10-Q 1 a2057010z10-q.txt FORM 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 JUNE 30, 2001 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 ------ ------ 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 June 30, 2001) THE DAYTON POWER AND LIGHT COMPANY INDEX
Page No. PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statement of Results of Operations 3 Consolidated Statement of Cash Flows 4 Consolidated Balance Sheet 5 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Operating Statistics 13 Item 3. Quantitative and Qualitative Disclosures about Market Risk 14 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 14 Signatures 15
2 PART I. FINANCIAL INFORMATION -------------------------------------------------------------------------------- ITEM 1. FINANCIAL STATEMENTS THE DAYTON POWER AND LIGHT COMPANY CONSOLIDATED STATEMENT OF RESULTS OF OPERATIONS (DOLLARS IN MILLIONS)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------------------------------------- 2001 2000 2001 2000 ---- ---- ---- ---- REVENUES Utility Service Revenues -- Electric..................................................... $287.2 $262.8 $581.9 $522.3 Gas.......................................................... - 31.1 - 132.6 ------ ------ ------ ------ Total utility service revenues........................... 287.2 293.9 581.9 654.9 ------ ------ ------ ------ EXPENSES Fuel and purchased power....................................... 89.9 66.3 172.0 125.4 Gas purchased for resale....................................... - 17.6 - 85.2 Operation and maintenance...................................... 48.5 49.8 81.6 96.3 Depreciation and amortization.................................. 28.5 34.4 57.2 67.9 Amortization of regulatory assets, net......................... 11.3 7.1 23.4 12.7 General taxes.................................................. 22.2 31.2 48.0 65.7 ------ ------ ------ ------ Total expenses............................................ 200.4 206.4 382.2 453.2 ------ ------ ------ ------ OPERATING INCOME............................................... 86.8 87.5 199.7 201.7 Other income (deductions)...................................... 1.5 1.8 (1.0) (5.8) Interest expense............................................... (16.0) (15.8) (31.9) (34.3) ------ ------ ------ ------ INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE......................................... 72.3 73.5 166.8 161.6 Income taxes................................................... 26.8 26.4 64.8 58.4 ------ ------ ------ ------ INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE....................................................... 45.5 47.1 102.0 103.2 Cumulative effect of accounting change, net of tax............. - - 1.0 - ------ ------ ------ ------ NET INCOME..................................................... 45.5 47.1 103.0 103.2 Preferred dividends............................................ 0.2 0.2 0.4 0.4 ------ ------ ------ ------ EARNINGS ON COMMON STOCK....................................... $ 45.3 $ 46.9 $102.6 $102.8 ====== ====== ====== ======
See Notes to Consolidated Financial Statements. These interim statements are unaudited. 3 THE DAYTON POWER AND LIGHT COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS (DOLLARS IN MILLIONS)
SIX MONTHS ENDED JUNE 30, ---------------------------------- 2001 2000 ---- ---- OPERATING ACTIVITIES Cash received from utility customers................................................. $ 566.7 $ 681.4 Other operating cash receipts........................................................ 47.6 10.8 Cash paid for: Fuel and purchased power........................................................ (183.8) (116.5) Purchased gas................................................................... - (74.2) Operation and maintenance labor................................................. (36.5) (41.7) Nonlabor operating expenditures................................................. (88.4) (108.9) Interest........................................................................ (29.7) (32.1) Income taxes.................................................................... (45.1) (63.7) General taxes................................................................... (76.2) (83.0) ------- ------- Net cash provided by operating activities............................................ 