UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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 June 30, 1999: 179,241,435 shares.
As of June 30, 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 delays or changes in costs for capital
projects, 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 readiness, 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 Six Months Ended
June 30, June 30,
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
OPERATING REVENUES ............................................... $1,614 $1,692 $3,026 $3,031
OPERATING EXPENSES:
Fuel, purchased power and interchange .......................... 588 558 1,095 994
Other operations and maintenance................................ 327 319 601 618
Depreciation and amortization .................................. 244 348 523 597
Impairment loss of Maine assets ................................ 176 - 176 -
Taxes other than income taxes .................................. 144 150 288 286
Total operating expenses ..................................... 1,479 1,375 2,683 2,495
OPERATING INCOME ................................................. 135 317 343 536
OTHER INCOME (DEDUCTIONS):
Interest charges ............................................... (58) (64) (106) (127)
Preferred stock dividends - FPL ................................ (4) (4) (7) (7)
Gain on sale of Adelphia Communications Corporation stock ...... - - 149 -
Other - net .................................................... 32 16 41 22
Total other income (deductions) - net ........................ (30) (52) 77 (112)
INCOME BEFORE INCOME TAXES ....................................... 105 265 420 424
INCOME TAXES ..................................................... 28 89 134 140
NET INCOME ....................................................... $ 77 $ 176 $ 286 $ 284
Earnings per share of common stock (basic and assuming dilution).. $ 0.45 $ 1.02 $ 1.67 $ 1.65
Dividends per share of common stock .............................. $ 0.52 $ 0.50 $ 1.04 $ 1.00
Average number of common shares outstanding ...................... 171 173 172 173
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on pages 9 through 13 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>
June 30, 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 ....................... $19,000 $17,952
Less accumulated depreciation and amortization ................................... (9,917) (9,397)
Total property, plant and equipment - net ...................................... 9,083 8,555
CURRENT ASSETS:
Cash and cash equivalents ........................................................ 595 187
Customer receivables, net of allowances of $7 and $8, respectively ............... 521 559
Materials, supplies and fossil fuel inventory - at average cost .................. 301 282
Other ............................................................................ 180 238
Total current assets ........................................................... 1,597 1,266
OTHER ASSETS:
Special use funds of FPL ......................................................... 1,318 1,206
Other investments ................................................................ 546 391
Other ............................................................................ 762 611
Total other assets ............................................................. 2,626 2,208
TOTAL ASSETS ....................................................................... $13,306 $12,029
CAPITALIZATION:
Common stock ..................................................................... $ 2 $ 2
Additional paid-in capital........................................................ 2,922 3,000
Retained earnings................................................................. 2,231 2,123
Accumulated other comprehensive income............................................ - 1
Total common shareholders' equity............................................... 5,155 5,126
Preferred stock of FPL without sinking fund requirements ......................... 226 226
Long-term debt ................................................................... 2,493 2,347
Total capitalization ........................................................... 7,874 7,699
CURRENT LIABILITIES:
Debt due within one year ......................................................... 1,387 469
Accounts payable ................................................................. 369 338
Accrued interest, taxes and other ................................................ 1,091 834
Total current liabilities ...................................................... 2,847 1,641
OTHER LIABILITIES AND DEFERRED CREDITS:
Accumulated deferred income taxes ................................................ 1,138 1,255
Unamortized regulatory and investment tax credits ................................ 332 353
Other ............................................................................ 1,115 1,081
Total other liabilities and deferred credits ................................... 2,585 2,689
COMMITMENTS AND CONTINGENCIES
TOTAL CAPITALIZATION AND LIABILITIES ............................................... $13,306 $12,029
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on pages 9 through 13 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>
Six Months Ended
June 30,
1999 1998
------ ------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................. $1,090 $ 997
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures of FPL ......................................................... (378) (327)
Independent power investments ....................................................... (1,352) (395)
Distributions and loan repayments from partnerships and joint ventures .............. 81 236
Other - net ......................................................................... 63 (43)
Net cash used in investing activities ........................................... (1,586) (529)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt .......................................................... 621 197
Retirement of long-term debt ........................................................ (354) (189)
Increase in short-term debt ......................................................... 899 103
Repurchase of common stock .......................................................... (84) (33)
Dividends on common stock ........................................................... (178) (172)
Net cash provided by (used in) financing activities ............................. 904 (94)
Net increase in cash and cash equivalents ............................................. 408 374
Cash and cash equivalents at beginning of period ...................................... 187 54
Cash and cash equivalents at end of period ............................................ $ 595 $ 428
