FPL Group Announces 2009 Third Quarter Earnings
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-- NextEra Energy Resources on track to add 1,170 megawatts of wind in 2009
including its recently announced acquisition, which is pending
-- Economic downturn continues to affect Florida Power & Light Company
-- FPL Group revises adjusted earnings expectations from a range of $4.20
to $4.40 per share to a range of $4.10 to $4.20 per share for 2009 and
from a range of $4.65 to $5.05 per share to a range of $4.25 to $4.85
per share for 2010
JUNO BEACH, Fla.--(BUSINESS WIRE)-- NOTE TO EDITORS: This news release reflects the earnings report of FPL Group, Inc. Reference to the corporation and its earnings or financial results should be to "FPL Group" and not abbreviated using the name "FPL" as the latter is the name/acronym of the corporation's electric utility subsidiary.
FPL Group, Inc. (NYSE: FPL) today reported 2009 third quarter net income on a GAAP basis of $533 million, or $1.31 per share, compared with $774 million, or $1.92 per share, in the third quarter of 2008. On an adjusted basis, FPL Group's earnings per share were $562 million, or $1.38 per share, compared with $506 million, or $1.25 per share, in the third quarter of 2008. Adjusted earnings exclude the mark-to-market effects of non-qualifying hedges and net other than temporary impairments (OTTI) on certain investments, both of which relate to NextEra Energy Resources.
FPL Group's management uses adjusted earnings, which is a non-GAAP financial measure, internally for financial planning, for analysis of performance, for reporting of results to the Board of Directors and as input in determining whether performance targets are met for performance-based compensation under the company's employee incentive compensation plans. FPL Group also uses earnings expressed in this fashion when communicating its earnings outlook to analysts and investors. FPL Group management believes that adjusted earnings provide a more meaningful representation of FPL Group's fundamental earnings power. The attachments to this news release include a reconciliation of historical adjusted earnings to net income, which is the most directly comparable GAAP measure.
"Despite challenges at FPL and in the Florida economy, FPL Group had another solid quarter. Our basic earnings story has remained fairly constant over the past two years: NextEra Energy Resources continues to grow adjusted earnings and earnings per share, while Florida Power & Light remains challenged by the economic downturn in Florida," said FPL Group Chairman and CEO Lew Hay.
Florida Power & Light Company
FPL Group's rate-regulated utility subsidiary, Florida Power & Light Company, reported third quarter net income of $306 million, or $0.75 per share, down from $314 million, or $0.78 per share, in the prior-year quarter.
Florida's economy continued to have a negative impact on FPL's results. The total number of customers continued to decline in the third quarter, although at a slower pace.
FPL had approximately 9,000 fewer customers on average during the third quarter of 2009 than it did during the third quarter of 2008. The number of inactive accounts rose by 4,000 since the end of the second quarter of 2009.
Overall, retail kilowatt-hour sales were up by 0.4 percent on a quarter-over-quarter basis primarily as a result of warmer weather. Operations and maintenance (O&M) expenses rose by $36 million over the prior-year quarter. The largest contributor to the increase was clause-related O&M, which has no effect on earnings.
Today, FPL is putting into service the 25 megawatt DeSoto Next Generation Solar Energy Center, the largest solar photovoltaic power plant in the country. President Barack Obama is scheduled to attend the commissioning. The DeSoto plant will produce enough electricity to serve approximately 3,000 homes, or nearly 20 percent of DeSoto County. Along with solar energy plants that FPL is building in other parts of the state, the company expects to have 110 megawatts of installed solar capacity by late 2010.
The company also completed construction of West County Energy Center Unit 1 during the quarter, a 1,220 megawatt combined cycle natural gas unit in Palm Beach County.
FPL's rate proceeding before the Florida Public Service Commission (PSC) remains ongoing.
NextEra Energy Resources
NextEra Energy Resources, the competitive energy subsidiary of FPL Group with generating facilities in 25 states and Canada, reported third quarter net income on a GAAP basis of $233 million, or $0.57 per share, compared with $483 million, or $1.20 per share, in the prior-year quarter. On an adjusted basis, NextEra Energy Resources' earnings were $262 million, or $0.64 per share, compared with $215 million, or $0.53 per share, in the third quarter of 2008.
NextEra Energy Resources' third quarter adjusted earnings per share rose by 21 percent over the prior-year quarter. The principal driver was the company's investment in new wind energy projects. This includes the positive effects of the American Recovery and Reinvestment Act, which allows the company to take the value of federal wind production tax credits in the form of cash grants. Other positive drivers were strong performance from retail operations and the wholesale marketing and trading business. These were offset by unfavorable market conditions for the company's fossil power plants in Texas. In addition, while the wind resource was above prior-year quarter, the wind resource across the fleet this quarter was well below normal.
NextEra Energy Resources continued to make progress on its wind development program during the quarter. The company has 985 megawatts of wind projects either completed or under construction and has agreed to acquire an additional 185 megawatts of existing wind projects. Including the pending acquisition, the company now expects to add 1,170 megawatts of wind power in 2009.
"Going forward, we believe it is clear that the United States is moving inexorably toward a carbon-constrained world. As a result of the investments we are continuing to make in clean energy, we believe we are well positioned for a future where carbon carries a cost," said Lew Hay.
Corporate and Other
The loss in Corporate and Other was $6 million in the third quarter of 2009 compared with $23 million in the third quarter of 2008.
