-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Aa5YzEl1kpkIUYgWwQGvJHkydGTR6IlIpEsUzsOssmTpdNOuiyYYhPSGrayF+tJC vjpw5SiIa54vV0v7pNRbhQ== 0000060549-97-000006.txt : 19970515 0000060549-97-000006.hdr.sgml : 19970515 ACCESSION NUMBER: 0000060549-97-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LOUISVILLE GAS & ELECTRIC CO /KY/ CENTRAL INDEX KEY: 0000060549 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 610264150 STATE OF INCORPORATION: KY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-02893 FILM NUMBER: 97605143 BUSINESS ADDRESS: STREET 1: 220 W MAIN ST STREET 2: P O BOX 32010 CITY: LOUISVILLE STATE: KY ZIP: 40232 BUSINESS PHONE: 5026272000 MAIL ADDRESS: STREET 1: 220 WEST MAIN ST CITY: LUUISVILLE STATE: KY ZIP: 40232 10-Q 1 LG&E'S MAR 1997 10-Q 1 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 March 31, 1997 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 2 - 26720 LOUISVILLE GAS AND ELECTRIC COMPANY (Exact name of registrant as specified in its charter) Kentucky 61 - 0264150 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 220 West Main Street 40232 P.O. Box 32010 (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. 21,294,223 shares, without par value, as of April 30, 1997, all of which were held by LG&E Energy Corp. 2 Part I. Financial Information - Item 1. Financial Statements Louisville Gas and Electric Company Statements of Income (Thousands of $) The following statements of income include all normal recurring adjustments and accruals which are, in the opinion of the Company, necessary to present a fair statement of the results for the periods shown. Quarter Ended March 31, 1997 1996 OPERATING REVENUES: Electric (Note 2) $128,661 $135,688 Gas 96,738 91,056 Total operating revenues 225,399 226,744 OPERATING EXPENSES: Fuel for electric generation 31,012 35,914 Power purchased 4,007 3,102 Gas supply expenses 67,825 58,232 Other operation expenses 36,868 39,728 Maintenance 11,722 14,167 Depreciation and amortization 22,952 22,250 Federal and state income taxes 13,277 14,577 Property and other taxes 4,841 4,824 Total operating expenses 192,504 192,794 NET OPERATING INCOME 32,895 33,950 Other income and (deductions) (Note 3) 886 122 Interest charges 9,814 10,520 NET INCOME 23,967 23,552 Preferred Stock Dividends 1,127 1,156 NET INCOME AVAILABLE FOR COMMON STOCK $ 22,840 $ 22,396 3 Louisville Gas and Electric Company Balance Sheets (Thousands of $) ASSETS Mar. 31, Dec. 31, 1997 1996 UTILITY PLANT: At original cost $2,699,988 $2,685,209 Less: reserve for depreciation 1,019,075 999,987 Net utility plant 1,680,913 1,685,222 OTHER PROPERTY AND INVESTMENTS - less reserve 1,635 1,028 CURRENT ASSETS: Cash and temporary cash investments 62,713 56,792 Marketable securities 12,682 3,595 Accounts receivable - less reserve 110,058 115,144 Materials and supplies - at average cost: Fuel (predominantly coal) 9,274 14,576 Gas stored underground 13,314 35,510 Other 32,090 32,426 Prepayments 1,833 2,480 Total current assets 241,964 260,523 DEFERRED DEBITS AND OTHER ASSETS: Unamortized debt expense 6,984 6,933 Regulatory assets 26,725 27,729 Other 29,535 25,277 Total deferred debits and other assets 63,244 59,939 Total assets $1,987,756 $2,006,712 4 Louisville Gas and Electric Company Balance Sheets (cont.) (Thousands of $) CAPITAL AND LIABILITIES Mar. 31, Dec. 31, 1997 1996 CAPITALIZATION: Common stock, without par value - Outstanding 21,294,223 shares $ 425,170 $ 425,170 Retained earnings 232,062 209,222 Other (935) (635) Total common equity 656,297 633,757 Cumulative preferred stock 95,328 95,328 Long-term debt 646,800 646,835 Total capitalization 1,398,425 1,375,920 CURRENT LIABILITIES: Accounts payable 57,501 97,478 Trimble County Settlement 15,799 17,511 Dividends declared 1,127 20,131 Accrued taxes 25,685 11,982 Accrued interest 8,493 9,994 Other 14,591 13,128 Total current liabilities 123,196 170,224 DEFERRED CREDITS AND OTHER LIABILITIES: Accumulated deferred income taxes 242,670 241,681 Investment tax credit, in process of amortization 78,954 80,040 Accumulated provision for pensions and related benefits 42,530 42,554 Regulatory liability 76,444 77,287 Other 25,537 19,006 Total deferred credits and other liabilities 466,135 460,568 Total capital and liabilities $1,987,756 $2,006,712 5 Louisville Gas and Electric Company Statements of Cash Flows (Thousands of $) Quarter Ended March 31, 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 23,967 $ 23,552 Items not requiring cash currently: Depreciation and amortization 22,952 22,250 Deferred income taxes - net 253 815 Investment tax credit - net (1,086) (1,101) Other 931 1,030 (Increases) decreases in net current assets: Accounts receivable 5,086 (1,507) Materials and supplies 27,834 29,211 Trimble County Settlement (1,712) (7,436) Accounts payable (39,977) (12,267) Accrued taxes 13,703 14,690 Accrued interest (1,501) (217) Prepayments and other 2,110 1,673 Other 2,274 (19,160) Net cash provided by operating activities 54,834 51,533 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of securities (10,238) (5,430) Proceeds from sales of securities 740 19,279 Construction expenditures (19,284) (19,145) Net cash used for investing activities (28,782) (5,296) CASH FLOWS FROM FINANCING ACTIVITIES: Payment of dividends (20,131) (19,672) Net cash used for financing activities $(20,131) $ (19,672) 6 Louisville Gas and Electric Company Statements of Cash Flows (cont.) (Thousands of $) Quarter Ended March 31 1997 1996 NET INCREASE IN CASH AND TEMPORARY CASH INVESTMENTS $ 5,921 $ 26,565 CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF PERIOD 56,792 58,131 CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $ 62,713 $ 84,696 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid (refunded) during the period for: Income taxes $ (52) $ 2,629 Interest on borrowed money 10,929 10,367 For the purposes of this statement, all temporary cash investments purchased with a maturity of three months or less are considered cash equivalents. 