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Exhibit 99.01
LG&E Energy Corp. Reports Strong Second Quarter Results Despite Rate
Reductions; Announces Addition to Reserves and Plans
To Expand Generating Presence in Key Markets
LOUISVILLE, Ky., July 28 /PRNewswire/ -- LG&E Energy Corp. (NYSE: LGE)
today reported earnings from continuing operations, excluding certain
non-recurring charges, of $0.39 per share in the second quarter of 2000. These
results are equal to earnings per share in the second quarter of 1999. The
results were driven primarily by lower utility operation and maintenance expense
and strong performance from the non-utility power generation business. These
improvements offset the $0.07 per share effect of retail rate reductions ordered
by the Kentucky Public Service Commission early this year.
LG&E Energy Corp. and Powergen plc now expect their merger to close by the
end of the year, pending completion of remaining regulatory approvals and
satisfaction of other conditions necessary for closing. The company received
notice today that it has obtained clearance under the Hart-Scott-Rodino Act. The
transaction previously has been approved by the shareholders of both companies,
the Kentucky Public Service Commission, the Virginia State Corporation
Commission and the Federal Energy Regulatory Commission.
Louisville Gas and Electric Company contributed $0.21 per share to
consolidated earnings for the quarter, compared with $0.16 per share for the
same period last year. The increase was driven primarily by lower operation and
maintenance expenses compared with last year. These improvements overcame the
rate reductions ordered by the Kentucky Public Service Commission, which lowered
earnings by $0.03.
Kentucky Utilities Company contributed $0.16 per share to consolidated
earnings for the second quarter, compared with $0.21 per share for the same
period one year ago. The decline was driven primarily by the previously
mentioned rate reductions, which lowered earnings by $0.04, and lower off-
system sales.
LG&E Capital Corp., the holding company for LG&E Energy's non-utility
businesses, contributed $0.07 per share, before non-recurring charges, during
the second quarter of 2000, compared with $0.04 per share for the same period in
1999. LG&E Capital's increase in earnings was primarily the result of strong
performance at Western Kentucky Energy and the company's Argentine operations.
These results were partially offset by higher interest expense.
The second quarter 2000 results include a $27 million (after-tax) charge
related to the company's planned sale of its gas gathering and processing
business, and an $11.9 million (after-tax) charge for costs associated with the
company's merger with Powergen. Including these items, earnings from continuing
operations were $0.09 per share for the quarter.
Excluding non-recurring items, LG&E Energy Corp. posted net income from
continuing operations of $92.6 million, or $0.71 per share, for the six months
ended June 30, 2000, compared with $94.6 million, or $0.74 per share, for the
same period last year.
LG&E Energy also announced today proposed plans to build up to 10 natural
gas fired combustion turbines to meet rising power demands in the Midwest and
Southeast regions of the U.S., and that it will adjust its reserve for
discontinued operations.
The turbines will be built in Kentucky to meet native load commitments of
the company's two utilities, and in Georgia to mitigate its exposure related to
its Oglethorpe Power Corporation (OPC) contract and to capture value in a
growing market.
"The addition of generating capacity in Kentucky and Georgia represents an
attractive investment in promising, high-demand areas of the country," said
Roger W. Hale, LG&E Energy chairman and chief executive officer. "It provides an
opportunity to leverage our experience in the Midwest and
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Southeast regions to take advantage of a situation where power demand is
outpacing available capacity. Further, turbines in the Southeast will reduce the
cost of providing service under the OPC contract."
The company's second quarter 2000 results also include a $155 million
(after-tax) charge related to an adjustment of the company's reserve for
discontinued operations. This primarily reflects the most recent OPC load
forecast, coupled with the increased demand experienced this summer, and new
price forecasts for the OPC and other long-term contracts. Including the
adjustment in the reserve for discontinued operations and the non-recurring
charges, LG&E Energy reported a loss of $1.11 per share for the second quarter
of 2000.
LG&E Energy Corp., headquartered in Louisville, Ky., is a Fortune 500
diversified energy services company with businesses in power generation and
project development; retail gas and electric utility services; and asset-based
energy marketing. The company owns and operates Louisville Gas and Electric
Company, a regulated electric and gas utility serving Louisville, Ky., and 16
surrounding counties; and Kentucky Utilities Company, a regulated electric
utility, based in Lexington, Ky., which serves customers in 77 Kentucky counties
and five counties in Virginia. LG&E Energy also owns equity in and operates
non-utility power plants in six states as well as in Spain; owns interests in
three natural gas distribution companies in Argentina; and owns CRC-Evans
Pipeline International, Inc., the world's leading provider of specialty
equipment and services to the natural gas and oil pipeline construction
industry.
