UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number 1-2385
THE DAYTON POWER AND LIGHT COMPANY
(Exact name of registrant as specified in its charter)
OHIO 31-0258470
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Courthouse Plaza Southwest
Dayton, Ohio 45402
----------------------------------------
(Address of principal executive offices)
(937) 224-6000
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES X NO
--- ---
The registrant meets the conditions set forth in General Instruction
H(1)(a) and (b) of Form 10-Q and is therefore filing this form with
the reduced disclosure format.
Indicate the number of shares of the issuer's classes of common stock,
as of the latest practicable date.
Common Stock, $.01 par value 41,172,173 Shares
- --------------------------------- -------------------------------
(Title of each class) (Outstanding at March 31, 1998)
<PAGE>
THE DAYTON POWER AND LIGHT COMPANY
INDEX
Page No.
--------
Part I - Financial Information
Item 1. Financial Statements
Consolidated Statement of Results of Operations 1
Consolidated Statement of Cash Flows 2
Consolidated Balance Sheet 3
Notes to Consolidated Financial Statements 5
Operating Statistics 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II - Other Information 10
Signatures 11
i
<PAGE>
CONSOLIDATED STATEMENT OF RESULTS OF OPERATIONS
The Dayton Power and Light Company
Three Months Ended
March 31
------------------
1998 1997
---- ----
--millions--
Income
- ------
Utility service revenues--
Electric $261.4 $253.1
Gas and other 91.5 104.2
------ ------
Total Utility Service Revenues 352.9 357.3
Interest and other income 4.6 2.1
------ ------
Total Income 357.5 359.4
------ ------
Expenses
- --------
Fuel and purchased power 61.2 55.1
Gas purchased for resale 58.8 66.9
Operation and maintenance 34.3 51.8
Depreciation and amortization 32.3 31.4
Amortization of regulatory assets, net 4.6 4.2
General taxes 34.4 33.6
Interest expense 21.2 21.8
------ ------
Total Expenses 246.8 264.8
------ ------
Income Before Income Taxes 110.7 94.6
Income taxes 41.2 32.4
------ ------
Net Income 69.5 62.2
Preferred dividends 0.2 0.2
------ ------
Earnings on Common Stock $ 69.3 $ 62.0
====== ======
Comprehensive Income $ 74.2 $ 61.8
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
-1-
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
The Dayton Power and Light Company
Three Months Ended
March 31
------------------
1998 1997
---- ----
--millions--
Operating Activities
- --------------------
Cash received from utility customers $348.8 $358.8
Other operating cash receipts 1.6 2.0
Cash paid for:
Fuel and purchased power (68.6) (57.8)
Purchased gas (48.6) (56.7)
Operation and maintenance labor (23.4) (24.8)
Nonlabor operating expenditures (42.9) (50.1)
Interest (26.7) (26.4)
Income taxes (12.9) (0.2)
Property, excise and payroll taxes (54.2) (52.5)
------ ------
Net cash provided by operating activities 73.1 92.3
Investing Activities
- --------------------
Property expenditures (26.7) (18.1)
Other activities (9.1) (12.5)
------ ------
Net cash used for investing activities (35.8) (30.6)
Financing Activities
- --------------------
Dividends paid on common stock (116.8) (28.9)
Dividends paid on preferred stock (0.2) (0.2)
Issuance (retirement) of short-term debt 75.5 (10.0)
------ ------
Net cash used for financing activities (41.5) (39.1)
Cash and temporary cash investments--
Net change (4.2) 22.6
Balance at beginning of period 11.8 2.1
------ ------
Balance at end of period $ 7.6 $ 24.7
====== ======
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
-2-
<PAGE>
CONSOLIDATED BALANCE SHEET
The Dayton Power and Light Company
At At
March 31, December 31,
1998 1997
--------- ------------
--millions--
ASSETS
Property $3,608.2 $3,587.8
Less--
Accumulated depreciation and amortization (1,386.1) (1,355.8)
-------- --------
Net property 2,222.1 2,232.0
-------- --------
Current Assets
- --------------
Cash and temporary cash investments 7.6 11.8
Accounts receivable, less provision for
uncollectible accounts 203.0 205.8
