SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 11-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998 or [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) Commission File No. 1-10568 (LG&E Energy Corp.) A. Full Title of the Plan: WKE CORP. BARGAINING EMPLOYEES' SAVINGS PLAN B. Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office: LG&E ENERGY CORP. 220 West Main Street P. O. Box 32030 Louisville, Kentucky 40232 WKE CORP. WKE CORP. BARGAINING EMPLOYEES' SAVINGS PLAN INDEX TO FINANCIAL STATEMENTS AND SCHEDULES FINANCIAL STATEMENTS AND SCHEDULES REFERENCE - ---------------------------------- --------- Report of Independent Public Accountants . . . . . . . . . . . . . . Page 1 Statements of Net Assets Available for Benefits with Fund Information as of December 31, 1998 . . . . . . Page 2 Statement of Changes in Net Assets Available for Benefits with Fund Information for the Period from Inception (July 17, 1998) to December 31, 1998 . . . . . . . . . . . . . . . Page 3 Notes to Financial Statements and Schedules for the Year Ended December 31, 1998 . . . . . . . . . . . . . . . . . . . . . Page 4-7 Item 27a - Schedule I - Schedule of Assets Held for Investment Purposes As of December 31,1998 . . . . . . . . . . . . Page 8 Item 27d - Schedule II - Schedule of Reportable Transactions for the Year Ended December 31, 1998 . . . . . . . . . . . . . . . Page 9 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Trustees of the WKE Corp. Bargaining Employees' Savings Plan: We have audited the accompanying statements of net assets available for benefits of the WKE Corp. Bargaining Employees' Savings Plan (the Plan) as of December 31, 1998, and the related statement of changes in net assets available for benefits for the year ended December 31, 1998. These financial statements and the supplemental schedules referred to below are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements and supplemental schedules based on our audit. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1998, and the changes in its net assets available for benefits for the year ended December 31, 1998, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes as of December 31, 1998 and reportable transactions for the year ended December 31, 1998 are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The fund information in the statements of net assets available for benefits as of December 31, 1998 and the statement of changes in net assets available for benefits for the year ended December 31, 1998 is presented for purposes of additional analysis rather than to present the net assets available for plan benefits and changes in net assets available for plan benefits of each fund. The supplemental schedules and fund information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. Louisville, Kentucky June 18, 1999 Page 1 WKE CORP. WKE CORP. BARGAINING EMPLOYEES' SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 1998 ASSETS 1998 - ------ ---- Investments - at Fair Value (Notes 1 and 2) Fidelity Magellan Fund $ 166,951 Fidelity Equity Income II Fund 153,126 Fidelity Contrafund 79,486 Spartan U.S. Equity Index Fund 71,915 Warburg Pincus Emerging Growth Fund 41,969 LG&E Energy Cor. Common Stock Fund 26,549 Fidelity Puritan Fund 25,508 Fidelity Ret. Gov't Money Market Portfolio 23,887 Templeton Foreign Fund A 16,861 Fidelity Intermediate Bond Fund 10,545 Participant Loans 1,100 ---------- Total Investments $ 617,897 ---------- ---------- The accompanying notes to financial statements and schedules Are an integral part of these statements Page 2 WKE CORP. WKE CORP. BARGAINING EMPLOYEES' SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION FOR THE PERIOD FROM INCEPTION (JULY 17, 1998) TO DECEMBER 31, 1998 LG&E ENERGY FIDELITY FIDELITY SPARTAN WARBURG PINCUS COMMON MAGELLAN EQUITY INCOME II FIDELITY U.S. EQUITY INDEX EMERGING GROWTH STOCK FUND FUND CONTRAFUND PORTFOLIO FUND FUND ---- ---- ---------- --------- ---- ---- ADDITIONS: Contributions: Employer $37,967 $31,568 $14,609 $13,665 $8,573 $6,638 Participant 107,597 106,484 54,602 51,258 26,103 19,446 ----------- ------------ ---------- ------------- ------------ ----------- 145,564 138,052 69,211 64,923 34,676 26,084 Interest and dividends 3,217 8,806 5,776 145 38 Net realized and unrealized gains (loss) 20,870 4,846 4,908 6,528 6,411 954 ----------- ------------ ---------- ------------- ------------ ----------- TOTAL ADDITIONS 169,651 151,704 79,895 71,596 41,087 27,076 DEDUCTIONS: Benefit payments 403 ----------- ------------ ---------- ------------- ------------ ----------- Net increase(decrease) prior to interfund transfers 169,248 151,704 79,895 71,596 41,087 27,076 Net interfund transfers to (from) investment options including participants loan transactions (2,297) 1,422 (409) 319 882 ($527) ----------- ------------ ---------- ------------- ------------ ----------- Net Increase 166,951 153,126 79,486 71,915 41,969 26,549 Net assets at beginning of year - - - - - - ----------- ------------ ---------- ------------- ------------ ----------- Net assets at end of year $166,951 $153,126 $79,486 $71,915 $41,969 $26,549 ----------- ------------ ---------- ------------- ------------ ----------- ----------- ------------ ---------- ------------- ------------ ----------- FIDELITY FIDELITY FIDELITY RET.GOV'T TEMPLETON NTERMEDIATE PURITAN MONEY MKT. FOREIGN BOND PARTICIPANT FUND PORTFOLIO FUND A FUND LOANS TOTAL ---- --------- ------ ---- ----- ----- ADDITIONS: Contributions: Employer $5,936 $6,052 $4,139 $3,180 $132,327 Participant 16,821 18,153 12,589 7,776 420,829 ---------- ----------- ---------- ----------- --------- ------------ 22,757 24,205 16,728 10,956 0 553,156 Interest and dividends 333 170 413 97 18,995 Net realized and unrealized gains (loss) 1,390 266 (24) 46,149 ---------- ----------- ---------- ----------- --------- ------------ TOTAL ADDITIONS 24,480 24,375 17,407 11,029 0 618,300 DEDUCTIONS: Benefit payments 403 ---------- ----------- ---------- ----------- --------- ------------ Net increase(decrease) prior to interfund transfers 24,480 24,375 17,407 11,029 0 617,897 Net interfund transfers to (from) investment options including participants loan transactions 1,028 (488) (546) (484) 1,100 - ---------- ----------- ---------- ----------- --------- ------------ Net Increase 25,508 23,887 16,861 10,545 1,100 617,897 Net assets at beginning of year - - - - - - ---------- ----------- ---------- ----------- --------- ------------ Net assets at end of year $25,508 $23,887 $16,861 $10,545 $1,100 $617,897 ----------- ------------ ---------- ----------- --------- ----------- ----------- ------------ ---------- ----------- --------- ----------- The accompanying notes to financial statements and schedules are an integral part of this statement PAGE 3 WKE CORP. WKE CORP. BARGAINING EMPLOYEES' SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS AND SCHEDULES (1) DESCRIPTION OF PLAN ------------------- The following description of the WKE Corp. Bargaining Employees' Savings Plan ("Plan") provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions. A. GENERAL The Plan was established on July 17, 1998. All Bargaining unit employees of WKE Corp., Western Kentucky Energy Corp. and WKE Station Two Inc., are eligible to participate in the Plan on the first of the month on or following twelve months of continuous employment. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). B. CONTRIBUTIONS AND VESTING Employees choosing to participate may elect to contribute an amount equal to an integral percentage from one percent (1%) to fifteen percent (15%) of base pay on a pre-tax or after-tax basis. The Company in turn will match fifty percent (50%) of the employees' contribution on the first six percent (6%) of eligible compensation. Employee contributions, plus actual earnings thereon, are vested immediately. Company contributions are 20% vested for each year of service with 100% vesting after five years. C. PARTICIPANT ACCOUNTS Each participant's account is credited with the participant's contribution and allocations of (a) the Company's contribution and, (b) Plan earnings, and charged with an allocation of certain administrative expenses. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. Page 4 D. INVESTMENT OPTIONS Participants direct the investment of all contributions (employee and employer). The Plan offers ten mutual fund investment options, detailed below., or a Company stock fund. An employee may invest in one or more of ten investment options in 1% increments. Participants may choose from the following ten mutual fund investment options or a company stock fund: - Fidelity Retirement Government Money Market Portfolio Invests in obligation issued or guaranteed as to timely payment of principal and interest by the U.S. government, it agencies or instrumentalities. - Fidelity Puritan Fund Diversifies investments among a variety of companies, industries and types of securities. - Spartan U.S. Equity