UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission Registrant; State of Incorporation; IRS Employer
File Number Address; and Telephone Number Identification No.
1-10944 KU Energy Corporation 61-1141273
(A Kentucky Corporation)
One Quality Street
Lexington, Kentucky 40507-1428
(606) 255-2100
1-3464 Kentucky Utilities Company 61-0247570
(A Kentucky and Virginia Corporation)
One Quality Street
Lexington, Kentucky 40507-1428
(606) 255-2100
Indicate by check mark whether the Registrants (1) have 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 such Registrants were required to file such
reports) and (2) have been subject to such filing requirements for the
past 90 days.
Yes X No .
Indicate the number of shares outstanding of each of the issuers'
classes of common stock, as of the latest practicable date:
KU Energy Corporation: Common stock, no par value, 37,817,878
shares outstanding at August 2, 1996
Kentucky Utilities Company: Common stock, no par value, 37,817,878
shares outstanding and held by KU Energy
Corporation at August 2, 1996
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KU ENERGY CORPORATION
AND
KENTUCKY UTILITIES COMPANY
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
CONTENTS
PART I. FINANCIAL INFORMATION Page No.
Item 1: Financial Statements
KU ENERGY CORPORATION
Consolidated Statements of Income 3-4
Consolidated Statements of Cash Flows 5
Consolidated Balance Sheets 6
KENTUCKY UTILITIES COMPANY
Statements of Income 7-8
Statements of Cash Flows 9
Balance Sheets 10
CONDENSED NOTES TO FINANCIAL STATEMENTS OF KU ENERGY
CORPORATION AND KENTUCKY UTILITIES COMPANY 11-15
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations
KU ENERGY CORPORATION AND KENTUCKY
UTILITIES COMPANY 16-21
PART II. OTHER INFORMATION
Item 1: Legal Proceedings 22
Item 4: Submission of Matters to a Vote of
Security Holders 22
Item 6: Exhibits and Reports on Form 8-K 22
Signatures 23
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PART I. FINANCIAL INFORMATION
KU ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands except for per share amounts)
For the Three
Months Ended
June 30,
1996 1995
Operating Revenues $167,510 $154,749
Operating Expenses:
Fuel, principally coal,
used in generation 45,079 40,679
Electric power purchased 17,589 17,631
Other operating expenses 30,727 30,661
Maintenance 17,606 19,495
Depreciation 20,154 18,832
Federal and state income taxes 9,636 5,378
Other taxes 3,894 4,180
Total Operating Expenses 144,685 136,856
Net Operating Income 22,825 17,893
Other Income and Deductions:
Interest and dividend income 666 1,127
Other income and deductions - net 2,927 1,868
Total Other Income and Deductions 3,593 2,995
Income Before Interest and Other Charges 26,418 20,888
Interest and Other Charges 10,345 10,466
Net Income $ 16,073 $ 10,422
Average Common Shares Outstanding 37,818 37,818
Earnings Per Common Share $ .42 $ .27
The accompanying Condensed Notes to Financial Statements are an
integral part of these statements.
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KU ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands except for per share amounts)
For the Six
Months Ended
June 30,
1996 1995
Operating Revenues $358,500 $321,889
Operating Expenses:
Fuel, principally coal,
used in generation 99,104 86,385
Electric power purchased 35,093 33,408
Other operating expenses 60,724 61,867
Maintenance 31,810 34,353
Depreciation 40,219 37,580
Federal and state income taxes 25,336 15,869
Other taxes 8,261 8,523
Total Operating Expenses 300,547 277,985
Net Operating Income 57,953 43,904
Other Income and Deductions:
Interest and dividend income 1,551 2,104
Other income and deductions - net 3,995 3,999
Total Other Income and Deductions 5,546 6,103
Income Before Interest and Other Charges 63,499 50,007
Interest and Other Charges 21,107 20,778
Net Income $ 42,392 $ 29,229
Average Common Shares Outstanding 37,818 37,818
Earnings Per Common Share $ 1.12 $ .77
The accompanying Condensed Notes to Financial Statements are an
integral part of these statements.
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KU ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of dollars)
For the
Six Months
Ended June 30,
1996 1995
Cash Flows from Operating Activities:
Net Income $ 42,392 $ 29,229
Items not requiring (providing) cash currently:
Depreciation 40,219 37,580
Deferred income taxes and investment tax credit 701 (392)
Changes in current assets and liabilities:
Change in fuel inventory (8,089) (2,199)
Change in accounts receivable 1,505 3,253
Change in accounts payable 3,050 (10,411)
Change in accrued taxes 42 4,575
Change in accrued utility revenues 2,345 (628)
Change in liability to ratepayers (6,599) (314)
Change in escrow funds 6,599 317
Other--net 6,886 (52)
Net Cash Provided by Operating Activities 89,051 60,958
Cash Flows from Investing Activities:
Construction expenditures - utility (47,431) (54,480)
Proceeds from leveraged lease investments 236 236
Investment in independent power projects (666) (2,595)
Proceeds from independent power projects 638 188
Other 201 13
Net Cash Used by Investing Activities (47,022) (56,638)
Cash Flows from Financing Activities:
Short-term borrowings - net (14,900) (31,300)
Issuance of long-term debt 35,682 49,401
Funds deposited with trustee - net 3,779 8,600
Retirement of long-term debt, incl. premiums (36,192) (21)
Payment of common stock dividends (32,523) (31,767)
Net Cash Used by Financing Activities (44,154) (5,087)
Net Decrease in Cash and Cash Equivalents (2,125) (767)
Cash and Cash Equivalents Beginning of Period 29,492 28,927
Cash and Cash Equivalents End of Period $ 27,367 $ 28,160
Supplemental Disclosures
Cash paid for:
Interest on short- and long-term debt $ 17,896 $ 18,622
Federal and state income taxes $ 26,975 $ 12,554
The accompanying Condensed Notes to Financial Statements are an
integral part of these statements.
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KU ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of dollars)
As of As of
June 30, Dec. 31,
ASSETS 1996 1995
Utility Plant:
Plant in service, at cost $ 2,434,567 $2,394,018
Less: Accumulated depreciation 1,034,025 997,366
1,400,542 1,396,652
Construction work in progress 64,247 61,410
1,464,789 1,458,062
Current Assets:
Cash and cash equivalents 27,367 29,492
Escrow funds - coal contract litigation - 6,599
Construction funds held by trustee - 3,743
Accounts receivable 48,024 49,529
Accrued utility revenues 25,555 27,900
Fuel, principally coal, at average cost 37,527 29,438
Materials and supplies, at average cost 22,970 23,064
Other 8,447 8,121
169,890 177,886
Investments, Deferred Charges and Other Assets:
Investment in leveraged leases 23,038 21,509
Unamortized loss on reacquired debt 11,370 11,304
Other 45,726 46,213
80,134 79,026
Total Assets $ 1,714,813 $1,714,974
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock equity $ 638,480 $ 628,611
Preferred stock of Subsidiary 40,000 40,000
Long-term debt of Subsidiary 546,373 545,980
1,224,853 1,214,591
Current Liabilities:
Long-term debt due within one year 21 21
Short-term borrowings 40,700 55,600
Accounts payable 40,985 37,935
Accrued interest 8,304 7,556
Accrued taxes 5,002 4,960
Customers' deposits 7,729 6,876
Accrued payroll and vacations 9,609 8,759
Liab. to ratepayers - coal contract litigation - 6,599
Other 9,112 6,992
121,462 135,298
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 237,953 233,707
Accumulated deferred investment tax credits 32,174 34,180
Regulatory tax liability 55,929 57,726
Other 42,442 39,472
368,498 365,085
Total Capitalization and Liabilities $ 1,714,813 $1,714,974
The accompanying Condensed Notes to Financial Statements are an
integral part of these statements.
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KENTUCKY UTILITIES COMPANY
STATEMENTS OF INCOME
(Unaudited)
(in thousands of dollars)
For the Three
Months Ended
June 30,
1996 1995
Operating Revenues $167,516 $154,757
Operating Expenses:
Fuel, principally coal,
used in generation 45,079 40,679
Electric power purchased 17,589 17,631
Other operating expenses 30,214 30,127
Maintenance 17,604 19,493
Depreciation 20,107 18,785
Federal and state income taxes 9,215 5,634
Other taxes 3,845 4,125
Total Operating Expenses 143,653 136,474
Net Operating Income 23,863 18,283
Other Income and Deductions:
Interest and dividend income 401 803
Other income and deductions - net 1,706 1,376
Total Other Income and Deductions 2,107 2,179
Income Before Interest Charges 25,970 20,462
Interest Charges 9,780 9,901
Net Income 16,190 10,561
Preferred Stock Dividend Requirements 564 564
Net Income Applicable to Common Stock $ 15,626 $ 9,997
The accompanying Condensed Notes to Financial Statements are an
integral part of these statements.
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KENTUCKY UTILITIES COMPANY
STATEMENTS OF INCOME
(Unaudited)
(in thousands of dollars)
For the Six
Months Ended
June 30,
1996 1995
Operating Revenues $358,512 $321,905
Operating Expenses:
Fuel, principally coal,
used in generation 99,104 86,385
Electric power purchased 35,093 33,408
Other operating expenses 59,902 60,725
Maintenance 31,806 34,349
Depreciation 40,125 37,486
Federal and state income taxes 25,551 16,268
Other taxes 8,080 8,439
Total Operating Expenses 299,661 277,060
Net Operating Income 58,851 44,845
Other Income and Deductions:
Interest and dividend income 1,014 1,436
Other income and deductions - net 3,806 2,856
Total Other Income and Deductions 4,820 4,292
Income Before Interest Charges 63,671 49,137
Interest Charges 19,978 19,648
Net Income 43,693 29,489
Preferred Stock Dividend Requirements 1,128 1,128
Net Income Applicable to Common Stock $ 42,565 $ 28,361
The accompanying Condensed Notes to Financial Statements are an
integral part of these statements.