154.6 172.1 ------- ------- INVESTING ACTIVITIES Capital expenditures................................................................. (85.1) (50.7) Income taxes on gain from sale of natural gas retail distribution operations......... (90.9) - ------- ------- Net cash used for investing activities............................................... (176.0) (50.7) ------- ------- FINANCING ACTIVITIES Dividends paid on common stock....................................................... (65.4) (102.5) Dividends paid on preferred stock.................................................... (0.4) (0.4) Retirement of long-term debt......................................................... (0.4) (0.4) Issuance (retirement) of short-term debt, net........................................ 84.8 (111.1) ------- ------- Net cash provided by/(used for) financing activities................................. 18.6 (214.4) ------- ------- CASH AND TEMPORARY CASH INVESTMENTS-- Net change........................................................................... (2.8) (93.0) Balance at beginning of period....................................................... 8.6 95.5 ------- ------- Balance at end of period............................................................. $ 5.8 $ 2.5 ======= =======
See Notes to Consolidated Financial Statements. These interim statements are unaudited. 4 THE DAYTON POWER AND LIGHT COMPANY CONSOLIDATED BALANCE SHEET (DOLLARS IN MILLIONS)
AT At JUNE 30, December 31, 2001 2000 -------- ------------ ASSETS PROPERTY Property..................................................................... $ 3,592.2 $ 3,522.6 Less: Accumulated depreciation and amortization.............................. (1,611.8) (1,560.4) --------- --------- Net property............................................................ 1,980.4 1,962.2 --------- --------- CURRENT ASSETS Cash and temporary cash investments.......................................... 5.8 8.6 Accounts receivable, less provision for uncollectible accounts of $9.8 and $6.8, respectively.......................................... 210.3 189.7 Inventories, at average cost................................................. 60.0 45.7 Prepaid taxes................................................................ 66.0 65.4 Other........................................................................ 11.9 35.5 --------- --------- Total current assets.................................................... 354.0 344.9 --------- --------- OTHER ASSETS Deferred compensation plan................................................... 156.7 171.8 Income taxes recoverable through future revenues............................. 45.9 49.4 Other regulatory assets...................................................... 123.7 146.4 Other........................................................................ 73.4 76.4 --------- --------- Total other assets...................................................... 399.7 444.0 --------- --------- TOTAL ASSETS................................................................. $ 2,734.1 $ 2,751.1 ========= =========
See Notes to Consolidated Financial Statements. These interim statements are unaudited. 5 THE DAYTON POWER AND LIGHT COMPANY CONSOLIDATED BALANCE SHEET (DOLLARS IN MILLIONS) (CONTINUED)
AT At JUNE 30, December 31, 2001 2000 -------- ------------ CAPITALIZATION AND LIABILITIES CAPITALIZATION Common shareholders' equity-- Common stock............................................. $ 0.4 $ 0.4 Other paid-in capital.................................... 773.3 769.8 Accumulated other comprehensive income................... 22.8 37.3 Earnings reinvested in the business...................... 242.5 205.4 ---------- ----------- Total common shareholders' equity.................... 1,039.0 1,012.9 Preferred stock............................................... 22.9 22.9 Long-term debt................................................ 666.3 666.5 ---------- ----------- Total capitalization................................. 1,728.2 1,702.3 ---------- ----------- CURRENT LIABILITIES Accounts payable.............................................. 102.2 103.9 Accrued taxes................................................. 99.3 220.0 Accrued interest.............................................. 19.3 19.1 Short-term debt............................................... 84.8 - Other......................................................... 25.5 14.3 ---------- ----------- Total current liabilities............................ 331.1 357.3 ---------- ----------- DEFERRED CREDITS AND OTHER Deferred taxes................................................ 421.5 429.9 Unamortized investment tax credit............................. 59.1 60.2 Deferred compensation......................................... 106.9 113.6 Other......................................................... 87.3 87.8 ---------- ----------- Total deferred credits and other..................... 674.8 691.5 ---------- ----------- TOTAL CAPITALIZATION AND LIABILITIES.......................... $ 2,734.1 $ 2,751.1 ========== ===========
