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 June 30, 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 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 July 31, 1996: 151,953,422.
<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 June 30, 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, Six and Twelve Months Ended June 30, 1996,
As Compared With the Corresponding Periods One Year Earlier
___________________________________________________________
Operating Revenues: For the three, six and twelve months ended June 30,
1996, operating revenues were affected by the following factors (in millions):
Three Months Six Months Twelve Months
____________ __________ _____________
Weather $ 21 $ 52 $ 152
Customer Growth/Changes
In Usage Patterns 10 45 75
NCEMC Load Loss (20) (39) (40)
Price (13) (28) (41)
Other 6 29 65
____ ____ ____
Total $ 4 $ 59 $ 211
==== ==== ====
The increase in the weather component of revenue for the three months
ended June 30, 1996, is the result of warmer than normal weather in the
current period. The six and twelve-month increases reflect milder than
normal weather in the prior period compared to more extreme weather patterns
in the current period. The loss of 200 megawatts of load from North
Carolina Electric Membership Corporation began in January 1996. For all
periods, the majority of the decrease in the price component of revenue is
attributable to a decrease in the fuel cost component of revenue.
The increase in other for the six and twelve months is primarily due to
increased bulk power sales, which reflect weather impacts and the Company's
active participation in the bulk power market.
Operating Expenses: Purchased power increased for the twelve months
ended June 30, 1996, due to increased purchases from cogenerators
($9 million) and from other utilities ($29 million). The increase in
purchases from cogenerators was the result of certain cogenerators being
shut down in the prior year. Partially offsetting the increased purchases
was a $10 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.
<PAGE>
For the three and six months ended June 30, 1996, operation and
maintenance expense decreased primarily due to increased expenses in the
prior periods due to the timing of nuclear plant outages. Excluding the
impact of a December 1994 insurance reserve adjustment, which reduced
expense in the twelve month prior period, operation and maintenance
expense decreased $37 million for the twelve months ended June 30, 1996
due to cost-cutting efforts and outage timing. In the prior period there
were several major fossil and nuclear plant outages that resulted
in higher expense for that period as compared to the current period.
The increase in income tax expense for all periods is due to an increase
in operating income and a reserve recorded for potential audit issues in
open tax years.
Other Income: The increase in the income tax credit for the twelve
months ended June 30, 1996, is primarily attributable to lower
non-operating income in the current period.
Interest Charges: Other interest charges increased for the twelve months
ended June 30, 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 June 30, 1996
and From June 30, 1995, to June 30, 1996
________________________________________
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 $350 million of commercial paper outstanding as
of June 30, 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 did not issue long-term debt in the twelve-month period
ended June 30, 1996. The proceeds of the issuance of short-term debt
and/or internally generated funds financed the redemption or retirement
of long-term debt totaling $378 million and $426 million during the six
and twelve months ended June 30, 1996, respectively.
The Company's capital structure as of June 30 was as follows:
1996 1995
____ ____
Common Stock Equity 49.32% 47.98%
Long-term Debt 47.99% 49.37%
Preferred Stock 2.69% 2.65%
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 8.8 million shares through June 30, 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 Securities ) Not applicable for the quarter
) ended June 30, 1996.
)
)
Item 4. Submission of Matters to a Vote of Security Holders
_______ ___________________________________________________
(a) The Annual Meeting of the Shareholders was held on May 8, 1996.
(b) The meeting involved the election of directors. Proxies for
the meeting were solicited pursuant to Regulation 14, there was
no solicitation in opposition to the management's nominees as
listed below, and all such nominees were elected.
(c) The Board of Directors' proposal to amend the Company's
Restated Charter to expand the purposes for which the Company
exists and to broaden the powers of the Company was
approved by the shareholders. The number of shares voted for
the amendment was 130,408,274, and the number of shares voted
against the amendment was 2,117,895.
