UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _____________
Commission file number 1-3382
CAROLINA POWER & LIGHT COMPANY
___________________________________________________________________
(Exact name of registrant as specified in its charter)
North Carolina 56-0165465
___________________________________________________________________
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization Identification No.)
411 Fayetteville Street, Raleigh, North Carolina 27601-1748
___________________________________________________________________
(Address of principal executive offices) (Zip Code)
919-546-6111
___________________________________________________________________
(Registrant's telephone number, including area code)
___________________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has 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 (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X . No .
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock (Without Par Value) shares outstanding at
April 30, 1995: 156,172,322
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
_______ ____________________
Reference is made to the attached Appendix containing the
Interim Financial Statements for the periods ended March 31, 1995. The
amounts are unaudited but, in the opinion of management, reflect all
transactions necessary to fairly present the Company's financial
position and results of operations for the interim periods.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
______ ___________________________________________________________
Results of Operations
For the Three and Twelve Months Ended March 31, 1995,
As Compared With the Corresponding Periods One Year Earlier
___________________________________________________________
Operating Revenues and Expenses: Although sales increased
slightly for the three and twelve months ended March 31, 1995, revenues
decreased due to mild weather in the current periods, the expiration of a
special North Carolina rate rider and decreased sales to North Carolina
Eastern Municipal Power Agency (Power Agency). The weather-related decrease
totaled $16 million and $116 million for the three and twelve months ended
March 31, 1995, respectively. The decrease due to the expiration of the
rate rider totaled $15 million and $44 million for the three and twelve months
ended March 31, 1995, respectively.
Sales to Power Agency decreased $12 million and $28 million for the three
and twelve months ended March 31, 1995, respectively, due to greater
generation by units jointly-owned by the Company and Power Agency. Partially
offsetting these decreases was an increase in revenues due to a combination of
customer growth and changes in customer usage patterns of $30 million and $117
million for the three and twelve-month periods, respectively.
Fuel for generation decreased for the three and twelve months ended
March 31, 1995, primarily due to greater availability of the Company's
nuclear generating units.
For the three-month period, lower-cost nuclear generation, as a
percentage of total generation, increased to 56%, from 36%, and higher-cost
fossil generation decreased to 44%, from 64%. For the twelve-month period,
nuclear generation, as a percentage of total generation, increased to 52%,
from 35%, and fossil generation decreased to 48%, from 64%.
For the three and twelve months ended March 31, 1995, deferred fuel
cost increased primarily due to lower fuel costs associated with increased
nuclear generation.
For the twelve-month period, the increase due to lower fuel costs more
than offset a decrease of $33 million related to fuel settlements reached with
the Company's regulators. Pursuant to these settlements, the Company agreed
to forgo recovery of deferred fuel costs totaling approximately $8 million and
$41 million for the twelve-month periods ended March 31, 1995, and March 31,
1994, respectively.
Purchased power decreased for the three months ended March 31, 1995, due
to decreased purchases from other utilities, primarily attributable to milder
weather, and due to lower purchases from Power Agency in accordance with the
Harris Plant buyback agreement.
For both reporting periods, the decreases in depreciation
and amortization are primarily due to the completion of the amortization of
abandoned plant costs for Harris Unit No. 2 and of costs associated with the
North Carolina rate rider. The decreases related to these items totaled $16
million and $41 million for the three and twelve months ended March 31, 1995,
respectively.
Other Income: The decrease in Harris Plant carrying costs for the
twelve months ended March 31, 1995, is primarily related to the Company's
settlement with North Carolina Electric Membership Corporation in 1993.
The decrease in interest income for the twelve months ended
March 31, 1995, is due to a change in accounting for employee stock ownership
plans, which was implemented in January 1994, and due to a settlement
recorded in 1993. Partially offsetting these decreases was an increase
related to certain Internal Revenue Service audit issues.
Other income, net, decreased for the twelve months ended
March 31, 1995, primarily due to the change in accounting for employee
stock ownership plans and due to a decrease in accretion to present value
associated with the Company's abandonment costs.
Material Changes in Capital Resources and Liquidity
From December 31, 1994, to March 31, 1995
and From March 31, 1994, to March 31, 1995
__________________________________________
During the three and twelve months ended March 31, 1995, the
Company issued long-term debt totalling $60 million and $232.6 million,
respectively. The proceeds of these issuances, along with internally
generated funds, financed the redemption or retirement of long-term debt
totaling $125 million and $297.7 million, respectively.
In order to provide flexibility in the timing and amounts of
long-term financing, the Company uses short-term financing in the form of
commercial paper backed by revolving credit agreements. Currently, these
revolving credit agreements amount to $307.9 million. The Company had
$95.5 million of commercial paper outstanding at March 31, 1995.
