-----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, CLIS0ATSRp180QQ+b3Y6jqY85YAruoLd2DslBK0dO1x39NEbf6NshJb7QEANvl5X 3nxajvkyPRopEJGdNvaoGg== 0000753308-98-000011.txt : 19980630 0000753308-98-000011.hdr.sgml : 19980630 ACCESSION NUMBER: 0000753308-98-000011 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980629 SROS: NYSE 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: 11-K SEC ACT: SEC FILE NUMBER: 001-08841 FILM NUMBER: 98656171 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 11-K 1 FPL GROUP EMPLOYEE THRIFT PLAN FISCAL YEAR ENDED 12/31/97 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 11-K [ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-8841 FPL Group Employee Thrift Plan (Full title of the plan) FPL GROUP, INC. (Name of issuer of the securities held pursuant to the plan) 700 Universe Boulevard Juno Beach, Florida 33408 (Address of principal executive office) INDEPENDENT AUDITORS' REPORT EMPLOYEE BENEFITS COMMITTEE OF THE BOARD OF DIRECTORS OF FPL GROUP, INC.: We have audited the accompanying statements of net assets available for benefits of the FPL Group Employee Thrift Plan (the "Plan") as of December 31, 1997 and 1996, and the related statement of changes in net assets available for benefits for the year ended December 31, 1997. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1997 and 1996 and the changes in net assets available for benefits for the year ended December 31, 1997 in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of (1) assets held for investment as of December 31, 1997, and (2) transactions in excess of five percent of the current value of plan assets for the year ended December 31, 1997, are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules are the responsibility of the Plan's management. Such schedules have been subjected to the auditing procedures applied in our audit of the basic 1997 financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. DELOITTE & TOUCHE LLP Miami, Florida June 26, 1998 FPL GROUP EMPLOYEE THRIFT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, --------------------------------- 1997 1996 -------------- --------------- ASSETS Accrued interest receivable - ESOP account ...................................... $ 1,730 $ 2,687 General investments, at fair value: Interest-bearing cash ......................................................... 6,972,866 6,598,924 Loans to participants - other ................................................. 23,773,117 24,214,344 Value of interest in master trusts ............................................ 280,285,885 269,909,329 Value of interest in registered investment companies .......................... 341,399,961 242,085,635 Total general investments ................................................... 652,431,829 542,808,232 Employer securities, at fair value: Employer securities held by the Plan .......................................... 342,682,045 299,873,755 Leveraged ESOP employer securities ............................................ 360,163,701 293,761,010 Total employer securities ................................................... 702,845,746 593,634,765 Total assets .................................................................... 1,355,279,305 1,136,445,684 LIABILITIES Interest payable - ESOP Account ................................................. 750,574 762,421 Acquisition indebtedness of leveraged ESOP ...................................... 232,375,835 236,043,545 Total liabilities ............................................................... 233,126,409 236,805,966 NET ASSETS AVAILABLE FOR BENEFITS ............................................... $1,122,152,896 $ 899,639,718
The accompanying Notes to Financial Statements are an integral part of these statements. FPL GROUP EMPLOYEE THRIFT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31, 1997 ------------------------------ INCOME Contributions: Received from employer ........................................................... $ 4,166,627 Received from participants ....................................................... 28,452,579 Noncash contributions (from employer) ............................................ 8,509,995 Total contributions ............................................................ $ 41,129,201 Earnings on investments: Interest: Interest-bearing cash .......................................................... 353,569 Other loans (participant loans) ................................................ 2,006,772 Total interest ............................................................... 2,360,341 Common stock dividends ........................................................... 9,678,430 Net appreciation in fair value of investments: Employer securities ............................................................ 78,544,860 Master trusts .................................................................. 28,294,937 Registered investment companies ................................................ 54,244,956 Total net appreciation in fair value of investments .......................... 161,084,753 Total income ....................................................................... 214,252,725 EXPENSES Benefit payments to participants or beneficiaries .................................. 63,172,060 Administrative expenses ............................................................ 76,707 Total expenses ................................................................... 63,248,767 NET INCOME ......................................................................... 151,003,958 TRANSFERS Transfers to the Plan - net ........................................................ 1,427,929 Effect of current year Leveraged ESOP activity ..................................... 70,081,291 Total transfers to the Plan ........................................................ 71,509,220 NET ASSETS AT DECEMBER 31, 1996 .................................................... 899,639,718 NET ASSETS AT DECEMBER 31, 1997 .................................................... $1,122,152,896
