ML20050E261
| ML20050E261 | |
| Person / Time | |
|---|---|
| Site: | Davis Besse  |
| Issue date: | 02/23/1982 |
| From: | CLEVELAND ELECTRIC ILLUMINATING CO. |
| To: | |
| Shared Package | |
| ML20050E259 | List: |
| References | |
| NUDOCS 8204130164 | |
| Download: ML20050E261 (48) | |
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W'04130164 82040s f' f' R ADOCK 05000346 PDR
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Our primery mission is to supgiy eiectric energy when and where it is needed to nearly three-quarters of a million customers in our 1,700-square-mile service area. Over a 100-year span, our electricity powered the development of Northeastem Ohio's industrial might. Today, that strong industrial base, together with growing service and commercial business segments, promises economic vitality for our area for many years to come. Similarly, our residential customers have depended on us to light, heat and cool their homes...to cook their food...to wash and dry their clothes. . .to provide reliable electricity for a better living standard. Because we are investor-owned, we are obligated to our share owners and bondholders whose investment makes our mission possible. These investors are entitled to a fair return on their investments. We strive to , meet that obligation. I
ontents ighlights Highlights 1
- Earnings per share were $2.52, up 11.5% from Financial Summary 1 $2.26 in 1980.
1.etter to Share Owners 2 . Common Stock dividends per share were Perspective 4 increased 2c per quarter, effective with the ! The Natural Environment 7 February 15,1982 payment, the 24th consecu-tive year of increase. l The Financial Environment 11 The Operating Environment 15
- In the retrial of the City of Cleveland's antitrust The Rate-setting Environment 19 case against the Company, the jury found in favor of the Company; the City has appealed Management's Discussion and Analysis the decision.
of Financial Condition and Results 21
- Annual operating revenues surpassed $1 billion of Operations f r the first time.
Management's Statement of Responsibility for Financial Statements 24
- A $147.8 million (17%) rate increase became 24 effective for retail electric customers.
Report of Independent Accountants Financial Results 25
- Hearings were completed before The Public Financial and Statistical Review 1971-1981_38 Utilities Commission of Ohio for a $130 million (12%) increase in retail electric rates; notice of inflation Accounting 40 intent to % for a $221 mGon A rate Directors and Officers 42 increase was announced.
Committees of the Board of Directors 43
- A record peak load of 3,362 megawatts was GeneralInformation 44 recorded in July.
Service Area Map 45
- The 1982-1986 construction program is
$1.8 billion.
;4. .
Enonciei somme, m Per Cent 1981 1980 Change Earnings Per Share of Common Stock $ 2.52 $ 2.26 11.5 Dividends Paid Per Share m to of Common Stock $ 2.08 $ 2.00 4.0 1% Book Value Per Share of Common Stock $ 19.63 $ 19.72 (0.5) Common Stock Share Owners 103,242 101,001 2.2 E ER. Operating Revenues (000) $1,012,930 $893,566 Operating Expenses (000) $ 820,226 $743,051 13.4 10.4 j i
, Net income (000) $ 155,734 $125,383 24.2 Earnings Available for Common Stock (000) $ 120,817 $ 97,672 23.7 Kilowatthour Sales (Millions of Kilowatthours)
Cover: Residential 4,376 4,463 (2.0) Thefour environments in which the Company works today: afamily enjoying the fag"*7f,f ' Other
& 399
& 416 Q
(3.8) natural environment, construction of a power Sub-total 17.233 17,090 0.8 S ' U'd"'" 275 l'070 (74 3) plant requires the raising of capitalin the Total 17,508 18,160 (3.6) financial environment, a boiler operator in the operating environment and a hearing before The Public Utilities Commission of Ohio in the rate setting environment. 1
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i a t' ' i6 ! 1. E 914 - I!a \ 'f f! b :na R wa(s 1%l was a i n u d 14 n u t lear p< >w er That b a l R naJeth, & qs y cat I hat u at, t she, t eat t, a th , Justrt and b:q , ,raer anJ mp!ementata n. a J l p%, s pet Mps n o, appo .pmic mi ( ' ,mpant A: cu aJn nosit ata > take ' nc N1 f m the steps taken :n
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cussed in detailin this report ar2 to fin nce our construction program, planning costs for four CAPCO indicative of an improving trend. rate increases which were perceived generating unit projects which were While we experienced peaks to be insufficient by the rating terminated in 1980. The Court and valleys, on balance,1981 was agencies and an adverse Ohio reached this decision despite con-en upbeat year for the Company's Supreme Court decision. curring with the PUCO finding that customers, employees and share The Federal administration and the companies' decisions to construct owners. Congress took two actions to help the plants in the first instance, and Earnings per common share utilities and our Company raise later to terminate, were both prudent increased 11.5% from $2.26 to capitalless expensively. They will decisions. The Court decision, which
$2.52. both improve our share owner is inconsistent with those in other The improved eamings enabled position and hold down rates for jurisdictions including the Federal th2 Board of Directors to increase customers. The first provides for Energy Regulatory Commission, dividends for the 24th straight year tax reductions to encourage invest- was appealed to the U.S. Supreme cnd to add one more to what is ment in new plant and equipment. Court which so far has declined to now 81 consecutive years of cash These reductions can now be review it on procedural grounds.
dividend payments. utilized by utility companies with We continue to pursue correction of Gross revenues exceeded one low taxable incomes. The second what we consider bad law through billion dollars for the first time, an is a benefit to utility share owners regulatory and judicial actions. event more attributable to the severe who reinvest their dividends in new In October 1981, a Federal inflation that plagued the economy common stock. The Company took court jury found for the Company than results of operations. We would advantage of the first action, and in the six-year antitrust case with the gl:dly have had lower revenues many of our share owners are taking City of Cleveland, after two days of and less inflation. advantage of the second. deliberation.The City has appealed The Public Utilities Commission The first Perry unit passed the the case. When the appeal is con- I of Ohio took an essential step 80% completion mark and con- cluded, and we do not believe the l toward meeting the need for tinues on schedule, and on budget, appeal will succeed, an era of dis- 1 revenues that cover our costs, toward its 1984 completion date. stressed relations with the City of . I including earnings to compensate Our integrated organization of Cleveland will end. It is particularly common share owners for their Company engineers, consultants important during these adverse ' investment, by approving a rate and outside contractors appears to economic times that the Company increase of $147.8 million in 1981. be producing an outstanding result. and the City direct their energies An Order deciding our pending As for the balance of our con- toward a more cooperative and ;
$130 million rate increase applica- struction program, our engineering constructive relationship.
tion is expected soon. Since we have and operating organizations have The three of us,the rest of our not caught up with cost increases, reviewed every proposed capital management team and our 5,000 we continue to need regular increases expenditure. Their objective, which employeeslook to 1982 and the in our prices-a situation that will be was met, was to limit new projects future with great enthusiasm. 'lhat common to all businesses, including to those absolutely essential to North Wind is still blowing but we utilities, until inflation is licked, provide adequate service and to believe the improvement in camings Those who expected the new complete those projects now under in 1981 was indicative of a lot of Administration's program to bring a way most expeditiously and eco- good things about your Company, strong economic recovery in 1981 nemically. As a result, our five-year now and in the future. We have were disappointed. Realistically, an cash budget for construction has provided reliable electric service to a immediate tumaround was too much been held to no increase, despite great section of a great country for to expect. However, our industrial the obvious five-year inflation in over 100 years. We will continue sales, despite heavy reliance on cost which is a consequence of to do so. Sincerely' cutos and steel, increased by 2.7% dropping 1981 expenditures and over the 1980 total, notwithstanding adding those planned for 19C6. ' the fourth quarter downtum. Share owners and customers benefit ppj R:sidential and commercial sales from this effective cost control. Robert M. Ginn, President were adversely impacted by very Two major court decisions poor housing growth and unusually impacted the Company during 1981: / mild weather in 1981. one unfavorable; the other favorable. We raised about $275 million The Ohio Supreme Court Richard A. Miller. Executive Vice President from outside financing despite a overruled the PUCO and disallowed j , downrating of our bonds. The rating the recovery through rates of the F' change reflects our need to continue Harold L. Williams, Executive Vice President to sell significant amounts of bonds February 23,1982 3
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servitafrom.a small area in Oek ' . economics oftfuputilityindustry _ needs olha service sea that includes , . s; tand to the L7DD sqtsare-si18e- '. t!!serettynedupWie.down Rapid ,, j $6.0lX)tesidentialeusteiners, t area we serve todst low doina. growth anduprovingtechnolegg - SiL0004Aumercingsfomers and up made a'shnificant contribution .. had worked te reducg the cost of more than 7.lW&industrialifirms: .
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-is aNected by haclfof the'other , :peopleoflhiertheasternOhio fi;E Americairt.puidit to<respondwith a ' .. . ~
environmetsaesumustassure mee than 300 yens.WeareteJ - renawed dernaedkproGuetsand that eleittitityflows Withent Mteth . sponslWe and respadsible in dealing tL :eTrfv1ag'eis. ruption trito each home hflice and " with $ tate and Federalrate'regule-7 i Nuclearenergy willhe a yital factbtyweservesand . 'torste thebest kng4erm interesta pbwesowevforow _.w..N -
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imita d ed N 3 ~ undesesngewed These four vnwtenmensare proper We see mose end ~ . suelearenergy.. . , . cascagps for the Company andchave acceptanceofme.piesD thereis ' * %Ottired Saesshesthebqrst . aclear need for.c ML E mcons elearie enegy avstemin dwworld. been eash is for diffleuk many enough 9ees;ladividuallS towork with ~ ceived,anddefinedmovironmental1 We%etheonl(mWor waddpower: . j whose electric pomr hdastryis - beseusir allfour overlap in samany - tesdatbasby boththeSate and '
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eomplex:ehaRenges. - As a nation, we are working ' by-mi9 ions ~of^ share owners.The ~ , Yethhe dialienges'are being .. hard Mr a:fundamshalknpeve-- unigwe Armerican systemweths . met; Mwhhbeerfaccomplished ment'in nur economic sebility We heemune therare-setting endrons m controllingemissions info the air need psou8decondeny laimprove ment unvich gomemspuidic utilities. , and disphargeslato ares divers, r eWfinemelalABWironmsel;SQurtd ' #0thsto thelmst irtigte#$of aR - t streams and lakesumadabis Waal fiscal prid monetaypolicy should parres. . , work goeg on. Desp'ite the vagaries bring >down inflation and redgee' The text which follows is g '
.ofthF finaMal markg$ We @e - J N$lWfest fetWS,IACIMe8tikfMt$1l^ iattDal aCMUtd of lTQW_llh6 QQ(p$ny .
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atural The natural environment -- the air Comiplexity we breathe and the water we use for Working in the natural environment _ drinking and recreation - has been a has become very complex. It requires concem of the Company from the time the interplay of many different we became large enough to affect it. academic disciplines, from engineering As our service area grew rapidly dunn9 to chemistry to botany. It is legally and the early 1900s, and as we built new operationally complicated by new and coal-burning generating plants to meet changing regulations and policies that growth, we recognized as we do emanating from Congress and various today that we had a responsibility to governmental agencies. To the com-see that air and water quality was plexities add uncertainty - uncertainty preserved about future regulations and how they will affect us - and the natural environ-T " ment clearly becomes a most difficult As early as the 1920s, pollution one in which to operate. control equipment was available in For example, the air quality con-America In 1926, we were the first trols and methods we use are designed utility in Ohio to install precipitators at to reduce two types of emissions from our power stations. Similarly, we als our coal-burning plants - sulfur dioxide monitored our waste water and treated and particulate matter (fly ash). Both it with the technology of the times, of these pollutants come from the coal Our dedication over the years t we burn - about six million tons per clean air and water has not come year - much of it from Ohio mines. cheaply Progress in pollution control ' Ohio coal has a high sulfur carries a stiff price, one borne by the content. Therefore, most of what we Company, its customers and investors. burn is washed to reduce its sulfur in the past 10 years alone. we have content prior to burning. Still, Ohio spent more than $400 million to install coal's sulfur content remains high water and air pollution control equip- enough to make it necessary for the ment m order to comply with State Company to purchase some expensive and Federal regulations. (See chart ow-sulfur coal from other eastern on this page ) states. By burning these two kinds of coal in a balanced manner, we are able to keep sulfur dioxide emissions within the allowable limits. l l l Jim Pitts, Maintenance l Supervisor at the Avon Lake Power Plant, and his family enjoy the beauty of Greater Cleveland's unique Metropark system, a part of Northeast Ohio's natural environment which the Company is committed to preserve, 7 l l l
r____________. To control fly ash emissions, we Even solutions bring new problems. install electrostatic precipitators which At our three Mansfield units where are effective in limiting fly ash emissions scrubbers remove substantially all of from our stacks. These devices can the sulfur dioxide from the stack emis-collect anywhere from 95 to 99.6 per sions. approximately 2.75 million tons cent of fly ash, depending on the of useless sludge must be disposed of characteristics of the coal. Ironically, every year. Another problem is the precipitators controlling fly ash emis- approximately 950.000 tons of fly ash sions do not work as efficiently with which must be removed from our low-sulfur coal as they do with high- plants and trucked to controlled land sulfur coal. fill operations each year. 4
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Since 1975, total sulfur dioxide emis-sions from our plants have been reduced by 33 per cent, while fly ash emissions from our stacks have been reduced by 75 per cent. Our policy is to comply with all The Ashtabula Power Plant, State and Federal air and water quality equipped with new, state-regulations. We have complied in ways of-the-art precipitators, that minimize the cost to our customers operates in harmony with and investors. We are workmg with -
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see that sound cost / benefit economics are considered before greater financial burdens are imposed on our customers and ourselves. N..a.... A new environmental issue has been raised by states to the east of Ohio and by the Canadian government: the acid bo=*=lt=' mat rain phenomenon. Much has been Our stewardship of the natural environ- l written and said about acid rain with ment in which we operate has been an little basis in fact. The present need ongoing commitment and responsibility. is thorough research and scientific We are mindful that the present regula-evaluation to determine its causes and tory climate could change drastically. formulate solutions based on prudent We have seen such changes before cost / benefit Judgments. The electric and know the stiff price that has been utility industry is sponsoring research paid for improvements in air and water in this field through the Electric Power quality. Nevertheless, we will continue ; Research Institute (EPRI), an industry. to cooperate with State and Federal funded research and development authorities as we work to improve our organization. EPRI, the Environmental natural environment. Protection Agency, universities and a host of others are spending millions of dollars in a search for the answers to the acid rain punle. Our concem is that mounting pressures to "do something now" will result in bad legislation, hastily drawn regulations and standards that could 9
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InaDClal The financial environment in which The largest items in the budget are we operate has been turbulent in recent our shares of three nuclear generating WHO ARETHE BOND RATERS? years. High inflation and interest rates units-Perry Units I and 2 and Beaver The foundation for the rating continue to increase the cost of doing Valley Unit 2. Also included in the 8,YS,,m
, , " ,* ",8j,' ,,det,erm,ne business. Adequately compensating budget are pollution control equipment laid in the 1850s by Henry Varnum our investors, meeting our service and transmission and distribution Poor, a lawyer and magazine editor.
P beHev 'ha nvestors were obligations and securing new capital facilities. ,n%Ie o ave , .,,,oeo p,ny are more difficult than before. rinancia eata-iniormation Our objective is to arrange bil"88 that previously had not been made of the financing at the lowest possible cost, The cost of money for such con- gublip
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while maintaining a balanced capital struction depends, in part, on ratings fought a long battle which even-structure and striving to improve our assigned to Company securities by tually led to legislation requiring financial rating agencies. Standard & corporate financial reporting on a securities ratings. regular and uniform basis. In 1941, Poor,s Corporation and Moody,s standard statistics company notraction Budget Investors Service-two of the major merged with Poor's Publishing to Regulatory lag, high interest rates and rating agencies-lowered the Com. form standard & Poor's Corporation.
