SCHEDULE I - CONDENSED UNCONSOLICATED FINANCIAL STATEMENTS AND NOTES TO CONDENSED UNCONSOLIDATED FINANCIAL STATEMENTS

12 Months Ended

Dec. 31, 2016

PPL Corp [Member]

Condensed Unconsolidated Financial Information [Line Items]

Schedule I - Condensed Unconsolidated Financial Information

SCHEDULE I - PPL CORPORATION

CONDENSED UNCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31,

(Millions of Dollars, except share data)

	2016			2015			2014
Operating Revenues	$	—		$	—		$	—
Operating Expenses
Other operation and maintenance	2			9			16
Total Operating Expenses	2			9			16
Operating Loss	(2		)	(9		)	(16		)
Other Income (Expense) - net
Equity in earnings of subsidiaries	1,915			711			1,776
Other income (expense)	(1		)	(15		)	(18		)
Total	1,914			696			1,758
Interest Expense	8			9			15
Interest Expense with Affiliates	10			10			10
Income Before Income Taxes	1,894			668			1,717
Income Taxes	(8		)	(14		)	(20		)
Net Income	$	1,902		$	682		$	1,737
Comprehensive Income Attributable to PPL Shareowners	$	852		$	252		$	1,028
Earnings Per Share of Common Stock:
Net Income Available to PPL Common Shareowners:
Basic	$	2.80		$	1.01		$	2.64
Diluted	$	2.79		$	1.01		$	2.61
Weighted-Average Shares of Common Stock Outstanding (in thousands)
Basic	677,592			669,814			653,504
Diluted	680,446			672,586			665,973

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

SCHEDULE I - PPL CORPORATION

CONDENSED UNCONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,

(Millions of Dollars)

	2016			2015			2014
Cash Flows from Operating Activities
Net cash provided by (used in) operating activities	$	1,563		$	993		$	1,633
Cash Flows from Investing Activities
Capital contributions to affiliated subsidiaries	(308		)	(491		)	(1,045		)
Return of capital from affiliated subsidiaries	—			112			247
Net cash provided by (used in) investing activities	(308		)	(379		)	(798		)
Cash Flows from Financing Activities
Issuance of equity, net of issuance costs	144			203			1,074
Net increase (decrease) in short-term debt with affiliates	(341		)	215			(913		)
Payment of common stock dividends	(1,030		)	(1,004		)	(967		)
Contract adjustment payments on Equity Units	—			—			(22		)
Other	(24		)	(28		)	(7		)
Net cash provided by (used in) financing activities	(1,251		)	(614		)	(835		)
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Period	—			—			—
Cash and Cash Equivalents at End of Period	$	4		$	—		$	—
Supplemental Disclosures of Cash Flow Information:
Cash Dividends Received from Subsidiaries	$	1,510		$	1,198		$	1,388

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

SCHEDULE I - PPL CORPORATION   

CONDENSED UNCONSOLIDATED BALANCE SHEETS AT DECEMBER 31,

(Millions of Dollars, shares in thousands)

	2016			2015
Assets
Current Assets
Cash and cash equivalents	$	4		$	—
Accounts Receivable
Other	7			10
Affiliates	10			20
Price risk management assets	63			139
Total Current Assets	84			169
Investments
Affiliated companies at equity	10,160			10,479
Other Noncurrent Assets
Deferred income taxes	70			100
Price risk management assets	284			133
Other noncurrent assets	1			1
Total Other Noncurrent Assets	355			234
Total Assets	$	10,599		$	10,882
Liabilities and Equity
Current Liabilities
Short-term debt with affiliates	$	44		$	385
Accounts payable with affiliates	30			16
Dividends	259			255
Price risk management liabilities	237			268
Other current liabilities	20			—
Total Current Liabilities	590			924
Deferred Credits and Other Noncurrent Liabilities	110			39
Equity
Common stock - $0.01 par value (a)	7			7
Additional paid-in capital	9,841			9,687
Earnings reinvested	3,829			2,953
Accumulated other comprehensive loss	(3,778		)	(2,728		)
Total Equity	9,899			9,919
Total Liabilities and Equity	$	10,599		$	10,882

(a) 1,560,000 shares authorized; 679,731 shares issued and outstanding at December 31, 2016; 780,000 shares authorized; 673,857 shares issued and outstanding at December 31, 2015.

