SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission Registrant, State of Incorporation, IRS Employer
File Number Address, and Telephone Number Identification No.
1-10568 LG&E Energy Corp. 61-1174555
(A Kentucky Corporation)
220 West Main Street
P.O. Box 32030
Louisville, Ky. 40232
(502) 627-2000
2-26720 Louisville Gas and Electric Company 61-0264150
(A Kentucky Corporation)
220 West Main Street
P.O. Box 32010
Louisville, Ky. 40232
(502) 627-2000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No ___
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
LG&E Energy Corp.
129,682,889 shares, without par value, as of May 5, 1998.
Louisville Gas and Electric Company
21,294,223 shares, without par value, as of April 30, 1998,
all held by LG&E Energy Corp.
This combined Form 10-Q is separately filed by LG&E Energy Corp. and
Louisville Gas and Electric Company. Information contained herein related
to LG&E Energy Corp. or any of its direct or indirect subsidiaries other
than Louisville Gas and Electric Company is provided solely by LG&E Energy
Corp. and not Louisville Gas and Electric Company and shall be deemed not
included in the Form 10-Q of Louisville Gas and Electric Company.
TABLE OF CONTENTS
PART I
Item 1 Financial Statements
LG&E Energy Corp. and Subsidiaries
Statements of Income 1
Balance Sheets 2
Statements of Cash Flows 4
Statements of Retained Earnings 6
Statements of Comprehensive Income 7
Louisville Gas and Electric Company
Statements of Income 8
Balance Sheets 9
Statements of Cash Flows 11
Statements of Retained Earnings 12
Statements of Comprehensive Income 13
Notes to Financial Statements 14
Item 2 Management's Discussion and Analysis of Results of
Operations and Financial Condition 17
PART II
Item 1 Legal Proceedings 21
Item 5 Other Information
Unaudited Supplemental Pro Forma Financial
Information 22
Unaudited Supplemental Pro Forma Combined
Condensed Balance Sheet as of March 31, 1998 23
Unaudited Supplemental Pro Forma Combined
Condensed Statements of Income:
Three Months Ended March 31, 1998 25
Three Months Ended March 31, 1997 26
Notes to Unaudited Supplemental Pro Forma
Combined Condensed Financial Statements 27
Item 6 Exhibits and Reports on Form 8-K 28
Signatures 29
Part I. Financial Information - Item 1. Financial Statements
LG&E Energy Corp. and Subsidiaries
Statements of Income
(Unaudited - Thousands of $ Except Per Share Data)
Three Months
Ended
March 31,
1998 1997
REVENUES:
Energy marketing and trading $ 940,714 $1,059,078
Electric utility 140,585 128,827
Gas utility 92,759 96,738
Argentine gas distribution and other 34,170 18,600
Total revenues 1,208,228 1,303,243
COST OF REVENUES:
Energy marketing and trading 932,479 1,046,396
Fuel and power purchased 45,640 35,019
Gas supply expenses 64,076 67,825
Argentine gas distribution and other 19,427 11,394
Total cost of revenues 1,061,622 1,160,634
Gross profit 146,606 142,609
OPERATING EXPENSES:
Operation and maintenance:
Energy marketing and trading 10,506 11,970
Utility 55,590 53,431
Argentine gas distribution and other 12,781 7,802
Depreciation and amortization 31,750 27,887
Total operating expenses 110,627 101,090
Equity in earnings
of joint ventures 5,119 3,384
OPERATING INCOME 41,098 44,903
Other income and (deductions) 1,531 3,367
Interest charges and preferred dividends 16,627 14,422
Minority interest 1,343 568
Income before income taxes 24,659 33,280
Income taxes 6,896 12,041
NET INCOME $ 17,763 $ 21,239
Average common shares
outstanding 66,528 66,383
Earnings per share - basic and diluted $ .27 $ .32
The accompanying notes are an integral part of these financial statements.
- 1 -
LG&E Energy Corp. and Subsidiaries
Balance Sheets
(Thousands of $)
ASSETS
(Unaudited)
March 31, Dec. 31,
1998 1997
CURRENT ASSETS:
Cash and temporary cash investments $ 134,984 $ 104,366
Marketable securities 25,048 22,300
Accounts receivable - less reserve 465,114 521,166
Materials and supplies - primarily at average cost:
Fuel (predominantly coal) 21,501 17,651
Gas stored underground 13,365 49,396
Other 31,985 31,866
Price risk management assets 182,262 120,341
Prepayments and other 4,340 10,599
Total current assets 878,599 877,685
UTILITY PLANT:
At original cost 2,789,600 2,779,234
Less: reserve for depreciation 1,087,647 1,072,842
Net utility plant 1,701,953 1,706,392
OTHER PROPERTY AND INVESTMENTS - LESS RESERVES:
Investment in affiliates 153,042 168,276
Non-utility property and plant, net 420,918 421,486
Price risk management assets 57,025 44,240
Other 29,228 24,743
Total other property and investments 660,213 658,745
DEFERRED DEBITS AND OTHER ASSETS 120,837 123,569
Total assets $3,361,602 $3,366,391
The accompanying notes are an integral part of these financial statements.
- 2 -
LG&E Energy Corp. and Subsidiaries
Balance Sheets (cont.)
(Thousands of $)
LIABILITIES AND CAPITAL
(Unaudited)
March 31, Dec. 31,
1998 1997
CURRENT LIABILITIES:
Long-term debt due within one year $ 20,000 $ 20,000
Notes payable 205,515 360,184
Accounts payable 393,748 449,230
Trimble County settlement 11,542 13,248
Price risk management liabilities 177,238 131,107
Other 78,388 84,966
Total current liabilities 886,431 1,058,735
Long-term debt 814,371 664,339
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income
taxes 319,633 327,343
Investment tax credit, in
process of amortization 74,722 75,800
Regulatory liability 71,287 65,502
Price risk management liabilities 53,848 23,803
Other 111,064 111,459
Total deferred credits and other liabilities 630,554 603,907
Minority interests 99,173 105,985
Cumulative preferred stock 98,353 98,353
COMMON EQUITY:
Common stock, without par value -
66,527,636 shares outstanding 470,136 470,136
Other (1,391) (1,068)
Retained earnings 363,975 366,004
Total common equity 832,720 835,072
Total liabilities and capital $3,361,602 $3,366,391
The accompanying notes are an integral part of these financial statements.
