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Pennsylvania Power Co 1987 Annual Rept
	ML20195C612
Person / Time
Site:	Beaver Valley
Issue date:	12/31/1987
From:	Cole A, Rogers J; PENNSYLVANIA POWER CO.
To:	;
Shared Package
ML20195C529	List: ML20195C524; ML20195C612; ML20195C626; ML20195C644;
References
	NUDOCS 8806220238
	Download: ML20195C612 (28)
	v • d • e

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-^ PENN POWER w

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l Financialliighlights l'or the Years Ended llecember 31. 1957 193*i ('hange (in \lilliono Kilowatt flour Sab .1,132.3 3.!03.1 + 1.7<;

Operating l'evenue3 $2312 $n:.0 -

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FuelEslen-e 117.o

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                                                                                                                                                                                                                                         $34 3 Net inn'me                                                                                             37.0                11.7                  - l ei. o< <

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1)i;idende on l'apital St ot E $ b.h $ ';7.2 + If; ('apital Espeiol;ture.- l'on-t ructisin of Faellitie- $ 51.5 $ 31.0 Ntic! car Fuel 5.4 7. i i ot her ('apit al I.ra-e- 1.3 o. ii Tot al $ til.2 e eil.ii - o.79 Ir. terr.ally t ienerated ('a-h 27,9 l-... - .ai.2'r - - - -

         . etIl!1afring dettiilies                                                                                 j.N          1 10 3. !* )

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Message to Stockholders l Indutrial sn!a s jaaw% shle ntial a nd comnu rchnt sala llulk Pouvr Sales ; climb to r, cont u n Is In !!b7, sales to other utilities climtel 5.2 percent. Since i Perry ( %tI in op, mti,m Compro "mr in a pos, tion to !!M the Ohio Edison System has ken aggrtwive in the bulk n p. 3t co31 n corecy, power sales market. A long-term bulk pmer sales agreement

. Sou t/a r" wrWre un a 1,lonmve.ht s u nfold.                                                        with I'otomac Electric l'ouer Company al'EPCOI that was Refimmring to,n rs Co" p* A d. M ar vu//'erry I' nit 1                                            announced in January 1937 became effective in June. Under in te n 3 r . .rpi o, s d4 6 en J.                                                                this agreement, l'enn I'ower and Ohio Edi on will rell appnm imately 50 billion kilowatt-hours to PEPCO, pnniucing $150 lletail Sales Climb                                                                                  million in average annual revenue , of w hich Penn l'ouer will Signi0 cam gains in a!! markets increa ed n-tai! sa!c3 1.7 per-                                  realize an aserage of $11 million annually.

cent for the year. An encouraging M 1 creent rise in inihbtrial

 -ales c an le attributed to new co-tomers and ewan3 ions, in                                         Net income lleclined w hich the CompanyV 3pecial incentis e rate- playist a part, arni                                        Net income declined in lim 7 by $7.1 nullion, or 10 percent, increa3ed onfers for 3 teel and other prnluct3 manufacturnl in                                        becau-e of -everal factors.

the area. In, July, the Pennsylvania Publie Utility Commi~ ion fl'PUQ l.a3t April, Sharon Steel, our large>t indu-t rial ca-tomer, took into cen,ideration the effect of the PEPCO sales agreement 1%l for Chapter 11 bankmptcy protection; de-pite reorganiza- and the Tax l'efonn Act of 1166. There considerations, along tion proceedings. kilou at t-ho -ale- t o t h i< cus t onm r increa-ed. with a PPCC deci+ ion to hmer the Company's a!! owed rate of ihlk fa ongoing -ervice to t, i3 cu3tomer are being paid on a return on common njuity, resulted in a $13 million reduction current han in retail rate 3. The new rates were the lowest since IN. ('ontinaed grouth uit hin the Co m pa ny'- service area, in addition, an ( >ctober !!n? decision by the Supreme Court particularly in tht southern portion, led to recon! Lilou att-hour of Penn9 tania 1 res ersal PPCC and low er court th ci3 ion <, and sale ~ to commercial and resdential cu tomer'.1: ate ineentis e3 di allowed our recos cry of the co3t3 of four nuclear units for both commere,al and nmidential customers enahM! the canceint in !!bn. The decision'- impact w as a net w rite off of Company to be competitise in the marketp! ace. Sale to com. $7.3 million for the y ear. Inercihl cu-tomt rsjumped 11 percent, u hile ales to re-idential A slight increve in operating and maintenance expense , u a-cu-tomer- climbed 1.2 percent w h n comparni to the pres jou3 off et by reduction < in fuel and related costs As a n+ ult, total par. A recon! De resalential heat pump in-tallatime m Itn7 operating exlen-e , including taw , w ere dou n $1.7 million. repn-ent a 221 percent increa,e comparni to t he previou- During the past tu oyears, we eserci ed ouroptien to rnleem year. Each heat pump repn~ ente an addition of approximately $m million in long term debt, $15 nulhon of u hich n a3 redeemed loJa o ki!"u att hour- in electric sales in lin7. This debt u a replaced with lou er rate long-term debt. A -ummer heat u ns e helped boo-t < air 3 to residential and re uiting in a $2.2 nullion reduction in inten+t on long-term commercial cu-tomers, and on July 21, pro luced a load peak debt for the Company in lik7. The Company al-o deferred reconl of dll n o kilow att3 interest expen-e- attributed to the Compann investment in Perry l' nit 1-and will reek recowry of these deferrals in a Growth Within Company's Sor ice Area future rate ca3e. Penn Poui ri economic dew!"pment rider to indu3t rial rate 3 encourage, mdet rics to locate a ithin our ren ice area and pro Perry Unit I in full Operation side-incentis e< for esi ting indu-tries to expann. In !!o7, four On November IN Unit 1 at the Perry Nuclear Power Plant new con panies and three exi-ting compar.!c3 qualified ar.d began operating commercially. receiwd rpecial rates under th rider. Thirtyeis companic3 The con-truction of the Perry Plant by the Central Area bas e beneGtnl from the r; der -ince it we first offered in !!al. Power Coordination Group <CAPCO constituted the large-t re-ulting in more than lp o r.ew job- part of the CompanyN construction activities in recent years. Commential and residential grow th i taking place in the in !!NT, Penn Power spent $515 million for its construction -outhern portion of the -er icc arca notably in Cranherry Town- pregram. During the la315 year. , the Company 3 pent M12 ship. UranMTy, a 25 muare-mile area north of Pitt-burgh, has milhon for construction. With Perry l' nit I completed, the beconm ths fa-te-t-growing te n-hip in Pem.,ylvania. In fact, Company has budgeted $21.2 million for 19e construction, the The Wal! Stn e t ,lournal reported that Cranberry i- the tbrd low est amount since the early 3es entie3. Additions and improw-fa-test-growing town 3 hip in the nation. 8ince l>n, Uranberryi ment- are estimated at $110.2 million for the lh e , war }vriod population ha, grow n n. arly 32 percent. Crantwrry' proqmnt) 19v through 1992. has already fueled grow th in surrounding communitie- that we Construction of Perry Unit 2 was su3 pended in 194 Under 3t rye, pri6mi3ing TWW !Darket oji}Wrlunities review are variinus septions [dir its future, inClWiing ru-jonding In 19G, w e announced a 5-year plan to inen a-e letad market coin-tructisin indet',nitely, resuming work on the Unit and term-sale- The plan cal!cd for additional annual sales of 115 million inating the unit, kilowatt hours. In lio?, Penn Pou t r exceeded its ta rg+ t for the thini con ccutiw year, with new connections representing a I crision Pending on Iteemering Perry Costs pote ntial increa e of $6 9 milhon in annual no enuc3 in June, the PPUC denied the Compann request to keep

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                                                                                                                                                                                                                                               = PENN POWI R t

I it< Mn.9 million retail rate increa3e requent ifiled in June !!o61 en hohl, pendine the commercial operation of Perry I!mt 1. We sought the extension to avert a delay in cost recovery and to avoid a dup!icate filing. The following month, the PPlT denied our reque3t to include Perry Unit 1 in ba<e rates because the unit was not in comm(reial operation within the time frame associated with the rate ca-e. In Augu t, we renled with the PPlT >eeking to increa3e annual revenues by N..) million, ! phased in over four year 3 The rate increase reque3ted in this ] current rate case reflect 3 the CompanyN $W2 mi! lion inve-tment in Perry Unit 1, as w cll as the operating co3t.- associat ed u ith t he l unit. With Perry Unit I now 3enir.g the electrical needs of our i cu -t ome r3, there will be no need for the PPUU to delay further i its con-ideration of our reque3t to include the unit in rate ha-e. The PPUU uill decide in early Slay on our htte3t request. ELECTRIC PLANT Employ ees C.ommitted to Safety and Senice CONSTRUCTION EXPENDITURES ~ During 1187, bot h the Pean 3ylvania Electric A.--ociation and UMoomP the Edi-on Electrie Institute cited Penn Power for its <afety achie\ ement 8. In addition to bemg committed to 3afety, employee are gdy" sgog 581 3 committed to providing our customers with the he3t po-shm 3el'Vice. I n t sur annua} reshlerd;al cu-t(@er sitri ey, l'q'3]Mindent-e\pt e--ed a high le\ el of Oc ahOdence in t he 3ers ice w e ppng gde, uith M percent ratine Penn Power escrilent or gmL - - l't nn } \iWt l'.11- emp!'i) t'em a!H1 cu-It>Nern tl*pelher Sulinirt the l'rojret 1:EM'll liard3 hip Fund that provide < emergency

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t fierCv grant s tai a33i-t needy fanuH.4 u ith t heir u inter energy SM 0 WS - bill l ymelh. ('U-tome" contact emldisyees partic!l> ate in the "Gatcheeper Program" t hat help- place su:reralde chlerly [M r.-W - ifl t <iu rh U lt h a-3 5-tance agencies We ci tan cral our employ ee3 for their ded! cation on the job alvl th>-tr in\ td\ emt nt in tht' Usernunity. The fut uri de;* nils _ _ _ _

                               . n them -t renct h . lone a tra ldion at Pt nn Pov.t r.
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4~*/ IM 2 i CJ _ _ _ l t'ha!rinan of the lh6ani l l l'lV- b le n t j Neu Ca-t Ir. I't n!;-)!\ af.'.a .gq.;g g ggg y y j

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Operating Statistics j 1 19s7 19'6 l!W5 1941 1933 llevenue from Electrie Sales tThous,mda:

                       !!esidential                                                    $ 74,615                        $ 75,751                                                $ 71,316                         8 69,1:t1                       $ 63,991 Conuncreial                                                            10,209                           10,772                                                      :9.266                   35,512                          36,311 Indust rial                                                         69,95x                            75,923                                                     77,N G                     77,210                          61,959 Other                                                                      6,611                           6 982                                                      6,916                    6.!* LI                           6,9 s9 Subtotal                                                        191,3td                          199,12*                                                  lik,:Iol                     19.615                           169,7M Sales to l'tilities                                                   18,12.0                           15.15i                                                   20,125                      11,721                              3.306 Total                                        . .$_2_09,513      _ _ -
                                                                                                                       $211,wl                                             -.215.126
                                                                                                                                                                              $                       . . - . . $2iG,569                  .- -  $ 178 J.i>9 ._

l I es enue from Electric Sales 'e I esidential 35.09 13.3'i II.o'i 31.o'4 15.9'i I Commercial 19.2 19.9 13.0 17.5 20.7 Indu< trial 33.4 35.3 35.6 37.9 al.s (Ither 3.2 I.2 3.2 3.1 3.9 Subtotal 91.1 92 5 W.3 92 3 95.3 Sales to l'tilities 5.6 7.2 9.2 7.2 1.7 Total Im.v4 Im.o'; Im.o'; 1m.oq 1m.oq

                                                                            =_ = =                                     - -                                                                      --
                                                                                                                                                                                                                            -==

Kilow at t.llour Sales ( 31illionM: 1:esidential . !*;1.3 022.2 391.3 Nio.7 376.0 Commercial 627,8 597.5 M5.5 S ix. .l Sw9.5 Indu tnal 1,717.5 1,667.3 1,705.9 1,519.7 1,627.:1 Other 126.7 122.0 1212 125.9 123.7 Sub tal 3,163.3 3,309.5 3.21* L 5 3,114.7 3,216.5 Sale- to Utihties 719.0 6NL6 Nei.1 593.:1 329.o Tot al 1,132.3 3,993.1 4,139.6 1,013.0 3,515.5 Cu tomer> Sers ed at December 31: I llesidential 115,793 111,616 113,697 113 36x 112,768 Commercial 14,261 13,1C) 13,7th 1:lf,ol 13,474 Ind'i-t rial 273 27% "wa Ow5 Int Other 112 135 131 124 129 Total 130,169 12s,9s2 127,ss2 127,3x2 126,175

                                                                              = ===~                                                         -                                                                      - -
                   !!esidential Custemer Averages:

Averaec Kw h I'3edl er I:e<idential Customer 3,357 3,o91 ,, w > ,,sst 7.3n t As crage l' rice per Ku h.ltesidential tCentM 7,77 N.19 3.31 7.76 7.30 Kilow att-llours Generated (.\lithono . 4,197.2 3,th 1.012.9 -1,i n LI. 5 3,563.7 Peak Load t.ilegaw attM 611 5 17 569 59. .67 Co3t of Coal per 31ilhon IITl' $ 1.31 $ 1.10 $ 1.50 $ 1.50 $ 1.57 Generation Capability: Coal 74.6 9 30.2', ...5 ...5 ...9 Oil . 2.s 3.0 6.I 6.I 6.1 Nuclear 22.6 16.s 16.2 16.2 16.2 Total 100.09 loo.o's le n to'; Im.oq l oo.o'i Source- of Elect rie Generation: Coal 75.O'i 75.79 7:5. %' 79.39 77.19 i Nuclear 25.0 21.: 26.2 20,7 22.9 Total 100.09 100.0 9 Im.09 loo.o't

                                                                              . - - = =                         x -- -               - =                                _

_ l--oo.o'.4

                                                                                                                                                                                                                              = = -

Numla r of Emplo. sees at December 31 1,725 1,771 1,7 W 1,523 1,N s

                                                                            =.-- _=     _                                   -a                                                                           -          =-          ._

4 I l

__ _ . - . _ _ _ . ._ - . -- . _ - _. . . . . _ - - . . _ _ . _ _ - -_ .- --._~ - . ._ l l l A

                                                                                                                                                                                                                                                                                    ~ . .

