Fourth Quarter 2015

PPL Corporation Reports 2015 Earnings

- Increased per-share earnings from ongoing operations by 9 percent in 2015.

- Announces 2016 earnings forecast range of $2.25 to $2.45 per share.

- Updates compound annual per-share earnings growth rate to 5 to 6 percent through 2018.

- Increases annualized common stock dividend to $1.52 per share.

Feb. 4, 2016
7:00

ALLENTOWN, Pa., Feb. 4, 2016 /PRNewswire/ -- PPL Corporation (NYSE: PPL) on Thursday (2/4) announced 2015 reported earnings of $682 million, or $1.01 per share, compared with $1.74 billion, or $2.61 per share, in 2014.

The company's results for 2015 reflect the loss from discontinued operations of $921 million, or $1.36 per share, resulting primarily from the June 1 spinoff of its competitive supply business.

Adjusting for special items, including results from the discontinued operations of the former Supply segment, earnings from ongoing operations were $1.49 billion, or $2.21 per share, compared with earnings from ongoing operations (adjusted) of $1.35 billion, or $2.03 per share in 2014, an increase of 9 percent on a per-share basis.

The company's results exceeded the midpoint of its 2015 earnings from ongoing operations forecast range of $2.15 to $2.25, marking the sixth consecutive year PPL has exceeded the midpoint of its earnings forecast.

"2015 marked a pivotal year for PPL, one in which we again delivered strong results for our shareowners while laying a firm foundation for PPL's continued growth and success," said William H. Spence, PPL's chairman, president and Chief Executive Officer.

"We completed the successful spinoff of our Supply segment, capping our strategic transformation into a high-performing, purely regulated utility business," Spence said. "We completed $3.5 billion in infrastructure improvements for our customers, secured approvals for recovery of additional utility investments in Pennsylvania and Kentucky rate cases, successfully transitioned to a new eight-year price-control period in the United Kingdom and reduced corporate support costs.

"Looking forward, we are well-positioned to continue to deliver competitive earnings growth and dividend yields, all supported by a low-risk business plan," Spence said.

The company announced its 2016 earnings forecast range of $2.25 to $2.45 per share. In addition, Spence said PPL expects compound annual growth through 2018 of 5 to 6 percent above 2014 earnings of $2.03 per share from ongoing operations (adjusted).

Earnings from PPL's operations in the United States, including its corporate services organization, are expected to grow 11 to 13 percent through 2018, with 1 to 3 percent earnings growth expected in the United Kingdom.

Backed by the continued strong performance and expected growth of its utilities, PPL announced that it is increasing its common stock dividend to $0.38 per share on a quarterly basis. The increased dividend will be payable April 1 to shareowners of record as of March 10. The increase, PPL's 14th in 15 years, raises the annualized dividend from $1.51 per share to $1.52 per share.

In closing out 2015, PPL reported fourth-quarter earnings of $399 million, or $0.59 per share, compared with reported earnings of $695 million, or $1.04 per share, in 2014. Adjusting for special items, fourth-quarter earnings from ongoing operations were $294 million, or $0.43 per share, compared with $330 million, or $0.49 per share, in 2014.  

2015 Earnings Details

PPL's reported earnings for 2015 included net special-item after-tax charges of $807 million, or $1.20 per share.

Special items for 2015 included a loss from discontinued operations of $921 million, or $1.36 per share, resulting primarily from the June 1 spinoff of its competitive supply business, partially offset by a reduction in the U.K. corporate income tax rate and unrealized gains on foreign currency-related economic hedges.

PPL's reported earnings for the fourth quarter of 2015 included net special-item after-tax credits of $105 million, or $0.16 per share.

Special items for the fourth quarter of 2015 included reductions to net deferred income tax liabilities resulting from a reduction in the U.K. corporate income tax rate and unrealized gains on foreign currency-related economic hedges.

Reported earnings are calculated in accordance with U.S. GAAP (generally accepted accounting principles). "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 this news release.