Index Portfolio Attempts to duplicate the composition and total return of the Standard & Poor's 500 Index. - Fidelity Magellan Fund Invests in common stocks, and securities convertible to common stock, issued by companies operating in the U.S. and/or abroad as well as foreign companies. Investments are made in large corporations as well as smaller, less well-known companies. The Fund also diversifies investments among a variety of industries and sectors within the market. - Fidelity Intermediate Bond Fund Invests in all types of medium to high quality U.S. and foreign bonds, including corporate or U.S. government issues. - Fidelity Equity Income II Fund Invests in stocks of domestic and foreign companies with potential for capital growth. - Fidelity Contrafund Invests in common stocks believed to be undervalued and in companies that are currently out of public favor but show potential for capital growth. - Warburg Pincus Emerging Growth Fund Invests primarily in common stocks of rapidly growing small and medium sized companies which generally will benefit from new products or services, technology, or changes in management. The stocks are diversified among a variety of industries. Page 5 D. INVESTMENT OPTIONS (CONTINUED) - Templeton Foreign Fund A Invests primarily in common stocks and it can purchase securities in any foreign country, developed or developing. - Janus Worldwide Fund, effective August 1, 1998 Invests primarily in common stocks of foreign and domestic companies. The fund normally invests in issuers from at least five different countries, including the US; however the fund may at times may invest in fewer than five countries or even a single country - LG&E Energy Corp. Common Stock Fund Invests primarily in the common stock of LG&E Energy Corp., as well as short-term investments F. PARTICIPANTS LOANS Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50 percent of their account balance. Loan transactions are treated as a transfer to (from) the investment fund from (to) the Participant Loans fund. Loans to purchase a home can not exceed 15 years and all other loans are for a period not exceeding five years. A participant can have up to two(2) loans. The loans are secured by the balance in the participant's account and bear interest at an agreed upon rate commensurate with local prevailing rates. Interest rates range from 6 percent to 9 percent. Principal and interest is paid ratably through monthly payroll deductions. G. PAYMENT OF BENEFITS On termination of service due to death, disability or retirement, a participant may elect to receive a lump-sum amount equal to the value of the participant's vested interest in his or her account, periodic installments over a fifteen year period, or any combination of lump-sum and periodic installments. For termination of service due to other reasons, a participant may receive the value of the vested interest in his or her account as a lump-sum distribution, periodic installments over a fifteen year period, or any combination of lump-sum and periodic installments. (2) SUMMARY OF ACCOUNTING POLICIES ------------------------------ A. BASIS OF ACCOUNTING The financial statements of the Plan are prepared under the accrual method of accounting in accordance with generally accepted accounting principles. B. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of changes in net assets during the reporting period. Actual results could differ from those estimates. Page 6 (2) SUMMARY OF ACCOUNTING POLICIES (CONTINUED) ------------------------------------------ C. INVESTMENT VALUATION AND INCOME RECOGNITION The Plan's investments are stated at fair value. Shares of registered investment companies are valued at quoted market prices which represent the net asset value of shares held by the Plan at year end. Participant loans receivable are valued at cost which approximates fair value. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. D. PAYMENT OF BENEFITS Benefits are recorded when paid. (3) RELATED PARTY TRANSACTIONS -------------------------- Certain Plan investments are shares of mutual funds managed by subsidiaries of Fidelity Management Research Corp. Fidelity Management Trust Company (a subsidiary of Fidelity Management Research Corp.) is the trustee as defined by the Plan, and therefore, these transactions qualify as party-in-interest. (4) PLAN TERMINATION ---------------- Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. (5) CERTIFIED INFORMATION --------------------- The Plan's funds are maintained by the trustee, Fidelity Management Trust Company. The Plan administrator has instructed the independent public accountants not to examine the information certified as complete and accurate by the trustee/custodian. The trustee/custodian's certification applies to all Plan assets and transactions for the dates presented on the financial statements and schedules listed on the accompanying index. (6) ADMINISTRATIVE COSTS -------------------- Certain expenses incurred for the administration of the Plan are paid by the Company. (7) RECONCILIATION TO FORM 5500 --------------------------- Interest and dividends shown on the accompanying financial statements include $18,995 of interest and dividends from registered investment companies. This amount, together with the net realized and unrealized gains of $46,149, is shown as net investment gain from registered investment companies on the Plan's 5500. (8) TAX STATUS ---------- On September 15, 1999, the plan Administrator requested a determination letter from the Internal Revenue Service. The Plan Sponsor and legal counsel believe that the Plan was designed and is currently being operated in compliance with applicable requirements of the Internal Revenue Code. Page 7 WKE CORP. WKE CORP. BARGAINING EMPLOYEES' SAVINGS PLAN ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 1998 Identity of Issue Description of Asset Cost Fair Value - ----------------- -------------------- ---- ---------- * Fidelity Fidelity Magellan Fund $ 146,413 $ 166,951 * Fidelity Fidelity Equity Income II Fund 148,286 153,126 * Fidelity Fidelity Contrafund 74,686 79,486 * Fidelity Spartan U.S. Equity Index Fund 65,393 71,915 Warburg Pincus Warburg Pincus Emerging Growth Fund 35,559 41,969 * LG&E Energy Corp. LG&E Energy Corp. Common Stock Fund 25,616 26,549 * Fidelity Fidelity Puritan Fund 24,122 25,508 * Fidelity Fidelity Ret. Gov't MM Portfilio 23,887 23,887 Templeton Templeton Foreign Fund A 16,589 16,861 * Fidelity Fidelity Intermediate Bond Fund 10,565 10,545 Participants Participant Loans ** 1,100 1,100 ----------- ------------- Total $ 572,216 $ 617,897 ----------- ------------- ----------- ------------- * - Party-in-interest ** - Rate of interest = 8.5% The accompanying notes to financial statements and schedules are an integral part of these statements Page 8 WKE CORP. WKE CORP. BARGAINING EMPLOYEES' SAVINGS PLAN SCHEDULE I I ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS DECEMBER 31, 1998 Fair Value Identity of Party Purchase Selling Cost of of Asset on Net Gain Involved Description of Asset Price Price Asset Transaction Date or (Loss) - -------------------- ----------------------------------- --------- -------- --------- ---------------- ---------- * Fidelity Magellan Fund $150,980 $ 4,900 $155,880 $ 156,212 $ 332 Spartan U.S. Equity Index Fund 65,446 59 65,506 65,512 7 * Fidelity Puritan Fund 24,175 57 24,232 24,236 4 * Fidelity Ret. Gov't MM Portfolio 27,465 3,578 31,043 31,043 - Templeton Foreign Fund A 17,141 546 17,686 17,692 6 Warburg Pincus Emerging Growth Fund 35,559 - 35,559 35,559 - * Fidelity Contrafund 76,034 1,456 77,490 77,599 109 * Fidelity Intermediate Bond Fund 11,052 484 11,536 11,533 (4) * Fidelity Equity Income II Fund 148,399 118 148,517 148,522 5 Other LG&E Energy Corp. Common Stock Fund 26,122 527 26,649 26,671 21 * - Party-in-Interest The accompanying notes to financial statements and schedules are an integral part of this schedule Page 9 EXHIBIT INDEX WKE CORP. BARGAINING EMPLOYEES' SAVINGS PLAN (PLAN) LG&E ENERGY CORP. (Issuer) Annual Report on Form 11-K For Fiscal Year Ended December 31, 1998 EXHIBITS EXHIBIT NO. DESCRIPTION 23 Consent of Independent Public Accountants SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, all members of the Committee having responsibility for the administration of the WKE Corp. Bargaining Employees' Savings Plan have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. WKE Corp. Bargaining Employees' Savings Plan - -------------------------------------------- Name of Plan October 8, 1999 /s/ Victor A. Staffieri ---------------------------- Victor A. Staffieri /s/ Charles A. Markel ---------------------------- Charles A. Markel /s/ S. Bradford Rives ---------------------------- S. Bradford Rives /s/ Frederick J. Newton III ---------------------------- Frederick J. Newton III /s/ R. Foster Duncan ---------------------------- R. Foster Duncan /s/ Robert M. Hewett ---------------------------- Robert M. Hewett