-----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, Q+JN/jWTiQE1/PtHulPLBWeedY3ws7553v2hZpx2KHlELTPk2uI8TVY7ooN6PHeP ypq+Fwd0vqNMMBLrjqJ/oA== 0000027430-99-000008.txt : 19991117 0000027430-99-000008.hdr.sgml : 19991117 ACCESSION NUMBER: 0000027430-99-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAYTON POWER & LIGHT CO CENTRAL INDEX KEY: 0000027430 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [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: 99755483 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, 1999 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, 1999) 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 Consolidated Statement of Shareholder's Equity 5 Notes to Consolidated Financial Statements 6 Operating Statistics 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosures about Market Risk 12 Part II. Other Information 14 Signatures 16 i CONSOLIDATED STATEMENT OF RESULTS OF OPERATIONS The Dayton Power and Light Company Three Months Nine Months Ended Ended September 30 September 30 ------------ ------------ 1999 1998 1999 1998 ---- ---- ---- ---- --millions-- --millions-- Revenues - -------- Utility service revenues-- Electric $304.1 $296.3 $812.7 $821.9 Gas and other 15.7 22.9 147.2 143.4 ------ ------ ------ ------ Total Utility Service Revenues 319.8 319.2 959.9 965.3 Expenses - -------- Fuel and purchased power 77.7 71.0 199.8 198.9 Gas purchased for resale 5.3 10.5 85.5 84.8 Operation and maintenance 51.8 68.4 138.0 162.3 Depreciation and amortization 32.4 31.2 97.1 93.8 Amortization of regulatory assets, net 7.4 6.4 19.7 17.2 General taxes 34.7 33.8 103.1 101.9 Interest expense 19.2 22.5 64.3 66.2 ------ ------ ------ ------ Total Expenses 228.5 243.8 707.5 725.1 ------ ------ ------ ------ Income - ------ Operating Income 91.3 75.4 252.4 240.2 Investment income 2.2 2.6 19.3 10.7 Other income and deductions 0.8 (1.6) (2.9) (3.4) ------ ------ ------ ------ Income Before Income Taxes 94.3 76.4 268.8 247.5 Income taxes 38.0 31.3 103.8 96.7 ------ ------ ------ ------ Net Income 56.3 45.1 165.0 150.8 Preferred dividends 0.2 0.2 0.7 0.7 ------ ------ ------ ------ Earnings on Common Stock $ 56.1 $ 44.9 $164.3 $150.1 ====== ====== ====== ====== 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 ----------------- 1999 1998 ---- ---- --millions-- Operating Activities - -------------------- Cash received from utility customers $986.1 $966.4 Other operating cash receipts 19.5 9.1 Cash paid for: Fuel and purchased power (208.2) (204.1) Purchased gas (109.2) (109.4) Operation and maintenance labor (58.0) (60.8) Nonlabor operating expenditures (70.5) (122.5) Interest (69.2) (70.2) Income taxes (57.4) (77.0) Property, excise and payroll taxes (115.2) (112.5) ------ ------ Net cash provided by operating activities 317.9 219.0 Investing Activities - -------------------- Capital expenditures (62.2) (71.2) Purchases of available-for-sale financial assets (197.2) (115.4) Sales of available-for-sale financial assets 58.0 33.7 ------ ------ Net cash used for investing activities (201.4) (152.9) Financing Activities - -------------------- Dividends paid on common stock (81.9) (210.1) Issuance (retirement) of short-term debt (38.6) 86.7 Parent company capital contribution 245.0 49.0 Retirement of long-term debt (237.5) (0.4) Dividends paid on preferred stock (0.7) (0.7) ------ ------ Net cash used for financing activities (113.7) (75.5) Cash and temporary cash investments-- - ----------------------------------- Net change 2.8 (9.4) Balance at beginning of period 1.9 11.8 ------ ------ Balance at end of period $ 4.7 $ 2.4 ====== ====== 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, 1999 1998 ------------- ------------ --millions-- ASSETS - ------ Property - -------- Electric property $3,443.7 $3,398.6 Gas property 302.3 296.9 Other property 17.8 18.9 -------- -------- Total property 3,763.8 3,714.4 Less-- Accumulated depreciation and amortization (1,577.5) (1,484.8) -------- -------- Net property 2,186.3 2,229.6 -------- -------- Current Assets - -------------- Cash and temporary cash investments 4.7 1.9 Accounts receivable, less provision for uncollectible accounts of $2.8 and $4.7, respectively 189.3 219.2 Inventories, at average cost 100.4 112.2 Deferred property and excise taxes 50.8 93.4 Other 44.1 49.2 -------- -------- Total current assets 389.3 475.9 -------- -------- Other Assets - ------------ Financial assets 381.9 232.7 Income taxes recoverable through future revenues 178.4 195.5 Other regulatory