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 March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Exact name of Registrants as specified
in their charters, address of principal IRS Employer
Commission executive offices and Identification
File Number Registrants' telephone number Number
- ----------- --------------------------------------- --------------
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
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 March 31, 1999: 180,164,535 shares.
As of March 31, 1999, 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.
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) 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 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 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 statement.
Some important factors that could cause actual results or outcomes to differ
materially from those discussed in the forward-looking statements include
changing 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 (NRC), with respect to
allowed rates of return including but not limited to return on common equity
(ROE) and equity ratio limits, industry and rate structure, operation of
nuclear power facilities, acquisition, disposal, depreciation and
amortization of assets and facilities, operation and construction of plant
facilities, recovery of fuel and purchased power costs, 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, legal
and administrative proceedings (whether civil, such as environmental, or
criminal) and settlements, and any unanticipated impact of the year 2000,
including delays or changes in costs of year 2000 compliance, or the failure of
major suppliers, customers and others with whom the Company does business to
resolve their own year 2000 issues on a timely basis.
All such factors are difficult to predict, contain uncertainties which may
materially affect actual results, and are beyond the control of the Company.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
FPL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1999 1998
------ ------
<S> <C> <C>
OPERATING REVENUES ............................................... $1,412 $1,338
OPERATING EXPENSES:
Fuel, purchased power and interchange .......................... 506 436
Other operations and maintenance................................ 275 299
Depreciation and amortization .................................. 279 249
Taxes other than income taxes .................................. 144 136
Total operating expenses ..................................... 1,204 1,120
OPERATING INCOME ................................................. 208 218
OTHER INCOME (DEDUCTIONS):
Interest charges ............................................... (47) (63)
Preferred stock dividends - FPL ................................ (4) (4)
Gain on sale of Adelphia Communications Corporation stock....... 149 -
Other - net .................................................... 9 7
Total other income (deductions) - net ........................ 107 (60)
INCOME BEFORE INCOME TAXES ....................................... 315 158
INCOME TAXES ..................................................... 106 50
NET INCOME ....................................................... $ 209 $ 108
Earnings per share of common stock (basic and assuming dilution).. $ 1.22 $ 0.63
Dividends per share of common stock .............................. $ 0.52 $ 0.50
Average number of common shares outstanding ...................... 172 173
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on pages 9 through 12 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, 1998 (1998 Form 10-K)
for FPL Group and FPL.
FPL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- ------------
<S> <C> <C>
PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant in service and other property,
including nuclear fuel and construction work in progress ....................... $18,346 $17,952
Less accumulated depreciation and amortization ................................... (9,672) (9,397)
Total property, plant and equipment - net ...................................... 8,674 8,555
CURRENT ASSETS:
Cash and cash equivalents ........................................................ 548 187
Customer receivables, net of allowances of $6 and $8, respectively ............... 462 559
Materials, supplies and fossil fuel inventory - at average cost .................. 275 282
Other ............................................................................ 143 238
Total current assets ........................................................... 1,428 1,266
OTHER ASSETS:
Special use funds of FPL ......................................................... 1,276 1,206
Other investments ................................................................ 490 391
Other ............................................................................ 428 611
Total other assets ............................................................. 2,194 2,208
TOTAL ASSETS ....................................................................... $12,296 $12,029
CAPITALIZATION:
Common stock ..................................................................... $ 2 $ 2
Additional paid-in capital........................................................ 2,967 3,000
Retained earnings................................................................. 2,243 2,123
Accumulated other comprehensive income............................................ - 1
Total common shareholders' equity............................................... 5,212 5,126
Preferred stock of FPL without sinking fund requirements ......................... 226 226
Long-term debt ................................................................... 2,207 2,347
Total capitalization ........................................................... 7,645 7,699
CURRENT LIABILITIES:
Debt and preferred stock due within one year ..................................... 616 469
Accounts payable ................................................................. 322 338
Accrued interest, taxes and other ................................................ 995 834
Total current liabilities ...................................................... 1,933 1,641
OTHER LIABILITIES AND DEFERRED CREDITS:
Accumulated deferred income taxes ................................................ 1,261 1,255
Unamortized regulatory and investment tax credits ................................ 342 353
Other ............................................................................ 1,115 1,081
Total other liabilities and deferred credits ................................... 2,718 2,689
COMMITMENTS AND CONTINGENCIES
TOTAL CAPITALIZATION AND LIABILITIES ............................................... $12,296 $12,029
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on pages 9 through 12 herein and the Notes
to Consolidated Financial Statements appearing in the 1998 Form 10-K for FPL
Group and FPL.
FPL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1999 1998
------ ------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................. $ 680 $ 454
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures of FPL ......................................................... (180) (159)
Independent power investments ....................................................... (316) (350)
Distributions and loan repayments from partnerships and joint ventures .............. 57 221
Other - net ......................................................................... 95 (23)
Net cash used in investing activities ........................................... (344) (311)
CASH FLOWS FROM FINANCING ACTIVITIES:
Retirement of long-term debt and preferred stock .................................... (130) (180)
Increase in commercial paper ........................................................ 276 158
Repurchase of common stock .......................................................... (32) (17)
Dividends on common stock ........................................................... (89) (86)
Net cash provided by (used in) financing activities ............................. 25 (125)
Net increase in cash and cash equivalents ............................................. 361 18
Cash and cash equivalents at beginning of period ...................................... 187 54
Cash and cash equivalents at end of period ............................................ $ 548 $ 72
Supplemental disclosures of cash flow information:
Cash paid for interest .............................................................. $ 45 $ 51
Cash paid for income taxes .......................................................... $ - $ -
Supplemental schedule of noncash investing and financing activities:
Additions to capital lease obligations .............................................. $ 26 $ 1
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on pages 9 through 12 herein and the Notes
to Consolidated Financial Statements appearing in the 1998 Form 10-K for FPL
Group and FPL.
FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Millions of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1999 1998
------- ------
<S> <C> <C>
OPERATING REVENUES ..................................................................... $1,359 $1,295
OPERATING EXPENSES:
Fuel, purchased power and interchange ................................................ 485 430
Other operations and maintenance ..................................................... 250 268
Depreciation and amortization ........................................................ 275 244
Income taxes ......................................................................... 56 57
Taxes other than income taxes ........................................................ 143 137
Total operating expenses ........................................................... 1,209 1,136
OPERATING INCOME ....................................................................... 150 159
OTHER INCOME (DEDUCTIONS):
Interest charges ..................................................................... (43) (50)
Other - net .......................................................................... 1 (2)
Total other deductions - net ....................................................... (42) (52)
NET INCOME ............................................................................. 108 107
PREFERRED STOCK DIVIDENDS .............................................................. 4 4
NET INCOME AVAILABLE TO FPL GROUP ...................................................... $ 104 $ 103
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on pages 9 through 12 herein and the Notes
to Consolidated Financial Statements appearing in the 1998 Form 10-K for FPL
Group and FPL.
FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- ------------
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Plant in service, including nuclear fuel and construction work in progress ....... $17,626 $17,464
Less accumulated depreciation and amortization ................................... (9,588) (9,317)
Electric utility plant - net ................................................... 8,038 8,147
CURRENT ASSETS:
Cash and cash equivalents ........................................................ 486 152
Customer receivables, net of allowances of $6 and $8, respectively ............... 423 521
Materials, supplies and fossil fuel inventory - at average cost .................. 241 239
Other ............................................................................ 109 204
Total current assets ........................................................... 1,259 1,116
OTHER ASSETS:
Special use funds ................................................................ 1,276 1,206
Other ............................................................................ 304 279
Total other assets ............................................................. 1,580 1,485
TOTAL ASSETS ....................................................................... $10,877 $10,748
CAPITALIZATION:
Common shareholder's equity ...................................................... $ 4,810 $ 4,803
Preferred stock without sinking fund requirements ................................ 226 226
Long-term debt ................................................................... 2,192 2,191
Total capitalization ........................................................... 7,228 7,220
CURRENT LIABILITIES:
Debt and preferred stock due within one year ..................................... 230 230
Accounts payable ................................................................. 309 321
Accrued interest, taxes and other ................................................ 884 800
Total current liabilities ...................................................... 1,423 1,351
OTHER LIABILITIES AND DEFERRED CREDITS:
Accumulated deferred income taxes ................................................ 914 887
Unamortized regulatory and investment tax credits ................................ 342 353
Other ............................................................................ 970 937
Total other liabilities and deferred credits ................................... 2,226 2,177
COMMITMENTS AND CONTINGENCIES
TOTAL CAPITALIZATION AND LIABILITIES ............................................... $10,877 $10,748
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on pages 9 through 12 herein and the Notes
to Consolidated Financial Statements appearing in the 1998 Form 10-K for FPL
Group and FPL.
FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1999 1998
------ ------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................. $ 667 $ 453
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ................................................................ (180) (159)
Other - net ......................................................................... (51) (21)
Net cash used in investing activities ........................................... (231) (180)
CASH FLOWS FROM FINANCING ACTIVITIES:
Retirement of long-term debt and preferred stock .................................... - (180)
Increase in commercial paper ........................................................ - 14
Dividends ........................................................................... (102) (98)
Net cash used in financing activities ............................................. (102) (264)
Net increase in cash and cash equivalents ............................................. 334 9
Cash and cash equivalents at beginning of period ...................................... 152 3
Cash and cash equivalents at end of period ............................................ $ 486 $ 12
Supplemental disclosures of cash flow information:
Cash paid for interest .............................................................. $ 39 $ 48
Cash paid for income taxes .......................................................... $ 1 $ -
Supplemental schedule of noncash investing and financing activities:
Additions to capital lease obligations .............................................. $ 26 $ 1
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on pages 9 through 12 herein and the Notes
to Consolidated Financial Statements appearing in the 1998 Form 10-K for FPL
Group and FPL.
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 1998 Form 10-K for FPL Group and FPL. In the
opinion of FPL Group and FPL management, all adjustments (consisting of normal
recurring accruals) considered necessary for fair financial statement
presentation 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 March 1999, the FPSC approved an agreement between FPL, the
State of Florida's Office of Public Counsel (Public Counsel), The Florida
Industrial Power Users Group (FIPUG) and The Coalition for Equitable Rates
(Coalition) regarding FPL's retail base rates, authorized regulatory ROE,
capital structure and other matters. As a result of the approval of this
agreement, all matters raised in Public Counsel's petition to the FPSC to
conduct a full rate proceeding are resolved. The three-year agreement became
effective April 15, 1999.
