PPL Corporation Reports Strong 2012 Earnings, Increases Common Stock Dividend
ALLENTOWN, Pa., Feb. 14, 2013 /PRNewswire/ — PPL Corporation (NYSE: PPL) announced on Thursday (2/14) strong 2012 earnings that exceeded forecast ranges, a 2013 earnings forecast range of $2.25 to $2.50 per share, and an increase in its quarterly common stock dividend — the 11th such increase in the past 12 years.
PPL’s 2012 reported earnings were $1.526 billion, or $2.60 per share, compared with $1.495 billion, or $2.70 per share in 2011. Per share earnings in 2012 include dilution of $0.14 per share because of common stock issued in April 2011 to fund the acquisition of the Midlands businesses in the United Kingdom.
Adjusting for special items, PPL’s earnings from ongoing operations were $1.417 billion, or $2.42 per share, in 2012 compared with $1.509 billion, or $2.73 per share, in 2011.
The increase in the quarterly common stock dividend to $0.3675 per share is payable April 1, 2013, to shareowners of record as of March 8, 2013. On an annualized basis, the dividend is $1.47 per share, up from $1.44 per share. PPL has increased its dividend in 11 of the last 12 years; the new dividend rate reflects a 177 percent increase over that 12-year period.
“Given the significant challenges of 2012, we are very pleased with the earnings we are announcing today, which exceed our forecast ranges,” said William H. Spence, PPL’s chairman, president and chief executive officer. PPL’s forecast ranges for 2012 were $2.37 to $2.47 per share for reported earnings and $2.30 to $2.40 per share for earnings from ongoing operations.
“Our strong earnings — and steadily increasing dividends — deliver significant value to shareowners. Our 2012 performance also demonstrates our ability to meet the commitments we made regarding the major acquisitions in Kentucky and the United Kingdom, and reflects the persistent efforts of PPL people to manage through the challenges of the competitive wholesale power market,” Spence said.
PPL’s reported earnings for the fourth quarter of 2012 were $359 million, or $0.60 per share, compared with $454 million, or $0.78 per share in the fourth quarter of 2011. Adjusting for special items, fourth quarter earnings from ongoing operations were $292 million, or $0.49 per share, compared with $410 million, or $0.71 per share in the fourth quarter of 2011.
PPL also announced its 2013 earnings forecast range of $2.25 to $2.50 per share, with a midpoint of $2.37 per share. PPL is projecting that its rate-regulated businesses will account for 85 percent of 2013 earnings, compared with 72 percent of ongoing earnings in 2012 and 58 percent of ongoing earnings in 2011.
“The 2013 earnings forecast reflects increased revenue from our three regulated businesses and lower energy margins for our supply business resulting largely from the roll-off of higher-priced hedges,” Spence said.
PPL’s 2013 earnings forecast also includes an additional scheduled outage at the Susquehanna nuclear power plant in Pennsylvania that accelerates PPL’s plan to address turbine blade issues that have affected both Susquehanna units.
“While the additional scheduled Susquehanna outage impacts projected 2013 earnings by about 5 cents per share, implementing a long-term solution sooner than previously planned reduces future risk and minimizes the overall financial effect on PPL,” Spence said.
2012 Earnings Details
PPL’s 2012 reported earnings include net special item credits of $109 million, or $0.18 per share, compared with net special item charges of $14 million, or $0.03 per share, in 2011.
The special item credits for 2012 include $0.13 per share to adjust a U.K. liability related to line losses, $0.13 per share for a reduction in the U.K. corporate income tax rate, and $0.07 per share for adjusted energy-related economic activity. These special item credits were partially offset by special item charges that include $0.06 per share for foreign currency-related economic hedges, $0.03 per share for coal contract modification payments and $0.03 per share for an impairment of an equity method investment in the Kentucky Regulated segment.
Reported earnings are calculated in accordance with U.S. generally accepted accounting principles (GAAP). Earnings from ongoing operations, a non-GAAP financial measure, are adjusted for special items that include the impact of adjusted energy-related economic activity (principally changes in fair value of economic hedges and the ineffective portion of qualifying cash flow hedges), acquisition-related adjustments, and other impacts fully detailed at the end of this news release.
(Dollars in millions, except
for per share amounts)
2012 2011 % Change
---- ---- --------
Reported Earnings $1,526 $1,495 2%
Reported Earnings Per Share $2.60 $2.70 -4%
Earnings from Ongoing
Operations $1,417 $1,509 -6%
Earnings from Ongoing
Operations Per Share $2.42 $2.73 -11%
Fourth Quarter 2012 Earnings Details
PPL’s reported earnings for the fourth quarter of 2012 include net special item credits of $0.11 per share. The special item credits include $0.13 per share to adjust a U.K. liability related to line losses and $0.02 per share for adjusted energy-related economic activity. The credits were partially offset by special item charges including $0.03 per share for an impairment of an equity method investment in the Kentucky Regulated segment and $0.01 per share for foreign currency-related economic hedges.
