UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form U5S
ANNUAL REPORT
For the year ended December 31, 2002
Filed pursuant to the Public Utility Holding Company Act of 1935
E.ON AG E.ON UK Ltd.
E.ON US Holding GmbH Powergen Ltd.
E.ON UK Holding GmbH Powergen US Holdings Ltd.
E.ON-Platz 1 Powergen US Investments
40479 Dusseldorf 53 New Broad Street
Germany London EC2M 1SL
United Kingdom
E.ON US Investments Corp.
220 West Main Street Powergen Luxembourg sarl
Louisville, Kentucky 40202 99 Grand-rue
L-1661 Luxembourg
Powergen Luxembourg Holdings sarl
99 Grand-rue
L-1661 Luxembourg
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(Name and address of each registered holding company in the system)
Table of Contents
Item 1. System Companies and Investments Therein as of December 31, 2002.....1
Item 2. Acquisitions or Sales of Utility Assets..............................2
Item 3. Issue, Sale, Pledge, Guarantee or Assumption of System Securities....5
Item 4. Acquisition, Redemption or Retirement of System Securities...........5
Item 5. Investments in Securities of Nonsystem Companies.....................6
Item 6. Officers and Directors...............................................7
Item 7. Contributions and Public Relations..................................11
Item 8. Service, Sales and Construction Contracts...........................11
Item 9. Wholesale Generators and Foreign Utility Companies..................12
Item 10. Financial Statements and Exhibits...................................16
SIGNATURE....................................................................21
Item 1. System Companies and Investments Therein as of December 31, 2002
The schedules listed below and included in Exhibit F, respond to Item 1:
Exhibit F, Schedule 1(a): A table listing E.ON AG ("E.ON") and its
subsidiary companies (except for LG&E Energy Corp. and its subsidiary companies
(the "LG&E Energy Group"), which are shown on a separate schedule). The table
indicates the number of common shares owned, percentage of voting power and
denotes the position of the company within the E.ON group of companies. The
position of each company within the E.ON group of companies is determined by a
review of the "owned by" columns. For example, company number 135, Montan GmbH
Assekuranz-Makler, is shown as being owned by company number 1300. Company 1300,
E.ON Risk Consulting GmbH, is shown as owned by E.ON. Therefore, company 135 is
a second tier subsidiary of E.ON and a direct subsidiary of E.ON Risk Consulting
GmbH.
An expanded version of Exhibit F, Schedule 1(a), denoted Exhibit F,
Schedule 1(b), is also provided under a request for confidential treatment in a
format that indicates additional information about the issuer's book value and
the owner's book value.
Exhibit F, Schedule 1(c): A table listing the LG&E Energy Group companies
and containing the same type of information provided in Exhibit F, Schedule
1(a).
Exhibit F, Schedule 1(d): A table listing the subsidiary companies that
left the E.ON Group during the reporting period, by merger, sale or liquidation.
Exhibit F, Schedule 1(e): A table listing the E.ON Group companies that had
their names changed during the reporting period.
1
Item 2. Acquisitions or Sales of Utility Assets
Kentucky Utilities Company and Louisville Gas and Electric Company neither
sold nor acquired operating units or systems exceeding $1 million in 2002.
However, the utilities made the following additions to existing plant in service
in excess of $1 million. The Trimble County combustion turbines, listed below,
were initiated at LG&E Capital Corp. and upon the approval of the Kentucky
Public Service Commission were transferred to the utilities where construction
was completed.
Kentucky Utilities Company
--------------------------
PLANT IN SERVICE EXCEEDING $1 Million
PROJECT
NUMBER PROJECT NAME LOCATION AMOUNT
-------------------------------------------------------------------------------
Trimble County #5
113727 CT Construction TC5 Combustion Turbine 39,045,125.00
Trimble County #6
113730 CT Construction TC6 Combustion Turbine 39,024,692.00
23037 GH2 Low Nox Retrofit Ghent Unit 2 5,224,392.30
113735 CT Construction TC P Trimble County Gas Pipeline 4,474,853.30
115225 GEMINI Work Mgmt. System LG&E Building 2,247,233.36
109728 BR2 Cooling Tower E W Brown Steam Unit 2 1,642,314.90
106624 GH1 DCS Ghent Unit 1 1,257,397.80
--------------
TOTAL PLANT IN SERVICE EXCEEDING $1 MILLION 92,916,008.66
CONSTRUCTION WORK IN PROCESS
113736 TC CT Substation Trimble County 3,560,457.61
112642 Ghent 345/138kV Transf #2 Ghent Substation 2,027,901.84
114155 GR3 Generator Rewind Green River 3 1,208,578.80
112973 BR2 Turbine Controls Brown Unit 2 1,189,879.82
--------------
TOTAL CWIP EXCEEDING $1 MILLION 7,986,818.07
--------------
TOTAL KU ADDITIONS EXCEEDING $1 MILLION 100,902,826.73
==============
2
Louisville Gas and Electric Company
-----------------------------------
PLANT IN SERVICE EXCEEDING $1 Million
PROJECT
NUMBER PROJECT NAME LOCATION AMOUNT
-------------------------------------------------------------------------------
LGE NOx
107182 Compliance Trimble County 34,910,939.00
Trimble County #5
113725 CT Construction - TC Combustion Turbine 15,969,870.00
Trimble County #6
113732 CT Construction TC6 Combustion Turbine 15,961,408.00
111379 West Louisville Distribution Mains 7,487,024.83
108260 New 345kv line from Middletown/Trimble SW 4541 5,629,408.00
110615 MC2 WET STACK CONVER Mill Creek SO2 - Unit 2 5,496,522.30
101159 Gas Main Extensions Distribution Mains 2,886,765.26
101299 MC2-Precipitator Mill Creek Unit 2 2,064,743.30
103554 Economizer Mill Creek Unit 2 2,018,207.80
113733 CT Construction TC P Trimble County Gas Pipeline 1,835,164.90
108709 Blue Lick Transformer Blue Lick Sub 1,629,495.00
108258 New 345kv line Middletown 1,608,071.20
105057 Seneca Gardens Distribution Mains 1,521,948.00
108257 MT 345/138kv Tranfor Middletown Sub 1,349,914.30
108688 TC Ash Hopper Trimble County 1,329,418.80
109356 Jeffersontown Distribution Mains 1,164,865.30
109216 Zoneton-Maryville Distribution Mains 1,136,442.30
108259 New 345kv line - TC Trimble County 1,017,960.00
----------------
TOTAL PLANT IN SERVICE EXCEEDING $1 MILLION 105,018,168.29
CONSTRUCTION WORK IN PROCESS
LGE NOx
107182 Compliance Jefferson County Power Plants 36,892,668.78
GEMINI Work Mgmt.