D- PENN POWER Selected Financial Data l l i l 1937 19mi 1935 19st 1953 (t hdlars in Thousanda Operating llevenues $ 223.197 $ 2:11,' ra l 8 2 % 206 $218.501 $195,201 Ol vrating Income $ j3.51_1 $ 41,519 $ 43,97] _$_ 4 M 91 1 {l._151 _ Net income til $ 37.591 $ -11.740 $ 46,593 $ 15,101 $ 31,313 Earnine on Common Stwk til - $ 26.511 hi,576 $ 36 -139 $ 27,017 !

                                                                                                                                                                                         -8_             u.529 _. $

_ _ = = x.= l Cash Diviilend< en ( ommon Stock 8 27,676 $ 25dm . _ _ . _ . 8 23#>o _.

                                                                                                                                                                                                                                                                          $ 20.M2             _ . __
                                                                                                                                                                                                                                                                                                           $ 19.203
                                                                                                                                                                                                                                                                                                                                   )

i Total As-ets a: December al $ 979,890 $ !*15,0 u $ 961.735 $331.119 $302,w3 l . _ _ _ _ . - . . _.- - -_ : I!tility Iht . $ 1,121,765 $1,iwi3,719 41.012,057 $930,510 $x37,t o l Deprecia'. ion 1:ncrve 2:b,0ll 210,103 192,521 173.05s 15s,715 Net l'tdity I'! ant $ Nd,751 $ 353.611 $ x19,533 $757,152 $6TM,2'9 Prole tv Ad litions $ 61,197 $ 61,625 $ t a l.320 $ 95.3<1 $ NI UT I.ong-Ti rm ohligations 51,623 $ 57,192 .. .-816,M6

                                                                                                                                                -50.2_77$            _-

8 51,45; _ $ _ _- CAPITAI.lZATION: Common 6ckholder'- Equity $ 278,510 $ 279,672 8 260,131 $217,otai $219,171 Preferred beh-Not SLhjt'Ct to blandd!ry IIedt mjat on ll,lo5 } } jh 6 ll,lM 0 I I ,'.N O ll ja 0 Sub;ect to bi:c latory I:edempn ,a

                                                             .                                                                                                       63,112                             69.362                            70,G:2                              56,562                             47,171            ;

l ng-Term Drht 372,391 357,111 379.123 317,764 32.1.:Su l Totai Cap tahmtion $ 760,914 4 T is,os .< 751,326 $661, :27 $c;2,213 l (' APITA LIX ATh >N I: ATII & Conunon StocMAl-r's Eipi ty 36.67 :7.4'; 1.6'; 37.1 , 31.7', Pre fe rred S t oo k -

                                                                                                                                                                                                                                                         .),6                                                                      l Not Suhjer! to )l:dida'or} liedemption                                                                                                    d.a                               .ji                                                                   6.3                                  0.6 NUIdiett til bla i!.lti rY } Mlrtnidis rl:
                                                                        ~            '

9.0 9.3 9 -l .% . . ) s..) l I on[ Term D1 ht 4 s.9 4... 4 -1 !!.9 51.2 l i T...al t 'alta:iz tiim 1( u t.i t'i li n u r; li n u r ; limi t e; li n i.i r ; i

e l 6 ' I " e g k ! at a '. l( ' f+'. 1 i} t f * \. '41 t'C*1Q Ci .' k t ' Fl Q 4k Uf*I\ k of com a -on.ted u n h p , ned m s l. ar un t u bch u rre term:nmed in 19'n reruh us m a .5..:.oo# o rnlactmn m r , ' h.come and carm:2- on ci mmon u nd. Nec Not r , 19-1 iu lud. - a r.onud d. preciation r-en e adjus m nt of ,

                               $6.3mp o u ha nwn a-rd rs ' in-me al                             t     cari nv on c..m:                                              o',   s t oc k .                                                                                                                                               i I

i i S i

Managemet:Es Discussion and Analysis of Results of O >crations and Financial Condition lle3ults of operations

                                                  ' 6p. ratine n -uh - for P.W7 u en unpact o f by a n cent 9:preme l'o Irt of Pe! ' -yh.mu nd nc w ith re-pt et t o t b na ou r ', of cos for wir nw . ar c. ' wanne m J . u hh h u.-n. tern nateil e Uno, fn un de ( '                                            - Pr! 33ha; i l%!,e l't ihty ('omm:-

r

                                               - r:1 ! } 'l'[l ') j a n i s                                 s ' i ' l - t i' e ' r* + - t i* N: te : ) tlc n -u?ir;e u r!'e i'ff ;ual l1115-                                       I
                                                                                                                ! j" --i 0f D 'Iu ' .t !- t i s cd-l $ >r j an'i          -1} n ct ,\ t n9 ] (l a                                 aia3ini ;q ,finti!!g n st M e - t he r              t lht t .' e a t s l i' a s or.e t a \t - I ',t $2,.1t 381,1131, @, iil,d H h t a! a l i I.Il 91,l 8 h l.

n -- peci n ci . a n 1 i r,t h- 1-e.1 o' her n d en -t r \ pi me In 8 D M,a 0 1 Li- um m a l.! ti oi o approximate;y 3 '.m u n u u ntti n of! car!.ier in t he 3 car i a re - W.! . ,f ' ulan!- n cently pre-cr: si in t he l'in.ua cd Ai co c a me St amlani- 1;.iani (l'.\Slil i-ce .h, eu-- ! he!"U i The shove 'o una fn,m the-+ tuo eser t-t otah d approdmate! $ s.:H v o i a ' I w a- n~ p. -ihte 'or d. 20 !r - det n a-i m .. m cre on c, un m sot k m Mu! u L. n c, in l r.t h a i ' s P, e -. , T! c m: decn a-c m carn:n e . s i 1 .n - u k for i x . u ten c14 li } '. : n ,l t . ! P. I' > u a3 j '! i'n! ' !y utir;}iu'alb t v s e\q!'

                                              .; Pn3 u h"!. h-n < 'Le ( < apar:- m t o 19-ii ( )n .l a h 1, 19 >
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1 T' c n a -, . total k; -w a . ! , ; r -a :._ TLcunn , ;n i . -

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                   +                          w a - a 12' . i n as                                    '

e - to ode r utit a - l he f. o u.c [ - C. ! r ' a r. / t w t ! e t'ca -i i O'r t!i ih, n au .n i,j t ra'i!;; p \ i ! ,

d. ira.e l'n! aral lini i lin? IM a ln Million-)

ohi, m.n

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                                                                                                                                                          .A_ .

PENN POWER D The reduction in ha-e rates durine Ith7 redect a PPlT nite order effectis e .luly 17. Ito7, w hich is designed to reduce the Company - annual o: nitir.e res e nue - by appnaimately , $ 13.m u '). In addition, a 3ctilement aercena nt ua, adopted l by the PPUC en Septe mber 5,1991. u herch, the Company I ha been makine refunds to its cu 'omer- in . nnection u;th I ct rtain ino rrne ta\e- n'irmahZed in }irh er } ears. Ihr C[Iert of thi- .ttlernent .lecrea3e<l operatii.e revenu ind inci>nie taxes h3 i.h y m mal $7.20iu m, re-pectis ely, and increa-ed ot her int e re3' ex p. n-e by $7aym ih: ring IN. resultine in no matenal effed to net mcome for 194. ( M her revenue 3 redecta redue' on anil eventual e; minati.m of a capacity -a'e to (>hio EJron in m licaver VaHey Unit I d inng 19 7. The c haneo in furl o-ts dunng t he la-t t u o ycar- n a att ribu' aNe 'o the fokuine factor-: l>7 19 4

                                                                                  !!n Tlillionu lle- rea-. d prw, -
                                                                              $ < L24                    $'hm                                           -

(l ar.ee in mb f[U+lcarn-Umt,l }p I).I I I.!It re!me in r.e'. drIe Freil bit i 0 -t- 19.9' 11.1) Net i icri a-e ( <lecriei-> $rII.9i R x.1 Itrcha-ed ami mierchanei <l pou. r a.crea-ed m 19*7 oier 19 6 pn napa:iy , a resa:t of the pun ha-e of a portion of (les elatal - E;ed ric li:s : e:.e Compan - l'eny I lut I capace> a al t he

                                                                                                                                        /                                       N cffect of the ca p;            '
                                   -a:e to tOo I:di-on !a i~re h n of w hwh u..- recog o red a- a cre.ht to ira rcharee pow er ex pen-el                                                                  /                                 -

referred t o id " d e. .\ redlcD ! n el erg) req 1. rrna r. - m 19% 7 ri -ultirg fro r adanat in e'ectric -ales, was j.r!raardV n -poti- -iNe f, r 11., d.-crea-e m purchau d and mt rehanced pow er for 194 w hen c. np; n41 to 19G TI;e n in; nt Trid! '-]' era'li .fi s.f } 't n'y l ) i '

                                                                           } in Nt A em!* r 19-7 cont nhum! 'o tl e inen .m - in ot}a r ope rat ion, maa tenani .                                                                           --~~~~    ~

and deprecLtion i sper -e- dur;ng 19'T The ails er-e i :fect of the-r old;t o nal expen . - pnor t. n i owry thn ach emet i ric / I" 6 ' e - ud- u in'a u ha* 8 3 + I li) 3 l'l'll' acn iu!:' ?:J tinier w hh h } *'rmit - II e ( h inij ht!.) ist I !" ft r l't !Ty I' nit I n+ - 'inti[t}cir n ci Jnit h a in l a'e- i-ce N i'+- 2 8 ( M I.e r t aj '+ rat i' q1 t \l'eli-e, in p.'N ft Ct t t etl c rt il.!- iaf $2,94 h V N N ii}'i. t ai II.e n t n . actis e tid!];.g i ella r ( '.\ l'( 1 l ci,mp: r. e- re ft rre 15 ab. a r Thi alp-t n + nt u a- pr.maril3 re-pe' yNe f~r t he nerea-. in 19" e x pe n-. 3 - 1;- u f.t

Il l'i Inl L;&n, I4 3 II- 6' \ l '+ - n - t ' . ( II f ,t ' f aa ' tt ' I'a I llif t (' \ j et'n 4 - hir h J ,' J,"'

                                                                                                                                                 ~9 19"; aho reCett a M.m y m red uct -n :n p.1 - on co '- re- line                                                       hp$2 L
                                                                                                                                        ,       -kg           u.
                                                                                                                                  *!    _       h .                      .

fn m M.c ( 'om pa- - adop'oon m 19Cf a ne a p. - rn ac' < in'u.e 5 /. +- pew,4 1 -- ." -t a!.< hinl i- o,I li) t he I'.\ S l l a

                                                                                                                      'y 99x%.y   s
                                                                                                                                              ~
   .\- docu--.-d .d m , ot h, r int ome for 19 7 w a- n d we I hs a u rne n:f re- " :.e from t he Supn me Court de ci-                                                        on 11 e

( h'inj uny '* tenn t at a <n i f four nue:e ar g, f. erat :.e an? Tl e ad idio :.d u rJe e:Tural3onCerted iiother no . d ..ru g 7

   - -_~_                                      _ . .-- -                                           - _ _ . _ _ - . .                                                 . -                   ..             __ ._.                     _ _ __ _ _ _                                 _ _ _ _ _ -

Miiiiingeiiieiit s nisctissioii iiiid Aiiiihsis <mnimuca, tLe firs q .a r' . r a n d n i int o : ) ' i n ng -t ao hnl- pn . 10-. d upon earnu e for 1%7. t he ( ; re p..n3 u ou'd he penm%l,

  -cnh d h3 'i e 1.\ Sit ' n a h n,p. ,e t ! .                                                                                            of-ach I rop et o                                    under o f ra no rteur unh ntme, to i -ue appn.sinia'ib I w' n, .v n e i l . - a n a u '. i ,13 'iit he i st.                                                                             'iftlm [q( w: !so                               i           S;." .,i N ' ',1 N N i l n ! . -{ l qd a m.

