____________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(Mark One)
{X}ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED) for the fiscal year ended December 31, 1994
OR
{ }TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED) for the transition period
from _________ to 5313 __________.
Commission file number 1-2578
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
OHIO EDISON SYSTEM SAVINGS PLAN
B. Name of issuer of the securities held pursuant to
the plan and the address of its principal executive
office:
OHIO EDISON COMPANY
76 SOUTH MAIN STREET
AKRON, OH 44308
Required Information
1. Financial statements with respect to the Ohio Edison System Savings
Plan as of December 31, 1994 and 1993, prepared in accordance with the
financial reporting requirements of the Employee Retirement Income Security
Act of 1974, as amended, together with the report and consent of independent
accountants.
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
REPORT ON AUDITS OF FINANCIAL STATEMENTS
----------------------------------------
AND SUPPLEMENTAL SCHEDULES
--------------------------
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
----------------------------------------------
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
--------------------------------------------------------
PAGE
----
REPORT OF INDEPENDENT ACCOUNTANTS 2
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS AS OF
DECEMBER 31, 1994 AND 1993 3-6
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS 7-8
FOR THE YEAR ENDED DECEMBER 31, 1994
NOTES TO FINANCIAL STATEMENTS 9-14
SUPPLEMENTAL SCHEDULES:
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF
DECEMBER 31, 1994 15
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR
ENDED DECEMBER 31, 1994 16
ALL OTHER SCHEDULES ARE OMITTED SINCE THEY ARE NOT APPLICABLE OR ARE NOT
REQUIRED BASED ON THE DISCLOSURE REQUIREMENTS OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974 AND APPLICABLE REGULATIONS ISSUED BY THE
DEPARTMENT OF LABOR.
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Savings Plan Committee of the
Ohio Edison System Savings Plan
We have audited the accompanying statements of net assets available for plan
benefits of the Ohio Edison System Savings Plan (the "Plan") as of
December 31, 1994 and 1993, and the related statement of changes in net
assets available for plan benefits for the year ended December 31, 1994.
These financial statements and the supplemental schedules referred to below
are the responsibility of the Savings Plan Committee. Our responsibility is
to express an opinion on these financial statements and supplemental
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by the Savings Plan Committee, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan
as of December 31, 1994 and 1993, and the changes in net assets available for
plan benefits for the year ended December 31, 1994 in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions, as of and for the
year ended December 31, 1994, are presented for purposes of additional
analysis and are not a required part of the basic financial statements but
are supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The Fund Information in the statement of net assets
available for plan benefits and the statement of changes in net assets
available for plan benefits is presented for purposes of additional analysis
rather than to present the net assets available for plan benefits and changes
in net assets available for plan benefits of each fund. The supplemental
schedules and Fund Information have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion,
are fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
COOPERS & LYBRAND, LLP
Cleveland, Ohio
June 16, 1995
- 2 -
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------
As of December 31, 1994
COMPANY CAPITAL ESOP
COMMON STOCK PRESERVATION S&P 500 UNALLOCATED SMALL CAP BALANCED
FUND FUND INDEX FUND FUND FUND FUND
------------ ------------ ---------- ----------- --------- --------
ASSETS
- --------------------------
CASH/CASH EQUIVALENTS $ 2,222,401 $ 7,573,415 $ 0 $ 12,206,134 $ 0 $ 0
COMPANY COMMON STOCK 19,152,921 0 0 173,981,567 0 0
GUARANTEED INSURANCE CONTRACTS 0 51,670,032 0 0 0 0
COLLATERALIZED MORTGAGE OBLIG. 0 9,968,352 0 0 0 0
DOMESTIC EQUITY STOCKS 0 0 37,523,598 0 0 0
INTERNATIONAL EQUITY STOCKS 0 0 0 0 0 0
SMALL-CAP STOCKS 0 0 0 0 127,136 0
BALANCED FUND SECURITIES 0 0 0 0 0 58,746
PARTICIPANT LOANS 0 0 0 0 0 0
INTEREST & DIVIDENDS RECEIVABLE 397,569 381,619 0 3,581,599 0 0
EMPLOYER CONTRIBUTIONS RECEIVABLE 0 0 0 3,854,319 0 0
---------- ---------- ----------- ------------ -------- -------
TOTAL ASSETS 21,772,891 69,593,418 37,523,598 193,623,619 127,136 58,746
LIABILITIES
- --------------------------
ACCRUED INTRA-FUND TRANSFERS (20,000) 500 0 8,874,426 0 (500)
LOAN PAYABLE 0 0 0 199,850,000 0 0
ACCRUED FEES 1,876 6,456 2,654 0 630 2
ACCRUED INTEREST EXPENSE 0 0 0 19,985,000 0 0
----------- ---------- ----------- ------------ -------- -------
TOTAL LIABILITIES (18,124) 6,956 2,654 228,709,426 630 (498)
----------- ---------- ----------- ------------ -------- -------
NET ASSETS (DEFICIENCY) AVAILABLE
FOR PLAN BENEFITS $21,791,015 $69,586,462 $37,520,944 $(35,085,807) $126,506 $59,244
=========== =========== =========== ============ ======== =======
The accompanying notes are an integral part of these financial statements.
