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, 1995
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 incorporation (I.R.S. Employer
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, 1995: 156,172,322
<PAGE>
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, 1995. The
amounts are unaudited but, in the opinion of management, reflect all
transactions 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, 1995,
As Compared With the Corresponding Periods One Year Earlier
___________________________________________________________
Operating Revenues and Expenses: Although sales increased
slightly for the three and twelve months ended March 31, 1995, revenues
decreased due to mild weather in the current periods, the expiration of a
special North Carolina rate rider and decreased sales to North Carolina
Eastern Municipal Power Agency (Power Agency). The weather-related decrease
totaled $16 million and $116 million for the three and twelve months ended
March 31, 1995, respectively. The decrease due to the expiration of the
rate rider totaled $15 million and $44 million for the three and twelve months
ended March 31, 1995, respectively.
Sales to Power Agency decreased $12 million and $28 million for the three
and twelve months ended March 31, 1995, respectively, due to greater
generation by units jointly-owned by the Company and Power Agency. Partially
offsetting these decreases was an increase in revenues due to a combination of
customer growth and changes in customer usage patterns of $30 million and $117
million for the three and twelve-month periods, respectively.
Fuel for generation decreased for the three and twelve months ended
March 31, 1995, primarily due to greater availability of the Company's
nuclear generating units.
For the three-month period, lower-cost nuclear generation, as a
percentage of total generation, increased to 56%, from 36%, and higher-cost
fossil generation decreased to 44%, from 64%. For the twelve-month period,
nuclear generation, as a percentage of total generation, increased to 52%,
from 35%, and fossil generation decreased to 48%, from 64%.
For the three and twelve months ended March 31, 1995, deferred fuel
cost increased primarily due to lower fuel costs associated with increased
nuclear generation.
For the twelve-month period, the increase due to lower fuel costs more
than offset a decrease of $33 million related to fuel settlements reached with
the Company's regulators. Pursuant to these settlements, the Company agreed
to forgo recovery of deferred fuel costs totaling approximately $8 million and
$41 million for the twelve-month periods ended March 31, 1995, and March 31,
1994, respectively.
<PAGE>
Purchased power decreased for the three months ended March 31, 1995, due
to decreased purchases from other utilities, primarily attributable to milder
weather, and due to lower purchases from Power Agency in accordance with the
Harris Plant buyback agreement.
For both reporting periods, the decreases in depreciation
and amortization are primarily due to the completion of the amortization of
abandoned plant costs for Harris Unit No. 2 and of costs associated with the
North Carolina rate rider. The decreases related to these items totaled $16
million and $41 million for the three and twelve months ended March 31, 1995,
respectively.
Other Income: The decrease in Harris Plant carrying costs for the
twelve months ended March 31, 1995, is primarily related to the Company's
settlement with North Carolina Electric Membership Corporation in 1993.
The decrease in interest income for the twelve months ended
March 31, 1995, is due to a change in accounting for employee stock ownership
plans, which was implemented in January 1994, and due to a settlement
recorded in 1993. Partially offsetting these decreases was an increase
related to certain Internal Revenue Service audit issues.
Other income, net, decreased for the twelve months ended
March 31, 1995, primarily due to the change in accounting for employee
stock ownership plans and due to a decrease in accretion to present value
associated with the Company's abandonment costs.
Material Changes in Capital Resources and Liquidity
From December 31, 1994, to March 31, 1995
and From March 31, 1994, to March 31, 1995
__________________________________________
During the three and twelve months ended March 31, 1995, the
Company issued long-term debt totalling $60 million and $232.6 million,
respectively. The proceeds of these issuances, along with internally
generated funds, financed the redemption or retirement of long-term debt
totaling $125 million and $297.7 million, respectively.
In order to provide flexibility in the timing and amounts of
long-term financing, the Company uses short-term financing in the form of
commercial paper backed by revolving credit agreements. Currently, these
revolving credit agreements amount to $307.9 million. The Company had
$95.5 million of commercial paper outstanding at March 31, 1995.
The Company's capital structure at March 31, 1995, was 48.9%
common stock equity, 48.4% long-term debt and 2.7% preferred stock.
