<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
LG&E ENERGY CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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<PAGE>
LG&E ENERGY CORP.
1999 SUMMARY ANNUAL REPORT
RANKED HIGHEST IN CUSTOMER SATISFACTION WITH
RESIDENTIAL ELECTRIC SERVICE IN THE MIDWESTERN
U.S. ... AND IN THE NATION.
<PAGE>
LG&E Energy Corp. is a diversified energy services company with businesses in
retail gas and electric utility services, power generation, project
development and asset-based energy marketing. As one of the nation's
lowest-cost energy providers, the Company operates in domestic and
international markets from its headquarters in Louisville, Kentucky, USA. At
LG&E Energy, our mission is to provide exceptional value to our customers and
shareholders as we strategically move toward the era of competition in the
energy industry.
<PAGE>
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PERFORMANCE HIGHLIGHTS
LG&E ENERGY CORP.
<TABLE>
<CAPTION>
Years Ended December 31 1999 1998 Change
- --------------------------------------------------------------------------------------------------------------------------------
in thousands of $ except per share data
<S> <C> <C> <C>
Basic earnings per common share before non-recurring items(1) $ 1.82 $ 1.78 2%
Basic earnings (loss) per common share $ 0.48 $ (0.74) 165%
Dividends paid per common share $ 1.24 $ 1.20 3%
Revenues $2,707,276 $2,086,246 30%
Net income from continuing operations before non-recurring items(1) $ 236,263 $ 230,617 2%
Net income (loss) $ 62,051 $ (95,490) 165%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) 1999 adjusted to reflect earnings before loss on disposal of discontinued
operations. 1998 adjusted to reflect earnings before loss on disposal of
discontinued operations, loss on discontinued operations, merger costs,
provision for rate refund and cumulative effect of accounting change.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BASIC EARNINGS PER
COMMON SHARE BEFORE
DIVIDENDS PAID PER SHARE NON-RECURRING ITEMS YEAR-END STOCK PRICES
(in dollars) (in dollars) (in dollars)
<S> <C> <C> <C> <C> <C>
95 1.08 95 1.37 95 21.13
96 1.12 96 1.51 96 24.50
97 1.16 97 1.61 97 24.81
98 1.20 98 1.78 98 28.31
99 1.24 99 1.82 99 17.44
* 24.85
</TABLE>
* Acquisition price to be paid in cash at closing of merger with PowerGen plc.
1
<PAGE>
DEAR SHAREHOLDERS:
ON FEBRUARY 28, 2000, WE ANNOUNCED A DEFINITIVE MERGER AGREEMENT WITH
POWERGEN PLC OF THE UNITED KINGDOM. THIS TRANSACTION IS AN IMMEDIATE
OPPORTUNITY TO PROVIDE SIGNIFICANT VALUE TO SHAREHOLDERS, OUR EMPLOYEES, OUR
CUSTOMERS AND THE COMMONWEALTH OF KENTUCKY. WE ENTERED INTO THIS TRANSACTION
NOW TO OPTIMIZE THE VALUE OF ONE OF OUR COUNTRY'S MOST EFFICIENT ENERGY
SERVICES COMPANIES AT A TIME WHEN THE ENERGY INDUSTRY IS STRUGGLING TO TAKE
COMMAND OF AN INCREASINGLY COMPETITIVE MARKETPLACE.
As you know, the evolving competitive nature of our industry has clearly
demanded from us creative and unique growth strategies. Over the past 10
years, LG&E Energy Corp. has been an industry innovator and has delivered
returns to its shareholders well above industry averages. In the previous
nine years since LG&E Energy was formed, your Company consistently
out-performed the utility market as a whole, generating returns that averaged
14.6 percent each year.
However, today, the state and nature of the industry have changed. Size and
scale have become a significant prerequisite for developing and executing any
viable growth strategy. Most of the major utility players today started with
large size and have gotten even bigger and far more aggressive. Even though
LG&E Energy is now nearly five times its size of a decade ago, we are limited
in our ability to continually make a significant impact on the current
market, and then deliver the year-after-year increasing growth rates now
demanded by investors.
Consequently, the merger with PowerGen is an immediate opportunity to provide
significant value to shareholders now. In addition, we will be able to
maintain our innovative status in the industry as the platform to help
PowerGen grow throughout the U.S.
