SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1 - 10568
LG&E ENERGY CORP.
(Exact name of registrant as specified in its charter)
Kentucky 61 - 1174555
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
220 West Main Street 40232
P.O. Box 32030 (Zip Code)
Louisville, KY
(Address of principal executive offices)
(502) 627-2000
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. 33,051,848 shares, without
par value, as of July 31, 1995.
Part I. Financial Information - Item 1. Financial Statements
LG&E Energy Corp. and Subsidiaries
Statements of Income
(Unaudited - Thousands of $ Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
REVENUES:
Electric utility (Note 3). . . . .$142,454 $143,368 $266,101 $266,786
Gas utility. . . . . . . . . . . . 25,480 29,769 101,455 126,131
Non-utility (Note 2) . . . . . . . 81,123 19,217 89,602 43,899
Total revenues. . . . . . . . . 249,057 192,354 457,158 436,816
COST OF REVENUES:
Fuel and power purchased . . . . . 36,837 40,484 69,495 77,104
Gas supply expenses. . . . . . . . 13,594 18,447 61,961 85,846
Non-utility (Note 2) . . . . . . . 77,599 16,679 85,580 37,437
Total cost of revenues. . . . . 128,030 75,610 217,036 200,387
Gross profit. . . . . . . . . . . . 121,027 116,744 240,122 236,429
OPERATING EXPENSES:
Operation and maintenance. . . . . 61,698 57,720 118,629 116,772
Depreciation and amortization. . . 23,283 21,109 45,112 42,074
Non-recurring charges (Note 4) . . - - - 48,743
Total operating expenses. . . . . 84,981 78,829 163,741 207,589
Equity in earnings of
joint ventures (Note 9). . . . . . 16,422 3,136 20,531 5,680
OPERATING INCOME. . . . . . . . . . 52,468 41,051 96,912 34,520
Other income and (deduc-
tions) (Note 11) . . . . . . . . . 1,503 7,165 2,327 6,324
Contribution to charitable
foundation (Note 4). . . . . . . . - - - 15,000
Interest charges. . . . . . . . . . 12,185 10,714 23,666 21,311
Income from continuing oper-
ations before income taxes . . . . 41,786 37,502 75,573 4,533
Income taxes. . . . . . . . . . . . 15,509 14,029 27,987 (354)
Income from continuing oper-
ations before preferred
dividends. . . . . . . . . . . . .$ 26,277 $ 23,473 $ 47,586 $ 4,887
LG&E Energy Corp. and Subsidiaries
Statements of Income (cont.)
(Unaudited - Thousands of $ Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Income from continuing oper-
ations before preferred
dividends. . . . . . . . . . . . .$ 26,277 $ 23,473 $ 47,586 $ 4,887
Preferred dividends . . . . . . . . 1,627 1,380 3,244 2,758
INCOME FROM CONTINUING
OPERATIONS . . . . . . . . . . . . 24,650 22,093 44,342 2,129
Gain on sale of discontinued
operations, net of income
taxes of $35,048 (Note 12) . . . . - - - 51,805
Income before cumulative effect of
change in accounting principle . . 24,650 22,093 44,342 53,934
Cumulative effect of change
in accounting principle, net of
income taxes of $2,280 (Note 5). . - - - (3,369)
NET INCOME. . . . . . . . . . . . .$ 24,650 $ 22,093 $ 44,342 $ 50,565
Average common shares
outstanding. . . . . . . . . . . . 33,051 32,988 33,039 32,978
EARNINGS PER SHARE:
Continuing operations. . . . . . .$ .75 $ .67 $ 1.34 $ .06
Gain on sale of discontinued
operations. . . . . . . . . . . . - - - 1.57
Cumulative effect of accounting
change. . . . . . . . . . . . . . - - - (.10)
Total earnings per share. . . .$ .75 $ .67 $ 1.34 $ 1.53
LG&E Energy Corp. and Subsidiaries
Balance Sheets
(Unaudited)
(Thousands of $)
ASSETS
June 30, Dec. 31,
1995 1994
UTILITY PLANT:
At original cost . . . . . . . . . . . . . . . . . .$2,569,555 $2,537,895
Less: reserve for depreciation. . . . . . . . . . . 918,133 881,861
Net utility plant . . . . . . . . . . . . . . . . . 1,651,422 1,656,034
OTHER PROPERTY AND INVESTMENTS - less reserve:
Investments in affiliates (Note 9) . . . . . . . . . 113,711 115,420
Non-utility property and plant, net (Note 2) . . . . 169,008 2,802
Other (Note 2) . . . . . . . . . . . . . . . . . . . 51,729 50,681
Total other property and investments. . . . . . . . 334,448 168,903
CURRENT ASSETS:
Cash and temporary cash investments. . . . . . . . . 84,915 49,407
Marketable securities. . . . . . . . . . . . . . . . 29,231 89,431
Accounts receivable - less reserve . . . . . . . . . 178,648 97,927
Materials and supplies - at average cost:
Fuel (predominantly coal) . . . . . . . . . . . . . 10,225 13,869
Gas stored underground. . . . . . . . . . . . . . . 19,526 31,354
Other . . . . . . . . . . . . . . . . . . . . . . . 36,635 37,299
Prepayments and other. . . . . . . . . . . . . . . . 6,316 4,020
Total current assets. . . . . . . . . . . . . . . . 365,496 323,307
DEFERRED DEBITS AND OTHER ASSETS:
Unamortized debt expense . . . . . . . . . . . . . . 7,844 7,776
Regulatory assets. . . . . . . . . . . . . . . . . . 31,817 31,726
Goodwill, net (Note 2) . . . . . . . . . . . . . . . 47,824 14,881
Other. . . . . . . . . . . . . . . . . . . . . . . . 14,376 14,837
Total deferred debits and other assets. . . . . . . 101,861 69,220
Total assets. . . . . . . . . . . . . . . . . . .$2,453,227 $2,217,464
LG&E Energy Corp. and Subsidiaries
Balance Sheets (cont.)
