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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended September 30, 2017
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, smaller reporting companies or emerging growth companies. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
 
Large accelerated
filer
Accelerated
filer
Non-accelerated
filer
Smaller reporting
company
Emerging growth 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 ]
[     ]
[     ]

If emerging growth companies, indicate by check mark if the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
PPL Corporation
[     ]
 
 
 
 
 
PPL Electric Utilities Corporation
[     ]
 
 
 
 
 
LG&E and KU Energy LLC
[     ]
 
 
 
 
 
Louisville Gas and Electric Company
[     ]
 
 
 
 
 
Kentucky Utilities Company
[     ]
 
 
 
 
 
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   
 
 


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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, 688,464,316 shares outstanding at October 25, 2017.
 
 
 
 
PPL Electric Utilities Corporation
Common stock, no par value, 66,368,056 shares outstanding and all held by PPL Corporation at October 25, 2017.
 
 
 
 
LG&E and KU Energy LLC
PPL Corporation directly holds all of the membership interests in LG&E and KU Energy LLC.
 
 
 
 
Louisville Gas and Electric Company
Common stock, no par value, 21,294,223 shares outstanding and all held by LG&E and KU Energy LLC at October 25, 2017.
 
 
 
 
Kentucky Utilities Company
Common stock, no par value, 37,817,878 shares outstanding and all held by LG&E and KU Energy LLC at October 25, 2017.

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.


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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 SEPTEMBER 30, 2017
 
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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
 
 
 
 
 
 
 
 
 
 
 
 
 


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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 administrative, management, and support services primarily 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 provides administrative, management and support services primarily to PPL Electric.
 
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, which carries a liability for a closed defined benefit pension plan and a receivable from WPD plc. Following a reorganization in October 2015, PPL WPD Limited is now parent to WPD plc having previously been a sister company.
 
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.
 

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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.
 
2016 Form 10-K - Annual Report to the SEC on Form 10-K for the year ended December 31, 2016.
 
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 amended the Pennsylvania Public Utility Code and created an energy efficiency and conservation program and smart metering technology requirements, adopted new PLR electricity supply procurement rules, provided remedies for market misconduct and changed the Alternative Energy Portfolio Standard.

Act 129 Smart Meter program - PPL Electric's system wide meter replacement program that installs wireless digital meters that provide secure communication between PPL Electric and the meter as well as all related infrastructure.
 
Advanced Metering System - meters and meter reading systems that provide two-way communication capabilities, which communicate usage and other relevant data to LG&E and KU at regular intervals, and are also able to receive information from LG&E and KU, such as software upgrades and requests to provide meter readings in real time.

AOCI - accumulated other comprehensive income or loss.

ARO - asset retirement obligation.
 
ATM Program - PPL's at-the-market common stock offering program.
 
BSER - Best System of Emission Reduction. The degree of emission reduction the 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.

Depreciation not normalized - the flow-through income tax impact related to the state regulatory treatment of depreciation-related timing differences.

Distribution Automation - advanced grid intelligence enabling LG&E and KU to perform remote monitoring and control, circuit segmentation and "self-healing" of select distribution system circuits, improving grid reliability and efficiency.

DNO - Distribution Network Operator in the U.K.
 
DRIP - PPL Amended and Restated Dividend Reinvestment and Direct Stock Purchase Plan.

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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 programs proposed by any utility under its jurisdiction. DSM programs consist of energy efficiency programs intended to reduce peak demand and delay the investment in additional power plant construction, provide customers with tools and information regarding their energy usage and support energy efficiency.
 
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 byproducts 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.

EPS - Earnings per share.
 
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.

GHG(s) - greenhouse gas(es).
 
GLT - Gas Line Tracker. The KPSC approved mechanism for LG&E's recovery of costs associated with gas transmission lines, gas service lines, gas risers, leak mitigation, and gas main replacements.

IBEW - International Brotherhood of Electrical Workers.

IRS - Internal Revenue Service, a U.S. government agency.
 
KPSC - Kentucky Public Service Commission, the state agency that has jurisdiction over the regulation of rates and service of utilities in Kentucky.

