PPL Corporation Reports 2010 Earnings
ALLENTOWN, Pa., Feb. 4, 2011 /PRNewswire/ — PPL Corporation (NYSE: PPL) on Friday (2/4) reported increases in both fourth-quarter and full-year earnings for 2010, compared with the same periods of 2009.
PPL’s reported earnings for the fourth quarter of 2010 were $0.73 per share, compared with $0.40 per share a year ago. For the full year 2010, PPL’s reported earnings were $2.17 per share, compared with $1.08 per share for 2009.
Excluding special items, PPL’s earnings from ongoing operations were $0.83 per share in the fourth quarter of 2010, compared with $0.52 per share a year ago. For all of 2010, earnings from ongoing operations were $3.13 per share, compared with $1.95 per share for 2009, exceeding the midpoint of the company’s most recent 2010 forecast of earnings from ongoing operations of $2.87 per share.
Both reported earnings and earnings from ongoing operations reflect dilution associated with PPL’s June 2010 issuance of common stock and equity units related to its Nov. 1, 2010, acquisition of E.ON U.S., owner of Louisville Gas and Electric Company and Kentucky Utilities Company. The impact of this financing reduced PPL’s per share earnings from ongoing operations for the fourth quarter and full year 2010 by $0.26 and $0.49 per share, respectively. The financing reduced reported earnings by $0.23 and $0.36 per share for these periods.
The Kentucky regulated segment contributed $0.12 per share in earnings from ongoing operations for 2010, offset by $0.06 per share of dilution.
“Our 2010 per share earnings from ongoing operations are more than 60 percent higher than in 2009. The performance of our competitive supply segment accounted for most of this 2010 growth,” said James H. Miller, PPL’s chairman, president and chief executive officer.
PPL said the main drivers of improved performance in 2010 versus the midpoint of its most recent earnings forecast were the $0.12 per share of ongoing earnings from the Kentucky segment and $0.12 per share of income tax benefits, driven primarily by the release of deferred tax valuation allowances related to state net operating loss carryforwards.
PPL Friday also announced a 2011 earnings forecast of $2.40 to $2.60 per share, with a midpoint of $2.50 per share. Miller said PPL is projecting that about half of its 2011 earnings will come from its regulated businesses, a substantial increase over the 27 percent contribution in 2010 earnings from ongoing operations.
“Our strategic actions of the past year have very clearly strengthened our financial position and improved our overall risk profile,” said Miller. “For 2011 and beyond, we expect that our growing regulated businesses will produce an increasing proportion of our earnings, reducing our relative exposure to commodity market swings. In addition, our competitive supply segment is well-positioned to benefit when wholesale electricity markets rebound.”
2010 Earnings Details
PPL’s reported earnings for 2010 included net special item charges totaling $0.96 per share, compared with net special item charges totaling $0.87 in 2009.
The major special item charges in 2010 were $0.67 per share for costs and charges related to the Kentucky acquisition and $0.27 per share for energy-related economic activity.
Reported earnings are calculated in accordance with generally accepted accounting principles (GAAP) in the U.S. Earnings from ongoing operations is a non-GAAP financial measure that is adjusted for special items. Special items include the impact of energy-related economic activity (principally changes in fair value of economic hedges and the ineffective portion of qualifying cash flow hedges), as well as other impacts fully detailed at the end of this news release.
(Dollars in millions, except for per share amounts)
2010 2009 % Change
---- ---- --------
Reported Earnings $938 $407 +130%
Reported Earnings per Share $2.17 $1.08 +101%
Earnings from Ongoing
Operations $1,358 $738 +84%
Per Share Earnings from
Ongoing Operations $3.13 $1.95 +61%
(See the tables at the end of the news release for details as to the reconciliation of earnings from ongoing operations to reported earnings.)
Fourth-quarter 2010 Earnings Results
For the fourth quarter of 2010, PPL announced reported earnings of $0.73 per share, an 83 percent increase compared with a year ago. Reported earnings for the current quarter included net special item charges totaling $0.10 per share, compared with net special item charges totaling $0.12 per share a year ago. Excluding special items, PPL’s earnings from ongoing operations for the fourth quarter of 2010 were $0.83 per share, a 60 percent increase over a year ago.
(Dollars in millions, except for per share amounts)
4Q 2010 4Q 2009 % Change
------- ------- --------
Reported Earnings $355 $153 +132%
Reported Earnings per Share $0.73 $0.40 +83%
Earnings from Ongoing
Operations $404 $198 +104%
Per Share Earnings from
Ongoing Operations $0.83 $0.52 +60%
(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 Earnings by Segment
The following chart shows PPL’s earnings by segment for the year and for the fourth quarter of 2010 compared with the same periods of 2009. The former international delivery and Pennsylvania delivery segments, otherwise unchanged, have been renamed as the international regulated and Pennsylvania regulated segments.
