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PPL Reports 2001 Earnings, Increases Dividend by 36 percent, Forecasts 2002 EPS from Core Operations of $3.30 to $3.50

ALLENTOWN, Pa. (Jan. 29, 2002) - PPL Corporation (NYSE: PPL) today reported 2001 earnings, announced a 36 percent increase in its common stock dividend and said it now forecasts 2002 earnings per share from core operations of $3.30 to $3.50.

The company reported 2001 diluted earnings per share of $1.22, compared with the $3.44 per share that it reported in 2000.

William F. Hecht, PPL chairman, president and chief executive officer, said the company's 2001 results were significantly reduced by several unusual items. "Earnings from our core operations in 2001 were $4.22 per share, compared with $3.28 per share from core operations in 2000," said Hecht.

The strong 2001 core earnings were offset by charges associated with the bankruptcy of Enron, PPL's cancellation of certain U.S. power plant projects and impairment charges in the company's Brazilian and United Kingdom electric delivery businesses.

"While we had a very strong year in the generation and sale of electricity in the United States and in our Pennsylvania electricity delivery business, there also were a number of developments that resulted in charges which significantly reduced our reported earnings for the year," said Hecht.

Among those developments was a decision to scale back the company's capital expenditures for new generation. The company announced earlier this month that it was canceling six power plant projects, resulting in reduced capital expenditures of $1.3 billion. The company is continuing to construct about 2,100 megawatts of generation, for which it already has financing in place.

Hecht said the company plans to maintain its strong liquidity and grow the business through the implementation of an integrated energy supply and delivery strategy. "Our strong cash position provides us with the flexibility to respond to future growth opportunities," he said.

The company, he said, is well-positioned to grow value for shareowners, even in the face of lower wholesale energy prices.

"We have a strong stream of revenues from our electric and gas delivery businesses," said Hecht. "And, our energy supply business provides stable earnings as well, with more than 85 percent of our projected 2002 margins to be derived from long-term contracts."

In addition, the 2001 "securitization" of PPL's Pennsylvania transmission and distribution business helped put the company in a strong cash position. At the end of 2001, Hecht said, the company had about $1 billion of cash on hand.

2001 Earnings

PPL had announced last week that it was evaluating the business and regulatory situation in Brazil to determine what actions should be taken with respect to its CEMAR electricity delivery company. As a result of that evaluation, the company has taken a $217 million charge against earnings in 2001.

"Unfortunately, a prolonged drought, electricity rationing, the regulatory climate and disruption of Brazil's electricity markets have dramatically reduced the value of CEMAR," said Hecht. "As a result, CEMAR has been unable to obtain the in-country financing necessary to fund its operations, and we have decided that PPL will not provide those funds. Consequently, we are writing off a substantial portion of our $317 million investment in 2001."

Accounting rules limit the company's ability to write off the entire CEMAR investment in 2001, so an additional write-off is expected in the first quarter of 2002. The amount of that write-off, up to the remaining value of the investment, is expected to be about $100 million, or $0.68 per share.

He said CEMAR, using funds generated through its own resources, will work with government officials to seek to ensure a continuation of reliable and safe service to its 1 million electricity delivery customers.

Hecht said PPL's other Latin American operations - in Chile, Bolivia and El Salvador - are unaffected by the situation in Brazil.

PPL also had announced earlier this month that it was evaluating the carrying value of its investment in Western Power Distribution, an affiliate that delivers electricity to 2 million customers in England and Wales. PPL announced Tuesday that it is taking a $117 million impairment charge in 2001 to bring the carrying value of WPD in line with its fair market value.

The company had announced earlier that it is recording a 2001 charge of $88 million as the result of scaling back its generation expansion. It also is recording charges of $28 million in 2001 related to Enron's bankruptcy.

These charges, which all occurred in the fourth quarter, were slightly offset by a credit resulting from a change in the company's pension accounting methods.
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