The agreement provides for a $350 million reduction in annual revenue from
retail base operations allocated to all customers on a cents-per-kilowatt-hour
basis. Additionally, the agreement sets forth a revenue sharing mechanism for
each of the three years covered by the agreement, whereby revenue from retail
base operations in excess of a stated threshold will be shared with customers
on the basis of two-thirds refunded to customers and one-third retained by
FPL. Revenue from retail base operations in excess of a second threshold will
be refunded 100% to customers.
The thresholds for the three years are as follows:
First Second Third
Twelve Twelve Twelve
Months Months Months
(Millions of Dollars)
Threshold to refund 66 2/3% to customers ..... $3,400 $3,450 $3,500
Threshold to refund 100% to customers ........ $3,556 $3,606 $3,656
In addition to the revenue reductions, the agreement lowers FPL's authorized
regulatory ROE range to 10% to 12% (down from the previous 11% to 13%).
During the term of the agreement, the achieved ROE may, from time to time, be
outside the authorized range and the sharing mechanism described above is
intended to be the appropriate and exclusive mechanism to address that
circumstance. The agreement establishes a cap on FPL's adjusted equity ratio
of 55.83%. The adjusted equity ratio reflects a discounted amount for off-
balance sheet obligations under certain long-term purchase power contracts.
The agreement also includes an allowance for special depreciation of up to
$100 million at FPL's discretion, in each year of the three-year agreement
period to be applied to nuclear and fossil generating assets. The special
amortization program terminated when the new agreement became effective.
Approximately $61 million and $30 million of special amortization was recorded
under this program during the three months ended March 31, 1999 and 1998,
respectively, and approximately $378 million was recorded in 1998. Finally,
included in the agreement are provisions which limit depreciation rates and
accruals for nuclear decommissioning and fossil dismantlement costs to
currently approved levels and limit amounts recoverable under the
environmental cost recovery clause during the three-year term of the
agreement.
The agreement states that Public Counsel, FIPUG and Coalition will neither
seek nor support any additional base rate reductions during the three-year
term of the agreement unless such reduction is initiated by FPL. Further, FPL
agreed to not petition for any base rate increases that would take effect
during the three-year term of the agreement.
Electric Plant, Depreciation and Amortization - In April 1999, the FPSC
granted final approval on FPL's most recent depreciation studies.
2. Capitalization
FPL Group Common Stock - During the three months ended March 31, 1999, FPL
Group repurchased 547,400 shares of common stock, under its share repurchase
program. A total of approximately 2.2 million shares have been repurchased
under the share repurchase program that began in April 1997.
Long-Term Debt - In January 1999, FPL Group Capital Inc (FPL Group Capital)
redeemed $125 million principal amount of 7.625% debentures, maturing in 2013.
This redemption resulted in a loss on reacquired debt of approximately $8
million, which is included in other-net in FPL Group's condensed consolidated
statements of income.
In April 1999, FPL sold $225 million principal amount of first mortgage bonds
maturing in 2009, with an interest rate of 5.875%. The proceeds will be used
in May 1999 to redeem approximately $216 million principal amount of first
mortgage bonds, maturing in 2013, bearing interest at 7.875%.
Long-Term Incentive Plan - Performance shares granted to date under FPL Group's
long-term incentive plan resulted in assumed incremental shares of common stock
outstanding for purposes of computing both basic and diluted earnings per share
for the three months ended March 31, 1999 and 1998. These incremental shares
were not material in the periods presented and did not cause diluted earnings
per share to differ from basic earnings per share.
Other - Comprehensive income of FPL Group totaling $209 million and $109
million for the three months ended March 31, 1999 and 1998, respectively,
includes net income and changes in unrealized gains (losses) on securities
and foreign currency translation adjustments. Accumulated other comprehensive
income is separately displayed in the condensed consolidated balance sheets
of FPL Group.
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 $2.9 billion for 1999 through 2001. Included in
this three-year forecast are capital expenditures for 1999 of approximately
$900 million, of which $180 million had been spent through March 31, 1999.
As of March 31, 1999, FPL Energy has made commitments for the acquisition and
development of independent power projects, including the non-nuclear generating
assets of Central Maine Power Company (CMP), totaling $1.2 billion. FPL Group
and its subsidiaries, other than FPL, have guaranteed approximately $260
million of purchase power agreement 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 $363 million per
incident at any nuclear utility reactor in the United States, payable at a
rate not to exceed $43 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 $51
million in retrospective premiums.
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 the majority of its transmission and distribution (T&D)
property due to the high cost and limited coverage available from third-party
insurers. As approved by the FPSC, FPL maintains a funded storm and property
insurance reserve, which totaled approximately $266 million at March 31, 1999,
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 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 383 mw thereafter through 2021. 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. Fuel contracts provide for the transportation and supply
of natural gas and coal. FPL Energy has long-term contracts for the
transportation and storage of natural gas to its Doswell plant which expire in
2007, with a five-year renewal option, and in 2017, respectively.
The required capacity and minimum payments through 2003 under these contracts
are estimated to be as follows:
1999 2000 2001 2002 2003
---- ---- ---- ---- ----
(Millions of Dollars)
FPL:
Capacity payments:
JEA and Southern Companies ............. $210 $210 $210 $210 $200
Qualifying facilities (a) .............. $360 $370 $390 $400 $410
Minimum payments, at projected prices:
Natural gas, including transportation ... $210 $210 $240 $260 $270
Coal .................................... $ 40 $ 40 $ 30 $ 30 $ 15
FPL Energy:
Natural gas transportation and storage .. $ 15 $ 15 $ 15 $ 15 $ 15
_______________
(a) Includes approximately $40 million, $40 million, $40 million,
$45 million, and $45 million, respectively, for capacity payments
associated with two contracts that are currently in dispute.
These capacity payments are subject to the outcome of the related
litigation. See Litigation.
Charges under these contracts were as follows:
<TABLE><CAPTION>
Three Months Ended March 31,
1999 Charges 1998 Charges
------------------- -------------------
Energy/ Energy/
Capacity Fuel Capacity Fuel
-------- ------- -------- -------
(Millions of Dollars)
<S> <C> <C> <C> <C>
FPL:
JEA and Southern Companies ................................... $50(b) $23(a) $49(b) $31(a)
Qualifying facilities ........................................ $75(c) $21(a) $74(c) $25(a)
Natural gas, including transportation......................... $ - $75(a) $ - $54(a)
Coal ......................................................... $ - $12(a) $ - $13(a)
FPL Energy:
Natural gas transportation and storage........................ $ - $ 4 $ - $ 5
_______________
(a) Recovered through the fuel clause.
(b) Recovered through base rates and the capacity cost recovery clause
(capacity clause).
(c) Recovered through the capacity clause.
</TABLE>
Litigation - In 1997, FPL filed a complaint against the owners of two
qualifying facilities (plant owners) seeking an order declaring that FPL's
obligations under the power purchase agreements with the qualifying facilities
were rendered of no force and effect because the power plants failed to
accomplish commercial operation before January 1, 1997, as required by the
agreements. In 1997, the plant owners filed for bankruptcy under Chapter XI
of the U.S. Bankruptcy Code, ceased all attempts to operate the power plants
and entered into an agreement with the holders of more than 70% of the bonds
that partially financed the construction of the plants. This agreement gives
the holders of a majority of the principal amount of the bonds (the majority
bondholders) the right to control, fund and manage any litigation against FPL
and the right to settle with FPL on any terms such majority bondholders
approve, provided that certain agreements are not affected and certain
conditions are met. In January 1998, the plant owners (through the attorneys
for the majority bondholders) filed an answer denying the allegations in FPL's
complaint and asserting counterclaims for approximately $2 billion, consisting
of all capacity payments that could have been made over the 30-year term of
the power purchase agreements and three times their actual damages for alleged
violations of Florida antitrust laws, plus attorneys' fees. In October 1998,
the court dismissed all of the plant owners' antitrust claims against FPL.
The plant owners have since moved for summary judgment on FPL's claims against
them.
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, a 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. In
November 1998, the FERC declined to make the requested ruling. The district
court has yet to act further.
FPL Group and FPL believe that they have meritorious defenses to the
litigation to which they are parties and are vigorously defending the suits.
Accordingly, the liabilities, if any, arising from the proceedings are not
anticipated to have a material adverse effect on their financial statements.
Accounting for Derivative Instruments and Hedging Activities - In June 1998,
the Financial Accounting Standards Board (FASB) issued Financial Accounting
Standards No. (FAS) 133, "Accounting for Derivative Instruments and Hedging
Activities." The statement establishes accounting and reporting standards
requiring that every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded in the balance sheet as
either an asset or liability measured at its fair value. The statement
requires that changes in the derivative's fair value be recognized currently
in earnings unless specific hedge accounting criteria are met. FPL Group and
FPL are currently assessing the effect, if any, on their financial statements
of implementing FAS 133. FPL Group and FPL will be required to adopt the
standard in 2000.
4. Segment Information
FPL Group anticipates the independent power segment will become reportable
during the second quarter of 1999. FPL Group's segment information for March
31, 1999 is as follows:
<TABLE><CAPTION>
Three Months Ended March 31,
1999 1998
------------------------------------------ ---------------------------------------------
Regulated Independent Corporate Regulated Independent Corporate
Utility Power & Other Total Utility Power & Other Total
--------- ----------- --------- ------- --------- ----------- --------- --------
(Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues ..... $ 1,359 $ 41 $ 12 $ 1,412 $ 1,295 $ 23 $ 20 $ 1,338
Net income ............. $ 104 $ 13 $ 92 $ 209 $ 103 $ 3 $ 2 $ 108
March 31, 1999 December 31, 1998
------------------------------------------ -------------------------------------------
Regulated Independent Corporate Regulated Independent Corporate
Utility Power & Other Total Utility Power & Other Total
--------- ----------- --------- ------- --------- ----------- --------- --------
(Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total assets ........... $10,877 $1,120 $299 $12,296 $10,748 $1,031 $250 $12,029
</TABLE>
5. Summarized Financial Information of FPL Group Capital
FPL Group Capital's debentures, when outstanding, are guaranteed by FPL Group
and included in FPL Group's condensed consolidated balance sheets. Operating
revenues of FPL Group Capital for the three months ended March 31, 1999 and
1998 were $54 million and $44 million, respectively. For the same periods,
operating expenses were approximately $51 million and $41 million,
respectively, and net income was approximately $112 million and $11 million,
respectively. See Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
At March 31, 1999, FPL Group Capital had approximately $341 million of current
assets, $1.6 billion of noncurrent assets, $511 million of current liabilities
and $542 million of noncurrent liabilities. At December 31, 1998, FPL Group
Capital had current assets of approximately $317 million, noncurrent assets of
$1.4 billion, current liabilities of $310 million and noncurrent liabilities
of $703 million.
Management has not presented separate financial statements and other
disclosures concerning FPL Group Capital because management has determined
that such information is not material to holders of the FPL Group Capital
debentures.