Year 4th Quarter
2010 2009 2010 2009
---- ---- ---- ----
(per share) (per share)
Earnings from
Ongoing
Operations
Kentucky
Regulated $0.06 $0.07
International
Regulated 0.53 $0.72 0.07 $0.18
Pennsylvania
Regulated 0.27 0.35 0.05 0.09
Supply 2.27 0.88 0.64 0.25
---- ---- ---- ----
Total $3.13 $1.95 $0.83 $0.52
===== ===== ===== =====
Special Items
Kentucky
Regulated
International
Regulated $0.07 $(0.08)
Pennsylvania
Regulated (0.02) $(0.01)
Supply (0.86) (0.77) $(0.06) (0.11)
Unallocated Costs
(a) (0.17) (0.04)
----- -----
Total $(0.96) $(0.87) $(0.10) $(0.12)
====== ====== ====== ======
Reported Earnings
Kentucky
Regulated $0.06 $0.07
International
Regulated 0.60 $0.64 0.07 $0.18
Pennsylvania
Regulated 0.27 0.33 0.05 0.08
Supply 1.41 0.11 0.58 0.14
Unallocated Costs
(a) (0.17) (0.04)
----- -----
Total $2.17 $1.08 $0.73 $0.40
===== ===== ===== =====
(a) This category reflects the Bridge Facility costs associated with the
acquisition of E.ON U.S. as well as associated transaction costs.
(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
International Regulated Segment
PPL’s international regulated segment primarily includes the U.K. regulated electric delivery operations of Western Power Distribution.
Segment earnings from ongoing operations in 2010 declined by $0.19 per share compared with 2009. This decline was primarily the net result of higher financing costs, higher pension expense and higher income taxes, which were partially offset by higher electric delivery revenue and more favorable foreign currency effects. Dilution for 2010 was $0.07 per share.
Segment earnings from ongoing operations declined in the fourth quarter of 2010 by $0.11 per share compared with a year ago. This decline was primarily the net result of higher income taxes, higher pension expense and higher financing costs, which were partially offset by higher electric delivery revenue. Dilution for the fourth quarter was $0.02 per share.
Pennsylvania Regulated Segment
PPL’s Pennsylvania regulated segment includes the regulated electric delivery operations of PPL Electric Utilities.
Segment earnings from ongoing operations in 2010 declined by $0.08 per share compared with 2009. This decline was primarily the net result of higher operation and maintenance expense and lower distribution revenue, which were partially offset by higher transmission revenue and lower financing costs. Dilution for 2010 was $0.03 per share.
Segment earnings from ongoing operations declined in the fourth quarter of 2010 by $0.04 per share compared with a year ago. This decline was primarily the result of lower distribution revenue and higher operation and maintenance expense. Dilution for the fourth quarter was $0.02 per share.
Supply Segment
PPL’s supply segment primarily consists of domestic electricity generation and the marketing operations of PPL Energy Supply.
Segment earnings from ongoing operations in 2010 increased by $1.39 per share compared with 2009. This increase resulted primarily from significantly higher sales prices for Eastern baseload generation, due to the expiration of the provider-of-last-resort contract at the end of 2009, combined with higher hedged prices established over the past few years and lower income taxes. The lower income taxes primarily resulted from the release of deferred tax valuation allowances related to Pennsylvania net operating loss carryforwards of $0.16 per share. These benefits were partially offset by higher operation and maintenance expense, higher depreciation and higher average fuel costs. Dilution for 2010 was $0.33 per share.
Segment earnings from ongoing operations increased by $0.39 per share in the fourth quarter of 2010 compared with a year ago. The increase was primarily the net result of the same factors that drove overall 2010 earnings for this segment, except that operation and maintenance expenses were lower in the fourth quarter of 2010 compared with the same period of 2009. Dilution for the fourth quarter was $0.17 per share.
2011 Earnings Forecast by Segment
Earnings 2011 2010
(per share) (forecast) (actual)
Midpoint Ongoing
earnings
Kentucky Regulated $0.47 $0.06 *
International Regulated 0.47 0.53
Pennsylvania Regulated 0.31 0.27
Supply 1.25 2.27
---- ----
Total $2.50 $3.13
----- -----
* The 2010 earnings for the Kentucky regulated segment only include results for November and December, partially offset by the interest expense associated with the equity units issued in June 2010 related to the acquisition of E.ON U.S.
