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):  October 26, 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 October 28, 2010, PPL Corporation (“PPL”) issued a press release announcing its financial results for the quarter ended September 30, 2010, and other business matters.  A copy of the press release is furnished as Exhibit 99.1 hereto.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

On October 28, 2010, PPL Energy Supply, LLC (“PPL Energy Supply”) borrowed $3.2 billion under its $4.0 billion Revolving Credit Agreement (“Credit Agreement”), dated as of October 19, 2010, among PPL Energy Supply, the lenders from time to time party thereto and Wells Fargo Bank, National Association.  PPL Energy Supply intends to use the Credit Agreement borrowings to make loans to certain of its affiliates to provide interim financing of amounts required by PPL to pay a portion of the purchase price of PPL’s previously announced approximately $7.6 billion acquisition (“Acquisition”) of E.ON U.S. LLC (“EUS”), the owner of Louisville Gas and Electric Company and Kentucky Utilities Company, from E.ON AG.  Such borrowing is expected to be refinanced by PPL through the issuance of long-term debt by affiliates and the use of internal funds.

Section 7 - Regulation FD

Item 7.01 Regulation FD Disclosure

On October 28, 2010, 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 quarter ended September 30, 2010, and other business matters.  A copy of the slides to be used during the webcast is furnished as Exhibit 99.2 hereto.  The event will be available live, in audio format, along with slides to the presentation, 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 8 - Other Events

Item 8.01 Other Events

On October 26, 2010, PPL issued a press release announcing that it had received approval from the Federal Energy Regulatory Commission to acquire all of the issued and outstanding limited liability company interests of EUS, the owner of Louisville Gas and Electric Company and Kentucky Utilities Company.  With the receipt of this approval, PPL has received all regulatory approvals necessary to complete the Acquisition and currently expects to complete the Acquisition on November 1, 2010.

A copy of this press release is filed as Exhibit 99.3 hereto.

Section 9 - Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits

 
(d)
 
Exhibits
 
         
     
99.1 -
Press Release, dated October 28, 2010, announcing PPL’s financial results for the quarter ended September 30, 2010, and other business matters.
     
99.2
Slides to be used on the October 28, 2010 webcast among members of PPL’s senior management and financial analysts.
     
99.3 -
Press release, dated October 26, 2010, announcing approval by the Federal Energy Regulatory Commission of PPL’s acquisition of E.ON U.S. LLC.
 
 
 
 
SIGNATURES

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/ Vincent Sorgi
 
   
Vincent Sorgi
Vice President and Controller
 
       


 
PPL ENERGY SUPPLY, LLC
       
 
By:
/s/ Vincent Sorgi
 
   
Vincent Sorgi
Vice President and Controller
 
       


 
PPL ELECTRIC UTILITIES CORPORATION
       
 
By:
/s/ Vincent Sorgi
 
   
Vincent Sorgi
Vice President and Controller
 




Dated:  October 28, 2010
Exhibit 99.1


 
Contacts:
For news media – George Biechler, 610-774-5997
 
For financial analysts – Joseph P. Bergstein, 610-774-5609


PPL Corporation Reports Third-Quarter Earnings

·  
Earnings increase for 2010 third quarter and first nine months on supply segment performance
·  
Company narrows 2010 earnings forecast ranges
·  
E.ON U.S. acquisition nears closing

ALLENTOWN, Pa. (Oct. 28, 2010 ) ― PPL Corporation (NYSE: PPL) on Thursday (10/28) reported increases in both third-quarter and nine-month earnings for 2010, compared with the same periods of 2009.

PPL’s reported earnings in the most recent quarter were $0.51 per share, compared with $0.05 per share a year ago. For the first nine months of 2010, PPL reported earnings of $1.40 per share, compared with $0.67 per share a year ago.

Excluding special items, earnings from ongoing operations were $0.74 per share in the third quarter of 2010, compared with $0.52 per share a year ago. For the first nine months of 2010, earnings from ongoing operations were $2.29 per share, compared with $1.43 per share a year ago.

Both reported earnings and earnings from ongoing operations reflect the impact of dilution associated with PPL’s June 2010 offering of common stock and equity units related to its acquisition of E.ON U.S., owner of Louisville Gas and Electric Company and Kentucky Utilities Company. PPL’s reported earnings in the most recent quarter and for the first nine months of 2010 included dilution of $0.17 and $0.16 per share, respectively, while the dilution in earnings from ongoing operations for those same two periods was $0.23 and $0.24 per share, respectively.

“The supply segment earnings clearly drove the improvement in our financial performance for the quarter and year to date,” said James H. Miller, PPL’s chairman, president and chief executive officer. “We remain on target to achieve significantly improved earnings in 2010 as compared with 2009.

“We expect the Kentucky acquisition to close on Nov. 1, a remarkable accomplishment given that we announced the deal only six months ago,” Miller said. He said the prompt closing is primarily due to the timely receipt of numerous state and federal regulatory approvals and the company’s June securities issuances to finance the equity portion of the transaction. “These significant accomplishments, I believe, reinforce the soundness of our decision to acquire E.ON U.S. and the value it is expected to create for all PPL stakeholders,” Miller said.

“This acquisition will strengthen the company’s business mix by adding two high-performing regulated utility operations while we retain the potential upside of our competitive generation business during periods of increased wholesale electricity prices and demand,” Miller said.

PPL has narrowed the ranges of its existing 2010 earnings forecasts, which reflect dilution associated with its late June offering of common stock and equity units in support of the Kentucky acquisition. The company now forecasts 2010 earnings from ongoing operations of $2.80 to $2.95 per share, excluding any earnings impact for the portion of 2010 that PPL will own and operate the Kentucky companies. The 2010 forecast of reported earnings, $1.94 to $2.09 per share, reflects special items recorded through Sept. 30, 2010.


Third-Quarter 2010 Earnings Details

PPL’s reported earnings in the third quarter of 2010 included net special item charges of $0.23 per share. The third quarter of 2009 included net special item charges of $0.47 per share.

Among the special item charges recorded in the third quarter of 2010 was $0.30 per share for costs and charges related to the previously announced Kentucky acquisition. Details of the costs and charges associated with the Kentucky acquisition, as well as other special items, are provided at the end of this news release.
 
Special item credits recorded in the third quarter of 2010 were: $0.04 per share for a change in the U.K. corporate tax rate; $0.03 per share for a favorable U.S. Tax Court ruling; and $0.01 per share for energy-related economic activity.

Reported earnings are calculated in accordance with generally accepted accounting principles (GAAP) in the U.S. 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 changes in fair value of economic hedges 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)

 
  3rd Quarter  
 
2010
 
2009
Reported Earnings
$248
 
$20
Reported Earnings Per Share
$0.51
 
$0.05
Earnings from Ongoing Operations
$358
 
$195
Per Share Earnings from Ongoing Operations
$0.74
 
$0.52


  (See the tables at the end of the news release for details as to the reconciliation of earnings from ongoing operations to reported earnings.)


Third-Quarter and Nine-Month 2010 Earnings by Business Segment

The following chart shows PPL’s earnings by business segment for the third quarter and first nine months of 2010, compared with the same periods of 2009.



   
3rd Quarter
 
Year to Date
Per share
 
2010
 
2009
 
2010
 
2009
                                 
Earnings from ongoing operations
                               
                                 
Supply
 
$
0.54
   
$
0.33
   
$
1.60
   
$
0.63
 
Pennsylvania Delivery
   
0.08
     
0.07
     
0.21
     
0.26
 
International Delivery
   
0.12
     
0.12
     
0.48
     
0.54
 
    Total
 
$
0.74
   
$
0.52
   
$
2.29
   
$
1.43
 
                                 
Special items
                               
                                 
Supply
 
$
(0.23
)
 
$
(0.41
)
 
$
(0.83
)
 
$
(0.67
)
Pennsylvania Delivery
   
-
     
-
     
-
     
(0.01
)
International Delivery
   
0.07
     
   (0.06)
     
0.07
     
(0.08
)
Unallocated Costs (a)
   
(0.07
)
   
-
     
(0.13
)
   
-
 
    Total
 
$
(0.23
)
 
$
(0.47
)
 
$
(0.89
)
 
$
(0.76
)
                                 
Reported earnings
                               
                                 
Supply
 
$
0.31
   
$
(0.08
)
 
$
0.77
   
$
(0.04)
 
Pennsylvania Delivery
   
0.08
     
0.07
     
0.21
     
0.25
 
International Delivery
   
0.19
     
0.06
     
0.55
     
0.46
 
Unallocated Costs (a)
   
(0.07
)
    -      
(0.13
)
    -  
    Total
 
$
0.51
   
$
0.05
   
$
1.40
   
$
0.67
 
 
(a) This category reflects the Bridge Facility costs associated with the pending acquisition of E.ON U.S. as well as associated transaction costs.

( 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 operations of PPL Energy Supply.

Earnings from ongoing operations for PPL’s supply business segment increased in the third quarter of 2010 by $0.21 per share compared with a year ago. This increase resulted primarily from significantly higher Eastern baseload generation pricing and a lower effective income tax rate. Partially offsetting these positive earnings factors were dilution of $0.17 per share, higher operation and maintenance expense and higher depreciation.

Earnings from ongoing operations for PPL’s supply business segment during the first nine months of 2010 rose by $0.97 per share compared with a year ago. This increase resulted primarily from the same factors that drove third-quarter 2010 results, reduced by the effects of a gain in 2009 on a debt repurchase. Dilution for the 2010 nine-month period was $0.18 per share.

Pennsylvania Delivery Segment
PPL’s Pennsylvania delivery business segment includes the regulated electric delivery operations of PPL Electric Utilities.

Earnings from ongoing operations for PPL’s Pennsylvania delivery business segment increased in the third quarter of 2010 by $0.01 per share compared with a year ago. This increase resulted from higher distribution revenue due to warmer weather and higher transmission revenue, which was partially offset by dilution of $0.02 per share and higher operation and maintenance expense.

Earnings from ongoing operations for PPL’s Pennsylvania delivery business segment declined during the first nine months of 2010 by $0.05 per share compared with a year ago. This decline resulted primarily from higher operation and maintenance expense and higher depreciation. Partially offsetting these negative earnings factors were higher transmission revenue and lower financing costs. Dilution for the 2010 nine-month period was $0.02 per share.

International Delivery Segment
PPL’s international delivery business segment primarily includes the regulated electric delivery operations of Western Power Distribution.

Earnings from ongoing operations for PPL’s international delivery business segment in the third quarter of 2010 were the same as a year ago. This performance was the net result of lower income taxes and higher electric delivery revenue, offset by dilution of $0.04 per share, higher pension expense and higher financing costs.

Earnings from ongoing operations for PPL’s international delivery business segment declined during the first nine months of 2010 by $0.06 per share compared with a year ago. This decline was primarily due to higher financing costs and higher pension expense, which were partially offset by higher electricity delivery revenue, lower income taxes and more favorable foreign currency effects. Dilution for the 2010 nine-month period was $0.04 per share.

2010 Earnings from Ongoing Operations Forecast by Business Segment

Earnings
(per share)
2010
(forecast,
adjusted for financing
dilution)
2009
(actual)
 
Midpoint
 
       
Supply
$2.03
 
$0.88
Pennsylvania Delivery
0.26
 
0.35
International Delivery
  0.58
 
  0.72
Total
$2.87
 
$1.95

 
Supply Segment
PPL projects higher earnings from its supply business segment in 2010 compared with 2009, primarily due to higher energy margins as a result of higher Eastern baseload generation pricing compared to the prices realized in 2009. This positive earnings driver is expected to be partially offset by higher operation and maintenance expenses, higher depreciation, and higher financing costs. Dilution for the year is expected to be $0.31 per share.

Pennsylvania Delivery Segment
PPL projects lower earnings from its Pennsylvania delivery business segment in 2010 compared with 2009, primarily driven by higher operation and maintenance expenses and depreciation, partially offset by lower taxes and lower financing costs. Dilution for the year is expected to be $0.04 per share.

International Delivery Segment
PPL projects lower earnings from its international delivery business segment in 2010 compared with 2009 as a result of higher financing costs, higher pension and operation and maintenance expenses, and higher income taxes. These negative factors are expected to be partially offset by higher electric delivery revenues and favorable foreign currency effects. Dilution for the year is expected to be $0.08 per share.
 

 
PPL Corporation, headquartered in Allentown, Pa., controls or owns nearly 12,000 megawatts of generating capacity in the United States, sells energy in key U.S. markets and delivers electricity to more than 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 the live webcast of management’s teleconference with financial analysts about third-quarter 2010 financial results at 9 a.m. EDT Thursday, Oct. 28. The meeting is available online live, in audio format , along with slides of the presentation, on PPL’s website: 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# 18694035).

“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:
·   
Energy-related economic activity (as discussed below).
·   
Foreign currency-related economic hedges.
·   
Gains and losses on sales of assets not in the ordinary course of business.
·   
Impairment charges (including impairments of securities in the company’s nuclear decommissioning trust funds).
·   
Workforce reduction and other restructuring impacts.
·   
Costs and charges related to the pending E.ON U.S. acquisition.
·   
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 economically 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 of the item that was hedged or upon realization. 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. Please refer to the Notes to the Consolidated Financial Statements and MD&A in PPL Corporation’s periodic filings with the Securities and Exchange Commission for additional information on energy-related economic activity.
 
Statements contained in this news release, including statements with respect to future events and their timing, including statements concerning the acquisition by PPL Corporation of E.ON U.S. LLC and its subsidiaries Louisville Gas and Electric Company and Kentucky Utilities Company (collectively, the “Kentucky Entities”), the expected results of operations of any of the Kentucky Entities or PPL Corporation both before or following PPL Corporation’s acquisition of the Kentucky Entities, as well as statements as to future earnings, energy prices, margins and sales, growth, revenues, expenses, cash flow, credit profile, ratings, financing, asset disposition, marketing performance, hedging, regulation, 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 expectations, assumptions and 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: capital market conditions and decisions regarding capital structure; 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; stock price performance; receipt of necessary government permits, approvals, rate relief and regulatory cost recovery; 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, the Kentucky Entities and either of their 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; the impact of state, federal or foreign investigations applicable to PPL Corporation, the Kentucky Entities and either of their subsidiaries; the outcome of litigation against PPL Corporation, the Kentucky Entities and either of their subsidiaries; political, regulatory or economic conditions in states, regions or countries where PPL Corporation, the Kentucky Entities and either of their 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 or environmental legislation or regulation; and the commitments and liabilities of PPL Corporation, the Kentucky Entities and each of their 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 website at www.pplnewsroom.com for additional news and background about the corporation and its subsidiaries.
 
PPL CORPORATION AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED FINANCIAL INFORMATION (a)
 
             
             
             
Condensed Consolidated Balance Sheets (Unaudited)
 
(Millions of Dollars)
 
             
   
September 30,
   
December 31,
 
   
2010
   
2009
 
Assets
           
Cash and cash equivalents
  $ 4,853     $ 801  
Price risk management assets - current
    2,251       2,157  
Assets held for sale
    387       127  
Other current assets
    1,701       1,667  
Investments
    624       613  
Property, plant and equipment
               
   Electric plant
    20,990       21,151  
   Gas and oil plant
    68       68  
   Other property
    163       166  
   Property, plant and equipment, gross
    21,221       21,385  
   Less:  accumulated depreciation
    8,310       8,211  
   Property, plant and equipment, net
    12,911       13,174  
Regulatory assets
    518       531  
Goodwill and other intangibles
    1,357       1,421  
Price risk management assets - noncurrent
    1,622       1,274  
Other noncurrent assets
    504       400  
   Total Assets
  $ 26,728     $ 22,165  
                 
Liabilities and Equity
               
Short-term debt
  $ 181     $ 639  
Price risk management liabilities - current
    1,748       1,502  
Other current liabilities
    2,416       2,041  
Long-term debt
    8,839       7,143  
Deferred income taxes and investment tax credits
    2,468       2,153  
Price risk management liabilities - noncurrent
    839       582  
Accrued pension obligations
    780       1,283  
Other noncurrent liabilities
    865       1,007  
Common stock and capital in excess of par value
    4,587       2,284  
Earnings reinvested
    3,897       3,749  
Accumulated other comprehensive loss
    (160 )     (537 )
Noncontrolling interests
    268       319  
   Total Liabilities and Equity
  $ 26,728     $ 22,165  
                 
 
(a)
The Financial Statements in this news release have been condensed and summarized for purposes of this presentation. Please refer to PPL Corporation's periodic filings with the Securities and Exchange Commission for full financial statements, including note disclosure.
 
 
PPL CORPORATION AND SUBSIDIARIES
 
                         
Condensed Consolidated Statements of Income (Unaudited)
 
(Millions of Dollars, Except Share Data)
 
                         
   
3 Months Ended September 30,
   
9 Months Ended September 30,
 
   
2010
   
2009 (a)
   
2010
   
2009 (a)
 
 
                       
Operating Revenues
                       
   Utility
  $ 732     $ 955     $ 2,438     $ 2,901  
   Unregulated retail electric and gas (b)
    116       34       321       108  
   Wholesale energy marketing
                               
        Realized
    1,192       976       3,782       2,474  
        Unrealized economic activity (b)
    52       (307 )     (190 )     (67 )
   Net energy trading margins
    (20 )     7       (4 )     2  
   Energy-related businesses
    107       117       311       321  
   Total Operating Revenues
    2,179       1,782       6,658       5,739  
Operating Expenses
                               
   Operation
                               
        Fuel (b)
    322       259       810       700  
        Energy purchases
                               
             Realized
    386       748       2,132       2,032  
             Unrealized economic activity (b)
    300       (79 )     418       255  
        Other operation and maintenance
    366       316       1,229       1,039  
        Amortization of recoverable transition costs
            73               227  
   Depreciation
    127       116       376       332  
   Taxes, other than income
    56       69       181       208  
   Energy-related businesses
    100       109       288       298  
   Total Operating Expenses
    1,657       1,611       5,434       5,091  
Operating Income
    522       171       1,224       648  
Other Income (Expense) - net
    (26 )     9       (18 )     37  
Other-Than-Temporary Impairments
                    3       18  
Interest Expense
    171       104       413       288  
Income from Continuing Operations Before Income Taxes
    325       76       790       379  
Income Taxes
    19       25       152       75  
Income from Continuing Operations After Income Taxes
    306       51       638       304  
Loss from Discontinued Operations (net of income taxes)
    (53 )     (25 )     (38 )     (35 )
Net Income
    253       26       600       269  
Net Income Attributable to Noncontrolling Interests
    5       6       17       15  
Net Income Attributable to PPL Corporation
  $ 248     $ 20     $ 583     $ 254  
                                 
Amounts Attributable to PPL Corporation:
                               
     Income from Continuing Operations After Income Taxes
  $ 301     $ 45     $ 621     $ 289  
     Loss from Discontinued Operations (net of income taxes)
    (53 )     (25 )     (38 )     (35 )
     Net Income
  $ 248     $ 20     $ 583     $ 254  
                                 
Earnings Per Share of Common Stock - Basic (c)
                               
     Earnings from Ongoing Operations
  $ 0.74     $ 0.52     $ 2.29     $ 1.43  
     Special Items
    (0.23 )     (0.47 )     (0.89 )     (0.76 )
     Net Income Available to PPL Corporation Common Shareowners
  $ 0.51     $ 0.05     $ 1.40     $ 0.67  
                                 
Earnings Per Share of Common Stock - Diluted (c)
                               
     Earnings from Ongoing Operations
  $ 0.74     $ 0.52     $ 2.29     $ 1.43  
     Special Items
    (0.23 )     (0.47 )     (0.89 )     (0.76 )
     Net Income Available to PPL Corporation Common Shareowners
  $ 0.51     $ 0.05     $ 1.40     $ 0.67  
                                 
Weighted-Average Shares of Common Stock Outstanding (thousands)
                               
        Basic
    482,552       376,384       414,068       375,795  
        Diluted
    482,762       376,716       414,287       376,113  
 
 (a) Certain amounts from 2009 have been reclassified to conform to the current year presentation. 
 (b) Includes energy-related contracts to hedge future cash flows that are not eligible for hedge accounting, or where hedge accounting is not elected.
 (c) Earnings in 2010 and 2009 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.
PPL CORPORATION AND SUBSIDIARIES
 
             
Condensed Consolidated Statements of Cash Flows (Unaudited)
 
(Millions of Dollars)
 
             
   
Nine Months Ended
 
   
September 30,
 
   
2010
   
2009
 
             
Cash Flows from Operating Activities
           
Net Income
  $ 600     $ 269  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation
    387       345  
Amortization
    211       286  
Defined benefit plans - expense
    72       56  
Defined benefit plans - funding
    (371 )     (85 )
Deferred income taxes and investment tax credits
    (179 )     20  
Gains related to the extinguishment of notes
            (29 )
Impairment of assets
    118       109  
Unrealized losses on derivatives, and other hedging activities
    595       256  
Provision for Montana hydroelectric litigation
    62          
Changes in current assets and current liabilities:
               
Counterparty collateral
    169       326  
Other changes in current assets and current liabilities
    66       (360 )
Other operating activities
    (34 )     54  
Net cash provided by operating activities
    1,696       1,247  
                 
Cash Flows from Investing Activities
               
Expenditures for property, plant and equipment
    (980 )     (821 )
Proceeds from the sale of the Long Island generation business
    124          
Expenditures for intangible assets
    (64 )     (67 )
Proceeds from the sale of other investments
            150  
Net decrease in restricted cash and cash equivalents
    78       170  
Other investing activities
    2       (23 )
Net cash used in investing activities
    (840 )     (591 )
                 
Cash Flows from Financing Activities
               
Issuance of long-term debt
    1,750       298  
Retirement of long-term debt
    (1 )     (916 )
Issuance of equity, net of issuance costs
    2,425       45  
Payment of common stock dividends
    (397 )     (386 )
Redemption of preferred stock of a subsidiary
    (54 )        
Debt issuance costs
    (79 )     (14 )
Net decrease in short-term debt
    (443 )     (70 )
Other financing activities
    (15 )     (17 )
Net cash provided by (used in) financing activities
    3,186       (1,060 )
                 
Effect of Exchange Rates on Cash and Cash  Equivalents
    10          
                 
Net Increase (Decrease) in Cash and Cash Equivalents
    4,052       (404 )
Cash and cash equivalents at beginning of period
    801       1,100  
Cash and cash equivalents at end of period
  $ 4,853     $ 696  
Key Indicators (Unaudited)
 
             
   
12 Months Ended
   
September 30,
Financial
 
2010
 
2009
             
Dividends declared per share
  $ 1.395     $ 1.370  
Book value per share (a)
  $ 17.24     $ 14.92  
Market price per share (a)
  $ 27.23     $ 30.34  
Dividend yield (a)
    5.1 %     4.5 %
Dividend payout ratio  (b)
    77 %     97 %
Dividend payout ratio - earnings from ongoing operations (b)(c)
    49 %     72 %
Price/earnings ratio (a)(b)
    15.0       21.5  
Price/earnings ratio - earnings from ongoing operations (a)(b)(c)
    9.6       16.1  
Return on average common equity
    11.39 %     9.78 %
Return on average common equity - earnings from ongoing operations (c)
    16.89 %     13.39 %
 
 (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 (Unaudited)
                                     
   
3 Months Ended September 30,
 
9 Months Ended September 30,
               
Percent
             
Percent
(millions of kwh)
 
2010
   
2009
   
Change
 
2010
   
2009
   
Change
                                     
Domestic Retail
                                   
Delivered (a)
    9,645       9,057       6.5 %     28,314       28,086       0.8 %
Supplied (b)
    2,260       9,603       (76.5 %)     6,891       29,748       (76.8 %)
                                                 
International Delivered
                                               
United Kingdom
    5,933       5,825       1.9 %     20,136       19,806       1.7 %
                                                 
Domestic Wholesale
                                               
East
    16,754       7,914       111.7 %     49,957       20,446       144.3 %
West
    2,676       2,844       (5.9 %)     8,125       8,480       (4.2 %)
 
 (a) Represents the kwh delivered and billed to retail customers within PPL Electric Utilities Corporation's service territory.
 (b) Represents the kwh supplied by PPL EnergyPlus to PPL Electric Utilities as PLR, and to retail customers in Pennsylvania and Montana.
 
Reconciliation of Business Segment Earnings from Ongoing Operations to Reported Earnings (Diluted)
 
(Unaudited)
                                                           
                                                             
3rd Quarter 2010
 
(millions of dollars)
   
(per share)
 
         
PA
   
Int'l
   
Unallocated
               
PA
   
Int'l
   
Unallocated
       
   
Supply
   
Delivery
   
Delivery
   
Costs
   
Total
   
Supply
   
Delivery
   
Delivery
   
Costs
   
Total
 
Earnings from Ongoing Operations
  $ 260     $ 36     $ 63     $ (1 )   $ 358     $ 0.54     $ 0.08     $ 0.12     $ -     $ 0.74  
Special Items
                                                                               
Energy-related economic activity
    4                               4       0.01                               0.01  
Foreign currency-related economic hedges - unrealized impacts
                    (1 )             (1 )                                        
Impairments:
                                                                               
Impacts from emission allowances
    (2 )                             (2 )     (0.01 )                             (0.01 )
Pending E.ON U.S. acquisition-related costs:
                                                                               
Monetization of certain full-requirement sales contracts
    (27 )                             (27 )     (0.06 )                             (0.06 )
Bridge Facility costs
                            (31 )     (31 )                             (0.06 )     (0.06 )
Other pending acquisition-related costs
                            (2 )     (2 )                             (0.01 )     (0.01 )
Anticipated sale of certain non-core generation facilities
    (62 )                             (62 )     (0.13 )                             (0.13 )
Discontinued cash flow hedges for unissued debt
    (19 )                             (19 )     (0.04 )                             (0.04 )
Other:
                                                                               
Montana hydroelectric litigation
    (1 )                             (1 )                                        
Change in U.K. tax rate
                    19               19                       0.04               0.04  
U.S. Tax Court ruling (U.K. Windfall Profits Tax)
                    12               12                       0.03               0.03  
Total Special Items
    (107 )     -       30       (33 )     (110 )     (0.23 )     -       0.07       (0.07 )     (0.23 )
Reported Earnings
  $ 153     $ 36     $ 93     $ (34 )   $ 248     $ 0.31     $ 0.08     $ 0.19     $ (0.07 )   $ 0.51  
                                                                                 
Year-to-Date
September 30, 2010
 
(millions of dollars)
   
(per share)
 
           
PA
   
Int'l
   
Unallocated
                   
PA
   
Int'l
   
Unallocated
         
   
Supply
   
Delivery
   
Delivery
   
Costs
   
Total
   
Supply
   
Delivery
   
Delivery
   
Costs
   
Total
 
Earnings from Ongoing Operations
  $ 668     $ 89     $ 198     $ (1 )   $ 954     $ 1.60     $ 0.21     $ 0.48     $ -     $ 2.29  
Special Items
                                                                               
Energy-related economic activity
    (115 )                             (115 )     (0.27 )                             (0.27 )
Foreign currency-related economic hedges - unrealized impacts
                    (2 )             (2 )                                     -  
Sales of assets:
                                                                               
Sundance indemnification (Q2, '10)
    1                               1                                       -  
Impairments:
                                                                               
Impacts from emission allowances (Q1, '10; Q2, '10; Q3, '10)
    (9 )                             (9 )     (0.02 )                             (0.02 )
Pending E.ON U.S. acquisition-related costs:
                                                                               
Monetization of certain full-requirement sales contracts (Q2, '10; Q3, '10)
    (102 )                             (102 )     (0.24 )                             (0.24 )
Bridge Facility costs (Q2, '10; Q3, '10)
                            (44 )     (44 )                             (0.11 )     (0.11 )
Other pending acquisition-related costs (Q2, '10; Q3, '10)
                            (8 )     (8 )                             (0.02 )     (0.02 )
Anticipated sale of certain non-core generation facilities (Q3, '10)
    (62 )                             (62 )     (0.15 )                             (0.15 )
Discontinued cash flow hedges for unissued debt (Q3, '10)
    (19 )                             (19 )     (0.05 )                             (0.05 )
Other:
                                                                               
Montana hydroelectric litigation (Q1, '10; Q2, '10; Q3, '10)
    (34 )                             (34 )     (0.08 )                             (0.08 )
Health Care Reform - tax impact (Q1, '10)
    (8 )                             (8 )     (0.02 )                             (0.02 )
Change in U.K. tax rate (Q3, '10)
                    19               19                       0.04               0.04  
U.S. Tax Court ruling (U.K. Windfall Profits Tax) (Q3, '10)
                    12               12                       0.03               0.03  
Total Special Items
    (348 )     -       29       (52 )     (371 )     (0.83 )     -       0.07       (0.13 )     (0.89 )
Reported Earnings
  $ 320     $ 89     $ 227     $ (53 )   $ 583     $ 0.77     $ 0.21     $ 0.55     $ (0.13 )   $ 1.40  
 
Reconciliation of Business Segment Earnings from Ongoing Operations to Reported Earnings (Diluted)
                                                                               
(Unaudited)
                                                                               
                                                                                 
3rd Quarter 2009
 
(millions of dollars)
   
(per share)
 
           
PA
   
Int'l
   
Unallocated
                   
PA
   
Int'l
   
Unallocated
         
   
Supply
   
Delivery
   
Delivery
   
Costs
   
Total
   
Supply
   
Delivery
   
Delivery
   
Costs
   
Total
 
Earnings from Ongoing Operations
  $ 124     $ 27     $ 44     $ -     $ 195     $ 0.33     $ 0.07     $ 0.12     $ -     $ 0.52  
Special Items
                                                                               
Energy-related economic activity
    (130 )                             (130 )     (0.34 )                             (0.34 )
Foreign currency-related economic hedges - unrealized impacts
                    4               4                                          
Sales of assets:
                                                                               
Latin American businesses
                    (24 )             (24 )                     (0.06 )             (0.06 )
Other:
                                                                               
Change in tax accounting method related to repairs
    (25 )                             (25 )     (0.07 )                             (0.07 )
Total Special Items
    (155 )     -       (20 )     -       (175 )     (0.41 )     -       (0.06 )     -       (0.47 )
Reported Earnings
  $ (31 )   $ 27     $ 24     $ -     $ 20     $ (0.08 )   $ 0.07     $ 0.06     $ -     $ 0.05  
                                                                                 
Year-to-Date
September 30, 2009
 
(millions of dollars)
   
(per share)
 
           
PA
   
Int'l
   
Unallocated
                   
PA
   
Int'l
   
Unallocated
         
   
Supply
   
Delivery
   
Delivery
   
Costs
   
Total
   
Supply
   
Delivery
   
Delivery
   
Costs
   
Total
 
Earnings from Ongoing Operations
  $ 239     $ 99     $ 202     $ -     $ 540     $ 0.63     $ 0.26     $ 0.54     $ -     $ 1.43  
Special Items
                                                                               
Energy-related economic activity
    (168 )                             (168 )     (0.45 )                             (0.45 )
Foreign currency-related economic hedges - unrealized impacts
                    (2 )             (2 )                     (0.01 )             (0.01 )
Sales of assets:
                                                                               
Long Island generation business (Q2, '09)
    (34 )                             (34 )     (0.09 )                             (0.09 )
Latin American businesses (Q3, '09)
                    (24 )             (24 )