|
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 | |
| FORM 10-Q | |
| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended September 30, 2015 |
| 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 Number |
Registrant; State of Incorporation; Address and Telephone Number |
IRS Employer Identification No. |
| 1-11459 |
PPL Corporation (Exact name of Registrant as specified in its charter) (Pennsylvania) Two North Ninth Street Allentown, PA 18101-1179 (610) 774-5151 |
23-2758192 |
| 1-905 |
PPL Electric Utilities Corporation (Exact name of Registrant as specified in its charter) (Pennsylvania) Two North Ninth Street Allentown, PA 18101-1179 (610) 774-5151 |
23-0959590 |
| 333-173665 |
LG&E and KU Energy LLC (Exact name of Registrant as specified in its charter) (Kentucky) 220 West Main Street Louisville, KY 40202-1377 (502) 627-2000 |
20-0523163 |
| 1-2893 |
Louisville Gas and Electric Company (Exact name of Registrant as specified in its charter) (Kentucky) 220 West Main Street Louisville, KY 40202-1377 (502) 627-2000 |
61-0264150 |
| 1-3464 |
Kentucky Utilities Company (Exact name of Registrant as specified in its charter) (Kentucky and Virginia) One Quality Street Lexington, KY 40507-1462 (502) 627-2000 |
61-0247570 |
Indicate by check mark whether the registrants (1) have 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 registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.
| PPL Corporation | Yes X | No | ||
| PPL Electric Utilities Corporation | Yes X | No | ||
| LG&E and KU Energy LLC | Yes X | No | ||
| Louisville Gas and Electric Company | Yes X | No | ||
| Kentucky Utilities Company | Yes X | No |
Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).
| PPL Corporation | Yes X | No | ||
| PPL Electric Utilities Corporation | Yes X | No | ||
| LG&E and KU Energy LLC | Yes X | No | ||
| Louisville Gas and Electric Company | Yes X | No | ||
| Kentucky Utilities Company | Yes X | No |
Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer |
Accelerated filer |
Non-accelerated filer |
Smaller reporting company | ||
| PPL Corporation | [ X ] | [ ] | [ ] | [ ] | |
| PPL Electric Utilities Corporation | [ ] | [ ] | [ X ] | [ ] | |
| LG&E and KU Energy LLC | [ ] | [ ] | [ X ] | [ ] | |
| Louisville Gas and Electric Company | [ ] | [ ] | [ X ] | [ ] | |
| Kentucky Utilities Company | [ ] | [ ] | [ X ] | [ ] |
Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).
| PPL Corporation | Yes | No X | ||
| PPL Electric Utilities Corporation | Yes | No X | ||
| LG&E and KU Energy LLC | Yes | No X | ||
| Louisville Gas and Electric Company | Yes | No X | ||
| Kentucky Utilities Company | Yes | No X |
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
| PPL Corporation | Common stock, $0.01 par value, 672,845,584 shares outstanding at October 23, 2015. | |
| PPL Electric Utilities Corporation | Common stock, no par value, 66,368,056 shares outstanding and all held by PPL Corporation at October 23, 2015. | |
| LG&E and KU Energy LLC | PPL Corporation directly holds all of the membership interests in LG&E and KU Energy LLC. | |
| Louisville Gas and Electric Company | Common stock, no par value, 21,294,223 shares outstanding and all held by LG&E and KU Energy LLC at October 23, 2015. | |
| Kentucky Utilities Company | Common stock, no par value, 37,817,878 shares outstanding and all held by LG&E and KU Energy LLC at October 23, 2015. |
This document is available free of charge at the Investors section of PPL Corporation's website at www.pplweb.com. However, information on this website does not constitute a part of this Form 10-Q.
PPL ELECTRIC UTILITIES CORPORATION
LG&E and KU Energy LLC
Louisville Gas and Electric Company
Kentucky Utilities Company
FORM 10-Q
FOR THE QUARTER ENDED September 30, 2015
Table of Contents
This combined Form 10-Q is separately filed by the following Registrants in their individual capacity: PPL Corporation, PPL Electric Utilities Corporation, LG&E and KU Energy LLC, Louisville Gas and Electric Company and Kentucky Utilities Company. Information contained herein relating to any individual Registrant is filed by such Registrant solely on its own behalf, and no Registrant makes any representation as to information relating to any other Registrant, except that information under "Forward-Looking Information" relating to subsidiaries of PPL Corporation is also attributed to PPL Corporation and information relating to the subsidiaries of LG&E and KU Energy LLC is also attributed to LG&E and KU Energy LLC.
Unless otherwise specified, references in this Report, individually, to PPL Corporation, PPL Electric Utilities Corporation, LG&E and KU Energy LLC, Louisville Gas and Electric Company and Kentucky Utilities Company are references to such entities directly or to one or more of their subsidiaries, as the case may be, the financial results of which subsidiaries are consolidated into such Registrants in accordance with GAAP. This presentation has been applied where identification of particular subsidiaries is not material to the matter being disclosed, and to conform narrative disclosures to the presentation of financial information on a consolidated basis.
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GLOSSARY OF TERMS AND ABBREVIATIONS
PPL Corporation and its subsidiaries
KU - Kentucky Utilities Company, a public utility subsidiary of LKE engaged in the regulated generation, transmission, distribution and sale of electricity, primarily in Kentucky.
LG&E - Louisville Gas and Electric Company, a public utility subsidiary of LKE engaged in the regulated generation, transmission, distribution and sale of electricity and the distribution and sale of natural gas in Kentucky.
LKE - LG&E and KU Energy LLC, a subsidiary of PPL and the parent of LG&E, KU and other subsidiaries.
LKS - LG&E and KU Services Company, a subsidiary of LKE that provides services to LKE and its subsidiaries.
PPL - PPL Corporation, the parent holding company of PPL Electric, PPL Energy Funding, PPL Capital Funding, LKE and other subsidiaries.
PPL Capital Funding - PPL Capital Funding, Inc., a financing subsidiary of PPL that provides financing for the operations of PPL and certain subsidiaries. Debt issued by PPL Capital Funding is guaranteed as to payment by PPL.
PPL Electric - PPL Electric Utilities Corporation, a public utility subsidiary of PPL engaged in the regulated transmission and distribution of electricity in its Pennsylvania service area and that provides electricity supply to its retail customers in this area as a PLR.
PPL Energy Funding - PPL Energy Funding Corporation, a subsidiary of PPL and the parent holding company of PPL Global and other subsidiaries.
PPL EU Services - PPL EU Services Corporation, a subsidiary of PPL that, beginning in 2015, provides support services and corporate functions such as financial, supply chain, human resources and information technology services primarily to PPL Electric and its affiliates.
