-- Quarterly earnings decline versus a year ago, when PPL recorded a gain on the sale of a Latin American business -- Company lowers ongoing earnings forecast for balance of year due to higher fuel costs and lower expected results from marketing and trading operations
ALLENTOWN, Pa., Aug. 1 /PRNewswire-FirstCall/ -- PPL Corporation
(NYSE: PPL) on Friday (8/1) reported declines in both second-quarter and
first-half earnings for 2008, compared with the same periods of 2007.
PPL's reported earnings in the most recent quarter were $0.50 per share,
compared with $0.88 per share a year ago. For the first six months of 2008,
PPL reported earnings of $1.19 per share, compared with $1.41 per share a year
ago.
Contributing to the declines in earnings versus 2007 were: the
divestitures of PPL's electricity delivery businesses in Latin America,
including the loss of operating earnings; a 2007 U.S. tax benefit that did not
recur in 2008; rising fuel costs; and the loss of synfuel-related earnings.
Partially offsetting these negative factors were improved margins from energy
marketing and trading activities.
Second-quarter earnings from ongoing operations also declined, to $0.50
per share, compared with $0.63 per share a year ago. For the first six months
of 2008, earnings from ongoing operations were $1.11 per share, compared with
$1.28 per share a year ago.
"As we stated last quarter, we expect stronger second-half margins in our
supply business segment, compared with first-half margins," said James H.
Miller, PPL's chairman, president and chief executive officer. "However, on
top of the previously announced loss of several key 2007 earnings
contributors, the continued increase in coal commodity and transportation
costs, combined with lower than planned results from our marketing and trading
activities, prompts us to lower our 2008 ongoing earnings forecast today."
PPL lowered its 2008 forecast of earnings from ongoing operations to $2.25
to $2.35 per share from $2.35 to $2.45 per share. The company's 2008 forecast
of reported earnings is $2.33 to $2.43 per share, reflecting special items
recorded through June 30, 2008. This forecast does not reflect the previously
announced potential impairment of certain emission allowances as a result of a
recent federal court decision invalidating the Environmental Protection
Agency's Clean Air Interstate Rule. Any impairment of allowances as a result
of the court's decision would be a special item charge.
"As we look ahead to initiating our 2009 earnings forecast later this
year, we anticipate that rising delivered fuel prices and the completion of
our scrubber construction program, coupled with the fall in sulfur dioxide
allowance prices, will create challenges for us in 2009 compared with our
expected results in 2008," Miller said. "While we will clearly continue to
explore ways to mitigate these cost pressures, we expect that our 2009
earnings will be lower than what we expect to achieve in 2008. Our ability to
recover these fuel price increases is constrained by the fixed-price,
provider-of-last-resort contract that expires at the end of 2009."
Beyond 2009, however, Miller said the company is seeing upside earnings
potential.
"We are more optimistic about our earnings outlook for 2010 than we were a
year ago, when we established our current forecast range of $4.00 to $4.60 per
share," Miller said. "Based on what we have been able to achieve through our
rigorous hedging program and the prices that we currently see in the
marketplace, we anticipate that -- for 2010 and beyond -- our generating
portfolio and marketing expertise will allow us to continue to increase value
for shareowners even in the face of higher fuel and other commodity costs."
Second-Quarter 2008 Earnings Details
PPL's reported earnings in the second quarter of 2008 reflected a special
item credit of $0.01 per share related to mark-to-market impacts of
energy-related, non-trading economic hedges, and a special item charge of
$0.01 for impairments of securities in PPL's nuclear decommissioning trust
funds. The second quarter of 2007 reflected net special item credits of $0.25
per share, primarily from the sale of PPL's electricity delivery business in
El Salvador.
Reported earnings are calculated in accordance with generally accepted
accounting principles (GAAP). Earnings from ongoing operations is a non-GAAP
financial measure that excludes special items. Special items include charges
or credits that are unusual or nonrecurring. Special items also include the
mark-to-market impact of energy-related, non-trading economic hedges and
impairments of securities in PPL's nuclear decommissioning trust funds.