111353 System LG&E Building 7,752,670.73
113932 West Louisville Distribution Mains 6,943,494.29
110613 MC1 WET STACK Mill Creek Unit 1 4,734,727.48
110616 MC3 WET STACK Mill Creek Unit 3 4,442,887.69
345/138 KV
113948 TRANSFORMER Cane Run Substation 1,533,153.14
Ohio Falls
114682 Redevelopment Ohio Falls 1,500,387.20
CR6 LP Turbine
114378 Blades Cane Run Unit 6 1,459,391.46
113734 TC CT Substation Trimble County 1,457,354.89
3
113933 South Louisville Distribution Mains 1,334,765.79
113429 Bulldozer Mill Creek 1,153,672.00
113924 Bulldozer Mill Creek 1,131,486.00
CR6 Generator Rotor
114571 Rewind Cane Run Unit 6 1,077,503.02
-----------------
TOTAL CWIP EXCEEDING $1 MILLION 1,414,162.47
-----------------
TOTAL LG&E ADDITIONS EXCEEDING $1 MILLION 176,432,330.76
=================
4
Item 3. Issue, Sale, Pledge, Guarantee or Assumption of System Securities
The schedules listed below and included in Exhibit F, respond to Item 3:
Exhibit F, Schedule 3(a): Issues of long term loans dated as of
July 1, 2002 - December 31, 2002.
Exhibit F, Schedule 3(b): Short term loans as of June 30, 2002.
Exhibit F, Schedule 3(c): Short term loans as of December 31, 2002.
Exhibit F, Schedule 3(d): Cash current accounts as of June 30, 2002.
Exhibit F, Schedule 3(e): Cash current accounts as of December 31, 2002.
Exhibit F, Schedule 3(f): Guarantees.
Exhibit F, Schedule 3(g): Issuance of equity.
Item 4. Acquisition, Redemption or Retirement of System Securities
Pursuant to shareholder resolutions approved at the annual general meeting
of shareholders held on May 28, 2002, E.ON's Board of Management is authorized
to buy back up to 10% of E.ON's outstanding share capital through October 31,
2003. As of December 31, 2002, E.ON held a total of 4,407,169 treasury shares in
the amount of EUR 259 million (equivalent to 0.6% or EUR 11,458,639 of the
capital stock). The number of outstanding shares as of December 31, 2002,
totalled 652,341,876. During 2002, E.ON purchased 241,523 shares on the market
and sold 503,434 shares to employees at preferential prices as part of E.ON's
stock-based compensation plan. An additional 35,250,955 shares of E.ON are held
by its subsidiaries. Following the VEBA-VIAG merger these shares were held in
non-consolidated subsidiaries. Following some restructuring in September and
October 2002 these shares were held by fully consolidated subsidiaries and
therefore qualified as treasury shares according to German law. Treasury shares
do not have voting rights.
As of July 16, 2001, the Free State of Bavaria ("Bavaria") reduced its
stake in E.ON to below 5.0%. As a result of the increase in the number of
treasury shares, following the restructuring, Bavaria's voting interest in E.ON
has increased to above 5.0%, again.
The schedules listed below and included in Exhibit F, also respond to Item
4.
Exhibit F, Schedule 4(a): Redemption of long term loans dated as of
July 1, 2002 - December 31, 2002.
Exhibit F, Schedule 4(b): Acquisition, retirement or redemption of
equity.
5
Item 5. Investments in Securities of Nonsystem Companies
E.ON is authorized to maintain equity investments to fund pension
liabilities and nuclear plant decommissioning by the Commission's June 14, 2002
order (Holding Co. Act Release No. 27539). Information with regard to this
portfolio of investments is provided below.
As of December 31, 2002, the E.ON Group had pension and nuclear
decommissioning liabilities of EUR 21,442,113,154 (USD $ 22,346,970,329) based
on actuarial calculations. The majority of the pension provisions and all
nuclear decommissioning liabilities are held by E.ON Energie. The market value
of portfolio investments held by E.ON Energie to fund such obligations as of
December 31, 2002 was EUR 8,027,675,295 (USD $8,366,443,193). This amount
represents 46 % of E.ON Energie's liabilities. The assets held to fund the
liabilities were composed of 65% (EUR 5,194,030,688 (USD $ 5,413,218,783)) fixed
income securities such as commercial paper, notes, bonds and 35% (EUR
2,833,644,607 (USD $ 2,953,224,409)) common stocks as of December 31, 2002.