Outlook
Due to a number of factors, including continued disappointment with the contributions from its Texas gas generation assets and another quarter of wind resource below expectations, FPL Group is revising its 2009 adjusted earnings expectations from $4.20 to $4.40 per share for 2009 to $4.10 to $4.20 per share. In addition, in light of the challenging market environment for the company's Texas merchant assets and the continued uncertainty about economic conditions in Florida, FPL Group is revising adjusted earnings expectations for 2010 from a range of $4.65 to $5.05 per share to a range of $4.25 to $4.85 per share.
FPL Group's adjusted earnings exclude the cumulative effect of adopting new accounting standards, the unrealized mark-to-market effect of non-qualifying hedges and net other than temporary impairment losses on securities held in NextEra Energy Resources' nuclear decommissioning funds, none of which can be determined at this time. In addition, these expectations assume, among other things: normal weather and operating conditions; no further significant decline in the national or the Florida economy; supportive commodity markets; continued public policy support for renewable power project development; selective transmission expansion to support renewable power projects; continued wind supply chain expansion; continued expansion of NextEra Energy Resources' non-wind activities; access to reasonable capital and credit markets; no acquisitions; and a constructive regulatory framework in Florida. Please see the accompanying cautionary statements for a list of the risk factors that may affect future earnings.
As previously announced, FPL Group's third quarter earnings conference call is scheduled for 9 a.m. ET on Tuesday, Oct. 27, 2009. The webcast is available on FPL Group's Web site by accessing the following link, http://www.FPLGroup.com/investor/contents/investor_index.shtml. The slides and earnings release accompanying the presentation may be downloaded at www.FPLGroup.com beginning at 7:30 a.m. ET today. For persons unable to listen to the live webcast, a replay will be available for 90 days by accessing the same link as listed above.
This press release should be read in conjunction with the attached unaudited financial information.
FPL Group: Energy Solutions for the Next Era
FPL Group, Inc. (NYSE: FPL) is a leading clean energy company with 2008 revenues of more than $16 billion, approximately 39,000 megawatts of generating capacity, and more than 15,000 employees in 27 states and Canada. Headquartered in Juno Beach, Fla., FPL Group's principal subsidiaries are NextEra Energy Resources, LLC, the largest generator in North America of renewable energy from the wind and sun, and Florida Power & Light Company, which serves 4.5 million customer accounts in Florida and is one of the largest rate-regulated electric utilities in the country. Through its subsidiaries, FPL Group collectively operates the third largest U.S. nuclear power generation fleet. For more information about FPL Group companies, visit these Web sites: www.FPLGroup.com, www.NextEraEnergyResources.com, www.FPL.com.
Cautionary Statements And Risk Factors That May Affect Future Results
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) are hereby providing cautionary statements identifying important factors that could cause FPL Group's or FPL'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 FPL Group and FPL in this press release, on their respective websites, in response to questions or otherwise. Any statements that express, or involve discussions as to, adjusted earnings or other expectations, beliefs, plans, objectives, assumptions, future events or performance, climate change strategy or growth strategies (often, but not always, through the use of words or phrases such as will, will likely result, are expected to, will continue, is anticipated, aim, believe, could, should, would, estimated, may, plan, potential, projection, target, outlook, predict and intend or words of similar meaning) are not statements of historical facts and may be forward-looking. Forward-looking statements involve estimates, assumptions and uncertainties. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors (in addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements) that could cause FPL Group's or FPL's actual results to differ materially from those contained or implied in forward-looking statements made by or on behalf of FPL Group and FPL.
Any forward-looking statement speaks only as of the date on which such statement is made, and FPL Group and FPL undertake no obligation to update any forward-looking statement to reflect events or circumstances, including unanticipated events, after the date on which such statement is made, unless otherwise required by law. 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 or implied in any forward-looking statement.
The following are some important factors that could have a significant impact on FPL Group's and FPL's operations and financial results, and could cause FPL Group's and FPL's actual results or outcomes to differ materially from those discussed or implied in the forward-looking statements:
FPL Group and FPL are subject to complex laws and regulations and to changes in laws and regulations as well as changing governmental policies and regulatory actions. FPL holds franchise agreements with local municipalities and counties, and must renegotiate expiring agreements. These factors may have a negative impact on the business and results of operations of FPL Group and FPL.
-- FPL Group and FPL are subject to complex laws and regulations, and to
changes in laws or regulations, with respect to, among other things,
allowed rates of return, industry and rate structure, operation of
nuclear power facilities, construction and operation of generation
facilities, construction and operation of transmission and distribution
facilities, acquisition, disposal, depreciation and amortization of
assets and facilities, recovery of fuel and purchased power costs,
decommissioning costs, return on common equity and equity ratio limits,
transmission reliability and present or prospective wholesale and retail
competition. This substantial and complex framework exposes FPL Group
and FPL to increased compliance costs and potentially significant
monetary penalties for non-compliance. The Florida Public Service
Commission (FPSC) has the authority to disallow recovery by FPL of any
and all costs that it considers excessive or imprudently incurred. The
regulatory process generally restricts FPL's ability to grow earnings
and does not provide any assurance as to achievement of earnings levels.
-- FPL Group and FPL also are subject to extensive federal, state and local
environmental statutes, rules and regulations, as well as the effect of
changes in or additions to applicable statutes, rules and regulations
that relate to, or in the future may relate to, for example, air
quality, water quality, climate change, greenhouse gas emissions, carbon
dioxide emissions, waste management, marine and wildlife mortality,
natural resources, health, safety and renewable portfolio standards that
could, among other things, restrict or limit the output of certain
facilities or the use of certain fuels required for the production of
electricity and/or require additional pollution control equipment and
otherwise increase costs. There are significant capital, operating and
other costs associated with compliance with these environmental
statutes, rules and regulations, and those costs could be even more
significant in the future.