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KENTUCKY UTILITIES COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of dollars)
For the Six
Months Ended
June 30,
1996 1995
Cash Flows from Operating Activities:
Net Income $ 43,693 $ 29,489
Items not requiring (providing) cash currently:
Depreciation 40,125 37,486
Deferred income taxes
and investment tax credit (497) (1,097)
Changes in current assets and liabilities:
Change in fuel inventory (8,089) (2,199)
Change in accounts receivable 1,447 2,957
Change in accounts payable 3,650 (11,075)
Change in accrued taxes (118) 4,737
Change in accrued utility revenues 2,345 (628)
Change in liability to ratepayers (6,599) (314)
Change in escrow funds 6,599 317
Other--net 7,515 1,797
Net Cash Provided by Operating Activities 90,071 61,470
Cash Flows from Investing Activities:
Construction expenditures - utility (47,431) (54,480)
Other 201 17
Cash Used by Investing Activities (47,230) (54,463)
Cash Flows from Financing Activities:
Short-term borrowings - net (14,900) (31,300)
Issuance of long-term debt 35,682 49,401
Funds deposited with trustee - net 3,779 8,600
Retirement of long-term debt, incl. premiums (36,192) (21)
Payment of dividends (33,651) (32,706)
Net Cash Used by Financing Activities (45,282) (6,026)
Net Increase (Decrease) in Cash and
Cash Equivalents (2,441) 981
Cash and Cash Equivalents Beginning of Period 5,697 3,111
Cash and Cash Equivalents End of Period $ 3,256 $ 4,092
Supplemental Disclosures
Cash paid for:
Interest on short- and long-term debt $ 17,896 $ 18,622
Federal and state income taxes $ 27,918 $ 12,826
The accompanying Condensed Notes to Financial Statements are an
integral part of these statements.
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KENTUCKY UTILITIES COMPANY
BALANCE SHEETS
(Unaudited)
(in thousands of dollars)
As of As of
June 30, Dec. 31,
1996 1995
ASSETS
Utility Plant:
Plant in service, at cost $2,434,567 $2,394,018
Less: Accumulated depreciation 1,034,025 997,366
1,400,542 1,396,652
Construction work in progress 64,247 61,410
1,464,789 1,458,062
Current Assets:
Cash and cash equivalents 3,256 5,697
Escrow funds - coal contract litigation - 6,599
Construction funds held by trustee - 3,743
Accounts receivable 48,024 49,471
Accrued utility revenues 25,555 27,900
Fuel, principally coal, at average cost 37,527 29,438
Materials and supplies, at average cost 22,970 23,064
Other 8,447 8,121
145,779 154,033
Investments, Deferred Charges and Other Assets:
Unamortized loss on reacquired debt 11,370 11,304
Other 37,202 36,589
48,572 47,893
Total Assets $1,659,140 $1,659,988
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock equity $ 586,578 $ 576,537
Preferred stock 40,000 40,000
Long-term debt 546,373 545,980
1,172,951 1,162,517
Current Liabilities:
Long-term debt due within one year 21 21
Short-term borrowings 40,700 55,600
Accounts payable 41,650 38,000
Accrued interest 8,304 7,556
Accrued taxes 5,083 5,201
Customers' deposits 7,729 6,876
Accrued payroll and vacations 9,560 8,706
Liab. to ratepayers - coal contract litigation - 6,599
Other 8,997 6,752
122,044 135,311
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 234,765 231,717
Accumulated deferred investment tax credits 32,174 34,180
Regulatory tax liability 55,929 57,726
Other 41,277 38,537
364,145 362,160
Total Capitalization and Liabilities $1,659,140 $1,659,988
The accompanying Condensed Notes to Financial Statements are an
integral part of these statements.
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KU ENERGY CORPORATION AND SUBSIDIARIES
KENTUCKY UTILITIES COMPANY
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. PRESENTATION OF CONDENSED INFORMATION
The unaudited interim financial statements presented herein
include the consolidated statements of KU Energy Corporation and
Subsidiaries (KU Energy or the Company) as well as separate financial
statements for Kentucky Utilities Company (KU). KU Energy Corporation
is a holding company organized under the laws of Kentucky with two
first-tier subsidiaries: KU Capital Corporation (KU Capital), a non-
utility subsidiary, and KU, an electric utility. KU Energy
Corporation owns 100% of the common equity of KU Capital and KU. KU
is KU Energy Corporation's principal subsidiary.
The unaudited statements have been prepared by the Company and
KU, respectively, pursuant to the rules and regulations of the
Securities and Exchange Commission. 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 such rules and regulations, although
the Company and KU believe the disclosures are adequate to make the
information presented not misleading. The Company's consolidated
financial statements should be read in conjunction with the financial
statements and notes thereto incorporated by reference in the Annual
Report on Form 10-K of KU Energy for the year ended December 31, 1995;
and the KU financial statements should be read in conjunction with the
financial statements and notes thereto included in the Annual Report
on Form 10-K of KU for the year ended December 31, 1995.
In the opinion of the Company and KU, the respective information
furnished herein reflects all adjustments, all of which are normal and
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KU ENERGY CORPORATION AND SUBSIDIARIES
KENTUCKY UTILITIES COMPANY
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Unaudited)
recurring, which are necessary to present fairly the results of the
periods shown and the disclosures which have been made are adequate to
make the information not misleading. Results of interim periods are
not necessarily indicative of results for any twelve-month period due
to the seasonal nature of KU's business. Prior year amounts have been
reclassified on a basis consistent with the June 30, 1996
presentation.
2. ENVIRONMENTAL COST RECOVERY
Since August 1994, KU has been collecting an environmental
surcharge from its Kentucky retail customers under a Kentucky statute
which authorizes electric utilities (including KU) to implement,
beginning January 1, 1993, an environmental surcharge. The surcharge
is designed to recover certain operating and capital costs of
compliance with federal, state or local environmental requirements
associated with the production of energy from coal, including the
Federal Clean Air Act as amended. KU's environmental surcharge was
approved by the Kentucky Public Service Commission (PSC) in July 1994
and was implemented in August 1994. The total surcharge collections
from August 1, 1994 through June 30, 1996 were approximately
$31 million.
The constitutionality of the surcharge statute was challenged in
the Franklin County (Kentucky) Circuit Court in an action brought
against KU and the PSC by the Attorney General of Kentucky and joined
by representatives of consumer groups. In July 1995, the Circuit
Court entered a judgment upholding the constitutionality of the
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KU ENERGY CORPORATION AND SUBSIDIARIES
KENTUCKY UTILITIES COMPANY
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Unaudited)
statute, but vacating that part of the PSC's July 1994 order which the
judgment describes as allowing KU to recover, under the surcharge,
environmental expenditures incurred before January 1, 1993, and
ordering the case remanded to the PSC for a determination in
accordance with the Circuit Court judgment.
The Attorney General and other consumer representatives appealed
to the Kentucky Court of Appeals that part of the Circuit Court
judgment upholding the constitutionality of the surcharge statute.
The PSC and KU appealed that part of the judgment denying recovery of
environmental expenditures incurred before January 1, 1993. On
August 22, 1995, in the first semi-annual reconciliation review, the
PSC ordered all surcharge revenues collected by KU from that date
subject to refund pending final determination of all appeals. In
March 1996 in the second semi-annual reconciliation review, the PSC
ordered all surcharge revenues collected during the six-month period
then under review (February 1, 1995 through July 31, 1995) subject to
refund pending final determination of all appeals. The total
surcharge collections from February 1, 1995 through June 30, 1996 were
approximately $27 million.
KU believes the constitutionality of the surcharge statute will
be upheld, but it cannot predict the outcome of that part of the
Circuit Court judgment disallowing recovery of environmental
expenditures incurred before January 1, 1993. If the Circuit Court
judgment is ultimately upheld as entered, KU estimates that the amount
it would be required to refund (which is based solely on costs
associated with environmental expenditures incurred before January 1,
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KU ENERGY CORPORATION AND SUBSIDIARIES
KENTUCKY UTILITIES COMPANY
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1993) for surcharge collections through June 30, 1996, from the
implementation of the surcharge would be approximately $9 million, and
from February 1, 1995 would be approximately $7 million. At this
time, KU has not recorded any reserve for refund.
3. FINANCING
In January 1996, KU issued $36 million of Series S First Mortgage
Bonds which bear interest at 5.99% and will mature January 15, 2006.
The proceeds were used to redeem $35.5 million of Series K First
Mortgage Bonds. A redemption premium of approximately $.7 million was
recorded on the balance sheet and will be amortized over the period to
the scheduled maturity of the new bonds.
4. OPERATING REVENUES AND FUEL COSTS
Pursuant to regulatory orders, KU had been refunding fuel cost
savings related to the resolution of a coal contract dispute. Refunds
were made to Virginia retail customers during the period August 1993
through June 1994. Refunds were made to wholesale customers under the
jurisdiction of the FERC in lump sum payments in September 1993.
Refunds to Kentucky retail customers commenced in July 1994. A
portion remained to be refunded to Kentucky customers who had not
filed required claims for refunds. Kentucky passed legislation in
March 1996 which provides for the distribution by the State of certain
unclaimed utility refunds to pay qualifying workers' compensation
claims through the Kentucky Workers' Compensation Funding Commission
(Funding Commission). KU requested permission from the PSC to
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KU ENERGY CORPORATION AND SUBSIDIARIES
KENTUCKY UTILITIES COMPANY
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Unaudited)
transfer the remaining unclaimed refunds to the state for this
purpose. The PSC issued an order in June 1996 approving this request
and releasing KU from any obligation imposed by the PSC to hold,
maintain and distribute the funds. KU transferred the funds
(approximately $6.8 million) to the Funding Commission in June 1996.
The legislation releases KU upon payment to the Kentucky State
Treasurer from any future liability relating to unclaimed refunds,
preserves the rights of ratepayers entitled to claim a refund who have
not yet done so, and authorizes the Funding Commission to make any
such refunds using any funds available.
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KU ENERGY CORPORATION AND SUBSIDIARIES
KENTUCKY UTILITIES COMPANY
MANAGEMENTS' DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and
results of operations is for the Company unless otherwise stated.
Material changes in the consolidated financial condition and operating
results of KU Energy are based primarily upon the operations of KU.
LIQUIDITY & RESOURCES
At June 30, 1996, KU's short-term borrowings were $40.7 million
compared to $55.6 million at December 31, 1995. The short-term
borrowings have been used primarily to finance ongoing construction
expenditures and general corporate requirements. The decrease is due
primarily to planned reductions in construction expenditures and
additional cash provided by operations during the first half of 1996.