The accompanying Notes to Financial Statements are an integral part of these statements. FPL GROUP EMPLOYEE THRIFT PLAN NOTES TO FINANCIAL STATEMENTS For the year ended December 31, 1997 1. Description of the Plan and Significant Accounting Policies The Plan The following description of the FPL Group Employee Thrift Plan (Plan) provides only general information. Participating employees (Members) should refer to the Summary Plan Description in their employee handbook for a more complete description of the Plan. Fidelity Management Trust Company (Trustee) administers the trust (Trust) established under the Plan and the Employee Thrift and Retirement Savings Plan for the Bargaining Unit Employees of Florida Power & Light Company (FPL Bargaining Plan). The Plan is a defined contribution plan subject to the provisions of the Employee Retirement Income Securities Act of 1974, as amended (ERISA). Participation in the Plan is voluntary. Employees (other than union employees) are eligible to participate in the Plan on the first day of the month coincident with the completion of six continuous full months of service with FPL Group, Inc. (FPL Group or Company) or certain of its subsidiaries or on the first day of any month thereafter. The Plan includes a cash or deferred compensation arrangement (Tax Saver Option) permitted by Section 401(k) of the Internal Revenue Code of 1986, as amended (Code). The Tax Saver Option permits a Member to elect to defer federal income taxes on all or a portion of their contributions (Tax Saver Contributions) until they are distributed from the Plan. Tax Saver Contributions were limited in 1997 to a maximum of $9,500 per Member and may be increased or decreased in future years for cost-of-living adjustments. The Plan also includes leveraged employee stock ownership plan (Leveraged ESOP) provisions. The Leveraged ESOP is a stock bonus plan within the meaning of Treasury Regulation Section 1.401-1(b)(1)(iii) that is qualified under Section 401(a) of the Code and is designed to invest primarily in common stock of FPL Group, Inc. (Common Stock). The Trust purchased Common Stock from FPL Group using the proceeds of a loan (Acquisition Indebtedness) from FPL Group Capital Inc (FPL Group Capital), a subsidiary of FPL Group (see Note 3). The Common Stock acquired by the Trust is initially held in a separate account (ESOP Account). As the Acquisition Indebtedness (including interest) is repaid, each Member's account is allocated its portion of Common Stock released from the ESOP Account. The Company has in place a Flexible Dividend Program which enables participants to choose how their dividends on certain shares of Common Stock held in the Plan are to be paid. Dividends on Common Stock acquired through the Leveraged ESOP do not qualify under this program. The options available to participants include reinvestment of dividends in Company Stock; distribution of dividends in cash; distribution of dividends in cash and contribution of an equivalent amount of their compensation to their thrift plan account; or a partial distribution with the balance reinvested in Common Stock. Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100 percent vested in their accounts. Contributions, Loans, Withdrawals and Transfers to (from) the Plan The Plan provides for basic contributions by eligible employees in whole percentages from 1% to 7% of their base compensation (Earnings), which is matched in part by the Company with shares of Common Stock. For basic Tax Saver or After-Tax Contributions, the Company match is 100% on the first 3% of a Member's Earnings, 50% on the next 3% and 25% on the last 1%. The Plan also provides for supplemental contributions by Members to be made in whole percentages from 1% to 9% of their Earnings, bringing the total maximum contributions to 16%. Supplemental contributions are not matched by the Company. The value of a Member's contributions (including all income, gains and losses) is at all times 100% vested. Company contributions vest at a rate of 20% each year and are fully vested upon a Member attaining five years of service as a Member of the Plan. An employee may also receive vesting credit for prior years of service as a member of the FPL Bargaining Plan. The Plan's investment options include fourteen investment choices: eleven core investment options and three investment strategy options. The core investment options include various mutual funds, a separately managed portfolio of short- and long-term investment contracts and Common Stock. The strategy options combine portions of the individual core investment options available through the Plan providing various combinations of stocks and fixed income investments. The Plan allows Members, at any time, to change their contribution percentage, to change their investment option allocation for future contributions or to transfer their account balance attributable to Member contributions from one investment option to another. At year end, the number of Members contributing to the Plan was 6,746. Company contributions are primarily made from Common Stock shares released from the ESOP Account. Forfeitures of non-vested Company contributions due to termination of Plan