Item 1. Business
KU Energy Corporation
KU Energy Corporation (KU Energy or the Company), an exempt utility holding company, was incorporated in the state of Kentucky on June 23, 1988. On December 1, 1991, a corporate reorganization was completed under which KU Energy became the holder of all common stock of Kentucky Utilities Company (Kentucky Utilities). KU Energy has two wholly owned subsidiaries, Kentucky Utilities, an electric utility, and KU Capital Corporation (KU Capital), a nonutility subsidiary. Kentucky Utilities is KU Energy's principal subsidiary.
The Company has adopted a core energy investment strategy for its nonutility investments. Under this strategy, energy-related investments that utilize the Company's knowledge and expertise will be targeted. In particular, the Company is focusing its attention on independent power projects (including qualifying facilities and exempt wholesale generators) and equipment leased to other utilities.
The Company is a public utility holding company as defined in the Public Utility Holding Company Act of 1935 (the Holding Company Act). On November 13, 1991, the Company obtained an order from the Securities and Exchange Commission which granted an exemption from all provisions of the Holding Company Act, except Section 9(a)(2) thereof which relates to the acquisition of securities of public utility companies.
The ability of the Company to pay dividends on its common stock is dependent upon distributions made to it by Kentucky Utilities and on amounts that may be earned by the Company on future investments.
Kentucky Utilities Company
Kentucky Utilities is a public utility engaged in producing and selling electric energy. Kentucky Utilities provides electric service to about 409,700 customers in over 600 communities and adjacent suburban and rural areas in 77 counties in central, southeastern and western Kentucky, and to about 27,900 customers in 5 counties in southwestern Virginia. Of the Kentucky communities, 160 are incorporated municipalities served under unexpired municipal franchises and the rest are unincorporated communities where no franchises are required. Service has been provided in Virginia without franchises for a number of years. This lack of Virginia franchises is not expected to have a material effect on Kentucky Utilities' operations. Kentucky Utilities also sells electric energy at wholesale for resale in 12 municipalities.
For a complete description of Kentucky Utilities' business, reference is made to its Annual Report on Form 10-K for the year ended December 31, 1993, filed herewith as Exhibit 99B and incorporated herein by reference.
Item 2.
Item 2. Properties
Refer to Kentucky Utilities Company's Annual Report on Form 10-K for the year ended December 31, 1993 for a description of its properties. Presently, KU Energy has no significant physical property.
Item 3.
Item 3. Legal Proceedings
None.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Executive Officers of the Registrant
Current Positions Positions Held During at Least the Name and Age Held Last 5 Years
John T. Newton Chairman and Chairman of the Board, President Age 63 President and and Director of KU Energy since Director* 1988.
Michael R. Whitley Senior Vice- Director of KU Energy since March Age 50 President and 1992 and Senior Vice-President Director* since 1988. Secretary of KU Energy from 1988 to November 1992.
Roger C. Grimm Vice- Vice-President of KU Energy since Age 55 President November 1992. Director of Nonutility Investments of KU Energy from August 1992 to November 1992. President of KUE Corp. of NY (financial consulting) from April 1991 to July 1992. Managing Director of Financial Security Assurance, Inc. (credit enhancement company) from September 1985 to March 1991.
George S. Brooks II General General Counsel and Corporate Age 43 Counsel and Secretary of KU Energy since Corporate November 1992. Secretary*
William N. English Treasurer* Treasurer of KU Energy since 1988. Age 43
Michael D. Robinson Controller* Controller of KU Energy since June Age 38 1990.
Note: Officers are elected annually by the Board of Directors. There is no family relationship between any executive officer and any other executive officer or any director.
* Identified persons hold positions with the same titles at Kentucky Utilities. Refer to Kentucky Utilities Form 10-K for information concerning positions held during last five years.
PART II
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The Company's common stock is listed on the New York and Pacific stock exchanges under the ticker symbol "KU." Quotes in daily newspapers can be found under the listing "KU Engy."
KU Energy's Board has declared a common stock dividend of $.41 per share payable March 15, 1994, to shareholders of record.
As of December 31, 1993, the Company had approximately 34,490 common shareholders of record.
Kentucky Utilities has paid cash dividends quarterly since 1949. KU Energy expects to continue this policy, although future dividends are dependent on future earnings, capital requirements and financial conditions. See Note 6 of the Notes to Consolidated Financial Statements in the Annual Report to Shareholders (Exhibit 13). Such information is incorporated herein by reference.
Item 6.
Item 6. Selected Financial Data
Item 6. Selected Financial Data (continued)
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Refer to the caption "Management's Discussion and Analysis" in the Annual Report to Shareholders (Exhibit 13) for the information required by this item. Such information is incorporated herein by reference.
Item 8.