6. Subsequent Event
On April 7, 1999, FPL Energy completed the purchase of CMP's non-nuclear
generating assets, which was financed primarily with the issuance of commercial
paper. The transaction was closed following the U.S. District Court for the
Southern District of New York's rejection in March 1999 of FPL Energy's request
for a declaratory judgment that CMP could not meet essential terms of the
purchase agreement between the two companies. The request for declaratory
judgment was filed because FPL Energy believed that recent FERC rulings
regarding transmission constituted a material adverse effect under the
purchase agreement and that FPL Energy should not be bound to complete the
transaction.
The rulings by the FERC, as well as the announcement of new entrants into the
market and changes in fuel prices, resulted in an impairment in the value of
certain assets purchased from CMP. FPL Group will record an impairment loss in
the range of $160 million to $180 million ($95 million to $107 million after
taxes) in the second quarter of 1999, which will reduce 1999 earnings per share
between $0.56 and $0.63.
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
1998 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
FPL Group's first quarter earnings benefited from improved results at FPL and
FPL Energy, partly offset by a premium paid to redeem high cost debt at FPL
Group Capital and start-up costs for retail marketing activities. FPL Group's
first quarter earnings also include an after-tax gain of approximately $96
million on the sale of an investment in Adelphia Communications Corporation
(Adelphia) common stock, which was obtained in the mid-1990s when FPL Group
exited the cable business.
FPL's net income available to FPL Group increased due to higher customer usage
and growth in customer accounts, reduced O&M expenses and lower interest
expense, partially offset by higher depreciation. FPL's revenues from retail
base operations for the three months ended March 31, 1999 increased to $762
million from $750 million for the same period in 1998. The increase in base
revenues resulted from increases in energy usage per retail customer of 1.2%,
primarily due to milder weather conditions in 1998, and a 1.9% increase in
customer accounts. Cost recovery clause revenues and franchise fees comprise
substantially all of the remaining portion of operating revenues. Such
revenues represent a pass-through of costs and do not significantly affect net
income. Fluctuations in these revenues are primarily driven by changes in
energy sales, fuel prices and capacity charges.
O&M expenses decreased for the three months ended March 31, 1998 due to cost
control, despite additional spending associated with the continued improvement
of service reliability. Lower interest expense during the first quarter of
1999 is the result of lower debt balances and the full amortization in 1998 of
deferred costs associated with reacquired debt as part of the FPSC's approved
special amortization program. Depreciation and amortization expense increased
for the three months ended March 31, 1999 as a result of the sales-related
amortization recorded under the special amortization program, which is a
function of retail base revenues.
In March 1999, the FPSC approved an agreement between FPL, Public Counsel and
certain other interested parties regarding FPL's revenue from retail base
operations, authorized regulatory ROE, capital structure and other matters.
As a result of the approval of this agreement, all matters raised in Public
Counsel's petition to the FPSC to conduct a full rate proceeding are resolved.
The three-year agreement began April 15, 1999.
The agreement provides for a $350 million reduction in annual revenue from
retail base operations allocated to all customers on a cents-per-kilowatt-hour
basis. Additionally, the agreement sets forth a revenue sharing mechanism for
each of the three years covered by the agreement, whereby revenue from retail
base operations in excess of a stated threshold will be shared with customers
on the basis of two-thirds refunded to customers and one-third retained by
FPL. Revenues from retail base operations in excess of a second threshold
will be refunded 100% to customers.
In addition to the revenue reductions, the agreement lowered FPL's authorized
ROE range to 10% to 12%. During the term of the agreement, the achieved ROE
may, from time to time, be outside the authorized range and the sharing
mechanism described above is intended to be the appropriate and exclusive
mechanism to address that circumstance. The agreement also includes an
allowance for special depreciation of up to $100 million at FPL's discretion,
in each year of the three-year agreement period to be applied to nuclear and
fossil generating assets. The special amortization program terminated when
the new agreement became effective. Approximately $61 million and $30 million
of special amortization was recorded under this program during the three
months ended March 31, 1999 and 1998, respectively, and approximately $378
million was recorded in 1998. Finally, included in the agreement are
provisions which limit depreciation rates and accruals for nuclear
decommissioning and fossil dismantlement costs to currently approved levels
and limit amounts recoverable under the environmental cost recovery clause
during the three-year term of the agreement.
The agreement states that Public Counsel, and other interested parties will
neither seek nor support any additional base rate reductions during the three-
year term of the agreement unless such reduction is initiated by FPL.
Further, FPL agreed to not petition for any base rate increases that would
take effect during the three-year term of the agreement. For information
concerning regulation see Note 1 - Regulation.
FPL Energy's net income improved for the three months ended March 31, 1999.
The improvements related to better results from the Doswell project and an
additional period of operation from FPL Energy's gas-fired plants in
Massachusetts and New Jersey, which were acquired mid-January 1998.
Additionally, as of January 1999, FPL Energy assumed the management of the two
plants in Massachusetts and New Jersey. Also contributing to the improvement
was the addition of five new wind projects in California and Oregon, as well
as the repowering of existing wind projects for increased operational
efficiencies.
On April 7, 1999, FPL Energy completed the purchase of CMP's non-nuclear
generating assets, which was financed primarily with the issuance of commercial
paper. The transaction was closed following the U.S. District Court for the
Southern District of New York's rejection in March 1999 of FPL Energy's request
for a declaratory judgment that CMP could not meet essential terms of the
purchase agreement between the two companies. The request for declaratory
judgment was filed because FPL Energy believed that recent FERC rulings
regarding transmission constituted a material adverse effect under the
purchase agreement and that FPL Energy should not be bound to complete the
transaction.
The rulings by the FERC, as well as the announcement of new entrants into the
market and changes in fuel prices, resulted in an impairment in the value of
certain assets purchased from CMP. FPL Group will record an impairment loss in
the range of $160 million to $180 million ($95 million to $107 million after
taxes) in the second quarter of 1999, which will reduce 1999 earnings per share
between $0.56 and $0.63.
FPL Group is continuing to work to resolve the impact of the year 2000 on the
processing of information by its computer systems. As of March 31, 1999 the
inventory and assessment of the information technology infrastructure,
computer applications and computerized processes embedded in operating
equipment have been completed and approximately 90% of the necessary
modifications have been tested and implemented. FPL Group continues to be on
schedule with its multi-phase plan and all phases are expected to be completed
by mid-1999, except for confirmatory testing at St. Lucie Unit No. 1 and
remediation at two projects in which FPL Energy has an ownership interest, all
of which will be completed during scheduled outages in October 1999. The
estimated cost of addressing year 2000 issues is not expected to exceed $50
million, of which approximately 45% had been spent through March 31, 1999.
Approximately 80% of the total estimate is for the multi-phase plan. The
remainder is an estimate for project and inventory contingencies. FPL Group's
year 2000 contingency planning is currently underway. Contingency plans are
expected to be completed by mid-1999.
LIQUIDITY AND CAPITAL RESOURCES
Using available cash flows from operations, FPL Group Capital redeemed $125
million principal amount of debentures that were scheduled to mature in 2013.
This redemption resulted in a loss on reacquired debt of approximately $8
million, which is included in other-net in FPL Group's condensed consolidated
statements of income. In April 1999, FPL Group borrowed approximately $982
million of commercial paper primarily to finance the purchase of CMP.
Additionally, available lines of credit, which support the commercial paper
program, aggregated approximately $2.4 billion ($900 million for FPL) and $1.9
billion ($900 million for FPL) at March 31, 1999 and December 31, 1998,
respectively. For additional information see Note 6. Additionally, during the
three months ended March 31, 1999, FPL Group repurchased 547,400 shares of
common stock.
In April 1999, FPL sold $225 million principal amount of first mortgage bonds
maturing in 2009. The proceeds will be used in May 1999 to redeem
approximately $216 million principal amount of first mortgage bonds, maturing
in 2013.
These actions are consistent with management's intent to reduce debt and
preferred stock balances and the number of outstanding shares of common stock.
For information concerning capital commitments see Note 3 - Commitments.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(b)
Exhibit FPL
Number Description Group FPL
------- ----------------------------------------- ----- ---
4 Ninety-ninth Supplemental Indenture dated x x
as of April 1, 1999 between FPL and Bankers
Trust Company, Trustee
10 Employment Agreement between FPL Group and
Roger Young dated as of February 22,1999 x
12(a) Computation of Ratio of Earnings to Fixed x
Charges
12(b) Computation of Ratios x
27 Financial Data Schedule x x
(b) Reports on Form 8-K
A Current Report on Form 8-K filed with the Securities and Exchange
Commission on March 17, 1999 by FPL Group and FPL reporting one event
under Item 5. Other Events.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
FPL GROUP, INC.
FLORIDA POWER & LIGHT COMPANY
(Registrants)
Date: April 30,1999
K. MICHAEL DAVIS
---------------------------------
K. Michael Davis
Controller and Chief Accounting Officer of FPL Group, Inc.
Vice President, Accounting, Controller and
Chief Accounting Officer of Florida Power & Light Company
(Principal Financial Officer of the Registrants)
EXHIBIT 4
This instrument was prepared by:
K. M. Davis
Florida Power & Light Company EXECUTED IN 60 COUNTERPARTS OF
700 Universe Boulevard WHICH THIS IS COUNTERPART NO. 46
Juno Beach, Florida 33408
FLORIDA POWER & LIGHT COMPANY
to
BANKERS TRUST COMPANY
As Trustee under Florida Power & Light
Company's Mortgage and Deed of Trust,
Dated as of January 1, 1944.
Ninety-ninth Supplemental Indenture
Relating to $225,000,000 Principal Amount
of First Mortgage Bonds, 5 7/8% Series
due April 1, 2009.
Dated as of April 1, 1999
This Supplemental Indenture has been executed in several counterparts,
all of which constitute but one and the same instrument. This
Supplemental Indenture has been recorded in several counties and
documentary stamp taxes as required by law in the amount of $787,500,
and non-recurring intangible taxes as required by law in the amount of
$63,891, were paid on the Supplemental Indenture recorded in the
public records of Palm Beach County, Florida.
Note to Examiner: The new bonds ("New Bonds") being issued in
connection with this Supplemental Indenture are secured by real
property and personal property located both within Florida and outside
of Florida. The aggregate fair market value of the collateral exceeds
the aggregate principal amount of (y) the New Bonds plus (z) the other
outstanding bonds secured by the mortgage supplemented hereby and all
previous supplemental indentures thereto. The intangible tax has been
computed pursuant to Section 199.133 (2), Florida Statutes, by (i)
determining the percentage of the aggregate fair market value of the
collateral constituting real property situated in Florida and by
multiplying that percentage times the principal amount of the New Bonds
(the result hereinafter defined as the "Tax Base") and (ii) multiplying
the tax rate times the Tax Base.
