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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Form 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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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
incorporation or organization) Identification No.)
Courthouse Plaza Southwest, Dayton, Ohio 45402
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 513-224-6000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of Each Class which registered
------------------- ------------------------
First Mortgage Bonds
8% Series Due 2003 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. (X)
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 ( )
Number of shares of registrant's common stock outstanding as of February 28,
1995, all of which were held by DPL Inc., was 41,172,173.
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PART I
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Item 1 - BUSINESS*
THE COMPANY
The Dayton Power and Light Company (the "Company") is a
public utility incorporated under the laws of Ohio in 1911.
Located in West Central Ohio, it furnishes electric service to
470,000 retail customers in a 24 county service area of
approximately 6,000 square miles and furnishes natural gas service
to 290,000 customers in 16 counties. In addition, the Company
provides steam heating service in downtown Dayton, Ohio. The
Company serves an estimated population of 1.2 million. Principal
industries served include electrical machinery, automotive and
other transportation equipment, non-electrical machinery,
agriculture, paper, rubber and plastic products. The Company's
sales reflect the general economic conditions and seasonal weather
patterns of the area. In 1994, electric revenues increased 5%
with a 2% growth in retail sales reflecting the continued strength
of the West Central Ohio economy. Gas revenues decreased 3% in
1994. An overall sales increase of 1% reflected strong sales to
transportation gas customers despite mild temperatures in late
1994. During 1994, cooling degree days were 5% above the twenty
year average and 1% above 1993. Heating degree days in 1994 were
2% below the thirty year average and 5% below 1993. Sales
patterns will change in future years as weather and the economy
fluctuate. The Company employed 3,078 persons as of December 31,
1994, of which 2,578 are full-time employees and 500 are part-time
employees.
All of the outstanding shares of common stock of the
Company are held by DPL Inc., which became the Company's corporate
parent, effective April 21, 1986. Subsidiaries of the Company
include MacGregor Park, Inc., an owner and developer of real
estate; DP&L Community Urban Redevelopment Corporation, the owner
of a downtown Dayton office building; and Miami Valley Equipment,
Inc., which presently owns no property and conducts no business.
The Company's principal executive and business office is
located at Courthouse Plaza Southwest, Dayton, Ohio 45402 -
telephone (513)224-6000.
Information relating to industry segments is contained in
Item 8 - Note 11 of Notes to Consolidated Financial Statements on
Page II-23 of this document, which Note is incorporated herein by
reference.
* Unless otherwise indicated, the information given in "Item 1 -
BUSINESS" is current as of March 24, 1995. No representation
is made that there have not been any subsequent changes to
such information.
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COMPETITION
The Company competes with privately and municipally
owned electric utilities and rural electric cooperatives,
natural gas suppliers and other alternate fuel suppliers. The
Company competes on the basis of price and service.
Like other utilities, the Company from time to time may
have electric generating capacity available for sale to other
utilities. The Company competes with other utilities to sell
electricity provided by such capacity. The ability of the
Company to sell this electricity will depend on how the
Company's price, terms and conditions compare to those of other
utilities. In addition, from time to time, the Company also
makes power purchases from neighboring utilities.
In an increasingly competitive energy environment,
cogenerated power may be used by customers to meet their own
power needs. Cogeneration is the dual use of a form of energy,
typically steam, for an industrial process and for the
generation of electricity. The Public Utilities Regulatory
Policies Act of 1978 ("PURPA") provides regulations that govern
the purchase of excess electric energy from cogeneration and
small power production facilities that have obtained qualifying
status under PURPA.
The National Energy Policy Act of 1992, which reformed
the Public Utilities Holding Company Act, allows the federal
government to mandate access by others to a utility's electric
transmission system and may accelerate wholesale competition in
the supply of electricity.
The Company provides transmission and wholesale
electric to 12 municipal customers which distribute electricity
within their corporate limits. In 1994, 11 of these municipal
customers signed new 20-year service agreements, which have been
filed with the Federal Energy Regulatory Commission (the
"FERC"), with approval expected in 1995. The twelfth municipal
customer signed a 20-year agreement, approved by the FERC on
February 13, 1995, that allows the Company to supply 97% of its
power requirements. In addition to these municipal customers,
the Company maintains an interconnection agreement with one
municipality which has the capability to generate all or a
portion of its energy requirements. Sales to municipalities
represented 1.3% of total electricity sales in 1994.
General deregulation of the natural gas industry has
continued to prompt the influence of market competition as the
driving force behind natural gas procurement. The maturation of
the natural gas spot market in combination with open access
interstate transportation provided by pipelines has provided the
Company, as well as its end-use customers, with an array of
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procurement options. Customers with alternate fuel capability
can continue to choose between natural gas and their alternate
fuel based upon overall economics. Therefore, demand for
natural gas purchased from the Company or purchased elsewhere
transported to the end-use customer by the Company could
fluctuate based on the economics of each in comparison with
changes in alternate fuel prices. For the Company, price
competition and reliability among both natural gas suppliers and
interstate pipeline sources are major factors affecting
procurement decisions.
CONSTRUCTION AND FINANCING PROGRAM OF THE COMPANY
1995-1999 Construction Program
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The estimated construction additions for the years
1995-1999 are set forth below:
Estimated
1995 1996 1997 1998 1999 1995-1999
---- ---- ---- ---- ---- ---------
millions
Electric generation and
transmission commonly
owned with neighboring
utilities................ $ 18 $ 26 $ 36 $ 32 $ 36 $148
Other electric
generation and
transmission facilities.. 31 36 32 32 32 163
Electric distribution...... 23 40 37 35 35 170
General.................... 2 2 2 2 2 10
Gas, steam and other
facilities............... 12 12 12 12 13 61
--- --- --- --- --- ---
Total construction..... $ 86 $116 $119 $113 $118 $552
Estimated construction additions over the next five
years average $110 million annually which is less than the
projected depreciation expense over the same period.
The construction program includes plans for the
construction of a series of 75 MW combustion turbine generating
units, the first of which is scheduled for completion in Summer
1995.
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, the availability of external funds at
reasonable cost and adequate and timely rate increases.
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See ENVIRONMENTAL CONSIDERATIONS for a description of
environmental control projects and regulatory proceedings which
may change the level of future construction additions. The
potential impact of these events on the Company's operations
cannot be estimated at this time.
1995-1999 Financing Program
---------------------------
The Company will require a total of $76 million during
the next five years for bond maturities and sinking funds in
addition to any funds needed for the construction program.
At year-end 1994, the Company had a cash and temporary
investment balance of $8.3 million. Proceeds from temporary
cash investments, together with internally generated cash and
future outside financings, will provide for the funding of the
construction program, sinking funds and general corporate
requirements.
In March 1994, DPL Inc. issued 3,200,000 shares of
common stock through a public offering. Proceeds from the sale
were used in connection with the redemption of all outstanding
shares of the Company's Preferred Stock Series D, E, F, H and I.
During late 1992 and early 1993, the Company took
advantage of favorable market conditions to reduce its cost of
debt and extend first mortgage bond maturities through early
refundings. Overall, five new series of First Mortgage Bonds
were issued, aggregating approximately $766 million with an
average interest rate of 7.9%. The proceeds were used to redeem
a similar principal amount of debt securities with an average
interest rate of 8.7% The amounts and timings of future
financings will depend upon market and other conditions, rate
increases, levels of sales and construction plans.
In November 1989, DPL Inc. entered into a revolving
credit agreement ("the Credit Agreement") with a consortium of
banks renewable through 1999 which allows total borrowings by
DPL Inc. and its subsidiaries of $200 million. The Company has
authority from the Public Utilities Commission of Ohio (the
"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. At December 31, 1994,
DPL Inc. had no outstanding borrowings under this Credit
Agreement. The Company also has $97 million available in short
term informal lines of credit. At year-end, the Company had no
borrowings outstanding from these lines of credit and no
commercial paper outstanding.
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Under the Company's First and Refunding Mortgage, First
Mortgage Bonds may be issued on the basis of (i) 60% of unfunded
property additions, subject to net earnings, as defined, being
at least two times interest on all First Mortgage Bonds
outstanding and to be outstanding, and (ii) 100% of retired
First Mortgage Bonds. The Company anticipates that, during
1995-99, it will be able to issue sufficient First Mortgage
Bonds to satisfy its long-term debt requirements in connection
with the financing of its construction and refunding programs
discussed above.
The maximum amount of First Mortgage Bonds which may be
issued in the future will fluctuate depending upon interest
rates, the amounts of bondable property additions, earnings and
retired First Mortgage Bonds. There are no coverage tests for
the issuance of preferred stock under the Company's Amended
Articles of Incorporation.
ELECTRIC OPERATIONS AND FUEL SUPPLY
The Company's present winter generating capability is
3,053,000 KW. Of this capability, 2,843,000 KW (approximately
93%) is derived from coal-fired steam generating stations and
the balance consists of combustion turbine and diesel-powered
peaking units. Approximately 87% (2,472,000 KW) of the existing
steam generating capability is provided by certain units owned
as tenants in common with Cincinnati Gas & Electric Company
("CG&E") or with CG&E and Columbus Southern Power Company
("CSP"). Under the agreements among the companies, each company
owns a specified undivided share of each facility, is entitled
to its share of capacity and energy output, and has a capital
and operating cost responsibility proportionate to its ownership
share.
A merger agreement between CG&E and PSI Resources, Inc.
to form CINergy Corp. was pending from late 1992 to October
1994. The merger was approved by the FERC on October 3, 1994
and by the SEC on October 21, 1994. A settlement agreement
between the Company, CG&E, PSI Resources and CINergy Corp.
resolved the Company's concerns regarding the impact of the
merger on the operations of its commonly owned generating units.
The remaining steam generating capability (371,000 KW)
is derived from a generating station owned solely by the
Company. The Company's all time net peak load was 2,824,000 KW,
which occurred in June 1994. The present summer generating
capability is 3,017,000 KW.
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GENERATING FACILITIES
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MW Rating
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Owner- Operating Company
Station ship* Company Location Portion Total
----------- ----- --------- ------------ ------- -----
Coal Units
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Hutchings W Company Miamisburg, OH 371 371
Killen C Company Wrightsville, OH 402 600
Stuart C Company Aberdeen, OH 820 2,340
Conesville-Unit 4 C CSP Conesville, OH 129 780
Beckjord-Unit 6 C CG&E New Richmond, OH 210 420
Miami Fort-
Units 7&8 C CG&E North Bend, OH 360 1,000
East Bend-Unit 2 C CG&E Rabbit Hash, KY 186 600
Zimmer C CG&E Moscow, OH 365 1,300
Combustion Turbines or Diesel
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Hutchings W Company Miamisburg, OH 32 32
Yankee Street W Company Centerville, OH 144 144
Monument W Company Dayton, OH 12 12
Tait W Company Dayton, OH 10 10
Sidney W Company Sidney, OH 12 12
* W = Wholly Owned; C = Commonly Owned
In order to transmit energy to their respective systems
from their commonly-owned generating units, the companies have
constructed and own, as tenants in common, 847 circuit miles of
345,000-volt transmission lines. The Company has several
interconnections with other companies for the purchase, sale and
interchange of electricity.
The Company derived over 99% of its electric output
from coal-fired units in 1994. The remainder was derived from
units burning oil or natural gas which were used to meet peak
demands.
The Company estimates that approximately 65-85% of its
coal requirements for the period 1995-1999 will be obtained
through long-term contracts, with the balance to be obtained by
spot market purchases. The Company has been informed by CG&E
and CSP through the procurement plans for the commonly owned
units operated by them that sufficient coal supplies will be
available during the same planning horizon.
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The prices to be paid by the Company under its
long-term coal contracts are subject to adjustment in accordance
with various indices. Each contract has features that will
limit price escalations in any given year.
The total average price per million British Thermal
Units ("MMBTU") of coal received was $1.39/MMBTU in 1994 and
$1.46/MMBTU in 1993 and 1992.
The average fuel cost per kWh generated of all fuel
burned for electric generation (coal, gas and oil) for the year
was 1.42 cents which represents a decrease from 1.43 cents in
1993 and 1.48 cents in 1992. Through the operation of a fuel
cost adjustment clause applicable to electric sales, the
increases and decreases in fuel costs are reflected in customer
rates on a timely basis. See RATE REGULATION AND GOVERNMENT
LEGISLATION and ENVIRONMENTAL CONSIDERATIONS.
GAS OPERATIONS AND GAS SUPPLY
The Company has long-term firm pipeline transportation
agreements with ANR Gas Pipeline Company ("ANR"), Texas Gas
Transmission Corporation ("Texas Gas"), Panhandle Eastern Pipe
Line Company ("Panhandle"), Columbia Gas Transmission
Corporation ("Columbia") and Columbia Gulf Transmission
Corporation for varying terms, up to late 2004. Along with firm
transportation services, the Company has approximately
16 billion cubic feet of firm storage service with various
pipelines. The Company also maintains and operates four
propane-air plants with a daily rated capacity of approximately
70,000 thousand cubic feet ("MCF") of natural gas.
In addition, the Company is interconnected with CNG
Transmission Corporation and Texas Eastern Transmission
Corporation. These interconnections with various interstate
pipelines provide the Company the opportunity to purchase
competitively-priced natural gas supplies and pipeline
services. The Company purchases its natural gas supplies using
a portfolio approach that minimizes price risks and ensures
sufficient firm supplies, at peak demand times. The portfolio
consists of long-term, short-term and spot supply agreements.
In 1994, firm agreements provided approximately 95% of total
supply, with the remaining supplies purchased on a
spot/short-term basis.
In April 1992, the FERC issued Order No. 636
("Order 636") amending its regulations governing the service
obligations, rate design and cost recovery of interstate
pipelines. The Company's interstate pipeline suppliers have
received approval from FERC to implement their restructuring
plans to comply with the regulations.
