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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 1-9052
DPL INC.
(Exact name of registrant as specified in its charter)
OHIO 31-1163136
(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:
Outstanding at Name of each exchange
Title of each class February 28, 1995 on which registered
------------------- ----------------- ---------------------
Common Stock $0.01 par value and 106,951,623 New York Stock Exchange
Preferred Share Purchase Rights
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 ( )
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of February 28, 1995 was $2,232,615,130.00 based on the closing
price of $20 7/8 on such date.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II incorporate by reference the registrant's 1994 Annual Report to
Shareholders.
Portions of the definitive Proxy Statement dated March 1, 1995, relating to the
1995 Annual Meeting of Shareholders of the registrant, are incorporated by
reference into Part III.
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PART I
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Item 1 - BUSINESS*
DPL INC.
DPL Inc. was organized in 1985 under the laws of the State
of Ohio to engage in the acquisition and holding of securities of
corporations for investment purposes. The executive offices of
DPL Inc. are located at Courthouse Plaza Southwest, Dayton, Ohio
45402 - telephone (513) 224-6000.
DPL Inc.'s principal subsidiary is The Dayton Power and
Light Company ("DP&L"). DP&L 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, DP&L provides steam heating service in downtown
Dayton, Ohio. DP&L 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. DP&L'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.
Subsidiaries of DP&L include MacGregor Park Inc., an owner
and developer of real estate; and DP&L Community Urban
Redevelopment Corporation, the owner of a downtown Dayton office
building.
Other subsidiaries of DPL Inc. include Miami Valley
CTC, Inc., which provides transportation services to DP&L and
another unaffiliated Dayton-based company; Miami Valley Leasing,
which leases vehicles, communications equipment and other
miscellaneous equipment, owns real estate and has, for financial
investment purposes, acquired limited partnership interests in
natural gas storage facilities. Miami Valley Resources, Inc.
("MVR"), a natural gas supply management company; Miami Valley
Lighting, Inc., a street lighting business; Miami Valley Insurance
Company, an insurance company for DPL Inc. and its subsidiaries;
and Miami Valley Development Company, which is engaged in the
business of technology research and development.
* 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 subsequent changes to such
information.
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DPL Inc. and its subsidiaries are exempt from
registration with the Securities and Exchange Commission under
the Public Utility Holding Company Act of 1935 because its
utility business operates solely in the State of Ohio.
DPL Inc. and its subsidiaries employed 3,078 persons as
of December 31, 1994, of which 2,578 are full-time employees and
500 are part-time employees.
Information relating to industry segments is contained
in Note 12 of Notes to Consolidated Financial Statements on
page 26 of the registrant's 1994 Annual Report to Shareholders
("1994 Annual Report"), which Note is incorporated herein by
reference.
COMPETITION
DPL Inc. competes through its principal subsidiary,
DP&L, with privately and municipally owned electric utilities
and rural electric cooperatives, natural gas suppliers and other
alternate fuel suppliers. DP&L competes on the basis of price
and service.
Like other utilities, DP&L from time to time may have
electric generating capacity available for sale to other
utilities. DP&L competes with other utilities to sell
electricity provided by such capacity. The ability of DP&L to
sell this electricity will depend on how DP&L's price, terms and
conditions compare to those of other utilities. In addition,
from time to time, DP&L 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 purchases 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 of 1935, allows the federal
government to mandate access by others to a utility's electric
transmission system and may accelerate competition in the supply
of electricity.
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MVR, established in 1986 as a subsidiary of DPL Inc., acts
as a broker in arranging and managing natural gas supplies for
business and industry. Deliveries of natural gas to MVR
customers can be made through DP&L's transportation system, or
another transportation system, on the same basis as deliveries
to customers of other gas brokerage firms. Customers with
alternate fuel capability can continue to choose between natural
gas and their alternate fuel based upon overall economics.
DP&L 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 DP&L to supply 97% of its power requirements.
In addition to these municipal customers, DP&L 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
DP&L, as well as its end-use customers, with an array of
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 DP&L or purchased elsewhere
transported to the end-use customer by DP&L could fluctuate
based on the economics of each in comparison with changes in
alternate fuel prices. For DP&L, price competition and
reliability among both natural gas suppliers and interstate
pipeline sources are major factors affecting procurement
decisions.
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CONSTRUCTION AND FINANCING PROGRAM OF DPL INC.
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............... 15 15 15 15 16 76
---- ---- ---- ---- ---- ----
Total construction..... $ 89 $119 $122 $116 $121 $567
Estimated construction costs over the next five years
average $113 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. DP&L's ability to complete its capital projects and
the reliability of future service will be affected by its
financial condition, the availability of external funds at
reasonable cost and adequate and timely rate increases.
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 DP&L's operations cannot be
estimated at this time.
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1995-1999 Financing Program
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DP&L 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.
DPL Inc. will require an additional $9 million for mandatory
redemptions.
At year-end 1994, DPL Inc. had a cash and temporary
investment balance of $96 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 DP&L's Preferred Stock Series D, E, F, H and I.
During late 1992 and early 1993, DP&L 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 1998 which allows total borrowings by
DPL Inc. and its subsidiaries of $200 million. DP&L 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. DP&L also has $97 million available in short term
informal lines of credit At year-end, DP&L had no borrowings
outstanding from these lines of credit and no commercial paper
outstanding.
Under DP&L'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
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outstanding and to be outstanding, and (ii) 100% of retired
First Mortgage Bonds. DP&L 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 DP&L's Amended Articles of
Incorporation.
ELECTRIC OPERATIONS AND FUEL SUPPLY
DP&L'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 the 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 DP&L, CG&E, PSI Resources and CINergy Corp. resolved
DP&L'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 DP&L.
DP&L'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 DP&L
Station ship* Company Location Portion Total
----------- ----- --------- --------------- ------- -----
Coal Units
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Hutchings W DP&L Miamisburg, OH 371 371
Killen C DP&L Wrightsville, OH 402 600
Stuart C DP&L 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
-----------------------------
Hutchings W DP&L Miamisburg, OH 32 32
Yankee Street W DP&L Centerville, OH 144 144
Monument W DP&L Dayton, OH 12 12
Tait W DP&L Dayton, OH 10 10
Sidney W DP&L 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. DP&L has several
interconnections with other companies for the purchase, sale and
interchange of electricity.
DP&L 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.
DP&L 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. DP&L 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 DP&L 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
DP&L 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, DP&L has approximately 16 billion cubic
feet of firm storage service with various pipelines. DP&L 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, DP&L is interconnected with CNG
Transmission Corporation and Texas Eastern Transmission
Corporation. These interconnections with various interstate
pipelines provide DP&L the opportunity to purchase
competitively-priced natural gas supplies and pipeline
services. DP&L 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. DP&L'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, DP&L, 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 DP&L 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 DP&L'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, DP&L 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 DP&L'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. DP&L 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 DP&L'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. DP&L 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, 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 DP&L 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, DP&L 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 DP&L'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 DP&L's full
recovery of transition costs.
RATE REGULATION AND GOVERNMENT LEGISLATION
DP&L's sales of electricity, natural gas and steam to
retail customers are subject to rate regulation by the PUCO and
various municipalities. DP&L'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.
DP&L'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, DP&L 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 DP&L's investment and recover the
current costs of providing electric service to its customers.
In November 1991, DP&L 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 DP&L's next electric rate case. In the
event that the DP&L'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, DP&L 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 DP&L 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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DP&L 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 DP&L 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, DP&L 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, DP&L
filed an application on January 21, 1994 to lower its PIPP
rate. The application was approved by the PUCO on March 24,
1994.
DP&L 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, DP&L's self-built option was
evaluated to be the least cost option. On March 7, 1994, the
OPSB approved DP&L'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.
DP&L 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 DP&L
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, DP&L 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 DP&L, including the commonly owned
facilities operated by DP&L, 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. DP&L 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
DPL INC.
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 DP&L.
DP&L'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. DP&L anticipates that costs to
comply with the Act will be eligible for recovery in future fuel
hearings and other regulatory proceedings. The PUCO is expected
I-14
<PAGE>
to initiate a hearing in 1995 to review DP&L's Phase I
compliance plans. DP&L 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 DP&L.
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
--------
DP&L 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.
DP&L received notification from the U.S. EPA in July
1987, for the Cardington Road site. DP&L has not joined the PRP
group formed at that site because of the absence of any known
evidence that DP&L 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 DP&L's financial position, earnings or cashflow.
I-15
<PAGE>
DP&L received notification from the U.S. EPA in
September 1987, for the United Scrap Lead Site. DP&L 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. DP&L 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. DP&L 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 DP&L's financial position, earnings or
cashflow.
DP&L 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. DP&L 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. DP&L 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 DP&L's financial
position, earnings or cashflow.
DP&L 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. DP&L has not joined the PRP
group formed for the site because the available information does
not demonstrate that DP&L contributed wastes to the site. The
final resolution will not have a material effect on DP&L's
financial position, earnings or cashflow.
I-16
<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-17
<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-18
<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, President and Chief 4/05/88 - 3/01/95
Executive Officer
Chairman, DP&L 4/06/92 - 3/01/95
Chairman and Chief Executive 8/02/88 - 4/06/92
Officer, DP&L
Allen M. Hill 49 President and Chief Executive 4/06/92 - 3/01/95
Officer, DP&L
President and Chief Operating 8/02/88 - 4/06/92
Officer, DP&L
Paul R. Anderson 52 Controller, DP&L 4/12/81 - 3/01/95
Stephen P. Bramlage 48 Assistant Vice President, DP&L 1/01/94 - 3/01/95
Director, Service Operations, 10/29/89 - 1/01/94
DP&L
Robert M. Combs 49 Vice President, DP&L 5/09/94 - 3/01/95
Treasurer, DP&L 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, DP&L 1/01/94 - 3/01/95
Director, Service Operations, 4/03/92 - 1/01/94
DP&L
Service Center Manager 6/11/89 - 4/03/92
Jeanne S. Holihan 38 Assistant Vice President, DP&L 3/17/93 - 3/01/95
Treasurer, DP&L 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>
I-19
<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 DP&L
Group Vice President and 11/06/90 - 5/09/94
Treasurer,
Group Vice President, DP&L
Vice President and Treasurer, 11/01/88 - 11/06/90
DPL Inc. and DP&L
Stephen F. Koziar, Jr. 50 Group Vice President and 1/31/95 - 3/01/95
Secretary, DPL Inc. and
DP&L
Group Vice President, 12/10/87 - 1/31/95
DPL Inc. and DP&L
Judy W. Lansaw 43 Group Vice President, DPL Inc. 1/31/95 - 3/01/95
and DP&L
Group Vice President and 12/07/93 - 1/31/95
Secretary, DPL Inc. and
DP&L
Vice President and Secretary 8/01/89 - 12/07/93
DPL Inc. and DP&L
Bryce W. Nickel 38 Assistant Vice President, DP&L 1/01/94 - 3/01/95
Director, Service Operations, 10/29/89 - 1/01/94
DP&L
H. Ted Santo 44 Group Vice President, DP&L 12/08/92 - 3/01/95
Vice President, DP&L 2/28/88 - 12/08/92
</TABLE>
I-20
<PAGE>
Item 2- PROPERTIES
Electric
--------
Information relating to DP&L's electric properties is contained in
Item 1 - BUSINESS, DPL INC. (pages I-1 and I-2), CONSTRUCTION AND FINANCING
PROGRAM OF DPL INC. (pages I-4 through I-6) and ELECTRIC OPERATIONS AND FUEL
SUPPLY (pages I-6 through I-8) - Notes 2 and 5 of Notes to Consolidated
Financial Statements on pages 21 and 23, respectively, of the registrant's 1994
Annual Report, which pages are incorporated herein by reference.
