EX-99.1 5 exhibit991generationsepara.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
THE DAYTON POWER AND LIGHT COMPANY
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
On October 1, 2017 (the "Closing Date"), The Dayton Power and Light Company ("DP&L"), a calendar-year public utility and wholly-owned subsidiary of DPL Inc. ("DPL") that owns generation units, owns transmission facilities, and provides electric distribution services to customers in the west central area of Ohio, completed the transfer of its generating plants, the real property on which the generation plants and generation-related assets are sited, step-up transformers and other transmission plant assets used to interconnect with the electric transmission grid, fuel inventory, equipment inventory and spare parts, working capital, and other miscellaneous generation-related assets and liabilities ("Generation assets") to AES Ohio Generation, LLC ("AES Ohio Gen"), a wholly-owned subsidiary of DPL that owns and operates peaking generation facilities from which it makes wholesale sales.
DP&L's transmission and distribution operations are regulated by the Public Utilities Commission of Ohio ("PUCO"). In 2014, the PUCO approved a plan for DP&L to sell or transfer its Generation assets. On August 25, 2016, DP&L and AES Ohio Gen jointly filed an application with the Federal Energy Regulatory Commission ("FERC") to complete the transfer of DP&L's Generation assets to AES Ohio Gen, which was approved by the FERC on August 29, 2017. As such, on the Closing Date, DP&L completed the transfer of its Generation assets to AES Ohio Gen at net book value.
For the transfer to occur, a new entity was created as an Ohio limited liability company that was a subsidiary of DP&L ("Merger Sub"). The transfer began with the contribution of the Generation assets of DP&L to Merger Sub. Immediately thereafter, the stock in Merger Sub was distributed as a dividend up from DP&L to DPL. Merger Sub then merged with and into AES Ohio Gen, with AES Ohio Gen being the surviving entity. After the Closing Date, DP&L no longer owns the Generation assets and, as such, will no longer consolidate the Generation assets into its financial results. Beginning in the fourth quarter of fiscal year 2017, the Generation assets' historical financial results for periods prior to the Closing Date will be reflected in DP&L's consolidated financial statements as a discontinued operation.
The following unaudited pro forma consolidated financial information is based upon the historical financial statements of DP&L, adjusted to reflect the transfer of the Generation assets. The following unaudited pro forma consolidated financial statements of DP&L should be read in conjunction with the related notes and with the historical consolidated financial statements of DP&L and the related notes included in previous filings with the Securities and Exchange Commission. The unaudited pro forma consolidated balance sheet reflects the transfer of the Generation assets as if it had occurred on June 30, 2017, while the unaudited pro forma consolidated statements of operations for the periods ended June 30, 2017, December 31, 2016, December 31, 2015, and December 31, 2014, respectively, give effect to the transfer of the Generation assets as if it had occurred on January 1, 2014. The pro forma adjustments, described in the related notes, are based on the best available information and certain assumptions that DP&L's management believes to be reasonable.
The unaudited pro forma consolidated financial statements are provided for illustrative purposes only and are not necessarily indicative of operating results or financial position that would have occurred had the transfer of the Generation assets occurred on the dates indicated for the unaudited pro forma consolidated balance sheet or for each period presented for the unaudited pro forma consolidated statements of operations.




THE DAYTON POWER AND LIGHT COMPANY
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
 
 
Six months ended June 30, 2017
$ in millions
 
Historical
DP&L
 
DP&L
Discontinued
Operations
 
Pro Forma
Adjustments
 
Note
 
Pro Forma
Continuing
Operations
Revenues
 
$
595.2

 
$
(236.9
)
 
$
—

 
 
 
$
358.3

 
 
 
 
 
 
 
 
 
 
 
Cost of revenues:
 
 
 
 
 
 
 
 
 
 
Net fuel costs
 
100.0

 
(100.0
)
 
—

 
 
 
—

Net purchased power
 
177.2

 
(29.6
)
 
—

 
 
 
147.6

Total cost of revenues
 
277.2

 
(129.6
)
 
—

 
 
 
147.6

 
 
 
 
 
 
 
 
 
 
 
Gross margin
 
318.0

 
(107.3
)
 
—

 
 
 
210.7

 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
Operations and maintenance
 
163.5

 
(84.5
)
 
