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, 1996
______________
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 Identification No.)
incorporation or organization)
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, 1996:
152,086,922.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
_______ ____________________
Reference is made to the attached Appendix containing the
Consolidated Interim Financial Statements for the periods ended March 31, 1996.
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, 1996,
As Compared With the Corresponding Periods One Year Earlier
___________________________________________________________
Operating Revenues: For the three and twelve months ended March 31, 1996,
operating revenues increased due to the following factors (in millions):
Three Months Twelve Months
____________ _____________
Customer Growth/Changes
In Usage Patterns $ 15 $ 81
Weather 31 111
Price (15) (48)
Other 24 58
_____ _____
Total $ 55 $ 202
===== =====
The increase in the weather component of revenue for the three months ended
March 31, 1996, is the result of colder weather in the current period as
compared to the prior period, which was milder than normal. The twelve-month
increase lso reflects more extreme weather patterns in the current period than
in the prior period. Approximately $13 million of the decrease in the price
componet of revenue for the three-month period and approximately $32 million for
the twelve-month period are attributable to a decrease in the fuel cost
component of revenue. In addition, for the twelve months, the price component
decreased due to the expiration in July 1994 of a North Carolina rate rider
under which the Company was allowed recovery of certain abandoned plant costs.
This reduction in revenue did not significantly impact net income due to a
corresponding decrease in amortization expense. The increase in the other
component for both periods is due to increased bulk power sales, which reflect
weather impacts and to the Company's active participation in the bulk power
market. The loss of 200 megawatts of load from North Carolina Electric
Membership Corporation, beginning in January 1996, is included as a reduction
in the customer growth component.
<PAGE>
Operating Expenses: The increase in fuel expense for the three and twelve
months ended March 31, 1996, is primarily due to a change in the generation mix.
For the three months, fossil generation, as a percentage of total generation,
increased from 43% to 59% and lower-cost nuclear generation decreased from 55%
to 39%. For the twelve months, fossil generation increased from 47% to 57%, and
nuclear generation decreased from 51% to 41%. The change in the generation mix
is due primarily to the timing of refueling outages of the Company's nuclear
facilities. Also contributing to the increase in fuel expense for both periods
is an increase in total generation due to higher sales.
Purchased power increased for the three months ended March 31, 1996, due to
reduced purchases from cogenerators in the prior period. For the twelve months
ended March 31, 1996, purchased power increased due to the reduced purchases
from cogenerators in the prior period ($15 million) and increased purchases from
other utilities ($24 million). These increases were partially offset by a $14
million decrease in purchases from Power Agency, which was primarily due to the
provisions of the Company's 1993 agreement with Power Agency. Pursuant to this
agreement, the Company's buyback percentage of capacity and energy from the
Harris Plant decreased from 50% in 1994 to 33% in 1995 and 1996.
Excluding the impact of a December 1994 insurance reserve adjustment, which
reduced expense in the prior period, operation and maintenance expense decreased
$20 million for the twelve months ended March 31, 1996. In the prior year there
were several major fossil plant outages that resulted in higher expense for that
period as compared to the current period.
For the twelve months ended March 31, 1996, the decrease in depreciation
and amortization reflects the completion of the amortization of abandoned plant
costs for Harris Unit No. 2 ($14 million decrease) and the completion in July
1994 of the amortization of certain abandoned plant costs associated with a
North Carolina rate rider ($13 million decrease). Partially offsetting the
decreases was an increase of $11 million in depreciation expense.
The increase in income tax expense for both periods is primarily due to an
increase in operating income.
Other Income: The increase in the income tax credit for the twelve months
ended March 31, 1996, is primarily attributable to lower non-operating income in
the current period.
The decrease in interest income for the twelve-month period is primarily
due to the recording in June 1994 of interest income related to certain IRS
audit issues.
Other income, net, decreased for the twelve-month period due to an increase
in charitable contributions of approximately $7 million and decreases in various
income items, none of which is individually significant.
