<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 June 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 or organization) Identification No.)
Courthouse Plaza Southwest
Dayton, Ohio 45402
(Address of principal executive offices)
(513) 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 June 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
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CONSOLIDATED STATEMENT OF RESULTS OF OPERATIONS
DPL INC.
Three Months Six Months
Ended Ended
June 30 June 30
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
--thousands-- --thousands--
Income
- ------
Utility service revenues $281,401 $265,895 $649,822 $621,462
Interest and other income 8,451 7,213 14,828 13,510
-------- -------- -------- --------
Total Income 289,852 273,108 664,650 634,972
-------- -------- -------- --------
Expenses
- --------
Fuel and purchased power 54,615 59,554 116,239 123,701
Gas purchased for resale 19,461 17,614 84,020 80,633
Operation and maintenance 68,551 55,957 124,663 107,461
Depreciation and amortization 32,272 29,050 62,660 57,946
Amortization of regulatory assets, net 3,402 2,794 7,461 5,519
General taxes 32,078 31,006 64,390 62,267
Interest expense 22,114 23,204 44,144 46,338
Preferred dividend requirements of
The Dayton Power and Light Company 217 217 434 434
-------- -------- -------- --------
Total Expenses 232,710 219,396 504,011 484,299
-------- -------- -------- --------
Income Before Income Taxes 57,142 53,712 160,639 150,673
Income Taxes 22,293 19,111 61,964 55,259
-------- -------- -------- --------
Net Income $ 34,849 $ 34,601 $ 98,675 $ 95,414
======== ======== ======== ========
Average Number of Common Shares
Outstanding (thousands) 100,569 101,130 100,765 101,093
Earnings Per Share of Common Stock $ 0.35 $ 0.34 $ 0.98 $ 0.94
Dividends Paid Per Share of Common
Stock $ 0.325 $ 0.31 $ 0.65 $ 0.62
Set Notes to Consolidated Financial Statements.
These interim statements are unaudited.
-1-
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CONSOLIDATED STATEMENT OF CASH FLOWS
DPL INC.
Six Months Ended
June 30
----------------
1996 1995
---- ----
--thousands--
Operating Activities
- --------------------
Cash received from utility customers $653,185 $641,539
Other operating cash receipts 13,555 16,799
Cash paid for:
Fuel and purchased power (108,065) (120,023)
Purchased gas (95,027) (74,315)
Operation and maintenance labor (43,786) (45,607)
Nonlabor operating expenditures (74,866) (73,599)
Interest (43,514) (43,125)
Income taxes (42,804) (42,804)
Property, excise and payroll taxes (72,371) (71,548)
-------- --------
Net cash provided by operating activities 186,307 187,317
-------- --------
Investing Activities
- --------------------
Property expenditures (41,937) (44,702)
Other activities (177,026) (5,608)
-------- --------
Net cash used for investing activities (218,963) (50,310)
-------- --------
Financing Activities
- --------------------
Dividends paid on common stock (65,982) (62,664)
Retirement of long-term debt (50) (3,145)
Purchase of treasury stock (15,803) -
-------- --------
Net cash used for financing activities (81,835) (65,809)
-------- --------
Cash and temporary cash investments--
- -----------------------------------
Net change (114,491) 71,198
Balance at beginning of period 150,371 95,566
-------- --------
Balance at end of period $ 35,880 $166,764
======== ========
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
-2-
<PAGE>
CONSOLIDATED BALANCE SHEET
DPL INC.
