UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file number 1-3382
CAROLINA POWER & LIGHT COMPANY
______________________________
(Exact name of registrant as specified in its charter)
North Carolina 56-0165465
_________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
411 Fayetteville Street, Raleigh, North Carolina 27601-1748
_________________________________________________________________
(Address of principal executive offices)
(Zip Code)
919-546-6111
_________________________________
(Registrant's telephone number, including area code)
_________________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X . No .
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock (Without Par Value) shares outstanding at April 30,
1994: 160,736,522
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
______________________________
Reference is made to the attached Appendix containing the
Interim Financial Statements for the periods ended March 31, 1994.
The amounts are unaudited but, in the opinion of management,
reflect all adjustments necessary to fairly present the Company's
financial position and results of operations for the interim
periods.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
___________________________________________________________
Results of Operations
For the Three and Twelve Months Ended March 31, 1994,
As Compared With the Corresponding Periods One Year Earlier
______________________________________________________________
Operating Revenues and Expense: Revenues increased for the
three and twelve months ended March 31, 1994, reflecting higher
energy sales due primarily to increased usage. For the three month
period, energy sales did not increase proportionately with revenues
due to higher demand-related charges.
A portion of the decrease in the deferred fuel credit for the
twelve months ended March 31, 1994, reflects settlement agreements
reached with the Company's regulators in the North Carolina and
South Carolina jurisdictions in July and September 1993,
respectively. As part of these settlements, the Company agreed to
forgo recovery of a total of $41.1 million of deferred fuel expense
related to the Brunswick Plant outage. Excluding the effect of
these settlements, the remaining $47 million decrease in the
deferred fuel credit was primarily due to lower fuel costs
associated with an increase in the use of nuclear generation.
Purchased power increased for the three and twelve months
ended March 31, 1994, due to increased purchases from Duke Power
Company (Duke) and North Carolina Eastern Municipal Power Agency
(Power Agency). The increased purchases from Duke of $16.5 million
and $39.7 million for the three and twelve months, respectively,
are due primarily to an agreement under which the Company began
purchasing 400 megawatts of generating capacity in July 1993. The
increased purchases from Power Agency of $11.6 million and $27.3
million for the three and twelve months, respectively, are due
primarily to the increased buyback provisions of the Company's
April 1993 agreement with Power Agency.
Other operating expenses increased for the twelve months ended
March 31, 1994, as a result of the recognition of increased expense
for postretirement benefits other than pensions due to new
accounting requirements effective in 1993 and as a result of
adjustments made in 1992 that decreased expense in the prior
period.
Maintenance expense decreased in the three and twelve months
ended March 31, 1994, due to a decrease in costs associated with
the Brunswick Plant of approximately $19 million and $44 million,
respectively. In the prior periods, significant costs were
incurred at the Brunswick Plant as a result of the Plant's
extended outage. The remaining fluctuation for the current twelve
month period is attributable to a decrease in expense due to the
capitalization of costs associated with plant modifications as
compared to the prior period.
The change in Harris Plant deferred costs for the twelve
months ended March 31, 1994, is primarily due to an adjustment made
in the prior period in order to better match these costs with the
associated revenue recovery. This adjustment decreased prior
period operating expenses by $13.4 million, net of tax.
Adjustments related to a 1993 settlement between the Company and
North Carolina Electric Membership Corporation (NCEMC) primarily
account for the remaining increase for the twelve month period.
Other Income: The increase in the income tax credit for the
three months ended March 31, 1994, is partially attributable to the
adoption of a new accounting standard applicable to the Company's
leveraged employee stock ownership plan (ESOP). See
New Accounting Standard.
_______________________
The increase in Harris Plant carrying costs for the twelve
months ended March 31, 1994, is primarily related to the 1993
settlement between the Company and NCEMC.
The Harris Plant disallowance - Power Agency line item
reflects a write-off recorded as a result of the 1993 settlement
with Power Agency. The write-off represents a portion of the
Company's Harris Plant costs that will not be recoverable through
sales of supplemental power to Power Agency.
The decrease in interest income and other income for the
three month period ended March 31, 1994, is primarily due to the
new ESOP accounting standard. See New Accounting Standard.
_______________________
Interest Charges: Interest charges on long-term debt
decreased for the three and twelve months ended March 31, 1994,
primarily due to long-term debt refinancings that allowed the
Company to take advantage of lower interest rates.
Material Changes in Capital Resources and Liquidity
From December 31, 1993, to March 31, 1994
and From March 31 1993, to March 31, 1994
______________________________________________________________
During the three and twelve months ended March 31, 1994, the
Company issued long-term debt totaling $150 million and $487.3
million, respectively. These issuances of debt, debt issued in
March 1993 and internally generated funds financed the retirement
or redemption of long-term debt totaling $94.8 million and
$786.9 million, respectively.