(Unaudited)
(Thousands of $)
CAPITAL AND LIABILITIES
June 30, Dec. 31,
1995 1994
CAPITALIZATION:
Common stock, without par value -
Authorized 75,000,000 shares;
outstanding 33,051,848 shares
and 33,015,951 shares . . . . . . . . . . . . . . .$ 462,226 $ 460,980
Common stock expense . . . . . . . . . . . . . . . . (917) (914)
Unrealized loss on marketable
securities, net of income
taxes of $396 and $2,980. . . . . . . . . . . . . . (662) (4,623)
Retained earnings. . . . . . . . . . . . . . . . . . 315,885 307,072
Total common equity . . . . . . . . . . . . . . . . 776,532 762,515
Cumulative preferred stock . . . . . . . . . . . . . 116,716 116,716
Long-term debt (Note 6). . . . . . . . . . . . . . . 646,854 662,862
Total capitalization. . . . . . . . . . . . . . . . 1,540,102 1,542,093
CURRENT LIABILITIES:
Long-term debt due within one year . . . . . . . . . 16,000 -
Notes payable (Note 10). . . . . . . . . . . . . . . 139,000 32,000
Accounts payable . . . . . . . . . . . . . . . . . . 149,346 78,254
Common dividends declared. . . . . . . . . . . . . . 17,765 17,746
Accrued taxes. . . . . . . . . . . . . . . . . . . . 18,252 15,747
Accrued interest . . . . . . . . . . . . . . . . . . 12,165 13,428
Other. . . . . . . . . . . . . . . . . . . . . . . . 41,690 34,218
Total current liabilities . . . . . . . . . . . . . 394,218 191,393
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income
taxes (Note 7). . . . . . . . . . . . . . . . . . . 254,318 269,828
Investment tax credit, in
process of amortization . . . . . . . . . . . . . . 86,339 88,779
Accumulated provision for pensions
and related benefits. . . . . . . . . . . . . . . . 41,094 48,126
Customers' advances for construction . . . . . . . . 9,166 8,621
Regulatory liability (Note 7). . . . . . . . . . . . 61,403 8,914
Other. . . . . . . . . . . . . . . . . . . . . . . . 66,587 59,710
Total deferred credits and other liabilities. . . . 518,907 483,978
Total capital and liabilities . . . . . . . . . .$2,453,227 $2,217,464
LG&E Energy Corp. and Subsidiaries
Statements of Cash Flows
(Unaudited - Thousands of $)
Six Months Ended
June 30,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . .$ 44,342 $ 50,565
Items not requiring cash currently:
Cumulative effect of change
in accounting principle . . . . . . . . . . . . . - 3,369
Non-recurring charges . . . . . . . . . . . . . . . - 48,743
Depreciation and amortization . . . . . . . . . . . 45,112 42,074
Deferred income taxes - net . . . . . . . . . . . . 8,567 (19,277)
Investment tax credit - net . . . . . . . . . . . . (2,440) (2,378)
Undistributed earnings of joint ventures. . . . . . 14,184 (2,180)
Gain on sale of discontinued operations . . . . . . - (90,878)
Other . . . . . . . . . . . . . . . . . . . . . . . 2,529 13,299
(Increases) decreases in net current assets:
Accounts receivable . . . . . . . . . . . . . . . . (26,144) 21,887
Materials and supplies. . . . . . . . . . . . . . . 21,768 19,539
Accounts payable. . . . . . . . . . . . . . . . . . 1,880 (21,777)
Accrued taxes . . . . . . . . . . . . . . . . . . . 2,505 14,357
Accrued interest. . . . . . . . . . . . . . . . . . (1,263) 325
Prepayments and other . . . . . . . . . . . . . . . (2,437) (11,212)
Other. . . . . . . . . . . . . . . . . . . . . . . . (8,498) (4,606)
Net cash provided by operating activities . . . . . 100,105 61,850
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities. . . . . . . . . . . . . . . (136,779) (218,382)
Proceeds from sales of securities. . . . . . . . . . 215,994 87,060
Construction expenditures. . . . . . . . . . . . . . (39,008) (37,864)
Investment in affiliates . . . . . . . . . . . . . . (12,475) (20,400)
Acquisition of Hadson Corporation, net of cash and
temporary cash investments acquired (Note 2). . . . (146,104) -
Proceeds from sale of discontinued operations. . . . - 170,000
Net cash used for investing activities. . . . . . .$(118,372) $ (19,586)
LG&E Energy Corp. and Subsidiaries
Statements of Cash Flows (cont.)
(Unaudited - Thousands of $)
Six Months Ended
June 30,
1995 1994
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock . . . . . . . . . . . . . .$ 1,243 $ 1,149
Issuance of pollution control bonds. . . . . . . . . 39,959 -
Retirement of pollution control bonds
and other long-term debt. . . . . . . . . . . . . . (43,600) -
Repayment of short-term borrowings . . . . . . . . . (35,292) (20,000)
Short-term borrowings. . . . . . . . . . . . . . . . 126,975 -
Payment of common dividends. . . . . . . . . . . . . (35,510) (34,291)
Net cash provided by (used for)
financing activities . . . . . . . . . . . . . . . 53,775 (53,142)
NET INCREASE (DECREASE) IN CASH AND
TEMPORARY CASH INVESTMENTS . . . . . . . . . . . . . 35,508 (10,878)
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF PERIOD. . . . . . . . . . . . . . . . . 49,407 67,377
CASH AND TEMPORARY CASH INVESTMENTS AT
END OF PERIOD. . . . . . . . . . . . . . . . . . . .$ 84,915 $ 56,499
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Income taxes. . . . . . . . . . . . . . . . . . .$ 20,521 $ 47,908
Interest on borrowed money. . . . . . . . . . . . 24,107 20,381
For the purposes of these statements, all temporary cash investments purchased
with a maturity of three months or less are considered cash equivalents.
LG&E Energy Corp. and Subsidiaries
Statements of Retained Earnings
(Unaudited)
(Thousands of $)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Balance at beginning of period. . . $309,000 $282,924 $307,072 $271,606
Net income. . . . . . . . . . . . . 24,650 22,093 44,342 50,565
Subtotal . . . . . . . . . . . . . 333,650 305,017 351,414 322,171
Cash dividends declared on
common stock ($.5375, $.52,
$1.075 and $1.04 per share). . . . 17,765 17,154 35,529 34,308
Balance at end of period. . . . . . $315,885 $287,863 $315,885 $287,863
LG&E Energy Corp. and Subsidiaries
Notes to Financial Statements
(Unaudited)
1. The unaudited consolidated financial statements include the accounts of
LG&E Energy Corp. and its wholly-owned subsidiaries - Louisville Gas and
Electric Company (LG&E), LG&E Energy Systems Inc. (Energy Systems) and
LG&E Gas Systems Inc. (Gas Systems), collectively referred to as the
"Company." Gas Systems, which was formed in 1995, directs the Company's
natural gas marketing and related businesses.