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In January 1994, the Company, the Staff of the PUCO and
the Office of the Ohio Consumers' Counsel submitted to the PUCO
an agreement which resolved issues relating to the recovery of
Order 636 "transition costs" to be billed to the Company by FERC
natural gas interstate pipeline companies. The agreement, which
was approved by the PUCO on July 14, 1994, provides for the full
recovery of these transition costs from the Company's
customers. The interstate pipelines will file with the FERC for
authority to recover these transition costs, the exact magnitude
of which has not been established.
In 1994, the Company purchased natural gas at an
estimated average price of $3.34 per MCF, compared to $3.65 per
MCF in 1993 and $3.31 per MCF in 1992. Through the operation of
a natural gas cost adjustment clause applicable to gas sales,
increases and decreases in the Company's natural gas costs are
reflected in customer rates on a timely basis. SEE RATE
REGULATION AND GOVERNMENT LEGISLATION.
The PUCO supports open access, nondiscriminatory
transportation of natural gas by the state's local distribution
companies for end-use customers. The PUCO has guidelines to
provide a standardized structure for end-use transportation
programs which requires a tariff providing the prices, terms and
conditions for such service. The Company has an approved tariff
which provides transportation service to 300 end-use customers,
delivering a total quantity of 15,146,664 MCF.
On July 31, 1991, Columbia Gas System Inc. and
Columbia, one of the Company's major pipeline suppliers, filed
separate Chapter 11 petitions in U.S. Bankruptcy Court. The
bankruptcy court permitted Columbia to break approximately 4,500
long-term natural gas contracts with upstream suppliers. The
Court also granted approval of an agreement between the
customers and Columbia which assures the continuation of all
firm service agreements (including storage) through the winter
of 1993, with year-to-year continuation unless adequate notice
is provided. After extensive litigation, the U.S. Supreme Court
denied an appeal by the Unsecured Creditors Committee from the
third Circuit Court of Appeals decision to treat take-or-pay
refunds as being outside of the Columbia estate, and thus
refundable to customers. The Company has received all post
petition take-or-pay refunds ordered by the Third Circuit.
Pre-petition take-or-pay refunds will remain in the estate until
a plan of reorganization is approved.
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On June 24, 1994, in Baltimore Gas & Electric Company
v. FERC, the U.S. Court of Appeals for the District of Columbia
Circuit decided in favor of Columbia's customers by holding that
a 1985 settlement between the parties should have prohibited
Columbia from collecting pre-1987 upstream take-or-pay costs
from its customers. FERC has been ordered by the Court of
Appeals to determine the actual amount of the refund due to the
Company and other customers. Such refunds will remain in the
bankruptcy estate until a plan of reorganization is approved.
The parties to the bankruptcy are currently evaluating
Columbia's proposed plan of reorganization. Based upon a July
1993 FERC order disallowing the recovery of natural gas producer
contracts rejected in the bankruptcy case, the Company does not
expect the bankruptcy proceedings to have a material adverse
effect on its earnings or competitive position.
On October 6, 1994, the PUCO authorized the Company's
plan to use pipeline supplier refunds to partially offset
transition cost billings to natural gas customers. This
approval will help stabilize gas costs while continuing to
ensure the Company's full recovery of transition costs.
RATE REGULATION AND GOVERNMENT LEGISLATION
The Company's sales of electricity, natural gas and
steam to retail customers are subject to rate regulation by the
PUCO and various municipalities. The Company's wholesale
electric rates to municipal corporations and other distributors
of electric energy are subject to regulation by FERC under the
Federal Power Act.
Ohio law establishes the process for determining rates
charged by public utilities. Regulation of rates encompasses
the timing of applications, the effective date of rate
increases, the cost basis upon which the rates are based and
other related matters. Ohio law also establishes the Office of
the Ohio Consumers' Counsel (the "OCC"), which has the authority
to represent residential consumers in state and federal judicial
and administrative rate proceedings.
The Company's electric and natural gas rate schedules
contain certain recovery and adjustment clauses subject to
periodic audits by, and proceedings before, the PUCO. Electric
fuel and gas costs are expensed as recovered through rates.
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Ohio legislation extends the jurisdiction of the PUCO
to the records and accounts of certain public utility holding
company systems, including DPL Inc. The legislation extends the
PUCO's supervisory powers to a holding company system's general
condition and capitalization, among other matters, to the extent
that they relate to the costs associated with the provision of
public utility service. Additionally, the legislation requires
PUCO approval of (i) certain transactions and transfers of
assets between public utilities and entities within the same
holding company system, and (ii) prohibits investments by a
holding company in subsidiaries which are not public utilities
in an amount in excess of 15% of the aggregate capitalization of
the holding company on a consolidated basis at the time such
investments are made.
In April 1991, the Company filed an application with
the PUCO to increase its electric rates to recover costs
associated with the construction of the William H. Zimmer
Generating Station ("Zimmer"), earn a return on the Company's
investment and recover the current costs of providing electric
service to its customers. In November 1991, the Company entered
into a settlement agreement with various consumer groups
resolving all issues in the case. The PUCO approved the
agreement on January 22, 1992. Pursuant to that agreement, new
electric rates took effect February 1, 1992, January 2, 1993 and
January 3, 1994. The agreement also established a baseline
return on equity of 13% (subject to upward adjustment) until the
Company's next electric rate case. In the event that the
Company's return exceeds the allowed return by between one and
two percent, then one half of the excess return will be used to
reduce the unrecovered cost of demand-side management ("DSM")
programs. Any return that exceeds the allowed return by more
than two percent will be entirely credited to these programs.
Amounts deferred during the phase-in period, including carrying
charges, will be capitalized and recovered over seven years
commencing in 1994. Deferrals were $58 million in 1992 and
$28 million in 1993. The recovery in 1994, net of additional
carrying cost deferrals, was $10 million. The phase-in plan
meets the requirements of the Financial Accounting Standards
Board ("FASB") Statement No. 92.
In addition, the Company agreed to undertake
cost-effective demand-side management ("DSM") programs with an
average annual cost of $15 million for four years commencing in
1992. The amount recoverable through rates was $4.6 million in
1992, and $7.8 million in subsequent years. The difference
between expenditures and amounts recovered through rates is
deferred and is eligible for recovery in future rates in
accordance with existing PUCO rulings.
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In March 1991, the PUCO granted the Company the
authority to defer interest charges, net of income tax, on its
28.1% ownership investment in Zimmer from the March 30, 1991,
commercial in-service date through January 31, 1992. Deferred
interest charges on the investment in Zimmer have been adjusted
to a before tax basis in 1993 as a result of FASB Statement
No. 109. Amounts deferred are being amortized over the life of
the plant.
Regulatory deferrals on the balance sheet were:
Dec. 31 Dec. 31
1994 1993
------- -------
--millions--
Phase-in $ 75.9 $ 85.8
DSM 31.9 20.3
Deferred interest - Zimmer 61.0 63.7
------ ------
Total $168.8 $169.8
====== ======
In 1989 the PUCO approved rules for the implementation
of a comprehensive Integrated Resource Planning ("IRP") program
for all investor-owned electric utilities in Ohio. Under this
program, each utility is required to file an IRP as part of its
Long Term Forecast Report ("LTFR"). The IRP requires each
utility to evaluate available demand-side resource options in
addition to supply-side options to determine the most
cost-effective means for satisfying customer requirements. The
rules currently allow a utility to apply for deferred recovery
of DSM program expenditures and lost revenues between LTFR
proceedings. Ultimate recovery of expenditures is contingent on
review and approval of such programs as cost-effective and
consistent with the most recent IRP proceeding. The rules also
allow utilities to submit alternative proposals for the recovery
of DSM programs and related costs.
In 1991 the PUCO issued a Finding and Order which
encourages electric utilities to undertake the competitive
bidding of new supply-side energy projects. The policy also
encourages utilities to provide transmission grid access to
those supply-side energy providers awarded bids by utilities.
Electric utilities are permitted to bid on their own proposals.
The PUCO has issued for comment proposed rules for competitive
bidding but has not issued final rules at this time.
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The Company has in place a percentage of income payment
plan ("PIPP") for eligible low-income households as required by
the PUCO. This plan prohibits disconnections for nonpayment of
customer bills if eligible low-income households pay a specified
percentage of their household income toward their utility bill.
The PUCO has approved a surcharge by way of a temporary base
rate tariff rider which allows companies to recover arrearages
accumulated under PIPP. In 1993 the Company reached a
settlement with the PUCO staff, the Office of the Ohio
Consumers' Counsel and the Legal Aid Society to provide new and
expanded programs for PIPP eligible customers. The expanded
programs include greater arrears crediting, lower monthly
payments, educational programs and information reports. In
exchange, the Company may accelerate recovery of PIPP and
pre-PIPP arrearages and recover program costs. The settlement
also established a four year moratorium on changes to the
program. The PUCO approved the settlement on December 2, 1993.
Pursuant to the terms of the settlement, the Company filed an
application on January 21, 1994 to lower its PIPP rate. The
application was approved by the PUCO on March 24, 1994.
The Company initiated a competitive bidding process in
January 1993 for the construction of up to 140 MW of electric
peaking capacity and energy by 1997. Through an Ohio Power
Siting Board ("OPSB") investigative process, the Company's
self-built option was evaluated to be the least cost option. On
March 7, 1994, the OPSB approved the Company's applications for
up to three combustion turbines and two natural gas supply lines
for the proposed site.
The OPSB issued rules on March 22, 1993 to provide
electric and magnetic field information in applications for
construction of major generating and transmission facilities.
The Company has addressed the topics covered by the new rules in
all recent projects. One utility requested a rehearing on the
rules which was denied by the OPSB on May 24, 1993. At this
time the Company cannot predict the ultimate impact on timing
and costs associated with the siting of new transmission lines.
In March 1994, Governor Voinovich appointed
Commissioner Jolynn Barry-Butler to a second five-year term as
PUCO commissioner, which began April 12, 1994. Also, on
February 7, 1995 Governor Voinovich appointed Ronda H. Fergus,
currently director of the PUCO's Telecommunications Division, to
the PUCO for a five year term commencing April 11, 1995, pending
approval by the Senate of the State of Ohio.
On February 22, 1994 a bill was introduced in the State
of Ohio House of Representatives which, if approved, would give
electric consumers the opportunity to obtain "retail" and
"wholesale at retail" services from electric suppliers other
than their current supplier. The bill was not reported out of
Committee.
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On June 1, 1994, the Company filed its natural gas LTFR
with the PUCO. DP&L filed its electric LTFR with the PUCO on
June 15, 1994. An IRP filed as part of the electric LTFR
included plans for the construction of a series of 75 MW
combustion turbine generating units, the first of which is
scheduled for completion in June 1995, and also the
implementation of DSM programs.
ENVIRONMENTAL CONSIDERATIONS
The operations of the Company, including the commonly
owned facilities operated by the Company, CG&E and CSP, are
subject to federal, state, and local regulation as to air and
water quality, disposal of solid waste and other environmental
matters, including the location, construction and initial
operation of new electric generating facilities and most
electric transmission lines. The Company expended $9 million
for environmental control facilities during 1994. The
possibility exists that current environmental regulations could
be revised which could change the level of estimated 1995-1999
construction expenditures. See CONSTRUCTION AND FINANCING
PROGRAM OF THE COMPANY.
Air Quality
-----------
Changing environmental regulations continue to increase
the cost of providing service in the utility industry. The
Clean Air Act Amendments of 1990 (the "Act") will limit sulfur
dioxide and nitrogen oxide emissions nationwide. The Act will
restrict emissions in two phases with Phase I compliance
completed by 1995 and Phase II completed by 2000. Final
regulations were issued by the U.S. EPA on January 11, 1993.
These regulations are consistent with earlier Act restrictions
and do not change the expected costs of compliance of the
Company.
The Company's environmental compliance plan ("ECP") was
approved by the PUCO on May 6, 1993. Phase I requirements are
met by switching to lower sulfur coal at several commonly owned
electric generating facilities and increasing existing scrubber
removal efficiency. Cost estimates to comply with Phase I of
the Act are approximately $10 million in capital expenditures.
Phase II requirements can be met primarily by switching to lower
sulfur coal at all non-scrubbed coal-fired electric generating
units. Overall compliance is projected to have a minimal 1% to
2% approximate price impact. The Company anticipates that costs
to comply with the Act will be eligible for recovery in future
fuel hearings and other regulatory proceedings. The PUCO is
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expected to initiate a hearing in 1995 to review the Company's
Phase I compliance plans. The Company is currently in the
process of updating its ECP and anticipates submitting it to the
PUCO in the second half of 1995.
In December 1988, the United States Environmental
Protection Agency ("U.S. EPA") notified the State of Ohio that
the portion of its State Implementation Plan ("SIP") dealing
with sulfur dioxide emission limitations for Hamilton County (in
southwestern Ohio) was deficient and required the Ohio
Environmental Protection Agency ("Ohio EPA") to develop a new
SIP within 18 months. The notice affected industrial and
utility sources and could have required significant reductions
in sulfur dioxide emission limitations at CG&E's Miami Fort
Units 7 and 8 which are jointly owned with the Company.
In October 1991, the Ohio EPA adopted new SO2
regulations for Hamilton County. These regulations did not
change the preexisting requirements for Miami Fort
Units 7 and 8. These regulations became effective September 22,
1994.
Land Use
--------
The Company and numerous other parties have been
notified by the U.S. EPA or Ohio EPA that it considers them
Potentially Responsible Parties ("PRPs") for clean-up at four
superfund sites in Ohio: the Sanitary Landfill Site on
Cardington Road in Montgomery County, Ohio, the United Scrap
Lead Site in Miami County, Ohio, the Powell Road Landfill in
Huber Heights, Montgomery County, Ohio, and the North Sanitary
(a.k.a. Valleycrest) Landfill in Dayton, Montgomery County,
Ohio.