Interest Charges: Other interest charges increased for the twelve months
ended March 31, 1996, primarily due to a $6 million interest accrual related to
the 1995 North Carolina Utilities Commission Fuel Order.
Material Changes in Capital Resources and Liquidity
From December 31, 1995, to March 31, 1996
and From March 31, 1995, to March 31, 1996
___________________________________________________
During the twelve months ended March 31, 1996, the Company issued long-term
debt of $125 million. The Company did not issue long-term debt in the
three-month period. The proceeds of this issuance, and/or the issuance of
short-term debt and internally generated funds, financed the redemption or
retirement of long-term debt totaling $248 million and $399 million during the
three and twelve months ended March 31, 1996, respectively.
<PAGE>
In the first quarter of 1996, the Company entered into two new long-term
revolving credit facilities totaling $350 million, which support the Company's
commercial paper borrowings. The Company is required to pay minimal annual
commitment fees to maintain these facilities. Consistent with management's
intent to maintain its commercial paper on a long-term basis, and as supported
by its long-term credit facilities, the Company has included in long-term debt
$339 million of commercial paper outstanding as of March 31, 1996. In addition
to these new facilities, the Company has other long-term credit agreements
totaling $235 million and a $100 million short-term credit agreement.
The Company's capital structure as of March 31 was as follows:
1996 1995
____ ____
Common Stock Equity 49.47% 48.94%
Long-term Debt 47.83% 48.37%
Preferred Stock 2.70% 2.69%
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. Moody's
Investors Service, Standard & Poor's and Duff & Phelps have rated the Company's
commercial paper "P-1," "A-1" and "D-1," respectively.
In 1994, the Board of Directors of the Company authorized the repurchase
of 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 8.6 million shares through March 31, 1996.
<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 ) Not applicable for the
Securities ) quarter ended March 31, 1996.
_______ ____________________ )
)
Item 4. Submission of Matters to )
a Vote of Security Holders )
_______ __________________________ )
Item 5. Other Information
_______ _________________
1. (Reference is made to the Company's 1995 Form 10-K, Generating
Capability, paragraph 3, page 6.) With regard to the Company's
generation additions schedule, the Company filed an Application
for a Certificate of Public Convenience and Necessity with the
North Carolina Utilities Commission (NCUC) on September 27,
1995, seeking permission to construct 500 MW of combustion
turbine capacity adjacent to the Company's Lee Steam Electric
Plant in Wayne County, North Carolina. The NCUC hearing in this
matter was held on January 9, 1996, and by order issued March
21, 1996, the NCUC granted the Company a certificate to
construct these combustion turbine units.
The Company issued a Notice of Inquiry (NOI) on March 12, 1996
concerning short-term power purchases for the peak winter months
of 1998 and 1999, and the peak summer months of 1998. The NOI
was sent to a number of electric utilities, independent power
producers and power marketers. The Company has received a
number of bids, which are under review and evaluation. The
Company currently plans to issue a request for bids during the
second quarter of 1996 relating to its next two blocks of
capacity additions. The Company cannot predict the outcome of
these matters.
2. (Reference is made to the Company's 1995 Form 10-K, Competition
and Franchises, paragraph 1.b., page 8). On April 24, 1996 the
Federal Energy Regulatory Commission (FERC) issued its final
rules on open access transmission and stranded costs and on
information systems and standards of conduct. The rule as
announced will require all transmitting utilities to have on
file an open access transmission tariff and it contains
provision for the recovery of stranded costs. The rule also
contains numerous other items that could impact the sale of
electric energy at the wholesale level. These final rules
become effective sixty (60) days after the rules are published
in the Federal Register. FERC also issued a notice of proposed
rulemaking (NOPR) on Capacity Reservation Open Access
Transmission Tariffs. Comments on this new NOPR are due to FERC
by August 1, 1996. The Company cannot predict the outcome of
this matter.