Supplemental disclosures of cash flow information:
Cash paid for interest .............................................................. $ 117 $ 129
Cash paid for income taxes .......................................................... $ 104 $ 13
Supplemental schedule of noncash investing and financing activities:
Additions to capital lease obligations .............................................. $ 28 $ 2
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on pages 9 through 13 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 Six Months Ended
June 30, June 30,
1999 1998 1999 1998
------ ------ ------- -------
<S> <C> <C> <C> <C>
OPERATING REVENUES ................................................. $1,511 $1,634 $2,869 $2,929
OPERATING EXPENSES:
Fuel, purchased power and interchange ............................ 548 546 1,033 977
Other operations and maintenance ................................. 284 285 534 553
Depreciation and amortization .................................... 234 342 509 585
Income taxes ..................................................... 95 96 151 154
Taxes other than income taxes .................................... 143 149 285 284
Total operating expenses ....................................... 1,304 1,418 2,512 2,553
OPERATING INCOME ................................................... 207 216 357 376
OTHER INCOME (DEDUCTIONS):
Interest charges ................................................. (43) (49) (86) (100)
Other - net ...................................................... 3 - 4 (3)
Total other deductions - net ................................... (40) (49) (82) (103)
NET INCOME ......................................................... 167 167 275 273
PREFERRED STOCK DIVIDENDS .......................................... 4 4 7 7
NET INCOME AVAILABLE TO FPL GROUP .................................. $ 163 $ 163 $ 268 $ 266
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on pages 9 through 13 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>
June 30, December 31,
1999 1998
---------- ------------
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Plant in service, including nuclear fuel and construction work in progress ....... $17,773 $17,464
Less accumulated depreciation and amortization ................................... (9,826) (9,317)
Electric utility plant - net ................................................... 7,947 8,147
CURRENT ASSETS:
Cash and cash equivalents ........................................................ 524 152
Customer receivables, net of allowances of $7 and $8, respectively ............... 469 521
Materials, supplies and fossil fuel inventory - at average cost .................. 270 239
Other ............................................................................ 152 204
Total current assets ........................................................... 1,415 1,116
OTHER ASSETS:
Special use funds ................................................................ 1,318 1,206
Other ............................................................................ 337 279
Total other assets ............................................................. 1,655 1,485
TOTAL ASSETS ....................................................................... $11,017 $10,748
CAPITALIZATION:
Common shareholder's equity ...................................................... $ 4,859 $ 4,803
Preferred stock without sinking fund requirements ................................ 226 226
Long-term debt ................................................................... 2,078 2,191
Total capitalization ........................................................... 7,163 7,220
CURRENT LIABILITIES:
Debt due within one year ......................................................... 355 230
Accounts payable ................................................................. 365 321
Accrued interest, taxes and other ................................................ 949 800
Total current liabilities ...................................................... 1,669 1,351
OTHER LIABILITIES AND DEFERRED CREDITS:
Accumulated deferred income taxes ................................................ 885 887
Unamortized regulatory and investment tax credits ................................ 332 353
Other ............................................................................ 968 937
Total other liabilities and deferred credits ................................... 2,185 2,177
COMMITMENTS AND CONTINGENCIES
TOTAL CAPITALIZATION AND LIABILITIES ............................................... $11,017 $10,748
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on pages 9 through 13 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>
Six Months Ended
June 30,
1999 1998
------ ------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................. $1,030 $ 971
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ................................................................ (378) (327)
Other - net ......................................................................... (59) (43)
Net cash used in investing activities ........................................... (437) (370)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt .......................................................... 224 197
Retirement of long-term debt ........................................................ (225) (180)
Decrease in commercial paper ........................................................ - (39)
Dividends ........................................................................... (220) (225)
Net cash used in financing activities ............................................. (221) (247)
Net increase in cash and cash equivalents ............................................. 372 354
Cash and cash equivalents at beginning of period ...................................... 152 3
Cash and cash equivalents at end of period ............................................ $ 524 $ 357
Supplemental disclosures of cash flow information:
Cash paid for interest .............................................................. $ 96 $ 99
Cash paid for income taxes .......................................................... $ 84 $ 22
Supplemental schedule of noncash investing and financing activities:
Additions to capital lease obligations .............................................. $ 28 $ 2
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on pages 9 through 13 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 were 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 retail customers on the basis of two-thirds refunded to retail
customers and one-third retained by FPL. Revenue from retail base
operations in excess of a second threshold will be refunded 100% to retail
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
Offsetting the annual revenue reduction will be lower special depreciation.
