**UNITED STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C.  20549**

 

**FORM 10-Q**

 

**ý****QUARTERLY REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE**

**SECURITIESEXCHANGE ACT OF 1934**

 

**Forthe quarterly period ended March 31, 2003**

 

**OR**

 

**o****TRANSITION REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE**

**SECURITIES EXCHANGE ACT OF 1934**

 

**Forthe transition period from            to           **

 

**CommissionFile Number  1-2385**

 

**THE DAYTONPOWER AND LIGHT COMPANY**

(Exact name of registrant as specified in its charter)

* *

| **OHIO**                                                        |   | **31-0258470**                       |
|-----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of  incorporation or organization) |   | (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 reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.

 

| YES | ý |   | NO | o |
|-----|--------|--------|----|---|

 

Indicate by check markwhether the registrant is an accelerated filer (as defined in Rule 12b-2 of theExchange Act).

 

| YES | ý |   | NO | o |
|-----|--------|--------|----|---|

 

Indicate the number ofshares of the issuer’s classes of common stock, as of the latest practicabledate.

 

| **Common  Stock, $.01 par value** |   | **41,172,173  Shares**           |
|-----------------------------------|--------|----------------------------------|
| (Title of each  class)            |   | (Outstanding at  March 31, 2003) |

 

 

----

 

**THEDAYTON POWER AND LIGHT COMPANY**

 

**INDEX**

 
| **Part I.  Financial Information** |
|-----------------------------------------|
|                                    |
|                                    | Item 1. | Financial Statements |
|                                    |   |   |
|                                    |   | Consolidated  Statement of Results of Operations |
|                                    |   |   |
|                                    |   | Consolidated  Statement of Cash Flows |
|                                    |   |   |
|                                    |   | Consolidated Balance Sheet |
|                                    |   |   |
|                                    |   | Notes to  Consolidated Financial Statements |
|                                    |   |   |
|                                    | Item 2. | Management’s Discussion and Analysis of  Financial Condition and Results of Operations |
|                                    |   |   |
|                                    |   | Operating  Statistics |
|                                    |   |   |
|                                    | Item 3. | Quantitative and Qualitative Disclosures about  Market Risk |
|                                    |   |   |
|                                    | Item 4. | Controls and Procedures |
|                                    |   |   |
| **Part II.  Other Information**    |
|                                    |   |
|                                    | Item 5. | Other Information |
|                                    |   |   |
|                                    | Item 6. | Exhibits and Reports on Form 8-K |
|                                    |   |   |
| **Other**                               |   |   |
|                                    |   |   |
|                                    | Signatures |
|                                    |   |
|                                    | Certifications |

 

2

----

 

**Part I. Financial Information**

**Item 1.****  Financial Statements**

 

**THE DAYTON POWER AND LIGHT COMPANY**

**CONSOLIDATED STATEMENT OF RESULTS OFOPERATIONS**

**(Dollars in millions)**

 
|                                                                          |   | **Three  Months Ended  March 31,** |       |
|-------------------------------------------------------------------------------|--------|------------------------------------|------------|
|                                                                          |   | **2003**                           |       | **2002** |   |
| **Revenues**                                                                  |   |                               | ** ** |   | ** ** |
| Electric                                                                      |   | **$**                              | **295.7**  |   | $ | 272.2 |   |
|                                                                          |   |                               |       |   |   |
| **Expenses**                                                                  |   |                               |       |   |   |
| Fuel                                                                          |   | **55.6**                           |       | 47.5 |   |
| Purchased  power                                                              |   | **20.0**                           |       | 33.1 |   |
| Operation  and maintenance                                                    |   | **35.4**                           |       | 37.3 |   |
| Depreciation  and amortization                                                |   | **29.1**                           |       | 29.6 |   |
| Amortization  of regulatory assets, net                                       |   | **12.1**                           |       | 11.5 |   |
| General  taxes                                                                |   | **28.3**                           |       | 25.9 |   |
| Total  expenses                                                               |   | **180.5**                          |       | 184.9 |   |
|                                                                          |   |                               |       |   |   |
| **Operating  Income**                                                         |   | **115.2**                          |       | 87.3 |   |
|                                                                          |   |                               |       |   |   |
| Other  income                                                                 |   | **1.0**                            |       | 10.3 |   |
| Interest  expense                                                             |   | **(12.8**                          | **)**      | (14.0 | ) |
|                                                                          |   |                               |       |   |   |
| **Income  Before Income Taxes and Cumulative Effect of Accounting****Change** |   | **103.4**                          |       | 83.6 |   |
|                                                                          |   |                               |       |   |   |
| Income  taxes                                                                 |   | **39.4**                           |       | 31.0 |   |
|                                                                          |   |                               |       |   |   |
| **Income  Before Cumulative Effect of Accounting Change**                     |   | **64.0**                           |       | 52.6 |   |
|                                                                          |   |                               |       |   |   |
| Cumulative  effect of accounting change, net of tax                           |   | **17.0**                           |       | — |   |
|                                                                          |   |                               |       |   |   |
| **Net  Income**                                                               |   | **81.0**                           |       | 52.6 |   |
|                                                                          |   |                               |       |   |   |
| Preferred  dividends                                                          |   | **0.2**                            |       | 0.2 |   |
|                                                                          |   |                               |       |   |   |
| **Earnings  on Common Stock**                                                 |   | **$**                              | **80.8**   |   | $ | 52.4 |   |

 

See Notes toConsolidated Financial Statements.

These interimstatements are unaudited.

