<PAGE>
<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission File No. 1-8841
FPL GROUP, INC.
(Exact name of registrant as specified in its charter)
Florida 59-2449419
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 Universe Boulevard
Juno Beach, Florida 33408
(Address of principal executive offices)
(Zip Code)
(407) 694-4647
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: Common
Stock, $.01 Par Value and Preferred Share Purchase Rights
Registered on New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months and (2) has been
subject to such filing requirements for the past 90 days. Yes X
No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [ X ]
Aggregate market value of the voting stock held by non-affiliates of
the registrant as of February 28, 1995 (based on the closing market
price on the Composite Tape on February 28, 1995) was $6,678,699,725
(determined by subtracting from the number of shares outstanding on
that date the number of shares held by directors and officers of the
registrant).
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the close of the latest practicable
date.
Common Stock, $.01 Par Value, outstanding at February 28, 1995:
186,442,735 shares
DOCUMENTS INCORPORATED BY REFERENCE
Incorporated documents
(to the extent indicated herein) Part of Form 10-K
Portions of Definitive Proxy Statement for
the 1995 Annual Meeting of Shareholders Part III<PAGE>
<PAGE>
DEFINITIONS
Acronyms and defined terms used in the text include the following:
<TABLE>
<CAPTION>
Term Meaning
<S> <C>
AFUDC Allowance for funds used during construction
capacity clause Capacity Cost Recovery Clause
charter Restated Articles of Incorporation, as amended
common stock Common Stock of FPL Group, Inc.
conservation clause Energy Conservation Cost Recovery Clause
DOE United States Department of Energy
EMF Electric and magnetic fields
environmental clause Environmental Compliance Cost Recovery Clause
ESI ESI Energy, Inc.
EWG Exempt Wholesale Generator
FDEP Florida Department of Environmental Protection
FERC Federal Energy Regulatory Commission
FGT Florida Gas Transmission Company
FMPA Florida Municipal Power Agency
FPL Florida Power & Light Company
FPL Group FPL Group, Inc.
FPL Group Capital FPL Group Capital Inc
FPSC Florida Public Service Commission
fuel clause Fuel and Purchased Power Cost Recovery Clause
Holding Company Act Public Utility Holding Company Act of 1935, as amended
JEA Jacksonville Electric Authority
kv Kilovolt
kva Kilovolt-ampere
kwh Kilowatt-hour
Management's Discussion Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
mortgage FPL's Mortgage and Deed of Trust dated as of January 1, 1944, as
supplemented and amended
mw Megawatt(s)
Note Note to Consolidated Financial Statements
NRC United States Nuclear Regulatory Commission
oil-backout clause Oil-Backout Cost Recovery Clause
PURPA Public Utility Regulatory Policies Act of 1978, as amended
qualifying facilities Non-utility power production facilities meeting the requirements of a
Qualifying Facility under the PURPA
ROE Return on Equity
SJRPP St. Johns River Power Park
Southern Companies Alabama Power Company, Georgia Power Company, Gulf Power Company,
Mississippi Power Company and Savannah Electric & Power Company
Telesat Telesat Cablevision, Inc.
Turner Turner Foods Corporation
/TABLE
<PAGE>
<PAGE>
PART I
Item 1. Business
FPL GROUP, INC.
FPL Group, incorporated under the laws of Florida in 1984, is a
public utility holding company (as defined in the Holding Company
Act) that is engaged, through its subsidiaries, in electric utility
and other operations.
FPL Group is exempt from substantially all of the provisions of the
Holding Company Act on the basis that FPL Group's and FPL's
businesses are predominantly intrastate in character and carried on
substantially in a single state, in which both are incorporated. FPL
Group, together with its subsidiaries, employs approximately 12,100
persons.
Utility operations are conducted through FPL, which is engaged in the
generation, transmission, distribution and sale of electric energy.
Other operations are conducted through FPL Group Capital and its
subsidiaries and consist mainly of investments in non-utility energy
projects and agricultural operations.
UTILITY OPERATIONS
General. FPL, a wholly-owned subsidiary of FPL Group, supplies
electric service throughout most of the east and lower west coasts of
Florida. This service territory contains 27,650 square miles with a
population of approximately 6.5 million. During 1994, FPL served
approximately 3.4 million customer accounts. Operating revenues
amounted to approximately $5.3 billion, of which about 55% was
derived from residential customers, 35% from commercial customers, 4%
from industrial customers and 6% from other sources.
Regulation. The retail operations of FPL provide approximately 97%
of FPL Group's operating revenues and are regulated by the FPSC,
which has jurisdiction over retail rates, service territory,
issuances of securities, planning, siting and construction of
facilities and other matters. FPL is also subject to regulation by
the FERC in various respects, including the acquisition and
disposition of facilities, interchange and transmission services and
wholesale purchases and sales of electric energy.
FPL is subject to the jurisdiction of the NRC with respect to its
nuclear power plants. NRC regulations govern the granting of
licenses for the construction and operation of nuclear power plants
and subject such power plants to continuing review and regulation.
Federal, state and local environmental laws and regulations cover air
and water quality, land use, power plant and transmission line
siting, electric and magnetic fields from power lines and
substations, noise and aesthetics, solid waste and other
environmental matters. Compliance with these laws and regulations
increases the cost of electric service by requiring, among other
things, changes in the design and operation of existing facilities
and changes or delays in the location, design, construction and
operation of new facilities. FPL estimates that capital expenditures
for improvements needed to comply with environmental laws and
regulations will be approximately $5 million to $16 million annually
for the years 1995 through 1999. These amounts are included in FPL's
projected capital expenditures set forth in Item 1.
Business - Capital Expenditures.
FPL holds franchises with varying expiration dates to provide
electric service in various municipalities and seven counties in
Florida. FPL considers its franchises to be adequate for the conduct
of its business.
Retail Ratemaking. The underlying concept of utility ratemaking is
to set rates at a level that allows the utility to collect total
revenues (revenue requirements) equal to its cost of providing
service, including a reasonable return on invested capital. To
accomplish this, the FPSC uses various ratemaking mechanisms.
The basic costs of providing electric service, other than fuel and
certain other costs, are recovered through base rates, which are
designed to recover the costs of constructing, operating and
maintaining the utility system. These costs include operations and
maintenance expenses, depreciation and taxes, as well as a rate of
return on FPL's investment in assets used and useful in providing
electric service (rate base). The rate of return on rate base
approximates FPL's weighted cost of capital, which includes its costs
for debt and preferred stock and an allowed ROE. FPL's currently
authorized ROE range is 11% to 13% with a midpoint of 12%. Base
rates are determined in rate proceedings which occur at irregular
intervals at the initiative of FPL, the FPSC or a substantially
affected party.
In Florida, electric utility companies are required to file historic
and projected revenue and cost data with the FPSC at least every four
years. The FPSC can either reaffirm current rates and practices or
take action leading to a rate proceeding. FPL is next required to
file such data with the FPSC by April 30, 1995 and expects an FPSC
decision in late 1995.
Fuel costs are recovered through levelized charges established
pursuant to the fuel clause. These charges, which are calculated
semi-annually, are based on estimated costs of fuel and estimated
customer usage for the ensuing six-month period, plus or minus a
true-up adjustment to reflect the variance of actual costs and usage
from the estimates used in setting the fuel adjustment charges for
prior periods.<PAGE>
<PAGE>
Capacity payments to other utilities and generators for purchased
power are recovered primarily through the capacity clause. Costs
associated with implementing energy conservation programs are
recovered through rates established pursuant to the conservation
clause. Certain other non-fuel costs and the accelerated recovery of
the costs of certain projects that displace oil-fired generation are
recovered through the oil-backout clause. Costs of complying with
federal, state and local environmental regulations are recovered
through the environmental clause to the extent not included in base
rates.
The FPSC has the authority to disallow recovery of costs which it
considers excessive or imprudently incurred. Such costs may include
operations and maintenance expenses, the cost of replacing power lost
when fossil and nuclear units are unavailable and costs associated
with the construction or acquisition of new facilities. Also, the
FPSC does not provide any assurance that the allowed ROE will be
achieved.
Competition. Competitive forces affecting the sale of electrical
energy may result in a transition from cost-based to market-based
pricing. Initiatives in various parts of the country have proposed
changing or phasing out traditional cost-of-service regulation,
particularly with regard to the generation of electricity. The
California Public Utilities Commission, for example, has proposed
allowing large industrial customers to purchase electricity from
generators outside of the current utility's service territory by
1996. Other customers would be allowed to choose their supplier in
future years, culminating in total retail competition by the year
2002. These proposals are the subject of considerable debate, and
are not yet effective; however, they are an indication of increasing
competitive pressures in the electric utility industry. FPL
currently faces competition from other suppliers of electrical energy
for wholesale customers and from alternative energy sources and
self-generation for other customer groups, primarily industrial
customers. In 1994, operating revenues from wholesale and industrial
customers represented 1% and 4%, respectively, of FPL's total
operating revenues. Florida law does not currently permit
competition among regulated and non-regulated suppliers of electrical
energy for retail customers and actions such as those in California
have not been proposed in Florida. However, in order to be prepared
in the event that greater retail competition arises in FPL's market,
FPL has instituted aggressive ongoing cost control efforts, including
significant reductions in capital expenditures and workforce.
While state regulatory commissions will decide what impact, if any,
competitive forces will have on retail transactions, the FERC has
jurisdiction over potential changes which could affect competition in
wholesale transactions. In 1994, the FERC announced broad policies
governing transmission access and pricing. In general, these
policies may require a utility to provide to third parties access to
the utility's transmission system on a basis comparable to the uses
the utility makes of its own system and at comparable costs.
In 1993, FPL filed with the FERC a comprehensive revision of its
service offerings in the wholesale market. FPL proposed changes to
its wholesale sales tariffs for service to municipal and
cooperatively-owned electric utilities, its power sharing
(interchange) agreements with other utilities and expanded its
transmission offerings for new services by switching from
individually negotiated contracts to three tariffs of general
applicability. Hearings on this filing are underway and a final
decision on this case is not expected until sometime in 1997. FPL
began collecting the proposed rates in 1994, subject to refund
pending the final outcome of the case.
The structure and pricing of network transmission service to the
FMPA, an association of municipal electric utilities operating in the
state, is the subject of a separate FERC proceeding. In 1994, FPL
filed its proposal for network transmission service to the FMPA in
compliance with a FERC order approving FPL's pricing mechanism. The
FMPA continues to dispute the appropriateness and application of this
ruling.
FPL is presently a defendant in three antitrust suits, including one
filed by the FMPA. The complaints include an alleged inability to
utilize FPL's transmission facilities to wheel power. See Item 3.
Legal Proceedings.
System Capability and Load. FPL's resources for serving load as of
December 31, 1994 consist of 18,146 mw of electric power generated by
FPL-owned facilities (see Item 2. Properties - Generating Facilities)
and obtained through purchased power contracts. FPL intends to
satisfy future load, which reflects projected annual growth in kwh
sales of 2.6% over the next 5 years, through the final installment on
the phased acquisition of Scherer Unit No. 4 and approximately 400 mw
of additional purchased power under existing contracts with new
qualifying facilities. The historic annual growth rate of kwh sales
was 3.9% for the three years ended December 31, 1994. See Note 11.
Customer usage and operating revenues are typically higher during the
summer months largely due to the prevalent use of air conditioning in
FPL's service territory. On February 9, 1995, FPL reached an all-
time energy peak demand of approximately 16,563 mw. At that time,
FPL was able to meet the peak with available installed generation and
purchased power and did not have to implement its 700 mw of load
management resources.
Capital Expenditures. FPL's capital expenditures, including AFUDC,
totaled approximately $770 million in 1994, $1.1 billion in 1993 and
$1.3 billion in 1992. Capital expenditures for the 1995-99 period
are expected to be $3.0 billion, including $712 million in 1995.
This estimate is subject to continuing review and adjustment, and
actual capital expenditures may vary from this estimate.<PAGE>
<PAGE>
Nuclear Operations. FPL owns and operates four nuclear units, two at
St. Lucie and two at Turkey Point. The operating licenses for St.
Lucie Units Nos. 1 and 2 expire in 2016 and 2023, respectively. The
operating licenses for Turkey Point Units Nos. 3 and 4 expire in 2012
and 2013, respectively. The nuclear units are periodically removed
from service to accommodate normal refueling and maintenance outages,
repairs and certain other modifications. A condition of the
operating license for each unit requires an approved plan for
decontamination and decommissioning. FPL's current plans provide for
prompt dismantlement of the Turkey Point units commencing in the year
2013. St. Lucie Unit No. 1 will be mothballed in 2016 until 2023
when dismantlement of both Unit No. 1 and Unit No. 2 will commence.
See estimated cost data in Note 1.
Indications of abnormal degradation have been found in the
pressurized water circulation tubes of the St. Lucie Unit No. 1 steam
generators and FPL has determined that they will need to be replaced.
Replacement steam generators have been ordered and are scheduled to
be installed and in service by the end of 1998. The cost of
replacing the steam generators by 1998 is included in FPL's projected
capital expenditures set forth above. The remaining undepreciated
cost of the existing steam generators and the related removal cost is
being recorded in depreciation expense in approximately equal annual
amounts through 1998.
Fuel. FPL's generating plants are fueled by nuclear fuel, natural
gas, residual and distillate oil and coal. The diverse fuel options,
along with purchased power, enable FPL to shift between sources of
generation to achieve an economical fuel mix. FPL's oil requirements
are obtained under short-term contracts and in the spot market.
FPL has contracts in place with FGT that satisfy substantially all of
the anticipated needs for natural gas transportation over the next
ten years. The existing contracts expire in 2005 and 2010, but can
be extended at FPL's option. To the extent desirable, FPL can also
purchase interruptible gas transportation service from FGT based on
pipeline availability. FPL has a 15-year firm natural gas supply
contract at market rates with an affiliate of FGT to provide
approximately two-thirds of FPL's anticipated needs for natural gas
volume. The remainder of FPL's gas requirements will be purchased
under other contracts and in the spot market.
