ML021370140
| ML021370140 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 05/09/2002 |
| From: | Hepper R Florida Power & Light Energy Seabrook, Pierce Atwood |
| To: | Howland D Office of Nuclear Reactor Regulation, State of NH, Public Utilities Commission |
| References | |
| NDFC 2002-2 | |
| Download: ML021370140 (52) | |
Text
FPL Group 2000 Annual Report fina nciaI highlig hts For the Years Ended December 31, 2000 1999 % change Financial Results (millions, except per shareamounts)
Operating Revenues $7,082 $6,438 10.0 Operating Income $1,240'1 $920(2) 34.8 Net Income $74513) $681' 9.4 Earnings Per Share $4.38(3) $3.98(` 10.1 Cash Flow from Operating Activities $976 $1,563 (37.6)
Total Assets $15,300 $13,441 13.8 Common Stock Data Average Shares Outstanding (millions) 170 171 (0.6)
Dividends Per Share $2.16 $2.08 3.8 Book Value Per Share $33.22 $31.47 5.6 Market Price Per Share (high/low) $73 - $363/8 $6115/6 - $411/8 Operating Data Energy Sales (millions kwh) 100,777 92,446 9.0 FPL Customer Accounts (average; thousands) 3,848 3,756 2.4 Employees (year end) 10,852 10,717 1.3 (1) Includes effects of merger-relatedexpenses.
(2) Includes effects of impairment loss on Maine assets and settlement of litigation between FPL and FMPA.
(3) Excludes effect of merger-relatedexpenses.
(4) Excludes effects ofgain on sale of Adelphia Communications Corporationstock, impairment loss on Maine assets, settlement of litigation between FPL and FMPA and the gain on the redemption of a one-third ownership interest in a cable limitedpartnership.
p ro file FPL Group is one of the nation's largest providers of electricity- related services. Its principal subsidiary, Florida Power & Light Company, serves more than seven million people along the eastern seaboard and the southern portion of Florida. FPL Energy, LLC, FPL Group's unregulated energy generating subsidiary, is a leader in producing electricity from clean and renewable fuels. FPL Energy owns and operates domestic power plants representing more than 4,100 megawatts and has more than 2,700 megawatts of capacity under construction or in late-stage development. FPL FiberNet provides fiber-optic services and fiber-optic cable to businesses within Florida.
to. our shareholders, Consistent Earnings Per Share Growth
$4.38 S35$3198 10%oearning n
$.57 1996 1997 1998 1999 2000 ExClides nonreurring items in I Ž and
~
nindgerdat d . n os . in 2 )00 year for FPL 200Group. 0as a landmark Our core businesses, Florida Power & Light and FPL Energy, produced outstanding operating results, and our new subsidiary, FPL FiberNet, achieved profitability in its first year of operation. This performance enabled us to reach new records of net income and earnings per share, and shareholders were rewarded with exceptionally attractive returns Am Record financial results
-" Net income, excluding special charges related to the pending merger, reached an all time high of $745 million
FPL Group 2000 Annual Report
-- Earnings per share increased by 10% Major achievements of to a record $4.38. Florida Power & Light:
The key to FPL's success in recent Shareholder returns years has been its ability to lower costs Electric utility stocks fared very well in while improving customer service and 2000 compared with the overall stock mar reliability. Outstanding achievements ket, and FPL Group performed substantially continued in all of these areas.
better than the industry as a whole. The Operations and maintenance costs per total return on the company's common kilowatt-hour declined for the tenth stock - dividends plus stock price apprecia consecutive year. Since 1990, we have tion - was 74.8%. The return of the reduced O&M costs by 40% - from Standard & Poor's Electric Companies Index 1.82 cents per kWh to 1.09 cents.
was 53. 4 %. More importantly, the stock of What's more, the lower costs have been FPL Group has been a sound long-term achieved during a period when the investment. Since we began restructuring Consumer Price Index has risen our company in 1990, the annualized total nearly 38% and FPL has added return to our shareholders has been 15.2%, more than 700,000 new customers.
compared to the 12.3% return for the SPower plant performance, already Standard & Poor's Electric Companies Index. among the best in the nation, continued to reach new levels.
3
the natural choice
__________I The 95% "availability factor" of A Decade of O&M Expense Reductions (cents per kilowatt-hour) our fossil plants was the highest 1 82
. i . Down ever and substantially above the 40%
industry average. since SOur nuclear plant availability of 93% 1. 1990 was far superior to the industry average. It was less than one percent age point short of the previous year's record, despite an additional scheduled refueling outage. 90 91 92 93 94 95 96 97 98 99 00
-' Service reliability again improved, and FPL's reliability is within the top 20% of the industry. -- ' In 2000 FPL Energy constructed and
-- ' FPL's customer satisfaction surveys, began operation of a 1,000-megawatt carried out by an independent agency, natural gas-fired plant in Texas and rewarded us with some of the highest purchased a 104-megawatt wind facility marks for service in the last decade. in Minnesota. This increased its generat ing capacity by over one-third - from Accomplishments of FPL Energy: 3,000 to more than 4,100 megawatts.
FPL Energy, our non-regulated whole -- ' The company now has power plants sale power business that operates outside in operation in 12 states. Additional Florida, is an industry leader in the use announced projects aggregating more of environmentally friendly fuels. than 2,700 megawatts are under late Approximately 80% of its electricity is stage development or construction.
generated from clean fuels, including These projects will further enhance the natural gas and renewable resources company's regional portfolios.
such as wind and solar. It is the largest - FPL Energy's contributions to earnings, developer of wind generation in the excluding nonrecurring charges and country and operates the two largest solar merger-related expenses, increased to plants in the world. $83 million, up 43% from $58 million in 1999. With a solid pipeline of potential projects, we expect FPL Energy's healthy growth to continue.
FPL Grorp 2000 Annual Report 4- ___________
SIn 2000 the company continued installing all competitors and created a new class of intra-city, metropolitan fiber networks wholesale generators. In addition, in recent that are tied together by its inter-city, years many states have restructured their long distance network. The company electric power businesses with varying results.
currently owns about 2,000 route-miles Going forward, the governor of Florida of long distance and metropolitan fiber has established a commission to examine network, which represent approximately the state's energy policy and make recom 122,000 fiber-miles. mendations regarding the future structure FPL FiberNet is already a profitable of the electricity system. Although a full business and is well positioned to make report is not due until December 2001, a growing contribution to earnings. the commission's initial proposal calls for creating a fully competitive wholesale Proposed merger terminated power market in Florida. Also, we have Just prior to the publication of this responded to the Federal Energy Regulatory annual report, we announced the termina Commission's request to all utilities and tion of our proposed merger with Entergy submitted a proposal to create a separate Corporation. When the merger was and independent for-profit company known announced in late July, and submitted to as a "Transco" to operate Florida's electric shareholders later in the year, we felt that transmission system.
combining our companies would prove No one can predict precisely the beneficial to shareholders and customers ultimate industry structure, but over the alike. However, a number of factors led us last ten years we have worked hard to recently to conclude that the merger would build an organization that will thrive neither achieve the synergies nor create the under any set of circumstances. We are shareholder value on which our original confident that under any fair rules, we agreement was based. Although I am disap will be successful and continue to pointed, this does not diminish in any way generate value for our shareholders.
our positive outlook for FPL Group's future.
Summary and outlook We are in a period of rapid change in the electric power industry. Federal James L. Broadhead legislation was enacted during the early Chairman and ChiefExecutive Officer 1990s that opened transmission lines to Apil 2, 2001 5
the natural choice Irir DrxAcr Q I n h t C rt rn n n 'i II I 1.J I I CI I M. K, L M The St. Lucie nuclear plant is home to sea turtles as well as 160 species of birds and 24 species of mammals. Three quarters of the plant's 1,132-acre site consists of swamps, marshes and beaches that are preserved for area wildlife.
same time, it has taken steps to meet the ues to change, one of the keys to sharply increasing energy demands of the electricis power success industry how well contin utilities a service area that continues to grow at execute the fundamentals. When it comes a rapid pace.
to basics, no electric utility has performed FPL's customer base grew by 2.5%
better than Florida Power & Light over the in 2000 to more than 3.8 million. More new past decade. customers, 92,000, were added than in any Since 1990, when the company was year since 1990. In addition, energy usage restructured, FPL has driven down costs per customer increased by nearly 2% over while achieving continuous improvements in the previous year.
virtually every area of its operations. At the
FPL Group 2000 Annua[ Repor Superior Long-Term because superior plant performance Investment Performance (10-year growth of $100 invested helps defer the need for additional new on Deemnber 31,1990) generation. It also enables FPL to reliably meet peak energy demands and to sell excess power produced by its plants to other utilities through the company's Energy Marketing and Trading Division, a leading wholesale marketer and trader of electricity, gas and oil. Gains from
$100'e these energy sales provide savings to 90 91 92 93 94 95 96 97 98 99 W FPL customers.
FPL Group S&P Electric Companies In 2000 the availability of FPL's fossil plants the percentage of time they were available to generate power Continued cost reduction rose to an all-time high of 95%. 'this In 2000, FPL reduced its operations and was well above the industry average maintenance costs per kilowatt hour for the of 86% and places FPL among the tenth consecutive year. Since 1990, O&M nation's best performers.
costs have declined 40% - from 1.82 cents -E The 93% availability of FPL's nuclear per kilowatt hour to 1 09 cents. During this plants was just short of the record time the company added more than high achieved in 1999, despite an 700.000 new customer accounts and additional scheduled refieling outage, increased its generating capacity by 24%, and it is substantially better than FPL's cost reduction efforts have the most recent nuclear industry resulted in a more efficient and productive average of 84%.
organization and enabled the company to In addition, the World Association hold down the price of its electricity to of Nuclear Operators Index, which below the national average. measures 11 critical areas of operating and safety peiformance, placed FPL's Performance-driven operations nuclear facilities in the top quartile of FPL continues to achieve major plants nationwide. The WAND rating improvements in such critical success areas of 981 is the highest FPL has ever as plant performance, electric reliability, received and marks the fourth and customer service. consecutive year of improvement.
FPL's power plants remain among the nation's top performers. This is important 7
An Industry Leader in Plant Performance Fossil Plant Availability 9r/ 92% 9 93% 95%
rIdustry t .
Average 90 92 94 96 98 99 00 Nuclear Plant Availability 93%2 94%9 80% 82o Industry Average FPL utilizes a diverse energy mix that enables it to take advantage of energy price changes In 2000, nuclear accounted for 26%
90 92 94 96 98 99 O00 of the power FPL provided, followed by natural gas at 25%. Oil also accounted for 25%, purchased power 17%, and coal 7%.
During 2000M utility companies Energy Sources Florida Power & Light Company nationwide experienced skyrocketing costs (based on kilowatt-hours produced) for oil and natural gas. The Florida Public Service Commission approved rate adjust ments allowing FPL to recover its fuel costs, which the company is spreading over a two year period to lessen the impact on customers. Continued pressures on oil and natural gas prices forced FPL to request an additional adjustment early in 2001.
FPL's electric reliability, which is rated within the top 20% of the industry, improved for the third straight year.
Coj-
FPL Group 2000 Annual Report Cooling canals at the Turkey Point power plant are among only three nesting areas inthe country for the endangered American crocodile. This unique habitat has attracted world attention on CNN, National Geographic and many other international programs.
As the result of a major initiative launched While improving its reliability, in 1997, FPL has: FPL also has taken steps to enhance its
- Reduced the average amount of communications with customers. A recent time its customers are without power independent study found that among the by 30%; customer call centers of 16 major utilities,
' Reduced by 10% the average duration FPL ranked number one overall. The com of interruptions; and pany also is utilizing the latest technologies
-- Reduced the frequency of interruptions to further improve customer service.
by 21%.
the natural choice Hundreds of manatees congregate at five FPL power plants during the winter months. As water temperatures decline in winter, these endangered mammals frequently find shelter in the power plants' warm water discharge.
Expanding for the future FPL expects approximately 2,700 To meet the needs of its rapidly megawatts of new generation to be growing service territory, FPL plans to add available by 2004.
over the next ten years approximately 7,000 - Approximately 2,000 megawatts megawatts of generating capability - an will come from "repowering" older increase of more than 40%. The additional oil-burning power plants at Fort Myers generation will be fueled by clean-burning and Sanford and converting them to natural gas, which will strengthen FPL's natural gas. The Fort Myers plant standing as one of the most environmentally already provides the first increments friendly utilities in the country. of new generation in the form of
"-'simple cycle" combustion turbines, I1 11
FPL Group 2000 Annual Report FPL Customer Growth Highest in a Decade (number of customer accounts in millions) 3
- 3. 6 2.5%
316 growth in2000 9
9 9 9 9
2 3 0 9I 90 91 92 93 94 95 96 97 98 99 00 which will ultimately be re-configured -- ' While FPL is adding new generation, it as "combined-cycle" units. When the continues to utilize energy conservation project is completed in 2002, the plant's programs to help individual customers capacity will nearly triple, while reduce their demand for energy and emissions will be reduced. The Sanford save on their electricity bills. Over the plant repowering will more than double past 20 years, these programs have its capacity, while reducing emissions reduced energy consumption and as well. Sanford is scheduled for enabled FPL to avoid building several completion by the end of 2002. additional power plants. Attaining FPL's
"- "Peaking" units will provide an 10-year energy conservation goals, additional 600 megawatts of generation. which the Florida Public Service These combustion turbines provide Commission approved in 2000, will power during short-term periods of eliminate the need for two additional peak demand. Two peaking units power plants that would otherwise have totaling 300 megawatts are scheduled been part of its expansion program.
to be available at the Martin plant site near Lake Okeechobee in Nuclear license extension 2001. Two similar-sized units will Nuclear power has played an important be added at Fort Myers in 2003. role in FPL's energy mix for nearly three decades - ever since the two nuclear units
the natural choice The Barley Barber Swamp is a 400-acre natural cypress swamp voluntarily preserved by FPL at the Martin power plant site. Hundreds of wildlife species are protected here.
The endangered Florida panther also roams the swamps and hammocks nearby.
at Turkey Point south of Miami began To ensure that customers continue to operation in 1972 and 1973. receive the economic and environmental The Turkey Point nuclear units generate benefits provided by Turkey Point, FPL approximately 1,400 megawatts of electricity in 2000 submitted an application to the
- enough to provide power for more than Nuclear Regulatory Commission to extend 300,000 customers - and are among the the plant's operating license an additional lowest-cost generators in the FPL system. 20 years until 2033.
In addition, the nuclear units produce The commission is expected to review no greenhouse emissions. the application over the next two to three
FPL Group 2000 Annual Report years before deciding whether to renew the separate and independent for-profit trans license. The NRC already has extended the mission company to operate the electrical licenses for several other nuclear plants. transmission system statewide. This so FPL plans to file a similar application called "Transco," if approved by the FERC, in 2002 to extend the license of the St. could be in operation before the end of Lucie nuclear units on Hutchinson Island. this year (see relatedstory on page 14 for additionalinformation).
Proposed changes in Florida An Energy Study Commission established #1 in environmental performance last year by Florida's governor is studying FPL is an environmental leader within possible changes in the state's electric the electric industry and considers making system. The commission is expected to the right choices to maintain and preserve make a final report to the governor and Florida's environment an important part of legislature in late 2001. its operations. Last year - in an affirmation
- Although acknowledging that the of its commitment to the environment - the current electric system has worked well investment research firm Innovest named in providing abundant, affordable and FPL number one among 30 leading electric reliable power, the commission early utilities in environmental performance.
in 2001 proposed to create a fully FPL's overall emissions are among the competitive wholesale power market lowest in the country, based on the amount in Florida. Under the commission's of electricity it produces.
proposal there would be a six-year More than half of its generation is derived transition period to ensure an orderly from clean energy sources. In addition, move to a competitive market and FPL will reduce emissions at two of its older all generators would compete oil-fired plants when they are converted to under the same rules. natural gas. The Fort Myers and Sanford plants will utilize advanced technology At the national level, the Federal Energy that will significantly lower emissions, Regulatory Commission (FERC) last year even though the plants will generate strongly recommended to the country's more electricity than before.
investor-owned utilities that they find ways FPL also has taken initiatives to protect to create regional transmission organiza the native environments surrounding its tions. As a result, FPL - together with power plants. As shown by the photos with Florida Power Corporation and Tampa in this report, FPL's efforts have enabled a Electric Company - proposed creating a large number of endangered and threatened species to thrive in their natural habitat.
