FPL Group Reports 2007 Fourth Quarter and Full-Year Earnings

FPL Group, Inc. (NYSE:FPL): NOTE TO EDITORS: This news release reflects the earnings report of FPL Group, Inc. Reference to the corporation and its earnings or financial results should be to "FPL Group” and not abbreviated using the name "FPL” as the latter is the name/acronym of the corporation’s electric utility subsidiary. FPL Group reports record net income for full year 2007; FPL Energy records best year ever; adds more than 1,000 megawatts to wind portfolio in 2007; Florida Power & Light benefits from new generation expansion and customer growth during first half of 2007; and, FPL Group reaffirms 2008 and 2009 adjusted earnings expectations and longer term outlook FPL Group, Inc. (NYSE:FPL) today reported 2007 fourth quarter net income on a GAAP basis of $224 million, or $0.56 per share, compared with $268 million, or $0.67 per share, in the fourth quarter of 2006. FPL Group’s net income for the 2007 fourth quarter included a net unrealized after-tax loss of $58 million associated with the mark-to-market effect of non-qualifying hedges. The 2006 results included a net unrealized after-tax gain of $15 million associated with the mark-to-market effect of non-qualifying hedges and $1 million of after-tax merger related costs. Excluding the mark-to-market effect of non-qualifying hedges (and merger related costs in 2006), FPL Group’s adjusted earnings were $282 million, or $0.71 per share for the fourth quarter of 2007, compared with $254 million, or $0.63 per share, in the fourth quarter of 2006. For the full year 2007, FPL Group reported net income on a GAAP basis of $1.31 billion or $3.27 per share, compared with $1.28 billion or $3.23 per share, in 2006. FPL Group’s results for the full year 2007 included a net unrealized after-tax loss of $86 million associated with the mark-to-market effect of non-qualifying hedges. Results for the full year 2006 included a net unrealized after-tax gain of $92 million associated with the mark-to-market effect of non-qualifying hedges and $14 million of after-tax merger related costs. Excluding the mark-to-market effect of non-qualifying hedges (and merger related costs in 2006), FPL Group’s 2007 adjusted earnings were almost $1.40 billion, or $3.48 per share for the full year, compared with $1.20 billion, or $3.04 per share, for the full year 2006. Several items that were included in GAAP and adjusted earnings results for the fourth quarter of 2006 make comparisons to the 2007 fourth quarter and full-year challenging. These 2006 items included: An after-tax gain at FPL Energy of $58 million, or $0.15 per share in the quarter and $63 million, or $0.16 per share for the full year, related to a legal judgment associated with an Indonesian geothermal project. An after-tax impairment charge at FPL FiberNet of $60 million against its metro-market assets, or a loss of $0.15 per share. FPL Group’s management uses adjusted earnings internally for financial planning, for analysis of performance, for reporting of results to the Board of Directors and as an input in determining whether performance targets are met for performance-based compensation under the company’s employee incentive compensation plans. FPL Group also uses earnings expressed in this fashion when communicating its earnings outlook to analysts and investors. FPL Group management believes that adjusted earnings provide a more meaningful representation of FPL Group’s fundamental earnings power. "FPL Group performed exceptionally well in 2007, driven again by the outstanding performance at FPL Energy,” said Lew Hay, chairman and chief executive officer of FPL Group. "Despite some weakness in revenues at Florida Power & Light, particularly late in the year, full-year results for FPL Group exceeded the expectations we set out in the Fall of 2006. "FPL Energy’s strong results benefited from contributions from new investments as well as the roll-off of below-market hedges in the existing fleet. The merchant portfolio and our wholesale marketing operations also took advantage of market opportunities and delivered results at the high end of our expectations. "Florida Power & Light delivered good results overall, although the latter part of the year was disappointing in terms of revenue growth. We expected 2007 to be a challenging year for Florida Power & Light on the cost front, and we had indicated some uncertainty about revenue growth. During the year, we were able to find offsetting productivity improvements for some of the cost pressures, but the revenue performance fell well short of our expectations. "Throughout 2007, FPL Energy and Florida Power & Light continued laying the groundwork for future growth, and we are pleased with our progress. At FPL Energy, we expanded and accelerated our growth plans and outlined a program to add an additional 8,000-10,000 megawatts of wind to our portfolio by 2012. FPL Energy also invested significant effort in other growth areas, including adding new solar capacity and transmission facilities designed to leverage the overall growth of the renewable business. "Florida Power & Light also took steps to add incremental fossil, nuclear and renewable generation as it continues to meet the needs of the growing Florida market. At the same time, we continued to invest in strengthening our transmission and distribution infrastructure, and our advanced metering initiative yielded good early results. As a result of our success in 2007, FPL Group is well positioned for earnings growth in future years and we remain comfortable with our previously announced earning expectations for 2008 and 2009. For 2008 we expect full year adjusted earnings per share to be in the range of $3.83 to $3.93, and for 2009 we continue to see a reasonable adjusted earnings per share range of $4.15 to $4.35.” When discussing earnings expectations, FPL Group assumes normal weather and marks its open positions to the current forward curves. FPL Group also excludes the effect of adopting new accounting standards, if any, and the mark-to-market effect of non-qualifying hedges, neither of which can be determined at this time. Florida Power & Light Company Fourth quarter 2007 net income for Florida Power & Light Company, FPL Group's utility subsidiary, was $173 million, or $0.43 per share, compared to $170 million, or $0.43 per share, in the prior year quarter. For the full year, net income increased to $836 million, or $2.09 per share, compared to $802 million, or $2.02 per share in 2006. Results benefited from a base revenue adjustment associated with the addition of the 1,144-megawatt Turkey Point 5 generating facility, which went into service in May. The average number of customer accounts increased by 64,000, or 1.5 percent during the fourth quarter. For the full year, the average number of customer accounts increased by 87,000, an increase of 2 percent, which is consistent with Florida Power & Light’s historical averages. The first half of the year saw customer growth rates slightly ahead of management expectations; however, this tapered off rapidly in the latter half of the year. Overall, retail kilowatt-hour sales rose 3.1 percent, largely due to weather during the quarter. This was made up of 1.5 percent customer growth, 2.6 percent due to favorable weather comparison with last year’s fourth quarter, and negative 1.0 percent from underlying usage, mix and all other effects. For the full year, retail kilowatt-hour sales were up 1.6 percent. Customer growth was a positive 2.0 percent while usage per customer fell 0.4 percent. Florida Power & Light’s costs continued to increase. For the fourth quarter, Florida Power & Light’s 2007 O&M expense was $380 million, compared to $350 in last year’s fourth quarter, driven by higher distribution, power generation, and employee benefits costs. Comparative nuclear expenses were down slightly owing to timing issues associated with scheduled plant outages. For the full year, Florida Power & Light’s O&M expense was $1.45 billion, up from $1.37 billion in 2006. The major drivers of the overall increase were increases in nuclear, power generation and distribution costs, including Storm Secure®, the company’s long-term program to harden infrastructure and increase resilience to hurricane impacts. Employee benefit costs also rose. Looking forward, Florida Power & Light expects continued cost pressures from nuclear, an increase in