Lt i t[ [,rst hu gt g,;g e } n i) 3 l- a d dn u l e ,! na en:a - o be o n '.,i d a ru il . pen d i f to n < os i r:. .ci n;'i res rat e of 115 hot u unbl ir ' treet t he n ipt nevnt - f n.m cu- < e. rx m e - i La rt. r for t he i- rai! ol11 al preferred tis t , To' al .\ l'I 'I n. ' h.- . n a-ed ou r il . la o 'uo u,n da ! ( in .\u m' . 1+7 the ( 'o'o pay F.:v<l .m a ppla ,' on u n h : Le prur.anb t e m n a n . -c deo tr ' on Nre upo uLh , I'lT4 ' fo r en h.cn ec m e!n t ne ra'i u ta h i- d.- a ! 'o

 .\lT l H ' 1 abJa ed r pt q .i:h I'. rr:, I % 1 AITi n ~ u m                                                                                                                                  pr od uc approe a ch Aa. toop

m a.Lht o al a:.nual ope r..t h -v ri ao . n d a. . d IN unh tb nu et c, n o n, n ;al n y n u nn.- Tre inen .. -c s pn.pou d t. N phawd m ou-r n;4 ri < , f I '. i r3 l'i 1. es er:d y or> r L d at an am et- di fenut durme ti .. plaw m In'. n- e s p. 4 <hsnasd durma IV i ompan J t 19 u '. . p, ni .d " i u!d 1." fo d3 rn ou n d by t Le i n.l of tLe fourt h 3 rar d.a. t o t Le n ih n .h ! , f la c h ( ou p. .n .h ! .t . % . 11. i . H .c r tl, TI.s n.que -t ha hole- t he cos , i i ua i,1 u ;t h I'erry l int 1. .\

19u;, iti Compun n 4 r e d S D .Dopu of h+e te no dek na e onier n i sp. i ted d.n me 'hi u i end quart r of le a t a h ca r r:. d a i . if., n e ama! 1 . n s rate of IM tlc

 . fn t o f W .                                     h mpt a - u a- p iri:au:. o % t in IM 7 hs the i -u a' i e m A;;u-til a n .o h i t h i :.d 5. ',5,t > H l.t h h l i                                                                                   '

nc % nn ih M u a h an a n' .al n.'i n ra'e ofto 1 r D.s..h al- on p n irrn d s t u L. i n evil m IW;i ser IX n Act w t Le n + ! cc

                                                                                                                                                                                                                                                                                               -t e .[           ;      .:).l.t.              .. t } $ \b j k M I,llq u > , ,[ ) .! , [ pri a ) ' g L, ;;; { } ,, [; . , g.t };

i j 1.u' e r i i pig Thei 1.i'r - uMrhe ' pri-- in -

                                            , , s p.' r.o m i-ta h,.                    n n J;u.                  .- huunrtn.-  n i ' t o r.       o  i t o > c.                     r'. o 'r i u . n S        t ALES TO OTHER UTILITIES th
 - u r i a.                                                                                          a           .i

[wNms of K+mm-hceeg . i ilit i f ial t i-t - i.T natiii - la !,f,'-

 ! !..i (10 45 i [u!Q If s ilr ir             '.m/n.3 tr.. . it-o!uf '.n.e n ' opati d t u ti . .                                                                                                                                                                                              Q           p 0~' u; . 1                                        o              he n (, e t , < m t h. ( ; nym; - rat -

5 ('apit al l'.e nurres and 1.iquidih. - ,sM ' s ( , a p J. a n.[i.n mi ' - n ; P. W .. !. r !Le ( .< ny. c -ii> s n itbin I .n t ra n . < a p.t al h a u - arol o.# ..o f'a ! u ci c a; pn s;; Jeh 0I})hHl hMi l is t r t },s. ', a - t [. \ , . ., e ai- fla e n o p 3n n,e : - u i . re appn.d n.c. :. ' ">23 'n.v. t u b i a pp rm u o4 f D;7p op u u o p: n: b d h om cu. nu: nc- Tr e 19-x P A21 ' !r. ..n M00-p r. c nn . i l c. i t a; h o-e n y n r. ru - an c.iro nt h e' nn.a i d - - - - - - - - - - - 6830 o I, Sl;op o.ii o ie sc' n L g . ,' i* . a r u. > JLti , d

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II.s e t r.1 ' ' b t' I l.! i' , . il ! : e ar 1;h { II'it :'f ff. ' i i \e av- - - - li .w s !! P 8_' ,.n. e- y' -l ti ! .. a;q u i,s:L; J, j g q".jnni,thni- - O l u ur t La' . ;4 n .d . L . tii- <&a n !.v e .i i ar !.. an esja<t..I 'o i .. n d a ed h3 . q ros m a' e

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C,s oo. i .o r ,!,(. y pa , n,, i r- mt .- t h r. A ' e tin ra ' t - l r i e -t t; ' - ifi na i !o i ..;qq sn ,1, b . ; _ , 6.i n o i,.j i, ' id - i 19 " n .i *!. un',, ' i il !.t 6l.'& '

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a a l1, n .s : n: .! i 5 2.i h 8 3,I k W i i ' .' . ' . . l .1 e ' I i't - c t r . a ! p .!i j .l e =\ , - U f I $ bI J 5- f ,, . , ' 4 . , 4

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i

                            ' l i' * )

A___. PENN POWEH D 4 i Statements ofIncome l g l'or the Years Ended I)ecember 31, lih7 19'6 19s5 (In Thou and-) r i l' Operating l{es enues _$_22:I,197_ S $ 235, l' W i _. .-. 2. M.o2 I t)perating Expen es and Tases: Oj r ration - I'uel 55,100 Qi,1N ' 5',919 l'urcha3*41 and interchancedI am t r. net 3,12w 7t*i 6,siio Other operati.m exper res lo.:;o:1 _4N.' l l . _ _._ 4 3.? l'. _ Total opera inn lini,772 11:1.621 It 9 U 01 31ainie nanu 13,977 1'.:;55 17.52* l'ron on for dej reciation t ul nne.1ization 22,517 21.:116 20,4: 1 l t ;errral tase- 11,91:1 11.*13 1:1,xti lh-fern ,i l'erry Unit I co,13 ( N .te 2 r al 5551 - - inc. me t ase- 15,*22 1:1.7: 2 2.;,905 , Ti tal operating esp. n-e- aml tase- 177,2i ni 131.37o Is!, tr2 , 1)perating income 15,t 51,l'1 .ti,511

                                                                                                                                                                                                 . _ . .          0. 1 01her Income and I) eduction-E m an. e fir e.ia':y funit- u-e 1 during con-t ract ui                                                                                                                                                                 19.131                      1 * ,o7 s               17.15)
                 .\li-ci Haneou , net ( Note :; r                                                                                                                                                          t 9.2:il i                   1,(;9                   2,. ,: ;6 Incom. tase3-creda                                                                                                                                                                       10,297                        7,w70                   7. 7.'.'

( Totaii ti.er meon." an I ledaction- _ 20[22- q7.737 27. .M Total i ncome Gij,21s T s,911 s l .02.; Net Interest: I r d e re- on bn.e term dela 15,79:l ;! .::97 ::O t t Intcre-t on nm : car far: old.ga: - ,671 : o77 1,193 lhfirkdl' err) l'n.t}.defe-I(N Mr21 ( } :5G14 -- - N!o ,u nc. n rlerr a id f.:de - -d d arj e co -t ra t hr., ret 4 'lef<rredno me:ase- i9,216) n,1:9, r ,191 ) litb r .rarre-t e s;w : -. 1,712 1.2GG 1t6 l l M i mit re

2w t;21 11,201 11, l';o

             % t income                                                                                                                                                                                   '17,591                      11,710                  01,39::

l l' referred Stock l)is idend l!cquirement s . Iloo<: 11,21I 10.017 l i ek(l! lIk% ll(I IINInI0III l N' ,.l . s. .t . .0I, I % l tlc a, c i mi e :.,* N o . 'o Imm H N a' erne: '- a re .. a M pa rt of G -. -t a o ' - l i l ] 4 i I i i i 9 t i

P 1 4 h l 6 l I 4 Italaiice Sheets Assets

                             .\t llecember 31,                                                                                                              19^7                             lib'i t in Thousands) l'tility I'lant:

In -en ice. it oneinal cost i Note u $ 1,031,:107) $677,701 L. -- .\ccuurd ited pros eion for depn.ciation $b,011 210, lus 7G,291 167,C! 4

                                       'on-truction u ork m procre                     4--

l-:lcet ne plant ( Note 3i fti,62:1 'l*,237 Nac!rar fa ! 3:,N!7 37,671 1 lix,1GO :b ,,97.s _ . _ _ _ _ . -8NI,751 G 1,Gil i 1 Other l'roperty and Ins e tments 1,2:19 911 ('urrent .\ssets: l ('a-h 19' 21- l Temporary ca h ir a t .-t ract.t a'. ci . t , u ha h approx!rnate inarket s alae

50i l

                                                                                                                                                                    ,                         17,( u n t I:ect a able--

l'u t onier- ile-- a( cuinu'at ed pr. i\ i.-iii'i of 57:12.i n n l and

                                                 $1169 #1, reslw t.t a ely, for uncol!cet th'e acco;ud-1                                                      12,150                          IG, As l'arent con:pany                                                                                                   11.9.;0                         19.s79

()t her 11.511 15,211

                                    .\lati nal and -aliphe , at as rive co-t -                                                                                                                                 !

l'uel 12,727 9,112

                                          <ither                                                                                                                 .w .ow                         G,717 a

f l'repa) r ,e nt . 2.370 1,1773 j T. i p.12 , _9,i n ;o a lieferred tharges: 4 lieferred farl eo t iNote si 1,1*;l 1,:G7 I l' rop. rty tau - 1,7' l 7tal l'i;ainortized co-t- of ternunat. d ron-;ruction pn.je4 t-I No'c li 1^ 11,5 9

                                    !)eferred l'erry l' rut I co '- &te 2)                                                                                        ~. ,2.' l                     -
]
)                                   tither                                                                                                                        5,G l w T .::17, 1
)                                                                                                                                                             20y05                           22,t G1          I

! $ 979 sthi 8:= Gnu i 10

h l UL PENN POWER w \

r Capitalization and Liabilities At I)erember 31, !!IS7 !!Ni (in Thousands) ) Capitalitation (See Statements of Capitahzation r: Common tockhohler'3 equity $275,510 $27ti,ti?2 l're4rred stock-Not subject to man latory redemption 41 !ai5 11,tio5 Subiect to mandatory redt mption . 11%,142 titi,30.2 Lon;, term ilebt 372,::91 157,111 710,9 1 % 743,os! _ I,ung Term Obligations: Nucicar fuel r Note 6) ta,620 :19,233 Capit al lea.-es ( Lt c 4 i 9,6'37 12.221 50,277 51,451 Current 1.iabilities: Currently 1 ayah!c preferred -tm k, lor.eterm delit and Im.cterm obhgation- 13,027 16.179 Ltc3 pay able to bank t Note Ti - - Account

pay able -

l'arent company 4,363 :1,41. Other 33,!*;3 :d,w; Accrued taxe- 2,013 6,619 ( A cc rueil int ere-t 9,519 9,276 (>ther l l,70si 12,$i9 30,156 36,377 1)eferred Credit <: Act umulated ileferred incon>e tase- 11,719 :17,617 Accumulated defet red ms e-tment tas credit.- 32,321 U,3+1s l'roperty taxe- 4,751 Tial Other 9,661 7,171 Aw,509 79,249 Commitments, Guaranters and Contingencies t Lt. - 1 anil N

                                                                                                  $979,5!a l        $' a in , Cd'i.1 The an ompanyine Lte- to Fmancial Stat. ment are an integral part of thc3e balance wheet ,

11 y .

l I i I l l i Statements of Capitalization At ikcember 31, Ib7 19"i (In Thousando Common Stockhuhler's Equity : i i Common nt. i . to par s alue, ei,Tn)y nsharu aut!w h l ' 6,Du,in whan - out tan.img $1M,700 $19,700 ' Other 1s!-in t apital 212 212 lietantol earning- (Not e 5,a . 89,59% in,7'n Total common 3tudhohieri o siity 27*.510 2 _ - . - - _79.672-optional lh.h mption l' rice Numla r of share- Agettgate G at-t amlin g <In 19-7 19sn l'er Share Thou-a r s t-i l'rc ferred 8tock i Nue ab t. Cuma:atis e, $100 par va!a A ut horiznl - 1.p n el s hare > Not Sulje et to Mualatory 1:~de mp' .on:

;                      1.24'n 4 M1                                                         111.019         111,019   $lo2.9w1tc no                $14,611                 11.105                          11.105 7Mupr;                                                              n yo           l i s p io  103.27-104 47                12.27s                 l l,N io                        ll,wn
                         .149.16',                                                                         1 cop u                                                                                                       l

_ ling o_ - __. l o.l. Tr. li ci.20

                                                                                                                                          - - - - -16.7-2     - _ - .