Investments in other non-system entities are described below:
Name of Owner's Book
System Name of Description of Number of % of Voting Nature of Value (in
Company Issuer Security Shares Power Business thousands)
---------------------------------------------------------------------------------------------------------------------
LG&E Energy Goldman Sachs Money market 9.4 million .1% Money market $9,400
Corp. Financial Square mutual fund mutual fund
Federal Fund
Louisville Gas & Ohio Valley Common stock 4,900 4.9% Public utility $490
Electric Electric Corp.
Company ("OVEC")
Kentucky OVEC Common stock 2,500 2.5% Public utility $250
Utilities
Company
See also, Exhibit F, Schedule 5(a) for other investments in non-system
entities.
6
Item 6. Officers and Directors
Part I. Officers and Directors
The schedules listed below and included in Exhibit F, respond to Item 6,
Part I:
Exhibit F, Schedule 6(a) E.ON Group officers and directors.
Exhibit F, Schedule 6(b) Powergen Group officers and directors.
Exhibit F, Schedule 6(c): LG&E Energy Group officers and directors.
Note: Exhibit F, Schedule 6(a) provides information about the officers
and directors of Degussa AG and Viterra AG. These are to-be-divested
companies and Degussa is now only 46.5% owned by E.ON. Although E.ON has
endeavored to provide complete information with regard to the officers and
directors of the subsidiaries of Degussa and Viterra, such information was
not available at the time this Annual Report was filed.
7
Part II. Financial Connections of Officers and Directors
------------------------------ ------------------------------- ---------------------------- -----------------------
Name of Officer or Name and Location of Position Held in Applicable
Director Financial Institution Financial Institution Exemption Rule
------------------------------ ------------------------------- ---------------------------- -----------------------
Dr. Andreas Georgi Dresdner Bank AG, Member, Board of Rule 70 no-action
Frankfurt/Main Management request dated June
27, 2002.
Allianz Dresdner Bauspar AG, Member, Supervisory
Deutsche Schiffsbank AG, Board
Eurohyp Aktiengesellschaft,
Oldenburgische Landesbank
Aktiengesellschaft, Dresdner
Bank Luxembourg S.A.,
Dresdner Bank (Schweiz) AG
------------------------------ ------------------------------- ---------------------------- -----------------------
Dr. Arend Oetker Gerling NCM Credit and Member, Supervisory Rule 70 no-action
Finance AG Board request dated June
27, 2002.
------------------------------ ------------------------------- ---------------------------- -----------------------
Dr. Bernd Voss Dresdner Bank AG, Member, Supervisory Rule 70 no-action
Frankfurt/Main; Bankhaus Board request dated June
Reuschel & Co. 27, 2002.
------------------------------ ------------------------------- ---------------------------- -----------------------
Dr. Erhard Schipporeit Commerzbank AG Member, Supervisory Rule 70 no-action
Board request dated June
27, 2002.
------------------------------ ------------------------------- ---------------------------- -----------------------
Dr. Henning Schulte-Noelle Dresdner Bank AG, Member, Supervisory Rule 70 no-action
Frankfurt/Main Board request dated June
27, 2002.
------------------------------ ------------------------------- ---------------------------- -----------------------
Dr. Karl-Hermann Baumann Deutsche Bank AG, Member, Supervisory Rule 70 no-action
Frankfurt/Main Board request dated June
27, 2002.
------------------------------ ------------------------------- ---------------------------- -----------------------
Dr. Paul Siebertz Bayerische Hypo- und Member, Board of Rule 70 no-action
Vereinsbank AG Management request dated June
27, 2002.
------------------------------ ------------------------------- ---------------------------- -----------------------
Dr. Rolf-E. Breuer Deutsche Bank AG, Member, Supervisory Rule 70 no-action
Kreditanstalt fur Board request dated June
Wiederaufbau, 27, 2002.
`Landwirtschaftliche
Rentenbank
------------------------------ ------------------------------- ---------------------------- -----------------------
Karl Starzacher Landesbank Hessen- Member, Supervisory Rule 70 no-action
Thuringen e.V. Board request dated June
27, 2002.
------------------------------ ------------------------------- ---------------------------- -----------------------
Kurt F. Viermetz Bayerische Hypo- und Member, Supervisory Rule 70 no-action
Vereinsbank AG Board request dated June
27, 2002.
------------------------------ ------------------------------- ---------------------------- -----------------------
Margret Monig-Raane Deutsche Bank AG, Member, Supervisory Rule 70 no-action
Frankfurt/Main Board request dated June
27, 2002.
------------------------------ ------------------------------- ---------------------------- -----------------------
Prof. Dr. Wilhelm Simson Bayerische Hypo- und Member, Supervisory Rule 70 no-action
Vereinsbank AG Board request dated June
27, 2002.
------------------------------ ------------------------------- ---------------------------- -----------------------
Ulrich Hartmann IKB Deutsche Industriebank AG Member, Supervisory Rule 70 no-action
Board request dated June
27, 2002.
------------------------------ ------------------------------- ---------------------------- -----------------------
Wolfgang Hartmann Commerzbank AG, Member, Board of Rule 70 no-action
Frankfurt/Main Management request dated June
27, 2002.
Commerzbank Belgium S.A., Member, Supervisory
Brussels; Commerzbank Board
(Nederland) N.V., Amsterdam
------------------------------ ------------------------------- ---------------------------- -----------------------
Victor Staffeiri Mid-America Bancorp Director Rule 70.