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the natural choice
-I-FPL's commitment to the environment Manatees seeking the warm waters near gained wide attention in January 2001 the Fort Myers plant. The island is the when it made the unusual donation of an first addition to the Caloosahatchee island to the U.S. Fish and Wildlife Service. National Wildlife Refuge, which was Manatee Island is an 18-acre refuge for established in 1920 by President Woodrow migratory and native birds that also serves Wilson as a preserve and breeding ground as a winter landmark for West Indian for native birds.
Proposing a Florida Transco n recent years the Federal Energy Regulatory Commission has pushed strongly and insome cases mandated a regional approach to the transmission of electricity. The FERC believes this will ensure more open access to the interconnected system of electric lines that are located throughout the country. As a result, a number of investor-owned electric utilities have divested their individual transmission systems infavor of regional transmission organizations.
In 2000, the FERC ordered the country's investor-owned utilities to propose ways to create regional transmission organizations. FPL - together with Florida Power Corporation and Tampa Electric Company - have proposed transferring control of their transmission assets to form what is known within the industry as a Transco.
This would be a separate, for-profit transmission company responsible for operating the electrical transmission lines that run from the power plants to substations throughout peninsular Florida. The electrical distribution lines that carry power directly to homes and businesses would remain with the individual utilities.
The Transco would be a fully independent company, incentive-d riven, anc organized and governed much like any corporation. FPL would no longer own or operate its transmission system. However, inexchange for title to FPLs transmission assets, it would retain a passive ownership interest in the new company. This interest would enable FPL Group to share in the earnings of the Transco.
Ifapproved, the Transco could be in operation before the end of this year.
II III
FPL Group 2000 Annual Report r p jP i n p r fl P
The osprey is a protected species that builds its nests in large trees ... or occasionally on utility poles. Inthe latter case, FPL provides special elevated nesting platforms for the osprey's protection.
development projects should ensure strong growing wholesale power business and continued growth.
F PL Energy and is the leader an industry company's rapidly in clean Excluding nonrecurring items and energy production - including renewable merger-related expenses, FPL Energy's energy sources and the use of environmen contributions to net income rose 43% in tally friendly fuels. Since 1998, its power 2000 from $58 million to $83 million.
plant portfolio has more than doubled to Its contributions to earnings per share 4,110 megawatts of capacity, with plants in increased from 34 cents to 49 cents, an 12 states. In addition, a strong pipeline of increase of 44%. The growth in earnings
reo n.AVur~ 0.o' Inaddition to providing clean, renewable power to homes and businesses, several FPL Energy wind projects sited in the California desert are home to the endangered San Joaquin kit fox.
A Diversified Portfolio reflects an increase in its portfolio of (net mw in operation) generation and improved operating performances of existing assets. FEE Energy achieved earnings growth despite the costs of building necessary infrastructure to support its future expansion.
Generating assets in Maine and wind Ur facilities in California were among the FPL Energy operations making strong earnings 6%t contributions in 2000
FiL Oro.p 2000 AlnulI RsPor FPL Energy A 536-megawatt facility near Austin, A Growing Portfolio Texas, in which FPL tnergy retains 50%
(net mw in operation) ownership (2002);
A 525-megawatt plant in Bellingham, Massachusetts (2003);
37% A 744 megawatt plant in Marcus Hook, growth 1i,78 in 2000 Pennsylvania (2003).
1,240 Wind projects totaling nearly 500 megawatts include:
1996 1997 1998 1999 200
ý A 300 megawatt wind farm on the Washington/Oregon border (2001);
> A 160-megawatt project in Texas (2001);
FPL Energy increased its generation "A25 megawatt facility in Wisconsin portfolio 37% during 2000 with the (2001).
construction of a 1,000-megawatt natural gas plant in Lamar, *exas, and the purchase Focus on clean energy of a 104 megawatt wind facility in southwest FPL Energy's primary strategy is to Minnesota. utilize its power generation expertise and energy marketing and trading skills Building capacity to develop or acquire new projects that Projects currently under construction emphasize 'clean energy.'
or that have been announced will provide Natural gas or renewable sources, FEPL Energy with more than 2,700 additional including wind, solar, hydro and geothermal, megawatts of generation through 2003 provide the fuel hir nearly 80% of FPL Natural gas-fired projects totaling more Energy's generation. The company places than 2,200 megawatts and their expected a particular emphasis on natural gas-fired completion dates include: and wind driven generation, areas in which A peaking unit, totaling 171 megawatts, it possesses world class skills.
at the Doswell plant in Virginia, which > A contract with General Electric for is already one of the nation's largest 66 gas turbines through 2004 supports independent power facilities (2001); future natural gas projects. Some of the A 535 megawatt plant in Johnston, turbines are being used by FPL for its Rhode Island (2002): capacity expansion.
17 C o/
the natural choice State-of-the-art fishways at FPL Energy's hydroelectric facilities in Maine are helping to preserve and restore populations of Atlantic salmon, American shad and river herring in the Saco River.
"- Wind power is a niche market that to the environment, the demand for clean has proven to be highly profitable for energy is growing, and some states are FPL Energy. The company currently requiring that a portion of their generation operates wind farms that produce nearly come from renewable sources. In addition, 1,000 megawatts. clean power provides cost advantages as more stringent emission requirements make FPL's focus on clean energy offers strong it more expensive to generate electricity business advantages. Because of its benefits using fuels such as oil or coal.
II II
Fri Group 2000 Annual Renrt FPI F i h Pr N pt FPL FiberNet owns approximately 2,000 PL forneda Subsidiary FibterNet, Group of IlrL at the beginning miles of fiber network and plans to of 2000, was aI modest contributor add several hundred more miles by to earnings in its first year of operation 2002 The 2,000 route niles represent FPL FiberNet provides fiber optic services approximately 122,000 fiber miles.
and fiber optic cable to businesses that Fiber optic cable is utilized to send include cable television, Internet service data, voice and video communications providers, wireless cOmlllmunications. and and is capable of carrying thousands telecommunications. of times more information than conventional cable.
Expansion at FPL FiberNet Jacksonville metrowhok Ta. Petbr Melbourne M. Peterburg Sarasoi t m FPL FMIbNeINnN1ok M ....
crrati ,,r Fort Myers Boca Raton Fort Lauderdale We Pal Beach Mia 19 c07
the natural choice i
The squirrel treefrog lives near many of our power plants in areas carefully set aside for wildlife protection. The frog is considered to be one of nature's best indicators of a healthy environment.
"- The company is expanding its FPL FiberNet supports a number of intra-city fiber networks in initiatives to install Internet nodes municipalities throughout Florida. in South Florida. This installation,
- FPL FiberNet has completed networks combined with international fiber in Miami, Fort Lauderdale, Orlando cables coming into South Florida, and Tampa, and is currently construct will establish the area as an international ing fiber networks in Boca Raton, telecommunications hub.
West Palm Beach, St. Petersburg and Jacksonville.
I1 II
Al' manatee island: The lush flora ",A- .
-/r- a.
and fauna of Manatee Island, located in the CaloosahatcheeRiver adjacent to the Fort Myers power plant, will continue to be protected with FPL's donation of,° ., ,. ....
the 18-acre refuge to the U.S. Fish and :. ., . .
Wildlife Service in January2001. 4,, j.
Triangular in shape, the island serves as ..
a unique haven for birds and other species of wildlife. With FSL's donation, .
Manatee Island becomes the first addi- - "
tion to the CaloosahatcheeNational V Wildlife Refuge, established in 1920.
the natural choice
- v, ri C' I I I n f r r m t i n n I1 U a (j UI CA financial and operating statistics Years Ended December 31, 2000 1999 1998 1997 1996 1995 1990 110 (IOPIC Iilos Operating Revenues S7,082 $6,438 $6,661 $6,369 $6,037 $5,592 $5,075
$5,842 $5,518 $5,409 $5,141 $4,866 $4,395 $4,326 Operating Expenses
$1,240 $920 $1,252 $1,228 $1,171 $1,197 $749 Operating Income Income from Continuing Operations S704 $697 $664 $618 $579 $553 $298 Net Income (Loss) $704 $697,3) $664 $618 $579 $553 $691)"4
$15,300 $13,441 $12,029 $12,449 $12,219 $12,459 $10,802 Total Assets Long-Termn Debt (excluding current maturities) S3,976 $3,478 $2,347 $2,949 $3,144 $3,377 $3,853 Preferred Stock of FPL with sinking fund requirements (excluding current maturities) 10 $-- $-- $-- $42 $50 $166 100,777 92,446 91,041 84,642 80,889 79,756 66,763 Energy Sales (kwh)
I flRIflA DflWR R. II(HT OOMPANY -
Operating Revenues (millions) S6,361 $6,057 $6,366 $6,132 $5,986 $5,530 $4,988 Energy Sales (millions of kwh) 91,969 88,067 89,362 82,734 80,889 79,756 66,763 Customer Accounts Average (thousands) 3,848 3,756 3,680 3,616 3,551 3,489 3,159 17,057 16,802 13,047 16,490 18,096 11,868 Peak Load, Winter (mw 60-minute)`' 18,219 17,615 17,897 16,613 16,064 15,813 13,754 Peak Load, Summer (mw 60-minute) 17,808 18,649 18,509 18,715 18,538 18,153 16,074 Total Capability (summer peak, mw)" 1%069 14 10 20 23 21 19 Reserve Margin (summer peak, %)' 13 Net Energy for Load (%):
25 27 18 18 19 23 Oil 25 25 26 29 29 31 17 Natural Gas 25 27 26 25 26 25 24 Nuclear 26 16 14 20 20 18 33 Net Purchased Power and Interchange 17 7 7 8 7 7 3 Coal 7
$924 $617 $551 $474 $669 $1,038 Capital Expenditures S1,299 f~fRR~nK DAT STOC Average Shares Outstanding (millions) 170 171 173 173 174 175 137 Earnings Per Share of Common Stock:'
Continuing Operations $4.14 $4.07 $3.85 $3.57 $3.33 $3.16 $2.18 (,
S4.14" $4.07(3) $3.85 $3.57 $3.33 $3.16 $(2.86)
Net Income (Loss) $2.34
$2.16 $2.08 $2.00 $1.92 $1.84 $1.76 Dividends Paid Per Share
$33.22 $31.47 $29.76 $28.03 $26.46 $25.12 $19.63 Book Value Per Share (year end)
$713/ $42'/ $615/ $59'& $46 $46%/ $29 Market Price Per Share (year end)
S73-363/. $61V'-411/. $72,m6-56&6 $60-42% $481/8-411/2 $461/2-34 $36 /226 14 Market Price Per Share (high-low) 45,066 50,215 55,149 60,493 67,580 74,169 69,554 Number of Shareholders (year end)
(1)Includes chargesfor write-clown of businesses to be discontinued. Excluding these charges, income and earningsper sharefiom continuing operations would have been $361 ,nillion and $2.64, respectively.
(2) Includes merger-related expenses. Excluding these expenses, net income and earningsper share would have been $745 million and $4.38, respectively.
(3) Includes effects of a gain on sale ofAdelphia Communications Corporationstock, impairment loss on Maine assets, settlement of litigation between FPL and FMjPA and a gain on the redemption of a one-third ownership interest in a cable limited partnership.
Excluding these items, net income and earningsper share would have been $681 million and $3.98. respectively.
(4) includes chargesfor disposition and write-down of a subsidiamyaccountedfor as discontinued operations.
(5) Winter season includes November and December of the currentyear andJanuary to March of the following year.
(6)Represents installed capabilityplus purchasedpower. Reserve margin is based on peak load net of load managneent.
(7) Basic and assuming dilution.
22
FPL Group 2000 Annual Report management's discussion and analysis of financial condition and results of operations This discussion should be read in conjunction with the FPL's operating revenues consist primarily of revenues from Notes to Consolidated Financial Statements contained herein. retail base operations, cost recovery clauses and franchise fees.
In the following discussion, all comparisons are with the Revenues from retail base operations were $3.5 billion, $3.5 billion corresponding items in the prior year. and $3.8 billion in 2000, 1999 and 1998, respectively. Revenues from cost recovery clauses and franchise fees represent a pass MERGER through of costs and do not significantly affect net income.
In July 2000, FPL Group and Entergy announced a proposed Fluctuations in these revenues are primarily driven by changes merger, which was approved by the shareholders of the respec in energy sales, fuel prices and capacity charges. Due to higher tive companies in December 2000. Subsequently, a number of than projected oil and natural gas prices in 2000, the Florida Public factors led FPL Group to conclude the merger would not achieve Service Commission (FPSC) approved higher per kwh charges the synergies or create the shareholder value originally contem effective June 15, 2000. These additional clause revenues resulted plated when the merger was announced. As a result, on April 1, in higher operating revenues. Later in the year, the FPSC approved 2001, FPL Group and Entergy mutually terminated the merger FPL's annual fuel filing for 2001, which included an estimate agreement. of under-recovered fuel costs in 2000 of $518 million. FPL will In 2000, FPL Group recorded $67 million in merger-related recover the $518 million over a two-year period beginning January expenses, of which FPL recorded $62 million ($38 million after 2001, rather than the typical one-year time frame. FPL has also tax), FPL Energy recorded $2 million ($1 million after-tax) and agreed that instead of receiving a return at the commercial paper Corporate and Other recorded $3 million ($2 million after-tax). rate on this unrecovered portion through the fuel and purchased Merger-related expenses will continue in 2001, although to power cost recovery clause (fuel clause), the under-recovery will a lesser degree. For additional information concerning the be included as a rate base regulatory asset over the two-year merger, see Note 2. recovery period. Actual under-recovered fuel costs through December 31, 2000 exceeded the estimates made earlier in the RESULTS OF OPERATIONS year by $78 million, and in February 2001, FPL requested the FPL Group's net income and earnings per share in 2000 FPSC to approve a fuel adjustment increase effective April 2001 increased despite a charge for merger-related expenses. to recover the additional $78 million of under-recovered fuel costs.
This charge reduced net income and earnings per share by See Note 1 - Regulation.
$41 million and $0.24, respectively. Net income and earnings In 1999, the FPSC approved a three-year agreement among per share in 1999 included the net effect of several nonrecurring FPL, the State of Florida Office of Public Counsel, The Florida transactions that resulted in additional net income of $16 million, Industrial Power Users Group and The Coalition for Equitable or $0.09 per share. Excluding the merger-related expenses in Rates regarding FPL's retail base rates, authorized regulatory 2000 and the nonrecurring items in 1999, FPL Group's net return on equity (ROE), capital structure and other matters.
income in 2000 increased 9.4% to $745 million, and earnings The agreement, which became effective April 15, 1999, provides per share increased 10.1% to $4.38. The comparable growth for a $350 million reduction in annual revenues from retail base rates for 1999 were 2.6% and 3.4%, respectively, excluding the operations allocated to all customers on a cents-per-kilowatt-hour effects of the nonrecurring items in 1999. In 2000, both FPL and basis. Additionally, the agreement sets forth a revenue sharing FPL Energy contributed to the growth, while in 1999 the growth mechanism for each of the twelve month periods covered by was primarily attributable to FPL Energy. the agreement, whereby revenues from retail base operations in excess of a stated threshold are required to be shared on the FPL - FPL's results for 2000 continued to benefit from customer basis of two-thirds refunded to retail customers and one-third growth, increased electricity usage per retail customer and lower retained by FPL. Revenues from retail base operations in excess O&M expenses. The effect of the rate reduction and higher of a second threshold are required to be refunded 100% to interest charges partly offset these positives. FPL's portion of retail customers.
the merger-related expenses in 2000 reduced net income by The refund thresholds are as follows:
$38 million. Results for 1999 also include a nonrecurring charge related to the settlement of litigation that reduced net income (millions) by $42 million. FPL's net income, excluding these items in both Twelve Months Ended April 14, 2000 2001 2002 periods, was $645 million in 2000, up $27 million from 1999.