- 3 -
LG&E Energy Corp. and Subsidiaries
Statements of Cash Flows
(Unaudited - Thousands of $)
Three Months
Ended
March 31,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 17,763 $ 21,239
Items not requiring cash currently:
Depreciation and amortization 31,750 27,887
Deferred income taxes - net (1,131) 6,529
Change in net price risk management assets 1,470 (22,313)
Other (2,361) 2,352
Change in net current assets 30,607 17,290
Other (13,730) (2,457)
Net cash flows from operating activities 64,368 50,527
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities (3,584) (11,846)
Proceeds from sales of securities 961 2,033
Construction expenditures (22,954) (21,366)
Proceeds from sale of investment
in affiliate 16,000 -
Investments in affiliates - (985)
Acquisition of interests in
Argentine natural gas distribution
companies, net of cash and temporary
cash investments acquired - (126,499)
Net cash flows from investing activities (9,577) (158,663)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of medium-term notes 150,000 -
Repayment of short-term borrowings (995,724) (61,000)
Short-term borrowings 841,343 201,000
Issuance of common stock - 2,594
Payment of common dividends (19,792) (19,073)
Net cash flows from financing activities $ (24,173) $ 123,521
- 4 -
LG&E Energy Corp. and Subsidiaries
Statements of Cash Flows (cont.)
(Unaudited - Thousands of $)
Three Months
Ended
March 31,
1998 1997
CHANGE IN CASH AND TEMPORARY
CASH INVESTMENTS $ 30,618 $ 15,385
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF PERIOD 104,366 114,669
CASH AND TEMPORARY CASH INVESTMENTS AT
END OF PERIOD $ 134,984 $ 130,054
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid (received) during the period for:
Income taxes $ 2,160 $ (62)
Interest on borrowed money 16,073 13,175
For the purposes of these statements, all temporary cash investments
purchased with a maturity of three months or less are considered cash
equivalents.
The accompanying notes are an integral part of these financial statements.
- 5 -
LG&E Energy Corp. and Subsidiaries
Statements of Retained Earnings
(Unaudited)
(Thousands of $)
Three Months
Ended
March 31,
1998 1997
Balance at beginning
of period $366,004 $345,994
Net income 17,763 21,239
Cash dividends declared on
common stock ($.2975 and
$.2875 per share) 19,792 19,112
Balance at end of period $363,975 $348,121
The accompanying notes are an integral part of these financial statements.
- 6 -
LG&E Energy Corp. and Subsidiaries
Statements of Comprehensive Income
(Unaudited - Thousands of $)
Three Months
Ended
March 31,
1998 1997
Net income $17,763 $21,239
Unrealized holding losses on
available-for-sale securities
arising during the period (14) (405)
Reclassification adjustment for realized
gains and losses on available-for-sale
securities included in net income 111 (18)
Other comprehensive income (loss), before tax 97 (423)
Income tax expense related to items
of other comprehensive income 37 (169)
Comprehensive income $17,823 $20,985
The accompanying notes are an integral part of these financial statements.
- 7 -
Louisville Gas and Electric Company
Statements of Income
(Unaudited)
(Thousands of $)
Three Months
Ended
March 31,
1998 1997
REVENUES:
Electric $140,585 $128,661
Gas 92,759 96,738
Total operating revenues 233,344 225,399
OPERATING EXPENSES:
Fuel for electric generation 36,041 31,012
Power purchased 9,600 4,007
Gas supply expenses 64,076 67,825
Other operation expenses 40,368 36,868
Maintenance 10,266 11,722
Depreciation and amortization 23,294 22,952
Federal and state
income taxes 12,417 13,277
Property and other taxes 4,956 4,841
Total operating expenses 201,018 192,504
NET OPERATING INCOME 32,326 32,895
Other income and (deductions) 311 886
Interest charges 9,238 9,814
NET INCOME 23,399 23,967
Preferred stock dividends 1,123 1,127
NET INCOME AVAILABLE
FOR COMMON STOCK $ 22,276 $ 22,840
The accompanying notes are an integral part of these financial statements.
- 8 -
Louisville Gas and Electric Company
Balance Sheets
(Thousands of $)
ASSETS
(Unaudited)
March 31, Dec. 31,
1998 1997
UTILITY PLANT:
At original cost $2,789,600 $2,779,234
Less: reserve for depreciation 1,087,647 1,072,842
Net utility plant 1,701,953 1,706,392
OTHER PROPERTY AND INVESTMENTS -
LESS RESERVES 1,267 1,365
CURRENT ASSETS:
Cash and temporary cash investments 89,015 50,472
Marketable securities 22,001 19,311
Accounts receivable - less reserve 102,670 124,872
Materials and supplies - at average cost:
Fuel (predominantly coal) 21,501 17,651
Gas stored underground 15,352 41,487
Other 31,966 31,866
Prepayments 2,060 2,627
Total current assets 284,565 288,286
DEFERRED DEBITS AND OTHER ASSETS:
Unamortized debt expense 6,147 6,074
Regulatory assets 26,545 24,899
Other 25,773 28,625
Total deferred debits and other assets 58,465 59,598
Total assets $2,046,250 $2,055,641
The accompanying notes are an integral part of these financial statements.
- 9 -
Louisville Gas and Electric Company
Balance Sheets (cont.)
(Thousands of $)
CAPITAL AND LIABILITIES
(Unaudited)
March 31, Dec. 31,
1998 1997
CAPITALIZATION:
Common stock, without par value -
Outstanding 21,294,223 shares $ 425,170 $ 425,170
Retained earnings 261,386 258,910
Other (731) (754)
Total common equity 685,825 683,326
Cumulative preferred stock 95,328 95,328
Long-term debt 626,800 626,800
Total capitalization 1,407,953 1,405,454
CURRENT LIABILITIES:
Long-term debt due within one year 20,000 20,000
Accounts payable 72,347 98,894
Trimble County settlement 11,542 13,248
Dividends declared 20,923 21,152
Accrued taxes 27,903 18,723
Accrued interest 8,130 8,016
Other 16,152 14,608
Total current liabilities 176,997 194,641
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income
taxes 246,625 249,851
Investment tax credit, in
process of amortization 74,722 75,800
Accumulated provision for pensions
and related benefits 40,608 40,608
Regulatory liability 71,287 65,502
Other 28,058 23,785
Total deferred credits and other liabilities 461,300 455,546
Total capital and liabilities $2,046,250 $2,055,641
The accompanying notes are an integral part of these financial statements.
