PPL Corporation Reports 28 Percent Increase in Third-Quarter Earnings; Company Confirms Earnings Forecast for 2001, Revises 2002 Forecast

PPL Corporation (NYSE: PPL) today (10/24) reported the strongest third quarter earnings in company history, a 28 percent increase in earnings per share over the same period in 2000. PPL earned $1.04 per share during the third quarter of 2001 as compared to $0.81 per share a year ago, when adjusted to exclude the benefit of nonrecurring items.

  (Photo:  http://www.newscom.com/cgi-bin/prnh/19981015/PHTH025 )
  PPL's record third-quarter earnings were driven primarily by:

   -- increased margins on wholesale energy activities in markets in the
       Eastern United States, compared to a year ago.
   -- success in continuing to reduce operating costs.
   -- higher volumes of electricity delivered in PPL Electric Utilities'
       franchised service territory.
   -- improved earnings contributions from energy-related businesses
       including the company's mechanical contracting subsidiaries and the
       company's synfuels operations.

These factors offset lower margins from PPL's wholesale energy activities in the Western United States and lower returns from the company's international operations.

"Excellent operating performance during the third quarter allowed us to offset the lower margins from our Western wholesale energy sales," said William F. Hecht, PPL's chairman, president and chief executive officer. "The strength of our integrated growth strategy and our strong business fundamentals are leading to record PPL earnings for 2001 despite the precipitous decline in energy prices."

For the first nine months of 2001, PPL reported a significant 39 percent increase in earnings per share over a year ago. PPL reported earnings of $3.35 per share for that period of 2001, compared to $2.41 per share reported a year ago, when adjusted to exclude the benefit of nonrecurring items. Actual earnings for the third quarter of 2000 benefited from the nonrecurring impact of 13 cents per share from a settlement with various insurers for environmental and other liabilities.

The strong growth in PPL's earnings for the first nine months of 2001 resulted primarily from the following factors: increased margins on energy activities in markets in both the Eastern and Western United States; improved earnings contributions from energy-related businesses including the company's mechanical contracting subsidiaries and the company's synfuel operations; success in continuing to control operating costs; and higher returns from the company's international operations.

Company Confirms 2001 Earnings Forecast, Revises 2002 Forecast

Based on the excellent results in the third quarter, the company confirmed that it still forecasts earnings in excess of $4.00 per share for 2001, which would be the highest annual earnings in the company's history.

For 2002, PPL now forecasts little, if any, change from the level of earnings per share currently forecast for 2001. The change from the previous 2002 forecast of $4.55 to $4.65 is essentially due to the significant decline in wholesale energy margins, offset by reductions in operating and financing costs.

The 2002 earnings forecast represents a compound annual growth rate of 19 percent based on adjusted earnings per share for 1999, the first full year of deregulation in Pennsylvania. About 80 percent of PPL's 2002 earnings are expected to come from its energy supply business and the balance from its domestic and international delivery businesses.

"Our 2001 performance through the first three quarters of 2001 provides a firm base from which we expect continued long-term growth," said Hecht. "This base has been solidified through a concerted effort by our wholesale energy marketing operation to maximize the value of our generation capacity through long-term contracts in key U.S. markets."

PPL's most recent major long-term contract is an agreement to provide 450 megawatts of electricity supply to The Montana Power Company over a five-year period beginning July 1, 2002. "This contract, at prices comparable to the current market in the Northwestern United States, ends the uncertainty about our power supply arrangements in Montana," Hecht said. As a result of this agreement and other wholesale and retail agreements, Hecht said, PPL will have the majority of the output of its Montana power plants under long-term contracts beginning in July 2002.

During the third quarter of 2001, PPL also completed the strategic initiative the company terms "securitization" of PPL Electric Utilities, the regulated electricity delivery subsidiary. In connection with this initiative, PPL EnergyPlus, PPL's energy marketing and trading affiliate, won the competitive bid to provide the energy sufficient for PPL Electric Utilities to meet its needs through 2009. This contract permits PPL to sell a substantial portion of its Eastern U.S. generation over the next eight years at attractive margins when compared to current market prices.

Hecht also pointed out that the company's electricity and natural gas distribution businesses -- in the United States and overseas -- provide a stable, reliable source of earnings for PPL as it continues to pursue a targeted generation-building strategy.

