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 September 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 Identifica-
or organization tion 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 October 31, 1996: 151,415,722.
<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
September 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, Nine and Twelve Months Ended September 30, 1996,
As Compared With the Corresponding Periods One Year Earlier
____________________________________________________________
Operating Revenues: For the three, nine and twelve months ended
September 30, 1996, operating revenues were affected by the following
factors (in millions):
Three Months Nine Months Twelve Months
____________ ___________ _____________
Weather $ (26) $ 26 $ 83
Customer Growth/
Changes In Usage
Patterns 11 66 75
NCEMC Load Loss (23) (73) (73)
Price (5) (33) (41)
Sales to Other Utilities 2 25 41
Other (3) 4 12
_____ ____ ____
Total $ (44) $ 15 $ 97
====== ===== ====
The weather-related decrease in revenue for the three months
ended September 30, 1996, is the result of milder than normal
temperatures in the current period. The nine- and twelve-month
weather-related increases reflect extreme weather patterns in the
current periods as compared to more normal weather in the prior
periods. The loss of 200 megawatts of load from North Carolina
Electric Membership Corporation (NCEMC) began in January 1996. For
all periods, the price-related decrease in revenue is primarily
attributable to a decrease in the fuel cost component of revenue. The
increase in sales to other utilities for the nine and twelve months
is primarily due to increased bulk power sales, which is a result of
weather impacts and the Company's active participation in the bulk
power market. Sales to other utilities for the three-month period
were negatively impacted by milder than normal temperatures and lower
total generation in the current period.
Operating Expenses: Fuel expense decreased $14 million for
the three-month period due to lower total generation. For the nine-
and twelve-month periods, fuel expense decreased by $17 million and
$8 million, respectively, primarily due to the refunding of prior
overrecovered fuel costs to customers in the North Carolina retail
jurisdiction in the current periods. The decreases in the nine- and
twelve-month periods more than offset the increases in fuel expense
related to increased generation during these periods.
<PAGE>
Purchased power increased for the nine and twelve months ended
September 30, 1996, due to increased purchases from cogenerators and
purchases from other utilities. The increase in purchases from
cogenerators was the result of certain cogenerators being shut down
in the prior periods. Partially offsetting the increase in the
twelve-month period was a decrease in purchases from Power Agency,
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.
Included in operation and maintenance expense for each of the
current periods is $29.8 million of expense incurred as a result of
Hurricane Fran striking the Company's service territory on September
5, 1996. Excluding the impact of Hurricane Fran and the impact of an
insurance reserve adjustment of $23 million recorded in the fourth
quarter of 1994, operation and maintenance expense decreased $13
million, $34 million and $60 million for the three, nine and twelve
months ending September 30, 1996, respectively. The decreases are
due to cost reduction efforts and the timing of plant outages. In
the prior periods there were several major fossil and nuclear plant
outages that resulted in higher expense for those periods as compared
to the current periods.
Current estimates indicate that restoring the Company's system
from Hurricane Fran's damage could result in total operation and
maintenance expense of approximately $36 million and capital
expenditures of approximately $47 million, for a total estimated cost
of approximately $83 million. On September 13, 1996, the Company
proposed to the North Carolina Utilities Commission (NCUC) a plan
that would allow deferral of hurricane-related maintenance expenses,
with amortization over the next three years. See additional
discussion in Retail Rate Matters.
The increase in income tax expense for the nine- and twelve-
month periods is due to an increase in operating income and a reserve
recorded for potential audit issues in open tax years. The decrease
in income tax expense for the three-month period is due to a decrease
in operating income.
Other Income: The increase in the income tax credit for all
periods is primarily attributable to lower non-operating income in
the current periods.
The decrease in interest income for all periods is due to the
recording of interest income in the prior periods that related to
certain IRS audit issues.
Other income, net, decreased for the twelve-month period due to
an increase in charitable contributions of approximately $3 million,
and decreases in certain income items, none of which is individually
significant.
Interest Charges: Interest charges on long-term debt decreased
for all periods primarily due to reductions of long-term debt in the
current periods. Also contributing to the decrease were refinancings
of long-term debt with lower interest cost short-term borrowings
which are backed by the Company's long-term revolving credit
facilities, as discussed in the capital resources and liquidity
section below.