16 o lutno 1 j Tmal n. t ubj et to 1 ma r. .a t ory l'olt lOl tt iun l]9,019 419,o lf f h l3.cIFl 4 1,9115 ll,9115 i Subject to Man,latory l Mit ftlitie t (Niste Ist f w 21'; .lo rs; 17op o 175p n slo t 12.lo;y, 91 .o ; 17p o 17,To i 11 m7 II.7m 311.616 151,591 lo129.lowJti 36,436 :11312 15,1 5's 13 N ,.15t m 1o n l uiy n 111,oTrlit ol Di,22% is n l=p o lh .lcmptmn w it hm one y ear i t .22i o (1,297 Tot al -abject io rnb r.d at or,v re le '. l .! P 04 f2Lt.616 Il k *e9) $74.7j7 l'O,1 jj c[0,alij laing Term ikht INote T h: fir-t mor* gage bond, - 11 TM u e6 hte.! as erwe iMert -t rate, dac 177 t hrough IMr2 . Tr , *'.o 765a 10.167 u iigMol as crave inti re t r:ite, due !?r.t3 t trough 11r*7 75.No 4o. M n

7#i w eichied as erage interi-t rate, due l!Ph {[pnggh pprj ,

{ % g *,g f,g {g ) l 9.ol'; n e ighteil as er ace mti re-t rate. due $ nl3 through $ n7 17.0w l s,1:M 9 NPi u c!ghtml as trage inte re t ra'e, dac ? m W . 259 m) 25.1 m n l l eal f.r t mortoge 1 end- 247,31s 2?>.2 41

           , ikib1 I' 1 4. '* a ! H   .I   P [a 1*b' 7.467 w e ightnl as erage irJere-t rate, due 19e throuch IMC .                                                                                            1,7 7, ,                         1,756 11 l*7 w ewhtm n erace ir. ten -t rate, due l&ed through Itr*7 17,o n;                          17,o47 10317 w c:chted as erage intere-t rate, dae !!@ throuch ser2 .                                                                                          y;, cog                         2;,cy2 7.TM w e ightol as eracr ir tere-t rate. dae ? ni t hrough 9 n?                                                                                        25.766                          2/uTGi 9.7W w ochial aurace o tere-t rate. duc 2o13 thr .uch 2015                                                                                             32. l N i                       32.15o 1;1,411                         131.411 Amount hi bl by Tru ice                                                                                                                                                                    #2.221i

_ ' l_.c3 0 Total -ccun,1 not e3 an.1 oN. gat nm 112.791 1.-t11 Cl 1 I N+ t unamort zed d. munt on debt an,I oth, r 1777) i v.11

           !.ong.u i n debt dac u a h;n one y ar                                                                                                                          r5.4111                          I3. 43 h I

Totallong term debt a72..:91 ni,141 Tot al capshrat mn $7F i.94* $74 .ost 1 1 The utompany.f g Note s to financial .Y atrmrt?- are an uJt gral }to't of the e t a's Int n*- l 4 l l

l l I2 l

.I                                                                                                                                                                                                                       i

i; i 1 O.

                                                                                                                                                                                                       ~- PTNN POWER 4                                                                                                                                                                                                        W Statements of Retained Earnings For the Years Fnded l>ecember 31,                                                                                                1987                            ItNi                         19*5 (in Thousand*)

llalance at beginning of > ear $ tH), da $ NI,22i) $ 70,1N 37,591 11,710 46,593 Net income

128,:151 107,960 116,739 Ca3h disidends on common stock 27,G70 25,99^ W,5Go Cash dividend >n prefern d stock ___I leyj __1 Mo2 __ lo,m9 as,756 :17,200 33,Ts;9 Italance at end of 3 ear (Note 5a) __ $ 39,i. - _'_t. -

                                                                                                                                                                                             . --8 90.?.?.              . $ N ,22ij Statements of Capital Stock and Other Paid in Capital                                                                                                                              -

l* referred Stock Subject to Not Subject to M andat ory i Common Stock ilandatory liedemption 1(edemption I Other Number l'ar l' aid,In N u mber l'ar Number l'ar j of Shares Value Capital of Share,, Value of Shares Value l (1)ollarn in Thousand*) 1:a!ance,,lanuary 1,19G 5,M a i.i a o $17G,700 $2m 119 o19 $ 11,ta t. .>.0, GIG Si7,iw;2 l -l Sah ef 11.58Fi Sene- ll of I' referred Stock - - - - - 150,i n n i 15,i k u l f ' Sinking l' mal i;edemption - -

24'< Si rie3 - - - - - ( 5,t *
h ( Si n h

11.in N S. nc- - -

11 - - (1.o w ( l o'.o 11 dam e,1)ecemler 31,19G 5,N* i.i n n 176,700 211 119,019 11,1

G Il 1.Tes 71,1NI f

Sale of Comnv.n Stock i m ikal 12.i a " - - - - - Sinkinc fund I:edemptmn3-3.219 Series - - - - - i S,i n a h (Ts u h .i ll.4 N f } Sene- - - I - - 8 2,!a;IT ) (Z41) Italance, t h cembr 31,1"Ni G.C a l.i m a l l '.' 7m 212 119.019 11,1= 15 7t ni,591 To,G59 l ,

Smking Fund I;edeml ; ion--

j %,21', S. rie- - - - - - ( 5,l k h o 1581ii) I 4 11.iare Se rie- . _ . _ - _ __ __. _ __. _ _ _ . . _ _ _ _ _ _ _ __ _(79756__ ._ . 7_97) 1 It. dance, I)cci mbt i 31,1947 G,2 0,inni $_19,7i m i $212 419,019 $ 11,ia G G101,616 $G9,::G2 l l l Tite act,,miiariyirig .Nute s t,i Firiaticial Statenit iit * :iri ari irit egrall iart iif tlii si state niciit s. 13

Statements of Cash Flow I Y For the T ear, Ended lict ember 31. 19*7 19'6 19w5 iin 1 hou sando ()swratin g .h tis ities: Nethurrr,e $ ;;7,Tol $ 41,710 $ 44.Wt l'nrxi iul no u h it er.- t h pn, nst o,n an.l ana rihon W.1*7 2N5?' 29. Nil ilefi rreil inn n e taxes Il.:LB 4.701 11,Ci In u. ' n xi.t ta x ( n41.t . r2 ' (l.nlli 5.119 3. " "i l'rou n.n fmr reu nue n f.; al 3.i rjl 7,p r, _

                      .\lb.u ar.w for cept 3 f aral u-c.i during con trus 6..n                                                                                                                (19,1*ll                                 iINHIN                117.47!!

14fe rn J ft. I co ' . n, t 0;19 N 512 (l .Mih Wnte+ff of te e na ,atuli .n t rade.n projitt- l H, 4 7'; - liefern~l l'er n l' rat 1 i n 's M.'2246 - Workb c raprtai apg l t M.r opir. vion- 1,771-. 134 I: _. _ _ _ 'A l L : ca A pnis n h 41 In t ol ranon- 14.617 N '.w i N '.t m l Hs idend l'a.s mr nt s: Umn m -m k . 27.676 25.im .'.:.:n i l'n fi n ol -M L l l .ON I l l,$ r2 log s 1 To' a! . a-h ae! I- d.s nh oi- :b.756 ';7.:.m 1 ..69 hnaru ing h tnities: ( , m. . ...k - 12p ni . I'n f. n i d x - -- 15p u i 1 o' , N no ii. hi a,'5'a - S t.;' W l .'> & 5 r!' . .h! , a n .! - x.:Cl 6.ra9 9.: 1s La e ! .m en f no! h. hl m e s n.a '. i. i 1.3 12 11.!>=2 ht r U.. ou- (Soih 72.+ <91> j 11413 "O,7. ;u w9.9 9 l No ca-h i h: , v n.n .ru ur m t & , 2 11 n tam t u.21 s i T. 'al ra d f ro : n. a Gn., o r e A

                                                                                                                                                                    'n2                                     i * . iil
                                                                                                                                                                                                                    .             wi,7 41 lh p.o               .r        -

P , f, n cd - m L 1.*J i7 791 rm I .. 6 o rt- d, 19.176 T2.a7- 27,ra l Is c n i m ol ., p.n. a. - 7,77i 9,46 _ _ 9_77 _ l

                                'l < t al ( A -nl f r i e FO                          e 30.2~l                                     b l,9 l}              7, ri l 2 N . ' i a- t, u ..; a b d D                    . a-, . i f. , i f mu ,            ,      'e,,',

4.*11

                                                                                                                                                                                                          <l63_7;n

_. _ __ .63.129 j i 1 l Inse ting h tnities: i 8

                                      . *"     h 9     e                                    ,b                  ,. l l '11 l 'll$A { 1,. ihi p h f rfl.* -
                     .\!:ou :e o fmespt,f;. a a-mi
                           . harmc ci s n. '                                                                                                                     il9.lwl)                                 tlsuTsi                (17.1;]i I k-f, rnsi iu . - 'au                           on aJ .w a            e f. ,

18 Pill #U l't ld - [5 ' ~3 L [fe[ [ { - l] ! ji .![ t \ t ! .J l.! , ' :h b-;il f' a ' II.II) I, Cili n .l b) ! i 'a p0 3h o f h is n. ' of .ii f, i t J t or i 6.7ofo i6,112; ss ,o l i )

            .                 s ., m                       - pg,                                                                                                           nd                                 2, r.2                            '

mi E . ;:2 ,r eum N. toma } %t i . I f-r .r u . e e a1 o .'n-4'i,9 22- 17 S t s ' 75.i ca 'j Nt ! 1m n .rt - h ( n a - ' 1, i h a . I ta . - .s t ,s L; . i ' r .. t *

                                                                                                                                                               $   (" $6I                               % )l,7 (i 61           $ li, ll' , \

15.. is ...n ; #1 e c Nos - N 1 r

                   ;                                                         . .i ;'.    '-          .t'.an an a p .d pa rt . <f t t. . ' O .        1. '-

i I i 14 l 1

                     .                                                                _                        _      _ _ _ . . _ ~ _       _     . _ _ . _ . _ _ .__ _...-_                                  __ ..____ _ _ . ._

l f i b 'I l I 4

                                                                                                                                                                                                .A,,,,                                          i
                                                                                                                                                                                                ~-- PENN POWER Statements of.Rwes W                                               ;

k l

' 19'I !!Ni 19 0 For the Years Ended licccmtwr 31. a (In11uiu aivle i I General Tases: i Stnte grow rt cept < $ d.fA 6 9.211 $NW ih al arnl ]w r. onal preperty 2320 1.74! 2 2>'J 5 tate rapital s'm k 1 G2 2.12' 2.WJ MLd secunty aral unercploy mer.t 1.ful 1.VJ 412 I . '-

                                                                                                                                                                                   .,               l a,l
                                                                                                                                                                                                                                     .i M:x e:laneou.-                                                                                                                                                                                                       ,

Total gereral taw 414.'13 513.'11 I

                                                                                                                                                                 $14fid J

l l'rai ion for income Tases: .

Currently jay b!e - [

.                              Federal                                                                                                                           $ 2.Tal3                 $ 2.741                    $ 1. %                     !

