PPL Reports Increase in Third-Quarter Earnings; Tightens 2003 Forecast Range; Announces 2004 Forecast
PRNewswire-FirstCall
ALLENTOWN, Pa.

PPL Corporation (NYSE: PPL) today announced an increase in reported earnings and income from core operations for the third quarter and for the first nine months of 2003 compared to a year ago. The company also tightened the range for its 2003 earnings forecast and announced its earnings forecast for 2004.

The company reported net income, or earnings, of $171 million, or $0.97 per share, for the third quarter of 2003 compared to $122 million, or $0.80 per share, in the third quarter of 2002. Excluding non-core items, PPL's income was $176 million, or $1.00 per share, in the third quarter of 2003. By comparison, income from core operations was $145 million, or $0.95 per share, in the third quarter of 2002. Third-quarter income from core operations increased by $31 million, or 21 percent from last year.

The only non-core item in the third quarter of 2003 was a charge of $0.03 per share for workforce reductions that are a completion of the workforce reduction program that commenced in 2002. In last year's third quarter, there was also one non-core item, a non-cash charge of $0.15 per share related to operating losses at PPL's Brazilian affiliate.

"Our performance to date demonstrates that PPL's balanced corporate strategy is providing growth in both cash flow and earnings for our shareowners," said William F. Hecht, PPL's chairman, president and chief executive officer.

During the first nine months of 2003, PPL reported earnings of $526 million, or $3.06 per share, compared to $92 million, or $0.62 per share, for the same period a year ago. Income from core operations for the first nine months of 2003 was $468 million, or $2.73 per share, compared to $407 million, or $2.72 per share, a year ago. Income from core operations for the first nine months of 2003 increased by $61 million, or 15 percent from last year.

Non-core items recorded during the first nine months of 2003 were a credit of $0.36 per share from the adoption, in the first quarter, of a new accounting rule addressing asset retirement obligations and the third-quarter workforce reduction charge of $0.03 per share. Non-core charges recorded for the first nine months of 2002 totaled $2.10 per share (see table entitled "Reconciliation of Income from Core Operations and Reported Earnings per Share (Diluted)").

Earnings for both the three- and nine-month periods were driven by the benefit of full ownership of PPL's electricity delivery business in the United Kingdom, reduced interest expense and the benefit of the workforce reduction program. Earnings per share for both periods increased despite the dilutive effects of additional shares of common stock outstanding, as well as the impact on operating and maintenance expenses from storm damage associated with Hurricane Isabel in September and a series of strong thunderstorms in July.

"Our diversified and low-cost generation portfolio supports our asset- backed marketing and hedging strategy," said Hecht. "Matching generation with customer load under long-term contracts has allowed us to provide value for shareowners. Coupled with our comprehensive risk management program and our low-cost, award-winning energy delivery businesses, PPL's balanced strategy has resulted in a strong and stable financial position."

2003 Earnings Forecast

PPL has tightened the range of its 2003 forecast of income from core operations. The new range is $3.50 to $3.70 per share, replacing the previous forecast of $3.45 to $3.75 per share. The midpoint remains $3.60 per share. Additionally, the company expects its reported earnings per share for 2003 to range between $4.17 and $4.52, a revision from the previous forecast of $3.70 to $4.00 per share.

The revised forecast of reported earnings per share reflects the positive impact associated with the tax loss related to PPL's Brazilian investment, CEMAR, which is expected to be between $0.50 and $0.65 per share and will be recorded in the fourth quarter of 2003. This forecast also reflects the net benefit of $0.20 per share from two non-core items resulting from changes in accounting rules and the $0.03 per share charge for the workforce reduction in the third quarter. The accounting changes are the adoption, in the first quarter, of a new accounting rule addressing asset retirement obligations (a credit to earnings of $0.36 per share) and the addition to the company's balance sheet in the fourth quarter of certain power plant financing arrangements that were reflected as operating leases in prior years (a charge to earnings of about $0.16 per share).