See Notes to Consolidated Financial Statements. These interim statements are unaudited. 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The Dayton Power and Light Company ("DP&L" or "the Company") is a wholly owned subsidiary of DPL Inc ("DPL"). DP&L 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 2000 Annual Report on Form 10-K. 2. Reclassifications have been made in certain prior years' amounts to conform to the current reporting presentation of the Company. In the opinion of management, the information included in this Form 10-Q reflects all adjustments that are necessary for a fair statement of the results of operations for the periods presented. Any adjustments are of a normal recurring nature. 3. The Company adopted the provisions of the Financial Accounting Standard Board's ("FASB") Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended ("SFAS No. 133") as of January 1, 2001. SFAS No. 133 requires that all derivatives be recognized as either assets or liabilities in the consolidated balance sheet and be measured at fair value, and changes in the fair value be recorded in earnings, unless they are designated as a cash flow hedge of a forecasted transaction. As a result of adopting this accounting standard, the Company recorded a cumulative effect of accounting change of $1.0 million in income, net of tax. The implementation of this accounting standard did not have a material impact on the Company's financial position or results of operations. The Company uses forward and option purchase contracts as a hedge against the risk of changes in cash flows associated with expected electricity purchases. These purchases are required to meet full requirements load during times of peak demand or during planned and unplanned generation facility outages. The Company also holds forward sales contracts that hedge against the risk of changes in cash flows associated with power sales during periods of projected generation facility availability. The Company records the fair value of all these contracts as "Other Assets" or "Other Liabilities" on the Consolidated Balance Sheet with an offset to "Accumulated Other Comprehensive Income," which is reclassified into earnings in the month of physical receipt or delivery of power. In June 2001, the FASB concluded that electric utilities could apply the normal purchases and sales exception for option-type contracts and forward contracts in electricity subject to specific criteria for the power buyers and sellers. The Company holds contracts currently classified as cash flow hedges that will meet the requirements for the normal purchases and sales exception to be excluded from the scope of SFAS No. 133. These contracts remain recorded as hedges as the scope exception is not effective until the third quarter of 2001. Beginning on July 1, 2001, the Company intends to apply the normal purchase and sales exception as defined in SFAS No. 133 and accordingly will account for these contracts upon settlement. Therefore, the fair value of these contracts as of June 30, 2001 will become their net carrying amount beginning July 1, 2001 and, prospectively, carrying amounts of the contracts will no longer be adjusted for changes in their fair values. Similarly, the hedge accounting effects of these contracts recorded in Accumulated Other Comprehensive Income on June 30, 2001 will be recorded in earnings in the month of physical receipt or delivery of the power. This prospective 7 change will not have a material impact on the Company's financial position or results of operations. The Company also holds purchased gas contracts through November 2001, as well as emission allowance options through 2004, that are classified as derivatives not subject to hedge accounting. The fair value of these contracts is reflected as "Other Assets" or "Other Liabilities" on the Consolidated Balance Sheet and changes in fair value are recorded as "Other Income/Deductions" on the Consolidated Statement of Results of Operations. The impact on net income was immaterial during the second quarter and the first six months of 2001. 4. In prior years, the Company had two reportable operating segments: Electric and Natural Gas. In October 2000, the Company completed the sale of substantially all of its natural gas retail distribution assets and certain liabilities. Accordingly, the Electric segment is the remaining reportable operating segment. The Electric segment generates, markets, distributes, and transmits electricity to retail and wholesale customers. Prior year amounts related to the Natural Gas segment are included in "Other."
