|
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 March 31, 2016 |
| 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, 676,945,176 shares outstanding at April 22, 2016. | |
| PPL Electric Utilities Corporation | Common stock, no par value, 66,368,056 shares outstanding and all held by PPL Corporation at April 22, 2016. | |
| 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 April 22, 2016. | |
| Kentucky Utilities Company | Common stock, no par value, 37,817,878 shares outstanding and all held by LG&E and KU Energy LLC at April 22, 2016. |
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 CORPORATION
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 March 31, 2016
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 facilities management 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 administrative, management and support services to PPL and its subsidiaries.
PPL WPD Limited - an indirect U.K. subsidiary of PPL Global and parent to WPD plc.
WPD - refers to PPL WPD Limited and its subsidiaries.
WPD (East Midlands) - Western Power Distribution (East Midlands) plc, a British regional electricity distribution utility company.
WPD plc - Western Power Distribution plc, a direct U.K. subsidiary of PPL WPD Limited. 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.
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.
i
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.
2015 Form 10-K - Annual Report to the SEC on Form 10-K for the year ended December 31, 2015.
2001 Mortgage Indenture - PPL Electric's Indenture, dated as of August 1, 2001, to the Bank of New York Mellon (as successor to JPMorgan Chase Bank), as trustee, as supplemented.
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).
AOCI - accumulated other comprehensive income or loss.
ARO - asset retirement obligation.
ATM Program - At-the-Market stock offering program.
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.
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.
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.
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.
ii
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.
Earnings from Ongoing Operations - A non-GAAP financial measure of earnings adjusted for the impact of special items and used in "Item 2. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations" (MD&A). See "Non-GAAP Financial Measures" within the MD&A for additional details.
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.
ELG(s) - Effluent Limitation Guidelines, regulations promulgated by the EPA.
EPA - Environmental Protection Agency, a U.S. government agency.
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.
GAAP - Generally Accepted Accounting Principles in the U.S.
GBP - British pound sterling.
GLT - Gas Line Tracker. The KPSC approved mechanism for 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.
Gross Margins - A non-GAAP financial measure of performance used in "Item 2. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations" (MD&A). See "Non-GAAP Financial Measures" within the MD&A for additional details.
KPSC - Kentucky Public Service Commission, the state agency that has jurisdiction over the regulation of rates and service of utilities in Kentucky.
LCIDA - Lehigh County Industrial Development Authority.
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.
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.
iii
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.
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.
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.
Registrant(s) - refers to the Registrants named on the cover of this Report (each a "Registrant" and collectively, the "Registrants").
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.
RPI - Retail Price Index, is a measure of inflation in the United Kingdom published monthly by the Office for National Statistics.
SCRs - selective catalytic reduction, a pollution control process for the removal of nitrogen oxide from exhaust gas.
iv
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.
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.
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.
Subsidiary Registrant(s) - PPL Electric, LKE, LG&E and KU.
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 - Talen Energy Marketing, LLC, PPL EnergyPlus' new name subsequent to the spinoff of PPL Energy Supply.
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.
VSCC - Virginia State Corporation Commission, the state agency that has jurisdiction over the regulation of Virginia corporations, including utilities.
v
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 2015 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.
| · | challenges by intervenors to the return on equity granted in existing rate structures; |
| · | fuel supply and cost; |
| · | 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 transmission and distribution operations, and customer energy use; |
| · | availability and operating costs of existing generation facilities; |
| · | the duration of and cost associated with outages at our generating facilities; |
| · | generation, transmission and distribution system conditions, and operating costs; |
| · | expansion of alternative and distributed sources of electricity generation and storage; |
| · | collective labor bargaining negotiations; |
| · | laws or regulations to reduce emissions of "greenhouse" gases or physical effects of climate change; |
| · | 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; |
| · | market prices of commodity inputs for ongoing capital expenditures or key operational needs; |
| · | 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; |
| · | defaults by counterparties or suppliers for energy, capacity, coal, natural gas or key commodities, goods or services; |
| · | 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; |
| · | the effect of changes in RPI on WPD's revenues and index linked debt; |
| · | 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; |
| · | the effect of the outcome of the June 2016 referendum in the U.K. relating to its membership in the European Union; |
| · | 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 achievement of performance targets set by Ofgem; |
