DPL Reports Improved First Quarter Earnings.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 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 of $0.48 per share for the first quarter of 2007 compared to $0.43 per share for the first quarter of 2006, a 12% increase. Total basic earnings were $0.52 per share for the first quarter of 2007, which included $0.04 per share 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. resulting from recognition of the final deferred gain from the sale of the private equity funds in 2005. For the same period in 2006, total basic earnings were $0.49 per share, including $0.06 per share in earnings from discontinued operations. "I am pleased that earnings per share from continuing operations were up 12% in the first quarter this year compared to the same period last year, as we continue to focus upon improved performance of our generating fleet along with ongoing cost control throughout the Company," stated DPL President and Chief Executive Officer Paul Barbas. "In that regard, we have recently realigned our leadership team to focus on improvement in these areas. Finally, we will continue to build upon the positive momentum of 2006 created by over 1,400 dedicated employees." First Quarter 2007 Financial Results Revenues increased 11% to $379.7 million for the three months ended March 31, 2007 compared to $341.1 million for the same period in 2006, primarily reflecting higher average rates and sales volume for both retail and wholesale. Heating degree days Heating degree day (HDD) and cooling degree day (CDD) are quantitative indices demonstrated to reflect demand for energy to heat or cool houses and businesses. These indices are derived from daily temperature observations and power demand. were 15% higher in the first quarter of 2007 compared to the first quarter of 2006. These increases were partially offset by lower ancillary revenues Ancillary Revenue Revenue generated from goods or services that differ from or enhance the main services or product lines of a company. By introducing new products and services or using existing products to branch into new markets, companies create additional opportunities for associated with participation in the 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) and MISO markets. [TABLE OMITTED] Fuel, which includes coal, gas, oil and emission allowance costs, increased $6.1 million, or 7%, in the first quarter 2007 compared to the same period in 2006, primarily as a result of increased fuel prices and higher generation output. Even with this increase, we continue to anticipate our total fuel costs for 2007 to be relatively flat compared to 2006.
Three Months Ended March 31,
$ in millions 2007 2006 Variance
Coal $87.5 $81.5 $6.0
Gas 1.4 0.6 0.8
Oil 1.3 1.3 0.0
Emission Allowance Costs 0.1 0.8 (0.7)
Total Fuel Costs $90.3 $84.2 $6.1
Purchased power costs increased $26.9 million in the first quarter of 2007 compared to the same period in 2006 resulting from increased charges of $22.3 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc higher purchased power volume due primarily to planned and unplanned outages at both DPL-operated and partner-operated generating plants and a $4.4 million increase due to higher average market rates.
Three Months Ended March 31,
$ in millions 2007 2006 Variance
Purchased Power $39.8 $13.1 $26.7
RTO Ancillaries 12.4 12.2 0.2
Total Purchased Power $52.2 $25.3 $26.9
Gross margin of $237.2 million for the three months ended March 31, 2007 increased $5.6 million, or 2%, from the same period in 2006. The dollar increase reflects higher retail and wholesale volume and the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. revenue impact of the 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 offset by increased fuel and purchased power costs. As a percentage of total revenues, gross margin decreased to 62.5% in 2007 compared to 67.9% in 2006 due primarily to higher purchased power costs. Operation and maintenance expense increased $6.9 million, or 11%, in the first quarter 2007 compared to the first quarter 2006. This was primarily due to increases of: * $4.0 million in legal costs; * $2.8 million in additional compensation expense due to mark-to-market 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); * $2.4 million in power production costs, reflecting higher boiler maintenance and plant 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. ; and * $1.9 million in service operation costs resulting primarily from two major ice storms in February 2007. These increases were partially offset by a $2.5 million decrease in long-term and other incentive compensation, a $0.9 million decrease in pension and benefits expenses, and a $1.3 million decrease in expenses for injuries and damages. Depreciation and amortization decreased $3.4 million in the first quarter 2007 compared to the first quarter of 2006 reflecting the absence of depreciation on the Darby and Greenville peaking units and the impact of asset retirements. Amortization of regulatory assets increased $1.8 million to $2.9 million in the first quarter 2007 compared to the same period in 2006. The increase reflects a full quarter of amortization of the 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 $3.4 million in the first quarter of 2007 as compared to the same period in 2006, reflecting lower cash and short-term investment balances. Interest expense for the first quarter of 2007 decreased $3.2 million, or 12%, compared to the same period in 2006. Decreases in interest expense resulted from the redemption of DPL's $225 million 8.25% Senior Notes, the elimination of the 1% interest penalty on DPL's $175 million 8% Senior Notes, and higher 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. associated with DP&L's major construction projects. These decreases were partially offset by additional interest expense resulting from DP&L's $100 million 4.8% Series Pollution Control Bonds issued September 13, 2006 and $65 million of short-term borrowing from DP&L's $220 million unsecured revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. Liquidity and Cash Flow DPL's cash and cash equivalents totaled $106.4 million at March 31, 2007, compared to $262.2 million at December 31, 2006, a decrease of $155.8 million. In addition, DPL had no restricted funds from the tax-exempt bonds Tax-exempt bond A bond usually issued by municipal, county, or state governments whose interest payments are not subject to federal and, in some cases, state and local income tax. tax-exempt bond See municipal bond. held in trust at March 31, 2007 compared to $10.1 million held in trust at December 31, 2006. The decrease in cash and cash equivalents was primarily attributable to the retirement of DPL's $225 million 8.25% Senior Notes. Capital expenditures were $80.5 million in the first quarter 2007 compared to $110.9 million in the first quarter 2006. The decrease reflects the timing of expenditures to fund 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. Insurance Recovery Claim On January 13, 2006, DP&L filed a claim against one of its insurers, Associated Electric & Gas Insurance Services (AEGIS), under a fiduciary liability policy to recoup recoup To sell an asset at a price sufficient to recover the original outlay or to offset a previous loss. legal fees associated with the 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. against three former executives. On April 30, 2007, DP&L and AEGIS reached a settlement in which AEGIS agreed to pay DP&L $14.5 million for legal fees incurred by DP&L associated with the litigation against three former executives. This recovery of legal expenses will be recorded in the second quarter 2007. Peaker Sale Update During the fourth quarter of 2006, DPL announced the sale of two peaking generating sites, Darby and Greenville. On April 25, 2007, DPL completed the sale transaction for each site and received approximately $151.2 million in cash as a result of closing these transactions. These sale proceeds will be used to pay down short-term borrowings and fund DP&L's major construction projects. Future Outlook Basic Earnings from Continuing Operations - The Company reaffirmed its guidance for basic earnings per share from continuing operations of $1.60 to $1.75 for 2007. This estimate is based on 108 million shares outstanding and includes the recovery of legal expenses resulting from the settlement of the AEGIS claim. Capital Forecast Over the three-year period of 2007 through 2009, DPL is projecting to invest an estimated $645 million in capital projects, approximately 40% of which is related to changing environmental standards. This represents a $40 million increase over the previously reported estimate of $605 million, due primarily to increases in the flue gas desulfurization (scrubber) projects at DPL-operated generating plants. With this increase, DPL still believes the flue gas desulfurization projects remain best-in-class from an installed costs/kw basis. Conference Call/Webcast DPL will conduct a webcast conference call with financial analysts on Tuesday, May 1, 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 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 3,750 megawatts of generation capacity, of which 2,800 megawatts are low cost coal-fired units and 950 megawatts are natural gas and diesel peaking units. Further information can be found at www.dplinc.com. Certain statements contained in this press release 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 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; significant delays associated with large construction projects; 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 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 on which the forward-looking statement is based. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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