The total votes for the election of directors were as follows:
Class I Votes For Votes Withheld
_______ _________ ______________
(Term Expiring in 1999)
Leslie M. Baker, Jr. 132,601,648 2,750,919
William O. McCoy 132,713,230 2,639,337
Sherwood H. Smith, Jr. 132,665,812 2,686,755
J. Tylee Wilson 132,637,529 2,715,038
Item 5. Other Information
_______ __________________
1. (Reference is made to the Company's 1995 Form 10-K, Generating
Capability, paragraph 3, page 6. Reference is also made to
the Company's Form 10-Q for the quarter ended March 31,
1996, Item 5, paragraph 1.) With regard to the Company's
generation additions schedule, the Company has delayed plans
for construction of the 500 MW of combustion turbine capacity
adjacent to the Company's Lee Steam Electric Plant in Wayne
County, North Carolina. Construction of the 500 MW of capacity,
originally scheduled to begin this year, is now scheduled to
begin no earlier than 1997, with commercial operation now
anticipated to begin in 1999. In the interim, summer
1998 peaking requirements will be met with power purchases.
<PAGE>
In June, the Company issued a Request for Proposals (RFP) for
purchased power of 700 to 1000 MW of capacity to meet
the Company's future generation needs in its service territory.
The Company projects a need of approximately 200 to 350 MW in
its western service territory, and approximately 350 to 650 MW
in its eastern service territory. The capacity was requested
to be available for delivery by June 1, 1999. Proposals were
invited from all potential suppliers who were capable of
meeting the conditions of the RFP. Due to increased economic
activity and growth in its western service territory, the
Company is also investigating the possibility of adding
combustion turbines at its Asheville plant in order to ensure
continuted reliable service to its customers. The
Company cannot predict the outcome of this matter.
2. (Reference is made to the Company's 1995 Form 10-K,
Interconnections with Other Systems, paragraph 3,
page 7). The Company has agreed with Cogentrix of North
Carolina, Inc. and Cogentrix Eastern North Carolina
Corporation to amend five purchased power contracts.
These amendments will become effective only after Cogentrix
obtains refinancing of the debt for the five plants covered
by the contracts. The amendments permit the Company
to dispatch the output of these plants. In return, the
Company will give up its right to purchase two of the five
plants. These amendments will result in substantial savings
to the Company over the life of these contracts.
3. (Reference is made to the Company's 1995 Form 10-K,
Competition and Franchises, paragraph 1.b., page 8.
Reference is also made to the Company's Form 10-Q for
the quarter ended March 31, 1996, Item 5, paragraph
2.) With regard to the final rules issued on April 24, 1996
in orders 888 and 889 by the Federal Energy Regulatory
Commission (FERC) regarding open access transmission and
stranded costs and on information systems and
standards of conduct, on May 24, 1996, the Company filed
a Request for Clarification and Rehearing of those orders,
as did many other entities. The orders vary in certain
respects from the proposed rules the FERC had issued, but
the final rules still require all transmitting utilities to
file an open access transmission tariff for wholesale
transactions. The Company filed its open access transmission
tariff with the FERC on July 9, 1996. On August 7, 1996,
North Carolina Eastern Municipal Power Agency (Power Agency)
filed with FERC a motion to intervene and protest
concerning the Company's tariff. That protest challenges
numerous aspects of the Company's tariff and requests that
an evidentiary proceeding be held. A number of other entities
have filed similar interventions since that time. The Company
cannot predict the outcome of this matter.
By order issued May 7, 1996, in Docket No. E-100, Sub 77,
which concerns retail competition, the North Carolina
Utilities Commission (NCUC) found that these FERC rules
essentially restructure the wholesale electric industry,
and therefore may provide a new focus for NCUC proceedings
with respect to competition in the electric industry.
As a result, the NCUC concluded: (i) that all parties should
concentrate their efforts on examining the impacts of
the FERC orders, (ii) that the filing of comments requested by
its order issued April 3, 1996 should be extended
indefinitely, and (iii) that this docket should be held in
abeyance pending further order. The Company cannot predict
the outcome of this matter.
By order issued May 15, 1996, the NCUC established a new docket
(Docket No. E-100, Sub 78) to address the FERC orders. In
accordance with the NCUC's order, the Company filed its
comments on July 16, 1996 regarding the implementation of the
FERC's orders, their impact on North Carolina customers and
what the NCUC can do to maximize the benefits of the wholesale
market. The Company cannot predict the outcome of this matter.
<PAGE>
With regard to the issue of retail wheeling, legislation was
introduced in Congress on July 11, 1996 (HR 3790) mandating
retail wheeling in all 50 states no later than December 15,
2000. As proposed, the bill would require states to give all
customers the right to choose their electric
supplier. If this choice was not implemented by the
states, the bill proposes that the FERC would be responsible for
the implementation. The Company cannot predict the outcome of
this matter.
