UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-8841
FPL Group Employee Thrift Plan
(Full title of the plan)
FPL GROUP, INC.
(Name of issuer of the securities held pursuant to the plan)
700 Universe Boulevard
Juno Beach, Florida 33408
(Address of principal executive office)
INDEPENDENT AUDITORS' REPORT
EMPLOYEE BENEFITS COMMITTEE OF THE BOARD OF DIRECTORS OF FPL GROUP, INC.:
We have audited the accompanying statements of net assets available for
benefits of the FPL Group Employee Thrift Plan (the "Plan") as of
December 31, 1998 and 1997, and the related statement of changes in net
assets available for benefits for the year ended December 31, 1998. These
financial statements are the responsibility of the Plan'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 financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of
December 31, 1998 and 1997 and the changes in net assets available for
benefits for the year ended December 31, 1998 in conformity with generally
accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of (1)
assets held for investment as of December 31, 1998, and (2) transactions in
excess of five percent of the current value of plan assets for the year ended
December 31, 1998, are presented for the purpose of additional analysis and
are not a required part of the basic financial statements, but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedules are the responsibility of
the Plan's management. Such schedules have been subjected to the auditing
procedures applied in our audit of the basic 1998 financial statements and,
in our opinion, are fairly stated in all material respects when considered in
relation to the basic financial statements taken as a whole.
DELOITTE & TOUCHE LLP
Miami, Florida
June 25, 1999
FPL GROUP EMPLOYEE THRIFT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
December 31,
1998 1997
-------------- --------------
<S> <C> <C>
ASSETS
Accrued interest receivable - ESOP Account ...................................... $ 1,110 $ 1,730
General investments, at fair value:
Interest-bearing cash ......................................................... 7,020,174 6,972,866
Loans to participants - other ................................................. 23,748,932 23,773,117
Value of interest in master trusts ............................................ 318,547,810 280,285,885
Value of interest in registered investment companies .......................... 414,944,344 341,399,961
Total general investments ................................................... 764,261,260 652,431,829
Employer securities, at fair value:
Employer securities held by the Plan .......................................... 366,300,945 342,682,045
Leveraged ESOP employer securities ............................................ 374,447,811 360,163,701
Total employer securities ................................................... 740,748,756 702,845,746
Total assets .................................................................... 1,505,011,126 1,355,279,305
LIABILITIES
Interest payable - ESOP Account ................................................. 773,925 750,574
Acquisition indebtedness of Leveraged ESOP ...................................... 239,605,055 232,375,835
Total liabilities ............................................................... 240,378,980 233,126,409
NET ASSETS AVAILABLE FOR BENEFITS ............................................... $1,264,632,146 $1,122,152,896
</TABLE>
The accompanying Notes to Financial Statements are an integral part of these
statements.
FPL GROUP EMPLOYEE THRIFT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
Year Ended December 31, 1998
----------------------------
<S> <C> <C>
INCOME
Contributions:
Received from participants ....................................................... $ 31,236,462
Noncash contributions (from employer) ............................................ 13,443,803
Total contributions ............................................................ $ 44,680,265
Earnings on investments:
Interest:
Interest-bearing cash .......................................................... 345,705
Other loans (participant loans) ................................................ 1,994,973
Total interest ............................................................... 2,340,678
Common stock dividends ........................................................... 9,687,406
Net appreciation in fair value of investments:
Employer securities ............................................................ 15,332,318
Master trusts .................................................................. 35,345,436
Registered investment companies ................................................ 88,579,767
Total net appreciation in fair value of investments .......................... 139,257,521
Total income ....................................................................... 195,965,870
EXPENSES
Benefit payments to participants or beneficiaries .................................. 65,108,984
Administrative expenses ............................................................ 89,746
Total expenses ................................................................... 65,198,730
NET INCOME ......................................................................... 130,767,140
TRANSFERS
Transfers to the Plan - net ........................................................ 4,681,191
Effect of current year Leveraged ESOP activity ..................................... 7,030,919
Total transfers to the Plan ........................................................ 11,712,110
NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1997 ............................. 1,122,152,896
NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1998 ............................. $1,264,632,146
</TABLE>
The accompanying Notes to Financial Statements are an integral part of these
statements.
FPL GROUP EMPLOYEE THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
For the year ended December 31, 1998
1. Description of the Plan and Significant Accounting Policies
The Plan
The following description of the FPL Group Employee Thrift Plan (Plan)
provides only general information. Participating employees (Members) should
refer to the Summary Plan Description in their employee handbook for a more
complete description of the Plan. Fidelity Management Trust Company
(Trustee) administers the trust (Trust) established under the Plan and the
Employee Thrift and Retirement Savings Plan for the Bargaining Unit Employees
of Florida Power & Light Company (FPL Bargaining Plan).