-- FPL Group and FPL operate in a changing market environment influenced by
various legislative and regulatory initiatives regarding regulation,
deregulation or restructuring of the energy industry, including, for
example, deregulation or restructuring of the production and sale of
electricity, as well as increased focus on renewable and clean energy
sources and reduction of carbon emissions. FPL Group and its
subsidiaries will need to adapt to these changes and may face increasing
costs and competitive pressure in doing so.
-- FPL Group's and FPL's results of operations could be affected by FPL's
ability to negotiate or renegotiate franchise agreements with
municipalities and counties in Florida.
The operation and maintenance of power generation, transmission and distribution facilities involve significant risks that could adversely affect the results of operations and financial condition of FPL Group and FPL.
-- The operation and maintenance of power generation, transmission and
distribution facilities involve many risks, including, for example,
start up risks, breakdown or failure of equipment, transmission and
distribution lines or pipelines, the inability to properly manage or
mitigate known equipment defects throughout FPL Group's and FPL's
generation fleets and transmission and distribution systems, use of new
or unproven technology, the dependence on a specific fuel source,
failures in the supply or transportation of fuel, the impact of unusual
or adverse weather conditions (including natural disasters such as
hurricanes, floods and droughts), and performance below expected or
contracted levels of output or efficiency. This could result in lost
revenues and/or increased expenses, including, for example, lost
revenues due to prolonged outages and increased expenses due to monetary
penalties or fines, replacement equipment costs or an obligation to
purchase or generate replacement power at potentially higher prices to
meet contractual obligations. Insurance, warranties or performance
guarantees may not cover any or all of the lost revenues or increased
expenses. Breakdown or failure of an operating facility of NextEra
Energy Resources, LLC (NextEra Energy Resources) may, for example,
prevent the facility from performing under applicable power sales
agreements which, in certain situations, could result in termination of
the agreement or subject NextEra Energy Resources to incurring a
liability for liquidated damages.
The operation and maintenance of nuclear facilities involves inherent risks, including environmental, health, regulatory, terrorism and financial risks, that could result in fines or the closure of nuclear units owned by FPL or NextEra Energy Resources, and which may present potential exposures in excess of insurance coverage.
-- FPL and NextEra Energy Resources own, or hold undivided interests in,
nuclear generation facilities in four states. These nuclear facilities
are subject to environmental, health and financial risks such as on-site
storage of spent nuclear fuel, the ability to dispose of spent nuclear
fuel, the ability to maintain adequate reserves for decommissioning,
potential liabilities arising out of the operation of these facilities,
and the threat of a possible terrorist attack. Although FPL and NextEra
Energy Resources maintain decommissioning trusts and external insurance
coverage to minimize the financial exposure to these risks, it is
possible that the cost of decommissioning the facilities could exceed
the amount available in the decommissioning trusts, and that liability
and property damages could exceed the amount of insurance coverage.
-- The U.S. Nuclear Regulatory Commission (NRC) has broad authority to
impose licensing and safety-related requirements for the construction
and operation and maintenance of nuclear generation facilities. In the
event of non-compliance, the NRC has the authority to impose fines or
shut down a unit, or both, depending upon its assessment of the severity
of the situation, until compliance is achieved. NRC orders or new
regulations related to increased security measures and any future safety
requirements promulgated by the NRC could require FPL and NextEra Energy
Resources to incur substantial operating and capital expenditures at
their nuclear plants. In addition, if a serious nuclear incident were to
occur at an FPL or NextEra Energy Resources plant, it could result in
substantial costs. A major incident at a nuclear facility anywhere in
the world could cause the NRC to limit or prohibit the operation or
licensing of any domestic nuclear unit.
-- In addition, potential terrorist threats and increased public scrutiny
of utilities could result in increased nuclear licensing or compliance
costs which are difficult or impossible to predict.
The construction of, and capital improvements to, power generation and transmission facilities involve substantial risks. Should construction or capital improvement efforts be unsuccessful or delayed, the results of operations and financial condition of FPL Group and FPL could be adversely affected.
-- The ability of FPL Group and FPL to complete construction of, and
capital improvement projects for, their power generation and
transmission facilities on schedule and within budget are contingent
upon many variables that could delay completion, increase costs or
otherwise adversely affect operational and financial results, including,
for example, limitations related to transmission interconnection issues,
escalating costs for materials and labor and environmental compliance,
delays with respect to permits and other approvals, and disputes
involving third parties, and are subject to substantial risks. Should
any such efforts be unsuccessful or delayed, FPL Group and FPL could be
subject to additional costs, termination payments under committed
contracts, loss of tax credits and/or the write-off of their investment
in the project or improvement.
The use of derivative contracts by FPL Group and FPL in the normal course of business could result in financial losses or the payment of margin cash collateral that adversely impact the results of operations or cash flows of FPL Group and FPL.
-- FPL Group and FPL use derivative instruments, such as swaps, options,
futures and forwards, some of which are traded in the over-the-counter
markets or on exchanges, to manage their commodity and financial market
risks, and for FPL Group to engage in trading and marketing activities.
FPL Group could recognize financial losses as a result of volatility in
the market values of these derivative instruments, or if a counterparty
fails to perform or make payments under these derivative instruments and
could suffer a reduction in operating cash flows as a result of the
requirement to post margin cash collateral. In the absence of actively
quoted market prices and pricing information from external sources, the
valuation of these derivative instruments involves management's judgment
or use of estimates. As a result, changes in the underlying assumptions
or use of alternative valuation methods could affect the reported fair
value of these derivative instruments. In addition, FPL's use of such
instruments could be subject to prudence challenges and, if found
imprudent, cost recovery could be disallowed by the FPSC.