Statements made in this release that state the Company's or management's
intentions, expectations or predictions of the future are forward-looking
statements. The Company's 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 SEC filings contain
additional information concerning factors that could cause actual results to
differ materially from those in the forward-looking statements.
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LG&E Energy Corp. and Subsidiaries
Income Statements
(In thousands of dollars, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
REVENUES:
Electric utility $376,606 $406,758 $742,496 $768,431
Gas utility 29,979 23,652 118,295 99,431
Western Kentucky Energy 66,975 69,050 127,729 129,028
Argentine gas distribution
and other 132,731 124,697 243,161 226,532
Total revenues 606,291 624,157 1,231,681 1,223,422
Provision for rate refund -- (500) -- (500)
Net revenues 606,291 623,657 1,231,681 1,222,922
COST OF REVENUES:
Electric utility 149,455 161,275 292,379 307,714
Gas utility 18,688 13,395 82,082 63,887
Western Kentucky Energy 35,757 41,305 71,008 77,048
Argentine gas distribution
and other 91,284 91,939 172,139 159,417
Total cost of revenues 295,184 307,914 617,608 608,066
Gross profit 311,107 315,743 614,073 614,856
OPERATING EXPENSES:
Operation and maintenance:
Utility 98,257 115,192 202,115 218,897
Western Kentucky Energy 24,332 26,587 48,828 50,592
Argentine gas distribution
and other 31,878 20,847 55,920 41,806
Depreciation and
amortization 56,802 53,479 115,175 108,215
Asset impairment charge 45,000 -- 45,000 --
Nonrecurring charges 14,676 -- 35,389 --
Total operating expenses 270,945 216,105 502,427 419,510
Equity in earnings of
unconsolidated ventures 10,760 12,051 16,690 33,707
OPERATING INCOME 50,922 111,689 128,336 229,053
Other income 5,707 2,611 10,716 8,999
Interest charges and
preferred dividends 36,919 32,243 71,884 62,763
Minority interest 4,520 3,842 6,014 5,413
Income before income taxes 15,190 78,215 61,154 169,876
Income taxes 3,841 28,250 19,923 63,132
Income from continuing
operations 11,349 49,965 41,231 106,744
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Gain (loss) on disposal of
discontinued operations,
net of income taxes (155,000) -- (155,000) 788
NET INCOME (LOSS) ($143,651) $49,965 ($113,769) $107,532
Average common shares
outstanding 129,677 129,677 129,677 129,677
Basic and diluted earnings
(loss) per share:
From continuing operations $0.09 $0.39 $0.32 $0.82
Gain (loss) on disposal of
discontinued operations (1.20) -- (1.20) 0.01
Total ($1.11) $0.39 ($0.88) $0.83
</TABLE>
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LG&E Energy Corp. and Subsidiaries
Income Statements
(In thousands of dollars, except per share data)
<TABLE>
<CAPTION>
Twelve Months Ended
June 30,
2000 1999
<S> <C> <C>
REVENUES:
Electric utility $1,667,098 $1,550,989
Gas utility 196,443 171,677
Western Kentucky Energy 332,486 257,547
Argentine gas distribution
and other 527,143 402,703
Total revenues 2,723,170 2,382,916
Provision for rate refund (7,135) (26,500)
Net revenues 2,716,035 2,356,416
COST OF REVENUES:
Electric utility 732,983 590,584
Gas utility 132,940 109,422
Western Kentucky Energy 203,667 142,959
Argentine gas distribution
and other 371,178 280,945
Total cost of revenues 1,440,768 1,123,910
Gross profit 1,275,267 1,232,506
OPERATING EXPENSES:
Operation and maintenance:
Utility 401,728 438,596
Western Kentucky Energy 97,476 103,208
Argentine gas distribution
and other 108,218 88,238
Depreciation and amortization 226,278 211,013
Asset impairment charge 45,000 --
Nonrecurring charges 35,389 --
Total operating expenses 914,089 841,055
Equity in earnings of
unconsolidated ventures 32,700 50,642
OPERATING INCOME 393,878 442,093
Other income 21,022 19,367
Interest charges and
preferred dividends 141,187 119,858
Minority interest 12,648 11,221
Income before income taxes 261,065 330,381
Income taxes 90,315 124,186
Income from continuing
operations 170,750 206,195
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Gain (loss) on disposal of
discontinued operations,
net of income taxes (330,000) 1,640
NET INCOME (LOSS) ($159,250) $207,835
Average common shares outstanding 129,677 129,677
Basic and diluted earnings (loss) per share:
From continuing operations $1.32 $1.59
Gain (loss) on disposal of
discontinued operations (2.55) 0.01
Total ($1.23) $1.60
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