 

3

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**THE DAYTON POWER AND LIGHT COMPANY**

**CONSOLIDATED STATEMENT OF CASH FLOWS**

**(Dollars in millions)**

 
|                                                  |   | **Three  Months Ended  March 31,** |       |
|-------------------------------------------------------|--------|------------------------------------|------------|
|                                                  |   | **2003**                           |       | **2002** |   |
| **Operating  Activities**                             |   |                               | ** ** |   | ** ** |
|                                                  |   |                               | ** ** |   | ** ** |
| Net  income                                           |   | **$**                              | **81.0**   |   | $ | 52.4 |   |
| Adjustments:                                          |   |                               |       |   |   |
| Depreciation  and amortization                        |   | **29.1**                           |       | 29.6 |   |
| Amortization  of regulatory assets, net               |   | **12.1**                           |       | 11.5 |   |
| Deferred  income taxes                                |   | **23.7**                           |       | 6.0 |   |
| Cumulative  effect of accounting change, net of tax   |   | **(17.0**                          | **)**      | — |   |
| Changes  in working capital:                          |   |                               |       |   |   |
| Accounts  receivable                                  |   | **11.8**                           |       | 1.8 |   |
| Accounts  payable                                     |   | **8.5**                            | ** ** | — |   |
| Net  intercompany receivables from parent             |   | **—**                         | ** ** | (39.4 | ) |
| Accrued  taxes payable                                |   | **11.2**                           | ** ** | (3.4 | ) |
| Accrued  interest payable                             |   | **(10.8**                          | **)**      | (10.8 | ) |
| Inventories                                           |   | **2.2**                            | ** ** | (3.0 | ) |
| Other                                                 |   | **(3.2**                           | **)**      | (8.7 | ) |
|                                                  |   |                               | ** ** |   |   |
| Net  cash provided by operating activities            |   | **148.6**                          | ** ** | 36.0 |   |
|                                                  |   |                               | ** ** |   |   |
| **Investing  Activities**                             |   |                               | ** ** |   |   |
|                                                  |   |                               | ** ** |   |   |
| Capital  expenditures                                 |   | **(35.0**                          | **)**      | (42.0 | ) |
|                                                  |   |                               | ** ** |   |   |
| **Financing  Activities**                             |   |                               | ** ** |   |   |
|                                                  |   |                               | ** ** |   |   |
| Issuance  of short-term debt, net                     |   | **—**                         | ** ** | 12.0 |   |
| Dividends  paid on common stock                       |   | **(82.5**                          | **)**      | — |   |
| Dividends  paid on preferred stock                    |   | **(0.2**                           | **)**      | (0.2 | ) |
|                                                  |   |                               | ** ** |   |   |
| Net  cash provided by (used for) financing activities |   | **(82.7**                          | **)**      | 11.8 |   |
|                                                  |   |                               | ** ** |   |   |
| **Cash  and temporary cash investments**              |   |                               | ** ** |   |   |
|                                                  |   |                               | ** ** |   |   |
| Net  change                                           |   | **30.9**                           | ** ** | 5.8 |   |
| Balance  at beginning of period                       |   | **17.1**                           | ** ** | 0.9 |   |
| Balance  at end of period                             |   | **$**                              | **48.0**   | ** ** | $ | 6.7 |   |
|                                                  |   |                               |       |   |   |
| **Cash  Paid During the Period for:**                 |   |                               |       |   |   |
| Interest                                              |   | **$**                              | **22.6**   |   | $ | 23.8 |   |
| Income  taxes                                         |   | **$**                              | **(5.0**   | ) | $ | 18.7 |   |

 

See Notes toConsolidated Financial Statements.

These interimstatements are unaudited.

 

4

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**THE DAYTON POWER AND LIGHT COMPANY**

**CONSOLIDATED BALANCE SHEET**

**(Dollars in millions)**

 

 
|                                                                                             |   | **At  March 31,  2003** |        | **At  December 31,  2002** |   |
|--------------------------------------------------------------------------------------------------|--------|-------------------------|-------------|----------------------------|--------|
| **ASSETS**                                                                                       |   |                    |        |                       |   |
|                                                                                             |   |                    |        |                       |   |
| **Property**                                                                                     |   |                    |        |                       |   |
|                                                                                             |   |                    |        |                       |   |
| Property                                                                                         |   | **$**                   | **3,803.2** |                       | $      | 3,781.7 |   |
| Less:  Accumulated depreciation and amortization                                                 |   | **(1,762.2**            | **)**       | (1,765.1                   | )      |
| Net  property                                                                                    |   | **2,041.0**             |        | 2,016.6                    |   |
|                                                                                             |   |                    |        |                       |   |
| **Current  Assets**                                                                              |   |                    |        |                       |   |
|                                                                                             |   |                    |        |                       |   |
| Cash  and temporary cash investments                                                             |   | **48.0**                |        | 17.1                       |   |
| Accounts  receivable, less provision for uncollectible accounts of $5.0 and $10.9,  respectively |   | **147.5**               |        | 159.4                      |   |
| Inventories,  at average cost                                                                    |   | **51.9**                |        | 54.1                       |   |
| Prepaid  taxes                                                                                   |   | **35.2**                |        | 46.9                       |   |
| Other                                                                                            |   | **62.8**                |        | 65.2                       |   |
|                                                                                             |   |                    |        |                       |   |
| Total  current assets                                                                            |   | **345.4**               |        | 342.7                      |   |
|                                                                                             |   |                    |        |                       |   |
| **Other  Assets**                                                                                |   |                    |        |                       |   |
|                                                                                             |   |                    |        |                       |   |
| Income  taxes recoverable through future revenues                                                |   | **43.5**                |        | 34.6                       |   |
| Other  regulatory assets                                                                         |   | **59.1**                |        | 71.1                       |   |
| Trust  assets                                                                                    |   | **77.2**                |        | 115.6                      |   |
| Other                                                                                            |   | **82.3**                |        | 79.0                       |   |
|                                                                                             |   |                    |        |                       |   |
| Total  other assets                                                                              |   | **262.1**               |        | 300.3                      |   |
|                                                                                             |   |                    |        |                       |   |
| **Total  Assets**                                                                                |   | **$**                   | **2,648.5** |                       | $      | 2,659.6 |   |

 

See Notes toConsolidated Financial Statements.

These interimstatements are unaudited.

