UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 <TABLE> <CAPTION> Commission Exact name of Registrants as specified in their charters, address IRS Employer Iden- File Number of principal executive offices and Registrants' telephone number tification Number <S> <C> <C> 1-8841 FPL GROUP, INC. 59-2449419 1-3545 FLORIDA POWER & LIGHT COMPANY 59-0247775 700 Universe Boulevard Juno Beach, Florida 33408 (407) 694-4647 </TABLE> State or other jurisdiction of incorporation or organization: Florida Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) have been subject to such filing requirements for the past 90 days. Yes X No ___ APPLICABLE ONLY TO CORPORATE ISSUERS: The number of shares outstanding of each class of FPL Group, Inc. common stock, as of the latest practicable date: Common Stock, $.01 Par Value, outstanding at April 30, 1996: 183,757,635 shares As of April 30, 1996 there were issued and outstanding 1,000 shares of Florida Power & Light Company's common stock, without par value, all of which were held, beneficially and of record, by FPL Group, Inc. ______________________________ This combined Form 10-Q represents separate filings by FPL Group, Inc. and Florida Power & Light Company. Information contained herein relating to an individual registrant is filed by that registrant on its own behalf. Florida Power & Light Company makes no representations as to the information relating to FPL Group, Inc.'s other operations.
PART I - FINANCIAL INFORMATION Item 1. Financial Statements FPL GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) <TABLE> <CAPTION> Three Months Ended March 31, 1996 1995 (In thousands, except per share amounts) <S> <C> <C> OPERATING REVENUES ................................................................... $1,357,707 $1,177,366 OPERATING EXPENSES: Fuel, purchased power and interchange .............................................. 449,660 344,872 Other operations and maintenance.................................................... 279,974 254,991 Depreciation and amortization ...................................................... 267,655 200,283 Taxes other than income taxes ...................................................... 137,044 128,423 Total operating expenses ......................................................... 1,134,333 928,569 OPERATING INCOME ..................................................................... 223,374 248,797 OTHER INCOME (DEDUCTIONS): Interest charges ................................................................... (69,246) (76,979) Dividend requirements on preferred stock of FPL .................................... (6,434) (12,153) Other - net ........................................................................ (1,363) 5,392 Total other deductions - net ..................................................... (77,043) (83,740) INCOME BEFORE INCOME TAXES ........................................................... 146,331 165,057 INCOME TAXES ......................................................................... 52,619 65,217 NET INCOME ........................................................................... $ 93,712 $ 99,840 Earnings per share of common stock ................................................... $ 0.54 $ 0.57 Dividends per share of common stock .................................................. $ 0.46 $ 0.44 Average number of common shares outstanding .......................................... 174,706 176,023 </TABLE> This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on Pages 8 through 10 herein and the Notes to Consolidated Financial Statements appearing in the combined 1995 Annual Report on Form 10-K (Form 10-K) for FPL Group, Inc. (FPL Group) and Florida Power & Light Company (FPL).