The Company's First Mortgage Bonds are currently rated "A2"
by Moody's Investors Service, "A" by Standard & Poor's and "A+" by Duff &
Phelps. Standard & Poor's and Moody's Investors Service have
rated the Company's commercial paper "A-1" and "P-1", respectively.
<PAGE>
In 1994, the Board of Directors of the Company authorized
the Executive Committee of the Board of Directors to repurchase up to 10
million shares of the Company's common stock on the open market. Under this
stock repurchase program, the Company has purchased approximately 4.5
million shares from July 1994 through March 1995. The decrease in average
common shares outstanding resulted in an increase in earnings per common
share of approximately $.02 and $.04 for the three and twelve months
ended March 31, 1995, respectively.
Other Matters
_____________
In 1994, the Company established a wholly-owned subsidiary,
CaroNet, Inc., and the subsidiary joined a regional partnership, BellSouth
Carolinas PCS, L.P., led by BellSouth Personal Communications, Inc.
(BellSouth). In March 1995, BellSouth won its bid for a Federal Communications
Commission license to operate a personal communications services (PCS) system
covering most of North Carolina and South Carolina and a small portion of
Georgia. PCS, a wireless communications technology, is expected to provide
high-quality mobile communications. Wireless technology could also support
automated meter reading, automated service connection and disconnection, and
control and monitoring of certain aspects of the Company's electric
transmission and distribution systems. BellSouth will transfer the PCS license
to the partnership. BellSouth is the general partner and handles day-to-day
management of the business. Construction of the system infrastructure is
expected to begin during the summer of 1995, with service start-up anticipated
by mid-1996. In anticipation of the infrastructure construction, the Company
invested $50 million in CaroNet, Inc. in April 1995. CaroNet, Inc. owns
a ten percent limited partnership interest in BellSouth Carolinas PCS, L.P.
<PAGE>
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,
) 1995.
)
Item 4. Submission of Matters to a Vote )
of Security Holders )
______ _______________________________ )
Item 5. Other Information
______ _________________
1. (Reference is made to the Company's 1994 Form 10-K, Competition and
Franchises, paragraph 1.b., page 8.) On March 29, 1995, the Federal
Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking
(Proposal) that would establish guidelines for wholesale wheeling of electric
power. The Proposal would require utilities to provide open access to their
interstate power transmission network and not give themselves preferential
access to their own services. Currently, such power transfers are negotiated
case-by-case or under long-term contracts. The FERC's Proposal would establish
a standard generic set of terms and conditions, and would define the
terms under which independent power producers and others could gain access to a
utility's transmission grid to sell power to a wholesale customer such as a
municipality or rural electric cooperative. The Company is
currently evaluating the Proposal to determine its impact on the Company
and its customers. Comments on the Proposal are due August 7, 1995.
The Company cannot predict the outcome of this matter.
2. (Reference is made to the Company's 1994 Form 10-K, Competition and
Franchises, paragraph 1, page 8.) On March 29, 1995, a bill was
introduced in the North Carolina General Assembly to facilitate
the construction of an interstate natural gas pipeline to be built
from Aiken, South Carolina to Leland, North Carolina. The bill, as
originally introduced, proposed to, among other things, exempt from utility
regulation all power generating facilities that receive gas from
the pipeline as fuel. On May 9, 1995, both the House Utilities
Committee and the Senate Utilities Committee approved an amended
version of this bill which orders the Joint Legislative Utility Review
Committee to study the issues contained in the original bill and report
its findings and any recommendations to the North Carolina General
Assembly in 1996. Final legislative approval of the amended bill
is pending. The Company cannot predict the outcome of this matter.
3. (Reference is made to the Company's 1994 Form 10-K, Competition and
Franchises, page 8.) A bill was introduced in the North Carolina General
Assembly that would change fundamentally the nature of public power agencies
in the state. The bill, as originally introduced, proposed to, among other
things, permit certain organizational changes among the state's municipal power
agencies and provide additional authority for the marketing of excess
capacity and energy. On May 4, 1995, the House Utilities Committee approved
a substantially amended version of this bill which would authorize internal
reorganization of the state's municipal power agencies, and order the Joint
Legislative Utility Review Committee to study other issues contained in the
original legislation and report its findings and any recommendations to the
General Assembly in 1996. Final legislative approval of the amended bill is
pending. The Company cannot predict the outcome of this matter.
