-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DR7ZupwZfwNDmijqO3eBLh1V6OcGj+jvPDd6hxioeoLUehrx/5jVkTMEwcY+MyRs MwWiFJ1kaqe0qJggUtyEdQ== 0000753308-00-000006.txt : 20000501 0000753308-00-000006.hdr.sgml : 20000501 ACCESSION NUMBER: 0000753308-00-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000428 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FPL GROUP INC CENTRAL INDEX KEY: 0000753308 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 592449419 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08841 FILM NUMBER: 612663 BUSINESS ADDRESS: STREET 1: 700 UNIVERSE BLVD CITY: JUNO BEACH STATE: FL ZIP: 33408 BUSINESS PHONE: 5616944000 MAIL ADDRESS: STREET 1: P O BOX 14000 CITY: JUNO BEACH STATE: FL ZIP: 33408 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLORIDA POWER & LIGHT CO CENTRAL INDEX KEY: 0000037634 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 590247775 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 002-27612 FILM NUMBER: 612664 BUSINESS ADDRESS: STREET 1: 700 UNIVERSE BLVD CITY: JUNO BEACH STATE: FL ZIP: 33408 BUSINESS PHONE: 5616944000 MAIL ADDRESS: STREET 1: P O BOX 14000 CITY: JUNO BEACH STATE: FL ZIP: 33408 10-Q 1 FPL GROUP AND FPL 3/31/00 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Exact name of Registrants as specified Commission in their charters, address of principal IRS Employer File executive offices and Registrants' Identification Number 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 March 31, 2000: 178,166,335 shares. As of March 31, 2000, 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 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, 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 March 31, 2000 1999 ------------------- OPERATING REVENUES .................................................................. $1,468 $1,412 OPERATING EXPENSES: Fuel, purchased power and interchange ............................................. 542 506 Other operations and maintenance................................................... 285 275 Depreciation and amortization ..................................................... 259 279 Taxes other than income taxes ..................................................... 145 144 Total operating expenses ........................................................ 1,231 1,204 OPERATING INCOME .................................................................... 237 208 OTHER INCOME (DEDUCTIONS): Interest charges .................................................................. (62) (47) Preferred stock dividends - FPL ................................................... (4) (4) Gain on sale of Adelphia Communications Corporation stock ......................... - 149 Other - net ....................................................................... 7 9 Total other income (deductions) - net ........................................... (59) 107 INCOME BEFORE INCOME TAXES .......................................................... 178 315 INCOME TAXES ........................................................................ 57 106 NET INCOME .......................................................................... $ 121 $ 209 Earnings per share of common stock (basic and assuming dilution)..................... $ 0.71 $ 1.22 Dividends per share of common stock ................................................. $ 0.54 $ 0.52 Average number of common shares outstanding ......................................... 170 172
This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on pages 9 through 12 herein and the Notes to Consolidated Financial Statements appearing in the combined Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (1999 Form 10-K) for FPL Group and FPL. FPL GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (millions) (unaudited)
March 31, December 31, 2000 1999 --------- ------------ PROPERTY, PLANT AND EQUIPMENT: Electric utility plant in service and other property, including nuclear fuel and construction work in progress ....................... $19,867 $19,554 Less accumulated depreciation and amortization ................................... (10,551) (10,290) Total property, plant and equipment - net ...................................... 9,316 9,264 CURRENT ASSETS: Cash and cash equivalents ........................................................ 104 361 Customer receivables, net of allowance of $5 and $7, respectively................. 463 482 Materials, supplies and fossil fuel inventory - at average cost .................. 312 343 Deferred clause expenses ......................................................... 69 54 Other ............................................................................ 129 133 Total current assets ........................................................... 1,077 1,373 OTHER ASSETS: Special use funds of FPL ......................................................... 1,441 1,352 Other investments ................................................................ 655 611 Other ............................................................................ 872 841 Total other assets ............................................................. 