PPL's solid operating performance in 2003, combined with its successful financing program, including the issuance of about $1 billion of common stock since the beginning of September 2002, has substantially improved the company's liquidity position and strengthened its balance sheet. At Sept. 30, 2003, the company had no commercial paper outstanding, $587 million of cash on hand and $1.8 billion of available credit facilities.

PPL expects about $1.3 billion in cash flow from operations in 2003 that is available to help fund projected capital expenditures of $800 million, common and preferred stock dividends of $300 million and the repayment of $250 million of transition bonds. This cash flow forecast represents a $100 million improvement from the company's previously expected cash flow projections, and the company currently expects to have $500 million of cash on hand at the end of 2003 net of short-term debt.

PPL's equity to total capitalization ratio, using debt and equity as presented on PPL's balance sheet as of Sept. 30, 2003, is 29 percent. PPL's equity to total capitalization ratio for the same period, as adjusted, is about 45 percent. This adjusted ratio includes as debt $1.0 billion of certain power plant lease obligations and excludes $1.5 billion of transition bonds and $2.1 billion of debt of international affiliates that is non-recourse to PPL. For this calculation, the company treats $575 million of Premium Equity Participating Security (PEPS)(SM) units as equity since those securities convert to common stock in May of 2004.

PPL Establishes 2004 Forecast

PPL also has announced its preliminary earnings forecast for 2004 of $3.45 to $3.75 per share. This forecast includes the following key assumptions:

  -- A 45-megawatt increase in capacity from turbine replacements at its
     Susquehanna nuclear power plant.
  -- A higher price for generation supply sold by PPL EnergyPlus to PPL
     Electric Utilities for customers who choose not to shop in
     Pennsylvania's competitive environment.
  -- Load growth of 2 percent at PPL Electric Utilities.
  -- Lower financing costs.
  -- The benefit of previously announced wholesale energy contracts.
  -- The continuation of current wholesale electricity price levels.
  -- The dilutive effect of the conversion of PEPS units into common stock.
  -- Lower pension income.
  -- Higher operating expenses for PPL Electric Utilities.

"Although the 2004 earnings per share forecast is the same as our previous forecast of 2003 core earnings," Hecht said, "the 2004 forecast projects increases in net income and free cash flow, a strengthened balance sheet and an improved credit profile."

PPL's forecast for 2004 projects approximately $1.25 billion in cash flow from operations. Net of capital expenditures of $650 million, common and preferred dividends of $300 million and repayment of $250 million of transition bonds, the company expects to have positive free cash flow of $50 million in 2004. PPL expects cash on hand at the end of 2004 to be approximately $500 million, net of short-term debt.

PPL's equity to total capitalization ratio as of Dec. 31, 2004, is forecast to be 35 percent, compared to 29 percent at Sept. 30, 2003. PPL's equity to total capitalization ratio for the same period, as adjusted, is forecast to be about 48 percent, compared to about 45 percent at Sept. 30, 2003. This adjusted ratio includes as debt $700 million of certain power plant lease obligations and excludes $1.2 billion of transition bonds and $1.9 billion of debt of international affiliates that is non-recourse to PPL. The company is in the process of updating its long-term business plan, which will include higher prices for generation supply sold by PPL EnergyPlus to PPL Electric Utilities for customers who choose not to shop in Pennsylvania's competitive environment, as follows: a 1.8 percent increase in 2005, an 8.4 percent increase in 2006 and a 1.3 percent increase in 2007.

In addition to the ongoing evaluation of future business opportunities, the company's long-term business plan also will include the following key elements:

  -- The outcome of the planned 2004 Pennsylvania rate increase request for
     delivery customers of PPL Electric Utilities, with the new rates to
     become effective Jan. 1, 2005, and recovery from those customers of
     the cost of transmission-related services regulated by the Federal
     Energy Regulatory Commission.
  -- Load growth at PPL Electric Utilities.
  -- The future level of wholesale energy prices.
  -- The impact of the upcoming rate review for Western Power Distribution,
     PPL's electric delivery business in the United Kingdom.

