10-Q 1 file10q.txt FORM 10-Q JUNE 30, 2001 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Exact name of registrants as specified in their charters, address of principal IRS Employer Commission executive offices and Identification File Number registrants' telephone number Number ----------- --------------------------------------- -------------- 1-8841 FPL GROUP, INC. 59-2449419 1-3545 FLORIDA POWER & LIGHT COMPANY 59-0247775 700 Universe Boulevard Juno Beach, Florida 33408 (561) 694-4000 State or other jurisdiction of incorporation or organization: Florida Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) have been subject to such filing requirements for the past 90 days. Yes X No ___ APPLICABLE ONLY TO CORPORATE ISSUERS: The number of shares outstanding of each class of FPL Group, Inc. common stock, as of the latest practicable date: Common Stock, $.01 par value, outstanding at July 31, 2001: 175,872,617 shares. As of July 31, 2001, there were issued and outstanding 1,000 shares of Florida Power & Light Company's common stock, without par value, all of which were held, beneficially and of record, by FPL Group, Inc. ______________________________ This combined Form 10-Q represents separate filings by FPL Group, Inc. and Florida Power & Light Company. Information contained herein relating to an individual registrant is filed by that registrant on its own behalf. Florida Power & Light Company makes no representations as to the information relating to FPL Group, Inc.'s other operations. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (Reform Act), FPL Group, Inc. (FPL Group) and Florida Power & Light Company (FPL) (collectively, the Company) are hereby filing cautionary statements identifying important factors that could cause the Company's actual results to differ materially from those projected in forward-looking statements (as such term is defined in the Reform Act) made by or on behalf of the Company in this combined Form 10-Q, in presentations, in response to questions or otherwise. Any statements that express, or involve discussions as to expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as will likely result, are expected to, will continue, is anticipated, estimated, projection, outlook) are not statements of historical facts and may be forward-looking. Forward-looking statements involve estimates, assumptions and uncertainties. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors that could cause the Company's actual results to differ materially from those contained in forward-looking statements made by or on behalf of the Company. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. Some important factors that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements include changes in laws or regulations, changing governmental policies and regulatory actions, including those of the Federal Energy Regulatory Commission (FERC), the Florida Public Service Commission (FPSC), the Public Utility Regulatory Policies Act of 1978, as amended (PURPA), the Public Utility Holding Company Act of 1935, as amended, and the U. S. Nuclear Regulatory Commission, with respect to allowed rates of return including but not limited to return on common equity and equity ratio limits, industry and rate structure, operation of nuclear power facilities, acquisition, disposal, depreciation and amortization of assets and facilities, operation and construction of plant facilities, recovery of fuel and purchased power costs, decommissioning costs, and present or prospective wholesale and retail competition (including but not limited to retail wheeling and transmission costs). The business and profitability of the Company are also influenced by economic and geographic factors including political and economic risks, changes in and compliance with environmental and safety laws and policies, weather conditions (including natural disasters such as hurricanes), population growth rates and demographic patterns, competition for retail and wholesale customers, availability, pricing and transportation of fuel and other energy commodities, market demand for energy from plants or facilities, changes in tax rates or policies or in rates of inflation or in accounting standards, unanticipated delays or changes in costs for capital projects, unanticipated changes in operating expenses and capital expenditures, capital market conditions, competition for new energy development opportunities and legal and administrative proceedings (whether civil, such as environmental, or criminal) and settlements. All such factors are difficult to predict, contain uncertainties which may materially affect actual results, and are beyond the control of the Company. PART I - FINANCIAL INFORMATION Item 1. Financial Statements FPL GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (millions, except per share amounts) (unaudited)
Three Months Ended Six Months Ended June 30, June 30, 2001 2000 2001 2000 OPERATING REVENUES ............................................... $2,166 $1,670 $4,107 $3,138 OPERATING EXPENSES: Fuel, purchased power and interchange .......................... 1,054 605 2,005 1,146 Other operations and maintenance................................ 313 308 623 593 Merger-related ................................................. - - 30 - Depreciation and amortization .................................. 245 266 485 525 Taxes other than income taxes .................................. 174 144 344 291 Total operating expenses ..................................... 1,786 1,323 3,487 2,555 OPERATING INCOME ................................................. 380 347 620 583 OTHER INCOME (DEDUCTIONS): Interest charges ............................................... (82) (64) (167) (126) Preferred stock dividends - FPL ................................ (4) (4) (7) (7) Other - net .................................................... 34 26 48 34 Total other deductions - net ................................. (52) (42) (126) (99) INCOME BEFORE INCOME TAXES ....................................... 328 305 494 484 INCOME TAXES ..................................................... 109 101 165 159 NET INCOME ....................................................... $ 219 $ 204 $ 329 $ 325 Earnings per share of common stock (basic and assuming dilution).. $ 1.30 $ 1.20 $ 1.95 $ 1.91 Dividends per share of common stock .............................. $ 0.56 $ 0.54 $ 1.12 $ 1.08 Weighted-average number of common shares outstanding: Basic .......................................................... 169 170 169 170 Assuming dilution .............................................. 169 171 169 171
This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements (Notes) herein and the Notes to Consolidated Financial Statements appearing in the combined Annual Report on Form 10-K/A for the fiscal year ended December 31, 2000 (2000 Form 10-K) for FPL Group and FPL. FPL GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (millions) (unaudited)