The agreement allows 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/or fossil generating assets. For the three and six
months ended June 30, 1999, FPL recorded approximately $19 million and $80
million of special depreciation/amortization compared to approximately $117
million and $148 million for the three and six months ended June 30, 1998,
respectively. Approximately $378 million of special amortization was
recorded in 1998. In addition the agreement lowered FPL's authorized
regulatory ROE range to 10% - 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
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. 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, which
were effective for 1998.
2. Acquisition of Maine Assets
During the second quarter of 1999, FPL Energy, Inc. (FPL Energy) completed
the purchase of Central Maine Power Company's (CMP) non-nuclear generating
assets, primarily fossil and hydro power plants, for $866 million. The
purchase price was based on an agreement, subject to regulatory approvals,
reached with CMP in January 1998. In October 1998, the FERC struck down
transmission rules that had been in effect in New England since the 1970s.
FPL Energy filed a lawsuit in November 1998 requesting a declaratory
judgment that CMP could not meet the essential terms of the purchase
agreement and, as a result, FPL Energy should not be required to complete
the transaction. FPL Energy believed these FERC rulings regarding
transmission constituted a material adverse effect under the purchase
agreement because of the significant decline in the value of the assets
caused by the rulings. The request for declaratory judgment was denied in
March 1999, and the acquisition was completed on April 7,1999. The
acquisition was accounted for under the purchase method of accounting and
the results of operating the Maine plants have been included in the
condensed consolidated financial statements since the acquisition date.
The FERC rulings regarding transmission, as well as the announcement of new
entrants into the market and changes in fuel prices since January 1998,
resulted in FPL Energy recording a $176 million pre-tax impairment loss
related to the fossil assets. The fossil assets are now reflected at their
fair value, which was determined based on a discounted cash flow analysis.
The impairment loss reduced FPL Group's second quarter 1999 results of
operations and earnings per share by $104 million and $0.61 per share,
respectively.
Most of the remainder of the purchase price was allocated to the hydro
operations. The hydro plants and related goodwill are being amortized on a
straight-line basis over the 40-year term of the hydro plant operating
licenses.
3. Capitalization
FPL Group Common Stock - During the three and six months ended June 30, 1999,
FPL Group repurchased 922,600 shares and 1,470,000 shares of common stock,
respectively, under its share repurchase program. A total of approximately
3.2 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 5/8% 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 for the six months ended June 30, 1999. In
April 1999, FPL sold $225 million principal amount of first mortgage bonds
maturing in 2009, with an interest rate of 5 7/8%. The proceeds were used in
May 1999 to redeem approximately $216 million principal amount of first
mortgage bonds, maturing in 2013, bearing interest at 7 7/8%. In June 1999,
FPL Group Capital sold $175 million principal amount of 6 7/8% debentures,
maturing in 2004 and $225 million principal amount of 7 3/8% debentures,
maturing in 2009.
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 and six months ended June 30, 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 $76 million and $176
million for the three months ended June 30, 1999 and 1998 and $285 million
and $284 million for the six months ended June 30, 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.
4. 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 $380 million had been spent through June
30, 1999. As of June 30, 1999, FPL Energy has made commitments for the
development of an independent power project totaling $241 million. FPL Group
and its subsidiaries, other than FPL, have guaranteed approximately $703
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 $50
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 $273 million at
June 30, 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
<TABLE><CAPTION>
1999 2000 2001 2002 2003
---- ---- ---- ---- ----
(Millions of Dollars)
<S> <C> <C> <C> <C> <C>
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 ................................. $290 $200 $220 $250 $250
Coal .................................................................. $ 40 $ 40 $ 30 $ 30 $ 15
FPL Energy:
Natural gas transportation and storage ................................ $ 15 $ 15 $ 15 $ 15 $ 15
_______________
(a) Includes approximately $40 million, $42 million, $44 million, $47 million and $49 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.
