EX-99.2 4 ppl-08022022exhibit992.htm EX-99.2
Exhibit 99.2
PPL CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On May 25, 2022, the PPL Corporation (PPL) through its subsidiary PPL Rhode Island Holdings acquired 100% of the outstanding shares of common stock of the Narragansett Electric Company (Narragansett Electric) from National Grid USA, a subsidiary of National Grid plc (the Acquisition). Narragansett Electric, whose service area covers substantially all of Rhode Island, is primarily engaged in the transmission and distribution of natural gas and electricity. The Acquisition expands PPL’s portfolio of regulated natural gas and electric transmission and distribution assets.
The consideration for the Acquisition consisted of approximately $3.8 billion in cash and approximately $1.5 billion of long-term debt assumed through the transaction. The fair value of the consideration paid for Narragansett Electric was as follows (in billions):

Aggregate enterprise consideration |  |  |  |  |  | $ | 5.3 |
Less: fair value of assumed long-term debt outstanding |  |  |  |  |  | 1.5 |
Total cash consideration |  |  |  |  |  | $ | 3.8 |

The $3.8 billion total cash consideration paid was funded with cash on hand.
The unaudited Pro Forma Condensed Consolidated Statement of Income (Pro Forma Statement of Income) for the year ended December 31, 2021 has been derived from the historical Condensed Consolidated Statement of Income of PPL for the year ended December 31, 2021 and the historical Statement of Operations and Comprehensive Income of Narragansett Electric for the year ended March 31, 2022. The Pro Forma Statement of Income for the three months ended March 31, 2022 has been derived from the historical Condensed Consolidated Statement of Income of PPL for the three months ended March 31, 2022 and from the historical Statement of Operations and Comprehensive Income of Narragansett Electric for the year ended March 31, 2022. The Pro Forma Statements of Income have been adjusted to give effect to the Acquisition as if it occurred on January 1, 2021. Because PPL and Narragansett Electric have different fiscal years, the financial information of Narragansett Electric included in the Pro Forma Statement of Income for the three months ended March 31, 2022 is also included in the Pro Forma Statement of Income for the year ended December 31, 2022
The unaudited Pro Forma Condensed Consolidated Balance Sheet (Pro Forma Balance Sheet) has been derived from the historical March 31, 2022 Condensed Consolidated Balance Sheet of PPL and the historical March 31, 2022 Balance Sheet of Narragansett Electric, as adjusted to give effect to the Acquisition.
The unaudited Pro Forma Statements of Income and Pro Forma Balance Sheet should be read in conjunction with:
•The accompanying Notes to the Pro Forma Statements of Income and Pro Forma Balance Sheet.
•The financial statements and notes contained in PPL’s Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on February 18, 2022.
•The financial statements and notes contained in PPL’s Form 10-Q for the period ended March 31, 2022 filed with the SEC on May 5, 2022.
•The financial statements and notes contained in Narragansett Electric’s financial statements as of and for the year ended March 31, 2022 included in this filing as exhibit 99.1.
The transaction accounting adjustments consist of those necessary to account for the Acquisition. The Pro Forma Statements of Income and Pro Forma Balance Sheet do not necessarily reflect what PPL’s results of operations would have been had the Acquisition occurred on January 1, 2021. The Pro Forma Statements of Income and Pro Forma Balance Sheet may not be useful in predicting the future results of operations of PPL. PPL’s actual results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.
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PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, except share data)

| For the Year Ended December 31, 2021
| PPL As Reported |  | Narragansett Electric As Reported |  | Transaction Accounting Adjustments |  | PPL Pro Forma
Operating Revenues | $ | 5,783 |  |  | $ | 1,621 |  |  | $ | — |  |  | $ | 7,404 |
Operating Expenses |  |  |  |  |  |  |
Operation |  |  |  |  |  |  |
Fuel | 710 |  |  | — |  |  | — |  |  | 710 |
Energy purchases | 752 |  |  | 533 |  |  | — |  |  | 1,285 |
Other operation and maintenance | 1,608 |  | (a) | 567 |  | (b) | 18 |  | (c) | 2,193 |
Depreciation | 1,082 |  |  | 143 |  |  | — |  |  | 1,225 |
Taxes, other than income | 207 |  |  | 148 |  |  | — |  |  | 355 |
Total Operating Expenses | 4,359 |  |  | 1,391 |  |  | 18 |  |  | 5,768 |
Operating Income | 1,424 |  |  | 230 |  |  | (18) |  |  | 1,636 |
Other Income (Expense) - net | 15 |  |  | (11) |  |  | — |  |  | 4 |
Interest Expense | 918 |  |  | 64 |  |  | — |  |  | 982 |
Income from Continuing Operations Before Income Taxes | 521 |  |  | 155 |  |  | (18) |  |  | 658 |
Income Taxes | 503 |  |  | 26 |  |  | (5) |  | (c) | 524 |
Income from Continuing Operations After Taxes | $ | 18 |  |  | $ | 129 |  |  | $ | (13) |  |  | $ | 134 |
Earnings Per Share of Common Stock: |  |  |  |  |  |  |
Income from Continuing Operations Available to PPL Shareowners |  |  |  |  |  |  |
Basic | $ | 0.03 |  |  |  |  |  |  | $ | 0.18 |
Diluted | $ | 0.03 |  |  |  |  |  |  | $ | 0.18 |
Weighted-Average Shares of Common Stock Outstanding (in thousands) |  |  |  |  |  |  |
Basic | 762,902 |  |  |  |  |  |  | 762,902 |
Diluted | 764,819 |  |  |  |  |  |  | 764,819 |