FPL GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS <TABLE> <CAPTION> March 31, 1996 December 31, (Unaudited) 1995 (Thousands of Dollars) <S> <C> <C> PROPERTY, PLANT AND EQUIPMENT: Electric utility plant and other property - at original cost, including nuclear fuel and construction work in progress ...................... $16,813,313 $16,725,231 Less accumulated depreciation and amortization .................................. 7,114,274 6,873,250 Total property, plant and equipment - net ..................................... 9,699,039 9,851,981 CURRENT ASSETS: Cash and cash equivalents ....................................................... 28,291 46,177 Customer receivables, net of allowances of $11,222 and $11,929, respectively .... 432,128 482,326 Materials, supplies and fossil fuel stock - at average cost ..................... 238,507 247,323 Other ........................................................................... 229,534 209,522 Total current assets .......................................................... 928,460 985,348 OTHER ASSETS: Special use funds of FPL ........................................................ 694,690 646,846 Other investments ............................................................... 426,696 447,006 Unamortized debt reacquisition costs of FPL ..................................... 290,011 294,844 Other ........................................................................... 227,530 233,201 Total other assets ............................................................ 1,638,927 1,621,897 TOTAL ASSETS ...................................................................... $12,266,426 $12,459,226 CAPITALIZATION: Common shareholders' equity ..................................................... $ 4,387,381 $ 4,392,509 Preferred stock of FPL without sinking fund requirements ........................ 289,580 289,580 Preferred stock of FPL with sinking fund requirements ........................... 46,000 50,000 Long-term debt .................................................................. 3,377,057 3,376,613 Total capitalization .......................................................... 8,100,018 8,108,702 CURRENT LIABILITIES: Accounts payable ................................................................ 274,305 305,126 Debt and preferred stock due within one year .................................... 155,723 390,402 Accrued interest, taxes and other ............................................... 839,288 808,615 Total current liabilities ..................................................... 1,269,316 1,504,143 OTHER LIABILITIES AND DEFERRED CREDITS: Accumulated deferred income taxes ............................................... 1,599,675 1,587,449 Unamortized regulatory and investment tax credits ............................... 417,439 426,317 Other ........................................................................... 879,978 832,615 Total other liabilities and deferred credits .................................. 2,897,092 2,846,381 COMMITMENTS AND CONTINGENCIES TOTAL CAPITALIZATION AND LIABILITIES .............................................. $12,266,426 $12,459,226 </TABLE> This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on Pages 8 through 10 herein and the Notes to Consolidated Financial Statements appearing in the 1995 Form 10-K for FPL Group and FPL.
FPL GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) <TABLE> <CAPTION> Three Months Ended March 31, 1996 1995 (Thousands of Dollars) <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES: Net income .......................................................................... $ 93,712 $ 99,840 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ..................................................... 267,655 200,283 Other - net ....................................................................... 125,313 116,432 Net cash provided by operating activities ........................................... 486,680 416,555 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (1) ............................................................ (115,508) (132,920) Other - net ......................................................................... (51,786) (15,215) Net cash used in investing activities ............................................. (167,294) (148,135) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of debt .................................................................... - 58,630 Retirement of long-term debt and preferred stock .................................... (102,973) (57,014) Repurchase of common stock .......................................................... (24,374) (28,878) Decrease in commercial paper ........................................................ (138,700) (29,737) Dividends on common stock ........................................................... (80,394) (77,523) Other - net ......................................................................... 9,169 (60,102) Net cash used in financing activities ............................................. (337,272) (194,624) Net increase (decrease) in cash and cash equivalents .................................. (17,886) 73,796 Cash and cash equivalents at beginning of period ...................................... 46,177 85,750 Cash and cash equivalents at end of period ............................................ $ 28,291 $ 159,546 Supplemental disclosures of cash flow information: Cash paid for interest .............................................................. $ 72,692 $ 84,119 Cash paid for income taxes .......................................................... $ 9,700 $ 26,400 Supplemental schedule of noncash investing and financing activities: Additions to capital lease obligations .............................................. $ 30,742 $ 12,114 (1) 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 8 through 10 herein and the Notes to Consolidated Financial Statements appearing in the 1995 Form 10-K for FPL Group and FPL.
FLORIDA POWER & LIGHT COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) <TABLE> <CAPTION> Three Months Ended March 31, 1996 1995 (Thousands of Dollars) <S> <C> <C> OPERATING REVENUES ................................................................. $1,340,742 $1,156,269 OPERATING EXPENSES: Fuel, purchased power and interchange ............................................ 449,660 344,872 Other operations and maintenance ................................................. 262,517 231,889 Depreciation and amortization .................................................... 266,241 197,774 Income taxes ..................................................................... 58,423 68,190 Taxes other than income taxes .................................................... 137,096 127,928 Total operating expenses ....................................................... 1,173,937 970,653 OPERATING INCOME ................................................................... 166,805 185,616 OTHER INCOME/(DEDUCTIONS): Interest charges - net ........................................................... (62,386) (70,094) Other - net ...................................................................... 2,734 3,920 Total other deductions - net ................................................... (59,652) (66,174) NET INCOME ......................................................................... 107,153 119,442 DIVIDEND REQUIREMENTS ON PREFERRED STOCK ........................................... 6,434 12,153 NET INCOME AVAILABLE TO FPL GROUP .................................................. $ 100,719 $ 107,289 </TABLE> This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on Pages 8 through 10 herein and the Notes to Consolidated Financial Statements appearing in the 1995 Form 10-K for FPL Group and FPL.
