<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number 1-9052
DPL INC.
(Exact name of registrant as specified in its charter)
OHIO 31-1163136
(State or other jurisdiction of (I.R.S. Employer
incorporation ororganization) Identification No.)
Courthouse Plaza Southwest
Dayton, Ohio 45402
(Address of principal executive offices)
(937) 224-6000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
YES X NO
--- ---
Indicate the number of shares of the issuer's classes of common stock,
as of the latest practicable date.
Common Stock, $.01 par value
and Preferred Share Purchase Rights 106,009,923 Shares
----------------------------------- ------------------
(Title of each class) (Outstanding at September 30, 1996)
<PAGE>
DPL INC.
INDEX
Page No.
--------
Part I - Financial Information
Item 1. Financial Statements
Consolidated Statement of Results of Operations 1
Consolidated Statement of Cash Flows 2
Consolidated Balance Sheet 3
Notes to Consolidated Financial Statements 5
Operating Statistics 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
Part II - Other Information 10
Signatures 11
i
<PAGE>
CONSOLIDATED STATEMENT OF RESULTS OF OPERATIONS
DPL INC.
Three Months Nine Months
Ended Ended
September 30 September 30
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
--thousands-- --thousands--
Income
- ------
Utility service revenues $277,616 $300,051 $927,438 $921,513
Interest and other income 4,766 6,651 19,594 20,161
-------- -------- -------- --------
Total Income 282,382 306,702 947,032 941,674
-------- -------- -------- --------
Expenses
- --------
Fuel and purchased power 57,823 68,543 174,061 192,244
Gas purchased for resale 9,700 9,670 93,721 90,303
Operation and maintenance 57,385 68,372 182,049 175,834
Depreciation and amortization 30,061 31,410 92,721 89,356
Amortization of regulatory assets, net 4,142 6,632 11,603 12,151
General taxes 32,480 31,740 96,869 94,007
Interest expense 22,391 23,989 66,535 70,327
Preferred dividend requirements of
The Dayton Power and Light Company 217 216 650 650
-------- -------- -------- --------
Total Expenses 214,199 240,572 718,209 724,872
-------- -------- -------- --------
Income Before Income Taxes 68,183 66,130 228,823 216,802
Income Taxes 26,462 26,687 88,427 81,945
-------- -------- -------- --------
Net Income $ 41,721 $ 39,443 $140,396 $134,857
======== ======== ======== ========
Average Number of Common Shares
Outstanding (thousands) 100,384 101,135 100,637 101,107
Earnings Per Share of Common Stock $ 0.42 $ 0.39 $ 1.40 $ 1.33
Dividends Paid Per Share of Common
Stock $ 0.325 $ 0.31 $ 0.975 $ 0.93
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
-1-
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
DPL INC.
Nine Months Ended
September 30
-----------------
1996 1995
---- ----
--thousands--
Operating Activities
- --------------------
Cash received from utility customers $952,262 $925,030
Other operating cash receipts 20,050 22,684
Cash paid for:
Fuel and purchased power (166,711) (183,970)
Purchased gas (133,501) (103,174)
Operation and maintenance labor (61,445) (66,320)
Nonlabor operating expenditures (110,036) (98,458)
Interest (71,755) (71,119)
Income taxes (77,758) (70,416)
Property, excise and payroll taxes (104,657) (101,900)
-------- --------
Net cash provided by operating activities 246,449 252,357
-------- --------
Investing Activities
- --------------------
Property expenditures (71,773) (63,503)
Other activities (213,224) (10,515)
-------- --------
Net cash used for investing activities (284,997) (74,018)
-------- --------
Financing Activities
- --------------------
Dividends paid on common stock (98,606) (94,014)
Purchase of treasury stock (15,802) -
Retirement of long-term debt (450) (119,177)
Issuance of short-term debt 35,000 -
Issuance of long-term debt - 108,910
-------- --------
Net cash used for financing activities (79,858) (104,281)
-------- --------
Cash and temporary cash investments--
- -----------------------------------
Net change (118,406) 74,058
Balance at beginning of period 150,371 95,566
-------- --------
Balance at end of period $ 31,965 $169,624
======== ========
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
-2-
<PAGE>
CONSOLIDATED BALANCE SHEET
DPL INC.