NINETY-NINTH SUPPLEMENTAL INDENTURE
INDENTURE, dated as of the first day of April, 1999, made and
entered into by and between FLORIDA POWER & LIGHT COMPANY, a corporation of
the State of Florida, whose post office address is 700 Universe Boulevard,
Juno Beach, Florida 33408 (hereinafter sometimes called FPL), and BANKERS
TRUST COMPANY, a corporation of the State of New York, whose post office
address is Four Albany Street, New York, New York 10006 (hereinafter called
the Trustee), as the ninety-ninth supplemental indenture (hereinafter called
the Ninety-ninth Supplemental Indenture) to the Mortgage and Deed of Trust,
dated as of January 1, 1944 (hereinafter called the Mortgage), made and
entered into by FPL, the Trustee and The Florida National Bank of
Jacksonville, as Co-Trustee (now resigned), the Trustee now acting as the
sole trustee under the Mortgage, which Mortgage was executed and delivered by
FPL to secure the payment of bonds issued or to be issued under and in
accordance with the provisions thereof, reference to which Mortgage is
hereby made, this Ninety-ninth Supplemental Indenture being supplemental
thereto;
WHEREAS, Section 8 of the Mortgage provides that the form of
each series of bonds (other than the first series) issued thereunder shall be
established by Resolution of the Board of Directors of FPL and that the form
of such series, as established by said Board of Directors, shall specify the
descriptive title of the bonds and various other terms thereof, and may also
contain such provisions not inconsistent with the provisions of the Mortgage
as the Board of Directors may, in its discretion, cause to be inserted
therein expressing or referring to the terms and conditions upon which such
bonds are to be issued and/or secured under the Mortgage; and
WHEREAS, Section 120 of the Mortgage provides, among other
things, that any power, privilege or right expressly or impliedly reserved to
or in any way conferred upon FPL by any provision of the Mortgage, whether
such power, privilege or right is in any way restricted or is unrestricted,
may be in whole or in part waived or surrendered or subjected to any
restriction if at the time unrestricted or to additional restriction if
already restricted, and FPL may enter into any further covenants, limitations
or restrictions for the benefit of any one or more series of bonds issued
thereunder, or FPL may cure any ambiguity contained therein, or in any
supplemental indenture, or may establish the terms and provisions of any
series of bonds other than said first series, by an instrument in writing
executed and acknowledged by FPL in such manner as would be necessary to
entitle a conveyance of real estate to record in all of the states in which
any property at the time subject to the Lien of the Mortgage shall be
situated; and
WHEREAS, FPL now desires to create the series of bonds described
in Article I hereof and to add to its covenants and agreements contained in
the Mortgage certain other covenants and agreements to be observed by it
and to alter and amend in certain respects the covenants and provisions
contained in the Mortgage; and
WHEREAS, the execution and delivery by FPL of this Ninety-ninth
Supplemental Indenture, and the terms of the bonds, hereinafter referred
to in Article I, have been duly authorized by the Board of Directors of
FPL by appropriate resolutions of said Board of Directors;
NOW, THEREFORE, THIS INDENTURE WITNESSETH: That FPL, in
consideration of the premises and of One Dollar to it duly paid by the
Trustee at or before the ensealing and delivery of these presents, the
receipt whereof is hereby acknowledged, and in further evidence of assurance
of the estate, title and rights of the Trustee and in order further to secure
the payment of both the principal of and interest and premium, if any, on
the bonds from time to time issued under the Mortgage, according to their
tenor and effect, and the performance of all the provisions of the Mortgage
(including any instruments supplemental thereto and any modification made
as in the Mortgage provided) and of said bonds, hereby grants, bargains,
sells, releases, conveys, assigns, transfers, mortgages, pledges, sets over
and confirms (subject, however, to Excepted Encumbrances as defined in
Section 6 of the Mortgage) unto Bankers Trust Company, as Trustee under the
Mortgage, and to its successor or successors in said trust, and to said
Trustee and its successors and assigns forever, all property, real,
personal and mixed, acquired by FPL after the date of the execution and
delivery of the Mortgage (except any herein or in the Mortgage, as
heretofore supplemented, expressly excepted), now owned (except any
properties heretofore released pursuant to any provisions of the Mortgage and
in the process of being sold or disposed of by FPL) or, subject to the
provisions of Section 87 of the Mortgage, hereafter acquired by FPL and
wheresoever situated, including (without in anywise limiting or impairing
by the enumeration of the same the scope and intent of the foregoing) all
lands, power sites, flowage rights, water rights, water locations, water
appropriations, ditches, flumes, reservoirs, reservoir sites, canals,
raceways, dams, dam sites, aqueducts, and all rights or means for
appropriating, conveying, storing and supplying water; all rights of way
and roads; all plants for the generation of electricity by steam, water
and/or other power; all power houses, gas plants, street lighting systems,
standards and other equipment incidental thereto, telephone, radio and
television systems, air-conditioning systems and equipment incidental
thereto, water works, water systems, steam heat and hot water plants,
substations, lines, service and supply systems, bridges, culverts, tracks,
ice or refrigeration plants and equipment, offices, buildings and other
structures and the equipment thereof; all machinery, engines, boilers,
dynamos, electric, gas and other machines, regulators, meters, transformers,
generators, motors, electrical, gas and mechanical appliances, conduits,
cables, water, steam heat, gas or other pipes, gas mains and pipes,
service pipes, fittings, valves and connections, pole and transmission
lines, wires, cables, tools, implements, apparatus, furniture, chattels,
and choses in action; all municipal and other franchises, consents or
permits; all lines for the transmission and distribution of electric
current, gas, steam heat or water for any purpose including towers, poles,
wires, cables, pipes, conduits, ducts and all apparatus for use in connection
therewith; all real estate, lands, easements, servitudes, licenses, permits,
franchises, privileges, rights of way and other rights in or relating to real
estate or the occupancy of the same and (except as herein or in the Mortgage,
as heretofore supplemented, expressly excepted) all the right, title and
interest of FPL in and to all other property of any kind or nature
appertaining to and/or used and/or occupied and/or enjoyed in connection
with any property hereinbefore or in the Mortgage, as heretofore
supplemented, described.
TOGETHER WITH all and singular the tenements, hereditaments and
appurtenances belonging or in anywise appertaining to the aforesaid property
or any part thereof, with the reversion and reversions, remainder and
remainders and (subject to the provisions of Section 57 of the Mortgage)
the tolls, rents, revenues, issues, earnings, income, products and profits
thereof, and all the estate, right, title and interest and claim whatsoever,
at law as well as in equity, which FPL now has or may hereinafter acquire in
and to the aforesaid property and franchises and every part and parcel
thereof.
IT IS HEREBY AGREED by FPL that, subject to the provisions of
Section 87 of the Mortgage, all the property, rights, and franchises acquired
by FPL after the date hereof (except any herein or in the Mortgage, as
heretofore supplemented, expressly excepted) shall be and are as fully
granted and conveyed hereby and as fully embraced within the Lien of the
Mortgage, as if such property, rights and franchises were now owned by FPL
and were specifically described herein and conveyed hereby.
PROVIDED that the following are not and are not intended to be
now or hereafter granted, bargained, sold, released, conveyed, assigned,
transferred, mortgaged, pledged, set over or confirmed hereunder and are
hereby expressly excepted from the Lien and operation of this Ninety-ninth
Supplemental Indenture and from the Lien and operation of the Mortgage,
as heretofore supplemented, viz: (1) cash, shares of stock, bonds, notes
and other obligations and other securities not hereafter specifically
pledged, paid, deposited, delivered or held under the Mortgage or
covenanted so to be; (2) merchandise, equipment, materials or supplies
held for the purpose of sale in the usual course of business and fuel
(including Nuclear Fuel unless expressly subjected to the Lien and
operation of the Mortgage by FPL in a future Supplemental Indenture), oil
and similar materials and supplies consumable in the operation of any
properties of FPL; rolling stock, buses, motor coaches, automobiles and
other vehicles; (3) bills, notes and accounts receivable, and all contracts,
leases and operating agreements not specifically pledged under the Mortgage
or covenanted so to be; (4) the last day of the term of any lease or
leasehold which may hereafter become subject to the Lien of the Mortgage;
(5) electric energy, gas, ice, and other materials or products generated,
manufactured, produced or purchased by FPL for sale, distribution or
use in the ordinary course of its
business; all timber, minerals, mineral rights and royalties; (6) FPL's
franchise to be a corporation; and (7) the properties already sold or in the
process of being sold by FPL and heretofore released from the Mortgage and Deed
of Trust, dated as of January 1, 1926, from Florida Power & Light Company to
Bankers Trust Company and The Florida National Bank of Jacksonville, trustees,
and specifically described in three separate releases executed by Bankers Trust
Company and The Florida National Bank of Jacksonville, dated July 28, 1943,
October 6, 1943 and December 11, 1943, which releases have heretofore been
delivered by the said trustees to FPL and recorded by FPL among the Public
Records of all Counties in which such properties are located; provided,
however, that the property and rights expressly excepted from the Lien and
operation of the Mortgage in the above subdivisions (2) and (3) shall (to
the extent permitted by law) cease to be so excepted in the event and as of
the date that the Trustee or a receiver or trustee shall enter upon and
take possession of the Mortgaged and Pledged Property in the manner
provided in Article XIII of the Mortgage by reason of the occurrence of a
Default as defined in Section 65 thereof.
TO HAVE AND TO HOLD all such properties, real, personal and
mixed, granted, bargained, sold, released, conveyed, assigned, transferred,
mortgaged, pledged, set over or confirmed by FPL as aforesaid, or intended
so to be, unto Bankers Trust Company, the Trustee, and its successors and
assigns forever.
IN TRUST NEVERTHELESS, for the same purposes and upon the same
terms, trusts and conditions and subject to and with the same provisos and
covenants as are set forth in the Mortgage, as heretofore supplemented, this
Ninety-ninth Supplemental Indenture being supplemental thereto.
AND IT IS HEREBY COVENANTED by FPL that all terms, conditions,
provisos, covenants and provisions contained in the Mortgage shall affect and
apply to the property hereinbefore described and conveyed and to the estate,
rights, obligations and duties of FPL and the Trustee and the beneficiaries of
the trust with respect to said property, and to the Trustee and its successors
as Trustee of said property in the same manner and with the same effect as if
said property had been owned by FPL at the time of the execution of the
Mortgage, and had been specifically and at length described in and conveyed to
said Trustee, by the Mortgage as a part of the property therein stated to be
conveyed.