4. (Reference is made to the Company's 1995 Form 10-K, Competition
and Franchises, paragraph 1.h., page 10.) With regard to the
request made by one of the Company's industrial customers
to the City of Darlington, South Carolina ("City") that the
City become a municipal electric utility, both the
Company and the City have undertaken studies to determine
the feasibility of the municipalization proposal. The
results of the Company's study, which was conducted by the
consulting group Stone & Webster, found that municipalization
would increase the cost of electricity to the City.
The results of the City's study, conducted by the consulting
group Strategic Energy Limited, found that municipalization
will only benefit the City if the City is not required to pay
the Company for any of its lost revenues or stranded costs.
The Company cannot predict the outcome of this matter
5. (Reference is made to the Company's 1995 Form 10-K,
Competition and Franchises, paragraph 1, page 11.)
On August 7, 1996, North Carolina Eastern Municipal Power
Agency (Power Agency) notified the Company that
it intends to discontinue certain contractual purchases of
electricity from the Company effective September 1, 2001.
The contract between the parties requires that Power Agency give
appropriate notice five years prior to such event.
Power Agency stated that it intends to replace these contractual
purchases with purchases from the wholesale market
and that the Company will be considered as a supplier for those
purchases. 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 2, page 13.) With regard to the
Company's current retail rates, a petition was filed on
July 19, 1996 by the Carolina Industrial Group for Fair
Utility Rates (CIGFUR) with the NCUC requesting the NCUC
conduct an investigation of the Company's base rates.
The petition alleges that the Company's return on equity,
which was authorized by the NCUC in the Company's last general
rate proceeding in 1988, and earnings are too high.
The Company filed a response to the petition and motion to
dismiss on July 29, 1996, in which it argued that
the petition was without merit. It is not known at this time
if the NCUC will initiate a proceeding. The Company cannot
predict the outcome of this matter.
7. (Reference is made to the Company's 1995 Form 10-K, Retail
Rate Matters, paragraph 5, page 14. Reference is also made to
the Company's Form 10-Q for the quarter ended March 31, 1996,
Item 5, paragraph 6.) With regard to the Company's 1996 North
Carolina fuel case hearing, on June 7, 1996, the Company
filed its 1996 application proposing no change in its net fuel
factor. The Company cannot predict the outcome of this matter.
With regard to the South Carolina retail jurisdiction, the
South Carolina General Assembly made several modifications
during the 1996 legislative session to SC Code Ann. Section
58-27-865, which is the statute that governs the
recovery of fuel cost by electric utilities. The
modifications include: changing the test period from a
six month period to a twelve month period, which would
result in the frequency of fuel cost hearings being changed
from every six months to every twelve months; allowing
utilities to recover the cost of Clear Air Act allowances
through the fuel factor; and establishing a rebuttable
presumption of prudent operation of a utility's nuclear
generating facilities if the utility achieves a nuclear
system capacity factor of 92.5%, exclusive of refueling
and maintenance outages. Due to these modifications of
the statute, the Company's next South Carolina fuel
proceeding will be in March of 1997.
<PAGE>
8. (Reference is made to the Company's 1995 Form 10-K, Fuel,
paragraph 2, page 24.) With regard to the Company's
coal-supply contracts, the Company and certain subsidiaries of
Zeigler Coal Holding Company (Zeigler) have renegotiated
their existing contract. Under the revised agreement,
which expires in 2006, the Company will continue to
purchase approximately 2.75 million tons of coal annually
from Zeigler's Marrowbone mine, and will purchase approximately
6 million tons of additional, lower cost coal from Zeigler
over a period of several years under a new contract. The
coal will be required to meet the same technical
specifications for sulfur and thermal content as the coal
supplied from the Marrowbone mine, and is expected to save the
Company more than $100 million over the life of the contract.
9. (Reference is made to the Company's 1995 Form 10-K, Other
Matters, page 27.) With regard to Hurricane Bertha
that struck the North Carolina coast on July 12, 1996, as a
precaution the Company's Brunswick nuclear power plant
was put into cold shutdown. Once the storm passed, the
Federal Emergency Management Agency completed its review
of the plant's offsite emergency plans and equipment, and
the plant was given permission to restart on July 15.