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).

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.
 

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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.

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.

Performance Unit - A stock-based compensation award that represents a variable number of shares of PPL common stock that a recipient may receive based on PPL's attainment of total shareowner return over a three-year performance period as compared to companies in the Philadelphia Stock Exchange Utility Index.

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.
 
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. RAV additions are based on a percentage of annual total 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 - Ofgem's framework for setting U.K. regulated gas and electric utility price controls which stands for "Revenues = Incentive + Innovation + Outputs." RIIO-1 refers to the first generation of price controls under the RIIO framework. RIIO-ED1 refers to the RIIO regulatory price control applicable to the operators of U.K. electricity distribution networks, the duration of which is April 2015 through March 2023. RIIO-2 refers to the second generation of price controls under the RIIO framework. RIIO-ED2 refers to the second regulatory price control applicable to the operators of U.K. electricity distribution networks, which will begin in April 2023.

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 - S&P Global Ratings, 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.
 

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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.
 
Superfund - federal environmental statute that addresses remediation of contaminated sites; states also have similar statutes.
 
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.

U.K. Finance Acts - refers to U.K. Finance Act of 2015 and 2016, enacted in November 2015 and September 2016 respectively, which collectively reduced the U.K. statutory corporate income tax rate from 20% to 19%, effective April 1, 2017 and from 19% to 17%, effective April 1, 2020.

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 2016 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:
 
•
the outcome of rate cases or other cost recovery or revenue filings;
•
changes in U.S. or U.K. tax laws or regulations;
•
effects of cyber-based intrusions or natural disasters, threatened or actual terrorism, war or other hostilities;
•
significant decreases in demand for electricity in the U.S.;
•
expansion of alternative and distributed sources of electricity generation and storage;
•
changes in foreign currency exchange rates for British pound sterling and the related impact on unrealized gains and losses on PPL's foreign currency economic hedges;
•
the effectiveness of our risk management programs, including foreign currency and interest rate hedging;
•
non-achievement by WPD of performance targets set by Ofgem;
•
the effect of changes in RPI on WPD's revenues and index linked debt;
•
the March 29, 2017 notification by the U.K. to the European Council of the European Union of the U.K.'s intent to withdraw from the European Union and any actions in response thereto;
•
defaults by counterparties or suppliers for energy, capacity, coal, natural gas or key commodities, goods or services;
•
capital market conditions, including the availability of capital or credit, changes in interest rates and certain economic indices, and decisions regarding capital structure;
•
a material decline in the market value of PPL's equity;
•
significant decreases 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, ARO liabilities and interest payable on certain debt securities;
•
volatility in or the impact of other changes in financial markets and economic conditions;
•
the potential impact of unrecorded commitments and liabilities, if any, of the Registrants and their subsidiaries;
•
new accounting requirements or new interpretations or applications of existing requirements;
•
changes in securities and credit ratings;
•
any requirement to record impairment charges pursuant to GAAP with respect to any of our significant investments;
•
laws or regulations to reduce emissions of GHGs or the physical effects of climate change;
•
continuing ability to access fuel supply for LG&E and KU, as well as the 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 and other conditions affecting generation, transmission and distribution operations, operating costs and customer energy use;
•
changes in political, regulatory or economic conditions in states, regions or countries where the Registrants or their subsidiaries conduct business;
•
receipt of necessary governmental permits and approvals;
•
new state, federal or foreign legislation or regulatory developments;
•
the impact of any state, federal or foreign investigations applicable to the Registrants and their subsidiaries and the energy industry;
•
our ability to attract and retain qualified employees;
•
the effect of any business or industry restructuring;
•
development of new projects, markets and technologies;
•
performance of new ventures;
•
business dispositions or acquisitions and our ability to realize expected benefits from such business transactions;
•
collective labor bargaining negotiations; and
•
the outcome of litigation against the Registrants and their subsidiaries.

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.

