United States Securities and Exchange Commission Washington, DC 20549 Form 10-Q THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1) (a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 -------------------- OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to _______________ Commission File Registrant; State of Incorporation; IRS Employer Number Address; and Telephone No. Identification No. ------ -------------------------- ------------------ 333-75369 PPL Transition Bond Company, LLC 23-3004428 (Delaware) Two North Ninth Street, GENA92, Room 3 Allentown, PA 18101-1179 (610) 774-7934 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [ X ] NO [_] PPL TRANSITION BOND COMPANY, LLC -------------------------------- FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000 INDEX -----

~~Three~~PART ~~Months~~I. ~~Six~~FINANCIAL ~~Months~~INFORMATION ~~Ended~~Page ~~June~~Item ~~30,~~1. ~~Ended~~Financial ~~June~~Statements ~~30,~~Statement ~~-------------------------~~of ~~----------------------------~~Operations ~~2000~~and ~~1999~~Changes ~~2000~~in ~~1999~~Member's ~~(a)~~Equity ~~---------~~1 ~~---------~~Statement ~~---------~~of ~~---------~~Cash ~~(unaudited)~~Flows ~~(audited)~~2 ~~(unaudited)~~Balance ~~(audited)~~Sheet ~~Revenue~~3 ~~Intangible~~Notes ~~transition~~to ~~charge~~Financial ~~revenue.......................~~Statements ~~$92,973 $206,061 Interest income............................................~~ 4 81Item ~~--------- --------- --------- --------- Total revenue~~2.~~.....................................~~ ~~92,977~~Management's ~~206,142~~Discussion ~~---------~~and ~~---------~~Analysis ~~--------- --------- Expenses Amortization~~ of ~~intangible~~Financial ~~transition~~Condition ~~property............. 52,039 123,242 Interest expense........................................... 40,467 81,902 Administrative~~ and ~~general~~Results ~~expenses........................~~of ~~466~~Operations ~~916~~8 ~~---------~~Item ~~--------- --------- --------- Total expenses~~3.~~....................................~~ ~~92,972~~Quantitative ~~206,060~~and ~~---------~~Qualitative ~~---------~~Disclosures ~~---------~~About ~~---------~~Market ~~Operating~~Risk ~~Income...............................................~~9 5PART ~~82 Income tax expense~~II.~~............................................~~ 2OTHER 34INFORMATION ~~---------~~Item ~~--------- --------- --------- Net Income~~1.~~....................................................~~ $3Legal ~~$48~~Proceedings ~~=========~~10 ~~=========~~Item ~~========= ========= Member's equity - beginning of period~~6.~~.........................~~ ~~12,350~~Exhibits ~~12,305~~and ~~Member's~~Reports ~~cash~~on ~~contribution.....................................~~Form ~~$1 $1~~ 8-~~--------~~K ~~---------~~10 ~~---------~~GLOSSARY ~~---------~~OF ~~Member's~~TERMS ~~equity~~AND -ABBREVIATIONS ~~end~~11 ofSIGNATURES ~~period................................ $12,353 $1 $12,353 $1 ========= ========= ========= =========~~13

PPL TRANSITION BOND COMPANY, LLC -------------------------------- Part 1. FINANCIAL INFORMATION -------------------------------- Item 1. Financial Statements -------------------------------- STATEMENT OF OPERATIONS AND CHANGES IN MEMBER'S EQUITY (Unaudited) (Thousands of Dollars)

~~For~~Three ~~the~~Months ~~Period~~Nine ~~For the March 25, 1999 (date Six~~ Months Ended ofSeptember ~~inception) to June~~ 30, ~~2000~~Ended ~~June~~September 30, ~~1999~~ --------------------------- -------------------------- ~~(unaudited)~~2000 1999 2000 1999 (~~audited~~a) ~~Cash~~--------- ~~Flows~~--------- ~~From~~-------- ~~Operating~~---------- ~~Activities~~Revenue ~~Net~~Intangible ~~Income~~transition charge revenue................. $95,363 $64,164 $301,424 $64,164 Interest income................................ ~~$48 $0 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of intangible transition property~~......~~...~~ ~~123,242~~55 ~~Amortization~~100 of136 ~~debt~~100 ~~issuance~~------- ~~expenses.................~~------- ~~1,721~~-------- ~~Amortization~~------- ofTotal ~~debt discount~~revenue......................~~....~~ 3595,418 ~~Changes~~64,264 in301,560 ~~current~~64,264 ~~assets~~------- ~~and~~------- ~~liabilities:~~-------- ~~Intangible~~------- ~~transition~~Expenses ~~charges~~Amortization ~~receivable~~of ~~from~~intangible ~~Servicer~~transition property.......