EXHIBIT 99.1
PPL REPORTS FIRST-QUARTER RESULTS,
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MAINTAINS $3.30 TO $3.50 PER SHARE FORECAST FROM CORE OPERATIONS IN 2002
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ALLENTOWN, Pa. (April 24, 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.
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
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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.)
3
PPL CORPORATION AND SUBSIDIARY COMPANIES
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CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
CONSOLIDATED BALANCE SHEET
(MILLIONS OF DOLLARS)
MARCH 31, 2002 DEC. 31, 2001 (a)
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ASSETS
- ------
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
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Electric utility plant 5,809 5,673
Gas and oil utility plant 199 197
Other property 104 103
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6,112 5,973
Recoverable transition costs 2,119 2,172
Regulatory and other assets 1,022 1,060
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Total assets $12,368 $12,574
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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)
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Total liabilities and equity $12,368 $12,574
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(a) Certain amounts have been reclassified to conform to the current year
presentation.
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CONSOLIDATED INCOME STATEMENT
(MILLIONS OF DOLLARS)
3 MONTHS ENDED MARCH 31 12 MONTHS ENDED 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
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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.
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KEY INDICATORS
FINANCIAL
12 MONTHS ENDED 12 MONTHS ENDED
MARCH 31, 2002 MARCH 31, 2001
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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
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PERCENT PERCENT
PPL CORP. 2002 2001 CHANGE 2002 2001 CHANGE
(millions of kwh) ------ ------ ------- ------ ------ -------
Retail
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
Wholesale
East 4,937 5,244 -5.9 18,817 27,060 -30.5
West
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. 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
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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.