The Company received notification from the U.S. EPA in
July 1987, for the Cardington Road site. The Company has not
joined the PRP group formed at that site because of the absence
of any known evidence that the Company contributed hazardous
substances to this site. The Record of Decision issued by the
U.S. EPA identifies the chosen clean-up alternative at a cost
estimate of $8.1 million. The final resolution will not have a
material effect on the Company's financial position, earnings or
cashflow.
I-14
<PAGE>
The Company received notification from the U.S. EPA in
September 1987, for the United Scrap Lead Site. The Company has
joined a PRP group for this site, which is actively conferring
with the U.S. EPA. The Record of Decision issued by the U.S.
EPA estimates clean-up costs at $27.1 million. The Company is
one of over 200 parties to this site, and its estimated
contribution to the site is less than .01%. Nearly 60 PRPs are
actively working to settle the case. The Company is
participating in the sponsorship of a study to evaluate
alternatives to the U.S. EPA's clean-up plan. The final
resolution of these investigations will not have a material
effect on the Company's financial position, earnings or
cashflow.
The Company and numerous other parties received
notification from the U.S. EPA on May 21, 1993 that it considers
them PRPs for clean-up of hazardous substances at the Powell
Road Landfill Site in Huber Heights, Ohio. The Company has
joined the PRP group for the site. On October 1, 1993, the U.S.
EPA issued its Record of Decision identifying a cost estimate of
$20.5 million for the chosen remedy. The Company is one of over
200 PRPs to this site, and its estimated contribution is less
than 1%. The final resolution will not have a material effect
on the Company's financial position, earnings or cashflow.
The Company and numerous other parties received
notification from the Ohio EPA on July 27, 1994 that it
considers them PRPs for clean-up of hazardous substances at the
North Sanitary Landfill site in Dayton, Ohio. The Company has
not joined the PRP group formed for the site because the
available information does not demonstrate that the Company
contributed wastes to the site. The final resolution will not
have a material effect on the Company's financial position,
earnings or cashflow.
I-15
<PAGE>
<TABLE>
<CAPTION>
THE DAYTON POWER AND LIGHT COMPANY
OPERATING STATISTICS
ELECTRIC OPERATIONS
Years Ended December 31,
-----------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Electric Output (millions of kWh)
Generation -
Coal-fired units.................. 14,483 14,729 13,639
Other units....................... 27 17 3
Power purchases...................... 897 1,107 1,514
Exchanged and transmitted power...... 3 (7) 14
Company use and line losses.......... (1,191) (1,170) (1,116)
-------- -------- --------
Total............................. 14,219 14,676 14,054
======== ======== ========
Electric Sales (millions of kWh)
Residential.......................... 4,465 4,558 4,260
Commercial........................... 3,068 3,006 2,896
Industrial........................... 4,388 4,089 3,938
Public authorities and railroads..... 1,333 1,356 1,311
Private utilities and wholesale...... 965 1,667 1,649
-------- -------- --------
Total............................. 14,219 14,676 14,054
======== ======== ========
Electric Customers at End of Period
Residential.......................... 420,487 416,508 413,040
Commercial........................... 41,647 40,606 39,685
Industrial........................... 2,400 2,387 2,415
Public authorities and railroads..... 5,320 5,287 5,130
Other................................ 18 17 16
-------- -------- --------
Total............................. 469,872 464,805 460,286
======== ======== ========
Operating Revenues (thousands)
Residential.......................... $390,531 $373,760 $326,547
Commercial........................... 218,046 200,124 180,890
Industrial........................... 228,546 205,996 189,720
Public authorities and railroads..... 75,387 72,859 67,596
Private utilities and wholesale...... 24,273 38,491 35,174
Other................................ 9,110 10,090 9,372
-------- -------- --------
Total............................. $945,893 $901,320 $809,299
======== ======== ========
Residential Statistics
(per customer-average)
Sales - kWh.......................... 10,676 10,998 10,358
Revenue.............................. $ 933.70 $ 901.91 $ 794.03
Rate per kWh (Month of Dec.)(cents).. 8.68 7.99 7.23
</TABLE>
I-16
<PAGE>
<TABLE>
<CAPTION>
THE DAYTON POWER AND LIGHT COMPANY
OPERATING STATISTICS
GAS OPERATIONS
Years Ended December 31,
----------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Gas Output (thousands of MCF)
Direct market purchases .............. 43,140 44,284 46,229
Liquefied petroleum gas............... 144 58 7
Company use and unaccounted for....... (1,227) (1,164) (1,717)
Transportation gas received........... 15,141 13,704 10,973
-------- -------- --------
Total.............................. 57,198 56,882 55,492
======== ======== ========
Gas Sales (thousands of MCF)
Residential........................... 27,911 28,786 27,723
Commercial............................ 8,081 8,468 8,642
Industrial............................ 3,150 3,056 4,914
Public authorities.................... 2,909 3,171 3,402
Transportation gas delivered.......... 15,147 13,401 10,811
-------- -------- --------
Total.............................. 57,198 56,882 55,492
======== ======== ========
Gas Customers at End of Period
Residential........................... 266,116 262,834 260,471
Commercial............................ 21,060 20,853 20,589
Industrial............................ 1,528 1,527 1,577
Public authorities.................... 1,317 1,333 1,311
-------- -------- --------
Total.............................. 290,021 286,547 283,948
======== ======== ========
Operating Revenues (thousands)
Residential........................... $157,193 $161,254 $127,532
Commercial............................ 42,382 44,321 36,148
Industrial............................ 14,949 14,890 18,633
Public authorities.................... 14,165 15,248 12,516
Other................................. 8,433 9,366 8,953
-------- -------- --------
Total.............................. $237,122 $245,079 $203,782
======== ======== ========
Residential Statistics
(per customer-average)
Sales - MCF........................... 105.7 110.2 107.0
Revenue............................... $595.30 $617.33 $492.33
Rate per MCF (Month of December)...... $ 5.57 $ 5.66 $ 5.27
</TABLE>
I-17
<PAGE>
Item 2- PROPERTIES
Electric
--------
Information relating to the Company's electric
properties is contained in Item 1 - BUSINESS, THE COMPANY
(page I-1), CONSTRUCTION AND FINANCING PROGRAM OF THE COMPANY
(pages I-3 through I-5), ELECTRIC OPERATIONS AND FUEL SUPPLY
(pages I-5 through I-7) and Item 8 - Notes 2 and 5 of Notes to
Consolidated Financial Statements on pages II-14 and II-18,
respectively, which pages are incorporated herein by reference.
Gas
---
Information relating to the Company's gas properties
is contained in Item 1 - BUSINESS, THE COMPANY (page I-1), and
GAS OPERATIONS AND GAS SUPPLY (pages I-7 through I-9), which
pages are incorporated herein by reference.
Steam
-----
The Company owns two steam generating plants and the
steam distribution facility serving downtown Dayton, Ohio.
Other
-----
The Company owns a number of area service buildings
located in various operating centers.
Substantially all property and plant of the Company is
subject to the lien of the Mortgage securing the Company's First
Mortgage Bonds.
Item 3 - LEGAL PROCEEDINGS
Information relating to legal proceedings involving
the Company is contained in Item 1 - BUSINESS, THE COMPANY
(page I-1), COMPETITION (Pages I-2 through I-3) ELECTRIC
OPERATIONS AND FUEL SUPPLY (pages I-5 through I-7), GAS
OPERATIONS AND GAS SUPPLY (pages I-7 through I-9), RATE
REGULATION AND GOVERNMENT LEGISLATION (pages I-9 through I-13),
ENVIRONMENTAL CONSIDERATIONS (pages I-13 through I-15) and
Item 8 - Note 2 of Notes to Consolidated Financial Statements on
page II-14, which pages are incorporated herein by reference.
Item 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
None.
I-18
<PAGE>
PART II
-------
Item 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock is held solely by DPL Inc.
and as a result is not listed for trading on any stock exchange.
The information required by this item of Form 10-K is
set forth in Item 8 - Selected Quarterly Information on page
II-25 and the Financial and Statistical Summary on page II-26,
which pages are incorporated herein by reference.
The Company's Mortgage restricts the payment of
dividends on the Company's Common Stock under certain
conditions. In addition, so long as any Preferred Stock is
outstanding, the Company's Amended Articles of Incorporation
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 the
Company available for dividends on its Common Stock subsequent
to December 31, 1946, plus $1,200,000. As of year end, all
earnings reinvested in the business of the Company were
available for Common Stock dividends.
The Credit Agreement requires that the aggregate
assets of the Company and its subsidiaries constitute not less
than 60% of the total consolidated assets of DPL Inc., and that
the Company maintain common shareholder's equity (as defined in
the Credit Agreement) at least equal to $550 million.
Item 6 - SELECTED FINANCIAL DATA
The information required by this item of Form 10-K is
set forth in Item 8 - Financial and Statistical Summary on page
II-25, which page is incorporated herein by reference.
II-1
<PAGE>
<TABLE>
<CAPTION>
Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Dayton Power and Light Company
Performance Highlights 1994 1993 1992
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CAPITAL INVESTMENT PERFORMANCE:
Capital Structure (millions)
Common shareholder's equity...........................$ 1,160.3 1,049.2 1,022.0
Preferred stock.......................................$ 22.9 112.9 121.4
Long-term debt........................................$ 1,003.7 1,012.9 952.1
------- ------- -------
Total...............................................$ 2,186.9 2,175.0 2,095.5
OPERATING PERFORMANCE:
Electric--
Sales (millions of kWh)
Residential............................................ 4,465 4,558 4,260
Commercial............................................. 3,068 3,006 2,896
Industrial............................................. 4,388 4,089 3,938
Other.................................................. 2,298 3,023 2,960
------- ------- -------
Total................................................ 14,219 14,676 14,054
Revenues (millions)
Residential...........................................$ 390.5 373.8 326.5
Commercial............................................$ 218.1 200.1 180.9
Industrial............................................$ 228.5 206.0 189.7
Other.................................................$ 108.8 121.4 112.2
------- ------- -------
Total...............................................$ 945.9 901.3 809.3
Average price per kWh--retail and wholesale customers
(calendar year) (cents)............................... 6.59 6.07 5.69
Gas--
Sales (thousands of MCF)
Residential............................................ 27,911 28,786 27,723
Commercial............................................. 8,081 8,468 8,642
Industrial............................................. 3,150 3,056 4,914
Other.................................................. 18,056 16,572 14,213
------- ------- -------
Total................................................ 57,198 56,882 55,492
Revenues (millions)
Residential...........................................$ 157.2 161.3 127.5
Commercial............................................$ 42.4 44.3 36.2
Industrial............................................$ 14.9 14.9 18.6
Other.................................................$ 22.6 24.6 21.5
------- ------- -------
Total...............................................$ 237.1 245.1 203.8
Average price per MCF--all customers (calendar year)....$ 5.44 5.42 4.36
</TABLE>
II-2
<PAGE>
Results of Operations
---------------------
The 1994 earnings on common stock are $148 million compared
to $135 million in 1993 and $133 million in 1992.
In 1994, electric revenues increased 5% with a 2% growth in
retail sales reflecting the continued strength of the West
Central Ohio economy. In 1993, warm summer temperatures
contributed to a 11% increase in electric revenues and a 5%
increase in retail sales. Implementation of the second and
third steps of the electric rate increase phased in at 6.4% in
1993 and 1994 also caused revenues to increase in both years.
Gas revenues decreased 3% in 1994. An overall sales
increase of 1% reflected strong sales to transportation gas
customers despite mild temperatures in late 1994. The 20%
increase in gas revenues in 1993 reflected significantly higher
gas cost rates and the 6.2% increase in base rates in March
1992.
Interest and other income includes interest income
associated with federal income tax refunds of $3 million in 1994
and $6 million in 1993.
Operating and administrative expenses decreased 13% in 1994
and increased 16% in 1993. Bond redemption costs of $23 million
and $9 million were incurred in 1993 and 1992, respectively.
Maintenance expense decreased 4% in 1994 and increased 18%
in 1993 reflecting changes in the level of planned maintenance
programs on the Company's production and distribution equipment.
Regulatory assets recorded during the phase-in of electric
rates are now being amortized over a seven year recovery period
that began in 1994. Additionally, deferred interest charges on
the William H. Zimmer Generating Station ("Zimmer") are being
amortized at a rate of $3 million annually over the life of the
plant.
In conjunction with the Public Utilities Commission of Ohio
("PUCO")-approved electric phase-in plan, a baseline return of
equity of 13% (subject to upward adjustment) was established for
the Company. In the event the return exceeds the allowed return
by between one to two percent, then one half of the excess
return will be used to reduce the unrecovered cost of
demand-side management programs, and any return that exceeds the
allowed return by more than two percent will be entirely
credited to these programs.
Total income taxes increased in 1994 and 1993 resulting from
higher pre-tax income. Additionally, in 1993, the corporate tax
rate was increased to 35%, increasing income taxes by
$3 million.
II-3
<PAGE>
Credit Ratings
--------------
In late 1994, the Company's first mortgage bond credit
rating was upgraded to "AA" from "AA-" and preferred stock to
"AA-" from "A+" by Duff and Phelps. The Company's senior debt
credit ratings were also upgraded to "AA-" by Standard & Poor's
and to "A1" by Moody's Investors Service earlier in 1994. These
upgrades reflect the Company's strong financial performance,
cost reductions and competitive position. Duff & Phelps had
previously upgraded the Company's credit ratings in 1993.
During the first quarter of 1992, the Company's bond, preferred
stock and commercial paper ratings were upgraded by all three
credit rating agencies, reflecting the positive outcome of the
Zimmer coal conversion project and rate settlement agreement.
Each of these credit ratings is considered investment grade.
Construction Program and Financing
----------------------------------
Construction additions were $94 million, $79 million and
$58 million in 1994, 1993 and 1992, respectively. Construction
additions are expected to total $552 million during 1995-1999.