7 Louisville Gas and Electric Company Statements of Retained Earnings (Thousands of $) Quarter Ended March 31, 1997 1996 Balance at beginning of period $209,222 $181,049 Net income 23,967 23,552 Subtotal 233,189 204,601 Cash dividends declared on stock - 5% cumulative preferred 269 269 Auction rate cumulative pref. 491 520 $5.875 cumulative preferred 367 367 Common - 18,500 Total dividends declared 1,127 19,656 Balance at end of period $232,062 $184,945 8 Louisville Gas and Electric Company Notes to Financial Statements (Unaudited) 1. The financial statements included herein have been prepared by Louisville Gas and Electric Company (the "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year 1996. 2. In April 1995, in response to an application filed by the Company, the Commission approved, with modifications, an environmental cost recovery surcharge that increased electric revenues by $3.2 million in 1995, $2.4 million in 1996 and is expected to increase 1997 revenues an additional $1 million. An appeal of the Commission's April 1995 order by various intervenors in the proceeding is currently pending in the Franklin Circuit Court of Kentucky. The Company is contesting the legal challenges to the surcharge, but cannot predict the outcome of the appeal. The amount of refunds that may be ordered, if any, are not expected to have a material adverse effect on the Company's financial position or results of operations. 3. Other income and deductions consisted of the following for the quarter ended March 31 (in thousands of $): 1997 1996 Interest and dividend income $1,841 $ 859 Gains (losses) on fixed asset disposal 8 2 Donations (58) (38) Income taxes and other (905) (701) $ 886 $ 122 9 4. New Accounting Pronouncements. Effective January 1, 1997, the Company adopted Statement of Financial Accounting Standards No. 125, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (SFAS No. 125). This new standard is effective for all transfers and servicing of financial assets and extinguishments of liabilities occurring after December 31, 1996. Adopting SFAS No. 125 had no impact on the Company's financial position or results of operations. 5. The Company adopted the provisions of Statement of Position (SOP) 96-1, Environmental Remediation Liabilities, January 1, 1997. This statement provides authoritative guidance for recognition, measurement, and disclosure of environmental remediation liabilities in financial statements. Due to the Company's previous recognition of this type of liability, adoption did not have a material impact on the Company's financial position or results of operation. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, Earnings per Share, effective for annual periods ending after December 15, 1997. This statement, which establishes standards for computing and presenting earnings per share, will not have an effect on the Company because the common stock is held by the parent, LG&E Energy Corp. 6. Reference is made to Part II herein - Item 1, Legal Proceedings, and Note 13 of the Notes to Financial Statements of the Company's Annual Report on Form 10-K for the year ended December 31, 1996. 10 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition. Some of the matters discussed in Part I or Part II of this Form 10-Q may contain forward looking statements that are subject to certain risks, uncertainties and assumptions. Such forward looking statements are intended to be identified in this document by the words "anticipate," "estimate," "objective," "possible," "potential" and similar expressions. Actual results may vary materially. Factors that could cause actual results to differ materially include: general economic conditions; business and competitive conditions in the energy industry; change in federal or state legislation; unusual weather; actions by state or federal regulatory agencies affecting rates; and the other factors described in Exhibit 99.01 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996. Results of Operations Because of seasonal fluctuations in temperature and other factors the results of one interim period are not necessarily indicative of results to be expected for the year. Quarter Ended March 31, 1997, Compared with Quarter Ended March 31, 1996 Net income increased $.4 million (2%) for the quarter ended March 31, 1997, over the quarter ended March 31, 1996, primarily due to a decrease in operation and maintenance expenses of 10%, partially offset by lower electric and gas sales caused by the warmer weather. A comparison of operating revenues for the quarter ended March 31, 1997, with the quarter ended March 31, 1996, reflects increases and decreases