FLORIDA POWER & LIGHT COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS <TABLE> <CAPTION> March 31, 1996 December 31, (Unaudited) 1995 (Thousands of Dollars) <S> <C> <C> ELECTRIC UTILITY PLANT: At original cost, including nuclear fuel and construction work in progress ....... $16,620,192 $16,531,492 Less accumulated depreciation and amortization ................................... 7,072,069 6,832,201 Electric utility plant - net ................................................... 9,548,123 9,699,291 CURRENT ASSETS: Cash and cash equivalents ........................................................ 1,494 412 Customer receivables, net of allowances of $11,031 and $11,737, respectively ..... 428,831 479,838 Materials, supplies and fossil fuel stock - at average cost ...................... 222,929 230,553 Other ............................................................................ 206,608 180,414 Total current assets ........................................................... 859,862 891,217 OTHER ASSETS: Special use funds ................................................................ 694,690 646,846 Unamortized debt reacquisition costs ............................................. 290,011 294,844 Other ............................................................................ 213,832 219,061 Total other assets ............................................................. 1,198,533 1,160,751 TOTAL ASSETS ....................................................................... $11,606,518 $11,751,259 CAPITALIZATION: Common shareholder's equity ...................................................... $ 4,525,823 $ 4,473,708 Preferred stock without sinking fund requirements ................................ 289,580 289,580 Preferred stock with sinking fund requirements ................................... 46,000 50,000 Long-term debt ................................................................... 3,094,702 3,094,050 Total capitalization ........................................................... 7,956,105 7,907,338 CURRENT LIABILITIES: Accounts payable ................................................................. 271,194 299,987 Debt and preferred stock due within one year ..................................... 127,800 382,500 Accrued interest, taxes and other ................................................ 810,396 778,465 Total current liabilities ...................................................... 1,209,390 1,460,952 OTHER LIABILITIES AND DEFERRED CREDITS: Accumulated deferred income taxes ................................................ 1,227,190 1,204,315 Unamortized regulatory and investment tax credits ................................ 417,439 426,317 Other ............................................................................ 796,394 752,337 Total other liabilities and deferred credits ................................... 2,441,023 2,382,969 COMMITMENTS AND CONTINGENCIES TOTAL CAPITALIZATION AND LIABILITIES ............................................... $11,606,518 $11,751,259 </TABLE> This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on Pages 8 through 10 herein and the Notes to Consolidated Financial Statements appearing in the 1995 Form 10-K for FPL Group and FPL.
FLORIDA POWER & LIGHT COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) <TABLE> <CAPTION> Three Months Ended March 31, 1996 1995 (Thousands of Dollars) <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES: Net income ........................................................................... $ 107,153 $ 119,442 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ...................................................... 266,241 197,774 Other - net ........................................................................ 125,954 109,201 Net cash provided by operating activities ............................................ 499,348 426,417 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (1) ............................................................. (114,781) (127,069) Other - net .......................................................................... (74,077) (7,498) Net cash used in investing activities .............................................. (188,858) (134,567) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of debt ..................................................................... - 58,630 Retirement of long-term debt and preferred stock ..................................... (102,770) (56,225) Decrease in commercial paper ......................................................... (158,700) (25,000) Dividends ............................................................................ (104,952) (105,484) Capital contributions from FPL Group ................................................. 50,000 - Other - net .......................................................................... 7,014 (61,160) Net cash used in financing activities .............................................. (309,408) (189,239) Net increase in cash and cash equivalents .............................................. 1,082 102,611 Cash and cash equivalents at beginning of period ....................................... 412 535 Cash and cash equivalents at end of period ............................................. $ 1,494 $ 103,146 Supplemental disclosures of cash flow information: Cash paid for interest ............................................................... $ 67,542 $ 78,906 Cash paid for income taxes ........................................................... $ 12,766 $ 10,520 Supplemental schedule of noncash investing and financing activities: Additions to capital lease obligations ............................................... $ 30,742 $ 12,114 (1) 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 8 through 10 herein and the Notes to Consolidated Financial Statements appearing in the 1995 Form 10-K for FPL Group and FPL.