the number of planned fossil unit outages and from increasing employee costs. Depreciation in the fourth quarter declined to $197 million from $199 million in the same period a year ago. For the full year, depreciation fell to $773 million from $787 million. The fourth quarter and full year reflect underlying growth in transmission and distribution and the introduction of the Turkey Point fossil unit, which was more than offset by reductions in certain amounts recovered through the capacity clause. Underlying base depreciation increased by approximately $8 and $29 million for the quarter and year, respectively. During the year, Florida Power & Light invested approximately $1.8 billion to expand and enhance its electric system and generating facilities to ensure continued reliable service to meet the power needs of present and future customers. In May, Florida Power & Light’s 1,144-megawatt Turkey Point 5 power plant began commercial operation, slightly ahead of schedule and under budget. The addition of this facility to the portfolio provides benefits to customers and shareholders, with a slight increase in base rates being more than offset by the fuel savings arising from the high efficiency of the new unit. Construction of the West County Energy Center continued to make good progress during the year, and the first of the two approximately 1,220 megawatt units currently under construction is expected to be placed into service in 2009. These units will be among the lowest emitting and most efficient fossil units anywhere in the world. Florida Power & Light took significant steps during the year to further diversify its fuel supply by making a major commitment to expand its nuclear generation capability. In December, Florida Power & Light received regulatory approval to implement uprates at all four of its existing Florida nuclear units. The uprates will provide approximately 400 megawatts of capacity with zero greenhouse gas emissions by the end of 2012. In addition, Florida Power & Light filed a petition for determination of need with the Florida Public Service Commission for the addition of two new nuclear power units at its existing Turkey Point site, subject to numerous required regulatory approvals and satisfactory resolution of outstanding technical and economic uncertainties. If approved and developed, this project will add between 2,200 and 3,040 megawatts of emission-free capacity to the company’s generating fleet in the 2018 to 2020 timeframe. In addition to expanding its nuclear generation capacity, Florida Power & Light also announced plans to build new solar thermal and wind generation in Florida. In July, Governor Crist hosted a Florida Global Climate Summit and laid out important new policy directions for the entire state on this issue. Of most direct significance to Florida Power & Light are three executive orders, setting targets for renewable energy supplies and for greenhouse gas reductions. Partly in response to the Governor’s challenge to the state, Florida Power & Light has accelerated plans for new initiatives in this area. Florida Power & Light’s solar plans call for building a 10-megawatt solar thermal demonstration facility in Florida. Subject to meeting agreed-upon cost and technical specifications, as well as gaining regulatory and related approvals, Florida Power & Light’s solar thermal capacity is then expected to be expanded to 300 megawatts. Also as part of its efforts to increase renewable energy capacity, Florida Power & Light will soon officially open the state’s largest photovoltaic solar power facility in Sarasota County and hopes to develop a wind generation project in St. Lucie County. During the year, Florida Power & Light also made good progress in its development of advanced metering technology. One of the benefits of this new technology is that it helps Florida Power & Light customers monitor and control their monthly use of electricity. To date, the utility has deployed about 50,000 automated meters, with another 50,000 expected to be deployed in 2008, ramping up further in 2009 and beyond if all continues to go well. FPL Energy FPL Energy, the competitive energy subsidiary of FPL Group, reported fourth quarter 2007 net income on a GAAP basis of $72 million, or $0.18 per share, compared to $148 million, or $0.37 per share, in the prior-year quarter. FPL Energy’s net income for the fourth quarter 2007 included a net unrealized after-tax loss of $58 million associated with the mark-to-market effect of non-qualifying hedges. The results of last year’s fourth quarter included a net unrealized after-tax gain of $15 million associated with the mark-to-market effect of non-qualifying hedges. Excluding the mark-to-market effect of non-qualifying hedges, earnings would have been $130 million or $0.33 per share for 2007, compared to $133 million, or $0.33 per share, in 2006. For the full year 2007, FPL Energy reported net income on a GAAP basis of $540 million, or $1.35 per share, compared to $610 million, or $1.54 per share in 2006. FPL Energy’s results for the full year 2007 included a net unrealized after-tax loss of $86 million associated with the mark-to-market effect of non-qualifying hedges. Results in the full year 2006 included a net after-tax gain of $92 million associated with the mark-to-market effect of non-qualifying hedges. Excluding the mark-to-market effect of non-qualifying hedges, FPL Energy’s earnings were $626 million, or $1.56 per share, for the full year 2007, compared with $518 million, or $1.31 per share, for the full year 2006. "FPL Energy had an excellent quarter and an outstanding year overall,” said Hay. "The adjusted financial comparisons are stronger than they appear due to a gain recorded in 2006 on a litigation settlement which is included in adjusted earnings benefiting last year’s fourth quarter and full year by $0.15 and $0.16 per share, respectively. "Annual growth was driven by margin expansion at the existing assets, most notably in NEPOOL, where we benefited from the anticipated roll-over of older hedges to higher prices, by new assets - primarily new wind projects, with a small contribution from the Point Beach Nuclear Plant located near Two Rivers, Wisconsin - and growth in our wholesale marketing and trading operations, including our full requirements business. Financial results for the year reflect incremental G&A expenditures owing primarily to the growth of the wind business.” Overall, FPL Energy remains well-hedged for 2008 and 2009. For 2008, more than 90 percent of expected equivalent gross margin from the existing asset portfolio is protected against commodity price volatility. For 2009, the comparable figure is 84 percent. Earlier this year, FPL Energy committed to a significant expansion of its wind business and plans to add 8,000 to 10,000 megawatts of new wind capacity to its portfolio in the 2007 to 2012 timeframe, representing a capital investment estimated at more than $15 billion. In 2007, FPL Energy again added more megawatts of wind capacity in the U.S. than any other company, and has about a 30 percent share of installed wind capacity in the U.S. market. FPL Energy’s 2007 wind program included new projects in Texas, Colorado, North Dakota and Iowa as well as the purchase of assets it operates in California. In all, FPL Energy added 1,064 megawatts to its wind portfolio and now owns 5,077 net megawatts of wind capacity. Also during the quarter, FPL Energy sold a differential partnership interest in wind facilities with approximately 600 megawatts of wind generation. In exchange for an upfront payment of cash, FPL Energy offered a differential interest in the economic attributes of the portfolio of projects, including the tax attributes, for a variable period, estimated at 10 years, while retaining the long-term upside potential in the value of the facilities. To date, FPL Energy has invested approximately $6 billion in its wind business. In 2008, FPL Energy expects to add at least 1,100 megawatts of new wind projects to its portfolio. Construction is already underway on a number of projects representing more than 700 megawatts that are expected to reach commercial operation by the end of 2008. In addition to the growth of the wind business, FPL Energy also expanded its portfolio and its strategic position through the completion of the acquisition of the two-unit, 1,023-megawatt Point Beach Nuclear Plant. All of the power from