- 3 -
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------
As of December 31, 1994
(Continued)
ESOP INTERNATIONAL
ALLOCATED INDEX LOAN PAYSOP
FUND FUND FUND FUND TOTAL
------------ ------------ ---------- ----------- -----------
ASSETS
- --------------------------
CASH/CASH EQUIVALENTS $ 30 $ 0 $ 0 $ 218,977 $ 22,220,957
COMPANY COMMON STOCK 21,421,754 0 0 3,145,08 217,701,322
GUARANTEED INSURANCE CONTRACTS 0 0 0 0 51,670,032
COLLATERALIZED MORTGAGE OBLIG. 0 0 0 0 9,968,352
DOMESTIC EQUITY STOCKS 0 0 0 0 37,523,598
INTERNATIONAL EQUITY STOCKS 0 5,617,830 0 0 5,617,830
SMALL-CAP STOCKS 0 0 0 0 127,136
BALANCED FUND SECURITIES 0 0 0 0 58,746
PARTICIPANT LOANS 0 0 5,248,141 0 5,248,141
INTEREST & DIVIDENDS RECEIVABLE 439,750 0 0 40,360 4,840,897
EMPLOYER CONTRIBUTIONS RECEIVABLE 0 0 0 0 3,854,319
----------- ----------- ----------- ------------ ------------
TOTAL ASSETS 21,861,534 5,617,830 5,248,141 3,404,417 358,831,330
LIABILITIES
- --------------------------
ACCRUED INTRA-FUND TRANSFERS (8,874,426) 20,000 0 0 0
LOAN PAYABLE 0 0 0 0 199,850,000
ACCRUED FEES 440 969 0 0 13,027
ACCRUED INTEREST EXPENSE 0 0 0 0 19,985,000
----------- ----------- ----------- ------------ ------------
TOTAL LIABILITIES (8,873,986) 20,969 0 0 219,848,027
----------- ----------- ----------- ------------ ------------
NET ASSETS (DEFICIENCY) AVAILABLE
FOR PLAN BENEFITS $30,735,520 $ 5,596,861 $ 5,248,141 $ 3,404,417 $138,983,303
=========== =========== =========== ============ ============
The accompanying notes are an integral part of these financial statements.
- 4 -
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------
As of December 31, 1993
COMPANY CAPITAL ESOP
COMMON STOCK PRESERVATION S&P 500 UNALLOCATED
FUND FUND INDEX FUND FUND
------------ ------------ ---------- -----------
ASSETS
- --------------------------
CASH/CASH EQUIVALENTS $ 16,989 $ 4,991,209 $ 0 $ 11,451,125
COMPANY COMMON STOCK 24,148,802 0 0 224,705,140
GUARANTEED INSURANCE CONTRACTS 0 31,262,253 0 0
COLLATERALIZED MORTGAGE OBLIG. 0 27,536,831 0 0
DOMESTIC EQUITY STOCKS 0 0 36,655,661 0
INTERNATIONAL EQUITY STOCKS 0 0 0 0
PARTICIPANT LOANS 0 0 0 0
INTEREST & DIVIDENDS RECEIVABLE 402,013 363,825 3,332 3,734,305
EMPLOYER CONTRIBUTIONS RECEIVABLE 0 0 0 3,842,721
EMPLOYEE CONTRIBUTIONS RECEIVABLE 34,512 221,962 155,076 0
REIMBURSEMENTS RECEIVABLE 0 4 0 0
----------- ----------- ----------- ------------
TOTAL ASSETS 24,602,316 64,376,084 36,814,069 243,733,291
LIABILITIES
- --------------------------
ACCRUED INTRA-FUND TRANSFERS 7,368 114,748 (59,191) 7,951,503
LOAN PAYABLE 0 0 0 199,850,000
ACCRUED INTEREST EXPENSE 0 0 0 19,985,000
----------- ----------- ---------- -----------
TOTAL LIABILITIES 7,368 114,748 (59,191) 227,786,503
----------- ----------- ----------- ------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $24,594,948 $64,261,336 $36,873,260 $ 15,946,788
=========== =========== =========== ============
The accompanying notes are an integral part of these financial statements.