- 10 -
Louisville Gas and Electric Company
Statements of Cash Flows
(Unaudited - Thousands of $)
Three Months
Ended
March 31,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 23,399 $ 23,967
Items not requiring cash currently:
Depreciation and amortization 23,294 22,952
Deferred income taxes - net 2,547 253
Investment tax credit - net (1,078) (1,086)
Other 1,000 931
Changes in net current assets:
Accounts receivable 22,202 5,086
Materials and supplies 22,185 27,834
Trimble County settlement (1,706) (1,712)
Accounts payable (26,547) (39,977)
Accrued taxes 9,180 13,703
Accrued interest 114 (1,501)
Prepayments and other 2,111 2,110
Other 4,710 2,274
Net cash flows from operating activities 81,411 54,834
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities (3,096) (10,238)
Proceeds from sales of securities 444 740
Construction expenditures (19,064) (19,284)
Net cash flows from investing activities (21,716) (28,782)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of dividends (21,152) (20,131)
Net cash flows from financing activities (21,152) (20,131)
CHANGE IN CASH AND TEMPORARY
CASH INVESTMENTS 38,543 5,921
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF PERIOD 50,472 56,792
CASH AND TEMPORARY CASH INVESTMENTS AT
END OF PERIOD $ 89,015 $ 62,713
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid (refunded) during the period for:
Income taxes $ 4,276 $ (52)
Interest on borrowed money 8,705 10,929
For the purposes of these statements, all temporary cash investments
purchased with a maturity of three months or less are considered cash
equivalents.
The accompanying notes are an integral part of these financial statements.
- 11 -
Louisville Gas and Electric Company
Statements of Retained Earnings
(Unaudited)
(Thousands of $)
Three Months
Ended
March 31,
1998 1997
Balance at beginning
of period $258,910 $209,222
Net income 23,399 23,967
Subtotal 282,309 233,189
Cash dividends declared on stock:
5% cumulative preferred 269 269
Auction rate cumulative
preferred 487 491
$5.875 cumulative preferred 367 367
Common 19,800 -
Subtotal 20,923 1,127
Balance at end of period $261,386 $232,062
The accompanying notes are an integral part of these financial statements.
- 12 -
Louisville Gas and Electric Company
Statements of Comprehensive Income
(Unaudited - Thousands of $)
Three Months
Ended
March 31,
1998 1997
Net income $22,276 $22,840
Unrealized holding gains on available-
for-sale securities arising during
the period (27) (417)
Reclassification adjustment for realized
gains on available-for-sale securities
included in net income 66 10
Other comprehensive income (loss), before tax 39 (407)
Income tax expense related to items
of other comprehensive income 16 (107)
Comprehensive income $22,299 $22,540
The accompanying notes are an integral part of these financial statements.
- 13 -
LG&E Energy Corp. and Subsidiaries
Louisville Gas and Electric Company
Notes to Financial Statements
(Unaudited)
1. This report includes unaudited consolidated financial statements for
LG&E Energy Corp. and its wholly owned subsidiaries - Louisville Gas
and Electric Company (LG&E) and LG&E Capital Corp. (Capital Corp.),
collectively referred to as the "Company." This report also includes
financial statements for LG&E. The unaudited consolidated financial
statements of LG&E Energy as of and for the three months ended March
31, 1998 and 1997 included herein do not include or reflect the
financial results of either KU Energy Corporation or Kentucky Utilities
Company. As described below, subsequent to March 31, 1998, KU Energy
Corporation was merged into LG&E Energy Corp. Unaudited supplemental
pro forma financial information for the periods ended March 31, 1998
and 1997 giving effect to the merger is presented, however, in Part II
- Item 5, Unaudited Supplemental Pro Forma Financial Information.
In the opinion of management, all adjustments, including those of a
normal recurring nature, have been made to present fairly the
consolidated financial position, results of operations and cash flows
for the periods indicated. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to SEC rules and regulations, although
the Company believes that the disclosures are adequate to make the
information presented not misleading.
Certain reclassifications have been made to the Company's income
statement for the three months ended March 31, 1997, to conform to the
presentation for the three months ended March 31, 1998, with no impact
on previously reported net income.
These financial statements should be read with the financial statements
and notes thereto included in the Company's and LG&E's Annual Reports
on Form 10-K for 1997.
2. On April 3, 1998, LG&E entered into a forward-starting interest-rate
swap with a notional amount of $83.3 million. The swap will hedge
anticipated variable-rate borrowing commitments. It will start in
August 2000 and mature in November 2020. LG&E will pay a fixed rate of
5.21% and receive a variable rate based on the Bond Market Association
Municipal Swap Index. Under certain conditions, the counterparty to
the agreement may terminate the swap at no cost after August 2010.
3. On May 4, 1998, the Company and KU Energy Corporation merged, with the
Company as the surviving corporation. The Company will account for the
merger as a pooling of interests. Through March 31, 1998, the
Company's costs associated with the merger amounted to $8.6 million.
In accordance with regulatory filings approved by the Kentucky Public
Service Commission, one half of the Company's costs to achieve the
merger synergies, up to a total of $77.2 million, are permitted to be
deferred as a regulatory asset and amortized ratably over five years to
reduce the amount of merger related savings being refunded to customers
through a surcredit over five years. Amortization will begin in July
1998, when LG&E initiates the surcredit on customers' bills for 50% of
the projected net non-fuel savings to be realized in each of the five
years subsequent to consummation of the merger. The remaining one half
of the recorded costs to achieve the merger will be expensed during the
second quarter of 1998. The costs to achieve the merger, including
separation costs, transaction costs and other merger-related
expenditures, are currently estimated to total approximately $47
million for LG&E and $47 million for Kentucky Utilities. These amounts
are higher than earlier estimates, primarily as a result of higher than
originally estimated separation costs. Amounts in excess of $77.2
million will be expensed consis
- 14 -
tent with the approved regulatory plan as part of the second quarter
one-time charge. The accompanying financial statements do not reflect
the effects of the merger.