the Point Beach Nuclear Plant is sold to We Energies under a long-term contract at attractive prices through the current license period of both units. Corporate and Other Corporate and Other negatively impacted fourth quarter 2007 net income by $21 million, or a loss of $0.05 per share. For the full year, Corporate and Other negatively impacted net income by $64 million or a loss of $0.17 per share. As in most recent years, the primary driver is interest expense. Outlook "FPL Group is well positioned for the future with many visible drivers of earnings growth in place,” Hay said. "We continue to expect very strong growth from FPL Energy, driven both by contributions from new investment and the roll-over of existing hedges to new values more closely approximating current market conditions. While there is greater uncertainty at Florida Power & Light in the near term due to the slowdown in customer and revenue growth, we remain confident in the long-term prospects of this business. "The strategy we have put in place should allow us to continue to produce average adjusted earnings per share growth of at least 10 percent through 2012 off the 2006 base. For 2008, we expect adjusted earnings per share to be in the range of $3.83 to $3.93. For 2009, we expect adjusted earnings per share to be in the range of $4.15 to $4.35.” As always, FPL Group’s earnings expectations assume normal weather and operating conditions and exclude the effect of adopting new accounting standards, if any, and the mark-to-market effect of non-qualifying hedges, neither of which can be determined at this time. As previously announced, FPL Group’s fourth quarter earnings conference call is scheduled for 9 a.m. EST on Monday, Jan. 28, 2008. The webcast is available on FPL Group’s website by accessing the following link, http://www.FPLGroup.com/investor/contents/investor_index.shtml. The slides accompanying the presentation may be downloaded at www.FPLGroup.com beginning at 7:30 a.m. EST today. For persons unable to listen to the live webcast, a replay will be available for 90 days by accessing the same link as listed above. This press release should be read in conjunction with the attached unaudited financial information. Profile FPL Group, with annual revenues of over $15 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 27 states, it is widely recognized as one of the country's premier power companies. Its principal subsidiary, Florida Power & Light Company, serves 4.5 million customer accounts in Florida. FPL Energy, LLC, an FPL Group competitive energy 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 and www.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 providing cautionary statements identifying important factors that could cause FPL Group's or FPL's actual results to differ materially from those projected in forward-looking statements (as such term is defined in the Reform Act) made by or on behalf of FPL Group and FPL in this press release, on their respective websites, in response to questions or otherwise. Any statements that express, or involve discussions as to, 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 expected to, will continue, is anticipated, believe, could, estimated, may, plan, potential, projection, target, outlook) are not statements of historical facts and may be forward-looking. Forward-looking statements involve estimates, assumptions and uncertainties. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors (in addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements) that could cause FPL Group's or FPL's actual results to differ materially from those contained in forward-looking statements made by or on behalf of FPL Group and FPL. Any forward-looking statement speaks only as of the date on which such statement is made, and FPL Group and FPL undertake no obligation to update any forward-looking statement to reflect events or circumstances, including unanticipated events, after the date on which such statement is made. 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: FPL Group and FPL are subject to complex laws and regulations and to changes in laws and regulations as well as changing governmental policies and regulatory actions, including initiatives regarding deregulation and restructuring of the energy industry and environmental matters including, but not limited to, matters related to the effects of climate change. FPL holds franchise agreements with local municipalities and counties, and must renegotiate expiring agreements. These factors may have a negative impact on the business and results of operations of FPL Group and FPL. FPL Group and FPL are subject to complex laws and regulations, and to changes in laws or regulations, including the Public Utility Regulatory Policies Act of 1978, as amended, the Public Utility Holding Company Act of 2005, the Federal Power Act, the Atomic Energy Act of 1954, as amended, the Energy Policy Act of 2005 (2005 Energy Act) and certain sections of the Florida statutes relating to public utilities, changing governmental policies and regulatory actions, including those of the Federal Energy Regulatory Commission (FERC), the Florida Public Service Commission (FPSC) and the legislatures and utility commissions of other states in which FPL Group has operations, and the Nuclear Regulatory Commission (NRC), with respect to, among other things, allowed rates of return, industry and rate structure, operation of nuclear power facilities, operation and construction of plant facilities, operation and construction of transmission facilities, acquisition, disposal, depreciation and amortization of assets and facilities, recovery of fuel and purchased power costs, decommissioning costs, return on common equity and equity ratio limits, and present or prospective wholesale and retail competition (including but not limited to retail wheeling and transmission costs). The FPSC has the authority to disallow recovery by FPL of any and all costs that it considers excessive or imprudently incurred. The regulatory process generally restricts FPL's ability to grow earnings and does not provide any assurance as to achievement of earnings levels. FPL Group and FPL are subject to extensive federal, state and local environmental statutes as well as the effect of changes in or additions to applicable statutes, rules and regulations relating to air quality, water quality, climate change, waste management, wildlife mortality, natural resources and health and safety that could, among other things, restrict or limit the output of certain facilities or the use of certain fuels required for the production of electricity and/or require additional pollution control equipment and otherwise increase costs. There are significant capital, operating and other costs associated with compliance with these environmental statutes, rules and regulations, and those costs could be even more significant in the future. FPL Group and FPL operate in a changing market environment influenced by various legislative and regulatory initiatives regarding deregulation, regulation or restructuring of the energy industry, including deregulation or restructuring of the production and sale of electricity. FPL Group and its subsidiaries will need to adapt to these changes and may face increasing competitive pressure. FPL Group's and FPL's results of operations could be affected by FPL's ability to renegotiate franchise agreements with municipalities and counties in Florida. The operation and maintenance of power generation facilities, including nuclear facilities, involve significant risks that could adversely affect the results of operations and financial condition of FPL Group and FPL. The operation and maintenance of power generation facilities involve many risks, including, but not limited to, start up risks, breakdown or failure of equipment, transmission lines or pipelines, the inability to properly manage or mitigate known equipment defects throughout our generation fleets unless and until such defects are remediated, use of new technology, the dependence on a specific fuel source, including the supply and transportation of fuel, or the impact of unusual or adverse weather conditions (including natural disasters such as hurricanes), as well as the risk of performance below expected or contracted levels of output or efficiency. This could result in lost revenues and/or increased expenses, including, but not