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
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
As of April 30, 1996 there were issued and outstanding 1,000 shares
of Florida Power & Light Company's common stock, without par value,
all of which were held, beneficially and of record, by FPL Group,
Inc.
______________________________
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
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
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.
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
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
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.
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.
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.
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
(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)