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 June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-3545
FLORIDA POWER & LIGHT COMPANY
(Exact name of registrant as specified in its charter)
Florida 59-0247775
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 Universe Boulevard
Juno Beach, Florida 33408
(Address of principal executive offices)
(Zip Code)
(407) 694-4647
(Registrant's telephone number, including area code)
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 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, No Par Value, outstanding at July 31, 1995: 1,000
shares
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
FLORIDA POWER & LIGHT COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
(Thousands of Dollars)
OPERATING REVENUES ............................. $1,446,203 $1,418,573 $2,602,472 $2,574,362
OPERATING EXPENSES:
Fuel, purchased power and interchange ........ 458,403 473,587 803,275 838,401
Other operations and maintenance ............. 274,817 354,394 506,706 624,146
Depreciation and amortization ................ 260,207 167,602 457,982 331,921
Income taxes ................................. 95,554 79,337 163,743 143,969
Taxes other than income taxes ................ 137,668 133,836 265,596 255,038
Total operating expenses ................... 1,226,649 1,208,756 2,197,302 2,193,475
OPERATING INCOME ............................... 219,554 209,817 405,170 380,887
OTHER INCOME - NET ............................. 1,840 4,568 5,761 11,588
INTEREST CHARGES - NET ......................... 67,590 71,398 137,685 140,933
NET INCOME ..................................... 153,804 142,987 273,246 251,542
PREFERRED STOCK DIVIDEND REQUIREMENTS .......... 9,039 9,879 21,192 19,808
NET INCOME AVAILABLE TO FPL GROUP, INC. ........ $ 144,765 $ 133,108 $ 252,054 $ 231,734
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on Pages 5 through 7 herein and the
Notes to Consolidated Financial Statements appearing in Florida Power
& Light Company's (FPL) 1994 Annual Report on Form 10-K (Form 10-K).
FLORIDA POWER & LIGHT COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30,
1995 December 31,
(Unaudited) 1994
(Thousands of Dollars)
ELECTRIC UTILITY PLANT:
At original cost, including nuclear fuel and construction work in progress $16,375,307 $16,138,641
Less accumulated depreciation and amortization ........................... 6,528,431 6,132,488
Electric utility plant - net ........................................... 9,846,876 10,006,153
CURRENT ASSETS:
Cash and cash equivalents ................................................ 15,168 535
Customer receivables, net of allowances of $9,422 and $11,518 ............ 497,847 458,047
Materials, supplies and fossil fuel stock - at average cost .............. 283,630 292,601
Other .................................................................... 111,845 81,290
Total current assets ................................................... 908,490 832,473
OTHER ASSETS:
Special use funds ........................................................ 529,178 435,117
Unamortized debt reacquisition costs and litigation items ................ 381,837 402,978
Other .................................................................... 172,408 144,731
Total other assets ..................................................... 1,083,423 982,826
TOTAL ASSETS ............................................................... $11,838,789 $11,821,452
CAPITALIZATION:
Common shareholder's equity .............................................. $ 4,234,180 $ 4,185,586
Preferred stock without sinking fund requirements ........................ 451,250 451,250
Preferred stock with sinking fund requirements ........................... 50,000 94,000
Long-term debt ........................................................... 3,181,148 3,581,157
Total capitalization ................................................... 7,916,578 8,311,993
CURRENT LIABILITIES:
Accounts payable ......................................................... 298,376 306,616
Debt and preferred stock due within one year ............................. 319,619 111,350
Accrued interest, taxes and other ........................................ 923,315 686,811
Total current liabilities .............................................. 1,541,310 1,104,777
OTHER LIABILITIES AND DEFERRED CREDITS:
Accumulated deferred income taxes ........................................ 1,216,973 1,259,822
Unamortized regulatory and investment tax credits ........................ 483,183 498,703
Other .................................................................... 680,745 646,157
Total other liabilities and deferred credits ........................... 2,380,901 2,404,682
COMMITMENTS AND CONTINGENCIES
TOTAL CAPITALIZATION AND LIABILITIES ....................................... $11,838,789 $11,821,452
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on Pages 5 through 7 herein and the
Notes to Consolidated Financial Statements appearing in FPL's 1994
Form 10-K.