participation are used to reduce the amount of future Company contributions to the Plan. A Member who has attained at least the age of fifty and completed five years of service while a Member will be permitted to transfer all or any portion of Company contributions made to his or her account and any earnings thereon to one or more of the other investment options. Any future Company contributions will continue to be invested in Common Stock. A Member may borrow from his or her account during his or her employment under certain conditions. At December 31, 1997, the loan interest rate was 8.5%. Withdrawals by Members from certain of their accounts during their employment are permitted with certain penalties and restrictions. The penalties limit a Member's contributions to the Plan for varying periods following a withdrawal. Transfers to (from) the Plan generally represent net transfers between the Plan and the FPL Bargaining Plan. The transfers arise as a result of members transferring between bargaining unit and non-bargaining unit status while employed by Florida Power & Light Company (FPL). Basis of Accounting The financial statements of the Plan are prepared under the accrual basis of accounting. Investment income and interest income on loans to Members is recognized when earned. Contributions by Members and Company contributions are accrued on the basis of amounts withheld through payroll deductions. Distributions to Members are recorded when paid. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. Investment Valuation and Income Recognition The Plan's investments are stated at fair value, except insurance and financial institution investment contracts which are stated at contract value (see Investment Contracts below). Shares of registered investment companies are valued at quoted market prices, which represent the net asset value of shares held by the Plan at year end. The FPL Group Company stock is valued at its quoted market price. Loans to participants are valued at cost, which approximates fair value. Purchases and sales of investment securities are recorded on the trade date. Gains or losses on sales of investment securities are determined using the carrying amount of the securities. The carrying amounts of securities held in Member accounts are adjusted daily; securities held in the ESOP Account (see Note 2) are adjusted annually. Unrealized appreciation or depreciation is recorded to recognize changes in market value. Investment Contracts The Plan has entered into investment contracts with various insurance companies and financial institutions. The contracts are fully benefit responsive and are included in the financial statements at contract value (which represents contributions made under the contract, plus earnings, less withdrawals and administrative expenses). There are no reserves against contract values for credit risk of the contract issuer or otherwise. The contract value of investment contracts at December 31, 1997, which are held in the Conservative Investment Strategy, Moderate Growth Investment Strategy, Long-Term Growth Investment Strategy, and FPL Managed Income Portfolio was $9,338,000, $12,360,000, $4,485,000 and $153,881,000, respectively. As of the same date, the fair value of investment contracts in these funds was $9,421,000, $12,470,000, $4,525,000 and $155,252,000, respectively. At December 31, 1996, the contract value of investment contracts for these funds was $8,699,000, $10,330,000, $3,308,000 and $147,695,000, respectively, with fair values of $8,750,000, $10,390,000, $3,327,000 and $148,559,000, respectively. The average yield for the portfolio of investment contracts was 6.67% and 6.68% for 1997 and 1996, respectively. The crediting interest rate at December 31, 1997 and 1996 was 6.43% and 6.24%, respectively. The crediting interest rate is based on an agreed-upon formula with the issuer, but cannot be less than zero. 2. Employee Stock Ownership Plan Account Allocation The assets, liabilities and net income of the ESOP Account are not considered plan assets but are for the joint benefit of the Plan and the FPL Bargaining Plan. The ESOP Account is allocated for financial reporting purposes based on each plan's relative net assets. The Plan's allocation of Common Stock held in the ESOP Account (employer securities), Acquisition Indebtedness and interest payable have been reflected in the Statements of Net Assets Available for Benefits, but are not available for, or the obligation of, Plan Members. The employer securities will be released from the ESOP Account and distributed to Members' accounts in satisfaction of part or all of the Company's matching contribution obligation under the Plan as the Acquisition Indebtedness is repaid (see Note 3). ESOP shares allocated to date are classified as employer securities held by the Plan on the Statements of Net Assets Available for Benefits. The Acquisition Indebtedness will be repaid from dividends on the shares acquired by the ESOP Account, as well as from cash contributions from FPL Group. The net effect of a change in the allocation percentage from year to year is reported as a transfer to or from the Plan. The value of the shares distributed to Member accounts is not affected by these allocations. Condensed financial statements of the ESOP Account are presented below, indicating the allocations made to each plan. The effect of current year Leveraged ESOP activity on net assets is included in transfers to (from) the plan in the financial statements of each plan. Distributions of shares to the plans are presented as noncash contributions in the financial statements of each plan.