------------------------------ ------------------------------- ---------------------------- -----------------------
8
Note: The table above does not indicate any financial connections that officers
or directors of Degussa AG and Viterra AG, and their respective subsidiaries,
may have with financial institutions. See also, the note to Item 6, Part I,
above.
Part III Certain Disclosures With Respect to Officers and Directors Compensation
The total remuneration paid to members of E.ON's Supervisory Board was EUR
2.6 million for the year ended December 31, 2002. Of this total, EUR 0.7 million
consists of fixed compensation (including compensation for duties performed at
subsidiaries and attendance fees), and EUR 1.9 million of variable compensation.
Pursuant to E.ON's Articles of Association, members of the Supervisory Board
receive an annual fixed fee of EUR 10,000 and are reimbursed each fiscal year
for their meeting-related expenses, including reimbursement for the value added
tax on their remuneration. Members of the Supervisory Board also receive an
attendance fee of EUR 1,000 per meeting. In addition, members of the Supervisory
Board receive an annual variable fee of EUR 1,250 for each percentage point by
which the dividend paid to shareholders exceeds 4 percent of E.ON's capital
stock. The Chairman of the Supervisory Board receives three times the
above-mentioned fees, the Deputy Chairman receives double the above-mentioned
fees, and each member of a committee receives one-and-a-half times the
above-mentioned fees. Members of the Supervisory Board who serve less than the
entire financial year owing to a change in the Board's composition receive the
above-mentioned fees on a proportionate basis. There were no loans to members of
the Supervisory Board in the 2002 financial year.
The total remuneration paid to members of E.ON's Board of Management was
Eur 10.5 million. Of this total, EUR 4.6 million consisted of fixed
compensation, including compensation for duties performed at subsidiaries, as
well as monetary benefits and other compensation. Variable compensation of EUR
5.2 million reflects a performance-related bonus. Total remuneration also
includes gains totaling EUR 0.7 million from the exercise of 124,750 stock
appreciation rights ("SARs") from the first and second tranche of the SAR. Since
1999, E.ON has run a SAR plan for key executives of the E.ON Group. The purpose
of this plan is to focus key executives on long-term corporate growth. The SAR
plan is based on the performance of E.ON's ordinary shares. E.ON granted
approximately 1.6 million SARs to 186 top-level executives worldwide in 2002,
including members of the Board of Management, as part of their compensation. In
2001, Degussa also introduced a SAR plan for executives. This plan is based on
the performance of Degussa's ordinary shares. In 2002, Degussa granted
approximately 1.5 million SARs to 227 executives worldwide, including the
members of Degussa's Board of Management, as part of their compensation. (More
information about the SAR plan is included in Note 10 of the Notes to
Consolidated Financial Statements in E.ON's Annual Report on Form 20-F, see
below.) In early 2002, members of the Board of Management received 260,000 SARs.
These SARs were part of the fourth tranche of the SAR plan. On December 31,
2002, the SARs of all tranches had a hypothetical exercise value of zero,
because the E.ON share price ended the year markedly below the strike prices of
the respective tranches.
Total payments to retired members of the Board of Management and their
beneficiaries were EUR 4.9 million. Provisions of EUR 53.9 million have been
provided for the pension
9
obligations to retired members of the Board of Management and their
beneficiaries. There were no loans to members of the Board of Management in the
2002 financial year.
E.ON has service agreements with the members of its Board of Management.
The service agreements of the members of the Board of Management do not contain
provisions for payments should a member's employment be terminated prior to
expiration of the agreement or not be extended by the Supervisory Board. In the
case where an agreement has not been extended, members of the Board of
Management shall receive retirement payments after their service agreements have
ended which are based on the length of their membership on the Board of
Management. Should a member's service agreement be terminated prior to
expiration or not be extended at the request of such member or for important
reason no retirement payments shall be due, except for statutory claims, such as
mandatory pension benefits. In the special case of a change in control of E.ON,
members of the Board of Management shall receive a payment equal to a maximum of
five years' annual compensation.
Additional information is provided in the Annual Report of E.ON AG filed on
Form 20-F (filed March 19, 2003), SEC File No. 001-14688, at pp. 113-115 and at
note 10 of the Notes to the Consolidated Financial Statements.
10
Item 7. Contributions and Public Relations
None.
Item 8. Service, Sales and Construction Contracts
Part I. Contracts for Services or Goods Supplied by a System Company to
Another System Company
LG&E Energy Services reports on Form U-13-60 with regard to services
rendered by members of the E.ON Group or the Powergen Group for the LG&E Energy
Group, by members of the LG&E Energy Group for the E.ON Group or the Powergen
Group, and by members of the LG&E Energy Group for one another, in accordance
with a supplemental reporting requirement in the Commission's order in E.ON AG,
Holding Co. Act Release No. 27539 (June 14, 2002). With regard to transactions
involving companies in the E.ON Group exempt under Rule 58, the registrants
incorporate by reference Powergen plc's Quarterly Report on Form U-9C-3, SEC
File No. 078-00049 (filed August 29, 2002).
Registrants have omitted information about service, sales and construction
contracts among subsidiaries of E.ON AG to the extent such transactions do not
involve any companies in the LG&E Energy Group.
Part II. Affiliate Contracts
Not applicable.
Part III. Persons Employed to Provide Management, Supervisory or Financial
Advisory Services
See the response to Item 6, Part III, above.