- 5 -
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------
As of December 31, 1993
(Continued)
ESOP INTERNATIONAL
ALLOCATED INDEX LOAN PAYSOP
FUND FUND FUND FUND TOTAL
------------ ------------ ---------- ----------- -----------
ASSETS
- --------------------------
CASH/CASH EQUIVALENTS $ 676,369 $ 0 $ 0 $ 229,423 $ 17,365,115
COMPANY COMMON STOCK 16,886,061 0 0 4,201,647 269,941,650
GUARANTEED INSURANCE CONTRACTS 0 0 0 0 31,262,253
COLLATERALIZED MORTGAGE OBLIG. 0 0 0 0 27,536,831
DOMESTIC EQUITY STOCKS 0 0 0 0 36,655,661
INTERNATIONAL EQUITY STOCKS 0 3,638,224 0 0 3,638,224
PARTICIPANT LOANS 0 0 4,377,055 0 4,377,055
INTEREST & DIVIDENDS RECEIVABLE 280,480 21 0 52,602 4,836,578
EMPLOYER CONTRIBUTIONS RECEIVABLE 0 0 0 0 3,842,721
EMPLOYEE CONTRIBUTIONS RECEIVABLE 0 31,092 0 0 442,642
REIMBURSEMENTS RECEIVABLE 0 0 0 711 715
----------- ----------- ----------- ------------ ------------
TOTAL ASSETS 17,842,910 3,669,337 4,377,055 4,484,383 399,899,445
LIABILITIES
- --------------------------
ACCRUED INTRA-FUND TRANSFERS (7,951,503) (25,285) (37,640) 0 0
LOAN PAYABLE 0 0 0 0 199,850,000
ACCRUED INTEREST EXPENSE 0 78 0 0 19,985,078
----------- ----------- ----------- ------------ ------------
TOTAL LIABILITIES (7,951,503) (25,207) (37,640) 0 219,835,078
----------- ----------- ----------- ------------ ------------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $25,794,413 $ 3,694,544 $ 4,414,695 $ 4,484,383 $180,064,367
=========== =========== =========== ============ ============
The accompanying notes are an integral part of these financial statements.
- 6 -
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
--------------------------------------------------------------
For the Year Ended December 31, 1994
COMPANY CAPITAL ESOP
COMMON PRESERVATION S&P 500 UNALLOCATED SMALL CAP BALANCED
STOCK FUND FUND INDEX FUND FUND FUND FUND
----------- ------------ ----------- ------------ --------- --------
EMPLOYEE CONTRIBUTIONS $ 1,066,702 $ 7,184,068 $ 4,700,784 $ 0 $ 6,524 $ 3,567
EMPLOYER CONTRIBUTIONS 0 0 0 3,854,319 0 0
INTEREST INCOME & DIVIDENDS 1,648,671 4,389,314 0 14,411,894 0 0
INTEREST EXPENSE 0 0 0 (19,985,000) 0 0
FEES (1,863) (40,156) (6,472) 0 (630) (3)
EXCESS (DEFICIENCY) OF NET
PROCEEDS OVER MARKET VALUE
AT BEGINNING OF YEAR:
AGGREGATE PROCEEDS 3,570,672 249,257,712 4,748,908 9,927,540 0 0
AGGREGATE COST 4,328,205 249,257,712 4,723,891 10,754,835 0 0
----------- ------------ ----------- ------------ -------- -------
NET EXCESS (DEFICIENCY) (757,533) 0 25,017 (827,295) 0 0
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION)
ON SECURITIES (3,810,489) 0 506,210 (41,021,853) 2,531 308
DISTRIBUTIONS TO
PARTICIPANTS (1,604,499) (5,654,282) (3,074,029) 0 0 (4)
NET INTRA-FUND PLAN TRANSFERS 655,078 (553,818) (1,503,826) (7,464,660) 118,081 55,376
----------- ----------- ----------- ------------ -------- -------
NET CHANGE IN PLAN EQUITY (2,803,933) 5,325,126 647,684 (51,032,595) 126,506 59,244
NET ASSETS AVAILABLE FOR
PLAN BENEFITS - BEGINNING
OF YEAR 24,594,948 64,261,336 36,873,260 15,946,788 0 0
----------- ----------- ----------- ------------ -------- -------
NET ASSETS (DEFICIENCY) AVAILABLE
FOR PLAN BENEFITS - END OF YEAR $21,791,015 $69,586,462 $37,520,944 $(35,085,807) $126,506 $59,244
=========== =========== =========== ============ ======== =======
The accompanying notes are an integral part of these financial statements.
