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INDEX
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
ý |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2002 |
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OR |
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o |
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 (State or other jurisdiction of incorporation or organization) |
31-1163136 (I.R.S. Employer Identification No.) |
1065 Woodman Drive Dayton, Ohio 45432 (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 ý NO o
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 (Title of each class) |
126,501,404 Shares (Outstanding at September 30, 2002) |
DPL INC.
2
DPL INC.
CONSOLIDATED STATEMENT OF RESULTS OF OPERATIONS
(Dollars in millions)
| |
Three Months Ended September 30, |
Nine Months Ended September 30, |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
2002 |
2001 |
2002 |
2001 |
||||||||||
| |
|
As Restated |
|
As Restated |
||||||||||
| Revenues | ||||||||||||||
| Electric revenues | $ | 341.1 | $ | 350.9 | $ | 891.3 | $ | 931.9 | ||||||
| Other revenues, net of fuel costs | 3.6 | 4.1 | 10.4 | 12.1 | ||||||||||
| 344.7 | 355.0 | 901.7 | 944.0 | |||||||||||
| Expenses | ||||||||||||||
| Fuel | 70.7 | 70.6 | 172.9 | 185.3 | ||||||||||
| Purchased power | 26.2 | 20.4 | 67.5 | 58.6 | ||||||||||
| Operation and maintenance | 38.0 | 36.5 | 112.4 | 119.7 | ||||||||||
| Depreciation and amortization | 35.5 | 32.1 | 102.3 | 94.0 | ||||||||||
| Amortization of regulatory assets, net | 13.5 | 12.1 | 36.4 | 35.5 | ||||||||||
| General taxes | 29.8 | 26.4 | 82.8 | 75.1 | ||||||||||
| Total expenses | 213.7 | 198.1 | 574.3 | 568.2 | ||||||||||
| Operating Income | 131.0 | 156.9 | 327.4 | 375.8 | ||||||||||
| Investment income (loss) | 14.0 | 18.2 | (91.8 | ) | 48.0 | |||||||||
| Other income (deductions) | 5.0 | 4.1 | (0.8 | ) | (4.2 | ) | ||||||||
| Interest expense | (39.6 | ) | (36.0 | ) | (115.3 | ) | (98.5 | ) | ||||||
| Trust preferred distributions by subsidiary | (6.2 | ) | (9.9 | ) | (18.5 | ) | (33.3 | ) | ||||||
| Income Before Income Taxes and Cumulative Effect of Accounting Change | 104.2 | 133.3 | 101.0 | 287.8 | ||||||||||
| Income taxes | 39.5 | 49.6 | 39.1 | 108.3 | ||||||||||
| Income Before Cumulative Effect of Accounting Change | 64.7 | 83.7 | 61.9 | 179.5 | ||||||||||
| Cumulative effect of accounting change, net of tax | — | — | — | 1.0 | ||||||||||
| Net Income | $ | 64.7 | $ | 83.7 | $ | 61.9 | $ | 180.5 | ||||||
| Average Number of Common Shares Outstanding (millions) | ||||||||||||||
| Basic | 119.0 | 118.8 | 119.1 | 119.1 | ||||||||||
| Diluted | 119.0 | 125.2 | 122.9 | 127.8 | ||||||||||
| Earnings Per Common Share | ||||||||||||||
| Basic: | ||||||||||||||
| Income before cumulative effect of accounting change | $ | 0.54 | $ | 0.70 | $ | 0.52 | $ | 1.51 | ||||||
| Cumulative effect of accounting change | — | — | — | 0.01 | ||||||||||
| Total Basic | $ | 0.54 | $ | 0.70 | $ | 0.52 | $ | 1.52 | ||||||
| Diluted: | ||||||||||||||
| Income before cumulative effect of accounting change | $ | 0.54 | $ | 0.67 | $ | 0.50 | $ | 1.40 | ||||||
| Cumulative effect of accounting change | — | — | — | 0.01 | ||||||||||
| Total Diluted | $ | 0.54 | $ | 0.67 | $ | 0.50 | $ | 1.41 | ||||||
| Dividends Paid Per Share of Common Stock | $ | 0.235 | $ | 0.235 | $ | 0.705 | $ | 0.705 | ||||||
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
3
DPL INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in millions)
| |
Nine Months Ended September 30, |
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|---|---|---|---|---|---|---|---|---|
| |
2002 |
2001 |
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| |
|
As Restated |
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| Operating Activities | ||||||||