<PAGE>
4. (Reference is made to the Company's 1994 Form 10-K, Financing
Program, paragraph 3, page 11.) On April 21, 1995, the Company issued $125
million principal amount of Quarterly Income Capital Securities (Series A
Subordinated Deferrable Interest Debentures) ("Capital Securities") at an
interest rate of 8.55%, for net proceeds to the Company of approximately $121
million. The proceeds from the issuance of the Capital Securities were
applied to the Company's ongoing maintenance and construction program, and
for other general corporate purposes.
5. Reference is made to the Company's 1994 Form 10-K, Financing Program,
paragraph 4, page 12.) On April 1, 1995, the Company retired $77.1
million principal amount of First Mortgage Bonds, 9.14% Series, which matured
on that date.
6. (Reference is made to the Company's 1994 Form 10-K, Other Matters,
paragraph 2, page 27.) In April 1992, an independent consultant's safety
inspection report for the Marshall Hydroelectric Project was submitted to
the FERC for approval. In March 1995, the Company received comments on the
report from the FERC. By letter dated May 3, 1995, the Company submitted
a response to the FERC's comments. The Company cannot predict the outcome
of this matter.
7. (Reference is made to the Company's 1994 Form 10-K, Nuclear
Matters, paragraph 7.c., page 23.) With regard to the Company's
Brunswick Nuclear Plant, additional shroud inspections were performed for
Brunswick Unit No. 1 during the spring refueling outage. Re-examination of
previously identified cracks indicated that no significant
crack growth had occurred. Minor indications were noted in areas not
previously examined, but these findings are not expected to affect restart
of the unit following the refueling outage or unit operation over the next
fuel cycle. The Company is proceeding to develop contingency plans which
could be relied upon if shroud repairs are required in the future. The Company
cannot predict the outcome of this matter.
8. (Reference is made to the Company's 1994 Form 10-K, Other Matters,
paragraph 5, page 28.) With regard to the dispute between the Company and
Zeigler Coal Holding Company (Zeigler) over a coal-supply agreement between
the Company and certain Zeigler subsidiaries, on April 3, 1995, the parties
moved for a 30-day stay in the arbitration process after reaching
a preliminary settlement agreement. On April 28, 1995, the parties entered
into a final settlement agreement that resolves the dispute. The resolution,
effective April 1, 1995, has produced a new coal supply arrangement between
the Company and Zeigler, and amicably resolves all points of disagreement.
The new coal supply arrangement will provide lower coal costs for the Company
and allow Zeigler operating and source flexibility.
9. (Reference is made to the Company's 1994 Form 10-K, Other Matters,
paragraph 6, page 28.) In 1994, the Company established a wholly-owned
subsidiary, CaroNet, Inc. (CaroNet), and CaroNet joined a regional partnership,
BellSouth Carolinas PCS, L.P., led by BellSouth Personal Communications, Inc.
(BellSouth). On March 14, 1995, BellSouth won its bid for a Federal
Communications Commission license to operate a personal communications
services (PCS) system covering most of North Carolina and South Carolina and
a small portion of Georgia. BellSouth will transfer the PCS license to the
partnership. The partnership is expected to begin construction of the PCS
system infrastructure during the summer of 1995. Service start-up is
anticipated by mid-1996. In anticipation of the infrastructure construction,
the Company invested $50 million in CaroNet on April 28, 1995. CaroNet owns
a ten percent limited partnership interest in BellSouth Carolinas PCS, L.P.