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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
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, except share data)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Operating Revenues
$
1,845

 
$
1,889

 
$
5,521

 
$
5,685

 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 
 
 
Operation
 
 
 
 
 
 
 
Fuel
202

 
227

 
576

 
607

Energy purchases
143

 
151

 
494

 
531

Other operation and maintenance
397

 
417

 
1,217

 
1,292

Depreciation
257

 
232

 
745

 
692

Taxes, other than income
69

 
76

 
214

 
229

Total Operating Expenses
1,068

 
1,103

 
3,246

 
3,351

 
 
 
 
 
 
 
 
Operating Income
777

 
786

 
2,275

 
2,334

 
 
 
 
 
 
 
 
Other Income (Expense) - net
(76
)
 
49

 
(235
)
 
284

 
 
 
 
 
 
 
 
Interest Expense
230

 
223

 
669

 
671

 
 
 
 
 
 
 
 
Income Before Income Taxes
471

 
612

 
1,371

 
1,947

 
 
 
 
 
 
 
 
Income Taxes
116

 
139

 
321

 
510

 
 
 
 
 
 
 
 
Net Income
$
355

 
$
473

 
$
1,050

 
$
1,437

 
 
 
 
 
 
 
 
Earnings Per Share of Common Stock:
 
Net Income Available to PPL Common Shareowners:
 
 
 
 
 
 
 
Basic
$
0.52

 
$
0.70

 
$
1.53

 
$
2.12

Diluted
$
0.51

 
$
0.69

 
$
1.53

 
$
2.11

 
 
 
 
 
 
 
 
Dividends Declared Per Share of Common Stock
$
0.3950

 
$
0.38

 
$
1.185

 
$
1.14

 
 
 
 
 
 
 
 
Weighted-Average Shares of Common Stock Outstanding
(in thousands)
 
 
 
 
 
 
 
Basic
686,563

 
678,114

 
683,783

 
676,905

Diluted
688,746

 
680,348

 
686,081

 
679,969

 
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 September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Net income
$
355

 
$
473

 
$
1,050

 
$
1,437

 
 
 
 
 
 
 
 
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, ($2), ($1), ($4)
(12
)
 
(641
)
 
195

 
(837
)
Qualifying derivatives, net of tax of $0, ($16), $7, ($9)
1

 
62

 
(29
)
 
57

Defined benefit plans:
 

 


 
 
 
 
Net actuarial gain (loss), net of tax of $2, $4, $9, $3
(3
)
 
(6
)
 
(14
)
 
(4
)
Reclassifications from AOCI - (gains) losses, net of tax expense (benefit):
 

 
 

 
 
 
 
Qualifying derivatives, net of tax of $1, $17, ($6), $15
—

 
(69
)
 
24

 
(62
)
Equity investees' other comprehensive (income) loss, net of tax of $0, $0, $0, $0
—

 
—

 
1

 
(1
)
Defined benefit plans:
 

 
 

 
 
 
 
Prior service costs, net of tax of ($1), ($1), ($1), ($1)
—

 
—

 
1

 
1

Net actuarial (gain) loss, net of tax of ($10), ($10), ($28), ($27)
34

 
31

 
97

 
94

Total other comprehensive income (loss)
20

 
(623
)
 
275

 
(752
)
 
 
 
 
 
 
 
 
Comprehensive income (loss)
$
375

 
$
(150
)
 
$
1,325

 
$
685

 
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)
 
Nine Months Ended September 30,
 
2017
 
2016
Cash Flows from Operating Activities
 

 
 

Net income
$
1,050

 
$
1,437

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

 
 

Depreciation
745

 
692

Amortization
72

 
54

Defined benefit plans - expense (income)
(69
)
 
(29
)
Deferred income taxes and investment tax credits
284

 
436

Unrealized (gains) losses on derivatives, and other hedging activities
194

 
107

Stock-based compensation expense
30

 
23

Other
(8
)
 
(12
)
Change in current assets and current liabilities
 

 
 

Accounts receivable
25

 
(29
)
Accounts payable
(93
)
 
(40
)
Unbilled revenues
81

 
32

Fuel, materials and supplies
35

 
8

Prepayments
(37
)
 
(34
)
Taxes payable
6

 
40

Regulatory assets and liabilities, net
(3
)
 
