-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, I0yI7YcA/OG+wS3MEMzmTLvpFw9rb6VH/wPdmpDeINYewABQ9p01ujYT415C/4kW vl5k0/dQrFFh3CDSiZ2Cpg== 0000055387-94-000036.txt : 19940517 0000055387-94-000036.hdr.sgml : 19940517 ACCESSION NUMBER: 0000055387-94-000036 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940506 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KENTUCKY UTILITIES CO CENTRAL INDEX KEY: 0000055387 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 610247570 STATE OF INCORPORATION: KY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03464 FILM NUMBER: 94526436 BUSINESS ADDRESS: STREET 1: ONE QUALITY ST CITY: LEXINGTON STATE: KY ZIP: 40507 BUSINESS PHONE: 6062552100 10-Q 1 KENTUCKY UTILITIES CO. 1ST QTR 1994 FORM 10-Q 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 March 31, 1994 TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-3464 Kentucky Utilities Company (Exact name of registrant as specified in its charter) Kentucky and Virginia 61-0247570 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Quality Street, Lexington, Kentucky 40507 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 606-255-2100 Not Applicable Former name, former address and former fiscal year, if changed since last report 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 . Number of shares of Common Stock outstanding at May 5, 1994: 37,817,878 shares (owned by the parent-KU Energy Corporation). -1- PART I. FINANCIAL INFORMATION KENTUCKY UTILITIES COMPANY STATEMENTS OF INCOME (Unaudited) (in thousands of dollars) For the Three Months Ended March 31, 1994 1993 Operating Revenues $166,528 $154,236 Operating Expenses: Fuel, principally coal, used in generation 43,859 43,658 Electric power purchased 15,883 9,968 Other operating expenses 26,687 25,171 Maintenance 14,538 11,321 Depreciation 16,187 15,223 Federal and state income taxes 14,731 14,037 Other taxes 4,063 3,703 Total Operating Expenses 135,948 123,081 Net Operating Income 30,580 31,155 Other Income and Deductions: Interest and dividend income 1,736 883 Other income and deductions - net 1,173 1,682 Total Other Income and Deductions 2,909 2,565 Income Before Interest Charges 33,489 33,720 Interest Charges 8,145 9,172 Net Income 25,344 24,548 Preferred Stock Dividend Requirements 692 629 Net Income Applicable to Common Stock $ 24,652 $ 23,919 The accompanying Notes to Financial Statements are an integral part of these statements. -2- KENTUCKY UTILITIES COMPANY STATEMENTS OF CASH FLOWS (Unaudited) (in thousands of dollars) For the Three Months Ended March 31, 1994 1993 Cash Flows from Operating Activities: Net Income $ 25,344 $ 24,548 Items not requiring (providing) cash currently: Depreciation 16,187 15,223 Deferred income taxes and investment tax credit (1,819) 1,748 Change in fuel inventory 4,644 (1,709) Change in accounts receivable 1,418 (6,814) Change in accounts payable (10,332) (2,115) Change in accrued taxes 17,858 12,861 Change in accrued utility revenues 4,788 2,567 Change in liability to ratepayers (519) 38,332 Change in escrow funds 507 (44,240) Other--net 1,166 6,659 Net Cash Provided by Operating Activities 59,242 47,060 Cash Flows from Investing Activities: Construction expenditures - utility (40,496) (17,928) Nonutility property - (4,956) Other 163 108 Cash Used by Investing Activities (40,333) (22,776) Cash Flows from Financing Activities: Short-term borrowings - net 3,500 - Funds deposited with trustee - net 9,000 - Retirement of long-term debt (21) (30,021) Retirement of preferred stock, including premium (20,302) - Payment of dividends (16,258) (15,757) Net Cash Used by Financing Activities (24,081) (45,778) Net Decrease in Cash and Cash Equivalents (5,172) (21,494) Cash and Cash Equivalents Beginning of Period 8,832 94,299 Cash and Cash Equivalents End of Period $ 3,660 $ 72,805 Supplemental Disclosures Cash paid for: Interest on long-term debt $ 4,772 $ 9,612 Federal and state income taxes $ - $ - The accompanying Notes to Financial Statements are an integral part of these statements. -3- KENTUCKY UTILITIES COMPANY BALANCE SHEETS (Unaudited) (in thousands of dollars) As of As of Mar. 31, Dec. 31, 1994 1993 ASSETS Utility Plant: Plant in service, at cost $2,012,198 $2,004,688 Less: Accumulated depreciation 896,527 879,960 1,115,671 1,124,728 Construction work in progress 191,530 158,829 1,307,201 1,283,557 Current Assets: Cash and cash equivalents 3,660 8,832 Escrow funds - coal contract litigation 37,245 37,752 Construction