<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
<TABLE>
<CAPTION>
Exact name of Registrants as specified in
Commission their charters, address of principal executive IRS Employer Iden-
File Number offices and Registrants' telephone number tification Number
<S> <C> <C>
1-8841 FPL GROUP, INC. 59-2449419
1-3545 FLORIDA POWER & LIGHT COMPANY 59-0247775
700 Universe Boulevard
Juno Beach, Florida 33408
(561) 694-4000
</TABLE>
State or other jurisdiction of incorporation or organization: Florida
Indicate by check mark whether the registrants (1) have 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 and (2) have been
subject to such filing requirements for the past 90 days. Yes X No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of each class of FPL Group, Inc.
common stock, as of the latest practicable date: Common Stock, $.01
Par Value, outstanding at June 30, 1997: 182,093,385 shares
As of June 30, 1997, there were issued and outstanding 1,000 shares
of Florida Power & Light Company's common stock, without par value,
all of which were held, beneficially and of record, by FPL Group,
Inc.
______________________________
This combined Form 10-Q represents separate filings by FPL Group, Inc.
and Florida Power & Light Company. Information contained herein
relating to an individual registrant is filed by that registrant on its own
behalf. Florida Power & Light Company makes no representations as to
the information relating to FPL Group, Inc.'s other operations.
<PAGE>
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (Reform Act), FPL Group, Inc. (FPL
Group) and Florida Power & Light Company (FPL) (collectively, the
Company) are hereby filing cautionary statements identifying important
factors that could cause the Company's actual results to differ materially
from those projected in forward-looking statements (as such term is
defined in the Reform Act) of the Company made by or on behalf of the
Company which are made in this combined Form 10-Q, in presentations,
in response to questions or otherwise. Any statements that express, or
involve discussions as to, expectations, beliefs, plans, objectives,
assumptions or future events or performance (often, but not always,
through the use of words or phrases such as will likely result, are
expected to, will continue, is anticipated, estimated, projection, outlook)
are not statements of historical facts and may be forward-looking.
Forward-looking statements involve estimates, assumptions, and
uncertainties that could cause actual results to differ materially from
those expressed in the forward-looking statements. Accordingly, any
such statements are qualified in their entirety by reference to, and are
accompanied by, the following important factors that could cause the
Company's actual results to differ materially from those contained in
forward-looking statements of the Company made by or on behalf of the
Company.
Any forward-looking statement speaks only as of the date on which such
statement is made, and the Company undertakes no obligation to update
any forward-looking statement or statements to reflect events or
circumstances after the date on which such statement is made or to
reflect the occurrence of unanticipated events. New factors emerge from
time to time and it is not possible for management to predict all of such
factors, nor can it assess the impact of each such factor on the business
or the extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any
forward-looking statements.
Some important factors that could cause actual results or outcomes to
differ materially from those discussed in the forward-looking statements
include prevailing governmental policies and regulatory actions, including
those of the Federal Energy Regulatory Commission (FERC), the Florida
Public Service Commission (FPSC) and the Nuclear Regulatory
Commission, with respect to allowed rates of return, industry and rate
structure, operation of nuclear power facilities, acquisition and disposal
of assets and facilities, operation and construction of plant facilities,
recovery of purchased power, decommissioning costs, and present or
prospective wholesale and retail competition (including but not limited to
retail wheeling and transmission costs).
The business and profitability of the Company are also influenced by
economic and geographic factors including political and economic risks,
changes in and compliance with environmental and safety laws and
policies, weather conditions (including natural disasters such as
hurricanes), population growth rates and demographic patterns,
competition for retail and wholesale customers, pricing and transportation
of commodities, market demand for energy from plants or facilities,
changes in tax rates or policies or in rates of inflation, unanticipated
development project delays or changes in project costs, unanticipated
changes in operating expenses and capital expenditures, capital market
conditions, competition for new energy development opportunities, and
legal and administrative proceedings (whether civil, such as
environmental, or criminal) and settlements.
All such factors are difficult to predict, contain uncertainties which may
materially affect actual results, and are beyond the control of the
Company.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
FPL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
OPERATING REVENUES ........................................ $1,587,145 $1,474,086 $3,032,339 $2,831,793
OPERATING EXPENSES:
Fuel, purchased power and interchange ................... 560,346 500,169 1,103,904 949,829
Other operations and maintenance......................... 298,267 304,451 567,441 584,235
Depreciation and amortization ........................... 262,490 231,926 530,354 499,581
Taxes other than income taxes ........................... 144,586 138,252 283,928 275,486
Total operating expenses .............................. 1,265,689 1,174,798 2,485,627 2,309,131
OPERATING INCOME .......................................... 321,456 299,288 546,712 522,662
OTHER INCOME (DEDUCTIONS):
Interest charges ........................................ (71,500) (67,871) (142,535) (137,117)
Preferred stock dividends - FPL ......................... (4,340) (5,766) (10,050) (12,200)
Other - net ............................................. 1,674 (8,500) 9,445 (9,863)
Total other deductions - net .......................... (74,166) (82,137) (143,140) (159,180)
INCOME BEFORE INCOME TAXES ................................ 247,290 217,151 403,572 363,482
INCOME TAXES .............................................. 82,907 66,838 138,120 119,457
NET INCOME ................................................ $ 164,383 $ 150,313 $ 265,452 $ 244,025
Earnings per share of common stock ........................ $ 0.95 $ 0.86 $ 1.53 $ 1.40
Dividends per share of common stock ....................... $ 0.48 $ 0.46 $ 0.96 $ 0.92
Average number of common shares outstanding ............... 173,041 174,103 173,131 174,403
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on Pages 9 through 11 herein and
the Notes to Consolidated Financial Statements appearing in the
combined Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (1996 Form 10-K) for FPL Group and FPL.
