Document
Table of Contents


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 June 30, 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

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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, 678,094,068 shares outstanding at August 3, 2016.
 
 
 
 
PPL Electric Utilities Corporation
Common stock, no par value, 66,368,056 shares outstanding and all held by PPL Corporation at August 3, 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 August 3, 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 August 3, 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 June 30, 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.
 
 
Page
PART I.  FINANCIAL INFORMATION
 
 
Item 1.  Financial Statements
 
 
 
PPL Corporation and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PPL Electric Utilities Corporation and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LG&E and KU Energy LLC and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Louisville Gas and Electric Company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kentucky Utilities Company
 
 
 
 
 
 
 
 
 
 
 
 
 



 
Combined Notes to Condensed Financial Statements (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.  Combined Management's Discussion and Analysis of Financial Condition and Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PART II.  OTHER INFORMATION
 
 
 
 
 







COMPUTATIONS OF RATIO OF EARNINGS TO FIXED CHARGES
 
CERTIFICATES OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
 
CERTIFICATES OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 




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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.
 
WKE - Western Kentucky Energy Corp., a subsidiary of LKE that leased certain non-utility generating plants in western Kentucky until July 2009.
 

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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.

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

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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).
 
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.
 
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.

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).

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.
 
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

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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.

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.
 

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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.
 
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.

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Forward-looking Information
 
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 June 23, 2016 referendum in the U.K. to withdraw from 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
•
business dispositions or acquisitions and our ability to realize expected benefits from such business transactions.


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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.


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PART I.  FINANCIAL INFORMATION
ITEM 1. Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, except share data)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Operating Revenues
$
1,785

 
$
1,781

 
$
3,796

 
$
4,011

 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 
 
 
Operation
 
 
 
 
 
 
 
Fuel
183

 
214

 
380

 
467

Energy purchases
147

 
170

 
380

 
499

Other operation and maintenance
425

 
467

 
875

 
923

Depreciation
231

 
216

 
460

 
432

Taxes, other than income
74

 
76

 
153

 
162

Total Operating Expenses
1,060

 
1,143

 
2,248

 
2,483

 
 
 
 
 
 
 
 
Operating Income
725

 
638

 
1,548

 
1,528

 
 
 
 
 
 
 
 
Other Income (Expense) - net
174

 
(102
)
 
235

 
(14
)
 
 
 
 
 
 
 
 
Interest Expense
224

 
215

 
448

 
424

 
 
 
 
 
 
 
 
Income from Continuing Operations Before Income Taxes
675

 
321

 
1,335

 
1,090

 
 
 
 
 
 
 
 
Income Taxes
192

 
71

 
371

 
288

 
 
 
 
 
 
 
 
Income from Continuing Operations After Income Taxes
483

 
250

 
964

 
802

 
 
 
 
 
 
 
 
Income (Loss) from Discontinued Operations (net of income taxes) (Note 8)
—


(1,007
)
 
—

 
(912
)
 
 
 
 
 
 
 
 
Net Income (Loss)
$
483

 
$
(757
)
 
$
964

 
$
(110
)
 
 
 
 
 
 
 
 
Earnings Per Share of Common Stock:
 
 
 
 
 
 
 
Income from Continuing Operations After Income Taxes:
 
Basic
$
0.71

 
$
0.37

 
$
1.42

 
$
1.20

Diluted
$
0.71

 
$
0.37

 
$
1.41

 
$
1.19

Net Income (Loss):
 
 
 
 
 
 
 
Basic
$
0.71

 
$
(1.13
)
 
$
1.42

 
$
(0.17
)
Diluted
$
0.71

 
$
(1.13
)
 
$
1.41

 
$
(0.17
)
 
 
 
 
 
 
 
 
Dividends Declared Per Share of Common Stock
$
0.38

 
$
0.3725

 
$
0.76

 
$
0.7450

 
 
 
 
 
 
 
 
Weighted-Average Shares of Common Stock Outstanding (in thousands)
 
 
 
 
 
 
 
Basic
677,145

 
668,415

 
676,293

 
667,698

Diluted
680,729

 
671,286

 
679,773

 
670,013

 
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Net income (loss)
$
483

 
$
(757
)
 