Natural Gas
-----------
Information relating to DP&L's gas properties is contained in Item 1
- BUSINESS, DPL INC. (pages I-1 and I-2) and GAS OPERATIONS AND GAS SUPPLY
(pages I-8 through I-10), which pages are incorporated herein by reference.
Steam
-----
DP&L owns two steam generating plants and the steam distribution
facility serving downtown Dayton, Ohio.
Other
-----
DP&L owns a number of area service buildings located in various
operating centers.
Substantially all property and plant of DP&L is subject to the lien
of the Mortgage securing DP&L's First Mortgage Bonds.
Item 3 - LEGAL PROCEEDINGS
Information relating to legal proceedings involving DP&L is contained
in Item 1 - BUSINESS, DPL INC. (pages I-1 and I-2), COMPETITION (pages I-2
through I-3), ELECTRIC OPERATIONS AND FUEL SUPPLY (pages I-6 through I-8), GAS
OPERATIONS AND GAS SUPPLY (pages I-8 through I-10), RATE REGULATION AND
GOVERNMENT LEGISLATION (pages I-10 through I-14) and ENVIRONMENTAL
CONSIDERATIONS (pages I-14 through I-16) and - Note 2 of Notes of Consolidated
Financial Statements on page 21 of the registrant's 1994 Annual Report, which
pages are incorporated herein by reference.
Item 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
DPL Inc.'s Annual Meeting of Shareholders ("Annual Meeting") was held
on April 19, 1994. Three directors of DPL Inc. were elected at the Annual
Meeting, each of whom will serve a three year term expiring in 1997. The
nominees were elected as follows: Ernie Green, 90,918,169 shares FOR, 989,620
shares WITHHELD; David R. Holmes, 90,677,633 shares FOR, 1,230,156 shares
WITHHELD; and Burnell R. Roberts, 90,959,663 shares FOR, 948,126 shares
WITHHELD.
I-21
<PAGE>
PART II
-------
Item 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The information required by this item of Form 10-K is set
forth on pages 14, 27 and 28 of the registrant's 1994 Annual
Report, which pages are incorporated herein by reference. As of
December 31, 1994, there were 51,270 holders of record of
DPL Inc. common equity, excluding individual participants in
security position listings.
DP&L's Mortgage restricts the payment of dividends on DP&L's
Common Stock under certain conditions. In addition, so long as
any Preferred Stock is outstanding, DP&L'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 DP&L
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 DP&L were available for
Common Stock dividends.
The Credit Agreement requires that the aggregate assets of
DP&L and its subsidiaries (if any) constitute not less than 60%
of the total consolidated assets of DPL Inc., and that DP&L
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 on page 14 of the registrant's 1994 Annual Report, which
page is incorporated herein by reference.
Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required by this item of Form 10-K is set
forth in Note 2 of Notes to Consolidated Financial Statements on
page 21 and on pages 1, 13, 15 and 16 of the registrant's 1994
Annual Report, which pages are incorporated herein by
reference.
Item 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item of Form 10-K is set
forth on page 14 and on pages 17 through 27 of the registrant's
1994 Annual Report, which pages are incorporated herein by
reference.
II-1
<PAGE>
Report of Independent Accountants
on Financial Statement Schedules
--------------------------------
To The Board of Directors of DPL Inc.
Our audits of the consolidated financial statements referred to
in our report dated January 18, 1995 appearing on page 27 of the
1994 Annual Report to Shareholders of DPL Inc. (which report and
consolidated financial statements are incorporated by reference
in 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-2
<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 information required by this item of Form 10-K is
set forth on pages 2 through 5 of DPL Inc.'s definitive Proxy
Statement dated March 1, 1995, relating to the 1995 Annual
Meeting of Shareholders ("1995 Proxy Statement"), which pages
are incorporated herein by reference, and on pages I-19 and I-20
of this Form 10-K.
Item 11 - EXECUTIVE COMPENSATION
The information required by this item of Form 10-K is
set forth on pages 9 through 15 of the 1995 Proxy Statement,
which pages are incorporated herein by reference.
Item 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The information required by this item of Form 10-K is
set forth on pages 3 through 6 and on pages 14 and 15 of the
1995 Proxy Statement, which pages are incorporated herein by
reference.
Item 13 - CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
None.
III-1
<PAGE>
PART IV
-------
Item 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
Pages of 1994 Form
10-K Incorporated
by Reference
------------------
Report of Independent Accountants..................... II-2
(a) Documents filed as part of the Form 10-K
1. Financial Statements Pages of 1994 Annual
-------------------- Report Incorporated
by Reference
--------------------
Consolidated Statement of Results of Operations
for the three years in the period ended
December 31, 1994..................................... 17
Consolidated Statement of Cash Flows for the
three years in the period ended December 31, 1994..... 18
Consolidated Balance Sheet as of December 31,
1994 and 1993......................................... 19
Notes to Consolidated Financial Statements............ 20 - 26
Report of Independent Accountants..................... 27
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
DPL Inc., Holding Sub Inc. and DP&L 1986 Proxy Statement
dated January 6, 1986.................. (File No. 1-2385)
3(a) Copy of Amended Articles of Exhibit 3 to Report on
Incorporation of DPL Inc. dated Form 10-K for year ended
January 4, 1991, and amendment dated December 31, 1991
December 3, 1991....................... (File No. 1-9052)
3(b) Copy of Amendment dated April 20, 1993 Exhibit 3(b) to Report
to DPL Inc.'s Amended Articles of on Form 10-K for the
Incorporation.......................... year ended December 31,
1993 (File No. 1-9052)
4(a) Copy of Composite Indenture dated as of Exhibit 4(a) to
October 1, 1935, between DP&L and Report on Form 10-K
The Bank of New York, Trustee with all for year ended
amendments through the Twenty-Ninth December 31, 1985
Supplemental Indenture................. (File No. 1-2385)
4(b) Copy of the Thirtieth Supplemental Exhibit 4(h) to
Indenture dated as of March 1, 1982, Registration Statement
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 DP&L and The Bank of New York, No. 33-56162
Trustee................................
4(d) Copy of the Thirty-Second Supplemental Exhibit 4(i) to
Indenture dated as of November 1, 1982, Registration Statement
between DP&L and The Bank of New York, No. 33-56162
Trustee................................
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 DP&L 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 DP&L 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
Indenture dated as of December 1, 1986, report on Form 10-K
between DP&L and The Bank of New York, for the year ended
Trustee................................ December 31, 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 DP&L 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 DP&L 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 DP&L 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 DP&L and The Bank of New York, No. 33-57928
Trustee................................
4(l) Copy of the Fortieth Supplemental Exhibit 4(m) to Report
Indenture dated as of February 15, 1993, on Form 10-K for the
between DP&L and The Bank of New York, year ended December 31,
Trustee................................ 1992 (File No. 1-2385)
4(m) Copy of the Credit Agreement dated as Exhibit 4(k) to DPL
of November 2, 1989 between DPL Inc., Inc.'s Registration
the Bank of New York, as agent, and Statement on Form S-3
the banks named therein................ (File No. 33-32348)
4(n) Copy of Shareholder Rights Agreement Exhibit 4 to Report
between DPL Inc. and The First on Form 8-K dated
National Bank of Boston................ December 13, 1991 (File
No. 1-9052)
10(a) Description of Management Incentive Exhibit 10(c) to
Compensation Program for Certain Report on Form 10-K
Executive Officers..................... for the year ended
December 31, 1986 (File
No. 1-9052)
10(b) Copy of Severance Pay Agreement Exhibit 10(f) to Report
with Certain Executive Officers........ on Form 10-K for the
year ended December 31,
1987 (File No. 1-9052)
IV-3
<PAGE>
10(c) Copy of Supplemental Executive Exhibit 10(e) to Report
Retirement Plan amended August 6, on Form 10-K for the
1991................................... year ended December 31,
1991 (File No. 1-9052)
10(d) Amended description of Directors' Exhibit 10(d) to Report
Deferred Stock Compensation Plan on Form 10-K for the
effective January 1, 1993.............. year ended December 31,
1993 (File No. 1-9052)
10(e) Amended description of Deferred Exhibit 10(e) to Report
Compensation Plan for Non-Employee on Form 10-K for the
Directors effective January 1, 1993.... year ended December 31,
1993 (File No. 1-9052)
10(f) Copy of Management Stock Incentive Exhibit 10(f) to Report
Plan amended January 1, 1993........... on Form 10-K for the
year ended December 31,
1993 (File No. 1-9052)
18 Copy of preferability letter relating Exhibit 18 to Report on
to change in accounting for unbilled Form 10-K for the year
revenues from Price Waterhouse......... ended December 31, 1987
(File No. 1-9052)
21 Copy of List of Subsidiaries of Exhibit 21 to Report
DPL Inc................................ on Form 10-K for the
year ended December 31,
1993 (File No. 1-9052)
The following exhibits are filed herewith:
Page No.
----------------------
13 Copy of DPL Inc.'s 1994 Annual Report
to Shareholders........................