June 30, December 31, 2001 2000 PROPERTY, PLANT AND EQUIPMENT: Electric utility plant in service and other property, including nuclear fuel and construction work in progress ....................... $22,145 $21,022 Less accumulated depreciation and amortization ................................... (11,508) (11,088) Total property, plant and equipment - net ...................................... 10,637 9,934 CURRENT ASSETS: Cash and cash equivalents ........................................................ 72 129 Customer receivables, net of allowances of $7 at each date ....................... 670 637 Materials, supplies and fossil fuel inventory - at average cost .................. 373 370 Deferred clause expenses ......................................................... 473 337 Other ............................................................................ 275 308 Total current assets ........................................................... 1,863 1,781 OTHER ASSETS: Special use funds of FPL ......................................................... 1,585 1,497 Other investments ................................................................ 901 651 Other ............................................................................ 1,573 1,437 Total other assets ............................................................. 4,059 3,585 TOTAL ASSETS ....................................................................... $16,559 $15,300 CAPITALIZATION: Common stock ..................................................................... $ 2 $ 2 Additional paid-in capital ....................................................... 2,798 2,788 Retained earnings ................................................................ 2,944 2,803 Accumulated other comprehensive income ........................................... 5 - Total common shareholders' equity .............................................. 5,749 5,593 Preferred stock of FPL without sinking fund requirements ......................... 226 226 Long-term debt ................................................................... 4,474 3,976 Total capitalization ........................................................... 10,449 9,795 CURRENT LIABILITIES: Debt due within one year ......................................................... 1,562 1,223 Accounts payable ................................................................. 622 564 Accrued interest, taxes and other ................................................ 1,127 976 Total current liabilities ...................................................... 3,311 2,763 OTHER LIABILITIES AND DEFERRED CREDITS: Accumulated deferred income taxes ................................................ 1,398 1,378 Unamortized regulatory and investment tax credits ................................ 248 269 Other ............................................................................ 1,153 1,095 Total other liabilities and deferred credits ................................... 2,799 2,742 COMMITMENTS AND CONTINGENCIES TOTAL CAPITALIZATION AND LIABILITIES ............................................... $16,559 $15,300
This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2000 Form 10-K for FPL Group and FPL. FPL GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (millions) (unaudited)
Six Months Ended June 30, 2001 2000 NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................. $ 849 $ 748 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures of FPL ......................................................... (595) (660) Independent power investments ....................................................... (899) (294) Other - net ......................................................................... (55) (63) Net cash used in investing activities ........................................... (1,549) (1,017) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of long-term debt .......................................................... 493 145 Retirement of long-term debt ........................................................ (66) (149) Increase in commercial paper ........................................................ 404 363 Repurchase of common stock .......................................................... - (34) Dividends on common stock ........................................................... (188) (183) Net cash provided by financing activities ....................................... 643 142 Net decrease in cash and cash equivalents ............................................. (57) (127) Cash and cash equivalents at beginning of period ...................................... 129 361 Cash and cash equivalents at end of period ............................................ $ 72 $ 234 Supplemental schedule of noncash investing and financing activities: Additions to capital lease obligations .............................................. $ 24 $ 22
This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2000 Form 10-K for FPL Group and FPL. FLORIDA POWER & LIGHT COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (millions) (unaudited)
Three Months Ended Six Months Ended June 30, June 30, 2001 2000 2001 2000 OPERATING REVENUES ................................................. $1,935 $1,533 $3,582 $2,871 OPERATING EXPENSES: Fuel, purchased power and interchange ............................ 939 570 1,702 1,071 Other operations and maintenance ................................. 256 250 510 487 Merger-related ................................................... - - 26 - Depreciation and amortization .................................... 226 254 449 501 Income taxes ..................................................... 107 101 169 161 Taxes other than income taxes .................................... 174 140 337 282 Total operating expenses ....................................... 1,702 1,315 3,193 2,502 OPERATING INCOME ................................................... 233 218 389 369 OTHER INCOME (DEDUCTIONS): Interest charges ................................................. (47) (42) (100) (82) Other - net ...................................................... - - (2) (2) Total other deductions - net ................................... (47) (42) (102) (84) NET INCOME ......................................................... 186 176 287 285 PREFERRED STOCK DIVIDENDS .......................................... 4 4 7 7 NET INCOME AVAILABLE TO FPL GROUP .................................. $ 182 $ 172 $ 280 $ 278
This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2000 Form 10-K for FPL Group and FPL. FLORIDA POWER & LIGHT COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (millions) (unaudited)
June 30, December 31, 2001 2000 ELECTRIC UTILITY PLANT: Plant in service, including nuclear fuel and construction work in progress ....... $19,475 $19,033 Less accumulated depreciation and amortization ................................... (11,307) (10,919) Electric utility plant - net ................................................... 8,168 8,114 CURRENT ASSETS: Cash and cash equivalents ........................................................ 8 66 Customer receivables, net of allowances of $6 and $7, respectively................ 575 489 Materials, supplies and fossil fuel inventory - at average cost .................. 315 313 Deferred clause expenses ......................................................... 473 337 Other ............................................................................ 167 211 Total current assets ........................................................... 1,538 1,416 OTHER ASSETS: Special use funds ................................................................ 1,585 1,497 Other ............................................................................ 920 993 Total other assets ............................................................. 2,505 2,490 TOTAL ASSETS ....................................................................... $12,211 $12,020 CAPITALIZATION: Common shareholder's equity ...................................................... $ 5,410 $ 5,032 Preferred stock without sinking fund requirements ................................ 226 226 Long-term debt ................................................................... 2,577 2,577 Total capitalization ........................................................... 8,213 7,835 CURRENT LIABILITIES: Debt due within one year ......................................................... 192 625 Accounts payable ................................................................. 490 458 Accrued interest, taxes and other ................................................ 1,054 859 Total current liabilities ...................................................... 1,736 1,942 OTHER LIABILITIES AND DEFERRED CREDITS: Accumulated deferred income taxes ................................................ 1,079 1,084 Unamortized regulatory and investment tax credits ................................ 248 269 Other ............................................................................ 935 890 Total other liabilities and deferred credits ................................... 2,262 2,243 COMMITMENTS AND CONTINGENCIES TOTAL CAPITALIZATION AND LIABILITIES ............................................... $12,211 $12,020