A full year of earnings from the Kentucky regulated segment is the largest positive driver of PPL’s 2011 projected earnings. Partially offsetting this benefit is dilution of $0.34 per share associated with PPL’s June 2010 issuance of common stock.
Kentucky Regulated Segment
The projected 2011 segment earnings represent a full year of earnings versus two months in 2010. This segment’s 2011 earnings are expected to be generally driven by high-performing utilities in the progressive state regulatory environment and by the results of electric and gas base rate increases that became effective Aug. 1, 2010. Dilution for 2011 is expected to be $0.01 per share.
International Regulated Segment
After adjusting for dilution of $0.06 per share, PPL expects segment earnings in 2011 to be comparable with 2010 earnings. This is primarily the result of higher electric delivery revenue and a more favorable currency exchange rate offset by higher income taxes, higher depreciation and higher financing costs.
Pennsylvania Regulated Segment
PPL projects higher segment earnings in 2011 compared with 2010 due to higher distribution revenues resulting from an approved distribution base rate increase effective Jan. 1, 2011. Dilution for 2011 is expected to be $0.03 per share.
Supply Segment
PPL expects lower segment earnings in 2011 compared with 2010 as a result of lower energy margins driven by lower energy and capacity prices in the East, higher average fuel costs, and higher operation and maintenance expense. Dilution for 2011 is expected to be $0.24 per share.
PPL Corporation, headquartered in Allentown, Pa., owns or controls about 19,000 megawatts of generating capacity in the United States, sells energy in key U.S. markets, and delivers electricity and natural gas to about 5.2 million customers in the United States 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 a live Internet webcast of management’s teleconference with financial analysts about annual and fourth-quarter 2010 financial results at 9 a.m. EST Friday, Feb. 4. 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# 35502001).
“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 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:
- 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.
- Costs and charges related to the acquisition of E.ON U.S.
- Other charges or credits that are, in management’s view, not reflective of the company’s ongoing operations.
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, load-following 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). Also included in this special item are the ineffective portion of qualifying cash flow hedges and the premium amortization associated with options classified as economic activity. These items are included in ongoing earnings 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 energy-related economic activity.
Statements contained in this news release, including statements with respect to future events and their timing, including statements concerning the Nov. 1, 2010, acquisition by PPL Corporation of E.ON U.S. LLC and its subsidiaries Louisville Gas and Electric Company and Kentucky Utilities Company (collectively, the “Kentucky Entities”), the expected results of operations of any of the Kentucky Entities or PPL Corporation, as well as statements as to future earnings, energy prices, margins and sales, growth, revenues, expenses, cash flow, credit profile, ratings, financing, asset disposition, marketing performance, hedging, 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 expectations, assumptions and 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: capital market conditions and decisions regarding capital structure; 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; stock price performance; receipt of necessary government permits, approvals, rate relief and regulatory cost recovery; 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, the Kentucky Entities and either of their 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; the impact of state, federal or foreign investigations applicable to PPL Corporation, the Kentucky Entities and either of their subsidiaries; the outcome of litigation against PPL Corporation, the Kentucky Entities and either of their subsidiaries; political, regulatory or economic conditions in states, regions or countries where PPL Corporation, the Kentucky Entities and either of their 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 or environmental legislation or regulation; and the commitments and liabilities of PPL Corporation, the Kentucky Entities and each of their 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,
2010 (b) 2009 (c)
-------- --------
Assets
Cash and cash equivalents $925 $801
Short-term investments 163
Price risk management assets - current 1,918 2,157
Assets held for sale 374 127
Other current assets 2,808 1,667
Investments 693 613
Property, Plant and Equipment
Regulated utility plant -electric and
gas 15,994 9,288
Less: Accumulated depreciation -
regulated utility plant 2,942 2,764
----- -----
Regulated utility plant -electric and
gas, net 13,052 6,524
------ -----
Non-regulated property, plant and
equipment 11,146 11,530
Less: Accumulated depreciation - non-
regulated property, plant and equipment 5,500 5,447
----- -----
Non-regulated property, plant and
equipment, net 5,646 6,083
Construction work in progress 2,160 567
----- ---
Property, Plant and Equipment, net 20,858 13,174
------ ------
Regulatory assets 1,145 531
Goodwill and other intangibles 2,727 1,421
Price risk management assets - noncurrent 655 1,274
Other noncurrent assets 571 400
--- ---
Total Assets $32,837 $22,165
======= =======
Liabilities and Equity
Short-term debt $694 $639
Price risk management liabilities -
current 1,144 1,502
Other current liabilities 3,376 2,041
Long-term debt 12,161 7,143
Deferred income taxes and investment tax
credits 2,800 2,153
Price risk management liabilities -
noncurrent 470 582
Accrued pension obligations 1,496 1,283
Regulatory liabilities 1,031 10
Other noncurrent liabilities 1,187 997
Common stock and capital in excess of par
value 4,607 2,284
Earnings reinvested 4,082 3,749
Accumulated other comprehensive loss (479) (537)
Noncontrolling interests 268 319
--- ---
Total Liabilities and Equity $32,837 $22,165
======= =======
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
(a) statements, including note disclosure.