| · | 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 |
1
| · | 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.
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) | |||||||||
| March 31, | December 31, | ||||||||
| 2016 | 2015 | ||||||||
| Liabilities and Equity | |||||||||
| Current Liabilities | |||||||||
| Short-term debt | $ | 1,265 | $ | 916 | |||||
| Long-term debt due within one year | 485 | 485 | |||||||
| Accounts payable | 707 | 812 | |||||||
| Taxes | 96 | 85 | |||||||
| Interest | 315 | 303 | |||||||
| Dividends | 257 | 255 | |||||||
| Customer deposits | 306 | 326 | |||||||
| Regulatory liabilities | 119 | 145 | |||||||
| Other current liabilities | 516 | 549 | |||||||
| Total Current Liabilities | 4,066 | 3,876 | |||||||
| Long-term Debt | 18,074 | 18,563 | |||||||
| Deferred Credits and Other Noncurrent Liabilities | |||||||||
| Deferred income taxes | 3,560 | 3,440 | |||||||
| Investment tax credits | 127 | 128 | |||||||
| Accrued pension obligations | 1,183 | 1,405 | |||||||
| Asset retirement obligations | 517 | 536 | |||||||
| Regulatory liabilities | 942 | 945 | |||||||
| Other deferred credits and noncurrent liabilities | 478 | 489 | |||||||
| Total Deferred Credits and Other Noncurrent Liabilities | 6,807 | 6,943 | |||||||
| Commitments and Contingent Liabilities (Notes 6 and 10) | |||||||||
| Equity | |||||||||
| Common stock - $0.01 par value (a) | 7 | 7 | |||||||
| Additional paid-in capital | 9,729 | 9,687 | |||||||
| Earnings reinvested | 3,185 | 2,953 | |||||||
| Accumulated other comprehensive loss | (3,159) | (2,728) | |||||||
| Total Equity | 9,762 | 9,919 | |||||||
| Total Liabilities and Equity | $ | 38,709 | $ | 39,301 | |||||
| (a) | 780,000 shares authorized; 676,384 and 673,857 shares issued and outstanding at March 31, 2016 and December 31, 2015. |
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 equals 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) | |||||||||
| March 31, | December 31, | ||||||||
| 2016 | 2015 | ||||||||
| Liabilities and Equity | |||||||||
| Current Liabilities | |||||||||
| Short-term debt | $ | 125 | |||||||
| Accounts payable | 300 | $ | 288 | ||||||
| Accounts payable to affiliates | 38 | 35 | |||||||
| Taxes | 16 | 24 | |||||||
| Interest | 31 | 37 | |||||||
| Regulatory liabilities | 89 | 113 | |||||||
| Customer deposits | 22 | 31 | |||||||
| Other current liabilities | 73 | 77 | |||||||
| Total Current Liabilities | 694 | 605 | |||||||
| Long-term Debt | 2,829 | 2,828 | |||||||
| Deferred Credits and Other Noncurrent Liabilities | |||||||||
| Deferred income taxes | 1,731 | 1,663 | |||||||
| Accrued pension obligations | 184 | 183 | |||||||
| Regulatory liabilities | 25 | 22 | |||||||
| Other deferred credits and noncurrent liabilities | 89 | 91 | |||||||
| Total Deferred Credits and Other Noncurrent Liabilities | 2,029 | 1,959 | |||||||
| Commitments and Contingent Liabilities (Notes 6 and 10) | |||||||||
| Equity | |||||||||
| Common stock - no par value (a) | 364 | 364 | |||||||
| Additional paid-in capital | 1,934 | 1,934 | |||||||
| Earnings reinvested | 870 | 821 | |||||||
| Total Equity | 3,168 | 3,119 | |||||||
| Total Liabilities and Equity | $ | 8,720 | $ | 8,511 | |||||
| (a) | 170,000 shares authorized; 66,368 shares issued and outstanding at March 31, 2016 and December 31, 2015. |
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. |
The
accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
14
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15
| (a) | Net income approximates comprehensive income. |
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) | |||||||||
| March 31, | December 31, | ||||||||
| 2016 | 2015 | ||||||||
| Liabilities and Equity | |||||||||
| Current Liabilities | |||||||||
| Short-term debt | $ | 116 | $ | 265 | |||||
| Long-term debt due within one year | 25 | 25 | |||||||
| Notes payable with affiliate | 147 | 54 | |||||||
| Accounts payable | 232 | 266 | |||||||
| Accounts payable to affiliates | 10 | 5 | |||||||
| Customer deposits | 53 | 52 | |||||||
| Taxes | 21 | 46 | |||||||
| Price risk management liabilities | 6 | 5 | |||||||
| Regulatory liabilities | 30 | 32 | |||||||
| Interest | 74 | 32 | |||||||
| Asset retirement obligations | 70 | 50 | |||||||
| Other current liabilities | 90 | 135 | |||||||
| Total Current Liabilities | 874 | 967 | |||||||
| Long-term Debt | |||||||||
| Long-term debt | 4,663 | 4,663 | |||||||
| Long-term debt to affiliate | 400 | 400 | |||||||
| Total Long-term Debt | 5,063 | 5,063 | |||||||
| Deferred Credits and Other Noncurrent Liabilities | |||||||||
| Deferred income taxes | 1,532 | 1,463 | |||||||
| Investment tax credits | 127 | 128 | |||||||
| Accrued pension obligations | 267 | 296 | |||||||
| Asset retirement obligations | 470 | 485 | |||||||
| Regulatory liabilities | 917 | 923 | |||||||
| Price risk management liabilities | 47 | 42 | |||||||
| Other deferred credits and noncurrent liabilities | 205 | 206 | |||||||
| Total Deferred Credits and Other Noncurrent Liabilities | 3,565 | 3,543 | |||||||
| Commitments and Contingent Liabilities (Notes 6 and 10) | |||||||||
| Member's equity | 4,609 | 4,517 | |||||||
| Total Liabilities and Equity | $ | 14,111 | $ | 14,090 | |||||
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) | |||||||||
| March 31, | December 31, | ||||||||
| 2016 | 2015 | ||||||||
| Liabilities and Equity | |||||||||
| Current Liabilities | |||||||||
| Short-term debt | $ | 82 | $ | 142 | |||||
| Long-term debt due within one year | 25 | 25 | |||||||
| Accounts payable | 137 | 157 | |||||||
| Accounts payable to affiliates | 25 | 25 | |||||||
| Customer deposits | 26 | 26 | |||||||
| Taxes | 11 | 20 | |||||||
| Price risk management liabilities | 6 | 5 | |||||||
| Regulatory liabilities | 8 | 13 | |||||||
| Interest | 24 | 11 | |||||||
| Asset retirement obligations | 40 | 25 | |||||||
| Other current liabilities | 27 | 39 | |||||||
| Total Current Liabilities | 411 | 488 | |||||||
| Long-term Debt | 1,617 | 1,617 | |||||||
| Deferred Credits and Other Noncurrent Liabilities | |||||||||
| Deferred income taxes | 867 | 829 | |||||||
| Investment tax credits | 34 | 35 | |||||||
| Accrued pension obligations | 43 | 56 | |||||||
| Asset retirement obligations | 136 | 149 | |||||||
| Regulatory liabilities | 428 | 431 | |||||||