23 Consent of Price Waterhouse............
Pursuant to paragraph (b)(4)(iii)(A) of Item 601 of Regulation S-K, DPL Inc.
has not filed as an exhibit to this Form 10-K certain instruments with respect
to long-term debt if the total amount of securities authorized thereunder does
not exceed 10% of the total assets of DPL Inc. and its subsidiaries on a
consolidated basis, but hereby agrees to furnish to the SEC on request any such
instruments.
(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.
DPL Inc.
Registrant
March 28, 1995 Peter H. Forster
---------------------------------
Peter H. Forster
Chairman, President and Chief
Executive Officer
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.
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)
Director March , 1995
-------------------------
(J. G. Haley)
IV-5
<PAGE>
Allen M. Hill Director March 30, 1995
-------------------------
(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
and accounting
officer)
Burnell R. Roberts Director March 30, 1995
-------------------------
(B. R. Roberts)
IV-6
<PAGE>
<TABLE>
<CAPTION>
Schedule II
DPL INC.
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
<PAGE>
Exhibit 13
(see appendix for logo description)
(see appendix for photo description)
(see appendix for logo description)
1994 Annual Report
[cover]
<PAGE>
(see appendix for logo description)
Newsflash
December 8, 1994
DP&L Selected as Top Electric Company in the Country
The Dayton Power and Light Company has been selected as the
1994 Utility of the Year by Electric Light and Power
magazine. In a special ceremony today at DP&L's Energy
Resource Center, DPL Inc. Chairman Pete Forster received the
award from Wayne Beaty, managing editor of EL&P, the electric
industry's premiere publication.
"This award belongs to you, the employees of DP&L," said
Pete. "You are the ones who made it happen. Being selected
as Utility of the Year recognizes your hard work, commitment
to excellence and quality customer service."
EL&P cited DP&L's outstanding performance to customers,
employees and shareholders and responsible, caring corporate
citizenship as the major factors for the Company's selection
as the number one investor-owned utility in the country.
DP&L is the 26th recipient of this annual honor. The Company
and our 1994 accomplishments will be featured in the December
issue of the publication.
The Company was also recognized as Utility of the Year at the
POWER-GEN AMERICAS '94 conference, December 7, a yearly forum
for electric industry leaders to discuss energy issues.
"Every employee plays a vital role in making the Company
successful," said Pete. "This award is an excellent example
of what people can accomplish when they work together as a
team toward a common goal."
"Now, more than ever, it's important to set our sights on the
future and use this award as a stepping stone to reach a
higher level of performance in 1995," said Pete.
CONTENTS
Setting The Direction/Corporate Profile 2
Creating The Strategies/Letter to Shareholders 3
Distinguished Performance 4
Making It Happen 6
Financial Review 13, 15-16
Financial & Statistical Summary 14
Financial Statements & Notes 17-27
Corporate Information 28
[inside front cover]
<PAGE>
<TABLE>
<CAPTION>
Financial & Operating Highlights
1994 1993 %change
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial Performance:
Earnings per share of common stock $ 1.54 1.42 9
Dividends paid per share $ 1.18 1.12 5
Return on shareholders' equity % 14.1 13.7
Return on total capital % 11.3 11.0
Market value per share at December 31 $ 20-1/2 20-5/8 (1)
Book value per share at December 31 $ 11.17 10.51 6
Total electric and natural
gas revenues (millions) $ 1,180.6 1,144.0 3
Taxes per share $ 2.21 1.95 13
Number of common shareholders 51,270 53,275 (4)
Cash provided by operating
activities (millions) $ 286.9 235.3 22
First Mortgage Bond Ratings:
Duff & Phelps, Inc. AA AA-
Standard & Poor's Corporation AA- A
Moody's Investors Service A1 A2
Capital Investment Performance:
Construction additions (millions) $ 101.1 88.9 14
Construction expenditures paid from
internal funds % 100 100
DP&L Operating Performance:
Electric --
Average price per kWh-retail and
wholesale customers (calendar year) cents 6.59 6.07 9
Fuel efficiency --
Heat rate-Btu per kWh 9,836 9,793 -
Industry average 10,351 10,340 -
Fuel savings (millions) $ 11.0 12.0 (8)
System peak load-MW (calendar year) 2,824 2,765 2
Reserve margin-capacity
relative to peak load % 6.8 9.1
Gas --
Average price per MCF-retail customers
(calendar year) $ 5.44 5.42 -
</TABLE>
1
<PAGE>
DIRECTORS Pictured from left to right: BURNELL R. ROBERTS
(2)(3) Retired Chairman and Chief Executive Officer, The Mead
Corporation, Dayton, Ohio DAVID R. HOLMES (1)(4) Chairman,
President and Chief Executive Officer, The Reynolds and
Reynolds Company, Dayton, Ohio JAMES F. DICKE, II (2)(3)
President, Crown Equipment Corporation, New Bremen, Ohio
PETER H. FORSTER (1)(3)(4) Chairman, President and Chief
Executive Officer, DPL Inc., Chairman, DP&L, Dayton, Ohio
W AUGUST HILLENBRAND (2)(3) President and Chief Executive
Officer, Hillenbrand Industries, Batesville, Indiana JANE G.
HALEY (1)(4) President, Gosiger, Inc., Dayton, Ohio ALLEN M.
HILL (1)(4) President and Chief Executive Officer, DP&L,
Dayton, Ohio THOMAS J. DANIS (1) Former Chairman and Chief
Executive Officer, The Danis Companies, Dayton, Ohio ERNIE
GREEN (1)(4) President and Chief Executive Officer, Ernie
Green Industries, Dayton, Ohio All Directors of DPL Inc. are
also Directors of DP&L. 1994 Committee Assignments:
DPL Inc. - Finance and Audit Review (1) Compensation and
Management Review (2) Executive (3) DP&L - Community and
External Relations (4)
(see appendix for photo description)
Setting The Direction
DP&L Service Area
West Central Ohio
(see appendix for artwork description)
Corporate Profile:
The interests of shareholders, employees and the community
are all interrelated. These relationships are guided by the
Board of Directors and Management setting the direction and
creating the strategies. These strategies are fulfilled by
our employees making it happen and working together with
individual communities. Performing responsibly in all these
areas leads to greater value for the shareholder.
DPL Inc. was formed in 1986 as a holding company. Its
principal subsidiary is The Dayton Power and Light Company
("DP&L"). DP&L sells electricity and natural gas to
residential, commercial, industrial and governmental
customers in a 6,000 square mile area of West Central Ohio,
and employs over 3,000 people. Electricity for DP&L's 24
county service area is generated at eight power plants and is
distributed to 470,000 retail customers. On a wholesale
basis, electric energy is supplied to 12 municipalities.
Natural gas service is provided to 290,000 customers in 16
counties. DP&L also provides steam service to 200 customers
in downtown Dayton for heating and industrial processing.
The corporate offices of DPL Inc. are located at:
Courthouse Plaza Southwest
Dayton, Ohio 45402
(513) 224-6000
2
<PAGE>
Creating The Strategies
(see appendix for logo description)
Dear Shareholders:
Nationally, 1994 saw utility common stock prices being
battered by a combination of increases in long-term rates,
inflation fears, uncertain economic growth and generally
below average dividend and earnings growth over-shadowed by
certain change for the utility industry as we know it today.
Against this backdrop, at DPL we focused our effort
heavily on keeping the stock price up, generating above
average earnings, substantially increasing dividends and
taking advantage of the healthy economy in our region.
Getting our success story out by visiting 20 cities, and
talking with over 400 analysts helped us swim against the
tide this past year. While the industry total return was off
16%, we finished up 5% with the stock price closing at $20-
1/2. The people who heard our strategy generally agreed that
it was right for DPL and many of them, who are long-term
investors, bought our stock. In addition, during 1994, our
credit ratings were upgraded by all three major rating
agencies, including most recently, an upgrade to "AA" by Duff
& Phelps.
Our basic belief, incorporated in our strategy since 1978,
is that we sell a commodity, and a commodity sells on price.
The components that support this belief and make DPL
successful remain unchanged:
- Consistent, superior plant operations and
low, but adequate reserves
- Closely managed costs and adoption of best
practices
- Competitive retail electric and gas prices
- A growing service area economy
- Strong financial performance and a strong
balance sheet
We also believe that we have to produce a meaningful
return to you, our shareholder, every year. We increased our
annual dividend rate by six cents a year, or 5.4%, in
February 1994 to $1.18 per share and increased it again on
January 31, 1995 by six cents, or 5.1%, to $1.24 per share.
Our continuing goal is sustainable above average earnings and
sustainable above average dividend growth. We finished the
year with earnings per share at $1.54 compared to $1.42 last
year.
<PAGE>
A proud moment for DPL and its employees was being named
the 1994 Utility of the Year. This achievement reaffirms the
public's confidence in us and recognizes our commitment to
the communities we serve.
We believe, nationally, 1995 could be a lot like 1994.
The year will begin with a lot political change, but of
unknown impact, and an increasing interest rate environment.
We are going to stay with the basics that we know and do
well. We like our business and believe in our customers in
West Central Ohio. It's a growing, healthy part of America
and we are proud to be the energy supplier. The State of
Ohio is pro growth with a reasonable balance in government,
an experienced utility commission and elected officials
committed to growth.
Thanks for letting us work for you.
Best regards,
Peter H. Forster
Peter H. Forster
Chairman, President & CEO,
DPL Inc.
