-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, gcdAEu4T6fIB3GV9jJsx6iPOyNaPIJLfipisr9xn3ZkAK8G5idKpZJNDyAz1fauV h5OArPyWX9+59vjJW1ui/Q== 0000950152-94-001155.txt : 19941116 0000950152-94-001155.hdr.sgml : 19941116 ACCESSION NUMBER: 0000950152-94-001155 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTERIOR ENERGY CORP CENTRAL INDEX KEY: 0000774197 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 341479083 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09130 FILM NUMBER: 94559449 BUSINESS ADDRESS: STREET 1: 6200 OAK TREE BLVD CITY: INDEPENDENCE STATE: OH ZIP: 44131 BUSINESS PHONE: 2164473100 MAIL ADDRESS: STREET 1: PO BOX 94661 CITY: CLEVELAND STATE: OH ZIP: 44101-4661 FORMER COMPANY: FORMER CONFORMED NAME: NORTH HOLDING CO /OH/ DATE OF NAME CHANGE: 19851002 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CLEVELAND ELECTRIC ILLUMINATING CO CENTRAL INDEX KEY: 0000020947 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 340150020 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-02323 FILM NUMBER: 94559450 BUSINESS ADDRESS: STREET 1: 55 PUBLIC SQ STREET 2: PO BOX 5000 CITY: CLEVELAND STATE: OH ZIP: 44101 BUSINESS PHONE: 2166229800 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOLEDO EDISON CO CENTRAL INDEX KEY: 0000352049 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 344375005 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03583 FILM NUMBER: 94559451 BUSINESS ADDRESS: STREET 1: 300 MADISON AVE CITY: TOLEDO STATE: OH ZIP: 43652 BUSINESS PHONE: 4192495000 10-Q 1 CENTERIOR ENERGY, C.E.I. & TOLEDO EDISON 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [ X ] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 1994 OR [ ] Transition report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the transition period from _____ to _____ Commission Registrant; State of Incorporation; I.R.S. Employer File Number Address; and Telephone Number Identification No. - ----------- ---------------------------------- ----------------- 1-9130 CENTERIOR ENERGY CORPORATION 34-1479083 (An Ohio Corporation) 6200 Oak Tree Boulevard Independence, Ohio 44131 Telephone (216) 447-3100 1-2323 THE CLEVELAND ELECTRIC 34-0150020 ILLUMINATING COMPANY (An Ohio Corporation) 55 Public Square Cleveland, Ohio 44113 Telephone (216) 622-9800 1-3583 THE TOLEDO EDISON COMPANY 34-4375005 (An Ohio Corporation) 300 Madison Avenue Toledo, Ohio 43652 Telephone (419) 249-5000 Indicate by check mark whether each of the registrants (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No On November 7, 1994, there were 148,031,503 shares of Centerior Energy Corporation Common Stock outstanding. Centerior Energy Corporation is the sole holder of the 79,590,689 shares and 39,133,887 shares of common stock of The Cleveland Electric Illuminating Company and The Toledo Edison Company, respectively, outstanding on that date. 2 This combined Form 10-Q is separately filed by Centerior Energy Corporation ("Centerior Energy"), The Cleveland Electric Illuminating Company ("Cleveland Electric") and The Toledo Edison Company ("Toledo Edison"). Centerior Energy, Cleveland Electric and Toledo Edison are sometimes referred to collectively as the "Companies". Cleveland Electric and Toledo Edison are sometimes collectively referred to as the "Operating Companies". Information contained herein relating to any individual registrant is filed by such registrant on its behalf. No registrant makes any representation as to information relating to any other registrant, except that information relating to either or both of the Operating Companies is also attributed to Centerior Energy. TABLE OF CONTENTS Page PART I. FINANCIAL INFORMATION Centerior Energy Corporation and Subsidiaries The Cleveland Electric Illuminating Company and Subsidiaries The Toledo Edison Company Notes to Financial Statements 1 Centerior Energy Corporation and Subsidiaries Income Statement 7 Balance Sheet 8 Cash Flows 9 Management's Discussion and Analysis of Financial 10 Condition and Results of Operations The Cleveland Electric Illuminating Company and Subsidiaries Income Statement 15 Balance Sheet 16 Cash Flows 17 Management's Discussion and Analysis of Financial 18 Condition and Results of Operations The Toledo Edison Company Income Statement 22 Balance Sheet 23 Cash Flows 24 Management's Discussion and Analysis of Financial 25 Condition and Results of Operations PART II. OTHER INFORMATION Item 5. Other Information 29 Item 6. Exhibits and Reports on Form 8-K 29 Signatures 31 Exhibit Index 32 -i- 3 CENTERIOR ENERGY CORPORATION AND SUBSIDIARIES, THE CLEVELAND ELECTRIC ILLUMINATING COMPANY AND SUBSIDIARIES, AND THE TOLEDO EDISON COMPANY NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (1) Interim Financial Statements Centerior Energy Corporation (Centerior Energy) is a holding company of Centerior Service Company (Service Company) and two electric utilities, The Cleveland Electric Illuminating Company (Cleveland Electric) and The Toledo Edison Company (Toledo Edison). These two utilities are referred to collec- tively herein as the "Operating Companies". Centerior Energy, Cleveland Electric and Toledo Edison are referred to collectively herein as the "Companies". The comparative income statement and balance sheet and the related statement of cash flows of each of the Companies have been prepared from the records of each of the Companies without audit by independent public accountants. In the opinion of management, all adjustments necessary for a fair statement of financial position at September 30, 1994 and results of operations for the three months and nine months ended September 30, 1994 and 1993 have been included. All such adjustments were normal recurring adjustments, except for those discussed in Notes 2 and 7. These financial statements and notes should be read in conjunction with the financial statements and notes included in the Companies' combined Annual Report on Form 10-K for the year ended December 31, 1993 (1993 Form 10-K) and the Quarterly Reports on Form 10-Q for the quarter ended March 31, 1994 (First Quarter 1994 Form 10-Q) and the quarter ended June 30, 1994 (Second Quarter 1994 Form 10-Q). These interim period financial results are not necessarily indicative of results for a 12-month period. (2) New Accounting Standard Effective January 1, 1994, the Companies adopted the new accounting standard for certain investments in debt and equity securities (SFAS 115). SFAS 115 addresses the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. The adoption of SFAS 115 did not materially affect the financial positions or the 1994 third quarter and nine-month results of operations of the Companies. (3) Equity Distribution Restrictions The Operating Companies can make cash available for the funding of Centerior Energy's common stock dividends by paying dividends on their respective common stock, which is held solely by Centerior Energy. Federal law prohibits the Operating Companies from paying dividends out of capital accounts. However, the Operating Companies may pay preferred and common stock dividends out of appropriated retained earnings and current earnings. At September 30, 1994, Cleveland Electric and Toledo Edison had $160.7 million and $93.8 million, respectively, of appropriated retained earnings for the payment of dividends. However, Toledo Edison is prohibited from paying a common stock dividend by a 4 provision in its mortgage that essentially requires such dividends to be paid out of the total balance of retained earnings, which currently is a deficit. (4) Common Stock Dividends Cash dividends per common share declared by Centerior Energy during the nine months ended September 30, 1994 and 1993 were as follows: 1994 1993 Paid February 15 $.20 $.40 Paid May 15 .20 .40 Paid August 15 .20 .40 Paid November 15 .20 .40 Common stock cash dividends declared by Cleveland Electric during the nine months ended September 30, 1994 and 1993 were as follows: 1994 1993 (millions) Paid in February $18.6 $46.7 Paid in May 24.2 47.0 Paid in August 24.3 47.3 Also, during the third quarter of 1994, Cleveland Electric declared property dividends totaling $25.6 million for the transfer of its investments in three wholly owned subsidiaries to Centerior Energy. One subsidiary's common stock was transferred to Centerior Energy during the quarter, while the other two subsidiaries' common stock was transferred on October 1, 1994. Cleveland Electric's valuation of the property dividends was based on the historical cost (carrying value) of the common stock investments in the subsidiaries, their undistributed retained earnings and, for one subsidiary, an equity advance (loan). The value of the noncash dividends payable by Cleveland Electric to Centerior Energy at September 30, 1994 was $25.5 million. Toledo Edison did not declare any common stock dividends during the nine months ended September 30, 1994 and 1993. (5) Financing Activity During the three months ended September 30, 1994, the Operating Companies retired debt and preferred stock as follows: Cleveland Electric Mandatory redemptions consisted of $1.2 million of bank loans, pollution control notes and other long-term debt, and $1.0 million of Serial Preferred Stock, $7.35 Series C. 5 Toledo Edison Mandatory redemptions consisted of $10 million of Cumulative Preferred Stock, $25 par value, $2.81 Series, and $0.5 million of bank loans and other long- term debt. Toledo Edison also elected to redeem an additional $10 million of the $2.81 Preferred Stock. (6) Revised Decommissioning Cost Estimates In 1994, Centerior Energy, Cleveland Electric and Toledo Edison increased their annual decommissioning expense accruals for their three nuclear generating units to $23.6 million, $12.8 million and $10.8 million, respectively. These revised accruals which also are required to be funded are based on increased decommissioning cost estimates and the external trust funding methodology required by The Public Utilities Commission of Ohio (PUCO). The PUCO has recognized that these increases are recoverable in rates. The increased decommissioning cost estimates were derived from recently updated, site-specific studies for each of the units. The updated studies estimate total decommissioning costs to aggregate $716 million, $397 million and $319 million for Centerior Energy, Cleveland Electric and Toledo Edison, respectively, in 1993 and 1992 dollars. (See table below.) The updated estimates reflect substantial increases from the prior PUCO-recognized aggregate estimates of $257 million, $142 million and $115 million in 1987 and 1986 dollars for Centerior Energy, Cleveland Electric and Toledo Edison, respectively. The revised estimates reflect the DECON method of decommissioning (prompt decontamination), the locations and cost characteristics specific to the units, and include costs associated with decontamination, dismantlement and site restoration. The revised estimates include additional low-level waste burial costs, higher labor and equipment costs, and costs resulting from an additional five-year period in the decommissioning process to allow sufficient cooling of on-site, spent nuclear fuel. The revised estimates for the units are as follows: License Expiration Centerior Cleveland Toledo Generating Unit Year Energy Electric Edison (millions) Davis-Besse Nuclear Power Station (1) 2017 $346 $178 $168 Perry Power Plant Unit 1 (1) 2026 256 156 100 Beaver Valley Power Station Unit 2 (2) 2027 114 63 51 Total $716 $397 $319 (1) Dollar amounts in 1993 dollars. (2) Dollar amounts in 1992 dollars. 6 The estimated costs to decommission the units in future dollars, at the time of license expiration, assuming a 4% annual inflation rate are as follows: Centerior Cleveland Toledo Generating Unit Energy Electric Edison (millions) Davis-Besse Nuclear Power Station (1) $ 862 $ 443 $419 Perry Power Plant Unit 1 (2) 908 554 354 Beaver Valley Power Station Unit 2 (3) 423 233 190 Total $2,193 $1,230 $963 (1) Dollar amounts in 2017 dollars. (2) Dollar amounts in 2026 dollars. (3) Dollar amounts in 2027 dollars. The PUCO requires that the decommissioning expense and payments to the external trusts be determined on a levelized basis. Specifically, the annual expense and investment in the trusts are calculated by dividing the unrecovered decommissioning costs in current dollars by the remaining years in the licensing period of each unit. Payments to the trusts are to be made quarterly. This methodology requires that the net earnings on the trusts be reinvested therein with the intent of allowing net earnings to offset inflation. The PUCO requires that the estimated costs of decommissioning and the funding level be reviewed at least every five years and updated, if necessary. In the Balance Sheet at September 30, 1994, Accumulated Depreciation and Amortization included $92 million, $50 million and $42 million for Centerior Energy, Cleveland Electric and Toledo Edison, respectively, of decommissioning costs previously expensed and the earnings on the external trust funding. The amounts exceed the Balance Sheet amounts of the external Nuclear Plant Decommissioning Trusts for the Companies because the reserves began prior to the external trust funding. The Operating Companies record the trust earnings as an increase to the trust assets and the related component of the decommissioning reserve (included in Accumulated Depreciation and Amortization). The staff of the Securities and Exchange Commission has questioned certain of the current accounting practices of the electric utility industry, including the Companies, regarding the recognition, measurement and classification of decommissioning costs for nuclear generating stations in the financial state- ments of electric utilities. In response to these questions, the Financial Accounting Standards Board has agreed to review the accounting for removal costs, including decommissioning. If current electric utility industry accounting practices for such decommissioning are changed: 1) the annual provision for decommissioning could increase, 2) the estimated cost for decommissioning could be recorded as a liability rather than as accumulated 7 depreciation, and 3) trust fund income from the external decommissioning trusts could be reported as investment income rather than as a reduction to decommissioning expense. (7) Early Retirement Program in 1993 Other operation and maintenance expenses for the three months and nine months ended September 30, 1993 included accruals for pension and other benefits for employees retiring under an early retirement program, called the Voluntary Transition Program (VTP). The Operating Companies' accruals for these benefits included a pro rata share of the Service Company's costs. Over 1,500 employees elected the VTP. The estimated amounts accrued for these benefits for the three months and nine months ended September 30, 1993 were as follows:
Centerior Cleveland Toledo Energy Electric Edison Three Nine Three Nine Three Nine Months Months Months Months Months Months (millions) Pension Costs (Credits): Special Termination and Curtailment Costs $202.9 $208.3 $131.1 $135.5 $ 71.8 $ 72.8 Settlement Gain (81.6) (81.6) (62.1) (62.1) (19.5) (19.5) Net Pension Costs 121.3 126.7 69.0 73.4 52.3 53.3 Enhanced VTP Benefits Payable from Corporate Funds 3.9 10.6 2.0 4.9 1.9 5.7 Total Pension-Related Costs 125.2 137.3 71.0 78.3 54.2 59.0 SFAS 106 Curtailment Costs 79.8 80.7 38.5 39.1 41.3 41.6 Total VTP Costs $205.0 $218.0 $109.5 $117.4 $ 95.5 $100.6
A portion of these accruals related to the VTP curtailment cost of postretire- ment benefits other than pensions (shown as "SFAS 106 Curtailment Costs" in the table), which was deferred to later years under a provision of the Rate Stabilization Program. (For further information on the Rate Stabilization Program, see Note 7 in the Companies' Notes to the Financial Statements for 1993 in the 1993 Form 10-K.) The deferred amounts at September 30, 1993 were $80.7 million, $39.1 million and $41.6 million for Centerior Energy, Cleveland Electric and Toledo Edison, respectively. 8 (8) Commitments and Contingencies Various legal actions, claims and regulatory proceedings covering several matters are pending against the Companies. See "Item 3. Legal Proceedings" in the 1993 Form 10-K. The Companies continue to seek the necessary regulatory approvals to complete the merger of the Operating Companies. The Operating Companies plan to seek preferred stock share owner approval in early 1995. The merger is expected to be effective in 1995. 9 CENTERIOR ENERGY CORPORATION AND SUBSIDIARIES INCOME STATEMENT (Unaudited) (Thousands, Except Per Share Amounts)
Three Months Ended Nine Months Ended September 30 September 30 --------------------- ------------------------- 1994 1993 1994 1993 -------- -------- ---------- ---------- OPERATING REVENUES $ 666,985 $ 709,075 $ 1,850,989 $ 1,896,221 OPERATING EXPENSES Fuel and Purchased Power 112,342 121,935 332,663 359,733 Other Operation and Maintenance 177,221 417,760 563,881 817,098 Depreciation and Amortization 72,478 64,878 208,389 195,343 Taxes, Other Than Federal Income Taxes 82,318 81,407 247,903 247,184 Deferred Operating Expenses, Net (14,877) (98,792) (45,591) (133,562) Federal Income Taxes 51,882 15,971 95,556 55,984 -------- -------- ---------- ---------- Total Operating Expenses 481,364 603,159 1,402,801 1,541,780 -------- -------- ---------- ---------- OPERATING INCOME 185,621 105,916 448,188 354,441 NONOPERATING INCOME Allowance for Equity Funds Used During Construction 1,197 1,498 3,291 3,916 Other Income and Deductions, Net 1,416 (1,570) 6,105 (3,773) Deferred Carrying Charges 10,009 13,705 29,711 41,309 Federal Income Taxes - Credit (Expense) (928) 1,991 (3,672) 3,077 -------- -------- ---------- ---------- Total Nonoperating Income 11,694 15,624 35,435 44,529 -------- -------- ---------- ---------- INCOME BEFORE INTEREST CHARGES 197,315 121,540 483,623 398,970 INTEREST CHARGES Long-term Debt 87,818 85,964 263,249 260,219 Short-term Debt 2,130 1,889 5,376 5,533 Allowance for Borrowed Funds Used During Construction (1,200) (1,133) (3,334) (2,965) -------- -------- ---------- ---------- Net Interest Charges 88,748 86,720 265,291 262,787 -------- -------- ---------- ---------- INCOME AFTER INTEREST CHARGES 108,567 34,820 218,332 136,183 Preferred Dividend Requirements of Subsidiaries 16,429 17,584 49,655 50,181 -------- -------- ---------- ---------- NET INCOME $ 92,138 $ 17,236 $ 168,677 $ 86,002 ======== ======== ========== ========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 148,023 145,347 147,780 144,359 ======== ======== ========== ========== EARNINGS PER COMMON SHARE $ .62 $ .12 $ 1.14 $ .60 ======== ======== ========== ========== The accompanying notes to financial statements as they relate to Centerior Energy are an integral part of this statement.
10 CENTERIOR ENERGY CORPORATION AND SUBSIDIARIES BALANCE SHEET (Thousands)
September 30, December 31, 1994 1993 (Unaudited) ----------- ----------- ASSETS PROPERTY, PLANT AND EQUIPMENT Utility Plant In Service $ 9,727,523 $ 9,571,124 Accumulated Depreciation and Amortization (2,880,768) (2,677,369) ----------- ----------- 6,846,755 6,893,755 Construction Work In Progress 164,918 180,931 ----------- ----------- 7,011,673 7,074,686 Nuclear Fuel, Net of Amortization 306,575 344,642 Other Property, Less Accumulated Depreciation 43,128 40,808 ----------- ----------- 7,361,376 7,460,136 CURRENT ASSETS Cash and Temporary Cash Investments 174,290 225,253 Amounts Due from Customers and Others, Net 243,428 220,500 Unbilled Revenues 100,844 123,844 Materials and Supplies, at Average Cost 143,010 135,511 Fossil Fuel Inventory, at Average Cost 31,827 32,159 Taxes Applicable to Succeeding Years 107,731 249,544 Other 12,919 6,235 ----------- ----------- 814,049 993,046 DEFERRED CHARGES AND OTHER ASSETS Amounts Due from Customers for Future Federal Income Taxes 992,219 968,267 Unamortized Loss from Beaver Valley Unit 2 Sale 101,821 105,190 Unamortized Loss on Reacquired Debt 86,132 92,385 Carrying Charges and Operating Expenses 936,849 861,660 Nuclear Plant Decommissioning Trusts 62,392 55,682 Other 162,833 173,464 ----------- ----------- 2,342,246 2,256,648 ----------- ----------- $ 10,517,671 $ 10,709,830 =========== =========== CAPITALIZATION AND LIABILITIES CAPITALIZATION Common Stock Equity $ 1,847,267 $ 1,785,122 Preferred Stock With Mandatory Redemption Provisions 262,402 313,575 Without Mandatory Redemption Provisions 450,871 450,871 Long-Term Debt 3,733,364 4,018,554 ----------- ----------- 6,293,904 6,568,122 OTHER NONCURRENT LIABILITIES Nuclear Fuel Lease Obligations 229,094 253,666 Other 190,745 195,377 ----------- ----------- 419,839 449,043 CURRENT LIABILITIES Current Portion of Long-Term Debt and Preferred Stock 356,853 127,253 Current Portion of Lease Obligations 77,269 111,490 Accounts Payable 141,229 188,409 Accrued Taxes 232,063 377,887 Accrued Interest 97,810 87,394 Dividends Declared 45,041 15,795 Other 57,824 57,399 ----------- ----------- 1,008,089 965,627 DEFERRED CREDITS Unamortized Investment Tax Credits 291,441 329,290 Accumulated Deferred Federal Income Taxes 1,710,760 1,578,955 Unamortized Gain from Bruce Mansfield Plant Sale 531,582 551,268 Accumulated Deferred Rents for Bruce Mansfield Plant and Beaver Valley Unit 2 139,268 127,661 Other 122,788 139,864 ----------- ----------- 2,795,839 2,727,038 COMMITMENTS AND CONTINGENCIES (Note 8) ----------- ----------- $ 10,517,671 $ 10,709,830 =========== =========== The accompanying notes to financial statements as they relate to Centerior Energy are an integral part of this statement.