The Plan is a defined contribution plan subject to the provisions of the
Employee Retirement Income Securities Act of 1974, as amended (ERISA). The
Plan has been designated as an Employee Stock Ownership Plan. Participation
in the Plan is voluntary. Employees (other than union employees) are eligible
to participate in the Plan on the first day of the month coincident with the
completion of six continuous full months of service with FPL Group, Inc. (FPL
Group or Company) or certain of its subsidiaries or on the first day of any
payroll period thereafter. Effective February 1, 1999, eligibility
requirements were amended to provide for participation in the Plan after one
full month of service. The Plan includes a cash or deferred compensation
arrangement (Tax Saver Option) permitted by Section 401(k) of the Internal
Revenue Code of 1986, as amended (Code). The Tax Saver Option permits a
Member to elect to defer federal income taxes on all or a portion of their
contributions (Tax Saver Contributions) until they are distributed from the
Plan. Tax Saver Contributions were limited in 1998 to a maximum of $10,000
per Member and may be increased or decreased in future years for cost-of-
living adjustments.
The Plan also includes leveraged employee stock ownership plan (Leveraged
ESOP) provisions. The Leveraged ESOP is a stock bonus plan within the
meaning of Treasury Regulation Section 1.401-1(b)(1)(iii) that is qualified
under Section 401(a) of the Code and is designed to invest primarily in
common stock of FPL Group, Inc. (Common Stock). The Trust purchased Common
Stock from FPL Group using the proceeds of a loan (Acquisition Indebtedness)
from FPL Group Capital Inc (FPL Group Capital), a subsidiary of FPL Group
(see Note 3). The Common Stock acquired by the Trust is initially held in a
separate account (ESOP Account). As the Acquisition Indebtedness (including
interest) is repaid, each Member's account is allocated its portion of Common
Stock released from the ESOP Account.
The Company has in place a Flexible Dividend Program which enables
participants to choose how their dividends on certain shares of Common Stock
held in the Plan are to be paid. Dividends on Common Stock acquired through
the Leveraged ESOP do not qualify under this program. The options available
to participants include reinvestment of dividends in Company Stock;
distribution of dividends in cash; distribution of dividends in cash and
contribution of an equivalent amount of their compensation to their thrift
plan account; or a partial distribution with the balance reinvested in Common
Stock.
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate
the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become 100 percent vested in their accounts.
Contributions, Loans, Withdrawals and Transfers to (from) the Plan
The Plan provides for basic contributions by eligible employees in whole
percentages from 1% to 7% of their base compensation (Earnings), which is
matched in part by the Company with shares of Common Stock. For basic Tax
Saver or After-Tax Contributions, the Company match is 100% on the first 3%
of a Member's Earnings, 50% on the next 3% and 25% on the last 1%. The Plan
also provides for supplemental contributions by Members to be made in whole
percentages from 1% to 9% of their Earnings, bringing the total maximum
contributions to 16%. Supplemental contributions are not matched by the
Company.
The value of a Member's contributions (including all income, gains and
losses) is at all times 100% vested. Company contributions vest at a rate of
20% each year and are fully vested upon a Member attaining five years of
service as a Member of the Plan. An employee may also receive vesting credit
for prior years of service as a member of the FPL Bargaining Plan.
Effective April 1999, the Plan was amended to add special eligibility and
vesting rules, as well as a separate company matching benefit, applicable to
employees of FPL Energy Maine Operating Services, LLC. Employees of FPL
Energy Maine, other than certain transition employees, become eligible to
join the plan only upon completion of twelve full calendar months of service.
Company matching contributions equal to 60% of the first 5 percent of
compensation contributed by an FPL Energy Maine employee, and 50% of the
sixth and seventh percentage of compensation contributed, are provided.
Company matching contributions are, at all times fully vested.
The Plan's investment options include fourteen core funds: eleven "mix your
own" investment options and three "pre-mixed" investment strategies. The
"mix your own" investment options include various mutual funds, a separately
managed portfolio of short- and long-term investment contracts and Common
Stock. The "pre-mixed" investment strategy options are made up of different
allocations of the "mix your own" investment options providing various
combinations of stocks and fixed income investments. Effective June 1, 1999,
an additional feature was added to the Plan under which a Member can select
investment options from a wide variety of mutual funds, in addition to the
core investment options and investment strategy options. This additional
feature is currently not available for the FPL Bargaining Plan.
The Plan allows Members, at any time, to change their contribution
percentage, to change their investment option allocation for future
contributions or to transfer their account balance attributable to Member
contributions from one investment option to another. At year end, the number
of Members contributing to the Plan was 7,260. Company contributions are
primarily made from Common Stock shares released from the ESOP Account.
Forfeitures of non-vested Company contributions due to termination of Plan
participation are used to reduce the amount of future Company contributions
to the Plan or may be applied to administrative expenses. A Member who has
attained at least the age of fifty and completed five years of service while
a Member will be permitted to transfer all or any portion of Company
contributions made to his or her account and any earnings thereon to one or
more of the other investment options. Any future Company contributions will
continue to be invested in Common Stock.
