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 March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission Exact name of Registrants as specified in their charters, address IRS Employer Iden-
File Number of principal executive offices and Registrants' telephone number tification Number
1-8841 FPL GROUP, INC. 59-2449419
1-3545 FLORIDA POWER & LIGHT COMPANY 59-0247775
700 Universe Boulevard
Juno Beach, Florida 33408
(407) 694-4647
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State or other jurisdiction of incorporation or organization: Florida
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 and (2) have been subject to such filing requirements for the past 90 days. Yes X No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of each class of FPL Group, Inc. common stock, as of the latest practicable date: Common Stock, $.01 Par Value, outstanding at April 30, 1996: 183,757,635 shares
This combined Form 10-Q represents separate filings by FPL Group, Inc. and Florida Power & Light Company. Information contained herein relating to an individual registrant is filed by that registrant on its own behalf. Florida Power & Light Company makes no representations as to the information relating to FPL Group, Inc.'s other operations.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
FPL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
1996 1995
(In thousands, except
per share amounts)
OPERATING REVENUES ................................................................... $1,357,707 $1,177,366
OPERATING EXPENSES:
Fuel, purchased power and interchange .............................................. 449,660 344,872
Other operations and maintenance.................................................... 279,974 254,991
Depreciation and amortization ...................................................... 267,655 200,283
Taxes other than income taxes ...................................................... 137,044 128,423
Total operating expenses ......................................................... 1,134,333 928,569
OPERATING INCOME ..................................................................... 223,374 248,797
OTHER INCOME (DEDUCTIONS):
Interest charges ................................................................... (69,246) (76,979)
Dividend requirements on preferred stock of FPL .................................... (6,434) (12,153)
Other - net ........................................................................ (1,363) 5,392
Total other deductions - net ..................................................... (77,043) (83,740)
INCOME BEFORE INCOME TAXES ........................................................... 146,331 165,057
INCOME TAXES ......................................................................... 52,619 65,217
NET INCOME ........................................................................... $ 93,712 $ 99,840
Earnings per share of common stock ................................................... $ 0.54 $ 0.57
Dividends per share of common stock .................................................. $ 0.46 $ 0.44
Average number of common shares outstanding .......................................... 174,706 176,023
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This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on Pages 8 through 10 herein and the Notes to Consolidated Financial Statements appearing in the combined 1995 Annual Report on Form 10-K (Form 10-K) for FPL Group, Inc. (FPL Group) and Florida Power & Light Company (FPL).
FPL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31,
1996 December 31,
(Unaudited) 1995
(Thousands of Dollars)
PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant and other property - at original cost,
including nuclear fuel and construction work in progress ...................... $16,813,313 $16,725,231
Less accumulated depreciation and amortization .................................. 7,114,274 6,873,250
Total property, plant and equipment - net ..................................... 9,699,039 9,851,981
CURRENT ASSETS:
Cash and cash equivalents ....................................................... 28,291 46,177
Customer receivables, net of allowances of $11,222 and $11,929, respectively .... 432,128 482,326
Materials, supplies and fossil fuel stock - at average cost ..................... 238,507 247,323
Other ........................................................................... 229,534 209,522
Total current assets .......................................................... 928,460 985,348
OTHER ASSETS:
Special use funds of FPL ........................................................ 694,690 646,846
Other investments ............................................................... 426,696 447,006
Unamortized debt reacquisition costs of FPL ..................................... 290,011 294,844
Other ........................................................................... 227,530 233,201
Total other assets ............................................................ 1,638,927 1,621,897
TOTAL ASSETS ...................................................................... $12,266,426 $12,459,226
CAPITALIZATION:
Common shareholders' equity ..................................................... $ 4,387,381 $ 4,392,509
Preferred stock of FPL without sinking fund requirements ........................ 289,580 289,580
Preferred stock of FPL with sinking fund requirements ........................... 46,000 50,000
Long-term debt .................................................................. 3,377,057 3,376,613
Total capitalization .......................................................... 8,100,018 8,108,702
CURRENT LIABILITIES:
Accounts payable ................................................................ 274,305 305,126
Debt and preferred stock due within one year .................................... 155,723 390,402
Accrued interest, taxes and other ............................................... 839,288 808,615
Total current liabilities ..................................................... 1,269,316 1,504,143
OTHER LIABILITIES AND DEFERRED CREDITS:
Accumulated deferred income taxes ............................................... 1,599,675 1,587,449
Unamortized regulatory and investment tax credits ............................... 417,439 426,317
Other ........................................................................... 879,978 832,615
Total other liabilities and deferred credits .................................. 2,897,092 2,846,381
COMMITMENTS AND CONTINGENCIES
TOTAL CAPITALIZATION AND LIABILITIES .............................................. $12,266,426 $12,459,226
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This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on Pages 8 through 10 herein and the Notes to Consolidated Financial Statements appearing in the 1995 Form 10-K for FPL Group and FPL.
FPL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
1996 1995
(Thousands of Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .......................................................................... $ 93,712 $ 99,840
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization ..................................................... 267,655 200,283
Other - net ....................................................................... 125,313 116,432
Net cash provided by operating activities ........................................... 486,680 416,555
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1) ............................................................ (115,508) (132,920)
Other - net ......................................................................... (51,786) (15,215)
Net cash used in investing activities ............................................. (167,294) (148,135)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of debt .................................................................... - 58,630
Retirement of long-term debt and preferred stock .................................... (102,973) (57,014)
Repurchase of common stock .......................................................... (24,374) (28,878)
Decrease in commercial paper ........................................................ (138,700) (29,737)
Dividends on common stock ........................................................... (80,394) (77,523)
Other - net ......................................................................... 9,169 (60,102)
Net cash used in financing activities ............................................. (337,272) (194,624)
Net increase (decrease) in cash and cash equivalents .................................. (17,886) 73,796
Cash and cash equivalents at beginning of period ...................................... 46,177 85,750
Cash and cash equivalents at end of period ............................................ $ 28,291 $ 159,546
Supplemental disclosures of cash flow information:
Cash paid for interest .............................................................. $ 72,692 $ 84,119
Cash paid for income taxes .......................................................... $ 9,700 $ 26,400
Supplemental schedule of noncash investing and financing activities:
Additions to capital lease obligations .............................................. $ 30,742 $ 12,114
(1) Capital expenditures exclude allowance for equity funds used during construction.