Total Return-
Five Year Average
Annual Return
Percent
(with reinvested Dividends)
--Industry Average
(see appendix for graph description)
Dividends
Per Share
Dollars
(see appendix for graph description)
Earnings
Per Share
Dollars
(see appendix for graph description)
3
<PAGE>
Distinguished Performance
Growing Service Area Economy - 1
Setting the Direction
Enhance strong partnership with West Central Ohio to
achieve economic growth
Creating The Strategies
Promote the strengths of West Central Ohio
Attract new business and encourage expansion of existing
business
Work with local communities to enhance the quality of life
in West Central Ohio
Promote wise energy use
Making It Happen
Regional unemployment at less than 5% is below that of
Ohio and the United States
State of Ohio #1 ranked in economic development and
expansion 1991 - 1993
Solid growth in value-added jobs, business customers and
sales to business in 1994
Nationally recognized, effective and comprehensive demand-
side management program
<PAGE>
Distinguished Performance
Managing Costs - 2
Setting The Direction
Manage costs at all levels while achieving performance
goals
Creating The Strategies
Improve Company-wide culture of cost control
Predict and control operating and maintenance expense
Manage capital expenditures to maximize reliability in
least cost manner
Making It Happen
All employees are shareholders and have incentive pay tied
directly to cost control
Predictable labor costs through the rest of the century
DP&L employment remains below 1980 levels
Capital expenditures at or below depreciation
<PAGE>
Distinguished Performance
Strong Financial Performance - 3
Setting The Direction
Produce strong financial performance while minimizing
future risk
Creating The Strategies
Achieve above average earnings growth through energy sales
growth and control of expenses
Create and maintain financial risk profile that results in
improved credit ratings
Produce strong cashflow
Finance all capital expenditures through internal cashflow
Making It Happen
EPS growth of 8.5% in 1994 and 6.0% in 1993
Credit ratings have been upgraded from BBB+ to AA since
1992, versus trend of downgrades in industry
100% cash earnings in 1994
Refinancing stretched maturities - no short or medium-term
interest rate risk
4
<PAGE>
Distinguished Performance
Competitive Prices - 4
Setting The Direction
Keep prices competitive relative to the state and the
region
Creating The Strategies
Achieve successful solutions which balance the needs of
customers, shareholders and employees
Implement cost-effective compliance plans for regulatory
initiatives
Making It Happen
Minimal Clean Air Act exposure will solidify competitive
position with no material price impact
Non-nuclear, 100% fossil fuel Company reduces operating
risk
Production costs are low and will be reduced further
Natural gas pipeline access and contracts ensure low
overall energy prices
<PAGE>
Distinguished Performance
Superior Operations - 5
Setting The Direction
Achieve consistent, superior operations with the most
efficient use of existing assets
Creating The Strategies
Focus on customer service throughout the organization
Operate with low, but adequate electric reserves
Maintain national leadership position in efficiency and
productivity
Continue with fuel contracts that will ensure low costs
and enhance flexibility
Making It Happen
Customer satisfaction remains at historically high levels
Top ten in power plant efficiency and productivity nine
times out of the last ten years
Fuel contracts allow type and amount of coal procurement
options at low and predictable prices
<PAGE>
Distinguished Performance
Return to Shareholders - 6
Setting The Direction
Deliver above average and sustainable earnings and
dividend growth - maximize shareholder value
Creating The Strategies
Achieve sustainable, above average earnings and dividend
growth
Produce strong financial performance
Differentiate the Company from the industry in terms of
performance and position
Minimize future risk through "Plain Vanilla" Balance Sheet
Making It Happen
Dividend increases in seven of last eight years, averaging
3.6% per year
Total return of 110% since 1989 versus 6% for the industry
Intensive investor relations effort in 1994 that resulted
in nearly 100 meetings with investors managing total
capital of over $4 trillion
5
<PAGE>
Caption to photograph:
Growing Service Area Economy - 1
General Motors Corp. continues its presence in the Dayton
area. The Moraine Assembly Plant builds the popular
redesigned Chevy Blazer and GMC Jimmy.
(see appendix for photo description)
6
<PAGE>
Making It Happen
(see appendix for logo description)
Caption:
Managing Costs - 2
DPL is recognized as being among the best in the energy
industry at managing costs. Employees are key to our
success, as all employees are shareholders and have
incentive pay tied directly to cost control.
DPL Inc. continued to distinguish itself as one of the
nation's top-performing energy companies in an extremely
challenging year. The formula for success and continued
improvement remains simple. Combine a strong West Central
Ohio economy with a quality product and excellent customer
service to produce solid financial returns for DPL
shareholders.
The West Central Ohio economy experienced remarkable
growth in 1994. Productivity and expansion is on the rise in
all sectors of West Central Ohio's diverse economy, including
light manufacturing, research and development, high
technology, transportation and professional services. This
growth means new, value-added jobs for our region which, in
turn, supports additional economic development opportunities
and expansion. Unemployment in our area was below five
percent, well under the national average, reflecting
essentially full employment.
The economic growth within our service territory continues
to outpace state and national performance. This is due, in
part, to expansion of already significant operations at
General Motors Corporation, Honda of America, Copeland
Corporation, Emery Worldwide and Whirlpool Corporation. For
the past three years, Ohio ranked first in the nation for new
manufacturing facilities and plant expansions, both in square
footage and investment dollars. That's better than states
such as Texas, North Carolina and California -- and
indications are that the state and West Central Ohio will
continue this positive trend.
We play a major role in developing our customer base and
highlighting the strengths of West Central Ohio. Through our
energy incentive programs, we have supported the creation of
more than 54,000 new jobs since 1986. These initiatives
include WorkSmart, which promotes job creation through energy-
efficient growth, and TargetSearch, which helps our
communities attract new business.
<PAGE>
In a year when industry stock prices were down
significantly, DPL was one of only a few utilities that
produced a positive overall return for 1994. Positioning
itself as a low-risk investment in an industry currently
challenged by uncertainty, DPL followed a financial strategy
that provides shareholders with above average earnings and
dividend growth.
Caption to photograph:
Whirlpool, the world's leading
manufacturer and marketer of home appliances, announced
construction of a new, world-class assembly facility at its
Greenville, Ohio division. Currently producing mixers and
blenders, the $12.5 million project is expected to add 100
new jobs to the current work force of 350. Selected from 27
potential sites, Greenville and the dedicated loyal work
force have proven their ability to consistently build world-
class products.
(see appendix for photo and logo description)
7
<PAGE>
(see appendix for logo description)
In 1994, earnings per share rose to $1.54, an increase of
8.5%. Dividends to our shareholders, which have increased
seven of the last eight years, were increased six cents to
$1.18 per share. And return on shareholders' equity was
14.1%. As measured by the market-to-book ratio, DPL ranks in
the top ten nationally in our industry. As an indicator of
DP&L's solid financial condition, our credit ratings were
upgraded in November 1994 by Duff & Phelps and in March 1994
by both Standard and Poor's and Moody's Investors Service.
Duff & Phelps raised our ratings to "AA" from "AA-", our
highest rating in more than twenty years. S&P's upgrade to
"AA-" was the second two-grade jump for DP&L in two years.
DP&L is the only electric utility to achieve such upgrades in
the last five years.
The Company successfully issued 3.2 million common shares
in March 1994 through a public offering in difficult market
conditions. The offering was well-received by key
institutional buyers and proceeds from the sale of shares
were used to redeem 75% of DP&L's outstanding preferred
stock. This action saves millions of dollars each year in
preferred dividends.
DP&L again achieved national recognition for its high
standard of excellence in operating performance. In Electric
Light and Power magazine's review of 1993 power generation
marks at more than 100 utilities, DP&L's heat rate ranked as
the second most efficient in the nation. This ranking was
our best ever for heat rate, which measures the amount of
energy it takes to produce one kilowatt of electricity. DP&L
has placed in the top ten nine of the past ten years and in
the top five for four consecutive years. Our 1994 heat rate
of 9,836 Btu/kWh is expected to again be among the industry
leaders.
High operational standards and the effective use of
resources combined with planned maintenance resulted in an
equivalent forced outage rate ("EFOR") of 4.6%. EFOR
measures the amount of time that an unplanned outage occurs
at a generating unit. Over the past ten years, we saved our
customers more than $250 million through our efficiency and
productivity improvements.
DP&L remains committed to its energy strategy of being an
all-coal company. Flexible coal procurement contracts, in
terms of cost, quality and volume, are in
<PAGE>
Caption to artwork:
Sidney, Ohio is one of the many thriving West Central Ohio
communities known for a quality work force and strong work
ethic. DP&L continues to help communities attract new
business and works closely with local, regional and state
organizations to build partnerships for success in
economic growth.
(see appendix for artwork description)
Caption:
Strong Financial Performance - 3
DPL is committed to providing above average financial
performance for shareholders. In 1994, 3.2 million Common
Shares were issued, with the proceeds used to redeem
Preferred Stock of The Dayton Power and Light Company.
This action results in preferred dividend savings of $7
million annually.
8
<PAGE>
Caption to photograph:
Competitive Prices - 4
Airborne Express continues to expand its current
operational hub in Wilmington, Ohio to a nightly lift
capacity of about three million pounds - with a fleet of
nearly 100 aircraft. The complex also includes the
Airborne Stock Exchange, a combined critical parts
warehouse and rapid response delivery system.
(see appendix for photo description)
9
<PAGE>
Caption to photograph:
Superior Operations - 5
Corning has formed a partnership with both its customers
and employees. Glass melting and forming in the
Greenville, Ohio plant is a complex process using state-of-
the-art technology. This plant manufactures consumer
Pyrex(trademark), and pressed glass for both the
automotive lighting and consumer markets. Employees work
to continuously improve production processes, product
quality, and customer service.
(see appendix for photo description)
10
<PAGE>
(see appendix for logo description)
place and take advantage of plentiful coal supplies in the
region. As a result, the Company is well-positioned to meet
the requirements of the Clear Air Act Amendments, and
compliance is expected to have only an insignificant impact
on prices.
Our employees were put to the test in 1994 when severe
weather pushed DP&L's natural gas and electric system
capabilities to new levels. This June, DP&L set an all-time
peak of 2,824,000 kilowatts of electricity. In January, our
electric system set a new winter peak of 2,747,000 kilowatts,
and our natural gas customer use was 630,000 MCF, the largest
one day usage in over 20 years. During both peaks, there
were no forced service curtailments, particularly significant
in light of DP&L's low reserve margin of 7% versus an
industry average of 20%. Our customers also experienced only
minimal weather-related outages.
Anticipating the growing energy needs of West Central
Ohio, DP&L continues to operate its plants as efficiently as
possible and plans to add a small number of peaking units.
The new units will be clean, dual-fired combustion turbines
that can burn natural gas or low sulfur fuel oil. Because of
their small size, the units can be built economically,
providing additional flexibility to efficiently meet the
increasing energy demands of our customers. The first
peaking unit is planned to be operational in Summer 1995.
DP&L is uniquely positioned for the future as a full-
service electric and natural gas provider. This year, the
Company added 53 miles of new gas pipelines in the northern
part of our service territory. These additions strengthen
the Company's natural gas distribution system and increase
customers' supply and transportation options, supporting our
regional strength as a total energy provider.
Exceeding our customers' expectations continues to be a
priority at DP&L and we regularly seek customer feedback on
our progress. Our track record of providing quality customer
service is confirmed by the results of frequent surveys. To
ensure ongoing customer satisfaction, all employees have
incentive compensation tied to factors related to quality
customer service.