Refer to Note 3 of the Condensed Notes to Financial Statements
for a discussion of KU's recent financing activities.
RESULTS OF OPERATIONS
Quarter ended June 30, 1996, compared
to the Quarter ended June 30, 1995
The Company's earnings per common share for the three-month
period ended June 30, 1996 were $.42 compared to $.27 for the
corresponding period of 1995. The increase reflects the success of
KU's aggressive marketing efforts in the residential sector and the
positive effects of colder weather in April 1996 as well as increased
sales to industrial customers and increased opportunity sales during
the second quarter of 1996 compared to 1995. The positive effects of
these factors were somewhat offset by increased fuel and depreciation.
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KU ENERGY CORPORATION AND SUBSIDIARIES
KENTUCKY UTILITIES COMPANY
MANAGEMENTS' DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
expenses.
The changes in operating revenues and kilowatt-hour sales
described below are for the Company. The only difference between
changes in operating revenues for the Company and operating revenues
for KU are intercompany revenues that are eliminated in the
consolidated financial statements. These intercompany amounts are
immaterial.
Increase (Decrease)
From Prior Year
Three Months
Ended June 30, 1996
kWh Revenues
(%) (000's)
Residential 13 $4,663
Commercial 3 968
Industrial 7 2,272
Mine Power (7) (677)
Public Authorities 10 1,236
Total Retail Sales 7 8,462
Wholesale 6 908
Opportunity 45 2,167
Total Other Electric Utilities 22 3,075
Miscellaneous Revenues & Other - 1,224
Total 9 $12,761
Operating revenues increased $12.8 million (8%). The increase
reflects a 9% increase in kilowatt-hour sales. The increase in
kilowatt-hour sales is primarily attributable to increases in
residential, industrial and opportunity sales. The increase in
residential sales was due to the positive impacts of aggressive
marketing efforts and to colder weather during April 1996. The
increase in industrial sales reflects continued economic growth in the
manufacturing sector of KU's service area evidenced primarily by a 10%
increase in the number of industrial customers over 1995. The
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KU ENERGY CORPORATION AND SUBSIDIARIES
KENTUCKY UTILITIES COMPANY
MANAGEMENTS' DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
increase in opportunity sales (374,794 megawatt-hours versus 257,961
megawatt-hours) is primarily due to agreements with two neighboring
utilities for non-firm energy sales during 1996.
Fuel expense increased $4.4 million (11%). The increase was
primarily due to a 14% increase in the tons of coal consumed partially
offset by a 4% reduction in the average price per ton of coal
consumed. The increased consumption was primarily caused by a 13%
increase in generation due to the previously mentioned increase in
kilowatt-hour sales.
Maintenance expense decreased $1.9 million (10%). The decrease
was primarily due to the timing of expenditures for transmission and
distribution maintenance.
Federal and state income taxes increased $4.3 million (79%).
The increase was primarily attributable to higher pretax net income.
Six Months ended June 30, 1996, compared
to the Six Months ended June 30, 1995
The Company's earnings per common share for the six-month
period ended June 30, 1996 were $1.12 compared to $.77 for the
corresponding period of 1995. The increase reflects the success of
KU's aggressive marketing efforts in the residential sector, the
positive effects of colder weather in the first four months of 1996
and increases in industrial and opportunity sales during the first
half of 1996 compared to 1995. The positive effects of these factors
were somewhat offset by increased fuel and depreciation expenses.
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KU ENERGY CORPORATION AND SUBSIDIARIES
KENTUCKY UTILITIES COMPANY
MANAGEMENTS' DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Increase (Decrease)
From Prior Year
Six Months
Ended June 30, 1996
kWh Revenues
(%) (000's)
Residential 13 $12,849
Commercial 4 2,986
Industrial 9 5,406
Mine Power (5) (912)
Public Authorities 9 2,378
Total Retail Sales 8 22,707
Wholesale 6 1,681
Opportunity 149 10,087
Total Other Electric Utilities 51 11,768
Miscellaneous Revenues & Other - 2,136
Total 14 $36,611
Operating revenues increased $36.6 million (11%). The increase
reflects a 14% increase in kilowatt-hour sales. The increase in
kilowatt-hour sales is primarily due to increases in residential,
industrial and opportunity sales. The increase in residential sales
was due to the positive impacts of aggressive marketing efforts and to
colder weather during the first four months of 1996 compared to the
same period of 1995. KU set an all-time record peak demand for
electricity on February 5, 1996 of 3,391 megawatts. The increase in
opportunity sales was primarily attributable to agreements with
neighboring utilities for non-firm energy sales during 1996. The
increase in industrial sales was primarily due to an 8% increase in
the number of industrial customers over 1995.
Fuel expense increased $12.7 million (15%). The increase was
primarily due to a 17% increase in the tons of coal consumed slightly
offset by a 3% decrease in the average price per ton of coal consumed.
The increase in consumption was primarily due to a 16% increase in
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KU ENERGY CORPORATION AND SUBSIDIARIES
KENTUCKY UTILITIES COMPANY
MANAGEMENTS' DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
generation due to the previously mentioned increase in kilowatt-hour
sales.
Maintenance expense decreased by $2.5 million (7%) due
primarily to the timing of expenditures for transmission and
distribution maintenance.
Federal and state income taxes increased by $9.5 million (60%).
The increase was primarily attributable to higher pretax net income.
UTILITY ISSUES - COMPETITION
Refer to Management's Discussion and Analysis in the 1995
KU Energy Annual Report on Form 10-K under the heading "Utility Issues
-Competition" for a discussion of the Federal Energy Regulatory
Commission's (FERC) proposed rules addressing open access transmission
service and the collection of charges for the recovery of stranded
costs. In late April 1996, the FERC issued two final rules and a
Notice of Proposed Rulemaking (NOPR). FERC Order No. 888 (Order 888)
addressed both open access and stranded cost issues. FERC Order
No. 889 (Order 889) requires utilities to establish an electronic Open
Access Same-Time Information System (OASIS) to share information about
available transmission capacity, and also requires the establishment
by each utility of standards of conduct for its transmission system
operation. The NOPR proposes to establish a new system for utilities
to use in reserving capacity on their own and other's transmission
lines.
On July 9, 1996, KU filed a new open access transmission tariff
with the FERC designed to comply with provisions of Order 888. Upon
acceptance by the FERC, the new tariff will supersede KU's existing
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KU ENERGY CORPORATION AND SUBSIDIARIES
KENTUCKY UTILITIES COMPANY
MANAGEMENTS' DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Transmission Services Tariff, which had been in effect since December
1994. The provisions of the tariff filed July 9, 1996, are similar to
the terms and conditions of service contained in KU's existing tariff.
KU is in the process of developing an OASIS and finalizing its
standards of conduct pursuant to Order 889. KU expects to meet the
FERC's November 1, 1996, deadline for implementation of these
requirements.
KU is also in the process of evaluating the FERC's NOPR which
rules, if adopted as proposed, would supersede KU's transmission
tariff filed July 9, 1996.
The Company believes that competition and change will continue
to impact the industry going forward. With utility rates that are
among the lowest in the Nation, KU believes it is well-positioned for
an increasingly competitive environment.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 2 of the Condensed Notes to Financial Statements,
Environmental Cost Recovery, for a discussion of KU's
environmental surcharge.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
KU Energy Corporation
At the April 23, 1996, Annual Meeting of Shareholders, the
following proposal was acted upon and approved.
To elect five Directors to the Board of Directors of the
Company.
Votes for Votes Withheld
Mira S. Ball 31,443,277 371,571
Carol M. Gatton 31,402,099 371,571
Frank V. Ramsey, Jr. 31,432,761 371,571
Charles L. Shearer 31,397,729 371,571
Lee T. Todd, Jr. 31,454,407 371,571
Kentucky Utilities Company
At the April 23, 1996, Annual Meeting of Shareholders, the
following proposal was acted upon and approved.
To elect five Directors to the Board of Directors of KU.
Votes for Votes Withheld
Mira S. Ball 37,817,878 0
Carol M. Gatton 37,817,878 0
Frank V. Ramsey, Jr. 37,817,878 0
Charles L. Shearer 37,817,878 0
Lee T. Todd, Jr. 37,817,878 0
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
The following exhibits are filed as part of this report:
Exhibit Number Description
4.01 By-laws of KU Energy Corporation dated
July 29, 1996
4.02 By-laws of Kentucky Utilities Company dated
July 29, 1996
27.01 Financial Data Schedule for KU Energy
27.02 Financial Data Schedule for KU
(Both required for electronic filing only in accordance
with Item 601(c)(1) of Regulation S-K.)
(b) Reports on Form 8-K.
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, KU Energy Corporation and Kentucky Utilities Company have
each duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KU ENERGY CORPORATION and
KENTUCKY UTILITIES COMPANY
(Registrants)
Date August 2, 1996 /s/ Michael R. Whitley
Michael R. Whitley
Chairman and President
Date August 2, 1996 /s/ Michael D. Robinson
Michael D. Robinson
Controller
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EXHIBIT 4.01
BY-LAWS
OF
KU ENERGY CORPORATION
Dated July 29, 1996
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BY-LAWS
OF
KU ENERGY CORPORATION
ARTICLE I
STOCK TRANSFERS
Section 1. Each holder of fully paid stock shall be entitled to a
certificate or certificates of stock stating the number and the class of
shares owned by such holder, provided that, the Board of Directors may, by
resolution, authorize the issue of some or all of the shares of any or all
classes or series of stock without certificates. All certificates of stock
shall, at the time of their issuance, be signed by the Chairman of the Board,
the President or a Vice-President and by the Secretary or Assistant Secretary,
and may be authenticated and registered by a duly appointed registrar. If the
stock certificate is authenticated by a registrar, the signatures of the
corporate officers may be facsimiles. In case any officer designated for the
purpose who has signed or whose facsimile signature has been used on any stock
certificate shall, from any cause, cease to be such officer before the
certificate has been delivered by the Company, the certificate may
nevertheless be adopted by the Company and be issued and delivered as though
the person had not ceased to be such officer.
