DPL Reports Solid Third 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. Inc. (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 $0.44 per share for the third quarter of 2006 compared to $0.21 per share for the third quarter of 2005. Basic earnings from continuing operations for the third quarter of 2005 included a one-time charge of $0.31 per share for the early redemption of debt and a $0.12 per share gain on the sale of public securities. Total basic earnings were $0.47 per share for the third quarter of 2006, which included $0.03 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. related to the recognition of deferred gains from the sale of the private equity portfolio in 2005. For the third quarter of 2005, there were minimal earnings from discontinued operations. "Quarterly results benefited from the steps taken to strengthen the Company's financial position, including increased revenues from 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 and regulatory cost recovery, lower interest expense as the result of debt reduction and refinancing Refinancing An extension and/or increase in amount of existing debt. , and our recently completed share buyback Buyback The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buyback shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may program," said Paul Barbas, President and Chief Executive Officer of DPL Inc. For the nine months ended September 30, 2006, basic earnings per share from continuing operations were $1.06 compared to $0.65 in 2005. Including discontinued operations, total basic earnings per share were $1.16 in 2006 versus $1.01 in 2005 for the nine month period. The $0.15 per share gain was due to a $0.41 per share increase in earnings from continuing operations partially offset by a $0.26 per share decrease in earnings from discontinued operations reflecting the sale of most of the private equity funds in 2005. Third Quarter and Year-To-Date Financial Results Total revenues increased 10% to $392.5 million in the third quarter of 2006 compared to $357.4 million for the third quarter of 2005, reflecting higher average rates for retail sales and greater wholesale sales volume. These increases were partially offset by lower retail sales volume, lower average rates for wholesale sales, and 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 a Regional Transmission Organization  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. (RTO (Recovery Time Objective) The amount of time a computer system or application can stop functioning before it is considered intolerable to the enterprise. It can be computed to be from seconds to days, depending on how critical the application is to the organization. ). Cooling degree days were down 17% compared to the same period in 2005 reflecting milder weather. [TABLE OMITTED] For the nine months ended September 30, 2006, revenues increased 9% to $1,042.6 million compared to $957.9 million for the same period in 2005. Fuel, which includes coal, gas, oil and emission allowance costs, remained relatively stable in the third quarter of 2006 compared to the same period of the prior year, decreasing $1.9 million or 2%. [TABLE OMITTED] Fuel costs rose by $11.2 million, or 4%, in the first nine months of 2006 compared to 2005 as a result of higher generation output and higher market prices. Purchased power costs were $23.7 million, or 63%, higher in the third quarter of 2006 compared to the third quarter of 2005. The increase was primarily due to higher purchased power volume caused by the timing of forced outages and scheduled maintenance at DPL-operated and partner-operated generating plants, partially offset by lower average market rates. [TABLE OMITTED] Purchased power costs increased by $19.7 million, or 19%, in the first nine months of 2006 compared to the prior year reflecting higher purchased power volume, increased average market rates, and greater RTO ancillary Subordinate; aiding. A legal proceeding that is not the primary dispute but which aids the judgment rendered in or the outcome of the main action. A descriptive term that denotes a legal claim, the existence of which is dependent upon or reasonably linked to a main claim. costs. Gross margin (revenues minus fuel and purchased power) in the third quarter of 2006 increased $13.3 million, or 6%, to $231.9 million from $218.6 million in the third quarter of 2005. This increase was driven mostly by the ability to recover additional retail fuel and regulatory costs. Gross margin in the first nine months of 2006 increased $53.8 million, or 9%, to $656.9 million from $603.1 million in the same period of 2005. Operation and maintenance expense increased $12.4 million, or 24%, in the third quarter of 2006 compared to the same period in 2005. This was primarily due to increases of: * $4.9 million in legal costs; * $3.7 million in employee compensation and benefit expenses, the majority of which was pension related; * $2.8 million in service operations costs, mainly related to greater line clearance activity and electric system overhead and substation costs; * $2.6 million in power production costs reflecting $1.5 million of credits received in 2005 that were not received 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. ; * $1.6 million in low-income assistance program costs; and * $1.4 million in 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) administrative fees. DP&L is receiving regulatory recovery for the low-income assistance program costs and PJM administrative fees. In addition, the O&M increases were partially offset by a $5.0 million decrease in reserves for insurance, injuries and damages. For the nine months ended September 30, 2006, operation and maintenance expense increased $32.8 million, or 20%, compared to the same period in 