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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission Exact name of Registrants as specified in their charters, address of IRS Employer Iden-
File Number 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
Securities registered pursuant to Section 12(b) of the Act: Name of exchange on which registered
FPL Group, Inc.:
Common Stock, $.01 Par Value and Preferred Share Purchase Rights New York Stock Exchange
Florida Power & Light Company:
$2.00 No Par Preferred Stock, Series A New York Stock Exchange
8.75% Quarterly Income Debt Securities (Subordinated Deferrable New York Stock Exchange
Interest Debentures)
Securities registered pursuant to Section 12(g) of the Act:
FPL Group, Inc.: None
Florida Power & Light Company: Preferred Stock, $100 Par Value
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
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrants' knowledge in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [ ]
Aggregate market value of the voting stock of FPL Group, Inc. held by
non-affiliates as of February 29, 1996 (based on the closing market
price on the Composite Tape on February 29, 1996) was $8,222,204,624
(determined by subtracting from the number of shares outstanding on
that date the number of shares held by directors and officers of FPL
Group, Inc.).
Aggregate market value of the voting stock of Florida Power & Light
Company held by non-affiliates as of February 29, 1996 was zero.
The number of shares of FPL Group, Inc. outstanding of each class of
common stock, as of the close of the latest practicable date: Common
Stock, $.01 Par Value, outstanding at February 29, 1996: 184,512,535
shares
As of February 29, 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.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of FPL Group, Inc.'s Definitive Proxy Statement for the 1996
Annual Meeting of Shareholders are incorporated by reference in Part
III hereof.
______________________________
This combined Form 10-K 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.
DEFINITIONS
Acronyms and defined terms used in the text include the following:
Term Meaning
AFUDC Allowance for funds used during construction
capacity clause Capacity cost recovery clause
charter Restated Articles of Incorporation, as amended, of FPL Group or FPL, as
the case may be
common stock Common Stock of FPL Group
conservation clause Energy conservation cost recovery clause
DOE United States Department of Energy
EMF Electric and magnetic fields
environmental clause Environmental compliance cost recovery clause
ESI ESI Energy, Inc.
EWG Exempt wholesale generator
FDEP Florida Department of Environmental Protection
FERC Federal Energy Regulatory Commission
FGT Florida Gas Transmission Company
FMPA Florida Municipal Power Agency
FPL Florida Power & Light Company
FPL Group FPL Group, Inc.
FPL Group Capital FPL Group Capital Inc
FPSC Florida Public Service Commission
fuel clause Fuel and purchased power cost recovery clause
Holding Company Act Public Utility Holding Company Act of 1935, as amended
JEA Jacksonville Electric Authority
kv Kilovolt
kva Kilovolt-ampere
kwh Kilowatt-hour
Management's Discussion Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
mortgage FPL's Mortgage and Deed of Trust dated as of January 1, 1944, as
supplemented and amended
mw Megawatt(s)
Note Note to Consolidated Financial Statements
NRC United States Nuclear Regulatory Commission
O&M expenses Other operations and maintenance expenses
PURPA Public Utility Regulatory Policies Act of 1978, as amended
qualifying facilities Non-utility power production facilities meeting the requirements of a
qualifying facility under the PURPA
ROE Return on equity
SJRPP St. Johns River Power Park
Telesat Telesat Cablevision, Inc.
Thrift Plans FPL Group employee thrift plans
Turner Turner Foods Corporation
/TABLE
PART I
Item 1. Business
FPL GROUP
FPL Group, incorporated under the laws of Florida in 1984, is a
public utility holding company (as defined in the Holding Company
Act). FPL Group's principal subsidiary, FPL, is engaged in the
generation, transmission, distribution and sale of electric energy.
Other operations are conducted through FPL Group Capital and its
subsidiaries and mainly consist of investments in non-utility energy
projects and agricultural operations. FPL Group, together with its
subsidiaries, employs approximately 11,400 persons.
FPL Group is exempt from substantially all of the provisions of the
Holding Company Act on the basis that FPL Group's and FPL's
businesses are predominantly intrastate in character and carried on
substantially in a single state, in which both are incorporated.
FPL OPERATIONS
General. FPL, incorporated under the laws of Florida in 1925 and a
wholly-owned subsidiary of FPL Group, supplies electric service
throughout most of the east and lower west coasts of Florida. This
service territory contains 27,650 square miles with a population of
approximately 6.5 million. During 1995, FPL served approximately 3.5
million customer accounts. Operating revenues were as follows:
Years Ended December 31,
1995 1994 1993
(Millions of Dollars)
Residential .......................... $3,097 $2,920 $2,950
Commercial ........................... 1,953 1,854 1,924
Industrial ........................... 195 189 210
Other, including unbilled revenues.... 285 380 140
$5,530 $5,343 $5,224
Regulation. The retail operations of FPL provided approximately 98%
of FPL's operating revenues for 1995. Such operations are regulated
by the FPSC which has jurisdiction over retail rates, service
territory, issuances of securities, planning, siting and construction
of facilities and other matters. FPL is also subject to regulation
by the FERC in various respects, including the acquisition and
disposition of facilities, interchange and transmission services and
wholesale purchases and sales of electric energy.
FPL is subject to the jurisdiction of the NRC with respect to its
nuclear power plants. NRC regulations govern the granting of
licenses for the construction and operation of nuclear power plants
and subject such power plants to continuing review and regulation.
Federal, state and local environmental laws and regulations cover air
and water quality, land use, power plant and transmission line
siting, electric and magnetic fields from power lines and
substations, noise and aesthetics, solid waste and other
environmental matters. Compliance with these laws and regulations
increases the cost of electric service by requiring, among other
things, changes in the design and operation of existing facilities
and changes or delays in the location, design, construction and
operation of new facilities. FPL estimates that capital expenditures
required to comply with environmental laws and regulations for 1996
through 1998 will not be material. These expenditures are included
in FPL's projected capital expenditures set forth in Item 1.
Business - FPL Operations - Capital Expenditures.
FPL holds franchises with varying expiration dates to provide
electric service in various municipalities and counties in Florida.
FPL considers its franchises to be adequate for the conduct of its
business.
Retail Ratemaking. The underlying concept of utility ratemaking is
to set rates at a level that allows the utility to collect total
revenues (revenue requirements) equal to its cost of providing
service, including a reasonable return on invested capital. To
accomplish this, the FPSC uses various ratemaking mechanisms.
The basic costs of providing electric service, other than fuel and
certain other costs, are recovered through base rates, which are
designed to recover the costs of constructing, operating and
maintaining the utility system. These costs include O&M expenses,
depreciation and taxes, as well as a return on FPL's investment in
assets used and useful in providing electric service (rate base).
The rate of return on rate base approximates FPL's weighted cost of
capital, which includes its costs for debt and preferred stock and an
allowed ROE. FPL's currently authorized ROE range is 11% to 13% with
a midpoint of 12%. The FPSC does not provide any assurance that the
allowed ROE will be achieved. Base rates are determined in rate
proceedings which occur at irregular intervals at the initiative of
FPL, the FPSC or a substantially affected party.
Fuel costs, which totaled approximately $1.4 billion in 1995, are
recovered through levelized charges established pursuant to the fuel
clause. These charges are calculated semi-annually based on
estimated costs of fuel and estimated customer usage for the ensuing
six-month period, plus or minus a true-up adjustment to reflect the
variance of actual costs and usage from the estimates used in setting
the fuel adjustment charges for prior periods.
Capacity payments to other utilities and generating companies for
purchased power recovered through the capacity clause totaled
approximately $300 million in 1995. Costs associated with
implementing energy conservation programs, which totaled
approximately $120 million in 1995, are recovered through rates
established pursuant to the conservation clause. Costs of complying
with federal, state and local environmental regulations, which
totaled approximately $10 million in 1995, are recovered through the
environmental clause to the extent not included in base rates.
The FPSC has the authority to disallow recovery of costs which it
considers excessive or imprudently incurred. Such costs may include
O&M expenses, the cost of replacing power lost when fossil and
nuclear units are unavailable and costs associated with the
construction or acquisition of new facilities.
Competition. Competitive forces affecting the sale of electrical
energy may result in a transition from cost-based to market-based
pricing. Initiatives in various states have proposed changing or
phasing out traditional cost-of-service regulation, particularly with
regard to the generation of electricity. These initiatives are the
subject of considerable debate, and are generally not yet effective;
however, they are an indication of increasing competitive pressures
in the electric utility industry. In Florida, such initiatives have
not progressed as far as in other states. FPL currently faces
competition from other suppliers of electrical energy for wholesale
customers and from alternative energy sources and self-generation for
other customer groups, primarily industrial customers. In 1995,
operating revenues from wholesale and industrial customers
represented 1% and 4%, respectively, of FPL's total operating
revenues. Florida law does not currently permit competition among
regulated and non-regulated suppliers of electrical energy for retail
customers. However, in order to be prepared in the event that
greater retail competition arises in FPL's market, FPL has instituted
aggressive ongoing cost control efforts, including significant
reductions in capital expenditures and O&M expenses. FPL has also
petitioned and received interim approval from the FPSC to accelerate
recovery of its nuclear facilities. A final decision is expected by
mid-1996. See Management's Discussion - Results of Operations.
While legislators and state regulatory commissions will decide what
impact, if any, competitive forces will have on retail transactions,
the FERC has jurisdiction over potential changes which could affect
competition in wholesale transactions. In 1994, the FERC announced
broad policies governing transmission access and pricing. In 1995,
the FERC expanded such policies through a broad Notice of Proposed
Rulemaking that requires jurisdictional utilities to have on file at
the FERC open access transmission tariffs that comply with the FERC's
proposals. The rules are expected to become final in 1996. In
general, these policies require a utility to provide to third parties
access to the utility's transmission system on a basis comparable to
the uses the utility makes of its own system and at comparable costs.
In 1993, FPL filed with the FERC a comprehensive revision of its
service offerings in the wholesale market. FPL proposed changes to
its wholesale sales tariffs for service to municipal and
cooperatively-owned electric utilities, its power sharing
(interchange) agreements with other utilities and expanded its
transmission offerings for new services by switching from
individually negotiated contracts to three tariffs of general
applicability. In December 1995, the administrative law judge issued
his initial decision, ruling in favor of FPL on some issues and
against FPL on others. A final decision on this case is not expected
until sometime in 1997. FPL began collecting the proposed rates in
1994, subject to refund pending the final outcome of the case.
The structure and pricing of network transmission service to the
FMPA, an association of municipal electric utilities operating in the
state, is the subject of a separate FERC proceeding. In 1994, FPL
filed its proposal for network transmission service to the FMPA in
compliance with a FERC order approving FPL's pricing mechanism. In
January 1996, the FERC issued an order, which among other things,
accepted FPL's proposed filing as modified by the order and ordered
the proceeding closed.
FPL is a defendant in three antitrust suits, including one filed by
the FMPA. The complaints include an alleged inability to utilize
FPL's transmission facilities to wheel power. See Item 3. Legal
Proceedings.
System Capability and Load. FPL's resources for serving load as of
December 31, 1995 consisted of 18,483 mw of electric power, 16,312 mw
generated by FPL-owned facilities (see Item 2.
Properties - Generating Facilities) and 2,171 mw obtained through
purchased power contracts. FPL intends to satisfy future load, which
reflects projected compounded annual growth in kwh sales of 2.4% over
the next 5 years, with approximately 120 mw of additional purchased
power under existing contracts with new qualifying facilities. See
Note 10 - Contracts. The compounded annual growth rate of kwh sales
was 4.8% for the three years ended December 31, 1995. Customer
growth averaged 2.1% per year during the same period.
Customer usage and operating revenues are typically higher during the
summer months largely due to the prevalent use of air conditioning in
FPL's service territory. However, occasionally, extremely cold
temperatures during the winter months result in unusually high
electricity usage for a short period of time. On February 5, 1996,
FPL reached an all-time energy peak demand of approximately 18,100
mw. At that time, FPL was able to meet the peak with available
installed generation, purchased power and load management resources.
Capital Expenditures. FPL's capital expenditures totaled
approximately $669 million in 1995, $770 million in 1994 and $1.1
billion in 1993. Capital expenditures for the 1996-98 period are
expected to be approximately $1.5 billion, including $511 million in
1996. This estimate is subject to continuing review and adjustment,
and actual capital expenditures may vary from this estimate. See
Management's Discussion - Liquidity and Capital Resources.
Nuclear Operations. FPL owns and operates four nuclear units, two at
St. Lucie and two at Turkey Point. The operating licenses for St.
Lucie Units Nos. 1 and 2 expire in 2016 and 2023, respectively. The
operating licenses for Turkey Point Units Nos. 3 and 4 expire in 2012
and 2013, respectively. The nuclear units are periodically removed
from service to accommodate normal refueling and maintenance outages,
repairs and certain other modifications. A condition of the
operating license for each unit requires an approved plan for
decontamination and decommissioning. FPL's current plans provide for
dismantlement of the Turkey Point units commencing in 2013. St.
Lucie Unit No. 1 will be mothballed in 2016 until 2023 when
dismantlement of both Unit No. 1 and Unit No. 2 will commence. See
estimated cost data in Note 1 - Nuclear Decommissioning.
Fuel. FPL's generating plants are fueled by nuclear fuel, natural
gas, residual and distillate oil and coal. See Note 10 - Contracts.
The diverse fuel options, along with purchased power, enable FPL to
shift between sources of generation to achieve an economical fuel
mix. FPL's oil requirements are obtained under short-term contracts
and in the spot market.
FPL has contracts in place with FGT that satisfy substantially all of
the anticipated needs for natural gas transportation over the next
ten years. The existing contracts expire in 2005 and 2010, but can
be extended at FPL's option. To the extent desirable, FPL can also
purchase interruptible gas transportation service from FGT based on
pipeline availability. FPL has a 15-year firm natural gas supply
contract at market rates with an affiliate of FGT to provide
approximately two-thirds of FPL's anticipated needs for natural gas.
The remainder of FPL's gas requirements will be purchased under other
contracts and in the spot market.
FPL has, through its joint ownership interest in SJRPP Units Nos. 1
and 2, long-term coal supply and transportation contracts for a
significant portion of the fuel needs for those units. All of the
transportation requirements and a portion of the fuel supply needs
for Scherer Unit No. 4 are covered by a series of annual and
long-term contracts. The remaining coal requirements will be
obtained under additional contracts and in the spot market.
FPL leases nuclear fuel for all four of its nuclear units. See
Note 3. Under the Nuclear Waste Policy Act of 1982, the DOE is
required to construct permanent storage facilities and will take
title to and provide transportation and storage for spent nuclear
fuel for a specified fee based on current generation from nuclear
power plants. Through 1995, FPL has paid approximately $310 million
to the DOE for future transportation and storage. Although the DOE
estimates that its storage facilities will be completed by 2010,
there is considerable doubt within the utility industry that this
schedule will be met. Currently, FPL is storing spent fuel on site
and plans to provide adequate storage capacity for all of its spent
nuclear fuel up to and beyond 2010, pending its removal by the DOE.
In 1994, FPL entered into a 20-year contract with Bitor America to
purchase Orimulsion, a fuel that is an emulsion of bitumen and water
and is priced equivalently to coal. The contract is contingent upon
FPL obtaining an operating permit from environmental agencies to use
Orimulsion at the Manatee units. The environmental permitting
process is underway and final rulings are expected by mid-1996. FPL
has committed to purchase Orimulsion to satisfy approximately 60% of
the capacity of the Manatee units, but may elect to purchase enough
Orimulsion to satisfy Manatee's total capacity. See Item 2.
