______________________________________________________________
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, 1996
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, 1996 and 1995, 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, 1996 AND 1995
--------------------------------
AND FOR THE YEAR ENDED DECEMBER 31, 1996
----------------------------------------
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, 1996 AND 1995 3-6
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN
BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1996 7-8
NOTES TO FINANCIAL STATEMENTS 9-14
SUPPLEMENTAL SCHEDULES:
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT
PURPOSES AS OF DECEMBER 31, 1996 15
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS FOR
THE YEAR ENDED DECEMBER 31, 1996 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, 1996 and 1995, and the related statement
of changes in net assets available for plan benefits for the year
ended December 31, 1996. These financial statements are the
responsibility of the Savings Plan Committee. 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, 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, 1996 and 1995, and the
changes in net assets available for plan benefits for the year
ended December 31, 1996 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, 1996, 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, L.L.P.
Cleveland, Ohio
June 20, 1997
- 2 -
<TABLE>
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------
As of December 31, 1996
<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>
ASSETS
- ------------------------------
CASH/CASH EQUIVALENTS $ 953,160 $ 0 $ 0 $ 15,277,893 $ 702,333 $ 0 $ 0
COMPANY COMMON STOCK 23,915,654 0 0 192,440,635 42,593,000 0 0
GUARANTEED INSURANCE CONTRACTS 0 60,061,245 0 0 0 0 0
COLLATERALIZED MORTGAGE OBLIG. 0 9,953,100 0 0 0 0 0
DOMESTIC EQUITY STOCKS 0 0 66,309,427 0 0 0 0
INTERNATIONAL EQUITY STOCKS 0 0 0 0 0 0 0
SMALL-CAP STOCKS 0 0 0 0 0 3,558,695 0
OTHER EQUITIES 0 0 0 0 0 0 0
BALANCED FUND SECURITIES 0 0 0 0 0 0 3,256,716
PARTICIPANT LOANS 0 0 0 0 0 0 0
INTEREST & DIVIDENDS RECEIVABLE 404,030 366,110 0 54,864 2,901 0 0
EMPLOYER CONTRIBUTIONS
RECEIVABLE 0 0 0 3,949,910 0 0 0
----------- ------------ ----------- ------------ ----------- ---------- ----------
TOTAL ASSETS 25,272,844 70,380,455 66,309,427 211,723,302 43,298,234 3,558,695 3,256,716
LIABILITIES
- ----------------------------
ACCRUED INTRA-FUND TRANSFERS 0 0 0 8,874,426 (8,874,426) 0 0
LOAN PAYABLE 0 0 0 199,850,000 0 0 0
ACCRUED FEES 32,313 70,028 14,396 0 0 3,984 (8,359)
ACCRUED INTEREST EXPENSE 0 0 0 19,985,000 0 0 0
----------- ------------ ----------- ------------ ---------- ---------- ----------
TOTAL LIABILITIES 32,313 70,028 14,396 228,709,426 (8,874,426) 3,984 (8,359)
----------- ------------ ----------- ------------ ---------- ---------- ----------
NET ASSETS (DEFICIENCY)
AVAILABLE FOR PLAN BENEFITS $25,240,531 $70,310,427 $66,295,031 $(16,986,124) $52,172,660 $3,554,711 $3,265,075
=========== =========== =========== ============ =========== ========== ==========
<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, 1996
(Continued)
<CAPTION>
INTERNATIONAL
SELF MANAGED INDEX LOAN PAYSOP
FUND FUND FUND FUND TOTAL
------------ ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
- ------------------------------
CASH/CASH EQUIVALENTS $ 0 $ 0 $ 0 $ 243,630 $ 17,177,016
COMPANY COMMON STOCK 0 0 0 3,082,762 262,032,051
GUARANTEED INSURANCE CONTRACTS 0 0 0 0 60,061,245