 

5

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**THE DAYTON POWER AND LIGHT COMPANY**

**CONSOLIDATED BALANCE SHEET**

**(Dollars in millions)**

(continued)

** **
|                                      |   | **At  March 31,  2003** |        | **At  December 31,  2002** |   |
|-------------------------------------------|--------|-------------------------|-------------|----------------------------|--------|
| **CAPITALIZATION AND LIABILITIES**        |   |                    |        |                       |   |
|                                      |   |                    |        |                       |   |
| **Capitalization**                        |   |                    |        |                       |   |
|                                      |   |                    |        |                       |   |
| Common  shareholder’s equity         |   |                    |        |                       |   |
| Common  stock                             |   | **$**                   | **0.4**     |                       | $      | 0.4 |   |
| Other  paid-in capital                    |   | **771.8**               |        | 771.7                      |   |
| Accumulated  other comprehensive income   |   | **(3.3**                | )           | 1.5                        |   |
| Earnings  reinvested in the business      |   | **393.5**               |        | 395.3                      |   |
|                                      |   |                    |        |                       |   |
| Total  common shareholder’s equity   |   | **1,162.4**             |        | 1,168.9                    |   |
|                                      |   |                    |        |                       |   |
| Preferred  stock                          |   | **22.9**                |        | 22.9                       |   |
| Long-term  debt                           |   | **665.4**               |        | 665.5                      |   |
|                                      |   |                    |        |                       |   |
| Total  capitalization                     |   | **1,850.7**             |        | 1,857.3                    |   |
|                                      |   |                    |        |                       |   |
| **Current  Liabilities**                  |   |                    |        |                       |   |
|                                      |   |                    |        |                       |   |
| Accounts  payable                         |   | **90.6**                |        | 96.5                       |   |
| Accrued  taxes                            |   | **98.6**                |        | 100.5                      |   |
| Accrued  interest                         |   | **8.2**                 |        | 19.0                       |   |
| Other                                     |   | **26.5**                |        | 18.9                       |   |
|                                      |   |                    |        |                       |   |
| Total  current liabilities                |   | **223.9**               |        | 234.9                      |   |
|                                      |   |                    |        |                       |   |
| **Deferred  Credits and Other**           |   |                    |        |                       |   |
|                                      |   |                    |        |                       |   |
| Deferred  taxes                           |   | **400.5**               |        | 370.9                      |   |
| Unamortized  investment tax credit        |   | **54.7**                |        | 55.1                       |   |
| Trust  obligations                        |   | **69.7**                |        | 101.2                      |   |
| Other                                     |   | **49.0**                |        | 40.2                       |   |
|                                      |   |                    |        |                       |   |
| Total  deferred credits and other         |   | **573.9**               |        | 567.4                      |   |
|                                      |   |                    |        |                       |   |
| **Total  Capitalization and Liabilities** |   | **$**                   | **2,648.5** |                       | $      | 2,659.6 |   |

 

See Notes toConsolidated Financial Statements.

These interimstatements are unaudited.

 

6

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**Notesto Consolidated Financial Statements**

 

1.     The DaytonPower and Light Company (“DP&L” or “the Company”) is a wholly ownedsubsidiary of DPL Inc (“DPL”).  DP&Lhas prepared the consolidated financial statements in this report withoutaudit, pursuant to the rules and regulations of the Securities and ExchangeCommission.  Certain information andfootnote disclosures normally included in financial statements prepared inaccordance with generally accepted accounting principles have been condensed oromitted pursuant to such rules and regulations.  These consolidated financial statements should be read inconjunction with the consolidated financial statements and notes thereto in theCompany’s 2002 Annual Report on Form 10-K.

 

2.     Reclassificationshave been made in the presentation of certain prior year amounts to conform tothe current reporting presentation of the Company.

 

In the opinion ofmanagement, the information included in this Form 10-Q reflects alladjustments that are necessary for a fair statement of the results ofoperations for the periods presented. Any adjustments are of a normal recurring nature.

 

3.     Comprehensiveincome for the three months ended March 31, 2003 and 2002 consisted of thefollowing:

 
|                                                                                                              |   | **Three  Months Ended  March 31,** |     |
|-------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|----------|
| **$ in millions**                                                                                                 |   | **2003**                           |     | **2002** |   |
|                                                                                                              |   |                               |     |   |   |
| Net  income                                                                                                       |   | **$**                              | **81.0** |   | $ | 52.6 |   |
| Net  change in unrealized gains (losses) on financial instruments net of  reclassification adjustments, after tax |   | **(4.8**                           | **)**    | 2.6 |   |
| Comprehensive  income                                                                                             |   | **$**                              | **76.2** |   | $ | 55.2 |   |

 

7

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4.     The Company adopted the provisions of the Financial AccountingStandard Board’s (“FASB”) Statement of Financial Accounting Standards No. 143“Accounting for Asset Retirement Obligations” (“SFAS No. 143”) as of January 1,2003.  SFAS No. 143 requires legalobligations associated with the retirement of long-lived assets to berecognized at their fair value at the time those obligations are incurred.  Upon initial recognition of a legalliability, costs are capitalized as part of the related long-lived asset andallocated to expense over the useful life of the asset.  SFAS No. 143 also requires that componentsof previously recorded depreciation related to the cost of removal of assetsupon retirement, whether legal asset retirement obligations or not, must beremoved from a company’s accumulated depreciation reserve.  The Company’s legal obligations associatedwith the retirements of its long-lived assets consist primarily of river intakeand discharge structures, coal unloading facilities, loading docks, icebreakers, and ash disposal facilities. Application of SFAS No. 143 in 2003 resulted in an increase in netproperty, plant and equipment of $0.8 million, the recognition of an assetretirement obligation of $4.6 million and reduced the Company’s accumulateddepreciation reserve by $32.1 million. If the new accounting rules had been adopted on January 1, 2002, theasset retirement obligation would have approximated $4.3 million.  Beginning in January 2003, depreciation rateswere reduced to reflect the discontinuation of the cost of removal accrual forapplicable non-regulated generation assets. This change will reduce annual depreciation and amortization expense by$1.9 million.  On a pro forma basis, theimpact for the quarter ended March 31, 2002 would have been $0.3 million aftertax.  In addition, costs for the removalof retired assets are charged to operation and maintenance when incurred.  Since the generation assets are not subjectto Ohio regulation, the Company recorded the net effect of adopting thisstandard in its Consolidated Statement of Results of Operations.  The total cumulative effect of the adoptionof SFAS No. 143 increased earnings on common stock and shareholder’s equity by$28.3 million before tax.