Excluding the litigation settlement in 1999, FPL's slight net 661h% to customers $3,400 S3,450 S3,500 income growth in 1999 reflected lower depreciation, customer 100% to customers $3556 S3,606 S3,656 growth and lower O&M expenses partly offset by the effect of the rate reduction and a decline in electricity usage per retail customer. 23
I the natural choice financial information continuedfrom page 23 During 2000, FPL accrued approximately $60 million relating approximately 4% of FPL's total operating revenues. A number to refunds to retail customers compared to $20 million in 1999. of potential merchant plants have been announced in Florida Furthermore, FPL refunded in 2000 approximately $23 million, over the past several years. Five of these announced merchant including interest, to retail customers for the first twelve-month plants totaling 3,700 megawatts (rmw) have presented submissions period under the rate agreement. At December 31, 2000 and to seek a determination of need to the FPSC. In March 1999, 1999, the accrual for the revenue refund was approximately the FPSC approved one of the petitions for a power plant to be
$57 million and $20 million, respectively. constructed within FPL's service territory. FPL, along with other The earnings effect of the annual revenue reduction was Florida utilities, appealed the decision to the Florida Supreme offset by lower special depreciation. The agreement allows for Court. In April 2000, the Florida Supreme Court upheld arguments special depreciation of up to $100 million, at FPL's discretion, by FPL and other Florida utilities and ruled that under current in each year of the three-year agreement period to be applied Florida law the FPSC is not authorized to grant a determination to nuclear and/or fossil generating assets. Under this new of need for a proposed power plant, the output of which is not depreciation program, FPL recorded $100 million of special fully comnitted to use by Florida retail customers. In March depreciation in the first twelve-month period and $71 million 2001, the United States Supreme Court denied a petition for through December 31, 2000 of the second twelve-month period. certiorari review by one of the petitioners. See Note 1 On a fiscal year basis, FPL recorded approximately $101 million Regulation.
and $70 million of special depreciation in 2000 and 1999, respec In 2000, the Governor of Florida signed an executive tively. The new depreciation program replaced a revenue-based order creating the Energy 2020 Study Commission to propose special amortization program whereby special amortization in the an energy plan and strategy for Florida. The order required that amount of $63 million and $378 million was recorded in 1999 recommendations be made to the legislature and Governor by and 1998, respectively. See Note 1 - Electric Plant, Depreciation December 1, 2001. The commission chose to split the energy and Amortization. study between wholesale and retail competition. In January 2001, The agreement also lowered FPL's authorized regulatory the commission issued an interim report containing a proposal ROE range to 10% - 12%. During the term of the agreement, for restructuring Florida's wholesale market for electricity.
the achieved ROE may from time to time be outside the authorized The proposal reqommends the removal of statutory barriers to range, and the revenue sharing mechanism described above is entry for merchant plants and, according to the report, provides specified to be the appropriate and exclusive mechanism to a transition to a "level playing field" for all generating assets.
address that circumstance. FPL reported an ROE of 12.2%, 12.1% Under the commission's proposal, investor-owned utilities such and 12.6% in 2000, 1999 and 1998, respectively. See Note 1 as FPL would establish, and transfer their generating assets to, Revenues and Rates. affiliated exempt wholesale generators, which would also Revenues from retail base operations were flat during 2000. construct and operate new generating assets. The investor-owned Customer growth of 2.5% and a 1.9% increase in electricity usage load-serving utilities, such as FPL, would acquire energy per retail customer was almost entirely offset by the effect of the resources through competitive bidding, negotiated contracts rate reduction. or from the short-term (spot) market. Purchases from affiliated The decline in retail base revenues in 1999 was largely exempt wholesale generators would be pursuant to a competitive due to the rate reduction. A 2.8% decline in electricity usage bidding process. The proposal includes a number of features, per retail customer, mainly due to milder weather conditions, including a three-year retail base rate freeze. The proposal was almost entirely offset by the 2.0% increase in the number may be addressed in the next legislative session which takes of customer accounts. place in March through May 2001. In addition, the FERC FPL's O&M expenses continued to decline in 2000 due to has jurisdiction over potential changes which could affect improved productivity. O&M expenses in 1999 also declined as competition in wholesale transactions. The commission will a result of continued cost control efforts partially offset by higher now consider recommendations for the retail market.
overhaul costs at fossil plants. In 1999, the FERC issued its final order on regional Interest charges increased in 2000 reflecting increased debt transmission organizations (RTOs). RTOs, under a variety of activity to fund FPL's capital expansion program and under-recov structures, provide for the independent operation of transmission ered fuel costs. Lower interest charges in 1999 and 1998 reflect systems for a given geographic area. The final order establishes lower average debt balances and the full amortization in 1998 guidelines for public utilities to use in considering and/or of deferred costs associated with debt reacquired through 1998. developing plans to initiate operations of RTOs by December 15, The electric utility industry is facing increasing competitive 2001. In October 2000, FPL, together with Florida Power pressure. FPL currently faces competition from other suppliers Corporation and Tampa Electric Company, filed a joint proposal of electrical energy to wholesale customers and from alternative to form a fully irkdependent for-profit transmission company energy sources and self-generation for other customer groups, that would be responsible for the transmission lines that carry 24 primarily industrial customers. In 2000, operating revenues electricity from power plants primarily within the state to from wholesale and industrial customers combined represented substations in Florida. The October filing was supplemented I1 III
FPL Group 2000 Annual Report by a December 2000 filing that provided certain operational details affecting success in these markets include the ability to operate of the proposed RTO. generating assets efficiently, the price and supply of fuel, transmission Under the proposed form of RTO, FPL would contribute constraints, competition from new sources of generation, demand its*transmission assets to an independent transmission company, growth and exposure to legal and regulatory changes.
GridFlorida LLC (GridFlorida) that would own and operate FPL Energy has approximately 540 net mw in California, the system. A separate corporation would be formed to own most of which are wind, solar and geothermal qualifying facilities.
the voting interest in and manage GridFlorida. In return for its The output of these projects is sold predominantly under long transmission assets, FPL would receive a non-voting ownership term contracts with California utilities. Increases in natural gas interest in GridFlorida, which could be exchanged for non-voting prices and an imbalance between power supply and demand, as stock of the managing corporation. FPL would account for its well as other factors, have contributed to significant increases in interest in GridFlorida using the equity method. wholesale electricity prices in California. Utilities in California had previously agreed to fixed tariffs to their retail customers, which FPL Energy - FPL Energy's earnings continue to benefit from resulted in significant under-recoveries of wholesale electricity the significant expansion of its independent power generation purchase costs. FPL Energy's projects have not received the portfolio, which has more than tripled since 1997 to over 4,100 majority of payments due from California utilities since November mw at December 31, 2000. In 2000, Lamar Power Partners, 2000. On April 6, 2001, Pacific Gas and Electric Company (PG&E) a natural gas-fired plant in the Central region became operational filed for protection under the U.S. Bankruptcy laws. Earnings and added approximately 1,000 mw to FPL Energy's operating from projects that sell to PG&E represent approximately 15% of portfolio. In 1999, FPL Energy acquired the Maine assets, FPL Energy's earnings from California projects. At December 31, which totaled 1,159 mw and in 1998, FPL Energy invested in 2000, FPL Energy's net investment in California projects was two natural gas-fired plants in the Northeast, adding 295 mw. approximately $250 million. It is impossible to predict what the In addition, approximately 400 mw of wind projects have been outcome of the situation in California will be.
added in the West and Central regions since 1997.
In 2000, FPL Energy's net income also benefited from Corporate and Other - Beginning in 2000, the corporate increased revenues generated by the Maine assets as a result of and other segment includes FPL FiberNet's operating results. FPL warmer weather and higher prices in the Northeast during May FiberNet was formed in January 2000 to enhance the value of 2000, and lower O&M expenses at Doswell. In 1999, the effect of FPL Group's fiber-optic network assets that were originally built a $176 million ($104 million after-tax) impairment loss (see Note to support FPL operations. Accordingly, FPL's existing 1,600 miles
- 10) and higher administrative expenses to accommodate future of fiber-optic lines were transferred to FPL FiberNet in January growth more than offset the benefits of the growing generation 2000. In 1999, net income for the corporate and other segment portfolio and improved results from Doswell. FPL Energy's 1998 reflects a $149 million ($96 million after-tax) gain on the sale of net income includes the effect of a $35 million ($21 million an investment in Adelphia Communications Corporation common after-tax) charge for the termination of an interest rate swap stock, a $108 million ($66 million after-tax) gain recorded by FPL agreement, which was partly offset by the receipt of a $31 million Group Capital Inc (FPL Group Capital) on the redemption of its
($19 million after-tax) settlement relating to a contract dispute. one-third interest in a cable limited partnership, costs associated Deregulation of the electric utility market presents both with closing a retail marketing business of $11 million ($7 million opportunities and risks for FPL Energy. Opportunities exist for the after-tax) and the favorable resolution of a prior year state tax selective acquisition of generation assets that are being divested matter of $10 million ($7 million after-tax). In 1998, net income under deregulation plans and for the construction and operation for the corporate and other segment reflects a $36 million ($25 of efficient plants that can sell power in competitive markets. million after-tax) loss from the sale of Turner Foods Corporation's Substantially all of the energy produced in 2000 by FPL Energy's assets, the cost of terminating an agreement designed to fix independent power projects was sold through power sales interest rates of $26 million ($16 million after-tax) and adjustments agreements with utilities that expire in 2001-28. As competitive relating to prior years' tax matters, including the resolution of wholesale markets become more accessible to other generators, a $30 million audit issue with the Internal Revenue Service.
obtaining power sales agreements will become a progressively more competitive process. FPL Energy expects that as its existing LIQUIDITY AND CAPITAL RESOURCES power sales agreements expire, more of the energy produced FPL Group's capital requirements consist of expenditures to meet will be sold through shorter-term contracts and into competitive increased electricity usage and customer growth of FPL, investment wholesale markets. opportunities at FPL Energy and expansion of FPL FiberNet.
Competitive wholesale markets in the United States continue Capital expenditures of FPL for the 2001-03 period are expected to evolve and vary by geographic region. Revenues from electricity to be approximately $3.3 billion, including $1.1 billion in 2001.
sales in these markets will vary based on the prices obtainable for As of December 31, 2000, FPL Energy has commitments totaling energy, capacity and other ancillary services. Some of the factors approximately $380 million, primarily in connection with the 25
the natural choice ffinancial inform ation continuedfrom page 25 development and expansion of independent power projects. MARKET RISK SENSITIVITY Subsidiaries of FPL Group, other than FPL, have guaranteed Substantially all financial instruments and positions held by FPL approximately $810 million of prompt performance payments, Group described below are held for purposes other than trading.
lease obligations, purchase and sale of power and fuel agreement Market risk is measured as the potential loss in fair value resulting obligations, debt service payments and other payments subject to from hypothetical reasonably possible changes in interest rates, certain contingencies. See Note 13 - Commitments. equity prices or commodity prices over the next year.
Debt maturities of FPL Group's subsidiaries will require cash outflows of approximately $1.0 billion through 2005, including Interest rate risk - The special use funds of FPL include
$65 million in 2001. It is anticipated that cash requirements for restricted funds set aside to cover the cost of storm damage capital expenditures, energy-related investments and debt maturi and for the decommissioning of FPL's nuclear power plants.
ties in 2001 will be satisfied with internally generated finds and A portion of these funds is invested in fixed income debt debt issuances. Any internally generated funds not required for securities carried at their market value of approximately capital expenditures and current maturities may be used to reduce $1.002 billion and $847 million at December 31, 2000 and 1999, outstanding debt or repurchase common stock, or for investment. respectively. Adjustments to market value result in a corresponding Any temporary cash needs will be met by short-term bank adjustment to the related liability accounts based on current borrowings. In 2000, FPL had $125 million of first mortgage regulatory treatment. Because the funds set aside for storm bonds mature and issued S452 million of variable-rate bonds and damage could be needed at any time, the related investments
$500 million of first mortgage bonds. The proceeds from these are generally more liquid and, therefore, are less sensitive to issuances were used in 2000 to redeem $278 million of variable changes in interest rates. The nuclear decommissioning funds, rate bonds, S109 million of first mortgage bonds and to repay in contrast, are generally invested in longer-term securities, FPL's short-term borrowings. In 2001, $65 million was used to as decommissioning activities are not expected to begin redeem $49 million of variable-rate bonds and $16 million of until at least 2012. At December 31, 2000 and 1999, other first mortgage bonds. Bank lines of credit currently available investments include $300 million and $291 million, respectively, to FPL Group and its subsidiaries aggregate $3.0 billion. of investments that are carried at estimated fair value or cost, During 2000, FPL Group repurchased 2.6 million shares of which approximates fair value.
common stock under its share repurchase programs. Under the
$570 million share repurchase program authorized in connection The following are estimates of the fair value of long-term debt:
with the merger agreement with Entergy, 1,876,500 shares total ing $116 million have been repurchased through January 31, (millions) 2000 1999 2001. See Note 2. Carrying Fair Carrying Fair FPL self-insures for damage to certain transmission and Value Value Value Value distribution properties and maintains a funded storm reserve Long-term debth $4,041 S4,0801"' $3,603 $3,5181"'
to reduce the financial impact of storm losses. The balance of the storm fund reserve at December 31, 2000 and 1999 was (a) Includes current maturities.
$229 million and S216 million, respectively. Bank lines of credit (b) Based on quoted marketpricesjbrthese or similarissues.
of $300 million, included in the $3.0 billion above, are also available if needed to provide cash for storm restoration costs.
Based upon a hypothetical 10% decrease in interest rates, The FPSC has indicated that it would consider future storm the net fair value of the net liabilities would increase by losses in excess of the funded reserve for possible recovery approximately $84 million at December 31, 2000.
from customers.
FPL's charter and mortgage contain provisions which, Equity price risk - Included in the special use funds of FPL under certain conditions, restrict the payment of dividends are marketable equity securities carried at their market value of and the issuance of additional unsecured debt, first mortgage approximately $511 million and $573 million at December 31, bonds and preferred stock. Given FPL's current financial 2000 and 1999, respectively. A hypothetical 10% decrease in the condition and level of earnings, expected financing activities prices quoted by stock exchanges would result in a $51 million and dividends are not affected by these limitations.
reduction in fair value and corresponding adjustment to the related liability accounts based on current regulatory treatment NEW ACCOUNTING RULE at December 31, 2000.
Effective January 1, 2001, FPL Group adopted Financial Accounting Standards No. (FAS) 133, "Accounting for Derivative Commodity price risk - Energy Marketing & Trading (EMT),
Instruments and Hedging Activities," as amended by FAS 138, a division of FPL, and FPL Energy Power Marketing, Inc. (PMI),
"Accounting for Certain Derivative Instruments and Certain a subsidiary of FPL Energy, purchase natural gas and oil to 26 Hedging Activities." For information concerning the adoption be delivered in the future for use as fuel in the generation of of FAS 133/138, see Note 1 - Accounting for Derivative Instruments and Hedging Activities.
