PPL Corporation Reports Third-Quarter Earnings -- Solid quarter and strong performance from regulated utilities drive increase in midpoint of 2013 forecast of earnings from ongoing operations

ALLENTOWN, Pa., Oct. 31, 2013 /PRNewswire/ -- PPL Corporation (NYSE: PPL) announced on Thursday (10/31) third-quarter reported earnings of $410 million, or $0.62 per share, compared with $355 million, or $0.61 per share, a year ago. For the first nine months of 2013, PPL's reported earnings were $1.23 billion, or $1.90 per share, compared with $1.17 billion, or $2.00 per share, for the first nine months of 2012.

Adjusting for special items, PPL's third-quarter earnings from ongoing operations were $432 million, or $0.66 per share, compared with $419 million, or $0.72 per share, a year ago. For the first nine months of 2013, earnings from ongoing operations were $1.20 billion, or $1.85 per share, compared with $1.13 billion, or $1.93 per share, for the first nine months of 2012. Reported earnings and earnings from ongoing operations for both periods of 2013 were negatively affected by a $0.06 per share non-cash adjustment of deferred tax assets.

"The solid third-quarter performance and continued growth in earnings from ongoing operations from our regulated business segments allow us to increase the midpoint of our 2013 forecast of earnings from ongoing operations," said William H. Spence, PPL's chairman, president and chief executive officer.

PPL's increased 2013 forecast of earnings from ongoing operations is a range of $2.30 to $2.40 per share. The forecast of reported earnings is $2.35 to $2.45 per share, reflecting special items recorded through the third quarter.          

Third-Quarter 2013 Earnings Details

PPL's reported earnings for the third quarter of 2013 include net special item charges of $0.04 per share. The charges include $0.13 per share for foreign currency-related economic hedges, $0.03 per share from an adjustment to the accrued liability for line losses during a U.K. price control period preceding PPL's acquisition of WPD Midlands, and $0.01 per share from adjusted energy-related economic activity, partially offset by a $0.13 per share credit for a reduction in the U.K. corporate income tax rate.

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, foreign currency-related economic hedges and other impacts fully detailed at the end of this news release. 

(Dollars in millions, except for per share amounts)


3rd Quarter





2013


2012


% Change












Reported Earnings


$

410



$

355



15%

Reported Earnings Per Share


$

0.62



$

0.61



2%

Earnings from Ongoing Operations


$

432



$

419



3%

Earnings from Ongoing Operations Per Share


$

0.66



$

0.72



-8%

(See the tables at the end of the news release for details as to the reconciliation of earnings from ongoing operations to reported earnings.)

2013 Third-Quarter and Nine-Month Earnings by Business Segment

The following chart shows PPL's earnings by business segment for the third quarter and first nine months of 2013, compared with the same periods of 2012.

Per share


3rd Quarter


Year to Date



2013


2012


2013


2012

Earnings from ongoing operations

















Kentucky Regulated


$

0.14



$

0.12



$

0.36



$

0.26


U.K. Regulated



0.31




0.28




1.02




0.90


Pennsylvania Regulated



0.08




0.06




0.24




0.16


Supply



0.14




0.26




0.26




0.61


Corporate and Other1



(0.01)







(0.03)





    Total


$

0.66



$

0.72



$

1.85



$

1.93



















Special items

















Kentucky Regulated


$



$



$

0.01



$


U.K. Regulated



(0.03)




0.07




0.12




0.06


Pennsylvania Regulated













Supply



(0.01)




(0.18)




(0.08)




0.01


Corporate and Other1













    Total


$

(0.04)



$

(0.11)



$

0.05



$

0.07



















Reported earnings

















Kentucky Regulated


$

0.14



$

0.12



$

0.37



$

0.26


U.K. Regulated



0.28




0.35




1.14




0.96


Pennsylvania Regulated



0.08




0.06




0.24




0.16


Supply



0.13




0.08




0.18




0.62


Corporate and Other1



(0.01)







(0.03)





    Total


$

0.62



$

0.61



$

1.90



$

2.00



1 This category primarily includes unallocated corporate-level financing and other 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 Business 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 in the third quarter of 2013 increased by $0.02 per share compared with a year ago. This increase was primarily due to higher base rates that became effective Jan. 1 and returns from additional environmental capital investments, partially offset by lower sales volume due to weather and dilution of $0.02 per share.