(Dollars in millions, except for per share amounts)
2nd Quarter
2008 2007% Change
Reported Earnings$190 $345-45 %
Reported Earnings per Share $0.50 $0.88-43 %
Earnings from Ongoing
Operations $190 $248-23 %
Per Share Earnings from Ongoing
Operations $0.50 $0.63-21 %
(See the tables at the end of the news release for details as to the
reconciliation of reported earnings versus earnings from ongoing operations.)
First-Half and Second-Quarter 2008 Earnings by Business Segment
The following chart shows PPL's earnings by business segment for the
second quarter and first half of 2008, compared with the same periods of 2007.
2nd Quarter Year to Date
2008 20072008 2007
Per share earnings from ongoing
operations
Supply$0.26 $0.30 $0.45 $0.62
Pennsylvania Delivery 0.08 0.070.24 0.23
International Delivery 0.16 0.260.42 0.43
Total $0.50 $0.63 $1.11 $1.28
Special Items
Supply $- $0.04 $0.08 $0.02
Pennsylvania Delivery - - - -
International Delivery- 0.21 - 0.11
Total$- $0.25 $0.08 $0.13
Reported earnings
Supply$0.26 $0.34 $0.53 $0.64
Pennsylvania Delivery 0.08 0.070.24 0.23
International Delivery 0.16 0.470.42 0.54
Total $0.50 $0.88 $1.19 $1.41
(For more details and a breakout of special items by segment, see the
reconciliation tables at the end of this news release.)
Key Factors Impacting Business Segment Earnings from Ongoing Operations
Supply Segment
PPL's supply business segment primarily consists of the domestic energy
generation and marketing operations of PPL Energy Supply.
Earnings from ongoing operations for PPL's supply business segment
decreased in the second quarter of 2008 by $0.04 per share, or 13 percent,
compared with a year ago. This decline resulted primarily from the following
factors: a $0.02 per share loss in synfuel-related earnings as a result of the
expiration of federal synfuel tax credits at the end of 2007; higher average
fuel prices and lower base load generation; and higher operating expenses.
Partially offsetting these negative factors were improved margins from energy
marketing and trading activities in the East and West.
Earnings from ongoing operations for PPL's supply business segment during
the first six months of 2008 decreased by $0.17 per share, or 27 percent,
compared with a year ago. This decline resulted primarily from the same
factors that drove second-quarter 2008 results, including $0.10 per share
related to synfuels.
Pennsylvania Delivery Segment
PPL's Pennsylvania delivery business segment includes the regulated
electric and gas delivery operations of PPL Electric Utilities and PPL Gas
Utilities.
Earnings from ongoing operations for PPL's Pennsylvania delivery business
segment increased in the second quarter of 2008 by $0.01 per share, or 14
percent, compared with a year ago. This increase resulted primarily from the
higher electricity revenues as a result of load growth and PPL Electric
Utilities' base rate increase effective Jan. 1, 2008. These positive earnings
factors were partially offset by higher operation and maintenance expenses.
Earnings from ongoing operations for PPL's Pennsylvania delivery business
segment increased during the first six months of 2008 by $0.01 per share, or 4
percent, compared with a year ago. This increase resulted primarily from the
net impact of the same factors that drove second-quarter 2008 results.
International Delivery Segment
PPL's international delivery business segment primarily includes
investments in the regulated electric distribution companies in the United
Kingdom and included the operating results of the Latin American electricity
distribution businesses prior to their divestiture in 2007.
Earnings from ongoing operations for PPL's international delivery business
segment decreased in the second quarter of 2008 by $0.10 per share, or 38
percent, compared with a year ago. This decline resulted primarily from a 2007
U.S. tax benefit of $0.08 per share related to the U.K. businesses and the
loss in earnings of $0.03 per share from PPL's Latin American businesses
following their divestitures throughout 2007. Partially offsetting these
decreases were higher U.K. delivery revenues, due to higher rates from the
annual regulatory adjustment for inflation, and lower operating expenses.