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a tight money market hinder us from pany's first mortgage bond ratings ,,arted by lo"hnood n 9$, keeping pace with inflation and make from "AA " and "Aa',' respectively, to provides another source of business the raising of funds for new construc- "A'.' Standard & Poor's also reduced and financial data for investors. standard s ' * " " tion more challenging. We plan to our preferred stock rating to "BBB" , , , , , y,wo ne na o c$r #
- spend about $1.8 billion on construc- from "A "; however, Moody's main- porate rating services. Fitch tion over the next five years, about tained its "a" rating. investors service,inc.and Dut a h '" ' $
half of which will have to be raised in fns utio s h y a ng the capital markets. services.They all have built solid reputations for accuracy and objectivity.Their ratings have
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agenctes cited the Company's low ratio We have adjusted our capitalization of income to mterest charges and the goals for greater conservatism. At year low level of internal cash generation . end 1981. our capitalization structure A contnbutmg factor was last year's was 37 per cent common equity. 48 Ohio Supreme Court decision not to per cent debt and 15 per cent preferred allow the Company to recover in rates stock Our long-term goal is a capital-as an operating expense the costs of ization structure of 40 to 42 per cent four terminated nuclear pro)ects (See common equity 10 to 12 per cent Note F in " Notes to Consolidated preferred stock and a maximum of 48 Financial Statements") per cent debt. We are stnving to restore our g secunties ratmgs to their former levels a inancings in order to do this. we have become Financing activity in 1981 totaled about $275 million. Our major effons included two private placements of i 12
preferred stock totahng $70 5 nulhon, stock share owners are participating m 1 . - A .- the raising of $60 milhon through the Plan We expect participation to INFLATION HURTS US, TOO private placements of first mortgage continue to grow throughout the year The prices we pay for essentiai l bonds and a public offering of 3% material and equipment have been rising right al ng with everything milhon common shares which raised - 4 QudffyU l.mn.tgp shd UCd@ds f4tdatw " - else in these years of high inflation.
$48 8 mi!! ion ln addition, we raised . , g g., gg g4 ~ ~ '
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.r 8,600 iight poles and about 275
* - .. . miles t eiectric cable. our fleet of the sale of variable rate, tax exempt vehicles and equipment consumes pollution control revenue bonds Also. .g .. . .;- . .
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[. ate in 1981, we were one of the ' one kilowatthour of electricity few utilities which arranged sales of
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3 and items we use: Investment tax credits and accelerated g- -- 45 .4 ' ) . 44 , ... p cost recovery depreciation rights as .
- : 1971 1981 increase provided for in The ficonomic Recovery : ?
ikwh 564c 7512c 170 Tax Act of 1981 We raised $25 4 ^ ! 152
- Line truck $ 38.130 $ 96.000 milhon in two such transactions Cablelf t. $ 66 $ 1.90 188 In January 1982, we sold four Pole $ 153 $ 560 266
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public which raised $60 8 milhon We 6 Gasigat $ .24 $ 1.32 450 also plan to taise $75 to $125 mill'"" ^* '"did"a "d c maa"'**- through the pubhc sale of first mortgage D3'Id'ad inflation is the cruelest tax we pay ( honds in the first half of 1982 and The Board of Directors raised the another $200 nulhon through additional quarterly dividend on common stock l debt and equity fmancmys later in the from 52 cents per share to 54 cents vear We will contmue to raise funds per share on January 5.1982 it was through the sale of common stock the 24th consecutive year in which under the Company's emplovee stock (hvidends have been increased and purt base plans and our Share ()wner the Sist year of uninterrupted cash Dividend Reinvestment and Stock payments Purchase Plan We plan to reduce the l average level of short term debt to 1 -- 1, 1 ' -c : - f give us more financing flexibility 2" - ' The new tax law provides an f-
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perating Operating an electric utility over the Our industrial sales are depressed past 10 years has been a demanding during the current recession, but most THE ENERGY MAKERS task. The Company has prevailed in economists predict a recovery during COMMUNICATE lts purpose-to provide continuous the second half of 1982.The current Our employees,the Energy Makers, a electric service to all of its customers level of new construction and urban wem,,, ve}cn IIg ton"pYo've under-at the lowest possible price, consistent renewalin downtown Cleveland is standing among the Company and with reliability and safety. Elsewhere good evidence that there is a resurging its customers and the general vitality here at the hub of our service pub c. in this report, we discuss the major Influences on our operations by focusing area. is to counsel our industrial, com-on the financial arena, the regulatory Over the longer term, we are mercial and residential customers climate and natural environmental planning for slightly more than a two 3"j'y,tg*
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,,, ou*$"g concerns. The operating environment per cent annual sales and load growth. 1981, some 104,000 customers in in which we work is affected by what Our construction program is designed all three categories were reached is happening in each of the others. to phase in new generating capacity at [ofr peopweconon tsTad7rIore"than specific intervals during the Eighties 300 presentations to more than
"**"*d"" to match this energy demand with 16,000 persons, advising them Our construction program is the most adequate reserves. We are committed about the efficient use of home PP " "
visible and costly part of our operating to coal and uranium as our primary yst ms. b >re than 50 seminars environment. Its progress is directly fuel sources through the rest of this on electric heating and proper tied to our ability to raise the funds to century. insulation attracted thousands of people fr m the construction pay for it. In addition, the Nuclear industry. Regulatory Comm.ission will have a Energy specialists also met with decisive influence on when the nuclear customers attending trade shows, seminars and expositions stressing Units under Construction are Completed the efficient use of electricity. and when they may be operated. The Our Speakers Bureau, staffed Federal EPA's actions regarding with 51 volunteer employees, responded to more than 1,500 emission limitations will determine the " future availability of our Coal-burning unit e gi n Pt %s "s g plants. The Ohio Power Siting Board films and slides and teiling our story to over 50.000 persons in our will determine the route of future trans. mission lines and the sites of generat.ing P. "" "'T /* service area. oay in and day out our customer plants, significantly affecting their costs. : [ service employees work with indi-viduals, answering questions and helping with problems. During 1981, approximately 740.000 phone calls were handled.
# Beyond their job responsibilities,
- our employees invest freely of their own time in their communities.
Many of our employees serve in J various positions in local govern-ments and many more work as volunteers in other activities ranging from Little League to Little Theater. Jim Pappas (left), Boller , Operator at the Eastlake ^ Ed Plomske, supervisor of Pou:er Plant, symbolizes a line multi-crew unit, the operating environment. serves his community of 1981 was an outstandin9 BaInbridge as a volunteer yearfrom the standpoint , , , ,, fire chief. ofgenerating eBlclency and service reliability. 15
l N.ci.ar Our Perry construction project is s l In spite of the unfounded claims of currently on schedule and on budget. the anti-nuclear groups regarding We realized at the time we contracted l j nuclear safety, the fact remains-and for the Perry Plant that we would be it is indisputable-that America has successful only if we became deeply had 500 reactor years of commercial involved in its construction on a day-nuclear power generation without a to-day basis. Consequently, in the single nuclear-caused death or injury. early Seventies, we created a manage-We know of no other large-scale ment organization, which was unique industry with such an enviable record in the industry at that time, to assume of safeguarding the public. Despite the overall management responsibility for the construction of the Plant. Construction of major new unfortunate consequences of the About 4,000 people are working o#ce buildings in down-Three Mile Island (TMI) accident, the at the Perry site-over 400 are Com- t wn Cleveland is illustrative safety systems worked. No one died pany employees and the remainder of the vitality of our service or was even injured. New information derived from a thorough examination are consulting contractors and their area. Pictured here (left to craftsmen. We are leaving nothing to right) are the 28-story of TMI has resulted in further refine. chance on this project-our own SUPerfor Square Ofce ments in nuclear technology which employees are in key positions to see Tower, the SI-story Medical make all plants-existing ones and those under construction-even safer that all work is done properly, safely Mutual Center and the than before. The likelihood of financially and on time. 16-story Ohio Bell General debilitating shutdowns has also been Ofce Buffding. These significantly reduced. Raoo..... buildinss, scheduledfor The year 1981 was an especially C mPl etion in 1983, will We are committed to nuclear power. We have completed construc- satisfactory operating year. The length Provide more than 1.5 of downtimes on generating units was milli n squarefeet of new tion of 80 per cent of Perry Unit I while Perry Unit 2 is 40 per cent complete. considerably shortened from last year's
$ce space.
Beaver Valley Unit 2, now 50 per cent experience. e- ~ .~ " complete, is being built by Duquesne Our generating units are complex 3 Light Company, a CAPCO partner. machines, susceptible to breakdowns. (See Page 45 for information about We operate our system with reserve CAPCO.) While the construction costs units ready to back up any that fail so of nuclear plants are greater than those that the customer is unaware of the of coal-fired units, their long-term outage. The more our better units run, payoff for consumers comes from the the more efficient our overell operation. a much lower cost of nuclear fuel. The Moreover, the greater the " availability" d
>7w electricity we get from Davis-Besse is (the percentage of time units are avail-the lowest cost power in our system. able), the less is the reserve capacity Nj' Without Davis-Besse, our customers need in the long run. Overall, avail- h'U would have been charged more than ability was improved to 74.8 per cent -
6 ;
$50 million in additional fuel costs in in 1981 compared with 71.0 per cent
- W; 1981. Compared with fossil-fueled units, nuclear generation will result in in 1980. The only extended equipment outages were those planned to take '
QC lower bills over the long run, place during the installation of pollution 4,. control equipment. ' Efficiency and availability are l closely related. In 1981, improved efficiency of our fossil-fueled units ; reduced our fuel expense by $2.4 million from the 1980 level. As nuclear power becomes a larger part of our generation, we will be less dependent 16
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g . on some of our older, less efficient Pregress - coal-burning plants, further improvin9 Our performance in the 1981 operating our efficiency. environment made it our best year Reliability is the key measure of ever. Construction progress was on arvice from the customer's perspective- target Availabihty. efficiency and Last year our customers had electric reliability were improved. Costs were service available on the average of kept under tight control. We will 99.98 per cent of the time. This is continue to reinforce our system, typical of the United States where we improve our services and closely have the best reliability in the world. supervise our construction program Service interruptions experienced by It is a tribute to those who pre our customers were reduced from the ceded us and a chalUnge to us today previous year. Average restoration to note that The Cleveland Electric time for those customers whose service Illuminating Company has provided was interrupted improved from 100 quality electric service for more than minutes in 1980 to 67 minutes in 1981- 100 years. We promise the same for a 33 per cent improvement- the future betenePeak On July 9, our customers created a new 60-minute peak demand of 3.362 megawatts, up from 3,304 last year and 12 megawatts higher than the i previous record set in 1977. This new l high was set in a period of weak economic activity, we expect and must plan for higher peaks in the future.
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Rate-setting The extraordinary efficiency and R.. L....... 1 ". . reli bility of the electric utility industry At least 90 days prior to a formal filing THE PUCO COMMISSIONERS in America didn't just happen. It of a new rate case, we must file with the More than 100 years ago, the Ohio resulted from the flexibility and adapt- G'"l Assembly recognized PUCO a " notice of intent" to file for 'ha' " " " "' " '" ability of investor ownership of the an increase in rates. This is followed s r r o sh uI t> provld by electric utilities. An essentialingredient by the formal, detailed request for the regulated monopolies. In 1867,the in this process is govemmental regula- General Assembly singled out rail-rate increase. s P tion.The regulation of rates-the Each step in a single rate case- ',n*[,*o*jj'j*n , hone co price we receive for our product-is a 12-month process which includes them. lt wasn't until 1911 that a decisive factor in our industry. notice of intent, formal filing, staff 'iectric, gas, water and steam heating utilities came under State rep it, public hearings and PUCO regulation through the Public R. sui..gon decision -is widely reported. The Services Commission of Ohio-Rate regulation makes us different from public often hears, reads and sees later renamed The Public Utilities most other industries. This regulatory Com" " h several media stories and does not The cu ent cor jo(P ,, onCr \ of process has evolved at Federal and realize they are all related to different the PUCO, two Republicans and state levels from legislation, administra- time frames, one Democrat, are appointees of R tive practice and judicial review. On May 4,1981, we were granted 0 'ln"'p,'g 3 'iJ "'** 3o ^{a)ho is airman Specifically, the primary rate-setting a 17 per cent, $144.1 million (later of the PUCO and was appointed in environment in which the Company increased to $147.8 million) electric rate July 1981. Kelly had been the G " operates today consists of laws passed increase based on a request submitted he hlo jn al' sse"" y d by the Ohio General Assembly, the in July 1980. On May 5,1981, we had worked closely with the PUCO administration and application of these filed an application for a 12 per cent, in coordinating legislative programs laws by The Public Utilities Commission '"'"9'"*'8Y**"*^"*"
$130 million rate increase which will " * " '
of Ohio (PUCO) and rulings by the be settled early in 1982. Then in ser'ic[n univeEty Na*shington, Ohio Supreme Court and the U.S. November, we filed a notice of intent D.C.,and eamed his law degree Supreme Court. When our costs in- for an increase of 17 per cent, or $221
Embu'P '*blo.'*'*"# '"
C crease and we need a higher price for million, which will set rates for 1983. Michael Del Bane,63,(D), a our electricity, we must seek PUCO former State representative from Mahoning County,was appointed approval which involves a rate-setting to the PUCO in February 1979. He process that takes months to complete. resigned from the State legislature, (See story on next page.) where he was chairman of the lhe amount we ask for is what we House State Government Com. believe we need to keep the Company Nil *in'lll,*,*,P/3o$ 'l,fn"7,'"'- financially healthy. This includes a fair Ohio House, from 1969 to 1978. D nI i"'s R was retum to our investors consistent with ,, , na 9 9 ,,,,, the commitment we made to them his appointment, Pines was legal when they invested their capital with director of the PUCO where he has served since 1976. He also had us. We must also provide reliable experience at Union Carbide and electric service by maintaining and General Electric before joining the expanding our generation, transmission PUCO. A native of New York City, Pines camed a degree in chemistry and distribution system. at Case Westem Reserve University in Cleveland and a law degree from Capital University. Charles C. Chopp (seated left), Company Controller, is testifying before The Public Utilities Commission cf Ohlo In connection with a Company rate increase application. 19
We believe the public would in addition, we have an application better understand the need for rate for a rate increase covering sales for WHATS A RATE CASE? increases if our rates, as are prices resale to the Cleveland municipal elec- Physically, a rate case is impressive. charged by other businesses, were tric system pending with the Federal It stands 18 inches tall. is made up based on current costs. We have asked Energy Regulatory Commission. We e9h a 5 pounds t the PUCO to consider expenses in- began collecting this $2.3 million in- just our direct testimony in the curred in a current, or matching, test crease in September 1981, subject to format filing. h year (rather than historic) which would refund depending upon the outcome c,,, s7onducted s leng hy and promptly recognize the effects of in- of formal hearings. typically consumes about 20,000 flation on our operations. Thus,1982 Our industry and its regulatory manhours of Company staff time. 0" rates would then be based on 1982 process has been the subject of intense uC t i* fa' ' bwith huf(e costs. public dialogue. Yet, under regulation- months examining it. Then, the While our electricity sales are our the investor-owned electric utility PUCO staff issues a " Staff Report" major revenue source, our steam industry in this country has become whi h ma s P mj"of%iudg-
,,nt , ho e heating business accounted for more the most efficiera and dependable in requested rate increase they think than $15 million in revenues in 1981. the world. To maintain this unique should be granted.