<PAGE>
With regard to the issue of retail competition in the Company's
retail jurisdictions, in 1995, the NCUC concluded that for the
time being it should monitor developments in other states and at
the FERC regarding jurisdictional and other issues affecting
retail competition. The NCUC also requested that interested
parties suggest specific issues it should consider in connection
with this matter. In response to those suggestions, on April 3,
1996, the NCUC issued an order seeking comments regarding the
impact of retail competition on system reliability, obligation
to serve, stranded costs and ancillary costs. These comments
are due June 3, 1996. The NCUC continues to believe there is no
need to hold hearings at this time. The Company cannot predict
the outcome of this matter.
3. (Reference is made to the Company's 1995 Form 10-K, Competition
and Franchises, paragraph 1.f., page 10.) On April 26, the
Joint Utility Review Committee adopted a resolution stating
"that no further amendments to Chapter 62 of the General
Statutes are necessary at this time to encourage the
construction of new interstate pipelines in North Carolina (and)
that the Committee will continue to review the efforts to expand
natural gas service in North Carolina on a regular basis, as the
Committee has done since 1987." The Company cannot predict the
outcome of this matter.
4. (Reference is made to the Company's 1995 Form 10-K, Financing
Program, paragraph 4, page 12.) Additional retirements and
redemptions during 1996 were as follows:
-- The retirement on April 1, 1996, of $30 million principal
amount of First Mortgage Bonds, 5.125% Series, which matured
on that date.
-- The redemption on April 1, 1996, of $100 million principal
amount of First Mortgage Bonds, 9% Series due April 1, 2022,
at 105.89% of the principal amount of such bonds plus accrued
interest to the date of redemption.
5. (Reference is made to the Company's 1995 Form 10-K, Retail Rate
Matters, paragraph 3, page 14.) With regard to the South
Carolina Public Service Commission's (SCPSC) proceeding to
consider the Company's 1995 Integrated Resource Plan, the South
Carolina Consumer Advocate and Nucor Corporation have intervened
in this proceeding. The Company cannot predict the outcome of this
matter.
6. (Reference is made to the Company's 1995 Form 10-K, Retail Rate
Matters, paragraph 5, page 14.) With regard to the Company's
spring 1996 South Carolina fuel case hearing, by order dated
March 29, 1996, the SCPSC granted the Company's request to
maintain the fuel factor at its current level of 1.34 cents/kWh
for the six month period from April 1, 1996 through September 30,
1996.
7. (Reference is made to the Company's 1995 Form 10-K, Retail Rate
Matters, paragraph 6, page 15.) With regard to the Company's
South Carolina avoided cost proceeding, the SCPSC has opened
Docket No. 95-1192-E to establish avoided cost rates for all
electric utilities in South Carolina, and hearings are scheduled
for August 8 and 9, 1996.
8. (Reference is made to the Company's 1995 Form 10-K, Wholesale
Rate Matters, paragraph 2.a., page 15.) With regard to the
offer of settlement the Company filed with the FERC on February
6, 1996, concerning the return on equity (ROE) in connection
with the formula rates provided in the Power Coordination
Agreement dated August 27, 1993, between the Company and the
North Carolina Electric Membership Corporation, on April 11,
1996 the FERC issued an order approving the 10.75% ROE and
ordered refunds of excess revenues collected since January 1,
1996. These refunds are not material to the results of
operations of the Company.
<PAGE>
9. (Reference is made to the Company's 1995 Form 10-K,
Environmental Matters, paragraph 3, page 16.) By letter dated
March 7, 1996, the Environmental Protection Agency (EPA)
notified the Company that it is a potentially responsible party
(PRP) with respect to the disposal of hazardous substances at
the Cherokee Oil Company (Cherokee) sites in Charlotte, North
Carolina. The materials sent from the Company's facilities to
the Cherokee sites were associated with tank cleanings at the
Company's former Wilmington Oil Terminal. The EPA has performed
removal actions at the sites and is now seeking information for
purposes of cost recovery. Although the Company cannot predict
the outcome of this matter, it does not anticipate costs
associated with this site will be material to the results of
operations of the Company.