Section 2. Shares of stock shall be transferable only on the books
of the Company and upon proper endorsement and surrender of the outstanding
certificates representing the same. If any outstanding certificate of stock
shall be lost, destroyed or stolen, the officers of the Company shall have
authority to cause a new certificate to be issued to replace such certificate
upon the receipt by the Company of satisfactory evidence that such certificate
has been lost, destroyed or stolen and of a bond of indemnity deemed
sufficient by the officers to protect the Company and any registrar and any
transfer agent of the Company against loss which may be sustained by reason of
issuing such new certificate to replace the certificate reported lost,
destroyed or stolen; and any transfer agent of the Company shall be authorized
to issue and deliver such new certificate and any registrar of the Company is
authorized to register such new certificate, upon written directions signed by
the Chairman of the Board, the President or a Vice-President and by the
Treasurer or the Secretary of the Company.
Section 3. All certificates representing each class of stock shall
be numbered and a record of each certificate shall be kept showing the name of
the person to whom the certificate was issued with the number and the class of
shares and the date thereof. All certificates exchanged or returned to the
Company shall be cancelled and an appropriate record made.
Section 4. The Board of Directors may fix a date not exceeding
seventy days preceding the date of any meeting of shareholders, or the date
fixed for the payment of any dividend or distribution, or the date of
allotment of rights, or, subject to contract rights with respect thereto, the
date when any change or conversion or exchange of shares shall be made or go
into effect, as a record date for the determination of the shareholders
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entitled to notice of and to vote at any such meeting, or entitled to receive
payment of any such dividend, or allotment of rights, or to exercise the
rights with respect to any such change, conversion or exchange of shares, and
in such case only shareholders of record on the date so fixed shall be
entitled to notice of and to vote at such meeting, or to receive payment of
such dividend or allotment of rights or to exercise such rights, as the case
may be, notwithstanding any transfer of shares on the books of the Company
after the record date fixed as aforesaid. The Board of Directors may close
the books of the Company against transfer of shares during the whole or any
part of such period. When a determination of shareholders entitled to notice
of and to vote at any meeting of shareholders has been made as provided in
this section, such determination shall apply to any adjournment thereof except
as otherwise provided by statute.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. An Annual Meeting of Stockholders of the Company shall
be held at such date and time as shall be designated from time to time by the
Board of Directors. Each such Annual Meeting shall be held at the principal
office of the Company in Kentucky or at such other place as the Board of
Directors may designate from time to time.
Section 2. Special meetings of the stockholders may be called by
the Board of Directors or by the holders of not less than 51% of all the votes
entitled to be cast on each issue proposed to be considered at the special
meeting, or in such other manner as may be provided by statute. Business
transacted at special meetings shall be confined to the purposes stated in the
notice of meeting.
Section 3. Notice of the time and place of each annual or special
meeting of stockholders shall be sent by mail to the recorded address of each
stockholder entitled to vote not less than ten or more than sixty days before
the date of the meeting, except in cases where other special method of notice
may be required by statute, in which case the statutory method shall be
followed. The notice of special meeting shall state the object of the
meeting. Notice of any meeting of the stockholders may be waived by any
stockholder.
Section 4. At an Annual Meeting of the Stockholders, only such
business shall be conducted as shall have been properly brought before the
meeting in accordance with the procedures set forth in these By-laws. To be
properly brought before the Annual Meeting, business must be (a) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the Board of Directors, (b) otherwise properly brought before the meeting
by or at the direction of the Board of Directors, or (c) otherwise be a proper
matter for consideration and otherwise be properly requested to be brought
before the meeting by a stockholder as hereinafter provided. For business to
be properly requested to be brought before an Annual Meeting by a stockholder,
a stockholder of a class of shares of the Company entitled to vote upon the
matter requested to be brought before the meeting (or his designated proxy as
provided below) must have given timely and proper notice thereof to the
Secretary. To be timely, a stockholder's notice must be given by personal
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delivery or mailed by United States mail, postage prepaid, and received by the
Secretary not fewer than sixty calendar days prior to the meeting; provided,
however, that in the event that the date of the meeting is not publicly
announced by mail, press release or otherwise or disclosed in a public report,
information statement, or other filing made with the Securities and Exchange
Commission, in either case, at least seventy calendar days prior to the
meeting, notice by the stockholder to be timely must be received by the
Secretary, as provided above, not later than the close of business on the
tenth day following the day on which such notice of the date of the meeting or
such public disclosure or filing was made. To be proper, a stockholder s
notice to the Secretary must be in writing and must set forth as to each
matter the stockholder proposes to bring before the Annual Meeting (a) a
description in reasonable detail of the business desired to be brought before
the Annual Meeting and the reasons for conducting such business at the Annual
Meeting, (b) the name and address, as they appear on the Company books, of the
stockholder proposing such business or granting a proxy to the proponent or an
intermediary, (c) a representation that the stockholder is a holder of record
of stock of the Company entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons
specified in the notice, (d) the name and address of the proponent, if the
holder of a proxy from a qualified stockholder of record, and the names and
addresses of any intermediate proxies, (e) the class and number of shares of
the Company which are beneficially owned by the stockholder, and (f) any
material interest of the stockholder or the proponent in such business. The
chairman of an Annual Meeting shall determine whether business was properly
brought before the meeting, which determination absent manifest error will be
conclusive for all purposes.
Section 5. The Chairman of the Board, if present, and in his
absence the President, and the Secretary of the Company, shall act as Chairman
and Secretary, respectively, at each stockholders meeting, unless otherwise
provided by the Board of Directors prior to the meeting. Unless otherwise
determined by the Board of Directors prior to the meeting, the Chairman of the
stockholders meeting shall determine the order of business and shall have the
authority in his discretion to regulate the conduct of any such meeting,
including, without limitation, by imposing restrictions on the persons (other
than stockholders of the Company or their duly appointed proxies) who may
attend any such stockholders meeting, by determining whether any stockholder
or his proxy may be excluded from any stockholders meeting based upon any
determination by the Chairman, in his sole discretion, that any such person
has unduly disrupted or is likely to disrupt the proceedings thereat, and by
regulating the circumstances in which any person may make a statement or ask
questions at any stockholders meeting.
Section 6. The Company shall be entitled to treat the holder of
record of any share or shares as the holder in fact thereof and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such share on the part of any other person whether or not it shall have
express or other notice thereof, except as expressly provided by law.
Section 7. The Board of Directors may postpone and reschedule any
previously scheduled annual or special meeting of stockholders and may adjourn
any convened meeting of stockholders to another date and time as specified by
the chairman of the meeting.
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ARTICLE III
BOARD OF DIRECTORS
Section 1. The Board of Directors shall consist of no more than
eleven and no less than nine members as determined from time to time by
resolution of the Board of Directors. The Directors shall be divided into
three groups, with each group containing one-third of the total, as near as
may be, to be elected and to serve staggered terms as provided in the Articles
of Incorporation of the Company. Except as otherwise expressly provided by
the Articles of Incorporation, the Board of Directors may accept resignations
of individual Directors and may fill, until the first annual election
thereafter and until the necessary election shall have taken place, vacancies
occurring at any time in the membership of the Board by death, resignation or
otherwise. Written notice of such resignation shall be made as provided by
law.
Section 2. Nominations for the election of directors may be made
by the Board of Directors or a committee appointed by the Board of Directors
or by any stockholder entitled to vote in the election of directors generally.
However, any stockholder entitled to vote in the election of directors
generally may nominate one or more persons for election as directors at a
meeting only if the stockholder has given timely and proper notice thereof to
the Secretary. To be timely, a stockholder s notice must be given by personal
delivery or mailed by United States mail, postage prepaid, and received by the
Secretary not fewer than sixty calendar days or more than ninety calendar days
prior to the meeting; provided, however, that in the event that the date of
the meeting is not publicly announced by mail, press release or otherwise or
disclosed in a public report, information statement or other filing made with
the Securities and Exchange Commission, in either case, at least seventy
calendar days prior to the meeting, notice by the stockholder to be timely
must be so received by the Secretary, as provided above, not later than the
close of business on the tenth day following the day on which such notice of
the date of the meeting or such public disclosure or filing was made. To be
proper, a stockholder s notice of nomination to the Secretary must be in
writing and must set forth as to each nominee: (a) the name and address, as
they appear on the Company books, of the stockholder who intends to make the
nomination or granting a proxy to the proponent or an intermediary; (b) the
name and address of the person or persons to be nominated; (c) a
representation that the stockholder is a holder of record of stock of the
Company entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting to nominate the person or persons specified in the
notice; (d) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the stockholder; (e) such other information regarding each nominee
proposed by such stockholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission, had the nominee been nominated, or intended to be nominated, by
the Board of Directors, provided that (i) such information does not in any way
violate any applicable Securities and Exchange Commission regulation,
including regulations concerning public availability of information, and
(ii) any information withheld on such basis shall be provided by separate
notice at such time as would not be in violation of any applicable Securities
and Exchange Commission regulation, such notice to be a supplement to the
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notice otherwise required herein; (f) the class and number of shares of the
Company which are beneficially owned by the stockholder; and (g) the signed
consent of each nominee to serve as a director of the Company if so elected.
Section 3. If the Chairman of the meeting for the election of
Directors determines that a nomination of any candidate for election as a
director at such meeting was not made in accordance with the applicable
provisions of these By-laws, such nomination shall be void.
Section 4. The Board of Directors may adopt such special rules and
regulations for the conduct of their meetings and the management of the
affairs of the Company as they may determine to be appropriate, not
inconsistent with law or these By-laws.
Section 5. A regular meeting of the Board of Directors shall be
held as soon as practicable after the annual meeting of stockholders in each
year. In addition, regular quarterly meetings of the Board may be held at the
general offices of the Company in Kentucky, or at such other place as shall be
specified in the notice of such meeting on the last Monday of January, July
and October in each year. Written notice of every regular meeting of the
Board, stating the time of day at which such meeting will be held, shall be
given to each Director not less than two days prior to the date of the
meeting. Such notice may be given personally in writing, or by telegraph or
other written means of electronic communication, or by depositing the same,
properly addressed, in the mail.