</TABLE>
Charges under these contracts were as follows:
<TABLE><CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1999 Charges 1998 Charges 1999 Charges 1998 Charges
----------------- ------------------ ----------------- ------------------
Energy/ Energy/ Energy/ Energy/
Capacity Fuel Capacity Fuel Capacity Fuel Capacity Fuel
-------- ------- -------- ------- -------- ------- -------- -------
(Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FPL:
JEA and Southern Companies .. $49(b) $ 31(a) $54(b) $35(a) $101(b) $ 55(a) $105(b) $ 67(a)
Qualifying facilities........ $76(c) $ 28(a) $75(c) $28(a) $151(c) $ 49(a) $149(c) $ 54(a)
Natural gas, including
transportation ............ $ - $111(a) $ - $84(a) $ - $186(a) $ - $138(a)
Coal ........................ $ - $ 11(a) $ - $11(a) $ - $ 23(a) $ - $ 23(a)
FPL Energy:
Natural gas transportation
and storage ............... $ - $ 4 $ - $ 4 $ - $ 8 $ - $ 9
_______________
(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. In June 1999, the plant owners' motion for summary judgment was
denied.
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 1998, the FERC declined to make the requested ruling. Trial
is set for November 1999.
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. In June 1999, the FASB issued FAS 137, "Accounting
for Derivative Instruments and Hedging Activities - Deferral of the Effective
Date of FASB Statement No. 133," which delayed the adoption of FAS 133 for
one year. As a result of FAS 137, FPL Group and FPL will not be required to
adopt FAS 133 until 2001.
5. Segment Information
FPL Group's reportable segments include FPL, a regulated utility, and FPL
Energy, an unregulated energy generating subsidiary. FPL Group's segment
information is as follows:
<TABLE><CAPTION>
Three Months Ended June 30,
1999 1998
---------------------------------------- ------------------------------------------
FPL Corporate FPL Corporate
FPL Energy & Other Total FPL Energy(a) & Other(a) Total
------- ------- --------- ------- ------- --------- ----------- -----
(Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues ..... $ 1,511 $ 93 $ 10 $ 1,614 $ 1,634 $ 42 $ 16 $ 1,692
Net income ............. $ 163 $ (86)(b) $ - $ 77 $ 163 $ 8 $ 5 $ 176
</TABLE>
<TABLE><CAPTION>
Six Months Ended June 30,
1999 1998
----------------------------------------- ------------------------------------------
FPL Corporate FPL Corporate
FPL Energy & Other Total FPL Energy(a) & Other(a) Total
------- --------- --------- ------- ------- --------- ----------- -------
(Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues ..... $ 2,869 $ 134 $ 23 $ 3,026 $ 2,929 $ 65 $ 37 $ 3,031
Net income ............. $ 268 $ (77)(b) $ 95(c) $ 286 $ 266 $ 11 $ 7 $ 284
</TABLE>
<TABLE><CAPTION>
June 30, 1999 December 31, 1998
----------------------------------------- ------------------------------------------
FPL Corporate FPL Corporate
FPL Energy & Other Total FPL Energy & Other Total
------- ------- --------- ------- ------- ------ --------- -------
(Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total assets ........... $11,017 $2,025 $264 $13,306 $10,748 $1,092 $189 $12,029
</TABLE>
(a) FPL Energy began imputing interest in the second quarter of 1999 based on
an assumed capital structure of 50% debt. For comparability, 1998
amounts have been restated.
(b) Includes effect of $104 million after-tax impairment loss. See Note 2
and Management's Discussion and Analysis of Financial Condition and
Results of Operations - Results of Operations - FPL Energy.
(c) Includes effect of $96 million after-tax gain on the sale of an
investment in Adelphia Communications Corporation (Adelphia) common
stock. See Management's Discussion and Analysis of Financial Condition
and Results of Operations - Results of Operations - Corporate and Other.
