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 4, 2011

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 4, 2011, PPL Corporation (“PPL”) issued a press release announcing its financial results for the year ended December 31, 2010, 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 4, 2011, 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, 2010, 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

 
(d)
 
Exhibits
 
         
     
99.1 -
Press Release, dated February 4, 2011, announcing PPL’s financial results for the year ended December 31, 2010, and other business matters.
     
99.2 -
Slides to be used on the February 4, 2011 webcast among members of PPL’s senior management and financial analysts.
 
 
 
 
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:  February 4, 2011
Exhibit 99.1

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


PPL Corporation Reports 2010 Earnings

·  
Company announces 2010 reported earnings of $2.17 per share and earnings from ongoing operations of $3.13 per share ― exceeding most recent forecast
·  
Company also announces 2011 earnings forecast

ALLENTOWN, Pa. (Feb. 4, 2011 ) ―  PPL Corporation (NYSE: PPL) on Friday (2/4) reported increases in both fourth-quarter and full-year earnings for 2010, compared with the same periods of 2009.

PPL’s reported earnings for the fourth quarter of 2010 were $0.73 per share, compared with $0.40 per share a year ago. For the full year 2010, PPL’s reported earnings were $2.17 per share, compared with $1.08 per share for 2009.

Excluding special items, PPL’s earnings from ongoing operations were $0.83 per share in the fourth quarter of 2010, compared with $0.52 per share a year ago. For all of 2010, earnings from ongoing operations were $3.13 per share, compared with $1.95 per share for 2009, exceeding the midpoint of the company’s most recent 2010 forecast of earnings from ongoing operations of $2.87 per share.

Both reported earnings and earnings from ongoing operations reflect dilution associated with PPL’s June 2010 issuance of common stock and equity units related to its Nov. 1, 2010, acquisition of E.ON U.S., owner of Louisville Gas and Electric Company and Kentucky Utilities Company. The impact of this financing reduced PPL’s per share earnings from ongoing operations for the fourth quarter and full year 2010 by $0.26 and $0.49 per share, respectively. The financing reduced reported earnings by $0.23 and $0.36 per share for these periods.

The Kentucky regulated segment contributed $0.12 per share in earnings from ongoing operations for 2010, offset by $0.06 per share of dilution.

“Our 2010 per share earnings from ongoing operations are more than 60 percent higher than in 2009. The performance of our competitive supply segment accounted for most of this 2010 growth,” said James H. Miller, PPL’s chairman, president and chief executive officer.

PPL said the main drivers of improved performance in 2010 versus the midpoint of its most recent earnings forecast were the $0.12 per share of ongoing earnings from the Kentucky segment and $0.12 per share of income tax benefits, driven primarily by the release of deferred tax valuation allowances related to state net operating loss carryforwards

PPL Friday also announced a 2011 earnings forecast of $2.40 to $2.60 per share, with a midpoint of $2.50 per share. Miller said PPL is projecting that about half of its 2011 earnings will come from its regulated businesses, a substantial increase over the 27 percent contribution in 2010 earnings from ongoing operations.
 
“Our strategic actions of the past year have very clearly strengthened our financial position and improved our overall risk profile,” said Miller. “For 2011 and beyond, we expect that our growing regulated businesses will produce an increasing proportion of our earnings, reducing our relative exposure to commodity market swings. In addition, our competitive supply segment is well-positioned to benefit when wholesale electricity markets rebound.”

2010 Earnings Details

PPL’s reported earnings for 2010 included net special item charges totaling $0.96 per share, compared with net special item charges totaling $0.87 in 2009.

The major special item charges in 2010 were $0.67 per share for costs and charges related to the Kentucky acquisition and $0.27 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)

 
2010
2009
% Change
Reported Earnings
$938
$407
   +130%
Reported Earnings per Share
$2.17
$1.08
   +101%
Earnings from Ongoing Operations
$1,358
$738
 +84%
Per Share Earnings from Ongoing Operations
$3.13
$1.95
 +61%

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

Fourth-quarter 2010 Earnings Results

For the fourth quarter of 2010, PPL announced reported earnings of $0.73 per share, an 83 percent increase compared with a year ago. Reported earnings for the current quarter included net special item charges totaling $0.10 per share, compared with net special item charges totaling $0.12 per share a year ago. Excluding special items, PPL’s earnings from ongoing operations for the fourth quarter of 2010 were $0.83 per share, a 60 percent increase over a year ago.

(Dollars in millions, except for per share amounts)

 
4Q 2010
4Q 2009
% Change
Reported Earnings
$355
$153
  +132%
Reported Earnings per Share
$0.73
$0.40
+83%
Earnings from Ongoing Operations
$404
$198
  +104%
Per Share Earnings from Ongoing Operations
$0.83
$0.52
+60%

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

Annual and Fourth-quarter Earnings by Segment

The following chart shows PPL’s earnings by segment for the year and for the fourth quarter of 2010 compared with the same periods of 2009. The former international delivery and Pennsylvania delivery segments, otherwise unchanged, have been renamed as the international regulated and Pennsylvania regulated segments.

   
Year
 
4 th Quarter
   
2010
 
2009
 
2010
 
2009
   
(per share)
   
(per share)
 
Earnings from Ongoing Operations
                               
                                 
Kentucky Regulated
 
$
0.06
           
$
0.07
         
International Regulated
   
0.53
   
$
0.72
     
0.07
   
$
0.18
 
Pennsylvania Regulated
   
0.27
     
0.35
     
0.05
     
0.09
 
Supply
   
2.27
     
0.88
     
0.64
     
0.25
 
Total
 
$
3.13
   
$
1.95
   
$
0.83
   
$
0.52
 
                         
Special Items
                               
                                 
Kentucky Regulated
                               
International Regulated
 
$
0.07
   
$
(0.08
)
               
Pennsylvania Regulated
           
(0.02
)
         
$
(0.01
)
Supply
   
(0.86
)
   
(0.77
)
 
$
(0.06
)
   
(0.11
)
Unallocated Costs (a)
   
(0.17
)
           
(0.04
)
       
Total
 
$
(0.96
)
 
$
(0.87
)
 
$
(0.10
)
 
$
(0.12
)
                         
Reported Earnings
                               
                                 
Kentucky Regulated
 
$
0.06
           
$
0.07
         
International Regulated
   
0.60
   
$
0.64
     
0.07
   
$
0.18
 
Pennsylvania Regulated
   
0.27
     
0.33
     
0.05
     
0.08
 
Supply
   
1.41
     
0.11
     
0.58
     
0.14
 
Unallocated Costs (a)
   
(0.17
)
           
(0.04
)
       
Total
 
$
2.17
   
$
1.08
   
$
0.73
   
$
0.40
 
 
(a) This category reflects the Bridge Facility costs associated with the 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 Segment Earnings from Ongoing Operations

International Regulated Segment
PPL’s international regulated segment primarily includes the U.K. regulated electric delivery operations of Western Power Distribution.

Segment earnings from ongoing operations in 2010 declined by $0.19 per share compared with 2009. This decline was primarily the net result of higher financing costs, higher pension expense and higher income taxes, which were partially offset by higher electric delivery revenue and more favorable foreign currency effects. Dilution for 2010 was $0.07 per share.

Segment earnings from ongoing operations declined in the fourth quarter of 2010 by $0.11 per share compared with a year ago. This decline was primarily the net result of higher income taxes, higher pension expense and higher financing costs, which were partially offset by higher electric delivery revenue. Dilution for the fourth quarter was $0.02 per share.

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

Segment earnings from ongoing operations in 2010 declined by $0.08 per share compared with 2009. This decline was primarily the net result of higher operation and maintenance expense and lower distribution revenue, which were partially offset by higher transmission revenue and lower financing costs. Dilution for 2010 was $0.03 per share.

Segment earnings from ongoing operations declined in the fourth quarter of 2010 by $0.04 per share compared with a year ago. This decline was primarily the result of lower distribution revenue and higher operation and maintenance expense. Dilution for the fourth quarter was $0.02 per share.

Supply Segment
PPL’s supply segment   primarily consists of domestic electricity generation and the marketing operations of PPL Energy Supply.

Segment earnings from ongoing operations in 2010 increased by $1.39 per share compared with 2009. This increase resulted primarily from significantly higher sales prices for Eastern baseload generation, due to the expiration of the provider-of-last-resort contract at the end of 2009, combined with higher hedged prices established over the past few years and lower income taxes. The lower income taxes primarily resulted from the release of deferred tax valuation allowances related to Pennsylvania net operating loss carryforwards of $0.16 per share. These benefits were partially offset by higher operation and maintenance expense, higher depreciation and higher average fuel costs. Dilution for 2010 was $0.33 per share.

Segment earnings from ongoing operations increased by $0.39 per share in the fourth quarter of 2010 compared with a year ago. The increase was primarily the net result of the same factors that drove overall 2010 earnings for this segment, except that operation and maintenance expenses were lower in the fourth quarter of 2010 compared with the same period of 2009. Dilution for the fourth quarter was $0.17 per share.
 
 
2011 Earnings Forecast by Segment

Earnings
(per share)
2011
(forecast)
 
2010
(actual)
 
 
Midpoint
 
Ongoing earnings
 
         
Kentucky Regulated
$0.47
 
$0.06
 *
International Regulated
0.47
 
0.53
 
Pennsylvania Regulated
0.31
 
0.27
 
Supply
  1.25
 
  2.27
 
    Total
$2.50
 
$3.13
 

* The 2010 earnings for the Kentucky regulated segment only include results for November and December, partially offset by the interest expense associated with the equity units issued in June 2010 related to the acquisition of E.ON U.S.

A full year of earnings from the Kentucky regulated segment is the largest positive driver of PPL’s 2011 projected earnings. Partially offsetting this benefit is dilution of $0.34 per share associated with PPL’s June 2010 issuance of common stock.

Kentucky Regulated Segment
The projected 2011 segment earnings represent a full year of earnings versus two months in 2010. This segment’s 2011 earnings are expected to be generally driven by high-performing utilities in the progressive state regulatory environment and by the results of electric and gas base rate increases that became effective Aug. 1, 2010. Dilution for 2011 is expected to be $0.01 per share.

International Regulated Segment
After adjusting for dilution of $0.06 per share, PPL expects segment earnings in 2011 to be comparable with 2010 earnings. This is primarily the result of higher electric delivery revenue and a more favorable currency exchange rate offset by higher income taxes, higher depreciation and higher financing costs.

Pennsylvania Regulated Segment
PPL projects higher segment earnings in 2011 compared with 2010 due to higher distribution revenues resulting from an approved distribution base rate increase effective Jan. 1, 2011. Dilution for 2011 is expected to be $0.03 per share.
 
Supply Segment
 
PPL expects lower segment earnings in 2011 compared with 2010 as a result of lower energy margins driven by lower energy and capacity prices in the East, higher average fuel costs, and higher operation and maintenance expense. Dilution for 2011 is expected to be $0.24 per share.
 

PPL Corporation, headquartered in Allentown, Pa., owns or controls about 19,000 megawatts of generating capacity in the United States, sells energy in key U.S. markets, and delivers electricity and natural gas to about 5.2 million customers in the United States 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 2010 financial results at 9 a.m. EST Friday, Feb. 4. 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 website for 30 days. Interested individuals also can access the live conference call via telephone at 702-696-4769 (ID# 35502001 ).

“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 management’s view of PPL’s fundamental earnings performance as another criterion in making 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 acquisition of E.ON U.S.
·   
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 economically 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 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 Nov. 1, 2010, 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, 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 PPL Corporation.

 
 
 
PPL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL INFORMATION (a)
 
 
 
 
 
 
 
 
 
Condensed Consolidated Balance Sheets (Unaudited)
(Millions of Dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
 
December 31,
 
 
 
 
2010 (b)
 
2009 (c)
Assets
 
 
 
 
 
 
Cash and cash equivalents
 
$
 925 
 
$
 801 
Short-term investments
 
 
 163 
 
 
 
Price risk management assets - current
 
 
 1,918 
 
 
 2,157 
Assets held for sale
 
 
 374 
 
 
 127 
Other current assets
 
 
 2,808 
 
 
 1,667 
Investments
 
 
 693 
 
 
 613 
Property, Plant and Equipment
 
 
 
 
 
 
 
Regulated utility plant - electric and gas
 
 
 15,994 
 
 
 9,288 
 
Less: Accumulated depreciation - regulated utility plant
 
 
 2,942 
 
 
 2,764 
 
 
Regulated utility plant - electric and gas, net
 
 
 13,052 
 
 
 6,524 
 
Non-regulated property, plant and equipment
 
 
 11,146 
 
 
 11,530 
 
Less: Accumulated depreciation - non-regulated property, plant and equipment
 
 
 5,500 
 
 
 5,447 
 
 
Non-regulated property, plant and equipment, net
 
 
 5,646 
 
 
 6,083 
 
Construction work in progress
 
 
 2,160 
 
 
 567 
 
Property, Plant and Equipment, net
 
 
 20,858 
 
 
 13,174 
Regulatory assets
 
 
 1,145 
 
 
 531 
Goodwill and other intangibles
 
 
 2,727 
 
 
 1,421 
Price risk management assets - noncurrent
 
 
 655 
 
 
 1,274 
Other noncurrent assets
 
 
 571 
 
 
 400 
Total Assets
 
$
 32,837 
 
$
 22,165 
 
 
 
 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
Short-term debt
 
$
 694 
 
$
 639 
Price risk management liabilities - current
 
 
 1,144 
 
 
 1,502 
Other current liabilities
 
 
 3,376 
 
 
 2,041 
Long-term debt
 
 
 12,161 
 
 
 7,143 
Deferred income taxes and investment tax credits
 
 
 2,800 
 
 
 2,153 
Price risk management liabilities - noncurrent
 
 
 470 
 
 
 582 
Accrued pension obligations
 
 
 1,496 
 
 
 1,283 
Regulatory liabilities
 
 
 1,031 
 
 
 10 
Other noncurrent liabilities
 
 
 1,187 
 
 
 997 
Common stock and capital in excess of par value
 
 
 4,607 
 
 
 2,284 
Earnings reinvested
 
 
 4,082 
 
 
 3,749 
Accumulated other comprehensive loss
 
 
 (479)
 
 
 (537)
Noncontrolling interests
 
 
 268 
 
 
 319 
Total Liabilities and Equity
 
$
 32,837 
 
$
 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.
(b)
Certain line items at December 31, 2010 were impacted by the acquisition of the Kentucky entities on November 1, 2010.
(c)
Certain amounts from 2009 have been reclassified to conform to the current year presentation.
 
 
 
 
 PPL CORPORATION AND SUBSIDIARIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Condensed Consolidated Statements of Income (Unaudited)
(Millions of Dollars, Except Share Data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
 
 
 
 
2010 (a)
 
2009 (b)
 
2010 (a)
 
2009 (b)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
Utility
 
$
 1,230 
 
$
 1,001 
 
$
 3,668 
 
$
 3,902 
 
Unregulated retail electric and gas (c)
 
 
 94 
 
 
 44 
 
 
 415 
 
 
 152 
 
Wholesale energy marketing
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized
 
 
 1,050 
 
 
 710 
 
 
 4,832 
 
 
 3,184 
 
 
Unrealized economic activity (c)
 
 
 (615)
 
 
 (162)
 
 
 (805)
 
 
 (229)
 
Net energy trading margins
 
 
 6 
 
 
 15 
 
 
 2 
 
 
 17 
 
Energy-related businesses
 
 
 98 
 
 
 102 
 
 
 409 
 
 
 423 
 
Total Operating Revenues
 
 
 1,863 
 
 
 1,710 
 
 
 8,521 
 
 
 7,449 
Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Operation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel (c)
 
 
 425 
 
 
 220 
 
 
 1,235 
 
 
 920 
 
 
Energy purchases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized
 
 
 641 
 
 
 593 
 
 
 2,773 
 
 
 2,625 
 
 
 
Unrealized economic activity (c)
 
 
 (704)
 
 
 (100)
 
 
 (286)
 
 
 155 
 
 
Other operation and maintenance
 
 
 527 
 
 
 379 
 
 
 1,756 
 
 
 1,418 
 
 
Amortization of recoverable transition costs
 
 
 
 
 
 77 
 
 
 
 
 
 304 
 
Depreciation
 
 
 180 
 
 
 123 
 
 
 556 
 
 
 455 
 
Taxes, other than income
 
 
 57 
 
 
 72 
 
 
 238 
 
 
 280 
 
Energy-related businesses
 
 
 95 
 
 
 98 
 
 
 383 
 
 
 396 
 
Total Operating Expenses
 
 
 1,221 
 
 
 1,462 
 
 
 6,655 
 
 
 6,553 
Operating Income
 
 
 642 
 
 
 248 
 
 
 1,866 
 
 
 896 
Other Income (Expense) - net
 
 
 (13)
 
 
 10 
 
 
 (31)
 
 
 47 
Other-Than-Temporary Impairments
 
 
 
 
 
 
 
 
 3 
 
 
 18 
Interest Expense
 
 
 180 
 
 
 99 
 
 
 593 
 
 
 387 
Income from Continuing Operations Before Income Taxes
 
 
 449 
 
 
 159 
 
 
 1,239 
 
 
 538 
Income Taxes
 
 
 111 
 
 
 30 
 
 
 263 
 
 
 105 
Income from Continuing Operations After Income Taxes
 
 
 338 
 
 
 129 
 
 
 976 
 
 
 433 
Income (Loss) from Discontinued Operations (net of income taxes)
 
 
 21 
 
 
 28 
 
 
 (17)
 
 
 (7)
Net Income
 
 
 359 
 
 
 157 
 
 
 959 
 
 
 426 
Net Income Attributable to Noncontrolling Interests
 
 
 4 
 
 
 4 
 
 
 21 
 
 
 19 
Net Income Attributable to PPL Corporation
 
$
 355 
 
$
 153 
 
$
 938 
 
$
 407 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amounts Attributable to PPL Corporation:
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from Continuing Operations After Income Taxes
 
$
 334 
 
$
 125 
 
$
 955 
 
$
 414 
 
Income (Loss) from Discontinued Operations (net of income taxes)
 
 
 21 
 
 
 28 
 
 
 (17)
 
 
 (7)
 
Net Income
 
$
 355 
 
$
 153 
 
$
 938 
 
$
 407 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings Per Share of Common Stock - Basic (d)
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from Ongoing Operations
 
$
 0.83 
 
$
 0.52 
 
$
 3.14 
 
$
 1.95 
 
Special Items
 
 
 (0.10)
 
 
 (0.12)
 
 
 (0.97)
 
 
 (0.87)
 
Net Income Available to PPL Corporation Common Shareowners
 
$
 0.73 
 
$
 0.40 
 
$
 2.17 
 
$
 1.08 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings Per Share of Common Stock - Diluted (d)
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from Ongoing Operations
 
$
 0.83 
 
$
 0.52 
 
$
 3.13 
 
$
 1.95 
 
Special Items
 
 
 (0.10)
 
 
 (0.12)
 
 
 (0.96)
 
 
 (0.87)
 
Net Income Available to PPL Corporation Common Shareowners
 
$
 0.73 
 
$
 0.40 
 
$
 2.17 
 
$
 1.08 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-Average Shares of Common Stock Outstanding (thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
 
483,145 
 
 
376,910 
 
 
431,345 
 
 
376,082 
 
Diluted
 
 
483,382 
 
 
377,252 
 
 
431,569 
 
 
376,406 

(a)
Certain line items for 2010 include two months of results of the Kentucky entities, which were acquired on November 1, 2010.
(b)
Certain amounts from 2009 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.
(d)
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)
 
 
 
 
 
2010 (a)
 
2009 
Cash Flows from Operating Activities
 
 
 
 
 
 
 
Net income
 
$
  959 
 
$
  426 
 
Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
 
 
 
 
 
Pre-tax gain from the sale of the Maine hydroelectric generation business
 
 
 (25)
 
 
 (38)
 
 
Depreciation
 
 
  567 
 
 
  471 
 
 
Amortization
 
 
  219 
 
 
  389 
 
 
Defined benefit plans - expense
 
 
  102 
 
 
  70 
 
 
Defined benefit plans - funding
 
 
 (396)
 
 
 (185)
 
 
Deferred income taxes and investment tax credits
 
 
  241 
 
 
  104 
 
 
Impairment of assets
 
 
  120 
 
 
  127 
 
 
Unrealized (gains) losses on derivatives, and other hedging activities
 
 
  542 
 
 
  329 
 
 
Provision for Montana hydroelectric litigation
 
 
  66 
 
 
  8 
 
Change in current assets and current liabilities
 
 
 
 
 
 
 
 
Counterparty collateral
 
 
 (18)
 
 
  334 
 
 
Other
 
 
 (338)
 
 
 (228)
 
Other operating activities
 
 
 (5)
 
 
  45 
 
 
 
Net cash provided by operating activities
 
 
  2,034 
 
 
  1,852 
Cash Flows from Investing Activities
 
 
 
 
 
 
 
Expenditures for property, plant and equipment
 
 
 (1,597)
 
 
 (1,225)
 
Proceeds from the sale of the Long Island generation business
 
 
  124 
 
 
 
 
Proceeds from the sale of the Maine hydroelectric generation business
 
 
  37 
 
 
  81 
 
Acquisition of LKE, net of cash acquired
 
 
 (6,812)
 
 
 
 
Expenditures for intangible assets
 
 
 (92)
 
 
 (88)
 
Purchases of nuclear plant decommissioning trust investments
 
 
 (128)
 
 
 (227)
 
Proceeds from the sale of nuclear plant decommissioning trust investments
 
 
  114 
 
 
  201 
 
Proceeds from the sale of other investments
 
 
 
 
 
  154 
 
Net (increase) decrease in restricted cash and cash equivalents
 
 
  85 
 
 
  218 
 
Other investing activities
 
 
  39 
 
 
  6 
 
 
 
Net cash used in investing activities
 
 
 (8,230)
 
 
 (880)
Cash Flows from Financing Activities
 
 
 
 
 
 
 
Issuance of long-term debt
 
 
  4,642 
 
 
  298 
 
Retirement of long-term debt
 
 
 (20)
 
 
 (1,016)
 
Issuance of equity, net of issuance costs
 
 
  2,441 
 
 
  60 
 
Payment of common stock dividends
 
 
 (566)
 
 
 (517)
 
Redemption of preferred stock of a subsidiary
 
 
 (54)
 
 
 
 
Debt issuance and bridge facility costs
 
 
 (175)
 
 
 (21)
 
Net increase (decrease) in short-term debt
 
 
  70 
 
 
 (52)
 
Other financing activities
 
 
 (31)
 
 
 (23)
 
 
 
Net cash provided by (used in) financing activities
 
 
  6,307 
 
 
 (1,271)
Effect of Exchange Rates on Cash and Cash Equivalents
 
 
  13 
 
 
 
Net Increase (Decrease) in Cash and Cash Equivalents
 
 
  124 
 
 
 (299)
Cash and Cash Equivalents at Beginning of Period
 
 
  801 
 
 
  1,100 
Cash and Cash Equivalents at End of Period
 
$
  925 
 
$
  801 

(a)
Certain line items for 2010 were impacted by the acquisition of the Kentucky entities on November 1, 2010.
 
 
 

Key Indicators (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
Financial
 
 
 
 
 
2010 
 
2009 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends declared per share
 
 
 
 
 
$ 1.40
 
$ 1.38
Book value per share (a)
 
 
 
 
 
$ 16.98
 
$ 14.57
Market price per share (a)
 
 
 
 
 
$ 26.32
 
$ 32.31
Dividend yield (a)
 
 
 
 
 
5.3%
 
4.3%
Dividend payout ratio (b)
 
 
 
 
 
65%
 
128%
Dividend payout ratio - earnings from ongoing operations (b)(c)
 
 
 
 
 
45%
 
71%
Price/earnings ratio (a)(b)
 
 
 
 
 
12.1 
 
29.9 
Price/earnings ratio - earnings from ongoing operations (a)(b)(c)
 
 
 
 
 
8.4 
 
16.6 
Return on average common equity
 
 
 
 
 
13.26%
 
7.48%
Return on average common equity - earnings from ongoing operations (c)
 
 
 
 
 
18.11%
 
13.61%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
 
 
 
 
 
 
 
Percent
 
 
 
 
 
Percent
(GWh)
 
2010 
 
2009 
 
Change
 
2010 
 
2009 
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domestic Retail Delivered (a)
 
 
 
 
 
 
 
 
 
 
 
 
 
PPL Electric Utilities
 
 8,569 
 
 8,631 
 
(0.7%)
 
 36,883 
 
 36,717 
 
0.5%
 
LKE (b)
 
 5,458 
 
 
 
 
 
 5,458 
 
 
 
 
 
 
Total
 
 14,027 
 
 8,631 
 
62.5%
 
 42,341 
 
 36,717 
 
15.3%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domestic Retail Supplied (c)
 
 7,704 
 
 9,164 
 
(15.9%)
 
 14,595 
 
 38,912 
 
(62.5%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International Delivered
 
 
 
 
 
 
 
 
 
 
 
 
 
United Kingdom
 
 6,684 
 
 6,552 
 
2.0%
 
 26,820 
 
 26,358 
 
1.8%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domestic Wholesale
 
 
 
 
 
 
 
 
 
 
 
 
 
East
 
 14,365 
 
 7,076 
 
103.0%
 
 64,322 
 
 27,522 
 
133.7%
 
West
 
 2,598 
 
 2,986 
 
(13.0%)
 
 10,723 
 
 11,466 
 
(6.5%)
 
LKE (b)
 
 444 
 
 
 
 
 
 444 
 
 
 
 
 
 
Total
 
 17,407 
 
 10,062 
 
73.0%
 
 75,489 
 
 38,988 
 
93.6%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) Represents GWh delivered and billed to retail customers.
(b) Represents GWh for the two months following the November 1, 2010 acquisition.
(c) Represents GWh supplied by PPL EnergyPlus to PPL Electric Utilities as PLR, and to other retail customers in Pennsylvania and
Montana.  Also includes 5,458 GWh supplied by LKE for the two months following the November 1, 2010 acquisition.
 
 
 

Reconciliation of Segment Earnings from Ongoing Operations to Reported Earnings (Diluted)
(After Tax)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter 2010
 
(millions of dollars)
 
 
 
Kentucky
 
International
 
Pennsylvania
 
 
 
Unallocated
 
 
 
 
 
Regulated (a)
 
Regulated
 
Regulated
 
Supply
 
Costs
 
Total
Earnings from Ongoing Operations
 
$
 36 
 
$
 32 
 
$
 26 
 
$
 311 
 
$
 (1)
 
$
 404 
Special Items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy-related economic activity
 
 
 (1)
 
 
 
 
 
 
 
 
 (6)
 
 
 
 
 
 (7)
Foreign currency-related economic hedges
 
 
 
 
 
 3 
 
 
 
 
 
 
 
 
 
 
 
 3 
Sales of assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maine hydroelectric generation business
 
 
 
 
 
 
 
 
 
 
 
 15 
 
 
 
 
 
 15 
Impairments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impacts from emission allowances
 
 
 
 
 
 
 
 
 
 
 
 (1)
 
 
 
 
 
 (1)
LKE acquisition-related costs:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Monetization of certain full-requirement sales contracts
 
 
 
 
 
 
 
 
 
 
 
 (23)
 
 
 
 
 
 (23)
 
Anticipated sale of certain non-core generation facilities
 
 
 
 
 
 
 
 
 
 
 
 (2)
 
 
 
 
 
 (2)
 
Discontinued cash flow hedges & ineffectiveness
 
 
 
 
 
 
 
 
 
 
 
 (9)
 
 
 
 
 
 (9)
 
Reduction of credit facility
 
 
 
 
 
 
 
 
 
 
 
 (6)
 
 
 
 
 
 (6)
 
Bridge Facility costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 (8)
 
 
 (8)
 
Other acquisition-related costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 (14)
 
 
 (14)
Other:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change in U.K. tax rate
 
 
 
 
 
 (1)
 
 
 
 
 
 
 
 
 
 
 
 (1)
 
LKE discontinued operations
 
 
 2 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 2 
 
Montana basin seepage litigation
 
 
 
 
 
 
 
 
 
 
 
 2 
 
 
 
 
 
 2 
Total Special Items
 
 
 1 
 
 
 2 
 
 
 
 
 
 (30)
 
 
 (22)
 
 
 (49)
Reported Earnings
 
$
 37 
 
$
 34 
 
$
 26 
 
$
 281 
 
$
 (23)
 
$
 355 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(per share)
 
 
 
Kentucky
 
International
 
Pennsylvania
 
 
 
Unallocated
 
 
 
 
 
Regulated (a)
 
Regulated
 
Regulated
 
Supply
 
Costs
 
Total
Earnings from Ongoing Operations
 
$
 0.07 
 
$
 0.07 
 
$
 0.05 
 
$
 0.64 
 
 
 
 
$
 0.83 
Special Items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy-related economic activity
 
 
 
 
 
 
 
 
 
 
 
 (0.01)
 
 
 
 
 
 (0.01)
Sales of assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maine hydroelectric generation business
 
 
 
 
 
 
 
 
 
 
 
 0.03 
 
 
 
 
 
 0.03 
LKE acquisition-related costs:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Monetization of certain full-requirement sales contracts
 
 
 
 
 
 
 
 
 
 
 
 (0.05)
 
 
 
 
 
 (0.05)
 
Discontinued cash flow hedges & ineffectiveness
 
 
 
 
 
 
 
 
 
 
 
 (0.02)
 
 
 
 
 
 (0.02)
 
Reduction of credit facility
 
 
 
 
 
 
 
 
 
 
 
 (0.01)
 
 
 
 
 
 (0.01)
 
Bridge Facility costs
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 (0.01)
 
 
 (0.01)
 
Other acquisition-related costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 (0.03)
 
 
 (0.03)
Total Special Items
 
 
 
 
 
 
 
 
 
 
 
 (0.06)
 
 
 (0.04)
 
 
 (0.10)
Reported Earnings
 
$
 0.07 
 
$
 0.07 
 
$
 0.05 
 
$
 0.58 
 
$
 (0.04)
 
$
 0.73 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) The Kentucky Regulated segment includes $10 million of interest expense on the equity units, which were issued in June 2010 to partially fund the LKE
 
acquisition.
 
 
 

Reconciliation of Segment Earnings from Ongoing Operations to Reported Earnings (Diluted)
(After Tax)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year-to-Date December 31, 2010
 
(millions of dollars)
 
 
 
Kentucky
 
International
 
Pennsylvania
 
 
 
Unallocated
 
 
 
 
 
Regulated (a)
 
Regulated
 
Regulated
 
Supply
 
Costs
 
Total
Earnings from Ongoing Operations
 
$
 25 
 
$
 230 
 
$
 115 
 
$
 990 
 
$
 (2)
 
$
 1,358 
Special Items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy-related economic activity
 
 
 (1)
 
 
 
 
 
 
 
 
 (121)
 
 
 
 
 
 (122)
Foreign currency-related economic hedges
 
 
 
 
 
 1 
 
 
 
 
 
 
 
 
 
 
 
 1 
Sales of assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maine hydroelectric generation business
 
 
 
 
 
 
 
 
 
 
 
 15 
 
 
 
 
 
 15 
 
Sundance indemnification
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 
 
 
 
 1 
Impairments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impacts from emission allowances
 
 
 
 
 
 
 
 
 
 
 
 (10)
 
 
 
 
 
 (10)
LKE acquisition-related costs:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Monetization of certain full-requirement sales contracts
 
 
 
 
 
 
 
 
 
 
 
 (125)
 
 
 
 
 
 (125)
 
Anticipated sale of certain non-core generation facilities
 
 
 
 
 
 
 
 
 
 
 
 (64)
 
 
 
 
 
 (64)
 
Discontinued cash flow hedges & ineffectiveness
 
 
 
 
 
 
 
 
 
 
 
 (28)
 
 
 
 
 
 (28)
 
Reduction of credit facility
 
 
 
 
 
 
 
 
 
 
 
 (6)
 
 
 
 
 
 (6)
 
Bridge Facility costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 (52)
 
 
 (52)
 
Other acquisition-related costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 (22)
 
 
 (22)
Other:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Montana hydroelectric litigation
 
 
 
 
 
 
 
 
 
 
 
 (34)
 
 
 
 
 
 (34)
 
Health Care Reform - tax impact
 
 
 
 
 
 
 
 
 
 
 
 (8)
 
 
 
 
 
 (8)
 
Change in U.K. tax rate