The Company uses short-term financing in the form of
commercial paper backed by revolving credit agreements to provide
flexibility in the timing and amounts of long-term financing. At
March 31, 1994, these revolving credit agreements amounted to
$208.1 million. A portion of the facilities totaling $23.1 million
expired on April 30, 1994. The Company intends to renew or replace
these facilities in the second quarter of 1994. At March 31, 1994,
the Company had $6.7 million in commercial paper outstanding.
The Company's First Mortgage Bonds are currently rated "A2" by
Moody's Investors Service, "A" by Standard & Poors and "A+" by Duff
& Phelps. Standard & Poors and Moody's Investors Service have
rated the Company's commercial paper "A-1" and "P-1", respectively.
The Company's capital structure at March 31, 1994, was 50.06%
common stock equity, 47.24% long-term debt and 2.7% preferred
stock.
New Accounting Standard
_______________________
In January 1994, the Company implemented Statement of Position
(SOP) 93-6, "Employers' Accounting for Stock Ownership Plans," on
a prospective basis. This SOP requires the following changes in
accounting for the Company's leveraged employee stock ownership
plan: 1) ESOP shares that have not been committed to be released
are no longer considered outstanding for the determination of
earnings per common share; 2) dividends on unallocated ESOP shares
are no longer recognized for financial statement purposes; 3)
all tax benefits of ESOP dividends are now recorded directly to
non-operating income tax expense, whereas previously a portion of
the tax benefits was recorded directly to retained earnings; 4)
interest income related to the qualified ESOP loan is no longer
recognized; and 5) the difference between the acquisition and
allocation prices of ESOP shares, which was previously recorded as
other income, net, is now recorded directly to common
stock. In addition, ESOP loan transactions between the Company and
the Stock Purchase-Savings Plan Trustee are no longer reflected in
the Statements of Cash Flows. The implementation of SOP 93-6
resulted in an increase in earnings per common share of
approximately $.01 for the three months ended March 31, 1994.
Competition
___________
In February 1994, the Company entered into a contract with
E. I. duPont de Nemours (duPont), its largest industrial customer,
that will enable the Company to retain the electrical load it now
serves at duPont's three plants in the Company's North Carolina
service area. The parties also signed an agreement regarding the
two duPont plants the Company serves in South Carolina. The
agreements provide for the payment by duPont of a lower
co-generation deferral rate for electricity in exchange for a
seven-year commitment by duPont to purchase its electricity
requirements from the Company. The annual reduction in revenues is
not material to the results of operations of the Company.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Legal aspects of certain matters are set forth in Item 5
below.
Item 2. Changes in Securities )
)
)
Item 3. Defaults upon Senior Securities ) Not applicable
) for the quarter
) ended March 31,
) 1994.
)
)
Item 4. Submission of Matters to a Vote )
of Security Holders )
Item 5. Other Information
1. (Reference is made to the Company's 1993 10-K, Generating
Capability, paragraph 4, page 5.) With regard to the
Walters Hydroelectric Plant relicensing proceeding
(Project Nos. 432-004 and 2748-000), on March 21, 1994
the Administrative Law Judge certified the settlement
agreement regarding various environmental issues to the
Federal Energy Regulatory Commission (FERC) for its
decision. Additionally, by order dated April 19, 1994,
the FERC approved the Power Coordination Agreement (PCA)
and the Interchange Agreement (IA) entered into by the
Company and North Carolina Electric Membership
Corporation (NCEMC), and filed with the FERC on
September 17, 1993, provided the parties agreed to
certain modifications. The FERC also stated that unless
the parties agreed to the modifications by May 4, 1994,
the FERC would reject the PCA, the IA, and the settlement
agreement that resolves the Walters relicensing
proceeding, and certain issues related to NCEMC's
objections to the Company's purchase power contract with
Duke Power Company (Duke) and NCEMC's interest in
transferring base load capacity from its ownership in
Duke's Catawba Nuclear Station (Docket Nos.
ER 89-106-000, EL 91-55-000 and ER 92-199-000). By
letter dated May 4, 1994, the parties notified the
FERC that they had reached an agreement, subject to
approval by NCEMC's Board of Directors, which allows them
to accept the FERC's modifications, and still implement
the intent of the PCA. On May 11, 1994, the parties
notified the FERC that they had obtained the approval of
NCEMC's Board of Directors, and filed with the FERC the
First Amendment to the PCA which implements the
changes necessary to accept the FERC's modifications.
2. (Reference is made to the Company's 1993 Form
10-K, Competition and Franchises, paragraph 1.b., page
7.) In February 1994, the Company entered into a
contract with E. I. duPont de Nemours (duPont), its
largest industrial customer, that will enable the Company
to retain the electrical load it now serves at duPont's
three plants in the Company's North Carolina service a
area. The parties also signed an agreement regarding the
two duPont plants the Company serves in South Carolina.
