UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number 1-9052
DPL INC.
(Exact name of registrant as specified in its charter)
OHIO 31-1163136
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Courthouse Plaza Southwest
Dayton, Ohio 45402
----------------------------------------
(Address of principal executive offices)
(937) 224-6000
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES X NO
--- ---
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 160,477,896 Shares
- ----------------------------------- -------------------------------
(Title of each class) (Outstanding at March 31, 1998)
<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 Ended
March 31
------------------
1998 1997
---- ----
--millions--
Income
- ------
Utility service revenues $352.3 $356.7
Other income 31.5 38.9
------ ------
Total Income 383.8 395.6
------ ------
Expenses
- --------
Fuel and purchased power 61.2 55.1
Gas purchased for resale 81.9 93.5
Operation and maintenance 35.1 53.9
Depreciation and amortization 32.7 31.8
Amortization of regulatory assets, net 4.6 4.2
General taxes 34.5 33.7
Interest expense 21.9 22.0
------ ------
Total Expenses 271.9 294.2
------ ------
Income Before Income Taxes 111.9 101.4
Income taxes 41.7 35.1
------ ------
Net Income $ 70.2 $ 66.3
====== ======
Average Number of Common Shares
Outstanding (millions) 152.3 150.8
Earnings Per Share of Common Stock $ 0.46 $ 0.44
Dividends Paid Per Share of Common Stock $0.235 $0.227
Comprehensive Income $ 82.2 $ 64.9
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
-1-
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
DPL INC.
Three Months Ended
March 31
------------------
1998 1997
---- ----
--millions--
Operating Activities
- --------------------
Cash received from utility customers $348.2 $358.2
Other operating cash receipts 28.6 27.7
Cash paid for:
Fuel and purchased power (68.6) (57.8)
Purchased gas (71.7) (83.4)
Operation and maintenance labor (23.9) (25.5)
Nonlabor operating expenditures (40.8) (40.0)
Interest (29.0) (28.2)
Income taxes (15.0) (0.7)
Property, excise and payroll taxes (54.3) (52.7)
------ ------
Net cash provided by operating activities 73.5 97.6
Investing Activities
- --------------------
Property expenditures (26.8) (18.5)
Other activities (27.8) (41.0)
------ ------
Net cash used for investing activities (54.6) (59.5)
Financing Activities
- --------------------
Dividends paid on common stock (35.8) (34.2)
Retirement of long-term debt (1.5) (1.0)
Issuance of common stock 5.0 5.1
Issuance (retirement) of short-term debt 39.6 (10.0)
------ ------
Net cash used for financing activities 7.3 (40.1)
Cash and temporary cash investments--
Net change 26.2 (2.0)
Balance at beginning of period 26.1 72.8
------ ------
Balance at end of period $ 52.3 $ 70.8
====== ======
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
-2-
<PAGE>
CONSOLIDATED BALANCE SHEET
DPL INC.
At At
March 31, December 31,
1998 1997
--------- ------------
--millions--
ASSETS
Property $3,663.1 $3,642.8
Less--
Accumulated depreciation and amortization (1,417.3) (1,386.6)
-------- --------
Net property 2,245.8 2,256.2
-------- --------
Current Assets
- --------------
Cash and temporary cash investments 52.3 26.1
Accounts receivable, less provision for
uncollectible accounts 214.0 211.4
Inventories, at average cost 79.6 87.5
Deferred property and excise taxes 59.7 91.9
Prepaid utility excise tax 36.7 18.6
Other 24.7 35.6
-------- --------
Total current assets 467.0 471.1
-------- --------
Other Assets
- ------------
Financial assets 432.8 384.0
Income taxes recoverable through future revenues 205.6 208.2
Regulatory assets 111.7 116.7
Other 143.0 149.0
-------- --------
Total other assets 893.1 857.9
-------- --------
Total Assets $3,605.9 $3,585.2
======== ========
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
-3-
<PAGE>
CONSOLIDATED BALANCE SHEET
(continued)
DPL INC.