As an integral part of this transaction, we will maintain our respected name,
operations and efficient corporate structure. As a result, Kentucky will
continue to enjoy the nation's highest quality of service and some of its
lowest rates. We will enhance our corporate presence as one of Kentucky's
major sponsors of educational, civic and cultural initiatives. We will
provide for our employees an opportunity to continue their rewarding careers
with a major global energy corporation, which is rooted for all time in the
traditions and respected history of both Louisville Gas and Electric Company
and Kentucky Utilities Company.
2
<PAGE>
DISCUSSION OF 1999 PERFORMANCE
SHARE PRICE Two events in 1999 clearly overshadowed an excellent operating
year for LG&E Energy and caused our stock to decline. The first, and most
significant, resulted from the combination of investor rotation out of
utility stocks in general and into the technology sector, and a series of
interest rate hikes, as indicated by a 27 percent increase in the 30-year
Treasury bond yield in 1999. As a result, the S&P Electric Index was down 23
percent in 1999, its sharpest decline in 25 years. Not since 1974 have
utilities suffered more.
The second event occurred on January 28, 1999, when the Kentucky Public
Service Commission (PSC) announced that they would consolidate into our
Performance-Based Ratemaking (PBR) case the industrial intervenors' demand
for a combined $145 million rate reduction by LG&E and KU.
The market uncertainty created by this action sent our stock down
immediately, and we stayed 10 to 15 percentage points below the declining
utility market throughout 1999. Since our announced merger with PowerGen,
the stock price has increased to approximately $22 per share, a 40 percent
increase.
EARNINGS
Notwithstanding the regulatory uncertainty that followed us throughout 1999,
our employees continued to aggressively focus on growth and improving the
efficiency of all of our businesses. They were very successful in that
endeavor.
Our revenue increased 30 percent from $2.1 billion to $2.7 billion, and
earnings from continuing operations increased from $1.78 to $1.82, overcoming
the negative impact of several unplanned regulatory orders.
This increase in earnings was due to the solid performance of our two
utilities and to the continued growth and outstanding performance of our
non-utility businesses. Our subsidiaries in Argentina, Western Kentucky and
our Independent Power businesses throughout the country all exceeded 1998's
operating performance results.
OPC ARBITRATION
As you may recall, in the summer of 1998, we decided to exit the
merchant-trading portion of our energy marketing business. We made this
difficult decision to accelerate potential forward losses from our long-term
contracts and took a $225 million reserve for these discontinued operations.
The Oglethorpe Power Corporation (OPC) contract represented the majority of
our loss exposure.
The stock market reacted favorably to our decision, and our share price rose
more than 12 percent, finishing 1998 at an all-time high.
In April of 1998, we initiated arbitration proceedings against OPC because we
believed our evidence clearly showed they had fraudulently misled LG&E Energy
to sign the 1996 agreement. The proceedings lasted most of 1999 with a
decision rendered on December 21. In a two-to-one decision,
COMPARISON OF CUMULATIVE TOTAL SHAREHOLDER RETURN (in dollars)
ASSUMES $100 INVESTED ON JANUARY 1, 1990, WITH QUARTERLY
REINVESTMENT OF DIVIDENDS.
<TABLE>
<CAPTION>
LG&E ENERGY CORP. S&P ELECTRIC INDEX
<S> <C> <C>
90 104 104
91 133 -
92 156 -
93 190 -
94 183 -
95 221 -
96 269 -
97 287 -
98 342 -
99 224 213
</TABLE>
3
<PAGE>
THE END OF A CENTURY MARKS THE BEGINNING OF NEW OPPORTUNITIES AND
PROSPERITY FOR LG&E ENERGY CORP.
the panel ruled in favor of OPC, requiring us to continue to perform the
contract, but the order did not address the issue of fraud. As a result, the
Company faces continued exposure over the life of the contract until 2004
when we have the right to terminate the relationship. This ruling caused us
to re-evaluate our exposure due to forecasted increases in load and prices.
Accordingly, we have increased our after-tax reserve by $175 million for the
discontinued operations.
This charge will not have a material impact on future net income from
continuing operations.
While we were greatly disappointed that the arbitration order did not address
the fraud issue, we will continually assess ways to hedge and limit our
exposure under this contract.
PBR CASE
In approving the LG&E/KU merger in the spring of 1998, the Kentucky PSC
ordered LG&E Energy to submit an alternative, non-traditional plan for
regulation in the future. To comply, LG&E Energy submitted a PBR plan
designed to provide incentives for our shareholders based on excellent
service and penalties if service were to fall below pre-set standards.
4
<PAGE>
On January 28, 1999, while this case was pending, the Kentucky PSC agreed to
consolidate the industrial intervenors' claims for a $145 million rate
reduction into the PBR case, creating stock market uncertainty.
