 1065 Woodman Drive, Dayton, Ohio
45432 |
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1065 Woodman Drive, Dayton, Ohio
45432 |
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Highlights 
Corporate Profile 
DPL Inc. is a diversified regional energy company. DPL’s principal subsidiaries include The Dayton Power & Light Company (DP&L) and DPL Energy. DP&L provides electric services to over 500,000 retail customers in West Central Ohio. DPL Energy markets over 4,400 megawatts of generation capacity throughout the eastern United States. DPL Inc., through its subsidiaries, ranks among the top energy companies in generation efficiency and productivity. Further information on DPL Inc. can be found at http://www.dplinc.com/. |
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To Our Shareholders We are pleased to provide you with this Annual
Report for the year 2003 as well as to report to you on important
initiatives to make your Company stronger in all aspects. These
initiatives reflect the commitment of DPL’s new management team, our full
Board of Directors, and all of our employees to ensuring the highest
standards of service to our customers, excellence in corporate governance,
integrity in financial reporting, and value for our
shareholders. Thank You for Your Patience 
During the past six months, we undertook a
thorough and time-consuming review of DPL’s financial statements for the
past three years. We appreciate the patience of our shareholders during
this period. We are grateful for the confidence you have shown in DPL, and
as your new Chairman and Chief Executive Officer, we assure you that we
share a deep commitment to the success of your Company. Strengthening Your Company On May 16, 2004, the Board of Directors took
decisive and sweeping actions to protect and further the interests of all
DPL stakeholders. Our actions included the appointment of Robert Biggs as
Chairman, W August Hillenbrand as non-executive Vice Chairman, and James
Mahoney as Chief Executive Officer. The Board further reinforced its
commitment to full disclosure, an increased level of stakeholder
communication and sound internal controls. |
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Corporate Governance First, we continue
to implement best practices for ongoing corporate governance. We have
rebuilt our Board of Directors with individuals of accomplishment and
diversity of experience. We recently announced the addition of four new
Board members – Glenn Harder, Retired General Lester Lyles, Dr. Ned
Sifferlen, and James Mahoney. These individuals add an outstanding
combination of financial expertise, industry knowledge and community
leadership. Eight of the ten Board members are now independent directors
under rules of the New York Stock Exchange. Board Oversight The Board will continue its active participation in the development of corporate strategy and the tracking of operational results. We will review management performance, plans to build second tier bench strength, and management’s analysis of important operational and industry challenges and opportunities. We have adopted new corporate risk management and investment policies. And, we have made great progress on the recommendations generated by the independent investigation of an employee’s concerns. Financial Asset Portfolio Review The Board is undertaking a thorough review of the financial asset portfolio with the assistance of Morgan Stanley. The financial portfolio is broadly diversified and currently generating strong cash flow. We will consider a range of strategic options, with no preconceived outcome other than what is in the best interests of our shareholders. In addition, all accounting and financial reporting responsibilities for the portfolio have been consolidated under the supervision and oversight of the Chief Financial Officer and Controller. DPL – Fundamentally Sound As we look at DPL today, it is clear this is a strong company, organizationally, operationally and financially. We move forward with solid fundamentals:
This strong foundation will serve us well as the management team focuses on the basics of running the energy business. We believe there are four key issues that will require careful planning, close oversight and periodic adjustments. |
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They are fuel procurement, environmental compliance, operating in the PJM regional transmission organization (RTO), and managing the rate stabilization plan. Fuel Procurement We burn approximately eight million tons of coal per year at our DPL-operated plants. Managing this expense in a volatile fuel market with the proper balance of short- and long-term contracts is one of our highest priorities. Environmental Compliance DPL is committed to maintaining our strong environmental performance in a cost-effective manner. With our early purchasing efforts, we recently completed a $175 million NOx-reduction investment at costs approximately 20% below current installations. We plan to bring this same focus on cost and productivity to future required environmental programs. The PJM Market As we announced on September 30, 2004, we have successfully integrated DPL’s transmission system into the PJM RTO. As a low-cost producer, we believe our participation will create new opportunities with respect to our ability to provide customers with reliable, cost-effective power. DPL’s Rate Stabilization Plan DPL was the first utility in Ohio to gain approval of its rate stabilization plan. It provides customers with fixed prices through 2005 and rate stability through 2008. At the same time, it provides DPL with the opportunity to recover increased costs associated with environmental compliance, fuel, taxes and security. We are making appropriate risk management and organizational changes to enhance our ability to manage these and other critical operational issues going forward. We will keep you updated as to our progress through information posted on our website, news releases and quarterly earnings conference calls made available to all at http://www.dplinc.com/. In closing, the Company performed well in 2003 and responded effectively to significant challenges over the spring and summer. We look to the future with excitement and optimism. The Board of Directors, the new leadership and the 1,500 employees of DPL are committed to providing our customers with quality service while delivering to you, our shareholders, the solid returns you’ve come to expect from DPL. Once again, thank you for your confidence and support.  |
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operations improved over 2002, in spite of increased operating
costs primarily resulting from electric production costs and corporate
expenses. Through 2003, liquidity remained strong with $338 million in
cash and $140 million in public securities as of December 31, 2003. With
these solid financials, the Board declared a 2% dividend increase, from
$0.94 to $0.96 per share in December 2003.
