Earnings Per Share

9 Months Ended

Sep. 30, 2011

4. Earnings Per Share

(PPL)

Basic EPS is computed by dividing income available to PPL common shareowners by the weighted-average number of common shares outstanding during the period. Diluted EPS is computed by dividing income available to PPL common shareowners by the weighted-average number of shares outstanding that are increased for additional shares that would be outstanding if potentially dilutive non-participating securities were converted to common shares as calculated using the treasury stock method. In 2011 and 2010, these securities included stock options, performance units granted under incentive compensation plans and the 2010 Purchase Contract component of the 2010 Equity Units. Additionally, in 2011, these securities included the 2011 Purchase Contract component of the 2011 Equity Units. The 2011 Purchase Contracts will be dilutive under the treasury stock method if the average VWAP of PPL's common stock for a certain period exceeds approximately $30.99. The 2010 Purchase Contracts will be dilutive under the treasury stock method if the average VWAP of PPL's common stock for a certain period exceeds $28.80. The 2011 and 2010 Purchase Contracts were excluded from the diluted EPS calculations because they did not meet this criteria during the three and nine months ended September 30, 2011 and 2010. Subject to antidilution adjustments at September 30, 2011, the maximum number of shares issuable to settle the Purchase Contracts was 103,372,695 shares, including 86,552,565 shares that could be issued under standard provisions of the Purchase Contracts and 16,820,130 shares that could be issued under make-whole provisions in the event of early settlement upon a Fundamental Change. See Note 7 for additional information on the 2011 Equity Units.

Reconciliations of the amounts of income and shares of PPL common stock (in thousands) for the periods ended September 30 used in the EPS calculation are:

			Three Months				Nine Months
			2011		2010		2011		2010
Income (Numerator)
Income from continuing operations after income taxes attributable to PPL			$	444	$	301	$	1,039	$	621
Less amounts allocated to participating securities				2		1		4		2
Income from continuing operations after income taxes available to PPL
	common shareowners		$	442	$	300	$	1,035	$	619

Income (loss) from discontinued operations (net of income taxes) available
	to PPL		$		$	(53)	$	2	$	(38)

Net income attributable to PPL			$	444	$	248	$	1,041	$	583
Less amounts allocated to participating securities				2		1		4		2
Net income available to PPL common shareowners			$	442	$	247	$	1,037	$	581

Shares of Common Stock (Denominator)
Weighted-average shares - Basic EPS				577,595		482,552		541,135		414,068
Add incremental non-participating securities:
		Stock options and performance units		459		210		345		219
Weighted-average shares - Diluted EPS				578,054		482,762		541,480		414,287

Basic EPS
Available to PPL common shareowners:
		Income from continuing operations after income taxes	$	0.76	$	0.62	$	1.91	$	1.49
		Income (loss) from discontinued operations (net of income taxes)				(0.11)		0.01		(0.09)
Net Income			$	0.76	$	0.51	$	1.92	$	1.40

Diluted EPS
Available to PPL common shareowners:
		Income from continuing operations after income taxes	$	0.76	$	0.62	$	1.91	$	1.49
		Income (loss) from discontinued operations (net of income taxes)				(0.11)				(0.09)
Net Income			$	0.76	$	0.51	$	1.91	$	1.40

For the periods ended September 30 the following options to purchase PPL common stock and performance units were excluded from the computations of diluted EPS because the effect would have been antidilutive.

	Three Months				Nine Months
(Shares in thousands)	2011		2010		2011		2010

Stock options		4,473		5,194		5,377		4,844
Performance units		3				3		61

During the three and nine months ended September 30, 2011, PPL issued 17,311 and 410,283 shares of common stock related to the exercise of stock options, vesting of restricted stock and restricted stock units and conversion of stock units granted to directors under its stock-based compensation plans. In addition, PPL issued 561,918 and 1,741,827 shares of common stock related to its DRIP during the three and nine months ended September 30, 2011. PPL also issued 301,319 shares related to its ESOP during the nine months ended September 30, 2011.

See Note 7 for information on the April 2011 issuance of common stock and 2011 Equity Units.