Properties - Generating Facilities. The FPSC has authorized FPL to
recover through the fuel clause on an accelerated basis the capital
costs of modifying the Manatee units to burn Orimulsion as well as
any incremental operating and maintenance costs. The FPSC also found
that FPL's decision to convert these units to burn Orimulsion is
prudent and reasonable. FPL expects to commence using Orimulsion in
1998, pending environmental approvals.
Electric and Magnetic Fields. In recent years, increasing public,
scientific and regulatory attention has been focused on possible
adverse health effects of EMF. These fields are created whenever
electricity flows through a power line or an appliance. Several
epidemiological (i.e., statistical) studies have suggested a linkage
between EMF and certain types of cancer, including leukemia and brain
cancer; other studies have been inconclusive, contradicted earlier
studies or have shown no such linkage. Neither these epidemiological
studies nor clinical studies have produced any conclusive evidence
that EMF does or does not cause adverse health effects.
The FDEP has promulgated regulations setting standards for EMF levels
within and at the edge of the rights of way for transmission lines,
and FPL is in compliance with these regulations. The FDEP reviewed
its EMF standards in 1992 and confirmed the field limits previously
established. Future changes in the standards could require
additional capital expenditures by FPL for such things as increasing
the right of way corridors or relocating or reconfiguring
transmission facilities. At present it is not known whether any such
expenditures will be required.
In addition, litigation seeking damages for diminution of property
value or personal injury is likely. FPL is presently a defendant in
one suit alleging personal injury and wrongful death resulting from
EMF.
Employees. FPL had approximately 11,100 employees at December 31,
1995. Approximately 36% of the employees are represented by the
International Brotherhood of Electrical Workers under a collective
bargaining agreement with FPL expiring on October 31, 1997.
OTHER FPL GROUP OPERATIONS
FPL Group Capital, a wholly-owned subsidiary of FPL Group, holds the
capital stock of the operating subsidiaries other than FPL and
provides most of their funding. The business activities of these
companies consist primarily of investments in non-utility energy
projects and agricultural operations.
Non-Utility Energy. ESI provides equity capital, debt financing,
project development and operations management for non-utility energy
projects. To date, ESI has invested in one project that qualifies as
an EWG. Substantially all other projects in which it has invested
are qualifying facilities under PURPA. ESI participates in 27
non-utility energy projects totaling 1,906 mw, primarily through
non-controlling ownership interests in joint ventures or leveraged
lease investments. Based on ESI's invested capital at December 31,
1995, the projects are concentrated in California (57%) and
Pennsylvania (17%). The technologies and fuels used by the projects
to produce electricity include wind, geothermal, natural gas, solar,
biomass (wood), waste-to-energy and waste coal. Energy production
from the non-utility energy investments is generally higher during
the third quarter due to increased energy demand and resource
availability.
Many of the projects in which ESI invests, particularly those located
in California, operate under fixed price energy sales contracts for a
period of years then convert to the purchasing utility's avoided
costs. Currently, avoided cost is below the fixed price for many of
these projects. Competitive initiatives in California propose
phasing in market-based rather than cost-based pricing by 2002. The
effect of these initiatives may be to lower avoided cost and, as a
result, revenues paid to non-utility generators. Any decline in
revenues not offset by operational or performance efficiencies would
adversely affect ESI's earnings from and the value of its investment
in these projects.
Agriculture. FPL Group Capital's agricultural subsidiary, Turner,
owns and operates citrus groves in Florida. Turner's primary product
is juice oranges, which are sold to processors for the premium not-
from-concentrate, as well as the domestic frozen-concentrate, orange
juice markets. Other products include grapefruit and specialty
fruits. Turner's operations are seasonal, with the majority of the
citrus harvest taking place between January and April.
As of December 31, 1995, Turner owned or leased approximately 29,000
acres of citrus properties, which included 18,000 planted acres,
4,000 acres of undeveloped land and 7,000 acres of infrastructure,
wet lands and reservoirs.
Other. After giving effect to transactions completed in 1995 which
had no significant effect on net income, FPL Group Capital maintains
a limited amount of properties held for disposition. The remaining
properties mainly consist of undeveloped land and certain
mortgaged-backed loans. These assets are carried at estimated net
realizable value including costs to dispose. Efforts to dispose of
these properties continue. FPL Group cannot estimate the timing of
their ultimate disposition, but these transactions are not expected
to have an adverse effect on FPL Group's net income. In 1995,
Telesat began the process of transferring, pending regulatory
approval, its remaining wholly-owned cable television subscriber base
into a limited partnership, which removed FPL Group from the
day-to-day management and operation of the cable television business.
EXECUTIVE OFFICERS OF THE REGISTRANTS (1)(2)
Name Age Position Effective Date
James L. Broadhead 60 Chairman of the Board, President and Chief Executive Officer
of FPL Group .................................................... May 8, 1990
Chairman of the Board and Chief Executive Officer of FPL .......... January 15, 1990
Dennis P. Coyle 57 General Counsel and Secretary of FPL Group ........................ June 1, 1991
General Counsel and Secretary of FPL .............................. July 1, 1991
K. Michael Davis 49 Controller and Chief Accounting Officer of FPL Group .............. May 13, 1991
Vice President, Accounting, Controller and Chief Accounting
Officer of FPL .................................................. July 1, 1991
Paul J. Evanson 54 President of FPL .................................................. January 9, 1995
Lawrence J. Kelleher 48 Vice President, Human Resources of FPL Group ...................... May 13, 1991
Senior Vice President, Human Resources of FPL ..................... July 1, 1991
Thomas F. Plunkett 56 President, Nuclear Division of FPL ................................ March 1, 1996
Dilek L. Samil 40 Treasurer of FPL Group ............................................ May 13, 1991
Treasurer of FPL .................................................. July 1, 1991
C. O. Woody 57 Senior Vice President, Power Generation of FPL .................... July 1, 1991
Michael W. Yackira 44 Vice President, Finance and Chief Financial Officer of FPL Group .. January 9, 1995
Senior Vice President, Finance and Chief Financial Officer of FPL.. January 9, 1995
(1) Executive officers are elected annually by, and serve at the pleasure of, their respective boards of directors. Except as
noted below, each officer has held his or her present position for five years or more and his or her employment history is
continuous.
(2) The business experience of the executive officers is as follows: Mr. Coyle was general counsel and vice president of FPL
Group from June 1989 to June 1991 and general counsel of FPL from March 1990 to July 1991; Mr. Davis was formerly
comptroller of FPL; Mr. Evanson was vice president, finance and chief financial officer of FPL Group and senior vice
president, finance and chief financial officer of FPL from December 1992 to January 1995. Prior to that, Mr. Evanson was
president and chief operating officer of the Lynch Corporation, a diversified holding company; Mr. Kelleher was vice
president of FPL Group from June 1989 to May 1991 and chief human resources officer of FPL from May 1990 to July
1991; Mr. Plunkett was formerly site vice president at Turkey Point; Ms. Samil was formerly assistant treasurer of FPL
Group and FPL; Mr. Woody was executive vice president of FPL from November 1987 to July 1991; and Mr. Yackira was
vice president of FPL Group from April 1989 to May 1991, senior vice president, market and regulatory services of FPL from
May 1991 to January 1995 and chief planning officer of FPL from May 1990 to May 1991.
Item 2. Properties
FPL Group and its subsidiaries maintain properties which are adequate
for their operations. The electric generating, transmission,
distribution and general facilities of FPL represent approximately
48%, 13%, 32% and 7%, respectively, of gross investment in electric
utility plant in service.
Generating Facilities. As of December 31, 1995, FPL had the
following generating facilities:
No. of Net Warm Weather
Facility Location Units Fuel Peaking Capability (mw)
STEAM TURBINES
Cape Canaveral ......................... Cocoa, FL 2 Oil/Gas 810
Cutler ................................. Miami, FL 2 Gas 215
Fort Myers ............................. Fort Myers, FL 2 Oil 538
Manatee ................................ Parrish, FL 2 Oil 1,638
Martin ................................. Indiantown, FL 2 Oil/Gas 1,638
Port Everglades ........................ Port Everglades, FL 4 Oil/Gas 1,237
Riviera ................................ Riviera Beach, FL 2 Oil/Gas 580
St. Johns River Power Park ............. Jacksonville, FL 2 Coal 250(1)
St. Lucie .............................. Hutchinson Island, FL 2 Nuclear 1,553(2)
Sanford ................................ Lake Monroe, FL 3 Oil/Gas 934
Scherer ................................ Monroe County, GA 1 Coal 625(3)
Turkey Point ........................... Florida City, FL 2 Oil/Gas 810
2 Nuclear 1,332
COMBINED CYCLE
Lauderdale ............................. Dania, FL 2 Gas/Oil 860
Martin ................................. Indiantown, FL 2 Gas 860
Putnam ................................. Palatka, FL 2 Gas/Oil 498
COMBUSTION TURBINES
Fort Myers ............................. Fort Myers, FL 12 Oil 624
Lauderdale ............................. Dania, FL 24 Oil/Gas 864
Port Everglades ........................ Port Everglades, FL 12 Oil/Gas 432
DIESEL UNITS
Turkey Point ........................... Florida City, FL 5 Oil 14
TOTAL .................................... 16,312
(1) Represents FPL's 20% individual ownership interest in SJRPP Units Nos. 1 and 2, which are jointly owned with the JEA.
(2) Excludes Orlando Utilities Commission's and the FMPA's combined share of approximately 15% of St. Lucie Unit No. 2.
(3) Represents FPL's approximately 76% ownership of Scherer Unit No. 4, which is jointly owned with the JEA.
Transmission and Distribution. FPL owns and operates 470 substations
with a total capacity of 102,052,570 kva. Electric transmission and
distribution lines owned and in service as of December 31, 1995 are
as follows:
Overhead Lines Trench and Submarine
Nominal Voltage Pole Miles Cable Miles
500 kv ............................................................ 1,050(1) -
230 kv ............................................................ 2,476 31
138 kv ............................................................ 1,487 48
115 kv ............................................................ 675 -
69 kv ............................................................ 167 15
Less than 69 kv ................................................... 38,584 18,719
Total ............................................................. 44,439 18,813
(1) Includes approximately 80 miles owned jointly with the JEA.
Character of Ownership. Substantially all of FPL's properties are
subject to the lien of its mortgage, which secures most debt
securities issued by FPL. The principal properties of FPL are held
by it in fee and are free from other encumbrances, subject to minor
exceptions, none of which is of such a nature as to substantially
impair the usefulness to FPL of such properties. Some of the
electric lines are located on land not owned in fee but are covered
by necessary consents of governmental authorities or rights obtained
from owners of private property.
Item 3. Legal Proceedings
In October 1988, Union Carbide Corporation, the corporate predecessor
of Praxair, Inc. (Praxair), filed suit against FPL and Florida Power
Corporation (Florida Power) in the United States District Court for
the Middle District of Florida. Praxair requested that Florida Power
sell power to its facility located within FPL's service territory,
and that FPL transport (wheel) the power to the facility. Florida
Power and FPL denied the request as being inconsistent with Florida
law and public policy. The FPSC issued a declaratory statement that
FPL's denial of Praxair's request was proper and ordered FPL not to
wheel power under such circumstances. The suit alleged that through
a territorial agreement, FPL and Florida Power have conspired to
eliminate competition for the sale of electric power to retail
customers, thereby unreasonably restraining trade and commerce in
violation of federal antitrust laws as contained in Section 1 of the
Sherman Antitrust Act (Sherman Act). The suit sought treble damages
of an unspecified amount based on alleged higher prices paid for
electricity and product sales lost. At the direction of the 11th
Circuit Court of Appeals, the District Court entered a final judgment
in favor of FPL and Florida Power in January 1996.
In November 1988, TEC Cogeneration, Inc., its affiliate Thermo
Electron Corporation, RRD Corp. and its affiliate Rolls Royce Inc.
filed suit in the United States District Court for the Southern
District of Florida against FPL Group and its subsidiaries, FPL and
ESI, on behalf of South Florida Cogeneration Associates (SFCA), a
joint venture which since 1986 has operated a cogeneration facility
for Metropolitan Dade County within FPL's service territory in Miami,
Florida. The suit alleges that the defendants have engaged in anti-
competitive conduct intended to prevent and defeat competition from
cogenerators within FPL's service territory, and from SFCA's
Metropolitan Dade County facility in particular. It alleges that the
defendants' actions constitute monopolization and attempts to
monopolize in violation of Section 2 of the Sherman Act; conspiracy
in restraint of trade in violation of Section 1 of the Sherman Act;
unlawful discrimination in prices, services or facilities in
violation of Section 2 of the Clayton Act; and intentional
interference with SFCA's contractual relationship with Metropolitan
Dade County in violation of Florida law. The suit sought damages in
excess of $100 million, before trebling under antitrust law, plus
other unspecified compensatory and punitive damages. 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 PURPA. 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.
In December 1991, the FMPA, an association of municipal electric
utilities operating in the state, filed a suit against FPL in the
Circuit Court of the Ninth Judicial Circuit in Orange County,
Florida. The suit was subsequently removed to the United States
District Court for the Middle District of Florida. The FMPA alleges
that FPL is in breach of a "contract," consisting of several
different documents, by refusing to provide transmission service to
the FMPA and its members on the FMPA's terms. The FMPA also alleges
that FPL has violated federal and Florida antitrust laws by
monopolizing or attempting to monopolize the provision, coordination
and transmission of electric power in FPL's area of operation by
refusing to provide transmission service or to permit the FMPA to
invest in and use FPL's transmission system on the FMPA's terms. The
FMPA seeks $140 million in damages, before trebling for the antitrust
claim, and asks the court to require FPL: to transmit electric power
among the FMPA and its members on "reasonable terms and conditions";
to permit the FMPA to contribute to and use FPL's transmission system
on "reasonable terms and conditions"; and to recognize the FMPA
transmission investments as part of FPL's transmission system such
that the FMPA can obtain transmission on a basis equivalent to FPL
or, alternatively, to provide transmission service equivalent to such
FMPA transmission ownership. In 1993, a district court granted
summary judgment in favor of FPL. In 1995, the court of appeals
vacated the district court's summary judgment and remanded the matter
to the district court for further proceedings.
In November 1989, Johnson Enterprises of Jacksonville, Inc. (Johnson
Enterprises) filed suit in the United States District Court for the
Middle District of Florida against FPL Group, FPL Group Capital and
Telesat, a subsidiary of FPL Group Capital. The suit alleged breach
of contract, fraud, violation of racketeering statutes and several
other claims. Plaintiff claimed more than $24 million in
compensatory damages, treble damages under racketeering statutes,
punitive damages and attorneys' fees. 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.
In the event that FPL Group or FPL does not prevail in these suits,
there may be a material adverse effect on their financial position or
results of operations. However, 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.
Item 4. Submission of Matters to a Vote of Security Holders
None
PART II
Item 5. Market for the Registrants' Common Equity and Related
Stockholder Matters
Common Stock Data. All of FPL's common stock is owned by FPL Group.
FPL Group's common stock is traded on the New York Stock Exchange.
The high and low sales prices for the common stock of FPL Group as
reported in the consolidated transaction reporting system of the New
York Stock Exchange for each quarter during the past two years are as
follows:
Quarter 1995 1994
High Low High Low
First ....................................................... $37 1/4 $34 $39 1/8 $32 3/8
Second ...................................................... $39 1/4 $36 1/8 $35 3/4 $26 7/8
Third ....................................................... $41 1/8 $37 $32 1/2 $29 7/8
Fourth ...................................................... $46 1/2 $40 1/4 $35 3/4 $31
Approximate Number of Stockholders. As of the close of business on
February 29, 1996, there were 72,822 holders of record of FPL Group's
common stock.
