PPL (PPL) Q4 2004 earnings summary

Executive summary

• 2004 revenue rose to $5,812 million from $5,596 million and operating income to $1,387 million from $1,340 million; net income fell to $698 million from $734 million.

• Diluted EPS was $3.77 versus $4.24; reported results included unusual items, with a net $8 million after-tax benefit in 2004.

• Operating cash flow increased to $1,437 million from $1,340 million, supporting operations and planned capital spending.

Financial highlights

• Operating revenues increased 4% to $5,812 million; operating income rose to $1,387 million, while income from continuing operations declined to $700 million from $719 million.

• Net income was $698 million versus $734 million; 2004 included $63 million from ARO adoption, offset by a $27 million VIE adoption charge and other unusual items.

• Cash from operations was $1,437 million; investing used $718 million and financing used $578 million in 2004.

• Year-end cash and cash equivalents were $616 million; short-term debt was $42 million and long-term debt was $7,658 million.

Outlook and guidance

• 2005 electricity prices were expected to exceed 2004 levels, but energy margins were not expected to rise as fuel, transport and emissions costs increase.

• About 83% of expected annual generation for 2005–2009 was committed under long- and intermediate-term contracts.

• 2005–2009 capital expenditure projections totaled about $5.0 billion; 2005 spending was expected to be funded from operations and cash on hand.

• A potential Sundance sale loss or impairment of $47 million after tax, or $0.25/share, could be recorded in 2005, subject to FERC approval.

• Pension costs were expected to increase by about $40 million in 2005, including about $31 million attributable to WPD plans.