1 State su

                                                                                                                                                                                               ...9
                                                                                                                                                                                               ..4                         ....o i

it'd tw Lul2 ].f s.G ! i k ferr.,l. r et r-ce t,-h w t - Fed rM 10.'21 7.114 10.1 % ! Rat 515 i2.71o) .- 1.129 i 11,:2 1.Tol 1 1.e;2. . , ( w 4 Inus-tnwi t tas ered A n t < f amort aation -.1.014 ) - _-5.11_9_ _ _. W .. 2 f T .tal pros i. m for in < m t a u-- =-=

                                                                                                                                                                 $12.9 r2                 41i.7 .                    e 27,.m7 Income Statement ClaeificaOnn nf
  ,                    l'rmi inn for income Tases i                         open.t:r:e esp. !,e-                                                                                                                   $ 15.'22                 fla 7 0                    + 2.u r.G I e t r i:. . .                                                                                                                         (I".2971                   ( 7. * !m                  47 7223 Abm ace 6.r h nvu d f a i :-ed                                                                                                               . . ~ .                         .

x. . .I -,1 j darn e con in. i .n .m. s. _

Tot.d pr a e. ion for nao Ne _

                                                                                                                                                                 $ 12.9 r2                < l 4,7 ,                  92 , m; J

Source nf li tferrid inenme Tuse-E s ci of tas m r imk i.1 r , t.c n .. : t $1G.$i7 s#W- *4%1 A U.iss .a s't- f. T i ' n Tros\ t,I I .'a la U-hl tI anj g cu .* rm < n, a L c h !- ( r. d.ml t . p! r 7 177 -*7* y24 , 1)e ftn i d f... I co b ra t 275 4..;4 rb wi i l hn i reJ o . re

m !. . d na.m ar fuel u t M' 41,461, il.;715

. T e nn.n.d ed co i n; ' t n prr ;i s t.- i 3.wTo r22 t t2 J'ros m in f <r res e: e a f and. r . ' (1.34 h . ;n i _ l'ro;

rt., t as e .

1.724 c,4 i tim li. 'i rn .l l' rn l'r.n 1 m ' l .Wi - Abn tot ! a n tas d. . n al U t.12 h .- t >] >. Fa' 5 i - G rr) [ ir A a n! .

                                       ?                                                                                                                             ( I . *2' ' l                   -                            -

(iib r.fa _ _ . _I_2

                                                                                                                                                                              %              d 1,1( 47,1                       1 f 4121

! Ni t J. f< rn d u ,.t.a.- $11.:a _

                                                                                                                                                                                           -     1 In t               311.c; ,

I flerunriliatinn of Feth ral Im ome 'I as F. spen e at f Statutors !! ale to Total l'rns i ion for im ome Tase-i it.ok u5c. e he foi .. pr..s i-i , i f a a . e nac- -

17 , (TEGm i Go. 4fi .

j Fi dt rd i rx t as r s p. i1 'a' . . ,r) ra t e D I. II ! *27 % 4 NU 977 ( lu n a-t- i n du - ,n i tau - n a e fm 1 A'l. M a l d e f. .F i i g j

                                 .                          f .i fe h i-et! d er !          4 4                                   ci e t n.ct b .n. n b h d,4 - n'n

2 .

t aso! dc hn ief'io (IJ J S I 6 4- ".lc' ( * . 4 r,,,'I l '. ? ! a' e n.i . e. ' a u - ? . of I ed( n.l I un r e t a s b. v. 314 !!*li 2.2 ,- l An .c . ..n of ms e-t n:. ni tas t n d.t i1,743' t 1,4'J i i ) . ~. M l l E se. - of1 .keuitasdi.;re4'a' n . r.. u t 1.nJa 7 'T 427 l l 1:cu rs d of ta u s d. fen i d a. pn .r y c.o - < N 'i l ' + 2. 41G - tit. i r.n.' -- - 7%' i1-- i7.7. h l Ti a i l i n i- . r. ' t t is - 412. '" C

14. 7 - > $ 2.'. . ' 7 l

l m ue.n e. e n e N+ m i s , oa: m. m , s o c a: p.o t f s - s . u - i ! 15 l l l

j j Notes to Financial Statements l x

tr-

                                                                                                                 .                        :                 .o                                       .
                                                                                                                                                                                                                                      ,:                      )

1 1 1 (11 Suminary of.significant Arrounting Iblic les: on the !!alance Sheet under utihty plant at De cember 31,157, ' The Company a u houy ow ned -uh-i har) of (lhin Ednun include the felbming: i Comp;my iEih3 on, fe'u > the an.cntme 1 'Heies and practice- i pn-crilel by the ikn 3h unia Pub:ic l'tihty Commi I and the [,t dend Etrig.\ l,eguhitfiry (imnaob[,.13 >H,1 1[.-sion1PPID I tiht) h t umulated f eitht rut 16een ('oluiu n t 't I omr h'ip i l unt t.rm i ion r..r h k in s kne rating i nit

in N n ie r i k pru iat h.n Progrr *in I nt.m t I b 00 AD - tin 1hou and*i L

The Comp;myi retail customer- are meterni un a (wie ba-i- ' WHv - l,aienue i Iro gni/ed for e.wctrie 3t n ice ha3ed on nwirrs read s - $nio s u'u, i "s a , *n % ! through the enil .if tim rrmut h. ws ,..y w' n .. a l 1 *icidh- fn.m Shanoi Steel Ci rl initiioi, ti.e (;4m}'anyi ca s s -c. . ' ;.+.> 0.. . . i la rge-! CO M Omer, anb @t eil til a lrj m ik if na t t '} \ 8211 N r (lii W I, IEO i r G

    $2 I,IllI,1 M N '                                                                                                                                                                                  '                ' "

8 alal $2b. INl.Ill)ll, in NWI, UWN un i I.Wh rt*l>er- * # tiu ly, n pnm m mg tm, loE ar.d 10 W , re3p. et hely, of t he 7.' [ .l[ (impanji tohd openJ ng revenac3. On Apnl 17, UN7. Shan >n i3 , , .. /.m 1.. p.. ni l stt el tbl u l'etition under Chapter ll of the Fe h ralliankruptcy hm' . __fo 'tr. I Nhs The (1mpany ha- fbi a pninf of claim in thi- pn creding L/ - - 816 * $oo of appn>xm;at e!) boo,'a o for e:ect nc 3en ice fanu-la d t o Shaeon ) 3 Sin 1 pnor to the Chap 9 r !! he. The (impany i- earrently + tui,i ., , c,,.,, p. - - m. i Er o , , , . . .. o.a , b4 ine paid on a dauy kni- for c:cetne -enice furni4ed ioni 4 -p. i

3. ,e l

lu - m a ldd on acennndated a 3ub-1.mt ial re cunt 3 d. post pur-uant to O e onler of u e lh nLruptcy ( %#. Nut lear l'uel-lieferrni l'url ( ht - Tlx (1mp; m, amortin tlw oi-t of nu lear fuel ha-nl mi t he The (; mpas, recowr- fael o-t 3 v i ot heru ne n2 nu1ed rate of con-umptio: The ( im pany '3 e!cct ric rates ini bnic

,   tla oach hcc roter fu m .N cusomer- tLn wh an anmial                                                                   .onoura - for t Le future ilspos t of-l+nt nudear fael ba-ed upon
      }c\ c!)/ed" e f.t PJy o d nJelli('l(> Tim 1:CI: w hich a i hah,                                                      the f ,rma!a uwd 'o compute payment- t o tLe If niini State-
   .o lj o tme' t for any ou r or i der conection fn m nrtmners, o                                                          liepar mi nt of Energ3 recalculah il i ach .u ar. Aeronia.el3 , !Le Company de fer- tl e

{ d.ff remv he u ce n actual energy co-t - avl t L. anm u Allouante for i'und lini lluring Construc tmn-corn Lth rn m end in.m it urtona r AFl'In ' reprnens de n i fmodtg co-t > cantabnl to n.n- . l'efi rence % ma.le to Ne ar 3 with n y.ni to rn i \ e r) of 'la -inyt h m w ork m lngre' durirg t he con 3t na ' iin ].en 41. TLe !

   < o-t of 1:n i e M e -fb Ll 14ar.t coal                                                                                   horn. uni fu mis pe &n n fect- capitabed inh re,t pay na nt,                                                                      l and the t ytoty fuMl porti. ; repn+ cot !Le none.rh raphalva-                                                                      1 I tility l'hmt and lieprn iation-                                                                                        tion of ;mputed ec.t> co+ u ha h an. ihargni to con-t nwtion                                                                       '

l'f d.t y ][at.t l'i f ect - t h ' e r! L.na l t , a! t i[ D +n-! n et h . , Ma i c l- A fl *l M ' \ ane- acn.nhrg lo ([Jrgn m the leit lie [ 0,n3t nkt u m H c pa) ro!) WI n ! ited o J clh as !au ,l m ob and Mkif uolk W pn' grew an i m the co t o[ capMah Ibe (Empani lom- i fru ge beni fa a.hra t rame aol gi u ral o -t s aol aCwn.m pun- Al'I'IM' n he a net rf tas noe. u Lit h i- con -n nt l i %r fural- i ni ilar.ne n '-truct n i Al l'lhi u n h t he rate in at ment. Tia Al l'lW rate related to mch ar l Tl e t a n.pany prm e b- f+ r depreciat in on a e ra;cht.bne ha r f;a 1 finamni onl3 ihnmgh tLe ha urrenw of leh rm ohbea.

!  at s anoa nde- ou r t Le e draated hum of I n p rty un md. .I                                                            t i. . - n.co Note Q .- N -cd on act ual iuere-t un runt on t Le in pha.! m -en ;ce. The a nnual o.mp.-it e nc. - f.,r t h s in c id*'                                                   ohHem na r d#ng the pen d. Tim a un.al ratt - u ed 1,y tLe w e re I l'. in Un7 and 1 & :n Pimo al PN TL. (; n.p ny                                                                  ( 'ompa ny fo r d o' Ler < . o rt na-t io n o> n ;ec t - u i re lo P ; m un7                                                      4 i

1 ree+ .R ' U J c - a delirena! ' rn e \l *1 -. t -tHna!nl W % ar dec 2 ,e. I ajqc,\Maated 4 0'; in MWI asi l!W3 l n';--U mil e o O - a- t he co-t - ate i n . d e n ,l in m ( u

i t a r-l A f W Fifit - (i > n ('s il In nn 5 a'a ' e r- f.'r ile n eh nd - ':lt'3 an- .

Inneme 13\e%- I iccumulated in i -< f oo an ;u.t - la A . f 01 n tal pnn: on for u s ome t ne- are Joa n m t le p' ati rne nt - of Ta se . Th di fi cred u. . one t a u 3 n'au from i ('iHolmen (lu nership fif ( Arth ratillR l'arilitic%- t ; nH ') J d . ! rt In* Mt !!a- I t % i e nd 'io n i.f l ei r t 8

                                                                                                                                                                                                                              - alple \l= n e -

The ( ; mr my and i.dsr ( '. m ral .\ rea l'ou er ( '. ont nat m f ir tas aul an ountiv p rp ~ -

Gn.up < CAlO n rmpan s- u a n, ,n t emu a m comm~n, s ar. t - Tle (; m p. . ah - . - t he m i n, i n b. > i f.t u lo ch re - a h - p.u t r p t yratu s f iciLt a - E.uhi.itb <icl.a'n.-i-aligatnl ni m it d ere-t * \lw o e re!a'nl t ii o ' Mr'a t e m u >rh :n l.n'd i - to p.e a 3 ha re ' toe o ' H nkt on o r - of g ph !!) i:u t ed to anima fase- i redit o Med 'ad r ot h r meon x i al fw .hty in (Le vlw po p Tt.on a- l' - ow n. i + p in t en 't . Th. dedmta - m il e P at en a ut , . .f I n. om. Co m pan) 4 p en of op.nt ur e\p n-n a-- n i nd u al t Lew in Api d Psi the S ipn n . i brt of l'enn-3 h an-a na d m .

joua !) oo m d f.a it a , n ua ludel m t he i orn -p n h / .p rat c 6 f.a or o f t b C. <.na r A h m at e of l'. r -y h.naa m an app .d i e \ p. n -e - o n t he 9 a5 nar N oflo mne neam i % refectnl '

                                                                                                                                       . n :n m a Un t (in.nc nua? L C e deci+n, a M h nph. hl I

l l 1 j '6 1 a i

                                         - - - - - - - - - - .- - - -                                    - - - -   ----.---,------,--_~n._-_m,-.--,n,.,-,+- . , -                                                                                     ,. -ne

                                                                                                                                                      - PENN POWER                   r D                              ,

1 F the bm; my' !!N2 PPll' n tail rate < ae ihs u m a!bming lietirement Ilenefits- ! nornudtwmoofincome taw- a .-ociatnl u ith eertm ;lil tndim! The company s t rusteed, noncont nbutory defan d benetit depreci dion hene0S The Supreme Court iis h ut,l > tate peimon plan envers almo all fut! tinte employeet Upm wtin~ e inune ta x i .3nnahmti.m and rerlauled to the l' plt for funber inent, emp!oyt es nweh e a montHy pen +n he.,I on h-ngth of st udy t ra practice of fuleru! u;come tn nonnahn. tion. Un rersice and compensaion Pnor m hly 1, IN, the Compan, , Septemlvr 25,19% a settlem. t t agreement na3 apprmed b3 fmaled pe -iea co-ts accrued using the frezen initial habihty ; th* II'll$ Are'ardm/ y.l 45}GitioJ rtm enues arel illn'me l'txts actuarial [uniling nielhia!. Eff ethe July 1.19<, t he (;>mpany , were n doo-d by $6,M7p o and $7.2.t2,ir,o. repet h ely ml changed to t he projectol unit ensht method for fmalb.g purp.-es j intere-t expense wa< n:rica-ed h,s $Opo during IN 'o and has v to n mquimd to make le: - on cont nhutions riou-tecuenin the amour.t- n fm.dah:e to cahmers a a re-uh of June m, IN Contributiou of $2.23:'po were inade duriw t he >Pitlt Mt Mt. This -ett! na nt had no material etTts t <;n 1:et the fn t six nomths of 1R4 income for PK The Comp ny adopt .i the puvi-ion

of Sl'AS L. 87, .