I1 III
FPL Group 2000 Annual Report electric power. Generation, to the extent not required for The Board of Directors pursues its oversight responsibility for FPL's native load customers or under contract by FPL Energy, financial reporting and accounting through its Audit Committee.
is also sold for future delivery by EMT and PMI. To manage This Committee, which is comprised entirely of outside directors, the risk inherent in fluctuating commodity prices compared to meets periodically with management, the internal auditors and the the committed prices, EMT and PMI enter into commodity-based independent auditors to make inquiries as to the manner in which derivative instruments (primarily swaps and futures) to mitigate the responsibilities of each are being discharged. The independent this risk. The fair value of the net position in commodity-based auditors and the internal audit staff have free access to the derivative instruments at December 31, 2000 was a negative Committee without management's presence to discuss auditing,
$11 million. At December 31, 1999, the fair value of these internal accounting control and financial reporting matters.
instruments was insignificant. The effect of a hypothetical 40% decrease in the price of natural gas and a hypothetical INDEPENDENT AUDITORS' REPORT 25% decrease in the price of oil would be to change the fair To the Board of Directors and Shareholders, FPL Group, Inc.:
value at December 31, 2000 of these instruments to a negative
$32 million.
We have audited the accompanying consolidated balance sheets of FPL Group, Inc. and subsidiaries as of December 31, MANAGEMENT'S REPORT 2000 and 1999, and the related consolidated statements of The management of FPL Group is responsible for the income, shareholders' equity, and cash flows for each of the integrity and objectivity of the financial information and three years in the period ended December 31, 2000. These representations contained in the consolidated financial statements financial statements are the responsibility of the company's and other sections of this Annual Report. The consolidated management. Our responsibility is to express an opinion on financial statements, which in part are based on informed these financial statements based on our audits.
judgments and estimates made by management, have been prepared in conformity with generally accepted accounting We conducted our audits in accordance with auditing principles applied on a consistent basis. standards generally accepted in the United States of America.
To aid in carrying out this responsibility, management Those standards require that we plan and perfornm the audit maintains a system of internal accounting control, which is to obtain reasonable assurance about whether the financial established after weighing the cost of such controls against statements are free of material misstatement. An audit includes the benefits derived. The overall system of internal accounting examining, on a test basis, evidence supporting the amounts control, in the opinion of management, provides reasonable and disclosures in the financial statements. An audit also assurance that the assets of FPL Group and its subsidiaries are includes assessing the accounting principles used and significant safeguarded and transactions are executed in accordance with estimates made by management, as well as evaluating the management's authorization and are properly recorded for the overall financial statement presentation. We believe that our preparation of financial statements. In addition, management audits provide a reasonable basis for our opinion.
believes the overall system of internal accounting control provides reasonable assurance that material errors or irregularities In our opinion, such consolidated financial statements present would be prevented or detected on a timely basis by employees fairly, in all material respects, the financial position of FPL Group, in the normal course of their duties. Due to the inherent Inc. and subsidiaries at December 31, 2000 and 1999, and the limitations of the effectiveness of any system of internal results of their operations and their cash flows for each of the accounting control, management cannot provide absolute three years in the period ended December 31, 2000, in conformity assurance that the objectives of internal accounting control will with accounting principles generally accepted in the United be met. The system of internal accounting control is supported States of America.
by written policies and guidelines, the selection and training of qualified employees, an organizational structure that provides an appropriate division of responsibility and a program of internal auditing. To further enhance the internal accounting control environment, management has prepared and distributed to all employees a Code of Conduct which states management's policy Deloitte &Touche LIP on conflict of interest and ethical conduct. Certified Public Accountants FPL Group's independent auditors, Deloitte & Touche LLP, are engaged to express an opinion on FPL Group's financial Miami, Florida statements. Their report is based on procedures believed by February 9, 2001, except for the first paragraph them to provide a reasonable basis to support such an opinion. of Note 2, as to which the date is April 2, 2001 27
the natural choice fin a n cial info rm a ti o n consolidated statements of income FPL Group, Inc.
Years Ended December 31, 2000 1999 1998 (million., except per share anionts)
OPERATING REVENUES $7,082 $6,438 $6,661 OPERATING EXPENSES Fuel, purchased power and interchange 2,868 2,365 2,244 Other operations and maintenance 1,257 1,253 1,284 Litigation settlement - 69 Merger-related 67 -
Depreciation and amortization 1,032 1,040 1,284 Impairment loss on Maine assets - 176 Taxes other than income taxes 618 615 597 Total operating expenses 5,842 5,518 5,409 OPERATING INCOME 1,240 920 1,252 OTHER INCOME (DEDUCTIONS)
Interest charges (278) (222) (322)
Preferred stock dividends - FPL (15) (15) (15)
Divestiture of cable investments - 257 Other - net 93 80 28 Total other income (deductions) - net (200) 100 (309)
INCOME BEFORE INCOME TAXES 1,040 1,020 943 INCOME TAXES 336 323 279 NET INCOME $ 704 $ 697 $ 664 Earnings per share of common stock (basic and assuming dilution) $4.14 $4.07 $3.85 Dividends per share of common stock $2.16 $2.08 $2.00 Average number of common shares outstanding 170 171 173 The accompanying Notes to ConsolidatedFinancialStatements are an integralpart of these statements.
28 II 11
FPL Group 2000 Annual Report consolidated balance sheets FPL Group, Inc.
December 31, 2000 1999 (nillions)
PROPERTY, PLANT AND EQUIPMENT Electric utility plant in service and other property $ 19,642 $ 18,474 Nuclear fuel under capital lease - net 127 157 Construction work in progress 1,253 923 Less accumulated depreciation and amortization (11,088) (10,290)
Total property, plant and equipment - net 9,934 9,264 CURRENT ASSETS Cash and cash equivalents 129 361 Customer receivables, net of allowances of $7 each 637 482 Other receivables 246 61 Materials, supplies and fossil fuel inventory - at average cost 370 343 Deferred clause expenses 337 54 Other 62 72 Total current assets 1,781 1,373 OTHER ASSETS Special use funds of FPL 1,497 1,352 Other investments 651 611 Other 1,437 841 Total other assets 3,585 2,804 TOTAL ASSETS $15,300 $ 13,441 CAPITALIZATION Common shareholders' equity $ 5,593 $ 5,370 Preferred stock of FPL without sinking fund requirements 226 226 Long-term debt 3,976 3,478 Total capitalization 9,795 9,074 CURRENT LIABILITIES Commercial paper 1,158 339 Current maturities of long-term debt 65 125 Accounts payable 564 407 Customers' deposits 254 284 Accried interest and taxes 146 182 Deferred clause revenues 70 116 Other 506 417 Total current liabilities 2,763 1,870 OTHER LIABILITIES AND DEFERRED CREDITS Accumulated deferred income taxes 1,378 1,079 Deferred regulatory credit - income taxes 107 126 Unamortized investment tax credits 162 184 Storm and property insurance reserve 229 216 Other 866 892 Total other liabilities and deferred credits 2,742 2,497 COMMITMENTS AND CONTINGENCIES TOTAL CAPITALIZATION AND LIABILITIES $ 15,300 $ 13,441 The accompanying Notes to ConsolidatedFinancialStatements are an integralpart of these statements.
29
the natural choice t
f i n q n n i q I i n f n r m q t i nf n consolidated statements of cash flows FPL Group, Inc.
Years Ended December 31, 2000 1999 1998
("illhons)
CASH FLOWS FROM OPERATING ACTIVITIES Net income S 704 $ 697 $ 664 Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 1,032 1,040 1,284 Increase (decrease) in deferred income taxes and related regulatory credit 283 (198) (237)
Deferrals under cost recoveiy clauses (810) 55 68 Gain on sale of cable investments (257)
Impairment loss on Maine assets 176 Other- net (233) SO Net cash provided by operating activities 976 1,563 1,743 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures of FPL (1,299) (861) (617)
Independent power investments (507) (1,540) (521)
Return of investment and loan repayments-partnerships and joint ventures 24 57 220 Proceeds from the sale of assets 22 198 135 Other - net (183) (26) (12)
Net cash used in investing activities (1,943) (2,172) (795)
CASH FLOWS FROM FINANCING ACTIVITIES Issuance of long-term debt 947 1,609 343 Retirement of long-term debt (515) (584) (727)
Increase (decrease) in short-term debt 819 229 (24)
Repurchases of common stock (150) (116) (62)
Dividends on common stock (366) (355) (345)
Net cash provided by (used in) financing activities 735 783 (815)
Net increase (decrease) in cash and cash equivalents (232) 174 133 Cash and cash equivalents at beginning of year 361 187 54 Cash and cash equivalents at end of year $ 129 $ 361 $ 187 Supplemental Disclosures of Cash Flow Information Cash paid for interest (net of amount capitalized) $ 301 $ 221 $ 308 Cash paid for income taxes $ 160 $ 573 $ 463 Supplemental Schedule of Noncash Investing and Financing Activities Additions to capital lease obligations $ 43 $ 86 $ 34 The accompanying Notes to ConsolidatedFinancialStatements are an integralpartof these statements.
II III
FPL Group 2000 Annual Report consolidated statements of shareholders' equity FPL Group, Inc.
Accumulated Common Stock(,) Additional Other Common Aggregate Paid-In Unearned Comprehensive Retained Shareholders' (millions) Shares Par Value Capital Compensation Income (Loss) Earnings Equity Balances, December 31, 1997 182 $ 2 $3,302 $(264) $ 1 $1,804 Net income .. - 664 Repurchases of common stock (1) - (62) -
Dividends on common stock - - - (345)
Earned compensation under ESOP - - 13 12 Other - - (1) -
Balances, December 31, 1998 181(b0 2 3,252 (252) 1 2,123 Net income - - 697 Repurchases of common stock (2) - (116) - -
Dividends on common stock -..- (355)
Earned compensation under ESOP - 12 14 -
Other comprehensive loss - - - (2)
Other - - (6) -
Balances, December 31, 1999 179"'h 2 3,148 (244) (1) 2,465 $5,370 Net income - - - 704 Repurchases of common stock (3) (150) -
Dividends on common stock ..... (366)
Earned compensation under ESOP - - 12 15 -
Other comprehensive income -. 1 Other - - (2) 9 Balances, December 31, 2000 176('1, $ 2 $3,008 $(220) $- $2,803 $5,593 (a) $0.01 par value, authorized- 300,000,000 shares;outstanding 175,766,215 and 178,554,735 at December31, 2000 and 1999.
respectively.
(b) Outstanding and unallocatedshares held by the Employee Stock Ownership Plan Trust totaled 7 million, 8 million and 9 million at December31, 2000, 1999 and 1998, respectively.
The accompanying Notes to ConsolidatedFinancialStatements are an integralpartof these statements.
31
the natural choice 1
f i n q n r i q I i n f n r m q t i n n notes to consolidated financial statements Years EndedDecember 31, 2000, 1999 and 1998 The principal regulatory assets and liabilities are as follows:
- 1.
SUMMARY
OF SIGNIFICANT ACCOUNTING AND (nillions)
REPORTING POLICIES December 31, 2000 1999 Basis of Presentation - FPL Group, Inc.'s (FPL Group) Assets (included in other assets):
operations are conducted primarily through Florida Power Unamortized debt reacquisition costs $ 18 $ 12
& Light Company (FPL) and FPL Energy, LLC (FPL Energy). Deferred Department of Energy assessment $ 35 $ 39 FPL, a rate-regulated public utility, supplies electric service Under-recovered fuel costs to approximately 3.8 million customers throughout most of the (noncurrent portion) S259 S east and lower west coasts of Florida. FPL Energy invests in Litigation settlement (see Note 12) S223 $
independent power projects through both controlled and consolidated entities and non-controlling ownership interests Liabilities:
in joint ventures accounted for under the equity method. Deferred regulatory credit - income taxes $107 $126 The consolidated financial statements of FPL Group include Unamortized investment tax credits S162 $184 the accounts of its majority-owned and controlled subsidiaries. Storm and property insurance reserve All significant intercompany balances and transactions have been (see Note 13 - Insurance) $229 $216 eliminated in consolidation. Certain amounts included in prior years' consolidated financial statements have been reclassified The amounts presented above exclude clause-related regulatory to conform to the current year's presentation. The preparation of assets and liabilities that are recovered or refunded over the next financial statements requires the use of estimates and assumptions twelve-month period. These amounts are included in deferred that affect the reported amounts of assets, liabilities, revenues clause expenses and deferred clause revenues in the consolidated and expenses and the disclosure of contingent assets and balance sheets. At December 31, 2000, under-recovered fuel liabilities. Actual results could differ from those estimates. costs totaled $596 million, $337 million of which is included in deferred clause expenses and $259 million, the noncurrent portion, Regulation - FPL is subject to regulation by the Florida Public is included in other assets. At December 31, 1999, under-recovered Service Commission (FPSC) and the Federal Energy Regulatory fuel costs totaled $54 million and are included in deferred Commission (FERC). Its rates are designed to recover the cost of clause expenses. As part of the annual fuel filing for 2001, providing electric service to its customers including a reasonable the FPSC approved FPL's request to recover $518 million of the rate of return on invested capital. As a result of this cost-based under-recovered fuel costs over a two-year period beginning regulation, FPL follows the accounting practices set forth in January 200,1, rather than the typical one-year time frame. FPL has Statement of Financial Accounting Standards No. (FAS) 71, also agreed that instead of receiving a return at the commercial "Accounting for the Effects of Certain Types of Regulation." FAS paper rate on this unrecovered portion through the fuel and 71 indicates that regulators can create assets and impose liabilities purchased power cost recovery clause (fuel clause), the under that would not be recorded by unregulated entities. Regulatory recovery will be included as a rate base regulatory asset over assets and liabilities represent probable future revenues that the two-year recovery period. Actual under-recovered fuel costs will be recovered from or refunded to customers through the through December 31, 2000 exceeded the estimates made earlier ratemaking process. The continued applicability of FAS 71 is in the year by $78 million, and in February 2001, FPL requested assessed at each reporting period. the FPSC to approve a fuel adjustment increase effective April 2001 In the event that FPL's generating operations are no longer to recover the additional $78 million of under-recovered fuel costs.
subject to the provisions of FAS 71, portions of the existing Over half of the states, other than Florida, have enacted regulatory assets and liabilities that relate to generation would legislation or have state commissions that issued orders designed be written off unless regulators specify an alternative means to deregulate the production and sale of electricity. By allowing of recovery or refund. Further, other aspects of the business, customers to choose their electricity supplier, deregulation is such as generation assets and long-term power purchase expected to result in a shift from cost-based rates to market-based commitments, would need to be reviewed to assess their rates for energy production and other services provided to retail recoverability in a changed regulatory environment. customers. Similar initiatives are also being pursued on the federal level. Although the legislation and initiatives vary substantially, common areas of focus include when market-based pricing will be available for wholesale and retail customers, what existing prudently incurred costs in !excess of the market-based price will be recoverable and Whether generation assets should be separated from transmission, distribution and other assets. It is generally believed transmission and distribution activities would remain regulated.
II 111
FPL Group 2000 Annual Report In 2000, the Governor of Florida signed an executive of energy delivered to customers but not yet billed. Unbilled base order creating the Energy 2020 Study Commission to propose revenues are included in customer receivables and amounted to an energy plan and strategy for Florida. The order required that $137 million and $130 million at December 31, 2000 and 1999, recommendations be made to the legislature and Governor by respectively. Substantially all of the energy produced by FPL Energy's December 1, 2001. The commission chose to split the energy independent power projects is sold through power sales agreements study between wholesale and retail competition. In January 2001, with utilities and revenue is recorded on a delivered basis.
the commission issued an interim report containing a proposal In 1999, the FPSC approved a three-year agreement among for restructuring Florida's wholesale market for electricity. FPL, the State of Florida Office of Public Counsel (Public The proposal recommends the removal of statutory barriers to Counsel), The Florida Industrial Power Users Group (FIPUG) entry for merchant plants and, according to the report, provides and The Coalition for Equitable Rates (Coalition) regarding a transition to a "level playing field" for all generating assets. FPL's retail base rates, authorized regulatory return on common Under the commission's proposal, investor-owned utilities such equity (ROE), capital structure and other matters. The agreement, as FPL would establish, and transfer their generating assets to, which became effective April 15, 1999, provides for a $350 million affiliated exempt wholesale generators, which would also reduction in annual revenues from retail base operations construct and operate new generating assets. The investor-owned allocated to all customers on a cents-per-kilowatt-hour basis.
load-serving utilities, such as FPL, would acquire energy Additionally, the agreement sets forth a revenue sharing mechanism resources through competitive bidding, negotiated contracts or for each of the twelve month periods covered by the agreement, from the short-term (spot) market. Purchases from affiliated whereby revenues from retail base operations in excess of exempt wholesale generators would be pursuant to a competitive a stated threshold are required to be shared on the basis of bidding process. The proposal includes a number of features, two-thirds refunded to retail customers and one-third retained by including a three-year retail base rate freeze. The proposal may FPL. Revenues from retail base operations in excess of a second be addressed in the next legislative session which takes place in threshold are required to be refunded 100% to retail customers.