funds held by trustee 9,372 18,268 Accounts receivable 40,039 41,457 Accrued utility revenues 20,787 25,575 Fuel, principally coal, at average cost 26,429 31,073 Materials and supplies, at average cost 18,441 17,261 Other 8,910 7,804 164,883 188,022 Investments, Deferred Charges and Other Assets: Accumulated deferred income taxes 38,508 35,778 Unamortized loss on reacquired debt 13,084 13,295 Other 38,690 38,400 90,282 87,473 Total Assets $1,562,366 $1,559,052 CAPITALIZATION AND LIABILITIES Capitalization: Common stock equity $ 560,897 $ 552,106 Preferred stock 40,000 40,000 Long-term debt 442,021 442,045 1,042,918 1,034,151 Current Liabilities: Preferred stock and long-term debt due within one year 21 20,021 Short-term borrowings 3,500 - Accounts payable 33,674 44,006 Accrued interest 9,796 7,302 Accrued taxes 22,518 4,660 Customers' deposits 8,835 10,803 Accrued payroll and vacations 10,061 7,709 Liab. to ratepayers - coal contract litigation 36,348 36,867 Other 6,236 6,434 130,989 137,802 Deferred Credits and Other Liabilities: Accumulated deferred income taxes 250,359 248,103 Accumulated deferred investment tax credits 41,358 42,385 Regulatory liabilities 68,818 69,689 Other 27,924 26,922 388,459 387,099 Total Capitalization and Liabilities $1,562,366 $1,559,052 The accompanying Notes to Financial Statements are an integral part of these statements. -4- KENTUCKY UTILITIES COMPANY NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. PRESENTATION OF CONDENSED INFORMATION Pursuant to the rules and regulations of the Securities and Exchange Commission, certain information has been condensed and certain footnote disclosures have been omitted, which are normal- ly included in financial statements prepared in accordance with generally accepted accounting principles. These financial statements should be read in conjunction with the financial statements and notes thereto in the Kentucky Utilities Company (Kentucky Utilities) Annual Report on Form 10-K for the year ended December 31, 1993 (1993 10-K). In the opinion of management, the information furnished herein reflects all adjustments 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 mislead- ing. Results of interim periods are not necessarily indicative of results for any twelve-month period due to the seasonal nature of Kentucky Utilities' business. 2. FINANCIAL INSTRUMENTS Effective January 1, 1994, Kentucky Utilities adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (SFAS 115). This statement contains accounting and disclosure requirements associated with investments in equity securities that have readily determinable fair values and all investments in debt securities. This statement requires, among other things, classification -5- KENTUCKY UTILITIES COMPANY NOTES TO FINANCIAL STATEMENTS (Unaudited) of securities into one of three categories: held-to-maturity, available-for-sale or trading. Currently, Kentucky Utilities has no trading securities. Kentucky Utilities' temporary cash investments are classified as available-for-sale or held-to- maturity and are reported under the caption "Cash and cash equivalents" on the Balance Sheet. Kentucky Utilities has minimal investments in marketable securities which are classified as available-for-sale and are included in the caption "Other" in the noncurrent portion of the Balance Sheet. The adoption of SFAS 115 did not have a material impact on financial condition or results of operations. Reference is made to the 1993 10-K for market value disclosures on these securities. 3. PREFERRED STOCK Kentucky Utilities issued $20 million of 6.53% preferred stock in December 1993. On February 1, 1994, Kentucky Utilities used the proceeds from this issue, together with other available funds, to redeem its 7.84% Preferred Stock at a total cost of $20.3 million (including a redemption premium of $.3 million). Kentucky Utilities announced its intention to redeem this preferred stock on December 22, 1993. -6- KENTUCKY UTILITIES COMPANY MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY & RESOURCES Kentucky Utilities' construction expenditures increased approximately $23 million during the three-month period ended March 31, 1994, when compared to the first quarter of 1993. The increase can be attributed primarily to expenditures for combustion turbine peaking units and for compliance with the 1990 Clean Air Act Amendments. Kentucky Utilities expects to fund the majority of its remaining 1994 construction expenditures from