $1.80 $1.76 $1.76 $1.76 $1.76 $1.64 %
Common Stock Dividend Payout Ratio 74 % 81 % 83 % 77 % 116 % 98 % 98 %
Common Stock Dividend Yield at December 31 13.6 % 14.7 % 12.6 % 15.1 % 14.8 % 13.2 % 13 9 %
Price /Eamings Ratio at December 31 5.4 5.5 6.6 5.1 7.8 7.4 7.1 Shares of Common Stock Outstanding at December 31 (000) 122,237 108,460 96,082 78,676 68,526 59,622 31,695 Book Value per Common Share d December 31 $15.93 $15.78 $15.49 $15.62 $15.58 $16.27 $15.29 Market Price per Common Share C December 31 $13.50 $12.25 $14.00 $11.625 $11.875 $13.375 $11.875 Ratio of Market Price to Book Value per Share at December 31 85 % 78 % 90 % 74 % 76 % 82 % 78 %
38
~ Consolid:ted Opercting Statistics 1984 1983 1982 1981 1980 1979 1974 Revenue From Electric Sales (thousands):
- Residential 5 571,878 $ 540,167 5 497,941 $ 442,267 $ 398,832 $360.273 $179,300 Commercial 400,291 385,277 356,325 308,599 268,788 240,453 122,009 frdustrial 469,112 421,736 383,535 381,162 330.717 315,185 159,585 Other 57,921 69,278 67,828 53,993 50,420 42,607 22,641 Subtotal 1,499,202 1,416,458 1,305,629 1,186,021 1,048,757 958,523 483,535 Sales to Utilities 117,385 76,220 101.688 73,966 12,381 10,185 4,288 Total $1,616,587 $1,492,678 $1,407,317 $1,259,987 $1,061,138 $968,708 $487,823 Revenue From Electnc Sales-%:
Residential 35.4 % 36.2 % 35.4 % 35.1 % 37.6 % 37.2 % 36.8 %
Commercial 24.7 25.8 25.3 24.5 25.3 24.8 25.0 Industrial 29.0 28.3 27.3 30.2 31.2 32.5 32.7 Other 3.6 4.6 4.8 4.3 4.7 4.4 4.6
/ Subtotal 92.7 94.9 92.8 94.1 98.8 98.9 99.1 Sales to Utilities 7.3 5.1 7.2 5.9 1.2 1.1 0.9 Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Kilowctt-Hour Sales (millions):
Residentia) 6,836 6.735 6,733 6,747 6,801 6.650 5,610 Commercial 5,101 5,096 4,996 4.917 4,812 4,693 4,023 Irdustrial 9,161 8,386 7,708 9,352 8,909 9,830 9,631 Other 1,075 1,211 1,227 1,181 1,370 1,346 1,095 Subtotal 22.173 21,428 20,664 22,197 21,892 22,519 20,359 Sales to Utilities 4,591 2.917 3,361 2,465 502 441 323 Total 26,764 24,345 24,025 24,662 22,394 22.960 20.682 Customers Served at December 31:
Reskkntial 885,376 878,949 873,877 872,303 867,447 861,196 800,612 Commercial 90.810 90,072 89,706 89,231 88,505 87,425 83,111 Industrial 1,757 1,003 1,048 1,068 1,059 1,161 1,109 Other 721 736 724 711 704 693 586 Total 978,664 9/0,760 965,355 963,313 957,715 950,475 885,418 Average Annual Residential KWH Usage 7,762 7,695 7,723 7,760 7,870 7,780 7,070 Average Residential Price Per KWH 8.37s 8.02c 7.40c 6.56c 5.864 5.42c 3.20$
Cost of Coal Per Million BTU $1,59 $1.62 $1.75 $1.81 $1.50 $1.26 S.90 Generating Capability at December 31:
CcIl 89.1 % 89.2 % 86.2 % 86.3 % 86.1 % 85.1 % 92.2 %
OJ 3.0 3.0 6.3 6.2 6.4 7.4 7.8 Nuclear 7,9 7.8 7.5 7.5 7.5 7.5 -
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Sources of Electric Generation:
Coal 90.4 % 89.8 % 93.8 % 89.9 % 98.7 % 93.9 % 98.2 %
Oil - -
0.1 0.2 0.6 2.0 1.8 Nuclear 9.6 10.2 6.1 9.9 0.7 4.1 -
i Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Peak Load-Megawatts 4,093 4,148 4,073 4,148 4,210 4,105 3,664 Number of Employees at December 31 7,611 7,702 7,885 7,669 7,503 7,157 6,156 i
l i
I 39
Stockh:Id:rinf rm tion l
I Stockholder Profile Dividend Reinvestment Plan Additionallnformation i At the end of the year,209,529 At the end of 1984, more than Information and assistance on j stockholders owned 122.2 71,000 stockholders were individual holdings, dividend l million shares of Ohio Edison enrolled in the Company's payments, dividend reinvest-common stock. Approximately Dividend Reinvestment and ment, the transfer of stock or 29 percent of those stock- Stock Purchase Plan, represent- any stockholder matter can be holders are women,27 percent ing 31 percent of allstockholders. obtained by writing to Ohio ara men and 32 percent are They reinvested $69.7 million in Edison Company, Stockholder joint holders.The remaining 12 dividends and made optional Services,76 South Main Street, <