At At
June 30, December 31,
1996 1995
-------- ------------
--thousands--
ASSETS
- ------
Property
- --------
Utility property $3,372,921 $3,370,697
Other property 36,220 55,427
Construction work in progress 65,289 23,496
---------- ----------
3,474,430 3,449,620
Less--
Accumulated depreciation and amortization (1,218,135) (1,167,779)
---------- ----------
Net property 2,256,295 2,281,841
---------- ----------
Current Assets
- --------------
Cash and temporary cash investments 35,880 150,371
Accounts receivable, less provision for
uncollectible accounts 144,965 147,998
Inventories, at average cost 63,842 82,700
Taxes applicable to subsequent years 77,086 82,371
Other current assets 46,500 39,784
---------- ----------
Total current assets 368,273 503,224
---------- ----------
Other Assets
- ------------
Income taxes recoverable through future revenues 232,675 238,632
Regulatory assets 147,195 155,715
Financial assets 164,666 27,191
Other assets 118,728 116,152
---------- ----------
Total other assets 663,264 537,690
---------- ----------
Total Assets $3,287,832 $3,322,755
========== ==========
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
-3-
<PAGE>
CONSOLIDATED BALANCE SHEET
(continued)
DPL INC.
At At
June 30, December 31,
1996 1995
-------- ------------
--thousands--
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization
- --------------
Common shareholders' equity--
Common stock $ 1,060 $ 1,067
Other paid-in capital 756,232 771,414
Common stock held by employee plans (106,093) (107,228)
Earnings reinvested in the business 499,248 499,533
Total common shareholders' equity 1,150,447 1,164,786
Preferred stock 22,851 22,851
Long-term debt 1,040,632 1,081,591
---------- ----------
Total capitalization 2,213,930 2,269,228
---------- ----------
Current Liabilities
- -------------------
Accounts payable 66,939 96,982
Accrued taxes 112,045 119,398
Accrued interest 24,869 24,929
Current portion of long-term debt 41,400 450
Other 50,549 43,071
---------- ----------
Total current liabilities 295,802 284,830
---------- ----------
Deferred Credits and Other
- --------------------------
Deferred taxes 505,406 516,292
Unamortized investment tax credit 76,902 79,646
Other 195,792 172,759
---------- ----------
Total deferred credits and other 778,100 768,697
---------- ----------
Total Capitalization and Liabilities $3,287,832 $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:
Six Months Ended
June 30
1996 1995
---- ----
--millions--
Net Income $ 98.7 $ 95.4
Adjustments for non-cash items:
Depreciation and amortization 62.7 57.9
Changes in working capital:
Accounts receivable 5.8 28.7
Accounts payable (26.3) (21.9)
Other 19.5 30.7
Other operating activities 25.9 (3.5)
------ ------
Net cash provided by operating activities $186.3 $187.3
====== ======
2. Reclassifications have been made in certain prior years' amounts
to conform to the current reporting presentation of DPL Inc.
3. 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 Six Months
Ended Ended
June 30 June 30
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
Electric
- --------
Sales (millions of kWh)--
Residential 1,032 924 2,530 2,271
Commercial* 881 769 1,713 1,541
Industrial* 1,122 1,168 2,185 2,264
Other 750 1,028 1,696 2,048
------- ------- ------- -------
Total 3,785 3,889 8,124 8,124
Revenues (thousands of dollars)--
Residential 94,967 84,672 214,317 194,981
Commercial* 63,052 54,930 119,865 108,767
Industrial* 55,501 59,530 108,929 115,575
Other 32,043 35,712 67,076 71,596
------- ------- ------- -------
Total 245,563 234,844 510,187 490,919
Other Electric Statistics--
Average price per kWh--retail and
wholesale customers (cents) 6.41 5.97 6.21 5.98
Fuel cost per net kWh generated
(cents) 1.24 1.31 1.26 1.33
Electric customers at end of period 476,822 472,394 476,822 472,394
Average kWh use per residential
customer 2,420 2,188 5,938 5,381
Peak demand-maximum one hour
use (mw), (net) 2,641 2,704 2,668 2,704
*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 Six Months
Ended Ended
June 30 June 30
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
Gas
- ---
Sales (millions of mcf)--
Residential 4,284 3,617 18,997 16,388
Commercial 1,242 999 5,689 4,544
Industrial 739 423 2,585 1,648
Other 410 546 1,718 1,742
Transportation gas delivered 3,623 3,521 9,274 8,974
------- ------- ------- -------
Total 10,298 9,106 38,263 33,296
Revenues (thousands of dollars)--
Residential 22,793 19,833 89,703 85,305
Commercial 5,964 4,930 25,092 22,274
Industrial 2,951 1,692 10,210 7,531
Other 4,108 4,186 13,326 12,718
------- ------- ------- -------
Total 35,816 30,641 138,331 127,828
Other Gas Statistics--
Average price mcf-retail customers
(dollars) 5.00 5.10 4.55 5.05
Gas customers at end of period 295,351 291,326 295,351 291,326
Degree Days (based on calendar month)--
Heating 723 607 3,920 3,438
Cooling 282 249 282 249
-7-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
DPL Inc.'s earnings for the second quarter of 1996 were $0.35 per
share, up $.01 from second quarter earnings a year ago. Year-to-date
earnings were $0.98 per share, up from $0.94 per share for the same
period in 1995. The West Central Ohio economy remained very strong in
the second quarter with unemployment levels in the service area
dropping below 4%, outpacing both the state and national economies.