A $7 million rate request filed in April status. our regulatory process must written objections to the Staff Report by the Company and by was granted early in 1982. We filed a continue to be responsive to changing intervenors f rame the issues which request for an additional $2.4 million economic conditions. This requires are addressed in public hearings. in February 1982. prompt and adequate rate increases Hearings usually begin about seven months after the initial filing. which provide both full recovery of The hearings, presided over by an current costs and competitive com- examiner who works for the PUCO, pensation to investors. take about four to six weeks. During this time, as many as 40 witnesses might be heard. The Company, intervenors and the PUCO staff all may present witnesses. Intervenors may include municipal govern-ments, organizations representing all classes of customeis and other special interest groups. Af ter the hearings, each party to the case writes a brief and submits it to the hearing examiner. Sub-sequently, the hearing examiner draf ts an " Opinion and Order." He submits it to the PUCO com-missioners who make the final judgment on the issues and set d m the amount of the rate increase to be granted. s
~
~ Barbara Luethjohn,
- Treasury Department,
- stands beside the stack of direct Company testimony requiredforformalfiling of a rate case.
20
Management's discussion and analysis of financial condition and results of operations C.gii.i ne.o ,ce. .nd Liquidity these increased costs (" regulatory lag"). Consequently, , We are carrying on a construction program under carnings per share have improved slightly since 1979 1 which new facilities are being built to meet the antici- although the ratio of earnings to fixed charges declined pated growth in demand for electricity in our service (2.67,2.33 and 2.37 in 1979,1980 and 1981, area. We also are building facilities needed to comply respectively). with pollution control regulations. During the years 1979-1981, we spent approximately $1.2 billion on our construction program. This amount includes an allowance for funds used during construction which is explained in Note A of " Notes to Consohdated Financial Statements". We estimate that the cost of the program for the next five years (1982-1986) will be about $1.8 bilhon. The details on the construction pro- _ gram are descnbed elsewhere in this Annual Report. c N At December 31,1981, our purchase commitments $m MS $ip , ^
- totaled $303,522,000 which relate mainly to the 1 g ,
construction program. 4 pft l l 'A After paying our expenses, taxes, interest and - N ; D,; dividends, our business does not currently generate ~ lF all of the funds needed for our construction program. 4 "; y sN Accordingly, we must raise additional money from ~W n f investors, in the last three years. about 70% of the
, y %y , M money used for construction was raised from sales of securities, such as notes, f:rst mortgage bonds and
'
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preferred and common stock, and from bank borrow- M r > 'o* ~ ,W ings The cost of these funds has been high and the common stock was soki at prices below book value. We also raised funds from two sales of the Federal We have attempted to minimize the effect of income tax benef:ts related to equipment placed in regulatory lag by filing for rate increases as often as service in 1981. These sales were made possible bV allowed by law. In addition, we have asked for rates changes in the tax treatment of equipment leasin9 to be based on costs expected to prevail during the rules contained in The Economic Recovery Tax Act period when the new rates would be in effect rather of 1981. We expect to raise approximately one-half than on historical costs. Details on rate matters are of 1982- 1986 construction program funds bv sellin9 discussed elsewhere in this Annual Report. various securities and by borrowing. In 1981, ratings on our first mortgage bonds were in order to be able to attract money from lowered to "A" by both Moody's Investors Service investors on the best terms, we must receive sufficient and Standard & Poor's Corporation. Previously, the and timely rate increases to enable us to pay them the bonds were rated "Aa" by Moody's and "AA " by retum on investment they demand in the form of Standard & Poor's. Our preferred stock rating was intercst, dividends and increased net worth. The Public maintained at "a" by Moody's, but was dropped to Utilities Commission of Ohio ("PUCO") has granted "BBB" from "A " by Standard & Poor's. us the following retail electric rate increases in the last We will continue to be vigorous in seeking fair three years- 9.2% (1979),9.0% (1980) and 17% rate levels in order to maintain as strong a financial (1981). We also received various increases in steam, position as possible. Without needed e increases wholesa!c power and street hghting rates in the three-
- it would be impossible to corn a fair .m i for year period. These rate increases and higher allowances our common stock share owners in a.. nnlationary for funds used dunng construction offset cffects of economy. This also could result in further lowering inflation on operatmg expenses, higher aterest expense, of our securities ratings, thereby increasing the cost stock sales and the delay between the time our costs of raising money from outside sources. Our rate 90 up and the time we receive a rate increase to cover increase requests and future financing plans are designed to prevent further lowering of our ratings 21
e while maintaining a balanced capital structure of R ..it. or operation. 40-42% common equity,10-12% preferred and The chart below sets forth the factors which caused preference stock and a maximum of 48% debt. At our electric revenues to increase in each of the last year end 1981, our capitalization structure was 37% five years. common equity,15% preferred and preference stock and 48% debt. Specific financing plans are discussed Sources of Electnc Revenue increases elsewhere in this Annual Report. (milhon5 of doll *'s) Over the 1982-1986 period, we must refinance _ _. %%%______.__._.. . _ _ _ _ _ _ _ _ $398.364,000 of maturing debt and preferred 'N a.,, _ ,,m stock which was outstanding at December 31,1981. - -- in addition, we are required to offer to redeem _ _ _ _ _ _ _ . _ . . __ . . _ _ _ _ _ _ _ _ _ _ _ _ _ $19,400.000 of preferred and preference stock in
- both 1984 and 1985 and $36,067,000 in 1986. 3 Some of our debt which matures in the five year __ _ _ _ _ _ _ _ _ ___ __
period has very low interest rates. Refmancing of this debt will probably be done at much higher rates, thereby increasing our cost of capital. _ The amount of First Mortgage Bonds the Company can issue is governed by our Mortgage and Deed of Trust. At December 31,1981, we had the o _ ability to issue approximately $646,000,000 of ad- M 147f ditional first mortgage bonds. This amount fluctuates as :rW new property is acquired and interest rates and earn- . %* ings change. There are no restrictions on issuing addi-tional authorized preferred stock and preference stock. g~ g We use short-term finanting, such as bank Imes of credit and the sale of commercial paper, to give us flexibility in timing our long term fmencings. Money In the last three years, the most significant factor raised through these means is primarily used to fi- affecting kilowatthour sales was the recession which nance temporanly our construction program. We have began in 1980. Sales to industrial customers were a total short-term borrowing capability of $240,000,000 down 13% in 1980 from 1979. The decline was in the form of bank lines of credit and revolving loan due primarily to lower sales to automobile and steel commitments. In accordance with customary industry manufacturers. In 1981, industrial sales recovered Practice, part of these lines are held in reserve t stmngly in the first nine months. However, a 12% ensure that we will be able to pay off commercial decline in the fourth quarter resulted in industrial paper when it is due. Our commercial paper has the sales increasing only 2.7% in 1981. Economic con-highest rating given by Moody s. Standard & Poor s ditions as well as milder weather were the major rates our commercial paper in the second highest facters affecting sales to commercial customers in category. Note L of " Notes to Consolidated Financial 1981. As a result, commercial sales increased only Statements gwes the details of our credit arrange- 0.7% in 1981, down from the 2.7% increases in both ments. The Balance Sheet shows the amount of short- 1979 and 1980. Residential sales were down 2.0% term debt which is outstanding. At year end 1981, n 1981 after moderate gains in 1979 and 1980. The we had on deposit with trustees $36,337,000 t decrease was due primarily to milder weather. Our finance pollut:on control facilities under construction. sales to other utilities showed a significant decrease relative to 1980 because a sales agreement with another utility was not renewed in 1981. Overall, sales declined 4.6% in 1980 and 3.6% in 1981. Fuel and purchased power expense is the larg-est part of our operating expenses. The amount of purchased power varies from year to year depending 22
upon the availainhty of our power plants, the energt; external financing and higher interest and preferred demands of our customers and the pnce of electnc:ty dividend rates. The impact of the increases in these ava.lable from other utihties in 1981, we generated items was on'y partially offset by related increases m more of our energy need; at our plants than in 1950, the amount of the allowance for funds used during prunanly because of the greater availabihty of the construct:on. Davis Besse Nuclear Power Stat;on Accordmgly. The significant mcrease in deferred fuel expense purchased power expense deaeased sharply from is dscussed in Note B of " Notes to Consolidated I the precedmg vear. Financial Statements" For a discussion of how we are affected by infla-tion. see "Supplernentary Information Concerning the Effects of Inflation". We could be affected in the future by the resolu-
- tion of legal proceedings regarding recovery of our investment in generating unit projects which were terminated in January 1980 as descnbed in Note F of
" Notes to Conschdated Financial Statements" and the timing of recovery in rates of the cost of coal obtained from the Quarto Mming Company as de-scnbed in Note B of " Notes to Consohdated Financial Statements" The retnal of the antitrust suit brought by the City of Cleveland agam>t the Company was completed in October 1981 The jury unanimously found in favor of the Company. The City had pre-sented evidence cla ming treb!e damages of about
$ 160.000.000 On December 2.1981. the City appealed the decision to the Umted States Court of Appeals for 'he S:xth Circuit.
The Company beheves that the ultimate resolution of these three matters should not have a matenal adwrse effect upon its financial position, Total fuel and purchased power expense although an adverse final determination in any of mt icased over the 1970 1981 period despite the them could ha'.c a material effect on income for the t}et rease M1 total kt!oWa!! hour sale 5. Ihh WCrease penod in W hlch i: occurs occuned because of sharply higher pnces of coal and oil Substantial use of nuc! car generation, which has a low, relativelv stabk cost of fuel, partiaNy offset the mi reases in coal and oil costs Nuclear generation axounted for 4% 7% and 13% of our total electric generat:on m 1079,1%U and 1981, respecta ely Other siqn:ficant items at!'ectlng earninqs per Ah tic Were Illt.f c.)Wd paVrliellts (>f Intelest and pre-fCrred st(R k daIdelids anil a gica!cr IlumkTT of out-starltlirig cs Hn11H 41 shares resu}tiliq fit)n) additii nial 1 23 1 L . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _-
Management's statement of responsibility for financial statements The management of The Cleveland Electric illuminating Company is respons:ble for the consolidated financial state-ments which appear in th.s Annual Report. The statements were prepared in accordance with generally accepted accounting principles which are appropriate in the circumstances. These pnnciples require that certain amounts must be recorded based on estimates. Such estimates are based on an analysis of the best inforrnation available regarding the amount to be estimated. We maintain a system of intemal accounting controls. The control procedures used are designed to assure that our fmancial records are reasonably complete and accurate. They also are designed to help protect the assets and their related records. We make an effort to ensure that the costs of our control procedures do not exceed the benefits. We have an intemal audit program which monitors the internal accounting controls. This program is designed to examine ivhether the controls are adequate and effective. Also, an examination of the financial statements is conducted by Price Waterhouse, independent accountants, whose opinion appears below. The Board of D: rectors of the Company is responsible for determining whether management and the independent accountants are carrying out their responsibihties. The Board has established an Audit Committee comprised entirely of outside directors. The responsibilities of the Audit Committee are descr: bed elsewhere in this Annual Report. eport of independent accountants
). " " " " ^ = "
FICC . cauww-3 =^= nllCl]OUSC To the Board of Duectors and the Share Owners of The Cleveland Electric Illuminatmg Company: h We have exammed the consohdated balance sheet and the consohdated statement of capitalization of The Cleveland Electne illuminating Company and its subsidianes as of December 31,1981 and 1980, and the related consohdated statements of income, tetained earnings, and changes in fmanc2al position for each of the three years in the peitod ended December 31,1981. Our examinations were made in accordance with generally accepted auditing i standards and accordmgly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. As more fully desciibed in Note C to the fmancial statements, the method of computing depreciation for the Davis-Besse Nuclear Power Station was changed in 1979. In our opinion, the consolidated financial statements examined by as present fairly the fmancial position of The Cleveland Electric liluminating Company and its subsidiaries at December 31,1981 and 1980, and the results of then operations and the changes in their fmancial posnion for each of the three years in the penod ended December 31,1981, m conformity with generally accepted accountmg principles consistently applied during the period except 6 for the change in the method of computing depreciation for the Davis-Besse Nuclear Power Station, with which we concur, referred to in the preceding paragraph Pnce Waterhouse
, , Fetsruary 12,1982 24
, DCOme statement The Cleveland Electric illuminating Contpany and Subsidiaries For the Yes.r Ended December 31. 1981 1980 1979 OPERATING REVENUES Electnc $1,000,734 $878.501 $811,219 Steam 12.196 15.065 13,048 Total Operating Revenues 1,012,930 893,566 824,267 l OPERATING EXPENSES Operation l Fuel 332.837 268,096 272;599 Deferred fuel (10,683) 959 959 Purchased power 29,256 91,292 75,469 Other 149,374 127,823 108.873 500,784 488,170 457,900 Mamtenance 74,925 67,058 53,763 Depreciation and amortization 85,294 64,619 59,443 Taxes, other than Federalincome tax 91,648 81,630 79,455 Federal income tax 67,575 41.574 38.227 Total Operatmg Expenses 820,226 743,051 688.788 l NET OPERATING INCOME 192,704 150.515 135.479 NONOPERATING INCOME A!!owance for eqmtv funds used dunng construction 48.970 40,873 33,432 Other income and deductions, net 10,617 7,605 4,889 Federal income tax - credit 16.125 13.962 9.300 Total Nonoperating income 75,712 62.440 47.621 INCOME BEFORE INTEREST CllARGES 268,416 212,955 183.100 INTEREST Cl{ARGES Long term debt 121,040 95.085 79,534 Short term bank loans, commercial paper and other 25,672 17,538 5,765 Allowance for borrowed funds used dunng construction (34,030) (25.051) (15,733) Total Interest Charges 112,682 87,572 69.566 INCOME HEFORE CUMULATIVE EFFECT OF ACCOUNTING CilANGE 155,734 125,383 113,534 Cumulative effect of change m depicciation method on periods pnor to January 1,1979 - - 4,125 NET INCOME 155,734 125.383 117,659 Dividend requirements on preferred and preference stock 34,917 27,711 25,587 EARNINGS AVAILAHLE FOR COMMON STOCK $ 120.817 $ 97.t>72 $ 92,072 EARNINGS PER COMMON SilARF. Before cumulative effect of accountmg change $ 2.52 $ 2 26 5 2.31 Cumulative effect of change in depreciation method on penods prior to January 1,1979 - -
,11 Total $ 2.52 $ 2.26 $ 2.42 DIVIDENDS DECLARED PER LOMMON Sl!ARE $ 2.08 $ 2.00 $ 1.92 I i
D For the Year Ended December 31,
- netained earnings statement 19s1 los0 1979 (T w m.u m !tu hre BALANCE AT BEGINNING OF YEAR $ 258,432 $245.716 $225.950 ADDDIONS Net income 155,734 125,383 117,659 DEDUC'llONS Diodends declared Preferred stock 29,762 22,949 21,010 Preference stock 4.417 4,417 4.417 Common stock 99.134 85.296 71.842 Costs of issumg equitv secunties 568 5 624 Total Deductions 133.881 112,667 97,893 BALANCE AT END OF YEAR $ 280.285 $258.432 $245.716
- m. .-- _. ~.- nn.~ .--
25
Balance sheet at December 31 ne cievetema sie<:,1c inemimetms c cmneov esa ses 1aier e, bsets 1981 1980 (Thousands of DoLN PROPER FY AND PLANT Ut.hty plant Ek c tnc in service
$2,585.892 52,372,851 Steam in servxe 38.546 31.404 2,624,43S 2,404,255 621.353 557,859 Less accumu!awd depreaanon and amortuation __.