-- FPL Group provides full energy and capacity requirement services, which
include load-following services and various ancillary services,
primarily to distribution utilities to satisfy all or a portion of such
utilities' power supply obligations to their customers. The supply costs
for these transactions may be affected by a number of factors, such as
weather conditions, fluctuating prices for energy and ancillary
services, and the ability of the distribution utilities' customers to
elect to receive service from competing suppliers, which could
negatively affect FPL Group's results of operations from these
transactions.
FPL Group's competitive energy business is subject to risks, many of which are beyond the control of FPL Group, including, but not limited to, the efficient development and operation of generating assets, the successful and timely completion of project restructuring activities, the price and supply of fuel and equipment, transmission constraints, competition from other generators, including those using new sources of generation, excess generation capacity and demand for power, that may reduce the revenues and adversely impact the results of operations and financial condition of FPL Group.
-- There are various risks associated with FPL Group's competitive energy
business. In addition to risks discussed elsewhere, risk factors
specifically affecting NextEra Energy Resources' success in competitive
wholesale markets include, for example, the ability to efficiently
develop and operate generating assets, the successful and timely
completion of project restructuring activities, maintenance of the
qualifying facility status of certain projects, the price and supply of
fuel (including transportation) and equipment, transmission constraints,
the ability to utilize production tax credits, competition from other
and new sources of generation, excess generation capacity and shifting
demand for power. There can be significant volatility in market prices
for fuel, electricity and renewable and other energy commodities, and
there are other financial, counterparty and market risks that are beyond
the control of NextEra Energy Resources. NextEra Energy Resources'
inability or failure to effectively hedge its assets or positions
against changes in commodity prices, interest rates, counterparty credit
risk or other risk measures could significantly impair FPL Group's
future financial results. In keeping with industry trends, a portion of
NextEra Energy Resources' power generation facilities operate wholly or
partially without long-term power purchase agreements. As a result,
power from these facilities is sold on the spot market or on a
short-term contractual basis, which may increase the volatility of FPL
Group's financial results. In addition, NextEra Energy Resources'
business depends upon power transmission and natural gas transportation
facilities owned and operated by others; if transmission or
transportation is disrupted or capacity is inadequate or unavailable,
NextEra Energy Resources' ability to sell and deliver its wholesale
power or natural gas may be limited.
FPL Group's ability to successfully identify, complete and integrate acquisitions is subject to significant risks, including, but not limited to, the effect of increased competition for acquisitions resulting from the consolidation of the power industry.
-- FPL Group is likely to encounter significant competition for acquisition
opportunities that may become available as a result of the consolidation
of the power industry in general. In addition, FPL Group may be unable
to identify attractive acquisition opportunities at favorable prices and
to complete and integrate them successfully and in a timely manner.
FPL Group and FPL participate in markets that are often subject to uncertain economic conditions, which makes it difficult to estimate growth, future income and expenditures.
-- FPL Group and FPL participate in markets that are susceptible to
uncertain economic conditions, which complicate estimates of revenue
growth. Because components of budgeting and forecasting are dependent
upon estimates of revenue growth in the markets FPL Group and FPL serve,
the uncertainty makes estimates of future income and expenditures more
difficult. As a result, FPL Group and FPL may make significant
investments and expenditures but never realize the anticipated benefits,
which could adversely affect results of operations. The future direction
of the overall economy also may have a significant effect on the overall
performance and financial condition of FPL Group and FPL.
Customer growth and customer usage in FPL's service area affect FPL Group's and FPL's results of operations.
-- FPL Group's and FPL's results of operations are affected by the growth
in customer accounts in FPL's service area and by customer usage.
Customer growth can be affected by population growth. Customer growth
and customer usage can be affected by economic factors in Florida and
elsewhere, including, for example, job and income growth, housing starts
and new home prices. Customer growth and customer usage directly
influence the demand for electricity and the need for additional power
generation and power delivery facilities at FPL.
Weather affects FPL Group's and FPL's results of operations, as can the impact of severe weather. Weather conditions directly influence the demand for electricity and natural gas, affect the price of energy commodities, and can affect the production of electricity at power generating facilities.
-- FPL Group's and FPL's results of operations are affected by changes in
the weather. Weather conditions directly influence the demand for
electricity and natural gas, affect the price of energy commodities, and
can affect the production of electricity at power generating facilities,
including, but not limited to, wind, solar and hydro-powered facilities.
FPL Group's and FPL's results of operations can be affected by the
impact of severe weather which can be destructive, causing outages
and/or property damage, may affect fuel supply, and could require
additional costs to be incurred. At FPL, recovery of these costs is
subject to FPSC approval.
Adverse capital and credit market conditions may adversely affect FPL Group's and FPL's ability to meet liquidity needs, access capital and operate and grow their businesses, and increase the cost of capital. Disruptions, uncertainty or volatility in the financial markets can also adversely impact the results of operations and financial condition of FPL Group and FPL, as well as exert downward pressure on the market price of FPL Group's common stock.
