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FPL Group Announces First Quarter Recurring Earnings Growth Of 4 Percent

PRNewswire-FirstCall
JUNO BEACH, Fla.
Apr 19, 2002

FPL Group, Inc. today reported 2002 first quarter recurring net income of $135 million compared to $130 million the prior year. Earnings per share rose to 80 cents from 77 cents a year ago, a 4 percent increase.

(Photo: http://www.newscom.com/cgi-bin/prnh/20010621/FPLLOGO )

These 2002 first-quarter results exclude two nonrecurring items -- a $30-million or 18 cents per share gain on the settlement of litigation with the Internal Revenue Service and an after-tax impairment loss on goodwill of $222 million or $1.31 per share. The goodwill impairment is the cumulative effect of adopting a new accounting standard (FAS 142). Both quarters exclude the after-tax effect of mark-to-market accounting of non-managed hedges which was a $1 million gain in the 2002 quarter and a $1 million loss in the 2001 quarter. The comparison to the 2001 quarter excludes merger-related expenses last year of 11 cents per share.

Including all items, net income for the 2002 first quarter was a negative $56 million or a loss of 33 cents per share compared to $110 million or 65 cents per share in the 2001 quarter.

"FPL Group's first-quarter operating results were solid, despite a general downturn in the economy, milder weather in Florida and extreme drought conditions affecting our hydroelectric operations in the Northeast," said Lew Hay, chairman and chief executive officer.

"With a solid first quarter under our belt and a new rate agreement in place at Florida Power & Light, we expect 2002 earnings to be $4.78 to $4.82," he said.

Mr. Hay said he expects flat earnings from the utility in 2002 and 15 to 20 percent earnings growth from its independent power production subsidiary, FPL Energy. The projected growth for FPL Energy in 2002 reflects the impact of the Northeast drought in the first quarter and assumes the addition of approximately 500 megawatts of wind generation, normal weather conditions the remainder of the year and no major declines in power markets.

"For 2003 through 2005, FPL Group expects to realize 6 to 8 percent average annual earnings growth," said Mr. Hay. "We expect FPL to achieve average annual earnings growth of 4 to 5 percent, driven by anticipated growth in customer accounts and usage per customer, cost management and lower depreciation. Excluding the recently announced acquisition of the Seabrook Nuclear Generating Station, FPL Energy expects average annual earnings growth of 20 to 30 percent, as several gas-fired power projects transition from construction to operation, and we add at least 500 to 1,000 megawatts of wind generation."

The Seabrook purchase, which is expected to close by the end of 2002, is expected to be modestly accretive in 2003 and add 10 cents to 12 cents per share on average each year over the following three years. Accretion is expected to accelerate thereafter.

Florida Power & Light

Florida Power & Light Company's net income for the quarter rose 4 percent to $118 million from $113 million the prior year quarter, excluding previously mentioned items. The utility's contribution to earnings per share was 69 cents compared to 67 cents in the 2001 quarter.

Base revenues were up 1.6 percent due to customer growth. FPL added approximately 76,000 new customer accounts, a 1.9-percent increase. However, usage per customer declined 2.2 percent due to milder weather and weaker economic conditions.

Higher revenues, coupled with lower interest expense, more than offset higher operations and maintenance expense, driving the 4 percent earnings increase.

During the quarter, FPL announced a 7 percent base-rate reduction of $250 million a year through 2005 that was part of an incentive-based agreement approved by the Florida Public Service Commission and endorsed by the Office of Public Counsel and other parties following nine months of review. The agreement became effective April 15 and is similar in structure to one negotiated in 1999.

FPL Energy

First quarter net income for FPL Energy was $23 million compared to $20 million the prior year quarter, excluding previously mentioned items. The independent power production subsidiary contributed earnings per share of 13 cents, compared to 12 cents per share last year.

Contributing to the increase was the addition of projects totaling more than 1,000 megawatts since last year's first quarter and a $9 million after- tax or 5 cents per share gain from mark-to-market managed hedging and trading activities. The new projects include 843 megawatts of wind assets in the central and western regions and the 171-megawatt expansion of the gas-fired Doswell plant in Virginia. Partially offsetting the gains from the new projects and trading activities was the severe drought in the Northeast that had a serious negative impact on the performance of the company's hydroelectric assets in Maine.

In March, Congress extended the production tax credit for wind generation projects. As a result, FPL Energy expects to build 1,000 to 2,000 additional megawatts of wind projects over the next two years, adding to its current 1,400-megawatt wind portfolio. As part of its growth plan, FPL Energy announced earlier this month an agreement with Vestas Wind Systems A/S of Denmark for delivery of approximately 175 660-kilowatt wind turbines and an option for an additional 650 turbines.

With the addition of Seabrook and the anticipated wind projects to FPL Energy's current list of projects in operation and under construction, the subsidiary expects to have an 11,500-megawatt portfolio by 2004.

Corporate and Other

Corporate and Other was essentially flat. Earnings from FPL FiberNet, an FPL Group subsidiary providing fiber-optic networks and related services in Florida, were lower than the prior year quarter; however the business remained profitable despite a turbulent telecommunications market.