6. Summarized Financial Information of FPL Group Capital
FPL Group Capital holds the capital stock and provides funding for FPL
Group's operating subsidiaries other than FPL. FPL Group Capital's
debentures are guaranteed by FPL Group and included in FPL Group's
condensed consolidated balance sheets. Summarized financial information of
FPL Group Capital is as follows:
<TABLE><CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30, June 30,
1999 1998 1999 1998
---- ---- ---- ----
(Millions of Dollars)
<S> <C> <C> <C> <C>
Operating revenues ..................... $103 $ 58 $157 $102
Operating expenses ..................... $269 (a) $ 54 $320(a) $ 95
Net income (loss) ...................... $(81)(a) $ 18 $ 31(a)(b) $ 29
</TABLE>
<TABLE><CAPTION>
June 30, 1999 December 31, 1998
------------- -----------------
(Millions of Dollars)
<S> <C> <C>
Current assets ......................... $ 332 $ 317
Noncurrent assets ...................... $2,407 $1,445
Current liabilities .................... $1,118 $ 310
Noncurrent liabilities ................. $ 843 $ 703
</TABLE>
(a) Includes effect of $104 million after-tax impairment loss. See Note 2
and Management's Discussion and Analysis of Financial Condition and
Results of Operations - Results of Operations - FPL Energy.
(b) Includes effect of $96 million after-tax gain on the sale of an
investment in Adelphia common stock. See Management's Discussion and
Analysis of Financial Condition and Results of Operations - Results of
Operations - Corporate and Other.
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.
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 continues to represent the principal operations of FPL Group. FPL
Group's second quarter and year to date 1999 earnings reflect a $176
million ($104 million after-tax) impairment loss recorded by FPL Energy
related to the fossil assets purchased from CMP. Year to date earnings
also reflect a $149 million ($96 million after-tax) gain recorded by FPL
Group Capital on the sale of an investment in Adelphia common stock in the
first quarter of 1999. Excluding these items, FPL Group's year to date
earnings growth is primarily the result of FPL Energy's growth and improved
operating results.
FPL - FPL's net income was flat for the three months ended June 30, 1999
and up slightly for the six months ended June 30, 1999. FPL's revenues
from retail base rates for the three and six months ended June 30, 1999,
were $827 million and $ 1.6 billion, respectively, and $961 million and
$1.7 billion for the same periods in 1998. The decrease in revenues from
retail base rates resulted mainly from the rate reduction agreement, which
became effective April 15, 1999. FPL's revenues also declined due to lower
energy usage per retail customer of 4.7% and 2.1% for the three and six
months ended June 30, 1999, respectively, due to warmer weather during the
prior year. This was partly offset by customer growth of 2% and 1.9% for
the same periods.
The rate reduction 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 rate reduction 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 retail customers on the basis of
two-thirds refunded to retail customers and one-third retained by FPL.
Revenues from retail base operations in excess of a second threshold will
be refunded 100% to retail customers. The thresholds for the twelve months
ended April 15, 2000, are $3.4 billion and $3.556 billion, respectively.
Offsetting the annual revenue reduction will be lower special depreciation.
The rate reduction agreement allows 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/or fossil generating assets.
Approximately $378 million of special amortization was recorded in 1998.
See Note 1 - Regulation.
FPL's O&M expense decreased slightly for the three and six months ended
June 30, 1999, reflecting, among other things, continued cost control.
Depreciation and amortization expense also decreased for those periods as a
result of lower special depreciation. For the three and six months ended
June 30, 1999, FPL recorded approximately $19 million and $80 million of
special depreciation/amortization compared to approximately $117 million
and $148 million for the three and six months ended June 30, 1998,
respectively. Lower interest expense for the three and six months ended
June 30, 1999 is the result of lower average debt balances and the full
amortization in 1998 of deferred costs associated with reacquired debt.
FPL Energy - FPL Energy's net income for the three and six months ended
June 30, 1999, decreased due to the $176 million ($104 million after-tax)
impairment loss recorded in the second quarter of 1999. Net income
excluding the impairment loss more than doubled for the three and six
months ended June 30, 1999. The improvement is primarily attributable to
the addition of the Maine generating assets, new and repowered wind
projects, as well as improved results from natural gas operations in the
eastern United States. Earnings in all periods includes the effect of
imputed interest expense on an assumed capital structure of 50% debt.