For more information, see Item 1, Business, and Unaudited Supplemental
Pro Forma Combined Condensed Financial Information in this report under
Part II, Item 5, Other Information, Note 2 of the Company's Notes to
Financial Statements in the Company's Annual Report on Form 10-K for
the year ended December 31, 1997, and the Company's Current Report on
Form 8-K dated May 4, 1998.
4. In the first quarter of 1998, the Company and LG&E adopted Statement of
Accounting Standards No. 130, Reporting Comprehensive Income. The
Company and LG&E have presented the information required by the
Statement in their respective Statements of Comprehensive Income.
Accumulated other comprehensive income included in the Company's equity
totaled $277,000 and $217,000 at March 31, 1998, and December 31, 1997,
respectively. Accumulated other comprehensive income included in
LG&E's equity totaled $82,000 and $105,000 at March 31, 1998, and
December 31, 1997, respectively. The Company's and LG&E's accumulated
other comprehensive income at March 31, 1998, and December 31, 1997,
consisted of unrealized holding gains and losses on available-for-sale
securities.
On April 3, 1998, the American Institute of Certified Public
Accountants issued Statement of Position No. 98-5, Reporting on the
Costs of Start-Up Activities. The statement requires companies to
expense the costs of start-up activities as incurred. The statement
also requires certain previously capitalized costs to be charged to
expense at the time of adoption and reported as the cumulative effect
of a change in accounting principle. The Company is currently
analyzing the provisions of the statement and cannot predict the impact
this statement will have on its consolidated operations and financial
position.
5. Effective January 1, 1996, the Company adopted the mark-to-market
method of accounting for its energy marketing and trading activities.
The fair values of the Company's price risk management assets and
liabilities as of March 31, 1998, and the averages for the three months
then ended follow (in thousands of $):
March 31, 1998 Average
Fair Value Fair Value
Liabil- Liabil-
Counterparty Assets ities Assets ities
Electricity $157,121 $145,437 $113,735 $101,224
Natural gas 82,397 84,096 88,158 93,526
Other (231) - 11 -
Totals 239,287 229,533 $201,904 $194,750
Reserves - 1,553
Net values $239,287 $231,086
As of March 31, 1998, the Company estimated that a $1 change in
electricity prices and a 10-cent change in natural gas prices across
all geographic areas and time periods could have changed the value of
the Company's net price risk management assets by approximately $1.2
million. In addition to price risk, the value of the Company's entire
energy portfolio is subject to operational and event risks including,
among others, regulatory changes, increases in load demand, and forced
outages at units providing supply for the Company.
- 15 -
For more information, see Notes 1 and 5 of the Company's Notes to
Financial Statements in the Company's Annual Report on Form 10-K for
the year ended December 31, 1997.
6. Reference is made to Part II herein - Item 1, Legal Proceedings, and
Note 16 of the Notes to Financial Statements of the Company's Annual
Report on Form 10-K for the year ended December 31, 1997.
- 16 -
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
On May 4, 1998, the Company and KU Energy Corporation ("KU Energy") merged.
KU Energy is the parent company of Kentucky Utilities Company ("Kentucky
Utilities"). Further information concerning the merger and supplemental
pro forma financial information relating thereto is included in Note 3 and
Part II of this Form 10-Q. Except as otherwise indicated, the following
discussion and analysis is based on the financial condition and operations
of the Company and does not reflect the effects of the combination between
the Company and KU Energy. Reference is made to the Form 10-Q of KU Energy
for the quarter ended March 31, 1998, for a discussion of its results of
operations and other matters (File No. 1-10944).
Without regard to the above-mentioned merger, one of the Company's
principal subsidiaries is LG&E, an electric and gas utility. Accordingly,
LG&E's results of operations and liquidity and capital resources are
primary factors affecting the Company's consolidated results of operations
and capital resources and liquidity.
Some of the matters discussed in Part I or Part II of this Form 10-Q may
contain forward-looking statements that are subject to certain risks,
uncertainties and assumptions. Actual results may vary materially.
Factors that could cause actual results to differ materially include, but
are not limited to: general economic conditions; business and competitive
conditions in the energy industry; unusual weather; regulatory decisions,
including decisions resulting from the combination of the Company and KU
Energy; the factors described in Exhibit 99.01 of this Report on Form 10-Q,
and other factors described from time to time in the Company's reports to
the Securities and Exchange Commission.
Results of Operations
LG&E's and the Argentine gas distribution companies' results of operations
are significantly affected by seasonal fluctuations in temperature and
other weather-related factors. To a lesser degree, the results of the
Company's Energy Marketing and Trading Division are also affected by
seasonal fluctuations in temperature and other weather-related factors.
Because of these and other factors, the results of one interim period are
not necessarily indicative of results or trends to be expected for the full
year.
Three Months Ended March 31, 1998, Compared to
Three Months Ended March 31, 1997
Earnings per share decreased 16% to $.27 in 1998 from $.32 in 1997 mainly
due to a loss on the previously announced sale of the Company's San Miguel
generating facilities in Argentina and lower energy marketing and trading
gross margins. The decrease in energy marketing and trading margins
reflects the impact of increasing summer electricity pricing being
recognized through mark-to-market accounting. Lower energy marketing and
trading operation and maintenance expenses partially offset these
decreases.
LG&E (Utility) Operating Results:
LG&E's net income decreased $.6 million (2%) for the quarter ended March
31, 1998, as compared to the quarter ended March 31, 1997, primarily due to
a decrease in electric and gas retail sales caused by the unseasonably mild
weather and higher operation expenses. Heating degree days were 12% below
1997.