                 Third-quarter 2003 Core Earnings Factors

Key earnings drivers for PPL in the third quarter of 2003 included the benefit of full ownership of PPL's electricity delivery business in the United Kingdom; reduced interest expense; higher energy margins in the eastern and western United States; property damage recoveries; and the benefit of the workforce reduction program and other cost-reduction efforts.

Earnings from core operations for the third quarter of 2003 improved despite the dilutive effect of additional shares of common stock outstanding, which was approximately 14 cents per share. Also offsetting the earnings benefits for the third quarter of 2003 were the incremental impact on operating and maintenance expenses of storm damage associated with Hurricane Isabel, which was about $0.05 per share, and lower pension income.

Nine-month 2003 Core Earnings Factors

Key drivers for PPL in the first nine months of 2003 were the benefit of full ownership of PPL's electricity delivery business in the United Kingdom, higher electricity delivery revenues in PPL's Pennsylvania service territory, higher energy margins in the western United States, reduced interest expense, and the benefit of the workforce reduction program and other cost-reduction efforts.

Offsetting the earnings benefits during the first nine months of 2003 were the dilutive effect of additional shares of common stock outstanding, which was approximately $0.38 per share; the incremental impact on operating and maintenance expenses from storm damage associated with Hurricane Isabel; higher operating and maintenance expenses associated with new generating facilities; lower energy margins in the eastern United States; and lower pension income.

Core Earnings by Business Segment

The following chart shows core earnings contributions per share from PPL's business segments for the third quarter and the first nine months of 2003 compared to the same periods of 2002.

  Comparison in Core Earnings by Business Segment

                             3rd Quarter         YTD
                            2003     2002   2003    2002

  Supply                   $0.91    $0.74  $1.97   $2.07
  Pennsylvania Delivery    (0.02)    0.15   0.20    0.41
  International             0.11     0.06   0.56    0.24
                           $1.00    $0.95  $2.73   $2.72

(See table entitled "Reconciliation of Business Segment Core and Reported Earnings.")

12-month Earnings Results

PPL's reported earnings for the 12 months ended Sept. 30, 2003, were $642 million, or $3.77 per share, compared to a loss of $220 million, or $1.48 per share, for the same period of 2002. The company recorded a variety of charges and credits due to non-core items occurring during these periods (see the reconciliation tables).

Income from core operations for the 12 months ended Sept. 30, 2003 was $602 million, or $3.54 per share, compared to $536 million, or $3.61 per share, for the same period of 2002. Income from core operations increased by $66 million, or 12 percent, over last year. Earnings drivers for the period included the benefit of full ownership of PPL's electricity delivery business in the United Kingdom, the higher electricity delivery revenues in PPL's Pennsylvania service territory, improved energy margins in the western United States, and lower interest expense.

These earnings improvements were offset by decreased energy margins in the eastern United States, the dilutive effect of additional shares of PPL common stock outstanding, higher operating and maintenance costs associated with new generation facilities, lower pension income, and the incremental impact on operating and maintenance expenses from storm damage associated with Hurricane Isabel.

  Reconciliation of Income from
   Core Operations and Reported
   Earnings
                                Current Year - 2003    Last Year - 2002
  (Millions of dollars)         3rd   Sept.  12 Mos.  3rd  Sept.   12 Mos.
                                Qtr    YTD    Sept.   Qtr    YTD    Sept.
  Income from Core Operations  $176    $468    $602  $145   $407     $536
   Non-core items (net of tax):
    Accounting changes:
      Asset retirement
       obligations                       63      63
      Goodwill impairment                                   (150)    (150)
      Pensions                                                         10
    Unusual items:
      Impact of Enron
       bankruptcy                                                     (29)
      Cancellation of
       generation projects                                            (88)
      CEMAR operating losses                          (23)   (23)     (23)
      WPD impairment                                                 (117)
      CEMAR impairment                                       (98)    (315)
      Tax benefit - Teesside                      8
      Writedown of generation
       equipment                                (26)
       Workforce reduction       (5)     (5)     (5)         (44)     (44)

    Total Non-core Items         (5)     58      40   (23)  (315)    (756)
  Earnings - Reported          $171    $526    $642  $122    $92    ($220)