Corporate and Other - Net income for the corporate and other segment for
the six months ended June 30, 1999 reflects a $149 million ($96 million
after-tax) gain recorded by FPL Group Capital on the sale of an investment
in Adelphia common stock in the first quarter of 1999.
Year 2000 - As of June 30, 1999, FPL Group is essentially complete with its
plan to address the potential impact of the year 2000 on its technology
systems, except for remediation at two projects in which FPL Energy has an
ownership interest. Remediation at these projects will be completed during
scheduled outages in October 1999. FPL Group has also prepared its year
2000 contingency plans, which are based upon certain hypothetical year 2000
scenarios at the operating level (such as generation, transmission and
distribution), as well as at the business level (such as customer service,
procurement and accounting). These plans are intended to mitigate both
internal risks and potential risks in FPL Group's supply chain. During the
second half of 1999, FPL Group will continue to conduct training and
drills, as well as evaluate and update its contingency plans. In addition,
FPL Group has retained independent engineering and hardware/software
remediation firms to validate and verify mission critical and other
important aspects of its year 2000 program. The estimated cost of
addressing year 2000 issues is expected to be approximately $40 million, of
which approximately 80% had been spent through June 30, 1999. The
remainder is a cost estimate for verification, mitigation, training and
rollover staffing. FPL Group believes that the most reasonably likely
worst case scenarios relating to the year 2000 could include a temporary
disruption of service to customers, caused by a potential disruption in
fuel supply, water supply and telecommunications, as well as transmission
grid disruptions caused by other companies whose electrical systems are
interconnected with FPL.
LIQUIDITY AND CAPITAL RESOURCES
See Note 3 - Long-Term Debt for financing activity during the six months
ended June 30, 1999. In addition, as of June 30, 1999, FPL Group Capital
had increased its outstanding commercial paper by $922 million since
December 31, 1998, primarily to fund FPL Energy investments. Available
bank lines of credit, which support the commercial paper program,
aggregated approximately $2.5 billion ($900 million for FPL) and $1.9
billion ($900 million for FPL) at June 30, 1999 and December 31, 1998,
respectively. Additionally, during the three and six months ended June 30,
1999, FPL Group repurchased 922,600 and 1,470,000 shares of common stock,
respectively.
These actions are consistent with management's intent to reduce the number
of outstanding shares of common stock. For information concerning capital
commitments see Note 4 - Commitments.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
FPL Group:
(a) The Annual Meeting of FPL Group's shareholders was held on May 10,
1999. Of the 180,165,035 shares of common stock outstanding on the
record date of March 1, 1999, a total of 148,463,102 shares were
represented in person or by proxy.
(b) The following directors were elected effective May 10, 1999:
<TABLE><CAPTION>
Votes Cast
----------------------------
Against or
For Withheld
----------- ----------
<S> <C> <C>
H. Jesse Arnelle ................................ 145,924,913 2,538,189
Sherry S. Barrat ................................ 146,003,405 2,459,697
Robert M. Beall, II ............................. 146,012,816 2,450,286
James L. Broadhead .............................. 145,452,063 3,011,039
J. Hyatt Brown .................................. 145,719,786 2,743,316
Armando M. Codina ............................... 145,927,243 2,535,859
Marshall M. Criser .............................. 145,882,157 2,580,945
B. F. Dolan ..................................... 145,938,376 2,524,726
Willard D. Dover ................................ 146,014,799 2,448,303
Alexander W. Dreyfoos, Jr. ...................... 146,008,989 2,454,113
Paul J. Evanson ................................. 145,962,410 2,500,692
Drew Lewis ...................................... 145,669,152 2,793,950
Frederic V. Malek ............................... 145,699,987 2,763,115
Paul R. Tregurtha ............................... 145,814,212 2,648,890
Roger Young ..................................... 145,131,849 3,331,253
</TABLE>
(c) The vote to ratify the appointment of Deloitte & Touche LLP as
independent auditors for 1999 was 146,472,735 for, 1,136,687 against
and 853,680 abstaining.
(d) The vote to reapprove the Annual Incentive Plan was 137,673,697 for,
8,778,744 against and 2,010,661 abstaining.