-- Having access to the credit and capital markets, at a reasonable cost,
is necessary for FPL Group and FPL to fund their operations, including
their capital requirements. Those markets have provided FPL Group and
FPL with the liquidity to operate and grow their businesses that is not
otherwise provided from operating cash flows. Disruptions, uncertainty
or volatility in those markets can increase FPL Group's and FPL's cost
of capital. If FPL Group and FPL are unable to access the credit and
capital markets on terms that are reasonable, they may have to delay
raising capital, issue shorter-term securities and/or bear an
unfavorable cost of capital, which, in turn, could adversely impact
their ability to grow their businesses, decrease earnings, significantly
reduce financial flexibility and/or limit FPL Group's ability to sustain
its current common stock dividend level.
-- The market price and trading volume of FPL Group's common stock could be
subject to significant fluctuations due to, among other things, general
stock market conditions and changes in market sentiment regarding FPL
Group and its subsidiaries' operations, business, growth prospects and
financing strategies.
FPL Group's, FPL Group Capital's and FPL's inability to maintain their current credit ratings may adversely affect FPL Group's and FPL's liquidity, limit the ability of FPL Group and FPL to grow their businesses, and would likely increase interest costs.
-- FPL Group and FPL rely on access to capital and credit markets as
significant sources of liquidity for capital requirements not satisfied
by operating cash flows. The inability of FPL Group, FPL Group Capital
and FPL to maintain their current credit ratings could affect their
ability to raise capital or obtain credit on favorable terms, which, in
turn, could impact FPL Group's and FPL's ability to grow their
businesses and would likely increase their interest costs.
FPL Group and FPL are subject to credit and performance risk from third parties under supply and service contracts.
-- FPL Group and FPL rely on contracts with vendors for the supply of
equipment, materials, fuel and other goods and services required for the
construction and operation of, and for capital improvements to, their
facilities, as well as for business operations. If vendors fail to
fulfill their contractual obligations, FPL Group and FPL may need to
make arrangements with other suppliers, which could result in higher
costs, untimely completion of power generation facilities and other
projects, and/or a disruption to their operations.
FPL Group and FPL are subject to costs and other potentially adverse effects of legal and regulatory proceedings, as well as regulatory compliance and changes in or additions to applicable tax laws, rates or policies, rates of inflation, accounting standards, securities laws, corporate governance requirements and labor and employment laws.
-- FPL Group and FPL are subject to costs and other potentially adverse
effects of legal and regulatory proceedings, settlements, investigations
and claims, as well as regulatory compliance and the effect of new, or
changes in, tax laws, rates or policies, rates of inflation, accounting
standards, securities laws, corporate governance requirements and labor
and employment laws.
-- FPL and NextEra Energy Resources, as owners and operators of bulk power
transmission systems and/or critical assets within various regions
throughout the United States, are subject to mandatory reliability
standards promulgated by the North American Electric Reliability
Corporation and enforced by the Federal Energy Regulatory Commission.
These standards, which previously were being applied on a voluntary
basis, became mandatory in June 2007. Noncompliance with these mandatory
reliability standards could result in sanctions, including substantial
monetary penalties, which likely would not be recoverable from
customers.
Threats of terrorism and catastrophic events that could result from terrorism, cyber attacks, or individuals and/or groups attempting to disrupt FPL Group's and FPL's business may impact the operations of FPL Group and FPL in unpredictable ways.
-- FPL Group and FPL are subject to direct and indirect effects of
terrorist threats and activities, as well as cyber attacks and
disruptive activities of individuals and/or groups. Infrastructure
facilities and systems, including, for example, generation, transmission
and distribution facilities, physical assets and information systems, in
general, have been identified as potential targets. The effects of these
threats and activities include, but are not limited to, the inability to
generate, purchase or transmit power, the delay in development and
construction of new generating facilities, the risk of a significant
slowdown in growth or a decline in the U.S. economy, delay in economic
recovery in the United States, and the increased cost and adequacy of
security and insurance.
The ability of FPL Group and FPL to obtain insurance and the terms of any available insurance coverage could be adversely affected by international, national, state or local events and company-specific events.
-- FPL Group's and FPL's ability to obtain insurance, and the cost of and
coverage provided by such insurance, could be adversely affected by
international, national, state or local events as well as
company-specific events.
FPL Group and FPL are subject to employee workforce factors that could adversely affect the businesses and financial condition of FPL Group and FPL.
-- FPL Group and FPL are subject to employee workforce factors, including,
for example, loss or retirement of key executives, availability of
qualified personnel, inflationary pressures on payroll and benefits
costs and collective bargaining agreements with union employees and work
stoppage that could adversely affect the businesses and financial
condition of FPL Group and FPL.
The risks described herein are not the only risks facing FPL Group and FPL. Additional risks and uncertainties also may materially adversely affect FPL Group's or FPL's business, financial condition and/or future operating results.
FPL Group, Inc.
Preliminary Condensed Consolidated Statements of Income
(millions, except per share amounts)
(unaudited)
Three Months Ended Florida Power NextEra Energy Corporate & FPL Group,
September 30, 2009
& Light Resources Other Inc.