A Member may borrow from his or her account during his or her employment
under certain conditions. At December 31, 1998, the loan interest rate was
8.5%.
Withdrawals by Members from certain of their accounts during their employment
are permitted with certain penalties and restrictions. The penalties limit a
Member's contributions to the Plan for varying periods following a
withdrawal.
Transfers to (from) the Plan generally represent net transfers between the
Plan and the FPL Bargaining Plan. The transfers arise as a result of members
transferring between bargaining unit and non-bargaining unit status while
employed by Florida Power & Light Company (FPL).
Basis of Accounting
The financial statements of the Plan are prepared using the accrual basis of
accounting. Investment income and interest income on loans to Members is
recognized when earned. Contributions by Members and Company contributions
are accrued on the basis of amounts withheld through payroll deductions.
Distributions to Members are recorded when paid.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, and changes therein,
and disclosure of contingent assets and liabilities. Actual results could
differ from those estimates.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value, except insurance and
financial institution investment contracts which are stated at contract value
(see Investment Contracts below). Shares of registered investment companies
are valued at quoted market prices, which represent the net asset value of
shares held by the Plan at year end. The FPL Group Company stock is valued
at its quoted market price. Loans to participants are valued at cost, which
approximates fair value.
Purchases and sales of investment securities are recorded on the trade date.
Gains or losses on sales of investment securities are determined using the
carrying amount of the securities. The carrying amounts of securities held
in Member accounts are adjusted daily; securities held in the ESOP Account
(see Note 2) are adjusted annually. Unrealized appreciation or depreciation
is recorded to recognize changes in market value.
Investment Contracts
The Plan has entered into investment contracts with various insurance
companies and financial institutions. The contracts are fully benefit
responsive and are included in the financial statements at contract value
(which represents contributions made under the contract, plus earnings, less
withdrawals and administrative expenses). There are no reserves against
contract values for credit risk of the contract issuer or otherwise. The
contract value of investment contracts at December 31, 1998, which are held
in the Conservative Investment Strategy, Moderate Growth Investment Strategy,
Long-Term Growth Investment Strategy, and FPL Managed Income Portfolio was
$10,508,000, $13,780,000, $4,900,000 and $170,873,000, respectively. As of
the same date, the fair value of investment contracts in these funds was
$10,335,000, $13,553,000, $4,819,000 and $168,065,000, respectively. At
December 31, 1997, the contract value of investment contracts for these funds
was $9,338,000, $12,360,000, $4,485,000 and $153,881,000, respectively, with
fair values of $9,421,000, $12,470,000, $4,525,000 and $155,252,000,
respectively. The average yield for the portfolio of investment contracts
was 6.58% and 6.67% for 1998 and 1997, respectively. The crediting interest
rate at December 31, 1998 and 1997 was 5.61% and 6.43%, respectively. The
crediting interest rate is based on an agreed-upon formula with the issuer,
but cannot be less than zero.
2. Employee Stock Ownership Plan Account Allocation
The assets, liabilities and net income of the ESOP Account are not considered
plan assets but are for the joint benefit of the Plan and the FPL Bargaining
Plan. The ESOP Account is allocated for financial reporting purposes based
on each plan's relative net assets. The Plan's allocation of Common Stock
held in the ESOP Account (employer securities), Acquisition Indebtedness and
interest payable have been reflected in the Statements of Net Assets
Available for Benefits, but are not available for, or the obligation of, Plan
Members. The employer securities will be released from the ESOP Account and
distributed to Members' accounts in satisfaction of part or all of the
Company's matching contribution obligation under the Plan as the Acquisition
Indebtedness is repaid (see Note 3). ESOP shares allocated to date are
classified as employer securities held by the Plan on the Statements of Net
Assets Available for Benefits. The Acquisition Indebtedness will be repaid
from dividends on the shares acquired by the ESOP Account, as well as from
cash contributions from FPL Group. The net effect of a change in the
allocation percentage from year to year is reported as a transfer to or from
the Plan. The value of the shares distributed to Member accounts is not
affected by these allocations.
Condensed financial statements of the ESOP Account are presented below,
indicating the allocations made to each plan. The effect of current year
Leveraged ESOP activity on net assets is included in transfers to (from) the
plan in the financial statements of each plan. Distributions of shares to
the plans are presented as noncash contributions in the financial statements
of each plan.