Other interest charges decreased for all reported periods
primarily due to a $6 million interest accrual recorded in the prior
periods that related to the 1995 NCUC Fuel Order.
Material Changes in Capital Resources and Liquidity
From December 31, 1995, to September 30, 1996
and From September 30, 1995, to September 30, 1996
__________________________________________________
During 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 $244.7 million
<PAGE>
of commercial paper outstanding as of September 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 September 30, 1996. The proceeds of the issuance of
short-term debt resulting from the aforementioned credit facilities,
and/or internally generated funds, financed the redemption or
retirement of long-term debt totaling $378 million and $401 million
during the nine and twelve months ended September 30, 1996,
respectively.
The Company's capital structure as of September 30 was as
follows:
1996 1995
____ ____
Common Stock Equity 50.75% 48.22%
Long-term Debt 46.53% 49.15%
Preferred Stock 2.72% 2.63%
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 9.2 million shares through
September 30, 1996.
Retail Rate Matters
___________________
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 that 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. On August 2, 1996, the Company notified
the NCUC that the Company would submit to the NCUC a list of proposed
accounting adjustments related to regulatory assets. On September
13, 1996, the Company filed its proposed accelerated amortizations of
certain regulatory assets and its proposed deferral and amortization
of hurricane-related damage expenses. See additional discussion of
hurricane-related damage expenses in Operating Expenses. The Company
requested that the NCUC approve implementation of these adjustments,
and renewed its motion to dismiss CIGFUR's petition. The proposed
accelerated amortizations (excluding the amortization of deferred
hurricane-related damage expenses) will reduce net income by
approximately $43 million in each of the next three years. On
October 28, 1996, the Public Staff of the NCUC, which represents the
using and consuming public in matters before the NCUC, filed its
comments on the Company's proposal. Those comments included
recommendations that the NCUC issue an order allowing the adjustments
proposed by the Company, subject to certain minor modifications. The
NCUC has not yet ruled on the Company's proposal.
With regard to the South Carolina retail jurisdiction,
the Company anticipates filing a similar proposal to accelerate
amortization of certain regulatory assets with the South Carolina
Public Service Commission. These adjustments, if approved, would
reduce net income by approximately an additional $13 million in each
of the next three years. The Company cannot predict the outcome of
this matter.
<PAGE>
Competition
___________
In 1994, NCEMC issued two requests for proposals (RFPs) to provide
blocks of up to 225 MW (for a minimum of ten years) of baseload power
NCEMC would otherwise purchase from the Company beginning in each of
the three years 2001, 2002 and 2003. The Company responded to the RFPs
and negotiations between the parties concerning power supply options
continued for several months. As a result of those negotiations, on
October 31, 1996, the Company and NCEMC entered into a revised power
coordination agreement under which NCEMC will receive discounted capacity
in exchange for long-term commitments to the Company for its supplemental
power. As a result of this new agreement, the Company will provide 225 MW of
baseload power to NCEMC from 1997 to 2010, an additional block of 225
MW from 2000 to 2004, and a third block of 225 MW from 2001 to 2008.
The remainder of the NCEMC load provided by the Company, not
separately contracted for in the revised agreement, will be billed at
a fixed price through the year 2004, rather than at the formula rates
established in the 1994 Power Coordination Agreement. The revised
agreement is subject to Federal Energy Regulatory Commission
approval. The Company cannot predict the outcome of this matter.
On August 6, 1996, North Carolina Eastern Municipal Power
Agency (Power Agency) notified the Company of its intention to discontinue
certain contractual purchases of power from the Company effective
September 1, 2001. Power Agency's notice indicated that it intends to
replace these contractual obligations through purchases of
capacity and energy and related services in the open market, and that the
Company will be considered as a potential supplier for those purchases.
Under the 1981 Power Coordination Agreement, as amended, between the Company
and Power Agency, Power Agency can reduce its purchases from the
Company with an appropriate five-year notice. The Company and Power
Agency are currently discussing the sufficiency of the notice. The
Company cannot predict the outcome of this matter.
Other Matters
_____________
Amendments to five electric power purchase agreements between
the Company and Cogentrix of North Carolina, Inc. and Cogentrix
Eastern North Carolina Corporation (collectively referred to as
"Cogentrix") became effective on September 26, 1996. The agreements
involve five Cogentrix generating plants located throughout the
Company's service area. Under the amendments to the agreements,
Cogentrix will retain ownership of its facilities and will continue
to provide process steam to industrial companies under contract. As
a result of these contract amendments, the Company will save
approximately $30 million per year in energy costs during the years
1997 through 2002.