March through May 2001. In addition, the FERC has jurisdiction The refund thresholds are as follows:
over potential changes which could affect competition in wholesale transactions. The commission will now consider Onillions) recommendations for the retail market. Twelve Months Ended April 14, 2000 2001 2002 In 1999, the FERC issued its final order on regional 66ý,% to customers $3400 S3,450 $3,500 transmission organizations (RTOs). RTOs, under a variety of 100% to customers $3,556 S3.606 S30656 structures, provide for the independent operation of transmission systems for a given geographic area. The final order establishes guidelines for public utilities to use in considering and/or The accrual for the refund associated with the revenue developing plans to initiate operations of RTOs by December 15, sharing mechanism is computed monthly for each twelve-month 2001. In October 2000, FPL, together with Florida Power period of the rate agreement. At the beginning of each twelve Corporation and Tampa Electric Company, filed a joint proposal month period, planned revenues are reviewed to determine if it to form a fully independent for-profit transmission company is probable that the threshold will be exceeded. If so, an accrual that would be responsible for the transmission lines that carry is recorded each month for a portion of the anticipated refund electricity from power plants primarily within the state to based on the relative percentage of year-to-date planned revenues substations in Florida. The October filing was supplemented to the total estimated revenues for the twelve-month period, plus by a December 2000 filing that provided certain operational accrued interest. In addition, if in any month actual revenues details of the proposed RTO. are above or below planned revenues, the accrual is increased Under the proposed form of RTO, FPL would contribute or decreased as necessary to recognize the effect of this variance its transmission assets to an independent transmission company, on the expected refund amount. The annual refund (including GridFlorida LLC (GridFlorida), that would own and operate the interest) is paid to customers as a credit to their June electric bill.
system. A separate corporation would be formed to own the As of December 31, 2000 and 1999, the accrual for the revenue voting interest in and manage GridFlorida. In return for its refund was approximately $57 million and $20 million, respectively.
transmission assets, FPL would receive a non-voting ownership The agreement also lowered FPL's authorized regulatory interest in GridFlorida, which could be exchanged for non-voting ROE range to 10% - 12%. During the term of the agreement, the stock of the managing corporation. FPL would account for achieved ROE may from time to time be outside the authorized its interest in GridFlorida using the equity method. range, and the revenue sharing mechanism described above is specified to be the appropriate and exclusive mechanism Revenues and Rates - FPL's retail and wholesale utility rate to address that circumstance. For purposes of calculating ROE, schedules are approved by the FPSC and the FERC, respectively. the agreement establishes a cap on FPL's adjusted equity ratio FPL records unbilled base revenues for the estimated amount of 55.83%. The adjusted equity ratio reflects a discounted 33
the natural choice fi nf qnlc iq I i n f n r m q t i n n amount for off-balance sheet obligations under certain long-term Further, these rates exclude the special and plant-related deferred purchased power contracts. Finally, the agreement established cost amortization discussed below.
a new special depreciation program (see Electric Plant, The agreement that reduced FPL's base rates (see Revenues Depreciation and Amortization) and includes provisions which and Rates) also allows for special depreciation of up to $100 million, limit depreciation rates and accruals for nuclear decommissioning at FPL's discretion, in each year of the three-year agreement and fossil dismantlement costs to currently approved levels and period to be applied to nuclear and/or fossil generating assets.
limit amounts recoverable under the environmental compliance Under this new depreciation program, FPL recorded $100 million cost recovery clause during the term of the agreement. of special depreciation in the first twelve-month period The agreement states that Public Counsel, FIPUG and and $71 million through December 31, 2000 of the second Coalition will neither seek nor support any additional base rate twelve-month period. On a fiscal year basis, FPL recorded reductions during the three-year term of the agreement unless approximately $101 nmlion and $70 million of special depreciation such reduction is initiated by FPL. Further, FPL agreed to not in 2000 and 1999, respectively. The new depreciation program petition for any base rate increases that would take effect replaced a revenue-based special amortization program whereby during the term of the agreement. FPL recorded as depreciation and amortization expense a fixed FPL's revenues include amounts resulting from cost recovery amount of $9 million in 1999 and S30 million in 1998 for nuclear clauses, certain revenue taxes and franchise fees. Cost recovery assets. FPL also recorded under the revenue-based special clauses, which are designed to permit full recovery of certain costs amortization program variable amortization based on the actual and provide a return on certain assets utilized by these programs, level of retail base revenues compared to a fixed amount.
include substantially all fuel, purchased power and interchange The variable amounts recorded in 1999 and 1998 were $54 million expenses, conservation- and environmental-related expenses and and $348 million, respectively. The 1998 variable amount certain revenue taxes. Revenues from cost recovery clauses are includes, as depreciation and amortization expense, $161 million recorded when billed; FPL achieves matching of costs and related for amortization of regulatory assets. The remaining variable revenues by deferring the net under- or over-recovery. Any under amounts were applied against nuclear and fossil production recovered costs or over-recovered revenues are collected from or assets. Additionally, FPL completed amortization of certain returned to customers in subsequent periods. See Regulation. plant-related deferred costs by recording $24 million in 1998.
These costs are considered recoverable costs and are monitored Electric Plant, Depreciation and Amortization - The through the monthly reporting process with the FPSC.
cost of additions to units of utility property of FPL and FPL Energy is added to electric utility plant. In accordance with regulatory Nuclear Fuel - FPL leases nuclear fuel for all four of its accounting, the cost of FPL's units of utility property retired, less nuclear units. Nuclear fuel lease expense was $82 million, net salvage, is charged to accumulated depreciation. Maintenance $83 million and $83 million in 2000, 1999 and 1998, respectively.
and repairs of property as well as replacements and renewals Included in this expense was an interest component of $9 million, of items determined to be less than units of utility property are $8 million and $9 million in 2000, 1999 and 1998, respectively.
charged to other operations and maintenance (O&M) expenses. Nuclear fuel lease payments and a charge for spent nuclear fuel At December 31, 2000, the generating, transmission, distribution disposal are charged to fuel expense on a unit of production and general facilities of FPL represented approximately 45%, method. These costs are recovered through the fuel clause.
13%, 36% and 6%, respectively, of FPL's gross investment in Under certain circumstances of lease termination, FPL is required electric utility plant in service. Substantially all electric utility to purchase all nuclear fuel in whatever form at a purchase price plant of FPL is subject to the lien of a mortgage securing FPL's designed to allow the lessor to recover its net investment cost first mortgage bonds. in the fuel, which totaled $127 million at December 31, 2000.
Depreciation of electric property is primarily provided For ratemaking, these leases are classified as operating leases.
on a straight-line average remaining life basis. FPL includes in For financial reporting, the capital lease obligation is recorded depreciation expense a provision for fossil plant dismantlement at the amount due in the event of lease termination.
and nuclear plant decommissioning (see Decommissioning and Dismantlement of Generating Plant). For substantially all Decommissioning and Dismantlement of Generating of FPL's property, depreciation studies are performed and filed Plant - FPL accrues nuclear decommissioning costs over the with the FPSC at least every four years. In April 1999, the FPSC expected service life of each unit. Nuclear decommissioning granted final approval of FPL's most recent depreciation studies, studies are performed at least every five years and are submitted which were effective January 1, 1998. The weighted annual to the FPSC for approval. In January 2001, FPL filed updated composite depreciation rate for FPL's electric plant in service was nuclear decommissioning studies with the FPSC. These studies approximately 4.2% for 2000, 4.3% for 1999 and 4.4% for 1998, assume prompt dismantlement for the Turkey Point Units Nos. 3 excluding the effects of decommissioning and dismantlement. and 4 with decommissioning activities commencing in 2012 and 34 II III
FPL Group 2000 Annual Report 2013, respectively. Current plans call for St. Lucie Unit No. 1 to respectively, and is included in other liabilities. Any difference be mothballed beginning in 2016 with decommissioning activities between the estimated and actual costs are included in O&M to be integrated with the prompt dismantlement of St. Lucie expenses when known.
Unit No. 2 beginning in 2023. These studies also assume that FPL Energy's estimated major maintenance costs for each FPL will be storing spent fuel on site pending removal to unit's next planned outage are accrued over the period from a U.S. government facility. The studies, which are pending the end of the last outage to the end of the next planned outage.
FPSC approval, indicate FPL's portion of the ultimate costs of The accrual for FPL Energy's major maintenance costs totaled decommissioning its four nuclear units, including costs associated $33 million at both December 31, 2000 and 1999. Any difference with spent fuel storage, to be $6.8 billion. Decommissioning between the estimated and actual costs are included in O&IvM expense accruals included in depreciation and amortization expenses when known.
expense, were $85 million in each of the years 2000, 1999 and 1998. FPL's portion of the ultimate cost of decommissioning Construction Activity - In accordance with FPSC guidelines, its four units, expressed in 2000 dollars, is currently estimated FPL has elected not to capitalize interest or a return on common to aggregate $1.8 billion. At December 31, 2000 and 1999, equity on construction projects. The cost of these construction the accumulated provision for nuclear decommissioning totaled projects is allowed as an element of rate base. FPL Group's approximately $1.5 billion and $1.4 billion, respectively, unregulated operations capitalize interest on construction projects.
and is included in accumulated depreciation. See Electric Plant, Depreciation and Amortization. Storm and Property Insurance Reserve Fund (storm Similarly, FPL accrues the cost of dismantling its fossil fund) - The storm fund provides coverage toward storm fuel plants over the expected service life of each unit. Fossil fuel damage costs and possible retrospective premium assessments plant dismantlement studies are performed and filed with the stemming from a nuclear incident under the various insurance FPSC at least every four years. Fossil fuel plant dismantlement programs covering FPL's nuclear generating plants. Securities held studies were filed in September 1998 and were effective in the fund are carried at market value with market adjustments January 1, 1999. The dismantlement studies indicated an resulting in a corresponding adjustment to the storm and property estimated reserve deficiency of $38 million, which was recovered insurance reserve. See Note 4 - Special Use Funds and Note 13 through the special amortization program. Fossil dismantlement - Insurance. Fund earnings, net of taxes, are reinvested in the expense was $14 million in 2000 and $17 million in each fund. The tax effects of amounts not yet recognized for tax of the years 1999 and 1998, and is included in depreciation purposes are included in accumulated deferred income taxes.
and amortization expense. FPL's portion of the ultimate cost to dismantle its fossil units is $482 million. At December 31, 2000 Other Investments - Included in other investments is FPL and 1999, the accumulated provision for fossil dismantlement Group's participation in leveraged leases of $154 million at both totaled $246 million and $232 million, respectively, and is December 31, 2000 and 1999. Additionally, other investments included in accumulated depreciation. See Electric Plant, include notes receivable and non-controlling non-majority owned Depreciation and Amortization. interests in partnerships and joint ventures, essentially all of Restricted trust funds for the payment of future expenditures which are accounted for under the equity method. See Note 4.
to decommission FPL's nuclear units are included in special use funds of FPL. Securities held in the decommissioning fund are Impairment of Long-Lived Assets - FPL Group evaluates carried at market value with market adjustments resulting in a on an ongoing basis the recoverability of its assets and related corresponding adjustment to the accumulated provision for nuclear intangible assets for impairment whenever events or changes decommissioning. See Note 4 - Special Use Funds. Contributions in circumstances indicate that the carrying amount may not be to the funds are based on current period decommissioning recoverable as described in FAS 121, "Accounting for the expense. Additionally, fund earnings, net of taxes are reinvested Impairment of Long-Lived Assets and for Long-Lived Assets to in the funds. The tax effects of amounts not yet recognized for tax be Disposed Of." See Note 10.
purposes are included in accumulated deferred income taxes.
Cash Equivalents - Cash equivalents consist of short-term, Accrual for Major Maintenance Costs - Consistent with highly liquid investments with original maturities of three months regulatory treatment, FPL's estimated nuclear maintenance costs or less.
for each nuclear unit's next planned outage are accrued over the period from the end of the last outage to the end of the next Retirement of Long-Term Debt - The excess of FPL's planned outage. The accrual for nuclear maintenance costs at reacquisition cost over the book value of long-term debt is December 31, 2000 and 1999 totaled $31 million and $42 million, deferred and amortized to expense ratably over the remaining
the natural choice
+i.
fin 2nfl .
i1 l in f n r mn
- t i n n life of the original issue, which is consistent with its treatment in In addition to the amounts recorded by FPL, in January the ratemaking process. See Regulation. FPL Group Capital Inc 2001 FPL Energy recorded an initial adjustment to record (FPL Group Capital) expenses this cost in the period incurred. derivative assets of $37 million, derivative liabilities of $35 million and an increase in investments of $11 million. For those con Income Taxes - Deferred income taxes are provided on all tracts where hedge accounting is applied, the adoption of the significant temporary differences between the financial statement new rules resulted in a credit of $10 million to other comprehen and tax bases of assets and liabilities. The deferred regulatory sive income (in stockholders' equity). FPL Group recorded a $2 credit - income taxes of FPL represents the revenue equivalent million loss as the cumulative effect on earnings of a change in of the difference in accumulated deferred income taxes accounting principle representing the effect of those derivative computed under FAS 109, "Accounting for Income Taxes," as instruments for which hedge accounting was not applied.
compared to regulatory accounting rules. This amount is being In December 2000, the Financial Accounting Standards amortized in accordance with the regulatory treatment over the Board's Derivatives Implementation Group (DIG) discussed estimated lives of the assets or liabilities which resulted in the several issues related to the power generation industry, but did initial recognition of the deferred tax amount. Investment tax not reach conclusions on those issues. The ultimate resolution credits (ITC) for FPL are deferred and amortized to income of these issues could result in a requirement to mark certain over the approximate lives of the related property in accordance of FPL Group's power and fuel agreements to their fair market with the regulatory treatment. values each reporting period. If these agreements are required to be treated as derivative instruments, the new accounting would Energy Trading - FPL and FPL Energy engage in limited first be applied in the quarter following final resolution of the energy trading activities to optimize the value of electricity and issues. At this time, management is unable to estimate the effects fuel contracts, as well as generating facilities. These activities are on the financial statements of any future decisions of the accounted for at market value. There were no significant open Financial Accounting Standards Board or the DIG.
positions in trading activities at December 31, 2000 or 1999.
Substantially all of the effects of FPL's trading activities are 2. MERGER reported net and passed through to customers in the fuel clause In July 2000, FPL Group and Entergy announced a proposed or capacity cost recovery clause (capacity clause). FPL Energy's merger, which was approved by the shareholders of the respec trading activities are reflected gross in operating revenues and tive companies in December 2000. Subsequently, a number of fuel expense in the consolidated statements of income. factors led FPL Group to conclude the merger would not achieve the synergies or create the shareholder value originally contem Accounting for Derivative Instruments and Hedging plated when the merger was announced. As a result, on April 1, Activities - Effective January 1, 2001, FPL Group adopted 2001, FPL Group and Entergy mutually terminated the merger FAS 133, "Accounting for Derivative Instruments and Hedging agreement. Both companies agreed that no termination fee is Activities," as amended by FAS 138, "Accounting for Certain payable under the terms of the merger agreement as a result of Derivative Instruments and Certain Hedging Activities." this termination. A fee will be payable by FPL Group or Entergy, The statement establishes accounting and reporting standards however, if either agrees with another party to a comparable requiring that every derivative instrument (including certain transaction prior to January 2002. Each company will bear its derivative instruments embedded in other contracts) be recorded own merger-related expenses.
in the balance sheet as either an asset or liability measured at its In 2000, FPL Group recorded $67 million in merger-related fair value. The statement requires that changes in the derivatives' expenses of which FPL recorded $62 million ($38 million after fair value be recognized currently in earnings unless specific tax), FPL Energy recorded $2 million ($1 million after-tax) and hedge accounting criteria are met. In January 2001, FPL recorded Corporate and Other recorded $3 million ($2 million after-tax).
an initial adjustment to record the fair values of instruments not previously reported on the balance sheet, resulting in derivative liabilities of $5 million, with the net offsetting amount recorded as a deferred regulatory asset. Subsequent changes in the fair values of FPL's derivative instruments will also be deferred in a regulatory asset or liability until the contracts are settled.