FPL has, through its joint ownership interest in SJRPP Units Nos. 1
and 2, long-term coal supply and transportation contracts for a
significant portion of the fuel needs for those units. All of the
transportation requirements and a portion of the fuel supply needs
for Scherer Unit No. 4 are covered by a series of annual and
long-term contracts. The remaining coal requirements will be
obtained under additional contracts and in the spot market.
FPL leases nuclear fuel for all four of its nuclear units. See
Note 10. Under the Nuclear Waste Policy Act of 1982, the DOE is
required to construct permanent storage facilities and will take
title to and provide transportation and storage for spent nuclear
fuel for a specified fee based on current generation from nuclear
power plants. Through 1994, FPL has paid approximately $290 million
to the DOE for future transportation and storage. Although the DOE
estimates that its storage facilities will be completed by the year
2010, there is considerable doubt within the utility industry that
this schedule will be met. Currently, FPL is storing spent fuel on
site and plans to provide adequate storage capacity for all of its
spent nuclear fuel up to and beyond the year 2010, pending its
removal by the DOE.
In 1994, FPL entered into a 20-year contract with Bitor America to
purchase Orimulsion, a fuel that is an emulsion of bitumen and water
and is priced equivalently to coal. The contract is contingent upon
FPL obtaining an operating permit from environmental agencies to use
Orimulsion at the Manatee units. The environmental permitting
process is underway and final rulings are expected by late 1995. FPL
has committed to purchase Orimulsion to satisfy approximately 60% of
the capacity of the Manatee units, but may elect to purchase enough
Orimulsion to satisfy Manatee's total capacity. See Item 2.
Properties - Generating Facilities. The FPSC has authorized FPL to
recover through the fuel clause on an accelerated basis the capital
costs of modifying the Manatee units to burn Orimulsion as well as
any incremental operating and maintenance costs. The FPSC also found
that FPL's decision to convert these units to burn Orimulsion was
prudent and reasonable. FPL expects to be using Orimulsion in 1998.
Electric and Magnetic Fields. In recent years, increasing public,
scientific and regulatory attention has been focused on possible
adverse health effects of EMF. These fields are created whenever
electricity flows through a power line or an appliance. Several
epidemiological (i.e., statistical) studies have suggested a linkage
between EMF and certain types of cancer, including leukemia and brain
cancer; other studies have been inconclusive, contradicted earlier
studies or have shown no such linkage. Neither these epidemiological
studies nor clinical studies have produced any conclusive evidence
that EMF does or does not cause adverse health effects.
The FDEP has promulgated regulations setting standards for EMF levels
within and at the edge of the rights of way for transmission lines,
and FPL is in compliance with these regulations. The FDEP reviewed
its EMF standards in 1992 and confirmed the field limits previously
established. Future changes in the standards could require
additional capital expenditures by FPL for such things as increasing
the right of way corridors or relocating or reconfiguring
transmission facilities. At present it is not known whether any such
expenditures will be required.<PAGE>
<PAGE>
In addition, litigation seeking damages for diminution of property
value or personal injury is likely. FPL is presently a defendant in
one suit alleging personal injury and wrongful death, resulting from
EMF.
Employees. FPL had approximately 11,800 employees at December 31,
1994. Approximately 36% of the employees are represented by the
International Brotherhood of Electrical Workers whose collective
bargaining agreement with FPL expires October 31, 1997.
OTHER OPERATIONS
FPL Group Capital, a wholly-owned subsidiary of FPL Group, holds the
capital stock of the operating subsidiaries other than FPL and
provides most of their funding. The business activities of these
companies consist primarily of investments in non-utility energy
projects and agricultural operations. FPL Group Capital and its
subsidiaries had approximately 300 employees at December 31, 1994.
Non-Utility Energy. ESI provides equity capital, debt financing,
transaction management and project development for non-utility energy
projects. To date, ESI has invested in one project that qualifies as
an EWG. Substantially all other projects in which it has invested
are qualifying facilities under PURPA. ESI participates in 27 non-
utility energy projects totalling 1,910 mw, primarily through non-
controlling ownership interests in joint ventures or leveraged lease
investments. Based on ESI's invested capital at December 31, 1994,
the projects are concentrated in California (57%), Pennsylvania (16%)
and Virginia (11%). The technologies and fuels used by the projects
to produce electricity include wind, geothermal, natural gas, solar,
biomass (wood), waste-to-energy and waste coal. Energy production
from the non-utility energy investments is generally higher during
the third quarter due to increased energy demand and resource
availability.
Many of the projects in which ESI invests, particularly those located
in California, operate under fixed price energy sales contracts for a
period of years then convert to the purchasing utility's avoided
costs. Currently, avoided cost is below the fixed price for many of
these projects. Competitive initiatives in California propose
phasing in market-based rather than cost-based pricing by the year
2002. The effect of these initiatives may be to lower avoided cost
and, as a result, revenues paid to non-utility generators. Any
decline in revenues not offset by operational or performance
efficiencies would reduce ESI's earnings from or investment in these
projects.
Agriculture. FPL Group Capital's agricultural subsidiary, Turner,
owns and operates citrus groves in Florida. Turner's primary product
is juice oranges, which are sold to processors for the premium not-
from-concentrate, as well as the international frozen-concentrate,
orange juice markets. Other products include grapefruit and
specialty fruits. Turner's operations are seasonal, with the
majority of the citrus harvest taking place between January and
April.
As of December 31, 1994, Turner owned or leased approximately 29,000
acres of citrus properties, which included 18,000 planted acres,
4,000 acres of undeveloped land and 7,000 acres of infrastructure,
wet lands and reservoirs.
Other. After giving effect to transactions completed in 1994 which
had no significant effect on net income, FPL Group Capital maintains
a limited amount of properties held for disposition. These assets
are carried at estimated net realizable value including costs to
dispose. The remaining properties mainly consist of one operating
real estate project, undeveloped land and certain mortgaged-backed
loans. Efforts to dispose of these properties continue. FPL Group
cannot estimate the timing of their ultimate disposition, but these
transactions are not expected to have an adverse effect on FPL
Group's net income. In March 1995, Telesat agreed to transfer the
remaining wholly-owned cable television subscriber base into a
limited partnership, which would remove FPL Group from the day-to-day
operations of the cable television business.<PAGE>
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT (1)(2)
<TABLE>
<CAPTION>
Name Age Position Effective Date
<S> <C> <C> <C>
James L. Broadhead 59 Chairman of the Board, President and Chief Executive Officer
of FPL Group .................................................... May 8, 1990
Chairman of the Board and Chief Executive Officer of FPL .......... January 15, 1990
Dennis P. Coyle 56 General Counsel and Secretary of FPL Group ........................ June 1, 1991
General Counsel and Secretary of FPL .............................. July 1, 1991
K. Michael Davis 48 Controller and Chief Accounting Officer of FPL Group .............. May 13, 1991
Vice President, Accounting, Controller and Chief Accounting
Officer of FPL .................................................. July 1, 1991
Paul J. Evanson 53 President of FPL .................................................. January 9, 1995
Jerome H. Goldberg 63 President, Nuclear Division of FPL ................................ May 8, 1990
Lawrence J. Kelleher 47 Vice President, Human Resources of FPL Group ...................... May 13, 1991
Senior Vice President, Human Resources of FPL ..................... July 1, 1991
J. Thomas Petillo 50 Senior Vice President, External Affairs of FPL ................... July 1, 1991
Dilek L. Samil 39 Treasurer of FPL Group ............................................ May 13, 1991
Treasurer of FPL .................................................. July 1, 1991
C. O. Woody 56 Senior Vice President, Power Generation of FPL .................... July 1, 1991
Michael W. Yackira 43 Vice President, Finance and Chief Financial Officer of FPL Group .. January 9, 1995
Senior Vice President, Finance and Chief Financial Officer of FPL.. January 9, 1995
(1) The present term of office of the above executive officers extends to the first meeting of the Board of Directors after the
next annual election of Directors, which is scheduled to be held on May 15, 1995. Except as noted below, each officer has
held his or her present position for five years or more and his or her employment history is continuous.
(2) The business experience of the executive officers is as follows: Mr. Broadhead was president and chief executive officer of
FPL Group from January 1989 to May 1990; Mr. Coyle was general counsel and vice president of FPL Group from June
1989 to June 1991 and general counsel of FPL from March 1990 to July 1991; Mr. Davis was formerly comptroller of FPL;
Mr. Evanson was vice president, finance and chief financial officer of FPL Group and senior vice president, finance and
chief financial officer of FPL from December 1992 to January 1995. Prior to that, Mr. Evanson was president and chief
operating officer of the Lynch Corporation, a diversified holding company; Mr. Goldberg was executive vice president of FPL
from August 1989 to July 1991; Mr. Kelleher was vice president of FPL Group from June 1989 to May 1991 and chief
human resources officer of FPL from May 1990 to July 1991. Mr. Petillo was group vice president of FPL from November
1988 to July 1991; Ms. Samil was formerly assistant treasurer of FPL Group and FPL; Mr. Woody was executive vice
president of FPL from November 1987 to July 1991; and Mr. Yackira was vice president of FPL Group from April 1989 to
May 1991, senior vice president, market and regulatory services of FPL from May 1991 to January 1995 and chief planning
officer of FPL from May 1990 to May 1991.
</TABLE>
Item 2. Properties
FPL Group and its subsidiaries maintain properties which are adequate
for their operations. The electric generating, transmission,
distribution and general facilities of FPL represent approximately
49%, 12%, 32% and 7%, respectively, of FPL Group's gross investment
in electric utility plant in service.
<PAGE>
<PAGE>
Generating Facilities. FPL has improved its ability to operate
generating units at higher output levels to help meet peak loads. As
a result of equipment upgrades and changes in operating procedures,
FPL has gained approximately 570 mw of capacity. As of December 31,
1994, FPL had the following generating facilities:
<TABLE>
<CAPTION>
No. of Net Warm Weather
Facility Location Units Fuel Peaking Capability (mw)
<S> <C> <C> <C> <C>
STEAM TURBINES
Cape Canaveral ......................... Cocoa, FL 2 Oil/Gas 810
Cutler ................................. Miami, FL 2 Gas 215
Fort Myers ............................. Fort Myers, FL 2 Oil 542
Manatee ................................ Parrish, FL 2 Oil 1,638
Martin ................................. Indiantown, FL 2 Oil/Gas 1,638
Port Everglades ........................ Port Everglades, FL 4 Oil/Gas 1,237
Riviera ................................ Riviera Beach, FL 2 Oil/Gas 574
St. Johns River Power Park ............. Jacksonville, FL 2 Coal 250(1)
St. Lucie .............................. Hutchinson Island, FL 2 Nuclear 1,553(2)
Sanford ................................ Lake Monroe, FL 3 Oil/Gas 934
Scherer ................................ Monroe County, GA 1 Coal 539(3)
Turkey Point ........................... Florida City, FL 2 Oil/Gas 796
2 Nuclear 1,332
COMBINED CYCLE
Lauderdale ............................. Dania, FL 2 Gas/Oil 860
Martin ................................. Indiantown, FL 2 Gas 860
Putnam ................................. Palatka, FL 2 Gas/Oil 498
COMBUSTION TURBINES
Fort Myers ............................. Fort Myers, FL 12 Oil 626
Lauderdale ............................. Dania, FL 24 Oil/Gas 876
Port Everglades ........................ Port Everglades, FL 12 Oil/Gas 438
DIESEL UNITS
Turkey Point ........................... Florida City, FL 5 Oil 14
TOTAL .................................... 16,230
(1) Represents FPL's 20% ownership of SJRPP Units Nos. 1 and 2, which are jointly owned with the JEA.
(2) Excludes Orlando Utilities Commission's and the FMPA's combined share of approximately 15% of St. Lucie Unit No. 2.
(3) Represents FPL's approximately 66% ownership of Scherer Unit No. 4, which is jointly owned with the JEA and Georgia
Power Company. FPL has contracted to purchase an additional 11% (90 mw) undivided ownership interest in Scherer Unit
No. 4 in June 1995.
</TABLE>
Transmission and Distribution. FPL owns and operates 464 substations
with a total capacity of 101,311,970 kva. Electric transmission and
distribution lines owned and in service as of December 31, 1994 are
as follows:
<TABLE>
<CAPTION>
Overhead Lines Trench and Submarine
Nominal Voltage Pole Miles Cable Miles
<S> <C> <C>
500 kv ............................................................ 1,050(1) -
230 kv ............................................................ 2,189 31
138 kv ............................................................ 1,378 45
115 kv ............................................................ 637 -
69 kv ............................................................ 167 15
Less than 69 kv ................................................... 38,311 18,035
Total ............................................................. 43,732 18,126
(1) Includes approximately 80 miles owned jointly with the JEA.
</TABLE>
Character of Ownership. Substantially all of FPL's properties are
subject to the lien of its mortgage, which secures debt securities
issued by FPL. The principal properties of FPL are held by it in fee
and are free from other encumbrances, subject to minor exceptions,
none of which is of such a nature as to substantially impair the
usefulness to FPL of such properties. Some of the electric lines are
located on land not owned in fee but are covered by necessary
consents of governmental authorities or rights obtained from owners
of private property.
Item 3. Legal Proceedings
In October 1988, Union Carbide Corporation, the corporate predecessor
of Praxair, Inc. (Praxair), filed suit against FPL and Florida Power
Corporation (Florida Power) in the United States District Court for
the Middle District of Florida. Praxair requested that Florida Power
sell power to its facility located within FPL's service territory,
and that FPL transport (wheel) the power to the facility. Florida
Power and FPL denied the request as being inconsistent with Florida
law and public policy. The FPSC issued a declaratory statement that
FPL's denial of Praxair's request was proper and ordered FPL not to
wheel power under such circumstances. The suit alleges that through
a territorial agreement, FPL and Florida Power have conspired to<PAGE>
<PAGE>
eliminate competition for the sale of electric power to retail
customers, thereby unreasonably restraining trade and commerce in
violation of federal antitrust laws as contained in Section 1 of the
Sherman Antitrust Act (Sherman Act). The suit seeks treble damages
of an unspecified amount based on alleged higher prices paid for
electricity and product sales lost. Cross motions for summary
judgment were denied. Both parties are appealing the denials.
