ALLENTOWN, Pa.---PP&L Resources, Inc. Wednesday (10/22) reported net income of $41.6 million or 25 cents per share during the third quarter of 1997, compared to $78.8 million or 49 cents per share reported in the same period last year.

The reduction in earnings is due primarily to two previously announced one-time charges — first, a windfall profits tax in the United Kingdom based on a subsidiary's equity interest in a U.K. utility and second, the pending acquisition of a local gas distribution business in the United States.

These charges were offset by a one-time income tax benefit resulting from the reduction of the U.K. corporate income-tax rate.

Excluding the one-time adjustments and weather variances, earnings per share for the quarter ended Sept. 30 would have been 48 cents, compared to 51 cents per share for the comparable quarter in 1996.

"We are well positioned as deregulation comes to the Pennsylvania and mid-Atlantic electricity markets," said Ronald E. Hill, senior vice president-Financial. "The company's Energy Marketing Center contributed positively to earnings in the third quarter and already has surpassed its targets for the year on bulk power sales. Those sales were helped by increased power generation from the company's electric utility subsidiary, PP&L, Inc., combined with greater efficiency of its generating units."

Hill continued, "Our bulk power and service-territory sales continue to grow. In addition, the company now has a new brand of electricity, PP&L EnergyPlus, that is being marketed for the first time to customers outside the company's traditional Pennsylvania service territory."

As previously announced, the Labour Party in the U.K. enacted a windfall profits tax on privatized U.K. utilities. The company's subsidiary, PP&L Global, has a 25 percent equity interest in South Western Electricity plc, one of the U.K.'s privatized regional electric companies. PP&L Global's share of that tax was $39.7 million, or 24 cents per share, in the third quarter.

Concurrent with the enactment of the windfall profits tax, the U.K. government reduced the corporate income-tax rate, which resulted in a one-time benefit of $10 million, or 6 cents per share, in the third quarter.

Also in the third quarter, PP&L Resources recorded a one-time charge of 3 cents per share due to costs associated with its previously announced acquisition of Penn Fuel Gas, Inc. based in Oxford, Pa. The pending acquisition continues to move forward through the regulatory process.

PP&L Resources reported earnings of $1.81 per share for the 12 months ended Sept. 30, 1997, compared to earnings of $2.16 per share reported for the previous 12-month period. After removing the effects of weather and one-time adjustments, earnings per share for the 12 months ended Sept. 30, 1997, would have been $2.06 per share, compared to $1.94 per share for the previous 12-month period.

PP&L Global contributed 8 cents per share to the earnings improvement for the 12 month period, excluding the one-time charge for the windfall profits tax and the one-time tax benefit for the reduction in the U.K. corporate income-tax rate. PP&L continued to see growth in its weather-adjusted sales to all classes of service-area customers — residential, commercial and industrial — both for the three-month and 12-month periods ended Sept. 30, 1997.
Consolidated Financial Information (unaudited)