PPL Global - PPL Global, LLC, a subsidiary of PPL Energy Funding that, primarily through its subsidiaries, owns and operates WPD, PPL's regulated electricity distribution businesses in the U.K.
PPL Services - PPL Services Corporation, a subsidiary of PPL that provides services to PPL and its subsidiaries.
PPL WPD Limited - an indirect U.K. subsidiary of PPL Global. PPL WPD Limited holds a liability for a closed defined benefit pension plan and a receivable with WPD plc.
Registrant(s) - refers to the Registrants named on the cover of this Report (each a "Registrant" and collectively, the "Registrants").
Subsidiary Registrant(s) - Registrants that are direct or indirect wholly owned subsidiaries of PPL: PPL Electric, LKE, LG&E and KU.
WPD - refers to WPD plc and its subsidiaries together with a sister company PPL WPD Limited.
WPD (East Midlands) - Western Power Distribution (East Midlands) plc, a British regional electricity distribution utility company.
WPD plc - Western Power Distribution plc, formerly known as Western Power Distribution Limited, an indirect U.K. subsidiary of PPL Global. Its principal indirectly owned subsidiaries are WPD (East Midlands), WPD (South Wales), WPD (South West) and WPD (West Midlands).
WPD Midlands - refers to WPD (East Midlands) and WPD (West Midlands), collectively.
WPD (South Wales) - Western Power Distribution (South Wales) plc, a British regional electricity distribution utility company.
i
WPD (South West) - Western Power Distribution (South West) plc, a British regional electricity distribution utility company.
WPD (West Midlands) - Western Power Distribution (West Midlands) plc, a British regional electricity distribution utility company.
WKE - Western Kentucky Energy Corp., a subsidiary of LKE that leased certain non-utility generating plants in western Kentucky until July 2009.
Other terms and abbreviations
£ - British pound sterling.
2014 Form 10-K - Annual Report to the SEC on Form 10-K for the year ended December 31, 2014.
Act 11 - Act 11 of 2012 that became effective on April 16, 2012. The Pennsylvania legislation authorizes the PUC to approve two specific ratemaking mechanisms: the use of a fully projected future test year in base rate proceedings and, subject to certain conditions, a DSIC.
Act 129 - Act 129 of 2008 that became effective in October 2008. The law amends the Pennsylvania Public Utility Code and creates an energy efficiency and conservation program and smart metering technology requirements, adopts new PLR electricity supply procurement rules, provides remedies for market misconduct and changes to the Alternative Energy Portfolio Standard (AEPS).
AFUDC - Allowance for Funds Used During Construction, the cost of equity and debt funds used to finance construction projects of regulated businesses, which is capitalized as part of construction costs.
AOCI - accumulated other comprehensive income or loss.
ARO - asset retirement obligation.
ATM Program - At-the-Market stock offering program.
Basis - when used in the context of derivatives and commodity trading, the commodity price differential between two locations, products or time periods.
BSER - Best System of Emission Reduction. The degree of emission reduction that EPA determines has been adequately demonstrated when taking into account the cost of achieving such reduction and any non-air quality health and environmental impact and energy requirements.
Cane Run Unit 7 - a natural gas combined-cycle unit in Kentucky, jointly owned by LG&E and KU, which provides electric generating capacity of 642 MW (141 MW and 501 MW to LG&E and KU).
CCR(s) - Coal Combustion Residual(s). CCRs include fly ash, bottom ash and sulfur dioxide scrubber wastes.
Clean Air Act - federal legislation enacted to address certain environmental issues related to air emissions, including acid rain, ozone and toxic air emissions.
Clean Water Act - federal legislation enacted to address certain environmental issues relating to water quality including effluent discharges, cooling water intake, and dredge and fill activities.
COBRA - Consolidated Omnibus Budget Reconciliation Act, which provides individuals the option to temporarily continue employer group health insurance coverage after termination of employment.
ii
CPCN - Certificate of Public Convenience and Necessity. Authority granted by the KPSC pursuant to Kentucky Revised Statute 278.020 to provide utility service to or for the public or the construction of certain plant, equipment, property or facility for furnishing of utility service to the public.
Customer Choice Act - the Pennsylvania Electricity Generation Customer Choice and Competition Act, legislation enacted to restructure the state's electric utility industry to create retail access to a competitive market for generation of electricity.
DNO - Distribution Network Operator in the U.K.
DOJ - U.S. Department of Justice.
DPCR4 - Distribution Price Control Review 4, the U.K. five-year rate review period applicable to WPD that commenced April 1, 2005.
DPCR5 - Distribution Price Control Review 5, the U.K. five-year rate review period applicable to WPD that commenced April 1, 2010.
DRIP - PPL Amended and Restated Dividend Reinvestment and Direct Stock Purchase Plan.
DSIC - the Distribution System Improvement Charge authorized under Act 11, which is an alternative ratemaking mechanism providing more-timely cost recovery of qualifying distribution system capital expenditures.
DSM - Demand Side Management. Pursuant to Kentucky Revised Statute 278.285, the KPSC may determine the reasonableness of DSM plans proposed by any utility under its jurisdiction. Proposed DSM mechanisms may seek full recovery of costs and revenues lost by implementing DSM programs and/or incentives designed to provide financial rewards to the utility for implementing cost-effective DSM programs. The cost of such programs shall be assigned only to the class or classes of customers which benefit from the programs.
ECR - Environmental Cost Recovery. Pursuant to Kentucky Revised Statute 278.183, Kentucky electric utilities are entitled to the current recovery of costs of complying with the Clean Air Act, as amended, and those federal, state or local environmental requirements that apply to coal combustion wastes and by-products from the production of energy from coal.
EEI - Edison Electric Institute, the association that represents U.S. investor-owned electric companies.
ELG(s) - Effluent Limitation Guidelines, regulations promulgated by the EPA.
EPA - Environmental Protection Agency, a U.S. government agency.
EPS - earnings per share.
Equity Unit(s) - a PPL equity unit, issued in April 2011, consisting of a Purchase Contract and, initially, a 5.0% undivided beneficial ownership interest in $1,000 principal amount of PPL Capital Funding 4.32% Junior Subordinated Notes due 2019.
E.W. Brown - a generating station in Kentucky with capacity of 1,594 MW.
FERC - Federal Energy Regulatory Commission, the U.S. federal agency that regulates, among other things, interstate transmission and wholesale sales of electricity, hydroelectric power projects and related matters.
FGD - flue-gas desulfurization, a pollution control process for the removal of sulfur dioxide from exhaust gas.
Fitch - Fitch, Inc., a credit rating agency.