In November 1988, TEC Cogeneration, Inc., its affiliate Thermo
Electron Corporation, RRD Corp. and its affiliate Rolls Royce Inc.
filed suit in the United States District Court for the Southern
District of Florida against FPL Group and its subsidiaries, FPL and
ESI, on behalf of South Florida Cogeneration Associates (SFCA), a
joint venture which since 1986 has operated a cogeneration facility
for Metropolitan Dade County within FPL's service territory in Miami,
Florida. The suit alleges that the defendants have engaged in anti-
competitive conduct intended to prevent and defeat competition from
cogenerators within FPL's service territory, and from SFCA's
Metropolitan Dade County facility in particular. It alleges that the
defendants' actions constitute monopolization and attempts to
monopolize in violation of Section 2 of the Sherman Act; conspiracy
in restraint of trade in violation of Section 1 of the Sherman Act;
unlawful discrimination in prices, services or facilities in
violation of Section 2 of the Clayton Act; and intentional
interference with SFCA's contractual relationship with Metropolitan
Dade County in violation of Florida law. The suit seeks damages in
excess of $100 million, before trebling under antitrust law, plus
other unspecified compensatory and punitive damages. A motion for
summary judgment by FPL Group, FPL and ESI has been denied. FPL
Group, FPL and ESI are appealing the denial.
In December 1991, the FMPA, an association of municipal electric
utilities operating in the state, filed a suit against FPL in the
Circuit Court of the Ninth Judicial Circuit in Orange County,
Florida. The suit was subsequently removed to the United States
District Court for the Middle District of Florida. The FMPA alleges
that FPL is in breach of a "contract," consisting of several
different documents, by refusing to provide transmission service to
the FMPA and its members on the FMPA's terms. The FMPA also alleges
that FPL has violated federal and Florida antitrust laws by
monopolizing or attempting to monopolize the provision, coordination
and transmission of electric power in FPL's area of operation by
refusing to provide transmission service or to permit the FMPA to
invest in and use FPL's transmission system on the FMPA's terms. The
FMPA seeks $140 million in damages, before trebling for the antitrust
claim, and asks the court to require FPL: to transmit electric power
among the FMPA and its members on "reasonable terms and conditions";
to permit the FMPA to contribute to and use FPL's transmission system
on "reasonable terms and conditions"; and to recognize the FMPA
transmission investments as part of FPL's transmission system such
that the FMPA can obtain transmission on a basis equivalent to FPL
or, alternatively, to provide transmission service equivalent to such
FMPA transmission ownership. In December 1993, the District Court
granted summary judgment in favor of FPL. The FMPA has appealed.
In November 1989, Johnson Enterprises of Jacksonville, Inc. (Johnson
Enterprises) filed suit in the United States District Court for the
Middle District of Florida against FPL Group, FPL Group Capital and
Telesat, a subsidiary of FPL Group Capital. The suit alleged breach
of contract, fraud, violation of racketeering statutes and several
other claims. Plaintiff claimed more than $24 million in
compensatory damages, treble damages under racketeering statutes,
punitive damages and attorneys' fees. The trial court entered a
judgment in favor of FPL Group and Telesat on nine of twelve counts,
including all of the racketeering and fraud claims, and in favor of
FPL Group Capital on all counts. It also denied all parties' claims
for attorneys' fees. However, the jury in the case awarded the
contractor damages totaling approximately $6 million against FPL
Group and Telesat for breach of contract and tortious interference.
All parties have appealed.
FPL Group believes that it and its subsidiaries have meritorious
defenses to all of the litigation described above and is vigorously
defending these suits. Accordingly, the liabilities, if any, arising
from these proceedings are not anticipated to have a material adverse
effect on FPL Group's financial statements. However, in the event
that FPL Group does not prevail in these suits, there may be a
material adverse effect on FPL Group's financial position or results
of operations.
Item 4. Submission of Matters to a Vote of Security Holders
None
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
Common Stock Data. FPL Group's common stock is traded on the New
York Stock Exchange. The high and low sales prices for the common
stock of FPL Group as reported in the consolidated transaction
reporting system of the New York Stock Exchange for each quarter
during the past two years are as follows:
<TABLE>
<CAPTION>
Quarter 1994 1993
High Low High Low
<S> <C> <C> <C> <C>
First ....................................................... $39 1/8 $32 3/8 $39 5/8 $36 1/8
Second ...................................................... $35 3/4 $26 7/8 $38 5/8 $36 1/2
Third ....................................................... $32 1/2 $29 7/8 $41 $37 5/8
Fourth ...................................................... $35 3/4 $31 $40 3/8 $35 1/2
/TABLE
<PAGE>
<PAGE>
Approximate Number of Stockholders. As of the close of business on
February 28, 1995, there were 80,648 holders of record of FPL Group's
common stock.
Dividends. Quarterly dividends have been paid on common stock of
FPL Group during the past two years in the following amounts:
<TABLE>
<CAPTION>
Quarter 1994 1993
<S> <C> <C>
First ......................................................................................... $0.62 $0.61
Second ........................................................................................ $0.42 $0.62
Third ......................................................................................... $0.42 $0.62
Fourth ........................................................................................ $0.42 $0.62
</TABLE>
The amount and timing of dividends payable on common stock are within
the sole discretion of FPL Group's board of directors. In May 1994,
FPL Group's board of directors announced a change in dividend policy
which included a revised dividend payout ratio target of
approximately 60% of prior year's earnings and changing the date the
board reviews the dividend rate from May to February. The ability of
FPL Group to pay dividends on its common stock is dependent upon
dividends paid to it by its subsidiaries, primarily FPL. Given FPL's
current financial condition, there are no restrictions in effect that
currently limit FPL's ability to pay dividends to FPL Group. See
Management's Discussion - Liquidity and Capital Resources.
<PAGE>
<PAGE>
Item 6. Selected Financial Data
Certain amounts included in prior years' selected financial data were
reclassified to conform to current year's presentation.
<TABLE>
<CAPTION>
Years Ended December 31,
1994 1993 1992 1991 1990
(Thousands of Dollars, except per share amounts)
<S> <C> <C> <C> <C> <C>
SELECTED FINANCIAL DATA:
Operating revenues ........... $ 5,422,659 $ 5,311,685 $ 5,186,325 $ 5,238,368 $ 5,074,472
Income from continuing
operations ................. $ 518,711 $ 428,749(1) $ 466,949 $ 376,148(1) $ 298,175(2)
Net income (loss) ............ $ 518,711 $ 428,749(1) $ 466,949 $ 240,578(1)(3) $ (391,005)(2)(3)
Earnings (loss) per
share of common stock:
Continuing operations .... $ 2.91 $ 2.30(1) $ 2.65 $ 2.31(1) $ 2.18(2)
Net income (loss) ........ $ 2.91 $ 2.30(1) $ 2.65 $ 1.48(1)(3) $ (2.86)(2)(3)
Dividends paid per share
of common stock ............ $ 1.88 $ 2.47 $ 2.43 $ 2.39 $ 2.34
Total assets ................. $12,617,616 $13,078,012 $12,306,305 $11,281,785 $10,802,008
Long-term debt, excluding
current maturities ......... $ 3,864,465 $ 3,748,983 $ 3,960,096 $ 3,668,139 $ 3,852,662
Obligations under capital
leases, excluding
current maturities ......... $ 185,647 $ 271,498 $ 324,198 $ 279,657 $ 74,887
Preferred Stock of FPL
with sinking fund
requirements, excluding
current maturities ......... $ 94,000 $ 97,000 $ 130,150 $ 150,150 $ 165,950
SELECTED OPERATING STATISTICS OF FPL:
Energy sales (millions
of kwh) .................... 77,096 72,455 69,290 68,712 66,763
Energy sales:
Residential ................ 50.2% 50.2% 49.3% 50.4% 50.2%
Commercial ................. 38.8 39.3 39.0 39.6 39.7
Industrial ................. 5.0 5.4 5.9 5.9 6.1
Interchange power sales .... 2.5 2.6 2.4 1.6 1.6
Other(4) ................... 3.5 2.5 3.4 2.5 2.4
Total ........................ 100.0% 100.0% 100.0% 100.0% 100.0%
Approximate 60-minute
net peak served (mw):
Summer season ............ 15,179 15,266 14,661 14,123 13,754
Winter season(5) ......... 16,563 12,594 12,964 13,319 11,868
Average number of customer accounts:
Residential ................ 3,037,628 2,973,688 2,911,812 2,863,203 2,801,210
Commercial ................. 366,415 358,378 350,271 343,837 337,134
Industrial ................. 15,587 14,853 14,791 15,350 16,659
Other ...................... 2,562 3,261 4,376 4,079 3,820
Total ........................ 3,422,192 3,350,180 3,281,250 3,226,469 3,158,823
Average price per kwh
sold (cents)(6) ............ 6.82 7.10 7.25 7.39 7.37
(1) Reduced by $85 million, or $.45 per share, after-tax effect of cost reduction program in 1993 and $56 million, or $.34 per
share, after-tax effect of restructuring charge in 1991.
(2) Reduced by $63 million, or $.46 per share, after-tax charge related to the write-down of businesses to be discontinued.
(3) Reflects the write-down in 1990 and disposition in 1991 of a subsidiary accounted for as discontinued operations.
(4) Includes unbilled sales.
(5) The winter season generally represents November and December of the current year and January through March of the
following year.
(6) Includes unbilled and deferred cost recovery clause revenues.
</TABLE>
<PAGE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
FPL Group's operating results reflect management's continuing focus
on controlling costs and on reducing the net investment in assets
used in electric utility operations. Increased energy sales,
combined with cost control efforts, resulted in increased earnings in
1994 despite higher depreciation expense, as well as costs associated
with the consolidation of facilities and inventory reductions. Also,
reduced operating expenses reflect the benefits of the 1993 cost
reduction program which lowered FPL's work force by approximately
1,700 positions. The charge associated with the cost reduction
program, primarily consisting of severance pay and employee
retirement benefits, adversely affected net income in 1993. See Note
4.
FPL's retail operations, which represent approximately 97% of FPL
Group's operating revenues, are regulated by the Florida Public
Service Commission (FPSC). FPL reported a retail regulatory return
on equity of 12.3%, 9.8% and 12.4% in 1994, 1993 and 1992,
respectively. The return on equity range authorized by the FPSC for
these periods was 11% to 13% with a midpoint of 12%.
Operating revenues from energy sales primarily consist of revenues
from base rates and cost recovery clauses. Revenues from base rates
were $3.2 billion, $3.0 billion and $2.9 billion in 1994, 1993 and
1992, respectively. There were no changes in base rates during those
years. Revenues from cost recovery clauses (including fuel) and
franchise fees represent a pass-through of costs and do not
significantly affect net income. Such revenues declined in each of
the years 1994, 1993 and 1992 primarily due to lower fuel costs.
Retail customer growth was 2.1%, 2.1% and 1.7% in 1994, 1993 and
1992, respectively. Customer growth, together with favorable weather
conditions and an improving economy, increased energy sales in 1994
and 1993. The benefits of customer growth in 1992 were largely
offset by the effects of Hurricane Andrew.
Other operations and maintenance expense in 1994 reflects
management's determination to control costs and a full year of lower
employee-related expenses resulting from the 1993 cost reduction
program. Partially offsetting these reductions were charges
associated with facilities consolidation (including capital lease
terminations) and inventory reductions, as well as costs relating to
the growth in customer base and placement of additional generating
units in service. FPL also incurred costs relating to four planned
nuclear refueling outages in 1994 compared to two in 1993. Two of
the outages occurred in the fourth quarter of 1994 affecting the
comparison of quarterly results. Other operations and maintenance
expense in 1993 was adversely affected by the cost of supporting an
increasing customer base, as well as the implementation of two new
accounting standards relating to postretirement and postemployment
benefits. The 1993 benefit of the cost reduction program on other
operations and maintenance expense was limited as it was implemented
late in the year. Other operations and maintenance expense is
expected to decline in 1995, despite projected sales growth,
primarily due to two fewer nuclear refueling outages, the absence of
the facilities consolidation and inventory reduction charges recorded
in 1994 and continuing cost control measures.
An increase in depreciation rates for generating units, as well as
the accelerated write-off of plant overhaul costs from prior years,
consistent with FPSC orders, resulted in higher depreciation expense
in 1994. Depreciation expense in all periods reflects higher utility
plant balances added to meet customer growth. A proposal by FPL to
increase its nuclear decommissioning and fossil fuel plant
dismantlement accruals is pending FPSC approval. In addition, FPL
requested and the FPSC approved, in February 1995, the amortization
of approximately $111 million of deferred litigation items over a
period not to exceed five years. These actions, together with
continued growth in electric utility plant, will result in higher
depreciation expense in future years. See Note 1.
Allowance for funds used during construction (AFUDC) declined in 1994
due to the completion of new generating capacity placed in service in
1994 and 1993. During the past few years, FPL Group has refinanced
substantially all of its existing debt with lower interest rate
instruments. In addition, efforts continued in 1994 to reduce the
overall debt level and replace some higher fixed interest rate debt
with currently lower cost variable interest rate debt. These
activities led to the decline in interest expense and preferred stock
dividend requirements in 1994.
In 1994, FPL Group adopted AICPA Statement of Position (SOP) 93-6,
"Employer's Accounting for Employee Stock Ownership Plans." Under
the new accounting rules, 10.6 million shares held in trust are not
included in the earnings per share computation until allocated to
employee accounts over the next 15 years. Additionally, compensation
expense is measured at the fair value of shares allocated to employee
accounts during the period and interest income on the ESOP loan held
by FPL Group Capital, which was presented in other - net in 1993 and
1992, is eliminated in consolidation. The net effect of adopting SOP
93-6 was to reduce net income for 1994 by approximately $21 million
and increase earnings per share by $0.05.