FPL GROUP, INC. AND FLORIDA POWER & LIGHT COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) The accompanying condensed consolidated financial statements should be read in conjunction with the combined 1995 Form 10-K for FPL Group and FPL. In the opinion of FPL Group and FPL, all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position as of March 31, 1996 and the results of operations and cash flows for the three months ended March 31, 1996 and 1995 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. Summary of Significant Accounting and Reporting Policies - Depreciation and Amortization In the second quarter of 1995, the Florida Public Service Commission (FPSC) approved, on an interim basis, accelerated amortization of FPL's nuclear units of $30 million per year plus additional amounts based on the level of sales. In March 1996, the FPSC granted final approval of the $30 million per year of special nuclear amortization. The FPSC also approved the additional expense amounts recorded in 1995 based on the level of sales achieved and extended the program through 1997. Any additional expense will be applied against nuclear, fossil and regulatory assets. 2. Capitalization FPL Group Common Stock - During the first quarter of 1996, FPL Group repurchased approximately one-half million shares of common stock under its share repurchase program which began in May 1994. To date, a total of approximately 6.4 million shares have been repurchased. Preferred Stock - In January 1996, FPL redeemed all 600,000 outstanding shares of its 7.28% Preferred Stock, Series F, $100 Par Value and all 400,000 outstanding shares of its 7.40% Preferred Stock, Series G, $100 Par Value. The 1996 sinking fund requirements for the 6.84% Preferred Stock, Series Q, $100 Par Value and the 8.625% Preferred Stock, Series R, $100 Par Value were met by redeeming and retiring, in April 1996, 30,000 shares of Series Q and 50,000 shares of Series R. There are no sinking fund requirements for the remainder of 1996. Long-Term Debt - In April 1996, FPL purchased on the open market and retired $7 million principal amount of First Mortgage Bonds, 8.5% Series, due 2022. 3. Commitments and Contingencies Commitments - FPL has made commitments in connection with a portion of its projected capital expenditures. Capital expenditures for the construction or acquisition of additional facilities and equipment to meet customer demand are estimated to be approximately $1.5 billion for the years 1996 through 1998. Included in this three-year forecast are capital expenditures for 1996 of $511 million, of which $113 million had been spent through March 31, 1996. FPL Group Capital Inc (FPL Group Capital) and its subsidiaries, primarily ESI Energy, Inc. (ESI), have guaranteed up to approximately $90 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 $327 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 nuclear insurance mutual companies that provide $2.75 billion of limited insurance coverage for property damage, decontamination and premature decommissioning risks at its nuclear plants. The proceeds from such insurance, however, must first be used for reactor stabilization and site decontamination before they can be used for plant repair. FPL also participates in an insurance program that provides limited coverage for replacement power costs if a 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 $69 million in retrospective premiums. In the event of a subsequent accident at such nuclear plants during the policy period, the maximum additional assessment would be $30 million under the programs in effect at March 31, 1996. FPL also participates in a program that provides $200 million of tort liability coverage for nuclear worker claims. In the event of a tort claim by an FPL or another insured's nuclear worker, FPL could be assessed up to $12 million in retrospective premiums per incident. 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. FPL maintains a funded storm and property insurance reserve, which totaled approximately $202 million at March 31, 1996, for T&D property storm damage or assessments under the nuclear insurance program. Recovery from customers of any losses in excess of the storm and property insurance reserve will require the approval of the FPSC. FPL's available lines of credit include $300 million to provide additional liquidity in the event of a T&D property loss. Contracts - FPL has entered into 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 conditions. The fuel contracts provide for the transportation and supply of natural gas and coal and the supply and use of Orimulsion. Orimulsion is a new fuel which FPL expected to begin using in 1998, subject to regulatory approvals. In April 1996, Florida's Power Plant Siting Board denied FPL's request to burn Orimulsion at the Manatee power plant. FPL is currently evaluating its options. In no year are the obligations under any of the fuel contracts expected to exceed usage. The required annual capacity and minimum payments through 2000 under these contracts are estimated to be as follows: <TABLE> <CAPTION> 1996 1997 1998 1999 2000 (Millions of Dollars) <S> <C> <C> <C> <C> <C> Capacity payments: JEA and Southern