Exhibit 99.2
PPL CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Information
--------------------------------------------
The pro forma information that follows is presented to give effect to the
acquisition of Hyder plc (Hyder) by Western Power Distribution Limited (WPDL) on
the balance sheet and income statements of PPL Corporation. WPDL is jointly
owned by PPL Global LLC (PPL Global, a subsidiary of PPL Corporation) and
Southern Energy, Inc. (Southern). The ownership interests in WPDL are 60% and
40% for PPL Global and Southern , respectively. Under an arrangement between the
two companies, PPL Global's equity interest in WPDL may decrease to 51%, and
Southern's equity interest may increase to 49% depending on the execution of a
call option by Southern. 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 Hyder acquisition is described in Item 5 of this Current Report on Form
8-K, of which this Exhibit 99.2 is a part.
Pro forma adjustments are provided to the consolidated income statements of
PPL Corporation for the six months ended June 30, 2000, and for the twelve
months ended December 31, 1999. The adjustments are to the income statements
filed in PPL Corporation's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2000, and in its Annual Report on Form 10-K for the year ended December
31, 2000. The pro forma adjustments assume that the acquisition was consummated
at the beginning of the income statement periods.
The PPL Corporation pro forma income statement for the six months ended
June 30, 2000 includes the operating results of Hyder for the six months ended
March 31, 2000. The PPL Corporation pro forma income statement for the twelve
months ended December 31, 2000 includes the operating results of Hyder for the
twelve months ended March 31, 2000. As such, Hyder's results for the six months
ended March 31, 2000 are included in the pro forma results for both periods.
The PPL Corporation pro forma balance sheet is presented as if the Hyder
acquisition was made on June 30, 2000. The adjustments are applied to the
consolidated balance sheet of PPL Corporation at June 30, 2000, as set forth in
PPL Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30,
2000.
The Notes to Unaudited Pro Forma Consolidated Financial Information provide
additional descriptions of the adjustments to the income statements and balance
<PAGE>
sheet. The pro forma financial information should be read in conjunction with
the reports of PPL Corporation as noted above, as well as the audited financial
statements of Hyder for the year ended March 31, 2000. These financial
statements are included as Exhibit 99.1 in this Current Report on Form 8-K.
The pro forma information includes the results of Hyder's services and
industrial businesses, which are expected to be sold. During the twelve months
ended March 31, 2000, these businesses provided about 6% of Hyder's income from
operations. The pending sales of these businesses is not expected to have a
material effect on Hyder's results of operations. However, there can be no
assurance that these sales will be consummated.
<PAGE>
PPL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(Millions of Dollars)
<TABLE>
<CAPTION>
PRO FORMA NOTE
AS REPORTED ADJUSTMENTS REF AS ADJUSTED
----------- ----------- ---- -----------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Electric.................................................... $1,472 $1,472
Natural gas and propane..................................... 94 94
Wholesale energy marketing and trading...................... 943 943
Energy related businesses................................... 201 $13 1) 214
---------- ----------- -----------
Total....................................................... 2,710 13 2,723
---------- ----------- -----------
OPERATING EXPENSES
Operation
Electric fuel............................................. 216 216
Natural gas and propane................................... 38 38
Energy purchases for retail load and wholesale............ 947 947
Other..................................................... 304 304
Amortization of recoverable transition costs.............. 109 109
Maintenance................................................. 120 120
Depreciation and amortization .............................. 138 138
Taxes, other than income ................................... 109 109
Energy related businesses................................... 168 168
---------- ----------- -----------
Total ...................................................... 2,149 0 2,149
---------- ----------- -----------
OPERATING INCOME ............................................. 561 13 574
Other Income.................................................. 7 7
---------- ----------- -----------
INCOME BEFORE INTEREST, INCOME TAXES AND MINORITY INTEREST.... 568 13 581
Interest Expense.............................................. 180 7 2) 187
---------- ----------- -----------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST ............. 388 6 394
Income Taxes ................................................. 140 (2) 3) 138
Minority Interest............................................. 1 1
---------- ----------- -----------
INCOME BEFORE DIVIDENDS ON PREFERRED STOCK.................... 247 8 255
Preferred Stock Dividend Requirements......................... 13 13
---------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS............................. $234 $8 $242
========== =========== ===========
Earnings Per Share of Common Stock from Continuing Operations $1.63 $0.05 $1.68
(Basic and Diluted)
Average Common Shares Outstanding (thousands) 144,137 144,137
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Financial Information.