At At
September 30, December 31,
1996 1995
------------- ------------
--thousands--
ASSETS
- ------
Property
- --------
Utility property $3,393,711 $3,370,697
Other property 36,483 55,427
Construction work in progress 76,727 23,496
---------- ----------
3,506,921 3,449,620
Less--
Accumulated depreciation and amortization (1,251,554) (1,167,779)
---------- ----------
Net property 2,255,367 2,281,841
---------- ----------
Current Assets
- --------------
Cash and temporary cash investments 31,965 150,371
Accounts receivable, less provision for
uncollectible accounts 119,051 147,998
Inventories, at average cost 72,562 82,700
Deferred property and excise taxes 47,745 82,371
Other 76,748 39,784
---------- ----------
Total current assets 348,071 503,224
---------- ----------
Other Assets
- ------------
Income taxes recoverable through future revenues 228,972 238,632
Regulatory assets 141,945 155,715
Financial assets 174,398 27,191
Other 121,935 116,152
---------- ----------
Total other assets 667,250 537,690
---------- ----------
Total Assets $3,270,688 $3,322,755
========== ==========
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
-3-
<PAGE>
CONSOLIDATED BALANCE SHEET
(continued)
DPL INC.
At At
September 30, December 31,
1996 1995
------------- ------------
--thousands--
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization
- --------------
Common shareholders' equity--
Common stock $ 1,060 $ 1,067
Other paid-in capital 756,355 771,414
Common stock held by employee plans (103,449) (107,228)
Earnings reinvested in the business 510,373 499,533
---------- ----------
Total common shareholders' equity 1,164,339 1,164,786
Preferred stock 22,851 22,851
Long-term debt 1,039,253 1,081,591
---------- ----------
Total capitalization 2,226,443 2,269,228
---------- ----------
Current Liabilities
- -------------------
Accounts payable 51,330 96,982
Notes payable 35,000 -
Current portion of long-term debt 42,400 450
Accrued taxes 75,199 119,398
Accrued interest 18,800 24,929
Other 36,424 43,071
---------- ----------
Total current liabilities 259,153 284,830
---------- ----------
Deferred Credits and Other
- --------------------------
Deferred taxes 500,446 516,292
Unamortized investment tax credit 76,151 79,646
Other 208,495 172,759
---------- ----------
Total deferred credits and other 785,092 768,697
---------- ----------
Total Capitalization and Liabilities $3,270,688 $3,322,755
========== ==========
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
-4-
<PAGE>
Notes to Consolidated Financial Statements
1. Reconciliation of Net Income to Net Cash Provided by Operating
Activities:
Nine Months Ended
September 30
1996 1995
---- ----
--millions--
Net Income $140.4 $134.9
Adjustments for non-cash items:
Depreciation and amortization 92.7 89.4
Changes in working capital:
Accounts receivable 32.3 12.5
Accounts payable (40.8) (15.4)
Other (19.5) 2.1
Other operating activities 41.3 28.9
------ ------
Net cash provided by operating activities $246.4 $252.4
====== ======
2. Other current assets on the consolidated balance sheet include:
September 30, December 31,
1996 1995
---- ----
--millions--
Prepayments $ 2.6 $ 21.1
Financial assets 66.5 -
Other 7.6 18.7
------ ------
Total $ 76.7 $ 39.8
====== ======
3. Reclassifications have been made in certain prior years' amounts
to conform to the current reporting presentation of DPL Inc.