2,968 2,804 TOTAL ASSETS ....................................................................... $13,361 $13,441 CAPITALIZATION: Common stock ..................................................................... $ 2 $ 2 Additional paid-in capital........................................................ 2,896 2,904 Retained earnings................................................................. 2,494 2,465 Accumulated other comprehensive loss ............................................. - (1) Total common shareholders' equity............................................... 5,392 5,370 Preferred stock of FPL without sinking fund requirements ......................... 226 226 Long-term debt ................................................................... 3,478 3,478 Total capitalization ........................................................... 9,096 9,074 CURRENT LIABILITIES: Debt due within one year ......................................................... 246 464 Accounts payable ................................................................. 448 407 Accrued interest, taxes and other ................................................ 1,003 999 Total current liabilities ...................................................... 1,697 1,870 OTHER LIABILITIES AND DEFERRED CREDITS: Accumulated deferred income taxes ................................................ 1,166 1,079 Unamortized regulatory and investment tax credits ................................ 299 310 Other ............................................................................ 1,103 1,108 Total other liabilities and deferred credits ................................... 2,568 2,497 COMMITMENTS AND CONTINGENCIES TOTAL CAPITALIZATION AND LIABILITIES ............................................... $13,361 $13,441
This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on pages 9 through 12 herein and the Notes to Consolidated Financial Statements appearing in the 1999 Form 10-K for FPL Group and FPL. FPL GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (millions) (unaudited)
Three Months Ended March 31, 2000 1999 ------- ------- NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................. $ 480 $ 680 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures of FPL ......................................................... (301) (180) Independent power investments ....................................................... (81) (316) Distributions and loan repayments from partnerships and joint ventures .............. 15 57 Other - net ......................................................................... (44) 95 Net cash used in investing activities ........................................... (411) (344) CASH FLOWS FROM FINANCING ACTIVITIES: Retirement of long-term debt ........................................................ - (130) Increase (decrease) in commercial paper ............................................. (218) 276 Repurchase of common stock .......................................................... (16) (32) Dividends on common stock ........................................................... (92) (89) Net cash provided by (used in) financing activities ............................. (326) 25 Net increase (decrease) in cash and cash equivalents .................................. (257) 361 Cash and cash equivalents at beginning of period ...................................... 361 187 Cash and cash equivalents at end of period ............................................ $ 104 $ 548 Supplemental disclosures of cash flow information: Cash paid for interest .............................................................. $ 53 $ 45 Cash paid for income taxes .......................................................... $ 17 $ - Supplemental schedule of noncash investing and financing activities: Additions to capital lease obligations .............................................. $ 17 $ 26
This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on pages 9 through 12 herein and the Notes to Consolidated Financial Statements appearing in the 1999 Form 10-K for FPL Group and FPL. FLORIDA POWER & LIGHT COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (millions) (unaudited
Three Months Ended March 31, 2000 1999 ------ ------ OPERATING REVENUES ......................................................................... $1,338 $1,359 OPERATING EXPENSES: Fuel, purchased power and interchange .................................................... 501 485 Other operations and maintenance ......................................................... 237 250 Depreciation and amortization ............................................................ 247 275 Income taxes ............................................................................. 60 56 Taxes other than income taxes ............................................................ 142 143 Total operating expenses ............................................................... 1,187 1,209 OPERATING INCOME ........................................................................... 151 150 OTHER INCOME (DEDUCTIONS): Interest charges ......................................................................... (40) (43) Other - net .............................................................................. (1) 1 Total other deductions - net ........................................................... (41) (42) NET INCOME ................................................................................. 110 108 PREFERRED STOCK DIVIDENDS .................................................................. 4 4 NET INCOME AVAILABLE TO FPL GROUP .......................................................... $ 106 $ 104