Planned dispositions of non-utility properties held for sale had a
positive effect on cash flows, and a related reduction in other
investments, but no significant effect on earnings. Income was
reduced in 1993 by costs associated with the refinancing of high cost
debt for the non-regulated subsidiaries. FPL's debt reacquisition
costs are amortized over the remaining life of the respective debt
securities, consistent with the ratemaking treatment. See Note 1.<PAGE>
<PAGE>
Liquidity and Capital Resources
FPL Group's primary capital requirements consist of expenditures to
meet increased electricity usage and customer growth of FPL. FPL's
capital expenditures for the period 1995 through 1999, including
AFUDC, are expected to be approximately $3.0 billion, including $712
million in 1995. See Note 11. FPL's capital expenditure forecast
has declined significantly over the past few years as a result of
continuing efforts to reduce costs and the completion of its
generation expansion plan. No new generating plants are expected to
be constructed before the year 2004.
Debt maturities and minimum sinking fund requirements will require
cash outflows of approximately $612 million through 1999, including
$87 million in 1995. See Notes 7 and 8. It is anticipated that cash
requirements for construction expenditures and debt repayments in
1995 will be financed from internally generated funds. FPL Group
expects no new long-term external financings in 1995; however,
refinancing of existing debt or preferred stock with lower interest
rate instruments, which could include variable interest rate debt,
may occur based on market conditions. Excess internally generated
funds may be used to reduce outstanding debt, preferred stock or
common stock. Any temporary cash shortages will be met by the
issuance of commercial paper. Bank lines of credit currently
available to FPL Group and its subsidiaries aggregate $985 million.
FPL self-insures for damage to certain transmission and distribution
properties and maintains a funded reserve to guard against storm
losses. Bank lines of credit of $300 million, included in the $985
million above, are available if needed to provide cash for
restoration costs. The FPSC has indicated that it would consider
future storm losses in excess of the funded reserve for possible
recovery from ratepayers.
In 1994, FPL Group liquidated its participation in a consolidated
limited partnership, contributing to the reduction in marketable
securities and other current liabilities. FPL Group Capital and its
subsidiaries, primarily ESI, have guaranteed up to approximately $105
million of lease obligations, debt service payments and other
payments subject to certain contingencies.
In 1993 and 1992, FPL Group's dividend payout ratio was 90% or
greater. In its annual review of dividends in May 1994, the board of
directors met with outside advisors and management on this issue
which resulted in the adoption of a new financial policy. The key
elements of this policy include a revised dividend payout ratio
target of approximately 60% of prior year's earnings and acceleration
of the dividend review to February of each year. In addition, the
board of directors authorized the repurchase of up to 10 million
shares of common stock through 1997, 4 million of which were
repurchased through December 31, 1994.
FPL Group's charter does not limit the dividends that may be paid on
its common stock; however, FPL's charter and mortgage contain
provisions which, under certain conditions, restrict the payment of
dividends and other distributions to FPL Group. Given FPL's current
financial condition and level of earnings, these restrictions do not
currently limit FPL's ability to pay dividends to FPL Group. At
December 31, 1994, limits under FPL's charter and mortgage would
allow the issuance of approximately $1.4 billion of additional
unsecured debt and $5.7 billion of additional first mortgage bonds,
respectively. The amount of additional first mortgage bonds that are
permitted to be issued will increase as the amount of unfunded
property additions increases. FPL's charter also prohibits the
issuance of preferred stock unless the preferred stock coverage
ratio, as prescribed, is at least 1.5; for the twelve months ended
December 31, 1994 it was 2.6.<PAGE>
<PAGE>
Item 8. Financial Statements and Supplementary Data
INDEPENDENT AUDITORS' REPORT
FPL GROUP, INC.:
We have audited the consolidated financial statements of FPL Group,
Inc. and its subsidiaries, listed in the accompanying index as Item
14(a)1 of this Annual Report (Form 10-K) to the Securities and
Exchange Commission for the year ended December 31, 1994. These
financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of FPL
Group, Inc. and its subsidiaries at December 31, 1994 and 1993 and
the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994 in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Certified Public Accountants
Miami, Florida
February 10, 1995<PAGE>
<PAGE>
FPL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Years Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
OPERATING REVENUES ..................................................... $5,422,659 $5,311,685 $5,186,325
OPERATING EXPENSES:
Fuel, purchased power and interchange ................................ 1,715,345 1,758,298 1,829,908
Other operations and maintenance ..................................... 1,304,046 1,321,540 1,277,669
Depreciation and amortization ........................................ 723,856 598,389 554,237
Cost reduction program charge ........................................ - 138,000 -
Taxes other than income taxes ........................................ 530,970 526,109 497,739
Total operating expenses ........................................... 4,274,217 4,342,336 4,159,553
OPERATING INCOME ....................................................... 1,148,442 969,349 1,026,772
INTEREST EXPENSE AND OTHER (INCOME) DEDUCTIONS:
Interest and preferred stock dividend requirements ................... 358,525 409,760 410,152
Allowance for funds used during construction ......................... (24,031) (66,238) (57,782)
Other - net .......................................................... (12,045) (53,421) (53,980)
Interest expense and other - net ................................... 322,449 290,101 298,390
INCOME BEFORE INCOME TAXES ............................................. 825,993 679,248 728,382
INCOME TAXES ........................................................... 307,282 250,499 261,433
NET INCOME ............................................................. $ 518,711 $ 428,749 $ 466,949
Earnings per share of common stock ..................................... $2.91 $2.30 $2.65
Dividends per share of common stock .................................... $1.88 $2.47 $2.43
Average number of common shares outstanding ............................ 178,009 186,777 176,458
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.<PAGE>
<PAGE>
FPL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
<TABLE>
<CAPTION>
December 31,
1994 1993
<S> <C> <C>
PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant - at original cost, including nuclear fuel under capital lease. $15,845,996 $14,838,160
Construction work in progress ........................................................ 292,645 781,435
Other property ....................................................................... 250,892 261,125
Less accumulated depreciation and amortization ....................................... 6,186,699 5,591,265
Total property, plant and equipment - net .......................................... 10,202,834 10,289,455
CURRENT ASSETS:
Cash and cash equivalents ............................................................ 85,750 152,014
Marketable securities - at market value (cost of $169,607) ........................... - 171,988
Customer receivables, net of allowances of $11,792 and $13,946 ....................... 464,709 444,815
Materials, supplies and fossil fuel stock - at average cost .......................... 309,308 329,599
Other ................................................................................ 89,880 152,941
Total current assets ............................................................... 949,647 1,251,357
OTHER ASSETS:
Special use funds of FPL ............................................................. 435,117 378,774
Other investments .................................................................... 489,268 606,218
Unamortized debt reacquisition costs of FPL .......................................... 292,119 302,561
Deferred litigation items of FPL ..................................................... 110,859 110,859
Other ................................................................................ 137,772 138,788
Total other assets ................................................................. 1,465,135 1,537,200
TOTAL ASSETS ........................................................................... $12,617,616 $13,078,012
CAPITALIZATION:
Common shareholders' equity .......................................................... $ 4,197,235 $ 4,100,607
Preferred stock of FPL without sinking fund requirements ............................. 451,250 451,250
Preferred stock of FPL with sinking fund requirements ................................ 94,000 97,000
Long-term debt ....................................................................... 3,864,465 3,748,983
Total capitalization ............................................................... 8,606,950 8,397,840
CURRENT LIABILITIES:
Commercial paper ..................................................................... 34,979 349,600
Current maturities of long-term debt and preferred stock ............................. 87,113 279,680
Accounts payable ..................................................................... 311,256 323,282
Customers' deposits .................................................................. 220,787 216,140
Accrued interest and taxes ........................................................... 199,817 204,086
Other ................................................................................ 307,696 465,829
Total current liabilities .......................................................... 1,161,648 1,838,617
OTHER LIABILITIES AND DEFERRED CREDITS:
Accumulated deferred income taxes .................................................... 1,625,481 1,512,067
Deferred regulatory credit - income taxes ............................................ 195,906 216,546
Unamortized investment tax credits ................................................... 302,797 323,791
Capital lease obligations ............................................................ 185,647 271,498
Other ................................................................................ 539,187 517,653
Total other liabilities and deferred credits ....................................... 2,849,018 2,841,555
COMMITMENTS AND CONTINGENCIES
TOTAL CAPITALIZATION AND LIABILITIES ................................................... $12,617,616 $13,078,012
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.<PAGE>
<PAGE>
FPL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
<TABLE>
<CAPTION>
Years Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ....................................................... $ 518,711 $ 428,749 $ 466,949
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization ................................ 723,856 598,389 554,237
Increase in deferred income taxes and
related regulatory credit .................................. 92,774 10,225 211,156
Cost recovery clauses (1) .................................... (82,142) 138,949 (102,977)
Other ........................................................ 128,754 93,272 (66,266)
Net cash provided by operating activities ...................... 1,381,953 1,269,584 1,063,099
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2) ......................................... (758,690) (1,095,502) (1,312,127)
Proceeds from properties held for sale ........................... 123,012 87,427 17,150
Other ............................................................ 61,744 (125,367) (163,811)
Net cash used in investing activities .......................... (573,934) (1,133,442) (1,458,788)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of first mortgage bonds and other long-term debt ........ 172,850 2,208,882 899,633
Issuance of preferred stock ...................................... - 190,000 125,000
Retirement of long-term debt and preferred stock ................. (470,720) (2,648,170) (699,614)
Issuance of common stock ......................................... 16,685 276,287 422,626
Repurchase of common stock ....................................... (123,733) - -
Dividends on common stock ........................................ (334,751) (461,639) (430,716)
Increase (decrease) in commercial paper .......................... (114,621) 349,600 -
Other ............................................................ (19,993) 22,756 (13,295)
Net cash (used) provided by financing activities ............... (874,283) (62,284) 303,634
Net (decrease) increase in cash and cash equivalents ............... (66,264) 73,858 (92,055)
Cash and cash equivalents at beginning of year ..................... 152,014 78,156 170,211
Cash and cash equivalents at end of year ........................... $ 85,750 $ 152,014 $ 78,156
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest (net of amount capitalized) ............... $ 318,405 $ 350,845 $ 316,826
Cash paid for income taxes ....................................... $ 239,050 $ 150,227 $ 115,045
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Additions to capital lease obligations ........................... $ 63,479 $ 57,579 $ 152,833
(1) Represents the effect on cash flows from operating activities of the net amounts deferred or recovered under the fuel and
purchased power, oil-backout, energy conservation, capacity and environmental cost recovery clauses.
(2) Excludes allowance for equity funds used during construction.
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.<PAGE>
<PAGE>
FPL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1994, 1993 and 1992
1. Summary of Significant Accounting and Reporting Policies
Basis of Presentation - The consolidated financial statements include
the accounts of FPL Group, Inc. (FPL Group) and its subsidiaries.
All significant intercompany balances and transactions have been
eliminated in consolidation. Certain amounts included in prior
years' consolidated financial statements have been reclassified to
conform to the current year's presentation.
Regulation - The principal operating company of FPL Group is Florida
Power & Light Company (FPL), a utility subject to regulation by the
Florida Public Service Commission (FPSC) and the Federal Energy
Regulatory Commission (FERC). As a result of such regulation, FPL
follows the accounting practices set forth in Statement of Financial
Accounting Standard (SFAS) No. 71, "Accounting for the Effects of
Certain Types of Regulation." SFAS 71 indicates that regulators can
create assets and impose liabilities that would not be recorded by
non-regulated entities. Recoverability of these assets is judged the
same as for enterprises in general. The principal assets recorded
under SFAS 71 are unamortized debt reacquisition costs and deferred
litigation items, aggregating $403 million at December 31, 1994,
which are presented in the other assets section of the consolidated
balance sheets. The principal SFAS 71-related liabilities are
deferred regulatory credit - income taxes, unamortized investment tax
credits and the storm and property insurance reserve, aggregating
$595 million at December 31, 1994, which are presented in the other
liabilities and deferred credits section of the consolidated balance
sheets. Other accounting practices followed by regulated electric
utilities that differ from non-regulated entities are outlined below,
including deferral of clause under or over recoveries, nuclear
decommissioning and allowance for funds used during construction.
Revenues and Rates - FPL's retail and wholesale utility rate
schedules are approved by the FPSC and the FERC, respectively. FPL
records the estimated amount of base revenues for energy delivered to
customers but not billed. Such unbilled revenues are included in
customer receivables and amounted to approximately $117 million and
$112 million at December 31, 1994 and 1993, respectively.
Revenues include amounts resulting from cost recovery clauses, which
are designed to permit full recovery of certain costs and provide a
return on certain assets utilized by these programs, and franchise
fees. Such revenues represent a pass-through of costs and include
substantially all fuel, purchased power and interchange expenses,
conservation-related expenses, revenue taxes and franchise fees.
Revenues from cost recovery clauses are recorded when billed; FPL
achieves matching of costs and related revenues by deferring the net
under or over recovery.
Electric Utility Plant, Depreciation and Amortization - The cost of
additions to units of utility property is added to electric utility
plant. The cost of units of property retired, less net salvage, is
charged to accumulated depreciation. Maintenance and repairs of
property as well as replacements and renewals of items determined to
be less than units of property are charged to other operations and
maintenance expense. At December 31, 1994, the generating,
transmission, distribution and general facilities of FPL represented
approximately 49%, 12%, 32% and 7%, respectively, of FPL Group's
gross investment in electric utility plant in service. Substantially
all electric utility plant is subject to the lien of a mortgage,
securing FPL's first mortgage bonds.
