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PPL Annual Report, Year Ended Dec 31, 2002

Filing Date
Filed March 3, 2003
Period End
December 31, 2002
Securities
PPLPPLC
In the record · 2016–202610-K1110-Q328-K239

PPL filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 239 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Jun ’19Jun ’19
  2. Deal closed8-K · Jun ’21Jun ’21
  3. Leadership change8-K · Jan ’23Jan ’23
  4. FY2024 annual report10-K · Feb ’25Feb ’25

01—Abstract

Summary

Summary of the 10-K filed March 3, 2003. Cited figures are marked; the original filing is the authoritative source.

PPL Corporation, an energy and utility holding company, reports 2002 net income of $208 milliona, or $1.36 diluted EPS, compared with $179 million in 2001, while income from core operations was $541 million ($3.54 diluted EPS) versus $620 million in 2001.

Operating revenues rose to $5.43 billionb from $5.08 billion, driven largely by the September 2002 acquisition of a controlling interest in Western Power Distribution (WPD), the U.K. distribution business, for about $236 million. Results were pressured by lower wholesale energy prices in the East and West, a $150 million goodwill impairment from adopting SFAS 142, a $100 million CEMAR (Brazil) impairment, and a $75 million workforce reduction charge. The filing shows PPL deconsolidated its Brazilian CEMAR investment after ANEEL assumed control in August 2002.

Balance sheet growth was substantial: total assets rose to $15.57 billionc from $12.56 billion, largely from consolidating WPD, and short-term debt increased to $943 million. Net cash from operations was $796 million, and capital expenditure projections for 2003-2007 total about $3.7 billion, with the company stating that capital needs are expected to decrease significantly in 2003. The company also raised its quarterly dividend to 38.5 cents per share from 36 cents.

Management flags material uncertainty from the low wholesale energy price environment, a possible impairment of new gas-fired generation assets, and pending litigation including PJM capacity-market investigations, the Montana Power shareholder suit, and the Lower Mt. Bethel project appeals. S&P lowered PPL's corporate credit rating to BBB from BBB+ in May 2002 and revised its outlook to negative in September 2002, citing declining wholesale power prices and setbacks in international operations, particularly Brazil.

02—Key points

Key Highlights

  1. Net income rose to $208 million ($1.36 diluted EPS) in 2002 from $179 million ($1.22) in 2001, after unusual items including a $150 million goodwill impairment.
  2. Income from core operations was $541 million ($3.54 diluted EPS) in 2002, down from $620 million ($4.22) in 2001.
  3. Operating revenues were $5.43 billion in 2002 versus $5.08 billion in 2001; total assets increased to $15.57 billion from $12.56 billion.
  4. PPL acquired Mirant's 49% interest in WPD for about $236 million in September 2002, giving it full control of two U.K. electric distribution companies serving about 2.5 million end-users.
  5. PPL Global deconsolidated its CEMAR investment in Brazil after ANEEL assumed control, and recorded a $100 million CEMAR impairment in 2002.
  6. Capital expenditure projections total about $3.7 billion for 2003-2007, and the quarterly dividend was increased to 38.5 cents per share from 36 cents.
  7. Standard & Poor's lowered PPL's corporate credit rating to BBB from BBB+ in May 2002 and revised the outlook to negative in September 2002.

03—Questions

Frequently Asked Questions

  1. How did PPL's earnings change in 2002?

    Reported net income increased to $208 million ($1.36 diluted EPS) from $179 million ($1.22) in 2001. However, income from core operations, which excludes unusual items, declined to $541 million ($3.54 diluted EPS) from $620 million ($4.22), as lower wholesale margins and other factors reduced earnings.

  2. What was the impact of the WPD acquisition?

    In September 2002, PPL Global acquired Mirant's 49% interest in WPDH Limited and WPDL for about $236 million, giving PPL complete control of WPD. The consolidation added $3.4 billion of assets and $2.1 billion of WPD debt to PPL's balance sheet, and the filing says the earnings comparison is not meaningful without adjusting for this consolidation.

  3. What are the main risks the filing highlights for investors?

    The filing cites low wholesale energy prices adversely affecting margins in 2003 and beyond, a possible impairment of new gas-fired generation assets, and litigation including PJM capacity-market claims, the Montana Power shareholder suit, NorthWestern Corporation litigation, and appeals related to the Lower Mt. Bethel project. PPL states it cannot predict the outcome of these matters.

  4. How is PPL's credit profile described?

    S&P lowered PPL's corporate credit rating from BBB+ to BBB in May 2002 and revised the outlook to negative in September 2002, reflecting weaker wholesale prices and international setbacks, particularly in Brazil. PPL Electric's senior secured debt was rated A-, and the company stated it expects to access both the capital and commercial paper markets during 2003.

  5. What dividend and capital spending plans were disclosed?

    PPL announced in February 2003 an increase in its quarterly common stock dividend, payable April 1, 2003, from 36 cents to 38.5 cents per share, equal to $1.54 per year. Projected capital expenditures for 2003-2007 total about $3.7 billion, and PPL expects capital needs to decrease significantly in 2003 as its generation construction program is substantially complete.

04—Continue

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