limited to, the requirement to purchase power in the market at potentially higher prices to meet contractual obligations. Insurance, warranties or performance guarantees may not cover any or all of the lost revenues or increased expenses, including the cost of replacement power. In addition to these risks, FPL Group's and FPL's nuclear units face certain risks that are unique to the nuclear industry including, but not limited to, the ability to store and/or dispose of spent nuclear fuel and the potential payment of significant retrospective insurance premiums, as well as additional regulatory actions up to and including shutdown of the units stemming from public safety concerns, whether at FPL Group's and FPL's plants, or at the plants of other nuclear operators. Breakdown or failure of an operating facility of FPL Energy may prevent the facility from performing under applicable power sales agreements which, in certain situations, could result in termination of the agreement or incurring a liability for liquidated damages. The construction of, and capital improvements to, power generation facilities involve substantial risks. Should construction or capital improvement efforts be unsuccessful, the results of operations and financial condition of FPL Group and FPL could be adversely affected. FPL Group's and FPL's ability to successfully and timely complete their power generation facilities currently under construction, those projects yet to begin construction or capital improvements to existing facilities within established budgets is contingent upon many variables and subject to substantial risks. Should any such efforts be unsuccessful, FPL Group and FPL could be subject to additional costs, termination payments under committed contracts, and/or the write-off of their investment in the project or improvement. The use of derivative contracts by FPL Group and FPL in the normal course of business could result in financial losses that negatively impact the results of operations of FPL Group and FPL. FPL Group and FPL use derivative instruments, such as swaps, options and forwards to manage their commodity and financial market risks. FPL Group provides full energy and capacity requirements services and engages in trading activities. FPL Group could recognize financial losses as a result of volatility in the market values of these contracts, or if a counterparty fails to perform. In the absence of actively quoted market prices and pricing information from external sources, the valuation of these derivative instruments involves management's judgment or use of estimates. As a result, changes in the underlying assumptions or use of alternative valuation methods could affect the reported fair value of these contracts. In addition, FPL's use of such instruments could be subject to prudency challenges and if found imprudent, cost recovery could be disallowed by the FPSC. FPL Group's competitive energy business is subject to risks, many of which are beyond the control of FPL Group, that may reduce the revenues and adversely impact the results of operations and financial condition of FPL Group. There are other risks associated with FPL Group's competitive energy business. In addition to risks discussed elsewhere, risk factors specifically affecting FPL Energy's success in competitive wholesale markets include the ability to efficiently develop and operate generating assets, the successful and timely completion of project restructuring activities, maintenance of the qualifying facility status of certain projects, the price and supply of fuel (including transportation), transmission constraints, competition from new sources of generation, excess generation capacity and demand for power. There can be significant volatility in market prices for fuel and electricity, and there are other financial, counterparty and market risks that are beyond the control of FPL Energy. FPL Energy's inability or failure to effectively hedge its assets or positions against changes in commodity prices, interest rates, counterparty credit risk or other risk measures could significantly impair FPL Group's future financial results. In keeping with industry trends, a portion of FPL Energy's power generation facilities operate wholly or partially without long-term power purchase agreements. As a result, power from these facilities is sold on the spot market or on a short-term contractual basis, which may affect the volatility of FPL Group's financial results. In addition, FPL Energy's business depends upon transmission facilities owned and operated by others; if transmission is disrupted or capacity is inadequate or unavailable, FPL Energy's ability to sell and deliver its wholesale power may be limited. FPL Group's ability to successfully identify, complete and integrate acquisitions is subject to significant risks, including the effect of increased competition for acquisitions resulting from the consolidation of the power industry. FPL Group is likely to encounter significant competition for acquisition opportunities that may become available as a result of the consolidation of the power industry, in general, as well as the passage of the 2005 Energy Act. In addition, FPL Group may be unable to identify attractive acquisition opportunities at favorable prices and to successfully and timely complete and integrate them. Because FPL Group and FPL rely on access to capital markets, the inability to maintain current credit ratings and access capital markets on favorable terms may limit the ability of FPL Group and FPL to grow their businesses and would likely increase interest costs. FPL Group and FPL rely on access to capital markets as a significant source of liquidity for capital requirements not satisfied by operating cash flows. The inability of FPL Group, FPL Group Capital Inc and FPL to maintain their current credit ratings could affect their ability to raise capital on favorable terms, particularly during times of uncertainty in the capital markets, which, in turn, could impact FPL Group's and FPL's ability to grow their businesses and would likely increase their interest costs. Customer growth in FPL's service area affects FPL Group's and FPL's results of operations. FPL Group's and FPL's results of operations are affected by the growth in customer accounts in FPL's service area. Customer growth can be affected by population growth as well as economic factors in Florida, including job and income growth, housing starts and new home prices. Customer growth directly influences the demand for electricity and the need for additional power generation and power delivery facilities at FPL. Weather affects FPL Group's and FPL's results of operations. FPL Group's and FPL's results of operations are affected by changes in the weather. Weather conditions directly influence the demand for electricity and natural gas and affect the price of energy commodities, and can affect the production of electricity at wind and hydro-powered facilities. FPL Group's and FPL's results of operations can be affected by the impact of severe weather which can be destructive, causing outages and/or property damage, may affect fuel supply, and could require additional costs to be incurred. At FPL, recovery of these costs is subject to FPSC approval. FPL Group and FPL are subject to costs and other effects of legal proceedings as well as changes in or additions to applicable tax laws, rates or policies, rates of inflation, accounting standards, securities laws and corporate governance requirements. FPL Group and FPL are subject to costs and other effects of legal and administrative proceedings, settlements, investigations and claims, as well as the effect of new, or changes in, tax laws, rates or policies, rates of inflation, accounting standards, securities laws and corporate governance requirements. Threats of terrorism and catastrophic events that could result from terrorism may impact the operations of FPL Group and FPL in unpredictable ways. FPL Group and FPL are subject to direct and indirect effects of terrorist threats and activities. Generation and transmission facilities, in general, have been identified as potential targets. The effects of terrorist threats and activities include, among other things, terrorist actions or responses to such actions or threats, the inability to generate, purchase or transmit power, the risk of a significant slowdown in growth or a decline in