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ----------------------------------- ------------------------------------ 2001 2000 2001 2000 ---- ---- ---- ---- NET REVENUES: Electric................................. $197.3 $196.5 $409.9 $396.9 Other.................................... - 13.5 - 47.4 ------ ------ ------ ------ Total................................. $197.3 $210.0 $409.9 $444.3 ====== ====== ====== OPERATING INCOME: Electric................................. $ 94.8 $ 90.9 $201.7 $189.3 Other (a)................................ (8.0) (3.4) (2.0) 12.4 ------ ------ ------ ------ Total................................. $ 86.8 $ 87.5 $199.7 $201.7 ====== ====== ====== RECONCILIATION: Operating income......................... $ 86.8 $ 87.5 $199.7 $201.7 Other deductions......................... 4.9 12.7 2.4 (5.8) Interest expense......................... (16.0) (26.7) (31.9) (34.3) ------ ------ ------ ------ Income before income taxes and cumulative effect of accounting change................................ $ 75.7 $ 73.5 $170.2 $161.6 ====== ====== ====== ======
(a) Includes unallocated corporate items. The second quarter and year-to-date periods for 2000 also include operating income for the natural gas retail distribution operations, the sale of which was completed in October 2000. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Dayton Power and Light Company ("DP&L" or "the Company") reported earnings on common stock for the second quarter of 2001 of $45.3 million, which was 3% lower than earnings on common stock of $46.9 million for the same quarter last year. Earnings on common stock for the current year-to-date period were $102.6 million compared to earnings on common stock of $102.8 million for same period last year. FINANCIAL CONDITION At June 30, 2001, the Company's cash and temporary cash investment balance was $5.8 million. During the first quarter of 2001, investing cash flows included a cash payment of $90.9 million for income taxes associated the gain on the sale of the natural gas retail distribution assets and certain liabilities that was reported in October 2000. DPL and its subsidiaries have $265 million available through Revolving Credit Agreements ("Credit Agreements"). The primary purpose of the revolving credit facilities is to provide back-up liquidity for the commercial paper program. The Company had no borrowings outstanding under these Credit Agreements at June 30, 2001. The Company also has $75 million available in short-term informal lines of credit. The Company had no borrowings outstanding under these informal lines and $85 million in commercial paper outstanding at June 30, 2001. 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 2001-2005. Construction plans are subject to continuing review and are expected to be revised in light of changes in financial and economic conditions, load forecasts, electricity and fuel price forecasts, legislative and regulatory developments and changing environmental standards, among other factors. As a result of DPL's December 2000 press release regarding its exploration of strategic alternatives in January 2001, Standard & Poor's placed DPL and DP&L on credit watch with developing implications. Also in January, Moody's placed the ratings of DPL and its affiliates under review. On May 2, 2001, Standard & Poor's affirmed its ratings on DPL and DP&L with a stable outlook, and removed the credit watch with developing implications. On July 27, 2001, Moody's also affirmed the ratings of DPL and DP&L with a stable outlook. The current credit ratings for DPL and DP&L are investment grade. 9 RESULTS OF OPERATIONS
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, --------------------------------- --------------------------------- 2001 2000 2001 2000 ---- ---- ---- ---- Electric revenues........................ $287.2 $262.8 $581.9 $522.3 Fuel and purchased power................. 89.9 66.3 172.0 125.4 ------ ------ ----- ----- Net electric revenues............... 197.3 196.5 409.9 396.9 Gas revenues............................. $ - $ 31.1 $ - $132.6 Gas purchased for resale................. - 17.6 - 85.2 ------ ------ ----- ----- Net gas revenues.................... $ - $ 13.5 $ - $ 47.4 Operating income......................... $ 86.8 $ 87.5 $ 199.7 $201.7