<PAGE>
FPL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
<TABLE>
<CAPTION>
June 30,
1997 December 31,
(Unaudited) 1996
<S> <C> <C>
PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant and other property - at original cost,
including nuclear fuel and construction work in progress ....................... $17,651,166 $17,033,623
Less accumulated depreciation and amortization ................................... (8,122,301) (7,649,734)
Total property, plant and equipment - net ...................................... 9,528,865 9,383,889
CURRENT ASSETS:
Cash and cash equivalents ........................................................ 337,597 195,932
Customer receivables, net of allowances of $11,017 and $12,474, respectively ..... 538,067 461,501
Materials, supplies and fossil fuel stock - at average cost ...................... 287,884 268,186
Other ............................................................................ 158,955 247,912
Total current assets ........................................................... 1,322,503 1,173,531
OTHER ASSETS:
Special use funds of FPL ......................................................... 896,930 805,819
Other investments ................................................................ 463,815 326,855
Unamortized debt reacquisition costs of FPL ...................................... 231,719 282,756
Other ............................................................................ 309,219 246,473
Total other assets ............................................................. 1,901,683 1,661,903
TOTAL ASSETS ....................................................................... $12,753,051 $12,219,323
CAPITALIZATION:
Common shareholders' equity ...................................................... $ 4,670,511 $ 4,592,132
Preferred stock of FPL without sinking fund requirements ......................... 226,250 289,580
Preferred stock of FPL with sinking fund requirements ............................ 36,500 42,000
Long-term debt ................................................................... 3,227,944 3,144,313
Total capitalization ........................................................... 8,161,205 8,068,025
CURRENT LIABILITIES:
Accounts payable ................................................................. 362,488 307,836
Debt and preferred stock due within one year ..................................... 360,228 154,600
Accrued interest, taxes and other ................................................ 973,836 812,028
Total current liabilities ...................................................... 1,696,552 1,274,464
OTHER LIABILITIES AND DEFERRED CREDITS:
Accumulated deferred income taxes ................................................ 1,449,601 1,530,538
Unamortized regulatory and investment tax credits ................................ 418,145 379,279
Other ............................................................................ 1,027,548 967,017
Total other liabilities and deferred credits ................................... 2,895,294 2,876,834
COMMITMENTS AND CONTINGENCIES
TOTAL CAPITALIZATION AND LIABILITIES ............................................... $12,753,051 $12,219,323
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on Pages 9 through 11 herein and
the Notes to Consolidated Financial Statements appearing in the 1996
Form 10-K for FPL Group and FPL.
<PAGE>
FPL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .......................................................................... $ 265,452 $ 244,025
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization ..................................................... 530,354 499,581
Other - net ....................................................................... 157,145 80,478
Net cash provided by operating activities ....................................... 952,951 824,084
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ................................................................ (260,147) (238,993)
Investments in energy-related projects .............................................. (206,527) (975)
Other - net ......................................................................... 48,755 (43,687)
Net cash used in investing activities ........................................... (417,919) (283,655)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt .......................................................... 20,588 -
Retirement of long-term debt and preferred stock .................................... (204,566) (219,765)
Decrease in short-term debt ......................................................... (10,973) (107,813)
Repurchase of common stock .......................................................... (32,267) (58,869)
Dividends on common stock ........................................................... (166,149) (160,463)
Other - net ......................................................................... - 39,229
Net cash used in financing activities ........................................... (393,367) (507,681)
Net increase in cash and cash equivalents ............................................. 141,665 32,748
Cash and cash equivalents at beginning of period ...................................... 195,932 46,177
Cash and cash equivalents at end of period ............................................ $ 337,597 $ 78,925
Supplemental disclosures of cash flow information:
Cash paid for interest .............................................................. $ 138,857 $ 131,331
Cash paid for income taxes .......................................................... $ 84,672 $ 50,700
Supplemental schedule of noncash investing and financing activities:
Additions to capital lease obligations .............................................. $ 40,401 $ 42,192
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on Pages 9 through 11 herein and
the Notes to Consolidated Financial Statements appearing in the 1996
Form 10-K for FPL Group and FPL.