Companies ............................................... $210 $210 $210 $220 $220 Qualifying facilities .................................................... $300 $310 $320 $340 $350 Minimum payments, at projected prices: Natural gas .............................................................. $270 $210 $210 $210 $210 Orimulsion (1) ........................................................... - - $120 $140 $140 Coal ..................................................................... $ 50 $ 50 $ 40 $ 40 $ 40 (1) All of FPL's Orimulsion-related contract obligations are subject to obtaining the required regulatory approvals. </TABLE> Capacity, energy and fuel charges under these contracts were as follows: <TABLE> <CAPTION> Three Months Ended March 31, 1996 Charges 1995 Charges Energy/ Energy/ Capacity Fuel (1) Capacity Fuel (1) (Millions of Dollars) <S> <C> <C> <C> <C> JEA and Southern Companies ............................................. $46(2) $33 $60(2) $32 Qualifying facilities................................................... $70(3) $27 $37(3) $20 Natural gas ............................................................ - $97 - $67 Coal ................................................................... - $12 - $11 (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> Litigation - In 1988, Union Carbide Corporation sued FPL and Florida Power Corporation (Florida Power) 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 sought treble damages of an unspecified amount based on alleged higher prices paid for electricity and for product sales lost. At the direction of the 11th Circuit Court of Appeals, a final judgment was entered in favor of FPL and Florida Power in January 1996. Praxair has petitioned to the U.S. Supreme Court to review the Court of Appeals' decision. The Florida Municipal Power Agency (FMPA), an organization comprised of municipal electric utilities, has sued FPL for allegedly breaching a "contract" to provide transmission service to the FMPA and its members and for breaching antitrust laws by monopolizing or attempting to monopolize the provision, coordination and transmission of electric power in refusing to provide transmission service, or to permit the FMPA to invest in and use FPL's transmission system, on the FMPA's proposed terms. The FMPA seeks $140 million in damages, before trebling for the antitrust claim, and court orders requiring FPL to permit the FMPA to invest in and use FPL's transmission system on "reasonable terms and conditions" and on a basis equal to FPL. In 1995, the Court of Appeals vacated the District Court's summary judgment in favor of FPL and remanded the matter to the District Court for further proceedings. A former cable installation contractor for Telesat Cablevision, Inc. (Telesat), a wholly-owned subsidiary of FPL Group Capital, 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 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 and FPL believe that they have meritorious defenses to all of the litigation described above and are vigorously defending these suits. Accordingly, the liabilities, if any, arising from these proceedings are not anticipated to have a material adverse effect on their financial statements. A suit brought by the partners in a cogeneration project located in Dade County, Florida, alleged 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 sought 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 by the District Court. In March 1996, the 11th Circuit Court of Appeals reversed the District Court and granted FPL Group's, FPL's and ESI's motions for partial summary judgment on the anti-trust claims and remanded the case to the District Court for further proceedings on the remaining issues. In February 1996, all parties to this litigation and certain other persons entered into an agreement that would completely settle all disputes among the parties as part of a buy-out of an uneconomic power purchase agreement that FPL was required to enter into because of the Public Utility Regulatory Policies Act of 1978, as amended. All amounts payable by FPL under the settlement agreement would be recovered through either the capacity clause or fuel clause. The settlement is contingent upon approval by the FPSC. 4. Summarized Financial Information of FPL Group Capital FPL Group Capital's debentures are guaranteed by FPL Group. Operating revenues of FPL Group Capital for the three months ended March 31, 1996 and 1995 were approximately $17 million and $21 million, respectively. For the same periods, operating expenses were approximately $18 million and $26 million. Net income for the three months ended March 31, 1996 was approximately $.4 million and net loss for the three months ended March 31,1995 was approximately $2 million. At March 31, 1996, FPL Group Capital had current assets of approximately $126 million, noncurrent assets of approximately $912 million, current liabilities of approximately $42 million and noncurrent liabilities of approximately $783 million. At December 31, 1995, FPL Group Capital had approximately $89 million of current assets, $934 million of noncurrent assets, $24 million of current liabilities and $787 million of noncurrent liabilities.