FPL further covenants and agrees to and with the Trustee and
its successors in said trust under the Mortgage, as follows:
ARTICLE I
Ninety-sixth Series of Bonds
Section 1. (I) There shall be a series of bonds designated "5
7/8% Series due April 1, 2009", herein sometimes referred to as the "Ninety-
sixth Series", each of which shall also bear the descriptive title First
Mortgage Bond, and the form thereof, which shall be established by Resolution
of the Board of Directors of FPL, shall contain suitable provisions with
respect to the matters hereinafter in this Section specified. Bonds of the
Ninety-sixth Series shall mature on April 1, 2009 and shall be issued as
fully registered bonds in denominations of One Thousand Dollars and, at the
option of FPL, in any multiple or multiples of One Thousand Dollars (the
exercise of such option to be evidenced by the execution and delivery
thereof); they shall bear interest from April 1, 1999, at the rate of
5 7/8% per annum, payable semi-annually on October 1 and April 1 of each
year commencing on October 1, 1999; the principal of and interest on each
said bond to be payable at the office or agency of FPL in the Borough of
Manhattan, The City of New York, in such coin or currency of the United
States of America as at the time of payment is legal tender for public and
private debts. Bonds of the Ninety-sixth Series shall be dated as in Section
10 of the Mortgage provided.
(II) Bonds of the Ninety-sixth Series shall be redeemable
either at the option of FPL or pursuant to the requirements of the Mortgage
(including, among other requirements, the application of cash delivered to or
deposited with the Trustee pursuant to the provisions of Section 64 of the
Mortgage or with proceeds of Released Property) in whole at any time, or in
part from time to time, prior to maturity, upon notice, as provided in
Section 52 of the Mortgage, mailed at least thirty (30) days prior to the
date fixed for redemption (the "Redemption Date"), at a price (the
"Redemption Price") equal to 100% of the principal amount thereof plus
accrued and unpaid interest, if any, to the Redemption Date plus a premium,
if any (the "Make-Whole Premium"). In no event will the Redemption Price
be less than 100% of the principal amount of the bonds of the Ninety-sixth
series being redeemed plus accrued interest to the Redemption Date.
The amount of the Make-Whole Premium with respect to any bond
of the Ninety-sixth Series (or portion thereof) to be redeemed will be equal
to the excess, if any, of:
1. the sum of the present values, calculated as of the Redemption
Date, of:
a. each interest payment that, but for such
redemption, would have been payable on the
bond of the Ninety-sixth Series (or portion
thereof) being redeemed on each interest
payment date occurring after the Redemption
Date (excluding any accrued interest for the
period prior to the Redemption Date); and
b. the principal amount that, but for such
redemption, would have been payable at the
final maturity of the bond of the Ninety-
sixth Series (or portion thereof) being
redeemed; over
2. the principal amount of the bond of the Ninety-sixth
Series (or portion thereof) being redeemed.
The present values of interest and principal payments
referred to in clause (1) above will be determined in accordance with
generally accepted principles of financial analysis. Such present values
will be calculated by discounting the amount of each payment of interest or
principal from the date that each such payment would have been payable, but
for the redemption, to the Redemption Date at a discount rate equal to the
Treasury Yield (as defined below) plus 10 basis points.
The Make-Whole Premium will be calculated by an independent
investment banking institution of national standing appointed by FPL; provided
that if FPL fails to make such appointment at least 30 calendar days prior to
the Redemption Date, or if the institution so appointed is unwilling or unable
to make such calculation, such calculation will be made by NationsBanc
Montgomery Securities LLC or, if such firm is unwilling or unable to make such
calculation, by an independent investment banking institution of national
standing appointed by the Trustee (in any such case, an "Independent
Investment Banker").
For purposes of determining the Make-Whole Premium, "Treasury
Yield" means a rate of interest per annum equal to the weekly average yield to
maturity of United States Treasury Notes that have a constant maturity that
corresponds to the remaining term to maturity of the bonds of the Ninety-sixth
Series, calculated to the nearest 1/12th of a year (the "Remaining Term"). The
Treasury Yield will be determined as of the third business day immediately
preceding the applicable Redemption Date.
The weekly average yields of United States Treasury Notes will
be determined by reference to the most recent statistical release published by
the Federal Reserve Bank of New York and designated "H.15(519) Selected
Interest Rates" or any successor release (the "H.15 Statistical Release").
If the H.15 Statistical Release sets forth a weekly average yield for the
United States Treasury Notes having a constant maturity that is the same as
the Remaining Term, then the Treasury Yield will be equal to such weekly
average yield. In all other cases, the Treasury Yield will be calculated
by interpolation, on a straight-line basis, between the weekly average
yields on the United States Treasury Notes that have a constant maturity
closest to and greater than the Remaining Term and the United States Treasury
Notes that have a constant maturity closest to and less than the Remaining
Term (in each case as set forth in the H.15 Statistical Release). Any
weekly average yields so calculated by interpolation will be rounded to
the nearest 1/100th of 1%, with any figure of 1/200th of 1% or above being
rounded upward. If weekly average yields for United States Treasury Notes
are not available in the H.15 Statistical Release or otherwise, then
the Treasury Yield will be calculated by interpolation of
comparable rates selected by the Independent Investment Banker.
(III) At the option of the registered owner, any bonds of
the Ninety-sixth Series, upon surrender thereof for cancellation at the office
or agency of FPL in the Borough of Manhattan, The City of New York, together
with a written instrument of transfer wherever required by FPL, duly executed
by the registered owner or by his duly authorized attorney, shall (subject
to the provisions of Section 12 of the Mortgage) be exchangeable for a like
aggregate principal amount of bonds of the same series of other authorized
denominations.
Bonds of the Ninety-sixth Series shall be transferable
(subject to the provisions of Section 12 of the Mortgage) at the office or
agency of FPL in the Borough of Manhattan, The City of New York.
Upon any exchange or transfer of bonds of the Ninety-sixth
Series, FPL may make a charge therefor sufficient to reimburse it for any tax
or taxes or other governmental charge, as provided in Section 12 of the
Mortgage, but FPL hereby waives any right to make a charge in addition
thereto for any exchange or transfer of bonds of the Ninety-sixth Series.
ARTICLE II
Dividend Covenant
SECTION 2. Section 3 of the Third Supplemental Indenture, as
heretofore amended, is hereby further amended by inserting the words
"or Ninety-sixth Series" immediately before the words "remain Outstanding".
ARTICLE III
Miscellaneous Provisions
SECTION 3. Subject to the amendments provided for in this
Ninety-ninth Supplemental Indenture, the terms defined in the Mortgage, as
heretofore supplemented, shall, for all purposes of this Ninety-ninth
Supplemental Indenture, have the meanings specified in the Mortgage, as
heretofore supplemented.
SECTION 4. The holders of bonds of the Ninety-sixth Series
consent that FPL may, but shall not be obligated to, fix a record date for the
purpose of determining the holders of bonds of the Ninety-sixth Series
entitled to consent to any amendment, supplement or waiver. If a record
date is fixed, those persons who were holders at such record date (or their
duly designated proxies), and only those persons, shall be entitled to
consent to such amendment, supplement or waiver or to revoke any consent
previously given, whether or not such persons continue to be holders after
such record date. No such consent shall be valid or effective for more
than 90 days after such record date.
SECTION 5. The Trustee hereby accepts the trust herein
declared, provided, created or supplemented and agrees to perform the same
upon the terms and conditions herein and in the Mortgage, as heretofore
supplemented, set forth and upon the following terms and conditions:
The Trustee shall not be responsible in any manner whatsoever
for or in respect of the validity or sufficiency of this Ninety-ninth
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made by FPL solely. In general, each and every term
and condition contained in Article XVII of the Mortgage, as heretofore
amended, shall apply to and form part of this Ninety-ninth Supplemental
Indenture with the same force and effect as if the same were herein set
forth in full with such omissions, variations and insertions, if any,
as may be appropriate to make the same conform to the provisions of this
Ninety-ninth Supplemental Indenture.
SECTION 6. Whenever in this Ninety-ninth Supplemental Indenture
either of the parties hereto is named or referred to, this shall, subject to
the provisions of Articles XVI and XVII of the Mortgage, as heretofore
amended, be deemed to include the successors and assigns of such party,
and all the covenants and agreements in this Ninety-ninth Supplemental
Indenture contained by or on behalf of FPL, or by or on behalf of the
Trustee, or either of them, shall, subject as aforesaid, bind and inure to
the respective benefits of the respective successors and assigns of such
parties, whether so expressed or not.
SECTION 7. Nothing in this Ninety-ninth Supplemental Indenture,
expressed or implied, is intended, or shall be construed, to confer upon, or
to give to, any person, firm or corporation, other than the parties hereto
and the holders of the bonds and coupons Outstanding under the Mortgage,
any right, remedy or claim under or by reason of this Ninety-ninth
Supplemental Indenture or any covenant, condition, stipulation, promise or
agreement hereof, and all the covenants, conditions, stipulations, promises
and agreements in this Ninety-ninth Supplemental Indenture contained by or
on behalf of FPL shall be for the sole and exclusive benefit of the parties
hereto, and of the holders of the bonds and coupons Outstanding under the
Mortgage.
SECTION 8. The Mortgage, as heretofore supplemented and amended
and as supplemented hereby, is intended by the parties hereto, as to
properties now or hereafter encumbered thereby and located within the
State of Georgia, to operate and is to be construed as granting a lien
only on such properties and not as a deed passing title thereto.
SECTION 9. This Ninety-ninth Supplemental Indenture shall be
executed in several counterparts, each of which shall be an original and
all of which shall constitute but one and the same instrument.
IN WITNESS WHEREOF, FPL has caused its corporate name to be
hereunto affixed, and this instrument to be signed and sealed by its President
or one of its Vice Presidents, and its corporate seal to be attested by its
Secretary or one of its Assistant Secretaries for and in its behalf, and
BANKERS TRUST COMPANY has caused its corporate name to be hereunto affixed,
and this instrument to be signed and sealed by one of its Vice Presidents
or Assistant Vice Presidents, and its corporate seal to be attested by
one of its Assistant Vice Presidents or one of its Assistant Secretaries,
all as of the day and year first above written.