- 7 -
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
--------------------------------------------------------------
For the Year Ended December 31, 1994
(Continued)
ESOP INTERNATIONAL
ALLOCATED INDEX LOAN PAYSOP
FUND FUND FUND FUND TOTAL
----------- ------------ ----------- ------------ ------------
EMPLOYEE CONTRIBUTIONS $ 0 $ 1,212,202 $ 0 $ 0 $ 14,173,847
EMPLOYER CONTRIBUTIONS 0 0 0 0 3,854,319
INTEREST INCOME & DIVIDENDS 1,824,919 133 288,225 265,277 22,828,433
INTEREST EXPENSE 0 0 0 0 (19,985,000)
FEES (440) (1,092) 0 0 (50,656)
EXCESS (DEFICIENCY) OF NET
PROCEEDS OVER MARKET VALUE
AT BEGINNING OF YEAR:
AGGREGATE PROCEEDS 1,080,481 543,046 0 278,197 269,406,556
AGGREGATE COST 1,309,315 514,298 0 334,207 271,222,463
----------- ----------- ----------- ------------ ------------
NET EXCESS (DEFICIENCY) (228,834) 28,748 0 (56,010) $ (1,815,907)
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION)
ON SECURITIES (3,038,706) 268,769 0 (733,321) (47,826,551)
DISTRIBUTIONS TO
PARTICIPANTS (1,080,492) (291,733) 0 (554,510) (12,259,549)
NET INTRA-FUND PLAN TRANSFERS 7,464,660 685,290 545,221 (1,402) 0
----------- ----------- ----------- ------------ ------------
NET CHANGE IN PLAN EQUITY 4,941,107 1,902,317 833,446 (1,079,966) (41,081,064)
NET ASSETS AVAILABLE FOR
PLAN BENEFITS - BEGINNING
OF YEAR 25,794,413 3,694,544 4,414,695 4,484,383 180,064,367
----------- ----------- ----------- ------------ ------------
NET ASSETS (DEFICIENCY) AVAILABLE
FOR PLAN BENEFITS - END OF YEAR $30,735,520 $ 5,596,861 $ 5,248,141 $ 3,404,417 $138,983,303
=========== =========== =========== ============ ============
The accompanying notes are an integral part of these financial statements.
- 8 -
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
December 31, 1994 and 1993
--------------------------
1. Description of the Plan
-----------------------
The Ohio Edison System Savings Plan (the "Plan") provides eligible
employees of Ohio Edison Company (the "Company") and its wholly-owned
subsidiary, Pennsylvania Power Company ("Penn Power"), a mechanism through
which they can save and invest part of their income on a tax deferred basis
at regular intervals. Additionally, the Company and Penn Power (the
"Companies") may match employee contributions with shares of Company common
stock (see Note 4) held in the Employee Stock Ownership Plan ("ESOP").
Employees may invest their contributions in other investment options (the
"Funds"). All contributions made to employees' accounts are fully and
immediately vested in the Plan. The purpose of the Plan is to encourage
employees to adopt a regular savings program and to provide additional
security for retirement. The following is a brief description of the Plan
and is provided for general information purposes only. Employees should
refer to the Plan documents for more complete information.
The Plan is a qualified profit-sharing plan under Section 401(a) of the
Internal Revenue Code of 1954, as amended (the "Code"), and provides for
salary reduction contributions under Section 401(k) of the Code. In general,
plans established pursuant to Section 401(k) of the Code permit eligible
employees to defer current Federal and, subject to applicable laws, state and
local income taxes on the portion of their current compensation represented
by the amount of the salary reduction elected. The amounts, as elected by
the employees, are contributed to the Plan by the Companies through payroll
deductions.
The Plan is subject to Title I of the Employee Retirement Income
Security Act of 1974 (ERISA) but not Title IV because it is an "individual
account plan". Title I establishes reporting and disclosure requirements,
minimum standards for participation, vesting and benefit accrual,
prohibitions governing the conduct of fiduciaries and provides that ERISA
preempts other federal, state and local statutes relating to employee
benefits. The protective benefits of Title IV which relate to insuring
pension benefits by the Pension Benefit Guaranty Corporation are not
applicable to individual account plans.