To accomplish our customer service goals, we start with
the basics. DP&L's 23 customer service centers, located
throughout West Central Ohio, ensure our customers receive
<PAGE>
Caption to photograph:
Way To Go, the umbrella name for
our energy conservation
programs, emphasizes our belief that being energy smart
and money wise is definitely the Way To Go!
Lucky the Dog, featured in numerous promotions, has
attained local celebrity status and is part of our award
winning consumer awareness campaign and an energy
awareness program.
(see appendix for artwork and logo description)
Caption:
Return to Shareholders - 6
DPL worked hard to provide top of the industry returns to
our shareholders in 1994.
11
<PAGE>
(see appendix for logo description)
reliable, quality service 24 hours a day, seven days a week.
From there, we take additional steps to offer programs and
services that go beyond our customers expectations.
DP&L's Way To Go energy conservation program has reached a
broad section of our customer base. Over the past two years,
more than 100,000 business and residential customers have
been introduced to the value of energy efficiency through our
energy and money-saving programs that include energy audits,
lighting and motor rebates, and workshops.
Supporting DP&L's commitment to the customer is our Energy
Resource Center which showcases the latest in energy saving
technology. In the first year of operation, this state-of-
the-art learning center set new standards for customer
service within the industry. More than 7,000 customers,
including energy professionals, participated in hands-on
programs at the Center.
DP&L invests in the communities it serves through our
education activities and employees' volunteer efforts. In
1994, DPL's "In Concert With the Environment" reached 10,000
future energy users and taught the importance of energy
efficiency and protection of the environment. Additionally,
36,000 children learned energy conservation techniques and
electricity and natural gas safety from DP&L employee
volunteers.
DP&L's Way To Go Scholars initiative combines academic
excellence with valuable on-the-job experience. Since 1991,
DP&L has instituted 11 scholarship programs at area
universities and colleges, providing up to 44 students with
tuition assistance and cooperative education opportunities
each year.
In recognition of a defining year of accomplishment for
our customers, shareholders and employees, DP&L was named
"1994 Utility of the Year" by Electric Light and Power
magazine. Looking forward, we will seek out every
opportunity for improvement, no matter how small. We are
committed to being a full service electricity and natural gas
provider that meets our customers' total energy needs -- and
we continue to chart a steady financial course to ensure that
DPL remains a low-risk investment in the heart of America
that provides you, our shareholders, with an above average
return on your investment.
<PAGE>
Caption to artwork and logo:
Located in Washington Court House, Ohio, FoxMeyer's
300,000-square foot pharmaceutical distribution center is
scheduled to be operational by May 1995. Employing up to
200 people in the eastern edge of DP&L's service area,
the FoxMeyer facility will be the largest, most automated
distribution center in the world.
(see appendix for artwork and logo description)
12
<PAGE>
Financial Review
Electric Revenues Gas Revenues Total Taxes
$ in millions $ in millions $ in millions
(see appendix for (see appendix for (see appendix for
graph description) graph description) graph description)
Electric Sales Gas Sales Operating Expenses
Thousands of GWH Millions of MCF $ in millions
(see appendix for (see appendix for (see appendix for
graph description) graph description) graph description)
Average Price-Electric Average Price-Gas Construction Costs
Calendar Year Calendar Year $ in millions
cents/kWh $/MCF
(see appendix for (see appendix for (see appendix for
graph description) graph description) graph description)
13
<PAGE>
<TABLE>
<CAPTION>
Financial and Statistical Summary DPL Inc.
1994 1993 1992 1991 1990
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
For the years ended December 31,
DPL Inc.: Earnings per share of common stock . . . . . $ 1.54 1.42 1.34 1.15 1.49
Dividends paid per share . . . . . . . . . . $ 1.18 1.12 1.08 1.08 1.04
Dividend payout ratio . . . . . . . . . . . % 76.6 78.9 80.6 93.9 69.8
Return on shareholders' equity . . . . . . . % 14.1 13.7 13.0 11.0 14.7
Net income (millions) . . . . . . . . . . . $ 154.9 139.0 138.8 119.2 153.0
Utility service revenues (millions) . . . . $ 1,187.9 1,151.3 1,017.3 995.6 945.5
Construction additions (millions) . . . . . $ 101.1 88.9 59.0 117.4 249.2
Market value per share at December 31 . . . $ 20-1/2 20-5/8 19-3/4 17-1/4 12-7/8
DP&L: 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,
DPL Inc.: Book value per share . . . . . . . . . . . . $ 11.17 10.51 9.75 10.38 10.31
Total assets (millions) . . . . . . . . . . $ 3,232.7 3,302.0 2,976.7 2,972.7 2,914.8
Long-term debt and preferred stock with
mandatory redemption provisions
(millions) $ 1,093.7 1,132.9 990.6 1,047.1 1,055.5
DP&L: 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
DPL Inc.: Common . . . . . . . . . . . . . . . . . . . 51,270 53,275 54,023 53,846 53,030
DP&L: Preferred . . . . . . . . . . . . . . . . . 795 1,873 1,969 2,034 2,100
</TABLE>
14
<PAGE>
Financial Review
The 1994 earnings are $1.54 per share, compared to earnings per share of
$1.42 in 1993 and $1.34 in 1992. The return on shareholders' equity was 14.1%
in 1994 compared to 13.7% in 1993 and 13.0% 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 an 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. (See Financial Statement Note 2.)
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
17% in 1993. Bond redemption costs of $23 million and $9 million were incurred
in 1993 and 1992, respectively.
Maintenance expense decreased 5% in 1994 and increased 17% 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 on equity of 13%
(subject to upward adjustment) was established for DP&L. 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.
<PAGE>
Credit Ratings
In late 1994, DP&L's first mortgage bond credit rating was upgraded to "AA"
from "AA-" and preferred stock to "AA-" from "A+" by Duff & 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
<TABLE>
<CAPTION>
Income Statement Highlights
$ in millions except per share amounts 1994 1993 1992
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Electric Utility:
Revenues . . . . . . . . . . . . . . . . . . . . . . $944 $899 $807
Fuel used in production . . . . . . . . . . . . . . 218 225 219
---- ---- ----
Net revenues . . . . . . . . . . . . . . . . . . . 726 674 588
Gas Utility:
Revenues . . . . . . . . . . . . . . . . . . . . . . 237 245 204
Gas purchased for resale . . . . . . . . . . . . . . 151 156 118
---- ---- ----
Net revenues . . . . . . . . . . . . . . . . . . . 86 89 86
Interest and other income . . . . . . . . . . . . . . . 30 27 22
Operating and administrative . . . . . . . . . . . . . 160 185 158
Maintenance of equipment and facilities . . . . . . . . 86 90 77
Amortization (deferral) of regulatory assets, net . . . 11 (26) (59)
Income taxes . . . . . . . . . . . . . . . . . . . . . 101 78 68
Net income . . . . . . . . . . . . . . . . . . . . . . 155 139 139
Earnings per share of common stock . . . . . . . . . . 1.54 1.42 1.34
Return on shareholders' equity . . . . . . . . . . . . 14.1% 13.7% 13.0%
</TABLE>
15
<PAGE>
previously upgraded the Company's credit ratings in 1993. During the first
quarter of 1992, DP&L'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 $101 million, $89 million and $59 million in
1994, 1993 and 1992, respectively. Construction additions are expected to
total $567 million during 1995-1999. The construction program includes plans
for the construction of a series of 70 MW combustion turbine generating units,
the first of which is scheduled for completion in Summer 1995. During this
same period, a total of $85 million will be required for debt maturities and
sinking funds for bonds and notes.
During 1994, total cash provided by operating activities was $287 million.
At year-end, cash and temporary cash investments were $96 million and there
were no short-term borrowings.
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 DP&L's Preferred Stock Series D, E, F,
H and I.
During late 1992 and early 1993, DP&L 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%.
Issuance of additional amounts of First Mortgage Bonds by DP&L 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. DPL Inc. anticipates that it has sufficient capacity
to issue DP&L 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, DPL Inc. had no borrowings outstanding under this credit
agreement.
DP&L also has $97 million available in short-term lines of credit. At
year-end, DP&L had no borrowings outstanding from these lines of credit and no
commercial paper outstanding.
Issues and Financial Risks
As a public utility, DP&L 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 $113 million annually, which is less than the projected
depreciation over the same period.
<PAGE>
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, DP&L, 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 DP&L
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 DP&L 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.
The Federal Environmental Protection Agency ("EPA") has notified numerous
parties, including DP&L, 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
DP&L'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 DP&L's Clean Air Act Compliance Plan. This plan
outlines the methods by which the emission reduction requirements will be met.
Overall compliance is expected to have a minimal 1% to 2% price impact. DP&L
anticipates that costs to comply with the Act will be eligible for recovery in
future fuel hearings and other regulatory proceedings.
16
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF RESULTS OF OPERATIONS DPL Inc.
For the years ended December 31,
$ In millions except per share amounts 1994 1993 1992
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income
Utility service revenues . . . . . . . . . . . . . . . . . . $1,187.9 $1,151.3 $1,017.3
Interest and other income . . . . . . . . . . . . . . . . . 30.1 26.7 22.3
-------------------------------------
Total income . . .. . . . . . . . . . . . . . . . . . . 1,218.0 1,178.0 1,039.6
-------------------------------------
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) . . . . . . . . . . . 159.9 184.6 157.8
Maintenance of equipment and facilities . . . . . . . . . . 85.9 90.2 77.3
Depreciation and amortization . . . . . . . . . . . . . . . 114.7 110.9 105.6
Amortization (deferral) of regulatory assets, net (Note 2) . 10.9 (25.8) (58.7)
General taxes . . . . . . . . . . . . . . . . . . . . . . . 121.1 112.0 108.5
Interest expense . . . . . . . . . . . . . . . . . . . . . . 93.2 97.0 94.3
Preferred dividend requirements of
The Dayton Power & Light Company (Note 9). . . . . . . . . 4.7 8.7 9.4
-------------------------------------
Total expenses . . . . . . . . . . . . . . . . . . . . . 961.9 960.6 832.5
-------------------------------------
Income Before Income Taxes . . . . . . . . . . . . . . . . . 256.1 217.4 207.1
Income taxes (Notes 1 and 3) . . . . . . . . . . . . . . . . 101.2 78.4 68.3
-------------------------------------
Net Income . . . . . . . .. . . .. . . . . . . . . . . . . . $ 154.9 $ 139.0 $ 138.8
=====================================
Average Number of Common Shares . . . . . . . . . . . . . . 100.4 97.7 103.5
Outstanding (millions) (Note 8)
Earnings Per Share of Common Stock . . . . . . . . . . . . . $ 1.54 $ 1.42 $ 1.34
Dividends Paid Per Share of Common Stock . . . . . . . . . . $ 1.18 $ 1.12 $ 1.08
Return on Shareholders' Equity . . . . . . . . . . . . . . . 14.1% 13.7% 13.0%
See Notes to Consolidated Financial Statements.