| Net income | $ | 61.9 | $ | 180.5 | ||||
| Adjustments: | ||||||||
| Depreciation and amortization | 102.3 | 94.0 | ||||||
| Amortization of regulatory assets, net | 36.4 | 35.5 | ||||||
| Deferred income taxes | (37.8 | ) | 36.7 | |||||
| Investment (income) loss | 99.1 | (52.0 | ) | |||||
| Changes in working capital: | ||||||||
| Accounts receivable | (13.6 | ) | 48.8 | |||||
| Accounts payable | (8.2 | ) | (54.5 | ) | ||||
| Inventories | 5.7 | (14.2 | ) | |||||
| Accrued taxes payable | (3.0 | ) | (41.3 | ) | ||||
| Accrued interest payable | (24.3 | ) | (8.9 | ) | ||||
| Other | (18.9 | ) | (1.2 | ) | ||||
| Net cash provided by operating activities | 199.6 | 223.4 | ||||||
| Investing Activities | ||||||||
| Capital expenditures | (134.9 | ) | (254.8 | ) | ||||
| Purchases of fixed income and equity securities | (223.2 | ) | (262.1 | ) | ||||
| Sales of fixed income and equity securities | 242.6 | 280.0 | ||||||
| Income taxes on gain from sale of natural gas retail distribution operations | — | (90.9 | ) | |||||
| Net cash used for investing activities | (115.5 | ) | (327.8 | ) | ||||
| Financing Activities | ||||||||
| Issuance of short-term debt, net | 33.1 | 12.9 | ||||||
| Issuance of long-term debt, net of issue costs | — | 396.1 | ||||||
| Retirement of long-term debt | (7.6 | ) | (6.4 | ) | ||||
| Dividends paid on common stock | (83.9 | ) | (84.0 | ) | ||||
| Issuance of preferred securities | — | 289.3 | ||||||
| Retirement of preferred securities | — | (550.0 | ) | |||||
| Purchase of treasury stock | — | (35.9 | ) | |||||
| Net cash provided by (used for) financing activities | (58.4 | ) | 22.0 | |||||
| Cash and temporary cash investments— | ||||||||
| Net change | 25.7 | (82.4 | ) | |||||
| Balance at beginning of period | 7.5 | 131.9 | ||||||
| Balance at end of period | $ | 33.2 | $ | 49.5 | ||||
| Cash Paid During the Period for: | ||||||||
| Interest and trust preferred distributions | $ | 152.8 | $ | 135.8 | ||||
| Income taxes | $ | 76.7 | $ | 150.5 | ||||
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
4
DPL INC.
CONSOLIDATED BALANCE SHEET
(Dollars in millions)
| |
At September 30, 2002 |
At December 31, 2001 |
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|---|---|---|---|---|---|---|---|---|
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|
As Restated |
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| ASSETS | ||||||||
Property |
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| Property | $ | 4,298.4 | $ | 4,176.6 | ||||
| Less: Accumulated depreciation and amortization | (1,790.6 | ) | (1,694.3 | ) | ||||
| Net property | 2,507.8 | 2,482.3 | ||||||
Current Assets |
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| Cash and temporary cash investments | 33.2 | 7.5 | ||||||
| Accounts receivable, less provision for uncollectible accounts of $12.1 and $12.5, respectively | 178.0 | 164.4 | ||||||
| Inventories, at average cost | 55.9 | 61.6 | ||||||
| Prepaid taxes | 8.4 | 54.8 | ||||||
| Other | 35.6 | 35.7 | ||||||
| Total current assets | 311.1 | 324.0 | ||||||
Other Assets |
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| Financial assets: | ||||||||
| Public Securities | 201.7 | 183.1 | ||||||
| Private Securities under the Equity Method | 398.6 | 515.4 | ||||||
| Private Securities under the Cost Method | 436.8 | 444.3 | ||||||
| 1,037.1 | 1,142.8 | |||||||
| Income taxes recoverable through future revenues | 34.6 | 39.2 | ||||||
| Other regulatory assets | 64.0 | 99.7 | ||||||
| Other | 192.3 | 187.9 | ||||||
| Total other assets | 1,328.0 | 1,469.6 | ||||||
| Total Assets | $ | 4,146.9 | $ | 4,275.9 | ||||
See
Notes to Consolidated Financial Statements.
These interim statements are unaudited.
5
DPL INC.