11 CENTERIOR ENERGY CORPORATION AND SUBSIDIARIES CASH FLOWS (Unaudited) (Thousands)
Nine Months Ended September 30, -------------------- 1994 1993 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $168,677 $86,002 -------- -------- Adjustments to Reconcile Net Income to Cash from Operating Activities: Depreciation and Amortization 208,389 195,343 Deferred Federal Income Taxes 85,218 17,393 Unbilled Revenues 23,000 13,000 Deferred Fuel (17,646) 3,801 Deferred Carrying Charges (29,711) (41,309) Leased Nuclear Fuel Amortization 72,771 65,263 Deferred Operating Expenses, Net (45,591) (133,562) Allowance for Equity Funds Used During Construction (3,291) (3,916) Noncash Early Retirement Program Expenses, Net -- 207,351 Changes in Amounts Due from Customers and Others, Net (22,928) (44,156) Changes in Inventories (7,167) 24,999 Changes in Accounts Payable (47,180) 3,825 Changes in Working Capital Affecting Operations 146 17,575 Other Noncash Items 16,176 12,931 ------- ------- Total Adjustments 232,186 338,538 ------- ------- Net Cash from Operating Activities 400,863 424,540 CASH FLOWS FROM FINANCING ACTIVITIES Bank Loans, Commercial Paper and Other Short-Term Debt -- (49,502) Debt Issues: First Mortgage Bonds -- 300,200 Secured Medium-Term Notes -- 128,000 Term Bank Loan -- 40,000 Preferred Stock Issue -- 100,000 Common Stock Issues 11,902 54,194 Reacquired Common Stock -- 468 Maturities, Redemptions and Sinking Funds (107,286) (406,332) Nuclear Fuel Lease Obligations (93,155) (72,928) Common Stock Dividends Paid (88,621) (172,733) Premiums, Discounts and Expenses (973) (11,940) ------- ------- Net Cash from Financing Activities (278,133) (90,573) CASH FLOWS FROM INVESTING ACTIVITIES Cash Applied to Construction (149,160) (147,006) Interest Capitalized as Allowance for Borrowed Funds Used During Construction (3,334) (2,965) Other Cash Applied (21,199) (20,862) ------- ------- Net Cash from Investing Activities (173,693) (170,833) ------- ------- NET CHANGE IN CASH AND TEMPORARY CASH INVESTMENTS (50,963) 163,134 CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF PERIOD 225,253 92,949 ------- ------- CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $174,290 $256,083 ======= ======= Other Payment Information: Interest (net of amounts capitalized) $216,000 $208,000 Federal Income Taxes 1,100 32,500 The accompanying notes to financial statements as they relate to Centerior Energy are an integral part of this statement.
12 CENTERIOR ENERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Capital Resources and Liquidity Reference is made to "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in Item 7 of the 1993 Form 10-K, in the First Quarter 1994 Form 10-Q and in the Second Quarter 1994 Form 10-Q. The information under "Capital Resources and Liquidity" remains un- changed with the following exceptions: During the third quarter of 1994, the Operating Companies redeemed various securities as discussed in Note 5. On August 26, 1994, Moody's Investors Service, Inc. (Moody's) downgraded the credit ratings of certain securities of the Operating Companies. The preferred stock of both Operating Companies was downgraded from "b1" to "b2" and Toledo Edison's debentures were downgraded from "Ba3" to "B1". Moody's noted that the Operating Companies' recently amended bank facilities provide the participating banks with second mortgages on the assets of the Operating Companies, thereby creating a new level of priority above the classes of securities that Moody's downgraded. (For further information on this transaction, see "Management's Discussion and Analysis of Financial Condition and Results of Operations--Capital Resources and Liquidity" and Note 7 in the Second Quarter 1994 Form 10-Q.) Since the Operating Companies were unable to issue commercial paper because of their below investment grade commercial paper ratings, the Operating Companies requested that Standard & Poor's Rating Group (S&P) withdraw its ratings on their commercial paper. Accordingly, S&P no longer provides any ratings with respect to the Operating Companies' commercial paper. In October 1994, Cleveland Electric and Toledo Edison issued $46.1 million and $30.5 million, respectively, of first mortgage bonds as collateral security for the sale by a public authority of equal principal amounts of tax-exempt bonds. The proceeds from the sales of the public authority's bonds were used to refund equal principal amounts of the authority's tax-exempt bonds that were issued in 1988 and had been continuously remarketed on a floating rate basis. The new bonds mature on October 1, 2023 and have an 8% fixed interest rate. They are not redeemable prior to October 1, 2004. Centerior Energy now expects to raise only about $12 million in 1994 from the sale of authorized but unissued common stock under certain of its employee and share owner stock purchase plans. Shares of common stock for these plans have been acquired in the open market rather than issued as new shares or issued from treasury stock. 13 Additional first mortgage bonds may be issued by the Operating Companies under their respective mortgages on the basis of property additions, cash or refund- able first mortgage bonds. Under their respective mortgages, each Operating Company may issue first mortgage bonds on the basis of property additions and, under certain circumstances, refundable bonds only if the applicable interest coverage test is met. At September 30, 1994, Cleveland Electric and Toledo Edison would have been permitted to issue approximately $454 million and $348 million of additional first mortgage bonds, respectively, after giving effect to the corresponding October 1994 first mortgage bond issuances and redemptions discussed above. After the fourth quarter of 1994, Cleveland Electric's ability to issue first mortgage bonds is expected to increase substantially when its interest coverage ratio will no longer be affected by the write-offs recorded at December 31, 1993. Results of Operations Factors contributing to the 5.9% and 2.4% decreases in 1994 operating revenues from 1993 for the third quarter and nine months, respectively, are shown as follows: Changes for Period Ended September 30, 1994 Three Nine Factors Months Months (millions) Sales Volume and Mix $(21.2) $ 11.9 Wholesale Revenues (17.1) (37.5) Fuel Cost Recovery Revenues (3.6) (25.9) Miscellaneous Revenues (0.2) 6.3 Total $(42.1) $(45.2) Percentage changes between 1994 and 1993 billed electric kilowatt-hour sales are summarized as follows: Changes for Period Ended September 30, 1994 Three Nine Customer Categories Months Months Residential (5.5)% 0.7% Commercial 0.6 3.0 Industrial 3.0 4.2 Other (43.0) (35.0) Total (7.2) (2.4) 14 Third quarter 1994 total kilowatt-hour sales decreased primarily because of lower wholesale sales (included in the "Other" category). Increases in industrial and commercial sales were completely offset by lower residential sales. Industrial sales increased on the strength of increased sales to large automotive manufacturers and the broad-based, smaller industrial customer group. Residential sales were negatively affected by the cooler summer weather as compared with the 1993 period. Total kilowatt-hour sales decreased for the nine-month period in 1994 because of lower wholesale sales. Industrial sales increased on the strength of increased sales to large automotive manufacturers and the broad-based, smaller industrial customer group. Residential and commercial sales increased as a result of weather conditions. For the 1994 nine-month period, retail operating revenues were 34.4% residential, 32.4% commercial and 33.2% industrial and retail kilowatt-hour sales were 26.7% residential, 28.5% commercial and 44.8% industrial. The average price per kilowatt-hour for residential, commercial and industrial customers was $.11, $.10 and $.06, respectively. The changes from the comparable 1993 period were not significant. The decreases in 1994 wholesale sales and revenues were attributable to the expiration of a wholesale power agreement, softer market conditions and limited power availability for bulk power transactions because of generating plant outages. The decreases in 1994 fuel cost recovery revenues included in customer bills resulted from decreases in the fuel cost recovery factors used by the Operating Companies to calculate these revenues. The weighted averages of the fuel cost recovery factors used in the third quarter of 1994 decreased about 2% and 6% for Cleveland Electric and Toledo Edison, respectively, and during the nine-month period in 1994 decreased about 11% and 3%, respectively, compared to those used in 1993. Nine-month miscellaneous revenues in 1994 increased from the 1993 amounts primarily because of increased billings to other utilities for overhead expenses related to the 1994 refueling and maintenance outage of the jointly owned Perry Nuclear Power Plant Unit 1 (Perry Unit 1). Third quarter operating expenses in 1994 decreased 20.2% from the 1993 amount. Other operation and maintenance expenses in the 1993 third quarter included $205 million of one-time VTP benefit expenses as discussed in Note 7. Other operation and maintenance expenses also decreased because of expense reductions resulting from cost reduction measures, including the major work force reduction in 1993. Fuel and purchased power expenses decreased because of lower fuel expense, including less amortization of previously deferred fuel costs than the amount amortized in 1993. Depreciation and amortization expenses increased because of higher nuclear plant decommissioning expense accruals in 1994 as discussed in Note 6. A decrease in deferred operating expenses resulted primarily from lower Rate Stabilization Program deferrals in the 1994 period. The 1993 third quarter Rate Stabilization Program deferrals 15 included $79.8 million of SFAS 106 curtailment cost deferrals related to the VTP. Federal income taxes increased as a result of higher pretax operating income. Third quarter credits for carrying charges in 1994 decreased from the 1993 amount primarily because of the cessation at the end of 1993 of accruals related to the rate phase-in plans for the investments in Perry Unit 1 and Beaver Valley Power Station Unit 2 under a 1989 rate agreement for the Operating Companies. The third quarter federal income tax provision for non- operating income in 1994 increased from the 1993 amount because the expense increase resulting from a lower tax allocation of interest charges to non- operating activities exceeded the decrease related to the lower carrying charge credits. Third quarter net income in 1994 increased $75 million from the 1993 amount of $17 million. Quarterly earnings per common share increased $.50 per share from the 1993 amount of $.12. The 1993 quarterly earnings were reduced by a one-time, after-tax VTP charge of approximately $81 million, or $.56 per share. Nine-month operating expenses in 1994 decreased 9% from the 1993 amount. Fuel and purchased power expenses decreased because of lower fuel expense, including less amortization of previously deferred fuel costs than the amount amortized in 1993. An increase in purchased power expense partially offset the lower fuel expense. During a June 1994 heat wave, additional power was purchased because two large generating units were out of operation for maintenance. Other operation and maintenance expenses decreased primarily because the 1993 nine-month period expenses included $218 million of one-time VTP benefit expenses as discussed in Note 7. Also, cost reduction measures helped lower operation and maintenance expenses in 1994 despite increased maintenance expenses related to generating plant outages in 1994. Depreciation and amortization expenses increased primarily because of the aforementioned higher nuclear plant decommissioning expense accruals. A decrease in deferred operating expenses resulted primarily from lower Rate Stabilization Program deferrals in the 1994 period. The 1993 nine-month Rate Stabilization Program deferrals included $80.7 million of SFAS 106 curtailment cost deferrals related to the VTP. Federal income taxes increased as a result of higher pretax operating income. The nine-month credits for carrying charges in 1994 decreased from the 1993 amount primarily because of the cessation at the end of 1993 of accruals related to the phase-in plans. The nine-month federal income tax provision for nonoperating income in 1994 increased from the 1993 amount because the expense increase resulting from a lower tax allocation of interest charges to nonoperating activities exceeded the decrease related to the lower carrying charge credits. Nine-month net income in 1994 increased $83 million, or 96.1%, from the 1993 amount. Nine-month earnings per common share increased $.54 per share, or 90%. The 1993 nine-month earnings were reduced by a one-time, after-tax VTP charge of approximately $89 million, or $.61 per share. 16 Outlook--Competition--Cleveland Public Power Cleveland Public Power (CPP) continues to expand its operations into two areas which Cleveland Electric has served for many years. CPP is constructing new transmission and distribution facilities extending into eastern portions of Cleveland and plans to expand to western portions of Cleveland. During the 1991-1993 period, Cleveland Electric had a net loss of about 7,000 customers, including several hundred, primarily small, commercial and industrial customers, to CPP which resulted in a reduction in 1993 annual net income of about $14,000,000. CPP's Phase I expansion, as now planned, could take away about 18,000 more of Cleveland Electric's customers, while its Phase II expansion could take away about 29,000 more customers over the next several years. If CPP's expansion is completed as planned, this could eventually reduce annual net income by an additional estimated $27,000,000, for a total estimated reduction in annual net income of about $41,000,000. Despite CPP's expansion efforts, Cleveland Electric has been successful in retaining many of its large commercial and industrial customers in Cleveland by offering them incentive packages in return for sole-supplier contracts with Cleveland Electric for five years. In addition, an increasing number of CPP's customers continue to convert back to Cleveland Electric's service. 17 THE CLEVELAND ELECTRIC ILLUMINATING COMPANY AND SUBSIDIARIES INCOME STATEMENT (Unaudited) (Thousands)
Three Months Ended Nine Months Ended September 30 September 30 --------------------- ------------------------- 1994 1993 1994 1993 -------- -------- ---------- ---------- OPERATING REVENUES $ 473,969 $ 506,873 $ 1,296,628 $ 1,345,453 OPERATING EXPENSES Fuel and Purchased Power (1) 98,475 107,567 290,446 323,562 Other Operation and Maintenance 104,872 237,667 336,439 479,408 Depreciation and Amortization 50,488 45,853 146,117 137,853 Taxes, Other Than Federal Income Taxes 58,818 57,514 176,862 175,298 Deferred Operating Expenses, Net (9,225) (50,161) (29,251) (70,612) Federal Income Taxes 38,840 19,719 67,750 44,617 -------- -------- ---------- ---------- Total Operating Expenses 342,268 418,159 988,363 1,090,126 -------- -------- ---------- ---------- OPERATING INCOME 131,701 88,714 308,265 255,327 NONOPERATING INCOME Allowance for Equity Funds Used During Construction 860 1,204 2,437 3,133 Other Income and Deductions, Net 1,619 (1,889) 4,731 (4,197) Deferred Carrying Charges 6,303 7,596 18,766 22,898 Federal Income Taxes - Credit (Expense) (617) 1,388 (2,579) 2,053 -------- -------- ---------- ---------- Total Nonoperating Income 8,165 8,299 23,355 23,887 -------- -------- ---------- ---------- INCOME BEFORE INTEREST CHARGES 139,866 97,013 331,620 279,214 INTEREST CHARGES Long-term Debt 60,624 57,945 181,137 177,108 Short-term Debt 890 657 2,823 2,500 Allowance for Borrowed Funds Used During Construction (1,097) (945) (3,002) (2,464) -------- -------- ---------- ---------- Net Interest Charges 60,417 57,657 180,958 177,144 -------- -------- ---------- ---------- NET INCOME 79,449 39,356 150,662 102,070 Preferred Dividend Requirements 11,329 12,016 34,197 32,862 -------- -------- ---------- ---------- EARNINGS AVAILABLE FOR COMMON STOCK $ 68,120 $ 27,340 $ 116,465 $ 69,208 ======== ======== ========== ========== (1) Includes purchased power expense for purchases from Toledo Edison. $ 27,716 $ 30,357 $ 84,329 $ 91,346 The accompanying notes to financial statements as they relate to Cleveland Electric are an integral part of this statement.
18 THE CLEVELAND ELECTRIC ILLUMINATING COMPANY AND SUBSIDIARIES BALANCE SHEET (Thousands)
September 30, December 31, 1994 1993 (Unaudited) ----------- ----------- ASSETS PROPERTY, PLANT AND EQUIPMENT Utility Plant In Service $ 6,830,264 $ 6,734,130 Accumulated Depreciation and Amortization (1,994,281) (1,889,584) ----------- ----------- 4,835,983 4,844,546 Construction Work In Progress 130,846 141,422 ----------- ----------- 4,966,829 4,985,968 Nuclear Fuel, Net of Amortization 185,005 202,200 Other Property, Less Accumulated Depreciation 39,771 41,041 ----------- ----------- 5,191,605 5,229,209 CURRENT ASSETS Cash and Temporary Cash Investments 18,344 77,374 Amounts Due from Customers and Others, Net 173,126 155,899 Amounts Due from Affiliates 4,165 5,399 Unbilled Revenues 84,000 99,000 Materials and Supplies, at Average Cost 96,617 92,659 Fossil Fuel Inventory, at Average Cost 18,808 20,188 Taxes Applicable to Succeeding Years 76,036 178,577 Other 4,236 2,967 ----------- ----------- 475,332 632,063 DEFERRED CHARGES AND OTHER ASSETS Amounts Due from Customers for Future Federal Income Taxes 603,377 586,494 Unamortized Loss on Reacquired Debt 57,569 60,293 Carrying Charges and Operating Expenses 566,575 518,613 Nuclear Plant Decommissioning Trusts 33,115 29,955 Other 95,385 102,546 ----------- ----------- 1,356,021 1,297,901 ----------- ----------- $ 7,022,958 $ 7,159,173 =========== =========== CAPITALIZATION AND LIABILITIES CAPITALIZATION Common Stock Equity $ 1,075,083 $ 1,039,947 Preferred Stock With Mandatory Redemption Provisions 255,717 285,225 Without Mandatory Redemption Provisions 240,871 240,871 Long-Term Debt 2,564,159 2,793,162 ----------- ----------- 4,135,830 4,359,205 OTHER NONCURRENT LIABILITIES Nuclear Fuel Lease Obligations 140,625 150,775 Other 94,894 96,352 ----------- ----------- 235,519 247,127 CURRENT LIABILITIES Current Portion of Long-Term Debt and Preferred Stock 273,983 70,394 Current Portion of Lease Obligations 44,419 62,610 Accounts Payable 73,529 122,385 Accounts and Notes Payable to Affiliates 75,187 60,956 Accrued Taxes 205,143 304,621 Accrued Interest 69,743 60,376 Dividends Declared 33,032 19,258 Other 35,733 32,632 ----------- ----------- 810,769 733,232 DEFERRED CREDITS Unamortized Investment Tax Credits 202,937 235,293 Accumulated Deferred Federal Income Taxes 1,188,342 1,104,859 Unamortized Gain from Bruce Mansfield Plant Sale 330,994 343,183 Accumulated Deferred Rents for Bruce Mansfield Plant 83,856 77,304 Other 34,711 58,970 ----------- ----------- 1,840,840 1,819,609 COMMITMENTS AND CONTINGENCIES (Note 8) ----------- ----------- $ 7,022,958 $ 7,159,173 =========== =========== The accompanying notes to financial statements as they relate to Cleveland Electric are an integral part of this statement.
19 THE CLEVELAND ELECTRIC ILLUMINATING COMPANY AND SUBSIDIARIES CASH FLOWS (Unaudited) (Thousands)
Nine Months Ended September 30, -------------------- 1994 1993 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $150,662 $102,070 -------- -------- Adjustments to Reconcile Net Income to Cash from Operating Activities: Depreciation and Amortization 146,117 137,853 Deferred Federal Income Taxes 43,704 15,488 Unbilled Revenues 15,000 11,000 Deferred Fuel (21,785) 6,897 Deferred Carrying Charges (18,766) (22,898) Leased Nuclear Fuel Amortization 39,966 36,232 Deferred Operating Expenses, Net (29,251) (70,612) Allowance for Equity Funds Used During Construction (2,437) (3,133) Noncash Early Retirement Program Expenses, Net -- 112,449 Changes in Amounts Due from Customers and Others, Net (17,227) (29,652) Changes in Inventories (2,578) 13,826 Changes in Accounts Payable (48,856) (21,961) Changes in Working Capital Affecting Operations 10,527 (8,806) Other Noncash Items 5,475 1,673 ------- ------- Total Adjustments 119,889 178,356 ------- ------- Net Cash from Operating Activities 270,551 280,426 CASH FLOWS FROM FINANCING ACTIVITIES Bank Loans, Commercial Paper and Other Short-Term Debt -- (10,000) Notes Payable to Affiliates 19,200 (11,000) Debt Issues: First Mortgage Bonds -- 280,000 Secured Medium-Term Notes -- 35,000 Term Bank Loan -- 40,000 Preferred Stock Issue -- 100,000 Maturities, Redemptions and Sinking Funds (55,353) (333,451) Nuclear Fuel Lease Obligations (51,115) (40,563) Dividends Paid (101,494) (172,358) Premiums, Discounts and Expenses (761) (10,964) ------- ------- Net Cash from Financing Activities (189,523) (123,336) CASH FLOWS FROM INVESTING ACTIVITIES Cash Applied to Construction (124,366) (119,212) Interest Capitalized as Allowance for Borrowed Funds Used During Construction (3,002) (2,464) Other Cash Received (Applied) (12,690) 5,364 ------- ------- Net Cash from Investing Activities (140,058) (116,312) ------- ------- NET CHANGE IN CASH AND TEMPORARY CASH INVESTMENTS (59,030) 40,778 CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF PERIOD 77,374 33,524 ------- ------- CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $18,344 $74,302 ======= ======= Other Payment Information: Interest (net of amounts capitalized) $148,000 $142,000 Federal Income Taxes 11,300 28,000 The accompanying notes to financial statements as they relate to Cleveland Electric are an integral part of this statement.