Depreciation of utility property is primarily provided on a
straight-line average remaining life basis and includes a provision
for dismantlement. For substantially all utility property,
depreciation and fossil fuel plant dismantlement studies are
performed at least every four years. The most recent depreciation
studies were filed with the FPSC and approved in 1994; approval of
fossil fuel plant dismantlement studies also filed in 1994 is
pending. The weighted annual composite depreciation rate was
approximately 4.0%, 3.9% and 3.5% for the years 1994, 1993 and 1992,
respectively. Excluded from the composite rate for 1994 is the
accelerated write-off of certain accumulated plant overhaul costs.
Nuclear fuel costs, including a charge for spent nuclear fuel
disposal, is accrued in fuel expense on a unit of production method.
Allowance for Funds Used During Construction (AFUDC) - FPL recognizes
AFUDC as a noncash item which represents the allowed cost of capital
used to finance a portion of FPL's construction work in progress.
AFUDC is capitalized as an additional cost of utility plant and is
recorded as an addition to income. The capitalization rate used in
computing AFUDC was 8.26% in 1994, 8.67% from January 1993 through
June 1993, 8.26% from July 1993 through December 1993 and 8.61% in
1992. FPL allocates total AFUDC between borrowed funds and other
funds. The portion of AFUDC attributable to short- and long-term
borrowed funds amounted to $10 million, $31 million and $27 million
for the years ended December 31, 1994, 1993 and 1992, respectively.
Nuclear Decommissioning - FPL accrues nuclear decommissioning costs
over the expected service life of each plant. Nuclear
decommissioning studies are performed at least every five years for
FPL's four nuclear units and are submitted to the FPSC for approval.
The most recent studies were filed in December 1994 and are pending
approval. These studies assume prompt dismantlement for the Turkey
Point nuclear units commencing in the year 2013 and for St. Lucie
Unit No. 2 commencing in<PAGE>
<PAGE>
2023. St. Lucie Unit No. 1 will be mothballed in 2016 until St.
Lucie Unit No. 2 is ready for dismantlement. Decommissioning expense
accruals, included in depreciation and amortization expense in the
consolidated statements of income, were $38 million for each of the
years 1994, 1993 and 1992, and are projected to be $46 million for
1995 and future years. FPL's portion of the ultimate cost of
decommissioning its four units, including dismantlement and
reclamation, expressed in 1994 dollars, is currently estimated to
aggregate $1.1 billion. At December 31, 1994 and 1993, the
accumulated provision for nuclear decommissioning totaled $507
million and $445 million, respectively, and is included in
accumulated depreciation.
Amounts equal to decommissioning expense are deposited in funds which
may be used only for the payment of the cost of decommissioning FPL's
nuclear units. Included in special use funds of FPL in the
consolidated balance sheets were $373 million and $325 million of
decommissioning funds at December 31, 1994 and 1993, respectively.
Securities held in the decommissioning funds primarily consist of
tax-exempt obligations with a weighted-average maturity of 10 years
and, in 1994, are carried at market value. Any market value
adjustment results in a corresponding adjustment to the accumulated
provision for nuclear decommissioning. See Note 9. Fund earnings,
net of taxes, are reinvested in the funds. Both fund earnings and
the reinvestment of the earnings are included in other - net,
resulting in no net impact on FPL Group's earnings. The related
income tax effects are included in accumulated deferred income taxes.
In 1994, the Financial Accounting Standards Board (FASB) added a
project to its agenda to review current accounting practices for
nuclear decommissioning. The objective of the project is to
determine if and when a liability for nuclear decommissioning should
be recognized, how the liability should be measured and whether a
corresponding asset is created. FPL is unable to predict the outcome
of this project; however, these deliberations could result in a
significant change to FPL Group's balance sheet. Some or all of the
accumulated provision for nuclear decommissioning could be
reclassified out of accumulated depreciation and presented as a
liability. Additionally, the amount of the liability could be
increased to the total estimated decommissioning cost stated in
current dollars, or the present value of projected future dollars,
with an offset to a property or other account. FPL Group expects no
significant adverse effect on results of operations from potential
changes currently being considered by the FASB.
Storm and Property Insurance Reserve Fund - A storm and property
insurance reserve fund (storm fund) provides coverage toward storm
damage costs and possible retrospective premium assessments stemming
from a nuclear incident under the various insurance programs covering
FPL's nuclear generating plants. Securities held in the fund are
carried at market value in 1994 and are included in special use funds
of FPL in the consolidated balance sheets. The related income tax
effects are included in accumulated deferred income taxes. These
securities primarily consist of tax-exempt obligations with a
weighted-average maturity of 7 years. Any market value adjustment
results in a corresponding adjustment to the storm and property
insurance reserve. See Note 9. Included in special use funds in the
consolidated balance sheets were $62 million and $54 million of storm
funds at December 31, 1994 and 1993, respectively.
Other Investments - Included in other investments are FPL Group's
non-majority owned interests in partnerships and joint ventures,
essentially all of which are accounted for under the equity method.
Additionally, other investments include FPL Group's participation in
leveraged leases of $158 million and $155 million at December 31,
1994 and 1993, respectively.
Marketable Securities - In 1993, marketable securities and a related
liability for securities sold short were held by a consolidated
limited partnership and accounted for at market value. Earnings on
the investments are included in other - net in the consolidated
statements of income. The partnership was liquidated during 1994.
Cash Equivalents - Cash equivalents consist of short-term, highly
liquid investments with original maturities of three months or less.
Commercial Paper - The year end weighted-average interest rate on
commercial paper at December 31, 1994 and 1993 was 5.9% and 3.4%,
respectively. The average annual rate for 1994 and 1993 was 4.4% and
3.2%, respectively. In 1994, $200 million of commercial paper was
classified as long-term debt as FPL expects to maintain this level of
commercial paper usage for the foreseeable future.
Retirement of Long-Term Debt - The excess of FPL's reacquisition cost
over the book value of long-term debt is deferred and amortized to
expense ratably over the remaining life of the original issue, which
is consistent with its treatment in the ratemaking process. FPL
Group Capital Inc (FPL Group Capital) expenses this cost in the
period incurred.
Rate Matters - Deferred litigation items primarily consist of
deferred costs associated with the replacement of steam generators at
the Turkey Point nuclear units. In 1986, the FPSC approved recovery
of these costs over five years commencing with FPL's next general
rate proceeding. In February 1995, the FPSC approved FPL's request
to amortize these costs over a period of no more than five years,
commencing in 1995.<PAGE>
<PAGE>
Income Taxes - Deferred income taxes are provided on all significant
temporary differences between the financial statement and tax bases
of assets and liabilities. Investment tax credits are used to reduce
current federal income taxes and, in the case of FPL, are deferred
and amortized to income over the approximate lives of the related
property in accordance with the regulatory treatment.
2. Income Taxes
The components of income taxes are as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
1994 1993 1992
(Thousands of Dollars)
<S> <C> <C> <C>
Federal:
Current ..................................................................... $203,407 $205,233 $124,417
Deferred:
Premium on reacquired debt ................................................ (4,104) 41,606 10,117
Cost reduction program .................................................... 2,378 (31,288) -
Depreciation and related items ............................................ (5,196) 36,213 77,543
Cost recovery clauses ..................................................... 27,115 (45,873) 33,334
Leveraged leases .......................................................... 22,967 7,880 36,605
Alternative minimum tax credits ........................................... 57,610 44,647 (31,302)
Other ..................................................................... (17,635) (24,978) (6,404)
Investment tax credits - net ................................................ (21,205) (21,994) (23,532)
Total federal ........................................................... 265,337 211,446 220,778
State:
Current ..................................................................... 32,020 33,324 23,544
Deferred .................................................................... 9,925 5,729 17,111
Total state ............................................................. 41,945 39,053 40,655
Total income taxes ............................................................ $307,282 $250,499 $261,433
</TABLE>
A reconciliation between income tax expense and the income tax
expense calculated at the applicable statutory rates is as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
1994 1993 1992
(Thousands of Dollars)
<S> <C> <C> <C>
Computed at statutory federal income tax rate ................................. $289,098 $237,737 $247,650
Increases (reductions) resulting from:
State income taxes - net of federal income tax benefit ...................... 27,264 24,530 26,832
Amortization of investment tax credits ...................................... (21,205) (21,491) (20,714)
Allowance for equity funds used during construction ......................... (5,081) (14,177) (11,801)
Preferred dividend requirements of FPL ...................................... 13,854 14,932 14,926
Other - net ................................................................. 3,352 8,968 4,540
Total income taxes ............................................................ $307,282 $250,499 $261,433
/TABLE
<PAGE>
<PAGE>
The income tax effects of temporary differences giving rise to FPL
Group's consolidated deferred income tax liabilities and assets are as
follows:
<TABLE>
<CAPTION>
December 31,
1994 1993
(Thousands of Dollars)
<S> <C> <C>
Deferred tax liabilities:
Property related ................................................................ $1,715,349 $1,677,926
Leveraged leases ................................................................ 185,005 167,467
Partnerships and joint ventures ................................................. 200,587 166,376
Unamortized debt reacquisition costs ............................................ 112,368 116,556
Other ........................................................................... 38,057 75,666
Total deferred tax liabilities ................................................ 2,251,366 2,203,991
Deferred tax assets and valuation allowance:
Asset writedowns and capital loss carryforward .................................. 200,241 236,865
Unamortized investment tax credits .............................................. 116,804 124,913
Deferred regulatory credit - income taxes ....................................... 75,571 83,524
Storm and decommissioning reserves .............................................. 147,269 133,754
Alternative minimum tax credits ................................................. 43,778 106,422
Other ........................................................................... 226,320 193,534
Valuation allowance ............................................................. (184,098) (187,088)
Net deferred tax assets ....................................................... 625,885 691,924
Accumulated deferred income taxes ................................................. $1,625,481 $1,512,067
</TABLE>
In 1993, FPL Group adopted SFAS No. 109, "Accounting for Income
Taxes," which requires the use of the liability method in accounting for
income taxes. At FPL, the principal effect of adopting SFAS 109 was
the establishment of a new account, deferred regulatory credit - income
taxes. This amount, which represents the revenue equivalent of the
difference in accumulated deferred income taxes computed under
SFAS 109 as compared to prior accounting rules, will be amortized over
the estimated lives of the assets or liabilities which resulted in the initial
recognition of the deferred tax amount. Adoption of this standard had no
effect on results of operations.
The valuation allowance in 1994 and 1993 offsets a related amount of
deferred tax assets recorded pursuant to SFAS 109. The primary
component of the valuation allowance relates to capital loss
carryforwards from the disposition of a subsidiary in a prior year. The
amount of the deductible loss from this disposition was limited by
Internal Revenue Service rules which are being challenged by FPL
Group. FPL Group is unable to predict the outcome of this challenge.
3. Employee Retirement Benefits
Pension Benefits - Substantially all employees of FPL Group and its
subsidiaries are covered by a noncontributory defined benefit pension
plan. Plan benefits are generally based on employees' years of service
and compensation during the last years of employment. Participants are
vested after five years of service.
For 1994, 1993 and 1992 the components of pension cost, net of
amounts capitalized, are as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
1994 1993 1992
(Thousands of Dollars)
<S> <C> <C> <C>
Service cost .............................................................. $ 37,423 $ 36,105 $ 39,624
Interest cost on projected benefit obligation ............................. 80,466 78,797 62,518
Actual return on plan assets .............................................. (11,293) (236,565) (76,755)
Net amortization and deferral ............................................. (118,770) 106,894 (30,592)
Negative pension cost ..................................................... (12,174) (14,769) (5,205)
Effect of cost reduction program (see Note 4) ............................. - 34,463 -
FPL regulatory adjustment ................................................. - - 5,221
Pension cost recognized in the consolidated statements of income .......... $ (12,174) $ 19,694 $ 16
</TABLE>
Prior to 1993, an adjustment was made to reflect in the results of
operations FPL's pension cost calculated under the actuarial cost
method used for utility ratemaking purposes. In 1993, FPL adopted
consistent pension measurements for ratemaking and financial reporting.
The accumulated regulatory adjustment is being amortized to income
over five years. At December 31,<PAGE>
<PAGE>
1994 and 1993, the unamortized balance of this regulatory adjustment
included in other liabilities was approximately $12 million and $16 million,
respectively.
FPL Group funds the pension cost calculated under the entry age normal
level percentage of pay actuarial cost method, provided that this amount
satisfies the minimum funding standards of the Employee Retirement
Income Security Act of 1974, as amended, and is not greater than the
maximum tax deductible amount for the year. No contributions to the
plan were required for 1994, 1993 or 1992.
A reconciliation of the funded status of the plan to the amounts
recognized in the consolidated balance sheets is presented below:
<TABLE>
<CAPTION>
December 31,
1994 1993
(Thousands of Dollars)
<S> <C> <C>
Plan assets at fair value, primarily listed stocks and bonds .......................... $1,620,978 $1,662,051
Actuarial present value of benefits for services rendered to date:
Accumulated benefits based on salaries to date, including vested benefits
of $683 million and $689 million .................................................. 734,759 740,959
Additional benefits based on estimated future salary levels ......................... 326,356 325,582
Projected benefit obligation .......................................................... 1,061,115 1,066,541
Plan assets in excess of projected benefit obligation ................................. 559,863 595,510
Prior service costs not recognized in net periodic pension cost ....................... 200,185 212,908
Unrecognized net asset at January 1, 1986, being amortized primarily
over 19 years - net of accumulated amortization ..................................... (233,558) (256,914)
Unrecognized net gain ................................................................. (511,553) (548,741)
Prepaid pension cost .................................................................. $ 14,937 $ 2,763
</TABLE>
The weighted-average discount rate used in determining the actuarial
present value of the projected benefit obligation was 7.75% and 7.0% for
1994 and 1993, respectively. The assumed rate of increase in future
compensation levels was 5.5% for both years. The expected long-term
rate of return on plan assets used in determining pension cost was
7.75% for 1994 and 1993 and 7.0% for 1992.