The agreements provide for the payment by duPont of a
lower co-generation deferral rate for electricity in
exchange for a seven-year commitment by duPont to
purchase its electricity requirements from the Company.
The annual reduction in revenues is not material to the
results of operations of the Company. The agreements
were approved by the South Carolina Public Service
Commission on April 14, 1994 and by the North Carolina
Utilities Commission (NCUC) on April 26, 1994. In a
related matter, the North Carolina Public Staff, which
represents the using and consuming public in matters
before the NCUC, filed a petition with the NCUC
requesting that interim guidelines be established for
consideration of any future special rate requests and
that a generic proceeding be instituted to address the
issues raised by such rate reductions. The Company
cannot predict the outcome of these matters.
3. (Reference is made to the Company's 1993 Form 10-K,
Financing Program, paragraph 3, page 9.) External financings in
1994 consist of the following:
- The issuance on January 19, 1994, of $150 million
principal amount of First Mortgage Bonds, 5 7/8%
Series due January 15, 2004, for net proceeds of
approximately $148 million. The proceeds from the
issuance were used to reduce the outstanding balance
of commercial paper and other short-term debt, to
redeem outstanding long-term debt and for other
general corporate purposes.
- The issuance on May 12, 1994, of $72.6 million
principal amount of First Mortgage Bonds, Pollution
Control Series L, Wake County Pollution Control
Revenue Refunding Bonds (Carolina Power & Light
Company Project) Series 1994A due May 1, 2024 and
$50 million principal amount of First Mortgage
Bonds, Pollution Control Series M, Wake County
Pollution Control Revenue Refunding Bonds (Carolina
Power & Light Company Project) Series 1994B due May
1, 2024, for a total net proceeds of $122.6 million.
The proceeds will be used for the proposed redemption
on June 15, 1994 of $122.6 million First Mortgage
Bonds, Pollution Control Series G, Wake County
Pollution Control Revenue Bonds Series 1984A due June
15, 2014, at 100% of the principal amount of such
bonds plus accrued interest to the date of
redemption.
4. (Reference is made to the Company's 1993 Form 10-K,
Financing Program, paragraph 4, page 10.) Redemptions
and retirements in 1994 consist of the following:
- The redemption on March 24, 1994, of $17.5 million
principal amount of First Mortgage Bonds, 8 1/2%
Series due October 1, 2007, at 100.25% of the
principal amount of such bonds plus accrued
interest to the date of redemption.
- The redemption on March 24, 1994, of $77.4 million
principal amount of First Mortgage Bonds, 8 1/8%
Series, due November 1, 2003, at 100.61% of the
principal amount of such bonds plus accrued
interest to the date of redemption.
- The retirement on April 15, 1994, of $50 million
principal amount of First Mortgage Bonds, 5.85%
Secured Medium-Term Notes, Series B, which
matured on that date.
5. (Reference is made to the Company's 1993 Form 10-K,
Retail Rate Matters, page 13.) The NCUC has opened
two additional dockets. The first docket will
address the proper interpretation of North Carolina
General Statute Section 62-140(c) which involves
the offer or payment of consideration by a public
utility to secure the installation or adoption of
the use of the utility's services. The second
docket will further explore the issue of what
factors the NCUC should consider when evaluating
the reasonableness of proposed Demand Side
Management programs. The Company cannot predict
the outcome of these matters.
6. (Reference is made to the Company's 1993 Form 10-K,
Environmental Matters, paragraph 3.c., page 17).
With regard to the Elliot's Auto Parts superfund
site located in Benton, Arkansas, the Elliot's
Auto Parts Potentially Responsible Party (PRP)
Committee has completed remedial activities at the
site and will soon submit a final report to the
Environmental Protection Agency (EPA). Once the
Elliot's Auto Parts PRP Committee receives final
approval from the EPA for its final report, the
Company has agreed to (i) pay $90,000 to the
Elliot's Auto Parts PRP Committee towards the $2.7
million previously expended to remediate the site;
(ii) pay 3.4% toward any future expense incurred
in connection with the site; and (iii) execute an
Administrative Order on Consent with the EPA.
Although the Company cannot predict the
outcome of this matter, it does not anticipate
that costs associated with this site will be
material to the results of operations of the
Company.
7. (Reference is made to the Company's 1993 Form
10-K, Environmental Matters, paragraph 3.f,
page 18.) With regard to the Macon-Dockery
superfund site located near Cordova, North
Carolina, on April 13, 1994, Crown Cork & Seal
Company, Inc. and Clark Equipment Co. filed
a motion to add the Company as a defendant in an
ongoing lawsuit that was filed in the United
States District Court for the Middle District of
North Carolina in Greensboro, North Carolina
(Civil Action No. 3:92CV00744) on December 4,
1992. The lawsuit seeks to recover costs
incurred in undertaking the Remedial Investigation
Feasibility Study and the Remedial Design
for the site. No ruling has been made on this
motion. The Company cannot predict the
outcome of this matter.