Section 6. Special meetings of the Board may be called at any time
by the Chairman of the Board, or the President, or by a Vice-President when
acting as President, or by any two Directors. Notice of such meeting, stating
the place, day and hour of the meeting shall be given to each Director not
less than one day prior to the date of the meeting. Such notice may be given
personally in writing, or by telegraph or other written means of electronic
communication, or by depositing the same, properly addressed, in the mail.
Section 7. Notice of any meeting of the Board may be waived by any
Director.
Section 8. A majority of the Board of Directors shall constitute a
quorum for the transaction of business at any meeting of the board, but a less
number may adjourn the meeting to some other day or sine die. The Board of
Directors shall keep minutes of their proceedings at their meetings. The
members of the Board may be paid such fees or compensations for their services
as Directors as the Board, from time to time, by resolution, may determine.
ARTICLE IV
COMMITTEES
Section 1. The Board of Directors may, by resolution passed by a
majority of the whole Board, appoint an Executive Committee of not less than
three members of the Board, including the Chairman of the Board, if there be
one, and the President of the Company. The Executive Committee may make its
own rules of procedure and elect its Chairman, and shall meet where and as
provided by such rules, or by resolution of the Board of Directors. A
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majority of the members of the Committee shall constitute a quorum for the
transaction of business. During the intervals between the meetings of the
Board of Directors, the Executive Committee shall have all the powers of the
Board in the management of the business and affairs of the Company except as
limited by statute, including power to authorize the seal of the Company to be
affixed to all papers which require it, and, by majority vote of all its
members, may exercise any and all such powers in such manner as such Committee
shall deem best for the interests of the Company, in all cases in which
specific directions shall not have been given by the Board of Directors. The
Executive Committee shall keep regular minutes of its proceedings and report
the same to the Board at meetings thereof.
Section 2. The Board of Directors may appoint other committees,
standing or special, from time to time from among their own number, or
otherwise, and confer powers on such committees, and revoke such powers and
terminate the existence of such committees at its pleasure.
Section 3. Meetings of any committee may be called in such manner
and may be held at such times and places as such committee may by resolution
determine, provided that a meeting of any committee may be called at any time
by the Chairman of the Board or by the President. Notice of such meeting,
stating the place, day and hour of the meeting shall be given to each Director
not less than one day prior to the meeting. Such notice may be given
personally in writing, or by telegraph or other written means of electronic
communication, or by depositing the same, properly addressed, in the mail.
Members of all committees may be paid such fees for attendance at meetings as
the Board of Directors may determine.
ARTICLE V
OFFICERS
Section 1. There shall be elected by the Board of Directors in
each year, and if practicable at its first meeting after the annual election
of Directors, the following principal officers, namely: a President, one or
more Vice-Presidents (any one or more of whom may be designated Executive
Vice-President or Senior Vice-President), a Secretary, a Treasurer, and a
Controller; and the Board may provide for and elect a Chairman of the Board
and such other officers and prescribe such duties for them as in its judgment
may, from time to time, be required to conduct the business of the Company.
If the Board shall elect a Chairman of the Board, the Board may, but need not,
designate the Chairman of the Board as the chief executive officer of the
Company. In absence of the election of a Chairman of the Board or any such
designation, the President shall be the chief executive officer of the
Company. All references in the By-laws of the Company to a Vice-President or
Vice-Presidents shall include any Executive Vice-President and any Senior
Vice-President. All officers, unless sooner removed, shall hold their
respective offices until the first meeting of the Board of Directors after the
next succeeding annual election of Directors, and until their successors,
willing to serve, shall have been elected, but any officer may be removed from
office at the pleasure of the Board.
Section 2. The chief executive officer of the Company (whether the
Chairman of the Board or the President) shall have responsibility for the
general management and direction, subject to the approval of the Board of
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Directors and of the Executive Committee, of the business of the Company,
including the power to appoint and to remove and discharge any and all agents
and employees of the Company not elected or appointed directly by the Board of
Directors. He shall have such other power and duties as usually devolve upon
the chief executive officer of the corporation and such further powers and
duties as may from time to time be prescribed by the Board of Directors.
Section 3. The Chairman of the Board, if there be one elected and
when present, shall preside at all meetings of the Board of Directors, and at
all meetings of the stockholders of the Company at which the stockholders
shall not choose some other person to preside. He shall be a member of the
Executive Committee, if there be one, and may attend any meeting of any
committee of the Board whether or not he is a member of such committee. The
Chairman of the Board, when requested so to do, shall give the President and
the Board of Directors of the Company the benefit of his advice and experience
with respect to the Company s affairs and, when not designated as the chief
executive officer, shall perform such other duties as may be delegated to him
by the Board of Directors.
Section 4. The President, when not designated as the chief
executive officer or when not acting as the chief executive officer, shall
have such other powers and duties as usually devolve upon the President of a
corporation and such further powers and duties as may from time to time be
prescribed by the Board of Directors or as may be delegated to him by the
Chairman of the Board. The President shall be a member of the Executive
Committee, if there be one, and may attend any meeting of any committee of the
Board whether or not he is a member of such committee. In the absence or
inability of the Chairman of the Board to act, if there be one elected, the
powers and duties of the Chairman of the Board (including those as chief
executive officer if he shall have been designated as such) shall temporarily
devolve upon the President. The President shall, unless a Chairman of the
Board shall have been elected and present, preside at all meetings of the
Board of Directors and at all meetings of the stockholders at which the
stockholders shall not choose some other person to preside. He may, with the
approval of the Board of Directors, appoint, to aid him in his duties, an
assistant to be known as Assistant to the President, and may assign to said
Assistant such duties as he shall think advisable and as shall not be
inconsistent with the By-laws of the Company.
Section 5. Each of the Vice-Presidents shall have such powers and
duties as may be prescribed for him by the Board of Directors, or be delegated
to him by the Chairman of the Board or the President. In the absence or
inability of the President, or in case of his death, resignation or removal
from office, the powers and duties of the President shall temporarily devolve
upon such of the Vice-Presidents as the Board shall have designated or shall
designate for the purpose, and the officer so designated shall have and
exercise all powers and duties of the President during such absence or
disability, or until the vacancy in the office of President shall be filled.
Section 6. The Secretary shall attend all meetings of the Board of
Directors and of the Executive Committee, shall keep a true and faithful
record thereof in proper books to be provided for that purpose, and shall have
the custody and care of the corporate seal, records, minutes and stock books
of the Company. He shall also act as Secretary of all stockholders meetings,
and keep a record thereof, except as some other person may be selected as
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Secretary or as may be prescribed for him by the Board or the Executive
Committee.
Section 7. The Treasurer shall have charge of, and be responsible
for, the collection, receipt, custody and disbursement of the funds of the
Company, and shall deposit its funds in the name of the Company in such banks,
trust companies, or safety vaults as he shall select, subject to the approval
of the chief executive officer. He shall have the custody of such books,
receipted vouchers and other books and papers as in the practical business
operations of the Company shall naturally belong in the office or custody of
the Treasurer, or shall be placed in his custody by the Board of Directors, by
the Executive Committee, by the Chairman of the Board, by the President, or by
any one of the Vice-Presidents when acting as or on behalf of the President.
He shall sign checks, drafts and other papers providing for the payment of
money by the Company for approved purposes in the usual course of business,
and shall have such other powers and duties as are commonly incidental to the
office of Treasurer, or as may be prescribed for him by the Board or the
Executive Committee. He may be required to give bond to the Company for the
faithful discharge of his duties in such form and to such amount and with such
sureties as shall be determined by the Board of Directors.
Section 8. The Controller shall have general supervision over all
books and accounts of the Company relating to receipts and disbursements, and
shall arrange the form of all vouchers, accounts, reports and returns required
by the various departments. He shall examine the accounts of all officers and
employees from time to time, and as often as practicable, and shall see that
proper returns are made of all receipts from all sources, and that correct
vouchers are turned over to him for all disbursements for any purpose. All
bills for the previous month, properly made in detail and certified, shall be
submitted to him, and he shall audit and approve the same if found
satisfactory and correct, but he shall not approve or audit any voucher unless
the charges covered by the voucher have been previously approved through
working order, requisition or otherwise by the head of the department in which
it originated or unless he shall be otherwise satisfied of its propriety and
correctness. He shall have full access to all contracts, correspondence and
other papers and records of the Company relating to its business matters, and
shall have the custody of its account books, original contracts, and other
papers relating to the accounts of the Company, except such as in the
practical business operations of the Company shall naturally belong in the
custody of the Treasurer, or shall be placed in his custody by the Board of
Directors, by the Executive Committee, by the Chairman of the Board, by the
President, or by one of the Vice-Presidents when acting as or on behalf of the
President. The Controller shall have such other powers and duties as are
commonly incidental to the office of Controller or as may be prescribed for
him. He may be required to give bond to the Company for the faithful
discharge of his duties in such form and to such amount and with such sureties
as shall be determined by the Board of Directors.
Section 9. Assistant Secretaries, Assistant Treasurers and
Assistant Controllers, when elected, shall, respectively, assist the
Secretary, Treasurer and Controller of the Company in the performance of their
respective duties assigned to such principal officers, and in assisting his
principal officer, each assistant officer shall, for such purpose, have the
same powers as his principal officer. The powers and duties of any such
principal officer, shall, except as otherwise ordered by the Board of
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Directors, temporarily devolve upon his assistant in case of the absence,
disability, death, resignation or removal from office of such principal
officer.
ARTICLE VI
MISCELLANEOUS
Section 1. The funds of the Company shall be deposited to its
credit in such banks or trust companies as are selected by the Treasurer,
subject to the approval of the chief executive officer. Such funds shall be
withdrawn only on checks or drafts of the Company for the purpose of the
Company, except that such funds may be withdrawn without the issuance of a
check or draft (a) to effect a transfer of funds between accounts maintained
by the Company at one or more depositaries; (b) to effect the withdrawal of
funds, pursuant to resolution of the Board of Directors, for the payment of
either commercial paper promissory notes of other entities or government
securities purchased by the Company; (c) to effect a withdrawal of funds by
the Company pursuant to the terms of any agreement or other document, approved
by the Board of Directors, which requires or contemplates payment or payments
by the Company by means other than a check or draft; or (d) to effect a
withdrawal of funds for such other purpose as the Board of Directors by
resolution shall provide. All checks and drafts of the Company shall be
signed in such manner and by such officer or officers or such individuals as
the Board of Directors, from time to time by resolution, shall determine.