20 THE CLEVELAND ELECTRIC ILLUMINATING COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Capital Resources and Liquidity Reference is made to "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in Item 7 of the 1993 Form 10-K, in the First Quarter 1994 Form 10-Q and in the Second Quarter 1994 Form 10-Q. The information under "Capital Resources and Liquidity" remains unchanged with the following exceptions: During the third quarter of 1994, Cleveland Electric redeemed various securities as discussed in Note 5. On August 26, 1994, Moody's Investors Services, Inc. (Moody's) downgraded the credit ratings of Cleveland Electric's preferred stock from "b1" to "b2". Moody's noted that Cleveland Electric's recently amended bank facilities provide the participating banks with second mortgages on Cleveland Electric's assets, thereby creating a new level of priority above the preferred stock that Moody's downgraded. (For further information on this transaction, see "Management's Discussion and Analysis of Financial Condition and Results of Operations--Capital Resources and Liquidity" and Note 7 in the Second Quarter 1994 Form 10-Q.) Since Cleveland Electric was unable to issue commercial paper because of its below investment grade commercial paper ratings, Cleveland Electric requested that Standard & Poor's Rating Group (S&P) withdraw its rating on Cleveland Electric's commercial paper. Accordingly, S&P no longer provides any rating with respect to commercial paper of Cleveland Electric. In October 1994, Cleveland Electric issued $46.1 million of first mortgage bonds as collateral security for the sale by a public authority of an equal principal amount of tax-exempt bonds. The proceeds from the sale of the public authority's bonds were used to refund $46.1 million of the authority's tax-exempt bonds that were issued in 1988 and had been continuously remarketed on a floating rate basis. The new bonds mature on October 1, 2023 and have an 8% fixed interest rate. They are not redeemable prior to October 1, 2004. Additional first mortgage bonds may be issued by Cleveland Electric under its mortgage on the basis of property additions, cash or refundable first mortgage bonds. Under its mortgage, Cleveland Electric may issue first mortgage bonds on the basis of property additions and, under certain circumstances, refund- able bonds only if the applicable interest coverage test is met. At September 30, 1994, Cleveland Electric would have been permitted to issue approximately $454 million of additional first mortgage bonds after giving effect to the October 1994 first mortgage bond issuance and redemption discussed above. After the fourth quarter of 1994, Cleveland Electric's ability to issue first mortgage bonds is expected to increase substantially when its interest coverage ratio will no longer be affected by the write-offs recorded at December 31, 1993. 21 Results of Operations Factors contributing to the 6.5% and 3.6% decreases in 1994 operating revenues from 1993 for the third quarter and nine months, respectively, are shown as follows: Changes for Period Ended September 30, 1994 Three Nine Factors Months Months (millions) Sales Volume and Mix $(15.9) $ 4.7 Wholesale Revenues (15.9) (39.9) Fuel Cost Recovery Revenues (1.4) (22.4) Miscellaneous Revenues 0.3 8.8 Total $(32.9) $(48.8) Percentage changes between 1994 and 1993 billed electric kilowatt-hour sales are summarized as follows: Changes for Period Ended September 30, 1994 Three Nine Customer Categories Months Months Residential (6.1)% 0.2% Commercial 1.6 3.2 Industrial - 1.9 Other (49.6) (53.3) Total (9.1) (6.0) Third quarter 1994 total kilowatt-hour sales decreased because of lower wholesale sales (included in the "Other" category) and lower residential sales. Residential sales were negatively affected by the cooler summer weather as compared with the 1993 period. However, commercial sales increased slightly. Industrial sales were virtually the same as in the 1993 period. Total kilowatt-hour sales decreased for the nine-month period in 1994 because of lower wholesale sales. Industrial sales increased on the strength of increased sales to large automotive manufacturers and the broad-based, smaller industrial customer group. Residential and commercial sales increased as a result of weather conditions. For the 1994 nine-month period, retail operating revenues were 34.2% residential, 34.3% commercial and 31.5% industrial and retail kilowatt-hour sales were 26.7% residential, 31.1% commercial and 42.2% industrial. The average price per kilowatt-hour for residential, commercial and industrial customers was $.11, $.09 and $.06, respectively. The changes from the comparable 1993 period were not significant. 22 The decreases in 1994 wholesale sales and revenues were attributable to the expiration of a wholesale power agreement, softer market conditions and limited power availability for bulk power transactions because of generating plant outages. The decreases in 1994 fuel cost recovery revenues included in customer bills resulted from decreases in the fuel cost recovery factors used in 1994 to calculate these revenues compared to those used in 1993. The decreases in the weighted averages of the fuel cost recovery factors for 1994 were about 2% and 11% for the third quarter and nine months, respectively. Miscellaneous revenues in 1994 increased from the 1993 amounts primarily because of increased billings to other utilities for overhead expenses related to the 1994 refueling and maintenance outage of the jointly owned Perry Nuclear Power Plant Unit 1 (Perry Unit 1). Third quarter operating expenses in 1994 decreased 18.1% from the 1993 amount. Other operation and maintenance expenses in the 1993 third quarter included $109.5 million of one-time VTP benefit expenses as discussed in Note 7. Other operation and maintenance expenses also decreased because of expense reductions resulting from cost reduction measures, including the major work force reduction in 1993. Fuel and purchased power expenses decreased because of lower fuel expense, including less amortization of previously deferred fuel costs than the amount amortized in 1993. Depreciation and amortization expenses increased because of higher nuclear plant decommissioning expense accruals in 1994 as discussed in Note 6. A decrease in deferred operating expenses resulted primarily from lower Rate Stabilization Program deferrals in the 1994 period. The 1993 third quarter Rate Stabilization Program deferrals included $38.5 million of SFAS 106 curtailment cost deferrals related to the VTP. Federal income taxes increased as a result of higher pretax operating income. Third quarter credits for carrying charges in 1994 decreased from the 1993 amount primarily because of the cessation at the end of 1993 of accruals related to the rate phase-in plan for the investments in Perry Unit 1 and Beaver Valley Power Station Unit 2 under a 1989 rate agreement. The third quarter federal income tax provision for nonoperating income in 1994 increased from the 1993 amount because the expense increase resulting from a lower tax allocation of interest charges to nonoperating activities exceeded the decrease related to the lower carrying charge credits. Third quarter earnings available for common stock in 1994 increased $41 million from the 1993 amount of $27 million. The 1993 quarterly earnings were reduced by a one-time, after-tax VTP charge of approximately $46 million. Nine-month operating expenses in 1994 decreased 9.3% from the 1993 amount. Fuel and purchased power expenses decreased because of lower fuel expense, including less amortization of previously deferred fuel costs than the amount amortized in 1993. An increase in purchased power expense partially offset the lower fuel expense. During a June 1994 heat wave, additional power was purchased because two large generating units were out of operation for maintenance. Other operation and maintenance expenses decreased primarily 23 because the 1993 nine-month period expenses included $117.4 million of one-time VTP benefit expenses as discussed in Note 7. Also, cost reduction measures helped lower operation and maintenance expenses in 1994 despite increased maintenance expenses related to generating plant outages in 1994. Depreciation and amortization expenses increased primarily because of the aforementioned higher nuclear plant decommissioning expense accruals. A decrease in deferred operating expenses resulted primarily from lower Rate Stabilization Program deferrals in the 1994 period. The 1993 nine-month Rate Stabilization Program deferrals included $39.1 million of SFAS 106 curtailment cost deferrals related to the VTP. Federal income taxes increased as a result of higher pretax operating income. The nine-month credits for carrying charges in 1994 decreased from the 1993 amount primarily because of the cessation at the end of 1993 of accruals related to the phase-in plan. The nine-month federal income tax provision for nonoperating income in 1994 increased from the 1993 amount because the expense increase resulting from a lower tax allocation of interest charges to non- operating activities exceeded the decrease related to the lower carrying charge credits. Nine-month earnings available for common stock in 1994 increased $47 million, or 68.3%, from the 1993 amount. The 1993 nine-month earnings available for common stock were reduced by a one-time, after-tax VTP charge of approximately $51 million. Outlook--Competition--Cleveland Public Power Cleveland Public Power (CPP) continues to expand its operations into two areas which Cleveland Electric has served for many years. CPP is constructing new transmission and distribution facilities extending into eastern portions of Cleveland and plans to expand to western portions of Cleveland. During the 1991-1993 period, Cleveland Electric had a net loss of about 7,000 customers, including several hundred, primarily small, commercial and industrial customers, to CPP which resulted in a reduction in 1993 annual net income of about $14,000,000. CPP's Phase I expansion, as now planned, could take away about 18,000 more of Cleveland Electric's customers, while its Phase II expansion could take away about 29,000 more customers over the next several years. If CPP's expansion is completed as planned, this could eventually reduce annual net income by an additional estimated $27,000,000, for a total estimated reduction in annual net income of about $41,000,000. Despite CPP's expansion efforts, Cleveland Electric has been successful in retaining many of its large commercial and industrial customers in Cleveland by offering them incentive packages in return for sole-supplier contracts with Cleveland Electric for five years. In addition, an increasing number of CPP's customers continue to convert back to Cleveland Electric's service. 24 THE TOLEDO EDISON COMPANY INCOME STATEMENT (Unaudited) (Thousands)
Three Months Ended Nine Months Ended September 30 September 30 --------------------- ------------------------- 1994 1993 1994 1993 -------- -------- ---------- ---------- OPERATING REVENUES (1) $ 227,447 $ 238,543 $ 660,471 $ 663,708 OPERATING EXPENSES Fuel and Purchased Power 42,018 45,220 129,041 130,113 Other Operation and Maintenance 79,301 185,783 247,665 357,931 Depreciation and Amortization 21,990 19,025 62,271 57,490 Taxes, Other Than Federal Income Taxes 23,326 23,775 70,517 71,530 Deferred Operating Expenses, Net (5,653) (48,630) (16,341) (62,949) Federal Income Taxes 13,105 (3,699) 28,099 11,570 -------- -------- ---------- ---------- Total Operating Expenses 174,087 221,474 521,252 565,685 -------- -------- ---------- ---------- OPERATING INCOME 53,360 17,069 139,219 98,023 NONOPERATING INCOME Allowance for Equity Funds Used During Construction 336 294 853 783 Other Income and Deductions, Net 780 (27) 2,402 854 Deferred Carrying Charges 3,706 6,109 10,945 18,411 Federal Income Taxes - Credit (Expense) (158) 807 (536) 1,613 -------- -------- ---------- ---------- Total Nonoperating Income 4,664 7,183 13,664 21,661 -------- -------- ---------- ---------- INCOME BEFORE INTEREST CHARGES 58,024 24,252 152,883 119,684 INTEREST CHARGES Long-term Debt 27,195 28,020 82,112 83,111 Short-term Debt 1,983 1,232 3,923 3,637 Allowance for Borrowed Funds Used During Construction (104) (188) (332) (501) -------- -------- ---------- ---------- Net Interest Charges 29,074 29,064 85,703 86,247 -------- -------- ---------- ---------- NET INCOME (LOSS) 28,950 (4,812) 67,180 33,437 Preferred Dividend Requirements 5,099 5,568 15,457 17,319 -------- -------- ---------- ---------- EARNINGS (LOSS) AVAILABLE FOR COMMON STOCK $ 23,851 $ (10,380) $ 51,723 $ 16,118 ======== ======== ========== ========== (1) Includes revenues from bulk power sales to Cleveland Electric. $ 27,716 $ 30,357 $ 84,329 $ 91,346 The accompanying notes to financial statements as they relate to Toledo Edison are an integral part of this statement.
25 THE TOLEDO EDISON COMPANY BALANCE SHEET (Thousands)
September 30, December 31, 1994 1993 (Unaudited) ----------- ----------- ASSETS PROPERTY, PLANT AND EQUIPMENT Utility Plant In Service $ 2,897,259 $ 2,836,993 Accumulated Depreciation and Amortization (886,487) (787,785) ----------- ----------- 2,010,772 2,049,208 Construction Work In Progress 34,072 39,509 ----------- ----------- 2,044,844 2,088,717 Nuclear Fuel, Net of Amortization 121,570 142,442 Other Property, Less Accumulated Depreciation 3,357 (234) ----------- ----------- 2,169,771 2,230,925 CURRENT ASSETS Cash and Temporary Cash Investments 77,353 82,042 Amounts Due from Customers and Others, Net 69,316 62,979 Amounts Due from Affiliates 39,532 15,682 Unbilled Revenues 16,844 24,844 Materials and Supplies, at Average Cost 46,392 42,852 Fossil Fuel Inventory, at Average Cost 13,020 11,971 Taxes Applicable to Succeeding Years 31,695 70,966 Other 1,528 2,284 ----------- ----------- 295,680 313,620 DEFERRED CHARGES AND OTHER ASSETS Amounts Due from Customers for Future Federal Income Taxes 388,798 381,729 Unamortized Loss from Beaver Valley Unit 2 Sale 101,821 105,190 Unamortized Loss on Reacquired Debt 28,563 32,093 Carrying Charges and Operating Expenses 370,274 343,046 Nuclear Plant Decommissioning Trusts 29,277 25,727 Other 69,195 77,524 ----------- ----------- 987,928 965,309 ----------- ----------- $ 3,453,379 $ 3,509,854 =========== =========== CAPITALIZATION AND LIABILITIES CAPITALIZATION Common Stock Equity $ 673,959 $ 622,375 Preferred Stock With Mandatory Redemption Provisions 6,685 28,350 Without Mandatory Redemption Provisions 210,000 210,000 Long-Term Debt 1,169,205 1,225,392 ----------- ----------- 2,059,849 2,086,117 OTHER NONCURRENT LIABILITIES Nuclear Fuel Lease Obligations 88,469 102,891 Other 78,762 82,757 ----------- ----------- 167,231 185,648 CURRENT LIABILITIES Current Portion of Long-Term Debt and Preferred Stock 82,870 56,859 Current Portion of Lease Obligations 32,849 48,880 Accounts Payable 55,852 63,384 Accounts Payable to Affiliates 29,705 26,608 Accrued Taxes 25,883 89,574 Accrued Interest 28,443 27,022 Other 14,687 16,948 ----------- ----------- 270,289 329,275 DEFERRED CREDITS Unamortized Investment Tax Credits 88,504 93,997 Accumulated Deferred Federal Income Taxes 520,798 471,471 Unamortized Gain from Bruce Mansfield Plant Sale 200,588 208,085 Accumulated Deferred Rents for Bruce Mansfield Plant and Beaver Valley Unit 2 55,412 50,357 Other 90,708 84,904 ----------- ----------- 956,010 908,814 COMMITMENTS AND CONTINGENCIES (Note 8) ----------- ----------- $ 3,453,379 $ 3,509,854 =========== =========== The accompanying notes to financial statements as they relate to Toledo Edison are an integral part of this statement.
26 THE TOLEDO EDISON COMPANY CASH FLOWS (Unaudited) (Thousands)
Nine Months Ended September 30, -------------------- 1994 1993 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $67,180 $33,437 ------- ------- Adjustments to Reconcile Net Income to Cash from Operating Activities: Depreciation and Amortization 62,271 57,490 Deferred Federal Income Taxes 42,521 1,726 Unbilled Revenues 8,000 2,000 Deferred Fuel 4,139 (3,096) Deferred Carrying Charges (10,945) (18,411) Leased Nuclear Fuel Amortization 32,805 29,031 Deferred Operating Expenses, Net (16,341) (62,949) Allowance for Equity Funds Used During Construction (853) (783) Noncash Early Retirement Program Expenses, Net -- 94,902 Changes in Amounts Due from Customers and Others, Net (6,337) (13,562) Changes in Inventories (4,589) 11,174 Changes in Accounts Payable (7,532) 13,663 Changes in Working Capital Affecting Operations (26,057) 3,163 Other Noncash Items 10,701 11,258 ------ ------ Total Adjustments 87,783 125,606 ------ ------ Net Cash from Operating Activities 154,963 159,043 CASH FLOWS FROM FINANCING ACTIVITIES Bank Loans, Commercial Paper and Other Short-Term Debt -- (39,502) Debt Issues: First Mortgage Bonds -- 20,200 Secured Medium-Term Notes -- 93,000 Maturities, Redemptions and Sinking Funds (51,933) (72,881) Nuclear Fuel Lease Obligations (42,040) (32,365) Dividends Paid (15,596) (17,577) Premiums, Discounts and Expenses (212) (882) ------- ------ Net Cash from Financing Activities (109,781) (50,007) CASH FLOWS FROM INVESTING ACTIVITIES Cash Applied to Construction (24,794) (27,794) Interest Capitalized as Allowance for Borrowed Funds Used During Construction (332) (501) Loans to Affiliates (19,200) -- Other Cash Applied (5,545) (1,431) ------ ------ Net Cash from Investing Activities (49,871) (29,726) ------ ------ NET CHANGE IN CASH AND TEMPORARY CASH INVESTMENTS (4,689) 79,310 CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF PERIOD 82,042 15,731 ------- ------- CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $77,353 $95,041 ======= ======= Other Payment Information: Interest (net of amounts capitalized) $69,000 $66,000 Federal Income Taxes 5,700 4,800 The accompanying notes to financial statements as they relate to Toledo Edison are an integral part of this statement.