(32
)
Accrued interest
49

 
32

Other current liabilities
(53
)
 
(48
)
Other
5

 
(5
)
Other operating activities
 
 
 
Defined benefit plans - funding
(558
)
 
(345
)
Other assets
4

 
18

Other liabilities
(5
)
 
(75
)
Net cash provided by operating activities
1,754

 
2,230

Cash Flows from Investing Activities
 

 
 

Expenditures for property, plant and equipment
(2,152
)
 
(2,073
)
Expenditures for intangible assets
(25
)
 
(23
)
Other investing activities
13

 
30

Net cash used in investing activities
(2,164
)
 
(2,066
)
Cash Flows from Financing Activities
 

 
 

Issuance of long-term debt
1,088

 
1,241

Retirement of long-term debt
(60
)
 
(905
)
Settlement of cross-currency swaps
—

 
46

Issuance of common stock
275

 
133

Payment of common stock dividends
(800
)
 
(772
)
Net increase (decrease) in short-term debt
269

 
(268
)
Other financing activities
(34
)
 
(33
)
Net cash provided by (used in) financing activities
738

 
(558
)
Effect of Exchange Rates on Cash and Cash Equivalents
7

 
(26
)
Net Increase (Decrease) in Cash and Cash Equivalents
335

 
(420
)
Cash and Cash Equivalents at Beginning of Period
341

 
836

Cash and Cash Equivalents at End of Period
$
676

 
$
416

 
 
 
 
Supplemental Disclosures of Cash Flow Information
 
 
 
Significant non-cash transactions:
 
 
 
Accrued expenditures for property, plant and equipment at September 30,
$
373

 
$
293

Accrued expenditures for intangible assets at September 30,
$
60

 
$
104


 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)

 
September 30,
2017
 
December 31,
2016
Assets
 

 
 

 
 
 
 
Current Assets
 

 
 

Cash and cash equivalents
$
676

 
$
341

Accounts receivable (less reserve: 2017, $52; 2016, $54)
 

 
 

Customer
617

 
666

Other
96

 
46

Unbilled revenues
405

 
480

Fuel, materials and supplies
323

 
356

Prepayments
101

 
63

Price risk management assets
57

 
63

Other current assets
56

 
52

Total Current Assets
2,331

 
2,067

 
 
 
 
Property, Plant and Equipment
 

 
 

Regulated utility plant
36,678

 
34,674

Less:  accumulated depreciation - regulated utility plant
6,624

 
6,013

Regulated utility plant, net
30,054

 
28,661

Non-regulated property, plant and equipment
422

 
413

Less:  accumulated depreciation - non-regulated property, plant and equipment
154

 
134

Non-regulated property, plant and equipment, net
268

 
279

Construction work in progress
1,494

 
1,134

Property, Plant and Equipment, net
31,816

 
30,074

 
 
 
 
Other Noncurrent Assets
 

 
 

Regulatory assets
1,869

 
1,918

Goodwill
3,134

 
3,060

Other intangibles
666

 
700

Pension benefit asset
532

 
9

Price risk management assets
267

 
336

Other noncurrent assets
143

 
151

Total Other Noncurrent Assets
6,611

 
6,174

 
 
 
 
Total Assets
$
40,758

 
$
38,315

 
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)

 
September 30,
2017
 
December 31,
2016
Liabilities and Equity
 

 
 

 
 
 
 
Current Liabilities
 

 
 

Short-term debt
$
1,211

 
$
923

Long-term debt due within one year
448

 
518

Accounts payable
838

 
820

Taxes
110

 
101

Interest
322

 
270

Dividends
272

 
259

Customer deposits
291

 
276

Regulatory liabilities
87

 
101

Other current liabilities
570

 
569

Total Current Liabilities
4,149

 
3,837

 
 
 
 
Long-term Debt
19,110

 
17,808

 
 
 
 
Deferred Credits and Other Noncurrent Liabilities
 

 
 

