SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of earliest event reported: May 11, 1994
FPL GROUP CAPITAL INC
(Exact name of registrant as specified in its charter)
FLORIDA 0-15607 59-2576416
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
700 Universe Boulevard
Juno Beach, Florida 33408
(Address of principal executive offices)
(Zip Code)
(407) 694-3509
(Registrant's telephone number, including area code)<PAGE>
<PAGE>
ITEM 5. Other Events
Attached hereto are:
(1) Financial Statements of FPL Group, Inc. and its subsidiaries as
they appeared in FPL Group, Inc.'s Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1994.
(a) Condensed Consolidated Statements of Income (unaudited) for
the three months ended March 31, 1994 and 1993.
(b) Condensed Consolidated Balance Sheets at March 31, 1994
(unaudited) and December 31, 1993.
(c) Condensed Consolidated Statements of Cash Flows (unaudited)
for the three months ended March 31, 1994 and 1993.
(d) Notes to Condensed Consolidated Financial Statements
(unaudited).<PAGE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
FPL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1994 1993
(In thousands, except per
share amounts)
<S> <C> <C>
OPERATING REVENUES:
Utility .................................................................... $1,155,789 $1,103,536
Non-utility ................................................................ 23,111 28,840
Total operating revenues ................................................. 1,178,900 1,132,376
OPERATING EXPENSES:
Utility operations:
Fuel, purchased power and interchange .................................... 364,814 375,541
Other operations and maintenance.......................................... 269,752 262,386
Non-utility operations ..................................................... 20,231 24,454
Depreciation and amortization .............................................. 166,995 142,732
Taxes other than income taxes .............................................. 121,863 121,338
Total operating expenses ................................................. 943,655 926,451
OPERATING INCOME ............................................................. 235,245 205,925
OTHER INCOME (DEDUCTIONS):
Interest expense ........................................................... (81,963) (94,259)
Allowance for funds used during construction ............................... 10,850 21,335
Preferred stock dividend requirements of Florida Power & Light Company...... (9,930) (11,277)
Other - net ................................................................ (2,771) 12,118
Total other deductions - net ............................................. (83,814) (72,083)
INCOME BEFORE INCOME TAXES ................................................... 151,431 133,842
INCOME TAXES ................................................................. 56,992 41,892
NET INCOME ................................................................... $ 94,439 $ 91,950
Average number of common shares outstanding .................................. 179,327 183,779
Earnings per share of common stock ........................................... $ 0.53 $ 0.50
Dividends per share of common stock ............................... .......... $ 0.62 $ 0.61
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on Pages 5 through 7 herein and the
Notes to Consolidated Financial Statements appearing in FPL Group, Inc.'s
(FPL Group) 1993 Annual Report on Form 10-K (Form 10-K).<PAGE>
<PAGE>
FPL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
1994 December 31,
(Unaudited) 1993
(Thousands of Dollars)
<S> <C> <C>
ASSETS
PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant - at original cost,
including nuclear fuel under capital lease ........................... $15,231,509 $ 14,838,160
Construction work in progress .......................................... 480,701 781,435
Other .................................................................. 240,840 261,125
Less accumulated depreciation and amortization ......................... 5,760,442 5,591,265
Total property, plant and equipment - net ............................ 10,192,608 10,289,455
INVESTMENTS .............................................................. 1,057,016 984,992
CURRENT ASSETS:
Cash and cash equivalents .............................................. 88,930 152,014
Marketable securities - at market value (cost
of $84,532 and $169,607, respectively) ............................... 82,947 171,988
Receivables - net ...................................................... 511,440 504,597
Materials, supplies and fossil fuel stock - at average cost ............ 311,168 329,599
Other .................................................................. 87,027 93,159
Total current assets ................................................. 1,081,512 1,251,357
OTHER ASSETS AND DEFERRED DEBITS:
Unamortized debt reacquisition costs of FPL ............................ 299,066 302,561
Deferred litigation items of FPL ....................................... 110,859 110,859