PPL Corporation, headquartered in Allentown, Pa., generates electricity at power plants in Pennsylvania, Maine and Montana; markets wholesale or retail energy in 42 U.S. states and Canada; and delivers energy to nearly 6 million customers in Pennsylvania, the United Kingdom and Latin America.


                        Consolidated Balance Sheet
                          (Millions of Dollars)

                                          Sept. 30, 2001  Dec. 31, 2000

  Current Assets                              $2,276          $1,945
  Investments                                  1,195           1,161
  Property, plant and equipment -- net
    Transmission and distribution              2,797           2,841
    Generation                                 2,329           2,177
    General and intangible                       302             294
    Construction work in progress                330             261
    Nuclear fuel and other leased property       104             123
    Electric utility plant                     5,862           5,696
    Gas and oil utility plant                    193             177
    Other property                                68              75
                                               6,123           5,948

  Recoverable transition costs                 2,234           2,425
  Regulatory and other assets                    965             881
    Total assets                             $12,793         $12,360

  Liabilities and Equity
  Current liabilities                         $1,938          $2,511
  Long-term debt (less current portion)        4,675           4,467
  Deferred income taxes and ITC                1,433           1,412
  Liability for above market NUG purchases       516             581
  Other noncurrent liabilities                   918             976
  Minority interest                               52              54
   mandatorily redeemable securities             825             250
  Preferred stock                                 96              97
  Earnings reinvested                          1,374             999
  Other common equity                          1,802           1,849
  Treasury stock                                (836)           (836)
    Total liabilities and equity             $12,793         $12,360

                      Consolidated Income Statement
                          (Millions of Dollars)

                      3 Months Ended    9 Months Ended    12 Months Ended
                         Sept. 30          Sept. 30          Sept. 30
                       2001   2000(a)   2001     2000(a)   2001   2000(a)

  Operating Revenues
    Retail electric
     and gas          $818     $751   $2,566    $2,307   $3,426   $3,033
    Wholesale energy
     marketing and
     trading           454      620    1,360     1,573    1,867    1,886
     businesses        166       97      487       298      625      392
                     1,438    1,468    4,413     4,178    5,918    5,311

  Operating Expenses
    Fuel and purchased
     power             530      690    1,667     1,891    2,237    2,355
    Other operation and
     maintenance       261      212      785       651    1,100      890
    Amortization of
     transition costs   65       50      191       159      259      218
    Depreciation        63       58      190       196      255      260
    Other              180      145      536       407      695      507
                     1,099    1,155    3,369     3,304    4,546    4,230

  Operating income     339      313    1,044       874    1,372    1,081
  Other income and
   (deductions)          7        1       16         8       (7)      98
  Income before interest,
   income taxes and
   minority interest   346      314    1,060       882    1,365    1,179
  Interest expense      91       94      283       274      385      348
  Income taxes          86       75      247       215      326      297
  Minority interest      1        3        4         4        4        5
  Income before
   extraordinary items 168      142      526       389      650      529
  Extraordinary items
   (net of tax)          0        0        0         0       11       13
  Income before dividends
   on preferred
   securities          168      142      526       389      661      542
  Dividends - preferred
   securities           16        6       35        19       42       26
  Net Income          $152     $136     $491      $370     $619     $516

  Earnings per share
   of common stock
   - basic
      Income before
       items         $1.04    $0.81    $3.37     $2.41    $4.25    $3.04
       items (net
       of tax)        0.00     0.13     0.00      0.16     0.00     0.55
      Net Income     $1.04    $0.94    $3.37     $2.57    $4.25    $3.59

  Earnings per share
   of common stock
   - diluted
      Income before
       items         $1.04    $0.81    $3.35     $2.41    $4.22    $3.04
       (net of tax)   0.00     0.13     0.00      0.16     0.00     0.55
      Net Income     $1.04    $0.94    $3.35     $2.57    $4.22    $3.59

  Average number of
   shares outstanding
   (thousands)     146,241  144,578  145,818   144,165  145,597  144,056

