PPL reports increased first-quarter results compared to a year ago

ALLENTOWN, Pa., April 29, 2003 — PPL Corp. has announced increases in both reported earnings and earnings from core operations for the first quarter of 2003 compared to a year ago.

Reported earnings for the first quarter of 2003 were $1.43 per share. A year ago, PPL reported a loss per share of $0.02 due primarily to a non-cash charge related to changes in accounting rules for goodwill that affected its Latin American investments. PPL’s first-quarter 2003 earnings benefited from an unusual item of $0.37 per share due to the adoption of a new accounting rule addressing asset retirement obligations.

Income from core operations, which excludes unusual items, was $1.06 per share in the first quarter of 2003, an increase of about 3 percent over the $1.03 per share reported for the first quarter of 2002.

“The major ingredient in our continued success remains the effective operation of power plants in key U.S. markets with favorable long-term contracts for both the electricity produced and the fuel needed to run the plants,” said William F. Hecht, PPL chairman, president and chief executive officer. “This managed-risk approach to electricity marketing is buttressed by the cost-effective performance of our electricity delivery businesses.

“Despite much higher natural gas and oil costs at some of our power plants, PPL’s hedging strategy continued to work as designed during the first quarter,” said Hecht. “As a result of our effective management of price and fuel risks, our first-quarter performance keeps us on track to achieve long- term, steady growth and profitability.”

Hecht said PPL’s strategic balancing of generation, marketing and delivery was instrumental in its first-quarter success. Although PPL’s electricity sales margins in the Northeastern United States were lower than in the first quarter of 2002, that shortfall was more than overcome by strong performance in the company’s electricity delivery businesses.

“Excellent results from our highly efficient electricity delivery businesses in the Northeastern United States and in the United Kingdom allowed us to improve our core earnings over last year,” Hecht said. “In addition, we recognized increased margins from our operations in Montana, which resulted from higher average sales prices and an increase in the volume of wholesale energy sales.”

Hecht said PPL’s first-quarter earnings also benefited from reduced interest expense due primarily to the voluntary retirement of higher-cost debt. These benefits were offset by the dilutive effects of additional shares of common stock outstanding and lower pension income. In September of 2002, PPL issued $500 million of common stock in a public offering. During the fourth quarter of 2002, the company issued an additional $41 million through its structured equity shelf program.

PPL also announced that it has increased the amount of its planned 2003 common stock issuance from $300 million to $400 million. So far in 2003, PPL has issued about $100 million under its structured equity shelf and dividend reinvestment programs.

Hecht said PPL remains on track to meet previously stated 2003 earnings forecasts of $3.75 to $4.05 per share for reported earnings and $3.45 to $3.75 per share in income from core operations. The company also is reaffirming its long-term forecast of a 5 percent to 8 percent compound annual growth rate based on 2002 earnings from core operations of $3.54 per share.

The difference between the 2003 forecast for reported earnings and the forecast of earnings from core operations reflects two unusual items resulting from changes in accounting rules. These items are expected to provide a net benefit to earnings of about $0.30 per share in 2003. The adoption, in the first quarter, of a new accounting rule addressing asset retirement obligations (a credit to earnings of $0.37 per share) is expected to be partially offset in the third quarter by the addition to the company’s balance sheet of power plant financing arrangements that were reflected as operating leases in prior years (a charge to earnings of about $0.07 per share).

PPL’s reported earnings per share for the 12 months ended March 31, 2003, were $2.86, compared to a loss of $0.31 per share for the same period of 2002.

Income from core operations for the 12 months ended March 31, 2003, was $3.60 per share compared to $3.74 per share for the same period of 2002. Earnings drivers for the period included the positive operating performance of PPL’s electricity distribution company in the United Kingdom and improved margins on wholesale energy sales from the company’s generating assets in Montana. These earnings improvements were offset by lower energy margins in the Northeastern United States, the dilutive effects of additional common shares outstanding, lower pension income and additional operating and maintenance expenses on new generating facilities.

PPL’s 2003 forecast excludes any positive or negative impact of exiting its Brazilian investment, CEMAR, and is based on the following key developments or assumptions: current forward wholesale electricity prices; common stock issuances of $400 million; the addition to the company’s balance sheet, in the third quarter, of the variable interest entities related to power plants that currently are reflected as operating leases; and, effective January 2003, the adoption of a new accounting rule addressing asset retirement obligations.

PPL Corporation, headquartered in Allentown, Pa., controls about 11,500 megawatts of generating capacity in the United States, sells energy in key U.S. markets and delivers electricity to customers in Pennsylvania, the United Kingdom and Latin America.

(Note: All references to earnings per share in the text are stated in terms of diluted earnings per share.)

More information is available on PPL’s web site: www.pplweb.com.

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