At At
March 31, December 31,
1998 1997
--------- ------------
--millions--
CAPITALIZATION AND LIABILITIES
Capitalization
- --------------
Common shareholders' equity--
Common stock $ 1.6 $ 1.6
Other paid-in capital 783.0 777.3
Common stock held by employee plans (96.4) (98.0)
Accumulated other comprehensive income 31.9 19.9
Earnings reinvested in the business 619.4 585.2
-------- --------
Total common shareholders' equity 1,339.5 1,286.0
Preferred stock 22.9 22.9
Long-term debt 969.0 971.0
-------- --------
Total capitalization 2,331.4 2,279.9
-------- --------
Current Liabilities
- -------------------
Accounts payable 77.4 129.8
Accrued taxes 138.7 158.5
Accrued interest 16.3 24.2
Current portion of long-term debt 3.9 3.4
Short-term debt 155.3 115.7
Other 55.8 46.3
-------- --------
Total current liabilities 447.4 477.9
-------- --------
Deferred Credits and Other
- --------------------------
Deferred taxes 469.8 464.9
Unamortized investment tax credit 71.7 72.4
Insurance and claims costs 154.9 151.6
Other 130.7 138.5
-------- --------
Total deferred credits and other 827.1 827.4
-------- --------
Total Capitalization and Liabilities $3,605.9 $3,585.2
======== ========
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
-4-
<PAGE>
Notes to Consolidated Financial Statements
1. Reclassifications have been made in certain prior years' amounts
to conform to the current reporting presentation of DPL Inc.
2. 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 1997 Annual Report on Form 10-K.
The information included in this Form 10-Q reflects all
adjustments which are, in the opinion of management, necessary for a
fair statement of the results of operations for the periods presented.
Any adjustments are of a normal recurring nature.
-5-
<PAGE>
OPERATING STATISTICS
The Dayton Power and Light Company
Three Months Ended
March 31
1998 1997
---- ----
Electric
- --------
Sales (millions of kWh) --
Residential 1,323 1,408
Commercial 820 823
Industrial 1,098 1,090
Other 1,185 838
------- -------
Total 4,426 4,159
Revenues (thousands of dollars) --
Residential 109,508 112,851
Commercial 56,678 56,454
Industrial 52,522 52,132
Other 42,677 31,665
------- -------
Total 261,385 253,102
Other Electric Statistics --
Average price per kWh-retail and wholesale
customers (cents) 5.77 6.01
Fuel cost per net kWh generated (cents) 1.25 1.27
Electric customers at end of period 486,795 480,835
Average kWh use per residential customer 3,045 3,277
Peak demand-maximum one hour use (mw), (net) 2,373 2,690
-6-
<PAGE>
OPERATING STATISTICS
(continued)
The Dayton Power and Light Company
Three Months Ended
March 31
1998 1997
---- ----
Gas
- ---
Sales (millions of MCF) --
Residential 11,356 13,145
Commercial 3,032 4,017
Industrial 920 1,198
Other 906 1,017
Transported gas 5,913 6,170
------- -------
Total 22,127 25,547
Revenues (thousands of dollars) --
Residential 59,953 68,952
Commercial 15,373 20,028
Industrial 4,492 5,581
Other 11,658 8,980
------- -------
Total 91,476 103,541
Other Gas Statistics --
Average price per MCF-retail customers
(dollars) 5.19 5.13
Gas customers at end of period 303,023 298,729
Degree Days (based on calendar month) --
Heating 2,369 2,788
Cooling 23 0
-7-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
DPL Inc.'s earnings for the first quarter of 1998 were $0.46 per
share, up from $0.44 per share earned in the first quarter last year.
Winter temperatures in the first quarter were 15% milder than last
year and 20% milder than normal. This resulted in gas sales declining
13% and weather sensitive electric residential sales declining 6% from
last year. The strong economy in West Central Ohio provided increased
commercial and industrial sales which helped offset the effects of the
mild winter. Total electric sales were down 2% from last year.