  Reconciliation of Income
   from Core Operations and
   Reported Earnings per Share
   (Diluted)
                                Current Year - 2003    Last Year - 2002
                                      Sept.  12 Mos.          Sept. 12 Mos.
                              3rd Qtr  YTD    Sept.   3rd Qtr  YTD   Sept.
  Income from Core
   Operations - per share     $1.00   $2.73   $3.54   $0.95 $2.72    $3.61
    Non-core items (net of tax):
      Accounting changes:
        Asset retirement
         obligations                   0.36    0.37
        Goodwill impairment                                (1.01)    (1.02)
        Pensions                                                      0.07
    Unusual items:
        Impact of Enron
         bankruptcy                                                  (0.19)
        Cancellation of
         generation projects                                         (0.59)
        CEMAR operating
         losses                                      (0.15) (0.15)   (0.15)
        WPD impairment                                               (0.79)
        CEMAR impairment                                    (0.65)   (2.12)
        Tax benefit - Teesside                 0.05
        Writedown of generation
         equipment                            (0.16)
        Workforce reduction   (0.03)  (0.03)  (0.03)        (0.29)   (0.30)

    Total Non-core Items      (0.03)   0.33    0.23  (0.15) (2.10)  (5.09)
  Earnings per Share -
   Reported                   $0.97   $3.06   $3.77   $0.80 $0.62   $(1.48)

PPL Corporation, headquartered in Allentown, Pa., controls about 11,500 megawatts of generating capacity in the United States, sells energy in key U.S. markets and delivers electricity to customers in Pennsylvania, the United Kingdom and Latin America.

(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.)

PPL invites interested parties to listen to the live Internet webcast of management's teleconference with financial analysts about third-quarter financial results at 9 a.m. (EDT) on Thursday, Oct. 23. The teleconference is available online live, in audio format, on PPL's Internet Web site: www.pplweb.com. The webcast will be available for replay on the PPL Web site for 30 days. Interested individuals also can access the live conference call via telephone at 719-867-0640.

                 PPL CORPORATION AND SUBSIDIARY COMPANIES
         CONDENSED CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)

                   Condensed Consolidated Balance Sheet
                          (Millions of Dollars)


                                      Sept. 30, 2003    Dec. 31, 2002 (a)
  Assets
  Cash                                          $587                 $245
  Other current assets                         1,482                1,592
  Investments                                    688                  656
  Property, plant and equipment -- net
    Electric plant                             9,390                9,113
    Gas and oil plant                            204                  201
    Other property                               261                  252
                                               9,855                9,566
  Recoverable transition costs                 1,754                1,946
  Regulatory and other assets                  1,560                1,542
    Total assets                             $15,926              $15,547

  Liabilities and Equity
  Short-term debt (including current
   portion of long-term debt)                   $412               $1,309
  Other current liabilities                    1,360                1,304
  Long-term debt (less current portion) (b)    7,130                5,901
  Deferred income taxes and investment
   tax credits                                 2,400                2,371
  Other noncurrent liabilities                 1,574                1,659
  Minority interest                               35                   36
  Company-obligated mandatorily redeemable
   securities (b)                                  0                  661
  Preferred stock                                 51                   82
  Earnings reinvested                          1,339                1,013
  Other common equity                          2,908                2,493
  Accumulated other comprehensive loss          (446)                (446)
  Treasury stock                                (837)                (836)
  Total liabilities and equity               $15,926              $15,547

  (a) Certain amounts have been reclassified to conform to the current year
      presentation.
  (b) PPL adopted Statement of Financial Accounting Standards 150,
      "Accounting for Certain Financial Instruments with Characteristics of
      Both Liabilities and Equity," effective July 1, 2003. This required
      the reclassification of Company-obligated mandatorily redeemable
      preferred securities to Long-term debt on a prospective basis.