Segment earnings from ongoing operations during the first nine months of 2013 increased by $0.10 per share compared to a year ago. This increase was primarily due to higher base rates that became effective Jan. 1 and returns from additional environmental capital investments, partially offset by dilution of $0.02 per share.

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 the third quarter of 2013 increased by $0.03 per share compared with a year ago. This increase was primarily due to higher electricity delivery prices and lower U.K. income taxes, partially offset by an accrual for over-recovery of current-year revenues, lower sales volume due to weather, higher operation and maintenance expense and dilution of $0.03 per share.

Segment earnings from ongoing operations during the first nine months of 2013 increased by $0.12 per share compared to a year ago. This increase was primarily due to higher electricity delivery prices, increased sales volume due to weather, and lower U.K. income taxes, partially offset by an accrual for over-recovery of current-year revenues, higher operation and maintenance expense, higher depreciation and dilution of $0.11 per share.

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 the third quarter of 2013 increased by $0.02 per share compared with a year ago. This increase was primarily due to higher electricity base rates that became effective Jan. 1 and higher transmission margins from additional capital investments, partially offset by dilution of $0.01 per share.

Segment earnings from ongoing operations during the first nine months of 2013 increased by $0.08 per share compared to a year ago. This increase was primarily due to higher electricity base rates that became effective Jan. 1, higher transmission margins from additional capital investments and lower operation and maintenance expense, partially offset by higher depreciation and dilution of $0.03 per share.

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 the third quarter of 2013 decreased by $0.12 per share compared with a year ago. This decrease was primarily due to lower baseload energy prices, lower baseload generation, higher operation and maintenance expense, higher income taxes and dilution of $0.02 per share. The higher income taxes resulted primarily from a $0.04 per share non-cash adjustment of deferred tax assets. The decline in segment earnings was partially offset by higher capacity prices.

Segment earnings from ongoing operations during the first nine months of 2013 decreased by $0.35 per share compared to a year ago. This decrease was primarily due to lower baseload energy prices, higher fuel costs, higher income taxes, higher depreciation and dilution of $0.03 per share. The higher income taxes resulted primarily from a $0.04 per share non-cash adjustment of deferred tax assets. The decline in segment earnings was partially offset by higher capacity prices, higher intermediate and peaking margins and higher baseload generation.

Earnings from Ongoing Operations Forecast by Business Segment






2013

Forecast Midpoint


2012

Actual

Earnings per share






Kentucky Regulated

$0.45



$0.33


U.K. Regulated

1.32



1.19


Pennsylvania Regulated

0.28



0.22


Supply

0.34



0.68


Corporate and Other

(0.04)




    Total

$ 2.35



$ 2.42


PPL expects lower earnings per share in 2013 compared with 2012, primarily due to lower earnings in the Supply segment and expected dilution of $0.25 per share associated with shares related to the 2010 and 2011 Equity Units and the April 2012 forward stock sale that settled in 2013, partially offset by higher earnings in the three regulated segments.   

Kentucky Regulated Segment
PPL expects higher segment earnings in 2013 compared with 2012, primarily driven by base rate increases and returns on additional environmental capital investments. Dilution is expected to be $0.03 per share.

U.K. Regulated Segment
PPL expects higher segment earnings in 2013 compared with 2012, primarily driven by higher electricity delivery prices and lower income taxes, partially offset by higher operation and maintenance expense, higher depreciation and higher interest expense. Dilution is expected to be $0.13 per share.

Pennsylvania Regulated Segment
PPL expects higher segment earnings in 2013 compared with 2012, primarily driven by higher distribution revenues from the Jan. 1 base rate increase and higher transmission margins due to additional capital investment, partially offset by higher depreciation and higher interest expense. Dilution is expected to be $0.04 per share.  

Supply Segment
PPL expects lower segment earnings in 2013 compared with 2012, primarily driven by lower energy prices, higher fuel costs, higher depreciation, higher taxes and higher financing costs, partially offset by lower operation and maintenance expense, higher capacity prices and higher baseload generation output. Dilution is expected to be $0.05 per share.

Corporate and Other
This category includes primarily unallocated corporate-level financing and other costs.

PPL Corporation, with revenues of more than $12 billion in 2012, 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 third-quarter 2013 financial results at 8:30 a.m. Eastern time on Thursday, Oct. 31. The meeting is available online live, in audio format, 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 866-652-5200. International participants should call 1-412-317-6060.