COLLATERALIZED MORTGAGE OBLIG. 0 0 0 0 9,953,100
DOMESTIC EQUITY STOCKS 0 0 0 0 66,309,427
INTERNATIONAL EQUITY STOCKS 0 7,256,711 0 0 7,256,711
SMALL-CAP STOCKS 0 0 0 0 3,558,695
OTHER EQUITIES 1,944,487 0 0 0 1,944,487
BALANCED FUND SECURITIES 0 0 0 0 3,256,716
PARTICIPANT LOANS 0 0 6,371,562 0 6,371,562
INTEREST & DIVIDENDS RECEIVABLE 0 0 0 857 828,762
EMPLOYER CONTRIBUTIONS RECEIVABLE 0 0 0 0 3,949,910
----------- ----------- ----------- ------------ ------------
TOTAL ASSETS 1,944,487 7,256,711 6,371,562 3,327,249 442,699,682
LIABILITIES
- ----------------------------
ACCRUED INTRA-FUND TRANSFERS 0 0 0 0 0
LOAN PAYABLE 0 0 0 0 199,850,000
ACCRUED FEES 0 16,425 0 0 128,787
ACCRUED INTEREST EXPENSE 0 0 0 0 19,985,000
----------- ----------- ----------- ------------ ------------
TOTAL LIABILITIES 0 16,425 0 0 219,963,787
----------- ----------- ----------- ------------ ------------
NET ASSETS (DEFICIENCY) AVAILABLE
FOR PLAN BENEFITS $ 1,944,487 $ 7,240,286 $ 6,371,562 $ 3,327,249 $222,735,895
=========== =========== =========== ============ ============
<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, 1995
<CAPTION>
COMPANY CAPITAL ESOP ESOP
COMMON PRESERVATION S&P 500 UNALLOCATED ALLOCATED SMALL CAP BALANCED
STOCK FUND FUND INDEX FUND FUND FUND FUND FUND
----------- ------------ ----------- ------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
- ------------------------------
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>
- 5 -
<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
------------ ------------- ----------- ------------ --------------
<S> <C> <C> <C> <C> <C>
ASSETS
- ------------------------------
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>
- 6 -
<TABLE>
OHIO EDISON SYSTEM SAVINGS PLAN
-------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
--------------------------------------------------------------
For the Year Ended December 31, 1996
<CAPTION>
COMPANY CAPITAL ESOP ESOP
COMMON PRESERVATION S&P 500 UNALLOCATED ALL0CATED SMALL CAP BALANCED
STOCK FUND FUND INDEX FUND FUND FUND FUND FUND
----------- ------------ ----------- ------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
EMPLOYEE CONTRIBUTIONS $ 836,187 $ 5,531,857 $ 5,015,842 $ 0 $ 0 $ 510,904 $ 526,865
EMPLOYER CONTRIBUTIONS 0 0 0 3,949,910 0 0 0
INTEREST INCOME & DIVIDENDS 1,661,446 4,624,956 0 13,145,510 2,886,067 0 0
INTEREST EXPENSE 0 0 0 (19,985,000) 0 0 0
FEES & ADJUSTMENTS (49,907) (158,916) (66,846) 0 (379) (4,827) (5,147)
EXCESS OF NET PROCEEDS FROM SALES
OF ASSETS OVER MARKET VALUE AT
BEGINNING OF YEAR:
AGGREGATE PROCEEDS 4,817,569 10,529,395 6,696,752 11,641,223 2,956,544 418,367 533,375
AGGREGATE COST 5,263,246 10,529,395 6,048,872 11,109,390 3,211,305 395,375 515,679
----------- ----------- ----------- ------------ ----------- ---------- ----------
NET EXCESS (DEFICIENCY) (445,677) 0 647,880 531,833 (254,761) 22,992 17,696
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) ON
SECURITIES (433,896) 0 11,703,424 (9,110,994) 831,299 523,798 271,833
DISTRIBUTIONS TO PARTICIPANTS (2,846,378) (8,464,177) (4,466,863) 0 (2,951,480) (73,230) (199,060)
NET INTRA-FUND PLAN TRANSFERS (310,434) (3,853,259) 893,448 (6,085,322) 6,085,322 1,400,445 1,115,625
----------- ----------- ----------- ------------ ----------- ---------- ----------
NET CHANGE IN PLAN EQUITY (1,588,659) (2,319,539) 13,726,885 (17,554,063) 6,596,068 2,380,082 1,727,812
NET ASSETS AVAILABLE FOR PLAN
BENEFITS - BEGINNING OF YEAR 26,829,190 72,629,966 52,568,146 567,939 45,576,592 1,174,629 1,537,263
