-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EWxpRsqWXx8ECrC48msTNQPfuTEBm6NiV0HXEfVWDMd/1yA6VgWnQf1kqKt9WdUq 93klADaDQCdi4yz6ls8IYA== 0000753308-99-000016.txt : 19990505 0000753308-99-000016.hdr.sgml : 19990505 ACCESSION NUMBER: 0000753308-99-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990504 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FPL GROUP INC CENTRAL INDEX KEY: 0000753308 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 592449419 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08841 FILM NUMBER: 99609381 BUSINESS ADDRESS: STREET 1: 700 UNIVERSE BLVD CITY: JUNO BEACH STATE: FL ZIP: 33408 BUSINESS PHONE: 5616944000 MAIL ADDRESS: STREET 1: P O BOX 14000 CITY: JUNO BEACH STATE: FL ZIP: 33408 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLORIDA POWER & LIGHT CO CENTRAL INDEX KEY: 0000037634 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 590247775 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-03545 FILM NUMBER: 99609382 BUSINESS ADDRESS: STREET 1: 700 UNIVERSE BLVD CITY: JUNO BEACH STATE: FL ZIP: 33408 BUSINESS PHONE: 5616944000 MAIL ADDRESS: STREET 1: P O BOX 14000 CITY: JUNO BEACH STATE: FL ZIP: 33408 10-Q 1 FPL GROUP AND FPL 3/31/99 10-Q 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, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Exact name of Registrants as specified in their charters, address of principal IRS Employer Commission executive offices and Identification File Number Registrants' telephone number Number - ----------- --------------------------------------- -------------- 1-8841 FPL GROUP, INC. 59-2449419 1-3545 FLORIDA POWER & LIGHT COMPANY 59-0247775 700 Universe Boulevard Juno Beach, Florida 33408 (561) 694-4000 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 March 31, 1999: 180,164,535 shares. As of March 31, 1999, 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. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (Reform Act), FPL Group, Inc. (FPL Group) and Florida Power & Light Company (FPL) (collectively, the Company) are hereby filing cautionary statements identifying important factors that could cause the Company's actual results to differ materially from those projected in forward- looking statements (as such term is defined in the Reform Act) made by or on behalf of the Company which are made in this combined Form 10-Q, in presentations, in response to questions or otherwise. Any statements that express, or involve discussions as to expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as will likely result, are expected to, will continue, is anticipated, estimated, projection, outlook) are not statements of historical facts and may be forward-looking. Forward-looking statements involve estimates, assumptions and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors that could cause the Company's actual results to differ materially from those contained in forward-looking statements made by or on behalf of the Company. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. Some important factors that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements include changing governmental policies and regulatory actions, including those of the Federal Energy Regulatory Commission (FERC), the Florida Public Service Commission (FPSC) and the Nuclear Regulatory Commission (NRC), with respect to allowed rates of return including but not limited to return on common equity (ROE) and equity ratio limits, industry and rate structure, operation of nuclear power facilities, acquisition, disposal, depreciation and amortization of assets and facilities, operation and construction of plant facilities, recovery of fuel and purchased power costs, decommissioning costs, and present or prospective wholesale and retail competition (including but not limited to retail wheeling and transmission costs). The business and profitability of the Company are also influenced by economic and geographic factors including political and economic risks, changes in and compliance with environmental and safety laws and policies, weather conditions (including natural disasters such as hurricanes), population growth rates and demographic patterns, competition for retail and wholesale customers, pricing and transportation of commodities, market demand for energy from plants or facilities, changes in tax rates or policies or in rates of inflation, unanticipated development project delays or changes in project costs, unanticipated changes in operating expenses and capital expenditures, capital market conditions, competition for new energy development opportunities, legal and administrative proceedings (whether civil, such as environmental, or criminal) and settlements, and any unanticipated impact of the year 2000, including delays or changes in costs of year 2000 compliance, or the failure of major suppliers, customers and others with whom the Company does business to resolve their own year 2000 issues on a timely basis. All such factors are difficult to predict, contain uncertainties which may materially affect actual results, and are beyond the control of the Company. PART I - FINANCIAL INFORMATION Item 1. Financial Statements FPL GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share amounts) (Unaudited)
Three Months Ended March 31, -------------------- 1999 1998 ------ ------ OPERATING REVENUES ............................................... $1,412 $1,338 OPERATING EXPENSES: Fuel, purchased power and interchange .......................... 506 436 Other operations and maintenance................................ 275 299 Depreciation and amortization .................................. 279 249 Taxes other than income taxes .................................. 144 136 Total operating expenses ..................................... 1,204 1,120 OPERATING INCOME ................................................. 208 218 OTHER INCOME (DEDUCTIONS): Interest charges ............................................... (47) (63) Preferred stock dividends - FPL ................................ (4) (4) Gain on sale of Adelphia Communications Corporation stock....... 149 - Other - net .................................................... 9 7 Total other income (deductions) - net ........................ 107 (60) INCOME BEFORE INCOME TAXES ....................................... 315 158 INCOME TAXES ..................................................... 106 50 NET INCOME ....................................................... $ 209 $ 108 Earnings per share of common stock (basic and assuming dilution).. $ 1.22 $ 0.63 Dividends per share of common stock .............................. $ 0.52 $ 0.50 Average number of common shares outstanding ...................... 172 173
This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on pages 9 through 12 herein and the Notes to Consolidated Financial Statements appearing in the combined Annual Report on Form 10-K for the fiscal year ended December 31, 1998 (1998 Form 10-K) for FPL Group and FPL. FPL GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Millions of Dollars) (Unaudited)
March 31, December 31, 1999 1998 --------- ------------ PROPERTY, PLANT AND EQUIPMENT: Electric utility plant in service and other property, including nuclear fuel and construction work in progress ....................... $18,346 $17,952 Less accumulated depreciation and amortization ................................... (9,672) (9,397) Total property, plant and equipment - net ...................................... 8,674 8,555 CURRENT ASSETS: Cash and cash equivalents ........................................................ 548 187 Customer receivables, net of allowances of $6 and $8, respectively ............... 462 559 Materials, supplies and fossil fuel inventory - at average cost .................. 275 282 Other ............................................................................ 143 238 Total current assets ........................................................... 1,428 1,266 OTHER ASSETS: Special use funds of FPL ......................................................... 1,276 1,206 Other investments ................................................................ 490 391 Other ............................................................................ 428 611 Total other assets ............................................................. 2,194 2,208 TOTAL ASSETS ....................................................................... $12,296 $12,029 CAPITALIZATION: Common stock ..................................................................... $ 2 $ 2 Additional paid-in capital........................................................ 2,967 3,000 Retained earnings................................................................. 2,243 2,123 Accumulated other comprehensive income............................................ - 1 Total common shareholders' equity............................................... 5,212 5,126 Preferred stock of FPL without sinking fund requirements ......................... 226 226 Long-term debt ................................................................... 2,207 2,347 Total capitalization ........................................................... 7,645 7,699 CURRENT LIABILITIES: Debt and preferred stock due within one year ..................................... 616 469 Accounts payable ................................................................. 322 338 Accrued interest, taxes and other ................................................ 995 834 Total current liabilities ...................................................... 1,933 1,641 OTHER LIABILITIES AND DEFERRED CREDITS: Accumulated deferred income taxes ................................................ 1,261 1,255 Unamortized regulatory and investment tax credits ................................ 342 353 Other ............................................................................ 1,115 1,081 Total other liabilities and deferred credits ................................... 2,718 2,689 COMMITMENTS AND CONTINGENCIES TOTAL CAPITALIZATION AND LIABILITIES ............................................... $12,296 $12,029
This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on pages 9 through 12 herein and the Notes to Consolidated Financial Statements appearing in the 1998 Form 10-K for FPL Group and FPL. FPL GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Millions of Dollars) (Unaudited)
Three Months Ended March 31, ------------------ 1999 1998 ------ ------ NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................. $ 680 $ 454 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures of FPL ......................................................... (180) (159) Independent power investments ....................................................... (316) (350) Distributions and loan repayments from partnerships and joint ventures .............. 57 221 Other - net ......................................................................... 95 (23) Net cash used in investing activities ........................................... (344) (311) CASH FLOWS FROM FINANCING ACTIVITIES: Retirement of long-term debt and preferred stock .................................... (130) (180) Increase in commercial paper ........................................................ 276 158 Repurchase of common stock .......................................................... (32) (17) Dividends on common stock ........................................................... (89) (86) Net cash provided by (used in) financing activities ............................. 25 (125) Net increase in cash and cash equivalents ............................................. 361 18 Cash and cash equivalents at beginning of period ...................................... 187 54 Cash and cash equivalents at end of period ............................................ $ 548 $ 72 Supplemental disclosures of cash flow information: Cash paid for interest .............................................................. $ 45 $ 51 Cash paid for income taxes .......................................................... $ - $ - Supplemental schedule of noncash investing and financing activities: Additions to capital lease obligations .............................................. $ 26 $ 1
This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on pages 9 through 12 herein and the Notes to Consolidated Financial Statements appearing in the 1998 Form 10-K for FPL Group and FPL. FLORIDA POWER & LIGHT COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Millions of Dollars) (Unaudited)
Three Months Ended March 31, ------------------ 1999 1998 ------- ------ OPERATING REVENUES ..................................................................... $1,359 $1,295 OPERATING EXPENSES: Fuel, purchased power and interchange ................................................ 485 430 Other operations and maintenance ..................................................... 250 268 Depreciation and amortization ........................................................ 275 244 Income taxes ......................................................................... 56 57 Taxes other than income taxes ........................................................ 143 137 Total operating expenses ........................................................... 1,209 1,136 OPERATING INCOME ....................................................................... 150 159 OTHER INCOME (DEDUCTIONS): Interest charges ..................................................................... (43) (50) Other - net .......................................................................... 1 (2) Total other deductions - net ....................................................... (42) (52) NET INCOME ............................................................................. 108 107 PREFERRED STOCK DIVIDENDS .............................................................. 4 4 NET INCOME AVAILABLE TO FPL GROUP ...................................................... $ 104 $ 103
