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, 1999
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 159,281,004 Shares
- ----------------------------------- -------------------------------
(Title of each class) (Outstanding at March 31, 1999)
<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
Consolodiated Statement of Common Shareholders' Equity 5
Notes to Consolidated Financial Statements 6
Operating Statistics 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II - Other Information 11
Signatures 12
i
<PAGE>
CONSOLIDATED STATEMENT OF RESULTS OF OPERATIONS
DPL INC.
Three Months Ended
March 31
------------------
1999 1998
---- ----
--millions--
Revenues
- --------
Utility service revenues $362.4 $352.3
Other revenues 21.1 25.6
------ ------
Total Operating Revenues 383.5 377.9
Expenses
- --------
Fuel and purchased power 61.2 61.2
Gas purchased for resale 84.2 81.9
Operation and maintenance 39.6 35.1
Depreciation and amortization 33.0 31.7
Amortization of regulatory assets, net 6.5 5.6
General taxes 34.3 34.5
Interest and preferred stock dividends 26.4 21.9
------ ------
Total Expenses 285.2 271.9
Other income 19.1 5.9
------ ------
Income Before Income Taxes 117.4 111.9
Income taxes 44.9 41.7
------ ------
Net Income $ 72.5 $ 70.2
====== ======
Average Number of Common Shares
Outstanding (millions) 152.9 152.3
Earnings Per Share of Common Stock
- Basic and Diluted $ 0.47 $ 0.46
Dividends Paid Per Share of Common Stock $0.235 $0.235
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
------------------
1999 1998
---- ----
--millions--
Operating Activities
- --------------------
Cash received from utility customers $341.1 $348.2
Other operating cash receipts 26.0 28.7
Cash paid for:
Fuel and purchased power (53.8) (68.6)
Purchased gas (73.0) (71.7)
Operation and maintenance labor (24.2) (23.9)
Nonlabor operating expenditures (16.6) (40.8)
Interest (29.8) (29.0)
Income taxes (12.4) (15.0)
Property, excise and payroll taxes (55.7) (54.3)
------ ------
Net cash provided by operating activities 101.6 73.6
Investing Activities
- --------------------
Property expenditures (20.5) (26.8)
Increases in financial assets (130.4) (58.3)
Decreases in financial assets 72.0 30.4
------ ------
Net cash used for investing activities (78.9) (54.7)
Financing Activities
- --------------------
Dividends paid on common stock (36.1) (35.8)
Purchase of treasury stock (30.5) -
Issuance of short-term debt 45.5 39.6
Issuance of common stock - 5.0
Retirement of long-term debt (2.0) (1.5)
------ ------
Net cash provided by (used for) financing activities (23.1) 7.3
Cash and temporary cash investments--
- -----------------------------------
Net change (0.4) 26.2
Balance at beginning of period 13.7 26.1
------ ------
Balance at end of period $ 13.3 $ 52.3
====== ======
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
-2-
<PAGE>
CONSOLIDATED BALANCE SHEET
DPL INC.
At At
March 31, December 31,
1999 1998
-------- -----------
--millions--
ASSETS
Property
- --------
Electric property $3,404.1 $3,398.6
Gas property 298.2 296.9
Other property 48.0 47.8
-------- --------
Total Property 3,750.3 3,743.3
Less--
Accumulated depreciation and amortization (1,533.0) (1,504.6)
-------- --------
Net property 2,217.3 2,238.7
-------- --------
Current Assets
- --------------
Cash and temporary cash investments 13.3 13.7
Accounts receivable, less provision for
uncollectible accounts 243.6 227.7
Inventories, at average cost 97.1 112.4
Deferred property and excise taxes 61.1 93.4
Prepaid utility excise tax 35.4 17.7
Other 23.0 29.9
-------- --------
Total current assets 473.5 494.8
-------- --------
Other Assets
- ------------
Financial assets 772.8 697.1
Income taxes recoverable through future revenues 188.8 195.5
Other regulatory assets 76.7 82.2
Other 142.9 147.6
-------- --------
Total other assets 1,181.2 1,122.4
-------- --------
Total Assets $3,872.0 $3,855.9
======== ========
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,
1999 1998
-------- -----------
--millions--
CAPITALIZATION AND LIABILITIES
Capitalization
- --------------
Common shareholders' equity--
Common stock $ 1.6 $ 1.6
Other paid-in capital 764.2 799.0
Common stock held by employee plans (92.7) (94.4)
Accumulated other comprehensive income 49.4 47.2
Earnings reinvested in the business 666.7 630.3
-------- --------
Total common shareholders' equity 1,389.2 1,383.7
Preferred stock 22.9 22.9
Long-term debt 838.4 1,065.9
-------- --------
Total capitalization 2,250.5 2,472.5
-------- --------
Current Liabilities
- -------------------
Short-term debt 240.4 194.9
Current portion of long-term debt 229.9 4.4
Accounts payable 100.7 109.0
Accrued taxes 149.3 165.2
Accrued interest 19.9 24.8
Other 65.5 50.5
-------- --------
Total current liabilities 805.7 548.8
-------- --------
Deferred Credits and Other
- --------------------------
Deferred taxes 452.6 460.6
Unamortized investment tax credit 68.6 69.4
Insurance and claims costs 151.8 150.7
Other 142.8 153.9
-------- --------
Total deferred credits and other 815.8 834.6
-------- --------
Total Capitalization and Liabilities $3,872.0 $3,855.9
======== ========
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
-4-
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
DPL INC.