| Price risk management liabilities | 47 | 42 | |||||||
| Other deferred credits and noncurrent liabilities | 90 | 91 | |||||||
| Total Deferred Credits and Other Noncurrent Liabilities | 1,645 | 1,633 | |||||||
| Commitments and Contingent Liabilities (Notes 6 and 10) | |||||||||
| Stockholder's Equity | |||||||||
| Common stock - no par value (a) | 424 | 424 | |||||||
| Additional paid-in capital | 1,641 | 1,611 | |||||||
| Earnings reinvested | 326 | 295 | |||||||
| Total Equity | 2,391 | 2,330 | |||||||
| Total Liabilities and Equity | $ | 6,064 | $ | 6,068 | |||||
| (a) | 75,000 shares authorized; 21,294 shares issued and outstanding at March 31, 2016 and December 31, 2015. |
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) | |||||||||
| March 31, | December 31, | ||||||||
| 2016 | 2015 | ||||||||
| Liabilities and Equity | |||||||||
| Current Liabilities | |||||||||
| Short-term debt | $ | 34 | $ | 48 | |||||
| Accounts payable | 77 | 88 | |||||||
| Accounts payable to affiliates | 42 | 39 | |||||||
| Customer deposits | 27 | 26 | |||||||
| Taxes | 12 | 20 | |||||||
| Regulatory liabilities | 22 | 19 | |||||||
| Interest | 38 | 16 | |||||||
| Asset retirement obligations | 30 | 25 | |||||||
| Other current liabilities | 28 | 44 | |||||||
| Total Current Liabilities | 310 | 325 | |||||||
| Long-term Debt | 2,326 | 2,326 | |||||||
| Deferred Credits and Other Noncurrent Liabilities | |||||||||
| Deferred income taxes | 1,091 | 1,046 | |||||||
| Investment tax credits | 93 | 93 | |||||||
| Accrued pension obligations | 37 | 46 | |||||||
| Asset retirement obligations | 334 | 336 | |||||||
| Regulatory liabilities | 489 | 492 | |||||||
| Other deferred credits and noncurrent liabilities | 60 | 60 | |||||||
| Total Deferred Credits and Other Noncurrent Liabilities | 2,104 | 2,073 | |||||||
| 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 | |||||||
| Earnings reinvested | 394 | 383 | |||||||
| Total Equity | 3,298 | 3,287 | |||||||
| Total Liabilities and Equity | $ | 8,038 | $ | 8,011 | |||||
| (a) | 80,000 shares authorized; 37,818 shares issued and outstanding at March 31, 2016 and December 31, 2015. |
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, 2015 is derived from that Registrant's 2015 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 2015 Form 10-K. The results of operations for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for the full year ending December 31, 2016 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 March 31, 2016 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. In addition, the Statement of Cash Flows for the three months ended March 31, 2015 separately reports 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 2015 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 months ended March 31, 2016, PPL Electric purchased $382 million of accounts receivable from unaffiliated third parties. During the three months ended March 31, 2015, PPL Electric purchased $331 million of accounts receivable from unaffiliated third parties and $93 million from PPL EnergyPlus. 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 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.
33
Discount Rate Change for U.K. Pension Plans (PPL)
In selecting the discount rate for its U.K. pension plans, WPD historically used a single weighted-average discount rate in the calculation of net periodic defined benefit cost. Effective January 1, 2016, WPD began using individual spot rates to measure service cost and interest cost to calculate net periodic defined benefit cost. For the three months ended March 31, 2016, this change in discount rate resulted in lower net periodic defined benefit costs recognized on the Statement of Income of $11 million ($9 million after-tax or $0.01 per share).
New Accounting Guidance Adopted (All Registrants)
Accounting for Stock-Based Compensation
Effective January 1, 2016, the Registrants adopted accounting guidance to simplify the accounting for share-based payment transactions. The guidance requires excess tax benefits and tax deficiencies to be recorded as income tax benefit or expense on the statement of income, eliminates the requirement that excess tax benefits be realized before companies can recognize them and changes the threshold for statutory income tax withholding requirements to qualify for equity classification to the maximum statutory tax rates in the applicable jurisdictions. This guidance also changes the classification of excess tax benefits to an operating activity and employee taxes paid when shares are withheld to satisfy the employer's statutory income tax withholding obligation to a financing activity on the statement of cash flows and allows entities to make a policy election to either estimate forfeitures or recognize them when they occur. The adoption of this guidance had the following impacts:
| · | Using the required prospective method of transition, PPL recorded a tax benefit of $8 million ($0.01 per share) and PPL Electric recorded a tax benefit of $5 million related to excess tax benefits for awards that were exercised and vested for the period ending March 31, 2016. These amounts were recorded to Income taxes on the Statements of Income and Deferred income taxes on the Balance Sheets. The impact on LKE was not significant. |
| · | PPL elected to use the prospective method of transition for classifying excess tax benefits as an Operating activity on the Statement of Cash Flows. The amounts classified as Financing activities in the prior periods were not significant. |
| · | Using the required modified retrospective method of transition, PPL recorded a cumulative effect adjustment of $7 million to increase Earnings reinvested and decrease Deferred income taxes on the Balance Sheet related to prior period unrecognized excess tax benefits. |
| · | PPL has historically presented employee taxes paid for net settled awards as a Financing activity on the Statement of Cash Flows. Therefore, there is no transition impact for this requirement. |
| · | PPL has elected to recognize forfeitures when they occur. Due to past experience of insignificant forfeitures there is no transition impact of this policy election. |
3. Segment and Related Information
(PPL)
See Note 2 in PPL's 2015 Form 10-K for a discussion of reportable segments and related information.