This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on pages 9 through 12 herein and the Notes to Consolidated Financial Statements appearing in the 1998 Form 10-K for FPL Group and FPL. FLORIDA POWER & LIGHT COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Millions of Dollars) (Unaudited)
March 31, December 31, 1999 1998 --------- ------------ ELECTRIC UTILITY PLANT: Plant in service, including nuclear fuel and construction work in progress ....... $17,626 $17,464 Less accumulated depreciation and amortization ................................... (9,588) (9,317) Electric utility plant - net ................................................... 8,038 8,147 CURRENT ASSETS: Cash and cash equivalents ........................................................ 486 152 Customer receivables, net of allowances of $6 and $8, respectively ............... 423 521 Materials, supplies and fossil fuel inventory - at average cost .................. 241 239 Other ............................................................................ 109 204 Total current assets ........................................................... 1,259 1,116 OTHER ASSETS: Special use funds ................................................................ 1,276 1,206 Other ............................................................................ 304 279 Total other assets ............................................................. 1,580 1,485 TOTAL ASSETS ....................................................................... $10,877 $10,748 CAPITALIZATION: Common shareholder's equity ...................................................... $ 4,810 $ 4,803 Preferred stock without sinking fund requirements ................................ 226 226 Long-term debt ................................................................... 2,192 2,191 Total capitalization ........................................................... 7,228 7,220 CURRENT LIABILITIES: Debt and preferred stock due within one year ..................................... 230 230 Accounts payable ................................................................. 309 321 Accrued interest, taxes and other ................................................ 884 800 Total current liabilities ...................................................... 1,423 1,351 OTHER LIABILITIES AND DEFERRED CREDITS: Accumulated deferred income taxes ................................................ 914 887 Unamortized regulatory and investment tax credits ................................ 342 353 Other ............................................................................ 970 937 Total other liabilities and deferred credits ................................... 2,226 2,177 COMMITMENTS AND CONTINGENCIES TOTAL CAPITALIZATION AND LIABILITIES ............................................... $10,877 $10,748
This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on pages 9 through 12 herein and the Notes to Consolidated Financial Statements appearing in the 1998 Form 10-K for FPL Group and FPL. FLORIDA POWER & LIGHT COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Millions of Dollars) (Unaudited)
Three Months Ended March 31, ------------------ 1999 1998 ------ ------ NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................. $ 667 $ 453 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ................................................................ (180) (159) Other - net ......................................................................... (51) (21) Net cash used in investing activities ........................................... (231) (180) CASH FLOWS FROM FINANCING ACTIVITIES: Retirement of long-term debt and preferred stock .................................... - (180) Increase in commercial paper ........................................................ - 14 Dividends ........................................................................... (102) (98) Net cash used in financing activities ............................................. (102) (264) Net increase in cash and cash equivalents ............................................. 334 9 Cash and cash equivalents at beginning of period ...................................... 152 3 Cash and cash equivalents at end of period ............................................ $ 486 $ 12 Supplemental disclosures of cash flow information: Cash paid for interest .............................................................. $ 39 $ 48 Cash paid for income taxes .......................................................... $ 1 $ - Supplemental schedule of noncash investing and financing activities: Additions to capital lease obligations .............................................. $ 26 $ 1
This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements on pages 9 through 12 herein and the Notes to Consolidated Financial Statements appearing in the 1998 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 1998 Form 10-K for FPL Group and FPL. In the opinion of FPL Group and FPL management, all adjustments (consisting of normal recurring accruals) considered necessary for fair financial statement presentation have been made. Certain amounts included in the prior year's 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 Regulation - In March 1999, the FPSC approved an agreement between FPL, the State of Florida's Office of Public Counsel (Public Counsel), The Florida Industrial Power Users Group (FIPUG) and The Coalition for Equitable Rates (Coalition) regarding FPL's retail base rates, authorized regulatory ROE, capital structure and other matters. As a result of the approval of this agreement, all matters raised in Public Counsel's petition to the FPSC to conduct a full rate proceeding are resolved. The three-year agreement became effective April 15, 1999. The agreement provides for a $350 million reduction in annual revenue from retail base operations allocated to all customers on a cents-per-kilowatt-hour basis. Additionally, the agreement sets forth a revenue sharing mechanism for each of the three years covered by the agreement, whereby revenue from retail base operations in excess of a stated threshold will be shared with customers on the basis of two-thirds refunded to customers and one-third retained by FPL. Revenue from retail base operations in excess of a second threshold will be refunded 100% to customers. The thresholds for the three years are as follows: First Second Third Twelve Twelve Twelve Months Months Months (Millions of Dollars) Threshold to refund 66 2/3% to customers ..... $3,400 $3,450 $3,500 Threshold to refund 100% to customers ........ $3,556 $3,606 $3,656 In addition to the revenue reductions, the agreement lowers FPL's authorized regulatory ROE range to 10% to 12% (down from the previous 11% to 13%). During the term of the agreement, the achieved ROE may, from time to time, be outside the authorized range and the sharing mechanism described above is intended to be the appropriate and exclusive mechanism to address that circumstance. The agreement establishes a cap on FPL's adjusted equity ratio of 55.83%. The adjusted equity ratio reflects a discounted amount for off- balance sheet obligations under certain long-term purchase power contracts. The agreement also includes an allowance for special depreciation of up to $100 million at FPL's discretion, in each year of the three-year agreement period to be applied to nuclear and fossil generating assets. The special amortization program terminated when the new agreement became effective. Approximately $61 million and $30 million of special amortization was recorded under this program during the three months ended March 31, 1999 and 1998, respectively, and approximately $378 million was recorded in 1998. Finally, included in the agreement are provisions which limit depreciation rates and accruals for nuclear decommissioning and fossil dismantlement costs to currently approved levels and limit amounts recoverable under the environmental cost recovery clause during the three-year term of the agreement. The agreement states that Public Counsel, FIPUG and Coalition will neither seek nor support any additional base rate reductions during the three-year term of the agreement unless such reduction is initiated by FPL. Further, FPL agreed to not petition for any base rate increases that would take effect during the three-year term of the agreement. Electric Plant, Depreciation and Amortization - In April 1999, the FPSC granted final approval on FPL's most recent depreciation studies. 2. Capitalization FPL Group Common Stock - During the three months ended March 31, 1999, FPL Group repurchased 547,400 shares of common stock, under its share repurchase program. A total of approximately 2.2 million shares have been repurchased under the share repurchase program that began in April 1997. Long-Term Debt - In January 1999, FPL Group Capital Inc (FPL Group Capital) redeemed $125 million principal amount of 7.625% debentures, maturing in 2013. This redemption resulted in a loss on reacquired debt of approximately $8 million, which is included in other-net in FPL Group's condensed consolidated statements of income. In April 1999, FPL sold $225 million principal amount of first mortgage bonds maturing in 2009, with an interest rate of 5.875%. The proceeds will be used in May 1999 to redeem approximately $216 million principal amount of first mortgage bonds, maturing in 2013, bearing interest at 7.875%. Long-Term Incentive Plan - Performance shares granted to date under FPL Group's long-term incentive plan resulted in assumed incremental shares of common stock outstanding for purposes of computing both basic and diluted earnings per share for the three months ended March 31, 1999 and 1998. These incremental shares were not material in the periods presented and did not cause diluted earnings per share to differ from basic earnings per share. Other - Comprehensive income of FPL Group totaling $209 million and $109 million for the three months ended March 31, 1999 and 1998, respectively, includes net income and changes in unrealized gains (losses) on securities and foreign currency translation adjustments. Accumulated other comprehensive income is separately displayed in the condensed consolidated balance sheets of FPL Group. 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 $2.9 billion for 1999 through 2001. Included in this three-year forecast are capital expenditures for 1999 of approximately $900 million, of which $180 million had been spent through March 31, 1999. As of March 31, 1999, FPL Energy has made commitments for the acquisition and development of independent power projects, including the non-nuclear generating assets of Central Maine Power Company (CMP), totaling $1.2 billion. FPL Group and its subsidiaries, other than FPL, have guaranteed approximately $260 million of purchase power agreement 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 $363 million per incident at any nuclear utility reactor in the United States, payable at a rate not to exceed $43 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 nuclear 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 $51 million in retrospective premiums. 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 the majority of its transmission and distribution (T&D) property due to the high cost and limited coverage available from third-party insurers. As approved by the FPSC, FPL maintains a funded storm and property insurance reserve, which totaled approximately $266 million at March 31, 1999, 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 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 (Southern Companies) provide approximately 1,300 megawatts (mw) of power through mid- 2010 and 383 mw thereafter through 2021. 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. Fuel contracts provide for the transportation and supply of natural gas and coal. FPL Energy has long-term contracts for the transportation and storage of natural gas to its Doswell plant which expire in 2007, with a five-year renewal option, and in 2017, respectively. The required capacity and minimum payments through 2003 under these contracts are estimated to be as follows: 1999 2000 2001 2002 2003 ---- ---- ---- ---- ---- (Millions of Dollars) FPL: Capacity payments: JEA and Southern Companies ............. $210 $210 $210 $210 $200 Qualifying facilities (a) .............. $360 $370 $390 $400 $410 Minimum payments, at projected prices: Natural gas, including transportation ... $210 $210 $240 $260 $270 Coal .................................... $ 40 $ 40 $ 30 $ 30 $ 15 FPL Energy: Natural gas transportation and storage .. $ 15 $ 15 $ 15 $ 15 $ 15 _______________ (a) Includes approximately $40 million, $40 million, $40 million, $45 million, and $45 million, respectively, for capacity payments associated with two contracts that are currently in dispute. These capacity payments are subject to the outcome of the related litigation. See Litigation. Charges under these contracts were as follows:
Three Months Ended March 31, 1999 Charges 1998 Charges ------------------- ------------------- Energy/ Energy/ Capacity Fuel Capacity Fuel -------- ------- -------- ------- (Millions of Dollars) FPL: JEA and Southern Companies ................................... $50(b) $23(a) $49(b) $31(a) Qualifying facilities ........................................ $75(c) $21(a) $74(c) $25(a) Natural gas, including transportation......................... $ - $75(a) $ - $54(a) Coal ......................................................... $ - $12(a) $ - $13(a) FPL Energy: Natural gas transportation and storage........................ $ - $ 4 $ - $ 5 _______________ (a) Recovered through the fuel clause. (b) Recovered through base rates and the capacity cost recovery clause (capacity clause). (c) Recovered through the capacity clause.