assets 60.3 82.2 Other assets 201.8 196.5 -------- -------- Total other assets 822.4 706.9 -------- -------- Total Assets $3,398.0 $3,412.4 ======== ======== 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, 1999 1998 ------------- ------------ --millions-- CAPITALIZATION AND LIABILITIES - ------------------------------ Capitalization - -------------- Common shareholder's equity-- Common stock $ 0.4 $ 0.4 Other paid-in capital 1,033.3 788.2 Accumulated other comprehensive income 33.1 33.6 Earnings reinvested in the business 533.2 450.8 -------- -------- Total common shareholder's equity 1,600.0 1,273.0 Preferred stock 22.9 22.9 Long-term debt 661.2 885.6 -------- -------- Total capitalization 2,284.1 2,181.5 -------- -------- Current Liabilities - ------------------- Short-term debt 142.5 181.2 Dividends payable 26.0 - Accounts payable 76.5 106.6 Accrued taxes 110.1 160.9 Accrued interest 10.2 20.7 Other 55.0 50.2 -------- -------- Total current liabilities 420.3 519.6 -------- -------- Deferred Credits and Other - -------------------------- Deferred taxes 476.6 488.2 Unamortized investment tax credit 67.0 69.3 Other 150.0 153.8 -------- -------- Total deferred credits and other 693.6 711.3 -------- -------- Total Capitalization and Liabilities $3,398.0 $3,412.4 ======== ======== See Notes to Consolidated Financial Statements. These interim statements are unaudited. -4-
CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY The Dayton Power and Light Company Nine Months Ended September 30, 1999 and 1998 Common Stock Accum. Earnings ------------------ Other Other Reinvested Outstanding Paid-In Comp. in the $ in millions Shares Amount Capital Income Business Total - ----------------------------------------------------------------------------------- 1999: Beginning balance 41,172,173 $0.4 $ 788.2 $33.6 $450.8 $1,273.0 Net income 165.0 Unrealized gains, net of reclassification (0.5) adjustments, after tax Total comprehensive income 164.5 Common stock dividends (81.9) (81.9) Preferred stock dividends (0.7) (0.7) Parent company capital contribution 245.0 245.0 Other 0.1 0.1 -------------------------------------------------------- Ending balance 41,172,173 $0.4 $1,033.3 $33.1 $533.2 $1,600.0 ======================================================== 1998: Beginning balance 41,172,173 $0.4 $ 739.1 $20.3 $521.0 $1,280.8 Net income 150.8 Unrealized gains, net of reclassification 7.6 adjustments, after tax Total comprehensive income 158.4 Common stock dividends (210.1) (210.1) Preferred stock dividends (0.7) (0.7) Parent company capital contribution 49.0 49.0 Other 0.1 0.1 -------------------------------------------------------- Ending balance 41,172,173 $0.4 $ 788.2 $27.9 $461.0 $1,277.5 ========================================================
See Notes to Consolidated Financial Statements. These interim statements are unaudited. -5- Notes to Consolidated Financial Statements 1. The Dayton Power and Light Company ("the Company") has prepared the consolidated financial statements in this report 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 1998 Annual Report on Form 10-K. Reclassifications have been made in certain prior years' amounts to conform to the current reporting presentation of the Company. 2. The Company accounts for its investments in debt and equity securities by classifying the securities into different categories (held-to-maturity and available-for-sale); available-for-sale securities are carried at fair market value and unrealized gains and losses, net of deferred income taxes, are presented as a separate component of shareholder's equity for investments. Investments classified as held-to-maturity are carried at amortized cost. The value of equity security investments and fixed maturity investments is based upon market quotations or investment cost to approximate market. The cost basis for equity security and fixed maturity investments is cost and amortized cost, respectively. At September 30, At December 31, 1999 1998 --------------------------- --------------------------- Gross Unrealized Gross Unrealized --------------------------- --------------------------- Fair Fair $ in millions Value Gains Losses Cost Value Gains Losses Cost - ------------------------------------------------------------------------------ $ $ $ $ $ $ $ $ Assets (a) - ---------- Available-for-sale equity securities 441.4 55.0 (4.1) 390.5 299.4 55.2 (3.5) 247.7 Held-to-maturity securities: Debt securities 45.2 - (1.2) 46.4 51.1 1.3 - 49.8 Temporary cash investments 2.0 - - 2.0 4.4 - - 4.4 ----- ---- ---- ----- ----- ---- ---- ----- Total 47.2 - (1.2) 48.4 55.5 1.3 - 54.2 Liabilities (b) - --------------- Debt 813.9 804.2 1,152.5 1,067.3 (a) Maturities range from 1999 to 2011. (b) Includes current maturities. 