-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, W6GBGsBBZmwr7kloCN9lwNRzXvv9mTJ21VgwB72e0pcL//goT2ES9dOUQF5c5IU8 WBg+LcmOSIt2+W4ILi5U9g== 0000017797-95-000026.txt : 19950516 0000017797-95-000026.hdr.sgml : 19950516 ACCESSION NUMBER: 0000017797-95-000026 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAROLINA POWER & LIGHT CO CENTRAL INDEX KEY: 0000017797 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 560165465 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03382 FILM NUMBER: 95538534 BUSINESS ADDRESS: STREET 1: 411 FAYETTEVILLE ST CITY: RALEIGH STATE: NC ZIP: 27601 BUSINESS PHONE: 9195466111 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to _____________ Commission file number 1-3382 CAROLINA POWER & LIGHT COMPANY ___________________________________________________________________ (Exact name of registrant as specified in its charter) North Carolina 56-0165465 ___________________________________________________________________ (State or other jurisdiction of incorporation (I.R.S. Employer or organization Identification No.) 411 Fayetteville Street, Raleigh, North Carolina 27601-1748 ___________________________________________________________________ (Address of principal executive offices) (Zip Code) 919-546-6111 ___________________________________________________________________ (Registrant's telephone number, including area code) ___________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock (Without Par Value) shares outstanding at April 30, 1995: 156,172,322 PART I. FINANCIAL INFORMATION Item 1. Financial Statements _______ ____________________ Reference is made to the attached Appendix containing the Interim Financial Statements for the periods ended March 31, 1995. The amounts are unaudited but, in the opinion of management, reflect all transactions necessary to fairly present the Company's financial position and results of operations for the interim periods. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ______ ___________________________________________________________ Results of Operations For the Three and Twelve Months Ended March 31, 1995, As Compared With the Corresponding Periods One Year Earlier ___________________________________________________________ Operating Revenues and Expenses: Although sales increased slightly for the three and twelve months ended March 31, 1995, revenues decreased due to mild weather in the current periods, the expiration of a special North Carolina rate rider and decreased sales to North Carolina Eastern Municipal Power Agency (Power Agency). The weather-related decrease totaled $16 million and $116 million for the three and twelve months ended March 31, 1995, respectively. The decrease due to the expiration of the rate rider totaled $15 million and $44 million for the three and twelve months ended March 31, 1995, respectively. Sales to Power Agency decreased $12 million and $28 million for the three and twelve months ended March 31, 1995, respectively, due to greater generation by units jointly-owned by the Company and Power Agency. Partially offsetting these decreases was an increase in revenues due to a combination of customer growth and changes in customer usage patterns of $30 million and $117 million for the three and twelve-month periods, respectively. Fuel for generation decreased for the three and twelve months ended March 31, 1995, primarily due to greater availability of the Company's nuclear generating units. For the three-month period, lower-cost nuclear generation, as a percentage of total generation, increased to 56%, from 36%, and higher-cost fossil generation decreased to 44%, from 64%. For the twelve-month period, nuclear generation, as a percentage of total generation, increased to 52%, from 35%, and fossil generation decreased to 48%, from 64%. For the three and twelve months ended March 31, 1995, deferred fuel cost increased primarily due to lower fuel costs associated with increased nuclear generation. For the twelve-month period, the increase due to lower fuel costs more than offset a decrease of $33 million related to fuel settlements reached with the Company's regulators. Pursuant to these settlements, the Company agreed to forgo recovery of deferred fuel costs totaling approximately $8 million and $41 million for the twelve-month periods ended March 31, 1995, and March 31, 1994, respectively. Purchased power decreased for the three months ended March 31, 1995, due to decreased purchases from other utilities, primarily attributable to milder weather, and due to lower purchases from Power Agency in accordance with the Harris Plant buyback agreement. For both reporting periods, the decreases in depreciation and amortization are primarily due to the completion of the amortization of abandoned plant costs for Harris Unit No. 2 and of costs associated with the North Carolina rate rider. The decreases related to these items totaled $16 million and $41 million for the three and twelve months ended March 31, 1995, respectively. Other Income: The decrease in Harris Plant carrying costs for the twelve months ended March 31, 1995, is primarily related to the Company's settlement with North Carolina Electric Membership Corporation in 1993. The decrease in interest income for the twelve months ended March 31, 1995, is due to a change in accounting for employee stock ownership plans, which was implemented in January 