In the opinion of management, all adjustments have been made to present
fairly the consolidated financial position, results of operations and cash
flows for the periods indicated. Certain information and footnote disclo-
sures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or
omitted pursuant to SEC rules and regulations, although the Company
believes that the disclosures contained herein are adequate to make the
information presented not misleading. Certain amounts in the statements
of income and cash flows for the three- and six-month periods ended June
30, 1994, have been reclassified to be consistent with the presentation
for the three- and six-month periods ended June 30, 1995, with no impact
on previously reported net income or earnings per share. Also, certain
amounts in the balance sheet as of December 31, 1994, have been reclassi-
fied to be consistent with the balance sheet as of June 30, 1995.
These financial statements should be read in conjunction with the finan-
cial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the year 1994.
2. On May 15, 1995, Gas Systems acquired all of the outstanding common stock
of Hadson Corporation (Hadson), a Dallas-based natural gas marketing,
gathering and processing company, for $143 million, plus transaction-
related costs and expenses. The Company accounted for the acquisition as
a purchase, and the purchase price was allocated to the assets and
liabilities acquired based on their estimated fair values. Approximately
$33.4 million of goodwill was recorded and has been allocated to Hadson's
lines of business. Accordingly, the goodwill is being amortized using the
straight-line method over periods ranging from seven to 24 years.
A summary of the estimated fair value of the net assets acquired follows
(amounts in thousands of dollars):
Fair value of assets acquired $279,534
Liabilities assumed 136,423
Cash paid, excluding
transaction costs 143,111
Cash and equivalents acquired 4,924
Net cash paid, excluding
transaction costs 138,187
Transaction costs 7,917
Net cash paid $146,104
Hadson's natural gas gathering and transportation facilities are depreci-
ated using the straight-line method over periods that do not exceed the
expected life of the underlying natural gas reserves, which range from 20
to 25 years. Depreciation of Hadson's other property and equipment is
provided using the straight-line method over a useful life of three years.
All of Hadson's property and equipment is included in non-utility property
and plant in the balance sheet as of June 30, 1995. The fair value
assigned to certain gas contracts as part of the purchase price allocation
will be amortized using the straight-line method over seven years. The
contracts are included in other property and investments in the balance
sheet as of June 30, 1995.
Hadson's results of operations have been included in the Company's results
of operations since the date of acquisition. Non-utility revenues in the
Company's statements of income for the three- and six-month periods ended
June 30, 1995, include Hadson's revenues since the date of acquisition of
$73.5 million. Hadson's operations did not have a material impact on
consolidated gross profits or operating income for the three- and six-
month periods ended June 30, 1995.
Hadson's accounts receivable relate primarily to sales of energy products
and services in the United States to end-user and utility markets. Credit
terms, typical of industry standards, are of a short-term nature.
Hadson enters into hedging activities including futures contracts and swap
agreements (discussed below) primarily for the purpose of hedging price
risks of natural gas associated with certain firm purchase and sales
commitments. Gains and losses on hedges of existing assets or liabilities
are included in the carrying amounts of those assets or liabilities and
ultimately recognized in income as part of those carrying amounts. Gains
and losses related to qualifying hedges of firm commitments or anticipated
transactions are also deferred and are recognized in income or as adjust-
ments of carrying amounts when the hedged transaction occurs. Speculative
futures trading was an immaterial activity in the periods presented in the
accompanying financial statements.
At June 30, 1995, Hadson had exchange-traded futures contracts with
maturities of July 1995 through September 1996, covering 48,100,000 MMBtu
of natural gas. Such contracts are typically settled in cash. Deferred
losses related to exchange-traded futures contracts were immaterial at
June 30, 1995.
Hadson also has fixed-price and basis swap agreements in place for July
1995 through December 1998 which are settled through cash payments.
Hadson has fixed-price swap agreements in place on 25,352,714 MMBtu of
natural gas. Basis swap agreements are used to supplement the futures
contracts or fixed-price swap agreements and are in place on 43,100,797
MMBtu of natural gas. Management expects profits on the physical sales of
gas relating to these agreements to exceed the unrealized losses on all
swap agreements. Deferred losses related to closed swap agreements were
immaterial at June 30, 1995.
Hadson remains at risk for possible changes in the market value of hedging
instruments; however, such risk should be mitigated by price changes in
the underlying hedged item. Hadson is also exposed to credit-related
losses in the event of nonperformance by counterparties to the commodity
swap agreements. The credit worthiness of counterparties is subject to
continuing review, and full performance is anticipated.
When acquired by the Company, Hadson had a total of $71 million of net
operating loss carryforwards available under Internal Revenue Code
limitations. The carryforwards expire in 1997 through 2009. At June 30,
1995, Hadson had a valuation allowance of $6 million related to deferred
tax assets which may reduce goodwill if certain unrecorded net operating
loss carryforwards are realized.
3. LG&E filed an application with the Public Service Commission of Kentucky
(Commission) on October 7, 1994, in which it requested approval of an
environmental cost recovery surcharge to recover certain costs required to
comply with the Federal Clean Air Act, as amended, and those federal,
state, and local environmental requirements which apply to coal combustion
wastes and by-products from facilities utilized for the production of
energy from coal. On April 6, 1995, the Commission approved, with
modifications, an environmental cost recovery surcharge estimated to
increase electric revenues by approximately $3.8 million in 1995 and $7.2
million in 1996. The surcharge became effective on May 1, 1995. LG&E,
the Kentucky Attorney General (KAG) and the Kentucky Industrial Utility
Customers (KIUC) filed applications for rehearing on certain issues in the
April 6 order. Among other things, the KAG and KIUC are requesting a
reduction of the amounts recoverable by LG&E. The Commission denied all
motions for rehearing, and appeals have subsequently been filed in
Franklin Circuit Court, which are pending. LG&E is unable to predict the
outcome of these proceedings.