(Dollars in millions, except for per share amounts)
4th Quarter 4th Quarter
2012 2011 % Change
---- ---- --------
Reported Earnings $359 $454 -21%
Reported Earnings Per Share $0.60 $0.78 -23%
Earnings from Ongoing
Operations $292 $410 -29%
Earnings from Ongoing
Operations Per Share $0.49 $0.71 -31%
(See the tables at the end of the news release for details as to the reconciliation of earnings from ongoing operations to reported earnings.)
Annual and Fourth-Quarter 2012 Earnings by Segment
The following chart shows PPL’s earnings by segment for 2012 and the fourth quarter of 2012, compared with the same periods of 2011.
Per share Year 4th Quarter
Earnings from ongoing operations 2012 2011 2012 2011
---- ---- ---- ----
Kentucky Regulated $0.33 $0.40 $0.08 $0.06
U.K. Regulated 1.19 0.87 0.29 0.28
Pennsylvania Regulated 0.22 0.31 0.05 0.10
Supply 0.68 1.15 0.07 0.27
---- ---- ---- ----
Total $2.42 $2.73 $0.49 $0.71
===== ===== ===== =====
Special items
Kentucky Regulated $(0.03) $ - $(0.03) $ -
U.K. Regulated 0.18 (0.28) 0.12 (0.12)
Pennsylvania Regulated - - - -
Supply 0.03 0.25 0.02 0.19
---- ---- ---- ----
Total $0.18 $(0.03) $0.11 $0.07
===== ====== ===== =====
Reported earnings
Kentucky Regulated $0.30 $0.40 $0.05 $0.06
U.K. Regulated 1.37 0.59 0.41 0.16
Pennsylvania Regulated 0.22 0.31 0.05 0.10
Supply 0.71 1.40 0.09 0.46
---- ---- ---- ----
Total $2.60 $2.70 $0.60 $0.78
===== ===== ===== =====
(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 Segment Earnings from Ongoing Operations
Kentucky Regulated Segment
PPL’s Kentucky Regulated segment primarily consists of the regulated electricity and natural gas operations of Louisville Gas and Electric Company and Kentucky Utilities Company.
Segment earnings from ongoing operations decreased in 2012 by $0.07 per share compared to a year ago primarily due to higher operation and maintenance expense, higher depreciation, higher property taxes, losses from an equity method investment and dilution of $0.02 per share, partially offset by lower income taxes.
Segment earnings from ongoing operations in the fourth quarter of 2012 increased by $0.02 per share compared with the fourth quarter of 2011 primarily due to higher retail margins as a result of returns on new environmental investments, increased residential sales due to customer growth, and more seasonable weather than in 2011.
U.K. Regulated Segment
PPL’s U.K. Regulated segment consists of the regulated electricity delivery operations of Western Power Distribution, serving Southwest and Central England and South Wales.
Segment earnings from ongoing operations in 2012 increased by $0.32 per share compared to a year ago primarily due to four additional months of earnings from the WPD Midlands businesses, higher delivery revenue and lower U.K. income taxes, partially offset by higher U.S. income taxes, higher depreciation, a less favorable currency exchange rate, and dilution of $0.07 per share.
Segment earnings from ongoing operations in the fourth quarter of 2012 increased by $0.01 per share compared with the fourth quarter of 2011 primarily due to higher delivery revenue, partially offset by higher operation and maintenance expense and higher income taxes.
Pennsylvania Regulated Segment
PPL’s Pennsylvania Regulated segment consists of the regulated electricity delivery operations of PPL Electric Utilities.
Segment earnings from ongoing operations in 2012 decreased by $0.09 per share compared to a year ago primarily due to higher operation and maintenance expense, higher income and non-income taxes, lower distribution margins as a result of mild weather early in the year, higher depreciation and dilution of $0.01 per share, partially offset by higher transmission revenue and lower financing costs due to the redemption of $250 million of preferred securities.
Segment earnings from ongoing operations in the fourth quarter of 2012 decreased by $0.05 per share compared with the fourth quarter of 2011 primarily due to higher operation and maintenance expense and higher income and non-income taxes, partially offset by higher transmission revenue, higher distribution margins due to colder weather and lower financing costs.
Supply Segment
PPL’s Supply segment consists primarily of the competitive electricity generation and energy marketing operations of PPL Energy Supply.
