Equity

12 Months Ended

Dec. 31, 2015

Entity Information [Line Items]

Equity

Note 11 – Equity

Redeemable Preferred Stock of Subsidiary

DP&L has $100 par value preferred stock, 4,000,000 shares authorized, of which 228,508 were outstanding at December 31, 2015 and 2014. DP&L also has $25 par value preferred stock, 4,000,000 shares authorized, none of which was outstanding at December 31, 2015 or 2014. The table below details the preferred shares outstanding at December 31, 2015:

		December 31, 2015 and 2014			Carrying Value (a) ($ in millions)
	Preferred Stock Rate	Redemption price ($ per share)		Shares Outstanding	December 31, 2015		December 31, 2014
DP&L Series A	3.75%	$	102.50	93,280	$	7.4	$	7.4
DP&L Series B	3.75%	$	103.00	69,398	5.6		5.6
DP&L Series C	3.90%	$	101.00	65,830	5.4		5.4
Total				228,508	$	18.4	$	18.4

(a) Carrying value is fair value at the Merger date plus cumulative accrued dividends, of which there were none at December 31, 2015 and 2014.

The DP&L preferred stock may be redeemed at DP&L’s option as determined by its Board of Directors at the per-share redemption prices indicated above, plus cumulative accrued dividends, of which there were none at December 31, 2015. In addition, DP&L’s Amended Articles of Incorporation contain provisions that permit preferred stockholders to elect members of the Board of Directors in the event that cumulative dividends on the preferred stock are in arrears in an aggregate amount equivalent to at least four full quarterly dividends. Since this potential redemption-triggering event is not solely within the control of DP&L, the preferred stock is presented on the Consolidated Balance Sheets as “Redeemable Preferred Stock” in a manner consistent with temporary equity.

Dividend Restrictions

DPL’s Amended Articles of Incorporation (the Articles) contain provisions which state that DPL may not make a distribution to its shareholder or make a loan to any of its affiliates (other than its subsidiaries), unless: (a) there exists no Event of Default (as defined in the Articles) and no such Event of Default would result from the making of the distribution or loan; and either (b)(i) at the time of, and/or as a result of, the distribution or loan, DPL’s leverage ratio does not exceed 0.67 to 1.00 and DPL’s interest coverage ratio is not less than 2.50 to 1.00 or, (b)(ii) if such ratios are not within the parameters, DPL’s senior long-term debt rating from one of the three major credit rating agencies is at least investment grade. Further, the restrictions on the payment of distributions to a shareholder and the making of loans to its affiliates (other than subsidiaries) cease to be in effect if the three major credit rating agencies confirm that a lowering of DPL’s senior long-term debt rating below investment grade by the credit rating agencies would not occur without these restrictions.

As long as any DP&L preferred stock is outstanding, DP&L’s Amended Articles of Incorporation also contain provisions restricting the payment of cash dividends on any of its common stock if, after giving effect to such dividend, the aggregate of all such dividends distributed subsequent to December 31, 1946 exceeds the net income of DP&L available for dividends on its common stock subsequent to December 31, 1946, plus $1.2 million. This dividend restriction has historically not affected DP&L’s ability to pay cash dividends and, at December 31, 2015, DP&L’s retained earnings of $437.3 million were all available for common stock dividends payable to DPL. We do not expect this restriction to have an effect on the payment of cash dividends in the future. DPL records dividends on preferred stock of DP&L within Interest expense on the Statements of Operations.

Common Stock

Effective on the Merger date, DPL adopted Amended Articles of Incorporation providing for 1,500 authorized common shares, of which one share is outstanding at December 31, 2015.

As described above,DPL’s Amended Articles of Incorporation contain restrictions on DPL’s ability to make dividends, distributions and affiliate loans (other than to its subsidiaries), including restrictions of making such dividends, distributions and loans if certain financial ratios exceed specified levels and DPL’s senior long-term debt rating from a rating agency is below investment grade. As of December 31, 2015, DPL’s leverage ratio was at 1.03 to 1.00 and DPL’s senior long-term debt rating from all three major credit rating agencies was below investment grade. As a result, as of December 31, 2015, DPL was prohibited under its Articles of Incorporation from making a distribution to its shareholder or making a loan to any of its affiliates (other than its subsidiaries).

DP&L has 250,000,000 authorized common shares, of which 41,172,173 are outstanding at December 31, 2015. All common shares are held by DP&L’s parent, DPL.

As part of the PUCO’s approval of the Merger, DP&L agreed to maintain a capital structure that includes an equity ratio of at least 50 percent and not to have a negative retained earnings balance.

THE DAYTON POWER AND LIGHT COMPANY [Member]

Entity Information [Line Items]

Equity

Note 10 – Equity

Redeemable Preferred Stock

DP&L has $100 par value preferred stock, 4,000,000 shares authorized, of which 228,508 were outstanding at December 31, 2015. DP&L also has $25 par value preferred stock, 4,000,000 shares authorized, none of which was outstanding at December 31, 2015. The table below details the preferred shares outstanding at December 31, 2015 and 2014:

		December 31, 2015 and 2014			Par Value ($ in millions)
	Preferred Stock Rate	Redemption price ($ per share)		Shares Outstanding	December 31, 2015		December 31, 2014
DP&L Series A	3.75%	$	102.50	93,280	$	9.3	$	9.3
DP&L Series B	3.75%	$	103.00	69,398	7.0		7.0
DP&L Series C	3.90%	$	101.00	65,830	6.6		6.6
Total				228,508	$	22.9	$	22.9

The DP&L preferred stock may be redeemed at DP&L’s option as determined by its Board of Directors at the per-share redemption prices indicated above, plus cumulative accrued dividends, of which there were none at December 31, 2015. In addition, DP&L’s Amended Articles of Incorporation contain provisions that permit preferred stockholders to elect members of the Board of Directors in the event that cumulative dividends on the preferred stock are in arrears in an aggregate amount equivalent to at least four full quarterly dividends. Since this potential redemption-triggering event is not solely within the control of DP&L, the preferred stock is presented on the Balance Sheets as “Redeemable Preferred Stock” in a manner consistent with temporary equity.

Dividend Restrictions

As long as any DP&L preferred stock is outstanding, DP&L’s Amended Articles of Incorporation also contain provisions restricting the payment of cash dividends on any of its common stock if, after giving effect to such dividend, the aggregate of all such dividends distributed subsequent to December 31, 1946 exceeds the net income of DP&L available for dividends on its common stock subsequent to December 31, 1946, plus $1.2 million. This dividend restriction has historically not impacted DP&L’s ability to pay cash dividends and, as of December 31, 2015, DP&L’s retained earnings of 437.3 million were all available for common stock dividends payable to DPL. We do not expect this restriction to have an effect on the payment of cash dividends in the future.

Common Stock

DP&L has 250,000,000 authorized common shares, of which 41,172,173 are outstanding at December 31, 2015. All common shares are held by DP&L’s parent, DPL.

As part of the PUCO’s approval of the Merger, DP&L agreed to maintain a capital structure that includes an equity ratio of at least 50 percent and not to have a negative retained earnings balance.