This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2000 Form 10-K for FPL Group and FPL. FLORIDA POWER & LIGHT COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (millions) (unaudited)
Six Months Ended June 30, 2001 2000 NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................. $ 905 $ 722 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ................................................................ (595) (660) Other - net ......................................................................... (24) (43) Net cash used in investing activities ........................................... (619) (703) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of long-term debt .......................................................... - 145 Retirement of long-term debt ........................................................ (66) (149) Increase (decrease) in commercial paper ............................................. (368) 253 Dividends ........................................................................... (210) (225) Capital contributions from FPL Group ................................................ 300 100 Net cash provided by (used in) financing activities ............................... (344) 124 Net increase (decrease) in cash and cash equivalents .................................. (58) 143 Cash and cash equivalents at beginning of period ...................................... 66 - Cash and cash equivalents at end of period ............................................ $ 8 $ 143 Supplemental schedule of noncash investing and financing activities: Additions to capital lease obligations .............................................. $ 24 $ 22 Transfer of net assets to FPL FiberNet, LLC ......................................... $ - $ 100
This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2000 Form 10-K for FPL Group and FPL. FPL GROUP, INC. AND FLORIDA POWER & LIGHT COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The accompanying condensed consolidated financial statements should be read in conjunction with the 2000 Form 10-K for FPL Group and FPL. In the opinion of FPL Group and FPL management, all adjustments (consisting of normal recurring accruals) considered necessary for fair financial statement presentation have been made. Certain amounts included in the prior year's consolidated financial statements have been reclassified to conform to the current year's presentation. The results of operations for an interim period may not give a true indication of results for the year. 1. New Accounting Rules Accounting for Derivative Instruments and Hedging Activities - Effective January 1, 2001, FPL Group and FPL adopted Statement of Financial Accounting Standards No. (FAS) 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by FAS 137 and 138 (collectively, FAS 133). As a result, beginning in January 2001, derivative instruments are recorded on FPL Group's and FPL's balance sheets as either an asset or liability (in other current assets, other assets, other current liabilities and other liabilities) measured at fair value. FPL Group and FPL use derivative instruments (primarily swaps, options and futures) to manage the commodity price risk inherent in fuel purchases and electricity sales, as well as to optimize the value of power generation assets. At FPL, changes in fair value are deferred as a regulatory asset or liability until the contracts are settled. Upon settlement, any gains or losses will be passed through the fuel and purchased power cost recovery clause (fuel clause) and the capacity cost recovery clause (capacity clause). For FPL Group's unregulated operations, predominantly FPL Energy, LLC (FPL Energy), changes in the derivatives' fair value are recognized currently in earnings (in other-net) unless hedge accounting is applied. While substantially all of FPL Energy's derivative transactions are entered into for the purposes described above, hedge accounting is only applied where specific criteria are met and it is practicable to do so. In order to apply hedge accounting, the transaction must be designated as a hedge and it must be highly effective. The hedging instrument's effectiveness is assessed utilizing regression analysis at the inception of the hedge and on at least a quarterly basis throughout its life. Hedges are considered highly effective when a correlation coefficient of .8 or higher is achieved. Substantially all of the transactions that FPL Group has designated as hedges are cash flow hedges. The effective portion of the gain or loss on a derivative instrument designated as a cash flow hedge is reported as a component of other comprehensive income and is reclassified into earnings in the period(s) during which the transaction being hedged affects earnings. The ineffective portion of these hedges flows through earnings in the current period. Settlement gains and losses are included within the line items in the statements of income to which they relate. In January 2001, FPL Group recorded in other-net a $2 million loss as the cumulative effect on FPL Group's earnings of a change in accounting principle representing the effect of those derivative instruments for which hedge accounting was not applied. For those contracts where hedge accounting was applied, the adoption of the new rules resulted in a credit of approximately $10 million to other comprehensive income for FPL Group. Included in FPL Group's accumulated other comprehensive income at June 30, 2001 is approximately $5 million of net unrealized gains associated with cash flow hedges of forecasted fuel purchases through December 2003. Approximately $1 million of FPL Group's accumulated other comprehensive income at June 30, 2001 will be reclassified into earnings within the next 12 months as the hedged fuel is consumed. Within other comprehensive income, approximately $8 million and $6 million represent the effective portion of the net loss on cash flow hedges during the three and six months ended June 30, 2001, respectively. See Note 3 - Other. In June 2001, the Financial Accounting Standards Board (FASB) reached conclusions on several derivative accounting issues related to the power generation industry, which became effective July 1, 2001. Management is in the process of evaluating the conclusions reached by the FASB and is unable to estimate the effects, if any, on FPL Group's financial statements. One possible result of the FASB's conclusions could be that certain power purchase and power sales contracts will have to be recorded at fair value with changes in fair value recorded in the income statement each reporting period. Goodwill and Other Intangible Assets - In July 2001, the FASB issued FAS 142, "Goodwill and Other Intangible Assets." Under this statement, the amortization of goodwill will no longer be permitted. Instead, goodwill will be assessed for impairment at least annually by applying a fair-value based test. At June 30, 2001, FPL Group had approximately $380 million of goodwill recorded in other assets. Management is in the process of evaluating the impact of implementing FAS 142 and is unable to estimate the effect, if any, on FPL Group's financial statements. FPL Group will be required to adopt FAS 142 beginning in 2002. 