-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LI00LNJhNYlCxs+/h0NdQlaMbrI2qLxdX1CWB4xCA934uDQ4YxDXSPtttkApDQYO uuetql4tIIl78r+m7qfMFQ== 0000027430-98-000005.txt : 19981123 0000027430-98-000005.hdr.sgml : 19981123 ACCESSION NUMBER: 0000027430-98-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981116 DATE AS OF CHANGE: 19981120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAYTON POWER & LIGHT CO CENTRAL INDEX KEY: 0000027430 STANDARD INDUSTRIAL CLASSIFICATION: 4931 IRS NUMBER: 310258470 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-02385 FILM NUMBER: 98753313 BUSINESS ADDRESS: STREET 1: PO BOX 8825 STREET 2: PO BOX 1247 CITY: DAYTON STATE: OH ZIP: 45401 BUSINESS PHONE: 5132246000 MAIL ADDRESS: STREET 1: P O BOX 8825 CITY: DAYTON STATE: OH ZIP: 45401 10-Q 1 DP&L COMPANY 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1998 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number 1-2385 ------ THE DAYTON POWER AND LIGHT COMPANY (Exact name of registrant as specified in its charter) OHIO 31-0258470 - - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) Courthouse Plaza Southwest Dayton, Ohio 45402 ---------------------------------------- (Address of principal executive offices) (937) 224-6000 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format. Indicate the number of shares of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $.01 par value 41,172,173 Shares - - ---------------------------- ----------------------------------- (Title of each class) (Outstanding at September 30, 1998) THE DAYTON POWER AND LIGHT COMPANY INDEX Page No. -------- Part I - Financial Information Item 1. Financial Statements Consolidated Statement of Results of Operations 1 Consolidated Statement of Cash Flows 2 Consolidated Balance Sheet 3 Notes to Consolidated Financial Statements 5 Operating Statistics 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II - Other Information 11 Signatures 12 i CONSOLIDATED STATEMENT OF RESULTS OF OPERATIONS The Dayton Power and Light Company Three Months Nine Months Ended Ended September 30 September 30 ------------ ------------ 1998 1997 1998 1997 ---- ---- ---- ---- --millions-- --millions-- Income - - ------ Utility service revenues-- Electric $296.3 $260.6 $821.9 $748.4 Gas and other 22.9 23.3 143.4 162.6 ------ ------ ------ ------ Total Utility Service Revenues 319.2 283.9 965.3 911.0 Interest and other income 3.7 1.7 9.9 6.1 ------ ------ ------ ------ Total Income 322.9 285.6 975.2 917.1 ------ ------ ------ ------ Expenses - - -------- Fuel and purchased power 71.0 59.5 198.9 165.7 Gas purchased for resale 10.5 10.8 84.8 97.6 Operation and maintenance 71.0 52.3 164.8 163.4 Depreciation and amortization 32.4 31.5 96.9 94.0 Amortization of regulatory assets, net 5.3 4.6 14.2 12.6 General taxes 33.8 33.5 101.9 100.4 Interest expense 22.5 20.3 66.2 64.0 ------ ------ ------ ------ Total Expenses 246.5 212.5 727.7 697.7 ------ ------ ------ ------ Income Before Income Taxes 76.4 73.1 247.5 219.4 Income taxes 31.3 28.8 96.7 79.6 ------ ------ ------ ------ Net Income 45.1 44.3 150.8 139.8 Preferred dividends 0.2 0.2 0.7 0.7 ------ ------ ------ ------ Earnings on Common Stock $ 44.9 $ 44.1 $150.1 $139.1 ====== ====== ====== ====== Comprehensive Income $ 41.2 $ 49.0 $158.4 $146.2 See Notes to Consolidated Financial Statements. These interim statements are unaudited. -1- CONSOLIDATED STATEMENT OF CASH FLOWS The Dayton Power and Light Company Nine Months Ended September 30 ----------------- 1998 1997 ---- ---- --millions-- Operating Activities - - -------------------- Cash received from utility customers $966.4 $940.7 Other operating cash receipts 8.4 7.2 Cash paid for: Fuel and purchased power (204.1) (173.2) Purchased gas (109.4) (128.7) Operation and maintenance labor (60.8) (60.2) Nonlabor operating expenditures (120.2) (116.5) Interest (70.2) (68.6) Income taxes (77.0) (43.1) Property, excise and payroll taxes (112.5) (108.8) ------ ------ Net cash provided by operating activities 220.6 248.8 Investing Activities - - -------------------- Property expenditures (71.2) (76.3) Other activities (83.3) (33.1) ------ ------ Net cash used for investing activities (154.5) (109.4) Financing Activities - - -------------------- Dividends paid on common stock (210.1) (86.9) Issuance (retirement) of short-term debt 86.7 (4.0) Parent company capital contribution 49.0 - Retirement of long-term debt (0.4) (40.4) Dividends paid on preferred stock (0.7) (0.7) ------ ------ Net