$
964

 
$
(110
)
 
 
 
 
 
 
 
 
Other comprehensive income (loss):
 

 
 

 
 
 
 
Amounts arising during the period - gains (losses), net of tax (expense) benefit:
 

 
 

 
 
 
 
Foreign currency translation adjustments, net of tax of $0, $6, ($2), $1
268

 
(83
)
 
(196
)
 
(149
)
Available-for-sale securities, net of tax of $0, ($3), $0, ($9)
—

 
2

 
—

 
7

Qualifying derivatives, net of tax of $22, ($11), $7, ($7)
(85
)
 
21

 
(5
)
 
27

Defined benefit plans:
 

 
 

 
 
 
 
Prior service costs, net of tax of $0, $4, $0, $4
—

 
(6
)
 
—

 
(6
)
Net actuarial gain (loss), net of tax of ($1), ($36), ($1), ($36)
2

 
53

 
2

 
52

Reclassifications from AOCI - (gains) losses, net of tax expense (benefit):
 

 
 

 
 
 
 
Available-for-sale securities, net of tax of $0, $1, $0, $2
—

 
(1
)
 
—

 
(2
)
Qualifying derivatives, net of tax of ($21), ($24), ($2), ($20)
85

 
27

 
7

 
10

Equity investees' other comprehensive (income) loss, net of tax of $0, $0, $0, $1
(1
)
 
—

 
(1
)
 
(1
)
Defined benefit plans:
 

 
 

 
 
 
 
Prior service costs, net of tax of $0, $0, $0, $0
1

 
—

 
1

 
—

Net actuarial loss, net of tax of ($8), ($12), ($17), ($25)
32

 
38

 
63

 
76

Total other comprehensive income (loss)
302

 
51

 
(129
)
 
14

 
 
 
 
 
 
 
 
Comprehensive income (loss)
$
785

 
$
(706
)
 
$
835

 
$
(96
)
 
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.


4
Table of Contents


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
 
Six Months Ended June 30,
 
2016
 
2015
Cash Flows from Operating Activities
 

 
 

Net income (loss)
$
964

 
$
(110
)
(Income) Loss from discontinued operations (net of income taxes)
—

 
912

Income from continuing operations (net of income taxes)
964

 
802

Adjustments to reconcile Income from continuing operations (net of taxes) to net cash provided by operating activities - continuing operations
 

 
 

Depreciation
460

 
432

Amortization
37

 
27

Defined benefit plans - expense (income)
(24
)
 
32

Deferred income taxes and investment tax credits
320

 
256

Unrealized (gains) losses on derivatives, and other hedging activities
(192
)
 
62

Stock-based compensation expense
18

 
38

Other
(11
)
 
11

Change in current assets and current liabilities
 

 
 

Accounts receivable
16

 
(74
)
Accounts payable
(39
)
 
(83
)
Unbilled revenues
(2
)
 
79

Prepayments
(66
)
 
(61
)
Counterparty collateral
76

 
—

Taxes payable
22

 
(129
)
Accrued interest
(85
)
 
(87
)
Other current liabilities
(47
)
 
(91
)
Other
—

 
13

Other operating activities
 
 
 
Defined benefit plans - funding
(224
)
 
(289
)
Other assets
2

 
(29
)
Other liabilities
(55
)
 
61

Net cash provided by operating activities - continuing operations
1,170

 
970

Net cash provided by operating activities - discontinued operations
—

 
343

Net cash provided by operating activities
1,170

 
1,313

Cash Flows from Investing Activities
 

 
 

Expenditures for property, plant and equipment
(1,346
)
 
(1,679
)
Expenditures for intangible assets
(14
)
 
(24
)
Proceeds from the sale of other investments
—

 
135

Other investing activities
13

 
(7
)
Net cash provided by (used in) investing activities - continuing operations
(1,347
)
 
(1,575
)
Net cash provided by (used in) investing activities - discontinued operations
—

 
(149
)
Net cash provided by (used in) investing activities
(1,347
)
 
(1,724
)
Cash Flows from Financing Activities
 

 
 

Issuance of long-term debt
1,020

 
88

Retirement of long-term debt
(684
)
 