FLORIDA POWER & LIGHT COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
1995 1994
(Thousands of Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .................................................................... $ 273,246 $ 251,542
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ............................................. 457,982 331,921
Deferred income taxes and unamortized regulatory and investment tax credits (58,370) 22,046
Other ..................................................................... 200,599 20,610
Net cash provided by operating activities ................................... 873,457 626,119
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1) ...................................................... (348,283) (408,830)
Other ......................................................................... (10,066) (12,881)
Net cash used in investing activities ....................................... (358,349) (421,711)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuances of debt ............................................................. 110,349 86,350
Retirement of debt and preferred stock ........................................ (356,706) (90,729)
Dividends ..................................................................... (222,347) (180,408)
Other ......................................................................... (31,771) (25,750)
Net cash used in financing activities ....................................... (500,475) (210,537)
Net increase in cash and cash equivalents ....................................... 14,633 (6,129)
Cash and cash equivalents at beginning of period ................................ 535 7,316
Cash and cash equivalents at end of period ...................................... $ 15,168 $ 1,187
Supplemental disclosures of cash flow information:
Cash paid for interest (net of amount capitalized) ............................ $ 149,844 $ 140,933
Cash paid for income taxes .................................................... $ 94,685 $ 80,443
Supplemental schedule of noncash investing and financing activities:
Additions to capital lease obligations ........................................ $ 41,944 $ 17,759
(1) Capital expenditures exclude allowance for equity funds used during construction.
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on Pages 5 through 7 herein and the
Notes to Consolidated Financial Statements appearing in FPL's 1994
Form 10-K.
FLORIDA POWER & LIGHT COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The accompanying condensed consolidated financial statements should
be read in conjunction with FPL's 1994 Form 10-K. In the opinion of
FPL, all adjustments (consisting only of normal recurring accruals)
necessary to present fairly the financial position as of June 30,
1995, the results of operations for the three and six months ended
June 30, 1995 and 1994 and the cash flows for the six months ended
June 30, 1995 and 1994 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. Capitalization
Preferred Stock - In April 1995, FPL redeemed 400,000 shares of its
8.625% Preferred Stock, Series R, $100 Par Value.
Long-Term Debt - In March and June 1995, FPL sold approximately $59
million and $52 million principal amount of variable interest rate
Pollution Control Revenue Refunding Bonds, at initial variable rates
of 2.90% and 2.25%, respectively, maturing in April 2020, March 2027
and May 2029. The proceeds were used in April and June 1995, and
will be used in September 1995, to redeem a like principal amount of
Pollution Control Revenue Bonds, maturing in 2019 and 2020 bearing
interest at 9 5/8% and 10%, respectively. In April 1995, FPL
redeemed approximately $66 million principal amount of 9 3/8% First
Mortgage Bonds, due July 2019. In addition, through June 1995, FPL
purchased on the open market and retired approximately $44 million
principal amount of various series of first mortgage bonds.
In July 1995, an additional $3 million principal amount of first
mortgage bonds were purchased on the open market and retired. In
early August 1995, FPL called for redemption in September 1995
approximately $92 million of first mortgage bonds, designated medium-
term notes, maturing in 2006 through 2022 at interest rates of 8.40%
to 9.05%.
At December 31, 1994, FPL had $200 million of commercial paper
classified as long-term debt. FPL no longer intends to maintain this
level of commercial paper usage for the foreseeable future and,
accordingly, has retired $48 million and classified the remaining
$152 million of commercial paper outstanding at June 30, 1995 as a
current liability.
2. Commitments and Contingencies
Capital 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 $3.0 billion,
including allowance for funds used during construction (AFUDC), for
the years 1995 through 1999. Included in this five-year forecast are
capital expenditures for 1995 of $712 million, of which $353 million,
including AFUDC, had been spent through June 30, 1995.
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 $317 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 insurance pools and other arrangements 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 $77 million in
retrospective premiums, and in the event of a subsequent accident at
such nuclear plants during the policy period, the maximum aggregate
assessment is $93 million under the programs in effect at June 30,
1995. FPL has a storm and property insurance reserve, which totaled
approximately $107 million at June 30, 1995, for assessments under
the nuclear insurance program and costs incurred under the
transmission and distribution (T&D) property self-insurance program
described below.
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's financial condition.
FPL self-insures certain of its T&D property due to the high cost and
limited coverage available from third-party insurers. Recovery from
ratepayers of any losses in excess of the storm and property
insurance reserve will require the approval of the Florida Public
Service Commission (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 obligations. The fuel contracts provide for the
transportation and supply of natural gas and the supply and use of
Orimulsion. Orimulsion is a new fuel which FPL expects to begin
using in 1998, subject to environmental approvals. In no year are
the obligations under the fuel contracts expected to exceed usage
requirements.