4. As part of a study of LG&E Energy Corp.'s business strategy and realign-
ment during 1994, LG&E re-evaluated its regulatory strategy which previ-
ously had been to seek full recovery of certain costs deferred in accor-
dance with prior precedents established by the Commission. As a result of
this re-evaluation, in the first quarter of 1994, LG&E wrote off certain
expenses that had previously been deferred amounting to approximately
$38.6 million before taxes. While LG&E continues to believe that it could
have reasonably expected to recover these costs in future rate proceedings
before the Commission, LG&E decided to deduct these expenses currently and
not seek recovery for such expenses in future rates due to increasing
competitive pressures and the existing and anticipated future economic
conditions. The items written off include costs incurred in connection
with early retirements and workforce reductions that occurred in 1992 and
1993 which consist primarily of separation payments, enhanced early
retirement benefits, and health care benefits; costs associated with
property damage claims pertaining to particulate emissions from its Mill
Creek electric generating plant which primarily consist of spotting on
automobile finish and aluminum siding; and certain costs previously
deferred resulting from adoption in January 1993 of Statement of Financial
Accounting Standards No. 106, Employers' Accounting for Post-Retirement
Benefits Other Than Pensions. LG&E Power Inc. (LPI), a wholly-owned
subsidiary of Energy Systems, recorded a reserve for $10.1 million, before
taxes, for the costs related to vacating leased office space.
In the first quarter of 1994, the Board of Directors of the Company
approved the formation of a tax-exempt charitable foundation (Foundation)
which will make charitable contributions to qualified persons and enti-
ties. In 1994, the Company recorded a pretax charge against income and
made an irrevocable payment of $15 million to fund the Foundation. On
June 6, 1994, the Internal Revenue Service issued a letter stating that it
had determined the Foundation was exempt from Federal income tax under the
Internal Revenue Code.
5. The Company adopted Statement of Financial Accounting Standards No. 112,
Employers' Accounting for Post-Employment Benefits (SFAS 112) on January
1, 1994, as required. SFAS 112 requires the accrual of the expected cost
of benefits to former or inactive employees after employment but before
retirement. The cumulative effect of the accounting change was recorded
in the first quarter of 1994 and decreased net income by $3.4 million.
6. On April 18, 1995, LG&E completed the issuance of $40 million Jefferson
County, Kentucky, 5.90% Pollution Control Bonds, 1995 Series A due April
15, 2023. The proceeds from the sale were used to redeem the 1985 Series
A Jefferson County, Kentucky, 9.25% Pollution Control Bonds.
7. The Company adopted Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes, effective January 1, 1993. Regulatory assets
and liabilities were established to recognize the future revenue require-
ment impact from the deferred income taxes which were not immediately
recognized in operating results because of ratemaking treatment. The
increase in Regulatory Liability in the accompanying balance sheet
reflects the accrual for the six months ended June 30, 1995, and certain
reclassifications between Accumulated Deferred Income Taxes and Regulatory
Liability applicable to prior periods.
8. The Company, through subsidiaries, owns a 50% interest in Westmoreland-
LG&E Partners (WLP), the sole owner of Roanoke Valley I, a cogeneration
facility selling electric power to Virginia Electric and Power Company
(Virginia Power) and steam energy to Patch Rubber Company. Under the
Power Purchase Agreement (PPA) between WLP and Virginia Power, WLP is
entitled to receive capacity payments from Virginia Power. From May 1994
through July 1995, Virginia Power withheld approximately $6.9 million of
these capacity payments during periods of forced outages. To date, the
Company has not recognized any income on its 50% portion of the capacity
payments being withheld by Virginia Power. On October 31, 1994, WLP filed
a complaint against Virginia Power seeking damages of at least $5.7
million, contending that Virginia Power has breached the PPA in withhold-
ing such payments. On March 17, 1995, the Circuit Court of the City of
Richmond, Virginia, dismissed WLP's complaint, but allowed WLP to amend.
On April 17, 1995, WLP filed an amended complaint with the circuit court
alleging breach of contract and fraud. On April 27, 1995, Virginia Power
filed a demurrer (motion to dismiss) on both of WLP's claims. On August
9, 1995, the Court denied Virginia Power's demurrer, thus allowing the
case to proceed.
In the Company's opinion, WLP is entitled to recover the capacity payments
withheld by Virginia Power and should prevail in this matter, ensuring
receipt of future capacity payments during forced outages billable to
Virginia Power during the remaining 25 years of the PPA. However, the
Company is unable to predict the outcome of this matter, or the amount of
capacity payments, if any, which Virginia Power may be ordered to pay to
WLP.
9. In June 1995, Babcock-Ultrapower West Enfield and Babcock-Ultrapower
Jonesboro, two partnerships which are 17%-owned by LPI, sold two power-
purchase contracts back to the purchasing utility, Bangor Hydro-Electric
Company. Equity in earnings of joint ventures in the Company's statements
of income for the three- and six-month periods ended June 30, 1995,
include $9.7 million representing LPI's interest in the gains on the
sales.
10. At June 30, 1995, Energy Systems had notes payable outstanding of $56
million at a weighted average interest rate of 6.40%, and Gas Systems had
notes payable outstanding of $83 million at a weighted average interest
rate of 6.17%. At June 30, 1995, lines of credit were in place totaling
$535 million ($145 million for LG&E, $150 million for Energy Systems, $215
million for Gas Systems, and $25 million for LG&E Energy Corp.), for which
the companies pay commitment or facility fees. These lines of credit were
unused, except for the amounts mentioned above. The credit lines are
scheduled to expire at various times between 1995 and 2000, and management
intends to renegotiate them when they expire.
In connection with the credit lines for Gas Systems, LG&E Energy Corp.
entered into a support agreement with Gas Systems for the benefit of Gas
Systems' lenders, that is comparable to the existing support agreement
with Energy Systems. See Note 13 of Notes to Financial Statements in Item
8 of the Company's Form 10-K for the year 1994.