Only checks and drafts so signed shall be valid checks or drafts of the
Company.
Section 2. No debt shall be contracted except for current expenses
unless authorized by the Board of Directors or the Executive Committee, and no
bills shall be paid by the Treasurer unless audited and approved by the
Controller or some other person or committee expressly authorized by the Board
of Directors or the Executive Committee, to audit and approve bills for
payment. All notes of the Company shall be executed by two different officers
of the Company. Either or both of such executions may be by facsimile.
Section 3. The fiscal year of the Company shall close at the end
of December annually.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS
Section 1. Unless prohibited by law, the Company shall indemnify
each of its Directors, officers, employees and agents against expenses
(including attorneys fees), judgments, taxes, fines and amounts paid in
settlement, incurred by such person in connection with, and shall advance
expenses (including attorneys fees) incurred by such person in defending any
threatened, pending or completed action, suit or proceeding (whether civil,
criminal, administrative or investigative) to which such person was, is, or is
threatened to be made a party by reason of the fact that such person is or was
a Director, officer, employee or agent of another domestic or foreign
corporation, partnership, joint venture, trust, other enterprise, or employee
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benefit plan. Advancement of expenses shall be made upon receipt of a written
statement of his good faith belief that he has met the standard of conduct as
required by statute and a written undertaking, with such security, if any, as
the Board may reasonably require, by or on behalf of the person seeking
indemnification, to repay amounts advanced if it shall ultimately be
determined that such person is not entitled to be indemnified by the Company.
Section 2. In addition (and not by way of limitation of) the
foregoing provisions of Section 1 of this Article VII and the provisions of
the Kentucky Business Corporation Act, each person (including the heirs,
executors, administrators and estate of such person) who is or was or had
agreed to become a Director, officer, employee or agent of the Company and
each person (including the heirs, executors, administrators and estate of such
person) who is or was serving or who had agreed to serve at the request of the
Directors or any officer of the Company as a Director, officer, employee,
trustee, partner or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise shall be indemnified by the
Company to the fullest extent permitted by the Kentucky Business Corporation
Act or any other applicable laws as presently or hereafter in effect. Without
limiting the generality or the effect of the foregoing, the Company is
authorized to enter into one or more agreements with any person which provide
for indemnification greater or different than that provided in this
Article VII. Any repeal or modification of this Article by the stockholders
of the Company shall not adversely affect any indemnification of any person
hereunder in respect of any act or omission occurring prior to the time of
such repeal or modification.
Section 3. The Company may purchase and maintain insurance on
behalf of any person who is or was entitled to indemnification as described
above, whether or not the Company would have the power or duty to indemnify
such person against such liability under this Article VII or applicable law.
Section 4. To the extent required by applicable law, any
indemnification of, or advance of expenses to, any person who is or was
entitled to indemnification as described above, if arising out of a proceeding
by or in the right of the Company, shall be reported in writing to the
stockholders with or before the notice of the next stockholders meeting.
Section 5. The indemnification provided by this Article VII:
(a) shall not be deemed exclusive of any other rights to which the Company s
Directors, officers, employees or agents may be entitled pursuant to the
Articles of Incorporation, any agreement of indemnity, as a matter of law or
otherwise; and (b) shall continue as to a person who has ceased to be a
Director, officer, employee or agent and shall inure to the benefit of such
person s heirs, executors and administrators.
ARTICLE VIII
AMENDMENT OR REPEAL OF BY-LAWS
These By-laws may be added to, amended or repealed at any meeting
of the Board of Directors, and may also be added to, amended or repealed by
the stockholders.
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EXHIBIT 4.02
BY-LAWS
OF
KENTUCKY UTILITIES COMPANY
Dated July 29, 1996
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BY-LAWS
OF
KENTUCKY UTILITIES COMPANY
ARTICLE I
STOCK TRANSFERS
Section 1. Each holder of fully paid stock shall be entitled to a
certificate or certificates of stock stating the number and the class of
shares owned by such holder, provided that, the Board of Directors may, by
resolution, authorize the issue of some or all of the shares of any or all
classes or series of stock without certificates. All certificates of stock
shall, at the time of their issuance, be signed by the Chairman of the Board,
the President or a Vice-President and by the Secretary or Assistant Secretary,
and may be authenticated and registered by a duly appointed registrar. If the
stock certificate is authenticated by a registrar, the signatures of the
corporate officers may be facsimiles. In case any officer designated for the
purpose who has signed or whose facsimile signature has been used on any stock
certificate shall, from any cause, cease to be such officer before the
certificate has been delivered by the Company, the certificate may
nevertheless be adopted by the Company and be issued and delivered as though
the person had not ceased to be such officer.
Section 2. Shares of stock shall be transferable only on the books
of the Company and upon proper endorsement and surrender of the outstanding
certificates representing the same. If any outstanding certificate of stock
shall be lost, destroyed or stolen, the officers of the Company shall have
authority to cause a new certificate to be issued to replace such certificate
upon the receipt by the Company of satisfactory evidence that such certificate
has been lost, destroyed or stolen and of a bond of indemnity deemed
sufficient by the officers to protect the Company and any registrar and any
transfer agent of the Company against loss which may be sustained by reason of
issuing such new certificate to replace the certificate reported lost,
destroyed or stolen; and any transfer agent of the Company shall be authorized
to issue and deliver such new certificate and any registrar of the Company is
authorized to register such new certificate, upon written directions signed by
the Chairman of the Board, the President or a Vice-President and by the
Treasurer or the Secretary of the Company.
Section 3. All certificates representing each class of stock shall
be numbered and a record of each certificate shall be kept showing the name of
the person to whom the certificate was issued with the number and the class of
shares and the date thereof. All certificates exchanged or returned to the
Company shall be cancelled and an appropriate record made.
Section 4. The Board of Directors may fix a date not exceeding
seventy days preceding the date of any meeting of shareholders, or the date
fixed for the payment of any dividend or distribution, or the date of
allotment of rights, or, subject to contract rights with respect thereto, the
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date when any change or conversion or exchange of shares shall be made or go
into effect, as a record date for the determination of the shareholders
entitled to notice of and to vote at any such meeting, or entitled to receive
payment of any such dividend, or allotment of rights, or to exercise the
rights with respect to any such change, conversion or exchange of shares, and
in such case only shareholders of record on the date so fixed shall be
entitled to notice of and to vote at such meeting, or to receive payment of
such dividend or allotment of rights or to exercise such rights, as the case
may be, notwithstanding any transfer of shares on the books of the Company
after the record date fixed as aforesaid. The Board of Directors may close
the books of the Company against transfer of shares during the whole or any
part of such period. When a determination of shareholders entitled to notice
of and to vote at any meeting of shareholders has been made as provided in
this section, such determination shall apply to any adjournment thereof except
as otherwise provided by statute.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. An Annual Meeting of Stockholders of the Company shall
be held at such date and time as shall be designated from time to time by the
Board of Directors. Each such Annual Meeting shall be held at the principal
office of the Company in Kentucky or at such other place as the Board of
Directors may designate from time to time.
Section 2. Special meetings of the stockholders may be called by
the Board of Directors or by the holders of not less than 51% of all the votes
entitled to be cast on each issue proposed to be considered at the special
meeting, or in such other manner as may be provided by statute. Business
transacted at special meetings shall be confined to the purposes stated in the
notice of meeting.
Section 3. Notice of the time and place of each annual or special
meeting of stockholders shall be sent by mail to the recorded address of each
stockholder entitled to vote not less than ten or more than sixty days before
the date of the meeting, except in cases where other special method of notice
may be required by statute, in which case the statutory method shall be
followed. The notice of special meeting shall state the object of the
meeting. Notice of any meeting of the stockholders may be waived by any
stockholder.
Section 4. At an Annual Meeting of the Stockholders, only such
business shall be conducted as shall have been properly brought before the
meeting in accordance with the procedures set forth in these By-laws. To be
properly brought before the Annual Meeting, business must be (a) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the Board of Directors, (b) otherwise properly brought before the meeting
by or at the direction of the Board of Directors, or (c) otherwise be a proper
matter for consideration and otherwise be properly requested to be brought
before the meeting by a stockholder as hereinafter provided. For business to
be properly requested to be brought before an Annual Meeting by a stockholder,
a stockholder of a class of shares of the Company entitled to vote upon the
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matter requested to be brought before the meeting (or his designated proxy as
provided below) must have given timely and proper notice thereof to the
Secretary. To be timely, a stockholder s notice must be given by personal
delivery or mailed by United States mail, postage prepaid, and received by the
Secretary not fewer than sixty calendar days prior to the meeting; provided,
however, that in the event that the date of the meeting is not publicly
announced by mail, press release or otherwise or disclosed in a public report,
information statement, or other filing made with the Securities and Exchange
Commission, in either case, at least seventy calendar days prior to the
meeting, notice by the stockholder to be timely must be received by the
Secretary, as provided above, not later than the close of business on the
tenth day following the day on which such notice of the date of the meeting or
such public disclosure or filing was made. To be proper, a stockholder s
notice to the Secretary must be in writing and must set forth as to each
matter the stockholder proposes to bring before the Annual Meeting (a) a
description in reasonable detail of the business desired to be brought before
the Annual Meeting and the reasons for conducting such business at the Annual
Meeting, (b) the name and address, as they appear on the Company books, of the
stockholder proposing such business or granting a proxy to the proponent or an
intermediary, (c) a representation that the stockholder is a holder of record
of stock of the Company entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons
specified in the notice, (d) the name and address of the proponent, if the
holder of a proxy from a qualified stockholder of record, and the names and
addresses of any intermediate proxies, (e) the class and number of shares of
the Company which are beneficially owned by the stockholder, and (f) any
material interest of the stockholder or the proponent in such business. The
chairman of an Annual Meeting shall determine whether business was properly
brought before the meeting, which determination absent manifest error will be
conclusive for all purposes.