The accompanying Notes to Unaudited Pro Forma Condensed Consolidated Statements of Income are an integral part of the financial statements
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PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, except share data)

| For the Three Months Ended March 31, 2022
| PPL As Reported |  | Narragansett Electric As Reported |  | Transaction Accounting Adjustments |  | PPL Pro Forma
Operating Revenues | $ | 1,782 |  |  | $ | 507 |  |  | $ | — |  |  | $ | 2,289 |
Operating Expenses |  |  |  |  |  |  |
Operation |  |  |  |  |  |  |
Fuel | 212 |  |  | — |  |  | — |  |  | 212 |
Energy purchases | 352 |  |  | 196 |  |  | — |  |  | 548 |
Other operation and maintenance | 433 |  | (d) | 146 |  | (b) | 16 |  | (e) | 595 |
Depreciation | 271 |  |  | 37 |  |  | — |  |  | 308 |
Taxes, other than income | 60 |  |  | 38 |  |  | — |  |  | 98 |
Total Operating Expenses | 1,328 |  |  | 417 |  |  | 16 |  |  | 1,761 |
Operating Income | 454 |  |  | 90 |  |  | (16) |  |  | 528 |
Other Income (Expense) - net | — |  |  | (10) |  |  | — |  |  | (10) |
Interest Expense | 107 |  |  | 17 |  |  | — |  |  | 124 |
Income from Continuing Operations Before Income Taxes | 347 |  |  | 63 |  |  | (16) |  |  | 394 |
Income Taxes | 74 |  |  | 12 |  |  | (5) |  | (e) | 81 |
Income from Continuing Operations After Taxes | $ | 273 |  |  | $ | 51 |  |  | $ | (11) |  |  | $ | 313 |
Earnings Per Share of Common Stock: |  |  |  |  |  |  |
Income from Continuing Operations Available to PPL Shareowners |  |  |  |  |  |  |
Basic | $ | 0.37 |  |  |  |  |  |  | $ | 0.43 |
Diluted | $ | 0.37 |  |  |  |  |  |  | $ | 0.43 |
Weighted-Average Shares of Common Stock Outstanding (in thousands) |  |  |  |  |  |  |
Basic | 735,503 |  |  |  |  |  |  | 735,503 |
Diluted | 736,184 |  |  |  |  |  |  | 736,184 |

The accompanying Notes to Unaudited Pro Forma Condensed Consolidated Statements of Income are an integral part of the financial statements
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PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, shares in thousands)