The cost of repairing the storm's damage to the Company's
system, estimated to be between $8 million and $10 million,
will not have a material impact on the results of operations
or financial position 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: August 12, 1996
<TABLE>
<CAPTION>
Carolina Power & Light Company
(ORGANIZED UNDER THE LAWS OF NORTH CAROL INA)
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(NOT AUDITED BY INDEPENDENT AUDITORS)
JUNE 30, 1996
STATEMENTS OF INCOME
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
(In thousands except per share amounts) 1996 1995 1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
Operating Revenues $ 685,968 $ 681,965 $ 1,469,553 $ 1,410,203 $ 3,065,903 $ 2,855,021
- --------------------------------------------------------------------------------------------------------------------------------
Operating Expenses
Operation - fuel 112,955 120,647 250,521 253,918 526,415 520,853
purchased power 105,688 105,137 211,677 198,796 422,822 395,741
other 128,743 139,106 251,099 266,184 526,361 536,073
Maintenance 44,620 57,353 91,664 98,108 190,142 194,105
Depreciation and amortization 93,408 90,896 185,886 181,171 369,242 364,703
Taxes other than on income 34,092 35,280 72,656 74,200 142,499 140,473
Income tax expense 67,172 32,942 144,267 94,358 309,134 211,583
Harris Plant deferred costs, net 4,324 7,178 12,389 13,783 26,735 26,940
- --------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 591,002 588,539 1,220,159 1,180,518 2,513,350 2,390,471
- --------------------------------------------------------------------------------------------------------------------------------
Operating Income 94,966 93,426 249,394 229,685 552,553 464,550
- --------------------------------------------------------------------------------------------------------------------------------
Other Income
Allowance for equity funds used during construction 1,187 984 2,222 1,897 3,675 3,870
Income tax credit 4,418 3,207 8,831 6,497 20,875 13,432
Harris Plant carrying costs 2,549 2,128 4,358 4,347 8,308 9,055
Interest income 1,041 2,781 2,175 5,369 5,486 8,536
Other income, net 5,799 4,250 11,998 8,271 12,795 19,846
- --------------------------------------------------------------------------------------------------------------------------------
Total Other Income 14,994 13,350 29,584 26,381 51,139 54,739
- --------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 109,960 106,776 278,978 256,066 603,692 519,289
- --------------------------------------------------------------------------------------------------------------------------------
Interest Charges
Long-term debt 43,353 47,248 88,029 93,841 181,585 183,767
Other interest charges 4,993 5,011 11,905 11,039 26,763 19,420
Allowance for borrowed funds used
during construction (1,042) (1,445) (1,958) (2,809) (4,267) (4,021)
- --------------------------------------------------------------------------------------------------------------------------------
Net Interest Charges 47,304 50,814 97,976 102,071 204,081 199,166
- --------------------------------------------------------------------------------------------------------------------------------
Net Income 62,656 55,962 181,002 153,995 399,611 320,123
Preferred Stock Dividend Requirements (2,402) (2,402) (4,804) (4,804) (9,609) (9,609)
- --------------------------------------------------------------------------------------------------------------------------------
Earnings for Common Stock $ 60,254 $ 53,560 $ 176,198 $ 149,191 $ 390,002 $ 310,514
================================================================================================================================
Average Common Shares Outstanding (Note 3) 143,808 147,183 143,716 147,226 144,490 147,772
Earnings per Common Share (Note 3) $ 0.42 $ 0.36 $ 1.23 $ 1.01 $ 2.70 $ 2.10
Dividends Declared per Common Share $ 0.455 $ 0.440 $ 0.910 $ 0.880 $ 1.805 $ 1.745
................................................................................................................................