4. The consolidated financial statements in this report have been
prepared by DPL Inc., without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. These consolidated financial statements should be read
in conjunction with the consolidated financial statements and notes
thereto in DPL Inc.'s 1995 Annual Report on Form 10-K.
The information included in this Form 10-Q reflects all
adjustments which are, in the opinion of management, necessary for a
fair statement of the results of operations for the periods presented.
Any adjustments are of a normal recurring nature.
-5-
<PAGE>
OPERATING STATISTICS
The Dayton Power and Light Company
Three Months Nine Months
Ended Ended
September 30 September 30
------------ ------------
1996 1995 1996 1995
---- ---- ---- ----
Electric
- --------
Sales (millions of kWh)--
Residential 1,197 1,365 3,727 3,636
Commercial* 895 927 2,608 2,468
Industrial* 1,198 1,196 3,383 3,459
Other 814 1,021 2,510 3,070
------- ------- ------- -------
Total 4,104 4,509 12,228 12,633
Revenues (thousands of dollars)--
Residential 107,348 121,821 321,665 316,802
Commercial* 59,224 61,607 179,089 170,374
Industrial* 57,800 59,457 166,729 175,031
Other 32,884 36,790 99,960 108,387
------- ------- ------- -------
Total 257,256 279,675 767,443 770,594
Other Electric Statistics--
Average price per kWh--retail and
wholesale customers (cents) 6.19 6.15 6.20 6.04
Fuel cost per net kWh generated
(cents) 1.23 1.36 1.26 1.34
Electric customers at end of period 477,675 473,468 477,675 473,468
Average kWh use per residential
customer 2,805 3,229 8,742 8,611
Peak demand-maximum one hour
use (mw), (net) 2,887 2,961 2,887 2,961
*Includes the effect of reclassifying certain industrial customers as
commercial customers in the fourth quarter of 1995.
-6-
<PAGE>
OPERATING STATISTICS
(continued)
The Dayton Power and Light Company
Three Months Nine Months
Ended Ended
September 30 September 30
------------ ------------
1996 1995 1996 1995
---- ---- ---- ----
Gas
- ---
Sales (millions of mcf)--
Residential 1,841 1,981 20,838 18,369
Commercial 631 715 6,320 5,260
Industrial 158 140 2,743 1,788
Other 244 323 1,962 2,065
Transportation gas delivered 3,092 2,763 12,366 11,737
------- ------- ------- -------
Total 5,966 5,922 44,229 39,219
Revenues (thousands of dollars)--
Residential 12,922 12,930 102,625 98,235
Commercial 3,544 3,658 28,636 25,932
Industrial 868 708 11,078 8,239
Other 3,317 3,295 16,643 16,014
------- ------- ------- -------
Total 20,651 20,591 158,982 148,420
Other Gas Statistics--
Average price mcf-retail customers
(dollars) 6.39 5.88 4.72 5.14
Gas customers at end of period 295,110 291,812 295,110 291,812
Degree Days (based on calendar month)--
Heating 107 108 4,027 3,546
Cooling 552 776 834 1,025
-7-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
DPL Inc.'s earnings for the third quarter of 1996 were $0.42 per
share, up $.03 from third quarter earnings a year ago. For the nine
months ended September 30, 1996, earnings were $1.40 per share, versus
$1.33 per share earned in the same period last year. Summer
temperatures were 13% cooler than normal and 29% cooler than last
year's hot summer. As a result, total retail electric sales were down
nearly 5% from the third quarter of 1995, influenced primarily by a
12% drop in residential electric sales.
Offsetting the effects of milder temperatures, operating and
maintenance expenses in the third quarter were 16% less than a year
ago as a result of Company-wide productivity improvements and lower
financing fees.
An analysis of the financial condition and results of operations
for the third quarter and nine months ended September 30, 1996 and
1995 is discussed below.
Financial Condition
- -------------------
Construction plans are subject to continuing review and are
expected to be revised in light of changes in financial and economic
conditions, load forecasts, legislative and regulatory developments
and changing environmental standards, among other factors. 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.