2,003,085 1,846,396 Construction work in progress 956.457 811.0S4 2,989,542 2,657,480 Oths r property,less accumulated depreciation 23.870 21.137 3,013,412 2.678.617 f DEEU FlON CON THOL CONSTRUC TION FUNDS -- unexpended 36,337 71,943 CURRENT ASSETS reh _ 6.946 9.124 remporary muestments. at cost 17,750 - An u sunts ihm fr(,m cu3tomers and < >thers, net 94,407 104,883 Matenal3 and suppl:es. at average cost 25,640 24,545 1 osd fuel inventory, at as crage cost 68.773 67,467 Taxes app'. cab:e to san eeding years 63,610 58.111 Other __ 1.7S6 1.481 278,912 265,611 DI I i RRE.D CilARGES Unamort:<ed c osts of term:nated protects 49,548 54.244 Defened f ue' 11,642 959 Other _ . _ . . _ _ _ _ _ _ _ _ 16.174 23.088 77,414 78.291
$3.400.075 53,094.462 Capital.izat. ion and L.iabilit.ies CAPirAl 1/AilON (See statement of Cap:talaat.on) 1 onq tenu debt _ _ _ _
$ 1,328,404 $1,211,528 Serht picfened stJ Wah mandatory redemption prousions 271,000 203,500 Wit hout mandati iy redemphon ptovmons 45.071 95,071 Senal preferent e stack u.th mandatory redempt:on provmons 57.000 57,000 Cornmon sto4 k e q u.t v _ 1.002.200 912,731 2.753,6M 1 2,479.830 CURRI NT 1.1 AHil 1111 $
Cune st pomon cd long term debt 20.145 10.148 Notes pavane to banks and others 91,903 166.937 Au ounts pavane . . _ _ . _ 105.302 91,081 At cr ued pauoll an i tat ations _ 13,353 11,466 l'edcr al income tases _ _ _ _ _ _ S.300 4,070 Othertaxes _ _ _ _ _ _ _ 103,631 102,415 Int. cst 97,.PJ 1 21.205 Other _ . . ___ _ __ 5.2S6 5.235 37s.471 412,557 Dii1 RRt D CHilH f S linamottwd mtestment t n credtts _ . _ 102.438 s4,198 At cumulated defeited i edcral mcome t,nes 131,043 107,654 Unamottved t.n bc,cf ts so!J to others .__ 25.101 - k}Iber - _ _ _ _ _ _ . _ _ _ . . _ . . _ _ _ _ _ _ _ _ _ - _ - - _ _ _ 12.341 9.623 273,423 202.075 COMMll MI NIS AND CONTINGENCIES - Sec Nete M 53 40n.075 $3.094.462 ne< ., rsr . ., ,,,, . W rwr s ecw ' >s m: e e ers . 26
bapitalization at December 31 ne cieveiana E:c<tnc i::uminatin9 company ana subsiatarles 1941 1980 19K1 14MO 1.ONG-TLHM DI B f (a) , n me , or N u op ..q'enu w, < .m l'irst Mortme]e hands - matunnq through 2013 at rates of 2WL to 15WL (l. css $20 000.000 in 1981 dassifwd as cunent) $ 1,092,291 $ 1.030.001 Co!!ateral Piedge Notes -- matunnq :n 2010 at semenua! equivalent rates of 1175't to 15.1T0 23,900 19.100 Term Bank Loans (b) -matunnq 1981 1968 at 100 L to 105't of pnme rate 134.000 84.000 Prom:ssorv Notes - maturing in 19H3 at a rate of 14 % (1 ess $10,000.000 in 1980 at a rate of ISU L cla%s;fied as curren0 20,000 20.000 Podut on Control Notes-matunng through 2012_. at rates of 5 6% to 0 7% (Less $105.000
; :n loM1 and 1980 dassifwd as current) 57,945 58.050 i Other - net 26S 287 Total Lonq term Debt _ _ _ _ l.328.404 1.211.52s 48.2 48 9 3EHIAL PHLI:ERHi D AND PRITERENCE SIOCK-cumulative. mthout par t alue, 4.000.000 and 3.000.000 authortNd shares. respe( tively Preferred 5tock wthout mandatory redemption prousions Aimiial D:udend Senes Rare Shares A 17 40 500.000 50.000 50.000 B $7 56 450 000 45,071 45.071 Preferre i % toc k wth mandatoiv redemption prousions 95.071 95.071 Annua! M-mda!Ory IhuJend Helempt.on Senes Rate Sh ucs Pote C F 7 35 250.000 $ 100 25,0(X) 25.000 1 1 M S Oti 57.000 i1 000 57,000 00.000 i $ 75 00 50.000 i1.000 50,000 50.000 (i $ b0 (n) 40 O()O $1,0tH) 40.000 4().000 ll i145 no 28.500 51.000 28,500 28.500 1 5145 00 31.500 51.000 31.500 -
J t113 50 "q 000
, $ 1.000 29.000 -
K i 1 13 !,0 10.000 i1.000 10.000 -- 271,000 203.500 Pieferen, e Stoc k w th mandatory reJemption piouxons An n u al ManJatory Dio!cn i Hedempt:nn
'senes Hate Sh. ires Pr>cv I h77 [d) b7thh) h l .(K 4) 57.000 57 (44)
. ital Prefened and Pref <rence Stock _ _ _ 423.071 355.571 15.4 14 3 COMMON STOCK I QUll'i i Common shares u:thout par vaiue - 55 000.000 authonzed.
l 510:.4.503 and do.2 s8.o20 outstand.ng m los t and 10
- L re<.pn ta e6 721.921 taL209 Retxned earntnqs 280.285
_25s.432 T >tal Common stoi k i qu;te 1.002.706 412.731 36 4 30 8 i01 Al C.WII AII/AT!ON _ _ _ _ _ $2.753.681 $2.474.s 40 100.0 ino e t ., ; re 1 a.h mn , , c: c t .- ,s : s mir,#4 mz a w . i .w a , ' s o.,, u i, a Bi r e % cn
$j14 % 1 'igtg l'N 4 $9 ' ' ( s h - ]'sw l $11 '( {gg45 3
'i e s ; .y sj $ ',7 _ b ! . h l r3 la ti lhe we i, eni n n w ,'*e(< pv3- .r #:r ,;,n!ir 'n M W w. cr c 1 N1 E st '+casi +
j t . sp'e d wi t' .. s rs s l' W. i m: , ; * ' M 't*42 ca 9 b., Yr: .< 4 s s (\,,d is in v ,he 3 6 ac .'aw
.d 7 9 ac. .
3., , , < i r..* r c " f e ., ' pier" * ' e , ceh
{f3VIlangeSInf.inanClal position ne C eve!and E!ectnc li'uminating Companv and Subsidiaries For the Year Ended December 31. 1981 1980 1979 FINANCIAL. RESOUHrES PROVIDED income before cumulat.t e effect of accountmg < hange $155.734 $125.3S3 $113.534 Items not affett.nq workng cap:ta! Depreciaton and amortuation 85.325 64.640 59.459 Defened Federal income tax 43.931 30.330 21.445 Ahance for equ:t ; funds used dunnq construction (48.970) (40,873) (33.432) O*ner 1.910 1.636 1.245 lota: f mannal resources prnaded fmm operanons 237.930 181.116 162.251 Cumu!atne effe st of accountmq change 4.125 SM.". of ser urt:es 1 :rst moropge tvinds ___ 82.200 171.591 52.000 Pref, ire I stod< ___ 70.500 28.500 - C< mmon sto< k ___ 07.622 79.604 91.762 T. . tai sMes of set ur tn 220.322 279.695 143.762 Term bank loans 50.000 - 60.000 l' rom s < .r y notes __ 30.000 - C .heral p'edqe notes __ 4,800 19.100 - Sale < :f t.n benef.ts to others 25.199 - - Pol!at s m e , mtn ,! ! md, e, pended 57.805 95 25a e 2.405 haicw m short term debt and other honotunqs - S0.431 63.327 Work nq < ap.tal dc< r, ase Ia) 14.591 - 0.077 (hh n _. ._ __ l.451 - - lota! Emanc ai Resoun cs Pinaded jn12.098 1685.59 e 5511.917 1 IN AM'l AL RW )!'RES list.D Ad ! tons to utJ tv p? ant $409.277 $398.08S $385.892 AU a aru e fur equ.tv f unds uscJ dunny ( on',trut t on (48.970) (40.873) (33.432) 3h0.307 357.215 352,400 Rctacment <.f l.r st m, arqaqc honds _ _ _ _ _ _ _ - 31,831 - H. tirement of orch neti sti n k _ _ _ _ _ _ 3.000 - - Het . m, nt of prom on.' note _ 10,000 - - D Jen I. ___ _ . _ _ 133.312 112.662 97.269 l'o::ut m conrn . _ _.l_ t_ i. i_ _ _ _ _-n uct;on f unds deposited 22.200 123.300 52.000 lh fcncd f uc! co +s . _ . _ _ . . _ __ 11.642 -- - 71,n37 I w w a s. m sin tt t, nn debt and other bonoa.ngs Workmq cap ta! mctcmc tal _ _ _ _ _ _ _ 51,715 - t hhet - __ __ . _ _ __._ _ _ _ _ _ S.S74 10.218 L ,t a! I man. tal Re s mrs es l1 sed ._ _ 5612.098 $6S5.547 $511.047 Nt!MM ARY ()I CliAM;F5 IN W(HKING CAPITAL (a) Icmp ran. necsim ents i 17.750 $ (4.300) $ 4.300 An iinnes due hom i ust' >mcr s and other s. net (10.477) 2% 572 9.784 Fo mi fuel mventon; _ _ 1.306 11.912 15.632 A<i- vis pavahle .eti as _ _ _ _ _ _ _ _ _ _ _uucJ p esn.:1 and t acatuns (In.108) 9.034 (23.215) I cJ.4a mwna and der t.ncs pavw , __ _ (5.440) 120 (14,408) ( hhcr _ _ . _ _ . - _ _ _ _ _ . _ _ _ ___ (1.616) 7.777 1.830 t hqc m WM mq cap-ta!(a) _ _ _ _ _ _ 5 i14.59 n 5 51.715 5 in.077) k 8 T ' . l g . q_{ { ',f 1+ {, 5*j , 1
': g r g
j % ] ,
?'c .s p t 8 u s , r
. rs j 28
/ -- - _ - - _ __ _ - _ _ - _ _ _ _ _ _ _ _ _ _ _ _ -
otes to Consolidated Financial Statements Noi, A so .rv or sisoiric. ^<<ooniins reincipi,. ana rERC oao us to mc:ade a pon:on of the cost of h.e are requirt*d tti f(w,, vN the at ce>uritMig princip!es set bv money as part of the total cost of uinstmc t.ng new assets The Pok,c Utines Comnession of Oha2 (PUL,O.) and tim S,uch cost of maneu is rec orded as the Aem>wance for F unds I.edera: Erwrgy H.1;u!atory L.omm:ssion &.L.RL,) . A Used Dunnq L,on,truchon ( Al UlX,). d.v opt;on of our s go.fx ant au ount.ng pruicip!cs fo.,us lhe amount of AFUDLs for an account.ng penod is 4,g ,,d k 44m a e d W)C to h> accumulated Consolidatiori construct:on co-ts Tiw annua! Al'UDC penentage rate is Our f.nanaal statements un !ude the accounts of two m nor detenruned by a fannu!a wn by FLRC The rate represents sMmes We own al of the stoa of both One subs J;ary an aterage of the co,t of money we are uung for con-i, lhe CEICO Conman ; whx h owns nonut:hty land arni struct:on (osts The rate a compounJed sermannua:iy The prouJes < citam submetermg servwes ~lhe other n C C O Pad "f the rate whmh wprewmts mterest is reduced to C< onp.mv whu h u,oidmates the operanon of a f n.e com. n> cog /e that interest is tax deduct.bk, parry p ,4er p(,ol (wiu< h na hides the Company) caMed the he ann >um < d MMX appem on our mconw ce Cetara! Arca Power Coordmatun Group (CAPCO) 'Ilw ment in two p!m under N]onopvanny income as the oe.ts of CCO are sharcJ 1rj a!! the CAPCO compames "Albwance for I:q1tv Fun is Used Dunng Constructain" and under Interest Ch.uges a3 "Anowance for Ibnowed Property and Planit huub. Used I)uruy Constn, t:on"(>n the tulance stwet. the , lhe .% nw property we own is stated m the fmanoa! AFUDC beu,me> part of "Constructon Work m Pingress" statenets at the mst n uned when inst devoted to putar hn mnstruction :s completed. we stop recordmg unLiv sertRe Staun pu,perty is stated at the pm e we paid Al Ul)C At thn punt. the f(>tal cost < >f the new anet. f( a it Ihe cost 4,f m5arl wpalrs is dedu(ted from revenues irulu&ng Al-UDC is used to determine the rate we charge m the an ome st.nenwnt as mamtenant e The cost of our custonwrs for seruce Smce the rates we charge for rep!m mq or :mproung property is added to Propenv and our product mtlade a3 these costs we are bem3 a'k wed Iknt after dolut t.ng hennng) the ( ost of the rep!* ed to recoter m cash al costs of the propenv mcludmg AFUDC properte When we iciac propenv. there is iso a redut tion Ihc amount of AFUDC recorded m each accountmg
- n the de;ucuat:on resert e f wtm h n lamed "Au umulued penod v.mes The tar.at:on occurs because of (1) the
!)cpreuatun and Annatuatoni number of do"ars bemg spent on construct;on. (2) the Deprecian. on kmqth of the c onsnut ton penod and (3) the rate used m M~UDC b 19M h m> m n ; m 19%
We show h prematu n expense as a cunent cost of dom 9 bu . mess to a<i ount for the using up of our propenv the rate As M FA and m 10X1 the rate was 10170 liepnx :at:on n ict . a ded equal lv os er the estanated usef ul federal locome Tm I fe of tv pmpe:tv i or etunple, if we estanate that an The deprecianon espense reported on our mcome state-nem ui r . usef ul for 10 se.us, we < harge one tenth of its ment is dfferent from the deprec:at:on expense we use to vine t; > . j an uta >n expense cat h year ialculite I ederal amome tax There are severa: reasons for An e- . A m to th.s punt ip!c s the Dans Iksse Nuclear the efference I .nt, the Internal Revenue Semce (IRS) Powei Nan 4 m s lksse) Daus Besse deprn unon n does not akw us to mc!ude Al UDC and certam over-based en the o Anup of the amount of e!n inc energv heads :n the cost of assets wha h we deprec: ate for tax it prodni es e. n w at tuuntmq penod to the total expn ted purposes lioweser these costs are mcluded m the cost of pn n lu( ta m i n . :t s useful hfe (see Note C) assets used ti> determme the depret u!Mn show n on our Ammtliadon of Terminated Projects mcome statement Second. the pened of tane over u h:ch the IRS a,u, >ws the cost of assets to be depwcuted s shorter In Janu.uv 1%R CAPM) deuded ro t to hm!d four p:anned than the penod of tune f usefu! hfe) we use FmaU . the IRS nos lear acociat,nq units Before that deusion w as made. 4 >ws some of 'he depwmon w m. ennded to in future o .nudet alde planmnq. enq.ncenng and desaqn wi ak w a' 4 me h.i thev un.tt As dext. bed m Note I . a porten of to be uW ed (Tb dHm me 8 cied 1.berd/cd depin uun aM adh'M am. awatun ) 1 or mmme s!me - these (i nts has l' Celi anh Mt./ cal af hI lecot Cred al rates ggg g g g , gp gg I g g, g } 3 h g gg g g punuant t< i a l'UG ) onio Rn ot av of the remamJer ha* bberi cJ depto : m m a>d m cekrmM anmnum m a e not been des ned pendnq the u;tunare outu nne of our erforts wgp,M m du> n M m A h u oht m dwm Thn me to obtam tel.cf fn on an Uh:o Supreme Court dn. son
& kned N the pan ds m whwh we n.ama% would have denmq u> the nqht to in oter and amortue sus h cost' Our shme of the unrn owwd cmts n an!uJed a deknM obtmnd dwm The A knM mmun's aw hud to i hmqt s on our bNanse sho t as Unamort/ed Costs of mmme < n a de M l-k < f pcrty through a pn w Mure g,3 gong,g y lemona:M Po ocets gn ug g 3, , . pgaf ugu ;3,c7gn 9 A!!oh anct' Ior Iund% U%ed Dufing (othtf uction) PbO, the (i wts (.f ,,Lr ter m.nated imt l var in t yech w ere We pay mterest and dua nds to out awestors for the use of deJ ut tel as an o pense.11. # et er. on our mo ome the:r no met I hn s t alni the "mst cf rnonev 1 he l'UCU eat. me:
- these ten nata n i osts wee amunced i n er 10 29
1 1 1 1 , ,.