34
Financial data for the segments and reconciliation to PPL's consolidated results for the periods ended March 31 are:
| Three Months | ||||||||||||||||
| 2016 | 2015 | |||||||||||||||
| Income Statement Data | ||||||||||||||||
| Revenues from external customers | ||||||||||||||||
| U.K. Regulated | $ | 595 | $ | 697 | ||||||||||||
| Kentucky Regulated | 826 | 899 | ||||||||||||||
| Pennsylvania Regulated | 585 | 630 | ||||||||||||||
| Corporate and Other | 5 | 4 | ||||||||||||||
| Total | $ | 2,011 | $ | 2,230 | ||||||||||||
| Net Income | ||||||||||||||||
| U.K. Regulated (a) | $ | 289 | $ | 375 | ||||||||||||
| Kentucky Regulated | 112 | 109 | ||||||||||||||
| Pennsylvania Regulated | 94 | 87 | ||||||||||||||
| Corporate and Other | (14) | (19) | ||||||||||||||
| Discontinued Operations (b) | 95 | |||||||||||||||
| Total | $ | 481 | $ | 647 | ||||||||||||
| March 31, | December 31, | ||||||
| 2016 | 2015 | ||||||
| Balance Sheet Data | |||||||
| Assets | |||||||
| U.K. Regulated (c) | $ | 15,802 | $ | 16,669 | |||
| Kentucky Regulated | 13,777 | 13,756 | |||||
| Pennsylvania Regulated | 8,720 | 8,511 | |||||
| Corporate and Other (d) | 410 | 365 | |||||
| Total assets | $ | 38,709 | $ | 39,301 | |||
| (a) | Includes unrealized gains and losses from hedging foreign-currency related economic activity. See Note 14 for additional information. |
| (b) | 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. 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 March 31 used in the EPS calculation are:
| Three Months | |||||||||||||||
| 2016 | 2015 | ||||||||||||||
| Income (Numerator) | |||||||||||||||
| Income from continuing operations after income taxes | $ | 481 | $ | 552 | |||||||||||
| Less amounts allocated to participating securities | 2 | 3 | |||||||||||||
| Income from continuing operations after income taxes available to PPL common shareowners - Basic and Diluted | $ | 479 | $ | 549 | |||||||||||
| Income (loss) from discontinued operations (net of income taxes) available to PPL common shareowners - Basic | |||||||||||||||
| and Diluted | $ | 95 | |||||||||||||
| Net income | $ | 481 | $ | 647 | |||||||||||
| Less amounts allocated to participating securities | 2 | 3 | |||||||||||||
| Net income available to PPL common shareowners - Basic and Diluted | $ | 479 | $ | 644 | |||||||||||
35
| Three Months | |||||||||||||||
| 2016 | 2015 | ||||||||||||||
| Shares of Common Stock (Denominator) | |||||||||||||||
| Weighted-average shares - Basic EPS | 675,441 | 666,974 | |||||||||||||
| Add incremental non-participating securities: | |||||||||||||||
| Share-based payment awards | 3,376 | 1,758 | |||||||||||||
| Weighted-average shares - Diluted EPS | 678,817 | 668,732 | |||||||||||||
| Basic EPS | |||||||||||||||
| Available to PPL common shareowners: | |||||||||||||||
| Income from continuing operations after income taxes | $ | 0.71 | $ | 0.83 | |||||||||||
| Income (loss) from discontinued operations (net of income taxes) | 0.14 | ||||||||||||||
| Net Income | $ | 0.71 | $ | 0.97 | |||||||||||
| Diluted EPS | |||||||||||||||
| Available to PPL common shareowners: | |||||||||||||||
| Income from continuing operations after income taxes | $ | 0.71 | $ | 0.82 | |||||||||||
| Income (loss) from discontinued operations (net of income taxes) | 0.14 | ||||||||||||||
| Net Income | $ | 0.71 | $ | 0.96 | |||||||||||
For the periods ended March 31, PPL issued common stock related to stock-based compensation plans and the DRIP as follows (in thousands):
| Three Months | ||||||||||||||
| 2016 | 2015 | |||||||||||||
| Stock-based compensation plans (a) | 2,125 | 1,445 | ||||||||||||
| DRIP | 402 | 419 | ||||||||||||
| (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. |
For the periods ended March 31, the following shares (in thousands) were excluded from the computations of diluted EPS because the effect would have been antidilutive.
| Three Months | ||||||||||||
| 2016 | 2015 | |||||||||||
| Stock options | 696 | 1,473 | ||||||||||
| Performance units | 146 | |||||||||||
Reconciliations of income taxes for the periods ended March 31 are as follows.
| (PPL) | ||||||||||||||||
| Three Months | ||||||||||||||||
| 2016 | 2015 | |||||||||||||||
| Federal income tax on Income from Continuing Operations Before | ||||||||||||||||
| Income Taxes at statutory tax rate - 35% | $ | 231 | $ | 269 | ||||||||||||
| Increase (decrease) due to: | ||||||||||||||||
| State income taxes, net of federal income tax benefit | 13 | 14 | ||||||||||||||
| Valuation allowance adjustments | 6 | 9 | ||||||||||||||
| Impact of lower U.K. income tax rates | (54) | (62) | ||||||||||||||
| Interest benefit on U.K. financing entities | (5) | (7) | ||||||||||||||
| Stock-based compensation (a) | (8) | |||||||||||||||
| Other | (4) | (6) | ||||||||||||||
| Total increase (decrease) | (52) | (52) | ||||||||||||||
| Total income taxes | $ | 179 | $ | 217 | ||||||||||||
36
| (PPL Electric) | ||||||||||||||||
| Three Months | ||||||||||||||||
| 2016 | 2015 | |||||||||||||||
| Federal income tax on Income Before Income Taxes at statutory tax rate - 35% | $ | 53 | $ | 51 | ||||||||||||
| Increase (decrease) due to: | ||||||||||||||||
| State income taxes, net of federal income tax benefit | 9 | 10 | ||||||||||||||
| Stock-based compensation (a) | (5) | |||||||||||||||
| Other | (1) | (2) | ||||||||||||||
| Total increase (decrease) | 3 | 8 | ||||||||||||||
| Total income taxes | $ | 56 | $ | 59 | ||||||||||||
| (LKE) | ||||||||||||||||
| Three Months | ||||||||||||||||
| 2016 | 2015 | |||||||||||||||
| Federal income tax on Income Before Income Taxes at statutory tax rate - 35% | $ | 67 | $ | 68 | ||||||||||||
| Increase (decrease) due to: | ||||||||||||||||
| State income taxes, net of federal income tax benefit | 7 | 7 | ||||||||||||||
| Valuation allowance adjustments | 3 | |||||||||||||||
| Stock-based compensation | (1) | |||||||||||||||
| Other | (1) | (2) | ||||||||||||||
| Total increase (decrease) | 5 | 8 | ||||||||||||||
| Total income taxes | $ | 72 | $ | 76 | ||||||||||||
| (LG&E) | ||||||||||||||||
| Three Months | ||||||||||||||||
| 2016 | 2015 | |||||||||||||||
| Federal income tax on Income Before Income Taxes at statutory tax rate - 35% | $ | 32 | $ | 30 | ||||||||||||
| Increase (decrease) due to: | ||||||||||||||||
| State income taxes, net of federal income tax benefit | 3 | 3 | ||||||||||||||
| Total increase (decrease) | 3 | 3 | ||||||||||||||
| Total income taxes | $ | 35 | $ | 33 | ||||||||||||
| (KU) | ||||||||||||||||
| Three Months | ||||||||||||||||
| 2016 | 2015 | |||||||||||||||
| Federal income tax on Income Before Income Taxes at statutory tax rate - 35% | $ | 42 | $ | 44 | ||||||||||||
| Increase (decrease) due to: | ||||||||||||||||
| State income taxes, net of federal income tax benefit | 4 | 4 | ||||||||||||||
| Other | (1) | |||||||||||||||
| Total increase (decrease) | 4 | 3 | ||||||||||||||
| Total income taxes | $ | 46 | $ | 47 | ||||||||||||
(All Registrants)
The following table provides information about the regulatory assets and liabilities of cost-based rate-regulated utility operations.