The construction program includes plans for the construction of
a series of 75 MW combustion turbine generating units, the first
of which is scheduled for completion in summer 1995. During
this same period, a total of $76 million will be required for
debt maturities and sinking funds for bonds and notes.
During 1994, total cash provided by operating activities was
$271 million. At year end, cash and temporary investments were
$8 million.
In March 1994, DPL Inc. issued 3,200,000 shares of common
stock through a public offering. Proceeds from the sale were
used in connection with the redemption of all outstanding shares
of the Company's Preferred Stock Series D, E, F, H and I.
During late 1992 and early 1993, the Company took advantage
of favorable market conditions to reduce its cost of debt and
extend maturities through early refundings. Overall, five new
series of First Mortgage Bonds were issued, aggregating
approximately $766 million with an average interest rate of
7.9%. The proceeds were used to redeem a similar principal
amount of debt securities with an average interest rate of 8.7%.
II-4
<PAGE>
Issuance of additional amounts of First Mortgage Bonds by
the Company is limited by provisions of its mortgage. The
amounts and timing of future financings will depend upon market
and other conditions, rate increases, levels of sales and
construction plans. The Company anticipates that it has
sufficient capacity to issue First Mortgage Bonds to satisfy its
requirements in connection with its construction and refunding
program during 1995-1999.
DPL Inc. has a revolving credit agreement, renewable through
1999, which allows total borrowings by DPL Inc. and its
subsidiaries of $200 million. At year-end 1994 and 1993,
DPL Inc. had no borrowings outstanding under this credit
agreement.
The Company also has $97 million available in short-term
lines of credit. At year-end, the Company had no borrowings
outstanding from these lines of credit and no commercial paper
outstanding.
Issues and Financial Risks
--------------------------
As a public utility, the Company is subject to processes
which determine the rates it charges for energy services.
Regulators determine which costs are eligible for recovery in
the rate setting process and when the recovery will occur. They
also establish the rate of return on utility investments which
are valued under Ohio law based on historical costs.
The utility industry is subject to inflationary pressures
similar to those experienced by other capital-intensive
industries. Because rates for regulated services are based on
historical costs, cash flows may not cover the total future
costs of providing services. Projected construction costs over
the next five years average $110 million annually, which is less
than the projected depreciation over the same period.
The National Energy Policy Act allows the federal government
to mandate access by others to a utility's transmission system
and may accelerate competition in the supply of electricity.
In January 1994, the Company, the Staff of the PUCO and the
Office of the Ohio Consumers' Counsel submitted to the PUCO an
agreement which resolves issues relating to the recovery of
natural gas "transition costs" to be billed to the Company by
interstate pipeline companies. The agreement, which was
approved by the PUCO in July 1994, provides for the full
recovery of these transition costs from customers. The
interstate pipelines are continuing to file with the Federal
Energy Regulatory Commission for authority to recover these
transition costs, the exact magnitude of which has not been
established.
II-5
<PAGE>
The Federal Environmental Protection Agency ("EPA") has
notified numerous parties, including the Company, that they are
considered "Potentially Responsible Parties" for clean up of
four hazardous waste sites in Ohio. The EPA has estimated total
costs of $56 million for its preferred clean-up plans at three
of these sites and has not established an estimated cost for the
fourth site. The final resolution of these investigations will
not have a material effect on the Company's financial position,
earnings or cash flow.
Changing environmental regulations continue to increase the
cost of providing service in the utility industry. The Clean
Air Act Amendments of 1990 (the "Act") limit sulfur dioxide and
nitrogen oxide emissions nationwide. The Act will restrict
emissions in two phases with the Phase I compliance completed by
1995 and Phase II completed by 2000.
In 1993, the PUCO approved the Company's Clean Air Act
Compliance Plan. This plan outlines the methods by which the
emission reduction requirements will be met. Overall compliance
is projected to have a minimal 1% to 2% price impact. The
Company anticipates that costs to comply with the Act will be
eligible for recovery in future fuel hearings and other
regulatory proceedings.
Income Statement Highlights
$ in millions 1994 1993 1992
---------------------------------------------------------------
Electric Utility:
Revenues..................... $946 $901 $809
Fuel used in production...... 218 225 219
---- ---- ----
Net revenues............... 728 676 590
Gas Utility:
Revenues..................... 237 245 204
Gas purchased for resale..... 151 156 118
---- ---- ----
Net revenues............... 86 89 86
Interest and other income...... 9 12 4
Operating and administrative... 157 181 155
Maintenance of equipment and
facilities................... 86 90 76
Amortization (deferral) of
regulatory assets, net...... 11 (26) (59)
Income taxes................... 96 76 64
Earnings on common stock....... 148 135 133
II-6
Item 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements Page No.
------------------------------------------ --------
Consolidated Statement of Results of
Operations for the three years in the
period ended December 31, 1994............... II-8
Consolidated Statement of Cash Flows
for the three years in the period ended
December 31, 1994............................ II-9
Consolidated Balance Sheet as of
December 31, 1994 and 1993................... II-10 - II-11
Notes to Consolidated Financial Statements... II-12 - II-24
Reports of Independent Accountants........... II-27 - II-28
Index to Supplemental Information Page No.
--------------------------------- --------
Selected Quarterly
Information............................ II-25
Financial and Statistical
Summary................................ II-26
II-7
<PAGE>
<TABLE>
<CAPTION>
The Dayton Power and Light Company
CONSOLIDATED STATEMENT OF RESULTS OF OPERATIONS
---------------------------------------------------------------------------------------------------
For the years ended December 31,
$ in millions 1994 1993 1992
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME
Utility service revenues--
Electric . . . . . . . . . . . . . . . . . . . . . $ 945.9 $ 901.3 $ 809.3
Gas . . . . . . . . . . . . . . . . . . . . . . . 237.1 245.1 203.8
Steam . . . . . . . . . . . . . . . . . . . . . . 7.3 7.3 6.7
-------------------------------------
Total utility service revenues . . . . . . . . 1,190.3 1,153.7 1,019.8
Interest and other income . . . . . . . . . . . . . . 9.4 12.0 3.8
-------------------------------------
Total income . . . . . . . . . . . . . . . . . 1,199.7 1,165.7 1,023.6
-------------------------------------
EXPENSES
Fuel used in electric and steam production . . . . . 220.7 226.6 220.7
Gas purchased for resale . . . . . . . . . . . . . . 150.8 156.4 117.6
Operating and administrative (Note 1) . . . . . . . 156.8 180.8 155.2
Maintenance of equipment and facilities . . . . . . 86.0 89.6 76.1
Depreciation and amortization . . . . . . . . . . . 111.9 109.0 104.4
General taxes . . . . . . . . . . . . . . . . . . . 120.6 111.7 108.2
Interest expense . . . . . . . . . . . . . . . . . . 93.5 97.4 94.3
Amortization (deferral) of regulatory assets, net . . 10.9 (25.8) (58.7)
-------------------------------------
Total Operating Expenses . . . . . . . . . . . 951.2 945.7 817.8
-------------------------------------
Operating Income . . . . . . . . . . . . . . . . . . 248.5 220.0 205.8
Income taxes . . . . . . . .. . . . . . . . . . . . 96.1 76.4 63.8
-------------------------------------
Net Income . . . . . . . . . . . . . . . . . . . . . 152.4 143.6 142.0
Preferred dividends . . . . . . . . . . . . . . . . 4.7 8.7 9.4
-------------------------------------
Earnings on Common Stock . . . . . . . . . . . . . . $ 147.7 $ 134.9 $ 132.6
=====================================
</TABLE>
See Notes to Consolidated Financial Statements.
II-8
<PAGE>
<TABLE>
<CAPTION>
The Dayton Power and Light Company
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------------------------------------------------------------------------
For the years ended December 31,
$ In millions 1994 1993 1992
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Cash received from utility customers . . . . . . . . . . $1,201.4 $1,140.0 $1,006.3
Other operating cash receipts . . . . . . . . . . . . . . 9.9 13.0 4.4
Cash paid for:
Fuel and purchased power . . . . . . . . . . . . . . . (226.0) (216.6) (234.0)
Purchased gas . . . . . . . . . . . . . . . . . . . . (142.8) (146.9) (137.5)
Operation and maintenance labor . . . . . . . . . . . (88.3) (80.3) (84.2)
Nonlabor operating expenditures . . . . . . . . . . . (168.9) (218.4) (144.2)
Interest (net of amounts capitalized) . . . . . . . . (92.4) (86.9) (97.0)
Income taxes . . . . . . . . . . . . . . . . . . . . . (100.7) (46.6) (44.4)
Property, excise and payroll taxes . . . . . . . . . . (121.1) (111.1) (98.4)
-------- -------- --------
Net cash provided by operating activities . . . . . . . 271.1 246.2 171.0
-------- -------- --------
INVESTING ACTIVITIES
Net cash used for property expenditures . . . . . . . . . (94.4) (88.6) (61.5)
--------- -------- --------
FINANCING ACTIVITIES
Dividends paid on common stock . . . . . . . . . . . . . (103.7) (107.8) (103.6)
Dividends paid on preferred stock . . . . . . . . . . . . (5.4) (8.8) (9.4)
Retirement of long-term debt . . . . . . . . . . . . . . (9.2) (439.2) (321.0)
Retirement of preferred stock . . . . . . . . . . . . . . (94.2) (8.5) (4.3)
Issuance of long-term debt . . . . . . . . . . . . . . . - 446.0 320.4
Retirement of short-term debt . . . . . . . . . . . . . . (25.0) (37.0) (21.9)
Receipt of funds on deposit with trustee . . . . . . . . - - 21.7
Capital contribution . . . . . . . . . . . . . . . . . . 63.1 - -
-------- -------- --------
Net cash used for financing activities . . . . . . . . . (174.4) (155.3) (118.1)
-------- -------- --------
Cash and temporary cash investments
Net change . . . . . . . . . . . . . . . . . . . . . . . 2.3 2.3 (8.6)
Balance at beginning of year . . . . . . . . . . . . . . 6.0 3.7 12.3
-------- -------- --------
Balance at end of year . . . . . . . . . . . . . . . . . $ 8.3 $ 6.0 $ 3.7
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
II-9
<PAGE>
<TABLE>
<CAPTION>
The Dayton Power and Light Company
CONSOLIDATED BALANCE SHEET
--------------------------------------------------------------------------------------------------
At December 31,
$ in millions 1994 1993
--------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Electric property and plant . . . . . . . . . . . . . $2,961.5 $2,923.8
Gas property and plant . . . . . . . . . . . . . . . . 251.8 240.1
Steam and other property and plant . . . . . . . . . . 38.6 38.3
Construction work in progress . . . . . . . . . . . . 68.5 35.8
-------- --------
3,320.4 3,238.0
Less--
Accumulated depreciation and amortization . . . . . . (1,043.8) (950.6)
-------- --------
Net property and plant . . . . . . . . . . . . . . 2,276.6 2,287.4
-------- --------
CURRENT ASSETS
Cash and temporary cash investments (at cost) . . . . 8.3 6.0
Accounts receivable, less provision for uncollectible
accounts of $7.8 and $9.1, respectively . . . . . . 99.8 130.1
Inventories, at average cost . . . . . . . . . . . . . 83.3 85.4
Taxes applicable to subsequent years . . . . . . . . . 78.3 72.8
Gas costs recoverable . . . . . . . . . . . . . . . . - 23.1
Prepaid utility excise tax . . . . . . . . . . . . . . 17.9 15.9
Prepayments and other . . . . . . . . . . . . . . . . 11.7 28.8
-------- --------
Total current assets . . . . . . . . . . . . . . . 299.3 362.1
-------- --------
OTHER ASSETS
Income taxes recoverable through future
revenues (Note 3) . . . . . . . . . . . . . . . . . 249.3 269.1
Regulatory deferrals (Note 2) . . . . . . . . . . . . 168.8 169.8
Other assets . . . . . . . . . . . . . . . . . . . . . 153.0 122.9
-------- --------
Total other assets . . . . . . . . . . . . . . . . 571.1 561.8
-------- --------
Total Assets . . . . . . . . . . . . . . . . . . . . . $3,147.0 $3,211.3
======== ========
</TABLE>
II-10
<PAGE>
<TABLE>
<CAPTION>
The Dayton Power and Light Company
CONSOLIDATED BALANCE SHEET
(continued)
--------------------------------------------------------------------------------------------------
At December 31,
$ in millions 1994 1993
--------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common shareholder's equity-- (Note 8)
Common stock . . . . . . . . . . . . . . . . . . . . $ 0.4 $ 0.4
Other paid-in capital . . . . . . . . . . . . . . . . 738.5 675.2
Earnings reinvested in the business . . . . . . . . . 421.4 373.6
-------- --------
Total common shareholder's equity . . . . . . . . . 1,160.3 1,049.2
-------- --------
Preferred stock-- (Note 9)
Without mandatory redemption provisions . . . . . . . 22.9 82.9
With mandatory redemption provisions . . . . . . . . - 30.0
Long-term debt (Note 5) . . . . . . . . . . . . . . . 1,003.7 1,012.9
-------- --------
Total capitalization . . . . . . . . . . . . . . . 2,186.9 2,175.0
-------- --------
CURRENT LIABILITIES
Accounts payable . . . . . . . . . . . . . . . . . . . 75.6 113.7
Short-term debt (Note 6) . . . . . . . . . . . . . . . - 25.0
Current portion of first mortgage bonds
and preferred stock . . . . . . . . . . . . . . . . . 4.7 9.0
Accrued taxes . . . . . . . . . . . . . . . . . . . . 123.5 113.6
Accrued interest . . . . . . . . . . . . . . . . . . . 20.7 21.1
Other . . . . . . . . . . . . . . . . . . . . . . . . 31.7 56.1
-------- --------
Total current liabilities . . . . . . . . . . . . . 256.2 338.5
-------- --------
DEFERRED CREDITS AND OTHER
Deferred taxes (Note 3) . . . . . . . . . . . . . . . 530.6 536.2
Unamortized investment tax credit . . . . . . . . . . 81.2 84.9
Other . . . . . . . . . . . . . . . . . . . . . . . . 92.1 76.7
-------- --------
Total deferred credits and other . . . . . . . . . 703.9 697.8
-------- --------
Total Capitalization and Liabilities . . . . . . . . . $3,147.0 $3,211.3
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
II-11
<PAGE>
The Dayton Power and Light Company
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------------------------------
PRINCIPLES OF CONSOLIDATION
The accounts of the Company and its wholly-owned subsidiaries
are included in the accompanying consolidated financial
statements. The consolidated financial statements principally
reflect the results of operations and financial condition of the
Company. The results of operations of the Company's
subsidiaries currently do not have a material impact on the
consolidated results.