17
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS DPL Inc.
For the years ended December 31,
$ in millions 1994 1993 1992
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities
Cash received from utility customers . . . . . . . . . . . $1,199.0 $1,137.5 $1,003.8
Other operating cash receipts . . . . . . . . . . . . . . 25.4 26.4 23.5
Cash paid for:
Fuel and purchased power . . . . . . . . . . . . . . . . (226.0) (216.6) (234.0)
Purchased gas . . . . . . . . . . . . . . . . . . . . . (142.8) (146.9) (137.5)
Operating and maintenance labor . . . . . . . . . . . . (90.0) (83.3) (84.2)
Nonlabor operating expenditures . . . . . . . . . . . . (159.4) (232.7) (152.7)
Interest (net of amounts capitalized) . . . . . . . . . (92.1) (83.3) (96.8)
Income taxes . . . . . . . . . . . . . . . . . . . . . . (105.8) (54.4) (50.1)
Property, excise and payroll taxes . . . . . . . . . . . (121.4) (111.4) (98.7)
-------------------------------------
Net cash provided by operating activities . . . . . . . . 286.9 235.3 173.3
-------------------------------------
Investing Activities
Net cash used for property expenditures and other . . . . (94.3) (113.6) (63.0)
-------------------------------------
Financing Activities
Dividends paid on common stock . . . . . . . . . . . . . . (118.3) (109.5) (110.8)
Redemption of preferred stock . . . . . . . . . . . . . . (94.2) (8.5) (4.3)
Issuance (retirement) of common stock . . . . . . . . . . 77.5 - (0.1)
Purchase of treasury stock . . . . . . . . . . . . . . . . (9.4) - -
Issuance (retirement) of short-term debt . . . . . . . . . (25.0) (127.0) 67.5
Retirement of long-term debt . . . . . . . . . . . . . . . (9.2) (439.2) (321.0)
Issuance of long-term debt . . . . . . . . . . . . . . . . - 536.0 320.4
Common stock held by ESOP . . . . . . . . . . . . . . . . - - (90.0)
Receipt of funds on deposit with trustee . . . . . . . . . - - 21.7
-------------------------------------
Net cash used for financing activities . . . . . . . . . . (178.6) (148.2) (116.6)
-------------------------------------
Cash and temporary cash investments -
Net change . . . . . . . . . . . . . . . . . . . . 14.0 (26.5) (6.3)
Balance at beginning of year . . . . . . . . . . . 81.6 108.1 114.4
-------------------------------------
Balance at end of year . . . . . . . . . . . . . . $ 95.6 $ 81.6 $108.1
=====================================
See Notes to Consolidated Financial Statements.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET DPL Inc.
At December 31,
$ in millions 1994 1993
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Utility property and plant . . . . . . . . . . . . . . . . . $3,254.1 $3,204.7
Other property and plant . . . . . . . . . . . . . . . . . . 62.3 55.5
Construction work in progress . . . . . . . . . . . . . . . . 68.6 35.8
-------------------------------------
3,385.0 3,296.0
Less--
Accumulated depreciation and amortization . . . . . . . . . (1,072.8) (977.2)
-------------------------------------
Net property and plant . . . . . . . . . . . . . . . . . . 2,312.2 2,318.8
-------------------------------------
Current Assets
Cash and temporary cash investments . . . . . . . . . . . . . 95.6 81.6
Accounts receivable, less provision for uncollectible
accounts of $7.8 and $9.1, respectively . . . . . . . . . . 103.4 135.0
Inventories, at average cost . . . . . . . . . . . . . . . . 84.6 86.4
Taxes applicable to subsequent years . . . . . . . . . . . . 78.3 72.8
Gas costs recoverable . . . . . . . . . . . . . . . . . . . . - 23.1
Prepayments and other . . . . . . . . . . . . . . . . . . . . 24.9 41.7
-------------------------------------
Total current assets . . . . . . . . . . . . . . . . . . . 386.8 440.6
-------------------------------------
Other Assets
Income taxes recoverable through future revenues (Note 1) . . 249.3 269.1
Regulatory assets (Note 2) . . . . . . . . . . . . . . . . . 168.8 169.8
Other assets . . . . . . . . . . . . . . . . . . . . . . . . 115.6 103.7
-------------------------------------
Total other assets . . . . . . . . . . . . . . . . . . . 533.7 542.6
-------------------------------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . $3,232.7 $3,302.0
=====================================
<PAGE>
Capitalization and Liabilities
Capitalization
Common shareholders' equity (Note 8)--
Common stock . . . . . . . . . . . . . . . . . . . . . . . . $ 1.1 $ 1.0
Other paid-in capital . . . . . . . . . . . . . . . . . . . 776.6 708.1
Common stock held by employee plans . . . . . . . . . . . . (108.7) (105.2)
Earnings reinvested in the business . . . . . . . . . . . . 459.3 423.4
-----------------------------------
Total common shareholders' equity . . . . . . . . . . . . 1,128.3 1,027.3
Preferred stock of The Dayton Power and Light Company
(Note 9)--
Without mandatory redemption provisions . . . . . . . . . . 22.9 82.9
With mandatory redemption provisions . . . . . . . . . . . . - 30.0
Long-term debt (Note 7) . . . . . . . . . . . . . . . . . . . 1,093.7 1,102.9
-----------------------------------
Total capitalization . . . . . . . . . . . . . . . . . . . 2,244.9 2,243.1
-----------------------------------
Current Liabilities
Accounts payable . . . . . . . . . . . . . . . . . . . . . . 75.3 113.1
Short-term debt (Note 6) . . . . . . . . . . . . . . . . . . - 25.0
Current portion of first mortgage bonds
and preferred stock . . . . . . . . . . . . . . . . . . . . 4.7 9.0
Accrued taxes . . . . . . . . . . . . . . . . . . . . . . . . 123.9 114.4
Accrued interest . . . . . . . . . . . . . . . . . . . . . . 24.0 24.3
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.0 51.4
------------------------------------
Total current liabilities . . . . . . . . . . . . . . . . . 254.9 337.2
------------------------------------
Deferred Credits and Other
Deferred taxes (Note 3) . . . . . . . . . . . . . . . . . . . 511.8 519.3
Unamortized investment tax credit . . . . . . . . . . . . . . 81.5 85.1
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139.6 117.3
------------------------------------
Total deferred credits and other . . . . . . . . . . . . . 732.9 721.7
------------------------------------
Total Capitalization and Liabilities . . . . . . . . . . . . $3,232.7 $3,302.0
====================================
See Notes to Consolidated Financial Statements.
</TABLE>
19
<PAGE>
Notes to Consolidated Financial Statements DPL Inc.
1. Summary of Significant Accounting Policies
Principles of Consolidation
The accounts of DPL Inc. and its wholly-owned subsidiaries are included in
the accompanying consolidated financial statements. The consolidated financial
statements of DPL Inc. principally reflect the results of operations and
financial condition of DPL Inc.'s public utility subsidiary, The Dayton Power
and Light Company ("DP&L"). DP&L is engaged in the business of selling
electric energy, natural gas and steam. The results of operations of
DPL Inc.'s non-utility subsidiaries currently do not have a material financial
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.
DP&L 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.
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.
<PAGE>
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.
20
<PAGE>
-------------------------------------------------------------------------------
2. Regulatory Matters
Pursuant to the 1992 PUCO-approved settlement agreement ("Agreement") among
DP&L 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 DP&L 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,
$ in millions 1994 1993
-----------------------------------------------------------------
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 DP&L 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.
<PAGE>
-------------------------------------------------------
3. Income Taxes
For the years ended
December 31,
$ in millions 1994 1993 1992
-------------------------------------------------------
Computation of Tax Expense
Statutory income tax rate . . 35% 35% 34%
Federal income tax (a) . . . $ 91.3 $79.1 $74.1
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. . . . . . . . . 1.0 (1.8) 1.1
-----------------------
Total Tax Expense . . . . $101.2 $78.4 $69.7
=======================
Components of Tax Expense
Taxes currently payable . . . $107.9 $61.2 $38.4
Deferred taxes--
Regulatory assets . . . . . 1.6 7.1 9.2
Liberalized depreciation
and amortization . . . . . 17.2 17.6 18.6
Property taxes . . . . . . (6.1) (6.1) (5.9)
Fuel and gas costs . . . . (12.7) 5.8 10.5
Other . . . . . . . . . . . (3.1) (4.6) 2.4
Deferred investment tax
credit, net . . . . . . . . (3.6) (2.6) (3.5)
-----------------------
Total Tax Expense . . . . $101.2 $78.4 $69.7
=======================
Classification of Tax Expense
Income taxes . . . . . . . . $101.2 $78.4 $68.3
Regulatory assets . . . . . . - - 1.4
-----------------------
Total Tax Expense . . . . $101.2 $78.4 $69.7
=======================
(a) Statutory rates applied to pre-tax income before
preferred dividends and before tax expenses included
in Regulatory assets.
<PAGE>
Components of Deferred Tax Assets and Liabilities
At December 31,
$ in millions 1994 1993
----------------------------------------------------------------------
Depreciation/property basis . . . $(437.4) $(429.5)
Income taxes recoverable . . . . (88.9) (93.8)
Regulatory assets . . . . . . . . (57.0) (57.4)
Investment tax credit . . . . . . 28.4 29.7
Other . . . . . . . . . . . . . 43.1 31.7
------ -----
Net non-current liability . . . $(511.8) $(519.3)
====== =====
Net current asset (liability) . $ 2.3 $ (13.4)
====== =====
21
<PAGE>
-------------------------------------------------------------------------------
4. Pensions and Postretirement Benefits
A. Pensions
Substantially all DP&L 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
-------------------------------------------------------
Service cost-benefits earned $ 6.1 $5.4 $ 4.3
Interest cost 13.4 12.0 12.5
Expected return on plant
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)
======================
<PAGE>
The following table sets forth the plans' funded status and amounts
recorded in Other assets on the Consolidated Balance Sheet at December 31:
$ in millions 1994 1993
-----------------------------------------------------
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.