—

Settlement of cross-currency swaps
46

 
—

Issuance of common stock
76

 
83

Payment of common stock dividends
(513
)
 
(500
)
Net increase (decrease) in short-term debt
(66
)
 
276

Other financing activities
(31
)
 
(18
)
Net cash provided by (used in) financing activities - continuing operations
(152
)
 
(71
)
Net cash provided by (used in) financing activities - discontinued operations
—

 
(546
)
Net cash distributions to parent from discontinued operations
—

 
132

Net cash provided by (used in) financing activities
(152
)
 
(485
)
Effect of Exchange Rates on Cash and Cash Equivalents
(15
)
 
(9
)
Net (Increase) Decrease in Cash and Cash Equivalents included in Discontinued Operations
—

 
352

Net Increase (Decrease) in Cash and Cash Equivalents
(344
)
 
(553
)
Cash and Cash Equivalents at Beginning of Period
836

 
1,399

Cash and Cash Equivalents at End of Period
$
492

 
$
846


 The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.

5
Table of Contents


CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, shares in thousands)

 
June 30,
2016
 
December 31,
2015
Assets
 

 
 

 
 
 
 
Current Assets
 

 
 

Cash and cash equivalents
$
492

 
$
836

Accounts receivable (less reserve: 2016, $48; 2015, $41)
 

 
 

Customer
667

 
673

Other
44

 
59

Unbilled revenues
447

 
453

Fuel, materials and supplies
336

 
357

Prepayments
131

 
66

Price risk management assets
200

 
139

Other current assets
43

 
63

Total Current Assets
2,360

 
2,646

 
 
 
 
Property, Plant and Equipment
 

 
 

Regulated utility plant
35,226

 
34,399

Less:  accumulated depreciation - regulated utility plant
5,966

 
5,683

Regulated utility plant, net
29,260

 
28,716

Non-regulated property, plant and equipment
491

 
516

Less:  accumulated depreciation - non-regulated property, plant and equipment
157

 
165

Non-regulated property, plant and equipment, net
334

 
351

Construction work in progress
1,200

 
1,315

Property, Plant and Equipment, net
30,794

 
30,382

 
 
 
 
Other Noncurrent Assets
 

 
 

Regulatory assets
1,762

 
1,733

Goodwill
3,455

 
3,550

Other intangibles
708

 
679

Price risk management assets
285

 
156

Other noncurrent assets
164

 
155

Total Other Noncurrent Assets
6,374

 
6,273

 
 
 
 
Total Assets
$
39,528

 
$
39,301

 
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.


6
Table of Contents


CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, shares in thousands)

 
June 30,
2016
 
December 31,
2015
Liabilities and Equity
 

 
 

 
 
 
 
Current Liabilities
 

 
 

Short-term debt
$
856

 
$
916

Long-term debt due within one year
219

 
485

Accounts payable
726

 
812

Taxes
106

 
85

Interest
211

 
303

Dividends
258

 
255

Customer deposits
326

 
326

Regulatory liabilities
99

 
145

Other current liabilities
607

 
549

Total Current Liabilities
3,408

 
3,876

 
 
 
 
Long-term Debt
18,949

 
18,563

 
 
 
 
Deferred Credits and Other Noncurrent Liabilities
 

 
 

Deferred income taxes
3,749

 
3,440

Investment tax credits
134

 
128

Accrued pension obligations
1,074

 
1,405

Asset retirement obligations
513

 
536

Regulatory liabilities
935

 
945

Other deferred credits and noncurrent liabilities
441

 
489

Total Deferred Credits and Other Noncurrent Liabilities
6,846

 
6,943

 
 
 
 
Commitments and Contingent Liabilities (Notes 6 and 10)


 


 
 
 
 
Equity
 

 
 

Common stock - $0.01 par value (a)
7

 
7

Additional paid-in capital
9,766

 
9,687

Earnings reinvested
3,409

 
2,953

Accumulated other comprehensive loss
(2,857
)
 
(2,728
)
Total Equity
10,325

 
9,919

 
 
 
 
Total Liabilities and Equity
$
39,528

 
$
39,301

 
(a)
780,000 shares authorized; 677,549 and 673,857 shares issued and outstanding at June 30, 2016 and December 31, 2015.