<PAGE>
FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
OPERATING REVENUES ........................................ $1,541,119 $1,454,997 $2,939,887 $2,795,739
OPERATING EXPENSES:
Fuel, purchased power and interchange ................... 550,974 500,169 1,076,160 949,829
Other operations and maintenance ........................ 278,455 287,677 524,949 550,194
Depreciation and amortization ........................... 255,694 230,551 518,313 496,792
Income taxes ............................................ 91,864 79,687 149,692 138,109
Taxes other than income taxes ........................... 144,009 138,156 282,996 275,252
Total operating expenses .............................. 1,320,996 1,236,240 2,552,110 2,410,176
OPERATING INCOME .......................................... 220,123 218,757 387,777 385,563
OTHER INCOME (DEDUCTIONS):
Interest charges ........................................ (57,329) (61,548) (116,536) (123,934)
Other - net ............................................. 1,228 1,148 2,542 3,882
Total other deductions - net .......................... (56,101) (60,400) (113,994) (120,052)
NET INCOME ................................................ 164,022 158,357 273,783 265,511
PREFERRED STOCK DIVIDENDS ................................. 4,340 5,766 10,050 12,200
NET INCOME AVAILABLE TO FPL GROUP ......................... $ 159,682 $ 152,591 $ 263,733 $ 253,311
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on Pages 9 through 11 herein and
the Notes to Consolidated Financial Statements appearing in the 1996
Form 10-K for FPL Group and FPL.
<PAGE>
FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
<TABLE>
<CAPTION>
June 30,
1997 December 31,
(Unaudited) 1996
<S> <C> <C>
ELECTRIC UTILITY PLANT:
At original cost, including nuclear fuel and construction work in progress ....... $16,983,373 $16,808,792
Less accumulated depreciation and amortization ................................... (8,013,124) (7,610,786)
Electric utility plant - net ................................................... 8,970,249 9,198,006
CURRENT ASSETS:
Cash and cash equivalents ........................................................ 233,638 78,417
Customer receivables, net of allowances of $10,868 and $12,176, respectively ..... 518,778 460,120
Materials, supplies and fossil fuel stock - at average cost ...................... 245,308 247,597
Other ............................................................................ 144,607 225,153
Total current assets ........................................................... 1,142,331 1,011,287
OTHER ASSETS:
Special use funds ................................................................ 896,930 805,819
Unamortized debt reacquisition costs ............................................. 231,719 282,756
Other ............................................................................ 245,680 233,405
Total other assets ............................................................. 1,374,329 1,321,980
TOTAL ASSETS ....................................................................... $11,486,909 $11,531,273
CAPITALIZATION:
Common shareholder's equity ...................................................... $ 4,716,979 $ 4,666,941
Preferred stock without sinking fund requirements ................................ 226,250 289,580
Preferred stock with sinking fund requirements ................................... 36,500 42,000
Long-term debt ................................................................... 2,673,002 2,981,261
Total capitalization ........................................................... 7,652,731 7,979,782
CURRENT LIABILITIES:
Accounts payable ................................................................. 305,972 299,026
Debt and preferred stock due within one year ..................................... 181,840 4,040
Accrued interest, taxes and other ................................................ 906,354 824,945
Total current liabilities ...................................................... 1,394,166 1,128,011
OTHER LIABILITIES AND DEFERRED CREDITS:
Accumulated deferred income taxes ................................................ 1,102,848 1,146,680
Unamortized regulatory and investment tax credits ................................ 418,145 379,279
Other ............................................................................ 919,019 897,521
Total other liabilities and deferred credits ................................... 2,440,012 2,423,480
COMMITMENTS AND CONTINGENCIES
TOTAL CAPITALIZATION AND LIABILITIES ............................................... $11,486,909 $11,531,273
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on Pages 9 through 11 herein and
the Notes to Consolidated Financial Statements appearing in the 1996
Form 10-K for FPL Group and FPL.
<PAGE>
FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .......................................................................... $ 273,783 $ 265,511
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization ..................................................... 518,313 496,792
Other - net ....................................................................... 58,597 69,480
Net cash provided by operating activities ....................................... 850,693 831,783
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ................................................................ (230,123) (236,308)
Other - net ......................................................................... (46,838) (85,756)
Net cash used in investing activities ........................................... (276,961) (322,064)
CASH FLOWS FROM FINANCING ACTIVITIES:
Retirement of long-term debt and preferred stock .................................... (194,775) (219,354)
Decrease in commercial paper ........................................................ - (138,500)
Dividends ........................................................................... (223,736) (224,843)
Capital contributions from FPL Group ................................................ - 50,000
Other - net ......................................................................... - 34,991
Net cash used in financing activities ........................................... (418,511) (497,706)
Net increase in cash and cash equivalents ............................................. 155,221 12,013
Cash and cash equivalents at beginning of period ...................................... 78,417 412
Cash and cash equivalents at end of period ............................................ $ 233,638 $ 12,425
Supplemental disclosures of cash flow information:
Cash paid for interest .............................................................. $ 112,841 $ 120,303
Cash paid for income taxes .......................................................... $ 196,657 $ 87,166
Supplemental schedule of noncash investing and financing activities:
Additions to capital lease obligations .............................................. $ 40,401 $ 42,192
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on Pages 9 through 11 herein and
the Notes to Consolidated Financial Statements appearing in the 1996
Form 10-K for FPL Group and FPL.