—

 
 
 
79.0

Depreciation and amortization
 
45.5

 
(8.8
)
 
—

 
 
 
36.7

General taxes
 
47.2

 
(8.7
)
 
—

 
 
 
38.5

Fixed-asset impairment
 
66.3

 
(66.3
)
 
—

 
 
 
—

Loss on asset disposal
 
16.2

 
(16.2
)
 
—

 
 
 
—

Total operating expenses
 
338.7

 
(184.5
)
 
—

 
 
 
154.2

 
 
 
 
 
 
 
 
 
 
 
Operating income / (loss)
 
(20.7
)
 
77.2

 
—

 
 
 
56.5

 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
 
 
 
 
 
 
 
 
 
Investment income, net
 
0.1

 
—

 
—

 
 
 
0.1

Interest expense
 
(15.4
)
 
0.2

 
—

 
 
 
(15.2
)
Charge for early redemption of debt
 
(0.1
)
 
—

 
—

 
 
 
(0.1
)
Other deductions
 
(1.3
)
 
0.1

 
—

 
 
 
(1.2
)
Total other expense, net
 
(16.7
)
 
0.3

 
—

 
 
 
(16.4
)
 
 
 
 
 
 
 
 
 
 
 
Income / (loss) from operations before income tax
 
(37.4
)
 
77.5

 
—

 
 
 
40.1

Income tax expense / (benefit)
 
(11.7
)
 
23.5

 
—

 
 
 
11.8

 
 
 
 
 
 
 
 
 
 
 
Net income / (loss)
 
$
(25.7
)
 
$
54.0

 
$
—

 
 
 
$
28.3






THE DAYTON POWER AND LIGHT COMPANY
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
 
 
Year ended December 31, 2016
$ in millions
 
Historical
DP&L
 
DP&L
Discontinued
Operations
 
Pro Forma
Adjustments
 
Note
 
Pro Forma
Continuing
Operations
Revenues
 
$
1,365.9

 
$
(557.9
)
 
$
—

 
 
 
$
808.0

 
 
 
 
 
 
 
 
 
 
 
Cost of revenues:
 
 
 
 
 
 
 
 
 
 
Net fuel costs
 
248.9

 
(243.6
)
 
—

 
 
 
5.3

Net purchased power
 
414.1

 
(97.4
)
 
—

 
 
 
316.7

Total cost of revenues
 
663.0

 
(341.0
)
 
—

 
 
 
322.0

 
 
 
 
 
 
 
 
 
 
 
Gross margin
 
702.9

 
(216.9
)
 
—

 
 
 
486.0

 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
Operations and maintenance
 
343.2

 
(163.9
)
 
—

 
 
 
179.3

Depreciation and amortization
 
120.3

 
(49.3
)
 
—

 
 
 
71.0

General taxes
 
83.8

 
(15.8
)
 
—

 
 
 
68.0

Gain on termination of contract
 
(27.7
)
 
27.7

 
—

 
 
 
—

Fixed-asset impairment
 
1,353.5

 
(1,353.5
)
 
—

 
 
 
—

Other
 
(0.1
)
 
(0.3
)
 
—

 
 
 
(0.4
)
Total operating expenses
 
1,873.0

 
(1,555.1
)
 
—

 
 
 
317.9

 
 
 
 
 
 
 
 
 
 
 
Operating income / (loss)
 
(1,170.1
)
 
1,338.2

 
—

 
 
 
168.1

 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
 
 
 
 
 
 
 
 
 
Investment income
 
0.4

 
—

 
—

 
 
 
0.4

Interest expense
 
(24.5
)
 
0.5

 
—

 
 
 
(24.0
)
Charge for early redemption of debt
 
(0.5
)
 
—

 
—

 
 
 
(0.5
)
Other deductions
 
(0.4
)
 
—

 
—

 
 
 
(0.4
)
Total other expense, net
 
(25.0
)
 
0.5

 
—

 
 
 
(24.5
)
 
 
 
 
 
 
 
 
 
 
 
Income / (loss) from operations before income tax
 
(1,195.1
)
 
1,338.7

 
—

 
 
 
143.6

Income tax expense / (benefit)
 
(422.4
)
 
468.3

 
—

 
 