Net electric revenues increased by $0.8 million and by $13.0 million or 3% compared to last year's second quarter and year-to-date periods, respectively. Wholesale revenues increased by 83% for the quarter and more than doubled for the six-month period as a result of increased sales volume, higher wholesale market prices, and revenue from additional generating facilities. Retail revenues were 2% and 3% higher for the quarter and year-to-date periods, respectively, primarily as a result of a higher average rate based on tax law changes. Retail sales were down 1% for the quarter on account of lower industrial sales resulting from sluggish economic conditions in DP&L's service territory, which offset sales increases in residential (1%) and commercial (4%) markets. Year-to-date retail sales were 1% higher than last year. Growth in residential and commercial markets was partially offset by declines in industrial sales, again reflecting economic conditions in DP&L's service territory. Fuel costs increased for both comparison periods as a result of higher spot-market prices for coal, higher prices on the wholesale market for purchased power, and a greater volume of fuel usage and power purchases resulting from increased wholesale sales. The decline in net gas revenues for the quarter and year-to-date periods resulted from the sale of the natural gas retail distribution assets and certain liabilities, which was completed in October 2000. Operation and maintenance expense decreased by $1.3 or 3% for the quarter and by $14.7 million or 15% for the six-month period. The decreases for both comparison periods were primarily attributable to the sale of the natural gas retail distribution operations, lower insurance and claims expense, lower pension expense, and general cost containment efforts. These favorable variances were partially offset by voluntary early retirement costs. Depreciation and amortization expense decreased by $5.9 million or 17% for the quarter and by $10.7 million or 16% for the six-month period. The decreases for both comparison periods resulted from depreciation rate changes for certain generation units and the sale of the natural gas retail distribution assets. 10 Beginning January 1, 2001, regulatory transition cost assets of $144.8 million are being amortized over a three-year period based on transition revenues. As a result, amortization expense increased by $4.2 million or 59% for the quarter and by $10.7 million or 84% for the year-to-date period based on transition revenues recognized in the respective periods. General taxes decreased by $9.0 million or 29% for the quarter and by $17.7 million or 27% for the six-month period. The decreases for both comparison periods primarily resulted from changes in tax laws associated with the Ohio deregulation order and the sale of the natural gas retail distribution assets. Other income (deductions) increased by $4.8 million for the six-month period. This increase was primarily attributable to the elimination of certain compensation programs in the prior year, partially offset by strategic consulting expenses, net derivative losses, and deferred compensation expense all reported in the current year. Interest expense was essentially flat for the quarter and decreased by $2.4 million or 7% for the six-month period. The decrease in the year-to-date period was primarily attributable to higher capitalized interest, partially offset by higher long-term debt and higher long-term debt interest rates. The effective income tax rates for the second quarter of 2001 and 2000 were 37.1% and 35.9%, respectively, and the effective income tax rates for the first six months of 2001 and 2000 were 38.8% and 36.1%, respectively. The increases were primarily attributable to higher state income-based taxes resulting from the implementation of the Ohio deregulation order. The cumulative effect of an accounting change reflects the Company's adoption of the provisions of the Financial Accounting Standard Board's ("FASB") Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended ("SFAS No. 133"). SFAS No. 133 requires that all derivatives be recognized as either assets or liabilities in the consolidated balance sheet and be measured at fair value, and changes in the fair value be recorded in earnings, unless they are designated as hedges of an underlying transaction. OTHER MATTERS A wholly-owned captive subsidiary of DPL provides, among other coverages, business interruption and specific risk coverage for DP&L with respect to the impact of environmental law and electric deregulation. "Insurance Claims and Costs" on DPL's Consolidated Balance Sheet includes insurance reserves of the captive subsidiary of approximately $87 million for this coverage, as well as other coverages based on actuarial methods and loss experience data. As the policy impact of electric deregulation becomes known during the three-year regulatory transition period ending December 31, 2003, either policy payments from the captive subsidiary to DP&L or release of the appropriate reserves will occur and be reflected in income. 11 FORWARD-LOOKING STATEMENTS 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. 12 THE DAYTON POWER AND LIGHT COMPANY OPERATING STATISTICS