Your management team worked diligently and creatively with the various
intervenor groups to settle the matter and eliminate the pressure on our
share price. Ironically, we were successful in reaching an agreement with
intervenors representing the overwhelming majority of our customers - the
Kentucky Attorney General, and the cities of Louisville and Lexington.
However, the industrial intervenors and a few special interest groups would
not agree.
After 15 months, the Kentucky PSC finally reached a decision rejecting this
settlement agreement and the PBR. They reduced the combined earnings of LG&E
and KU by $63.7 million per year and proposed allowing the companies to earn
up to 12.5 percent return-on-equity with any earnings beyond that amount
split 60/40 with shareholders and customers. This Earnings Sharing Mechanism
will offer the Company significant opportunity to enhance its ongoing efforts
to build upon our operating efficiencies and award-winning quality of service.
Y2K
More than four years ago, LG&E Energy began its preparations to ensure that
there were no service interruptions during the millennium changeover. By the
third quarter of 1999, more than 6,000 systems in the U.S. and Argentina had
been identified and modified as required. While contingency plans were put
into place to monitor the situation, no problems occurred. This was a
monumental effort by our employees - one that may never receive its true place
in "Company history" simply because it went so well.
CUSTOMER SERVICE
On July 20, 1999, LG&E Energy was recognized by J.D. Power and Associates as
the nation's number one utility in customer service, exceeding the ranking of
118 utilities across the country. This was an extraordinary tribute to the
men and women of both KU and LG&E.
IN CLOSING...
Your Company remains very strong financially. It has an outstanding
environmental record. It has some of the lowest-cost, best performing assets
in the country and is blessed with employees who have demonstrated over the
years their extraordinary creativity and overwhelming penchant for success.
I remain very confident in the quality of the organization at LG&E Energy.
The significant premium we were able to command in the PowerGen transaction
validates that confidence. As an essential component of a global energy
leader, we are poised to partner with PowerGen to take advantage of the
opportunities presented by the changing competitive marketplace in the U.S.
Yours very truly,
/s/ Roger W. Hale
- --------------------------------
Roger W. Hale
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
5
<PAGE>
BOARD OF DIRECTORS
LG&E ENERGY CORP.
ROGER W. HALE
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER,
LG&E ENERGY CORP.; CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER, LOUISVILLE
GAS AND ELECTRIC COMPANY AND
KENTUCKY UTILITIES COMPANY
A director of LG&E since June 1989 and
of LG&E Energy Corp. since August 1990.
Director of KU since May 1998.
Term expires in 2002.
NOMINATING AND GOVERNANCE COMMITTEE (EX-OFFICIO)
MIRA S. BALL
CHIEF FINANCIAL OFFICER, BALL HOMES, INC.
(HOME CONSTRUCTION), LEXINGTON, KY
A director of LG&E Energy Corp. and LG&E
since May 1998. Director of KU since 1992.
Term expires in 2002.
NOMINATING AND GOVERNANCE AND
AUDIT COMMITTEES
WILLIAM C. BALLARD, JR.
OF COUNSEL, GREENEBAUM DOLL & MCDONALD (LEGAL AFFAIRS), LOUISVILLE, KY
A director of LG&E since May 1989 and
of LG&E Energy Corp. since August 1990.
Director of KU since May 1998.
Term expires in 2000.
NOMINATING AND GOVERNANCE AND AUDIT COMMITTEES
OWSLEY BROWN II
CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
BROWN-FORMAN CORPORATION (CONSUMER PRODUCTS), LOUISVILLE, KY
A director of LG&E since May 1989 and
of LG&E Energy Corp. since August 1990.
Director of KU since May 1998.
Term expires in 2001.
NOMINATING AND GOVERNANCE AND
AUDIT COMMITTEES
CAROL M. GATTON
CHAIRMAN, AREA BANCSHARES CORPORATION
(BANK HOLDING COMPANY), OWENSBORO, KY
A director of LG&E Energy Corp. and LG&E
since May 1998. Director of KU since May 1996.
Term Expires in 2001.
AUDIT AND COMPENSATION COMMITTEES
J. DAVID GRISSOM
CHAIRMAN, MAYFAIR CAPITAL, INC. (INVESTMENTS), LOUISVILLE, KY
A director of LG&E since January 1982 and of LG&E Energy Corp.
since August 1990. Director of KU since May 1998.
Term expires in 2001.