Upon settlement, any gains or losses will be passed through the fuel and capacity clauses.
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FPL Group 2000 Annual Report
- 3. EMPLOYEE RETIREMENT BENEFITS FPL Group and its subsidiaries sponsor a noncontributory defined benefit pension plan and defined benefit postretirement plans for health care and life insurance benefits (other benefits) for substantially all employees. The following tables provide a reconciliation of the changes in the plans' benefit obligations, fair value of assets and a statement of the funded status:
(millions) Pension Benefits Other Benefits 2000 1999 2000 1999 Change in benefit obligation:
Obligation at October 1 of prior year $1,178 $1,173 S 335 $ 345 Service cost 44 46 5 6 Interest cost 77 71 22 21 Participant contributions - - 1 2 Plan amendments 6 - -
Actuarial (gains) losses - net (20) (38) 4 (24)
Acquisitions - 4 - 2 Benefit payments (80) (78) (17) (17)
Obligation at September 30 1,205 1,178 350 335 Change in plan assets:
Fair value of plan assets at October 1 of prior year 2,555 2,329 111 115 Actual return on plan assets 284 310 7 12 Participant contributions - - 1 2 Benefit payments and expenses (89) (84) (21) (18)
Fair value of plan assets at September 30 2,750 2,555 98 111 Funded Status:
Funded status at September 30 1,545 1,377 (252) (224)
Unrecognized prior service cost (76) (89) -
Unrecognized transition (asset) obligation (93) (117) 42 45 Unrecognized (gain) loss (993) (900) 15 7 Prepaid (accrued) benefit cost at December 31 $ 383 $ 271 $(195) $ (172)
The following table provides the components of net periodic benefit cost for the plans:
O(mmlions) Pension Benefits Other Benefits Years ended December 31, 2000 1999 1998 2000 1999 1998 Senrice cost $ 44 $ 46 $ 45 $ 5 $ 6 $ 6 Interest cost 77 71 75 21 21 21 Expected return on plan assets (172) (156) (149) (7) (7) (8)
Amortization of transition (asset) obligation (23) (23) (23) 4 3 3 Amortization of prior service cost (7) (8) (8) - -
Amortization of losses (gains) (31) (22) (21) - 1 1 Effect of Maine acquisition - - - 2 Net periodic (benefit) cost $(112) $ (92) $ (81) $ 23 $ 26 $ 23 The weighted-average discount rate used in determining the benefit obligations was 6.75% and 6.5% for 2000 and 1999, respectively.
The assumed level of increase in future compensation levels was 5.5% for all years. The expected long-term rate of return on plan assets was 7.75% for all years.
Based on the current discount rates and current health care costs, the projected 2001 trend assumptions used to measure the expected cost of benefits covered by the plans are 5.8% for persons up to age 65 and 5.4% thereafter. The rate is assumed to decrease over the next two years to the ultimate trend rate of 5% for all age groups and remain at that level thereafter.
37
the natural choice fin a n ci al in fo rm a ti o n Assumed health care cost trend rates can have a significant effect on the amounts reported for the health care plans. A 1%increase or decrease in assumed health care cost trend rates would have a corresponding effect on the service and interest cost components and the accumulated obligation of other benefits of approximately $1 million and $13 million, respectively.
- 4. FINANCIAL INSTRUMENTS The carrying amounts of cash equivalents and commercial paper approximate their fair values. At December 31, 2000 and 1999, other investments include $300 million and $291 million, respectively, of investments that are carried at estimated fair value or cost, which approximates fair value. The following estimates of the fair value of financial instruments have been made using available market information and other valuation methodologies. However, the use of different market assumptions or methods of valuation could result in different estimated fair values.
(milliomos)
December 31, 2000 1999 Carrying Estimated Carrying Estimated Amount Fair Value Amount Fair Value Long-term debt. including current maturities $4,041 $4,080'"' $3,603 $3,5181" (a) Based on quoted market prices for these or similar issues.
Special Use Funds - The special use funds consist of storm fund assets totaling $140 million and $131 million, and decommission ing fund assets totaling $1.357 billion and $1.220 billion at December 31, 2000 and 1999, respectively. Securities held in the special use funds are carried at estimated fair value based on quoted market prices. The nuclear decommissioning fund consists of approximately 40% equity securities and 60% municipal, government, corporate and mortgage- and other asset-backed debt securities with a weighted average maturity of approximately nine years. The storm fund primarily consists of municipal debt securities with a weighted-average maturity of approximately four years. The cost of securities sold is determined on the specific identification method. The funds had approximate realized gains of $8 million and approximate realized losses of $15 million in 2000, $32 million and $22 million in 1999 and $24 million and $4 million in 1998, respectively. The funds had unrealized gains of approximately $258 million and $286 million at December 31, 2000 and 1999, respectively; the unrealized losses at those dates were approximately $4 million and $17 million. The proceeds from the sale of securities in 2000, 1999 and 1998 were approximately $2.0 billion, $2.7 billion and $1.2 billion, respectively.
- 5. COMMON STOCK Common Stock Dividend Restrictions - FPL Group's charter does not limit the dividends that may be paid on its common stock. As a practical matter, the ability of FPL Group to pay dividends on its common stock is dependent upon dividends paid to it by its subsidiaries, primarily FPL. FPL's charter and a mortgage securing FPL's first mortgage bonds contain provisions that, under certain conditions, restrict the payment of dividends and other distributions to FPL Group. These restrictions do not currently limit FPL's ability to pay dividends to FPL Group. In 2000, 1999 and 1998, FPL paid, as dividends to FPL Group, its net income available to FPL Group on a one-month lag basis.
Employee Stock Ownership Plan (ESOP) - The employee thrift plans of FPL Gi-oup include a leveraged ESOP feature. Shares of common stock held by the Trust for the thrift plans (Trust) are used to provide all or a portion of the employers' matching contribu tions. Dividends received on all shares, along with cash contributions from the employers, are used to pay principal and interest on an ESOP loan held by FPL Group Capital. Dividends on shares allocated to employee accounts and used by the Trust for debt service are replaced with an equivalent amount of shares of common stock at prevailing market prices.
ESOP-related compensation expense of approximately $22 million, $21 million and $19 million in 2000, 1999 and 1998, respectively, was recognized based on the fair value of shares allocated to employee accounts during the period. Interest income on the ESOP loan is eliminated in consolidation. ESOP-related unearned compensation included as a reduction of shareholders' equity at December 31, 2000 was approximately $217 million, representing 7 million unallocated shares at the original issue price of $29 per share. The fair value of the ESOP-related unearned compensation account using the closing price of FPL Group stock as of December 31, 2000 was approximately S538 million.
II III
FPL Group 2000 Annual Report Long-Term Incentive Plan - As of December 31, 2000, approximately 9 million shares of common stock are reserved and available for awards to officers and employees of FPL Group and its subsidiaries under FPL Group's long-term incentive plan. Restricted stock is issued at market value at the date of grant, typically vests within four years and is subject to, among other things, restrictions on transferability.
Performance share awards are typically payable at the end of a three- or four-year performance period and are subject to risk of forfeiture if the specified performance criteria is not met within the vesting period. The changes in share awards under the incentive plan are as follows:
Options "
Restricted Performance Weighted-Average Stock Shares',' Number Exercise Price Balances, December 31, 1997 219,550 442,588 -
Granted 19,500"b' 178,518" -
Paid/released (80,920) -
Forfeited (22,250) (29,566) -
Balances, December 31, 1998 216,800 510,620 -
Granted 210,1001' 294,662'" 1,300,000"' $51.53 Paid/released - (78,640)
Forfeited (13,500) (80,027) (200,000) S51.16 Balances, December 31, 1999 413,400 646,615 1,100,000 $51.59 Granted 28,350"' 465,614-" 564,950'" $39.64 Paid/released/exercised (264,800) (1,038,375) (1,060,726) $49.88 Forfeited (95,700) (54,854) (212,056) $50.51 Balances, December 31, 2000 81,250 19,000 392,168`" $39.58 (a) Performance sharesand options resulted in 373,431, 252,572 and 128,443 assumed incrementalshares of common stock outstandingforpurposes of computing diluted earningsper share in 2000, 1999 and 1998, respectively. These incremental shares did not change basic earningsper share.
(b) The weighted-averagegrantdatefair value of restrictedstock granted in 2000, 1999 and 1998 was $45.55, $53.21 and $61.89per share.
respectively.
(c) The weighted-averagegrant datefair value ofperformance sharesgranted in 2000, 1999 and 1998 was $41.25, $61.19 and $59.19 per share, respectively.
(d) The weighted-averagegrant datefair value of options granted was $39.64 and $51.53 per share in 2000 and 1999, respectively. The exercise price of each option granted in 2000 and 1999 equaled the market price of FPL Group stock on the date of grant.
(e) Exercisepricesfor options outstanding as of December31, 2000, rangedfrom $38.13 to $4763per shareand had a neighted-averageremaining contractuallife of 9.2 years. As of December 31, 2000, all outstanding options were exercisableandfully vested.
FAS 123, "Accounting for Stock-Based Compensation," encourages a fair value based method of accounting for stock-based compensation. FPL Group, however, uses the intrinsic value based method of accounting as permitted by the statement. Stock-based compensation expense was approximately $80 million, $13 million and $10 million in 2000, 1999 and 1998, respectively. Stock-based compensation expense in 2000 reflects merger-related costs associated with the change in control provisions in FPL Group's long-term incentive plan. Compensation expense for restricted stock and performance shares is the same under the fair value and the intrinsic value based methods. Had compensation expense for the options been determined as prescribed by the fair value based method, FPL Group's net income and earnings per share would have been $696 million and $4.10 ($4.09 assuming dilution) in 2000 and $696 million and $4.06 in 1999, respectively.
The fair value of the options granted in 2000 and 1999 were estimated on the date of the grant using the Black-Scholes option-pricing model with a weighted-average expected dividend yield of 3.82% and 3.81%, a weighted-average expected volatility of 20.27% and 17.88%,
a weighted-average risk-free interest rate of 6.59% and 5.46% and a weighted-average expected term of 10 years and 9.3 years, respectively.
Other - Each share of common stock has been granted a Preferred Share Purchase Right (Right), at an exercise price of $120, subject to adjustment, in the event of certain attempted business combinations. The Rights will cause substantial dilution to a person or group attempting to acquire FPL Group on terms not approved by FPL Group's board of directors.
39
the natural choice fin a n c ial in fo rm a tio n
- 6. PREFERRED STOCK FPL Group's charter authorizes the issuance of 100 million shares of serial preferred stock, $0.01 par value. None of these shares is out standing. FPL Group has reserved 3 million shares for issuance upon exercise of preferred share purchase rights which expire in June 2006. Preferred stock of FPL consists of the following:-° December 31, 2000 (millions)
Shares Redemption December 31, Outstanding Price 2000 1999 Cumulative, $100 Par Value, without sinking fund requirements, authorized 15,822,500 shares:
4'Y% Series 100,000 S101.00 S 10 $ 10 42%0 Series A 50,000 S101.00 5 5 4Y°0/o Series B 50,000 S101.00 5 5 4,Oo Series C 62,500 S103.00 6 6 4.32% Series D 50,000 $103.50 5 5 4.35% Series E 50,000 $102.00 5 5 6.98% Series S 750,000 S103.49", 75 75 7.05% Series T 500,000 $103.52" 50 50 6.75% Series U 650,000 S103.37"' 65 65 Total preferred stock of FPL 2,262,500 $226 $226 (a) FPLM s charter also authorizes the issuanceof 5 million shares ofsubordinatedprefenred stock, no par value- None of these shares is outstanding. There were no issuances or redemptions of prefenred stock in 2000, 1999 and 1998.
(b) Not callableprior to 2003.
- 7. DEBT Long-term debt consists of the following:
(millions)
December 31, 2000 1999 FPL First mortgage bonds:
Maturing through 2005 - 5X% to 60%"- $ 725 $ 350 Maturing 2008 through 2016 - 5A/%to 7.3% 650 650 Maturing 2023 through 2026 - 7%to 7Y% 516 516 Medium-term notes - maturing 2003 - 5.79% 70 70 Pollution control and industrial development series maturing 2020 through 2027 - 6.7% to 7.5% 41 150 Pollution control, solid waste disposal and industrial development revenue bonds maturing 2020 through 2029 - variable, 3.4 % and 3.4% average annual interest rate, respectively ,h, 658 483 Unamortized discount - net (18) (15)
Total long-term debt of FPL 2,642 2,204 Less current maturities 65 125 Long-term debt of FPL. excluding current maturities 2,577 2,079 FPL Group Capital Debentures:
Maturing 2004 - 634% 175 175 Maturing 2006 through 2009 - 7Xg% to 7O/% 1,225 1,225 Other long-term debt - maturing 2013 - 7.35% 5 5 Unamortized discount (6) (6)
Total long-term debt of FPL Group Capital 1,399 1,399 Total long-term debt $3,976 $3,478 (a) In December2000, FPL issued $500 million principalamount offi~st mortgage bonds with an interest rate of 6 7%.
maturing in 2005.
(b) In December2000, FPL issued approximately $65 million pancipalamount of iariable-ratebonds maturing in 2024.
Also in December 2000, FPL redeemed a total of approximately $242 million ptui)cipalanmount of variable-ratebonds 40 maturing between 2026 and 2029.
II II
FPL Group 2000 Annual Report Minimum annual maturities of long-term debt for FPL Group The income tax effects of temporary differences giving rise are approximately $65 million, $170 million, $300 million and to consolidated deferred income tax liabilities and assets are as
$500 million for 2001, 2003, 2004 and 2005, respectively. follows:
At December 31, 2000, commercial paper borrowings had a year end weighted-average interest rate of 6.77%. Available lines (millions) of credit aggregated approximately $3.0 billion at December 31, December 31, 2000 1999 2000, all of which were based on firm commitments. Deferred tax liabilities:
Property-related S1,338 $1,377
- 8. INCOME TAXES Investment-related 398 373 The components of income taxes are as follows: Other 630 312 Total deferred tax liabilities 2,366 2,062
(*mllions)
Deferred tax assets and valuation allowance:
Years Ended December 31, 2000 1999 1998 Asset writedowns and capital Federal: loss carryforward 156 170 Current $ 77 $511 $467 Unamortized ITC and deferred Deferred 239 (196) (215) regulatory credit - income taxes 104 119 ITC and other - net (35) (29) (27) Storm and decommissioning reserves 277 245 Total federal 281 286 225 Other 474 472 State: Valuation allowance (23) (23)
Current 6 55 72 Net deferred tax assets 988 983 Deferred 49 (18) (18) Accumulated deferred income taxes $1,378 $1,079 Total state 55 37 54 Total income taxes $336 $323 $279 The carryforward period for a capital loss from the disposi tion in a prior year of an FPL Group Capital subsidiary expired A reconciliation between the effective income tax rates and at the end of 1996. The amount of the deductible loss from this the applicable statutory rates is as follows:
disposition was limited by IRS rules. FPL Group is challenging the IRS loss limitation and the IRS is disputing certain other positions Years Ended December 31, 2000 1999 1998 taken by FPL Group. Tax benefits, if any, associated with these Statutory federal income tax rate 35.0% 35.0% 35.0%
Increases (reductions) resulting from: matters will be reported in future periods when resolved.