<PAGE>
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 23, 1995 January 23, 1995 Item 7. Financial
Statements, Pro
Forma Financial
Information and
Exhibits
April 13, 1995 April 13, 1995 Item 7. Financial
Statements, Pro
Forma Financial
Information and
Exhibits
April 20, 1995 April 20, 1995 Item 7. Financial
Statements, Pro
Forma Financial
Information and
Exhibits
<PAGE>
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 12, 1995
[DESCRIPTION] FINANCIAL STATEMENTS FOR QUARTER ENDED 3/31/95
<TABLE>
<CAPTION>
Carolina Power & Light Company
(ORGANIZED UNDER THE LAWS OF NORTH CAROLINA)
INTERIM FINANCIAL STATEMENTS
(NOT AUDITED BY INDEPENDENT AUDITORS)
MARCH 31, 1995
STATEMENTS OF INCOME
Three Months Ended Twelve Months Ended
(In thousands March 31 March 31
except per share amounts) 1995 1994 1995 1994
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Revenues $ 728,238 $ 744,461 $2,860,367 $2,932,358
-----------------------------------------------------------------------------------------------------------------
Operating Expenses
Operation - fuel for generation 110,796 129,912 452,851 527,659
deferred fuel cost (credit), net 22,475 (2,251) 62,897 26,370
purchased power 93,659 111,541 396,419 401,931
other 127,078 130,804 536,232 513,549
Maintenance 40,755 46,959 200,529 218,874
Depreciation and amortization 90,275 105,057 382,953 415,422
Taxes other than on income 38,920 35,436 142,025 144,404
Income tax expense 61,416 57,498 202,453 195,029
Harris Plant deferred costs, net 6,605 6,478 26,456 27,846
-----------------------------------------------------------------------------------------------------------------
Total Operating Expenses 591,979 621,434 2,402,815 2,471,084
-----------------------------------------------------------------------------------------------------------------
Operating Income 136,259 123,027 457,552 461,274
-----------------------------------------------------------------------------------------------------------------
Other Income (Expense)
Allowance for equity funds used during construction 913 2,263 4,724 9,597
Income tax credit 3,290 3,583 9,131 4,093
Harris Plant carrying costs 2,219 2,563 9,410 27,111
Harris Plant disallowance - Power Agency - - - (20,645)
Interest income 2,588 1,294 15,863 29,753
Other income, net 4,021 6,490 23,124 37,399
-----------------------------------------------------------------------------------------------------------------
Total Other Income 13,031 16,193 62,252 87,308
-----------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 149,290 139,220 519,804 548,582
-----------------------------------------------------------------------------------------------------------------
Interest Charges
Long-term debt 46,593 47,376 183,108 198,336
Other interest charges 6,028 4,251 17,896 15,022
Allowance for borrowed funds used
during construction (1,364) (1,231) (3,576) (6,098)
-----------------------------------------------------------------------------------------------------------------
Net Interest Charges 51,257 50,396 197,428 207,260
-----------------------------------------------------------------------------------------------------------------
Net Income 98,033 88,824 322,376 341,322
Preferred Stock Dividend Requirements (2,402) (2,402) (9,609) (9,609)
-----------------------------------------------------------------------------------------------------------------
Earnings for Common Stock $ 95,631 $ 86,422 $ 312,767 $ 331,713
=================================================================================================================
Average Common Shares Outstanding (Note 4) 147,270 150,820 148,738 158,291
Earnings per Common Share (Note 4) $ 0.65 $ 0.57 $ 2.10 $ 2.10
Dividends Declared per Common Share $ 0.440 $ 0.425 $ 1.730 $ 1.670
.................................................................................................................