<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 September 30, 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. Reference
is also made to the Company's Form 10-Q for the quarter
ended March 31, 1996, Item 5, paragraph 1 and to the
Company's Form 10-Q for the quarter ended June 30, 1996,
Item 5, paragraph 1.) With regard to the Company's
generation additions schedule, on September 4, 1996, the
Company filed with the North Carolina Utilities
Commission (NCUC) its preliminary plans to construct
approximately 320 MW of combustion turbine generating
capacity in Buncombe County, North Carolina at the
Company's existing Asheville Steam Electric Plant, with
an in-service date of the summer of 1999. 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. Reference is also made to the Company's Form 10-Q
for the quarter ended June 30, 1996, Item 5, paragraph
2.) With regard to the five electric power purchase
agreements between the Company and Cogentrix of North
Carolina, Inc. and Cogentrix Eastern North Carolina
Corporation, the amendments to the contracts became
effective on September 26, 1996. As a result of the
contract amendments, the Company will save approximately
$30 million per year in energy costs during the years
1997 through 2002.
3. (Reference is made to the Company's 1995 Form 10-K,
Competition and Franchises, paragraph 1.d., page 9.)
With regard to the negotiations between the Company and
North Carolina Electric Membership Corporation (NCEMC)
concerning power supply options, on October 31, 1996,
the Company and NCEMC entered into a revised power coordination
agreement under which the Company will continue to serve a
majority of NCEMC's power needs well past the year 2000.
Under the terms of the agreement NCEMC will receive
discounted capacity in exchange for long-term
commitments to the Company for its supplemental power.
As a result of this new agreement, the Company will
provide 225 MW of baseload power to NCEMC from 1997 to
2010, an additional block of 225 MW from 2000 to 2004,
and a third block of 225 MW from 2001 to 2008. The
remainder of the NCEMC load provided by the Company, not
separately contracted for in the revised agreement, will
be billed at a fixed price through the year 2004, rather
<PAGE>
than at the formula rates established in the prior power
coordination agreement (the 1994 PCA). The revised
agreement, which represents an amendment to the 1994
PCA, will be submitted to the Federal Energy Regulatory
Commission for approval. 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.
Reference is also made to the Company's Form 10-Q for
the quarter ended June 30, 1996, Item 5, paragraph 4.)
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, on September 3, 1996, the Darlington
City Council voted against the proposal that the City
become a municipal electric utility and will take no
further action on the request at this time.
5. (Reference is made to the Company's 1995 Form 10-K,
Retail Rate Matters, paragraph 2, page 13. Reference is
also made to the Company's Form 10-Q for the quarter
ended June 30, 1996, Item 5, paragraph 6, and to the
Company's Form 8-K dated September 13, 1996, Item 5.)
With regard to the petition filed on July 19, 1996 by
the Carolina Industrial Group for Fair Utility Rates
(CIGFUR) with the NCUC (Docket No. E-2, Sub 699)
requesting the NCUC conduct an investigation of the
Company's base rates, by letter dated August 2, 1996,
the Company notified the NCUC that the Company intended
to seek NCUC approval of certain accounting adjustments
that would impact the Company's earnings. On August 6,
1996, the NCUC issued an order allowing the Company
until September 16, 1996, to submit these adjustments,
and stating that it would take no further action in this
docket until the filing was made by the Company. On
September 13, 1996, the Company (i) filed its proposed
accelerated amortizations of certain regulatory assets,
and its proposed deferral and amortization of hurricane
damage expenses, (ii) requested NCUC approval to
implement these adjustments, and (iii) renewed its
motion to dismiss CIGFUR's petition. The proposed
accelerated amortizations (excluding the amortization of
deferred hurricane damage expenses) will reduce net
income by approximately $43 million during each of the
next three years. Current estimates indicate that
restoring the Company's system from Hurricane Fran's
damage could result in total operation and maintenance
expense of approximately $36 million and capital
expenditures of approximately $47 million, for a total
estimated cost of approximately $83 million. On October
28, 1996, the Public Staff of the NCUC, which represents
the using and consuming public in matters before the
NCUC, filed its comments on the Company's proposal.