As of September 30, 1996, DPL Inc.'s cash and temporary cash
investment balance was $32.0 million. In addition, $240.9 million was
invested in debt and equity financial assets.
DP&L has available to it $97 million in short-term informal lines
of credit. DPL Inc. and its subsidiaries have $200 million available
through a Revolving Credit Agreement ("Credit Agreement"). As of
September 30, 1996, DPL Inc. had no outstanding borrowings under this
Credit Agreement. DP&L has authority from the Public Utilities
Commission of Ohio ("PUCO") to issue short term debt up to
$200 million with a maximum debt limit of $300 million including loans
from DPL Inc. under the terms of the Credit Agreement. As of
September 30, 1996, DP&L had $22 million in commercial paper
outstanding and $13 million through the informal credit lines.
DP&L anticipates that it has sufficient capacity to issue First
Mortgage Bonds to satisfy its requirements in connection with the
financing of its construction and refinancing programs during the five
year period 1996-2000.
-8-
<PAGE>
Results of Operations
- ---------------------
Electric revenues decreased by $22.4 million and $3.2 million,
respectively, for the third quarter and nine months ended
September 30, 1996, from the corresponding periods in 1995.
Residential sales decreased 12% in the third quarter while showing a
year-to-date increase of 3% from 1995. Sales to other public
utilities were down 37% for the quarter and 32% year-to-date compared
to last year.
Gas revenues increased $10.6 million year-to-date compared to
last year due to a higher gas cost recovery rate and more weather-
related residential sales.
Fuel and purchased power expense decreased $10.7 million and
$18.2 million, respectively, from the third quarter and year-to-date
1995, primarily related to decreased sales to other utilities and
lower fuel cost recovery rates.
Gas purchased for resale increased $3.4 million for the year
compared to 1995 as a result of the increased sales.
Operation and maintenance expense for the third quarter decreased
from last year by $11.0 million and increased $6.2 million year-to-
date. The decrease in the third quarter was due to financing fees of
$4.7 million associated with the 1995 debt refinancing and lower
administration expenses. Offsetting the decrease for the quarter and
causing the increase on a year-to-date basis are higher insurance and
claim costs.
Depreciation and amortization expense increased $3.4 million over
year-to-date 1995. This variance primarily reflects increased
depreciable assets and a second quarter adjustment to the depreciation
reserve.
General taxes increased $2.9 million over the 1995 year-to-date
amounts due to increased property taxes.
Interest expense decreased $1.6 million from the third quarter
last year and $3.8 million year-to-date. This was primarily due to
interest savings from the 1995 bond refinancing.
Income taxes increased $6.5 million over year-to-date 1995
primarily due to higher pre-tax income.
-9-
<PAGE>
Part II. Other Information
---------------------------
Item 5. Other Information.
Rate Regulation and Government Legislation
- ------------------------------------------
On September 30, 1996, the Federal Energy Regulatory Commission
("FERC") conditionally accepted DP&L's market-based sales tariff which
will allow DP&L to sell wholesale generation supply at prices that
reflect current market prices. At the same time, FERC approved the
application and authorization of DPL Energy Inc., a wholly-owned
subsidiary of DPL Inc., to sell and broker electric power and also
charge market-based prices for such power.
Item 6. Exhibits and Reports on Form 8-K.
(b) Reports on Form 8-K
------------------------
No reports on Form 8-K were filed by DPL Inc. during the quarter
ended September 30, 1996.
-10 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
DPL INC.
----------------------
(Registrant)
Date: November 14, 1996 /s/ Stephen F. Koziar
----------------- ---------------------
Stephen F. Koziar
Group Vice President and Secretary
Date: November 14, 1996 /s/ Thomas M. Jenkins
----------------- ---------------------
Thomas M. Jenkins
Group Vice President and Treasurer
(Principal Financial Officer)
-11-
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