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
_________________________ _________________ ______________
NONE
<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 /s/ Glenn E. Harder
Executive Vice President
By /s/ Mark F. Mulhern
Vice President and Controller
(and Principal Accounting Officer)
Date: May 14, 1996
<TABLE>
<CAPTION>
APPENDIX
Carolina Power & Light Company
(ORGANIZED UNDER THE LAWS OF NORTH CAROLINA)
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(NOT AUDITED BY INDEPENDENT AUDITORS)
March 31, 1996
STATEMENTS OF INCOME
Three Months Ended Twelve Months Ended
March 31 March 31
<S> <C> <C> <C> <C>
(In thousands except per share amounts) 1996 1995 1996 1995
-----------------------------------------------------------------------------------------------------------------
Operating Revenues $ 783,585 $ 728,238 $3,061,899 $2,860,367
-----------------------------------------------------------------------------------------------------------------
Operating Expenses
Operation - fuel 137,566 133,271 534,107 515,748
purchased power 105,989 93,659 422,270 396,419
other 122,356 127,078 536,725 536,232
Maintenance 47,044 40,755 202,874 200,529
Depreciation and amortization 92,478 90,275 366,730 382,953
Taxes other than on income 38,564 38,920 143,687 142,025
Income tax expense 77,095 61,416 274,903 202,453
Harris Plant deferred costs, net 8,065 6,605 29,588 26,456
-----------------------------------------------------------------------------------------------------------------
Total Operating Expenses 629,157 591,979 2,510,884 2,402,815
-----------------------------------------------------------------------------------------------------------------
Operating Income 154,428 136,259 551,015 457,552
-----------------------------------------------------------------------------------------------------------------
Other Income
Allowance for equity funds used during construction 1,035 913 3,472 4,724
Income tax credit 4,413 3,290 19,664 9,131
Harris Plant carrying costs 1,809 2,219 7,886 9,410
Interest income 1,134 2,588 7,226 15,863
Other income, net 6,199 4,021 11,244 23,124
-----------------------------------------------------------------------------------------------------------------
Total Other Income 14,590 13,031 49,492 62,252
-----------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 169,018 149,290 600,507 519,804
-----------------------------------------------------------------------------------------------------------------
Interest Charges
Long-term debt 44,676 46,593 185,480 183,108
Other interest charges 6,912 6,028 26,781 17,896
Allowance for borrowed funds used during construction (916) (1,364) (4,670) (3,576)
-----------------------------------------------------------------------------------------------------------------
Net Interest Charges 50,672 51,257 207,591 197,428
-----------------------------------------------------------------------------------------------------------------
Net Income 118,346 98,033 392,916 322,376
Preferred Stock Dividend Requirements (2,402) (2,402) (9,609) (9,609)
-----------------------------------------------------------------------------------------------------------------
Earnings for Common Stock $ 115,944 $ 95,631 $ 383,307 $ 312,767
=================================================================================================================
Average Common Shares Outstanding (Note 4) 143,625 147,270 145,329 148,738
Earnings per Common Share (Note 4) $ 0.81 $ 0.65 $ 2.64 $ 2.10
Dividends Declared per Common Share $ 0.455 $ 0.440 $ 1.790 $ 1.730
.................................................................................................................
See Supplemental Data and Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Carolina Power & Light Company
BALANCE SHEETS March 31 December 31
<S> <C> <C> <C>
(In thousands) 1996 1995 1995
- ------------------------------------------------------------------------------------------------------
ASSETS
Electric Utility Plant
Electric utility plant in service $ 9,520,522 $ 9,246,650 $ 9,440,442
Accumulated depreciation (3,566,838) (3,263,768) (3,493,153)
- ------------------------------------------------------------------------------------------------------
Electric utility plant in service, net 5,953,684 5,982,882 5,947,289
Held for future use 13,737 13,195 13,304
Construction work in progress 173,113 171,717 179,260
Nuclear fuel, net of amortization 182,402 163,159 188,655
- ------------------------------------------------------------------------------------------------------
Total Electric Utility Plant, Net 6,322,936 6,330,953 6,328,508
- ------------------------------------------------------------------------------------------------------
Current Assets
Cash and cash equivalents 5,602 39,858 14,489
Accounts receivable 338,923 284,934 364,536
Fuel 43,914 103,820 53,654
Materials and supplies 123,014 124,826 121,227
Prepayments 69,682 50,628 59,918
Other current assets 29,213 26,792 27,834
- ------------------------------------------------------------------------------------------------------
Total Current Assets 610,348 630,858 641,658
- ------------------------------------------------------------------------------------------------------
Deferred Debits and Other Assets
Income taxes recoverable through future rates 388,009 385,089 387,150
Abandonment costs 53,657 67,177 57,120
Harris Plant deferred costs 101,737 123,438 107,992
Unamortized debt expense 66,639 61,933 58,404
Miscellaneous other property and investments 490,864 374,338 475,564
Other assets and deferred debits 171,782 184,409 170,754
- ------------------------------------------------------------------------------------------------------
Total Deferred Debits and Other Assets 1,272,688 1,196,384 1,256,984
- ------------------------------------------------------------------------------------------------------
Total Assets $ 8,205,972 $ 8,158,195 $ 8,227,150
======================================================================================================
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock equity $ 2,640,027 $ 2,622,103 $ 2,574,743
Preferred stock - redemption not required 143,801 143,801 143,801
Long-term debt, net 2,552,415 2,591,462 2,610,343
- ------------------------------------------------------------------------------------------------------
Total Capitalization 5,336,243 5,357,366 5,328,887
- ------------------------------------------------------------------------------------------------------
Current Liabilities
Current portion of long-term debt 268,366 150,050 105,755
Notes payable 3,640 95,500 73,743
Accounts payable 137,997 127,234 309,294
Taxes accrued 62,846 84,086 2,456
Interest accrued 43,612 49,638 48,441
Dividends declared 71,525 70,770 71,285
Deferred fuel credit 16,086 50,819 27,495
Other current liabilities 81,458 61,022 79,220
- ------------------------------------------------------------------------------------------------------
Total Current Liabilities 685,530 689,119 717,689
- ------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities
Accumulated deferred income taxes 1,728,933 1,627,090 1,716,835
Accumulated deferred investment tax credits 240,095 249,498 242,707
Other liabilities and deferred credits 215,171 235,122 221,032
- ------------------------------------------------------------------------------------------------------
Total Deferred Credits and Other Liabilities 2,184,199 2,111,710 2,180,574
- ------------------------------------------------------------------------------------------------------
Commitments and Contingencies (Note 5)
Total Capitalization and Liabilities $ 8,205,972 $ 8,158,195 $ 8,227,150
======================================================================================================
SCHEDULES OF COMMON STOCK EQUITY
(In thousands)
Common stock (Note 4) $ 1,387,041 $ 1,508,098 $ 1,381,496
Unearned ESOP common stock (182,140) (197,011) (191,341)
Capital stock issuance expense (790) (790) (790)
Retained earnings 1,435,916 1,311,806 1,385,378
- ------------------------------------------------------------------------------------------------------
Total Common Stock Equity $ 2,640,027 $ 2,622,103 $ 2,574,743
======================================================================================================
......................................................................................................