 
45.9

 
 
 
 
 
 
 
 
 
 
 
Net income / (loss)
 
$
(772.7
)
 
$
870.4

 
$
—

 
 
 
$
97.7

 
 
 
 
 
 
 
 
 
 
 
Dividends on preferred stock
 
0.7

 
—

 
—

 
 
 
0.7

 
 
 
 
 
 
 
 
 
 
 
Income / (loss) attributable to common stock
 
$
(773.4
)
 
$
870.4

 
$
—

 
 
 
$
97.0






THE DAYTON POWER AND LIGHT COMPANY
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
 
 
Year ended December 31, 2015
$ in millions
 
Historical
DP&L
 
DP&L
Discontinued
Operations
 
Pro Forma
Adjustments
 
Note
 
Pro Forma
Continuing
Operations
Revenues
 
$
1,552.3

 
$
(901.6
)
 
$
206.3

 
(a)
 
$
857.0

 
 
 
 
 
 
 
 
 
 
 
Cost of revenues:
 
 
 
 
 
 
 
 
 
 
Net fuel costs
 
244.7

 
(253.7
)
 
—

 
 
 
(9.0
)
Net purchased power
 
555.7

 
(444.6
)
 
206.3

 
(a)
 
317.4

Total cost of revenues
 
800.4

 
(698.3
)
 
206.3

 
 
 
308.4

 
 
 
 
 
 
 
 
 
 
 
Gross margin
 
751.9

 
(203.3
)
 
—

 
 
 
548.6

 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
Operations and maintenance
 
350.5

 
(166.5
)
 
—

 
 
 
184.0

Depreciation and amortization
 
138.2

 
(66.7
)
 
—

 
 
 
71.5

General taxes
 
85.0

 
(14.2
)
 
—

 
 
 
70.8

Other
 
0.4

 
(0.3
)
 
—

 
 
 
0.1

Total operating expenses
 
574.1

 
(247.7
)
 
—

 
 
 
326.4

 
 
 
 
 
 
 
 
 
 
 
Operating income / (loss)
 
177.8

 
44.4

 
—

 
 
 
222.2

 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
 
 
 
 
 
 
 
 
 
Investment income
 
0.3

 
—

 
—

 
 
 
0.3

Interest expense
 
(30.9
)
 
2.9

 
—

 
 
 
(28.0
)
Charge for early redemption of debt
 
(5.0
)
 
—

 
—

 
 
 
(5.0
)
Other deductions
 
(0.7
)
 
0.2

 
—

 
 
 
(0.5
)
Total other expense, net
 
(36.3
)
 
3.1

 
—

 
 
 
(33.2
)
 
 
 
 
 
 
 
 
 
 
 
Income / (loss) from operations before income tax
 
141.5

 
47.5

 
—

 
 
 
189.0

Income tax expense / (benefit)
 
35.1

 
26.8

 
—

 
 
 
61.9

 
 
 
 
 
 
 
 
 
 
 
Net income / (loss)
 
$
106.4

 
$
20.7

 
$
—

 
 
 
$
127.1

 
 
 
 
 
 
 
 
 
 
 
Dividends on preferred stock
 
0.9

 
—

 
—

 
 
 
0.9

 
 
 
 
 
 
 
 
 
 
 
Income / (loss) attributable to common stock
 
$
105.5

 
$
20.7

 
$
—

 
 
 
$
126.2






THE DAYTON POWER AND LIGHT COMPANY
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
 
 
Year ended December 31, 2014
$ in millions
 
Historical
DP&L
 
DP&L
Discontinued
Operations
 
Pro Forma
Adjustments
 
Note
 
Pro Forma
Continuing
Operations
Revenues
 
$
1,668.3

 
$
(751.8
)
 
$
105.3

 
(b)
 
$
1,021.8

 
 
 
 
 
 
 
 
 
 
 
Cost of revenues:
 
 
 
 
 
 
 
 
 
 
Net fuel costs
 
314.9

 
(293.1
)
 
—

 
 
 
21.8

Net purchased power
 
582.4

 
(300.7
)
 
105.3

 
(b)
 
387.0

Total cost of revenues
 
897.3

 
(593.8
)
 
105.3

 
 
 
408.8

 
 