37
| PPL | PPL Electric | ||||||||||||
| March 31, | December 31, | March 31, | December 31, | ||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||
| Current Regulatory Assets: | |||||||||||||
| Environmental cost recovery | $ | 6 | $ | 24 | |||||||||
| Transmission service charge | 7 | 10 | $ | 7 | $ | 10 | |||||||
| Other | 13 | 14 | 2 | 3 | |||||||||
| Total current regulatory assets (a) | $ | 26 | $ | 48 | $ | 9 | $ | 13 | |||||
| Noncurrent Regulatory Assets: | |||||||||||||
| Defined benefit plans | $ | 801 | $ | 809 | $ | 465 | $ | 469 | |||||
| Taxes recoverable through future rates | 328 | 326 | 328 | 326 | |||||||||
| Storm costs | 84 | 93 | 26 | 30 | |||||||||
| Unamortized loss on debt | 68 | 68 | 43 | 42 | |||||||||
| Interest rate swaps | 145 | 141 | |||||||||||
| Accumulated cost of removal of utility plant | 139 | 137 | 139 | 137 | |||||||||
| AROs | 165 | 143 | |||||||||||
| Other | 17 | 16 | 2 | 2 | |||||||||
| Total noncurrent regulatory assets | $ | 1,747 | $ | 1,733 | $ | 1,003 | $ | 1,006 | |||||
| Current Regulatory Liabilities: | |||||||||||||
| Generation supply charge | $ | 30 | $ | 41 | $ | 30 | $ | 41 | |||||
| Demand side management | 11 | 8 | |||||||||||
| Gas supply clause | 6 | ||||||||||||
| Universal service rider | 6 | 5 | 6 | 5 | |||||||||
| Transmission formula rate | 37 | 48 | 37 | 48 | |||||||||
| Fuel adjustment clause | 16 | 14 | |||||||||||
| Storm damage expense | 15 | 16 | 15 | 16 | |||||||||
| Other | 4 | 7 | 1 | 3 | |||||||||
| Total current regulatory liabilities | $ | 119 | $ | 145 | $ | 89 | $ | 113 | |||||
| Noncurrent Regulatory Liabilities: | |||||||||||||
| Accumulated cost of removal of utility plant | $ | 693 | $ | 691 | |||||||||
| Coal contracts (b) | 14 | 17 | |||||||||||
| Power purchase agreement - OVEC (b) | 82 | 83 | |||||||||||
| Net deferred tax assets | 22 | 23 | |||||||||||
| Act 129 compliance rider | 25 | 22 | $ | 25 | $ | 22 | |||||||
| Defined benefit plans | 24 | 24 | |||||||||||
| Interest rate swaps | 79 | 82 | |||||||||||
| Other | 3 | 3 | |||||||||||
| Total noncurrent regulatory liabilities | $ | 942 | $ | 945 | $ | 25 | $ | 22 | |||||
| LKE | LG&E | KU | ||||||||||||||||||
| March 31, | December 31, | March 31, | December 31, | March 31, | December 31, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||
| Current Regulatory Assets: | ||||||||||||||||||||
| Environmental cost recovery | $ | 6 | $ | 24 | $ | 6 | $ | 13 | $ | 11 | ||||||||||
| Gas supply clause | 1 | 1 | ||||||||||||||||||
| Gas line tracker | 1 | 1 | 1 | 1 | ||||||||||||||||
| Other | 10 | 9 | 1 | $ | 10 | 8 | ||||||||||||||
| Total current regulatory assets | $ | 17 | $ | 35 | $ | 7 | $ | 16 | $ | 10 | $ | 19 | ||||||||
| Noncurrent Regulatory Assets: | ||||||||||||||||||||
| Defined benefit plans | $ | 336 | $ | 340 | $ | 211 | $ | 215 | $ | 125 | $ | 125 | ||||||||
| Storm costs | 58 | 63 | 32 | 35 | 26 | 28 | ||||||||||||||
| Unamortized loss on debt | 25 | 26 | 16 | 17 | 9 | 9 | ||||||||||||||
| Interest rate swaps | 145 | 141 | 103 | 98 | 42 | 43 | ||||||||||||||
| AROs | 165 | 143 | 64 | 57 | 101 | 86 | ||||||||||||||
| Plant retirement costs | 6 | 6 | 6 | 6 | ||||||||||||||||
| Other | 9 | 8 | 4 | 2 | 5 | 6 | ||||||||||||||
| Total noncurrent regulatory assets | $ | 744 | $ | 727 | $ | 430 | $ | 424 | $ | 314 | $ | 303 | ||||||||
38
| LKE | LG&E | KU | ||||||||||||||||||
| March 31 | December 31, | March 31, | December 31, | March 31, | December 31, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||
| Current Regulatory Liabilities: | ||||||||||||||||||||
| Demand side management | $ | 11 | $ | 8 | $ | 5 | $ | 4 | $ | 6 | $ | 4 | ||||||||
| Gas supply clause | 6 | 6 | ||||||||||||||||||
| Fuel adjustment clause | 16 | 14 | 3 | 2 | 13 | 12 | ||||||||||||||
| Other | 3 | 4 | 1 | 3 | 3 | |||||||||||||||
| Total current regulatory liabilities | $ | 30 | $ | 32 | $ | 8 | $ | 13 | $ | 22 | $ | 19 | ||||||||
| Noncurrent Regulatory Liabilities: | ||||||||||||||||||||
| Accumulated cost of removal | ||||||||||||||||||||
| of utility plant | $ | 693 | $ | 691 | $ | 303 | $ | 301 | $ | 390 | $ | 390 | ||||||||
| Coal contracts (b) | 14 | 17 | 6 | 7 | 8 | 10 | ||||||||||||||
| Power purchase agreement - OVEC (b) | 82 | 83 | 57 | 57 | 25 | 26 | ||||||||||||||
| Net deferred tax assets | 22 | 23 | 22 | 23 | ||||||||||||||||
| Defined benefit plans | 24 | 24 | 24 | 24 | ||||||||||||||||
| Interest rate swaps | 79 | 82 | 39 | 41 | 40 | 41 | ||||||||||||||
| Other | 3 | 3 | 1 | 2 | 2 | 1 | ||||||||||||||
| Total noncurrent regulatory liabilities | $ | 917 | $ | 923 | $ | 428 | $ | 431 | $ | 489 | $ | 492 | ||||||||
| (a) | These amounts are included in "Other current assets" on the Balance Sheets. |
| (b) | These liabilities were recorded as offsets to certain intangible assets that were recorded at fair value upon the acquisition of LKE by PPL. |
U.K. Activities (PPL)
Ofgem Review of Line Loss Calculation
In 2014, Ofgem issued its final decision on the DPCR4 line loss incentives and penalties mechanism. WPD began refunding its liability for over-recovery of line losses to customers on April 1, 2015 and will continue through March 31, 2019. The liability at March 31, 2016 was $45 million.