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This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on Pages 8 through 10 herein and the Notes to Consolidated Financial Statements appearing in the 1995 Form 10-K for FPL Group and FPL.
FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
1996 1995
(Thousands of Dollars)
OPERATING REVENUES ................................................................. $1,340,742 $1,156,269
OPERATING EXPENSES:
Fuel, purchased power and interchange ............................................ 449,660 344,872
Other operations and maintenance ................................................. 262,517 231,889
Depreciation and amortization .................................................... 266,241 197,774
Income taxes ..................................................................... 58,423 68,190
Taxes other than income taxes .................................................... 137,096 127,928
Total operating expenses ....................................................... 1,173,937 970,653
OPERATING INCOME ................................................................... 166,805 185,616
OTHER INCOME/(DEDUCTIONS):
Interest charges - net ........................................................... (62,386) (70,094)
Other - net ...................................................................... 2,734 3,920
Total other deductions - net ................................................... (59,652) (66,174)
NET INCOME ......................................................................... 107,153 119,442
DIVIDEND REQUIREMENTS ON PREFERRED STOCK ........................................... 6,434 12,153
NET INCOME AVAILABLE TO FPL GROUP .................................................. $ 100,719 $ 107,289
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This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on Pages 8 through 10 herein and the Notes to Consolidated Financial Statements appearing in the 1995 Form 10-K for FPL Group and FPL.
FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31,
1996 December 31,
(Unaudited) 1995
(Thousands of Dollars)
ELECTRIC UTILITY PLANT:
At original cost, including nuclear fuel and construction work in progress ....... $16,620,192 $16,531,492
Less accumulated depreciation and amortization ................................... 7,072,069 6,832,201
Electric utility plant - net ................................................... 9,548,123 9,699,291
CURRENT ASSETS:
Cash and cash equivalents ........................................................ 1,494 412
Customer receivables, net of allowances of $11,031 and $11,737, respectively ..... 428,831 479,838
Materials, supplies and fossil fuel stock - at average cost ...................... 222,929 230,553
Other ............................................................................ 206,608 180,414
Total current assets ........................................................... 859,862 891,217
OTHER ASSETS:
Special use funds ................................................................ 694,690 646,846
Unamortized debt reacquisition costs ............................................. 290,011 294,844
Other ............................................................................ 213,832 219,061
Total other assets ............................................................. 1,198,533 1,160,751
TOTAL ASSETS ....................................................................... $11,606,518 $11,751,259
CAPITALIZATION:
Common shareholder's equity ...................................................... $ 4,525,823 $ 4,473,708
Preferred stock without sinking fund requirements ................................ 289,580 289,580
Preferred stock with sinking fund requirements ................................... 46,000 50,000
Long-term debt ................................................................... 3,094,702 3,094,050
Total capitalization ........................................................... 7,956,105 7,907,338
CURRENT LIABILITIES:
Accounts payable ................................................................. 271,194 299,987
Debt and preferred stock due within one year ..................................... 127,800 382,500
Accrued interest, taxes and other ................................................ 810,396 778,465
Total current liabilities ...................................................... 1,209,390 1,460,952
OTHER LIABILITIES AND DEFERRED CREDITS:
Accumulated deferred income taxes ................................................ 1,227,190 1,204,315
Unamortized regulatory and investment tax credits ................................ 417,439 426,317
Other ............................................................................ 796,394 752,337
Total other liabilities and deferred credits ................................... 2,441,023 2,382,969
COMMITMENTS AND CONTINGENCIES
TOTAL CAPITALIZATION AND LIABILITIES ............................................... $11,606,518 $11,751,259
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This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on Pages 8 through 10 herein and the Notes to Consolidated Financial Statements appearing in the 1995 Form 10-K for FPL Group and FPL.
FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
1996 1995
(Thousands of Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ........................................................................... $ 107,153 $ 119,442
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization ...................................................... 266,241 197,774
Other - net ........................................................................ 125,954 109,201
Net cash provided by operating activities ............................................ 499,348 426,417
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1) ............................................................. (114,781) (127,069)
Other - net .......................................................................... (74,077) (7,498)
Net cash used in investing activities .............................................. (188,858) (134,567)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of debt ..................................................................... - 58,630
Retirement of long-term debt and preferred stock ..................................... (102,770) (56,225)
Decrease in commercial paper ......................................................... (158,700) (25,000)
Dividends ............................................................................ (104,952) (105,484)
Capital contributions from FPL Group ................................................. 50,000 -
Other - net .......................................................................... 7,014 (61,160)
Net cash used in financing activities .............................................. (309,408) (189,239)
Net increase in cash and cash equivalents .............................................. 1,082 102,611
Cash and cash equivalents at beginning of period ....................................... 412 535
Cash and cash equivalents at end of period ............................................. $ 1,494 $ 103,146
Supplemental disclosures of cash flow information:
Cash paid for interest ............................................................... $ 67,542 $ 78,906
Cash paid for income taxes ........................................................... $ 12,766 $ 10,520
Supplemental schedule of noncash investing and financing activities:
Additions to capital lease obligations ............................................... $ 30,742 $ 12,114
(1) Capital expenditures exclude allowance for equity funds used during construction.
