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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
June 14, 2000
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State or other jurisdiction
Exact name of registrant as Address of principal executive of incorporation or
specified in its charter; offices; zip code; registrant's organization; IRS Employer
Commission File No.: telephone number, including area code: Identification No.:
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DQE, Inc. Cherrington Corporate Center, Pennsylvania
1-10290 Suite 100, 500 Cherrington Parkway, 25-1598483
Coraopolis, PA 15108-3184
412-269-0700
Duquesne Light Company 411 Seventh Avenue Pennsylvania
1-956 Pittsburgh, PA 15219 25-0451600
412-393-6000
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Items 1-4. Not applicable.
Item 5. Other Events.
On June 14, 2000, officers of DQE and its affiliates made a presentation to
the Wall Street Utility Group. The following issues were discussed:
With the sale of our generating plants, the electricity business will be a
smaller part of DQE than historically, and the role of our administration
infrastructure will be changing. As discussed in our Quarterly Report on Form
10-Q for the quarter ended March 31, 2000 (the "First Quarter 10-Q"), we have
initiated a corporate center excellence project, through which we expect to
reduce administrative costs by approximately $40 million by 2001. We also
expect Duquesne Light Company to reduce costs by $50 million annually by the end
of 2001, through its Best-in-Class expenditure-reducing initiative. We further
expect Duquesne Light will achieve annual revenues of $300 million on the
transmission and distribution business, and earn a 9 percent return on equity.
Also as previously discussed, due to the generation divestiture we are changing
the capital structure of Duquesne Light, in connection with which we plan to
continue aggressively repurchasing DQE common stock.
DQE Systems, Inc. expects to achieve an overall 10 percent return on its
investments by the end of 2000, comprised of 4 percent and 34 percent returns,
respectively, on investments made by its propane and telecommunications
subsidiaries. Further, we expect returns on investments by those subsidiaries
of 10 percent and 44 percent in 2001.
DQE Financial Corp. expects to achieve returns on investments in 2000 and
2001 of (1) 16 percent and 14 percent in structured finance, (2) 9 percent
(including an expected $5 million write-off of a coalbed methane investment) and
14 percent in alternative energy and (3) 31 percent and 23 percent in affordable
housing.
DQE Energy Services, Inc. expects to sell its E-Fuel(R) assets by the end
of 2000, and expects to achieve a return on its investments in energy facility
construction, operation and maintenance of 12 percent and 14 percent in 2000 and
2001.
As discussed in the First Quarter 10-Q, in 2000 AquaSource, Inc. expects to
sell its non-core assets (including its bottled water operations), achieve
overall returns on its investments of 8 percent, and complete rate filings in
Texas and Indiana. AquaSource further expects to improve its revenues by $6
million and $8 million in 2000 and 2001, and significantly increase its customer
growth.
As discussed in the First Quarter 10-Q, DQE Enterprises, Inc. expects to
add to its portfolio of electronic commerce and energy technology businesses by
investing in at least 10 new, principally early-stage companies in 2000. DQE
Enterprises anticipates that several of its portfolio companies will undertake
capital raising and market valuation activities such as initial public offerings
during the third and fourth quarters of 2000.
All of the returns discussed above are on an unlevered basis, except with
respect to DQE Financial, whose debt to equity ratio currently is 35:65.
Duquesne Light, DQE Systems, DQE Financial, DQE Energy Services, AquaSource and
DQE Enterprises are all wholly owned subsidiaries of DQE.
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The foregoing statements are forward-looking, and the actual results may
materially differ from those implied due to known and unknown risks and
uncertainties, including but not limited to, the following:
Our ability to centralize and streamline administrative functions to
eliminate redundancies, as well as to retrain and redeploy administrative
employees, will affect the ultimate amount of cost reductions at both DQE and
Duquesne Light. Fluctuations in our common stock price could affect our
repurchasing plans. Changing market conditions, weather conditions and demand
for electric utility services could affect projected returns on equity, returns
on investment and revenue levels at Duquesne Light. Changing market conditions,
weather conditions and demand for water, gas and telecommunications utility
services, and the availability of appropriate investment opportunities in those
industries, could affect projected returns on investment and revenue levels at
DQE Systems, DQE Financial and AquaSource. DQE Financial's projected returns
will also be affected by the availability of appropriate investments, and active
markets for the disposal of certain assets, in the structured finance,
alternative energy and affordable housing areas, as well as additional minor
adjustments regarding the coalbed methane investment. AquaSource's projected
returns and revenues will also be affected by the outcome of the Texas and
Indiana rate filings, which will depend on the determinations made by the public
utility commissions in each state. The outcome of negotiations with purchasers
will affect the sale of AquaSource's non-core assets and DQE Energy Services' E-
Fuel(R) assets. Customer energy demand, fuel costs and plant operations could
affect DQE Energy Services' projected returns regarding energy facility
investments. The availability of appropriate investment opportunities could
affect DQE Enterprises' plans for additional technology investments. The
volatility of the stock markets, as well as general business and economic
conditions, could affect the potential for initial public offerings or other
capital raising activities being made at any time by the companies in which we
invest. Overall performance by DQE and its affiliates could be affected by the
pending filing with the Public Utility Commission regarding transaction costs
related to the generation asset auction and competitive transition charge
recovery, the final outcome of the merger litigation with Allegheny Energy
Corporation, and by economic, competitive, regulatory, governmental and
technological factors affecting operations, markets, products, services and
prices.
Items 6-8. Not applicable.
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SIGNATURE
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.
DQE, Inc.
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(Registrant)
Date June 14, 2000 /s/ Morgan K. O'Brien
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(Signature)
Morgan K. O'Brien
Executive Vice President,
Corporate Development
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.
Duquesne Light Company
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(Registrant)
Date June 14, 2000 /s/ Stevan R. Schott
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(Signature)
Stevan R. Schott
Vice President and Controller
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