See Supplemental Data and Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Carolina Power & Light Company
BALANCE SHEETS March 31 December 31
(In thousands) 1995 1994 1994
- ------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C>
Electric Utility Plant
Electric utility plant in service $ 9,246,650 $ 8,881,884 $ 9,190,874
Accumulated depreciation (3,263,768) (2,974,558) (3,196,139)
- ------------------------------------------------------------------------------------------------------
Electric utility plant in service, net 5,982,882 5,907,326 5,994,735
Held for future use 13,195 13,195 13,195
Construction work in progress 171,717 260,887 170,390
Nuclear fuel, net of amortization 163,159 211,702 171,164
- ------------------------------------------------------------------------------------------------------
Total Electric Utility Plant, Net 6,330,953 6,393,110 6,349,484
- ------------------------------------------------------------------------------------------------------
Current Assets
Cash and cash equivalents 39,858 33,444 80,239
Accounts receivable 284,934 292,473 302,218
Fuel 103,820 69,595 96,136
Materials and supplies 124,826 119,238 122,720
Prepayments 50,628 46,308 52,988
Other current assets 26,792 16,437 24,129
- ------------------------------------------------------------------------------------------------------
Total Current Assets 630,858 577,495 678,430
- ------------------------------------------------------------------------------------------------------
Deferred Debits and Other Assets
Income taxes recoverable
through future rates 385,089 382,224 384,375
Abandonment costs 67,177 106,450 71,079
Harris Plant deferred costs 123,438 140,484 127,824
Unamortized debt expense 61,933 63,260 63,302
Miscellaneous other property and investments 374,338 276,424 360,611
Other assets and deferred debits 184,409 188,821 176,058
- ------------------------------------------------------------------------------------------------------
Total Deferred Debits and Other Assets 1,196,384 1,157,663 1,183,249
- ------------------------------------------------------------------------------------------------------
Total Assets $ 8,158,195 $ 8,128,268 $ 8,211,163
======================================================================================================
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock equity $ 2,622,103 $ 2,664,101 $ 2,586,179
Preferred stock - redemption not required 143,801 143,801 143,801
Long-term debt, net 2,591,462 2,514,047 2,530,773
- ------------------------------------------------------------------------------------------------------
Total Capitalization 5,357,366 5,321,949 5,260,753
- ------------------------------------------------------------------------------------------------------
Current Liabilities
Current portion of long-term debt 150,050 287,630 275,050
Notes payable (principally commercial paper) 95,500 6,700 68,100
Accounts payable 127,234 166,025 285,610
Taxes accrued 84,086 95,132 4,650
Interest accrued 49,638 51,206 54,569
Dividends declared 70,770 70,022 70,658
Deferred fuel credit (cost) 50,819 (12,078) 28,344
Other current liabilities 61,022 69,369 67,161
- ------------------------------------------------------------------------------------------------------
Total Current Liabilities 689,119 734,006 854,142
- ------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities
Accumulated deferred income taxes 1,627,090 1,574,761 1,628,430
Accumulated deferred investment tax credits 249,498 260,704 252,051
Other liabilities and deferred credits 235,122 236,848 215,787
- ------------------------------------------------------------------------------------------------------
Total Deferred Credits and Other Liabilities 2,111,710 2,072,313 2,096,268
- ------------------------------------------------------------------------------------------------------
Commitments and Contingencies (Note 5)
Total Capitalization and Liabilities $ 8,158,195 $ 8,128,268 $ 8,211,163
======================================================================================================
SCHEDULES OF COMMON STOCK EQUITY
(In thousands)
Common stock (Note 4) $ 1,508,098 $ 1,624,114 $ 1,510,956
Unearned ESOP common stock (197,011) (214,908) (204,947)
Capital stock issuance expense (790) (790) (790)
Retained earnings 1,311,806 1,255,685 1,280,960
- ------------------------------------------------------------------------------------------------------
Total Common Stock Equity $ 2,622,103 $ 2,664,101 $ 2,586,179
======================================================================================================
......................................................................................................