See Supplemental Data and Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Carolina Power & Light Company
BALANCE SHEETS June 30 December 31
(In thousands) 1996 1995 1995
- ------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C>
Electric Utility Plant
Electric utility plant in service $ 9,584,032 $ 9,295,945 $ 9,440,442
Accumulated depreciation (3,643,838) (3,337,249) (3,493,153)
- ------------------------------------------------------------------------------------------------------
Electric utility plant in service, net 5,940,194 5,958,696 5,947,289
Held for future use 12,752 13,303 13,304
Construction work in progress 184,614 188,610 179,260
Nuclear fuel, net of amortization 175,968 181,774 188,655
- ------------------------------------------------------------------------------------------------------
Total Electric Utility Plant, Net 6,313,528 6,342,383 6,328,508
- ------------------------------------------------------------------------------------------------------
Current Assets
Cash and cash equivalents 2,448 16,600 14,489
Accounts receivable 355,137 308,941 364,536
Fuel 58,094 97,264 53,654
Materials and supplies 124,245 126,191 121,227
Prepayments 58,359 64,935 59,918
Other current assets 30,651 29,607 27,834
- ------------------------------------------------------------------------------------------------------
Total Current Assets 628,934 643,538 641,658
- ------------------------------------------------------------------------------------------------------
Deferred Debits and Other Assets
Income taxes recoverable through future rates 384,669 385,960 387,150
Abandonment costs 50,136 63,880 57,120
Harris Plant deferred costs 94,782 118,388 107,992
Unamortized debt expense 72,452 60,875 58,404
Miscellaneous other property and investments 499,424 428,556 475,564
Other assets and deferred debits 176,284 175,136 170,754
- ------------------------------------------------------------------------------------------------------
Total Deferred Debits and Other Assets 1,277,747 1,232,795 1,256,984
- ------------------------------------------------------------------------------------------------------
Total Assets $ 8,220,209 $ 8,218,716 $ 8,227,150
======================================================================================================
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock equity $ 2,636,175 $ 2,607,920 $ 2,574,743
Preferred stock - redemption not required 143,801 143,801 143,801
Long-term debt, net 2,565,268 2,683,514 2,610,343
- ------------------------------------------------------------------------------------------------------
Total Capitalization 5,345,244 5,435,235 5,328,887
- ------------------------------------------------------------------------------------------------------
Current Liabilities
Current portion of long-term debt 138,258 78,000 105,755
Notes payable 80,749 82,700 73,743
Accounts payable 155,758 187,318 309,294
Taxes accrued 83,070 87,142 2,456
Interest accrued 42,462 50,265 48,441
Dividends declared 71,549 69,925 71,285
Deferred fuel credit 17,560 44,144 27,495
Other current liabilities 78,618 62,508 79,220
- ------------------------------------------------------------------------------------------------------
Total Current Liabilities 668,024 662,002 717,689
- ------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities
Accumulated deferred income taxes 1,733,287 1,630,742 1,716,835
Accumulated deferred investment tax credits 237,484 246,945 242,707
Other liabilities and deferred credits 236,170 243,792 221,032
- ------------------------------------------------------------------------------------------------------
Total Deferred Credits and Other Liabilities 2,206,941 2,121,479 2,180,574
- ------------------------------------------------------------------------------------------------------
Commitments and Contingencies (Note 4)
Total Capitalization and Liabilities $ 8,220,209 $ 8,218,716 $ 8,227,150
======================================================================================================
SCHEDULES OF COMMON STOCK EQUITY
(In thousands)
Common stock (Note 3) $ 1,384,712 $ 1,505,093 $ 1,381,496
Unearned ESOP common stock (178,514) (197,010) (191,341)
Capital stock issuance expense (790) (790) (790)
Retained earnings 1,430,767 1,300,627 1,385,378
- ------------------------------------------------------------------------------------------------------
Total Common Stock Equity $ 2,636,175 $ 2,607,920 $ 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 Nine Months Ended Twelve Months Ended
June 30 June 30 June 30
1996 1995 1996 1995 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Activities
Net income $ 62,656 $ 55,962 $ 181,002 $ 153,995 $ 399,611 $ 320,123
