PPL Reports Third-Quarter Earnings of 80 Cents Per Share, Core Earnings of 95 Cents Per Share; Reaffirms Core Earnings Forecasts for 2002, 2003

PPL Corporation (NYSE: PPL) today reported third-quarter earnings per share of $0.80, which includes a $0.15 per share non-cash charge relating to operating losses at its Brazilian affiliate. Excluding that impact, PPL reported third-quarter earnings from its core operations of $0.95 per share. PPL reported record third-quarter earnings of $1.04 per share a year ago.

(Photo: http://www.newscom.com/cgi-bin/prnh/19981015/PHTH025 )

In addition to reporting its third-quarter results, the company reaffirmed its forecasts of earnings from core operations of $3.30 to $3.50 per share in 2002 and $3.60 to $3.80 per share in 2003. For the longer term, PPL also reaffirmed its forecast of 5 to 8 percent compound annual growth in core earnings per share, using the midpoint of its existing 2002 forecast of earnings from core operations as the base.

Third-quarter earnings per share for 2002 were lower than a year ago primarily due to the losses associated with the Brazilian affiliate, lower prices in the wholesale energy markets and higher financing costs. However, the effects of lower energy prices were partially offset in the quarter by higher volumes of wholesale energy sales and retail electricity delivered, compared to a year ago.

"Our integrated business strategy of matching electricity load and load- related hedges with generation assets is reinforced by a financing strategy that focuses on maintaining a strong credit profile and liquidity position," said William F. Hecht, PPL's chairman, president and chief executive officer. "This key element of our strategy, combined with our operation of high-quality energy delivery systems in selected regions, positions PPL to withstand uncertainties in the energy markets and to take advantage of business opportunities that may exist." Hecht added that approximately 85 percent of PPL's projected margins from energy sales through 2003 and about 75 percent beyond 2003 are expected to be derived from long-term, fixed-price energy contracts. The two largest of these contracts expire in 2007 and 2009.

"PPL is in a strong credit and liquidity position," said Hecht. "All three major rating agencies have just recently reaffirmed our ratings in connection with our acquisition of the remaining 49 percent interest in Western Power Distribution in the United Kingdom and a successful $500 million common stock sale."

PPL's current business plans show improvement in the company's equity ratio without the need for any significant additional common equity sales. In addition, PPL currently has no need to access the debt capital markets through 2006 other than for refinancings.

PPL had almost $340 million of cash and cash equivalents on hand at Sept. 30, 2002, according to Hecht. In addition, the company has $1.5 billion in available bank credit lines and expects approximately $1 billion in net cash flow from operations in 2003 as well.

PPL reported earnings of $0.62 per share for the first nine months of 2002, as compared to $3.35 per share a year ago, primarily due to several unusual charges in 2002. During this period, the company recorded a charge of $1.01 per share related to a change in accounting rules for goodwill related to its Latin American investments. Also affecting PPL's earnings for the first nine months of 2002 were charges of $0.65 per share associated with the writedown of its Brazilian investment, $0.29 per share associated with PPL's worldwide workforce reduction program, and $0.15 per share associated with the losses from its Brazilian affiliate.

Earnings from PPL's core operations for the first nine months of 2002 were $2.72 per share, as compared to $3.35 per share a year ago, when no unusual charges were reported. Compared to a year ago, the results for the first nine months of 2002 were affected by lower prices in the wholesale energy markets and higher financing costs. These effects were partially offset by higher volumes of wholesale energy sales.

Earlier this year, PPL wrote down its investment in CEMAR, its Brazilian affiliate, to zero and stated that it would make no additional investments in CEMAR. On Aug. 21, following a bankruptcy filing by CEMAR, the Brazilian electricity regulator officially intervened and assumed full operating and financial control of the company.

PPL suspended recording CEMAR's financial results effective Aug. 21 because it no longer controls the entity as a result of the intervention by the Brazilian electricity regulator. Any negative carrying value of the investment in CEMAR, which includes the losses for the third quarter, will be reversed upon the final sale or other disposition of the company. The Brazilian regulator has published a schedule for the sale of CEMAR to another investor by year-end 2002.

Hecht noted that PPL's third-quarter financial statements include, for the first time, the consolidation of its United Kingdom subsidiary, Western Power Distribution (WPD), a regulated energy delivery business. In September of 2002, PPL acquired the remaining 49 percent interest in WPD from Mirant Corporation. This acquisition, and the resulting consolidation, added an estimated $3.5 billion of assets. In addition, $2.1 billion of WPD's debt, which is non-recourse to PPL, was added on PPL's balance sheet. These are preliminary results, pending the completion of all purchase accounting adjustments. PPL also expects to receive from WPD cash dividends of about $55 million, net of U.S. taxes, in 2002 and about $42 million in 2003.