GAAP - Generally Accepted Accounting Principles in the U.S.
GBP - British pound sterling.
GHG - greenhouse gas(es).
iii
GLT - Gas Line Tracker. The KPSC approved LG&E's recovery of costs associated with gas service lines, gas risers, leak mitigation, and gas main replacements. Rate recovery became effective on January 1, 2013.
Holdco - Talen Energy Holdings, Inc., a Delaware corporation, which was formed for the purposes of the June 1, 2015 spinoff of PPL Energy Supply, LLC.
If-Converted Method - A method applied to calculate diluted EPS for a company with outstanding convertible debt. The method is applied as follows: Interest charges (after-tax) applicable to the convertible debt are added back to net income and the convertible debt is assumed to have been converted to equity at the beginning of the period, and the resulting common shares are treated as outstanding shares. Both adjustments are made only for purposes of calculating diluted EPS. This method was applied to PPL's Equity Units prior to settlement.
IRS - Internal Revenue Service, a U.S. government agency.
KPSC - Kentucky Public Service Commission, the state agency that has jurisdiction over the regulation of rates and service of utilities in Kentucky.
LIBOR - London Interbank Offered Rate.
MATS - Mercury and Air Toxics Standards, regulations promulgated by the EPA.
Moody's - Moody's Investors Service, Inc., a credit rating agency.
MW - megawatt, one thousand kilowatts.
NAAQS - National Ambient Air Quality Standards periodically adopted pursuant to the Clean Air Act.
NERC - North American Electric Reliability Corporation.
NGCC - Natural gas-fired combined-cycle generating plant.
NorthWestern - NorthWestern Corporation, a Delaware corporation, and successor in interest to Montana Power's electricity delivery business, including Montana Power's rights and obligations under contracts with PPL Montana.
NPNS - the normal purchases and normal sales exception as permitted by derivative accounting rules. Derivatives that qualify for this exception may receive accrual accounting treatment.
NRC - Nuclear Regulatory Commission, the U.S. federal agency that regulates nuclear power facilities.
NSR - The new source review provisions of the Clean Air Act that impose stringent emission control requirements on new and modified sources of air emissions that result in emission increases beyond thresholds allowed by the Clean Air Act.
OCI - other comprehensive income or loss.
Ofgem - Office of Gas and Electricity Markets, the British agency that regulates transmission, distribution and wholesale sales of electricity and related matters.
OVEC - Ohio Valley Electric Corporation, located in Piketon, Ohio, an entity in which LKE indirectly owns an 8.13% interest (consists of LG&E's 5.63% and KU's 2.50% interests), which is accounted for as a cost-method investment. OVEC owns and operates two coal-fired power plants, the Kyger Creek plant in Ohio and the Clifty Creek plant in Indiana, with combined summer rating capacities of 2,120 MW.
PLR - Provider of Last Resort, the role of PPL Electric in providing default electricity supply within its delivery area to retail customers who have not chosen to select an alternative electricity supplier under the Customer Choice Act.
PP&E - property, plant and equipment.
iv
PPL EnergyPlus - prior to the June 1, 2015 spinoff of PPL Energy Supply, PPL EnergyPlus, LLC, a subsidiary of PPL Energy Supply that marketed and traded wholesale and retail electricity and gas, and supplied energy and energy services in competitive markets.
PPL Energy Supply - prior to the June 1, 2015 spinoff, PPL Energy Supply, LLC, a subsidiary of PPL Energy Funding and the parent company of PPL EnergyPlus and other subsidiaries.
PPL Montana - prior to the June 1, 2015 spinoff of PPL Energy Supply, PPL Montana, LLC, an indirect subsidiary of PPL Energy Supply, LLC that generated electricity for wholesale sales in Montana and the Pacific Northwest.
PUC - Pennsylvania Public Utility Commission, the state agency that regulates certain ratemaking, services, accounting and operations of Pennsylvania utilities.
RAV - regulatory asset value. This term, used within the U.K. regulatory environment, is also commonly known as RAB or regulatory asset base. RAV is based on historical investment costs at time of privatization, plus subsequent allowed additions less annual regulatory depreciation, and represents the value on which DNOs earn a return in accordance with the regulatory cost of capital. RAV is indexed to Retail Price Index (RPI) in order to allow for the effects of inflation. Since the beginning of DPCR5 in April 2010, RAV additions have been based on a percentage of annual total expenditures, which have continued from April 2015 under RIIO-ED1. RAV is intended to represent expenditures that have a long-term benefit to WPD (similar to capital projects for the U.S. regulated businesses that are generally included in rate base).
RCRA - Resource Conservation and Recovery Act of 1976.
Regulation S-X - SEC regulation governing the form and content of and requirements for financial statements required to be filed pursuant to the federal securities laws.
RFC - ReliabilityFirst Corporation, one of eight regional entities with delegated authority from NERC that work to safeguard the reliability of the bulk power systems throughout North America.
RIIO-ED1 - RIIO represents "Revenues = Incentive + Innovation + Outputs." RIIO-ED1 refers to the initial eight-year rate review period applicable to WPD which commenced April 1, 2015.
Riverstone - Riverstone Holdings LLC, a Delaware limited liability company and ultimate parent company of the entities that own the competitive power generation business contributed to Talen Energy other than the competitive power generation business contributed by virtue of the spinoff of a newly formed parent of PPL Energy Supply.
RJS Power - RJS Generation Holdings LLC, a Delaware limited liability company controlled by Riverstone, that owns the competitive power generation business contributed by its owners to Talen Energy other than the competitive power generation business contributed by virtue of the spinoff of a newly formed parent of PPL Energy Supply.
RMC - Risk Management Committee.
S&P - Standard & Poor's Ratings Services, a credit rating agency.
Sarbanes-Oxley - Sarbanes-Oxley Act of 2002, which sets requirements for management's assessment of internal controls for financial reporting. It also requires an independent auditor to make its own assessment.
SCRs - selective catalytic reduction, a pollution control process for the removal of nitrogen oxide from exhaust gas.
Scrubber - an air pollution control device that can remove particulates and/or gases (primarily sulfur dioxide) from exhaust gases.
SEC - the U.S. Securities and Exchange Commission, a U.S. government agency primarily responsible to protect investors and maintain the integrity of the securities markets.
SERC - SERC Reliability Corporation, one of eight regional entities with delegated authority from NERC that work to safeguard the reliability of the bulk power systems throughout North America.
v
Smart meter - an electric meter that utilizes smart metering technology.
Smart metering technology - technology that can measure, among other things, time of electricity consumption to permit offering rate incentives for usage during lower cost or demand intervals. The use of this technology also has the potential to strengthen network reliability.