| As of March 31, 2022
| PPL Corporation |  | Narragansett Electric As Reported |  | Transaction Accounting Adjustments |  | Pro Forma
Assets |  |  |  |  |  |  |
Current Assets |  |  |  |  |  |  |
Cash and cash equivalents | $ | 4,249 |  |  | $ | 8 |  |  | $ | (3,766) |  | (f) | $ | 491 |
Accounts receivable, net |  |  |  |  |  |  |
Customer | 625 |  |  | 256 |  | (g) | — |  |  | 881 |
Other | 44 |  |  | — |  |  | — |  |  | 44 |
Unbilled revenues, net | 279 |  |  | 57 |  | (g) | (1) |  | (h) | 335 |
Accounts receivable from affiliates | — |  |  | 94 |  |  | (94) |  | (f)(i) | — |
Fuel, materials and supplies | 280 |  |  | 50 |  |  |  |  | 330 |
Prepayments | 135 |  |  | — |  |  |  |  | 135 |
Other current assets | 101 |  |  | 162 |  |  | (11) |  | (j) | 252 |
Total Current Assets | 5,713 |  |  | 627 |  |  | (3,872) |  |  | 2,468 |
Property, Plant and Equipment |  |  |  |  |  |  |
Regulated utility plant, net | 24,080 |  |  | 3,983 |  |  | — |  |  | 28,063 |
Non-regulated property, plant and equipment | 278 |  |  | — |  |  |  |  | 278 |
Less: accumulated depreciation - non-regulated property, plant and equipment | 41 |  |  | — |  |  | — |  |  | 41 |
Non-regulated property, plant and equipment, net | 237 |  |  | — |  |  | — |  |  | 237 |
Construction work in progress | 1,328 |  |  | — |  |  |  |  | 1,328 |
Property, Plant and Equipment, net | 25,645 |  |  | 3,983 |  |  | — |  |  | 29,628 |
Other Noncurrent Assets |  |  |  |  |  |  |
Regulatory assets | 1,219 |  |  | 437 |  |  | — |  |  | 1,656 |
Goodwill | 716 |  |  | 725 |  |  | 870 |  | (k) | 2,311 |
Other intangibles | 340 |  |  | — |  |  | — |  |  | 340 |
Pension benefit asset | — |  |  | 44 |  |  | (4) |  | (l) | 40 |
Other noncurrent assets | 474 |  |  | 45 |  |  | (22) |  | (m)(q) | 497 |
Total Other Noncurrent Assets | 2,749 |  |  | 1,251 |  |  | 844 |  |  | 4,844 |
Total Assets | $ | 34,107 |  |  | $ | 5,861 |  |  | $ | (3,028) |  |  | $ | 36,940 |

The accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements are an integral part of the financial statements.
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| As of March 31, 2022
| PPL Corporation |  | Narragansett Electric As Reported |  | Transaction Accounting Adjustments |  | Pro Forma
Liabilities and Equity |  |  |  |  |  |  |
Current Liabilities |  |  |  |  |  |  |
Short-term debt | $ | 985 |  |  | $ | 14 |  |  | $ | — |  |  | $ | 999 |
Long-term debt due within one year | 474 |  |  | — |  |  | — |  |  | 474 |
Accounts payable | 686 |  |  | 175 |  |  | 31 |  | (n) | 892 |
Accounts payable to affiliates | — |  |  | 69 |  |  | (69) |  | (n)(o) | — |
Taxes | 92 |  |  | 43 |  |  | (5) |  | (p) | 130 |
Interest | 138 |  |  | 16 |  |  | — |  |  | 154 |
Dividends | 147 |  |  | — |  |  | — |  |  | 147 |
Regulatory liabilities | 122 |  |  | 177 |  |  | — |  |  | 299 |
Other current liabilities | 389 |  |  | 149 |  |  | 16 |  | (p) | 554 |
Total Current Liabilities | 3,033 |  |  | 643 |  |  | (27) |  |  | 3,649 |
Long-term Debt | 10,668 |  |  | 1,496 |  |  | — |  |  | 12,164 |
Deferred Credits and Other Noncurrent Liabilities |  |  |  |  |  |  |
Deferred income taxes | 3,211 |  |  | 428 |  |  | (464) |  | (q) | 3,175 |
Investment tax credits | 124 |  |  | — |  |  | — |  |  | 124 |
Accrued pension obligations | 183 |  |  | 10 |  |  | (1) |  | (r) | 192 |
Asset retirement obligations | 151 |  |  | 10 |  |  | — |  |  | 161 |
Regulatory liabilities | 2,417 |  |  | 616 |  |  | — |  |  | 3,033 |
Other deferred credits and noncurrent liabilities | 455 |  |  | 131 |  |  | — |  |  | 586 |
Total Deferred Credits and Other Noncurrent Liabilities | 6,541 |  |  | 1,195 |  |  | (465) |  |  | 7,271 |
Commitments and Contingent Liabilities |  |  |  |  |  |  |
Equity |  |  |  |  |  |  |
Common stock - $0.01 par value(1) | 8 |  |  | 57 |  |  | (57) |  | (s) | 8 |
Additional paid-in capital | 12,299 |  |  | 1,443 |  |  | (1,443) |  | (s) | 12,299 |
Treasury Stock | (987) |  |  | — |  |  | — |  |  | (987) |
Earnings reinvested | 2,697 |  |  | 1,027 |  |  | (1,039) |  | (h)(p) (s) | 2,685 |
Noncontrolling interest | — |  |  | 3 |  |  | — |  |  | 3 |
Accumulated other comprehensive loss | (152) |  |  | (3) |  |  | 3 |  | (s) | (152) |
Total Equity | 13,865 |  |  | 2,527 |  |  | (2,536) |  |  | 13,856 |
Total Liabilities and Equity | $ | 34,107 |  |  | $ | 5,861 |  |  | $ | (3,028) |  |  | $ | 36,940 |