Consistent with a change in accounting rules affecting the entire energy industry, in the third quarter of 2002, PPL began to record all revenues and expenses from energy trading activities on a net rather than on a gross basis. PPL's net energy trading activities contributed zero and 2 percent to energy margins for the three- and nine-month periods ended September 30, 2002, respectively, compared to 9 percent and 6 percent, respectively, for the same periods of 2001.

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 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 8:30 a.m. (EDT) on Friday, Oct. 18. 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 913-981-5591.


                   Condensed Consolidated Balance Sheet
                          (Millions of Dollars)

                                      Sept. 30, 2002 (a)  Dec. 31, 2001 (b)
  Cash                                        $339                $933
  Other current assets                       1,532               1,397
  Investments                                  725                 999
  Property, plant and equipment -- net
    Electric plant                           8,868               5,648
    Gas and oil plant                          202                 196
    Other property                             200                 103
                                             9,270               5,947
  Recoverable transition costs               2,007               2,172
  Regulatory and other assets                1,807               1,118
    Total assets                           $15,680             $12,566

  Liabilities and Equity
  Short-term debt (including current portion
   of long-term debt)                       $1,085                $616
  Other current liabilities                  1,210               1,214
  Long-term debt (less current portion)      6,301               5,081
  Deferred income taxes and investment
   tax credits                               2,438               1,449
  Other noncurrent liabilities               1,433               1,404
  Minority interest                             35                  38
  Company-obligated mandatorily redeemable
   securities                                  661                 825
  Preferred stock                               82                  82
  Earnings reinvested                          956               1,023
  Other common equity                        2,315               1,670
  Treasury stock                              (836)               (836)
    Total liabilities and equity           $15,680             $12,566

  (a)  The Sept. 30, 2002 balance sheet includes a preliminary consolidation
       of the accounts of Western Power Distribution (WPD), of which PPL
       Global achieved operational control on Sept. 6, 2002, when it
       purchased Mirant Corporation's interest in WPD.  The balance sheet
       presentation may change when reflected in the Form 10-Q for the third
       quarter of 2002, as additional purchase accounting adjustments and
       other reclassifications may be recorded.
  (b)  Certain amounts have been reclassified to conform to the current year

                 Condensed Consolidated Income Statement
                          (Millions of Dollars)

                      3 Months Ended    9 Months Ended     12 Months Ended
                         Sept. 30,         Sept. 30,          Sept. 30,
                     2002        2001   2002      2001      2002    2001
                    (a)(b)      (b)(c) (a)(b)    (b)(c)    (a)(b)  (b)(c)

  Operating Revenues
    Utility         $1,227       $767  $2,774   $2,288    $3,520   $3,255
     retail electric
     and gas            46         59     137      302       191      199
    Wholesale energy
     marketing         344        195     693      645       850      912
    Net energy trading
     margins             0         37      21       70        32       82
     businesses        111        167     430      491       600      629
                     1,728      1,225   4,055    3,796     5,193    5,077
  Operating Expenses
    Fuel and purchased
     power             428        315   1,054    1,045     1,341    1,390
    Other operation and
     maintenance       297        258     812      777     1,052    1,091
    Amortization of
     transition costs   61         65     165      191       225      259
    Depreciation       144         67     269      200       335      191
     businesses        161        143     439      424       593      622
    Taxes, other than
     income             74         40     172      120       207      164
    Other charges
      Write-down of
       energy projects   0          0     100        0       436        0
      Cancellation of
       projects          0          0       0        0       150        0
       reduction         1          0      75        0        75        0
                     1,166        888   3,086    2,757     4,414    3,717
  Operating Income     562        337     969    1,039       779    1,360
  Other income - net     7          9      18       21        14        6
  Interest expense     231         91     428      283       531      385
  Income Before Income
   Taxes and
   Minority Interest   338        255     559      777       262      981
  Income taxes         127         86     194      247       208      328
  Minority interest     74          1      76        4        70        4
  Income (Loss) Before
   Extraordinary Items 137        168     289      526       (16)     649
  Extraordinary item
   (net of tax)          0          0       0        0         0       11
  Income (Loss) Before
   Cumulative Effect of
   a Change in
   Principles          137        168     289      526       (16)     660
  Cumulative effect
   of a change in
   (net of tax)          0          0    (150)       0      (140)       0
  Income (Loss)
   Before Dividends
   and Distributions
   on Preferred
   Securities          137        168     139      526      (156)     660
  Dividends and
   distributions on
   securities           15         16      47       35        64       42
  Net Income (Loss)   $122       $152     $92     $491     ($220)    $618