Deferred income taxes
4,224

 
3,889

Investment tax credits
130

 
132

Accrued pension obligations
796

 
1,001

Asset retirement obligations
312

 
428

Regulatory liabilities
873

 
899

Other deferred credits and noncurrent liabilities
472

 
422

Total Deferred Credits and Other Noncurrent Liabilities
6,807

 
6,771

 
 
 
 
Commitments and Contingent Liabilities (Notes 6 and 9)


 


 
 
 
 
Equity
 

 
 

Common stock - $0.01 par value (a)
7

 
7

Additional paid-in capital
10,122

 
9,841

Earnings reinvested
4,066

 
3,829

Accumulated other comprehensive loss
(3,503
)
 
(3,778
)
Total Equity
10,692

 
9,899

 
 
 
 
Total Liabilities and Equity
$
40,758

 
$
38,315

 
(a)
1,560,000 shares authorized; 688,133 and 679,731 shares issued and outstanding at September 30, 2017 and December 31, 2016.

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, 2016
679,731

 
$
7

 
$
9,841

 
$
3,829

 
$
(3,778
)
 
$
9,899

Common stock issued
8,402

 


 
303

 
 
 
 
 
303

Stock-based compensation
 
 
 
 
(22
)
 
 
 
 
 
(22
)
Net income
 
 
 
 
 
 
1,050

 
 
 
1,050

Dividends and dividend equivalents
 
 
 
 
 
 
(813
)
 
 
 
(813
)
Other comprehensive income (loss)
 
 
 
 
 
 
 
 
275

 
275

September 30, 2017
688,133

 
$
7

 
$
10,122

 
$
4,066

 
$
(3,503
)
 
$
10,692

 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2015
673,857

 
$
7

 
$
9,687

 
$
2,953

 
$
(2,728
)
 
$
9,919

Common stock issued
5,411

 
 

 
168

 
 

 
 

 
168

Stock-based compensation
 

 
 

 
(31
)
 
 

 
 

 
(31
)
Net income
 

 
 

 
 

 
1,437

 
 

 
1,437

Dividends and dividend equivalents
 

 
 

 
 

 
(773
)
 
 

 
(773
)
Other comprehensive income (loss)
 

 
 

 
 

 
 

 
(752
)
 
(752
)
Adoption of stock-based compensation guidance cumulative effect adjustment
 
 
 
 
 
 
7

 
 
 
7

September 30, 2016
679,268

 
$
7

 
$
9,824

 
$
3,624

 
$
(3,480
)
 
$
9,975

 
 
 
 
 
 
 
 
 
 
 
 
(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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THIS PAGE INTENTIONALLY LEFT BLANK.

9

Table of Contents

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

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Operating Revenues
$
547

 
$
539

 
$
1,620

 
$
1,619

 
 
 
 
 
 
 
 
Operating Expenses
 

 
 

 
 
 
 
Operation
 

 
 

 
 
 
 
Energy purchases
121

 
129

 
374

 
414

Other operation and maintenance
133

 
144

 
435

 
431

Depreciation
77

 
64

 
228

 
185

Taxes, other than income
27

 
26

 
79

 
79

Total Operating Expenses
358

 
363

 
1,116

 
1,109

 
 
 
 
 
 
 
 
Operating Income
189

 
176

 
504

 
510

 
 
 
 
 
 
 
 
Other Income (Expense) - net
4

 
4

 
8

 
12

 
 
 
 
 
 
 
 
Interest Income from Affiliate
2

 
—

 
3

 
—

 
 
 
 
 
 
 
 
Interest Expense
36

 
32

 
105

 
97

 
 
 
 
 
 
 
 
Income Before Income Taxes
159

 
148

 
410

 
425

 
 
 
 
 
 
 
 
Income Taxes
64

 
58

 
159

 
162

 
 
 
 
 
 
 
 
Net Income (a)
$
95

 
$
90

 
$
251

 
$
263

 
(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)
 
Nine Months Ended September 30,
 
2017
 
2016
Cash Flows from Operating Activities
 

 
 

Net income
$
251

 
$
263

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

 
 

Depreciation
228

 
185

Amortization
25

 
19

Defined benefit plans - expense
10

 
9

Deferred income taxes and investment tax credits
129

 
151

Other
(8
)
 