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

SCHEDULE I - PPL CORPORATION

NOTES TO CONDENSED UNCONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

PPL Corporation is a holding company and conducts substantially all of its business operations through its subsidiaries. Substantially all of its consolidated assets are held by such subsidiaries. PPL Corporation uses the equity method to account for its investments in entities in which it has a controlling financial interest. PPL Corporation's cash flow and its ability to meet its obligations are largely dependent upon the earnings of these subsidiaries and the distribution or other payment of such earnings to it in the form of dividends, loans or advances or repayment of loans and advances from it. These condensed financial statements and related footnotes have been prepared in accordance with Reg. §210.12-04 of Regulation S-X. These statements should be read in conjunction with the consolidated financial statements and notes thereto of PPL Corporation.

PPL Corporation indirectly or directly owns all of the ownership interests of its significant subsidiaries. PPL Corporation relies on dividends or loans from its subsidiaries to fund PPL Corporation's dividends to its common shareowners and to meet its other cash requirements. See Note 7 to PPL Corporation's consolidated financial statements for discussions related to restricted net assets of its subsidiaries for the purposes of transferring funds to PPL in the form of distributions, loans or advances.

Balance Sheet Classification of Deferred Taxes

Effective October 1, 2015, PPL Corporation retrospectively adopted accounting guidance to simplify the presentation of deferred taxes which requires that deferred tax assets and deferred tax liabilities be classified as noncurrent on the balance sheet.

The adoption of this guidance required PPL Corporation to reclassify deferred tax assets and deferred tax liabilities from current to noncurrent on the balance sheet, and did not have a significant impact.

2. Commitments and Contingencies

See Note 13 to PPL Corporation's consolidated financial statements for commitments and contingencies of its subsidiaries.

Guarantees and Other Assurances

PPL Corporation's subsidiaries are separate and distinct legal entities and have no obligation to pay any amounts that may become due under PPL Corporation's guarantees or other assurances or to make any funds available for such payment.

PPL Corporation fully and unconditionally guarantees the payment of principal, premium and interest on all of the debt securities of PPL Capital Funding. The estimated maximum potential amount of future payments that could be required under the guarantees at December 31, 2016 was $8.6 billion. These guarantees will expire in 2073. The probability of expected payment under these guarantees is remote.

L G And E And K U Energy L L C Unconsolidated [Member]

Condensed Unconsolidated Financial Information [Line Items]

Schedule I - Condensed Unconsolidated Financial Information

SCHEDULE I - LG&E and KU Energy LLC

CONDENSED UNCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31,

(Millions of Dollars)

	2016			2015			2014
Other Income (Expense) - net
Equity in Earnings of Subsidiaries	$	452		$	390		$	368
Interest Income with Affiliate	9			4			5
Total	461			394			373
Interest Expense	29			39			41
Interest Expense with Affiliate	18			5			3
Income Before Income Taxes	414			350			329
Income Tax Expense (Benefit)	(15		)	(14		)	(15		)
Net Income Attributable to Member	$	429		$	364		$	344
Comprehensive Income Attributable to Member	$	405		$	363		$	286

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

SCHEDULE I - LG&E and KU Energy LLC

CONDENSED UNCONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,

(Millions of Dollars)

	2016			2015			2014
Cash Flows from Operating Activities
Net cash provided by (used in) operating activities	$	285		$	246		$	(183	)
Cash Flows from Investing Activities
Capital contributions to affiliated subsidiaries	(91		)	(140		)	(248		)
Net decrease (increase) in notes receivable from affiliates	47			73			555
Net cash provided by (used in) investing activities	(44		)	(67		)	307
Cash Flows from Financing Activities
Net increase (decrease) in notes payable with affiliates	90			315			58
Net increase (decrease) in short-term debt	(75		)	—			—
Retirement of long-term debt	—			(400		)	—
Contribution from member	61			125			248
Distribution to member	(316		)	(219		)	(436		)
Net cash provided by (used in) financing activities	(240		)	(179		)	(130		)
Net Increase (Decrease) in Cash and Cash Equivalents	1			—			(6		)
Cash and Cash Equivalents at Beginning of Period	—			—			6
Cash and Cash Equivalents at End of Period	$	1		$	—		$	—
Supplemental disclosures of cash flow information:
Cash Dividends Received from Subsidiaries	$	376		$	272		$	260

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

SCHEDULE I - LG&E and KU Energy LLC

CONDENSED UNCONSOLIDATED BALANCE SHEETS AT DECEMBER 31,

(Millions of Dollars)

