Exhibit 99.1
Contacts: For media - Dan McCarthy, 610-774-5758
For financial analysts - Tim Paukovits, 610-774-4124
PPL Corporation
Two North Ninth St.
Allentown, PA 18101
Fax 610-774-5281
PPL REPORTS INCREASED FIRST-QUARTER RESULTS COMPARED TO A YEAR AGO;
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REAFFIRMS EARNINGS FORECASTS FOR 2003
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ALLENTOWN, Pa. (April 29, 2003) - PPL Corporation (NYSE: PPL) today
announced increases in both reported earnings and earnings from core operations
for the first quarter of 2003 compared to a year ago.
Reported earnings for the first quarter of 2003 were $1.43 per share.
A year ago, PPL reported a loss per share of $0.02 due primarily to a non-cash
charge related to changes in accounting rules for goodwill that affected its
Latin American investments. PPL's first-quarter 2003 earnings benefited from an
unusual item of $0.37 per share due to the adoption of a new accounting rule
addressing asset retirement obligations.
Income from core operations, which excludes unusual items, was $1.06
per share in the first quarter of 2003, an increase of about 3 percent over the
$1.03 per share reported for the first quarter of 2002.
"The major ingredient in our continued success remains the effective
operation of power plants in key U.S. markets with favorable long-term contracts
for both the electricity produced and the fuel needed to run the plants," said
William F. Hecht, PPL chairman, president and chief executive officer. "This
managed-risk approach to electricity marketing is buttressed by the
cost-effective performance of our electricity delivery businesses.
"Despite much higher natural gas and oil costs at some of our power
plants, PPL's hedging strategy continued to work as designed during the first
quarter," said Hecht. "As a result of our effective management of price and fuel
risks, our first-quarter performance keeps us on track to achieve long-term,
steady growth and profitability."
Hecht said PPL's strategic balancing of generation, marketing and
delivery was instrumental in its first-quarter success. Although PPL's
electricity sales margins in the Northeastern United States were lower than in
the first quarter of 2002, that shortfall was more than overcome by strong
performance in the company's electricity delivery businesses.
"Excellent results from our highly efficient electricity delivery
businesses in the Northeastern United States and in the United Kingdom allowed
us to improve our core earnings over last year," Hecht said. "In addition, we
recognized increased margins from our operations in Montana, which resulted from
higher average sales prices and an increase in the volume of wholesale energy
sales."
Hecht said PPL's first-quarter earnings also benefited from reduced
interest expense due primarily to the voluntary retirement of higher-cost debt.
These benefits were offset by the dilutive effects of additional shares of
common stock outstanding and lower pension income. In September of 2002, PPL
issued $500 million of common stock in a public offering. During the fourth
quarter of 2002, the company issued an additional $41 million through its
structured equity shelf program.
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PPL also announced that it has increased the amount of its planned
2003 common stock issuance from $300 million to $400 million. So far in 2003,
PPL has issued about $100 million under its structured equity shelf and dividend
reinvestment programs.
Hecht said PPL remains on track to meet previously stated 2003
earnings forecasts of $3.75 to $4.05 per share for reported earnings and $3.45
to $3.75 per share in income from core operations. The company also is
reaffirming its long-term forecast of a 5 percent to 8 percent compound annual
growth rate based on 2002 earnings from core operations of $3.54 per share.
The difference between the 2003 forecast for reported earnings and the
forecast of earnings from core operations reflects two unusual items resulting
from changes in accounting rules. These items are expected to provide a net
benefit to earnings of about $0.30 per share in 2003. The adoption, in the first
quarter, of a new accounting rule addressing asset retirement obligations (a
credit to earnings of $0.37 per share) is expected to be partially offset in the
third quarter by the addition to the company's balance sheet of power plant
financing arrangements that were reflected as operating leases in prior years (a
charge to earnings of about $0.07 per share).
PPL's reported earnings per share for the 12 months ended March 31,
2003, were $2.86, compared to a loss of $0.31 per share for the same period of
2002.
Income from core operations for the 12 months ended March 31, 2003,
was $3.60 per share compared to $3.74 per share for the same period of 2002.