cash used for financing activities (75.5) (132.0) Cash and temporary cash investments-- - - ----------------------------------- Net change (9.4) 7.4 Balance at beginning of period 11.8 2.1 ------ ------ Balance at end of period $ 2.4 $ 9.5 ====== ====== See Notes to Consolidated Financial Statements. These interim statements are unaudited. -2- CONSOLIDATED BALANCE SHEET The Dayton Power and Light Company At At September 30, December 31, 1998 1997 ------------- ------------ --millions-- ASSETS Property $3,653.2 $3,587.8 Less-- Accumulated depreciation and amortization (1,445.2) (1,355.8) -------- -------- Net property 2,208.0 2,232.0 -------- -------- Current Assets - - -------------- Cash and temporary cash investments 2.4 11.8 Accounts receivable, less provision for uncollectible accounts 188.6 205.8 Inventories, at average cost 94.6 87.1 Deferred property and excise taxes 49.7 91.9 Other 27.6 61.4 -------- -------- Total current assets 362.9 458.0 -------- -------- Other Assets - - ------------ Financial assets 206.7 111.1 Income taxes recoverable through future revenues 197.3 208.2 Regulatory assets 102.6 116.7 Other 202.2 200.8 -------- -------- Total other assets 708.8 636.8 -------- -------- Total Assets $3,279.7 $3,326.8 ======== ======== See Notes to Consolidated Financial Statements. These interim statements are unaudited. -3- CONSOLIDATED BALANCE SHEET (continued) The Dayton Power and Light Company At At September 30, December 31, 1998 1997 ------------- ------------ --millions-- CAPITALIZATION AND LIABILITIES Capitalization - - -------------- Common shareholder's equity-- Common stock $ 0.4 $ 0.4 Other paid-in capital 788.2 739.1 Accumulated other comprehensive income 27.9 20.3 Earnings reinvested in the business 461.0 521.0 -------- -------- Total common shareholder's equity 1,277.5 1,280.8 Preferred stock 22.9 22.9 Long-term debt 885.6 886.0 -------- -------- Total capitalization 2,186.0 2,189.7 -------- -------- Current Liabilities - - ------------------- Short-term debt 167.6 81.0 Accounts payable 74.1 124.2 Accrued taxes 100.4 157.8 Accrued interest 14.7 20.7 Other 31.8 42.3 -------- -------- Total current liabilities 388.6 426.0 -------- -------- Deferred Credits and Other - - -------------------------- Deferred taxes 494.2 500.5 Unamortized investment tax credit 70.0 72.2 Other 140.9 138.4 -------- -------- Total deferred credits and other 705.1 711.1 -------- -------- Total Capitalization and Liabilities $3,279.7 $3,326.8 ======== ======== See Notes to Consolidated Financial Statements. These interim statements are unaudited. -4- Notes to Consolidated Financial Statements 1. Reclassifications have been made in certain prior years' amounts to conform to the current reporting presentation of the Company. 2. The consolidated financial statements in this report have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto in the Company's 1997 Annual Report on Form 10-K. The information included in this Form 10-Q reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the result of operations for the periods presented. Any adjustments are of a normal recurring nature. -5- OPERATING STATISTICS The Dayton Power and Light Company Three Months Nine Months Ended Ended September 30 September 30 ------------- ------------- 1998 1997 1998 1997 ---- ---- ---- ---- Electric - - -------- Sales (millions of kWh)-- Residential 1,361 1,141 3,689 3,551 Commercial 982 953 2,688 2,604 Industrial 1,202 1,244 3,500 3,526 Other 1,130 968 3,466 2,611 ------- ------- ------- ------- Total 4,675 4,306 13,343 12,292 Revenues (thousands of dollars)-- Residential 121,273 102,024 323,317 304,323 Commercial 64,264 59,801 182,444 174,188 Industrial 60,253 59,633 172,171 167,462 Other 50,490 39,134 143,922 102,430 ------- ------- ------- ------- Total 296,280 260,592 821,854 748,403 Other Electric Statistics-- Average price per kWh-retail and wholesale customers (cents) 6.23 5.97 6.05 6.01 Fuel cost per net kWh generated (cents) 1.25 1.27 1.27 1.27 Electric customers at end of period 488,110 481,200 488,110 481,200 Average kWh use per residential customer 3,127 2,654 8,481 8,260 Peak demand-maximum one hour use (mw), (net) 3,007 2,848 3,007 2,848 -6- OPERATING STATISTICS (continued) The Dayton Power and Light Company Three Months Nine Months Ended Ended September 30 September 30 ------------- ------------- 1998 1997 1998 1997 ---- ---- ---- ---- Gas - - --- Sales (millions of MCF)-- Residential 2,056 2,006 16,119 19,035 Commercial 798 835 