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NEXTERA ENERGY INC Annual Report, Year Ended Dec 31, 1998

Filing Date
Filed March 2, 1999
Period End
December 31, 1998
In the record · 2016–202610-K1110-Q338-K225

NEE filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 225 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Jul ’18Jul ’18
  2. Material agreement8-K · Dec ’20Dec ’20
  3. Leadership change8-K · Jan ’23Jan ’23
  4. Leadership change8-K · Mar ’25Mar ’25

01—Abstract

Summary

Summary of the 10-K filed March 2, 1999. Cited figures are marked; the original filing is the authoritative source.

FPL Group, Inc. (NEE's predecessor name) and its principal subsidiary Florida Power & Light Company (FPL) reported solid 1998 results in this combined 10-K.

FPL Group net income rose 7.4% to $664 milliona and EPS rose 7.8% to $3.85, driven mainly by better results at FPL Energy's independent power projects, particularly natural gas-fired plants. FPL, the regulated utility, generated 96% of operating revenues and 93% of net income, serving about 3.7 million customer accounts across Florida. Retail ROE was 12.6% against an allowed midpoint of 12%, and the company's fundamentals look stable, with operating revenues of $6.66 billion and total assets of $12.0 billion.

The main investor concerns are regulatory and litigation risk. In December 1998 the FPSC proposed a settlement lowering FPL's 1999 allowed ROE range to 10.2%-12.2%, but FPL withdrew from it in mid-February 1999, and Public Counsel has petitioned for a full rate proceeding that the FPSC will address in March 1999. Several legal matters are pending, including the FMPA transmission antitrust suit, the qualifying facility dispute, and FPL Energy's effort to back out of the $846 millionb Central Maine Power asset purchase.

Management says it has meritorious defenses and expects no material adverse effect, but the outcomes are uncertain. Growth plans call for about $2.8 billionc of FPL capital expenditures over 1999-2001, and the year 2000 remediation cost is capped at about $50 million.

Near-term catalysts include the FPSC rate proceeding, the Central Maine trial scheduled for March 1999, and the January 1999 sale of Adelphia stock, which produced an after-tax gain of about $96 milliond. Investors will want to watch how regulatory outcomes affect the earnings growth that management has been delivering.

02—Key points

Key Highlights

  1. FPL Group 1998 net income of $664 million (up 7.4%) and EPS of $3.85 (up 7.8%), with growth led by FPL Energy's natural gas-fired independent power projects
  2. FPL, the regulated utility, accounted for about 96% of operating revenues and 93% of net income; 1998 retail ROE was 12.6% against an allowed midpoint of 12%
  3. Proposed FPSC settlement would have cut the allowed ROE range to 10.2%-12.2% from 1999, but FPL withdrew in mid-February 1999, and Public Counsel has requested a full rate proceeding
  4. Capital expenditures of about $2.8 billion are planned for 1999-2001 (including $910 million in 1999), with 18,204 MW of total generating capacity at year-end 1998
  5. Pending litigation includes the FMPA transmission antitrust suit (seeking $140 million before trebling), a ~$2 billion counterclaim in the qualifying facility dispute, and FPL Energy's effort to avoid the $846 million Central Maine Power purchase
  6. January 1999 sale of Adelphia Communications stock produced an after-tax gain of about $96 million; the company also repurchased 1.0 million shares in 1998
  7. Year 2000 remediation cost is estimated at no more than $50 million, with about 80% of modifications tested and implemented as of the filing date

03—Questions

Frequently Asked Questions

  1. How did FPL Group perform financially in 1998?

    Net income rose 7.4% to $664 million and EPS rose 7.8% to $3.85. Operating revenues were $6.66 billion, up from $6.37 billion in 1997. Growth came mainly from FPL Energy's independent power projects, especially its natural gas-fired plants, along with higher kWh sales at FPL.

  2. What is the risk from the Florida rate proceedings?

    The FPSC had proposed a settlement that would have lowered the allowed ROE range to 10.2%-12.2% beginning in 1999, but FPL withdrew in February 1999 and the proceeding concluded. Public Counsel has separately petitioned for a full rate case, which the FPSC will address in March 1999. Management says it cannot predict the outcome or its effect on the financial statements.

  3. What are the most significant legal exposures?

    The FMPA suit seeks $140 million in damages before trebling for antitrust claims. The qualifying facility litigation involves counterclaims of about $2 billion. FPL Energy's suit over the $846 million Central Maine Power asset purchase is scheduled for trial in March 1999. Management believes it has meritorious defenses and expects no material adverse effect, but an adverse outcome in these suits could be material.

  4. How much will the company invest, and how will it be funded?

    FPL plans about $2.8 billion in capital expenditures for 1999-2001, including $910 million in 1999. Management expects to fund 1999 cash needs with internally generated funds and debt issuances, with short-term bank borrowings for temporary needs. Bank credit lines total $1.9 billion, including $900 million for FPL.

  5. What is the outlook for the Central Maine Power acquisition?

    FPL Energy's subsidiary filed suit in November 1998 asking for a declaratory judgment that Central Maine cannot meet its contractual obligations because of recent FERC transmission rulings. FPL Group argues these rulings are a material adverse effect that should excuse the subsidiary from completing the $846 million purchase. The trial is scheduled for March 1999, so the outcome is uncertain.

04—Continue

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