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This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on Pages 8 through 10 herein and the Notes to Consolidated Financial Statements appearing in the 1995 Form 10-K for FPL Group and FPL.
FPL GROUP, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The accompanying condensed consolidated financial statements should be read in conjunction with the combined 1995 Form 10-K for FPL Group and FPL. In the opinion of FPL Group and FPL, all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position as of March 31, 1996 and the results of operations and cash flows for the three months ended March 31, 1996 and 1995 have been made. Certain amounts included in the prior year's condensed consolidated financial statements have been reclassified to conform to the current year's presentation. The results of operations for an interim period may not give a true indication of results for the year.
1. Summary of Significant Accounting and Reporting Policies - Depreciation and Amortization
In the second quarter of 1995, the Florida Public Service Commission (FPSC) approved, on an interim basis, accelerated amortization of FPL's nuclear units of $30 million per year plus additional amounts based on the level of sales. In March 1996, the FPSC granted final approval of the $30 million per year of special nuclear amortization. The FPSC also approved the additional expense amounts recorded in 1995 based on the level of sales achieved and extended the program through 1997. Any additional expense will be applied against nuclear, fossil and regulatory assets.
2. Capitalization
FPL Group Common Stock - During the first quarter of 1996, FPL Group repurchased approximately one-half million shares of common stock under its share repurchase program which began in May 1994. To date, a total of approximately 6.4 million shares have been repurchased.
Preferred Stock - In January 1996, FPL redeemed all 600,000 outstanding shares of its 7.28% Preferred Stock, Series F, $100 Par Value and all 400,000 outstanding shares of its 7.40% Preferred Stock, Series G, $100 Par Value.
The 1996 sinking fund requirements for the 6.84% Preferred Stock, Series Q, $100 Par Value and the 8.625% Preferred Stock, Series R, $100 Par Value were met by redeeming and retiring, in April 1996, 30,000 shares of Series Q and 50,000 shares of Series R. There are no sinking fund requirements for the remainder of 1996.
Long-Term Debt - In April 1996, FPL purchased on the open market and retired $7 million principal amount of First Mortgage Bonds, 8.5% Series, due 2022.
3. Commitments and Contingencies
Commitments - FPL has made commitments in connection with a portion of its projected capital expenditures. Capital expenditures for the construction or acquisition of additional facilities and equipment to meet customer demand are estimated to be approximately $1.5 billion for the years 1996 through 1998. Included in this three-year forecast are capital expenditures for 1996 of $511 million, of which $113 million had been spent through March 31, 1996. FPL Group Capital Inc (FPL Group Capital) and its subsidiaries, primarily ESI Energy, Inc. (ESI), have guaranteed up to approximately $90 million of lease obligations, debt service payments and other payments subject to certain contingencies.
Insurance - Liability for accidents at nuclear power plants is governed by the Price-Anderson Act, which limits the liability of nuclear reactor owners to the amount of the insurance available from private sources and under an industry retrospective payment plan. In accordance with this Act, FPL maintains $200 million of private liability insurance, which is the maximum obtainable, and participates in a secondary financial protection system under which it is subject to retrospective assessments of up to $327 million per incident at any nuclear utility reactor in the United States, payable at a rate not to exceed $40 million per incident per year.
FPL participates in nuclear insurance mutual companies that provide $2.75 billion of limited insurance coverage for property damage, decontamination and premature decommissioning risks at its nuclear plants. The proceeds from such insurance, however, must first be used for reactor stabilization and site decontamination before they can be used for plant repair. FPL also participates in an insurance program that provides limited coverage for replacement power costs if a plant is out of service because of an accident. In the event of an accident at one of FPL's or another participating insured's nuclear plants, FPL could be assessed up to $69 million in retrospective premiums. In the event of a subsequent accident at such nuclear plants during the policy period, the maximum additional assessment would be $30 million under the programs in effect at March 31, 1996.
FPL also participates in a program that provides $200 million of tort liability coverage for nuclear worker claims. In the event of a tort claim by an FPL or another insured's nuclear worker, FPL could be assessed up to $12 million in retrospective premiums per incident.
In the event of a catastrophic loss at one of FPL's nuclear plants, the amount of insurance available may not be adequate to cover property damage and other expenses incurred. Uninsured losses, to the extent not recovered through rates, would be borne by FPL and could have a material adverse effect on FPL Group's and FPL's financial condition.
FPL self-insures certain of its transmission and distribution (T&D) property due to the high cost and limited coverage available from third-party insurers. FPL maintains a funded storm and property insurance reserve, which totaled approximately $202 million at March 31, 1996, for T&D property storm damage or assessments under the nuclear insurance program. Recovery from customers of any losses in excess of the storm and property insurance reserve will require the approval of the FPSC. FPL's available lines of credit include $300 million to provide additional liquidity in the event of a T&D property loss.
Contracts - FPL has entered into certain long-term purchased power and fuel contracts. Take-or-pay purchased power contracts with the Jacksonville Electric Authority (JEA) and with subsidiaries of the Southern Company provide approximately 1,300 megawatts (mw) of power through mid-2010 and 374 mw through 2022. FPL also has various firm pay-for-performance contracts to purchase approximately 1,000 mw from certain cogenerators and small power producers (qualifying facilities) with expiration dates ranging from 2002 through 2026. The purchased power contracts provide for capacity and energy payments. Energy payments are based on the actual power taken under these contracts. Capacity payments for the pay-for-performance contracts are subject to the qualifying facilities meeting certain contract conditions. The fuel contracts provide for the transportation and supply of natural gas and coal and the supply and use of Orimulsion. Orimulsion is a new fuel which FPL expected to begin using in 1998, subject to regulatory approvals. In April 1996, Florida's Power Plant Siting Board denied FPL's request to burn Orimulsion at the Manatee power plant. FPL is currently evaluating its options. In no year are the obligations under any of the fuel contracts expected to exceed usage.