<PAGE>
FPL GROUP, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The accompanying condensed consolidated financial statements should
be read in conjunction with the combined 1996 Form 10-K for FPL Group
and FPL. In the opinion of FPL Group and FPL, all adjustments
(consisting only of normal recurring accruals) necessary to present fairly
the financial position as of June 30, 1997 and December 31, 1996, the
results of operations for the three and six months ended June 30, 1997
and 1996 and cash flows for the six months ended June 30, 1997 and
1996 have been made. Certain amounts included in the prior year's
consolidated financial statements have been reclassified to conform to
the current year's presentation. The results of operations for an interim
period may not give a true indication of results for the year.
1. Summary of Significant Accounting and Reporting Policies
Regulation - In April 1997, the FPSC voted to extend through 1999
FPL's program to amortize certain specified assets, mainly costs
associated with nuclear and fossil generating assets and debt
reacquisition costs, based on the level of retail base revenues achieved
compared to a fixed amount. The decision was subject to any third party
request for hearings. Such a request was filed, and hearings regarding
the extension are scheduled to take place later this year. The hearings
will not address amounts recorded prior to January 1, 1998.
For a discussion of amounts recorded under the special amortization
program during the three and six months ended June 30, 1997 and
1996, see Management's Discussion and Analysis of Financial Condition
and Results of Operations - Results of Operations.
2. Capitalization
FPL Group Common Stock - FPL Group's board of directors authorized
the repurchase of up to 10 million shares of common stock commencing
on April 1, 1997 under a new share repurchase program. During the
three months ended June 30, 1997, FPL Group repurchased 346,500
shares of common stock under the new program. A total of 8.1 million
shares were repurchased under a similar share repurchase program that
began in 1994 and was terminated in March 1997, which included
371,500 shares repurchased during the first quarter of 1997.
Preferred Stock - In March 1997, FPL redeemed all 2,533,188
outstanding shares of its $2.00 No Par Value Preferred Stock, Series A
(Involuntary Liquidation Value $25 Per Share).
The 1997 sinking fund requirements for the 6.84% Preferred Stock,
Series Q, $100 Par Value and the 8.625% Preferred Stock, Series R,
$100 Par Value were met by redeeming and retiring, in April 1997,
30,000 shares of Series Q and the remaining 50,000 shares of Series R.
There are no preferred stock sinking fund requirements for the remainder
of 1997.
Long-Term Debt - In March 1997, FPL redeemed all $61,670,300 face
amount of the outstanding 8.75% Quarterly Income Debt Securities
(Subordinated Deferrable Interest Debentures) due 2025.
In April and May 1997, FPL purchased on the open market and retired
approximately $66 million in aggregate principal amount of several series
of first mortgage bonds, due on dates ranging from 2013 through 2026,
with interest rates ranging from 7% to 7 7/8%.
3. Commitments and Contingencies
Commitments - FPL has made commitments in connection with a portion
of its projected capital expenditures. Capital expenditures for the
construction or acquisition of additional facilities and equipment to meet
customer demand are estimated to be approximately $1.6 billion for
1997 through 1999. Included in this three-year forecast are capital
expenditures for 1997 of approximately $590 million, of which $230
million had been spent through June 30, 1997. FPL Group Capital Inc
(FPL Group Capital) and its subsidiaries, primarily ESI Energy, Inc., have
guaranteed approximately $150 million of lease obligations, debt service
payments and other payments subject to certain contingencies.
Insurance - Liability for accidents at nuclear power plants is governed by
the Price-Anderson Act, which limits the liability of nuclear reactor
owners to the amount of the insurance available from private sources
and under an industry retrospective payment plan. In accordance with
this Act, FPL maintains $200 million of private liability insurance, which is
the maximum obtainable, and participates in a secondary financial
protection system under which it is subject to retrospective assessments
of up to $327 million per incident at any nuclear utility reactor in the
United States, payable at a rate not to exceed $40 million per incident
per year.
FPL participates in nuclear insurance mutual companies that provide
$2.75 billion of limited insurance coverage for property damage,
decontamination and premature decommissioning risks at its nuclear
plants. The proceeds from such insurance, however, must first be used
for reactor stabilization and site decontamination before they can be
used for plant repair. FPL also participates in an insurance program that
provides limited coverage for replacement power costs if a nuclear plant
is out of service because of an accident. In the event of an accident at
one of FPL's or another participating insured's nuclear plants, FPL could
be assessed up to $70 million in retrospective premiums.
FPL also participates in a program that provides $200 million of tort
liability coverage industry wide for nuclear worker claims. In the event of
a tort claim by an FPL or another insured's nuclear worker, FPL could be
assessed up to $12 million in retrospective premiums per incident.