Other Postretirement Benefits - FPL Group and its subsidiaries have
defined benefit postretirement plans for health care and life insurance
benefits that cover substantially all employees. Eligibility for health care
benefits is based upon age plus years of service at retirement. The
plans are contributory, and contain cost-sharing features such as
deductibles and coinsurance. FPL Group has capped company
contributions for postretirement health care at a defined level which,
depending on actual claims experience, may be reached by the year
2000. Generally, life insurance benefits for retirees are capped at
$50,000. FPL Group's policy is to fund postretirement benefits in
amounts determined at the discretion of management.
In 1993, FPL Group adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions." For 1994 and 1993, the
components of net periodic postretirement benefit cost, net of amounts
capitalized, are as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
1994 1993
(Thousands of Dollars)
<S> <C> <C>
Service cost ......................................................................... $ 4,717 $ 5,233
Interest cost ........................................................................ 17,336 14,633
Return on plan assets ................................................................ (749) (8,130)
Amortization of transition obligation ................................................ 3,485 4,064
Net amortization and deferral ........................................................ (6,156) -
Net periodic postretirement benefit cost ............................................. 18,633 15,800
Effect of cost reduction program (see Note 4) ........................................ - 29,008
Postretirement benefit cost recognized in the consolidated statements of income ...... $18,633 $44,808
/TABLE
<PAGE>
<PAGE>
A reconciliation of the funded status of the plan to the amounts
recognized in the consolidated balance sheets is presented below:
<TABLE>
<CAPTION>
December 31,
1994 1993
(Thousands of Dollars)
<S> <C> <C>
Plan assets at fair value, primarily listed stocks and bonds ......................... $ 99,178 $ 109,372
Accumulated postretirement benefit obligation:
Retirees ........................................................................... 166,215 177,419
Fully eligible active plan participants ............................................ 1,946 6,788
Other active plan participants ..................................................... 74,577 68,823
Total ............................................................................ 242,738 253,030
Accumulated postretirement benefit obligation in excess of plan assets ............... (143,560) (143,658)
Unrecognized net transition obligation (amortized over 20 years) ..................... 62,732 66,217
Unrecognized net loss ................................................................ 17,387 32,633
Accrued postretirement benefit liability ............................................. $ 63,441 $ 44,808
</TABLE>
The weighted-average annual assumed rate of increase in the per capita
cost of covered benefits (i.e., health care cost trend rate) for 1994 is
9.0% for retirees under age 65 and 8.0% for retirees over age 65.
These rates are assumed to decrease gradually to 5.0% by the year
2003, which is when it is anticipated that benefit costs will reach the
defined level at which company contributions will be capped. The cap
on FPL Group's contributions mitigates the potential significant increase
in costs resulting from an increase in the health care cost trend rate.
Increasing the assumed health care cost trend rate by one percentage
point would increase the plan's accumulated postretirement benefit
obligation as of December 31, 1994 by $7 million, and the aggregate of
the service and interest cost components of net periodic postretirement
benefit cost of the plan for 1994 by approximately $1 million.
The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation was 7.75% and 7.0% for
1994 and 1993, respectively. The expected long-term rate of return on
plan assets used in determining postretirement benefit cost was 7.75%
for 1994 and 1993.
4. Cost Reduction Program Charge
In 1993, FPL implemented a cost reduction program which resulted in a
$138 million ($85 million after-tax) charge, primarily consisting of
severance payments and employee retirement benefits. The impact on
pension cost and postretirement benefits was approximately $34 million
and $29 million, respectively, and was included as part of the total
charge of $138 million. See Note 3. A total of 1,700 positions
throughout FPL were eliminated.
5. Jointly-Owned Electric Utility Plant
FPL owns approximately 85% of the St. Lucie Nuclear Unit No. 2, 20%
of the St. Johns River Power Park (SJRPP) units and coal terminal and
approximately 66% undivided interest in Scherer Unit No. 4. FPL
expects to purchase an additional 11% undivided ownership interest in
Scherer Unit No. 4 in 1995. At December 31, 1994, FPL's investment in
St. Lucie Unit No. 2 was $719 million, net of accumulated depreciation of
$448 million; the investment in the SJRPP units and coal terminal was
$209 million, net of accumulated depreciation of $121 million; the
investment in Scherer Unit No. 4 was $384 million, net of accumulated
depreciation of $85 million.
FPL is responsible for its share of the operating costs, as well as
providing its own financing. At December 31, 1994, there was no
significant balance of construction work in progress on these facilities.
<PAGE>
<PAGE>
6. Common Shareholders' Equity
The changes in common shareholders' equity accounts are as follows:
<TABLE>
<CAPTION>
Common Stock (1) Additional Common
Aggregate Paid-In Unearned Retained Shareholders'
Shares Par Value Capital Compensation Earnings Equity
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1991 .... 170,756 $1,708 $2,886,113 $(346,215) $ 812,241
Net income ................... - - - - 466,949
Issuances of common stock .... 12,032 120 429,482 (5,683) -
Dividends on common stock .... - - - - (430,716)
Earned compensation and tax
benefits on ESOP dividends.. - - - 15,543 9,139
Other ........................ - - (2,692) - -
Balances, December 31, 1992 .... 182,788 1,828 3,312,903 (336,355) 857,613
Net income ................... - - - - 428,749
Issuances of common stock .... 7,277 73 278,123 - -
Dividends on common stock .... - - - - (461,639)
Earned compensation and tax
benefits on ESOP dividends.. - - - 15,234 5,110
Other ........................ - - (1,032) - -
Balances, December 31, 1993 .... 190,065 1,901 3,589,994 (321,121) 829,833 $4,100,607
Net income ................... - - - - 518,711
Issuances of common stock .... 506 5 16,680 - -
Repurchase of common stock ... (4,000) (40) (123,693) - -
Dividends on common stock .... - - - - (334,751)
Earned compensation under ESOP - - 1,964 16,900 -
Other ........................ - - 852 - -
Balances, December 31, 1994 .... 186,571(2) $1,866 $3,485,797 $(304,221) $1,013,793 $4,197,235
(1) $0.01 par value, authorized - 300,000,000 shares; outstanding 186,570,549 and 190,065,570 at December 31, 1994 and
1993, respectively.
(2) Outstanding and unallocated shares held by the ESOP Trust totaled 10.4 million shares at December 31, 1994. Unallocated
shares are excluded from average shares outstanding in the earnings per share computation.
</TABLE>
Common Stock Dividend Restrictions - FPL Group's Charter does not
limit the dividends that may be paid on its common stock. As a practical
matter, the ability of FPL Group to pay dividends on its common stock is
dependent upon dividends paid to it by its subsidiaries, primarily FPL.
FPL's charter and a mortgage securing FPL's first mortgage bonds
contain provisions that, under certain conditions, restrict the payment of
dividends and other distributions to FPL Group. Given FPL's current
financial condition and level of earnings, these restrictions do not
currently limit FPL's ability to pay dividends to FPL Group.
Employee Stock Ownership Plan - The employee thrift plans of FPL
Group include a leveraged Employee Stock Ownership Plan (ESOP)
feature. Shares of common stock held by the Trust for the Thrift Plans
(Trust) are used to provide all or a portion of the employers' matching
contributions. In 1990, the Trust borrowed funds from FPL Group
Capital, at an interest rate of 9.69% to purchase 12.4 million shares and
is repaying the loan with dividends received on all shares along with
cash contributions from the employers. Dividends on shares allocated to
employee accounts and used by the Trust for debt service are replaced
with an equivalent amount of shares of common stock at prevailing
market prices. Dividends paid aggregated approximately $23 million in
1994 and $30 million in 1993 and 1992.
In 1994, FPL Group adopted American Institute of Certified Public
Accountants Statement of Position (SOP) 93-6, "Employer's Accounting
for Employee Stock Ownership Plans." Under the new accounting rules,
unallocated shares held by the Trust were removed from the earnings
per share computation until allocated to employee accounts over the
next 15 years. Additionally, compensation expense totaling
approximately $18 million is now measured at the fair value of shares
allocated to employee accounts during the period and interest income on
the ESOP loan held by FPL Group Capital is eliminated in consolidation.
The net effect of adopting SOP 93-6 was to reduce net income for 1994
by approximately $21 million and increase earnings per share by $0.05.
ESOP-related unearned compensation included as a reduction of
shareholders' equity at December 31, 1994 was approximately $300
million, representing 10.4 million unallocated shares at the original issue
price of $29 per share. The fair value of the unearned compensation
account using the closing price of FPL Group stock as reported on the
Composite Tape for New York Stock Exchange listed companies as of
December 31, 1994 was approximately $364 million.<PAGE>
<PAGE>
Long-Term Incentive Plan - In 1994, FPL Group's board of directors and
its shareholders approved a new long-term incentive plan which replaced
the prior long-term incentive plan. Under the new plan, 9 million shares
of common stock are reserved and available for awards to officers and
employees of FPL Group and its subsidiaries. No further awards will be
made under the prior plan. Total compensation charged against
earnings under the incentive plan, and the effect on earnings per share,
were not material in any year. The changes in share awards under the
incentive plan are as follows:
<TABLE>
<CAPTION>
Performance Restricted Non-qualified
Shares Stock Option Shares
<S> <C> <C> <C>
Balances, December 31, 1991 ....................................... 272,981 124,244 159,797
Granted ......................................................... 106,516 60,950 -
Exercised at $30 7/8 ............................................ - - (71,814)
Paid/released ................................................... (65,061) (6,898) -
Forfeited ....................................................... (22,991) (1,000) (2,577)
Balances, December 31, 1992 ....................................... 291,445 177,296 85,406
Granted ......................................................... 89,827 - -
Exercised at $30 7/8 ............................................ - - (35,045)
Paid/released ................................................... (87,169) (6,903) -
Forfeited ....................................................... (14,044) (4,070) (285)
Balances, December 31, 1993 ....................................... 280,059 166,323 50,076
Granted ......................................................... 102,720 29,000 -
Exercised at $30 7/8 ............................................ - - (8,941)
Paid/released ................................................... - (6,223) -
Forfeited ....................................................... (5,589) (1,350) (2,748)
Balances, December 31, 1994 ....................................... 377,190(1) 187,750(2) 38,387(3)
(1) Payment of performance shares is based on the market price of FPL Group's common stock when the related performance
goal is achieved.
(2) Shares of restricted stock were issued at market value at the date of the grant.
(3) All outstanding options are exercisable at $30 7/8.
</TABLE>
In conjunction with the options referred to above, stock appreciation
rights have been granted in an equivalent amount. No awards of
incentive stock options had been granted as of December 31, 1994.
Other - FPL Group has 19 million shares of common stock reserved for
issuance under the Dividend Reinvestment and Common Share Purchase
Plan and Employee Benefit Plans at December 31, 1994.
Each share of common stock has been granted a Preferred Share
Purchase Right, which is exercisable in the event of certain
attempted business combinations. The Rights will cause substantial
dilution to a person or group attempting to acquire FPL Group on
terms not approved by FPL Group's board of directors.<PAGE>
<PAGE>
7. Preferred Stock (1)(2)
Preferred stock consists of the following:
<TABLE>
<CAPTION>
December 31, 1994
Shares Redemption December 31,
Outstanding Price 1994 1993
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Cumulative, No Par Value, authorized 10,000,000 shares at
December 31, 1994 and 1993; without sinking fund requirements -
$2.00 No Par Value, Series A (Involuntary Liquidation Value
$25 Per Share) ............................................... 5,000,000 $ 27.00 $125,000 $125,000
Cumulative, $100 Par Value, authorized 15,822,500 shares at
December 31, 1994 and 1993:
Without sinking fund requirements:
4 1/2% Series ............................................ 100,000 101.00 10,000 10,000
4 1/2% Series A .......................................... 50,000 101.00 5,000 5,000
4 1/2% Series B .......................................... 50,000 101.00 5,000 5,000
4 1/2% Series C .......................................... 62,500 103.00 6,250 6,250
4.32% Series D ........................................... 50,000 103.50 5,000 5,000
4.35% Series E ........................................... 50,000 102.00 5,000 5,000
7.28% Series F ........................................... 600,000 102.93 60,000 60,000
7.40% Series G ........................................... 400,000 102.53 40,000 40,000
6.98% Series S ........................................... 750,000 -(3) 75,000 75,000
7.05% Series T ........................................... 500,000 -(3) 50,000 50,000
6.75% Series U ........................................... 650,000 -(3) 65,000 65,000
Total preferred stock of FPL without sinking
fund requirements .................................... 8,262,500 $451,250 $451,250
With sinking fund requirements (4):
6.84% Series Q (5) ....................................... 440,000 103.65 $ 44,000 $ 48,500
8.625% Series R (6) ...................................... 500,000 105.75 50,000 50,000
Total preferred stock of FPL with sinking
fund requirements .................................... 940,000 94,000 98,500
Less current maturities ............................ - - 1,500
Total preferred stock of FPL with sinking fund
requirements, excluding current maturities ........... 940,000 $ 94,000 $ 97,000
(1) FPL Group's charter authorizes the issuance of 100 million shares of serial preferred stock, $.01 par value. None of these
shares is outstanding.
(2) FPL;s charter authorizes the issuance of 5 million shares of subordinated preferred stock, no par value. None of these
shares is outstanding. There were no issuances of preferred stock in 1994. In 1993, FPL issued 1,900,000 shares of $100
par value preferred stock without sinking fund. In 1992, FPL issued 5,000,000 shares of $2.00 No Par Value, Series A,
preferred stock. In 1993, FPL redeemed and retired 160,000 shares of $100 par value preferred stock without sinking fund
requirements and 167,660 shares of $100 par value preferred stock with sinking fund requirements. In 1992, FPL
redeemed and retired 50,000 shares of $100 par value preferred stock without sinking fund requirements and 185,039
shares of $100 par value preferred stock with sinking fund requirements, excluding the 15,000 shares of Series Q retired
under the sinking fund provision referred to below under footnote (5).
(3) Not redeemable prior to 2003.