Certain line items at December 31, 2010 were impacted by the
(b) acquisition of the Kentucky entities on November 1, 2010.
Certain amounts from 2009 have been reclassified to conform to
(c) the current year presentation.
PPL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
(Millions of Dollars, Except Share Data)
Three Months Ended
December 31,
------------------
2010 (a) 2009 (b)
-------- --------
Operating Revenues
Utility $1,230 $1,001
Unregulated retail electric and gas (c) 94 44
Wholesale energy marketing
Realized 1,050 710
Unrealized economic activity (c) (615) (162)
Net energy trading margins 6 15
Energy-related businesses 98 102
--- ---
Total Operating Revenues 1,863 1,710
----- -----
Operating Expenses
Operation
Fuel (c) 425 220
Energy purchases
Realized 641 593
Unrealized economic activity (c) (704) (100)
Other operation and maintenance 527 379
Amortization of recoverable transition
costs 77
Depreciation 180 123
Taxes, other than income 57 72
Energy-related businesses 95 98
--- ---
Total Operating Expenses 1,221 1,462
----- -----
Operating Income 642 248
Other Income (Expense) - net (13) 10
Other-Than-Temporary Impairments
Interest Expense 180 99
--- ---
Income from Continuing Operations Before
Income Taxes 449 159
Income Taxes 111 30
--- ---
Income from Continuing Operations After
Income Taxes 338 129
Income (Loss) from Discontinued
Operations (net of income taxes) 21 28
--- ---
Net Income 359 157
Net Income Attributable to
Noncontrolling Interests 4 4
--- ---
Net Income Attributable to PPL
Corporation $355 $153
==== ====
Amounts Attributable to PPL Corporation:
Income from Continuing Operations After
Income Taxes $334 $125
Income (Loss) from Discontinued
Operations (net of income taxes) 21 28
--- ---
Net Income $355 $153
==== ====
Earnings Per Share of Common Stock -
Basic (d)
Earnings from Ongoing Operations $0.83 $0.52
Special Items (0.10) (0.12)
----- -----
Net Income Available to PPL Corporation
Common Shareowners $0.73 $0.40
===== =====
Earnings Per Share of Common Stock -
Diluted (d)
Earnings from Ongoing Operations $0.83 $0.52
Special Items (0.10) (0.12)
----- -----
Net Income Available to PPL Corporation
Common Shareowners $0.73 $0.40
===== =====
Weighted-Average Shares of Common Stock
Outstanding (thousands)
Basic 483,145 376,910
Diluted 483,382 377,252
Year Ended December
31,
--------------------
2010 (a) 2009 (b)
-------- --------
Operating Revenues
Utility $3,668 $3,902
Unregulated retail electric and gas (c) 415 152
Wholesale energy marketing
Realized 4,832 3,184
Unrealized economic activity (c) (805) (229)
Net energy trading margins 2 17
Energy-related businesses 409 423
--- ---
Total Operating Revenues 8,521 7,449
----- -----
Operating Expenses
Operation
Fuel (c) 1,235 920
Energy purchases
Realized 2,773 2,625
Unrealized economic activity (c) (286) 155
Other operation and maintenance 1,756 1,418
Amortization of recoverable transition costs 304
Depreciation 556 455
Taxes, other than income 238 280
Energy-related businesses 383 396
--- ---
Total Operating Expenses 6,655 6,553
----- -----
Operating Income 1,866 896
Other Income (Expense) - net (31) 47
Other-Than-Temporary Impairments 3 18
Interest Expense 593 387
--- ---
Income from Continuing Operations Before
Income Taxes 1,239 538
Income Taxes 263 105
--- ---
Income from Continuing Operations After Income
Taxes 976 433
Income (Loss) from Discontinued Operations
(net of income taxes) (17) (7)
--- ---
Net Income 959 426
Net Income Attributable to Noncontrolling
Interests 21 19
--- ---
Net Income Attributable to PPL Corporation $938 $407
==== ====
Amounts Attributable to PPL Corporation:
Income from Continuing Operations After Income
Taxes $955 $414
Income (Loss) from Discontinued Operations
(net of income taxes) (17) (7)
--- ---
Net Income $938 $407
==== ====
Earnings Per Share of Common Stock - Basic (d)
Earnings from Ongoing Operations $3.14 $1.95
Special Items (0.97) (0.87)
----- -----
Net Income Available to PPL Corporation Common
Shareowners $2.17 $1.08
===== =====
Earnings Per Share of Common Stock -Diluted
(d)
Earnings from Ongoing Operations $3.13 $1.95
Special Items (0.96) (0.87)
----- -----
Net Income Available to PPL Corporation Common
Shareowners $2.17 $1.08
===== =====
Weighted-Average Shares of Common Stock
Outstanding (thousands)
Basic 431,345 376,082
Diluted 431,569 376,406
Certain line items for 2010 include two months of results of the
(a) Kentucky entities, which were acquired on November 1, 2010.