In the event of a catastrophic loss at one of FPL's nuclear plants, the
amount of insurance available may not be adequate to cover property
damage and other expenses incurred. Uninsured losses, to the extent
not recovered through rates, would be borne by FPL and could have a
material adverse effect on FPL Group's and FPL's financial condition.
FPL self-insures certain of its transmission and distribution (T&D)
property due to the high cost and limited coverage available from
third-party insurers. FPL maintains a funded storm and property
insurance reserve, which totaled approximately $237 million at June 30,
1997, for T&D property storm damage or assessments under the nuclear
insurance program. Recovery from customers of any losses in excess of
the storm and property insurance reserve will require the approval of the
FPSC. FPL's available lines of credit include $300 million to provide
additional liquidity in the event of a T&D property loss.
Contracts - FPL has entered into certain long-term purchased power and
fuel contracts. Take-or-pay purchased power contracts with the
Jacksonville Electric Authority (JEA) and with subsidiaries of the
Southern Company (Southern Companies) provide approximately 1,300
megawatts (mw) of power through mid-2010 and 374 mw through 2022.
FPL also has various firm pay-for-performance contracts to purchase
approximately 1,000 mw from certain cogenerators and small power
producers (qualifying facilities) with expiration dates ranging from 2002
through 2026. The purchased power contracts provide for capacity and
energy payments. Energy payments are based on the actual power
taken under these contracts. Capacity payments for the
pay-for-performance contracts are subject to the qualifying facilities
meeting certain contract conditions. The fuel contracts provide for the
transportation and supply of natural gas and coal and the supply and
use of Orimulsion. Orimulsion is a new fuel that FPL expected to begin
using in 1998. The contract and related use of this fuel is subject to
regulatory approvals. In 1996, Florida's Power Plant Siting Board denied
FPL's request to burn Orimulsion at the Manatee power plant. FPL
appealed the denial and the First District Court of Appeal of the State of
Florida has directed Florida's Power Plant Siting Board to reconsider
FPL's plan to burn Orimulsion.
The required capacity and minimum payments through 2001 under these
contracts are estimated to be as follows:
<TABLE>
<CAPTION>
1997 1998 1999 2000 2001
(Millions of Dollars)
<S> <C> <C> <C> <C> <C>
Capacity payments:
JEA and Southern Companies ............................................... $210 $210 $210 $210 $210
Qualifying facilities .................................................... $340 $350 $360 $370 $380
Minimum payments, at projected prices:
Natural gas, including transportation .................................... $300 $180 $180 $190 $190
Orimulsion (1) ........................................................... - - $140 $140 $140
Coal ..................................................................... $ 50 $ 50 $ 40 $ 40 $ 30
(1) All of FPL's Orimulsion-related contract obligations are subject to obtaining the required regulatory approvals.
</TABLE>
Capacity, energy and fuel charges under these contracts were as
follows:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1997 Charges 1996 Charges 1997 Charges 1996 Charges
Energy/ Energy/ Energy/ Energy/
Capacity Fuel (1) Capacity Fuel (1) Capacity Fuel (1) Capacity Fuel (1)
(Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JEA and Southern Companies .. $50(2) $ 38 $45(2) $34 $102(2) $ 73 $ 91(2) $ 67
Qualifying facilities........ $74(3) $ 31 $70(3) $35 $148(3) $ 60 $139(3) $ 62
Natural gas ................. - $112 - $80 - $201 - $177
Coal ........................ - $ 14 - $11 - $ 26 - $ 22
(1) Recovered through the fuel and purchased power cost recovery clause.
(2) Recovered through base rates and the capacity cost recovery clause (capacity clause).
(3) Recovered through the capacity clause.
</TABLE>
Litigation - The Florida Municipal Power Agency (FMPA), an organization
comprised of municipal electric utilities, has sued FPL for allegedly
breaching a "contract" to provide transmission service to the FMPA and
its members and for breaching antitrust laws by monopolizing or
attempting to monopolize the provision, coordination and transmission of
electric power in refusing to provide transmission service, or to permit
the FMPA to invest in and use FPL's transmission system, on the
FMPA's proposed terms. The FMPA seeks $140 million in damages,
before trebling for the antitrust claim, and court orders requiring FPL to
permit the FMPA to invest in and use FPL's transmission system on
"reasonable terms and conditions" and on a basis equal to FPL. In
1995, the Court of Appeals vacated the District Court's summary
judgment in favor of FPL and remanded the matter to the District Court
for further proceedings. In 1996, the District Court ordered the FMPA to
seek a declaratory ruling from the FERC regarding certain issues in the
case. All other action in the case has been stayed pending the FERC's
ruling.
A former cable installation contractor for Telesat Cablevision, Inc.
(Telesat), a wholly-owned subsidiary of FPL Group Capital, sued FPL
Group, FPL Group Capital and Telesat for breach of contract, fraud,
violation of racketeering statutes and several other claims. The trial
court entered a judgment in favor of FPL Group and Telesat on nine of
twelve counts, including all of the racketeering and fraud claims, and in
favor of FPL Group Capital on all counts. It also denied all parties'
claims for attorneys' fees. However, the jury in the case awarded the
contractor damages totaling approximately $6 million against FPL Group
and Telesat for breach of contract and tortious interference. All parties
have appealed.