This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on pages 9 through 12 herein and the Notes to Consolidated Financial Statements appearing in the 1999 Form 10-K for FPL Group and FPL. FLORIDA POWER & LIGHT COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (millions) (unaudited
March 31, December 31, 2000 1999 --------- ------------ ELECTRIC UTILITY PLANT: Plant in service, including nuclear fuel and construction work in progress ....... $18,307 $18,162 Less accumulated depreciation and amortization ................................... (10,414) (10,184) Electric utility plant - net ................................................... 7,893 7,978 CURRENT ASSETS: Cash and cash equivalents ........................................................ 9 - Customer receivables, net of allowance of $5 and $7, respectively................. 399 433 Materials, supplies and fossil fuel inventory - at average cost .................. 284 299 Deferred clause expenses ......................................................... 69 54 Other ............................................................................ 89 107 Total current assets ........................................................... 850 893 OTHER ASSETS: Special use funds ................................................................ 1,441 1,352 Other ............................................................................ 412 385 Total other assets ............................................................. 1,853 1,737 TOTAL ASSETS ....................................................................... $10,596 $10,608 CAPITALIZATION: Common shareholder's equity ...................................................... $ 4,701 $ 4,793 Preferred stock without sinking fund requirements ................................ 226 226 Long-term debt ................................................................... 2,079 2,079 Total capitalization ........................................................... 7,006 7,098 CURRENT LIABILITIES: Debt due within one year ......................................................... 141 219 Accounts payable ................................................................. 417 379 Accrued interest, taxes and other ................................................ 900 835 Total current liabilities ...................................................... 1,458 1,433 OTHER LIABILITIES AND DEFERRED CREDITS: Accumulated deferred income taxes ................................................ 878 802 Unamortized regulatory and investment tax credits ................................ 299 310 Other ............................................................................ 955 965 Total other liabilities and deferred credits ................................... 2,132 2,077 COMMITMENTS AND CONTINGENCIES TOTAL CAPITALIZATION AND LIABILITIES ............................................... $10,596 $10,608
This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on pages 9 through 12 herein and the Notes to Consolidated Financial Statements appearing in the 1999 Form 10-K for FPL Group and FPL. FLORIDA POWER & LIGHT COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (millions) (unaudited
Three Months Ended March 31, 2000 1999 ------ ------ NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................. $ 516 $ 667 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ................................................................ (301) (180) Other - net ......................................................................... (26) (51) Net cash used in investing activities ........................................... (327) (231) CASH FLOWS FROM FINANCING ACTIVITIES: Decrease in commercial paper ........................................................ (78) - Dividends ........................................................................... (102) (102) Net cash used in financing activities ............................................. (180) (102) Net increase in cash and cash equivalents ............................................. 9 334 Cash and cash equivalents at beginning of period ...................................... - 152 Cash and cash equivalents at end of period ............................................ $ 9 $ 486 Supplemental disclosures of cash flow information: Cash paid for interest .............................................................. $ 27 $ 39 Cash paid for income taxes .......................................................... $ 18 $ 1 Supplemental schedule of noncash investing and financing activities: Additions to capital lease obligations .............................................. $ 17 $ 26 Transfer of net assets to FPL FiberNet, LLC ......................................... $ 100 $ -