8. (Reference is made to the Company's 1993 Form
10-K, Nuclear Matters, paragraph 8.e., page 24.)
The Company recently received a letter from the
Nuclear Regulatory Commission (NRC) regarding an
apparent violation of NRC requirements related to
inattention to licensed duties which was identified
at the Company's H. B. Robinson Plant. An
enforcement conference between the Company and the
NRC to discuss this apparent violation has been
scheduled for May 16, 1994. The Company cannot
predict the outcome of this matter.
9. (Reference is made to the Company's 1993 Form
10-K, Other Matters, page 27.) On April 20,
1994, the Company filed a Complaint with the FERC
(Docket No. EL-94-62-000 and QF85-102-005) and in
the United States District Court for the Eastern
District of North Carolina in Raleigh, North
Carolina (Civil Action No. 5:94-CV-285-DI)
claiming that the rate the Company pays for power
it purchases from Stone Container Corporation
(Stone Container) is invalid. The Company entered
into a twenty-year purchase power agreement with
Stone Container in 1984, and in 1987 began
receiving power from a cogeneration facility
operated by Stone Container in Florence, South
Carolina. It is the Company's position that when
Stone Container elected to sell the facility's
gross output under a "buy all/sell all" option in
1991, the facility lost its status as a "qualified
facility" under the Public Utility Regulatory
Policies Act and became a public utility. As a
result, the contract rate the Company pays for
power purchased from the facility is no longer
valid and a just and reasonable rate should be
established by the FERC under the Federal Power
Act. The Company will continue to purchase
electricity from Stone Container at the current
contract rate pending the outcome of this
litigation. The Company cannot predict the
outcome of this matter.
10. (Reference is made to the Company's 1993 Form
10-K, Other Matters, page 27.) On April 28,
1994, the Company filed a Complaint against the
U.S. Government in the United States District
Court for the Eastern District of North Carolina
in Raleigh, North Carolina (Civil Action No.
5:94-CV-313-BR3) seeking a refund of approximately
$188 million representing tax and interest related to
depreciation deductions the Internal Revenue
Service (IRS) previously disallowed for the years
1986 and 1987 on the Company's Harris Plant,
a nuclear facility located in Wake County, North
Carolina. The Company maintains that under
applicable laws and regulations the Harris
Plant was ready and available for operation in 1
1986. The IRS has previously denied some of
the depreciation deductions on the Company's tax
returns for the years in question on the ground
that in its view the plant was not placed in
service until 1987. The Company cannot
predict the outcome of this matter.
Item 6. Exhibits and Reports on Form 8-K
__________________________________________
(a) Exhibits
None.
(b) Reports on Form 8-K filed during or with respect
to the quarter:
Date of Report
(Earliest Event Reported) Date of Signature Items Reported
________________________________________________________________
January 19, 1994 January 19, 1994 Item 7. Financial
Statements, Pro
Forma Financial
Information and
Exhibits
SIGNATURES
Pursuant to requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
CAROLINA POWER & LIGHT COMPANY
(Registrant)
By: Charles D. Barham, Jr.
Executive Vice President
By: Paul S. Bradshaw
Vice President and Controller
(and Principal Accounting Officer)
Date: May 16, 1994
<TABLE>
<CAPTION>
Carolina Power & Light Company
(ORGANIZED UNDER THE LAWS OF NORTH CAROLINA)
INTERIM FINANCIAL STATEMENTS
(NOT AUDITED BY INDEPENDENT AUDITORS)
MARCH 31, 1994
<S> <C> <C> <C> <C>
STATEMENTS OF INCOME
(In thousands Three Months Ended Twelve Months Ended
except per share amounts) March 31 March 31
1994 1993 1994 1993
---- ---- ---- ----
Operating Revenues...............................................$ 744,461 $707,485 $2,932,358 $2,816,036
-------- -------- ---------- ----------
Operating Expenses
Operation - fuel for generation................................ 129,912 126,619 527,659 545,111
deferred fuel cost (credit), net................... (2,251) (1,257) 26,370 (61,887)
purchased power.................................... 111,541 77,702 401,931 342,781
other.............................................. 130,804 115,588 513,549 443,703
Maintenance.................................................... 46,959 63,534 218,874 273,785
Depreciation and amortization.................................. 105,057 103,281 415,422 401,663
Taxes other than on income..................................... 35,436 33,902 144,404 132,349
Income tax expense............................................. 57,498 51,786 195,029 199,993
Harris Plant deferred costs, net............................... 6,478 6,207 27,846 4,755
-------- -------- ---------- ----------
Total Operating Expenses................................. 621,434 577,362 2,471,084 2,282,253
-------- -------- ---------- ----------
Operating Income................................................. 123,027 130,123 461,274 533,783
-------- -------- ---------- ----------
Other Income (Expense)
Allowance for equity funds used during construction............ 2,263 1,665 9,597 8,186