1994, and due to a settlement recorded in 1993. Partially offsetting these decreases was an increase related to certain Internal Revenue Service audit issues. Other income, net, decreased for the twelve months ended March 31, 1995, primarily due to the change in accounting for employee stock ownership plans and due to a decrease in accretion to present value associated with the Company's abandonment costs. Material Changes in Capital Resources and Liquidity From December 31, 1994, to March 31, 1995 and From March 31, 1994, to March 31, 1995 __________________________________________ During the three and twelve months ended March 31, 1995, the Company issued long-term debt totalling $60 million and $232.6 million, respectively. The proceeds of these issuances, along with internally generated funds, financed the redemption or retirement of long-term debt totaling $125 million and $297.7 million, respectively. In order to provide flexibility in the timing and amounts of long-term financing, the Company uses short-term financing in the form of commercial paper backed by revolving credit agreements. Currently, these revolving credit agreements amount to $307.9 million. The Company had $95.5 million of commercial paper outstanding at March 31, 1995. The Company's capital structure at March 31, 1995, was 48.9% common stock equity, 48.4% long-term debt and 2.7% preferred stock. The Company's First Mortgage Bonds are currently rated "A2" by Moody's Investors Service, "A" by Standard & Poor's and "A+" by Duff & Phelps. Standard & Poor's and Moody's Investors Service have rated the Company's commercial paper "A-1" and "P-1", respectively. In 1994, the Board of Directors of the Company authorized the Executive Committee of the Board of Directors to repurchase up to 10 million shares of the Company's common stock on the open market. Under this stock repurchase program, the Company has purchased approximately 4.5 million shares from July 1994 through March 1995. The decrease in average common shares outstanding resulted in an increase in earnings per common share of approximately $.02 and $.04 for the three and twelve months ended March 31, 1995, respectively. Other Matters _____________ In 1994, the Company established a wholly-owned subsidiary, CaroNet, Inc., and the subsidiary joined a regional partnership, BellSouth Carolinas PCS, L.P., led by BellSouth Personal Communications, Inc. (BellSouth). In March 1995, BellSouth won its bid for a Federal Communications Commission license to operate a personal communications services (PCS) system covering most of North Carolina and South Carolina and a small portion of Georgia. PCS, a wireless communications technology, is expected to provide high-quality mobile communications. Wireless technology could also support automated meter reading, automated service connection and disconnection, and control and monitoring of certain aspects of the Company's electric transmission and distribution systems. BellSouth will transfer the PCS license to the partnership. BellSouth is the general partner and handles day-to-day management of the business. Construction of the system infrastructure is expected to begin during the summer of 1995, with service start-up anticipated by mid-1996. In anticipation of the infrastructure construction, the Company invested $50 million in CaroNet, Inc. in April 1995. CaroNet, Inc. owns a ten percent limited partnership interest in BellSouth Carolinas PCS, L.P. PART II. OTHER INFORMATION Item 1. Legal Proceedings ______ _________________ Legal aspects of certain matters are set forth in Item 5 below. Item 2. Changes in Securities ) ______ _____________________ ) ) ) Item 3. Defaults upon Senior Securities ) Not applicable for the ______ _______________________________ ) quarter ended March 31, ) 1995. ) Item 4. Submission of Matters to a Vote ) of Security Holders ) ______ _______________________________ ) Item 5. Other Information ______ _________________ 1. (Reference is made to the Company's 1994 Form 10-K, Competition and Franchises, paragraph 1.b., page 8.) On March 29, 1995, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (Proposal) that would establish guidelines for wholesale wheeling of electric power. The Proposal would require utilities to provide open access to their interstate power transmission network and not give themselves preferential access to their own services. Currently, such power transfers are negotiated case-by-case or under long-term contracts. The FERC's Proposal would establish a standard generic set of terms and conditions, and would define the terms under which independent power producers and others could gain access to a utility's transmission grid to sell power to a wholesale customer such as a municipality or rural electric cooperative. The Company is currently evaluating the Proposal to determine its impact on the Company and its customers. Comments on the Proposal are due August 7, 1995. The Company cannot predict the outcome of this matter. 