 

5.     On January 1, 2003, the Company began accounting for DPL stockoptions under the fair value method set forth in FASB Statement of FinancialAccounting Standards No. 123, “Accounting for Stock-Based Compensation (“SFASNo. 123”).”  This standard requires therecognition of compensation expense for stock-based awards to reflect the fairvalue of the award on the date of grant. The Company previously followed Accounting Principles Board Opinion No.25, “Accounting for Stock Issued to Employees” (“APB 25”) and relatedAccounting Principles Board and FASB interpretations in accounting for DPLstock options granted to its employees. The Company has adopted SFAS No. 123 on a prospective basis for allgrants issued after January 1, 2003.  Ifthe Company had used a fair-value method of accounting for stock-basedcompensation cost related to DPL stock options granted prior to 2003, earningson common stock would have been reported as follows:

 
|                                                                                                    |   | **Three  Months Ended  March 31,** |     |
|---------------------------------------------------------------------------------------------------------|--------|------------------------------------|----------|
| **$ in millions**                                                                                       |   | **2003**                           |     | **2002** |   |
|                                                                                                    |   |                               |     |   |   |
| Earnings  on common stock, as reported                                                                  |   | **$**                              | **80.8** |   | $ | 52.4 |   |
| Add:  Total stock-based compensation expense   determined under APB 25, net of related tax effects |   | **—**                         |     | 0.3 |   |
| Deduct:  Total stock-based compensation expense determined under FAS 123, net of  related tax effects   |   | **(0.8**                           | **)**    | (0.9 | ) |
| Pro  forma earnings on common stock                                                                     |   | **$**                              | **80.0** |   | $ | 51.8 |   |

 

8

----

 

6.     DPL’s transmission and distribution and base load and peakinggeneration operations are managed and evaluated as a single operating segment,“Electric.”

 
|                                                                   |   | **Three  Months Ended  March 31,** |      |
|------------------------------------------------------------------------|--------|------------------------------------|-----------|
| **$ in millions**                                                      |   | **2003**                           |      | **2002** |   |
|                                                                   |   |                               |      |   |   |
| **Net  revenues:**                                                     |   |                               |      |   |   |
| Electric                                                               |   | **$**                              | **220.1** |   | $ | 191.6 |   |
|                                                                   |   |                               |      |   |   |
| **Operating  income:**                                                 |   |                               |      |   |   |
| Electric                                                               |   | **$**                              | **119.3** |   | $ | 91.4 |   |
| Other  (a)                                                             |   | **(4.1**                           | **)**     | (4.1 | ) |
| Total                                                                  |   | **115.2**                          |      | 87.3 |   |
| Other  income (deductions)                                             |   | **1.0**                            |      | 10.3 |   |
| Interest  expense                                                      |   | **(12.8**                          | )         | (14.0 | ) |
| Income  before income taxes and cumulative effect of accounting change |   | **$**                              | **103.4** |   | $ | 83.6 |   |

 

----

(a) Includes unallocatedcorporate items.

 

9

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**Item 2.****    Management’sDiscussion and Analysis of Financial Condition and Results of Operations**

 

The Dayton Power andLight Company (“DP&L” or “the Company”) reported earnings on common stockbefore the cumulative effect of an accounting change of $63.8 million for thefirst quarter of 2003, an increase of 22% over earnings on common stock of$52.4 million for the first quarter of 2002. The earnings improvement was primarily attributable to higher retail andwholesale sales and margins.  Thecumulative effect of an accounting change in the current quarter of $17.0million resulted from the adoption of a new accounting standard for assetretirement obligations.

 

**Income Statement Highlights**

 
|               |   | **Three  Months Ended  March 31,** |      |
|--------------------|--------|------------------------------------|-----------|
| **$ in millions**  |   | **2003**                           |      | **2002** |   |
|               |   |                               |      |   |   |
| Electric  revenues |   | **$**                              | **295.7** |   | $ | 272.2 |   |
| Fuel               |   | **55.6**                           |      | 47.5 |   |
| Purchased  power   |   | **20.0**                           |      | 33.1 |   |
| Net  revenues      |   | **$**                              | **220.1** |   | $ | 191.6 |   |
|               |   |                               |      |   |   |
| Operating  income  |   | **$**                              | **115.2** |   | $ | 87.3 |   |

 

Increased electricrevenues resulted from increases in both retail and wholesale revenues.  Retail residential revenues increased $10.8million or 9% as a result of higher sales volume driven by colder weather ascompared to 2002 with heating degree days of 3,193 in the first quarter of 2003compared to 2,563 in the first quarter last year.  Wholesale capacity and energy revenues increased $19.0 million or73% primarily as a result of increased operating output at the Company’sgenerating units and higher average wholesale electric commodity prices.  Fuel costs increased $8.1 million or 17% asa result of increased production and higher plant availability.  Purchased power costs decreased $13.1million or 40% as a result of lower purchased power volumes resulting from increasedproduction and higher plant availability.

 

Operation and maintenanceexpense decreased $1.9 million or 5% primarily as a result of lower employeebenefits costs, including charges of $1.1 million incurred in the prior yearfor a union severance program.

 

General taxes increased$2.4 million or 9% primarily as a result of increased sales causing an increasein the Ohio kWh excise tax and increases in property base resulting in higherproperty tax expense, as well as property tax rate increases.

 

Other income decreased$9.3 million or 90% primarily as a result of income of $7.3 million recognizedin the prior year for the business interruption insurance policy related toderegulation (see “Issues and Financial Risks - Other Matters”).

 

Interest expensedecreased $1.2 million or 9% higher capitalized interest for selectivecatalytic reduction installations in 2003.

 

10

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The cumulative effect ofan accounting change reflects the Company’s adoption of the provisions of theFinancial Accounting Standard Board’s (“FASB”) Statement of FinancialAccounting Standards No. 143 “Accounting for Asset Retirement Obligations”(“SFAS No. 143”) as of January 1, 2003 (see Note 4 to the ConsolidatedFinancial Statements).