Item 8. Financial Statements and Supplementary Data
Refer to the Annual Report to Shareholders (Exhibit 13) for the information required by this item which is incorporated herein by reference, including:
Consolidated Statements of Income and Retained Earnings, Consolidated Statements of Cash Flows, Consolidated Balance Sheets, Consolidated Statements of Capitalization, Notes to Consolidated Financial Statements, and Report of Independent Public Accountants.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
The information required by Item 10 relating to each director and each nominee for election as a director at the Company's 1994 Annual Shareholders Meeting is set forth in the Company's definitive proxy statement (the "Proxy Statement") filed with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934 in connection with the Company's 1994 Annual Shareholders Meeting. Such information is incorporated herein by reference to the material appearing in the Proxy Statement under the caption "Election of Directors--General." Information required by this item relating to executive officers of the Company is set forth under a separate caption in Part I hereof.
On January 12, 1993, a report on Form 4 (due January 10, 1993) was filed on behalf of John T. Newton, Chairman, President and Chief Executive Officer of the Company, with the Securities and Exchange Commission reporting a purchase of Company Common Stock.
Item 11.
Item 11. Executive Compensation
The information required by Item 11 is incorporated herein by reference to the material appearing in the Proxy Statement under the caption Election of Directors--"Directors' Compensation", and -- "Executive Compensation" (but excluding any information contained under the subheadings --"Report of Compensation Committee on Executive Compensation", and --"Performance Graph").
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by Item 12 is incorporated herein by reference to the material appearing in the Proxy Statement under the caption "Election of Directors--Voting Securities Beneficially Owned by Directors, Nominees and Executive Officers; Other Information."
Item 13.
Item 13. Certain Relationships and Related Transactions
None.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(A) The following (1) financial statements, (2) schedules, and (3) exhibits, are filed as a part of this Annual Report.
(1) Financial Statements (incorporated by reference under Item 8, Financial Statements and Supplementary Data)
Consolidated Statements of Income and Retained Earnings for the three years ended December 31, 1993, Consolidated Statements of Cash Flows for the three years ended December 31, 1993, Consolidated Balance Sheets as of December 31, 1993 and 1992, Consolidated Statements of Capitalization as of December 31, 1993 and 1992, Notes to Consolidated Financial Statements, and Report of Independent Public Accountants.
(2) Schedules
Schedule V Property, plant and equipment. Schedule VI Accumulated depreciation, depletion and amortization of property, plant and equipment. Schedule VIII Valuation and qualifying accounts. Schedule IX Short-term borrowings. Schedule X Supplementary income statement information.
The following Schedules are omitted as not applicable or not required under Regulation S-X:
I, II, III, IV, VII, XI, XII, XIII, XIV.
(3) Exhibits
No. Description Page 3.A Amended and Restated Articles of Incorporation of KU Energy Corporation. (Exhibit 3A to Form 10-K Annual Report of KU Energy Corporation for the year ended December 31, 1992). Incorporated by reference. -
3.B By-laws of KU Energy Corporation (Exhibit 3B to Form 10-K Annual Report of KU Energy Corporation for the year ended December 31, 1992). Incorporated by reference. -
4.A Rights Agreement, dated as of January 27, 1992, by and between KU Energy Corporation and Illinois Stock Transfer Company (Exhibit 4.1 to Form 8-K Current Report of KU Energy Corporation, dated January 27, 1992). Incorporated by reference. -
4.B Indenture of Mortgage or Deed of Trust dated May 1, 1947, between Kentucky Utilities Company and Continental Illinois National Bank and Trust Company of Chicago and Edmond B. Stofft, as Trustees (Amended Exhibit 7(a) in File No. 2-7061), and Supplemental Indentures thereto dated, respectively, January 1, 1949 (Second Amended Exhibit 7.02 in File No. 2-7802), July 1, 1950 (Amended Exhibit 7.02 in File No. 2-8499), June 15, 1951 (Exhibit 7.02(a) in File No. 2-8499), June 1, 1952 (Amended Exhibit 4.02 in File No. 2-9658), April 1, 1953 (Amended Exhibit 4.02 in File No. 2-10120), April 1, 1955 (Amended Exhibit 4.02 in File No. 2-11476), April 1, 1956 (Amended Exhibit 2.02 in File No. 2-12322), May 1, 1969 (Amended Exhibit 2.02 in File No. 2-32602), April 1, 1970 (Amended Exhibit 2.02 in File No. 2-36410), September 1, 1971 (Amended Exhibit 2.02 in File No. 2-41467), December 1, 1972 (Amended Exhibit 2.02 in File No. 2-46161) April 1, 1974 (Amended Exhibit 2.02 in File No. 2-50344), September 1, 1974 (Exhibit 2.04 in File No. 2-59328), July 1, 1975 (Exhibit 2.05 in File No. 2-9328), May 15, 1976 (Amended Exhibit 2.02 in File No. 2-56126), April 15, 1977 (Exhibit 2.06 in File No. 2-59328, August 1, 1979 (Exhibit 2.04 in File No. 2-64969), May 1, 1980 (Exhibit 2 to Form 10-Q Quarterly Report of Kentucky Utilities for the quarter ended June 30, 1980), September 15, 1982 (Exhibit 4.04 in File No. 2-79891), August 1, 1984 (Exhibit 4B to Form 10-K Annual Report of Kentucky Utilities Company for the year ended December 31, 1984), June 1, 1985 (Exhibit 4 to Form 10-Q Quarterly Report of Kentucky Utilities Company for the quarter ended June 30, 1985), May 1, 1990 (Exhibit 4 to Form 10-Q Quarterly Report of Kentucky Utilities Company for the quarter ended June 30, 1990), May 1, 1991