Certain amounts from 2009 have been reclassified to conform to
(b) the current year presentation.
Includes energy-related contracts to hedge future cash flows
that are not eligible for hedge accounting, or where hedge
(c) accounting is not elected.
Earnings in 2010 and 2009 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
(d) special items.
PPL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Millions of Dollars)
2010
(a) 2009
---- ----
Cash Flows from Operating Activities
Net income $959 $426
Adjustments to reconcile net income to net cash
provided by operating activities
Pre-tax gain from the sale of the Maine
hydroelectric generation business (25) (38)
Depreciation 567 471
Amortization 219 389
Defined benefit plans - expense 102 70
Defined benefit plans - funding (396) (185)
Deferred income taxes and investment tax credits 241 104
Impairment of assets 120 127
Unrealized (gains) losses on derivatives, and other
hedging activities 542 329
Provision for Montana hydroelectric litigation 66 8
Change in current assets and current liabilities
Counterparty collateral (18) 334
Other (338) (228)
Other operating activities (5) 45
--- ---
Net cash provided by operating activities 2,034 1,852
----- -----
Cash Flows from Investing Activities
Expenditures for property, plant and equipment (1,597) (1,225)
Proceeds from the sale of the Long Island generation
business 124
Proceeds from the sale of the Maine hydroelectric
generation business 37 81
Acquisition of LKE, net of cash acquired (6,812)
Expenditures for intangible assets (92) (88)
Purchases of nuclear plant decommissioning trust
investments (128) (227)
Proceeds from the sale of nuclear plant
decommissioning trust investments 114 201
Proceeds from the sale of other investments 154
Net (increase) decrease in restricted cash and cash
equivalents 85 218
Other investing activities 39 6
--- ---
Net cash used in investing activities (8,230) (880)
------ ----
Cash Flows from Financing Activities
Issuance of long-term debt 4,642 298
Retirement of long-term debt (20) (1,016)
Issuance of equity, net of issuance costs 2,441 60
Payment of common stock dividends (566) (517)
Redemption of preferred stock of a subsidiary (54)
Debt issuance and bridge facility costs (175) (21)
Net increase (decrease) in short-term debt 70 (52)
Other financing activities (31) (23)
--- ---
Net cash provided by (used in) financing activities 6,307 (1,271)
----- ------
Effect of Exchange Rates on Cash and Cash Equivalents 13
---
Net Increase (Decrease) in Cash and Cash Equivalents 124 (299)
Cash and Cash Equivalents at Beginning of Period 801 1,100
--- -----
Cash and Cash Equivalents at End of Period $925 $801
==== ====
Certain line items for 2010 were impacted by the
(a) acquisition of the Kentucky entities on November 1, 2010.