2. Rate Matters In May 2001, the FPSC ordered FPL to submit minimum filing requirements (MFRs) to initiate a base rate proceeding regarding FPL's future retail rates. FPL expects to file MFRs with the FPSC by October 15, 2001. Any change in base rates would become effective after the expiration of the current rate agreement on April 14, 2002. FPL as well as other investor- owned utilities in Florida had requested that the FPSC open a separate generic docket to address issues related to the utilities' participation in an independent regional transmission organization (RTO), pursuant to the FERC's Order 2000. In June 2001, the FPSC decided to address on an expedited basis the RTO matters in conjunction with the base rate proceeding instead of in a generic docket. In mid-July 2001, the FERC initiated a mediation process directed toward forming a single RTO for the Southeast region of the United States. FPL is participating in the mediation process, scheduled to last 45 days. 3. Capitalization FPL Group Common Stock - In April 2001, FPL Group's $570 million share repurchase program authorized in connection with the merger agreement with Entergy Corporation was terminated. As of June 30, 2001, FPL Group had repurchased a total of approximately 4.6 million shares of common stock under the 10 million share repurchase program that began in April 1997. No FPL Group shares have been repurchased in 2001. Long-Term Debt - In February 2001, FPL redeemed approximately $65 million principal amount of solid waste disposal revenue refunding bonds, consisting of $16 million bearing interest at 7.15% maturing in 2023 and $49 million with variable rate interest maturing in 2025. In May 2001, FPL Group Capital Inc (FPL Group Capital) sold $500 million principal amount of 6 1/8% debentures maturing in 2007. In July 2001, a subsidiary of FPL Energy issued $435 million of 7.52% senior secured bonds maturing in 2019. Long-Term Incentive Plan - Performance shares and options granted to date under FPL Group's long-term incentive plan resulted in assumed incremental shares of common stock outstanding for purposes of computing diluted earnings per share for the three and six months ended June 30, 2001 and 2000. These incremental shares were not material in the periods presented and did not cause diluted earnings per share to differ from basic earnings per share. Other - Comprehensive income of FPL Group, totaling $211 million and $204 million for the three months ended June 30, 2001 and 2000 and $333 million and $325 million for the six months ended June 30, 2001 and 2000, respectively, includes net income, changes in unrealized gains and losses on securities and foreign currency translation adjustments. For the three and six months ended June 30, 2001, comprehensive income of FPL Group also includes approximately $8 million of net unrealized losses and $5 million of net unrealized gains, respectively, on cash flow hedges of forecasted fuel purchases. Accumulated other comprehensive income is separately displayed in the condensed consolidated balance sheets of FPL Group. 4. 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 $3.3 billion for 2001 through 2003. Included in this three-year forecast are capital expenditures for 2001 of approximately $1.1 billion, of which $548 million had been spent through June 30, 2001. As of June 30, 2001, FPL Energy has made commitments in connection with the development and expansion of independent power projects totaling approximately $860 million. In July 2001, an additional $440 million was committed by FPL Energy for project development and expansion. Subsidiaries of FPL Group, other than FPL, have guaranteed approximately $690 million of prompt performance payments, lease obligations, purchase and sale of power and fuel agreement obligations, debt service payments and other payments subject to certain contingencies. In addition, at June 30, 2001 approximately $183 million of cash collateral was posted pursuant to a project financing agreement and is included in other assets in FPL Group's condensed consolidated balance sheets. 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 $363 million per incident at any nuclear utility reactor in the United States, payable at a rate not to exceed $43 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 nuclear 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 $36 million in retrospective premiums. 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 the majority of its transmission and distribution (T&D) property due to the high cost and limited coverage available from third- party insurers. As approved by the FPSC, FPL maintains a funded storm and property insurance reserve, which totaled approximately $247 million at June 30, 2001, for uninsured 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 Group has a long-term agreement for the supply of gas turbines through 2004 and for parts, repairs and on-site services through 2011. In addition, FPL Energy has entered into a contract to purchase 866 wind turbines through 2001, of which approximately 240 were placed in service as of June 30, 2001 and the remainder are expected to be in operation by the end of 2001. FPL Energy has also entered into various engineering, procurement and construction contracts to support its development activities through 2003. All of these contracts are intended to support expansion, primarily at FPL Energy, and the related commitments are included in Commitments above. FPL has entered into 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 (Southern Companies) provide approximately 1,300 megawatts (mw) of power through mid-2010 and 388 mw thereafter through 2021. FPL also has various firm pay-for- performance contracts to purchase approximately 900 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 and the Southern Companies' contract is subject to minimum quantities. Capacity payments for the pay-for-performance contracts are subject to the qualifying facilities meeting certain contract conditions. In 2001, FPL entered into agreements with several electricity suppliers to purchase an aggregate of up to approximately 1,300 mw of power with expiration dates ranging from 2003 through 2007. In general, the agreements require FPL to make capacity payments and supply the fuel consumed by the plants under the contracts. FPL has long-term contracts for the transportation and supply of natural gas, coal and oil with various expiration dates through 2022. FPL Energy has long-term contracts for the transportation and storage of natural gas with expiration dates ranging from 2005 through 2017, and a contract for the supply of natural gas that expires in mid-2002. The required capacity and minimum payments under these contracts for the remainder of 2001 (July-December) and for 2002 through 2005 are estimated to be as follows:
2001 2002 2003 2004 2005 (millions) FPL: Capacity payments: JEA and Southern Companies .......................................... $110 $200 $200 $200 $200 Qualifying facilities ............................................... $185 $330 $340 $350 $340 Other electricity suppliers ......................................... $ 5 $ 75 $ 95 $ 95 $ 45 Minimum payments, at projected prices: Southern Companies - energy ......................................... $ 30 $ 50 $ 60 $ 50 $ 60 Natural gas, including transportation ............................... $340 $715 $695 $720 $720 Coal ................................................................ $ 20 $ 45 $ 20 $ 10 $ 10 Oil ................................................................. $100 $ 10 $ - $ - $ - FPL Energy: Natural gas, including transportation and storage ................... $ 15 $ 20 $ 15 $ 15 $ 15
Charges under these contracts were as follows:
Three Months Ended June 30, Six Months Ended June 30, 2001 Charges 2000 Charges 2001 Charges 2000 Charges Energy/ Energy/ Energy/ Energy/ Capacity Fuel Capacity Fuel Capacity Fuel Capacity Fuel (millions) FPL: JEA and Southern Companies $50(a) $ 44(b) $51(a) $ 41(b) $101(a) $ 84(b) $102(a) $ 72(b) Qualifying facilities .... $79(c) $ 35(b) $80(c) $ 28(b) $156(c) $ 69(b) $159(c) $ 59(b) Other electricity suppliers $ 3 $ 2 $ - $ - $ 3 $ 2 $ - $ - Natural gas, including transportation ......... $ - $215(b) $ - $130(b) $ - $416(b) $ - $212(b) Coal ..................... $ - $ 12(b) $ - $ 11(b) $ - $ 24(b) $ - $ 23(b) Oil ...................... $ - $ 91(b) $ - $ 89(b) $ - $189(b) $ - $110(b) FPL Energy: Natural gas, including trans- portation and storage .. $ $ 4 $ - $ 4 $ - $ 8 $ - $ 8 _______________ (a) Recovered through base rates and the capacity clause. (b) Recovered through the fuel clause. (c) Recovered through the capacity clause.