The required annual capacity and minimum payments through 2000 under these contracts are estimated to be as follows:
1996 1997 1998 1999 2000
(Millions of Dollars)
Capacity payments:
JEA and Southern Companies ............................................... $210 $210 $210 $220 $220
Qualifying facilities .................................................... $300 $310 $320 $340 $350
Minimum payments, at projected prices:
Natural gas .............................................................. $270 $210 $210 $210 $210
Orimulsion (1) ........................................................... - - $120 $140 $140
Coal ..................................................................... $ 50 $ 50 $ 40 $ 40 $ 40
(1) All of FPL's Orimulsion-related contract obligations are subject to obtaining the required regulatory approvals.
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Capacity, energy and fuel charges under these contracts were as follows:
Three Months Ended March 31,
1996 Charges 1995 Charges
Energy/ Energy/
Capacity Fuel (1) Capacity Fuel (1)
(Millions of Dollars)
JEA and Southern Companies ............................................. $46(2) $33 $60(2) $32
Qualifying facilities................................................... $70(3) $27 $37(3) $20
Natural gas ............................................................ - $97 - $67
Coal ................................................................... - $12 - $11
(1) Recovered through the fuel and purchased power cost recovery clause (fuel clause).
(2) Recovered through base rates and the capacity cost recovery clause (capacity clause).
(3) Recovered through the capacity clause.
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Litigation - In 1988, Union Carbide Corporation sued FPL and Florida Power Corporation (Florida Power) alleging that, through a territorial agreement approved by the FPSC, they conspired to eliminate competition in violation of federal antitrust laws. Praxair, Inc., an entity that was formerly a unit of Union Carbide, has been substituted as the plaintiff. The suit sought treble damages of an unspecified amount based on alleged higher prices paid for electricity and for product sales lost. At the direction of the 11th Circuit Court of Appeals, a final judgment was entered in favor of FPL and Florida Power in January 1996. Praxair has petitioned to the U.S. Supreme Court to review the Court of Appeals' decision.
The Florida Municipal Power Agency (FMPA), an organization comprised of municipal electric utilities, has sued FPL for allegedly breaching a "contract" to provide transmission service to the FMPA and its members and for breaching antitrust laws by monopolizing or attempting to monopolize the provision, coordination and transmission of electric power in refusing to provide transmission service, or to permit the FMPA to invest in and use FPL's transmission system, on the FMPA's proposed terms. The FMPA seeks $140 million in damages, before trebling for the antitrust claim, and court orders requiring FPL to permit the FMPA to invest in and use FPL's transmission system on "reasonable terms and conditions" and on a basis equal to FPL. In 1995, the Court of Appeals vacated the District Court's summary judgment in favor of FPL and remanded the matter to the District Court for further proceedings.
A former cable installation contractor for Telesat Cablevision, Inc. (Telesat), a wholly-owned subsidiary of FPL Group Capital, sued FPL Group, FPL Group Capital and Telesat for breach of contract, fraud, violation of racketeering statutes and several other claims. The trial court entered a judgment in favor of FPL Group and Telesat on nine of twelve counts, including all of the racketeering and fraud claims, and in favor of FPL Group Capital on all counts. It also denied all parties' claims for attorneys' fees. However, the jury in the case awarded the contractor damages totaling approximately $6 million against FPL Group and Telesat for breach of contract and tortious interference. All parties have appealed.
FPL Group and FPL believe that they have meritorious defenses to all of the litigation described above and are vigorously defending these suits. Accordingly, the liabilities, if any, arising from these proceedings are not anticipated to have a material adverse effect on their financial statements.
A suit brought by the partners in a cogeneration project located in Dade County, Florida, alleged that FPL Group, FPL and ESI engaged in anti-competitive conduct intended to eliminate competition from cogenerators generally, and from their facility in particular, in violation of federal antitrust laws and wrongfully interfered with the cogeneration project's contractual relationship with Metropolitan Dade County. The suit sought damages in excess of $100 million, before trebling under antitrust laws, plus other unspecified compensatory and punitive damages. A motion for summary judgment by FPL Group, FPL and ESI was denied by the District Court. In March 1996, the 11th Circuit Court of Appeals reversed the District Court and granted FPL Group's, FPL's and ESI's motions for partial summary judgment on the anti-trust claims and remanded the case to the District Court for further proceedings on the remaining issues. In February 1996, all parties to this litigation and certain other persons entered into an agreement that would completely settle all disputes among the parties as part of a buy-out of an uneconomic power purchase agreement that FPL was required to enter into because of the Public Utility Regulatory Policies Act of 1978, as amended. All amounts payable by FPL under the settlement agreement would be recovered through either the capacity clause or fuel clause. The settlement is contingent upon approval by the FPSC.
4. Summarized Financial Information of FPL Group Capital
FPL Group Capital's debentures are guaranteed by FPL Group. Operating revenues of FPL Group Capital for the three months ended March 31, 1996 and 1995 were approximately $17 million and $21 million, respectively. For the same periods, operating expenses were approximately $18 million and $26 million. Net income for the three months ended March 31, 1996 was approximately $.4 million and net loss for the three months ended March 31,1995 was approximately $2 million.