11. Other income and deductions consisted of the following (in thousands of
dollars):
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Fee income . . . . . . . . . .$ - $ 3,562 $ - $ 3,562
Gains (losses) on securities . (1,250) 1,595 (3,419) 43
Interest and dividend income . 2,775 3,115 6,087 5,064
Gains on fixed asset
disposals. . . . . . . . . . 758 1,045 974 1,041
Donations. . . . . . . . . . . (60) (1) (169) (1,002)
Other. . . . . . . . . . . . . (720) (2,151) (1,146) (2,384)
Total. . . . . . . . . . . . . $ 1,503 $ 7,165 $ 2,327 $ 6,324
12. In January 1994, the Company sold its 36.5% partnership interest in
Natural Gas Clearinghouse for $170 million. The Company's interest was
acquired in 1992 at a cost of approximately $70 million and was accounted
for as a purchase. The transaction resulted in an after-tax gain of $52
million, which has been classified as gain on sale of discontinued
operations in the accompanying income statement for the six months ended
June 30, 1994.
13. On July 19, 1995, the Public Service Commission of Kentucky issued an
order that requires LG&E to refund $23.9 million to its electric custom-
ers, plus interest applicable through June 1995 of $9.9 million, for a
total of $33.8 million, arising from the Commission's disallowance of 25%
of the Trimble County power plant. The Commission's order requires LG&E
to submit a proposed refund methodology for approval within 30 days from
the date of the order. On August 4, 1995, the Kentucky Attorney General
filed a complaint in the Franklin (Kentucky) Circuit Court for review of
the Commission's orders of July 8, 1994, April 25, 1995, and July 19,
1995, in this proceeding. The complaint seeks to have the Court vacate
those orders and remand the proceeding back to the Commission with
instructions that the Commission consider in determining a refund amount
the revenues paid by LG&E's customers as a result of the inclusion of
Trimble County-related CWIP in LG&E's rate base prior to May 20, 1988. On
August 8, 1995, LG&E filed a request for rehearing of the July 19 order
with the Commission. If LG&E is unsuccessful at overturning the decision
and the refund is required to be paid, the after-tax charge to net income
would amount to approximately $20.2 million. However, the outcome of this
matter is uncertain, and LG&E is unable to predict the exact amount of
refunds, if any, that may ultimately be due.
14. The Company has recorded an $8 million liability in connection with
potential amounts that may be owed by LG&E as a result of litigation. The
liability is offset by an asset of equal amount representing proceeds
received from a third party in the second quarter. The Company is in the
process of determining the amount of liability to charge to expense.
15. Reference is made to Part II herein - Item 1, Legal Proceedings and Item
5, Other Information.
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
The Company's principal subsidiary is LG&E, an electric and gas utility.
Accordingly, LG&E's results of operations and liquidity and capital resources
are the primary factors affecting the Company's consolidated results of
operations and capital resources and liquidity.
Results of Operations
The Company acquired Hadson on May 15, 1995, and the Company's results of
operations include Hadson's results since May 15, 1995. Although the inclusion
of Hadson's results of operations increased the Company's operating revenues
and operating expenses, it did not have a material impact on the Company's
gross profits or operating income for the reported periods.
LG&E's results of operations are significantly affected by seasonal fluctua-
tions in temperature and other weather-related factors. To a lesser degree,
Hadson's results are also affected by seasonal fluctuations in temperature and
other weather-related factors. Additionally, results of LPI's operations are
dependent, among other things, upon the timing and magnitude of development and
construction activities associated with various electric generation projects.
Because of these and other factors, the results of one interim period are not
necessarily indicative of results or trends to be expected for the full year.
Three Months Ended June 30, 1995, Compared with
Three Months Ended June 30, 1994
Earnings per share increased to $.75 in the second quarter of 1995 from $.67 in
the second quarter of 1994 primarily due to an increase in the earnings of
LPI's joint ventures and slightly higher earnings at LG&E, partially offset by
a decrease in gross profits at LPI and lower fee income. LG&E's earnings
increase was primarily due to an increase in electric industrial sales and
decreased power purchased required this quarter to meet native load and other
power commitments.
A comparison of utility operating revenues for the quarter ended June 30, 1995,
with the quarter ended June 30, 1994, reflects increases and decreases which
have been segregated by the following principal causes (see next page):
Increase or (Decrease)
(Thousands of $)
Electric Gas
Cause Revenues Revenues
Sales to ultimate consumers:
Fuel and gas supply adjustments $(3,372) $(2,406)
Demand side management/revenue
decoupling 625 529
Environmental cost recovery 504 -
Variation in sales volume, etc. 1,546 (2,992)
Total (697) (4,869)
Sales for resale (442) -
Gas transportation - net - 602
Other 225 (22)
Total $ (914) $(4,289)
Non-utility revenues increased $61.9 million due to acquiring Hadson on May 15,
1995, partially offset by a decrease at LPI resulting from completing construc-
tion on the Rensselaer and Roanoke Valley I plants in mid-1994 and the Roanoke
Valley II plant in mid-1995.
Fuel for electric generation and gas supply expenses comprise a large segment
of LG&E's total operating expenses. LG&E's electric and gas rates contain a
fuel adjustment clause and a gas supply clause, respectively, whereby increases
or decreases in the cost of fuel and gas supply may be reflected in LG&E's
rates, subject to the approval of the Public Service Commission of Kentucky.
Fuel and power purchased decreased $3.6 million (9%) for the quarter. Fuel
expenses decreased $.8 million (2%) for the quarter primarily because of a
decrease in the cost of coal burned ($3.1 million), partially offset by
increased generation of $2.3 million. Power purchased decreased $2.9 million
due mainly to less power being purchased to meet native load and other power
commitments.
Gas supply expenses decreased $4.9 million (26%) due to a lower volume of gas
delivered to the distribution system ($2.6 million) and a decrease in net gas
supply cost ($2.3 million).
LG&E implemented a Commission-approved demand side management (DSM) program in
January 1994. The agreement contains a rate mechanism that allows LG&E
concurrent recovery of DSM costs; provides LG&E an incentive for implementing
DSM programs; and allows LG&E to recover revenues due to lost sales associated
with the DSM programs.
On May 1, LG&E implemented a Commission-approved environmental cost recovery
surcharge to recover certain costs required to comply with the Federal Clean
Air Act. See Note 3 of Notes to Financial Statements.