(1)1,560,000 shares authorized, 770,013 shares issued and 735,765 shares outstanding at March 31, 2022
The accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements are an integral part of the financial statements.
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Notes to Unaudited Pro Forma Financial Statements
(Millions of Dollars, except share data)
Note 1. Basis of Presentation
The unaudited Pro Forma Condensed Consolidated Statement of Income (Pro Forma Statement of Income) for the year ended December 31, 2021 has been derived from the historical Condensed Consolidated Statement of Income of PPL for the year ended December 31, 2021 and the historical Statement of Operations and Comprehensive Income of Narragansett Electric for the year ended March 31, 2022. The Pro Forma Statement of Income for the three months ended March 31, 2022 has been derived from the historical Condensed Consolidated Statement of Income of PPL for the three months ended March 31, 2022 and from the historical Statement of Operations and Comprehensive Income of Narragansett Electric for the year ended March 31, 2022. The Pro Forma Statements of Income have been adjusted to give effect to the Acquisition as if it occurred on January 1, 2021. Because PPL and Narragansett Electric have different fiscal years, the financial information of Narragansett Electric included in the Pro Forma Statement of Income for the three months ended March 31, 2022 is also included in the Pro Forma Statement of Income for the year ended December 31, 2022
The unaudited Pro Forma Condensed Consolidated Balance Sheet (Pro Forma Balance Sheet) has been derived from the historical March 31, 2022 Condensed Consolidated Balance Sheet of PPL and the historical March 31, 2022 Balance Sheet of Narragansett Electric, as adjusted to give effect to the Acquisition.
References included in the Pro Forma Financial Statements above are discussed in Note 4.
Note 2. Consideration Paid for the Acquisition
The consideration for the Acquisition consisted of approximately $3.8 billion in cash and approximately $1.5 billion of long-term debt assumed through the transaction. The fair value of the consideration paid for Narragansett Electric is as follows (in billions):

Aggregate enterprise consideration |  |  |  |  |  | $ | 5.3 |
Less: fair value of assumed long-term debt outstanding |  |  |  |  |  | 1.5 |
Total cash consideration |  |  |  |  |  | $ | 3.8 |

The $3.8 billion total cash consideration paid was funded with cash on hand.
Note 3. Purchase Price Allocation
The operations of Narragansett Electric are subject to the accounting for certain types of regulation as prescribed by GAAP. The carrying value of Narragansett Electric’s assets and liabilities subject to rate-setting and cost recovery provisions provide revenues derived from costs, including a return on investment of assets and liabilities included in rate base. As such, the fair values of these assets and liabilities equal their carrying values. Accordingly, neither the assets acquired or liabilities assumed, nor the unaudited pro forma financial information presented, reflect any adjustments related to these amounts.
The excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed was $1,595 million, which has been recorded as goodwill.
The table below shows the preliminary allocation of the purchase price to the assets acquired and liabilities assumed as of March 31, 2022. The allocation is subject to change upon closing and during the subsequent one-year measurement period as additional information is obtained about the facts and circumstances that existed at closing. The items pending finalization include, but are not limited to, final working capital adjustments and the valuation of defined benefit plans. As a result, the amount of goodwill included below may change by a material amount as PPL finalizes the allocation of the purchase price.
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|  |  |  |  |  | March 31, 2022
Assets |  |  |  |  |  |
Current Assets |  |  |  |  |  |
Cash and Cash Equivalents |  |  |  |  |  | $ | 64 |
Accounts Receivable(1) |  |  |  |  |  | 256 |
Unbilled Revenues |  |  |  |  |  | 56 |
Fuel, materials and supplies |  |  |  |  |  | 50 |
Other Current Assets |  |  |  |  |  | 151 |
Total Current Assets |  |  |  |  |  | 577 |
Noncurrent Assets |  |  |  |  |  |
Property, Plant and Equipment |  |  |  |  |  | 3,983 |
Regulatory Assets |  |  |  |  |  | 437 |
Goodwill |  |  |  |  |  | 1,595 |
Pension benefit asset |  |  |  |  |  | 40 |
Other Noncurrent Assets |  |  |  |  |  | 23 |
Total Noncurrent Assets |  |  |  |  |  | 6,078 |
Total Assets |  |  |  |  |  | $ | 6,655 |
Liabilities |  |  |  |  |  |
Current Liabilities |  |  |  |  |  |
Long-Term Debt Due Within One Year |  |  |  |  |  | $ | 14 |
Accounts Payable |  |  |  |  |  | 206 |
Taxes |  |  |  |  |  | 43 |
Interest |  |  |  |  |  | 16 |
Regulatory Liabilities |  |  |  |  |  | 177 |
Other Current Liabilities |  |  |  |  |  | 149 |
Total Current Liabilities |  |  |  |  |  | 605 |
Noncurrent Liabilities |  |  |  |  |  |
Long-Term Debt |  |  |  |  |  | 1,496 |
Accrued pension obligations |  |  |  |  |  | 9 |
Asset retirement obligations |  |  |  |  |  | 10 |
Regulatory Liabilities |  |  |  |  |  | 616 |
Other Deferred Credits and Noncurrent Liabilities |  |  |  |  |  | 97 |
Noncurrent Liabilities |  |  |  |  |  | 2,228 |
Total Purchase Price (Balance Sheet Net Assets) |  |  |  |  |  | $ | 3,822 |