FPL Group and FPL believe that they have meritorious defenses to the
litigation described above and are vigorously defending these suits.
Accordingly, the liabilities, if any, arising from these proceedings are not
anticipated to have a material adverse effect on their financial
statements.
4. Summarized Financial Information of FPL Group Capital
FPL Group Capital's debentures are guaranteed by FPL Group.
Operating revenues of FPL Group Capital for the six months ended
June 30, 1997 and 1996 were approximately $92 million and $36 million,
respectively. For the same period, operating expenses were
approximately $83 million and $36 million. Net income for the six
months ended June 30, 1997 and 1996 was approximately $10 million
and $4 million, respectively.
At June 30, 1997, FPL Group Capital had current assets of
approximately $131 million, noncurrent assets of approximately $1.421
billion, current liabilities of approximately $260 million and noncurrent
liabilities of approximately $958 million. At December 31, 1996, FPL
Group Capital had approximately $144 million of current assets, $857
million of noncurrent assets, $182 million of current liabilities and $595
million of noncurrent liabilities. The consolidation of the Doswell Limited
Partnership in the first quarter of 1997 increased total assets and
liabilities by approximately $450 million. The partnership operates a 663
mw exempt wholesale generator.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
This discussion should be read in conjunction with the Notes to
Condensed Consolidated Financial Statements contained herein and
Management's Discussion and Analysis of Financial Condition and
Results of Operations appearing in the 1996 Form 10-K for FPL Group
and FPL. The results of operations for an interim period may not give a
true indication of results for the year. In the following discussion, all
comparisons are with the corresponding items in the prior year.
RESULTS OF OPERATIONS
The principal operations of FPL Group consist of the generation,
transmission, distribution and sale of electric energy by FPL. Net
income for the three and six months ended June 30, 1997 benefitted
from FPL's growing customer base, lower other operations and
maintenance expenses and lower interest and preferred stock dividends
at FPL, partly offset by higher depreciation expense. Certain fluctuations
resulting from FPL's operations were offset in FPL Group's financial
statements because, beginning with the first quarter of 1997, FPL
Group's financial statements include the accounts of the Doswell Limited
Partnership. Partnership activities did not have a significant impact on
operations or net income.
FPL's revenues from base rates for the three and six months ended
June 30, 1997 increased to $875 million and $1.64 billion, respectively,
from approximately $845 million and $1.63 billion for the same periods in
1996. The increases reflect a 1.7% increase in customer accounts and
increases in energy usage per retail customer of 2.6% and 1.4%,
respectively, primarily due to weather conditions. Revenues for the six
months ended June 30, 1997 also reflected a weather-related shift in
sales between customer classes and the different rates charged to those
classes. Cost recovery clause revenues and franchise fees comprise
substantially all of the remaining portion of FPL's operating revenues.
These revenues represent a pass-through of costs and do not
significantly affect net income.
FPL's other operations and maintenance (O&M) expenses decreased for
the three and six months ended June 30, 1997, primarily due to lower
nuclear refueling outage costs. In 1996, there were two planned nuclear
refueling outages, one in the first quarter and one in the second quarter.
During the six months ended June 30, 1997, FPL has been recording
nuclear refueling outage costs in accordance with the method approved
by the FPSC in October 1996. Under this method, the estimated nuclear
refueling and maintenance cost of each nuclear unit's next planned
outage is accrued from the time the unit resumes operation from the
preceding outage until the end of the next planned outage. FPL's interest
expense and preferred stock dividend requirements also declined,
resulting from reductions in debt and preferred stock balances. The
increase in FPL Group's interest expense reflects the consolidation of
the Doswell Limited Partnership beginning in 1997. Depreciation and
amortization expense at FPL increased for the three and six months
ended June 30, 1997, mainly as a result of the special amortization
program, which is a function of retail base revenues. A total of $53
million and $115 million of amortization was recorded under this program
during the three and six months ended June 30, 1997, respectively, and
$27 million and $101 million during the same periods in 1996. The
increased depreciation of nuclear and fossil generating assets during the
three and six months ended June 30, 1996 resulted in increased
amortization of related investment tax credits, lowering income tax
expense in 1996. Special amortization in 1997 is being applied against
regulatory assets, primarily debt reacquisition costs of FPL.
In April 1997, the FPSC voted to extend through 1999 FPL's program to
amortize certain specified assets, mainly costs associated with nuclear
and fossil generating assets and debt reacquisition costs, based on the
level of retail base revenues achieved compared to a fixed amount. The
decision was subject to any third party request for hearings. Such a
request was filed, and hearings regarding the extension are scheduled to
take place later this year. The hearings will not address amounts
recorded prior to January 1, 1998.