The Company expecu i hat d-fern,i taxi- w hit h have r4 t lx en "Empleyeri Accounting for l'twiota" a of Jatary 1, liisi ! prmidnl w!H he co%ted from its cu omerr a b.' the taxe- . As a re-ult, n poned ni t meom- for 194 wa.- approxinntely Itcome pa% de, hwd uj e_n t he e3tal'll-hed rale making j t.it!M e $9t oJ 8 MI higher than * .Vou!d ha* e ht en u;de.' the pre'.iom. ; of tL PPD' and the FE!:C As of IW mber 31,19si, the accountir.e -tamlanl. : eunm:atise n. t inceme tax timing.hffenmces for w hich deferrol The fonowing .-et funh the futMed rtatu- of the I dan am! l incomt taws hoe not N en provnh d were apprusanately amounts recognized on the Balanet Sheet- [ s

    $2mp op o.

Th+ (Sansmy defer, ime tment tax credit- (ITM ' tihmd At llecember al, 197 !!Ni i I and amelzes there credit < to n.come m r the estinnaed hfe Act uarial pre ent ulur of e j o,. t he re,.ated propeny. The ,uts I,,cform Act of 11%. repealed henef t *.hhgation-theITt,ehyecib e J a man 1. ,.9%. e m pt for certain t ran4 tion

                                                                                                \.ed                                  AN %. W H i < P ,'191'iko I

property. A- mr 1)eceniber ;,d,19s., approsunateiv *

                                                                      .?l2p nipio               h. nve-ted
                                                                                                      ~ ed heno0thoneh.ts *           " "2."o'w'p o ' -1, h.'no                      i, i
                                     . . o n dT-et futurer .ederal m(ume taxo3 hm                                                                                                 - - - -

of una-ed i FC u a- avana. payaide, of w hich approxinutei) $ lop op o expiro at the end Accumuhited bene G of 2m) with the remaindi r exgring at the end of 2002. The "Micati"n ~ 511.94 # o ! 37m19.0 =- Company a'- ho approxinately $a,lmpo of alternath" A t asd pn wm @. )' nununum tax endt e madabi. w h, a h may be carred farw ant gg g.9.d kwGt indef mteiy. l.. admtir the Gmpany had approumately Mddtim $ CMo $ .*s w ge f e p,,2mp o of tax net ultratirg lo--e at Ikccmher m,19 7 Plan e-ets at fair value 717tp o 76,170p o l acaibbh to (arry banl untd 2m2. Ntch tax net operatine Iy""" "'!' * *\ " "'"I. lo - -. - hm heen recogmu 1 by not pna hg deferred taxe- of l pro;ed ed kn. M appn nim..tely $7,*.n o m 19-7 u hich wotdd othe rw i e ha e ' * ) I d""' Db d"bl l eet n g in n i.let h Unn mniwd net 6 t eami 749p o Je ~mc'm n

         .fhe I.manend Accountmg SLndanl-ul, mnl raently i-we.l  .

l.nren gbl&d pner 5ta,.e mt nt u,p [rmane;a,, Acc(cnt mg tandanl4 l b f,A >, n % i 9,, a ruce t o-t ,,p m o L. o o

      ..Acet Cn d md f* T ll At ine .l. axe = , u h;ch, among 4 4lA r thihg , W.                                                                                                      {

l.nrecognimd net quin ~. a chance m the met hod u-ed hv enterpri-e4 to accoum . . .

                                                                                           .s ran-!! ion a -et                          i h.n. ps a n , '         ild L2 w.l' m n' i

far o.t fern d ira ome taw . l. de n r the new -tan lard, u t n h beco ., L!Pd "n hah!!.ty $ 1,cl o $ 1, ;m o effu the in 19-9, the Wmpany u dl he required to u nie dow n ! it- net defern I tax hiances to ref s t the na lo.u r urome l tn rate- inc..rp. rated in t h Tas ikfonn Act of 19-4. In-tea i The aweb ef 'le Wn n.n- -t primruy of emmon se of merea- ng meome due to ilus potemial w rite dow n, the 4 im- Urdted Rati- p.urwent Md, and o.rpaw 64 L+ pan 3 u Hi defer t he-e amount 4 A na ' nie t hem a- a n,i xt !. n p., si,,n emb & r 19-7 nd IDW m n wyM e Me t o cos- m nier m future rate proo r.hna The ra u -tm. dant u dl alui nymre the l'. n pan) ti'In ord a deft rn d tax habl.!3 g g' for tax henr0t- t hat haw pn4 9 a-13 hn n Cowed 'hnwh to w rum-t ,oen, t b earned

     < a M w r t al an e-uned deferred tax liakhty appheaNe to                                                                        S b2 IIM "' $ 2.h  P C t!a equit3 camp ra nt . .f .\ Pl'lW f,e uhhh m uaena 'ax                                  "WI            l*fU d t,nung d&rence esi^ un Ier < urn r> as cou nt h s , a hud-                       I M " fC 'I "h M "F'! "I
                                                                                              '" I "       "        '"                        I?'         d          I      93""I Nnie the (\4mpany ex}.nt- thM '!a a ld.t nq;al iiefe rre<l tax                                                "I"                    ' 2' I 2U M  " 'I2MI AM"

ham!am u d he cob . t e.] fn qn it c5 durr- w h- the taw / '" I b ' t dehnal uniM m GM9p oi A 791p o Im o ne p. ,aNe, an a--et u ul be to .c md fmr t hat pnd.aUe

Lt iwon co,t Mpo 4 12sp o future n wnne. _

 ~ _ _ _

t I i NOlCS komintled) ' The asrumed ihwunt' rate and mie of intn are in future the costs of the terininated unito The Sopteme Cauhiwision wmpen+ation level 3 u3ed in detennining the actuanal pn ant we ba-eiits interpretation ofSection 1315 cf tho Pennsylvama value of the prob'ed benefit oblication were 10 and 79, Pub!!c Utility Code ( w hich was in effect at t he cime vf the lTlX7 re+cet n ely for 1937 and I!M, The asm&d exlected long-t erm rate erdet1, w hieh it concludal bars the nwvery of such costs rate of arturn on plan arets w fW for 1937 and HM. thne.gh the rate making pmcen The Company wnste o1Y the Under the pn vious pen-ion accounting standant, the unamoni7al costs of t he tenninated anit s ap;dicable toits PPUC . Compmyi pension e.sts for IN vere $1,3n5,om. Of thi- jurinlictional cu3tomets and established a !!abihty for p>tential , amount, $1N7pM was primanly hded to the other CAPCO customer ivfunds of pn+iely reemend co-ts, eeducing net companies or chael to cetmetion; the balance was cham d incon e by apprmimately $7.3n0MN in the fourth quaner of , to operating egenn. In addition, pen-ion costs fer IN were 1937. The Company ha< askal the U S. Supreme Court to hear furt her n duced by $1.422,% due t o ret reat tive hpho > otbr an appealof t he decison of the Suprenw Court of Pennsylvania ; CAPCO companies. Such ewts included the amortization of i unfuncled peuervice c nt

on an wt uarial t asima r an year 3. < 0 t,en-co .

i The Company provides a minimum amount of noncentnbutory The ningmy hwes a pirtion ofit3 nuclear fuel requirements i hfe insurance to retiltd employee ill addition to oj tional con

certain t rw nn9 ion facihties, com puter eq lipment , nMee 3 pace tributory ilmirance ft atuth llenlth c:nr benefits, w hich mdude l and other projen) WV} equipment Mder cancelable and noncan-cenain emplayt+ deductibles and copay ment >, are alm ava%ble colable team. Consistent w:th the nyulatory treatment, n ntal i to retinst emi oyees, d their dependents and, under critain payments for espital and operating fea-es awharge,i to o}mrat-circu ms tar n s, to their 3un hors The Company pays in3unmee ing espew on tie Satements of Income. duch mts for the l premium to coser a PMioa of the3" heneth in exces of wt t hn e y ears ended Ocet mber 31,194 anmummamul as fdlou I 4

timits, au anmunt up to the limits are paid by the Company. Expene a.+ociate i u ith kalth care and life in-acance benefb { IN IN IN ; for retin e amounted to ElIJm. $19730 and MWH in

                                                                                                                                                                     ~ ^~
                                                                                                                                                         ~ '.in Thou anda ^ ~

s , 19% , 199; and Hy.>, repttn ely, and are (harted to incom" b re-t on captal le- $1M $ 1,% dunng the apphcanle payment pt riod" &:.174 ! hintion 4 c@:.l lew S. G 3N1 MM l l Significant Parent Company Transm tion

Op rdry he
1 ITt i s*J W !

Operating rrtenue* fcr h,11% and 19N melade $s,,>llyM, ,g ya go g % gpg g;,q

                     $1!?93Jm and $11,W1Jm nepecthely, attnbutshie to tran actions with Eden. Such noenues neulted primarily from                                                                                                                 !

E,h ow purchase of capac:ty fron the Company % ow$er hip In accordance with WAS L 71, the lieumber m,19so t interest in licaver Valley I mt 1. hnchued and interchanged Italanco Sheet and the Staten>nts of Ca h Flow for the year-pow cr, net, rek to chrges v en,htM of <!!2Wh. ($2, Won ended 1(ecember 31.1W and IN, haw ken netated to recog-and $1NJ,im dae to t he Company % net receipt (deliservi of we cupmd leae entern) into poor u Jamry 1, IN [ l interchanged power to and from Edi+n dunng 19s7, lid and T 19'ye'* future minimum n nt.d commitomnts as of Decemkr dl. ] 194, reqective ly, in aihhtion, other ob ration eyen3es for i 19w7, IWi and 194 include Sh512/ m, $U. lip C and $.t,502J ni. t nmpecthely, primanly attributah!e to data pmeening sen ir e, Capital Operating ! renden-d by Edi-on to the Company. l e es Lea es 19e $5,WJm $ 17.W l C Deferred Perry Unit 1 Cost %: 19 9 3.G9 p e liupo !