 

**Construction Program and Financing**

 

Construction additionswere $20 million for the first three months of 2003 and are expected toapproximate $109 million for the year. Current year additions relate to the Company’s environmental complianceprogram, power plant equipment, and the installation of meters and distributionlines.

 

The Company’sscheduled maturities of long-term debt, including capital lease obligations,over the next three years are $1.1 million each year.  The Company expects to finance its construction program and debtmaturities in 2003 and 2004 with internal funds.

 

DPL and the Company have$50.0 million and $105.0 million, respectively, available through 364-dayrevolving credit agreements with a consortium of banks.  The primary purpose of these revolvingcredit facilities is to provide back-up liquidity for DPL’s and the Company’scommercial paper programs.  Currentagreements, which expire in December of 2003, provide an appropriate amount ofcredit support for the Company’s business requirements over the remainder ofthe year.  At March 31, 2003, DPL andthe Company had no outstanding borrowings under these credit agreements and nooutstanding commercial paper balances.

 

The Company has $65.0million available in short-term informal lines of credit.  Borrowings under these lines of credit werezero at March 31, 2003.

 

Fees associated withthese revolving credit agreements and the Company’s lines of credit areapproximately $0.3 million in total per year.

 

Issuance of additionalamounts of first mortgage bonds by the Company is limited by provisions of itsmortgage.  The amounts and timing offuture financings will depend upon market and other conditions, rate increases,levels of sales and construction plans. The Company currently has sufficient capacity to issue first mortgagebonds to satisfy its requirements in connection with its refinancing andconstruction programs during the five-year period 2003-2007.

 

 

11

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** **

**Market Risk**

 

The Company’s financialresults are affected by changes in electricity, coal, and gas commodity prices,increased competition, the effect of weather and economic conditions in thesales area on retail sales volume, financial market conditions, foreigncurrency market risk, and adverse economic conditions.  Six percent of the Company’s expected 2003revenues are from spot energy sales in the wholesale market.

 

Fuel and purchased powercosts represented 42% and 43% of total operating costs in the first quarter of2003 and for the year 2002, respectively. The Company has contracted for approximately 90% of its coal needs for2003.  Purchased power costs depend uponthe timing and extent of planned and unplanned outages of the Company’sgenerating capacity.  The Company doesnot anticipate significant purchased power needs to cover scheduled maintenancefor the remainder of 2003.  A 2% changein overall fuel and purchased power costs would result in a $3.5 million changein net income.

 

The carrying value of theCompany’s debt was $667.0 million at December 31, 2002, consisting of theCompany’s first mortgage bonds and guaranteed air quality developmentobligations.  The fair value of thisdebt was $690.2 million at December 31, 2002, based on current market prices ordiscounted cash flows using current rates for similar issues with similar termsand remaining maturities.  The principalcash repayments and related weighted average interest rates by maturity datefor long-term, fixed-rate debt at December 31, 2002 are as follows.

 
|                       |   | **Long-term  Debt**  |   |
|----------------------------|--------|----------------------|--------|
| **Expected Maturity Date** |   | **Amount**           |   | **Average  Rate** |   |
|                       |   | **($ in  millions)** |   |   |   |
| 2003                       |   |                 | $      | 1.1 |   | 7.4 | % |
| 2004                       |   |                 | 1.1    |   | 7.4 | % |
| 2005                       |   |                 | 1.1    |   | 7.4 | % |
| 2006                       |   |                 | 1.1    |   | 7.4 | % |
| 2007                       |   |                 | 9.3    |   | 6.5 | % |
| Thereafter                 |   |                 | 653.3  |   | 7.5 | % |
| Total                      |   |                 | $      | 667.0 |   | 7.5 | % |
|                       |   |                 |   |   |   |   |
| Fair Value                 |   |                 | $      | 690.2 |   |   |   |

 

At March 31, 2003, theCompany had no short-term debt outstanding.

 

**Issues and Financial Risks**

 

This report containscertain forward-looking statements regarding plans and expectations for thefuture.  Investors are cautioned thatactual outcomes and results may vary materially from those projected due tovarious factors beyond the Company’s control, including abnormal weather,unusual maintenance or repair requirements, changes in fuel costs, changes incommodity prices, increased competition, regulatory changes and decisions,changes in accounting rules, financial market conditions, foreign currencymarket risk, and adverse economic conditions.

 

12

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**Other Matters**

 

A wholly-owned captivesubsidiary of DPL provides insurance coverage solely to DPL including, amongother coverages, business interruption and specific risk coverage with respectto environmental law and electric deregulation.  “Insurance Claims and Costs” on DPL’s Consolidated Balance Sheetas of March 31, 2003 and December 31, 2002 includes insurance reserves ofapproximately $76 million for based on actuarial methods and historical lossexperience.  Such amounts areestablished based upon claims reported to DPL and include estimates of lossesfor claims incurred but not reported based on past and current experience.  The liability is believed by management tobe adequate to cover the ultimate net cost of losses to date; however, theliability is an estimate.  There isuncertainty associated with the occurrence of insured events and actual lossresults could differ from the estimates. Modification of these loss estimates based on experience and changedcircumstances are reflected in the period in which the estimate isreevaluated.  As the outcome of electricderegulation becomes certain during the three-year regulatory transition periodending December 31, 2003, policy payments from the captive subsidiary toDP&L will occur and/or reserves of the captive insurance company will beadjusted and be reflected in DPL’s income. As of March 31, 2003, a $36 million receivable has been recognized byDP&L for insurance claims under its business interruption policy.  Of this amount, $7.3 million and $29.0million were reported as other income in the first quarter of 2002 and in thesecond half of 2001, respectively.

 

On January 1,2003, the Company began accounting for DPL stock options under the fair valuemethod set forth in FASB Statement of Financial Accounting Standards No. 123,“Accounting for Stock-Based Compensation (“SFAS No. 123”).”  This standard requires the recognition ofcompensation expense for stock-based awards to reflect the fair value of theaward on the date of grant.  The Companypreviously followed Accounting Principles Board Opinion No. 25, “Accounting forStock Issued to Employees” (“APB 25”) and related Accounting Principles Boardand FASB interpretations in accounting for DPL stock options granted to itsemployees.  The Company has adopted SFASNo. 123 on a prospective basis for all grants issued after January 1,2003.  The effect on compensationexpense, if any, will depend on the timing, amount, and terms of future stockoption awards.  During the first quarterof 2003, there was no material effect.