Superfund - federal environmental statute that addresses remediation of contaminated sites; states also have similar statutes.
Talen Energy - Talen Energy Corporation, the Delaware corporation formed to be the publicly traded company and owner of the competitive generation assets of PPL Energy Supply and certain affiliates of Riverstone.
Talen Energy Marketing - PPL EnergyPlus' new name subsequent to the spinoff of PPL Energy Supply.
Total shareowner return - the change in market value of a share of the Company's common stock plus the value of all dividends paid on a share of the common stock during the applicable performance period, divided by the price of the common stock as of the beginning of the performance period. The price used for purposes of this calculation is the average share price for the 20 trading days at the beginning and end of the applicable period.
Treasury Stock Method - A method applied to calculate diluted EPS that assumes any proceeds that could be obtained upon exercise of options and warrants (and their equivalents) would be used to purchase common stock at the average market price during the relevant period.
VaR - value-at-risk, a statistical model that attempts to estimate the value of potential loss over a given holding period under normal market conditions at a given confidence level.
Volumetric risk - the risk that the actual load volumes provided under full-requirement sales contracts could vary significantly from forecasted volumes.
VSCC - Virginia State Corporation Commission, the state agency that has jurisdiction over the regulation of Virginia corporations, including utilities.
vi
Statements contained in this Form 10-Q concerning expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are other than statements of historical fact are "forward-looking statements" within the meaning of the federal securities laws. Although the Registrants believe that the expectations and assumptions reflected in these statements are reasonable, there can be no assurance that these expectations will prove to be correct. Forward-looking statements are subject to many risks and uncertainties, and actual results may differ materially from the results discussed in forward-looking statements. In addition to the specific factors discussed in each Registrant's 2014 Form 10-K and in "Item 2. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Form 10-Q, the following are among the important factors that could cause actual results to differ materially from the forward-looking statements.
| · | fuel supply; |
| · | continuing ability to recover fuel costs and environmental expenditures in a timely manner at LG&E and KU, and natural gas supply costs at LG&E; |
| · | weather conditions affecting customer energy use; |
| · | availability of existing generation facilities; |
| · | the duration of and cost associated with unscheduled outages at our generating facilities; |
| · | transmission and distribution system conditions and operating costs; |
| · | expansion of alternative and distributed sources of electricity generation and storage; |
| · | collective labor bargaining negotiations; |
| · | the outcome of litigation against the Registrants and their subsidiaries; |
| · | potential effects of threatened or actual terrorism, war or other hostilities, cyber-based intrusions or natural disasters; |
| · | the commitments and liabilities of the Registrants and their subsidiaries; |
| · | the effectiveness of our risk management programs, including foreign currency and interest rate hedging; |
| · | our ability to attract and retain qualified employees; |
| · | volatility in demand for electricity and prices for energy and transmission services; |
| · | competition in retail and wholesale power and natural gas markets; |
| · | market prices of commodity inputs for ongoing capital expenditures; |
| · | capital market conditions, including the availability of capital or credit, changes in interest rates and certain economic indices, and decisions regarding capital structure; |
| · | stock price performance of PPL; |
| · | volatility in the fair value of debt and equity securities and its impact on the value of assets in defined benefit plans, and the potential cash funding requirements if fair value declines; |
| · | interest rates and their effect on pension and retiree medical liabilities and interest payable on certain debt securities; |
| · | volatility in or the impact of other changes in financial markets and economic conditions; |
| · | new accounting requirements or new interpretations or applications of existing requirements; |
| · | changes in securities and credit ratings; |
| · | changes in foreign currency exchange rates for British pound sterling; |
| · | current and future environmental conditions, regulations and other requirements and the related costs of compliance, including environmental capital expenditures, emission allowance costs and other expenses; |
| · | changes in political, regulatory or economic conditions in states, regions or countries where the Registrants or their subsidiaries conduct business; |
| · | receipt of necessary governmental permits, approvals and rate relief; |
| · | new state, federal or foreign legislation or regulatory developments; |
| · | the outcome of any rate cases or other cost recovery or revenue filings by PPL Electric, LG&E, KU or WPD; |
| · | the impact of any state, federal or foreign investigations applicable to the Registrants and their subsidiaries and the energy industry; |
| · | the effect of any business or industry restructuring; |
| · | development of new projects, markets and technologies; |
| · | performance of new ventures; and |
| · | business dispositions or acquisitions and our ability to realize expected benefits from such business transactions. |
Any such forward-looking statements should be considered in light of such important factors and in conjunction with other documents of the Registrants on file with the SEC.
1
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 the Registrants to predict all 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 the Registrants undertake no obligation to update the information contained in such statement to reflect subsequent developments or information.
2
The accompanying
Notes to Condensed Financial Statements are an integral part of the financial statements.
3
The accompanying
Notes to Condensed Financial Statements are an integral part of the financial statements.
4
The accompanying
Notes to Condensed Financial Statements are an integral part of the financial statements.
5
The accompanying Notes to Condensed Financial
Statements are an integral part of the financial statements.
6
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
| PPL Corporation and Subsidiaries | |||||||||
| (Unaudited) | |||||||||
| (Millions of Dollars, shares in thousands) | |||||||||
| September 30, | December 31, | ||||||||
| 2015 | 2014 | ||||||||
| Liabilities and Equity | |||||||||
| Current Liabilities | |||||||||
| Short-term debt | $ | 557 | $ | 836 | |||||
| Long-term debt due within one year | 1,460 | 1,000 | |||||||
| Accounts payable | 808 | 995 | |||||||
| Taxes | 118 | 263 | |||||||
| Interest | 300 | 298 | |||||||
| Dividends | 254 | 249 | |||||||
| Customer deposits | 312 | 304 | |||||||
| Regulatory liabilities | 151 | 91 | |||||||
| Other current liabilities | 508 | 632 | |||||||
| Current liabilities of discontinued operations | 2,775 | ||||||||
| Total Current Liabilities | 4,468 | 7,443 | |||||||
| Long-term Debt | 17,745 | 17,173 | |||||||
| Deferred Credits and Other Noncurrent Liabilities | |||||||||
| Deferred income taxes | 3,736 | 3,227 | |||||||
| Investment tax credits | 129 | 132 | |||||||
| Accrued pension obligations | 963 | 1,457 | |||||||
| Asset retirement obligations | 539 | 324 | |||||||
| Regulatory liabilities | 962 | 992 | |||||||
| Other deferred credits and noncurrent liabilities | 482 | 525 | |||||||
| Noncurrent liabilities of discontinued operations | 3,963 | ||||||||
| Total Deferred Credits and Other Noncurrent Liabilities | 6,811 | 10,620 | |||||||
| Commitments and Contingent Liabilities (Notes 6 and 10) | |||||||||
| Equity | |||||||||
| Common stock - $0.01 par value (a) | 7 | 7 | |||||||
| Additional paid-in capital | 9,630 | 9,433 | |||||||
| Earnings reinvested | 2,791 | 6,462 | |||||||
| Accumulated other comprehensive loss | (2,206) | (2,274) | |||||||
| Total Equity | 10,222 | 13,628 | |||||||
| Total Liabilities and Equity | $ | 39,246 | $ | 48,864 | |||||
| (a) | 780,000 shares authorized; 671,792 and 665,849 shares issued and outstanding at September 30, 2015 and December 31, 2014. |
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
7
| (a) | Shares in thousands. Each share entitles the holder to one vote on any question presented at any shareowners' meeting. |
The accompanying Notes to Condensed Financial
Statements are an integral part of the financial statements.