Inventories, at average cost 79.2 87.1
Deferred property and excise taxes 59.7 91.9
Prepaid utility excise tax 36.7 18.6
Other 30.1 42.8
-------- --------
Total current assets 416.3 458.0
-------- --------
Other Assets
- ------------
Financial assets 128.1 111.1
Income taxes recoverable through future revenues 205.6 208.2
Regulatory assets 111.7 116.7
Other 201.1 200.8
-------- --------
Total other assets 646.5 636.8
-------- --------
Total Assets $3,284.9 $3,326.8
======== ========
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
-3-
<PAGE>
CONSOLIDATED BALANCE SHEET
(continued)
The Dayton Power and Light Company
At At
March 31, December 31,
1998 1997
--------- ------------
--millions--
CAPITALIZATION AND LIABILITIES
Capitalization
- --------------
Common shareholder's equity--
Common stock $ 0.4 $ 0.4
Other paid-in capital 739.1 739.1
Earnings reinvested in the business 475.2 541.3
-------- --------
Total common shareholder's equity 1,214.7 1,280.8
Preferred stock 22.9 22.9
Long-term debt 886.0 886.0
-------- --------
Total capitalization 2,123.6 2,189.7
-------- --------
Current Liabilities
- -------------------
Accounts payable 70.9 124.2
Accrued taxes 138.1 157.8
Accrued interest 14.6 20.7
Current portion of long-term debt 0.4 0.4
Short-term debt 156.6 81.0
Other 76.6 41.9
-------- --------
Total current liabilities 457.2 426.0
-------- --------
Deferred Credits and Other
- --------------------------
Deferred taxes 502.0 500.5
Unamortized investment tax credit 71.5 72.2
Other 130.6 138.4
-------- --------
Total deferred credits and other 704.1 711.1
-------- --------
Total Capitalization and Liabilities $3,284.9 $3,326.8
======== ========
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
-4-
<PAGE>
Notes to Consolidated Financial Statements
1. Reclassifications have been made in certain prior years' amounts
to conform to the current reporting presentation of the Company.
2. The consolidated financial statements in this report have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. These consolidated financial statements should be read
in conjunction with the consolidated financial statements and notes
thereto in the Company's 1997 Annual Report on Form 10-K.
The information included in this Form 10-Q reflects all
adjustments which are, in the opinion of management, necessary for a
fair statement of the results of operations for the periods presented.
Any adjustments are of a normal recurring nature.
-5-
<PAGE>
OPERATING STATISTICS
The Dayton Power and Light Company
Three Months Ended
March 31
1998 1997
---- ----
Electric
- --------
Sales (millions of kWh) --
Residential 1,323 1,408
Commercial 820 823
Industrial 1,098 1,090
Other 1,185 838
------- -------
Total 4,426 4,159
Revenues (thousands of dollars) --
Residential 109,508 112,851
Commercial 56,678 56,454
Industrial 52,522 52,132
Other 42,677 31,665
------- -------
Total 261,385 253,102
Other Electric Statistics --
Average price per kWh-retail and wholesale
customers (cents) 5.77 6.01
Fuel cost per net kWh generated (cents) 1.25 1.27
Electric customers at end of period 486,795 480,835
Average kWh use per residential customer 3,045 3,277
Peak demand-maximum one hour use (mw), (net) 2,373 2,690
-6-
<PAGE>
OPERATING STATISTICS
(continued)
The Dayton Power and Light Company
Three Months Ended
March 31
1998 1997
---- ----
Gas
- ---
Sales (millions of MCF) --
Residential 11,356 13,145
Commercial 3,032 4,017
Industrial 920 1,198
Other 906 1,017
Transported gas 5,913 6,170
------- -------
Total 22,127 25,547
Revenues (thousands of dollars) --
Residential 59,953 68,952
Commercial 15,373 20,028
Industrial 4,492 5,581
Other 11,658 8,980
------- -------
Total 91,476 103,541
Other Gas Statistics --
Average price per MCF-retail customers
(dollars) 5.19 5.13
Gas customers at end of period 303,023 298,729
Degree Days (based on calendar month) --
Heating 2,369 2,788
Cooling 23 0
-7-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The Company's earnings for the first quarter of 1998 were
$69.3 million, up from $62.0 million earned in the first quarter last
year.