Dividends. Quarterly dividends have been paid on common stock of
FPL Group during the past two years in the following amounts:
Quarter 1995 1994
First ......................................................................................... $.44 $.62
Second ........................................................................................ $.44 $.42
Third ......................................................................................... $.44 $.42
Fourth ........................................................................................ $.44 $.42
The amount and timing of dividends payable on common stock are within
the sole discretion of FPL Group's board of directors. In May 1994,
FPL Group's board of directors reduced the dividend paid on the
common stock from $.62 to $.42 per share, reflecting the board of
directors' conclusion that it was inappropriate, in view of
increasing competition and other changes occurring in the electric
utility industry, to continue FPL Group's past practice of paying out
a high percentage of its earnings as dividends. The board of
directors reviews the dividend rate at least annually (in February)
to determine its appropriateness in light of FPL Group's financial
position and results of operations, conditions in the electric
utility industry and other factors. The ability of FPL Group to pay
dividends on its common stock is dependent upon dividends paid to it
by its subsidiaries, primarily FPL. There are no restrictions in
effect that currently limit FPL's ability to pay dividends to FPL
Group. See Management's Discussion - Liquidity and Capital Resources
and Note 6 regarding dividends paid by FPL to FPL Group.
Item 6. Selected Financial Data
Certain amounts included in prior years' selected financial data were
reclassified to conform to current year's presentation.
Years Ended December 31,
1995 1994 1993 1992 1991
(Thousands of Dollars, except per share amounts)
SELECTED FINANCIAL DATA OF FPL GROUP:
Operating revenues .............. $ 5,592,485 $ 5,422,659 $ 5,311,685 $ 5,186,325 $ 5,238,368
Income from continuing operations $ 553,311 $ 518,711 $ 428,749(1) $ 466,949 $ 376,148(1)
Net income ...................... $ 553,311 $ 518,711 $ 428,749(1) $ 466,949 $ 240,578(1)(2)
Earnings per share of
common stock:
Continuing operations ....... $ 3.16 $ 2.91 $ 2.30(1) $ 2.65 $ 2.31(1)
Net income .................. $ 3.16 $ 2.91 $ 2.30(1) $ 2.65 $ 1.48(1)(2)
Dividends paid per share of
common stock .................. $ 1.76 $ 1.88 $ 2.47 $ 2.43 $ 2.39
Total assets .................... $12,459,226 $12,617,616 $13,078,012 $12,306,305 $11,281,785
Long-term debt, excluding
current maturities ............ $ 3,376,613 $ 3,864,465 $ 3,748,983 $ 3,960,096 $ 3,668,139
Obligations of FPL under capital
lease, excluding current
maturities .................... $ 179,082 $ 185,647 $ 271,498 $ 324,198 $ 279,657
Preferred Stock of FPL with
sinking fund requirements, ex-
cluding current maturities..... $ 50,000 $ 94,000 $ 97,000 $ 130,150 $ 150,150
SELECTED FINANCIAL DATA OF FPL:
Operating revenues .............. $ 5,530,057 $ 5,342,656 $ 5,224,299 $ 5,100,463 $ 5,158,766
Net income available to FPL Group $ 567,972 $ 528,515 $ 425,297(1) $ 470,899 $ 376,261(1)
Total assets .................... $11,751,259 $11,821,452 $11,911,342 $11,348,626 $10,515,808
Long-term debt, excluding
current maturities............. $ 3,094,050 $ 3,581,157 $ 3,463,065 $ 3,404,404 $ 3,186,828
SELECTED OPERATING STATISTICS OF FPL:
Energy sales (millions of kwh) .. 79,756 77,096 72,455 69,290 68,712
Energy sales:
Residential ................... 50.8% 50.2% 50.2% 49.3% 50.4%
Commercial .................... 38.5 38.8 39.3 39.0 39.6
Industrial .................... 4.9 5.0 5.4 5.9 5.9
Interchange power sales ....... 1.6 2.5 2.6 2.4 1.6
Other(3) ...................... 4.2 3.5 2.5 3.4 2.5
Total ........................... 100.0% 100.0% 100.0% 100.0% 100.0%
Approximate 60-minute
net peak served (mw):
Summer season ............... 15,813 15,179 15,266 14,661 14,123
Winter season(4) ............ 18,096 16,563 12,594 12,964 13,319
Average number of customer accounts:
Residential ................... 3,097,194 3,037,628 2,973,688 2,911,812 2,863,203
Commercial .................... 374,012 366,415 358,378 350,271 343,837
Industrial .................... 15,143 15,587 14,853 14,791 15,350
Other ......................... 2,462 2,562 3,261 4,376 4,079
Total ........................... 3,488,811 3,422,192 3,350,180 3,281,250 3,226,469
Average price per kwh
sold (cents)(5) ............... 6.83 6.82 7.10 7.25 7.39
(1) Reduced by $85 million, or $.45 per share, after-tax effect of cost reduction program charge in 1993 and $56 million, or
$.34
per share, after-tax effect of restructuring charge in 1991.
(2) Reflects the disposition of a subsidiary accounted for as discontinued operations.
(3) Includes unbilled sales.
(4) The winter season generally represents November and December of the current year and January through March of the
following year. The winter peak of 18,096 occurred on February 5, 1996.
(5) Includes unbilled and cost recovery clause revenues.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
FPL's operations represent the predominant share of FPL Group's
operating revenues, expenses and net income. For each of the years
1995, 1994 and 1993, FPL's revenues have increased and its O&M
expenses have decreased. The revenue growth resulted from an
increase in customers as well as more extreme weather patterns. The
declining O&M expenses, in large part, reflect management's efforts
to increase the efficiency of FPL's operations. Since 1990, FPL has
reduced its workforce by approximately 8,500 positions or 38%. In
addition to reducing O&M expenses, FPL has initiated several measures
to lower the investment in nuclear plant and regulatory assets
through significantly higher depreciation and amortization expense.
Both the cost control and depreciation actions have been directed
toward improving FPL's cost structure; these efforts are expected to
continue.
FPL's retail activities comprise approximately 97% of FPL Group's
operating revenues and are regulated by the FPSC. FPL reported a
retail regulatory ROE of 12.3%, 12.3% and 9.8% in 1995, 1994 and
1993, respectively. The ROE in 1993 was adversely affected by the
cost reduction program charge. See Note 11. The ROE range
authorized by the FPSC for these periods was 11% to 13% with a
midpoint of 12%.
Operating revenues primarily consist of revenues from base rates,
cost recovery clauses and franchise fees. Revenues from base rates
were $3.4 billion, $3.2 billion and $3.0 billion in 1995, 1994 and
1993, respectively. There were no changes in base rates during those
years. Revenues from cost recovery clauses (including fuel) and
franchise fees represent a pass-through of costs and do not
significantly affect net income. Fluctuations in these revenues are
primarily driven by changes in energy sales and fuel prices.
Retail customer growth was 1.9%, 2.1% and 2.1% in 1995, 1994 and
1993, respectively. Customer growth, together with abnormal weather
conditions, increased total energy sales 3.5%, 6.4% and 4.6% in 1995,
1994 and 1993, respectively.
O&M expenses reflect lower employee-related costs and the effects of
nuclear refueling outages. During 1994, FPL incurred costs relating
to four planned nuclear refueling outages while 1995 and 1993 each
had two. Two nuclear refueling outages are planned for 1996.
Partially offsetting cost decreases in 1994, and to a lesser extent
in 1995, were charges associated with facilities consolidation and
inventory reductions, as well as costs relating to growth in customer
base and placement of additional generating units in service. O&M
expenses for 1995 also included costs associated with workforce
reductions following operational reviews at several business units.
Unlike the distinct company-wide restructuring and cost reduction
programs implemented in 1991 and 1993, management expects operational
reviews to be an ongoing process, targeting productivity enhancements
and enabling business units to respond to a changing business
environment. In 1993, FPL recorded a pretax cost reduction program
charge of $138 million, primarily consisting of severance pay and
retirement benefits resulting from elimination of approximately 1,700
positions.
The increase in depreciation expense in 1995 is primarily due to
interim approval by the FPSC of FPL's request for special
amortization of its nuclear units. The proposal calls for a
continuing amount of $30 million per year plus an additional amount
for 1995 and 1996 based on the level of sales. In granting interim
approval, the FPSC specified that amounts recorded as expense prior
to final approval would remain expense items regardless of their
final classification. This special amortization amounted to $126
million in 1995. FPL also sought and received approval to amortize,
over a period not to exceed five years, plant-related regulatory
assets deferred since FPL's last rate case in 1984. About a third of
this amount, or $37 million, was amortized in 1995. Additionally,
the fourth quarter included a provision to increase the annual
accrual for nuclear decommissioning costs to $85 million, up from $38
million recorded in 1994 and in 1993. The increase is the result of
the FPSC's review and approval of FPL's decommissioning studies filed
in late 1994 and reflects changes in cost, inflation and fund
earnings assumptions and a provision for temporary storage of spent
fuel pending removal to a U.S. Government site. Nuclear
decommissioning accruals are expected to remain at $85 million per
year at least until the next decommissioning studies, currently
scheduled for 2000. The increase in depreciation expense in 1994 was
due to an increase in depreciation rates for generating units, as
well as the accelerated write-off of plant overhaul costs from prior
years, consistent with FPSC orders.
In recent years, FPL Group's subsidiaries have refinanced
substantially all of their existing debt with lower interest rate
instruments. In addition, efforts continued to reduce the overall
level of debt and preferred stock which led to a decline in interest
charges. Preferred stock dividend requirements increased in 1995 due
to the inclusion of premiums on preferred stock redemptions. The
completion of FPL's generation expansion project has resulted in a
significant decline in AFUDC, the primary component of the
non-operating line other - net. AFUDC declined over $40 million
between 1993 and 1994 and in excess of $10 million in 1995. In 1994,
FPL Group adopted a new accounting rule for Employee Stock Ownership
Plans (ESOP). The net effect of adopting this new rule was to reduce
other - net for 1994 by approximately $34 million as a result of the
elimination in consolidation of interest income on the ESOP loan held
by FPL Group Capital. Also, ESOP shares held in trust of 10.0
million in 1995 and 10.6 million in 1994 were not considered
outstanding for earnings per share purposes. These shares will be
considered outstanding when they are allocated to employee accounts
over the program life, currently estimated to be 14 years.
Liquidity and Capital Resources
FPL Group's primary capital requirements consist of expenditures to
meet increased electricity usage and customer growth of FPL. FPL's
capital expenditures for the period 1996 through 1998 are expected to
be approximately $1.5 billion, including $511 million for 1996. See
Note 10 - Commitments. FPL's capital expenditures have declined
significantly over the past few years as a result of continuing
efforts to reduce costs and the completion of its generation
expansion plan. No new generating plants are expected to be
constructed before 2004.
Debt maturities and minimum sinking fund requirements of FPL Group's
subsidiaries will require cash outflows of approximately $911 million
($753 million for FPL) through 2000, including $212 million ($204
million for FPL) in 1996. See Notes 7 and 8. It is anticipated that
cash requirements for construction expenditures and debt repayments
in 1996 will be satisfied with internally generated funds.
Internally generated funds not required for construction expenditures
and current maturities may be used to reduce outstanding debt,
preferred stock or common stock. Any temporary cash needs will be
met by the issuance of commercial paper. Bank lines of credit
currently available to FPL Group and its subsidiaries aggregate $1.3
billion.
In addition to approximately $380 million net retirement of debt and
preferred stock of FPL during 1995, FPL Group repurchased 1.9 million
shares of common stock. Since May 1994, FPL Group has repurchased
5.9 million shares. The board of directors has authorized FPL Group
to purchase up to 10 million shares through 1997.
FPL self-insures for damage to certain transmission and distribution
properties and maintains a funded storm reserve to guard against
storm losses. The balance of the storm fund reserve at December 31,
1995 was $177 million. Bank lines of credit of $300 million,
included in the $1.3 billion above, are also available if needed to
provide cash for storm restoration costs. The FPSC has indicated
that it would consider future storm losses in excess of the funded
reserve for possible recovery from customers. In 1995, the FPSC
approved FPL's request to contribute to the storm fund reserve
insurance recoveries relating to Hurricane Andrew and the March 1993
storm that were not required for identified system repairs. Based on
recoveries through year end, the reserve was increased by $55
million. The FPSC also approved FPL's request to increase in 1995
the annual accrual for the funded reserve from $10 million to $20
million. These contributions, combined with the increase in nuclear
decommissioning costs, resulted in higher cash outflows from
investing activities.
FPL Group continues to dispose of certain non-FPL properties that are
not part of the core business. These dispositions had little effect
on earnings but have contributed to cash flows. Dispositions of
remaining properties are not expected to significantly affect future
operating results. FPL Group's 1994 cash flows from investing
activities were favorably affected by liquidation of its
participation in a limited partnership.
In 1996, the Financial Accounting Standards Board issued an exposure
draft on accounting for certain liabilities related to closure or
removal of long-lived assets. The primary effect of this exposure
draft would be to change the way FPL accounts for nuclear
decommissioning and fossil dismantlement costs. The exposure draft
calls for recording the present value of estimated future cash flows
to decommission FPL's nuclear power plants and dismantle its fossil
plants as an increase to plant balances and as a liability. This
amount is currently estimated to be $1.4 billion. It is anticipated
that there will be no effect on cash flows and, because of the
regulatory treatment, there will be no significant effect on net
income.
FPL Group Capital and its subsidiaries, primarily ESI, have
guaranteed up to approximately $94 million of lease obligations, debt
service payments and other payments subject to certain contingencies.
FPL's charter and mortgage contain provisions which, under certain
conditions, restrict the payment of dividends and the issuance of
additional unsecured debt, first mortgage bonds and preferred stock.
Given FPL's current financial condition and level of earnings,
expected financing activities and dividends are not affected by these
limitations.