Segment earnings from ongoing operations in 2012 decreased by $0.47 per share compared to a year ago primarily due to lower Eastern energy margins resulting from lower baseload energy and capacity prices, lower Western energy margins resulting from an early 2012 contract termination related to the bankruptcy of a large customer, higher operation and maintenance expense, higher depreciation, higher income taxes, higher financing costs and dilution of $0.04 per share.
Segment earnings from ongoing operations in the fourth quarter of 2012 decreased by $0.20 per share compared with the fourth quarter of 2011 primarily due to lower nuclear and fossil-fuel generation output in the East, lower Western energy margins, higher operation and maintenance expense, higher income taxes and higher depreciation, partially offset by higher capacity prices.
2013 Earnings Forecast by Segment
In the fourth quarter of 2012, PPL adopted a new consolidated financing strategy that, beginning in 2013, will change the presentation of operating results for purposes of assessing performance by PPL management. The segments will continue to be Kentucky Regulated, U.K. Regulated, Pennsylvania Regulated and Supply; however, certain corporate-level financing and other costs will not be allocated or assigned to segments, but rather will be presented in a separate category, Corporate and Other, to reconcile segment results to PPL’s consolidated results. Non-financing costs to be presented in this category are not expected to be significant.
PPL’s recent growth in rate-regulated businesses provides the organization with an enhanced corporate level financing alternative, PPL Capital Funding, Inc. (Cap Funding), that further enables PPL to support targeted credit profiles cost effectively across all of PPL’s rated companies. As a result, PPL plans to further utilize Cap Funding in addition to continued direct financing by the operating companies, as appropriate.
Cap Funding participated significantly in the financing for the acquisitions of LKE and WPD Midlands. The associated financing costs, as well as the financing costs associated with prior issuances of certain other Cap Funding securities, are and will continue to be assigned to the appropriate segments. The financing costs associated with Cap Funding’s $400 million of 3.5% Senior Notes issued in October 2012, as well as future securities issuances at Cap Funding, are not expected to be directly assignable or allocable to any segment and will be reflected in Corporate and Other beginning in 2013.
Earnings per share 2013 2012 actual
forecast midpoint (ongoing earnings)
Kentucky Regulated $0.47 $0.33
U.K. Regulated 1.25 1.19
Pennsylvania Regulated 0.29 0.22
Supply 0.40 0.68
Corporate and Other (0.04) -
----- ---
Total $2.37 $2.42
===== =====
PPL expects lower earnings in 2013 compared with 2012, primarily due to lower energy margins in the Supply segment, partially offset by higher earnings in PPL’s three regulated segments. These projected earnings also reflect dilution of $0.11 per share associated with 2013 common stock issuances related to PPL’s 2010 Equity Units and April 2012 forward stock sale.
Kentucky Regulated Segment
PPL projects higher segment earnings in 2013 compared with 2012, primarily driven by electric and gas base rate increases effective January 1, 2013, returns on additional environmental capital investments and retail load growth, partially offset by higher operation and maintenance expense. Dilution for 2013 is expected to be $0.02 per share.
U.K. Regulated Segment
PPL projects higher segment earnings in 2013 compared with 2012, primarily driven by higher electricity delivery revenue and lower income taxes, partially offset by higher operation and maintenance expense, higher depreciation and higher interest expense. Dilution for 2013 is expected to be $0.06 per share.
Pennsylvania Regulated Segment
PPL projects higher segment earnings in 2013 compared with 2012, primarily driven by higher distribution revenues from a distribution base rate increase effective January 1, 2013, and higher transmission margins, partially offset by higher depreciation. Dilution for 2013 is expected to be $0.01 per share.
Supply Segment
PPL projects lower segment earnings in 2013 compared with 2012 primarily driven by lower energy prices, higher fuel costs, higher operation and maintenance expense, higher depreciation and higher financing costs, which are partially offset by higher capacity prices and higher nuclear generation output despite scheduled outages for both Susquehanna units to implement a long-term solution to turbine blade issues. Dilution for 2013 is expected to be $0.02 per share.
Corporate and Other
This category primarily includes unallocated corporate-level financing and other costs.
PPL Corporation (NYSE: PPL), with annual revenue of more than $12 billion, is one of the largest companies in the U.S. utility sector. The PPL family of companies delivers electricity and natural gas to about 10 million customers in the United States and the United Kingdom, owns more than 18,000 megawatts of generating capacity in the United States and sells energy in key U.S. markets. 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 a live Internet webcast of management’s teleconference with financial analysts about annual and fourth quarter 2012 financial results at 9 a.m. (Eastern Time) Thursday, February 14. The meeting is available online live, in audio format, along with slides of the presentation, on PPL’s website: www.pplweb.com. The webcast will be available for replay on the PPL website for 30 days. Interested individuals also can access the live conference call via telephone at 702-696-4769 (ID#97396937).