----------- ----------- ----------- ------------ ----------- ---------- ----------
NET ASSETS (DEFICIENCY) AVAILABLE
FOR PLAN BENEFITS - END OF YEAR $25,240,531 $70,310,427 $66,295,031 $(16,986,124) $52,172,660 $3,554,711 $3,265,075
=========== =========== =========== ============ =========== ========== ==========
<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, 1996
(Continued)
<CAPTION>
INTERNATIONAL
SELF MANAGED INDEX LOAN PAYSOP
FUND FUND FUND FUND TOTAL
------------ ------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
EMPLOYEE CONTRIBUTIONS $ 0 $ 1,198,927 $ 0 $ 0 $ 13,620,582
EMPLOYER CONTRIBUTIONS 0 0 0 0 3,949,910
INTEREST INCOME & DIVIDENDS 35,126 0 549,963 220,918 23,123,986
INTEREST EXPENSE 0 0 0 0 (19,985,000)
FEES & ADJUSTMENTS 0 (8,503) 0 0 (294,525)
EXCESS OF NET PROCEEDS FROM SALES
OF ASSETS OVER MARKET VALUE AT
BEGINNING OF YEAR:
AGGREGATE PROCEEDS 782,264 1,399,413 0 344,734 40,119,636
AGGREGATE COST 762,764 1,370,154 0 369,226 39,575,406
---------- ----------- ---------- ---------- ------------
NET EXCESS (DEFICIENCY) 19,500 29,259 0 (24,492) 544,230
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION)
ON SECURITIES 64,364 352,010 0 (101,500) 4,100,338
DISTRIBUTIONS TO PARTICIPANTS 0 (425,690) (520,842) (577,690) (20,525,410)
NET INTRA-FUND PLAN TRANSFERS 689,454 (258,814) 323,535 0 0
---------- ----------- ---------- ---------- ------------
NET CHANGE IN PLAN EQUITY 808,444 887,189 352,656 (482,764) 4,534,111
NET ASSETS AVAILABLE FOR PLAN
BENEFITS - BEGINNING OF YEAR 1,136,043 6,353,097 6,018,906 3,810,013 218,201,784
---------- ----------- ---------- ---------- ------------
NET ASSETS (DEFICIENCY) AVAILABLE
FOR PLAN BENEFITS - END OF YEAR $1,944,487 $ 7,240,286 $6,371,562 $3,327,249 $222,735,895
========== =========== ========== ========== ============
<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, 1996 and 1995
--------------------------
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 is eligible to become a
participant in the Plan, herein referred to as "employee" or
"Member", immediately at commencement of employment.
- 9 -
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.
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. 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. At December 31,
1996 and 1995 the outstanding ESOP Loan balance was $199,850,000.
Requirements for maturing long-term debt are as follows:
1997 $ - 0 -
1998 5,700,000
1999 11,400,000
2000 14,500,000
2001 18,700,000
2002 and thereafter 149,550,000
------------
$199,850,000
============
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 1996 and 1995, respectively, 301,460 and 292,256 shares
of Company common stock were allocated to Members. An additional
allocation of 128,331 and 105,427 shares in 1996 and 1995,
respectively, of Company common stock were made relative to
- 10 -
reinvestments of dividends on the Company common stock. These
shares were subsequently released from the ESOP Unallocated Fund in
February, 1997 and 1996 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, 1996 and 1995, the status of the Company
common stock was as follows: 8,458,929 and 8,931,669, shares
respectively, of Company common stock in the ESOP Unallocated Fund
at market values of $192,440,635 and $209,894,221, respectively,
and 1,872,220 and 1,535,913 shares, respectively, of Company common
stock held in the ESOP Allocated Fund at market values of
$42,593,000 and $36,093,967. 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.