Income tax credit (expense) (Note 2)........................... 3,583 (902) 4,093 (5,068)
Harris Plant carrying costs.................................... 2,563 2,596 27,111 11,361
Harris Plant disallowance - Power Agency....................... - - (20,645) -
Interest income (Note 2)....................................... 1,294 7,736 29,753 26,112
Other income, net (Note 2)..................................... 6,490 11,557 37,399 38,548
-------- -------- ---------- ----------
Total Other Income....................................... 16,193 22,652 87,308 79,139
-------- -------- ---------- ----------
Income Before Interest Charges................................... 139,220 152,775 548,582 612,922
-------- -------- ---------- ----------
Interest Charges
Long-term debt................................................. 47,376 54,222 198,336 219,720
Other interest charges......................................... 4,251 5,649 15,022 17,808
Allowance for borrowed funds used
during construction.......................................... (1,231) (1,094) (6,098) (3,999)
-------- -------- ---------- ----------
Net Interest Charges.................................... 50,396 58,777 207,260 233,529
-------- -------- ---------- ----------
Net Income....................................................... 88,824 93,998 341,322 379,393
Preferred Stock Dividend Requirements............................ (2,402) (2,402) (9,609) (11,679)
Tax Benefit of ESOP Dividends.................................... - - - 10,656
-------- -------- ---------- ----------
Earnings for Common Stock........................................$ 86,422 $ 91,596 $ 331,713 $ 378,370
======== ======== ========== ==========
Average Common Shares Outstanding (Note 2)....................... 150,820 160,737 158,291 160,737
Earnings per Common Share (Note 2)...............................$ 0.57 $ 0.57 $ 2.10 $ 2.35
Dividends Declared per Common Share..............................$ 0.425 $ 0.410 $ 1.670 $ 1.610
---------------------
See Supplemental Data and Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Carolina Power & Light Company
BALANCE SHEETS March 31 December 31
(In thousands) 1994 1993 1993
---- ---- ----
ASSETS
<S> <C> <C> <C>
Electric Utility Plant
Electric utility plant in service......................$ 8,881,884 $ 8,675,584 $ 8,789,518
Accumulated depreciation............................... (2,974,558) (2,704,077) (2,897,832)
------------ ------------ ------------
Electric utility plant in service, net.......... 5,907,326 5,971,507 5,891,686
Held for future use.................................... 13,195 13,284 13,300
Construction work in progress.......................... 260,887 206,766 309,713
Nuclear fuel, net of amortization...................... 211,702 217,114 217,488
------------ ------------ ------------
Total Electric Utility Plant, Net............... 6,393,110 6,408,671 6,432,187
------------ ------------ ------------
Current Assets
Cash and cash equivalents.............................. 33,444 169,602 23,607
Accounts receivable.................................... 292,473 310,702 321,309
Fuel................................................... 69,595 94,902 62,029
Materials and supplies................................. 119,238 110,667 111,052
Deferred fuel cost..................................... 12,078 38,448 9,827
Prepayments............................................ 46,308 47,762 46,869
Other current assets................................... 16,437 19,283 18,591
------------ ------------ ------------
Total Current Assets............................ 589,573 791,366 593,284
------------ ------------ ------------
Deferred Debits and Other Assets
Income taxes recoverable
through future rates.................................. 382,224 378,185 385,515
Abandonment costs...................................... 106,450 194,338 125,361
Harris Plant deferred costs............................ 140,484 140,081 144,399
Unamortized debt expense............................... 63,260 49,281 63,898
Miscellaneous other property and investments........... 276,424 151,488 264,165
Other assets and deferred debits....................... 188,821 157,194 185,209
------------ ------------ ------------
Total Deferred Debits and Other Assets.......... 1,157,663 1,070,567 1,168,547
------------ ------------ ------------
Total Assets.................................$ 8,140,346 $ 8,270,604 $ 8,194,018
============ ============ ============
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock equity....................................$ 2,664,101 $ 2,570,533 $ 2,632,116
Preferred stock - redemption not required.............. 143,801 143,801 143,801
Long-term debt, net.................................... 2,514,047 2,716,709 2,584,903
------------ ------------ ------------
Total Capitalization............................ 5,321,949 5,431,043 5,360,820
------------ ------------ ------------
Current Liabilities
Current portion of long-term debt...................... 287,630 396,800 162,630
Notes payable (principally commercial paper)........... 6,700 - 76,000
Accounts payable....................................... 166,025 159,266 293,093
Taxes accrued.......................................... 95,132 67,171 20,913