~~.................................~~ (655,~~739)~~343 ~~Payable~~40,800 ~~to Servicer.................................... (1~~178,~~056)~~585 140,~~056~~800 ~~Other~~Interest expense.....................................~~.............~~ 139,~~269~~503 ~~Other~~23,722 ~~operating~~121,405 ~~activities~~23,722 -Administrative ~~net~~and general expenses..................~~...........~~ ~~654~~518 299 1,434 299 ------- -------~~---~~ -------- -------~~--------~~ ~~Net~~Total ~~cash provided by operating activities~~expenses..................... ~~119~~95,~~174~~364 164,~~056~~821 301,424 64,821 ------- -------~~---~~ -------- -------~~--------~~ ~~Cash~~Operating ~~Flows~~Income ~~From Investing Activities Decrease in restricted funds~~(Loss).................................. ~~663~~54 ~~-----------------~~(557) ~~-----------------------~~136 ~~Net~~(557) ~~cash~~Income ~~provided~~tax byexpense ~~investing activities~~(benefit)............................. ~~663~~22 (231) 56 (231) ------- -------~~---~~ -------- -------~~--------~~ ~~Cash~~Net ~~Flows~~Income ~~From Financing Activities Retirement of transition bonds...............................~~ (~~122,327~~Loss) ~~Debt issuance expenses~~........................................ $ 32 $ (~~1,056~~326) ~~Equity~~$ ~~contribution~~80 ~~from~~$ ~~member~~(326) ======= ======= ======== ======= Member's equity - beginning of period....................~~..........~~ 12,353 1 ~~-----------------~~12,305 ~~-----------------------~~0 ~~Net~~Member's cash ~~used in financing activities~~contribution........................ ~~(122,327) (1,055) ----------------- ----------------------- Net Increase (Decrease) in Cash and Cash Equivalents~~......... (212,~~490)~~100 ~~1 Cash and Cash Equivalents at Beginning of Period............. 2~~12,~~830~~101 ------- -------~~---~~ -------- -------~~--------~~ ~~Cash~~Member's ~~and~~equity ~~Cash~~- ~~Equivalents~~end ~~at End~~ of ~~Period~~period.......................... $~~340~~12,385 $111,775 $ 12,385 $11,775 ======= =======~~===~~ ======== =======~~======== Supplemental Disclosure of Cash Flow Information Cash paid during the period for: Interest $80,254 $0 Income taxes $0 $0~~

(a) For the Period March 25, 1999 (date of inception) to September 30, 1999. The accompanying Notes to Financial Statements are an integral part of the financial statements. 1 PPL TRANSITION BOND COMPANY, LLC -------------------------------- STATEMENT OF CASH FLOWS (Unaudited) (Thousands of Dollars)

For the Period For the March 25, 1999 (~~Thousands~~date Nine Months Ended of ~~Dollars~~inception) ~~June~~to September 30, ~~December~~2000 31September 30, ~~2000~~ 1999 ------------------- ------------------- ~~(Unaudited)~~Cash ~~(Audited)~~Flows ~~ASSETS~~From ~~Current~~Operating ~~Assets~~Activities ~~Cash~~Net ~~and~~Income ~~cash equivalents~~ (Loss)................................................................ $ ~~340~~80 $ ~~2,830~~(326) ~~Intangible~~Adjustments ~~transition~~to ~~charges~~reconcile ~~receivable~~net ~~from~~income ~~Servicer~~to ~~.........~~net ~~75,246~~cash ~~68,507~~provided ~~Accounts~~by ~~receivable~~operating ~~from~~activities: ~~member~~Amortization -of ~~income~~intangible ~~taxes~~transition property................................ 6178,~~102~~585 640,~~105~~800 ~~Prepaid~~Amortization ~~expenses~~of ~~and~~debt ~~other~~issuance ~~receivables~~ expenses........................................ 82,521 55454 ~~-----------~~Amortization ~~-----------~~of ~~Current~~debt ~~assets~~ discount................................................. ~~81,696~~51 ~~77,497~~11 ~~-----------~~Deferred ~~-----------~~income ~~Noncurrent Assets Intangible transition property, net~~ taxes............................ ~~2,193,737 2,316,980 Unamortized debt issuance expenses~~ ............................. ~~13,144~~(318) ~~14,865~~Changes ~~Restricted~~in ~~funds~~current assets and liabilities: Intangible transition charges receivable from Servicer.......................................................... 2(5,~~856~~250) 3(55,~~519~~734) ~~-----------~~Payable ~~-----------~~to ~~Noncurrent assets~~ Servicer....................................................... 