LIQUIDITY AND CAPITAL RESOURCES
Using available cash flows from operations, FPL has redeemed certain
series of its preferred stock and first mortgage bonds, thereby reducing
preferred stock dividends and interest expense. Additionally, during the
three and six months ended June 30, 1997, FPL Group repurchased
346,500 and 718,000 shares of common stock, respectively. These
actions are consistent with management's intent to reduce debt and
preferred stock balances and the number of outstanding shares of
common stock when considered appropriate. See Note 2.
The change in cash flows from investing activities primarily reflects
additional investment in existing domestic energy-related projects. For
information concerning capital commitments, see Note 3.
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
FPL Group:
(a) The Annual Meeting of FPL Group's shareholders was
held on May 12, 1997. Of the 182,443,635 shares of
common stock outstanding on the record date of
March 3, 1997, a total of 152,867,369 shares were
represented in person or by proxy.
(b) The following directors were elected effective May 12,
1997:
<TABLE>
<CAPTION>
Votes Cast
Against or
For Withheld
<S> <C> <C>
H. Jesse Arnelle ......................................................... 149,687,669 3,179,700
Robert M. Beall, II ...................................................... 149,712,241 3,155,128
James L. Broadhead ....................................................... 148,152,107 4,715,262
J. Hyatt Brown ........................................................... 149,177,131 3,690,238
Lynne V. Cheney .......................................................... 149,702,100 3,165,269
Armando M. Codina ........................................................ 149,643,683 3,223,686
Marshall M. Criser ....................................................... 149,652,651 3,214,718
B. F. Dolan .............................................................. 149,719,270 3,148,099
Willard D. Dover ......................................................... 149,389,600 3,477,769
Alexander W. Dreyfoos, Jr. ............................................... 149,560,201 3,307,168
Paul J. Evanson .......................................................... 149,472,995 3,394,374
Drew Lewis ............................................................... 149,238,605 3,628,764
Frederic V. Malek ........................................................ 149,233,714 3,633,655
Paul R. Tregurtha ........................................................ 149,314,745 3,552,624
</TABLE>
(c)(i) The vote to ratify the appointment of Deloitte &
Touche LLP as independent auditors for 1997 was
150,385,979 for, 1,566,175 against and 915,215
abstaining.
(ii) The vote to approve the FPL Group, Inc. Non-Employee
Directors Stock Plan was 140,784,635 for, 9,776,969
against and 2,305,765 abstaining.
(iii) The vote on a shareholder proposal requesting that
FPL Group adopt cumulative voting for the election of
directors was 38,503,045 for, 89,772,018 against,
3,348,509 abstaining and 21,243,797 broker non-votes.
FPL:
(a) The following FPL directors were elected effective
May 12, 1997 by the written consent of FPL Group, as
the sole common shareholder of FPL, in lieu of an
annual meeting of shareholders:
James L. Broadhead
Dennis P. Coyle
Paul J. Evanson
Lawrence J. Kelleher
Thomas F. Plunkett
C. O. Woody
Michael W. Yackira
Item 5. Other Information
(a) Reference is made to Item 1. Business - FPL
Operations - System Capability and Load in the 1996
Form 10-K for FPL Group and FPL.
On July 8, 1997, FPL reached a summer energy peak
demand of 16,329 mw. Adequate resources were
available at the time of peak to meet customer
demand.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit FPL
Number Description Group FPL
<S> <C> <C> <C>
12 Computation of Ratios x
27 Financial Data Schedule x x
</TABLE>
(b) Reports on Form 8-K - None
SIGNATURES
Pursuant to the 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.
FPL GROUP, INC.
FLORIDA POWER & LIGHT COMPANY
(Registrants)
Date: July 31, 1997 MICHAEL W. YACKIRA
Michael W. Yackira
Vice President, Finance and Chief Financial
Officer of FPL Group, Inc.,
Senior Vice President, Finance and Chief Financial
Officer of Florida Power & Light Company
(Principal Financial Officer of the Registrants)
EXHIBIT 12
FLORIDA POWER & LIGHT COMPANY
COMPUTATION OF RATIOS
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1997
(Thousands of Dollars)
RATIO OF EARNINGS TO FIXED CHARGES
<S> <C>
Earnings, as defined:
Net income .............................................................................. $273,783
Income taxes ............................................................................ 146,345
Fixed charges, as below ................................................................. 123,112
Total earnings, as defined ............................................................ $543,240
Fixed charges, as defined:
Interest expense ........................................................................ $116,536
Rental interest factor .................................................................. 1,963
Fixed charges included in nuclear fuel cost ............................................. 4,613
Total fixed charges, as defined ....................................................... $123,112
Ratio of earnings to fixed charges ........................................................ 4.41
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Earnings, as defined:
Net income .............................................................................. $273,783
Income taxes ............................................................................ 146,345
Fixed charges, as below ................................................................. 123,112
Total earnings, as defined ............................................................ $543,240
Fixed charges, as defined:
Interest expense ........................................................................ $116,536
Rental interest factor .................................................................. 1,963
Fixed charges included in nuclear fuel cost ............................................. 4,613
Total fixed charges, as defined ....................................................... 123,112
Non-tax deductible preferred stock dividends .............................................. 10,050
Ratio of income before income taxes to net income ......................................... 1.53
Preferred stock dividends before income taxes ............................................. 15,377
Combined fixed charges and preferred stock dividends ...................................... $138,489
Ratio of earnings to combined fixed charges and preferred stock dividends ................. 3.92
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from FPL Group's and FPL's condensed consolidated balance sheet as
of June 30, 1997 and condensed consolidated statements of income and cash flows for the six months ended June 30, 1997 and is
qualified in its entirety by reference to such financial statements.