“Earnings from ongoing operations” should not be considered as an alternative to reported earnings, or net income attributable to PPL, which is an indicator of operating performance determined in accordance with U.S. generally accepted accounting principles (GAAP). PPL believes that “earnings from ongoing operations,” although a non-GAAP financial measure, is also useful and meaningful to investors because it provides management’s view of PPL’s fundamental earnings performance as another criterion in making 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.
“Earnings from ongoing operations” is adjusted for the impact of special items. Special items include:
- Adjusted energy-related economic activity (as discussed below).
- Foreign currency-related economic hedges.
- Gains and losses on sales of assets not in the ordinary course of business.
- Impairment charges (including impairments of securities in the company’s nuclear decommissioning trust funds).
- Workforce reduction and other restructuring impacts.
- Acquisition-related adjustments.
- Other charges or credits that are, in management’s view, not reflective of the company’s ongoing operations.
Adjusted energy-related economic activity includes the changes in fair value of positions used economically to hedge a portion of the economic value of PPL’s generation assets, full-requirement sales contracts and retail activities. This economic value is subject to changes in fair value due to market price volatility of the input and output commodities (e.g., fuel and power) prior to the delivery period that was hedged. Also included in adjusted energy-related economic activity is the ineffective portion of qualifying cash flow hedges, the monetization of certain full-requirement sales contracts and premium amortization associated with options. This economic activity is deferred, with the exception of the full-requirement sales contracts that were monetized, and included in earnings from ongoing operations over the delivery period of the item that was hedged or upon realization. Management believes that adjusting for such amounts provides a better matching of earnings from ongoing operations to the actual amounts settled for PPL’s underlying hedged assets. Please refer to the Notes to the Consolidated Financial Statements and MD&A in PPL Corporation’s periodic filings with the Securities and Exchange Commission for additional information on adjusted energy-related economic activity.
Statements contained in this news release, including statements with respect to future earnings, cash flows, financing, regulation and corporate strategy, 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 are subject to 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; the length of scheduled and unscheduled outages at our plants; 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 or business acquisitions and dispositions, and PPL Corporation’s ability to realize the expected benefits from acquired businesses, including the 2010 acquisition of Louisville Gas and Electric Company and Kentucky Utilities Company and the 2011 acquisition of the Central Networks electricity distribution businesses in the U.K.; any impact of hurricanes or other severe weather on our business, including any impact on fuel prices; receipt of necessary government permits, approvals, rate relief and regulatory cost recovery; 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.
PPL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL INFORMATION (a)
Condensed Consolidated Balance Sheets (Unaudited)
(Millions of Dollars)
December 31, December 31,
2012 2011
---- ----
Assets
Cash and cash equivalents $901 $1,202
Price risk management assets - current 1,525 2,548
Other current assets 2,642 2,676
Investments 759 718
Property, Plant and Equipment
Regulated
utility plant 25,196 22,994
Less:
Accumulated
depreciation
-regulated
utility plant 4,164 3,534
Regulated utility plant, net 21,032 19,460
------ ------
Non-regulated
property,
plant and
equipment 12,545 11,608
Less:
Accumulated
depreciation
- non-
regulated
property,
plant and
equipment 5,942 5,676
Non-regulated property,
plant and equipment, net 6,603 5,932
Construction
work in
progress 2,397 1,874
Property,
Plant and
Equipment,
net 30,032 27,266
Regulatory assets 1,483 1,349
Goodwill and other intangibles 5,083 5,179
Price risk management assets - noncurrent 572 920
Other noncurrent assets 637 790
--- ---
Total Assets $43,634 $42,648
======= =======
Liabilities and Equity
Short-term debt $652 $578
Long-term debt due within one year 751
Accounts payable 1,252 1,150
Price risk management liabilities - current 1,065 1,570
Other current liabilities 1,905 1,957
Long-term debt 18,725 17,993
Deferred income taxes and investment tax credits 3,715 3,611
Price risk management liabilities - noncurrent 629 840
Accrued pension obligations 2,076 1,313
Regulatory liabilities 1,010 1,010
Other noncurrent liabilities 1,356 1,530
Common stock and additional paid-in-capital 6,942 6,819
Earnings reinvested 5,478 4,797
Accumulated other comprehensive loss (1,940) (788)
Noncontrolling interests 18 268
--- ---
Total Liabilities and Equity $43,634 $42,648
======= =======
(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.