Item 8. Financial Statements and Supplementary Data
INDEPENDENT AUDITORS' REPORT
FPL GROUP, INC. AND FLORIDA POWER & LIGHT COMPANY:
We have audited the consolidated financial statements of FPL Group,
Inc. and of Florida Power & Light Company, listed in the accompanying
index at Item 14(a)1 of this Annual Report (Form 10-K) to the
Securities and Exchange Commission for the year ended December 31,
1995. These financial statements are the responsibility of the
companies' management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of FPL
Group, Inc. and Florida Power & Light Company at December 31, 1995
and 1994 and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Certified Public Accountants
Miami, Florida
February 9, 1996
FPL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Years Ended December 31,
1995 1994 1993
OPERATING REVENUES ..................................................... $5,592,485 $5,422,659 $5,311,685
OPERATING EXPENSES:
Fuel, purchased power and interchange ................................ 1,721,730 1,715,345 1,758,298
Other operations and maintenance ..................................... 1,206,444 1,304,046 1,321,540
Depreciation and amortization ........................................ 917,936 723,856 598,389
Cost reduction program charge ........................................ - - 138,000
Taxes other than income taxes ........................................ 549,269 530,970 526,109
Total operating expenses ........................................... 4,395,379 4,274,217 4,342,336
OPERATING INCOME ....................................................... 1,197,106 1,148,442 969,349
OTHER INCOME (DEDUCTIONS):
Interest charges ..................................................... (290,669) (318,967) (367,097)
Dividend requirements on preferred stock of FPL ...................... (43,402) (39,558) (42,663)
Other - net .......................................................... 18,870 36,076 119,659
Total other deductions - net ....................................... (315,201) (322,449) (290,101)
INCOME BEFORE INCOME TAXES ............................................. 881,905 825,993 679,248
INCOME TAXES ........................................................... 328,594 307,282 250,499
NET INCOME ............................................................. $ 553,311 $ 518,711 $ 428,749
Earnings per share of common stock ..................................... $3.16 $2.91 $2.30
Dividends per share of common stock .................................... $1.76 $1.88 $2.47
Average number of common shares outstanding ............................ 175,335 178,009 186,777
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
FPL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
December 31,
1995 1994
PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant - at original cost ........................................... $16,034,653 $15,660,302
Nuclear fuel under capital lease .................................................... 179,100 185,694
Construction work in progress ....................................................... 317,739 292,645
Other property ...................................................................... 193,739 250,892
Less accumulated depreciation and amortization ...................................... 6,873,250 6,186,699
Total property, plant and equipment - net ......................................... 9,851,981 10,202,834
CURRENT ASSETS:
Cash and cash equivalents ........................................................... 46,177 85,750
Customer receivables, net of allowances of $11,929 and $11,792 ...................... 482,326 464,709
Materials, supplies and fossil fuel stock - at average cost ......................... 247,323 309,308
Deferred clause expenses ............................................................ 81,451 61
Other ............................................................................... 128,071 89,819
Total current assets .............................................................. 985,348 949,647
OTHER ASSETS:
Special use funds of FPL ............................................................ 646,846 435,117
Other investments ................................................................... 447,006 489,268
Unamortized debt reacquisition costs of FPL ......................................... 294,844 292,119
Other ............................................................................... 233,201 248,631
Total other assets ................................................................ 1,621,897 1,465,135
TOTAL ASSETS .......................................................................... $12,459,226 $12,617,616
CAPITALIZATION:
Common shareholders' equity ......................................................... $ 4,392,509 $ 4,197,235
Preferred stock of FPL without sinking fund requirements ............................ 289,580 451,250
Preferred stock of FPL with sinking fund requirements ............................... 50,000 94,000
Long-term debt ...................................................................... 3,376,613 3,864,465
Total capitalization .............................................................. 8,108,702 8,606,950
CURRENT LIABILITIES:
Commercial paper .................................................................... 178,500 34,979
Current maturities of long-term debt and preferred stock ............................ 211,902 87,113
Accounts payable .................................................................... 305,126 311,256
Customers' deposits ................................................................. 235,048 220,787
Accrued interest and taxes .......................................................... 219,935 199,817
Deferred clause revenues ............................................................ 78,809 45,866
Other ............................................................................... 274,823 261,830
Total current liabilities ......................................................... 1,504,143 1,161,648
OTHER LIABILITIES AND DEFERRED CREDITS:
Accumulated deferred income taxes ................................................... 1,587,449 1,625,481
Deferred regulatory credit - income taxes ........................................... 144,351 195,906
Unamortized investment tax credits .................................................. 281,966 302,797
Other ............................................................................... 832,615 724,834
Total other liabilities and deferred credits ...................................... 2,846,381 2,849,018
COMMITMENTS AND CONTINGENCIES
TOTAL CAPITALIZATION AND LIABILITIES .................................................. $12,459,226 $12,617,616
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
FPL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Years Ended December 31,
1995 1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ....................................................... $ 553,311 $ 518,711 $ 428,749
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization ................................ 917,936 723,856 598,389
Increase (decrease) in deferred income taxes and
related regulatory credit .................................. (89,587) 92,774 10,225
Cost recovery clauses (1) .................................... (48,447) (82,142) 138,949
Decrease in materials, supplies and fossil fuel stock ........ 61,985 20,291 52,481
Other - net .................................................. 114,946 108,463 40,791
Net cash provided by operating activities ...................... 1,510,144 1,381,953 1,269,584
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2) ......................................... (670,808) (758,690) (1,095,502)
Proceeds from properties held for sale ........................... 70,227 123,012 87,427
Other - net....................................................... (101,048) 61,744 (125,367)
Net cash used in investing activities .......................... (701,629) (573,934) (1,133,442)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of first mortgage bonds and other long-term debt ........ 177,512 172,850 2,208,882
Issuance of preferred stock ...................................... - - 190,000
Retirement of long-term debt and preferred stock ................. (574,343) (470,720) (2,648,170)
Issuance of common stock ......................................... - 16,685 276,287
Repurchase of common stock ....................................... (69,394) (123,733) -
Dividends on common stock ........................................ (308,582) (334,751) (461,639)
Increase (decrease) in short- and long-term commercial paper ..... (56,479) (114,621) 349,600
Other - net....................................................... (16,802) (19,993) 22,756
Net cash used in financing activities .......................... (848,088) (874,283) (62,284)
Net increase (decrease) in cash and cash equivalents ............... (39,573) (66,264) 73,858
Cash and cash equivalents at beginning of year ..................... 85,750 152,014 78,156
Cash and cash equivalents at end of year ........................... $ 46,177 $ 85,750 $ 152,014
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest ........................................... $ 275,542 $ 295,992 $ 333,584
Cash paid for income taxes ....................................... $ 390,800 $ 239,050 $ 150,227
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Additions to capital lease obligations ........................... $ 84,276 $ 63,479 $ 57,579
(1) Represents the effect on cash flows from operating activities of the net amounts deferred or recovered under the fuel and
purchased power, oil-backout, energy conservation, capacity and environmental cost recovery clauses.
(2) Excludes allowance for equity funds used during construction.
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
FLORIDA POWER & LIGHT COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Thousands of Dollars)
Years Ended December 31,
1995 1994 1993
OPERATING REVENUES ...................................................... $5,530,057 $5,342,656 $5,224,299
OPERATING EXPENSES:
Fuel, purchased power and interchange ................................. 1,721,730 1,715,345 1,758,298
Other operations and maintenance ...................................... 1,138,347 1,230,171 1,251,284
Depreciation and amortization ......................................... 909,357 713,352 586,543
Income taxes .......................................................... 347,341 322,435 243,022
Cost reduction program charge ......................................... - - 138,000
Taxes other than income taxes ......................................... 547,976 529,301 523,724
Total operating expenses ............................................ 4,664,751 4,510,604 4,500,871
OPERATING INCOME ........................................................ 865,306 832,052 723,428
OTHER INCOME (DEDUCTIONS):
Interest charges ...................................................... (269,952) (292,347) (327,085)
Other - net ........................................................... 16,020 28,368 71,617
Total other deductions - net ........................................ (253,932) (263,979) (255,468)
NET INCOME .............................................................. 611,374 568,073 467,960
DIVIDEND REQUIREMENTS ON PREFERRED STOCK ................................ 43,402 39,558 42,663
NET INCOME AVAILABLE TO FPL GROUP, INC. ................................. $ 567,972 $ 528,515 $ 425,297
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
FLORIDA POWER & LIGHT COMPANY
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
December 31,
1995 1994
ELECTRIC UTILITY PLANT:
At original cost ................................................................... $16,034,653 $15,660,302
Less accumulated depreciation ...................................................... (6,832,201) (6,132,488)
Net .............................................................................. 9,202,452 9,527,814
Construction work in progress ...................................................... 317,739 292,645
Nuclear fuel under capital lease ................................................... 179,100 185,694
Electric utility plant - net ................................................... 9,699,291 10,006,153
CURRENT ASSETS:
Cash and cash equivalents .......................................................... 412 535
Customer receivables, net of allowances of $11,737 and $11,518 ..................... 479,838 458,047
Materials, supplies and fossil fuel stock - at average cost ........................ 230,553 292,601
Deferred clause expenses ........................................................... 81,451 61
Other .............................................................................. 98,963 81,229
Total current assets ........................................................... 891,217 832,473
OTHER ASSETS:
Special use funds .................................................................. 646,846 435,117
Unamortized debt reacquisition costs ............................................... 294,844 292,119
Other .............................................................................. 219,061 255,590
Total other assets ............................................................. 1,160,751 982,826
TOTAL ASSETS ......................................................................... $11,751,259 $11,821,452
CAPITALIZATION:
Common shareholder's equity ........................................................ $ 4,473,708 $ 4,185,586
Preferred stock without sinking fund requirements .................................. 289,580 451,250
Preferred stock with sinking fund requirements ..................................... 50,000 94,000
Long-term debt ..................................................................... 3,094,050 3,581,157
Total capitalization ........................................................... 7,907,338 8,311,993
CURRENT LIABILITIES:
Commercial paper ................................................................... 178,500 25,000
Current maturities of long-term debt and preferred stock ........................... 204,000 86,350
Accounts payable ................................................................... 299,987 306,616
Customers' deposits ................................................................ 234,858 220,504
Accrued interest and taxes ......................................................... 210,559 187,678
Deferred clause revenues ........................................................... 78,809 45,866
Other .............................................................................. 254,239 232,763
Total current liabilities ...................................................... 1,460,952 1,104,777
OTHER LIABILITIES AND DEFERRED CREDITS:
Accumulated deferred income taxes .................................................. 1,204,315 1,259,822
Deferred regulatory credit - income taxes .......................................... 144,351 195,906
Unamortized investment tax credits ................................................. 281,966 302,797
Other .............................................................................. 752,337 646,157
Total other liabilities and deferred credits ................................... 2,382,969 2,404,682
COMMITMENTS AND CONTINGENCIES
TOTAL CAPITALIZATION AND LIABILITIES ................................................. $11,751,259 $11,821,452
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
FLORIDA POWER & LIGHT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Years Ended December 31,
1995 1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ....................................................... $ 611,374 $ 568,073 $ 467,960
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ................................ 909,357 713,352 586,543
Decrease in deferred income taxes and related
regulatory credit .......................................... (107,063) (21,405) (12,482)
Cost recovery clauses (1) .................................... (48,447) (82,142) 138,949
Decrease in materials, supplies and fossil fuel stock ........ 61,985 20,291 52,481
Other - net .................................................. 94,348 88,584 10,403
Net cash provided by operating activities ...................... 1,521,554 1,286,753 1,243,854
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2) ......................................... (660,818) (745,500) (1,077,590)
Other - net ...................................................... (73,049) (29,394) (15,727)
Net cash used in investing activities .......................... (733,867) (774,894) (1,093,317)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of first mortgage bonds and other long-term debt ........ 170,452 172,850 2,082,993
Issuance of preferred stock ...................................... - - 190,000
Increase (decrease) in short- and long-term commercial paper ..... (81,500) (124,600) 349,600
Capital contributions from FPL Group, Inc. ....................... 280,000 205,000 255,000
Retirement of long-term debt and preferred stock ................. (573,580) (181,989) (2,518,571)
Dividends ........................................................ (596,954) (567,012) (515,280)
Other - net ...................................................... 13,772 (22,889) 10,035
Net cash used in financing activities .......................... (787,810) (518,640) (146,223)
Net increase (decrease) in cash and cash equivalents ............... (123) (6,781) 4,314
Cash and cash equivalents at beginning of year ..................... 535 7,316 3,002
Cash and cash equivalents at end of year ........................... $ 412 $ 535 $ 7,316
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest ........................................... $ 252,459 $ 264,097 $ 293,337
Cash paid for income taxes ....................................... $ 478,708 $ 369,720 $ 260,920
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Additions to capital lease obligations ........................... $ 84,276 $ 63,479 $ 57,579
(1) Represents the effect on cash flows from operating activities of the net amounts deferred or recovered under the fuel and
purchased power, oil-backout, energy conservation, capacity and environmental cost recovery clauses.
(2) Excludes allowance for equity funds used during construction.
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
FPL GROUP, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1995, 1994 and 1993
1. Summary of Significant Accounting and Reporting Policies
Basis of Presentation - Essentially all of FPL Group Inc.'s (FPL
Group) revenues are derived from Florida Power & Light Company (FPL)
which supplies electric service to 3.5 million customer accounts
throughout most of the east and lower west coasts of Florida. Other
operations mainly consist of investments in non-utility energy
projects and agricultural operations.
The consolidated financial statements of FPL Group and FPL include
the accounts of FPL Group and its subsidiaries and of FPL and its
subsidiaries, respectively. All significant intercompany balances
and transactions have been eliminated in consolidation. The
preparation of financial statements requires the use of estimates and
assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses and disclosure of contingent assets and
liabilities. Actual results could differ from those estimates.
Certain amounts included in prior years' consolidated financial
statements have been reclassified to conform to the current year's
presentation.
Regulation - FPL is a utility subject to regulation by the Florida
Public Service Commission (FPSC) and the Federal Energy Regulatory
Commission (FERC). As a result of such regulation, FPL follows the
accounting practices set forth in Statement of Financial Accounting
Standard (SFAS) No. 71, "Accounting for the Effects of Certain Types
of Regulation." SFAS 71 indicates that regulators can create assets
and impose liabilities that would not be recorded by non-regulated
entities. Recoverability of these assets is assessed at each
reporting period. The principal assets recorded under SFAS 71, which
aggregated $369 million at December 31, 1995, are unamortized debt
reacquisition costs and plant-related deferred costs and are included
in the other assets section of the consolidated balance sheets. In
1995, FPL began amortizing the plant-related deferred costs over a
period of no more than five years as approved by the FPSC.
Approximately $37 million, or one-third of the balance, was amortized
in 1995. The principal SFAS 71-related liabilities, which aggregated
$604 million at December 31, 1995, are deferred regulatory
credit - income taxes, unamortized investment tax credits and a storm
and property insurance reserve and are included in the other
liabilities and deferred credits section of the consolidated balance
sheets. Other accounting practices followed by FPL that differ from
non-regulated entities are outlined below, including deferral of
clause under or over recoveries, nuclear amortization and
decommissioning and allowance for funds used during construction.
Revenues and Rates - FPL's retail and wholesale utility rate
schedules are approved by the FPSC and the FERC, respectively. FPL
records the estimated amount of base revenues for energy delivered to
customers but not billed. Such unbilled revenues are included in
customer receivables and amounted to approximately $155 million and
$117 million at December 31, 1995 and 1994, respectively.
Revenues include amounts resulting from cost recovery clauses, which
are designed to permit full recovery of certain costs and provide a
return on certain assets utilized by these programs, and franchise
fees. Such revenues represent a pass-through of costs and include
substantially all fuel, purchased power and interchange expenses,
conservation- and environmental-related expenses, certain revenue
taxes and franchise fees. Revenues from cost recovery clauses are
recorded when billed; FPL achieves matching of costs and related
revenues by deferring the net under or over recovery. Any under
recovered costs or over recovered revenues are collected from or
returned to customers in subsequent periods.
Electric Utility Plant, Depreciation and Amortization - The cost of
additions to units of utility property is added to electric utility
plant. The cost of units of utility property retired, less net
salvage, is charged to accumulated depreciation. Maintenance and
repairs of property as well as replacements and renewals of items
determined to be less than units of utility property are charged to
other operations and maintenance expense. At December 31, 1995, the
generating, transmission, distribution and general facilities of FPL
represented approximately 48%, 13%, 32% and 7%, respectively, of
FPL's gross investment in electric utility plant in service.
Substantially all electric utility plant is subject to the lien of a
mortgage securing FPL's first mortgage bonds.
Depreciation of utility property is primarily provided on a
straight-line average remaining life basis and includes a provision
for dismantlement. For substantially all utility property,
depreciation and fossil fuel plant dismantlement studies are
performed at least every four years. The most recent depreciation
studies were filed with and approved by the FPSC in 1994. Fossil
fuel plant dismantlement studies were filed in 1994 and approved by
the FPSC in 1995. The FPSC approved, on an interim basis,
accelerated amortization of FPL's nuclear units of $30 million per
year plus an additional amount based on the level of sales achieved
for 1995 and 1996. The weighted annual composite depreciation rate
was approximately 4.0% for 1995 and 1994 and 3.9% for 1993. The 1995
rate excludes $163 million of special nuclear amortization and
amortization of the plant-related deferred costs. The 1994 rate
excludes $47 million of accelerated write-off of certain accumulated
plant overhaul costs.