The Company's capital structure at March 31, 1995, was 48.9%
common stock equity, 48.4% long-term debt and 2.7% preferred stock.
The Company's First Mortgage Bonds are currently rated "A2"
by Moody's Investors Service, "A" by Standard & Poor's and "A+" by Duff &
Phelps. Standard & Poor's and Moody's Investors Service have
rated the Company's commercial paper "A-1" and "P-1", respectively.
In 1994, the Board of Directors of the Company authorized
the Executive Committee of the Board of Directors to repurchase up to 10
million shares of the Company's common stock on the open market. Under this
stock repurchase program, the Company has purchased approximately 4.5
million shares from July 1994 through March 1995. The decrease in average
common shares outstanding resulted in an increase in earnings per common
share of approximately $.02 and $.04 for the three and twelve months
ended March 31, 1995, respectively.
Other Matters
_____________
In 1994, the Company established a wholly-owned subsidiary,
CaroNet, Inc., and the subsidiary joined a regional partnership, BellSouth
Carolinas PCS, L.P., led by BellSouth Personal Communications, Inc.
(BellSouth). In March 1995, BellSouth won its bid for a Federal Communications
Commission license to operate a personal communications services (PCS) system
covering most of North Carolina and South Carolina and a small portion of
Georgia. PCS, a wireless communications technology, is expected to provide
high-quality mobile communications. Wireless technology could also support
automated meter reading, automated service connection and disconnection, and
control and monitoring of certain aspects of the Company's electric
transmission and distribution systems. BellSouth will transfer the PCS license
to the partnership. BellSouth is the general partner and handles day-to-day
management of the business. Construction of the system infrastructure is
expected to begin during the summer of 1995, with service start-up anticipated
by mid-1996. In anticipation of the infrastructure construction, the Company
invested $50 million in CaroNet, Inc. in April 1995. CaroNet, Inc. owns
a ten percent limited partnership interest in BellSouth Carolinas PCS, L.P.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
______ _________________
Legal aspects of certain matters are set forth in Item 5 below.
Item 2. Changes in Securities )
______ _____________________ )
)
)
Item 3. Defaults upon Senior Securities ) Not applicable for the
______ _______________________________ ) quarter ended March 31,
) 1995.
)
Item 4. Submission of Matters to a Vote )
of Security Holders )
______ _______________________________ )
Item 5. Other Information
______ _________________
1. (Reference is made to the Company's 1994 Form 10-K, Competition and
Franchises, paragraph 1.b., page 8.) On March 29, 1995, the Federal
Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking
(Proposal) that would establish guidelines for wholesale wheeling of electric
power. The Proposal would require utilities to provide open access to their
interstate power transmission network and not give themselves preferential
access to their own services. Currently, such power transfers are negotiated
case-by-case or under long-term contracts. The FERC's Proposal would establish
a standard generic set of terms and conditions, and would define the
terms under which independent power producers and others could gain access to a
utility's transmission grid to sell power to a wholesale customer such as a
municipality or rural electric cooperative. The Company is
currently evaluating the Proposal to determine its impact on the Company
and its customers. Comments on the Proposal are due August 7, 1995.
The Company cannot predict the outcome of this matter.
2. (Reference is made to the Company's 1994 Form 10-K, Competition and
Franchises, paragraph 1, page 8.) On March 29, 1995, a bill was
introduced in the North Carolina General Assembly to facilitate
the construction of an interstate natural gas pipeline to be built
from Aiken, South Carolina to Leland, North Carolina. The bill, as
originally introduced, proposed to, among other things, exempt from utility
regulation all power generating facilities that receive gas from
the pipeline as fuel. On May 9, 1995, both the House Utilities
Committee and the Senate Utilities Committee approved an amended
version of this bill which orders the Joint Legislative Utility Review
Committee to study the issues contained in the original bill and report
its findings and any recommendations to the North Carolina General
Assembly in 1996. Final legislative approval of the amended bill
is pending. The Company cannot predict the outcome of this matter.
3. (Reference is made to the Company's 1994 Form 10-K, Competition and
Franchises, page 8.) A bill was introduced in the North Carolina General
Assembly that would change fundamentally the nature of public power agencies
in the state. The bill, as originally introduced, proposed to, among other
things, permit certain organizational changes among the state's municipal power
agencies and provide additional authority for the marketing of excess
capacity and energy. On May 4, 1995, the House Utilities Committee approved
a substantially amended version of this bill which would authorize internal
reorganization of the state's municipal power agencies, and order the Joint
Legislative Utility Review Committee to study other issues contained in the
original legislation and report its findings and any recommendations to the
General Assembly in 1996. Final legislative approval of the amended bill is
pending. The Company cannot predict the outcome of this matter.
