Current Report
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): February 5,
2010
|
Commission
File
Number
|
Registrant;
State of Incorporation;
Address and Telephone
Number
|
IRS
Employer
Identification
No.
|
|
1-11459
|
PPL
Corporation
(Exact
name of Registrant as specified in its charter)
(Pennsylvania)
Two
North Ninth Street
Allentown,
PA 18101-1179
(610)
774-5151
|
23-2758192
|
|
1-32944
|
PPL
Energy Supply, LLC
(Exact
name of Registrant as specified in its charter)
(Delaware)
Two
North Ninth Street
Allentown,
PA 18101-1179
(610)
774-5151
|
23-3074920
|
|
1-905
|
PPL
Electric Utilities Corporation
(Exact
name of Registrant as specified in its charter)
(Pennsylvania)
Two
North Ninth Street
Allentown,
PA 18101-1179
(610)
774-5151
|
23-0959590
|
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
|
[ ]
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
|
[ ]
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
|
[ ]
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
|
|
[ ]
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
Section
2 - Financial Information
Item
2.02 Results of Operations and Financial Condition
On
February 5, 2010, PPL Corporation (“PPL”) issued a press release announcing its
financial results for the year ended December 31, 2009, and other business
matters. A copy of the press release is furnished as Exhibit
99.1
Section
7 - Regulation FD
Item
7.01 Regulation FD Disclosure
On
February 5, 2001, at 9:00 a.m. (Eastern Time), members of PPL’s senior
management will hold a teleconference and webcast with financial analysts to
discuss PPL’s financial results for the year ended December 31, 2009, and other
business matters. A copy of the slides to be used during the webcast
is furnished as Exhibit 99.2. The event will be available live, in
audio format, along with the slides, on PPL’s Internet Web
site: www.pplweb.com. The webcast will be available for
replay on PPL’s Web site for 30 days.
Section
9 - Financial Statements and Exhibits
Item
9.01 Financial Statements and Exhibits
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrants have
duly caused this report to be signed on their behalf by the undersigned hereunto
duly authorized.
|
PPL
CORPORATION
|
|||
|
By:
|
/s/
J. Matt Simmons, Jr.
|
||
|
J.
Matt Simmons, Jr.
Vice
President and Controller
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|||
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PPL
ENERGY SUPPLY, LLC
|
|||
|
By:
|
/s/
J. Matt Simmons, Jr.
|
||
|
J.
Matt Simmons, Jr.
Vice
President and Controller
|
|||
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PPL
ELECTRIC UTILITIES CORPORATION
|
|||
|
By:
|
/s/
J. Matt Simmons, Jr.
|
||
|
J.
Matt Simmons, Jr.
Vice
President and Controller
|
|||
Dated: February
5, 2010
t
99.1
Exhibit
99.1
|
Contacts:
|
For
news media – George Biechler, 610-774-5997
|
|
For
financial analysts – Joseph P. Bergstein,
610-774-5609
|
PPL Corporation reports
strong fourth-quarter results
and exceeds 2009 earnings
forecasts
|
·
|
Company
announces 2009 reported earnings of $1.08 per share and earnings from
ongoing operations of $1.95 per
share
|
|
·
|
2010
earnings forecast reaffirmed
|
ALLENTOWN,
Pa. (Feb. 5, 2010
) ―
Closing the year with a strong fourth quarter, PPL Corporation (NYSE:
PPL) on Friday (2/5) announced full-year earnings for 2009 that tracked well
ahead of the company’s reported and ongoing earnings forecasts.
PPL’s
reported earnings for 2009 were $1.08 per share, compared with $2.47 per share a
year ago. Adjusting for special items, PPL’s earnings from ongoing operations
for 2009 were $1.95 per share, compared with $2.02 per share for
2008.
For the
fourth quarter of 2009, PPL announced reported earnings of $0.40 per share,
compared with $0.74 per share a year ago. Adjusting for special items, PPL’s
earnings from ongoing operations for the fourth quarter of 2009 were $0.52 per
share, compared with $0.46 per share a year ago.
“Our
performance this past year speaks volumes about the dedication of our people,
the quality of our assets and our overall business model,” said James H. Miller,
PPL’s chairman, president and chief executive officer. “Higher wholesale energy
margins, solid operating performance and early cost-reduction initiatives
enabled us to deliver very sound results in 2009
―
outperforming the
challenging business plan that we put in place.”
Miller
highlighted some significant 2009 accomplishments: generation records at certain
power plants in Pennsylvania and Montana; successful transition to market-based
generation prices in Pennsylvania for 2010 and beyond; 20-year extensions of the
operating licenses for both units at PPL’s Susquehanna nuclear plant;
recognition of PPL’s strong operating performance by the U.K. regulator in a
rate review for the next five-year period; decisions to move ahead with major
hydroelectric expansions in Pennsylvania and Montana; and the on-time and
under-budget installation of major emission-control equipment at one of PPL’s
large coal-fired power plants in Pennsylvania.
PPL also
reaffirmed its 2010 earnings forecast of $3.10 to $3.50 per share. “We feel
confident that the hedges put in place under our multiyear hedging program will
provide significant value in 2010, allowing us to continue to forecast very
strong financial performance for the year,” Miller said.
2009
Earnings Details
PPL’s
2009 reported earnings included total net special item charges of $0.87 per
share, compared with total net special item credits of $0.45 per share in 2008.
The major special item charge in 2009 was $0.59 per share for energy-related
economic activity, primarily resulting from the reversal in 2009 of hedge
ineffectiveness gains recorded in 2008.
Adjusting
for special items, PPL’s 2009 earnings from ongoing operations declined by
approximately 3 percent, compared with 2008 results, due primarily to less
favorable currency exchange rates in its international delivery business segment
and lower margins in its Pennsylvania delivery segment. Partially offsetting
these earnings declines were higher wholesale energy margins in PPL’s supply
business segment in both the eastern and western U.S.
Reported
earnings are calculated in accordance with generally accepted accounting
principles (GAAP). Earnings from ongoing operations is a non-GAAP financial
measure that is adjusted for special items. Special items include the impact of
energy-related economic activity (principally unrealized impacts of economic
activity and the ineffective portion of qualifying cash flow hedges), as well as
other impacts fully detailed at the end of this news release.
(Dollars
in millions, except for per share amounts)
(See
the tables at the end of this news release for details as to all special items
and the reconciliation of earnings from ongoing operations to reported
earnings.)
Fourth-quarter
2009 Earnings Results
For the
fourth quarter of 2009, PPL announced reported earnings of $0.40 per share, a 46
percent decline compared with a year ago. Reported earnings for the current
quarter included net special item charges totaling $0.12 per share, compared
with net special item credits totaling $0.28 per share a year ago.
Adjusting
for special items, PPL’s fourth-quarter 2009 earnings from ongoing operations
were $0.52 per share, a 13 percent increase over a year ago. This quarterly
increase was primarily due to higher wholesale energy margins in the supply
business segment in both the eastern and western U.S. and higher electricity
delivery margins and lower U.S. income taxes in the international delivery
business segment.
(Dollars
in millions, except for per share amounts)
(See
the tables at the end of this news release for details as to all special items
and the reconciliation of earnings from ongoing operations to reported
earnings.)
Annual
and Fourth-quarter Earnings by Business Segment
The
following chart shows PPL’s earnings by business segment for the year and for
the fourth quarter of 2009 compared with the same periods of 2008.
|
Year
|
4
th
Quarter
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
(per
share)
|
(per
share)
|
|||||||||||||||
|
Earnings
from Ongoing Operations
|
||||||||||||||||
|
Supply
|
$
|
0.88
|
$
|
0.81
|
$
|
0.25
|
$
|
0.21
|
||||||||
|
Pennsylvania
Delivery
|
0.35
|
0.44
|
0.09
|
0.10
|
||||||||||||
|
International
Delivery
|
0.72
|
0.77
|
0.18
|
0.15
|
||||||||||||
|
Total
|
$
|
1.95
|
$
|
2.02
|
$
|
0.52
|
$
|
0.46
|
||||||||
|
Special
Items
|
||||||||||||||||
|
Supply
|
$
|
(0.77
|
)
|
$
|
0.46
|
$
|
(0.11
|
)
|
$
|
0.28
|
||||||
|
Pennsylvania
Delivery
|
(0.02
|
)
|
(0.01
|
)
|
(0.01
|
)
|
-
|
|||||||||
|
International
Delivery
|
(0.08
|
)
|
-
|
-
|
-
|
|||||||||||
|
Total
|
$
|
(0.87
|
)
|
$
|
0.45
|
$
|
(0.12
|
)
|
$
|
0.28
|
||||||
|
Reported
Earnings
|
||||||||||||||||
|
Supply
|
$
|
0.11
|
$
|
1.27
|
$
|
0.14
|
$
|
0.49
|
||||||||
|
Pennsylvania
Delivery
|
0.33
|
0.43
|
0.08
|
0.10
|
||||||||||||
|
International
Delivery
|
0.64
|
0.77
|
0.18
|
0.15
|
||||||||||||
|
Total
|
$
|
1.08
|
$
|
2.47
|
$
|
0.40
|
$
|
0.74
|
||||||||
(
For more details and a breakout of
special items by segment, see the reconciliation tables at the end of this news
release
.)
Key
Factors Impacting Business Segment Earnings from Ongoing Operations
Supply
Segment
PPL’s
supply business segment
primarily consists of
the domestic energy generation and marketing and trading operations of PPL
Energy Supply.
Earnings
from ongoing operations for PPL’s supply business segment in 2009 increased by
$0.07 per share compared with 2008. This increase was primarily due to
significant trading losses incurred in 2008, which were caused by the dramatic
decline in wholesale energy prices and lack of market liquidity that accompanied
the severe contraction of global financial markets.
Other
positive drivers of energy margins for the supply business segment in 2009
included higher value from PPL’s generation portfolio, partially offset by lower
net margins from load-following agreements due to lower customer demand, higher
operation and maintenance expenses, and higher depreciation.
Earnings
from ongoing operations for PPL’s supply business segment increased by $0.04 per
share in the fourth quarter of 2009 compared with a year ago. This increase was
driven primarily by the same factors that affected this business segment’s
annual results.
Pennsylvania
Delivery Segment
PPL’s
Pennsylvania delivery business segment includes the regulated electric delivery
operations of PPL Electric Utilities and included the delivery operations of
PPL’s natural gas and propane businesses prior to their divestiture in October
2008.
Earnings
from ongoing operations for PPL’s Pennsylvania delivery business segment in 2009
declined by $0.09 per share compared with 2008. This decline was primarily the
result of lower delivery revenue due to milder weather and the economy, higher
financing costs, and the divestiture of PPL’s natural gas and propane businesses
in 2008.
Earnings
from ongoing operations for PPL’s Pennsylvania delivery business segment
declined in the fourth quarter of 2009 by $0.01 per share compared with a year
ago. This decline was primarily due to higher operation and maintenance
expenses.
International
Delivery Segment
PPL’s
international delivery business segment primarily includes the regulated
electricity delivery operations of Western Power Distribution in the
U.K.
Earnings
from ongoing operations for PPL’s international delivery business segment in
2009 declined by $0.05 per share compared with 2008. This decline was primarily
the net result of less favorable currency exchange rates, which was partially
offset by lower financing costs, lower U.K. income taxes and higher electricity
delivery margins.
Earnings
from ongoing operations for PPL’s international delivery business segment
increased in the fourth quarter of 2009 by $0.03 per share compared with a year
ago. This increase was primarily the net result of higher electricity delivery
margins and lower U.S. income taxes, partially offset by a less favorable
currency exchange rate.
2010
Earnings Forecast by Business Segment
|
Earnings
(per
share)
|
2010
(forecast)
|
2009
(actual)
|
||
|
Midpoint
|
Ongoing
operations
|
|||
|
Supply
|
$2.55
|
$0.88
|
||
|
Pennsylvania
Delivery
|
0.27
|
0.35
|
||
|
International
Delivery
|
0.48
|
0.72
|
||
|
Total
|
$3.30
|
$1.95
|
PPL is
reaffirming its 2010 earnings forecast of $3.10 to $3.50 per share. This
forecast reflects the following key expectations by business
segment.
Supply
Segment
PPL
projects higher earnings from its supply business segment in 2010 compared with
2009 due to strong growth in energy margins. The forecast for strong growth in
energy margins is based on hedged power and fuel prices as well as established
capacity prices in the PJM Interconnection. These positive factors are expected
to be partially offset by higher depreciation, higher financing costs, and
higher operation and maintenance expenses.
Pennsylvania
Delivery Segment
PPL
projects lower earnings from its Pennsylvania delivery business segment in 2010
compared with 2009 as a net result of lower electricity distribution margins,
primarily due to continued slow economic growth and weak customer demand; higher
operation and maintenance expenses; and lower financing costs.
International
Delivery Segment
PPL
projects lower earnings from its international delivery business segment in 2010
compared with 2009 as a result of higher income taxes, higher operation and
maintenance expenses, and higher financing costs. These negative factors are
expected to be partially offset by higher electricity delivery margins and a
more favorable currency exchange rate.
PPL
Corporation, headquartered in Allentown, Pa., owns or controls nearly 12,000
megawatts of generating capacity in the United States, sells energy in key U.S.
markets and delivers electricity to about 4 million customers in Pennsylvania
and the United Kingdom. More information is available at
www.pplweb.com
.
###
(
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.
)
Conference
Call and Webcast
PPL
invites interested parties to listen to a live Internet webcast of management’s
teleconference with financial analysts about annual and fourth-quarter 2009
financial results at 9 a.m. EST Friday, Feb. 5. The meeting is available online
live, in audio format, along with slides of the presentation, on PPL’s 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 702-696-4769 (ID# 52833844).
“Earnings
from ongoing operations” should not be considered as an alternative to reported
earnings, or net income attributable to PPL, which is an indicator of operating
performance determined in accordance with generally accepted accounting
principles (GAAP). PPL believes that “earnings from ongoing operations,”
although a non-GAAP financial measure, is also useful and meaningful to
investors because it provides them with management’s view of PPL’s fundamental
earnings performance as another criterion in making their investment decisions.
PPL’s management also uses “earnings from ongoing operations” in measuring
certain corporate performance goals. Other companies may use different measures
to present financial performance.
“Earnings from ongoing operations” is
adjusted for the impact of special items.
Special items
include:
|
·
|
The
impact of energy-related economic activity (as discussed
below).
|
|
·
|
Foreign
currency-related economic hedges.
|
|
·
|
The
impact of sales of assets not in the ordinary course of
business.
|
|
·
|
Impairment
charges (including impairments of securities in the company’s nuclear
decommissioning trust).
|
|
·
|
Workforce
reduction and other restructuring
impacts.
|
|
·
|
Other
charges or credits that are, in management’s view, not reflective of the
company’s ongoing operations.
|
Energy-related
economic activity includes the changes in fair value of positions used to hedge
a portion of the economic value of PPL’s generation assets, load-following and
retail activities. This economic value is subject to changes in fair value due
to market price volatility of the input and output commodities (e.g., fuel and
power). Also included in this special item are the ineffective portion of
qualifying cash flow hedges and the premium amortization associated with options
classified as economic activity. These items are included in ongoing earnings
over the delivery period that was hedged. Management believes that adjusting for
such amounts provides a better matching of earnings from ongoing operations to
the actual amounts settled for PPL’s underlying hedged assets.
Statements contained in this news
release, including statements with respect to future earnings, energy prices,
margins and sales, growth, revenues, expenses, marketing performance, hedging,
regulation, exchange rates, corporate strategy, and generating capacity and
performance, 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 are subject to 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 conditions affecting
customer energy usage and operating costs; competition in 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 and the related costs of compliance, including environmental
capital expenditures and emission allowance and other expenses; system
conditions and operating costs; development of new projects, markets and
technologies; performance of new ventures; asset acquisitions and dispositions;
any impact of hurricanes or other severe weather on our business, including any
impact on fuel prices; receipt of necessary government permits, approvals, rate
relief and regulatory cost recovery; capital market conditions and decisions
regarding capital structure; the impact of state, federal or foreign
investigations applicable to PPL Corporation and its subsidiaries; the outcome
of litigation against PPL Corporation and its subsidiaries; stock price
performance; the market prices of equity securities and the impact on pension
income and resultant cash funding requirements for defined benefit pension
plans; the securities and credit ratings of PPL Corporation and its
subsidiaries; political, regulatory or economic conditions in states, regions or
countries where PPL Corporation or its subsidiaries conduct business, including
any potential effects of threatened or actual terrorism or war or other
hostilities; foreign exchange rates; new state, federal or foreign legislation,
including new tax legislation; and the commitments and liabilities of PPL
Corporation and its subsidiaries. Any such forward-looking statements should be
considered in light of such important factors and in conjunction with PPL
Corporation’s Form 10-K and other reports on file with the Securities and
Exchange Commission.
# # #
Note
to Editors: Visit PPL’s media Web site at www.pplnewsroom.com for additional
news and background about PPL Corporation.
|
PPL
CORPORATION AND SUBSIDIARIES
|
||||||||||||||||
|
Condensed
Consolidated Income Statement (Unaudited)
|
||||||||||||||||
|
(Millions
of Dollars, Except per Share Data)
|
||||||||||||||||
|
3
Months Ended December 31,
|
Year
Ended December 31,
|
|||||||||||||||
|
2009
(a)
|
2008
(a)(b)
|
2009
(a)
|
2008
(a)(b)
|
|||||||||||||
|
|
||||||||||||||||
|
Operating
Revenues
|
||||||||||||||||
|
Utility
|
$ | 1,001 | $ | 1,006 | $ | 3,902 | $ | 4,114 | ||||||||
|
Unregulated
retail electric and gas
|
44 | 41 | 152 | 151 | ||||||||||||
|
Wholesale
energy marketing (c)
|
||||||||||||||||
|
Realized
|
727 | 678 | 3,291 | 2,288 | ||||||||||||
|
Unrealized
economic activity
|
(162 | ) | 695 | (229 | ) | 1,056 | ||||||||||
|
Net
energy trading margins
|
15 | (39 | ) | 17 | (121 | ) | ||||||||||
|
Energy-related
businesses
|
102 | 125 | 423 | 519 | ||||||||||||
|
Total
Operating Revenues
|
1,727 | 2,506 | 7,556 | 8,007 | ||||||||||||
|
Operating
Expenses
|
||||||||||||||||
|
Operation
|
||||||||||||||||
|
Fuel
|
223 | 350 | 931 | 1,084 | ||||||||||||
|
Energy
purchases (c)
|
||||||||||||||||
|
Realized
|
587 | 508 | 2,636 | 1,634 | ||||||||||||
|
Unrealized
economic activity
|
(100 | ) | 396 | 155 | 553 | |||||||||||
|
Other
operation and maintenance
|
381 | 328 | 1,424 | 1,423 | ||||||||||||
|
Amortization
of recoverable transition costs
|
77 | 76 | 304 | 293 | ||||||||||||
|
Depreciation
|
126 | 113 | 469 | 458 | ||||||||||||
|
Taxes,
other than income
|
71 | 64 | 280 | 288 | ||||||||||||
|
Energy-related
businesses
|
98 | 120 | 396 | 481 | ||||||||||||
|
Total
Operating Expenses
|
1,463 | 1,955 | 6,595 | 6,214 | ||||||||||||
|
Operating
Income
|
264 | 551 | 961 | 1,793 | ||||||||||||
|
Other
Income - net
|
11 | 23 | 49 | 55 | ||||||||||||
|
Other-Than-Temporary
Impairments
|
20 | 18 | 36 | |||||||||||||
|
Interest
Expense
|
102 | 120 | 396 | 455 | ||||||||||||
|
Income
from Continuing Operations Before Income Taxes
|
173 | 434 | 596 | 1,357 | ||||||||||||
|
Income
Taxes
|
29 | 153 | 130 | 430 | ||||||||||||
|
Income
from Continuing Operations After Income Taxes
|
144 | 281 | 466 | 927 | ||||||||||||
|
Income
(Loss) from Discontinued Operations (net of income taxes)
|
13 | 1 | (40 | ) | 23 | |||||||||||
|
Net
Income
|
157 | 282 | 426 | 950 | ||||||||||||
|
Net
Income Attributable to Noncontrolling Interests
|
4 | 5 | 19 | 20 | ||||||||||||
|
Net
Income Attributable to PPL Corporation
|
$ | 153 | $ | 277 | $ | 407 | $ | 930 | ||||||||
|
Amounts
Attributable to PPL Corporation:
|
||||||||||||||||
|
Income
from Continuing Operations After Income Taxes
|
$ | 140 | $ | 276 | $ | 447 | $ | 907 | ||||||||
|
Income
(Loss) from Discontinued Operations (net of income taxes)
|
13 | 1 | (40 | ) | 23 | |||||||||||
|
Net
Income
|
$ | 153 | $ | 277 | $ | 407 | $ | 930 | ||||||||
|
Earnings
Per Share of Common Stock - Basic
|
||||||||||||||||
|
Earnings
from Ongoing Operations
|
$ | 0.52 | $ | 0.46 | $ | 1.95 | $ | 2.03 | ||||||||
|
Special
Items
|
(0.12 | ) | 0.28 | (0.87 | ) | 0.45 | ||||||||||
|
Net
Income Available to PPL Corporation Common Shareowners
|
$ | 0.40 | $ | 0.74 | $ | 1.08 | $ | 2.48 | ||||||||
|
Earnings
Per Share of Common Stock - Diluted
|
||||||||||||||||
|
Earnings
from Ongoing Operations
|
$ | 0.52 | $ | 0.46 | $ | 1.95 | $ | 2.02 | ||||||||
|
Special
Items
|
(0.12 | ) | 0.28 | (0.87 | ) | 0.45 | ||||||||||
|
Net
Income Available to PPL Corporation Common Shareowners
|
$ | 0.40 | $ | 0.74 | $ | 1.08 | $ | 2.47 | ||||||||
|
Weighted-Average
Shares of Common Stock Outstanding (thousands)
|
||||||||||||||||
|
Basic
|
376,910 | 374,388 | 376,082 | 373,626 | ||||||||||||
|
Diluted
|
377,252 | 374,720 | 376,406 | 374,901 | ||||||||||||
|
(a) Earnings in the 2009 and 2008 periods were
impacted by several special items, as described in the text and tables of
this news release. Earnings from ongoing operations excludes the
impact of these special items.
|
||||||||||||||||
| (b) Certain amounts from 2008 have been reclassified to conform to the current year presentation. | ||||||||||||||||
| (c) Includes energy-related contracts to hedge future cash flows that are not eligible for hedge accounting, or where hedge accounting is not elected. |
|
PPL
CORPORATION AND SUBSIDIARIES
|
||||||||
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
||||||||
|
(Millions
of Dollars)
|
||||||||
|
Year
Ended
|
||||||||
|
December
31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Cash
Flows from Operating Activities
|
||||||||
|
Net
Income
|
$ | 426 | $ | 950 | ||||
|
Adjustments
to reconcile net income to net cash provided
|
||||||||
|
by
operating activities:
|
||||||||
|
Pre-tax
gain from the sale of Maine hydroelectric generation
business
|
(38 | ) | ||||||
|
Depreciation
|
471 | 461 | ||||||
|
Amortization
of recoverable transition costs and other
|
389 | 383 | ||||||
|
Defined
benefits
|
(115 | ) | (100 | ) | ||||
|
Impairment
of assets
|
127 | 105 | ||||||
|
Gain
on the sale of emission allowances
|
(2 | ) | (6 | ) | ||||
|
Deferred
income taxes and investment tax credits
|
104 | 43 | ||||||
|
Unrealized
(gains) losses on derivatives, and other hedging
activities
|
329 | (279 | ) | |||||
|
Changes
in current assets and current liabilities
|
106 | (9 | ) | |||||
|
Other
operating activities
|
55 | 41 | ||||||
|
Net
cash provided by operating activities
|
1,852 | 1,589 | ||||||
|
Cash
Flows from Investing Activities
|
||||||||
|
Expenditures
for property, plant and equipment
|
(1,225 | ) | (1,418 | ) | ||||
|
Proceeds
from the sale of Maine hydroelectric generation business
|
81 | |||||||
|
Proceeds
from the sale of gas and propane businesses
|
303 | |||||||
|
Net
expenditures for intangible assets
|
(72 | ) | (313 | ) | ||||
|
Net
proceeds from (purchases of) other investments
|
154 | (95 | ) | |||||
|
Net
(increase) decrease in restricted cash and cash
equivalents
|
218 | (71 | ) | |||||
|
Other
investing activities
|
(36 | ) | (33 | ) | ||||
|
Net
cash used in investing activities
|
(880 | ) | (1,627 | ) | ||||
|
Cash
Flows from Financing Activities
|
||||||||
|
Net
issuances (retirements) of long-term debt
|
(718 | ) | 667 | |||||
|
Repurchase
of common stock
|
(38 | ) | ||||||
|
Payment
of common stock dividends
|
(517 | ) | (491 | ) | ||||
|
Net
increase (decrease) in short-term debt
|
(52 | ) | 588 | |||||
|
Other
financing activities
|
16 | (5 | ) | |||||
|
Net
cash provided by (used in) financing activities
|
(1,271 | ) | 721 | |||||
|
Effect
of Exchange Rates on Cash and Cash Equivalents
|
(13 | ) | ||||||
|
Net
Increase (Decrease) in Cash and Cash Equivalents
|
(299 | ) | 670 | |||||
|
Cash
and cash equivalents at beginning of period
|
1,100 | 430 | ||||||
|
Cash
and cash equivalents at end of period
|
$ | 801 | $ | 1,100 | ||||
|
Key
Indicators
|
||||||||
|
Year
Ended
|
||||||||
|
December
31,
|
||||||||
|
Financial
|
2009
|
2008
|
||||||
|
Dividends
declared per share
|
$ | 1.38 | $ | 1.34 | ||||
|
Book
value per share (a)
|
$ | 14.57 | $ | 13.55 | ||||
|
Market
price per share (a)
|
$ | 32.31 | $ | 30.69 | ||||
|
Dividend
yield (a)
|
4.3 | % | 4.4 | % | ||||
|
Dividend
payout ratio (b)
|
128 | % | 54 | % | ||||
|
Dividend
payout ratio - earnings from ongoing operations (b)(c)
|
71 | % | 66 | % | ||||
|
Price/earnings
ratio (a)(b)
|
29.9 | 12.4 | ||||||
|
Price/earnings
ratio - earnings from ongoing operations (a)(b)(c)
|
16.6 | 15.2 | ||||||
|
Return
on average common equity
|
7.48 | % | 16.88 | % | ||||
|
Return
on average common equity - earnings from ongoing operations
(c)
|
13.61 | % | 14.46 | % | ||||
|
(a)
End of period.
|
|
(b)
Based on diluted earnings per share.
|
|
(c)
Calculated using earnings from ongoing operations, which excludes the
impact of special items, as described in the text
|
|
and
tables of this news release.
|
|
Operating
- Domestic & International Electricity Sales
|
||||||||||||||||||||||||
|
3
Months Ended December 31,
|
Year
Ended December 31,
|
|||||||||||||||||||||||
|
Percent
|
Percent
|
|||||||||||||||||||||||
|
(millions
of kwh)
|
2009
|
2008
|
Change
|
2009
|
2008
|
Change
|
||||||||||||||||||
|
Domestic
Retail
|
||||||||||||||||||||||||
|
Delivered
(a)
|
8,630 | 9,032 | (4.5 | %) | 36,717 | 38,058 | (3.5 | %) | ||||||||||||||||
|
Supplied
|
9,164 | 9,631 | (4.8 | %) | 38,912 | 40,374 | (3.6 | %) | ||||||||||||||||
|
International
Delivered
|
||||||||||||||||||||||||
|
United
Kingdom
|
6,552 | 6,835 | (4.1 | %) | 26,358 | 27,724 | (4.9 | %) | ||||||||||||||||
|
Domestic
Wholesale
|
||||||||||||||||||||||||
|
East
|
7,076 | 7,367 | (4.0 | %) | 27,522 | 28,614 | (3.8 | %) | ||||||||||||||||
|
West
|
||||||||||||||||||||||||
|
NorthWestern
Energy
|
571 | 622 | (8.2 | %) | 2,270 | 2,491 | (8.9 | %) | ||||||||||||||||
|
Other
West
|
2,414 | 2,848 | (15.2 | %) | 9,196 | 11,607 | (20.8 | %) | ||||||||||||||||
(a)
Electricity delivered to retail customers represents the kwh delivered to
customers within PPL Electric Utilities Corporation's service
territory.
|
Reconciliation
of Business Segment Earnings from Ongoing Operations to Reported Earnings
(Diluted)
|
|||||||||
|
4th
Quarter 2009
|
(millions
of dollars)
|
(per
share)
|
||||||||||||||||||||||||||||||
|
PA
|
Int'l
|
PA
|
Int'l
|
|||||||||||||||||||||||||||||
|
Supply
|
Delivery
|
Delivery
|
Total
|
Supply
|
Delivery
|
Delivery
|
Total
|
|||||||||||||||||||||||||
|
Earnings
from Ongoing Operations
|
$ | 94 | $ | 34 | $ | 70 | $ | 198 | $ | 0.25 | $ | 0.09 | $ | 0.18 | $ | 0.52 | ||||||||||||||||
|
Special
Items
|
||||||||||||||||||||||||||||||||
|
Energy-related
economic
activity
|
(57 | ) | (57 | ) | (0.15 | ) | (0.15 | ) | ||||||||||||||||||||||||
|
Foreign
currency-related
economic hedges -
unrealized impacts
|
3 | 3 | 0.01 | 0.01 | ||||||||||||||||||||||||||||
|
Sales
of assets
|
19 | (3 | ) | 16 | 0.05 | (0.01 | ) | 0.04 | ||||||||||||||||||||||||
|
Impairments
|
(5 | ) | (5 | ) | (0.01 | ) | (0.01 | ) | ||||||||||||||||||||||||
|
Other:
|
||||||||||||||||||||||||||||||||
|
Change
in tax accounting
method related to repairs
|
4 | (3 | ) | 1 | 0.01 | (0.01 | ) | |||||||||||||||||||||||||
|
Montana
streambed litigation
|
(3 | ) | (3 | ) | (0.01 | ) | (0.01 | ) | ||||||||||||||||||||||||
|
Total
Special Items
|
(42 | ) | (3 | ) | (45 | ) | (0.11 | ) | (0.01 | ) | (0.12 | ) | ||||||||||||||||||||
|
Reported
Earnings
|
$ | 52 | $ | 31 | $ | 70 | $ | 153 | $ | 0.14 | $ | 0.08 | $ | 0.18 | $ | 0.40 | ||||||||||||||||
|
Year-to-Date
December 31, 2009
|
(millions
of dollars)
|
(per
share)
|
||||||||||||||||||||||||||||||
|
PA
|
Int'l
|
PA
|
Int'l
|
|||||||||||||||||||||||||||||
|
Supply
|
Delivery
|
Delivery
|
Total
|
Supply
|
Delivery
|
Delivery
|
Total
|
|||||||||||||||||||||||||
|
Earnings
from Ongoing Operations
|
$ | 333 | $ | 133 | $ | 272 | $ | 738 | $ | 0.88 | $ | 0.35 | $ | 0.72 | $ | 1.95 | ||||||||||||||||
|
Special
Items
|
||||||||||||||||||||||||||||||||
|
Energy-related
economic
activity
|
(225 | ) | (225 | ) | (0.59 | ) | (0.59 | ) | ||||||||||||||||||||||||
|
Foreign
currency-related
economic hedges -
unrealized impacts
|
1 | 1 | ||||||||||||||||||||||||||||||
|
Sales
of assets
|
(15 | ) | (27 | ) | (42 | ) | (0.04 | ) | (0.07 | ) | (0.11 | ) | ||||||||||||||||||||
|
Impairments
|
(23 | ) | (1 | ) | (1 | ) | (25 | ) | (0.06 | ) | (0.06 | ) | ||||||||||||||||||||
|
Workforce
reduction
|
(6 | ) | (5 | ) | (2 | ) | (13 | ) | (0.01 | ) | (0.01 | ) | (0.01 | ) | (0.03 | ) | ||||||||||||||||
|
Other:
|
||||||||||||||||||||||||||||||||
|
Change
in tax accounting
method related to repairs
|
(21 | ) | (3 | ) | (24 | ) | (0.06 | ) | (0.01 | ) | (0.07 | ) | ||||||||||||||||||||
|
Montana
streambed litigation
|
(3 | ) | (3 | ) | (0.01 | ) | (0.01 | ) | ||||||||||||||||||||||||
|
Total
Special Items
|
(293 | ) | (9 | ) | (29 | ) | (331 | ) | (0.77 | ) | (0.02 | ) | (0.08 | ) | (0.87 | ) | ||||||||||||||||
|
Reported
Earnings
|
$ | 40 | $ | 124 | $ | 243 | $ | 407 | $ | 0.11 | $ | 0.33 | $ | 0.64 | $ | 1.08 | ||||||||||||||||
|
Reconciliation
of Business Segment Earnings from Ongoing Operations to Reported Earnings
(Diluted)
|
|
4th
Quarter 2008
|
(millions
of dollars)
|
(per
share)
|
||||||||||||||||||||||||||||||
|
PA
|
Int'l
|
PA
|
Int'l
|
|||||||||||||||||||||||||||||
|
Supply
|
Delivery
|
Delivery
|
Total
|
Supply
|
Delivery
|
Delivery
|
Total
|
|||||||||||||||||||||||||
|
Earnings
from Ongoing Operations
|
$ | 78 | $ | 39 | $ | 58 | $ | 175 | $ | 0.21 | $ | 0.10 | $ | 0.15 | $ | 0.46 | ||||||||||||||||
|
Special
Items
|
||||||||||||||||||||||||||||||||
|
Energy-related
economic
activity
|
130 | 130 | 0.35 | 0.35 | ||||||||||||||||||||||||||||
|
Sales
of assets
|
(1 | ) | (1 | ) | ||||||||||||||||||||||||||||
|
Impairments
|
(25 | ) | (25 | ) | (0.07 | ) | (0.07 | ) | ||||||||||||||||||||||||
|
Workforce
reduction
|
(1 | ) | (1 | ) | (2 | ) | ||||||||||||||||||||||||||
|
Total
Special Items
|
104 | (1 | ) | (1 | ) | 102 | 0.28 | 0.28 | ||||||||||||||||||||||||
|
Reported
Earnings
|
$ | 182 | $ | 38 | $ | 57 | $ | 277 | $ | 0.49 | $ | 0.10 | $ | 0.15 | $ | 0.74 | ||||||||||||||||
|
Year-to-Date
December 31, 2008
|
(millions
of dollars)
|
(per
share)
|
||||||||||||||||||||||||||||||
|
PA
|
Int'l
|
PA
|
Int'l
|
|||||||||||||||||||||||||||||
|
Supply
|
Delivery
|
Delivery
|
Total
|
Supply
|
Delivery
|
Delivery
|
Total
|
|||||||||||||||||||||||||
|
Earnings
from Ongoing Operations
|
$ | 303 | $ | 167 | $ | 291 | $ | 761 | $ | 0.81 | $ | 0.44 | $ | 0.77 | $ | 2.02 | ||||||||||||||||
|
Special
Items
|
||||||||||||||||||||||||||||||||
|
Energy-related
economic
activity
|
251 | 251 | 0.67 | 0.67 | ||||||||||||||||||||||||||||
|
Sales
of assets
|
(6 | ) | (6 | ) | (0.01 | ) | (0.01 | ) | ||||||||||||||||||||||||
|
Impairments
|
(57 | ) | (57 | ) | (0.16 | ) | (0.16 | ) | ||||||||||||||||||||||||
|
Workforce
reduction
|
(1 | ) | (1 | ) | (2 | ) | ||||||||||||||||||||||||||
|
Other:
|
||||||||||||||||||||||||||||||||
|
Synfuel
tax adjustment
|
(13 | ) | (13 | ) | (0.04 | ) | (0.04 | ) | ||||||||||||||||||||||||
|
Off-site
remediation of ash
basin leak
|
1 | 1 | ||||||||||||||||||||||||||||||
|
Montana
basin seepage
litigation
|
(5 | ) | (5 | ) | (0.01 | ) | (0.01 | ) | ||||||||||||||||||||||||
|
Total
Special Items
|
176 | (6 | ) | (1 | ) | 169 | 0.46 | (0.01 | ) | 0.45 | ||||||||||||||||||||||
|
Reported
Earnings
|
$ | 479 | $ | 161 | $ | 290 | $ | 930 | $ | 1.27 | $ | 0.43 | $ | 0.77 | $ | 2.47 | ||||||||||||||||
Fourth
Quarter Earnings Call
February
5, 2010
Exhibit
99.2
2
Cautionary
Statements and Factors That
May Affect Future Results
May Affect Future Results
Any
statements made in this presentation
about future operating results or other future
events are forward-looking statements under
the Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995.
Actual results may differ materially from such
forward-looking statements. A discussion of
factors that could cause actual results or
events to vary is contained in the Appendix to
this presentation and in the Company’s SEC
filings.
about future operating results or other future
events are forward-looking statements under
the Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995.
Actual results may differ materially from such
forward-looking statements. A discussion of
factors that could cause actual results or
events to vary is contained in the Appendix to
this presentation and in the Company’s SEC
filings.
J.
H. Miller
P.
A. Farr
W.
H. Spence
3
Agenda
•
Fourth
Quarter 2009 Earnings
and 2010 Earnings Forecast and
Outlook
and 2010 Earnings Forecast and
Outlook
•
Segment
Results and Financial
Overview
Overview
•
Operational
Review
•
Q&A
Earnings
Results
Fourth
Quarter
Fourth
Quarter
Reported
Earnings
|
Note: See
Appendix for the reconciliation of earnings from ongoing operations to
reported earnings.
|
Year-to-Date
Reported
Earnings
Year-to-Date
Earnings
from Ongoing Operations
4
Forecast
5
$2.02
$3.50
Per
Share
$1.95
$3.10
Note:
See
Appendix for the reconciliation of earnings from ongoing operations to reported
earnings.
Strong
Expected Earnings Growth
$
0.06
$0.46
$0.52
Total
0.03
0.15
0.18
International
Delivery
(0.01)
0.10
0.09
Pennsylvania
Delivery
$
0.04
$0.21
$0.25
Supply
Change
Q4
2008
Q4
2009
6
|
Note: See
Appendix for the reconciliation of earnings from ongoing operations to
reported earnings.
|
$
(0.07)
$2.02
$1.95
Total
(0.05)
0.77
0.72
International
Delivery
(0.09)
0.44
0.35
Pennsylvania
Delivery
$
0.07
$0.81
$0.88
Supply
Change
2008
2009
Ongoing
Earnings Overview
|
Note: See
Appendix for the reconciliation of earnings from ongoing operations to
reported earnings.
|
7
|
|
2009
|
|
|
2008 EPS -
Ongoing Earnings
|
|
$0.81
|
|
Margins
- East
|
0.19
|
|
|
Margins
- West
|
0.07
|
|
|
O&M
|
(0.11)
|
|
|
Depreciation
|
(0.05)
|
|
|
Income
Taxes & Other
|
(0.03)
|
|
|
Total
|
|
0.07
|
|
2009 EPS -
Ongoing Earnings
|
|
$0.88
|
Supply
Segment
Earnings Drivers
Earnings Drivers
8
|
Note: See
Appendix for the reconciliation of earnings from ongoing operations to
reported earnings.
|
|
|
2009
|
|
|
2008 EPS -
Ongoing Earnings
|
|
$0.44
|
|
Delivery
Margins
|
(0.04)
|
|
|
Financing
Costs
|
(0.04)
|
|
|
Income
Taxes & Other
|
(0.01)
|
|
|
Total
|
|
(0.09)
|
|
2009 EPS -
Ongoing Earnings
|
|
$0.35
|
Pennsylvania
Delivery Segment
Earnings Drivers
Earnings Drivers
9
|
Note: See
Appendix for the reconciliation of earnings from ongoing operations to
reported earnings.
|
|
|
2009
|
|
|
2008 EPS -
Ongoing Earnings
|
|
$0.77
|
|
Delivery
Margins
|
0.05
|
|
|
O&M
|
0.03
|
|
|
Financing
Costs
|
0.07
|
|
|
Effect
of Exchange Rates
|
(0.22)
|
|
|
Income
Taxes & Other
|
0.02
|
|
|
Total
|
|
(0.05)
|
|
2009 EPS -
Ongoing Earnings
|
|
$0.72
|
International
Delivery Segment
Earnings Drivers
Earnings Drivers
Forecast
10
|
Note: See
Appendix for the reconciliation of earnings from ongoing operations to
reported earnings.
|
|
|
$2.02
$3.50
Per
Share
$1.95
$3.10
Strong
Expected Earnings Growth
Millions
11
Note:
See
Appendix for reconciliation of cash from operations to free cash flow before
dividends
Free
Cash Flow before Dividends Forecast
12
PA
Delivery Segment Operational Update
•
PA PUC conducted a
binding poll, indicating its
intent to approve the PPL electric portion of the
Susquehanna-Roseland 500 Kv transmission
line
intent to approve the PPL electric portion of the
Susquehanna-Roseland 500 Kv transmission
line
–
Final order
expected in February
•
288,000 customers
have selected retail
electricity suppliers for 2010
electricity suppliers for 2010
–
No material impact
on PPL
•
Third POLR
solicitation completed for the 2011
to mid-2013 procurement period
to mid-2013 procurement period
13
|
Exceptional
performance has earned WPD additional revenue
of over $240 million with potential to earn more |
International
Delivery Segment Operational Update
•
The Ofgem final
proposal was a constructive outcome for WPD
•
Increases revenues
by an average of 6.9% per year (plus inflation)
•
Higher revenues
result from a capital spending increase of 31% and
operating cost increase of 14%
operating cost increase of 14%
•
Additionally, WPD
was awarded the following benefits for its
performance:
performance:
–
$106 million for
capital cost efficiency (#1)
–
$77 million for
quality of supply performance (#1)
–
$48 million for
forecasting accuracy (#1)
–
$11 million for
operating cost efficiency (#3)
14
Supply
Segment Operational Update
•
Susquehanna
nuclear power plant set generation
record
record
•
Susquehanna
operating licenses renewed for an
additional 20 years
additional 20 years
•
Received FERC
approval to expand Holtwood hydro
plant in PA
plant in PA
•
Started
construction to expand Rainbow hydro facility
in MT
in MT
•
Completed
construction of scrubbers at Brunner
Island
Island
•
Completed sale of
the majority of Maine hydroelectric
assets
assets
As
of December 31, 2009
*Represents
expected sales based on current business plan assumptions
**Represents
energy, capacity, congestion and other revenues
15
|
|
|
|
2010
|
|
2011
|
|
2012
|
|
Baseload
|
|
|
|
|
|
|
|
|
Expected
Generation* (1,000 MWhs)
|
|
|
52.1
|
|
52.1
|
|
56.1
|
|
East
|
|
|
43.4
|
|
43.8
|
|
47.6
|
|
West
|
|
|
8.7
|
|
8.3
|
|
8.5
|
|
|
|
|
|
|
|
|
|
|
Current
Hedges (%)
|
|
|
99%
|
|
88%
|
|
55%
|
|
East
|
|
|
100%
|
|
88%
|
|
51%
|
|
West
|
|
|
97%
|
|
86%
|
|
78%
|
|
|
|
|
|
|
|
|
|
|
Average
Hedged Price (Energy Only) ($/MWh)
|
|
|
$59
|
|
$58
|
|
$61
|
|
East
|
|
|
$60
|
|
$59
|
|
$62
|
|
West
|
|
|
$49
|
|
$56
|
|
$57
|
|
|
|
|
|
|
|
|
|
|
Expected
Average Price (Fully Loaded) ($MWh)
|
|
|
$70
|
|
$67
|
|
$68
|
|
East**
|
|
|
$72
|
|
$69
|
|
$71
|
|
West
|
|
|
$49
|
|
$56
|
|
$57
|
|
|
|
|
|
|
|
|
|
|
% Hedged
Through Swaps/Options Energy Transactions
|
|
|
96%
|
|
88%
|
|
55%
|
|
% Hedged
Through Load-following Transactions
|
|
|
3%
|
|
0%
|
|
0%
|
|
Intermediate/Peaking
|
|
|
|
|
|
|
|
|
Expected
Generation (1,000 MWhs)
|
|
|
|