Non-utility cost of revenues increased $60.9 million due to acquiring Hadson on
May 15, 1995, partially offset by a decrease at LPI resulting from completing
construction on the Rensselaer, Roanoke Valley I and Roanoke Valley II pro-
jects.
Operation and maintenance expenses increased $4 million (7%) due to acquiring
Hadson on May 15, 1995, and due to a $1.1 million (3%) increase in other
operation expenses at LG&E resulting from increased costs to operate electric
power plants and electric and gas distribution systems. Partially offsetting
these increases was a $.4 million (3%) decrease in maintenance expenses at LG&E
resulting from fewer repairs this quarter associated with the Mill Creek
electric power plant.
Depreciation and amortization increased due to acquiring Hadson and because of
increased depreciable plant in service at LG&E.
Equity in earnings of joint ventures increased due mainly to two of LPI's
partnerships' recording gains on the sales of power purchase contracts to
Bangor Hydro-Electric Company in June 1995 (see Note 9 of Notes to Financial
Statements). Also contributing to the increase was the start-up of commercial
operations of LPI's Roanoke Valley I and Windpower Partners 1993 projects in
the second quarter of 1994, and of LPI's Roanoke Valley II project in the
second quarter of 1995.
Other income and deductions decreased due to receiving fees from Westmoreland
Energy Inc. (WEI) for Energy Systems' guarantee of WEI's equity funding
commitment on various cogeneration projects in the second quarter of 1994, and
due to an increase in realized losses on sales of marketable securities. See
Note 11 of Notes to Financial Statements.
Interest charges increased because of an increase in notes payable associated
with the acquisition of Hadson and a higher composite interest rate on out-
standing debt.
Variations in income tax expense are largely attributable to changes in pretax
income.
Six Months Ended June 30, 1995, Compared with
Six Months Ended June 30, 1994
Earnings per share decreased from $1.53 for the six months ended June 30, 1994,
to $1.34 for the six months ended June 30, 1995. Last year's earnings per
share included a gain of $1.57 on the sale of the Company's interest in Natural
Gas Clearinghouse, a write-off of certain non-recurring charges of $.91, a $.27
contribution to fund a charitable foundation, and a $.10 charge resulting from
adopting the new standard of accounting for post-employment benefits. Exclud-
ing these items, the Company's earnings per share increased by $.10 from $1.24
for the six months ended June 30, 1994, to $1.34 for the six months ended June
30, 1995. This increase resulted primarily from an increase in the earnings of
LPI's joint ventures and higher earnings at LG&E, partially offset by a
decrease in gross profits at LPI and lower fee income. LG&E's earnings
increase was primarily due to higher retail electric industrial sales during
the six-month period of 1995 and the higher maintenance expenses incurred in
January 1994 because of the severe winter storm.
A comparison of utility operating revenues for the six months ended June 30,
1995, with the six months ended June 30, 1994, reflects increases and decreases
which have been segregated by the following principal causes (see next page):
Increase or (Decrease)
(Thousands of $)
Electric Gas
Cause Revenues Revenues
Sales to ultimate consumers:
Fuel and gas supply adjustments $ (6,249) $ (9,632)
Demand side management/revenue
decoupling 3,069 2,602
Environmental cost recovery 504 -
Variation in sales volume, etc. 2,696 (19,956)
Total 20 (26,986)
Sales for resale (879) -
Gas transportation - net - 2,605
Other 174 (295)
Total $ (685) $(24,676)
Non-utility revenues increased $45.7 million due to acquiring Hadson on May 15,
1995, partially offset by a decrease at LPI resulting from completing construc-
tion on the Rensselaer, Roanoke Valley I, and Roanoke Valley II projects.
Fuel and power purchased decreased $7.6 million (10%) for the six months. Fuel
expenses decreased $2.2 million (3%) primarily because of a lower cost of coal
burned ($5.9 million), partially offset by increased generation ($3.7 million).
Power purchased declined because less power was wheeled for other utilities and
purchased to meet native load and other power commitments.
Gas supply expenses decreased $23.9 million (28%) primarily because of a
decrease in gas delivered to the distribution system ($16.8 million) and the
lower cost of net gas supply ($7.1 million).
Non-utility cost of revenues increased $48.1 million due to acquiring Hadson on
May 15, 1995, partially offset by a decrease at LPI resulting from completing
construction on the Rensselaer, Roanoke Valley I, and Roanoke Valley II
projects.
Operation and maintenance expenses increased $1.9 million (2%) due to acquiring
Hadson on May 15, 1995, and due to a $1.2 million (2%) increase in other
operation expenses at LG&E resulting from an increase in various administrative
expenses. Partially offsetting these increases were a $2.1 million (8%)
decrease in maintenance expenses at LG&E resulting from storm-related expenses
during the first quarter of 1994 ($1.3 million) and fewer repairs at the
electric power plants; and a decrease in property and other taxes at LG&E
resulting from payroll taxes associated with severance payments in connection
with workforce reductions recorded in the first quarter of 1994. See Note 4 of
Notes to Financial Statements.
Depreciation and amortization increased due to acquiring Hadson and because of
increased depreciable plant in service at LG&E.
Non-recurring charges include LG&E's write off of previously deferred costs in
connection with early retirements and work force reductions that occurred in
1992 and 1993, costs in connection with property damage claims pertaining to
particulate emissions from the Mill Creek electric generating plant, and
certain costs previously deferred resulting from adoption of Statement of
Financial Accounting Standards No. 106, Employers' Accounting for Post-Retire-
ment Benefits Other Than Pensions. Non-recurring charges also includes a
reserve to record costs related to LPI's vacating leased office space. See
Note 4 of Notes to Financial Statements.
Equity in earnings of joint ventures increased due mainly to two of LPI's
partnerships' recording gains on the sales of power purchase contracts to
Bangor Hydro-Electric Company in June 1995 (see Note 9 of Notes to Financial
Statements). Also contributing to the increase was the start-up of commercial
operations in the second quarter of 1994 at LPI's Roanoke Valley I, Rensselaer,
and Windpower Partners 1993 projects, and in the second quarter of 1995 at
LPI's Roanoke Valley II project.