FLORIDA POWER & LIGHT COMPANY
By: K. M. DAVIS
K. M. Davis
Vice President, Accounting, Controller
and Chief Accounting Officer
700 Universe Blvd.
Juno Beach, FL 33408
Attest:
DILEK SAMIL
Dilek Samil
Treasurer and Assistant Secretary
700 Universe Boulevard
Juno Beach, FL 33408
Executed, sealed and delivered by
FLORIDA POWER & LIGHT COMPANY
in the presence of:
HAROLD J. McCARTHY
Harold J. McCarthy
ROBERT W. BUFFETT
Robert W. Buffett
Bankers Trust Company
As Trustee
By: JAMES C. McDONOUGH
James C. McDonough
Vice President
4 Albany Street , 4th Floor
New York, NY 10006
Attest: WILLIAM T. JENKINS
William T. Jenkins
Assistant Vice President
4 Albany Street, 4th Floor
New York, NY 10066
Executed, sealed and delivered
by Bankers Trust Company
in the presence of:
DAVID BEANE
David Beane
SONJA EGGE
Sonja Egge
STATE OF FLORIDA
COUNTY OF PALM BEACH SS.:
On the 20th day of April, in the year 1999, before me personally
came K. M. Davis, to me known, who, being by me duly sworn, did depose and
say that he resides at 1101 N.W. 115th Ave., Plantation, FL 33323; that he
is a Vice President, Accounting, Controller and Chief Accounting Officer
of FLORIDA POWER & LIGHT COMPANY, one of the corporations described in and
which executed the above instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the Board of Directors of said
corporation, and that he signed his name thereto by like order.
I HEREBY CERTIFY, that on this 20th day of April, 1999, before me
personally appeared K. M. Davis and Dilek Samil, respectively, the Vice
President, Accounting, Controller and Chief Accounting Officer and the
Treasurer and Assistant Secretary of FLORIDA POWER & LIGHT COMPANY, a
corporation under the laws of the State of Florida, to me known to be
the persons described in and who executed the foregoing instrument and
severally acknowledged the execution thereof to be their free act and
deed as such officers, for the uses and purposes therein mentioned; and
that they affixed thereto the official seal of said corporation, and that
said instrument is the act and deed of said corporation.
K. M. Davis and Dilek Samil produced Florida Driver's License
No. D120-513-46-467-0 and Florida Driver's License No. S540-160-55-827-0 as
identification, respectively.
WITNESS my signature and official seal at Juno Beach, in the County
of Palm Beach, and State of Florida, the day and year last aforesaid.
FRANCINE MCGUIRE
Notary Public, State of Florida
Commission No. CC768319
My Commission Expires Oct. 21, 2002
STATE OF FLORIDA
COUNTY OF NEW YORK SS.:
On the 20th day of April, in the year 1999, before me personally
came James C. McDonough, to me know, who, being by me duly sworn, did depose
and say that he resides at 150 Draper Lane, Dobbs Ferry, New York; that
he is a Vice President of BANKERS TRUST COMPANY, one of the corporations
described in and which executed the above instrument; that he knows the
seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the Board of
Directors of said corporation, and that he signed his name thereto by
like order.
I HEREBY CERTIFY, that on this 20th day of April, 1999, before me
personally appeared James C. McDonough and William T. Jenkins, respectively,
a Vice President and an Assistant Vice President of BANKERS TRUST COMPANY,
a corporation under the laws of the state of New York, to me known to be
the persons described in and who executed the foregoing instrument and
severally acknowledged the execution thereof to be their free act and
deed as such officers, for the uses and purposes therein mentioned; and
that they affixed thereto the official seal of said corporation, and
that said instrument is the act and deed of said corporation.
James C. McDonough and William T. Jenkins produced New York
Driver's License No. 286 690 794 and Massachusetts Driver's License No.
S711243 as identification, respectively.
WITNESS my signature and official seal at New York City, in the
County of New York, and State of New York, the day and year last aforesaid.
RICHARD BUCKWALTER
Name of Notary:
Richard Buckwalter
Notary Public, State of New York
Commission No. 01SH5087362
Qualified in Kings County
Certificate Filed in New York County
My Commission Expires July 15, 1999
EXHIBIT 10
EMPLOYMENT AGREEMENT
Employment Agreement between FPL GROUP, INC., a Florida corporation
(the "Company"), and Roger Young (the "Executive"), dated as of February 22,
1999.
The Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company and its affiliated companies will have the continued
dedication of the Executive, notwithstanding the possibility, threat or
occurrence of a Change of Control (as defined below) of the Company. The
Board believes it is imperative to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks created by a
pending or threatened Change of Control and to encourage the Executive's
full attention and dedication to the Company and its affiliated companies
currently and in the event of any threatened or pending Change of Control,
and to provide the Executive with compensation and benefits arrangements
upon a Change of Control which ensure that the compensation and benefits
expectations of the Executive will be satisfied and which are competitive
with those of other corporations. Therefore, in order to accomplish these
objectives, the Board has caused the Company to enter into this Agreement.
Therefore, the Company and the Executive agree as follows:
1. Effective Date. The effective date of this Agreement shall be the
date on which a Change of Control occurs (the "Effective Date"). Anything in
this Agreement to the contrary notwithstanding, if a Change of Control occurs
and if the Executive's employment with the Company or its affiliated companies
is terminated or the Executive ceases to be an officer of the Company or its
affiliated companies prior to the date on which the Change of Control occurs,
and if it is reasonably demonstrated by the Executive that such termination of
employment or cessation of status as an officer (i) was at the request of a
third party who has taken steps reasonably calculated to effect the Change of
Control or (ii) otherwise arose in connection with or anticipation of the
Change of Control, then for all purposes of this Agreement
the "Effective Date" shall mean the date immediately prior to the date of
such termination of employment or cessation of status as an officer.
2. Change of Control. For the purposes of this Agreement, a "Change
of Control" shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the
then outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not constitute a
Change of Control: (i) any acquisition by the Company or any or its
subsidiaries, (ii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any of its
subsidiaries or (iii) any acquisition by any corporation with respect to
which, following such acquisition, more than 75% of, respectively, the
then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such acquisition in substantially the same proportions as
their ownership, immediately prior to such acquisition, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may
be; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of
the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption
of office occurs as a result of either an actual or threatened
solicitation to which Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act applies or other actual or threatened solicitation of
proxies or consents; or
(c) Approval by the shareholders of the Company of a reorganization,
merger or consolidation, in each case, with respect to which all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 75% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election
of directors, as the case may be, of the corporation resulting from such
reorganization, merger or consolidation in substantially the same proportions
as their ownership, immediately prior to such reorganization, merger or
consolidation of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be; or
(d) Approval by the shareholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) the sale or other
disposition of all or substantially all of the assets of the Company, other
than to a corporation, with respect to which following such sale or
other disposition, more than 75% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power
of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition in substantially the
same proportion as their ownership, immediately prior to such sale or
other disposition, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be.
The term "the sale or disposition by the Company of all or
substantially all of the assets of the Company" shall mean a sale or other
disposition transaction or series of related transactions involving assets of
the Company or of any direct or indirect subsidiary of the Company (including
the stock of any direct or indirect subsidiary of the Company) in which the
value of the assets or stock being sold or otherwise disposed of (as measured
by the purchase price being paid therefor or by such other method as the
Board determines is appropriate in a case where there is no readily
ascertainable purchase price) constitutes more than two-thirds of the
fair market value of the Company (as hereinafter defined). The "fair market
value of the Company" shall be the aggregate market value of the then
Outstanding Company Common Stock (on a fully diluted basis) plus the
aggregate market value of the Company's other outstanding equity securities.
The aggregate market value of the shares of Outstanding Company Common
Stock shall be determined by multiplying the number of shares of
Outstanding Company Common Stock (on a fully diluted basis) outstanding
on the date of the execution and delivery of a definitive agreement with
respect to the transaction or series of related transactions (the
"Transaction Date") by the average closing price of the shares of Outstanding
Company Common Stock for the ten trading days immediately preceding the
Transaction Date. The aggregate market value of any other equity securities
of the Company shall be determined in a manner similar to that
prescribed in the immediately preceding sentence for determining the
aggregate market value of the shares of Outstanding Company Common Stock
or by such other method as the Board shall determine is appropriate.
3. Employment Period. The Company hereby agrees to continue the
Executive in its or its affiliated companies' employ, or both, as the case
may be, and the Executive hereby agrees to remain in the employ of the
Company, or its affiliated companies, or both, as the case may be, for a
period commencing on the Effective Date and ending on the 4th anniversary
of such date (the "Employment Period"). As used in this Agreement, the
term "affiliated companies" shall include any corporation or other
entity controlled by, controlling or under common control with the Company.
4. Position and Duties. During the Employment Period, the
Executive's position (including status, offices, titles, and reporting
requirements), authority, duties, and responsibilities with the
Company or its affiliated companies or both, as the case may be, shall
be at least commensurate in all material respects with the most
significant of those held, exercised, and assigned at any time during the
90-day period immediately preceding the Effective Date. The Executive's
services shall be performed at the location where the Executive was
employed immediately preceding the Effective Date or any location less
than 20 miles from such location.
During the Employment Period, and excluding any periods of vacation
and sick leave to which the Executive is entitled, the Executive agrees
to devote full time and attention during normal business hours to
the business and affairs of the Company and its affiliated companies.
It shall not be a violation of this Agreement for the Executive to serve
on corporate, civic or charitable boards or committees, deliver lectures,
fulfill speaking engagements or teach at educational institutions and
manage personal investments, so long as such activities do not
significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company or its affiliated
companies in accordance with this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been conducted by the
Executive prior to the Effective Date, the continued conduct of such
activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not be deemed to
interfere with the performance of the Executive's responsibilities to
the Company and its affiliated companies.
5. Compensation. During the Employment Period, the Executive
shall be compensated as follows:
(a) Annual Base Salary. The Executive shall be paid an annual base
salary ("Annual Base Salary"), in equal biweekly installments, at least equal
to the annual base salary being paid to the Executive by the Company and
its affiliated companies with respect to the year in which the Effective
Date occurs. The Annual Base Salary shall be reviewed at least annually
and shall be increased substantially consistent with increases in base
salary generally awarded to other peer executives of the Company and its
affiliated companies. Such increases shall in no event be less than
the increases in the U.S. Department of Labor Consumer Price Index - U.S.
City Average Index. Any increase in Annual Base Salary shall not serve
to limit or reduce any other obligation to the Executive under this
Agreement. Annual Base Salary shall not be reduced after any such
increase and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased. As used in
this Agreement, the term "affiliated companies" shall include any
corporation or other entity controlled by, controlling or under
common control with the Company.
(b) Annual Bonus. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period,
an annual bonus (the "Annual Bonus") in cash at least equal to the
average annual incentive compensation (annualized for any fiscal year
consisting of less than twelve full months or with respect to which the
Executive has been employed by the Company for less than twelve full months)
paid or payable, including by reason of any deferral, to the Executive by
the Company and its affiliated companies in respect of the two fiscal years
immediately preceding the fiscal year in which the Effective Date occurs
(the "Recent Average Bonus"). The higher of the Recent Average Bonus or
the most recent Annual Bonus awarded by the Company and its affiliated
companies after the Effective Date is herein called the "Highest Annual
Bonus". Each such Annual Bonus shall be paid no later than the end of
the third month of the fiscal year next following the fiscal year for
which the Annual Bonus is awarded, unless the Executive shall elect to
defer the receipt of such Annual Bonus.