Every employee of the Companies was eligible to become a participant in
the Plan, herein referred to as "employee" or "Member", when he or she had
completed one year of service prior to December 5, 1994. After December 5,
1994, every employee of the Companies is eligible to become a participant in
the Plan immediately.
Employees may participate in one or more of the Funds through deferral
of compensation. The choice of investments (except the Companies' matching
- 9 -
contributions, which are in the form of Company common stock) are the
responsibility of the individual employee. Transfers between funds are the
responsibility of the employee and may be made on a daily basis.
Securities in the ESOP Account
- ------------------------------
The ESOP purchased a total of 10,654,114 shares of Company common stock
from November 1990 to December 1991 for the purpose of funding the Company's
matching contribution to the Plan.
The Plan borrowed $200 million, referred to herein as the "ESOP Loan",
at a rate of 10% from the Company to fund the purchase of the stock. The
ESOP Loan is collateralized by the unallocated Company common stock acquired
with the proceeds of the ESOP Loan. The ESOP Loan is expected to be repaid
by December 2005, with the first and second yearly principal payments taking
place in 1998 and 1999 at $5,700,000 and $11,400,000, respectively. Interest
payments on the loan are made annually. Additionally, principal payments may
be made sooner if additional shares of Company common stock are needed for
distributions to Members.
ESOP Allocation
- ---------------
Each Member's ESOP allocation will be computed at the end of each pay
period based on the Company's matching contribution (see Note 4) and on the
quoted market price of the Company common stock when allocated to the
participant's account. As of December 5, 1994, the ESOP allocation will be
computed the Thursday following the end of each pay period.
As principal and interest payments are made on the ESOP Loan, shares of
the Company common stock are released from the ESOP Unallocated Fund and
transferred to the ESOP Allocated Fund where they are made available for
distribution to Members.
During 1994 and 1993, respectively, 394,174 and 341,405 shares of
Company common stock were allocated to Members. An additional allocation of
95,041 and 47,641 shares in 1994 and 1993, respectively, of Company common
stock were made relative to reinvestments of dividends on the Company common
stock. These shares were subsequently released from the ESOP Unallocated
Fund in February, 1995 and 1994 when the Plan made interest payments of
$19,985,000 in each year, which released 472,740 shares in each year to the
ESOP Allocated Fund for distribution to Members.
As of December 31, 1994 and 1993, the status of the Company common stock
was as follows: 9,404,409 and 9,877,149, shares respectively, of Company
common stock in the ESOP Unallocated Fund at market values of $173,981,567
and $224,705,140, respectively, and 1,157,933 and 742,244 shares,
respectively, of Company common stock held in the ESOP Allocated Fund at
market values of $21,421,754 and $16,886,061. The market value of the
Company common stock is measured by the quoted market price.
PAYSOP
- ------
A component of the Plan consists of a qualified payroll-based tax credit
employee stock ownership plan (PAYSOP) under Section 401(a) and Section
501(a) of the Code.
- 10 -
Under the Economic Recovery Tax Act of 1981, effective January 1, 1983,
tax credits were based upon eligible employee compensation. The regulation
permitted the Companies to contribute to the Trust a maximum of one-half of
one percent of the aggregate compensation of eligible employees and claim a
tax credit on its consolidated Federal income tax return equal to this
amount. The amounts allocated to eligible employees were based upon the
proportion of their wages and salaries (to a maximum of $100,000) to the
wages and salaries of eligible employees for the year.
The Tax Reform Act of 1986 eliminated the PAYSOP tax credit with respect
to compensation earned in 1987 or later years. As a result, the Companies
have not contributed to the PAYSOP after the 1986 contribution other than the
reimbursement of PAYSOP administrative expenses.
Dividends are paid annually to Members in the PAYSOP. The market value
of the common stock in the PAYSOP is measured by the quoted market price.
2. Summary of Accounting Policies
------------------------------
The excess (deficiency) of net proceeds over market value under the Plan
is recognized upon the sale of investments generally in connection with the
termination or withdrawal from the Plan by Members. Unrealized appreciation
or depreciation, equal to the difference between the cost and the market
value of investments at the applicable valuation date, is recognized in
determining the value of Member accounts. The excess (deficiency) of net
proceeds over market value calculation methodology is based on the revalued
cost of assets instead of historical cost. The revalued cost is the market
value of an asset at the beginning of the Plan year or at the time of
purchase during the year.
The financial statements have been prepared on the accrual basis of
accounting. All administrative expenses of the Plan were paid by the
Companies prior to December 5, 1994. Effective December 5, 1994, however,
investment management fees will be deducted from investment returns.