"Earnings from ongoing operations," also referred to as "ongoing earnings," should not be considered as an alternative to reported earnings, or net income attributable to PPL shareowners, 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 effects.
  • 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 to economically hedge a portion of the economic value of the competitive 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. Adjusted energy-related economic activity also includes the premium amortization associated with options, the ineffective portion of qualifying cash flow hedges and realized economic activity associated with the monetization of certain full-requirement sales contracts in 2010. This economic activity was 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 generating plants and other facilities; the length of scheduled and unscheduled outages at our generating 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)














September 30,


December 31,





2013


2012

Assets







Cash and cash equivalents


$

1,291


$

901

Price risk management assets - current



1,045



1,525

Other current assets



2,635



2,642

Investments



851



759

Property, Plant and Equipment








Regulated utility plant



26,498



25,196


Less: Accumulated depreciation - regulated utility plant



4,636



4,164



Regulated utility plant, net



21,862



21,032


Non-regulated property, plant and equipment



13,077



12,545


Less: Accumulated depreciation - non-regulated property, plant and equipment



6,173



5,942



Non-regulated property, plant and equipment, net



6,904



6,603


Construction work in progress



2,822



2,397


Property, Plant and Equipment, net



31,588



30,032

Regulatory assets - noncurrent



1,423



1,483

Goodwill and other intangibles



4,982



5,083

Price risk management assets - noncurrent



550



572

Other noncurrent assets



623



637

Total Assets


$

44,988


$

43,634










Liabilities and Equity







Short-term debt


$

499


$

652

Long-term debt due within one year



751



751

Accounts payable



1,079



1,252

Price risk management liabilities - current



823



1,065

Other current liabilities



1,796



1,905

Long-term debt - noncurrent



19,092



18,725

Deferred income taxes and investment tax credits



4,122



3,715

Price risk management liabilities - noncurrent



538



629

Accrued pension obligations



1,529



2,076

Regulatory liabilities - noncurrent



1,054



1,010

Other noncurrent liabilities



1,343



1,356

Common stock and additional paid-in capital



8,311



6,942

Earnings reinvested



6,040



5,478

Accumulated other comprehensive loss



(2,007)



(1,940)

Noncontrolling interests



18



18

Total Liabilities and Equity


$

44,988


$

43,634

 


(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 September 30,


Nine Months Ended September 30,






2013


2012


2013


2012

















Operating Revenues














Utility


$

1,739


$

1,693


$

5,344


$

5,012


Unregulated retail electric and gas



264



218



758



620


Wholesale energy marketing















Realized



980



1,076



2,767



3,367



Unrealized economic activity (a)



(49)



(716)



(281)



(322)


Net energy trading margins



12



(11)



1



7


Energy-related businesses



159



143



423



380


Total Operating Revenues



3,105



2,403



9,012



9,064

















Operating Expenses














Operation















Fuel



494



570



1,464



1,405



Energy purchases
















Realized



592



583



1,855



2,253




Unrealized economic activity (a)



(37)



(569)



(192)



(420)



Other operation and maintenance



669



650



2,043



2,095


Depreciation



289



278



859



813


Taxes, other than income



90



90



272



268


Energy-related businesses



151



137



403



363


Total Operating Expenses



2,248



1,739



6,704



6,777

















Operating Income



857



664



2,308



2,287

















Other Income (Expense) - net



(116)



(44)



19



(31)

















Other-Than-Temporary Impairments



1






1



1

















Interest Expense



246



248



755



714

















Income from Continuing Operations Before Income Taxes



494



372



1,571



1,541

















Income Taxes



84



17



344



364

















Income from Continuing Operations After Income Taxes



410



355



1,227



1,177

















Income (Loss) from Discontinued Operations (net of income taxes)



1






2



(6)

















Net Income



411



355



1,229



1,171

















Net Income Attributable to Noncontrolling Interests



1






1



4

















Net Income Attributable to PPL Shareowners


$

410


$

355


$

1,228


$

1,167

















Amounts Attributable to PPL Shareowners:














Income from Continuing Operations After Income Taxes


$

409


$

355


$

1,226


$

1,173


Income (Loss) from Discontinued Operations (net of income taxes)



1






2



(6)


Net Income


$

410


$

355


$

1,228


$

1,167

















Earnings Per Share of Common Stock:














Income from Continuing Operations After Income Taxes Available














 to PPL Common Shareowners:














  Basic


$

0.65


$

0.61


$

2.03


$

2.01


  Diluted


$

0.62


$

0.61


$

1.90


$

2.01


 Net Income Available to PPL Common Shareowners:














  Basic


$

0.65


$

0.61


$

2.03


$

2.00


  Diluted


$

0.62


$

0.61


$

1.90


$

2.00

















Weighted-Average Shares of Common Stock Outstanding













  (in thousands)














  Basic



631,046



580,585



601,275



579,847


  Diluted



664,343



582,636



662,094



580,930

 


(a)

Includes activity from energy-related contracts that hedge future cash flows that were not eligible for hedge accounting, or for which hedge accounting was not elected.





 


 PPL CORPORATION AND SUBSIDIARIES











Condensed Consolidated Statements of Cash Flows (Unaudited)

(Millions of Dollars)
















Nine Months Ended September 30,






2013


2012

Cash Flows from Operating Activities








Net income


$

1,229


$

1,171


Adjustments to reconcile net income to net cash provided by operating activities









Depreciation



859



813



Amortization



164



144



Defined benefit plans - expense



135



123



Deferred income taxes and investment tax credits



301



298



Unrealized losses on derivatives, and other hedging activities



126



21



Other



92



34


Change in current assets and current liabilities









Accounts receivable



(79)



19



Accounts payable



(140)



(175)



Unbilled revenues



197



121



Taxes payable



76



29



Uncertain tax positions



(104)



(4)



Other



(180)



64


Other operating activities









Defined benefit plans - funding



(505)



(526)



Other



52



(38)




Net cash provided by operating activities



2,223



2,094

Cash Flows from Investing Activities








Expenditures for property, plant and equipment



(2,768)



(2,078)


Ironwood acquisition, net of cash acquired






(84)


Purchases of nuclear plant decommissioning trust investments



(102)



(112)


Proceeds from the sale of nuclear plant decommissioning trust investments



92



102


Other investing activities



(10)



56




Net cash used in investing activities



(2,788)



(2,116)

Cash Flows from Financing Activities








Issuance of long-term debt



862



824


Retirement of long-term debt



(309)



(105)


Repurchase of common stock



(74)





Issuance of common stock



1,409



54


Payment of common stock dividends



(645)



(623)


Redemption of preference stock of a subsidiary






(250)


Debt issuance and credit facility costs



(37)



(10)


Contract adjustment payments



(72)



(71)


Net decrease in short-term debt



(148)



(51)


Other financing activities



(20)



(8)




Net cash provided by (used in) financing activities



966



(240)

Effect of Exchange Rates on Cash and Cash Equivalents



(11)



6

Net Increase (Decrease) in Cash and Cash Equivalents



390



(256)

Cash and Cash Equivalents at Beginning of Period



901



1,202

Cash and Cash Equivalents at End of Period


$

1,291


$

946

 


Key Indicators (Unaudited)




























12 Months Ended













September 30,

Financial






2013


2012
















Dividends declared per share of common stock






$ 1.4625


$ 1.43

Book value per share (a)(b)






$ 19.59


$ 19.30

Market price per share (a)






$ 30.38


$ 29.05

Dividend yield






4.8%


4.9%

Dividend payout ratio (c)






58%


51%

Dividend payout ratio - earnings from ongoing operations (c)(d)






62%


54%

Price/earnings ratio (c)






12.1


10.4

Price/earnings ratio - earnings from ongoing operations (c)(d)






12.9


11.0

Return on average common equity






14.20%


14.68%

Return on average common equity - earnings from ongoing operations (d)






13.31%


13.91%
















(a) End of period.

(b) Based on 630,239 and 580,970 shares of common stock outstanding (in thousands) at September 30, 2013 and September 30, 2012.

(c) Based on diluted earnings per share.