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 115,350 107,687 228,283 222,748 452,197 452,602
Harris Plant deferred costs 1,775 5,050 8,031 9,436 18,427 17,885
Deferred income taxes 12,639 4,068 27,265 (7,511) 124,457 28,922
Investment tax credit adjustments (2,610) (2,553) (5,221) (5,106) (9,459) (10,877)
Allowance for equity funds used during construction (1,187) (984) (2,222) (1,897) (3,675) (3,870)
Deferred fuel cost (credit) 1,473 (6,675) (9,936) 15,800 (26,585) 62,185
Net increase in receivables, inventories
and prepaid expenses (19,710) (35,573) (35,285) (78,965) (34,169) (83,542)
Net increase (decrease) in payables and accrued
expenses 29,302 9,573 10,687 (6,803) (22,102) (26,775)
Miscellaneous 20,488 15,248 26,232 27,227 34,633 6,852
- -----------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 220,176 151,803 428,836 328,924 933,335 763,505
- -----------------------------------------------------------------------------------------------------------------------------------
Investing Activities
Gross property additions (81,022) (66,804) (169,500) (138,732) (297,168) (285,567)
Nuclear fuel additions (9,825) (19,442) (35,898) (35,310) (77,934) (48,732)
Contributions to external decommissioning trust (7,722) (8,052) (18,020) (26,616) (29,479) (34,526)
Contributions to retiree benefit trusts - - (24,700) (2,400) (24,700) (2,400)
Allowance for equity funds used during construction 1,187 984 2,222 1,897 3,675 3,870
Miscellaneous (5,328) (16,035) (18,566) (16,522) (30,559) (22,617)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (102,710) (109,349) (264,462) (217,683) (456,165) (389,972)
- -----------------------------------------------------------------------------------------------------------------------------------
Financing Activities
Proceeds from issuance of long-term debt 10,700 120,939 276,257 180,670 276,300 230,556
Net increase (decrease) in short-term notes
payable (maturity less than 90 days) 77,109 (12,800) 80,749 14,600 71,792 10,100
Retirement of long-term debt (135,971) (102,050) (391,475) (227,095) (440,524) (227,236)
Purchase of Company common stock (Note 3) (4,676) (3,815) (6,596) (7,993) (131,042) (122,710)
Dividends paid on common stock (65,378) (65,583) (130,546) (130,239) (258,244) (257,274)
Dividends paid on preferred stock (2,404) (2,403) (4,804) (4,823) (9,604) (9,623)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Financing Activities (120,620) (65,712) (176,415) (174,880) (491,322) (376,187)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Decrease in Cash and Cash Equivalents (3,154) (23,258) (12,041) (63,639) (14,152) (2,654)
Cash and Cash Equivalents at Beginning of the Period 5,602 39,858 14,489 80,239 16,600 19,254
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of the Period $ 2,448 $ 16,600 $ 2,448 $ 16,600 $ 2,448 $ 16,600
===================================================================================================================================
Supplemental Disclosures of Cash Flow Information
Cash paid during the period - interest $ 48,188 $ 48,761 $ 103,390 $ 103,455 $ 203,231 $ 196,578
income taxes $ 39,735 $ 39,000 $ 40,390 $ 40,611 $ 176,942 $ 168,645
...................................................................................................................................
See Supplemental Data and Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Carolina Power & Light Company
SUPPLEMENTAL DATA Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1996 1995 1996 1995 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues (in thousands)
Residential $ 204,385 $ 193,263 $ 488,663 $ 444,618 $ 1,013,157 $ 908,214
Commercial 150,338 149,714 301,916 290,856 629,455 593,112
Industrial 178,985 187,742 342,229 352,158 723,519 734,274
Government and municipal 18,966 18,723 39,025 37,565 79,859 76,784
Power Agency contract requirements 23,422 22,590 48,874 46,408 103,418 93,905
NCEMC 54,293 58,657 124,430 142,364 281,237 275,425
Other wholesale 19,990 20,125 41,895 40,525 83,776 76,309
Other utilities 22,412 20,128 56,109 33,669 100,587 51,817
Miscellaneous revenue 13,177 11,023 26,412 22,040 50,895 45,181
- ----------------------------------------------------------------------------------------------------------------------------
Total Operating Revenues $ 685,968 $ 681,965 $ 1,469,553 $ 1,410,203 $ 3,065,903 $ 2,855,021
============================================================================================================================
Energy Sales (millions of kWh)
Residential 2,640 2,419 6,448 5,682 12,840 11,184
Commercial 2,335 2,247 4,657 4,338 9,594 8,811
Industrial 3,691 3,733 7,025 7,000 14,337 14,237
Government and municipal 319 299 655 600 1,343 1,252