Earnings from ongoing operations for PPL's international delivery business
segment decreased during the first six months of 2008 by $0.01 per share, or 2
percent, compared with a year ago. This decline resulted primarily from the
net impact of the same factors that drove second-quarter 2008 results.
2008 Earnings from Ongoing Operations Forecast by Business Segment
Earnings 2008 2007
(per share) (forecast) (actual)
Midpoint
Supply $1.16 $1.42
Pennsylvania Delivery 0.45 0.40
International Delivery0.69 0.78
Total$2.30 $2.60
Supply Segment
PPL projects lower earnings from ongoing operations in its supply business
segment in 2008 compared with 2007 as a result of the loss of synfuel-related
benefits and higher depreciation and operating expenses for scrubbers that
have been or will be installed during 2008 at its Montour and Brunner Island
coal-fired power plants, both in Pennsylvania.
PPL now expects its energy margins to be flat in 2008 compared with 2007.
During the second half of 2008, increased margins as a result of higher-valued
wholesale energy contracts and higher expected base load generation are
expected to be offset by higher coal commodity and transportation costs and
lower expected margins from PPL's marketing and trading activities as a result
of reduced liquidity in certain energy markets.
Pennsylvania Delivery Segment
PPL projects higher earnings from ongoing operations for its Pennsylvania
delivery business segment, driven by higher revenues as a result of PPL
Electric Utilities' new distribution rates, partially offset by higher
operating expenses.
International Delivery Segment
PPL projects the earnings from ongoing operations of its international
delivery business segment will decline in 2008 compared with 2007. This
decline is a result of the 2007 divestiture of PPL's Latin American businesses
and higher U.S. income taxes primarily driven by certain U.S. income tax
benefits realized in 2007. Partially offsetting the impact of these negative
earnings drivers are lower U.K. pension expense and lower financing costs.
2010 Earnings Forecast
PPL also reaffirmed its 2010 earnings forecast range of $4.00 to $4.60 per
share. This forecast is driven primarily by higher energy margins based on
higher wholesale electricity and capacity prices, higher expected generation
output, and increased earnings from marketing and trading activities.
At the end of 2009, the full-requirements supply contract between PPL
EnergyPlus and PPL Electric Utilities will expire. As a result of higher
forward energy prices in the competitive marketplace and the 2010 capacity
prices set in PJM Interconnection's auctions, PPL expects a significant
improvement in energy margins in 2010.
This forecast does not include the effect of any new assets being added to
the company's portfolio and assumes PPL Electric Utilities' ability to fully
recover its market-based energy costs as provided under Pennsylvania law.
PPL Corporation, headquartered in Allentown, Pa., controls more than
11,000 megawatts of generating capacity in the United States, sells energy in
key U.S. markets and delivers electricity to more than 4 million customers in
Pennsylvania and the United Kingdom. More information is available at
www.pplweb.com.
(Note: All references to earnings per share in the text and tables of this
news release are stated in terms of diluted earnings per share.)
Conference Call and Webcast
PPL invites interested parties to listen to the live webcast of
management's teleconference with financial analysts about second-quarter 2008
financial results at 9 a.m. EDT Friday, Aug. 1. The meeting is available
online live, in audio format, along with slides of the presentation, on PPL's
Web site: www.pplweb.com. The webcast will be available for replay on the PPL
Web site for 30 days. Interested individuals also can access the live
conference call via telephone at 702-696-4769 (ID# 54797054).