27 THE TOLEDO EDISON COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Capital Resources and Liquidity Reference is made to "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in Item 7 of the 1993 Form 10-K, in the First Quarter 1994 Form 10-Q and in the Second Quarter 1994 Form 10-Q. The information under "Capital Resources and Liquidity" remains unchanged with the following exceptions: During the third quarter of 1994, Toledo Edison redeemed various securities as discussed in Note 5. On August 26, 1994, Moody's Investors Service, Inc. (Moody's) downgraded the credit ratings of certain securities of Toledo Edison. Toledo Edison's preferred stock was downgraded from "b1" to "b2" and Toledo Edison's debentures were downgraded from "Ba3" to "B1". Moody's noted that Toledo Edison's recently amended bank facilities provide the participating banks with second mortgages on Toledo Edison's assets, thereby creating a new level of priority above the classes of securities that Moody's downgraded. (For further information on this transaction, see "Management's Discussion and Analysis of Financial Condition and Results of Operations--Capital Resources and Liquidity" and Note 7 in the Second Quarter 1994 Form 10-Q.) Since Toledo Edison was unable to issue commercial paper because of its below investment grade commercial paper ratings, Toledo Edison requested that Standard & Poor's Rating Group (S&P) withdraw its rating on Toledo Edison's commercial paper. Accordingly, S&P no longer provides any rating with respect to commercial paper of Toledo Edison. In October 1994, Toledo Edison issued $30.5 million of first mortgage bonds as collateral security for the sale by a public authority of an equal principal amount of tax-exempt bonds. The proceeds from the sale of the public authority's bonds were used to refund $30.5 million of the authority's tax- exempt bonds that were issued in 1988 and had been continuously remarketed on a floating rate basis. The new bonds mature on October 1, 2023 and have an 8% fixed interest rate. They are not redeemable prior to October 1, 2004. Additional first mortgage bonds may be issued by Toledo Edison under its mortgage on the basis of property additions, cash or refundable first mortgage bonds. Under its mortgage, Toledo Edison may issue first mortgage bonds on the basis of property additions and, under certain circumstances, refundable bonds only if the applicable interest coverage test is met. At September 30, 1994, Toledo Edison would have been permitted to issue approximately $348 million of additional first mortgage bonds after giving effect to the October 1994 first mortgage bond issuance and redemption discussed above. 28 Results of Operations Factors contributing to the 4.7% and 0.5% decreases in 1994 operating revenues from 1993 for the third quarter and nine months, respectively, are shown as follows: Changes for Period Ended September 30, 1994 Three Nine Factors Months Months (millions) Sales Volume and Mix $ (5.3) $ 7.2 Wholesale Revenues (3.9) (4.7) Fuel Cost Recovery Revenues (2.2) (3.5) Miscellaneous Revenues 0.3 (2.2) Total $(11.1) $ (3.2) Percentage changes between 1994 and 1993 billed electric kilowatt-hour sales are summarized as follows: Changes for Period Ended September 30, 1994 Three Nine Customer Categories Months Months Residential (4.1)% 2.0% Commercial (2.8) 2.3 Industrial 9.4 9.0 Other (8.3) 5.8 Total (0.3) 5.6 Third quarter 1994 total kilowatt-hour sales decreased slightly because of lower residential and commercial sales and lower wholesale sales (included in the "Other" category). Residential and commercial sales were negatively affected by the cooler summer weather as compared with the 1993 period. Industrial sales increased on the strength of increased sales to large automotive manufacturers and the broad-based, smaller industrial customer group. Total kilowatt-hour sales increased for the nine-month period in 1994 as a result of increased wholesale sales, increased economic activity and weather-related demand. Industrial sales increased on the strength of increased sales to large automotive manufacturers and the broad-based, smaller industrial customer group. Residential and commercial sales increased as a result of weather conditions. 29 For the 1994 nine-month period, retail operating revenues were 34.9% residential, 27.8% commercial and 37.3% industrial and retail kilowatt-hour sales were 26.8% residential, 22% commercial and 51.2% industrial. The average price per kilowatt-hour for residential, commercial and industrial customers was $.11, $.11 and $.06, respectively. The changes from the comparable 1993 period were not significant. The decreases in 1994 fuel cost recovery revenues included in customer bills resulted from decreases in the fuel cost recovery factors used in 1994 to calculate these revenues compared to those used in 1993. The decreases in the weighted averages of the fuel cost recovery factors for 1994 were about 6% and 3% for the third quarter and nine months, respectively. Nine-month miscellaneous revenues in 1994 decreased from the 1993 amounts because of lower overhead expense billings in 1994 to Cleveland Electric for the jointly owned Davis-Besse Nuclear Power Station. Third quarter operating expenses in 1994 decreased 21.4% from the 1993 amount. Other operation and maintenance expenses in the 1993 third quarter included $95.5 million of one-time VTP benefit expenses as discussed in Note 7. Other operation and maintenance expenses also decreased because of expense reductions resulting from cost reduction measures, including the major work force reduction in 1993. Fuel and purchased power expenses decreased because of lower fuel expense resulting from less generation. Depreciation and amortization expenses increased because of higher nuclear plant decommissioning expense accruals in 1994 as discussed in Note 6. A decrease in deferred operating expenses resulted primarily from lower Rate Stabilization Program deferrals in the 1994 period. The 1993 third quarter Rate Stabilization Program deferrals included $41.3 million of SFAS 106 curtailment cost deferrals related to the VTP. Federal income taxes increased as a result of higher pretax operating income. Third quarter credits for carrying charges in 1994 decreased from the 1993 amount primarily because of the cessation at the end of 1993 of accruals related to the rate phase-in plan for the investments in Perry Nuclear Power Plant Unit 1 and Beaver Valley Power Station Unit 2 under a 1989 rate agreement. The third quarter federal income tax provision for nonoperating income in 1994 increased from the 1993 amount because the expense increase resulting from a lower tax allocation of interest charges to nonoperating activities exceeded the decrease related to the lower carrying charge credits. Third quarter earnings available for common stock in 1994 increased $34 million from the 1993 loss of $10 million. The 1993 quarterly earnings were reduced by a one-time, after-tax VTP charge of approximately $35 million. Nine-month operating expenses in 1994 decreased 7.9% from the 1993 amount. Other operation and maintenance expenses decreased primarily because the 1993 nine-month period expenses included $100.6 million of one-time VTP benefit expenses as discussed in Note 7. Also, cost reduction measures helped lower operation and maintenance expenses in 1994 despite increased maintenance expense related to a generating plant outage in 1994. Depreciation and amortization expenses increased primarily because of the aforementioned higher 30 nuclear plant decommissioning expense accruals. A decrease in deferred operating expenses resulted primarily from lower Rate Stabilization Program deferrals in the 1994 period. The 1993 nine-month Rate Stabilization Program deferrals included $41.6 million of SFAS 106 curtailment cost deferrals related to the VTP. Federal income taxes increased as a result of higher pretax operating income. The nine-month credits for carrying charges in 1994 decreased from the 1993 amount primarily because of the cessation at the end of 1993 of accruals related to the phase-in plan. The nine-month federal income tax provision for nonoperating income in 1994 increased from the 1993 amount because the expense increase resulting from a lower tax allocation of interest charges to non- operating activities exceeded the decrease related to the lower carrying charge credits. Nine-month preferred dividend requirements in 1994 decreased from the 1993 amount because of the retirement of preferred stock. Nine-month earnings available for common stock in 1994 increased $36 million from the 1993 amount of $16 million. The 1993 nine-month earnings available for common stock were reduced by a one-time, after-tax VTP charge of approximately $38 million. 31 PART II. OTHER INFORMATION Item 5. Other Information ----------------- 1. Management Changes ------------------ For background relating to this topic, see "Item 10. Directors and Executive Officers of the Registrants" in the 1993 Form 10-K. On October 25, 1994, the respective Boards of Directors of Centerior Energy, Cleveland Electric, Toledo Edison and Centerior Service Company ("Service Company") each elected the following officers effective November 1, 1994: Officer Title ------- ----- E. Lyle Pepin Controller David M. Blank Treasurer Janis T. Percio Secretary Mr. Blank's business experience over the past five years included various positions with the Service Company. He was Director--Rates Administration and Economic Analysis from May 1986 to May 1990; Director--Rates and Corporate Planning from May 1990 to October 1993; and Director--Strategic Planning since October 1993. He will continue in the latter position in conjunction with his office of Treasurer. Mrs. Percio's business experience over the past five years included positions as Assistant Secretary of Cleveland Electric from October 1982 to November 1994 and Assistant Secretary of Centerior Energy, Toledo Edison and the Service Company from April 1986 to November 1994. Item 6. Exhibits and Reports on Form 8-K -------------------------------- a. Exhibits -------- See Exhibit Index following. b. Reports on Form 8-K ------------------- During the quarter ended September 30, 1994, Centerior Energy, Cleveland Electric and Toledo Edison each filed the following Current Report on Form 8-K: A Form 8-K dated August 26, 1994 was filed on September 15, 1994 to report, under "Item 5. Other Events", on the following: 1. Ratings Downgrade (Moody's Investors Service, Inc. lowered its ratings on the Operating Companies' preferred stock and on Toledo Edison's debentures); 2. Retail Wheeling (the status of a bill introduced in the Ohio General Assembly in February 1994 concerning retail wheeling); 3. Garfield Heights (Cleveland Electric filed a complaint and appeal with The Public Utilities Commission of Ohio concerning Garfield Heights' March 1994 ordinance for a 30% reduction in Cleveland Electric's rates; city council removed from the November 1994 ballot an issue for the creation of a public utilities department in the City); and 4. Replacement of Trustee for Cleveland Electric Mortgage (The Chase Manhattan Bank (National Association) was appointed successor Trustee, Paying Agent and Transfer Agent under the Cleveland Electric senior mortgage, replacing Morgan Guaranty Trust Company of New York). - 29 - 32 Also, the Form 8-K filed, under "Item 7. Financial Statements and Exhibits", as Exhibit 4(a), an Open-End Subordinate Indenture of Mortgage between Cleveland Electric and Bank One, Columbus, N.A., as Trustee, dated as of June 1, 1994 and, as Exhibit 4(b), an Open-End Subordinate Indenture of Mortgage between Toledo Edison and Bank One, Columbus, N.A., as Trustee, dated as of June 1, 1994. - - 30 - 33 Signatures ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The person signing this report on behalf of each such registrant is also signing in his capacity as each registrant's Chief Accounting Officer. CENTERIOR ENERGY CORPORATION ---------------------------- (Registrant) THE CLEVELAND ELECTRIC ---------------------- ILLUMINATING COMPANY -------------------- (Registrant) THE TOLEDO EDISON COMPANY ------------------------- (Registrant) By: E. LYLE PEPIN ----------------------------------- E. Lyle Pepin, Controller and Chief Accounting Officer of each Registrant Date: November 10, 1994 - 31 - 34 EXHIBIT INDEX ------------- The following exhibits are filed or, in the case of Financial Data Schedules, submitted herewith: CENTERIOR ENERGY EXHIBIT ------------------------ Exhibit Number Description - -------------- ----------- 27(a) Financial Data Schedule for the period ended September 30, 1994. CLEVELAND ELECTRIC EXHIBITS --------------------------- Exhibit Number Description - -------------- ----------- 4(a) Sixty-Eighth Supplemental Indenture dated September 15, 1994 to Cleveland Electric's Mortgage and Deed of Trust, creating and securing First Mortgage Bonds, 8% Series due 2023-F (including therein the form of the Bonds of such Series). 27(b) Financial Data Schedule for the period ended September 30, 1994. TOLEDO EDISON EXHIBITS ---------------------- Exhibit Number Description - -------------- ----------- 4(b) Forty-first Supplemental Indenture dated as of September 15, 1994 to Toledo Edison's Indenture of Mortgage and Deed of Trust, creating and securing First Mortgage Bonds, 8% Series due 2023-G (including therein the form of the Bonds of such Series). 27(c) Financial Data Schedule for the period ended September 30, 1994. - 32 - EX-27.A 2 EXHIBIT 27.A
UT This schedule contains summary financial information extracted from the financial statements contained in the Form 10-Q for the quarterly period ended September 30, 1994 of Centerior Energy Corporation and is qualified in its entirety by reference to such financial statements. 0000774197 CENTERIOR ENERGY CORP. 1000 U.S. DOLLARS 9-MOS DEC-31-1994 JAN-01-1994 SEP-30-1994 1 PER-BOOK 7,011,673 412,490 814,049 2,279,459 0 10,517,671 2,319,638 0 (472,371) 1,847,267 262,402 450,871 3,733,364 0 0 0 305,674 51,179 229,094 77,269 3,560,551 10,517,671 1,850,989 95,556 1,307,245 1,402,801 448,188 35,435 483,623 265,291 168,677 0 0 118,228 290,225 400,863 1.14 0
EX-4.A 3 EXHIBIT 4.A 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE CLEVELAND ELECTRIC ILLUMINATING COMPANY TO THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) (herein becoming successor to Morgan Guaranty Trust Company of New York, formerly Guaranty Trust Company of New York) As Trustee under The Cleveland Electric Illuminating Company's Mortgage and Deed of Trust, Dated July 1, 1940 ------------------------ SIXTY-EIGHTH SUPPLEMENTAL INDENTURE DATED SEPTEMBER 15, 1994 FIRST MORTGAGE BONDS, 8% SERIES DUE 2023-F - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 i THE CLEVELAND ELECTRIC ILLUMINATING COMPANY Sixty-Eighth Supplemental Indenture Dated September 15, 1994 TABLE OF CONTENTS*
PAGE -------- PARTIES..................................................... 1 RECITALS: Indenture and Supplemental Indentures..................... 1 First Mortgage Bonds outstanding.......................... 2 Authorization by Indenture of issue of additional Bonds... 2 Bonds of this Series...................................... 2 Purpose of Sixty-Eighth Supplemental Indenture............ 2 Authorization of Sixty-Eighth Supplemental Indenture...... 3 Compliance with conditions to making of Sixty-Eighth Sup- plemental Indenture.................................... 3 GRANTING CLAUSES: Grant and Conveyance...................................... 3 ARTICLE I -- CONFIRMATION OF 1940 MORTGAGE AND SUPPLEMENTAL INDENTURES................................................ 4 ARTICLE II -- CREATION, PROVISIONS, REDEMPTION, PRINCIPAL AMOUNT AND FORM OF BONDS OF THIS SERIES................... 5 Section 1 -- Creation and designation of Bonds and compliance with Indenture............................ 5 Section 2 -- Date of Bonds, maturity date, interest rate, accrual date, payment dates, Record Date and place of payments.................................... 5 Section 3 -- Principal amount of Bonds................. 6 Section 4 -- Registration and denomination of Bonds.... 6 Section 5 -- Transfer and exchange of Bonds............ 6 Section 6 -- Redemption of Bonds....................... 7 Section 7 -- Redemption of Bonds pursuant to Section 4.01(a) of the OWDA Trust Indenture.................. 7 Section 8 -- Redemption of Bonds pursuant to Section 4.01(b) of the OWDA Trust Indenture.................. 8 Section 9 -- Redemption of Bonds pursuant to Section 4.01(c) of the OWDA Trust Indenture.................. 8 Section 10 -- Redemption of Bonds in an "Event of De- fault" under the OWDA Trust Indenture................ 9 - --------------- *The Table of Contents, the page headings and the recording data are not part of the Sixty-Eighth Supplemental Indenture as executed.
3 ii
PAGE -------- Section 11 -- Notice of redemption under Sections 7 through 10 of Article II of this Supplemental Indenture............................................ 9 Section 12 -- Bonds deemed to be paid in full upon surrender of State of Ohio Bonds for cancellation under the OWDA Trust Indenture....................... 10 Section 13 -- Payment on the State of Ohio Bonds deemed to be payment of corresponding obligation on Bonds... 10 Section 14 -- Surrender of Bonds in the event of payment in full or partial payment thereof and issuance of new Bonds for the unpaid balance......... 11 Section 15 -- Form of Fully Registered Bond of this Series.................................. 11 Form of Trustee's Certificate of Authentication.......................... 18 Form of Schedule of Payments............. 19 ARTICLE III -- THE TRUSTEE.................................. 20 Section 1 -- Acceptance by Trustee..................... 20 Section 2 -- Responsibility of Trustee................. 20 Section 3 -- Reliance by Trustee upon certain demands, certificates and opinions............................ 20 Section 4 -- Records kept and indemnity given by agency of the Company....................................... 20 Section 5 -- Certain advices to the Company............ 21 ARTICLE IV -- APPOINTMENT OF SUCCESSOR TRUSTEE.............. 21 ARTICLE V -- MISCELLANEOUS PROVISIONS....................... 21 EXECUTION................................................... 21 COMPANY'S ACKNOWLEDGMENT.................................... S-1 TRUSTEE'S ACKNOWLEDGMENT.................................... S-2 SCHEDULE A.................................................. P-1 RECORDING AND FILING DATA................................... R-1
4 SIXTY-EIGHTH SUPPLEMENTAL INDENTURE, dated September 15, 1994, made by and between THE CLEVELAND ELECTRIC ILLUMINATING COMPANY, a corporation organized and existing under the laws of the State of Ohio (the "Company"), and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) (successor to MORGAN GUARANTY TRUST COMPANY OF NEW YORK, formerly GUARANTY TRUST COMPANY OF NEW YORK), a national banking association existing under the laws of the United States of America, with its head office at 1 Chase Manhattan Plaza, The City of New York (the "Trustee"), as Trustee under the Mortgage and Deed of Trust dated July 1, 1940, hereinafter mentioned: RECITALS In order to secure First Mortgage Bonds of the Company ("Bonds"), the Company has heretofore executed and delivered to the Trustee the Mortgage and Deed of Trust dated July 1, 1940 (the "1940 Mortgage") and sixty-seven Supplemental Indentures thereto dated, respectively, July 1, 1940, August 18, 1944, December 1, 1947, September 1, 1950, June 1, 1951, May 1, 1954, March 1, 1958, April 1, 1959, December 20, 1967, January 15, 1969, November 1, 1969, June 1, 1970, November 15, 1970, May 1, 1974, April 15, 1975, April 16, 1975, May 28, 1975, February 1, 1976, November 23, 1976, July 26, 1977, September 27, 1977, May 1, 1978, September 1, 1979, April 1, 1980, April 15, 1980, May 28, 1980, June 9, 1980, December 1, 1980, July 28, 1981, August 1, 1981, March 1, 1982, July 15, 1982, September 1, 1982, November 1, 1982, November 15, 1982, May 24, 1983, May 1, 1984, May 23, 1984, June 27, 1984, September 4, 1984, November 14, 1984, November 15, 1984, April 15, 1985, May 28, 1985, August 1, 1985, September 1, 1985, November 1, 1985, April 15, 1986, May 14, 1986, May 15, 1986, February 25, 1987, October 15, 1987, February 24, 1988, September 15, 1988, May 15, 1989, June 13, 1989, October 15, 1989, January 1, 1990, June 1, 1990, August 1, 1990, May 1, 1991, May 1, 1992, July 31, 1992, January 1, 1993, February 1, 1993, May 20, 1993 and June 1, 1993; and The 1940 Mortgage, as supplemented and modified by said Supplemental Indentures and by this Sixty-Eighth Supplemental Indenture, will be hereinafter collectively referred to as the "Indenture" and this Sixty-Eighth Supplemental Indenture will be hereinafter referred to as "this Supplemental Indenture"; and WHEREAS, an instrument, dated September 14, 1994, was executed by Morgan Guaranty Trust Company of New York resigning as Trustee under the Indenture, by the Company appointing The Chase Manhattan Bank (National Association) as Trustee in succession to said Morgan Guaranty Trust Company of New York under the Indenture, 5 2 and by The Chase Manhattan Bank (National Association) accepting said appointment; and Pursuant to the provisions of the Indenture, the Company has issued 109 series of Bonds in the aggregate principal amount of $4,912,052,000, of which 72 series in the aggregate principal amount of $1,950,272,000 are no longer outstanding; and The Indenture provides among other things that the Company, from time to time, in addition to the Bonds authorized to be executed, authenticated and delivered pursuant to other provisions therein, may execute and deliver additional Bonds to the Trustee and the Trustee shall thereupon authenticate and deliver such Bonds to or upon the order of the Company; and The Company has determined to create pursuant to the provisions of the Indenture one new series of Bonds designated as "First Mortgage Bonds, 8% Series due 2023-F" (the "Bonds of this Series") with the denominations, rate of interest, date of maturity, redemption provisions and other provisions and agreements in respect thereof as in this Supplemental Indenture set forth; and The Bonds of this Series are to be issued by the Company to the Ohio Water Development Authority (hereinafter called the "OWDA") to evidence and secure the obligations of the Company to repay the loan (hereinafter called the "OWDA Loan") made by the OWDA to the Company pursuant to a certain loan agreement, dated as of September 15, 1994, between the OWDA and the Company (hereinafter called the "OWDA Loan Agreement") to assist the Company in refunding certain bonds which had been previously issued by the OWDA, the proceeds of which were loaned to the Company to assist in financing a portion of the costs of the acquisition, construction and installation of certain facilities comprising waste water and solid waste disposal facilities located at the Perry Nuclear Power Plant Unit No. 1 in Lake County, Ohio. The OWDA Loan is to be funded with proceeds derived from the sale by the OWDA of one series of State of Ohio 8% Collateralized Pollution Control Revenue Refunding Bonds, 1994 Series A (The Cleveland Electric Illuminating Company Project) in an aggregate principal amount of not more than $46,100,000 (said series hereinafter called the "State of Ohio Bonds"). The State of Ohio Bonds are to be issued under a certain trust indenture, dated as of September 15, 1994 (hereinafter called the "OWDA Trust Indenture"), between the OWDA and Society National Bank, Cleveland, Ohio, as trustee (hereinafter called the "OWDA Trustee"). The Bonds of this Series are to be assigned and pledged by the OWDA to the OWDA Trustee as security for the payment of the principal of and premium, if any, and interest on the State of Ohio Bonds and are to be delivered by the Company on behalf of the OWDA directly to, and registered in the name of, the 6 3 OWDA Trustee as trustee for the holders of the State of Ohio Bonds; and The Company, in the exercise of the powers and authority conferred upon and reserved to it under the provisions of the Indenture, and pursuant to appropriate resolutions of the Board of Directors, has duly resolved and determined to make, execute and deliver to the Trustee this Supplemental Indenture in the form hereof for the purposes herein provided; and All conditions and requirements necessary to make this Supplemental Indenture a valid, binding and legal instrument have been done, performed and fulfilled and the execution and delivery hereof have been in all respects duly authorized. NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH: That The Cleveland Electric Illuminating Company, in consideration of the premises and of the mutual covenants herein contained and of the sum of One Dollar ($1.00) to it duly paid by the Trustee at or before the ensealing and delivery of these presents and for other valuable considerations, the receipt whereof is hereby acknowledged, and in order to secure the payment of the principal of and interest (and premium, if any) on all Bonds at any time issued and outstanding under the Indenture according to their tenor and effect and the performance and observance of all the covenants and conditions contained in such Bonds, and in the Indenture, has granted, bargained, sold, warranted, aliened, remised, released, conveyed, assigned, transferred, mortgaged, pledged, set over and confirmed, and by these presents does grant, bargain, sell, warrant, alien, remise, release, convey, assign, transfer, mortgage, pledge, set over and confirm unto the Trustee and to its successors in said trust, and to its and their assigns, forever, all of the Company's interests in the parcels of land described in Schedule A attached hereto and made a part hereof. Together with all and singular the buildings, improvements, tenements, hereditaments and appurtenances belonging or in any wise appertaining, or hereafter to belong or appertain, to the aforesaid property or any part thereof, with the reversion and reversions, remainder and remainders, tolls, rents, revenues, issues, income, products and profits thereof, and all the estate, right, title, interest and claim whatsoever which the Company now has or may hereafter acquire in and to the same, at law as well as in equity, and every part and parcel thereof. TO HAVE AND TO HOLD the same unto the Trustee and to its successors and assigns forever; 7 4 SUBJECT, HOWEVER, to the exceptions and reservations and matters hereinabove and in the Indenture recited, to existing leases other than leases which by their terms are subordinate to the lien of the Indenture, to existing "liens upon rights-of-way for transmission or distribution line purposes," as defined in Article I of the Indenture, and any extensions