DPL Reports 2006 Full-Year Earnings.* Basic Earnings Per Share from Continuing Operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the Were $1.12 Including a Fourth Quarter Asset Impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. Charge of $0.39 * Higher Revenue, Generation Output and Wholesale Sales Contributed to Increased Gross Margin DAYTON, Ohio Dayton is a city in southwestern Ohio, United States. It is the county seat and largest city of Montgomery County. As of the 2005 census estimate, the population of Dayton was 158,873. -- DPL (Digital PowerLine) An earlier technology for transmitting a 1 Mbps data signal over electric power lines from Nortel Networks. It was developed in the late 1990s, but later abandoned due to implementation difficulties. See broadband over power lines. (NYSE NYSE See: New York Stock Exchange :DPL) today reported basic earnings from continuing operations of $1.12 per share for 2006 compared to $1.03 per share for 2005. Basic earnings from continuing operations in 2006 included a $0.39 per share asset impairment charge for the fourth quarter agreement to sell two peaking generating sites. Basic earnings from continuing operations in 2005 included a $0.31 per share charge for the early redemption of debt partially offset by a $0.25 per share gain on the sale of public equity investments. Excluding the $0.39 per share asset impairment charge, 2006 basic earnings from continuing operations were $1.51 per share. DPL's guidance for 2006 was $1.35 to $1.50 per share, excluding any sales of peaking plants. "Both financially and operationally, DPL had a very good year in 2006," stated DPL President and Chief Executive Officer Paul Barbas. "Our strong results were driven by increased revenues as we implemented the first year of the five-year rate stabilization Stabilization The action undertakes a country when it buys and sells its own currency to protect its exchange value. Actions registered competitive traders undertake by on the NYSE to meet the exchange requirement that 75% of their traded be stabilizing, meaning that sell orders plan, and higher-than-planned base load generation output, which led to increased wholesale sales. These positive factors more than offset the challenges of mild weather and higher purchased power costs. "In addition, the 2006 financial results reflect the impact of the positive moves that were initiated in 2005, including lower interest expense as a result of debt reduction and the completion of the $400 million stock buyback Stock buyback A corporation's purchase of its own outstanding stock, usually in order to raise the company's earnings per share. stock buyback See buyback. ," stated Mr. Barbas. Total basic earnings were $1.24 per share for 2006 compared to $1.44 per share for 2005. The decline was due to a $0.32 per share decrease in earnings from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. related to the sale of the private equity funds in 2005. Earnings Per Share Reconciliation DPL's management uses basic earnings from continuing operations to evaluate company performance and establish employee goals. Management believes the presentation in the table below enables investors to more clearly compare ongoing financial results. Earnings from continuing operations as presented below may not be comparable to similarly titled measures used by other companies. The following table provides a reconciliation of total basic earnings per share (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) to basic earnings per share from continuing operations (non-GAAP). [TABLE OMITTED] 2006 Results Revenues increased 8% to $1,393.5 million for 2006 compared to $1,284.9 million for 2005 primarily reflecting higher average rates for retail sales and greater wholesale sales volume. The gains in wholesale sales were partially driven by DPL plants producing the highest level of base load output in Company history. These revenue increases were partially offset by lower retail sales volume due to mild weather and slightly lower average rates for wholesale sales. [TABLE OMITTED] Fuel, which includes coal, gas, oil and emission allowance costs, increased $12.2 million, or 4%, for 2006 compared to 2005 primarily as a result of higher market prices. [TABLE OMITTED] Purchased power costs increased $25.7 million, or 19%, for 2006, compared to 2005. The increase was primarily due to higher purchased power volume caused by the timing of forced outages and the increased scheduled maintenance at DPL-operated and partner-operated generating plants, partially offset by lower average market rates. [TABLE OMITTED] Gross margin increased 9%, or $70.7 million, in 2006 to $885.4 million from $814.7 million in 2005. As a percentage of total revenues, gross margin of 63.5% in 2006 remained relatively flat compared to 63.4% in 2005. The dollar increase in gross margin was the result of greater revenues related to the rate stabilization plan surcharge An overcharge or additional cost. A surcharge is an added liability imposed on something that is already due, such as a tax on tax. It also refers to the penalty a court can impose on a fiduciary for breaching a duty. , regulatory asset recovery riders and increased wholesale sales volume, partially offset by increased fuel and purchased power costs. Operation and maintenance expense increased $46.4 million, or 21%, for the twelve months ended December 31, 2006 compared to the twelve months ended December 31, 2005. This was primarily due to increases of: * $13.5 million in legal costs; * $10.4 million in power production costs, reflecting credits received in 2005 and not in 2006 and increased operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. ; * $4.1 million in service operations costs, mainly due to greater line clearance activity; * $3.6 million in pension expense; and * $2.6 million from mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. accounting for restricted stock units Restricted stock units Similar to restricted stock. However, the