                 Condensed Consolidated Income Statement
               (Millions of Dollars, Except per Share Data)

                         3 Months Ended   9 Months Ended  12 Months Ended
                           Sept. 30,         Sept. 30,        Sept. 30,
                        2003   2002(a)    2003  2002(a)     2003  2002(a)

  Operating Revenues
    Utility             $897      $935  $2,778   $2,774   $3,680   $3,520
    Unregulated retail
     electric and gas     32        45     117      136      163      190
    Wholesale energy
     marketing           406       378   1,007      792    1,251    1,019
    Net energy trading
     margins               2        (3)      9       13       15       14
    Energy-related
     businesses          119       137     370      430      499      600
                       1,456     1,492   4,281    4,145    5,608    5,343
  Operating Expenses
    Fuel and purchased
     power               450       459   1,337    1,145    1,692    1,491
    Other operation and
     maintenance         287       293     885      831    1,182    1,086
    Amortization of
     recoverable
     transition costs     66        62     193      165      254      225
    Depreciation          99        92     287      269      385      335
    Energy-related
     businesses          119       137     375      416      502      556
    Taxes, other than
     income               64        54     189      172      249      207
    Other charges
      Write-down of
       international
       energy projects     0         0       0      100       13      436
      Workforce reduction  9         1       9       75        9       75
      Write-down of
       generation assets   0         0       0        0       44        0
      Cancellation of
       generation projects 0         0       0        0        0      150
                       1,094     1,098   3,275    3,173    4,330    4,561
  Operating Income       362       394   1,006      972    1,278      782
  Other income - net      15        11      46       22       54       19
  Interest expense       119       168     355      430      485      534
  Income Before Income
   Taxes and
   Minority Interest     258       237     697      564      847      267
  Income taxes            82        79     200      194      217      208
  Minority interest        3        20       5       76        7       70
  Income (Loss) Before
   Cumulative Effect of
   a Change in Accounting
   Principles            173       138     492      294      623      (11)
  Cumulative Effect of a
   Change in Accounting
   Principle (net of tax)  0         0      63     (150)      63     (140)
  Income (Loss) Before
   Dividends and
   Distributions on
   Preferred Securities  173       138     555      144      686     (151)
  Dividends and
   Distributions on
   Preferred securities    2        16      29       52       44       69
  Net Income (Loss)     $171      $122    $526      $92     $642    ($220)

  Earnings per share of
   common stock - basic
    Income from core
     operations (b)    $1.00     $0.96   $2.74    $2.73    $3.56    $3.61
    Non-core items     (0.03)    (0.15)   0.33     (2.11)   0.23    (5.09)
    Net Income (loss)  $0.97     $0.81   $3.07    $0.62    $3.79   ($1.48)

  Earnings per share of
   common stock - diluted
    Income from core
     operations (b)    $1.00     $0.95   $2.73    $2.72    $3.54    $3.61
    Non-core items     (0.03)    (0.15)   0.33     (2.10)   0.23    (5.09)
    Net Income (loss)  $0.97     $0.80   $3.06    $0.62    $3.77   ($1.48)

  Average shares
   outstanding (thousands)
    Basic            176,397   151,565 171,577  148,758  169,776  148,226
    Diluted          177,051   151,847 172,181  149,084  170,372  148,226

  (a) Certain amounts have been reclassified to conform to the current year
      presentation.
  (b) Income in the 2003 and 2002 periods was impacted by several non-core
      items, as described in the text and tables of this news release.
      Income from core operations excludes the impact of these non-core
      items.


                              Key Indicators

  Financial
                                       12 Months Ended    12 Months Ended
                                       Sept. 30, 2003     Sept. 30, 2002

  Dividends declared per share               $1.515          $1.345
  Book value per share (a)                   $16.71          $14.83
  Market price per share (a)                 $40.95          $32.54
  Dividend yield (a)                           3.7%            4.1%
  Dividend payout ratio (b)                     40%             (d)
  Dividend payout ratio - core
   operations (b)(c)                            43%             37%
  Price/earnings ratio (a)(b)                  10.9             (d)
  Price/earnings ratio - core
   operations (a)(b)(c)                        11.6             9.0
  Return on average common equity            24.76%         (10.89%)
  Return on average common equity -
   core operations (c)                       21.12%          21.49%

  (a) End of period.
  (b) Based on diluted earnings per share.
  (c) Calculated using income from core operations, which excludes the
      impact of non-core items, as described in the text and tables of this
      news release.
  (d) Calculation not meaningful due to net loss for the 12 months ended
      September 30, 2002.