No. Description Page 4.B (Exhibit 4 to Form 10-Q Quarterly Report of Kentucky cont Utilities Company for the quarter ended June 30, 1991), May 15, 1992 (Exhibit 4.02 to Form 8-K of Kentucky Utilities Company dated May 14, 1992), August 1, 1992 (Exhibit 4 to Form 10-Q Quarterly Report of Kentucky Utilities Company for the quarter ended September 30, 1992), June 15, 1993 (Exhibit 4.02 to Form 8-K of Kentucky Utilities Company dated June 15, 1993) and December 1, 1993 (Exhibit 4.01 to Form 8-K of Kentucky Utilities Company dated December 10, 1993). Incorporated by reference. -
4.C Supplemental Indenture dated March 1, 1992 between Kentucky Utilities and Continental Bank, National Association and M. J. Kruger, as Trustees, providing for the conveyance of properties formerly held by Old Dominion Power Company (Exhibit 4B to Form 10-K Annual Report of Kentucky Utilities Company for the year ended December 31, 1992). Incorporated by reference. -
10.A Kentucky Utilities' Amended and Restated Performance Share Plan (Exhibit 10A to Form 10-Q Quarterly Report of Kentucky Utilities Company for the quarter ended June 30, 1993). Incorporated by reference. -
10.B Kentucky Utilities' Annual Performance Incentive Plan (Exhibit 10B to Form 10-K Annual Report of Kentucky Utilities Company for the year ended December 31, 1990). Incorporated by reference. -
10.C Amendment No. 1 to Kentucky Utilities' Annual Performance Incentive Plan (Exhibit 10D to Form 10-K Annual Report of Kentucky Utilities Company for the year ended December 31, 1991). Incorporated by reference. -
10.D Kentucky Utilities' Executive Optional Deferred Compensation Plan (Exhibit 10C to Form 10-K Annual Report of Kentucky Utilities Company for the year ended December 31, 1990). Incorporated by reference. -
10.E Amendment No. 1 to Kentucky Utilities' Executive Optional Deferred Compensation Plan (Exhibit 10F to Form 10-K Annual Report of Kentucky Utilities Company for the year ended December 31, 1991). Incorporated by reference. -
No. Description Page 10.F Kentucky Utilities' Director Retirement Retainer Program, and Amendment No. 1 (Exhibit 10G to Form 10-K Annual Report of Kentucky Utilities Company for the year ended December 31, 1991). Incorporated by reference. -
10.G Kentucky Utilities' Supplemental Security Plan (Exhibit 10I to Form 10-K Annual Report of Kentucky Utilities Company for the year ended December 31, 1991). Incorporated by reference. -
10.H KU Energy's Director Retirement Retainer Program (Exhibit 10J to Form 10-K Annual Report of KU Energy Corporation for the year ended December 31, 1992). Incorporated by reference. -
10.I KU Energy's Performance Share Plan (Exhibit 10A to Form 10-Q Quarterly Report of KU Energy Corporation for the quarter ended June 30, 1993). Incorporated by reference. -
10.J KU Energy's Annual Performance Incentive Plan N/A
10.K Amendment No. 1 to KU Energy's Annual Performance Incentive Plan N/A
10.L Amendment No. 2 to Kentucky Utilities' Annual Performance Incentive Plan (Exhibit 10.H to Form 10-K Annual Report of Kentucky Utilities Company for the year ended December 31, 1993). Incorporated by reference. -
10.M Amendment No. 3 to Kentucky Utilities' Annual Performance Incentive Plan (Exhibit 10.I to Form 10-K Annual Report of Kentucky Utilities Company for the year ended December 31, 1993). Incorporated by reference. -
10.N Amendment No. 2 to Kentucky Utilities' Executive Optional Deferred Compensation Plan (Exhibit 10.J to Form 10-K Annual Report of Kentucky Utilities Company for the year ended December 31, 1993). Incorporated by reference. -
10.O Kentucky Utilities' Amended and Restated Director Deferred Compensation Plan (Exhibit 10.K to Form 10-K Annual Report of Kentucky Utilites Company for the year ended December 31, 1993). Incorporated by reference. -
10.P KU Energy's Executive Optional Deferred Compensation Plan N/A
10.Q KU Energy's Director Deferred Compensation Plan N/A
13 Portions of 1993 Annual Report to Shareholders N/A
21 List of Subsidiaries N/A
23 Consent of Independent Public Accountants N/A
No. Description Page
99.A Description of Common Stock N/A
99.B Kentucky Utilities Company Form 10-K for the year ended December 31, 1993 N/A
Note - Exhibit numbers 10.A through 10.Q are management contracts or compensatory plans or arrangements required to be filed as exhibits to this Form 10-K.