4. (Reference is made to the Company's 1994 Form 10-K, Financing
Program, paragraph 3, page 11.) On April 21, 1995, the Company issued $125
million principal amount of Quarterly Income Capital Securities (Series A
Subordinated Deferrable Interest Debentures) ("Capital Securities") at an
interest rate of 8.55%, for net proceeds to the Company of approximately $121
million. The proceeds from the issuance of the Capital Securities were
applied to the Company's ongoing maintenance and construction program, and
for other general corporate purposes.
5. Reference is made to the Company's 1994 Form 10-K, Financing Program,
paragraph 4, page 12.) On April 1, 1995, the Company retired $77.1
million principal amount of First Mortgage Bonds, 9.14% Series, which matured
on that date.
6. (Reference is made to the Company's 1994 Form 10-K, Other Matters,
paragraph 2, page 27.) In April 1992, an independent consultant's safety
inspection report for the Marshall Hydroelectric Project was submitted to
the FERC for approval. In March 1995, the Company received comments on the
report from the FERC. By letter dated May 3, 1995, the Company submitted
a response to the FERC's comments. The Company cannot predict the outcome
of this matter.
7. (Reference is made to the Company's 1994 Form 10-K, Nuclear
Matters, paragraph 7.c., page 23.) With regard to the Company's
Brunswick Nuclear Plant, additional shroud inspections were performed for
Brunswick Unit No. 1 during the spring refueling outage. Re-examination of
previously identified cracks indicated that no significant
crack growth had occurred. Minor indications were noted in areas not
previously examined, but these findings are not expected to affect restart
of the unit following the refueling outage or unit operation over the next
fuel cycle. The Company is proceeding to develop contingency plans which
could be relied upon if shroud repairs are required in the future. The Company
cannot predict the outcome of this matter.
8. (Reference is made to the Company's 1994 Form 10-K, Other Matters,
paragraph 5, page 28.) With regard to the dispute between the Company and
Zeigler Coal Holding Company (Zeigler) over a coal-supply agreement between
the Company and certain Zeigler subsidiaries, on April 3, 1995, the parties
moved for a 30-day stay in the arbitration process after reaching
a preliminary settlement agreement. On April 28, 1995, the parties entered
into a final settlement agreement that resolves the dispute. The resolution,
effective April 1, 1995, has produced a new coal supply arrangement between
the Company and Zeigler, and amicably resolves all points of disagreement.
The new coal supply arrangement will provide lower coal costs for the Company
and allow Zeigler operating and source flexibility.
9. (Reference is made to the Company's 1994 Form 10-K, Other Matters,
paragraph 6, page 28.) In 1994, the Company established a wholly-owned
subsidiary, CaroNet, Inc. (CaroNet), and CaroNet joined a regional partnership,
BellSouth Carolinas PCS, L.P., led by BellSouth Personal Communications, Inc.
(BellSouth). On March 14, 1995, BellSouth won its bid for a Federal
Communications Commission license to operate a personal communications
services (PCS) system covering most of North Carolina and South Carolina and
a small portion of Georgia. BellSouth will transfer the PCS license to the
partnership. The partnership is expected to begin construction of the PCS
system infrastructure during the summer of 1995. Service start-up is
anticipated by mid-1996. In anticipation of the infrastructure construction,
the Company invested $50 million in CaroNet on April 28, 1995. CaroNet owns
a ten percent limited partnership interest in BellSouth Carolinas PCS, L.P.
Item 6. Exhibits and Reports on Form 8-K
______ ________________________________
(a) Exhibits
None.
(b) Reports on Form 8-K filed during or with respect to the
quarter:
Date of Report
(Earliest Event Reported) Date of Signature Items Reported
_________________________ _________________ ______________
January 23, 1995 January 23, 1995 Item 7. Financial
Statements, Pro
Forma Financial
Information and
Exhibits
April 13, 1995 April 13, 1995 Item 7. Financial
Statements, Pro
Forma Financial
Information and
Exhibits
April 20, 1995 April 20, 1995 Item 7. Financial
Statements, Pro
Forma Financial
Information and
Exhibits
SIGNATURES
Pursuant to 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.
CAROLINA POWER & LIGHT COMPANY
(Registrant)
By: Charles D. Barham, Jr.
Executive Vice President
By: Paul S. Bradshaw
Vice President and Controller
(and Principal Accounting Officer)
Date: May 12, 1995