<PAGE> 1
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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[x] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
OHIO EDISON COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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<PAGE> 2
FirstEnergy
Merger Highlights for
Registered Representatives
<PAGE> 3
FirstEnergy Corp.
[map of Ohio]
Toledo Edison CEI
Penn
Power
Ohio Edison
<PAGE> 4
FirstEnergy
o 11th largest investor-owned utility
o 2.1 million customers
o 13,200 square mile service area
o Generating capacity of 11,681 MW
o Annual revenues of $5 billion
<PAGE> 5
Structure
o Tax-free, stock-for-stock transaction
o Exchange ratio:
- OEC: 1 share of FirstEnergy for each
share of OEC
- CX: .525 shares of FirstEnergy for each
share of CX
o FirstEnergy shareholders to receive
OE's dividend level
<PAGE> 6
Financial and Strategic Benefits
o Stronger enterprise with more resources to
provide value to our investors and customers
o Significant earnings and cash flow accretion
o Natural opportunities for synergies
- Minimum $1 billion over ten years - half labor
o Control of major assets, less reliance on
others
o Accelerated debt reduction program
- ($2.5 billion through 2000)
<PAGE> 7
Synergies
o Contiguous service territories, joint generation
ownership interests offer natural opportunities for synergies
o Anticipate elimination of 900 positions (8% of
workforce) in addition to reductions previously
announced
o Significant achievement of synergies in early
years is expected; transition teams have been
formed
<PAGE> 8
Merger Approval
Milestones
o PUCO approval of rate plan on January 30
o CX requires majority approval; OEC 2/3
approval
o Special shareholder meetings on March 27
o Hope to close merger by end of 1997
<PAGE> 9
Alignment of OEC Management
and Shareholder Interests
o Employees control about 11.6 million shares
(8% of total) through Savings Plan
o Nearly all employees are in an incentive
compensation plan
o Management employees have a significant
portion (up to 50%) of their total compensation
"at risk" based on the achievement of short-
and long-term goals
<PAGE> 10
Premium Valuation Comparison
<TABLE>
<CAPTION>
Utility Transactions
with
Significant Premiums CX
-------------------- -----
<S> <C> <C>
Premium 30.5% 42.9%
Price-Earnings Multiple 15.4x 9.8x
Cash Flow Multiple 6.4x 2.5x
</TABLE>
<PAGE> 11
OEC Common Stock
Total Returns
Periods Ending 12/31/96
<TABLE>
<CAPTION>
1 Yr. 3 Yrs. 5 Yrs.
---------------------
<S> <C> <C> <C>
OEC 3.7% 7.5% 9.4%
S & P Elec. Util. (0.2) 4.4 6.3
</TABLE>
<PAGE> 12
Summary
o Natural opportunity to capture synergies
o Significant accretion to earnings and cash
flow
o Strong cash flow supports rapid debt
repayment
o Stronger enterprise with more resources to
provide value to our investors and
customers
<PAGE> 13
Questions
&
Answers
<PAGE> 14
Shareholder Cash Flow
<TABLE>
<CAPTION>
$ Millions
<S> <C>
93 251
94 294
95 440
96 532
</TABLE>
<PAGE> 15
<TABLE>
<CAPTION>
OEC vs S&P UTILITIES INDEX
Stock Price Index
- -----------------
Sept - Dec 1996
OEC S&P
------- -------
<S> <C> <C>
September 1996
13 100.00 100.00
19 94.578 99.166
25 95.181 99.627
October 1996
1 94.578 99.407
7 95.181 101.244
11 96.988 100.777
17 97.590 101.889
23 97.590 101.847
29 100.000 103.086
November 1996
4 100.602 104.282
8 103.614 106.098
14 103.614 105.946
20 107.229 106.145
26 110.241 105.773
December 1996
3 110.843 104.681
9 107.831 104.529
13 106.627 102.949
19 108.434 104.146
26 110.241 104.970
Jan - Feb 1997
- --------------
January 1997
8 111.446 104.881
14 109.639 106.313
20 109.639 106.418
24 111.446 105.848
30 112.651 105.007
February 1997
5 110.843 103.637
</TABLE>
<PAGE> 16
FIRSTENERGY
The Right Choice for Ohio Edison Shareholders
/ X /
Vote FOR the merger to
CREATE a STRONGER, more COMPETITIVE company
<PAGE> 17
/X/ Vote FOR:
- - EARNINGS AND CASH FLOW GROWTH ANTICIPATED TO BEGIN IN THE FIRST YEAR OF THE
MERGER -- AND A GREATER POTENTIAL FOR DIVIDEND GROWTH
- - A NATURAL ALLIANCE OF ADJOINING SERVICE AREAS -- NEARLY DOUBLING CUSTOMERS,