CPCN and ECR Filings (PPL, LKE, LG&E and KU)
On January 29, 2016, LG&E and KU submitted applications to the KPSC for CPCNs and for ECR rate treatment regarding upcoming environmental construction projects relating to the EPA's regulations addressing the handling of coal combustion byproducts and MATS. The construction projects are expected to begin in 2016 and continue through 2023 and are estimated to cost approximately $316 million at LG&E and $678 million at KU. The applications request an authorized 10% return on equity with respect to LG&E's and KU's ECR mechanisms consistent with the 2014 Kentucky rate case approved in June 2015. Two parties have been granted intervenor status in the proceedings.
Gas Franchise (LKE and LG&E)
LG&E's existing gas franchise agreement for the Louisville/Jefferson County service area expired on March 31, 2016. Pursuant to Kentucky law, upon expiration of a franchise, LG&E retains a revocable license to own and operate its facilities and to provide service. LG&E and city representatives are negotiating regarding a new franchise agreement and, in the interim, LG&E continues to provide gas service to customers in this service area at existing rates, but without collecting the prior franchise fee. LG&E cannot predict the outcome of this matter but does not anticipate that it will have a material effect on its financial condition or results of operation.
Pennsylvania Activities (PPL and PPL Electric)
Act 129
Act 129 requires Pennsylvania Electric Distribution Companies (EDCs) to meet specified goals for reduction in customer electricity usage and peak demand by specified dates. EDCs not meeting the requirements of Act 129 are subject to significant penalties. In November 2015, PPL Electric filed with the PUC its Act 129 Phase III Energy Efficiency and Conservation Plan for the period June 1, 2016 through May 31, 2021. In January 2016, PPL Electric and the other parties
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reached a settlement of all major issues in the case and filed that settlement with the Administrative Law Judge. In March 2016, the PUC issued an Order approving PPL Electric's Phase III Plan as modified by the settlement, allowing PPL Electric to recover a maximum $313 million in program cost over the five-year period June 1, 2016 through May 31, 2021 through the Act 129 compliance rider.
Act 129 also requires Default Service Providers (DSP) to provide electricity generation supply service to customers pursuant to a PUC-approved default service procurement plan through auctions, requests for proposal and bilateral contracts at the sole discretion of the DSP. Act 129 requires a mix of spot market purchases, short-term contracts and long-term contracts (4 to 20 years), with long-term contracts limited to 25% of load unless otherwise approved by the PUC. A DSP is able to recover the costs associated with its default service procurement plan.
PPL Electric has received PUC approval of biannual DSP procurement plans for all periods required under Act 129. In January 2016, PPL Electric filed a Petition for Approval of a new DSP procurement plan with the PUC for the period June 1, 2017 through May 31, 2021. Hearings are scheduled for June 2016. This proceeding remains pending before the PUC. PPL Electric cannot predict the outcome of this proceeding.