2(1,~~209,737~~056) 21,~~335,364~~293 ~~----------- ----------- Total assets~~ Other..................................................................... $21,~~291,433~~766 $223,~~412,861~~664 ~~===========~~Other ~~===========~~operating ~~LIABILITIES~~activities ~~AND MEMBER'S EQUITY Current Liabilities Long~~-~~term~~ ~~debt~~ net................................................. $981 ~~233,509~~120 $--------------- ~~226,699~~--------------- ~~Interest~~Net ~~accrued~~cash provided by operating activities.................................~~..............~~ 2177,~~152~~678 29,~~255~~964 ~~Payable~~--------------- to--------------- ~~Servicer~~Cash Flows From Investing Activities Purchase of intangible transition property.......................................~~.....~~ 1(2,~~056~~402,000) ~~Other~~Increase in restricted funds.....................................................~~......~~ 1(5,~~908~~632) ~~587~~(12,200) --------------- --------------- ~~Current~~Net ~~liabilities~~cash used in investing activities.....................................~~.....~~ ~~237~~(5,~~569~~632) ~~230~~(2,~~597~~414,200) --------------- --------------- ~~Noncurrent~~Cash ~~Liabilities~~Flows ~~Long-term~~From ~~debt,~~Financing ~~net~~Activities Proceeds from issuance of ~~discount~~transition bonds...................................... 2,~~034~~419,~~280~~737 ~~2,163,382~~Retirement ~~Deferred~~of ~~income~~transition ~~taxes~~ bonds.................................................. 6(174,~~250~~624) ~~6,250~~Debt ~~Other~~issuance expenses........................................................... ~~981~~(14,281) ~~327~~Equity ~~-----------~~contribution ~~-----------~~from ~~Noncurrent liabilities~~ member................................................. 212,~~041,511~~101 ~~2,169,959~~ --------------- --------------- ~~Commitments~~Net ~~and~~cash ~~Contingent~~provided ~~Liabilities~~by (used in) financing activities......................~~.....~~ (174,624) 2,417,557 --------------- --------------- ~~Member's~~Net ~~Equity~~Increase (Decrease) in Cash and Cash Equivalents............................... (2,578) 13,321 Cash and Cash Equivalents at Beginning of Period................................... 122,~~353~~830 ~~12,305~~0 --------------- --------------- ~~Total~~Cash ~~liabilities~~ and ~~member's~~Cash ~~equity~~Equivalents at End of Period......................................... $~~2,291,433~~ 252 $2 13,~~412,861~~321 =============== =============== Supplemental Disclosure of Cash Flow Information Cash paid during the period for: Interest........................................................................ $ 118,985 $ 0 Income taxes.................................................................... $ 0 $ 0

The accompanying Notes to Financial Statements are an integral part of the financial statements. 2 PPL TRANSITION BOND COMPANY, LLC -------------------------------- BALANCE SHEET (Unaudited)

~~Expected~~(Thousands ~~Final~~of ~~Final~~Dollars) ~~Class~~September ~~Bond~~30, ~~Rate~~December ~~Amount~~31, ~~Payment~~2000 ~~Date~~1999 ~~Maturity Date~~ ------------- ------------ ASSETS Current Assets Cash and cash equivalents............................... $ 252 $ 2,830 Intangible transition charges receivable from Servicer.. 73,757 68,507 Accounts receivable from member - income taxes.......... 6,162 6,105 Prepaid expenses and other receivables.................. 58 55 ----- -------- ------------ Current assets....................................... 80,229 77,497 ------------- ------------ ($Noncurrent ~~Thousands)~~Assets ~~A-1~~Intangible 6transition property, net.~~08%~~.................... $2,138,395 ~~140~~2,~~988~~316,980 ~~March~~Unamortized ~~25,~~debt ~~2001~~issuance ~~March~~expenses...................... 2512,344 ~~2003~~14,865 ~~A-2~~Restricted 6funds.~~41%~~....................................... ~~178~~9,~~000~~151 ~~December 26~~3,519 ~~2001~~------------- ~~December~~------------ 26Noncurrent assets.................................... 2,159,890 ~~2003~~2,335,364 A-3------------ 6------------ Total assets.~~60%~~........................................ ~~303~~$ 2,~~000~~240,119 ~~March~~$ 252,412,861 ~~2003~~============= ~~March~~============ ~~25,~~LIABILITIES ~~2005~~AND AMEMBER'S EQUITY Current Liabilities Long-4term 6debt.