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
1995 1994 1995 1994
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Activities
Net income $ 98,033 $ 88,824 $ 322,376 $ 341,322
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 115,061 119,467 469,075 466,632
Harris Plant deferred costs 4,386 3,915 17,046 736
Harris Plant disallowance - Power Agency - - - 20,645
Deferred income taxes (11,579) (8,821) 34,482 52,706
Investment tax credit adjustments (2,553) (2,884) (11,207) (12,797)
Allowance for equity funds used during construction (913) (2,263) (4,724) (9,597)
Deferred fuel cost (credit) 22,475 (2,251) 62,897 26,370
Net (increase) decrease in receivables, inventories
and prepaid expenses (43,392) (23,083) (94,200) 2,952
Net increase (decrease) in payables and accrued
expenses (16,376) 7,157 (70,304) (4,013)
Miscellaneous 11,919 19,621 (12,636) 11,036
- --------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 177,061 199,682 712,805 895,992
- --------------------------------------------------------------------------------------------------------------
Investing Activities
Gross property additions (71,928) (72,313) (274,392) (331,824)
Nuclear fuel additions (15,868) (11,216) (30,501) (53,287)
Contributions to external decommissioning trust (18,504) (6,328) (33,801) (23,539)
Contributions to retiree benefit trusts (2,400) (18,917) (2,400) (22,667)
Loan transactions with SPSP Trustee, net - - - 19,769
Allowance for equity funds used during construction 913 2,263 4,724 9,597
Miscellaneous (487) - (6,581) -
- --------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (108,274) (106,511) (342,951) (401,951)
- --------------------------------------------------------------------------------------------------------------
Financing Activities
Proceeds from issuance of long-term debt 59,731 147,986 229,956 434,765
Net decrease in pollution control bond escrow - - - 1,800
Net increase (decrease) in short-term notes
payable (maturity less than 90 days) 27,400 (69,300) 88,800 6,700
Retirement of long-term debt (125,045) (95,623) (297,802) (803,148)
Purchase of Company common stock (Note 4) (4,178) - (118,895) -
Dividends paid on common stock (64,656) (63,986) (255,876) (260,833)
Dividends paid on preferred stock (2,420) (2,411) (9,623) (9,483)
- --------------------------------------------------------------------------------------------------------------
Net Cash Used in Financing Activities (109,168) (83,334) (363,440) (630,199)
- --------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (40,381) 9,837 6,414 (136,158)
Cash and Cash Equivalents at Beginning of the Period 80,239 23,607 33,444 169,602
- --------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of the Period $ 39,858 $ 33,444 $ 39,858 $ 33,444
==============================================================================================================
Supplemental Disclosures of Cash Flow Information
Cash paid during the period - interest $ 54,694 $ 52,247 $ 191,201 $ 215,151
income taxes 1,611 2,050 180,320 115,861
..............................................................................................................
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
1995 1994 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Revenues (in thousands)
Residential $ 251,355 $ 262,373 $ 904,968 $ 957,702
Commercial 141,142 143,797 592,918 600,128
Industrial 164,416 166,860 739,217 749,420
Government and municipal 18,842 19,516 77,644 79,463
Wholesale - standard rate schedules 20,400 23,854 81,320 101,108
Power Agency contract requirements 23,818 35,947 103,133 131,223
NCEMC contract requirements 83,707 77,344 273,097 262,661
Other utilities 13,541 4,070 43,261 12,567
Miscellaneous revenue 11,017 10,700 44,809 38,086
- ----------------------------------------------------------------------------------------------
Total Operating Revenues $ 728,238 $ 744,461 $2,860,367 $2,932,358
==============================================================================================
Energy Sales (millions of kWh)
Residential 3,263 3,343 11,068 11,577
Commercial 2,091 2,051 8,730 8,692
Industrial 3,268 3,117 14,181 13,663
Government and municipal 301 306 1,257 1,257
Wholesale - standard rate schedules 462 478 1,966 2,103
Power Agency contract requirements 476 647 2,418 3,193
NCEMC contract requirements 1,384 1,223 5,047 4,795
Other utilities 573 117 1,441 340
- ---------------------------------------------------------------------------------------------
Total Energy Sales 11,818 11,282 46,108 45,620
==============================================================================================
Energy Supply (millions of kWh)
Generated - coal 4,563 6,096 19,468 25,430
nuclear 5,847 3,383 20,976 13,937
hydro 298 304 877 741
combustion turbines (1) 39 27 116
Purchased 1,510 1,957 6,592 7,430
- ----------------------------------------------------------------------------------------------