Nuclear fuel costs, including a charge for spent nuclear fuel
disposal, is accrued in fuel expense on a unit of production method.
Allowance for Funds Used During Construction (AFUDC) - FPL recognizes
AFUDC as a noncash item representing the allowed cost of capital
including a return on common equity used to finance a portion of
FPL's construction work in progress. AFUDC is capitalized as an
additional cost of utility plant and is recorded as an addition to
income. The capitalization rate used in computing AFUDC was 8.26% in
1995 and 1994 and an average rate of approximately 8.47% for 1993.
AFUDC amounted to $15 million, $24 million and $66 million for the
years ended December 31, 1995, 1994 and 1993, respectively, and is
included in other - net in the consolidated statements of income.
Nuclear Decommissioning - FPL accrues nuclear decommissioning costs
over the expected service life of each unit. Nuclear decommissioning
studies are performed at least every five years for FPL's four
nuclear units and are submitted to the FPSC for approval. The most
recent studies were filed in December 1994 and approved in 1995.
These studies assume prompt dismantlement for the Turkey Point Unit
Nos. 3 and 4 with decommissioning activities commencing in 2012 and
2013, respectively. St. Lucie Unit No. 1 will be mothballed in 2016
until St. Lucie Unit No. 2 is ready for decommissioning in 2023.
These studies also assume that FPL will be storing spent fuel on site
pending removal to a U.S. Government facility. Decommissioning
expense accruals, included in depreciation and amortization expense
in the consolidated statements of income, were $85 million for 1995
and $38 million for each of the years 1994 and 1993. FPL's portion
of the ultimate cost of decommissioning its four units, including
dismantlement and reclamation, expressed in 1995 dollars, is
currently estimated to aggregate $1.4 billion. At December 31, 1995
and 1994, the accumulated provision for nuclear decommissioning
totaled $666 million and $500 million, respectively, and is included
in accumulated depreciation.
Restricted assets for the payment of future expenditures to
decommission FPL's nuclear units are included in special use funds of
FPL in the consolidated balance sheets. At December 31, 1995 and
1994, decommissioning fund assets were $534 million and $373 million,
respectively. Securities held in the decommissioning fund are
carried at market value with market adjustments resulting in a
corresponding adjustment to the accumulated provision for nuclear
decommissioning. See Note 9. Contributions to the funds are based
on current period decommissioning expense. Additionally, fund
earnings, net of taxes are reinvested in the funds. The effects of
amounts not yet recognized for tax purposes are included in
accumulated deferred income taxes.
In 1996, the Financial Accounting Standards Board issued an exposure
draft, "Accounting for Certain Liabilities Related to Closure or
Removal of Long-Lived Assets." The primary effect of this exposure
draft would be to change the way FPL accounts for nuclear
decommissioning and fossil dismantlement costs. The exposure draft
calls for recording the present value of estimated future cash flows
to decommission FPL's nuclear power plants and dismantle its fossil
plants as an increase to plant balances and as a liability. This
amount is currently estimated to be $1.4 billion. It is anticipated
that there will be no effect on cash flows and, because of the
regulatory treatment, there will be no significant effect on net
income.
Storm and Property Insurance Reserve Fund - A storm and property
insurance reserve fund (storm fund) provides coverage toward storm
damage costs and possible retrospective premium assessments stemming
from a nuclear incident under the various insurance programs covering
FPL's nuclear generating plants. The storm fund, which totaled $113
million and $62 million at December 31, 1995 and 1994, respectively,
is included in special use funds of FPL in the consolidated balance
sheets. Securities held in the fund are carried at market value with
market adjustments resulting in a corresponding adjustment to the
storm and property insurance reserve. See Note 9.
Other Investments - Included in other investments in FPL Group's
consolidated balance sheets are non-majority owned interests in
partnerships and joint ventures, essentially all of which are
accounted for under the equity method. Additionally, other
investments include FPL Group's participation in leveraged leases of
$158 million at December 31, 1995 and 1994.
Cash Equivalents - Cash equivalents consist of short-term, highly
liquid investments with original maturities of three months or less.
Commercial Paper - The year end weighted-average interest rate on
commercial paper at December 31, 1995 and 1994 was 5.8% and 5.9%,
respectively.
Retirement of Long-Term Debt - The excess of FPL's reacquisition cost
over the book value of long-term debt is deferred and amortized to
expense ratably over the remaining life of the original issue, which
is consistent with its treatment in the ratemaking process. FPL
Group Capital Inc (FPL Group Capital) expenses this cost in the
period incurred.
Income Taxes - Deferred income taxes are provided on all significant
temporary differences between the financial statement and tax bases
of assets and liabilities. FPL is included in the consolidated
federal income tax return filed by FPL Group. FPL determines its
income tax provision on the "separate return method." The deferred
regulatory credit - income taxes of FPL represents the revenue
equivalent of the difference in accumulated deferred income taxes
computed under SFAS 109, "Accounting for Income Taxes" as compared to
prior accounting rules. This amount is being amortized in accordance
with the regulatory treatment over the estimated lives of the assets
or liabilities which resulted in the initial recognition of the
deferred tax amount. Investment tax credits for FPL are deferred and
amortized to income over the approximate lives of the related
property in accordance with the regulatory treatment.
2. Income Taxes
The components of income taxes are as follows:
FPL Group FPL
Years Ended December 31, Years Ended December 31,
1995 1994 1993 1995 1994 1993
(Thousands of Dollars)
Federal:
Current ............................... $380,792 $203,407 $205,233 $395,480 $314,956 $238,208
Deferred .............................. (78,467) 83,135 28,207 (84,630) (22,125) (12,571)
Investment tax credits - net .......... (20,957) (21,205) (21,994) (20,832) (20,994) (21,646)
Total federal ..................... 281,368 265,337 211,446 290,018 271,837 203,991
State:
Current ............................... 58,426 32,020 33,324 64,427 46,152 41,780
Deferred .............................. (11,200) 9,925 5,729 (7,104) 4,446 (2,749)
Total state ....................... 47,226 41,945 39,053 57,323 50,598 39,031
Income taxes charged to operations - FPL. 347,341 322,435 243,022
Credited to other income
(deductions) - FPL .................... (5,047) (3,026) (3,132)
Total income taxes ...................... $328,594 $307,282 $250,499 $342,294 $319,409 $239,890
A reconciliation between income tax expense and the income tax
expense calculated at the applicable statutory rates is as follows:
FPL Group FPL
Years Ended December 31, Years Ended December 31,
1995 1994 1993 1995 1994 1993
(Thousands of Dollars)
Computed at statutory federal income
tax rate .............................. $308,667 $289,098 $237,737 $333,784 $310,619 $247,747
Increases (reductions) resulting from:
State income taxes - net of federal
income tax benefit .................. 30,697 27,264 24,530 37,076 32,996 25,461
Amortization of investment tax credits. (20,957) (21,205) (21,491) (20,832) (20,994) (21,143)
Allowance for equity funds used
during construction ................. (3,134) (5,081) (14,177) (3,134) (5,081) (14,177)
Dividend requirements on preferred
stock of FPL ........................ 15,191 13,854 14,932 - - -
Other - net ........................... (1,870) 3,352 8,968 (4,600) 1,869 2,002
Total income taxes ...................... $328,594 $307,282 $250,499 $342,294 $319,409 $239,890
The income tax effects of temporary differences giving rise to
consolidated deferred income tax liabilities and assets are as follows:
FPL Group FPL
December 31, December 31,
1995 1994 1995 1994
(Thousands of Dollars)
Deferred tax liabilities:
Property-related ................................... $1,704,643 $1,715,349 $1,670,242 $1,675,774
Investment-related ................................. 371,298 385,592 - -
Unamortized debt reacquisition costs and other ..... 222,279 171,258 145,180 114,497
Total deferred tax liabilities ................... 2,298,220 2,272,199 1,815,422 1,790,271
Deferred tax assets and valuation allowance:
Asset writedowns and capital loss carryforward ..... 263,149 254,303 - -
Unamortized investment tax credits and deferred
regulatory credit - income taxes ................. 164,451 192,375 164,451 192,375
Storm and decommissioning reserves ................. 200,890 147,269 200,890 147,269
Other .............................................. 289,885 258,309 245,766 190,805
Valuation allowance ................................ (207,604) (205,538) - -
Net deferred tax assets .......................... 710,771 646,718 611,107 530,449
Accumulated deferred income taxes .................... $1,587,449 $1,625,481 $1,204,315 $1,259,822
The valuation allowance in 1995 and 1994 offsets a related amount of
deferred tax assets recorded pursuant to SFAS 109. The primary
component of the valuation allowance relates to capital loss
carryforwards from the disposition of an FPL Group Capital subsidiary in
a prior year. The amount of the deductible loss from this disposition was
limited by Internal Revenue Service rules which are being challenged by
FPL Group. FPL Group is unable to predict the outcome of this
challenge.
3. Leases
FPL leases nuclear fuel for all four of its nuclear units. Nuclear fuel
lease payments, which are based on energy production and are charged
to fuel expense, were $104 million, $115 million and $122 million for the
years ended December 31, 1995, 1994 and 1993, respectively. Included
in these payments was an interest component of $11 million for each of
the years 1995, 1994 and 1993. Under certain circumstances of lease
termination, FPL is required to purchase all nuclear fuel in whatever form
at a purchase price designed to allow the lessor to recover its net
investment cost in the fuel, which totaled $179 million at December 31,
1995. For ratemaking, these leases are classified as operating leases.
For financial reporting, the capital lease obligation is recorded at the
amount due in the event of lease termination.
FPL Group, through its subsidiaries, leases automotive, computer, office
and other equipment through rental agreements with various terms and
expiration dates. Rental expense totaled $17 million, $26 million and
$33 million for 1995, 1994 and 1993, respectively. Minimum annual
rental commitments for noncancelable operating leases are not material.
4. Jointly-Owned Electric Utility Plant
FPL owns approximately 85% of the St. Lucie Nuclear Unit No. 2, 20%
of the St. Johns River Power Park (SJRPP) units and coal terminal and
approximately 76% of Scherer Unit No. 4. At December 31, 1995, FPL's
gross investment in these units was $1.169 billion, $329 million and
$569 million, respectively; accumulated depreciation was $576 million,
$132 million and $119 million, respectively.
FPL is responsible for its share of the operating costs, as well as
providing its own financing. At December 31, 1995, there was no
significant balance of construction work in progress on these facilities.
5. Employee Retirement Benefits
Pension Benefits - Substantially all employees of FPL Group and its
subsidiaries are covered by a noncontributory defined benefit pension
plan. Plan benefits are generally based on employees' years of service
and compensation during the last years of employment. Participants are
vested after five years of service. All costs of the FPL Group pension
plan are allocated to participating subsidiaries on a pro rata basis.
For 1995, 1994 and 1993 the components of pension cost are as
follows:
Years Ended December 31,
1995 1994 1993
(Thousands of Dollars)
Service cost .............................................................. $ 31,782 $ 37,423 $ 36,105
Interest cost on projected benefit obligation ............................. 87,871 80,466 78,797
Actual return on plan assets .............................................. (350,237) (11,293) (236,565)
Net amortization and deferral ............................................. 211,523 (118,770) 106,894
Negative pension cost ..................................................... (19,061) (12,174) (14,769)
Effect of special retirement programs ..................................... 5,338 - 34,463
FPL Group's pension cost .................................................. $ (13,723) $ (12,174) $ 19,694
Pension costs allocated to FPL ............................................ $ (13,432) $ (11,966) $ 19,871
FPL Group and its subsidiaries fund the pension cost calculated under
the entry age normal level percentage of pay actuarial cost method,
provided that this amount satisfies the minimum funding standards of the
Employee Retirement Income Security Act of 1974, as amended, and is
not greater than the maximum tax deductible amount for the year. No
contributions to the plan were required for 1995, 1994 or 1993.
A reconciliation of the funded status of the plan to the amounts
recognized in FPL Group's consolidated balance sheets is presented
below:
December 31,
1995 1994
(Thousands of Dollars)
Plan assets at fair value, primarily listed stocks and bonds .......................... $1,910,986 $1,620,978
Actuarial present value of benefits for services rendered to date:
Accumulated benefits based on salaries to date, including vested benefits
of $924 million and $683 million .................................................. 982,159 734,759
Additional benefits based on estimated future salary levels ......................... 447,120 326,356
Projected benefit obligation .......................................................... 1,429,279 1,061,115
Plan assets in excess of projected benefit obligation ................................. 481,707 559,863
Prior service costs not recognized in net periodic pension cost ....................... 187,463 200,185
Unrecognized net asset at January 1, 1986, being amortized primarily
over 19 years - net of accumulated amortization ..................................... (210,203) (233,558)
Unrecognized net gain ................................................................. (430,307) (511,553)
Prepaid pension cost of FPL Group ..................................................... $ 28,660 $ 14,937
Prepaid pension cost allocated to FPL ................................................. $ 25,069 $ 11,637
The weighted-average discount rate used in determining the actuarial
present value of the projected benefit obligation was 6.75% and 7.75%
for 1995 and 1994, respectively. The assumed rate of increase in future
compensation levels was 5.5% for both years. The expected long-term
rate of return on plan assets used in determining pension cost was
7.75% for 1995, 1994 and 1993.
Other Postretirement Benefits - FPL Group and its subsidiaries have
defined benefit postretirement plans for health care and life insurance
benefits that cover substantially all employees. All costs of the FPL
Group plans are allocated to participating subsidiaries on a pro rata
basis. Eligibility for health care benefits is based upon age plus years of
service at retirement. The plans are contributory and contain
cost-sharing features such as deductibles and coinsurance. FPL Group
has capped company contributions for postretirement health care at a
defined level which, depending on actual claims experience, may be
reached by the year 2004. Generally, life insurance benefits for retirees
are capped at $50,000. FPL Group's policy is to fund postretirement
benefits in amounts determined at the discretion of management.
In 1993, FPL Group and FPL adopted SFAS 106, "Employers'
Accounting for Postretirement Benefits Other than Pensions." For 1995,
1994 and 1993, the components of net periodic postretirement benefit
cost are as follows:
Years Ended December 31,
1995 1994 1993
(Thousands of Dollars)
Service cost ....................................................................... $ 4,216 $ 4,717 $ 5,233
Interest cost ...................................................................... 18,119 17,336 14,633
Actual return on plan assets ....................................................... (23,742) (749) (8,130)
Amortization of transition obligation .............................................. 3,485 3,485 4,064
Net amortization and deferral ...................................................... 16,479 (6,156) -
Net periodic postretirement benefit cost ........................................... 18,557 18,633 15,800
Effect of cost reduction program (see Note 11)...................................... - - 29,008
FPL Group's postretirement benefit cost ............................................ $ 18,557 $18,633 $44,808
Postretirement benefit costs allocated to FPL ...................................... $ 18,326 $18,436 $44,487
A reconciliation of the funded status of the plan to the amounts
recognized in FPL Group's consolidated balance sheets is presented
below:
December 31,
1995 1994
(Thousands of Dollars)
Plan assets at fair value, primarily listed stocks and bonds ......................... $ 110,435 $ 99,178
Accumulated postretirement benefit obligation:
Retirees ........................................................................... 172,572 166,215
Fully eligible active plan participants ............................................ 3,194 1,946
Other active plan participants ..................................................... 94,128 74,577
Total ............................................................................ 269,894 242,738
Accumulated postretirement benefit obligation in excess of plan assets ............... (159,459) (143,560)
Unrecognized net transition obligation (amortized over 20 years) ..................... 59,247 62,732
Unrecognized net loss ................................................................ 18,269 17,387
Accrued postretirement benefit liability of FPL Group ................................ $ (81,943) $ (63,441)
Accrued postretirement benefit liability allocated to FPL ............................ $ (81,194) $ (62,923)
The weighted-average annual assumed rate of increase in the per capita
cost of covered benefits (i.e., health care cost trend rate) for 1995 is
8.5% for retirees under age 65 and 7.5% for retirees over age 65.