4,894 6,039 Industrial 159 164 1,329 1,729 Transported gas and other 3,197 3,305 14,601 15,418 ------- ------- ------- ------- Total 6,210 6,310 36,943 42,221 Revenues (thousands of dollars)-- Residential 15,132 15,074 92,610 106,540 Commercial 4,498 4,601 25,516 30,824 Industrial 797 725 6,525 8,092 Transported gas and other 2,498 2,940 18,763 16,384 ------- ------- ------- ------- Total 22,925 23,340 143,414 161,840 Other Gas Statistics-- Average price MCF-retail customers (dollars) 6.80 6.74 5.55 5.39 Gas customers at end of period 302,628 297,458 302,628 297,458 Degree Days (based on calendar month)-- Heating 29 111 2,905 3,729 Cooling 724 486 1,070 669 -7- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. The Company's earnings on common stock for the third quarter of 1998 were $44.9 million, up $0.8 million from quarterly earnings a year ago. Year-to-date earnings were $150.1 million, up $11.0 million from the same period in 1997. Retail sales of electricity increased 6% for the quarter due to the healthy West Central Ohio economy as well as more normal summer temperatures. The financial condition and results of operations for the third quarter and nine months ended September 30, 1998 and 1997 are discussed below. Financial Condition - - ------------------- Construction plans are subject to continuing review and are expected to be revised in light of changes in financial and economic conditions, load forecasts, legislative and regulatory developments and changing environmental standards, among other factors. The Company's ability to complete its capital projects and the reliability of future service will be affected by its financial condition, the availability of external funds at reasonable cost and adequate and timely rate increases. As of September 30, 1998, the Company's cash and temporary cash investment balance was $2.4 million. In addition, $206.7 million was invested in debt and equity financial assets. DPL Inc. and its subsidiaries have $200 million available through a Revolving Credit Agreement ("Credit Agreement"). As of September 30, 1998, DPL Inc. had no outstanding borrowings under this Credit Agreement. The Company has authority from the Public Utilities Commission of Ohio ("PUCO") to issue short-term debt up to $200 million with a maximum debt limit of $300 million including loans from DPL Inc. under the terms of the Credit Agreement. The Company has $97 million available in short-term informal lines of credit. As of September 30, 1998, the Company had $79.0 million of these informal lines outstanding and $87.3 million in commercial paper outstanding. The Company anticipates that it has sufficient capacity to issue First Mortgage Bonds to satisfy its requirements in connection with the financing of its construction and refinancing programs during the five year period 1998-2002. -8- Results of Operations - - --------------------- Utility service revenues increased by $35.3 million and $54.3 million, respectively, for the third quarter and nine months ended September 30, 1998. Electric revenues increased $35.7 million in the third quarter and $73.5 million year-to-date due to increased sales to residential customers and other utilities. Gas revenues were lower year-to-date due to mild weather. Fuel and purchased power increased $11.5 million and $33.2 million, respectively, from the third quarter and year-to-date last year as a result of increased retail and wholesale sales. Gas purchased for resale in the third quarter 1998 decreased $0.3 million compared to the same quarter 1997 and $12.8 million compared to year-to-date 1997. Lower sales due to milder weather caused the variations. Operation and maintenance expense increased from last year by $18.7 million for the third quarter and $1.4 million year-to-date. For the quarter, the increase was due to higher benefit costs, software development costs, and production expenditures, which were partially offset by lower insurance and claims costs. The year-to- date variation was due to higher benefit costs and software development costs. Lower insurance and claims costs as well as Company-wide cost containment efforts offset the year-to-date variation. Income taxes increased $2.5 million and $17.1 million, respectively, from the third quarter and year-to-date 1997 primarily due to higher taxable income. Issues and Financial Risks - - -------------------------- This report contains forward-looking statements under the Private Securities Litigation Reform