Credit Arrangements and Short-term Debt
(All Registrants)
The Registrants maintain credit facilities to enhance liquidity, provide credit support and provide a backstop to commercial paper programs. For reporting purposes, on a consolidated basis, the credit facilities and commercial paper programs of PPL Electric, LKE, LG&E and KU also apply to PPL and the credit facilities and commercial paper programs of LG&E and KU also apply to LKE. The amounts borrowed below are recorded as "Short-term debt" on the Balance Sheets. The following credit facilities were in place at:
| March 31, 2016 | December 31, 2015 | |||||||||||||||||||||||||
| Letters of | Letters of | |||||||||||||||||||||||||
| Credit | Credit | |||||||||||||||||||||||||
| and | and | |||||||||||||||||||||||||
| Commercial | Commercial | |||||||||||||||||||||||||
| Expiration | Paper | Unused | Paper | |||||||||||||||||||||||
| Date | Capacity | Borrowed | Issued | Capacity | Borrowed | Issued | ||||||||||||||||||||
| PPL | ||||||||||||||||||||||||||
| U.K. | ||||||||||||||||||||||||||
| WPD plc | ||||||||||||||||||||||||||
| Syndicated Credit Facility | Jan. 2021 | £ | 210 | £ | 144 | £ | 72 | £ | 133 | |||||||||||||||||
| WPD (South West) | ||||||||||||||||||||||||||
| Syndicated Credit Facility | July 2020 | 245 | 245 | |||||||||||||||||||||||
| WPD (East Midlands) | ||||||||||||||||||||||||||
| Syndicated Credit Facility | July 2020 | 300 | 37 | 263 | ||||||||||||||||||||||
| WPD (West Midlands) | ||||||||||||||||||||||||||
| Syndicated Credit Facility | July 2020 | 300 | 300 | |||||||||||||||||||||||
| Uncommitted Credit Facilities | 40 | £ | 4 | 36 | £ | 4 | ||||||||||||||||||||
| Total U.K. Credit Facilities (a) | £ | 1,095 | £ | 181 | £ | 4 | £ | 916 | £ | 133 | £ | 4 | ||||||||||||||
| U.S. | ||||||||||||||||||||||||||
| PPL Capital Funding | ||||||||||||||||||||||||||
| Syndicated Credit Facility | Jan. 2021 | $ | 700 | $ | 700 | $ | 151 | |||||||||||||||||||
| Syndicated Credit Facility | Nov. 2018 | 300 | 73 | $ | 227 | 300 | ||||||||||||||||||||
| Bilateral Credit Facility | Mar. 2017 | 150 | 17 | 133 | 20 | |||||||||||||||||||||
| Total PPL Capital Funding Credit Facilities | $ | 1,150 | $ | 790 | $ | 360 | $ | 471 | ||||||||||||||||||
| PPL Electric | ||||||||||||||||||||||||||
| Syndicated Credit Facility | Jan. 2021 | $ | 400 | $ | 126 | $ | 274 | $ | 1 | |||||||||||||||||
| LKE | ||||||||||||||||||||||||||
| Syndicated Credit Facility (b) | Oct. 2018 | $ | 75 | $ | 75 | $ | 75 | |||||||||||||||||||
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| March 31, 2016 | December 31, 2015 | |||||||||||||||||||||||||
| Letters of | Letters of | |||||||||||||||||||||||||
| Credit | Credit | |||||||||||||||||||||||||
| and | and | |||||||||||||||||||||||||
| Commercial | Commercial | |||||||||||||||||||||||||
| Expiration | Paper | Unused | Paper | |||||||||||||||||||||||
| Date | Capacity | Borrowed | Issued | Capacity | Borrowed | Issued | ||||||||||||||||||||
| LG&E | ||||||||||||||||||||||||||
| Syndicated Credit Facility | Dec. 2020 | $ | 500 | $ | 82 | $ | 418 | $ | 142 | |||||||||||||||||
| KU | ||||||||||||||||||||||||||
| Syndicated Credit Facility | Dec. 2020 | $ | 400 | $ | 34 | $ | 366 | $ | 48 | |||||||||||||||||
| Letter of Credit Facility | Oct. 2017 | 198 | 198 | 198 | ||||||||||||||||||||||
| Total KU Credit Facilities | $ | 598 | $ | 232 | $ | 366 | $ | 246 | ||||||||||||||||||
(a) WPD plc's amounts borrowed at March 31, 2016 and December 31, 2015 were USD-denominated borrowings of $200 million for both periods, which bore interest at 1.26% and 1.83%. The unused capacity reflects the amount borrowed in GBP of £138 million as of the date borrowed. WPD (East Midlands) amount borrowed at March 31, 2016 was a GBP-denominated borrowing which equated to $51 million and bore interest at 0.91%. At March 31, 2016, the unused capacity under the U.K. credit facilities was approximately $1.3 billion.
| (b) | LKE's interest rate on outstanding borrowings at December 31, 2015 was 1.68%. |
PPL, PPL Electric, LG&E and KU maintain commercial paper programs to provide an additional financing source to fund short-term liquidity needs, as necessary. Commercial paper issuances, included in "Short-term debt" on the Balance Sheets, are supported by the respective Registrant's Syndicated Credit Facility. The following commercial paper programs were in place at:
| March 31, 2016 | December 31, 2015 | ||||||||||||||||||||||
| Weighted - | Commercial | Weighted - | Commercial | ||||||||||||||||||||
| Average | Paper | Unused | Average | Paper | |||||||||||||||||||
| Interest Rate | Capacity | Issuances | Capacity | Interest Rate | Issuances | ||||||||||||||||||
| PPL Capital Funding | 0.85% | $ | 1,000 | $ | 773 | $ | 227 | 0.78% | $ | 451 | |||||||||||||
| PPL Electric | 0.72% | 400 | 125 | 275 | |||||||||||||||||||
| LG&E | 0.79% | 350 | 82 | 268 | 0.71% | 142 | |||||||||||||||||
| KU | 0.64% | 350 | 34 | 316 | 0.72% | 48 | |||||||||||||||||
| Total | $ | 2,100 | $ | 1,014 | $ | 1,086 | $ | 641 | |||||||||||||||
See Note 11 for discussion of intercompany borrowings.
Long-term Debt
(PPL and PPL Electric)
In March 2016, the LCIDA issued $116 million of Pollution Control Revenue Refunding Bonds, Series 2016A due 2029 and $108 million of Pollution Control Revenue Refunding Bonds, Series 2016B due 2027 on behalf of PPL Electric. The bonds were issued bearing interest at an initial term rate of 0.90% through their mandatory purchase dates of September 1, 2017 and August 15, 2017. The proceeds of the bonds were used to redeem $116 million of 4.70% Pollution Control Revenue Refunding Bonds, 2005 Series A due 2029 and $108 million of 4.75% Pollution Control Revenue Refunding Bonds, 2005 Series B due 2027 previously issued by the LCIDA on behalf of PPL Electric.
In connection with the issuance of each of these new series of LCIDA bonds, PPL Electric entered into a loan agreement with the LCIDA pursuant to which the LCIDA has loaned to PPL Electric the proceeds of the LCIDA bonds on payment terms that correspond to the LCIDA bonds. In order to secure its obligations under the loan agreement, PPL Electric issued $224 million of First Mortgage Bonds under its 2001 Mortgage Indenture, which also have payment terms that correspond to the LCIDA bonds.
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(PPL)
ATM Program
In February 2015, PPL filed a registration statement with the SEC and entered into two separate equity distribution agreements, pursuant to which PPL may sell, from time to time, up to an aggregate of $500 million of its common stock. For the periods ended March 31, 2016 and 2015, PPL did not issue any shares under the agreements.
