2. Segment and Related Information

(PPL)

PPL is organized into three segments: U.K. Regulated, Kentucky Regulated and Pennsylvania Regulated. PPL's segments are segmented by geographic location.

The U.K. Regulated segment consists of PPL Global, which primarily includes WPD's regulated electricity distribution operations, the results of hedging the translation of WPD's earnings from GBP into U.S. dollars, and certain costs, such as U.S. income taxes, administrative costs, and certain acquisition-related financing costs.

The Kentucky Regulated segment consists primarily of LKE's regulated electricity generation, transmission and distribution operations of LG&E and KU, as well as LG&E's regulated distribution and sale of natural gas. In addition, certain acquisition-related financing costs are allocated to the Kentucky Regulated segment.

The Pennsylvania Regulated segment includes the regulated electricity transmission and distribution operations of PPL Electric. In addition, certain costs are allocated to the Pennsylvania Regulated segment.

"Corporate and Other" primarily includes financing costs incurred at the corporate level that have not been allocated or assigned to the segments, as well as certain other unallocated costs, which is presented to reconcile segment information to PPL's consolidated results.

On June 1, 2015, PPL completed the spinoff of PPL Energy Supply, which substantially represented PPL's Supply segment. As a result of this transaction, PPL no longer has a Supply segment and its results are presented in "Discontinued Operations". See Note 8 for additional information.

Income Statement data for the segments and reconciliation to PPL's consolidated results for the years ended December 31 are as follows:



	2017			2016			2015
Operating Revenues from external customers (a)
U.K. Regulated	$	2,091		$	2,207		$	2,410
Kentucky Regulated	3,156			3,141			3,115
Pennsylvania Regulated	2,195			2,156			2,124
Corporate and Other	5			13			20
Total	$	7,447		$	7,517		$	7,669

Depreciation
U.K. Regulated	$	230		$	233		$	242
Kentucky Regulated	439			404			382
Pennsylvania Regulated	309			253			214
Corporate and Other	30			36			45
Total	$	1,008		$	926		$	883

Amortization (b)
U.K. Regulated	$	34		$	16		$	6
Kentucky Regulated	24			29			27
Pennsylvania Regulated	33			32			26
Corporate and Other	6			3			—
Total	$	97		$	80		$	59

Unrealized (gains) losses on derivatives and other hedging activities (c)
U.K. Regulated	$	166		$	13		$	(88	)
Kentucky Regulated	6			6			11
Corporate and Other	6			—			—
Total	$	178		$	19		$	(77	)

Interest Expense
U.K. Regulated	$	397		$	402		$	417
Kentucky Regulated	261			260			232
Pennsylvania Regulated	142			129			130
Corporate and Other	101			97			92
Total	$	901		$	888		$	871

Income from Continuing Operations Before Income Taxes
U.K. Regulated	$	804		$	1,479		$	1,249
Kentucky Regulated	645			640			547
Pennsylvania Regulated	575			550			416
Corporate and Other (d)	(112		)	(119		)	(144		)
Total	$	1,912		$	2,550		$	2,068

Income Taxes (e)
U.K. Regulated	$	152		$	233		$	128
Kentucky Regulated	359			242			221
Pennsylvania Regulated	216			212			164
Corporate and Other (d)	57			(39		)	(48		)
Total	$	784		$	648		$	465

Deferred income taxes and investment tax credits (f)
U.K. Regulated	$	66		$	31		$	45
Kentucky Regulated	294			291			236
Pennsylvania Regulated	257			221			220
Corporate and Other (d)	90			17			(73		)
Total	$	707		$	560		$	428



	2017			2016			2015

Net Income
U.K. Regulated	$	652		$	1,246		$	1,121
Kentucky Regulated	286			398			326
Pennsylvania Regulated	359			338			252
Corporate and Other (d)	(169		)	(80		)	(96		)
Discontinued Operations (g)	—			—			(921		)
Total	$	1,128		$	1,902		$	682


(a)	See Note 1 for additional information on Operating Revenues.


(b)	Represents non-cash expense items that include amortization of regulatory assets, debt discounts and premiums, debt issuance costs, emission allowances and RECs.


(c)	Includes unrealized gains and losses from economic activity. See Note 17 for additional information.


(d)	2015 includes certain costs related to the spinoff of PPL Energy Supply, including deferred income tax expense, transition costs and separation benefits for PPL Services employees. See Note 8 for additional information.


(e)	Represents both current and deferred income taxes, including investment tax credits. See Note 5 for additional information on the impact of the TCJA in 2017.


(f)	Represents a non-cash expense item that is also included in "Income Taxes."


(g)	2015 includes an $879 million loss on the spinoff of PPL Energy Supply and five months of Supply segment earnings. See Note 8 for additional information on these transactions.

Cash Flow data for the segments and reconciliation to PPL's consolidated results for the years ended December 31 are as follows:



	2017		2016		2015
Expenditures for long-lived assets
U.K. Regulated	$	1,015	$	1,031	$	1,242
Kentucky Regulated	892		791		1,210
Pennsylvania Regulated	1,254		1,134		1,107
Corporate and Other	10		1		11
Total	$	3,171	$	2,957	$	3,570

The following provides Balance Sheet data for the segments and reconciliation to PPL's consolidated results as of:



	As of December 31,
	2017		2016
Total Assets
U.K. Regulated (a)	$	16,813	$	14,537
Kentucky Regulated	14,468		14,037
Pennsylvania Regulated	10,082		9,426
Corporate and Other (b)	116		315
Total	$	41,479	$	38,315


(a)	Includes $12.5 billion and $10.8 billion of net PP&E as of December 31, 2017 and December 31, 2016. WPD is not subject to accounting for the effects of certain types of regulation as prescribed by GAAP.


(b)	Primarily consists of unallocated items, including cash, PP&E and the elimination of inter-segment transactions.

Geographic data for the years ended December 31 are as follows:



	2017		2016		2015
Revenues from external customers
U.K.	$	2,091	$	2,207	$	2,410
U.S.	5,356		5,310		5,259
Total	$	7,447	$	7,517	$	7,669



	As of December 31,
	2017		2016
Long-Lived Assets
U.K.	$	12,851	$	11,177
U.S.	20,936		19,595
Total	$	33,787	$	30,772

(PPL Electric, LKE, LG&E and KU)

PPL Electric has two operating segments that are aggregated into a single reportable segment. LKE, LG&E and KU are individually single operating and reportable segments.