REVENUES AND FUEL
Revenues include amounts charged to customers through fuel and
gas recovery clauses, which are adjusted periodically for
changes in such costs. Related costs that are recoverable or
refundable in future periods are deferred along with the related
income tax effects. Also included in revenues are amounts
charged to customers through a surcharge for recovery of
arrearages from certain eligible low-income households.
The Company records revenue for services provided but not yet
billed to more closely match revenues with expenses. Accounts
receivable on the Consolidated Balance Sheet includes unbilled
revenue of (in millions) $13.1 in 1994 and $30.0 in 1993.
OPERATING AND ADMINISTRATIVE
Operating and administrative expenses include $22.8 million in
1993 and $9.1 million in 1992 of redemption premiums and other
costs relating to the refinancing of various bond issues.
PROPERTY AND PLANT, MAINTENANCE AND DEPRECIATION
Property and plant is shown at its original cost. Cost includes
direct labor and material, allocable overhead costs and
allowance for funds used during construction ("AFC"). AFC is
reflected in the Consolidated Statement of Results of Operations
in Interest and other income and amounts to (in millions) $0.5
in 1993 and $0.3 in 1992.
II-12
<PAGE>
When a unit of property is retired, the original cost of that
property plus the cost of removal less any salvage value is
charged to accumulated depreciation. Maintenance costs and
replacements of minor items of property are charged to expense.
Depreciation expense is calculated using the straight-line
method, which depreciates the cost of property over its
estimated useful life, at a rate of 3.4% for 1994, 1993 and
1992.
INCOME TAXES
Income taxes are deferred under the liability method in
accordance with the Financial Accounting Standards Board
Statement No. 109, "Accounting for Income Taxes" effective in
1993. Under the liability method, deferred income taxes are
provided for all differences between the financial statement
basis and the tax basis of assets and liabilities using the
enacted tax rate. Additional deferred income taxes and
offsetting regulatory assets or liabilities are recorded to
recognize that the income taxes will be recoverable/refundable
through future revenues. Investment tax credits, previously
deferred, are being amortized over the lives of the related
properties.
CONSOLIDATED STATEMENT OF CASH FLOWS
The temporary cash investments presented on this Statement
consist of liquid investments with an original maturity of three
months or less.
RECLASSIFICATIONS
Reclassifications have been made in certain prior years' amounts
to conform to the current reporting presentation.
II-13
<PAGE>
----------------------------------------------------------------
2. REGULATORY MATTERS
Pursuant to the 1992 PUCO-approved settlement agreement
("Agreement") among the Company and various consumer groups, the
third and final phase of the electric rate increase of 6.4% took
effect in January 1994. Deferrals (including carrying charges)
during the phase-in period of $28.1 million in 1993 and
$57.7 million in 1992 were capitalized as Regulatory assets on
the Consolidated Balance Sheet and are being recovered over a
seven year period that began in 1994. Amortization, net of
additional carrying charges, was $9.8 million in 1994.
This settlement included an agreement by the Company to
undertake cost-effective demand-side management ("DSM") programs
with an average annual cost of $15 million for four years
commencing in 1992. The amount recovered in rates was
$4.6 million in 1992. This amount increased to $7.8 million in
1993 and subsequent years. The difference between expenditures
and amounts recovered through rates is deferred as a Regulatory
asset and is eligible for future recovery in accordance with
existing PUCO rulings.
Regulatory assets also include interest charges on Zimmer
which were previously deferred pursuant to PUCO approval.
Amounts are being amortized at $2.8 million per year over the
life of Zimmer.
Regulatory assets on the Consolidated Balance Sheet were:
At December 31,
1994 1993
------- -------
--millions--
Phase-in $ 75.9 $ 85.8
DSM 31.9 20.3
Deferred interest-Zimmer 61.0 63.7
------ -----
Total $168.8 $169.8
====== ======
The Agreement established a baseline return on equity for
the Company of 13% (subject to upward adjustment). In the event
that the return exceeds the allowed return by between one to two
percent, then one half of the excess return will be used to
reduce the unrecovered cost of DSM programs, and any return that
exceeds the allowed return by more than two percent will be
entirely credited to these programs.
II-14
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
3. INCOME TAXES
For the years ended December 31,
$ in millions 1994 1993 1992
------------- --------------------------------
<S> <C> <C> <C>
COMPUTATION OF TAX EXPENSE
Statutory income tax rate . . . . . . . . . . . . . . . . . . . . 35% 35% 34%
Federal income tax (statutory rates applied to pre-tax income
before preferred dividends and before tax expenses included
in Regulatory assets) . . . . . . . . . . . . . . . . . . . . . $ 87.0 $77.0 $70.4
Increases (decreases) in tax from -
Regulatory assets . . . . . . . . . . . . . . . . . . . . . . . 2.2 (6.1) (11.8)
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4 10.2 9.3
Investment tax credit amortized . . . . . . . . . . . . . . . . (3.7) (3.0) (3.0)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 (1.7) 0.3
-------------------------------
Total Tax Expense . . . . . . . . . . . . . . . . . . . . . . $ 96.1 $76.4 $65.2
===============================
COMPONENTS OF TAX EXPENSE
Taxes currently payable . . . . . . . . . . . . . . . . . . . . . . $103.4 $54.3 $31.9
Deferred taxes--
Regulatory assets . . . . . . . . . . . . . . . . . . . . . . . 1.6 7.1 9.2
Liberalized depreciation and amortization . . . . . . . . . . . 16.9 17.6 18.6
Property taxes . . . . . . . . . . . . . . . . . . . . . . . . . (6.1) (6.1) (5.9)
Fuel and gas costs . . . . . . . . . . . . . . . . . . . . . . . (12.7) 5.8 10.5
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3.4) 0.2 4.4
Deferred investment tax credit, net . . . . . . . . . . . . . . . . (3.6) (2.5) (3.5)
-------------------------------
Total Tax Expense . . . . . . . . . . . . . . . . . . . . . $ 96.1 $76.4 $65.2
===============================
CLASSIFICATION OF TAX EXPENSE
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 96.1 $76.4 $63.8
Regulatory assets . . . . . . . . . . . . . . . . . . . . . . . . . - - 1.4
-------------------------------
Total Tax Expense . . . . . . . . . . . . . . . . . . . . . . $ 96.1 $76.4 $65.2
===============================
COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES
At December 31,
1994 1993
----------------------
Depreciation/property basis . . . . . . . . . . $(437.0) $(429.6)
Income taxes recoverable. . . . . . . . . . . . (88.9) (57.4)
Regulatory assets . . . . . . . . . . . . . . . (57.0) (93.8)
Investment tax credit . . . . . . . . . . . . . 28.4 29.7
Other . . . . . . . . . . . . . . . . . . . . . 23.9 14.9
------- --------
Net non-current liability. . . . . . . . . . $(530.6) $(536.2)
======= =======
Net current asset (liability) . . . . . . . $ 2.3 $ (13.4)
======= =======
</TABLE>
II-15
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
4. PENSIONS AND POSTRETIREMENT BENEFITS
A. PENSIONS
Substantially all Company employees participate in pension plans paid for by
the Company. Employee benefits are based on their years of service, age at
retirement and, for salaried employees, their compensation. The plans are
funded in amounts actuarially determined to provide for these benefits.
In developing the amounts in the following tables, an interest rate of 6.25%
was used in 1994 and 6.0% was used in 1993 and 1992. Actual returns on plan
assets for 1994, 1993 and 1992 were 0.9%, 6.2% and 8.8%, respectively.
Increases in compensation levels approximating 5% were used for all years.
The following table presents the components of pension cost (portions of which
were capitalized):
$ in millions 1994 1993 1992
------------- --------------------------
<S> <C> <C> <C>
Service cost - benefits earned . . . . . . . . . . . . . . . . . . . . $ 6.1 $ 5.4 $ 4.3
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4 12.0 12.5
Expected return on plan assets of 7.5% in each year . . . . . . . . . . (18.2) (16.9) (15.2)
Net amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.5) (2.0) (2.6)
---------------------------
Net pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . $ (0.2) $ (1.5) $ (1.0)
===========================
The following table sets forth the plans' funded status and amounts recorded in Other assets on the
Consolidated Balance Sheet at December 31:
<CAPTION>
$ in millions 1994 1993
------------- ----------------
<S> <C> <C>
Plan assets at fair value (a) . . .. . . . . . . . . . . . . . . . . . . $247.6 $255.0
Actuarial present value of projected benefit obligation . . . . . . . . 229.9 230.6
----------------
Plan assets in excess of projected benefit obligation . . . . . . . . . $ 17.7 $ 24.4
Unamortized transition obligation . . . . . . . . . . . . . . . . . . . (23.8) (28.0)
Prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.2 22.9
Changes in plan assumptions and actuarial gains and losses . . . . . . . 32.8 25.1
----------------
Net pension assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 46.9 $ 44.4
================
Vested benefit obligation . . . . . . . . . . . . . . . . . . . . . . $179.7 $183.9
Accumulated benefit obligation without projected wage increases . . . . $211.1 $207.4
(a) Invested in guaranteed investment contracts, fixed income investments and equities including
$22.4 million and $22.5 million of DPL Inc. common stock in 1994 and 1993, respectively.
</TABLE>
II-16
<PAGE>
<TABLE>
<CAPTION>
B. POSTRETIREMENT BENEFITS
Qualified employees who retired prior to 1987 and their dependents are eligible for health care and life
insurance benefits. The unamortized transition obligation associated with these benefits is being
amortized over the approximate average remaining life expectancy of the retired employees. Active
employees are eligible for life insurance benefits, and this unamortized transition obligation is being
amortized over the average remaining service period.
The following table sets forth the accumulated postretirement benefit amounts at December 31:
$ in millions 1994 1993
------------- ----- -----
<S> <C> <C>
Accumulated postretirement benefit obligation:
- retirees and dependents . . . . . . . . . . . . . . . . . . . $61.4 $63.1
- active employees . . . . . . . . . . . . . . . . . . . . . . 1.1 1.2
----- -----
Total 62.5 64.3
Unamortized transition obligation . . . . . . . . . . . . . . . . (24.8) (27.7)
Actuarial gains and loses . . . . . . . . . . . . . . . . . . . . 3.0 -
----- -----
Accrued postretirement benefit liability . . . . . . . . . . . . . $40.7 $36.6
===== =====
The following table presents the components of postretirement benefit costs:
$ in millions 1994 1993
------------- ----- -----
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3.7 $ 3.7
Net amortization . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.0
----- -----
Postretirement benefit cost . . . . . . . . . . . . . . . . . . . $ 6.7 $ 6.7
===== =====
The assumed health care cost trend rate used in measuring the unfunded accumulated postretirement benefit
obligation is 15% for 1994 and decreases to 8% by 2004. A one percentage point increase in each future
year's assumed health care trend rate would increase postretirement benefit cost by $0.4 million annually
and would increase the accumulated postretirement benefit obligation by $6.1 million. The weighted
average discount rate used in determining the accumulated postretirement benefit obligation was 6.25% in
1994 and 6.0% in 1993.
</TABLE>
II-17
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
5. COMMONLY OWNED FACILITIES
The Company owns certain electric generating and transmission facilities as tenants in common with
other Ohio utilities. Each utility is obligated to pay its ownership share of construction and
operation costs of each facility. As of December 31, 1994, the Company had $12.8 million of
commonly owned facilities under construction. The Company's share of expenses is included in the
Consolidated Statement of Results of Operations.
The following table presents the Company's share of the commonly owned facilities:
Company Share Investment
--------------------------- ---------------
Production Plant in
Ownership Capacity Service
-----------------------------------------------
(%) (MW) ($ in millions)
<S> <C> <C> <C>
Production Units:
Beckjord Unit 6 . . . . . . . . . . . . . 50.0 210 50
Conesville Unit 4 . . . . . . . . . . . . 16.5 129 30
East Bend Station . . . . . . . . . . . . 31.0 186 149
Killen Station . . . . . . . . . . . . . . 67.0 402 406
Miami Fort Units 7 & 8 . . . . . . . . . . 36.0 360 113
Stuart Station . . . . . . . . . . . . . . 35.0 820 236
Zimmer Station . . . . . . . . . . . . . . 28.1 365 985
Transmission (at varying percentages) . . . . 66
---------------------------------------------------------------------------------------------------
6. NOTES PAYABLE AND COMPENSATING BALANCES
DPL Inc., the Company's parent company, has $200 million available through a revolving credit
agreement. This agreement with a consortium of banks is renewable through 1999. Commitment fees
are approximately $350,000 per year, depending upon the aggregate unused balance of the loan.
At December 31, 1994, DPL Inc. had no outstanding borrowings under this credit agreement.
The Company also has $97.1 million available in short-term informal lines of credit. To support
these lines of credit, the Company is required to maintain average daily compensating balances of
approximately $700,000 and also pay $168,000 per year in fees.
At year-end, the Company had no borrowings from these lines of credit and no commercial paper
outstanding.