Those comments included recommendations that the NCUC
issue an order allowing the adjustments proposed by the
Company, subject to certain minor modifications. The
NCUC has not yet ruled on the Company's proposal.
<PAGE>
With regard to the South Carolina retail jurisdiction,
the Company anticipates filing a similar proposal to
accelerate amortization of certain regulatory assets
with the South Carolina Public Service Commission
(SCPSC). These adjustments, if approved, would reduce
net income by approximately $13 million in each of the
next three years. 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. Reference is
also made to the Company's Form 10-Q for the quarter
ended March 31, 1996, Item 5, paragraph 6 and to the
Company's Form 10-Q for the quarter ended June 30, 1996,
Item 5, paragraph 7.) With regard to the Company's 1996
North Carolina fuel case hearing held on August 14,
1996, by order issued September 10, 1996, the NCUC
approved the Company's request for no change in its net
fuel factor.
7. (Reference is made to the Company's 1995 Form 10-K,
Retail Rate Matters, paragraph 6, page 15. Reference is
also made to the Company's Form 10-Q for the quarter
ended March 31, 1996, Item 5, paragraph 7.) With regard
to the Company's South Carolina avoided cost proceeding,
on August 28, 1996 the SCPSC issued an order approving
the Company's proposed avoided cost rates.
On July 30, 1996, the NCUC opened Docket No. E-100, Sub
79 for its biennial proceeding to establish the avoided
cost rates for all electric utilities in North Carolina.
The Company's initial filing in this docket was made on
November 4, 1996. Comments on the filing are due on
January 10, 1997, and non-expert public testimony is
scheduled for February 4, 1997. The Company cannot
predict the outcome of this matter.
Item 6. Exhibits and Reports on Form 8-K
________________________________________
(a) Exhibits
None.
(b) Reports on Form 8-K filed during or with respect
to the quarter:
Date of Report
(Earliest Event Reported) Date of Signature Items Reported
_________________________ _________________ ______________
September 13, 1996 September 13, 1996 Item 5. Other Events
<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 and
Chief Financial Officer
Date: November 6, 1996
<TABLE>
<CAPTION>
APPENDIX
Carolina Power & Light Company
(ORGANIZED UNDER THE LAWS OF NORTH CAROLINA)
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(NOT AUDITED BY INDEPENDENT AUDITORS)
SEPTEMBER 30, 1996
STATEMENTS OF INCOME
Three Months Ended Nine Months Ended Twelve Months Ended
September 30 September 30 September 30
(In thousands except for per share amounts) 1996 1995 1996 1995 1996 1995
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues $ 831,590 $ 875,500 $ 2,301,143 $ 2,285,703 $ 3,021,994 $ 2,924,969
------------------------------------------------------------------------------------------------------------------------------
Operating Expenses
Operation - fuel 141,139 154,776 391,660 408,694 512,778 520,312
purchased power 108,621 110,538 320,298 309,334 420,904 403,796
other 116,967 133,841 368,066 400,025 509,488 539,609
Maintenance (Note 4) 79,156 45,206 170,820 143,314 224,091 200,591
Depreciation and amortization 94,283 91,415 280,169 272,586 372,110 359,094
Taxes other than on income 37,364 38,686 110,020 112,886 141,178 142,162
Income tax expense 82,123 99,424 226,390 193,782 291,832 228,574
Harris Plant deferred costs, net 7,812 7,174 20,201 20,957 27,372 27,638
------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 667,465 681,060 1,887,624 1,861,578 2,499,753 2,421,776
------------------------------------------------------------------------------------------------------------------------------
Operating Income 164,125 194,440 413,519 424,125 522,241 503,193
------------------------------------------------------------------------------------------------------------------------------
Other Income
Allowance for equity funds used during construction 4 774 2,226 2,671 2,905 2,984
Income tax credit 5,488 4,036 14,319 10,533 22,327 14,582
Harris Plant carrying costs 1,530 2,027 5,888 6,374 7,811 8,685
Interest income 689 2,058 2,864 7,427 4,117 8,265
Other income, net 2,374 5,523 14,372 13,794 9,642 19,786
------------------------------------------------------------------------------------------------------------------------------
Total Other Income 10,085 14,418 39,669 40,799 46,802 54,302
------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 174,210 208,858 453,188 464,924 569,043 557,495
------------------------------------------------------------------------------------------------------------------------------
Interest Charges
Long-term debt 42,408 46,993 130,437 140,834 177,000 184,932