<PAGE>
PPL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999
(Millions of Dollars)
<TABLE>
<CAPTION>
PRO FORMA NOTE
AS REPORTED ADJUSTMENTS REF AS ADJUSTED
----------- ----------- ---- -----------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Electric.................................................... $2,758 $2,758
Natural gas and propane..................................... 109 109
Wholesale energy marketing and trading...................... 1,446 1,446
Energy related businesses................................... 277 ($1) 1) 276
---------- ----------- -----------
Total....................................................... 4,590 (1) 4,589
---------- ----------- -----------
OPERATING EXPENSES
Operation
Electric fuel............................................. 446 446
Natural gas and propane................................... 46 46
Energy purchases for retail load and wholesale............ 1,518 1,518
Other..................................................... 686 686
Amortization of recoverable transition costs.............. 172 172
Maintenance................................................. 215 215
Depreciation and amortization .............................. 257 257
Taxes, other than income ................................... 161 161
Energy related businesses................................... 217 217
---------- ----------- -----------
Total ...................................................... 3,718 0 3,718
---------- ----------- -----------
OPERATING INCOME ............................................. 872 (1) 871
Other Income.................................................. 97 97
---------- ----------- -----------
INCOME BEFORE INTEREST, INCOME TAXES AND MINORITY INTEREST.... 969 (1) 968
Interest Expense.............................................. 277 13 2) 290
---------- ----------- -----------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST ............. 692 (14) 678
Income Taxes ................................................. 174 (5) 3) 169
Minority Interest............................................. 14 14
---------- ----------- -----------
INCOME BEFORE DIVIDENDS ON PREFERRED STOCK.................... 504 (9) 495
Preferred Stock Dividend Requirements......................... 26 26
---------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS............................. $478 ($9) $469
========== =========== ===========
Earnings Per Share of Common Stock from Continuing Operations $3.14 ($0.06) $3.08
(Basic and Diluted)
Average Common Shares Outstanding (thousands) 152,287 152,287
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Financial Information.
<PAGE>
PPL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
(Millions of Dollars)
<TABLE>
<CAPTION>
PRO FORMA NOTE
AS REPORTED ADJUSTMENTS REF AS ADJUSTED
----------- ----------- ---- -----------
<S> <C> <C> <C> <C>
Assets
CURRENT ASSETS
Cash and cash equivalents .................................. $215 $215
Accounts receivable, net ................................... 482 482
Unbilled revenues .......................................... 360 360
Fuel, materials and supplies - at average cost ............. 190 190
Prepayments ................................................ 135 135
Unrealized energy trading gains ............................ 106 106
Other ...................................................... 125 77 2) 202
---------- ----------- -----------
1,613 77 1,690
---------- ----------- -----------
INVESTMENTS
Nuclear plant decommissioning trust fund ................... 269 269
Investment in unconsolidated affiliate at equity ........... 580 126 1) 706
Other ...................................................... 14 14
---------- ----------- -----------
863 126 989
---------- ----------- -----------
PROPERTY, PLANT AND EQUIPMENT
Electric utility plant in service - net
Transmission and distribution ............................ 2,470 2,470
Generation ............................................... 2,465 2,465
General .................................................. 277 277
---------- ----------- -----------
5,212 0 5,212
Construction work in progress - at cost .................... 221 221
Nuclear fuel owned and leased - net ........................ 123 123
---------- ----------- -----------
Electric utility plant - net ............................. 5,556 0 5,556
Gas and oil utility plant - net ............................ 171 171
Other property - net ....................................... 69 69
---------- ----------- -----------
5,796 0 5,796
---------- ----------- -----------
REGULATORY ASSETS AND OTHER NONCURRENT ASSETS
Recoverable transition costs ............................... 2,538 2,538
Other ...................................................... 1,059 1,059
---------- ----------- -----------
3,597 0 3,597
---------- ----------- -----------
$11,869 $203 $12,072
========== =========== ===========
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Financial Information.
<PAGE>
PPL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
(Millions of Dollars)
<TABLE>
<CAPTION>
PRO FORMA NOTE
AS REPORTED ADJUSTMENTS REF AS ADJUSTED
----------- ----------- ---- -----------
<S> <C> <C> <C> <C>
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term debt ............................................ $985 $203 3) $1,188
Long-term debt ............................................. 356 356
Above market NUG contracts ................................. 96 96
Accounts payable ........................................... 422 422
Taxes and interest accrued ................................. 151 151
Dividends payable .......................................... 45 45
Unrealized energy trading losses ........................... 105 105
Other ...................................................... 113 113
---------- ----------- -----------
2,273 203 2,476
---------- ----------- -----------
LONG-TERM DEBT ............................................... 4,329 4,329
---------- ----------- -----------
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES
Deferred income taxes and investment tax credits ........... 1,529 1,529
Above market NUG purchases ................................. 627 627
Other....................................................... 933 933
---------- ----------- -----------
3,089 0 3,089
COMMITMENTS AND CONTINGENT LIABILITIES .......................
MINORITY INTEREST ............................................ 55 55
COMPANY-OBLIGATED MANDATORILY REDEEMABLE
PREFERRED SECURITIES OF SUBSIDIARY TRUST
HOLDING SOLELY COMPANY DEBENTURES .......................... 250 250
PREFERRED STOCK
With sinking fund requirements ............................. 47 47
Without sinking fund requirements .......................... 50 50
---------- ----------- -----------
97 0 97
---------- ----------- -----------
SHAREOWNER'S COMMON EQUITY
Common stock ............................................... 2 2
Capital in excess of par value ............................. 1,873 1,873
Treasury stock ............................................. (836) (836)
Earnings reinvested ........................................ 812 812
Accumulated other comprehensive income ..................... (63) (63)
Capital stock expense and other ............................ (12) (12)
---------- ----------- -----------
1,776 0 1,776
---------- ----------- -----------
$11,869 $203 $12,072
========== =========== ===========
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Financial Information.
<PAGE>
PPL CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(Millions of Dollars)
INCOME STATEMENT ADJUSTMENTS:
----------------------------
1) Adjustment to record PPL Global's share of the equity earnings or loss from
Hyder. These equity results reflect the impact of purchase accounting
adjustments in accordance with US GAAP. The equity earnings were derived as
follows:
<TABLE>
<CAPTION>
Six Twelve
Mos. Ended Mos. Ended
June 30, 2000 Dec. 31, 1999
------------- -------------
<S> <C> <C>
Hyder US GAAP loss from continuing operations (a) $ (662) $ (669)
Eliminate impairment loss (b) 700 700
------------- -------------
Adjusted Hyder US GAAP income from continuing operations 38 31
Purchase accounting adjustments [income / (expense)]:
Interest expense (c) (24) (49)
Goodwill amortization (d) (2) (3)
Depreciation expense (e) 2 5
UK income tax on purchase accounting adjustments (f) 7 14
------------- -------------
Adjusted Hyder US GAAP income (loss) from continuing operations after 21 (2)
purchase accounting adjustments
PPL Global ownership interest in Hyder (g) 60% 60%
------------- -------------
PPL Global equity in income (loss) of Hyder $ 13 $ (1)
============= =============
</TABLE>
(a) Reflects the net loss reported by Hyder for the six and twelve months
ended March 31, 2000, respectively. Average interbank exhange rates of
1.62 and 1.61 were used to convert the results of these periods from
British Pounds Sterling to US dollars.
(b) Hyder recorded an impairment loss in December 1999. As this impairment
was comprehended in the purchase and asset valuation, it is excluded
from results of continuing operations for purposes of calculating
equity earnings.
(c) Assumed that WPDL issued $672 million of debt at 7.25% to acquire
Hyder.
(d) The excess of the $847 million purchase price over the fair value of
the net assets acquired is preliminarily estimated at $120 million.
PPL Global expects to amortize this goodwill over a 40 year period.
(e) Reductions in depreciation expense from amounts included in Hyder's
operating results are anticipated, based on the initial asset
valuation. Depreciable lives of fixed assets are not expected to
change.
(f) A UK tax rate of 30% was applied to the purchase accounting
adjustments.
(g) This assumes that WPDL acquires 100% of the outstanding shares of
Hyder, and that Southern does not exercise its option to increase its
equity interest from 40% to 49%. At 60% equity interest, each 5%
reduction in shares acquired would reduce PPL Global's share of equity
earnings for the six months ended June 30, 2000 by about $600,000. If
all of the outstanding shares of Hyder were acquired, but Southern
exercised its option to increase its equity ownership to 49%, PPL
Global's share of equity earnings for the six months ended June 30,
2000 would be $11 million.
2) PPL Global's portion of the Hyder acquisition, $126 million, and temporary
financing to WPDL of $77 million, were financed through commercial paper
issued by an affiliate of PPL Corporation. For purposes of calculating the
pro froma information, an interest rate of 6.5% was assumed for the six
months ended June 30, 2000 as well as for the twelve months ended December
31, 1999.
3) Additional US income taxes of 5% was provided on the equity earnings or
loss, and income taxes of 40% were applied to interest expense on
commerical paper.
BALANCE SHEET ADJUSTMENTS:
-------------------------
1) Adjustment to record PPL Global's equity investment in Hyder, as if the
investment were made on June 30, 2000.
2) Adjustment to record a note receivable for temporary financing provided to
WPDL, expected to be repaid upon sale of the businesses identified as held
for sale.
3) Adjustment to give effect to the commerical paper issued by an affiliate of
PPL Corporation to finance PPL Global's acquisition of its 60% interest in
Hyder, and to provide temporary financing to WPDL.