<TABLE>
<CAPTION>
The FPL
Total ESOP Bargaining
Account The Plan Plan
------------ ------------ ------------
<S> <C> <C> <C>
Allocation percentage ............................................. 100% 71% 29%
Accrued interest .................................................. $ 1,561 $ 1,110 $ 451
Employer securities ............................................... 526,385,960 374,447,811 151,938,149
Total assets .................................................... 526,387,521 374,448,921 151,938,600
Interest payable .................................................. 1,087,957 773,925 314,032
Acquisition indebtedness .......................................... 336,828,613 239,605,055 97,223,558
Total liabilities ............................................... 337,916,570 240,378,980 97,537,590
Net assets at December 31, 1998 ................................... $188,470,951 $134,069,941 $ 54,401,010
Contributions received from employer .............................. $ 14,449,150
Interest income ................................................... 5,856
Dividends ......................................................... 17,463,713
Net appreciation in fair value of investments ..................... 22,169,901
Total income .................................................... 54,088,620
Interest expense .................................................. 32,951,116
Net income ........................................................ 21,137,504 $ 15,036,291 $ 6,101,213
Distribution of shares to plans ................................... (18,942,956) (13,443,803) (5,499,153)
Transfers to (from) the plan ...................................... - 5,438,431 (5,438,431)
Effect of current year Leveraged ESOP activity on net assets ...... 2,194,548 7,030,919 (4,836,371)
Net assets at December 31, 1997 ................................... 186,276,403 127,039,022 59,237,381
Net assets at December 31, 1998 ................................... $188,470,951 $134,069,941 $ 54,401,010
</TABLE>
3. Acquisition Indebtedness
In December 1990, the Trust, which holds plan assets for both the Plan and
the FPL Bargaining Plan, borrowed $360 million from FPL Group Capital to
purchase approximately 12.4 million shares of Common Stock. The Acquisition
Indebtedness matures in 2019, bears interest at a fixed rate of 9.69% per
year and is to be repaid using dividends received on both Common Stock held
by the ESOP Account and ESOP shares distributed to Member accounts, along
with cash contributions from FPL Group. For those dividends on shares
allocated to Member accounts used to repay the loan, additional shares, equal
in value to those dividends, will be allocated to Member accounts. In 1998,
dividends received from shares held by the ESOP and shares distributed to
Member accounts totaled approximately $17,464,000 and $4,946,000,
respectively. Cash contributed in 1998 by FPL Group for the debt service
shortfall totaled approximately $14,449,000.
The unallocated shares of Common Stock acquired with the proceeds of the
Acquisition Indebtedness are collateral for the Acquisition Indebtedness. As
principal payments are made, a percentage of Common Stock is released as
collateral and becomes available to satisfy matching contributions, as well
as to repay dividends on ESOP shares distributed to Member accounts for debt
service. During 1998, 380,824 shares of Common Stock were released as
collateral for the Acquisition Indebtedness. The scheduled principal
repayments of the Acquisition Indebtedness for the next five years and
thereafter are as follows: 1999 - $1,825,100; 2000 - $1,872,600; 2001 -
$3,883,000; 2002 - $4,451,600; 2003 - $5,023,600 and thereafter -
$319,773,000.
See Note 2 for information on the Plan's allocation percentage of the
Acquisition Indebtedness.
4. Parties-In-Interest Transactions
Company contributions are primarily made in Common Stock released from the
ESOP Account or in cash which is used by the Trustee to purchase Common
Stock. Such amounts are reported as noncash contributions (from employer)
and contributions received from employer, respectively. For 1998, all
Company contributions were made in Common Stock released from the ESOP
Account.
Dividend income earned by the Plan results from dividends on Common Stock.
Dividends on shares held in the ESOP Account were used to repay the
Acquisition Indebtedness (see Note 3). Certain dividends on shares held in
Members' accounts are reinvested in Common Stock for the benefit of its
Members pursuant to FPL Group's Dividend Reinvestment and Common Share
Purchase Plan in which the Trustee participates.
5. Statement of Net Assets Available for Benefits Information by
Investment Fund Option
Information about the Statements of Net Assets Available for Benefits by
investment fund option is as follows:
<TABLE><CAPTION>
December 31,
1998 1997
------------- ------------
<S> <C> <C>
Interest-bearing cash:
Fidelity Retirement Government Money Market Portfolio .............................. $ 7,020,174 $ 6,972,866
Value of interest in master trusts:
Conservative Investment Strategy ................................................... $ 18,778,336 $ 16,831,751
Moderate Growth Investment Strategy ................................................ 58,690,323 52,102,264
Long-term Growth Investment Strategy ............................................... 66,918,128 54,479,923
Short-term liquid investments maintained in FPL Group Company Stock Fund ........... 3,287,761 2,991,224
FPL Managed Income Portfolio ....................................................... 170,873,262 153,880,723
$318,547,810 $280,285,885
Value of interest in registered investment companies:
Fidelity U.S. Bond Index Fund ...................................................... $ 18,208,199 $ 14,843,916
Spartan U.S. Equity Index Fund ..................................................... 148,351,892 119,946,605
T. Rowe Price Equity Income Fund ................................................... 14,138,354 15,749,652
Fidelity Magellan Fund ............................................................. 116,864,219 84,982,862
Fidelity OTC Portfolio ............................................................. 72,529,468 52,081,236