 

(Dollars in millions, except for per share amounts)


Year


Fourth Quarter



2015


2014


%
Change


2015


2014


%
Change


















Reported earnings


$

682


$

1,737


(61%)


$

399


$

695


(43%)

Reported earnings per share


$

1.01


$

2.61


(61%)


$

0.59


$

1.04


(43%)




















Year


Fourth Quarter



2015


2014
 (adjusted)


%
Change


2015


2014

(adjusted)


%

Change

Earnings from ongoing operations


$

1,489


$

1,349


10%


$

294


$

330


(11%)

Earnings from ongoing operations
     per share


$

2.21


$

2.03


9%


$

0.43


$

0.49


(12%)

 

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

 

2015 and Fourth-Quarter Earnings by Segment




Year


Fourth Quarter

Per share


2015


2014

(adjusted)


2015


2014

(adjusted)

Earnings from ongoing operations

















U.K. Regulated


$

1.44



$

1.37



$

0.29



$

0.36


Kentucky Regulated



0.51




0.47




0.09




0.10


Pennsylvania Regulated



0.37




0.40




0.09




0.10


Corporate and Other1



(0.11)




(0.21)




(0.04)




(0.07)


    Total


$

2.21



$

2.03



$

0.43



$

0.49





















Year


Fourth Quarter

Special items and dissynergy
adjustments



2015




2014

(adjusted)




2015




2014

(adjusted)


Special items (expense) benefit

















   U.K. Regulated


$

0.22



$

0.11



$

0.16



$

0.08


   Kentucky Regulated



(0.03)











   Pennsylvania Regulated






(0.01)








   Corporate and Other1



(0.03)




(0.10)




0.01





   Supply/Discontinued Operations



(1.36)




0.45




(0.01)




0.43


      Total special items



(1.20)




0.45




0.16




0.51


Dissynergy adjustments expense
(benefit)

















   Corporate and Other1






0.13







0.04


      Total special items and dissynergy   
      adjustments


$

(1.20)



$

0.58



$

0.16



$

0.55





















Year


Fourth Quarter

Reported earnings (loss)



2015




2014




2015




2014


U.K. Regulated


$

1.66



$

1.48



$

0.45




0.44


Kentucky Regulated



0.48




0.47




0.09




0.10


Pennsylvania Regulated



0.37




0.39




0.09




0.10


Corporate and Other1



(0.14)




(0.18)




(0.03)




(0.03)


Supply/Discontinued Operations2



(1.36)




0.45




(0.01)




0.43


    Total


$

1.01



$

2.61



$

0.59




1.04



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 in the 4th quarter and $0.07 YTD), Interest ($0.02 in the 4th quarter and $0.05 YTD), and Depreciation ($0.01 YTD).


22015 reported earnings include discontinued operations of the former Supply segment.

 

(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 (WPD), serving Southwest and Central England and South Wales.

Earnings from ongoing operations in 2015 increased by $0.07 per share compared with a year ago. This increase was primarily due to lower income taxes, lower depreciation expense and higher  margins driven by an April 1, 2014 price increase, partially offset by lower prices driven by an April 1, 2015 price decrease due to the beginning of the new eight-year price control period (RIIO-ED1).

Earnings from ongoing operations in the fourth quarter of 2015 decreased by $0.07 per share compared with a year ago. This decrease was primarily due to lower margins primarily driven by an April 1, 2015 price decrease due to the commencement of RIIO-ED1 and higher operation and maintenance expense, partially offset by lower U.K. income taxes due to a change in tax rates and lower depreciation expense.

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 the regulated electricity operations of Kentucky Utilities Company.

Earnings from ongoing operations in 2015 increased by $0.04 per share compared with a year ago. This was primarily due to higher base electricity rates effective July 1, 2015, and higher returns on additional environmental capital investments, partially offset by lower sales volumes due to unfavorable weather in the fourth quarter, and higher operation and maintenance expense, including costs associated with the retirement of coal-fired generation at the Cane Run facility, and higher financing costs related to the 2015 debt issuances.

Earnings from ongoing operations in the fourth quarter of 2015 decreased by $0.01 per share compared with a year ago. This was primarily due to lower sales volumes due to unfavorable weather and higher financing costs, partially offset by higher base electricity rates effective July 1, 2015, and higher returns on additional environmental capital investments.                 

Pennsylvania Regulated Segment 
PPL's Pennsylvania Regulated segment consists of the regulated electricity delivery operations of PPL Electric Utilities.

Earnings from ongoing operations in 2015 decreased by $0.03 per share compared with a year ago, driven primarily by higher operation and maintenance expense and higher depreciation expense,  partially offset by higher transmission and distribution margins and the release of a gross receipts tax reserve.

Earnings from ongoing operations in the fourth quarter of 2015 decreased by $0.01 per share compared with a year ago.  This was primarily due to higher operation and maintenance expense, higher depreciation expense and lower sales volumes due to unfavorable weather, partially offset by higher transmission margins and the release of a gross receipts tax reserve.