Section 5. The Chairman of the Board, if present, and in his
absence the President, and the Secretary of the Company, shall act as Chairman
and Secretary, respectively, at each stockholders meeting, unless otherwise
provided by the Board of Directors prior to the meeting. Unless otherwise
determined by the Board of Directors prior to the meeting, the Chairman of the
stockholders meeting shall determine the order of business and shall have the
authority in his discretion to regulate the conduct of any such meeting,
including, without limitation, by imposing restrictions on the persons (other
than stockholders of the Company or their duly appointed proxies) who may
attend any such stockholders meeting, by determining whether any stockholder
or his proxy may be excluded from any stockholders meeting based upon any
determination by the Chairman, in his sole discretion, that any such person
has unduly disrupted or is likely to disrupt the proceedings thereat, and by
regulating the circumstances in which any person may make a statement or ask
questions at any stockholders meeting.
Section 6. The Company shall be entitled to treat the holder of
record of any share or shares as the holder in fact thereof and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such share on the part of any other person whether or not it shall have
express or other notice thereof, except as expressly provided by law.
Section 7. The Board of Directors may postpone and reschedule any
previously scheduled annual or special meeting of stockholders and may adjourn
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any convened meeting of stockholders to another date and time as specified by
the chairman of the meeting.
ARTICLE III
BOARD OF DIRECTORS
Section 1. The Board of Directors shall consist of no more than
eleven and no less than nine members as determined from time to time by
resolution of the Board of Directors. Subject to the special rights of the
holders of shares of the Preferred Stock and the holders of shares of the
Preference Stock to elect Directors as specified in the Articles of
Incorporation, the Directors shall be divided into three groups, with each
group containing one-third of the total, as near as may be, to be elected and
to serve staggered terms as provided in the Articles of Incorporation of the
Company. Except as otherwise expressly provided by the Articles of
Incorporation, the Board of Directors may accept resignations of individual
Directors and may fill, until the first annual election thereafter and until
the necessary election shall have taken place, vacancies occurring at any time
in the membership of the Board by death, resignation or otherwise. Written
notice of such resignation shall be made as provided by law.
Section 2. Nominations for the election of directors may be made
by the Board of Directors or a committee appointed by the Board of Directors
or by any stockholder entitled to vote in the election of directors generally.
However, any stockholder entitled to vote in the election of directors
generally may nominate one or more persons for election as directors at a
meeting only if the stockholder has given timely and proper notice thereof to
the Secretary. To be timely, a stockholder s notice must be given by personal
delivery or mailed by United States mail, postage prepaid, and received by the
Secretary not fewer than sixty calendar days or more than ninety calendar days
prior to the meeting; provided, however, that in the event that the date of
the meeting is not publicly announced by mail, press release or otherwise or
disclosed in a public report, information statement or other filing made with
the Securities and Exchange Commission, in either case, at least seventy
calendar days prior to the meeting, notice by the stockholder to be timely
must be so received by the Secretary, as provided above, not later than the
close of business on the tenth day following the day on which such notice of
the date of the meeting or such public disclosure or filing was made. To be
proper, a stockholder s notice of nomination to the Secretary must be in
writing and must set forth as to each nominee: (a) the name and address, as
they appear on the Company books, of the stockholder who intends to make the
nomination or granting a proxy to the proponent or an intermediary; (b) the
name and address of the person or persons to be nominated; (c) a
representation that the stockholder is a holder of record of stock of the
Company entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting to nominate the person or persons specified in the
notice; (d) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the stockholder; (e) such other information regarding each nominee
proposed by such stockholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission, had the nominee been nominated, or intended to be nominated, by
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the Board of Directors, provided that (i) such information does not in any way
violate any applicable Securities and Exchange Commission regulation,
including regulations concerning public availability of information, and
(ii) any information withheld on such basis shall be provided by separate
notice at such time as would not be in violation of any applicable Securities
and Exchange Commission regulation, such notice to be a supplement to the
notice otherwise required herein; (f) the class and number of shares of the
Company which are beneficially owned by the stockholder; and (g) the signed
consent of each nominee to serve as a director of the Company if so elected.
Section 3. If the Chairman of the meeting for the election of
Directors determines that a nomination of any candidate for election as a
director at such meeting was not made in accordance with the applicable
provisions of these By-laws, such nomination shall be void.
Section 4. The Board of Directors may adopt such special rules and
regulations for the conduct of their meetings and the management of the
affairs of the Company as they may determine to be appropriate, not
inconsistent with law or these By-laws.
Section 5. A regular meeting of the Board of Directors shall be
held as soon as practicable after the annual meeting of stockholders in each
year. In addition, regular quarterly meetings of the Board may be held at the
general offices of the Company in Kentucky, or at such other place as shall be
specified in the notice of such meeting on the last Monday of January, July
and October in each year. Written notice of every regular meeting of the
Board, stating the time of day at which such meeting will be held, shall be
given to each Director not less than two days prior to the date of the
meeting. Such notice may be given personally in writing, or by telegraph or
other written means of electronic communication, or by depositing the same,
properly addressed, in the mail.
Section 6. Special meetings of the Board may be called at any time
by the Chairman of the Board, or the President, or by a Vice-President when
acting as President, or by any two Directors. Notice of such meeting, stating
the place, day and hour of the meeting shall be given to each Director not
less than one day prior to the date of the meeting. Such notice may be given
personally in writing, or by telegraph or other written means of electronic
communication, or by depositing the same, properly addressed, in the mail.
Section 7. Notice of any meeting of the Board may be waived by any
Director.
Section 8. A majority of the Board of Directors shall constitute a
quorum for the transaction of business at any meeting of the board, but a less
number may adjourn the meeting to some other day or sine die. The Board of
Directors shall keep minutes of their proceedings at their meetings. The
members of the Board may be paid such fees or compensations for their services
as Directors as the Board, from time to time, by resolution, may determine.
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ARTICLE IV
COMMITTEES
Section 1. The Board of Directors may, by resolution passed by a
majority of the whole Board, appoint an Executive Committee of not less than
three members of the Board, including the Chairman of the Board, if there be
one, and the President of the Company. The Executive Committee may make its
own rules of procedure and elect its Chairman, and shall meet where and as
provided by such rules, or by resolution of the Board of Directors. A
majority of the members of the Committee shall constitute a quorum for the
transaction of business. During the intervals between the meetings of the
Board of Directors, the Executive Committee shall have all the powers of the
Board in the management of the business and affairs of the Company except as
limited by statute, including power to authorize the seal of the Company to be
affixed to all papers which require it, and, by majority vote of all its
members, may exercise any and all such powers in such manner as such Committee
shall deem best for the interests of the Company, in all cases in which
specific directions shall not have been given by the Board of Directors. The
Executive Committee shall keep regular minutes of its proceedings and report
the same to the Board at meetings thereof.
Section 2. The Board of Directors may appoint other committees,
standing or special, from time to time from among their own number, or
otherwise, and confer powers on such committees, and revoke such powers and
terminate the existence of such committees at its pleasure.
Section 3. Meetings of any committee may be called in such manner
and may be held at such times and places as such committee may by resolution
determine, provided that a meeting of any committee may be called at any time
by the Chairman of the Board or by the President. Notice of such meeting,
stating the place, day and hour of the meeting shall be given to each Director
not less than one day prior to the meeting. Such notice may be given
personally in writing, or by telegraph or other written means of electronic
communication, or by depositing the same, properly addressed, in the mail.
Members of all committees may be paid such fees for attendance at meetings as
the Board of Directors may determine.
ARTICLE V
OFFICERS
Section 1. There shall be elected by the Board of Directors in
each year, and if practicable at its first meeting after the annual election
of Directors, the following principal officers, namely: a President, one or
more Vice-Presidents (any one or more of whom may be designated Executive
Vice-President or Senior Vice-President), a Secretary, a Treasurer, and a
Controller; and the Board may provide for and elect a Chairman of the Board
and such other officers and prescribe such duties for them as in its judgment
may, from time to time, be required to conduct the business of the Company.
If the Board shall elect a Chairman of the Board, the Board may, but need not,
designate the Chairman of the Board as the chief executive officer of the
Company. In absence of the election of a Chairman of the Board or any such
designation, the President shall be the chief executive officer of the
Company. All references in the By-laws of the Company to a Vice-President or
Vice-Presidents shall include any Executive Vice-President and any Senior
Vice-President. All officers, unless sooner removed, shall hold their
respective offices until the first meeting of the Board of Directors after the
next succeeding annual election of Directors, and until their successors,
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willing to serve, shall have been elected, but any officer may be removed from
office at the pleasure of the Board.
Section 2. The chief executive officer of the Company (whether the
Chairman of the Board or the President) shall have responsibility for the
general management and direction, subject to the approval of the Board of
Directors and of the Executive Committee, of the business of the Company,
including the power to appoint and to remove and discharge any and all agents
and employees of the Company not elected or appointed directly by the Board of
Directors. He shall have such other power and duties as usually devolve upon
the chief executive officer of the corporation and such further powers and
duties as may from time to time be prescribed by the Board of Directors.
Section 3. The Chairman of the Board, if there be one elected and
when present, shall preside at all meetings of the Board of Directors, and at
all meetings of the stockholders of the Company at which the stockholders
shall not choose some other person to preside. He shall be a member of the
Executive Committee, if there be one, and may attend any meeting of any
committee of the Board whether or not he is a member of such committee. The
Chairman of the Board, when requested so to do, shall give the President and
the Board of Directors of the Company the benefit of his advice and experience
with respect to the Company s affairs and, when not designated as the chief
executive officer, shall perform such other duties as may be delegated to him
by the Board of Directors.
Section 4. The President, when not designated as the chief
executive officer or when not acting as the chief executive officer, shall
have such other powers and duties as usually devolve upon the President of a
corporation and such further powers and duties as may from time to time be
prescribed by the Board of Directors or as may be delegated to him by the
Chairman of the Board. The President shall be a member of the Executive
Committee, if there be one, and may attend any meeting of any committee of the
Board whether or not he is a member of such committee. In the absence or
inability of the Chairman of the Board to act, if there be one elected, the
powers and duties of the Chairman of the Board (including those as chief
executive officer if he shall have been designated as such) shall temporarily
devolve upon the President. The President shall, unless a Chairman of the
Board shall have been elected and present, preside at all meetings of the
Board of Directors and at all meetings of the stockholders at which the
stockholders shall not choose some other person to preside. He may, with the
approval of the Board of Directors, appoint, to aid him in his duties, an
assistant to be known as Assistant to the President, and may assign to said
Assistant such duties as he shall think advisable and as shall not be
inconsistent with the By-laws of the Company.