</TABLE>
II-18
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
7. LONG-TERM DEBT
At December 31,
$ in millions 1994 1993
------------- ----------------------
First mortgage bonds maturing:
<S> <C> <C>
1997 5-5/8% . . . . . . . . . . . . . . . . . . $ 40.0 $ 40.0
1998 6.87% and 7.06% (a) . . . . . . . . . . . . 26.4 29.0
1999-2003 8.16% and 8.41% (a) . . . . . . . . . . . . 43.0 49.0
2022-2026 8.14% . . . . . . . . . . . . . . . . . . . 671.0 671.0
Pollution control series maturing through 2027 - 7.97% . . 218.4 218.8
----------------------
998.8 1,007.8
Unamortized debt discount and premium (net) . . . . . . . . (2.5) (2.5)
----------------------
996.3 1,005.3
Mortgage note due in installments through 2012-10.0% . . . . . . . 7.4 7.6
----------------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . $1,003.7 $1,012.9
======================
(a) Weighted average interest rates for 1994 and 1993, respectively.
The amounts of maturities and mandatory redemptions for first mortgage bonds are (in millions)
$4.7 in 1995 and 1996, $40.5 in 1997, $25.4 in 1998 and 0.4 in 1999. Substantially all
property and plant of the Company is subject to the mortgage lien securing first mortgage
bonds.
</TABLE>
II-19
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
8. COMMON SHAREHOLDER'S EQUITY
Common Stock (a)
--------------------- Other Paid-in Earnings
Outstanding Capital (premium, Reinvested in
$ in millions Shares Amount net of expense) the Business Total
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1992:
Beginning Balance . . . . . . . 41,172,173 $ 0.4 $674.8 $320.7 $ 995.9
Net income . . . . . . . . . . . 142.0 142.0
Common stock dividends . . . . . (103.6) (103.6)
Preferred stock dividends . . . (9.4) (9.4)
Other . . . . . . . . . . . . . 0.2 (3.1) (2.9)
-----------------------------------------------------------------------
Ending balance . . . . . . . . . . 41,172,173 $ 0.4 $675.0 $346.6 $1,022.0
1993:
Net income . . . . . . . . . . . 143.6 143.6
Common stock dividends . . . . . (107.7) (107.7)
Preferred stock dividends . . . (8.7) (8.7)
Other . . . . . . . . . . . . . 0.2 (0.2) -
-----------------------------------------------------------------------
Ending balance . . . . . . . . . . 41,172,173 $ 0.4 $675.2 $373.6 $1,049.2
1994:
Net income . . . . . . . . . . . 152.4 152.4
Common stock dividends . . . . . (103.7) (103.7)
Preferred stock dividends . . . (4.7) (4.7)
Contribution to capital . . . . 63.1 - 63.1
Other . . . . . . . . . . . . . 0.2 3.8 4.0
-----------------------------------------------------------------------
Ending balance . . . . . . . . . . 41,172,173 $ 0.4 $738.5 $421.4 $1,160.3
=======================================================================
(a) 50,000,000 shares authorized
</TABLE>
II-20
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
9. PREFERRED STOCK
$25 par value, 4,000,000 shares authorized, no shares outstanding; and $100 par value,
4,000,000 shares authorized, 228,508 shares outstanding.
Without Mandatory With Mandatory
Redemption Redemption
Provisions Provisions (a)
-----------------------------------------
Current Exercised Current ($ in millions)
Series/ Redemption Redemption Shares At December 31, At December 31,
Rate Price Price Outstanding 1994 1993 1994 1993
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A 3.75% $102.50 - 93,280 $ 9.3 $ 9.3
B 3.75% $103.00 - 69,398 7.0 7.0
C 3.90% $101.00 - 65,830 6.6 6.6
D 7.48% - $103.23 - - 15.0
E 7.70% - $101.00 - - 20.0
F 7.375% - $101.00 - - 25.0
H 8-5/8% - $101.00 - - $12.0
I 9-3/8% - $101.00 - - 18.0
------- ---- ---- ----- -----
Total 228,508 $22.9 $82.9 - $30.0
(a) Exclusive of sinking fund payment due within one year.
The shares without mandatory redemption provisions may be redeemed at the option of the Company
at the per share prices indicated, plus accrued dividends.
Mandatory and optional redemptions (at par) of outstanding shares of Series H and I were 40,000
and 45,000, respectively, in both 1994 and 1993.
In 1994, the Company redeemed all outstanding shares of its Preferred Stock Series D, E, F, H
and I.
</TABLE>
II-21
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
10. RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
For the years ended December 31,
$ in millions 1994 1993 1992
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income . . . . . . . . . . . . . . . . . . . . . . . $152.4 $143.6 $142.0
Adjustments for non-cash items:
Depreciation and amortization . . . . . . . . . . . . 111.9 109.0 104.4
Deferred income taxes . . . . . . . . . . . . . . . . (7.3) 22.1 31.9
Amortization (deferral) of regulatory assets, net . . 10.9 (25.8) (58.7)
Changes in working capital:
Accounts receivable and unbilled revenue . . . . . . . 30.3 (3.8) (0.3)
Accounts payable . . . . . . . . . . . . . . . . . . . (41.1) 23.4 (1.5)
Deferred gas costs . . . . . . . . . . . . . . . . . . 28.7 (7.9) (28.8)
Accrued interest . . . . . . . . . . . . . . . . . . . (0.4) 8.7 (4.4)
Other . . . . . . . . . . . . . . . . . . . . . . . . 7.7 11.7 (11.8)
DSM deferred costs . . . . . . . . . . . . . . . . . . . (14.4) (20.3) (2.2)
Other operating activities . . . . . . . . . . . . . . . (7.6) (14.5) 0.4
-----------------------------
Net cash provided by operating activities . . . . . . . $271.1 $246.2 $171.0
=============================
</TABLE>
II-22
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
11. FINANCIAL INFORMATION BY BUSINESS SEGMENTS
For the years ended December 31,
$ in millions 1994 1993 1992
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Utility service revenues
Electric . . . . . . . . . . . . . . . . . . . . . $ 945.9 $ 901.3 $ 809.3
Gas . . . . . . . . . . . . . . . . . . . . . . . 237.1 245.1 203.8
Other . . . . . . . . . . . . . . . . . . . . . . 7.3 7.3 6.7
-------------------------------
Total utility service revenues . . . . . . . . . . . . 1,190.3 1,153.7 1,019.8
Interest and other income . . . . . . . . . . . . . . . 9.4 12.0 3.8
-------------------------------
Total income . . . . . . . . . . . . . . . . . . . . $1,199.7 $1,165.7 $1,023.6
===============================
Operating profit before tax
Electric . . . . . . . . . . . . . . . . . . . . . $ 325.2 $ 310.8 $ 284.7
Gas . . . . . . . . . . . . . . . . . . . . . . . 10.3 19.9 22.1
Other . . . . . . . . . . . . . . . . . . . . . . (0.7) 0.9 0.5
-------------------------------
Total operating profit before tax . . . . . . . . . . . 334.8 331.6 307.3
Other income, net (a) . . . . . . . . . . . . . . . . . 7.3 (14.2) (7.2)
Interest expense . . . . . . . . . . . . . . . . . . . (93.5) (97.4) (94.3)
-------------------------------
Operating income . . . . . . . . . . . . . . . . . . $ 248.6 $ 220.0 $ 205.8
===============================
Depreciation and amortization
Electric . . . . . . . . . . . . . . . . . . . . . $ 104.8 $ 102.4 $ 97.9
Gas . . . . . . . . . . . . . . . . . . . . . . . 6.2 5.7 5.6
Other . . . . . . . . . . . . . . . . . . . . . . 0.9 0.9 0.9
-------------------------------
Total depreciation and amortization . . . . . . . . $ 111.9 $ 109.0 $ 104.4
===============================
Construction additions
Electric . . . . . . . . . . . . . . . . . . . . . $ 82.1 $ 66.3 $ 46.6
Gas . . . . . . . . . . . . . . . . . . . . . . . 11.6 11.9 11.0
Other . . . . . . . . . . . . . . . . . . . . . . 0.3 0.3 0.1
-------- -------- --------
Total construction additions . . . . . . . . . . . . $ 94.0 $ 78.5 $ 57.7
===============================
Assets
Electric . . . . . . . . . . . . . . . . . . . . . $2,772.3 $2,822.5 $2,522.8
Gas . . . . . . . . . . . . . . . . . . . . . . . 201.7 236.0 219.5
Other (b) . . . . . . . . . . . . . . . . . . . . 173.0 152.8 124.4
-------------------------------
Total assets at year end . . . . . . . . . . . . . . $3,147.0 $3,211.3 $2,866.7
===============================
(a) Includes primarily interest income less bond redemption costs in 1993 and 1992.
(b) Includes primarily cash, temporary cash investments and certain deferred items.
</TABLE>
II-23
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
12. Fair Value of Financial Instruments
At December 31,
1994 1993
--------------------- ------------------------
$ in millions Fair Value Cost Fair Value Cost
----------------------------------------------------------------------------------------------
$ $ $ $
<S> <C> <C> <C> <C>
Assets
------
Available for sale equity securities 31.2 25.1 24.4 18.2
Held to maturity securities,
including temporary cash investments
of $13.3 in 1994 and $6.5 in 1993 (a) 44.3 44.8 34.2 33.5
Liabilities
-----------
Debt (b) 960.0 1,008.5 1,115.9 1,042.6
Capitalization
--------------
Preferred stock with mandatory
redemptions (b) - - 34.6 34.3
(a) Contractual maturities range from 1995 to 2005.
(b) Includes current maturities.
Available for sale marketable equity securities are carried at market; the remaining financial
instruments are carried at cost. The fair value is based upon quoted market prices or
securities with similar characteristics.
</TABLE>
II-24
<PAGE>
<TABLE>
<CAPTION>
SELECTED QUARTERLY INFORMATION
For the three months ended
March 31, June 30, September 30, December 31,
$ in millions 1994 1993 1994 1993 1994 1993 1994 1993
--------------------------------------------------------------------------------------------------------------
$ $ $ $ $ $ $ $
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Utility service revenues . . . . 372.7 346.4 257.9 238.7 264.0 262.6 295.7 306.0
Income before income taxes . . . 93.1 81.9 56.5 47.2 57.3 56.2 41.6 34.7
Net income . . . . . . . . . . . 56.2 54.8 35.9 32.5 34.6 34.3 25.7 22.0
Earnings on common stock . . . . 54.1 52.5 33.7 30.4 34.4 32.2 25.5 19.8
Dividends paid . . . . . . . . . 29.0 26.9 20.5 26.9 24.6 27.0 29.6 27.0
</TABLE>
II-25
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL AND STATISTICAL SUMMARY
1994 1993 1992 1991 1990
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED DECEMBER 31,
Utility service revenues (millions) . . . $ 1,190.3 1,153.7 1,019.8 998.0 948.0
Earnings on common stock (millions) . . . $ 147.7 134.9 132.6 117.7 152.0
Earnings per share of common stock . . . . $ 3.59 3.28 3.22 2.86 3.69
Dividends paid (millions). . . . . . . . . $ 103.7 107.8 103.6 111.8 82.3
Electric sales (millions of kWh)--
Residential . . . . . . . . . . . . . . 4,465 4,558 4,260 4,571 4,125
Commercial . . . . . . . . . . . . . . . 3,068 3,006 2,896 2,945 2,738
Industrial . . . . . . . . . . . . . . . 4,388 4,089 3,938 3,949 3,958
Other . . . . . . . . . . . . . . . . . 2,298 3,023 2,960 1,850 1,807
------- ------- ------- ------- --------
Total . . . . . . . . . . . . . . . . 14,219 14,676 14,054 13,315 12,628
Gas sales (thousands of MCF)--
Residential . . . . . . . . . . . . . . 27,911 28,786 27,723 26,594 25,486
Commercial . . . . . . . . . . . . . . . 8,081 8,468 8,642 8,368 8,259
Industrial . . . . . . . . . . . . . . . 3,150 3,056 4,914 6,014 5,934
Other . . . . . . . . . . . . . . . . . 2,909 3,171 3,402 3,187 3,076
Transportation gas delivered . . . . . . 15,147 13,401 10,811 8,494 8,093
------- ------- ------- ------- -------
Total . . . . . . . . . . . . . . . . 57,198 56,882 55,492 52,657 50,848
AT DECEMBER 31,
Total assets (millions) . . . . . . . . . $ 3,147.0 3,211.3 2,866.7 2,851.5 2,800.7
Long-term debt and preferred stock with
mandatory redemption provisions
(millions) . . . . . . . . . . . . . . . $ 1,003.7 1,042.9 990.6 1,039.2 1,047.5
First mortgage bond ratings--
Duff & Phelps, Inc. . . . . . . . . . . AA AA- A+ BBB+ BBB+
Standard & Poor's Corporation . . . . . AA- A A BBB+ BBB+
Moody's Investors Service . . . . . . . A1 A2 A2 A3 A3
NUMBER OF SHAREHOLDERS
Preferred . . . . . . . . . . . . . . . . 795 1,873 1,969 2,034 2,100
</TABLE>
II-26
<PAGE>
Report of Independent Accountants
---------------------------------
To the Board of Directors and Shareholder of The Dayton Power
and Light Company
In our opinion, the consolidated financial statements
listed in the index, appearing under Item 8 on page II-7 of this
Form 10-K, present fairly, in all material respects, the
financial position of The Dayton Power and Light Company and its
subsidiaries at December 31, 1994 and 1993, and the results of
their operations and their cash flows for each of the three
years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles. These consolidated
financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these
consolidated financial statements based on our audits. We
conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
consolidated financial statements, assessing the accounting
principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the
opinion expressed above.
As discussed in Note 1 to the consolidated financial
statements, the Company changed its method of accounting for
income taxes in 1993.