At March 31, 1996, FPL Group Capital had current assets of approximately $126 million, noncurrent assets of approximately $912 million, current liabilities of approximately $42 million and noncurrent liabilities of approximately $783 million. At December 31, 1995, FPL Group Capital had approximately $89 million of current assets, $934 million of noncurrent assets, $24 million of current liabilities and $787 million of noncurrent liabilities.
Item 2. Managements' Discussion and Analysis of Financial Condition and Results of Operations
This discussion should be read in conjunction with the Notes to Condensed Consolidated Financial Statements contained herein and Managements' Discussion and Analysis of Financial Condition and Results of Operations appearing in the 1995 Form 10-K for FPL Group and FPL. The results of operations for an interim period may not give a true indication of results for the year. In the following discussion, all comparisons are with the corresponding items in the prior year.
RESULTS OF OPERATIONS
FPL Group's net income for the three months ended March 31, 1996 was lower than the prior period due to higher depreciation and other operations and maintenance (O&M) expenses. Partly offsetting the increased expenses were higher energy sales, resulting from both increased energy usage per customer and customer growth.
FPL's revenues from base rates increased to approximately $735 million for the three months ended March 31, 1996 from approximately $718 million for the same period in 1995. The increase reflects higher energy usage per retail customer of 5.8%, primarily due to extreme weather conditions in 1996. Customer growth of 1.7%, down slightly from 1995, also contributed to the increase. Revenues from cost recovery clauses and franchise fees comprise substantially all of the remaining portion of operating revenues. These revenues represent a pass-through of costs and do not significantly affect net income.
O&M expenses increased for the three months ended March 31, 1996, primarily due to costs associated with a planned nuclear refueling outage in the first quarter of 1996. There were no nuclear refueling outages in the first quarter of 1995. Depreciation expense increased for the three months ended March 31, 1996 mainly as a result of the special amortization of nuclear units, which amounted to approximately $74 million, and an increase in the provision for nuclear decommissioning and fossil dismantlement. See Note 1.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities benefited from higher sales and lower cash expenses. Using available cash flows from operations, FPL has redeemed certain series of its preferred stock and first mortgage bonds and FPL Group has repurchased approximately 500,000 shares of common stock, consistent with managements' intent to reduce debt balances and outstanding shares of common stock. See Note 2.
For information concerning capital commitments, see Note 3.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
(a) Reference is made to Item 3. Legal Proceedings in the 1995 Form 10-K for FPL Group and FPL.
In March 1996, Praxair petitioned the U.S. Supreme Court to review the Court of Appeals' decision previously entered in favor of FPL and Florida Power Corporation.
Item 5. Other Information
(a) Reference is made to Item 1. Business - FPL Operations
- Competition in the 1995 Form 10-K for FPL Group and
FPL.
In April 1996, the Federal Energy Regulatory Commission issued a final rule regarding wholesale transmission access and pricing. FPL expects to file open access transmission tariffs in compliance with the final rule during the third quarter of 1996.
In April 1996, the FMPA began receiving network transmission service from FPL for certain of its members under a network service agreement filed with the FERC in March 1996.
(b) Reference is made to Item 1. Business - FPL Operations
- Fuel in the 1995 Form 10-K for FPL Group and FPL.
In April 1996, Florida's Power Plant Siting Board denied FPL's request to burn Orimulsion at the Manatee power plant. FPL is currently evaluating its options.
(c) Reference is made to Item 1. Business - FPL Operations
- Electric and Magnetic Fields in the 1995 Form 10-K for
FPL Group and FPL.
In May 1996, the court granted summary judgment for FPL in the suit that alleged personal injury and wrongful death resulting from electric and magnetic fields.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit FPL
Number Description Group FPL
4(a) Ninety-seventh Supplemental Indenture dated as of March 1, 1996 between FPL x x
and Bankers Trust Company, Trustee
12 Computation of Ratios x
27 Financial Data Schedule x x
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(b) Reports on Form 8-K - None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
FPL GROUP, INC.