Earnings drivers for the period included the positive operating performance of
PPL's electricity distribution company in the United Kingdom and improved
margins on wholesale energy sales from the company's generating assets in
Montana. These earnings improvements were offset by lower energy margins in the
Northeastern United States, the dilutive effects of additional common shares
outstanding, lower pension income and additional operating and maintenance
expenses on new generating facilities.
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RECONCILIATION OF CORE EARNINGS & REPORTED EARNINGS
Three Months Ended March Twelve Months Ended
March 31, March 31,
2003 2002 2003 2002
Earnings per share - Core Operations $1.06 $1.03 $3.60 $3.74
Unusual Items:
Accounting method change- asset 0.37 0.40
retirement obligations
Goodwill impairment (1.02) (1.03)
CEMAR impairment (.03) (0.60) (1.50)
CEMAR operating losses (0.14)
Writedown of generation equipment (0.17)
Workforce reduction (0.28)
Tax benefit - Teesside 0.05
Cancellation of generation projects (0.60)
WPD impairment (0.80)
Impact of Enron bankruptcy (0.19)
Accounting method change - pensions 0.07
----- ------ ------ -------
Total Unusual Items 0.37 (1.05) (0.74) (4.05)
----- ------ ------ -------
Earnings (loss) per share - Reported $1.43 ($.02) $2.86 ($0.31)
----- ------ ------ -------
PPL's 2003 forecast excludes any positive or negative impact of
exiting its Brazilian investment, CEMAR, and is based on the following key
developments or assumptions: current forward wholesale electricity prices;
common stock issuances of $400 million; the addition to the company's balance
sheet, in the third quarter, of the variable interest entities related to power
plants that currently are reflected as operating leases; and, effective January
2003, the adoption of a new accounting rule addressing asset retirement
obligations.
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 FIRST-QUARTER
FINANCIAL RESULTS AT 9 A.M. (EDT) ON TUESDAY, APRIL 29. 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 719-457-2679.
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PPL CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
CONSOLIDATED BALANCE SHEET
(MILLIONS OF DOLLARS)
MARCH 31, 2003 DEC. 31, 2002(a)
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ASSETS
- ------
Cash $397 $245
Other current assets 1,778 1,615
Investments 645 656
Property, plant and equipment -- net
Electric plant 9,244 9,110
Gas and oil plant 202 201
Other property 253 252
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9,699 9,563
Recoverable transition costs 1,875 1,946
Regulatory and other assets 1,579 1,545
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Total assets $15,973 $15,570
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LIABILITIES AND EQUITY
- ----------------------
Short-term debt (including current portion of
long-term debt) $1,279 $1,309
Other current liabilities 1,373 1,327
Long-term debt (less current portion) 6,116 5,901
Deferred income taxes and investment tax credits 2,393 2,371
Other noncurrent liabilities 1,567 1,659
Minority interest 34 36
Company-obligated mandatorily redeemable securities 661 661
Preferred stock 82 82
Earnings reinvested 1,187 1,013
Other common equity 2,556 2,493
Accumulated other comprehensive loss (439) (446)
Treasury stock (836) (836)
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Total liabilities and equity $15,973 $15,570
======= =======
<FN>
(a) Certain amounts have been reclassified to conform to the current year
presentation.
