_________________________________________________________________
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, 1995
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, 1995 and 1994, 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
--------------------------
AS OF DECEMBER 31, 1995 AND 1994
--------------------------------
AND FOR THE YEAR ENDED DECEMBER 31, 1995
----------------------------------------
<PAGE>
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, 1995 AND 1994 3-6
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS 7-8
FOR THE YEAR ENDED DECEMBER 31, 1995
NOTES TO FINANCIAL STATEMENTS 9-14
SUPPLEMENTAL SCHEDULES:
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF
DECEMBER 31, 1995 15
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR
ENDED DECEMBER 31, 1995 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, 1995 and 1994, and the related statement of changes in net assets
available for plan benefits for the year ended December 31, 1995. 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, 1995 and 1994, and the changes in net assets available for
plan benefits for the year ended December 31, 1995 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, 1995, 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 19, 1996
- 2 -
<TABLE>
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------
As of December 31, 1995
<CAPTION>
COMPANY CAPITAL ESOP ESOP
COMMON STOCK PRESERVATION S&P 500 UNALLOCATED ALLOCATED SMALL CAP BALANCED
FUND FUND INDEX FUND FUND FUND FUND FUND
------------ ------------ ---------- ------------ ----------- ----------- -----------
ASSETS
- ------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CASH/CASH EQUIVALENTS $ 1,325,836 $ 2,907,505 $ 0 $ 12,296,921 $ 0 $ 0 $ 0
COMPANY COMMON STOCK 25,125,100 0 0 209,894,221 36,093,967 0 0
GUARANTEED INSURANCE CONTRACTS 0 59,453,325 0 0 0 0 0
COLLATERALIZED MORTGAGE OBLIG. 0 9,969,586 0 0 0 0 0
DOMESTIC EQUITY STOCKS 0 0 52,680,727 0 0 0 0
INTERNATIONAL EQUITY STOCKS 0 0 0 0 0 0 0
SMALL-CAP STOCKS 0 0 0 0 0 1,185,232 0
OTHER EQUITIES 0 0 0 0 0 0 0
BALANCED FUND SECURITIES 0 0 0 0 0 0 1,534,918
PARTICIPANT LOANS 0 0 0 0 0 0 0
INTEREST & DIVIDENDS RECEIVABLE 410,894 412,735 0 3,383,646 608,200 0 0
EMPLOYER CONTRIBUTIONS RECEIVABLE 0 0 0 3,702,576 0 0 0
----------- ----------- ----------- ------------ ----------- ---------- ----------
TOTAL ASSETS 26,861,830 72,743,151 52,680,727 229,277,364 36,702,167 1,185,232 1,534,918
LIABILITIES
- -----------------------------
ACCRUED INTRA-FUND TRANSFERS (1,479) 16,690 80,629 8,874,425 (8,874,425) 0 (4,500)
LOAN PAYABLE 0 0 0 199,850,000 0 0 0
ACCRUED FEES 34,119 96,495 31,952 0 0 10,603 2,155
ACCRUED INTEREST EXPENSE 0 0 0 19,985,000 0 0 0
----------- ----------- ----------- ------------ ----------- ---------- ----------
TOTAL LIABILITIES 32,640 113,185 112,581 228,709,425 (8,874,425) 10,603 (2,345)
----------- ----------- ----------- ------------ ----------- ---------- ----------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $26,829,190 $72,629,966 $52,568,146 $ 567,939 $45,576,592 $1,174,629 $1,537,263
=========== =========== =========== ============ =========== ========== ==========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
- 3 -
<TABLE>
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------
As of December 31, 1995
(Continued)
<CAPTION>
INTERNATIONAL
SELF MANAGED INDEX LOAN PAYSOP
FUND FUND FUND FUND TOTAL
------------ ------------ ---------- ----------- -----------
ASSETS
- --------------------------
<S> <C> <C> <C> <C> <C>
CASH/CASH EQUIVALENTS $ 0 $ 0 $ 0 $ 203,784 $ 16,734,046
COMPANY COMMON STOCK 0 0 0 3,548,179 274,661,467