- otes to Consolidated Financial Statements ears b on!..r to moh v wt > w.th th. r wheed Feh! Not, B o ren,a i o,i u rouv t a chi t is. the tw ac.ngs were defened and w en> We reccr.e coi supp!.es for Rosheid Unas 1,2 an.13
,a h r e y n." ,i .n t he u m. . taternent over a 10 scar from the Quano M.n.nq Company (Quarto) S:nce May 31-
.r o n,. !!o.x, ser aav i,l'L-.O n,ued an order m d tar 1%R u,nen the dese:opmcnt period of the Quarto mines
~i el t,. :.no u, ,,o si .p ro ownnq t, anatta w.s :n rm ended. the pr ce of Quano coal has included full production m, . c ,.u . . A" o N,1 ..s.s .p rn u d.nq the c. . fened ,a b , unts ed defened dese:opment period costs. Quarto coal 93g .
has been subson' Gy more expen<ive than comparable Ui hen we p,a ce new pwperty m scruce dunnq th. coms aidah,.e in the mar.ket . o tear. the lh,S oou s u > a acit aw st the tax due eh:, i n hi danuary lHl. the PUCO ordered us to ehnunate ' ( fed an m.e. < t ment , i s ( rcJ,1 O, wa ad l ederal mcome bom our tuel frtor charged to customers the portion of
,a
. s i .n < n a n 4 m.e .dem.mt as !!r suq;) it u ere not re' o,uced the w~t of Quarto coal wh;ch a above the general market
.e the te sawm ,.ri >rn th 3 < wd ,.
p ,,. , p o. ( n ,. i , Lee to oq. c, er the Me < d the pn gny mt < >h ed thn >ujh the prat'.ce of pm mmm .. wah S.nce we were not recovering all these com through resenues the PUCO a!so ordered us n ,n n, , ,m not to mt!ude the ur;rea mwd amount in cunent o*neratmi3 i he L oncn,. , kn , ,.civ lax t us t of 1,.hl aSows us to t
, expense Accord.nfc. that portion of fuel expense was
. , , om5 .n the te h
; c..ts re, ced to pmpenv n' ac ed m defened Dun u; 1981. about 1213(X).O(X) of such costs e < .n a,ul v..cr u Januar,s, 1. Ins 1 3 dons , rec er.ed fmm were detared from expenses and not recovered through
, , r ,, 4 .
. u .c i h si. , ne b ; n, c ,q' n.ud m the a mne t 3te .
ra'es .Ih:s d.l r c! result m any change in net income or n w ,. .t , , a n ia ,. n n tmes ia er the est mated u cJ, !fe
*I" '@ I'M ic i
<h11 The PUCO st.ced m its order that it would aCow s i i!(chal1.1.:'t!cm, .it l,a ome taws ue n euer buauw we can ,
m wry of xtua! Quarto coal costs including any pre-do % t . !a ;nt nst t h : eshumoe<mm ljus redutten d en .une,unts. when the pnce of Quarto coal uou
< d t.m , q it tw een 3 >per at n.; a e;< ,me' .eui Vn- d""""'" PC"J d"'P' to about 2% above pre-
< >; . i . e q o n < a ra The ta n ductu m . wsuh.nq from ""*U *E"I pm for wn1pmaW mal Steps are be:ng
+ re * . n fu nis whx h me used on assets ( unene; beng ta n m an eH. an to reduc e the co3t of Quarto coal The
<ie tn. te f .uc i < a ateJ to "n. mopaat.nq mcm/ The I UCO vated that it wouM consider in Wy of 1%2 tas wJa ' ms rv r nq tmm mt. nest par f on ii .ther.
whether to connnue in e ffett, mod fv or ternunate its cost tua L .ne ,;4 c.-l to ; pene ,q mmne reo tery f ormula-As des ried m Nate A - Retenues. smce September Hewnues 1,1%1 our rates are ad;usted every sm months to reflect (%. a m oth ac .1h r n 91 cm h custonn t's rneter or ccm.cc h , nsme ; d then M h.m We wo o d rewnues im ( hanges in fuii costs. Under the new las the d fferences i , tween the cost < f fuel actua"v used and the costs mciuded
- i. , ,ou tatem. < t for the month the meta u.a, rea i < ,r m the E ', to cus unen are defened The defened amount u Heia n u ed.n y eJ. s of w hen the L3 n n,ued or pa i h cowdered m the fuel frtor m a subsequent six-month I he r v. mib ,e t a b oner s f .r . eiInc ay and penod. We were not aMoned to defer such costs (except a en hme h en m ; !c up of tu o pmts lhese parts me a h ,r the cost of Qumto coa! ment:oned above) under the M. u. and a k. I ran ' F.n h no mth tL ' team "f uel
, heed i rn u ! '
u e p d f< a fuel vi that nu. nth }h q pws u m nu " ; fuel abtment method Smce the new r a t. fud wmvay nw thod came mto effect. actual fuel costs
. > N l m n J cr 1. l' h l , i a h w oth's ch f t;.. ' f ud rate ' was (m. J i m w hat w e gi f1 4 d < me month cad.cr hme hen h a the amount bLJ The result was to reduce deferw i fue; expenv m W1 by approumately (W<>!ranqur al a n shN de tr;c fm I rate has b W WRPIO ken t h n a J We were wou. 91 t e nnp'v u dh th s nea .
Iea < m W pte',n .r 1. I m l b . Ns & B) Ihe new laa h Note C Dept,ciation wqu w a f uo ,a. '
- t > h m ,m d em , m bec t ate s Ihetus.
we &gge up,um 9 y gg g Im te syh m ; si n en o ne ch,cetahem y hfow i, the I ( M (- ) mu.,; p cmq m mepret a
- ame pn 'reny h a wmpwte dCPIC' ab 'n ! A ' Ibc cc mposde rate s one based on the Fud " ' '"A The rav Co :ndudes a factor W! m u e mar. 3 pw m t 6 o : , 4i n m da ;o"*""#none e e.p wg when w.' dgw of the m t % h i n i ~h. '
u'I i Fud inwm W WL 3 ue pn p *
- isWt e) a ni the cost et d3mant.mg and remoung 1,.,,. t aa i pn m......
I,m .atlu i,wer,t tu d d on the Iin ab's m ci t) The t r q;p' sie ta'e used m 19N was i 4 9 a ,. s, i.u.t
. m .13 ,
,n,.3.t h r s ( e.ci ., As me f un, . , .
43d b;r i e r
- m( 1D), the ra*e used hae. been 3 4'L .
,A i, t r a, t .4 . t (;,g', , 11. t} n ,qq,g 1,. I I , . :J. s- t ,s',3,,,
a cI Net' 1 !.m_ er rde :n liN) JJ m.' res'dt :n a h3d gpg mma- dHa c: :e m i 1%) rep. 4ted net income H e h o. ' - p>t a id p' ant ! eM fer futum use base
- s e oa n s. n s & pu y . .n wcs Ratestan g gfn,m 30
l l 18% to 8 33% are used for hydroelectnc property A rate depreciation method on penods piior to January 1.1979:' of 3 75% is used for plant held for future use. Th;s amount increased 1979 earnings per share by llc. In 1979, the PUCO a!kawed us to change the way we When a nuclear plant is retired frorn service, we wi!! ca', ulate deprectat;on for Davis Besse. We had been record-have add.tional costs to shut it down. These costs are ca!!ed ing depreciation on the plant based on its useful1:fe Under decommission:ng costs From 1979 through 1981, the the new method, we depreciate Davis Besse in the orm depreciat:on recorded for DavwBesse inc!uded a factor for portion of the electncity it produced dunng the accour:tmg these costs. The factor was determined in 1979 and 1980 period to the totalit is expected to produce oser its useful estimatmg that the decommissioning costs would be hfe. $20.000,000 in current dollars. The factor used in 1981 By usmg the new niethod, our net income and was based on an est: mate of $27,000.000. carnings per share were increased $5.089.000 and 13C, We ca!culate depreciation for our steam property by respectivelv. in 1979. If we had used the new method mult:p!ying our deprec:able property by a depreciation rate before 1979, the net mcome for poor years would have for each individual steam ticcount The depreciation rates been higher by $4,125.000 We added this amount to net used range from 2.22% to 3 42% incorne in 1979 as the " cumulative effect of change in Note O lederat income Tau federal incorne tat computed by mu!tiplying the income before taxes by the statutory rate of 46%, is reconciled to the amount prouded as fobws
% of % of % of pre Tax Pre-Tax Pre Tax 1981 income 19%0 incorne 1979 Income m.. mns mms uh-s of ( k ams) ef [ u .ve . .! I V,W ikn a stu vime twf are l'ederal mt ome f.tx and cumulatne efM t of accountmg change ___ $207.184 $152395 $142.461 h on to & mu >me wmputed at statutory rate _ UE55 46 0 $ 70 355 40 0 $ 65.513 46 0 Decicaws to tax due tai f u vu of tax depret tat:t.n os er b ul deprec anon (2,5%) (1 1) 4.201 28 4.377 3.1 hanc e for funds u .cd dunng construction _ 38.150 18 4 30.325 19 8 22.616 15 9 Ccitmo meibcads c ap:taiaed on the twie, 2.526 12 2.207 1a 3.73% 26 Oth.rdems 5.637 27 5.953 39 5 555 41 43.S35 21 2 42.746 2S O 36.536 25 7 lota i c.teral a ome ta = c= pense $ 51.450 24 8 $ 27.612 18 0 $ 28,927 20 3 I edcral mcome tax expense is shown in the mcome statement as follows 1981 1+0 1979 m, a m. n.n , a ..n m of [ W..n of1U.m , .t I V m liper eng lipenscs Cunent tax promon 5 23 boS $ 11244 $ 10.783 Chanon m ac(umulated deterred I cdcral mcome tas
! a cra:acd deprenavn and au cierated amortaaten 19.747 lo.lon 12.4n0 Temnaud protects (l.841) 21.944 -
( > hcr items 8 301 (254) (2 W N ink t-onet t! 13% t red.! dc!<rred, !c% ameunts amnitwd _ _ . 17.640 g 7.4 t.N 11m2 Teta!( haracd to operanng openses 67.575 41.574 3& 227 N.,noper.,nnq In< ome Cuncnt tas prmston _ (lb12N (13 %2; N 3Ni letM i edcra! neme tas open* $ 51.450 $ 27 012 $ 2A927 31
m otes to Consolidated Financial Statements in 14% we had a h m, for li detal maina> t a pur $upreme Court ir u essary pme, R:s happened pu < pal; because we dedutted hom In Januars 1W. the Company appea:ed the PUCO's tad:e :m om, ne co,t of fi,ur nude ir proms whKh were October 1981 order to the Oluo Supreme Court and raised temm ' "1 ;n imuan 1"So The wsu:tm ; hs we haJ that agam the :ssue of recovery of the term:nat on costs. We i.e.u we appM! as s:rt ta aNe munne m pt:or tears a!so base rmsed th:s issue m the f ast of the two rate cases lh. In i nw tax we pud in 1979. uni l'h] was desenbed in the secoral paragraph of Note N At I)etember 31,1981. 57.20EOO had been recovered ns i ed % mscwent ta ochs nt 513907M in and W.I sl.i M N t re'pn in.c: hce we ial a loss m IW L we through rates and rewrded in the mcome statement as o u:J not u-e am; mrtment tax oed.t in ihm scar het amonzson expense Accordng!y. at that date. W),598,000 n ent tas ( rebs w % h me .na!Pe to the Company mj of termmation costs were unretotered. As stated in Note hwe m it ho n um! amount t. , 57U 271M 60. We < an use 1), the term.nat:on costs were deducted un our 1980 tl 4 .unow .ts t< > h& c ta.x l A! n, Ihn > ugh 19 " > l ederal nuome tax return When the resultmg tax re-duction is of tset ag' a:nst the te rmination c osts, the net Not, E me,.2, sh.r . ooi. .adian umecosered amount 8 ieduced to s30.200.000 A cr>ntrattor who wused on these projects has c' aimed
'I h n eni cr . >f < > un L a shmes of < onumn sh (k < >t the
( 3,n q % c h.mqe d.an g th. var We (a'.culate canrnqs that we owe f um KiOOU.OOU for costs he incurred We
.1! < 1n d. .n ci.v y naniber . t shares < >ut are negit:stmg wuth the contractor to try to settle this
;o- t.
< ta: . o ihn u@ it te (ca[[ he w eghted .n t raqe shares matter We have a ieady pa.d more than $15.000.000
<ut> in; ni a ) , i d ti.e la .t thwe se.u s w ere towards the cla:m and this amount b .ncluded in the
.m,e .nn,,
EbEhl.OOO ment oned abuse. We bdeve that if we
.m. owe any addA ' E rnonev. :t would be substantia!!y less mj ;bsim 49qg than the amount clumed after credit for payments pN already made We behes e, based on the opinion of our counsel, that Not, F* Termin. sed Projects ultimatelv we show,.d not hat e to wrae off in one year the A , ,ta 'd al N c A. m bH) the CAID) Fo!npan es unamurtyed costs. h bMeVer, if ;t beComes unhkely that r.m m thea plans to u nstnu t four najear qcneiannq rehef can be ol ta:ned. then we would have to wnte off a!!
mt , lhe amount sp. nt on thoc pn y.rts through I h ember the unamortwJ costs (net of tax). Any amount deter-i.a, %ti %l.1 vt M1 'I be 14 JCO af. w ed ns to m:ned to be due the contrattot on his claim would sinularly 31 l'hl ri, om a:nn st a:! of th, e < osts thiou ih rates < haged to base to be wr:tten off. A wnte off m one year of the i na m n o,cr a lo svar pen. ,d bonnmq ! ate m July umecovewd termmation costs (net of tas) would have a l') N I ll t al st s < ! t . %' ! Us !s i dei!uct t!)CW (t 6ts m t}w tnaterla! ads erW cif o.! t an earn'ngs In the year it is made.
, onc statcn.cnt + an opetsnq e, pense over the same but would not base a matenal adverse effect on the fman-In , , e pm 41 ha.n e , -n) t he port.on of the term na cial cond.t:on of the Company.
t s .n i s i N w h . h hm e iv >t u t tven amoiwed in the mtome si ven . ni i, , amcJ < n 4 iur ha'am e sheet as "IMerred Cha% l; nano n/at Cost , of 'lenn.nated Pros tts" In JuN 1981 the ( N > %picme Coult tu:cd that the h 1 l ) d d ni >t hm auth 't J , under ()h;o law to auth.)nle ltic ('t 4!!j MrPl ! s le t i A cr !!1ew ( t ^ts tlM(ju'dl ra!es as a:iiq' ataele q w n w As a tesult. iti ()s tt .ber inSI the I'l Tl) r derolnshedo ontmue amortaatu in < >t the t i >sts
.u el t i icdia c inu rics A t ordmqh. but nt)t tii u t;te ott th. unann ut..cd am mnt u dhout f urther order l'h e r e t vi e .