The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.


7
Table of Contents


CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)  

 
Common
stock
shares
outstanding (a)
 
Common
stock
 
Additional
paid-in
capital
 
Earnings
reinvested
 
Accumulated
other
comprehensive
loss
 
Total
December 31, 2015
673,857

 
$
7

 
$
9,687

 
$
2,953

 
$
(2,728
)
 
$
9,919

Common stock issued
3,692

 


 
109

 
 
 
 
 
109

Stock-based compensation
 
 
 
 
(30
)
 
 
 
 
 
(30
)
Net income
 
 
 
 
 
 
964

 
 
 
964

Dividends and dividend equivalents
 
 
 
 
 
 
(515
)
 
 
 
(515
)
Other comprehensive income (loss)
 
 
 
 
 
 
 
 
(129
)
 
(129
)
Adoption of stock-based compensation guidance cumulative effect adjustment (Note 2)
 
 
 
 
 
 
7

 
 
 
7

June 30, 2016
677,549

 
$
7

 
$
9,766

 
$
3,409

 
$
(2,857
)
 
$
10,325

 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
665,849

 
$
7

 
$
9,433

 
$
6,462

 
$
(2,274
)
 
$
13,628

Common stock issued
3,665

 
 

 
111

 
 

 
 

 
111

Stock-based compensation
 

 
 

 
20

 
 

 
 

 
20

Net income (loss)
 

 
 

 
 

 
(110
)
 
 

 
(110
)
Dividends and dividend equivalents
 

 
 

 
 

 
(498
)
 
 

 
(498
)
Distribution of PPL Energy Supply (Note 8)
 
 
 
 
 
 
(3,200
)
 
(24
)
 
(3,224
)
Other comprehensive income (loss)
 

 
 

 
 

 
 

 
14

 
14

June 30, 2015
669,514

 
$
7

 
$
9,564

 
$
2,654

 
$
(2,284
)
 
$
9,941

 
(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
Table of Contents


CONDENSED CONSOLIDATED STATEMENTS OF INCOME
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Operating Revenues
$
495

 
$
476

 
$
1,080

 
$
1,106

 
 
 
 
 
 
 
 
Operating Expenses
 

 
 

 
 
 
 
Operation
 

 
 

 
 
 
 
Energy purchases
118

 
138

 
285

 
365

Energy purchases from affiliate
—

 
5

 
—

 
14

Other operation and maintenance
137

 
140

 
287

 
273

Depreciation
62

 
52

 
121

 
103

Taxes, other than income
24

 
25

 
53

 
60

Total Operating Expenses
341

 
360

 
746

 
815

 
 
 
 
 
 
 
 
Operating Income
154

 
116

 
334

 
291

 
 
 
 
 
 
 
 
Other Income (Expense) - net
5

 
2

 
8

 
4

 
 
 
 
 
 
 
 
Interest Expense
32

 
33

 
65

 
64

 
 
 
 
 
 
 
 
Income Before Income Taxes
127

 
85

 
277

 
231

 
 
 
 
 
 
 
 
Income Taxes
48

 
36

 
104

 
95

 
 
 
 
 
 
 
 
Net Income (a)
$
79

 
$
49

 
$
173

 
$
136

 
(a)
Net income equals comprehensive income.

The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.


10
Table of Contents


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)

 
Six Months Ended June 30,
 
2016
 
2015
Cash Flows from Operating Activities
 

 
 

Net income
$
173

 
$
136

Adjustments to reconcile net income to net cash provided by operating activities
 

 
 

Depreciation
121

 
103

Amortization
15

 
14

Defined benefit plans - expense
7

 
8

Deferred income taxes and investment tax credits
107

 
39

Other
(10
)
 
(6
)
Change in current assets and current liabilities
 

 
 

Accounts receivable
(6
)
 
(24
)
Accounts payable
(26
)
 
(93
)
Unbilled revenue
3

 
25

Prepayments
3

 
(80
)
Regulatory assets and liabilities
(40
)
 
36

Taxes payable
(16
)
 