 

13

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**THE DAYTON POWER AND LIGHT COMPANY**

**OPERATINGSTATISTICS**

 
|                                 |   | **Three  Months Ended  March 31,** |        |
|--------------------------------------|--------|------------------------------------|-------------|
|                                 |   | **2003**                           |        | **2002** |   |
| **Electric**                         |   |                               |        |   |   |
|                                 |   |                               |        |   |   |
| Sales  (millions of kWh)             |   |                               |        |   |   |
| Residential                          |   | **1,546**                          |        | 1,383 |   |
| Commercial                           |   | **886**                            |        | 843 |   |
| Industrial                           |   | **1,023**                          |        | 1,033 |   |
| Other  retail                        |   | **333**                            |        | 324 |   |
| Total  retail                        |   | **3,788**                          |        | 3,583 |   |
| Wholesale                            |   | **832**                            |        | 736 |   |
|                                 |   |                               |        |   |   |
| Total                                |   | **4,620**                          |        | 4,319 |   |
|                                 |   |                               |        |   |   |
| Revenues  (thousands of dollars)     |   |                               |        |   |   |
| Residential                          |   | **$**                              | **126,193** |   | $ | 115,355 |   |
| Commercial                           |   | **60,130**                         |        | 60,166 |   |
| Industrial                           |   | **41,619**                         |        | 48,609 |   |
| Other  retail                        |   | **22,870**                         |        | 22,184 |   |
| Total  retail                        |   | **250,812**                        |        | 246,314 |   |
| Wholesale                            |   | **44,853**                         |        | 25,900 |   |
|                                 |   |                               |        |   |   |
| Total                                |   | **$**                              | **295,665** |   | $ | 272,214 |   |
|                                 |   |                               |        |   |   |
| Electric  customers at end of period |   | **505,568**                        |        | 501,971 |   |

 

**Item 3.****    Quantitativeand Qualitative Disclosures about Market Risk**

 

See the “Market Risk”section of Item 2.

 

**Item 4.****    Controlsand Procedures**

 

Within 90 days prior tothe filing date of this report, the Company carried out an evaluation, underthe supervision and with the participation of the Company’s management,including the Company’s Chief Executive Officer and Chief Financial Officer, ofthe effectiveness of the design and operation of the Company’s disclosurecontrols and procedures.  Based on thatevaluation, the Chief Executive Officer and Chief Financial Officer concludedthat the Company’s disclosure controls and procedures are effective to ensurethat information required to be disclosed by the Company in the reports that itfiles or submits under the Securities Exchange Act of 1934 is recorded,processed, summarized and reported within the time periods specified in theSecurities and Exchange Commission’s rules and forms.

 

There were no significantchanges in the Company’s internal controls or in other factors that couldsignificantly affect internal controls subsequent to the date of theirevaluation.

 

14

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** **

**Part II.  Other Information**

 

**Item 5.****    OtherInformation**

 

Electric RestructuringLegislation

 

On October 28, 2002,DP&L filed with the Public Utilities Commission of Ohio (“PUCO”) requestingan extension of its market development period as originally determined underCase No. 99-1687-EL-ETP from December 31, 2003 to December 31, 2005.  If approved by the PUCO as requested, theextension of the market development period will continue DP&L’s currentrate structure and provide its retail customers with rate stability.  On March 31, 2003, the PUCO issued a staffrecommendation that suggests the adoption of the Company’s request to extendits market development period through 2005 and maintain current rates.  However, beginning January 1, 2004, itproposes to increase the credit issued to commercial and industrial customerswho elect competitive retail generation service during the market developmentperiod, which may increase the number of customers who switch to a competitivesupplier.  On April 1, 2003, the PUCOissued an Order that sets the hearing date in this case for May 15, 2003.  The final outcome of this case cannot bedetermined at this time.

 

On May 28, 2002, theCompany filed a notice with the Federal Energy Regulatory Commission (“FERC”)stating its intention to join the PJM Interconnection, L.L.C. (“PJM”), anorganization responsible for the operation and control of the bulk electricpower system throughout major portions of five Mid-Atlantic states and theDistrict of Columbia.  On July 31, 2002,the FERC granted the Company approval to join PJM conditioned on the partiesmeeting several regulatory reliability, ratemaking, and market developinginitiatives.  On September 30, 2002, theCompany signed an implementation agreement with PJM with the expectation thatthe Company will be fully integrated into the PJM market by May 1, 2003.  On March 3, 2003, PJM announced the planneddate for the full integration of American Electric Power, Commonwealth Edison,and the Company was being extended. While technical implementation activities continue, full integration ofthe utilities into PJM will be delayed pending the necessary regulatory approvals.

 

On September 12, 2002,the Ohio Consumers’ Counsel, Industrial Energy Users-Ohio and AmericanMunicipal Power-Ohio, Inc. filed a complaint with the PUCO alleging that theCompany had failed to join and transfer operational control of its transmissionassets to a FERC-approved Regional Transmission Organization (“RTO”).  The Company filed a motion to dismiss thecomplaint on October 24, 2002.  OnFebruary 20, 2003, the PUCO issued an Entry ordering this case to be stayeduntil otherwise ordered by the PUCO, stating there were too many unresolvedissues relating to the RTO matters.  Assuch, the outcome of this complaint cannot be determined at this time.

 

15

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On March 10, 2003,American Municipal Power of Ohio, Inc. on behalf of the Company’s municipalcustomers (“Municipals”) filed a complaint at the FERC alleging the Municipalswill be faced with higher rates under the Power Services Agreement they enteredinto with the Company in 1994 once the Company is fully integrated intoPJM.  The Company intends to vigorouslydefend this case and cannot be determine the outcome of this complaint at thistime.