Corporate and Other 
PPL's Corporate and Other category primarily includes unallocated corporate-level financing and other costs. Corporate and Other in 2015 improved by $0.10 per share compared with a year ago (adjusted) and $0.03 per share in the fourth quarter compared with the previous year. This was primarily due to the benefits of the corporate restructuring.

Forecast of Earnings from Ongoing Operations





2016

forecast

midpoint


2015 actual

Per share




U.K. Regulated 

$ 1.43


$ 1.44

Kentucky Regulated

0.57


0.51

Pennsylvania Regulated                                         

0.47


0.37

Corporate and Other

(0.12)


(0.11)

    Total

$ 2.35


$ 2.21

 

(See the tables at the end of this news release for a reconciliation of reported earnings to 2015 earnings from ongoing operations.)

The midpoint of PPL's 2016 earnings forecast of $2.35 per share represents an increase of more than 6 percent compared to 2015 earnings from ongoing operations. This increase is primarily attributable to increases in the Pennsylvania Regulated and Kentucky Regulated segments.

U.K. Regulated Segment            
PPL projects relatively flat segment earnings in 2016 compared with 2015, due to higher financing costs, depreciation expense, currency, taxes and other expenses, partially offset by lower operation and maintenance expense, including pension expense, and higher gross margins. 

The 2016 foreign currency exposure for this segment is 95 percent hedged at an average rate of $1.56 per pound.

Kentucky Regulated Segment  
PPL projects higher segment earnings in 2016 compared with 2015, primarily driven by electric and gas base rate increases effective July 1, 2015, and higher returns on additional environmental capital investments, partially offset by higher depreciation expense and higher financing costs.

Pennsylvania Regulated Segment
PPL projects higher segment earnings in 2016 compared with 2015, primarily driven by a distribution base rate increase effective Jan. 1, 2016, and higher transmission margins, partially offset by higher depreciation, higher financing costs and a benefit received in 2015 from the release of a gross receipts tax reserve.

Corporate and Other 
PPL projects costs to be relatively flat in this category in 2016 compared with 2015.

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 2015 financial results at 8:30 a.m. Eastern Standard Time on Thursday, Feb. 4. 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: 0130109.

"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. 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 discontinued operations.
  • 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.

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; 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 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)














December 31,


December 31,





2015


2014 (b)

Assets







Cash and cash equivalents


$

836


$

1,399

Short-term investments






120

Accounts receivable



732



808

Unbilled revenues



453



517

Fuel, materials and supplies



357



381

Price risk management assets - current



139



79

Current assets of discontinued operations






2,592

Other current assets



129



130

Property, Plant and Equipment








Regulated utility plant



34,399



30,568


Less: accumulated depreciation - regulated utility plant



5,683



5,361



Regulated utility plant, net



28,716



25,207


Non-regulated property, plant and equipment



516



592


Less: accumulated depreciation - non-regulated property, plant and equipment



165



162



Non-regulated property, plant and equipment, net



351



430


Construction work in progress



1,315



2,532


Property, Plant and Equipment, net



30,382



28,169

Noncurrent regulatory assets



1,733



1,562

Goodwill and other intangibles



4,229



4,335

Noncurrent assets of discontinued operations






8,311

Other noncurrent assets



311



203

Total Assets


$

39,301


$

48,606










Liabilities and Equity







Short-term debt


$

916


$

836

Long-term debt due within one year



485



1,000

Accounts payable



812



995

Current liabilities of discontinued operations






2,771

Other current liabilities



1,663



1,837

Long-term debt



18,563



17,054

Deferred income taxes and investment tax credits



3,568



3,234

Accrued pension obligations



1,405



1,457

Assets retirement obligations



536



324

Noncurrent regulatory liabilities



945



992

Noncurrent liabilities of discontinued operations






3,953

Other noncurrent liabilities



489



525

Common stock and additional paid-in capital



9,694



9,440

Earnings reinvested (c)



2,953



6,462

Accumulated other comprehensive loss



(2,728)



(2,274)

Total Liabilities and Equity


$

39,301


$

48,606


(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 and the adoption of new accounting guidance in 2015.

