EXHIBIT 99.3
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PPL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED INFORMATION
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The pro forma information that follows is presented to give effect to the
acquisition of Mirant Corporation's 49% indirect equity interest in Western
Power Distribution Holdings Limited and WPD Investment Holdings Limited
(together, "WPD") on the income statements of PPL. The pro forma results are
based on assumptions set forth below, as well as in the Notes to Unaudited Pro
Forma Consolidated Financial Information, and are not necessarily indicative of
the results of operations which would actually have occurred if the transactions
had occurred in such periods, or which may exist or occur in the future.
The WPD acquisition is described in Item 2 of this Current Report on Form 8-K/A,
of which this Exhibit 99.3 is a part. The acquisition was completed on September
6, 2002.
Pro forma adjustments are provided to the consolidated income statements of PPL
for the nine months ended September 30, 2002, and for the twelve months ended
December 31, 2001. The adjustments are to the income statements filed in PPL's
Quarterly Report on Form 10-Q for the quarter ended September 30, 2002, and in
its Annual Report on Form 10-K for the year ended December 31, 2001. The pro
forma adjustments assume that the acquisition was consummated at the beginning
of the income statement periods.
The PPL pro forma income statement for the nine months ended September 30, 2002
includes the operating results of WPD for the nine months ended August 31, 2002.
The PPL pro forma income statement for the twelve months ended December 31, 2001
includes the operating results of WPD for the twelve months ended November 30,
2001. This treatment is consistent with PPL's policy of recording results of its
international operations on a lag basis.
The September 30, 2002 Balance Sheet filed in PPL's Quarterly Report on Form
10-Q for the quarter ended September 30, 2002 included the consolidation of the
accounts of WPD. Because the accounts have already been consolidated, there is
no presentation of a pro forma balance sheet in this Current Report on Form
8-K/A.
The Notes to Unaudited Pro Forma Consolidated Financial Information provide
additional descriptions of the adjustments to the income statements. The pro
forma financial information should be read in conjunction with the reports of
PPL as noted above, as well as the audited financial statements of Western Power
Distribution Holdings Limited and WPD Investment Holdings Limited for the year
ended March 31, 2002. These financial statements are included as Exhibit 99.1
and Exhibit 99.2 in this Current Report on Form 8-K/A.
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PPL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(Millions of Dollars, except per share data)
PRO FORMA NOTE
AS REPORTED ADJUSTMENTS REF AS ADJUSTED
----------- ----------- ---- -----------
OPERATING REVENUES
Utility................................................... $ 2,774 $ 2,774
Unregulated retail electric and gas....................... 137 137
Wholesale energy marketing................................ 693 693
Net energy trading margins................................ 21 21
Energy related businesses................................. 430 430
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Total..................................................... 4,055 4,055
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OPERATING EXPENSES
Operation
Fuel.................................................... 435 435
Energy purchases........................................ 619 619
Other................................................... 596 596
Amortization of recoverable transition costs............ 165 165
Maintenance............................................... 216 216
Depreciation.............................................. 269 269
Taxes, other than income.................................. 172 172
Energy related businesses................................. 439 439
Other charges
Write-down of international energy projects............. 100 100
Workforce reduction..................................... 75 75
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Total..................................................... 3,086 3,086
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OPERATING INCOME............................................ 969 969
Other Income - net.......................................... 18 18
Interest Expense............................................ 423 $ 4 1) 427
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INCOME BEFORE INCOME TAXES AND MINORITY INTEREST............ 564 (4) 560
Income Taxes................................................ 194 2) 194
Minority Interest........................................... 76 (72) 3) 4
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INCOME BEFORE DIVIDENDS AND DISTRIBUTIONS ON PREFERRED
SECURITIES................................................. 294 68 362
Dividends and Distributions - Preferred Securities.......... 52 52
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INCOME FROM CONTINUING OPERATIONS........................... $ 242 $ 68 $ 310
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EARNINGS PER SHARE OF COMMON STOCK FROM CONTINUING