8
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9
| (a) | Net income approximates comprehensive income. |
The
accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
10
The accompanying
Notes to Condensed Financial Statements are an integral part of the financial statements.
11
The accompanying
Notes to Condensed Financial Statements are an integral part of the financial statements.
12
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
| PPL Electric Utilities Corporation and Subsidiaries | |||||||||
| (Unaudited) | |||||||||
| (Millions of Dollars, shares in thousands) | |||||||||
| September 30, | December 31, | ||||||||
| 2015 | 2014 | ||||||||
| Liabilities and Equity | |||||||||
| Current Liabilities | |||||||||
| Short-term debt | $ | 68 | |||||||
| Long term debt due within one year | 100 | $ | 100 | ||||||
| Accounts payable | 315 | 325 | |||||||
| Accounts payable to affiliates | 36 | 70 | |||||||
| Taxes | 35 | 85 | |||||||
| Interest | 26 | 34 | |||||||
| Regulatory liabilities | 120 | 76 | |||||||
| Other current liabilities | 114 | 103 | |||||||
| Total Current Liabilities | 814 | 793 | |||||||
| Long-term Debt | 2,503 | 2,502 | |||||||
| Deferred Credits and Other Noncurrent Liabilities | |||||||||
| Deferred income taxes | 1,655 | 1,483 | |||||||
| Accrued pension obligations | 149 | 212 | |||||||
| Regulatory liabilities | 25 | 18 | |||||||
| Other deferred credits and noncurrent liabilities | 69 | 60 | |||||||
| Total Deferred Credits and Other Noncurrent Liabilities | 1,898 | 1,773 | |||||||
| Commitments and Contingent Liabilities (Notes 6 and 10) | |||||||||
| Equity | |||||||||
| Common stock - no par value (a) | 364 | 364 | |||||||
| Additional paid-in capital | 1,925 | 1,603 | |||||||
| Earnings reinvested | 801 | 750 | |||||||
| Total Equity | 3,090 | 2,717 | |||||||
| Total Liabilities and Equity | $ | 8,305 | $ | 7,785 | |||||
| (a) | 170,000 shares authorized; 66,368 shares issued and outstanding at September 30, 2015 and December 31, 2014. |
The accompanying Notes to Condensed Financial
Statements are an integral part of the financial statements.
13
| (a) | Shares in thousands. All common shares of PPL Electric stock are owned by PPL. |
| (b) | Includes non-cash contributions of $47 million. |
The
accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
14
The
accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
15
The accompanying
Notes to Condensed Financial Statements are an integral part of the financial statements.
16
The accompanying
Notes to Condensed Financial Statements are an integral part of the financial statements.
17
The accompanying
Notes to Condensed Financial Statements are an integral part of the financial statements.
18
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
| LG&E and KU Energy LLC and Subsidiaries | |||||||||
| (Unaudited) | |||||||||
| (Millions of Dollars) | |||||||||
| September 30, | December 31, | ||||||||
| 2015 | 2014 | ||||||||
| Liabilities and Equity | |||||||||
| Current Liabilities | |||||||||
| Short-term debt | $ | 75 | $ | 575 | |||||
| Long-term debt due within one year | 900 | 900 | |||||||
| Notes payable with affiliates | 62 | 41 | |||||||
| Accounts payable | 284 | 399 | |||||||
| Accounts payable to affiliates | 1 | 2 | |||||||
| Customer deposits | 51 | 52 | |||||||
| Taxes | 36 | 36 | |||||||
| Price risk management liabilities | 5 | 5 | |||||||
| Price risk management liabilities with affiliates | 66 | ||||||||
| Regulatory liabilities | 31 | 15 | |||||||
| Interest | 60 | 23 | |||||||
| Other current liabilities | 142 | 131 | |||||||
| Total Current Liabilities | 1,647 | 2,245 | |||||||
| Long-term Debt | 4,717 | 3,667 | |||||||
| Deferred Credits and Other Noncurrent Liabilities | |||||||||
| Deferred income taxes | 1,489 | 1,241 | |||||||
| Investment tax credits | 128 | 131 | |||||||
| Accrued pension obligations | 275 | 305 | |||||||
| Asset retirement obligations | 488 | 274 | |||||||
| Regulatory liabilities | 937 | 974 | |||||||
| Price risk management liabilities | 45 | 43 | |||||||
| Other deferred credits and noncurrent liabilities | 214 | 268 | |||||||
| Total Deferred Credits and Other Noncurrent Liabilities | 3,576 | 3,236 | |||||||
| Commitments and Contingent Liabilities (Notes 6 and 10) | |||||||||
| Member's equity | 4,437 | 4,248 | |||||||
| Total Liabilities and Equity | $ | 14,377 | $ | 13,396 | |||||
The accompanying
Notes to Condensed Financial Statements are an integral part of the financial statements.
19
The accompanying Notes to Condensed Financial
Statements are an integral part of the financial statements.
20
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21
| (a) | Net income equals comprehensive income. |
The
accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
22
The accompanying
Notes to Condensed Financial Statements are an integral part of the financial statements.
23
The accompanying
Notes to Condensed Financial Statements are an integral part of the financial statements.