Act of 1995 that involved risks and uncertainties. Although the Company believes that the forward-looking statements are based upon reasonable assumptions, there can be no assurance that the forward-looking statements will prove to be accurate. The Company undertakes no obligation to re-publish forward- looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The information systems of the Company, like those of most companies, will be affected to some extent by the year 2000 ("Y2K"). The Company has implemented a plan to remediate Y2K problems in critical areas by the end of the second quarter, 1999. This includes all information technology systems, as well as embedded technology. The Company has inventoried its applications and equipment, is determining which of those are non-compliant, -9- and is simultaneously remediating those situations. The four phases of the Company's plan - inventory, assess for compliance, remediate and test - are in various stages of completion. The Company does not have to complete one phase to begin the next. Remediation is being accomplished by a combination of methods. In some cases equipment or software is being modified while in others it is being replaced. The Company estimates that the cost of remediation for Y2K issues including hardware and software modifications and consultant expenditures is $15,000,000. Some of the Company's information technology systems were already scheduled for replacement and are not included in this amount, since the scheduled replacement was not accelerated to allow compliance with Y2K needs. The Company is working closely with other members of the utility industry to assure the smooth transition. Telecommunications are needed for monitoring and control of power systems. Also, the extent of interdependence among electrical systems creates uncertainty. These issues affect each utility in the industry and the Company is working with other utilities, as well as industry and regulatory groups to ensure that problems are understood and solutions are shared. Among other groups, the Company is involved with the Y2K efforts of the Electric Power Research Institute, the North American Reliability Council, and the Edison Electric Institute. -10- Part II. Other Information Item 5. Other Information. ----------------- Rate Regulation and Government Legislation - - ------------------------------------------ In January 1997, a twelve member Joint Committee of the Ohio Senate and House of Representatives was created to explore and possibly draft retail wheeling legislation. The Committee has conducted hearings to gather information from energy companies, regulators, customers and industry experts. The Committee co-chairs issued a draft report on January 6, 1998 recommending opening the electric generation market, in the future, to competition for all Ohio consumers. On March 26, 1998, the Committee co-chairs introduced an electric deregulation Bill that reflected the recommendations contained in their report. On September 16, 1998, the Company and the three other major investor owned utilities in Ohio presented a comprehensive electric utility restructuring Bill to a working group of the Committee. The Company is participating in the Committee's working group to discuss the restructuring process. Due to the prospects for legislation that would restructure the electric utility industry, the Company will continue to evaluate its portfolio of assets to prepare for opportunities in the deregulated environment. Item 6. Exhibits and Reports on Form 8-K. -------------------------------- (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the quarter ended September 30, 1998. -11- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE DAYTON POWER AND LIGHT COMPANY ---------------------------------- (Registrant) Date: November 16, 1998 /s/James P. Torgerson ----------------- ---------------------------------- James P. Torgerson Vice President, CFO and Treasurer Date: November 16, 1998 /s/Paul R. Anderson ----------------- ----------------------------------- Paul R. Anderson Controller (Principal Accounting Officer) -12- EX-27 2 DP&L COMPANY FINANCIAL DATA SCHEDULE
UT 1,000 9-MOS DEC-31-1998 SEP-30-1998 PER-BOOK 2208000 0 362900 299900 408900 3279700 400 788200 488900 1277500 0 22900 885600 80300 0 87300 0 0 0 0 926100 3279700 965300 96700 661500 758200 207100 9900 217000 66200 150800 700 150100 210100 70200 220600 3.65 3.65
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