PPL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
(Millions of Dollars, Except Share Data)
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2012 2011 2012 (a) 2011 (a)
---- ---- ------- -------
Operating Revenues
Utility $1,796 $1,597 $6,808 $6,292
Unregulated
retail electric
and gas (b) 224 209 844 726
Wholesale energy
marketing
Realized 1,066 1,130 4,433 3,807
Unrealized
economic
activity (b) 11 1,178 (311) 1,407
Net energy
trading margins (3) (16) 4 (2)
Energy-related
businesses 128 120 508 507
Total Operating
Revenues 3,222 4,218 12,286 12,737
Operating Expenses
Operation
Fuel (b) 432 454 1,837 1,946
Energy
purchases
Realized 744 663 2,997 2,130
Unrealized economic
activity (b) (22) 1,074 (442) 1,123
Other
operation and
maintenance 740 626 2,835 2,667
Depreciation 287 263 1,100 960
Taxes, other than
income 98 88 366 326
Energy-related
businesses 121 116 484 484
Total Operating
Expenses 2,400 3,284 9,177 9,636
Operating Income 822 934 3,109 3,101
Other Income (Expense) - net (8) 6 (39) 4
Other-Than-Temporary Impairments 26 27 6
Interest Expense 247 220 961 898
--- --- --- ---
Income from Continuing Operations Before Income
Taxes 541 720 2,082 2,201
Income Taxes 181 262 545 691
--- --- --- ---
Income from Continuing Operations After Income
Taxes 360 458 1,537 1,510
Income (Loss) from Discontinued Operations (net of
income taxes) (6) 2
--- ---
Net Income 360 458 1,531 1,512
Net Income Attributable to Noncontrolling Interests 1 4 5 17
--- --- --- ---
Net Income Attributable to PPL Shareowners $359 $454 $1,526 $1,495
==== ==== ====== ======
Amounts Attributable to PPL Shareowners
Income from
Continuing
Operations After
Income Taxes $359 $454 $1,532 $1,493
Income (Loss)
from
Discontinued
Operations (net
of income taxes) (6) 2
Net Income $359 $454 $1,526 $1,495
Earnings Per Share of Common Stock - Basic
Net Income
Available to PPL
Common
Shareowners $0.61 $0.78 $2.61 $2.71
Earnings Per Share of Common Stock - Diluted (c)
Earnings from
Ongoing
Operations $0.49 $0.71 $2.42 $2.73
Special Items 0.11 0.07 0.18 (0.03)
Net Income
Available to PPL
Common
Shareowners $0.60 $0.78 $2.60 $2.70
Weighted-Average Shares of Common Stock Outstanding
(in thousands)
Basic 581,492 578,153 580,276 550,395
Diluted 583,644 579,347 581,626 550,952
(a) The results of operations for
2012 are not comparable with
2011 due to the acquisition of
WPD Midlands. WPD Midlands'
results are consolidated on a
one-month lag, and includes
eight months of results in
2011, as the date of the
acquisition was April 1, 2011.
(b) Includes activity from energy-
related contracts to hedge
future cash flows that are not
eligible for hedge accounting,
or for which hedge accounting
was not elected.
(c) Earnings in 2012 and 2011 were
impacted by several special
items, as described in the text
and tables of this news
release. Earnings from ongoing
operations exclude the impact
of these special items.
PPL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Millions of Dollars)
2012 2011 (a) 2010 (a)
---- ------- -------
Cash Flows from Operating Activities
Net income $1,531 $1,512 $959
Adjustments to
reconcile net
income to net
cash provided
by operating
activities
Depreciation 1,100 961 567
Amortization 186 254 213
Defined
benefit
plans -
expense 166 205 102
Deferred
income taxes
and
investment
tax credits 441 582 241
Impairment of
assets 28 13 120
Unrealized
(gains)
losses on
derivatives,
and other
hedging
activities 27 (314) 542
Provision for
Montana
hydroelectric
litigation (74) 66
Change in
current assets
and current
liabilities
Prepayments (5) 294 (318)
Counterparty
collateral (34) (190) (18)
Other (26) 56 (20)
Other operating
activities
Defined
benefit
plans -
funding (607) (667) (396)
Other
operating
activities (91) (125) (25)
--- ---- ---
Net cash provided by
operating activities 2,716 2,507 2,033
----- ----- -----
Cash Flows from Investing Activities
Expenditures for
property, plant
and equipment (3,057) (2,487) (1,597)
Proceeds from
the sale of
certain non-
core generation
facilities 381
Proceeds from
the sale of the
Long Island