Litigation - In 1997, FPL filed a complaint against the owners of two qualifying facilities (plant owners) seeking an order declaring that FPL's obligations under the power purchase agreements with the qualifying facilities were rendered of no force and effect because the power plants failed to accomplish commercial operation before January 1, 1997, as required by the agreements. In 1997, the plant owners filed for bankruptcy under Chapter XI of the U.S. Bankruptcy Code, ceased all attempts to operate the power plants and entered into an agreement with the holders of more than 70% of the bonds that partially financed the construction of the plants. This agreement gives the holders of a majority of the principal amount of the bonds (the majority bondholders) the right to control, fund and manage any litigation against FPL and the right to settle with FPL on any terms such majority bondholders approve, provided that certain agreements are not affected and certain conditions are met. In January 1998, the plant owners (through the attorneys for the majority bondholders) filed an answer denying the allegations in FPL's complaint and asserting counterclaims for approximately $2 billion, consisting of all capacity payments that could have been made over the 30-year term of the power purchase agreements and three times their actual damages for alleged violations of Florida antitrust laws, plus attorneys' fees. In October 1998, the court dismissed all of the plant owners' antitrust claims against FPL. The plant owners have since moved for summary judgment on FPL's claims against them. 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, a 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. In 1996, the district court ordered the FMPA to seek a declaratory ruling from the FERC regarding certain issues in the case. In November 1998, the FERC declined to make the requested ruling. The district court has yet to act further. FPL Group and FPL believe that they have meritorious defenses to the litigation to which they are parties and are vigorously defending the suits. Accordingly, the liabilities, if any, arising from the proceedings are not anticipated to have a material adverse effect on their financial statements. Accounting for Derivative Instruments and Hedging Activities - In June 1998, the Financial Accounting Standards Board (FASB) issued Financial Accounting Standards No. (FAS) 133, "Accounting for Derivative Instruments and Hedging Activities." The statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. FPL Group and FPL are currently assessing the effect, if any, on their financial statements of implementing FAS 133. FPL Group and FPL will be required to adopt the standard in 2000. 4. Segment Information FPL Group anticipates the independent power segment will become reportable during the second quarter of 1999. FPL Group's segment information for March 31, 1999 is as follows:
Three Months Ended March 31, 1999 1998 ------------------------------------------ --------------------------------------------- Regulated Independent Corporate Regulated Independent Corporate Utility Power & Other Total Utility Power & Other Total --------- ----------- --------- ------- --------- ----------- --------- -------- (Millions of Dollars) Operating revenues ..... $ 1,359 $ 41 $ 12 $ 1,412 $ 1,295 $ 23 $ 20 $ 1,338 Net income ............. $ 104 $ 13 $ 92 $ 209 $ 103 $ 3 $ 2 $ 108 March 31, 1999 December 31, 1998 ------------------------------------------ ------------------------------------------- Regulated Independent Corporate Regulated Independent Corporate Utility Power & Other Total Utility Power & Other Total --------- ----------- --------- ------- --------- ----------- --------- -------- (Millions of Dollars) Total assets ........... $10,877 $1,120 $299 $12,296 $10,748 $1,031 $250 $12,029
5. Summarized Financial Information of FPL Group Capital FPL Group Capital's debentures, when outstanding, are guaranteed by FPL Group and included in FPL Group's condensed consolidated balance sheets. Operating revenues of FPL Group Capital for the three months ended March 31, 1999 and 1998 were $54 million and $44 million, respectively. For the same periods, operating expenses were approximately $51 million and $41 million, respectively, and net income was approximately $112 million and $11 million, respectively. See Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. At March 31, 1999, FPL Group Capital had approximately $341 million of current assets, $1.6 billion of noncurrent assets, $511 million of current liabilities and $542 million of noncurrent liabilities. At December 31, 1998, FPL Group Capital had current assets of approximately $317 million, noncurrent assets of $1.4 billion, current liabilities of $310 million and noncurrent liabilities of $703 million. Management has not presented separate financial statements and other disclosures concerning FPL Group Capital because management has determined that such information is not material to holders of the FPL Group Capital debentures. 6. Subsequent Event On April 7, 1999, FPL Energy completed the purchase of CMP's non-nuclear generating assets, which was financed primarily with the issuance of commercial paper. The transaction was closed following the U.S. District Court for the Southern District of New York's rejection in March 1999 of FPL Energy's request for a declaratory judgment that CMP could not meet essential terms of the purchase agreement between the two companies. The request for declaratory judgment was filed because FPL Energy believed that recent FERC rulings regarding transmission constituted a material adverse effect under the purchase agreement and that FPL Energy should not be bound to complete the transaction. The rulings by the FERC, as well as the announcement of new entrants into the market and changes in fuel prices, resulted in an impairment in the value of certain assets purchased from CMP. FPL Group will record an impairment loss in the range of $160 million to $180 million ($95 million to $107 million after taxes) in the second quarter of 1999, which will reduce 1999 earnings per share between $0.56 and $0.63. Item 2. Management's 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 Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in the 1998 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 first quarter earnings benefited from improved results at FPL and FPL Energy, partly offset by a premium paid to redeem high cost debt at FPL Group Capital and start-up costs for retail marketing activities. FPL Group's first quarter earnings also include an after-tax gain of approximately $96 million on the sale of an investment in Adelphia Communications Corporation (Adelphia) common stock, which was obtained in the mid-1990s when FPL Group exited the cable business. FPL's net income available to FPL Group increased due to higher customer usage and growth in customer accounts, reduced O&M expenses and lower interest expense, partially offset by higher depreciation. FPL's revenues from retail base operations for the three months ended March 31, 1999 increased to $762 million from $750 million for the same period in 1998. The increase in base revenues resulted from increases in energy usage per retail customer of 1.2%, primarily due to milder weather conditions in 1998, and a 1.9% increase in customer accounts. Cost recovery clause revenues and franchise fees comprise substantially all of the remaining portion of operating revenues. Such revenues represent a pass-through of costs and do not significantly affect net income. Fluctuations in these revenues are primarily driven by changes in energy sales, fuel prices and capacity charges. O&M expenses decreased for the three months ended March 31, 1998 due to cost control, despite additional spending associated with the continued improvement of service reliability. Lower interest expense during the first quarter of 1999 is the result of lower debt balances and the full amortization in 1998 of deferred costs associated with reacquired debt as part of the FPSC's approved special amortization program. Depreciation and amortization expense increased for the three months ended March 31, 1999 as a result of the sales-related amortization recorded under the special amortization program, which is a function of retail base revenues. In March 1999, the FPSC approved an agreement between FPL, Public Counsel and certain other interested parties regarding FPL's revenue from retail base operations, authorized regulatory ROE, capital structure and other matters. As a result of the approval of this agreement, all matters raised in Public Counsel's petition to the FPSC to conduct a full rate proceeding are resolved. The three-year agreement began April 15, 1999. The agreement provides for a $350 million reduction in annual revenue from retail base operations allocated to all customers on a cents-per-kilowatt-hour basis. Additionally, the agreement sets forth a revenue sharing mechanism for each of the three years covered by the agreement, whereby revenue from retail base operations in excess of a stated threshold will be shared with customers on the basis of two-thirds refunded to customers and one-third retained by FPL. Revenues from retail base operations in excess of a second threshold will be refunded 100% to customers. In addition to the revenue reductions, the agreement lowered FPL's authorized ROE range to 10% to 12%. During the term of the agreement, the achieved ROE may, from time to time, be outside the authorized range and the sharing mechanism described above is intended to be the appropriate and exclusive mechanism to address that circumstance. The agreement also includes an allowance for special depreciation of up to $100 million at FPL's discretion, in each year of the three-year agreement period to be applied to nuclear and fossil generating assets. The special amortization program terminated when the new agreement became effective. Approximately $61 million and $30 million of special amortization was recorded under this program during the three months ended March 31, 1999 and 1998, respectively, and approximately $378 million was recorded in 1998. Finally, included in the agreement are provisions which limit depreciation rates and accruals for nuclear decommissioning and fossil dismantlement costs to currently approved levels and limit amounts recoverable under the environmental cost recovery clause during the three-year term of the agreement. The agreement states that Public Counsel, and other interested parties will neither seek nor support any additional base rate reductions during the three- year term of the agreement unless such reduction is initiated by FPL. Further, FPL agreed to not petition for any base rate increases that would take effect during the three-year term of the agreement. For information concerning regulation see Note 1 - Regulation. FPL Energy's net income improved for the three months ended March 31, 1999. The improvements related to better results from the Doswell project and an additional period of operation from FPL Energy's gas-fired plants in Massachusetts and New Jersey, which were acquired mid-January 1998. Additionally, as of January 1999, FPL Energy assumed the management of the two plants in Massachusetts and New Jersey. Also contributing to the improvement was the addition of five new wind projects in California and Oregon, as well as the repowering of existing wind projects for increased operational efficiencies. On April 7, 1999, FPL Energy completed the purchase of CMP's non-nuclear generating assets, which was financed primarily with the issuance of commercial paper. The transaction was closed following the U.S. District Court for the Southern District of New York's rejection in March 1999 of FPL Energy's request for a declaratory judgment that CMP could not meet essential terms of the purchase agreement between the two companies. The request for declaratory judgment was filed because FPL Energy believed that recent FERC rulings regarding transmission constituted a material adverse effect under the purchase agreement and that FPL Energy should not be bound to complete the transaction. The rulings by the FERC, as well as the announcement of new entrants into the market and changes in fuel prices, resulted in an impairment in the value of certain assets purchased from CMP. FPL Group will record an impairment loss in the range of $160 million to $180 million ($95 million to $107 million after taxes) in the second quarter of 1999, which will reduce 1999 earnings per share between $0.56 and $0.63. FPL Group is continuing to work to resolve the impact of the year 2000 on the processing of information by its computer systems. As of March 31, 1999 the inventory and assessment of the information technology infrastructure, computer applications and computerized processes embedded in operating equipment have been completed