Total Energy Supply
(Company Share) 12,217 11,779 47,940 47,654
==============================================================================================
Detail of Income Taxes (in thousands)
Included in Operating Expenses
Income tax expense - current $ 77,155 $ 70,243 $ 189,557 $ 161,881
Income tax expense - deferred (13,186) (9,861) 24,101 44,751
Income tax expense - investment
tax credit adjustments (2,553) (2,884) (11,205) (11,603)
- ----------------------------------------------------------------------------------------------
Subtotal 61,416 57,498 202,453 195,029
- ----------------------------------------------------------------------------------------------
Harris Plant deferred costs -
investment tax credit adjustments (74) (74) (297) 188
- ----------------------------------------------------------------------------------------------
Total Included in Operating Expenses 61,342 57,424 202,156 195,217
- ----------------------------------------------------------------------------------------------
Included in Other Income
Income tax expense (credit) - current (4,897) (4,623) (19,512) (10,854)
Income tax expense (credit) - deferred 1,607 1,040 10,381 7,955
Income tax expense (credit) -
investment tax credit adjustments - - - (1,194)
- ----------------------------------------------------------------------------------------------
Total Included in Other Income (3,290) (3,583) (9,131) (4,093)
- ----------------------------------------------------------------------------------------------
Total Income Tax Expense 58,052 53,841 193,025 191,124
==============================================================================================
FINANCIAL STATISTICS
Ratio of earnings to fixed charges 3.36 3.28
Return on average common stock equity 11.87 % 12.68 %
Book value per common share 17.81 17.65
Capitalization ratios
Common stock equity $ 48.94 % $ 50.06 %
Preferred stock - redemption not required 2.69 2.70
Long-term debt, net 48.37 47.24
- ----------------------------------------------------------------------------------------------
Total 100.00 % 100.00 %
==============================================================================================
..............................................................................................
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. These interim financial statements are prepared in conformity with the
accounting principles reflected in the financial statements included in
the Company's 1994 Annual Report to Shareholders and the 1994 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 1994 have been reclassified to conform to the
1995 presentation.
2. In 1994, the Company established a wholly-owned subsidiary, CaroNet,
Inc., and the subsidiary joined a regional partnership, BellSouth
Carolinas PCS, L.P., led by BellSouth Personal Communications, Inc.
(BellSouth). On March 14, 1995, BellSouth won its bid for a Federal
Communications Commission license for the partnership to operate a
personal communications services (PCS) system covering most of North
Carolina and South Carolina, as well as a small portion of Georgia. PCS,
a wireless communications technology, is expected to provide high-quality
mobile communications.
Wireless technology could also support automated meter reading, automated
service connection and disconnection, and control and monitoring of
certain aspects of the Company's electric transmission and distribution
systems. BellSouth will transfer the PCS license to the partnership.
BellSouth is the general partner and will handle day-to-day management of
the business. Construction of the system infrastructure is expected to
begin during the summer of 1995, with service start-up anticipated by
mid-1996. In anticipation of the infrastructure construction, the Company
invested $50 million in CaroNet, Inc. in April 1995. CaroNet, Inc. owns a
ten percent limited partnership interest in BellSouth Carolinas PCS, L.P.
3. On April 21, 1995, the Company issued $125 million principal amount of
8.55% Quarterly Income Capital Securities (Series A Subordinated
Deferrable Interest Debentures). These capital securities mature on June
30, 2025. The obligations of the Company under the securities are
subordinate and junior in right of payment to the senior indebtedness of
the Company.
4. In 1994, the Board of Directors of the Company authorized the Executive
Committee of the Board to repurchase up to 10 million shares of the
Company's common stock on the open market. In accordance with the stock
repurchase program, the Company has purchased approximately 4.5 million
shares through March 31, 1995. The decrease in average common shares
outstanding resulted in an increase in earnings per common share of
approximately $.02 and $.04 for the three and twelve month periods ended
March 31, 1995, respectively.