Litigation - In 1999, the Attorney General of the United States, on behalf of the U.S. Environmental Protection Agency (EPA), brought an action against Georgia Power Company and other subsidiaries of The Southern Company for certain alleged violations of the Clean Air Act. In May 2001, the EPA amended its complaint. The amended complaint alleges, among other things, that Georgia Power Company constructed and is continuing to operate Scherer Unit No. 4, in which FPL owns a 76% interest, without obtaining proper permitting, and without complying with performance and technology standards as required by the Clean Air Act. It also alleges that unspecified major modifications have been made at Scherer Unit No. 4 that require its compliance with the aforementioned Clean Air Act provisions. The EPA seeks injunctive relief requiring the installation of best available control technology and civil penalties of up to $25,000 per day for each violation from an unspecified date after June 1, 1975 through January 30, 1997, and $27,500 per day for each violation thereafter. Georgia Power Company has answered the amended complaint, asserting that it has complied with all requirements of the Clean Air Act, denying the plaintiff's allegations of liability, denying that the plaintiff is entitled to any of the relief that it seeks and raising various other defenses. In June 2001, the Court stayed discovery and administratively closed the case pending resolution of the EPA's motion for consolidation of discovery in several Clean Air Act cases that was filed with a Multi- District Litigation (MDL) panel. The MDL panel has heard oral argument on the motion for consolidation but has not yet ruled on it. In 2000, Southern California Edison Company (SCE) filed with the FERC a Petition for Declaratory Order (petition) asking the FERC to apply a November 1999 federal circuit court of appeals' decision to all qualifying small power production facilities, including two solar facilities operated by partnerships indirectly owned in part by FPL Energy (the partnerships) which have power purchase agreements with SCE. The federal circuit court of appeals' decision invalidated the FERC's so-called essential fixed assets standard, which permitted uses of fossil fuels by qualifying small power production facilities beyond those expressly set forth in PURPA. The petition requests that the FERC declare that qualifying small power production facilities may not continue to use fossil fuel under the essential fixed assets standard and that they may be required to make refunds with respect to past usage. In August 2000, the partnerships filed motions to intervene and protest before the FERC, vigorously objecting to the position taken by SCE in its petition. The partnerships contend that they have always operated the solar facilities in accordance with certification orders issued to them by the FERC. Such orders were neither challenged nor appealed at the time they were granted, and it is the position of the partnerships that the orders remain fully in effect. Briefing in this proceeding is complete and the parties are currently awaiting a final determination from the FERC. In June 2001, SCE and the partnerships entered into an agreement that provides, among other things, that SCE and the partnerships will take all necessary steps to suspend or stay, during a specified period of time, the proceeding initiated by the petition. The agreement is conditioned upon, among other things, legislative action in California and completion of SCE's financing plan. The agreement provides that, if the conditions of the agreement are satisfied, then SCE and each of the partnerships agree to release and discharge each other from any and all claims of any kind arising from either parties' performance under the power purchase agreements. Such a release would include release of the claim made by SCE in the petition for refunds with respect to past usage. For additional information regarding the agreement, see Management's Discussion and Analysis of Financial Condition and Results of Operations (Management's Discussion) - Results of Operations - FPL Energy. FPL Group and FPL believe that they have meritorious defenses to the pending litigation discussed above and are vigorously defending the suits. Accordingly, the liabilities, if any, arising from the proceedings are not anticipated to have a material adverse effect on their financial statements. 5. Segment Information FPL Group's reportable segments include FPL, a rate-regulated utility, and FPL Energy, a non-rate regulated energy generating subsidiary. Corporate and Other represents other business activities, other segments that are not separately reportable and eliminating entries. FPL Group's segment information is as follows:
Three Months Ended June 30, 2001 2000 FPL Corporate FPL Corporate FPL Energy & Other Total FPL Energy & Other Total (millions) Operating revenues .......... $ 1,935 $ 199 $ 32 $ 2,166 $ 1,533 $ 114 $ 23 $ 1,670 Net income .................. $ 182 $ 38 $ (1) $ 219 $ 172 $ 28 $ 4 $ 204 Six Months Ended June 30, 2001 2000 FPL Corporate FPL Corporate FPL Energy & Other Total FPL Energy & Other Total (millions) Operating revenues .......... $ 3,582 $ 463 $ 62 $ 4,107 $ 2,871 $ 222 $ 45 $ 3,138 Net income (a)............... $ 280 $ 56 $ (7) $ 329 $ 278 $ 42 $ 5 $ 325 June 30, 2001 December 31, 2000 FPL Corporate FPL Corporate FPL Energy & Other Total FPL Energy & Other Total (millions) Total assets ................ $12,211 $3,707 $641 $16,559 $12,020 $2,679 $601 $15,300 _______________ (a) Includes merger-related expense in 2001 of $19 million after-tax, of which $16 million was recognized by FPL and $3 million by Corporate and Other.
6. Summarized Financial Information of FPL Group Capital FPL Group Capital, a 100% owned subsidiary of FPL Group, provides funding for and holds ownership interest in FPL Group's operating subsidiaries other than FPL. FPL Group Capital's debentures are fully and unconditionally guaranteed by FPL Group. Condensed consolidating financial information is as follows Condensed Consolidating Statements of Income
Three Months Ended Three Months Ended June 30, 2001 June 30, 2000 FPL FPL Group FPL FPL Group FPL Group Other Consoli- FPL Group Other Consoli- Group Capital (a) dated Group Capital (a) dated (millions) Operating revenues ................ $ - $ 231 $ 1,935 $ 2,166 $ - $ 138 $ 1,532 $ 1,670 Operating expenses ................ - (193) (1,593) (1,786) - (109) (1,214) (1,323) Interest charges .................. (7) (35) (40) (82) (8) (22) (34) (64) Other income (deductions) - net ... 224 45 (239) 30 210 35 (223) 22 Income before income taxes ........ 217 48 63 328 202 42 61 305 Income tax expense (benefit) ...... (2) 6 105 109 (2) 4 99 101 Net income (loss) ................. $ 219 $ 42 $ (42) $ 219 $ 204 $ 38 $ (38) $ 204 Six Months Ended Six Months Ended June 30, 2001 June 30, 2000 FPL FPL Group FPL FPL Group FPL Group Other Consoli- FPL Group Other Consoli- Group Capital (a) dated Group Capital (a) dated (millions) Operating revenues ................ $ - $ 525 $ 3,582 $ 4,107 $ - $ 268 $ 2,870 $ 3,138 Operating expenses ................ - (463) (3,024) (3,487) - (214) (2,341) (2,555) Interest charges .................. (15) (66) (86) (167) (16) (44) (66) (126) Other income (deductions) - net ... 339 73 (371) 41 337 55 (365) 27 Income before income taxes ........ 324 69 101 494 321 65 98 484 Income tax expense (benefit) ...... (5) 6 164 165 (4) 7 156 159 Net income (loss) ................. $ 329 $ 63 $ (63) $ 329 $ 325 $ 58 $ (58) $ 325 --------------- (a) Represents FPL, other subsidiaries and consolidating adjustments.