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
1996 1995 1996 1995
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Activities
Net income $ 118,346 $ 98,033 $ 392,916 $ 322,376
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 112,933 115,061 444,534 469,075
Harris Plant deferred costs 6,256 4,386 21,702 17,046
Deferred income taxes 14,626 (11,579) 115,886 34,482
Investment tax credit (2,611) (2,553) (9,402) (11,207)
Allowance for equity funds used during construction (1,035) (913) (3,472) (4,724)
Deferred fuel cost (credit) (11,409) 22,475 (34,733) 62,897
Net increase in receivables, inventories
and prepaid expenses (15,575) (43,392) (50,032) (94,200)
Net decrease in payables and accrued expenses (18,615) (16,376) (41,831) (70,304)
Miscellaneous 5,744 11,979 29,394 (12,576)
- -----------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 208,660 177,121 864,962 712,865
- -----------------------------------------------------------------------------------------------------------
Investing Activities
Gross property additions (88,478) (71,928) (282,950) (274,392)
Nuclear fuel additions (26,073) (15,868) (87,551) (30,501)
Contributions to external decommissioning trust (10,298) (18,564) (29,809) (33,861)
Contributions to retiree benefit trusts (24,700) (2,400) (24,700) (2,400)
Allowance for equity funds used during construction 1,035 913 3,472 4,724
Miscellaneous (13,238) (487) (41,266) (6,581)
- -----------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (161,752) (108,334) (462,804) (343,011)
- -----------------------------------------------------------------------------------------------------------
Financing Activities
Proceeds from issuance of long-term debt 265,557 59,731 386,539 229,956
Net increase (decrease) in short-term notes
payable (maturity less than 90 days) 3,640 27,400 (18,117) 88,800
Retirement of long-term debt (255,504) (125,045) (406,603) (297,802)
Purchase of Company common stock (Note 4) (1,920) (4,178) (130,181) (118,895)
Dividends paid on common stock (65,168) (64,656) (258,449) (255,876)
Dividends paid on preferred stock (2,400) (2,420) (9,603) (9,623)
- -----------------------------------------------------------------------------------------------------------
Net Cash Used in Financing Activities (55,795) (109,168) (436,414) (363,440)
- -----------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (8,887) (40,381) (34,256) 6,414
Cash and Cash Equivalents at Beginning of the Period 14,489 80,239 39,858 33,444
- -----------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of the Period $ 5,602 $ 39,858 $ 5,602 $ 39,858
===========================================================================================================
Supplemental Disclosures of Cash Flow Information
Cash paid during the period - interest $ 55,202 $ 54,694 $ 203,804 $ 191,201
income taxes $ 655 $ 1,611 $ 176,207 $ 180,320
...........................................................................................................
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
1996 1995 1996 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Revenues (in thousands)
Residential $ 284,278 $ 251,355 $ 1,002,034 $ 904,968
Commercial 151,578 141,142 628,831 592,918
Industrial 163,244 164,416 732,276 739,217
Government and municipal 20,059 18,842 79,616 77,644
Power Agency contract requirements 25,452 23,818 102,585 103,133
NCEMC 70,137 83,707 285,601 273,097
Other wholesale 21,905 20,400 83,912 81,320
Other utilities 33,697 13,541 98,303 43,261
Miscellaneous revenue 13,235 11,017 48,741 44,809
- ----------------------------------------------------------------------------------------------
Total Operating Revenues $ 783,585 $ 728,238 $ 3,061,899 $ 2,860,367
==============================================================================================
Energy Sales (millions of kWh)
Residential 3,808 3,263 12,619 11,068
Commercial 2,322 2,091 9,506 8,730
Industrial 3,334 3,268 14,378 14,181
Government and municipal 336 301 1,323 1,257
Power Agency contract requirements 770 476 2,632 2,418
NCEMC 1,091 1,384 5,161 5,047
Other wholesale 480 462 1,935 1,966
Other utilities 1,572 573 4,231 1,441
- ----------------------------------------------------------------------------------------------
Total Energy Sales 13,713 11,818 51,785 46,108
==============================================================================================
Energy Supply (millions of kWh)
Generated - coal 7,143 4,563 26,097 19,468
nuclear 4,679 5,847 18,780 20,976
hydro 312 298 838 877
combustion turbines 14 (1) 72 27
Purchased 1,896 1,510 7,819 6,592
- ----------------------------------------------------------------------------------------------
Total Energy Supply
(Company Share) 14,044 12,217 53,606 47,940
==============================================================================================
Detail of Income Taxes (in thousands)
Included in Operating Expenses
Income tax expense (credit)- current $ 66,104 $ 77,155 $ 174,216 $ 189,557
Income tax expense - deferred 13,602 (13,186) 110,090 24,101
Income tax expense - investment
tax credit adjustments (2,611) (2,553) (9,403) (11,205)