(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 (Unaudited)

(Millions of Dollars, Except Share Data)






Three Months Ended December 31,


Year Ended December 31,


















2015


2014 (a)



2015 (a)



2014 (a)

















Operating Revenues


$

1,780


$

1,946


$

7,669


$

7,852

















Operating Expenses













      Operation













      Fuel



168



217



863



965

            Energy purchases



179



241



855



924

            Other operation and maintenance



533



474



1,938



1,856

      Depreciation



225



235



883



923

      Taxes, other than income



58



79



299



317

      Total Operating Expenses



1,163



1,246



4,838



4,985

















Operating Income



617



700



2,831



2,867

















Other Income (Expense) - net



47



72



108



105

















Interest Expense



226



206



871



843

















Income from Continuing Operations Before Income Taxes



438



566



2,068



2,129

















Income Taxes



33



158



465



692

















Income from Continuing Operations After Income Taxes



405



408



1,603



1,437

















Income (Loss) from Discontinued Operations (net of income taxes)



(6)



287



(921)



300

Net Income


$

399


$

695


$

682


$

1,737

















Earnings Per Share of Common Stock:













      Income from Continuing Operations After Income Taxes













      Available to PPL Common Shareowners:













        Basic


$

0.60


$

0.62


$

2.38


$

2.19

        Diluted


$

0.60


$

0.62


$

2.37


$

2.16

      Net Income Available to PPL Common Shareowners:













        Basic


$

0.59


$

1.04


$

1.01


$

2.64

        Diluted


$

0.59


$

1.04


$

1.01


$

2.61

















Weighted-Average Shares of Common Stock Outstanding













      (in thousands)













        Basic



673,028



665,205



669,814



653,504

        Diluted



676,548



667,263



672,586



665,973















(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)






























2015


2014


2013

Cash Flows from Operating Activities











Net income


$

682


$

1,737


$

1,130


Loss (income) from discontinued operations (net of income taxes)



921



(300)



238


Income from continuing operations (net of income taxes)



1,603



1,437



1,368


Adjustments to reconcile Income from continuing operations (net of taxes) to net cash











provided by operating activities - continuing operations












Depreciation



883



923



843



Amortization



59



65



66



Defined benefit plans - expense



56



48



125



Deferred income taxes and investment tax credits



428



666



387



Unrealized (gains) losses on derivatives, and other hedging activities



(77)



(187)



56



Adjustment to WPD line loss accrual






65



45



Other



17



66





Change in current assets and current liabilities












Accounts receivable



47



(123)



(211)



Accounts payable



(154)



40



127



Unbilled revenues



54



22



(56)



Prepayments



(23)



87



39



Taxes payable



(175)



161



51



Uncertain tax positions



(17)






(112)



Other



99



23



(66)


Other operating activities












Defined benefit plans - funding



(499)



(384)



(450)



Settlement of interest rate swaps



(101)






104



Other assets



(19)



9



11



Other liabilities



53



23



120




Net cash provided by operating activities - continuing operations



2,234



2,941



2,447


Net cash provided by operating activities - discontinued operations



343



462



409




Net cash provided by operating activities


2,577



3,403



2,856

Cash Flows from Investing Activities











Expenditures for property, plant and equipment



(3,495)



(3,674)



(3,629)


Expenditures for intangible assets



(37)



(49)



(53)


Purchases of other investments






(120)





Proceeds from the sale of other investments



136








Net decrease in restricted cash and cash equivalents



8



19



2


Other investing activities



(13)



(2)



16




Net cash used in investing activities - continuing operations



(3,401)



(3,826)



(3,664)


Net cash provided by (used in) investing activities - discontinued operations



(149)



497



(631)




Net cash used in investing activities



(3,550)



(3,329)



(4,295)

Cash Flows from Financing Activities











Issuance of long-term debt



2,236



296



2,038


Retirement of long-term debt



(1,000)



(237)





Repurchase of common stock









(74)


Issuance of common stock



203



1,074



1,411


Payment of common stock dividends



(1,004)



(967)



(878)


Contract adjustment payments on Equity Units






(22)



(82)


Net increase in short-term debt



94



147



405


Other financing activities



(47)



(29)



(67)




Net cash provided by financing activities - continuing operations



482



262



2,753


Net cash provided by (used in) financing activities - discontinued operations



(546)



(846)



47


Net cash distributions to parent from discontinued operations



132



1,167



(1,169)




Net cash provided by financing activities



68



583



1,631

Effect of Exchange Rates on Cash and Cash Equivalents



(10)



(8)



8

Net (Increase) Decrease in Cash and Cash Equivalents included in Discontinued Operations



352



(113)



175

Net Increase (Decrease) in Cash and Cash Equivalents



(563)



536



375

Cash and Cash Equivalents at Beginning of Period



1,399



863



488

Cash and Cash Equivalents at End of Period


$

836


$

1,399


$

863

 



Key Indicators (Unaudited)




