Operating Revenues $ 3,301 $ 1,136 $ 36 $ 4,473
Operating Expenses
Fuel, purchased power and 1,786 367 11 2,164
interchange
Other operations and 392 269 21 682
maintenance
Storm cost amortization 3 - - 3
Depreciation and 260 166 4 430
amortization
Taxes other than income 306 38 1 345
taxes
Total operating expenses 2,747 840 37 3,624
Operating Income (Loss) 554 296 (1 ) 849
Other Income (Deductions)
Interest expense (78 ) (86 ) (40 ) (204 )
Equity in earnings of - 29 - 29
equity method investees
Allowance for equity
funds used during 15 - - 15
construction
Interest income - 5 10 15
Other than temporary
impairment losses on
securities held in - - - -
nuclear decommissioning
funds
Other - net (5 ) 13 3 11
Total other income (68 ) (39 ) (27 ) (134 )
(deductions) - net
Income (Loss) Before 486 257 (28 ) 715
Income Taxes
Income Tax Expense 180 24 (22 ) 182
(Benefit)
Net Income (Loss) $ 306 $ 233 $ (6 ) $ 533
Reconciliation of Net
Income (Loss) to Adjusted
Earnings (Loss):
Net Income (Loss) $ 306 $ 233 $ (6 ) $ 533
Adjustments, net of income
taxes:
Net unrealized
mark-to-market (gains) - 32 - 32
losses associated with
non-qualifying hedges
Other than temporary - (3 ) - (3 )
impairment losses - net
Adjusted Earnings (Loss) $ 306 $ 262 $ (6 ) $ 562
Earnings (Loss) Per Share $ 0.75 $ 0.57 $ (0.01 ) $ 1.31
(assuming dilution)
Adjustments:
Net unrealized
mark-to-market (gains) - 0.08 - 0.08
losses associated with
non-qualifying hedges
Other than temporary - (0.01 ) - (0.01 )
impairment losses - net
Adjusted Earnings (Loss) $ 0.75 $ 0.64 $ (0.01 ) $ 1.38
Per Share
Weighted-average shares
outstanding (assuming 408
dilution)
NextEra Energy Resources' interest expense is based on a deemed capital
structure of 50% debt for operating projects and 100% debt for projects under
construction. For these purposes, the deferred credit associated with
differential membership interests sold by a NextEra Energy Resources subsidiary
in 2007 is included with debt. Residual non-utility interest expense is included
in Corporate & Other. Corporate & Other represents other business activities,
other segments that are not separately reportable, eliminating entries, and may
include the net effect of rounding.
FPL Group, Inc.
Preliminary Condensed Consolidated Statements of Income
(millions, except per share amounts)
(unaudited)
Three Months Ended Florida Power NextEra Energy Corporate & FPL Group,
September 30, 2008
& Light Resources Other Inc.
Operating Revenues $ 3,423 $ 1,916 $ 48 $ 5,387
Operating Expenses
Fuel, purchased power and 1,992 711 25 2,728
interchange
Other operations and 356 259 18 633
maintenance
Storm cost amortization 20 - - 20
Depreciation and 200 144 4 348
amortization
Taxes other than income 306 36 - 342
taxes
Total operating expenses 2,874 1,150 47 4,071
Operating Income (Loss) 549 766 1 1,316
Other Income (Deductions)
Interest expense (83 ) (81 ) (39 ) (203 )
Equity in earnings of - 46 - 46
equity method investees
Allowance for equity
funds used during 9 - - 9
construction
Interest income 2 9 2 13
Other than temporary
impairment losses on
securities held in - (40 ) - (40 )
nuclear decommissioning
funds
Other - net (2 ) - (4 ) (6 )
Total other income (74 ) (66 ) (41 ) (181 )
(deductions) - net
Income (Loss) Before 475 700 (40 ) 1,135
Income Taxes
Income Tax Expense 161 217 (17 ) 361
(Benefit)
Net Income (Loss) $ 314 $ 483 $ (23 ) $ 774
Reconciliation of Net
Income (Loss) to Adjusted
Earnings (Loss):
Net Income (Loss) $ 314 $ 483 $ (23 ) $ 774
Adjustments, net of income
taxes:
Net unrealized
mark-to-market (gains) - (285 ) - (285 )
losses associated with
non-qualifying hedges
Other than temporary - 17 - 17
impairment losses - net
Adjusted Earnings (Loss) $ 314 $ 215 $ (23 ) $ 506
Earnings (Loss) Per Share $ 0.78 $ 1.20 $ (0.06 ) $ 1.92
(assuming dilution)
Adjustments:
Net unrealized
mark-to-market (gains) - (0.71 ) - (0.71 )
losses associated with
non-qualifying hedges
Other than temporary - 0.04 - 0.04
impairment losses - net
Adjusted Earnings (Loss) $ 0.78 $ 0.53 $ (0.06 ) $ 1.25
Per Share
Weighted-average shares
outstanding (assuming 403
dilution)
NextEra Energy Resources' interest expense is based on a deemed capital
structure of 50% debt for operating projects and 100% debt for projects under
construction. For these purposes, the deferred credit associated with
differential membership interests sold by a NextEra Energy Resources subsidiary
in 2007 is included with debt. Residual non-utility interest expense is included
in Corporate & Other. Corporate & Other represents other business activities,
other segments that are not separately reportable, eliminating entries, and may
include the net effect of rounding.
FPL Group, Inc.
Preliminary Condensed Consolidated Statements of Income
(millions, except per share amounts)
(unaudited)
Nine Months Ended September Florida Power NextEra Energy Corporate & FPL Group,
30, 2009
& Light Resources Other Inc.