This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on pages 9 through 12 herein and the Notes to Consolidated Financial Statements appearing in the 1999 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 1999 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. Capitalization FPL Group Common Stock - During the three months ended March 31, 2000, FPL Group repurchased 369,400 shares of common stock under its share repurchase program. A total of approximately 4.2 million shares have been repurchased under the share repurchase program that began in April 1997. Long-Term Debt - In April 2000, FPL sold approximately $96 million principal amount of variable-rate pollution control revenue refunding bonds maturing in July 2022. The proceeds will be used in July 2000 to redeem approximately $96 million of pollution control revenue refunding bonds of which $76 million bear interest at 7.3% and mature in 2020 and $20 million are variable rate and mature in 2024. 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 both basic and diluted earnings per share for the three months ended March 31, 2000 and 1999. 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 $121 million and $209 million for the three months ended March 31, 2000 and 1999, respectively, includes net income, changes in unrealized gains and losses on securities and foreign currency translation adjustments. Accumulated other comprehensive income is separately displayed in the condensed consolidated balance sheets of FPL Group. 2. 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 $3.1 billion for 2000 through 2002. Included in this three-year forecast are capital expenditures for 2000 of approximately $1.3 billion, of which $301 million had been spent through March 31, 2000. As of March 31, 2000, FPL Energy, LLC (FPL Energy), has made commitments in connection with the development and expansion of independent power projects totaling approximately $97 million. FPL Group and its subsidiaries, other than FPL, have guaranteed approximately $300 million of purchased power agreement 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 $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 $50 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 $209 million at March 31, 2000, 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 entered into a $3.7 billion long-term agreement with General Electric Company for the supply of 66 gas turbines from 2000 through 2004 and parts, repairs and on-site services through 2011. The turbines are intended to support expansion at FPL and FPL Energy, and the related commitments for a portion of the 66 gas turbines 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 383 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. Capacity payments for the pay-for-performance contracts are subject to the qualifying facilities meeting certain contract conditions. FPL has long-term contracts for the transportation and supply of natural gas, coal and oil with various expiration dates through 2021. FPL Energy has long-term contracts for the transportation and storage of natural gas with expiration dates ranging from 2005 through 2017, and a 24-month contract commencing in mid-2000 for the supply of natural gas. The required capacity and minimum payments through 2004 under these contracts are estimated to be as follows
2000 2001 2002 2003 2004 (millions) FPL: Capacity payments: JEA and Southern Companies .......................................... $210 $210 $210 $200 $200 Qualifying facilities (a) ........................................... $370 $380 $400 $410 $425 Minimum payments, at projected prices: Natural gas, including transportation ............................... $315 $440 $495 $510 $545 Coal ................................................................ $ 50 $ 45 $ 45 $ 20 $ 10 Oil ................................................................. $175 $195 $ 10 $ - $ - FPL Energy: Natural gas, including transportation and storage ..................... $ 20 $ 20 $ 20 $ 15 $ 15 _______________ (a) Includes approximately $40 million, $40 million, $45 million, $45 million and $50 million, respectively, for capacity payments associated with two contracts that are currently in dispute. These capacity payments are subject to the outcome of the related litigation. See Litigation.
Charges under these contracts were as follows:
Three Months Ended March 31, 2000 Charges 1999 Charges ------------------------------------------ Energy/ Energy/ Capacity Fuel Capacity Fuel ------------------------------------------ (millions) FPL: JEA and Southern Companies ......................... $50(a) $31(b) $50(a) $23(b) Qualifying facilities .............................. $79(c) $32(b) $75(c) $21(b) Natural gas, including transportation .............. $ - $82(b) $ - $75(b) Coal ............................................... $ - $11(b) $ - $12(b) Oil ................................................ $ - $21(b) $ - $11(b) FPL Energy: Natural gas transportation and storage ............. $ - $ 4 $ - $ 4 _______________ (a) Recovered through base rates and the capacity cost recovery clause (capacity clause). (b) Recovered through the fuel and purchased power cost recovery clause. (c) Recovered through the capacity clause.