REVENUES AND CASH FLOW
- - A LARGER, STRONGER COMPANY -- COMMITTED TO CUT DEBT BY 40 PERCENT THROUGH
THE YEAR 2000
- - OHIO EDISON'S BEST STRATEGY FOR FUTURE SUCCESS
NOTE: This document contains certain forward-looking statements with respect to
the financial condition, results of operations and business of FirstEnergy
following the consummation of the merger. These forward-looking statements
involve certain risks and uncertainties. For example, savings resulting from the
merger are based on assumptions that Ohio Edison believes to be reasonable, but
there can be no assurances that such assumptions will approximate actual
experience, and actual results could differ materially from the presumptions
included herein. Shareholders are urged to review pages 13 and 14 of Ohio
Edison's proxy statement for greater detail on risks, uncertainties and
underlying assumptions regarding the merger and to review the entire proxy and
prospectus on the merger.
You can find more information on the merger at Ohio Edison's site on the World
Wide Web: http://www.ohioedison.com
1
<PAGE> 18
Dear fellow SHAREHOLDER:
Recently, you received a copy of a comprehensive document - our legally required
filing with the Securities and Exchange Commission regarding our proposed merger
with Centerior Energy under a new holding company called FIRSTENERGY. This
supplement provides a brief review of the positive impact that we believe the
merger will have on your investment.
I'll begin by offering a simple explanation for the merger: We intend to create
a larger, stronger, more competitive company that is FIRST in value to
shareholders, FIRST in service to customers, and FIRST in opportunities for
employees. And we believe that's good news for your investment.
This booklet should give you a clearer picture of why your board of directors
and management team strongly support the merger and urge that you vote FOR the
merger on your proxy card.
WE NEED YOUR SUPPORT. Approval of the merger requires a FOR vote from holders
of at least two-thirds of Ohio Edison's common stock - and abstentions will
have the effect of votes against the merger.
By voting FOR the merger and returning your proxy card to us, you will help us
create a company that is better positioned to compete and succeed in a rapidly
changing utility industry - and one that we believe will add greater value to
your investment.
If you have questions regarding the merger after reviewing this material, please
call us at 1-800-631-8945. We'll be glad to provide you with more information on
why FirstEnergy merits your approval.
Sincerely,
/s/ Willard R. Holland
Willard R. Holland
Chairman and Chief Executive Officer
Ohio Edison Company
2
<PAGE> 19
/X/ Vote FOR:
Earnings and
cash flow GROWTH
We are confident that joining the forces of Ohio Edison and Centerior Energy
under FirstEnergy will create a stronger, more competitive utility that will
INCREASE THE VALUE OF YOUR INVESTMENT. That's because FirstEnergy is a natural
alliance - providing many opportunities to eliminate duplicative costs, maximize
efficiencies, and increase management flexibility in a changing energy business.
For these and other reasons, we anticipate earnings and cash flow growth
beginning in the first year of the merger.
Under the terms of our merger agreement, we expect to maintain your current
annual dividend of $1.50 per share, and we have the flexibility to increase the
dividend up to $1.60 per share prior to completion of the merger. After the
merger is completed, FirstEnergy's Board of Directors will determine the new
company's dividend level.
<TABLE>
<CAPTION>
Earnings on Common Stock (Millions)
- -----------------------------------
Ohio Edison Centerior FirstEnergy
- ----------- --------- -----------
<C> <C> <C>
$295 $220 $542*
</TABLE>
<TABLE>
<CAPTION>
Cash Flow from Operations (Millions)
- ------------------------------------
Ohio Edison Centerior FirstEnergy
- ----------- --------- -----------
<C> <C> <C>
$753 $611 $1,364+
<FN>
Unless otherwise indicated, statistics included in this booklet are for the
year ended December 31, 1995.