3. Plan Termination
----------------
Although the Companies expect that the Plan will be permanent, the
Companies reserve the right to discontinue or terminate the Plan at any time.
If the Plan should be terminated, in whole or in part, Members will be
entitled to withdraw the full value of their accounts, to the extent allowed
by law.
4. Contributions
-------------
Employer Contributions
- ----------------------
The Companies pay a matching contribution of 50% on the first 6% of
compensation contributed by an employee. In addition, the Companies may
designate a number of performance objectives and contribute an additional 5%
for each objective achieved, up to a maximum of 25%. The Companies'
contributions are always invested in Company common stock.
The Companies' contributions have been pre-funded by the Company common
stock held by the ESOP unallocated fund. These shares of Company common
- 11 -
stock earn dividend income and are subject to unrealized appreciation and
depreciation as the market value of the Company common stock fluctuates. The
dividend income serves to pay the ESOP loan and related interest, which
results in the release of shares to the ESOP allocated fund as the Companies'
matching contribution. To the extent dividend income is not sufficient to
pay the ESOP loan and interest, the Companies will contribute cash which is
reflected as employer contributions in the statement of changes in net assets
available for plan benefits.
Employee Contributions
- ----------------------
After December 5, 1994, employees may invest between 1% and 15% of their
salary in the Plan. Prior to this, employees were able to invest between 1%
and 12% of their salary in the Plan. Employee contributions may be made on
a before-tax and/or after-tax basis. Under the before-tax option, deposits
are deducted from currently taxable income but are taxable when they are
withdrawn from the Plan. The Tax Reform Act of 1986 limits the maximum
annual before-tax contribution to $9,240 and $8,994 for 1994 and 1993,
respectively. Prior to age 59-1/2, an active employee may withdraw before-
tax deposits only under certain hardship conditions (see Note 7).
Employees may make rollover contributions to the Plan of funds held in
other tax-qualified plans which the employee was a member of prior to
becoming employed by the Companies. The rollover contributions must be the
result of a qualified total distribution from another tax-qualified plan and
must be contributed to the Plan within 60 days after distribution to the
employee.
Both employer and employee contributions under the Plan are held in a
trust fund (Trust) with an independent trustee (State Street Bank & Trust
Company). Employees may choose to invest their contributions in Funds A, B,
C, D, F, G or H (see Note 6) which are offered by the Plan. A loan option
was added in 1993 (Fund E).
5. Reconciliation to Form 5500
---------------------------
At December 31, 1994, the Plan has received applications for withdrawals
in the amount of $87,004 which were not paid at year end. Pursuant to recent
professional guidance, no payable has been recorded in the statement of net
assets available for plan benefits at year end. However, the Department of
Labor requires Form 5500 to include these pending withdrawals as liabilities.
6. Descriptions of Funds
---------------------
The following is a brief description of the Funds currently available
to Members at December 31, 1994:
Fund A - S&P 500 Index Fund: This Fund is a common/collective trust
---------------------------
investing in the S&P 500 stocks. The objective of this Fund is the growth of
capital through both appreciation and investment income. The market value of
the S&P 500 Index Fund is based on the market value per share determined by
the Trustee.
Fund B - Capital Preservation Fund: This Fund consists primarily of
----------------------------------
guaranteed fixed income contracts issued by insurance companies and banks,
- 12 -
and short-term money market instruments. These contracts guarantee interest
for a fixed period and the principal amount of all investments. The market
value of the Capital Preservation Fund is measured at the contract value as
determined by the insurers and banks.
Fund C - International Index Fund: This Fund consists of foreign
---------------------------------
currencies designed to produce returns similar to those of the Morgan Stanley
Capital International Europe, Australia, Far East (MSCI EAFE) Index. The
objective of the Fund is the growth of capital through appreciation. The
market value of the International Index Fund is measured at the market value
per share determined by the Trustee.
Fund D - Company Common Stock Fund: This Fund consists entirely of
----------------------------------
shares in Ohio Edison Company common stock. The Fund provides an opportunity
for employees to increase their common ownership stake in the Company. The
objective for this Fund is the growth of capital through both appreciation
and current income. The Fund also holds the pre-ESOP Company matching
contribution in Company common stock. The common stock is purchased by the
Trustee on the open market. The market value of the common stock is measured
by the quoted market price.
Fund E - Loan Fund: Effective January 1, 1993, the Savings Plan allows
------------------
participants to borrow from their before-tax account for certain approved
purposes. When loans are made, they are recorded as interfund transfers.