and approximately 90% of the necessary modifications have been tested and implemented. FPL Group continues to be on schedule with its multi-phase plan and all phases are expected to be completed by mid-1999, except for confirmatory testing at St. Lucie Unit No. 1 and remediation at two projects in which FPL Energy has an ownership interest, all of which will be completed during scheduled outages in October 1999. The estimated cost of addressing year 2000 issues is not expected to exceed $50 million, of which approximately 45% had been spent through March 31, 1999. Approximately 80% of the total estimate is for the multi-phase plan. The remainder is an estimate for project and inventory contingencies. FPL Group's year 2000 contingency planning is currently underway. Contingency plans are expected to be completed by mid-1999. LIQUIDITY AND CAPITAL RESOURCES Using available cash flows from operations, FPL Group Capital redeemed $125 million principal amount of debentures that were scheduled to mature in 2013. This redemption resulted in a loss on reacquired debt of approximately $8 million, which is included in other-net in FPL Group's condensed consolidated statements of income. In April 1999, FPL Group borrowed approximately $982 million of commercial paper primarily to finance the purchase of CMP. Additionally, available lines of credit, which support the commercial paper program, aggregated approximately $2.4 billion ($900 million for FPL) and $1.9 billion ($900 million for FPL) at March 31, 1999 and December 31, 1998, respectively. For additional information see Note 6. Additionally, during the three months ended March 31, 1999, FPL Group repurchased 547,400 shares of common stock. In April 1999, FPL sold $225 million principal amount of first mortgage bonds maturing in 2009. The proceeds will be used in May 1999 to redeem approximately $216 million principal amount of first mortgage bonds, maturing in 2013. These actions are consistent with management's intent to reduce debt and preferred stock balances and the number of outstanding shares of common stock. For information concerning capital commitments see Note 3 - Commitments. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (b) Exhibit FPL Number Description Group FPL ------- ----------------------------------------- ----- --- 4 Ninety-ninth Supplemental Indenture dated x x as of April 1, 1999 between FPL and Bankers Trust Company, Trustee 10 Employment Agreement between FPL Group and Roger Young dated as of February 22,1999 x 12(a) Computation of Ratio of Earnings to Fixed x Charges 12(b) Computation of Ratios x 27 Financial Data Schedule x x (b) Reports on Form 8-K A Current Report on Form 8-K filed with the Securities and Exchange Commission on March 17, 1999 by FPL Group and FPL reporting one event under Item 5. Other Events. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized. FPL GROUP, INC. FLORIDA POWER & LIGHT COMPANY (Registrants) Date: April 30,1999 K. MICHAEL DAVIS --------------------------------- K. Michael Davis Controller and Chief Accounting Officer of FPL Group, Inc. Vice President, Accounting, Controller and Chief Accounting Officer of Florida Power & Light Company (Principal Financial Officer of the Registrants) EX-4 2 NINETY-NINTH SUPPLEMENTAL INDENTURE EXHIBIT 4 This instrument was prepared by: K. M. Davis Florida Power & Light Company EXECUTED IN 60 COUNTERPARTS OF 700 Universe Boulevard WHICH THIS IS COUNTERPART NO. 46 Juno Beach, Florida 33408 FLORIDA POWER & LIGHT COMPANY to BANKERS TRUST COMPANY As Trustee under Florida Power & Light Company's Mortgage and Deed of Trust, Dated as of January 1, 1944. Ninety-ninth Supplemental Indenture Relating to $225,000,000 Principal Amount of First Mortgage Bonds, 5 7/8% Series due April 1, 2009. Dated as of April 1, 1999 This Supplemental Indenture has been executed in several counterparts, all of which constitute but one and the same instrument. This Supplemental Indenture has been recorded in several counties and documentary stamp taxes as required by law in the amount of $787,500, and non-recurring intangible taxes as required by law in the amount of $63,891, were paid on the Supplemental Indenture recorded in the public records of Palm Beach County, Florida. Note to Examiner: The new bonds ("New Bonds") being issued in connection with this Supplemental Indenture are secured by real property and personal property located both within Florida and outside of Florida. The aggregate fair market value of the collateral exceeds the aggregate principal amount of (y) the New Bonds plus (z) the other outstanding bonds secured by the mortgage supplemented hereby and all previous supplemental indentures thereto. The intangible tax has been computed pursuant to Section 199.133 (2), Florida Statutes, by (i) determining the percentage of the aggregate fair market value of the collateral constituting real property situated in Florida and by multiplying that percentage times the principal amount of the New Bonds (the result hereinafter defined as the "Tax Base") and (ii) multiplying the tax rate times the Tax Base. NINETY-NINTH SUPPLEMENTAL INDENTURE INDENTURE, dated as of the first day of April, 1999, made and entered into by and between FLORIDA POWER & LIGHT COMPANY, a corporation of the State of Florida, whose post office address is 700 Universe Boulevard, Juno Beach, Florida 33408 (hereinafter sometimes called FPL), and BANKERS TRUST COMPANY, a corporation of the State of New York, whose post office address is Four Albany Street, New York, New York 10006 (hereinafter called the Trustee), as the ninety-ninth supplemental indenture (hereinafter called the Ninety-ninth Supplemental Indenture) to the Mortgage and Deed of Trust, dated as of January 1, 1944 (hereinafter called the Mortgage), made and entered into by FPL, the Trustee and The Florida National Bank of Jacksonville, as Co-Trustee (now resigned), the Trustee now acting as the sole trustee under the Mortgage, which Mortgage was executed and delivered by FPL to secure the payment of bonds issued or to be issued under and in accordance with the provisions thereof, reference to which Mortgage is hereby made, this Ninety-ninth Supplemental Indenture being supplemental thereto; WHEREAS, Section 8 of the Mortgage provides that the form of each series of bonds (other than the first series) issued thereunder shall be established by Resolution of the Board of Directors of FPL and that the form of such series, as established by said Board of Directors, shall specify the descriptive title of the bonds and various other terms thereof, and may also contain such provisions not inconsistent with the provisions of the Mortgage as the Board of Directors may, in its discretion, cause to be inserted therein expressing or referring to the terms and conditions upon which such bonds are to be issued and/or secured under the Mortgage; and WHEREAS, Section 120 of the Mortgage provides, among other things, that any power, privilege or right expressly or impliedly reserved to or in any way conferred upon FPL by any provision of the Mortgage, whether such power, privilege or right is in any way restricted or is unrestricted, may be in whole or in part waived or surrendered or subjected to any restriction if at the time unrestricted or to additional restriction if already restricted, and FPL may enter into any further covenants, limitations or restrictions for the benefit of any one or more series of bonds issued thereunder, or FPL may cure any ambiguity contained therein, or in any supplemental indenture, or may establish the terms and provisions of any series of bonds other than said first series, by an instrument in writing executed and acknowledged by FPL in such manner as would be necessary to entitle a conveyance of real estate to record in all of the states in which any property at the time subject to the Lien of the Mortgage shall be situated; and WHEREAS, FPL now desires to create the series of bonds described in Article I hereof and to add to its covenants and agreements contained in the Mortgage certain other covenants and agreements to be observed by it and to alter and amend in certain respects the covenants and provisions contained in the Mortgage; and WHEREAS, the execution and delivery by FPL of this Ninety-ninth Supplemental Indenture, and the terms of the bonds, hereinafter referred to in Article I, have been duly authorized by the Board of Directors of FPL by appropriate resolutions of said Board of Directors; NOW, THEREFORE, THIS INDENTURE WITNESSETH: That FPL, in consideration of the premises and of One Dollar to it duly paid by the Trustee at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, and in further evidence of assurance of the estate, title and rights of the Trustee and in order further to secure the payment of both the principal of and interest and premium, if any, on the bonds from time to time issued under the Mortgage, according to their tenor and effect, and the performance of all the provisions of the Mortgage (including any instruments supplemental thereto and any modification made as in the Mortgage provided) and of said bonds, hereby grants, bargains, sells, releases, conveys, assigns, transfers, mortgages, pledges, sets over and confirms (subject, however, to Excepted Encumbrances as defined in Section 6 of the Mortgage) unto Bankers Trust Company, as Trustee under the Mortgage, and to its successor or successors in said trust, and to said Trustee and its successors and assigns forever, all property, real, personal and mixed, acquired by FPL after the date of the execution and delivery of the Mortgage (except any herein or in the Mortgage, as heretofore supplemented, expressly excepted), now owned (except any properties heretofore released pursuant to any provisions of the Mortgage and in the process of being sold or disposed of by FPL) or, subject to the provisions of Section 87 of the Mortgage, hereafter acquired by FPL and wheresoever situated, including (without in anywise limiting or impairing by the enumeration of the same the scope and intent of the foregoing) all lands, power sites, flowage rights, water rights, water locations, water appropriations, ditches, flumes, reservoirs, reservoir sites, canals, raceways, dams, dam sites, aqueducts, and all rights or means for appropriating, conveying, storing and supplying water; all rights of way and roads; all plants for the generation of electricity by steam, water and/or other power; all power houses, gas plants, street lighting systems, standards and other equipment incidental thereto, telephone, radio and television systems, air-conditioning systems and equipment incidental thereto, water works, water systems, steam heat and hot water plants, substations, lines, service and supply systems, bridges, culverts, tracks, ice or refrigeration plants and equipment, offices, buildings and other structures and the equipment thereof; all machinery, engines, boilers, dynamos, electric, gas and other machines, regulators, meters, transformers, generators, motors, electrical, gas and mechanical appliances, conduits, cables, water, steam heat, gas or other pipes, gas mains and pipes, service pipes, fittings, valves and connections, pole and transmission lines, wires, cables, tools, implements, apparatus, furniture, chattels, and choses in action; all municipal and other franchises, consents or permits; all lines for the transmission and distribution of electric current, gas, steam heat or water for any purpose including towers, poles, wires, cables, pipes, conduits, ducts and all apparatus for use in connection therewith; all real estate, lands, easements, servitudes, licenses, permits, franchises, privileges, rights of way and other rights in or relating to real estate or the occupancy of the same and (except as herein or in the Mortgage, as heretofore supplemented, expressly excepted) all the right, title and interest of FPL in and to all other property of any kind or nature appertaining to and/or used and/or occupied and/or enjoyed in connection with any property hereinbefore or in the Mortgage, as heretofore supplemented, described. TOGETHER WITH all and singular the tenements, hereditaments and appurtenances belonging or in anywise appertaining to the aforesaid property or any part thereof, with the reversion and reversions, remainder and remainders and (subject to the provisions of Section 57 of the Mortgage) the tolls, rents, revenues, issues, earnings, income, products and profits thereof, and all the estate, right, title and interest and claim whatsoever, at law as well as in equity, which FPL now has or may hereinafter acquire in and to the aforesaid property and franchises and every part and parcel thereof. IT IS HEREBY AGREED by FPL that, subject to the provisions of Section 87 of the Mortgage, all the property, rights, and franchises acquired by FPL after the date hereof (except any herein or in the Mortgage, as