~~72%~~......................................... ~~201~~$ 236,~~000~~859 ~~December~~$ 26226,699 ~~2003~~Interest ~~December~~accrued........................................ 262,107 ~~2005~~2,255 ~~A-5~~Payable 6to Servicer.~~83%~~.................................... ~~313~~1,~~000~~056 ~~March~~Other................................................... 252,561 ~~2005~~587 ~~March~~------------- ~~25, 2007 A~~-6----------- 6Current liabilities.~~96%~~................................. ~~223~~241,~~000~~527 ~~December 26~~230,597 ~~2005~~------------- ~~December~~------------ ~~26,~~Noncurrent ~~2007~~Liabilities ALong-7term ~~7.05% 455~~debt,~~000~~ ~~June~~net ~~25,~~of ~~2007~~discount......................... ~~June~~1,978,649 252,163,382 ~~2009~~Deferred ~~A-8~~income 7taxes.~~15%~~.................................. ~~454~~6,~~000~~250 ~~December 26~~6,250 ~~2008~~Other................................................... ~~June 25~~1,308 ~~2009~~327 ------------- $------------ Noncurrent liabilities............................... 1,986,207 2,~~267~~169,~~988~~959 ~~Current~~------------- ~~Maturities~~------------ ~~(233,509)~~Commitments ~~Unamort~~And Contingent Liabilities..................... ~~Discount~~------------- ~~(199)~~------------ Member's Equity............................................ 12,385 12,305 ------------- ~~Long~~-~~term~~----------- ~~Debt~~Total liabilities and member's equity................ $ 2,~~034~~240,~~280~~119 $ 2,412,861 ============= ============

The accompanying Notes to Financial Statements are an integral part of the financial statements. 3 PPL Transition Bond Company, LLC Notes to Financial Statements --------------------------------- Terms and abbreviations appearing in Notes to Financial Statements are explained in the glossary. 1. Interim Financial Statements Certain information in footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles, has been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the SEC. These financial statements should be read in conjunction with the financial statements and notes included in PPL Transition Bond Company, LLC's Annual Report to the SEC on Form 10-K for the year ended December 31, 1999. Certain amounts in the September 30, 1999 and December 31, 1999 financial statements have been reclassified to conform to the presentation in the September 30, 2000 financial statements. 2. Nature of Operations The financial statements include the accounts of PPL Transition Bond Company, LLC (the Company). The Company is a limited liability company established under the laws of the State of Delaware, and was formed on March 25, 1999 pursuant to a limited liability company agreement. PPL Electric Utilities is the sole member of the Company. The Company was organized for the sole purpose of purchasing and owning ITP, issuing transition bonds (the Bonds), pledging its interest in ITP and other collateral to the Trustee under an Indenture between the Company and the Trustee to collateralize the Bonds, and performing activities that are necessary to accomplish these purposes. ITP represents the irrevocable right of PPL Electric Utilities, or its successor or assignee, to collect a non-bypassable ITC from customers pursuant to the PUC Restructuring Order in accordance with the Competition Act. The PUC Restructuring Order authorized the ITC to be sufficient to recover up to $2.85 billion aggregate principal amount of Bonds, plus an amount sufficient to provide for any credit enhancement, to fund any reserves and to pay interest, redemption premiums, servicing fees and other expenses relating to the Bonds. The Company's organizational documents require it to operate in a manner so that its assets would not be consolidated with the bankruptcy estate of PPL Electric Utilities in the event PPL Electric Utilities becomes subject to a bankruptcy proceeding. Both PPL Electric Utilities and the Company have treated the transfer of the ITP to the Company as a sale under applicable law. The Bonds are treated as debt obligations of the Company. The assets of the Company are not available to creditors of PPL Electric Utilities or PPL Corporation, and the ITP is legally not an asset of PPL Electric Utilities or PPL Corporation. The Company is expected to terminate its existence after final maturity of the Bonds. The Company issued $2.42 billion of Bonds in eight different classes on August 10, 1999. See Note 4 for additional information. 