2. (Reference is made to the Company's 1994 Form 10-K, Competition and Franchises, paragraph 1, page 8.) On March 29, 1995, a bill was introduced in the North Carolina General Assembly to facilitate the construction of an interstate natural gas pipeline to be built from Aiken, South Carolina to Leland, North Carolina. The bill, as originally introduced, proposed to, among other things, exempt from utility regulation all power generating facilities that receive gas from the pipeline as fuel. On May 9, 1995, both the House Utilities Committee and the Senate Utilities Committee approved an amended version of this bill which orders the Joint Legislative Utility Review Committee to study the issues contained in the original bill and report its findings and any recommendations to the North Carolina General Assembly in 1996. Final legislative approval of the amended bill is pending. The Company cannot predict the outcome of this matter. 3. (Reference is made to the Company's 1994 Form 10-K, Competition and Franchises, page 8.) A bill was introduced in the North Carolina General Assembly that would change fundamentally the nature of public power agencies in the state. The bill, as originally introduced, proposed to, among other things, permit certain organizational changes among the state's municipal power agencies and provide additional authority for the marketing of excess capacity and energy. On May 4, 1995, the House Utilities Committee approved a substantially amended version of this bill which would authorize internal reorganization of the state's municipal power agencies, and order the Joint Legislative Utility Review Committee to study other issues contained in the original legislation and report its findings and any recommendations to the General Assembly in 1996. Final legislative approval of the amended bill is pending. The Company cannot predict the outcome of this matter. 4. (Reference is made to the Company's 1994 Form 10-K, Financing Program, paragraph 3, page 11.) On April 21, 1995, the Company issued $125 million principal amount of Quarterly Income Capital Securities (Series A Subordinated Deferrable Interest Debentures) ("Capital Securities") at an interest rate of 8.55%, for net proceeds to the Company of approximately $121 million. The proceeds from the issuance of the Capital Securities were applied to the Company's ongoing maintenance and construction program, and for other general corporate purposes. 5. Reference is made to the Company's 1994 Form 10-K, Financing Program, paragraph 4, page 12.) On April 1, 1995, the Company retired $77.1 million principal amount of First Mortgage Bonds, 9.14% Series, which matured on that date. 6. (Reference is made to the Company's 1994 Form 10-K, Other Matters, paragraph 2, page 27.) In April 1992, an independent consultant's safety inspection report for the Marshall Hydroelectric Project was submitted to the FERC for approval. In March 1995, the Company received comments on the report from the FERC. By letter dated May 3, 1995, the Company submitted a response to the FERC's comments. The Company cannot predict the outcome of this matter. 7. (Reference is made to the Company's 1994 Form 10-K, Nuclear Matters, paragraph 7.c., page 23.) With regard to the Company's Brunswick Nuclear Plant, additional shroud inspections were performed for Brunswick Unit No. 1 during the spring refueling outage. Re-examination of previously identified cracks indicated that no significant crack growth had occurred. Minor indications were noted in areas not previously examined, but these findings are not expected to affect restart of the unit following the refueling outage or unit operation over the next fuel cycle. The Company is proceeding to develop contingency plans which could be relied upon if shroud repairs are required in the future. The Company cannot predict the outcome of this matter. 8. (Reference is made to the Company's 1994 Form 10-K, Other Matters, paragraph 5, page 28.) With regard to the dispute between the Company and Zeigler Coal Holding Company (Zeigler) over a coal-supply agreement between the Company and certain Zeigler subsidiaries, on April 3, 1995, the parties moved for a 30-day stay in the arbitration process after reaching a preliminary settlement agreement. On April 28, 1995, the parties entered into a final settlement agreement that resolves the dispute. The resolution, effective April 1, 1995, has produced a new coal supply arrangement between the Company and Zeigler, and amicably resolves all points of disagreement. The new coal supply arrangement will provide lower coal costs for the Company and allow Zeigler operating and source flexibility. 9. (Reference is made to the Company's 1994 Form 10-K, Other Matters, paragraph 6, page 28.) In 1994, the Company established a wholly-owned subsidiary, CaroNet, Inc. (CaroNet), and CaroNet joined a regional partnership, BellSouth Carolinas PCS, L.P., led by BellSouth Personal Communications, Inc. (BellSouth). On March 14, 1995, BellSouth won its bid for a Federal Communications Commission license to operate a personal communications services (PCS) system covering most of North Carolina and South Carolina and a small portion of Georgia. BellSouth will transfer the PCS license to the partnership. The partnership is expected to begin construction of the PCS system infrastructure during the summer of 1995. Service start-up is anticipated by mid-1996. In anticipation of the infrastructure construction, the Company invested $50 million in CaroNet on April 28, 1995. CaroNet owns a ten percent limited partnership interest in BellSouth Carolinas PCS, L.P. Item 6. Exhibits and Reports on Form 8-K ______ ________________________________ (a) Exhibits None. (b) Reports on Form 8-K filed during or with respect to