3. For the three months ended September 30, 1999 and 1998, there were no gross realized gains or losses. Gross realized gains and losses were $12.3 million and $0.8 million, respectively, for the nine months ended September 30, 1999; for the nine months ended September 30, 1998, gross realized gains were $3.2 million and there were no losses. -6- Notes to Consolidated Financial Statements Continued 4. The Company and other Ohio utilities have undivided ownership interests in seven electric generating facilities and numerous transmission facilities. Certain expenses, primarily fuel costs for the generating units, are allocated to the owners based on their energy usage. The remaining expenses, as well as the investments in fuel inventory, plant materials and operating supplies and capital additions, are allocated to the owners in accordance with their respective ownership interests. 5. DPL Inc. and its other wholly-owned subsidiaries provide certain administrative services to the Company. These costs were $2.2 million and $5.3 million, respectively, for the three months ended September 30, 1999 and 1998; amounts for the nine months ended September 30, 1999 and 1998 were $6.7 million and $10.0 million, respectively. The primary expense provided by the subsidiaries is insurance. This expense is either specifically identified with the Company or allocated based upon the relationships of payroll, revenue and/or property. Management considers the allocation methods used as reasonable, and that the expenses approximate what would have been incurred on a stand-alone basis. 6. The Company had $124.6 million of notes payable to DPL Inc. outstanding at an interest rate of 7.75% at September 30, 1999. The notes are payable on demand. 7. In October, the Company transferred its investments in MVE, Inc., MacGregor Park, Inc. and DP&L Community Urban Redevelopment Corporation to its sole shareholder, DPL Inc. In the opinion of management, the information included in this Form 10-Q reflects all adjustments which are necessary for a fair statement of the results of operations for the periods presented. Any adjustments are of a normal recurring nature. -7- OPERATING STATISTICS The Dayton Power and Light Company Three Months Nine Months Ended Ended September 30 September 30 ------------- ------------- 1999 1998 1999 1998 ---- ---- ---- ---- Electric - -------- Sales (millions of kWh)-- Residential 1,309 1,361 3,666 3,689 Commercial 927 982 2,577 2,688 Industrial 1,273 1,202 3,712 3,500 Other 1,083 1,130 2,927 3,466 ------- ------- ------- ------- Total 4,592 4,675 12,882 13,343 Revenues (thousands of dollars)-- Residential 116,756 121,273 318,817 323,317 Commercial 61,460 64,264 176,188 182,444 Industrial 68,208 60,253 185,919 172,171 Other 57,684 50,490 131,808 143,922 ------- ------- ------- ------- Total 304,108 296,280 812,732 821,854 Other Electric Statistics-- Average price per kWh-retail and wholesale customers (cents) 6.54 6.23 6.22 6.05 Fuel cost per net kWh generated (cents) 1.29 1.25 1.27 1.27 Electric customers at end of period 491,941 488,110 491,941 488,110 Average kWh use per residential customer 2,982 3,127 8,356 8,481 Peak demand-maximum one hour use (MW), (net) 3,130 3,007 3,130 3,007 -8- OPERATING STATISTICS (continued) The Dayton Power and Light Company Three Months Nine Months Ended Ended September 30 September 30 ------------- ------------- 1999 1998 1999 1998 ---- ---- ---- ---- Gas - --- Sales (millions of MCF)-- Residential 1,029 2,056 16,691 16,119 Commercial 525 798 5,390 4,894 Industrial 235 159 1,705 1,329 Other 36 2 852 1,140 Transportation gas delivered 3,549 3,195 13,868 13,461 ------ ------ ------ ------ Total 5,374 6,210 38,506 36,943 Revenues (thousands of dollars)-- Residential 8,163 15,132 94,059 92,610 Commercial 2,932 4,498 27,607 25,516 Industrial 1,142 797 8,187 6,525 Other 3,448 2,498 17,363 18,763 ------ ------ ------- ------- Total 15,685 22,925 147,216 143,414 Other Gas Statistics-- Average price per MCF-retail customers (dollars) 6.81 6.80 5.44 5.55 Gas customers at end of period 304,818 302,628 304,818 302,628 Degree Days (based on calendar month) -- Heating 83 29 3,381 2,905 Cooling 738 724 1,051 1,070 -9- Item 2. Management's Discussion and Analysis of Financial Condition ----------------------------------------------------------- and Results of Operations. -------------------------- This report contains certain forward-looking statements regarding plans and expectations for the future. Investors are cautioned that actual outcomes and results may vary materially from those projected due to various factors beyond the Company's control, including abnormal weather, unusual maintenance or repair requirements, changes in fuel costs, increased competition, regulatory changes and decisions, changes in accounting rules and adverse economic conditions. The Company's earnings on common stock for the third quarter of 1999 were $56.1 million, up $11.2 million from quarterly earnings a year ago. Year-to-date earnings were $164.3 million, up $14.2 million from the same period in 1998. The quarterly earnings increase is primarily attributable to the completion of DP&L's Phase One expansion of its combustion turbine program and a decrease in operation and maintenance expense. The expansion provided additional peaking capacity to meet the demands of its customers and other utility companies resulting from the high heat and humidity experienced in July. See Item 5, Other Information, for a discussion of government legislation and the restructuring of Ohio utilities. Financial Condition - ------------------- On August 30, 1999, DPL Inc. announced Phase Two of its combustion turbine expansion program. At an investment of $80 million, DPL Inc. has contracted to purchase four natural gas-fired combustion peaking units. These units will provide an additional 225 MW of capacity to be available and online by the summer of 2000. This follows DP&L's completion, in December 1998, of its first phase of peaking capacity expansions in which three combustion turbine units were added totaling 250 MW additional peaking capacity at an investment of $75 million. On April 6, 1999, DPL Inc. completed a private placement issuance of $500 million of Senior Notes due 2004, with an interest rate of 6.32%. The proceeds were used for the redemption of the Company's $225 million 8.40% Series of First Mortgage Bonds, the reduction of short-term debt and for general corporate purposes. 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 and the availability of external funds at reasonable cost. -10- At September 30, 1999, the Company's cash and temporary cash investment balance was $4.7 million. The Company held financial assets valued as of September 30, 1999 at $381.9 million. Financial assets include direct and indirect managed debt and equity securities. DPL Inc. and its subsidiaries have $300 million available through Revolving Credit Agreements ("Credit Agreements"). At September 30, 1999, DPL Inc. had no borrowings outstanding under these Credit Agreements. The Company has $75 million available in short-term informal lines of credit. At September 30, 1999, there were no borrowings outstanding under these informal lines and $18 million in commercial paper outstanding. The Company currently 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 1999-2003. Results of Operations - --------------------- Utility service revenues increased by $0.6 million for the third quarter. For the nine months ended September 30, 1999, utility service revenues decreased $5.4 million due to reduced electric sales to other utilities, partially offset by increased gas sales. Fuel and purchased power increased $6.7 million and $0.9 million, respectively, from the third quarter and year-to-date last year. For the quarter, the increase was due to higher purchased power costs associated with sales to other utilities. Operation and maintenance expense decreased from last year by $16.6 million for the third quarter and $24.3 million year-to-date. Lower electric and gas distribution costs, software development costs, uncollectible reserves, insurance and claims costs and benefit costs caused the decreases. Investment income increased by $8.6 million from year-to-date last year primarily due to realized gains. Income taxes increased $6.7 million and $7.1 million, respectively, from the third quarter and year-to-date 1998 because of higher taxable income. Issues and Financial Risks - -------------------------- The utility industry relies on computer applications to monitor and control interdependent power and utility systems. Some computer applications may not properly recognize dates beginning with the year 2000. This "Y2K" issue, if not corrected, could cause disruptions in information