the U.S. economy, delay in economic recovery in the U.S., and the increased cost and adequacy of security and insurance. The ability of FPL Group and FPL to obtain insurance and the terms of any available insurance coverage could be affected by national, state or local events and company-specific events. FPL Group's and FPL's ability to obtain insurance, and the cost of and coverage provided by such insurance, could be affected by national, state or local events as well as company-specific events. FPL Group and FPL are subject to employee workforce factors that could affect the businesses and financial condition of FPL Group and FPL. FPL Group and FPL are subject to employee workforce factors, including loss or retirement of key executives, availability of qualified personnel, collective bargaining agreements with union employees and work stoppage that could affect the businesses and financial condition of FPL Group and FPL. The risks described herein are not the only risks facing FPL Group and FPL. Additional risks and uncertainties not currently known to FPL Group or FPL, or that are currently deemed to be immaterial, also may materially adversely affect FPL Group's or FPL's business, financial condition and/or future operating results. Note to Editors: High-resolution logos and executive head shots are available for download at http://www.fpl.com/news/logos.shtml. FPL Group, Inc. Condensed Consolidated Statements of Income (millions, except per share amounts) (unaudited)       Three Months EndedDecember 31, 2007   Florida Power& Light   FPL Energy   Corporate& Other   FPL Group,Inc.     Operating Revenues $ 2,824 $ 816 $ 43 $ 3,683   Operating Expenses Fuel, purchased power and interchange 1,645 306 20 1,971 Other operations and maintenance 380 255 20 655 Impairment charges - - 4 4 Disallowed storm costs - - - - Storm cost amortization 13 - - 13 Merger-related - - - - Depreciation and amortization 197 147 4 348 Taxes other than income taxes   247       24       -       271     Total operating expenses   2,482       732       48       3,262       Operating Income (Loss)   342       84       (5 )     421     Other Income (Deductions) Interest charges (80 ) (91 ) (39 ) (210 ) Equity in earnings of equity method investees - 1 - 1 Gains (losses) on disposal of assets - (1 ) - (1 ) Allowance for equity funds used during construction 5 - - 5 Interest Income 3 13 11 27 Other – net   (3 )     (7 )     (1 )     (11 )   Total other income (deductions) – net   (75 )     (85 )     (29 )     (189 )     Income (Loss) Before Income Taxes 267 (1 ) (34 ) 232   Income Tax Expense (Benefit)   94       (73 )     (13 )     8       Net Income (Loss) $ 173     $ 72     $ (21 )   $ 224         Reconciliation of Net Income (Loss) to Adjusted Earnings (Loss):   Net Income (Loss) $ 173 $ 72 $ (21 ) $ 224   Adjustments, net of income taxes: Merger - related costs - - - - Net unrealized mark-to-market (gains) losses associated with non-qualifying hedges   -       58       -       58       Adjusted Earnings (Loss) $ 173     $ 130     $ (21 )   $ 282       Earnings (Loss) Per Share (assuming dilution) $ 0.43 $ 0.18 $ (0.05 ) $ 0.56 Adjusted Earnings (Loss) Per Share $ 0.43 $ 0.33 $ (0.05 ) $ 0.71 Weighted-average shares outstanding (assuming dilution) 402   FPL Energy's interest charges are based on a deemed capital structure of 50% debt for operating projects and 100% debt for projects under construction. Residual non-utility interest charges are included in Corporate & Other. Corporate & Other represents other business activities, other segments that are not separately reportable, eliminating entries, and may include the net effect of rounding.     FPL Group, Inc. Condensed Consolidated Statements of Income (millions, except per share amounts) (unaudited)   Three Months EndedDecember 31, 2006   Florida Power& Light   FPL Energy   Corporate& Other   FPL Group,Inc.   Operating Revenues $ 2,892 $ 692 $ 39 $ 3,623   Operating Expenses Fuel, purchased power and interchange 1,746 296 18 2,060 Other operations and maintenance 350 166 12 528 Impairment charges - 8 97 105 Disallowed storm costs (2 ) - - (2 ) Storm cost amortization 37 - - 37 Merger-related - - 2 2 Depreciation and amortization 199 103 6 308 Taxes other than income taxes   249       19       -       268     Total operating expenses   2,579       592       135       3,306       Operating Income (Loss)   313       100       (96 )     317     Other Income (Deductions) Interest charges (67 ) (73 ) (40 ) (180 ) Equity in earnings of equity method investees - 98 - 98 Gains (losses) on disposal of assets 2 22 - 24 Allowance for equity funds used during construction 6 - - 6 Interest Income 10 7 3 20 Other – net   (3 )     1       (1 )     (3 )   Total other income (deductions) – net   (52 )     55       (38 )     (35 )     Income (Loss) Before Income Taxes 261 155 (134 ) 282   Income Tax Expense (Benefit)   91       7       (84 )     14       Net Income (Loss) $ 170     $ 148     $ (50 )   $ 268         Reconciliation of Net Income (Loss) to Adjusted Earnings (Loss):   Net Income (Loss) $ 170 $ 148 $ (50 ) $ 268   Adjustments, net of income taxes: Merger - related costs - - 1 1 Net unrealized mark-to-market (gains) losses associated with non-qualifying hedges   -       (15 )     -       (15 )     Adjusted Earnings (Loss) $ 170     $ 133     $ (49 )   $ 254       Earnings (Loss) Per Share (assuming dilution) $ 0.43 $ 0.37 $ (0.13 ) $ 0.67 Adjusted Earnings (Loss) Per Share $ 0.43 $ 0.33 $ (0.13 ) $ 0.63 Weighted-average shares outstanding (assuming dilution) 399   FPL Energy's interest charges are based on a deemed capital structure of 50% debt for operating projects and 100% debt for projects under construction. Residual non-utility interest charges are included in Corporate & Other. Corporate & Other represents other business activities, other segments that are not separately reportable, eliminating entries, and may include the net effect of rounding. FPL Group, Inc. Condensed Consolidated Statements of Income (millions, except per share amounts) (unaudited)         Twelve Months EndedDecember 31, 2007   Florida Power& Light   FPL Energy   Corporate& Other   FPL Group,Inc.     Operating Revenues $ 11,622 $ 3,474 $ 167 $ 15,263   Operating Expenses Fuel, purchased power and interchange 6,726 1,390 76 8,192 Other operations and maintenance 1,454 792 68 2,314 Impairment charges - - 4 4 Disallowed storm costs - - - - Storm cost amortization 74 - - 74 Merger-related - - - - Depreciation and amortization 773 473 15 1,261 Taxes other than income taxes     1,032       98       5       1,135     Total operating expenses     10,059       2,753       168       12,980       Operating Income (Loss)   1,563       721       (1 )     2,283     Other Income (Deductions) Interest charges (304 ) (312 ) (146 ) (762 ) Equity in earnings of equity method investees - 68 - 68 Gains (losses) on disposal of assets - 3 (1 ) 2 Allowance for equity funds used during construction 23 - - 23 Interest Income 17 40 32 89 Other – net   (12 )     (15 )     4       (23 )   Total other income (deductions) – net   (276 )     (216 )     (111 )     (603 )     Income (Loss) Before Income Taxes 1,287 505 (112 ) 1,680   Income Tax Expense (Benefit)   451       (35 )     (48 )     368       Net Income (Loss) $ 836     $ 540     $ (64 )   $ 1,312         Reconciliation of Net Income (Loss) to Adjusted Earnings (Loss):   Net Income (Loss) $ 836 $ 540 $ (64 ) $ 1,312   Adjustments, net of income taxes: Merger - related costs - - - - Net unrealized mark-to-market (gains) losses associated with non-qualifying hedges   -       86       -       86       Adjusted Earnings (Loss) $ 836     $ 626     $ (64 )   $ 1,398       Earnings (Loss) Per Share (assuming dilution) $ 2.09 $ 1.35 $ (0.17 ) $ 3.27 Adjusted Earnings (Loss) Per Share $ 2.09 $ 1.56 $ (0.17 ) $ 3.48 Weighted-average shares outstanding (assuming dilution) 401   FPL Energy's interest charges are based on a deemed capital structure of 50% debt for operating projects and 100% debt for projects under construction. Residual non-utility interest charges are included in Corporate & Other. Corporate & Other represents other business activities, other segments that are not separately reportable, eliminating entries, and may include the net effect of rounding.     FPL Group, Inc. Condensed Consolidated Statements of Income (millions, except per share amounts) (unaudited)   Twelve Months EndedDecember 31, 2006   Florida Power& Light   FPL Energy   Corporate& Other   FPL Group,Inc.   