Three Months Ended March 31, 1999 and 1998
Common Accum.
Common Stock Stock Other Earnings
-------------------- Other Held by Compr- Reinvested
Outstanding Paid-in Employee hensive in the
$ in millions Shares Amount Capital Plans Income Business Total
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1999:
Beginning Balance 161,264,604 $1.6 $799.0 $(94.4) $47.2 $630.3 $1,383.7
Net Income 72.5
Unrealized gains, net of
reclassification
adjustments, after tax 2.2
Total comprehensive income 74.7
Common stock dividends (36.1) (36.1)
Treasury stock (1,983,600) - (35.3) (35.3)
Employee stock plans 0.5 1.7 2.2
-----------------------------------------------------------------------
Ending balance 159,281,004 $1.6 $764.2 $(92.7) $49.4 $666.7 $1,389.2
=======================================================================
1998:
Beginning Balance 160,202,949 $1.6 $777.3 $(98.0) $19.9 $585.2 $1,286.0
Net Income 70.2
Net unrealized gain on
securities, after tax 12.0
Total comprehensive income 82.2
Common stock dividends (35.8) (35.8)
Dividend reinvestment plan 283,722 - 5.1 5.1
Employee stock plans 0.7 1.6 2.3
Other (8,775) - (0.1) (0.2) (0.3)
-----------------------------------------------------------------------
Ending balance 160,477,896 $1.6 $783.0 $(96.4) $31.9 $619.4 $1,339.5
=======================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
-5-
<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. DPL Inc., has prepared the consolidated financial statements in
this report 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 1998 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.
-6-
<PAGE>
OPERATING STATISTICS
The Dayton Power and Light Company
Three Months Ended
March 31
------------------
1999 1998
---- ----
Electric
- --------
Sales (millions of kWh) --
Residential 1,414 1,323
Commercial 798 820
Industrial 1,123 1,098
Other 908 1,185
------- -------
Total 4,243 4,426
Revenues (thousands of dollars) --
Residential 114,101 109,508
Commercial 55,249 56,678
Industrial 54,783 52,522
Other 36,293 42,677
------- -------
Total 260,426 261,385
Other Electric Statistics --
Average price per kWh-retail and wholesale
customers (cents) 6.04 5.77
Fuel cost per net kWh generated (cents) 1.26 1.25
Electric customers at end of period 491,840 486,795
Average kWh use per residential customer 3,223 3,045
Peak demand-maximum one hour use (mw), (net) 2,561 2,373
-7-
<PAGE>
OPERATING STATISTICS
(continued)
The Dayton Power and Light Company
Three Months Ended
March 31
------------------
1999 1998
---- ----
Gas
- ---
Sales (millions of MCF) --
Residential 13,188 11,356
Commercial 3,947 3,032
Industrial 1,237 920
Other 673 906
Transported gas 6,513 5,913
------- -------
Total 25,558 22,127
Revenues (thousands of dollars) --
Residential 68,615 59,953
Commercial 19,622 15,373
Industrial 5,827 4,492
Other 8,449 11,658
------- -------
Total 102,513 91,476
Other Gas Statistics --
Average price per MCF-retail customers (dollars) 5.11 5.19
Gas customers at end of period 307,018 303,023
Degree Days (based on calendar month) --
Heating 2,843 2,369
Cooling - 23
-8-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
DPL Inc.'s earnings for the first quarter of 1999 were $0.47 per
share, up 2% from the $0.46 per share earned in the first quarter a
year ago. In the quarter, winter temperatures were colder than last
year, but still warmer than normal. The service territory remains
strong with a 2% increase in retail electric sales from the first
quarter of 1998. Increased revenues from these higher sales coupled
with income from investments contributed to the improved financial
performance. DP&L advanced some maintenance expenditures into the
first quarter to prepare for the peak summer months.
The financial condition and results of operations for the first
quarter ended March 31, 1999 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.
On April 6, 1999, DPL Inc. completed a private placement issuance
of $500 million of Senior Notes due 2004, with an interest rate of
6.32%. The proceeds were used for the redemption of DP&L's
$225 million 8.40% Series of First Mortgage Bonds, the reduction of
short-term debt and for general corporate purposes.