2005, which was anticipated. Amortization of regulatory assets was $1.8 million higher than the same period in 2005 mainly driven by $0.9 million for customer billing system modifications to accommodate electric choice; $0.4 million for deferred PJM administrative fees; and $0.4 million for 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. Amortization of regulatory assets increased $3.7 million for the first nine months of 2006 compared to the same period in 2005. Investment income decreased $30.8 million during the third quarter of 2006 compared to 2005. The decrease reflects a $23.4 million decline in gains on investments from the sale of the public equity and income funds in 2005, and a $7.1 million decrease in interest income resulting from lower cash and cash equivalents. Investment income decreased $30.7 million during the first nine months of 2006 compared to the same period in 2005. Interest expense decreased $9.2 million, or 27%, for the third quarter of 2006 compared to the same period in 2005 primarily due to debt reduction of nearly $450 million and debt refinancing of approximately $214 million, most of which occurred in the third quarter of 2005. As a result of this debt reduction and refinancing, DPL recorded a $59.1 million charge for premiums paid and other related costs. There was no such activity in 2006. The reduction in interest expense was also affected by $3.6 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. related to increased pollution control capital expenditures. For the nine months ended September 30, 2006, interest expense declined $33.4 million, or 30%, compared to the same period in 2005. Other income (deductions) decreased $0.6 million in the third quarter of 2006 compared to the third quarter of 2005. For the nine months ended September 30, 2006, other income (deductions) declined $11.5 million from the same period in 2005 mainly reflecting a $12.3 million gain realized in 2005 from the sale of pollution control emission allowances. There were no emission allowance sales in 2006. Liquidity and Cash Flow DPL's cash and cash equivalents totaled $189.9 million at September 30, 2006, compared to $595.8 million at December 31, 2005, a decrease of $405.9 million. This decline was principally the result of the 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. program and increased capital expenditures. In addition, DPL had no short-term investments available for sale at September 30, 2006 compared to $125.8 million at December 31, 2005. Capital expenditures were $283.9 million for the first nine months of 2006 and $138.2 million for the first nine months of 2005. Total capital additions are expected to approximate $365 million in 2006 primarily related 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. DPL expects to finance its capital additions in 2006 with a combination of cash on hand, tax-exempt debt and internally-generated funds. Capital Forecast Over the three-year period of 2006 through 2008, DPL is projecting to spend an estimated $830 million in capital projects, approximately 56% of which is to meet changing environmental standards. This forecast represents an increase of $10 million over DPL's previous projection of $820 million due to revised capital expenditures at both DPL-operated and partner-operated plants. Stock Buyback DPL completed its Board-authorized $400 million share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program on August 21, 2006. In total, 14.9 million shares were repurchased, or 11.7% of the outstanding stock at December 31, 2005, at an average price of $26.91 per share. Peaker Review As previously announced, DPL is reviewing its peaking generation portfolio and has received bids for three of its peaking generating sites. The sites represent a combined capacity of 872 megawatts and a net book value of approximately $300 million. While a final decision concerning which sites to sell, if any, has not been reached or approved, the Company has received several strong bids and is in discussions with several potential buyers. Any transaction is not expected to close before 2007. Future Outlook 2006 - The Company reaffirmed its guidance for basic earnings per share from continuing operations of $1.35 to $1.50 for 2006. 2007 - The Company updated its 2007 guidance for basic earnings per share from continuing operations to $1.50 to $1.65 from its previous forecast of $1.65 to $1.80. There are three drivers to the revised guidance: fuel, purchased power and 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. expenses. The estimated 2007 fuel and purchased power cost increases have several components. * The market price of coal is slightly higher than forecasted. * The coal testing and blending process at Killen Station upon the completion of the scrubber construction will be longer than expected, resulting in the use of compliance coals for a longer period of time. * Less coal generation will be available in 2007 due to changes in plant outage out·age n. 1. A quantity or portion of something lacking after delivery or storage. 2. A temporary suspension of operation, especially of electric power. schedules. Either natural gas units or purchased power will be required to compensate for the reduced coal generation availability. The update in 2007 litigation expenses is related to the lawsuit lawsuit: see procedure; tort. against former Company executives. Conference Call/Webcast DPL will conduct a webcast conference call with financial analysts on Wednesday, November 1, 2006, 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. 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, 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 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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