State income taxes - net of federal income tax benefit 3.5 2.4 3.7 9. JOINTLY-OWNED ELECTRIC UTILITY PLANT Amortization of ITC (2.1) (2.1) (2.5) FPL owns approximately 85% of St. Lucie Unit No. 2, 20% of the Amortization of deferred regulatory St. Johns River Power Park units and coal terminal and approxi credit - income taxes (1.2) (1.3) (1.8) mately 76% of Scherer Unit No. 4. At December 31, 2000, the Adjustments of prior years' proportionate share of FPL's gross investment in these units tax matters (2.7) (2.7) (6.3)," was $1.174 billion, $329 million and $569 million, respectively; Preferred stock dividends - FPL 0.5 0.5 0.5 accumulated depreciation was $752 million, $167 million and Other - net (0.7) (0.2) 1.0 $288 million, respectively.
Effective income tax rate 32.3% 31.6% 29.6%
FPL is responsible for its share of the operating costs, as well (a) Includes the resolution ofan audit issue with as providing its own financing. These costs are included in the the Internal Revenue Sewice (IRS). consolidated statements of income. At December 31, 2000, there was no significant balance of construction work in progress on these facilities. See Note 13 - Litigation.
- 10. ACQUISITION OF MAINE ASSETS During the second quarter of 1999, FPL Energy completed the purchase of Central Maine Power Company's (CMP) non-nuclear generating assets, primarily fossil and hydro power plants, for
$866 million. The purchase price was based on an agreement, subject to regulatory approvals, reached with CMP in January 1998. In October 1998, the FERC struck down transmission rules that had been in effect in New England since the 1970s. FPL 41
the natural choice finA nc i lI i n f n r m n t i nf Energy filed a lawsuit in November 1998 requesting a declaratory through the fuel and capacity clauses over a five-year period judgment that CMP could not meet the essential terms of the beginning January 1, 2002. Also, from the payment date to purchase agreement and, as a result, FPL Energy should not be December 31, 2001, FPL will not receive a return on the unre required to complete the transaction. FPL Energy believed these covered amount through the fuel and capacity clauses, but FERC rulings regarding transmission constituted a material instead, the settlement amount will be included as a rate base adverse effect under the purchase agreement because of the regulatory asset over that period. See Note 1 - Regulation.
significant decline in the value of the assets caused by the rulings. The request for declaratory judgment was denied in 13. COMMITMENTS AND CONTINGENCIES March 1999 and the acquisition was completed on April 7, 1999. Commitments - FPL has made commitments in connection The acquisition was accounted for under the purchase method with a portion of its projected capital expenditures. Capital of accounting and the results of operating the Maine plants expenditures for the construction or acquisition of additional have been included in the consolidated financial statements facilities and equipment to meet customer demand are estimated since the acquisition date. to be approximately $3.3 billion for 2001 through 2003. Included The FERC rulings regarding transmission, as well as the in this three-year forecast are capital expenditures for 2001 of announcement of new entrants into the market and changes in approximately S1.1 billion. As of December 31, 2000. FPL Energy fuel prices since January 1998, resulted in FPL Energy recording has made commitments in connection with the development and a $176 million pre-tax impairment loss to write-down the fossil expansion of independent power projects totaling approximately assets to their fair value, which was determined based on a $380 million. Subsidiaries of FPL Group, other than FPL, have discounted cash flow analysis. The impairment loss reduced guaranteed approximately $810 million of prompt performance 1999 results of operations and earnings per share by $104 million payments, lease obligations, purchase and sale of power and and $0.61 per share, respectively. fuel agreement obligations, debt service payments and other Most of the remainder of the purchase price was allocated payments subject to certain contingencies.
to the hydro operations. The hydro plants and related goodwill are being amortized on a straight-line basis over the 40-year term Insurance - Liability for accidents at nuclear power plants is of the hydro plant operating licenses. governed by the Price-Anderson Act, which limits the liability of nuclear reactor owners to the amount of the insurance available
- 11. DIVESTITURE OF CABLE INVESTMENTS from private sources and under an industry retrospective pay In January 1999, a subsidiary sold 3.5 million common shares of ment plan. In accordance with this Act, FPL maintains S200 mil Adelphia Communications Corporation (Adelphia) stock and in lion of private liability insurance, which is the maximum obtain October 1999 had its one-third ownership interest in a cable able, and participates in a secondary financial protection system linited partnership redeemed, resulting in after-tax gains of tinder which it is subject to retrospective assessments of up to approximately $96 million and $66 million, respectively. Both S363 million per incident at any nuclear utility reactor in the investments had been accounted for under the equity method. United States, payable at a rate not to exceed S43 million per incident per year.
- 12. SETTLEMENT OF LITIGATION FPL participates in nuclear insurance mutual companies that In October 1999, FPL and the Florida Municipal Power Agency provide S2.75 billion of limited insurance coverage for property (FMPA) entered into a settlement agreement pursuant to which damage, decontamination and premature decommissioning risks FPL agreed to pay FMPA a cash settlement; FPL agreed to reduce at its nuclear plants. The proceeds from such insurance, howev the demand charge on an existing power purchase agreement; er, must first be used for reactor stabilization and site decontami and FPL and FMPA agreed to enter into a new power purchase nation before they can be used for plant repair. FPL also partici agreement giving FMPA the right to purchase limited amounts of pates in an insurance program that provides limited coverage for power in the future at a specified price. FMPA agreed to dismiss replacement power costs if a nuclear plant is out of service the lawsuit with prejudice, and both parties agreed to exchange because of an accident. In the event of an accident at one of mutual releases. The settlement reduced 1999 net income by FPL's or another participating insured's nuclear plants, FPL could
$42 million. be assessed up to $38 million in retrospective premiums.
In September 2000, the bankruptcy court approved the set in the event of a catastrophic loss at one of FPL's nuclear tlement of a contract dispute between FPL and two qualifying plants, the amount of insurance available may not be adequate facilities. The settlement was approved by the FPSC in October to cover property damage and other expenses incurred.
2000. In December 2000, under the terms of the settlement, the Uninsured losses, to the extent not recovered through rates, trustee was paid S222.5 million plus security deposits. The funds would be borne by FPL and could have a material adverse effect were subsequently distributed by the trustee as directed by the on FPL Group's financial condition.
bankruptcy court. FPL will recover the cost of the settlement 42 II III
FPL Group 2000 Annual Report FPL self-insures the majority of its transmission and distribution (T&D) property due to the high cost and limited coverage available from third-party insurers. As approved by the FPSC, FPL maintains a funded storm and property insurance reserve, which totaled approximately $229 million at December 31, 2000 for uninsured property storm damage or assessments under the nuclear insurance program. Recovery from customers of any losses in excess of the storm and property insurance reserve will require the approval of the FPSC. FPL's available lines of credit include $300 million to provide additional liquidity in the event of a T&D property loss.
Contracts - FPL Group has entered into a $3.7 billion long-term agreement with General Electric Company for the supply of 66 gas turbines through 2004 and parts, repairs and on-site services through 2011. The turbines are intended to support expansion at FPL and FPL Energy, and the related commitments for a portion of the 66 gas turbines are included in Commitments above.
FPL has entered into long-term purchased power and fuel contracts. Take-or-pay purchased power contracts with the Jacksonville Electric Authority (JEA) and with subsidiaries of The Southern Company (Southern Companies) provide approximately 1,300 megawatts (mw) of power through mid-2010 and 388 mw thereafter through 2021. FPL also has various firm pay-for-performance contracts to pur chase approximately 900 mw from certain cogenerators and small power producers (qualifying facilities) with expiration dates ranging from 2002 through 2026. The purchased power contracts provide for capacity and energy payments. Energy payments are based on the actual power taken under these contracts. Capacity payments for the pay-for-performance contracts are subject to the qualifying facilities meeting certain contract conditions. FPL has long-term contracts for the transportation and supply of natural gas, coal and oil with vari ous expiration dates through 2022. FPL Energy has long-term contracts for the transportation and storage of natural gas with expiration dates ranging from 2002 through 2017, and a contract for the supply of natural gas that expires in mid-2002.
The required capacity and minimum payments through 2005 under these contracts are estimated to be as follows:
(millions) 2001 2002 2003 2004 2005 FPL Capacity payments:
JEA and Southern Companies $ 200 $ 200 S 190 $ 200 $ 200 Qualifying facilities $ 320 $ 330 S 340 $ 350 S 340 Minimum payments, at projected prices:
Natural gas, including transportation $1,020 $ 815 S 710 $ 680 S 630 Coal S 45 $ 45 S 20 $ 10 S 10 Oil S 275 $ 15 $ - $ - S FPL Energy Natural gas, including transportation and storage S 20 S 20 S 15 S 15 S 15 Charges under these contracts were as follows:
(Iimlions) 2000 Charges 1999 Charges 1998 Charges Energy/ Energy/ Energy/
Capacity Fuel Capacity Fuel Capacity Fuel FPL JEA and Southern Companies $198' S153" $186( $132"b, $192(") $138"b' Qualifying facilities $318"' $135"" $319"' $121 b' S299" $108"b' Natural gas, including transportation $- $567"" $- $373 "b $- 280"
Coal $- S 50"" $- $ 43("' $- $ 50ob Oil $- $354"" $- $115"' S- $
FPL Energy Natural gas, including transportation and storage S- $ 17 $- $ 16 $- S 18 (a) Recoverable through base rates and the capacit, clause.
(b) Recoverable through the fuel clause.
(c) Recoverable through the capacity clause.
43
the natural choice finnnniI i n F n r rn a t i n n fI i n -A. , r-, I i nI f n r enI a + I Litigation - In 1999, the Attorney General of the United Protest before the FERC, vigorously objecting to the position States, on behalf of the U.S. Environmental Protection Agency taken by SCE in .its petition. The partnerships have always oper (EPA) brought an action against Georgia Power Company and ated the solar failities in accordance with orders issued by the other subsidiaries of The Southern Company for injunctive relief FERC. Such ordeis were neither challenged nor appealed at the and the assessment of civil penalties for certain violations of the time they were granted, and it is the position of the partnerships Clean Air Act. Among other things, the EPA alleges Georgia that the orders remain in effect.
Power Company constructed and is continuing to operate In 2000, Katen and Bruce Alexander filed suit against FPL Scherer Unit No. 4, in which FPL owns a 76% interest, without Group, FPL, FPL FiberNet, LLC, FPL Group Capital and FPL obtaining proper permitting, and without complying with per Investments, Inc. in the Florida circuit court purportedly on formance and technology standards as required by the Clean Air behalf of all property owners in Florida whose property is Act. The suit seeks injunctive relief requiring the installation of encumbered by defendants' easements and on whose property such technology and civil penalties of up to $25,000 per day for the defendants have installed or intend to install fiber-optic cable each violation from an unspecified date after August 7, 1977 which defendant$ lease, license or convey for non-electric trans through January 30, 1997, and $27,500 per day for each violation mission or distribution purposes, or intend to do so. The lawsuit thereafter. Georgia Power Company has filed an answer to the alleged that FPL's easements did not permit the installation and complaint asserting that it has complied with all requirements of use of fiber-optic cable for general communication purposes. The the Clean Air Act, denying the plaintiffs allegations of liability, plaintiffs sought injunctive relief, compensatory damages, interest denying that the plaintiff is entitled to any of the relief that it and attorneys' fees. The defendants served an offer of judgment seeks and raising various other defenses. The EPA subsequently for ten dollars on the named plaintiffs, reflecting the defendants' moved for leave to file an amended complaint that would extend conclusion that, based on an analysis of the claims and circum the suit to other Southern Company subsidiaries and plants and stances of these individual plaintiffs, they had not sustained the would add an allegation that unspecified major modifications injuries for which they claimed a right to relief. In January 2001, have been made at Scherer Unit No. 4 that require its compli the plaintiffs accdpted this offer of judgment, pursuant to which ance with the aforementioned Clean Air Act provisions (compa the suit has been dismissed with prejudice.
rable allegations were made in the original complaint as to other FPL Group believes that it has meritorious defenses to the plants but not Scherer Unit No. 4). The Court has not yet ruled pending litigation discussed above and is vigorously defending on whether to permit the amendment. If amended as proposed, the suits. Accordingly, the liabilities, if any, arising from the pro the EPA's demand for civil penalties with respect to Scherer Unit ceedings are not anticipated to have a material adverse effect on No. 4 would apply to the period commencing on an unspecified its financial statements.
date after June 1, 1975.
In 2000, Southern California Edison Company (SCE) filed 14. SEGMENT INFORMATION with the FERC a Petition for Declaratory Order (petition) asking FPL Group's reportable segments include FPL, a regulated utility, the FERC to apply a November 1999 federal circuit court of and FPL Energy, a non-rate regulated energy generating sub appeals' decision to all qualifying small power production facili sidiary. Corporate and Other represents other business activities, ties, including two solar facilities operated by partnerships indi other segments that are not separately reportable and eliminating rectly owned in part by FPL Energy. The federal circuit court of entries. Operating revenues derived from the sale of electricity appeals' decision invalidated the FERC's so-called essential fixed represented approximately 97%, 98% and 97% of FPL Group's assets standard, which permitted secondary uses of fossil fuels operating revenues in 2000, 1999 and 1998, respectively. Less by qualifying small power production facilities beyond those than 1% of operating revenues were from foreign sources for expressly set forth in the Public Utility Regulatory Policies Act of each of the three years ended December 31, 2000. As of 1978, as amended. The petition requests that the FERC declare December 31, 2000 and 1999, less than 1%of long-lived that qualifying small power production facilities may not contin assets were located in foreign countries.
ue to use fossil fuel under the essential fixed assets standard and that they may be required to make refunds with respect to past usage. The partnerships intend to file a Motion to Intervene and 44 II II
FPL Group 2000 Annual Report Segment information is as follows:
(nillions) 2000 1999 1998 Corp. Corp. Corp.
FPL and FPL and FPL and FPL Energy Other Total FPL Energy Other Total FPL Energy Other Total Operating revenues $ 6,361 $ 632 S 89 $7,082 $ 6,057 $ 323 $ 58 $ 6,438 $ 6,366 $ 234 $ 61 $ 6,661 Interest expense S 176 S 67"1 S 35 S 278 $ 163 $ 44111 $ 15 $ 222 $ 196 $ 840' $ 42 $ 322 Depreciation and amortization S 975 $ 50 $ 7 $1,032 $ 989 $ 34 $ 17 $1,040 $1,249 $ 31 $ 4 $ 1,284 Equity in earnings of equity method investees S - $ 45 S- $ 45 $ - $ 50 $- $ 50 $ - $ 39 $-- $ 39 Income tax expense (benefit)" $ 341 5 36 S(41) S 336 $ 324 $ (42) $ 41 $ 323 $ 349 $ 24 $(94) $ 279 Net income (loss)"" $ 607 $ 82"' S 15"' $ 704"' $ 576 $ (46) $167 $ 697 $ 616 $ 32 $16 $ 664 Significant.noncash items S (57) $ - $100 $ 43 $ 86 $ - $- $ 86 $ 34 $ - $- $ 34 Capital expenditures and investments $ 1,299 $ 507 S 90 $1,896 $ 924 $1,540 $ 15 $ 2,479 $ 617 $ 313 $ 16 $ 946 Total assets $12,020 $2,679 $601 $15,300 $10,608 $2,212 $621 $13,441 $10,748 $1,092 $189 $12,029 Investment in equity method investees $ - $ 196 S5- S 196 $ - $ 166 $- $ 166 $ - $ 165 $- $ 165 (a) Based on an assumed capitalstructureof 50% debt for operating projects and 10001 debt forprojects under construction.FPL Energys 1998 interest expense also includes the cost of terminatingan interest rateswap agreement.
(b) FPL Group allocates income taxes to FPL Energy on the "separatereturn method" as if it wvere a taxpaying entity.
(c) Includes merger related expenses of $38 million for FM',
$1 millionfor FPL Energy and $2 million for Corporate and Othertotaling $41 million after-tax (see Note 2).