Profile

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 more than 15 states, it is widely recognized as one of the country's premier power companies and has nearly 22,000 megawatts of electricity generating capacity. 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. FPL FiberNet, LLC is a leading provider of fiber-optic networks in Florida. Additional information is available on the Internet at http://www.fplgroup.com/, http://www.fpl.com/, http://www.fplenergy.com/ and http://www.fplfibernet.com/.

NOTE: A Webcast of FPL Group's first quarter earnings conference call, scheduled at 9 a.m. EDT on Friday, April 19, 2002, is available on FPL Group's Web site, http://www.fplgroup.com/, by following the link provided.

Safe Harbor Statement: Any statements made herein about future operating results or other future events are forward-looking statements under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ substantially from such forward-looking statements. A discussion of factors that could cause actual results or events to vary is contained in FPL Group's 2001 SEC Form 10-KA.

                             FPL Group, Inc.
                            Financial Summary
                 (in millions, except per share amounts)

                                                Three Months Ended March 31,
                                                      2002           2001
  Operating Revenues                                $1,843         $1,941

  Operating Expenses
   Fuel, purchased power and interchange               804            951
   Other operations and maintenance                    346            310
   Depreciation and amortization                       264            240
   Taxes other than income taxes                       173            169
    Total operating expenses                         1,587          1,670

  Other Income (Deductions)
   Interest charges and preferred stock dividends     (84)           (89)
   Other - net                                          11             17
    Total other deductions - net                      (73)           (72)

  Income Taxes                                          48             69

  Net Income excluding after-tax effect of
   nonrecurring items and net unrealized
   mark-to-market gains (losses)
   associated with non-managed hedges                 $135           $130

  Goodwill impairment                                (222)             --
   Gain on settlement of IRS litigation                 30             --
   Net unrealized mark-to-market gains (losses)
    associated with non-managed hedges                   1            (1)
   Merger-related expenses                              --           (19)

  Net Income (Loss)                                  $(56)           $110

  Earnings Per Share excluding nonrecurring items
   and net unrealized mark-to-market gains
   (losses) associated with non-managed hedges       $0.80          $0.77
  Earnings (loss) per share (assuming dilution)    $(0.33)          $0.65
  Weighted-average shares outstanding
   (assuming dilution)                                 169            169


                                               Twelve Months Ended March 31,
                                                      2002           2001
  Operating Revenues                                $8,377         $7,555

  Operating Expenses
   Fuel, purchased power and interchange             3,883          3,278
   Other operations and maintenance                  1,361          1,282
   Depreciation and amortization                     1,007          1,013
   Taxes other than income taxes                       714            641

     Total operating expenses                        6,965          6,214

  Other Income (Deductions)
   Interest charges and preferred stock dividends    (334)          (316)
   Other - net                                          86            103
    Total other deductions - net                     (248)          (213)

  Income Taxes                                         366            373

  Net Income excluding after-tax effect of
   nonrecurring items and net unrealized
   mark-to-market gains (losses)
   associated with non-managed hedges                 $798           $755

  Goodwill impairment                                (222)             --
  Gain on settlement of IRS litigation                  30             --
  Net unrealized mark-to-market gains (losses)
   associated with non-managed hedges                    9            (1)
  Merger-related expenses                               --           (60)

  Net Income                                          $615           $694

  Earnings Per Share excluding nonrecurring
   items and net unrealized mark-to-market
   gains (losses) associated with non-managed
   hedges                                            $4.72          $4.45
  Earnings per share (assuming dilution)             $3.64          $4.09
  Weighted-average shares outstanding
   (assuming dilution)                                 169            170


                               FPL Group, Inc.
                          Earnings Per Share Summary
                             (assuming dilution)


                                                Three Months Ended March 31,
                                                      2002           2001

  Florida Power & Light Company                      $0.69          $0.67
  FPL Energy, LLC                                     0.13           0.12
  Corporate and other                               (0.02)         (0.02)

  Earnings Per Share excluding
   nonrecurring items and
   net unrealized mark-to-market
   gains (losses) associated with
   non-managed hedges                                $0.80          $0.77

  Goodwill impairment                               (1.31)             --
  Gain on settlement of IRS litigation                0.18             --
  Net unrealized mark-to-market gains (losses)
  associated with non-managed hedges                    --         (0.01)
  Merger-related expenses                               --         (0.11)
                                                    (1.13)         (0.12)

  Earnings (Loss) Per Share                        $(0.33)          $0.65


                                               Twelve Months Ended March 31,
                                                      2002           2001

  Florida Power & Light Company                      $4.14          $3.84
  FPL Energy, LLC                                     0.64           0.52
  Corporate and other                               (0.06)           0.09

  Earnings Per Share excluding nonrecurring
   items and net unrealized mark-to-market
   gains (losses) associated with non-managed
   hedges                                            $4.72          $4.45

  Goodwill impairment                               (1.31)             --
  Gain on settlement of IRS litigation                0.18             --
  Net unrealized mark-to-market gains (losses)
  associated with non-managed hedges                  0.05         (0.01)
  Merger-related expenses                               --         (0.35)
                                                    (1.08)         (0.36)

  Earnings Per Share                                 $3.64          $4.09

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SOURCE: Florida Power & Light Company

Contact: Corporate Communications Dept., FPL Group, Inc.,
+1-305-552-3888



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