The repayments of principal and interest are credited to the participants'
account balances within the respective funds. The employee repays the loan
and all related interest through payroll deductions.
Participants may borrow up to 50 percent of their total account balance
or 100 percent of their before-tax account, whichever is less. The interest
rate charged is based on the prime rate plus 1 percent. They may have up to
two loans outstanding at one time. The minimum loan amount is $1,000 and
must be repaid between 6 and 60 months. If the loan is for the purchase of
a principal residence, the loan repayment period can be extended to 15 years.
The maximum loan amount is $50,000.
Fund F - Balanced Fund: Available December 5, 1994, the purpose of this
----------------------
Fund is to provide stable income by investing in a diversified portfolio of
equities and fixed income. The Fund invests in a portfolio of stocks, bonds
and cash equivalents.
Fund G - Small Cap Fund: Available December 5, 1994, the objective of
-----------------------
this Fund is to invest in securities of small companies that generally have
capitalization of $500 million or less. This portfolio holds approximately
400 stocks.
Fund H - Self Managed Brokerage Account Option: Effective December 5,
----------------------------------------------
1994, in addition to the six core Funds, investors may invest in a self-
managed brokerage account option available through State Street Brokerage
Services, Inc. Options include mutual funds along with any security that is
listed on the NYSE, ASE and NASDAQ. As of December 31, 1994, no account had
been opened with State Street Brokerage Services.
- 13 -
7. Tax Considerations
------------------
The Plan received a determination letter from the Internal Revenue
Service ("IRS") dated September 3, 1986 regarding amendments through October
18, 1985 that the Plan is qualified under the appropriate sections of the
Code. A request for determination was submitted to the IRS on December 22,
1994 for the Plan as amended effective December 1, 1994. Although the IRS
has not yet issued a revised determination letter, the Savings Plan Committee
and in-house counsel believe that the amended Ohio Edison System Savings Plan
continues to qualify under Sections 401(a) and 40l(k) and therefore continues
to be tax-exempt.
The Plan is exempt from Federal, state and local income taxes. The
Federal, state and local income tax treatments of distributions from the Plan
depend upon when they are made and their form. The withdrawal of the
principal amount of a Member's after-tax contribution is not, however,
subject to tax. For tax years beginning after December 31, 1986, the Tax
Reform Act of 1986 requires that an additional tax of 10% be applied to
employee withdrawals from the Plan prior to death, disability, attainment of
age 59-1/2, or under certain other limited circumstances.
In the case of withdrawals by a Member employed by the Companies prior
to the attainment of age 59-1/2, the excess of the value of the withdrawal
over the total amount of the Member's after-tax contributions, is taxable at
ordinary income tax rates. The value of the Company common stock withdrawn
is considered to be its fair market value on the date it is withdrawn.
In the case of a distribution that qualifies as a lump-sum distribution
upon a Member's termination of employment with either of the Companies or
after attaining the age of 59-1/2, only the excess of the value of the lump
sum distribution over the amount of the Member's after-tax contributions to
the Plan (less withdrawals) is taxable at ordinary income tax rates. In
determining the value of the lump-sum distribution, the Company common stock
distributed in-kind or in cash shall be valued at its original cost to the
Trustee.
