-----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, SUo5uhlGT1dcboD9BpynNqE4HVm54ZJBiUlYHqogLUGbP93XrkBzfUIK5tme/XSU 4EuLLVLHXHDJOAKgZzgXJw== 0000787250-98-000008.txt : 19981123 0000787250-98-000008.hdr.sgml : 19981123 ACCESSION NUMBER: 0000787250-98-000008 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: DPL INC CENTRAL INDEX KEY: 0000787250 STANDARD INDUSTRIAL CLASSIFICATION: 4931 IRS NUMBER: 311163136 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09052 FILM NUMBER: 98753281 BUSINESS ADDRESS: STREET 1: PO BOX 8825 CITY: DAYTON STATE: OH ZIP: 45401 BUSINESS PHONE: 5132246000 MAIL ADDRESS: STREET 1: PO BOX 8825 CITY: DAYTON STATE: OH ZIP: 45401 10-Q 1 DPL INC. 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 1-9052 ------ DPL INC. (Exact name of registrant as specified in its charter) OHIO 31-1163136 - - ------------------------------- ------------------------------------ (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 and Preferred Share Purchase Rights 161,026,378 Shares - - ----------------------------------- ----------------------------------- (Title of each class) (Outstanding at September 30, 1998) DPL INC. 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 DPL INC. Three Months Nine Months Ended Ended September 30 September 30 ------------- ------------- 1998 1997 1998 1997 ---- ---- ---- ---- --millions-- --millions-- Income - - ------ Utility service revenues $318.6 $283.4 $ 963.5 $909.3 Other income 19.3 14.5 66.4 68.9 ------ ------ -------- ------ Total Income 337.9 297.9 1,029.9 978.2 ------ ------ -------- ------ Expenses - - -------- Fuel and purchased power 71.1 59.5 198.9 165.7 Gas purchased for resale 18.2 21.1 127.5 144.5 Operation and maintenance 71.9 53.6 167.6 164.8 Depreciation and amortization 32.8 31.9 98.1 95.4 Amortization of regulatory assets, net 5.3 4.6 14.2 12.6 General taxes 33.9 33.6 102.2 100.6 Interest expense 24.3 20.5 69.6 64.7 ------ ------ -------- ------ Total Expenses 257.5 224.8 778.1 748.3 ------ ------ -------- ------ Income Before Income Taxes 80.4 73.1 251.8 229.9 Income taxes 32.9 28.2 98.8 83.7 ------ ------ -------- ------ Net Income $ 47.5 $ 44.9 $ 153.0 $146.2 ====== ====== ======== ====== Average Number of Common Shares Outstanding (millions) 153.0 151.6 152.7 151.2 Earnings Per Share of Common Stock $ 0.31 $ 0.30 $ 1.00 $ 0.97 Dividends Paid Per Share of Common Stock $0.235 $0.227 $ 0.705 $0.681 Comprehensive Income $ 32.5 $ 55.2 $ 168.5 $163.6 See Notes to Consolidated Financial Statements. These interim statements are unaudited. -1- CONSOLIDATED STATEMENT OF CASH FLOWS DPL INC. Nine Months Ended September 30 ----------------- 1998 1997 ---- ---- --millions-- Operating Activities - - -------------------- Cash received from utility customers $964.5 $939.0 Other operating cash receipts 58.8 61.2 Cash paid for: Fuel and purchased power (204.1) (173.2) Purchased gas (152.2) (175.7) Operation and maintenance labor (61.9) (61.7) Nonlabor operating expenditures (114.9) (82.6) Interest (72.6) (70.4) Income taxes (80.6) (60.9) Property, excise and payroll taxes (112.8) (109.2) ------ ------ Net cash provided by operating activities 224.2 266.5 Investing Activities - - -------------------- Property expenditures (72.5) (77.5) Other activities (224.4) (95.9) ------ ------ Net cash used for investing activities (296.9) (173.4) Financing Activities - - -------------------- Dividends paid on common stock (107.6) (102.8) Issuance of long-term debt 98.5 - Issuance (retirement) of short-term debt 50.6 (4.0) Issuance of common stock 14.9 14.8 Retirement of long-term debt (3.4) (42.4) ------ ------ Net cash provided by (used for) financing activities 53.0 (134.4) Cash and temporary cash investments-- - - ----------------------------------- Net change (19.7) (41.3) Balance at beginning of period 26.1 72.8 ------ ------ Balance at end of period $ 6.4 $ 31.5 ====== ====== See Notes to Consolidated Financial Statements. These interim statements are unaudited. -2- CONSOLIDATED BALANCE SHEET DPL INC. At At September 30, December 31, 1998 1997 ------------- ------------ --millions-- ASSETS Property $3,708.1 $3,642.8 Less-- Accumulated depreciation and amortization (1,477.1) (1,386.6) -------- -------- Net property 2,231.0 2,256.2 -------- -------- Current Assets - - -------------- Cash and temporary cash investments 6.4 26.1 Accounts receivable, less provision for uncollectible accounts 196.7 211.4 Inventories, at average cost 94.9 87.5 Deferred property and excise taxes 49.7 91.9 Other 22.1 54.2 -------- -------- Total current assets 369.8 471.1 -------- -------- Other Assets - - ------------ Financial assets 636.1 384.0 Income taxes recoverable through future revenues 197.3 208.2 Regulatory assets 102.7 116.7 Other 145.4 149.0 -------- -------- Total other assets 1,081.5 857.9 -------- -------- Total Assets $3,682.3 $3,585.2 ======== ======== See Notes to Consolidated Financial Statements. These interim statements are unaudited. -3- CONSOLIDATED BALANCE SHEET (continued) DPL INC. At At September 30, December 31, 1998 1997 ------------- ------------ --millions-- CAPITALIZATION AND LIABILITIES Capitalization - - -------------- Common shareholders' equity-- Common stock $ 1.6 $ 1.6 Other paid-in capital 793.3 777.3 Common stock held by employee plans (95.7) (98.0) Accumulated other comprehensive income 35.5 19.9 Earnings reinvested in the business 594.3 585.2 ------- -------- Total common shareholders' equity 1,329.0 1,286.0 Preferred stock 22.9 22.9 Long-term debt 1,065.8 971.0 -------- -------- Total capitalization 2,417.7 2,279.9 -------- -------- Current Liabilities - - ------------------- Short-term debt 166.3 115.7 Accounts payable 70.1 129.8 Dividends payable 36.5 - Accrued taxes 101.6 158.5 Accrued interest 18.6 24.2 Other 36.1 49.7 -------- -------- Total current liabilities 429.2 477.9 -------- -------- Deferred Credits and Other - - -------------------------- Deferred taxes 460.7 464.9 Unamortized investment tax credit 70.2 72.4 Insurance and claims costs 163.5 151.6 Other 141.0 138.5 -------- -------- Total deferred credits and other 835.4 827.4 -------- -------- Total Capitalization and Liabilities $3,682.3 $3,585.2 ======== ======== 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 DPL Inc. 2. DPL Inc., 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 DPL Inc.'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 results 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 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. DPL Inc.'s earnings for the third quarter of 1998 were $0.31 per share, up from $0.30 per share in the third quarter a year ago. Earnings were $1.00 per share year-to-date, an increase of 3% over earnings of $0.97 per share for 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. DP&L'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, DPL Inc.'s cash and temporary cash investment balance was $6.4 million. In addition, $636.1 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. DP&L 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. DP&L also has $97 million available in short-term informal lines of credit. As of September 30, 1998, DP&L had $79.0 million of these informal lines outstanding and $87.3 million in commercial paper outstanding. DP&L 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 $35.2 million and $54.2 million, respectively, for the third quarter and nine months ended September 30, 1998. Electric revenues were higher due to increased sales to residential customers and other utilities. Gas revenues were lower year-to-date due to mild weather. Other income was $4.8 million higher compared to the third quarter 1997 and $2.5 million lower than year-to-date 1997. Increased investment income was the primary cause of the quarterly variation. A gain on an investment sale in the first quarter 1997 contributed to the year-to-date variation. Fuel and purchased power increased $11.6 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 $2.9 million compared to the same quarter 1997 and $17.0 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 $18.3 million for the third quarter and $2.8 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 $4.7 million and $15.1 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 DP&L 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. DP&L 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 DP&L, like those of most companies, will be affected to some extent by the year 2000 ("Y2K"). DP&L 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. DP&L has inventoried its applications and equipment, is determining which of -9- those are non-compliant, and is simultaneously remediating those situations. The four phases of DP&L's plan - inventory, assess for compliance, remediate and test - are in various stages of completion. DP&L 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. DP&L estimates that the cost of remediation for Y2K issues including hardware and software modifications and consultant expenditures is $15,000,000. Some of DP&L'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. DP&L 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 DP&L 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, DP&L 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, DP&L and the three other major investor owned utilities in Ohio presented a comprehensive electric utility restructuring Bill to a working group of the Committee. DP&L 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 DPL Inc. 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. DPL INC. ---------------------------------- (Registrant) Date: November 16, 1998 /s/James P. Torgerson ----------------- ---------------------------------- James P. Torgerson Vice President, CFO and Treasurer Date: November 16, 1998 /s/Stephen F. Koziar Jr. ----------------- ---------------------------------- Stephen F. Koziar, Jr. Group Vice President and Secretary -12- EX-27 2 DPL INC. FINANCIAL DATA SCHEDULE
UT 1,000 9-MOS DEC-31-1998 SEP-30-1998 PER-BOOK 2231000 0 369800 300000 781500 3682300 1600 697600 629800 1329000 0 22900 1065800 79000 0 87300 0 0 0 0 1098300 3682300 963500 98800 707800 806600 156900 66400 223300 69600 153700 700 153000 107600 72600 224200 1.00 1.00
-----END PRIVACY-ENHANCED MESSAGE-----