GUARANTEED INSURANCE CONTRACTS 0 0 0 0 59,453,325
COLLATERALIZED MORTGAGE OBLIG. 0 0 0 0 9,969,586
DOMESTIC EQUITY STOCKS 0 0 0 0 52,680,727
INTERNATIONAL EQUITY STOCKS 0 6,338,381 0 0 6,338,381
SMALL-CAP STOCKS 0 0 0 0 1,185,232
OTHER EQUITIES 1,054,930 0 0 0 1,054,930
BALANCED FUND SECURITIES 0 0 0 0 1,534,918
PARTICIPANT LOANS 0 0 6,039,130 0 6,039,130
INTEREST & DIVIDENDS RECEIVABLE 0 0 0 58,050 4,873,525
EMPLOYER CONTRIBUTIONS RECEIVABLE 0 0 0 0 3,702,576
----------- ----------- ----------- ----------- -------------
TOTAL ASSETS 1,054,930 6,338,381 6,039,130 3,810,013 438,227,843
LIABILITIES
- --------------------------
ACCRUED INTRA-FUND TRANSFERS (81,113) (30,451) 20,224 0 0
LOAN PAYABLE 0 0 0 0 199,850,000
ACCRUED FEES 0 15,735 0 0 191,059
ACCRUED INTEREST EXPENSE 0 0 0 0 19,985,000
----------- ----------- ----------- ----------- -------------
TOTAL LIABILITIES (81,113) (14,716) 20,224 0 220,026,059
----------- ----------- ----------- ----------- -------------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $ 1,136,043 $ 6,353,097 $ 6,018,906 $ 3,810,013 $218,201,784
=========== =========== =========== =========== ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
- 4 -
<TABLE>
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------
As of December 31, 1994
<CAPTION>
COMPANY CAPITAL ESOP ESOP
COMMON STOCK PRESERVATION S&P 500 UNALLOCATED ALLOCATED SMALL CAP BALANCED
FUND FUND INDEX FUND FUND FUND FUND FUND
------------ ----------- ----------- ------------- ----------- ---------- ---------
ASSETS
- ------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CASH/CASH EQUIVALENTS $ 2,222,401 $ 7,573,415 $ 0 $ 12,206,134 $ 30 $ 0 $ 0
COMPANY COMMON STOCK 19,152,921 0 0 173,981,567 21,421,754 0 0
GUARANTEED INSURANCE CONTRACTS 0 51,670,032 0 0 0 0 0
COLLATERALIZED MORTGAGE OBLIG. 0 9,968,352 0 0 0 0 0
DOMESTIC EQUITY STOCKS 0 0 37,523,598 0 0 0 0
INTERNATIONAL EQUITY STOCKS 0 0 0 0 0 0 0
SMALL-CAP STOCKS 0 0 0 0 0 127,136 0
BALANCED FUND SECURITIES 0 0 0 0 0 0 58,746
PARTICIPANT LOANS 0 0 0 0 0 0 0
INTEREST & DIVIDENDS RECEIVABLE 397,569 381,619 0 3,581,599 439,750 0 0
EMPLOYER CONTRIBUTIONS RECEIVABLE 0 0 0 3,854,319 0 0 0
----------- ----------- ----------- ------------ ----------- -------- -------
TOTAL ASSETS 21,772,891 69,593,418 37,523,598 193,623,619 21,861,534 127,136 58,746
LIABILITIES
- ----------------------------
ACCRUED INTRA-FUND TRANSFERS (20,000) 500 0 8,874,426 (8,874,426) 0 (500)
LOAN PAYABLE 0 0 0 199,850,000 0 0 0
ACCRUED FEES 1,876 6,456 2,654 0 440 630 2
ACCRUED INTEREST EXPENSE 0 0 0 19,985,000 0 0 0
----------- ----------- ----------- ------------ ----------- -------- -------
TOTAL LIABILITIES (18,124) 6,956 2,654 228,709,426 (8,873,986) 630 (498)
----------- ----------- ----------- ------------ ----------- -------- -------
NET ASSETS (DEFICIENCY) AVAILABLE
FOR PLAN BENEFITS $21,791,015 $69,586,462 $37,520,944 $(35,085,807) $30,735,520 $126,506 $59,244
=========== =========== =========== ============ =========== ======== =======
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
- 5 -
<TABLE>
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------
As of December 31, 1994
(Continued)
<CAPTION>
INTERNATIONAL
INDEX LOAN PAYSOP
FUND FUND FUND TOTAL
------------ ----------- ----------- ------------
ASSETS
- ------------------------------
<S> <C> <C> <C> <C>
CASH/CASH EQUIVALENTS $ 0 $ 0 $ 218,977 $ 22,220,957
COMPANY COMMON STOCK 0 0 3,145,080 217,701,322
GUARANTEED INSURANCE CONTRACTS 0 0 0 51,670,032
COLLATERALIZED MORTGAGE OBLIG. 0 0 0 9,968,352
DOMESTIC EQUITY STOCKS 0 0 0 37,523,598
INTERNATIONAL EQUITY STOCKS 5,617,830 0 0 5,617,830