The required capacity and minimum payments through 1999 under these
contracts are estimated to be as follows:
1995 1996 1997 1998 1999
(Millions of Dollars)
Capacity payments:
JEA .............................................................. $ 80 $ 80 $ 80 $ 80 $ 90
Southern Companies ............................................... $140 $140 $140 $130 $130
Qualifying facilities ............................................ $190 $300 $310 $320 $340
Minimum payments, at projected prices:
Natural gas ...................................................... $266 $200 $200 $210 $200
Orimulsion ....................................................... - - - $130 $160
Capacity, energy and fuel charges under these contracts were as
follows:
Three Months Ended June 30, Six Months Ended June 30,
1995 Charges 1994 Charges 1995 Charges 1994 Charges
Energy/ Energy/ Energy/ Energy/
Capacity Fuel (1) Capacity Fuel (1) Capacity Fuel (1) Capacity Fuel (1)
(Millions of Dollars)
JEA ................... $21(2) $10 $21(2) $12 $43(2) $ 21 $ 42(2) $ 22
Southern Companies .... $39(3) $25 $52(3) $36 $78(3) $ 45 $108(3) $ 69
Qualifying facilities.. $39(3) $18 $37(3) $16 $76(3) $ 38 $ 65(3) $ 31
Natural gas ........... - $96 - $69 - $163 - $115
(1) Recovered through the fuel and purchased power cost recovery clause.
(2) Recovered through base rates and the capacity cost recovery clause (capacity clause).
(3) Recovered through the capacity clause.
Litigation - Union Carbide Corporation sued FPL and Florida Power
Corporation 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 seeks treble
damages of an unspecified amount based on alleged higher prices paid
for electricity and for product sales lost. Cross motions for summary
judgment were denied. Both parties are appealing the denials.
A suit brought by the partners in a cogeneration project located in Dade
County, Florida, alleges that FPL and certain affiliated companies have
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 have wrongfully interfered with the
cogeneration project's contractual relationship with Metropolitan Dade
County. The suit seeks damages in excess of $100 million, before
trebling under antitrust laws, plus other unspecified compensatory and
punitive damages. FPL's motion for summary judgment was denied.
FPL is appealing the denial.
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
December 1993, a district court granted summary judgment in favor of
FPL. The FMPA has appealed.
FPL believes that it has meritorious defenses to all of the litigation
described above and is vigorously defending these suits. Accordingly,
the liabilities, if any, arising from these proceedings are not anticipated
to have a material adverse effect on FPL's financial statements.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
This discussion should be read in conjunction with the Notes to the
Condensed Consolidated Financial Statements contained herein and
Management's Discussion and Analysis of Financial Condition and
Results of Operations appearing in FPL's 1994 Form 10-K. 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's net income for the three and six months ended June 30, 1995 was
favorably affected by ongoing cost control measures and higher energy
sales, resulting from both customer growth and increased energy usage
per customer. Partially offsetting these factors were higher depreciation
and lower AFUDC.
FPL's revenues from base rates increased to approximately $882 million
and $1.6 billion for the three and six months ended June 30, 1995 from
approximately $847 million and $1.5 billion for the same periods in 1994.
The increases reflect customer growth of 1.9% and 2.0% for the three
and six months ended June 30, 1995, respectively, and increases in
energy usage per retail customer of 2.3% and 1.3%, primarily reflecting
weather conditions. Revenues from cost recovery clauses (including
fuel) and franchise fees, which represent a pass-through of costs and do
not significantly affect net income, declined due to lower fuel and
capacity charges.
The decrease in other operations and maintenance expenses reflects
ongoing cost reduction efforts in the current year and 1994 expenses,
primarily relating to nuclear refueling and consolidation of facilities, that
were not incurred in 1995. FPL proposed to the FPSC a special
amortization of its nuclear units in a fixed amount of $30 million per year
beginning in 1995, plus an additional amount based on the level of sales
achieved for 1995 and 1996. The year-to-date portion of the special
nuclear amortization was recorded in the second quarter of 1995, when
interim FPSC approval was received. In granting interim approval, the
FPSC specified that amounts recorded as expense would remain
expense items regardless of their final classification, which will be
determined at the time of final FPSC review that is expected to occur in
October 1995. Depreciation expense increased for the three and six
months ended June 30, 1995 as a result of the special amortization of
nuclear units, an increase in nuclear decommissioning and fossil
dismantlement, the amortization of deferred litigation items over a period
not to exceed five years, and the placement in service of the Martin
Units Nos. 3 and 4 in February and April of 1994.
LIQUIDITY AND CAPITAL RESOURCES
Based on available cash flows from operations, FPL has redeemed
certain series of its preferred stock and first mortgage bonds and
reduced the level of commercial paper, consistent with management's
intent to further reduce debt balances. Preferred stock dividends in 1995
include the premium paid on the redemption of 400,000 shares of the
8.625% Preferred Stock, Series R, $100 Par Value. See Note 1.
