EX-99 5 ex99_3.txt EX. 99.3 - PPL CORPORATION FIN. INFO. EXHIBIT 99.3 ------------ PPL CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED INFORMATION -------------------------------------------- The pro forma information that follows is presented to give effect to the acquisition of Mirant Corporation's 49% indirect equity interest in Western Power Distribution Holdings Limited and WPD Investment Holdings Limited (together, "WPD") on the income statements of PPL. The pro forma results are based on assumptions set forth below, as well as in the Notes to Unaudited Pro Forma Consolidated Financial Information, and are not necessarily indicative of the results of operations which would actually have occurred if the transactions had occurred in such periods, or which may exist or occur in the future. The WPD acquisition is described in Item 2 of this Current Report on Form 8-K/A, of which this Exhibit 99.3 is a part. The acquisition was completed on September 6, 2002. Pro forma adjustments are provided to the consolidated income statements of PPL for the nine months ended September 30, 2002, and for the twelve months ended December 31, 2001. The adjustments are to the income statements filed in PPL's Quarterly Report on Form 10-Q for the quarter ended September 30, 2002, and in its Annual Report on Form 10-K for the year ended December 31, 2001. The pro forma adjustments assume that the acquisition was consummated at the beginning of the income statement periods. The PPL pro forma income statement for the nine months ended September 30, 2002 includes the operating results of WPD for the nine months ended August 31, 2002. The PPL pro forma income statement for the twelve months ended December 31, 2001 includes the operating results of WPD for the twelve months ended November 30, 2001. This treatment is consistent with PPL's policy of recording results of its international operations on a lag basis. The September 30, 2002 Balance Sheet filed in PPL's Quarterly Report on Form 10-Q for the quarter ended September 30, 2002 included the consolidation of the accounts of WPD. Because the accounts have already been consolidated, there is no presentation of a pro forma balance sheet in this Current Report on Form 8-K/A. The Notes to Unaudited Pro Forma Consolidated Financial Information provide additional descriptions of the adjustments to the income statements. The pro forma financial information should be read in conjunction with the reports of PPL as noted above, as well as the audited financial statements of Western Power Distribution Holdings Limited and WPD Investment Holdings Limited for the year ended March 31, 2002. These financial statements are included as Exhibit 99.1 and Exhibit 99.2 in this Current Report on Form 8-K/A. 1 PPL CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 (Millions of Dollars, except per share data)
PRO FORMA NOTE AS REPORTED ADJUSTMENTS REF AS ADJUSTED ----------- ----------- ---- ----------- OPERATING REVENUES Utility................................................... $ 2,774 $ 2,774 Unregulated retail electric and gas....................... 137 137 Wholesale energy marketing................................ 693 693 Net energy trading margins................................ 21 21 Energy related businesses................................. 430 430 -------- -------- -------- Total..................................................... 4,055 4,055 -------- -------- -------- OPERATING EXPENSES Operation Fuel.................................................... 435 435 Energy purchases........................................ 619 619 Other................................................... 596 596 Amortization of recoverable transition costs............ 165 165 Maintenance............................................... 216 216 Depreciation.............................................. 269 269 Taxes, other than income.................................. 172 172 Energy related businesses................................. 439 439 Other charges Write-down of international energy projects............. 100 100 Workforce reduction..................................... 75 75 -------- -------- -------- Total..................................................... 3,086 3,086 -------- -------- -------- OPERATING INCOME............................................ 969 969 Other Income - net.......................................... 18 18 Interest Expense............................................ 423 $ 4 1) 427 -------- -------- -------- INCOME BEFORE INCOME TAXES AND MINORITY INTEREST............ 564 (4) 560 Income Taxes................................................ 194 2) 194 Minority Interest........................................... 76 (72) 3) 4 -------- -------- -------- INCOME BEFORE DIVIDENDS AND DISTRIBUTIONS ON PREFERRED SECURITIES................................................. 294 68 362 Dividends and Distributions - Preferred Securities.......... 52 52 -------- -------- -------- INCOME FROM CONTINUING OPERATIONS........................... $ 242 $ 68 $ 310 ======== ======== ======== EARNINGS PER SHARE OF COMMON STOCK FROM CONTINUING OPERATIONS Basic..................................................... $ 1.63 $ 0.46 $ 2.09 Diluted................................................... $ 1.63 $ 0.46 $ 2.08 AVERAGE COMMON SHARES OUTSTANDING (THOUSANDS)............... 148,758 148,758