11
Item 9. Wholesale Generators and Foreign Utility Companies
Part I. Information with Respect to EWGs and FUCOs
E.ON Energie, a foreign utility company, located at Brienner Stra(beta)e
40, 80333 Munchen, Germany, produces electricity at jointly and wholly owned
power plants. Its power generation facilities have a total installed capacity of
approximately 50,200 MW, E.ON Energie's attributable share of which is
approximately 34,100 MW (not including mothballed, shut down and reduced power
plants). Electricity is transmitted to purchasers by means of high-voltage
transmission lines and underground cables owned by E.ON Energie. E.ON Energie is
wholly owned by E.ON which has an aggregate investment in E.ON Energie of EUR
5,569 million, consisting of 82% equity and 18% debt interests. ABN Ambro has
granted former Electriciteitsbedrijf Zuid-Holland, Voorburg, Netherlands, now
E.ON Benelux Generation, an E.ON Energie subsidiary, an amount of (euro)58.97
million (maturity date: May 10, 2006) plus interest and cost for which E.ON
guarantees. E.ON Energie's ratio of debt to common equity is 113.2%. Its net
income for the twelve months ended December 31, 2002, was EUR 522 million. E.ON
Energie had no material service and goods contracts with other companies in the
E.ON Group (excluding FUCOs).
Powergen Group Holdings Ltd. ("PGGH"), a foreign utility company, located
at 53 New Broad Street , London EC2M 1SL, England, produces electricity at
jointly and wholly owned power plants. PGGH owns or through joint ventures has
an attributable interest in 10,183 MW of generating capacity. Electricity is
transmitted to purchasers by means of the National Grid transmission network in
the U.K. PGGH is wholly owned by Powergen which has an aggregate investment in
PGGH (*) of GBP 3,168 million, consisting of 33% equity and 67% debt interests.
PGGH's ratio of debt to common equity is 1.620. Its net income for the twelve
months ended December 31, 2002 was GBP 23.3 million. PGGH had no material
service and goods contracts with other companies in the E.ON Group (excluding
FUCOs). (* The aggregate investment has been calculated as the Powergen
proportion of E.ON UK's investment in Powergen Limited together with E.ON Group
inter-company debt in PGGH.)
Information about the EWGs and FUCOs held in the LG&E Energy Group is set
forth in Exhibit F, Schedules 9(a) through 9(c).
Windpower Partners 1994, L.P. ("Windpower 1994") had the following material
service contract with a company in the E.ON Group. Windpower 1994 entered into
an operating agreement with LG&E Power Services, LLC, an indirect subsidiary of
LG&E Capital Corp, in September 1996 for the operation, maintenance, and
management of the power plants including the administration of Windpower 1994's
day-to-day operations. In 2002, Windpower 1994 incurred expenses of $795,027
related to this contract.
Windpower Partners 1993, L.P. ("Windpower 1993") had the following material
service contract with a company in the E.ON Group. Windpower 1993 entered into
an operating agreement with LG&E Power Services, LLC, an indirect subsidiary of
LG&E Capital Corp, in September 1996 for the operation, maintenance, and
management of the power plants including
12
the administration of Windpower 1993's day-to-day operations. In 2002,
Windpower 1993 incurred expenses of $1,538,542 related to this contract.
Westmoreland - LG&E Partners ("ROVA"), ROVA had the following material
service contracts with companies in the E.ON Group. ROVA entered into an
operating agreement with LG&E Power Services, LLC, an indirect subsidiary of
LG&E Capital Corp, for the operation, maintenance, and management of the power
plants including the administration of ROVA's day-to-day operations. In 2002,
ROVA incurred expenses of $4,565,684 related to this contract. ROVA also has a
contract with LG&E Power Operation, an indirect subsidiary of LG&E Capital Corp,
for payment of venture management fees, financial management, and environmental
services. In 2002, ROVA incurred expenses of $497,907 related to this contract.
E.ON Zehnte Verwaltungsgesellschaft mbH ("E.ON Zehnte"), a foreign utility
company, located at E.ON-Platz 1, 40479 Dusseldorf, Germany, owns directly and
indirectly Ruhrgas AG ("Ruhrgas"). The acquisition of Ruhrgas, Germany's leading
distributor of natural gas, is a major element in E.ON's implementation of its
strategy of expanding its gas operations and building an integrated power and
gas company.
Ruhrgas is not publicly traded, and was, prior to the completion of the
acquisition by E.ON, owned by a number of holding companies, with indirect
stakes dispersed among a number of major industrial and energy companies both
within and outside Germany. In 2001, E.ON concluded contracts for the purchase
of significant indirect shareholdings in Ruhrgas held through Gelsenberg AG
("Gelsenberg", i.e. 25.5 percent voting rights in Ruhrgas) and Bergemann GmbH
("Bergemann", i.e. 34.75 percent voting rights in Ruhrgas) with BP p.l.c. ("BP")
and Vodafone Group plc ("Vodafone"). The aggregate consideration paid for these
stakes was EUR 3.3 billion. E.ON also reached an agreement in principle with RAG
to acquire its Ruhrgas stakes. In January and February 2002, the German Federal
Cartel Office blocked the consummation of the transactions with the
aforementioned parties on the grounds that the proposed purchase would have had
a negative effect on competition in the German gas market. E.ON appealed the
decision to the German Economics Ministry, which has the power to overrule the
Cartel Office if it determines the transaction would result in an overriding
general benefit to the German economy. In March 2002, E.ON agreed to acquire
ThyssenKrupp AG's interest in Ruhrgas for total consideration of EUR 0.5
billion.