SMALL-CAP STOCKS 0 0 0 127,136
BALANCED FUND SECURITIES 0 0 0 58,746
PARTICIPANT LOANS 0 5,248,141 0 5,248,141
INTEREST & DIVIDENDS RECEIVABLE 0 0 40,360 4,840,897
EMPLOYER CONTRIBUTIONS RECEIVABLE 0 0 0 3,854,319
----------- ----------- ----------- ------------
TOTAL ASSETS 5,617,830 5,248,141 3,404,417 358,831,330
LIABILITIES
- ------------------------------
ACCRUED INTRA-FUND TRANSFERS 20,000 0 0 0
LOAN PAYABLE 0 0 0 199,850,000
ACCRUED FEES 969 0 0 13,027
ACCRUED INTEREST EXPENSE 0 0 0 19,985,000
----------- ----------- ----------- ------------
TOTAL LIABILITIES 20,969 0 0 219,848,027
----------- ----------- ----------- ------------
NET ASSETS (DEFICIENCY) AVAILABLE
FOR PLAN BENEFITS $ 5,596,861 $ 5,248,141 $ 3,404,417 $138,983,303
=========== =========== =========== ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
- 6 -
<TABLE>
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
--------------------------------------------------------------
For the Year Ended December 31, 1995
<CAPTION>
COMPANY CAPITAL ESOP ESOP
COMMON STOCK PRESERVATION S&P 500 UNALLOCATED ALLOCATED SMALL CAP BALANCED
FUND FUND INDEX FUND FUND FUND FUND FUND
------------ ----------- ----------- ------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
EMPLOYEE CONTRIBUTIONS $ 914,016 $ 6,511,228 $ 4,638,054 $ 0 $ 0 $ 263,376 $ 293,645
EMPLOYER CONTRIBUTIONS 0 0 0 3,702,576 0 0 0
INTEREST INCOME & DIVIDENDS 1,680,425 4,938,913 58 13,743,591 2,448,420 0 0
INTEREST EXPENSE 0 0 0 (19,985,000) 0 0 0
FEES & ADJUSTMENTS (39,685) (225,626) (50,434) 0 (284) (9,985) (2,446)
EXCESS OF NET PROCEEDS FROM SALES OF
ASSETS OVER MARKET VALUE AT
BEGINNING OF YEAR:
AGGREGATE PROCEEDS 3,370,444 9,981,508 5,574,577 9,868,447 3,414,902 276,192 162,785
AGGREGATE COST 2,894,670 9,981,508 4,917,794 8,745,690 2,869,033 259,095 152,824
----------- ----------- ----------- ------------ ----------- ---------- ----------
NET EXCESS 475,774 0 656,783 1,122,757 545,869 17,097 9,961
NET CHANGE IN UNREALIZED
APPRECIATION ON SECURITIES 4,854,350 0 13,253,673 43,664,323 7,269,519 135,965 139,137
DISTRIBUTIONS TO PARTICIPANTS (1,929,626) (6,936,360) (2,809,073) 0 (2,016,953) (14,424) (29,254)
NET INTRA-FUND PLAN TRANSFERS (917,079) (1,244,651) (641,859) (6,594,501) 6,594,501 656,094 1,066,976
----------- ----------- ----------- ------------ ----------- ---------- ----------
NET CHANGE IN PLAN EQUITY 5,038,175 3,043,504 15,047,202 35,653,746 14,841,072 1,048,123 1,478,019
NET ASSETS (DEFICIENCY) AVAILABLE
FOR PLAN BENEFITS - BEGINNING
OF YEAR 21,791,015 69,586,462 37,520,944 (35,085,807) 30,735,520 126,506 59,244
----------- ----------- ----------- ------------ ----------- ---------- ----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS - END OF YEAR $26,829,190 $72,629,966 $52,568,146 $ 567,939 $45,576,592 $1,174,629 $1,537,263
=========== =========== =========== ============ =========== ========== ==========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
- 7 -
<TABLE>
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
--------------------------------------------------------------
For the Year Ended December 31, 1995
(Continued)
<CAPTION>
INTERNATIONAL
SELF MANAGED INDEX LOAN PAYSOP
FUND FUND FUND FUND TOTAL
------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
EMPLOYEE CONTRIBUTIONS $ 0 $ 1,278,499 $ 0 $ 0 $ 13,898,818
EMPLOYER CONTRIBUTIONS 0 0 0 0 3,702,576
INTEREST INCOME & DIVIDENDS 16,690 0 453,436 270,619 23,552,152
INTEREST EXPENSE 0 0 0 0 (19,985,000)
FEES & ADJUSTMENTS 0 (15,251) 0 1,041 (342,670)
EXCESS OF NET PROCEEDS FROM SALES OF
ASSETS OVER MARKET VALUE AT
BEGINNING OF YEAR:
AGGREGATE PROCEEDS 251,040 1,773,891 0 407,847 35,081,633
AGGREGATE COST 244,470 1,724,506 0 354,075 32,143,665
---------- ----------- ----------- ------------ ------------
NET EXCESS 6,570 49,385 0 53,772 2,937,968
NET CHANGE IN UNREALIZED
APPRECIATION ON SECURITIES 69,297 594,980 0 753,774 70,735,018
DISTRIBUTIONS TO PARTICIPANTS 0 (340,390) (530,691) (673,610) (15,280,381)
NET INTRA-FUND PLAN TRANSFERS 1,043,486 (810,987) 848,020 0 0
---------- ----------- ----------- ------------ ------------
NET CHANGE IN PLAN EQUITY 1,136,043 756,236 770,765 405,596 79,218,481
NET ASSETS (DEFICIENCY) AVAILABLE
FOR PLAN BENEFITS - BEGINNING
OF YEAR 0 5,596,861 5,248,141 3,404,417 138,983,303
---------- ----------- ----------- ------------ ------------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS - END OF YEAR $1,136,043 $ 6,353,097 $ 6,018,906 $ 3,810,013 $218,201,784
========== =========== =========== ============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
- 8 -
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
December 31, 1995 and 1994
--------------------------
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
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.
- 9 -
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 is computed the Thursday following 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 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 1995 and 1994, respectively, 292,256 and 394,174 shares of
Company common stock were allocated to Members. An additional allocation of
105,427 and 95,041 shares in 1995 and 1994, 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, 1996 and 1995 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, 1995 and 1994, the status of the Company common
stock was as follows: 8,931,669 and 9,404,409, shares respectively, of Company
common stock in the ESOP Unallocated Fund at market values of $209,894,221 and
$173,981,567, respectively, and 1,535,913 and 1,157,933 shares, respectively,
of Company common stock held in the ESOP Allocated Fund at market values of
$36,093,967 and $21,421,754. 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.
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.
- 10 -
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 are deducted from investment returns.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts recorded in the financial statements and
accompanying notes. Actual results may differ from these estimates.
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 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.
- 11 -
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 $9,500 and $9,240 for 1995 and 1994,
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. Employees may
also elect to borrow from their before-tax accounts for certain approved
purposes (Fund E).
5. Reconciliation to Form 5500
---------------------------
At December 31, 1995, the Plan has received applications for
withdrawals in the amount of $77,846 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, 1995:
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, and
short-term money market instruments. These contracts guarantee interest for a
fixed period and the principal amount of all investments. The average yield
of the contracts was 6.99% and 6.80% for the fiscal years 1995 and 1994,
respectively. The crediting interest rate as of December 31, 1995 and 1994
was 6.93% and 6.95%, respectively. The market value of the Capital
Preservation Fund is measured at the contract value as determined by the
insurers and banks and no valuation reserves in relation to the contract value
is deemed necessary.