The FPL Total ESOP Bargaining Account The Plan Plan ------------ ------------ ------------ Allocation percentage ............................................. 100% 68% 32% Accrued interest .................................................. $ 2,537 $ 1,730 $ 807 Employer securities ............................................... 528,105,440 360,163,701 167,941,739 Total assets .................................................... 528,107,977 360,165,431 167,942,546 Interest payable .................................................. 1,100,561 750,574 349,987 Acquisition indebtedness .......................................... 340,731,013 232,375,835 108,355,178 Total liabilities ............................................... 341,831,574 233,126,409 108,705,165 Net assets at December 31, 1997 ................................... $186,276,403 $127,039,022 $ 59,237,381 Contributions received from employer .............................. $ 13,612,372 Interest income ................................................... 5,668 Dividends ......................................................... 17,393,116 Net appreciation in fair value of investments ..................... 117,994,417 Total income .................................................... 149,005,573 Interest expense .................................................. 33,114,393 Net income ........................................................ $115,891,180 $ 79,036,860 $ 36,854,320 Distribution of shares to plans ................................... (12,474,438) (8,509,995) (3,964,443) Transfers to (from) the plan ...................................... - (445,574) 445,574 Effect of current year Leveraged ESOP activity on net assets ...... 103,416,742 70,081,291 33,335,451 Net assets at December 31, 1996 ................................... 82,859,661 56,957,731 25,901,930 Net assets at December 31, 1997 ................................... $186,276,403 $127,039,022 $ 59,237,381
3. Acquisition Indebtedness In December 1990, the Trust, which holds plan assets for both the Plan and the FPL Bargaining Plan, borrowed $360 million from FPL Group Capital to purchase approximately 12.4 million shares of Common Stock. The Acquisition Indebtedness matures in 2019, bears interest at a fixed rate of 9.69% per year and is to be repaid using dividends received on both Common Stock held by the ESOP Account and ESOP shares distributed to Member accounts, along with cash contributions from FPL Group. For those dividends on shares allocated to Member accounts used to repay the loan, additional shares, equal in value to those dividends, will be allocated to Member accounts. In 1997, dividends received from shares held by the ESOP and shares distributed to Member accounts totaled approximately $17,393,000 and $4,765,000, respectively. Cash contributed in 1997 by FPL Group for the debt service shortfall totaled approximately $13,612,000. The unallocated shares of Common Stock acquired with the proceeds of the Acquisition Indebtedness are collateral for the Acquisition Indebtedness. As principal payments are made, a percentage of Common Stock is released as collateral and becomes available to satisfy matching contributions, as well as to repay dividends on ESOP shares distributed to Member accounts for debt service. During 1997, 367,653 shares of Common Stock were released as collateral for the Acquisition Indebtedness. The scheduled principal repayments of the Acquisition Indebtedness for the next five years and thereafter are as follows: 1998 - $1,672,000; 1999 - $1,825,000; 2000 - $1,873,000; 2001 - $3,883,000; 2002 - $4,452,000 and thereafter - $327,026,000. See Note 2 for information on the Plan's allocation percentage of the Acquisition Indebtedness. 4. Parties-In-Interest Transactions Company contributions are primarily made in Common Stock released from the ESOP Account or in cash which is used by the Trustee to purchase Common Stock. Such amounts are reported as noncash contributions (from employer) and contributions received from employer, respectively. Dividend income earned by the Plan results from dividends on Common Stock. Dividends on shares held in the ESOP Account were used to repay the Acquisition Indebtedness (see Note 3). Certain dividends on shares held in Members' accounts are reinvested in Common Stock for the benefit of its Members pursuant to FPL Group's Dividend Reinvestment and Common Share Purchase Plan in which the Trustee participates. 5. Statement of Net Assets Available for Benefits Information by Investment Fund Option Information about the Statements of Net Assets Available for Benefits by investment fund option is as follows:
December 31, ---------------------------- 1997 1996 ------------ ------------ Interest-bearing cash: Fidelity Retirement Government Money Market Portfolio .............................. $ 6,972,866 $ 6,598,924 Value of interest in master trusts: Conservative Investment Strategy ................................................... $ 16,831,751 $ 16,735,918 Moderate Growth Investment Strategy ................................................ 52,102,264 48,888,853 Long-term Growth Investment Strategy ............................................... 54,479,923 45,603,632 Short-term liquid investments maintained in FPL Group Company Stock Fund ........... 2,991,224 3,624,176 FPL Managed Income Portfolio ....................................................... 153,880,723 155,056,750 $280,285,885 $269,909,329 Value of interest in registered investment companies: Fidelity U.S. Bond Index Fund ...................................................... $ 14,843,916 $ 14,739,302 Spartan U.S. Equity Index Fund ..................................................... 119,946,605 82,132,216 T. Rowe Price Equity Income Fund ................................................... 15,749,652 - Fidelity Magellan Fund ............................................................. 84,982,862 69,812,448 Fidelity OTC Portfolio ............................................................. 52,081,236 49,397,073 Brandywine Fund, Inc. ............................................................. 21,997,246 - Fidelity Overseas Fund ............................................................. 26,868,842 26,004,596 Templeton Foreign Fund I .......................................................... 4,929,602 - $341,399,961 $242,085,635 FPL Group Company Stock Fund ......................................................... $342,682,045 $299,873,755 Loan fund ............................................................................ $ 23,773,117 $ 24,214,344