generation
business 124
Proceeds from
the sale of the
Maine
hydroelectric
generation
business 38
Ironwood
Acquisition,
net of cash
acquired (84)
Acquisition of
WPD Midlands (5,763)
Acquisition of
LKE, net of
cash acquired (6,812)
Purchases of
nuclear plant
decommissioning
trust
investments (154) (169) (128)
Proceeds from
the sale of
nuclear plant
decommissioning
trust
investments 139 156 114
Proceeds from
the sale of
other
investments 20 163
Net (increase)
decrease in
restricted cash
and cash
equivalents 96 (143) 85
Other investing
activities (35) (90) (53)
Net cash used in
investing activities (3,075) (7,952) (8,229)
------ ------ ------
Cash Flows from Financing Activities
Issuance of
long-term debt 1,223 5,745 4,642
Retirement of
long-term debt (108) (1,210) (20)
Issuance of
common stock 72 2,297 2,441
Payment of
common stock
dividends (833) (746) (566)
Redemption of
preference
stock of a
subsidiary (250) (54)
Debt issuance
and credit
facility costs (17) (102) (175)
Contract
adjustment
payments on
Equity Units (94) (72) (13)
Net increase
(decrease) in
short-term
debt 74 (125) 70
Other financing
activities (19) (20) (18)
Net cash provided by
financing activities 48 5,767 6,307
--- ----- -----
Effect of Exchange Rates on Cash and Cash
Equivalents 10 (45) 13
--- --- ---
Net Increase (Decrease) in Cash and Cash
Equivalents (301) 277 124
Cash and Cash Equivalents at Beginning of Period 1,202 925 801
----- --- ---
Cash and Cash Equivalents at End of Period $901 $1,202 $925
==== ====== ====
(a) LKE's cash flows are
consolidated for two months in
2010, as the date of
acquisition was November 1,
2010. WPD Midlands' cash flows
are consolidated on a one-
month lag, and includes eight
months of results in 2011, as
the date of acquisition was
April 1, 2011.
Key Indicators (Unaudited)
12 Months Ended
December 31,
------------
Financial 2012 2011
---- ----
Dividends declared per share $1.44 $1.40
Book value per share (a) $18.01 $18.72
Market price per share (a) $28.63 $29.42
Dividend yield (a) 5.0% 4.8%
Dividend payout ratio (b) 55% 52%
Dividend payout ratio - earnings from ongoing operations (c) 60% 51%
Price/earnings ratio (a)(b) 11.0 10.9
Price/earnings ratio - earnings from ongoing operations (a)(c) 11.8 10.8
Return on average common equity 13.76% 14.93%
Return on average common equity - earnings from ongoing operations (c) 12.78% 15.08%
(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.
Operating - Domestic & International Electricity Sales (Unaudited)
3 Months Ended December 31, 12 Months Ended December 31,
--------------------------- ----------------------------
Percent Percent
(GWh) 2012 2011 Change 2012 2011 Change
---- ---- ------ ---- ---- ------
Domestic Retail Delivered
PPL Electric
Utilities (a) 8,917 8,854 0.7% 36,023 36,908 (2.4%)
LKE 7,215 7,119 1.3% 30,908 30,898 0.0%
Total 16,132 15,973 1.0% 66,931 67,806 (1.3%)
====== ====== ====== ======
Domestic Retail Supplied (b)
PPL EnergyPlus 2,938 2,537 15.8% 11,471 9,249 24.0%
LKE 7,215 7,119 1.3% 30,908 30,898 0.0%
Total 10,153 9,656 5.1% 42,379 40,147 5.6%
====== ===== ====== ======
International Delivered
United Kingdom (c) 19,518 19,487 0.2% 77,467 58,245 33.0%
Domestic Wholesale Supplied
PPL EnergyPlus -
East 10,405 13,427 (22.5%) 46,585 51,804 (10.1%)
PPL EnergyPlus -
West 2,173 2,465 (11.8%) 7,413 10,327 (28.2%)
LKE (d) 595 1,039 (42.7%) 2,304 3,550 (35.1%)
Total 13,173 16,931 (22.2%) 56,302 65,681 (14.3%)
====== ====== ====== ======
(a) Prior period volumes were restated to include unbilled volumes.
(b) Represents GWh supplied by PPL EnergyPlus to PPL Electric Utilities as PLR, and to other retail customers in Pennsylvania, New Jersey, Montana, Delaware and Maryland. Also includes GWh supplied by LKE to retail customers in Kentucky, Virginia and Tennessee.
(c) The WPD Midlands acquisition occurred April 1, 2011 and sales volumes are reported on a one-month lag. The twelve months ended December 31, 2012 and 2011 include 51,603 GWh and 31,900 GWh delivered by WPD Midlands.
(d) Represents FERC-regulated municipal and unregulated off-system sales.