Other income and deductions decreased due to receiving fees from Westmoreland
Energy Inc. (WEI) for Energy Systems' guarantee of WEI's equity funding
commitment on various cogeneration projects in the second quarter of 1994, and
due to an increase in realized losses on sales of marketable securities. An
increase in dividend and interest income partially offset these decreases. See
Note 11 of Notes to Financial Statements.
The contribution to charitable foundation represents the expense associated
with the formation of a tax-exempt charitable foundation in the first quarter
of 1994. See Note 4 of Notes to Financial Statements.
Interest charges increased because of an increase in notes payable and a higher
composite interest rate on outstanding debt.
Variations in income tax expense are largely attributable to changes in pretax
income.
Gain on sale of discontinued operations reflects the sale of the Company's
investment in NGC in January 1994. See Note 12 of Notes to Financial State-
ments.
Cumulative effect of change in accounting principle reflects the adoption of
Statement of Financial Standards No. 112, Employers' Accounting for Post-
Employment Benefits. See Note 5 of Notes to Financial Statements.
Liquidity and Capital Resources
The Company's capital structure remained solid throughout the reported periods.
This is evidenced primarily by the Company's strong cash flow from operations,
large unused borrowing capacity, and its significant investment in available-
for-sale securities at June 30, 1995.
The Company's need for capital funds is primarily related to the construction
of plant and equipment necessary to meet LG&E's electric and gas customers'
needs and protection of the environment. Needs for capital funds also arise
from partnership equity contributions in connection with independent power
production projects in the non-utility business and other business development
opportunities. LG&E construction expenditures for the six months ended June
30, 1995, of $38 million were financed with internally generated funds.
The Company acquired Hadson Corporation (Hadson) on May 15, 1995, for $143
million, plus acquisition-related fees and expenses. Hadson is involved in the
marketing, gathering, processing, storage and transportation of natural gas and
natural gas liquids. Also, the Company provided Hadson with additional cash to
meet working capital needs. The Company used cash and drew against new and
existing credit lines to finance the acquisition and cash infusion. With the
acquisition, Hadson's credit capacity has been expanded, enabling it to more
easily secure trade credit for gas purchases. The enhanced ability to secure
trade credit has allowed Hadson to sell significantly more gas than before the
acquisition. See Notes 2 and 10 of Notes to Financial Statements.
The Company's combined cash and marketable securities balance decreased $25
million during the first six months of 1995. The decrease reflects the Hadson
acquisition, capital expenditures, additional investments in affiliates, and
dividends, partially offset by cash flows from operations, a net increase in
borrowings, and a net decrease in investments in securities classified as other
property and investments.
The significant increases during the first six months of 1995 in non-utility
property and plant, accounts receivable, goodwill, and accounts payable
resulted from acquiring Hadson. Variations in accounts receivable and accounts
payable are not generally significant indicators of the Company's liquidity,
because such variations are primarily attributable to fluctuations in weather
in LG&E's service territory, which has a direct effect on sales of electricity
and natural gas.
In April 1995, LG&E issued $40 million in Jefferson County, Kentucky, Pollution
Control Revenue Bonds, 5.90% Series, due April 15, 2023. The proceeds of the
bonds were used to redeem the outstanding 9.25% Series of Pollution Control
Bonds due July 1, 2015.
At June 30, 1995, lines of credit were in place totaling $535 million ($145
million for LG&E, $150 million for Energy Systems, $215 million for Gas
Systems, and $25 million for LG&E Energy Corp.), for which the companies pay
commitment or facility fees. These lines of credit were unused, except for $56
million Energy Systems notes payable and $83 million Gas Systems notes payable.
The credit lines are scheduled to expire at various times between 1995 and
2000, and management intends to renegotiate them when they expire. See Note 10
of Notes to Financial Statements.
The Company's capitalization ratios at June 30, 1995, and December 31, 1994,
were:
June 30, Dec. 31,
1995 1994
Long-term debt (including current portion) 39.1% 42.2%
Notes payable 8.2 2.0
Preferred stock 6.9 7.4
Common equity 45.8 48.4
Total 100.0% 100.0%
For a description of significant contingencies that may affect the Company,
reference is made to Part II herein - Item 1, Legal Proceedings.
Part II. Other Information
Item 1. Legal Proceedings.
For a description of the significant legal proceedings involving the Company,
reference is made to: (i) the information under the following items and
captions of the Company's Annual Report on Form 10-K for the year ended
December 31, 1994: Item 1, Business; Item 3, Legal Proceedings; Item 7,
Management's Discussion and Analysis of Results of Operations and Financial
Condition; and Notes 2, 13 and 14 of the Notes to Financial Statements under
Item 8, Financial Statements and Supplementary Data, (ii) the information under
Part II, Item 1, Legal Proceedings, of the Company's Form 10-Q for the quarter
ended March 31, 1995, and (iii) the Company's current report on Form 8-K dated
July 21, 1995. Except as noted below, there have been no material changes in
these proceedings as reported in the Company's 1994 Form 10-K, Form 10-Q for
the quarter ended June 30, 1995, and Form 8-K dated July 21, 1995.
Trimble County. Reference is made to Note 14 of the Notes to Financial
Statements under Item 8 of the Company's Form 1994 10-K; Part II, Item 1, Legal
Proceedings, of the Company's Form 10-Q for the quarter ended March 31, 1995;
and the Company's current report of Form 8-K, dated July 21, 1995, regarding
proceedings before the Kentucky Public Service Commission (Commission) to
determine the proper ratemaking treatment to exclude 25% of LG&E's Trimble
County electric generating facility from customer rates for the period May 1988
through December 1990. On July 19, 1995, the Commission ordered LG&E to issue
its electric customers a refund of $23.9 million, plus interest applicable
through June 1995 of $9.9 million, for a total of $33.8 million, arising from
the disallowance of 25% of its Trimble County plant. The Commission's order
requires LG&E to submit, within the next 30 days, a proposed refund methodology
for Commission approval. On August 4, 1995, the Kentucky Attorney General
filed a complaint in the Franklin (Kentucky) Circuit Court for review of the
Commission's orders of July 8, 1994, April 25, 1995, and July 19, 1995, in this
proceeding. The complaint seeks to have the Court vacate those orders and
remand the proceeding back to the Commission with instructions that the
Commission consider in determining a refund amount the revenues paid by LG&E's
customers as a result of the inclusion of Trimble County-related CWIP in LG&E's
rate base prior to May 20, 1988. On August 8, 1995, LG&E filed a request for
rehearing of the July 19 order with the Commission. However, the outcome of
this matter is uncertain, and LG&E is unable to predict the exact amount of
refunds, if any, that ultimately may be due.