Interest accrued....................................... 51,206 62,991 54,770
Dividends declared (Note 2)............................ 70,022 70,706 74,111
Other current liabilities.............................. 69,369 75,383 67,510
------------ ------------ ------------
Total Current Liabilities....................... 746,084 832,317 749,027
------------ ------------ ------------
Deferred Credits and Other Liabilities
Accumulated deferred income taxes...................... 1,574,761 1,511,270 1,585,490
Accumulated deferred investment tax credits............ 260,704 273,501 263,588
Other liabilities and deferred credits................. 236,848 222,473 235,093
------------ ------------ ------------
Total Deferred Credits and Other Liabilities.... 2,072,313 2,007,244 2,084,171
------------ ------------ ------------
Commitments and Contingencies (Note 3)
Total Capitalization and Liabilities.........$ 8,140,346 $ 8,270,604 $ 8,194,018
============ ============ ============
SCHEDULES OF COMMON STOCK EQUITY
(In thousands)
Common stock...........................................$ 1,624,114 $ 1,622,277 $ 1,622,277
Unearned ESOP common stock............................. (214,908) (232,498) (220,725)
Capital stock issuance expense......................... (790) (334) (790)
Retained earnings...................................... 1,255,685 1,181,088 1,231,354
------------ ------------ ------------
Total Common Stock Equity.......................$ 2,664,101 $ 2,570,533 $ 2,632,116
============ ============ ============
---------------------
See Supplemental Data and Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Carolina Power & Light Company
STATEMENTS OF CASH FLOWS
(In thousands) Three Months Ended Twelve Months Ended
March 31 March 31
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating Activities
Net income............................................... $ 88,824 $ 93,998 $ 341,322 $ 379,393
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization.......................... 123,641 112,929 470,806 428,983
Harris Plant deferred costs............................ 3,915 3,611 736 (6,606)
Harris Plant disallowance - Power Agency............... - - 20,645 -
Deferred income taxes.................................. (8,821) 9,825 52,706 102,316
Investment tax credit adjustments...................... (2,884) (2,894) (12,797) (11,086)
Allowance for equity funds used during construction.... (2,263) (1,665) (9,597) (8,186)
Deferred fuel cost (credit)............................ (2,251) (1,257) 26,370 (61,887)
Uncollectible accounts expense......................... 818 805 4,955 3,759
Net (increase) decrease in receivables, inventories
and prepaid expenses................................. (23,901) (34,643) (2,003) (90,627)
Net increase (decrease) in payables and accrued
expenses............................................. 7,157 (50,843) (4,013) 2,989
Miscellaneous.......................................... 16,705 19,468 8,120 (31,182)
------- ------- ------- -------
Net Cash Provided by Operating Activities............. 200,940 149,334 897,250 707,866
--------- --------- --------- ---------
Investing Activities
Gross property additions................................. (72,313) (81,611) (331,824) (283,201)
Nuclear fuel additions................................... (15,391) (5,930) (57,462) (58,341)
Contributions to external decommissioning trust.......... (6,328) (3,667) (23,539) (14,756)
Contributions to retiree benefit trusts.................. (16,000) - (19,750) (6,667)
Loan transactions with SPSP Trustee, net (Note 2)........ - 1,365 19,769 29,505
Allowance for equity funds used during construction...... 2,263 1,665 9,597 8,186
------- ------- ------- -------
Net Cash Used in Investing Activities................. (107,769) (88,178) (403,209) (325,274)
------- ------- ------- -------
Financing Activities
Proceeds from issuance of long-term debt................. 147,986 295,251 434,765 844,628
Net decrease in pollution control bond escrow............ - 327 1,800 9,116
Net increase (decrease) in short-term notes
payable (maturity less than 90 days)................... (69,300) (46,800) 6,700 (112,200)
Retirement of long-term debt............................. (95,623) (82,851) (803,148) (560,152)
Retirement of preferred stock............................ - - - (134,625)
Dividends paid on common stock (Note 2).................. (63,986) (65,902) (260,833) (256,375)
Dividends paid on preferred stock........................ (2,411) (2,402) (9,483) (16,849)
------- ------- ------- -------
Net Cash Provided by (Used in) Financing Activities... (83,334) 97,623 (630,199) (226,457)
--------- --------- ------- -------
Net Increase (Decrease) in Cash and Cash Equivalents....... 9,837 158,779 (136,158) 156,135
Cash and Cash Equivalents at Beginning of the Period....... 23,607 10,823 169,602 13,467
------- ------- ------- -------
Cash and Cash Equivalents at End of the Period............. $ 33,444 $ 169,602 $ 33,444 $ 169,602
======= ======= ======= =======
Supplemental Disclosures of Cash Flow Information
Cash paid during the period - interest................... $ 52,247 $ 55,897 $ 215,151 $ 226,148
income taxes............... 2,050 (288) 115,861 94,943