(4) Minimum annual sinking fund requirements on preferred stock are approximately $4 million for each of the years 1996,
1997, 1998 and 1999. In the event that FPL should be in arrears on its sinking fund obligations, FPL may not pay dividends
on common stock.
(5) Entitled to a sinking fund to retire a minimum of 15,000 shares and a maximum of 30,000 shares annually from 1995
through 2026 at $100 per share plus accrued dividends. FPL redeemed and retired 15,000 shares in 1992 and 45,000
shares in 1994, satisfying the 1993-95 minimum annual sinking fund requirement.
(6) Entitled to a sinking fund to retire a minimum of 25,000 shares and a maximum of 50,000 shares annually from 1996
through 2015 at $100 per share plus accrued dividends.
/TABLE
<PAGE>
<PAGE>
8. Long-Term Debt (1)(2)
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
1994 1993
(Thousands of Dollars)
<S> <C> <C>
Florida Power & Light Company
First Mortgage Bonds:
Maturing through 2000 - 4 5/8% to 9 5/8% ....................................... $ 460,697 $ 460,697
Maturing 2001 through 2015 - 6 5/8% to 7 7/8% .................................. 700,000 700,000
Maturing 2016 through 2026 - 7% to 9 3/8% ...................................... 1,126,223 1,126,223
Medium-Term Notes:
Maturing through 2000 - 4.85% to 6.20% ...................................... 280,300 280,300
Maturing 2001 through 2015 - 5.79% to 9.4% .................................. 155,000 155,725
Maturing 2016 through 2022 - 8% to 9.05% .................................... 148,700 148,700
Pollution Control and Industrial Development Series -
Maturing 2008 through 2027 - 6.1% to 11 3/8% ................................ 260,705 412,565
Pollution Control, Solid Waste Disposal and Industrial Development Revenue
Bonds - Maturing 2021 through 2029 - variable, 3.0% and 2.4%
average annual interest rate, respectively .................................... 373,165 200,315
Installment Purchase and Security Contracts - Maturing 2007 - 5.9% .............. 2,000 22,990
Commercial paper - 4.4% average annual interest rate(3) ......................... 200,000 -
Unamortized discount - net ...................................................... (39,283) (44,450)
Total long-term debt of FPL ................................................... 3,667,507 3,463,065
Less current maturities ....................................................... 86,350 -
Long-term debt of FPL, excluding current maturities ........................... 3,581,157 3,463,065
FPL Group Capital Inc
Debentures:
Maturing 1997 - 6 1/2% ........................................................ 150,000 150,000
Maturing 2013 - 7 5/8% ........................................................ 125,000 125,000
Maturing 2017 - 8 7/8% ........................................................ - 150,000
Bank loans - 3.7% to 4.2% in 1993 ............................................... - 125,000
Other long-term debt - 7.0% to 9.9% due various dates to 2013 ................... 11,320 16,399
Unamortized discount ............................................................ (2,249) (2,302)
Total long-term debt of FPL Group Capital ..................................... 284,071 564,097
Less current maturities ....................................................... 763 278,179
Long-term debt of FPL Group Capital, excluding current maturities ............. 283,308 285,918
Total long-term debt ............................................................ $3,864,465 $3,748,983
(1) Minimum annual maturities and sinking fund requirements of long-term debt for 1995-99 are approximately $87 million, $101
million, $150 million, $180 million and $230 million, respectively.
(2) Available lines of credit aggregated approximately $985 million at December 31, 1994, all of which were based on firm
commitments.
(3) See Note 1 - Commercial Paper.
</TABLE>
9. Financial Instruments
The following estimates of the fair value of financial instruments
have been made using available market information and other valuation
methodologies. However, the use of different market assumptions or
methods of valuation could result in different estimated fair values.
<TABLE>
<CAPTION>
December 31,
1994 1993
Carrying Estimated Carrying Estimated
Amount Fair Value (1) Amount Fair Value (1)
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Special use funds of FPL ............................ $ 435,117 $ 435,117 $ 378,774 $ 403,841
Marketable securities ............................... $ - $ - $ 171,988 $ 171,988
Other investments ................................... $ 65,727 $ 65,727 $ 82,045 $ 82,045
Preferred stock with sinking fund requirements (2) .. $ 94,000 $ 92,840 $ 98,500 $ 104,463
Long-term debt (2) .................................. $3,951,578 $3,678,995 $4,027,162 $4,200,802
(1) Based on quoted market prices for these or similar issues.
(2) Includes current maturities.
/TABLE
<PAGE>
<PAGE>
The carrying amounts of cash equivalents and commercial paper
approximate their fair values.
Special Use Funds - The cost of securities sold is determined on the
specific identification method. Realized gains and losses on the
nuclear decommissioning and storm funds were not material. The gross
unrealized loss and the gross unrealized gain at December 31, 1994 on
nuclear decommissioning reserve funds was $9 million and $2 million,
respectively; the cost basis of the funds was $380 million. The
estimated fair value of the storm fund approximates its cost and
there were no significant gross unrealized gains or losses.
10. Leases
FPL leases its nuclear fuel for all four of its nuclear units.
Nuclear fuel lease payments, which are based on energy production and
are charged to fuel expense, were $115 million, $122 million and $120
million for the years ended December 31, 1994, 1993 and 1992,
respectively. Included in these payments was an interest component
of $11 million, $11 million and $13 million in 1994, 1993 and 1992,
respectively. Under certain circumstances of lease termination, FPL
is required to purchase all nuclear fuel in whatever form at a
purchase price designed to allow the lessor to recover its net
investment cost in the fuel, which totaled $186 million at
December 31, 1994. For ratemaking, these leases are classified as
operating leases. For financial reporting, the capital lease
obligation is recorded at the amount due in the event of lease
termination.
FPL Group, through its subsidiaries, leases automotive, computer,
office and other equipment through rental agreements with various
terms and expiration dates. Rental expense totaled $26 million, $33
million and $55 million for 1994, 1993 and 1992, respectively.
Minimum annual rental commitments for noncancelable operating leases
are $23 million for 1995, $16 million for 1996, $7 million for 1997,
$6 million for 1998, $5 million for 1999 and $11 million thereafter.
11. 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 aggregate $3.0 billion,
including AFUDC, for the years 1995 through 1999. FPL Group Capital
and its subsidiaries, primarily ESI Energy, Inc. (ESI), have
guaranteed up to approximately $105 million of lease obligations,
debt service payments and other payments subject to certain
contingencies.
Insurance - Liability for accidents at nuclear power plants is
governed by the Price-Anderson Act, which limits the liability of
nuclear reactor owners to the amount of the insurance available from
private sources and under an industry retrospective payment plan. In
accordance with this Act, FPL maintains $200 million of private
liability insurance, which is the maximum obtainable, and
participates in a secondary financial protection system under which
it is subject to retrospective assessments of up to $317 million per
incident at any nuclear utility reactor in the United States, payable
at a rate not to exceed $40 million per incident per year.
FPL participates in insurance pools and other arrangements 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 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 $77 million in
retrospective premiums, and in the event of a subsequent accident at
such nuclear plants during the policy period, the maximum aggregate
assessment is $93 million under the programs in effect at
December 31, 1994. This contingent liability would be partially
offset by a portion of FPL's storm and property insurance reserve,
which totaled $96 million at that date.
In the event of a catastrophic loss at one of FPL's nuclear plants,
the amount of insurance available may not be adequate to cover
property damage and other expenses incurred. Uninsured losses, to
the extent not recovered through rates, would be borne by FPL and
could have a material adverse effect on FPL Group's and FPL's
financial condition.
FPL self-insures certain of its transmission and distribution (T&D)
property due to the high cost and limited coverage available from
third-party insurers. Costs incurred under the self-insurance
program will be charged against FPL's storm fund. Recovery from
ratepayers of any losses in excess of the storm fund will require the
approval of the FPSC. FPL's available lines of credit include $300
million to provide additional liquidity in the event of a T&D
property loss.
Contracts - FPL has entered into certain long-term purchased power
and fuel contracts. Take-or-pay purchased power contracts with the
Jacksonville Electric Authority (JEA) and with subsidiaries of the
Southern Company provide approximately 1,300 megawatts (mw) of power
through mid-2010 and 374 mw through 2022. FPL also has various firm
pay-for-performance contracts to purchase approximately 1,000 mw from
certain cogenerators and small power producers (qualifying
facilities) with expiration dates ranging from 2002 through 2026.
The purchased power contracts provide for capacity and energy
payments. Energy payments are based on the actual power taken under
these contracts. Capacity payments for the pay-for-performance
contracts are subject to the qualifying facilities meeting certain
contract obligations. The fuel contracts provide for the
transportation and supply of natural gas and the supply and use of
Orimulsion. Orimulsion is a new fuel which FPL expects<PAGE>
<PAGE>
to begin using in 1998, subject to environmental approvals. In no
year are the obligations under the fuel contracts expected to exceed
usage requirements.
The required capacity payments through 1999 under these contracts are
estimated to be as follows:
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999
(Millions of Dollars)
<S> <C> <C> <C> <C> <C>
Capacity payments:
JEA ............................................................. $ 80 $ 80 $ 80 $ 80 $ 90
Southern Companies .............................................. $140 $140 $140 $130 $130
Qualifying Facilities ........................................... $150 $290 $310 $310 $330
Minimum payment, at projected prices:
Natural gas ..................................................... $230 $240 $240 $250 $260
Orimulsion ...................................................... - - - $120 $140
</TABLE>
FPL's capacity and energy charges under these contracts were as
follows:
<TABLE>
<CAPTION>
1994 Charges 1993 Charges 1992 Charges
Capacity Energy(1) Capacity Energy(1) Capacity Energy(1)
(Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C>
JEA ............................................. $ 82(2) $ 48 $ 85(2) $ 51 $ 85(2) $ 48
Southern Companies .............................. $186(3) $124 $268(3) $183 $377(3) $283
Qualifying Facilities ........................... $137(3) $ 68 $ 60(3) $ 40 $ 44(3) $ 40
(1) Recovered through the fuel and purchased power cost recovery clause (fuel clause).
(2) Recovered through base rates and the capacity cost recovery clause (capacity clause).
(3) Recovered through the capacity clause.
</TABLE>
Natural gas payments, which were recovered through the fuel clause,
were $232 million, $270 million and $269 million for 1994, 1993 and
1992, respectively.
Litigation - Union Carbide Corporation sued FPL and Florida Power
Corporation alleging that, through a territorial agreement approved
by the FPSC, they conspired to eliminate competition in violation of
federal antitrust laws. Praxair, Inc., an entity that was formerly a
unit of Union Carbide, has been substituted as the plaintiff. The
suit seeks treble damages of an unspecified amount based on alleged
higher prices paid for electricity and for product sales lost. Cross
motions for summary judgment were denied. Both parties are appealing
the denials.
A suit brought by the partners in a cogeneration project located in
Dade County, Florida, alleges that FPL Group, FPL and ESI engaged in
anti-competitive conduct intended to eliminate competition from
cogenerators generally, and from their facility in particular, in
violation of federal antitrust laws and wrongfully interfered with
the cogeneration project's contractual relationship with Metropolitan
Dade County. The suit seeks damages in excess of $100 million,
before trebling under antitrust laws, plus other unspecified
compensatory and punitive damages. A motion for summary judgment by
FPL Group, FPL and ESI was denied. FPL Group, FPL and ESI are
appealing the denial.
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
December 1993, a district court granted summary judgement in favor of
FPL. The FMPA has appealed.
A former cable installation contractor for Telesat Cablevision, Inc.
(Telesat) sued FPL Group, FPL Group Capital and Telesat for breach of
contract, fraud, violation of racketeering statutes and several other
claims. The trial court entered a judgment in favor of FPL Group and
Telesat on nine of twelve counts, including all of the racketeering
and fraud claims, and in favor of FPL Group Capital on all counts.
It also denied all parties' claims for attorney's fees. However, the
jury in the case awarded the contractor damages totaling
approximately $6 million against FPL Group and Telesat for breach of
contract and tortious interference. All parties have appealed.<PAGE>
<PAGE>
FPL Group believes that it and its subsidiaries have meritorious
defenses to all of the litigation described above and is vigorously
defending these suits. Accordingly, the liabilities, if any, arising
from these proceedings are not anticipated to have a material adverse
effect on FPL Group's financial statements.
12. Summarized Financial Information (Unaudited)
Summarized financial information of FPL Group Capital, a consolidated
wholly-owned subsidiary whose debentures are guaranteed by FPL Group,
is provided below:
<TABLE>
<CAPTION>
Years Ended December 31,
1994 1993 1992
(Thousands of Dollars)
<S> <C> <C> <C>
Operating revenues ......................................................... $80,281 $87,808 $86,316
Operating expenses ......................................................... $84,381 $88,073 $85,380
Income before extraordinary item ........................................... $ 7,059 $ 5,175 $ 734
Net income (loss) .......................................................... $ 7,059 $(7,636) $(4,539)
</TABLE>
<TABLE>
<CAPTION>
December 31,
1994 1993
(Thousands of Dollars)
<S> <C> <C>
Current assets ...................................................................... $ 84,300 $ 96,387
Noncurrent assets ................................................................... $1,005,420 $1,169,552
Current liabilities ................................................................. $ 36,171 $ 313,605
Noncurrent liabilities .............................................................. $ 714,115 $ 619,818
</TABLE>
13. Quarterly Data (Unaudited)
Condensed consolidated quarterly financial information for 1994 and
1993 is as follows:
<TABLE>
<CAPTION>
March 31 (1) June 30 (1) September 30 (1) December 31 (1)
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
1994
Operating revenues ................... $ 1,178,334 $ 1,442,353 $ 1,512,261 $ 1,289,711
Operating income ..................... $ 234,679 $ 288,184 $ 427,486 $ 198,093
Net income ........................... $ 94,439 $ 125,843 $ 222,244 $ 76,185
Earnings per share of common stock ... $ 0.53 $ 0.70 $ 1.25 $ 0.43
Dividends per share of common stock .. $ 0.62 $ 0.42 $ 0.42 $ 0.42
High-low trading prices .............. $39 1/8 - 32 3/8 $35 3/4 - 26 7/8 $32 1/2 - 29 7/8 $ 35 3/4 - 31
1993
Operating revenues ................... $ 1,131,086 $ 1,348,988 $ 1,601,191 $ 1,230,420
Operating income ..................... $ 204,635 $ 234,728 $ 293,359(2) $ 236,627
Net income ........................... $ 91,950 $ 110,546 $ 140,522(2) $ 85,731
Earnings per share of common stock ... $ 0.50 $ 0.60 $ 0.75(2) $ 0.45
Dividends per share of common stock .. $ 0.61 $ 0.62 $ 0.62 $ 0.62
High-low trading prices .............. $39 5/8 - 36 1/8 $38 5/8 - 36 1/2 $ 41 - 37 5/8 $40 3/8 - 35 1/2
(1) In the opinion of FPL Group, all adjustments, which consist of normal recurring accruals necessary to present a fair
statement of such amounts for such periods, have been made. Results of operations for an interim period may not give a
true indication of results for the calendar year. Certain amounts included in previously reported quarterly consolidated
financial statements have been reclassified to conform to the current year's presentation.