* Derived from the unaudited, pro forma financial information found on page
50 of our proxy statement.
+ Derived from Ohio Edison and Centerior statements of cash flow incorporated
by reference in our proxy statement.
</TABLE>
3
<PAGE> 20
/X/ Vote FOR:
Considerable SAVINGS
Key benefits from merging Ohio Edison and Centerior will lead to savings that
are far greater than we could achieve on our own. For example:
- - SAVINGS OF $1 BILLION OVER TEN YEARS will result from new efficiencies
throughout our shared operations
- - Our aggressive goal to REDUCE DEBT BY AT LEAST $2.5 BILLION through the
year 2000 will improve earnings by LOWERING THE COMPANIES' COMBINED
INTEREST COSTS NEARLY $240 MILLION ANNUALLY BY 2001
<TABLE>
<CAPTION>
kWh Sales (Billions)
- --------------------
Ohio Edison Centerior FirstEnergy
- ----------- --------- -----------
<S> <C> <C>
$33 31 64
</TABLE>
<TABLE>
<CAPTION>
Revenues (Millions)
- -------------------
Ohio Edison Centerior FirstEnergy
- ----------- --------- -----------
<S> <C> <C>
$2,466 $2,516 $4,965*
</TABLE>
4
<PAGE> 21
/X/ Vote FOR:
A LARGER,
STRONGER utility
Based on total electric sales, FirstEnergy will become the nation's 11th largest
investor-owned electric system - a larger, stronger utility with more
opportunities to increase revenue and ultimately provide dividend growth for
shareholders. Here's FirstEnergy at a glance:
- - STRONG ELECTRIC SALES - 64 billion kilowatt-hours annually
- - ATTRACTIVE PROSPECTS FOR FUTURE GROWTH - 2.1 million customers throughout a
13,200-square- mile service area that is one of the nation's leaders in
promoting economic development
- - GREATER FINANCIAL RESOURCES -$5 billion in annual revenues and more than
$18 billion in assets
- - RELIABLE POWER SUPPLIES - 11,681 megawatts of generating capability
- - A NATURAL ALLIANCE THAT MAKES SENSE - bringing together the companies'
adjoining service areas
- - STRATEGIC LOCATION - within a 500-mile radius of one-half of the U.S.
population
- - STRONGER TRANSMISSION NETWORK - 6,500 miles of transmission lines, and 57
interconnections with 8 electric systems
- - BETTER OPPORTUNITIES FOR OFF-SYSTEM ELECTRIC SALES - including growing
markets in Canada and the eastern U.S.
- - SOLID SUPPORT FOR LOCAL COMMUNITIES - and a commitment to build on these
strong ties in the years ahead
5
<PAGE> 22
[Graphic depicting map with locations of Toledo Edison, Ohio Edison, CEI,
Penn Power highlighted]
6
<PAGE> 23
A GOOD VALUE For Shareholders
The merger represents an excellent opportunity for Ohio Edison shareholders.