For information concerning capital commitments, see Note 2.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The following directors were elected effective May 15, 1995 by the
written consent of the sole common shareholder of FPL in lieu of an
annual meeting of shareholders:
James L. Broadhead
Dennis P. Coyle
Paul J. Evanson
Jerome H. Goldberg
Lawrence J. Kelleher
J. Thomas Petillo
C. O. Woody
Michael W. Yackira
Item 5. Other Information
(a) Reference is made to Item 1. Business - System Capability and
Load in FPL's 1994 Form 10-K.
In June 1995, under a 1991 agreement with Georgia Power
Company, FPL purchased an additional 11% (90 mw) ownership
interest in Scherer Unit No. 4 for approximately $80 million.
(b) Reference is made to Item 1. Business - Retail Ratemaking in FPL's
1994 Form 10-K.
FPL was required to file historic and projected revenues and cost
data with the FPSC at least every four years. In July 1995, the
Florida legislature eliminated the requirement for such filing by
Florida electric utilities.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
*4(a) Mortgage and Deed of Trust dated as of January 1,
1944, and Ninety-five Supplements thereto between
FPL and Bankers Trust Company and The Florida
National Bank of Jacksonville (now First Union National
Bank of Florida) Trustees (as of September 2, 1992,
the sole trustee is Bankers Trust Company) (filed as
Exhibit B-3, File No. 2-4845; Exhibit 7(a), File No.
2-7126; Exhibit 7(a), File No. 2-7523; Exhibit 7(a), File
No. 2-7990; Exhibit 7(a), File No. 2-9217; Exhibit
4(a)-5, File No. 2-10093; Exhibit 4(c), File No. 2-11491;
Exhibit 4(b)-1, File No. 2-12900; Exhibit 4(b)-1, File
No. 2-13255; Exhibit 4(b)-1, File No. 2-13705; Exhibit
4(b)-1, File No. 2-13925; Exhibit 4(b)-1, File
No. 2-15088; Exhibit 4(b)-1, File No. 2-15677; Exhibit
4(b)-1, File No. 2-20501; Exhibit 4(b)-1, File
No. 2-22104; Exhibit 2(c), File No. 2-23142; Exhibit
2(c), File No. 2-24195; Exhibit 4(b)-1, File No. 2-25677;
Exhibit 2(c), File No. 2-27612; Exhibit 2(c), File No.
2-29001; Exhibit 2(c), File No. 2-30542; Exhibit 2(c),
File No. 2-33038; Exhibit 2(c), File No. 2-37679; Exhibit
2(c), File No. 2-39006; Exhibit 2(c), File No. 2-41312;
Exhibit 2(c), File No. 2-44234; Exhibit 2(c), File
No. 2-46502; Exhibit 2(c), File No. 2-48679; Exhibit
2(c), File No. 2-49726; Exhibit 2(c), File No. 2-50712;
Exhibit 2(c), File No. 2-52826; Exhibit 2(c), File No.
2-53272; Exhibit 2(c), File No. 2-54242; Exhibit 2(c),
File No. 2-56228; Exhibits 2(c) and 2(d), File
No. 2-60413; Exhibits 2(c) and 2(d), File No. 2-65701;
Exhibit 2(c), File No. 2-66524; Exhibit 2(c), File No.
2-67239; Exhibit 4(c), File No. 2-69716; Exhibit 4(c),
File No. 2-70767; Exhibit 4(b), File No. 2-71542;
Exhibit 4(b), File No. 2-73799; Exhibits 4(c), 4(d) and
4(e), File No. 2-75762; Exhibit 4(c), File No. 2-77629;
Exhibit 4(c), File No. 2-79557; Exhibit 99(a) to
Post-Effective Amendment No. 5 to Form S-8, File
No. 33-18669; Exhibit 99(a) to Post-Effective
Amendment No. 1 to Form S-3, File No. 33-46076;
Exhibit 4(b) to Form 10-K for the year ended
December 31, 1993, File No. 1-3545; and Exhibit 4(i)
to Form 10-Q for the quarter ended June 30, 1994, File
No. 1-3545)
4(b) Ninety-sixth Supplemental Indenture dated as of
June 1, 1995 between FPL and Bankers Trust
Company, Trustee
12 Computation of Ratios
27 Financial Data Schedule
* Incorporated herein by reference
(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.
FLORIDA POWER & LIGHT COMPANY
(Registrant)
MICHAEL W. YACKIRA
Michael W. Yackira
Senior Vice President, Finance
and Chief Financial Officer
(Principal Financial Officer)
Date: August 10, 1995