PPL CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED FINANCIAL INFORMATION (a)
Condensed Consolidated Balance Sheet (Unaudited)
(Millions of Dollars)
June 30, 2008 Dec. 31, 2007
Assets
Cash and cash equivalents$466 $430
Price risk management assets - current 2,431319
Assets held for sale 315318
Other current assets2,474 2,101
Investments 594608
Property, plant and equipment
Electric plant 20,391 20,109
Gas and oil plant 67 66
Other property 193202
20,651 20,377
Less: accumulated depreciation 7,812 7,772
12,839 12,605
Recoverable transition costs 430574
Goodwill and other intangibles 1,515 1,326
Price risk management assets - noncurrent 1,697587
Other noncurrent assets 1,140 1,104
Total assets $23,901$19,972
Liabilities and Equity
Short-term debt (including current portion
of long-term debt)$1,162 $770
Price risk management liabilities - current 2,312423
Liabilities held for sale 46 68
Other current liabilities 1,942 1,621
Long-term debt (less current portion) 7,019 6,890
Deferred income taxes and investment tax
credits1,735 2,192
Price risk management liabilities -
noncurrent 2,943916
Other noncurrent liabilities1,239 1,216
Minority interest 19 19
Preferred securities of a subsidiary 301301
Earnings reinvested 3,647 3,448
Common stock and capital in excess of par
value 2,184 2,176
Accumulated other comprehensive loss (648) (68)
Total liabilities and equity $23,901$19,972
(a) The Financial Statements in this news release have been condensed and
summarized for purposes of this presentation. Please refer to PPL
Corporation's periodic filings with the Securities and Exchange Commission for
full financial statements, including note disclosure.
Condensed Consolidated Income Statement (Unaudited)
(Millions of Dollars, Except per Share Data)
3 Months Ended 6 Months Ended
June 30 June 30
2008(a) 2007(a)(b) 2008(a) 2007(a)(b)
Operating Revenues
Utility $981 $977$2,101 $2,058
Unregulated retail electric and
gas 332367 45
Wholesale energy marketing (c)
Realized 443 371 881727
Unrealized economic activity (616)8 (796) (99)
Net energy trading margins52 950 18
Energy-related businesses131 185 247370
1,024 1,573 2,550 3,119
Operating Expenses
Fuel 208 202 451435
Energy purchases (c)
Realized 309 207 626449
Unrealized economic activity (623) (14) (885) (134)
Other operation and maintenance 360 347 737672
Amortization of recoverable
transition costs 6870 144151
Depreciation 118 110 230226
Taxes, other than income 7272 147150
Energy-related businesses119 201 227403
631 1,195 1,677 2,352
Operating Income 393 378 873767
Other Income - net 82116 48
Interest Expense 110 120 218240
Income from Continuing
Operations Before Income
Taxes, Minority Interest and
Dividends on Preferred
Securities of a Subsidiary 291 279 671575
Income Taxes 9731 226100
Minority Interest 1 1 1
Dividends on Preferred
Securities of a Subsidiary 4 4 9 9
Income from Continuing
Operations 189 244 435465
Income from Discontinued
Operations (net of income
taxes) 1 10115 83
Net Income $190 $345 $450 $548
Earnings per share of common
stock - basic
Earnings from ongoing operations $0.51 $0.64 $1.13 $1.30
Special items - 0.25 0.08 0.12
Net Income$0.51 $0.89 $1.21 $1.42
Earnings per share of common
stock - diluted
Earnings from ongoing operations $0.50 $0.63 $1.11 $1.28
Special items - 0.25 0.08 0.13
Net Income$0.50 $0.88 $1.19 $1.41
Average shares outstanding
(thousands)
Basic 373,158 385,300 373,009385,053
Diluted 376,507 390,109 376,593389,645
(a) Earnings in the 2008 and 2007 periods were impacted by several special
items, as described in the text and tables of this news release. Earnings from
ongoing operations excludes the impact of these special items.
(b) Certain amounts from 2007 have been reclassified to conform to the
current year presentation. This includes the reclassification of PPL Gas
Utilities Corporation accounts to Discontinued Operations.
(c) PPL enters into certain non-trading energy or energy-related contracts
to hedge future cash flows that are not eligible for hedge accounting, or
where hedge accounting is not elected. Consistent with the treatment of the
hedged item, unrealized and realized gains and losses on these transactions
are reflected in "Wholesale energy marketing" or "Energy purchases."