Condensed Consolidating Balance Sheets
June 30, 2001 December 31, 2000 FPL FPL Group FPL FPL Group FPL Group Other Consoli- FPL Group Other Consoli- Group Capital (a) dated Group Capital (a) dated (millions) PROPERTY, PLANT AND EQUIPMENT: Electric utility plant in service and other property .......................... $ - $ 2,663 $19,482 $22,145 $ - $1,984 $19,038 $21,022 Less accumulated depreciation and amortization ............................ - (202) (11,306) (11,508) - (170) (10,918) (11,088) Total property, plant and equipment - net - 2,461 8,176 10,637 - 1,814 8,120 9,934 CURRENT ASSETS: Cash and cash equivalents ................. 1 63 8 72 12 51 66 129 Receivables ............................... 1 668 168 837 56 418 409 883 Other ..................................... 1 79 874 954 - 66 703 769 Total current assets .................... 3 810 1,050 1,863 68 535 1,178 1,781 OTHER ASSETS: Investment in subsidiaries ................ 6,413 - (6,413) - 5,967 - (5,967) - Other ..................................... 124 1,838 2,097 4,059 141 1,365 2,079 3,585 Total other assets ...................... 6,537 1,838 (4,316) 4,059 6,108 1,365 (3,888) 3,585 TOTAL ASSETS ................................ $ 6,540 $ 5,109 $ 4,910 $16,559 $ 6,176 $3,714 $ 5,410 $15,300 CAPITALIZATION: Common shareholders' equity ............... $ 5,749 $ 1,003 $(1,003) $ 5,749 $ 5,593 $ 935 $ (935) $ 5,593 Preferred stock of FPL without sinking fund requirements ............... - - 226 226 - - 226 226 Long-term debt ............................ - 1,897 2,577 4,474 - 1,400 2,576 3,976 Total capitalization .................... 5,749 2,900 1,800 10,449 5,593 2,335 1,867 9,795 CURRENT LIABILITIES: Accounts payable and commercial paper ..... - 1,502 682 2,184 - 705 1,017 1,722 Other ..................................... 684 174 269 1,127 467 186 388 1,041 Total current liabilities ............... 684 1,676 951 3,311 467 891 1,405 2,763 OTHER LIABILITIES AND DEFERRED CREDITS: Accumulated deferred income taxes and unamortized tax credits ................. - 423 1,223 1,646 - 399 1,248 1,647 Other ..................................... 107 110 936 1,153 116 89 890 1,095 Total other liabilities and deferred credits ............................... 107 533 2,159 2,799 116 488 2,138 2,742 COMMITMENTS AND CONTINGENCIES TOTAL CAPITALIZATION AND LIABILITIES ........ $ 6,540 $ 5,109 $ 4,910 $16,559 $ 6,176 $3,714 $ 5,410 $15,300 ---------------- (a) Represents FPL, other subsidiaries and consolidating adjustments.
Condensed Consolidating Statements of Cash Flows
Six Months Ended Six Months Ended June 30, 2001 June 30, 2000 FPL FPL Group FPL FPL Group FPL Group Other Consoli- FPL Group Other Consoli- Group Capital (a) dated Group Capital (a) dated (millions) NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ..................... $ 485 $(330) $ 694 $ 849 $ 356 $ (107) $ 499 $ 748 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures and independent power investments ....................... - (899) (595) (1,494) - (294) (660) (954) Capital contributions to subsidiaries...... (300) - 300 - (118) - 118 - Other - net ............................... (8) (24) (23) (55) 6 (24) (45) (63) Net cash used in investing activities ............................ (308) (923) (318) (1,549) (112) (318) (587) (1,017) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of long-term debt ................ - 493 - 493 - - 145 145 Retirement of long-term debt .............. - - (66) (66) - - (149) (149) Increase (decrease) in commercial paper.... - 772 (368) 404 - 110 253 363 Capital contributions from FPL Group ...... - - - - - 18 (18) - Repurchases of common stock ............... - - - - (34) - - (34) Dividends ................................. (188) - - (188) (183) - - (183) Net cash provided by (used in) financing activities .................. (188) 1,265 (434) 643 (217) 128 231 142 Net increase (decrease) in cash and cash equivalents .......................... (11) 12 (58) (57) 27 (297) 143 (127) Cash and cash equivalents at beginning of period.................................. 12 51 66 129 (16) 376 1 361 Cash and cash equivalents at end of period... $ 1 $ 63 $ 8 $ 72 $ 11 $ 79 $ 144 $ 234 ----------------- (a) Represents FPL, other subsidiaries and consolidating adjustments.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This discussion should be read in conjunction with the Notes contained herein and Management's Discussion appearing in the 2000 Form 10-K for FPL Group and FPL. The results of operations for an interim period may not give a true indication of results for the year. In the following discussion, all comparisons are with the corresponding items in the prior year. RESULTS OF OPERATIONS FPL Group's net income increased for the three and six months ended June 30, 2001 primarily as a result of increased earnings at both FPL and FPL Energy. The adoption of FAS 133, which became effective January 1, 2001, positively affected FPL Group's and FPL Energy's earnings by $5 million for both the three and six months ended June 30, 2001. For additional information regarding FAS 133, see Note 1 - Accounting for Derivative Instruments and Hedging Activities. FPL Group's earnings for the six months ended June 30, 2001 also include approximately $19 million after-tax of merger-related expenses, of which $16 million relates to FPL and $3 million relates to the Corporate and Other segment. The discussion of results of operations below excludes the effects of FAS 133 and merger- related expenses. FPL - FPL's net income for the three months ended June 30, 2001 improved mainly due to lower depreciation expense, partially offset by higher other operations and maintenance (O&M) expenses and higher interest charges. Revenues from retail base operations were $880 million for the second quarter of 2001 compared to $874 million for the same period last year. This reflects an increase in the average number of customer accounts of 2.3% offset by a decrease in usage per customer of 2.2% due to milder weather. During the second quarter of 2001, FPL accrued $38 million associated with refunds to retail customers under the rate reduction agreement, approximately the same amount as in 2000. In June 2001, FPL refunded approximately $109 million, including interest, to retail customers for the second twelve-month period under the rate agreement. Primarily all of this refund was accrued in periods prior to the second quarter of 2001. In June 2000, approximately $23 million was refunded to retail customers for the first twelve-month period, primarily all of which was accrued in 1999. FPL's revenues and fuel, purchased power and interchange expense have increased for both the three-month and