Reconciliation of Segment Earnings from Ongoing Operations to Reported Earnings
(After Tax)
(Unaudited)
4th Quarter 2012 (millions of dollars)
--------------------
Kentucky U.K. Pennsylvania
Regulated Regulated Regulated Supply Total
--------- --------- --------- ------ -----
Earnings from Ongoing
Operations $44 $172 $37 $39 $292
Special Items:
Adjusted energy-related
economic activity, net 15 15
Foreign currency-related
economic hedges (5) (5)
Impairments:
Other asset impairments (15) (1) (16)
Acquisition-related
adjustments:
WPD Midlands
------------
Separation benefits (2) (2)
Other:
Change in U.K. tax rate 1 1
Line loss adjustment 74 74
Total Special Items (15) 68 14 67
--- --- --- ---
Reported Earnings $29 $240 $37 $53 $359
=== ==== === === ====
(per share - diluted)
--------------------
Kentucky U.K. Pennsylvania
Regulated Regulated Regulated Supply Total
--------- --------- --------- ------ -----
Earnings from Ongoing
Operations $0.08 $0.29 $0.05 $0.07 $0.49
Special Items:
Adjusted energy-related
economic activity, net 0.02 0.02
Foreign currency-related
economic hedges (0.01) (0.01)
Impairments:
Other asset impairments (0.03) (0.03)
Other:
Line loss adjustment 0.13 0.13
Total Special Items (0.03) 0.12 0.02 0.11
----- ---- ---- ----
Reported Earnings $0.05 $0.41 $0.05 $0.09 $0.60
===== ===== ===== ===== =====
Reconciliation of Segment Earnings from Ongoing Operations to Reported Earnings
(After Tax)
(Unaudited)
Year-to-Date December 31, 2012 (millions of dollars)
--------------------
Kentucky U.K. Pennsylvania
Regulated Regulated (a) Regulated Supply Total
--------- ------------- --------- ------ -----
Earnings from Ongoing Operations $193 $696 $132 $396 $1,417
Special Items:
Adjusted energy-related economic
activity, net 38 38
Foreign currency-related economic
hedges (33) (33)
Impairments:
Adjustments -nuclear decommissioning
trust investments 2 2
Other asset impairments (15) (1) (16)
Acquisition-related adjustments:
WPD Midlands
------------
Separation benefits (11) (11)
Other acquisition-related adjustments 2 2
LKE
---
Net operating loss carryforward and
other tax-related adjustments 4 4
Other:
LKE discontinued operations (5) (5)
Change in U.K. tax rate 75 75
Counterparty bankruptcy (6) (6)
Wholesale supply cost reimbursement 1 1
Ash basin leak remediation adjustment 1 1
Coal contract modification payments (17) (17)
Line loss adjustment 74 74
Total Special Items (16) 107 18 109
--- --- --- ---
Reported Earnings $177 $803 $132 $414 $1,526
==== ==== ==== ==== ======
(per share - diluted)
--------------------
Kentucky U.K. Pennsylvania
Regulated Regulated (a) Regulated Supply Total
--------- ------------- --------- ------ -----
Earnings from Ongoing Operations $0.33 $1.19 $0.22 $0.68 $2.42
Special Items:
Adjusted energy-related economic
activity, net 0.07 0.07
Foreign currency-related economic
hedges (0.06) (0.06)
Impairments:
Other asset impairments (0.03) (0.03)
Acquisition-related adjustments:
WPD Midlands
------------
Separation benefits (0.02) (0.02)
LKE
---
Net operating loss carryforward and
other tax-related adjustments 0.01 0.01
Other:
LKE discontinued operations (0.01) (0.01)
Change in U.K. tax rate 0.13 0.13
Counterparty bankruptcy (0.01) (0.01)
Coal contract modification payments (0.03) (0.03)
Line loss adjustment 0.13 0.13
Total Special Items (0.03) 0.18 0.03 0.18
----- ---- ---- ----
Reported Earnings $0.30 $1.37 $0.22 $0.71 $2.60
===== ===== ===== ===== =====
(a) The results of operations for 2012 are not comparable with 2011 due to the acquisition of WPD
Midlands. WPD Midlands' results are consolidated on a one-month lag, and include eight
months of results in 2011, as the date of acquisition was April 1, 2011.