(1) Amount represents net fair value as of March 31, 2022. The gross contractual amount is $318 million. Cash flows not expected to be collected as of March 31, 2022 are $62 million.
Note 4. Transaction Accounting Adjustments and Other Information
(a)Other operation and maintenance expense includes $10 million of non-recurring transaction costs incurred by PPL related to the Acquisition.
(b)Narragansett Electric did not incur any non-recurring transaction costs related to the Acquisition.
(c)Represents accrued acquisition transaction costs of $18 million ($13 million net of tax) for expected remaining costs as of December 31, 2021. The tax effect of the transaction was estimated using a statutory tax rate of 28.9%.
(d)Other operation and maintenance expense includes $2 million of non-recurring transaction costs incurred by PPL related to the Acquisition.
(e)Represents accrued acquisition transaction costs of $16 million ($11 million net of tax) for expected remaining costs as of March 31, 2022. The tax effect of the transaction was estimated using a statutory tax rate of 28.9%.
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(f)Includes cash consideration paid of $3.8 billion, including estimated working capital adjustments, for the purchase of Narragansett Electric, offset by an increase of $56 million for Narragansett Electric’s intercompany money pool which was settled as cash upon acquisition.
(g)The balances are net of Narragansett Electric’s recorded reserves and represent net fair value as of the balance sheet date.
(h)Includes a $1 million allowance and a cumulative-effect adjustment to earnings reinvested for the adoption of the Current Expected Credit Loss model by Narragansett Electric to conform to PPL’s established accounting policies. The income statement impact on the Pro Forma Condensed Consolidated Statement of Income was immaterial.
(i)Narragansett Electric’s accounts receivable from affiliates of $38 million were netted against Narragansett Electric’s accounts payable to affiliates of $69 million and reclassified to third party accounts payable.
(j)Exclusion of prepaid and current assets for uncertain tax positions which were not acquired by PPL as part of the Acquisition.
(k)Represents goodwill resulting from the Acquisition as of the March 31, 2022 Pro Forma Balance Sheet.
(l)Exclusion of certain pension assets that were not acquired by PPL as part of the Acquisition.
(m)As a result of the transaction being an asset acquisition for tax purposes, PPL did not recognize assets for uncertain tax positions previously recorded on Narragansett Electric’s financial statements.
(n)Represents reclassification of affiliate payables of $69 million and affiliate receivables of $38 million, which have been netted and shown as third party accounts payable.
(o)Narragansett Electric’s net accounts payable to affiliates of $69 million were reclassified to third party accounts payable.
(p)Represents accrued acquisition transaction costs of $16 million ($11 million net of tax) and the associated increase in taxes payable of $5 million.
(q)As a result of the transaction being an asset acquisition for tax purposes, Narragansett Electric’s net deferred tax liability of $428 million will not be assumed by PPL. Additionally, certain assets acquired and liabilities assumed in the Acquisition do not have tax basis. As a result, PPL recorded a deferred tax asset of $36 million, which is being presented as an offset to PPL’s deferred tax liability.
(r)Exclusion of certain pension obligations not assumed by PPL as part of the Acquisition.
(s)Represents the removal of Narragansett Electric’s historical equity as any difference between net assets and the purchase price was recorded as goodwill.
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