welcome shareholders. cautionary statements and risk factors that may affect future results in...
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WELCOME SHAREHOLDERS
Lew Hay Chairman and CEO
FPL Group, Inc.
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
Total Shareholder Return(12/31/01 – 12/31/02)
-22%
-15%
11%
FPL Group
S&P 500 Electric
Utilities Index S&P 500 Index
2002 – Another Great Year
• Exceeded financial plan• Improved service levels• Continued world-class
plant performance
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
2002 Major Accomplishments:FPL Energy
• Continued disciplined portfolio growth
• Extended leadership position in wind
• Restructured business
to better position for the future
2002 Major Accomplishments:FPL FiberNet
• Performed better than peers amidst very difficult marketconditions
3 Major Attributes
FinancialDiscipline
OperationalExcellence
FPLGROUP
FinancialStrength
Utilizing Quality Tools and Techniques
• Ingrained in culture• Renewing focus• Part of continuous
improvement efforts
Paul EvansonPresident
Florida Power & Light Company
Attractive financial returnsAttractive financial returnsAttractive financial returnsAttractive financial returns
Premier Electric Utility
• Strong customer growth• Operational excellence • Proven cost management • Constructive regulatory
environment
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
Accommodating Growth
• 28% increase in generation over next 10 years
• Sanford repoweringand Fort Myers peaking unitsthis year
• Martin and Manatee units in 2005
Expanding Infrastructure
• Additional delivery systems needed to support continued growth
• Urban areas pose biggest challenge
• Working closely with customersto help ensure minimal impact
Operational Excellence
97
67
93 92
90 00 01 02
95 95 9482
90 00 01 02
Nuclear Availability %Fossil Availability %
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
Operational ExcellenceService Unavailability(average annual minutes per customer)
69
139139
104
97 98 99 00 01 02
FPL
Industry
industry source EEI
Good
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
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
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
Constructive Regulatory Environment
• Classic regulated structure• Incentive-based agreements• Shareholders and customers benefit• Florida a model for other states
Attractive financial returnsAttractive financial returnsAttractive financial returnsAttractive financial returns
Premier Electric Utility
• Strong customer growth• Operational excellence • Proven cost management • Constructive regulatory
environment
Liberty CityTornado
29
Jim Robo President
FPL Energy
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.
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.
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
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
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
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
Moray DewhurstChief Financial Officer
FPL Group, Inc.
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
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).
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
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
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
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
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
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
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.
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
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
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
Superior Environmental Management
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