- ----------------------------------------------------------------------------------------------
Subtotal 77,095 61,416 274,903 202,453
- ----------------------------------------------------------------------------------------------
Harris Plant deferred costs -
investment tax credit adjustments (74) (74) (297) (297)
- ----------------------------------------------------------------------------------------------
Total Included in Operating Expenses 77,021 61,342 274,606 202,156
- ----------------------------------------------------------------------------------------------
Included in Other Income
Income tax expense (credit) - current (5,437) (4,897) (25,460) (19,512)
Income tax expense (credit) - deferred 1,024 1,607 5,796 10,381
- ----------------------------------------------------------------------------------------------
Total Included in Other Income (4,413) (3,290) (19,664) (9,131)
- ----------------------------------------------------------------------------------------------
Total Income Tax Expense $ 72,608 $ 58,052 $ 254,942 $ 193,025
==============================================================================================
FINANCIAL STATISTICS
Ratio of earnings to fixed charges 3.84 3.36
Return on average common stock equity 14.58 % 11.87 %
Book value per common share $ 18.36 $ 17.81
Capitalization ratios
Common stock equity 49.47 % 48.94 %
Preferred stock - redemption not required 2.70 2.69
Long-term debt, net 47.83 48.37
- ----------------------------------------------------------------------------------------------
Total 100.00 % 100.00 %
==============================================================================================
..............................................................................................
See Notes to Financial Statements.
</TABLE>
Carolina Power & Light Company
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 1995 Annual Report to Shareholders and the 1995 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 1995 have been reclassified to conform to the
1996 presentation.
2. In the first quarter of 1996, the Company entered into two new long-term
revolving credit facilities totaling $350 million, which support the
Company's commercial paper borrowings. The Company is required to pay
minimal annual commitment fees to maintain these facilities. Consistent
with management's intent to maintain its commercial paper on a long-term
basis, and as supported by the long-term credit facilities, the Company
has included in long-term debt $339 million of commercial paper
outstanding as of March 31, 1996.
3. On April 1, 1996, the Company retired $30 million principal amount of
First Mortgage Bonds, 5.125% Series, which matured on that date and
redeemed $100 million principal amount of First Mortgage Bonds, 9% Series,
due April 1, 2022 at 105.89% of the principal amount of such bonds, plus
accrued interest to date.
4. In 1994, the Board of Directors of the Company authorized the repurchase
of 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 8.6 million shares through March 31, 1996.
5. Contingencies existing as of the date of these statements are described
below. No significant changes have occurred since December 31, 1995, with
respect to the commitments discussed in Note 10 of the financial
statements included in the Company's 1995 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 agreements. 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 the Brunswick and
Harris nuclear 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 reached several tentative
conclusions with respect to its project regarding accounting practices
related to closure and removal of long-lived assets. The primary
conclusions as they relate to nuclear decommissioning are: 1) the cost of
decommissioning should be accounted for as a liability and accrued as the
obligation is incurred; 2) recognition of a liability for decommissioning
results in recognition of an increase to the cost of the plant; 3) the
decommissioning liability should be measured based on discounted future
cash flows using a risk-free rate; and 4) decommissioning trust funds
should not be offset against the decommissioning liability. An exposure
draft was issued in February 1996, and it is uncertain what impact, if
any, the final statement may have on the Company's accounting for
decommissioning and other closure and removal 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 continues to investigate the identities of parties
connected to MGP sites in North Carolina, 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 expect costs associated with these sites to be
material to the results of operations of the Company.
The Company has recorded a liability for the estimated costs associated
with investigation and remediation activities for certain MGP sites and
for sites other than MGP sites. This liability is not material to the
financial position 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.
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM (INTERIM FINANCIAL STATEMENTS AS OF MARCH 31, 1996) AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000017797
<NAME> CAROLINA POWER & LIGHT COMPANY
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