welcome shareholders
DESCRIPTION
WELCOME SHAREHOLDERS. Lew Hay Chairman and CEO FPL Group, Inc. A Tough Year for Energy Companies (total shareholder return). $100. S&P 500 Electric Utilities Index. (15)%. S&P 500 Multi-Utilities Index. (68)%. 12/31/01. 3/31/02. 6/30/02. 9/30/02. 12/31/02. - PowerPoint PPT PresentationTRANSCRIPT
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WELCOME SHAREHOLDERS
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Lew Hay Chairman and CEO
FPL Group, Inc.
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A Tough Year for Energy Companies(total shareholder return)
(15)%
(68)%
S&P 500 Electric Utilities Index
S&P 500 Multi-Utilities Index
$100
12/31/01 3/31/02 6/30/02 9/30/02 12/31/02
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Total Shareholder Return(12/31/01 – 12/31/02)
-22%
-15%
11%
FPL Group
S&P 500 Electric
Utilities Index S&P 500 Index
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2002 – Another Great Year
• Exceeded financial plan• Improved service levels• Continued world-class
plant performance
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2002 Major Accomplishments: Florida Power & Light
• Contributed significantly to FPL Group earnings
• Continued strong growth in customers and usage
• Lowered rates• Expanded generating
capability • Enhanced reliability,
customer responsiveness
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2002 Major Accomplishments:FPL Energy
• Continued disciplined portfolio growth
• Extended leadership position in wind
• Restructured business
to better position for the future
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2002 Major Accomplishments:FPL FiberNet
• Performed better than peers amidst very difficult marketconditions
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3 Major Attributes
FinancialDiscipline
OperationalExcellence
FPLGROUP
FinancialStrength
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Utilizing Quality Tools and Techniques
• Ingrained in culture• Renewing focus• Part of continuous
improvement efforts
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Paul EvansonPresident
Florida Power & Light Company
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Attractive financial returnsAttractive financial returnsAttractive financial returnsAttractive financial returns
Premier Electric Utility
• Strong customer growth• Operational excellence • Proven cost management • Constructive regulatory
environment
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36%
55%
6%3%
Customer Mix % by revenues
Large and Growing Customer Base
• 2.4% increase in customer accounts
• 3.5% increase inusage per customer
• 10-year annual averages
– 2% increase in customer accounts– 1.6% increase in
electrical usage
• Favorable customer mix
Residential
Commercial
IndustrialOther
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Accommodating Growth
• 28% increase in generation over next 10 years
• Sanford repoweringand Fort Myers peaking unitsthis year
• Martin and Manatee units in 2005
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Expanding Infrastructure
• Additional delivery systems needed to support continued growth
• Urban areas pose biggest challenge
• Working closely with customersto help ensure minimal impact
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Operational Excellence
97
67
93 92
90 00 01 02
95 95 9482
90 00 01 02
Nuclear Availability %Fossil Availability %
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Important Nuclear Milestones
• Turkey Point units approved to operate additional 20 years
• St. Lucie extensioncurrently under review by NRC
• Nuclear provides nearly one-fourth of FPL generation
Turkey Point Plant
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Operational ExcellenceService Unavailability(average annual minutes per customer)
69
139139
104
97 98 99 00 01 02
FPL
Industry
industry source EEI
Good
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3.63
2.36
0.71.1
1.591.63
0.49
3.12
1.96 1.98
93 94 95 96 97 98 99 00 01 02
OSHA Incident Rate DownFPL Power Generation Business Unit(serious injuries per 200,000 hrs. worked)
Good
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Superior Cost Management Operating expenses ($ per customer)
$513 $517
$373
$305
93 94 95 96 97 98 99 00 01 02
Industry Average
FPL
Good
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FPL Residential Rates Low
Comparisons of a 1,000 kWh residential bill as of 3/4/03Rates for FPL, PEF and TECO are effective 4/1/03.
$81.60 $88.66 $88.93$106.55 $112.00
$177.99
$133.69
FPL NationalAverage
Florida IOUsAverage
MA NJ CA NYC
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Constructive Regulatory Environment
• Classic regulated structure• Incentive-based agreements• Shareholders and customers benefit• Florida a model for other states
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Attractive financial returnsAttractive financial returnsAttractive financial returnsAttractive financial returns
Premier Electric Utility
• Strong customer growth• Operational excellence • Proven cost management • Constructive regulatory
environment
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Liberty CityTornado
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29
Jim Robo President
FPL Energy
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FPL Energy:A Disciplined Wholesale Generator
• Low-risk approach• Low-cost provider• World leader in wind
generation• Strong asset
optimization capability
• 7,2741 net MW in operation
• presence in 23 statesNote:
1 Includes 550 MW of leased capacity at R.I.S.E.P.
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NortheastNortheast
Mid-AtlanticMid-Atlantic24%24%
26%26%
14%14%
36%36%
WestWest
Regional DiversityRegional Diversity Fuel DiversityFuel DiversityGasGas60%60%
20%20%WindWind
OtheOtherr1%1%HydrHydroo3%3% 7%7%
OilOil
Diversified Portfolio at FPL EnergyProjectedProjected 2004 2004
(11,525(11,52511 net mw in net mw in operation)operation)
CentralCentral
NucleNuclearar9%9%
Note:1 Includes 550 mw of leased capacity at R.I.S.E.P.
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Wind Energy: A Unique Advantage
• About 40% U.S. share• Majority of industry’s
annual growth achieved by FPL Energy
• More than 1,700 net mw in operation today– expect 700-1000 mw
more by end of 2003
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Why Wind?