These rates are assumed to decrease gradually to 5.0% by the year
2003. The cap on FPL Group's contributions mitigates the potential
significant increase in costs resulting from an increase in the health care
cost trend rate. Increasing the assumed health care cost trend rate by
one percentage point would increase the plan's accumulated
postretirement benefit obligation as of December 31, 1995 by $8 million,
and the aggregate of the service and interest cost components of net
periodic postretirement benefit cost of the plan for 1995 by approximately
$1 million.
The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation was 6.75% and 7.75% for
1995 and 1994, respectively. The expected long-term rate of return on
plan assets used in determining postretirement benefit cost was 7.75%
for 1995, 1994 and 1993.
6. Common Shareholders' Equity
FPL Group - The changes in FPL Group's common shareholders' equity
accounts are as follows:
Common Stock (1) Additional Common
Aggregate Paid-In Unearned Retained Shareholders'
Shares Par Value Capital Compensation Earnings Equity
(In Thousands)
Balances, December 31, 1992 .... 182,788 $1,828 $3,312,903 $(336,355) $ 857,613
Net income ................... - - - - 428,749
Issuance of common stock ..... 7,277 73 278,123 - -
Dividends on common stock .... - - - - (461,639)
Earned compensation and tax
benefits on ESOP dividends.. - - - 15,234 5,110
Other ........................ - - (1,032) - -
Balances, December 31, 1993 .... 190,065 1,901 3,589,994 (321,121) 829,833
Net income ................... - - - - 518,711
Issuance of common stock ..... 506 5 16,680 - -
Repurchase of common stock ... (4,000) (40) (123,693) - -
Dividends on common stock .... - - - - (334,751)
Earned compensation under ESOP - - 1,964 16,900 -
Other ........................ - - 852 - -
Balances, December 31, 1994 .... 186,571(2) 1,866 3,485,797 (304,221) 1,013,793 $4,197,235
Net income ................... - - - - 553,311
Repurchase of common stock ... (1,878) (19) (69,375) - -
Dividends on common stock .... - - - - (308,582)
Earned compensation under ESOP - - 5,030 16,741 -
Other ........................ - - (1,832) - -
Balances, December 31, 1995 .... 184,693(2) $1,847 $3,419,620 $(287,480) $1,258,522 $4,392,509
(1) $.01 par value, authorized - 300,000,000 shares; outstanding 184,692,985 and 186,570,549 at December 31, 1995 and
1994, respectively.
(2) Outstanding and unallocated shares held by the ESOP Trust totaled 9.8 million and 10.4 million at December 31, 1995 and
1994. Unallocated shares are excluded from average shares outstanding in the earnings per share computation beginning in
1994.
Common Stock Dividend Restrictions - FPL Group's charter does not
limit the dividends that may be paid on its common stock. As a practical
matter, the ability of FPL Group to pay dividends on its common stock is
dependent upon dividends paid to it by its subsidiaries, primarily FPL.
FPL's charter and a mortgage securing FPL's first mortgage bonds
contain provisions that, under certain conditions, restrict the payment of
dividends and other distributions to FPL Group. These restrictions do
not currently limit FPL's ability to pay dividends to FPL Group. In 1995,
1994 and 1993 FPL paid, as dividends to FPL Group, its net income
available to FPL Group on a one-month lag basis.
Employee Stock Ownership Plan - The employee thrift plans of FPL
Group include a leveraged Employee Stock Ownership Plan (ESOP)
feature. Shares of common stock held by the Trust for the thrift plans
(Trust) are used to provide all or a portion of the employers' matching
contributions. Dividends received on all shares, along with cash
contributions from the employers, are used to pay principal and interest
on the ESOP loan held by FPL Group Capital. Dividends on shares
allocated to employee accounts and used by the Trust for debt service
are replaced with an equivalent amount of shares of common stock at
prevailing market prices.
In 1994, FPL Group adopted American Institute of Certified Public
Accountants Statement of Position (SOP) 93-6, "Employers' Accounting
for Employee Stock Ownership Plans." Under the new accounting rules,
unallocated shares held by the Trust were removed from the earnings
per share computation until allocated to employee accounts over the
next 14 years. Additionally, compensation expense totaling
approximately $18 million in 1995 and 1994 is now measured at the fair
value of shares allocated to employee accounts during the period and
interest income on the ESOP loan is eliminated in consolidation. The
net effect of adopting SOP 93-6 was to reduce net income for 1994 by
approximately $21 million and increase earnings per share by $.05.
ESOP-related unearned compensation included as a reduction of
shareholders' equity at December 31, 1995 was approximately $284
million, representing 9.8 million unallocated shares at the original issue
price of $29 per share. The fair value of the unearned compensation
account using the closing price of FPL Group stock as of December 31,
1995 was approximately $454 million.
Long-Term Incentive Plan - In 1994, FPL Group's board of directors and
its shareholders approved a new long-term incentive plan which replaced
the prior long-term incentive plan. Under the new plan, 9 million shares
of common stock are reserved and available for awards to officers and
employees of FPL Group and its subsidiaries as of December 31, 1995.
No further awards will be made under the prior plan. Total
compensation charged against earnings under the incentive plan, and
the effect on earnings per share, were not material in any year. The
changes in share awards under the incentive plan are as follows:
Performance Restricted Non-qualified
Shares Stock Option Shares
Balances, December 31, 1992 ....................................... 291,445 177,296 85,406
Granted ......................................................... 89,827 - -
Exercised at $30 7/8 ............................................ - - (35,045)
Paid/released ................................................... (87,169) (6,903) -
Forfeited ....................................................... (14,044) (4,070) (285)
Balances, December 31, 1993 ....................................... 280,059 166,323 50,076
Granted ......................................................... 102,720 29,000 -
Exercised at $30 7/8 ............................................ - - (8,941)
Paid/released ................................................... - (6,223) -
Forfeited ....................................................... (5,589) (1,350) (2,748)
Balances, December 31, 1994 ....................................... 377,190 187,750 38,387
Granted ......................................................... 97,786 13,500 -
Exercised at $30 7/8 ............................................ - - (23,136)
Paid/released ................................................... (123,328) (3,000) -
Forfeited ....................................................... (31,312) (4,050) (4,066)
Balances, December 31, 1995 ....................................... 320,336(1) 194,200(2) 11,185(3)
(1) Payment of performance shares is based on the market price of FPL Group's common stock when the related performance
goal is achieved.
(2) Shares of restricted stock were issued at market value at the date of the grant.
(3) All outstanding options are exercisable at $30 7/8 and expire in mid-1996.
In conjunction with the options referred to above, stock appreciation
rights have been granted in an equivalent amount. No awards of
incentive stock options had been granted as of December 31, 1995.
Other - Each share of common stock has been granted a Preferred Share
Purchase Right (Right), which is exercisable in the event of certain
attempted business combinations. The Rights will cause substantial
dilution to a person or group attempting to acquire FPL Group on
terms not approved by FPL Group's board of directors.
FPL - The changes in FPL's common shareholder's equity accounts are
as follows:
Common Additional Retained Common Share-
Stock (1) Paid-in Capital Earnings holder's Equity
(Thousands of Dollars)
Balances, December 31, 1992 ......................... $1,373,069 $1,487,467 $ 917,945
Contributions from FPL Group ...................... - 255,000 -
Net income available to FPL Group ................. - - 425,297
Dividends to FPL Group ............................ - - (472,617)
Preferred stock issuance costs and other .......... - (1,031) (5,705)
Balances, December 31, 1993 ......................... 1,373,069 1,741,436 864,920
Contributions from FPL Group ...................... - 205,000 -
Net income available to FPL Group ................. - - 528,515
Dividends to FPL Group ............................ - - (527,454)
Other ............................................. - 100 -
Balances, December 31, 1994 ......................... 1,373,069 1,946,536 865,981 $4,185,586
Contributions from FPL Group ...................... - 280,000 -
Net income available to FPL Group ................. - - 567,972
Dividends to FPL Group ............................ - - (557,923)
Other ............................................. - 2,057 (3,984)
Balances, December 31, 1995 ......................... $1,373,069 $2,228,593 $ 872,046 $4,473,708
(1) Common stock, no par value, 1,000 shares authorized, issued and outstanding.
7. Preferred Stock
FPL Group's charter authorizes the issuance of 100 million shares of
serial preferred stock, $.01 par value. None of these shares is
outstanding. Preferred stock of FPL consists of the following: (1)
December 31, 1995
Shares Redemption December 31,
Outstanding Price 1995 1994
(Thousands of Dollars)
Cumulative, No Par Value, authorized 10,000,000 shares at
December 31, 1995 and 1994; without sinking fund
requirements - $2.00 No Par Value, Series A (Involuntary
Liquidation Value $25 Per Share) (2) ........................ 2,533,188 $ 27.00 $ 63,330 $125,000
Cumulative, $100 Par Value, authorized 15,822,500 shares at
December 31, 1995 and 1994:
Without sinking fund requirements:
4 1/2% Series ........................................... 100,000 101.00 10,000 10,000
4 1/2% Series A ......................................... 50,000 101.00 5,000 5,000
4 1/2% Series B ......................................... 50,000 101.00 5,000 5,000
4 1/2% Series C ......................................... 62,500 103.00 6,250 6,250
4.32% Series D .......................................... 50,000 103.50 5,000 5,000
4.35% Series E .......................................... 50,000 102.00 5,000 5,000
7.28% Series F .......................................... 600,000 102.93 60,000 60,000
7.40% Series G .......................................... 400,000 102.53 40,000 40,000
6.98% Series S .......................................... 750,000 -(3) 75,000 75,000
7.05% Series T .......................................... 500,000 -(3) 50,000 50,000
6.75% Series U .......................................... 650,000 -(3) 65,000 65,000
Total preferred stock of FPL without sinking
fund requirements ................................... 5,795,688 389,580 451,250
Less current maturities ........................... 1,000,000 100,000 -
Total preferred stock of FPL without sinking fund
requirements, excluding current maturities .......... 4,795,688 $289,580 $451,250
With sinking fund requirements (4):
6.84% Series Q (5) ...................................... 440,000 $102.74 $ 44,000 $ 44,000
8.625% Series R (6) ..................................... 100,000 105.18 10,000 50,000
Total preferred stock of FPL with sinking
fund requirements ................................... 540,000 54,000 94,000
Less current maturities ........................... 40,000 4,000 -
Total preferred stock of FPL with sinking fund
requirements, excluding current maturities .......... 500,000 $ 50,000 $ 94,000
(1) FPL's charter authorizes the issuance of 5 million shares of subordinated preferred stock, no par value. None of these
shares is outstanding. There were no issuances of preferred stock in 1995 and 1994. In 1993, FPL issued 1,900,000
shares of $100 par value preferred stock without sinking fund requirements. In December 1995, FPL called for redemption,
in January 1996, 600,000 shares of its 7.28% Preferred Stock, Series F, $100 Par Value and 400,000 shares of its 7.40%
Preferred Stock, Series G, $100 Par Value. In 1993, FPL redeemed and retired 160,000 shares of $100 par value preferred
stock without sinking fund requirements and 167,660 shares of $100 par value preferred stock with sinking fund
requirements.
(2) In 1995, 2,466,812 shares were tendered, accepted for exchange and retired by FPL pursuant to its offer to exchange each
such share for $25 in principal amount of 8.75% Quarterly Income Debt Securities (Subordinated Deferrable Interest
Debentures).
(3) Not redeemable prior to 2003.
(4) Minimum annual sinking fund requirements on preferred stock are $4 million for each of the years 1996, 1997, 1998 and
1999 and approximately $2 million in 2000. In the event that FPL should be in arrears on its sinking fund obligations, FPL
may not pay dividends on common stock.
(5) Entitled to a sinking fund to retire a minimum of 15,000 shares and a maximum of 30,000 shares annually from 1996
through 2026 at $100 per share plus accrued dividends. FPL redeemed and retired 45,000 shares in 1994, satisfying the
1994 and 1995 minimum annual sinking fund requirement.
(6) Entitled to a sinking fund to retire a minimum of 25,000 shares and a maximum of 50,000 shares annually from 1996
through 2015 at $100 per share plus accrued dividends. FPL redeemed and retired 400,000 shares in 1995.
/TABLE
8. Long-Term Debt (1)(2)
Long-term debt consists of the following:
December 31,
1995 1994
(Thousands of Dollars)
FPL
First mortgage bonds:
Maturing through 2000 - 4 5/8% to 9 5/8% .......................................... $ 355,000 $ 460,697
Maturing 2001 through 2015 - 6 5/8% to 7 7/8% ..................................... 661,838 700,000
Maturing 2016 through 2026 - 7% to 9 3/8% ......................................... 1,024,702 1,126,223
Medium-term notes:
Maturing through 2000 - 4.85% to 6.20% .......................................... 280,300 280,300
Maturing 2001 through 2015 - 5.79% to 8.95% ..................................... 106,500 155,000
Maturing 2016 through 2022 - 8% to 9.05% ........................................ 98,610 148,700
Pollution control and industrial development series -
Maturing 2019 through 2027 - 6.7% to 7.5% ....................................... 150,135 260,705
Pollution control, solid waste disposal and industrial development revenue
bonds - Maturing 2021 through 2029 - variable, 4.3% and 3%
average annual interest rate, respectively ...................................... 483,735 373,165
Installment purchase and security contracts - maturing 2007 - 5.9% .................. 2,000 2,000
Quarterly Income Debt Securities (Subordinated Deferrable Interest
Debentures) - maturing 2025 - 8.75% ............................................... 61,670 -
Commercial paper - 4.4% average annual interest rate ................................ - 200,000
Unamortized discount - net .......................................................... (30,440) (39,283)
Total long-term debt of FPL ....................................................... 3,194,050 3,667,507
Less current maturities ......................................................... 100,000 86,350
Long-term debt of FPL, excluding current maturities ............................. 3,094,050 3,581,157
FPL Group Capital
Debentures:
Maturing 1997 - 6 1/2% ............................................................ 150,000 150,000
Maturing 2013 - 7 5/8% ............................................................ 125,000 125,000
Other long-term debt - 7% to 10% due various dates to 2013 .......................... 17,655 11,320
Unamortized discount ................................................................ (2,190) (2,249)
Total long-term debt of FPL Group Capital ......................................... 290,465 284,071
Less current maturities ......................................................... 7,902 763
Long-term debt of FPL Group Capital, excluding current maturities ............... 282,563 283,308
Total long-term debt .............................................................. $3,376,613 $3,864,465
(1) Minimum annual maturities and sinking fund requirements of long-term debt for 1996-2000 are approximately $108 million,
$150 million, $180 million, $230 million and $125 million, respectively.
(2) Available lines of credit aggregated approximately $1.3 billion at December 31, 1995, all of which were based on firm
commitments.
9. Financial Instruments
The carrying amounts of cash equivalents and commercial paper
approximate their fair values. Certain investments of FPL Group
included in other investments in the consolidated balance sheets are
carried at estimated fair value which was $84 million and $66 million
at December 31, 1995 and 1994, respectively. The following estimates
of the fair value of financial instruments have been made using
available market information and other valuation methodologies.
However, the use of different market assumptions or methods of
valuation could result in different estimated fair values.
