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

12 Months Ended

Dec. 31, 2017

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)

	2017			2016			2015
Operating Revenues	$	—		$	—		$	—
Operating Expenses
Other operation and maintenance	2			2			9
Total Operating Expenses	2			2			9
Operating Loss	(2		)	(2		)	(9		)
Other Income (Expense) - net
Equity in earnings of subsidiaries	1,175			1,915			711
Other income (expense)	(1		)	(1		)	(15		)
Total	1,174			1,914			696
Interest Expense	8			8			9
Interest Expense with Affiliates	16			10			10
Income Before Income Taxes	1,148			1,894			668
Income Taxes	20			(8		)	(14		)
Net Income	$	1,128		$	1,902		$	682
Total other comprehensive income (loss)	356			(1,050		)	(430		)
Comprehensive Income Attributable to PPL Shareowners	$	1,484		$	852		$	252
Earnings Per Share of Common Stock:
Net Income Available to PPL Common Shareowners:
Basic	$	1.64		$	2.80		$	1.01
Diluted	$	1.64		$	2.79		$	1.01
Weighted-Average Shares of Common Stock Outstanding (in thousands)
Basic	685,240			677,592			669,814
Diluted	687,334			680,446			672,586

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)

	2017			2016			2015
Cash Flows from Operating Activities
Net cash provided by (used in) operating activities	$	1,108		$	1,563		$	993
Cash Flows from Investing Activities
Capital contributions to affiliated subsidiaries	(585		)	(308		)	(491		)
Return of capital from affiliated subsidiaries	—			—			112
Net cash provided by (used in) investing activities	(585		)	(308		)	(379		)
Cash Flows from Financing Activities
Issuance of equity, net of issuance costs	453			144			203
Net increase (decrease) in short-term debt with affiliates	113			(341		)	215
Payment of common stock dividends	(1,072		)	(1,030		)	(1,004		)
Other	(21		)	(24		)	(28		)
Net cash provided by (used in) financing activities	(527		)	(1,251		)	(614		)
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Period	4			—			—
Cash and Cash Equivalents at End of Period	$	—		$	4		$	—
Supplemental Disclosures of Cash Flow Information:
Cash Dividends Received from Subsidiaries	$	1,253		$	1,510		$	1,198

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)

	2017			2016
Assets
Current Assets
Cash and cash equivalents	$	—		$	4
Accounts Receivable
Other	7			7
Affiliates	17			10
Price risk management assets	196			63
Total Current Assets	220			84
Investments
Affiliated companies at equity	11,141			10,160
Other Noncurrent Assets
Deferred income taxes	46			70
Price risk management assets	186			284
Other noncurrent assets	1			1
Total Other Noncurrent Assets	233			355
Total Assets	$	11,594		$	10,599
Liabilities and Equity
Current Liabilities
Short-term debt with affiliates	$	157		$	44
Accounts payable with affiliates	2			30
Dividends	273			259
Price risk management liabilities	233			237
Other current liabilities	19			20
Total Current Liabilities	684			590
Deferred Credits and Other Noncurrent Liabilities	149			110
Equity
Common stock - $0.01 par value (a)	7			7
Additional paid-in capital	10,305			9,841
Earnings reinvested	3,871			3,829
Accumulated other comprehensive loss	(3,422		)	(3,778		)
Total Equity	10,761			9,899
Total Liabilities and Equity	$	11,594		$	10,599

(a) 1,560,000 shares authorized; 693,398 and 679,731 shares issued and outstanding at December 31, 2017 and December 31, 2016.

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.

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, 2017 was $9.7 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)

	2017			2016			2015
Other Income (Expense) - net
Equity in Earnings of Subsidiaries	$	397		$	452		$	390
Interest Income with Affiliate	14			9			4
Total	411			461			394
Interest Expense	30			29			39
Interest Expense with Affiliate	20			18			5
Income Before Income Taxes	361			414			350
Income Tax Expense (Benefit)	45			(15		)	(14		)
Net Income	$	316		$	429		$	364
Total other comprehensive loss	(18		)	(24		)	(1		)
Comprehensive Income Attributable to Member	$	298		$	405		$	363

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)

	2017			2016			2015
Cash Flows from Operating Activities
Net cash provided by (used in) operating activities	$	401		$	285		$	246
Cash Flows from Investing Activities
Capital contributions to affiliated subsidiaries	(30		)	(91		)	(140		)
Net decrease (increase) in notes receivable from affiliates	(28		)	47			73
Net cash provided by (used in) investing activities	(58		)	(44		)	(67		)
Cash Flows from Financing Activities
Net increase (decrease) in notes payable with affiliates	58			90			315
Net increase (decrease) in short-term debt	—			(75		)	—
Retirement of long-term debt	—			—			(400		)
Contribution from member	—			61			125
Distribution to member	(402		)	(316		)	(219		)
Net cash provided by (used in) financing activities	(344		)	(240		)	(179		)
Net Increase (Decrease) in Cash and Cash Equivalents	(1		)	1			—
Cash and Cash Equivalents at Beginning of Period	1			—			—
Cash and Cash Equivalents at End of Period	$	—		$	1		$	—
Supplemental disclosures of cash flow information:
Cash Dividends Received from Subsidiaries	$	418		$	376		$	272

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)

	2017		2016
Assets
Current Assets
Cash and cash equivalents	$	—	$	1
Accounts receivable	1		—
Accounts receivable from affiliates	8		23
Income taxes receivable	1		31
Notes receivable from affiliates	1,035		1,007
Total Current Assets	1,045		1,062
Investments
Affiliated companies at equity	5,209		5,219
Other Noncurrent Assets
Deferred income taxes	263		227
Total Assets	$	6,517	$	6,508
Liabilities and Equity
Current Liabilities
Notes payable to affiliates	$	241	$	179
Accounts payable to affiliates	469		450
Taxes	35		—
Other current liabilities	5		6
Total Current Liabilities	750		635
Long-term Debt
Long-term debt	722		721
Notes payable to affiliates	476		480
Total Long-term Debt	1,198		1,201
Deferred Credits and Other Noncurrent Liabilities	6		5
Equity	4,563		4,667
Total Liabilities and Equity	$	6,517	$	6,508

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 formerly covered other indemnifications related to the purchase price of excess power, had a term expiring in 2023, and a maximum exposure of $100 million, which excess power matter and related indemnifications had been the subject of a dispute and legal proceeding among the parties. In December 2017, the parties executed settlement agreements which resolved all claims relating to the excess power matter, and terminated such guarantee, for $11 million.

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 a PPL affiliate. This note matures in 2026. LKE's $76 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, 2017 was 2.1%. This note matures in 2019.