6. Statement of Changes in Net Assets Available for Benefits Information by Investment Fund Option Information about the Statement of Changes in Net Assets Available for Benefits by investment fund option is as follows:
Fidelity Retirement Moderate Long-term Government Conservative Growth Growth Money Mkt. Investment Investment Investment Portfolio Strategy Strategy Strategy ---------- ----------- ----------- ----------- INCOME Contributions ............................................ $ 265,029 $ 297,424 $ 1,963,474 $ 3,419,794 Interest ................................................. 353,569 - - - Net appreciation in fair value of investments in master trusts .......................................... - 1,968,045 7,516,940 8,937,639 Total income ......................................... 618,598 2,265,469 9,480,414 12,357,433 EXPENSES Benefit payments to participants or beneficiaries ........ 1,277,870 1,730,670 1,946,956 2,118,931 Administrative expenses .................................. 2,002 692 2,753 3,420 Total expenses ....................................... 1,279,872 1,731,362 1,949,709 2,122,351 NET INCOME (LOSS) ........................................ (661,274) 534,107 7,530,705 10,235,082 TRANSFERS Net transfers to (from) the Plan ......................... 192 (5,661) 78,378 (46,653) Net exchanges between investment funds ................... 1,054,208 (588,459) (4,435,283) (1,695,784) Net participant loan activity ............................ (19,184) 155,846 39,611 383,646 Total transfers ...................................... 1,035,216 (438,274) (4,317,294) (1,358,791) NET ASSETS AT DECEMBER 31, 1996 .......................... 6,598,924 16,735,918 48,888,853 45,603,632 NET ASSETS AT DECEMBER 31, 1997 .......................... $6,972,866 $16,831,751 $52,102,264 $54,479,923
FPL Managed Fidelity Spartan T. Rowe Price Income U.S. Bond U.S. Equity Equity Income Portfolio Index Fund Index Fund Fund ------------ ----------- ------------ -------------- INCOME Contributions .......................................... $ 3,507,752 $ 751,857 $ 4,539,440 $ 328,602 Net appreciation in fair value of investments in master trusts ..................................... 9,872,313 - - - Net appreciation in fair value of investments in registered investment companies ................... - 1,327,932 28,297,692 1,177,597 Total income ....................................... 13,380,065 2,079,789 32,837,132 1,506,199 EXPENSES Benefit payments to participants or beneficiaries ...... 14,327,606 788,897 7,302,392 397,945 Administrative expenses ................................ 7,168 12,658 27,201 - Total expenses ..................................... 14,334,774 801,555 7,329,593 397,945 NET INCOME (LOSS) ...................................... (954,709) 1,278,234 25,507,539 1,108,254 TRANSFERS Net transfers to (from) the Plan ....................... 551,665 2,908 44,885 (3,549) Net exchanges between investment funds ................. (649,242) (1,173,299) 12,231,623 14,614,893 Net participant loan activity .......................... (123,741) (3,229) 30,342 30,054 Total transfers .................................... (221,318) (1,173,620) 12,306,850 14,641,398 NET ASSETS AT DECEMBER 31, 1996 ........................ 155,056,750 14,739,302 82,132,216 - NET ASSETS AT DECEMBER 31, 1997 ........................ $153,880,723 $14,843,916 $119,946,605 $15,749,652
Fidelity Fidelity Fidelity Magellan OTC Brandywine Overseas Fund Portfolio Fund, Inc. Fund ----------- ----------- ----------- ----------- INCOME Contributions .......................................... $ 4,649,896 $ 3,419,307 $ 532,459 $ 2,056,404 Net appreciation (depreciation) in fair value of investments in registered investment companies ...... 17,888,562 4,770,080 (2,215,784) 3,280,593 Total income (loss) ................................ 22,538,458 8,189,387 (1,683,325) 5,336,997 EXPENSES Benefit payments to participants or beneficiaries ...... 5,198,342 3,258,827 399,353 1,692,076 Administrative expenses ................................ 12,328 1,154 - 611 Total expenses ..................................... 5,210,670 3,259,981 399,353 1,692,687 NET INCOME (LOSS) ...................................... 17,327,788 4,929,406 (2,082,678) 3,644,310 TRANSFERS Net transfers to (from) the Plan ....................... 113,563 138,896 - 99,792 Net exchanges between investment funds ................. (2,617,072) (2,714,938) 24,019,871 (3,130,120) Net participant loan activity .......................... 346,135 330,799 60,053 250,264 Total transfers .................................... (2,157,374) (2,245,243) 24,079,924 (2,780,064) NET ASSETS AT DECEMBER 31, 1996 ........................ 69,812,448 49,397,073 - 26,004,596 NET ASSETS AT DECEMBER 31, 1997 ........................ $84,982,862 $52,081,236 $21,997,246 $26,868,842