(55
)
Other
(6
)
 
(14
)
Other operating activities
 

 
 

Defined benefit plans - funding
—

 
(33
)
Other assets
11

 
(2
)
Other liabilities
(8
)
 
22

Net cash provided by operating activities
328

 
76

 
 
 
 
Cash Flows from Investing Activities
 

 
 

Expenditures for property, plant and equipment
(424
)
 
(480
)
Other investing activities
(3
)
 
(3
)
Net cash provided by (used in) investing activities
(427
)
 
(483
)
 
 
 
 
Cash Flows from Financing Activities
 

 
 

Issuance of long-term debt
224

 
—

Retirement of long-term debt
(224
)
 
—

Contributions from parent
200

 
160

Payment of common stock dividends to parent
(117
)
 
(107
)
Net increase (decrease) in short-term debt
6

 
168

Other financing activities
(2
)
 
—

Net cash provided by (used in) financing activities
87

 
221

 
 
 
 
Net Increase (Decrease) in Cash and Cash Equivalents
(12
)
 
(186
)
Cash and Cash Equivalents at Beginning of Period
47

 
214

Cash and Cash Equivalents at End of Period
$
35

 
$
28

 The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.

11
Table of Contents


CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, shares in thousands)

 
June 30,
2016
 
December 31,
2015
Assets
 

 
 

 
 
 
 
Current Assets
 

 
 

Cash and cash equivalents
$
35

 
$
47

Accounts receivable (less reserve: 2016, $23; 2015, $16)
 

 
 

Customer
286

 
286

Other
13

 
10

Accounts receivable from affiliates
3

 
—

Unbilled revenues
88

 
91

Materials and supplies
30

 
34

Prepayments
63

 
66

Other current assets
18

 
21

Total Current Assets
536

 
555

 
 
 
 
Property, Plant and Equipment
 

 
 

Regulated utility plant
9,110

 
8,734

Less: accumulated depreciation - regulated utility plant
2,656

 
2,573

Regulated utility plant, net
6,454

 
6,161

Construction work in progress
577

 
530

Property, Plant and Equipment, net
7,031

 
6,691

 
 
 
 
Other Noncurrent Assets
 

 
 

Regulatory assets
995

 
1,006

Intangibles
246

 
244

Other noncurrent assets
17

 
15

Total Other Noncurrent Assets
1,258

 
1,265

 
 
 
 
Total Assets
$
8,825

 
$
8,511

 
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.


12
Table of Contents


CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, shares in thousands)

 
June 30,
2016
 
December 31,
2015
Liabilities and Equity
 

 
 

 
 
 
 
Current Liabilities
 

 
 

Short-term debt
$
6

 
$
—

Accounts payable
295

 
288

Accounts payable to affiliates
35

 
35

Taxes
8

 
24

Interest
34

 
37

Regulatory liabilities
74

 
113

Customer deposits
22

 
31

Other current liabilities
77

 
77

Total Current Liabilities
551

 
605

 
 
 
 
Long-term Debt
2,830

 
2,828

 
 
 
 
Deferred Credits and Other Noncurrent Liabilities
 

 
 

Deferred income taxes
1,776

 
1,663

Accrued pension obligations
184

 
183

Regulatory liabilities
19

 
22

Other deferred credits and noncurrent liabilities
89

 
91

Total Deferred Credits and Other Noncurrent Liabilities
2,068

 
1,959

 
 
 
 
Commitments and Contingent Liabilities (Notes 6 and 10)


 


 
 
 
 
Equity
 

 
 

Common stock - no par value (a)
364

 
364

Additional paid-in capital
2,134

 
1,934

Earnings reinvested
878

 
821

Total Equity
3,376

 
3,119

 
 
 
 
Total Liabilities and Equity
$
8,825

 
$
8,511

 
(a)
170,000 shares authorized; 66,368 shares issued and outstanding at June 30, 2016 and December 31, 2015.

The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.