Section 5. Each of the Vice-Presidents shall have such powers and
duties as may be prescribed for him by the Board of Directors, or be delegated
to him by the Chairman of the Board or the President. In the absence or
inability of the President, or in case of his death, resignation or removal
from office, the powers and duties of the President shall temporarily devolve
upon such of the Vice-Presidents as the Board shall have designated or shall
designate for the purpose, and the officer so designated shall have and
exercise all powers and duties of the President during such absence or
disability, or until the vacancy in the office of President shall be filled.
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Section 6. The Secretary shall attend all meetings of the Board of
Directors and of the Executive Committee, shall keep a true and faithful
record thereof in proper books to be provided for that purpose, and shall have
the custody and care of the corporate seal, records, minutes and stock books
of the Company. He shall also act as Secretary of all stockholders meetings,
and keep a record thereof, except as some other person may be selected as
Secretary or as may be prescribed for him by the Board or the Executive
Committee.
Section 7. The Treasurer shall have charge of, and be responsible
for, the collection, receipt, custody and disbursement of the funds of the
Company, and shall deposit its funds in the name of the Company in such banks,
trust companies, or safety vaults as he shall select, subject to the approval
of the chief executive officer. He shall have the custody of such books,
receipted vouchers and other books and papers as in the practical business
operations of the Company shall naturally belong in the office or custody of
the Treasurer, or shall be placed in his custody by the Board of Directors, by
the Executive Committee, by the Chairman of the Board, by the President, or by
any one of the Vice-Presidents when acting as or on behalf of the President.
He shall sign checks, drafts and other papers providing for the payment of
money by the Company for approved purposes in the usual course of business,
and shall have such other powers and duties as are commonly incidental to the
office of Treasurer, or as may be prescribed for him by the Board or the
Executive Committee. He may be required to give bond to the Company for the
faithful discharge of his duties in such form and to such amount and with such
sureties as shall be determined by the Board of Directors.
Section 8. The Controller shall have general supervision over all
books and accounts of the Company relating to receipts and disbursements, and
shall arrange the form of all vouchers, accounts, reports and returns required
by the various departments. He shall examine the accounts of all officers and
employees from time to time, and as often as practicable, and shall see that
proper returns are made of all receipts from all sources, and that correct
vouchers are turned over to him for all disbursements for any purpose. All
bills for the previous month, properly made in detail and certified, shall be
submitted to him, and he shall audit and approve the same if found
satisfactory and correct, but he shall not approve or audit any voucher unless
the charges covered by the voucher have been previously approved through
working order, requisition or otherwise by the head of the department in which
it originated or unless he shall be otherwise satisfied of its propriety and
correctness. He shall have full access to all contracts, correspondence and
other papers and records of the Company relating to its business matters, and
shall have the custody of its account books, original contracts, and other
papers relating to the accounts of the Company, except such as in the
practical business operations of the Company shall naturally belong in the
custody of the Treasurer, or shall be placed in his custody by the Board of
Directors, by the Executive Committee, by the Chairman of the Board, by the
President, or by one of the Vice-Presidents when acting as or on behalf of the
President. The Controller shall have such other powers and duties as are
commonly incidental to the office of Controller or as may be prescribed for
him. He may be required to give bond to the Company for the faithful
discharge of his duties in such form and to such amount and with such sureties
as shall be determined by the Board of Directors.
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Section 9. Assistant Secretaries, Assistant Treasurers and
Assistant Controllers, when elected, shall, respectively, assist the
Secretary, Treasurer and Controller of the Company in the performance of their
respective duties assigned to such principal officers, and in assisting his
principal officer, each assistant officer shall, for such purpose, have the
same powers as his principal officer. The powers and duties of any such
principal officer, shall, except as otherwise ordered by the Board of
Directors, temporarily devolve upon his assistant in case of the absence,
disability, death, resignation or removal from office of such principal
officer.
ARTICLE VI
MISCELLANEOUS
Section 1. The funds of the Company shall be deposited to its
credit in such banks or trust companies as are selected by the Treasurer,
subject to the approval of the chief executive officer. Such funds shall be
withdrawn only on checks or drafts of the Company for the purpose of the
Company, except that such funds may be withdrawn without the issuance of a
check or draft (a) to effect a transfer of funds between accounts maintained
by the Company at one or more depositaries; (b) to effect the withdrawal of
funds, pursuant to resolution of the Board of Directors, for the payment of
either commercial paper promissory notes of other entities or government
securities purchased by the Company; (c) to effect a withdrawal of funds by
the Company pursuant to the terms of any agreement or other document, approved
by the Board of Directors, which requires or contemplates payment or payments
by the Company by means other than a check or draft; or (d) to effect a
withdrawal of funds for such other purpose as the Board of Directors by
resolution shall provide. All checks and drafts of the Company shall be
signed in such manner and by such officer or officers or such individuals as
the Board of Directors, from time to time by resolution, shall determine.
Only checks and drafts so signed shall be valid checks or drafts of the
Company.
Section 2. No debt shall be contracted except for current expenses
unless authorized by the Board of Directors or the Executive Committee, and no
bills shall be paid by the Treasurer unless audited and approved by the
Controller or some other person or committee expressly authorized by the Board
of Directors or the Executive Committee, to audit and approve bills for
payment. All notes of the Company shall be executed by two different officers
of the Company. Either or both of such executions may be by facsimile.
Section 3. The fiscal year of the Company shall close at the end
of December annually.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS
Section 1. Unless prohibited by law, the Company shall indemnify
each of its Directors, officers, employees and agents against expenses
(including attorneys fees), judgments, taxes, fines and amounts paid in
-44-
<PAGE>
settlement, incurred by such person in connection with, and shall advance
expenses (including attorneys fees) incurred by such person in defending any
threatened, pending or completed action, suit or proceeding (whether civil,
criminal, administrative or investigative) to which such person was, is, or is
threatened to be made a party by reason of the fact that such person is or was
a Director, officer, employee or agent of another domestic or foreign
corporation, partnership, joint venture, trust, other enterprise, or employee
benefit plan. Advancement of expenses shall be made upon receipt of a written
statement of his good faith belief that he has met the standard of conduct as
required by statute and a written undertaking, with such security, if any, as
the Board may reasonably require, by or on behalf of the person seeking
indemnification, to repay amounts advanced if it shall ultimately be
determined that such person is not entitled to be indemnified by the Company.
Section 2. In addition (and not by way of limitation of) the
foregoing provisions of Section 1 of this Article VII and the provisions of
the Kentucky Business Corporation Act, each person (including the heirs,
executors, administrators and estate of such person) who is or was or had
agreed to become a Director, officer, employee or agent of the Company and
each person (including the heirs, executors, administrators and estate of such
person) who is or was serving or who had agreed to serve at the request of the
Directors or any officer of the Company as a Director, officer, employee,
trustee, partner or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise shall be indemnified by the
Company to the fullest extent permitted by the Kentucky Business Corporation
Act or any other applicable laws as presently or hereafter in effect. Without
limiting the generality or the effect of the foregoing, the Company is
authorized to enter into one or more agreements with any person which provide
for indemnification greater or different than that provided in this
Article VII. Any repeal or modification of this Article by the stockholders
of the Company shall not adversely affect any indemnification of any person
hereunder in respect of any act or omission occurring prior to the time of
such repeal or modification.
Section 3. The Company may purchase and maintain insurance on
behalf of any person who is or was entitled to indemnification as described
above, whether or not the Company would have the power or duty to indemnify
such person against such liability under this Article VII or applicable law.
Section 4. To the extent required by applicable law, any
indemnification of, or advance of expenses to, any person who is or was
entitled to indemnification as described above, if arising out of a proceeding
by or in the right of the Company, shall be reported in writing to the
stockholders with or before the notice of the next stockholders meeting.
Section 5. The indemnification provided by this Article VII:
(a) shall not be deemed exclusive of any other rights to which the Company s
Directors, officers, employees or agents may be entitled pursuant to the
Articles of Incorporation, any agreement of indemnity, as a matter of law or
otherwise; and (b) shall continue as to a person who has ceased to be a
Director, officer, employee or agent and shall inure to the benefit of such
person s heirs, executors and administrators.
-45-
<PAGE>
ARTICLE VIII
AMENDMENT OR REPEAL OF BY-LAWS
These By-laws may be added to, amended or repealed at any meeting
of the Board of Directors, and may also be added to, amended or repealed by
the stockholders.
-46-
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1996 AND THE CONSOLIDATED STATEMENTS
OF INCOME AND CASH FLOWS FOR THE PERIOD ENDED JUNE 30, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q QUARTERLY REPORT.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,464,789
<OTHER-PROPERTY-AND-INVEST> 43,497
<TOTAL-CURRENT-ASSETS> 169,890
<TOTAL-DEFERRED-CHARGES> 36,637
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,714,813
<COMMON> 308,140
<CAPITAL-SURPLUS-PAID-IN> (594)
<RETAINED-EARNINGS> 330,934
<TOTAL-COMMON-STOCKHOLDERS-EQ> 638,480
0
40,000
<LONG-TERM-DEBT-NET> 546,373
<SHORT-TERM-NOTES> 40,700
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 21
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 449,239
<TOT-CAPITALIZATION-AND-LIAB> 1,714,813
<GROSS-OPERATING-REVENUE> 358,500
<INCOME-TAX-EXPENSE> 25,336
<OTHER-OPERATING-EXPENSES> 275,211
<TOTAL-OPERATING-EXPENSES> 300,547
<OPERATING-INCOME-LOSS> 57,953
<OTHER-INCOME-NET> 5,546
<INCOME-BEFORE-INTEREST-EXPEN> 63,499
<TOTAL-INTEREST-EXPENSE> 21,107
<NET-INCOME> 42,392
0
<EARNINGS-AVAILABLE-FOR-COMM> 42,392
<COMMON-STOCK-DIVIDENDS> 32,523
<TOTAL-INTEREST-ON-BONDS> 18,937
<CASH-FLOW-OPERATIONS> 89,051
<EPS-PRIMARY> 1.12
<EPS-DILUTED> 1.12
</TABLE>