December 31,
1995 1994
Carrying Estimated Carrying Estimated
Amount Fair Value(1) Amount Fair Value(1)
(Thousands of Dollars)
Preferred stock of FPL with sinking fund requirements (2). $ 54,000 $ 55,520 $ 94,000 $ 92,840
Long-term debt of FPL (2) ................................ $3,194,050 $3,285,925 $3,667,507 $3,452,618
Long-term debt of FPL Group (2) .......................... $3,484,515 $3,588,835 $3,951,578 $3,678,995
(1) Based on quoted market prices for these or similar issues.
(2) Includes current maturities.
Special Use Funds - Securities held in the special use funds are
carried at estimated fair value. The nuclear decommissioning fund
primarily consists of municipal and corporate debt securities with a
weighted-average maturity of 9 years. The storm fund primarily
consists of municipal debt securities with a weighted-average
maturity of 5 years. The cost of securities sold is determined on
the specific identification method. During 1995, the special use
funds realized gains of $13 million and losses of $4 million. At
December 31, 1995, the funds included unrealized gains of $33 million
and no significant unrealized losses. Realized gains and losses
during 1994 were $6 million and $8 million, respectively. At
December 31, 1994, unrealized gains were $2 million and unrealized
losses were $9 million. The proceeds from the sale of securities in
1995 and 1994 were $950 million and $650 million, respectively. A
shift in the asset mix of the decommissioning fund occurred in 1995
and 1994 due to certain tax law changes.
10. 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. FPL
Group Capital and its subsidiaries, primarily ESI Energy, Inc. (ESI),
have guaranteed up to approximately $94 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 December 31,
1995.
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 $177 million at
December 31, 1995, 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 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 2000 under these
contracts are estimated to be as follows:
1996 1997 1998 1999 2000
(Millions of Dollars)
Capacity payments:
JEA ...................................................................... $ 80 $ 80 $ 80 $ 80 $ 80
Southern Companies ....................................................... $130 $140 $130 $130 $140
Qualifying facilities .................................................... $300 $320 $330 $340 $350
Minimum payments, at projected prices:
Natural gas .............................................................. $200 $200 $200 $200 $200
Orimulsion ............................................................... - - $120 $140 $140
Coal ..................................................................... $ 50 $ 50 $ 40 $ 40 $ 40
Capacity, energy and fuel charges under these contracts were as
follows:
1995 Charges 1994 Charges 1993 Charges
Energy/ Energy/ Energy/
Capacity Fuel (1) Capacity Fuel (1) Capacity Fuel (1)
(Millions of Dollars)
JEA ................................................. $ 83(2) $ 47 $ 82(2) $ 48 $ 85(2) $ 51
Southern Companies .................................. $130(3) $ 94 $186(3) $124 $268(3) $183
Qualifying facilities................................ $158(3) $ 92 $137(3) $ 68 $ 60(3) $ 40
Natural gas ......................................... - $361 - $232 - $270
Coal ................................................ - $ 37 - $ 33 - $ 26
(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.
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. FPL Group, FPL and ESI have appealed the denial. 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.
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.
11. Cost Reduction Program Charge
In 1993, FPL implemented a cost reduction program which eliminated
1,700 positions resulting in a $138 million charge, primarily consisting of
severance payments and employee retirement benefits including pension
and postretirement benefits costs. See Note 5.
12. Transactions with Related Parties
FPL provides certain services to and receives services from FPL Group,
or other subsidiaries of FPL Group. The full cost of such services is
charged to the entity benefitting from the service. In addition, certain
common costs of FPL Group are allocated to all subsidiaries, including
FPL, primarily based on each subsidiary's equity. Neither current period
amounts charged or allocated, nor balances outstanding, were material
for any year. See Note 1 - Income Taxes.
13. Summarized Financial Information of FPL Group Capital
(Unaudited)
FPL Group Capital's debentures are guaranteed by FPL Group.
Operating revenues of FPL Group Capital for the three years ended
December 31, 1995, 1994 and 1993 were $62 million, $80 million and
$88 million, respectively. For the same periods, operating expenses
were $77 million, $84 million and $88 million, respectively. Net income
for 1995 was $2 million and for 1994 was $7 million. In 1993, an
extraordinary loss ($13 million, net of income taxes) on the early
extinguishment of debt resulted in a net loss of $8 million.
At December 31, 1995, FPL Group Capital had $89 million of current
assets, $934 million of noncurrent assets, $24 million of current liabilities
and $787 million of noncurrent liabilities. At December 31, 1994, FPL
Group Capital had current assets of $84 million, noncurrent assets of
$1.005 billion, current liabilities of $36 million and noncurrent liabilities of
$714 million.
14. Quarterly Data (Unaudited)
FPL Group's condensed consolidated quarterly financial information for
1995 and 1994 is as follows:
March 31 (1) June 30 (1) September 30 (1) December 31 (1)
(In thousands, except per share amounts)
1995
Operating revenues ................... $ 1,177,366 $ 1,466,724 $ 1,587,037 $ 1,361,358
Operating income ..................... $ 248,797 $ 312,191 $ 447,935 $ 188,183
Net income ........................... $ 99,840 $ 138,302 $ 240,449 $ 74,720
Earnings per share of common stock ... $ 0.57 $ 0.79 $ 1.37 $ 0.43
Dividends per share of common stock .. $ 0.44 $ 0.44 $ 0.44 $ 0.44
High-low trading prices .............. $ 37 1/4 - 34 $39 1/4 - 36 1/8 $ 41 1/8 - 37 $46 1/2 - 40 1/4
1994
Operating revenues ................... $ 1,178,334 $ 1,442,353 $ 1,512,261 $ 1,289,711
Operating income ..................... $ 234,679 $ 288,184 $ 427,486 $ 198,093
Net income ........................... $ 94,439 $ 125,843 $ 222,244 $ 76,185
Earnings per share of common stock ... $ 0.53 $ 0.70 $ 1.25 $ 0.43
Dividends per share of common stock .. $ 0.62 $ 0.42 $ 0.42 $ 0.42
High-low trading prices .............. $39 1/8 - 32 3/8 $35 3/4 - 26 7/8 $32 1/2 - 29 7/8 $ 35 3/4 - 31
(1) In the opinion of FPL Group, all adjustments, which consist of normal recurring accruals necessary to present a fair
statement of such amounts for such periods, have been made. Results of operations for an interim period may not give a
true indication of results for the calendar year. Certain amounts included in previously reported quarterly consolidated
financial statements have been reclassified to conform to the current year's presentation.
FPL's condensed consolidated quarterly financial information for 1995
and 1994 is as follows:
March 31 (1) June 30 (1) September 30 (1) December 31 (1)
(Thousands of Dollars)
1995
Operating revenues ............................ $1,156,269 $1,446,203 $1,579,549 $1,348,036
Operating income .............................. $ 185,616 $ 219,554 $ 306,782 $ 153,354
Net income .................................... $ 119,442 $ 153,804 $ 245,747 $ 92,381
Net income available to FPL Group ............. $ 107,289 $ 144,765 $ 236,757 $ 79,161
1994
Operating revenues ............................ $1,155,789 $1,418,573 $1,501,896 $1,266,398
Operating income .............................. $ 171,069 $ 209,817 $ 296,596 $ 154,570
Net income .................................... $ 108,555 $ 142,987 $ 229,546 $ 86,985
Net income available to FPL Group ............. $ 98,625 $ 133,108 $ 219,667 $ 77,115
(1) In the opinion of FPL, all adjustments, which consist of normal recurring accruals necessary to present a fair statement of
such amounts for such periods, have been made. Results of operations for an interim period may not give a true indication
of results for the calendar year.
/TABLE
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrants
FPL Group - The information required by this Item will be included in
FPL Group's Definitive Proxy Statement which will be filed with the
Securities and Exchange Commission in connection with the 1996 Annual
Meeting of Shareholders (FPL Group's Proxy Statement) and is
incorporated herein by reference, or is included in Item I.
Business - Executive Officers of the Registrants.
FPL DIRECTORS(1)
James L. Broadhead. Mr. Broadhead, 60, is chairman and chief
executive officer of FPL and chairman, president and chief executive
officer of FPL Group. Mr. Broadhead is a former president of the
Telephone Operating Group of GTE Corporation and is also a former
president of St. Joe Minerals Corporation. He is a director of
Barnett Banks, Inc., Delta Air Lines, Inc. and The Pittston Company
and a board fellow of Cornell University. Mr. Broadhead has been a
director of FPL and FPL Group since January 1989.
Dennis P. Coyle. Mr. Coyle, 57, has been general counsel and
secretary of FPL since July 1991 and of FPL Group since June 1991.
From March 1990 to July 1991 he was general counsel of FPL and from
June 1989 to June 1991 he was general counsel and vice president of
FPL Group. Mr. Coyle has been a director of FPL since January 1990.
Paul J. Evanson. Mr. Evanson, 54, became president of FPL in January
1995 after having served as senior vice president, finance and chief
financial officer of FPL and vice president, finance and chief
financial officer of FPL Group since December 1992. Prior to that,
he was president and chief operating officer of the Lynch
Corporation, a diversified holding company. He is a director of
Lynch Corporation and Southern Energy Homes, Inc. Mr. Evanson has
been a director of FPL since December 1992 and a director of FPL
Group since January 1995.
Lawrence J. Kelleher. Mr. Kelleher, 48, is senior vice president,
human resources of FPL and vice president, human resources of FPL
Group. From May 1990 to July 1991 Mr. Kelleher was chief human
resources officer of FPL. From June 1989 to May 1991 Mr. Kelleher
was vice president of FPL Group. Mr. Kelleher has been a director of
FPL since May 1990.
Thomas F. Plunkett. Mr. Plunkett, 56, is president of FPL's nuclear
division. He was formerly site vice president at Turkey Point. Mr.
Plunkett has been a director of FPL since March 1996.
C. O. Woody. Mr. Woody, 57, is senior vice president, power
generation of FPL. From November 1987 to July 1991 he was executive
vice president of FPL. Mr. Woody has been a director of FPL since
December 1989.
Michael W. Yackira. Mr. Yackira, 44, became senior vice president,
finance and chief financial officer of FPL and vice president,
finance and chief financial officer of FPL Group in January 1995 and
was senior vice president, market and regulatory services of FPL from
May 1991 to January 1995. From May 1990 to May 1991 Mr. Yackira was
chief planning officer of FPL. From April 1989 to May 1991 he was
vice president of FPL Group. Mr. Yackira has been a director of FPL
since May 1990.
(1) Directors are elected annually and serve until their
resignation, removal or until their respective
successors are elected. Each director's business
experience during the past five years is noted either
here or in the Executive Officers table in Item 1.
Business - Executive Officers of the Registrants.
Item 11. Executive Compensation
FPL Group - The information required by this Item will be included in
FPL Group's Proxy Statement and is incorporated herein by reference,
provided that the Compensation Committee Report and Performance Graph
which are contained in FPL Group's Proxy Statement shall not be
deemed to be incorporated herein by reference.
FPL - The following table sets forth compensation paid during the
past three years to FPL's chief executive officer and the other four
most highly-compensated persons who served as executive officers of
FPL at December 31, 1995.
SUMMARY COMPENSATION TABLE
Annual Compensation
Long-Term
Compensation
Payouts
Other Long Term All
Annual Incentive Other
Compen- Plan Compen-
Name and Principal Position Year Salary Bonus sation Payouts(1) sation(2)
James L. Broadhead (3) 1995 $749,567 $637,000 $30,342 $947,387 $15,901
Chairman of the Board and Chief Executive 1994 692,346 565,500 5,658 780,681 14,131
Officer of FPL and FPL Group, President 1993 666,333 505,747 4,989 609,664 21,583
of FPL Group
Paul J. Evanson 1995 500,000 307,400 3,691 155,513 12,906
President 1994 261,000 130,500 3,254 69,622 10,214
1993 243,600 112,543 16,424 - 9,276
Jerome H. Goldberg 1995 478,700 212,900 18,228 352,401 9,249
President, Nuclear Division 1994 462,500 212,461 8,059 190,059 14,817
1993 445,100 204,468 9,702 148,432 16,532
Dennis P. Coyle 1995 303,849 138,957 3,756 223,724 11,972
General Counsel and Secretary of FPL 1994 280,662 125,344 - 165,351 10,784
and FPL Group 1993 270,135 116,648 - 129,136 14,501
C.O. Woody 1995 283,300 133,400 3,234 207,350 15,539
Senior Vice President, Power Generation 1994 273,700 123,216 1,458 165,288 14,391
1993 261,900 126,039 721 129,078 18,643
(1) Payouts were made in cash (for payment of income taxes) and shares of common stock, valued at the closing price on the
last business day preceding payout.
(2) Represents employer matching contributions to thrift plans and employer contributions for life insurance.
Thrift Match Life Insurance
Mr. Broadhead ....................... $6,195 $9,706
Mr. Evanson ......................... 6,808 6,098
Mr. Goldberg ........................ 6,808 2,441
Mr. Coyle ........................... 6,195 5,777
Mr. Woody ........................... 6,808 8,731
(3) At December 31, 1995, Mr. Broadhead held 96,800 shares of restricted common stock with a value of $4,489,100. These
shares were awarded in 1991 for the purpose of financing Mr. Broadhead's supplemental retirement plan and will offset
lump sum benefits that would otherwise be payable to him in cash upon retirement. See Retirement Plans herein.
Dividends at normal rates are paid on restricted common stock.
Stock Options - The following table sets forth information with
respect to the only executive officer named in the Summary
Compensation Table who held or exercised any stock options or stock
appreciation rights during 1995.
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options/SARs at 12/31/95 Options/SARs at 12/31/95
Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
C. O. Woody .................. 1,787 $20,327 - - - -
Long Term Incentive Plan Awards - In 1995, awards of performance
shares under FPL Group's Long Term Incentive Plan were made to the
executive officers named in the Summary Compensation Table as set
forth in the following table.
LONG TERM INCENTIVE PLAN AWARDS
Estimated Future Payouts
Under Non-Stock Price-Based Plans
Number of Shares
Number of Performance Period
Name Shares Until Payout Threshold Target Maximum
James L. Broadhead ................ 24,909 1/1/95 - 12/31/98 - 24,909 39,854
Paul J. Evanson ................... 9,622 1/1/95 - 12/31/98 - 9,622 15,395
Jerome H. Goldberg ................ 7,896 1/1/95 - 12/31/98 - 7,896 12,634
Dennis P. Coyle ................... 5,508 1/1/95 - 12/31/98 - 5,508 8,813
C. O. Woody ....................... 4,673 1/1/95 - 12/31/98 - 4,673 7,477
The performance share awards shown above are payable at the end of
the four-year performance period. The amount of the payout is
determined by multiplying the participant's target number of shares
by his average level of attainment, expressed as a percentage, which
may not exceed 160%, of his targeted awards under the Annual
Incentive Plans for each of the years encompassed by the award
period. The incentive performance measures were financial indicators
(weighted 50%) and operating indicators (weighted 50%). The
financial indicators were operations and maintenance costs, capital
expenditure levels, book and regulatory return on equity and net
income. The operating indicators were customer satisfaction survey
results, service reliability as measured by the frequency and
duration of service interruptions, system performance as measured by
availability factors for the fossil and nuclear power plants,
unplanned trips of nuclear power plants, SALP ratings for nuclear
power plants, full-time equivalent workforce, number of significant
environmental violations, employee safety, load management installed
capability and conservation programs' annual installed capacity.
Retirement Plans - FPL Group maintains a non-contributory defined
benefit pension plan and a supplemental executive retirement plan
which covers FPL employees. The following table shows the estimated
annual benefits, calculated on a straight-line annuity basis, payable
upon retirement in 1995 at age 65 after the indicated years of
service.