(d) The following nonrecurringitems affected 1999 net income FPL settled litigationfor $42 million after-tax (see Note 12); MPI Energy recorded $104 million after-tax impairment loss (see Note 10); and Corporateand Other divested its cable investments resulting in a $162 million after-tax gain (see Note 11).
- 15. SUMMARIZED FINANCIAL INFORMATION OF FPL GROUP CAPITAL FPL Group Capital, a 100% owned subsidiary of FPL Group, provides funding for and holds ownership interest in FPL Group's operating subsidiaries other than FPL. FPL Group Capital's debentures are fully and unconditionally guaranteed by FPL Group.
Condensed consolidating financial information is as follows:
condensed consolidating statements of income (millions)
Years ended December 31, 2000 1999 1998 FPL FPL Group FPL FPL Group FPL FPL Group FPL Group Consoli- FPL Group Consoli- FPL Group Consoli Group Capital Other" dated Group Capital Other"' Dated Group Capital Other', dated Operating revenues $ $ 721 $6,361 $ 7,082 $- $ 380 $ 6,058 $ 6,438 $ $ 295 $ 6,366 $ 6,661 Operating expenses (-) (632) (5,210) (5,842) (-) (533) (4,985) (5,518) (-) (225) (5,184) (5,409) interest charges (31) (102) (145) (278) (32) (59) (131) (222) (33) (126) (163) (322)
Divestiture of cable investments - - - - - 257 - 257 - - -
Other income (deductions) - net 726 135 (783) 78 712 108 (755) 65 689 61 (737) 13 income before income taxes 695 122 223 1,040 680 153 187 1,020 656 5 282 943 Income tax expense (benefit) (9) 4 341 336 (17) 15 325 323 (8) (63) 350 279 Net income (loss) $ 704 $ 118 $ (118) $ 704 $697 $ 138 $ (138) $ 697 $664 $ 68 $ (68) $ 664 45 (a) Represents FPL, other subsidiariesand consolidatingadjustments.
the natural choice financial information condensed consolidating balance sheets (millions)
December 31, 2000 1999 FPL FPL Group FPL FPL Group FPL Group Consoli- FPL Group Consoli Group Capital Other"' dated Group Capital Otherý, dated PROPERTY, PLANT AND EQUIPMENT Electric utility plant in service and other property $ S-1,984 $19,038 $21,022 $ - $1,386 $18,168 $19,554 Less accumulated depreciation and amortization - 170 10,918 11,088 - 105 10,185 10,290 Total property, plant and equipment - net - 1,814 8,120 9,934 - 1,281 7,983 9,264 CURRENT ASSETS Cash and cash equivalents 12 51 66 129 (16) 376 1 361 Receivables 56 418 409 883 - 218 325 543 Other - 66 703 769 - 46 423 469 Total current assets 68 535 1,178 1,781 (16) 640 749 1,373 OTHER ASSETS Investment in subsidiaries 5,967 - (5,967) - 5,805 - (5,805)
Other 141 1,365 2,079 3,585 133 1,346 1,325 2,804 Total other assets 6.108 1,365 (3,888) 3,585 5,938 1,346 (4,480) 2,804 TOTAL ASSETS $6,176 S3V714 $ 5,410 S15,300 $5,922 $3,267 $ 4,252 $13,441 CAPITALIZATION Common shareholders' equity $5593 S 935 $ (935) S 5,593 $5,370 $1,013 $(1,013) $ 5,370 Preferred stock of FPL without sinking fund requirements - - 226 226 - - 226 226 Long-term debt - 1,400 2,576 3,976 - 1,399 2,079 3,478 Total capitalization 51593 2.335 1,867 9,795 5,370 2,412 1,292 9,074 CURRENT LIABILITIES Accounts payable and commercial paper - 705 1,017 1,722 - 273 473 746 Other 467 186 388 1,041 485 141 498 1,124 Total current liabilities 467 891 1,405 2,763 485 414 971 1,870 OTHER LIABILITIES AND DEFERRED CREDITS Accumulated deferred income taxes and unamortized tax credits - 399 1.248 1,647 - 365 1,024 1,389 Other 116 89 890 1,095 67 76 965 1,108 Total other liabilities and deferred credits 116 488 2,138 2,742 67 441 1,989 2,497 COMMITMENTS AND CONTINGENCIES TOTAL CAPITALIZATION AND LIABILITIES $6,176 $3,714 $ 5,410 S15,300 $5,922 $3,267 $ 4,252 $13,441 (a) Represents FPL other subsidiariesand consolidatingadjustments.
II Ii
FPL Group 2000 Annual Report condengped ronsolidnting statcmmnts of cash flows (millions)
Years ended December 31, 2000 1999 1998 FPL FPL Group FPL FPL Group FPL FPL Group FPL Group Consoli- FPL Group Consoli- FPL Group Consoli Group Capital Other", dated Group Capital Other"> dated Group Capital Other"> dated NET CASH PROVIDED BY (USED IN)OPERATING ACTIVITIES $ 959 $ 159 $ (142) S 976 $ 594 $ 56 $ 913 $1,563 $ 654 $ 8 $1,081 $1,743 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures and independent power investments - (507) (1,299) (1.806) - (1,540) (861) (2,401) - (521) (617) (1,138)
Capital contributions to FPL Group Capital and FPL (418) - 418 - (127) - 127 - (249) - 249 Other - net 3 (34) (106) (137) (18) 313 (66) 229 - 427 (84) 343 Net cash used in investing activities (415) (541) (987) (1,943) (145) (1,227) (800) (2,172) (249) (94) (452) (795)
CASH FLOWS FROM FINANCING ACTIVITIES Issuance of long term debt - - 947 947 1,385 224 1,609 - 146 197 343 Retirement of long-term debt - - (515) (515) - (130) (454) (584) - (338) (389) (727)
Increase (decrease) in short-term debt - 353 466 819 - 135 94 229 - 16 (40) (24)
Capital contributions from FPL Group - 18 (18) - - 127 (127) - - 249 (249)
Repurchases of common stock (150) - - (150) (116) - - (116) (62) - - (62)
Dividends (366) (314) 314 (366) (355) - - (355) (345) - - (345)
Net cash provided by (used in) financing activities (516) 57 1,194 735 (471) 1,517 (263) 783 (407) 73 (481) (815)
Net increase (decrease) in cash and cash equivalents 28 (325) 65 (232) (22) 346 (150) 174 (2) (13) 148 133 Cash and cash equivalents at beginning of year (16) 376 1 361 6 30 151 187 8 43 3 54 Cash and cash equivalents at end of year $ 12 $ 51 $ 66 $ 129 $ (16) $ 376 $ 1 $ 361 $ 6 $ 30 $ 151 $ 187 (a) Represents FPL, other subsidiariesand consolidatingadjustments.
- 16. QUARTERLY DATA (UNAUDITED)
Condensed consolidated quarterly financial information is as follows:
Onillions, except per share amounts) 2000 1999 March 31" June 30'" Sept. 301" Dec. 310 March 311>" June 301" Sept. 30"' Dec. 31")
Operating revenues $1,468 $1,670 $2,087 $1,857 $1,412 $1,614 $1,892 $1,520 Operating income $ 237 $ 347 $ 511 $ 145c $ 208 $ 135`d) $ 470 $ 107")
Net income $ 121 $ 204 $ 314 $ 65")* $ 2090 $ 77(d) $ 291 $ 120(0(W Earnings per share:"b' Basic $ 0.71 $ 1.20 $ 1.85 $ 0.39(0 $ 1.220 $ 0.45"') $ 1.70 $ 0.71")w Assuming dilution $ 0.71 $ 1.20 $ 1.84 $ 0.38>>c $ 1.22'0 $ 0.45d) $ 1.70 $ 0.71"v Dividends per share $ 0.54 $ 0.54 $ 0.54 $ 0.54 $ 0.52 $ 0.52 $ 0.52 $ 0.52 High-low common stock sales prices $ 48%-36'/8 $50%6-411% $676-47% $73-59A $61'X6-50% $60Y-52% $56>%6-49% $52Y2-41%
(a) In the opinion of FPL Group,all adjustments, which consist of normal recurringaccruals necessary to present a fairstatement of the amounts shown for such periods, have been made. Results of operationsfor an interim period may not give a true indication of resultsfor the year.
(b) The sum of the quarterly amounts may not equal the totalfor the yeardue to rounding.
(c) Includes merger-relatedexpenses.
(d) Includes impairment loss on Maine assets. 47 (e) Includes the settlement of litigation between FPL and FIMPA.
(9 Includes gain on the sale of an investment in Adelphia common stock.
(g) Includes gain on the redemption of a one-third oivnership interest in a cable limitedpartnership.
the natural choice FPL Group, Inc. Mary Lou Kromer Dennis P. Coyle Antonio Rodriguez James L. Broadhead Vice President General Counsel Senior Vice President Chairmanand Corporate Communications and Secretary Power GenerationDivision Cbief Executive Officer Robert L. McGrath Lawrence J. Kelleher FPL Energy, LLC Dennis P. Coyle Treasurer Senior Vice President James L. Broadhead General Counsel Human Resources Chairman and Secretary Florida Power and CorporateServices
& Light Company Lewis Hay, HI K. Michael Davis James L. Broadhead Armando J. Olivera President Controller Chairmanand Senior Vice President Chief Executive Officer PowerSystems Robert L. McGrath James P. Higgins Vice President, Finance Vice President PaulJ. Evanson Thomas F. Plunkett Tax President President Glenn E. Smith NuclearDivision Senior Vice President Lawrence J. Kelleher Development Vice President Human Resources h n q r d o f d i r P.c t o H. Jesse Arnelle James L. Broadhead Marshall M. Criser Paul J. Evanson Of Counsel, Womble, Chairman and Of Counsel, McGuire, President, Florida Power Carlyle, Sandridge & Rice Chief Executive Officer Woods, Battle & Boothe, & Light Company (law firm) Directorsince FPL Group, Inc. L.L.P. (law firm) Director Directorsince 1995.
1990. Member audit Directorsince 1989. since 1989. Chairman committee, compensation Chairman executive audit committee. Member Frederic V. Malek committee. committee. executive committee, Chairman, Thayer Capital finance committee. Partners (merchant bank)
Sherry S. Barrat J. Hyatt Brown Directorsince 1987.
Chairman and Chief Chairman, President and Willard D. Dover Chairman benefits Executive Officer of Chief Executive Officer Principal Niles, Dobbins, committee. Member Northern Trust Bank Brown & Brown, Inc. Meeks, Raleigh & Dover acquisitionscommittee, of California, N.A. (insurance broker) (law firm) Directorsince executive committee, (commercial bank) Directorsince 1989. 1989. Member audit finance committee.
Directorsince 1998. Chairman compensation committee, acquisitions Member audit committee, committee. Member benefits committee, benefits Paul R. Tregurtha finance committee. committee, executive committee. Chairman and Chief committee. Executive Officer, Mormac Robert M. Beall, II Alexander W. Dreyfoos, Jr. Marine Group, Inc.
Chairman and Chief Armando M. Codina Owner and Chief Executive (maritime shipping Executive Officer Beall's, Chairman and Chief Officer, The Dreyfoos company) Directorsince Inc. (department stores) Executive Officer Group/Photo Electronics 1989. Chairmanfinance Directorsince 1989. Codina Group, Inc. Corporation (electronic committee. Member Member acquisitions (real estate developer) equipment developer) compensation committee, committee, benefits Directorsince 1994. Directorsince 1997. executive committee.
committee, compensation Chairman acquisitions Member audit committee, committee. committee. Member finance committee.
benefits committee, compensation committee, executive committee.
I I11
FPL Group 2000 Annual Report rx] n +t ~ r I fI r, V rI m I1 n* +/-t i t** n I UI V U C) I UL I II S- L. I-I Shareholder Inquiries News and Financial Information Corporate Offices Communications concerning Investors can get the latest news FPL Group, Inc. and financial information about 700 Universe Blvd. transfer requirements, lost certificates, dividend checks, FPL Group through our Shareholder P.O. Box 14000 Direct toll-free line at (888) 375-1329.
Juno Beach, FL 33408-0420 address changes, stock accounts and the dividend reinvestment In addition to hearing recorded Exchange Listings plan should be directed to announcements, you can request Common Stock EquiServe: (888) 218-4392 or information via fax or e-mail.
New York Stock Exchange www.equiserve.com Analyst Inquiries Ticker Symbol: FPL
Contact:
Other shareholder communications to:
Options Shareholder Services Investor Relations Philadelphia Stock Exchange (800) 222-4511 (561) 694-4697 (561) 694-4694 (561) 694-4620 (Fax)
Newspaper Listing (561) 694-4620 (Fax)
Common Stock: FPL Gp News Media Inquiries Dividend Reinvestment Plan
Contact:
Registrar, Transfer, FPL Group offers a low-cost plan Corporate Communications and Paying Agents for holders of common stock and P.O. Box 029100 FPL Group Common Stock FPL preferred stock to reinvest their Miami, FL 33102-9100 and FPL PreferredStock dividends or make optional cash pay (305) 552-3888 FPL Group, Inc. ments for the purchase of additional (305) 552-2144 (Fax) c/o EquiServe common stock. Enrollment materials P.O. Box 43010 Certified Public Accountants may be obtained by calling EquiServe. Deloitte & Touche LLP Providence, RI 02940-3010 Online Investor Information 200 S. Biscayne Boulevard, Suite 400 FloridaPower& Light Co. Up-to-the-minute information on Miami, FL 33131-2310 FirstMortgage Bonds FPL Group and its subsidiaries is Form 10-K Bankers Trust Company just a mouse click away, 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> The Form 10-K annual report for Security Holder Relations a day, seven days a week. Visit our P.O. Box 305050 2000 as filed with the Securities and expanded investor information site at Nashville, TN 37230-5050 Exchange Commission is available www.investor.fplgroup.com to without charge by writing to (800) 735-7777 get stock quotes, earnings reports, FPL Group, Shareholder Services.
financial releases and other news.
Duplicate Mailings You can also request and receive Annual Meeting Financial reports must be mailed to information via e-mail. Shareholders May 14, 2001, 10 a.m.
each account unless you instruct us of record can receive secure online PGA National Resort otherwise. If you wish to discontinue account access through a link to multiple mailings to your address, 400 Avenue of the Champions our transfer agent, EquiServe. Palm Beach Gardens, FL please call EquiServe.
Electronic Proxy Material Direct Deposit of Dividends Registered shareholders may receive Cash dividends may be deposited proxy materials electronically by directly to personal accounts at financial contacting www.econsent.com/fpl.
institutions. Direct deposit expedites Beneficial shareholders should contact payments and eliminates lost checks. their brokerage firm to determine the Call EquiServe for authorization forms. availability of electronic proxy material distribution.
Proposed 2001 Common Stock Dividend Dates* Optional Cash Payment Dates Qtr.IYr. Acceptance begins Must be received by Declaration Ex-Dividend Record Payment 2nd/01 May 15 June 8 February 12 February 21 February 23 March 15 3rd/01 August 15 September 10 May 14 May 23 May 25 June 15 4th/01 November 15 December 10 August 13 August 29 August 31 September 17 1st/02 February 15 March 8 November 12 November 28 November 30 December 17 on the assumption that pastpatterns weillprevail.
"Declarationofdividends and datesshoun are subject to the discretion of the board of directors of FPL Group. Dates shown are based 49
g the natural choice: Bald eac/es - a threatened species - live in harmony with other wildlife at FPL Group facilities. As shown by the A photos within this report, FPL's efforts to protect and preserve the environment have enabled a large number of endangered, threatened and protected species to thrive in their natural habitat.
Operating in harmony with the environment is a natural choice for FPL Group. And with its track record of strong operatingperformance and attractive growth profile, FPL Group is the natural choice for shareholdersseeking exceptional value.
-PL.M FPL Group, Inc.
700 Universe Boulevard Juno Beach, Florida 33408 Printed on recycled paper o732 AR-01