What was the primary driver for the significant increase in year-to-date net income in 2003 compared to 2002?

The substantial increase in year-to-date net income for the first six months of 2003, from $194 million to $414 million, was primarily driven by the absence of a $222 million after-tax charge related to the cumulative effect of adopting FAS 142 in the first quarter of 2002. Excluding this prior-year charge, the underlying year-over-year improvement in net income would be less pronounced.

How did the adoption of FAS 143 affect the company's financial statements?

Effective January 1, 2003, FPL Group and FPL adopted FAS 143, which requires the recognition of liabilities for asset retirement obligations (AROs) at fair value. This resulted in the recognition of approximately $1.8 billion in AROs for nuclear decommissioning at FPL, with a corresponding capitalization of asset retirement costs. This adoption also led to the recognition of accretion expense. For FPL Energy, the impact was smaller, with an increase in AROs of approximately $6 million.

What are the key investment areas for FPL Group's capital expenditures over the next few years?

FPL Group has substantial capital expenditure plans through 2007. For FPL, the primary investments are in generation ($2.1 billion), transmission ($695 million), and distribution ($2.3 billion). FPL Energy's focus is on wind projects ($685 million) and gas-fired generation ($235 million), with additional investments in nuclear facilities. FPL FiberNet also has capital expenditures planned for its fiber optic network.

What is the outlook for FPL Energy's growth, and how is it being financed?

FPL Energy's net income growth is driven by new project additions. The company expects future growth from wind development (contingent on production tax credit extensions) and asset acquisitions. To support this growth, FPL Energy has secured significant debt financing, including a $400 million construction term facility and the sale of $380 million in senior secured bonds. The company targets having approximately 75% of its capacity under contract.

NEXTERA ENERGY INC 10-Q Quarterly Report Q2 FY2003

Summary

NEXTERA ENERGY INC (NEE) reported its second quarter and year-to-date results for 2003. For the second quarter, net income was $239 million ($1.35 per share), a slight decrease from $250 million ($1.46 per share) in the prior year. However, year-to-date net income significantly increased to $414 million ($2.34 per share) compared to $194 million ($1.14 per share) in the same period of 2002. This year-over-year improvement in the first six months is largely due to a $222 million after-tax charge recognized in the first quarter of 2002 related to the adoption of FAS 142. The company also adopted FAS 143, "Accounting for Asset Retirement Obligations," effective January 1, 2003, which impacted its balance sheet by recognizing new liabilities and assets. The company continues to invest heavily in capital expenditures, particularly in generation and transmission, with significant planned outlays through 2007. FPL Energy, the non-regulated generation subsidiary, showed strong year-over-year growth in net income for both the quarter and year-to-date periods, driven by new project additions. FPL, the regulated utility subsidiary, experienced a decline in net income for the second quarter, primarily due to higher operating and maintenance costs and depreciation, although year-to-date performance remained solid. The company highlighted ongoing regulatory matters and various legal proceedings, which management believes will not have a material adverse effect on financial statements.

Key Highlights

1Net income for the second quarter of 2003 was $239 million ($1.35 EPS), down slightly from $250 million ($1.46 EPS) in Q2 2002.
2Year-to-date net income was $414 million ($2.34 EPS), a significant increase from $194 million ($1.14 EPS) in the first six months of 2002, largely due to a prior-year accounting charge.
3The company adopted FAS 143 (Asset Retirement Obligations) in 2003, resulting in the recognition of significant asset retirement obligations and related capitalized costs.
4FPL Energy demonstrated strong growth, with net income increasing to $49 million in Q2 2003 and $93 million year-to-date, driven by new project additions.
5FPL's net income decreased in Q2 2003 due to higher operating and maintenance expenses and depreciation, despite increased retail base revenues.
6Significant capital expenditure plans are in place, with total estimated expenditures of $5.67 billion for FPL and $1.035 billion for FPL Energy through 2007.
7The company is preparing for the consolidation of Variable Interest Entities (VIEs) effective July 1, 2003, under FIN 46, which is expected to increase assets and liabilities.

NEXTERA ENERGY INC Quarterly Report for Q2 Ended Jun 30, 2003

Summary

Key Highlights

Frequently Asked Questions