FPL Group Templeton Company Loan Foreign Fund I Stock Fund Fund -------------- ------------ ----------- INCOME Contributions .......................................... $ 170,191 $ 15,227,572 - Interest and dividends ................................. - 9,678,430 $ 2,006,772 Net appreciation in fair value of investments in employer securities ............................... - 78,544,860 - Net depreciation in fair value of investments in registered investment companies ................... (281,716) - - Total income (loss) ................................ (111,525) 103,450,862 2,006,772 EXPENSES Benefit payments to participants or beneficiaries ...... 40,016 21,733,312 958,867 Administrative expenses ................................ - 6,720 - Total expenses ..................................... 40,016 21,740,032 958,867 NET INCOME (LOSS) ...................................... (151,541) 81,710,830 1,047,905 TRANSFERS Net transfers to (from) the Plan ....................... - 274,255 - Net exchanges between investment funds ................. 5,060,730 (39,977,128) - Net participant loan activity .......................... 20,413 167,381 (1,489,132) Total transfers .................................... 5,081,143 (39,535,492) (1,489,132) NET ASSETS AT DECEMBER 31, 1996 ........................ - 303,497,931 24,214,344 NET ASSETS AT DECEMBER 31, 1997 ........................ $4,929,602 $345,673,269 $23,773,117
7. Income Taxes In February 1996, FPL received from the Internal Revenue Service (IRS) a favorable determination that the Plan, as amended and restated through January 1, 1995, met the requirements of Section 401 of the Code. The Trust established under the Plan will generally be exempt from federal income taxes under Section 501(a) of the Code; Company contributions paid to the Trust under the Plan will be allowable federal income tax deductions of the Company subject to the conditions and limitations of Section 404 of the Code; and the Plan will meet the requirements of Section 401(k) of the Code allowing Tax Saver Contributions to be exempt from federal income tax at the time such contributions are made, provided that in operation the Plan and Trust meet the applicable provisions of the Code. In addition, FPL Group will be able to claim an income tax deduction for dividends used to repay the Acquisition Indebtedness and for dividends distributed directly to members. Company contributions to the Plan on a Member's behalf, Member's Tax Saver Contributions, and the earnings thereon generally are not taxable to the Member until such Company contributions, Tax Saver Contributions, and earnings from investments are distributed or withdrawn. A loan from a Member's account generally will not represent a taxable distribution if the loan is repaid in a timely manner and does not exceed certain limitations. 8. Expenses Certain fees such as annual account maintenance and investment management fees are paid by Plan participants. Trustee's fees and expenses are paid by FPL Group (which may charge each company under the Plan its allocated share) and, therefore, are not reflected in the financial statements. 9. Master Trusts A summary of participating interest in and financial statements for the Master Trusts follow.
Percent of Interest in Master Trust December 31, ------------------------ 1997 1996 ------- ------- FPL MANAGED INCOME PORTFOLIO FPL Group Employee Thrift Plan EIN 59-0247775 PN 002 ............................................................................... 73.5% 75.3% Employee Thrift and Retirement Savings Plan for Bargaining Unit Employees of Florida Power & Light Company EIN 59-0247775 PN 003 ............................................................................... 26.5% 24.7% CONSERVATIVE INVESTMENT STRATEGY FPL Group Employee Thrift Plan EIN 59-0247775 PN 002 ............................................................................... 78.8% 78.5% Employee Thrift and Retirement Savings Plan for Bargaining Unit Employees of Florida Power & Light Company EIN 59-0247775 PN 003 ............................................................................... 21.2% 21.5% MODERATE GROWTH INVESTMENT STRATEGY FPL Group Employee Thrift Plan EIN 59-0247775 PN 002 ............................................................................... 69.9% 72.8% Employee Thrift and Retirement Savings Plan for Bargaining Unit Employees of Florida Power & Light Company EIN 59-0247775 PN 003 ............................................................................... 30.1% 27.2% LONG-TERM GROWTH INVESTMENT STRATEGY FPL Group Employee Thrift Plan EIN 59-0247775 PN 002 ............................................................................... 72.2% 73.2% Employee Thrift and Retirement Savings Plan for Bargaining Unit Employees of Florida Power & Light Company EIN 59-0247775 PN 003 ............................................................................... 27.8% 26.8%
FPL MANAGED INCOME PORTFOLIO STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, --------------------------- 1997 1996 ------------ ------------ ASSETS General investments: Value of unallocated insurance and financial institution contracts ............... $209,333,382 $205,997,972 Total assets ....................................................................... 209,333,382 205,997,972 LIABILITIES ........................................................................ - - NET ASSETS AVAILABLE FOR BENEFITS .................................................. $209,333,382 $205,997,972
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31, 1997 ------------ INCOME Contributions received from participants .......................................................... $ 5,594,289 Earnings on investments: Interest ........................................................................................ 13,246,947 Total income ...................................................................................... 18,841,236 EXPENSES Benefit payments to participants or beneficiaries ................................................. 18,543,665 Account maintenance fees .......................................................................... 11,180 Total expenses .................................................................................... 18,554,845 NET INCOME ........................................................................................ 286,391 TRANSFERS Transfers into fund ............................................................................... 3,822,002 Transfers out of fund ............................................................................. (772,983) Net transfers ..................................................................................... 3,049,019 NET ASSETS AT DECEMBER 31, 1996 ................................................................... 205,997,972 NET ASSETS AT DECEMBER 31, 1997 ................................................................... $209,333,382