4 3. Summary of Significant Accounting Policies Management's Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions will affect the reported amount of revenues, expenses, assets, and liabilities and disclosure of contingencies. Actual results could differ from these estimates. Cash and Cash Equivalents The Company considers all liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Cash and Cash Equivalents do not include Restricted Funds. Restricted Funds Under the Indenture, the Company deposited an amount equal to 0.5% of the initial principal amount of the 1999-1 Bonds into the Capital Subaccount with the Trustee. This amount was contributed by PPL Electric Utilities to the Company. This account is the last account drawn in the event funds are insufficient to make scheduled allocations. If the Capital Subaccount is used, it will be replenished from ITC remittances to its original level through the periodic reconciliation process. Accordingly, the Capital Subaccount is classified as "Restricted Funds" on the Balance Sheet. Amortization of Intangible Transition Property The ITP was recorded at the acquired cost and is being amortized over the life of the Bonds, based on ITC revenues, interest accruals and other fees. The ITP is solely the property of the Company. Amortization of Debt Issuance Costs and Discount on Debt The costs associated with the issuance of the Bonds have been capitalized and are being amortized over the life of the Bonds, utilizing the effective interest method. Income Taxes The Company is a limited liability company and has elected to be disregarded as a separate entity for federal and state income tax purposes. The Company's taxable income or loss is included in the consolidated federal and state income tax returns of its member. The Statement of Operations and Changes in Member's Equity reflects the Company's pro rata allocation of its member's consolidated income taxes in accordance with its member's tax sharing policy. 4. Long-Term Debt and Source of Repayment In August 1999, the Company issued $2.42 billion of Series 1999-1 Bonds. The Bonds consist of eight classes. The Company used the proceeds 5 from the Bonds to purchase ITP from CEP Securities. The Bonds are collateralized by the ITP and other assets of the Company. Scheduled maturities and interest rates for the Bonds at September 30, 2000 are: Expected Final Final Class Bond Rate Amount Payment Date Maturity Date ----- --------- ------ ---------------- ----------------- ($ Thousands) A-1 6.08% $ 88,690 March 25, 2001 March 25, 2003 A-2 6.41% 178,000 December 26, 2001 December 26, 2003 A-3 6.60% 303,000 March 25, 2003 March 25, 2005 A-4 6.72% 201,000 December 26, 2003 December 26, 2005 A-5 6.83% 313,000 March 25, 2005 March 25, 2007 A-6 6.96% 223,000 December 26, 2005 December 26, 2007 A-7 7.05% 455,000 June 25, 2007 June 25, 2009 A-8 7.15% 454,000 December 26, 2008 June 25, 2009 ---------- $2,215,690 Current Maturities (236,859) Unamort. Discount (182) ---------- Long-term Debt $1,978,649 ========== The carrying value of the long-term debt approximates fair market value as of September 30, 2000. The current maturities stated above are based on the expected final payment dates rather than the final maturity date. The source of repayment for the Bonds is the ITC. The Servicer collects this non-bypassable charge from PPL Electric Utilities' retail consumers of electricity. The Servicer deposits ITC monthly collections into a General Subaccount maintained by the Trustee under the Indenture. The monthly ITC collections from December 1999 through August 2000 were $297 million in aggregate. Each quarter, such monies are used to make principal and interest payments on the Bonds, and to pay fees, costs and charges specified in the Indenture. The Trustee made scheduled payments on March 27, June 26 and September 25, 2000. The Indenture also includes a Reserve Subaccount that is maintained for the purpose of retaining any excess amount of ITC collections and investment earnings not released to the Company. The Indenture also provides for an Overcollateralization Subaccount. The funding level of this account is 0.5% of the initial principal amount of the Series 1999-1 Bonds, funded ratably over the life of the Bonds. An amount equal to 0.5% of the initial principal