• Strong construction, operational expertise
• Supported by federal and state policy trends
• Attractive financial characteristics– long-term power contracts
(15 – 25 years)– attractive returns– immediate contributor to earnings
• Disciplined development opportunities underway
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More than 90 percent of expected 2003 gross margin hedged
Significant Contract Coverage
Notes:1 Weighted to reflect in-service dates, planned maintenance, and refueling outage for Seabrook2 Reflects RTC MW hedged3 Reflects on-peak MW hedgedAs of 3/31/03
Balance of 2003
Asset Class Available
MW 1 % MW Hedged 1
Wind 2 1,981
100 Other projects / QFs 2 1,255 98
Merchants Seabrook 2 932 92 NEPOOL / PJM / NYPP 3 1,556 50 ERCOT 3 2,657 72 WECC / SERC 3 1,093 39
Total portfolio 3 9,474
76
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FPL Energy Business Strategy
• Remain a low-cost provider• Selective development, primarily wind• Maintain diversified portfolio• Contract majority of output and hedge fuel
requirements• Further optimize portfolio• Consider acquisitions that are accretive,
strategically attractive and financeable
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Moray DewhurstChief Financial Officer
FPL Group, Inc.
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2002 Earnings Guidance(presented at 2002 annual meeting)
• FPL approximately flat with 2001– assuming normal weather
• FPL Energy up 15% - 20%– reflects modest capacity growth and delay
in production tax credits– reflects poor hydro conditions in 1st quarter– assumes no major changes in market
prices• Group EPS $4.78 - $4.82
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FPL Group 2002 Results
$2.73
$4.80
GAAP Adjusted
$473
$831
GAAP Adjusted
Net Income(millions)
EPS
Includes the cumulative effect of an accounting change at FPL Energy ($222 million after-tax or $1.28 per share), restructuring and other charges at FPL Energy ($73 million after-tax or $0.42 per share), restructuring and impairment charges at Corporate and Other ($64 million after-tax or $0.37 per share), a reserve for leverage leases at Corporate and Other ($30 million after-tax or $0.17 per share), a favorable settlement of litigation with the IRS at Corporate and Other ($30 million after-tax or $0.17 per share) and net unrealized mark-to-market gains associated with non-managed hedges at FPL Energy ($1 million after-tax).
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FPL Group 2002 Results: Reconciliation to GAAP
Net income per GAAP
Adjustments:• Adoption of FAS 142 (accounting
change)• One-time tax benefit• Restructuring and related
charges• Non-managed hedges
Adjusted results*
In millions
$ 2.73
$ 1.28 $(0.17) $ 0.96 -
$ 4.80
$ 473
$ 222$ (30)$ 167 $ (1)
$ 831
* Management views adjusted results as an important indicator of current period operational and economic performance.
Per share
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Florida Power & Light Results(net income in millions)
$717$679
$695$717
GAAP Adjusted
01 02 01 02
Notes: 1 Includes merger-related expenses ($16 million after tax)
1
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FPL Energy Results (net income in millions)
$113
($169)
$126$105
GAAP Adjusted
01 02
01 02
Notes: 1 Includes net unrealized mark-to-market gains associated with non-managed hedges ($8 million after tax)
2 Includes the cumulative effect of an accounting change ($222 million after tax), restructuring and other charges ($73 million after tax), and net unrealized mark-to-market gains associated with non-managed hedges ($1 million after tax)
1
2
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Financial Strength
• Strong credit ratings re-affirmed in 2002– Florida Power & Light Aa3 / A– FPL Group Capital A2 / A-
• $2.3 billion operating cash flow -- $1.9 billion net of dividends
• Issued $1.4 billion equity and equity-linked securities
• Credit statistics and ratings well above industry averages
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Financial DisciplinePrudent Dividend Policy
• Healthy 3.9% yield
• Approximately 50% payout ratio expected in 2003
• 4% average growth(1995-2002)
$1.76
$2.32
95 96 97 98 99 00 01 02
Dividends per share
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Conservative Risk Management ProfileWell Hedged Position
85%
15%
85%
15%
FloridFlorida a Power Power
& & LightLight
FPLFPL EnergyEnergy
Corporate & Corporate & OtherOther
Earnings Earnings Contribution %Contribution %
2003 estimated2003 estimated11 • Fuel clause mitigates commodity price fluctuations
• Geographic diversity• Fuel/technology
diversity• Well-hedged portfolio
1 Excludes mark-to-market effect of non-managed hedges, which cannot be determined at this time
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Outlook for 2003 Remains Strong• FPL
– expect $725 - $735 million net income in 2003 assuming normal weather
• FPL Energy– expect 2003 earnings of $165 - $190 million1
• Corporate and Other– breakeven results at FPL FiberNet– higher interest expense– net drag of 20 - 30 cents per share
Expect EPS of $4.80 to $5.001
1 Excluding the effect of non-managed hedges which cannot be determined at this time.
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0302
$0.99
EPS
2003 results include a net unrealized mark-to-market gain of $3 million after-tax or $0.02 per share associated with non-managed hedges, primarily at FPL Energy. 2002 results include an impairment loss of $222 million after-tax or $1.31 per share at FPL Energy, a net unrealized mark-to-market gain of $1 million after-tax associated with non-managed hedges at FPL Energy and a favorable IRS settlement of $30 million or $0.18 per share at Corporate and Other.
$(0.33)
$175
$(56)
GAAP Adjusted
0302
$0.80$135
0302 0302
Net Income(millions)
EPSNet Income(millions)
First Quarter Strong Performance
$0.97$172
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FPL Group: A Solid Investment
• Built on solid fundamentals• Proven track record• Attractive, realistic
growth prospects• Relatively low-risk profile• Ongoing commitment to
excellent corporate governance
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Toward Another Great Year in 2003
• Committed to financial strength and discipline, operational excellence
• Steady growth and strong operating performance at FPL
• Continued disciplined growth at FPL Energy
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Superior Environmental Management
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