;                        The PPUC enten d t he rompany to deremps ration anWmainten-                19'o                                            2,203J m                    120p u      ;

anee co-ts inet of eneryy 3asire from l'erry Unit 1s ik preciatian 1991 1,79-J m 112, & expense. propeMy taxc3 and intereR c\ pen

aeocihl with 1992 1,G21J m llop M h ny I'mt 1. from its hember la 19N conunemal ope ration Lars thenefter . 17, Al",rm 2,9 t s p o date until each cut.- un recognnwd m the Comi anyk electne Total minimum hwe rates Itmed e thi4 onler, the Comhmy de fenrd $7n224p u in 177 for futun~ recosery fnim its retail cu tomer . ;oyment- U12,tm $ 3411 m i

                                                     '                                                                                                                                        i Eucutory co-ts                                  UT2- a_on-m Terminated Construction l'rojecto                                            Net minimam h ase

! In Jana:uy 19Ni, the Company and all ot her CA P('t i companie* oaymt ut > %,1 lop u tenmnated plan- t o con-truct four nuclear pocrating unit 3. (in Intere t Fortion 12..M7p H ()cta der 15,19'I, t he SupMne Coult of Penn-y! vama Dicr.wd a gir ent vd'F of &t MMm dt eP hin 6 8 the th mrniinVea}Ih tilan of I'enn yhama w h:ch dnnul the PPU(9 deel* ion to permit the Company to treos er lease ist meet- $ 1.1.Glya n ny e J 1 iS i t I _ _ . . _ _ _ _ _ , ._ _ , - - - . - - - - - ~-. - - - - - - - - - - - - - - - - - ' - ~

I

                                                                                                                                                          - PENN POWCR 1

i l l W Capitalization: long ti rm debt for the next fke yeas ;or: M llets.inet! Carnine-Uraler the Companyb Chahr, the Company nained earn- 19e S '>,-l ll # o ings utmt r9ted for , myna t of cah daihl- or, 'lw Com- ItWi 3,El.m i panyi comme 2 stwk um e SCW7,mo at Ihwnher 31, 67. Iv0 5,tnip o 1991 5,t m.t oo j th) Preferred Stock- I Mr'. b,115p 6 At the CompanyN opt vin. ali pivfeired M na.,. be n-dermed in w hde. or in p u+ at cny tirm upm nut les than M nor more The s mehted a arxe interest rates Am n on tb Stat ments thsn 60 day, no* u , uMer of herww noted. Redempt o . of a'.! of r pitahzathin a tr Lie to h.ng-n m debt eut taniling at i prefern-d -toch bel u nhin t he pa-t $m 3 car- wi Mt t o December T,1F cc ttain restricti m, rm.rh n fu: dine oncrudons. TL optional T-t al recunal noter orbt anding at Dee-mber 31 '"*7 and !!K n6mption price. shm n o $ th, Sta'ewrt s ofi kp:t duim will ese!ude $ 1,Q L. n o an ! $2J*2ipAi, rr per;tivelv, of cenein ; de:Une to eu nted nuarnan 4 p-r snan accordine w the Nihr pJution contn i nnte. the pniceeds of w hkh w ere theWa e.-en e enniw ' hat ertabh h ea. h .m poung their dn hurrement for cons tniction of pdlution eontnd facilac . The t L mpmyi obligations to repay mtain pollution i f ci 1% feried Ah Subject to Endator3 Pedemption- con'nd notes are + urnt by rne3 of first mortgage lands ; Amr.ai i,nhine fund pno hi"n for the i Mp-.n3% 1 n fen %I '

     -v aC  I
              ' , % hfh ah ',)Iln d a $ U Ni j F dMrc hd- UcerW"I lb h!CQl-                 (NI !sOnNhrIn (NdlMallon*!                                                          8 an a-fohw (                                                                                l'enn-yh anisi l'om r Fuel Corlmration ra corporation in u hk h the (limjnday h;U f anIM nt I .-hit a Int e rt%t i lin i\ id h's futpl- ['T t he pn%n i~nt of mh 6M on behalf of 0 e U"mpany. The Com-5eries               Shares                  Date             Ibginning
                                                                                            !N bI'l                     C E UNM            '     "O w                           in HI       {ha e n)her 1                i;I                                I l i.['8 kvi U v                             k urv 1                       ti!
                                                                                               &g M4 q(                   ) nat the aciju -ah >n i1f nudear lmtt el]al         l 15 oi n                    i)l 1?o a w;     JM3 ;5'                     I! u          that ui!} ultim itely be med io fuel sariou < 300 l gennntmg nx                     e                 un                         n.o           um i n+r monaomreunwaoces d- C"nex m"W n :nr ;                   io. o         Ju$ 1                       I F. 'o
                                                                                            '#1' f"r nudcar f uel a- it i- con-ainnh Fmancing on behalf Ilh };                 upo               :e. pu nbe r 1             IM            of the ( ompanc of up to $1*v o,mi qf g hich $1390,'u) hyl                         .

Min bono A i rdi 2@, N er ut ds d a- of Det end < r 31, l d bw t f rmen t he I ennoivada IWe Nel(p i i cutwntly orpirat ton, cit h. asa a r t brough iit N i re n ,e n t - rf t he si ru - b c, e N cu r. n \"hg nuht anwrnwnb or N Lu;oae ' o mnn md e is.;mr. u hich i, rupp ced by a bank letter of creda, or a combina- ;

                  -               i Tbc t oncun; -aoang furl nync ,o                           b' r d.c n"u m e tion of both f

toem of u1> to $N'him tof u hich $1r m' olo ygggg ha ! litM utIJ781! d* I IIreeml'er M, h"D I? M alI.d de I' k S U. . )

on b. half of the Cornpany, subjet to et riam hm,tation- 1 in $ 1.,"o n Tbc Conyny aand inwn -t appheable to thq nudear fuel 3 png a 7% g ,, ohhgatium ifer fel a Meh i- not inchided in utihty plant l'1 ,

',    181 til                                                                       i   >pl  " I bT I         b b GI             " M '      M       Id\ U             '

lyn c /o o honming, tme bei n or are espected to be made again-t t he p.rx 6.22o u be rICn"ht m adable to the fuel corpondion; the fuel carpe tion ha. i,-acl . col ha- out-tarehng comm. rcial paper-apported l6 t he brr tif Undt. Tis !b e\le!;l that Iu'rnm ing, are leH than ids l Aing.Torm Dg hl Q $hgypH gadaM*Unthrthi cadthne. t he fuel (orin- l TL mort csge a; l n- supp'. " + t S u h a h ~ s u re Ji or d e ndso nre t p;r, a ronuniina ni fcc or ! 6 to l:21 on the avadaNe Urmpan A fir t negag' - . A n n e a :hn a tir-t u e ca,;e pm,n of de h> . of en d.t. It abo pay- a fee of 5 W to T M bt on -ub- anNMy ab pn ted) ; I fram L -e. i& r t han

           -                                                                                 t;tr t he let t e. '>f (n ,1 t i.n the aggrecate amount of out tan hnc p r n nly e serp'ed pq t its, im L. d hy t he ( Dimp ui).                            cong,.,.10 al paj i n IMernt on ( 3 ICT pan base comm.tment, i-llael on O i amoue of 6nd- W b ' ' wa'n! by t b Tnat, e                            at n u w M L \ ar) fn.m 1-1 6 to 1 12. owr 'he imen't                              '

thn ueh DeermN r R noi, the 4 W ,i au : M -ahe ad rc- apphco% to ur'dn ih a!er pbd commercial paper. The

     , n p% e m. > ' f a nd reg n r n ' ' - f~ r a 3 Mr d-
                      .                                                  cl i nh r ti .      . Hectne awrage ann ul int. n t rm - app! #c to nicar fuel nme r a c ammmN ei $ 1,3p o Tb i 'o va n

s p. < t - '

owg at. , - c. + n . U, , m and 9 7 . e nk g Uni, I N and

     - Abf3 t b -e rmaruen - m 19 e by                          + ridyire un! i'n h d        IM n -l.cct ni lv.      '

pn -pe n) adh L ,r.3 '1M 2. <ifthe n q: re ! n mt. I A- of I b o mL i Jd. Im?. Il e Gnixp Cnk : fu sl rm ure-i n m! I f. T et r' am -el b - of dr ' m li v Me li %d3 .O! M hrn4 L i i [ 19 ,

k i 4 l Notes (wti:iiiued) ; The Company en+cntly espect to make pay ment 4 applimble nrmery ofit s ime<tment in h rry Unit 2 over a ten-yet r period. to these obhatiorni dunng the nest Cve years a foUowe Duquwne he wiviel the 1 I UU that it will not agree to rwump- - tbn of the cort-truction ofl'ent l' nit *.' thiquesnei dern. inn ue 19 * . , . $7.Llw n) inderndently made tant does not rnpresent a dtwiaion on the part ; t IM , . 6,noT,mn of the Company to alandon l' nit 2 for nite nuking or any other IW NllDzo primes. liowe,er, any futun deci ion on the status of l'erry , 1:rs1 O m oon CrJt 2 vil h.we to take mto account 1)uque3ne's laition and wap ! M2 , 5, W Uson uill hme to be fomul to anommulate its positwn if constnaction on Ihe unit b to thulne. (D Nntes l'a>nble to llanks ami 1.ines of Creilit: IWy in the cumpletion ,tf l'erry I' nit 2 can lx exiveted to Tsw Cornpany ha* Ime4 of credit with bmb the pnai,le for inc?va-e it3 total co-t by 3m< un9 w hich are not presently deter-borrow ing< of up to Mo# a Vionat the prmaihng prime or similar minalde. If a decision wcre made to terminate Dit 2, certain intenst rate. phort term bornm mg* nu;; be rnmle under these co3ts uhich an currently arignnt to Unit 2 would be reewnt l. hnes of ennht on the (impanyk un<erunst rutes. The Cominny w h-n apprepnate, to Urut 1. liowner, cancellation charges pay 53 nMp25n11 to 144) colnmi'mt nt [ees thai \ arY f5Nnt :!Wl to 1/2* E aIEe to runtivetors amt other nots of terrnination cimbl be in- ; io a sun t he auWabthty of thew knes of en1ht. .Ml of the curri d Pending completion of the CAPCO rniew, the Cotr:pany a cuntnt 1.ne- expire 1)ccen Ar 31, lim howewr, ar) unused is unalde to pndiet whether the con-truction on Unit 2 will hiam nuy bo carMnl by the banb at any tune continue or. if continu!. no what ba i, such continuation udl pnveed, lladed on Set tmn *du of the Penn3)lvania hddie '*tihty N Commitments, Guantntees ami Contingencien: Code (w hich openfm.dly permits utihties to acour trium of, but ('onstf uction Progrant- not a ret urn on, pnpl antly incurtyd rowl s of any part hdly ro!njdeti+d The Cornpany's rurrent buket fon cast nect* expmhtt.nw facinty w hen cancel lation i< found by t he PPIT to be in the pubbe of approum;.tely $110,000 nuo for propeny ad.htion and inten-t for any generating unit canceh,I after October 10. IW improwment* fnim 19e tbrough IM, of u hich appnnimately the Company be!iew it couM n ceritsime tment in Unit 2 witb

         $219@o i< apphcab6 ta 19w in ail htmn, the Co.npany                             n~pect to ita Pl'l'C junobctional cu+ti mess if a decision were esIrct to inte t appnnimately $9.'uo#H for nuclear fuel                         mxle to terminate h rr) I nit L the G mlunyb reponni net ivame darme the IM 194 period, of wlach appnnmutek $wp o.no                           would be n duenl at that time hy the ibffen nee hetween the co t i- appucable to 19"                                                            of Peny Fr.it 2 arnt the pnwat due cf nsenue to be colheted 1

The (1mpany curn ndy h.e a rate inenS-c iwpe-t pet 4ng from PPCC juri-dwtional customets apidicable to the unit. I,rfon t he Pl'l't ' u hich nx holr3 it - im t *t!T.ent in Perry I' nit 1. The Ills ' nri ntl) rin i-id it s i= da y wit h wsl=<t to nros ciing l In the ('omp,oni We4 rae onb r, the PPIT fomul that no the co-t> of tenninated con truction project lf Perry Unit O wen. l' 1 ml.m tmi ni f~r impnnien<c attnbutab!c to Perry Un.t 1. houhl termuuted. the Comparu anuhl be n quinst to w nte offoned.a!f he nale fo+ all esp. rahtun, incunwl throuph the En h IW of it 3 ime twnt appheabie to its ITI;C jurishetional customer, fui t loa.h in a recent 16 pc3ne Liel t Compan) i l la. j u e-r.c ) if ud to the estent that the ITIK re i-ed pohcy i, apphcaNe. rote ca-c, tl.e pn .wi.ne Mmir.i ind n e Law .bnige. rubog on l'nder such circum tanec3, the remaming costs, plu a n turn on e\]Wiplit un > beunt il [ nim th- fut i U la I dDie tit re smmerria! the unanbidl7ed inie t! Dent, wouhl be n cinert11 [!hm 114 11ll[ opera mn. n nwnendnt no adiue meet for oopolence jurishctional cu-toraer, The CA111' comred.~ an erm n.uing t" nw w the tat e of ; Perry l'mt 7. ( hrrenth, no -ienife ant work i Iwine perfonnni Quarto Pntjed - j on the uf at. .b of.!uh 1,194. the t'ompam stopped mehnbre The timpany, toget her with the other t 'A14i> compans, l MTDC n ! ' ire to i mt 2 in net incune. ii.til ro iew of the ha entend into an aereemerc with Consolidation Coal Com-I statu of Udt 2 has be. n c.-tnpirted, t nere d! b. no de fin. d pan 3 Wor,soh under w hrh Con ol aepred aM t hr eommon .-tock ] -. hedh for e r compi tion; t he con-t r+ t mn ca m.at n for t he of Qmoto Mining t on~pany iQuart o; and r--tated in it. enan ty h* I?>2 period & n J inc! bh- any amuM apphcSe to h rr) the co;d 'upply retract for the f rm e . Man-fa ld Ibnt. The Un,t 2 if n urxtv-n ~f the umt on to le re-uwd Po #c t 3hli companii s' w nd guaranten of remain Quado debt i alteroatnr- lu n.g n s b wed w dh n'pn't to I'mt 2 mehvic mdrf- and h are old gat mn an D.P affrcle I by the t hangm in the nate ep nsion of (oretnwtion e n t he mut. n um} tm i of v or L acreement. .b of Ibette r 31,194, the (bmpeyi hare of on the umt and Iern.u ;aimn ef t he utat i n accon hm ce w it h t hi the gaanmtce m $21,N2Po The prin under t he coal supp!) U,\ h l > an en ment s nm, of Rrw .Qrrr.a m my 1. im;+ cont e u ', w hich inohalm redain minanum payment s, ha been metsti d w it b at t he aj.] no bl of U.o h '*f the $ 314 l) t'Hnj dl5m altt e IM'Hal kQ t h n4 d tii t v- -ufNelrl;t to Mt h fy Qaadib ddd 1 Da pe- H\ claimed %le fx to" al,a nd um 11, for t & tM W' .ml tra-c ohhv.O mn The t 'empan3% tof al payna nts under the j u,rpo-.- of it, l '. H miemt a Perry Umt 2 a a aco pwd 4 t urn +t contr a t mt h ConW an.1 the pnq iou. Quado nint r.o t, ihe PPrF m a n-t nu u rar r&c ed D me o, n-a w i na imhnanmant> nbted to mine conanwt inn co+, amount ed i i [.) a