amount of the Bonds was deposited into the Capital Subaccount under the Indenture on the date of issuance. If amounts available in the General, Reserve, and Overcollateralization Subaccounts are not sufficient on any payment date to make scheduled payments, the Trustee will draw on amounts in the Capital Subaccount in excess of $100,000. The Trustee was required to withdraw $8.6 million from the Capital Subaccount on December 27, 1999 and $3.4 million from the Capital Subaccount on March 27, 2000 to help make principal payments of $29.7 and $60.9 million, respectively. On June 26, 2000, the Trustee replenished the Capital Subaccount in the amount of $2.8 million, and on September 25, 2000, the Trustee replenished the Capital Subaccount in the amount of $6.3 million. Additionally, the Company's scheduled Overcollateralization Subaccount level as of September 30, 2000, was $1.3 million. As of September 30, 2000, no allocations of any required amounts to the Overcollateralization Subaccount have been made. The Overcollateralization Subaccount level will be replenished to equal the 6 scheduled overcollateralization level after all shortfalls in the Capital Subaccount have been replenished. Any remaining amounts collateralizing the Bonds will be released to the Company upon final payment on the Bonds. At September 30, 2000, the following balances were reflected in the Subaccounts maintained by the Trustee: Subaccounts Balance ----------- ------- ($ Thousands) General $ 0 Reserve 0 Overcollateralization 0 Capital $9,151 5. Significant Agreements and Related Party Transactions Under the Servicing Agreement, PPL Electric Utilities, as Servicer, is required to manage and administer the ITP of the Company and to collect the ITC on behalf of the Company. The Company pays an annual servicing fee of $1.25 million to PPL Electric Utilities. For the three months ended September 30, 2000, the Company expensed servicing fees of approximately $313,000 and other administrative fees of $25,000. For the nine months ended September 30, 2000, the Company expensed servicing fees of approximately $939,000 and other administrative fees of $75,000. Debt issuance costs of approximately $16.3 million were incurred in connection with the issuance of the Bonds. Of that amount, about $4.9 million has been incurred by PPL Electric Utilities and has been reimbursed by the Company. At September 30, 2000, the Balance Sheet includes a receivable from PPL Electric Utilities of approximately $74 million for ITC collections. 7 PPL Transition Bond Company, LLC -------------------------------- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations --------------------------------------------- Forward-Looking Information Certain statements contained in this Form 10-Q concerning expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements which are other than statements of historical facts are "forward-looking statements" within the meaning of the federal securities laws. Although PPL Electric Utilities and the Company believe that the expectations and assumptions reflected in these statements are reasonable, there can be no assurance that these expectations will prove to have been correct. These forward-looking statements involve a number of risks and uncertainties, and actual results may differ materially from the results discussed in the forward-looking statements. Any such forward-looking statements should be considered in conjunction with PPL Electric Utilities' and the Company's other documents on file with the SEC. New factors that could cause actual results to differ materially from those described in forward-looking statements emerge from time to time, and it is not possible for PPL Electric Utilities or the Company to predict all of such factors, or the extent to which any such factor or combination of factors may cause actual results to differ from those contained in any forward-looking statement. Any forward-looking statement speaks only as of the date on which such statement is made, and neither PPL Electric Utilities nor the Company undertakes any obligation to update the information contained in such statement to reflect subsequent developments or information. Results of Operations The following analysis of the financial condition and results of operations of the Company is in an abbreviated format