 
 
 
 
 
 
 
 
 
Gross margin
 
771.0

 
(158.0
)
 
—

 
 
 
613.0

 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
Operations and maintenance
 
355.2

 
(159.5
)
 
—

 
 
 
195.7

Depreciation and amortization
 
144.8

 
(69.3
)
 
—

 
 
 
75.5

General taxes
 
85.7

 
(16.1
)
 
—

 
 
 
69.6

Other
 
(3.5
)
 
4.5

 
—

 
 
 
1.0

Total operating expenses
 
582.2

 
(240.4
)
 
—

 
 
 
341.8

 
 
 
 
 
 
 
 
 
 
 
Operating income / (loss)
 
188.8

 
82.4

 
—

 
 
 
271.2

 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
 
 
 
 
 
 
 
 
 
Investment income
 
0.9

 
—

 
—

 
 
 
0.9

Interest expense
 
(33.9
)
 
5.0

 
—

 
 
 
(28.9
)
Other deductions
 
(1.1
)
 
0.5

 
—

 
 
 
(0.6
)
Total other expense, net
 
(34.1
)
 
5.5

 
—

 
 
 
(28.6
)
 
 
 
 
 
 
 
 
 
 
 
Income / (loss) from operations before income tax
 
154.7

 
87.9

 
—

 
 
 
242.6

Income tax expense / (benefit)
 
39.7

 
28.9

 
—

 
 
 
68.6

 
 
 
 
 
 
 
 
 
 
 
Net income / (loss)
 
$
115.0

 
$
59.0

 
$
—

 
 
 
$
174.0

 
 
 
 
 
 
 
 
 
 
 
Dividends on preferred stock
 
0.9

 
—

 
—

 
 
 
0.9

 
 
 
 
 
 
 
 
 
 
 
Income / (loss) attributable to common stock
 
$
114.1

 
$
59.0

 
$
—

 
 
 
$
173.1






THE DAYTON POWER AND LIGHT COMPANY
UNAUDITED PRO FORMA BALANCE SHEET
 
 
June 30, 2017
$ in millions
 
Historical
DP&L
 
DP&L
Discontinued
Operations
 
Pro Forma
Adjustments
 
Note
 
Pro Forma
Continuing
Operations
ASSETS
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
6.1

 
$
—

 
$
—

 
 
 
$
6.1

Restricted cash
 
1.5

 
(1.5
)
 
—

 
 
 
—

Accounts receivables, net
 
95.1

 
(35.7
)
 
—

 
 
 
59.4

Inventories
 
27.7

 
(20.1
)
 
—

 
 
 
7.6

Taxes applicable to subsequent years
 
40.1

 
(5.8
)
 
—

 
 
 
34.3

Regulatory assets, current
 
4.3

 
—

 
—

 
 
 
4.3

Other prepayments and current assets
 
28.6

 
(19.8
)
 
—

 
 
 
8.8

Assets held for sale - current
 
68.6

 
(68.6
)
 
—

 
 
 
—

Total current assets
 
272.0

 
(151.5
)
 
—

 
 
 
120.5

 
 
 
 
 
 
 
 
 
 
 
Property, plant & equipment
 
 
 
 
 
 
 
 
 
 
Property, plant & equipment
 
2,331.7

 
(114.5
)
 
—

 
 
 
2,217.2

Less: Accumulated depreciation and amortization
 
(1,048.3
)
 
81.6

 
—

 
 
 
(966.7
)
 
 
1,283.4

 
(32.9
)
 
—

 
 
 
1,250.5

Construction work in process
 
51.1

 
(10.5
)
 
—

 
 
 
40.6

Total net property, plant & equipment
 
1,334.5

 
(43.4
)
 
—

 
 
 
1,291.1

 
 
 
 
 
 
 
 
 
 
 
Other non-current assets:
 
 
 
 
 
 
 
 
 
 
Regulatory assets, non-current
 
209.5

 
—

 
—

 
 
 
209.5

Intangible assets, net of amortization
 
19.3

 
(0.3
)
 
—

 
 
 
19.0

Other deferred assets
 
13.3

 
(1.2
)
 
—

 
 
 
12.1

Total other non-current assets
 
242.1

 
(1.5
)
 
—

 
 