Reconciliation of Segment Earnings from Ongoing Operations to Reported Earnings
(After Tax)
(Unaudited)
4th Quarter 2011 (millions of dollars)
--------------------
Kentucky U.K. Pennsylvania
Regulated Regulated Regulated Supply Total
--------- --------- --------- ------ -----
Earnings from Ongoing Operations $36 $164 $58 $152 $410
Special Items:
Adjusted energy-related economic activity, net 69 69
Foreign currency-related economic hedges (3) (3)
Acquisition-related adjustments:
WPD Midlands
------------
Separation benefits (7) (7)
Other acquisition-related costs (21) (21)
Other:
Montana hydroelectric litigation 47 47
Windfall profits tax litigation (39) (39)
Counterparty bankruptcy (6) (6)
Wholesale supply cost reimbursement 4 4
Total Special Items (70) 114 44
--- --- ---
Reported Earnings $36 $94 $58 $266 $454
=== === === ==== ====
(per share - diluted)
--------------------
Kentucky U.K. Pennsylvania
Regulated Regulated Regulated Supply Total
--------- --------- --------- ------ -----
Earnings from Ongoing Operations $0.06 $0.28 $0.10 $0.27 $0.71
Special Items:
Adjusted energy-related economic activity, net 0.11 0.11
Acquistion-related adjustments:
WPD Midlands
------------
Separation benefits (0.01) (0.01)
Other acquisition-related costs (0.04) (0.04)
Other:
Montana hydroelectric litigation 0.08 0.08
Windfall profits tax litigation (0.07) (0.07)
Counterparty bankruptcy (0.01) (0.01)
Wholesale supply cost reimbursement 0.01 0.01
Total Special Items (0.12) 0.19 0.07
----- ---- ----
Reported Earnings $0.06 $0.16 $0.10 $0.46 $0.78
===== ===== ===== ===== =====
Reconciliation of Segment Earnings from Ongoing Operations to Reported Earnings
(After Tax)
(Unaudited)
Year-to-Date December 31, 2011 (millions of dollars)
--------------------
Kentucky U.K. Pennsylvania
Regulated Regulated (a) Regulated Supply Total
--------- ------------- --------- ------ -----
Earnings from Ongoing Operations $220 $482 $173 $634 $1,509
Special Items:
Adjusted energy-related economic
activity, net 1 72 73
Foreign currency-related economic
hedges 5 5
Impairments:
Emission allowances (1) (1)
Renewable energy credits (3) (3)
Acquisition-related adjustments:
WPD Midlands
------------
2011 Bridge Facility costs (30) (30)
Foreign currency loss on 2011 Bridge
Facility (38) (38)
Net hedge gains 38 38
Hedge ineffectiveness (9) (9)
U.K. stamp duty tax (21) (21)
Separation benefits (75) (75)
Other acquisition-related costs (57) (57)
LKE
---
Sale of certain non-core generation
facilities (2) (2)
Other:
Montana hydroelectric litigation 45 45
Litigation settlement -spent nuclear
fuel storage 33 33
Change in U.K. tax rate 69 69
Windfall profits tax litigation (39) (39)
Counterparty bankruptcy (6) (6)
Wholesale supply cost reimbursement 4 4
Total Special Items 1 (157) 142 (14)
--- ---- --- ---
Reported Earnings $221 $325 $173 $776 $1,495
==== ==== ==== ==== ======
(per share - diluted)
--------------------
Kentucky U.K. Pennsylvania
Regulated Regulated (a) Regulated Supply Total
--------- ------------- --------- ------ -----
Earnings from Ongoing Operations $0.40 $0.87 $0.31 $1.15 $2.73
Special Items:
Adjusted energy-related economic
activity, net 0.12 0.12
Foreign currency-related economic
hedges 0.01 0.01
Impairments:
Renewable energy credits (0.01) (0.01)
Acquisition-related adjustments:
WPD Midlands
------------
2011 Bridge Facility costs (0.05) (0.05)
Foreign currency loss on 2011 Bridge
Facility (0.07) (0.07)
Net hedge gains 0.07 0.07
Hedge ineffectiveness (0.02) (0.02)
U.K. stamp duty tax (0.04) (0.04)
Separation benefits (0.13) (0.13)
Other acquisition-related costs (0.10) (0.10)
Other:
Montana hydroelectric litigation 0.08 0.08
Litigation settlement -spent nuclear
fuel storage 0.06 0.06
Change in U.K. tax rate 0.12 0.12
Windfall profits tax litigation (0.07) (0.07)
Counterparty bankruptcy (0.01) (0.01)
Wholesale supply cost reimbursement 0.01 0.01
Total Special Items (0.28) 0.25 (0.03)
----- ---- -----
Reported Earnings $0.40 $0.59 $0.31 $1.40 $2.70
===== ===== ===== ===== =====
(a) The results of operations for 2012 are not comparable with 2011 due to the acquisition of
WPD Midlands. WPD Midlands' results are consolidated on a one-month lag, and include
eight months of results in 2011, as the date of the acquisition was April 1, 2011.
SOURCE PPL Corporation