OPERATIONS
Basic..................................................... $ 1.63 $ 0.46 $ 2.09
Diluted................................................... $ 1.63 $ 0.46 $ 2.08
AVERAGE COMMON SHARES OUTSTANDING (THOUSANDS)............... 148,758 148,758
See Notes to Unaudited Pro Forma Consolidated Financial Information
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PPL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2001
(Millions of Dollars, except per share data)
PRO FORMA NOTE
AS REPORTED ADJUSTMENTS REF AS ADJUSTED
----------- ----------- ---- -----------
OPERATING REVENUES
Wholesale energy marketing and trading.................... $ 3,357 $ 3,357
Retail electric and gas................................... 1,712 $ 550 4) 2,262
Energy related businesses................................. 656 (51) 5) 605
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Total..................................................... 5,725 499 6,224
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OPERATING EXPENSES
Operation
Fuel.................................................... 602 602
Energy purchases........................................ 1,526 1,526
Other................................................... 755 31 4) 786
Amortization of recoverable transition costs............ 251 251
Maintenance............................................... 269 59 4) 328
Depreciation.............................................. 254 105 4) 359
Taxes, other than income.................................. 155 39 4) 194
Energy related businesses................................. 572 6 4) 578
Other charges
Write-down of international energy projects............. 336 336
Cancellation of generation projects..................... 150 150
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Total..................................................... 4,870 240 5,110
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OPERATING INCOME............................................ 855 259 1,114
Other Income - net.......................................... 12 26 4) 38
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INCOME BEFORE INTEREST EXPENSE.............................. 867 285 1,152
Interest Expense............................................ 387 139 1) 526
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INCOME BEFORE INCOME TAXES AND MINORITY INTEREST............ 480 146 626
Income Taxes................................................ 261 79 2) 340
Minority Interest........................................... (2) (2)
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INCOME BEFORE DIVIDENDS ON PREFERRED SECURITIES............. 221 67 288
Dividends - Preferred Securities............................ 52 7 4) 59
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INCOME FROM CONTINUING OPERATIONS........................... $ 169 $ 60 $ 229
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EARNINGS PER SHARE OF COMMON STOCK FROM CONTINUING
OPERATIONS
Basic..................................................... $ 1.16 $ 0.41 $ 1.57
Diluted................................................... $ 1.15 $ 0.41 $ 1.56
AVERAGE COMMON SHARES OUTSTANDING (THOUSANDS)............... 145,974 145,974
See Notes to Unaudited Pro Forma Consolidated Financial Information
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PPL CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
INCOME STATEMENT ADJUSTMENTS:
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1) The cost of the WPD acquisition, $236 million, was financed through
commercial paper issued by an affiliate of PPL. For purposes of calculating
the pro forma information, an interest rate of 2.0% and 4.3% were assumed
for the nine months ended September 30, 2002 and for the twelve months
ended December 31, 2001, respectively. The twelve-month period also
includes $129 million of interest expense included in WPD's results.
2) Giving effect to the acquisition of Mirant's interest in WPD as of the
beginning of the periods, U.S. income taxes were not provided on
undistributed earnings of WPD as such earnings are deemed permanently
reinvested. The pro forma results reflect the incremental U.S. income taxes
that would have been payable with respect to WPD had a tax return for those
periods been prepared, offset by the U.S. federal income tax benefit on the
interest expense incurred on commercial paper borrowings. The incremental
U.S. income taxes associated with the additional earnings from WPD were
$1 million for the nine months ended September 30, 2002 and $20 million for
the year ended December 31, 2001.
3) The September 30, 2002 Income Statement filed in PPL's Form 10-Q provided
for the consolidation of WPD's results of operations as of January 1, 2002.
The minority interest account represented Mirant's 49% interest in WPD.
This proforma adjustment is made to reverse Mirant's share of WPD earnings,
thereby, reflecting PPL's 100% ownership of WPD.
4) Represents WPD's U.S. GAAP results for the twelve months ended November 30,
2001. An average interbank exchange rate of 1.4799 was assumed for the
period.
5) Includes WPD's U.S. GAAP results for the twelve months ended November 30,
2001, less PPL's equity earnings in WPD of $91 million prior to the
acquisition.
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