-------------------------------------------------------------------------------
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.
<PAGE>
The following table sets forth the accumulated
postretirement benefit amounts at December 31:
$ in millions 1994 1993
---------------------------------------------------
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 losses 3.0 -
---- ----
Accrued postretirement benefit
liability $40.7 $36.6
==== ====
The following table presents the components of
postretirement benefit cost:
$ 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.
22
<PAGE>
------------------------------------------------------------------------------
5. Commonly Owned Facilities
DP&L 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, DP&L had $12.8 million of commonly owned facilities
under construction. DP&L's share of expenses is included in the Consolidated
Statement of Results of Operations.
The following table presents DP&L's share of the commonly owned
facilities:
DP&L
DP&L Share Investment
----------- ----------
Owner- Prod. Plant in
ship Capacity Service
(%) (MW) ($ in mil.)
-------------------------------------------------------
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. and its subsidiaries have $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.
DP&L also has $97.1 million available in short-term informal lines of
credit. To support these lines of credit, DP&L is required to maintain average
daily compensating balances of approximately $700,000 and also pay $168,000 per
year in fees.
At year-end, DP&L had no borrowings from these lines of credit and no
commercial paper outstanding.
<PAGE>
-------------------------------------------------------------------------------
7. Long-term Debt
At December 31,
$ in millions 1994 1993
-----------------------------------------------------
First mortgage bonds maturing:
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
Notes due 2007 - 7.83% . . . . . 90.0 90.0
Mortgage note due in install-
ments through 2012-10.0% . . . 7.4 7.6
--------------------
Total . . . . . . . . . . $1,093.7 $1,102.9
====================
(a) Weighted average interest rates for 1994 and
1993, respectively.
The amounts of maturities and mandatory redemptions for first mortgage
bonds and notes are (in millions) $4.7 in 1995 and 1996, $42.5 in 1997, $28.4
in 1998 and $4.4 in 1999. Substantially all property and plant of DP&L is
subject to the mortgage lien securing the first mortgage bonds.
23
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
8. Common Shareholders' Equity
Common
Common Stock(a) Stock
---------------------- Other Held By Earnings
Outstanding Paid-in Employee Reinvested in
$ in millions Shares Amount Capital Plans the Business Total
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1992: Beginning balance . . . . . 69,010,903 $ 0.7 $708.1 $ - $366.2 $1,075.0
Net income . . . . . . . . 138.8 138.8
Common stock dividends . . (110.8) (110.8)
Three-for-two stock split 34,499,095 0.3 (0.3) -
Employee stock plans . . . (103.0) (103.0)
Other . . . . . . . . . . 0.2 (0.2) -
------------------------------------------------------------------------------
Ending balance . . . . . . 103,509,998 1.0 708.0 (103.0) 394.0 1,000.0
1993: Net Income . . . . . . . . 139.0 139.0
Common stock dividends . . (109.5) (109.5)
Employee stock plans . . . (2.2) (2.2)
Other . . . . . . . . . . 0.1 (0.1) -
------------------------------------------------------------------------------
Ending balance . . . . . . 103,509,998 1.0 708.1 (105.2) 423.4 1,027.3
1994: Net income . . . . . . . . 154.9 154.9
Common stock dividends . . (118.3) (118.3)
Public offering . . . . . 3,200,000 0.1 63.1 63.2
Dividend reinvestment plan 720,225 - 14.4 14.4
Treasury stock . . . . . . (478,600) - (9.4) (9.4)
Employee stock plans . . . 0.2 (3.5) (3.3)
Other . . . . . . . . . . 0.2 (0.7) (0.5)
------------------------------------------------------------------------------
Ending balance . . . . . . 106,951,623 $ 1.1 $776.6 $(108.7) $459.3 $1,128.3
==============================================================================
(a) $0.01 par value, 250,000,000 shares authorized.
</TABLE>
In March 1994, DPL Inc. issued 3,200,000 shares of common stock through a
public offering. The net proceeds from the sale were used in connection with
the redemption of all outstanding shares of several series of DP&L's preferred
stock. (See Note 9.)
DPL Inc. had 2,107,323 authorized but unissued shares reserved for the
dividend reinvestment plan at December 31, 1994. The plan provides that either
original issue shares or shares purchased on the open market may be used to
satisfy plan requirements.
DPL Inc. established a leveraged Employee Stock Ownership Plan ("ESOP") in
1992 to fund matching contributions to the Company's 401(k) retirement savings
plan and certain other payments to employees. The ESOP borrowed $90.0 million
from DPL Inc. and acquired 4,706,550 shares of common stock on the open
market. Common shareholders' equity is reduced for the cost of unallocated
shares held by the trust and for 1,496,848 shares related to another employee
plan. These shares reduce the number of common shares used in the calculation
of earnings per share.
<PAGE>
Dividends received by the ESOP are used to repay the loan to DPL Inc. As
debt service payments are made on the loan, shares are released on a pro-rata
basis. Dividends on the allocated shares are charged to retained earnings, and
dividends on the unallocated shares reduce accrued interest.
In 1994 and 1993, 209,281 shares and 100,498 shares, respectively, were
allocated to employees and are outstanding for the calculation of earnings per
share. Compensation expense, which is based on the fair value of the shares
allocated, amounted to $4.0 million in 1994 and $2.0 million in 1993.
DPL Inc. has a Shareholder Rights Plan pursuant to which two-thirds of a
Right is attached to and trades with each outstanding DPL Inc. Common Share.
The Rights would separate from the Common Shares and become exercisable in the
event of certain attempted business combinations.
24
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
9. Preferred Stock
DPL Inc.: No par value, 8,000,000 shares authorized, no shares outstanding.
DP&L: $25 par value, 4,000,000 shares authorized, no shares outstanding; and $100 par value, 4,000,000 shares
authorized, 228,508 shares outstanding.
Without Mandatory With Mandatory
Redemption Provisions Redemption Provisions(a)
--------------------------------------------------------
Current Exercised Current ($ 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.
</TABLE>
The shares without mandatory redemption provisions may be redeemed at the
option of DP&L 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, DP&L redeemed all outstanding shares of its Preferred Stock Series
D, E, F, H and I.
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
10. 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 11.2 12.1 0.5 0.5
Held to maturity securities, including temporary cash
investments of $93.7 in 1994 and $81.1 in 1993 (a) 124.8 125.3 123.9 123.1
Liabilities
Debt (b) 1,043.3 1,098.5 1,214.0 1,132.6
Capitalization
Preferred stock with mandatory redemptions (b) - - 34.6 34.3
Unallocated stock in ESOP 90.1 84.1 95.0 88.1
</TABLE>
(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>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
11. 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $154.9 $139.0 $138.8
Adjustments for noncash items:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . 114.7 110.9 105.6
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . (6.7) 17.2 29.9
Amortization (deferral) of regulatory assets, net . . . . . . . . . . . 10.9 (25.8) (58.7)
Changes in working capital:
Accounts receivable and unbilled revenue . . . . . . . . . . . . . . . 27.9 (2.5) (2.9)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . (40.0) 15.0 3.0
Deferred gas costs . . . . . . . . . . . . . . . . . . . . . . . . . . 28.7 (7.9) (28.8)
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.3) 11.8 (4.2)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 10.2 (11.4)
DSM deferred costs . . . . . . . . . . . . . . . . . . . . . . . . . . . (14.4) (20.3) (2.2)
Other operating activities . . . . . . . . . . . . . . . . . . . . . . . 7.7 (12.3) 4.2
------------------------------
Net cash provided by operating activities . . . . . . . . . . . . . . . $286.9 $235.3 $173.3
==============================
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
12. Financial Information by Business Segments
For the years ended December 31,
$ in millions 1994 1993 1992
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Utility service revenues
Electric . . . . . . . . . . . . . . . . . . . $ 943.5 $ 898.9 $ 806.9
Gas . . . . . . . . . . . . . . . . . . . . . . 237.1 245.1 203.8
Other . . . . . . . . . . . . . . . . . . . . . 7.3 7.3 6.6
--------------------------------------------
Total utility service revenues . . . . . . . . . . . 1,187.9 1,151.3 1,017.3
Interest and other income . . . . . . . . . . . . . . 30.1 26.7 22.3
--------------------------------------------
Total income . . . . . . . . . . . . . . . . . . . $1,218.0 $1,178.0 $1,039.6
============================================
Operating profit before tax
Electric . . . . . . . . . . . . . . . . . . . $ 325.2 $ 310.8 $ 284.7
Gas . . . . . . . . . . . . . . . . . . . . . . 10.3 19.9 22.1
Other . . . . . . . . . . . . . . . . . . . . . 6.5 5.4 8.8
--------------------------------------------
Total operating profit before tax . . . . . . . . . . 342.0 336.1 315.6
Other income, net (a) . . . . . . . . . . . . . . . . 12.0 (13.0) (4.8)
Interest expense . . . . . . . . . . . . . . . . . . (93.2) (97.0) (94.3)
Preferred dividends . . . . . . . . . . . . . . . . . (4.7) (8.7) (9.4)
--------------------------------------------
Income before income taxes . . . . . . . . . . . . $ 256.1 $ 217.4 $ 207.1
============================================
Depreciation and amortization
Electric . . . . . . . . . . . . . . . . . . . $ 104.8 $ 102.4 $ 97.9
Gas . . . . . . . . . . . . . . . . . . . . . . 6.2 5.7 5.6
Other . . . . . . . . . . . . . . . . . . . . . 3.7 2.8 2.1
--------------------------------------------
Total depreciation and amortization . . . . . . . . $ 114.7 $ 110.9 $ 105.6
============================================
Construction additions
Electric . . . . . . . . . . . . . . . . . . . $ 82.1 $ 66.3 $ 46.6
Gas . . . . . . . . . . . . . . . . . . . . . . 11.6 11.9 11.0
Other . . . . . . . . . . . . . . . . . . . . . 7.4 10.7 1.4
--------------------------------------------
Total construction additions . . . . . . . . . . . $ 101.1 $ 88.9 $ 59.0
============================================
Assets
Electric . . . . . . . . . . . . . . . . . . . $2,772.3 $2,822.5 $2,522.8
Gas . . . . . . . . . . . . . . . . . . . . . . 201.7 236.0 219.5
Other (b) . . . . . . . . . . . . . . . . . . . 258.7 243.5 234.4
--------------------------------------------
Total assets at year-end . . . . . . . . . . . . . $3,232.7 $3,302.0 $2,976.7
============================================
(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>
26
<PAGE>
Report of Independent Accountants
Price Waterhouse LLP (see appendix for logo description)
To the Board of Directors and Shareholders of DPL Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of results of operations and of cash flows present
fairly, in all material respects, the financial position of DPL Inc. 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 financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these 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
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the 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.