the quarter: Date of Report (Earliest Event Reported) Date of Signature Items Reported _________________________ _________________ ______________ January 23, 1995 January 23, 1995 Item 7. Financial Statements, Pro Forma Financial Information and Exhibits April 13, 1995 April 13, 1995 Item 7. Financial Statements, Pro Forma Financial Information and Exhibits April 20, 1995 April 20, 1995 Item 7. Financial Statements, Pro Forma Financial Information and Exhibits SIGNATURES Pursuant to 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. CAROLINA POWER & LIGHT COMPANY (Registrant) By: Charles D. Barham, Jr. Executive Vice President By: Paul S. Bradshaw Vice President and Controller (and Principal Accounting Officer) Date: May 12, 1995 EX-99 2 [DESCRIPTION] FINANCIAL STATEMENTS FOR QUARTER ENDED 3/31/95
Carolina Power & Light Company (ORGANIZED UNDER THE LAWS OF NORTH CAROLINA) INTERIM FINANCIAL STATEMENTS (NOT AUDITED BY INDEPENDENT AUDITORS) MARCH 31, 1995 STATEMENTS OF INCOME Three Months Ended Twelve Months Ended (In thousands March 31 March 31 except per share amounts) 1995 1994 1995 1994 ----------------------------------------------------------------------------------------------------------------- Operating Revenues $ 728,238 $ 744,461 $2,860,367 $2,932,358 ----------------------------------------------------------------------------------------------------------------- Operating Expenses Operation - fuel for generation 110,796 129,912 452,851 527,659 deferred fuel cost (credit), net 22,475 (2,251) 62,897 26,370 purchased power 93,659 111,541 396,419 401,931 other 127,078 130,804 536,232 513,549 Maintenance 40,755 46,959 200,529 218,874 Depreciation and amortization 90,275 105,057 382,953 415,422 Taxes other than on income 38,920 35,436 142,025 144,404 Income tax expense 61,416 57,498 202,453 195,029 Harris Plant deferred costs, net 6,605 6,478 26,456 27,846 ----------------------------------------------------------------------------------------------------------------- Total Operating Expenses 591,979 621,434 2,402,815 2,471,084 ----------------------------------------------------------------------------------------------------------------- Operating Income 136,259 123,027 457,552 461,274 ----------------------------------------------------------------------------------------------------------------- Other Income (Expense) Allowance for equity funds used during construction 913 2,263 4,724 9,597 Income tax credit 3,290 3,583 9,131 4,093 Harris Plant carrying costs 2,219 2,563 9,410 27,111 Harris Plant disallowance - Power Agency - - - (20,645) Interest income 2,588 1,294 15,863 29,753 Other income, net 4,021 6,490 23,124 37,399 ----------------------------------------------------------------------------------------------------------------- Total Other Income 13,031 16,193 62,252 87,308 ----------------------------------------------------------------------------------------------------------------- Income Before Interest Charges 149,290 139,220 519,804 548,582 ----------------------------------------------------------------------------------------------------------------- Interest Charges Long-term debt 46,593 47,376 183,108 198,336 Other interest charges 6,028 4,251 17,896 15,022 Allowance for borrowed funds used during construction (1,364) (1,231) (3,576) (6,098) ----------------------------------------------------------------------------------------------------------------- Net Interest Charges 51,257 50,396 197,428 207,260 ----------------------------------------------------------------------------------------------------------------- Net Income 98,033 88,824 322,376 341,322 Preferred Stock Dividend Requirements (2,402) (2,402) (9,609) (9,609) ----------------------------------------------------------------------------------------------------------------- Earnings for Common Stock $ 95,631 $ 86,422 $ 312,767 $ 331,713 ================================================================================================================= Average Common Shares Outstanding (Note 4) 147,270 150,820 148,738 158,291 Earnings per Common Share (Note 4) $ 0.65 $ 0.57 $ 2.10 $ 2.10 Dividends Declared per Common Share $ 0.440 $ 0.425 $ 1.730 $ 1.670 ................................................................................................................. See Supplemental Data and Notes to Financial Statements.
Carolina Power & Light Company BALANCE SHEETS March 31 December 31 (In thousands) 1995 1994 1994 - ------------------------------------------------------------------------------------------------------ ASSETS Electric Utility Plant Electric utility plant in service $ 9,246,650 $ 8,881,884 $ 9,190,874 Accumulated depreciation (3,263,768) (2,974,558) (3,196,139) - ------------------------------------------------------------------------------------------------------ Electric utility plant in service, net 5,982,882 5,907,326 5,994,735 Held for future use 13,195 13,195 13,195 Construction work in progress 171,717 260,887 170,390 Nuclear fuel, net of amortization 163,159 211,702 171,164 - ------------------------------------------------------------------------------------------------------ Total Electric Utility Plant, Net 6,330,953 6,393,110 6,349,484 - ------------------------------------------------------------------------------------------------------ Current Assets Cash and cash equivalents 39,858 33,444 80,239 