six-month periods. This is the result of an increase in FPL's fuel charge to retail customers in mid-2000 and in 2001 in response to higher fuel costs. FPL's fuel costs are substantially a pass-through and do not significantly affect net income. Depreciation expense declined during the quarter ended June 30, 2001 reflecting lower special depreciation under the rate reduction agreement. Interest expense increased due to higher debt balances required to fund FPL's capital expansion and under-recovered fuel costs. Net income for the six months ended June 30, 2001 improved mainly due to higher energy sales and lower depreciation expense, partially offset by higher O&M expenses and higher interest charges. Revenues from retail base operations were $1,664 million for the six months ended June 30, 2001 compared to $1,632 million for the same period last year. This reflects an increase in the average number of customer accounts of 2.3% and an increase in usage per customer of 1.4%. The increase in usage reflects cold weather conditions, primarily in January, partly offset by the milder weather in the second quarter. Partially offsetting the increase in revenues due to higher usage and customer growth was a higher provision for revenue refund under the rate reduction agreement. During the six months ended June 30, 2001, FPL accrued approximately $78 million relating to refunds to retail customers, compared to $37 million in 2000. Depreciation expense declined during the six-month period reflecting lower special depreciation under the rate reduction agreement. FPL's O&M expenses increased primarily due to additional fossil plant outage costs, partly due to timing, and higher employee-related costs. Interest expense increased due to higher debt balances required to fund FPL's capital expansion and under-recovered fuel costs. In January 2001, the Energy 2020 Study Commission issued a proposal for restructuring Florida's wholesale electricity market anticipating that the proposal would be considered in the 2001 legislative session. In May 2001, the Florida legislative session ended with no action taken on the commission's proposal. The commission is scheduled to develop a recommendation addressing retail competition by the end of 2001. Both wholesale and retail competition issues may then be addressed in the 2002 legislative session. In May 2001, the FPSC ordered FPL to submit MFRs to initiate a base rate proceeding regarding FPL's future retail rates. FPL expects to file MFRs with the FPSC by October 15, 2001. Any change in base rates would become effective after the expiration of the current rate agreement on April 14, 2002. FPL as well as other investor-owned utilities in Florida had requested that the FPSC open a separate generic docket to address issues related to the utilities' participation in an independent RTO, pursuant to the FERC's Order 2000. In June 2001, the FPSC decided to address on an expedited basis the RTO matters in conjunction with the base rate proceeding instead of in a generic docket. In mid-July 2001, the FERC initiated a mediation process directed toward forming a single RTO for the Southeast region of the United States. FPL is participating in the mediation process, scheduled to last 45 days. FPL Energy - FPL Energy's net income for the three and six months ended June 30, 2001 benefited from a power generation portfolio with approximately 1,200 more mw in operation and improved performance from the wind projects. These benefits were somewhat offset in the second quarter of 2001 by lower income from the Northeast region, mainly reflecting lower market prices and transmission constraints affecting the Maine assets. FPL Energy is continuing its expansion plans, which include adding 11 plants with more than 5,800 mw by the end of 2003. FPL Energy has a net ownership interest in approximately 540 mw in California, most of which are wind, solar and geothermal qualifying facilities. The output of these projects is sold predominantly under long- term contracts with California utilities. Increases in natural gas prices and an imbalance between power supply and demand, as well as other factors, have contributed to significant increases in wholesale electricity prices in California. Utilities in California had previously agreed to fixed tariffs to their retail customers, which resulted in significant under- recoveries of wholesale electricity purchase costs. FPL Energy's projects have not received the majority of payments due from California utilities for electricity sold from November 2000 through March 2001. In April 2001, Pacific Gas & Electric Company (PG&E) filed for protection under Chapter 11 of the U.S. Bankruptcy Code. In July 2001, an agreement was reached between PG&E and FPL Energy regarding most of the qualifying facility contracts between the companies. The agreement requires a fixed payment structure over the next five years as well as payment of all outstanding receivables subject to approval of PG&E's reorganization plan by the bankruptcy court and PG&E's creditors. In June 2001, an agreement was reached between SCE and FPL Energy regarding the qualifying facility contracts with SCE. The agreement with SCE also requires a fixed payment structure over the next five years as well as payment of all outstanding receivables but is conditioned upon, among other things, legislative action in California and completion of SCE's financing plan. No assurance can be given that the conditions to the agreements with PG&E and SCE will be satisfied. FPL Group's earnings exposure relating to past due receivables from these California utilities at June 30, 2001 was approximately $15 million. At June 30, 2001, FPL Energy's net investment in California projects was approximately $290 million. It is impossible to predict what the outcome of the situation in California will be or its effect, if any, on FPL Group's financial statements. New Accounting Rules - For information concerning FAS 142, which FPL Group will be required to adopt in 2002, see Note 1 - Goodwill and Other Intangible Assets. LIQUIDITY AND CAPITAL RESOURCES For financing activity during the six months ended June 30, 2001, see Note 3 - Long-Term Debt. In July 2001, a subsidiary of FPL Energy issued $435 million of 7.52% senior secured bonds maturing in 2019, the proceeds of which will be used in part to reduce FPL Group Capital's commercial paper balance. Principal will be payable in semi-annual installments beginning December 31, 2001. For information concerning capital commitments and posting of cash collateral, see Note 4 - Commitments. PART II - OTHER INFORMATION Item 1. Legal Proceedings Reference is made to Item 3. Legal Proceedings