Price Waterhouse LLP
Price Waterhouse LLP
Dayton, Ohio
January 18, 1995
II-27
<PAGE>
Report of Independent Accountants
on Financial Statement Schedules
--------------------------------
To the Board of Directors of The Dayton Power and Light Company
Our audits of the consolidated financial statements of
The Dayton Power and Light Company and its subsidiaries referred
to in our report dated January 18, 1995 appearing on page II-27
of this Annual Report on Form 10-K also included an audit of the
Financial Statement Schedules listed in Item 14(a) of this
Form 10-K. In our opinion, these Financial Statement Schedules
present fairly, in all material respects, the information set
forth therein when read in conjunction with the related
consolidated financial statements.
Price Waterhouse LLP
Price Waterhouse LLP
Dayton, Ohio
January 18, 1995
II-28
<PAGE>
Item 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
--------
Item 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT
Directors of the Registrant
---------------------------
The Board is presently authorized to consist of nine
directors. These nine directors are also directors of DPL Inc.,
the holding company of the Company. Nine directors are to be
elected this year to serve until the Annual Meeting of
Shareholders in 1996 or until their successors are duly elected
and qualified. Should any nominee become unable to accept
nomination or election, the Board will vote for the election of
such other person as a director as the present directors may
recommend in the place of such nominee.
The following information regarding the nominees is
based on information furnished by them:
Director
Principal Occupation and Other Information Since
------------------------------------------ --------
THOMAS J. DANIS, Age 45 1989
Former Chairman and Chief Executive Officer,
The Danis Companies, Dayton, Ohio,
construction, real estate and environmental
services.
Director: CSR America Inc.
Trustee: University of Dayton, Dayton Business
Committee, Dayton Foundation.
JAMES F. DICKE, II, Age 49 1990
President, Crown Equipment Corporation,
New Bremen, Ohio, international manufacturer
and distributor of electric lift trucks and
material handling products.
Director: Regional Boys and Girls Clubs
of America, Plaid Holdings Company.
Vice Chairman: Trinity University Board of
Trustees.
Secretary: Culver Educational Foundation.
III-1
<PAGE>
PETER H. FORSTER, Age 52 1979
Chairman, President and Chief Executive Officer,
DPL Inc.; Chairman, The Dayton Power and Light
Company.
Chairman: Miami Valley Research Foundation.
Director: Bank One, Dayton, NA, Amcast
Industrial Corp., Comair Holdings, Inc.
Trustee: F. M. Tait Foundation,
MedAmerica Health Systems Corp., Dayton Business
Committee, Arts Center Foundation.
ERNIE GREEN, Age 56 1991
President and Chief Executive Officer, Ernie Green
Industries, Dayton, Ohio, automotive components
manufacturer.
Director: Bank One, Dayton, NA, Day-Med Health
Maintenance Plan, Inc., WPTD-TV, The Duriron
Company.
Trustee: Central State University, Dayton Area
Chamber of Commerce, The Ronald McDonald Childrens
Charities.
JANE G. HALEY, Age 64 1978
President, Gosiger, Inc., Dayton, Ohio,
national importer and distributor
of machine tools.
Director: Society Bank, NA, Advisory
Board, Dayton, Ohio.
Trustee: University of Dayton, Chaminade-
Julienne High School, Dayton, Ohio.
Member: Area Progress Council.
ALLEN M. HILL, Age 49 1989
President and Chief Executive Officer,
The Dayton Power and Light Company.
Director: Citizens Federal Bank, F.S.B.,
Dayton Boys/Girls Club, Miami Valley
Regional Planning Commission, Ohio Electric
Utility Institute.
Trustee: The University of Dayton, Hipple Cancer
Research Center.
W AUGUST HILLENBRAND, Age 54 1992
President and Chief Executive Officer, Hillenbrand
Industries, Batesville, Indiana, a diversified
public holding company with seven wholly-owned and
autonomously operated subsidiaries manufacturing
caskets, hospital furniture, hospital supplies,
high-tech security locks and providing funeral
planning services.
Director: Forecorp, Inc., Forethought Life
Insurance Company.
Trustee: Denison University, National
Committee for Quality Health Care, Batesville
Girl Scouts.
III-2
<PAGE>
DAVID R. HOLMES, Age 54 1994
Chairman, President and Chief Executive
Officer, The Reynolds and Reynolds Company,
Dayton, Ohio, information management systems.
Director: Bank One, Dayton, NA.
Advisor: J.L. Kellogg Graduate School of
Management, Northwestern University.
Co-Chair: Downtown Dayton Partnership.
Member: Dayton Business Committee, Area
Progress Council.
BURNELL R. ROBERTS, Age 67 1987
Chairman, Sweetheart Holdings, Inc.
Retired Chairman of the Board and Chief Executive
Officer, The Mead Corporation, Dayton, Ohio,
forest products producer.
Director: Armco, Inc., National City Corporation,
The Perkin-Elmer Corporation, Rayonier, Inc.
Universal Protective Plastics, Inc.
III-3
<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS OF THE REGISTRANT
(As of March 1, 1995)
Business Experience,
Last Five Years
(Positions with Registrant
Name Age Unless Otherwise Indicated) Dates
--------------------- --- ----------------------------- ------------------
<S> <C> <C> <C>
Peter H. Forster 52 Chairman 4/06/92 - 3/01/95
Chairman, President and Chief 4/05/88 - 3/01/95
Executive Officer, DPL Inc.
Chairman and Chief Executive 8/02/88 - 4/06/92
Officer
Allen M. Hill 49 President and Chief Executive 4/06/92 - 3/01/95
Officer
President and Chief Operating 8/02/88 - 4/06/92
Officer
Paul R. Anderson 52 Controller 4/12/81 - 3/01/95
Stephen P. Bramlage 48 Assistant Vice President 1/01/94 - 3/01/95
Director, Service Operations 10/29/89 - 1/01/94
Robert M. Combs 49 Vice President 5/09/94 - 3/01/95
Treasurer 3/17/93 - 5/09/94
Director, J. M. Stuart 9/16/91 - 3/17/93
Electric Generating Station
United States Navy
Production Officer, 8/01/88 - 9/16/91
Charleston Naval Shipyard
Georgene H. Dawson 45 Assistant Vice President 1/01/94 - 3/01/95
Director, Service Operations 4/03/92 - 1/01/94
Service Center Manager 6/11/89 - 4/03/92
Jeanne S. Holihan 38 Assistant Vice President 3/17/93 - 3/01/95
Treasurer 11/06/90 - 3/17/93
Director, Financial 4/01/90 - 11/06/90
Administration and Planning
Manager, Financial 4/02/89 - 4/01/90
Administration and Planning
</TABLE>
III-4
<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS OF THE REGISTRANT
(As of March 1, 1995)
Business Experience,
Last Five Years
(Positions with Registrant
Name Age Unless Otherwise Indicated) Dates
--------------------- --- ----------------------------- ------------------
<S> <C> <C> <C>
Thomas M. Jenkins 43 Group Vice President and 5/09/94 - 3/01/95
Treasurer, DPL Inc. and
the Company
Group Vice President, 11/06/90 - 5/09/94
Group Vice President and
Treasurer, DPL Inc.
Vice President and Treasurer, 11/01/88 - 11/06/90
DPL Inc. and the Company
Stephen F. Koziar, Jr. 50 Group Vice President and 1/31/95 - 3/01/95
Secretary, DPL Inc. and
the Company
Group Vice President, 12/10/87 - 1/31/95
DPL Inc. and the Company
Judy W. Lansaw 43 Group Vice President, 1/31/95 - 3/01/95
DPL Inc. and the Company
Group Vice President and 12/07/93 - 1/31/95
Secretary, DPL Inc. and
the Company
Vice President and 8/01/89 - 12/07/93
Secretary, DPL Inc. and
the Company
Bryce W. Nickel 38 Assistant Vice President 1/01/94 - 3/01/95
Director, Service Operations 10/29/89 - 1/01/94
H. Ted Santo 44 Group Vice President 12/08/92 - 3/01/95
Vice President 2/28/88 - 12/08/92
</TABLE>
III-5
<PAGE>
Item 11 - EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
-------------------------
Directors of the Company who are not employees receive $12,000
annually for services as a director, $600 for attendance at a Board meeting,
and $500 for attendance at a committee meeting or operating session, of
DPL Inc. and the Company. Members of the Executive Committee of DPL Inc.
receive $2,000 annually for services on that committee. Each committee
chairman receives an additional $1,600 annually. Directors who are not
employees of the Company also participate in a Directors' Deferred Stock
Compensation Plan (the "Stock Plan") under which a number of DPL Inc. common
shares are awarded to directors each year. All shares awarded under the Stock
Plan are transferred to a grantor trust (the "Master Trust") maintained by
DPL Inc. to secure its obligations under various directors' and officers'
deferred and incentive compensation plans. Receipt of the shares or cash equal
to the value thereof is deferred until the participant retires as a director or
until such other time as designated by the participant and approved by the
Compensation and Management Review Committee (the "Committee") of DPL Inc. In
the event of a change of control (as defined in the Stock Plan), the authority
and discretion which is exercisable by the Committee, will be exercised by the
trustees of the Master Trust. In April 1994, each non-employee director was
awarded 1,500 shares.
DPL Inc. maintains a Deferred Compensation Plan (the "Compensation
Plan") for non-employee directors of DPL Inc. and the Company in which payment
of directors' fees may be deferred. The Compensation Plan also includes a
supplementary deferred income program which provides that DPL Inc. will match
$5,000 annually of deferred directors' fees for a maximum of ten years. Under
the supplementary program, a $150,000 death benefit is provided until such
director ceases to participate in the Compensation Plan. Under the standard
deferred income program directors are entitled to receive a lump sum payment or
payments in approximately equal installments over a ten-year period. A
director may elect payment in either cash or common shares. Participants in
the supplementary program are entitled to receive deferred payments over a
ten-year period in equal installments. The Compensation Plan provides that in
the event of a change in control of DPL Inc., as defined in the Compensation
Plan, all benefits provided under the supplementary deferred income program
become immediately vested without the need for further contributions by the
participants and the discretion which, under the Compensation Plan, is
exercisable by the Chief Executive Officer of DPL Inc. will be exercised by the
trustees of the Master Trust. If the consent of the Chief Executive Officer of
DPL Inc. is obtained, individuals who have attained the age of 55 and who are
no longer directors of DPL Inc. or the Company may receive a lump sum payment
of amounts credited to them under the supplementary deferred income program.
III-6
<PAGE>
EXECUTIVE OFFICER COMPENSATION
------------------------------
Summary Compensation Table
--------------------------
Set forth below is certain information concerning the compensation of
the Chief Executive Officer and each of the other four most highly compensated
executive officers of the Company for the last three fiscal years, for services
rendered in all capacities to the Company and its subsidiaries, DPL Inc., and
the other subsidiaries of DPL Inc.
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual ----------------
Compensation Restricted
----------------- Stock Unit All Other
Name and Principal Salary Bonus(1) Awards(2) Compensation(3)
Position Year ($) ($) ($) ($)
------------------ ---- ------ -------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Peter H. Forster 1994 526,000 318,000 708,000 ('95-97) 1,000
Chairman 1993 496,000 298,000 580,000 ('94-96) 1,000
1992 496,000 298,000 436,000 ('93-95) 0
Allen M. Hill 1994 336,000 205,000 333,000 ('95-97) 1,000
President and Chief 1993 315,000 193,000 249,000 ('94-96) 1,000
Executive Officer 1992 294,000 180,000 183,000 ('93-95) 0
Stephen F. Koziar, Jr. 1994 198,000 91,000 124,000 ('95-97) 1,000
Group Vice President 1993 189,000 86,000 103,000 ('94-96) 1,000
and Secretary 1992 181,000 83,000 86,000 ('93-95) 0
Thomas M. Jenkins 1994 188,000 87,000 239,000 ('95-97) 1,000
Group Vice President 1993 172,000 81,000 188,000 ('94-96) 1,000
and Treasurer 1992 150,000 72,000 150,000 ('93-95) 0
H. Ted Santo 1994 173,000 81,000 142,000 ('95-97) 1,000
Group Vice President 1993 151,000 73,000 192,000 ('94-96) 1,000
1992 129,000 64,000 153,000 ('93-95) 0
------------------------
</TABLE>
(1) Amounts in this column represent awards made under the Management
Incentive Compensation Program ("MICP"). Awards are based on achievement
of specific predetermined operating and management goals in the year
indicated and paid in the year earned or in the following year.
III-7
<PAGE>
(2) Amounts shown in this column have not been paid, but are contingent on
performance and represent the dollar value of restricted stock incentive
units ("SIU's") awarded to the named executive officer under the
Management Stock Incentive Plan ("MSIP") based on the closing price of a
DPL Inc. common share on the New York Stock Exchange--Consolidated
Transactions Tape on the date of award. The SIU's awarded for 1992, 1993
and 1994 vest only to the extent that the DPL Inc. average return on
equity ("ROE") over a three-year performance period is above the RRA
industry median.
Depending on the performance of DPL Inc., these SIU's vest in amounts
ranging from 0% to 100% of the target award at an ROE between 0 and
100 basis points above median ROE and from 100% to 150% of target award
at an ROE between 100 and 200 basis points above median ROE. No units
vest if the three-year average ROE is below 10%. Amounts shown for 1992,
1993 and 1994 reflect target awards. For each SIU which vests, a
participant receives the cash equivalent of one DPL Inc. common share
plus dividend equivalents from the date of award. Prior to payout at
retirement, an individual may elect to convert a portion of vested SIU's
to a cash equivalent and accrue interest thereon. All payouts of vested
SIU's under the MSIP are deferred until retirement.
(3) Amounts in this column represent employer matching contributions on
behalf of each named executive under the DP&L Employee Savings Plan made
to the DPL Inc. Employee Stock Ownership Plan.