Accounts receivable 284,934 292,473 302,218 Fuel 103,820 69,595 96,136 Materials and supplies 124,826 119,238 122,720 Prepayments 50,628 46,308 52,988 Other current assets 26,792 16,437 24,129 - ------------------------------------------------------------------------------------------------------ Total Current Assets 630,858 577,495 678,430 - ------------------------------------------------------------------------------------------------------ Deferred Debits and Other Assets Income taxes recoverable through future rates 385,089 382,224 384,375 Abandonment costs 67,177 106,450 71,079 Harris Plant deferred costs 123,438 140,484 127,824 Unamortized debt expense 61,933 63,260 63,302 Miscellaneous other property and investments 374,338 276,424 360,611 Other assets and deferred debits 184,409 188,821 176,058 - ------------------------------------------------------------------------------------------------------ Total Deferred Debits and Other Assets 1,196,384 1,157,663 1,183,249 - ------------------------------------------------------------------------------------------------------ Total Assets $ 8,158,195 $ 8,128,268 $ 8,211,163 ====================================================================================================== CAPITALIZATION AND LIABILITIES Capitalization Common stock equity $ 2,622,103 $ 2,664,101 $ 2,586,179 Preferred stock - redemption not required 143,801 143,801 143,801 Long-term debt, net 2,591,462 2,514,047 2,530,773 - ------------------------------------------------------------------------------------------------------ Total Capitalization 5,357,366 5,321,949 5,260,753 - ------------------------------------------------------------------------------------------------------ Current Liabilities Current portion of long-term debt 150,050 287,630 275,050 Notes payable (principally commercial paper) 95,500 6,700 68,100 Accounts payable 127,234 166,025 285,610 Taxes accrued 84,086 95,132 4,650 Interest accrued 49,638 51,206 54,569 Dividends declared 70,770 70,022 70,658 Deferred fuel credit (cost) 50,819 (12,078) 28,344 Other current liabilities 61,022 69,369 67,161 - ------------------------------------------------------------------------------------------------------ Total Current Liabilities 689,119 734,006 854,142 - ------------------------------------------------------------------------------------------------------ Deferred Credits and Other Liabilities Accumulated deferred income taxes 1,627,090 1,574,761 1,628,430 Accumulated deferred investment tax credits 249,498 260,704 252,051 Other liabilities and deferred credits 235,122 236,848 215,787 - ------------------------------------------------------------------------------------------------------ Total Deferred Credits and Other Liabilities 2,111,710 2,072,313 2,096,268 - ------------------------------------------------------------------------------------------------------ Commitments and Contingencies (Note 5) Total Capitalization and Liabilities $ 8,158,195 $ 8,128,268 $ 8,211,163 ====================================================================================================== SCHEDULES OF COMMON STOCK EQUITY (In thousands) Common stock (Note 4) $ 1,508,098 $ 1,624,114 $ 1,510,956 Unearned ESOP common stock (197,011) (214,908) (204,947) Capital stock issuance expense (790) (790) (790) Retained earnings 1,311,806 1,255,685 1,280,960 - ------------------------------------------------------------------------------------------------------ Total Common Stock Equity $ 2,622,103 $ 2,664,101 $ 2,586,179 ====================================================================================================== ...................................................................................................... See Supplemental Data and Notes to Financial Statements.
Carolina Power & Light Company STATEMENTS OF CASH FLOWS (In thousands) Three Months Ended Twelve Months Ended March 31 March 31 1995 1994 1995 1994 - -------------------------------------------------------------------------------------------------------------- Operating Activities Net income $ 98,033 $ 88,824 $ 322,376 $ 341,322 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 115,061 119,467 469,075 466,632 Harris Plant deferred costs 4,386 3,915 17,046 736 Harris Plant disallowance - Power Agency - - - 20,645 Deferred income taxes (11,579) (8,821) 34,482 52,706 Investment tax credit adjustments (2,553) (2,884) (11,207) (12,797) Allowance for equity funds used during construction (913) (2,263) (4,724) (9,597) Deferred fuel cost (credit) 22,475 (2,251) 62,897 26,370 Net (increase) decrease in receivables, inventories and prepaid expenses (43,392) (23,083) (94,200) 2,952 Net increase (decrease) in payables and accrued expenses (16,376) 7,157 (70,304) (4,013) Miscellaneous 11,919 19,621 (12,636) 11,036 - -------------------------------------------------------------------------------------------------------------- Net Cash Provided by Operating Activities 177,061 199,682 712,805 895,992 - -------------------------------------------------------------------------------------------------------------- Investing Activities Gross property additions (71,928) (72,313) (274,392) (331,824) Nuclear fuel additions (15,868) (11,216) (30,501) (53,287) Contributions to external decommissioning trust (18,504) (6,328) (33,801) (23,539) Contributions to retiree benefit trusts (2,400) (18,917) (2,400) (22,667) Loan