(e) The vote to reapprove part of the Long Term Incentive Plan was
133,797,304 for, 12,439,117 against and 2,226,681 abstaining.
FPL:
(a) The following FPL directors were elected effective July 1, 1999 by the
written consent of FPL Group, as the sole common shareholder of FPL,
in lieu of an annual meeting of shareholders:
James L. Broadhead
Dennis P. Coyle
Paul J. Evanson
Lawrence J. Kelleher
Armando J. Olivera
Thomas F. Plunkett
Antonio Rodriguez
Roger Young
Item 5. Other Information
(a) Reference is made to Item 1. Business - FPL Operations - System
Capability and Load in the 1998 Form 10-K for FPL Group and FPL.
The in-service date for the repowering of FPL's two Fort Myers units
has been delayed until mid-2002.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE><CAPTION>
Exhibit FPL
Number Description Group FPL
------- ------------------------------------------------------- ----- ---
<S> <C> <C> <C>
12(a) Computation of Ratio of Earnings to Fixed Charges x
12(b) Computation of Ratios x
27 Financial Data Schedule x x
</TABLE>
(b) Reports on Form 8-K
A Current Report on Form 8-K was filed with the Securities and
Exchange Commission on April 16, 1999 by FPL Group reporting one event
under Item 5. Other Events.
A Current Report on Form 8-K was filed with the Securities and
Exchange Commission on April 16, 1999 by 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: August 5 ,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
(Chief Accounting Officer of the Registrants)
EXHIBIT 12(a)
FPL GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Six Months
Ended
June 30, 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 ............................................ $ 286 $ 664 $ 618 $ 579 $ 553 $ 519
Income taxes .......................................... 134 279 304 294 329 307
Fixed charges, included in the determination of
net income, as below ................................ 112 335 304 283 308 337
Distributed income of independent power investments.... 31 68 47 38 39 28
Less: Equity in earnings of independent power
investments ......................................... 24 39 14 5 6 (3)
Total earnings, as defined ........................ $ 539 $1,307 $1,259 $1,189 $1,223 $1,194
Fixed charges, as defined:
Interest charges ...................................... $ 106 $ 322 $ 291 $ 267 $ 291 $ 319
Rental interest factor ................................ 2 4 4 5 6 7
Fixed charges included in nuclear fuel cost ........... 4 9 9 11 11 11
Fixed charges, included in the determination of net
income .............................................. 112 335 304 283 308 337
Capitalized interest .................................. 1 2 4 - - -
Total fixed charges, as defined ................... $ 113 $ 337 $ 308 $ 283 $ 308 $ 337
Ratio of earnings to fixed charges ...................... 4.77 3.88 4.09 4.20 3.97 3.54
</TABLE>
EXHIBIT 12(b)
FLORIDA POWER & LIGHT COMPANY
COMPUTATION OF RATIOS
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1999
-----------------
(Millions of Dollars)
RATIO OF EARNINGS TO FIXED CHARGES
<S> <C>
Earnings, as defined:
Net income .............................................................................. $ 275
Income taxes ............................................................................ 151
Fixed charges, as below ................................................................. 92
Total earnings, as defined ............................................................ $ 518
Fixed charges, as defined:
Interest charges ........................................................................ $ 86
Rental interest factor .................................................................. 2
Fixed charges included in nuclear fuel cost ............................................. 4
Total fixed charges, as defined ....................................................... $ 92
Ratio of earnings to fixed charges ........................................................ 5.63