CONSERVATIVE INVESTMENT STRATEGY STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, -------------------------- 1997 1996 ----------- ----------- ASSETS Receivables: Income ........................................................................... $ 94,080 $ 92,010 Other ........................................................................... 25,847 - Total receivables ............................................................ 119,927 92,010 General investments: Value of unallocated insurance and financial institution contracts ............... 11,853,200 11,130,733 Mutual funds ..................................................................... 9,388,949 10,114,440 Total general investments .................................................... 21,242,149 21,245,173 Total assets ....................................................................... 21,362,076 21,337,183 LIABILITIES ........................................................................ 176 10,000 NET ASSETS AVAILABLE FOR BENEFITS .................................................. $21,361,900 $21,327,183
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31, 1997 ------------ INCOME Contributions received from participants ............................................ $ 438,893 Earnings on investments: Interest .......................................................................... 729,081 Dividends ......................................................................... 582,847 Net appreciation in fair value of investments ..................................... 1,198,859 Total income ........................................................................ 2,949,680 EXPENSES Benefit payments to participants or beneficiaries ................................... 2,227,602 Account maintenance fees ............................................................ 1,313 Total expenses ...................................................................... 2,228,915 NET INCOME .......................................................................... 720,765 TRANSFERS Transfers into fund ................................................................. 4,608,355 Transfers out of fund ............................................................... (5,294,403) Net transfers ....................................................................... (686,048) NET ASSETS AT DECEMBER 31, 1996 ..................................................... 21,327,183 NET ASSETS AT DECEMBER 31, 1997 ..................................................... $21,361,900
MODERATE GROWTH INVESTMENT STRATEGY STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, -------------------------- 1997 1996 ----------- ----------- ASSETS Receivables: Income ........................................................................... $ 205,402 $ 189,105 Other ............................................................................ 686 289,362 Total receivables .............................................................. 206,088 478,467 General investments: Value of unallocated insurance and financial institution contracts ............... 17,684,993 16,619,701 Mutual funds ..................................................................... 56,678,220 50,206,139 Total general investments .................................................... 74,363,213 66,825,840 Total assets ....................................................................... 74,569,301 67,304,307 LIABILITIES ........................................................................ 9,549 160,161 NET ASSETS AVAILABLE FOR BENEFITS .................................................. $74,559,752 $67,144,146
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31, 1997 ------------ INCOME Contributions received from participants ............................................ $ 2,874,440 Earnings on investments: Interest .......................................................................... 1,078,866 Dividends ......................................................................... 3,090,215 Net appreciation in fair value of investments ..................................... 6,265,853 Total income ........................................................................ 13,309,374 EXPENSES Benefit payments to participants or beneficiaries ................................... 2,652,618 Account maintenance fees ............................................................ 4,204 Total expenses ...................................................................... 2,656,822 NET INCOME .......................................................................... 10,652,552 TRANSFERS Transfers into fund ................................................................. 12,159,118 Transfers out of fund ............................................................... (15,396,064) Net transfers ....................................................................... (3,236,946) NET ASSETS AT DECEMBER 31, 1996 ..................................................... 67,144,146 NET ASSETS AT DECEMBER 31, 1997 ..................................................... $ 74,559,752