(14
)
Change in current assets and current liabilities
 

 
 

Accounts receivable
7

 
(6
)
Accounts payable
(38
)
 
(1
)
Unbilled revenues
30

 
10

Prepayments
(31
)
 
29

Regulatory assets and liabilities, net
—

 
(41
)
Taxes payable
10

 
(6
)
Other
(9
)
 
(13
)
Other operating activities
 

 
 

Defined benefit plans - funding
(24
)
 
—

Other assets
(2
)
 
15

Other liabilities
(3
)
 
(5
)
Net cash provided by operating activities
575

 
595

 
 
 
 
Cash Flows from Investing Activities
 

 
 

Expenditures for property, plant and equipment
(851
)
 
(739
)
Expenditures for intangible assets
(7
)
 
(3
)
Net increase in notes receivable from affiliate
(2
)
 
—

Other investing activities
2

 
2

Net cash used in investing activities
(858
)
 
(740
)
 
 
 
 
Cash Flows from Financing Activities
 

 
 

Issuance of long-term debt
470

 
224

Retirement of long-term debt
—

 
(224
)
Contributions from parent
575

 
200

Payment of common stock dividends to parent
(231
)
 
(193
)
Net increase (decrease) in short-term debt
(295
)
 
130

Other financing activities
(6
)
 
(3
)
Net cash provided by financing activities
513

 
134

 
 
 
 
Net Increase (Decrease) in Cash and Cash Equivalents
230

 
(11
)
Cash and Cash Equivalents at Beginning of Period
13

 
47

Cash and Cash Equivalents at End of Period
$
243

 
$
36

 
 
 
 
Supplemental Disclosure of Cash Flow Information
 
 
 
Significant non-cash transactions:
 
 
 
Accrued expenditures for property, plant and equipment at September 30,
$
190

 
$
166


 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)

 
September 30,
2017
 
December 31,
2016
Assets
 

 
 

 
 
 
 
Current Assets
 

 
 

Cash and cash equivalents
$
243

 
$
13

Accounts receivable (less reserve: 2017, $25; 2016, $28)
 

 
 

Customer
275

 
272

Other
10

 
21

Accounts receivable from affiliates
1

 
—

Notes receivable from affiliate
2

 
—

Unbilled revenues
84

 
114

Materials and supplies
31

 
32

Prepayments
40

 
9

Regulatory assets
14

 
19

Other current assets
11

 
8

Total Current Assets
711

 
488

 
 
 
 
Property, Plant and Equipment
 

 
 

Regulated utility plant
10,449

 
9,654

Less: accumulated depreciation - regulated utility plant
2,880

 
2,714

Regulated utility plant, net
7,569

 
6,940

Construction work in progress
699

 
641

Property, Plant and Equipment, net
8,268

 
7,581

 
 
 
 
Other Noncurrent Assets
 

 
 

Regulatory assets
1,073

 
1,094

Intangibles
256

 
251

Other noncurrent assets
15

 
12

Total Other Noncurrent Assets
1,344

 
1,357

 
 
 
 
Total Assets
$
10,323

 
$
9,426

 
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)

 
September 30,
2017
 
December 31,
2016
Liabilities and Equity
 

 
 

 
 
 
 
Current Liabilities
 

 
 

Short-term debt
$
—

 
$
295

Long-term debt due within one year
—

 
224

Accounts payable
397

 
367

Accounts payable to affiliates
38

 
42

Taxes
22

 
12

Interest
38

 
34

Regulatory liabilities
72

 
83

Other current liabilities
90

 
101

Total Current Liabilities
657

 
1,158

 
 
 
 
Long-term Debt
3,298

 
2,607

 
 
 
 
Deferred Credits and Other Noncurrent Liabilities
 

 
 

Deferred income taxes
2,036

 
1,899

Accrued pension obligations
257

 
281

Other deferred credits and noncurrent liabilities
89

 
90

Total Deferred Credits and Other Noncurrent Liabilities
2,382

 
2,270

 
 
 
 
Commitments and Contingent Liabilities (Notes 6 and 9)


 


 
 
 
 
Equity
 

 
 

Common stock - no par value (a)
364

 
364

Additional paid-in capital
2,729

 
2,154

Earnings reinvested
893

 
873

Total Equity
3,986

 
3,391

 
 
 
 
Total Liabilities and Equity
$
10,323

 
$
9,426

 
(a)
170,000 shares authorized; 66,368 shares issued and outstanding at September 30, 2017 and December 31, 2016.