Operating Revenues $ 11,988 $ 3,558 $ 164 $ 15,710   Operating Expenses Fuel, purchased power and interchange 7,116 1,747 80 8,943 Other operations and maintenance 1,374 592 56 2,022 Impairment charges - 8 97 105 Disallowed storm costs 52 - - 52 Storm cost amortization 151 - - 151 Merger-related - - 23 23 Depreciation and amortization 787 375 23 1,185 Taxes other than income taxes   1,045       81       6       1,132     Total operating expenses   10,525       2,803       285       13,613       Operating Income (Loss)   1,463       755       (121 )     2,097     Other Income (Deductions) Interest charges (278 ) (269 ) (159 ) (706 ) Equity in earnings of equity method investees - 181 - 181 Gains (losses) on disposal of assets - 29 - 29 Allowance for equity funds used during construction 21 - - 21 Interest Income 30 25 7 62 Other – net   (10 )     (1 )     5       (6 )   Total other income (deductions) – net   (237 )     (35 )     (147 )     (419 )     Income (Loss) Before Income Taxes 1,226 720 (268 ) 1,678   Income Tax Expense (Benefit)   424       110       (137 )     397       Net Income (Loss) $ 802     $ 610     $ (131 )   $ 1,281         Reconciliation of Net Income (Loss) to Adjusted Earnings (Loss):   Net Income (Loss) $ 802 $ 610 $ (131 ) $ 1,281   Adjustments, net of income taxes: Merger - related costs - - 14 14 Net unrealized mark-to-market (gains) losses associated with non-qualifying hedges   -       (92 )     -       (92 )     Adjusted Earnings (Loss) $ 802     $ 518     $ (117 )   $ 1,203       Earnings (Loss) Per Share (assuming dilution) $ 2.02 $ 1.54 $ (0.33 ) $ 3.23 Adjusted Earnings (Loss) Per Share $ 2.02 $ 1.31 $ (0.29 ) $ 3.04 Weighted-average shares outstanding (assuming dilution) 397   FPL Energy's interest charges are based on a deemed capital structure of 50% debt for operating projects and 100% debt for projects under construction. Residual non-utility interest charges are included in Corporate & Other. Corporate & Other represents other business activities, other segments that are not separately reportable, eliminating entries, and may include the net effect of rounding. FPL Group, Inc. Condensed Consolidated Balance Sheets (millions) (unaudited)           December 31, 2007   Florida Power& Light   FPL Energy   Corporate& Other   FPL Group,Inc.   Property, Plant and Equipment   Electric utility plant in service and other property $ 25,585 $ 12,398 $ 248 $ 38,231 Nuclear fuel 565 531 - 1,096 Construction work in progress 1,101 605 7 1,713 Less accumulated depreciation and amortization   (10,081 )     (2,167 )     (140 )     (12,388 )   Total property, plant and equipment – net   17,170       11,367       115       28,652       Current Assets Cash and cash equivalents 63 157 70 290 Customer receivables, net of allowances 807 673 16 1,496 Other receivables, net of allowances 178 99 (52 ) 225 Materials, supplies and fossil fuel inventory – at avg. cost 583 268 6 857 Regulatory assets: Deferred clause and franchise expenses 103 - - 103 Securitized storm-recovery costs/storm reserve deficiency 59 - - 59 Derivatives 117 - - 117 Other - - 2 2 Derivatives 83 99 - 182 Other   260       150       38       448     Total current assets   2,253       1,446       80       3,779       Other Assets Special use funds 2,499 982 1 3,482 Pension plan assets - net 907 - 1,004 1,911 Other investments 7 227 157 391 Regulatory assets: Securitized storm-recovery costs/storm reserve deficiency 756 - - 756 Unamortized loss on reacquired debt 36 - - 36 Derivatives 5 - - 5 Deferred clause expenses 121 - - 121 Other 67 - 23 90 Other   223       483       194       900     Total other assets   4,621       1,692       1,379       7,692       Total Assets $ 24,044     $ 14,505     $ 1,574     $ 40,123       Capitalization Common stock $ 1,373 $ - $ (1,369 ) $ 4 Additional paid-in capital 4,318 5,139 (4,787 ) 4,670 Retained earnings 1,584 1,792 2,569 5,945 Accumulated other comprehensive income   -       (28 )     144       116     Total common shareholders' equity 7,275 6,903 (3,443 ) 10,735 Long-term debt   4,976       2,873       3,431       11,280     Total capitalization 12,251       9,776       (12 )     22,015       Current Liabilities Commercial paper 842 - 175 1,017 Current maturities of long-term debt 241 654 506 1,401 Accounts payable 706 493 5 1,204 Customer deposits 531 7 1 539 Accrued interest and taxes 225 128 (2 ) 351 Regulatory liabilities: Deferred clause and franchise revenues 18 - - 18 Pension - - 24 24 Derivatives 182 107 - 289 Other   531       380       4       915     Total current liabilities   3,276       1,769       713       5,758       Other Liabilities and Deferred Credits Asset retirement obligations 1,653 504 - 2,157 Accumulated deferred income taxes 2,716 935 170 3,821 Regulatory liabilities: Accrued asset removal costs 2,098 - - 2,098 Asset retirement obligation regulatory expense difference 921 - - 921 Pension - - 696 696 Other 235 - 1 236 Derivatives 5 346 - 351 Other   889       1,175       6       2,070     Total other liabilities and deferred credits   8,517       2,960       873       12,350       Commitments and Contingencies   Total Capitalization and Liabilities $ 24,044     $ 14,505     $ 1,574     $ 40,123     Corporate & Other represents other business activities, other segments that are not separately reportable, eliminating entries, and may include the net effect of rounding. FPL Group, Inc. Condensed Consolidated Balance Sheets (millions) (unaudited)           December 31, 2006   Florida Power& Light   FPL Energy   Corporate& Other   FPL Group,Inc.   Property, Plant and Equipment Electric utility plant in service and other property $ 24,150 $ 9,689 $ 232 $ 34,071 Nuclear fuel 423 265 - 688 Construction work in progress 1,113 270 10 1,393 Less accumulated depreciation and amortization   (9,848 )     (1,679 )     (126 )     (11,653 )   Total property, plant and equipment – net   15,838       8,545       116       24,499       Current Assets Cash and cash equivalents 64 92 464 620 Customer receivables, net of allowances 872 389 18 1,279 Other receivables, net of allowances 221 232 (76 ) 377 Materials, supplies and fossil fuel inventory – at avg. cost 558 219 8 785 Regulatory assets: Deferred clause and franchise expenses 167 - - 167 Securitized storm recovery-costs/storm reserve deficiency 106 - - 106 Derivatives 921 - - 921 Other - - 3 3 Derivatives 4 354 - 358 Other   99       110       5       214     Total current assets   3,012       1,396       422       4,830       Other Assets Special use funds 2,264 561 (1 ) 2,824 Pension plan assets - net 857 - 751 1,608 Other investments 8 389 136 533 Regulatory assets: Securitized storm-recovery costs/storm reserve deficiency 762 - - 762 Unamortized loss on reacquired debt 39 - - 39 Derivatives 1 - - 1 Deferred clause expenses - - - - Other 36 - 43 79 Other   153       414       80       647     Total other assets   4,120       1,364       1,009       6,493       Total Assets $ 22,970     $ 11,305     $ 1,547     $ 35,822       Capitalization Common stock $ 1,373 $ - $ (1,369 ) $ 4 Additional paid-in capital 4,318 4,695 (4,458 ) 4,555 Retained earnings 1,848 1,252 2,156 5,256 Accumulated other comprehensive income   -       17       98       115     Total common shareholders' equity 7,539 5,964 (3,573 ) 9,930 Long-term debt   4,214       2,490       2,887       9,591     Total capitalization   11,753       8,454       (686 )     19,521       Current Liabilities Commercial paper 630 - 467 1,097 Current maturities of long-term debt - 572 1,073 1,645 Accounts payable 735 322 3 1,060 Customer deposits 500 10 - 510 Accrued interest and taxes 281 54 (33 ) 302 Regulatory liabilities: Deferred clause and franchise revenues 37 - - 37 Pension - - 17 17 Derivatives 677 315 3 995 Other   423       219       21       663     Total current liabilities   3,283       1,492       1,551       6,326       Other Liabilities and Deferred Credits Asset retirement obligations 1,572 248 - 1,820 Accumulated deferred income taxes 2,561 907 (36 ) 3,432 Regulatory liabilities: Accrued asset removal costs 2,044 - - 2,044 Asset retirement obligation regulatory expense difference 868 - - 868 Pension - - 531 531 Other 209 - - 209 Derivatives 1 104 - 105 Other   679       100       187       966     Total other liabilities and deferred credits   7,934       1,359       682       9,975       Commitments and Contingencies   Total Capitalization and Liabilities $ 22,970     $ 11,305     $ 1,547     $ 35,822     Corporate & Other represents other business activities, other segments that are not separately reportable, eliminating entries, and may include the net effect of rounding. FPL Group, Inc. Condensed Consolidated Statements of Cash Flows (millions) (unaudited)           Twelve Months EndedDecember 31, 2007   Florida Power& Light   FPL Energy   Corporate& Other   FPL Group,Inc.   