LONG-TERM GROWTH INVESTMENT STRATEGY STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, -------------------------- 1997 1996 ----------- ----------- ASSETS Receivables: Income ........................................................................... $ 93,471 $ 84,421 Other ............................................................................ 21,324 144,682 Total receivables .............................................................. 114,795 229,103 General investments: Value of unallocated insurance and financial institution contracts ............... 6,214,020 5,841,951 Mutual funds ..................................................................... 69,328,846 56,400,940 Total general investments .................................................... 75,542,866 62,242,891 Total assets ....................................................................... 75,657,661 62,471,994 LIABILITIES ........................................................................ 192,276 159,707 NET ASSETS AVAILABLE FOR BENEFITS .................................................. $75,465,385 $62,312,287
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31, 1997 ------------ INCOME Contributions received from participants ............................................ $ 4,619,550 Earnings on investments: Interest .......................................................................... 383,520 Dividends ......................................................................... 3,342,428 Net appreciation in fair value of investments ..................................... 8,454,382 Total income ........................................................................ 16,799,880 EXPENSES Benefit payments to participants or beneficiaries ................................... 2,997,391 Account maintenance fees ............................................................ 4,861 Total expenses ...................................................................... 3,002,252 NET INCOME .......................................................................... 13,797,628 TRANSFERS Transfers into fund ................................................................. 19,963,254 Transfers out of fund ............................................................... (20,607,784) Net transfers ....................................................................... (644,530) NET ASSETS AT DECEMBER 31, 1996 ..................................................... 62,312,287 NET ASSETS AT DECEMBER 31, 1997 ..................................................... $ 75,465,385
ATTACHMENT: SCHEDULE 1 FORM 5500: Line 27(a) FLORIDA POWER & LIGHT COMPANY EIN 59-0247775 FPL GROUP EMPLOYEE THRIFT PLAN PLAN #002 PLAN YEAR: 1997 ASSETS HELD FOR INVESTMENT AS OF DECEMBER 31, 1997
Historic Current Units Fund Name Price Cost Value - --------------- ----------------------------------------------------- ------ ------------ -------------- 6,972,865.910 Fidelity Retirement Government Money Market Portfolio $ 1.00 $ 6,972,866 $ 6,972,866 1,177,045.522 Conservative Investment Strategy $14.30 12,685,119 16,831,751 3,258,428.041 Moderate Growth Investment Strategy $15.99 35,548,292 52,102,264 3,167,437.358 Long-Term Growth Investment Strategy $17.20 37,768,584 54,479,923 153,880,723.170 FPL Managed Income Portfolio $ 1.00 153,880,723 153,880,723 1,375,710.443 Fidelity U.S. Bond Index Fund $10.79 14,580,415 14,843,916 3,429,005.295 Spartan U.S. Equity Index Fund $34.98 79,962,691 119,946,605 604,129.334 T. Rowe Price Equity Income Fund $26.07 15,832,626 15,749,652 892,021.226 Fidelity Magellan Fund $95.27 71,856,229 84,982,862 1,556,987.635 Fidelity OTC Portfolio $33.45 47,159,744 52,081,236 712,115.460 Brandywine Fund, Inc. $30.89 26,857,202 21,997,246 825,717.335 Fidelity Overseas Fund $32.54 24,971,431 26,868,842 495,437.381 Templeton Foreign Fund I $ 9.95 5,688,870 4,929,602 15,499,496.056 FPL Company Stock Fund $15.89 131,024,255 246,286,993 6,219,416.536 FPL Company Stock Fund - LESOP $15.98 63,517,651 99,386,276 6,085,131.168 Leveraged ESOP Employer Securities $59.19 176,468,804 360,163,701 Outstanding Loan Balances (7.5% to 9.75%; 23,773,117 23,773,117 maturing 1998-2002) Total Assets Held for Investment $928,548,619 $1,355,277,575
ATTACHMENT: SCHEDULE 2 FORM 5500: Line 27(d) FLORIDA POWER & LIGHT COMPANY EIN 59-0247775 FPL GROUP EMPLOYEE THRIFT PLAN PLAN #002 PLAN YEAR: 1997 TRANSACTIONS IN EXCESS OF FIVE PERCENT OF THE CURRENT VALUE OF PLAN ASSETS FOR THE YEAR ENDED DECEMBER 31, 1997
Transaction by Total Total Number of Number Realized Fund or Carrier Purchases Sales Purchases of Sales Gain (Loss) - ----------------------------- ------------ ------------ --------- -------- ----------- FPL Managed Income Portfolio $193,295,338 $194,471,364 256 253 - Brandywine Fund, Inc. $ 42,940,847 $156,308,824 128 117 $ 774,821 FPL Group Company Stock Fund $ 60,755,030 $ 98,654,377 253 253 $20,013,532 Fidelity Magellan Fund $ 30,765,616 $ 28,004,533 253 253 $ 2,646,221 Fidelity OTC Portfolio $ 49,017,124 $ 47,452,634 253 253 $ 2,304,364 Fidelity Overseas Fund $ 49,235,834 $ 50,344,723 253 251 $ 1,473,414 Spartan U.S. Equity Index Fund $ 87,343,491 $ 75,211,908 253 253 $ 7,286,130
SIGNATURES The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the Employee Benefits Plan Administrative Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. DATE: June 26, 1998 FPL Group Employee Thrift Plan (Name of Plan) By: JAMES K. PETERSON ----------------------- James K. Peterson Director, Human Resources Centers of Expertise EX-23 2 INDEPENDENT AUDITORS' CONSENT EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Post-Effective Amendment No. 2 to Registration Statement No. 33-31487 on Form S-8 and Registration Statement No. 333-30697 on Form S-8 of our report dated June 26, 1998 on the financial statements of the FPL Group Employee Thrift Plan for the year ended December 31, 1997 appearing in this Annual Report on Form 11-K of FPL Group, Inc. for the year ended December 31, 1997. DELOITTE & TOUCHE LLP Miami, Florida June 26, 1998 -----END PRIVACY-ENHANCED MESSAGE-----