(d) Calculated using earnings from ongoing operations, which is a non-GAAP financial measure that 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 September 30,


9 Months Ended September 30,









Percent






Percent

(GWh)


2013


2012


Change


2013


2012


Change
















Domestic Retail Delivered














PPL Electric Utilities


9,223


9,410


(2.0%)


27,544


27,106


1.6%


LKE


8,213


8,605


(4.6%)


23,539


23,693


(0.6%)



Total


17,436


18,015


(3.2%)


51,083


50,799


0.6%
















Domestic Retail Supplied (a)














PPL EnergyPlus


3,549


3,147


12.8%


10,076


8,533


18.1%


LKE


8,213


8,605


(4.6%)


23,539


23,693


(0.6%)



Total


11,762


11,752


0.1%


33,615


32,226


4.3%
















International Delivered














United Kingdom


17,494


17,545


(0.3%)


59,042


57,949


1.9%
















Domestic Wholesale














PPL EnergyPlus - East


13,282


14,851


(10.6%)


37,960


36,180


4.9%


PPL EnergyPlus - West


1,525


1,791


(14.9%)


5,149


5,240


(1.7%)


LKE (b)


591


608


(2.8%)


1,751


1,709


2.5%



Total


15,398


17,250


(10.7%)


44,860


43,129


4.0%
















(a) 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

(b) Represents FERC-regulated municipal and unregulated off-system sales.

 


Reconciliation of Segment Earnings from Ongoing Operations to Reported Earnings

(After Tax)

(Unaudited)





























































3rd Quarter 2013


(millions of dollars)




Kentucky 


U.K. 


Pennsylvania 




Corporate 






Regulated 


Regulated 


Regulated 


Supply 


and Other 


Total 





















Earnings from Ongoing Operations


$

93


$

199


$

51


$

97


$

(8)


$

432

Special Items:



















Adjusted energy-related economic activity, net












(6)






(6)

Foreign currency-related economic hedges






(82)












(82)

Acquisition-related adjustments:




















WPD Midlands




















Separation benefits






(2)












(2)

Other:




















Change in WPD line loss accrual






(16)












(16)


Change in U.K. tax rate






84












84

Total Special Items






(16)






(6)






(22)

Reported Earnings


$

93


$

183


$

51


$

91


$

(8)


$

410
































































(per share - diluted) (a)




Kentucky 


U.K. 


Pennsylvania 




Corporate 






Regulated 


Regulated 


Regulated 


Supply 


and Other 


Total 





















Earnings from Ongoing Operations


$

0.14


$

0.31


$

0.08


$

0.14


$

(0.01)


$

0.66

Special Items:



















Adjusted energy-related economic activity, net












(0.01)






(0.01)

Foreign currency-related economic hedges






(0.13)












(0.13)

Other:




















Change in WPD line loss accrual






(0.03)












(0.03)


Change in U.K. tax rate






0.13












0.13

Total Special Items






(0.03)






(0.01)






(0.04)

Reported Earnings


$

0.14


$

0.28


$

0.08


$

0.13


$

(0.01)


$

0.62









































(a)  The "If-Converted Method" was applied to PPL's Equity Units beginning in the first quarter of 2013, resulting in $7 million of interest charges

      (after tax) being added back to net income for the three months ended September 30, 2013, and approximately 32 million shares of PPL

      Common Stock being treated as outstanding.  Both adjustments are only done for purposes of calculating diluted earnings per share.





















 


Reconciliation of Segment Earnings from Ongoing Operations to Reported Earnings

(After Tax)

(Unaudited)





























































Year-to-Date September 30, 2013


(millions of dollars)




Kentucky 


U.K. 


Pennsylvania 




Corporate 






Regulated 


Regulated 


Regulated 


Supply 


and Other 


Total 





















Earnings from Ongoing Operations


$

225


$

663


$

160


$

171


$

(22)


$

1,197

Special Items:



















Adjusted energy-related economic activity, net












(47)






(47)

Foreign currency-related economic hedges






(8)












(8)

Acquisition-related adjustments:




















WPD Midlands




















Separation benefits






(4)












(4)


Other acquisition-related adjustments






(2)












(2)

Other:




















LKE discontinued operations



1















1


EEI adjustments



1















1


Change in tax accounting method related to repairs












(3)






(3)


Counterparty bankruptcy












1






1


Windfall tax litigation






43












43


Change in WPD line loss accrual






(35)












(35)


Change in U.K. tax rate






84












84

Total Special Items



2



78






(49)






31

Reported Earnings


$

227


$

741


$

160


$

122


$

(22)


$

1,228
































































(per share - diluted) (a)




Kentucky 


U.K. 