FLORIDA POWER & LIGHT COMPANY
(Registrants)
Date: May 8, 1996 MICHAEL W. YACKIRA
Michael W. Yackira
Vice President, Finance and Chief Financial Officer of FPL Group, Inc., Senior Vice President, Finance and Chief Financial Officer of Florida Power & Light Company
(Principal Financial Officer of the Registrants)
EXHIBIT 12
FLORIDA POWER & LIGHT COMPANY
COMPUTATION OF RATIOS
Three Months Ended
March 31, 1996
(Thousands of Dollars)
RATIO OF EARNINGS TO FIXED CHARGES
Earnings, as defined:
Net income ................................................................................ $107,153
Income taxes .............................................................................. 56,751
Fixed charges, as below ................................................................... 68,270
Total earnings, as defined .............................................................. $232,174
Fixed charges, as defined:
Interest expense .......................................................................... $ 64,248
Rental interest factor .................................................................... 1,397
Fixed charges included in nuclear fuel cost ............................................... 2,625
Total fixed charges, as defined ......................................................... $ 68,270
Ratio of earnings to fixed charges .......................................................... 3.40
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND DIVIDEND REQUIREMENTS ON PREFERRED STOCK
Earnings, as defined:
Net income ................................................................................ $107,153
Income taxes .............................................................................. 56,751
Fixed charges, as below ................................................................... 68,270
Total earnings, as defined .............................................................. $232,174
Fixed charges, as defined:
Interest expense .......................................................................... $ 64,248
Rental interest factor .................................................................... 1,397
Fixed charges included in nuclear fuel cost ............................................... 2,625
Total fixed charges, as defined ......................................................... 68,270
Non-tax deductible dividend requirements on preferred stock ................................. 6,434
Ratio of income before income taxes to net income ........................................... 1.53
Dividend requirements on preferred stock before income taxes ................................ 9,844
Combined fixed charges and dividend requirements on preferred stock ......................... $ 78,114
Ratio of earnings to combined fixed charges and dividend requirements on preferred stock .... 2.97
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<ARTICLE> UT <LEGEND> This schedule contains summary financial information extracted from FPL Group's and FPL's condensed consolidated balance sheet as of March 31, 1996 and condensed consolidated statements of income and cash flows for the three months ended March 31, 1996 and is qualified in its entirety by reference to such financial statements. <CIK> 0000753308 <NAME> FPL Group, Inc. <MULTIPLIER> 1,000 <FISCAL-YEAR-END> DEC-31-1996 <PERIOD-END> MAR-31-1996 <PERIOD-TYPE> 3-MOS <BOOK-VALUE> PER-BOOK <TOTAL-NET-UTILITY-PLANT> $9,548,123 <OTHER-PROPERTY-AND-INVEST> $1,272,302 <TOTAL-CURRENT-ASSETS> $928,460 <TOTAL-DEFERRED-CHARGES> $0 <OTHER-ASSETS> $517,541 <TOTAL-ASSETS> $12,266,426 <COMMON> $0 <CAPITAL-SURPLUS-PAID-IN> $0 <RETAINED-EARNINGS> $0 <TOTAL-COMMON-STOCKHOLDERS-EQ> $4,387,381 <PREFERRED-MANDATORY> $46,000 <PREFERRED> $289,580 <LONG-TERM-DEBT-NET> $3,377,057 <SHORT-TERM-NOTES> $0 <LONG-TERM-NOTES-PAYABLE> $0 <COMMERCIAL-PAPER-OBLIGATIONS> $0 <LONG-TERM-DEBT-CURRENT-PORT> $0 <PREFERRED-STOCK-CURRENT> $0 <CAPITAL-LEASE-OBLIGATIONS> $0 <LEASES-CURRENT> $0 <OTHER-ITEMS-CAPITAL-AND-LIAB> $4,166,408 <TOT-CAPITALIZATION-AND-LIAB> $12,266,426 <GROSS-OPERATING-REVENUE> $1,357,707 <INCOME-TAX-EXPENSE> $52,619 <OTHER-OPERATING-EXPENSES> $1,134,333 <TOTAL-OPERATING-EXPENSES> $1,134,333 <OPERATING-INCOME-LOSS> $223,374 <OTHER-INCOME-NET> ($1,363) <INCOME-BEFORE-INTEREST-EXPEN> $215,577 <TOTAL-INTEREST-EXPENSE> $69,246 <NET-INCOME> $93,712 <PREFERRED-STOCK-DIVIDENDS> $6,434 <EARNINGS-AVAILABLE-FOR-COMM> $93,712 <COMMON-STOCK-DIVIDENDS> $80,394 <TOTAL-INTEREST-ON-BONDS> $0 <CASH-FLOW-OPERATIONS> $486,680 <EPS-PRIMARY> $0.54 <EPS-DILUTED> $0.54 |
<ARTICLE> UT <LEGEND> This schedule contains summary financial information extracted from FPL's condensed consolidated balance sheet as of March 31, 1996 and condensed consolidated statements of income and cash flows for the three months ended March 31, 1996 and is qualified in its entirety by reference to such financial statements. <CIK> 0000037634 <NAME> Florida Power & Light Company <MULTIPLIER> 1,000 <FISCAL-YEAR-END> DEC-31-1996 <PERIOD-END> MAR-31-1996 <PERIOD-TYPE> 3-MOS <BOOK-VALUE> PER-BOOK <TOTAL-NET-UTILITY-PLANT> $9,548,123 <OTHER-PROPERTY-AND-INVEST> $694,690 <TOTAL-CURRENT-ASSETS> $859,862 <TOTAL-DEFERRED-CHARGES> $0 <OTHER-ASSETS> $503,843 <TOTAL-ASSETS> $11,606,518 <COMMON> $0 <CAPITAL-SURPLUS-PAID-IN> $0 <RETAINED-EARNINGS> $0 <TOTAL-COMMON-STOCKHOLDERS-EQ> $4,525,823 <PREFERRED-MANDATORY> $46,000 <PREFERRED> $289,580 <LONG-TERM-DEBT-NET> $3,094,702 <SHORT-TERM-NOTES> $0 <LONG-TERM-NOTES-PAYABLE> $0 <COMMERCIAL-PAPER-OBLIGATIONS> $0 <LONG-TERM-DEBT-CURRENT-PORT> $0 <PREFERRED-STOCK-CURRENT> $0 <CAPITAL-LEASE-OBLIGATIONS> $0 <LEASES-CURRENT> $0 <OTHER-ITEMS-CAPITAL-AND-LIAB> $3,650,413 <TOT-CAPITALIZATION-AND-LIAB> $11,606,518 <GROSS-OPERATING-REVENUE> $1,340,742 <INCOME-TAX-EXPENSE> $58,423 <OTHER-OPERATING-EXPENSES> $1,115,514 <TOTAL-OPERATING-EXPENSES> $1,173,937 <OPERATING-INCOME-LOSS> $166,805 <OTHER-INCOME-NET> $2,734 <INCOME-BEFORE-INTEREST-EXPEN> $169,539 <TOTAL-INTEREST-EXPENSE> $62,386 <NET-INCOME> $107,153 <PREFERRED-STOCK-DIVIDENDS> $6,434 <EARNINGS-AVAILABLE-FOR-COMM> $100,719 <COMMON-STOCK-DIVIDENDS> $98,518 <TOTAL-INTEREST-ON-BONDS> $0 <CASH-FLOW-OPERATIONS> $499,348 <EPS-PRIMARY> $0 <EPS-DILUTED> $0 |
This Instrument was prepared by:
Michael W. Yackira of
Florida Power & Light Company 700 Universe Boulevard, Juno Beach, Florida 33408
FLORIDA POWER & LIGHT COMPANY
to
BANKERS TRUST COMPANY
As Trustee under Florida Power & Light Company's Mortgage and Deed of Trust, Dated as of January 1, 1944.