Other .................................................................. 130,910 138,788
Total other assets and deferred debits ............................... 540,835 552,208
TOTAL ASSETS ............................................................... $12,871,971 $ 13,078,012
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock ........................................................... $ 1,905 $ 1,901
Other shareholders' equity ............................................. 4,106,041 4,098,706
Preferred stock of Florida Power & Light Company:
Without sinking fund requirements .................................... 451,250 451,250
With sinking fund requirements ....................................... 95,500 97,000
Long-term debt ......................................................... 3,869,766 3,748,983
Total capitalization ................................................. 8,524,462 8,397,840
CURRENT LIABILITIES:
Commercial paper ....................................................... 140,082 349,600
Current maturities of long-term debt and preferred stock ............... 217,157 279,680
Accounts payable ....................................................... 250,172 323,282
Customers' deposits .................................................... 220,897 216,140
Accrued interest and taxes ............................................. 228,102 204,086
Other .................................................................. 402,101 465,829
Total current liabilities ............................................ 1,458,511 1,838,617
OTHER LIABILITIES AND DEFERRED CREDITS
Accumulated deferred income taxes ...................................... 1,569,474 1,512,067
Deferred regulatory credit - income taxes............................... 209,124 216,546
Unamortized investment tax credits ..................................... 318,565 323,791
Capital lease obligations .............................................. 248,365 271,498
Other .................................................................. 543,470 517,653
Total other liabilities and deferred credits ......................... 2,888,998 2,841,555
COMMITMENTS AND CONTINGENCIES
TOTAL CAPITALIZATION AND LIABILITIES ....................................... $12,871,971 $ 13,078,012
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on Pages 5 through 7 herein and the
Notes to Consolidated Financial Statements appearing in FPL Group's 1993
Form 10-K.<PAGE>
<PAGE>
FPL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1994 1993
(Thousands of Dollars)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................................ $ 94,439 $ 91,950
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ......................................... 166,995 142,732
Increase in deferred income taxes and related regulatory credit ....... 49,985 51,787
Deferrals under cost recovery clauses (1) ............................. 16,094 1,201
Other - net ........................................................... 13,684 (50,136)
Net cash provided by operating activities ............................... 341,197 237,534
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2) .................................................. (145,257) (257,542)
Other - net ............................................................... 30,362 10,237
Net cash used in investing activities ................................... (114,895) (247,305)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of bonds and other long-term debt ................................ 86,350 669,095
Issuance of preferred stock of Florida Power & Light Company .............. - 75,000
Issuance of common stock .................................................. 16,689 78,626
Decrease in commercial paper .............................................. (49,518) -
Retirement of long-term debt and preferred stock .......................... (198,880) (560,182)
Dividends on common stock ................................................. (111,125) (112,442)
Refinancing proceeds placed in trust ...................................... (46,479) -
Other - net ............................................................... 13,577 (9,136)
Net cash (used in) provided by financing activities ..................... (289,386) 140,961
Net (decrease) increase in cash and cash equivalents ........................ (63,084) 131,190
Cash and cash equivalents at beginning of period ............................ 152,014 78,156
Cash and cash equivalents at end of period .................................. $ 88,930 $ 209,346
Supplemental disclosures of cash flow information:
Cash paid for interest (net of amount capitalized) ........................ $ 90,803 $ 98,207
Cash paid for income taxes ................................................ $ 4,800 $ 1,777
Supplemental schedule of noncash investing and financing activities:
Additions to capital lease obligations .................................... $ 4,775 $ 10,532
(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) Capital expenditures exclude allowance for equity funds used during construction.