- f. o w is i e pn .s aled on m.d att, t (K tuber 27.1481, the l'.onp mv wdus ed & rates ab. ut 0 M resu:tmq m an e' ecd $h,it h) (4 h l Ic.ia tain m annual icvenues We Mal s y *csl u1P .ItL ol !! n It I n U na',t m ((ht'. bus dN! thit to all i afly (Ilinic m lwt Un(Hlw i)r eaf tuli b lYr shaie 1 he l'ompans appea:e i the ( ho Supteme Couit rd t t. the l!n '.cd States Npwme Coutt in .lanuary l'N th it (k aa t rctu -cd < m pn s edura grounds tis hear 6 mt a;q al 1 he l's n j >.uiv a (t ait num] m the pt s n ced.m b
, W r Jt cil be ow h>- . k au% >ntatu m to tet a a cr the un.muoL iictni .af.s n ( . vs thn mqh rates We Wend
- t. > t am h r uc aun a appcah to the (!nded 5tates 32
Not. G n,.t umes. . now. Not. H L.....
% ws Intef ot At IM ernber 31. A> part of our operations, we have entered into the Due loued Twc IW1 1980 "**9 *
% a ab~ Type Remammy Terms 1%2 l'47 TO $ 20.000 5 20. f a t:
N,ucl car fuel 1%3 l<r/5 8 85 L
.>o 000 50 9 v i (a) 1983 A 1%o T4% ,4.700
, .,,4. D io Un:t trains 5-9 wars (b) 1%4 19 /./ 7 5'3% Offre space 6 years (tn 25'ou i 25.oi4i 1%4 A 1%o 12: 4%
30 000 30 of H I D.ita pro < essmq and Mmtly short term lea,es l w_, 1%o
.o ct /, 5.000 25 A no , ottce equ pment i havmg a fmed noncancelaNe 19W A 1960 11 M. 15291 1M291 #" " " ##'
19 % 19i1 T,1 25.ut 'a 25 MMI 1986-A 197: n 51 s't 4AlfMI 4.f 4 H) (4) We had a leaw be t'w f rst cure rl ti.w! at Dav:s 13 ewe thn>ufi the 19M B 197h 51 4't 1 J h 10 1.ot)O nWie of l'al The L iw f a rebad fuel wC :ast as lon; a3 it tak=w us n 19W 1%1 30 2(U n 'o 20.000 b" tb M Nr A r* ~ a 2 !<d*
- Pav re"t when"Cr the ful a lwA 1931 151 it 10.000 I """d ""o " Pdi d ""4 *"I *"* on h s a e d the U 19'Ab 19t ,9 7 ',1 ni Upot) 60 ot 4) "
l'89 1 1909 M ',1 lij it X ) .M (4M) M lht trin easn a, dude renewal eptions rhroyh 2011 The : ease 1992 1%1 l Y .1 20.000 -
'"' * ** " "" * " " *" d I " '" h
- W' F ""d 5 1991 1%8 1,T 30.000 30.000 pel p,59 4g When the PUCO determ:nes uhat rates are to be 21000 25 000 charged to our customers. tt includes the rents on all of the 2005 1970 WI 75 000 75,( m 2000 A 197n 70 14 000 14.u00 above leases as an operat:ng expense. Accordino'y, we ~
7o09 1974 met 50 000 50M io mo thow wns on our inmmq ,tatement as opaanng
/o09 A 1979 7 't, 50 nu i 51000 npenws Fmancial Account:ng Standard No.13 would
, 2009 H 1979 71 1an o 1.N n ) twat our leased nuc! car fuel and umt train coal dehvery
/009 C 1979 7L 1,0u0 1.000 equ:pment as thout;h we owned it. This would require us /010 19/5 i V,1 100 000 100 000 to record the propertes bemq leased as assets which would Ut il l 197n n ', % Izioini 125.14 H i bt' depreciated. A!si). we would have to record a long-terrri 2011 A 1%d (a) 4Nooo 4M.000 de bt for the promises to make lease payments, if this /011 B 19S1 M 22.200 accountmg treatment weiv foCowed, it would not result in zi)12 1977 Y,% 75 moo 75000 2013 any rnatenal changes in our balance sheet or our income 19 N 6 2n L 47 500 47.500 statement.
1.112.291 1.0 to 091 A:1 the payments we make for nudeur fuel and umt i ns .unnunt . i bsw d a s i un ent 20000 trains are recorded in balance sheet fuel accountt The costs il 092 291 $1.030 091 . In these accounts are transferred to fuel expense on the m-ie i w w.i n ,a ,,n o m i n s e a sm e raw t he nw on come statement (see Note A- Fuel) when the fuelis used we pg 57,93c@0 m 1981,57,240,&)0 in 1980 and
$$2ih $[[N Nbe,$7"* '#"'"
$8.932.000 m 1979 for nudear fuel and umt train lease,,
lease payments under all other leases were not material. I he uen si y J cn m, , m % sorasan.6euw Iha un tan , , beno>,*cvtan W an*e i bn;h,i rhan 141 ~l tw awnye ute olel n NWM e nonQn ms of a to ao i. Inore than one year We have to make the following pay-ments for these leases after December 31, 1981: I ust Mortgage Bonds are mued under our Mortgage t hat Mortgage ocates a dnect hen on a!must all the Year Amount pmpeitv we own and hanchus we hohl N- mom Ihe Collateral hedge Notes mcluded m the Statement 19S2 5 2.839 of Cap;tahzation were asued under an agreement signed in lW3 2.M39 1950 lhe agteement lets us twrow up to io0.th10,000 N4 2 "01 19S5 " mer a two year penod .T he : ,terest rate on any of the , 14 4 lettowmgs (annot tv higher than 15 <.,L. W,e bas e debreted No 1 100,000 A100 of our i.trst Modgage Bonds as secunty for Lare: N. ears h. '81S L,tal 510 us3 out obb,ption to pay the Couat ral Medge Notes issued under this agreement t hew bonds are not consiJeted to t c outstanJmg on our te, liowes ci. thev are out- W.e d,d not mc:.ude m the above table the payments standmg under our Mangage we Inust make on out hav:5-bsw nudear fuC) Teload wase Smce payments are made when fuel is used, we don't know when we wdl hate to make paynents flow-ever, we da know we must pay the lessor a rema:nmg total (4! bb,hN dh.M foI Ient 33
Notes to Consolidated Financial Statements Note I Serial Preferred and Preference Stock with pay (plus dividends accrued to the redemption dates) Mandatory Hedemption Provisions are as follows: Some of the Serial Preferred Stock we have issued is subject Redemption to mandatory redemption. These provisions require us to Senes Date Pnces buy back and retire outstanding shares on certain dates Prefened C July 31,1983 and pnor $110 00 The table bidow hsts those redemption obbgat:ons: August 1,1983 and Shares to thereafter $103 00-$101.00 be Redeerned Beg:nning Redemption Preferred E May 31,1956 and pnor $1.088 00 Senes Annuauv On Prices fa) June 1,1986 and thereafter $1,049.74- $1,000 00 C 10,000 8-1-84 5 100 L 3.000 tv1-81 $ 1.000 Preferred F February 28.1982 11 1,782 6185 $1.000 and pnor $1.055 00 1 1.969 b 1-86 $ 1,000 March 1.1982 and (a) I'tas dut,mds aanad to the redempron da,, thereafter $1,035 00- $1,000 00 Preferred G December 1.1983 through The total amount to be paid for these redeemed shares S vember 30,1984 $1.035 56 in each of the next fwe years is: December 1.1984 and 1982 $3.000.ON 1985 $5,782.000 thereafter $1.026 67- 51,000 00 1983 $3 000,000 1980 $7.751,000 June 1.1990 through Prefened H 1984 $4.tMLOOO May 31,1991 $1,068 68 If for some reason we cannot buy back the shares, the June 1.1991 and thereafter $1,06105- $ 1,000.00 unredeemed shares would be added to the next year's redemption obhgation. This would continue to be done Preferred 1 June 1.1991 through until the total obh<ption to redeem is met. May 31,1992 $1,068 68 Some of the Senal Prefened and Preference Stock we June 1,1992 and have issued includes a provision which requaes us to ask thereafter $ 1,061.05 - $1,000.00 the owners of that Stock whether they want us to huy hack Prefened J June 1,1981 through their shares, as fo!!ows- May 31,1987 $1.050 44 June 1.1987 and thereafter $1,037 83-$1,000 00 Shares Preference 1 August 1.1981 through Sub;ect to July 31,1982 $ 1,038.75 Purchaw Offer Purchase August 1,1982 and AnnuaHv ikymmng on Pnces thereafter $1,032 29- $1,000.00 Pretened Senes F 16 667 11 1-85 $ 1,000 Prefened Sees G 9 00 8184 $ 1.000 We can buy cack Series E before June 1,19S6 and Prefcence Senes 1 11.400 4184 $1,000 Series F before March 1,1982 only under certain cond:tions. If the owners decide to sell. we must redeem the shares Any bonowed money we use to buy back the shares can-four months after the date we offer to buy if they decide not be bonowed at an effective interest cost of less than to sell all the shares which we must offer to buy over the 8.8% for Series E and 7.5% for Series F. Also, we may next fwe yeats, we would have to pay for those shares not use money from the sale of other prefened stock or
$19,400,000 in both 1984 and 1985 and $36.067,000 stock ranking hqher than Serial Preferred Stock if its in 1986 effective dividend cost is less than 8.8% in the case of We have assured the owners of our Series F stock a Series E and 7.5% in the case of Senes F. Finally, we may minimum return on thea investment of 6 90% after not use money raised through the sale of stock which is deducting their Federalincome tax on the dividends re. junior to the Series E or F.
cened on the >tock. If certain income tax laws are changed Sales and retaements of Serial Preferred Stock with such that thra after-tax ictum is lower, we would have the mandatory redemption provisions during the three years option to do one of two things. We could buy back the ended December 31,1981 were as follows: Senes F at $1,000 per share plus accrued dandends or we Shares sold (Retaed) cocki exchange $cnes F for a new preferred stock The new stock would haw a dividend rate high enough to Ym Senes Pnces Shares provide a h96% after-tax retum- 1980 Pretened H $ 1.000 28,500 We have the nght to buy back and retae at certain Prefened 1 $ 1.000 31.500 1981 11mes diares of Sesial Piefened and Preference Stock Pretened J $ 1,000 29 000 which have mandatory redemption ptouts:ons The times Preferred K $ 1,000 10,000 when this may be done and the pnces we would haw t 34 Prefened E $1,000 (3.000)
l Note J seria: Preferred stock witho.t mandatory Stock Plan and the 1978 Key Employee Stock Option Plan Nrdeemption Proviolone are granted at 10(PL of the fair market value on the date of During the last three years, wc did not sell or buy back the grant. The shares which were actually bought during any shares of our Serial Preferred Stock which did not have thr three years ended December 31,1981 were sold at mandatory redemption provisions. However, we have the pt n prkes rang g hom $17.63 to $18.59. Shares under right to buy back and retire this Stock. The times when this utoandmg options held by employees were as follows: may be done and the prices (plus dividends accrued to the Key Employee redemption dates) are as follows: Incentive Stock Plan (a) Redemption 1981 1980 1979 Series Date Pnces Options Outstanding at December 31 Prefened A December 1,1981 and Shares 150,095 154.148 166,849 thereafter $102 50- $10100 Opnon Pnce $17.63 to $17.63 to $17.63 to Preferred B July 31,1982 and prior $106 35 $22 43 $22.43 $22.43 August 1,1982 and thereafter $103.78- $102 26 1978 Key Employee Stock Option Plan 1981 1980 1979 Note K Common Shares issued and Reserved for Issue Options Outstanding at Shares of Common Stock sold dunng the three years ended December 31 December 31,1981 were as follows: Shares 244.425 251,375 202,775 Option Pnce $16 94 to $16.94 to $17.88 to 1981 1980 1979 $20 25 $20 25 $20.25 Public Sale 3,500,000 4.000.000 4.500.000 (a) Under the terms of the Key Emplosee Intentwe Stock Plan, no Share Owner further opnons may be granted Accordingiv, only those shares relanny p,y,dend to phons utstanding ar December 31.1981 may be issued. Heinvestment and Stewk Purchu Plan __ 557,139 Note b Short-Term Borrowing Arrangensente 926.542 733.188 Employee Notes payable to banks and others were as follows: Savings Plan __ 264,605 218.902 164.988 Ernployee Thnft Plan 74,727 64.496 50.236 At December 31. Key Empk,yee Type 1981 1980 Incentwe Stoch 1%n iTwas a twi.ie 469 3.846 Total Bank Loans $19.400 $ 17,087 4 765.874 5.017.055 5.276.209 Commen ial Paper 75.900 149.850 ) In January 1982, the Company sold an additional $95.300 $166.937 [ 4,000.000 shares of Common Stock to the pubhc. Avadable bank cred;t arrangements are as follows: At December 31.1981, we had fwe stock purchase plans avadable for our employees and shate owners. The At December 31. I common shates which are set aside to be used for these D W8I " 80 plans (mcludmg unused stock options) are as follows- ' U"*"# #" Employev Savmqs Plan Bank Imes of cred.t (borrowings
-115.981 Employee Ihnft Plan at er near prime interest rate) $209,600 $169,600 604.102 Eurodollar revoking credit Share Owner DMdend Hemvestment and Stock Purchase 1%n agreement $30,000 $30,000 641.512 % nab lc intviest note , Kev Emp%ve incennve Stock ibn 55R250 (a) 1978 Kev tmpkee Stock Opoon Plan agreements $20,000 $20,000 600 000 2.51154') All borrowings under the Eurodollar agreement are made and paid back in U.S. dollars. Dere are no require-ments that minimum cash balances (compensatmg balances)
The Company plans to take acton. includmg share owncr be mamtamed at the banks mvolved. However, a fee of approval at the Apnl 1982 Annual Meetmg, to make an %% to %% per year is paid on any anused part of this a&btenal 3,000,000 shares available for u!e under the borrowing agreement. The interest rate on borrowmgs Employec Saungs Plan is %% above the rate which specified banks pay for Stock options held by empk)yees to purchase unissued Eurodollar depos:ts in the London mterbank market. shaies of Comnon Stock under the Key Employee incentwe Borrowings under the vanable interest rate agree-35
1
- otes to Consolidated Financial Statements mi nt must he pa.d bac k whenever the bank requests sus b customers an aJdmna! 146.(nun) in 1979. 547JU) 000 repayment Interes' is based on the rate for hyh qua:.ty :n 19no and $133.300.0U0 :n 1981.
c ommercia! paper in the 30 150 day n atunty range. la 1981. we asked the PUCO for another $130.000.000 Commercal paper and vanable interest notes out- increase The PUCO comp:eted pub:.c hearings early in stamhng are backed hv no less than an equal amount <! 1%2 Any increase granted would begm to be co!!ected :n unused bank i.ncs of crelt to ensure the Company's ar tv the f:rst quarter of 1982. We hate also mformed the PUCO to repay them that we wJl be weking an increase of another $221,00MO Any increase granted would go into effect early in 19S3 The unused port:on of the abe credt arran7 ment; On January 1.1979. the PUCO aMowed us to increase after di dur t.ng bank 1.nes held to cover outstanduq cone Meam rates by 25% . On January 1.1950, it aHowed us merna! paper and vanalde mterest notes amounted to ilR30)1RX) at December 31,19S1. anotha M increase m these rates Because of these inaeaws. we charged customers an add.tkmal 52,300.000
'i he aseiaqe dady c.nh holance m bank at touus wa., in 1979 and another i400.000 m 1%0. In January 1982, E 700.000 m 1951 and $5.700.000 in 1950 Th:s balance the M CO approwd another 47% increase which amounts sansf.ed mformal compensatmq ha! ant e arrangements maler whk h we ma,nta.n baLmces at banks of $3.(M),000 to approumati s 57.000.(X)0. In February 1982. we fded an appkaton for an ad& tonal annualincrease in steam to io.(N N1(ul, depend.ng on the amount we borrow rates of approumately 52A00.(KM Any mcrease granted wtU go mto effett late in lW2.