______________________
See Supplemental Data and Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Carolina Power & Light Company
SUPPLEMENTAL DATA Three Months Ended Twelve Months Ended
March 31 March 31
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating Revenues (in thousands)
Residential............................. $ 262,373 $ 248,368 $ 957,702 $ 893,645
Commercial.............................. 143,797 136,642 600,128 566,962
Industrial.............................. 166,860 161,456 749,420 719,134
Government and municipal................ 19,516 18,669 79,463 76,753
Wholesale - standard rate schedules..... 101,198 91,350 363,769 361,704
Power Agency contract requirements...... 35,947 38,983 131,223 154,408
Other utilities......................... 4,070 2,734 12,567 4,623
Miscellaneous revenue................... 10,700 9,283 38,086 38,807
--------- --------- ---------- ----------
Total Operating Revenues.......... $ 744,461 $ 707,485 $ 2,932,358 $2,816,036
========= ========= ========== ==========
Energy Sales (millions of kWh)
Residential............................. 3,343 3,163 11,577 10,805
Commercial.............................. 2,051 1,908 8,692 8,103
Industrial.............................. 3,117 3,010 13,663 13,114
Government and municipal................ 306 297 1,257 1,216
Wholesale - standard rate schedules..... 1,700 1,724 6,898 6,545
Power Agency contract requirements...... 647 960 3,193 3,763
Other utilities......................... 118 105 340 177
--------- --------- ---------- ----------
Total Energy Sales................ 11,282 11,167 45,620 43,723
========= ========= ========== ==========
Energy Supply (millions of kWh)
Generated - coal........................ 6,096 6,473 25,430 27,690
nuclear..................... 3,383 3,138 13,937 9,219
hydro....................... 304 346 741 1,009
combustion turbines......... 39 6 116 62
Purchased............................... 1,957 1,638 7,430 7,554
--------- --------- ---------- ----------
Total Energy Supply
(Company Share)................. 11,779 11,601 47,654 45,534
========= ========= ========== ==========
Detail of Income Taxes (in thousands)
Included in Operating Expenses
Income tax expense - current............ $ 70,243 $ 46,985 $ 161,881 $ 120,427
Income tax expense - deferred........... (9,861) 7,695 44,751 90,652
Income tax expense - investment
tax credit adjustments................ (2,884) (2,894) (11,603) (11,086)
--------- --------- ---------- ----------
Subtotal.......................... 57,498 51,786 195,029 199,993
--------- --------- ---------- ----------
Harris Plant deferred costs - deferred... - - - 4,046
Harris Plant deferred costs -
investment tax credit adjustments...... (74) (45) 188 (150)
--------- --------- ---------- ----------
Subtotal.......................... (74) (45) 188 3,896
--------- --------- ---------- ----------
Total Included in Operating Expenses.... 57,424 51,741 195,217 203,889
--------- --------- ---------- ----------
Included in Other Income
Income tax expense (credit) - current... (4,623) (1,228) (10,854) (6,596)
Income tax expense (credit) - deferred 1,040 2,130 7,955 11,664
Income tax expense (credit) -
investment tax credit adjustments...... - - (1,194) -
--------- --------- ---------- ----------
Subtotal.......................... (3,583) 902 (4,093) 5,068
Harris Plant carrying costs - deferred.. - - - 1,601
Other income, net - deferred............ - - - 53
--------- --------- ---------- ----------
Total Included in Other Income.... (3,583) 902 (4,093) 6,722
--------- --------- ---------- ----------
Included in Interest Charges
Allowance for borrowed funds used
during construction - deferred....... - - - 1,837
--------- --------- ---------- ----------
Total Income Tax Expense...... $ 53,841 $ 52,643 $ 191,124 $ 212,448
========= ========= ========== ==========
<CAPTION>
FINANCIAL STATISTICS March 31, 1994 March 31, 1993
Actual Pro Forma Actual Pro Forma
(Note 2) (Note 2)
<S> <C> <C> <C> <C>
Ratio of earnings to fixed charges........ 3.28 3.46 3.31 3.50
Return on average common stock equity..... 12.97% 11.93% 15.14% 13.80%
Book value per common share (Note 2)...... $ 17.65 N/A $ 17.44 N/A
Capitalization ratios
Common stock equity................... 50.06% 54.09% 47.33% 51.64%
Preferred stock - redemption
not required......................... 2.70 2.70 2.65 2.65
Long-term debt, net................... 47.24 43.21 50.02 45.71
-------- -------- -------- --------
Total......................... 100.00% 100.00% 100.00% 100.00%
======= ======== ======== ========
- - --------------------------
See Notes to Financial Statements.
</TABLE>
Carolina Power & Light Company
NOTES TO FINANCIAL STATEMENTS
1. Except as described in Note 2 below, these interim financial
statements are prepared in conformity with the accounting
principles reflected in the financial statements included in
the Company's 1993 Annual Report to Shareholders and the 1993
Annual Report on Form 10-K. These are interim financial
statements, and because of temperature variations between
seasons of the year and the timing of outages of electric
generating units, especially nuclear-fueled units, the amounts
reported in the Statements of Income for periods of less than
twelve months are not necessarily indicative of amounts
expected for the year.