transactions with SPSP Trustee, net - - - 19,769 Allowance for equity funds used during construction 913 2,263 4,724 9,597 Miscellaneous (487) - (6,581) - - -------------------------------------------------------------------------------------------------------------- Net Cash Used in Investing Activities (108,274) (106,511) (342,951) (401,951) - -------------------------------------------------------------------------------------------------------------- Financing Activities Proceeds from issuance of long-term debt 59,731 147,986 229,956 434,765 Net decrease in pollution control bond escrow - - - 1,800 Net increase (decrease) in short-term notes payable (maturity less than 90 days) 27,400 (69,300) 88,800 6,700 Retirement of long-term debt (125,045) (95,623) (297,802) (803,148) Purchase of Company common stock (Note 4) (4,178) - (118,895) - Dividends paid on common stock (64,656) (63,986) (255,876) (260,833) Dividends paid on preferred stock (2,420) (2,411) (9,623) (9,483) - -------------------------------------------------------------------------------------------------------------- Net Cash Used in Financing Activities (109,168) (83,334) (363,440) (630,199) - -------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Cash and Cash Equivalents (40,381) 9,837 6,414 (136,158) Cash and Cash Equivalents at Beginning of the Period 80,239 23,607 33,444 169,602 - -------------------------------------------------------------------------------------------------------------- Cash and Cash Equivalents at End of the Period $ 39,858 $ 33,444 $ 39,858 $ 33,444 ============================================================================================================== Supplemental Disclosures of Cash Flow Information Cash paid during the period - interest $ 54,694 $ 52,247 $ 191,201 $ 215,151 income taxes 1,611 2,050 180,320 115,861 .............................................................................................................. See Supplemental Data and Notes to Financial Statements.
Carolina Power & Light Company SUPPLEMENTAL DATA Three Months Ended Twelve Months Ended March 31 March 31 1995 1994 1995 1994 - ---------------------------------------------------------------------------------------------- Operating Revenues (in thousands) Residential $ 251,355 $ 262,373 $ 904,968 $ 957,702 Commercial 141,142 143,797 592,918 600,128 Industrial 164,416 166,860 739,217 749,420 Government and municipal 18,842 19,516 77,644 79,463 Wholesale - standard rate schedules 20,400 23,854 81,320 101,108 Power Agency contract requirements 23,818 35,947 103,133 131,223 NCEMC contract requirements 83,707 77,344 273,097 262,661 Other utilities 13,541 4,070 43,261 12,567 Miscellaneous revenue 11,017 10,700 44,809 38,086 - ---------------------------------------------------------------------------------------------- Total Operating Revenues $ 728,238 $ 744,461 $2,860,367 $2,932,358 ============================================================================================== Energy Sales (millions of kWh) Residential 3,263 3,343 11,068 11,577 Commercial 2,091 2,051 8,730 8,692 Industrial 3,268 3,117 14,181 13,663 Government and municipal 301 306 1,257 1,257 Wholesale - standard rate schedules 462 478 1,966 2,103 Power Agency contract requirements 476 647 2,418 3,193 NCEMC contract requirements 1,384 1,223 5,047 4,795 Other utilities 573 117 1,441 340 - --------------------------------------------------------------------------------------------- Total Energy Sales 11,818 11,282 46,108 45,620 ============================================================================================== Energy Supply (millions of kWh) Generated - coal 4,563 6,096 19,468 25,430 nuclear 5,847 3,383 20,976 13,937 hydro 298 304 877 741 combustion turbines (1) 39 27 116 Purchased 1,510 1,957 6,592 7,430 - ---------------------------------------------------------------------------------------------- Total Energy Supply (Company Share) 12,217 11,779 47,940 47,654 ============================================================================================== Detail of Income Taxes (in thousands) Included in Operating Expenses Income tax expense - current $ 77,155 $ 70,243 $ 189,557 $ 161,881 Income tax expense - deferred (13,186) (9,861) 24,101 44,751 Income tax expense - investment tax credit adjustments (2,553) (2,884) (11,205) (11,603) - ---------------------------------------------------------------------------------------------- Subtotal 61,416 57,498 202,453 195,029 - ---------------------------------------------------------------------------------------------- Harris Plant deferred costs - investment tax credit adjustments (74) (74) (297) 188 - ---------------------------------------------------------------------------------------------- Total Included in Operating Expenses 61,342 57,424 202,156 195,217 - ---------------------------------------------------------------------------------------------- Included in Other Income Income tax expense (credit) - current (4,897) (4,623) (19,512) (10,854) Income tax expense (credit) - deferred 1,607 1,040 10,381 7,955 Income tax expense (credit) - investment tax credit adjustments - - - (1,194) - ---------------------------------------------------------------------------------------------- Total Included in Other Income (3,290) (3,583) (9,131) (4,093) - ---------------------------------------------------------------------------------------------- Total