Reconciliation of Business Segment Core and Reported Earnings

                                      Current Year - 2003
                               Supply  International   Delivery     Total
  (millions of dollars)

  Income from core operations
   - 3rd Qtr                      $160         $19        ($3)       $176
    Non-core Items:
      Unusual Items                                        (5)         (5)
  Earnings - reported 3rd Qtr     $160         $19        ($8)       $171

  Income from core operations
   - YTD                          $338         $96        $34        $468
    Non-core Items:
      Accounting Changes            63                                 63
      Unusual Items                                        (5)         (5)
  Earnings - reported YTD         $401         $96        $29        $526

  (per share)

  Income from core operations
   - 3rd Qtr                     $0.91       $0.11      ($0.02)     $1.00
    Non-core Items:
      Unusual Items                                      (0.03)     (0.03)
  Earnings - reported 3rd Qtr    $0.91       $0.11      ($0.05)     $0.97

  Income from core operations
   - YTD                         $1.97       $0.56       $0.20      $2.73
    Non-core Items:
      Accounting Changes           .36                                .36
      Unusual Items                                     (0.03)      (0.03)
  Earnings - reported YTD        $2.33       $0.56      $0.17       $3.06




                                             Last Year - 2002
                                Supply  International  Delivery     Total
  (millions of dollars)

  Income from core operations
   - 3rd Qtr                      $112         $11        $22        $145
    Non-core Items:
      Unusual Items                            (23)                   (23)
  Earnings - reported 3rd Qtr     $112        ($12)       $22        $122

  Income from core operations
   - YTD                          $311         $37        $59        $407
    Non-core Items:
      Accounting Changes                      (150)                  (150)
      Unusual Items               (25)        (121)       (19)       (165)
  Earnings - reported YTD         $286       ($234)       $40         $92

  (per share)

  Income from core operations
   - 3rd Qtr                     $0.74       $0.06      $0.15       $0.95
    Non-core Items:
      Unusual Items                          (0.15)                 (0.15)
  Earnings - reported 3rd Qtr    $0.74      ($0.09)     $0.15       $0.80

  Income from core operations
   - YTD                         $2.07       $0.24      $0.41       $2.72
    Non-core Items:
      Accounting Changes                     (1.01)                 (1.01)
      Unusual Items             (0.16)       (0.80)     (0.13)      (1.09)
  Earnings - reported YTD        $1.91      ($1.57)     $0.28       $0.62



  Operating - Domestic Electricity Sales

                                      3 Months Ended Sept. 30,
  (millions of kwh)                                     Percent
                                     2003        2002    Change

  Retail
    Delivered (a)                   8,921       9,108     (2.1%)
    Supplied                        9,319       9,605     (3.0%)

  Wholesale
    East                            8,624       8,650     (0.3%)
    West
      NorthWestern Energy/
       Montana Power (b)              842         846     (0.5%)
      Other                         2,306       2,240      3.0%



                                      9 Months Ended Sept. 30,
  (millions of kwh)                                     Percent
                                     2003        2002    Change

  Retail
    Delivered (a)                  26,890      26,484      1.5%
    Supplied                       27,861      27,924     (0.2%)

  Wholesale
    East                           22,878      18,557     23.3%
    West
      NorthWestern Energy/
       Montana Power (b)            2,507       3,413    (26.5%)
      Other                         6,580       5,715     15.1%


                                      12 Months Ended Sept. 30,
  (millions of kwh)                                     Percent
                                     2003        2002    Change

  Retail
    Delivered (a)                  35,514      34,429      3.2%
    Supplied                       36,759      36,464      0.8%

  Wholesale
    East                           28,991      23,325     24.3%
    West
      NorthWestern Energy/
       Montana Power (b)            3,354       4,614    (27.3%)
      Other                         8,760       6,827     28.3%

  (a) Electricity delivered to retail customers represents the kwh delivered
      to customers within PPL Electric Utilities' service territory.
  (b) NorthWestern Corporation purchased The Montana Power Company's
      electric delivery business in February 2002, including Montana Power's
      rights under a power supply agreement with PPL Montana that expired on
      June 30, 2002.  In July 2002, PPL EnergyPlus, on behalf of PPL
      Montana, began selling energy to NorthWestern Corporation under a new
      five-year agreement.