thereof, and subject to existing easements for streets, alleys, highways, rights-of-way and railroad purposes over, upon or across certain of the property hereinbefore described, and also any restrictions as to use imposed by law and to the lien of certain judgments against the Company not exceeding $75,000 in aggregate amount, and subject also to all the terms, conditions, agreements, covenants, exceptions and reservations expressed or provided in the deeds or other instruments, respectively, under and by virtue of which the Company now owns or may hereafter acquire any property subject to the lien of the Indenture and to undetermined liens and charges, if any, incidental to construction or other existing permitted liens as defined in Article I of the Indenture. IN TRUST, NEVERTHELESS, upon the terms and trusts set forth in the Indenture for the equal and proportionate benefit and security of all present and future holders of the Bonds and coupons issued and to be issued under the Indenture, without preference of any of such Bonds and coupons of any particular series over the Bonds and coupons of any other series, by reason of priority in the time of the issue, sale or negotiation thereof, or by reason of the purpose of issue or otherwise, howsoever, except as otherwise provided in Section 2 of Article IV of the Indenture. ARTICLE I CONFIRMATION OF 1940 MORTGAGE AND SUPPLEMENTAL INDENTURES The 1940 Mortgage (as modified in Article V of the Supplemental Indenture dated December 1, 1947, Article V of the Supplemental Indenture dated May 1, 1954, Article V of the Supplemental Indenture dated March 1, 1958, Article V of the Supplemental Indenture dated January 15, 1969, Article III of the Supplemental Indenture dated November 23, 1976 and Article III of the Supplemental Indenture dated April 15, 1985) and the Supplemental Indentures dated July 1, 1940, August 18, 1944, December 1, 1947, September 1, 1950, June 1, 1951, May 1, 1954, March 1, 1958, April 1, 1959, December 20, 1967, January 15, 1969, November 1, 1969, June 1, 1970, November 15, 1970, May 1, 1974, April 15, 1975, April 16, 1975, May 28, 1975, February 1, 1976, November 23, 1976, July 26, 1977, September 27, 1977, May 1, 1978, September 1, 1979, April 1, 1980, April 15, 1980, May 28, 1980, June 9, 1980, December 1, 1980, July 28, 1981, August 1, 1981, March 1, 1982, July 15, 1982, September 1, 1982, November 1, 8 5 1982, November 15, 1982, May 24, 1983, May 1, 1984, May 23, 1984, June 27, 1984, September 4, 1984, November 14, 1984, November 15, 1984, April 15, 1985, May 28, 1985, August 1, 1985, September 1, 1985, November 1, 1985, April 15, 1986, May 14, 1986, May 15, 1986, February 25, 1987, October 15, 1987, February 24, 1988, September 15, 1988, May 15, 1989, June 13, 1989, October 15, 1989, January 1, 1990, June 1, 1990, August 1, 1990, May 1, 1991, May 1, 1992, July 31, 1992, January 1, 1993, February 1, 1993, May 20, 1993 and June 1, 1993, respectively, are hereby in all respects confirmed. ARTICLE II CREATION, PROVISIONS, REDEMPTION, PRINCIPAL AMOUNT AND FORM OF BONDS OF THIS SERIES SECTION 1. The Company hereby creates a new series of Bonds to be issued under and secured by the Indenture and to be designated as "First Mortgage Bonds, 8% Series due 2023-F" of the Company. The Bonds of this Series shall be executed, authenticated and delivered in accordance with the provisions of, and shall in all respects be subject to, all of the terms, conditions and covenants of the Indenture. SECTION 2. The Bonds of this Series shall be dated the date of their authentication, shall mature October 1, 2023, and shall bear interest from the time hereinafter provided at the rate of 8% per annum payable semiannually on the same dates as interest is payable on the State of Ohio Bonds (each such date herein called an "interest payment date") until the maturity of the Bonds of this Series, or, in the case of any Bonds of this Series duly called for redemption, until the redemption date, or, in the case of any default by the Company in the payment of the principal due on any Bonds of this Series, until the Company's obligation with respect to the payment of the principal shall be discharged as provided in the Indenture. Except as hereinafter provided, each Bond of this Series shall bear interest (a) from the interest payment date next preceding the date of such Bond to which interest has been paid, or (b) if the date of such Bond is an interest payment date to which interest has been paid, then from such date, or (c) if no interest has been paid thereon, then from September 15, 1994. Notwithstanding the foregoing, if the date of such Bond is after a Record Date (as hereinafter defined) and before the next following interest payment date, then it shall bear interest from such interest payment date; provided, however, that (i) if the Company shall default in the payment of the interest due on such interest payment date, then such Bond shall bear interest from the interest payment date next preceding the date of such Bond to which interest 9 6 has been paid, or (ii) if no interest has been paid thereon, then it shall bear interest from September 15, 1994. The interest payable on any interest payment date shall be paid to the respective persons in whose names the Bonds of this Series shall be registered at the close of business on the Record Date next preceding such interest payment date, notwithstanding the cancellation of any such Bond upon any transfer or exchange thereof subsequent to such Record Date and prior to such interest payment date; provided, however, that, if and to the extent the Company shall default in the payment of the interest due on such interest payment date, such defaulted interest shall be paid to the respective persons in whose names such outstanding Bonds of this Series are registered at the close of business on a date (the "Subsequent Record Date") not less than ten days nor more than 15 days next preceding the date of payment of such defaulted interest, such Subsequent Record Date to be established by the Company by notice given by mail by or on behalf of the Company to the registered owners of Bonds of this Series not less than 10 days next preceding such Subsequent Record Date. The term "Record Date" shall mean, with respect to any regular interest payment date of any Bond of this Series, the date which would be the "Regular Record Date", as defined in the OWDA Trust Indenture, applicable to such regular interest payment date, if it were an "Interest Payment Date", as defined in the OWDA Trust Indenture. The Bonds of this Series shall be payable as to principal (and premium, if any) and interest in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts and shall be payable (as well the interest as the principal thereof and the premium thereon, if any) at the agency of the Company in the City of Cleveland, State of Ohio, or, at the option of the Company, at the agency of the Company in The City of New York. Unless the context indicates a different meaning, any reference in this Article II to "agency of the Company" means either the agency of the Company in the City of Cleveland, State of Ohio or the agency of the Company in The City of New York. SECTION 3. The principal amount of Bonds of this Series which may be authenticated and delivered hereunder shall not exceed $46,100,000, except as otherwise provided in the Indenture. SECTION 4. The Bonds of this Series shall be issued as fully registered Bonds only, without coupons, in the denominations of $100,000 and any integral multiple thereof. SECTION 5. In the manner and subject to the limitations provided in the Indenture, Bonds of this Series may be transferred or may be exchanged for a like aggregate principal amount of Bonds of this Series 10 7 of other authorized denominations, in either case without charge, except for any tax or taxes or other governmental charges incident to such transfer or exchange, at the agency of the Company in The City of New York. In the event less than all of the Bonds of this Series at the time outstanding are called for redemption, the Company shall not be required (a) to register any transfer or make any exchange of any such Bond for a period of 15 days before the mailing of the notice of redemption of any such Bond, (b) to register any transfer or make any exchange of any such Bond so called for redemption in its entirety, or (c) to register any transfer or make any exchange of any portion of any such Bond so called for redemption. Except as otherwise provided in Section 2 of this Article II with respect to the payment of interest, the Company, the agencies of the Company and the Trustee may deem and treat the person in whose name a Bond of this Series is registered as the absolute owner thereof for the purpose of receiving any payment and for all other purposes. SECTION 6. The Bonds of this Series shall be redeemable only to the extent provided in this Article II, subject to the provisions contained in Article V of the Indenture and the form of Bond of this Series. SECTION 7. The Bonds of this Series shall be subject to redemption by the Company prior to maturity in whole at any time or in part from time to time at a redemption price of 100% of the principal amount to be redeemed, but in each instance only upon receipt by the Trustee of an officers' certificate to the effect (a) that the OWDA, at the direction of the Company, or the Company, on behalf of the OWDA, has given notice to the OWDA Trustee that the Company is exercising its option to direct the redemption of all or a part (specifying the principal amount) of the State of Ohio Bonds as provided in Section 4.01(a) of the OWDA Trust Indenture and (b) that an equivalent principal amount of Bonds of this Series shall be concurrently called for redemption. Such officers' certificate shall specify the principal amount of the Bonds of this Series to be redeemed and the accrued and unpaid interest to the redemption date, shall have attached to it a copy of said notice to the OWDA Trustee and said direction of the Company and shall specify the redemption date of such Bonds of this Series (which redemption date shall be not less than forty-five (45) days from the date of the Trustee's receipt of such certificate and shall be the same date as the redemption date of the State of Ohio Bonds being concurrently redeemed which is specified in said attached notice). The redemption of the Bonds of this Series shall be made upon the notice and in the manner provided in this Article II, subject to the provisions of the Indenture. 11 8 SECTION 8. The Bonds of this Series shall be redeemed by the Company prior to maturity in whole at any time or in part from time to time upon a final determination by any federal judicial or administrative authority that interest on the State of Ohio Bonds is includable for federal income tax purposes in the gross income of the holders of the State of Ohio Bonds (other than because a holder is a "substantial user" of the projects being financed pursuant to the OWDA Loan Agreement or a "related person" thereof as those terms are used in Section 147(a) of the Internal Revenue Code of 1986, as amended) at a redemption price of 100% of the principal amount to be redeemed plus accrued and unpaid interest to the redemption date, but in each instance only upon receipt by the Trustee of an officers' certificate to the effect (a) that the OWDA, at the direction of the Company, or the Company, on behalf of the OWDA, has given notice to the OWDA Trustee that it is required to redeem all or a part (specifying the principal amount) of the State of Ohio Bonds as provided in Section 4.01(b) of the OWDA Trust Indenture and (b) that an equivalent principal amount of Bonds of this Series shall be concurrently called for redemption. Such officers' certificate shall specify the principal amount of the Bonds of this Series to be redeemed and the redemption price thereof and accrued and unpaid interest to the redemption date, shall have attached to it a copy of said notice to the OWDA Trustee and said direction of the Company and shall specify the redemption date of such Bonds of this Series (which redemption date shall be not less than forty-five (45) days from the date of the Trustee's receipt of such certificate and shall be the same date as the redemption date of the State of Ohio Bonds being concurrently redeemed which is specified in said attached notice). The redemption of the Bonds of this Series shall be made upon the notice and in the manner provided in this Article II, subject to the provisions of the Indenture. SECTION 9. The Bonds of this Series shall be subject to redemption by the Company prior to maturity in whole at any time or in part from time to time, but in no instance before October 1, 2004, at the same redemption price plus accrued and unpaid interest, if any, as shall be payable on the State of Ohio Bonds to be redeemed concurrently therewith, to the redemption date as follows:
REDEMPTION PRICE (EXPRESSED AS A PERCENTAGE OF THE REDEMPTION PERIODS PRINCIPAL AMOUNT (DATES INCLUSIVE) BEING REDEEMED) ------------------ -------------------- October 1, 2004 through September 30, 2005... 102% October 1, 2005 through September 30, 2006... 101 October 1, 2006 and thereafter............... 100
12 9 but in each instance only upon receipt by the Trustee of an officers' certificate to the effect (a) that the OWDA, at the direction of the Company, or the Company, on behalf of the OWDA, has given notice to the OWDA Trustee that the Company is exercising its option to direct the redemption of all or part (specifying the principal amount) of the State of Ohio Bonds as provided in Section 4.01(c) of the OWDA Trust Indenture and (b) that an equivalent principal amount of Bonds of this Series shall be concurrently called for redemption. Such officers' certificate shall specify the principal amount of the Bonds of this Series to be redeemed and the redemption price thereof and accrued and unpaid interest to the redemption date, shall have attached to it a copy of said notice to the OWDA Trustee and said direction of the Company and shall specify the redemption date of such Bonds of this Series (which redemption date shall be not less than forty-five (45) days from the date of the Trustee's receipt of such certificate and shall be the same date as the redemption date of the State of Ohio Bonds being concurrently redeemed which is specified in said attached notice). The redemption of the Bonds of this Series shall be made upon the notice and in the manner provided in this Article II, subject to the provisions of the Indenture. SECTION 10. The Bonds of this Series shall be redeemed by the Company in whole at any time prior to maturity at a redemption price of 100% of the principal amount to be redeemed, plus accrued and unpaid interest to the redemption date, but only if the Trustee shall receive a written demand from the OWDA Trustee for redemption of all Bonds of this Series held by the OWDA Trustee stating that an "Event of Default" under the OWDA Trust Indenture has occurred and is continuing and that payment of the principal of the State of Ohio Bonds has been accelerated; provided, however, that the Bonds of this Series shall not be redeemed in the event that prior to the date of mailing of notice of such redemption as provided in Section 11 of this Article II (a) the Trustee shall have received a certificate of the OWDA Trustee (i) stating that there has been a waiver of such acceleration or (ii) withdrawing said written demand or (b) if an event of default under Section 1 of Article IX of the Indenture shall have occurred and be continuing, there has been a declaration of acceleration of the principal of the Bonds of this Series. The redemption of the Bonds of this Series shall be made on a date selected by the Company not more than forty-five (45) days after receipt of the written demand and shall be made upon the notice and in the manner provided in this Article II, subject to the provisions of the Indenture. SECTION 11. Subject to the provisions of the Indenture, written notice of redemption of Bonds of this Series pursuant to any of Sections 7 through 10, inclusive, of this Article II shall be given by the Trustee by mailing to the registered owner or owners of such Bonds to 13 10 be redeemed a notice of such redemption, first class postage prepaid, at its last address as it shall appear upon the books of the Company for the registration and transfer of such Bonds. Any notice of redemption pursuant to said Section 7, 8 or 9 shall be mailed at least 30 days and not more than 60 days before the redemption date and any notice of redemption pursuant to said Section 10 shall be mailed not more than 45 days before the redemption date; provided, however, that the registered owner or owners of all Bonds of this Series may consent in writing to a shorter notice period, and such consent, if filed with the Trustee, shall be binding upon the Company and such registered owner or owners and their transferees. In the event of a partial redemption, the Trustee shall select the Bonds of this Series to be redeemed in such manner as the Trustee shall deem appropriate and fair. SECTION 12. In the event any State of Ohio Bonds shall be purchased by the Company and surrendered by the Company to the OWDA Trustee for cancellation or shall be otherwise surrendered to the OWDA Trustee or other person for cancellation pursuant to the OWDA Trust Indenture (except upon exchange for other State of Ohio Bonds), Bonds of this Series equal in principal amount to the State of Ohio Bonds so surrendered shall be deemed to have been paid, but only when and to the extent that (a) such payment of such principal amount of such Bonds of this Series shall be noted by an agency of the Company on the Schedule of Payments on such Bonds of this Series and (if such agency is not the Trustee) written notice by such agency of such notation shall have been received by the Trustee or (b) such principal amount of such Bonds of this Series shall have been surrendered to and cancelled by the Trustee as provided in Section 14 of this Article II. SECTION 13. In the event and to the extent the principal of (or premium, if any) or interest on any State of Ohio Bonds shall be paid out of funds held by the OWDA Trustee or out of any other funds or shall otherwise be deemed to be paid, an equal amount of principal (or premium, if any) or interest, as the case may be, payable with respect to an aggregate principal amount of Bonds of this Series equal to the aggregate principal amount of such State of Ohio Bonds shall be deemed to have been paid, but, in the case of such payment of principal of such Bonds of this Series, only when and to the extent that (a) such payment of the principal amount thereof shall be noted by an agency of the Company on the Schedule of Payments on such Bonds of this Series and (if such agency is not the Trustee) written notice by such agency of such notation shall have been received by the Trustee or (b) such principal amount of Bonds of this Series shall have been surrendered to and cancelled by the Trustee as provided in Section 14 of this Article II. If the State of Ohio Bonds are issued in an aggregate principal amount of less than $46,100,000, an aggregate principal 14 11 amount of the Bonds of this Series equal to the difference between $46,100,000 and the aggregate principal amount of the State of Ohio Bonds issued (and all related premium and interest, if any) shall be deemed to have been paid. SECTION 14. When payment of any principal amount of a Bond of this Series is made as provided in Section 12 or 13 of this Article II, the registered owner thereof shall surrender such Bond to an agency of the Company for notation and notification or to the Trustee for cancellation as provided in such Section. All Bonds of this Series deemed to have been paid in full as provided in Section 12 or 13 of this Article II shall be surrendered to the Trustee for cancellation and the Trustee shall forthwith cancel the same. In the event that part of a Bond of this Series shall be deemed to have been paid as provided in said Section 12 or 13, the registered owner shall surrender such Bond to the Trustee for cancellation, in which event the Trustee shall cancel such Bond and the Company shall execute and the Trustee shall authenticate and deliver, without charge to the registered owner, Bonds of this Series in such authorized denominations as shall be specified by the registered owner in an aggregate principal amount equal to the unpaid balance of the principal amount of such surrendered Bond. SECTION 15. The form of the fully registered Bonds of this Series and of the Trustee's certificate of authentication thereon shall be substantially as follows: [FORM OF FULLY REGISTERED BOND OF THIS SERIES] THE CLEVELAND ELECTRIC ILLUMINATING COMPANY Incorporated under the laws of the State of Ohio FIRST MORTGAGE BOND, 8% SERIES DUE 2023-F Due October 1, 2023 No. $ THE CLEVELAND ELECTRIC ILLUMINATING COMPANY, a corporation organized and existing under the laws of the State of Ohio (hereinafter called the "Company", which term shall include any successor corporation as defined in the Indenture hereinafter referred to), for value received, hereby promises to pay to , or registered assigns, the sum of Dollars or the aggregate unpaid principal amount hereof (as shown on the Schedule of Payments hereon), whichever is less, on October 1, 2023, in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts, and to pay interest on the unpaid principal amount hereof in like coin or currency from the time hereinafter provided at such rate per annum on each interest payment date (hereinafter defined) as shall cause the 15 12 amount of interest payable on such interest payment date on the Bonds of this Series (hereinafter defined) to equal the amount of interest payable on such interest payment date on the State of Ohio Bonds (hereinafter defined) and payable semiannually on the same dates as interest is payable on said State of Ohio Bonds (each such date herein called an "interest payment date") until the maturity of this Bond, or, if this Bond shall be duly called for redemption, until the redemption date, or, if the Company shall default in the payment of the principal amount of this Bond, until the Company's obligation with respect to the payment of such principal shall be discharged as provided in said Indenture. Except as hereinafter provided, this Bond shall bear interest (a) from the interest payment date next preceding the date of this Bond to which interest has been paid, or (b) if the date of this Bond is an interest payment date to which interest has been paid, then from such date, or (c) if no interest has been paid on this Bond, then from September 15, 1994. Notwithstanding the foregoing, if the date of this Bond is after the Record Date (as defined in Section 2 of Article II of the Supplemental Indenture hereinafter defined) which next precedes an interest payment date and before such interest payment date, then it shall bear interest from such interest payment date; provided, however, that (i) if the Company shall default in the payment of the interest due on such interest payment date, then this Bond shall bear interest from the interest payment date next preceding the date of this Bond to which interest has been paid, or (ii) if no interest has been paid on this Bond, then it shall bear interest from September 15, 1994. Subject to certain exceptions provided in said Indenture, the interest payable on any interest payment date shall be paid to the person in whose name this Bond shall be registered at the close of business on the Record Date or, in the case of defaulted interest, on a day preceding the date of payment thereof established by notice to the registered owner of this Bond in the manner provided in said Supplemental Indenture. Principal of (and premium, if any) and interest on this Bond are payable at the agency of the Company in The City of New York, or, at the option of the registered owner, at the agency of the Company in the City of Cleveland, State of Ohio. This Bond is one of the duly authorized First Mortgage Bonds of the Company (herein called the "Bonds"), all issued and to be issued under and equally secured by a Mortgage and Deed of Trust dated July 1, 1940, executed by the Company to Guaranty Trust Company of New York as Trustee, under which The Chase Manhattan Bank (National Association) is successor trustee (herein called the "Trustee"), and all indentures supplemental thereto (said Mortgage as so supplemented herein called the "Indenture") to which reference is hereby made for a description of the properties mortgaged and pledged, the nature and extent of the security, the rights of the registered owner or owners of 16 13 the Bonds and of the Trustee in respect thereof and the terms and conditions upon which the Bonds are, and are to be, secured. The Bonds may be issued in series, for various principal sums, may mature at different times, may bear interest at different rates and may otherwise vary as in the Indenture provided. This Bond is one of a series designated as the First Mortgage Bonds, 8% Series due 2023-F (herein called the "Bonds of this Series") limited, except as otherwise provided in the Indenture, in aggregate principal amount to $46,100,000, issued under and secured by the Indenture and described in the Supplemental Indenture dated September 15, 1994, between the Company and the Trustee (herein called the "Supplemental Indenture"). The Bonds of this Series have been issued by the Company to the Ohio Water Development Authority (herein called the "OWDA") to evidence and secure the obligations of the Company to repay the loan (herein called the "OWDA Loan") made by the OWDA to the Company pursuant to a certain loan agreement, dated as of September 15, 1994, between the OWDA and the Company to assist the Company in refunding certain bonds which had been previously issued by OWDA, the proceeds of which were loaned to the Company to assist in financing a portion of the costs of the acquisition, construction and installation of certain facilities comprising waste water and solid waste disposal facilities located at the Perry Nuclear Power Plant Unit No. 1 in Lake County, Ohio. To provide funds for the OWDA Loan, the OWDA will issue one series of State of Ohio Collateralized Pollution Control Revenue Refunding Bonds, 1994 Series A (The Cleveland Electric Illuminating Company Project) in an aggregate principal amount of not more than $46,100,000 (herein called the "State of Ohio Bonds") under a certain trust indenture, dated as of September 15, 1994 (herein called the "OWDA Trust Indenture"), between the OWDA and Society National Bank, as trustee (herein called the "OWDA Trustee"). All right, title and interest of the OWDA in the Bonds of this Series have been assigned and pledged by the OWDA to the OWDA Trustee as security for the payment of the principal of and premium, if any, and interest on the State of Ohio Bonds; and the Bonds of this Series have been delivered to the OWDA Trustee, as trustee for the holders of the State of Ohio Bonds. In the event any State of Ohio Bonds shall be surrendered to the OWDA Trustee or other person for cancellation pursuant to the OWDA Trust Indenture (except upon exchange for other State of Ohio Bonds), Bonds of this Series equal in principal amount to such State of Ohio Bonds shall be deemed to have been paid, but only when and to the extent (a) so noted on the Schedule of Payments hereon by one of the agencies of the Company hereinabove specified and (if such agency is not the Trustee) written notice by such agency of such notation has been received by the Trustee or (b) such Bond is surrendered to and 17 14 cancelled by the Trustee as provided in the next paragraph; and in the event and to the extent the principal of (or premium, if any) or interest on any State of Ohio Bonds shall be paid or deemed to be paid, an equal amount of principal (or premium, if any) or interest, as the case may be, payable with respect to an aggregate principal amount of Bonds of this Series equal to the aggregate principal amount of such State of Ohio Bonds shall be deemed to have been paid, but, in the case of such payment of principal, only when and to the extent (i) so noted on the Schedule of Payments hereon by one of the agencies of the Company hereinabove specified and (if such agency is not the Trustee) written notice by such agency of such notation has been received by the Trustee or (ii) such Bond is surrendered to and cancelled by the Trustee as provided in the next paragraph. When any such payment of principal of this Bond is made, such Bond shall be surrendered by the registered owner hereof to an agency of the Company for such notation or to the Trustee for cancellation. If the State of Ohio Bonds are issued in an aggregate principal amount of less than $46,100,000, an aggregate principal amount of the Bonds of this Series equal to the difference between $46,100,000 and the aggregate principal amount of the State of Ohio Bonds issued (and all related premium and interest, if any) shall be deemed to have been paid. In the event that this Bond shall be deemed to have been paid in full, this Bond shall be surrendered to the Trustee for cancellation. In the event that this Bond shall be deemed to have been paid in part, this Bond may, at the option of the registered holder, be surrendered to the Trustee for cancellation, in which event the Trustee shall cancel this Bond and the Company shall execute and the Trustee shall authenticate and deliver Bonds of this Series in authorized denominations in aggregate principal amount equal to the unpaid balance of the principal amount of this Bond. The Bonds of this Series are subject to redemption by the Company prior to maturity in whole at any time or in part from time to time as provided in Section 7 of Article II of the Supplemental Indenture at a redemption price of 100% of the principal amount to be redeemed, plus accrued and unpaid interest to the redemption date. The Bonds of this Series shall be redeemed by the Company prior to maturity in whole at any time or in part from time to time as provided in Section 8 of Article II of the Supplemental Indenture at a redemption price of 100% of the principal amount to be redeemed, plus accrued and unpaid interest to the redemption date, at the earliest practicable date selected by the OWDA Trustee after consultation with the Company, but in no event later than 180 days following the OWDA Trustee's notification of the Determination of Taxability (as defined in the OWDA Trust Indenture). 