the issuance of long-term debt with the balance primarily from internal sources. RESULTS OF OPERATIONS Quarter ended March 31, 1994, compared to the Quarter ended March 31, 1993 Increase (Decrease) From Prior Year Three Months Ended Mar. 31, 1994 kWh Revenues (%) (000's) Residential 11 $ 5,412 Commercial 6 1,680 Industrial 7 1,291 Mine Power & Public Authorities 4 569 Total Retail Sales 8 8,952 Other Electric Utilities 36 3,450 Provision for Refund - Litigation Settlement - (537) Miscellaneous Revenues & Other - 427 Total 11 $ 12,292 Operating revenues increased $12.3 million (8%). The increase can be attributed to an 11% increase in kilowatt-hour sales. The increase in kilowatt-hour sales is primarily attributable to increases in residential, commercial, industrial and off-system sales. The increases in residential and -7- KENTUCKY UTILITIES COMPANY MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS commercial sales reflect colder weather during the first quarter of 1994. Kentucky Utilities set a new record winter peak demand of 3,092 megawatts on January 19, 1994. The increase in industrial sales reflects the general strength of the service area economy as well as an increase in the number of industrial customers. The increase in off-system sales is attributable to an increase in demand for power due to extreme weather conditions and maintenance programs at neighboring utilities during the first quarter of 1994. Revenues were reduced by approximately $.5 million resulting from refunds to customers of amounts recovered from a litigation settlement with a former coal supplier. The $.5 million, which was charged against revenue, represents $2.9 million of fuel savings less $2.4 million for incurred litigation costs and off-system sales which Kentucky Utilities was allowed to retain pursuant to a regulatory order. Fuel and purchased power expense increased $6.1 million (11%). Fuel expense for the first quarter of 1994 reflects a $2.9 million reduction associated with the refunding to customers of fuel cost savings related to the resolution of a coal contract dispute. This reduction in fuel expense was offset by a $3.1 million increase resulting from a 4% increase in coal consumption as well as a 3% increase in the average price per ton of coal consumed. Purchased power expense increased by $5.9 million due to greater kilowatt-hour purchases ($3.2 million) and higher demand costs ($2.7 million). The increase is attributable to a permanent increase in capacity entitlement, effective January 1994, under an existing purchased -8- KENTUCKY UTILITIES COMPANY MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS power contract with Electric Energy, Inc. The increases in tons of coal consumed and kilowatt-hour purchases are the result of the previously discussed sales increases. Maintenance expenses increased $3.2 million (28%), primarily due to distribution utility line maintenance costs incurred as a result of extensive ice storm damage during the first quarter of 1994. -9- PART II. OTHER INFORMATION KENTUCKY UTILITIES COMPANY ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. The following exhibit is filed as part of this report: Exhibit Number Description 12 Computation of Ratio of Earnings to Fixed Charges. (b) Reports on Form 8-K. None. -10- KENTUCKY UTILITIES COMPANY SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. KENTUCKY UTILITIES COMPANY (Registrant) Date May 5, 1994 /s/ John T. Newton John T. Newton Chairman and President Date May 5, 1994 /s/ Michael D. Robinson Michael D. Robinson Controller -11- EX-12 2 KENTUCKY UTILITIES CO. EXHIBIT 12 EXHIBIT 12 KENTUCKY UTILITIES COMPANY COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES 12 Months Ended Mar. 31, 1994 (in thousands, except ratios) Earnings Net Income $ 82,081 Adjustments Fixed charges 31,952 Income taxes Current Federal 38,298 Current State 9,938 Deferred Federal-Net 1,062 Deferred State-Net (324) Deferred investment tax credit-Net (102) Income taxes included in Other Income and Deductions Current Federal and State (409) Deferred Federal and State 1,415 Amortization of investment tax credit (4,024) Undistributed income of Electric Energy, Inc. (24) Total Earnings $159,863 Fixed Charges Interest on long-term debt $ 30,765 Other interest charges 1,187 Total Fixed Charges $ 31,952 Ratio of Earnings to Fixed Charges 5.00 Note--Rentals are not material and have not been included in fixed charges. -12- -----END PRIVACY-ENHANCED MESSAGE-----