percent are trusts, corporations, cash payments of $44.2 million Akron, Ohio 44308, or by calling institutions, biokers and other to acquire 10 million snares of (216)384-5509.
investment groups, common stock during the year. Ohio Edison Company common N arly 75 percent of common The Plan was amended to stock is listed on the New York stockholders own 300 shares or eliminate the discounted price and Midwest stock exchanges 1:ss. They live in all 50 states for stock acquired, beginning and traded on other registered and many foreign countries. with optional cash payments exchanges under the "OEC" in November 1984 and the com- ticker symbol. Newspapers gen-Common Stock mon stock dividend payment in erally use the symbol "OhioEd" Dividend increased December 1984. Also, the pur- in stock listings.
Effective the first quarter of chase price of acquired stock is A copy of our 1984 Annual 1985, the Company's Board of based on the average closing Report to the Securities and Directorsincreased the quarterly price for five days ending on the Exchange Commission, Form common stock dividend to 47 investment date instead of on 10.K, will be sent without charge c:nts per share from 46 cents. the average high and low sale to stockholders upon request.To ,
Dividends of 46 cents per share price on that date. receive a copy, please write to !
of common stock outstanding Most participants in the Plan Gregory F. LaFlame, Secretary, '
w:re declared by the Board for may still exclude from their Ohio Edison Company,76 South c:ch quarter of 1984. annualincome up to $750 Main Street, Akron, Ohio 44308. ,
($1,500 on a joint return) of tax- For information and assistance !
Dividend income Taxability able dividends they reinvested. on the transfer or registration of i Of total 1984 common stock But according to the Economic all classes of Company stock, dividends,56 percent was Recovery Tax Act of 1981, this contact:
estimated to represent a return exclusion will continue only of capital and was nontaxable through 1985, unless extended Transfer Agent:
for federalincome tax purposes by Congress. Transfer Agent unirss the stock was sold. All Additionalinformation about the Ohio Edison Company pr:ferred and preference stock Plan, and a Prospectus, can be 76 South Main Street dividends paid during 1984 were obtained by contacting Ohio Akron, Ohio 44308 taable.These figures are sub- Edison's Stockholder Services.
ject to final determination by Registrar-.
the Internal Revenue Service, Annual Meeting of Stockholdert, National City Bank, Akron cnd stockholders will be notified Stockholders are invited to at- One Cascade Plaza of cny significant change. tend the 1985 Annual Meeting Akron, Ohio 44308 A provision of the Deficit Reduc- on Thursday, April 25, at 10 a.m.,
tion Act of 1984 requires certain local time, in the Company's changes in how a corporation General Office auditorium in ;
calculates earnings to determine Akron, Ohio.Those unable to or i the portion of dividends treated choosing not to attend can vote as a retum of capital. We expect on the items of business by those changes to virtually elimi- filling out and retuming the :
nat]the possibility of return of proxy card, which is mailed to l capital dividends beginning in each stockholder approximately 1985. 30 days before the meeting.