Winter temperatures in the first quarter were 15% milder than
last year and 20% milder than normal. This resulted in gas sales
declining 13% and weather sensitive electric residential sales
declining 6% from last year. The strong economy in West Central Ohio
provided increased commercial and industrial sales which helped offset
the effects of the mild winter. Total electric sales were down 2%
from last year. The Company's sales to other utilities and successful
cost control programs overcame effects of weather and contributed to
the good first quarter performance.
The financial condition and results of operations for the first
quarter ended March 31, 1998 and 1997 are discussed below.
Financial Condition
- -------------------
Construction plans are subject to continuing review and are
expected to be revised in light of changes in financial and economic
conditions, load forecasts, legislative and regulatory developments
and changing environmental standards, among other factors. 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.
As of March 31, 1998, the Company's cash and temporary cash
investment balance was $7.6 million. In addition, $128.1 million was
invested in debt and equity financial assets.
DPL Inc. and its subsidiaries have $200 million available through
a Revolving Credit Agreement ("Credit Agreement"). As of March 31,
1998, DPL Inc. had no outstanding borrowings under this Credit Agreement.
The Company has authority from the Public Utilities Commission of Ohio
("PUCO") to issue short-term debt up to $200 million with a maximum debt
limit of $300 million including loans from DPL Inc. under the terms of
the Credit Agreement. The Company has $97 million available in short-
term informal lines of credit. As of March 31, 1998, the Company had
$59.0 million of these informal lines outstanding and $96.3 million in
commercial paper outstanding.
The Company anticipates that it has sufficient capacity to issue
First Mortgage Bonds to satisfy its requirements in connection with
the financing of its construction and refinancing programs during the
five year period 1998-2002.
-8-
<PAGE>
Results of Operations
- ---------------------
Utility service revenues decreased by $4.4 million from the first
quarter last year. Higher electric sales to other utilities was the
primary cause of an increase in electric revenues of $8.3 million.
Increased electric industrial sales were more than offset by lower
residential sales, due to the effects of mild weather. Gas revenues
declined $12.1 million, also reflecting the effects of mild weather.
Other income increased $2.5 million primarily due to higher
income on investments in the first quarter of 1998.
Fuel and purchased power increased $6.1 million compared to the
corresponding quarter a year ago from power purchases for sales to
other utilities. Gas purchased for resale decreased $8.1 million for
the first quarter primarily from lower sales due to milder weather.
Operation and maintenance expense decreased from last year by
$17.5 million. Lower insurance and claims costs, decreased production
maintenance and overall cost containment efforts contributed to the
decrease.
Income taxes increased $8.8 million from the corresponding
quarter last year due to higher book income.
-9-
<PAGE>
Part II. Other Information
Item 5. Other Information.
Rate Regulation and Government Legislation
- ------------------------------------------
On December 18, 1997 the PUCO directed the Company to file a
proposal to implement a small-volume gas transportation pilot program.
In compliance with this Opinion and Order, on February 27, 1998 the
Company filed an application to implement a small-volume gas
transportation pilot program with the PUCO. The Company's application
is pending and the impact of this tariff cannot be assessed at the
present time.
In January 1997, a twelve member Joint Committee of the Ohio
Senate and House of Representatives was created to explore and
possibly draft retail wheeling legislation. The Committee has
conducted hearings to gather information from energy companies,
regulators, customers and industry experts. The Committee co-chairs
issued a draft report on January 6, 1998 recommending opening the
electric generation market, in the future, to competition for all Ohio
consumers. On March 26, 1998, the Committee co-chairs introduced an
electric deregulation Bill that reflected the recommendations
contained in their report.
Item 6. Exhibits and Reports on Form 8-K.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
quarter ended March 31, 1998.
-10-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
THE DAYTON POWER AND LIGHT COMPANY
----------------------------------
(Registrant)
Date: May 12, 1998 /s/ Paul R. Anderson
------------ ------------------------------
Paul R. Anderson
Controller
(Principal Accounting Officer)
Date: May 12, 1998 /s/ Allen M. Hill
------------ -------------------------------------
Allen M. Hill
President and Chief Executive Officer
-11-
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