Other interest charges 3,833 11,288 15,738 22,327 19,307 25,055
Allowance for borrowed funds used
during construction (1,190) (1,328) (3,148) (4,137) (4,129) (4,267)
------------------------------------------------------------------------------------------------------------------------------
Net Interest Charges 45,051 56,953 143,027 159,024 192,178 205,720
------------------------------------------------------------------------------------------------------------------------------
Net Income 129,159 151,905 310,161 305,900 376,865 351,775
Preferred Stock Dividend Requirements (2,402) (2,402) (7,206) (7,206) (9,609) (9,609)
------------------------------------------------------------------------------------------------------------------------------
Earnings for Common Stock $ 126,757 $ 149,503 $ 302,955 $ 298,694 $ 367,256 $ 342,166
==============================================================================================================================
Average Common Shares Outstanding (Note 3) 143,738 146,161 143,724 146,867 143,881 146,952
Earnings per Common Share (Note 3) $ 0.88 $ 1.02 $ 2.11 $ 2.03 $ 2.55 $ 2.33
Dividends Declared per Common Share $ 0.455 $ 0.440 $ 1.365 $ 1.320 $ 1.820 $ 1.760
..............................................................................................................................
See Supplemental Data and Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Carolina Power & Light Company
BALANCE SHEETS September 30 December 31
(In thousands) 1996 1995 1995
---------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C>
Electric Utility Plant
Electric utility plant in service $ 9,659,303 $ 9,354,427 $ 9,440,442
Accumulated depreciation (3,721,581) (3,413,489) (3,493,153)
---------------------------------------------------------------------------------------------------------
Electric utility plant in service, net 5,937,722 5,940,938 5,947,289
Held for future use 12,752 13,304 13,304
Construction work in progress 215,329 177,606 179,260
Nuclear fuel, net of amortization 183,178 181,720 188,655
---------------------------------------------------------------------------------------------------------
Total Electric Utility Plant, Net 6,348,981 6,313,568 6,328,508
---------------------------------------------------------------------------------------------------------
Current Assets
Cash and cash equivalents 18,020 14,868 14,489
Accounts receivable 344,753 345,894 364,536
Fuel 43,478 58,137 53,654
Materials and supplies 127,644 127,385 121,227
Prepayments 55,041 56,577 59,918
Other current assets 32,014 31,844 27,834
---------------------------------------------------------------------------------------------------------
Total Current Assets 620,950 634,705 641,658
---------------------------------------------------------------------------------------------------------
Deferred Debits and Other Assets
Income taxes recoverable through future rates 384,325 386,581 387,150
Abandonment costs 46,559 60,528 57,120
Harris Plant deferred costs 88,500 113,240 107,992
Unamortized debt expense 71,201 59,599 58,404
Miscellaneous other property and investments 454,796 439,992 475,564
Other assets and deferred debits 175,099 170,061 170,754
---------------------------------------------------------------------------------------------------------
Total Deferred Debits and Other Assets 1,220,480 1,230,001 1,256,984
---------------------------------------------------------------------------------------------------------
Total Assets $ 8,190,411 $ 8,178,274 $ 8,227,150
=========================================================================================================
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock equity $ 2,682,931 $ 2,633,751 $ 2,574,743
Preferred stock - redemption not required 143,801 143,801 143,801
Long-term debt, net 2,459,445 2,684,408 2,610,343
---------------------------------------------------------------------------------------------------------
Total Capitalization 5,286,177 5,461,960 5,328,887
---------------------------------------------------------------------------------------------------------
Current Liabilities
Current portion of long-term debt 138,345 53,000 105,755
Notes payable 3,640 17,000 73,743
Accounts payable 194,810 122,635 309,294
Taxes accrued 176,160 168,696 2,456
Interest accrued 36,055 49,785 48,441
Dividends declared 71,386 69,103 71,285
Deferred fuel credit 8,754 35,460 27,495
Other current liabilities 71,236 72,006 79,220
---------------------------------------------------------------------------------------------------------
Total Current Liabilities 700,386 587,685 717,689
---------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities
Accumulated deferred income taxes 1,733,013 1,640,364 1,716,835