Key Indicators (Unaudited)
Year Ended
December 31,
------------
Financial 2010 2009
---- ----
Dividends declared per share $1.40 $1.38
Book value per share (a) $16.98 $14.57
Market price per share (a) $26.32 $32.31
Dividend yield (a) 5.3% 4.3%
Dividend payout ratio (b) 65% 128%
Dividend payout ratio -earnings from ongoing
operations (b)(c) 45% 71%
Price/earnings ratio (a)(b) 12.1 29.9
Price/earnings ratio -earnings from ongoing
operations (a)(b)(c) 8.4 16.6
Return on average common equity 13.26% 7.48%
Return on average common equity -earnings from
ongoing operations (c) 18.11% 13.61%
(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)
Three Months Ended
December 31,
------------------
Percent
(GWh) 2010 2009 Change
---- ---- ------
Domestic Retail Delivered (a)
PPL Electric Utilities 8,569 8,631 (0.7%)
LKE (b) 5,458
-----
Total 14,027 8,631 62.5%
====== =====
Domestic Retail Supplied (c) 7,704 9,164 (15.9%)
===== =====
International Delivered
United Kingdom 6,684 6,552 2.0%
===== =====
Domestic Wholesale
East 14,365 7,076 103.0%
West 2,598 2,986 (13.0%)
LKE (b) 444
---
Total 17,407 10,062 73.0%
====== ======
Year Ended December 31,
-----------------------
Percent
(GWh) 2010 2009 Change
---- ---- ------
Domestic Retail Delivered (a)
PPL Electric Utilities 36,883 36,717 0.5%
LKE (b) 5,458
-----
Total 42,341 36,717 15.3%
====== ======
Domestic Retail Supplied (c) 14,595 38,912 (62.5%)
====== ======
International Delivered
United Kingdom 26,820 26,358 1.8%
====== ======
Domestic Wholesale
East 64,322 27,522 133.7%
West 10,723 11,466 (6.5%)
LKE (b) 444
---
Total 75,489 38,988 93.6%
====== ======
(a) Represents GWh delivered and billed to retail customers.
(b) Represents GWh for the two months following the November 1, 2010
acquisition.
(c) Represents GWh supplied by PPL EnergyPlus to PPL Electric
Utilities as PLR, and to other retail customers in Pennsylvania and
Montana. Also includes 5,458 GWh supplied by LKE for the two months
following the November 1, 2010 acquisition.
Reconciliation of Segment Earnings from Ongoing Operations to
Reported Earnings (Diluted)
(After Tax)
(Unaudited)
4th Quarter 2010 (millions of dollars)
---------------------
Kentucky International Pennsylvania
Regulated
(a) Regulated Regulated
---------- --------- ---------
Earnings from Ongoing Operations $36 $32 $26
Special Items:
Energy-related economic activity (1)
Foreign currency-related economic
hedges 3
Sales of assets:
Maine hydroelectric generation
business
Impairments:
Impacts from emission allowances
LKE acquisition-related costs:
Monetization of certain full-
requirement sales contracts
Anticipated sale of certain non-
core generation facilities
Discontinued cash flow hedges &
ineffectiveness
Reduction of credit facility
Bridge Facility costs
Other acquisition-related costs
Other:
Change in U.K. tax rate (1)
LKE discontinued operations 2
Montana basin seepage litigation
Total Special Items 1 2
--- ---
Reported Earnings $37 $34 $26
=== === ===
4th Quarter 2010 (millions of dollars)
---------------------
Unallocated
Supply Costs Total
------ ----- -----
Earnings from Ongoing Operations $311 $(1) $404
Special Items:
Energy-related economic activity (6) (7)
Foreign currency-related economic
hedges 3
Sales of assets:
Maine hydroelectric generation
business 15 15
Impairments:
Impacts from emission allowances (1) (1)
LKE acquisition-related costs:
Monetization of certain full-
requirement sales contracts (23) (23)
Anticipated sale of certain non-
core generation facilities (2) (2)
Discontinued cash flow hedges &
ineffectiveness (9) (9)
Reduction of credit facility (6) (6)
Bridge Facility costs (8) (8)
Other acquisition-related costs (14) (14)
Other:
Change in U.K. tax rate (1)
LKE discontinued operations 2
Montana basin seepage litigation 2 2
Total Special Items (30) (22) (49)
--- --- ---
Reported Earnings $281 $(23) $355
==== ==== ====
(per share)
-----------
Kentucky International Pennsylvania
Regulated
(a) Regulated Regulated
--------- --------- ---------
Earnings from Ongoing
Operations $0.07 $0.07 $0.05
Special Items:
Energy-related economic
activity
Sales of assets:
Maine hydroelectric
generation business
LKE acquisition-related
costs:
Monetization of certain
full-requirement sales
contracts
Discontinued cash flow
hedges & ineffectiveness
Reduction of credit facility
Bridge Facility costs
Other acquisition-related
costs
Total Special Items
Reported Earnings $0.07 $0.07 $0.05
===== ===== =====
Unallocated
Supply Costs Total
------ ----- -----
Earnings from Ongoing Operations $0.64 $0.83
Special Items:
Energy-related economic activity (0.01) (0.01)
Sales of assets:
Maine hydroelectric generation
business 0.03 0.03
LKE acquisition-related costs:
Monetization of certain full-
requirement sales contracts (0.05) (0.05)
Discontinued cash flow hedges &
ineffectiveness (0.02) (0.02)
Reduction of credit facility (0.01) (0.01)
Bridge Facility costs $(0.01) (0.01)
Other acquisition-related costs (0.03) (0.03)
Total Special Items (0.06) (0.04) (0.10)
----- ----- -----
Reported Earnings $0.58 $(0.04) $0.73
===== ====== =====
(a) The Kentucky Regulated segment includes $10 million of interest
expense on the equity units, which were issued in June 2010 to
partially fund the LKE acquisition.