Certain Severance Pay Agreements
--------------------------------
DPL Inc. entered into severance pay agreements with each of
Messrs. Forster, Hill, Koziar, Jenkins and Santo providing for the payment of
severance benefits in the event that the individual's employment with DPL Inc.
or its subsidiaries is terminated under specified circumstances within three
years after a change in control of DPL Inc. or DP&L (generally, defined as the
acquisition of 15% or more of the voting securities or certain mergers or other
business combinations). The agreements entered into between 1987 and 1991
require the individuals to remain with DPL Inc. throughout the period during
which any change of control is pending in order to help put in place the best
plan for the shareholders. The principal severance benefits under each
agreement include payment of the following: (i) the individual's full base
salary and accrued benefits through the date of termination and any awards for
any completed or partial period under the MICP and the individual's award for
the current period under the MICP (or for a completed period if no award for
that period has yet been determined) fixed at an amount equal to his average
annual award for the preceding three years; (ii) 300% of the sum of the
individual's annual base salary at the rate in effect on the date of
termination (or, if higher, at the rate in effect as of the time of the change
in control) plus the average amount awarded to the individual under the MICP
for the three preceding years; (iii) all awarded or earned but unpaid SIU's;
and (iv) continuing medical, life, and disability insurance. In the event any
payments under these agreements are subject to an excise tax under the Internal
III-8
<PAGE>
Revenue Code of 1986, the payments will be adjusted so that the total payments
received on an after-tax basis will equal the amount the individual would have
received without imposition of the excise tax. The severance pay agreements
are effective for one year but are automatically renewed each year unless
DPL Inc. or the participant notifies the other one year in advance of its or
his intent not to renew. DPL Inc. has agreed to secure its obligations under
the severance pay agreements by transferring required payments to the Master
Trust.
Pension Plans
-------------
The following table sets forth the estimated total annual benefits
payable under the Company retirement income plan and the supplemental executive
retirement plan to executive officers at normal retirement date (age 65) based
upon years of accredited service and final average annual compensation
(including base and incentive compensation) for the three highest years during
the last ten:
Total Annual Retirement Benefits for
Years of Accredited Service at Age 65
Final Average --------------------------------------
Annual Earnings 10 Years 15 Years 20-30 Years
--------------- -------- -------- -----------
$ 200,000 $ 53,000 $ 79,000 $105,500
400,000 110,000 164,500 219,500
600,000 167,000 250,000 333,500
800,000 224,000 335,500 447,500
1,000,000 281,000 421,000 561,500
The years of accredited service for the named executive officers are
Mr. Forster -- 30 yrs.; Mr. Hill -- 25 yrs.; Mr. Koziar -- 25 yrs.;
Mr. Jenkins -- 17 yrs. and Mr. Santo -- 19 yrs. Years of service under the
retirement income plan are capped at 30 years, however, the retirement and
supplemental plans, taken together, can provide full benefits after 20 years of
accredited service. Benefits are computed on a straight-life annuity basis,
are subject to deduction for Social Security benefits and may be reduced by
benefits payable under retirement plans of other employers. For each year an
individual retires prior to age 62, benefits under the supplemental plan are
reduced by 3% or 21% for early retirement at age 55.
III-9
<PAGE>
Item 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company's stock is beneficially owned by DPL Inc.
Set forth below is information concerning the beneficial ownership of
shares of Common Stock of DPL Inc. by each director of the Company as of
January 31, 1995.
Amount and Nature of
Name of Director Beneficial Ownership (1)
---------------- ------------------------
Incumbent Directors
-------------------
Thomas J. Danis 17,821 shares
James F. Dicke, II 58,689 shares
Peter H. Forster 21,474 shares
Ernie Green 14,762 shares
Jane G. Haley 26,673 shares
Allen M. Hill 20,175 shares
W August Hillenbrand 7,663 shares
David R. Holmes 1,670 shares
Burnell R. Roberts 16,334 shares
Set forth below is information concerning the beneficial ownership of
shares of Common Stock of DPL Inc. by each executive officer of the Company
named in the Summary Compensation Table (other than executive officers who are
directors of the Company whose security ownership is found above) as of
January 31, 1995.
Amount and Nature of
Name of Executive Officer Beneficial Ownership (1)
------------------------- ------------------------
Stephen F. Koziar, Jr. 6,979 shares
Thomas M. Jenkins 5,175 shares
H. Ted Santo 1,713 shares
(1) The number of shares shown represents in each instance less than 1% of the
outstanding Common Shares of DPL Inc.
There were 212,245 shares or 0.20% of the total number of Common Shares
beneficially owned by all directors and executive officers of DPL Inc. and
the Company as a group at January 31, 1995. The number of shares shown for
the directors includes Common Shares transferred to the Master Trust for
non-employee directors pursuant to the Directors' Deferred Stock
Compensation Plan.
Item 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
III-10
<PAGE>
PART IV
-------
Item 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON
FORM 8-K
(a) Documents filed as part of the Form 10-K
1. Financial Statements
--------------------
See Item 8 - Index to Financial Statements on page
II-7, which page is incorporated herein by
reference.
2. Financial Statement Schedule
----------------------------
For the three years in the period ended December 31,
1994:
Page
No.
----
Schedule II - Valuation and qualifying accounts IV-7
The information required to be submitted in Schedules I,
III and IV is omitted as not applicable or not required under
rules of Regulation S-X.
IV-1
<PAGE>
3. Exhibits
--------
The following exhibits have been filed with the Securities and Exchange
Commission and are incorporated herein by reference.
Incorporation by
Reference
-----------------
2 Copy of the Agreement of Merger among Exhibit A to the 1986
DPL Inc., Holding Sub Inc. and the Proxy Statement
Company dated January 6, 1986................. (File No. 1-2385)
3(a) Regulations and By-Laws of the Company........ Exhibit 2(e) to
Registration
Statement No. 2-68136
to Form S-16.
3(b) Copy of Amended Articles of Incorporation Exhibit 3(b) to Report
of the Company dated January 3, 1991.......... on Form 10-K for the
year ended December 31,
1991 (File No. 1-2385)
4(a) Copy of Composite Indenture dated as of Exhibit 4(a) to Report
October 1, 1935, between the Company and on Form 10-K for year
The Bank of New York, Trustee with all ended December 31, 1985
amendments through the Twenty-Ninth (File No. 1-2385)
Supplemental Indenture........................
4(b) Copy of the Thirtieth Supplemental Indenture Exhibit 4(h) to
dated as of March 1, 1982, between the Registration Statement
Company and The Bank of New York, Trustee..... No. 33-53906
4(c) Copy of the Thirty-First Supplemental Exhibit 4(h) to
Indenture dated as of November 1, 1982, Registration Statement
between the Company and The Bank of New York, No. 33-56162
Trustee.......................................
4(d) Copy of the Thirty-Second Supplemental Inden- Exhibit 4(i) to
ture dated as of November 1, 1982, between the Registration Statement
Company and The Bank of New York, Trustee..... No. 33-56162
4(e) Copy of the Thirty-Third Supplemental Exhibit 4(e) to
Indenture dated as of December 1, 1985, Report on Form 10-K
between the Company and The Bank of New York, for year ended
Trustee....................................... December 31, 1985
(File No. 1-2385)
4(f) Copy of the Thirty-Fourth Supplemental Exhibit 4 to Report
Indenture dated as of April 1, 1986, on Form 10-Q for
between the Company and The Bank of New York, quarter ended
Trustee....................................... June 30, 1986
(File No. 1-2385)
IV-2
<PAGE>
4(g) Copy of the Thirty-Fifth Supplemental Exhibit 4(h) to Report
Indenture dated as of December 1, 1986, on Form 10-K for the
between the Company and The Bank of New York, year ended December 31,
Trustee....................................... 1986 (File No. 1-9052)
4(h) Copy of the Thirty-Sixth Supplemental Exhibit 4(i) to
Indenture dated as of August 15, 1992, Registration Statement
between the Company and The Bank of New York, No. 33-53906
Trustee.......................................
4(i) Copy of the Thirty-Seventh Supplemental Exhibit 4(j) to
Indenture dated as of November 15, 1992, Registration Statement
between the Company and The Bank of New York, No. 33-56162
Trustee.......................................
4(j) Copy of the Thirty-Eighth Supplemental Exhibit 4(k) to
Indenture dated as of November 15, 1992, Registration Statement
between the Company and The Bank of New York, No. 33-56162
Trustee.......................................
4(k) Copy of the Thirty-Ninth Supplemental Exhibit 4(k) to
Indenture dated as of January 15, 1993, Registration Statement
between the Company and The Bank of New York, No. 33-57928
Trustee.......................................
4(l) Copy of the Fortieth Supplemental Indenture Exhibit 4(m) to Report
dated as of February 15, 1993, between on Form 10-K for the
the Company and The Bank of New York, year ended December 31,
Trustee....................................... 1992 (File No. 1-2385)
10(a) Description of Management Incentive Exhibit 10(d) to Report
Compensation Program for Certain Executive on Form 10-K for the
Officers...................................... year ended December 31,
1986 (File No. 1-9052)
10(b) Copy of Severance Pay Agreement Exhibit 10(g) to Report
with Certain Executive Officers............... on Form 10-K for the
year ended December 31,
1987 (File No. 1-2385)
10(c) Copy of Supplemental Executive Retirement Exhibit 10(f) to Report
Plan amended August 6, 1991................... on Form 10-K for the
year ended December 31
1991 (File No. 1-2385)
10(d) Amended description of Directors' Deferred Exhibit 10(d) to Report
Stock Compensation Plan effective on Form 10-K for the
January 1, 1993............................... year ended December 31,
1993 (File No. 1-2385)
IV-3
<PAGE>
10(e) Amended description of Deferred Compensation Exhibit 10(e) to Report
Plan for Non-Employee Directors effective on Form 10-K for the
January 1, 1993............................... year ended December 31,
1993 (File No. 1-2385)
10(f) Copy of Management Stock Incentive Plan Exhibit 10(f) to Report
amended January 1, 1993....................... on Form 10-K for the
year ended December 31,
1993 (File No. 1-2385)
18 Copy of preferability letter relating to Exhibit 18 to Report
change in accounting for unbilled revenues on Form 10-K for the
from Price Waterhouse......................... year ended December 31,
1988 (File No. 1-2385)
21 Copy of List of Subsidiaries of the Company... Exhibit 21 to Report on
Form 10-K for the year
ended December 31, 1993
(File No. 1-2385)
(b) Reports on Form 8-K
-------------------
None
IV-4
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
March 28, 1995 Peter H. Forster
----------------------------------
Peter H. Forster
Chairman
Pursuant to the requirements of the Securities Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Paul R. Anderson Controller (principal March 28, 1995
------------------------- accounting officer)
(P. R. Anderson)
Director March , 1995
-------------------------
(T. J. Danis)
Director March , 1995
-------------------------
(J. F. Dicke, II)
Peter H. Forster Director and Chairman March 28, 1995
------------------------- (principal executive
(P. H. Forster) officer)
Ernie Green Director March 29, 1995
-------------------------
(E. Green)
IV-5
<PAGE>
Director March , 1995
-------------------------
(J. G. Haley)
Allen M. Hill Director, President and March 29, 1995
------------------------- Chief Executive Officer
(A. M. Hill)
Director March , 1995
-------------------------
(W A. Hillenbrand)
David R. Holmes Director March 30, 1995
-------------------------
(D. R. Holmes)
Thomas M. Jenkins Group Vice President March 30, 1995
------------------------- and Treasurer
(T. M. Jenkins) (principal financial
officer)
Burnell R. Roberts Director March 30, 1995
-------------------------
(B. R. Roberts)
IV-6
<PAGE>
<TABLE>
<CAPTION>
Schedule II
THE DAYTON POWER AND LIGHT COMPANY
VALUATION AND QUALIFYING ACCOUNTS
For the years ended December 31, 1994, 1993 and 1992
--------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
--------------------------------------------------------------------------------------------------------
Additions
Balance at ------------------- Balance
Beginning Charged to Deductions at End
Description of Period Income Other (1) of Period
--------------------------------------------------------------------------------------------------------
------------------------thousands----------------------------
<S> <C> <C> <C> <C> <C>
1994:
Deducted from accounts receivable--
Provision for uncollectible accounts... $ 9,122 $ 1,553 $ - $2,874 $ 7,801
1993:
Deducted from accounts receivable--
Provision for uncollectible accounts... $ 10,461 $ 1,353 $ - $2,692 $ 9,122
1992:
Deducted from accounts receivable--
Provision for uncollectible accounts... $ 11,510 $ 1,675 $ - $2,724 $ 10,461
(1) Amounts written off, net of recoveries of accounts previously written off.
</TABLE>
IV-7
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2276600
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 299300
<TOTAL-DEFERRED-CHARGES> 418100
<OTHER-ASSETS> 153000
<TOTAL-ASSETS> 3147000
<COMMON> 400
<CAPITAL-SURPLUS-PAID-IN> 738500
<RETAINED-EARNINGS> 421400
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1160300
0
22900
<LONG-TERM-DEBT-NET> 1003700
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 4700
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 955400
<TOT-CAPITALIZATION-AND-LIAB> 3147000
<GROSS-OPERATING-REVENUE> 1190300
<INCOME-TAX-EXPENSE> 96100
<OTHER-OPERATING-EXPENSES> 857700
<TOTAL-OPERATING-EXPENSES> 953800
<OPERATING-INCOME-LOSS> 236500
<OTHER-INCOME-NET> 9400
<INCOME-BEFORE-INTEREST-EXPEN> 245900
<TOTAL-INTEREST-EXPENSE> 93500
<NET-INCOME> 152400
4700
<EARNINGS-AVAILABLE-FOR-COMM> 147700
<COMMON-STOCK-DIVIDENDS> 103700
<TOTAL-INTEREST-ON-BONDS> 92400
<CASH-FLOW-OPERATIONS> 271100
<EPS-PRIMARY> 3.59
<EPS-DILUTED> 3.59
</TABLE>