In February 2016, PPL declared a quarterly common stock dividend, payable April 1, 2016, of 38 cents per share (equivalent to $1.52 per annum). Future dividends, declared at the discretion of the Board of Directors, will depend upon future earnings, cash flows, financial and legal requirements and other factors.
8. Acquisitions, Development and Divestitures
(All Registrants)
The Registrants from time to time evaluate opportunities for potential acquisitions, divestitures and development projects. Development projects are reexamined based on market conditions and other factors to determine whether to proceed with, modify or terminate the projects. Any resulting transactions may impact future financial results. See Note 8 in the Registrants' 2015 Form 10-K for additional information.
Discontinued Operations
Spinoff of PPL Energy Supply
In June 2015, PPL and PPL Energy Supply completed the spinoff of PPL Energy Supply which combined its competitive power generation businesses with those of Riverstone to form a new, stand-alone, publicly traded company named Talen Energy.
Following completion of the spinoff, PPL shareowners owned 65% of Talen Energy and affiliates of Riverstone owned 35%. The spinoff had no effect on the number of PPL common shares owned by PPL shareowners or the number of shares of PPL common stock outstanding. The transaction is intended to be tax-free to PPL and its shareowners for U.S. federal income tax purposes.
PPL has no continuing ownership interest in or control of Talen Energy and Talen Energy Supply (formerly PPL Energy Supply). See Note 8 in PPL's 2015 Form 10-K for additional information.
Continuing Involvement (PPL and PPL Electric)
As a result of the spinoff, PPL and PPL Energy Supply entered into a Transition Services Agreement (TSA) that terminates no later than two years after the spinoff. Pursuant to the TSA, PPL is providing Talen Energy certain information technology, financial and accounting, human resource and other specified services. For the three months ended March 31, 2016, the amounts PPL billed Talen Energy for these services were $10 million. In general, the fees for the transition services allow the provider to recover its cost of the services, including overheads, but without margin or profit.
Additionally, prior to the spinoff, through the annual competitive solicitation process, PPL EnergyPlus was awarded supply contracts for a portion of the PLR generation supply for PPL Electric, which were retained by Talen Energy Marketing as part of the spinoff. PPL Electric's supply contracts with Talen Energy Marketing extend through November 2016. Energy purchases from PPL EnergyPlus were previously included in PPL Electric's Statements of Income as "Energy purchases from affiliate" but were eliminated in PPL's Consolidated Statements of Income.
For the three months ended March 31, 2016, PPL Electric's energy purchases from Talen Energy Marketing were $54 million and are no longer considered affiliate transactions.
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Summarized Results of Discontinued Operations (PPL)
The operations of the Supply segment prior to the spinoff on June 1, 2015 are included in "Income (Loss) from Discontinued Operations (net of income taxes)" on the Statements of Income. Following are the components of Discontinued Operations in the Statement of Income for the period ended March 31, 2015:
| Operating revenues | $ | 944 | ||||||||||
| Operating expenses | 767 | |||||||||||
| Other Income (Expense) - net | 7 | |||||||||||
| Interest expense (a) | 38 | |||||||||||
| Income (loss) before income taxes | 146 | |||||||||||
| Income tax expense (benefit) | 51 | |||||||||||
| Income (Loss) from Discontinued Operations (net of income taxes) | $ | 95 |
| (a) | Includes interest associated with the Supply Segment with no additional allocation as the Supply segment was sufficiently capitalized. |
Development
Regional Transmission Line Expansion Plan (PPL and PPL Electric)
Northeast/Pocono
In October 2012, the FERC issued an order in response to PPL Electric's December 2011 request for ratemaking incentives for the Northeast/Pocono Reliability project (a new 58-mile, 230 kV transmission line that includes three new substations and upgrades to adjacent facilities). The FERC granted the incentive for inclusion in rate base of all prudently incurred construction work in progress costs but denied the requested incentive for a 100 basis point adder to the return on equity.
In December 2012, PPL Electric submitted an application to the PUC requesting permission to site and construct the project. In January 2014, the PUC issued a Final Order approving the application. The line was energized in April 2016, completing the $350 million project which includes additional substation security enhancements. Costs related to the project were capitalized and are included on the Balance Sheets, primarily in "Regulated utility plant."
(PPL, LKE and LG&E)
Certain net periodic defined benefit costs are applied to accounts that are further distributed among capital, expense and regulatory assets, including certain costs allocated to applicable subsidiaries for plans sponsored by PPL Services and LKE. Following are the net periodic defined benefit costs (credits) of the plans sponsored by PPL and its subsidiaries, LKE and its subsidiaries and LG&E for the three month periods ended March 31:
| Pension Benefits | Other Postretirement Benefits | |||||||||||||||||||
| U.S. | U.K. | |||||||||||||||||||
| 2016 | 2015 | 2016 (b) | 2015 | 2016 | 2015 | |||||||||||||||
| PPL | ||||||||||||||||||||
| Service cost | $ | 17 | $ | 30 | $ | 18 | $ | 20 | $ | 2 | $ | 4 | ||||||||
| Interest cost | 43 | 57 | 62 | 79 | 6 | 7 | ||||||||||||||
| Expected return on plan assets | (56) | (75) | (133) | (131) | (5) | (7) | ||||||||||||||
| Amortization of: | ||||||||||||||||||||
| Prior service cost | 1 | 2 | ||||||||||||||||||
| Actuarial (gain) loss | 15 | 24 | 37 | 39 | ||||||||||||||||
| Net periodic defined benefit costs (credits) (a) | $ | 20 | $ | 38 | $ | (16) | $ | 7 | $ | 3 | $ | 4 | ||||||||
| LKE | ||||||||||||||||||||
| Service cost | $ | 6 | $ | 7 | $ | 1 | $ | 1 | ||||||||||||
| Interest cost | 17 | 17 | 2 | 2 | ||||||||||||||||
| Expected return on plan assets | (21) | (22) | (2) | (1) | ||||||||||||||||
| Amortization of: | ||||||||||||||||||||
| Prior service cost | 1 | 2 | 1 | 1 | ||||||||||||||||
| Actuarial (gain) loss | 5 | 8 | < | |||||||||||||||||