18 15 The Bonds of this Series are subject to redemption by the Company prior to maturity in whole at any time or in part from time to time, but in no instance before October 1, 2004, as provided in Section 9 of Article II of the Supplemental Indenture at a redemption price, plus accrued and unpaid interest, if any, to the redemption date as follows:
REDEMPTION PRICE (EXPRESSED AS A PERCENTAGE OF THE REDEMPTION PERIODS PRINCIPAL AMOUNT (DATES INCLUSIVE) BEING REDEEMED) ------------------ -------------------- October 1, 2004 through September 30, 2005... 102% October 1, 2005 through September 30, 2006... 101 October 1, 2006 and thereafter............... 100
The Bonds of this Series shall be redeemed by the Company prior to maturity in whole at any time as provided in Section 10 of Article II of the Supplemental Indenture at a redemption price of 100% of the principal amount to be redeemed, plus accrued and unpaid interest to the redemption date. Any redemption of the Bonds of this Series shall be made after written notice to the registered owner or owners of such Bonds, sent by the Trustee by first class mail, postage prepaid, at least 30 days and not more than 60 days before the redemption date (except in the event of redemption described in the next preceding paragraph in which case such notice shall be mailed not more than 45 days before the redemption date), unless a shorter notice period is consented to in writing by the registered owner or owners of all Bonds of this Series and such consent is filed with the Trustee, and such redemption and notice shall be made in the manner provided in Article II of the Supplemental Indenture, subject to the provisions of the Indenture. In the event of a partial redemption, the Trustee shall select the Bonds of this Series to be redeemed in such manner as the Trustee shall deem appropriate and fair. In the Forty-Third Supplemental Indenture dated April 15, 1985 between the Company and the Trustee, the Company has modified, in certain respects, the redemption provisions in the Indenture effective only with respect to the Bonds of all series established or created in said Forty-Third Supplemental Indenture and all supplemental indentures dated after May 28, 1985. To the extent permitted by and as provided in the Indenture, modifications or alterations of the Indenture, or of any indenture supplemental thereto, and of the rights and obligations of the Company and of the holders of the Bonds and coupons may be made with the consent of the Company by an affirmative vote of not less than 80% in principal amount of the Bonds entitled to vote then outstanding at a 19 16 meeting of Bondholders called and held as provided in the Indenture and, in case one or more but less than all of the series of Bonds then outstanding under the Indenture are so affected, by an affirmative vote of not less than 80% in principal amount of the Bonds of any series entitled to vote then outstanding and affected by such modification or alteration; provided, however, that no such modification or alteration shall be made which will affect the terms of payment of the principal of (or premium, if any) or interest on this Bond. In the Nineteenth Supplemental Indenture dated November 23, 1976 between the Company and the Trustee, the Company has modified the Indenture effective from and after the time when none of the Bonds of any series established prior to the execution of the Nineteenth Supplemental Indenture shall remain outstanding so as to change "80%" in the foregoing sentence to "60%" and to make certain other modifications of the Indenture and has reserved the right to make certain other modifications of the Indenture without any vote, consent or other action by the holders of Bonds of any series established in the Nineteenth Supplemental Indenture or in any subsequent supplemental indenture. If an event of default, as defined in the Indenture, shall occur, the principal of all the Bonds at any such time outstanding under the Indenture may be declared or may become due and payable upon the conditions and in the manner and with the effect provided in the Indenture. The Indenture provides that such declaration may in certain events be waived by the holders of a majority in principal amount of the Bonds outstanding. Subject to the limitations provided in the Indenture, this Bond is transferable by the registered owner hereof, in person or by duly authorized attorney, on the books of the Company to be kept for that purpose at the agency of the Company in The City of New York upon surrender and cancellation of this Bond, and upon presentation of a duly executed written instrument of transfer, and thereupon a new fully registered Bond or Bonds of this Series, of the same aggregate principal amount and in authorized denominations will be issued to the transferee or transferees in exchange herefor; and this Bond, with or without other Bonds of this Series, may in like manner be exchanged for one or more new fully registered Bonds of this Series of other authorized denominations but of the same aggregate principal amount; all without charge except for any tax or taxes or other governmental charges incidental to such transfer or exchange and all subject to the terms and conditions set forth in the Indenture. In the event less than all of the Bonds of this Series at the time outstanding are called for redemption, the Company shall not be required (a) to register any transfer or make any exchange of any such Bond for a period of 15 days before the mailing of the notice of redemption of any such Bond, 20 17 (b) to register any transfer or make any exchange of any such Bond so called for redemption in its entirety, or (c) to register any transfer or make any exchange of any portion of any such Bond so called for redemption. Except as otherwise provided herein with respect to the payment of interest, the Company, the agencies of the Company and the Trustee may deem and treat the person in whose name this Bond is registered as the absolute owner hereof for the purpose of receiving any payment and for all other purposes. No recourse shall be had for the payment of the principal of or the interest or premium, if any, on this Bond, or for any claim based hereon or on the Indenture or any indenture supplemental thereto, against any incorporator, or against any stockholder, director or officer, past, present or future, of the Company, or of any predecessor or successor corporation, as such, either directly or through the Company or any such predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability, whether at common law, in equity, by any constitution or statute or otherwise, of incorporators, stockholders, directors or officers being released by every owner hereof by the acceptance of this Bond and as part of the consideration for the issue hereof and being likewise released by the terms of the Indenture. This Bond shall not be entitled to any benefit under the Indenture or any indenture supplemental thereto, or become valid or obligatory for any purpose, until the Trustee under the Indenture, or a successor trustee thereto under the Indenture, shall have signed the form of certificate of authentication endorsed hereon. 21 18 IN WITNESS WHEREOF, The Cleveland Electric Illuminating Company has caused this Bond to be signed in its name by its President or a Vice President (whose signature may be manual or a facsimile thereof) and its corporate seal (or a facsimile thereof) to be hereto affixed and attested by its Secretary or an Assistant Secretary (whose signature may be manual or a facsimile thereof). Dated: THE CLEVELAND ELECTRIC ILLUMINATING COMPANY By .................................................... VICE PRESIDENT Attest: ............................ Secretary [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This Bond is one of the Bonds of the series designated and described in the within-mentioned Indenture and Supplemental Indenture. THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), TRUSTEE By ........................................... AUTHORIZED OFFICER 22 19 [FORM OF SCHEDULE OF PAYMENTS] SCHEDULE OF PAYMENTS
AGENCY OF THE UNPAID COMPANY PRINCIPAL PRINCIPAL PREMIUM INTEREST MAKING AUTHORIZED DATE PAYMENT AMOUNT PAYMENT PAYMENT NOTATION OFFICER TITLE - --------- ------- ------- ------- ------- ------- ------- -------
[END OF FORM OF FULLY REGISTERED BOND] 23 20 ARTICLE III THE TRUSTEE SECTION 1. The Trustee hereby accepts the trusts hereby declared and provided upon the terms and conditions in the Indenture set forth and upon the terms and conditions set forth in this Article III. SECTION 2. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or the due execution hereof by the Company or for or in respect of the recitals contained herein, all of which recitals are made by the Company solely. In general, each and every term and condition contained in Article XIII of the Indenture shall apply to this Supplemental Indenture with the same force and effect as if the same were herein set forth in full, with such omissions, variations and modifications thereof as may be appropriate. SECTION 3. For purposes of this Supplemental Indenture, (a) the Trustee may conclusively rely and shall be protected in acting upon the written demand from, or certificate of, the OWDA Trustee or any officers' certificate or opinion of counsel as to the truth of the statements and the correctness of the opinions expressed therein, without independent investigation or verification thereof, subject to Article XIII of the Indenture and (b) a written demand from, or certificate of, the OWDA Trustee shall mean a written demand or certificate executed by the president, any vice president or any trust officer of the OWDA Trustee. SECTION 4. The Company shall cause any agency of the Company, other than the Trustee, which it may appoint from time to time to act as such agency in respect of the Bonds of this Series, to execute and deliver to the Trustee an instrument in which such agency shall: (a) Agree to keep and maintain, and furnish to the Trustee from time to time as reasonably requested by the Trustee, appropriate records of all transactions carried out by it as such agency and to furnish the Trustee such other information and reports as the Trustee may reasonably require; (b) Certify that it is eligible for appointment as such agency and agree to notify the Trustee promptly if it shall cease to be so eligible; and (c) Agree to indemnify the Trustee, in a manner satisfactory to the Trustee, against any loss, liability or expense incurred by, and defend any claim asserted against, the Trustee by reason of any acts or failures to act as such agency, except for any liability resulting from any action taken by it at the specific direction of the Trustee; 24 21 provided, however, that the Company, in lieu of causing any such agency to furnish such an instrument, may make such other arrangements with the Trustee in respect of any such agency as shall be satisfactory to the Trustee. SECTION 5. The Trustee shall advise the Company in writing of the receipt of any notification provided for in or any cancellation made pursuant to Section 12, 13 or 14 of Article II of this Supplemental Indenture. ARTICLE IV APPOINTMENT OF SUCCESSOR TRUSTEE Pursuant to Section 6 of Article XIII of the 1940 Mortgage, as heretofore supplemented and amended, Morgan Guaranty Trust Company of New York has resigned as Trustee under the Indenture and the Company appointed The Chase Manhattan Bank (National Association) as successor Trustee under the Indenture effective at the close of business on September 14, 1994. ARTICLE V MISCELLANEOUS PROVISIONS This Supplemental Indenture may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original; but such counterparts shall together constitute but one and the same instrument. EXECUTION IN WITNESS WHEREOF, said The Cleveland Electric Illuminating Company has caused this Supplemental Indenture to be executed on its behalf by its President or one of its Vice Presidents and its corporate seal to be hereto affixed and said seal and this Supplemental Indenture to be attested by its Secretary or an Assistant Secretary, and said The Chase Manhattan Bank (National Association), in evidence of its acceptance of the trust hereby created, has caused this Supplemental Indenture to be executed on its behalf by one of its Vice Presidents or one of its Trust Officers and its corporate seal to be hereto affixed and said seal and this Supplemental Indenture to be attested by one of its Assistant Secretaries or Corporate Trust Officers, all as of the day and year first above written. 25 S-1 THE CLEVELAND ELECTRIC ILLUMINATING COMPANY By Gary R. Leidich -------------------------------- Vice President Attest: E. Lyle Pepin ----------------------------------- Secretary Signed, sealed and acknowledged by The Cleveland Electric Illuminating Company in the presence of: Patricia Barkey - ------------------------------------------ Patricia Barkey Amy McCabe - ------------------------------------------ Amy McCabe As witnesses THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), AS TRUSTEE By Valerie Dunbar ------------------------------ Second Vice President Attest: Mary Lewicki ---------------------------- Corporate Trust Officer Signed, sealed and acknowledged on behalf of The Chase Manhattan Bank (National Association) in the presence of: Ronald J. Halleran - ------------------------------------------ Ronald J. Halleran Timothy E. Burke - ------------------------------------------ Timothy E. Burke As witnesses 26 S-2 STATE OF OHIO SS: COUNTY OF CUYAHOGA On this 29th day of September, 1994, before me personally appeared GARY R. LEIDICH and E. LYLE PEPIN to me personally known, who being by me severally duly sworn, did say that they are a Vice President and the Secretary, respectively, of The Cleveland Electric Illuminating Company, that the seal affixed to the foregoing instrument is the corporate seal of said corporation and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors; and said officers severally acknowledged said instrument to be the free act and deed of said corporation. Sondra Y. Clarke --------------------------------------------- Notary Public Sondra Y. Clarke Notary Public, State of Ohio Recorded in Cuyahoga County My Commission expires November 25, 1998 STATE OF NEW YORK SS: COUNTY OF NEW YORK On this 27th day of September, 1994, before me personally appeared VALERIE DUNBAR and MARY LEWICKI to me personally known, who being by me severally duly sworn, did say that they are a Second Vice President and a Corporate Trust Officer, respectively, of The Chase Manhattan Bank (National Association), that the seal affixed to the foregoing instrument is the corporate seal of said corporation and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors; and said officers severally acknowledged said instrument to be the free act and deed of said corporation. Della K. Benjamin ----------------------------------------- Notary Public Della K. Benjamin Notary Public, State of New York No. 24-4659567 Qualified in Kings County Commission Expires April 30, 1995 This instrument prepared by Bruce T. Rosenbaum, attorney at law. 27 P-1 SCHEDULE A DESCRIPTION OF REAL ESTATE IROQUOIS SUBSTATION Situated in the City of Cleveland, County of Cuyahoga and State of Ohio and known as being part of sublots 17, 18 and 20 in the Dennis Ford and Arey's Subdivision a part of Original One Hundred Acre Lot No. 404 as shown by plat recorded in Volume 13, Page 15 of Cuyahoga County Deed Records, and also being part of Arey Road, S.E., vacated by ordinance No. 88217, passed by the Council of the City of Cleveland on August 26, 1929 and more fully described as follows: Beginning at an iron pin, set by A.C.L.A., at the southwest corner of a parcel of land conveyed to Michael W. Sands and known as being Auditor's Permanent Parcel No. 121-12-32, said point also on the northerly right-of-way line of Arey Road, 50 feet wide, now vacated; Thence South 38 degrees 29' 23" West, 50.00 feet to a point on the southerly right-of- way line of Arey Road, now vacated, as aforesaid; Thence North 51 degrees 33' 42" West, 17.26 feet to an iron pin set; Thence North, 30 degrees 30' 00"" East and along the easterly right-of-way line of a parcel of land conveyed to the Greater Cleveland R.T.A. and known as being Auditor's Permanent Parcel No. 121-12-63, 252.42 feet to an iron pin set; Thence South 51 degrees 33' 42" East, 52.34 feet to a point; Thence South 38 degrees 29' 23" West, 200 feet to the Place of Beginning and containing 0.1997 acres of land according to a survey by Adache-Ciuni-Lynn Associates August 9, 1993, be the same, more or less, but subject to all legal highways. Situated in the City of Cleveland, County of Cuyahoga and State of Ohio: and known as being Sublot No. 15 in Dennis, Ford and Arey's Subdivision of part of Original 100 acre Lot No. 404, as shown by the recorded plat in Volume 13 of Maps, Page 15 of Cuyahoga County Records, and having a frontage of 41 feet on the Northeasterly side of Arey Road, S.E., and extending back of equal width 173 feet, as appears by said plat. Situated in the City of Cleveland, County of Cuyahoga and State of Ohio; and known as being all of Sublot No. 16 and part of Sublot No. 20 in Dennis, Ford and Arey's Subdivision of part of original 100 Acre Lot No. 403, as shown by the recorded plat in Volume 13 of Maps, Page 15 of Cuyahoga County Records, and together forming a parcel of land bounded and described as follows: Beginning on the Northeasterly line of Arey Road S.E., (50 feet wide) at the most Southerly corner of said Sublot No. 16; thence 28 P-2 Northwesterly along the Northeasterly line of Arey Road S.E. 42 feet to the most Westerly corner of said Sublot No. 16; thence Northeasterly along the Northwesterly line of said Sublot No. 16 and along the Northeasterly prolongation thereof, 200 feet to the most Northerly corner of land conveyed to Luigi and Maria Sepe by deed dated october 31, 1952 and recorded in Volume 7653, Page 381 of Cuyahoga County Records; thence Southeasterly along the Northeasterly line of land so conveyed 42 feet to the Southeasterly line of said Sublot No. 20; thence Southwesterly along the Southeasterly line of said Sublots Nos. 20 and 16, 200 feet to the place of beginning. EAST POINT FLY ASH SITE ADDITION Situated in the Village of North Kingsville, County of Ashtabula and State of Ohio: Known as being part of Original Kingsville Township Lot No. 34, and bounded and described as follows: Beginning at the point of intersection of the center line of Middle Rd. with the west line of Lot #34; Thence Southerly along the easterly line of land formerly owned by Angelo Ray, a distance of 12 rods to a stake; Thence Easterly and along a northerly line of land now or formerly owned by Walter H. Balcomb and Bessie E. Balcomb, a distance of 10 rods to a stake; Thence northerly along a westerly line of said Balcomb land, a distance of 12 rods to a point in the center line of Middle Rd.; Thence Westerly along the center line of Middle Rd. to the place of beginning, and containing 0.75 of an acre of land, be the same more or less, but subject to all legal highways. EASTLAKE PLANT ADDITIONS Situated in the City of Eastlake, County of Lake and State of Ohio, an accurate description and plat of which are as follows, to-wit: and known as being the Easterly portions of Sublots 11 and 12 in Block 18 of The Elworthy Helwick Company's Lake Shore Boulevard Estates Allotment No. 1 of part of Original Willoughby Township Lot 24, Gore Tract, as shown by the Plat of said Allotment recorded in Volume D, Page 55 of the Map Records of said Lake County, and together forming a parcel of land containing 0.2923 of an acre. And bounded and described as follows: BEGINNING at a point in the Westerly line of Erie Road, 60 feet wide, at the Southeasterly corner of said Sublot No. 12; THENCE North 12 deg. 50' 30" West, along said Westerly line of Erie Road 111.11 feet to the point at the Northeasterly corner of said Sublot 11; THENCE North 86 deg. 00' 00" West, along the Northerly line of said Sublot 11 a distance of 115.38 feet to a point; THENCE South 9 deg. 47' 45" East, 102.97 feet to a point in the 29 P-3 Southerly line of said Sublot 12; THENCE South 86 deg. 00' 00" East, 139.26 feet to the place of beginning. Situated in the City of Eastlake, County of Lake and State of Ohio, an accurate description and plat of which are as follows, to-wit: and known as being a part of Willoughby Lot No. 24 in the Gore and is bounded and described as follows: BEGINNING on the centerline of River Road, now known as Erie Road, also known as Lake Road, at a point South 21 deg. 57' East, along the centerline of said road distant 246.3 feet from the Southwest corner of one acre of land now owned by Emma S. Trimmer; THENCE North 80 deg. 55' East, 550.8 feet to the centerline of dead branch of Chagrin River passing through iron stakes at 30.77 feet on the East line of said road and 47.74 feet from the centerline of said dead branch; THENCE South 44 deg. 37' East, along the centerline of said dead branch and said line extending 134.11 feet to an iron pipe stake; THENCE South 68 deg. 03' West, 588.7 feet to the centerline of said River Road, now known as Erie Road, passing through iron pipe stakes 210.85 feet and 30.0 feet from the centerline of said River Road, now known as Erie Road; THENCE North 21 deg. 57' West, along the centerline of said River Road, now known as Erie Road, 246.3 feet to the place of beginning and containing 2.354 acres of land, according to a survey thereof made by the Clark and Pike Co., Registered Surveyor No. 798, be the same more or less, but subject to all legal highways. ASHTABULA MALL SUBSTATION Situated in the State of Ohio, County of Ashtabula, and the Township of Ashtabula, and being known as a part of Lot 8 and Lot 9 of the Erie Tract, New Survey, of said Ashtabula Township, and being more fully described as follows: Beginning at the point of intersection of the centerline of North Ridge Road (U.S. Route 20) 66 feet in width, with the relocated centerline of Eureka Road, 50 feet in width, as shown in Plat Volume 11, Page 58 & 59, recorded in the Ashtabula County Recorders Office; Thence N 78 deg. 10' 46" E, along the centerline of North Ridge Road (U.S. Route 20), a distance of 618.01 feet to a point, said point being the southeasterly corner of lands owned by The Cleveland Electric Illuminating Company as recorded in Volume 307, Page 250, in the Ashtabula County Recorders Office; Thence N 00 deg. 00' 00" E, along the easterly line of said Cleveland Electric Illuminating Company lands, a distance of 2,745.62 feet to a point, said point being the TRUE PLACE OF BEGINNING for the herein described parcel of land; 30 P-4 Thence continuing N 00 deg. 00' 00" E, along the easterly line of said Cleveland Electric Illuminating Company lands, a distance of 200.00 feet to a point; Thence S 90 deg. 00' 00" E, 90 deg. to the right, a distance of 150 feet to a point; Thence S 00 deg. 00' 00" W, 90 deg. to the right, a distance of 200.00 feet to a point; Thence N 90 deg. 00' 00" W, 90 deg. to the right, a distance of 150.00 feet to a point on the easterly line of said Cleveland Electric Illuminating Company lands, returning to the True Place of Beginning and containing an area of 0.688 acres of land more or less. 31 R-1 This page contains information as to recording and filing which was not set forth in this Supplemental Indenture at the time of execution. This page is not a part of this Supplemental Indenture. RECORDING AND FILING DATA This Supplemental Indenture was filed for record and recorded in the record of mortgages in the offices of the Recorders of the following Counties:
COUNTY VOLUME PAGE FILED FOR RECORD - ------------------------------- --------------- ------------------------- Ohio Ashtabula Cuyahoga Geauga Lake Lorain Ottawa Portage Stark Summit Trumbull Pennsylvania Warren Beaver
This Supplemental Indenture was filed for record and recorded in the Registered Land Department of the offices of the Recorders of the following Counties in the State of Ohio:
COUNTY DOCUMENT NUMBER FILED FOR RECORD - --------------------------------------------- ------------------------- Cuyahoga Lake
An amendment to a previously filed financing statement and a counterpart of this Supplemental Indenture were filed in the office of the Secretary of the Commonwealth of Pennsylvania on under original or amendment file number , microfilm number , to comply with the filing requirements of the Pennsylvania enactment of the Uniform Commercial Code. EX-27.B 4 EXHIBIT 27.B
UT This schedule contains summary financial information extracted from the financial statements contained in the Form 10-Q for the quarterly period ended September 30, 1994 of The Cleveland Electric Illuminating Company and is qualified in its entirety by reference to such financial statements. 0000020947 THE CLEVELAND ELECTRIC ILLUMINATING COMPANY 1000 U.S. DOLLARS 9-MOS DEC-31-1994 SEP-30-1994 1 PER-BOOK 4,966,829 257,941 475,332 1,322,856 0 7,022,958 1,241,087 78,625 (244,629) 1,075,083 255,717 240,871 2,564,159 19,200 0 0 234,469 39,514 140,625 44,419 2,408,901 7,022,958 1,296,628 67,750 920,613 988,363 308,265 23,355 331,620 180,958 150,662 34,197 116,465 92,628 227,349 270,551 0 0
EX-4.B 5 EXHIBIT 4.B 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE TOLEDO EDISON COMPANY TO THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), TRUSTEE. ------------------------ FORTY-FIRST SUPPLEMENTAL INDENTURE DATED AS OF SEPTEMBER 15, 1994 ------------------------ (SUPPLEMENTAL TO INDENTURE DATED AS OF APRIL 1, 1947) ------------------------ FIRST MORTGAGE BONDS, 8% SERIES DUE 2023-G - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS
PAGE --------- PARTIES.................................................. 1 RECITALS................................................. 1 FORM OF BOND OF THIS SERIES.............................. 4 GRANTING CLAUSES......................................... 11 ARTICLE I CREATION AND DESCRIPTION OF BONDS OF THIS SERIES SECTION 1. Creation of Bonds of this Series, limit on amount issuable........................... 12 SECTION 2. Interest Rates, Computation and Payment Dates..................................... 12 SECTION 3. Place and coin of payment................... 12 SECTION 4. Denominations............................... 13 SECTION 5. Transfer and Exchange....................... 13 SECTION 6. Record date for payment of interest......... 13 SECTION 7. Date of Bonds of this Series................ 14 SECTION 8. Authentication of Bonds of this Series by Trustee................................ 14 ARTICLE II REDEMPTION OF BONDS OF THIS SERIES SECTION 1. Bonds of this Series redeemable............. 14 SECTION 2. Mandatory redemption provisions............. 15 SECTION 3. Certain provisions of Original Indenture applicable to redemption of Bonds of this Series.................................... 16 SECTION 4. Bondholder agrees to accept payment of Bonds of this Series redeemed prior to maturity.................................. 16
3 ii
PAGE --------- ARTICLE III PAYMENT DEEMED MADE OF BONDS OF THIS SERIES SECTION 1. Upon surrender of Water Bonds purchased..... 16 SECTION 2. Upon payment of Water Bonds................. 17 SECTION 3. Surrender and cancellation of Bonds of this Series.................................... 17 ARTICLE IV THE TRUSTEE SECTION 1. The Trustee accepts trust created by Forty-first Supplemental Indenture........ 17 SECTION 2. Agency of the Company other than the Trustee................................... 18 SECTION 3. Trustee advises Company of notations provided for in Article III............... 18 ARTICLE V MISCELLANEOUS PROVISIONS SECTION 1. Ratification and approval of Original Indenture as supplemented................. 18 Covenants of Original Indenture, except as modified, continue in effect.............. 18 SECTION 2. Forty-first Supplemental Indenture may be executed in counterparts.................. 19 TESTIMONIUM CLAUSE....................................... 19 SIGNATURES AND SEALS..................................... S-1 ACKNOWLEDGMENTS.......................................... S-2 RECORDING AND FILING DATA................................ R-1
4 FORTY-FIRST SUPPLEMENTAL INDENTURE, dated as of September 15, 1994, between THE TOLEDO EDISON COMPANY, a corporation organized and existing under the laws of the State of Ohio (hereinafter called the "Company"), and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), a national banking association existing under the laws of the United States of America, with its head office at 1 Chase Manhattan Plaza, The City of New York (hereinafter called the "Trustee"), as Trustee. RECITALS The Company has heretofore executed and delivered an Indenture of Mortgage and Deed of Trust dated as of April 1, 1947 (hereinafter referred to as the "Original Indenture") to The Chase National Bank of the City of New York, predecessor Trustee, to secure an issue of First Mortgage Bonds of the Company, issuable in series, and created thereunder an initial series of bonds designated as First Mortgage Bonds, 2 7/8% Series due 1977, being the initial series of bonds issued under the Original Indenture; and The Company has heretofore executed and delivered to The Chase National Bank of the City of New York, predecessor Trustee, four Supplemental Indentures supplementing the Original Indenture dated, respectively, September 1, 1948, April 1, 1949, December 1, 1950 and March 1, 1954 and has heretofore executed and delivered to The Chase Manhattan Bank, which on March 31, 1955, became the Trustee under the Original Indenture by virtue of the merger of The Chase National Bank of the City of New York into President and Directors of The Manhattan Company under the name of The Chase Manhattan Bank, the Fifth and the Sixth Supplemental Indentures dated, respectively, February 1, 1956, and May 1, 1958, supplementing the Original Indenture; and The Chase Manhattan Bank was converted into a national banking association under the name The Chase Manhattan Bank (National Association), effective September 23, 1965; and by virtue of said conversion the continuity of the business of The Chase Manhattan Bank, including its business of acting as corporate trustee, and its corporate existence, have not been affected, so that The Chase Manhattan Bank (National Association) is vested with all the trusts, powers, discretion, immunities, privileges and all other matters as were vested in said The Chase Manhattan Bank under the Indenture, with like effect as if originally named as Trustee therein; and 5 2 The Company has heretofore executed and delivered to the Trustee 34 Supplemental Indentures dated, respectively, as follows: Seventh, August 1, 1967, Eighth, November 1, 1970, Ninth, August 1, 1972, Tenth, November 1, 1973, Eleventh, July 1, 1974, Twelfth, October 1, 1975, Thirteenth, June 1, 1976, Fourteenth, October 1, 1978, Fifteenth, September 1, 1979, Sixteenth, September 1, 1980, Seventeenth, October 1, 1980, Eighteenth, April 1, 1981, Nineteenth, November 1, 1981, Twentieth, June 1, 1982, Twenty-first, September 1, 1982, Twenty-second, April 1, 1983, Twenty-third, December 1, 1983, Twenty-fourth, April 1, 1984, Twenty-fifth, October 15, 1984, Twenty-sixth, October 15, 1984, Twenty-seventh, August 1, 1985, Twenty-eighth, August 1, 1985, Twenty-ninth, December 1, 1985, Thirtieth, March 1, 1986, Thirty-first, October 15, 1987, Thirty-second, September 15, 1988, Thirty-third, June 15, 1989, Thirty-fourth, October 15, 1989, Thirty-fifth, May 15, 1990, Thirty-sixth, March 1, 1991, Thirty-seventh, May 1, 1992, Thirty-eighth, August 1, 1992, Thirty-ninth, October 1, 1992 and Fortieth, January 1, 1993 supplementing the Original Indenture (The Original Indenture, all the aforementioned Supplemental Indentures, this Forty-first Supplemental Indenture and any other indentures supplemental to the Original Indenture are herein collectively called the "Indenture" and this Forty-first Supplemental Indenture is hereinafter called "this Supplemental Indenture"); and Pursuant to the provisions of the Indenture, the Company has issued 46 series of bonds in the aggregate principal amount of $1,987,300,000, of which 28 series (including the Bonds of the 1977 Series issued pursuant to the Original Indenture) in the aggregate principal amount of $1,115,300,000 are no longer outstanding and of which additional portions, aggregating $36,875,000 in principal amount, of 4 other series have been retired; and The Company covenanted in and by the Original Indenture to execute and deliver such further instruments and do such further acts as may be necessary or proper to carry out more effectually the purposes of the Original Indenture and to make subject to the lien thereof property acquired after the execution and delivery of the Original Indenture; and Under Article 3 of the Original Indenture, the Company is authorized to issue additional bonds upon the terms and conditions expressed in the Original Indenture; and The Company proposes to create one new series of First Mortgage Bonds to be designated as First Mortgage Bonds, 8% Series due 2023-G (hereinafter called the "Bonds of this Series"), with the denominations, rate of interest, 6 3 date of maturity, redemption provisions and other provisions and agreements in respect thereof as in this Supplemental Indenture set forth; and The Bonds of this Series are to be issued by the Company to the Ohio Water Development Authority (hereinafter called the "Water Authority"), and registered initially in the name of The Fifth Third Bank of Northwestern Ohio, N.A., Toledo, Ohio, Trustee (hereinafter called the "Water Bond Trustee") for the account of the Water Authority, to evidence and secure the obligations of the Company to repay a loan (hereinafter called the "Water Loan") made by the Water Authority to the Company pursuant to a certain loan agreement, dated as of September 15, 1994, between the Water Authority and the Company (hereinafter called the "Water Authority Loan Agreement") to assist the Company in refunding certain bonds which had been previously issued by the Water Authority the proceeds of which had been loaned to the Company to assist in financing a portion of the costs of the acquisition, construction and installation of certain facilities comprising waste water and solid waste disposal facilities located at the Perry Nuclear Power Plant Unit No. 1 in Lake County, Ohio. The Water Loan is to be funded with proceeds to be derived from the sale by the Authority of one series of State of Ohio Collateralized Pollution Control Revenue Refunding Bonds, 1994 Series A (The Toledo Edison Company Project) (hereinafter called the "Water Bonds") in the aggregate principal amount of $30,500,000, to be issued under a Trust Indenture, dated as of September 15, 1994 (hereinafter called the "Water Bond Indenture"), between the Water Bond Trustee and the Water Authority. All right, title and interest of the Water Authority in the Bonds of this Series are to be assigned and pledged by the Water Authority to the Water Bond Trustee as further security for the payment of the principal of and premium, if any, and interest on the Water Bonds; and The Company, by appropriate corporate action, has duly resolved and determined to execute this Supplemental Indenture for the purpose of providing for the creation of the Bonds of this Series and of specifying the form, provisions and particulars thereof as in said Original Indenture, as amended, provided or permitted, including the issuance only of fully registered Bonds, and of giving to the Bonds of this Series the protection and security of the Indenture; and 7 4 The text of the Bonds of this Series is to be substantially in the form following: [FORM OF BOND OF THIS SERIES] THE TOLEDO EDISON COMPANY FIRST MORTGAGE BOND, 8% SERIES DUE 2023-G DUE OCTOBER 1, 2023 No. OA- $ THE TOLEDO EDISON COMPANY, an Ohio corporation (hereinafter called the Company), for value received, hereby promises to pay to , or registered assigns, the principal sum of Dollars or the aggregate unpaid principal amount hereof (as shown on the Schedule of Payments hereon), whichever is less, on October 1, 2023, at its office or agency in The City of New York, or, so long as the registered owner of this Bond is the Water Bond Trustee (hereinafter defined), at the agency of the Company in the City of Toledo, State of Ohio, and semiannually on the same dates as interest is payable on the Water Bonds (hereinafter defined; each such date hereinafter called an interest payment date) and to pay interest on the unpaid principal amount hereof to the registered owner hereof at said office or agencies at the rate per annum specified in the title of this Bond, until maturity, or, if this Bond shall be duly called for redemption, until the redemption date, or, if the Company shall default in the payment of the principal amount of this Bond, until the Company's obligation with respect to the payment of such principal shall be discharged as provided in the Indenture (hereinafter defined). Except as hereinafter provided, this Bond shall bear interest from the interest payment date next preceding the date of this Bond to which interest has been paid, unless this Bond is dated on an interest payment date, in which case from the date hereof; or unless this Bond is dated prior to the first interest payment date in respect hereof, in which case from September 15, 1994, and except that if this Bond is delivered on a transfer or exchange of or in substitution for one or more Bonds of this Series (hereinafter defined) it shall bear interest from the last preceding date to which interest shall have been paid on the Bond or Bonds of this Series in respect of which this Bond is delivered (except that if this Bond is dated between the record date (hereinafter defined) for any interest payment date and such interest payment date, then from such interest payment date; provided, however, that if the Company shall default in the payment of interest due on such interest payment date, then from the next preceding interest payment date to which interest has been paid on the 8 5 Bonds of this Series, or if such interest payment date is the first interest payment date for Bonds of this Series, then from September 15, 1994). The interest so payable on any interest payment date will, subject to certain exceptions provided in the Indenture, be paid to the person in whose name this Bond is registered at the close of business on the record date, which shall be the "Regular Record Date" as defined in the Water Bond Indenture, applicable to the regular interest payment date of any Bond of this Series, if it were an "Interest Payment Date" as defined in the Water Bond Indenture. Both the principal of and the interest on this Bond shall be payable in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. This Bond is one of the Bonds of the Company, known as its First Mortgage Bonds, issued and to be issued in one or more series under and equally and ratably secured (except as any sinking, amortization, improvement or other fund, established in accordance with the provisions of the Indenture, may afford additional security for the Bonds of any particular series) by a certain Indenture of Mortgage and Deed of Trust, dated as of April 1, 1947 (hereinafter called the Original Indenture), made by the Company to The Chase National Bank of the City of New York (The Chase Manhattan Bank (National Association), successor), as Trustee (hereinafter called the Trustee), and by certain indentures supplemental thereto, including the Forty-first Supplemental Indenture dated as of September 15, 1994 (the Original Indenture and said indentures supplemental thereto herein collectively called the Indenture and said Forty-first Supplemental Indenture hereinafter called the Supplemental Indenture), to which Indenture reference is hereby made for a description of the property mortgaged, the nature and extent of the security, the rights and limitations of rights of the Company, the Trustee and the holders of said Bonds and of the coupons appurtenant to coupon Bonds under the Indenture and the terms and conditions upon which said Bonds are and are to be issued and secured, to all of the provisions of which Indenture and of all such supplemental indentures in respect of such security, including the provisions of the Indenture permitting the issue of Bonds of any series for property which, under the restrictions and limitations therein specified, may be subject to liens prior to the lien of the Indenture, the holder, by accepting this Bond, assents. To the extent permitted by and as provided in the Indenture, the rights and obligations of the Company and of the holders of said Bonds and coupons (including those pertaining to any sinking or other fund) may be changed and modified, with the consent of the Company, by the holders of at least 75% in aggregate principal amount of the Bonds then outstanding, such percentage 9 6 being determined as provided in the Indenture; provided, however, that in case such changes and modifications affect one or more but less than all series of Bonds then outstanding, they shall be required to be adopted only by the affirmative vote of the holders of at least 75% in aggregate principal amount of outstanding Bonds of such one or more series so affected; and further provided, that without the consent of the holder hereof no such change or modification shall be made which will extend the time of payment of the principal of, or of the interest or premium, if any, on this Bond or reduce the principal amount hereof or the rate of interest or the premium, if any, hereon, or affect any other modification of the terms of payment of such principal or interest, or premium, if any, or will permit the creation of any lien ranking prior to or on a parity with the lien of the Indenture on any of the mortgaged property, or will deprive the holder hereof of the benefit of a lien upon the mortgaged property for the security of this Bond, or will reduce the percentage of Bonds required for the adoption of changes or modifications as aforesaid. This Bond is one of a series of Bonds designated as the First Mortgage Bonds, 8% Series due 2023-G, of the Company (herein called Bonds of this Series) limited, except as otherwise provided in the Indenture, in aggregate principal amount to $30,500,000 and issued under and secured by the Supplemental Indenture. The Bonds of this Series have been issued by the Company to the Ohio Water Development Authority (herein called the Water Authority) to evidence and secure the obligations of the Company to repay a loan (herein called the Water Authority Loan) made by the Water Authority to the Company pursuant to a certain loan agreement, dated as of September 15, 1994 (herein called the Water Authority Loan Agreement), between the Water Authority and the Company to assist the Company in refunding certain bonds which have been previously issued by the Water Authority the proceeds of which had been loaned to the Company to assist in financing its portion of the costs of the acquisition, construction and installation of certain facilities comprising waste water and solid waste disposal facilities. The Water Authority Loan has been funded with the proceeds derived from the sale by the Water Authority of one series of State of Ohio Collateralized Pollution Control Revenue Refunding Bonds, 1994 Series A (The Toledo Edison Company Project) (herein called the Water Bonds) in the aggregate principal amount of $30,500,000, issued under a Trust Indenture, dated as of September 15, 1994 (herein called the Water Bond Indenture), between The Fifth Third Bank of Northwestern Ohio, N.A., as trustee (herein called the Water Bond Trustee) and the Water Authority. All right, title and interest of the Water Authority in the Bonds of this Series have been assigned and pledged by the Water 10 7 Authority to the Water Bond Trustee as security for the payment of the principal of and premium, if any, and interest on the Water Bonds; and the Bonds of this Series have been delivered to the Water Bond Trustee, as trustee, for the benefit of the holders of the Water Bonds. In the event any Water Bonds shall be surrendered to the Water Bond Trustee or other person for cancellation pursuant to the Water Bond Indenture (except upon exchange for other Water Bonds), Bonds of this Series equal in principal amount to such Water Bonds shall be deemed to have been paid, but only when and to the extent (a) so noted on the Schedule of Payments hereon by one of the agencies of the Company hereinabove specified and (if such agency is not the Trustee) written notice by such agency of such notation has been received by the Trustee or (b) such Bond is surrendered to and cancelled by the Trustee as provided in the next paragraph; and in the event and to the extent the principal of (or premium, if any) or interest on any Water Bonds shall be paid or deemed to be paid, an equal amount of principal (or premium, if any) or interest, as the case may be, payable with respect to an aggregate principal amount of Bonds of this Series equal to the aggregate principal amount of such Water Bonds shall be deemed to have been paid, but, in the case of such payment of principal, only when and to the extent (i) so noted on the Schedule of Payments hereon by one of the agencies of the Company hereinabove specified and (if such agency is not the Trustee) written notice by such agency of such notation has been received by the Trustee or (ii) this Bond is surrendered to and cancelled by the Trustee as provided in the next paragraph. When any such payment of principal of this Bond is made, this Bond shall be surrendered by the registered owner hereof to an agency of the Company for such notation and notification or to the Trustee for cancellation. In the event that this Bond shall be deemed to have been paid in full, this Bond shall be surrendered to the Trustee for cancellation. In the event that this Bond shall be deemed to have been paid in part, this Bond may, at the option of the registered owner, be surrendered to the Trustee for cancellation, in which event the Trustee shall cancel this Bond and the Company shall execute and the Trustee shall authenticate and deliver Bonds of this Series in authorized denominations in aggregate principal amount equal to the unpaid balance of the principal amount of this Bond. The Bonds of this Series are subject to mandatory redemption by the Company prior to maturity, upon not less than thirty days prior notice, in whole or in part at any time, all as more fully provided in Section 1 of Article II of the Supplemental Indenture, in the event the Company exercises its option to 11 8 direct the redemption of Water Bonds pursuant to Section 6.2 of the Water Authority Loan Agreement, and an equivalent principal amount of Water Bonds are being concurrently called for redemption, at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date fixed for redemption. The Bonds of this Series are also subject to mandatory redemption by the Company prior to maturity at any time (a) in whole upon notice of the occurrence of an event of default under the Water Bond Indenture and of the acceleration of the payment of the principal of the Water Bonds or (b) in whole or in part upon a final determination by any federal judicial or administrative authority that interest on the Water Bonds is includable for federal income tax purposes in the gross income of the holders of the Water Bonds (other than because a holder is a "substantial user" of the project being financed pursuant to the Water Authority Loan Agreement or a "related person" thereof, as those terms are used in Section 147(a) of the Internal Revenue Code of 1986, as amended) and an equivalent amount of Water Bonds are being concurrently called for redemption, in each case as provided in Section 2 of Article II of the Supplemental Indenture, at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date fixed for redemption. The Bonds of this Series are also subject to mandatory redemption by the Company prior to stated maturity, all as more fully provided in Section 1 of Article II of the Supplemental Indenture, in whole or in part, on any date on or after October 1, 2004, in the event that and to the extent that the Company exercises its option to direct the redemption of Water Bonds pursuant to Section 6.1 of the Water Authority Loan Agreement, and an equivalent principal amount of Water Bonds are being concurrently called for redemption, at redemption prices, plus accrued and unpaid interest if any, to the redemption date as follows:
REDEMPTION PRICE (EXPRESSED AS A PERCENTAGE REDEMPTION PERIODS OF THE PRINCIPAL AMOUNT (DATES INCLUSIVE) BEING REDEEMED) ------------------ ----------------------- October 1, 2004 through September 30, 2005 102% October 1, 2005 through September 30, 2006 101 October 1, 2006 and thereafter 100
