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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(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 __________
Commission file number 1-905
A. Full title of the plan and the address of the
plan, if different from that of the issuer named
below:
PENNSYLVANIA POWER & LIGHT COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
B. Name of issuer of the securities held pursuant to
the plan and the address of its principal executive
office:
PENNSYLVANIA POWER & LIGHT COMPANY
TWO NORTH NINTH STREET
ALLENTOWN, PENNSYLVANIA 18101-1179
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INDEPENDENT AUDITORS' REPORT
The Employee Benefit Plan Board of
Pennsylvania Power & Light Company:
We have audited the accompanying statements of financial
condition of the Pennsylvania Power & Light Company Employee
Stock Ownership Plan as of December 31, 1994 and 1993, and the
related statements of income and changes in plan equity for each
of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these
financial statements 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 management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the financial condition of the plan at
December 31, 1994 and 1993, and the income and changes in plan
equity for each of the three years in the period ended December
31, 1994 in conformity with generally accepted accounting
principles.
/s/ Deloitte & Touche LLP
March 10, 1995
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<TABLE>
PENNSYLVANIA POWER & LIGHT COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF FINANCIAL CONDITION
AT DECEMBER 31, 1994 AND 1993
<CAPTION>
PLAN ASSETS 1994 1993
<S> <C> <C>
INVESTMENT - Common stock of Pennsylvania
Power & Light Company, at fair value;
1994 cost $93,256,689 (5,840,770 shares);
1993 cost $88,564,892 (5,605,696 shares) $110,974,630 $151,353,792
DIVIDENDS RECEIVABLE ............................. 2,299,512 2,215,475
$113,274,142 $153,569,267
LIABILITIES AND PLAN EQUITY
DIVIDENDS PAYABLE TO PARTICIPANTS.......... $2,299,512 $2,215,475
PLAN EQUITY AT END OF YEAR ....................... 110,974,630 151,353,792
$113,274,142 $153,569,267
<FN>
See Notes to Financial Statements.
</TABLE>
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<TABLE>
PENNSYLVANIA POWER & LIGHT COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF INCOME AND CHANGES IN PLAN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993
AND 1992
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
INCREASES:
Employer contributions ...................... $6,859,103 $6,635,215 $6,056,237
Dividend income ............................. 9,253,150 8,923,281 8,452,849
Unrealized appreciation of
investment (Note 5) ............................................. 4,572,120
Realized gain on sale of stock
(1994 proceeds $1,194,149,
cost $894,542; 1993 proceeds
$1,632,435, cost $858,185;
1992 proceeds $1,017,584,
cost $589,056)............................. 299,607 774,250 428,528
Total increases ......................... 16,411,860 16,332,746 19,509,734
DECREASES:
Dividend distributions to participants ...... 9,253,150 8,923,281 8,452,849
Distributions of stock and cash
to active and terminated
participants .............................. 2,466,913 3,173,155 2,143,934
Unrealized depreciation of
investment (Note 5) ....................... 45,070,959 1,877,574
Total decreases ......................... 56,791,022 13,974,010 10,596,783
INCOME(LOSS) AND CHANGES IN PLAN EQUITY
FOR THE YEAR ................................ (40,379,162) 2,358,736 8,912,951
PLAN EQUITY AT BEGINNING OF YEAR .............. 151,353,792 148,995,056 140,082,105
PLAN EQUITY AT END OF YEAR .................... $110,974,630 $151,353,792 $148,995,056
<FN>
See Notes to Financial Statements.
</TABLE>
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PENNSYLVANIA POWER & LIGHT COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
1. PLAN DESCRIPTION
The Pennsylvania Power & Light Company Employee Stock
Ownership Plan (Plan) was adopted effective January 1, 1975
and most recently amended effective January 1, 1995. Amounts
contributed to the Plan are used to purchase for employees
shares of common stock of the Pennsylvania Power & Light
Company (Company).
The Plan requires that dividends on shares credited to
participants' accounts be paid in cash. Under existing income
tax laws, the Company is permitted to deduct the amount of
those dividends for income tax purposes and to contribute the
resulting tax savings (dividend-based contribution) to the
Plan. The dividend-based contribution is used to buy
additional shares of the Company's common stock and is
expressly conditioned upon the deductibility of the
contribution for federal income tax purposes.
Substantially all full-time employees of the Company who have
completed one year of service are eligible to participate in
the Plan. All amounts contributed to the Plan are invested in
shares of common stock of the Company. The shares of common
stock purchased with the dividend-based contribution are
allocated to participants' accounts, 75% on the basis of
shares held in a participant's account and 25% on the basis of
the participant's compensation.