(2) Charge resulting from cost reduction program reduced operating income by $138 million, net income by $85 million and
earnings per share by $0.45. See Note 4.
</TABLE>
14. Subsequent Event (Unaudited)
In March 1995, FPL issued notices to call 400,000 shares of its
8.625% Preferred Stock, Series R and $66.2 million principal amount
of First Mortgage Bonds, 9 3/8% Series due July 1, 2019.<PAGE>
<PAGE>
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
The information required by this Item will be included in FPL Group's
Definitive Proxy Statement which will be filed with the SEC in
connection with the 1995 Annual Meeting of Shareholders (FPL Group's
Proxy Statement) and is incorporated herein by reference, or is
included in Part I under Executive Officers of the Registrant.
Item 11. Executive Compensation
The information required by this Item will be included in FPL Group's
Proxy Statement and is incorporated herein by reference, provided
that the Compensation Committee Report and Performance Graphs which
are contained in FPL Group's Proxy Statement shall not be deemed to
be incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information required by this Item will be included in FPL Group's
Proxy Statement and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
The information required by this Item will be included in FPL Group's
Proxy Statement and is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K
(a) 1. Financial Statements Page(s)
Independent Auditors' Report 14
Consolidated Statements of Income 15
Consolidated Balance Sheets 16
Consolidated Statements of Cash Flows 17
Notes to Consolidated Financial Statements 18-30
2. Financial Statement Schedules
Schedules are omitted as not applicable or not required.
3. Exhibits including those Incorporated by Reference
Exhibit
Number Description
*3(i) Restated Articles of Incorporation of FPL Group
dated December 31, 1984, as amended through
December 17, 1990 (filed as Exhibit 4(a) to
Post-Effective Amendment No. 5 to Form S-8, File
No. 33-18669)
*3(ii) Bylaws of FPL Group dated November 15, 1993
(filed as Exhibit 3(ii) to Form 10-K for the
year ended December 31, 1993, File No. 1-8841)
*4(a) Rights Agreement, dated as of June 16, 1986,
between FPL Group, Inc. and the First National
Bank of Boston (filed as Exhibit 4(e) to
Post-Effective Amendment No. 5 to Form S-8, File
No. 33-18669)
*4(b) Mortgage and Deed of Trust dated as of January
1, 1944, and Ninety-five Supplements thereto
between FPL and Bankers Trust Company and The
Florida National Bank of Jacksonville (now First
Union National Bank of Florida), Trustees (as of
September 2, 1992, the sole trustee is Bankers
Trust Company) (filed as Exhibit B-3, File No.
2-4845; Exhibit 7(a), File No. 2-7126; Exhibit
7(a), File No. 2-7523; Exhibit 7(a), File No.
2-7990; Exhibit 7(a), File No. 2-9217; Exhibit
4(a)-5, File No. 2-10093; Exhibit 4(c), File
No. 2-11491; Exhibit 4(b)-1, File No. 2-12900;
Exhibit 4(b)-1, File No. 2-13255; Exhibit
4(b)-1, File No. 2-13705; Exhibit 4(b)-1, File
No. 2-13925; Exhibit 4(b)-1, File No. 2-15088;
Exhibit 4(b)-1, File No. 2-15677; Exhibit
4(b)-1, File No. 2-20501; Exhibit 4(b)-1, File
No. 2-22104; Exhibit 2(c), File No. 2-23142;
Exhibit 2(c), File No. 2-24195; Exhibit 4(b)-1,
File No. 2-25677; Exhibit 2(c), File No.<PAGE>
<PAGE>
2-27612; Exhibit 2(c), File No. 2-29001; Exhibit
2(c), File No. 2-30542; Exhibit 2(c), File
No. 2-33038; Exhibit 2(c), File No. 2-37679;
Exhibit 2(c), File No. 2-39006; Exhibit 2(c),
File No. 2-41312; Exhibit 2(c), File
No. 2-44234; Exhibit 2(c), File No. 2-46502;
Exhibit 2(c), File No. 2-48679; Exhibit 2(c),
File No. 2-49726; Exhibit 2(c), File
No. 2-50712; Exhibit 2(c), File No. 2-52826;
Exhibit 2(c), File No. 2-53272; Exhibit 2(c),
File No. 2-54242; Exhibit 2(c), File
No. 2-56228; Exhibits 2(c) and 2(d), File No.
2-60413; Exhibits 2(c) and 2(d), File No.
2-65701; Exhibit 2(c), File No. 2-66524; Exhibit
2(c), File No. 2-67239; Exhibit 4(c), File No.
2-69716; Exhibit 4(c), File No. 2-70767; Exhibit
4(b), File No. 2-71542; Exhibit 4(b), File
No. 2-73799; Exhibits 4(c), 4(d) and 4(e), File
No. 2-75762; Exhibit 4(c), File No. 2-77629;
Exhibit 4(c), File No. 2-79557; Exhibit 99(a) to
Post-Effective Amendment No. 5 to Form S-8, File
No. 33-18669; Exhibit 99(a) to Post-Effective
Amendment No. 1 to Form S-3, File No. 33-46076);
Exhibit 4(b) to Form 10-K for the year ended
December 31, 1993, File No. 1-3545; and Exhibit
4(i) to Form 10-Q for the quarter ended June 30,
1994, File No. 1-3545)
*10(a) Supplemental Executive Retirement Plan, as
amended and restated (filed as Exhibit 99(b) to
Post-Effective Amendment No. 5 to Form S-8, File
No. 33-18669)
*10(b) Benefit Restoration Plan of FPL Group and
affiliates, as amended and restated (filed as
Exhibit 99(c) to Post-Effective Amendment No. 5
to Form S-8, File No. 33-18669)
*10(c) FPL Group Amended and Restated Supplemental
Executive Retirement Plan for J. L. Broadhead
(filed as Exhibit 99(d) to Post-Effective
Amendment No. 5 to Form S-8, File No. 33-18669)
*10(d) Employment Agreement between FPL Group and D. P.
Coyle dated June 12, 1989 (filed as Exhibit
99(e) to Post-Effective Amendment No. 5 to Form
S-8, File No. 33-18669)
*10(e) Employment Agreement between FPL and Stephen E.
Frank dated July 31, 1990 (filed as
Exhibit 99(f) to Post-Effective Amendment No. 5
to Form S-8, File No. 33-18669)
*10(f) Employment Agreement between FPL and Jerome H.
Goldberg dated August 9, 1989 (filed as
Exhibit 99(g) to Post-Effective Amendment No. 5
to Form S-8, File No. 33-18669)
*10(g) FPL Group Long-Term Incentive Plan of 1985, as
amended (filed as Exhibit 99(h) to
Post-Effective Amendment No. 5 to Form S-8, File
No. 33-18669)
*10(h) Director and Executive Compensation Deferral
Plan of FPL, as amended (filed as Exhibit 99(i)
to Post-Effective Amendment No. 5 to Form S-8,
File No. 33-18669)
*10(i) Employment Agreement between FPL Group and James
L. Broadhead dated February 13, 1989 (filed as
Exhibit 99(j) to Post-Effective Amendment No. 5
to Form S-8, File No. 33-18669)
*10(j) Employment Agreement between FPL Group and James
L. Broadhead dated as of December 13, 1993
(filed as Exhibit 10(j) to Form 10-K for the
year ended December 31, 1993, File No. 1-8841)
*10(k) Annual Incentive Plan dated as of March 31, 1994
(filed as Exhibit 10(k) to Form 10-Q for the
quarter ended March 31, 1994, File No. 1-8841)
*10(l) Long-Term Incentive Plan 1994 (filed as Exhibit
4(d) to Form S-8, File No. 33-57673)
*10(m) Employment Agreement between FPL and Jerome H.
Goldberg dated July 25, 1994 (filed as Exhibit
10(m) to Form 10-Q for the quarter ended
June 30, 1994, File No. 1-8841)
21 Subsidiaries of the Registrant
23 Independent Auditors' Consent
27 Financial Data Schedule
* Incorporated herein by reference
(b) Reports on Form 8-K
None<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized.
FPL Group, Inc.
JAMES L. BROADHEAD
James L. Broadhead
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer and Director)
Date: March 20, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature and Title as of March 20, 1995:
<S> <C>
MICHAEL W. YACKIRA K. MICHAEL DAVIS
Michael W. Yackira K. Michael Davis
Vice President, Finance and Chief Controller and Chief Accounting Officer
Financial Officer (Principal Accounting Officer)
(Principal Financial Officer)
Directors:
H. JESSE ARNELLE B. F. DOLAN
H. Jesse Arnelle B. F. Dolan
ROBERT M. BEALL, II WILLARD D. DOVER
Robert M. Beall, II Willard D. Dover
DAVID BLUMBERG PAUL J. EVANSON
David Blumberg Paul J. Evanson
J. HYATT BROWN DREW LEWIS
J. Hyatt Brown Drew Lewis
ARMANDO M. CODINA FREDERIC V. MALEK
Armando M. Codina Frederic V. Malek
MARSHALL M. CRISER PAUL R. TREGURTHA
Marshall M. Criser Paul R. Tregurtha
</TABLE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
State or Jurisdiction
Subsidiary of Incorporation
<S> <C>
1. Florida Power & Light Company (100%-Owned) ............................................. Florida
2. Bay Loan and Investment Bank (1) ....................................................... Rhode Island
3. Palms Insurance Company, Limited (1) ................................................... Cayman Islands
4. Palmetto Insurance Company Limited (2) ................................................. Cayman Islands
(1) 100%-owned subsidiary of FPL Group Capital Inc
(2) 100%-owned subsidiary of Palms Insurance Company, Limited
</TABLE>
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statement No. 33-56869 on Form S-3, Registration Statement No.
33-57673 on Form S-8, Post-Effective Amendment No. 2 to Registration
Statement No. 33-31487 on Form S-8; Post-Effective Amendment No. 2 to
Registration Statement No. 33-33215 on Form S-8; Registration
Statement No. 33-11631 on Form S-8; Post-Effective Amendment No. 1 to
Registration Statement No. 33-39306 on Form S-3; Registration
Statement No. 33-57470 on Form S-3; and Post-Effective Amendment
No. 5 to Registration Statement No. 33-18669 on Form S-8 of FPL
Group, Inc., of our report dated February 10, 1995 appearing in this
Annual Report on Form 10-K of FPL Group, Inc. for the year ended
December 31, 1994.
DELOITTE & TOUCHE LLP
Miami, Florida
March 20, 1995
<TABLE> <S> <C>
<S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from FPL's condensed consolidated balance sheet as of December 31,
1994 and condensed consolidated statements of income and cash flows for the twelve months ended December 31, 1994 and is qualified
in its entirety by reference to such financial statements.
<MULTIPLIER> 1,000
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<PERIOD-TYPE> 12-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $10,006,153
<OTHER-PROPERTY-AND-INVEST> $1,121,066
<TOTAL-CURRENT-ASSETS> $949,647
<TOTAL-DEFERRED-CHARGES> $402,978
<OTHER-ASSETS> $137,772
<TOTAL-ASSETS> $12,617,616
<COMMON> $1,866
<CAPITAL-SURPLUS-PAID-IN> $3,181,576
<RETAINED-EARNINGS> $1,013,793
<TOTAL-COMMON-STOCKHOLDERS-EQ> $4,197,235
$94,000
$451,250
<LONG-TERM-DEBT-NET> $3,864,465
<SHORT-TERM-NOTES> $0
<LONG-TERM-NOTES-PAYABLE> $0
<COMMERCIAL-PAPER-OBLIGATIONS> $34,979
<LONG-TERM-DEBT-CURRENT-PORT> $87,113
$0
<CAPITAL-LEASE-OBLIGATIONS> $185,647
<LEASES-CURRENT> $0
<OTHER-ITEMS-CAPITAL-AND-LIAB> $3,702,927
<TOT-CAPITALIZATION-AND-LIAB> $12,617,616
<GROSS-OPERATING-REVENUE> $5,422,659
<INCOME-TAX-EXPENSE> $307,282
<OTHER-OPERATING-EXPENSES> $4,274,217
<TOTAL-OPERATING-EXPENSES> $4,274,217
<OPERATING-INCOME-LOSS> $1,148,442
<OTHER-INCOME-NET> ($36,076)
<INCOME-BEFORE-INTEREST-EXPEN> $1,184,518
<TOTAL-INTEREST-EXPENSE> $358,525
<NET-INCOME> $518,711
$0
<EARNINGS-AVAILABLE-FOR-COMM> $518,711
<COMMON-STOCK-DIVIDENDS> ($334,751)
<TOTAL-INTEREST-ON-BONDS> $0
<CASH-FLOW-OPERATIONS> $1,381,953
<EPS-PRIMARY> $2.91
<EPS-DILUTED> $0
</TABLE>