Environmental Surcharge. As reported in Note 2 of the Notes to Financial
Statements under Item 8 of the Company's 1994 Form 10-K, and in Part II, Item
1, Legal Proceedings, of the Company's Form 10-Q for the quarter ended March
31, 1995, on April 6, 1995, the Commission approved, with modifications, LG&E's
application for an environmental cost recovery surcharge to recover certain
costs required to comply with the Federal Clean Air Act, as amended, and other
federal, state, and local environmental laws, regulations and orders which
apply to coal combustion wastes and by-products from facilities utilized for
the production of energy from coal. As a result of the order approving the
surcharge, LG&E estimates that its electric revenues will increase by approxi-
mately $3.8 million in 1995 and $7.2 million in 1996. LG&E, the Kentucky
Attorney General (KAG) and the Kentucky Industrial Utility Customers (KIUC)
filed applications for rehearing on certain issues in the April 6 order. Among
other things, the KAG and KIUC are requesting a reduction of the amounts
recoverable by LG&E. The Commission denied all motions for rehearing, and
appeals have subsequently been filed in Franklin Circuit Court, which are
pending. LG&E is unable to predict the outcome of these proceedings.
Environmental. As reported in Note 13 of Notes to Financial Statements in the
Company's 1994 Form 10-K, in August 1993, 34 persons filed a complaint in
Jefferson Circuit Court against LG&E seeking certification of a class consist-
ing of all persons within 2.5 miles of the Mill Creek plant who have alleged
suffered personal injury or property damage as a result of emissions from the
plant. In June 1994, the court denied the plaintiff's motion for certification
of the class and thus limited the scope of the litigation to the claims of the
individual plaintiffs. On August 3, 1995, the plaintiffs filed a motion for
leave to file an amended complaint bringing a total of 537 individual plain-
tiffs into the pending litigation. The plaintiffs continue to seek compensa-
tion for alleged personal injury and property damage, injunctive relief, a fund
to finance future medical monitoring of area residents, and other relief. The
plaintiffs seek certification of a class consisting of all persons within 3.5
miles of the plant who have allegedly suffered property damage. LG&E intends
to vigorously defend itself in the pending litigation.
Roanoke Valley I. As discussed in Item 3, Legal Proceedings, of the Company's
1994 Form 10-K, and Note 13 of the Notes to Financial Statements under Item 8
of the Company's 1994 Form 10-K, and Part II, Item 1, Legal Proceedings, of the
Company's Form 10-Q for the quarter ended March 31, 1995, Westmoreland-LG&E
Partners, the partnership that owns the Roanoke Valley I and II facilities
(WLP), filed a complaint against Virginia Electric and Power Company (Virginia
Power) seeking recovery of $5.7 million in capacity payments withheld by
Virginia Power during portions of 1994. Under a power purchase agreement
(PPA), WLP is entitled to receive capacity payments from Virginia Power. From
May 1994 through July 1995, Virginia Power withheld approximately $6.9 million
of these capacity payments during periods of forced outages. To date the
Company has not recognized any income on its 50% portion of the capacity
payments being withheld. In March 1995, the Circuit Court of the City of
Richmond, Virginia, dismissed WLP's complaint, but allowed WLP to amend. On
April, 17, 1995, WLP filed an amended complaint with the circuit court alleging
breach of contract and fraud. On April 27, 1995, Virginia Power filed a
demurrer (motion to dismiss) on both of WLP's claims. On August 9, 1995, the
Court denied Virginia Power's demurrer, thus allowing the case to proceed.
In the Company's opinion, WLP is entitled to recover the capacity payments
withheld by Virginia Power and should prevail in this matter, ensuring receipt
of future capacity payments during forced outages billable to Virginia Power
during the remaining 25 years of the PPA. However, the Company is unable to
predict the outcome of this matter, or the amount of capacity payments, if any,
which Virginia Power may be ordered to pay to WLP.
Item 5. Other Information.
On July 31, 1995, the Commission released the findings of a comprehensive
management and operations audit that found LG&E "well managed, aggressive and
fast becoming a 'best in class' utility."
The audit, which began in September 1994, was part of the Commission's ongoing
management audit program. Vantage Consulting, Inc., selected by the Commission
to perform the audit, commended LG&E for excellence in several areas, including
executive management, strategic planning, customer satisfaction, cost control,
continuous improvement, and employee and shareholder relations. The audit also
highlighted employees' dedication and commitment to achieving LG&E's goals and
increasing overall productivity.
Consultants from Vantage conducted 260 interviews and field visits and made 875
information requests of LG&E in completing its ten-month review. The audit
contains 98 recommendations. LG&E had begun or was planning to initiate many
of the recommendations within the Wholesale Electric, Retail Electric, and
Retail Gas areas.
By implementing the audit recommendations, the report estimates that LG&E may
realize $11 million in cost savings. However, many of those recommendations
require incremental costs to be incurred before savings can be realized.
Item 6(a). Exhibits.
Exhibit
Number Description
27 Financial Data Schedule.
Item 6(b). Reports on Form 8-K.
Current Report on Form 8-K dated May 26, 1995, stating that the Company closed
its previously announced acquisition of Hadson corporation, the Dallas-based
natural gas marketing, gathering and processing company.
Current Report on Form 8-K dated July 21, 1995, stating that on July 19, the
Public Service Commission of Kentucky ordered LG&E to issue to its electric
customers a refund of $33.8 million, arising from the disallowance of 25% of
LG&E's Trimble County plant.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LG&E ENERGY CORP.
Registrant
Date: August 11, 1995 /s/ Charles A. Markel
Charles A. Markel
Corporate Vice President, Finance
and Treasurer
(On behalf of the registrant in his capac-
ity as Principal Accounting Officer)
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