See Notes to Unaudited Pro Forma Consolidated Financial Information 2 PPL CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2001 (Millions of Dollars, except per share data)
PRO FORMA NOTE AS REPORTED ADJUSTMENTS REF AS ADJUSTED ----------- ----------- ---- ----------- OPERATING REVENUES Wholesale energy marketing and trading.................... $ 3,357 $ 3,357 Retail electric and gas................................... 1,712 $ 550 4) 2,262 Energy related businesses................................. 656 (51) 5) 605 -------- -------- -------- Total..................................................... 5,725 499 6,224 -------- -------- -------- OPERATING EXPENSES Operation Fuel.................................................... 602 602 Energy purchases........................................ 1,526 1,526 Other................................................... 755 31 4) 786 Amortization of recoverable transition costs............ 251 251 Maintenance............................................... 269 59 4) 328 Depreciation.............................................. 254 105 4) 359 Taxes, other than income.................................. 155 39 4) 194 Energy related businesses................................. 572 6 4) 578 Other charges Write-down of international energy projects............. 336 336 Cancellation of generation projects..................... 150 150 -------- -------- -------- Total..................................................... 4,870 240 5,110 -------- -------- -------- OPERATING INCOME............................................ 855 259 1,114 Other Income - net.......................................... 12 26 4) 38 -------- -------- -------- INCOME BEFORE INTEREST EXPENSE.............................. 867 285 1,152 Interest Expense............................................ 387 139 1) 526 -------- -------- -------- INCOME BEFORE INCOME TAXES AND MINORITY INTEREST............ 480 146 626 Income Taxes................................................ 261 79 2) 340 Minority Interest........................................... (2) (2) -------- -------- -------- INCOME BEFORE DIVIDENDS ON PREFERRED SECURITIES............. 221 67 288 Dividends - Preferred Securities............................ 52 7 4) 59 -------- -------- -------- INCOME FROM CONTINUING OPERATIONS........................... $ 169 $ 60 $ 229 ======== ======== ======== EARNINGS PER SHARE OF COMMON STOCK FROM CONTINUING OPERATIONS Basic..................................................... $ 1.16 $ 0.41 $ 1.57 Diluted................................................... $ 1.15 $ 0.41 $ 1.56 AVERAGE COMMON SHARES OUTSTANDING (THOUSANDS)............... 145,974 145,974
See Notes to Unaudited Pro Forma Consolidated Financial Information 3 PPL CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION INCOME STATEMENT ADJUSTMENTS: ----------------------------- 1) The cost of the WPD acquisition, $236 million, was financed through commercial paper issued by an affiliate of PPL. For purposes of calculating the pro forma information, an interest rate of 2.0% and 4.3% were assumed for the nine months ended September 30, 2002 and for the twelve months ended December 31, 2001, respectively. The twelve-month period also includes $129 million of interest expense included in WPD's results. 2) Giving effect to the acquisition of Mirant's interest in WPD as of the beginning of the periods, U.S. income taxes were not provided on undistributed earnings of WPD as such earnings are deemed permanently reinvested. The pro forma results reflect the incremental U.S. income taxes that would have been payable with respect to WPD had a tax return for those periods been prepared, offset by the U.S. federal income tax benefit on the interest expense incurred on commercial paper borrowings. The incremental U.S. income taxes associated with the additional earnings from WPD were $1 million for the nine months ended September 30, 2002 and $20 million for the year ended December 31, 2001. 3) The September 30, 2002 Income Statement filed in PPL's Form 10-Q provided for the consolidation of WPD's results of operations as of January 1, 2002. The minority interest account represented Mirant's 49% interest in WPD. This proforma adjustment is made to reverse Mirant's share of WPD earnings, thereby, reflecting PPL's 100% ownership of WPD. 4) Represents WPD's U.S. GAAP results for the twelve months ended November 30, 2001. An average interbank exchange rate of 1.4799 was assumed for the period. 5) Includes WPD's U.S. GAAP results for the twelve months ended November 30, 2001, less PPL's equity earnings in WPD of $91 million prior to the acquisition. 4