Item 2. Managements' Discussion and Analysis of Financial Condition and Results of Operations This discussion should be read in conjunction with the Notes to Condensed Consolidated Financial Statements contained herein and Managements' Discussion and Analysis of Financial Condition and Results of Operations appearing in the 1995 Form 10-K for FPL Group and FPL. The results of operations for an interim period may not give a true indication of results for the year. In the following discussion, all comparisons are with the corresponding items in the prior year. RESULTS OF OPERATIONS FPL Group's net income for the three months ended March 31, 1996 was lower than the prior period due to higher depreciation and other operations and maintenance (O&M) expenses. Partly offsetting the increased expenses were higher energy sales, resulting from both increased energy usage per customer and customer growth. FPL's revenues from base rates increased to approximately $735 million for the three months ended March 31, 1996 from approximately $718 million for the same period in 1995. The increase reflects higher energy usage per retail customer of 5.8%, primarily due to extreme weather conditions in 1996. Customer growth of 1.7%, down slightly from 1995, also contributed to the increase. Revenues from cost recovery clauses and franchise fees comprise substantially all of the remaining portion of operating revenues. These revenues represent a pass-through of costs and do not significantly affect net income. O&M expenses increased for the three months ended March 31, 1996, primarily due to costs associated with a planned nuclear refueling outage in the first quarter of 1996. There were no nuclear refueling outages in the first quarter of 1995. Depreciation expense increased for the three months ended March 31, 1996 mainly as a result of the special amortization of nuclear units, which amounted to approximately $74 million, and an increase in the provision for nuclear decommissioning and fossil dismantlement. See Note 1. LIQUIDITY AND CAPITAL RESOURCES Cash flows from operating activities benefited from higher sales and lower cash expenses. Using available cash flows from operations, FPL has redeemed certain series of its preferred stock and first mortgage bonds and FPL Group has repurchased approximately 500,000 shares of common stock, consistent with managements' intent to reduce debt balances and outstanding shares of common stock. See Note 2. For information concerning capital commitments, see Note 3.
PART II - OTHER INFORMATION Item 1. Legal Proceedings (a) Reference is made to Item 3. Legal Proceedings in the 1995 Form 10-K for FPL Group and FPL. In March 1996, Praxair petitioned the U.S. Supreme Court to review the Court of Appeals' decision previously entered in favor of FPL and Florida Power Corporation. Item 5. Other Information (a) Reference is made to Item 1. Business - FPL Operations - Competition in the 1995 Form 10-K for FPL Group and FPL. In April 1996, the Federal Energy Regulatory Commission issued a final rule regarding wholesale transmission access and pricing. FPL expects to file open access transmission tariffs in compliance with the final rule during the third quarter of 1996. In April 1996, the FMPA began receiving network transmission service from FPL for certain of its members under a network service agreement filed with the FERC in March 1996. (b) Reference is made to Item 1. Business - FPL Operations - Fuel in the 1995 Form 10-K for FPL Group and FPL. In April 1996, Florida's Power Plant Siting Board denied FPL's request to burn Orimulsion at the Manatee power plant. FPL is currently evaluating its options. (c) Reference is made to Item 1. Business - FPL Operations - Electric and Magnetic Fields in the 1995 Form 10-K for FPL Group and FPL. In May 1996, the court granted summary judgment for FPL in the suit that alleged personal injury and wrongful death resulting from electric and magnetic fields. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits <TABLE> <CAPTION> Exhibit FPL Number Description Group FPL <S> <C> <C> <C> 4(a) Ninety-seventh Supplemental Indenture dated as of March 1, 1996 between FPL x x and Bankers Trust Company, Trustee 12 Computation of Ratios x 27 Financial Data Schedule x x </TABLE> (b) Reports on Form 8-K - None
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, INC. FLORIDA POWER & LIGHT COMPANY (Registrants) Date: May 8, 1996 MICHAEL W. YACKIRA Michael W. Yackira Vice President, Finance and Chief Financial Officer of FPL Group, Inc., Senior Vice President, Finance and Chief Financial Officer of Florida Power & Light Company (Principal Financial Officer of the Registrants)