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Earnings, as defined:
Net income .............................................................................. $ 275
Income taxes ............................................................................ 151
Fixed charges, as below ................................................................. 92
Total earnings, as defined ............................................................ $ 518
Fixed charges, as defined:
Interest charges ........................................................................ $ 86
Rental interest factor .................................................................. 2
Fixed charges included in nuclear fuel cost ............................................. 4
Total fixed charges, as defined ....................................................... 92
Non-tax deductible preferred stock dividends .............................................. 7
Ratio of income before income taxes to net income ......................................... 1.55
Preferred stock dividends before income taxes ............................................. 11
Combined fixed charges and preferred stock dividends ...................................... $ 103
Ratio of earnings to combined fixed charges and preferred stock dividends ................. 5.03
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from FPL Group's and FPL's condensed consolidated balance
sheet as of June 30, 1999 and condensed consolidated statements of income and cash flows for the six months ended
June 30, 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> JUN-30-1999
<PERIOD-TYPE> 6-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $7,947
<OTHER-PROPERTY-AND-INVEST> $3,000
<TOTAL-CURRENT-ASSETS> $1,597
<TOTAL-DEFERRED-CHARGES> $0
<OTHER-ASSETS> $762
<TOTAL-ASSETS> $13,306
<COMMON> $2
<CAPITAL-SURPLUS-PAID-IN> $2,922
<RETAINED-EARNINGS> $2,231
<TOTAL-COMMON-STOCKHOLDERS-EQ> $5,155
$0
$226
<LONG-TERM-DEBT-NET> $2,493
<SHORT-TERM-NOTES> $0
<LONG-TERM-NOTES-PAYABLE> $0
<COMMERCIAL-PAPER-OBLIGATIONS> $0
<LONG-TERM-DEBT-CURRENT-PORT> $1,387
$0
<CAPITAL-LEASE-OBLIGATIONS> $0
<LEASES-CURRENT> $0
<OTHER-ITEMS-CAPITAL-AND-LIAB> $4,045
<TOT-CAPITALIZATION-AND-LIAB> $13,306
<GROSS-OPERATING-REVENUE> $3,026
<INCOME-TAX-EXPENSE> $134
<OTHER-OPERATING-EXPENSES> $2,683
<TOTAL-OPERATING-EXPENSES> $2,683
<OPERATING-INCOME-LOSS> $343
<OTHER-INCOME-NET> $41
<INCOME-BEFORE-INTEREST-EXPEN> $392
<TOTAL-INTEREST-EXPENSE> $106
<NET-INCOME> $286
$7
<EARNINGS-AVAILABLE-FOR-COMM> $286
<COMMON-STOCK-DIVIDENDS> $178
<TOTAL-INTEREST-ON-BONDS> $0
<CASH-FLOW-OPERATIONS> $1,090
<EPS-BASIC> $1.67
<EPS-DILUTED> $1.67
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from FPL's condensed consolidated balance sheet as of
June 30, 1999 and condensed consolidated statements of income and cash flows for the six months ended June 30, 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> JUN-30-1999
<PERIOD-TYPE> 6-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $7,947
<OTHER-PROPERTY-AND-INVEST> $1,318
<TOTAL-CURRENT-ASSETS> $1,415
<TOTAL-DEFERRED-CHARGES> $0
<OTHER-ASSETS> $337
<TOTAL-ASSETS> $11,017
<COMMON> $0
<CAPITAL-SURPLUS-PAID-IN> $0
<RETAINED-EARNINGS> $0
<TOTAL-COMMON-STOCKHOLDERS-EQ> $4,859
$0
$226
<LONG-TERM-DEBT-NET> $2,078
<SHORT-TERM-NOTES> $0
<LONG-TERM-NOTES-PAYABLE> $0
<COMMERCIAL-PAPER-OBLIGATIONS> $0
<LONG-TERM-DEBT-CURRENT-PORT> $355
$0
<CAPITAL-LEASE-OBLIGATIONS> $0
<LEASES-CURRENT> $0
<OTHER-ITEMS-CAPITAL-AND-LIAB> $3,499
<TOT-CAPITALIZATION-AND-LIAB> $11,017
<GROSS-OPERATING-REVENUE> $2,869
<INCOME-TAX-EXPENSE> $151
<OTHER-OPERATING-EXPENSES> $2,361
<TOTAL-OPERATING-EXPENSES> $2,512
<OPERATING-INCOME-LOSS> $357
<OTHER-INCOME-NET> $4
<INCOME-BEFORE-INTEREST-EXPEN> $361
<TOTAL-INTEREST-EXPENSE> $86
<NET-INCOME> $275
$7
<EARNINGS-AVAILABLE-FOR-COMM> $268
<COMMON-STOCK-DIVIDENDS> $0
<TOTAL-INTEREST-ON-BONDS> $0
<CASH-FLOW-OPERATIONS> $1,030
<EPS-BASIC> $0
<EPS-DILUTED> $0
</TABLE>