- 14 -
Ohio Edison Company
EIN 34-0437786
PN #002
OHIO EDISON SYSTEM SAVINGS PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
As of December 31, 1994
Description Market
Identity of Issue Maturity Cost Value
- -------------------------------- ---------------------- ----------- ----------
State Street High Yield STIF Fund Money Market Fund 5,584 5,583
State Street Yield Enhanced Fund Money Market Fund 7,573,415 7,573,415
State Street STIF Fund Money Market Fund 14,641,959 14,641,959
----------
Total Cash & Cash Equivalents 22,220,957
==========
ESOP Unallocated Fund OEC Common Stock 176,542,554 173,981,567
ESOP Allocated Fund OEC Common Stock 21,735,684 21,421,754
PAYSOP Fund OEC Common Stock 2,836,984 3,145,080
Company Stock Fund OEC Common Stock 20,052,214 19,152,921
International Index Fund EAFE Index Stocks 5,397,547 5,617,830
(Common/Collective Trust)
S&P 500 Index Fund S&P 500 Stocks 30,380,488 37,523,598
(Common/Collective Trust)
Small Cap Fund Small Cap Domestic Stocks 124,605 127,136
(Common/Collective Trust)
Balanced Fund Equities, Fixed Income 58,438 58,746
(Common/Collective Trust)
Capital Preservation Fund
FHMA, 6.0% CMO, 02-15-19 5,017,419 5,017,419
FNMA, 6.0% CMO, 09-25-14 4,950,933 4,950,933
Aetna Life, 5.30% GIC, 09-15-99 2,021,668 2,021,668
Black Rock, Managed Duration GIC, 08-01-99 15,320,626 15,320,626
Hartford Life, 9.36% GIC, 03-01-96 1,461,155 1,461,155
Hartford Life, 9.51% GIC, 06-20-95 1,512,718 1,512,718
Hartford Life, 9.21% GIC, 01-15-96 1,438,374 1,438,374
Hartford Life, 7.10% GIC, 09-30-98 3,896,174 3,896,174
Lincoln National, 5.64% GIC, 11-15-99 2,500,000 2,500,000
Lincoln National, 5.80% GIC, 03-15-99 2,602,849 2,602,849
Metropolitan Life, 8.75% GIC, 10-15-96 215,857 215,857
Metropolitan Life, 8.25% GIC, 12-31-98 1,073,423 1,073,423
Metropolitan Life, 8.5% GIC, 04-15-96 212,061 212,061
Metropolitan Life, 8.05% GIC, 12-31-98 1,050,743 1,050,743
Metropolitan Life, 8.6% GIC, 04-14-95 1,499,373 1,499,373
Metropolitan Life, 8.6% GIC, 04-14-95 2,249,060 2,249,060
New York Life, 9.15% GIC, 10-02-95 1,506,727 1,506,727
New York Life, 8.40% GIC, 04-22-96 2,102,643 2,102,643
New York Life, 9.15% GIC, 10-02-95 2,260,090 2,260,090
Peoples Security, 9.1% GIC, 07-20-96 1,027,330 1,027,330
Peoples Security, 7.58% GIC, 04-30-93 346,944 346,944
Principal Mutual Life, 8.30% GIC, 12-31-99 4,000,000 4,000,000
Travelers, 9.02% GIC, 03-31-95 606,468 606,468
Travelers, 8.6% GIC, 11-16-96 1,365,123 1,365,123
Travelers, 9.0% GIC, 05-15-96 1,400,626 1,400,626
-----------
Total Capital Preservation Fund $61,638,384
===========
- 15 -
Ohio Edison Company
EIN 34-0437786
PN #002
OHIO EDISON SYSTEM SAVINGS PLAN
Item 27d - Schedule of Reportable Transactions
For the Year Ended December 31, 1994
Descriptions Number of Total No. of Total
of Purchase Value of Sales Selling Cost of
Assets Transactions Purchase Transactions Price Assets Sold Gain/(Loss)
- ---------------------- ------------ ---------- ------------ ----------- ----------- -----------
State Street STIF Fund 172 $28,932,897 157 $28,024,643 $28,024,653 $ 0
State Street Yield
Enhanced 77 20,298,232 50 12,724,817 12,724,817 0
S&P 500 Index Fund 69 5,085,617 56 4,748,908 4,723,891 25,017
- 16 -
Exhibit A
The Savings Plan Committee of
Ohio Edison System Savings Plan
We consent to the incorporation by reference in the Company's previously filed Registration Statements (File
Nos. 33-49135, 33-49259, 33-49413 and 33-51139) of our report dated June 16, 1995, on the audits of the Ohio
Edison System Savings Plan as of December 31, 1994 and 1993 and for the year ended December 31, 1994 which
report is included in this Annual Report on Form 11-K of Ohio Edison.
COOPERS & LYBRAND, L.L.P.
Cleveland, Ohio
June 26, 1995
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Savings Plan Committee, the
administrator of the Ohio Edison System Savings Plan, has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
OHIO EDISON SYSTEM
SAVINGS PLAN
June 26, 1995
- -------------------
Date
By: /s/ James A. Bowers
-------------------
James A. Bowers
Chairman
Savings Plan Committee
June 26, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Ohio Edison Company/Ohio Edison System Savings Plan
Gentlemen:
We transmit herewith for electronic filing with the Securities and Exchange Commission, pursuant to the
Securities Act of 1934, as amended, an annual report on Form 11-K of the Ohio Edison System Savings Plan. On
June 21, 1995, the Company paid the filing fee related to this Form 11-K by means of wire transfer.
Please address any comments regarding the above to the undersigned at 76 S. Main Street, Akron, OH 44308
(216) 384-5500.
Very truly yours,
OHIO EDISON COMPANY
By: /s/ N. C. Brink
---------------
N. C. Brink
Secretary