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Millions of Dollars)
6 Months Ended
June 30,
2008 2007
Cash Flows from Operating Activities
Net income $450 $548
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation230236
Amortization-recoverable transition costs and other 178209
Pre-tax gain from the sale of a Latin American
business (94)
Deferred income taxes and investment tax credits(38) (38)
Impairment of assets held for sale1 70
Unrealized gain on derivatives and other hedging
activities (84) (35)
Changes in working capital 164 (235)
Other32(42)
Net cash provided by operating activities 933619
Cash Flows from Investing Activities
Expenditures for property, plant and equipment (661) (687)
Proceeds from the sale of a Latin American business180
Net (expenditures for) sales of intangible assets (249)26
Net (purchases) sales of other investments (14) 9
Net increase in restricted cash and cash equivalents (281) (72)
Other investing activities (11) 2
Net cash used in investing activities (1,216) (542)
Cash Flows from Financing Activities
Net issuances (retirements) of long-term debt 182(63)
Repurchase of common stock (38) (77)
Payment of common stock dividends (239) (225)
Net increase in short-term debt 400 61
Other financing activities 18 13
Net cash provided by (used in) financing activities 323 (291)
Effect of Exchange Rates on Cash and Cash
Equivalents (2) 1
Net Increase (Decrease) in Cash and Cash Equivalents 38 (213)
Cash and cash equivalents at beginning of period430794
Cash and cash equivalents included in assets held
for sale(2) (14)
Cash and cash equivalents at end of period $466 $567
Key Indicators
Financial
12 Months 12 Months
Ended Ended
June 30, June 30,
2008 2007
Dividends declared per share $1.28 $1.16
Book value per share (a) $13.84 $13.95
Market price per share (a)$52.27 $46.79
Dividend yield (a) 2.4 % 2.5 %
Dividend payout ratio (b) 41 % 47 %
Dividend payout ratio - earnings from ongoing
operations (b)(c)53 % 50 %
Price/earnings ratio (a)(b) 16.6 19.1
Price/earnings ratio - earnings from ongoing
operations (a)(b)(c) 21.6 20.2
Return on average common equity22.16 %18.52 %
Return on average common equity - earnings from
ongoing operations (c)17.81 %17.49 %
(a) End of period.
(b) Based on diluted earnings per share.
(c) Calculated using earnings from ongoing operations, which excludes the
impact of special items, as described in the text and tables of this news
release.
Reconciliation of Business Segment Earnings from Ongoing Operations and
Reported Earnings (Diluted)
2nd Quarter 2008
(millions of dollars)
PA Int'l
Supply DeliveryDelivery Total
Earnings from Ongoing Operations$96$32 $62 $190
Special Items
MTM adj's from
energy-related, non-trading
economic hedges 44
Impairment of nuclear
decom. trust
investments (4) (4)
Off-site remediation of ash
basin leak11
Impairment of gas and
propane businesses (1) (1)
Total special items 1 (1)
Reported Earnings $97$31 $62 $190
Year-to-Date June 30, 2008
(millions of dollars)
PA Int'l
Supply DeliveryDelivery Total
Earnings from Ongoing Operations $166$92$160 $418
Special Items
MTM adj's from
energy-related, non-trading
economic hedges 54 54
Impairment of nuclear
decom. trust
investments (Q2, '08)(4) (4)
Off-site remediation of ash
basin leak
(Q2, '08) 11
Impairment of gas and
propane businesses
(Q2, '08) (1) (1)
Colstrip groundwater
litigation (Q1, '08;
Q2, '08) (5) (5)
Synfuel tax adjustment (Q1,
'08)(13) (13)
Total special items 33 (1) 32
Reported Earnings $199$91$160 $450
12 Months Ended June 30, 2008
(millions of dollars)
PA Int'l
Supply DeliveryDelivery Total
Earnings from Ongoing Operations $466 $159$293 $918
Special Items
MTM adj's from
energy-related, non-trading
economic hedges 60 60
Impairment of nuclear
decom. trust
investments (Q2, '08)(4) (4)
Off-site remediation of ash
basin leak
(Q2, '08) 11
Impairment of gas and
propane businesses
(Q2, '08) (1) (1)
Colstrip groundwater
litigation (Q1, '08;
Q2, '08) (5) (5)
Synfuel tax adjustment (Q1,
'08)(13) (13)
Workforce reduction (Q4,
'07) (4)(1) (4) (9)
Sale of Latin American
businesses (Q3, '07;
Q4, '07) 216 216
Sale of domestic
telecommunication
operations (Q3, '07; Q4,
'07) (3) (3)
Sale of gas and propane
businesses (Q3, '07;
Q4, '07) (44) (44)
Settlement of Wallingford
cost-based rates
(Q3, '07)33 33
Impairment of certain
transmission rights
(Q3, '07; Q4, '07) (13) (13)
Change in U.K. tax rate
(Q3, '07; Q4, '07) 5454
Total special items 52(46)266 272
Reported Earnings $518 $113$559$1,190
Reconciliation of Business Segment Earnings from Ongoing Operations and
Reported Earnings (Diluted)
2nd Quarter 2008
(per share)
PA Int'l
Supply DeliveryDeliveryTotal
Earnings from Ongoing
Operations $0.26 $0.08 $0.16$0.50
Special Items
MTM adj's from
energy-related,
non-trading
economic hedges 0.01 0.01
Impairment of nuclear
decom. trust
investments(0.01) (0.01)
Off-site remediation of
ash basin leak
Impairment of gas and
propane businesses
Total special items
Reported Earnings $0.26 $0.08 $0.16$0.50
Year-to-Date June 30, 2008
(per share)
PA Int'l
Supply DeliveryDelivery Total
Earnings from Ongoing
Operations $0.45 $0.24 $0.42 $1.11
Special Items
MTM adj's from
energy-related,
non-trading
economic hedges 0.14 0.14
Impairment of nuclear
decom. trust
investments (Q2, '08) (0.01) (0.01)
Off-site remediation of
ash basin leak
(Q2, '08)
Impairment of gas and
propane businesses
(Q2, '08)
Colstrip groundwater
litigation (Q1, '08;
Q2, '08) (0.01) (0.01)
Synfuel tax adjustment
(Q1, '08) (0.04) (0.04)
Total special items0.08 0.08
Reported Earnings $0.53 $0.24 $0.42 $1.19
12 Months Ended June 30, 2008
(per share)
PA Int'l
Supply DeliveryDelivery Total
Earnings from Ongoing
Operations $1.23 $0.42 $0.77$2.42
Special Items
MTM adj's from
energy-related,
non-trading
economic hedges 0.17 0.17
Impairment of nuclear
decom. trust
investments (Q2, '08) (0.01) (0.01)
Off-site remediation of
ash basin leak
(Q2, '08)
Impairment of gas and
propane businesses
(Q2, '08)
Colstrip groundwater
litigation (Q1, '08;
Q2, '08) (0.01) (0.01)
Synfuel tax adjustment
(Q1, '08) (0.04) (0.04)
Workforce reduction (Q4,
'07) (0.01) (0.01) (0.02)
Sale of Latin American
businesses (Q3, '07;
Q4, '07)0.57 0.57
Sale of domestic
telecommunication
operations (Q3, '07; Q4,
'07) (0.01) (0.01)
Sale of gas and propane
businesses (Q3, '07;
Q4, '07) (0.12) (0.12)
Settlement of
Wallingford cost-based
rates
(Q3, '07) 0.09 0.09
Impairment of certain
transmission rights
(Q3, '07; Q4, '07) (0.04) (0.04)
Change in U.K. tax rate
(Q3, '07; Q4, '07) 0.14 0.14
Total special items0.14 (0.12) 0 .70 0.72
Reported Earnings $1.37 $0.30 $1.47$3.14
Reconciliation of Business Segment Earnings from Ongoing Operations and
Reported Earnings (Diluted)
2nd Quarter 2007
(millions of dollars)
PA Int'l
SupplyDelivery Delivery Total
Earnings from Ongoing
Operations$118$30 $100$248
Special Items
MTM adj's from
energy-related, non-
trading economic
hedges16 16
Sale of Latin
American businesses83 83
Sale of domestic
telecommunication
operations(2) (2)
Total special items 14 83 97
Reported Earnings $132$30 $183$345
Year-to-Date June 30, 2007
(millions of dollars)