</FN>
5
CONDENSED CONSOLIDATED INCOME STATEMENT
(MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA)
3 MONTHS ENDED MARCH 31, 12 MONTHS ENDED MARCH 31,
------------------------ -------------------------
2003 2002(a) 2003 2002(a)
---- ------- ----- -------
OPERATING REVENUES
Utility $1,020 $951 $3,745 $3,158
Unregulated retail electric and gas 52 49 185 266
Wholesale energy marketing 298 193 1,141 930
Net energy trading margins (7) 14 (2) 26
Energy-related businesses 124 147 536 666
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1,487 1,354 5,605 5,046
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OPERATING EXPENSES
Fuel and purchased power 499 345 1,654 1,419
Other operation and maintenance 278 274 1,136 1,084
Amortization of recoverable transition costs 71 53 244 233
Depreciation 96 86 377 285
Energy-related businesses 121 129 535 563
Taxes, other than income 65 61 236 175
Other charges
Write-down of international energy projects 0 6 107 342
Workforce reduction 0 0 75 0
Cancellation of generation projects 0 0 44 150
------ ------ ------ ------
1,130 954 4,408 4,251
------ ------ ------ ------
OPERATING INCOME 357 400 1,197 795
Other income - net 10 7 35 18
Interest expense 108 130 537 412
------ ------ ------ ------
INCOME BEFORE INCOME TAXES AND MINORITY
INTEREST 259 277 695 401
Income taxes 69 86 193 221
Minority interest 1 26 53 22
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INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE
IN ACCOUNTING PRINCIPLES 189 165 449 158
Cumulative effect of a change in accounting
principles (net of tax) 63 (150) 63 (140)
------ ------ ------ ------
INCOME BEFORE DIVIDENDS AND DISTRIBUTIONS
ON PREFERRED SECURITIES 252 15 512 18
Dividends and distributions on preferred
securities 13 18 62 64
------ ------ ------ ------
NET INCOME (LOSS) $239 ($3) $450 ($46)
====== ====== ====== ======
EARNINGS PER SHARE OF COMMON STOCK - BASIC
Income from core operations (b) $1.06 $1.03 $3.61 $3.75
Unusual items 0.37 (1.05) (0.74) (4.06)
------ ------ ------ ------
Net Income (loss) $1.43 ($0.02) $2.87 ($0.31)
====== ====== ====== ======
EARNINGS PER SHARE OF COMMON STOCK - DILUTED
Income from core operations (b) $1.06 $1.03 $3.60 $3.74
Unusual items 0.37 (1.05) (0.74) (4.05)
------ ------ ----- ------
Net Income (loss) $1.43 ($0.02) $2.86 ($0.31)
====== ====== ====== ======
AVERAGE SHARES OUTSTANDING (THOUSANDS)
Basic 166,506 146,753 156,679 146,342
Diluted 167,016 147,091 157,225 146,835
<FN>
(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 unusual items,
as described in the text and tables of this news release. Income from core
operations excludes the impact of these unusual items.
</FN>
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KEY INDICATORS
FINANCIAL
12 MONTHS ENDED 12 MONTHS ENDED
MARCH 31, 2003 MARCH 31, 2002
--------------- ---------------
Dividends declared per share $1.465 $1.155
Book value per share (a) $14.71 $12.33
Market price per share (a) $35.61 $39.61
Dividend yield (a) 4.1% 2.9%
Dividend payout ratio (b) 51% (d)
Dividend payout ratio - core operations (b)(c) 41% 31%
Price/earnings ratio (a)(b) 12.5 (d)
Price/earnings ratio - core operations (a)(b)(c) 9.9 10.6
Return on average common equity 20.93% -2.17%
Return on average common equity - core
operations (c) 20.91% 24.34%
<FN>
(a) End of period.
(b) Based on diluted earnings per share.
(c) Calculated using income from core operations, which excludes the impact of
unusual 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
March 31, 2002.
</FN>
OPERATING - DOMESTIC ELECTRICITY SALES
3 MONTHS ENDED MARCH 31, 12 MONTHS ENDED MARCH 31,
------------------------ -------------------------
(millions of kwh) PERCENT PERCENT
2003 2002 CHANGE 2003 2002 CHANGE
---- ---- ------ ---- ---- ------
Retail
Delivered (a) 10,002 9,107 9.8% 36,003 33,869 6.3%
Supplied 10,256 9,632 6.5% 37,445 36,508 2.6%
Wholesale
East 7,031 4,619 52.2% 27,328 18,500 47.7%
West
NorthWestern /
Montana Power (b) 827 1,366 (39.5%) 3,820 4,885 (21.8%)
Other 2,189 1,664 31.6% 8,420 4,756 77.0%
<FN>
(a) Electricity delivered to retail customers represents the kwh delivered to
customers within PPL Electric Utilities Corp.'s 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.
</FN>
Income from core operations excludes the impact of unusual 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 GAAP. PPL believes that income from core operations, although a non-GAAP
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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.
Certain statements contained in this news release, including statements with
respect to future earnings, energy prices, securities offerings, accounting
treatment, 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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