Operating Revenues $ 8,738 $ 3,136 $ 114 $ 11,988
Operating Expenses
Fuel, purchased power and 4,810 923 40 5,773
interchange
Other operations and 1,108 801 63 1,972
maintenance
Storm cost amortization 29 - - 29
Depreciation and 757 479 12 1,248
amortization
Taxes other than income 821 104 4 929
taxes
Total operating expenses 7,525 2,307 119 9,951
Operating Income (Loss) 1,213 829 (5 ) 2,037
Other Income (Deductions)
Interest expense (235 ) (264 ) (132 ) (631 )
Equity in earnings of - 49 - 49
equity method investees
Allowance for equity
funds used during 46 - - 46
construction
Interest income 1 16 41 58
Other than temporary
impairment losses on
securities held in - (54 ) - (54 )
nuclear decommissioning
funds
Other - net (10 ) 29 15 34
Total other income (198 ) (224 ) (76 ) (498 )
(deductions) - net
Income (Loss) Before 1,015 605 (81 ) 1,539
Income Taxes
Income Tax Expense 369 (66 ) (31 ) 272
(Benefit)
Net Income (Loss) $ 646 $ 671 $ (50 ) $ 1,267
Reconciliation of Net
Income (Loss) to Adjusted
Earnings (Loss):
Net Income (Loss) $ 646 $ 671 $ (50 ) $ 1,267
Adjustments, net of income
taxes:
Net unrealized
mark-to-market (gains) - 33 - 33
losses associated with
non-qualifying hedges
Other than temporary - 26 - 26
impairment losses - net
Adjusted Earnings (Loss) $ 646 $ 730 $ (50 ) $ 1,326
Earnings (Loss) Per Share $ 1.59 $ 1.65 $ (0.12 ) $ 3.12
(assuming dilution)
Adjustments:
Net unrealized
mark-to-market (gains) - 0.08 - 0.08
losses associated with
non-qualifying hedges
Other than temporary - 0.06 - 0.06
impairment losses - net
Adjusted Earnings (Loss) $ 1.59 $ 1.79 $ (0.12 ) $ 3.26
Per Share
Weighted-average shares
outstanding (assuming 406
dilution)
NextEra Energy Resources' interest expense is based on a deemed capital
structure of 50% debt for operating projects and 100% debt for projects under
construction. For these purposes, the deferred credit associated with
differential membership interests sold by a NextEra Energy Resources subsidiary
in 2007 is included with debt. Residual non-utility interest expense is included
in Corporate & Other. Corporate & Other represents other business activities,
other segments that are not separately reportable, eliminating entries, and may
include the net effect of rounding.
FPL Group, Inc.
Preliminary Condensed Consolidated Statements of Income
(millions, except per share amounts)
(unaudited)
Nine Months Ended Florida Power NextEra Energy Corporate & FPL Group,
September 30, 2008
& Light Resources Other Inc.
Operating Revenues $ 8,829 $ 3,432 $ 146 $ 12,407
Operating Expenses
Fuel, purchased power and 5,047 1,296 75 6,418
interchange
Other operations and 1,114 759 53 1,926
maintenance
Storm cost amortization 46 - - 46
Depreciation and 596 417 12 1,025
amortization
Taxes other than income 817 100 2 919
taxes
Total operating expenses 7,620 2,572 142 10,334
Operating Income (Loss) 1,209 860 4 2,073
Other Income (Deductions)
Interest expense (252 ) (228 ) (117 ) (597 )
Equity in earnings of - 85 - 85
equity method investees
Allowance for equity
funds used during 22 - - 22
construction
Interest income 10 28 11 49
Other than temporary
impairment losses on
securities held in - (60 ) - (60 )
nuclear decommissioning
funds
Other - net (9 ) 15 (4 ) 2
Total other income (229 ) (160 ) (110 ) (499 )
(deductions) - net
Income (Loss) Before 980 700 (106 ) 1,574
Income Taxes
Income Tax Expense 342 50 (50 ) 342
(Benefit)
Net Income (Loss) $ 638 $ 650 $ (56 ) $ 1,232
Reconciliation of Net
Income (Loss) to Adjusted
Earnings (Loss):
Net Income (Loss) $ 638 $ 650 $ (56 ) $ 1,232
Adjustments, net of income
taxes:
Net unrealized
mark-to-market (gains) - (76 ) - (76 )
losses associated with
non-qualifying hedges
Other than temporary - 29 - 29
impairment losses - net
Adjusted Earnings (Loss) $ 638 $ 603 $ (56 ) $ 1,185
Earnings (Loss) Per Share $ 1.59 $ 1.62 $ (0.15 ) $ 3.06
(assuming dilution)
Adjustments:
Net unrealized
mark-to-market (gains) - (0.19 ) - (0.19 )
losses associated with
non-qualifying hedges
Other than temporary - 0.07 - 0.07
impairment losses - net
Adjusted Earnings (Loss) $ 1.59 $ 1.50 $ (0.15 ) $ 2.94
Per Share
Weighted-average shares
outstanding (assuming 403
dilution)
NextEra Energy Resources' interest expense is based on a deemed capital
structure of 50% debt for operating projects and 100% debt for projects under
construction. For these purposes, the deferred credit associated with
differential membership interests sold by a NextEra Energy Resources subsidiary
in 2007 is included with debt. Residual non-utility interest expense is included
in Corporate & Other. Corporate & Other represents other business activities,
other segments that are not separately reportable, eliminating entries, and may
include the net effect of rounding.
FPL Group, Inc.
Preliminary Condensed Consolidated Balance Sheets
(millions)
(unaudited)
September 30, Florida Power NextEra Energy Corporate & FPL Group,
2009
& Light Resources Other Inc.