heretofore supplemented, expressly excepted) shall be and are as fully granted and conveyed hereby and as fully embraced within the Lien of the Mortgage, as if such property, rights and franchises were now owned by FPL and were specifically described herein and conveyed hereby. PROVIDED that the following are not and are not intended to be now or hereafter granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over or confirmed hereunder and are hereby expressly excepted from the Lien and operation of this Ninety-ninth Supplemental Indenture and from the Lien and operation of the Mortgage, as heretofore supplemented, viz: (1) cash, shares of stock, bonds, notes and other obligations and other securities not hereafter specifically pledged, paid, deposited, delivered or held under the Mortgage or covenanted so to be; (2) merchandise, equipment, materials or supplies held for the purpose of sale in the usual course of business and fuel (including Nuclear Fuel unless expressly subjected to the Lien and operation of the Mortgage by FPL in a future Supplemental Indenture), oil and similar materials and supplies consumable in the operation of any properties of FPL; rolling stock, buses, motor coaches, automobiles and other vehicles; (3) bills, notes and accounts receivable, and all contracts, leases and operating agreements not specifically pledged under the Mortgage or covenanted so to be; (4) the last day of the term of any lease or leasehold which may hereafter become subject to the Lien of the Mortgage; (5) electric energy, gas, ice, and other materials or products generated, manufactured, produced or purchased by FPL for sale, distribution or use in the ordinary course of its business; all timber, minerals, mineral rights and royalties; (6) FPL's franchise to be a corporation; and (7) the properties already sold or in the process of being sold by FPL and heretofore released from the Mortgage and Deed of Trust, dated as of January 1, 1926, from Florida Power & Light Company to Bankers Trust Company and The Florida National Bank of Jacksonville, trustees, and specifically described in three separate releases executed by Bankers Trust Company and The Florida National Bank of Jacksonville, dated July 28, 1943, October 6, 1943 and December 11, 1943, which releases have heretofore been delivered by the said trustees to FPL and recorded by FPL among the Public Records of all Counties in which such properties are located; provided, however, that the property and rights expressly excepted from the Lien and operation of the Mortgage in the above subdivisions (2) and (3) shall (to the extent permitted by law) cease to be so excepted in the event and as of the date that the Trustee or a receiver or trustee shall enter upon and take possession of the Mortgaged and Pledged Property in the manner provided in Article XIII of the Mortgage by reason of the occurrence of a Default as defined in Section 65 thereof. TO HAVE AND TO HOLD all such properties, real, personal and mixed, granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over or confirmed by FPL as aforesaid, or intended so to be, unto Bankers Trust Company, the Trustee, and its successors and assigns forever. IN TRUST NEVERTHELESS, for the same purposes and upon the same terms, trusts and conditions and subject to and with the same provisos and covenants as are set forth in the Mortgage, as heretofore supplemented, this Ninety-ninth Supplemental Indenture being supplemental thereto. AND IT IS HEREBY COVENANTED by FPL that all terms, conditions, provisos, covenants and provisions contained in the Mortgage shall affect and apply to the property hereinbefore described and conveyed and to the estate, rights, obligations and duties of FPL and the Trustee and the beneficiaries of the trust with respect to said property, and to the Trustee and its successors as Trustee of said property in the same manner and with the same effect as if said property had been owned by FPL at the time of the execution of the Mortgage, and had been specifically and at length described in and conveyed to said Trustee, by the Mortgage as a part of the property therein stated to be conveyed. FPL further covenants and agrees to and with the Trustee and its successors in said trust under the Mortgage, as follows: ARTICLE I Ninety-sixth Series of Bonds Section 1. (I) There shall be a series of bonds designated "5 7/8% Series due April 1, 2009", herein sometimes referred to as the "Ninety- sixth Series", each of which shall also bear the descriptive title First Mortgage Bond, and the form thereof, which shall be established by Resolution of the Board of Directors of FPL, shall contain suitable provisions with respect to the matters hereinafter in this Section specified. Bonds of the Ninety-sixth Series shall mature on April 1, 2009 and shall be issued as fully registered bonds in denominations of One Thousand Dollars and, at the option of FPL, in any multiple or multiples of One Thousand Dollars (the exercise of such option to be evidenced by the execution and delivery thereof); they shall bear interest from April 1, 1999, at the rate of 5 7/8% per annum, payable semi-annually on October 1 and April 1 of each year commencing on October 1, 1999; the principal of and interest on each said bond to be payable at the office or agency of FPL in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for public and private debts. Bonds of the Ninety-sixth Series shall be dated as in Section 10 of the Mortgage provided. (II) Bonds of the Ninety-sixth Series shall be redeemable either at the option of FPL or pursuant to the requirements of the Mortgage (including, among other requirements, the application of cash delivered to or deposited with the Trustee pursuant to the provisions of Section 64 of the Mortgage or with proceeds of Released Property) in whole at any time, or in part from time to time, prior to maturity, upon notice, as provided in Section 52 of the Mortgage, mailed at least thirty (30) days prior to the date fixed for redemption (the "Redemption Date"), at a price (the "Redemption Price") equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the Redemption Date plus a premium, if any (the "Make-Whole Premium"). In no event will the Redemption Price be less than 100% of the principal amount of the bonds of the Ninety-sixth series being redeemed plus accrued interest to the Redemption Date. The amount of the Make-Whole Premium with respect to any bond of the Ninety-sixth Series (or portion thereof) to be redeemed will be equal to the excess, if any, of: 1. the sum of the present values, calculated as of the Redemption Date, of: a. each interest payment that, but for such redemption, would have been payable on the bond of the Ninety-sixth Series (or portion thereof) being redeemed on each interest payment date occurring after the Redemption Date (excluding any accrued interest for the period prior to the Redemption Date); and b. the principal amount that, but for such redemption, would have been payable at the final maturity of the bond of the Ninety- sixth Series (or portion thereof) being redeemed; over 2. the principal amount of the bond of the Ninety-sixth Series (or portion thereof) being redeemed. The present values of interest and principal payments referred to in clause (1) above will be determined in accordance with generally accepted principles of financial analysis. Such present values will be calculated by discounting the amount of each payment of interest or principal from the date that each such payment would have been payable, but for the redemption, to the Redemption Date at a discount rate equal to the Treasury Yield (as defined below) plus 10 basis points. The Make-Whole Premium will be calculated by an independent investment banking institution of national standing appointed by FPL; provided that if FPL fails to make such appointment at least 30 calendar days prior to the Redemption Date, or if the institution so appointed is unwilling or unable to make such calculation, such calculation will be made by NationsBanc Montgomery Securities LLC or, if such firm is unwilling or unable to make such calculation, by an independent investment banking institution of national standing appointed by the Trustee (in any such case, an "Independent Investment Banker"). For purposes of determining the Make-Whole Premium, "Treasury Yield" means a rate of interest per annum equal to the weekly average yield to maturity of United States Treasury Notes that have a constant maturity that corresponds to the remaining term to maturity of the bonds of the Ninety-sixth Series, calculated to the nearest 1/12th of a year (the "Remaining Term"). The Treasury Yield will be determined as of the third business day immediately preceding the applicable Redemption Date. The weekly average yields of United States Treasury Notes will be determined by reference to the most recent statistical release published by the Federal Reserve Bank of New York and designated "H.15(519) Selected Interest Rates" or any successor release (the "H.15 Statistical Release"). If the H.15 Statistical Release sets forth a weekly average yield for the United States Treasury Notes having a constant maturity that is the same as the Remaining Term, then the Treasury Yield will be equal to such weekly average yield. In all other cases, the Treasury Yield will be calculated by interpolation, on a straight-line basis, between the weekly average yields on the United States Treasury Notes that have a constant maturity closest to and greater than the Remaining Term and the United States Treasury Notes that have a constant maturity closest to and less than the Remaining Term (in each case as set forth in the H.15 Statistical Release). Any weekly average yields so calculated by interpolation will be rounded to the nearest 1/100th of 1%, with any figure of 1/200th of 1% or above being rounded upward. If weekly average yields for United States Treasury Notes are not available in the H.15 Statistical Release or otherwise, then the Treasury Yield will be calculated by interpolation of comparable rates selected by the Independent Investment Banker. (III) At the option of the registered owner, any bonds of the Ninety-sixth Series, upon surrender thereof for cancellation at the office or agency of FPL in the Borough of Manhattan, The City of New York, together with a written instrument of transfer wherever required by FPL, duly executed by the registered owner or by his duly authorized attorney, shall (subject to the provisions of Section 12 of the Mortgage) be exchangeable for a like aggregate principal amount of bonds of the same series of other authorized denominations. Bonds of the Ninety-sixth Series shall be transferable (subject to the provisions of Section 12 of the Mortgage) at the office or agency of FPL in the Borough of Manhattan, The City of New York. Upon any exchange or transfer of bonds of the Ninety-sixth Series, FPL may make a charge therefor sufficient to reimburse it for any tax or taxes or other governmental charge, as provided in Section 12 of the Mortgage, but FPL hereby waives any right to make a charge in addition thereto for any exchange or transfer of bonds of the Ninety-sixth Series. ARTICLE II Dividend Covenant SECTION 2. Section 3 of the Third Supplemental Indenture, as heretofore amended, is hereby further amended by inserting the words "or Ninety-sixth Series" immediately before the words "remain Outstanding". ARTICLE III Miscellaneous Provisions SECTION 3. Subject to the amendments provided for in this Ninety-ninth Supplemental Indenture, the terms defined in the Mortgage, as heretofore supplemented, shall, for all purposes of this Ninety-ninth Supplemental Indenture, have the meanings specified in the Mortgage, as heretofore supplemented. SECTION 4. The holders of bonds of the Ninety-sixth Series consent that FPL may, but shall not be obligated to, fix a record date for the purpose of determining the holders of bonds of the Ninety-sixth Series entitled to consent to any amendment, supplement or waiver. If a record date is fixed, those persons who were holders at such record date (or their duly designated proxies), and only those persons, shall be entitled to consent to such amendment, supplement or waiver or to revoke any consent previously given, whether or not such persons continue to be holders after such record date. No such consent shall be valid or effective for more than 90 days after such record date. SECTION 5. The Trustee hereby accepts the trust herein declared, provided, created or supplemented and agrees to perform the same upon the terms and conditions herein and in the Mortgage, as heretofore supplemented, set forth and upon the following terms and conditions: The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Ninety-ninth Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made by FPL solely. In general, each and every term and condition contained in