CONSOLIDATED BALANCE SHEET
(Dollars in millions)
(continued)
| |
At September 30, 2002 |
At December 31, 2001 |
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|---|---|---|---|---|---|---|---|---|---|
| |
|
As Restated |
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| CAPITALIZATION AND LIABILITIES | |||||||||
Capitalization |
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Common shareholders' equity— |
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| Common stock | $ | 1.3 | $ | 1.3 | |||||
| Other paid-in capital, net of treasury stock | — | — | |||||||
| Warrants | 50.0 | 50.0 | |||||||
| Common stock held by employee plans | (90.6 | ) | (93.5 | ) | |||||
| Accumulated other comprehensive income | (5.3 | ) | (13.2 | ) | |||||
| Earnings reinvested in the business | 841.5 | 891.1 | |||||||
| Total common shareholders' equity | 796.9 | 835.7 | |||||||
Preferred stock |
22.9 |
22.9 |
|||||||
| Preferred stock subject to mandatory redemption | 0.1 | 0.1 | |||||||
| Company obligated mandatorily redeemable trust preferred securities of subsidiary holding solely parent debentures | 292.6 | 292.4 | |||||||
| Long-term debt | 2,142.4 | 2,150.8 | |||||||
| Total capitalization | 3,254.9 | 3,301.9 | |||||||
Current Liabilities |
|||||||||
| Accounts payable | 96.9 | 115.3 | |||||||
| Accrued taxes | 45.5 | 84.7 | |||||||
| Accrued interest | 33.4 | 51.3 | |||||||
| Short-term debt | 44.9 | 12.0 | |||||||
| Other | 58.0 | 32.9 | |||||||
| Total current liabilities | 278.7 | 296.2 | |||||||
| Deferred Credits and Other | |||||||||
| Deferred taxes | 303.8 | 343.9 | |||||||
| Unamortized investment tax credit | 55.8 | 58.0 | |||||||
| Insurance and claims costs | 113.3 | 123.6 | |||||||
| Other | 140.4 | 152.3 | |||||||
| Total deferred credits and other | 613.3 | 677.8 | |||||||
| Contingencies (Note 6) | |||||||||
| Total Capitalization and Liabilities | $ | 4,146.9 | $ | 4,275.9 | |||||
See
Notes to Consolidated Financial Statements.
These interim statements are unaudited.
6
Notes to Consolidated Financial Statements
1. DPL Inc. ("DPL" or the "Company") 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's 2001 Annual Report on Form 10-K/A.
2. As publicly announced on August 14, 2002, DPL's independent accountant, PricewaterhouseCoopers, has required use of a different accounting method to recognize the investment results and valuation of DPL's financial asset portfolio. DPL agrees with this accounting method, which has been applied retroactively to 2001, and that recognizes income or loss from the financial asset portfolio in accordance with the equity and cost method of accounting. It is a non-cash change that adjusts the timing of when unrealized gains and losses are recognized in the income statement. Previously, they were reflected on the balance sheet in accumulated other comprehensive income. The revision resulted in a reduction in full year 2001 earnings of $19 million or $0.16 per share of which $3.5 million or $0.02 per share relates to the nine months ended September 30, 2001. The restated consolidated financial statement of results of operations for the three and nine months ended September 30, 2001 and balance sheet as of December 31, 2001 are included herein. Comparisons of restated and previously reported financial statement items for these periods are outlined below.
| |
Three Months Ended September 30, 2001 |
Nine Months Ended September 30, 2001 |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| $ in millions except per share amounts |
As Restated |
As Previously Reported |
As Restated |
As Previously Reported |
||||||||||
| Consolidated Statement of Results of Operations | ||||||||||||||
| Total revenue | $ | 355.0 | $ | 355.0 | $ | 944.0 | $ | 944.0 | ||||||
| Total operating expenses | 198.1 | 198.1 | 568.2 | 568.2 | ||||||||||
| Investment income | 18.2 | 21.3 | 48.0 | 53.2 | ||||||||||
| Income before income taxes and cumulative effect of accounting change | 133.3 | 136.5 | 287.8 | 293.1 | ||||||||||
| Income taxes | 49.6 | 50.7 | 108.3 | 110.1 | ||||||||||
| Income before cumulative effect of accounting change | 83.7 | 85.8 | 179.5 | 183.0 | ||||||||||
| Net income | 83.7 | 85.8 | 180.5 | 184.0 | ||||||||||
| Earnings per share of common stock—Basic: | ||||||||||||||
| Income before extraordinary item and accounting change | $ | 0.70 | $ | 0.72 | $ | 1.51 | $ | 1.53 | ||||||
| Net income | $ | 0.70 | $ | 0.72 | $ | 1.52 | $ | 1.54 | ||||||
| Earnings per share of common stock—Diluted: | ||||||||||||||
| Income before extraordinary item and accounting change | $ | 0.67 | $ | 0.69 | $ | 1.40 | $ | 1.43 | ||||||
| Net income | $ | 0.67 | $ | 0.69 | $ | 1.41 | $ | 1.44 | ||||||
Consolidated Statement of Cash Flows |
||||||||||||||
| Net income | $ | 180.5 | $ | 184.0 | ||||||||||
| Investment income (loss) | (52.0 | ) | (47.9 | ) | ||||||||||
| Net cash provided by operating activities | 223.4 | 223.4 | ||||||||||||
7
| |
December 31, 2001 |
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|---|---|---|---|---|---|---|---|
| $ in millions |
As Restated |
As Previously Reported |
|||||
| Consolidated Balance Sheet | |||||||
| Assets: | |||||||
| Net property | $ | 2,482.3 | |||||