Property, Plant
and Equipment
Electric utility plant in $ 27,767 $ 15,394 $ 295 $ 43,456
service and other property
Nuclear fuel 726 773 - 1,499
Construction
work in 1,949 2,286 35 4,270
progress
Less accumulated
depreciation and (10,538 ) (3,302 ) (169 ) (14,009 )
amortization
Total property, plant and 19,904 15,151 161 35,216
equipment - net
Current Assets
Cash and cash 34 94 36 164
equivalents
Customer receivables, net 1,022 559 13 1,594
of allowances
Other
receivables, 117 206 (19 ) 304
net of
allowances
Materials, supplies and
fossil fuel inventory - at 550 329 5 884
avg. cost
Regulatory
assets:
Deferred clause and 68 - - 68
franchise expenses
Securitized
storm-recovery 68 - - 68
costs
Derivatives 344 - - 344
Pension - - 19 19
Other - - 4 4
Derivatives 13 423 (1 ) 435
Other 129 158 5 292
Total current 2,345 1,769 62 4,176
assets
Other Assets
Special use 2,375 946 1 3,322
funds
Other 5 265 709 979
investments
Prepaid benefit 1,024 - (49 ) 975
costs
Regulatory
assets:
Securitized
storm-recovery 669 - - 669
costs
Deferred clause - - - -
expenses
Pension - - 114 114
Unamortized
loss on 30 - - 30
reacquired debt
Other 162 - 3 165
Other 247 842 420 1,509
Total other 4,512 2,053 1,198 7,763
assets
Total Assets $ 26,761 $ 18,973 $ 1,421 $ 47,155
Capitalization
Common stock $ 1,373 $ - $ (1,369 ) $ 4
Additional 4,393 6,648 (6,028 ) 5,013
paid-in capital
Retained 2,484 3,383 1,716 7,583
earnings
Accumulated other
comprehensive income - 161 (29 ) 132
(loss)
Total common 8,250 10,192 (5,710 ) 12,732
shareholders' equity
Long-term debt 5,782 3,927 5,892 15,601
Total 14,032 14,119 182 28,333
capitalization
Current
Liabilities
Commercial 827 - 754 1,581
paper
Notes payable - - - -
Current
maturities of 42 320 300 662
long-term debt
Accounts 612 439 6 1,057
payable
Customer 596 5 - 601
deposits
Accrued
interest and 466 243 (104 ) 605
taxes
Regulatory liabilities -
deferred clause and 168 - - 168
franchise revenues
Derivatives 357 161 1 519
Other 548 782 34 1,364
Total current 3,616 1,950 991 6,557
liabilities
Other
Liabilities and
Deferred
Credits
Asset
retirement 1,813 571 - 2,384
obligations
Accumulated
deferred income 3,509 963 21 4,493
taxes
Regulatory
liabilities:
Accrued asset 2,231 - - 2,231
removal costs
Asset retirement
obligation regulatory 655 - - 655
expense difference
Other 251 - - 251
Derivatives 1 203 2 206
Other 653 1,167 225 2,045
Total other liabilities 9,113 2,904 248 12,265
and deferred credits
Commitments and
Contingencies
Total
Capitalization $ 26,761 $ 18,973 $ 1,421 $ 47,155
and Liabilities
Corporate & Other represents other business activities, other segments that are
not separately reportable, eliminating entries, and may include the net effect
of rounding.
FPL Group, Inc.
Preliminary Condensed Consolidated Balance Sheets
(millions)
(unaudited)
December 31, Florida Power NextEra Energy Corporate & FPL Group,
2008
& Light Resources Other Inc.
Property, Plant
and Equipment
Electric utility plant in $ 26,497 $ 14,874 $ 267 $ 41,638
service and other property
Nuclear fuel 613 646 1 1,260
Construction
work in 1,862 748 20 2,630
progress
Less accumulated
depreciation and (10,189 ) (2,771 ) (157 ) (13,117 )
amortization
Total property, plant and 18,783 13,497 131 32,411
equipment - net
Current Assets
Cash and cash 120 145 270 535
equivalents
Customer
receivables, 796 630 17 1,443
net of
allowances
Other
receivables, 143 183 (62 ) 264
net of
allowances
Materials, supplies and
fossil fuel inventory - at 563 401 4 968
avg. cost
Regulatory
assets:
Deferred clause and 248 - - 248
franchise expenses
Securitized
storm-recovery 64 - - 64
costs
Derivatives 1,109 - - 1,109
Pension - - 19 19
Other 1 - 3 4
Derivatives 4 432 (3 ) 433
Other 124 156 25 305
Total current 3,172 1,947 273 5,392
assets
Other Assets
Special use 2,158 789 - 2,947
funds
Other 6 245 672 923
investments
Prepaid benefit 968 - (54 ) 914
costs
Regulatory
assets:
Securitized
storm-recovery 697 - - 697
costs
Deferred clause 79 - - 79
expenses
Pension - - 100 100
Unamortized
loss on 32 - - 32
reacquired debt
Other 133 - 5 138
Other 147 679 362 1,188
Total other 4,220 1,713 1,085 7,018
assets
Total Assets $ 26,175 $ 17,157 $ 1,489 $ 44,821
Capitalization
Common stock $ 1,373 $ - $ (1,369 ) $ 4
Additional 4,393 5,984 (5,572 ) 4,805
paid-in capital
Retained 2,323 2,707 1,855 6,885
earnings
Accumulated other
comprehensive income - 13 (26 ) (13 )
(loss)
Total common
shareholders' 8,089 8,704 (5,112 ) 11,681
equity
Long-term debt 5,311 3,893 4,629 13,833
Total 13,400 12,597 (483 ) 25,514
capitalization
Current
Liabilities
Commercial 773 - 1,062 1,835
paper
Notes payable - - 30 30
Current
maturities of 263 289 836 1,388
long-term debt
Accounts 645 416 1 1,062
payable
Customer 570 5 - 575
deposits
Accrued
interest and 449 99 (174 ) 374
taxes
Regulatory liabilities -
deferred clause and 11
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