Certain amounts for 1993 have been reclassified to conform to
the 1994 presentation.
2. In January 1994, the Company implemented Statement of Position
(SOP) 93-6, "Employers' Accounting for Employee Stock
Ownership Plans," on a prospective basis. This SOP requires
the following changes in accounting for the Company's
leveraged employee stock ownership plan (ESOP): 1) ESOP shares
that have not been committed to be released are no longer
considered outstanding for the determination of earnings per
common share; 2) dividends on unallocated ESOP shares are no
longer recognized for financial statement purposes; 3) all tax
benefits of ESOP dividends are now recorded to non-operating
income tax expense, whereas previously a portion of the tax
benefits was recorded directly to retained earnings; 4)
interest income related to the qualified ESOP loan is no
longer recognized; and 5) the difference between the
acquisition and allocation prices of ESOP shares, which was
previously recorded as other income, net, is now recorded
directly to common stock. In addition, ESOP loan transactions
between the Company and the Stock Purchase-Savings Plan (SPSP)
Trustee are no longer reflected in the Statements of Cash
Flows.
The implementation of SOP 93-6 resulted in an increase in
earnings per common share of approximately $.01 for the first
quarter of 1994.
Selected pro forma statistics, which eliminate the significant
capital structure-related impacts of the ESOP feature of the
SPSP, are included in Financial Statistics.
3. Contingencies existing as of the date of these statements are
described below. No significant changes have occurred since
December 31, 1993, with respect to the commitments discussed
in Note 9 of the financial statements included in the
Company's 1993 Annual Report to Shareholders.
a) In the Company's retail jurisdictions, provisions for
nuclear decommissioning costs are approved by the North
Carolina Utilities Commission and the South Carolina
Public Service Commission and are based on site-specific
estimates that included the costs for removal of all
radioactive and other structures at the site. In the
wholesale jurisdiction, the provisions for nuclear
decommissioning cost are based on amounts agreed upon in
applicable rate settlements. Accumulated decommissioning
cost provisions, which are included in accumulated
depreciation, were $230.2 million at March 31, 1994, and
$193.8 million at March 31, 1993, and include amounts
funded internally and amounts funded in an external
decommissioning trust. Based on current earnings and
inflation rate assumptions, provisions for nuclear
decommissioning costs are currently adequate to provide
for decommissioning of the Company's nuclear facilities.
The Company's most recent site-specific estimates of
decommissioning costs were developed in 1993 and are
based on prompt dismantlement decommissioning, which
reflects the cost of removal of all radioactive and other
structures currently at the site. These estimates, in
1993 dollars, are $257.7 million for Robinson Unit No. 2,
$284.3 million for the Harris Plant, $235.4 million for
Brunswick Unit No. 1 and $221.4 million for Brunswick
Unit No. 2. These estimates are subject to change based
on a variety of factors including, but not limited to,
inflation, changes in technology applicable to nuclear
decommissioning, and changes in federal, state or local
regulations. The cost estimates exclude the portion
attributable to North Carolina Eastern Municipal Power
Agency, which holds an undivided ownership interest in
certain of the Company's generating facilities.
b) There are several manufactured gas plant (MGP) sites to
which the Company and certain entities that were later
merged into the Company may have had some connection. In
this regard, the Company is participating in the North
Carolina MGP Group (Group), a group of entities alleged
to be former owners or operators of MGP sites. The
Group was formed in response to an initiative launched by
the North Carolina Department of Environment, Health
and Natural Resources, Division of Solid Waste Management
(DSWM), to encourage the voluntary assessment and,
where necessary, the remediation of MGP sites. The Group
and DSWM have entered into a Memorandum of Understanding
relative to the establishment of a uniform program and
framework for addressing MGP sites for which DSWM has
contended that members of the Group have potential
responsibility. It is anticipated that the investigation
and remediation of specific MGP sites will be addressed
pursuant to one or more Administrative Orders on Consent
between DSWM and individual potentially responsible
parties. In addition, a current owner of property that
was the site of one MGP site owned by Tidewater Power
Company, which merged into the Company in 1952, and the
Company have entered into an agreement to share the cost
of investigation and remediation of this site. Due to the
lack of information with respect to the operation of MGP
sites and the uncertainty concerning questions of
liability and potential environmental harm, the extent
and cost of required remedial action, if any, and the
extent to which liability may be asserted against the
Company or against others are not currently determinable.
The Company cannot predict the outcome of these matters
or the extent to which other former MGP sites may become
the subject of inquiry.
PAUL S. BRADSHAW
Vice President and Controller
RALEIGH, N.C. 27602
April 20, 1994