Ninety-seventh Supplemental Indenture
Relating to the Modification of the Mortgage
Dated as of March 1, 1996
There is no additional indebtedness being incurred in connection with the recording of this Supplemental Indenture. Under Sections 201.08(4) and 199.133(1), Florida Statutes, respectively, no Documentary Stamp Tax or Intangible Personal Property Tax is payable.
NINETY-SEVENTH SUPPLEMENTAL INDENTURE
INDENTURE, dated as of the 1st day of March, 1996, made and entered into by and between Florida Power & Light Company, a corporation of the State of Florida, whose post office address is 700 Universe Boulevard, Juno Beach, Florida 33408 (hereinafter sometimes called FPL), and Bankers Trust Company, a corporation of the State of New York, whose post office address is Four Albany Street, New York, New York 10006 (hereinafter sometimes called the Trustee), as the ninety-seventh supplemental indenture (hereinafter called the Ninety-seventh Supplemental Indenture) to the Mortgage and Deed of Trust, dated as of January 1, 1944 (hereinafter called the Mortgage), made and entered into by FPL, the Trustee and The Florida National Bank of Jacksonville, as Co-Trustee (now resigned), the Trustee now acting as sole trustee under the Mortgage, which Mortgage was executed and delivered by FPL to secure the payment of bonds issued or to be issued under and in accordance with the provisions thereof, reference to which Mortgage is hereby made, this Ninety-seventh Supplemental Indenture being supplemental thereto; and
Whereas, Section 120 of the Mortgage provides, among other things, that any power, privilege or right expressly or impliedly reserved to or in any way conferred upon FPL by any provision of the Mortgage, whether such power, privilege or right is in any way restricted or is unrestricted, may be in whole or in part waived or surrendered or subjected to any restriction if at the time unrestricted or to additional restriction if already restricted, and FPL may enter into any further covenants, limitations or restrictions for the benefit of any one or more series of bonds issued thereunder, or FPL may cure any ambiguity contained therein, or in any supplemental indenture, or may establish the terms and provisions of any series of bonds other than said first series, by an instrument in writing executed and acknowledged by FPL in such manner as would be necessary to entitle a conveyance of real estate to record in all of the states in which any property at the time subject to the Lien of the Mortgage shall be situated; and
Whereas, in the Twenty-second Supplemental Indenture, dated as of July 1, 1970, the Company reserved the right to amend the Mortgage in certain respects without the consent or other action by holders of the bonds of the Twenty-third Series, or any subsequently created series, and there is no series of bonds created prior to the bonds of the Twenty-third Series which remains Outstanding; and
Whereas, the execution and delivery by FPL of this Ninety-seventh Supplemental Indenture has been duly authorized by the Board of Directors of FPL by appropriate resolutions of said Board of Directors;
Now, Therefore, This Indenture Witnesseth: That FPL, in consideration of the premises and of One Dollar to it duly paid by the Trustee at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, covenants and agrees to and with the Trustee and its successors in said trust under the Mortgage, as follows:
Section 1. Pursuant to the
reservation of right in Section 4 of the Twenty-second
Supplemental Indenture dated as of July 1, 1970, and there being
no Outstanding bonds of any series created prior to the Twenty-
third Series, the Company hereby amends the Mortgage, as
supplemented, to eliminate the provisions of (and the references
to) clause (6) of Section 5 of the Mortgage and of subdivision (I)
of Section 39 of the Mortgage and to eliminate the references to
Section 39 from clause (c) of Section 5 of the Mortgage and from
Section 29 of the Mortgage.
Section 2. Pursuant to the reservation of right in Section 5 of the Twenty-second Supplemental Indenture dated as of July 1, 1970, and there being no Outstanding bonds of any series created prior to the Twenty- third Series, the Company hereby amends Article XIX of the Mortgage, as supplemented, to read as set forth in Section 5 of such Twenty-second Supplemental Indenture.
Section 3. Subject to the amendments provided for in this Ninety-seventh Supplemental Indenture, the terms defined in the Mortgage, as heretofore supplemented, shall, for all purposes of this Ninety-seventh Supplemental Indenture, have the meanings specified in the Mortgage, as heretofore supplemented.
Section 4. The Trustee hereby accepts the trust herein declared, provided, created or supplemented and agrees to perform the same upon the terms and conditions herein and in the Mortgage, as heretofore supplemented, set forth and upon the following terms and conditions:
The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Ninety-seventh Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made by FPL solely. In general, each and every term and condition contained in Article XVII of the Mortgage, as heretofore amended, shall apply to and form part of this Ninety-seventh Supplemental Indenture with the same force and effect as if the same were herein set forth in full with such omissions, variations and insertions, if any, as may be appropriate to make the same conform to the provisions of this Ninety-seventh Supplemental Indenture.