Article XVII of the Mortgage, as heretofore amended, shall apply to and form part of this Ninety-ninth Supplemental Indenture with the same force and effect as if the same were herein set forth in full with such omissions, variations and insertions, if any, as may be appropriate to make the same conform to the provisions of this Ninety-ninth Supplemental Indenture. SECTION 6. Whenever in this Ninety-ninth Supplemental Indenture either of the parties hereto is named or referred to, this shall, subject to the provisions of Articles XVI and XVII of the Mortgage, as heretofore amended, be deemed to include the successors and assigns of such party, and all the covenants and agreements in this Ninety-ninth Supplemental Indenture contained by or on behalf of FPL, or by or on behalf of the Trustee, or either of them, shall, subject as aforesaid, bind and inure to the respective benefits of the respective successors and assigns of such parties, whether so expressed or not. SECTION 7. Nothing in this Ninety-ninth Supplemental Indenture, expressed or implied, is intended, or shall be construed, to confer upon, or to give to, any person, firm or corporation, other than the parties hereto and the holders of the bonds and coupons Outstanding under the Mortgage, any right, remedy or claim under or by reason of this Ninety-ninth Supplemental Indenture or any covenant, condition, stipulation, promise or agreement hereof, and all the covenants, conditions, stipulations, promises and agreements in this Ninety-ninth Supplemental Indenture contained by or on behalf of FPL shall be for the sole and exclusive benefit of the parties hereto, and of the holders of the bonds and coupons Outstanding under the Mortgage. SECTION 8. The Mortgage, as heretofore supplemented and amended and as supplemented hereby, is intended by the parties hereto, as to properties now or hereafter encumbered thereby and located within the State of Georgia, to operate and is to be construed as granting a lien only on such properties and not as a deed passing title thereto. SECTION 9. This Ninety-ninth Supplemental Indenture shall be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. IN WITNESS WHEREOF, FPL has caused its corporate name to be hereunto affixed, and this instrument to be signed and sealed by its President or one of its Vice Presidents, and its corporate seal to be attested by its Secretary or one of its Assistant Secretaries for and in its behalf, and BANKERS TRUST COMPANY has caused its corporate name to be hereunto affixed, and this instrument to be signed and sealed by one of its Vice Presidents or Assistant Vice Presidents, and its corporate seal to be attested by one of its Assistant Vice Presidents or one of its Assistant Secretaries, all as of the day and year first above written. FLORIDA POWER & LIGHT COMPANY By: K. M. DAVIS K. M. Davis Vice President, Accounting, Controller and Chief Accounting Officer 700 Universe Blvd. Juno Beach, FL 33408 Attest: DILEK SAMIL Dilek Samil Treasurer and Assistant Secretary 700 Universe Boulevard Juno Beach, FL 33408 Executed, sealed and delivered by FLORIDA POWER & LIGHT COMPANY in the presence of: HAROLD J. McCARTHY Harold J. McCarthy ROBERT W. BUFFETT Robert W. Buffett Bankers Trust Company As Trustee By: JAMES C. McDONOUGH James C. McDonough Vice President 4 Albany Street , 4th Floor New York, NY 10006 Attest: WILLIAM T. JENKINS William T. Jenkins Assistant Vice President 4 Albany Street, 4th Floor New York, NY 10066 Executed, sealed and delivered by Bankers Trust Company in the presence of: DAVID BEANE David Beane SONJA EGGE Sonja Egge STATE OF FLORIDA COUNTY OF PALM BEACH SS.: On the 20th day of April, in the year 1999, before me personally came K. M. Davis, to me known, who, being by me duly sworn, did depose and say that he resides at 1101 N.W. 115th Ave., Plantation, FL 33323; that he is a Vice President, Accounting, Controller and Chief Accounting Officer of FLORIDA POWER & LIGHT COMPANY, one of the corporations described in and which executed the above instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and that he signed his name thereto by like order. I HEREBY CERTIFY, that on this 20th day of April, 1999, before me personally appeared K. M. Davis and Dilek Samil, respectively, the Vice President, Accounting, Controller and Chief Accounting Officer and the Treasurer and Assistant Secretary of FLORIDA POWER & LIGHT COMPANY, a corporation under the laws of the State of Florida, to me known to be the persons described in and who executed the foregoing instrument and severally acknowledged the execution thereof to be their free act and deed as such officers, for the uses and purposes therein mentioned; and that they affixed thereto the official seal of said corporation, and that said instrument is the act and deed of said corporation. K. M. Davis and Dilek Samil produced Florida Driver's License No. D120-513-46-467-0 and Florida Driver's License No. S540-160-55-827-0 as identification, respectively. WITNESS my signature and official seal at Juno Beach, in the County of Palm Beach, and State of Florida, the day and year last aforesaid. FRANCINE MCGUIRE Notary Public, State of Florida Commission No. CC768319 My Commission Expires Oct. 21, 2002 STATE OF FLORIDA COUNTY OF NEW YORK SS.: On the 20th day of April, in the year 1999, before me personally came James C. McDonough, to me know, who, being by me duly sworn, did depose and say that he resides at 150 Draper Lane, Dobbs Ferry, New York; that he is a Vice President of BANKERS TRUST COMPANY, one of the corporations described in and which executed the above instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and that he signed his name thereto by like order. I HEREBY CERTIFY, that on this 20th day of April, 1999, before me personally appeared James C. McDonough and William T. Jenkins, respectively, a Vice President and an Assistant Vice President of BANKERS TRUST COMPANY, a corporation under the laws of the state of New York, to me known to be the persons described in and who executed the foregoing instrument and severally acknowledged the execution thereof to be their free act and deed as such officers, for the uses and purposes therein mentioned; and that they affixed thereto the official seal of said corporation, and that said instrument is the act and deed of said corporation. James C. McDonough and William T. Jenkins produced New York Driver's License No. 286 690 794 and Massachusetts Driver's License No. S711243 as identification, respectively. WITNESS my signature and official seal at New York City, in the County of New York, and State of New York, the day and year last aforesaid. RICHARD BUCKWALTER Name of Notary: Richard Buckwalter Notary Public, State of New York Commission No. 01SH5087362 Qualified in Kings County Certificate Filed in New York County My Commission Expires July 15, 1999 EX-10 3 EMPLOYMENT AGREEMENT EXHIBIT 10 EMPLOYMENT AGREEMENT Employment Agreement between FPL GROUP, INC., a Florida corporation (the "Company"), and Roger Young (the "Executive"), dated as of February 22, 1999. The Board of Directors of the Company (the "Board"), has determined that it is in the best interests of the Company and its shareholders to assure that the Company and its affiliated companies will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive's full attention and dedication to the Company and its affiliated companies currently and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations. Therefore, in order to accomplish these objectives, the Board has caused the Company to enter into this Agreement. Therefore, the Company and the Executive agree as follows: 1. Effective Date. The effective date of this Agreement shall be the date on which a Change of Control occurs (the "Effective Date"). Anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if the Executive's employment with the Company or its affiliated companies is terminated or the Executive ceases to be an officer of the Company or its affiliated companies prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment or cessation of status as an officer (i) was at the request of a third party who has taken steps reasonably calculated to effect the Change of Control or (ii) otherwise arose in connection with or anticipation of the Change of Control, then for all purposes of this Agreement the "Effective Date" shall mean the date immediately prior to the date of such termination of employment or cessation of status as an officer. 2. Change of Control. For the purposes of this Agreement, a "Change of Control" shall mean: (a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change of Control: (i) any acquisition by the Company or any or its subsidiaries, (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or (iii) any acquisition by any corporation with respect to which, following such acquisition, more than 75% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such acquisition in substantially the same proportions as their ownership, immediately prior to such acquisition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or (b) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened solicitation to which Rule 14a-11 of Regulation 14A promulgated under the Exchange Act applies or other actual or threatened solicitation of proxies or consents; or (c) Approval by the shareholders of the Company of a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, more than 75% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or (d) Approval by the shareholders of the Company of (i) a complete liquidation or dissolution of the Company or (ii) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, more than 75% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be. The term "the sale or disposition by the Company of all or substantially all of the assets of the Company" shall mean a sale or other disposition transaction or series of related transactions involving assets of the Company or of any direct or indirect subsidiary of the Company (including the stock of any direct or indirect subsidiary of the Company) in which the value of the assets or stock being sold or otherwise disposed of (as measured by the purchase price being paid therefor or by such other method as the Board determines is appropriate in a case where there is no readily ascertainable purchase price) constitutes more than two-thirds of the fair market value of the Company (as hereinafter defined). The "fair market value of the Company" shall be the aggregate market value of the then Outstanding Company Common Stock (on a fully diluted basis) plus the aggregate market value of the Company's other outstanding equity securities. The aggregate market value of the shares of Outstanding Company Common Stock shall be determined by multiplying the number of shares of Outstanding Company Common Stock (on a fully diluted basis) outstanding on the date of the execution and delivery of a definitive agreement with respect to the transaction or series of related transactions (the "Transaction Date") by the average closing price of the shares of Outstanding Company Common Stock for the ten trading days immediately preceding the Transaction Date. The aggregate market value of any other equity securities of the Company shall be determined in a manner similar to that prescribed in the immediately preceding sentence for determining the aggregate market value of the shares of Outstanding Company Common Stock or by such other method as the Board shall determine is appropriate. 3. Employment Period. The Company hereby agrees to continue the Executive in its or its affiliated companies' employ, or both, as the case may be, and the Executive hereby agrees to remain in the employ of the Company, or its affiliated companies, or both, as the case may be, for a period commencing on the Effective Date and ending on the 4th anniversary of such date (the "Employment Period"). As used in this Agreement, the term "affiliated companies" shall include any corporation or other entity controlled by, controlling or under common control with the Company. 4. Position and Duties. During the Employment Period, the Executive's position (including status, offices, titles, and reporting requirements), authority, duties, and responsibilities with the Company or its affiliated companies or both, as the case may be, shall be at least commensurate in all material respects with the most significant of those held, exercised, and assigned at any time during the 90-day period immediately preceding the Effective Date. The Executive's services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or any location less than 20 miles from such location. During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote full time and attention during normal business hours to the business and affairs of the Company and its affiliated companies. It shall not be a violation of this Agreement for the Executive to serve on corporate, civic or charitable boards or committees, deliver lectures, fulfill speaking engagements or teach at educational institutions and manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company or its affiliated companies in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not be deemed to interfere with the performance of the Executive's responsibilities to the Company and its affiliated companies. 