pursuant to Instruction H of Form 10- Q. Such analysis should be read in conjunction with the Financial Statements and Notes to Financial Statements included in Item 1 above, and with the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report to the SEC on Form 10-K for the year ended December 31, 1999. PPL Transition Bond Company, LLC (the Company) is a Delaware limited liability company organized in March 1999 for the limited purposes of purchasing ITP and issuing Bonds secured by the ITP. The Company is wholly-owned by PPL Electric Utilities. The Company's organizational documents require it to operate in a manner so that its assets would not be consolidated with the bankruptcy estate of PPL Electric Utilities in the event PPL Electric Utilities becomes subject to a bankruptcy proceeding. During the nine months ended September 30, 2000, the revenue generated from the ITP was approximately $301 million. The Company also earned approximately $136,000 in interest from the Capital Subaccount maintained by the Trustee and from temporary investments. Interest expense of approximately $121 million consists of interest on the Bonds, amortization of debt issuance expenses and the discount on the Bonds. For the nine 8 months ended September 30, 2000, the Company also incurred administrative and general expenses of approximately $1.4 million, including servicing fees of approximately $939,000 and other administrative fees of $75,000. The principal amount of the Bonds, interest, fees, and funding of the Overcollateralization Subaccount will be recovered through ITC payable by retail consumers of electricity within PPL Electric Utilities' service territory who receive electric delivery service from PPL Electric Utilities. As part of PPL Electric Utilities' responsibility as Servicer under the Servicing Agreement, PPL Electric Utilities remitted to the Trustee approximately $297 million of ITC collections for the period December 1, 1999 to August 31, 2000. Quarterly payments of Bond principal, interest and all related expenses were made by the Trustee on March 27, June 26, and September 25, 2000. Due to the manner in which seasonal customer electricity usage levels were estimated for purpose of establishing the initial ITC, the Trustee was required to use $4.9 million of the funds in the Capital Subaccount on March 27, 2000 (including approximately $1.5 million of excess Bond proceeds transferred to the Capital Subaccount). There was sufficient revenue to make interest payments due on the quarterly payment date, March 27, 2000. After application of the remaining $4.9 million in the Capital Subaccount and unapplied Bond proceeds, the Company had a shortfall of $1.2 million in the scheduled principal payment on that date (which shortfall did not constitute an Event of Default under the Indenture). On June 26, 2000, there was sufficient revenue to make the scheduled quarterly principal and interest payments, to pay the $1.2 million shortfall in the scheduled principal payment for March 2000, and to replenish the Capital Subaccount in the amount of $2.8 million. On September 25, 2000, there was sufficient revenue to make the scheduled quarterly principal and interest payments, and to replenish the Capital Subaccount by an additional $6.3 million. The Company currently anticipates that there will be sufficient revenue to make interest and principal payments due on the next quarterly payment date of December 26, 2000, and to replenish the shortfalls in the Capital and Overcollateralization Subaccounts. Under the annual reconciliation process established by the Competition Act and the PUC Restructuring Order, withdrawals from the Capital Subaccount must be replenished, and shortfalls in the scheduled Overcollateralization level and scheduled principal payments must be made up, by increases in the ITC. Under the Servicing Agreement, PPL Electric Utilities, as Servicer, filed a request for an adjustment to the ITC with the PUC on December 15, 1999 to produce additional revenues sufficient to replenish the Capital Subaccount and to make up shortfalls in the scheduled Overcollateralization level and scheduled principal payments by the December 2000 quarterly payment date. This adjustment went into effect on January 1, 2000. Item 3. Quantitative and Qualitative Disclosures About Market Risk ---------------------------------------------------------- Not applicable. 