PENSION PLAN TABLE
Eligible Average Years of Service
Annual Compensation 10 20 30 40 50
$ 500,000 ............................................. $ 99,101 $198,190 $247,291 $260,931 $263,319
600,000 ............................................. 119,101 238,190 297,291 313,431 315,819
700,000 ............................................. 139,101 278,190 347,291 365,931 368,319
800,000 ............................................. 159,101 318,190 397,291 418,431 420,819
900,000 ............................................. 179,101 358,190 447,291 470,931 473,319
1,000,000 ............................................. 199,101 398,190 497,291 523,431 525,819
1,100,000 ............................................. 219,101 438,190 547,291 575,931 578,319
1,200,000 ............................................. 239,101 478,190 597,291 628,431 630,819
1,300,000 ............................................. 259,101 518,190 647,291 680,931 683,319
1,400,000 ............................................. 279,101 558,190 697,291 733,431 735,819
1,500,000 ............................................. 299,101 598,190 747,291 785,931 788,319
1,600,000 ............................................. 319,101 638,190 797,291 838,431 840,819
1,700,000 ............................................. 339,101 678,190 847,291 890,931 893,319
1,800,000 ............................................. 359,101 718,190 897,291 943,431 945,819
The compensation covered by the plans includes annual salaries and
bonuses of officers of FPL Group and annual salaries of officers of
FPL, as shown in the Summary Compensation Table, but no other amounts
shown in that table. The estimated credited years of service for the
executive officers named in the Summary Compensation Table are: Mr.
Broadhead, 7 years; Mr. Evanson, 3 years; Mr. Goldberg, 6 years; Mr.
Coyle, 6 years; and Mr. Woody, 39 years. Amounts shown in the table
reflect deductions to partially cover employer contributions to
Social Security.
A supplemental retirement plan for Mr. Broadhead provides for a
lump-sum retirement benefit equal to the then present value of a
joint and survivor annuity providing annual payments to him equal to
61% to 65% of his average annual compensation for the three years
prior to his retirement between age 62 (1998) and age 65 (2001) and
to his surviving beneficiary of 37.5% of such average annual
compensation, reduced by the then present value of the annual amount
of payments to which he is entitled under all other pension and
retirement plans of FPL Group and former employers. This benefit is
further reduced by the then value of 96,800 shares of restricted
common stock which vest as to 77,000 shares in 1998 and as to 19,800
shares in 2001. Upon a change of control of FPL Group (as defined
below under Employment Agreements), the restrictions on the
restricted stock lapse and the full retirement benefit becomes
payable. Upon termination of Mr. Broadhead's employment agreement
(also described below) without cause, the restrictions on the
restricted stock lapse and he becomes fully vested under the
supplemental retirement plan. Absent any such change of control or
termination of employment, Mr. Broadhead will have no right to such
shares of restricted stock, and there will be no payments under the
supplemental retirement plan, unless he remains with FPL Group until
at least age 62.
FPL's employment agreement with Mr. Goldberg, who retired March 1,
1996, provides for a retirement benefit which, together with the
amount received by him pursuant to his former employer's deferred
compensation program and retirement plan, equals the total
postretirement benefits he would have received if he had remained
employed by such employer until age 65. A supplemental retirement
plan for Mr. Coyle provides for benefits, upon retirement at age 62
or more, based on two times his credited years of service.
FPL Group sponsors a split-dollar life insurance plan for certain of
FPL and FPL Group's senior officers. Benefits under the split-dollar
plan are provided by universal life insurance policies purchased by
FPL Group. If the officer dies prior to retirement, the officer's
beneficiaries generally receive two and one-half times the officer's
annual salary at the time of death. If the officer dies after
retirement, the officer's beneficiaries receive between 50% to 100%
of the officer's final annual salary. Each officer is taxable on the
insurance carrier's one year term rate for his or her life insurance
coverage.
Employment Agreements - FPL Group has entered into an employment
agreement with Mr. Broadhead for an initial term ending
December 1997, with automatic one-year extensions thereafter unless
either party elects not to extend. The agreement provides for a
minimum base salary of $765,900 per year, subject to increases based
upon corporate and individual performance and increases in
cost-of-living indices, plus annual and long-term incentive
compensation opportunities at least equal to those currently in
effect. If FPL Group terminates Mr. Broadhead's employment without
cause, he is entitled to receive a lump sum payment of two years'
compensation. Compensation is measured by the then current base
salary plus the average of the preceding two years' annual incentive
awards. He would also be entitled to receive all amounts accrued
under all performance share grants in progress, prorated for the year
of termination and assuming achievement of the targeted award, and to
full vesting of his benefits under his supplemental retirement plan.
FPL Group and FPL have entered into employment agreements with
certain officers, including the individuals named in the Summary
Compensation Table (other than Mr. Goldberg), to become effective in
the event of a change of control of FPL Group, which is defined as
the acquisition of beneficial ownership of 20% of the voting power of
FPL Group, certain changes in FPL Group's Board, or approval by the
shareholders of the liquidation of FPL Group or of certain mergers or
consolidations or of certain transfers of FPL Group's assets. These
agreements are intended to assure FPL Group and FPL of the continued
services of key officers. The agreements provide that each officer
shall be employed by FPL Group or one of its subsidiaries in his or
her then current position, with compensation and benefits at least
equal to the then current base and incentive compensation and benefit
levels, for an employment period of four and, in certain cases, five
years after a change in control occurs.
In the event that the officer's employment is terminated (except for
death, disability or cause) or if the officer terminates his or her
employment for good reason, as defined in the agreement, the officer
is entitled to severance benefits in the form of a lump sum payment
equal to the compensation due for the remainder of the employment
period or for two years, whichever is longer. Such benefits would be
based on the officer's then base salary plus an annual bonus at least
equal to the average bonus for the two years preceding the change of
control. The officer is also entitled to the maximum amount payable
under all long-term incentive compensation grants outstanding,
continued coverage under all employee benefit plans, supplemental
retirement benefits and reimbursement for any tax penalties incurred
as a result of the severance payments.
Director Compensation - All of the directors of FPL are salaried
employees of FPL and do not receive any additional compensation for
serving as a director.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
FPL Group - The information required by this Item will be included in
FPL Group's Proxy Statement and is incorporated herein by reference.
FPL - FPL Group owns 100% of FPL's common stock. FPL's directors and
executive officers beneficially own shares of common stock as
follows:
Name Number of Shares (1)
James L. Broadhead ......................................................................... 151,910(2)
Dennis P. Coyle ............................................................................ 10,683
Paul J. Evanson ............................................................................ 6,162
Jerome H. Goldberg ......................................................................... 10,332
Lawrence J. Kelleher ....................................................................... 19,155
Thomas F. Plunkett ......................................................................... 19,751(3)
C. O. Woody ................................................................................ 21,289
Michael W. Yackira ......................................................................... 11,125
All directors and executive officers as a group ............................................ 261,451(4)
(1) Information is as of March 1, 1996, except for executive officers' holdings under the thrift plans, which are as of
December 31, 1995. Unless otherwise indicated, each person has sole voting and investment power.
(2) Includes 96,800 shares of restricted stock as to which Mr. Broadhead has voting but not investment power.
(3) Includes 15,000 shares of restricted stock as to which Mr. Plunkett has voting but not investment power.
(4) Less than 1% of the common stock outstanding.
FPL's directors and executive officers are required to file initial
reports of ownership and reports of changes of ownership of common
stock with the Securities and Exchange Commission. Based upon a
review of these filings and written representations from the
directors and executive officers, all required filings were timely
made in 1995 except that Michael W. Yackira, senior vice president,
finance and chief financial officer, reported on an annual statement
of changes in beneficial ownership one transaction that should have
been reported the previous month and Stephen E. Frank, after he
ceased being an officer and director of FPL, made a late filing of
one report relating to one transaction.
Item 13. Certain Relationships and Related Transactions
FPL Group - The information required by this Item will be included in
FPL Group's Proxy Statement and is incorporated herein by reference.
FPL - None
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K
(a) 1. Financial Statements Page(s)
Independent Auditors' Report 14
FPL Group:
Consolidated Statements of Income 15
Consolidated Balance Sheets 16
Consolidated Statements of Cash Flows 17
FPL:
Consolidated Statements of Income 18
Consolidated Balance Sheets 19
Consolidated Statements of Cash Flows 20
Notes to Consolidated Financial Statements 21-34
2. Financial Statement Schedules - Schedules are omitted as
not applicable or not required.
3. Exhibits including those Incorporated by Reference
Exhibit FPL
Number Description Group FPL
*3(i)a Restated Articles of Incorporation of FPL Group dated December 31, 1984, x
as amended through December 17, 1990 (filed as Exhibit 4(a) to Post-
Effective Amendment No. 5 to Form S-8, File No. 33-18669)
*3(i)b Restated Articles of Incorporation of FPL dated March 23, 1992 (filed as x
Exhibit 3(i)a to Form 10-K for the year ended December 31, 1993, File No.
1-3545)
*3(i)c Amendment to FPL's Restated Articles of Incorporation dated March 23, 1992 x
(filed as Exhibit 3(i)b to Form 10-K for the year ended December 31, 1993,
File No. 1-3545)
*3(i)d Amendment to FPL's Restated Articles of Incorporation dated May 11, 1992 x
(filed as Exhibit 3(i)c to Form 10-K for the year ended December 31, 1993,
File No. 1-3545)
*3(i)e Amendment to FPL's Restated Articles of Incorporation dated March 12, 1993 x
(filed as Exhibit 3(i)d to Form 10-K for the year ended December 31, 1993,
File No. 1-3545)
*3(i)f Amendment to FPL's Restated Articles of Incorporation dated June 16, 1993 x
(filed as Exhibit 3(i)e to Form 10-K for the year ended December 31, 1993,
File No. 1-3545)
*3(i)g Amendment to FPL's Restated Articles of Incorporation dated August 31, 1993 x
(filed as Exhibit 3(i)f to Form 10-K for the year ended December 31, 1993,
File No. 1-3545)
*3(i)h Amendment to FPL's Restated Articles of Incorporation dated November 30, x
1993 (filed as Exhibit 3(i)g to Form 10-K for the year ended December 31,
1993, File No. 1-3545)
*3(ii)a Bylaws of FPL Group dated November 15, 1993 (filed as Exhibit 3(ii) to Form x
10-K for the year ended December 31, 1993, File No. 1-8841)
*3(ii)b Bylaws of FPL dated May 11, 1992 (filed as Exhibit 3 to Form 8-K dated x
May 1, 1992, File No. 1-3545)
*4(a) Rights Agreement, dated as of June 16, 1986, between FPL Group, Inc. and x
the First National Bank of Boston (filed as Exhibit 4(e) to Post-Effective
Amendment No. 5 to Form S-8, File No. 33-18669)
*4(b) Mortgage and Deed of Trust dated as of January 1, 1944, and Ninety-six x x
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; Exhibit
4(i) to Form 10-Q for the quarter ended June 30, 1994, File No. 1-3545;
and Exhibit 4(b) to Form 10-Q for the quarter ended June 30, 1995, File
No. 1-3545)
4(c)(i) Indenture, dated as of November 1, 1995 between Florida Power & Light x x
Company and The Chase Manhattan Bank (National Association), as Trustee
FPL
Group FPL
4(c)(ii) Excerpts from Unanimous Consent of the Finance Committee of the Board of x x
Directors in lieu of meeting, dated July 10, 1995, establishing certain
terms of the 8.75% Quarterly Income Debt Securities (Subordinated
Deferrable Interest Debentures, Due 2025)
4(c)(iii) Officer's Certificate of Florida Power & Light Company, dated November 10, x x
1995, establishing certain terms of the 8.75% Quarterly Income Debt
Securities (Subordinated Deferrable Interest Debentures, Due 2025)
10(a) Supplemental Executive Retirement Plan, amended and restated effective x
January 1, 1994
*10(b) FPL Group Amended and Restated Supplemental Executive Retirement Plan for x
James L. Broadhead effective January 1, 1990 (filed as Exhibit 99(d) to
Post-Effective Amendment No. 5 to Form S-8, File No. 33-18669)
*10(c) FPL Group Long-Term Incentive Plan of 1985, as amended (filed as Exhibit x
99(h) to Post-Effective Amendment No. 5 to Form S-8, File No. 33-18669)
*10(d) Long-Term Incentive Plan 1994 (filed as Exhibit 4(d) to Form S-8, File x
No. 33-57673)
*10(e) Annual Incentive Plan dated as of March 31, 1994 (filed as Exhibit 10(k) x
to Form 10-Q for the quarter ended March 31, 1994, File No. 1-8841)
10(f) FPL Group Deferred Compensation Plan, amended and restated effective x
January 1, 1995
10(g) FPL Group Executive Long Term Disability Plan effective January 1, 1995 x
*10(h) Employment Agreement between FPL Group and James L. Broadhead dated as of x
December 13, 1993 (filed as Exhibit 10(j) to Form 10-K for the year ended
December 31, 1993, File No. 1-8841)
10(i) Employment Agreement between FPL Group and James L. Broadhead dated as of x
December 11, 1995
10(j) Employment Agreement between FPL Group and Dennis P. Coyle dated as of x
December 11, 1995
10(k) Employment Agreement between FPL Group and Paul J. Evanson dated as of x
December 11, 1995
10(l) Employment Agreement between FPL Group and Lawrence J. Kelleher dated x
as of December 11, 1995
10(m) Employment Agreement between FPL Group and C.O. Woody dated as of x
December 11, 1995
10(n) Employment Agreement between FPL Group and Michael W. Yackira as of x
December 11, 1995
12 Computation of Ratios x
21 Subsidiaries of the Registrant x
23 Independent Auditors' Consent x x
27 Financial Data Schedule x x
* Incorporated herein by reference
(b) Reports on Form 8-K - None
FPL GROUP, INC. SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
JAMES L. BROADHEAD
James L. Broadhead
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer and Director)
Date: March 12, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the date indicated.
Signature and Title as of March 12, 1996:
MICHAEL W. YACKIRA K. MICHAEL DAVIS
Michael W. Yackira K. Michael Davis
Vice President, Finance and Chief Controller and Chief Accounting Officer
Financial Officer (Principal Accounting Officer)
(Principal Financial Officer)
Directors:
H. JESSE ARNELLE B. F. DOLAN
H. Jesse Arnelle B. F. Dolan
ROBERT M. BEALL, II WILLARD D. DOVER
Robert M. Beall, II Willard D. Dover
DAVID BLUMBERG PAUL J. EVANSON
David Blumberg Paul J. Evanson
J. HYATT BROWN DREW LEWIS
J. Hyatt Brown Drew Lewis
LYNNE V. CHENEY FREDERIC V. MALEK
Lynne V. Cheney Frederic V. Malek
ARMANDO M. CODINA PAUL R. TREGURTHA
Armando M. Codina Paul R. Tregurtha
MARSHALL M. CRISER
Marshall M. Criser
/TABLE
FLORIDA POWER & LIGHT COMPANY SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
PAUL J. EVANSON
Paul J. Evanson
President and Director
Date: March 12, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the date indicated.
Signature and Title as of March 12, 1996:
JAMES L. BROADHEAD
James L. Broadhead
Chairman of the Board
(Principal Executive Officer and Director)
MICHAEL W. YACKIRA
Michael W. Yackira
Senior Vice President, Finance and Chief Financial Officer
(Principal Financial Officer and Director)
K. MICHAEL DAVIS
K. Michael Davis
Vice President, Accounting,
Controller and Chief Accounting Officer
(Principal Accounting Officer)
Directors:
DENNIS P. COYLE C. O. WOODY
Dennis P. Coyle C. O. Woody
THOMAS F. PLUNKETT LAWRENCE J. KELLEHER
Thomas F. Plunkett Lawrence J. Kelleher