Here are a few of the reasons why:
/X/ FAIR EXCHANGE RATIO:
- - Ohio Edison shareholders will receive one share of FirstEnergy common stock
for each share of Ohio Edison common stock they currently own
- - Centerior shareholders will receive 0.525 of a share of FirstEnergy common
stock for each share of Centerior stock they own
- - As a result, Ohio Edison shareholders will own approximately two-thirds of
the new company
/X/ TAX-FREE:
- - We expect exchange of shares to be tax-free for federal income tax purposes
/X/ OHIO EDISON LEADERSHIP:
- - Board of Directors of FirstEnergy will be designated by Ohio Edison's Board
- - Willard R. Holland will become chairman, president and CEO of FirstEnergy
- - FirstEnergy's headquarters will be located at Ohio Edison's general office
in Akron, Ohio
/X/ MOTIVATED MANAGEMENT TEAM:
- - Ohio Edison's management team is motivated to improve shareholder value -
with up to 50 percent of management's total incentive compensation based on
the performance of your stock
7
<PAGE> 24
/X/ Vote for:
Improved PERFORMANCE
Our service area adjoins Centerior's, and the two companies share ownership of
several major power plants. The merger will build on these strong ties to
achieve a number of significant benefits, including:
- - Accelerated debt reduction
- - Reduced operating expenses
- - Enhanced cash flow
- - Improved service for customers at lower prices over the long term
- - Better control and operation of our combined generation and transmission
facilities
- - Elimination of duplicative activities
- - More purchasing power, especially for our largest expense - fuel
- - Lower capital requirements
- - More opportunities for sales of energy-related products and services
<TABLE>
<CAPTION>
Generating Capability (Megawatts)
- ---------------------------------
Ohio Edison Centerior FirstEnergy
- ----------- --------- -----------
<S> <C> <C>
5,757 5,924 11,681
<CAPTION>
Customers
(Thousands)
- -----------
Ohio Edison Centerior FirstEnergy
- ----------- --------- -----------
<S> <C> <C>
1,096 1,040 2,136
</TABLE>
8
<PAGE> 25
/X/ Questions and ANSWERS
about the merger
Q WHAT AM I BEING ASKED TO VOTE ON?
A You are being asked to approve the merger of Ohio Edison and Centerior
under a new company named FirstEnergy Corp.
Q WHY SHOULD I VOTE FOR THE MERGER?
A Our merger means that you will have a stake in one of the nation's largest
electric utility systems under a new holding company, FirstEnergy. You will
own a larger company with more resources to meet the challenges of a
changing electric utility industry. We believe that the alliance will
enhance the long-term value of your investment in ways that otherwise would
not be possible. Our two companies have adjoining service areas, and we
already share ownership in many of our major generating plants. Together,
we believe we can increase revenues and cash flow, eliminate duplicative
costs, maximize efficiencies, reduce debt and capital expenditures, and
increase management flexibility.
Q WHAT IS THE POSITION OF OHIO EDISON'S BOARD OF DIRECTORS?
A Your Board of Directors has unanimously approved the plan to merge and
recommends that you also vote in favor of the merger.
Q WHAT HAPPENS TO MY FUTURE DIVIDENDS?
A After the merger, we expect the initial annual dividend of FirstEnergy to
be the same as Ohio Edison's annual dividend rate at that time, although
the actual dividend will be determined by the Board of FirstEnergy.
9
<PAGE> 26
Q WHAT ARE THE FEDERAL TAX CONSEQUENCES TO SHAREHOLDERS?
A We expect that your exchange of shares will be tax-free for federal income
tax purposes, except for taxes on cash received by dissenting shareholders.
Q WHAT DO I NEED TO DO NOW?
A Just mail your signed, dated proxy card in the enclosed envelope as soon as
possible. That way, your shares will be represented at the special
shareholder meeting on March 27, 1997.
Q MY SHARES ARE HELD IN MY BROKER'S NAME. WILL MY BROKER VOTE MY SHARES FOR
ME?
A Your broker will vote your shares only if you provide written instructions
on how to vote. Absent such instructions, your shares held in what is
called "street name" will not be voted. A failure to vote will have the
effect of a vote against the merger. Therefore, WE URGE YOU TO INSTRUCT
YOUR BROKER IN WRITING TO VOTE YOUR SHARES FOR THE MERGER.
Q WHAT WILL HAPPEN IF I DON'T VOTE?
A If you do not vote, it is in effect a vote against the merger. Abstentions
also are considered votes against the merger. To approve the merger, we
must receive the affirmative votes of holders of more than two-thirds of
the outstanding shares of Ohio Edison common stock, SO YOUR VOTE IS VERY
IMPORTANT.
Q WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A We are trying to complete the merger as quickly as possible. In addition to
shareholder approvals, we must also obtain a number of regulatory
approvals. We hope to complete the merger by the end of 1997.
10
<PAGE> 27
PLEASE mark, sign and
mail your proxy TODAY
Vote FOR /X/
YOUR BOARD OF DIRECTORS AND MANAGEMENT
TEAM URGE YOU TO VOTE FOR THE MERGER
ON THE ENCLOSED PROXY CARD.