Brandywine Fund, Inc. ............................................................. 13,477,967 21,997,246
Fidelity Overseas Fund ............................................................. 27,444,720 26,868,842
Templeton Foreign Fund I ........................................................... 3,929,525 4,929,602
$414,944,344 $341,399,961
FPL Group Company Stock Fund ......................................................... $366,300,945 $342,682,045
Loan fund ............................................................................ $ 23,748,932 $ 23,773,117
</TABLE>
6. Statement of Changes in Net Assets Available for Benefits Information
by Investment Fund Option
Information about the Statement of Changes in Net Assets Available for
Benefits by investment fund option is as follows:
<TABLE><CAPTION>
Fidelity
Retirement Moderate Long-term
Government Conservative Growth Growth
Money Mkt. Investment Investment Investment
Portfolio Strategy Strategy Strategy
---------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
INCOME
Contributions .......................................... $ 359,429 $ 291,677 $ 2,029,878 $ 3,605,065
Interest ............................................... 345,705 - - -
Net appreciation in fair value of investments in
master trusts ........................................ - 1,997,930 10,428,359 12,864,808
Total income ....................................... 705,134 2,289,607 12,458,237 16,469,873
EXPENSES
Benefit payments to participants or beneficiaries ...... 2,602,301 966,798 2,791,901 2,550,456
Administrative expenses ................................ 954 861 3,139 3,940
Total expenses ..................................... 2,603,255 967,659 2,795,040 2,554,396
NET INCOME (LOSS) ...................................... (1,898,121) 1,321,948 9,663,197 13,915,477
TRANSFERS
Net transfers to (from) the Plan ....................... 4,203 22,191 211,470 120,478
Net exchanges between investment funds ................. 1,958,441 611,807 (3,258,123) (1,826,151)
Net participant loan activity .......................... (17,215) (9,361) (28,485) 228,401
Total transfers .................................... 1,945,429 624,637 (3,075,138) (1,477,272)
NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1997 . 6,972,866 16,831,751 52,102,264 54,479,923
NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1998 . $7,020,174 $18,778,336 $58,690,323 $66,918,128
</TABLE>
<TABLE><CAPTION>
FPL Managed Fidelity Spartan T. Rowe Price
Income U.S. Bond U.S. Equity Equity Income
Portfolio Index Fund Index Fund Fund
------------ ----------- ------------ ---------------
<S> <C> <C> <C> <C>
INCOME
Contributions .......................................... $ 3,598,988 $ 740,129 $ 5,217,426 $ 923,107
Net appreciation in fair value of investments
in master trusts ..................................... 10,054,339 - - -
Net appreciation in fair value of investments
in registered investment companies ................... - 1,378,730 33,514,317 1,302,501
Total income ....................................... 13,653,327 2,118,859 38,731,743 2,225,608
EXPENSES
Benefit payments to participants or beneficiaries ...... 14,896,109 969,634 7,507,583 1,234,152
Administrative expenses ................................ 7,506 13,983 35,711 -
Total expenses ..................................... 14,903,615 983,617 7,543,294 1,234,152
NET INCOME (LOSS) ...................................... (1,250,288) 1,135,242 31,188,449 991,456
TRANSFERS
Net transfers to (from) the Plan ....................... 1,819,193 13,117 579,653 7,217
Net exchanges between investment funds ................. 16,398,599 2,124,479 (3,471,566) (2,636,341)
Net participant loan activity .......................... 25,035 91,445 108,751 26,370
Total transfers .................................... 18,242,827 2,229,041 (2,783,162) (2,602,754)
NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1997 . 153,880,723 14,843,916 119,946,605 15,749,652
NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1998 . $170,873,262 $18,208,199 $148,351,892 $14,138,354
</TABLE>
<TABLE><CAPTION>
Fidelity Fidelity Fidelity
Magellan OTC Brandywine Overseas
Fund Portfolio Fund, Inc. Fund
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
INCOME
Contributions .......................................... $ 4,991,337 $ 3,445,314 $ 1,200,562 $ 1,806,318
Net appreciation (depreciation) in fair value of
investments in registered investment companies ...... 29,058,617 20,499,847 (338,235) 3,330,021
Total income ....................................... 34,049,954 23,945,161 862,327 5,136,339
EXPENSES
Benefit payments to participants or beneficiaries ...... 5,061,078 2,777,889 553,505 1,365,537
Administrative expenses ................................ 14,079 1,413 - 663
Total expenses ..................................... 5,075,157 2,779,302 553,505 1,366,200
NET INCOME ............................................. 28,974,797 21,165,859 308,822 3,770,139
TRANSFERS
Net transfers to (from) the Plan ....................... 434,087 141,344 41,584 251,742
Net exchanges between investment funds ................. 2,139,574 (1,100,885) (9,009,584) (3,551,066)
Net participant loan activity .......................... 332,899 241,914 139,899 105,063
Total transfers .................................... 2,906,560 (717,627) (8,828,101) (3,194,261)
NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1997 . 84,982,862 52,081,236 21,997,246 26,868,842
NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1998 . $116,864,219 $72,529,468 $13,477,967 $27,444,720
</TABLE>
<TABLE>
<CAPTION>
FPL Group
Templeton Company Loan
Foreign Fund I Stock Fund Fund
-------------- ------------ -----------
<S> <C> <C> <C>
INCOME
Contributions .......................................... $ 417,606 $ 16,053,429 -
Interest and dividends ................................. - 9,687,406 $ 1,994,973
Net appreciation in fair value of investments
in employer securities ............................... - 15,332,318 -
Net depreciation in fair value of investments
in registered investment companies ................... (166,031) - -
Total income ....................................... 251,575 41,073,153 1,994,973