Any redemption of the Bonds of this Series shall be made in accordance with the applicable provisions of Sections 5.02, 5.03, 5.04 and 5.05 of the 12 9 Original Indenture, unless and to the extent waived in writing by the registered owner or owners of all Bonds of this Series and such waiver is filed with the Trustee. If this Bond shall be called for redemption and payment of the redemption price shall be duly provided by the Company as specified in the Indenture, interest shall cease to accrue hereon from and after the date of redemption fixed in the notice thereof. The principal of this Bond may be declared or may become due before the maturity hereof, on the conditions, in the manner and at the times set forth in the Indenture, upon the happening of a default as therein defined. This Bond is transferable by the registered owner hereof in person or by his or her duly authorized attorney at the office or agency of the Company in The City of New York, upon surrender and cancellation of this Bond, and thereupon a new fully registered Bond or Bonds of this Series and maturity, for the same aggregate principal amount, in authorized denominations, will be issued to the transferee in exchange therefor, as provided in the Indenture. The Company and the Trustee and any paying agent may deem and treat the person in whose name this Bond is registered as the absolute owner hereof for the purpose of receiving payment and for all other purposes. This Bond, alone or with other Bonds of this Series and maturity, may in like manner be exchanged at such office or agency for one or more new fully registered Bonds of this Series and maturity, in authorized denominations, of the same aggregate principal amount. Upon each such transfer, exchange and re-exchange, the Company will not require the payment of any charges, other than for any tax or other governmental charge required to be paid by the Company in connection therewith. In the event less than all of the Bonds of this Series at the time outstanding are called for redemption, the Company shall not be required (a) to register any transfer or make any exchange of any such Bond for a period of 15 days before the mailing of the notice of redemption of any such Bond, (b) to register any transfer or make any exchange of any such Bond so called for redemption in its entirety, or (c) to register any transfer or make any exchange of any portion of any such Bond so called for redemption. No recourse under or upon any covenant or obligation of the Indenture, or of any indenture supplemental thereto, or of this Bond, for the payment of the principal of or the interest on this Bond, or for any claim based thereon, or otherwise in any manner in respect thereof, shall be had against any incorporator, subscriber to the capital stock, stockholder, officer or director, as such, of 13 10 the Company, whether former, present or future, either directly, or indirectly through the Company or any predecessor or successor corporation or the Trustee, by the enforcement of any subscription to capital stock, assessment or otherwise, or by any legal or equitable proceeding by virtue of any constitution, statute, or otherwise (including, without limiting the generality of the foregoing, any proceeding to enforce any claimed liability of stockholders of the Company based upon any theory of disregarding the corporate entity of the Company or upon any theory that the Company was acting as the agent or instrumentality of the stockholders), any and all such liability of incorporators, stockholders, subscribers, officers and directors, as such, being released by the holder hereof, by the acceptance of this Bond, and being likewise waived and released by the terms of the Indenture. This Bond shall not be valid or become obligatory for any purpose until the certificate of authentication endorsed hereon shall have been signed by The Chase Manhattan Bank (National Association) or its successor, as Trustee under the Indenture. IN WITNESS WHEREOF, THE TOLEDO EDISON COMPANY has caused this Bond to be signed in its name by its President or a Vice-President, manually or in facsimile, and its corporate seal to be impressed or imprinted hereon and attested by a manual or facsimile signature of its Secretary or an Assistant Secretary. Dated THE TOLEDO EDISON COMPANY By ------------------------- Vice President. Attest: ---------------------- Secretary. 14 11 [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This Bond is one of the Bonds of the series designated herein, described in the within-mentioned Indenture. THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), AS TRUSTEE By ---------------------------------------- Authorized Officer. [FORM OF SCHEDULE OF PAYMENTS] SCHEDULE OF PAYMENTS
AGENCY OF THE UNPAID COMPANY PRINCIPAL PRINCIPAL PREMIUM INTEREST MAKING AUTHORIZED DATE PAYMENT AMOUNT PAYMENT PAYMENT NOTATION OFFICER TITLE - ------------ ---------- ---------- -------- --------- ---------- ----------- ------
[END OF FORM OF BOND OF THIS SERIES] 15 12 All conditions and requirements necessary to make this Supplemental Indenture a valid, legal and binding instrument in accordance with its terms and to make the Bonds of this Series, when duly executed by the Company and authenticated and delivered by the Trustee, and duly issued, the valid, binding and legal obligations of the Company, have been done and performed, and the execution and delivery of this Supplemental Indenture have been in all respects duly authorized; NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH: That The Toledo Edison Company, the Company herein named, in consideration of the premises and of One Dollar ($1.00) to it duly paid by the Trustee at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, does hereby covenant and agree to and with the Trustee and its successors in the trust under the Indenture, for the benefit of those who shall hold the bonds to be issued hereunder and thereunder, as hereinafter provided, as follows: ARTICLE I CREATION AND DESCRIPTION OF BONDS OF THIS SERIES SECTION 1. A new series of bonds to be issued under and secured by the Indenture is hereby created, to be designated as First Mortgage Bonds, 8% Series due 2023-G (such bonds herein referred to as the "Bonds of this Series"). The Bonds of this Series shall be limited to an aggregate principal amount of $30,500,000, excluding any Bonds of this Series which may be authenticated in exchange for or in lieu of or in substitution for or on transfer of other Bonds of this Series pursuant to any provisions of the Original Indenture or of this Supplemental Indenture. The Bonds of this Series shall be substantially in the form hereinbefore recited. SECTION 2. All Bonds of this Series shall mature October 1, 2023 and shall bear interest from September 15, 1994 at the rate of 8% per annum payable semiannually on the same dates as interest is payable on the Water Bonds. SECTION 3. Both principal and interest shall be payable, so long as the registered owner of the Bonds of this Series is the Water Bond Trustee, at the agency of the Company in the City of Toledo, State of Ohio, but if and when the registered owner of the Bonds of this Series is not the Water Bond Trustee, shall be payable at the office or agency of the Company in The City of New 16 13 York; and both principal and interest shall be payable in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. SECTION 4. The Bonds of this Series shall be issued only as fully registered Bonds in denominations of $100,000 and any integral multiple thereof. SECTION 5. Bonds of this Series shall be transferable and exchangeable for other Bonds of the same series at the office or agency of the Company in The City of New York, in the manner and upon the terms set forth in sec. 2.05 of the Original Indenture, but notwithstanding the provisions of sec. 2.08 of the Original Indenture, no charge shall be made upon any transfer or exchange of Bonds of said series other than for any tax or taxes or other governmental charge required to be paid by the Company. In the event less than all of the Bonds of this Series at the time outstanding are called for redemption, the Company shall not be required (a) to register any transfer or make any exchange of any such Bond for a period of 15 days before the mailing of the notice of redemption of any such Bond, (b) to register any transfer or make any exchange of any such Bond so called for redemption in its entirety, or (c) to register any transfer or make any exchange of any portion of any such Bond so called for redemption. SECTION 6. The person in whose name any Bond of this Series is registered at the close of business on any record date (as defined in the text of the Form of Bond of this Series set forth in this Supplemental Indenture) with respect to any interest payment date shall be entitled to receive the interest payable on such interest payment date notwithstanding the cancellation of such registered Bond upon any transfer or exchange thereof subsequent to the record date and prior to such interest payment date, except if and to the extent the Company shall default in the payment of the interest due on such interest payment date, in which case such defaulted interest shall be paid to the person in whose name such Bond (or any Bond or Bonds of this Series issued, directly or after intermediate transactions, upon transfer or exchange or in substitution thereof) is registered on the date of payment of such defaulted interest or on a subsequent record date for such payment if one shall have been established as hereinafter provided. A subsequent record date may be established by the Company by notice mailed to the holders of Bonds of this Series not less than 10 days preceding such record date, which record date shall be not more than 15 days prior to the subsequent interest payment date. 17 14 SECTION 7. Except as provided in this Article I, every Bond of this Series shall be dated and shall bear interest as provided in sec. 2.04 of the Original Indenture; provided, however, that, so long as there is no existing default in the payment of interest on said Bonds, the holder of any Bond of this Series authenticated by the Trustee between the record date for any interest payment date and such interest payment date shall not be entitled to the payment of the interest due on such interest payment date and shall have no claim against the Company with respect thereto; provided, further, that, if and to the extent the Company shall default in the payment of the interest due on such interest payment date, then any such Bond shall bear interest from the interest payment date next preceding the date of such Bond to which interest has been paid or, if the Company shall be in default with respect to the interest due on the first interest payment date of such Bond, then from September 15, 1994. SECTION 8. The Bonds of this Series may be executed by the Company and delivered to the Trustee and, upon compliance with all applicable provisions and requirements of the Original Indenture in respect thereof, shall be authenticated by the Trustee and delivered (without awaiting the filing or recording of this Supplemental Indenture) in accordance with the written order or orders of the Company. ARTICLE II REDEMPTION OF BONDS OF THIS SERIES SECTION 1. The Bonds of this Series shall, in the manner provided in Article 5 of the Original Indenture, be subject to redemption by the Company prior to maturity, as follows: (a) In the event the Company exercises its option to direct the redemption of Water Bonds upon the occurrence of any of the events described in Section 6.2 of the Water Authority Loan Agreement, in whole or in part, in each case at a redemption price of 100% of the principal amount, plus accrued interest to the date fixed for redemption; or (b) In whole or in part on any date on or after October 1, 2004, in the event that and to the extent that the Company exercises its option to direct the redemption of Water Bonds pursuant to Section 6.1 of the Water Authority Loan Agreement, at redemption prices equal to the following percentages of the principal amount to be redeemed, plus accrued interest to the date fixed for redemption: 18 15
REDEMPTION PRICE (EXPRESSED AS A PERCENTAGE REDEMPTION PERIODS OF THE PRINCIPAL AMOUNT (DATES INCLUSIVE) BEING REDEEMED) ------------------ ----------------------- October 1, 2004 through September 30, 2005................................... 102% October 1, 2005 through September 30, 2006................................... 101 October 1, 2006 and thereafter........... 100
Any redemption under this Section 1 shall occur only upon receipt by the Trustee of a certificate of the Company to the effect that (i) the Company has given notice to the Water Bond Trustee that the Company is exercising its option to direct redemption of Water Bonds as provided in Section 6.1 or 6.2 of the Water Authority Loan Agreement and (ii) an equivalent principal amount of Water Bonds are being currently called for redemption. Such certificate shall specify the principal amount of the Bonds of this Series to be redeemed, shall have attached to it a copy of said notice to the Water Bond Trustee and shall specify the redemption date of such Bonds of this Series, which redemption date shall not be less than forty-five (45) days from the date of the Trustee's receipt of such certificate and shall be the same as the redemption date specified in the attached notice for the Water Bonds being concurrently redeemed. SECTION 2.(a) The Bonds of this Series shall be subject to mandatory redemption by the Company in whole at any time prior to maturity if the Trustee shall receive a written demand from the Water Bond Trustee for redemption of all Bonds of this Series held by the Water Bond Trustee, stating that an "event of default" under the Water Bond Indenture has occurred and is continuing and that payment of the principal of the Water Bonds has been accelerated; provided, however, that the Bonds of this Series shall not be redeemed under this Section 2(a) in the event that prior to the date fixed for redemption: (i) the Trustee shall have received a certificate of the Water Bond Trustee (a) stating that there has been a waiver of such acceleration or (b) withdrawing said written demand, or (ii) if an event of default under Section 9.01 of Article 9 of the Original Indenture shall have occurred and be continuing, there has been an acceleration of the principal of the Bonds of this Series. Any such redemption shall be made on a date selected by the Company not more than 45 days after receipt of the written demand at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date fixed for redemption. 19 16 (b) The Bonds of this Series shall also be subject to special mandatory redemption by the Company in whole or in part at any time at a redemption price of 100% of the principal amount thereof, plus accrued interest to the date fixed for redemption, at the earliest practicable date selected by the Water Bond Trustee, after consultation with the Company, but in any event no later than 180 days following the Water Bond Trustee's notification of a Determination of Taxability (as defined in the Water Bond Indenture). Any special mandatory redemption hereunder shall be made upon receipt by the Trustee of a certificate of the Company to the effect that the Company is delivering moneys to redeem Bonds of this Series in order to provide the Water Bond Trustee with the moneys needed to redeem Water Bonds in accordance with Section 6.3 of the Water Authority Loan Agreement and Section 4.01(b) of the Water Bond Indenture. Such certificate shall specify the principal amount of Water Bonds to be redeemed and the redemption date of the Bonds of this Series, which date shall be the same as the redemption date for the Water Bonds being concurrently redeemed. SECTION 3. The provisions of sec.5.02, sec.5.03, sec.5.04 and sec.5.05 of the Original Indenture shall be applicable to Bonds of this Series, provided that upon deposit with the Trustee of money to redeem Bonds of this Series, such money shall be immediately available for payment. SECTION 4. The holder of each and every Bond of this Series issued hereunder hereby agrees to accept payment thereof prior to maturity on the terms and conditions provided for in this Article II. ARTICLE III PAYMENT DEEMED MADE OF BONDS OF THIS SERIES SECTION 1. In the event any Water Bonds shall be purchased by the Company and surrendered by it to the Water Bond Trustee for cancellation or shall be otherwise surrendered to the Water Bond Trustee for cancellation pursuant to the Water Bond Indenture (except upon exchange for other Water Bonds), Bonds of this Series equal in principal amount and maturity to the Water Bonds so surrendered shall be deemed to have been paid, but only when and to the extent that (a) such payment of the principal amount of such Bonds of this Series shall be noted by an agency of the Company on the Schedule of Payments on such Bonds of this Series and (if such agency is not the Trustee) written notice by such agency of such notation shall have been received by the 20 17 Trustee or (b) such Bonds of this Series shall have been surrendered to and cancelled by the Trustee as provided in Section 3 of this Article III. SECTION 2. In the event and to the extent the principal of or premium, if any, or interest on any Water Bonds shall be paid out of funds held by the Water Bond Trustee or out of any other funds or shall otherwise be deemed to be paid, an equal amount of principal of or premium, if any, or interest on, as the case may be, Bonds of this Series shall be deemed to have been paid, but in the case of such payments of principal on such Bonds of this Series, only when and to the extent that (a) such payment of the principal amount of such Bonds of this Series shall be noted by an agency of the Company on the Schedule of Payments on such Bonds of this Series and (if such agency is not the Trustee) written notice by such agency of such notation shall have been received by the Trustee or (b) such Bonds of this Series shall have been surrendered to and cancelled by the Trustee as provided in Section 3 of this Article III. SECTION 3. When payment of any principal amount of a Bond of this Series shall be deemed to have been made as provided in Section 1 or 2 of this Article III, the registered owner thereof shall surrender such Bond to an agency of the Company for notation and notification or to the Trustee for cancellation as provided in said Section. All Bonds of this Series which shall be deemed to have been paid in full as provided in said Section 1 or 2 shall be surrendered to the Trustee for cancellation and the Trustee shall forthwith cancel the same. In the event that part of a Bond of this Series shall be deemed to have been paid as provided in said Section 1 or 2, the registered owner may at its option surrender such Bond to the Trustee for cancellation, in which event the Trustee shall cancel such Bond and the Company shall execute and the Trustee shall authenticate and deliver, without charge to the registered owner, Bonds of this Series in such authorized denominations as shall be specified by the registered owner in an aggregate principal amount equal to the unpaid balance of the principal amount of such surrendered Bond. ARTICLE IV THE TRUSTEE SECTION 1. The Trustee accepts the trusts created by this Supplemental Indenture upon the terms and conditions in the Original Indenture and in this Supplemental Indenture set forth. The recitals in this Supplemental Indenture are made by the Company only and not by the Trustee. Each and every term and condition contained in Article 13 of the Original Indenture shall apply to 21 18 this Supplemental Indenture with the same force and effect as if the same were herein set forth in full, with such omissions, variations and modifications thereof as may be appropriate to make the same conform to this Supplemental Indenture. SECTION 2. The Company shall cause any agency of the Company, other than the Trustee, which it may appoint from time to time to act as such agency in respect of the Bonds of this Series, to execute and deliver to the Trustee an instrument in which such agency shall: (a) Agree to keep and maintain, and furnish to the Trustee from time to time as reasonably requested by the Trustee, appropriate records of all transactions carried out by it as such agency and to furnish the Trustee such other information and reports as the Trustee may reasonably require; and (b) Certify that it is eligible for appointment as such agency and agree to notify the Trustee promptly if it shall cease to be so eligible; provided, however, that the Company, in lieu of causing any such agency to furnish such an instrument, may make such other arrangements with the Trustee in respect of any such agency as shall be satisfactory to the Trustee. SECTION 3. The Trustee shall advise the Company, promptly, in writing of the notation or receipt of written notice of notation on or cancellation of any Bond of this Series provided for in Article III of this Supplemental Indenture. ARTICLE V MISCELLANEOUS PROVISIONS SECTION 1. The Original Indenture, as heretofore supplemented, is in all respects ratified and confirmed, and the Original Indenture, this Supplemental Indenture and all other indentures supplemental to the Original Indenture shall be read, taken and construed as one and the same instrument. Neither the execution of this Supplemental Indenture nor anything herein contained shall be construed to impair the lien of the Indenture on any of the property subject thereto, and such lien shall remain in full force and effect as security for all bonds now outstanding or hereafter issued under the Indenture. All covenants and provisions of the Original Indenture, except as modified by this Supplemental Indenture and all other indentures supplemental to the Original Indenture, shall continue in full force and effect for the respective periods of 22 19 time therein specified, and this Supplemental Indenture shall form part of the Indenture. All terms defined in Article 1 of the Original Indenture shall, for all purposes of this Supplemental Indenture, have the meanings in said Article 1 specified, except as modified by this Supplemental Indenture and all other indentures supplemental to the Original Indenture and unless the context otherwise requires. SECTION 2. This Supplemental Indenture may be simultaneously executed in any number of counterparts, and all said counterparts executed and delivered, each as an original, shall constitute but one and the same instrument. IN WITNESS WHEREOF, The Toledo Edison Company has caused its corporate name to be hereunto affixed, this instrument to be signed by its President or a Vice President and its corporate seal to be hereunto affixed and attested by its Secretary or an Assistant Secretary for and in its behalf and The Chase Manhattan Bank (National Association), as Trustee, in evidence of its acceptance of the trust hereby created, has caused its corporate name to be hereunto affixed, this instrument to be signed by its President or a Vice President and its corporate seal to be hereunto affixed and attested by its Secretary, an Assistant Secretary or a Corporate Trust Officer, for and in its behalf, all as of the day and year first above written. 23 S-1 THE TOLEDO EDISON COMPANY BY Gary R. Leidich ------------------------------------- VICE PRESIDENT Attest: E. Lyle Pepin --------------------------------------- Secretary Signed, sealed and acknowledged on behalf of The Toledo Edison Company in the presence of Patricia Barkey - ------------------------------------------ Patricia Barkey Amy McCabe - ------------------------------------------ Amy McCabe As witnesses THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as Trustee, By Valerie Dunbar ----------------------------------- Second Vice President Attest: Mary Lewicki ------------------------------------- Corporate Trust Officer Signed, sealed and acknowledged on behalf of The Chase Manhattan Bank (National Association) in the presence of Ronald J. Halleran - ------------------------------------------ Ronald J. Halleran Timothy E. Burke - ------------------------------------------ Timothy E. Burke As witnesses 24 S-2 STATE OF OHIO SS.: COUNTY OF CUYAHOGA On this 29th day of September, 1994, before me personally appeared GARY R. LEIDICH and E. LYLE PEPIN to me personally known, who being by me severally duly sworn, did say that they are a Vice President and the Secretary, respectively, of The Toledo Edison Company, that the seal affixed to the foregoing instrument is the corporate seal of said corporation and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors; and said officers severally acknowledged said instrument to be the free act and deed of said corporation. Sondra Y. Clarke ------------------------------------------ Notary Public Sondra Y. Clarke Notary Public, State of Ohio Recorded in Cuyahoga County My commission expires November 25, 1998 STATE OF NEW YORK SS.: COUNTY OF NEW YORK On this 27th day of September, 1994, before me personally appeared VALERIE DUNBAR and MARY LEWICKI to me personally known, who being by me severally duly sworn, did say that they are a Second Vice President and a Corporate Trust Officer, respectively, of The Chase Manhattan Bank (National Association), that the seal affixed to the foregoing instrument is the corporate seal of said association and that said instrument was signed and sealed in behalf of said association by authority of its Board of Directors; and said officers severally acknowledged said instrument to be the free act and deed of said association. Della K. Benjamin ------------------------------------------ Notary Public Della K. Benjamin Notary Public, State of New York No. 24-4659567 Qualified in Kings County Commission Expires April 30, 1995 THIS INSTRUMENT PREPARED BY BRUCE T. ROSENBAUM, ATTORNEY AT LAW. 25 R-1 This page contains information as to recording and filing which was not set forth in this Supplemental Indenture at the time of execution. This page is not a part of this Supplemental Indenture. RECORDING AND FILING DATA This Supplemental Indenture was filed for record and recorded in the record of mortgages in the offices of the Recorders of the following Counties:
FILED FOR COUNTY VOLUME PAGE(S) RECORD ------ ------ ------- --------- Ohio Belmont................ Defiance............... Erie................... Fulton................. Henry.................. Lake................... Monroe................. Ottawa................. Paulding............... Putnam................. Sandusky............... Seneca................. Williams............... Wood................... Pennsylvania Beaver.................
MICROFICHE ---------- Lucas, Ohio..........
An amendment to a previously filed financing statement and a counterpart of this Supplemental Indenture were filed in the office of the Secretary of the Commonwealth of Pennsylvania on under original or amendment file number , microfilm number , to comply with the filing requirements of the Pennsylvania enactment of the Uniform Commercial Code. EX-27.C 6 EXHIBIT 27.C
UT This schedule contains summary financial information extracted from the financial statements contained in the Form 10-Q for the quarterly period ended September 30, 1994 of The Toledo Edison Company and is qualified in its entirety by reference to such financial statements. 0000352049 THE TOLEDO EDISON COMPANY 1000 U.S. DOLLARS 9-MOS DEC-31-1994 JAN-01-1994 SEP-30-1994 1 PER-BOOK 2,044,844 154,549 295,680 958,306 0 3,453,379 195,687 602,116 (123,844) 673,959 6,685 210,000 1,169,205 0 0 0 71,205 11,665 88,469 32,849 1,189,342 3,453,379 660,471 28,099 493,153 521,252 139,219 13,664 152,883 85,703 67,180 15,457 51,723 0 62,876 154,963 0 0
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