PPL Reports First-Quarter Results, Maintains $3.30 to $3.50 Per Share Forecast from Core Operations in 2002

Due primarily to a $150 million non-cash charge related to changes in accounting rules for goodwill that affect its Latin American investments, PPL Corporation (NYSE: PPL) today reported a loss per share of $0.02 for the first quarter of 2002. Excluding the unusual items of this goodwill charge and a write-down of PPL's Brazilian investment, the company's first-quarter earnings per share from core operations were $1.03. This performance keeps PPL on track to achieve its 2002 earnings forecast of $3.30 to $3.50 per share from core operations.

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

Earnings per share of $1.03 represent the company's second-highest level of first-quarter earnings on record. A year ago, PPL reported quarterly earnings of $1.52 per share, its best single quarter ever for earnings.

The earnings decline from a year ago, in terms of core operations, was due primarily to dramatically lower wholesale energy prices, especially in the western United States. Lower earnings from international operations and lower electricity delivery sales resulting from a sluggish U.S. economy and the mild weather in PPL's Pennsylvania electricity distribution service area contributed to the decline in PPL's first-quarter earnings as compared to last year's first quarter.

The positive drivers of PPL's core earnings for the first quarter of 2002 included increased volume of wholesale energy sales in the western United States and improved earnings contributions from energy-related businesses such as PPL's synthetic fuel operations and its mechanical contracting companies.

"In a deregulated environment, we expect some earnings volatility," said William F. Hecht, PPL's chairman, president and chief executive officer. "We have taken significant steps, however, to provide earnings stability through our asset-backed, integrated strategy of energy delivery and supply. We also have a strong stream of revenues from our electricity and gas delivery businesses.

"About 70 percent of our earnings from core operations in 2002 are expected to come from our generation output that is dedicated to supplying energy under long-term contracts and from our regulated energy delivery businesses in Pennsylvania," Hecht continued.

"Our strategy to pursue long-term contracts for most of our generation supply reduces our exposure to variations in the market price of electricity and places PPL in an excellent position to meet the challenges of the competitive marketplace," Hecht said.

PPL continues to evaluate opportunities to expand its generation capacity. The company currently is developing more than 1,100 megawatts of generation capacity to go on line this summer in Arizona, Illinois and New York. PPL also is developing another 1,100 megawatts of generation capacity in New York and Pennsylvania to go on line by the summers of 2003 and 2004.

Hecht said the siting and building of these plants is consistent with PPL's generation-expansion strategy to generate and sell energy in key U.S. markets and to maintain an optimum balance of generation supply with long-term contracts.

In addition to generation, energy delivery is an important part of PPL's integrated strategy. The company has earned top awards for customer service on each of the three continents where it serves nearly 6 million customers: North America, South America and Europe. PPL's electricity delivery company in Pennsylvania has begun to install automated electric meters for its 1.3 million customers, reaffirming its commitment to excellence in customer service and customer satisfaction.

PPL reported a loss per share of $0.31 for the 12 months ended March 31, 2002, due to impairment charges on PPL's Latin American and United Kingdom electricity delivery businesses, the decision to cancel several domestic power plant projects and to charges associated with the bankruptcy of Enron. These charges were partially offset by a credit to earnings relating to a change in pension accounting. For the 12 months ended March 31, 2002, PPL's earnings from core operations were $3.74 per share compared to $3.81 per share for the same period of 2001.

In late January 2002, PPL announced that it had taken an impairment charge of $217 million with respect to CEMAR, its electricity distribution business in Brazil, and also said it would provide no additional funding for CEMAR. That impairment charge represented the net asset value of CEMAR at the end of 2001.

At that time, the balance of PPL's exposure with respect to CEMAR was about $100 million, primarily related to the cumulative translation adjustment (CTA), which is the amount of currency devaluation of PPL's original investment in CEMAR since the date of purchase. That $100 million balance could not be written off in 2001 because of accounting rules.

Hecht noted that PPL did record a $6 million portion of the remaining $100 million charge in the first quarter of 2002, equivalent to $0.03 a share. The possibility of a further $94 million charge, Hecht said, remains the worst- case scenario regarding CEMAR.

However, the company is working with CEMAR's creditors and governmental authorities in Brazil on a plan that could result in returning the company to financial stability. That plan includes a rate-increase request that is now being reviewed by regulators, and PPL expects that the process for the rate- increase request will reach conclusion by early in the third quarter of 2002.

"Because we have not yet exhausted all available avenues - including the pending rate request - to maximize the value of CEMAR, we did not take the CTA charge in the first quarter, as we originally anticipated," said Hecht. "We made this decision after confirming that continuing the workout plan during 2002 will leave PPL in no worse position financially than if it had taken the remaining full amount of the CTA charge in the first quarter of 2002."

PPL's first-quarter earnings for 2002 also reflect ongoing operating losses of $0.03 per share from CEMAR. Hecht said PPL expects that it will continue to incur quarterly operating losses of about this level during 2002, as it continues to work with authorities in Brazil to maximize the value of CEMAR. Should a decision be made to exit the investment in CEMAR, Hecht said, PPL would incur the remaining CTA charge, and any such operating losses would be completely offset upon exiting the investment.

PPL Corporation, headquartered in Allentown, Pa., controls or owns more than 10,000 megawatts of generating capacity in the United States, sells energy in key U.S. markets, and delivers electricity to nearly 6 million 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.)