EXPENSES
Benefit payments to participants or beneficiaries ...... 187,354 20,373,360 1,271,327
Administrative expenses ................................ - 7,497 -
Total expenses ..................................... 187,354 20,380,857 1,271,327
NET INCOME ............................................. 64,221 20,692,296 723,646
TRANSFERS
Net transfers to (from) the Plan ....................... 14,229 729,193 -
Net exchanges between investment funds ................. (1,105,954) 2,726,770 -
Net participant loan activity .......................... 27,427 (232,822) (747,831)
Total transfers .................................... (1,064,298) 3,223,141 (747,831)
NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1997 . 4,929,602 345,673,269 23,773,117
NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1998 . $3,929,525 $369,588,706 $23,748,932
</TABLE>
7. Income Taxes
In February 1996, FPL received from the Internal Revenue Service (IRS) a
favorable determination that the Plan, as amended and restated through
January 1, 1995, met the requirements of Section 401 of the Code. The Trust
established under the Plan will generally be exempt from federal income taxes
under Section 501(a) of the Code; Company contributions paid to the Trust
under the Plan will be allowable federal income tax deductions of the Company
subject to the conditions and limitations of Section 404 of the Code; and the
Plan will meet the requirements of Section 401(k) of the Code allowing Tax
Saver Contributions to be exempt from federal income tax at the time such
contributions are made, provided that in operation the Plan and Trust meet
the applicable provisions of the Code. In addition, FPL Group will be able
to claim an income tax deduction for dividends used to repay the Acquisition
Indebtedness and for dividends distributed directly to members.
Company contributions to the Plan on a Member's behalf, Member's Tax Saver
Contributions, and the earnings thereon generally are not taxable to the
Member until such Company contributions, Tax Saver Contributions, and
earnings from investments are distributed or withdrawn. A loan from a
Member's account generally will not represent a taxable distribution if the
loan is repaid in a timely manner and does not exceed certain limitations.
8. Expenses
Certain fees such as annual account maintenance and investment management
fees are paid by Plan participants. Trustee's fees and expenses are paid by
FPL Group (which may charge each company under the Plan its allocated share)
and, therefore, are not reflected in the financial statements.
9. Master Trusts
A summary of participating interest in and financial statements for the
Master Trusts follow.
<TABLE>
<CAPTION>
Percent of
Interest in Master Trust
December 31,
1998 1997
------ ------
<S> <C> <C>
FPL MANAGED INCOME PORTFOLIO
FPL Group Employee Thrift Plan
EIN 59-0247775
PN 002 ............................................................................... 79.5% 73.5%
Employee Thrift and Retirement Savings Plan for Bargaining Unit Employees of
Florida Power & Light Company
EIN 59-0247775
PN 003 ............................................................................... 20.5% 26.5%
CONSERVATIVE INVESTMENT STRATEGY
FPL Group Employee Thrift Plan
EIN 59-0247775
PN 002 ............................................................................... 83.3% 78.8%
Employee Thrift and Retirement Savings Plan for Bargaining Unit Employees of
Florida Power & Light Company
EIN 59-0247775
PN 003 ............................................................................... 16.7% 21.2%
MODERATE GROWTH INVESTMENT STRATEGY
FPL Group Employee Thrift Plan
EIN 59-0247775
PN 002 ............................................................................... 73.3% 69.9%
Employee Thrift and Retirement Savings Plan for Bargaining Unit Employees of
Florida Power & Light Company
EIN 59-0247775
PN 003 ............................................................................... 26.7% 30.1%
LONG-TERM GROWTH INVESTMENT STRATEGY
FPL Group Employee Thrift Plan
EIN 59-0247775
PN 002 ............................................................................... 74.1% 72.2%
Employee Thrift and Retirement Savings Plan for Bargaining Unit Employees of
Florida Power & Light Company
EIN 59-0247775
PN 003 ............................................................................... 25.9% 27.8%
</TABLE>
FPL MANAGED INCOME PORTFOLIO
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
December 31,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
General investments:
Value of unallocated insurance and financial institution contracts ............... $215,032,918 $209,333,382
Total assets ....................................................................... 215,032,918 209,333,382
LIABILITIES ........................................................................ - -
NET ASSETS AVAILABLE FOR BENEFITS .................................................. $215,032,918 $209,333,382
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
Year Ended
December 31,
1998
------------
<S> <C>
INCOME
Contributions received from participants .......................................................... $ 5,084,319
Earnings on investments:
Interest ........................................................................................ 12,692,170
Total income ...................................................................................... 17,776,489
EXPENSES
Benefit payments to participants or beneficiaries ................................................. 36,079,386
Account maintenance fees .......................................................................... 7,506
Total expenses .................................................................................... 36,086,892
NET INCOME (LOSS).................................................................................. (18,310,403)
TRANSFERS
Transfers into fund ............................................................................... 258,681,796
Transfers out of fund ............................................................................. (234,671,857)