Power Agency contract requirements 615 489 1,385 965 2,759 2,103
NCEMC 862 1,100 1,953 2,484 4,923 5,093
Other wholesale 503 473 983 935 1,963 1,866
Other utilities 1,080 902 2,652 1,476 4,410 2,126
- ----------------------------------------------------------------------------------------------------------------------------
Total Energy Sales 12,045 11,662 25,758 23,480 52,169 46,672
============================================================================================================================
Energy Supply (millions of kWh)
Generated - coal 4,884 5,877 12,027 10,440 25,104 19,591
nuclear 5,805 4,044 10,484 9,891 20,541 21,352
hydro 211 155 523 453 894 800
combustion turbines 15 1 29 85 1
Purchased 1,828 2,034 3,724 3,544 7,613 6,767
- ----------------------------------------------------------------------------------------------------------------------------
Total Energy Supply (Company Share) 12,743 12,111 26,787 24,328 54,237 48,511
============================================================================================================================
Detail of Income Taxes (in thousands)
Included in Operating Expenses
Income tax expense (credit)- current $ 58,915 $ 33,016 $ 125,020 $ 110,171 $ 200,115 $ 203,736
Income tax expense - deferred 10,868 2,479 24,470 (10,708) 118,480 18,721
Income tax expense - investment
tax credit adjustments (2,611) (2,553) (5,223) (5,105) (9,461) (10,874)
- ----------------------------------------------------------------------------------------------------------------------------
Subtotal 67,172 32,942 144,267 94,358 309,134 211,583
- ----------------------------------------------------------------------------------------------------------------------------
Harris Plant deferred costs -
investment tax credit adjustments (74) (74) (149) (149) (297) (297)
- ----------------------------------------------------------------------------------------------------------------------------
Total Included in Operating Expenses 67,098 32,868 144,118 94,209 308,837 211,286
- ----------------------------------------------------------------------------------------------------------------------------
Included in Other Income
Income tax expense (credit) - current (6,189) (4,796) (11,626) (9,693) (26,852) (23,633)
Income tax expense - deferred 1,771 1,589 2,795 3,196 5,977 10,201
- ----------------------------------------------------------------------------------------------------------------------------
Total Included in Other Income (4,418) (3,207) (8,831) (6,497) (20,875) (13,432)
- ----------------------------------------------------------------------------------------------------------------------------
Total Income Tax Expense $ 62,680 $ 29,661 $ 135,287 $ 87,712 $ 287,962 $ 197,854
============================================================================================================================
FINANCIAL STATISTICS
Ratio of earnings to fixed charges 4.07 3.35
Return on average common stock equity 15.03 % 11.93 %
Book value per common share $ 18.33 $ 17.72
Capitalization ratios
Common stock equity 49.32 % 47.98 %
Preferred stock - redemption not required 2.69 2.65
Long-term debt, net 47.99 49.37
- ----------------------------------------------------------------------------------------------------------------------------
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 included $350
million of commercial paper outstanding in long-term debt.
3. 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 8.8 million shares through June 30, 1996.
4. 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 JUNE 30, 1996) AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000017797
<NAME> CAROLINA POWER & LIGHT COMPANY
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $6,313,528
<OTHER-PROPERTY-AND-INVEST> $499,424
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<TOTAL-DEFERRED-CHARGES> $602,039
<OTHER-ASSETS> $176,284
<TOTAL-ASSETS> $8,220,209
<COMMON> $1,206,198
<CAPITAL-SURPLUS-PAID-IN> ($790)
<RETAINED-EARNINGS> $1,430,767
<TOTAL-COMMON-STOCKHOLDERS-EQ> $2,636,175
$0
$143,801
<LONG-TERM-DEBT-NET> $2,565,268
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<GROSS-OPERATING-REVENUE> $1,469,553
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<OTHER-OPERATING-EXPENSES> $1,075,892
<TOTAL-OPERATING-EXPENSES> $1,220,159
<OPERATING-INCOME-LOSS> $249,394
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<INCOME-BEFORE-INTEREST-EXPEN> $278,978
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<NET-INCOME> $181,002
$4,804
<EARNINGS-AVAILABLE-FOR-COMM> $176,198
<COMMON-STOCK-DIVIDENDS> $130,809
<TOTAL-INTEREST-ON-BONDS> $88,029
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</TABLE>