Reconciliation of Segment Earnings from Ongoing Operations to
Reported Earnings (Diluted)
(After Tax)
(Unaudited)
Year-to-Date December
31, 2010 (millions of dollars)
---------------------
Kentucky International Pennsylvania
Regulated
(a) Regulated Regulated
---------- --------- ---------
Earnings from Ongoing
Operations $25 $230 $115
Special Items:
Energy-related economic
activity (1)
Foreign currency-related
economic hedges 1
Sales of assets:
Maine hydroelectric
generation business
Sundance indemnification
Impairments:
Impacts from emission
allowances
LKE acquisition-related
costs:
Monetization of certain
full-requirement sales
contracts
Anticipated sale of
certain non-core
generation facilities
Discontinued cash flow
hedges & ineffectiveness
Reduction of credit
facility
Bridge Facility costs
Other acquisition-related
costs
Other:
Montana hydroelectric
litigation
Health Care Reform -tax
impact
Change in U.K. tax rate 18
U.S. Tax Court ruling
(U.K. Windfall Profits
Tax) 12
LKE discontinued
operations 2
Montana basin seepage
litigation
Total Special Items 1 31
--- ---
Reported Earnings $26 $261 $115
=== ==== ====
Year-to-Date December 31, 2010 (millions of dollars)
---------------------
Unallocated
Supply Costs Total
------ ----- -----
Earnings from Ongoing Operations $990 $(2) $1,358
Special Items:
Energy-related economic activity (121) (122)
Foreign currency-related economic
hedges 1
Sales of assets:
Maine hydroelectric generation
business 15 15
Sundance indemnification 1 1
Impairments:
Impacts from emission allowances (10) (10)
LKE acquisition-related costs:
Monetization of certain full-
requirement sales contracts (125) (125)
Anticipated sale of certain non-
core generation facilities (64) (64)
Discontinued cash flow hedges &
ineffectiveness (28) (28)
Reduction of credit facility (6) (6)
Bridge Facility costs (52) (52)
Other acquisition-related costs (22) (22)
Other:
Montana hydroelectric litigation (34) (34)
Health Care Reform - tax impact (8) (8)
Change in U.K. tax rate 18
U.S. Tax Court ruling (U.K. Windfall
Profits Tax) 12
LKE discontinued operations 2
Montana basin seepage litigation 2 2
Total Special Items (378) (74) (420)
---- --- ----
Reported Earnings $612 $(76) $938
==== ==== ====
(per share)
-----------
Kentucky International Pennsylvania
Regulated
(a) Regulated Regulated
--------- --------- ---------
Earnings from Ongoing
Operations $0.06 $0.53 $0.27
Special Items:
Energy-related
economic activity
Sales of assets:
Maine hydroelectric
generation business
Impairments:
Impacts from emission
allowances
LKE acquisition-
related costs:
Monetization of certain
full-requirement
sales contracts
Anticipated sale of
certain non-core
generation facilities
Discontinued cash flow
hedges &
ineffectiveness
Reduction of credit
facility
Bridge Facility costs
Other acquisition-
related costs
Other:
Montana hydroelectric
litigation
Health Care Reform -
tax impact
Change in U.K. tax rate 0.04
U.S. Tax Court ruling
(U.K. Windfall Profits
Tax) 0.03
Total Special Items 0.07
---
Reported Earnings $0.06 $0.60 $0.27
===== ===== =====
Unallocated
Supply Costs Total
------ ----- -----
Earnings from Ongoing Operations $2.27 $3.13
Special Items:
Energy-related economic activity (0.27) (0.27)
Sales of assets:
Maine hydroelectric generation
business 0.03 0.03
Impairments:
Impacts from emission allowances (0.02) (0.02)
LKE acquisition-related costs:
Monetization of certain full-
requirement sales contracts (0.29) (0.29)
Anticipated sale of certain non-
core generation facilities (0.14) (0.14)
Discontinued cash flow hedges &
ineffectiveness (0.06) (0.06)
Reduction of credit facility (0.01) (0.01)
Bridge Facility costs $(0.12) (0.12)
Other acquisition-related costs (0.05) (0.05)
Other:
Montana hydroelectric litigation (0.08) (0.08)
Health Care Reform - tax impact (0.02) (0.02)
Change in U.K. tax rate 0.04
U.S. Tax Court ruling (U.K. Windfall
Profits Tax) 0.03
Total Special Items (0.86) (0.17) (0.96)
----- ----- -----
Reported Earnings $1.41 $(0.17) $2.17
===== ====== =====
(a) The Kentucky Regulated segment includes $21 million of interest
expense on the equity units, which were issued in June 2010 to
partially fund the LKE acquisition. In the third quarter, $11
million of this interest expense was included in the Supply segment.