(c) Long Term Incentive Compensation. During the Employment Period,
the Executive shall be entitled to participate in all incentive compensation
plans, practices, policies, and programs applicable generally to other peer
executives of the Company and its affiliated companies, but in no event shall
such plans, practices, policies, and programs provide the Executive with
incentive opportunities and potential benefits, both as to amount and
percentage of compensation, less favorable, in the aggregate, than
those provided by the Company and its affiliated companies for the
Executive under the FPL Group Long Term Incentive Plan (including, without
limitation, performance share grants and awards) as in effect at any
time during the 90-day period immediately preceding the Effective Date
or; if more favorable to the Executive, those provided generally at any
time after the Effective Date to other peer executives of the Company and
its affiliated companies.
(d) Savings and Retirement Plans. During the Employment Period, the
Executive shall be entitled to participate in all savings and retirement
plans, practices, policies, and programs applicable generally to other
peer executives of the Company and its affiliated companies, but in
no event shall such plans, practices, policies, and programs provide the
Executive with savings opportunities and retirement benefit opportunities,
in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for
the Executive under such plans, practices, policies, and programs as in
effect at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided
generally at any time after the Effective Date to other peer executives
of the Company and its affiliated companies.
(e) Benefit Plans. During the Employment Period, the Executive
and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit
plans, practices, policies, and programs provided by the Company and
its affiliated companies (including, without limitation, medical, executive
medical, prescription, dental, vision, short-term disability, long-term
disability, executive long-term disability, salary continuance, employee
life, group life, benefits pursuant to a split dollar arrangement,
accidental death and dismemberment, and travel accident insurance plans
and programs) to the extent applicable generally to other peer executives
of the Company and its affiliated companies but in no event shall such
plans, practices, policies, and programs provide the Executive with benefits
which are less favorable, in the aggregate, than the most favorable of
such plans, practices, policies, and programs in effect for the Executive
at any time during the 90-day period immediately preceding the Effective
Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the
Company and its affiliated companies.
(f) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the most favorable policies, practices,
and procedures of the Company and its affiliated companies in effect for
the Executive at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
(g) Fringe Benefits. During the Employment Period, the Executive
shall be entitled to fringe benefits in accordance with the most favorable
plans, practices, programs, and policies of the Company and its affiliated
companies in effect for the Executive at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.
(h) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company and its affiliated companies at
any time during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as provided generally at any
time thereafter with respect to other peer executives of the Company
and its affiliated companies.
(i) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans,
policies, programs, and practices of the Company and its affiliated
companies as in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect
to other peer incentives of the Company and its affiliated companies.
6. Termination of Employment.
(a) Disability. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period (pursuant
to the definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 13(b) of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties.
For purposes of this Agreement, "Disability" shall mean the absence of
the Executive from the Executive's duties with the Company on a full-time
basis for 180 consecutive business days as a result of incapacity due to
mental or physical illness which is determined to be total and permanent
by a physician selected by the Company or its insurers and acceptable to
the Executive or the Executive's legal representative (such agreement as
to acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean (i) repeated violations by the Executive of the
Executive's obligations under Section 4 of this Agreement (other than as
a result of incapacity due to physical or mental illness) which are
demonstrably willful and deliberate on the Executive's part, which are
committed in bad faith or without reasonable belief that such violations
are in the best interests of the Company and which are not remedied in
a reasonable period of time after receipt of written notice from the
Company specifying such violations or (ii) the conviction of the
Executive of a felony involving an act of dishonesty intended to result
in substantial personal enrichment at the expense of the Company or its
affiliated companies.
(c) Good Reason. The Executive's employment may be terminated
during the Employment Period by the Executive for Good Reason.
For purposes of this Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including
status, offices, titles and reporting requirements), authority, duties
or responsibilities as contemplated by Section 4 of this Agreement, or
any other action by the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 5 of this Agreement, other than isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at
any office or location other than that described in Section 4 hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 12(c) of this Agreement, provided that such successor has
received at least ten days prior written notice from the Company or the
Executive of the requirements of Section 12(c) of the Agreement.
For purposes of this Section 6(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by
Notice of Termination to the other party hereto given in accordance with
Section 13(b) of this Agreement. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) to
the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of
such notice, specifies the termination date (which date shall be not more
than fifteen days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any
fact or circumstances which contributes to a showing of Good Reason or
Cause shall not waive any right of the Executive or the Company hereunder
or preclude the Executive or the Company from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination
or any later date specified therein, as the case may be, (ii) if the
Executive's employment is terminated by the Company other than for Cause
or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination and (iii) if the
Executive's employment is terminated by reason of Disability, the Date
of Termination shall be the Disability Effective Date.
7. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause or Disability. If, during the
Employment Period, the Company terminates the Executive's employment other
than for Cause or Disability or the Executive terminates employment for
Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the
following amounts (such aggregate being hereinafter referred to as the
"Special Termination Amount"):
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore
paid, (2) the product of (x) the Highest Annual Bonus and (y)
a fraction, the numerator of which is the number of days in
the current fiscal year through the Date of Termination, and
the denominator of which is 365 and (3) any compensation
previously deferred by the Executive (together with any
accrued interest or earnings thereon) (including, without
limitation, compensation, bonus, incentive compensation or
awards deferred under the FPL Group, Inc. Deferred
Compensation Plan or incentive compensation or awards deferred
under the FPL Group, Inc. Long-Term Incentive Plan of 1985,
the FPL Group, Inc. Long Term Incentive Plan of 1994, or
pursuant to an individual deferral agreement) and any accrued
vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (1), (2), and (3)
being herein called the "Accrued Obligations"); and
B. the amount equal to the product of (1) the
greater of two or the number of years (with any partial year
expressed as a fraction) remaining in the Employment Period
and (2) the sum of (x) the Executive's Annual Base Salary and
(y) the Highest Annual Bonus; provided, however, that such
amount shall be paid in lieu of, and the Executive hereby
waives the right to receive, any other amount of severance
relating to salary or bonus continuation to be received by the
Executive upon termination of employment of the Executive
under any severance plan, policy or arrangement of the
Company; and
C. the maximum amount payable under all performance
share grants and all other long term incentive compensation
grants to the Executive, calculated as though the Executive
had remained employed by the Company for the remainder of the
Employment Period and on the basis of actual achievement of
performance measures through the end of the fiscal year
preceding the fiscal year in which the Date of Termination
occurs and thereafter assuming 100% achievement of all
performance measures through the end of the Employment Period;
and
D. a separate lump-sum supplemental retirement
benefit equal to the difference between (1) the actuarial
equivalent (utilizing for this purpose the actuarial
assumptions utilized with respect to the FPL Group Employee
Pension Plan (or any successor plan thereto) (the "Retirement
Plan") during the 90-day period immediately preceding the
Effective Date) of the benefit payable under the Retirement
Plan and all supplemental and/or excess retirement plans
providing benefits for the Executive (the "SERP") (including,
but not limited to the Supplemental Pension Benefit (as
defined in the FPL Group, Inc. Supplemental Executive
Retirement Plan)) which the Executive would receive if the
Executive's employment continued at the compensation level
provided for in Sections 5(a) and 5(b) of this Agreement for
the remainder of the Employment Period, assuming for this
purpose that all accrued benefits are fully vested and that
benefit accrual formulas are no less advantageous to the
Executive than those in effect during the 90-day period
immediately preceding the Effective Date, or, if more
favorable to the Executive, as in effect generally at any time
thereafter during the Employment Period with respect to other
peer executives of the Company and its affiliated companies,
and (2) the actuarial equivalent (utilizing for this purpose
the actuarial assumptions utilized with respect to the
Retirement Plan during the 90-day period immediately preceding
the Effective Date) of the Executive's actual benefit (paid or
payable), if any, under the Retirement Plan and the SERP; and
E. a separate lump-sum supplemental retirement
benefit equal to the difference between (1) the value of the
Company Account (as defined in the FPL Group Employee Thrift
Plan or any successor plan thereto) (the "Thrift Plan") and
any other matching contribution accounts (including, but not
limited to the Supplemental Matching Contribution Account (as
defined in the FPL Group, Inc. Supplemental Executive
Retirement Plan) under a SERP which the Executive would
receive if (i) the Executive's employment continued at the
compensation level provided for in Sections 5(a) and 5(b) of
this Agreement for the remainder of the Employment Period,
(ii) the Executive made pre- and after-tax contributions at
the highest permissible rate (disregarding any limitations
imposed by the Internal Revenue Code, which may or may not be
set forth in the Thrift Plan) for each year remaining in the
Employment Period, (iii) the Company Account and the matching
contribution accounts are fully vested, and (iv) the matching
contribution formulas are no less advantageous to the
Executive than those in effect during the 90-day period
immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect generally at any time during
the remainder of the Employment Period with respect to other
peer executives of the Company and its affiliated companies,
and (2) the actual value of the Executive's Company Account
and matching contribution accounts (paid or payable), if any,
under the Thrift Plan and the SERP; and
(ii) for the remainder of the Employment Period, or such
longer period as any plan, program, practice or policy may provide, the
Company shall continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided to them
in accordance with the plans, programs, practices and policies
described in Sections 5(e) and 5(g) of this Agreement if the
Executive's employment had not been terminated, in accordance with the
most favorable plans, practices, programs or policies of the Company
and its affiliated companies applicable generally to other peer
executives and their families during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as
in effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies and their
families, provided, however, that if the Executive becomes reemployed
with another employer and is eligible to receive medical or other
welfare benefits under another employer provided plan, the medical and
other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of
eligibility. For purposes of determining eligibility of the Executive
for retiree benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained employed
until the end of the Employment Period and to have retired on the last
day of such period; and
(iii) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts
or benefits required to be paid or provided or which the Executive is
eligible to receive pursuant to this Agreement or otherwise under any
plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and benefits
shall be hereinafter referred to as the "Other Benefits"), but
excluding solely for purposes of this Section 7(a)(iii) amounts waived
by the Executive pursuant to Section 7(a)(i)(B).
(b) Death. Upon the Executive's death during the Employment Period,
this Agreement shall terminate without further obligations to the Executive's
legal representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. All
Accrued Obligations shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the
Date of Termination. The term Other Benefits as utilized in this
Section 7(b) shall include, without limitation, and the Executive's
family shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and any of its affiliated
companies to surviving families of peer executives of the Company and
such affiliated companies under such plans, programs, practices and policies
relating to family death benefits, if any, as in effect with respect to
other peer executives and their families at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to
the Executive and/or the Executive's family, as in effect on the date of
the Executive's death with respect to other peer executives of the
Company and its affiliated companies and their families.