5. Contingencies existing as of the date of these statements are described
below. No significant changes have occurred since December 31, 1994, with
respect to the commitments discussed in Note 10 of the financial
statements included in the Company's 1994 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
costs are based on amounts agreed upon in applicable rate
settlements. Based on the site-specific estimates discussed below,
and using an assumed after-tax earnings rate of 8.5% and an assumed
cost escalation rate of 4%, current levels of rate recovery for
nuclear decommissioning costs are 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, using 1993 cost factors, and are based
on prompt dismantlement decommissioning, which reflects the cost of
removal of all radioactive and other structures currently at the
site, with such removal occurring shortly after operating license
expiration. These estimates, in 1993 dollars, are $257.7 million for
Robinson Unit No. 2, $235.4 million for Brunswick Unit No. 1, $221.4
million for Brunswick Unit No. 2 and $284.3 million for the Harris
Plant. These estimates are subject to change based on a variety of
factors including, but not limited to, cost escalation, 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. Operating licenses for the
Company's nuclear units expire in the year 2010 for Robinson Unit
No. 2, 2016 for Brunswick Unit No. 1, 2014 for Brunswick Unit No. 2
and 2026 for the Harris Plant.
The Financial Accounting Standards Board has added a project to its
agenda regarding the electric industry's current accounting
practices related to decommissioning costs. Any changes to these
practices could affect such items as: 1) when the decommissioning
obligation is recognized, 2) where balances of accumulated
decommissioning costs are recorded, 3) where income earned on
external decommissioning trust balances is recorded and 4) the
levels of annual decommissioning cost provisions. It is uncertain
what impact, if any, this project may have on the Company's
accounting for decommissioning costs.
b) As required under the Nuclear Waste Policy Act of 1982, the Company
entered into a contract with the U. S. Department of Energy (DOE)
under which the DOE agreed to dispose of the Company's spent nuclear
fuel. The Company cannot predict whether the DOE will be able to
perform its contractual obligations and provide interim storage or
permanent disposal repositories for spent nuclear fuel and/or
high-level radioactive waste materials on a timely basis.
With certain modifications, the Company's spent fuel storage
facilities are sufficient to provide storage space for spent fuel
generated on the Company's system through the expiration of the
current operating licenses for all of the Company's nuclear
generating units. Subsequent to the expiration of the licenses, dry
storage may be necessary.
c) The Company is subject to federal, state and local regulations
addressing air and water quality, hazardous and solid waste
management and other environmental matters.
Various organic materials associated with the production of
manufactured gas, generally referred to as coal tar, are regulated
under various federal and state laws, and a liability may exist for
their remediation. 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, along with other entities alleged to be former
owners and operators of MGP sites in North Carolina, is
participating in a cooperative effort with the North Carolina
Department of Environment, Health and Natural Resources, Division of
Solid Waste Management (DSWM) to establish a uniform framework for
addressing those sites. 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. To date, the Company has not
entered into any such orders.
The Company has been approached by another North Carolina public
utility concerning a possible cost-sharing arrangement with respect
to the investigation and, if necessary, remediation of four MGP
sites. The Company is currently engaged in discussions with the
other utility regarding this matter.
In addition, a current owner of property that was the site of one
MGP owned by Tide Water Power Company (Tide Water Power), which
merged into the Company in 1952, and the Company have entered into
an agreement to share the cost of investigation and, if necessary,
the remediation of this site. The Company has also been approached
by a North Carolina municipality that is the current owner of
another MGP site that was formerly owned by Tide Water Power. The
Company is engaged in discussions with that municipality concerning
a possible cost-sharing arrangement with respect to the
investigation and, if necessary, the remediation of that site.
The Company is continuing its investigation regarding the identities
of parties connected to several additional MGP sites, the relative
relationships of the Company and other parties to those sites and
the degree, if any, to which the Company should undertake shared
voluntary efforts with others at individual sites.
The Company has been notified by regulators of its involvement or
potential involvement in several sites, other than MGP sites, that
require remedial action. Although the Company cannot predict the
outcome of these matters, it does not anticipate significant costs
associated with these sites.
In 1994, the Company accrued a liability for the estimated costs
associated with investigation and remediation activities for certain
MGP sites and for sites other than MGP sites. This accrual was not
material to the results of operations of the Company. Due to the
lack of information with respect to the operation of MGP sites for
which a liability has not been accrued and due to the uncertainty
concerning questions of liability and potential environmental harm,
the extent and cost of required remedial action, if any, are not
currently determinable. The Company cannot predict the outcome of
these matters or the extent to which other MGP sites may become the
subject of inquiry.