technology systems and operating control systems. The utility industry has organized work groups to identify and solve potential problems. The Company has evaluated the possibility of Y2K disruptions in the industry and has adopted proper contingency plans. -11- The Company has implemented a plan to identify and correct Y2K issues in its computer applications and operations. This plan includes (1) evaluation of applications and systems, (2) assessment of Y2K errors, (3) correction of errors and (4) testing of applications and systems. The evaluation and assessment phases are complete. The correction and testing phases are substantially complete, with final modifications and testing for a few components to be completed in the fourth quarter of 1999. The estimated cost of this corrective action is $20 million and includes modification and replacement of hardware and software. Responding to new Ohio legislation regarding energy companies, the Company is separating into various business units. As part of this separation process, each business unit is being evaluated on a stand-alone basis. Those units which do not complement the Company's going-forward strategy may be divested. As a result of this evaluation process, the Company is exploring the sale of its natural gas retail business unit. At September 30, 1999, year-to-date gas revenues were $147.2 million and $61.7 million net of gas purchased for resale. The Company's natural gas retail distribution has 305,000 residential, commercial and government customers and 5,000 miles of pipeline in 16 counties in West Central Ohio. Item 3. Quantitative and Qualitative Disclosures about Market Risk. ----------------------------------------------------------- The carrying value of the Company's debt was $1,067.3 million at December 31, 1998, which consisted of first mortgage bonds, guaranteed air quality development obligations, notes, commercial paper and lines of credit. The fair value of this debt was $1,152.5 million, based on current market prices or discounted cash flows using current rates for similar issues with similar terms and remaining maturities. The following table presents the principal cash repayments and related weighted average interest rates by maturity date for long-term fixed-rate debt at December 31, 1998. Extended Maturity Date ------------------------------------------------------------- $ in millions 1999 2000 2001 2002 2003 Thereafter Total Fair Value - ------------------------------------------------------------------------------ Long-term Debt - -------------- Fixed rate $0.4 $0.4 $0.4 $0.4 $0.4 $884.1 $886.1 $971.3 Average rate 6.4% 6.4% 6.4% 6.4% 6.4% 7.7% 7.7% The primary market risk to the Company is related to a short-term interest rate risk. The carrying value and fair value of short-term debt was $181.2 million with a weighted average interest rate of 5.6% at December 31, 1998. The interest expense risk related to this debt was estimated to be approximately an increase/decrease of $0.7 million if the weighted average cost increased/decreased 10%. -12- DPL Inc. closed on a private placement issuance of $500 million of Senior Notes Due 2004, with an interest rate of 6.32% in early April. The proceeds were used to redeem the Company's $225 million 8.4% Series First Mortgage Bonds and for general corporate purposes including redemption of short-term debt. The following table presents the principal cash repayments and related weighted average interest rates by maturity date for long-term fixed-rate debt after the retirement of the $225 million 8.4% Series First Mortgage Bonds. Extended Maturity Date ------------------------------------------------------------ $ in millions 1999 2000 2001 2002 2003 Thereafter Total Fair Value - ------------------------------------------------------------------------------ Long-term Debt - -------------- Fixed rate $225.4 $0.4 $0.4 $0.4 $0.4 $659.1 $661.1 $746.3 Average rate 8.4% 6.4% 6.4% 6.4% 6.4% 7.4% 7.4% The fair value of available-for-sale securities was $441.4 million and $299.4 million at September 30, 1999 and December 31, 1998, respectively. The equity price risk related to these securities was estimated as the potential increase/decrease in fair value of $44.1 million and $29.9 million at September 30, 1999 and December 31, 1998, respectively, that resulted from a hypothetical 10% increase/decrease in the market prices. As of September 30, 1999, there have been no other material changes in the above information since the end of the