- 12 -
Fund C - International Index Fund: This Fund consists of foreign
---------------------------------
equities and is 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: 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: This Fund invests in a diversified portfolio
----------------------
of stocks, bonds and cash equivalents. The objective of the fund is to earn,
on an annualized basis, three percent over the return of Long-Term U. S.
Government Bonds. The performance objective is to be achieved over a 5 year
market cycle. The Fund was first made available to employees on December 5,
1994.
Fund G - Small Cap Fund: This Fund invests in securities of small
-----------------------
companies, generally with capitalizations of $500 million or less, that pay
most of their earnings in dividends. The Fund is well diversified and holds
approximately 400 stocks. The objective of the Fund is to match or exceed the
returns of the Russell 2000 Index with lower risk. This Fund was first made
available to employees on December 5, 1994.
Fund H - Self Managed Brokerage Account Option: Effective December 5,
----------------------------------------------
1994, in addition to the six core Funds, Members 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 accounts had been
opened in this Fund.
- 13 -
7. Tax Considerations
------------------
The Plan received a determination letter from the Internal Revenue
Service ("IRS") dated April 3, 1996 regarding amendments through November 15,
1994 that the Plan is qualified under the appropriate sections of the Code.
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 -
<TABLE>
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, 1995
<CAPTION>
Description Market
Identity of Issue Maturity Cost Value
- -------------------------------- ----------------------- ----------- -----------
<S> <C> <C> <C>
State Street Yield Enhanced Fund Money Market Fund 2,907,505 2,907,505
State Street STIF Fund Money Market Fund 13,826,541 13,826,541
-----------
Total Cash & Cash Equivalents 16,734,046
===========
ESOP Unallocated Fund OEC Common Stock 167,668,128 209,894,221
ESOP Allocated Fund OEC Common Stock 28,794,494 36,093,967
PAYSOP Fund OEC Common Stock 2,520,098 3,548,179
Company Stock Fund OEC Common Stock 21,006,613 25,125,100
International Index Fund EAFE Index Stocks 5,580,545 6,338,381
(Common/Collective Trust)
S&P 500 Index Fund S&P 500 Stocks 33,168,902 52,680,727
(Common/Collective Trust)
Small Cap Fund Small Cap Domestic Stocks 1,047,763 1,185,232
(Common/Collective Trust)
Balanced Fund Equities, Fixed Income 1,395,538 1,534,918
(Common/Collective Trust)
Self Managed Fund Equities 985,633 1,054,930
Capital Preservation Fund
FHMA, 6.0% CMO, 02-15-19 5,011,072 5,011,072
FNMA, 6.0% CMO, 09-25-14 4,958,514 4,958,514
State Street Bank Selection Fund GIC, 09-15-99 59,453,325 59,453,325
-----------
Total Capital Preservation Fund $69,422,911
===========
</TABLE>
- 15 -<PAGE>
<TABLE>
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, 1995
<CAPTION>
Descriptions Number of Total Number of Total
of Purchase Value of Sales Selling Cost of
Assets Transactions Purchase Transactions Price Assets Sold Gain/(Loss)
- ---------------------- ------------ ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
State Street STIF Fund 116 $21,858,375 332 $22,673,793 $22,673,793 $ 0
State Street Yield
Enhanced Fund 106 19,551,940 167 24,217,849 24,217,849 0
S&P 500 Index Fund 106 6,821,249 144 5,574,577 4,917,794 656,783
Ohio Edison Company 281 14,212,551 424 17,061,640 14,863,468 2,198,172
</TABLE>
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 19, 1996, on the audits of the Ohio Edison System
Savings Plan as of December 31, 1995 and 1994 and for the year ended December
31, 1995 which report is included in this Annual Report on Form 11-K of Ohio
Edison.
COOPERS & LYBRAND, L.L.P.
Cleveland, Ohio
June 28, 1996
- 17 -<PAGE>
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 28, 1996
- ---------------
Date
By: /s/ James A. Bowers
-------------------
James A. Bowers
Chairman
Savings Plan Committee
- 18 -
June 28, 1996
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
27, 1996, 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 (330) 384-5500.
Very truly yours,
OHIO EDISON COMPANY
By: /s/ N. C. Ashcom
----------------
N. C. Ashcom
Secretary
- 19 -