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on Pages 5 through 7 herein and the
Notes to Consolidated Financial Statements appearing in FPL Group's 1993
Form 10-K.<PAGE>
<PAGE>
FPL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The accompanying condensed consolidated financial statements should be
read in conjunction with FPL Group's 1993 Form 10-K and, in the opinion of
FPL Group, all adjustments (consisting only of normal recurring accruals)
necessary to present fairly the financial position as of March 31, 1994, the
results of operations for the three months ended March 31, 1994 and 1993
and the cash flows for the three months ended March 31, 1994 and 1993
have been made. Certain amounts included in the prior year's condensed
consolidated financial statements have been reclassified to conform to the
current year's presentation. The results of operations for an interim period
may not give a true indication of results for the year.
1. Employee Stock Ownership Plan (ESOP)
Substantially all employees of FPL Group and its subsidiaries are covered by
employee thrift plans with matching contribution provisions which are
satisfied for the most part through a leveraged ESOP. The ESOP was
established in 1990 when the Trust for the Thrift Plans (Trust) borrowed
$360 million from FPL Group Capital Inc (FPL Group Capital) to purchase
approximately 12 million shares of FPL Group common stock. Dividends paid
on the shares held by the Trust, along with employer contributions, are used
to repay the loan.
In 1994, FPL Group adopted AICPA Statement of Position (SOP) 93-6,
"Employers' Accounting for Employee Stock Ownership Plans." Under the
new accounting rules, shares held by the Trust but not yet allocated to
employee accounts are no longer considered outstanding for earnings per
share purposes. Accordingly, unallocated shares have been and will
continue to be excluded from average shares outstanding for 1994. At
March 31, 1994, approximately 11 million shares were unallocated. In
accordance with SOP 93-6 guidelines, prior period financial statements were
not restated. Additionally, compensation expense is now measured at the fair
market value of shares allocated to employee accounts during the period.
Interest expense is included in FPL Group's consolidated financial
statements, and interest income on the ESOP loan is eliminated in
consolidation. Dividends on shares held by the Trust are shown as a
reduction of debt or accrued interest payable, as applicable. The net effect
of adopting SOP 93-6 was to reduce net income for the quarter by
approximately $5 million and increase earnings per share by $0.01.
Unearned compensation included as a reduction of shareholders' equity at
March 31, 1994 was $311 million, representing 11 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 Consolidated Tape for New York Stock Exchange listed
companies as of March 31, 1994 was $356 million.
2. Capitalization
Preferred Stock - The 1994 sinking fund requirements for the 6.84%
Preferred Stock, Series Q, $100 Par Value were met by redeeming and
retiring, in April 1994, 30,000 shares. There are no sinking fund
requirements for the remainder of 1994.
Long-Term Debt - In January 1994, FPL Group Capital redeemed $150
million of its 8 7/8% Debentures using proceeds from an advance from FPL
Group and internally generated funds. In March 1994, Florida Power & Light
Company (FPL) sold a total of $86.35 million principal amount of Pollution
Control Revenue Refunding Bonds, maturing in September 2024, at variable
interest rates ranging from 2.10% to 2.75%. The proceeds were or will be
used to redeem and retire in March and May 1994 a total of approximately
$86.35 million principal amount of Pollution Control Revenue Bonds, maturing
in 2007 through 2019 at interest rates ranging from 5.90% to 11 3/8%.
At March 31, 1994, $160 million of commercial paper has been included in
long-term debt pursuant to financing agreements which allow FPL to
refinance these amounts for periods extending beyond March 31, 1995.
3. Commitments and Contingencies
Commitments - FPL has made commitments in connection with a portion of
its projected capital expenditures. Capital expenditures for the construction
or acquisition of additional facilities and equipment to meet customer demand
are estimated to be $3.7 billion, including allowance for funds used during
construction (AFUDC), for the years 1994 through 1998.<PAGE>
<PAGE>
FPL Group Capital has committed to invest approximately $9 million in, and
lend approximately $2 million to, partnerships and joint ventures entered into
through ESI Energy, Inc. (ESI), all of which are expected to be funded in
1994. Additionally, FPL Group Capital and its subsidiaries, primarily ESI,
have guaranteed up to approximately $89 million of lease obligations, debt
service payments and other payments subject to certain contingencies.