which have been segregated by the following principal causes: Increase or (Decrease) (Thousands of $) Electric Gas Cause Revenues Revenues Sales to ultimate consumers: Fuel and gas supply adjustments $ (792) $ 20,672 Demand side management/revenue decoupling 1,404 1,568 Environmental cost recovery surcharge 152 - Variation in sales volume, etc. (3,111) (17,160) Total (2,347) 5,080 Sales for resale (6,037) - Gas transportation - net - 448 Other 1,357 154 Total $(7,027) $ 5,682 11 Fuel for electric generation and gas supply expenses comprise a large segment of the Company's total operating expenses. The Company'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 the Company's retail rates, subject to the approval of the Public Service Commission of Kentucky. While the price of coal purchased remained relatively stable, fuel for electric generation decreased $4.9 million (14%) for the quarter because of a decrease in generation. Gas supply expenses increased $9.6 million (16%) due to an increase in net gas supply cost ($22.6 million), partially offset by a decrease in the volume of gas delivered to the distribution system ($13.0 million). Power purchased increased $.9 million (29%) due to increased purchases because of the availability of economically priced power and increased unplanned outages at the electric generating plants. Other operation expenses decreased $2.9 million (7%) mainly as a result of improved cost containment efforts, particularly in administrative areas ($4.7 million), partially offset by increased costs to operate electric generating plants ($1.8 million). Maintenance expenses decreased $2.4 million (17%) mainly because of a decrease in repairs at the electric generating plants and fewer repairs to the electric transmission and distribution system, partially offset by the financial effects of the March flood in the Company's service area. Depreciation and amortization increased because of additional depreciable plant in service. Variations in income tax expense are largely attributable to changes in pre-tax income. Other income increased $.7 million because of interest recorded as a result of a favorable tax settlement. Interest charges decreased primarily because of a decrease in outstanding debt. The Company's First Mortgage Bonds, 5.625% Series of $16 million were retired at maturity on June 1, 1996 and $50 million in other debt was refinanced at more favorable rates in 1996. Liquidity and Capital Resources The Company's capital structure and cash flow remained strong throughout the quarter. This is evidenced primarily by the Company's ability to meet its capital needs through internal generation. 12 The Company's need for capital funds is primarily related to the construction of plant and equipment necessary to meet electric and gas customers' needs and the protection of the environment. Construction expenditures for the quarter ended March 31, 1997, of $19 million, were financed with internally generated funds. The Company's cash and temporary cash investments balance increased $6 million during the three months ended March 31, 1997. The increase reflects the Company's cash flow from operations less construction expenditures, dividends paid, and the purchase of securities. Variations in accounts receivable, accounts payable and materials and supplies are not generally significant indicators of the Company's liquidity, as such variations are primarily attributable to seasonal fluctuations in weather, which has a direct effect on sales of electricity and natural gas. At March 31, 1997, the Company had unused lines of credit of $200 million with banks for which it pays commitment fees. The lines are scheduled to expire in the year 2001. The Company expects to renegotiate such lines when they expire. The Company's capitalization ratios at March 31, 1997, and December 31, 1996 were: Mar. 31, Dec. 31, 1997 1996 Long-term debt 46.3% 47.0% Preferred stock 6.8 6.9 Common equity 46.9 46.1 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. 13 Part II. Other Information Item 1. Legal Proceedings. For a description of the significant legal proceedings involving the Company, reference is made to: the information under the following items and captions of the Company's Annual Report on Form 10-K for the year ended December 31, 1996 Item 1, Business; Item 3, Legal Proceedings; Item 7, Management's Discussion and Analysis of Results of Operations and Financial Condition; and Notes 2 and 13 of the Notes to Financial Statements under Item 8. To date, the proceedings reported in the Company's 1996 Form 10-K have not changed materially. Item 6(a). Exhibits. Exhibit No. 27. Financial Data Schedule Item 6(b) Reports on Form 8-K. None. 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. LOUISVILLE GAS AND ELECTRIC COMPANY Registrant Date: May 14, 1997 /s/ M. L. Fowler ______________________________ M. L. Fowler Vice President and Controller (On behalf of the registrant in his capacity as Principal Accounting Officer) EX-27 2
UT 1,000 3-MOS DEC-31-1997 MAR-31-1997 PER-BOOK 1,680,913 1,635 241,964 63,244 0 1,987,756 424,334 (99) 232,062 656,297 46,223 49,105 646,800 0 0 0 0 0 0 0 589,331 1,987,756 225,399 13,277 179,227 192,504 32,895 886 33,781 9,814 23,967 1,127 22,840 0 9,428 54,834 0 0
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