 

On March 21, 2002, thePUCO staff proposed modifications to the Minimum Electric Service and Safety Standards,which establish performance standards for various service-related functions ofinvestor-owned electric utilities.  Theproposed modifications affect billing, collections, allocation of customerpayments, meter reading, and distribution circuit performance.  The Company submitted comments and replycomments on the proposed rules, and filed an application for rehearing onOctober 26, 2002.  On March 18, 2003,the PUCO issued an Entry on Rehearing adopting the proposed modification withminor changes. The effect of compliance with these rules by the Company iscurrently under review.

 

On February 20, 2003, thePUCO issued an Entry requesting comments from interested stakeholders on theproposed rules for the conduct of a competitive bidding process that will takeplace at the end of the market development period.  The Company submitted comments and reply comments on March 7 andMarch 21, 2003, respectively.  Theeffect of the proposed rules cannot be determined at this time.

 

On March 20, 2003, thePUCO issued an Entry initiating a PUCO investigation regarding thedesirability, feasibility, and timing of declaring that retail ancillary,metering, billing and/or collection services are competitive retail electricservices that consumers may obtain from any supplier.  The initiation of this investigation was based on a requirementin the 1999 Ohio deregulation legislation. The PUCO is asking interested stakeholders to file comments by

June 6, 2003 and replycomments by July 7, 2003.  The Companywill actively participate in this case and will evaluate the potential outcomeof this proceeding.

 

Competition

 

As of April 2003, anon-utility affiliated marketer completed its registration to become acompetitive retail generation service provider in the Company’s serviceterritory.  The Company anticipates thatthis competitor will begin a marketing campaign to provide competitive retailgeneration service to the Company’s residential customers.

 

EnvironmentalConsiderations

 

On November 22, 2002, theUnited States Environmental Protection Agency (“USEPA”) announced its finalrule package on New Source Review reform and its proposed rule on thedefinition of “routine maintenance, repair and replacement.”  On December 31, 2002, the final and proposedrules were published in the Federal Register. Following this announcement, several northeast states brought lawsuitsin the United States Court of Appeals for the District of Columbia (the“Court”) challenging the final rule.  OnMarch 6, 2003, the Court denied a petition for a stay that would have delayedimplementation of the final rules.  TheCompany, along with utility groups in which it is a member, is conducting anextensive review of the published rules and does not expect the rule changes tohave a material effect on the Company’s financial position, earnings, or cashflow.

 

16

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On July 29, 2002, theBush Administration offered proposed legislation known as the “Clear Skies”initiative.  The proposal calls for emissionsreductions for sulfur dioxide, nitrogen oxides, and mercury commencing between2008 and 2010.  A competing proposedlegislation calling for reductions in sulfur dioxide, nitrogen oxides, mercury,and carbon dioxide emissions with earlier implementation dates has also beenproposed by a state senator.  Neitherproposal was passed in 2002.  Since theoffering of the Clear Skies proposal, competing proposed legislation revisingthe air pollution laws has emerged in the 108th session ofCongress.  In 2003, the Clear Skies andcompeting proposals were re-introduced in the second half of the 108thsession of Congress.  The effect of anyof the proposed legislation, if passed, cannot be determined at this time, butthe compliance with new environmental regulation if passed may requireadditional capital expenditures and may increase operating costs.

 

On January 14, 2003, theUSEPA issued proposed national emissions standards for hazardous air pollutantsfor stationary combustion turbines. Final rules are anticipated in August 2003.  The effect of any final standards cannot be determined at thistime.

 

On April 14, 2003, theUSEPA issued proposed and direct final rules for standards of performance forstationary gas turbines.  The finalrules will not have a material impact on the Company’s combustion turbinefacilities.

 

During the first quarterof 2003, the Ohio Environmental Protection Agency (“Ohio EPA”) indicated that,as part of the regular permit renewal process for the National PollutantDischarge Eliminations System (“NPDES”) permit for J.M. Stuart Station, it maynot renew the thermal variance that was previously issued under Section 316(a)of the Clean Water Act.  The Company iscontinuing discussions with the Ohio EPA and is assessing the effect of this onthe Company’s operations.

 

**Item 6.****    Exhibitsand Reports on Form 8-K**

 
| (a)    | There are no exhibits  required by Item 601 of Regulation S-K for the quarter ended March 31, 2003. |
|--------|-----------------------------------------------------------------------------------------------------|
|   |                                                                                                |   |
| (b)    | Reports on Form 8-K.                                                                                |

 

On March 13, 2003,DP&L filed a Form 8-K reporting under Item 4 that its independentaccountants, PricewaterhouseCoopers LLP, had declined to stand for reelectionby the Finance and Audit Review Committee of the Board of Directors asDP&L’s independent accountants for the year ended December 31, 2003.

 

On April 14, 2003,DP&L Inc. filed a Form 8-K reporting under Item 4 that its Finance andAudit Committee of the Board of Directors appointed KPMG LLP as DP&L’sindependent accountants for the year ended December 31, 2003.

 

17

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**SIGNATURES**

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the Registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

 

 
|   | **THE DAYTON POWER AND LIGHT COMPANY** |
|--------|----------------------------------------|
|   | (Registrant)                           |

 

 
| Date:  | April 30, 2003 |   | /s/ Stephen F. Koziar                                     |   |
|--------|----------------|--------|-----------------------------------------------------------|--------|
|   |           |   | Stephen F. Koziar                                         |   |
|   |           |   | President and Chief  Executive Officer                    |   |
|   |           |   |                                                      |   |
|   | April 30, 2003 |   | /s/ Caroline E.  Muhlenkamp                               |   |
|   |           |   | Caroline E. Muhlenkamp                                    |   |
|   |           |   | Interim Group Vice  President and Chief Financial Officer |
|   |           |   |                                                      |   |
|   | April 30, 2003 |   | /s/ Miles W. McHugh                                       |   |
|   |           |   | Miles W. McHugh                                           |   |
|   |           |   | Corporate Controller                                      |   |

 

18

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**CERTIFICATIONS**

 