<CIK> 0000753308
<NAME> FPL Group, Inc.
<MULTIPLIER> 1,000
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<PERIOD-TYPE> 6-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $8,970,249
<OTHER-PROPERTY-AND-INVEST> $1,919,361
<TOTAL-CURRENT-ASSETS> $1,322,503
<TOTAL-DEFERRED-CHARGES> $0
<OTHER-ASSETS> $540,938
<TOTAL-ASSETS> $12,753,051
<COMMON> $0
<CAPITAL-SURPLUS-PAID-IN> $0
<RETAINED-EARNINGS> $0
<TOTAL-COMMON-STOCKHOLDERS-EQ> $4,670,511
$36,500
$226,250
<LONG-TERM-DEBT-NET> $3,227,944
<SHORT-TERM-NOTES> $0
<LONG-TERM-NOTES-PAYABLE> $0
<COMMERCIAL-PAPER-OBLIGATIONS> $0
<LONG-TERM-DEBT-CURRENT-PORT> $0
$0
<CAPITAL-LEASE-OBLIGATIONS> $0
<LEASES-CURRENT> $0
<OTHER-ITEMS-CAPITAL-AND-LIAB> $4,591,846
<TOT-CAPITALIZATION-AND-LIAB> $12,753,051
<GROSS-OPERATING-REVENUE> $3,032,339
<INCOME-TAX-EXPENSE> $138,120
<OTHER-OPERATING-EXPENSES> $2,485,627
<TOTAL-OPERATING-EXPENSES> $2,485,627
<OPERATING-INCOME-LOSS> $546,712
<OTHER-INCOME-NET> $9,445
<INCOME-BEFORE-INTEREST-EXPEN> $407,987
<TOTAL-INTEREST-EXPENSE> $142,535
<NET-INCOME> $265,452
$10,050
<EARNINGS-AVAILABLE-FOR-COMM> $265,452
<COMMON-STOCK-DIVIDENDS> $166,149
<TOTAL-INTEREST-ON-BONDS> $0
<CASH-FLOW-OPERATIONS> $952,951
<EPS-PRIMARY> $1.53
<EPS-DILUTED> $1.53
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from FPL's condensed consolidated balance sheet as of June 30, 1997
and condensed consolidated statements of income and cash flows for the six months ended June 30, 1997 and is qualified in its
entirety by reference to such financial statements.
<CIK> 0000037634
<NAME> Florida Power & Light Company
<MULTIPLIER> 1,000
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<PERIOD-TYPE> 6-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $8,970,249
<OTHER-PROPERTY-AND-INVEST> $896,930
<TOTAL-CURRENT-ASSETS> $1,142,331
<TOTAL-DEFERRED-CHARGES> $0
<OTHER-ASSETS> $477,399
<TOTAL-ASSETS> $11,486,909
<COMMON> $0
<CAPITAL-SURPLUS-PAID-IN> $0
<RETAINED-EARNINGS> $0
<TOTAL-COMMON-STOCKHOLDERS-EQ> $4,716,979
$36,500
$226,250
<LONG-TERM-DEBT-NET> $2,673,002
<SHORT-TERM-NOTES> $0
<LONG-TERM-NOTES-PAYABLE> $0
<COMMERCIAL-PAPER-OBLIGATIONS> $0
<LONG-TERM-DEBT-CURRENT-PORT> $0
$0
<CAPITAL-LEASE-OBLIGATIONS> $0
<LEASES-CURRENT> $0
<OTHER-ITEMS-CAPITAL-AND-LIAB> $3,834,178
<TOT-CAPITALIZATION-AND-LIAB> $11,486,909
<GROSS-OPERATING-REVENUE> $2,939,887
<INCOME-TAX-EXPENSE> $149,692
<OTHER-OPERATING-EXPENSES> $2,402,418
<TOTAL-OPERATING-EXPENSES> $2,552,110
<OPERATING-INCOME-LOSS> $387,777
<OTHER-INCOME-NET> $2,542
<INCOME-BEFORE-INTEREST-EXPEN> $390,319
<TOTAL-INTEREST-EXPENSE> $116,536
<NET-INCOME> $273,783
$10,050
<EARNINGS-AVAILABLE-FOR-COMM> $263,733
<COMMON-STOCK-DIVIDENDS> $0
<TOTAL-INTEREST-ON-BONDS> $0
<CASH-FLOW-OPERATIONS> $850,693
<EPS-PRIMARY> $0
<EPS-DILUTED> $0
</TABLE>