                        Consolidated Balance Sheet
                          (Millions of Dollars)

                                         March 31, 2002  Dec. 31, 2001 (a)
  Current Assets                               $2,074        $2,338
  Investments                                   1,041         1,031
  Property, plant and equipment -- net
    Transmission and distribution               2,653         2,591
    Generation                                  2,466         2,464
    General and intangible                        312           310
    Construction work in progress                 262           181
    Nuclear fuel and other leased property        116           127
      Electric utility plant                    5,809         5,673
    Gas and oil utility plant                     199           197
    Other property                                104           103
                                                6,112         5,973
  Recoverable transition costs                  2,119         2,172
  Regulatory and other assets                   1,022         1,060
    Total assets                              $12,368       $12,574

  Liabilities and Equity
  Current liabilities                          $1,882        $1,838
  Long-term debt (less current portion)         4,937         5,081
  Deferred income taxes and ITC                 1,504         1,449
  Liability for above market NUG purchases        409           493
  Other noncurrent liabilities                    876           911
  Minority interest                                39            38
  Company-obligated mandatorily
   redeemable securities                          825           825
  Preferred stock                                  82            82
  Earnings reinvested                             967         1,023
  Other common equity                           1,683         1,670
  Treasury stock                                 (836)         (836)
    Total liabilities and equity              $12,368       $12,574

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

                      Consolidated Income Statement
                          (Millions of Dollars)

                                   3 Months Ended       12 Months Ended
                                      March 31              March 31
                                    2002   2001(a)       2002    2001(a)

  Operating Revenues
    Retail electric and gas         $847      $956     $3,248     $3,278
    Wholesale energy marketing and
     trading                         275       468      1,519      2,086
    Energy-related businesses        153       142        667        472
                                   1,275     1,566      5,434      5,836
  Operating Expenses
    Fuel and purchased power         405       583      1,950      2,436
    Other operation and maintenance  253       238      1,039        986
    Amortization of recoverable
     transition costs                 53        71        233        235
    Depreciation                      62        66        250        259
    Energy-related businesses        126       113        585        418
    Taxes, other than income          51        41        165        166
    Other charges
      Write-down of international
       energy projects                 6         0        342          0
      Cancellation of generation
       projects                        0         0        150          0
                                     956     1,112      4,714      4,500
  Operating income                   319       454        720      1,336
    Other income - net                 5         6         11         (8)
  Income before interest, income
   taxes and minority interest       324       460        731      1,328
  Interest expense                    97       104        380        392
  Income taxes                        62       126        197        338
  Minority interest                    1         2         (3)         5
  Income before extraordinary item   164       228        157        593
  Extraordinary item (net of tax)      0         0          0         11
  Income before cumulative effect of a
   change in accounting principle    164       228        157        604
  Cumulative effect of a change in
   accounting principle
   (net of tax)                     (150)        0       (140)         0
  Income before dividends on
   preferred securities               14       228         17        604
  Dividends - preferred securities    17         6         63         26
  Net income (loss)                  ($3)     $222       ($46)      $578

  Earnings per share of common stock - basic
    Income from core operations    $1.03     $1.53      $3.75      $3.83
    Unusual items                  (1.05)     0.00      (4.06)      0.16
    Net income (loss)             ($0.02)    $1.53     ($0.31)     $3.99

  Earnings per share of common stock - diluted
    Income from core operations    $1.03     $1.52      $3.74      $3.81
    Unusual items                  (1.05)     0.00      (4.05)      0.16
    Net income (loss)             ($0.02)    $1.52     ($0.31)     $3.97

  Average shares outstanding (thousands)
    Basic                        146,753   145,317    146,342    144,746
    Diluted                      147,091   146,245    146,835    145,409

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

                                Key Indicators

                                      12 Months Ended   12 Months Ended
                                      March 31, 2002     March 31, 2001

  Dividends declared per share             $1.155             $1.06
  Book value per share (a)                 $12.33            $13.75
  Market price per share (a)             $39.6100          $43.9600
  Dividend yield (a)                         2.9%              2.4%
  Dividend payout ratio - diluted (b)         31%               28%
  Price/earnings ratio - diluted (a) (b)     10.6              11.5
  Return on average common equity (b)      24.34%            30.39%

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

  Operating - Domestic Energy

                         3 Months Ended March 31   12 Months Ended March 31
                                           Percent                  Percent
  PPL Corp.                2002      2001   Change   2002     2001  Change
  (millions of kwh)

    Delivered (a)         9,126     9,881   -7.6   33,853   34,305   -1.3
    Supplied              9,651    10,552   -8.5   36,492   38,446   -5.1

    East                  4,937     5,244   -5.9   18,817   27,060  -30.5
      Montana Power (b)   1,366     1,199   13.9    4,885    4,954   -1.4
      Other               1,294     1,026   26.1    4,109    4,363   -5.8

  (a) Electricity delivered to retail customers represents the kwh delivered
       to customers within PPL Electric Utilities Corp.'s service territory.
  (b) Energy sold to Montana Power for resale to retail customers under
       power sale agreements that expire on or before June 30, 2002.

PPL invites interested parties to listen to the live Internet Webcast of management's teleconference on this topic with financial analysts at 9 a.m. on Wednesday, April 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 913-981-4910.

Also, the PPL Corporation annual shareowners meeting will be held at 10 a.m. on Friday, April 26, at Lehigh University's Stabler Arena in Bethlehem, Pa.

Certain statements contained in this news release, including statements with respect to future earnings, energy marketing, prices and delivery, corporate strategy, subsidiary performance, growth, project development, accounting impacts, revenues 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 countries where PPL Corporation 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 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.


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

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SOURCE: PPL Corporation

Contact: Dan McCarthy, +1-610-774-5758 or financial analysts: Tim
Paukovits, +1-610-774-4124, both of PPL Corporation, Fax: +1-610-774-5281

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

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