REMEMBER, NOT RETURNING YOUR PROXY CARD,
OR ABSTAINING, HAS THE EFFECT OF
A VOTE AGAINST THE MERGER.
Questions? CALL 1-800-631-8945
TO REACH A REPRESENTATIVE OF INVESTOR
SERVICES OR GEORGESON & COMPANY, INC.,
WHICH IS ASSISTING US WITH THE PROXY
SOLICITATION.
[OHIO EDISON LOGO]
The Energy Makers
76 South Main Street o Akron, Ohio 44308
<PAGE> 28
FIRSTENERGY
MERGER SUMMARY
On September 16, 1996, Ohio Edison and Centerior Energy announced an agreement
to merge under a new holding company called FirstEnergy Corp. Both investors and
customers will benefit from the merger, which will create the nation's 11th
largest electric utility based on total electric sales - with $5 billion in
revenues and 2.1 million customers in northern and central Ohio and western
Pennsylvania. As a larger, stronger company, FirstEnergy will be better
positioned to compete under any future industry structure.
BENEFITS OF MERGER
- - Earnings and cash flow growth expected to start in the first year of merger.
- - Increased size to better compete.
- - Savings of $1 billion over ten years.
- - Increased control of generating
plant assets to maximize operating efficiency.
- - Lower capital costs.
- - Natural alliance of contiguous service areas to enhance customer service
and prospects for off-system sales and future growth.
- - Operating companies to reduce their exposure to nuclear investments and
regulatory assets by an additional $4.3 billion by 2006.
APPROVALS
- - Merger requires two-thirds approval of Ohio Edison common shareholders and
majority approval of Centerior shareholders.
- - Merger will be reviewed by a number of regulatory agencies. The Public
Utilities Commission of Ohio has already approved a key element of the
merger - FirstEnergy's rate plan fo customers of Centerior.
EXCHANGE RATIO/TIMING
- - Upon completion of merger, OEC shareholders will receive one share of
FirstEnergy for each share of OEC common stock, and CX shareholders
will receive a .525 share of FirstEnergy for each share of CX common stock.
- - We expect FirstEnergy's common dividend rate to be equivalent to OEC's current
dividend rate.
- - We expect the exchange to be tax-free for federal income tax purposes.
[Map of Ohio PA Regions]
Toledo Edison
Ohio Edison
CEI
PennPower
OHIO PA
- - Special meeting of shareholders is scheduled for March 27, 1997.
- - We expect the merger to be completed by the end of 1997.
STOCK PRICE PERFORMANCE
This chart highlights Ohio Edison's common stock price performance since the
merger announcement.
- OEC
- S&P Utilities
Price at 9/13/96 = 100
OEC S/P
SEPTEMBER 1996
SEPTEMBER 13 100 100
20 93.373 99.659
27 94.578 99.386
OCTOBER 1996
OCTOBER 4 95.181 101.013
11 96.988 100.777
18 96.988 102.068
25 98.795 102.057
NOVEMBER 1996
NOVEMBER 1 100.000 104.198
8 103.614 106.098
15 104.217 106.056
22 109.639 105.998
29 110.843 105.411
DECEMBER 1996
DECEMBER 6 107.229 103.931
13 106.627 102.949
20 108.434 104.949
27 110.241 105.678
JANUARY 1997
JANUARY 3 110.241 103.831
10 110.241 105.678
17 110.241 106.770
24 111.446 105.848
30 112.651 105.007
COMMON STOCK HIGHLIGHTS
MARKET STATISTICS AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
OE CX
<S> <C> <C>
High/Low Price During 4th Quarter $23.25/$19.375 $10.75/$9.13
Earnings Per Share $2.10 $.82
Annualized Dividend Yield 6.6% 7.4%
Annualized Dividend Per Share $1.50 $.80
Price/Earnings Ratio (12 months) 10.8 13.1
Payout Ratio (12 months) 71% 98%
Book Value Per Share $17.35 $13.40
</TABLE>
- --------------------------------------------------------------------------------
CONTACT Greg LaFlame o Manager, Investor Relations
Ohio Edison Company - 76 South Main St. - Akron, OH 44308 - (330) 384-5500