A

                                                                                                                                                ~
                                                                                                                                               ~

PENN POWER D to s,unn,mi, sa,uw and suilc.om dunne w!, Pe and the d"u nwina cate. w petdion uniturad of e m 9 e It<>. re-pectiwly. 'Jnder % coal upply cont ract , the Company'. particu! ate el Sg emirion- fnm a numkr of so)nye; in Uluo , future minimum payment- rela'.ed solely 'n rnine con tniction ard other -tate- includmg pitentiaMy Samini I mt e. ' c\ i n ce t-13 art C ID 'fI bfibIC fIl 'IUIO' haw al.i.i.a d the El'A's de ci-b ut to t he l'.S. I bun of A ppeal for t he Drt rict ef('o!ambhi, a-king that the l! m s 2,917 '" " decrion he reucu ed and n wr-ed, mmLCed or set a ide. Eih on,

       !!' 9                                                                  2 M,n 'n        abine with otimr elcetric utintie- and other , ha interwned m I V, # )                                                               2.71! U " " '   the case. The ca-e ua aivurd in 1)ecerni er 19<> an,1 a 3econal INil                                                                   2.C.U""         ond argument ha heen scheduk d for April 20,1tr 3 TheCom-l!U2                                                                   2,.N $,INhl     jiany j mgahlt ti, jin,lict ([x inut eillne of the-e ]in >Cee(llog-Year- thermne;                                                        11 A19,0 0           gn g.* & r !N. the 118. Court of Appeal for t he Di trict of Columbia rewr3ed -ewnd -icuineant p,rtions of the Elm The IPl't ' oniern! the Company to d"fer lhe En30ebl                              n.pdation- on t he m. t hods ust11 by the El'A to detennine t he l'! ant coal co-t in esceu of gercrally i retailire mai b i prim                       amount of nu k !anht en dit for e3taldi-hing in lividual 3ouiw hia% eier, amount de fern 1} are loing Peri 6ered I,n>M CU-tomt T3                     gg4g g;g jg j - p g gpg { g,                         .,p,gy. ('gy pt dygg [

flaring lCriinl* that gt'nf rMUy }in vai}[nd Inaliel jintt's e\ce'91 g g . g g,, .g ,p p, g g eb ( g r;pt ,g A gqq.yJ l$ruce blan30ebl l'lant Mal Co-t 3 A of becem ber3},19 I the qccj,j g gg Jgly }94 [g, { j aA g,.] gg m ( h..jgt Companyi u urcowred coa: emt, :unouninl t u 31,7nl.m L regulation to contenn a it h the court'- decuio : b new nyu-E,nu,ronmental Matter" lation wen appeabl to the 118. Court of Apprai for the 1)i t&t of Cobmliia by the Company (in J mrv 24 15 the Comt meniU, Eih3"n M mn eand others Wriou- fnleral, state .uol b al authontic3 n % date In" l.d 3ewnd Comp my u ith swani to air and u at er <inht v and ot ht r endron- igMGJant ponion- of the Elm Juh 19<> regulat:on3. The El'A menud m7tters. I ha ,ompany e-timytes that compinuice require-

                                                                .                             g n.y;,..v ml pnedn'e rdatie ci n*,-tem with the
        +1 htlon(u ewnal exWnihtme3 o! appro\lmatel) MJa#U581                                 (.     't**  opnim TL- ( HM l-h inmm MM l'n. tat b m Accm-u luch n n.cluded in t he con truction e-timate giwn ahow under                                                                                                        '

and the l'enn-ylvania lh paliment of Etnininn:elu, d 1,e ource- .

        "Ca ir.st ruct v in l'n grani,, fi er t he { C riod ItM t hn 'u J h IW2.        .

mm t t h n rWMV N',embi% Ends W!er th'ir l'W-Clik e A part of the trautberuhttisininf the iran Air AfI,leC3!athett g ha- heen introde d in ( ongre- to ail.h c3- the -o-cabnl ' Al g g ) M die N b Eln 6m mimd any i c\ i-ed lim!!- nece--art to confonn to t.ie inew reeu,iation, rain" lIn idem. \.anir b h.lb ilit n Mim ell %'iabl I t"pn re I n!act b 'n- g{4 g p g g j h g g, g g. g g,gg g, gg m enu--mn< of su'fer thoside m i a and mle- of mt nen fn,m N @e c\i-tif t [dm. t a aTd! increast1l capital tit .- an. l 1)}lt ratinC i um'-y pow er pLu.1 and at her c.aw- b rated m -e u n'd -tat e- . expen-e- 1 he ( ,o m pa n y u current h. unaln,e to premet i the ini.ludig ()hiii anil l'eni 3) h af aa. Thi t ,iii,l any is u t :al ,i - t< > ou t come o f t ht- p oceci h n. g, pn dict u hether lea-lanon uiu be enacted arsi, .f so, to a hat in b IK t b El'A o , wW n W.n- murig -d estent,if any, the erm yion hm!'- at the (, p!.u.t- ornpan)ju ouM tbdA uter mi-3im- he u'ih Mikr3. MtMud the he aO,celnl Muh-tar.!!a! chanJe3 m the em --ion honb (olbl (,d imliaM, has an8'Mncl5h.lp nu,ere-1 M a' generatil:R u!,l, 'In i I.m re ult t!' the need fiar thangtm m Ci al sujijdy, -idllbCa!ll l'3}d.ta,i

                                                                                              ,,p { [,                j, g g, g . g.;     ,,   g,        , g,              g, mw-tments in hue ga- de-u!furitation e guipment or the clo-me                         e v. --h e maM p.mieu! ate emi- n m ui3 he f.oun I, t he (.vmpam.

of -ome co,d-f rnl generating wpality 10 a--ure comj;h. a r.Ce. lf I Unah'e to pn dict th u!!imaIC c!'ft et ef the-e n gidat5on-Cue ea- de-uifanzatmo equipment were to be m .ahed on a,d Wim n , nt to the em m,nmental pneceihng3 de-enk ' of m ger.eratme ur.it to as hiew comphance, a etrem rianc" Mi , t he Comp *v Wie et s tbt ny wl htion: 1 c:.ph al co-t-that f na; he ph',-team r iml=, 3ih!c becauw e'f -pa r ,h nutaun W wh h may lie rnpnrni a- a n>td,< ist stidi l.nici nline a will at 8ammi 1. mt.. . t he ( .ompany stimate' that the n p:tal co t-

                                                           ,                                   a - a m.' reijuin~l increa-e in operat mg co , , ,wud i u.timat t h.

i a

i telat ed % F. h
m h .ir rial!ati.in c.ia d e xci-i~l c a v a
U" a l In n et v\ e/t'd [D im it s CM-('Cer-The (%miumy i s!ect- that any such valutal i,-t , a- ut , e any increa-e 1 operatine coa - aunciatnl u it h -ueh cyu p m' l

uitahl u.t;maIelv I." n n i\ e rn l fn tm I! 3 ct b!( @t (* t >n Drn mb. r 3,1%1, the fi dend Em i orunental IWtn tio' Agent ) ( El'A i dena <l a +titi< m fn e t he (;enu.nweith i.f l'e: myh an;a and the tate- of Lw Wrk and Line, whh oucht to fon e t he El'A to make Endme- un Ier Sn t mn la of I the t ' lean Air Act. Set tun Ui prm iile a n moly for a dow nu unl 1 3 tate t hat can 3how a her3e impact h, taa-e air petion in an apu md 3 tate cauw- nonattamment of an apaht) taulwl- m l l 21

NotCS kontinual) 00 Summary of Quarterl.s Finantial 1)ata Wnaudited): The following rummari.w eettair olerating irsult, for the 4 four qu,uters of 19%7 and 1936. 31 arch 31, June 30, Septe mber 30, 1)ecember 31. Three \lonth* Ended Ita? 1957 lin? ItW7 (In Thousands) Ol ierating ih s enues $719,Titi !?A,0i c $~O,161 $.51,16" C;cratir:g Exten es ara! Taxe4 -16,'317 12,741 13.211 11,s T2 (livrating income 13.,526 1:1,216 12,7Tc 6,197 0;ber income and Deduction.- 6,0 13 7,791 7,titi (1,210 Net Intere<t 7,721 7,' h 7,d2 fi, tail

   & t liwonw al.o3 >                                                 $ 11,.x 1 w    $13,119                 $13,007           $ t7lo)

Earn:ne< < I,ou .\ lii>lieabir to 0 mni"n Stock .$ 9,uT6 $10,677 $ 10.2 ;6 $ 13,1_;9 41a rrh 31, June 30, Sept ember 30, December 31 Three \lonth, Ended lin6 I!Ni 19s6 I!KG (I n Thou sa nd * ) ( ywrating 1:es, nu,, 9%fil6 $l,9,5 C 1 S?a. !!G $ T,9,'49 (ytrating Esi+rw and Taxe- 16,ics 17,1:16 12,1!=i 16,7,16 i i y w ram. : I nnime i 1, Iw 11,u s 11,3t G 13,13.1 O'Ler Inconn and 161uctior.- 6.311 6,wil 7,o' c 7,01 ht-t Intertml 5,9I t ) ,% chi ) .%, 6146 3,02I) Nc!Inconie $ 12.W.I $141.159 $ 9,791 $ 12,1731 Earning

on C rnm..n :'toA $ 9,7,o7. $ 7,:M $ 6,9w $_ 9,6731 1

I l

I 1 1 4

l 4 4 4

A PENN POWER Mgr 4 I Auditors' Report . I 4> f.t* 4i , (( qb )pg

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ea a e . + k * .k k 1. e. $ . '* . f 5 S. a , u p ' m i e.. ' i uf l'e r s h aru a la c r G r.pa 3 r a l'. , h ari h. ii:.' -ub;n ! - t h. ' . cert m.ty c. m en re a p. t er i bl urcier-reo n i r3 . f n - - it- 4 Ut. 'l w:th n. twn c al oin ha .sl h.r the ! o rj a rat h.n a! l a a b. y .w i . ! 4 ' Sibr3tJ4>h ' E.!N n (' " i parv. a-<fIbce!6.r.1 194 m. l l'm6 :l 0 t iel 5te 1 -tate l'nn e M o n.Ce d I'l.e .11 mr J Ph7 atria : gid er m er'- uI,th l rc.. *- e: .r me n ,,,1 ean oc- c . p. , * . a. a v i i d.e r i ,ccu rn il, t h 1 %' . , h at i h:hu l'uh , f ir-e - on nu.dfa J . pealdn t ap ,<. .h f'm a 1 t a \. , r c a h . Ha t h ee 3. a r- ti v ( '. ar. pan 3 '- r eem e rs meu w i w hah th. n e p.1 y s I b p. r ol . l I h c, ..h< r ::1.19 7. f nu r c u n o '

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tra to. + f l 'c. l h a i n J .e t .;l, Pn! n' ,t +i $ nm,t 3 % .t! c1 r .e rL3 i s eli' ed .

l ' t . . ! .' i < a rl t ? s I" .J lt s 4c i e .l !( I f.e ( ' 31'l ilr t '= 4i 0,'. . ; , J [ Ft ;['.. - % !.o h e \' e j d '. r II1 e5 !.: ut- !!' l'.*t ' i n t h

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r x f..r 1.c r nn - t ce N o e l' r,n n pt i f w o r ,. a : .1 1. r n of t he l~ 1., e L n e h. . , a; p. ,i u a n .-ni ha +

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l 1 i i Directors OIIicers 4 Itot.ert II. f.'arlson Justin T. Itoger , Jr.

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             .\. W a.sre Cole                                                                                         Jame. It. E41gerl.i
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