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):  August 5, 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
     

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 August 5, 2011, PPL Corporation (“PPL”) issued a press release announcing its financial results for the quarter ended June 30, 2011, 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 August 5, 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 quarter ended June 30, 2011, 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 August 5, 2011, announcing PPL’s financial results for the quarter ended June 30, 2011, and other business matters.
         
     
99.2 -
Slides to be used on the August 5, 2011 webcast among members of PPL’s senior management and financial analysts.

 
 
 
 
 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


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




Dated:  August 5, 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 Second-Quarter Earnings

·  
U.K. acquisition and permanent financing completed in second quarter
·  
Company on track to achieve earnings forecast for 2011

ALLENTOWN, Pa. (Aug. 5, 2011 ) ― PPL Corporation (NYSE: PPL) on Friday (8/5) announced second-quarter reported earnings of $196 million, or $0.35 per share, up from $85 million, or $0.22 per share, a year ago. For the first six months of 2011, PPL’s reported earnings were $597 million, or $1.14 per share, compared with $335 million, or $0.88 per share, a year ago.

Adjusting for special items, PPL’s earnings from ongoing operations for the second quarter were $253 million, or $0.45 per share, compared with $239 million, or $0.62 per share a year ago. For the first six months of 2011, earnings from ongoing operations were $660 million, or $1.26 per share, compared with $596 million, or $1.56 per share a year ago.

PPL’s per share earnings from ongoing operations were lower primarily due to the June 2010 and April 2011 issuances of common stock to fund the acquisitions of regulated utility operations in Kentucky and the United Kingdom. The common stock issuances reduced PPL’s earnings from ongoing operations for the second quarter of 2011 by $0.21 per share and the first half of the year by $0.47 per share.

“We’re on track to achieve our forecasted 2011 earnings from ongoing operations despite extended unplanned outages to replace turbine blades at both of our Susquehanna nuclear units,” said James H. Miller, PPL’s chairman and chief executive officer. “We expect to mitigate the impact of the Susquehanna outages with strong performance from our U.K. business and positive results in other aspects of our competitive supply business,” Miller said.

PPL reaffirmed its 2011 forecast of $2.50 to $2.75 per share in earnings from ongoing operations, including projected after-tax earnings impacts of between $60 million and $65 million for the unplanned nuclear plant outages. PPL’s 2011 forecast of reported earnings is $2.38 to $2.63 per share, reflecting special items recorded through the first six months of 2011.

“We’ve completed two high-quality acquisitions to enhance the regulated portion of PPL’s business portfolio,” Miller said. “This larger, growing, more stable mix of businesses allows us to better face the challenges in the energy sector.

“Through these acquisitions, we’ve more than doubled our number of regulated utility customers, while increasing our generation capacity by more than 70 percent and our total assets by 80 percent. Our prime focus now is execution, to deliver on the financial performance objectives that we’ve established,” Miller said.


Second-Quarter 2011 Earnings Details

PPL’s reported earnings in the second quarter of 2011 included net special item charges of $0.10 per share, primarily for U.K. acquisition-related costs, partially offset by a credit from a settlement of litigation with the U.S. Department of Energy over spent nuclear fuel storage costs. The second quarter of 2010 reflected total special item charges of $0.40 per share.

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 acquisition-related costs and 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)

 
2nd Quarter
 
2011
2010
% Change
Reported Earnings
$196
 $85
+131%
Reported Earnings per Share
$0.35
$0.22
+59%
Earnings from Ongoing Operations
$253
$239
+6%
Per Share Earnings from Ongoing Operations
$0.45
$0.62
-27%

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

Second-Quarter and First-Half 2011 Earnings by Business Segment

The following chart shows PPL’s earnings by business segment for the second quarter and first half of 2011, compared with the same periods of 2010.

   
2nd Quarter
 
Year to Date
Per share
 
2011
 
2010
 
2011
 
2010
                                 
Earnings from ongoing operations
                               
                                 
Kentucky Regulated
 
$
0.06
   
$
-
   
$
0.20
   
$
-
 
International Regulated
   
0.21
     
0.15
     
0.37
     
0.35
 
Pennsylvania Regulated
   
0.06
     
0.04
     
0.17
     
0.14
 
Supply
   
0.12
     
0.43
     
0.52
     
1.07
 
                                 
    Total
 
$
0.45
   
$
0.62
   
$
1.26
   
$
1.56
 
                                 
Special items
                               
                                 
Kentucky Regulated
 
$
-
   
$
-
      $
-
   
$
-
 
International Regulated (a)
   
(0.14
)
   
-
   
 
(0.19
)
   
-
 
Pennsylvania Regulated
   
-
     
-
     
-
     
-
 
Supply
   
0.04
     
(0.35
)
   
0.07
     
(0.63
)
Other (b)
   
-
     
(0.05
)
   
-
     
(0.05
)
                                 
    Total
 
$
(0.10
)
 
$
(0.40
)
 
$
(0.12
)
 
$
(0.68
)
                                 
Reported earnings
                               
                                 
Kentucky Regulated
 
$
0.06
   
$
-
   
$
0.20
   
$
-
 
International Regulated (a)
   
0.07
     
0.15
     
0.18
     
0.35
 
Pennsylvania Regulated
   
0.06
     
0.04
     
0.17
     
0.14
 
Supply
   
0.16
     
0.08
     
0.59
     
0.44
 
Other (b)
   
-
     
(0.05
)
   
-
     
(0.05
)
                                 
    Total
 
$
0.35
   
$
0.22
   
$
1.14
   
$
0.88
 

(a) Includes the bridge facility costs and other acquisition-related costs associated with the April 1, 2011, acquisition of the Midlands utility operations.
(b) This category represents the bridge facility costs and other acquisition-related costs incurred prior to the Nov. 1, 2010, acquisition of the Kentucky utility operations.

( 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

Kentucky Regulated Segment
PPL’s Kentucky regulated segment primarily includes the regulated electricity and natural gas delivery operations and the regulated electricity generation of Louisville Gas and Electric and Kentucky Utilities.

PPL acquired the Kentucky businesses on Nov. 1, 2010. Earnings from ongoing operations of $0.06 per share in the second quarter of 2011 and $0.20 per share in the first six months of 2011 include operating results for these periods, interest expense associated with the equity units issued in June 2010 in connection with the acquisition of these businesses, and dilution of $0.02 and $0.08 per share, respectively, for the quarter and the year-to-date periods.

International Regulated Segment
PPL’s international regulated segment includes the U.K. regulated electricity delivery operations of Western Power Distribution, serving Southwest England and South Wales and, effective April 1, 2011, the Midlands region of England.

Earnings from ongoing operations for this segment increased in the second quarter of 2011 by $0.06 per share compared with a year ago. This increase was the net result of the operating results of the newly acquired Midlands businesses, which include interest expense associated with the equity units issued in April 2011 and the bridge facility established to finance the acquisition of these businesses; higher delivery revenues at WPD’s legacy delivery operations; and dilution of $0.10 per share.

Earnings from ongoing operations for this segment increased during the first six months of 2011 by $0.02 per share compared with a year ago. This increase primarily resulted from the same factors that drove second-quarter 2011 results. Dilution for this period was $0.14 per share.

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

Earnings from ongoing operations for this segment increased in the second quarter of 2011 by $0.02 per share compared with a year ago. This increase was the net result of increased revenue from the Jan. 1, 2011, distribution base rate increase, lower operation and maintenance expenses and dilution of $0.03 per share.

Earnings from ongoing operations for this segment increased during the first six months of 2011 by $0.03 per share compared with a year ago. This increase was the net result of higher distribution revenue, lower income taxes and dilution of $0.06 per share.

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

Earnings from ongoing operations for this segment declined in the second quarter of 2011 by $0.31 per share compared with a year ago. This decline was primarily due to lower energy margins and higher operation and maintenance expenses associated with the timing of the Susquehanna planned nuclear refueling and uprate outage and the unplanned turbine blade-replacement outages. Dilution for this period was $0.06 per share.

Earnings from ongoing operations for this segment during the first six months of 2011 declined by $0.55 per share compared with a year ago. This decline was primarily due to lower Eastern energy margins as a result of lower energy and capacity prices, the Susquehanna turbine blade-replacement outages, and lower coal and hydro generation. Also contributing to this decline were higher operation and maintenance expenses, primarily at the Susquehanna nuclear plant, and dilution of $0.19 per share.

2011 Earnings from Ongoing Operations Forecast by Business Segment
 
 
Earnings
2011
(Forecast)
 
2010
(Actual)
 
(per share)
midpoint
     
         
Kentucky Regulated
$0.41
 
$0.06
*
International Regulated
0.87
 
0.53
 
Pennsylvania Regulated
0.29
 
0.27
 
Supply
1.06
 
2.27
 
Total
$2.63
 
$3.13
 

* The 2010 earnings for the Kentucky regulated segment only include results for November and December.



A full year of earnings from the Kentucky regulated segment and a partial year of earnings from the recently acquired U.K. businesses are the largest positive drivers of PPL’s 2011 projected earnings. Offsetting these benefits is dilution of $0.74 per share associated with PPL’s June 2010 and April 2011 issuances of common stock, expected lower wholesale energy margins and the financial impact of the unplanned turbine-blade replacement outages at Susquehanna.

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 generally to be driven by the results of electricity and natural gas base rate increases that became effective Aug. 1, 2010. Dilution for 2011 is expected to be $0.12 per share.

International Regulated Segment
PPL projects higher segment earnings in 2011 compared with 2010. This increase is primarily due to the partial year of earnings from the newly acquired U.K. businesses. In addition, PPL expects higher earnings from its legacy WPD business compared with 2010, primarily due to higher electricity delivery revenue and a more favorable currency exchange rate, partially offset by higher income taxes, higher depreciation and higher financing costs. Dilution for 2011 is expected to be $0.24 per share.

Pennsylvania Regulated Segment
PPL projects higher segment earnings compared with 2010, as a result of higher distribution revenues from a Jan. 1, 2011, distribution base rate increase, offset by dilution of $0.08 per share.

Supply Segment
PPL expects lower segment earnings compared with 2010 as a result of lower energy margins driven by lower Eastern energy and capacity prices, higher average fuel costs and the turbine blade replacement at the Susquehanna nuclear plant, as well as higher income taxes and higher operation and maintenance expense. Dilution for 2011 is expected to be $0.30 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 10 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 the live webcast of management’s teleconference with financial analysts about second-quarter 2011 financial results at 9 a.m. EDT Friday, Aug. 5. 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# 86974802).

“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.
·  
Acquisition-related costs and charges.
·  
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, full-requirement sales contracts 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) prior to the delivery period that was hedged. Also included in energy-related economic activity is the ineffective portion of qualifying cash flow hedges, the monetization of certain full-requirement sales contracts and premium amortization associated with options. This economic activity is deferred, with the exception of the full-requirement sales contracts that were monetized, and included in earnings from ongoing operations 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 earnings, cash flows, financing, regulation and corporate strategy are "forward-looking statements" within the meaning of the federal securities laws. Although PPL Corporation believes that the expectations and assumptions reflected in these forward-looking statements are reasonable, these statements 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; the length of scheduled and unscheduled outages at our plants; 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 or business acquisitions and dispositions, and PPL Corporation’s ability to realize the expected benefits from acquired businesses, including the 2010 acquisition of Louisville Gas and Electric Company and Kentucky Utilities Company and the 2011 acquisition of the Central Networks electricity distribution businesses in the U.K.; 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 website at www.pplnewsroom.com for additional news and background about PPL Corporation and its subsidiaries.

 
 
 
PPL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL INFORMATION (a)
 
 
 
 
 
 
 
 
 
Condensed Consolidated Balance Sheets (Unaudited)
(Millions of Dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
 
December 31,
 
 
 
 
2011 (b)
 
2010 
Assets
 
 
 
 
 
 
Cash and cash equivalents
 
$
 1,269 
 
$
 925 
Short-term investments
 
 
 
 
 
 163 
Price risk management assets - current
 
 
 1,467 
 
 
 1,918 
Assets held for sale
 
 
 
 
 
 374 
Other current assets
 
 
 2,628 
 
 
 2,808 
Investments
 
 
 726 
 
 
 693 
Property, Plant and Equipment
 
 
 
 
 
 
 
Regulated utility plant - electric and gas
 
 
 22,572 
 
 
 15,994 
 
Less: Accumulated depreciation - regulated utility plant
 
 
 3,290 
 
 
 3,037 
 
 
Regulated utility plant - electric and gas, net
 
 
 19,282 
 
 
 12,957 
 
Non-regulated property, plant and equipment
 
 
 11,446 
 
 
 11,146 
 
Less: Accumulated depreciation - non-regulated property, plant and equipment
 
 
 5,535 
 
 
 5,440 
 
 
Non-regulated property, plant and equipment, net
 
 
 5,911 
 
 
 5,706 
 
Construction work in progress
 
 
 1,415 
 
 
 2,160 
 
Property, Plant and Equipment, net
 
 
 26,608 
 
 
 20,823 
Regulatory assets - noncurrent
 
 
 1,200 
 
 
 1,180 
Goodwill and other intangibles
 
 
 5,268 
 
 
 2,727 
Price risk management assets - noncurrent
 
 
 665 
 
 
 655 
Other noncurrent assets
 
 
 706 
 
 
 571 
Total Assets
 
$
 40,537 
 
$
 32,837 
 
 
 
 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
Short-term debt
 
$
 431 
 
$
 694 
Price risk management liabilities - current
 
 
 817 
 
 
 1,144 
Other current liabilities
 
 
 3,345 
 
 
 3,376 
Long-term debt
 
 
 17,532 
 
 
 12,161 
Deferred income taxes and investment tax credits
 
 
 3,696 
 
 
 2,800 
Price risk management liabilities - noncurrent
 
 
 443 
 
 
 470 
Accrued pension obligations
 
 
 1,015 
 
 
 1,496 
Regulatory liabilities - noncurrent
 
 
 1,023 
 
 
 1,031 
Other noncurrent liabilities
 
 
 1,316 
 
 
 1,187 
Common stock and additional paid-in capital
 
 
 6,780 
 
 
 4,607 
Earnings reinvested
 
 
 4,306 
 
 
 4,082 
Accumulated other comprehensive loss
 
 
 (435)
 
 
 (479)
Noncontrolling interests
 
 
 268 
 
 
 268 
Total Liabilities and Equity
 
$
 40,537 
 
$
 32,837 

(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)
June 30, 2011 balances include the preliminary purchase price allocation associated with the acquisition of WPD Midlands on April 1, 2011.

 
 
 
 PPL CORPORATION AND SUBSIDIARIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Condensed Consolidated Statements of Income (Unaudited)
(Millions of Dollars, Except Share Data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
 
 
 
2011 (a)
 
2010 (b)
 
2011 (a)
 
2010 (b)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
Utility (c)
 
$
 1,484 
 
$
 692 
 
$
 3,020 
 
$
 1,706 
 
Unregulated retail electric and gas (c)
 
 
 181 
 
 
 101 
 
 
 328 
 
 
 205 
 
Wholesale energy marketing
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized
 
 
 732 
 
 
 1,231 
 
 
 1,770 
 
 
 2,590 
 
 
Unrealized economic activity (c)
 
 
 (44)
 
 
 (666)
 
 
 13 
 
 
 (242)
 
Net energy trading margins
 
 
 10 
 
 
 5 
 
 
 21 
 
 
 16 
 
Energy-related businesses
 
 
 126 
 
 
 110 
 
 
 247 
 
 
 204 
 
Total Operating Revenues
 
 
 2,489 
 
 
 1,473 
 
 
 5,399 
 
 
 4,479 
Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Operation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel (c)
 
 
 414 
 
 
 258 
 
 
 889 
 
 
 488 
 
 
Energy purchases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized
 
 
 434 
 
 
 737 
 
 
 1,105 
 
 
 1,746 
 
 
 
Unrealized economic activity (c)
 
 
 (109)
 
 
 (445)
 
 
 (127)
 
 
 118 
 
 
Other operation and maintenance
 
 
 723 
 
 
 419 
 
 
 1,306 
 
 
 863 
 
Depreciation
 
 
 237 
 
 
 125 
 
 
 445 
 
 
 249 
 
Taxes, other than income
 
 
 75 
 
 
 53 
 
 
 148 
 
 
 125 
 
Energy-related businesses
 
 
 120 
 
 
 100 
 
 
 233 
 
 
 188 
 
Total Operating Expenses
 
 
 1,894 
 
 
 1,247 
 
 
 3,999 
 
 
 3,777 
Operating Income
 
 
 595 
 
 
 226 
 
 
 1,400 
 
 
 702 
Other Income (Expense) - net
 
 
 (34)
 
 
 
 
 
 (39)
 
 
 8 
Other-Than-Temporary Impairments
 
 
 
 
 
 3 
 
 
 1 
 
 
 3 
Interest Expense
 
 
 264 
 
 
 131 
 
 
 438 
 
 
 242 
Income from Continuing Operations Before Income Taxes
 
 
 297 
 
 
 92 
 
 
 922 
 
 
 465 
Income Taxes
 
 
 96 
 
 
 7 
 
 
 319 
 
 
 133 
Income from Continuing Operations After Income Taxes
 
 
 201 
 
 
 85 
 
 
 603 
 
 
 332 
Income (Loss) from Discontinued Operations (net of income taxes)
 
 
 (1)
 
 
 7 
 
 
 2 
 
 
 15 
Net Income
 
 
 200 
 
 
 92 
 
 
 605 
 
 
 347 
Net Income Attributable to Noncontrolling Interests
 
 
 4 
 
 
 7 
 
 
 8 
 
 
 12 
Net Income Attributable to PPL Corporation
 
$
 196 
 
$
 85 
 
$
 597 
 
$
 335 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amounts Attributable to PPL Corporation:
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from Continuing Operations After Income Taxes
 
$
 197 
 
$
 78 
 
$
 595 
 
$
 320 
 
Income (Loss) from Discontinued Operations (net of income taxes)
 
 
 (1)
 
 
 7 
 
 
 2 
 
 
 15 
 
Net Income
 
$
 196 
 
$
 85 
 
$
 597 
 
$
 335 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings Per Share of Common Stock - Basic (d)
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from Ongoing Operations
 
$
 0.45 
 
$
 0.62 
 
$
 1.26 
 
$
 1.56 
 
Special Items
 
 
 (0.10)
 
 
 (0.40)
 
 
 (0.12)
 
 
 (0.68)
 
Net Income Available to PPL Corporation Common Shareowners
 
$
 0.35 
 
$
 0.22 
 
$
 1.14 
 
$
 0.88 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings Per Share of Common Stock - Diluted (d)
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from Ongoing Operations
 
$
 0.45 
 
$
 0.62 
 
$
 1.26 
 
$
 1.56 
 
Special Items
 
 
 (0.10)
 
 
 (0.40)
 
 
 (0.12)
 
 
 (0.68)
 
Net Income Available to PPL Corporation Common Shareowners
 
$
 0.35 
 
$
 0.22 
 
$
 1.14 
 
$
 0.88 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-Average Shares of Common Stock Outstanding (in
 
 
 
 
 
 
 
 
 
 
 
 
  thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
 
561,652 
 
 
381,896 
 
 
522,897 
 
 
379,810 
 
Diluted
 
 
562,019 
 
 
382,075 
 
 
523,184 
 
 
380,034 

(a)
2011 includes activity for LKE, which was acquired on November 1, 2010, and for WPD Midlands, which was acquired on April 1, 2011. Consistent with PPL’s policy, the results of operations of WPD Midlands are generally consolidated on a one-month lag.
(b)
Certain amounts from 2010 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 2011 and 2010 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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30,
 
 
 
 
 
2011 (a)
 
2010 
Cash Flows from Operating Activities
 
 
 
 
 
 
 
Net income
 
$
  605 
 
$
  347 
 
Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
 
 
 
 
 
Depreciation
 
 
  446 
 
 
  258 
 
 
Amortization
 
 
  126 
 
 
  87 
 
 
Defined benefit plans - expense
 
 
  71 
 
 
  51 
 
 
Defined benefit plans - funding
 
 
 (550)
 
 
 (345)
 
 
Deferred income taxes and investment tax credits
 
 
  337 
 
 
 (63)
 
 
Unrealized (gains) losses on derivatives, and other hedging activities
 
 
 (165)
 
 
  344 
 
 
Provision for Montana hydroelectric litigation
 
 
  7 
 
 
  59 
 
Change in current assets and current liabilities
 
 
 
 
 
 
 
 
Counterparty collateral
 
 
 (258)
 
 
  98 
 
 
Other
 
 
  173 
 
 
 (344)
 
Other operating activities
 
 
  22 
 
 
  80 
 
 
 
Net cash provided by operating activities
 
 
  814 
 
 
  572 
Cash Flows from Investing Activities
 
 
 
 
 
 
 
Expenditures for property, plant and equipment
 
 
 (1,003)
 
 
 (624)
 
Proceeds from the sale of certain non-core generation facilities
 
 
  381 
 
 
 
 
Proceeds from the sale of the Long Island generation business
 
 
 
 
 
  124 
 
Acquisition of WPD Midlands
 
 
 (5,763)
 
 
 
 
Other investing activities
 
 
  86 
 
 
  42 
 
 
 
Net cash provided by (used in) investing activities
 
 
 (6,299)
 
 
 (458)
Cash Flows from Financing Activities
 
 
 
 
 
 
 
Issuance of long-term debt
 
 
  4,350 
 
 
  1,747 
 
Issuance of common stock
 
 
  2,266 
 
 
  2,410 
 
Payment of common stock dividends
 
 
 (340)
 
 
 (263)
 
Redemption of preferred stock of a subsidiary
 
 
 
 
 
 (54)
 
Debt issuance and credit facility costs
 
 
 (72)
 
 
 (76)
 
Net increase (decrease) in short-term debt
 
 
 (321)
 
 
 (158)
 
Other financing activities
 
 
 (36)
 
 
 (11)
 
 
 
Net cash provided by (used in) financing activities
 
 
  5,847 
 
 
  3,595 
Effect of Exchange Rates on Cash and Cash Equivalents
 
 
 (18)
 
 
 (5)
Net Increase (Decrease) in Cash and Cash Equivalents
 
 
  344 
 
 
  3,704 
Cash and Cash Equivalents at Beginning of Period
 
 
  925 
 
 
  801 
Cash and Cash Equivalents at End of Period
 
$
  1,269 
 
$
  4,505 

(a)
2011 includes activity for LKE, which was acquired on November 1, 2010, and for WPD Midlands, which was acquired on April 1, 2011. Consistent with PPL’s policy, the cash flows of WPD Midlands are generally consolidated on a one-month lag.
 

 
 
 
Key Indicators (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12 Months Ended
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
Financial
 
 
 
 
 
2011 
 
2010 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends declared per share
 
 
 
 
 
$ 1.40
 
$ 1.39
Book value per share (a)
 
 
 
 
 
$ 18.45
 
$ 16.46
Market price per share (a)
 
 
 
 
 
$ 27.83
 
$ 24.95
Dividend yield (a)
 
 
 
 
 
5.0%
 
5.6%
Dividend payout ratio (b)
 
 
 
 
 
59%
 
104%
Dividend payout ratio - earnings from ongoing operations (b) (c)
 
 
 
 
 
50%
 
53%
Price/earnings ratio (a)(b)
 
 
 
 
 
11.7 
 
18.6 
Price/earnings ratio - earnings from ongoing operations (a) (b) (c)
 
 
 
 
 
9.9 
 
9.6 
Return on average common equity
 
 
 
 
 
13.59%
 
8.65%
Return on average common equity - earnings from ongoing operations (c)
 
 
 
 
 
15.41%
 
16.16%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 June 30,
 
6 Months Ended June 30,
 
 
 
 
 
 
 
 
Percent
 
 
 
 
 
Percent
(GWh)
 
2011 
 
2010 
 
Change
 
2011 
 
2010 
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domestic Retail Delivered (a)
 
 
 
 
 
 
 
 
 
 
 
 
 
PPL Electric Utilities
 
 8,717 
 
 8,383 
 
4.0%
 
 19,190 
 
 18,669 
 
2.8%
 
LKE
 
 7,261 
 
 
 
 
 
 15,193 
 
 
 
 
 
 
Total
 
 15,978 
 
 8,383 
 
90.6%
 
 34,383 
 
 18,669 
 
84.2%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domestic Retail Supplied (b)
 
 
 
 
 
 
 
 
 
 
 
 
 
PPL EnergyPlus
 
 2,203 
 
 2,165 
 
1.8%
 
 4,148 
 
 4,631 
 
(10.4%)
 
LKE
 
 7,261 
 
 
 
 
 
 15,193 
 
 
 
 
 
 
Total
 
 9,464 
 
 2,165 
 
337.1%
 
 19,341 
 
 4,631 
 
317.6%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International Delivered
 
 
 
 
 
 
 
 
 
 
 
 
 
United Kingdom (c)
 
 13,780 
 
 6,594 
 
109.0%
 
 21,325 
 
 14,203 
 
50.1%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domestic Wholesale
 
 
 
 
 
 
 
 
 
 
 
 
 
PPL EnergyPlus - East (d)
 
 10,130 
 
 16,010 
 
(36.7%)
 
 24,255 
 
 33,203 
 
(26.9%)
 
PPL EnergyPlus - West
 
 2,333 
 
 2,688 
 
(13.2%)
 
 4,841 
 
 5,449 
 
(11.2%)
 
LKE
 
 756 
 
 
 
 
 
 1,705 
 
 
 
 
 
 
Total
 
 13,219 
 
 18,698 
 
(29.3%)
 
 30,801 
 
 38,652 
 
(20.3%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)    Represents GWh delivered and billed to retail customers.
(b)    Represents GWh supplied by PPL EnergyPlus to PPL Electric Utilities as PLR, and to other retail customers in Pennsylvania, New
 
  Jersey and Montana.  Also includes GWh supplied by LKE to retail customers in Kentucky, Virginia and Tennessee.
(c)    Includes electricity delivered by WPD Midlands since the April 1, 2011 date of acquisition.
(d)    Represents GWh generated plus GWh sold under full-requirement sales contracts.  The change for the 6 months ended June 30 was
 
  primarily due to less full requirement sales contracts in 2011.

 
 
 
Reconciliation of Segment Earnings from Ongoing Operations to Reported Earnings (Diluted)
(After Tax)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2nd Quarter 2011
 
(millions of dollars)
 
 
 
Kentucky
 
International
 
Pennsylvania
 
 
 
 
 
 
 
Regulated
 
Regulated
 
Regulated
 
Supply
 
Total
Earnings from Ongoing Operations
 
$
 31 
 
$
 118 
 
$
 36 
 
$
 68 
 
$
 253 
Special Items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy-related economic activity
 
 
 
 
 
 
 
 
 
 
 
 (3)
 
 
 (3)
Foreign currency-related economic hedges
 
 
 
 
 
 1 
 
 
 
 
 
 
 
 
 1 
Sales of assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-core generation facilities
 
 
 
 
 
 
 
 
 
 
 
 (2)
 
 
 (2)
WPD Midlands acquisition-related costs:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2011 Bridge Facility costs
 
 
 
 
 
 (25)
 
 
 
 
 
 
 
 
 (25)
 
Foreign currency loss on 2011 Bridge Facility
 
 
 
 
 
 (39)
 
 
 
 
 
 
 
 
 (39)
 
Net hedge gains
 
 
 
 
 
 43 
 
 
 
 
 
 
 
 
 43 
 
Hedge ineffectiveness
 
 
 
 
 
 (9)
 
 
 
 
 
 
 
 
 (9)
 
U.K. stamp duty tax
 
 
 
 
 
 (21)
 
 
 
 
 
 
 
 
 (21)
 
Other acquisition-related costs
 
 
 
 
 
 (30)
 
 
 
 
 
 
 
 
 (30)
Other:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Montana hydroelectric litigation
 
 
 
 
 
 
 
 
 
 
 
 (1)
 
 
 (1)
 
Litigation settlement - spent nuclear fuel storage
 
 
 
 
 
 
 
 
 
 
 
 29 
 
 
 29 
Total Special Items
 
 
 
 
 
 (80)
 
 
 
 
 
 23 
 
 
 (57)
Reported Earnings
 
$
 31 
 
$
 38 
 
$
 36 
 
$
 91 
 
$
 196 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(per share)
 
 
 
Kentucky
 
International
 
Pennsylvania
 
 
 
 
 
 
 
Regulated
 
Regulated
 
Regulated
 
Supply
 
Total
Earnings from Ongoing Operations
 
$
 0.06 
 
$
 0.21 
 
$
 0.06 
 
$
 0.12 
 
$
 0.45 
Special Items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy-related economic activity
 
 
 
 
 
 
 
 
 
 
 
 (0.01)
 
 
 (0.01)
WPD Midlands acquisition-related costs:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2011 Bridge Facility costs
 
 
 
 
 
 (0.04)
 
 
 
 
 
 
 
 
 (0.04)
 
Foreign currency loss on 2011 Bridge Facility
 
 
 
 
 
 (0.07)
 
 
 
 
 
 
 
 
 (0.07)
 
Net hedge gains
 
 
 
 
 
 0.08 
 
 
 
 
 
 
 
 
 0.08 
 
Hedge ineffectiveness
 
 
 
 
 
 (0.02)
 
 
 
 
 
 
 
 
 (0.02)
 
U.K. stamp duty tax
 
 
 
 
 
 (0.04)
 
 
 
 
 
 
 
 
 (0.04)
 
Other acquisition-related costs
 
 
 
 
 
 (0.05)
 
 
 
 
 
 
 
 
 (0.05)
Other:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Litigation settlement - spent nuclear fuel storage
 
 
 
 
 
 
 
 
 
 
 
 0.05 
 
 
 0.05 
Total Special Items
 
 
 
 
 
 (0.14)
 
 
 
 
 
 0.04 
 
 
 (0.10)
Reported Earnings
 
$
 0.06 
 
$
 0.07 
 
$
 0.06 
 
$
 0.16 
 
$
 0.35 

 
 
 
Reconciliation of Segment Earnings from Ongoing Operations to Reported Earnings (Diluted)
(After Tax)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year-to-Date June 30, 2011
 
(millions of dollars)
 
 
 
Kentucky
 
International
 
Pennsylvania
 
 
 
 
 
 
 
Regulated
 
Regulated
 
Regulated
 
Supply
 
Total
Earnings from Ongoing Operations
 
$
 106 
 
$
 193 
 
$
 88 
 
$
 273 
 
$
 660 
Special Items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy-related economic activity
 
 
 
 
 
 
 
 
 
 
 
 14 
 
 
 14 
Sales of assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-core generation facilities
 
 
 
 
 
 
 
 
 
 
 
 (3)
 
 
 (3)
Impairments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Emission allowances
 
 
 
 
 
 
 
 
 
 
 
 (1)
 
 
 (1)
 
Renewable energy credits
 
 
 
 
 
 
 
 
 
 
 
 (2)
 
 
 (2)
 
Adjustments - nuclear decommissioning trust investments
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 
 1 
WPD Midlands acquisition-related costs:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2011 Bridge Facility costs
 
 
 
 
 
 (30)
 
 
 
 
 
 
 
 
 (30)
 
Foreign currency loss on 2011 Bridge Facility
 
 
 
 
 
 (39)
 
 
 
 
 
 
 
 
 (39)
 
Net hedge gains
 
 
 
 
 
 39 
 
 
 
 
 
 
 
 
 39 
 
Hedge ineffectiveness
 
 
 
 
 
 (9)
 
 
 
 
 
 
 
 
 (9)
 
U.K. stamp duty tax
 
 
 
 
 
 (21)
 
 
 
 
 
 
 
 
 (21)
 
Other acquisition-related costs
 
 
 
 
 
 (40)
 
 
 
 
 
 
 
 
 (40)
Other:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Montana hydroelectric litigation
 
 
 
 
 
 
 
 
 
 
 
 (1)
 
 
 (1)
 
Litigation settlement - spent nuclear fuel storage
 
 
 
 
 
 
 
 
 
 
 
 29 
 
 
 29 
Total Special Items
 
 
 
 
 
 (100)
 
 
 
 
 
 37 
 
 
 (63)
Reported Earnings
 
$
 106 
 
$
 93 
 
$
 88 
 
$
 310 
 
$
 597 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(per share)
 
 
 
Kentucky
 
International
 
Pennsylvania
 
 
 
 
 
 
 
Regulated
 
Regulated
 
Regulated
 
Supply
 
Total
Earnings from Ongoing Operations
 
$
 0.20 
 
$
 0.37