Price Waterhouse LLP
Dayton, Ohio
January 18, 1995
<TABLE>
<CAPTION>
Selected Quarterly Information
For the Three Months Ended
$ in millions except March 31, June 30, September 30, December 31,
per share amounts 1994 1993 1994 1993 1994 1993 1994 1993
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ $ $ $ $ $ $ $
Utility service revenues . . . . 372.1 345.8 257.3 238.0 263.3 262.0 295.2 305.5
Income before income taxes . . . 92.6 80.0 56.9 47.0 61.7 55.7 44.9 34.7
Net income . . . . . . . . . . . 55.4 53.2 34.9 31.4 36.9 33.1 27.7 21.3
Earnings per share of common stock 0.57 0.54 0.34 0.33 0.36 0.33 0.27 0.22
Dividends paid per share . . . . 0.295 0.28 0.295 0.28 0.295 0.28 0.295 0.28
Common stock market price-High . 21-1/4 21-1/4 21-5/8 21 20-3/4 21-7/8 21 21-5/8
-Low . . 19-3/8 19-1/4 18-7/8 19 18-5/8 20-3/8 19 19
</TABLE>
27
<PAGE>
Corporate Information
Transfer Agent and Registrar--
Common Stock and DP&L Preferred Stock
Securities Transfer & Shareholder Inquiries:
The First National Bank of Boston
Mail Stop 45-02-09
Box 644
Boston, MA 02102-0644
(617) 575-2900
(800) 736-3001
Dividend Reinvestment:
The First National Bank of Boston
Mail Stop 45-01-06
Box 1681
Boston, MA 02105-1681
Also dividend paying agent
(617) 575-2900
(800) 736-3001
Trustee--DP&L First Mortgage Bonds
The Bank of New York
Corporate Trust Administration
101 Barclay Street
New York, New York, 10286
Also interest paying agent
Securities Listing
The New York Stock Exchange is the only national securities exchange on which
DPL Inc. Common Stock and DP&L First Mortgage Bonds are listed. The trading
symbol of the Common Stock is DPL.
Federal Income Tax Status of 1994 Dividend Payments
Dividends paid in 1994 on Common and Preferred Stock are fully taxable as
dividend income.
Annual Meeting
The Annual Meeting of Shareholders will be held at 10:00 a.m., Tuesday, April
18, 1995, at Edison Community College Piqua, Ohio.
Communications
DPL Inc. staffs an Investor Relations Department to meet the information needs
of shareholders and investors. Inquiries are welcomed. Communications
relating to shareholder accounts should be directed to the DPL Investor
Relations Department (513) 259-7150 or (800) 322-9244 or to The First
National Bank of Boston (617) 575-2900 or (800) 736-3001.
Form 10-K Report
DPL Inc. reports details concerning its operations and other matters annually
to the Securities and Exchange Commission on Form 10-K, which will be supplied
upon request. Please direct inquiries to the Investor Relations Department.
<PAGE>
Officers--DPL Inc. and DP&L
(Age/Years of Service)
Peter H. Forster(52/21)
Chairman, President and Chief Executive Officer--DPL Inc.
Chairman--DP&L
Allen M. Hill(49/27)
President and Chief Executive Officer--DP&L
Paul R. Anderson(52/16)
Controller--DP&L
Stephen P. Bramlage(48/26)
Assistant Vice President--DP&L
Robert M. Combs(49/4)
Vice President--DP&L
Georgene H. Dawson(45/20)
Assistant Vice President--DP&L
Jeanne S. Holihan(38/14)
Assistant Vice President--DP&L
Thomas M. Jenkins(43/17)
Group Vice President and Treasurer--DPL Inc. and DP&L
Stephen F. Koziar, Jr.(50/27)
Group Vice President and Secretary--DPL Inc. and DP&L
Judy W. Lansaw(43/16)
Group Vice President--DPL Inc. and DP&L
Bryce W. Nickel(38/14)
Assistant Vice President--DP&L
H. Ted Santo(44/23)
Group Vice President--DP&L
28
<PAGE>
As required by Rule 304 of Regulation S-T, the following appendix lists the
graphic material contained in the 1994 DPL Inc. Annual Report to Shareholders.
This graphic material, which appears in the paper copy of the report, was
omitted from the electronically filed copy of the report.
APPENDIX
Page Item Description
----- ------ ------------------------------------------------------
Cover:
Artwork: Logo - DPL Inc.
Photograph: Picture of six children, an elderly man and
a dog standing in a scenic setting
with Dayton skyline in the background.
Artwork: Logo - "DP&L 1994 Utility of the Year" with
"Way To Go" logo, the umbrella name for energy
conservation programs of the Company.
Inside
Cover:
Artwork: Logo - "DP&L 1994 Utility of the Year" with
"Way To Go" logo, the umbrella name for energy
conservation programs of the Company.
Page 2:
Photograph: The following are pictured with their names
and titles appearing above the photo:
Burnell R. Roberts, David R. Holmes, James F. Dicke,
II, Peter H. Forster, W August Hillenbrand, Jane G.
Haley, Allen M. Hill, Thomas J. Danis, Ernie Green.
Artwork: Map of the State of Ohio, with DP&L service territory
highlighted.
Page 3:
Artwork: Logo - "DP&L 1994 Utility of the Year" with
"Way To Go" logo, the umbrella name for energy
conservation programs of the Company.
Bar Chart: Total Return -
Five Year Average
Annual Return
Percent
(with reinvested Dividends)
---------------------------------
1992 1993 1994
---- ---- ----
DPL Inc. 22.6% 21.1% 16.0%
Industry
Average 12.4% 11.2% 1.1%
Bar Chart: Dividends
Per Share
Dollars
-----------------------------
1992 $1.08
1993 $1.12
1994 $1.18
<PAGE>
Page Item Description
----- ----- -------------------------------------------------------
Page 3:
(cont.)
Bar Chart: Earnings
Per Share
Dollars
---------------------------
1992 $1.34
1993 $1.42
1994 $1.54
Page 6:
Photograph: Assembly line at a General Motors plant.
Page 7:
Artwork: Logo - "DP&L 1994 Utility of the Year" with
"Way To Go" logo, the umbrella name for energy
conservation programs of the Company.
Photograph: Whirlpool mixer.
Artwork: Logo - Whirlpool Corporation.
Page 8:
Artwork: Logo - "DP&L 1994 Utility of the Year" with
"Way To Go" logo, the umbrella name for energy
conservation programs of the Company.
Artwork: Sign containing a map of the State of Ohio and
"Western Ohio Where Agriculture, People, and
Companies Grow".
Page 9:
Photograph: Airborne Express aircraft being loaded with cargo.
Page 10:
Photograph: View of glass manufacturing process at a Corning
Glass plant.
Page 11:
Artwork: Logo - "DP&L 1994 Utility of the Year" with
"Way To Go" logo, the umbrella name for energy
conservation programs of the Company.
Artwork: Lucky the Dog, promotional mascot for the energy
conservation programs of the Company.
Artwork: "DP&L" logo and "Way To Go" logo, the umbrella name
for energy conservation programs of the Company.
Page 12:
Artwork: Logo - "DP&L 1994 Utility of the Year" with
"Way To Go" logo, the umbrella name for energy
conservation programs of the Company.
Artwork: Artist's rendering of FoxMeyer Corporation facility
that is currently under construction.
Artwork: Logo -"FoxMeyer Corporation"
<PAGE>
Page Item Description
----- ----- ----------------------------------------
Page 13:
Bar Charts: Electric Revenues
$ in millions
Year
---------------------
1992 1993 1994
---- ---- ----
Residential 326 374 390
Commercial 181 200 218
Industrial 190 206 229
Other 112 121 109
Total 809 901 946
Gas Revenues
$ in millions
Year
---------------------
1992 1993 1994
---- ---- ----
Residential 128 161 157
Commercial 36 44 42
Industrial 19 15 15
Transportation
& Other 21 25 23
Total 204 245 237
Total Taxes
$ in millions
Year
---------------------
1992 178
1993 190
1994 222
Electric Sales
Thousands of GWH
Year
---------------------
1992 1993 1994
---- ---- ----
Residential 4.3 4.6 4.4
Commercial 2.9 3.0 3.1
Industrial 3.9 4.1 4.4
Other 3.0 3.0 2.3
Total 14.1 14.7 14.2
<PAGE>
Page Item Description
---- ---- ------------------------------------------
Page 13:
(cont.)
Bar Charts: Gas Sales
Millions of MCF
Year
---------------------
1992 1993 1994
---- ---- ----
Residential 28 29 28
Commercial 8 8 8
Industrial 5 3 3
Transportation
& Other 14 17 18
Total 55 57 57
Operating Expenses
$ in millions
Year
---------------------
1992 1993 1994
---- ---- ----
Fuel Used In
Production 221 227 221
Gas Purchased
For Resale 118 156 151
Operating &
Administrative 158 185 159
Maintenance 77 90 86
Total 574 658 617
Average Price - Electric
Calendar Year
cents/kWh
------------------------
1992 5.69
1993 6.07
1994 6.59
Average Price - Gas
Calendar Year
$/MCF
-----------------------
1992 4.36
1993 5.42
1994 5.44
Construction Costs
$ in millions
Year
-----------------------
1992 59
1993 89
1994 101
Page 27:
Artwork: Logo - Price Waterhouse LLP (Independent Auditors).
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the
Prospectuses constituting part of the Registration Statement on
Form S-3 (Registration No. 33-34316) of DPL Inc., with respect
to its Automatic Dividend Reinvestment and Stock Purchase Plan,
and Post-Effective Amendment No. 3 on Form S-8, to DPL Inc.'s
Registration Statement on Form S-4 (Registration No. 33-2551),
with respect to The Dayton Power and Light Company's Employees'
Stock Plan, of our report dated January 18, 1995, appearing on
page 27 of the Annual Report to Shareholders, which is
incorporated in this Annual Report on Form 10-K. We also
consent to the incorporation by reference of our report on the
Financial Statement Schedules, which appears on page II-2 of
this Form 10-K.
Price Waterhouse LLP
Price Waterhouse LLP
Dayton, Ohio
March 29, 1995
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