2001 2000 2001 2000 ---- ---- ---- ---- ELECTRIC Sales (millions of kWh)-- Residential.................................................. 1,017 1,008 2,497 2,348 Commercial................................................... 916 881 1,795 1,706 Industrial................................................... 1,148 1,265 2,242 2,423 Other retail................................................. 357 336 671 658 --------- -------- -------- -------- Total retail 3,438 3,490 7,205 7,135 Wholesale.................................................... 844 751 1,790 1,301 --------- -------- -------- -------- Total.................................................... 4,282 4,241 8,995 8,436 Revenues (thousands of dollars)-- Residential.................................................. $ 93,240 $ 92,406 $213,600 $203,274 Commercial................................................... 66,768 60,902 127,324 117,929 Industrial................................................... 57,921 61,537 112,679 117,024 Other retail................................................. 24,044 23,168 45,758 45,000 --------- -------- -------- -------- Total retail............................................. 241,973 238,013 499,361 483,227 Wholesale.................................................... 45,275 24,793 82,582 39,082 --------- -------- -------- -------- Total.................................................... $ 287,248 $262,806 $581,943 $522,309 Electric customers at end of period............................... 500,800 496,608 500,800 496,608 GAS (a) Sales (millions of MCF)-- Residential.................................................. - 3,035 - 14,669 Commercial................................................... - 859 - 4,413 Industrial................................................... - 534 - 1,600 Other........................................................ - 141 - 611 Transportation gas delivered................................. - 4,141 - 11,034 --------- -------- -------- -------- Total.................................................... - 8,710 - 32,327 Revenues (thousands of dollars)-- Residential.................................................. $ - $19,379 $ - $ 86,608 Commercial................................................... - 5,100 - 24,757 Industrial................................................... - 2,503 - 8,158 Other........................................................ - 4,161 - 13,101 --------- -------- -------- -------- Total.................................................... $ - $31,143 $ - $132,623 Gas customers at end of period.................................... - 309,486 - 309,486
(a) DP&L completed the sale of its natural gas retail distribution assets and certain liabilities in October 2000. 13 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The carrying value of the Company's debt was $667.3 million at December 31, 2000, consisting of the Company's first mortgage bonds, guaranteed air quality development obligations, and notes. The fair value of this debt was $666.7 million, based on current market prices or discounted cash flows using current rates for similar issues with similar terms and remaining maturities. The following table presents the principal cash repayments and related weighted average interest rates by maturity date for long-term, fixed-rate debt at December 31, 2000:
--------------------------------------------------------------------------------------------------------------------------- Expected Maturity Date --------------------------------------------------------------------------------------------------------------------------- 2001 2002 2003 2004 2005 Thereafter Total Fair Value ------------------------------ --------- ---------- ---------- ---------- ---------- ------------- ----------- ------------ Long-term Debt ------------------------------ --------- ---------- ---------- ---------- ---------- ------------- ----------- ------------ Amount ($ in millions) $1 $1 $1 $1 $1 $662.3 $667.3 $666.7 ------------------------------ --------- ---------- ---------- ---------- ---------- ------------- ----------- ------------ Average rate 6.4% 6.4% 6.4% 6.4% 6.4% 7.4% 7.4% ------------------------------ --------- ---------- ---------- ---------- ---------- ------------- ----------- ------------
Because the long-term debt is at a fixed rate, the primary market risk to the Company is short-term interest rate risk. The carrying value and fair value of short-term debt was $85 million with a weighted-average interest rate of 4.0% at June 30, 2001. The interest expense risk resulting from a hypothetical 10% increase/decrease in the quarterly average cost of this debt is negligible. PART II. OTHER INFORMATION -------------------------------------------------------------------------------- ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) There are no exhibits required by Item 601 of Regulation S-K for the quarter ended June 30, 2001. (b) Reports on Form 8-K. No reports on Form 8-K were filed by the Company during the quarter ended June 30, 2001. 14 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: August 14, 2001 /s/ Elizabeth M. McCarthy --------------- ------------------------------------------------ Elizabeth M. McCarthy Group Vice President and Chief Financial Officer Date: August 14, 2001 /s/ Stephen F. Koziar, Jr. --------------- ------------------------------------------------ Stephen F. Koziar, Jr. Group Vice President and Secretary 15