Acquisitions, Development and Divestitures (Tables)

3 Months Ended

Mar. 31, 2021

Disposal Group, Including Discontinued Operation, Income Statement Line Items

Following are the components of discontinued operations in the Statements of Income for the periods ended March 31:


	Three Months
	2021		2020
Operating Revenues	$	634	$	614
Operating Expenses	252		222
Other Income (Expense) - net	66		130
Interest Expense (a)	93		93
Income before income taxes	355		429
Loss on sale	(1,647)		—
Income tax expense (b)	751		79
Income (loss) from Discontinued Operations (net of income taxes)	$	(2,043)	$	350

(a)No interest from corporate level debt was allocated to discontinued operations.

(b)2021 primarily includes a federal tax expense of $689 million for the recognition of the tax cost associated with the realization of the book-tax outside basis difference in PPL's investment in the U.K. utility business and foreign tax expense of $73 million on current year operations.

Disposal Group, Including Discontinued Operation, Assets and Liabilities

The following major classes of assets and liabilities were reclassified on PPL's Balance Sheet as of March 31, 2021 and December 31, 2020:


	Held for Sale at March 31, 2021		Held for Sale at December 31, 2020
Cash and cash equivalents	$	152	$	266
Accounts receivable and unbilled revenues	459		389
Price risk management assets	62		146
Property, plant and equipment, net (a)	15,236		14,392
Goodwill (b)	1,029		2,558
Other intangibles	434		413
Pension benefit asset	911		682
Other assets	142		137
Total Assets	$	18,425	$	18,983

Short-term debt and long-term debt due within one year	$	812	$	994
Accounts payable	199		220
Customer deposits	240		217
Accrued interest	178		190

Long-term debt	8,297		7,938
Total deferred income taxes	1,123		1,032
Price risk management liabilities	180		137
Other deferred credits and liabilities	347		295
Total Liabilities	$	11,376	$	11,023

Net assets (c)	$	7,049	$	7,960

(a)Depreciation of fixed assets ceased upon classification as held for sale.

(b)The change in Goodwill is due to the loss on sale of $1,647 million and a gain on foreign currency translation of $118 million.

(c)The net assets and liabilities held for sale exclude $3.7 billion of accumulated other comprehensive losses related to the U.K. utility business that are required to be included in the carrying value of the loss on sale calculation presented above. Accumulated other comprehensive losses related to the U.K. utility business will be reported as a component of PPL’s equity until the sale of the U.K. utility business occurs.

Disposal Group, Including Discontinued Operation, Components of Gain (loss) on Sale

Accordingly, PPL’s investment in the U.K. utility business has been reported at its estimated fair value, less costs to sell, resulting in an estimated pre-tax loss on sale of $1.6 billion as of March 31, 2021, as determined below.


	Three Months
	2021
Sales proceeds (a)	$	10,806
Costs to sell (b)	48
Carrying value (c)	12,405
Loss on Sale (d)	(1,647)

(a)Amount represents a contractual selling price of £7.8 billion (a Level 1 fair value measurement) as well as accrued additional consideration of approximately £49 million converted at the March 31, 2021 spot rate of $1.38 per GBP.

(b)Estimated amounts incurred for bank advisory, legal and accounting fees to facilitate the transaction.

(c)The measurement of PPL’s carrying value of the U.K. utility business includes the realization of accumulated other comprehensive losses of $3.7 billion, which arose primarily from currency translation adjustments and defined benefit plans associated with the U.K. utility business.

(d)This loss has been recorded as a reduction to goodwill.