5. Compensation. During the Employment Period, the Executive shall be compensated as follows: (a) Annual Base Salary. The Executive shall be paid an annual base salary ("Annual Base Salary"), in equal biweekly installments, at least equal to the annual base salary being paid to the Executive by the Company and its affiliated companies with respect to the year in which the Effective Date occurs. The Annual Base Salary shall be reviewed at least annually and shall be increased substantially consistent with increases in base salary generally awarded to other peer executives of the Company and its affiliated companies. Such increases shall in no event be less than the increases in the U.S. Department of Labor Consumer Price Index - U.S. City Average Index. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase and the term Annual Base Salary as utilized in this Agreement shall refer to Annual Base Salary as so increased. As used in this Agreement, the term "affiliated companies" shall include any corporation or other entity controlled by, controlling or under common control with the Company. (b) Annual Bonus. In addition to Annual Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Period, an annual bonus (the "Annual Bonus") in cash at least equal to the average annual incentive compensation (annualized for any fiscal year consisting of less than twelve full months or with respect to which the Executive has been employed by the Company for less than twelve full months) paid or payable, including by reason of any deferral, to the Executive by the Company and its affiliated companies in respect of the two fiscal years immediately preceding the fiscal year in which the Effective Date occurs (the "Recent Average Bonus"). The higher of the Recent Average Bonus or the most recent Annual Bonus awarded by the Company and its affiliated companies after the Effective Date is herein called the "Highest Annual Bonus". Each such Annual Bonus shall be paid no later than the end of the third month of the fiscal year next following the fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect to defer the receipt of such Annual Bonus. (c) Long Term Incentive Compensation. During the Employment Period, the Executive shall be entitled to participate in all incentive compensation plans, practices, policies, and programs applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies, and programs provide the Executive with incentive opportunities and potential benefits, both as to amount and percentage of compensation, less favorable, in the aggregate, than those provided by the Company and its affiliated companies for the Executive under the FPL Group Long Term Incentive Plan (including, without limitation, performance share grants and awards) as in effect at any time during the 90-day period immediately preceding the Effective Date or; if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies. (d) Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all savings and retirement plans, practices, policies, and programs applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies, and programs provide the Executive with savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Company and its affiliated companies for the Executive under such plans, practices, policies, and programs as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies. (e) Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies, and programs provided by the Company and its affiliated companies (including, without limitation, medical, executive medical, prescription, dental, vision, short-term disability, long-term disability, executive long-term disability, salary continuance, employee life, group life, benefits pursuant to a split dollar arrangement, accidental death and dismemberment, and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of the Company and its affiliated companies but in no event shall such plans, practices, policies, and programs provide the Executive with benefits which are less favorable, in the aggregate, than the most favorable of such plans, practices, policies, and programs in effect for the Executive at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies. (f) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies, practices, and procedures of the Company and its affiliated companies in effect for the Executive at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies. (g) Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits in accordance with the most favorable plans, practices, programs, and policies of the Company and its affiliated companies in effect for the Executive at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies. (h) Office and Support Staff. During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to exclusive personal secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive by the Company and its affiliated companies at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as provided generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies. (i) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs, and practices of the Company and its affiliated companies as in effect for the Executive at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer incentives of the Company and its affiliated companies. 6. Termination of Employment. (a) Disability. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 13(b) of this Agreement of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" shall mean the absence of the Executive from the Executive's duties with the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive's legal representative (such agreement as to acceptability not to be withheld unreasonably). (b) Cause. The Company may terminate the Executive's employment during the Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean (i) repeated violations by the Executive of the Executive's obligations under Section 4 of this Agreement (other than as a result of incapacity due to physical or mental illness) which are demonstrably willful and deliberate on the Executive's part, which are committed in bad faith or without reasonable belief that such violations are in the best interests of the Company and which are not remedied in a reasonable period of time after receipt of written notice from the Company specifying such violations or (ii) the conviction of the Executive of a felony involving an act of dishonesty intended to result in substantial personal enrichment at the expense of the Company or its affiliated companies. (c) Good Reason. The Executive's employment may be terminated during the Employment Period by the Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall mean: (i) the assignment to the Executive of any duties inconsistent in any respect with the Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 4 of this Agreement, or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; (ii) any failure by the Company to comply with any of the provisions of Section 5 of this Agreement, other than isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; (iii) the Company's requiring the Executive to be based at any office or location other than that described in Section 4 hereof; (iv) any purported termination by the Company of the Executive's employment otherwise than as expressly permitted by this Agreement; or (v) any failure by the Company to comply with and satisfy Section 12(c) of this Agreement, provided that such successor has received at least ten days prior written notice from the Company or the Executive of the requirements of Section 12(c) of the Agreement. For purposes of this Section 6(c), any good faith determination of "Good Reason" made by the Executive shall be conclusive. (d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 13(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than fifteen days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstances which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company hereunder or preclude the Executive or the Company from asserting such fact or circumstance in enforcing the Executive's or the Company's rights hereunder. (e) Date of Termination. "Date of Termination" means (i) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination and (iii) if the Executive's employment is terminated by reason of Disability, the Date of Termination shall be the Disability Effective Date. 7. Obligations of the Company upon Termination. (a) Good Reason; Other Than for Cause or Disability. If, during the Employment Period, the Company terminates the Executive's employment other than for Cause or Disability or the Executive terminates employment for Good Reason: (i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the aggregate of the following amounts (such aggregate being hereinafter referred to as the "Special Termination Amount"): A. the sum of (1) the Executive's Annual Base Salary through the Date of Termination to the extent not theretofore paid, (2) the product of (x) the Highest Annual Bonus and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365 and (3) any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon) (including, without limitation, compensation, bonus, incentive compensation or awards deferred under the FPL Group, Inc. Deferred Compensation Plan or incentive compensation or awards deferred under the FPL Group, Inc. Long-Term Incentive Plan of 1985, the FPL Group, Inc. Long Term Incentive Plan of 1994, or pursuant to an individual deferral agreement) and any accrued vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (1), (2), and (3) being herein called the "Accrued Obligations"); and B. the amount equal to the product of (1) the greater of two or the number of years (with any partial year expressed as a fraction) remaining in the Employment Period and (2) the sum of (x) the Executive's Annual Base Salary and (y) the Highest Annual Bonus; provided, however, that such amount shall be paid in lieu of, and the Executive hereby waives the right to receive, any other amount of severance relating to salary or bonus continuation to be received by the Executive upon termination of employment of the Executive under any severance plan, policy or arrangement of the Company; and C. the maximum amount payable under all performance share grants and all other long term incentive compensation grants to the Executive, calculated as though the Executive had remained employed by the Company for the remainder of the Employment Period and on the basis of actual achievement of performance measures through the end of the fiscal year preceding the fiscal year in which the Date of Termination occurs and thereafter assuming 100% achievement of all performance measures through the end of the Employment Period; and D. a separate lump-sum supplemental retirement benefit equal to the difference between (1) the actuarial equivalent (utilizing for this purpose the actuarial assumptions utilized with respect to the FPL Group Employee Pension Plan (or any successor plan thereto) (the "Retirement Plan") during the 90-day period immediately preceding the Effective Date) of the benefit payable under the Retirement Plan and all supplemental and/or excess retirement plans providing benefits for the Executive (the "SERP") (including, but not limited to the Supplemental Pension Benefit (as defined in the FPL Group, Inc. Supplemental Executive Retirement Plan)) which the Executive would receive if the Executive's employment continued at the compensation level provided for in Sections 5(a) and 5(b) of this Agreement for the remainder of the Employment Period, assuming for this purpose that all accrued benefits are fully vested and that benefit accrual formulas are no less advantageous to the Executive than those in effect during the 90-day period immediately preceding the Effective Date, or, if more favorable to the Executive, as in effect generally at any time thereafter during the Employment Period with respect to other peer executives of the Company and its affiliated companies, and (2) the actuarial equivalent (utilizing for this purpose the actuarial assumptions utilized with respect to the Retirement Plan during the 90-day period immediately preceding the Effective Date) of the Executive's actual benefit (paid or payable), if any, under the Retirement Plan and the SERP; and E. a separate lump-sum supplemental retirement benefit equal to the difference between (1) the value of the Company Account (as defined in the FPL Group Employee Thrift Plan or any successor plan thereto) (the "Thrift Plan") and