unit represents a promise that employees will receive stock in the future. The units do not pay dividends until the stock is vested. (RSUs). In addition, O&M increased $5.5 million for PJM PJM Pacific Journal of Mathematics PJM Project Manager PJM Puerto Jimenez, Costa Rica (Airport code) PJM Pennsylvania New Jersey Maryland Interconnection LLC (Mid-Atlantic region power pool) administration fees and $5.1 million for a low-income assistance program, for which DP&L is receiving revenue recovery. Previous to 2006, PJM administrative fees were deferred for future recovery. These O&M increases were partially offset by a $3.2 million decrease in directors' and officers' liability insurance directors' and officers' liability insurance A type of insurance taken to protect a firm's directors and officers against lawsuits  mainly suits instituted by unhappy shareholders of the firm. costs.Depreciation and amortization increased $4.5 million primarily reflecting a higher plant base in 2006 compared to 2005 mainly due to environmental additions. Amortization of regulatory assets increased $5.6 million in 2006 mainly driven by customer billing system modifications to accommodate electric choice, deferred PJM administrative fees, and incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. storm costs incurred in 2004 and 2005. These costs are being recovered through retail rate riders that went into effect at various times throughout 2006. Investment income decreased $33.1 million to $17.8 million for 2006 compared to $50.9 million in 2005. The decrease reflects a $23.4 million decline in gains from investment sales and a $4.8 million decrease in interest income resulting from lower cash and cash equivalents. Interest expense decreased $35.5 million, or 26%, for 2006 compared to 2005 primarily due to debt reduction of nearly $450 million and debt refinancing Refinancing An extension and/or increase in amount of existing debt. of approximately $214 million. As a result of this debt reduction and refinancing, DPL recorded a $61.2 million charge in 2005 for premiums paid and other related costs. There was no such activity in 2006. The reduction in interest expense was also affected by $10.9 million of greater capitalized interest Capitalized interest Interest that is not immediately expensed, but rather is considered as an asset and is then amortized through the income statement over time. In the context of project financing, interest that is paid by additional borrowing. in 2006 related to increased environmental capital expenditures. Other income (deductions) decreased $14.7 million in 2006 reflecting gains of $12.3 million realized in 2005 from sales of pollution control emission allowances. There were no emission allowance sales in 2006. Liquidity and Cash Flow DPL's cash and cash equivalents totaled $262.2 million at December 31, 2006, compared to $595.8 million at December 31, 2005, a decrease of $333.6 million. In addition, DPL had no short-term investments available for sale at December 31, 2006 compared to $125.8 million at December 31, 2005. These declines were principally the result of the stock buyback program and increased environmental capital expenditures. Construction additions were $352 million in 2006 compared to $180 million in 2005. The increase was due to DPL's flue gas desulfurization Flue gas desulfurization (FGD) is the current state-of-the art technology used for removing sulfur dioxide (SO2) from the exhaust flue gases in power plants that burn coal or oil to produce steam for the steam turbines that drive their electricity generators. (scrubber) construction program at its generating plants. Fourth Quarter 2006, Sale of Peaking Plants For the quarter ending December 31, 2006, basic earnings from continuing operations were $0.04 per share compared to $0.38 per share for the same period in 2005. During the fourth quarter of 2006, DPL announced the sale of two peaking generating sites, Darby and Greenville, for $151.2 million in cash. As a result of these transactions, there was a $71.0 million pre-tax charge during the fourth quarter of 2006 to write down the assets to fair market value. There was no such activity in 2005. Total basic earnings per share for the fourth quarter of 2006 were $0.07 compared to $0.44 for the fourth quarter of 2005. 2007 Outlook Basic Earnings from Continuing Operations - DPL's guidance for basic earnings from continuing operations is $1.60 to $1.75 per share for 2007. This estimate is based on 108 million shares outstanding and includes the expected 2007 completion of the sale of the Darby and Greenville generating sites. Revenues are expected to remain flat or increase slightly in 2007 over 2006, assuming little to no customer switching. 2007 revenue projections assume weather-normalized sales and forecasted recovery of regulatory-approved costs, offset by a reduction in wholesale revenue. Fuel and purchased power costs are impacted by changes in volume and price and are driven by a number of variables including weather, coal deliveries, and generation plant mix. Based on weather-normalized sales, fuel costs are forecasted to be flat in 2007 compared to 2006. This forecast assumes increased coal prices of approximately 3% in 2007 as compared to 2006. DPL's system forecasted coal requirements are substantially hedged for 2007 at an average cost per ton of approximately $45. Purchased power costs are forecasted to decline 15% to 20% compared to 2006 due to expected lower purchased power volume and lower rates. Operation and maintenance costs are expected to increase 5% to 10% in 2007 compared to 2006 mainly due to power production and related environmental expenses. Depreciation expense is expected to be lower in 2007 as compared to 2006 by approximately 2% due to the sale of the peaking plants in the fourth quarter of 2006 partially offset by capital additions in 2006 and 2007. Liquidity and Cash Flow - Capital expenditures are forecasted to approximate $310 million in 2007, $165 million in 2008, and $130 million in 2009. Capital expenditures are forecasted to decrease as the Company completes the construction phase of its sulfur dioxide sulfur dioxide, chemical compound, SO2, a colorless gas with a pungent, suffocating odor. It is readily soluble in cold water, sparingly soluble in hot water, and soluble in alcohol, acetic acid, and sulfuric acid. environmental compliance program. For the three-year period, environmental capital expenditures are approximately 40% of the total. DPL expects to finance its construction additions in 2007, 2008 and 2009 with a combination of cash on hand, short-term financings, tax-exempt debt and internally-generated funds. Conference Call/Webcast DPL will conduct a webcast conference call with financial analysts on Thursday, February 22, 2007, at 9:00 a.m. Eastern Time to discuss results. Interested parties, including investors and the media, can access the webcast conference call real-time on DPL's website at www.dplinc.com in the Company's investor relations Investor relations The process by which the corporation communicates with its investors. section. Please go to the website at least fifteen minutes prior to the start of the event to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software to listen to the webcast. For those who are unable to listen to the live webcast, it will be archived on the DPL Inc. website for three months. About DPL DPL Inc. (NYSE:DPL) is a regional electric energy and utility company. DPL's principal subsidiaries include The Dayton Power and Light Company (DP&L); DPL Energy, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control (DPLE DPLE Declarative Programming Languages in Education (conference) DPLE Digital Principle Local Exchange DPLE Danish Primary Laboratory for Electricity ); and DPL Energy Resources, Inc. (DPLER). DP&L, a regulated electric utility, provides service to over 500,000 retail customers in West Central Ohio; DPLE engages in the operation of merchant peaking generation facilities; and DPLER is a competitive retail electric supplier in Ohio, selling to major industrial and commercial customers. DPL, through its subsidiaries, owns and operates approximately 4,400 megawatts of generation capacity, of which 2,800 megawatts are low cost coal-fired units and 1,600 megawatts are natural gas and diesel peaking units. Further information can be found at www.dplinc.com. Certain statements contained in this prospectus are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Matters discussed in press release that relate to events or developments that are expected to occur in the future, including management's expectations, strategic objectives, business prospects, anticipated economic performance and financial condition and other similar matters constitute forward-looking statements. Forward-looking statements are based on management's beliefs, assumptions and expectations of future economic performance, taking into account the information currently available to management. These statements are not statements of historical fact and are typically identified by terms and phrases such as "anticipate," "believe," "intend," "estimate," "expect," "continue," "should," "could," "may," "plan," "project," "predict," "will" and similar expressions. Such forward-looking statements are subject to risks and uncertainties, and investors are cautioned that outcomes and results may vary materially from those projected due to various factors beyond DPL's control, including but not limited to: abnormal or severe weather and catastrophic weather-related damage; unusual maintenance or repair requirements; changes in fuel costs and purchased power, coal, environmental emissions, gas and other commodity prices; volatility and changes in markets for electricity and other energy-related commodities; increased competition and deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. in the electric utility industry; increased competition in the retail generation market; changes in interest rates; state, federal and foreign legislative and regulatory initiatives that affect cost and investment recovery, emission levels, rate structures or tax laws; changes in federal and/or state environmental and other laws and regulations to which DPL and its subsidiaries are subject; the development of Regional Transmission Organizations  This August 2006 is in need of attention from an expert on the subject.Please help recruit one or [ improve this article] yourself. See the talk page for details. , including the PJM to which DPL's operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. has given control of its transmission functions; changes in DPL's purchasing processes Purchasing Purchasing is the formal process of buying goods and services. The Purchasing Process can vary from one organization to another but there are some key elements that are common throughout The process usually starts with a 'Demand' or requirements , delays and supplier availability; growth in DPL's service territory and changes in demand and demographic patterns; changes in accounting rules and the effect of accounting pronouncements issued periodically by accounting standard-setting bodies; financial market conditions; the outcomes of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and regulatory investigations, proceedings or inquiries; general economic conditions; and the risks and other factors discussed in DPL's filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date of the document in which they are made. We disclaim dis·claim v. dis·claimed, dis·claim·ing, dis·claims v.tr. 1. To deny or renounce any claim to or connection with; disown. 2. To deny the validity of; repudiate. 3. any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in our expectations or any change in events, conditions or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or on which the forward-looking statement is based. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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