The following instruments defining the rights of holders of certain long-term debt of Kentucky Utilities Company have not been filed with the Securities and Exchange Commission but will be furnished to the Commission upon request.
1. Loan Agreement dated as of May 1, 1990 between Kentucky Utilities and the County of Mercer, Kentucky, in connection with $12,900,000 County of Mercer, Kentucky, Collateralized Solid Waste Disposal Facility Revenue Bonds (Kentucky Utilities Company Project) 1990 Series A, due May 1, 2010 and May 1, 2020.
2. Loan Agreement dated as of May 1, 1991 between Kentucky Utilities and the County of Carroll, Kentucky, in connection with $96,000,000 County of Carroll, Kentucky, Collateralized Pollution Control Revenue Bonds (Kentucky Utilities Company Project) 1992 Series A, due September 15, 2016.
3. Loan Agreement dated as of August 1, 1992 between Kentucky Utilities and the County of Carroll, Kentucky, in connection with $2,400,000 County of Carroll, Kentucky, Collateralized Pollution Control Revenue Bonds (Kentucky Utilities Company Project) 1992 Series C, due February 1, 2018.
4. Loan Agreement dated as of August 1, 1992 between Kentucky Utilities and the County of Muhlenberg, Kentucky, in connection with $7,200,000 County of Muhlenberg, Kentucky, Collateralized Pollution Control Revenue Bonds (Kentucky Utilities Company Project) 1992 Series A, due February 1, 2018.
5. Loan Agreement dated as of August 1, 1992 between Kentucky Utilities and the County of Mercer, Kentucky, in connection with $7,400,000 County of Mercer, Kentucky, Collateralized Pollution Control Revenue Bonds (Kentucky Utilities Company Project) 1992 Series A, due February 1, 2018.
6. Loan Agreement dated as of August 1, 1992 between Kentucky Utilities and the County of Carroll, Kentucky, in connection with $20,930,000 County of Carroll, Kentucky, Collateralized Pollution Control Revenue Bonds (Kentucky Utilities Company Project) 1992 Series B, due February 1, 2018.
7. Loan Agreement dated as of December 1, 1993, between Kentucky Utilities and the County of Carroll, Kentucky, in connection with $50,000,000 County of Carroll, Kentucky, Collateralized Solid Waste Disposal Facilities Revenue Bonds (Kentucky Utilities Company Project) 1993 Series A due December 1, 2023.
(B) No reports on Form 8-K were filed by the Company during the last quarter of 1993.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To KU Energy Corporation & Subsidiaries:
We have audited, in accordance with generally accepted auditing standards, the consolidated financial statements included in KU Energy Corporation's Annual Report to Shareholders incorporated by reference in this Form 10-K and have issued our report thereon dated January 26, 1994. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The schedules listed in Item 14(a)(2) are the responsibility of KU Energy Corporation's management and are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly state, in all material respects, the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen & Co. Arthur Andersen & Co.
Chicago, Illinois January 26, 1994
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on March 14, 1994.
KU ENERGY CORPORATION
/s/ John T. Newton John T. Newton Chairman and President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the date indicated.
Signature Title
/s/ John T. Newton John T. Newton Chairman and President (Principal Executive Officer) and Director /s/ Michael R. Whitley Michael R. Whitley Senior Vice-President (Principal Financial Officer) and Director /s/ Michael D. Robinson Michael D. Robinson Controller (Principal Accounting Officer)
/s/ Mira S. Ball Mira S. Ball Director
/s/ W. B. Bechanan W. B. Bechanan Director
/s/ Harry M. Hoe Harry M. Hoe Director
/s/ Milton W. Hudson Milton W. Hudson Director
/s/ Frank V. Ramsey, Jr. Frank V. Ramsey, Jr. Director
/s/ Warren W. Rosenthal Warren W. Rosenthal Director
/s/ William L. Rouse, Jr. William L. Rouse, Jr. Director
/s/ Charles L. Shearer Charles L. Shearer Director
March 14, 1994