Income Tax Expense 58,052 53,841 193,025 191,124 ============================================================================================== FINANCIAL STATISTICS Ratio of earnings to fixed charges 3.36 3.28 Return on average common stock equity 11.87 % 12.68 % Book value per common share 17.81 17.65 Capitalization ratios Common stock equity $ 48.94 % $ 50.06 % Preferred stock - redemption not required 2.69 2.70 Long-term debt, net 48.37 47.24 - ---------------------------------------------------------------------------------------------- Total 100.00 % 100.00 % ============================================================================================== .............................................................................................. See Notes to Financial Statements.
EX-99 3 NOTES TO FINANCIAL STATEMENTS 1. These interim financial statements are prepared in conformity with the accounting principles reflected in the financial statements included in the Company's 1994 Annual Report to Shareholders and the 1994 Annual Report on Form 10-K. These are interim financial statements, and because of temperature variations between seasons of the year and the timing of outages of electric generating units, especially nuclear-fueled units, the amounts reported in the Statements of Income for periods of less than twelve months are not necessarily indicative of amounts expected for the year. Certain amounts for 1994 have been reclassified to conform to the 1995 presentation. 2. In 1994, the Company established a wholly-owned subsidiary, CaroNet, Inc., and the subsidiary joined a regional partnership, BellSouth Carolinas PCS, L.P., led by BellSouth Personal Communications, Inc. (BellSouth). On March 14, 1995, BellSouth won its bid for a Federal Communications Commission license for the partnership to operate a personal communications services (PCS) system covering most of North Carolina and South Carolina, as well as a small portion of Georgia. PCS, a wireless communications technology, is expected to provide high-quality mobile communications. Wireless technology could also support automated meter reading, automated service connection and disconnection, and control and monitoring of certain aspects of the Company's electric transmission and distribution systems. BellSouth will transfer the PCS license to the partnership. BellSouth is the general partner and will handle day-to-day management of the business. Construction of the system infrastructure is expected to begin during the summer of 1995, with service start-up anticipated by mid-1996. In anticipation of the infrastructure construction, the Company invested $50 million in CaroNet, Inc. in April 1995. CaroNet, Inc. owns a ten percent limited partnership interest in BellSouth Carolinas PCS, L.P. 3. On April 21, 1995, the Company issued $125 million principal amount of 8.55% Quarterly Income Capital Securities (Series A Subordinated Deferrable Interest Debentures). These capital securities mature on June 30, 2025. The obligations of the Company under the securities are subordinate and junior in right of payment to the senior indebtedness of the Company. 4. In 1994, the Board of Directors of the Company authorized the Executive Committee of the Board to repurchase up to 10 million shares of the Company's common stock on the open market. In accordance with the stock repurchase program, the Company has purchased approximately 4.5 million shares through March 31, 1995. The decrease in average common shares outstanding resulted in an increase in earnings per common share of approximately $.02 and $.04 for the three and twelve month periods ended March 31, 1995, respectively. 5. Contingencies existing as of the date of these statements are described below. No significant changes have occurred since December 31, 1994, with respect to the commitments discussed in Note 10 of the financial statements included in the Company's 1994 Annual Report to Shareholders. a) In the Company's retail jurisdictions, provisions for nuclear decommissioning costs are approved by the North Carolina Utilities Commission and the South Carolina Public Service Commission and are based on site-specific estimates that included the costs for removal of all radioactive and other structures at the site. In the wholesale jurisdiction, the provisions for nuclear decommissioning costs are based on amounts agreed upon in applicable rate settlements. Based on the site-specific estimates discussed below, and using an assumed after-tax earnings rate of 8.5% and an assumed cost escalation rate of 4%, current levels of rate recovery for nuclear decommissioning costs are adequate to provide for decommissioning of the Company's nuclear facilities. The Company's most recent site-specific estimates of decommissioning costs were developed in 1993, using 1993 cost factors, and are based on prompt dismantlement decommissioning, which reflects the cost of removal of all radioactive and other structures currently at the site, with such removal occurring shortly after operating license expiration. These estimates, in 1993 dollars, are $257.7 million for Robinson Unit No. 2, $235.4 million for Brunswick Unit No. 1, $221.4 million for Brunswick Unit No. 2 and $284.3 million for the Harris Plant. These estimates are subject to change based on a variety of factors