preceding fiscal year. -13- Part II. Other Information Item 5. Other Information. ------------------ Rate Regulation and Government Legislation - ------------------------------------------ On July 6, 1999, Ohio Governor Taft signed an Ohio electric industry restructuring bill which became effective on October 5, 1999. Under the bill, beginning January 1, 2001, electric generation, aggregation, power marketing and power brokerage services supplied to retail customers in the State of Ohio will be deemed competitive and will not be subject to supervision and regulation by the Public Utilities Commission of Ohio ("PUCO"). Existing limitations on an electric public utility's ownership rights of a non-public utility were eliminated. All earnings obligations, restrictions or caps imposed on an electric utility in a PUCO order are void as of the effective date of the legislation. Within ninety days of the effective date of the legislation, the Company is required to file with the PUCO a transition plan. As part of the transition plan, companies may file for the opportunity to receive transition revenues to be recovered through a transition charge during the market development period which ends December 31, 2005. The amount of transition revenues allowed will be determined by the PUCO based on criteria set forth in the statute. Regulatory assets that are part of the total allowable amount of transition costs will be separately identified as part of the transition charge, and the PUCO may set the revenue requirement for their recovery to end no later than December 31, 2010. A shopping incentive will be factored into the setting of the transition charge to induce 20% load switching by customer class by December 31, 2003, or halfway through the utility's market development period. The legislation contains a mandatory 5% rate cut for residential customers limited to the generation portion of their overall electric bill. The Company's impact is approximately $11 million. No company is permitted to own or control transmission facilities in Ohio on or after the start date of competition unless that entity is a member of and turns over control of its transmission facilities to one or more qualifying transmission entities as outlined in the statute. The PUCO is required to issue a final order not later than 275 days after the plan is filed, or in no event later than October 31, 2000. The Company is unable to predict the outcome of the regulatory process which could have an impact on the Company's future results of operations. Until the outcome is known, the Company will continue to account for its generation business according to Statement of Financial Accounting Standard No. 71, Accounting for the Effects of Certain Types of Regulation. -14- Environmental Considerations - ---------------------------- In early November, the United States Environmental Protection Agency ("EPA") filed civil complaints and Notices of Violations ("NOVs") against operators and owners of certain generation facilities for alleged violations of the Clean Air Act. Generation units operated by partners Cincinnati Gas & Electric (Beckjord 6) and Columbus Southern Power (Conesville 4) and co-owned by the Company were referenced in these actions. The Company was not identified in the NOVs or civil complaints. The partners will vigorously challenge the NOVs and complaints in court. At this time, it is not possible to determine the outcome of these claims or the impact, if any, on the Company. Item 6. Exhibits and Reports on Form 8-K. --------------------------------- (a) The following exhibit is filed herewith: Exhibit No. Description ----------- ----------- 27 Financial Data Schedule (b) Reports on Form 8-K. No reports on Form 8-K were filed by the Company during the quarter ended September 30, 1999. -15- 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 15, 1999 /s/ Jeanne S. Holihan ----------------- ------------------------------ Jeanne S. Holihan Vice President and Treasurer Date: November 15, 1999 /s/ Paul R. Anderson ----------------- ------------------------------ Paul R. Anderson Controller (Principal Accounting Officer) -16- EX-27 2 DP&L COMPANY FINANCIAL DATA SCHEDULE
UT 1,000 9-MOS DEC-31-1999 SEP-30-1999 PER-BOOK 2168500 17800 389300 238700 583700 3398000 400 1033300 566300 1600000 0 22900 661200 124500 0 18000 0 0 0 0 971400 3398000 959900 103800 643200 747000 212900 16400 229300 64300 165000 700 164300 81900 69200 317900 3.99 3.99
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