Litigation - In 1997, FPL filed a complaint against the owners of two qualifying facilities (plant owners) seeking an order declaring that FPL's obligations under the power purchase agreements with the qualifying facilities were rendered of no force and effect because the power plants failed to accomplish commercial operation before January 1, 1997, as required by the agreements. In 1997, the plant owners filed for bankruptcy under Chapter XI of the U.S. Bankruptcy Code and entered into an agreement with the holders of more than 70% of the bonds that partially financed the construction of the plants. This agreement gives the holders of a majority of the principal amount of the bonds (the majority bondholders) the right to control, fund and manage any litigation against FPL and the right to settle with FPL on any terms such majority bondholders approve, provided that certain agreements are not affected and certain conditions are met. In 1998, the plant owners (through the attorneys for the majority bondholders) filed an answer denying the allegations in FPL's complaint and asserting counterclaims for approximately $2 billion, consisting of all capacity payments that could have been made over the 30-year term of the power purchase agreements and three times their actual damages for alleged violations of Florida antitrust laws by FPL, FPL Group and FPL Group Capital Inc (FPL Group Capital), plus attorneys' fees. In 1998, the trial court dismissed all of the plant owners' antitrust claims. In 1999, the plant owners' motion for summary judgment was denied; they have appealed. A contract with Cedar Bay Generating Company, L.P. (Cedar Bay), a qualifying facility, provides FPL with the right to dispatch the Cedar Bay facility "in any manner it deems appropriate." Despite this contractual right, Cedar Bay initiated an action in 1997 in the circuit court challenging, among other things, the manner in which the facility had been dispatched by FPL. Although the court granted summary judgment to FPL with regard to Cedar Bay's claim that FPL's dispatch decisions violated the express terms of the contract, it permitted a jury to hear Cedar Bay's claim that such dispatch decisions violated an implied duty of good faith and fair dealing. The jury awarded Cedar Bay approximately $13 million on this claim. Thereafter, the court entered a declaration that FPL was, in the future, to dispatch the Cedar Bay facility in accordance with certain specified parameters. FPL expects to recover the amount of this judgment through the capacity clause. FPL has appealed both the jury award and the court's declaration. In 1999, after FPL filed its notice of appeal in the Cedar Bay action, a lender, on behalf of itself and a group of other Cedar Bay lenders, filed an action against FPL in the circuit court alleging breach of contract, breach of an implied duty of good faith and fair dealing, fraud, tortious interference with contract and several other claims regarding the manner in which FPL has dispatched the Cedar Bay facility. It seeks unspecified damages and other relief. FPL has moved to dismiss all counts of this complaint. 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 injunctive relief and the assessment of civil penalties for certain violations of the Clean Air Act. Among other things, the EPA alleges 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. The suit seeks injunctive relief requiring the installation of such technology and civil penalties of up to $25,000 per day for each violation from an unspecified date after August 7, 1977 through January 30, 1997, and $27,500 per day for each violation thereafter. Georgia Power Company has filed an answer to the 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. FPL Group and FPL believe that they have meritorious defenses to the litigation 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. 3. Segment Information FPL Group's reportable segments include FPL, a regulated utility, and FPL Energy, an unregulated 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 March 31, 2000 1999 ------------------------------------------ ---------------------------------------- FPL Corporate FPL Corporate FPL Energy & Other Total FPL Energy & Other Total ------------------------------------------ ---------------------------------------- (millions) Operating revenues ..... $ 1,338 $ 107 $ 23 $ 1,468 $ 1,359 $ 41 $ 12 $ 1,412 Net income ............. $ 106 $ 15 $ - $ 121 $ 104 $ 9 $ 96(a) $ 209
March 31, 2000 December 31, 1999 --------------------------------------- --------------------------------------- FPL Corporate FPL Corporate FPL(b) Energy & Other(b) Total FPL Energy & Other Total --------------------------------------- ---------------------------------------- (millions) Total assets ........... $10,596 $2,288 $ 477 $13,361 $10,608 $2,212 $621 $13,441
(a) Includes $96 million after-tax gain on the sale of an investment in Adelphia Communications Corporation (Adelphia) common stock. See Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Corporate and Other. (b) Includes effect of $100 million net asset transfer in January 2000 from FPL to FPL FiberNet, LLC. 4. Summarized Financial Information of FPL Group Capital FPL Group Capital provides funding for and holds ownership interest in FPL Group's operating subsidiaries other than FPL. FPL Group Capital's debentures are guaranteed by FPL Group and included in FPL Group's condensed consolidated balance sheets. Summarized financial information of FPL Group Capital is as follows:
Three Months Ended March 31, March 31, December 31, 2000 1999 2000 1999 ---- ---- --------- ------------ (millions) (millions) Operating revenues .... $130 $ 54 Current assets ......... $ 477 $ 640 Operating expenses .... $105 $ 51 Noncurrent assets ...... $2,801 $2,627 Net income ............ $ 20 $112(a) Current liabilities .... $ 286 $ 414 Noncurrent liabilities.. $1,860 $1,840
(a) Includes $96 million after-tax gain on the sale of an investment in Adelphia common stock. See Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Corporate and Other. Management has not presented separate financial statements and other disclosures concerning FPL Group Capital because management has determined that such information is not material to holders of the FPL Group Capital debentures. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This discussion should be read in conjunction with the Notes to Condensed Consolidated Financial Statements contained herein and Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in the 1999 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 earnings for the first quarter of 2000 improved over the same period last year, excluding the first quarter 1999 nonrecurring gain on the sale of Adelphia stock. The improvement was primarily a result of growth at FPL Energy. FPL - FPL's net income for the three months ended March 31, 2000 was up slightly despite the rate reduction that went into effect in April 1999. Higher sales, as well as lower depreciation and other operations and maintenance expenses contributed to the improvement. FPL's revenues from retail base operations for the three months ended March 31, 2000 were $730 million, down from $760 million for the same period in 1999. The effect of the rate agreement described below was partially offset by higher customer usage and growth in customer accounts. Usage per retail customer was up 4% due to weather conditions and some demand elasticity associated with lower rates. The number of customer accounts increased 2.3% for the same period. FPL's other operations and maintenance expense decreased for the three months ended March 31, 2000, primarily reflecting successful cost control efforts as well as the timing of expenditures. The rate agreement provides for a $350 million reduction in annual revenues from retail base operations allocated to all customers on a cents-per- kilowatt-hour basis. Additionally, the agreement sets forth a revenue sharing mechanism for each of the twelve-month periods covered by the agreement, whereby revenues from retail base operations in excess of a stated threshold will be shared on the basis of two-thirds refunded to retail customers and one-third retained by FPL. Revenues from retail base operations in excess of a second threshold will be refunded 100% to retail customers. The thresholds for the twelve months ended April 14, 2000, were $3.4 billion and $3.556 billion, respectively. As of March 31, 2000, FPL had accrued approximately $19 million associated with the refund to retail customers for the twelve months ended April 14, 2000. The annual revenue reduction was offset by lower special depreciation. The agreement allows for special depreciation of up to $100 million, in each year of the three- year agreement period to be applied to nuclear and/or fossil generating assets. During the first year of the agreement, FPL recognized as depreciation essentially all of the $100 million; $29 million in the first quarter of 2000 and $70 million in 1999. For the three months ended March 31, 1999, FPL recorded approximately $61 million under the previous program. FPL Energy - The improvement in FPL Energy's net income for the three months ended March 31, 2000 is primarily due to new projects and improved performance in the mid-atlantic and central regions. The new projects include the Maine assets, several wind projects and a gas project. Earnings from these additions were partially offset by higher interest and administrative expenses. Corporate and Other - First quarter 1999 net income for the corporate and other segment reflects a $149 million ($96 million after-tax) gain on the sale of an investment in Adelphia stock. LIQUIDITY AND CAPITAL RESOURCES During the three months ended March 31, 2000, FPL Group repurchased 369,400 shares of common stock. For information concerning capital commitments, see Note 2 - Commitments. PART II - OTHER INFORMATION Item 5. Other Information Reference is made to Item 1. Business - FPL Operations - Competition in the 1999 Form 10-K for FPL Group and FPL. In April 2000, the Florida Supreme Court upheld arguments by FPL and other Florida utilities and ruled that under current Florida law the FPSC is not authorized to grant a determination of need for a proposed power plant, the output of which is not fully committed to use by Florida retail customers. Also in April 2000, a settlement agreement between FPL and its wholesale customers was filed with the FERC covering issues that have been pending resolution since a rate case was filed by FPL in 1993. The settlement provides for lower rates to wholesale customers through the adoption of new fixed rates, rather than formula rates, effective January 1, 2000 and a $65 million refund for wholesale services from 1994-99, and is subject to FERC approval. As of March 31, 2000, FPL had accrued for the impact of this settlement. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits
Exhibit FPL Number Description Group FPL 12(a) Computation of Ratio of Earnings to Fixed Charges x 12(b) Computation of Ratios x 27 Financial Data Schedule x x
(b) Reports on Form 8-K - None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the 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: April 28, 2000 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) EX-12.A 2 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12(a) FPL GROUP, INC. AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Three Months Ended March 31, 2000 ----------- (millions) Earnings, as defined: Net income .............................................................................. $121 Income taxes ............................................................................ 57 Fixed charges, included in the determination of net income, as below .................... 65 Distributed income of independent power investments...................................... 13 Less: Equity in earnings of independent power investments ............................... 2 Total earnings, as defined ............................................................ $254 Fixed charges, as defined: Interest charges ........................................................................ $ 62 Rental interest factor .................................................................. 1 Fixed charges included in nuclear fuel cost ............................................. 2 Fixed charges, included in the determination of net income .............................. 65 Capitalized interest .................................................................... 5 Total fixed charges, as defined ....................................................... $ 70 Ratio of earnings to fixed charges ........................................................ 3.63
EX-12.B 3 COMPUTATION OF RATIOS EXHIBIT 12(b) FLORIDA POWER & LIGHT COMPANY COMPUTATION OF RATIO
Three Months Ended March 31, 2000 ------------------ (millions) RATIO OF EARNINGS TO FIXED CHARGES Earnings, as defined: Net income .............................................................................. $110 Income taxes ............................................................................ 58 Fixed charges, as below ................................................................. 43 Total earnings, as defined ............................................................ $211 Fixed charges, as defined: Interest charges ........................................................................ $ 40 Rental interest factor .................................................................. 1 Fixed charges included in nuclear fuel cost ............................................. 2 Total fixed charges, as defined ....................................................... $ 43 Ratio of earnings to fixed charges ........................................................ 4.91 RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS Earnings, as defined: Net income .............................................................................. $110 Income taxes ............................................................................ 58 Fixed charges, as below ................................................................. 43 Total earnings, as defined ............................................................ $211 Fixed charges, as defined: Interest charges ........................................................................ $ 40 Rental interest factor .................................................................. 1 Fixed charges included in nuclear fuel cost ............................................. 2 Total fixed charges, as defined ....................................................... 43 Non-tax deductible preferred stock dividends .............................................. 4 Ratio of income before income taxes to net income ......................................... 1.53 Preferred stock dividends before income taxes ............................................. 6 Combined fixed charges and preferred stock dividends ...................................... $ 49 Ratio of earnings to combined fixed charges and preferred stock dividends ................. 4.31
EX-27 4 FINANCIAL DATA SCHEDULE
UT This schedule contains summary financial information extracted from FPL Group's and FPL's condensed consolidated balance sheet as of March 31, 2000 and condensed consolidated statements of income and cash flows for the three months ended March 31, 2000 and is qualified in its entirety by reference to such financial statements. 0000753308 FPL Group, Inc. 1,000,000 DEC-31-1999 MAR-31-2000 3-MOS PER-BOOK $7,893 $3,519 $1,077 $0 $872 $13,361 $2 $2,896 $2,494 $5,392 $0 $226 $3,478 $0 $0 $0 $0 $0 $0 $0 $4,265 $13,361 $1,468 $57 $1,231 $1,231 $237 $7 $183 $62 $121 $4 $121 $92 $0 $480 $0.71 $0.71
EX-27 5 FINANCIAL DATA SCHEDULE
UT This schedule contains summary financial information extracted from FPL's condensed consolidated balance sheet as of March 31, 2000 and condensed consolidated statements of income and cash flows for the three months ended March 31, 2000 and is qualified in its entirety by reference to such financial statements. 0000037634 Florida Power & Light Company 1,000,000 DEC-31-1999 MAR-31-2000 3-MOS PER-BOOK $7,893 $1,441 $850 $0 $412 $10,596 $0 $0 $0 $4,701 $0 $226 $2,079 $0 $0 $0 $0 $0 $0 $0 $3,590 $10,596 $1,338 $60 $1,127 $1,187 $151 $(1) $150 $40 $110 $4 $106 $0 $0 $516 $0 $0
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