12 Months Ended













December 31,

Financial






2015


2014
















Dividends declared per share of common stock






$1.50


$1.49

Book value per share (a)(b)(c)






$14.72


$20.47

Market price per share (a)






$34.13


$36.33

Dividend yield






4.4%


4.1%

Dividend payout ratio (d)(e)






148.5%


57.1%

Dividend payout ratio - earnings from ongoing operations (d)(f)






67.9%


73.4%

Price/earnings ratio (d)(e)






33.8


13.9

Price/earnings ratio - earnings from ongoing operations (d)(f)






15.4


17.9

Return on common equity (e)






5.8%


13.0%

Return on common equity - earnings from ongoing operations (f)(g)






15.2%


15.5%
















(a)  End of period.

(b)  Based on 673,857 and 665,849 shares of common stock outstanding (in thousands) at December 31, 2015, and December 31, 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 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 five months of Supply segment earnings, compared to twelve months for 2014.

(f)  Calculated using earnings from ongoing operations, which is a non-GAAP financial measure that includes adjustments described

      in the text and tables of this news release. 2014 was adjusted for Supply segment earnings and the impact of dissynergies related

      to the spinoff of the Supply segment.

(g) Adjusted to exclude the equity of PPL Energy Supply, LLC as that business was spun off in 2015.














































Operating - Domestic & International Electricity Sales (Unaudited)




















3 Months Ended December 31,


12 Months Ended December 31,









Percent






Percent

(GWh)


2015


2014


Change


2015


2014


Change
















Domestic Retail Delivered













   PPL Electric Utilities


8,433


9,073


(7.1%)


36,984


37,026


(0.1%)

   LKE


6,830


7,510


(9.1%)


30,814


31,543


(2.3%)

      Total


15,263


16,583


(8.0%)


67,798


68,569


(1.1%)
















Domestic Retail Supplied













   LKE (a)


6,830


7,510


(9.1%)


30,814


31,543


(2.3%)
















International Delivered













   United Kingdom


18,785


18,859


(0.4%)


75,907


75,813


0.1%
















Domestic Wholesale













   LKE (b)


452


514


(12.1%)


2,241


2,365


(5.2%)
















(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)
























































(millions of dollars)

4th Quarter 2015


Year-to-Date December 31, 2015



U.K.


KY


PA


Corp.


Disc.




U.K.


KY


PA


Corp.


Disc.





Reg.


Reg.


Reg.


& Other


Ops.


Total


Reg.


Reg.


Reg.


& Other


Ops.(a)


Total

Reported Earnings (Loss)

$

307


$

59


$

61


$

(23)


$

(5)


$

399


$

1,121


$

326


$

252


$

(96)


$

(921)


$

682

Less: Special Items (expense) benefit:




































Foreign currency-related economic hedges


35















35



55















55

Spinoff of the Supply segment:




































   Discontinued operations














(5)



(5)















(921)



(921)

   Transition and transaction costs











4






4












(12)






(12)

   Employee transitional services











(1)






(1)












(5)






(5)

   Separation benefits











(2)






(2)












(5)






(5)

Other:




































   Change in U.K. tax rate


78















78



78















78

   Settlement of certain income tax positions




















18















18

   WPD Midlands acquisition-related adj.




















2















2

   Certain valuation allowances





(4)












(4)






(12)












(12)

   LKE acquisition-related adjustment























(5)












(5)

Total Special Items


113



(4)






1



(5)



105



153



(17)






(22)



(921)



(807)

Earnings from Ongoing Operations

$

194


$

63


$

61


$

(24)


$



$

294


$

968


$

343


$

252


$

(74)


$



$

1,489











































































(per share - diluted)

4th Quarter 2015


Year-to-Date December 31, 2015



U.K.


KY


PA


Corp.


Disc.




U.K.


KY


PA


Corp.


Disc.





Reg.


Reg.


Reg.


& Other


Ops.


Total


Reg.


Reg.


Reg.