- 17 -
A comparison of LG&E's revenues for the quarter ended March 31, 1998, with
the quarter ended March 31, 1997, reflects increases and decreases which
have been segregated by the following principal causes:
Increase or
(Decrease)
(Thousands of $)
Electric Gas
Cause Revenues Revenues
Sales to ultimate consumers:
Fuel and gas supply adjustments $ (1,463) $ 3,821
Demand side management/revenue
decoupling (1) 1,383
Environmental cost recovery surcharge (238) -
Variation in sales volume, etc. 482 (13,954)
Total (1,220) (8,750)
Sales for resale 13,390 4,508
Gas transportation - net - 484
Other (246) (221)
Total $ 11,924 $ (3,979)
Electric sales for resale increased due to larger amounts of power
available for off-system sales.
Gas wholesale sales increased to $4.5 million in 1998 from zero in 1997 due
to the implementation of LG&E's performance-based ratemaking mechanism.
Fuel for electric generation and gas supply expenses comprise a large
segment of LG&E's total operating expenses. LG&E's electric and gas rates
contain a fuel adjustment clause and a gas supply clause, respectively,
whereby increases or decreases in the cost of fuel and gas supply may be
reflected in retail rates, subject to the approval of the Public Service
Commission of Kentucky. Fuel for electric generation increased $5 million
(16%) for the quarter because of an increase in generation ($3.9 million)
and a higher cost of coal burned ($1.1 million). Gas supply expenses
decreased $3.7 million (6%) due to a decrease in the volume of gas
delivered to the distribution system ($10.1 million) partially offset by an
increase in net gas supply cost ($6.4 million).
Power purchased increased $5.6 million because of the availability of
economically priced power and an increase in unplanned outages at the
electric generating plants.
Other operation expenses increased $3.5 million (9%) over 1997 because of
increased administrative costs ($2.5 million) and increased costs to
operate the electric generating plants ($1 million).
Maintenance expenses decreased $1.5 million (12%) mainly because of a
decrease in repairs at the electric generating plants ($1.1 million) and
fewer storm damage expenses ($.5 million).
Variations in income tax expense are largely attributable to changes in pre-
tax income.
- 18 -
Capital Corp. (Non-Utility) Operating Results:
Capital Corp., a wholly-owned subsidiary of the Company, serves as the
holding company for the Company's non-utility operations. Capital Corp.,
through its subsidiaries, is engaged in energy marketing and trading, the
gas distribution business in Argentina, and various independent power
projects, which businesses are included in the accompanying income
statement under the headings "Energy Marketing and Trading," "Argentina Gas
Distribution and Other" and "Equity in Earnings of Joint Ventures."
Energy marketing and trading revenues and cost of revenues decreased $118.4
million (11%) and $113.9 million (11%), respectively, due to lower prices
in the energy markets, partially offset by increased volumes. The decrease
in gross margins reflects the impact of increasing summer electricity
pricing recognized through mark-to-market accounting.
Energy marketing and trading operation and maintenance expense decreased
$1.5 million (12%). The decrease primarily reflects savings resulting from
relocating gas trading operations from Dallas to Louisville during the
second quarter of 1997.
Argentine gas distribution and other revenues and cost of revenues
increased $15.6 million (84%) and $8.0 million (71%) due to acquiring
Distribuidora de Gas del Centro (Centro) in February 1997. Argentine gas
distribution and other operating expenses increased $5.0 million (64%) due
to the Centro acquisition and to higher corporate expenses.
Consolidated depreciation and amortization expense increased $3.9 million
(14%) due to acquiring Centro and to writing off certain costs related to
the San Miguel facility. The Company sold its interest in the San Miguel
project in February 1998. See Note 7 of Notes to Financial Statements
under Item 8 in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
Equity in earnings of joint ventures increased $1.7 million (51%) due
mainly to a reduction in forced-outage days at the Roanoke Valley I
project.
Non-utility interest charges increased $2.8 million (80%) due to an
increase in average debt outstanding.
The consolidated effective income tax rate decreased to 28.0% in 1998 from
36.2% in 1997 primarily due to the favorable resolution of income tax
audits in 1998.
Liquidity and Capital Resources
The Company's need for capital funds is primarily related to the
construction of plant and equipment necessary to meet LG&E's electric and
gas customers' needs and protection of the environment. Capital funds are
also needed for partnership equity contributions in connection with
independent power production projects, efforts to expand and improve gas
gathering and processing facilities, information system enhancements, and
other business development opportunities. Construction expenditures for
the three months ended March 31, 1998, of $23.0 million were financed with
internally generated funds.
The Company's combined cash and marketable securities balance increased
$33.4 million during the three months ended March 31, 1998. The increase
reflects cash flows from operations and proceeds received from the sale of
the Company's interest in the San Miguel project, partially offset by
construction expenditures and dividends paid.
Variations in accounts receivable, accounts payable and materials and
supplies are generally not significant indicators of the Company's
liquidity. Such variations are primarily attributable to fluctuations in
weather, which have a direct effect on sales of electricity and natural
gas. The significant decreases in accounts receivable and accounts pay
- 19 -
able resulted from seasonal fluctuations in the energy marketing and
trading division's and LG&E's businesses. Gas stored underground decreased
due to seasonal fluctuations in LG&E's business.
The decrease in notes payable and the offsetting increase in long-term debt
reflect issuing $150 million of medium-term notes in February 1998 and
using the proceeds to repay a portion of the outstanding commercial paper
balance. The Company also uses commercial paper which had maturity dates
ranging between one and 270 days. Because of the rollover of these
maturity dates, total short-term borrowings during the first quarter of
1998 were $1.0 billion and total repayments of short-term borrowings during
the quarter were $.8 billion. See Note 14 of Notes to Financial Statements
under Item 8 in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
At March 31, 1998, unused capacity under the Company's lines of credit
totaled $659.6 million after considering commercial paper support and
approximately $34.9 million in letters of credit securing on- and off-
balance sheet commitments. At December 31, 1997, unused capacity under the
lines of credit totaled $481.7 million. The increase in unused capacity
resulted from repaying a portion of the outstanding commercial paper
balance.
As explained in more detail under Item 1 of Part II of this report, the
Company continues to progress in its proposed lease of the generating
assets of Big Rivers Electric Corporation. Upon closing the transaction
and receiving the necessary regulatory approvals, the Company will need
funds to meet various working capital requirements. The Company expects to
issue debt to finance these requirements.