PA Int'l
SupplyDelivery Delivery Total
Earnings from Ongoing
Operations$244$88 $168$500
Special Items
MTM adj's from
energy-related, non-
trading economic
hedges26 26
Sale of Latin
American businesses
(Q1,'07; Q2, '07) 43 43
Sale of domestic
telecommunication
operations (Q1, '07;
Q2, '07) (20) (20)
PJM billing dispute
(Q1, '07) (1) (1)
Total special items 5 43 48
Reported Earnings $249$88 $211$548
12 Months Ended June 30, 2007
(millions of dollars)
PA Int'l
SupplyDelivery Delivery Total
Earnings from Ongoing
Operations$476 $150 $276 $902
Special Items
MTM adj's from
energy-related, non-
trading economic
hedges15 15
Sale of Latin
American businesses
(Q1,'07; Q2, '07) 43 43
Sale of domestic
telecommunication
operations (Q1, '07;
Q2, '07) (20) (20)
PJM billing dispute
(Q4, '06; Q1, '07) (18)20 2
Sale of interest in
Griffith (Q4, '06) 11
Workforce reduction
(Q4, '06) (3) (3)
Impairment of
nuclear decom. trust
investments (Q4,
'06) (3) (3)
Reversal of cost
recovery - Hurricane
Isabel (Q3, '06) (6) (6)
Realization of
benefits related to
Black Lung
Trust assets
(Q3, '06)2121
Total special items (28)35 43 50
Reported Earnings $448 $185 $319 $952
Reconciliation of Business Segment Earnings from Ongoing Operations and
Reported Earnings (Diluted)
2nd Quarter 2007
(per share)
PA Int'l
Supply Delivery Delivery Total
Earnings from Ongoing
Operations $0.30 $0.07$0.26$0.63
Special Items
MTM adj's from
energy-related, non-
trading economic
hedges 0.04 0.04
Sale of Latin
American businesses 0.21 0.21
Sale of domestic
telecommunication
operations
Total special items0.040.21 0.25
Reported Earnings $0.34 $0.07$0.47$0.88
Year-to-Date June 30, 2007
(per share)
PA Int'l
Supply Delivery Delivery Total
Earnings from Ongoing
Operations $0.62 $0.23$0.43$1.28
Special Items
MTM adj's from
energy-related, non-
trading economic
hedges 0.07 0.07
Sale of Latin
American businesses
(Q1, '07;
Q2, '07)0.11 0.11
Sale of domestic
telecommunication
operations (Q1, '07;
Q2, '07) (0.05) (0.05)
PJM billing dispute
(Q1, '07)
Total special items0.020.11 0.13
Reported Earnings $0.64 $0.23$0.54$1.41
12 Months Ended June 30, 2007
(per share)
PA Int'l
Supply Delivery Delivery Total
Earnings from Ongoing
Operations $1.22 $0.39$0.71$2.32
Special Items
MTM adj's from
energy-related, non-
trading economic
hedges 0.04 0.04
Sale of Latin
American businesses
(Q1, '07;
Q2, '07)0.11 0.11
Sale of domestic
telecommunication
operations (Q1, '07;
Q2, '07) (0.05) (0.05)
PJM billing dispute
(Q4, '06; Q1, '07) (0.04) 0.05 0.01
Sale of interest in
Griffith (Q4, '06)
Workforce reduction
(Q4, '06) (0.01) (0.01)
Impairment of
nuclear decom. trust
investments (Q4,
'06) (0.01) (0.01)
Reversal of cost
recovery - Hurricane
Isabel (Q3, '06) (0.02)(0.02)
Realization of
benefits related to
Black Lung
Trust assets
(Q3, '06) 0.06 0.06
Total special items (0.07) 0.09 0.11 0.13
Reported Earnings $1.15 $0.48$0.82$2.45
Operating - Domestic and International Electricity Sales
(millions of kwh)
3 Months Ended June 30 6 Months Ended June 30
PercentPercent
20082007Change 20082007 Change
Domestic Retail
Delivered (a) 8,832 8,872(0.5%) 19,401 19,180 1.2 %
Supplied9,404 9,395 0.1 % 20,526 20,236 1.4 %
International
Delivered
United Kingdom 6,949 6,840 1.6 % 14,703 14,565 0.9 %
Domestic Wholesale
East6,535 4,56343.2 % 12,4638,81141.4 %
West
NorthWestern Energy 669 836 (20.0%)1,2361,669 (25.9%)
Other West3,109 2,59020.0 %6,6395,32024.8 %
(a) Electricity delivered to retail customers represents the kwh delivered
to customers within PPL Electric Utilities Corporation's service territory.