AUDIT AND COMPENSATION (CHAIRMAN) COMMITTEES
DAVID B. LEWIS
CHAIRMAN AND A FOUNDING PARTNER, LEWIS & MUNDAY (LEGAL AFFAIRS),
DETROIT, MI
A director of LG&E and of LG&E Energy Corp.
since November 1992. Director of KU since May 1998.
Term expires in 2002.
NOMINATING AND GOVERNANCE AND
AUDIT (CHAIRMAN) COMMITTEES
ANNE H. MCNAMARA
SENIOR VICE PRESIDENT AND GENERAL COUNSEL, AMR CORPORATION
(AIRLINE HOLDING COMPANY) AND AMERICAN AIRLINES, INC., DALLAS, TX
A director of LG&E and LG&E Energy Corp.
since November 1991. Director of KU since May 1998.
Term expires in 2002.
NOMINATING AND GOVERNANCE AND
COMPENSATION COMMITTEES
T. BALLARD MORTON, JR.
EXECUTIVE IN RESIDENCE, UNIVERSITY OF LOUISVILLE, COLLEGE OF BUSINESS AND
PUBLIC ADMINISTRATION (HIGHER EDUCATION), LOUISVILLE, KY
A director of LG&E since May 1967 and
of LG&E Energy Corp. since August 1990.
Director of KU since May 1998.
Term expires in 2000.
COMPENSATION COMMITTEE
FRANK V. RAMSEY, JR.
PRESIDENT, DIXON BANK (BANKING INSTITUTION), DIXON, KY
A director of LG&E Energy Corp. and LG&E
since May 1998. Director of KU since 1986.
Term expires in 2002.
AUDIT AND NOMINATING AND
GOVERNANCE COMMITTEES
WILLIAM L. ROUSE, JR.
FORMER CHAIRMAN AND CHIEF EXECUTIVE OFFICER, FIRST SECURITY
CORPORATION OF KENTUCKY (BANK HOLDING COMPANY), LEXINGTON, KY
A director of LG&E Energy Corp. and LG&E
since May 1998. Director of KU since 1989.
Term expires in 2000.
COMPENSATION AND NOMINATING AND
GOVERNANCE (CHAIRMAN) COMMITTEES
CHARLES L. SHEARER, PH.D.
PRESIDENT, TRANSYLVANIA UNIVERSITY (HIGHER EDUCATION), LEXINGTON, KY
A director of LG&E Energy Corp. and LG&E
since May 1998. Director of KU since 1987.
Term expires in 2000.
AUDIT AND NOMINATING AND
GOVERNANCE COMMITTEES
LEE T. TODD, JR., PH.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER, DATABEAM CORPORATION
(TECHNOLOGY FIRM), LEXINGTON, KY
A director of LG&E Energy Corp. and LG&E
since May 1998. Director of KU since 1995.
Term expires in 2001.
AUDIT AND COMPENSATION COMMITTEES
6
<PAGE>
OFFICERS
LG&E ENERGY CORP.
<TABLE>
<S> <C> <C>
ROGER W. HALE ROBERT M. HEWETT R. FOSTER DUNCAN
CHAIRMAN OF THE BOARD AND GROUP EXECUTIVE--REGULATORY AFFAIRS EXECUTIVE VICE PRESIDENT AND
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER
STEPHEN R. WOOD
VICTOR A. STAFFIERI GROUP EXECUTIVE--RETAIL BUSINESSES WAYNE T. LUCAS
PRESIDENT AND CHIEF OPERATING OFFICER EXECUTIVE VICE PRESIDENT--POWER GENERATION
JOHN R. MCCALL
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND
CORPORATE SECRETARY
GEORGE W. BASINGER S. BRADFORD RIVES CHARLES A. MARKEL
SENIOR VICE PRESIDENT--INDEPENDENT SENIOR VICE PRESIDENT--FINANCE AND VICE PRESIDENT--FINANCE AND TREASURER
POWER OPERATIONS BUSINESS DEVELOPMENT
MICHAEL D. ROBINSON
REBECCA L. FARRAR DONALD F. SANTA, JR. VICE PRESIDENT AND CONTROLLER
SENIOR VICE PRESIDENT--DISTRIBUTION OPERATIONS SENIOR VICE PRESIDENT--STRATEGIC
PLANNING
FREDERICK J. NEWTON III PAUL W. THOMPSON
SENIOR VICE PRESIDENT AND SENIOR VICE PRESIDENT--ENERGY SERVICES
CHIEF ADMINISTRATIVE OFFICER
</TABLE>
7
<PAGE>
SHAREHOLDER INFORMATION
LG&E ENERGY CORP.