The Company's capitalization ratios at March 31, 1998, and December 31,
1997, follow:
March 31, Dec. 31,
1998 1997
Long-term debt (including current portion) 42.4% 34.7%
Notes payable 10.4 18.2
Preferred stock 5.0 4.8
Common equity 42.2 42.3
Total 100.0% 100.0%
LG&E's capitalization ratios at March 31, 1998, and December 31, 1997,
follow:
March 31, Dec. 31,
1998 1997
Long-term debt (including current portion) 45.3% 45.4%
Preferred stock 6.7 6.7
Common equity 48.0 47.9
Total 100.0% 100.0%
For a description of significant contingencies that may affect the Company,
reference is made to Part II herein - Item 1, Legal Proceedings.
- 20 -
Part II. Other Information
Item 1. Legal Proceedings.
For a description of the significant legal proceedings involving the
Company and LG&E, reference is made to the information under the following
items and captions of the Company's and LG&E's combined Annual Report on
Form 10-K for the year ended December 31, 1997: Item 1, Business; Item 3,
Legal Proceedings; Item 7, Management's Discussion and Analysis of Results
of Operations and Financial Condition; Notes 4 and 16 of the Company's
Notes to Financial Statements under Item 8; and Notes 3 and 12 of LG&E's
Notes to Financial Statements under Item 8. Except as described herein, to
date, the proceedings reported in the Company's and LG&E's combined 1997
Annual Report on Form 10-K have not changed materially.
Environmental.
Note 16 of the Company's, and Note 12 of LG&E's, Financial Statements for
the year ended December 31, 1997, respectively, in the Company's and LG&E's
Annual Report on Form 10-K for such year, discuss certain pending
settlements for an aggregate of $150,000 relating to LG&E's status as a
potentially responsible party under the Comprehensive Environmental
Response Compensation and Liability Act for certain disposal facilities.
These certain settlements are now final and have been entered by the court.
Big Rivers Transaction.
On April 30, 1998, the Kentucky Public Service Commission (the "Kentucky
Commission") issued an order approving, in principle, the proposed 25-year
lease by certain subsidiaries of the Company of the generating assets of
Big Rivers Electric Corporation ("Big Rivers") as generally set forth in a
New Participation Agreement dated April 6, 1998 among the parties. The New
Participation Agreement supersedes an earlier Participation Agreement dated
June 9, 1997 and is effective in lieu of an Amended and Restated
Participation Agreement dated March 18, 1998. The Kentucky Commission's
order contained or required certain modifications or further filings in
connection with the transaction and the Company, Big Rivers, its member
cooperatives and certain of Big Rivers' industrial customers are in
discussions to attempt to resolve the issues raised by the Kentucky
Commission's order. In connection with an earlier November 1997 order of
the Kentucky Commission, the New Participation Agreement also contains an
agreement by affiliates of the Company to assume, effective with the
overall proposed transaction, responsibility for certain unforeseen future
environmental, legislative and regulatory costs associated with the Big
Rivers generating facilities and the loads of certain industrial customers.
Consummation of the lease transaction, including consideration of
modifications contained in the recent Kentucky Commission order, is subject
to further regulatory and other approvals, including the U.S. Bankruptcy
Court and the Federal Energy Regulatory Commission ("FERC"). See Item 1,
Business, of Part I of the Company's Annual Report on Form 10-K for the
year ended December 31, 1997.
Southampton
Note 16 of the Company's Financial Statements for the year ended December
31, 1997 discusses the status of certain proceedings before the FERC
regarding the status of the Southampton cogeneration facility
("Southamption") as a qualifying facility ("QF") under the Public Utility
Regulatory Policies Act for the year 1992, including a request for
clarification as to any FERC-ordered rate refunds payable from Southampton
to Virginia Electric and Power Company ("VEPCO") for the 1992 period. On
May 13, 1998, the FERC approved an order, which has not been issued in
final form, addressing certain issues in this matter. The order reaffirmed
certain exemptions granted Southampton as a QF for the 1992 period.
Regarding the rate refund amount, the FERC order requires VEPCO to compen
- 21 -
sate Southampton for every hour in 1992 that the unit was available for
dispatch, whether or not actually dispatched, at VEPCO's hourly economy
energy cost, thus reducing Southampton's exposure to refund. FERC also
denied Southampton's request for approval of a $500,000 refund and directed
the parties to enter into further FERC-supervised settlement negotiations
regarding calculation of the refund amount in accordance with the
clarifications in the FERC order. Pending the commencement and outcome of
such negotiations, as well as any further potential actions, currently
unknown, to be taken by Southamption or VEPCO, including possible appeal of
any final FERC order, the Company cannot predict the ultimate amount of the
refund. The Company's share of the revenues received by Southampton in
1992 is approximately $9.5 million and any refund is subject to interest
charges.
Item 5. Other Information.
Unaudited Supplemental Pro Forma Financial Information.
On May 4, 1998, the Company and KU Energy Corporation, a Kentucky
corporation ("KU"), merged. Pursuant to the Merger Agreement, among other
things, KU was merged with and into LG&E Energy, with LG&E Energy as the
surviving corporation (the "Merger"). See Note 3 of Notes to Financial
Statements under Part I, Item 1, for more information.
The following unaudited supplemental pro forma financial information
combines the balance sheets and statements of income of LG&E Energy and KU
Energy, including their respective subsidiaries, after giving effect to the
Merger. The unaudited supplemental pro forma combined condensed balance
sheet at March 31, 1998, gives effect to the Merger as if it had occurred
on that date. The unaudited supplemental pro forma combined condensed
statements of income for all periods give effect to the Merger as if it had
occurred at the beginning of the periods presented. These statements are
prepared on the basis of accounting for the Merger as a pooling of
interests and are based on the assumptions set forth in the notes thereto.
In addition, the supplemental pro forma financial information does not give
effect to the expected synergies of the transaction.
