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Earnings Per Share
 9 Months Ended
Sep. 30, 2012
Earnings Per Share [Abstract]  
Earnings Per Share

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. For the three and nine months ended September 30, 2012 and 2011, these securities included stock options and performance units granted under incentive compensation plans and the Purchase Contracts associated with Equity Units. For the three and nine months ended September 30, 2012, these securities also included the PPL common stock forward sale agreements. See Note 7 for additional information on the forward sale agreements.

 

The forward sale agreements were dilutive under the treasury stock method for the three and nine months ended September 30, 2012 because the average stock price of PPL's common shares exceeded the forward sale price indicated in the forward sale agreements.

 

The Purchase Contracts are dilutive under the treasury stock method if the average VWAP of PPL common stock for a certain period exceeds approximately $30.99 and $28.80 for the 2011 and 2010 Purchase Contracts. The 2010 Purchase Contracts were dilutive for the three and nine months ended September 30, 2012. Subject to antidilution adjustments at September 30, 2012, the maximum number of shares issuable to settle the Purchase Contracts was 95.8 million shares, including 86.5 million shares that could be issued under standard provisions of the Purchase Contracts and 9.3 million shares that could be issued under make-whole provisions in the event of early settlement upon a Fundamental Change.

 

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
     2012 2011 2012 2011
Income (Numerator)            
Income from continuing operations after income taxes attributable to PPL            
 shareowners $ 355 $ 444 $ 1,173 $ 1,039
Less amounts allocated to participating securities   2   2   7   4
Income from continuing operations after income taxes available to PPL            
 common shareowners $ 353 $ 442 $ 1,166 $ 1,035
                
Income (loss) from discontinued operations (net of income taxes) available            
 to PPL common shareowners $  $  $ (6) $ 2
                
Net income attributable to PPL shareowners $ 355 $ 444 $ 1,167 $ 1,041
Less amounts allocated to participating securities   2   2   7   4
Net income available to PPL common shareowners $ 353 $ 442 $ 1,160 $ 1,037
                
Shares of Common Stock (Denominator)            
Weighted-average shares - Basic EPS   580,585   577,595   579,847   541,135
Add incremental non-participating securities:            
  Stock options and performance units   635   459   522   345
  2010 Purchase Contracts   439      146   
  Forward sale agreements   977      415   
Weighted-average shares - Diluted EPS   582,636   578,054   580,930   541,480
                
Basic EPS             
Available to PPL common shareowners:            
  Income from continuing operations after income taxes  $ 0.61 $ 0.76 $ 2.01 $ 1.91
  Income (loss) from discontinued operations (net of income taxes)         (0.01)   0.01
  Net Income $ 0.61 $ 0.76 $ 2.00 $ 1.92
                
Diluted EPS             
Available to PPL common shareowners:            
  Income from continuing operations after income taxes  $ 0.61 $ 0.76 $ 2.01 $ 1.91
  Income (loss) from discontinued operations (net of income taxes)         (0.01)   
  Net Income $ 0.61 $ 0.76 $ 2.00 $ 1.91

For the periods ended September 30, 2012, PPL issued common stock related to stock-based compensation plans, ESOP and DRIP as follows:

(Shares in thousands) Three Months Nine Months
         
Stock-based compensation plans (a)   159   512
ESOP      280
DRIP   598   1,773

(a)       Includes stock options exercised, vesting of restricted stock and restricted stock units and conversion of stock units granted to directors.

 

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) 2012 2011 2012 2011
             
Stock options   4,935   4,473   5,622   5,377
Performance units      3   76   3