  (a) Certain amounts have been reclassified to conform to the current year

                              Key Indicators

                                        12 Months Ended     12 Months Ended
                                        Sept. 30, 2001       Sept. 30, 2000

  Dividends declared per share               $1.06               $1.045
  Book value per share (a)                  $15.97               $13.12
  Market price per share (a)              $32.6000             $41.7500
  Dividend yield                              3.3%                 2.5%
  Dividend payout ratio - diluted (b)          25%                  34%
  Price/earnings ratio - diluted (b)           7.7                 13.7
  Return on average common equity (b)       30.17%               26.67%

  (a) End of period
  (b) Based on adjusted earnings

  Operating _ Domestic Energy

                                          3 Months Ended Sept. 30
  PPL Corp.
  (millions of kwh)                                             Percent
                                    2001             2000        Change

  Delivered (a)                     8,712           8,323          4.7%
  Supplied                          9,416           9,343          0.8%

    East                            4,853           7,555        -35.8%
      Montana Power Company (b)     1,268           1,257          0.9%
      Other                           960             922          4.1%

                                        9 Months Ended Sept. 30
  PPL Corp.
  (millions of kwh)                                              Percent
                                   2001             2000         Change

  Delivered (a)                    26,677          25,626          4.1%
  Supplied                         28,898          28,388          1.8%

    East                           14,356          25,339        -43.3%
      Montana Power Company (b)     3,516           3,843         -8.5%
      Other                         2,729           3,175        -14.0%

                                         12 Months Ended Sept. 30
  PPL Corp.
  (millions of kwh)                                              Percent
                                    2001            2000         Change

  Delivered (a)                    34,957          33,584          4.1%
  Supplied                         38,268          36,851          3.8%

    East                           20,603          33,084        -37.7%
      Montana Power Company (b)     4,769           3,843           (c)
      Other                         3,798           3,175           (c)

  (a)  Electricity delivered to retail customers represents the kwh
       delivered to customers within PPL Electric Utilities Corp.'s service
  (b)  Energy sold to Montana Power for retail customers under power sale
       agreements that expire on or before June 30, 2002.
  (c)  Assets pertaining to the wholesale sales in the West were acquired
       in December 1999.  As a result, only nine months of sales are
       reflected in the 12 months ended September 30, 2000.

[PPL invites interested parties to listen to the live Internet Webcast of management's third-quarter earnings teleconference with financial analysts at 9 a.m. on Wednesday, Oct. 24. The teleconference is available online live, in audio format, on PPL's Internet Web site: http://www.pplweb.com/. The Webcast will be available for replay on the PPL Web site for 30 days. Interested individuals also can access the live conference call via telephone at 913-981-5509.]

Certain statements contained in this news release, including statements with respect to future earnings, energy prices, supply, sales, margins and deliveries, operating and financing costs, strategic initiatives, subsidiary performance, growth, project development, and generating capacity, are "forward-looking statements" within the meaning of the federal securities laws. Although PPL Corp. believes that the expectations and assumptions reflected in these forward-looking statements are reasonable, these statements involve a number of risks and uncertainties, and actual results may differ materially from the results discussed in the statements. The following are among the important factors that could cause actual results to differ materially from the forward-looking statements: market demand and prices for energy, capacity and fuel; weather variations affecting customer energy usage; competition in retail and wholesale power markets; the effect of any business or industry restructuring; the profitability and liquidity of PPL Corp. and its subsidiaries; new accounting requirements or new interpretations or applications of existing requirements; operating performance of plants and other facilities; environmental conditions and requirements; system conditions and operating costs; development of new projects, markets and technologies; performance of new ventures; political, regulatory or economic conditions in countries where PPL Corp. or its subsidiaries conduct business; receipt of necessary governmental approvals; capital market conditions; stock price performance; foreign exchange rates; and the commitments and liabilities of PPL Corp. and its subsidiaries. Any such forward-looking statements should be considered in light of such factors and in conjunction with PPL Corp.'s Form 10-K and other reports on file with the Securities and Exchange Commission.


NewsCom: http://www.newscom.com/cgi-bin/prnh/19981015/PHTH025

PRN Photo Desk, 888-776-6555 or 212-782-2840

SOURCE: PPL Corporation

Contact: Media: Dan McCarthy, +1-610-774-5758, or Analysts: Tim
Paukovits, +1-610-774-4124, or fax: +1-610-774-5281, both of PPL

Website: http://www.pplweb.com/

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