24
| CONDENSED BALANCE SHEETS | |||||||||
| Louisville Gas and Electric Company | |||||||||
| (Unaudited) | |||||||||
| (Millions of Dollars, shares in thousands) | |||||||||
| September 30, | December 31, | ||||||||
| 2015 | 2014 | ||||||||
| Liabilities and Equity | |||||||||
| Current Liabilities | |||||||||
| Short-term debt | $ | 264 | |||||||
| Long-term debt due within one year | $ | 250 | 250 | ||||||
| Accounts payable | 191 | 240 | |||||||
| Accounts payable to affiliates | 20 | 20 | |||||||
| Customer deposits | 25 | 25 | |||||||
| Taxes | 18 | 19 | |||||||
| Price risk management liabilities | 5 | 5 | |||||||
| Price risk management liabilities with affiliates | 33 | ||||||||
| Regulatory liabilities | 15 | 10 | |||||||
| Interest | 15 | 6 | |||||||
| Other current liabilities | 50 | 42 | |||||||
| Total Current Liabilities | 589 | 914 | |||||||
| Long-term Debt | 1,653 | 1,103 | |||||||
| Deferred Credits and Other Noncurrent Liabilities | |||||||||
| Deferred income taxes | 818 | 700 | |||||||
| Investment tax credits | 35 | 36 | |||||||
| Accrued pension obligations | 34 | 57 | |||||||
| Asset retirement obligations | 147 | 66 | |||||||
| Regulatory liabilities | 439 | 458 | |||||||
| Price risk management liabilities | 45 | 43 | |||||||
| Other deferred credits and noncurrent liabilities | 97 | 111 | |||||||
| Total Deferred Credits and Other Noncurrent Liabilities | 1,615 | 1,471 | |||||||
| Commitments and Contingent Liabilities (Notes 6 and 10) | |||||||||
| Stockholder's Equity | |||||||||
| Common stock - no par value (a) | 424 | 424 | |||||||
| Additional paid-in capital | 1,541 | 1,521 | |||||||
| Earnings reinvested | 294 | 229 | |||||||
| Total Equity | 2,259 | 2,174 | |||||||
| Total Liabilities and Equity | $ | 6,116 | $ | 5,662 | |||||
| (a) | 75,000 shares authorized; 21,294 shares issued and outstanding at September 30, 2015 and December 31, 2014. |
The accompanying Notes to Condensed Financial
Statements are an integral part of the financial statements.
25
| (a) | Shares in thousands. All common shares of LG&E stock are owned by LKE. |
The accompanying Notes to Condensed Financial
Statements are an integral part of the financial statements.
26
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27
| (a) | Net income approximates comprehensive income. |
The
accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
28
The accompanying
Notes to Condensed Financial Statements are an integral part of the financial statements.
29
The accompanying
Notes to Condensed Financial Statements are an integral part of the financial statements.
30
| CONDENSED BALANCE SHEETS | |||||||||
| Kentucky Utilities Company | |||||||||
| (Unaudited) | |||||||||
| (Millions of Dollars, shares in thousands) | |||||||||
| September 30, | December 31, | ||||||||
| 2015 | 2014 | ||||||||
| Liabilities and Equity | |||||||||
| Current Liabilities | |||||||||
| Short-term debt | $ | 236 | |||||||
| Long-term debt due within one year | $ | 250 | 250 | ||||||
| Accounts payable | 77 | 141 | |||||||
| Accounts payable to affiliates | 41 | 47 | |||||||
| Customer deposits | 26 | 27 | |||||||
| Taxes | 23 | 14 | |||||||
| Price risk management liabilities with affiliates | 33 | ||||||||
| Regulatory liabilities | 16 | 5 | |||||||
| Interest | 30 | 11 | |||||||
| Other current liabilities | 53 | 41 | |||||||
| Total Current Liabilities | 516 | 805 | |||||||
| Long-term Debt | 2,341 | 1,841 | |||||||
| Deferred Credits and Other Noncurrent Liabilities | |||||||||
| Deferred income taxes | 1,048 | 884 | |||||||
| Investment tax credits | 93 | 95 | |||||||
| Accrued pension obligations | 44 | 59 | |||||||
| Asset retirement obligations | 341 | 208 | |||||||
| Regulatory liabilities | 498 | 516 | |||||||
| Other deferred credits and noncurrent liabilities | 63 | 101 | |||||||
| Total Deferred Credits and Other Noncurrent Liabilities | 2,087 | 1,863 | |||||||
| Commitments and Contingent Liabilities (Notes 6 and 10) | |||||||||
| Stockholder's Equity | |||||||||
| Common stock - no par value (a) | 308 | 308 | |||||||
| Additional paid-in capital | 2,596 | 2,596 | |||||||
| Accumulated other comprehensive income (loss) | (1) | ||||||||
| Earnings reinvested | 385 | 302 | |||||||
| Total Equity | 3,288 | 3,206 | |||||||
| Total Liabilities and Equity | $ | 8,232 | $ | 7,715 | |||||
| (a) | 80,000 shares authorized; 37,818 shares issued and outstanding at September 30, 2015 and December 31, 2014. |
The accompanying Notes to Condensed Financial
Statements are an integral part of the financial statements.
31
| (a) | Shares in thousands. All common shares of KU stock are owned by LKE. |
The accompanying Notes to Condensed Financial
Statements are an integral part of the financial statements.
32
Combined Notes to Condensed Financial Statements (Unaudited)
1. Interim Financial Statements
(All Registrants)
Capitalized terms and abbreviations appearing in the unaudited combined notes to condensed financial statements are defined in the glossary. Dollars are in millions, except per share data, unless otherwise noted. The specific Registrant to which disclosures are applicable is identified in parenthetical headings in italics above the applicable disclosure or within the applicable disclosure. Within combined disclosures, amounts are disclosed for any Registrant when significant.
The accompanying unaudited condensed financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include all of the information and footnote disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation in accordance with GAAP are reflected in the condensed financial statements. All adjustments are of a normal recurring nature, except as otherwise disclosed. Each Registrant's Balance Sheet at December 31, 2014 is derived from that Registrant's 2014 audited Balance Sheet. The financial statements and notes thereto should be read in conjunction with the financial statements and notes contained in each Registrant's 2014 Form 10-K. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the results to be expected for the full year ending December 31, 2015 or other future periods, because results for interim periods can be disproportionately influenced by various factors, developments and seasonal variations.
The classification of certain prior period amounts has been changed to conform to the presentation in the September 30, 2015 financial statements.
(PPL)
"Income (Loss) from Discontinued Operations (net of income taxes)" on the Statements of Income includes the activities of PPL Energy Supply, substantially representing PPL's former Supply segment, which was spun off and distributed to PPL shareowners on June 1, 2015. PPL Energy Supply's assets and liabilities have been reclassified on the Balance Sheet at December 31, 2014 to assets and liabilities of discontinued operations. The assets and liabilities were distributed and removed from PPL's Balance Sheets in the second quarter of 2015. In addition, the Statements of Cash Flows separately report the cash flows of the discontinued operations. See Note 8 for additional information.