The following supplemental pro forma financial information has been
prepared from, and should be read in conjunction with, the financial
statements and related notes thereto reported by the Company and KU Energy,
incorporated herein by reference. The following information is not
necessarily indicative of the financial position or operating results that
would have occurred had the Merger been consummated on the date as of
which, or at the beginning of the periods for which, the Merger is being
given effect nor is it necessarily indicative of future operating results
or financial position. In addition, due to the effect of seasonal
fluctuations in temperature and other weather-related factors on the
operations of the Company and KU Energy, financial results for the three
months ended March 31, 1998, and March 31, 1997, are not necessarily
indicative of trends for any twelve-month period.
- 22 -
LG&E Energy Corp.
Unaudited Supplemental Pro Forma Combined Condensed Balance Sheet
As of March 31, 1998
(Thousands of $)
ASSETS
As Reported Pro
Pro For-
LG&E KU Forma ma Com-
Energy Energy Adj. bined
CURRENT ASSETS:
Cash and temporary cash
investments $ 134,984 $ 32,386 $ - $ 167,370
Marketable securities 25,048 - - 25,048
Accounts receivable -
less reserve 465,114 70,163 (320) 534,957
Materials and supplies - pri-
marily at average cost:
Fuel (predominantly coal) 21,501 22,892 - 44,393
Gas stored underground 13,365 - - 13,365
Other 31,985 24,147 - 56,132
Price risk management
assets 182,262 - - 182,262
Prepayments and other 4,340 6,360 - 10,700
Total current assets 878,599 155,948 (320) 1,034,227
UTILITY PLANT:
At original cost 2,789,600 2,625,228 - 5,414,828
Less: reserve for
depreciation 1,087,647 1,149,284 - 2,236,931
Net utility plant 1,701,953 1,475,944 - 3,177,897
OTHER PROPERTY AND INVESTMENTS -
LESS RESERVES:
Investment in affiliates 153,042 2,081 - 155,123
Non-utility property and
plant, net 420,918 2,642 - 423,560
Price risk management
assets 57,025 - - 57,025
Other 29,228 43,349 - 72,577
Total other property and
investments 660,213 48,072 - 708,285
DEFERRED DEBITS AND OTHER
ASSETS 120,837 56,253 (2,798) 174,292
Total assets $3,361,602 $1,736,217 $ (3,118)$5,094,701
See accompanying notes to Unaudited Supplemental Pro Forma Combined
Financial Statements.
- 23 -
LG&E Energy Corp.
Unaudited Supplemental Pro Forma Combined Condensed Balance Sheet (cont.)
As of March 31, 1998
(Thousands of $)
LIABILITIES AND CAPITAL
As Reported Pro
Pro For-
LG&E KU Forma ma Com-
Energy Energy Adj. bined
CURRENT LIABILITIES:
Long-term debt due within
one year $ 20,000 $ 21 $ - $ 20,021
Notes payable 205,515 - - 205,515
Accounts payable 393,748 28,052 7,573 429,373
Trimble County settlement 11,542 - - 11,542
Price risk management
liabilities 177,238 - - 177,238
Other 78,388 63,468 (4,314) 137,542
Total current liabilities 886,431 91,541 3,259 981,231
Long-term debt 814,371 546,330 - 1,360,701
DEFERRED CREDITS AND OTHER
LIABILITIES:
Accumulated deferred income
taxes 319,633 255,037 - 574,670
Investment tax credit, in
process of amortization 74,722 25,163 - 99,885
Regulatory liability 71,287 50,263 - 121,550
Price risk management
liabilities 53,848 - - 53,848
Other 111,064 55,374 - 166,438
Total deferred credits and
other liabilities 630,554 385,837 - 1,016,391
Minority interests 99,173 - - 99,173
Cumulative preferred stock 98,353 40,000 - 138,353
Common equity 832,720 672,509 (6,377) 1,498,852
Total capital and liabilities $3,361,602 $1,736,217 $ (3,118)$5,094,701
See accompanying notes to Unaudited Pro Supplemental Forma Combined
Financial Statements.
- 24 -
LG&E Energy Corp.
Unaudited Supplemental Pro Forma Combined Condensed Statements of Income
Three Months Ended March 31, 1998
(Thousands of $ Except Per Share Data)
As Reported Pro
Pro For-
LG&E KU Forma ma Com-
Energy Energy Adj. Bined
REVENUES:
Energy marketing and trading $ 940,714 $ - $ - $ 940,714
Electric utility 140,585 183,210 (24) 323,771
Gas utility 92,759 - - 92,759
Argentine gas distribution
and other 34,170 1,912 - 36,082
Total revenues 1,208,228 185,122 (24) 1,393,326
COST OF REVENUES:
Energy marketing and trading 932,479 - - 932,479
Fuel and power purchased 45,640 66,336 (24) 111,952
Gas supply expenses 64,076 - - 64,076
Argentine gas distribution
and other 19,427 - - 19,427
Total cost of revenues 1,061,622 66,336 (24) 1,127,934
Gross profit 146,606 118,786 - 265,392
OPERATING EXPENSES:
Operation and maintenance:
Energy marketing and trading 10,506 - - 10,506
Utility 55,590 47,393 - 102,983
Argentine gas distribution
and other 12,781 540 - 13,321
Depreciation and amortization 31,750 21,533 - 53,283
Total operating expenses 110,627 69,466 - 180,093
Equity in earnings
of joint ventures 5,119 - - 5,119
OPERATING INCOME 41,098 49,320 - 90,418
Other income and (deductions) 1,531 953 - 2,484
Interest charges and pre-
ferred dividends 16,627 10,270 - 26,897
Minority interest 1,343 - - 1,343
Income before income taxes 24,659 40,003 - 64,662
Income taxes 6,896 14,598 - 21,494
NET INCOME $ 17,763 $ 25,405 $ - $ 43,168
Average shares outstanding 66,528 37,818 25,338 129,684
Earnings per share $ .27 $ .67 $ - $ .33
See accompanying notes to Unaudited Supplemental Pro Forma Combined
Financial Statements.
- 25 -
LG&E Energy Corp.