In May 2002, E.ON reached a definitive agreement with RAG to acquire RAG's
direct small participation in Ruhrgas and an additional 50.5 percent interest in
Bergemann and to sell E.ON's majority interest in Degussa to RAG. The RAG
transaction was subject to the completion of E.ON's acquisition of Ruhrgas, and
was to lapse if the acquisition had not been completed by January 31, 2003.
On July 3, 2002, E.ON reached agreements to acquire the 40 percent interest
in Ruhrgas held indirectly by Esso Deutschland GmbH ("Esso"), Deutsche Shell
GmbH ("Shell") and TUI AG through Schubert KG (i.e., 15 percent voting rights in
Ruhrgas) and BEB Erdgas und Erdol GmbH (i.e., 25 percent voting rights in
Ruhrgas). The aggregate purchase price for this stake was EUR 4.1 billion, and
completion of these transactions would make E.ON the sole owner of Ruhrgas.
13
On July 5, 2002, E.ON was granted the ministerial approval it had requested
for the acquisition of a majority shareholding in Ruhrgas. The ministerial
approval was linked with stringent requirements designed to promote competition
in the gas sector. In addition, E.ON and Ruhrgas were required to divest several
shareholdings. These include the majority stake in Gelsenwasser AG
("Gelsenwasser"), the minority stakes in VNG AG, EWE Aktiengesellschaft and
E.ON's stakes in Bayerngas GmbH ("Bayerngas") and Stadtwerke Bremen
Aktiengesellschaft ("Stadtwerke Bremen"). On the same day, E.ON through its
fully owned subsidiary E.ON Zehnte completed the acquisition of Gelsenberg from
BP and stakes in Bergemann held by Vodafone and ThyssenKrupp AG. With the
completion of these acquisitions E.ON indirectly held 38.5 percent of Ruhrgas.
A number of competitors with interests in the Germany energy industry filed
complaints against the ministerial approval in the state Superior Court
(Oberlandesgericht) in Dusseldorf and petitioned the court to issue a temporary
injunction blocking the transaction. The court subsequently issued a first order
on July 12, later followed by orders in August and September that temporarily
enjoined E.ON's acquisition of a majority stake in Ruhrgas. In addition, the
court prohibited E.ON from exercising its shareholders' rights with respect to
the voting rights in Ruhrgas holding company Gelsenberg acquired from BP, and in
Bergemann acquired from Vodafone and ThyssenKrupp AG until the takeover was
approved.
In the short period between July 5 and the issuance of the first temporary
injunction on July 12, 2002, E.ON as the sole shareholder of Gelsenberg only had
the opportunity to replace the former members of the supervisory board and board
of management from BP with E.ON<180>s representatives. No further corporate
actions happened. In Bergemann no such steps were initiated at all as E.ON only
acquired a minority stake from Vodafone and ThyssenKrupp. Although E.ON was the
sole shareholder of Gelsenberg during this short period, E.ON was not entitled
to directly exercise Gelsenberg<180>s 25 percent of the voting rights in
Ruhrgas, as Gelsenberg transferred its voting rights to Bergemann. On July 11,
2002 E.ON filed Form U-57 to notify the Commission that both E.ON Zehnte and
Gelsenberg were foreign utility companies within the meaning of Section 33 of
the Act.
Following the issuance of the temporary injunctions, on September 18, 2002,
Germany's Federal Minister of Economics confirmed the essential aspects of the
July 5 ministerial approval for E.ON's acquisition of Ruhrgas. However, the
Ministry linked its decision to a tightening of the requirements. Ruhrgas would
also be required to sell its stakes in Bayerngas and Stadtwerke Bremen and all
of the companies required to be disposed were to be granted special rights to
terminate their existing purchase agreements with E.ON and Ruhrgas on a
staggered basis. In addition, Ruhrgas was required to auction 200 billion kWh of
natural gas to its competitors, with the minimum bid in such auctions being much
lower than the average border-crossing price. On this basis, the Ministry asked
the state Superior Court to lift its temporary injunction.
On December 17, 2002, the state Superior Court decided not to lift the
temporary injunction, and formal proceedings (Hauptverfahren) regarding the
injunction started in January 2003. On January 31, 2003, E.ON reached settlement
agreements with all plaintiffs who had contested the validity of the ministerial
approval. Pursuant to such agreements, the plaintiffs withdrew their complaints
immediately, with the effect that the court procedure (including the temporary
injunction) terminated with immediate effect on January 31, 2003. On this day,
E.ON
14
completed the acquisition of RAG<180>s Ruhrgas stake of 52.5 percent in
Bergemann and on February 11, 2003 the last outstanding Bergemann stakes were
acquired from RWE. In March 2003, E.ON acquired all remaining shares of Ruhrgas
from Esso, Shell, TUI AG, RAG and Heinrich Industrie AG and became sole
shareholder of Ruhrgas on March 7, 2003.
E.ON<180>s capital expenditures in 2003 for the completion of the
acquisition of Ruhrgas will total EUR 4 billion. Beginning as of February 1,
2003, E.ON fully consolidated Ruhrgas. Accordingly, E.ON is not reporting its
interest in Ruhrgas in this Form U5S because it did not hold a controlling
interest in Ruhrgas during the reporting period.
Part II. Organizational Chart
Exhibit G is an organizational chart showing the relationship of the FUCOs
and EWGs in the E.ON Group to other E.ON Group companies.