Reconciliation of Segment Earnings from Ongoing Operations to
Reported Earnings (Diluted)
(After Tax)
(Unaudited)
4th Quarter 2009 (millions of dollars)
---------------------
International Pennsylvania
Regulated Regulated Supply Total
--------- --------- ------ -----
Earnings from Ongoing
Operations $70 $34 $94 $198
Special Items:
Energy-related economic
activity (57) (57)
Foreign currency-related
economic hedges 3 3
Sales of assets:
Maine hydroelectric
generation business 22 22
Long Island generation
business 1 1
Latin American businesses (3) (3)
Interest in Wyman Unit 4 (4) (4)
Impairments:
Impacts from emission
allowances (4) (4)
Adjustments -nuclear
decommissioning trust
investments 1 1
Other asset impairments (2) (2)
Other:
Montana hydroelectric
litigation (3) (3)
Change in tax accounting
method related to
repairs (3) 4 1
Total Special Items (3) (42) (45)
--- --- ---
Reported Earnings $70 $31 $52 $153
=== === === ====
(per share)
-----------
International Pennsylvania
Regulated Regulated Supply Total
--------- --------- ------ -----
Earnings from Ongoing
Operations $0.18 $0.09 $0.25 $0.52
Special Items:
Energy-related
economic activity (0.15) (0.15)
Foreign currency-
related economic
hedges 0.01 0.01
Sales of assets:
Maine hydroelectric
generation business 0.06 0.06
Latin American
businesses (0.01) (0.01)
Interest in Wyman Unit
4 (0.01) (0.01)
Impairments:
Impacts from emission
allowances (0.01) (0.01)
Other:
Montana hydroelectric
litigation (0.01) (0.01)
Change in tax
accounting method
related to repairs (0.01) 0.01
Total Special Items (0.01) (0.11) (0.12)
----- ----- -----
Reported Earnings $0.18 $0.08 $0.14 $0.40
===== ===== ===== =====
Reconciliation of Segment Earnings from Ongoing Operations to
Reported Earnings (Diluted)
(After Tax)
(Unaudited)
Year-to-Date
December 31, 2009 (millions of dollars)
---------------------
International Pennsylvania
Regulated Regulated Supply Total
--------- --------- ------ -----
Earnings from Ongoing
Operations $272 $133 $333 $738
Special Items:
Energy-related
economic activity (225) (225)
Foreign currency-
related economic
hedges 1 1
Sales of assets:
Maine hydroelectric
generation business 22 22
Long Island
generation business (33) (33)
Latin American
businesses (27) (27)
Interest in Wyman
Unit 4 (4) (4)
Impairments:
Impacts from emission
allowances (19) (19)
Other asset
impairments (1) (1) (4) (6)
Workforce reduction (2) (5) (6) (13)
Other:
Montana hydroelectric
litigation (3) (3)
Change in tax
accounting method
related to repairs (3) (21) (24)
Total Special Items (29) (9) (293) (331)
--- --- ---- ----
Reported Earnings $243 $124 $40 $407
==== ==== === ====
(per share)
-----------
International Pennsylvania
Regulated Regulated Supply Total
--------- --------- ------ -----
Earnings from Ongoing
Operations $0.72 $0.35 $0.88 $1.95
Special Items:
Energy-related
economic activity (0.59) (0.59)
Sales of assets:
Maine hydroelectric
generation business 0.06 0.06
Long Island generation
business (0.09) (0.09)
Latin American
businesses (0.07) (0.07)
Interest in Wyman Unit
4 (0.01) (0.01)
Impairments:
Impacts from emission
allowances (0.05) (0.05)
Other asset impairments (0.01) (0.01)
Workforce reduction (0.01) (0.01) (0.01) (0.03)
Other:
Montana hydroelectric
litigation (0.01) (0.01)
Change in tax
accounting method
related to repairs (0.01) (0.06) (0.07)
Total Special Items (0.08) (0.02) (0.77) (0.87)
----- ----- ----- -----
Reported Earnings $0.64 $0.33 $0.11 $1.08
===== ===== ===== =====
SOURCE PPL Corporation