	2016		2015
Assets
Current Assets
Cash and cash equivalents	$	1	$	—
Accounts receivable	—		1
Accounts receivable from affiliates	23		3
Income taxes receivable	31		—
Notes receivable from affiliates	1,007		1,054
Total Current Assets	1,062		1,058
Investments
Affiliated companies at equity	5,219		5,076
Other Noncurrent Assets
Deferred income taxes	227		228
Total Assets	$	6,508	$	6,362
Liabilities and Equity
Current Liabilities
Short-term debt	$	—	$	75
Notes payable to affiliates	179		69
Accounts payable to affiliates	450		469
Taxes	—		3
Other current liabilities	6		5
Total Current Liabilities	635		621
Long-term Debt
Long-term debt	721		720
Notes payable to affiliates	480		500
Total Long-term Debt	1,201		1,220
Deferred Credits and Other Noncurrent Liabilities	5		4
Equity	4,667		4,517
Total Liabilities and Equity	$	6,508	$	6,362

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

Schedule I - LG&E and KU Energy LLC

Notes to Condensed Unconsolidated Financial Statements

1. Basis of Presentation

LG&E and KU Energy LLC (LKE) is a holding company and conducts substantially all of its business operations through its subsidiaries. Substantially all of its consolidated assets are held by such subsidiaries. LKE uses the equity method to account for its investments in entities in which it has a controlling financial interest. LKE's cash flow and its ability to meet its obligations are largely dependent upon the earnings of these subsidiaries and the distribution or other payment of such earnings to it in the form of dividends or repayment of loans and advances from the subsidiaries. These condensed financial statements and related footnotes have been prepared in accordance with Reg. §210.12-04 of Regulation S-X. These statements should be read in conjunction with the consolidated financial statements and notes thereto of LKE.

LKE indirectly or directly owns all of the ownership interests of its significant subsidiaries. LKE relies primarily on dividends from its subsidiaries to fund LKE's distributions to its member and to meet its other cash requirements. See Note 7 to LKE's consolidated financial statements for discussions related to restricted net assets of its subsidiaries for the purposes of transferring funds to LKE in the form of distributions, loans or advances.

2. Commitments and Contingencies

See Note 13 to LKE's consolidated financial statements for commitments and contingencies of its subsidiaries.

Guarantees

LKE provides certain indemnifications covering the due and punctual payment, performance and discharge by each party of its respective obligations. The most comprehensive of these guarantees is the LKE guarantee covering operational, regulatory and environmental commitments and indemnifications made by WKE under a 2009 Transaction Termination Agreement. This guarantee has a term of 12 years ending July 2021, and a maximum exposure of $200 million, exclusive of certain items such as government fines and penalties that may exceed the maximum. Another WKE-related LKE guarantee covers other indemnifications related to the purchase price of excess power, has a term expiring in 2023, and a maximum exposure of $100 million. In May 2012, LKE's indemnitee received an unfavorable arbitration panel's decision interpreting this matter. In October 2014, LKE's indemnitee filed a motion for discretionary review with the Kentucky Supreme Court seeking to overturn the arbitration decision, and such motion was denied by the court in September 2015. In September 2015, the counterparty issued a demand letter to LKE's indemnitee. In February 2016, the counterparty filed a complaint in Henderson, Kentucky Circuit Court, seeking an award of damages in the matter. The proceeding is currently in the discovery phase. LKE does not believe appropriate contractual, legal or commercial grounds exist for the claim made. LKE believes its indemnification obligations in the WKE matter remain subject to various uncertainties, including additional legal and contractual developments, as well as future prices, availability and demand for the subject excess power. Although the parties have also conducted certain settlement discussions, the ultimate outcomes of the WKE termination-related indemnifications cannot be predicted at this time.

Additionally, LKE has indemnified various third parties related to historical obligations for other divested subsidiaries and affiliates. The indemnifications vary by entity and the maximum exposures range from being capped at the sale price to no specified maximum. LKE could be required to perform on these indemnifications in the event of covered losses or liabilities being claimed by an indemnified party. LKE cannot predict the ultimate outcomes of the various indemnification scenarios, but does not expect such outcomes to result in significant losses above the amounts recorded.

3. Long-Term Debt

See Note 7 to LKE's consolidated financial statements for the terms of LKE's outstanding senior unsecured notes outstanding. Of the total outstanding, $475 million matures in 2020 and $250 million matures in 2021. These maturities are based on stated maturities. Also see Note 7 to LKE's consolidated financial statements for the terms of LKE's $400 million note payable to PPL. This note matures in 2025. LKE's $80 million note payable to LG&E and KU Services Company bears a variable interest rate, which resets each quarter based on LIBOR. The rate at December 31, 2016 was 1.381%. This note matures in 2019.