2. Summary of Significant Accounting Policies
(All Registrants)
The following accounting policy disclosures represent updates to Note 1 to each indicated Registrant's 2014 Form 10-K and should be read in conjunction with those disclosures.
Accounts Receivable (PPL and PPL Electric)
In accordance with a PUC-approved purchase of accounts receivable program, PPL Electric purchases certain accounts receivable from alternative electricity suppliers at a discount, which reflects a provision for uncollectible accounts. The alternative electricity suppliers have no continuing involvement or interest in the purchased accounts receivable. The purchased accounts receivable are initially recorded at fair value using a market approach based on the purchase price paid and are classified as Level 2 in the fair value hierarchy. During the three and nine months ended September 30, 2015, PPL Electric purchased $361 million and $968 million of accounts receivable from unaffiliated third parties. During the three and nine months ended September 30, 2014, PPL Electric purchased $260 million and $874 million of accounts receivable from unaffiliated third parties and $77 million and $261 million from PPL EnergyPlus. PPL Electric's purchases from PPL EnergyPlus for the nine months ended September 30, 2015 were $146 million and include purchases through May 31, 2015, which is the period during which PPL Electric and PPL EnergyPlus were affiliated entities. As a result of the June 1, 2015 spinoff of PPL Energy Supply and creation of Talen Energy, PPL EnergyPlus (renamed Talen Energy Marketing) is no
33
longer an affiliate of PPL Electric. PPL Electric's purchases from Talen Energy Marketing subsequent to May 31, 2015 are included as purchases from an unaffiliated third party.
Depreciation (PPL)
Effective January 1, 2015, after completing a review of the useful lives of its distribution network assets, WPD extended the weighted average useful lives of these assets to 69 years from 55 years. For the three and nine months ended September 30, 2015, this change in useful lives resulted in lower depreciation of $22 million ($17 million after-tax or $0.03 per share) and $64 million ($50 million after-tax or $0.08 per share).
New Accounting Guidance Adopted (All Registrants)
Reporting of Discontinued Operations
Effective January 1, 2015, the Registrants prospectively adopted accounting guidance that changes the criteria for determining what should be classified as a discontinued operation and the related presentation and disclosure requirements. A discontinued operation may include a component of an entity or a group of components of an entity, or a business activity. A disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on the entity's operations and financial results when any of the following occurs: (1) The components of an entity or group of components of an entity meets the criteria to be classified as held for sale, (2) The component of an entity or group of components of an entity is disposed of by sale, or (3) The component of an entity or group of components of an entity is disposed of other than by sale (for example, by abandonment or in a distribution to owners in a spinoff).
As a result of the spinoff on June 1, 2015, PPL Energy Supply has been reported as a discontinued operation under the new discontinued operations guidance. See Note 8 for additional information.
3. Segment and Related Information
(PPL)
See Note 2 in PPL's 2014 Form 10-K for a discussion of reportable segments and related information.
On June 1, 2015, PPL completed the spinoff of PPL Energy Supply, which substantially represented PPL's Supply segment. As a result of this transaction, PPL no longer has a Supply segment. See Note 8 for additional information.
Financial data for the segments and reconciliation to PPL's consolidated results for the periods ended September 30 are:
| Three Months | Nine Months | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Income Statement Data | ||||||||||||||||
| Revenues from external customers | ||||||||||||||||
| U.K. Regulated | $ | 552 | $ | 644 | $ | 1,836 | $ | 1,964 | ||||||||
| Kentucky Regulated | 801 | 753 | 2,414 | 2,409 | ||||||||||||
| Pennsylvania Regulated | 519 | 477 | 1,625 | 1,516 | ||||||||||||
| Corporate and Other | 6 | 5 | 14 | 17 | ||||||||||||
| Total | $ | 1,878 | $ | 1,879 | $ | 5,889 | $ | 5,906 | ||||||||
| Net Income | ||||||||||||||||
| U.K. Regulated (a) | $ | 249 | $ | 295 | $ | 814 | $ | 688 | ||||||||
| Kentucky Regulated | 111 | 82 | 267 | 247 | ||||||||||||
| Pennsylvania Regulated | 55 | 57 | 191 | 194 | ||||||||||||
| Corporate and Other (b) | (19) | (24) | (74) | (100) | ||||||||||||
| Discontinued Operations (c) | (3) | 87 | (915) | 13 | ||||||||||||
| Total | $ | 393 | $ | 497 | $ | 283 | $ | 1,042 | ||||||||
34
| September 30, | December 31, | ||||||
| 2015 | 2014 | ||||||
| Balance Sheet Data | |||||||
| Assets | |||||||
| U.K. Regulated | $ | 16,382 | $ | 16,005 | |||
| Kentucky Regulated | 14,043 | 13,062 | |||||
| Pennsylvania Regulated | 8,305 | 7,785 | |||||
| Corporate and Other (d) | 516 | 1,095 | |||||
| Discontinued Operations (c) | 10,917 | ||||||
| Total assets | $ | 39,246 | $ | 48,864 | |||
| (a) | Includes unrealized gains and losses from economic activity. See Note 14 for additional information. |
| (b) | 2015 includes transition costs related to the formation of the Talen Energy organization and to reconfigure the remaining PPL Services functions. See Note 8 for additional information. |
| (c) | See Note 8 for additional information. |
| (d) | Primarily consists of unallocated items, including cash, PP&E and the elimination of inter-segment transactions. |
(PPL)
Basic EPS is computed by dividing income available to PPL common shareowners by the weighted-average number of common shares outstanding during the applicable period. Diluted EPS is computed by dividing income available to PPL common shareowners by the weighted-average number of common shares outstanding, increased by incremental shares that would be outstanding if potentially dilutive non-participating securities were converted to common shares as calculated using the Treasury Stock Method or the If-Converted Method, as applicable. Incremental non-participating securities that have a dilutive impact are detailed in the table below.