Accumulated deferred investment tax credits 234,873 244,393 242,707
Other liabilities and deferred credits 235,962 243,872 221,032
---------------------------------------------------------------------------------------------------------
Total Deferred Credits and Other Liabilities 2,203,848 2,128,629 2,180,574
---------------------------------------------------------------------------------------------------------
Commitments and Contingencies (Note 5)
Total Capitalization and Liabilities $ 8,190,411 $ 8,178,274 $ 8,227,150
=========================================================================================================
SCHEDULES OF COMMON STOCK EQUITY
(In thousands)
Common stock (Note 3) $ 1,369,963 $ 1,439,814 $ 1,381,496
Unearned ESOP common stock (178,514) (191,526) (191,341)
Capital stock issuance expense (790) (790) (790)
Retained earnings 1,492,272 1,386,253 1,385,378
---------------------------------------------------------------------------------------------------------
Total Common Stock Equity $ 2,682,931 $ 2,633,751 $ 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
September 30 September 30 September 30
1996 1995 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Activities
Net income $ 129,159 $ 151,905 $ 310,161 $ 305,900 $ 376,865 $ 351,775
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 114,076 111,958 342,359 334,706 454,317 445,012
Harris Plant deferred costs 6,282 5,147 14,313 14,583 19,561 18,953
Deferred income taxes (9,023) 12,499 18,242 4,988 102,934 46,999
Investment tax credit adjustments (2,611) (2,553) (7,834) (7,658) (9,520) (10,542)
Allowance for equity funds used during construction (4) (774) (2,226) (2,671) (2,905) (2,984)
Deferred fuel cost (credit) (8,806) (8,683) (18,742) 7,117 (26,707) 24,876
Net (increase) decrease in receivables, inventories
and prepaid expenses 17,133 5,147 (18,152) (73,818) (22,183) (97,641)
Net increase (decrease) in payables and accrued
expenses 103,497 37,425 114,184 30,622 43,969 (14,915)
Miscellaneous 53,496 7,300 79,730 34,526 80,827 11,168
- -------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 403,199 319,371 832,035 648,295 1,017,158 772,701
- -------------------------------------------------------------------------------------------------------------------------------
Investing Activities
Gross property additions (80,480) (52,629) (249,980) (191,361) (325,017) (274,262)
Nuclear fuel additions (28,705) (31,933) (64,603) (67,243) (74,705) (77,771)
Contributions to external decommissioning trust (7,515) (6,899) (25,535) (33,515) (30,095) (36,679)
Contributions to retiree benefit trusts - - (24,700) (2,400) (24,700) (2,400)
Allowance for equity funds used during construction 4 774 2,226 2,671 2,905 2,984
Miscellaneous (4,919) (5,212) (23,485) (21,734) (30,265) (27,829)
- -------------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (121,615) (95,899) (386,077) (313,582) (481,877) (415,957)
- -------------------------------------------------------------------------------------------------------------------------------
Financing Activities
Proceeds from issuance of long-term debt - - 276,257 180,670 276,300 230,556
Net increase (decrease) in short-term notes
payable (maturity less than 90 days) (77,109) (65,700) 3,640 (51,100) 60,383 2,000
Retirement of long-term debt (106,613) (25,000) (498,088) (252,095) (522,137) (252,098)
Purchase of Company common stock (Note 3) (14,472) (67,403) (21,068) (75,396) (78,111) (103,381)
Dividends paid on common stock (65,419) (64,702) (195,965) (194,941) (258,960) (257,750)
Dividends paid on preferred stock (2,399) (2,399) (7,203) (7,222) (9,604) (9,622)
- -------------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Financing Activities (266,012) (225,204) (442,427) (400,084) (532,129) (390,295)
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 15,572 (1,732) 3,531 (65,371) 3,152 (33,551)
Cash and Cash Equivalents at Beginning of the Period 2,448 16,600 14,489 80,239 14,868 48,419
- -------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of the Period $ 18,020 $ 14,868 $ 18,020 $ 14,868 $ 18,020 $ 14,868
===============================================================================================================================
Supplemental Disclosures of Cash Flow Information
Cash paid during the period - interest $ 51,310 $ 49,685 $154,700 $153,140 $204,806 $193,544
income taxes $ 8,360 $ 24,000 $ 48,750 $ 64,611 $161,302 $169,909
- -------------------------------------------------------------------------------------------------------------------------------
See Supplemental Data and Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Carolina Power & Light Company
SUPPLEMENTAL DATA Three Months Ended Nine Months Ended Twelve Months Ended