At March 31, 1999, DPL Inc.'s cash and temporary cash investment
balance was $13.3 million. In addition, $772.8 million was invested
in financial assets.
DPL Inc. and its subsidiaries have $300 million available through
Revolving Credit Agreements ("Credit Agreements"). At March 31, 1999,
DPL Inc. had $30 million outstanding under these Credit Agreements.
DPL Inc. also has $15 million available in a short-term informal line
of credit. At March 31, 1999, DPL Inc. had $15 million in borrowings
outstanding from this line. DP&L also has $97 million available in
short-term informal lines of credit. At March 31, 1999, DP&L had
$71.9 million of these informal lines outstanding and $123.5 million
in commercial paper outstanding.
DP&L currently 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
1999-2003.
-9-
<PAGE>
Results of Operations
- ---------------------
Utility service revenues increased by $10.1 million from the
first quarter last year. Higher retail gas sales due to colder
weather were the primary cause of this increase.
Gas purchased for resale increased $2.3 million over first
quarter 1998 as a result of the higher utility gas sales.
Operation and maintenance expense increased $4.5 million from the
first quarter last year. Higher production maintenance, line
clearance and insurance and claims costs were partially offset by
reduced compensation and benefit expense.
Interest expense increased from last year by $4.5 million,
because of higher short-term debt balances.
Other income increased by $13.2 million over the same period in
1998 as a result of higher investment income.
Income taxes increased $3.2 million from the corresponding
quarter last year with the higher pre-tax income.
Issues and Financial Risks
- --------------------------
This report contains certain forward-looking statements regarding
plans and expectations for the future. Investors are cautioned that
actual outcomes and results may vary materially from those projected
due to various factors beyond DP&L's control, including abnormal
weather, unusual maintenance or repair requirements, changes in fuel
costs, increased competition, regulatory changes and decisions,
changes in accounting rules and adverse economic conditions.
Some computer applications may not properly recognize dates
beginning with the year 2000. This "Y2K" issue, if not corrected,
could cause disruptions in information technology systems and
operating control systems.
DP&L has implemented a plan to identify and correct Y2K issues in
its computer applications and operations. This plan includes (1)
evaluation of applications and systems, (2) assessment of Y2K errors,
(3) correction of errors and (4) testing of applications and systems.
The evaluation and assessment phases are substantially complete. The
correction and testing phases, approximately 70% complete, continue on
schedule and are expected to be completed in the third quarter of 1999.
The estimated cost of this corrective action is $20 million, and includes
modification and replacement of hardware and software.
The electric industry relies on computer applications to monitor
and control interdependent power systems. These systems are also
susceptible to Y2K problems. The utility industry has organized work
groups to identify and solve potential problems. DP&L is evaluating
the possibility of Y2K disruptions in the industry and is adopting
proper contingency plans.
-10-
<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 20, 1999,
three directors of DPL Inc. were elected, each of whom will serve a three-
year term expiring in 2002. The nominees were elected as follows: James F.
Dicke II, 144,770,668 shares FOR, 1,644,547 shares WITHHELD; Peter H.
Forster, 144,596,997 shares FOR, 1,818,218 shares WITHHELD; and Jane G.
Haley, 144,653,493 shares FOR, 1,761,722 shares WITHHELD.
Item 5. Other Information.
- -------------------------
Rate Regulation and Government Legislation
- ------------------------------------------
On March 4, 1999, the PUCO initiated an inquiry into the adequacy
of electricity generation and transmission facilities of Ohio's
investor-owned electric utility companies to avoid a recurrence of the
power supply shortages that occurred in the summer of 1998. DP&L has
responded to various data requests from the PUCO concerning their inquiry.
On March 26, 1998, a twelve member Joint Committee of the Ohio
Senate and House of Representatives, created to explore and possibly
draft retail wheeling legislation, introduced an electric deregulation
Bill which expired at year end. On September 16, 1998, DP&L and the
three other major investor-owned utilities in Ohio presented a
comprehensive electric utility restructuring Bill to a working group
of the Committee. In March 1999, a group of legislators released to
the public a draft outline for restructuring. On March 25, 1999,
those legislators introduced companion electric restructuring Bills in
the Ohio House and Senate. DP&L is participating in hearings that are
being held on the companion Bills at the Legislature.
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, 1999.
-11-
<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 17, 1999 /s/James P. Torgerson
------------ ----------------------------------
James P. Torgerson
Vice President, CFO and Treasurer
Date: May 17, 1999 /s/Stephen F. Koziar Jr.
------------ ----------------------------------
Stephen F. Koziar, Jr.
Group Vice President and Secretary
-12-
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0
22900
<LONG-TERM-DEBT-NET> 838400
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