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Ohia Edison Board cf Directors Officers Division Managers Donald C. Blasius Justin T. Rogers, Jr. Anthony N. Gorant Chairman of the Board and Chief Executive President Akron Division Officer of The Tappan Company. Mansfield.
Ohio (appliances and furnishings). Member, Victor A. Owoc Denver G. Blosser Nominating Committee, Finance Committee. Executive Vice President Bay Division i
William A. Derrick Douglas W. Tschappat James E. Markle I Independent Electrical and Mechanical Executive Vice President Lake Erie Division Engineering Consultant, also President of Lynn Firestone Malcolm E. Cash Leisure Industnes, Inc., Sandusky, Ohio Senior Vice President Mansfield Division (developer of real estate and residential
, buildings). Chairman, Compensation David R. Gundry Robert L. Kensinger Committee. Senior Vice President Marion Division Dr. Lucille G. Ford Robert J. McWhorter N. Rod Monahan
- Vice President Dean of Business ~ Senior Vice President Springfield Division Administration and Economics and Director .
of ths Gill Center for Business & Economic Russell J. Spetrino Robert E. Dawson Education, AshlandCollege, Ashland, Ohio. Vice President and General Counsel Stark Division Chairman, Nominating Committee; Member. Ronald D. Best David C. Bixler, Jr.
Finance Committee. Vice President Warren Division Robert L. toughhead Frank E. Derry Peter A. Fetterolf
- Chairman of the Board, President and Chief Wungstown Division Vice President Executive Officer of Weirton Steel Corpora.
! tion, Weirton, West Virginia (steel products). Clyde W. Frederickson
, Member, Compensation Committee, Audit Vice President j Committse. John A. Gill Management Changes i Gl:nn H. Meadows Vice President Vice President Donald J. List retired on President and Director of McNeil Corporation- February 1,1985, after 38 years of service Akron, Ohio (various manufactured products). James D Wilson with Ohio Edison. He was succeeded by
, Member, Compensation Committee, Audit Vice President former Akron Division Manager John A. Gill Committee. H. Peter Burg as head of administrative services, human resources and industrial relations, informa.
i John Nelson Treasurer tion systems, purchasing and stores, and j Chairman of the Board and Chief Executive William A. Daniels telecommunications.
j Officer of Commercial Shearing. Inc.* Comptroller
' Wungstown, Ohio (engineered metal compo. With Mr. Gill's election to vice president by nents). Member, Compensation Committee. Gregory F. LaFlame the Board of Directors, Anthony N. Gorant, Secretary former manager of the Bay Division, was Victor A.Owoc named manager of the Akron Division. Mr.
Executive Vice President of Ohio Edison. Mark T. Clark Gorant was succeeded by former Alliance
- Mamber. Finance Committee. Assistant Treasurer District Manager Denver G. Blosser.
Justin T. Rogers, Jr. Warren G. Fouch Also, Charles N. Glasgow, former assistant
.i President of Ohio Edison and Chairman of Assistant Comptroller secretary, retired November 1,1984, after
, the Board of its subsidiary, Fbnnsylvania 36 years of service with the Company.
! ' Fower. Chairman, Finance Committee; HarveY L. Wa9ner Member, Nominating Committee. Assistant Comptroller
! Douglas W. Tschappat Joanne Martin
! Executive Vice President of Ohio Edison. Assistant Secretary l Frank C. Watson l Prssident and Director of The Wungstown Welding and Engineering Company, i Wungstown. Ohio (nonferrous alloys).
j Chairman, Audit Committee; Member,
! Nominating Committee.
f William C. Zekan l Prssident and Cha rman of the Board of A.
' Schulman, Inc., Akron, Ohio (custom plastic compounds). Member, Audit Committee.
Directors Emefitus D. Bruce Mar 4 field Waltar H. Sarnmis Fred H. Zuck i
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