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, 2016
66,368

 
$
364

 
$
2,154

 
$
873

 
$
3,391

Net income


 


 


 
251

 
251

Capital contributions from PPL


 


 
575

 


 
575

Dividends declared on common stock


 


 


 
(231
)
 
(231
)
September 30, 2017
66,368

 
$
364

 
$
2,729

 
$
893

 
$
3,986

 
 
 
 
 
 
 
 
 
 
December 31, 2015
66,368

 
$
364

 
$
1,934

 
$
821

 
$
3,119

Net income


 


 


 
263

 
263

Capital contributions from PPL


 


 
200

 


 
200

Dividends declared on common stock


 


 


 
(193
)
 
(193
)
September 30, 2016
66,368

 
$
364

 
$
2,134

 
$
891

 
$
3,389

 
(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

Table of Contents

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

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Operating Revenues
$
818

 
$
835

 
$
2,350

 
$
2,382

 
 
 
 
 
 
 
 
Operating Expenses
 

 
 

 
 

 
 

Operation
 

 
 

 
 

 
 

Fuel
202

 
227

 
576

 
607

Energy purchases
22

 
24

 
120

 
118

Other operation and maintenance
199

 
197

 
598

 
603

Depreciation
114

 
102

 
324

 
301

Taxes, other than income
17

 
16

 
49

 
46

Total Operating Expenses
554

 
566

 
1,667

 
1,675

 
 
 
 
 
 
 
 
Operating Income
264

 
269

 
683

 
707

 
 
 
 
 
 
 
 
Other Income (Expense) - net
1

 
(3
)
 
(5
)
 
(9
)
 
 
 
 
 
 
 
 
Interest Expense
49

 
50

 
148

 
147

 
 
 
 
 
 
 
 
Interest Expense with Affiliate
5

 
4

 
13

 
12

 
 
 
 
 
 
 
 
Income Before Income Taxes
211

 
212

 
517

 
539

 
 
 
 
 
 
 
 
Income Taxes
79

 
79

 
195

 
202

 
 
 
 
 
 
 
 
Net Income
$
132

 
$
133

 
$
322

 
$
337

 
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 September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Net income
$
132

 
$
133

 
$
322

 
$
337

 
 
 
 
 
 
 
 
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 $0, $0, $7, ($1)
(1
)
 
—

 
(12
)
 
1

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

 
—

 
1

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

 
—

 
1

 
1

Net actuarial loss, net of tax of $0, $0, ($2), ($1)
1

 
1

 
3

 
3

Total other comprehensive income (loss)
—

 
1

 
(7
)
 
4

 
 
 
 
 
 
 
 
Comprehensive income
$
132

 
$
134

 
$
315

 
$
341


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)
 
Nine Months Ended September 30,
 
2017
 
2016
Cash Flows from Operating Activities
 

 
 

Net income
$
322

 
$
337

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

 
 

Depreciation
324

 
301

Amortization
19

 
21

Defined benefit plans - expense
19

 
20

Deferred income taxes and investment tax credits
173

 
212

Other
1

 
—

Change in current assets and current liabilities
 

 
 

Accounts receivable
18

 
(43
)
Accounts payable
(30
)
 
7

Accounts payable to affiliates
3

 
4

Unbilled revenues
19

 
6

Fuel, materials and supplies
34

 
7

Taxes payable
13

 
—

Accrued interest
41

 
42

Other
(1
)
 
(4
)
Other operating activities
 

 
 

Defined benefit plans - funding
(32
)
 
(82
)
Expenditures for asset retirement obligations
(22
)
 
(15
)
Other assets
5

 
1

Other liabilities
14

 
2

Net cash provided by operating activities
920