including, but not limited to, cost escalation, changes in technology applicable to nuclear decommissioning, and changes in federal, state or local regulations. The cost estimates exclude the portion attributable to North Carolina Eastern Municipal Power Agency, which holds an undivided ownership interest in certain of the Company's generating facilities. Operating licenses for the Company's nuclear units expire in the year 2010 for Robinson Unit No. 2, 2016 for Brunswick Unit No. 1, 2014 for Brunswick Unit No. 2 and 2026 for the Harris Plant. The Financial Accounting Standards Board has added a project to its agenda regarding the electric industry's current accounting practices related to decommissioning costs. Any changes to these practices could affect such items as: 1) when the decommissioning obligation is recognized, 2) where balances of accumulated decommissioning costs are recorded, 3) where income earned on external decommissioning trust balances is recorded and 4) the levels of annual decommissioning cost provisions. It is uncertain what impact, if any, this project may have on the Company's accounting for decommissioning costs. b) As required under the Nuclear Waste Policy Act of 1982, the Company entered into a contract with the U. S. Department of Energy (DOE) under which the DOE agreed to dispose of the Company's spent nuclear fuel. The Company cannot predict whether the DOE will be able to perform its contractual obligations and provide interim storage or permanent disposal repositories for spent nuclear fuel and/or high-level radioactive waste materials on a timely basis. With certain modifications, the Company's spent fuel storage facilities are sufficient to provide storage space for spent fuel generated on the Company's system through the expiration of the current operating licenses for all of the Company's nuclear generating units. Subsequent to the expiration of the licenses, dry storage may be necessary. c) The Company is subject to federal, state and local regulations addressing air and water quality, hazardous and solid waste management and other environmental matters. Various organic materials associated with the production of manufactured gas, generally referred to as coal tar, are regulated under various federal and state laws, and a liability may exist for their remediation. There are several manufactured gas plant (MGP) sites to which the Company and certain entities that were later merged into the Company may have had some connection. In this regard, the Company, along with other entities alleged to be former owners and operators of MGP sites in North Carolina, is participating in a cooperative effort with the North Carolina Department of Environment, Health and Natural Resources, Division of Solid Waste Management (DSWM) to establish a uniform framework for addressing those sites. It is anticipated that the investigation and remediation of specific MGP sites will be addressed pursuant to one or more Administrative Orders on Consent between DSWM and individual potentially responsible parties. To date, the Company has not entered into any such orders. The Company has been approached by another North Carolina public utility concerning a possible cost-sharing arrangement with respect to the investigation and, if necessary, remediation of four MGP sites. The Company is currently engaged in discussions with the other utility regarding this matter. In addition, a current owner of property that was the site of one MGP owned by Tide Water Power Company (Tide Water Power), which merged into the Company in 1952, and the Company have entered into an agreement to share the cost of investigation and, if necessary, the remediation of this site. The Company has also been approached by a North Carolina municipality that is the current owner of another MGP site that was formerly owned by Tide Water Power. The Company is engaged in discussions with that municipality concerning a possible cost-sharing arrangement with respect to the investigation and, if necessary, the remediation of that site. The Company is continuing its investigation regarding the identities of parties connected to several additional MGP sites, the relative relationships of the Company and other parties to those sites and the degree, if any, to which the Company should undertake shared voluntary efforts with others at individual sites. The Company has been notified by regulators of its involvement or potential involvement in several sites, other than MGP sites, that require remedial action. Although the Company cannot predict the outcome of these matters, it does not anticipate significant costs associated with these sites. In 1994, the Company accrued a liability for the estimated costs associated with investigation and remediation activities for certain MGP sites and for sites other than MGP sites. This accrual was not material to the results of operations of the Company. Due to the lack of information with respect to the operation of MGP sites for which a liability has not been accrued and due to the uncertainty concerning questions of liability and potential environmental harm, the extent and cost of required remedial action, if any, are not currently determinable. The Company cannot predict the outcome of these matters or the extent to which other MGP sites may become the subject of inquiry. -----END PRIVACY-ENHANCED MESSAGE-----