(c) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. All Accrued Obligations shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of
Termination. The term Other Benefits as utilized in this Section 7(c)
shall include, and the Executive shall be entitled after the Disability
Effective Date to receive, disability and other benefits at least equal
to the most favorable of those generally provided by the Company and its
affiliated companies to disabled executives and/or their families in
accordance with such plans, programs, practices and policies relating
to disability, if any, as in effect generally with respect to other
peer executives and their families at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the
Executive and/or the Executive's family, as in effect at any time
thereafter generally with respect to other peer executives of the
Company and its affiliated companies and their families.
(d) Cause; Other Than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive
other than the obligation to pay to the Executive Annual Base Salary
through the Date of Termination plus the amount of any compensation
previously deferred by the Executive, in each case to the extent
theretofore unpaid. If the Executive terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the Executive, other
than for Accrued Obligations and the timely payment or provision of Other
Benefits. In such case, all Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
8. Non-exclusivity of Rights. Except as provided in Sections
7(a)(i)(B), 7(a)(ii), and 7(a)(iii) of this Agreement, nothing in this
Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the
Company or any of its affiliated companies and for which the Executive
may qualify, nor shall anything herein limit or otherwise affect such rights
as the Executive may have under any contract or agreement with the Company
or any of its affiliated companies. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the
Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
9. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against
the Executive or others. In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation
of the amounts payable to the Executive under any of the provisions of
this Agreement and, except as provided in Section 7(a)(ii) of this
Agreement, such amounts shall not be reduced whether or not the Executive
obtains other employment. The Company agrees to pay, to the full extent
permitted by law, all legal fees and expenses which the Executive may
reasonably incur at all stages of proceedings, including, without
limitation, preparation and appellate review, as a result of any
contest (regardless of whether formal legal proceedings are ever
commenced and regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about
the amount of any payment pursuant to this Agreement), plus in each
case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872 (f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").
10. Certain Additional Payments by the Company. Anything in this
Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under
this Section 10) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
11. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses, which shall have
been obtained by the Executive during the Executive's employment by
the Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the
Executive shall not, without the prior written consent of the Company or
as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. In no event shall an
asserted violation of the provisions of this Section 11 constitute a
basis for deferring or withholding any amounts otherwise payable to
the Executive under this Agreement.
12. Successors.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and /or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no
such succession had taken place. As used in this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
13. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Florida, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement may
not be amended or modified otherwise than by a written agreement executed
by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Roger Young
19001 SE Mack Dairy Road
Jupiter, Florida 33478
If to the Company:
FPL Group, Inc.
700 Universe Boulevard
Juno Beach, Florida 33408
Attention: Vice President, Human Resources
or such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement
or the failure to assert any right the Executive or the Company may
hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 6(c)(i)-(v) of
this Agreement, shall not be deemed to be a waiver of such provision or
right or any other provision or right of this Agreement.
(f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will"
and, prior to the Effective Date, may be terminated by either the Executive or
the Company at any time. Moreover, except as provided in Section 1, if prior
to the Effective Date, (i) the Executive's employment with the Company
terminates or (ii) the Executive ceases to be an officer of the Company, then
the Executive shall have no further rights under this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from the Board of Directors, the
Company has caused these presents to be executed in its name on its behalf,
all as of the day and year first above written.
ROGER YOUNG
Roger Young
FPL GROUP, INC.
By LAWRENCE J. KELLEHER
Lawrence J. Kelleher
Vice President Human Resources
EXHIBIT 12(a)
FPL GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Three Months
Ended
March 31, Years Ended December 31,
1999 1998 1997 1996 1995 1994
(Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C>
Earnings, as defined:
Net income ............................................ $ 209 $ 664 $ 618 $ 579 $ 553 $ 519
Income taxes .......................................... 106 279 304 294 329 307
Fixed charges, included in the determination of
net income, as below ................................ 50 335 304 283 308 337
Distributed income of independent power investments.... 7 68 47 38 39 28
Less: Equity in earnings of independent power
investments ......................................... 5 39 14 5 6 (3)
Total earnings, as defined ........................ $ 367 $1,307 $1,259 $1,189 $1,223 $1,194
Fixed charges, as defined:
Interest charges ...................................... $ 47 $ 322 $ 291 $ 267 $ 291 $ 319
Rental interest factor ................................ 1 4 4 5 6 7
Fixed charges included in nuclear fuel cost ........... 2 9 9 11 11 11
Fixed charges, included in the determination of net
income .............................................. 50 335 304 283 308 337
Capitalized interest .................................. - 2 4 - - -
Total fixed charges, as defined ................... $ 50 $ 337 $ 308 $ 283 $ 308 $ 337
Ratio of earnings to fixed charges ...................... 7.34 3.88 4.09 4.20 3.97 3.54
</TABLE>
EXHIBIT 12(b)
FLORIDA POWER & LIGHT COMPANY
COMPUTATION OF RATIOS
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1999
(Millions of Dollars)
RATIO OF EARNINGS TO FIXED CHARGES
<S> <C>
Earnings, as defined:
Net income .............................................................................. $ 108
Income taxes ............................................................................ 55
Fixed charges, as below ................................................................. 46
Total earnings, as defined ............................................................ $ 209
Fixed charges, as defined:
Interest charges ........................................................................ $ 43
Rental interest factor .................................................................. 1
Fixed charges included in nuclear fuel cost ............................................. 2
Total fixed charges, as defined ....................................................... $ 46
Ratio of earnings to fixed charges ........................................................ 4.54
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Earnings, as defined:
Net income .............................................................................. $108
Income taxes ............................................................................ 55
Fixed charges, as below ................................................................. 46
Total earnings, as defined ............................................................ $ 209
Fixed charges, as defined:
Interest charges ........................................................................ $ 43
Rental interest factor .................................................................. 1
Fixed charges included in nuclear fuel cost ............................................. 2
Total fixed charges, as defined ....................................................... 46
Non-tax deductible preferred stock dividends .............................................. 4
Ratio of income before income taxes to net income ......................................... 1.51
Preferred stock dividends before income taxes ............................................. 6
Combined fixed charges and preferred stock dividends ...................................... $ 52
Ratio of earnings to combined fixed charges and preferred stock dividends ................. 4.02
</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 March 31, 1999 and condensed consolidated statements of income and cash flows for the three months ended
March 31, 1999 and is qualified in its entirety by reference to such financial statements.
<CIK> 0000753308
<NAME> FPL Group, Inc.
<MULTIPLIER> 1,000,000
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<PERIOD-TYPE> 3-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $8,038
<OTHER-PROPERTY-AND-INVEST> $2,402
<TOTAL-CURRENT-ASSETS> $1,428
<TOTAL-DEFERRED-CHARGES> $0
<OTHER-ASSETS> $428
<TOTAL-ASSETS> $12,296
<COMMON> $2
<CAPITAL-SURPLUS-PAID-IN> $2,967
<RETAINED-EARNINGS> $2,243
<TOTAL-COMMON-STOCKHOLDERS-EQ> $5,212
$0
$226
<LONG-TERM-DEBT-NET> $2,207
<SHORT-TERM-NOTES> $0
<LONG-TERM-NOTES-PAYABLE> $0
<COMMERCIAL-PAPER-OBLIGATIONS> $0
<LONG-TERM-DEBT-CURRENT-PORT> $616
$0
<CAPITAL-LEASE-OBLIGATIONS> $0
<LEASES-CURRENT> $0
<OTHER-ITEMS-CAPITAL-AND-LIAB> $4,035
<TOT-CAPITALIZATION-AND-LIAB> $12,296
<GROSS-OPERATING-REVENUE> $1,412
<INCOME-TAX-EXPENSE> $106
<OTHER-OPERATING-EXPENSES> $1,204
<TOTAL-OPERATING-EXPENSES> $1,204
<OPERATING-INCOME-LOSS> $208
<OTHER-INCOME-NET> $158
<INCOME-BEFORE-INTEREST-EXPEN> $256
<TOTAL-INTEREST-EXPENSE> $47
<NET-INCOME> $209
$4
<EARNINGS-AVAILABLE-FOR-COMM> $209
<COMMON-STOCK-DIVIDENDS> $89
<TOTAL-INTEREST-ON-BONDS> $0
<CASH-FLOW-OPERATIONS> $680
<EPS-PRIMARY> $1.22
<EPS-DILUTED> $1.22
</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
March 31, 1999 and condensed consolidated statements of income and cash flows for the three months ended March 31, 1999 and
is qualified in its entirety by reference to such financial statements.
<CIK> 0000037634
<NAME> Florida Power & Light Company
<MULTIPLIER> 1,000,000
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<PERIOD-TYPE> 3-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $8,038
<OTHER-PROPERTY-AND-INVEST> $1,276
<TOTAL-CURRENT-ASSETS> $1,259
<TOTAL-DEFERRED-CHARGES> $0
<OTHER-ASSETS> $304
<TOTAL-ASSETS> $10,877
<COMMON> $0
<CAPITAL-SURPLUS-PAID-IN> $0
<RETAINED-EARNINGS> $0
<TOTAL-COMMON-STOCKHOLDERS-EQ> $4,810
$0
$226
<LONG-TERM-DEBT-NET> $2,192
<SHORT-TERM-NOTES> $0
<LONG-TERM-NOTES-PAYABLE> $0
<COMMERCIAL-PAPER-OBLIGATIONS> $0
<LONG-TERM-DEBT-CURRENT-PORT> $230
$0
<CAPITAL-LEASE-OBLIGATIONS> $0
<LEASES-CURRENT> $0
<OTHER-ITEMS-CAPITAL-AND-LIAB> $3,419
<TOT-CAPITALIZATION-AND-LIAB> $10,877
<GROSS-OPERATING-REVENUE> $1,359
<INCOME-TAX-EXPENSE> $56
<OTHER-OPERATING-EXPENSES> $1,153
<TOTAL-OPERATING-EXPENSES> $1,209
<OPERATING-INCOME-LOSS> $150
<OTHER-INCOME-NET> $1
<INCOME-BEFORE-INTEREST-EXPEN> $151
<TOTAL-INTEREST-EXPENSE> $43
<NET-INCOME> $108
$4
<EARNINGS-AVAILABLE-FOR-COMM> $104
<COMMON-STOCK-DIVIDENDS> $0
<TOTAL-INTEREST-ON-BONDS> $0
<CASH-FLOW-OPERATIONS> $667
<EPS-PRIMARY> $0
<EPS-DILUTED> $0
</TABLE>