Cash Flows From Operating Activities Net income (loss) $ 836 $ 540 $ (64 ) $ 1,312 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:   Depreciation and amortization 773 473 15 1,261 Nuclear fuel amortization 83 61 - 144 Impairment and restructuring charges - - 4 4 Recoverable storm-related costs of FPL (3 ) - - (3 ) Storm cost amortization 74 - - 74 Unrealized (gains) losses on marked to market energy contracts - 134 - 134 Deferred income taxes 346 23 33 402 Cost recovery clauses and franchise fees (75 ) - - (75 ) Change in prepaid option premiums 142 17 - 159 Equity in earnings of equity method investees - (68 ) - (68 ) Distributions of earnings from equity method investees - 175 - 175 Changes in operating assets and liabilities: Customer receivables 65 (284 ) 3 (216 ) Other receivables (32 ) (10 ) 28 (14 ) Materials, supplies and fossil fuel inventory (25 ) 10 1 (14 ) Other current assets (12 ) (3 ) 1 (14 ) Other assets (50 ) 3 (53 ) (100 ) Accounts payable (80 ) 141 2 63 Customer deposits 31 (2 ) - 29 Margin cash deposits 75 24 1 100 Income taxes (138 ) 208 (148 ) (78 ) Interest and other taxes 26 24 (1 ) 49 Other current liabilities 42 64 (3 ) 103 Other liabilities 3 (86 ) 34 (49 ) Other – net   84       72       60       216     Net cash provided by (used in) operating activities   2,165       1,516       (87 )     3,594       Cash Flows From Investing Activities Capital expenditures of FPL (1,826 ) - - (1,826 ) Independent power investments - (2,852 ) - (2,852 ) Nuclear fuel purchases (181 ) (129 ) - (310 ) Other capital expenditures - - (31 ) (31 ) Sale of independent power investments - 700 - 700 Proceeds from sale of securities in special use funds 1,978 233 - 2,211 Purchases of securities in special use funds (2,188 ) (254 ) 1 (2,441 ) Proceeds from sale of other securities - - 138 138 Purchases of other securities - - (156 ) (156 ) Other – net   1       (28 )     15       (12 )   Net cash provided by (used in) investing activities   (2,216 )     (2,330 )     (33 )     (4,579 )     Cash Flows From Financing Activities Issuances of long-term debt 1,230 938 1,031 3,199 Retirements of long-term debt (250 ) (541 ) (1,075 ) (1,866 ) Proceeds from purchased Corporate Units - - - - Payments to terminate Corporate Units - - - - Net change in short-term debt 212 - (292 ) (80 ) Issuances of common stock - - 46 46 Dividends on common stock - - (654 ) (654 ) Dividends & capital distributions from (to) FPL Group – net (1,100 ) 443 657 - Funds held for storm-recovery bond payments (42 ) - - (42 ) Other – net   -       39       13       52     Net cash provided by (used in) financing activities   50       879       (274 )     655       Net increase (decrease) in cash and cash equivalents (1 ) 65 (394 ) (330 ) Cash and cash equivalents at beginning of period   64       92       464       620       Cash and cash equivalents at end of period $ 63     $ 157     $ 70     $ 290     Corporate & Other represents other business activities, other segments that are not separately reportable, eliminating entries, and may include the net effect of rounding.     FPL Group, Inc. Condensed Consolidated Statements of Cash Flows (millions) (unaudited)   Twelve Months EndedDecember 31, 2006   Florida Power& Light   FPL Energy   Corporate& Other   FPL Group,Inc.   Cash Flows From Operating Activities Net income (loss) $ 802 $ 610 $ (131 ) $ 1,281 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:   Depreciation and amortization 745 375 23 1,143 Nuclear fuel amortization 89 37 1 127 Impairment and restructuring charges - 8 97 105 Recoverable storm-related costs of FPL (364 ) - - (364 ) Storm cost amortization 151 - - 151 Unrealized (gains) losses on marked to market energy contracts - (173 ) - (173 ) Deferred income taxes 27 321 45 393 Cost recovery clauses and franchise fees 940 - - 940 Change in prepaid option premiums (73 ) 7 - (66 ) Equity in earnings of equity method investees - (181 ) - (181 ) Distribution of earnings from equity method investees - 104 - 104 Changes in operating assets and liabilities: Customer receivables (219 ) - 4 (215 ) Other receivables 40 29 (7 ) 62 Materials, supplies and fossil fuel inventory (110 ) (97 ) 4 (203 ) Other current assets 9 (2 ) 1 8 Other assets (83 ) (84 ) 25 (142 ) Accounts payable (124 ) (60 ) (18 ) (202 ) Customer deposits 77 - (1 ) 76 Margin cash deposits (485 ) (62 ) 1 (546 ) Income taxes 157 (111 ) (92 ) (46 ) Interest and other taxes 24 13 12 49 Other current liabilities 16 39 (5 ) 50 Other liabilities 10 38 (16 ) 32 Other – net   39       (25 )     101       115       Net cash provided by (used in) operating activities   1,668       786       44       2,498       Cash Flows From Investing Activities Capital expenditures of FPL (1,763 ) - - (1,763 ) Independent power investments - (1,701 ) - (1,701 ) Nuclear fuel purchases (105 ) (108 ) 1 (212 ) Other capital expenditures - - (63 ) (63 ) Sale of independent power investments - 20 - 20 Proceeds from sale of securities in nuclear decommissioning funds 2,673 462 - 3,135 Purchases of securities in nuclear decommissioning funds (2,738 ) (479 ) - (3,217 ) Proceeds from sale of other securities - - 96 96 Purchases of other securities - - (109 ) (109 ) Other – net   -       8       (1 )     7     Net cash provided by (used in) investing activities   (1,933 )     (1,798 )     (76 )     (3,807 )     Cash Flows From Financing Activities Issuances of long-term debt 937 790 1,681 3,408 Retirements of long-term debt (135 ) (180 ) (1,350 ) (1,665 ) Proceeds from purchased Corporate Units - - 210 210 Payments to terminate Corporate Units - - (258 ) (258 ) Net change in short-term debt (529 ) - 467 (62 ) Issuances of common stock - - 333 333 Dividends on common stock - - (593 ) (593 ) Dividends & capital distributions from (to) FPL Group – net - 388 (388 ) - Other – net   -       23       3       26     Net cash provided by (used in) financing activities   273       1,021       105       1,399       Net increase (decrease) in cash and cash equivalents 8 9 73 90 Cash and cash equivalents at beginning of period   56       83       391       530       Cash and cash equivalents at end of period $ 64     $ 92     $ 464     $ 620     Corporate & Other represents other business activities, other segments that are not separately reportable, eliminating entries, and may include the net effect of rounding. FPL Group, Inc. Earnings Per Share Summary (assuming dilution) (unaudited)     Three Months Ended December 31,   2007       2006   Florida Power & Light Company $ 0.43 $ 0.43 FPL Energy, LLC 0.18 0.37 Corporate and Other   (0.05 )     (0.13 )   Earnings Per Share $ 0.56     $ 0.67       Reconciliation of Earnings Per Share to Adjusted Earnings Per Share:   Earnings Per Share $ 0.56 $ 0.67     Merger - related costs - - Net unrealized mark-to-market (gains) losses associated with non-qualifying hedges, primarily FPL Energy   0.15       (0.04 )   Adjusted Earnings Per Share $ 0.71     $ 0.63         Twelve Months Ended December 31,   2007       2006   Florida Power & Light Company $ 2.09 $ 2.02 FPL Energy, LLC 1.35 1.54 Corporate and Other   (0.17 )     (0.33 )   Earnings Per Share $ 3.27     $ 3.23       Reconciliation of Earnings Per Share to Adjusted Earnings Per Share:   Earnings Per Share $ 3.27 $ 3.23     Merger - related costs - 0.04 Net unrealized mark-to-market (gains) losses associated with non-qualifying hedges, primarily FPL Energy   0.21       (0.23 )   Adjusted Earnings Per Share $ 3.48     $ 3.04   FPL Group, Inc. Earnings Per Share Contributions (assuming dilution) (unaudited)           First Quarter   Second Quarter   Third Quarter   Fourth Quarter   Year-To-Date FPL Group – 2006 Earnings Per Share $ 0.64 $ 0.60 $ 1.32 $ 0.67 $ 3.23   Florida Power & Light – 2006 Earnings Per Share 0.31 0.46 0.82 0.43 2.02 Customer growth 0.03 0.03 0.03 0.02 0.11 Usage due to weather 0.01 (0.11 ) 0.02 0.04 (0.05 ) Underlying usage growth and price mix (0.01 ) 0.05 0.01 (0.01 )   0.02 Base rate adjustment for Turkey Point Unit No. 5 - 0.04 0.06 0.04   0.13 O&M expense - (0.01 ) (0.05 ) (0.04 )   (0.09 ) Depreciation expense (0.01 ) (0.01 ) (0.01 ) (0.01 )   (0.04 ) Storm disallowance - 0.07 - -   0.07 AFUDC 0.01 - - -   0.01 Interest expense (gross) - 0.01 (0.01 ) (0.01 )   (0.01 ) Share dilution (0.01 ) - (0.01 ) -   (0.02 ) Other   (0.01 )     -       (0.05 )     (0.03 )     (0.06 ) Florida Power & Light – 2007 Earnings Per Share 0.32 0.53 0.81 0.43 2.09   FPL Energy – 2006 Earnings Per Share 0.39 0.23 0.55 0.37 1.54 New investments 0.06 0.04 0.02 0.06 0.19 Existing assets - 0.07 0.05 0.15 0.28 Asset optimization and trading 0.07 0.01 0.03 0.03 0.14 Restructurings activities - - - (0.03 ) (0.03 ) Indonesian project settlement - (0.01 ) - (0.15 ) (0.16 ) Non-qualifying hedges impact (0.38 ) 0.20 (0.09 ) (0.19 ) (0.44 ) Share dilution (0.01 ) - - - (0.02 ) Other, including interest expense   (0.02 )     (0.03 )     (0.01 )     (0.06 )     (0.15 ) FPL Energy – 2007 Earnings Per Share 0.11 0.51 0.55 0.18 1.35   Corporate and Other – 2006 Earnings Per Share (0.06 ) (0.09 ) (0.05 ) (0.13 ) (0.33 ) FPL FiberNet: Operations - - - 0.01 0.03 Impairments - - - 0.14 0.14 Merger - related costs 0.01 0.01 0.02 - 0.04 Share dilution 0.01 (0.01 ) - - 0.01 Other, including interest expense   (0.01 )     0.06       -       (0.07 )     (0.06 ) Corporate and Other – 2007 Earnings Per Share   (0.05 )     (0.03 )     (0.03 )     (0.05 )     (0.17 )     FPL Group – 2007 Earnings Per Share $ 0.38     $ 1.01     $ 1.33     $ 0.56     $ 3.27     2006 amounts have been adjusted to reflect the retrospective application of an accounting standard change related to planned major maintenance activities.     The sum of the quarterly amounts may not equal the total for the year due to rounding. FPL Group, Inc. Schedule of Total Debt and Equity (millions) (unaudited)       December 31, 2007   Per Books   Adjusted1 Long-term debt, including current maturities, and commercial paper   Junior Subordinated Debentures2 $ 2,009 $ 850 Project debt: Natural gas-fired assets 308 Wind assets 2,143 Hydro assets 700 Storm Securitization Debt 652 Debt with partial corporate support: Natural gas-fired assets 164 Other long-term debt, including current maturities, and commercial paper3   7,722       7,722   Total debt 13,698 8,572 Junior Subordinated Debentures2 1,159 Common shareholders' equity   10,735       10,735   Total capitalization, including debt due within one year $ 24,433     $ 20,466     Debt ratio 56 % 42 %     December 31, 2006   Per Books   Adjusted1   Long-term debt, including current maturities, and commercial paper   Junior Subordinated Debentures2 $ 1,009 $ 350 Project debt: Natural gas-fired assets 353 Wind assets 2,026 Debt with partial corporate support: Natural gas-fired assets 341 Other long-term debt, including current maturities, and commercial paper3   8,604       8,604   Total debt 12,333 8,954 Junior Subordinated Debentures2 659 Common shareholders' equity   9,930       9,930   Total capitalization, including debt due within one year $ 22,263     $ 19,543       Debt ratio 55 % 46 %   1 Ratios exclude impact of imputed debt for purchase power obligations 2 Adjusted to reflect preferred stock characteristics of these securities (preferred trust securities and junior subordinated debentures) 3 Includes premium and discount on all debt issuances FPL Group, Inc. Long-Term Debt and Commercial Paper Schedule as of December 31, 2007 ($ millions) (unaudited)           Type of Debt   Interest Rate (%)   Maturity Date   Total Debt   Current Portion   Long-TermPortion Long-Term:   Florida Power & Light   First Mortgage Bonds: First Mortgage Bonds 6.000 06/01/08 $ 200 $ 200 $ - First Mortgage Bonds 5.875 04/01/09 225 - 225 First Mortgage Bonds 4.850 02/01/13 400 - 400 First Mortgage Bonds 5.850 02/01/33 200 - 200 First Mortgage Bonds 5.950 10/01/33 300 - 300 First Mortgage Bonds 5.625 04/01/34 500 - 500 First Mortgage Bonds 5.650 02/01/35 240 - 240 First Mortgage Bonds 4.950 06/01/35 300 - 300 First Mortgage Bonds 5.400 09/01/35 300 - 300 First Mortgage Bonds 6.200 06/01/36 300 - 300 First Mortgage Bonds 5.650 02/01/37 400 - 400 First Mortgage Bonds 5.850 05/01/37 300 - 300 First Mortgage Bonds 5.550 11/01/17   300       -     300   Total First Mortgage Bonds   3,965       200     3,765     Revenue Refunding Bonds: Miami-Dade Solid Waste Disposal VAR 02/01/23 15 - 15 St. Lucie Solid Waste Disposal VAR 05/01/24   79       -     79   Total Revenue Refunding Bonds 94 - 94   Pollution Control Bonds: Dade VAR 04/01/20 9 - 9 Martin VAR 07/15/22 96 - 96 Jacksonville VAR 09/01/24 46 - 46 Manatee VAR 09/01/24 16 - 16 Putnam VAR 09/01/24 4 - 4 Jacksonville VAR 05/01/27 28 - 28 St. Lucie VAR 09/01/28 242 - 242 Jacksonville VAR 05/01/29   52       -     52   Total Pollution Control Bonds 493 - 493   Industrial Bonds: Dade VAR 06/01/21 46 - 46 Total Industrial Bonds 46 - 46 Storm Securitization Bonds - Storm Securitization Bonds 5.053 02/01/11 124 41 83 Storm Securitization Bonds 5.044 08/01/13 140 - 140 Storm Securitization Bonds 5.127 08/01/15 100 - 100 Storm Securitization Bonds 5.256 08/01/19   288       -     288   Total Storm Securitization Bonds 652 41 611 Unamortized discount (34 ) - (34 )   TOTAL FLORIDA POWER & LIGHT 5,216 241 4,975   FPL Group Capital Debentures: Debentures (B Equity Units) 5.551 02/16/08 506 506 - Debentures 7.375 06/01/09 225 - 225 Debentures 7.375 06/01/09 400 - 400 Debentures 5.625 09/01/11 600 - 600 Debentures (Junior Subordinated) 5.875 03/15/44 309 - 309 Debentures (Junior Subordinated) 6.600 10/01/66 350 - 350 Debentures (Junior Subordinated) 6.350 10/01/66 350 - 350 Debentures (Junior Subordinated) 6.650 06/15/67 400 - 400 Debentures (Junior Subordinated) 7.300 09/01/67 250 - 250 Debentures (Junior Subordinated) 7.450 09/01/67   350       -     350   Total Debentures 3,740 506 3,234   Term Loans June 2008 200 - 200 Unamortized discount (1 ) - (1 ) FPL Energy Senior Secured Bonds: Senior Secured Bonds 6.876 06/27/17 89 12 77 Senior Secured Bonds 6.125 03/25/19 84 8 76 Senior Secured Bonds 6.639 06/20/23 287 29 258 Senior Secured Bonds 5.608 03/10/24 317 22 295 Senior Secured Bonds 7.260 07/20/15 125 - 125 Senior Secured Bonds 6.310 07/10/17 290 - 290 Senior Secured Bonds 6.610 07/10/27 35 - 35 Senior Secured Bonds 6.960 07/10/37   250       -     250   Total Senior Secured Bonds 1,477 71 1,406   Senior Secured Notes 7.520 06/30/19 211 14 197 Senior Secured Notes 7.110 06/28/20 97 6 91 Limited-recourse Senior Secured Notes 7.510 07/20/21 19 1 18 Senior Secured Notes 6.665 01/10/31 176 10 166 Construction Term Facility VAR 06/30/08 327 327 - Other Debt: Other Debt 8.450 11/30/12 48 9 39 Other Debt VAR 12/31/17 93 11 82 Other Debt 8.010 12/31/18 3 1 2 Other Debt Part fixed & VAR 11/30/19 246 57 189 Other Debt VAR 01/31/22 579 102 477 Other Debt VAR 12/31/12   250       45     205   Total Other Debt   1,219       225     994     TOTAL FPL ENERGY   3,526       654     2,872     Commercial Paper: FPL 842 842 - Capital 175 175 - TOTAL FPL GROUP CAPITAL   7,640       1,335     6,305     TOTAL FPL GROUP, INC. $ 13,698     $ 2,418   $ 11,280       May not agree to financial statements due to rounding. Florida Power & Light Company Statistics (unaudited)           Quarter Year to Date Periods Ended December 31 2007 2006 2007 2006 Energy sales (million kwh) Residential 13,387 13,076 55,138 54,570 Commercial 11,686 11,254 45,921 44,487 Industrial 917 1,004 3,774 4,036 Public authorities 142 151 581 565 Electric utilities 344 378 1,499 1,569 Increase (decrease) in unbilled sales (1,284 ) (1,326 ) (185 ) (15 ) Interchange power sales 373   476   1,908   2,301   Total 25,565   25,013   108,636   107,513         Average price (cents/kwh)1 Residential 11.39 11.91 11.40 11.90 Commercial 9.91 10.57 9.95 10.54 Industrial 8.42 8.77 8.50 8.87 Total 10.60 11.14 10.63 11.14   Average customer accounts (000's) Residential 3,991 3,935 3,981 3,906 Commercial 497 483 493 479 Industrial 16 21 19 21 Other 4   5   4   4   Total 4,508   4,444   4,497   4,410     1 Excludes interchange power sales, net change in unbilled revenues, deferrals under cost recovery clauses and any provision for refund.     2007 Normal 2006 Three Months Ended December 31 Cooling degree-days 357 275 289 Heating degree-days 58 75 60 Twelve Months Ended December 31 Cooling degree-days 1,868 1,789 1,757 Heating degree-days 200 261 251