 
240.6

 
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
1,848.6

 
$
(196.4
)
 
$
—

 
 
 
$
1,652.2

 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDER'S EQUITY
 

 

 
 
 

Current liabilities:
 
 
 
 
 
 
 
 
 

Current portion of long-term debt
 
$
26.4

 
$
—

 
$
—

 
 
 
$
26.4

Accounts payable
 
54.9

 
(14.7
)
 
—

 
 
 
40.2

Accrued taxes
 
34.0

 
4.7

 
—

 
 
 
38.7

Accrued interest
 
2.1

 
—

 
—

 
 
 
2.1

Security deposits
 
16.9

 
—

 
—

 
 
 
16.9

Regulatory liabilities, current
 
15.0

 
—

 
—

 
 
 
15.0

Other current liabilities
 
33.0

 
(21.4
)
 
—

 
 
 
11.6

Liabilities held for sale - current
 
22.2

 
(22.2
)
 
—

 
 
 
—

Total current liabilities
 
204.5

 
(53.6
)
 
—

 
 
 
150.9

 
 
 
 
 
 
 
 
 
 
 
Non-current liabilities:
 

 

 

 
 
 

Long-term debt
 
713.5

 
(2.8
)
 
—

 
 
 
710.7

Deferred taxes
 
157.5

 
121.7

 
—

 
 
 
279.2

Taxes payable
 
42.5

 
(3.2
)
 
—

 
 
 
39.3

Regulatory liabilities, non-current
 
133.1

 
—

 
—

 
 
 
133.1

Pension, retiree and other benefits
 
101.8

 
(10.3
)
 
—

 
 
 
91.5

Unamortized investment tax credit
 
16.6

 
(15.6
)
 
—

 
 
 
1.0

Asset retirement obligations
 
129.9

 
(121.8
)
 
—

 
 
 
8.1

Other deferred credits
 
12.6

 
(5.6
)
 
—

 
 
 
7.0

Total non-current liabilities
 
1,307.5

 
(37.6
)
 
—

 
 
 
1,269.9

 
 
 
 
 
 
 
 
 
 
 




Commitments and contingencies
 
—

 
—

 
—

 
 
 

 
 
 
 
 
 
 
 
 
 
 
Common shareholder's equity
 
 
 
 
 
 
 
 
 
 
Common stock
 
0.4

 
—

 
—

 
 
 
0.4

Other paid-in capital
 
801.8

 
(102.9
)
 
—

 
 
 
698.9

Accumulated other comprehensive income
 
(33.6
)
 
(2.3
)
 
—

 
 
 
(35.9
)
Accumulated deficit
 
(432.0
)
 
—

 
—

 
 
 
(432.0
)
Total common shareholder's equity
 
336.6

 
(105.2
)
 
—

 
 
 
231.4

 
 
 
 
 
 
 
 
 
 
 
Total liabilities and shareholder's equity
 
$
1,848.6

 
$
(196.4
)
 
$
—

 
 
 
$
1,652.2



(a)
Wholesale revenue for Historical DP&L in 2015 does not include OVEC revenue of $19.7 million as it is netted in purchased power. The impact of this netting adjustment from Net purchased power to Revenue is included in the Pro Forma Adjustments column in the table above but has no impact on Gross Margin or Net income / (loss). In addition, the Pro Forma Adjustments column for Revenue and Net purchased power includes intercompany eliminations of $186.6 million, which also have no impact on Gross margin or Net income / (loss).

(b)
Wholesale revenue for 2014 was not restated for the impact of netting between wholesale revenue and purchased power for the Generation Discontinued Operations because it was impracticable to restate. This impacts the Generation revenue as well as the adjustment for intercompany eliminations in the Pro Forma Adjustments column in the table above but has no impact on Gross margin or Net income / (loss). In addition, wholesale revenue for Historical DP&L in 2014 does not include OVEC revenue of $32.5 million as it is netted in purchased power. The impact of this netting adjustment from Net purchased power to Revenue is included in the Pro Forma Adjustments column in the table above but has no impact on Gross margin or Net income / (loss). The Pro Forma Adjustments column for Revenue and Net purchased power also includes intercompany eliminations of $72.8 million, which have no impact on Gross margin or Net income / (loss).