9 PPL TRANSITION BOND COMPANY, LLC -------------------------------- PART II. OTHER INFORMATION Item 1. Legal Proceedings -------------------------- None. Item 6. Exhibits and Reports on Form 8-K ----------------------------------------- (a) Exhibits 27 - Financial Data Schedule 99 - Quarterly Servicer's Certificate (b) Reports on Form 8-K None. 10 GLOSSARY OF TERMS AND ABBREVIATIONS Capital Subaccount - An account held by the Trustee under the Indenture which is funded by a contribution to PPL Transition Bond Company, LLC by PPL Electric Utilities at the date of issuance of each series of transition bonds. CEP Securities - CEP Securities Co. LLC, a Delaware limited liability company and an indirect wholly-owned subsidiary of PPL Electric Utilities. Effective July 1, 2000 CEP Securities is a subsidiary of PPL Energy Funding Corp. Competition Act - The Pennsylvania Electricity Generation Customer Choice and Competition Act, enacted in Pennsylvania in December 1996. General Subaccount - An account held by the Trustee under the Indenture, into which ITC remittances by the Servicer are deposited. The Trustee allocates the funds from the General Subaccount to other subaccounts on the quarterly payment dates. Indenture - The Indenture entered into by PPL Transition Bond Company, LLC and the Trustee, providing for the issuance of transition bonds. ITC - Intangible Transition Charge, which PPL Electric Utilities has been authorized by the PUC to impose on customer bills and to collect through a non- bypassable billing mechanism to recover Qualified Transition Expenses. ITP - Intangible Transition Property, which is the property right created under the Competition Act representing the irrevocable right of PPL Transition Bond Company, LLC to receive, through ITC, amounts sufficient to recover all Qualified Transition Expenses. Overcollateralization Subaccount - An account held by the Trustee under the Indenture, which is funded ratably from collections of ITC over the term of each series of transition bonds. PPL Electric Utilities - PPL Electric Utilities Corporation, the sole member of PPL Transition Bond Company, LLC. PUC - The Pennsylvania Public Utility Commission. PUC Restructuring Order - The final order issued by the PUC to PPL Electric Utilities in August 1998, in connection with PPL Electric Utilities' restructuring filing under the Competition Act, as supplemented by the May 1999 PUC order. Qualified Transition Expenses - The transition or stranded costs of an electric utility approved by the PUC for recovery through the issuance of transition bonds; the costs of retiring existing debt or equity capital of the electric utility or its holding company parent, including accrued interest and acquisition or redemption premium, costs of defeasance, and other related fees, costs and charges, through the issuance of transition bonds or the assignment, sale or other transfer of ITP; and the costs incurred to issue, service or refinance the transition bonds, including 11 accrued interest and acquisition or redemption premium, and other related fees, costs and charges associated with the transition bonds, or to assign, sell or otherwise transfer ITP. Reserve Subaccount - An account held by the Trustee, under the Indenture, which consists of remaining funds available after required allocations on the quarterly payment dates. SEC - Securities and Exchange Commission. Servicer - PPL Electric Utilities acting in its capacity under the Servicing Agreement. In this capacity, PPL Electric Utilities calculates, bills and collects ITC, and maintains applicable accounting records, among other duties. Servicing Agreement - The Intangible Property Servicing Agreement between PPL Electric Utilities, as Servicer, and PPL Transition Bond Company, LLC, as Issuer. Trustee - The Bank of New York, a New York banking corporation, as Trustee under the Indenture. 12 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PPL Transition Bond Company, LLC -------------------------------- (Registrant) Date: November 3, 2000 /s/ James S. Pennington ---------------------------- James S. Pennington, Manager /s/ Stephen C. May ------------------------------ Stephen C. May, Treasurer 13

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