This performance, combined with more seasonable weather than last
year, led to an increase in retail electric and total natural gas
sales of 5% and 15%, respectively, over year-to-date 1995 levels.
An analysis of the financial condition and results of operations
for the second quarter and six months ended June 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 June 30, 1996, DPL Inc.'s cash and temporary cash
investment balance was $35.9 million. In addition, $203.6 million was
invested in debt and equity financial assets.
DP&L has available to it $97 million in short-term informal lines
of credit. As of June 30, 1996, DP&L had no short-term debt
outstanding. DPL Inc. and its subsidiaries have $200 million
available through a Revolving Credit Agreement ("Credit Agreement").
As of June 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.
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 increased by $10.7 million and $19.3 million,
respectively, for the second quarter and six months ended June 30,
1996, over the corresponding periods in 1995. Residential customer
revenues were up 12% for the second quarter and 10% year-to-date as a
result of weather-related sales.
Gas revenues increased $5.2 million and $10.5 million,
respectively, from the second quarter and year-to-date last year. The
variance reflects increased gas sales of 13% in the second quarter and
15% year-to-date over last year due to colder weather and increased
business activity.
Fuel and purchased power expense decreased $4.9 million and
$7.5 million, respectively, for the second quarter and year-to-date.
The variance is a result of lower sales to other utilities as well as
a lower fuel cost recovery rate.
Gas purchased for resale increased $1.8 million from the
corresponding quarter in 1995 and $3.4 million from year-to-date last
year primarily as a result of the increased sales.
Operation and maintenance expense increased over last year by
$12.6 million for the quarter and $17.2 million year-to-date due to
higher insurance and claims expenses and planned maintenance measures
undertaken in the second quarter in preparation for the upcoming
summer cooling season.
Depreciation and amortization expense increased $3.2 million from
the previous year second quarter and $4.7 million year-to-date. This
variance reflects increased depreciable assets and a second quarter
adjustment to the depreciation reserve.
General taxes increased $2.1 million over the first six months
last year due to increased property taxes.
Income taxes increased $3.2 million and $6.7 million,
respectively, over the second quarter and 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 July 9, 1996, DP&L refiled its open-access transmission tariff
with the Federal Energy Regulatory Commission ("FERC") in compliance
with Order Nos. 888 and 889 issued by FERC on April 24, 1996.
On February 15, 1996, the PUCO issued guidelines for
interruptible service, including services that accommodate the
attainment and delivery of replacement electricity during periods when
the utility faces constraints on its own resources. On April 11,
1996, the PUCO issued an Entry on Rehearing ordering utilities to file
interruptible electric service tariffs. On June 14, 1996, DP&L filed
for approval of a non-firm electric service rate schedule and
replacement power rate riders.
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 June 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: August 14, 1996 /s/ Stephen F. Koziar
--------------- ---------------------
Stephen F. Koziar
Group Vice President and Secretary
Date: August 14, 1996 /s/ Thomas M. Jenkins
--------------- ---------------------
Thomas M. Jenkins
Group Vice President and Treasurer
(Principal Financial Officer)
-11-
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