13
Table of Contents


CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)

 
Common
stock
shares
outstanding
(a)
 
Common
stock
 
Additional
paid-in
capital
 
Earnings
reinvested
 
Total
December 31, 2015
66,368

 
$
364

 
$
1,934

 
$
821

 
$
3,119

Net income


 


 


 
173

 
173

Capital contributions from PPL


 


 
200

 


 
200

Dividends declared on common stock


 


 


 
(116
)
 
(116
)
June 30, 2016
66,368

 
$
364

 
$
2,134

 
$
878

 
$
3,376

 
 
 
 
 
 
 
 
 
 
December 31, 2014
66,368

 
$
364

 
$
1,603

 
$
750

 
$
2,717

Net income


 


 


 
136

 
136

Capital contributions from PPL (b)


 


 
207

 


 
207

Dividends declared on common stock


 


 


 
(107
)
 
(107
)
June 30, 2015
66,368

 
$
364

 
$
1,810

 
$
779

 
$
2,953

 
(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
Table of Contents


CONDENSED CONSOLIDATED STATEMENTS OF INCOME
LG&E and KU Energy LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Operating Revenues
$
721

 
$
714

 
$
1,547

 
$
1,613

 
 
 
 
 
 
 
 
Operating Expenses
 

 
 

 
 

 
 

Operation
 

 
 

 
 

 
 

Fuel
182

 
214

 
380

 
467

Energy purchases
28

 
28

 
94

 
120

Other operation and maintenance
204

 
214

 
406

 
423

Depreciation
100

 
94

 
199

 
189

Taxes, other than income
15

 
15

 
30

 
29

Total Operating Expenses
529

 
565

 
1,109

 
1,228

 
 
 
 
 
 
 
 
Operating Income
192

 
149

 
438

 
385

 
 
 
 
 
 
 
 
Other Income (Expense) - net
(5
)
 
(1
)
 
(6
)
 
(2
)
 
 
 
 
 
 
 
 
Interest Expense
48

 
42

 
97

 
84

 
 
 
 
 
 
 
 
Interest Expense with Affiliate
4

 
1

 
8

 
1

 
 
 
 
 
 
 
 
Income Before Income Taxes
135

 
105

 
327

 
298

 
 
 
 
 
 
 
 
Income Taxes
51

 
45

 
123

 
121

 
 
 
 
 
 
 
 
Net Income
$
84

 
$
60

 
$
204

 
$
177

 
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.


15
Table of Contents


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
LG&E and KU Energy LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)


Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Net income
$
84

 
$
60

 
$
204

 
$
177

 
 
 
 
 
 
 
 
Other comprehensive income (loss):
 
 
 
 
 
 
 
Amounts arising during the period - gains (losses), net of tax (expense) benefit:
 
 
 
 
 
 
 
Defined benefit plans:
 
 
 
 
 
 
 
Net actuarial gain (loss), net of tax of ($1), $5, ($1), $5
1

 
(8
)
 
1

 
(8
)
Reclassifications from AOCI - (gains) losses, net of tax expense (benefit):
 
 
 
 
 
 
 
Equity investees' other comprehensive (income) loss, net of tax of $0, $0, $0, $1
(1
)
 
—

 
(1
)
 
(1
)
Defined benefit plans:
 
 
 
 
 
 
 
Prior service costs, net of tax of $0, $0, $0, $0
1

 
1

 
1

 
1

Net actuarial loss, net of tax of ($1), ($1), ($1), ($1)
1

 
—

 
2

 
1

Total other comprehensive income (loss)
2

 
(7
)
 
3

 
(7
)
 
 
 
 
 
 
 
 
Comprehensive income (loss)
$
86

 
$
53

 
$
207

 
$
170


The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.


16
Table of Contents


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
LG&E and KU Energy LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)

 
Six Months Ended June 30,
 
2016
 
2015
Cash Flows from Operating Activities
 

 
 

Net income
$
204

 
$
177

Adjustments to reconcile net income to net cash provided by operating activities
 

 
 

Depreciation
199

 
189

Amortization
15

 
12

Defined benefit plans - expense
13

 
21

Deferred income taxes and investment tax credits
121

 
145

Other
(1
)
 
23

Change in current assets and current liabilities
 

 
 

Accounts receivable
5

 
13

Accounts payable
28

 
10

Unbilled revenues
(14
)
 
12

Fuel, materials and supplies