Part III. Aggregate Investment in EWGs and FUCOs
As of December 31, 2002, E.ON had invested, directly and indirectly, in
FUCOs and EWGs (including equity, debt, guarantees and recourse debt of FUCOs
and EWGs, but excluding investments in Ruhrgas), EUR 17,663 million (USD 18,369
million). The ratio of E.ON's aggregate EWG and FUCO investment to E.ON's
aggregate investment in LG&E and KU (USD 6,104 million) was 301% as of December
31, 2002.
15
Item 10. Financial Statements and Exhibits
FINANCIAL STATEMENTS
Exhibits FS- E.ON AG statement of income, statement of assets, statement of
1(a)-FS-1(d) liabilities and shareholders' FS-1(a)-FS-1(d) equity, and
statement of retained earnings consolidating the Energy,
Powergen, Chemicals, Real Estate, and Others subgroups, as of
and for the year ending December 31, 2002.
EXHIBITS
Exhibit A
o The Annual Report of E.ON AG filed on Form 20-F (filed March
19, 2003), SEC File No. 001-14688, is hereby incorporated by
reference.
o The Annual Report of Louisville Gas & Electric Co. (filed March
25, 2003), SEC File No. 001-02893, is hereby incorporated by
reference.
o The Annual Report of Kentucky Utilities Co. (filed March 25, 2003),
SEC File No. 001-03464, is hereby incorporated by reference.
Exhibit B
o The Articles of Association and Bylaws of E.ON AG are
incorporated by reference to Exhibit A-1 of E.ON's Application
on Form U-1, SEC File No. 70-9961 (filed June 11, 2002).
o The Articles of Association and Bylaws of E.ON US Verwaltungs
GmbH, E.ON UK Verwaltungs GmbH and E.ON UK plc are
incorporated by reference to Exhibit B of E.ON's Registration
Statement on Form U5B, SEC File No. 030-00355 (filed September
27, 2002).
o The following documents are also incorporated by reference to
Exhibit B to the Annual Report of Powergen plc on Form U5S,
SEC File No. 030-00346 (filed May 1, 2002):
B-2 Articles of Incorporation of LG&E Energy Corp.
B-3 By-laws of LG&E Energy Corp.
B-4 Restated Articles of Incorporation of LG&E, dated
November 6, 1996. (Filed as Exhibit 3.06 to
LG&E's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996 (SEC File No.
2-26720).
16
B-5 By-Laws of LG&E, as amended through June 2, 1999.
(Filed as Exhibit 3.02 to LG&E's Annual Report on
Form 10-K for the year ended December 31, 1999).
B-6 Amended and Restated Articles of Incorporation of KU.
(Filed as Exhibits 4.03 and 4.04 to Form 8-K Current
Report of KU, dated December 10, 1993).
B-7 By-Laws of KU, as amended through June 2, 1999.
(Filed as Exhibit 3.04 to KU's Annual Report of
Form 10-K for the year ended December 31, 1999).
o Exhibits B-1(a) and B-1(b) are the Memorandum of Association
of Powergen Limited and the Articles of Association of
Powergen Limited, respectively.
o Organizational documents of other subsidiaries will be provided to
the Commission upon request.
Exhibit C
o Indentures related to funded debt are incorporated by
reference to Exhibit C of E.ON's Registration Statement on
Form U5B, SEC File No. 030-00355 (filed September 27, 2002).
o Indentures related to funded debt of Powergen and its
subsidiaries are incorporated by reference to Exhibits C1
through C-43 of the Annual Report of Powergen plc on Form U5S,
SEC File No. 030-00346 (filed May 1, 2002).
o LG&E Supplemental Indentures dated March 1, 2002, March 15,
2002, and October 1, 2002, are incorporated by reference to
Exhibits 4.39, 4.40 and 4.41 to the Annual Report on Form 10-K
of LG&E, filed on March 25, 2003, SEC File No. 001-02893, for
the year ended December 31, 2002.
o KU Supplemental Indentures dated May 1, 2002 and September 1,
2002, are incorporated by reference to Exhibits 4.50 and 4.51
to the Annual Report on Form 10-K of KU, filed on March 25,
2003, SEC File No. 001-03464, for the year ended December 31,
2002.
Exhibit D
o The tax allocation agreement by and among Powergen US Investments
Corp. and certain subsidiaries (filed under cover of Form SE).
Exhibit E
o Supplemental information regarding tax-related transactions required
by Commission order dated June 14, 2002 (Holding Co. Act Release
No. 27539).
17
Exhibit F
o Schedule 1(a): A table listing the E.ON Group companies
(except for the LG&E Energy Group) (filed under cover of Form
SE).
o Schedule 1(b): A table listing the E.ON Group companies
(except for the LG&E Energy Group), and additional information
about the issuer's book value and the owner's book value
(confidential treatment requested).
o Schedule 1(c): A table listing the LG&E Energy Group companies.
o Schedule 1(d): A table listing the subsidiary companies that
left the E.ON Group during the reporting period, by merger,
sale or liquidation.
o Schedule 1(e): A table listing the E.ON Group companies that
had their names changed during the reporting period.
o Schedule 3(a): Issues of long term loans dated as of July 1, 2002
- December 31, 2002.
o Schedule 3(b): Short term loans as of June 30, 2002.
o Schedule 3(c): Short term loans as of December 31, 2002.
o Schedule 3(d): Cash current accounts as of June 30, 2002.
o Schedule 3(e): Cash current accounts as of December 31, 2002.
o Schedule 3(f): Guarantees.
o Schedule 3(g): Issuance of equity.
o Schedule 4(a): Redemption of long term loans dated as of
July 1, 2002 - December 31, 2002.
o Schedule 4(b): Acquisition, retirement or redemption of equity.
o Schedule 5(a): Investments in non-system entities (confidential
treatment requested).
o Schedule 6(a): E.ON Group officers and directors.
o Schedule 6(b): Powergen Group officers and directors.
o Schedule 6(c): LG&E Energy Group officers and directors.
