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FPL Group hosts annual meeting; Chairman and CEO expects continued strong performance
JUNO BEACH, Fla. - The success of FPL Group, Inc. (NYSE: FPL) continues to be driven by three fundamental factors - financial strength, financial discipline and a commitment to operational excellence, Lew Hay, chairman and CEO, told shareholders at the company's annual meeting today.
"Although 2002 was another tumultuous year for the electric power industry, FPL Group weathered the storm by continuing to pursue a strategy focused on its core business. As a result, we delivered significant value to shareholders, providing an 11 percent total return and out-performing both our peer group and the S&P 500," Mr. Hay said. "We expect to deliver solid returns in 2003 as well," he added.
"Our financial position remains a key competitive advantage and helps differentiate us from our peers. We have a disciplined investment strategy, a strong credit rating and a prudent dividend policy. In addition, we have successfully managed the risk inherent in certain portions of the energy business," he said.
"Today, we have a balanced portfolio comprised of a regulated utility that provides approximately 85 percent of our earnings and a wholesale generating subsidiary with a majority of its capacity under contract," said the chairman of one of the nation's largest electricity providers.
Mr. Hay illustrated the strong performance of the company in 2002 by highlighting some key accomplishments including:
Mr. Hay said that FPL Group's excellent performance has been achieved through the efforts of more than 11,000 employees dedicated to reducing costs, improving service reliability and satisfying customers. He said the company has launched a renewed commitment to quality to maintain and enhance its performance record.
Paul Evanson, president of Florida Power & Light Company, remarked that FPL continues to be one of the premier utilities in the industry due to strong customer growth, the company's focus on operational excellence, proven cost management, and a constructive regulatory environment.
"Our fundamental strengths have helped us achieve average earnings growth of five percent over the last decade," said Mr. Evanson. He also provided several examples of operational excellence and noted that, despite slightly higher operating and maintenance expenses in 2002, "FPL continues to manage its costs better than practically anyone in the industry."
Mr. Evanson added, "Our ability to maintain attractive rates and high reliability is supported by one of the best regulatory climates in the nation." He pointed out that under last year's rate agreement, FPL customers will save approximately $1 billion through 2005.
Jim Robo, president of FPL Energy, reviewed the subsidiary's business strategy and growth opportunities. "We will maintain our focus on being a low cost provider and minimize risk by continuing to sell forward a majority of the output from our plants instead of relying on the volatile spot market," Mr. Robo said. "We will continue to expand our industry-leading wind portfolio and will look for acquisition opportunities that are accretive, strategically attractive, financeable and enhance shareholder value." Mr. Robo pointed to the company's successful acquisition of a controlling interest in the Seabrook Nuclear plant in New Hampshire as such a transaction.
FPL Energy has a diversified portfolio of more than 7,250 megawatts in operation in 23 states. More than 80 percent of FPL Energy's capacity comes from clean, renewable sources such as wind, solar, hydro and nuclear. The company expects to add more than 2,800 megawatts of natural gas-fired generation to its portfolio this summer and 700 to 1,000 megawatts of wind generation by the end of 2003.
Moray Dewhurst, FPL Group's chief financial officer, reconfirmed at the meeting that the company expects in 2003 to achieve earnings per share of $4.80 to $5.00. He said, "Our financial condition remains strong, underpinned by our operating cash flows, which amounted to $1.9 billion, net of dividends to shareholders.
"Our strong financial position has enabled us to continue to pursue attractive investment opportunities that can help us achieve future growth, even in an industry environment that has been very challenging overall," Mr. Dewhurst added.
During his address to shareholders, Mr. Hay discussed the importance of corporate responsibility and corporate governance. Mr. Hay said, "There is no issue of greater importance to our board of directors, our senior executive team or to me personally. Corporate governance is not just about compliance with federal law or New York Stock Exchange rules or having an independent Board. It's also about taking the right actions to sustain the company's success -- satisfying customers and building shareholder value. Acting with integrity is a critical element of FPL Group's philosophy and ultimate success."
Mr. Hay pointed out that 9 of 11 FPL Group directors are independent and that the compensation and audit committees have been comprised solely of independent directors for many years. Additionally, he said, the corporate governance committee has been comprised of independent directors since its inception in 2001.
During the meeting, shareholders elected the following slate of directors to a one-year term: H. Jesse Arnelle, Sherry S. Barrat, Robert M. Beall, II, J. Hyatt Brown, James L. Camaren, Alexander W. Dreyfoos, Jr., Paul J. Evanson, Lewis Hay III, Frederic V. Malek, Paul R. Tregurtha, and Frank G. Zarb.
Shareholders also ratified the appointment of Deloitte & Touche LLP as the independent public accountants to audit the accounts of FPL Group and its subsidiaries for the fiscal year ending December 31, 2003.
A third proposal that had been presented to shareholders was withdrawn prior to the meeting by the United Brotherhood of Carpenters and Joiners of America. The union's proposal requested that FPL Group establish a policy of expensing in the company's annual income statement the costs of all future stock options issued by the company. FPL Group adopted such a policy after the Financial Accounting Standards Board's April 22 announcement indicating it had decided to require all companies to expense options using the "fair value" method and discussions with union representatives.
Also today, the board of directors declared a regular quarterly common stock dividend of 60 cents a share, payable June 16 to stockholders of record June 6. The declaration marks the 230th consecutive quarterly dividend paid to common stockholders over the past 57 years.
FPL Group, with annual revenues of more than $8 billion, is nationally known as a high quality, efficient, and customer-driven organization focused on energy-related products and services. With a growing presence in 24 states, it is widely recognized as one of the country's premier power companies. Its principal subsidiary, Florida Power & Light Company, serves more than 4 million customer accounts in Florida. FPL Energy, LLC, an FPL Group energy-generating subsidiary, is a leader in producing electricity from clean and renewable fuels. Additional information is available on the Internet at www.FPLGroup.com, www.FPL.com andwww.FPLEnergy.com.
CAUTIONARY STATEMENTS AND RISK FACTORS THAT MAY AFFECT FUTURE RESULTS
In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (Reform Act), FPL Group, Inc. (FPL Group) and Florida Power & Light Company (FPL) are hereby filing cautionary statements identifying important factors that could cause FPL Group's or FPL's actual results to differ materially from those projected in forward-looking statements (as such term is defined in the Reform Act) made by or on behalf of FPL Group and FPL in this press release, in SEC filings, in presentations, in response to questions or otherwise. Any statements that express, or involve discussions as to expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as will likely result, are
Forward-looking statements involve estimates, assumptions and uncertainties. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors (in addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements) that could cause FPL Group's or FPL's actual results to differ materially from those contained in forward-looking statements made by or on behalf of FPL Group and FPL.
Any forward-looking statement speaks only as of the date on which such statement is made, and FPL Group and FPL undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.
The following are some important factors that could have a significant impact on FPL Group's and FPL's operations and financial results, and could cause FPL Group's and FPL's actual results or outcomes to differ materially from those discussed in the forward-looking statements:
The issues and associated risks and uncertainties described above are not the only ones FPL Group and FPL may face. Additional issues may arise or become material as the energy industry evolves. The risks and uncertainties associated with these additional issues could impair FPL Group's and FPL's businesses in the future.