any other matching contribution accounts (including, but not limited to the Supplemental Matching Contribution Account (as defined in the FPL Group, Inc. Supplemental Executive Retirement Plan) under a SERP which the Executive would receive if (i) the Executive's employment continued at the compensation level provided for in Sections 5(a) and 5(b) of this Agreement for the remainder of the Employment Period, (ii) the Executive made pre- and after-tax contributions at the highest permissible rate (disregarding any limitations imposed by the Internal Revenue Code, which may or may not be set forth in the Thrift Plan) for each year remaining in the Employment Period, (iii) the Company Account and the matching contribution accounts are fully vested, and (iv) the matching contribution formulas are no less advantageous to the Executive than those in effect during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time during the remainder of the Employment Period with respect to other peer executives of the Company and its affiliated companies, and (2) the actual value of the Executive's Company Account and matching contribution accounts (paid or payable), if any, under the Thrift Plan and the SERP; and (ii) for the remainder of the Employment Period, or such longer period as any plan, program, practice or policy may provide, the Company shall continue benefits to the Executive and/or the Executive's family at least equal to those which would have been provided to them in accordance with the plans, programs, practices and policies described in Sections 5(e) and 5(g) of this Agreement if the Executive's employment had not been terminated, in accordance with the most favorable plans, practices, programs or policies of the Company and its affiliated companies applicable generally to other peer executives and their families during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies and their families, provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility. For purposes of determining eligibility of the Executive for retiree benefits pursuant to such plans, practices, programs and policies, the Executive shall be considered to have remained employed until the end of the Employment Period and to have retired on the last day of such period; and (iii) to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive pursuant to this Agreement or otherwise under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies (such other amounts and benefits shall be hereinafter referred to as the "Other Benefits"), but excluding solely for purposes of this Section 7(a)(iii) amounts waived by the Executive pursuant to Section 7(a)(i)(B). (b) Death. Upon the Executive's death during the Employment Period, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. All Accrued Obligations shall be paid to the Executive's estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. The term Other Benefits as utilized in this Section 7(b) shall include, without limitation, and the Executive's family shall be entitled to receive, benefits at least equal to the most favorable benefits provided by the Company and any of its affiliated companies to surviving families of peer executives of the Company and such affiliated companies under such plans, programs, practices and policies relating to family death benefits, if any, as in effect with respect to other peer executives and their families at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect on the date of the Executive's death with respect to other peer executives of the Company and its affiliated companies and their families. (c) Disability. If the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. All Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. The term Other Benefits as utilized in this Section 7(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable of those generally provided by the Company and its affiliated companies to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect generally with respect to other peer executives and their families at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect at any time thereafter generally with respect to other peer executives of the Company and its affiliated companies and their families. (d) Cause; Other Than for Good Reason. If the Executive's employment shall be terminated for Cause during the Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive Annual Base Salary through the Date of Termination plus the amount of any compensation previously deferred by the Executive, in each case to the extent theretofore unpaid. If the Executive terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Executive, other than for Accrued Obligations and the timely payment or provision of Other Benefits. In such case, all Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. 8. Non-exclusivity of Rights. Except as provided in Sections 7(a)(i)(B), 7(a)(ii), and 7(a)(iii) of this Agreement, nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement. 9. Full Settlement. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and, except as provided in Section 7(a)(ii) of this Agreement, such amounts shall not be reduced whether or not the Executive obtains other employment. The Company agrees to pay, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur at all stages of proceedings, including, without limitation, preparation and appellate review, as a result of any contest (regardless of whether formal legal proceedings are ever commenced and regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872 (f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). 10. Certain Additional Payments by the Company. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 10) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of Gross-Up Payment equal to the Excise Tax imposed upon the Payments. 11. Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive's employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). After termination of the Executive's employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this Section 11 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. 12. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. (c) The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and /or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. 13. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: Roger Young 19001 SE Mack Dairy Road Jupiter, Florida 33478 If to the Company: FPL Group, Inc. 700 Universe Boulevard Juno Beach, Florida 33408 Attention: Vice President, Human Resources or such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. (d) The Company may withhold from any amounts payable under this Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) The Executive's or the Company's failure to insist upon strict compliance with any provision hereof or any other provision of this Agreement or the failure to assert any right the Executive or the Company may hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 6(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. (f) The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company, the employment of the Executive by the Company is "at will" and, prior to the Effective Date, may be terminated by either the Executive or the Company at any time. Moreover, except as provided in Section 1, if prior to the Effective Date, (i) the Executive's employment with the Company terminates or (ii) the Executive ceases to be an officer of the Company, then the Executive shall have no further rights under this Agreement. IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from the Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written. ROGER YOUNG Roger Young FPL GROUP, INC. By LAWRENCE J. KELLEHER Lawrence J. Kelleher Vice President Human Resources EX-12.A 4 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12(a) FPL GROUP, INC. AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Three Months Ended March 31, Years Ended December 31, 1999 1998 1997 1996 1995 1994 (Millions of Dollars) Earnings, as defined: Net income ............................................ $ 209 $ 664 $ 618 $ 579 $ 553 $ 519 Income taxes .......................................... 106 279 304 294 329 307 Fixed charges, included in the determination of net income, as below ................................ 50 335 304 283 308 337 Distributed income of independent power investments.... 7 68 47 38 39 28 Less: Equity in earnings of independent power investments ......................................... 5 39 14 5 6 (3) Total earnings, as defined ........................ $ 367 $1,307 $1,259 $1,189 $1,223 $1,194 Fixed charges, as defined: Interest charges ...................................... $ 47 $ 322 $ 291 $ 267 $ 291 $ 319 Rental interest factor ................................ 1 4 4 5 6 7 Fixed charges included in nuclear fuel cost ........... 2 9 9 11 11 11 Fixed charges, included in the determination of net income .............................................. 50 335 304 283 308 337 Capitalized interest .................................. - 2 4 - - - Total fixed charges, as defined ................... $ 50 $ 337 $ 308 $ 283 $ 308 $ 337 Ratio of earnings to fixed charges ...................... 7.34 3.88 4.09 4.20 3.97 3.54
EX-12.B 5 COMPUTATION OF RATIOS EXHIBIT 12(b) FLORIDA POWER & LIGHT COMPANY COMPUTATION OF RATIOS
Three Months Ended March 31, 1999 (Millions of Dollars) RATIO OF EARNINGS TO FIXED CHARGES Earnings, as defined: Net income .............................................................................. $ 108 Income taxes ............................................................................ 55 Fixed charges, as below ................................................................. 46 Total earnings, as defined ............................................................ $ 209 Fixed charges, as defined: Interest charges ........................................................................ $ 43 Rental interest factor .................................................................. 1 Fixed charges included in nuclear fuel cost ............................................. 2 Total fixed charges, as defined ....................................................... $ 46 Ratio of earnings to fixed charges ........................................................ 4.54 RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS Earnings, as defined: Net income .............................................................................. $108 Income taxes ............................................................................ 55 Fixed charges, as below ................................................................. 46 Total earnings, as defined ............................................................ $ 209 Fixed charges, as defined: Interest charges ........................................................................ $ 43 Rental interest factor .................................................................. 1 Fixed charges included in nuclear fuel cost ............................................. 2 Total fixed charges, as defined ....................................................... 46 Non-tax deductible preferred stock dividends .............................................. 4 Ratio of income before income taxes to net income ......................................... 1.51 Preferred stock dividends before income taxes ............................................. 6 Combined fixed charges and preferred stock dividends ...................................... $ 52 Ratio of earnings to combined fixed charges and preferred stock dividends ................. 4.02
EX-27 6 FINANCIAL DATA SCHEDULE
UT This schedule contains summary financial information extracted from FPL Group's and FPL's condensed consolidated balance sheet as of March 31, 1999 and condensed consolidated statements of income and cash flows for the three months ended March 31, 1999 and is qualified in its entirety by reference to such financial statements. 0000753308 FPL Group, Inc. 1,000,000 DEC-31-1998 MAR-31-1999 3-MOS PER-BOOK $8,038 $2,402 $1,428 $0 $428 $12,296 $2 $2,967 $2,243 $5,212 $0 $226 $2,207 $0 $0 $0 $616 $0 $0 $0 $4,035 $12,296 $1,412 $106 $1,204 $1,204 $208 $158 $256 $47 $209 $4 $209 $89 $0 $680 $1.22 $1.22
EX-27 7 FINANCIAL DATA SCHEDULE
UT This schedule contains summary financial information extracted from FPL's condensed consolidated balance sheet as of March 31, 1999 and condensed consolidated statements of income and cash flows for the three months ended March 31, 1999 and is qualified in its entirety by reference to such financial statements. 0000037634 Florida Power & Light Company 1,000,000 DEC-31-1998 MAR-31-1999 3-MOS PER-BOOK $8,038 $1,276 $1,259 $0 $304 $10,877 $0 $0 $0 $4,810 $0 $226 $2,192 $0 $0 $0 $230 $0 $0 $0 $3,419 $10,877 $1,359 $56 $1,153 $1,209 $150 $1 $151 $43 $108 $4 $104 $0 $0 $667 $0 $0
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