September 30 September 30 September 30
1996 1995 1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues (in thousands)
Residential $ 279,468 $ 292,830 $ 768,131 $ 737,448 $ 999,794 $ 937,367
Commercial 176,561 178,531 478,477 469,387 627,484 606,635
Industrial 200,371 201,202 542,600 553,360 722,688 738,194
Government and municipal 18,651 21,650 57,676 59,215 76,861 77,619
Power Agency contract requirements 30,101 34,242 78,975 80,650 99,276 94,582
NCEMC 65,141 89,585 189,571 231,949 256,794 285,819
Other wholesale 21,196 21,136 63,091 61,661 83,837 76,975
Other utilities 26,497 24,343 82,606 58,012 102,741 62,040
Miscellaneous revenue 13,604 11,981 40,016 34,021 52,519 45,738
- --------------------------------------------------------------------------------------------------------------------------------
Total Operating Revenues $ 831,590 $ 875,500 $2,301,143 $2,285,703 $3,021,994 $2,924,969
================================================================================================================================
Energy Sales (millions of kWh)
Residential 3,288 3,413 9,736 9,095 12,716 11,567
Commercial 2,682 2,678 7,339 7,016 9,599 9,034
Industrial 3,750 3,676 10,775 10,676 14,411 14,327
Government and municipal 323 373 978 973 1,293 1,266
Power Agency contract requirements 693 802 2,078 1,767 2,649 2,241
NCEMC 1,122 1,702 3,075 4,186 4,343 5,260
Other wholesale 464 487 1,447 1,422 1,940 1,916
Other utilities 1,139 831 3,791 2,307 4,716 2,497
- --------------------------------------------------------------------------------------------------------------------------------
Total Energy Sales 13,461 13,962 39,219 37,442 51,667 48,108
=================================================================================================================================
Energy Supply (millions of kWh)
Generated - coal 6,999 7,231 19,026 17,671 24,871 21,331
nuclear 4,806 5,010 15,290 14,901 20,338 20,630
hydro 150 145 673 599 898 753
combustion turbines 27 55 56 55 58 54
Purchased 1,985 2,082 5,709 5,626 7,516 7,086
- ----------------------------------------------------------------------------------------------------------------------------------
Total Energy Supply
(Company Share) 13,967 14,523 40,754 38,852 53,681 49,854
==================================================================================================================================
Detail of Income Taxes (in thousands)
Included in Operating Expenses
Income tax expense (credit)- current $ 94,214 $ 90,522 $ 219,234 $ 200,692 $ 203,807 $ 198,034
Income tax expense - deferred (9,480) 11,455 14,990 748 97,545 41,082
Income tax expense - investment
tax credit adjustments (2,611) (2,553) (7,834) (7,658) (9,520) (10,542)
- ----------------------------------------------------------------------------------------------------------------------------------
Subtotal 82,123 99,424 226,390 193,782 291,832 228,574
- ----------------------------------------------------------------------------------------------------------------------------------
Harris Plant deferred costs -
investment tax credit adjustments (74) (74) (223) (223) (297) (297)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Included in Operating Expenses 82,049 99,350 226,167 193,559 291,535 228,277
- ----------------------------------------------------------------------------------------------------------------------------------
Included in Other Income
Income tax expense (credit) - current (5,945) (5,080) (17,571) (14,773) (27,717) (20,499)
Income tax expense - deferred 457 1,044 3,252 4,240 5,390 5,917
- ----------------------------------------------------------------------------------------------------------------------------------
Total Included in Other Income (5,488) (4,036) (14,319) (10,533) (22,327) (14,582)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Income Tax Expense $ 76,561 $ 95,314 $ 211,848 $ 183,026 $ 269,208 $ 213,695
==================================================================================================================================
FINANCIAL STATISTICS
Ratio of earnings to fixed charges 4.05 3.49
Return on average common stock equity 13.87 % 12.91 %
Book value per common share $ 18.71 $ 18.14
Capitalization ratios
Common stock equity 50.75 % 48.22 %
Preferred stock - redemption not required 2.72 2.63
Long-term debt, net 46.53 49.15
- -----------------------------------------------------------------------------------------------------------------------------------
Total 100.00 % 100.00 %
===================================================================================================================================
...................................................................................................................................