in the 2000 Form 10-K for FPL Group and FPL and Part II, Item 1. Legal Proceedings in the March 31, 2001 Form 10-Q for FPL Group and FPL. In November 1999, the Attorney General of the United States, on behalf of the EPA, brought an action in the U.S. District Court for the Northern District of Georgia against Georgia Power Company and other subsidiaries of The Southern Company for certain alleged violations of the Prevention of Significant Deterioration (PSD) provisions and the New Source Performance Standards (NSPS) of the Clean Air Act. In May 2001, the EPA amended its complaint. The amended complaint alleges, among other things, that Georgia Power Company constructed and is continuing to operate Scherer Unit No. 4, in which FPL owns a 76% interest, without obtaining a PSD permit, without complying with the NSPS requirements, and without applying best available control technology for nitrogen oxides, sulfur dioxide and particulate matter as required by the Clean Air Act. It also alleges that unspecified major modifications have been made at Scherer Unit No. 4 that require its compliance with the aforementioned Clean Air Act provisions. The EPA seeks injunctive relief requiring the installation of best available control technology and civil penalties of up to $25,000 per day for each violation from an unspecified date after June 1, 1975 through January 30, 1997, and $27,500 per day for each violation thereafter. Georgia Power Company has answered the amended complaint, asserting that it has complied with all requirements of the Clean Air Act, denying the plaintiff's allegations of liability, denying that the plaintiff is entitled to any of the relief that it seeks and raising various other defenses. In June 2001, the Court stayed discovery and administratively closed the case pending resolution of the EPA's motion for consolidation of discovery in several Clean Air Act cases that was filed with a MDL panel. The MDL panel has heard oral argument on the motion for consolidation but has not yet ruled on it. For discussion of litigation filed by SCE with the FERC against partnerships that are partially owned by FPL Energy, see Note 4 - Litigation. Item 4. Submission of Matters to a Vote of Security Holders The Annual Meeting of FPL Group's shareholders was held on May 14, 2001. Of the 175,838,735 shares of common stock outstanding on the record date of March 5, 2001, a total of 148,182,117 shares were represented in person or by proxy. The following directors were elected effective May 14, 2001: Votes Cast Against or For Withheld H. Jesse Arnelle ........... 137,309,390 10,872,727 Sherry S. Barrat ........... 137,420,056 10,762,061 Robert M. Beall, II ........ 137,404,792 10,777,325 James L. Broadhead ......... 127,817,453 20,364,664 J. Hyatt Brown ............. 137,393,592 10,788,525 Armando M. Codina .......... 137,349,906 10,832,211 Willard D. Dover ............ 137,352,766 10,829,351 Alexander W. Dreyfoos, Jr. .. 137,423,426 10,758,691 Paul J. Evanson .............. 137,307,240 10,874,877 Frederic V. Malek ............ 137,370,662 10,811,455 Paul R. Tregurtha ............ 137,395,206 10,786,911 Item 5. Other Information (a) Reference is made to Item 1. Business - FPL Operations - Retail Ratemaking in the 2000 Form 10-K for FPL Group and FPL. For information regarding FPL's base rate proceeding with the FPSC, see Note 2. (b) Reference is made to Item 1. Business - FPL Operations - System Capability and Load in the 2000 Form 10-K for FPL Group and FPL. For information regarding additional purchase power contracts, see Note 4 - Contracts. On July 30, 2001, FPL set an all-time record for energy peak demand of 18,354 mw. Adequate resources were available at the time of the peak to meet customer demand. (c) Reference is made to Item 1. Business - FPL Operations - Fuel in the 2000 Form 10-K for FPL Group and FPL. Based on current projections, FPL will lose its ability to store spent fuel on site for St. Lucie Unit No. 1 in 2005, St. Lucie Unit No. 2 in 2007, Turkey Point Unit No. 3 in 2009 and Turkey Point Unit No. 4 in 2011. In addition, degradation in a material used in the spent fuel pools at St. Lucie Unit No. 1 and Turkey Point Units Nos. 3 and 4 could result in implementation of alternative spent fuel storage options sooner than projected. FPL is pursuing various approaches to expanding spent fuel storage at the sites, including increasing rack space in its existing spent fuel pools and/or developing the capacity to store spent fuel in dry storage containers. (d) Reference is made to Item 1. Business - FPL Energy Operations in the 2000 Form 10-K for FPL Group and FPL. For information regarding FPL Energy's California projects, see Item 2. Management's Discussion - Results of Operations - FPL Energy. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits
Exhibit FPL Number Description Group FPL 4 Officer's Certificate of FPL Group Capital dated May 11, 2001, x creating the 6 1/8% Debentures, Series due May 15, 2007 10(a) FPL Group, Inc. Deferred Compensation Plan, amended and restated x effective January 1, 2001 10(b) Amendment to Employment Agreement between FPL Group, Inc. and x Thomas F. Plunkett, dated as of May 7, 2001 12(a) Computation of Ratio of Earnings to Fixed Charges x 12(b) Computation of Ratios x
FPL Group agrees to furnish to the Securities and Exchange Commission upon request any instrument with respect to long-term debt that FPL Group has not filed as an exhibit pursuant to the exemption provided by Item 601(b)(4)(iii)(A) of Regulation S-K. (b) Reports on Form 8-K A current report on Form 8-K was filed with the Securities and Exchange Commission on April 2, 2001 by FPL Group and FPL filing exhibits under Item 7. Financial Statements and Exhibits. A current report on Form 8-K was filed with the Securities and Exchange Commission on April 10, 2001 by FPL Group and FPL filing an exhibit under Item 7. Financial Statements and Exhibits and Item 9. Regulation FD Disclosure. A current report on Form 8-K was filed with the Securities and Exchange Commission on May 18, 2001 by FPL Group and FPL reporting one event under Item 5. Other Events. A current report on Form 8-K was filed with the Securities and Exchange Commission on June 13, 2001 by FPL Group and FPL reporting one event under Item 5. Other Events. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized. FPL GROUP, INC. FLORIDA POWER & LIGHT COMPANY (Registrants) Date: August 8, 2001 K. MICHAEL DAVIS ---------------- K. Michael Davis Controller and Chief Accounting Officer of FPL Group, Inc. Vice President, Accounting, Controller and Chief Accounting Officer of Florida Power & Light Company (Principal Accounting Officer of the Registrants)