Reconciliations of the amounts of income and shares of PPL common stock (in thousands) for the periods ended September 30 used in the EPS calculation are:
| Three Months | Nine Months | ||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||
| Income (Numerator) | |||||||||||||||
| Income from continuing operations after income taxes | $ | 396 | $ | 410 | $ | 1,198 | $ | 1,029 | |||||||
| Less amounts allocated to participating securities | 2 | 2 | 5 | 5 | |||||||||||
| Income from continuing operations after income taxes available to PPL | |||||||||||||||
| common shareowners - Basic | 394 | 408 | 1,193 | 1,024 | |||||||||||
| Plus interest charges (net of tax) related to Equity Units (a) | 9 | ||||||||||||||
| Income from continuing operations after income taxes available to PPL | |||||||||||||||
| common shareowners - Diluted | $ | 394 | $ | 408 | $ | 1,193 | $ | 1,033 | |||||||
| Income (loss) from discontinued operations (net of income taxes) available | |||||||||||||||
| to PPL common shareowners - Basic and Diluted | $ | (3) | $ | 87 | $ | (915) | $ | 13 | |||||||
| Net income | $ | 393 | $ | 497 | $ | 283 | $ | 1,042 | |||||||
| Less amounts allocated to participating securities | 2 | 2 | 1 | 5 | |||||||||||
| Net income available to PPL common shareowners - Basic | 391 | 495 | 282 | 1,037 | |||||||||||
| Plus interest charges (net of tax) related to Equity Units (a) | 9 | ||||||||||||||
| Net income available to PPL common shareowners - Diluted | $ | 391 | $ | 495 | $ | 282 | $ | 1,046 | |||||||
| Shares of Common Stock (Denominator) | |||||||||||||||
| Weighted-average shares - Basic EPS | 670,763 | 664,432 | 668,731 | 649,561 | |||||||||||
| Add incremental non-participating securities: | |||||||||||||||
| Share-based payment awards | 2,939 | 1,970 | 2,523 | 1,860 | |||||||||||
| Equity Units (a) | 14,080 | ||||||||||||||
| Weighted-average shares - Diluted EPS | 673,702 | 666,402 | 671,254 | 665,501 | |||||||||||
| Basic EPS | |||||||||||||||
| Available to PPL common shareowners: | |||||||||||||||
| Income from continuing operations after income taxes | $ | 0.59 | $ | 0.61 | $ | 1.78 | $ | 1.58 | |||||||
| Income (loss) from discontinued operations (net of income taxes) | (0.01) | 0.13 | (1.36) | 0.02 | |||||||||||
| Net Income Available to PPL common shareowners | $ | 0.58 | $ | 0.74 | $ | 0.42 | $ | 1.60 | |||||||
| Diluted EPS | |||||||||||||||
| Available to PPL common shareowners: | |||||||||||||||
| Income from continuing operations after income taxes | $ | 0.59 | $ | 0.61 | $ | 1.78 | $ | 1.55 | |||||||
| Income (loss) from discontinued operations (net of income taxes) | (0.01) | 0.13 | (1.36) | 0.02 | |||||||||||
| Net Income Available to PPL common shareowners | $ | 0.58 | $ | 0.74 | $ | 0.42 | $ | 1.57 | |||||||
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| (a) | In 2014, the If-Converted Method was applied to the Equity Units prior to the March 2014 settlement. |
For the periods ended September 30, PPL issued common stock related to stock-based compensation plans and the DRIP as follows (in thousands):
| Three Months | Nine Months | |||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||
| Stock-based compensation plans (a) | 1,368 | 210 | 3,805 | 2,228 | ||||||||||
| DRIP | 475 | 425 | 1,318 | 425 | ||||||||||
| (a) | Includes stock options exercised, vesting of performance units, vesting of restricted stock and restricted stock units and conversion of stock units granted to directors. |
See Note 7 for additional information on common stock issued under the ATM Program.
For the periods ended September 30, the following shares (in thousands) were excluded from the computations of diluted EPS because the effect would have been antidilutive.
| Three Months | Nine Months | |||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||
| Stock options | 1,484 | 527 | 1,218 | 1,901 | ||||||||
| Performance units | 49 | |||||||||||
| Restricted stock units | 41 | |||||||||||
Reconciliations of income taxes for the periods ended September 30 are as follows.
| (PPL) | ||||||||||||||||
| Three Months | Nine Months | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Federal income tax on Income from Continuing Operations Before | ||||||||||||||||
| Income Taxes at statutory tax rate - 35% | $ | 189 | $ | 214 | $ | 571 | $ | 547 | ||||||||
| Increase (decrease) due to: | ||||||||||||||||
| State income taxes, net of federal income tax benefit | 15 | 13 | 44 | 28 | ||||||||||||
| Valuation allowance adjustments (a) | 3 | 8 | 49 | |||||||||||||
| Impact of lower U.K. income tax rates | (40) | (48) | (138) | (124) | ||||||||||||
| U.S. income tax on foreign earnings - net of foreign tax credit (b) | 26 | (1) | 47 | |||||||||||||
| Federal and state tax reserve adjustments (c) | (9) | (21) | ||||||||||||||
| Foreign income tax return adjustments | (4) | |||||||||||||||
| Amortization of investment tax credit | (1) | 1 | (3) | (3) | ||||||||||||
| Depreciation not normalized | (1) | (3) | (4) | (7) | ||||||||||||
| Intercompany interest on U.K. financing entities | (4) | (15) | (4) | |||||||||||||
| Other | (5) | (5) | (5) | 1 | ||||||||||||
| Total increase (decrease) | (45) | (13) | (139) | (13) | ||||||||||||
| Total income taxes | $ | 144 | $ | 201 | $ | 432 | $ | 534 | ||||||||
| (b) | During the three and nine months ended September 30, 2015, PPL recorded lower income tax expense due to a decrease in taxable dividends. |
| (c) | During the three and nine months ended September 30, 2015, PPL recorded a $9 million tax benefit related to a planned amendment of a prior period tax return. |
| During the nine months ended September 30, 2015, PPL recorded a $12 million tax benefit to adjust the settled refund amount approved by the Joint Committee of Taxation for the open audit years 1998-2011. |
36
| (PPL Electric) | ||||||||||||||||
| Three Months | Nine Months | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Federal income tax on Income Before Income Taxes at statutory | ||||||||||||||||
| tax rate - 35% | $ | 32 | $ | 33 | $ | 112 | $ | 110 | ||||||||
| Increase (decrease) due to: | ||||||||||||||||
| State income taxes, net of federal income tax benefit | 7 | 5 | 21 | 17 | ||||||||||||
| Depreciation not normalized | (1) | (2) | (3) | (5) | ||||||||||||
| Other | (3) | 1 | (1) | |||||||||||||
| Total increase (decrease) | 3 | 4 | 18 | 11 | ||||||||||||
| Total income taxes | $ | 35 | $ | 37 | $ | 130 | $ | 121 | ||||||||
| (LKE) | ||||||||||||||||
| Three Months | Nine Months | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Federal income tax on Income from Continuing Operations Before | ||||||||||||||||
| Income Taxes at statutory tax rate - 35% | $ | 68 | $ | 51 | $ | 172 | $ | 153 | ||||||||
| Increase (decrease) due to: | ||||||||||||||||
| State income taxes, net of federal income tax benefit | 7 | 6 | 18 | 16 | ||||||||||||
| Amortization of investment tax credit | (1) | (1) | (2) | |||||||||||||