See Notes to Financial Statements.
</TABLE>
Carolina Power & Light Company
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. These consolidated 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. Due to
temperature variations between seasons of the year, the timing of
outages of electric generating units, especially nuclear-fueled units
and the impact of Hurricane Fran, which is discussed below, 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.
In preparing financial statements that conform with generally
accepted accounting principles, management must make estimates
and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at
the date of the financial statements and amounts of revenues and
expenses reflected during the reporting period. Actual results
could differ from those estimates.
2. In 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 $244.7 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 9.2 million shares through
September 30, 1996.
4. Included in the Company's Statements of Income is approximately
$29.8 million of maintenance expense incurred as a result of Hurricane
Fran striking the Company's service territory on September 5, 1996.
The Company estimates that restoring its system from the hurricane's
damage could result in expenditures of approximately $83 million.
Approximately two-thirds of the cost represents capital expenditures
related to labor and materials used in replacing destroyed poles,
lines and other equipment. The remaining one-third is related to
repairs of damaged equipment. On September 13, 1996, the Company
proposed to the North Carolina Utilities Commission (NCUC) a plan that
would allow deferral of hurricane-related maintenance expenses, with
amortization over the next three years. The capital expenditures
related to the hurricane will be depreciated. See Note 5 below for
additional discussion of this matter.
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 NCUC and the South
Carolina Public Service Commission and are based on site-specific
estimates that include 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.
<PAGE>
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) 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 that 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. As
part of this docket, the Company filed a proposal on September
13, 1996, to accelerate amortization of certain regulatory
assets. The proposed accelerated amortizations will reduce net
income by approximately $43 million in each of the next three
years. The Company anticipates filing a similar proposal to
accelerate amortization of certain regulatory assets with the
South Carolina Public Service Commission. These adjustments, if
approved, would reduce net income by approximately an additional
$13 million in each of the next three years. In addition to the
acceleration of amortization on the regulatory assets, the
Company proposed that the NCUC approve deferral of storm-related
maintenance expenses from Hurricane Fran, to be amortized over
the period 1997-1999. The Company cannot predict the outcome
of this matter.
d) 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.
<PAGE>
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 SEPTEMBER 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $6,348,981
<OTHER-PROPERTY-AND-INVEST> $454,796
<TOTAL-CURRENT-ASSETS> $620,950
<TOTAL-DEFERRED-CHARGES> $590,585
<OTHER-ASSETS> $175,099
<TOTAL-ASSETS> $8,190,411
<COMMON> $1,191,449
<CAPITAL-SURPLUS-PAID-IN> ($790)
<RETAINED-EARNINGS> $1,492,272
<TOTAL-COMMON-STOCKHOLDERS-EQ> $2,682,931
$0
$143,801
<LONG-TERM-DEBT-NET> $2,459,445
<SHORT-TERM-NOTES> $0
<LONG-TERM-NOTES-PAYABLE> $0
<COMMERCIAL-PAPER-OBLIGATIONS> $0
<LONG-TERM-DEBT-CURRENT-PORT> $138,345
$0
<CAPITAL-LEASE-OBLIGATIONS> $0
<LEASES-CURRENT> $0
<OTHER-ITEMS-CAPITAL-AND-LIAB> $2,765,889
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<GROSS-OPERATING-REVENUE> $2,301,143
<INCOME-TAX-EXPENSE> $226,390
<OTHER-OPERATING-EXPENSES> $1,661,234
<TOTAL-OPERATING-EXPENSES> $1,887,624
<OPERATING-INCOME-LOSS> $413,519
<OTHER-INCOME-NET> $39,669
<INCOME-BEFORE-INTEREST-EXPEN> $453,188
<TOTAL-INTEREST-EXPENSE> $143,027
<NET-INCOME> $310,161
$7,206
<EARNINGS-AVAILABLE-FOR-COMM> $302,955
<COMMON-STOCK-DIVIDENDS> $196,061
<TOTAL-INTEREST-ON-BONDS> $130,437
<CASH-FLOW-OPERATIONS> $832,035
<EPS-PRIMARY> $2.11
<EPS-DILUTED> $2.11
</TABLE>