Section 5. Whenever in this Ninety-seventh Supplemental Indenture either of the parties hereto is named or referred to, this shall, subject to the provisions of Articles XVI and XVII of the Mortgage, as heretofore amended, be deemed to include the successors and assigns of such party, and all the covenants and agreements in this Ninety-seventh Supplemental Indenture contained by or on behalf of FPL, or by or on behalf of the Trustee, or either of them, shall, subject as aforesaid, bind and inure to the respective benefits of the respective successors and assigns of such parties, whether so expressed or not.
Section 6. Nothing in this Ninety-seventh Supplemental Indenture, expressed or implied, is intended, or shall be construed, to confer upon, or to give to, any person, firm or corporation, other than the parties hereto and the holders of the bonds and coupons Outstanding under the Mortgage, any right, remedy or claim under or by reason of this Ninety-seventh Supplemental Indenture or any covenant, condition, stipulation, promise or agreement hereof, and all the covenants, conditions, stipulations, promises and agreements in this Ninety- seventh Supplemental Indenture contained by or on behalf of FPL shall be for the sole and exclusive benefit of the parties hereto, and of the holders of the bonds and coupons Outstanding under the Mortgage.
Section 7. The Mortgage, as heretofore supplemented and amended and as supplemented hereby, is intended by the parties hereto, as to properties now or hereafter encumbered thereby and located within the State of Georgia, to operate and is to be construed as granting a lien only on such properties and not as a deed passing title thereto.
Section 8. This Ninety-seventh Supplemental Indenture shall be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
In Witness Whereof, FPL has caused its corporate name to be hereunto affixed, and this instrument to be signed and sealed by its President or one of its Vice Presidents, and its corporate seal to be attested by its Secretary or one of its Assistant Secretaries for and in its behalf and Bankers Trust Company has caused its corporate name to be hereunto affixed, and this instrument to be signed and sealed by one of its Vice Presidents or Assistant Vice Presidents, and its corporate seal to be attested by one of its Assistant Vice Presidents or one of its Assistant Secretaries, all as of the day and year first above written.
Florida Power & Light Company
By MICHAEL W. YACKIRA
Michael W. Yackira
Senior Vice President, Finance
and Chief Financial Officer
700 Universe Boulevard
Juno Beach, FL 33408
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Attest:
P. R. SUTHERLAND
P. R. Sutherland
Assistant Treasurer and
Assistant Secretary
700 Universe Boulevard
Juno Beach, FL 33408
Executed, sealed and delivered by
Florida Power & Light Company
in the presence of:
MICHELE T. CANINO
Michele T. Canino
HAROLD J. MCCARTHY
Harold J. McCarthy
Bankers Trust Company, As Trustee
By ROBERT CAPORALE
Robert Caporale
Vice President
4 Albany Street - 4th Floor
New York, NY 10006
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Attest:
SHAFIQ JADAVJI
Shafiq Jadavji
Assistant Treasurer
4 Albany Street - 4th Floor
New York, NY 10006
Executed, sealed and delivered by
Bankers Trust Company
in the presence of:
SCOTT THIEL
Scott Thiel
KERRI O'BRIEN
Kerri O'Brien
State of Florida
County of Palm Beach ss.:
On the 1st day of March, in the year 1996, before me personally came Michael W. Yackira, to me known, who, being by me duly sworn, did depose and say that he resides at 102 Sandbourne Lane, Palm Beach Gardens, Florida 33418; that he is the Senior Vice President, Finance and Chief Financial Officer of Florida Power & Light Company, one of the corporations described in and which executed the above instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and that he signed his name thereto by like order.
I Hereby Certify, that on this 1st day of March, 1996, before me personally appeared Michael W. Yackira and P. R. Sutherland, respectively, the Senior Vice President, Finance and Chief Financial Officer and an Assistant Treasurer and Assistant Secretary of Florida Power & Light Company, a corporation under the laws of the State of Florida, to me known to be the persons described in and who executed the foregoing instrument and severally acknowledged the execution thereof to be their free act and deed as such officers, for the uses and purposes therein mentioned; and that they affixed thereto the official seal of said corporation, and that said instrument is the act and deed of said corporation.
Michael W. Yackira and P. R. Sutherland produced Florida Driver's License No. Y260-559-51-294 and Florida Driver's License No. S364-696-47-166-0 as identification, respectively.
Witness my signature and official seal at Juno Beach, in the County of Palm Beach, and State of Florida, the day and year last aforesaid.
BRENDA F. SMITH
Brenda F. Smith
Notary Public, State of Florida
Commission No. CC 198030
My Commission Expires May 3, 1996
State of New York
County of New York ss.:
On the 1st day of March, in the year 1996, before me personally came Robert Caporale, to me known, who, being by me duly sworn, did depose and say that he resides at 35 Meadowbrook Lane, Mt. Kisco, New York; that he is a Vice President of Bankers Trust Company, one of the corporations described in and which executed the above instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and that he signed his name thereto by like order.
I Hereby Certify, that on this 1st day of March, 1996, before me personally appeared Robert Caporale and Shafiq Jadavji, respectively, a Vice President and an Assistant Treasurer of Bankers Trust Company, a corporation under the laws of the state of New York, to me known to be the persons described in and who executed the foregoing instrument and severally acknowledged the execution thereof to be their free act and deed as such officers, for the uses and purposes therein mentioned; and that they affixed thereto the official seal of said corporation, and that said instrument is the act and deed of said corporation.
Robert Caporale and Shafiq Jadavji produced New York Driver's License No. C 01579 27892 342291 62 and New York Driver's License No. J 01114 34696 924007 68 as identification, respectively.
Witness my signature and official seal at New York City, in the County of New York, and State of New York, the day and year last aforesaid.
CAROL ALLEN
Carol Allen
Notary Public, State of New York
Commission No. 24-4920187
Qualified in Kings County
My Commission Expires
February 16, 1998