Net transfers ..................................................................................... 24,009,939
NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1997 ............................................ 209,333,382
NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1998 ............................................ $215,032,918
</TABLE>
CONSERVATIVE INVESTMENT STRATEGY
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
December 31,
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
Receivables:
Income ........................................................................... $ 87,211 $ 94,080
Other ........................................................................... - 25,847
Total receivables ............................................................ 87,211 119,927
General investments:
Value of unallocated insurance and financial institution contracts ............... 12,608,477 11,853,200
Mutual funds ..................................................................... 9,839,133 9,388,949
Total general investments .................................................... 22,447,610 21,242,149
Total assets ....................................................................... 22,534,821 21,362,076
LIABILITIES ........................................................................ 161 176
NET ASSETS AVAILABLE FOR BENEFITS .................................................. $22,534,660 $21,361,900
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
Year Ended
December 31,
1998
------------
<S> <C>
INCOME
Contributions received from participants .......................................................... $ 365,513
Earnings on investments:
Interest ........................................................................................ 757,539
Dividends ....................................................................................... 466,062
Net appreciation in fair value of investments ................................................... 1,165,450
Total income ...................................................................................... 2,754,564
EXPENSES
Benefit payments to participants or beneficiaries ................................................. 2,510,489
Account maintenance fees .......................................................................... 1,518
Total expenses .................................................................................... 2,512,007
NET INCOME ........................................................................................ 242,557
TRANSFERS
Transfers into fund ............................................................................... 7,449,081
Transfers out of fund ............................................................................. (6,518,878)
Net transfers ..................................................................................... 930,203
NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1997 ............................................ 21,361,900
NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1998 ............................................ $22,534,660
</TABLE>
MODERATE GROWTH INVESTMENT STRATEGY
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
December 31,
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
Receivables:
Income ........................................................................... $ 187,945 $ 205,402
Other ............................................................................ - 686
Total receivables .............................................................. 187,945 206,088
General investments:
Value of unallocated insurance and financial institution contracts ............... 18,811,810 17,684,993
Mutual funds ..................................................................... 61,272,710 56,678,220
Total general investments .................................................... 80,084,520 74,363,213
Total assets ....................................................................... 80,272,465 74,569,301
LIABILITIES ........................................................................ 150,829 9,549
NET ASSETS AVAILABLE FOR BENEFITS .................................................. $80,121,636 $74,559,752
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
Year Ended
December 31,
1998
------------
<S> <C>
INCOME
Contributions received from participants .......................................................... $ 2,672,061
Earnings on investments:
Interest ........................................................................................ 1,138,493
Dividends ....................................................................................... 2,811,446
Net appreciation in fair value of investments ................................................... 10,090,030
Total income ...................................................................................... 16,712,030
EXPENSES
Benefit payments to participants or beneficiaries ................................................. 6,884,091
Account maintenance fees .......................................................................... 4,766
Total expenses .................................................................................... 6,888,857
NET INCOME ........................................................................................ 9,823,173
TRANSFERS
Transfers into fund ............................................................................... 13,432,457
Transfers out of fund ............................................................................. (17,693,746)
Net transfers ..................................................................................... (4,261,289)
NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1997 ............................................ 74,559,752
NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1998 ............................................ $ 80,121,636
</TABLE>
LONG-TERM GROWTH INVESTMENT STRATEGY
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
December 31,
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
Receivables:
Income ........................................................................... $ 100,298 $ 93,471
Other ............................................................................ - 21,324
Total receivables .............................................................. 100,298 114,795
General investments:
Value of unallocated insurance and financial institution contracts ............... 6,610,050 6,214,020
Mutual funds ..................................................................... 83,547,773 69,328,846
Total general investments .................................................... 90,157,823 75,542,866
Total assets ....................................................................... 90,258,121 75,657,661
LIABILITIES ........................................................................ 578 192,276
NET ASSETS AVAILABLE FOR BENEFITS .................................................. $90,257,543 $75,465,385
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
Year Ended
December 31,
1998
------------
<S> <C>
INCOME
Contributions received from participants .......................................................... $ 4,755,798
Earnings on investments:
Interest ........................................................................................ 408,612
Dividends ....................................................................................... 3,091,085
Net appreciation in fair value of investments ................................................... 13,844,596
Total income ...................................................................................... 22,100,091
EXPENSES
Benefit payments to participants or beneficiaries ................................................. 5,009,291
Account maintenance fees .......................................................................... 5,506
Total expenses .................................................................................... 5,014,797
NET INCOME ........................................................................................ 17,085,294
TRANSFERS
Transfers into fund ............................................................................... 16,283,866
Transfers out of fund ............................................................................. (18,577,002)
Net transfers ..................................................................................... (2,293,136)
NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1997 ............................................ 75,465,385
NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1998 ............................................ $ 90,257,543
</TABLE>
ATTACHMENT: SCHEDULE 1
FORM 5500: Line 27(a)
FLORIDA POWER & LIGHT COMPANY
EIN 59-0247775
FPL GROUP EMPLOYEE THRIFT PLAN
PLAN #002
PLAN YEAR: 1998
ASSETS HELD FOR INVESTMENT AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
Historic Current
Units/Shares Fund Name Price Cost Value
- --------------- ----------------------------------------------------- -------- ------------ --------------
<S> <C> <C> <C> <C>
7,020,173.750 Fidelity Retirement Government Money Market Portfolio $ 1.00 $ 7,020,174 $ 7,020,174
1,175,114.913 Conservative Investment Strategy $ 15.98 13,401,757 18,778,336
3,045,683.578 Moderate Growth Investment Strategy $ 19.27 34,767,445 58,690,323
3,141,696.151 Long-Term Growth Investment Strategy $ 21.30 40,146,147 66,918,128
170,873,262.380 FPL Managed Income Portfolio $ 1.00 170,873,262 170,873,262
1,652,286.681 Fidelity U.S. Bond Index Fund $ 11.02 17,673,069 18,208,199
3,374,701.830 Spartan U.S. Equity Index Fund $ 43.96 86,769,491 148,351,892
537,375.674 T. Rowe Price Equity Income Fund $ 26.31 14,176,781 14,138,354
967,258.886 Fidelity Magellan Fund $120.82 83,203,026 116,864,219
1,662,376.070 Fidelity OTC Portfolio $ 43.63 52,577,142 72,529,468
445,111.179 Brandywine Fund, Inc. $ 30.28 15,672,320 13,477,967
762,777.108 Fidelity Overseas Fund $ 35.98 23,635,873 27,444,720
468,358.148 Templeton Foreign Fund I $ 8.39 4,956,793 3,929,525
15,557,608.421 FPL Company Stock Fund $ 16.55 144,271,551 257,478,419
6,737,397.041 FPL Company Stock Fund - LESOP $ 16.64 75,271,543 112,110,287
6,076,232.000 Leveraged ESOP Employer Securities $ 61.63 176,210,728 374,447,811
Outstanding Loan Balances (7.5% to 11.50%; 23,748,932 23,748,932
maturing 1999-2003)
Total Assets Held for Investment $984,376,034 $1,505,010,016
</TABLE>
ATTACHMENT: SCHEDULE 2
FORM 5500: Line 27(d)
FLORIDA POWER & LIGHT COMPANY
EIN 59-0247775
FPL GROUP EMPLOYEE THRIFT PLAN
PLAN #002
PLAN YEAR: 1998
TRANSACTIONS IN EXCESS OF FIVE PERCENT OF THE
CURRENT VALUE OF PLAN ASSETS FOR THE
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Transaction by Total Total Number of Number Realized
Fund or Carrier Purchases Sales Purchases of Sales Gain (Loss)
- -------------------------------- ------------ ------------- --------- -------- -----------
<S> <C> <C> <C> <C> <C>
FPL Managed Income Portfolio $232,825,664 $215,833,125 256 252 -
FPL Group Company Stock Fund $ 87,013,490 $ 86,928,120 252 252 $13,161,927
Fidelity Magellan Fund $ 45,465,322 $ 37,240,585 252 252 $ 3,122,061
Fidelity OTC Portfolio $ 60,692,370 $ 57,019,845 252 253 $ 1,744,874
Fidelity Overseas Fund $ 51,189,807 $ 53,395,569 252 252 $ 870,204
Spartan U.S. Equity Index Fund $ 77,251,355 $ 79,391,494 252 252 $ 8,946,939
</TABLE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the Employee Benefits Plan Administrative Committee has duly caused
this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
DATE: June 25, 1999 FPL Group Employee Thrift Plan
------------------------------
(Name of Plan)
By: JAMES K. PETERSON
-----------------
James K. Peterson
Director, Human Resources Centers of Expertise
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Post-Effective Amendment No.
2 to Registration Statement No. 33-31487 on Form S-8 and Registration
Statement No. 333-30697 on Form S-8 of our report dated June 25 , 1999 on the
financial statements of the FPL Group Employee Thrift Plan for the year ended
December 31, 1998 appearing in this Annual Report on Form 11-K of FPL Group,
Inc. for the year ended December 31, 1998.
DELOITTE & TOUCHE LLP
Miami, Florida
June 25, 1999