& Other


Ops.(a)


Total

Reported Earnings (Loss)

$

0.45


$

0.09


$

0.09


$

(0.03)


$

(0.01)


$

0.59


$

1.66


$

0.48


$

0.37


$

(0.14)


$

(1.36)


$

1.01

Less: Special Items (expense) benefit:




































Foreign currency-related economic hedges


0.05















0.05



0.08















0.08

Spinoff of the Supply segment:




































   Discontinued operations














(0.01)



(0.01)















(1.36)



(1.36)

   Transition and transaction costs











0.01






0.01












(0.02)






(0.02)

   Employee transitional services





























(0.01)






(0.01)

Other:




































   Change in U.K. tax rate


0.11















0.11



0.11















0.11

   Settlement of certain income tax positions




















0.03















0.03

   Certain valuation allowances























(0.02)












(0.02)

   LKE acquisition-related adjustment























(0.01)












(0.01)

Total Special Items


0.16









0.01



(0.01)



0.16



0.22



(0.03)






(0.03)



(1.36)



(1.20)

Earnings from Ongoing Operations

$

0.29


$

0.09


$

0.09


$

(0.04)


$



$

0.43


$

1.44


$

0.51


$

0.37


$

(0.11)


$



$

2.21






































(a)   Represents the Supply segment, which 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)


























































(millions of dollars)

4th Quarter 2014


Year-to-Date December 31, 2014




U.K.


KY


PA


Corp. &


Disc


Total


U.K.


KY


PA


Corp. &


Disc


Total




Reg.


Reg.


Reg.


Other(a)


Ops.(a)


Corp.


Reg.


Reg.


Reg.


Other(a)


Ops.(a)


Corp.


Reported Earnings (Loss)

$

294


$

65


$

69


$

(20)


$

287


$

695


$

982


$

312


$

263


$

(120)


$

300


$

1,737


Less: Special Items (expense) benefit:





































Foreign currency-related economic hedges


55















55



127















127


Spinoff of the Supply segment






































Supply segment earnings














291



291















307



307



Discontinued operations adjustments











2



(2)















(5)



5






Change in tax valuation allowances











3






3












(46)






(46)



Transition and transaction costs











(2)



(2)



(4)












(5)



(12)



(17)



Separation benefits











(1)






(1)












(12)






(12)


Other:






































Change in WPD line loss accrual




















(52)















(52)



Separation benefits


























(2)









(2)


Total Special Items


55









2



287



344



75






(2)



(68)



300



305








































Dissynergies-spinoff of Supply segment





































expense(benefit): (b)






































Indirect operation and maintenance











12






12












47






47



Interest expense











7






7












29






29



Depreciation











2






2












7






7


Total dissynergies-spinoff of Supply segment











21






21












83






83


Earnings from Ongoing Operations(Adj.)

$

239


$

65


$

69


$

(43)


$



$

330


$

907


$

312


$

265


$

(135)


$



$

1,349














































































(per share - diluted)

4th Quarter 2014


Year-to-Date December 31, 2014 (c)




U.K.


KY


PA


Corp. &


Disc


Total


U.K.


KY


PA


Corp. &


Disc


Total




Reg.


Reg.


Reg.


Other(a)


Ops.(a)


Corp.


Reg.


Reg.


Reg.


Other(a)


Ops.(a)


Corp.


Reported Earnings (Loss)

$

0.44


$

0.10


$

0.10


$

(0.03)


$

0.43


$

1.04


$

1.48


$

0.47


$

0.39


$

(0.18)


$

0.45


$

2.61


Less: Special Items (expense) benefit:





































Foreign currency-related economic hedges


0.08















0.08



0.19















0.19


Spinoff of the Supply segment:






































Supply segment earnings














0.43



0.43















0.46



0.46



Discontinued operations adjustments





























(0.01)



0.01






Change in tax valuation allowances





























(0.07)






(0.07)



Transition and transaction costs
































(0.02)



(0.02)



Separation benefits





























(0.02)






(0.02)


Other:






































Change in WPD line loss accrual




















(0.08)















(0.08)



Separation benefits


























(0.01)









(0.01)


Total Special Items


0.08












0.43



0.51



0.11






(0.01)



(0.10)



0.45



0.45








































Dissynergies-spinoff of Supply segment





































expense(benefit): (b)






































Indirect operation and maintenance











0.02






0.02












0.07






0.07



Interest expense











0.02






0.02












0.05






0.05



Depreciation





























0.01






0.01


Total dissynergies-spinoff of Supply segment











0.04






0.04












0.13






0.13


Earnings from Ongoing Operations (Adj.)

$

0.36


$

0.10


$

0.10


$

(0.07)


$



$

0.49


$

1.37


$

0.47


$

0.40


$

(0.21)


$



$

2.03














































































(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 11 million shares of PPL Common Stock being treated as outstanding.  Both adjustments are only for purposes of



calculating diluted earnings per share.


 

 

Contacts:

For news media – Ryan Hill, 610-774-5997


For financial analysts – Joseph P. Bergstein Jr., 610-774-5609

 

SOURCE PPL Corporation

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