"Earnings from ongoing operations" excludes the impact of special items.
Special items include charges, credits or gains that are unusual or
nonrecurring. Special items also include the mark-to-market impact of energy-
related, non-trading economic hedges and impairments of securities in PPL's
nuclear decommissioning trust funds. The mark-to-market impact of these hedges
is economically neutral to the company because the mark-to-market gains or
losses on the energy hedges will reverse as the hedging contracts settle in
the future. Earnings from ongoing operations should not be considered as an
alternative to reported earnings, or net income, which is an indicator of
operating performance determined in accordance with generally accepted
accounting principles (GAAP). PPL believes that earnings from ongoing
operations, although a non-GAAP measure, is also useful and meaningful to
investors because it provides them with PPL's underlying earnings performance
as another criterion in making their investment decisions. PPL's management
also uses earnings from ongoing operations in measuring certain corporate
performance goals. Other companies may use different measures to present
financial performance.
Statements contained in this news release, including statements with
respect to future earnings, energy prices, margins and sales, growth,
revenues, expenses and pension costs, marketing performance, regulation,
corporate strategy, and generating capacity and performance, are "forward-
looking statements" within the meaning of the federal securities laws.
Although PPL Corporation believes that the expectations and assumptions
reflected in these forward-looking statements are reasonable, these statements
involve a number of risks and uncertainties, and actual results may differ
materially from the results discussed in the statements. The following are
among the important factors that could cause actual results to differ
materially from the forward-looking statements: market demand and prices for
energy, capacity and fuel; weather conditions affecting customer energy usage
and operating costs; competition in power markets; the effect of any business
or industry restructuring; the profitability and liquidity of PPL Corporation
and its subsidiaries; new accounting requirements or new interpretations or
applications of existing requirements; operating performance of plants and
other facilities; environmental conditions and requirements and the related
costs of compliance, including environmental capital expenditures and emission
allowance and other expenses; system conditions and operating costs;
development of new projects, markets and technologies; performance of new
ventures; asset acquisitions and dispositions; any impact of hurricanes or
other severe weather on our business, including any impact on fuel prices;
receipt of necessary government permits, approvals and rate relief; capital
market conditions and decisions regarding capital structure; the impact of
state, federal or foreign investigations applicable to PPL Corporation and its
subsidiaries; the outcome of litigation against PPL Corporation and its
subsidiaries; stock price performance; the market prices of equity securities
and the impact on pension income and resultant cash funding requirements for
defined benefit pension plans; the securities and credit ratings of PPL
Corporation and its subsidiaries; political, regulatory or economic conditions
in states, regions or countries where PPL Corporation or its subsidiaries
conduct business, including any potential effects of threatened or actual
terrorism or war or other hostilities; foreign exchange rates; new state,
federal or foreign legislation, including new tax legislation; and the
commitments and liabilities of PPL Corporation and its subsidiaries. Any such
forward-looking statements should be considered in light of such important
factors and in conjunction with PPL Corporation's Form 10-K and other reports
on file with the Securities and Exchange Commission.
SOURCE PPL Corporation
