Slide 1: Filed by FPL Group, Inc.
Filed by FPL Group, Inc. Pursuant to Rule 425 under the Securities Act of 1933, as amended and deemed as filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934, as amended Subject Company: FPL Group, Inc. Commission File Number: 1-8841
Slide 2: Creating the Premier Competitive Energy Company
Creating the Premier Competitive Energy Company Investor Presentation December 19, 2005
Slide 3: Safe Harbor Language
Safe Harbor Language This presentation includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, for example, statements regarding benefits of the proposed merger, the likelihood and timing of closing o
Slide 4: Use Of Non-GAAP Financial Measures
Use Of Non-GAAP Financial Measures It is important to recognize that in certain instances in this presentation we have adjusted actual financial results, prepared in accordance with generally accepted accounting principles (GAAP), for certain items, including special items (which are defined as item
Slide 5: Non-Solicitation
Non-Solicitation This communication is not a solicitation of a proxy from any security holder of FPL Group or Constellation Energy. Constellation Energy intends to file with the Securities and Exchange Commission a registration statement that will include a joint proxy statement/prospectus of Conste
Slide 6: Agenda
Agenda All Q&A Follin Smith Financials Lew Hay Conclusion Mayo Shattuck A Unique Growth Platform Lew Hay Introduction and Overview Presenter Topic
Slide 7: Introduction and Overview
Introduction and Overview
Slide 8: Today We Are Announcing Our Agreement To Merge Our Two Companies
40.6 $28.0 $1,576 $26.5 16,550 22,040 3,211 32,722 8,228 45,194 5.5 Today We Are Announcing Our Agreement To Merge Our Two Companies Note: Combined amounts exclude the effects of synergies, as well as purchase accounting, which are expected to be favorable (1) As of 9/30/05 (2) Generation capacity a
Slide 9: Key Transaction Terms
Key Transaction Terms Structure: Modified merger of equals 1 share of FPL Group converted to 1 share of Constellation Energy after the merger 1 share of Constellation Energy converted to 1.444 shares of Constellation Energy after the merger Consideration: 100% stock Premium: Approximately 15% to Con
Slide 10: Organizational Structure
Board of Directors Chief Executive Officer Florida Power & Light Baltimore Gas and Electric Organizational Structure Mayo Shattuck – Chairman Lew Hay – Director Non-executive (13) – