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
3, 2015
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 3, 2015, PPL Corporation ("PPL") issued
a press release announcing its financial results for the quarter ended June 30, 2015 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 3, 2015, at 8:30 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, 2015 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 |
|
| |
|
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|
|
| |
|
|
99.1 - |
Press Release, dated August 3, 2015, announcing PPL's financial results for the quarter ended June 30, 2015 and other business matters. |
| |
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|
|
| |
|
|
99.2 - |
Slides to be used on the August 3, 2015 webcast among members of PPL's senior management and financial analysts. |
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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/ Stephen K. Breininger |
|
| |
|
Stephen K. Breininger
Vice President and Controller |
|
Dated: August 3, 2015
| Contacts |
For
news media – Ryan Hill, 610-774-5997 |
| |
For financial
analysts – Joseph P. Bergstein, 610-774-5609 |
PPL
Corporation Reports Second-Quarter Earnings
| · | Increases
2015 ongoing earnings forecast to midpoint of $2.20 per share from
$2.15 per share |
| · | Increases
annualized common stock dividend to $1.51 per share |
| · | Per-share
earnings from ongoing operations increase by 11 percent in second quarter and 15 percent
in first half compared to 2014 |
ALLENTOWN,
Pa. (Aug. 3, 2015) -- Reflecting a $1 billion loss, or $1.50 per
share, from discontinued operations associated with the June 1 spinoff of its competitive supply business, PPL Corporation (NYSE:PPL)
on Monday (8/3) reported a second-quarter 2015 loss of $757 million, or $1.13 per share. The loss from discontinued operations
included an $879 million loss reflecting the fair value of the supply business at the time of the spinoff compared to the recorded
value of that segment. For the second quarter of 2014, the company’s reported earnings were $229 million, or $0.34 per share.
The reported
loss for the first six months of 2015 was $110 million, or $0.17 per share, which includes a loss from discontinued operations
of $912 million, or $1.36 per share. The company’s reported earnings for the first half of 2014 were $545 million, or $0.83
per share.
Adjusting for
special items, including results from discontinued operations of PPL’s former Supply segment, second-quarter 2015 earnings
from ongoing operations were $329 million, or $0.49 per share, an increase of more than 11 percent from $296 million in earnings
from ongoing operations (adjusted), or $0.44 per share, in the second quarter of 2014.
Earnings from
ongoing operations for the first half of 2015 were $848 million, or $1.26 per share. This compares to earnings from ongoing operations
(adjusted) of $722 million, or $1.10 per share, in the first half of 2014, representing a 15 percent increase on a per-share basis.
“Based
on the strong performance of PPL’s seven regulated utility businesses in both the U.S. and the U.K., the continued rate
base growth from our significant infrastructure investment, and our solid business plan to grow earnings per share, we are increasing
the midpoint of our 2015 earnings forecast,” said William H. Spence, PPL chairman, president and Chief Executive Officer.
The company
narrowed its 2015 forecast range for earnings from ongoing operations to $2.15 to $2.25 per share from $2.05 to $2.25 per share,
increasing the midpoint from $2.15 to $2.20 per share. The 2015 forecast for reported earnings is $0.72 to $0.82 per share, reflecting
special items recorded through the second quarter.
Bolstered by
the solid performance through the first half of the year, Spence announced that the company is increasing its common stock dividend
to $0.3775 per share on a quarterly
basis. The increased dividend will
be payable Oct. 1 to shareowners of record as of Sept. 10. The increase, PPL’s 13th in 14 years, raises the annualized dividend
from $1.49 per share to $1.51 per share.
Spence also
said the company is confident it can achieve its previous projection of 4-6 percent compound annual earnings growth through at
least 2017.
“The new
PPL Corporation – with its strong growth profile, a solid dividend and diverse mix of holdings – is a unique and very
compelling investment option in the U.S. utility sector,” said Spence.
Second-Quarter
and Year-to-Date 2015 Earnings Details
PPL’s
reported earnings for the second quarter of 2015 included net special item after-tax charges of $1.09 billion, or $1.62 per share,
primarily due to a loss from discontinued operations of $1 billion, or $1.50 per share, associated with the spinoff of the Supply
segment. The loss from discontinued operations included an $879 million charge that reflected the difference between PPL’s
recorded value for the Supply segment and its estimated fair value as of the spinoff date, determined in accordance with applicable
accounting rules under U.S. generally accepted accounting principles (GAAP).
Reported earnings
for the second quarter of 2014 included net special item after-tax charges of $87 million, or $0.13 per share, primarily reflecting
charges of $0.07 per share for an increase in tax valuation allowances related to the then anticipated spinoff of the Supply segment
and $0.05 per share for foreign currency related economic hedges.
Reported earnings
are calculated in accordance with U.S. GAAP. “Earnings from ongoing operations” is a non-GAAP financial measure that
is adjusted for special items, including the Supply segment’s earnings and the loss from discontinued operations associated
with the spinoff of the Supply segment. In addition, 2014 has been adjusted to reflect the impact of dissynergies related to the
spinoff of the Supply segment. Special items and the dissynergies are fully detailed at the end of the news release.
| (Dollars in millions,
except for per share amounts) |
|
2nd
Quarter |
|
|
|
|
Year
to Date |
|
|
| |
|
2015 |
|
2014 |
|
%
Change |
|
|
2015 |
|
2014 |
|
%
Change |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reported earnings |
|
$ |
(757 |
) |
|
$ |
229 |
|
|
(431% |
) |
|
$ |
(110 |
) |
|
$ |
545 |
|
|
(120%) |
| Reported earnings per share |
|
$ |
(1.13 |
) |
|
$ |
0.34 |
|
|
(432% |
) |
|
$ |
(0.17 |
) |
|
$ |
0.83 |
|
|
(120%) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2nd
Quarter |
|
|
|
|
Year
to Date |
|
|
| |
|
2015 |
|
2014
(adjusted) |
|
%
Change |
|
|
2015 |
|
2014
(adjusted) |
|
%
Change |
| Earnings from ongoing operations |
|
$ |
329 |
|
|
$ |
296 |
|
|
11% |
|
|
$ |
848 |
|
|
$ |
722 |
|
|
17% |
Earnings from ongoing operations
per share |
|
$ |
0.49 |
|
|
$ |
0.44 |
|
|
11% |
|
|
$ |
1.26 |
|
|
$ |
1.10 |
|
|
15% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(See the tables at the end of
this news release for a reconciliation of reported earnings to earnings from ongoing operations.)
Second-Quarter
and Year-to-Date Earnings by Segment
| |
|
2nd
Quarter |
|
Year
to Date |
| Per share |
|
2015 |
|
2014
(adjusted) |
|
2015 |
|
2014
(adjusted) |
| Earnings from ongoing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.K. Regulated |
|
$ |
0.36 |
|
|
$ |
0.33 |
|
|
$ |
0.86 |
|
|
$ |
0.74 |
|
| Kentucky Regulated |
|
|
0.09 |
|
|
|
0.09 |
|
|
|
0.25 |
|
|
|
0.25 |
|
| Pennsylvania Regulated |
|
|
0.07 |
|
|
|
0.08 |
|
|
|
0.20 |
|
|
|
0.21 |
|
| Corporate and Other1 |
|
|
(0.03 |
) |
|
|
(0.06 |
) |
|
|
(0.05 |
) |
|
|
(0.10 |
) |
| Total |
|
$ |
0.49 |
|
|
$ |
0.44 |
|
|
$ |
1.26 |
|
|
$ |
1.10 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2nd
Quarter |
|
Year
to Date |
| Special items and dissynergy adjustments |
|
|
2015 |
|
|
|
2014
(adjusted) |
|
|
|
2015 |
|
|
|
2014
(adjusted) |
|
| Special items (expense) benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.K. Regulated |
|
$ |
(0.08 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.02) |
|
|
$ |
(0.14 |
) |
| Kentucky Regulated
|
|
|
(0.02 |
) |
|
|
– |
|
|
|
(0.02) |
|
|
|
– |
|
| Pennsylvania
Regulated |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
| Corporate and Other1 |
|
|
(0.02 |
) |
|
|
(0.08 |
) |
|
|
(0.03) |
|
|
|
(0.08 |
) |
| Supply/Discontinued Operations |
|
|
(1.50 |
) |
|
|
– |
|
|
|
(1.36) |
|
|
|
(0.11 |
) |
| Total special items |
|
|
(1.62 |
) |
|
|
(0.13 |
) |
|
|
(1.43) |
|
|
|
(0.33 |
) |
| Dissynergy adjustments expense (benefit) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Corporate and Other1 |
|
|
– |
|
|
|
0.03 |
|
|
|
– |
|
|
|
0.06 |
|
Total special items
and dissynergy
adjustments |
|
$ |
(1.62 |
) |
|
$ |
(0.10 |
) |
|
$ |
(1.43) |
|
|
$ |
(0.27 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2nd
Quarter |
|
Year
to Date |
| Reported earnings |
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
| U.K. Regulated |
|
$ |
0.28 |
|
|
$ |
0.28 |
|
|
$ |
0.84 |
|
|
$ |
0.60 |
|
| Kentucky Regulated |
|
|
0.07 |
|
|
|
0.09 |
|
|
|
0.23 |
|
|
|
0.25 |
|
| Pennsylvania Regulated |
|
|
0.07 |
|
|
|
0.08 |
|
|
|
0.20 |
|
|
|
0.21 |
|
| Corporate and Other1 |
|
|
(0.05 |
) |
|
|
(0.11 |
) |
|
|
(0.08 |
) |
|
|
(0.12 |
) |
| Supply/Discontinued Operations2 |
|
|
(1.50 |
) |
|
|
– |
|
|
|
(1.36 |
) |
|
|
(0.11 |
) |
| Total |
|
$ |
(1.13 |
) |
|
$ |
0.34 |
|
|
$ |
(0.17 |
) |
|
$ |
0.83 |
|
1This category primarily
includes unallocated corporate-level financing and other costs. For 2014, earnings from ongoing operations (adjusted) and special
items and dissynergy adjustments reflect the impact of dissynergies related to the spinoff of the Supply segment: Indirect O&M
($0.02- 2nd quarter and $0.04 YTD) and Interest ($0.01- 2nd quarter and $0.02 YTD).
22015 reported earnings
includes five months of Supply segment earnings and an $879 million loss reflecting the difference between PPL’s recorded
value for the Supply segment and the estimated fair value, a difference determined by PPL in conjunction with its accounting for
the spinoff.
(See the reconciliation tables
at the end of this news release for an itemization of special items and dissynergy adjustments.)
Key Factors
Impacting Earnings from Ongoing Operations
U.K. Regulated Segment
PPL’s
U.K. Regulated segment primarily consists of the regulated electricity delivery operations of Western Power Distribution, serving
Southwest and Central England and South Wales.
Earnings from
ongoing operations in the second quarter of 2015 increased by $0.03 per share compared with a year ago. This increase was primarily
due to lower depreciation expense and lower income taxes, partially offset by lower utility revenues primarily driven by an April
1, 2015, price decrease associated with the beginning of a new eight-year price control period (RIIO-ED1).
Earnings from
ongoing operations during the first six months of 2015 increased by $0.12 per share compared with a year ago. This increase was
primarily due to lower depreciation expense, lower income taxes and higher utility revenue driven by an April 1, 2014, price increase,
which was partially offset by lower prices driven by an April 1, 2015, price decrease due to the commencement of RIIO-ED1.
Kentucky Regulated Segment
PPL’s
Kentucky Regulated segment primarily consists of the regulated electricity and natural gas operations of Louisville Gas and Electric
Company and Kentucky Utilities Company.
Earnings from ongoing operations
in the second quarter of 2015 were the same as a year ago.
Earnings from
ongoing operations during the first six months of 2015 also were the same as a year ago. This was primarily due to returns on
additional environmental capital investments, offset by lower sales volumes and higher operations and maintenance expense associated
with the retirement of coal-fired generation at the segment’s Cane Run facility.
Pennsylvania Regulated Segment
PPL’s
Pennsylvania Regulated segment consists of the regulated electricity delivery operations of PPL Electric Utilities.
Earnings from
ongoing operations in the second quarter of 2015 decreased by $0.01 per share compared with a year ago. This was primarily due
to higher operations and maintenance expense and higher depreciation expense, partially offset by higher margins from additional
transmission capital investments.
Earnings from
ongoing operations during the first six months of 2015 decreased by $0.01 per share compared with a year ago, driven primarily
by higher depreciation expense, higher operation and maintenance expense, higher financing costs and a benefit recorded in the
first quarter of 2014 for a change in the estimate of a regulatory liability, partially offset by higher margins from additional
transmission capital investments, returns on distribution improvement capital investments and favorable effects of weather.
Corporate and Other
PPL’s
Corporate and Other category primarily includes unallocated corporate-level financing and other costs.
Corporate and
Other improved by $0.03 per share in the second quarter of 2015 compared to the second quarter of 2014 (adjusted) and by $0.05
per share for the first six months
of 2015 compared to a year ago.
This was primarily due to the benefits of the corporate restructuring.
Forecast
of Earnings from Ongoing Operations
| |
2015
forecast
midpoint |
|
2014
earnings from ongoing operations (adjusted) |
| Per share |
|
|
|
|
|
| U.K. Regulated |
$ 1.41 |
|
|
$ 1.37 |
|
| Kentucky Regulated |
0.51 |
|
|
0.47 |
|
| Pennsylvania Regulated |
0.38 |
|
|
0.40 |
|
| Corporate and Other1 |
(0.10 |
) |
|
(0.21 |
) |
| Total |
$
2.20 |
|
|
$
2.03 |
|
1 This category primarily
includes unallocated corporate-level financing and other costs. For 2014, earnings from ongoing operations (adjusted) reflect
the full impact of dissynergies related to the spinoff of the Supply segment: Indirect O&M ($0.07), Interest ($0.05) and Depreciation
($0.01).
See the tables at the end of
this news release for a reconciliation of reported earnings to 2014 earnings from ongoing operations (adjusted).
The midpoint
of PPL’s 2015 forecast earnings from ongoing operations of $2.20 per share represents an increase of 8.4 percent compared
to 2014 earnings from ongoing operations (adjusted). This increase is primarily attributed to increases in the U.K. Regulated
and Kentucky Regulated segments and lower Corporate and Other charges as detailed below.
U.K. Regulated Segment
PPL projects
higher segment earnings in 2015 compared with 2014, primarily driven by lower income taxes and lower depreciation expense, partially
offset by lower utility revenue as Western Power Distribution transitions to a new eight-year price control period (RIIO-ED1)
effective April 1, 2015. The remaining 2015 foreign currency earnings exposure for this segment is fully hedged.
Kentucky Regulated Segment
PPL projects
higher segment earnings in 2015 compared with 2014, primarily driven by electric and gas base rate increases effective July 1,
2015, and returns on additional environmental capital investments, partially offset by higher operation and maintenance expense,
higher depreciation and higher financing costs.
Pennsylvania Regulated Segment
PPL projects
lower segment earnings in 2015 compared with 2014, primarily driven by higher operation and maintenance expense, higher depreciation,
higher financing costs, and a benefit recorded in the first quarter of 2014 for a change in estimate of a regulatory liability,
partially offset by higher transmission margins and returns on distribution improvement capital investments.
Corporate and Other
PPL projects
lower costs in this category in 2015 compared with 2014, primarily driven by the reduction of dissynergies related to the Supply
business spinoff through corporate restructuring efforts and lower income taxes.
Headquartered
in Allentown, Pa., PPL Corporation (NYSE: PPL) is one of the largest companies in the U.S. utility sector. PPL’s seven high-performing,
award-winning utilities serve 10 million customers in the U.S. and United Kingdom. The company and its 13,000 employees are dedicated
to providing exceptional customer service and reliability and delivering superior value for shareowners. To learn more, visit
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 unless otherwise noted.)
Conference Call and Webcast
PPL invites interested parties
to listen to a live Internet webcast of management’s teleconference with financial analysts about second-quarter 2015 financial
results at 8:30 a.m. Eastern time on Monday, Aug. 3. The call will be webcast
live, in audio format, along with slides of the presentation. For those who are unable to listen to the live webcast, a replay
with slides will be accessible at www.pplweb.com/investors for 30
days after the call. Interested individuals can access the live conference call via telephone at 1-888-317-6003. International
participants should call 1-412-317-6061. Participants in Canada should call 1-866-284-3684. Participants will need to enter the
following “Elite Entry” number in order to join the conference: 6332528.
# # #
“Earnings
from ongoing operations,” should not be considered as an alternative to reported earnings, or net income, which is an indicator
of operating performance determined in accordance with U.S. 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 earnings excluding the Supply segment, as the spinoff was completed
June 1, 2015. Other companies may use different measures to present financial performance. “Earnings from ongoing operations”
is adjusted for the impact of special items as described below, which includes the Supply segment’s earnings now reflected
in discontinued operations, as PPL completed the spinoff of the Supply segment on June 1, 2015. Also included in special items
is the loss on spinoff resulting from the fair value of the Supply segment being less than PPL’s recorded value as of June
1, 2015, the date of the spinoff. “Earnings from ongoing operations (adjusted)” for 2014 also reflects, within the
Corporate and Other category, the impact of spinoff dissynergies that would remain with PPL after the completion of the transaction,
if left unmitigated.
“Earnings from ongoing
operations” is adjusted for the impact of special items. Special items include:
| • | Unrealized gains
or losses on foreign currency-related economic hedges. |
| • | Supply segment earnings. |
| • | Loss on the spinoff
of the Supply segment. |
| • | Gains and losses
on sales of assets not in the ordinary course of business. |
| • | Workforce reduction
and other restructuring effects. |
| • | Acquisition and
divestiture-related adjustments. |
| • | Other charges or
credits that are, in management’s view, not reflective of the company’s ongoing
operations. |
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 for energy in our service territories; weather conditions affecting customer energy usage and operating costs; the
effect of any business or industry restructuring, including the ability of PPL Corporation to realize all or a significant portion
of the anticipated cost savings from the corporate restructuring efforts following the Supply business spinoff; the profitability
and liquidity of PPL Corporation and its subsidiaries; new accounting requirements or new interpretations or applications of existing
requirements; operating performance of our facilities; the length of scheduled and unscheduled outages at our generating plants;
environmental conditions and requirements and the related costs of compliance; system conditions and operating costs; development
of new projects, markets and technologies; performance of new ventures; asset or business acquisitions and dispositions; any impact
of hurricanes or other severe weather on our business; 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; British pound sterling to U.S. dollar 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
our 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) |
| |
|
|
|
June 30, |
|
December 31, |
| |
|
|
|
2015
|
|
2014
(b) |
| Assets |
|
|
|
|
|
|
| Cash
and cash equivalents |
|
$ |
846
|
|
$ |
1,399
|
| Short-term
investments |
|
|
|
|
|
120
|
| Accounts
receivable |
|
|
843
|
|
|
808
|
| Unbilled
revenues |
|
|
431
|
|
|
517
|
| Fuel,
materials and supplies |
|
|
315
|
|
|
381
|
| Current
assets of discontinued operations |
|
|
|
|
|
2,600
|
| Other
current assets |
|
|
435
|
|
|
334
|
| Property,
Plant and Equipment |
|
|
|
|
|
|
| |
Regulated
utility plant |
|
|
32,990
|
|
|
30,568
|
| |
Less:
Accumulated depreciation - regulated utility plant |
|
|
5,480
|
|
|
5,361
|
| |
|
Regulated
utility plant, net |
|
|
27,510
|
|
|
25,207
|
| |
Non-regulated
property, plant and equipment |
|
|
537
|
|
|
592
|
| |
Less:
Accumulated depreciation - non-regulated property, plant and equipment |
|
|
168
|
|
|
162
|
| |
|
Non-regulated
property, plant and equipment, net |
|
|
369
|
|
|
430
|
| |
Construction
work in progress |
|
|
1,339
|
|
|
2,532
|
| |
Property,
Plant and Equipment, net |
|
|
29,218
|
|
|
28,169
|
| Noncurrent
regulatory assets |
|
|
1,569
|
|
|
1,562
|
| Goodwill
and other intangibles |
|
|
4,248
|
|
|
4,335
|
| Noncurrent
assets of discontinued operations |
|
|
|
|
|
8,317
|
| Other
noncurrent assets |
|
|
339
|
|
|
322
|
| Total
Assets |
|
$ |
38,244
|
|
$ |
48,864
|
| |
|
|
|
|
|
|
|
|
| Liabilities
and Equity |
|
|
|
|
|
|
| Short-term
debt |
|
$ |
1,100
|
|
$ |
836
|
| Long-term
debt due within one year |
|
|
1,000
|
|
|
1,000
|
| Accounts
payable |
|
|
902
|
|
|
995
|
| Current
liabilities of discontinued operations |
|
|
|
|
|
2,775
|
| Other
current liabilities |
|
|
1,507
|
|
|
1,837
|
| Long-term
debt |
|
|
17,103
|
|
|
17,173
|
| Deferred
income taxes and investment tax credits |
|
|
3,668
|
|
|
3,359
|
| Accrued
pension obligations |
|
|
1,078
|
|
|
1,457
|
| Asset
retirement obligations |
|
|
487
|
|
|
324
|
| Noncurrent
regulatory liabilities |
|
|
977
|
|
|
992
|
| Noncurrent
liabilities of discontinued operations |
|
|
|
|
|
3,963
|
| Other
noncurrent liabilities |
|
|
481
|
|
|
525
|
| Common
stock and additional paid-in capital |
|
|
9,571
|
|
|
9,440
|
| Earnings
reinvested (c) |
|
|
2,654
|
|
|
6,462
|
| Accumulated
other comprehensive loss |
|
|
(2,284) |
|
|
(2,274) |
| Total
Liabilities and Equity |
|
$ |
38,244
|
|
$ |
48,864
|
| (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) | Amounts have been reclassified to reflect
the Supply segment as a discontinued operation. |
| (c) | 2015 reflects the impact of the spinoff
of the Supply segment and a $3.2 billion related dividend. |
| PPL
CORPORATION AND SUBSIDIARIES |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Condensed
Consolidated Statements of Income (Loss) (Unaudited) |
| (Millions
of Dollars, except share data) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Three
Months Ended June 30, |
|
Six
Months Ended June 30, |
| |
|
|
|
|
2015
(a) |
|
2014
(a) |
|
2015
(a) |
|
2014
(a) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Utility |
|
$ |
1,765
|
|
$ |
1,830
|
|
$ |
3,979
|
|
$ |
3,992
|
| |
Energy-related
businesses |
|
|
16
|
|
|
19
|
|
|
32
|
|
|
35
|
| |
Total
Operating Revenues |
|
|
1,781
|
|
|
1,849
|
|
|
4,011
|
|
|
4,027
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Operation |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fuel
|
|
|
214
|
|
|
232
|
|
|
467
|
|
|
508
|
| |
|
Energy
purchases |
|
|
170
|
|
|
171
|
|
|
499
|
|
|
510
|
| |
|
Other
operation and maintenance |
|
|
454
|
|
|
447
|
|
|
897
|
|
|
887
|
| |
Depreciation
|
|
|
216
|
|
|
230
|
|
|
432
|
|
|
455
|
| |
Taxes,
other than income |
|
|
76
|
|
|
77
|
|
|
162
|
|
|
160
|
| |
Energy-related
businesses |
|
|
13
|
|
|
14
|
|
|
26
|
|
|
28
|
| |
Total
Operating Expenses |
|
|
1,143
|
|
|
1,171
|
|
|
2,483
|
|
|
2,548
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating
Income |
|
|
638
|
|
|
678
|
|
|
1,528
|
|
|
1,479
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other
Income (Expense) - net |
|
|
(102) |
|
|
(74) |
|
|
(14) |
|
|
(103) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest
Expense |
|
|
215
|
|
|
208
|
|
|
424
|
|
|
424
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income
from Continuing Operations Before Income Taxes |
|
|
321
|
|
|
396
|
|
|
1,090
|
|
|
952
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income
Taxes |
|
|
71
|
|
|
166
|
|
|
288
|
|
|
333
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income
from Continuing Operations After Income Taxes |
|
|
250
|
|
|
230
|
|
|
802
|
|
|
619
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income
(Loss) from Discontinued Operations (net of income taxes) |
|
|
(1,007) |
|
|
(1) |
|
|
(912) |
|
|
(74) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net
Income (Loss) |
|
$ |
(757) |
|
$ |
229
|
|
$ |
(110) |
|
$ |
545
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings
Per Share of Common Stock: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Income
from Continuing Operations After Income Taxes Available |
|
|
|
|
|
|
|
|
|
| |
to
PPL Common Shareowners: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Basic |
|
$ |
0.37
|
|
$ |
0.35
|
|
$ |
1.20
|
|
$ |
0.96
|
| |
Diluted |
|
$ |
0.37
|
|
$ |
0.34
|
|
$ |
1.19
|
|
$ |
0.94
|
| |
Net
Income (Loss) Available to PPL Common Shareowners: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Basic |
|
$ |
(1.13) |
|
$ |
0.35
|
|
$ |
(0.17) |
|
$ |
0.84
|
| |
Diluted |
|
$ |
(1.13) |
|
$ |
0.34
|
|
$ |
(0.17) |
|
$ |
0.83
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted-Average
Shares of Common Stock Outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
| (in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Basic |
|
|
668,415
|
|
|
653,132
|
|
|
667,698
|
|
|
642,002
|
| |
Diluted |
|
|
671,286
|
|
|
665,792
|
|
|
670,013
|
|
|
664,927
|
| (a) | Amounts have been reclassified to reflect
the Supply segment as a discontinued operation. |
| PPL
CORPORATION AND SUBSIDIARIES |
| |
|
|
|
|
|
|
|
|
|
| Condensed
Consolidated Statements of Cash Flows (Unaudited) |
| (Millions
of Dollars) |
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Six
Months Ended June 30, |
| |
|
|
|
|
2015
(a) |
|
2014
(a) |
| Cash
Flows from Operating Activities |
|
|
|
|
|
|
| |
Net
income (loss) |
|
$ |
(110) |
|
$ |
545
|
| |
Loss
from discontinued operations (net of income taxes) |
|
|
912
|
|
|
74
|
| |
Income
from continuing operations (net of income taxes) |
|
|
802
|
|
|
619
|
| |
Adjustments
to reconcile Income from continuing operations (net of taxes) to net cash provided by operating activities - continuing operations |
|
|
|
|
|
|
| |
|
Depreciation |
|
|
432
|
|
|
455
|
| |
|
Amortization |
|
|
27
|
|
|
35
|
| |
|
Defined
benefit plans - expense |
|
|
32
|
|
|
27
|
| |
|
Deferred
income taxes and investment tax credits |
|
|
256
|
|
|
253
|
| |
|
Unrealized
(gains) losses on derivatives, and other hedging activities |
|
|
62
|
|
|
69
|
| |
|
Adjustment
to WPD line loss accrual |
|
|
|
|
|
65
|
| |
|
Stock-based
compensation expense |
|
|
38
|
|
|
20
|
| |
|
Other
|
|
|
11
|
|
|
1
|
| |
Change
in current assets and current liabilities |
|
|
|
|
|
|
| |
|
Taxes
payable |
|
|
(129) |
|
|
52
|
| |
|
Accrued
interest |
|
|
(87) |
|
|
(107) |
| |
|
Other
current liabilities |
|
|
(91) |
|
|
(38) |
| |
|
Other
|
|
|
(126) |
|
|
(26) |
| |
Other
operating activities |
|
|
|
|
|
|
| |
|
Defined
benefit plans - funding |
|
|
(289) |
|
|
(186) |
| |
|
Other
|
|
|
32
|
|
|
54
|
| |
|
|
Net
cash provided by operating activities - continuing operations |
|
|
970
|
|
|
1,293
|
| |
Net
cash provided by operating activities - discontinued operations |
|
|
343
|
|
|
290
|
| |
|
|
Net
cash provided by operating activities |
|
|
1,313
|
|
|
1,583
|
| Cash
Flows from Investing Activities |
|
|
|
|
|
|
| |
Investing
activities from continuing operations: |
|
|
|
|
|
|
| |
Expenditures
for property, plant and equipment |
|
|
(1,679) |
|
|
(1,678) |
| |
Expenditures
for intangible assets |
|
|
(24) |
|
|
(24) |
| |
Purchase
of other investments |
|
|
(15) |
|
|
|
| |
Proceeds
from the sale of other investments |
|
|
135
|
|
|
|
| |
Net
decrease in restricted cash and cash equivalents |
|
|
8
|
|
|
7
|
| |
Other
investing activities |
|
|
|
|
|
(5) |
| |
|
|
Net
cash used in investing activities - continuing operations |
|
|
(1,575) |
|
|
(1,700) |
| |
Net
cash used in investing activities - discontinued operations |
|
|
(149) |
|
|
(403) |
| |
|
|
Net
cash used in investing activities |
|
|
(1,724) |
|
|
(2,103) |
| Cash
Flows from Financing Activities |
|
|
|
|
|
|
| |
Financing
activities from continuing operations: |
|
|
|
|
|
|
| |
Issuance
of long-term debt |
|
|
88
|
|
|
296
|
| |
Retirement
of long-term debt |
|
|
|
|
|
(239) |
| |
Issuance
of common stock |
|
|
83
|
|
|
1,017
|
| |
Payment
of common stock dividends |
|
|
(500) |
|
|
(470) |
| |
Net
increase (decrease) in short-term debt |
|
|
276
|
|
|
(217) |
| |
Other
financing activities |
|
|
(18) |
|
|
(38) |
| |
|
|
Net
cash provided by (used in) financing activities - continuing operations |
|
|
(71) |
|
|
349
|
| |
Net
cash provided by (used in) financing activities - discontinued operations |
|
|
(546) |
|
|
138
|
| |
Net
cash distributions to parent from discontinued operations |
|
|
132
|
|
|
184
|
| |
|
|
Net
cash provided by (used in) financing activities |
|
|
(485) |
|
|
671
|
| Effect
of Exchange Rates on Cash and Cash Equivalents |
|
|
(9) |
|
|
16
|
| Net
(Increase) Decrease in Cash and Cash Equivalents included in Discontinued Operations |
|
|
352
|
|
|
(25) |
| Net
Increase (Decrease) in Cash and Cash Equivalents |
|
|
(553) |
|
|
142
|
| Cash
and Cash Equivalents at Beginning of Period |
|
|
1,399
|
|
|
863
|
| Cash
and Cash Equivalents at End of Period |
|
$ |
846
|
|
$ |
1,005
|
| (a) | Amounts have been reclassified to reflect
the Supply segment as a discontinued operation. |
| Key
Indicators (Unaudited) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
12
Months Ended |
| |
|
|
|
|
|
|
|
|
|
|
|
June 30, |
| Financial |
|
|
|
|
|
2015 |
|
2014 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dividends
declared per share of common stock |
|
|
|
|
|
$1.49
|
|
$1.48
|
| Book
value per share (a)(b)(c) |
|
|
|
|
|
$14.85
|
|
$20.68
|
| Market
price per share (a) |
|
|
|
|
|
$29.47
|
|
$35.53
|
| Dividend
yield |
|
|
|
|
|
5.1% |
|
4.2% |
| Dividend
payout ratio (d)(e) |
|
|
|
|
|
92.5% |
|
112.1% |
| Dividend
payout ratio - earnings from ongoing operations (d)(f) |
|
|
|
|
|
67.7% |
|
57.1% |
| Price/earnings
ratio (d)(e) |
|
|
|
|
|
18.3
|
|
26.9
|
| Price/earnings
ratio - earnings from ongoing operations (d)(f) |
|
|
|
|
|
13.4
|
|
13.7
|
| Return
on average common equity (e) |
|
|
|
|
|
8.0% |
|
6.8% |
| Return
on average common equity - earnings from ongoing operations (f) |
|
|
|
|
|
10.8% |
|
13.6% |
| (b) | Based on 669,514 and 664,018 shares
of common stock outstanding (in thousands) at June 30, 2015 and June 30, 2014. |
| (c) | 2015 reflects the impact of the spinoff
of the Supply segment and a $3.2 billion related dividend. |
| (d) | Based on diluted earnings per share. |
| (e) | 2015 includes the impact of the $879
million loss on the spinoff of the Supply segment, reflecting the difference between
PPL’s recorded value for the Supply segment and the estimated fair value determined
in accordance with applicable accounting rules under GAAP. 2015 also includes 11 months
of Supply segment earnings, compared to 12 months in 2014. |
| (f) | The calculation for 2015 includes six
months of earnings from 2014 that were adjusted for Supply segment earnings and the impact
of dissynergies related to the spinoff of the Supply segment. 2014 was not adjusted for
such items. Earnings from ongoing operations is a non-GAAP financial measure that includes
adjustments 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) |
|
2015 |
|
2014 |
|
Change |
|
2015 |
|
2014 |
|
Change |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic
Retail Delivered |
|
|
|
|
|
|
|
|
|
|
|
|
| |
PPL
Electric Utilities |
|
8,467
|
|
8,378
|
|
1.1% |
|
19,128
|
|
19,008
|
|
0.6% |
| |
LKE |
|
7,406
|
|
7,418
|
|
(0.2%) |
|
15,702
|
|
15,913
|
|
(1.3%) |
| |
|
Total |
|
15,873
|
|
15,796
|
|
0.5% |
|
34,830
|
|
34,921
|
|
(0.3%) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic
Retail Supplied |
|
|
|
|
|
|
|
|
|
|
|
|
| |
LKE
(a) |
|
7,406
|
|
7,418
|
|
(0.2%) |
|
15,702
|
|
15,913
|
|
(1.3%) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| International
Delivered |
|
|
|
|
|
|
|
|
|
|
|
|
| |
United
Kingdom |
|
19,036
|
|
18,684
|
|
1.9% |
|
39,829
|
|
39,699
|
|
0.3% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic
Wholesale |
|
|
|
|
|
|
|
|
|
|
|
|
| |
LKE
(b) |
|
499
|
|
532
|
|
(6.2%) |
|
1,183
|
|
1,262
|
|
(6.3%) |
| (a) | Represents GWh supplied by LKE to retail
customers in Kentucky, Virginia and Tennessee. |
| (b) | Represents FERC-regulated municipal
and unregulated off-system sales. |
| Reconciliation
of Segment Reported Earnings (Loss) to Earnings from Ongoing Operations |
| (After-Tax) |
| (Unaudited) |
| |
|
|
| 2nd
Quarter 2015 |
|
(millions
of dollars) |
| |
|
|
U.K. |
|
Kentucky |
|
Pennsylvania |
|
Corporate |
|
Discontinued |
|
|
| |
|
|
Regulated |
|
Regulated |
|
Regulated |
|
and
Other |
|
Operations |
|
Total |
| Reported
Earnings (Loss) (a) |
|
$ |
190
|
|
$ |
47
|
|
$ |
49
|
|
$ |
(36) |
|
$ |
(1,007) |
|
$ |
(757) |
| Less:
Special Items (expense) benefit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Foreign
currency-related economic hedges |
|
|
(71) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(71) |
| Spinoff
of the Supply segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Discontinued
operations (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,007) |
|
|
(1,007) |
| |
Transition
and transaction costs |
|
|
|
|
|
|
|
|
|
|
|
(12) |
|
|
|
|
|
(12) |
| |
Employee
transitional services |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
|
|
|
|
(1) |
| |
Separation
benefits |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
|
|
|
|
(1) |
| Other: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Settlement
of certain income tax positions |
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
|
| |
Certain
valuation allowances |
|
|
|
|
|
(8) |
|
|
|
|
|
|
|
|
|
|
|
(8) |
| |
LKE
acquisition-related adjustment |
|
|
|
|
|
(4) |
|
|
|
|
|
|
|
|
|
|
|
(4) |
| Total
Special Items |
|
|
(53) |
|
|
(12) |
|
|
|
|
|
(14) |
|
|
(1,007) |
|
|
(1,086) |
| Earnings
from Ongoing Operations |
|
$ |
243
|
|
$ |
59
|
|
$ |
49
|
|
$ |
(22) |
|
$ |
- |
|
$ |
329
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
(per
share - diluted) |
| |
|
|
U.K. |
|
Kentucky |
|
Pennsylvania |
|
Corporate |
|
Discontinued |
|
|
| |
|
|
Regulated |
|
Regulated |
|
Regulated |
|
and
Other |
|
Operations |
|
Total |
| Reported
Earnings (Loss) (a) |
|
$ |
0.28
|
|
$ |
0.07
|
|
$ |
0.07
|
|
$ |
(0.05) |
|
$ |
(1.50) |
|
$ |
(1.13) |
| Less:
Special Items (expense) benefit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Foreign
currency-related economic hedges |
|
|
(0.11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.11) |
| Spinoff
of the Supply segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Discontinued
operations (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.50) |
|
|
(1.50) |
| |
Transition
and transaction costs |
|
|
|
|
|
|
|
|
|
|
|
(0.02) |
|
|
|
|
|
(0.02) |
| Other: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Settlement
of certain income tax positions |
|
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.03
|
| |
Certain
valuation allowances |
|
|
|
|
|
(0.01) |
|
|
|
|
|
|
|
|
|
|
|
(0.01) |
| |
LKE
acquisition-related adjustment |
|
|
|
|
|
(0.01) |
|
|
|
|
|
|
|
|
|
|
|
(0.01) |
| Total
Special Items |
|
|
(0.08) |
|
|
(0.02) |
|
|
|
|
|
(0.02) |
|
|
(1.50) |
|
|
(1.62) |
| Earnings
from Ongoing Operations |
|
$ |
0.36
|
|
$ |
0.09
|
|
$ |
0.07
|
|
$ |
(0.03) |
|
$ |
- |
|
$ |
0.49
|
| (a) | Includes an $879 million charge reflecting
the difference between PPL’s recorded value for the Supply segment and the estimated
fair value determined in accordance with applicable accounting rules under GAAP. |
| Reconciliation
of Segment Reported Earnings (Loss) to Earnings from Ongoing Operations |
| (After-Tax) |
| (Unaudited) |
| |
| Year-to-Date
June 30, 2015 |
|
(millions
of dollars) |
| |
|
|
U.K. |
|
Kentucky |
|
Pennsylvania |
|
Corporate |
|
Discontinued |
|
|
| |
|
|
Regulated |
|
Regulated |
|
Regulated |
|
and
Other |
|
Operations |
|
Total |
| Reported
Earnings (Loss) (a) |
|
$ |
565
|
|
$ |
156
|
|
$ |
136
|
|
$ |
(55) |
|
$ |
(912) |
|
$ |
(110) |
| Less:
Special Items (expense) benefit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Foreign
currency-related economic hedges |
|
|
(34) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(34) |
| Spinoff
of the Supply segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Discontinued
operations (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(912) |
|
|
(912) |
| |
Transition
and transaction costs |
|
|
|
|
|
|
|
|
|
|
|
(15) |
|
|
|
|
|
(15) |
| |
Employee
transitional services |
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
|
|
|
|
(3) |
| |
Separation
benefits |
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
|
|
|
|
(2) |
| Other: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
WPD
Midlands acquisition-related adjustment |
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
| |
Settlement
of certain income tax positions |
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
|
| |
Certain
valuation allowances |
|
|
|
|
|
(8) |
|
|
|
|
|
|
|
|
|
|
|
(8) |
| |
LKE
acquisition-related adjustment |
|
|
|
|
|
(4) |
|
|
|
|
|
|
|
|
|
|
|
(4) |
| Total
Special Items |
|
|
(14) |
|
|
(12) |
|
|
|
|
|
(20) |
|
|
(912) |
|
|
(958) |
| Earnings
from Ongoing Operations |
|
$ |
579
|
|
$ |
168
|
|
$ |
136
|
|
$ |
(35) |
|
$ |
- |
|
$ |
848
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
(per
share - diluted) |
| |
|
|
U.K. |
|
Kentucky |
|
Pennsylvania |
|
Corporate |
|
Discontinued |
|
|
| |
|
|
Regulated |
|
Regulated |
|
Regulated |
|
and
Other |
|
Operations |
|
Total |
| Reported
Earnings (Loss) (a) |
|
$ |
0.84
|
|
$ |
0.23
|
|
$ |
0.20
|
|
$ |
(0.08) |
|
$ |
(1.36) |
|
$ |
(0.17) |
| Less:
Special Items (expense) benefit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Foreign
currency-related economic hedges |
|
|
(0.05) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.05) |
| Spinoff
of the Supply segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Discontinued
operations (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.36) |
|
|
(1.36) |
| |
Transition
and transaction costs |
|
|
|
|
|
|
|
|
|
|
|
(0.02) |
|
|
|
|
|
(0.02) |
| |
Employee
transitional services |
|
|
|
|
|
|
|
|
|
|
|
(0.01) |
|
|
|
|
|
(0.01) |
| Other: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Settlement
of certain income tax positions |
|
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.03
|
| |
Certain
valuation allowances |
|
|
|
|
|
(0.01) |
|
|
|
|
|
|
|
|
|
|
|
(0.01) |
| |
LKE
acquisition-related adjustment |
|
|
|
|
|
(0.01) |
|
|
|
|
|
|
|
|
|
|
|
(0.01) |
| Total
Special Items |
|
|
(0.02) |
|
|
(0.02) |
|
|
|
|
|
(0.03) |
|
|
(1.36) |
|
|
(1.43) |
| Earnings
from Ongoing Operations |
|
$ |
0.86
|
|
$ |
0.25
|
|
$ |
0.20
|
|
$ |
(0.05) |
|
$ |
- |
|
$ |
1.26
|
| (a) | Includes an $879 million charge reflecting
the difference between PPL’s recorded value for the Supply segment and the estimated
fair value determined in accordance with applicable accounting rules under GAAP. |
| Reconciliation
of Segment Reported Earnings (Loss) to Earnings from Ongoing Operations (Adjusted) |
| (After-Tax) |
| (Unaudited) |
| |
| 2nd
Quarter 2014 |
|
(millions
of dollars) |
| |
|
|
U.K. |
|
Kentucky |
|
Pennsylvania |
|
Corporate |
|
Discontinued |
|
|
| |
|
|
Regulated |
|
Regulated |
|
Regulated |
|
and
Other (a) |
|
Operations
(a) |
|
Total |
| Reported
Earnings (Loss) |
|
$ |
187
|
|
$ |
58
|
|
$ |
52
|
|
$ |
(67) |
|
$ |
(1) |
|
$ |
229
|
| Special
Items (expense) benefit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Foreign
currency-related economic hedges |
|
|
(33) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(33) |
| Spinoff
of the Supply segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Discontinued
operations |
|
|
|
|
|
|
|
|
|
|
|
(4) |
|
|
(1) |
|
|
(5) |
| |
Change
in tax valuation allowances |
|
|
|
|
|
|
|
|
|
|
|
(46) |
|
|
|
|
|
(46) |
| Other: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
EEI
adjustments |
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
1
|
| |
Separation
benefits |
|
|
|
|
|
|
|
|
(4) |
|
|
|
|
|
|
|
|
(4) |
| Total
Special Items |
|
|
(33) |
|
|
1
|
|
|
(4) |
|
|
(50) |
|
|
(1) |
|
|
(87) |
| Dissynergies
related to the spinoff of the Supply segment (b) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Indirect
operation and maintenance |
|
|
|
|
|
|
|
|
|
|
|
(11) |
|
|
|
|
|
(11) |
| |
Interest
expense |
|
|
|
|
|
|
|
|
|
|
|
(8) |
|
|
|
|
|
(8) |
| |
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
|
|
|
|
(1) |
| Total
dissynergies related to the spinoff of the Supply segment |
|
|
|
|
|
|
|
|
|
|
|
(20) |
|
|
|
|
|
(20) |
| Earnings
from Ongoing Operations (Adjusted) |
|
$ |
220
|
|
$ |
57
|
|
$ |
56
|
|
$ |
(37) |
|
$ |
- |
|
$ |
296
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
(per
share - diluted) (c) |
| |
|
|
U.K. |
|
Kentucky |
|
Pennsylvania |
|
Corporate |
|
Discontinued |
|
|
| |
|
|
Regulated |
|
Regulated |
|
Regulated |
|
and
Other (a) |
|
Operations
(a) |
|
Total |
| Reported
Earnings (Loss) |
|
$ |
0.28
|
|
$ |
0.09
|
|
$ |
0.08
|
|
$ |
(0.11) |
|
$ |
- |
|
$ |
0.34
|
| Special
Items (expense) benefit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Foreign
currency-related economic hedges |
|
|
(0.05) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.05) |
| Spinoff
of the Supply segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Discontinued
operations |
|
|
|
|
|
|
|
|
|
|
|
(0.01) |
|
|
|
|
|
(0.01) |
| |
Change
in tax valuation allowances |
|
|
|
|
|
|
|
|
|
|
|
(0.07) |
|
|
|
|
|
(0.07) |
| Other: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total
Special Items |
|
|
(0.05) |
|
|
|
|
|
|
|
|
(0.08) |
|
|
|
|
|
(0.13) |
| Dissynergies
related to the spinoff of the Supply segment (b) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Indirect
operation and maintenance |
|
|
|
|
|
|
|
|
|
|
|
(0.02) |
|
|
|
|
|
(0.02) |
| |
Interest
expense |
|
|
|
|
|
|
|
|
|
|
|
(0.01) |
|
|
|
|
|
(0.01) |
| Total
dissynergies related to the spinoff of the Supply segment |
|
|
|
|
|
|
|
|
|
|
|
(0.03) |
|
|
|
|
|
(0.03) |
| Earnings
from Ongoing Operations (Adjusted) |
|
$ |
0.33
|
|
$ |
0.09
|
|
$ |
0.08
|
|
$ |
(0.06) |
|
$ |
- |
|
$ |
0.44
|
| (a) | Certain amounts have been reclassified
to reflect the Supply segment as a discontinued operation. |
| (b) | Represents 2014 costs allocated to
the Supply segment that remained with PPL after the spinoff of the Supply segment. |
| (c) | The "If-Converted Method"
has been applied to PPL's 2011 Equity Units, resulting in an immaterial amount of interest
charges being added back to earnings and approximately 11 million shares of PPL Common
Stock being treated as outstanding. Both adjustments are only for purposes of calculating
diluted earnings per share. |
| Reconciliation
of Segment Reported Earnings (Loss) to Earnings from Ongoing Operations (Adjusted) |
| (After-Tax) |
| (Unaudited) |
| |
| Year-to-Date
June 30, 2014 |
|
(millions
of dollars) |
| |
|
|
U.K. |
|
Kentucky |
|
Pennsylvania |
|
Corporate |
|
Discontinued |
|
|
| |
|
|
Regulated |
|
Regulated |
|
Regulated |
|
and
Other (a) |
|
Operations
(a) |
|
Total |
| Reported
Earnings (Loss) |
|
$ |
393
|
|
$ |
165
|
|
$ |
137
|
|
$ |
(76) |
|
$ |
(74) |
|
$ |
545
|
| Special
Items (expense) benefit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Foreign
currency-related economic hedges |
|
|
(39) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(39) |
| Spinoff
of the Supply segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Discontinued
operations |
|
|
|
|
|
|
|
|
|
|
|
(6) |
|
|
(74) |
|
|
(80) |
| |
Change
in tax valuation allowances |
|
|
|
|
|
|
|
|
|
|
|
(46) |
|
|
|
|
|
(46) |
| Other: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
EEI
adjustments |
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
1
|
| |
Change
in WPD line loss accrual |
|
|
(52) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(52) |
| |
Separation
benefits |
|
|
|
|
|
|
|
|
(4) |
|
|
|
|
|
|
|
|
(4) |
| Total
Special Items |
|
|
(91) |
|
|
1
|
|
|
(4) |
|
|
(52) |
|
|
(74) |
|
|
(220) |
| Dissynergies
related to the spinoff of the Supply segment (b) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Indirect
operation and maintenance |
|
|
|
|
|
|
|
|
|
|
|
(25) |
|
|
|
|
|
(25) |
| |
Interest
expense |
|
|
|
|
|
|
|
|
|
|
|
(15) |
|
|
|
|
|
(15) |
| |
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
|
|
|
|
(3) |
| Total
dissynergies related to the spinoff of the Supply segment |
|
|
|
|
|
|
|
|
|
|
|
(43) |
|
|
|
|
|
(43) |
| Earnings
from Ongoing Operations (Adjusted) |
|
$ |
484
|
|
$ |
164
|
|
$ |
141
|
|
$ |
(67) |
|
$ |
- |
|
$ |
722
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
(per
share - diluted) (c) |
| |
|
|
U.K. |
|
Kentucky |
|
Pennsylvania |
|
Corporate |
|
Discontinued |
|
|
| |
|
|
Regulated |
|
Regulated |
|
Regulated |
|
and
Other (a) |
|
Operations
(a) |
|
Total |
| Reported
Earnings (Loss) |
|
$ |
0.60
|
|
$ |
0.25
|
|
$ |
0.21
|
|
$ |
(0.12) |
|
$ |
(0.11) |
|
$ |
0.83
|
| Special
Items (expense) benefit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Foreign
currency-related economic hedges |
|
|
(0.06) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.06) |
| Spinoff
of the Supply segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Discontinued
operations |
|
|
|
|
|
|
|
|
|
|
|
(0.01) |
|
|
(0.11) |
|
|
(0.12) |
| |
Change
in tax valuation allowances |
|
|
|
|
|
|
|
|
|
|
|
(0.07) |
|
|
|
|
|
(0.07) |
| Other: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Change
in WPD line loss accrual |
|
|
(0.08) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.08) |
| Total
Special Items |
|
|
(0.14) |
|
|
|
|
|
|
|
|
(0.08) |
|
|
(0.11) |
|
|
(0.33) |
| Dissynergies
related to the spinoff of the Supply segment (b) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Indirect
operation and maintenance |
|
|
|
|
|
|
|
|
|
|
|
(0.04) |
|
|
|
|
|
(0.04) |
| |
Interest
expense |
|
|
|
|
|
|
|
|
|
|
|
(0.02) |
|
|
|
|
|
(0.02) |
| Total
dissynergies related to the spinoff of the Supply segment |
|
|
|
|
|
|
|
|
|
|
|
(0.06) |
|
|
|
|
|
(0.06) |
| Earnings
from Ongoing Operations (Adjusted) |
|
$ |
0.74
|
|
$ |
0.25
|
|
$ |
0.21
|
|
$ |
(0.10) |
|
$ |
- |
|
$ |
1.10
|
| (a) | Certain amounts have been reclassified
to reflect the Supply segment as a discontinued operation. |
| (b) | Represents 2014 costs allocated to
the Supply segment that remained with PPL after the spinoff of the Supply segment. |
| (c) | The "If-Converted Method"
has been applied to PPL's 2011 Equity Units, resulting in $9 million of interest charges
(after-tax) being added back to earnings and approximately 21 million shares of PPL Common
Stock being treated as outstanding. Both adjustments are only for purposes of calculating
diluted earnings per share. |
| Reconciliation
of Segment Reported Earnings (Loss) to Earnings from Ongoing Operations (Adjusted) |
| (After-Tax) |
| (Unaudited) |
| |
| Year-to-Date
December 31, 2014 |
|
(per
share - diluted) (a) |
| |
|
U.K. |
|
Kentucky |
|
Pennsylvania |
|
Corporate |
|
Discontinued |
|
|
| |
|
Regulated |
|
Regulated |
|
Regulated |
|
and
Other (b) |
|
Operations
(b) |
|
Total |
| Reported
Earnings (Loss) |
|
$ |
1.48
|
|
$ |
0.47
|
|
$ |
0.39
|
|
$ |
(0.18) |
|
$ |
0.45
|
|
$ |
2.61
|
| Special
Items (expense) benefit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Foreign
currency-related economic hedges |
|
|
0.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.19
|
| Spinoff
of the Supply segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Discontinued
operations |
|
|
|
|
|
|
|
|
|
|
|
(0.01) |
|
|
0.45
|
|
|
0.44
|
| |
Change
in tax valuation allowances |
|
|
|
|
|
|
|
|
|
|
|
(0.07) |
|
|
|
|
|
(0.07) |
| |
Separation
benefits |
|
|
|
|
|
|
|
|
|
|
|
(0.02) |
|
|
|
|
|
(0.02) |
| Other: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Change
in WPD line loss accrual |
|
|
(0.08) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.08) |
| |
Separation
benefits - bargaining unit voluntary program |
|
|
|
|
|
|
|
|
(0.01) |
|
|
|
|
|
|
|
|
(0.01) |
| Total
Special Items |
|
|
0.11
|
|
|
|
|
|
(0.01) |
|
|
(0.10) |
|
|
0.45
|
|
|
0.45
|
| Dissynergies
related to the spinoff of the Supply segment (c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Indirect
operation and maintenance |
|
|
|
|
|
|
|
|
|
|
|
(0.07) |
|
|
|
|
|
(0.07) |
| |
Interest
expense |
|
|
|
|
|
|
|
|
|
|
|
(0.05) |
|
|
|
|
|
(0.05) |
| |
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
(0.01) |
|
|
|
|
|
(0.01) |
| Total
dissynergies related to the spinoff of the Supply segment |
|
|
|
|
|
|
|
|
|
|
|
(0.13) |
|
|
|
|
|
(0.13) |
| Earnings
from Ongoing Operations (Adjusted) |
|
$ |
1.37
|
|
$ |
0.47
|
|
$ |
0.40
|
|
$ |
(0.21) |
|
$ |
|
|
$ |
2.03
|
| (a) | The
"If-Converted Method" has been applied to PPL's 2011 Equity Units, resulting
in $9 million of interest charges (after-tax) being added back to earnings and approximately
11 million shares of PPL Common Stock being treated as outstanding. Both adjustments
are only for purposes of calculating diluted earnings per share. |
| (b) | Certain amounts have been reclassified
to reflect the Supply segment as a discontinued operation. |
| (c) | Represents 2014 costs allocated to
the Supply segment that remained with PPL after the spinoff of the Supply segment. |
| Reconciliation
of PPL's Forecast of Reported Earnings (Loss) to Earnings from Ongoing Operations |
| (After-Tax) |
|
|
|
|
|
|
| (Unaudited) |
|
|
|
|
|
|
| |
Forecast
(per share - diluted) |
| |
|
Midpoint |
|
|
| |
|
U.K. |
|
Kentucky |
|
Pennsylvania |
|
Corporate |
|
Discontinued |
|
|
|
High |
|
Low |
| |
|
Regulated |
|
Regulated |
|
Regulated |
|
and
Other |
|
Operations |
|
Total |
|
2015 |
|
2015 |
| Reported
Earnings (Loss) (a) |
$ |
1.39
|
|
$ |
0.49
|
|
$ |
0.38
|
|
$ |
(0.13) |
|
$ |
(1.36) |
|
$ |
0.77
|
|
$ |
0.82
|
|
$ |
0.72
|
| Special
Items (expense) benefit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Foreign
currency-related economic hedges |
|
(0.05) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.05) |
|
|
(0.05) |
|
|
(0.05) |
| Spinoff
of the Supply segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Discontinued
operations (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.36) |
|
|
(1.36) |
|
|
(1.36) |
|
|
(1.36) |
| |
Transition
and transaction costs |
|
|
|
|
|
|
|
|
|
|
(0.02) |
|
|
|
|
|
(0.02) |
|
|
(0.02) |
|
|
(0.02) |
| |
Employee
transitional services |
|
|
|
|
|
|
|
|
|
|
(0.01) |
|
|
|
|
|
(0.01) |
|
|
(0.01) |
|
|
(0.01) |
| Other: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Settlement
of certain income tax positions |
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.03
|
|
|
0.03
|
|
|
0.03
|
| |
Certain
valuation allowances |
|
|
|
|
(0.01) |
|
|
|
|
|
|
|
|
|
|
|
(0.01) |
|
|
(0.01) |
|
|
(0.01) |
| |
LKE
acquisition-related adjustment |
|
|
|
|
(0.01) |
|
|
|
|
|
|
|
|
|
|
|
(0.01) |
|
|
(0.01) |
|
|
(0.01) |
| Total
Special Items |
|
(0.02) |
|
|
(0.02) |
|
|
- |
|
|
(0.03) |
|
|
(1.36) |
|
|
(1.43) |
|
|
(1.43) |
|
|
(1.43) |
| Earnings
from Ongoing Operations |
$ |
1.41
|
|
$ |
0.51
|
|
$ |
0.38
|
|
$ |
(0.10) |
|
$ |
- |
|
$ |
2.20
|
|
$ |
2.25
|
|
$ |
2.15
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
(a)
Includes an $879 million charge reflecting the difference between PPL's recorded value for the Supply segment and the estimated
fair value determined in accordance with applicable rules under GAAP. |
© PPL Corporation 2015 2 nd Quarter Earnings Call PPL Corporation August 3, 2015 Exhibit 99.2
© PPL Corporation 2015 2 Cautionary Statements and Factors That May Affect Future Results Anystatementsmadeinthispresentationaboutfutureoperating resultsorotherfutureeventsareforward-lookingstatements under the Safe Harbor Provisions of the Private Securities LitigationReformActof1995.Actualresultsmaydiffermaterially fromsuchforward-lookingstatements.Adiscussionoffactors thatcouldcauseactualresultsoreventstovaryiscontainedin theAppendixtothispresentationandintheCompany’sSEC filings.
© PPL Corporation 2015 3 The New PPL Investment Proposition Second Quarter Earnings Results, 2015 Earnings Forecast and Operational Overview Segment Results and Financial Overview Q&A W. H. Spence V. Sorgi Agenda W. H. Spence
© PPL Corporation 2015 Investment Highlights 100% rate-regulated business model • Pure-play utility modelwith strong earnings and dividend growth potential • Top 10 U.S. utility market capitalization and part of the S&P 500 • Annual total return proposition of 8% –11% • Diversified by region, regulator and customer class (Pennsylvania, Kentucky and United Kingdom) • Strong growth in regulated utilitybusinesses in the U.S. and U.K. drives projected rate base growth of ~7% CAGR through 2019 • Rate base/Regulated Asset Value (RAV) expected to grow over $9 billion to ~$32 billion by 2019 • Significant Transmission footprint with over 16% CAGR in Transmission rate base through 2019 Diverse asset mix with robust growth • Constructive rate recovery mechanisms in PA and KY support top in sector domestic earnings growth • Regulatory framework in the U.K. provides long-term certainty and creates a premiumjurisdiction • Over 80% of total capital expenditures through 2019 earn returns subject to no or minimal regulatory lag Strong regulatory jurisdictions • Strong investment-grade credit ratings (A-& Baa2 at PPL; A-& A3/Baa1 at utilities) • Disciplined currency hedging program results in more predictable U.K. earnings • Attractive dividend yield of 4.9% (1) , with continued dividend growth expected Solid financial position 4 Attractive future growth prospects • Annual regulated Cap Ex of ~$3.5 billion through 2019 (~$18 billion over 5 years) • Target 4-6% in EPS growth through at least 2017, driven by 8-10% earnings growth in U.S. utilities (1) Dividend yield as of 07/24/2015.
© PPL Corporation 2015 Significant Investment Opportunity with Constructive Rate Mechanisms Drives Earnings Growth (2) Earnings from Ongoing Operations based on 2014 adjusted actual earnings and midpoint of 2015 forecast. (3) Projection based on midpoint of 4% -6% CAGR off 2014 adjusted earnings. Does not represent earnings forecast or guidance for 2017. S t r o n g R e g u l a t e d R a t e B a s e G r o w t h R e a l - t i m e r e c o v e r y o f C a p E x 4% -6% Compound Annual EPS (2) Growth 5 Greater than 12 months 18% 0-6 months 76% 0-6 months 76% $28.0 (3) (1) “0-6 months” primarily consists of 100% of WPD capital expenditures and domestic capital expenditures where the investment occurs within six months of that spend being included in rates, and CWIP Incentive on the Northeast Pocono project. “7-12 months” and “Greater than 12 months” primarily consist of domestic capital expenditures where the investment occurs within 7 to 12 months or greater than 12 months of that spend being included in rates. 2015E –2017E Capital Recovery, Earning on Investment (1) ($bn) $22.8
© PPL Corporation 2015 Rate Base (2015E) Equity Ratio (1) Allowed ROE PPL Electric Utilities D: $3.0 billion T: $2.5 billion 51.60% D: 10.40% T: 11.68% (2) LG&E $3.7 billion 52.75% 10.00% (3) Kentucky Utilities $5.1 billion 53.02% 10.00% (3) Constructive Regulatory Framework Supports Robust Financial Performance Focus on rate structure optimization with constructive recovery mechanisms. EU LG&E KU Environmental Cost Recovery DSIC NA 6 Forward test year methodology CWIP includedin rate base (5)(6) Gas Line Tracker Pass through of Purchased Power Fuel and Gas Supply Adj. Clause Storm Recovery (7) NA Smart Meter Rider (4) NA NA Tracker/Mechanism Transmission Formula Rate Transmission Incentive Adder (2) NA NA NA NA NA NA NA NA Energy Efficiency/DSM 1. As filed in most recent rate cases. 2. Allowed ROE of 12.93% for Susquehanna-Roseland project. 3. No stated ROE for Kentucky Base Rates. However, the Environmental Cost Recovery Mechanism and Gas Line Tracker was awardeda 10% ROE. 4. Pending PAPUC approval. 5. CWIP included in forward test year rate base for LG&E and KU. 6. For PPL EU Transmission, CWIP included for Northeast Pocono reliability project totaling $335 million in capital investment. 7. LG&E and KU have historically been able to recover costs from extraordinary storms, but no formal tracker is in place.
© PPL Corporation 2015 The U.K.; a PremiumRegulatory Jurisdiction The U.K. OFGEM’s RIIO framework (Revenue = Incentives + Innovation + Outputs) allows Distribution Network Operators (DNO’s) to earn premium returns for strong performance and innovation. WPD Investment Advantage Regulatory cycle Fast track incentive Benefit sharing Inflation –adjusted revenues • Revenues set for 8 year period, commencing April 2015 through March 2023 • No volumetric risk in amount of electricity delivered • Ability to collect additional annualrevenue equivalent to 2.5% of total annual expenditures • Ability to retain 50% -70% of cost efficiencies; with benefits shared with customers • RPI Indexation of allowed revenues and Regulatory Asset Value (RAV) • Provides certainty and visibility • Ofgemaccepted business plan spend over 8 years drives RAV growth • WPD only 4 DNO’s awarded fast-track status • Estimated $43 million of annual fast-track revenue • Fast-track status allows WPD to retain 70% of cost efficiencies (O&M and Capital savings), compared to only 53% to 58% for the slow track DNO’s • RPI plan assumptions –2.6% for 2015/16; 3% thereafter (20 year historical average for RPI is 2.9%) Funding & leverage • Regulation requires funding to support investment grade credit ratings • Debt leverage set at 65% of Debt/RAV at the DNO level • U.K. is a self-funding operation; does not require any equity from PPL • Holding company structure provides for higher earned ROEs • PPL targets 80-85% Debt/RAV at consolidated U.K. level • Expected ability to annually repatriate $300 -$500 million of cash back to the U.S in a tax efficient manner Incentive regulation • WPD has a proven track record of outperformance • Additional opportunity to improve earned ROE’s; mid-to- upper teens earned ROE’s (1) expected through 2017 7 • Incentive revenues available for outstanding customer service and reliability RIIO-ED1 Framework (1) U.S. GAAP ROE’s exclude the effects of Goodwill and OCI.
© PPL Corporation 2015 8 $1.40 $1.44 $1.47 $1.49 $1.51 $0.50 $0.75 $1.00 $1.25 $1.50 $1.75 2011 2012 2013 2014 2015E (1) $/Share Annualized Continued Dividend Growth (1) Annualized dividend based on 8/3/2015 announced increase. Actual dividends to be determined by Board of Directors.
© PPL Corporation 2015 Summary of Drivers of 4% to 6% EPS Growth Through 2017 8% -10% Domestic Utility Earnings Growth: PA Regulated • Transmission Cap Ex of $2.0 billion at 11.68% base ROE, 12.93% for $630 million Susquehanna Roseland project drives transmission rate base growth of 18.9% through 2017 • 2015 Distribution Rate Case with rates effective early 2016 • DSIC Cap Ex of $500 million with 2016 DSIC Cap Ex in Base Rates • ~ 70% of gross margin subject to minimal or no volumetric risk KY Regulated • Environmental investment of $1.2 billion at 10% ROE • Gas Line Tracker investment of ~ $150 million at 10% ROE • $132 million 2014 Rate Case with rates effective July 1, 2015 • Assumed minimal load growth Corporate and Other • Corporate restructuring to achieve $75 million in cost reductions essentially complete • Expect no more than $200 million per year in Equity issuances through 2017 (1) Earnings from Ongoing Operations based on 2014 adjusted actual earnings and midpoint of 2015 forecast. (2) Projection based on midpoint of 4% -6% CAGR off 2014 adjusted earnings. Does not represent earnings forecast or guidance for 2017. (3) Based on 2015-2017 projections. Excludes the effects of Goodwill and OCI. 9 U.K. Regulated • No volumetric risk • Flat earnings growth from 2014 –2017 during transition to RIIO-ED1 • Average expected segment earned ROE of 15% to 18% (3) • Expected RAV growth of 5.8% through 2017 • Incentive revenue assumptions: 2015 -$125M; 2016 -$120- $130M; 2017 -$80-$100M; 2018 -$60-$90M • Assumed exchange rate of $1.60/£ for 2015 –2017 • Assumed RPI (inflation rate) –2.6% for 2015/16; 3.0% thereafter (2) 4% -6% Compound Annual EPS (1) Growth
© PPL Corporation 2015 Second Quarter Earnings Results 10
© PPL Corporation 2015 11 P e r S h a r e Note: See Appendix for the reconciliation of reported earnings (loss) to earnings from ongoing operations. (1) Second quarter reported earnings includes a $1 billion loss, or $1.50 per share from discontinued operations associated with theJune 1 spinoff of the Supply segment. Year-to-date reported earnings includes a $912 million loss, or $1.36 per share. (2) 2014 was adjusted for Supply segment earnings and dissynergies related to the spinoff of the Supply segment. 2015 excludes earning from the Supply segment. Earnings Results $0.34 ($1.13) ($1.20) ($0.70) ($0.20) $0.30 $0.80 $1.30 $1.80 $2.30 $2.80 2Q 2014 2Q 2015 Second Quarter Reported Earnings $0.44 $0.49 ($0.75) ($0.25) $0.25 $0.75 $1.25 $1.75 $2.25 $2.75 2Q 2014 (adj) 2Q 2015 Second Quarter Earnings from Ongoing Operations (2) P e r S h a r e $0.83 ($0.17) ($0.75) ($0.25) $0.25 $0.75 $1.25 $1.75 $2.25 $2.75 2Q 2014 2Q 2015 Year-to-date Reported Earnings (1) P e r S h a r e $1.10 $1.26 ($0.75) ($0.25) $0.25 $0.75 $1.25 $1.75 $2.25 $2.75 2Q 2014 (adj) 2Q 2015 Year-to-date Earnings from Ongoing Operations (2) P e r S h a r e (1)
© PPL Corporation 2015 $0.00 $1.00 $2.00 $3.00 2014 Adj Previous 2015E Revised 2015E $2.15 12 P e r S h a r e Increasing 2015 Ongoing Earnings Forecast $2.25 $2.03 Note: See Appendix for the reconciliation of 2014 reported earnings (loss) to earnings from ongoing operations. (1) 2015 earnings and 2014 earnings (adjusted) presented here excludes any earnings from the Supply segment. However, the Supply segment is part of PPL Corporation’s consolidated reported earnings for the first five months of 2015. (2) For 2014, earnings from ongoing operations (adjusted) reflects the full impact of dissynergies related to the spinoff of the Supply segment: Indirect O&M ($0.07), Interest ($0.05) and Depreciation ($0.01). Segment 2014 Earnings (Adjusted) Previous 2015E Midpoint (1) Revised 2015E Midpoint U.K. Regulated $1.37 $1.38 $1.41 Kentucky 0.47 0.48 0.51 PA Regulated 0.40 0.39 0.38 Corporate and Other (0.21) (0.10) (0.10) Total $2.03 $2.15 $2.20 $2.25 (2) $2.05
© PPL Corporation 2015 13 Pennsylvania • Compass Update • Smart Meter Program • Distribution Rate Case Kentucky • KY Rate Case Approval • Cane Run 7 U.K. • RIIO-ED1 effective April 1 Operational Overview
© PPL Corporation 2015 Summary Financial Highlights 14
© PPL Corporation 2015 15 Q2 2015 Q2 2014 (adj) Change Pennsylvania Regulated $0.07 $0.08 $(0.01) Kentucky Regulated 0.09 0.09 0.00 U.K. Regulated 0.36 0.33 0.03 Corporate and Other (0.03) (0.06) 0.03 Total $0.49 $0.44 $0.05 Ongoing Earnings Overview Note: See Appendix for the reconciliation of reported earnings (loss) to earnings from ongoing operations.
© PPL Corporation 2015 16 2nd Quarter 2014 EPS –Ongoing Earnings $0.08 Gross delivery margins 0.01 Operation and maintenance (0.01) Depreciation (0.01) Total (0.01) 2015 EPS –Ongoing Earnings $0.07 Pennsylvania Regulated Segment Earnings Drivers Note: See Appendix for the reconciliation of reported earnings (loss) to earnings from ongoing operations.
© PPL Corporation 2015 17 2nd Quarter 2014 EPS –Ongoing Earnings $0.09 Gross margins 0.01 Operation and maintenance (0.01) Total 0.00 2015 EPS –Ongoing Earnings $0.09 Kentucky Regulated Segment Earnings Drivers Note: See Appendix for the reconciliation of reported earnings (loss) to earnings from ongoing operations.
© PPL Corporation 2015 18 2nd Quarter 2014 EPS –Ongoing Earnings $0.33 Utility revenues (0.03) Depreciation 0.03 Foreign Currency (0.01) Income taxes and other 0.04 Total 0.03 2015 EPS –Ongoing Earnings $0.36 U.K. Regulated Segment Earnings Drivers Note: See Appendix for the reconciliation of reported earnings (loss) to earnings from ongoing operations.
© PPL Corporation 2015 Foreign Currency Hedging Status and RPI Sensitivity Note: FX hedging status as of 07/15/2015. (1) Sensitivity includes the net effects on revenue, O&M and interest expense on index-linked debt. 19 GBP Foreign Currency 2015 2016 2017 Percentage Hedged 100% 90% 40% Hedged Rate (GBP/USD) $1.58 $1.61 $1.62 Budgeted Rate on Open Position (GBP/USD) $1.60 $1.60 $1.60 EPS Sensitivities: Decrease in Rate (USD/GBP) 0.05 $0.00 ($0.01) ($0.03) 0.10 $0.00 ($0.02) ($0.05) Decrease in 2015/2016 RPI (1) (budget assumption 2.6%) 0.5% $0.00 $0.00 ($0.02) Change in EPS
© PPL Corporation 2015 Funding the Growth Strong domestic operating cash flows plus the U.K. dividend sufficient to fund the PPL dividend. Domestic debt and equity issuances fund domestic utility growth. 20 2013A (4) 2014A (4) 2015E (5) Domestic Cash from Operations $1,707 $2,219 $1,610 Domestic Maintenance Capex (1) (861) (900) (650) Dividend From UK Regulated 261 277 290 Cash Available for Distribution $1,107 $1,596 $1,250 Common Dividend (878) (967) (1,000) Cash Available for Reinvestment $229 $629 $250 Domestic Growth Capex ($2,142) ($1,816) ($1,615) Debt Maturities ($747) ($546) ($1,000) Debt Issuances and Change in Cash (2) 1,343 (159) 2,243 Equity Issuances 1,330 1,063 200 Other Investing & Financing Activities (13) 829 (78) Additional Funding Sources for Domestic Growth Capex $1,913 $1,187 $1,365 Note: Information provided on this slide to be updated on an annual basis. See appendix for the reconciliation of Domestic Cash from Operations. (1) Represents book depreciation (2) Includes domestic issuances (short and long term), net of issue costs (3) Includes approximately $900 million of proceeds from sale of the Montana hydros (4) Includes results of the PPL Energy Supply, LLC (5) Full year projections do not include activity related to PPL Energy Supply, LLC for any portion of 2015 (3)
© PPL Corporation 2015 Appendix 21
© PPL Corporation 2015 22 Note: Corporate and Other capital expenditures average approximately $5million per year. (1) WPD figures based on assumed exchange rate of $1.60 / £. (2) Expect between 80% and 90% to receive timely returns via ECR mechanism based on historical experience and future projections. (3) Pending PAPUC approval. Significant Ongoing Capital Expenditure Program… ($ in billions) $3.61 $3.33 $3.33 $3.53 $3.78 (1) (2) ~$18 billion of Capital Expenditures from 2015 –2019 to strengthen safety and reliability of T&D systems and address environmental regulations in Kentucky. • Over 80% of Regulated capital expenditures earn returns subject to minimal or no lag • PA –Implementation of ~$450 million Smart Meter Program to be recovered through a rider mechanism (~$328 million of Capital; ~$122 million O&M) (3) • PA and KY –Continued focus on improving reliability on both Transmission and Distribution systems • KY –Environmental spending in response to regulations for Mercury, SO2, NOX, Ozone, Particulates, Water Discharge and CCR’s (excludes proposed CO2 regulation) • U.K. –Continued focus on asset replacement, faults and overheads and general system reinforcement
© PPL Corporation 2015 23 ( $ i n b i l l i o n s ) (1) WPD figures based on assumed exchange rate of $1.60 / £ for 2015 -2019. (2) Represents capitalization for LKE, as LG&E and KU rate constructs are based on capitalization. Represents Regulatory Asset Value (RAV) for WPD. Strong regulated rate base growth will drive EPS growth. …Critical to Driving Strong Rate Base Growth $32.1 $30.1 $28.0 $26.2 $24.6 $22.8 (2) (1)
© PPL Corporation 2015 U.K. Regulated Segment Cash Repatriation Note: Assumes foreign currency exchange rate of $1.60/£ for 2015E, 2016E and 2017E. ($ in millions) Flexible strategy for meaningful U.K. cash repatriation. 24
© PPL Corporation 2015 25 Note: Total includes Residential, Commercial and Industrial customer classes as well as “Other”, which is not depicted on the charts above. U.S. Regulated Volume Variances Residential Commercial Industrial Total Residential Commercial Industrial Total Weather-Normalized (charted) -2.9% 0.0% 1.5% -0.6% -1.8% 0.8% 0.1% -0.5% Actual 0.2% 1.7% 1.5% 1.1% -2.5% 0.5% 0.1% -0.8% Residential Commercial Industrial Total Residential Commercial Industrial Total Weather-Normalized (charted) 1.1% -1.1% -0.1% 0.1% -1.5% -1.7% 2.1% -0.3% Actual 0.1% -0.8% -0.1% -0.2% -3.0% -2.3% 2.0% -1.1% 1.1% -1.5% -1.1% -1.7% -0.1% 2.1% 0.1% -0.3% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 3-months ended 6/30/2015 vs 6/30/2014 12-months ended 6/30/2015 vs 6/30/2014 % C h a n g e KY Regulated Weather-Normalized Sales -Retail
© PPL Corporation 2015 26 Pennsylvania Rate Case Schedule Timing Milestone 04/2015 Discovery phase begins 06/02/2015 Public input hearings 06/23/2015 Direct of other parties by 07/01/2015 First settlement conference 07/20/2015 Rebuttal testimony due 07/28/2015 Second settlement conference 07/31/2015 Surrebuttaltestimony 08/06-07-10-11/2015 Evidentiary hearings and oral rejoinder 08/11/2015 Close of record 09/01/2015 Main briefs 09/11/2015 Reply briefs 12/17/2015 Public meetings Completed
© PPL Corporation 2015 Kentucky Environmental Controls Low Nox Burners SCR/SNCR Scrubbers Closed Cycle Cooling Tower Dry Handling/Disposal/Beneficial Use Bag-houses NO x NO x SO 2 Water Intake Coal Combustion Residuals (CCRs) (2) Hg (Particulates) Unit 1 x x x x (1) (3) Unit 2 x x x x (1) x Unit 1 x x x x x x Unit 2 x (4) x x x (3) Unit 3 x x x x x x Unit 4 x x x x x x Unit 1 x (4) x x (1) (4) Unit 2 x (4) x x (1) (4) Unit 3 x x x x (1) (3a) Unit 1 x (4) x (4) x (3b) Unit 2 x (4) x x x (3b) Unit 3 x x x x x (3) Unit 4 x x x x x x Unit 4 (5) (5) (5) (5) (5) (5) Unit 5 (5) (5) (5) (5) (5) (5) Unit 6 (5) (5) (5) (5) (5) (5) Unit 3 x (6) (6) (6) (6) (6) Unit 4 x (6) (6) (6) (6) (6) Green River Cane Run Control Device Addresses Trimble County Ghent Brown Mill Creek 27 x Environmental control equipment already installed (1) Dry handling disposal construction approved by KPSC and permitting or construction underway at Trimble and Brown. Portions o f Ghent systems are operational at this time as other construction activity continues. (2) Wet ash impoundments exist at all plants. (3) Baghouses construction approved by KPSC and construction activity underway at Trimble, Ghent, Brown, and Mill Creek. (3a) Brown 3's commissioning scheduled to start in July 2015. (3b) Mill Creek 1's and 2's systems expect to begin commisioningin third quarter 2015. (4) Standards are station and company based. KU and LG&E Systems are already in compliance. (5) Cane Run units 4 and 5 were retired in June 2015. Cane Run unit 6 was retired in March 2015. (6) As part of the company’s generation capacity plans and EPA regulations, these units are expected to be retired before end of April 2016.
© PPL Corporation 2015 ($ in millions) 2015 2016 2017 2018 2019 PPL Capital Funding $0 $0 $0 $250 $0 PPL Electric Utilities 100 0 0 0 0 LG&E and KU Energy 400 0 0 0 0 Louisville Gas & Electric (1) 250 25 194 98 40 Kentucky Utilities 250 0 0 0 0 WPD 0 460 100 0 0 Total 1,000 485 294 348 40 28 Debt Maturities Note: As of June 30, 2015 (1) Louisville Gas & Electric has several municipal bonds that may be put by the holders before the bonds’ final maturities. These amounts reflect the timing of any put option in 2016 through 2019.
© PPL Corporation 2015 29 Liquidity Profile Note: As of June 30, 2015 Entity Facility Expiration Date Capacity (Millions) Letters of Credit & Commercial Paper Issued (Millions) Borrowed (Millions) Unused Capacity (Millions) PPL Capital Funding Syndicated Credit Facility Nov-2018 $300 $0 $0 $300 Syndicated Credit Facility Jul-2019 300 0 0 300 Bilateral Credit Facility Mar-2016 150 20 0 130 Uncommitted Credit Facility 65 1 0 64 $815 $21 $0 $794 PPL Electric Utilities Syndicated Credit Facility Jul-2019 $300 $169 $0 $131 LG&E and KU Energy (LKE) Syndicated Credit Facility Oct-2018 $75 $0 $75 $0 Louisville Gas & Electric Syndicated Credit Facility Jul-2019 $500 $259 $0 $241 Kentucky Utilities Syndicated Credit Facility Jul-2019 $400 $227 $0 $173 Letter of Credit Facility Oct-2017 198 198 0 0 $598 $425 $0 $173 WPD WPD Plc. Syndicated Credit Facility Dec-2016 £210 £0 £130 £80 WPD (South West) Syndicated Credit Facility Jul-2019 245 0 0 245 WPD (East Midlands) Syndicated Credit Facility Jul-2019 300 0 112 188 WPD (West Midlands) Syndicated Credit Facility Jul-2019 300 0 0 300 Uncommitted Credit Facilities 65 4 0 61 £1,120 £4 £242 £874 Strong liquidity position to fund current operations and growth.
© PPL Corporation 2015 WPD Holding Company LKE Holding Company PPL Electric UtilitiesLKE Operating Companies PPL Capital Funding Credit Rating Secured Unsecured Long-term Issuer Outlook S&P NR BBB+ NR Stable Moody’s NR Baa2 NR Stable Credit Rating Secured Unsecured Long-term Issuer Outlook S&P NR BBB+ A- Stable Moody’s NR Baa3 Baa3 Stable WPD Operating Companies Credit Rating Secured Unsecured Long-term Issuer Outlook S&P NR A- A- Stable Moody’s NR Baa1 Baa1 Stable Credit Rating Secured Unsecured Long-term Issuer Outlook S&P A NR A- Stable Moody’s A1 A3 A3 Stable Credit Rating Secured Unsecured Long-term Issuer Outlook S&P NR BBB+ A- Stable Moody’s NR Baa1 Baa1 Stable Credit Rating Secured Unsecured Long-term Issuer Outlook S&P A NR A- Stable Moody’s A2 Baa1 Baa1 Positive PPL Corporation Credit Rating Secured Unsecured Long-term Issuer Outlook S&P NR NR A- Stable Moody’s NR NR Baa2 Stable Strong Credit Ratings Post-Spin Strong credit profile at our utilities, holding companies and PPL Corporation. 30
© PPL Corporation 2015 31 Reconciliation of Segment Reported Earnings (Loss) to Earnings from Ongoing Operations (1) Includes an $879 million charge reflecting the difference between PPL’s recorded value for the Supply segment and the estimated fair value determined in accordance with applicable accounting rules under GAAP. After-Tax (Unaudited) 2nd Quarter 2015 (millions of dollars) U.K. Kentucky Pennsylvania Corporate Discontinued Regulated Regulated Regulated and Other Operations Total Reported Earnings (Loss) (1) $ 190 $ 47 $ 49 $ (36) $ (1,007) $ (757) Less: Special Items (expense) benefit: Foreign currency-related economic hedges (71) (71) Spinoff of the Supply segment: Discontinued operations (1) (1,007) (1,007) Transition and transaction costs (12) (12) Employee transitional services (1) (1) Separation benefits (1) (1) Other: Settlement of certain income tax positions 18 18 Certain valuation allowances (8) (8) LKE acquisition-related adjustment (4) (4) Total Special Items (53) (12) (14) (1,007) (1,086) Earnings from Ongoing Operations $ 243 $ 59 $ 49 $ (22) $ - $ 329 (per share -diluted) U.K. Kentucky Pennsylvania Corporate Discontinued Regulated Regulated Regulated and Other Operations Total Reported Earnings (Loss) (1) $ 0.28 $ 0.07 $ 0.07 $ (0.05) $ (1.50) $ (1.13) Less: Special Items (expense) benefit: Foreign currency-related economic hedges (0.11) (0.11) Spinoff of theSupply segment: Discontinued operations (1) (1.50) (1.50) Transition and transaction costs (0.02) (0.02) Other: Settlement of certain income tax positions 0.03 0.03 Certain valuation allowances (0.01) (0.01) LKE acquisition-related adjustment (0.01) (0.01) Total Special Items (0.08) (0.02) (0.02) (1.50) (1.62) Earnings from Ongoing Operations $ 0.36 $ 0.09 $ 0.07 $ (0.03) $ - $ 0.49
© PPL Corporation 2015 32 Reconciliation of Segment Reported Earnings (Loss) to Earnings from Ongoing Operations (Adjusted) (1) Certain amounts have been reclassified to reflect the Supply segment as a discontinued operation. (2) Represents 2014 costs allocated to the Supply segment that remained with PPL after the spinoff of the Supply segment. (3) The "If-Converted Method" has been applied to PPL's 2011 Equity Units, resulting in an immaterial amount of interest charges being added back to earnings and approximately 11 million shares of PPL Common Stock being treated as outstanding. Both adjustments are only for purposes of calculating diluted earnings per share. After-Tax (Unaudited) 2nd Quarter 2014 (millions of dollars) U.K. Kentucky Pennsylvania Corporate Discontinued Regulated Regulated Regulated and Other (1) Operations (1) Total Reported Earnings (Loss) $ 187 $ 58 $ 52 $ (67) $ (1) $ 229 Special Items (expense) benefit: Foreign currency-related economic hedges (33) (33) Spinoff of the Supply segment: Discontinued operations (4) (1) (5) Change in tax valuation allowances (46) (46) Other: EEI adjustments 1 1 Separation benefits (4) (4) Total Special Items (33) 1 (4) (50) (1) (87) Dissynergiesrelated to the spinoff of the Supply segment(2) Indirect operation and maintenance (11) (11) Interest expense (8) (8) Depreciation (1) (1) Total dissynergiesrelated to the spinoff of the Supplysegment (20) (20) Earnings from Ongoing Operations (Adjusted) $ 220 $ 57 $ 56 $ (37) $ - $ 296 (per share -diluted) (3) U.K. Kentucky Pennsylvania Corporate Discontinued Regulated Regulated Regulated and Other (1) Operations (1) Total Reported Earnings (Loss) $ 0.28 $ 0.09 $ 0.08 $ (0.11) $ - $ 0.34 Special Items (expense) benefit: Foreign currency-related economic hedges (0.05) (0.05) Spinoff of the Supplysegment: Discontinued operations (0.01) (0.01) Change in tax valuation allowances (0.07) (0.07) Other: EEI adjustments Total Special Items (0.05) (0.08) (0.13) Dissynergiesrelated to the spinoff of the Supply segment(2) Indirect operation and maintenance (0.02) (0.02) Interest expense (0.01) (0.01) Total dissynergiesrelated to the spinoff of the Supply segment (0.03) (0.03) Earnings from Ongoing Operations (Adjusted) $ 0.33 $ 0.09 $ 0.08 $ (0.06) $ - $ 0.44
© PPL Corporation 2015 Reconciliation of Segment Reported Earnings (Loss) to Earnings from Ongoing Operations (1) Includes an $879 million charge reflecting the difference between PPL’s recorded value for the Supply segment and the estimated fair value determined in accordance with applicable accounting rules under GAAP. 33 After-Tax (Unaudited) Year-to-Date June 30, 2015 (millions of dollars) U.K. Kentucky Pennsylvania Corporate Discontinued Regulated Regulated Regulated and Other Operations Total Reported Earnings (Loss) (1) $ 565 $ 156 $ 136 $ (55) $ (912) $ (110) Less: Special Items (expense) benefit: Foreign currency-related economic hedges (34) (34) Spinoff of the Supply segment: Discontinued operations (1) (912) (912) Transition and transaction costs (15) (15) Employee transitional services (3) (3) Separation benefits (2) (2) Other: WPD Midlands acquisition-related adjustment 2 2 Settlement of certain income tax positions 18 18 Certain valuation allowances (8) (8) LKE acquisition-related adjustment (4) (4) Total Special Items (14) (12) (20) (912) (958) Earnings from Ongoing Operations $ 579 $ 168 $ 136 $ (35) $ - $ 848 (per share -diluted) U.K. Kentucky Pennsylvania Corporate Discontinued Regulated Regulated Regulated and Other Operations Total Reported Earnings (Loss) (1) $ 0.84 $ 0.23 $ 0.20 $ (0.08) $ (1.36) $ (0.17) Less: Special Items (expense) benefit: Foreign currency-related economic hedges (0.05) (0.05) Spinoff of the Supply segment: Discontinued operations (1) (1.36) (1.36) Transition and transaction costs (0.02) (0.02) Employee transitional services (0.01) (0.01) Other: Settlement of certain income tax positions 0.03 0.03 Certain valuation allowances (0.01) (0.01) LKE acquisition-related adjustment (0.01) (0.01) Total Special Items (0.02) (0.02) (0.03) (1.36) (1.43) Earnings from Ongoing Operations $ 0.86 $ 0.25 $ 0.20 $ (0.05) $ - $ 1.26
© PPL Corporation 2015 Reconciliation of Segment Reported Earnings (Loss) to Earnings from Ongoing Operations (Adjusted) 34 (1) Certain amounts have been reclassified to reflect the Supply segment as a discontinued operation. (2) Represents 2014 costs allocated to the Supply segment that remained with PPL after the spinoff of the Supply segment. (3) The "If-Converted Method" has been applied to PPL's 2011 Equity Units, resulting in $9 million of interest charges (after-tax) beingadded back to earnings and approximately 21 million shares of PPL Common Stock being treated as outstanding. Both adjustments are only for purposes of calculating diluted earnings per share. After-Tax (Unaudited) Year-to-Date June 30, 2014 (millions of dollars) U.K. Kentucky Pennsylvania Corporate Discontinued Regulated Regulated Regulated and Other (1) Operations (1) Total Reported Earnings (Loss) $ 393 $ 165 $ 137 $ (76) $ (74) $ 545 Special Items (expense) benefit: Foreign currency-related economic hedges (39) (39) Spinoff of the Supply segment: Discontinued operations (6) (74) (80) Change in tax valuation allowances (46) (46) Other: EEI adjustments 1 1 Change in WPD line loss accrual (52) (52) Separation benefits (4) (4) Total Special Items (91) 1 (4) (52) (74) (220) Dissynergiesrelated to the spinoff of the Supply segment(2) Indirect operation and maintenance (25) (25) Interest expense (15) (15) Depreciation (3) (3) Total dissynergiesrelated to the spinoff of the Supply segment (43) (43) Earnings from Ongoing Operations (Adjusted) $ 484 $ 164 $ 141 $ (67) $ - $ 722 (per share -diluted) (3) U.K. Kentucky Pennsylvania Corporate Discontinued Regulated Regulated Regulated and Other (1) Operations (1) Total Reported Earnings (Loss) $ 0.60 $ 0.25 $ 0.21 $ (0.12) $ (0.11) $ 0.83 Special Items (expense) benefit: Foreign currency-related economic hedges (0.06) (0.06) Spinoff of the Supply segment: Discontinued operations (0.01) (0.11) (0.12) Change in tax valuation allowances (0.07) (0.07) Other: Change in WPD line loss accrual (0.08) (0.08) Total Special Items (0.14) (0.08) (0.11) (0.33) Dissynergiesrelated to the spinoff of the Supply segment(2) Indirect operation and maintenance (0.04) (0.04) Interest expense (0.02) (0.02) Total dissynergiesrelated to the spinoff of the Supply segment (0.06) (0.06) Earnings from Ongoing Operations (Adjusted) $ 0.74 $ 0.25 $ 0.21 $ (0.10) $ - $ 1.10
© PPL Corporation 2015 35 Reconciliation of Reported Earnings (Loss) to Earnings from Ongoing Operations (Adjusted) (1) The "If-Converted Method" has been applied to PPL's 2011 Equity Units, resulting in $9 million of interest charges (after-tax) being added back to earnings and approximately 11 million shares of PPL Common Stock being treated as outstanding. Both adjustments are only for purposes of calculating diluted earnings per share. (2) Certain amounts have been reclassified to reflect the Supply segment as a discontinued operation. (3) Represents 2014 costs allocated to the Supply segment that remained with PPL after the spinoff of the Supply segment. After-Tax (Unaudited) Year-to-Date December 31, 2014 (per share -diluted) (1) U.K. Kentucky Pennsylvania Corporate Discontinued Regulated Regulated Regulated and Other (2) Operations (2) Total Reported Earnings (Loss) $ 1.48 $ 0.47 $ 0.39 $ (0.18) $ 0.45 $ 2.61 Special Items (expense) benefit: Foreign currency-related economic hedges 0.19 0.19 Spinoff of the Supply segment: Discontinued operations (0.01) 0.45 0.44 Change in tax valuation allowances (0.07) (0.07) Separation benefits (0.02) (0.02) Other: Change in WPD line loss accrual (0.08) (0.08) Separation benefits -bargaining unit voluntary program (0.01) (0.01) Total Special Items 0.11 (0.01) (0.10) 0.45 0.45 Dissynergiesrelated to the spinoff of the Supply segment(3) Indirect operation and maintenance (0.07) (0.07) Interest expense (0.05) (0.05) Depreciation (0.01) (0.01) Total dissynergiesrelated to the spinoff of the Supply segment (0.13) (0.13) Earnings from Ongoing Operations (Adjusted) $ 1.37 $ 0.47 $ 0.40 $ (0.21) $ $ 2.03
© PPL Corporation 2015 36 Reconciliation of PPL’s Forecast of Reported Earnings (Loss) to Earnings from Ongoing Operations (After-Tax) Unaudited Forecast (per share -diluted) Midpoint U.K. Kentucky Pennsylvania Corporate Discontinued High Low Regulated Regulated Regulated and Other Operations Total 2015 2015 Reported Earnings (Loss) (1) $ 1.39 $ 0.49 $ 0.38 $ (0.13) $ (1.36) $ 0.77 $ 0.82 $ 0.72 Special Items (expense) benefit: Foreign currency-related economic hedges (0.05) (0.05) (0.05) (0.05) Spinoff of the Supply segment: Discontinued operations (1) (1.36) (1.36) (1.36) (1.36) Transition and transaction costs (0.02) (0.02) (0.02) (0.02) Employee transitional services (0.01) (0.01) (0.01) (0.01) Other: Settlement of certain income tax positions 0.03 0.03 0.03 0.03 Certain valuation allowances (0.01) (0.01) (0.01) (0.01) LKE acquisition-related adjustment (0.01) (0.01) (0.01) (0.01) Total Special Items (0.02) (0.02) - (0.03) (1.36) (1.43) (1.43) (1.43) Earnings from Ongoing Operations $ 1.41 $ 0.51 $ 0.38 $ (0.10) $ - $ 2.20 $ 2.25 $ 2.15 (1) Includes an $879 million charge reflecting the difference between PPL's recorded value for the Supply segment and the estimated fair value determined in accordance with applicable rules under GAAP.
© PPL Corporation 2015 37 Gross Margins Summary $ 438 $ 428 $ 10 $ 0.01 Distribution $ 193 $ 189 $ 4 Transmission 90 81 9 $ 0.01 $ 283 $ 270 $ 13 $ 0.01 Total (Millions of Dollars) Three Months Ended June 30, Per Share Diluted 2015 2014 Change (after-tax) KY Gross Margins PA Gross Delivery Margins (Unaudited)
© PPL Corporation 2015 38 Reconciliation of Second Quarter Margins to Operating Income $ 714 $ 476 $ 575 $ 1,765 $ 722 $ 449 $ 659 $ 1,830 16 16 19 19 Total Operating Revenues 714 476 591 1,781 722 449 678 1,849 214 214 231 1 232 28 138 4 170 36 114 21 171 5 (5) 21 (21) 24 27 403 454 25 23 399 447 9 207 216 2 228 230 1 23 52 76 21 56 77 13 13 14 14 Total Operating Expenses 276 193 674 1,143 294 179 698 1,171 $ 438 $ 283 $ (83) $ 638 $ 428 $ 270 $ (20) $ 678 Energy-related businesses Total Three Months Ended June 30, 2015 Operating Revenues Utility Operating Expenses Fuel Energy purchases Energy-related businesses Other operation and maintenance Depreciation Taxes, other than income Energy purchases from affiliate (Unaudited) Margins Three Months Ended June 30, 2014(Millions of Dollars) PA Gross Gross Delivery Operating Gross Delivery Kentucky PA Gross Kentucky Operating Other Income Margins Other Income Margins Margins
© PPL Corporation 2015 39 Reconciliation of Domestic Cash Flows
© PPL Corporation 2015 40 Statementscontainedinthispresentation,includingstatementswithrespecttofutureearnings,cashflows,financing,regulationandcorporate strategyare"forward-lookingstatements"withinthemeaningofthefederalsecuritieslaws.AlthoughPPLCorporationbelievesthatthe expectationsandassumptionsreflectedintheseforward-lookingstatementsarereasonable,thesestatementsaresubjecttoanumberofrisksand uncertainties,andactualresultsmaydiffermateriallyfromtheresultsdiscussedinthestatements.Thefollowingareamongtheimportantfactors thatcouldcauseactualresultstodiffermateriallyfromtheforward-lookingstatements:marketdemandforenergyinourserviceterritories, weatherconditionsaffectingcustomerenergyusageandoperatingcosts;theeffectofanybusinessorindustryrestructuring,includingtheability ofPPLCorporationtorealizeallorasignificantportionoftheanticipatedcostsavingsfromthecorporaterestructuringfollowingtheSupply businessspinoff;theprofitabilityandliquidityofPPLCorporationanditssubsidiaries;newaccountingrequirementsornewinterpretationsor applicationsofexistingrequirements;operatingperformanceofourfacilities;thelengthofscheduledandunscheduledoutagesatourgenerating plants;environmentalconditionsandrequirementsandtherelatedcostsofcompliance;systemconditionsandoperatingcosts;developmentof newprojects,marketsandtechnologies;performanceofnewventures;assetorbusinessacquisitionsanddispositions;anyimpactofhurricanesor othersevereweatheronourbusiness;receiptofnecessarygovernmentpermits,approvals,ratereliefandregulatorycostrecovery;capitalmarket conditionsanddecisionsregardingcapitalstructure;theimpactofstate,federalorforeigninvestigationsapplicabletoPPLCorporationandits subsidiaries;theoutcomeoflitigationagainstPPLCorporationanditssubsidiaries;stockpriceperformance;themarketpricesofequitysecurities andtheimpactonpensionincomeandresultantcashfundingrequirementsfordefinedbenefitpensionplans;thesecuritiesandcreditratingsof PPLCorporationanditssubsidiaries;political,regulatoryoreconomicconditionsinstates,regionsorcountrieswherePPLCorporationorits subsidiariesconductbusiness,includinganypotentialeffectsofthreatenedoractualterrorismorwarorotherhostilities;Britishpoundsterlingto U.S.dollarexchangerates;newstate,federalorforeignlegislation,includingnewtaxlegislation;andthecommitmentsandliabilitiesofPPL Corporationanditssubsidiaries.Anysuchforward-lookingstatementsshouldbeconsideredinlightofsuchimportantfactorsandinconjunction withPPLCorporation'sForm10-KandotherreportsonfilewiththeSecuritiesandExchangeCommission. Forward-Looking Information Statement
© PPL Corporation 2015 41 Definitions of Non-GAAP Financial Measures “Earningsfromongoingoperations,”shouldnotbeconsideredasanalternativetoreportedearnings,ornetincome,whichisanindicatorof operatingperformancedeterminedinaccordancewithU.S.generallyacceptedaccountingprinciples(GAAP). PPLbelievesthat“earningsfrom ongoingoperations,”althoughanon-GAAPfinancialmeasure,isalsousefulandmeaningfultoinvestorsbecauseitprovidesmanagement’sview ofPPL’searningsexcludingtheSupplysegment,asthespinoffwascompletedJune1,2015.Othercompaniesmayusedifferentmeasuresto presentfinancialperformance.“Earningsfromongoingoperations”isadjustedfortheimpactofspecialitemsasdescribedbelow,which includestheSupplysegment’searningsnowreflectedindiscontinuedoperations,asPPLcompletedthespinoffoftheSupplysegmentonJune1, 2015.AlsoincludedinspecialitemsisthelossonspinoffresultingfromthefairvalueoftheSupplysegmentbeinglessthanPPL’srecordedvalue asofJune1,2015,thedateofthespinoff.“Earningsfromongoingoperations(adjusted)”for2014alsoreflects,withintheCorporateandOther category,theimpactofspinoffdissynergiesthatwouldremainwithPPLafterthecompletionofthetransaction,ifleftunmitigated. “Earnings from ongoing operations” is adjusted for the impact of special items. Special items include: • Unrealized gains or losses on foreign currency-related economic hedges. • Supply segment earnings. • Loss on the spinoff of the Supply segment. • Gains and losses on sales of assets not in the ordinary course of business. • Impairment charges. • Workforce reduction and other restructuring effects. • Acquisition and divestiture-related adjustments. • Other charges or credits that are, in management’s view, not reflective of the company’s ongoing operations.
© PPL Corporation 2015 42 Definitions of Non-GAAP Financial Measures PPLutilizesthefollowingnon-GAAPfinancialmeasuresasindicatorsofperformanceforitsbusinesses.Thesemeasuresarenotintendedtoreplace "OperatingIncome,"whichisdeterminedinaccordancewithGAAP,asanindicatorofoveralloperatingperformance. Othercompaniesmayuse differentmeasurestoanalyzeandreporttheirresultsofoperations. Managementbelievesthesemeasuresprovideadditionalusefulcriteriato makeinvestmentdecisions.Theseperformancemeasuresareused,inconjunctionwithotherinformation,byseniormanagementandPPL'sBoard ofDirectorstomanagetheoperationsandanalyzeactualresultscomparedwithbudget. "KentuckyGrossMargins"isasinglefinancialperformancemeasureoftheelectricitygeneration,transmissionanddistributionoperationsofthe KentuckyRegulatedsegment,LKE,LG&EandKU,aswellastheKentuckyRegulatedsegment's,LKE'sandLG&E'sdistributionandsaleofnatural gas. Incalculatingthismeasure,fuel,energypurchasesandcertainvariablecostsofproduction(recordedas"Otheroperationandmaintenance" ontheStatementsofIncome)aredeductedfromrevenues. Inaddition,certainotherexpenses,recordedas"Otheroperationandmaintenance", "Depreciation"and"Taxes,otherthanincome"ontheStatementsofIncome,associatedwithapprovedcostrecoverymechanismsareoffset againsttherecoveryofthoseexpenses,whichareincludedinrevenues.Thesemechanismsallowfordirectrecoveryoftheseexpensesand,insome cases,returnsoncapitalinvestmentsandperformanceincentives. Asaresult,thismeasurerepresentsthenetrevenuesfromelectricityandgas operations. "PennsylvaniaGrossDeliveryMargins"isasinglefinancialperformancemeasureoftheelectricitydeliveryoperationsofthePennsylvania RegulatedsegmentandPPLElectric,whichincludestransmissionanddistributionactivities. Incalculatingthismeasure,utilityrevenuesand expensesassociatedwithapprovedrecoverymechanisms,includingenergyprovidedasaPLR,areoffsetwithminimalimpactonearnings. Costs associatedwiththesemechanismsarerecordedin"Energypurchases,""Otheroperationandmaintenance,"whichisprimarilyAct129costs,and "Taxes,otherthanincome,"whichisprimarilygrossreceiptstax. ThisperformancemeasureincludesPLRenergypurchasesbyPPLElectricfrom PPLEnergyPlus,whicharereflectedin"Energypurchasesfromaffiliate"inthereconciliationtables.AsaresultofthespinoffofPPLEnergySupply andcreationofTalenEnergyonJune1,2015,PPLEnergyPlus(renamedTalenEnergyMarketing)isnolongeranaffiliateofPPLElectric. PPL ElectricpurchasesfromTalenEnergyMarketingsubsequenttoMay31,2015arereflectedin"EnergyPurchases"inthereconciliationtables. This measurerepresentstherevenuesfromthePennsylvaniaRegulatedsegment'sandPPLElectric'selectricitydeliveryoperations.
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