SHAREHOLDER SERVICES
Shareholders who have questions or need help with their accounts may contact
LG&E Energy Shareholder Relations at the following numbers:
Within the Louisville area--(502) 627-3445
Toll-free--(800) 235-9705
Written inquiries should be mailed to:
LG&E Energy Corp.
Shareholder Relations
P.O. Box 32030
Louisville, KY 40232-2030
ANNUAL MEETINGS
The annual meetings of LG&E Energy Corp., Louisville Gas and Electric Company
and Kentucky Utilities Company are currently scheduled to be held on
Wednesday, June 7, 2000, at 10 a.m. (EDT) in the Kentucky International
Convention Center (formerly the Commonwealth Convention Center), 221 Fourth
Avenue, Louisville, Kentucky. THESE DATES AND LOCATIONS ARE SUBJECT TO
CHANGE, AND FINAL INFORMATION WILL BE MAILED TO SHAREHOLDERS WHEN IT IS
AVAILABLE.
COMMON STOCK LISTING
LG&E Energy Corp. common stock is listed on the New York and Chicago stock
exchanges, under the ticker symbol LGE.
AUTOMATIC DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
The Company offers shareholders the opportunity to reinvest their dividends
to purchase additional shares of common stock instead of receiving the
dividend by check. In addition, shareholders may make monthly cash payments
to purchase stock. Each payment must be at least $25. Optional cash
payments cannot exceed $40,000 per year. No brokerage commission or service
charges are assessed for either dividend or optional cash purchases.
TRANSFER AGENTS
FOR COMMON STOCK:
LG&E Energy Corp.
ATTN: Shareholder Relations
P.O. Box 32030
Louisville, KY 40232-2030
Harris Trust and Savings Bank
P.O. Box A3504
Chicago, IL 60690-3504
For LG&E and KU PREFERRED STOCK:
LG&E Energy Corp.
ATTN: Shareholder Relations
P.O. Box 32030
Louisville, KY 40232-2030
LG&E ENERGY CORP. ON THE INTERNET
Financial results, stock information and company news items are available via
LG&E Energy Corp.'s home page on the Internet. The address is
www.lgeenergy.com.
ANALYSTS/BROKER CONTACTS
Charles A. Markel
VICE PRESIDENT--FINANCE AND TREASURER
LG&E Energy Corp.
(502) 627-2203
(502) 627-2229 (FAX)
L. Stephen Cave
MANAGER, INVESTOR RELATIONS AND SHAREHOLDER SERVICES
LG&E Energy Corp.
(502) 627-3867
(502) 627-4742 (FAX)
ANNUAL REPORT CONTACT
R.W. "Chip" Keeling
DIRECTOR, CORPORATE COMMUNICATIONS
LG&E Energy Corp.
(502) 627-2502
(502) 627-3629 (FAX)
COMMON STOCK MARKET INFORMATION AND DIVIDENDS
(Trading Price Range and Dividends)
<TABLE>
<CAPTION>
1999 Quarters 1st 2nd 3rd 4th
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
High $28.750 $23.000 $23.688 $23.313
Low 20.750 20.688 20.688 17.375
Close 20.813 21.000 21.250 17.438
Dividends Paid 30.750CENTS 30.750CENTS 30.750CENTS 31.750CENTS
- -----------------------------------------------------------------------
<CAPTION>
1998 Quarters 1st 2nd 3rd 4th
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
High $26.438 $27.750 $27.875 $29.313
Low 23.000 24.688 22.500 26.063
Close 25.813 27.063 27.750 28.313
Dividends Paid 29.750CENTS 29.750CENTS 29.750CENTS 30.750CENTS
- -----------------------------------------------------------------------
</TABLE>
CUSTOMER SATISFACTION SURVEY
Information is based upon the J. D. Power and Associates/Navigant Consulting,
Inc. 1999 Electric Utility Residential Customer Satisfaction Study-SM-. The
top 18 largest electric companies in the Midwestern U.S. were ranked in the
study based upon a total of 26,096 consumer responses. See also
www.jdpower.com.
FORWARD-LOOKING STATEMENTS
Statements made in this report that state the Company's or management's
intentions, expectations or predictions of the future are forward-looking
statements. Actual results could differ materially from those projected in
the forward-looking statements, and there can be no assurance that estimates
of future results will be achieved. The Company's Securities and Exchange
Commission filings contain additional information concerning factors that
could affect actual results.
8
<PAGE>
www.lgeenergy.com
<PAGE>
[LOGO]
LG&E ENERGY CORP.
P.O. BOX 32030
LOUISVILLE, KY 40232-2030