Nas, M commiim,oi. . a consins,acie. In add.tton to the abose, we have an apphcation for a We plan to iuH 11 S hb.n of new plant and eqmp rate mcrease covenng sales for resale to the Cleveland ment oser the next txe wars. Some of the matenal and mun;apal electnc system pendmg with the FERC. We sert x es needed to budd new plant and equ;pment must be began col:cctmg the reque,ted $2.300.000 increase in on!cred now s. :t wd be trady to be used when needed. September 1981 subwet in refund dependent on the At Decend er 31.19S1, suc h wnun tments amounted ter outcome of formal heanngt (S ristria ta n (YNf y11 i2t h .(h H I.14 h 6 i a, I ca i m hm. nt N n , es _ i n7Mdk O Non, O eroperty own,a with och,, uniiiii.. Adsant e onlers are na ess.uv in our busmess t huaDV Some c,f the generatmg un:ts which we own or are buildmg u v can t atu el < n<! cts but we runst (dten ]>ay the manufac are (wned with other utotics Each company owns an Inters hn what they lo(e a!!cadV spent fist labisr afid undisided shme m the ent:re un:t. Al the owners are inatenah a'id 9 anettines a penahV " tenants in common" Each company has the right to a We has e aqrn miuts to ! case nutlear fuil we expn t peicentage of the generatmg capab.hty of each un:t equal to ninl in the fut'are b ir up t(> appinMmatch $213.W MU M O. It > his ownersh;p share. We are obhgated to pay for our t he wst whx h the lesser has aheadv .nvested m nuclear share of the construtt:on and operating costs of each unit. matenal was iol ho7 I00 at Decendvi 31.1981 We me not responstde for the other owners' shares. Under two 'onq term wa! pun base ananqcments. we Udty Mant at December 31,1981 mcludes the foHowing have aqiced to quaramee the nunmq companies' loan facd4 ties owned as tenants m common w:th other utihties and l caw < hhgata ins At ()ct emhet 31.1981, the pnnopal aint tunt (if the ina ct g ( c ini[>anws' b om and L',he Uhhqats >ns Company () A nenh'p wasiNt91ojXX) lhider otw < d ti;s se arrangemerits, we C,onstr ut t.on att* lequ'Ied it) pat the nUning ((>rnpanV anV actual out- g4 ist [w ket id:e tinte expenses, as advalu e pa(ments for I Ah pe Cem :n hen ke m pr e m c rial, when the mmes are : die b r leav 'ns lieV< nid ths' ,7 g, ,gg i (nitti d i >l if w intmnq 0 4m}MnV ()as;s Besse 51 34 i N2.440 $ 1R171 Metal lawstuts and goscriiment ai tioris me pend.ng Hiute Mansf rid I o 50 24.503 540 agamst the Company We Ivhese. based on the opuuon of Bnu e Mat.eLi ' M 00 110.076 2.241 our counsel. that the U!t: mate dnpostun (d these manets Brua MuMd 3 24 47 l'35,373 911 N'*
- f UCv M 47 -
ND shi uht f u rt have a inaterial ads etse eth% t (m (mr t'naIKla! 3d4 703 P'm 1 Al II t und t 4 n. akhough an adserse t;nal deuvon m < crtain 901 15' l 'e n " ' il 11 mstan, es t ould have a mmenal ettect on int ome for the (A 50 1.23.0 ' I.aese5 100.105 peitod n1 wIut h it in L uts %et a i3un p d % rrye i kdti, h ti c Eant N) Ud 54.704_ 44 Noi, N n... m u m %, my
~
I he ITC() aliwed us tai rav eIectik ' '
- 4 bV 9 [I: On May K 19N. I y 9% i .n .lui 14.10SO and is IM on Separate depreoaton records me kept for Dans Bew Mas n.1%1 Because of these mcreae we thamed propeity and Seneca pmm The aaumulated depreoanon 36
for Davis-Besse at December 311981 was $30,923JXXL pension plans use this method. This method takes into The accumulated depreciation for Seneca at December 31, account changes in an employee's future camings. It results 1981 was $10.354,000. Depreciation on all other property in an orderly way to try to assure that adequate funds will owned with other utilities has been accumulated on a be available to pay future benefits. By using this method, composite basis along with all other depreciable electric the assets in the plan at January 1,1981 were about equal property rather than by specfic units of depreciable propeny. to our total future liabil: ties under the plan at today's value. Our share of the operating expense of properties owned Statement of Financial Accounting Standards No. 36 w:th others is included in our income statement. (FAS-36) requires us to disclose future liabilities ignoring increases in employees' future camings. Therefore, the dis-Note P re eione closures below, required by FAS-36. compare assets accumulated on one bads and liabilities determined on a We pay the full cost of a pension plan for our employees. different basis. We and our external pension consultants Under this plan, full-time employees who have worked at believe that the FAS 36 disclosures are mislead:ng because the Company at least hve years and retire between ages 55 they understate the amount which ultimately wi!! be needed and 70 recewe penMon payments from the pension fund-to pay all of the plans' benefits. We are making the follow-lhe empk>yee's pension payments depend on how lon9 ng disclosures only because we are required to do so. he worked with the Company and how much he comed However, as permitted under The Age Disenmination in Employment Act Amendments of 1978, an employee who At January I works past age 65 does not cam extra credit for that time. 1981 1980 l If he retires before age 62, his payments are reduced. The Padhoan o' dollarsi plan also pays benef ts when an employee dies or is disabled. Actuarial present Va!ue of We deposit money into the plan to cover the benefits Accumulated Plan Benefits: the employees earn currently We also deposit money to ' 8 III0 [j ,g 4 cover the benef>ts ansmq from amendments to the plan and adiustments for the investment performance of the pension 3134_ $114 fund 'n 1979, our total payment mto the pension fund W ue of assets held in plan $193 $163 was about $8,NX').000. We deposited another $9,300,000 in 1980 and $10.200MX)in 1981. Of these amounts, we Under both methods, the one which we use and the recorded on the income statement as an operating expense FAS-36 method, the expected return on the assets in the $5,687,0(X) in 1979. $6.132,000 in 1980 and $6,659.000 plan needed to pay all future benefits was 5% in 1979 in 1981. The remainder was recorded in the balance sheet and 6%% in 1980 and 1981. mostly as construction costs. The amount we put into the pension plan is based on an actumlal formula cal led entry age normal Eny private Note Q Quarterly Heemite of Operations (Unaudited) The following h a tabulation of the unaud:ted quarterly results of operations for the two years ended December 31,1981. Quarters Ended March 31 . lune 30 Sept. 30 Dec.31 ih m euetr.n+wam mo 19S0 Total operating recenues $217.433 $198.767 $247,326 $230.039 Nct operatmg income $ 30.047 $ 30.873 $ 49.440 $ 40.154 Net mtome $ 24.913 $ 25.052 $ 43.830 $ 31.587 fern np wadable for common semk $ 18.516 $ 18,598 $ 36,400 $ 24.157 Ascrage mmmon shares 41.398 41.645 43.860 46.147 Farmngs per common share $ .45 $ .45 5 .83 $ .52 1 _991 Total operating ies enues $229.625 $237.320 $297,783 $248.203 Net operat;ng income $ 38.930 $ 41.822 5 67.759 5 44.189 N<t inwme $ 27.801 5 32.117 5 56.872 5 38,944 Earnings avadabic for common stak $ 20.371 5 23.692 5 47.432 5 29.332 Ascrage mmmon shares 46.445 46.777 47.959 50,914 Farmnger common share 5 44 $ 51 5 .99 5 .58 37
Financial and statistical Review 1971 -1981 1981 19 0 1979 1OTAL OPERATING REVENUES 1012 9 to 8" sr* ~ 824 2' Res fentW 310.409 2M 737 237.6 Commerca! 263.608 220.677 194.8' Ind uer.ai 3x6.805 323.764 322.9i O'hcr Liecmc h Mes Sah for Resaw 39.912 e5 273 55.7' Steam Hw.tv1 12 196 15OM 13 nc TOTAL OPLRAUNG EXPENSES 820 226 743 n51 64 > I uel and Purchavd Power 362.W3 %9.M 345 Ot Other Operahrq Expc.ws 211.616 195 MO 163.5' Deprwomn and Amretuton 85.294 64 619 59.44 Ton (mi Than i ederal lacome Taxes 91.648 bl .630 79.4' Iedca:Intorne Taws 67 575 41.574 34 2; NET OPERATING INCOME 192 704 Im sis 135 4: NONOPERATING lNCOME 75 712 t'2 44d 47 6. Ahance for Equm;Iunds Used Dunnq Construction 44.970 40.*75 33 4 Income Statement Oma ;m,rnand Dedumns 26 742 21 NJ 14 l' tThousands of D<.iars! INCOME BEFORE INTU<LST CHARGES 26x 41n 212 45 > 193 to INTTRLST 1128x2 87 572 c'9 9 lnng and Short term In' wst 146.712 112.623 85 2' Aik>un c f..r Horrowed f unds Uwd Dunnq Constrstm _ !14 OVn (25 051) (15 7 INCOME BEJ Okt CUMUI ATiVE LEILCT OF ACCOUNTING CHANGE 155.734 125 3s3 113.5 Cuma:ame Ufect of Change in Dmrerutu en Me* hod on Penods Pnor to January 1. Ih79 -- - 4.1; NIT INCOME (a) 155 734 12.; 344 117 6' IHUT RRED AND PRfRRLNCL DIVIDE 1;D REQUIRLMINTS M 917 27 711 2s s LARN:NGS AVAllABE I OR COMMON STOCK 120x17 97 671 92f EARN NGS Pt R SHARE BEFORE CUMULATIVE UT ECT OF ACCOUNnNG CHANGE 5 2 52 5 2 Zo 5 2 CUMUL AllVL DTECT IH!OR .O JANUARY 1.1979 - - TOT AL LARNNGS PER SHARE (M (N 5 2 52 5 2 26 5 2-DIVIDI NDS PI R SH ARE (M 5 2(w $ 2 00 $ 1? TOTAL ASSETS 3 Joh 075 3 0'*4 4n2 2 6 N 7: Ut.hrv P .mt - Total 1610 FIS 3 215 3 N 2.M2.2 Accumu ated Ur.!q Plant Depreciat:on and Amort zation (621.3531 (557 #; h till 1 Oth.:t Property 23.870 21 13, 19 3 Currert and (hher Aswis 392 663 41; M5 3 M 21
********M" ' " " ^"" 2*7 Ilalance Sheet , 1 oog tom (kht 1.32x.404 1.211 523 9739 iCar end Preferred an,l Pu ference St<xk W.th Mmdwry Redeerpt.on Prousens 32s ono 2f,0 5"O 232'0 (16u sands .f I WaN Wahout Mandery RedempNn Provmons 95 071 95 071 95 o
(.,ommon 5tm I 4mfv 1 002.2(o 912.731 g,'O 4 lkierrvJ l cderaiIname la=cs 236 4,1 192 452 162.1. Current L.mMta s and Other CreJ>ts 41s.91 t 4221sn 395 p UT!11TY l'LAN T ADDITIONS (c) 409 277 3% oxi 329 3 LIUllTY Pl ANT RETIREME NTS 13.721 25 fio2 11 6 NUMBf R Of COMMON SHARLS 65) 51.0 % 503 4b 2W629 41 271.5 KWHH SA1 Es (TbueN 17 N17 N4 15159 7s4 19 0 to 4' Hm !wt.a! 4.375 752 4 463 147 43529 Comne u! __ 4.17M 459 4 14 d 990 4N11 Ir a tu,tna! R 279 7no M A2.172 9.268 m (hher Un< lodcs Mes for Hew.9 674973 1 Ass 445 13677 f I LCTRIC Ct N('Mt RS - YlAR I ND 711 415 710 6;7 7ox 2 Res a d e42.925 M2M5 t,41 M Conutcrcel 60 71I bo 070 58 6' in tus W 7,2% 1 7.210 72 (hh. 425 412 4 RLhlDE NilAl SAL I S DAT A Awsw Ker pa Cmt:wr 6sh 6 en o s' Aume Racnue NT Cust. enct 5 4oh % 5 48?5 09 5 357c OpcTating StatBlics Ausd R.wn ,e m Ker . 712C 6 05c 5-I l f CIRIC PROI O ' TION Nct Ava% forscru e Arm (Nuunds! 19v.%7 & 722 61n 19Mso Na Cienm%n 17297.523 1.5 325 94w I7 M.9 Nc' R.med from O'he,s 1 639 041 4 3"n W 2 575 n b f Kef A bCibM }o W }o bD In D I uvil 04 pet M!.! ion BIU 175 1i: 1% 93* 142 ' C.W Costp.-r14m 5 4h 7a 5 N 31 5 35. Anrt A N.t ha M n M n Load hW Esd Intenop*m _ 3 %2 Om 4M1Om 30979 Net Veni O;ul 6 ; - KW -- %.y End __ 4 024 oi s ' 4 5% ! = o 492o Sif AM H! A11NG Ms Pa .nA :Thm.unN 1 612 151 1 979 N7 2 Din > Cmt mm - W w Lnd 3 47 3h 3 i Mi'Lt M Ls - Yi AR l ND 5IW 4 WI 4+
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.The Cleveland Electric llluminating Company and Subsidianes Statement of income from continuing operations adjusted for -
changing prices for the year ended December 31,1981 (unaudited) - Conventional Constant Do!lar Current Cost Histoncal Average Average Cost 1981 Dollars 1981 Dollars - tr m nas e mi Revenue $1,012,930 $1,012,930 $1,012,930 Operanon expense 500.784 500,784 500,784 - 74,925 74,925 Mentenance expense 74,925 Depreciation and amortization 85,294 171.699 198.005 Taxes other than Federal income tax 91.648 91.648 91,648 Federal income tax 67.575 67,575 67,575 Nonoperatmg income (75.712) (75,712) (75,712) Interest expense 112.682 112.682 112,682 857.196 943.601 969 007 Net mcome - cont:nuing operations 5 155.734 $ 69.329 (a) $ 43.023(a) Increase in speahc pnces of property and plant (b) $ 309.198 Reducnon to net recoverable cost $ (149.290) (148.734) Increase in general prices (283 448) Increase in general prites in excess of merease in speaf:c pnces after the reduct:on to net recoverab!e cost (122.934) Gain from dechne in purchasmg power of net amounts owed 158,775 158.775 Net pnce les el adjustment i 9.485 $ 35.791 wFNtaNw' o.n to net remeraw mst ret nmnw ce> for 1%1 wou ha;e ban im.%u0m m constart dMars and 5(105.711 Ae in mnc i me um
- 9) At De, . 9 ci ll,1%1 the ( unent c v < >f pn pnts, p'n? rd equipment net of acc umuh i der rt :. arm was 55 OR126.00n whde ong;nal (net .-
vi n Mi < mt w w if W M2 Onn upplementary information concerning the effects of inflation As prescnbed by Statement of I mannal Account:nq Cunent cost data d:ffer from constant do"ar data Standants No. 31 we have prepared mformanon on the ma:nly because the pnces of assets have mcreased at rates effnts of mflanon on operanons Ihe methods used to different from the rate of generalinflation. compute th;s data are expenmental and subyct to change Revenues and Expenses by the lanannal Aa ounnng Standards Board .t.he(e data Rewnun and expen-es (except for depreciation) were do not reflect the iurrent value" of our aucts Thev do ^"un,ed to accumu! ate evenly throughout the year. No not measure a!! the effects of inf!at.on on our operanons or a4ustmi nu were made to the figures reported in the pieJxt our future (ash requ::cments The effects descnbed pnman,' hnancial <atements. No adjustments were made bere:n aie not rnognved for income tax or ratemakmg to I ederal income tax expense. pmpose Depreciation __ General Dw concant daar and current cost est: mates of property limtoncal costs ad'usteii fot general mfbnon are tefened to and p ant were determmed by app!v'ng the indices noted to as ienstant di>llarI The ongmal co4 of utity phnt and engnal et Hegawd depu-aanon rnems wm uced to certxn other items was conwited to c onstant do!!ars bv N app V:nq the ('Emsomer 'tWe {ndex for AU (Irhan Constimers b E ' N obtamed by appiv ng current depreciaton rates by account to the cost of these assets Current (ost data refi(ts the cost of cunent rep: ace to m e prope aM pbnt hgurn N dntay ye h inent ad ex;stmq awets O W (urtentcostofasst *4 was
- E I T 'UO depwaanon ra+cs to the awrage of beg:nmng and end-of.