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.
- 11 -
The financial statements have been prepared on the accrual
basis of accounting and all 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.
Employee Contributions
- ----------------------
Employees may invest between 1% and 15% 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 for 1996 and 1995.
Prior to age 59-1/2, an active employee may withdraw before-tax
deposits only under certain hardship conditions (see Note 7).
- 12 -
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, 1996, the Plan has received applications for
withdrawals in the amount of $3,329 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, 1996:
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 6.50% and 6.99% for the fiscal years 1996 and 1995,
respectively. The crediting interest rate as of December 31, 1996
and 1995 was 6.57% and 6.93%, 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. The fair value
of the investment contracts at December 31, 1996 and 1995 were
$71,112,179 and $75,843,000, respectively.
Fund C - International Index Fund: This Fund consists of
---------------------------------
foreign equities and is designed to produce returns similar to
- 13 -
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.
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.
Fund H - Self Managed Brokerage Account Option: 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.
- 14 -
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.
- 15 -
<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, 1996
<CAPTION>
Description Market
Identity of Issue Maturity Cost Value
- ---------------------------------- ------------------------- ------------ ------------
<S> <C> <C> <C>
State Street STIF Fund Money Market Fund 17,177,016 17,177,016
----------
Total Cash & Cash Equivalents 17,177,016
==========
ESOP Unallocated Fund OEC Common Stock 158,793,703 192,440,635
ESOP Allocated Fund OEC Common Stock 35,111,667 42,593,000
PAYSOP Fund OEC Common Stock 2,263,075 3,082,762
Company Stock Fund OEC Common Stock 21,033,617 23,915,654
International Index Fund EAFE Index Stocks 6,284,783 7,256,711
(Common/Collective Trust)
S&P 500 Index Fund S&P 500 Stocks 37,159,288 66,309,427
(Common/Collective Trust)
Small Cap Fund Small Cap Domestic Stocks 2,923,592 3,558,695
(Common/Collective Trust)
Balanced Fund Equities, Fixed Income 2,872,668 3,256,716
(Common/Collective Trust)
Self Managed Fund Equities 1,944,487 1,944,487
Capital Preservation Fund
FHMA, 6.0% CMO, 02-15-19 4,965,600 4,965,600
FNMA, 6.0% CMO, 09-25-14 4,987,500 4,987,500
State Street Bank Stable Income
Fund GIC, 12-31-99 60,061,245 60,061,245
----------
Total Capital Preservation Fund $70,014,345
===========
</TABLE>
- 16 -
<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, 1996
<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 115 $25,937,238 318 $22,586,763 $22,586,763 $ 0
State Street Yield
Enhanced Fund 101 11,652,094 190 14,559,600 14,559,600 0
S&P 500 Index Fund 111 8,152,026 141 6,696,752 6,048,872 647,880
Ohio Edison Company 234 13,387,558 301 19,760,070 19,953,167 (193,097)
</TABLE>
- 17 -
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, 33-51139, 333-01489, 333-05277 and 333-21011) of
our report dated June 20, 1997, on the audits of the Ohio Edison
System Savings Plan as of December 31, 1996 and 1995 and for the
year ended December 31, 1996 which report is included in this
Annual Report on Form 11-K of Ohio Edison.
COOPERS & LYBRAND, L.L.P.
Cleveland, Ohio
June 27, 1997
- 18 -
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 27, 1997
- ---------------------
Date
By: /s/ James A. Bowers
---------------------------
James A. Bowers
Chairman
Savings Plan Committee
- 19 -
June 30, 1997
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.
Please address any comments regarding the above to the
undersigned at 76 S. Main Street, Akron, OH 44308 (330) 384-5504.
Very truly yours,
OHIO EDISON COMPANY
By: /s/ N. C. Ashcom
--------------------
N. C. Ashcom
Secretary
- 20 -