Pennsylvania 




Corporate 






Regulated 


Regulated 


Regulated 


Supply 


and Other 


Total 





















Earnings from Ongoing Operations


$

0.36


$

1.02


$

0.24


$

0.26


$

(0.03)


$

1.85

Special Items:



















Adjusted energy-related economic activity, net












(0.07)






(0.07)

Foreign currency-related economic hedges






(0.01)












(0.01)

Acquisition-related adjustments:




















WPD Midlands




















Separation benefits






(0.01)












(0.01)

Other:




















LKE discontinued operations



0.01















0.01


Change in tax accounting method related to repairs












(0.01)






(0.01)


Windfall tax litigation






0.06












0.06


Change in WPD line loss accrual






(0.05)












(0.05)


Change in U.K. tax rate






0.13












0.13

Total Special Items



0.01



0.12






(0.08)






0.05

Reported Earnings


$

0.37


$

1.14


$

0.24


$

0.18


$

(0.03)


$

1.90









































(a)  The "If-Converted Method" was applied to PPL's Equity Units beginning in the first quarter of 2013, resulting in $37 million of interest charges

       (after tax) being added back to net income for the nine months ended September 30, 2013, and approximately 59 million shares of PPL

       Common Stock being treated as outstanding.  Both adjustments are only done for purposes of calculating diluted earnings per share.





















 


Reconciliation of Segment Earnings from Ongoing Operations to Reported Earnings

(After Tax)

(Unaudited)




















































3rd Quarter 2012


(millions of dollars)




Kentucky 


U.K. 


Pennsylvania 








Regulated 


Regulated 


Regulated 


Supply 


Total 


















Earnings from Ongoing Operations


$

72


$

161


$

33


$

153


$

419

Special Items:
















Adjusted energy-related economic activity, net












(95)



(95)

Foreign currency-related economic hedges






(30)









(30)

Acquisition-related adjustments:

















WPD Midlands

















Separation benefits






(1)









(1)


Other acquisition-related adjustments






(2)









(2)

Other:

















Change in U.K. tax rate






74









74


Coal contract modification payments












(10)



(10)

Total Special Items






41






(105)



(64)

Reported Earnings


$

72


$

202


$

33


$

48


$

355























































(per share - diluted)




Kentucky 


U.K. 


Pennsylvania 








Regulated 


Regulated 


Regulated 


Supply 


Total 


















Earnings from Ongoing Operations


$

0.12


$

0.28


$

0.06


$

0.26


$

0.72

Special Items:
















Adjusted energy-related economic activity, net












(0.16)



(0.16)

Foreign currency-related economic hedges






(0.06)









(0.06)

Other:

















Change in U.K. tax rate






0.13









0.13


Coal contract modification payments












(0.02)



(0.02)

Total Special Items






0.07






(0.18)



(0.11)

Reported Earnings


$

0.12


$

0.35


$

0.06


$

0.08


$

0.61

 

Reconciliation of Segment Earnings from Ongoing Operations to Reported Earnings

(After Tax)

(Unaudited)




















































Year-to-Date September 30, 2012


(millions of dollars)




Kentucky 


U.K. 


Pennsylvania 








Regulated 


Regulated 


Regulated 


Supply 


Total 


















Earnings from Ongoing Operations


$

149


$

524


$

95


$

358


$

1,126

Special Items:
















Adjusted energy-related economic activity, net












23



23

Foreign currency-related economic hedges






(28)









(28)

Impairments:

















Adjustments - nuclear decommissioning trust investments












1



1

Acquisition-related adjustments:

















WPD Midlands

















Separation benefits






(9)









(9)


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






74









74


Counterparty bankruptcy












(6)



(6)


Wholesale supply cost reimbursement












1



1


Ash basin leak remediation adjustment












1



1


Coal contract modification payments












(17)



(17)

Total Special Items



(1)



39






3



41

Reported Earnings


$

148


$

563


$

95


$

361


$

1,167























































(per share - diluted)




Kentucky 


U.K. 


Pennsylvania 








Regulated 


Regulated 


Regulated 


Supply 


Total 


















Earnings from Ongoing Operations


$

0.26


$

0.90


$

0.16


$

0.61


$

1.93

Special Items:
















Adjusted energy-related economic activity, net












0.05



0.05

Foreign currency-related economic hedges






(0.05)









(0.05)

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)

Total Special Items






0.06






0.01



0.07

Reported Earnings


$

0.26


$

0.96


$

0.16


$

0.62


$

2.00


















 

SOURCE PPL Corporation



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