estimated by applvmq the ilandv%tman Index of I'uhhc vear niunated deprec:aNe propertv. t 'tity Constro tion s Costs to the onq nal coct of structures and equyment bgPal co'i of land Was tiended usmq tbe Materials and Supplies Consumet Pnse in&x for A'! Utban Consumers Cer+a:n RMance sheet items such as f uel m stock matenals and other property was trended to cunent cost uung other suppl es were treated as cash tepc items Fuel inventory is industrV tudices
=_
The Cleveland Electric illuminatmg Company and Subsidiaries . Five-year comparison of selected supplementary financial data adjusted for effects of changing prices (unauditea) (Average 1981 Dollars) Year Ended December 31. 1981 1980 1979 1978 1977 ( rhousana. ncipr per share amounts) Revenue as reported $ 1,012,930 $893.566 $ 824.267 $717,092 $659.290 in 1981 constant dol:ars $ 1.012,930 $9S6.254 $ 1,032,798 $999.671 $989,480 Net income as reported - continning operations $ 155,734 $ 125.383 $ 113.534 in 1981 constant dollars 5 69,329 $ 57,352 $ 72.182 in 1981 cunent cost dollars $ 43,023 $ 26.808 5 38.154 i income (Loss) per Common Share as reported - contmumg operations ___ $ 2.52 $ 2 26 $ 2 31 m 1981 constant do!!ars 5 0.72 $ 0.62 $ 1.05 in 19M1 current cost do!iars 5 0.17 $ (0.09) $ 0.16 Net Assets at Year End as iept nt ed $ 1.002.206 $912.731 $ 820,411 at net recuserable cost $ 969,808 $ 962.183 5 972.075 Inocase m general prices in eu ess of increase in speofr pik es after re luct:on to net recocerah!c cost _ $ 122,984 $ 208,409 $ 237,690 Gain from dedne in pun.hasing power of not amounts owed $ 158.775 $208.206 $ 222.056 Cash Dividends Declared per Common Share as reported _ $ 2.0S $ 2.00 $ 1.92 $ 1.84 $ 1.76 m InSi comtant dohars _ $ 2 08 5 2.21 $ 2.41 $ 2 57 $ 214 Maiket Price per Common Share at Year End as reported __ $ 16 00 $ 14 63 $ 16 25 $ 16 88 $ 22 50 m 1981 <onstant dot:ars i 15 4S $ 15 42 $ 19.25 $ 22.66 $ 32.93 Average Consumer Prx e index 272 4 246 8 217.4 195.4 181.5 subwct to rapid tummer As suc h, we beheve the origmal Effects of inflation on the Company i ost of this item fairly represents its conent c ost Our 19S1 revenues increased despite the decime in unit Heduction to Net Recoverable Cost sales of eintneity, but revenues in constant dollars rema:ned Under Oh:o law. we can reemer only what we pa:d for a mt h same as in pnm gars Tius shows that inflation plant and equipment, so the va'ues of these items under ret ected in rates by the increasing cost of service was main!y toth constant dolu and unrent iost methods were reduced '# # " # f" '#'#""# 9"*' to the lower onqinal t ost amount t incmne fmin opaanons increased in 1981 on both constant doi lar and current cost bases The differences increase in General Prices in Execss of increase in between these measures and income as reported occurs Spnific Prices After Heduction to Net Recoverable Cost bet ause we are not pernutted to recover cunent cost The overall inocase m pnt es of om propeity and p! ant measures of depreaat:on through rates. Ohio law restricts exceeded the moease in genera: pnees as measmed bv the recovay of investment through depreciation charges to the Consum, r Pnce Indes for A'l l t r ban Consumers dunng ong:nal cost of plant. The part of cunent cost we couldn't 1981 Hownci. when the cmrent cost of plant was reduced recocer was only partia'iy offset by the gam from holdmg to the low er ongma: cost amoant. this "ga:n" from spec he cash type habines ptlee n teases was more than idf set. We hase to raise new .apital to meet growth needs at inflated costs of construct;on and to replace worn out items Gain from Da hoe in Purchasing Power of Net at hyher replacement costs. If rate ad;ustments fail to Amounts Owed compensate for the co3t of new cap.tal. especially dunng W:th mflanen, holdmg ceh tspe assets sut h as money and nmes of hyh mflation. a regular aosion of the return on ret ettaNn resuit3 m a loss m purchasmg power Hohng equ;ty wi!! oteur As a resuh. there wi:! be a regu!ar need cash tyv tabit.cs sus h as ;ong Nnn debt resu'ts in a gam for rate rdef. m parthasmg power Pic!ened stuk and defened tas We continue to seek proper and t:mely rate increases ba!aikes were Ircatt d as cash f)pe bab ' nes for t[ns aqd a regu!atory em tronment which is re<punswe to the (om;mtat.on 4g effats of inf: anon on our mvestors.
Beeraofoirectors Rncipal officers and Executives Leigh Carter (56) Robert M. Ginn (58) President Chairman, President and Chief Executive Offwer of Richard A. Miller (55) Executive Vice President Tremco, Inc., manufacturer of specialty chemical Harold L. Williams (55) Executive Vice President products and a wholly owned subsidiary of The B.F. Dalwyn R. Davidson (63)Vice President-System Goodrich Company Engineering & Construction Robert M. Ginn (58) John W. Fenker (55)Vice President-Power Supply President of the Company Robert J. Farling (45)Vice President Administrative Roy 11. Iloidt (61) Services Chairman and Chief Executive Officer of White Frank A. Kender (54)Vice President-Energy Consolidated Industries, Inc., manufacturer of products Application Services for the home, pnncipally major appliances, and Edgar H. Maugans (47)Vice President-Finance machinery and equipment for industry John J. Misic (60)Vice President Distnbution & Services John Lansdale, Jr. (70) right (52)Vice President Public Affairs Partner in the law firm of Squire. Sanders & Dempsey AI[n Richard A. Miller (55) Clement T. Loshing (58) Treasurer Executive Vice President of the Company Charles C. Chopp (46) Controller Karl 11. Rudolph (67) Andrew H. Felmer (58) Secretary Chairman of the Executive Committee and retired Newton D. Flack (56) Division Manager-Steam Cha:rman and Chief Executive Officer of the Company Power Division Craig H. Smith (56) President of the Industrial Group of Bendix Corporation. The industrial Group is a producer of machines and accessories for the metalworking industry. Also Chairman, President and Chief Executive Officer of The Warner & Swasey Company. a wholly owned subsidiary of Bendix Corporation Charles E. Spahr (68) Director of several cornpanies and retired Chairman and Chief Executive Officer of The Standard Oil Company (Ohio), manufacturer of petroleum products, chemicals and plastics and supplier of coal lierbert E. Strawbridge (64) Chairman and Ch:cf Executive Officer of The Ihgbec Company, a department store Richard H. Tullis (68) Chairman of the Executive Committee and retired Chairman and Chief Executive Officer of liarris Corporation, manufacturer of communication and information processing equipment liarold L. Williams (55) Executive Vice President of the Company
< ) .um ,
Ralph M. Hesse Chairman Ementus of the Board of Directors Elmer L. Lindseth Chairman Ementus of the Board of D: rectors 42
Ommittees of the Board of Directors Audit Committee The Aud;t Committee recommends Nominating Committee The Nominating Comm:ttee to the Board the firm of independent accountants to be recommends to the Board candidates to be nominated retair.ed for the ensuing year and reviews the results for election as directors at the annual meeting and to fill of the independent accountants' exammation of the any vacancies on the Board. When reviewmg potential Company's financial statements and the audit practices candidates, the Comm:ttee considers suggesnons made employed by the accountants and the Company. The by share owners. Committee oversees the estabhshment and admmistra- R H. Holdt (Cho:rman), L Carter, J Lansdale, Jr., tion by management of effettive internal account:n9 K H. Rudolph. C.R. Smith, C E. Spahr, controls and an accountmg system designed to produce II E. Strawbridge, R B. Tulhs financial statements which present faulv the financial
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position of the Company. Planning Committee The Planning Comm:ttee was C R. Smith (Cho rman), C E. Spahr, Ii E. Strawbndge, f nned in 1981 to advise and consult with management R H Tulbs and the Board on long-range strategic planning. Respon-sibilities of the Committee include recommending long-Compensation Committee The Compensation range objectives and the strategics, manpower and overall Committee reviews and approves the Company's corporate organization appropriate to meet those objectives. overall Compensation Plan, includmg the pension and R. Af. Gmn (Chairman), L. Carter, R. A. Ah!!er, employee sto(k plans, and. in part:cular, fixes the R.B. Tu!hs, H L. Wilhas .s remuneration of the Chairman hf any), President and all Vice Presidents
!I L. Strou bridae (Chairman). L Carter. R.H Itoldt, C R. Smith, C E Spahr. R H Tulbs Executive Committee The Execute.e Committee acts on beha!! of the Board at times other than regular Board meetings when it is impracticahte to call together the entire Boa:d The Comm:ttee has the same authonty as the Board, except that it may not elect officers (othcr than assistant secretanes and assistant ticasurers), fill vacanoes on the Board or on the becutne Committee or authon/c the issuance of fust mortgage bonds R II Rudolph (Chairman). L Carter. R bl. Gmn.
C E Spahr l'inance Committee Tbc Fmance Comm:ttee reviews and in ommends lonq range f mancial pohcies and ohectwes and speof:c at tions to achieve those chectn es The Comunttee, attmg for the Company as adnunistrator of the Company's Pensa m Plan and Im,estruent Program of the I mployee Savmgs Plan a!so reviews the invest-ment performance of the pension fund trustee, other pension fund mtestment managers and the f mployee Savmqs Plan trustee and estabhshes ohn twes for the mvestment of Pension Plan and Emplovce Savmgs Plan a sset t R A Sta!ct (Charman). R 51 Gmn. R H Holdt. R II RudSph. C C S;,ahr. H H lidh.s 43
Geomenowmeso Share owner dividend reinvestment and stock Common Stock purchase plan The Company has a Share Owner Lnted on the New York Midwest and Pac 10c Stock Dtvidend Re:nvestment and Stock Purchase Plan which Exchanges, unhsted trad:ng on the Boston. provides common stock share owners of record a Phi!adclphia-Balnmore Washington and Cincmnati convenient means of purchasing additional shares of Stock Exchanges. New York Stock Exchange Company common stock automaticallv at no additional symbol - CVX cost by muesting a part or all of the r quarterly dividends Preferred Stock and additional cash payments. Dividends reinvested in lasted on the New hk Stock Exchange. Company common stock under the Plan quahfy for the new tax savmq provisions of The Economic Recoverv Registrars Tax Act of 19SI informatacn and a prospectus relat:ng For Common Stock and Preferred Stock to the Plan may be obtamed hom Share Owner Services AmenTrust Company at the Company. Euchd Avenue and East 9th Street Form 10.K The Company wdl furrush to share Cleveland. Ohio 44114 owners, w:thout charge. a copij of its most recent Transfer Agents annual report to the Secunties and Exchange For Common Stock and Preferred Stock l Comnussion (f orm 10 K) and, upon payment of 3 The Cleveland Electnc !!Iuminating Company reasonah!c fee, a copy of each exhib:t to Form 10-K. Sharc Owner Serv:ces Requests should be directed to the Secretary of the P.O. Box 5000. Cleveland, Ohio 44101 Company Stock transfers may be presented at We:Is Fargo Independent Accountants Secunties Clearance Corporation. 45 Broad Street. Pnce Waterhouse 1900 Central National Bank New York, N Y.10004 Bu:hbog. Cleveland. Ohio 44114 Share Owner Inqu.iries Bond Trustee and Hegistrar Commumcat;ons regading stock transfer requirements. Morgan Guaranty Trust Company of New hk for all lost cert;hcates, daidends and changes of address Senes. should be duected to Share Owner Services at the Company To reach Share Owner Services by phone. Communications regardmq bond reg:strat;on requaements and fost i ertthc ates should be d:rected to M the Mowing numbers: Monpn Guarantv Tru,t Company of New Wrk. 30 Local Caus in West thoadwav. New Wrk. N.Y 10015 C!eveland area 622 0800. ext 2325 Ekenbere Bond Paving Agents 06 1 MO &2 423' Manufacturers Hanover Tiust ( ompany. 90 Wa:1 Street. New York. N Y.10015 aiul Amerilrust (;>mpany. NO G* I'#'!UI Dh Euc hd Awnue and East 9th Street Cleveland. Oh:o P case have your account number ready when calbng. 44114 -- Co pavmg agents for thf Executive Offices Mail Address 3't, Senes, Due 1982 3'T, Senes. Due 1989 illuminatmg Budding Post Ofhce Box 5000 2.\1 Senes. Due 1985 3',1, senes. Due 1993 c,r> PuW Swe Gevded. ONo 44101 3\1, Senes. Due 19Sh 4',1, Senes. Due 1904 O @ nd. Oho Morgan Guarantv Trust Company of New Wrk. 30 Telephone Number (216) 622-9800 We~t thoadway. New Wk. N Y 10015 --for the S 85% Senes, Due 19S3 1570 Senes. Due 1992 The annual meeting of the share owners of the 7 bb'I, SetWs, l)ile IW4 87In Series f)tle 2005 ComparW wNI be he!d on Apnl 27,1982. Owners of 12',%
/ Senes. Due loS4 A WL Senes. Due 2004 common stock as of February 26. loS2. the record date 11'9% Senes Due 14S5 A 0 85% Senes. Due 2010 for the meetmg. wdiIv ent:tled to vote on the issues 15',% Senes. Doe lw9 A 8%% Seiies. Due 2011 The ofhcial nonce, proxy statement and proxy wdl be 7',% Senes. Due 1900 Si% Senes. Due 2012 maded to share owners on or about March 18.1982.
8%% Senes. Due 1991 Ingmnes regardmg mterest pasments shonM be d rected Notice: The annua: report and the hnandal statements to CMher Manuf acturces I f anmer I' rust Company or herem are for the genera: mformat:on of the share Monpn Go.uantv liust Compane of New WL for the owners of the Company and are not intended to be senes of bon..t for wh:ch eat h acts as paymg agent as used in connet ton with any sale or purchase of noted ahose sec unnes 44
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THE CLE\/ ELAND ELECTRIC ILLUMINATING COMPANY P.O. Box 5000 Cleveland, Ohio 44101
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