FPL Group, through a consolidated limited partnership, has entered into
forward commitments at March 31, 1994 to purchase $37 million of
mortgage-backed securities on various dates in April 1994 at specified prices.
Additionally, the partnership had entered into forward commitments to sell
short $150 million of U.S. Treasury Notes on various dates in April 1994 at
specified prices. At March 31, 1994, the amounts committed approximately
equal the market value of the related securities.
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 $58
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 $72 million under the programs in effect at March 31, 1994.
This contingent liability would be partially offset by a portion of FPL's
storm and property insurance reserve (storm fund), which totaled $86 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.
In 1993, FPL replaced its transmission and distribution (T&D) property
insurance coverage with a self-insurance program 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
of any losses in excess of the storm fund from ratepayers will require the
approval of the Florida Public Service Commission (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 take-or-pay contracts with the Jacksonville Electric
Authority (JEA) for 374 megawatts (mw) of power through 2023 and with the
subsidiaries of the Southern Company to purchase 1,406 mw of power
through May 1994, and declining amounts thereafter through mid-2010. FPL
also has various firm pay-for-performance contracts to purchase 1,031 mw
from certain cogenerators and small power producers (qualifying facilities)
with expiration dates ranging from 2002 through 2026. These contracts
provide for capacity and energy payments. Capacity payments for the
pay-for-performance contracts are subject to the qualifying facilities
meeting certain contract obligations. Energy payments are based on the
actual power taken under these contracts.
The required capacity payments through 1998 under these contracts are
estimated to be as follows:
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998
(Millions of Dollars)
<S> <C> <C> <C> <C> <C>
JEA .................................................... $ 80 $ 80 $ 80 $ 80 $ 80
Southern Companies ..................................... 200 150 140 140 140
Qualifying Facilities .................................. 140 160 310 340 350
/TABLE
<PAGE>
<PAGE>
FPL's capacity and energy charges under these contracts were as follows:
<TABLE>
<CAPTION>
Three Months Ended March 31,
1994 Charges 1993 Charges
Capacity Energy(1) Capacity Energy(1)
(Millions of Dollars)
<S> <C> <C> <C> <C>
JEA .................................................... $21(2) $10 $21(2) $13
Southern Companies ..................................... 57(3) 33 78(3) 56
Qualifying Facilities .................................. 29(3) 15 14(3) 9
(1) Recovered through the fuel and purchased power cost recovery clause.
(2) Recovered through base rates and the capacity cost recovery clause (capacity clause).
(3) Recovered through the capacity clause.
</TABLE>
FPL has take-or-pay contracts for the supply and transportation of natural
gas under which it is required to make payments estimated to be $270 million
for 1994, $370 million for 1995 and $390 million for each of the years 1996,
1997 and 1998. Total payments made under these contracts for the three
months ended March 31, 1994 and 1993 were $46 million and $51 million,
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
in an unspecified amount based on alleged higher prices paid for electricity
and product sales lost. Cross motions for summary judgement 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 have 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 have 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 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.
A former cable installation contractor for Telesat Cablevision, Inc. (an
indirect subsidiary of FPL Group) has sued FPL Group, FPL Group Capital and
Telesat for breach of contract, fraud and violation of racketeering statutes.
The suit seeks compensatory damages in excess of $24 million, treble
damages under racketeering activity statutes, punitive damages and
attorneys' fees, as well as the revocation of Telesat's corporate charter and
cable television franchises.
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 this litigation are not
anticipated to have a material adverse effect on FPL Group's financial
statements.<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FPL GROUP CAPITAL INC
(Registrant)
Date: May 10, 1994 PAUL J. EVANSON
Paul J. Evanson
Vice President and Chief Financial Officer