The shares of common stock allocated to a participant's
account may not exceed the maximum permitted by law. All
shares of common stock credited to a participant's account are
100% vested and nonforfeitable, but cannot be pledged as
security by the employee. Stock certificates representing sh
ares in the Plan are held by the Trustee.
Participants may elect to withdraw from their accounts common
stock which has been allocated with respect to a Plan year
ending at least 84 months prior to the end of the Plan year in
which the election is made. Participants so electing receive
cash or stock certificates for the number of whole shares,
cash for any fractional shares available for withdrawal or may
make a rollover to a qualified plan.
Participants who have attained age 55 and have completed ten
years of participation in the Plan may elect to withdraw a
limited number of shares added to their accounts after
December 31, 1986. For the first five years after meeting the
requirement participants may withdraw up to an aggregate of
25% of such shares. In the sixth year qualified participants
may withdraw up to an aggregate of 50% of such shares.
Upon termination of service with the Company, participants are
entitled to receive cash or stock certificates for the number
of whole shares, cash for any fractional shares allocated to
them or may make a rollover to a qualified plan. Participants
who terminate service with the Company and whose account
exceeds $3,500 may defer distribution of the shares of stock
in the account until the earlier of age 65 or death.
Participants who terminate service with the Company on or
after age 55 may defer distribution of the shares of stock in
the account up to April 1 of the year following the year in
which the participant attains the age of 70-1/2.
A 10% federal excise tax is applicable to withdrawals from the
Plan made, generally, before a participant reaches age 59-1/2.
The Company has reserved the right to amend or terminate the
Plan at any time by or pursuant to action of its Board of
Directors. Upon termination of the Plan a procedure for
distribution of all shares to participants would be
established.
The Plan complies with provisions of the Employee Retirement
Income Security Act of 1974.
2. SIGNIFICANT ACCOUNTING POLICIES
A. The Plan's common stock investment is stated at fair
value. Fair value is the quoted market price of the
Company's common stock. Realized gains and losses from th
e sale of stock by the Trustee are based on the average
cost of common stock held at the time of sale.
B. Dividend income and dividend distributions to participants
are recorded on dividend record dates.
C. Distributions of stock and cash to terminated participants
not electing to defer distributions are recorded in the
Plan year during which service is terminated. Otherwise
such distributions are recorded as stock certificates are
issued and cash is paid.
D. Distributions of stock and cash to active participants
electing to withdraw eligible shares are recorded in the
Plan year in which elections are received.
E. In accordance with the 1993 AICPA Audit and Accounting
Guide, Audits of Employee Benefit Plans, benefits payable
to persons who have withdrawn from participation in the
Plan have not been recorded as a liability of the Plan.
As of December 31, 1994 and 1993, net assets available for
benefits included benefits of $625,683 and $97,606,
respectively, due to participants who have withdrawn from
participation in the Plan.
3. ADMINISTRATION
The Plan is administered by an Employee Benefit Plan Board
(Board), composed of certain Company officers, appointed by
the Board of Directors of the Company. The Board of Directors
of the Company has appointed the individual members of the
Board as Trustees of the Plan.
Expenses incurred in the administration of the Plan are paid
by the Company and the facilities of the Company are used by
the Plan at no charge.
4. TAX STATUS
The Internal Revenue Service (IRS) has issued a determination
letter that the Plan, as amended and restated effective
January 1, 1985, is qualified under Section 401(a) of the
Internal Revenue Code as a stock bonus plan and constitutes an
employee stock ownership plan under Section 409A of the
Internal Revenue Code.
Under present Federal income tax laws and regulations, a
qualified plan is not taxed on contributions received from the
Company or participants, on dividend income, on realized gains
from the sale of stock or on any unrealized appreciation of
investments. A participant in a qualified plan is not subject
to Federal income tax on amounts contributed by the Company
until that participant receives a distribution from the Plan.
On March 23, 1995, the Company filed an application with the
IRS for a determination that the Plan as amended, effective
January 1, 1995, continues to be qualified, since the IRS has
indicated it will now accept such applications.
5. UNREALIZED APPRECIATION/(DEPRECIATION) OF INVESTMENT
The unrealized appreciation/(depreciation) of the investment
in the Company's common stock is as follows:
1994 1993 1992
Balance at beginning
of year $62,788,900 $64,666,474 $60,094,354
Change for the year (45,070,959) (1,877,574) 4,572,120
Balance at end of
year $17,717,941 $62,788,900 $64,666,474
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SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Employee Benefit Plan Board has duly caused
this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
Pennsylvania Power & Light Company
Employee Stock Ownership Plan
By: (Signed) John M. Chappelear
John M. Chappelear
Chairman, Employee Benefit Plan Board
Pennsylvania Power & Light Company
Dated: March 29, 1994