DP&L's sales to other utilities and successful cost control programs
overcame effects of weather and contributed to the good first quarter
performance.
The financial condition and results of operations for the first
quarter ended March 31, 1998 and 1997 are discussed below.
Financial Condition
- -------------------
Construction plans are subject to continuing review and are
expected to be revised in light of changes in financial and economic
conditions, load forecasts, legislative and regulatory developments
and changing environmental standards, among other factors. 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 March 31, 1998, DPL Inc.'s cash and temporary cash
investment balance was $52.3 million. In addition, $432.8 million was
invested in debt and equity financial assets.
DPL Inc. and its subsidiaries have $200 million available through
a Revolving Credit Agreement ("Credit Agreement"). As of March 31,
1998, DPL Inc. had no outstanding borrowings under this Credit
Agreement. 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 also has $97 million
available in short-term informal lines of credit. As of March 31,
1998, DP&L had $59.0 million of these informal lines outstanding and
$96.3 million of these informal lines outstanding are $96.3 million in
commercial paper outstanding.
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 1998-2002.
-8-
<PAGE>
Results of Operations
- ---------------------
Utility service revenues decreased by $4.4 million from the first
quarter last year. Higher electric sales to other utilities was the
primary cause of an increase in electric revenues of $8.3 million.
Increased electric industrial sales were more than offset by lower
residential sales, due to the effects of mild weather. Gas revenues
declined $12.1 million, also reflecting the effects of mild weather.
Other income declined $7.4 million primarily due to a gain on an
investment sale in the first quarter of 1997.
Fuel and purchased power increased $6.1 million compared to the
corresponding quarter a year ago from power purchases for sales to
other utilities. Gas purchased for resale decreased $11.6 million for
the first quarter primarily from lower sales due to milder weather.
Operation and maintenance expense decreased from last year by
$18.8 million. Lower insurance and claims costs, decreased production
maintenance and overall cost containment efforts contributed to the
decrease.
Income taxes increased $6.6 million from the corresponding
quarter last year due to higher book income.
-9-
<PAGE>
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders.
At DPL Inc.'s Annual Meeting of Shareholders held on April 14,
1998, three directors of DPL Inc. were elected, each of whom will
serve a three year term expiring in 2001. The nominees were elected
as follows: Thomas J. Danis, 143,654,309 shares FOR, 1,295,625 shares
WITHHELD; Allen M. Hill, 143,829,942 shares FOR, 1,119,992 shares
WITHHELD; and W August Hillenbrand, 143,842,964 shares FOR, 1,116,970
shares WITHHELD.
Item 5. Other Information.
Rate Regulation and Government Legislation
- ------------------------------------------
On December 18, 1997 the PUCO directed DP&L to file a proposal to
implement a small-volume gas transportation pilot program. In
compliance with this Opinion and Order, on February 27, 1998 DP&L
filed an application to implement a small-volume gas transportation
pilot program with the PUCO. DP&L's application is pending and the
impact of this tariff cannot be assessed at the present time.
In January 1997, a twelve member Joint Committee of the Ohio
Senate and House of Representatives was created to explore and
possibly draft retail wheeling legislation. The Committee has
conducted hearings to gather information from energy companies,
regulators, customers and industry experts. The Committee co-chairs
issued a draft report on January 6, 1998 recommending opening the
electric generation market, in the future, to competition for all Ohio
consumers. On March 26, 1998, the Committee co-chairs introduced an
electric deregulation Bill that reflected the recommendations
contained in their report.
Item 6. Exhibits and Reports on Form 8-K.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by DPL Inc. during the quarter
ended March 31, 1998.
-10-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
DPL INC.
----------------------------
(Registrant)
Date: May 12, 1998 /s/ Stephen F. Koziar
------------ ----------------------------------
Stephen F. Koziar
Group Vice President and Secretary
Date: May 12, 1998 /s/ Allen M. Hill
------------ -------------------------------------
Allen M. Hill
President and Chief Executive Officer
-11-
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