  Earnings per share
   of common stock -
    Income from core
     operations      $0.96      $1.04   $2.73    $3.37     $3.61    $4.25
    Unusual items    (0.15)         0   (2.11)       0     (5.09)       0
    Net Income
     (loss)          $0.81      $1.04   $0.62    $3.37    ($1.48)   $4.25

  Earnings per share
   of common stock -
    Income from core
     operations      $0.95      $1.04   $2.72    $3.35     $3.60    $4.22
    Unusual items    (0.15)         0   (2.10)       0     (5.08)       0
    Net Income
     (loss)          $0.80      $1.04   $0.62    $3.35    ($1.48)   $4.22

  Average number of
   shares outstanding
    Basic          151,565    146,241 148,758  145,818   148,226  145,597
    Diluted        151,848    146,753 149,084  146,564   148,551  146,386

  (a)  The income statements for the 2002 periods reflect the consolidation
       of the accounts of WPD, retroactive to Jan. 1, 2002.  Minority
       interest was adjusted to include the pre-acquisition earnings
       associated with Mirant's previous 49 percent ownership of WPD.  PPL
       Global purchased Mirant's interest in WPD on Sept. 6, 2002.
  (b)  All income statement periods reflect the reclassification of energy
       trading activities to a "net" basis, in accordance with new
       accounting regulations.  Previously, energy trading revenues and
       energy trading purchases were reported "gross" in "Wholesale energy
       marketing and trading" revenue and "Fuel and purchased power,"
       respectively.  The net energy trading margins are now separately
       presented in the income statement.  Operating income and net income
       were not affected by these reclassifications.
  (c)  Certain amounts have been reclassified to conform to the current year

                              Key Indicators

                                          12 Months Ended   12 Months Ended
                                           Sept. 30, 2002    Sept. 30, 2001

  Dividends declared per share                   $1.35              $1.06
  Book value per share (a)                      $14.83             $15.90
  Market price per share (a)                    $32.54             $32.60
  Dividend yield (a)                              4.1%               3.3%
  Dividend payout ratio - diluted (b)              37%                25%
  Price/earnings ratio - diluted (a)(b)            9.0                7.7
  Return on average common equity (b)           21.49%             30.18%

  (a) End of period
  (b) Based on earnings from core operations

  Operating - Domestic Electricity Sales

                     3 Months Ended Sept. 30,    9 Months Ended Sept. 30,

  (millions of kwh)                   Percent                    Percent
                     2002       2001   Change    2002      2001   Change
   Delivered (a)     9,107      8,712    4.5%   26,478    26,677   (0.7%)
   Supplied          9,603      9,386    2.3%   27,918    28,867   (3.3%)

   East              8,897      4,853   83.3%   18,804    14,356    31.0%
      Montana Power
      (b)              846      1,268 (33.3%)    3,413     3,516   (2.9%)
     Other           2,240        960  133.3%    5,715     2,729   109.4%

  Operating - Domestic Electricity Sales

                                         12 Months Ended Sept. 30,

  (millions of kwh)                                               Percent
                                   2002             2001          Change

   Delivered (a)                   34,412          34,957         (1.6%)
   Supplied                        36,446          38,236         (4.7%)

   East                            23,571          20,603         14.4%
      Montana Power
      (b)                           4,614           4,769         (3.3%)
     Other                          6,827           3,798         79.8%

  (a)  Electricity delivered to retail customers represents the kwh
       delivered to customers within PPL Electric Utilities Corp.'s service
  (b)  Northwestern Energy purchased Montana Power's electric delivery
       business in February 2002.  PPL Montana's power agreement with
       Montana Power expired June 30, 2002.  PPL EnergyPlus, on behalf of
       PPL Montana, began selling energy to Northwestern Energy on July 1,

Certain statements contained in this news release, including statements with respect to future earnings, energy margins, liquidity, securities offerings, accounting treatment, business disposition 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 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 and approvals; 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.

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SOURCE: PPL Corporation

CONTACT: Media, George Biechler, +1-610-774-5997, or Financial Analysts,
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Web site: http://www.pplweb.com/

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