18
o Schedule 9(a): LG&E Energy Corp. Investments in EWGs and FUCOs:
descriptions of facilities and other background information.
o Schedule 9(b): LG&E Energy Corp. Investments in EWGs and FUCOs:
capital invested (confidential treatment requested).
o Schedule 9(c): LG&E Energy Corp. Investments in EWGs and FUCOs:
capitalization ratios and earnings information (confidential
treatment requested).
Exhibit G
o Organizational chart of the E.ON Group, including its FUCOs and EWGs
(provided under cover of Form SE).
Exhibit H
o Exhibit H-1: E.ON Energie AG - Short Report for the year ended
December 31, 2002, including balance sheet, income statement
and analysis of operations (filed under cover of Form SE).
o Exhibit H-2(a) Powergen Group Holdings Ltd. - group
consolidated balance sheet, income statement, statement of
cash flows as of and for the year ended December 31, 2002
(confidential treatment requested).
o Exhibit H-2(b) Powergen Group Holdings Ltd. - report and accounts
for the year ended December 31, 2002 (confidential treatment
requested).
o Exhibit H-2(c) Information extracted from E.ON's 2002 Annual
Report to shareholders and from E.ON's Form 20-F filed with
the United States Securities and Exchange Commission on March
19, 2003 in File No. 1-14688, regarding Powergen's UK
operations.
o Exhibit H-3 K.W. Tarifa, S.A. - statement of operations and
balance sheet as of and for the year ended December 31, 2002
(confidential treatment requested).
o Exhibit H-4 Distribuidora de Gas del Centro S.A. - balance
sheet, income statement, statement of cash flows as of and for
the year ended December 31, 2002 (confidential treatment
requested).
o Exhibit H-5 Distribuidora de Gas Cuyana S.A. - balance sheet,
income statement, statement of cash flows as of and for the
year ended December 31, 2002 (confidential treatment
requested).
19
o Exhibit H-6 Gas Natural BAN S.A. - balance sheet, income
statement, statement of cash flows as of and for the year
ended December 31, 2002 (confidential treatment requested).
o Exhibit H-7 Westmoreland - LG&E Partners (ROVA) - balance
sheets, statements of income and comprehensive income, and
statements of cash flows as of and for the years ended
December 31, 2002 and December 31, 2001 (confidential
treatment requested).
o Exhibit H-8 Western Kentucky Energy Corp. - balance sheet,
income statement, statement of cash flows as of and for the
year ended December 31, 2002 (confidential treatment
requested).
o Exhibit H-9 Electric Energy Inc. - comparative balance sheets,
statements of retained earnings, and income statements as of
and for the years ended December 31, 2002 and December 31,
2001 (confidential treatment requested).
o Exhibit H-10 Windpower Partners 1994, L.P. - balance sheet,
statement of partners' equity, statement of cash flows and
budget versus actual analysis as of and for the twelve months
ending December 31, 2002 (confidential treatment requested).
o Exhibit H-11 Windpower Partners 1993, L.P. - balance sheet,
statement of partners' equity, statement of cash flows and
budget versus actual analysis as of and for the twelve months
ending December 31, 2002 (confidential treatment requested).
o Exhibit H-12 E.ON Zehnte Verwaltungsgesellschaft mbH - balance
sheet and income statement as of and for the year ended
December 31, 2002.
o Exhibit H-13 Gelsenberg AG - balance sheet and income statement
as of and for the year ended December 31, 2002.
20
SIGNATURE
Each undersigned system company has duly caused this annual report to be
signed on its behalf by the undersigned thereunto duly authorized pursuant to
the requirements of the Public Utility Holding Company Act of 1935. The
signature of each undersigned company shall be deemed to relate only to matters
having reference to such company or its subsidiaries.
E.ON AG
By: /s/ By: /s/
--------------------------- --------------------------
Name: Ulrich Hueppe Name: Karl-Heinz Feldmann
Title: General Counsel, Executive Title: Corporate Counsel
Vice President
Date: June 27, 2003 Date: June 27, 2003
E.ON US Holding GmbH E.ON UK Ltd
By: /s/ By: /s/
--------------------------- --------------------------
Name: Heinrich Montag Name: Christopher Salame
Title: Executive Director Title: Company Secretary
Date: June 27, 2003 Date: June 27, 2003
E.ON UK Holding GmbH Powergen Ltd
By: /s/ By: /s/
--------------------------- --------------------------
Name: Hans Gisbert Ulmke Name: Christopher Salame
Title: Executive Director Title: Company Secretary
Date: June 27, 2003 Date: June 27, 2003
21
Powergen US Holdings Ltd. Powergen US Investments
By: /s/ By: /s/
--------------------------- --------------------------
Name: Christopher Salame Name: Christopher Salame
Title: Company Secretary Title: Authorised Signatory for
Powergen Secretaries Limited,
Company Secretary
Date: June 27, 2003 Date: June 27, 2003
E.ON US Investments Corp. Powergen Luxembourg sarl
By: /s/ By: /s/
--------------------------- --------------------------
Name: S. Bradford Rives Name: David Beynon
Title: Vice President Title: Director
Date: June 27, 2003 Date: June 27, 2003
Powergen Luxembourg Holdings sarl
By: /s/
---------------------------
Name: David Beynon
Title: Director
Date: June 27, 2003
22