I, Caroline E.Muhlenkamp, certify that:

 
| 1.     | I have reviewed this  quarterly report on Form 10-Q of The Dayton Power and Light Company;                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                         |   |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |
| 2.     | Based on my knowledge,  this quarterly report does not contain any untrue statement of a material  fact or omit to state a material fact necessary to make the statements made,  in light of the circumstances under which such statements were made, not  misleading with respect to the period covered by this quarterly report;                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |
| 3.     | Based on my knowledge,  the financial statements, and other financial information included in this quarterly  report, fairly present in all material respects the financial condition,  results of operations and cash flows of the registrant as of, and for, the  periods presented in this quarterly report;                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |
| 4.     | The registrant’s other  certifying officers and I are responsible for establishing and maintaining  disclosure controls and procedures (as defined in Exchange Act Rules 13a- 14  and 15d-14) for the registrant and we have:                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |
|   | a)                                                                                                                                                                                                                                                                                                                                                                                             | designed such  disclosure controls and procedures to ensure that material information  relating to the registrant, including its consolidated subsidiaries, is made  known to us by others within those entities, particularly during the period  in which this quarterly report is being prepared;          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |
|   | b)                                                                                                                                                                                                                                                                                                                                                                                             | evaluated the  effectiveness of the registrant’s disclosure controls and procedures as of a  date within 90 days prior to the filing date of this quarterly report (the  “Evaluation Date”); and                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |
|   | c)                                                                                                                                                                                                                                                                                                                                                                                             | presented in this  quarterly report our conclusions about the effectiveness of the disclosure  controls and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |
| 5.     | The registrant’s other  certifying officers and I have disclosed, based on our most recent  evaluation, to the registrant’s auditors and the audit committee of  registrant’s board of directors (or persons performing the equivalent  function):                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |
|   | a)                                                                                                                                                                                                                                                                                                                                                                                             | all significant  deficiencies in the design or operation of internal controls which could  adversely affect the registrant’s ability to record, process, summarize and  report financial data and have identified for the registrant’s auditors any  material weaknesses in internal controls; and |
|   |                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                         |
|   | b)                                                                                                                                                                                                                                                                                                                                                                                             |  any fraud, whether or not material, that  involves management or other employees who have a significant role in the  registrant’s internal controls; and                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |
| 6.     | The registrant’s other  certifying officers and I have indicated in this quarterly report whether or  not there were significant changes in internal controls or in other factors  that could significantly affect internal controls subsequent to the date of  our most recent evaluation, including any corrective actions with regard to  significant deficiencies and material weaknesses. |
|        |                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                              |        |  |  |  |  |  |  |  |  |  |

 
| Date:       | April 30, 2003                                            |
|-------------|-----------------------------------------------------------|
| Signature:  | /s/ Caroline E.  Muhlenkamp                               |   |
| Print Name: | Caroline E. Muhlenkamp                                    |
| Title:      | Interim Group Vice  President and Chief Financial Officer |

 

19

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I, Stephen F. Koziar,certify that:

 
| 1.     | I have reviewed this  quarterly report on Form 10-Q of The Dayton Power and Light Company;                                                                                                                                                                                                                                                                                                          |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                |   |
| 2.     | Based on my knowledge, this quarterly report does  not contain any untrue statement of a material fact or omit to state a  material fact necessary to make the statements made, in light of the  circumstances under which such statements were made, not misleading with  respect to the period covered by this quarterly report;                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                |   |
| 3.     | Based on my knowledge,  the financial statements, and other financial information included in this  quarterly report, fairly present in all material respects the financial  condition, results of operations and cash flows of the registrant as of, and  for, the periods presented in this quarterly report;                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                |   |
| 4.     | The registrant’s other  certifying officers and I are responsible for establishing and maintaining  disclosure controls and procedures (as defined in Exchange Act Rules 13a-14  and 15d-14) for the registrant and we have:                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                |
|   | a)                                                                                                                                                                                                                                                                                                                                                                                             | designed such  disclosure controls and procedures to ensure that material information  relating to the registrant, including its consolidated subsidiaries, is made  known to us by others within those entities, particularly during the period  in which this quarterly report is being prepared; |
|   |                                                                                                                                                                                                                                                                                                                                                                                                |   |
|   | b)                                                                                                                                                                                                                                                                                                                                                                                             | evaluated the  effectiveness of the registrant’s disclosure controls and procedures as of a  date within 90 days prior to the filing date of this quarterly report (the  “Evaluation Date”); and |
|   |                                                                                                                                                                                                                                                                                                                                                                                                |   |
|   | c)                                                                                                                                                                                                                                                                                                                                                                                             | presented in this  quarterly report our conclusions about the effectiveness of the disclosure  controls and procedures based on our evaluation as of the Evaluation Date; |
|   |                                                                                                                                                                                                                                                                                                                                                                                                |   |
| 5.     | The registrant’s other  certifying officers and I have disclosed, based on our most recent  evaluation, to the registrant’s auditors and the audit committee of  registrant’s board of directors (or persons performing the equivalent  function):                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                |
|   | a)                                                                                                                                                                                                                                                                                                                                                                                             | all significant  deficiencies in the design or operation of internal controls which could  adversely affect the registrant’s ability to record, process, summarize and  report financial data and have identified for the registrant’s auditors any  material weaknesses in internal controls; and |
|   | b)                                                                                                                                                                                                                                                                                                                                                                                             | any fraud, whether or  not material, that involves management or other employees who have a  significant role in the registrant’s internal controls; and |
|   |                                                                                                                                                                                                                                                                                                                                                                                                |   |
| 6.     | The registrant’s other  certifying officers and I have indicated in this quarterly report whether or  not there were significant changes in internal controls or in other factors  that could significantly affect internal controls subsequent to the date of  our most recent evaluation, including any corrective actions with regard to  significant deficiencies and material weaknesses. |
|        |                                                                                                                                                                                                                                                                                                                                                                                                     |  |  |

 
| Date:       | April 30, 2003                         |
|-------------|----------------------------------------|
| Signature:  | /s/ Stephen F. Koziar                  |   |
| Print Name: | Stephen F. Koziar                      |
| Title:      | President and Chief  Executive Officer |

 

20

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