"Income from core operations" excludes the impact of non-core items. Income from core operations should not be considered as an alternative to net income, which is an indicator of operating performance determined in accordance with generally accepted accounting principles (GAAP). PPL believes that income from core operations, although a non-GAAP measure, is also useful and meaningful to investors because it provides them with PPL's underlying earnings performance as another criterion in making their investment decisions. PPL's management also uses income from core operations in measuring certain corporate performance goals. Other companies may use different measures to present financial performance.

"Free cash flow" is derived by deducting the following from cash flow from operations: capital expenditures (net of disposals, but adjusted to include lease financing), dividend payments and repayment of transition bonds. Free cash flow should not be considered as an alternative to cash flow from operations, which is determined in accordance with GAAP. PPL believes free cash flow is an important measure to both management and investors since it is an indicator of the company's ability to sustain operations and growth without additional outside financing beyond the requirement to fund maturing debt obligations. Other companies may calculate free cash flow in a different manner.

"Equity to total capitalization ratio" includes as equity minority interest and preferred stock as well as all of the components of common equity as presented on the balance sheet. Total capitalization is calculated as equity plus short-term debt plus long-term debt as presented on the balance sheet.

"Adjusted equity to total capitalization ratio" includes as debt certain power plant lease obligations, excludes transition bonds issued by PPL Transition Bond Company, LLC under the Pennsylvania Electricity Generation Customer Choice and Competition Act, excludes debt of international affiliates which is non-recourse to PPL, and treats Premium Equity Participating Security (PEPS) units as equity (since those securities convert to common stock in May of 2004). The adjusted equity to total capitalization ratio should not be considered as an alternative to an equity to total capitalization ratio using debt and equity balances as reflected on the balance sheet. PPL believes that this adjusted equity ratio is useful to investors because it provides them with another indicator of credit quality. The adjusted equity to total capitalization ratio focuses primarily on debt that is recourse to PPL, whether the debt is on or off balance sheet. It also treats the PEPS securities in a manner consistent with how PPL believes the rating agencies view them. Other companies may present adjusted equity ratios in a different manner.

Certain statements contained in this news release, including statements with respect to future earnings, net income, energy prices and sales, load growth, cash flows, equity ratios, financing costs, accounting treatment, corporate strategy and generating capacity, are "forward-looking statements" within the meaning of the federal securities laws. Although PPL Corporation believes that the expectations and assumptions reflected in these forward- looking statements are reasonable, these statements involve a number of risks and uncertainties, and actual results may differ materially from the results discussed in the statements. The following are among the important factors that could cause actual results to differ materially from the forward-looking statements: market demand and prices for energy, capacity and fuel; weather 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 Corporation and its subsidiaries; new accounting requirements or new interpretations or applications of existing requirements; operating performance of plants and other facilities; environmental conditions and requirements; system conditions and operating costs; development of new projects, markets and technologies; performance of new ventures; political, regulatory or economic conditions in states, regions and countries where PPL Corporation or its subsidiaries conduct business; receipt of necessary governmental permits, approvals and rate relief; capital market conditions; stock price performance; foreign exchange rates; and the commitments and liabilities of PPL Corporation and its subsidiaries. Any such forward-looking statements should be considered in light of such factors and in conjunction with PPL Corporation's Form 10-K and other reports on file with the Securities and Exchange Commission.

SOURCE: PPL Corporation

CONTACT: For media - George Biechler, +1-610-774-5997, or For financial
analysts - Tim Paukovits, +1-610-774-4124, both of PPL Corporation,
Fax: +1-610-774-5281

Web site: http://www.pplweb.com/

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