Unaudited Supplemental Pro Forma Combined Condensed Statements of Income
Three Months Ended March 31, 1997
(Thousands of $ Except Per Share Data)
As Reported Pro
Pro For-
LG&E KU Forma ma Com-
Energy Energy Adj. Bined
REVENUES:
Energy marketing and trading $1,059,078 $ - $ (4)$1,059,074
Electric utility 128,827 178,908 (204) 307,531
Gas utility 96,738 - - 96,738
Argentine gas distribution
and other 18,600 1,177 - 19,777
Total revenues 1,303,243 180,085 (208) 1,483,120
COST OF REVENUES:
Energy marketing and trading 1,046,396 - (14) 1,046,382
Fuel and power purchased 35,019 62,316 (194) 97,141
Gas supply expenses 67,825 - - 67,825
Argentine gas distribution
and other 11,394 - - 11,394
Total cost of revenues 1,160,634 62,316 (208) 1,222,742
Gross profit 142,609 117,769 - 260,378
OPERATING EXPENSES:
Operation and maintenance:
Energy marketing and trading 11,970 - - 11,970
Utility 53,431 46,812 - 100,243
Argentine gas distribution
and other 7,802 619 - 8,421
Depreciation and amortization 27,887 20,882 - 48,769
Total operating expenses 101,090 68,313 - 169,403
Equity in earnings
of joint ventures 3,384 - - 3,384
OPERATING INCOME 44,903 49,456 - 94,359
Other income and (deductions) 3,367 527 - 3,894
Interest charges and pre-
ferred dividends 14,422 10,440 - 24,862
Minority interest 568 - - 568
Income before income taxes 33,280 39,543 - 72,823
Income taxes 12,041 14,680 - 26,721
NET INCOME $ 21,239 $ 24,863 $ - $ 46,102
Average shares outstanding 66,383 37,818 25,338 129,539
Earnings per share $ .32 $ .66 $ - $ .36
See accompanying notes to Unaudited Supplemental Pro Forma Combined
Financial Statements.
- 26 -
LG&E Energy Corp.
Notes to Unaudited Supplemental Pro Forma Combined Condensed Financial
Statements.
1. Reclassifications have been made to certain "as-reported" account
balances reflected in KU Energy's financial statements to conform to
this reporting presentation. All other financial statement
presentation and accounting policy differences are immaterial and have
not been adjusted in the supplemental pro forma combined condensed
financial statements.
2. Intercompany transactions (power purchased and power sales
transactions) between LG&E Energy and KU Energy during the periods
presented were eliminated through pro forma adjustments.
3. Merger-related transaction costs are currently estimated to be
approximately $21.4 million (including fees for financial advisors,
attorneys, accountants, consultants, filings and printing). LG&E
Energy and KU Energy have incurred transaction costs of $13.5 million
through March 31, 1998, which are included in deferred debits and other
assets in the supplemental pro forma combined condensed balance sheet.
None of the estimated cost savings resulting from the Merger or costs
to achieve such savings have been reflected in the supplemental pro
forma combined condensed statements of income. A charge of $6.4
million ($10.7 million, net of income taxes of $4.3 million) as a pro
forma adjustment to retained earnings and a credit of $2.8 million
($10.7 million less $13.5 million actual charges incurred through March
31, 1998) as a pro forma adjustment to deferred debits and other assets
have been made in the supplemental pro forma combined condensed balance
sheet to recognize such estimated transaction costs and the proposed
treatment following the consummation of the Merger.
4. The supplemental pro forma combined condensed financial statements
reflect the conversion of each share of KU Energy Common Stock (no par
value) outstanding into 1.67 shares of LG&E Energy Common Stock (no par
value) as provided in the Merger Agreement. The supplemental pro forma
combined condensed financial statements are presented as if the
companies were combined during all periods included therein.
- 27 -
Item 6(a). Exhibits.
Exhibit
Number Description
27 Financial Data Schedules for LG&E Energy Corp. and
Louisville Gas and Electric Company.
99.01 Cautionary Statement for Purposes of the "Safe Harbor"
provisions of the Private Securities Litigation Reform
Act of 1995.
99.02 Description of Common Stock.
99.03 Unaudited Financial Statements of KU Energy Corporation
and Kentucky Utilities Company for the three months
ended March 31, 1998. [Filed as part of KU Energy
Corporation's, File No. 1-10944, and Kentucky Utilities
Company's, File No. 1-3464, Quarterly Report on Form 10-
Q for the three months ended March 31, 1998, and
incorporated herein by reference.]
Item 6(b). Reports on Form 8-K.
On January 8, 1998, LG&E Energy Corp. filed a report on Form 8-K stating
that:
(1)On December 19, 1997, LG&E Power Argentina I Inc. ("LG&E Argentina"), a
wholly owned indirect subsidiary of the Company, entered into a Put and
Call Agreement with Pluspetrol Resources Corporation ("Pluspetrol") and
ASTRA Compania Argentina de Petroleo S.A. ("Astra") pursuant to which
Pluspetrol and Astra have an option to purchase from LG&E Argentina,
and LG&E Argentina has an option to sell to Pluspetrol and Astra, LG&E
Argentina's one-third interest in the company which owns and operates
the San Miguel facility, at a purchase price which is established based
upon a variable pricing structure.
(2)On December 30, 1997, LG&E Energy Corp. announced that it elected R.
Foster Duncan, 43, to the position of Executive Vice President,
Planning and Development, effective January 12, 1998.
On April 9, 1998, the Company filed a report on Form 8-K announcing that
the LG&E Energy Corp. and KU Energy Corporation merger will close effective
May 4, 1998, subject to Securities and Exchange Commission final approval
and the satisfaction and confirmation of certain closing conditions set
forth in their merger agreement.
On May 6, 1998, the Company filed a report on Form 8-K stating that:
(1)On May 4, 1998, LG&E Energy Corp. and KU Energy Corporation completed
their merger with the Company as the surviving corporation.
(2)Effective May 1, 1998, the Company elected Frederick J. Newton, III, to
the position of Senior Vice President - Human Resources and
Administration.
- 28 -
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
LG&E ENERGY CORP.
Registrant
Date: May 15, 1998 /s/ Victor A. Staffieri
Victor A. Staffieri
Chief Financial Officer
(On behalf of the registrant)
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Louisville Gas and Electric Company
Registrant
Date: May 15, 1998 /s/ Victor A. Staffieri
Victor A. Staffieri
Chief Financial Officer
(On behalf of the registrant)
- 29 -