PPL (PPL) Q4 2007 earnings summary

Executive summary

• 2007 net income was $1.288B and diluted EPS was $3.35; excluding special items, ongoing-operations diluted EPS reached a record $2.60, up 16% YoY.

• The $0.67 per-share contribution from Latin American business sales accounted for part of the 50% increase in reported EPS; total shareowner return was 49% for 2007.

• Strategy centered on growing energy supply margins, expanding generation options and maintaining efficient, reliable regulated delivery operations.

Financial highlights

• Operating revenue was $6.498B vs. $6.131B in 2006; operating income was $1.683B vs. $1.509B.

• Net income rose to $1.288B from $865M; diluted EPS was $3.35 vs. $2.24, while ongoing-operations diluted EPS was $2.60 vs. $2.25.

• Net cash from operating activities was $1.571B, down 11% YoY; capital expenditures were $1.685B, up from $1.394B.

• Total assets were $19.972B; year-end long-term debt was $7.568B and common equity was $5.556B.

Outlook and guidance

• 2010 EPS forecast was $4.00–$4.60; the midpoint represented 65% growth over 2007 ongoing-operations EPS.

• Excluding special items, 2008 Supply earnings were forecast lower YoY, mainly from the expiration of synfuel credits and higher scrubber depreciation; higher energy margins were expected to offset part of the decline.

• 2008 International Delivery earnings were projected lower, reflecting the Latin American sales and higher U.S. taxes, partly offset by lower U.K. pension expense; Pennsylvania Delivery earnings were projected higher on new distribution rates.

• 2008–2012 capital expenditures were projected at approximately $7.5B; 2008 spending was expected to be funded with cash on hand, operating cash flow and debt issuance.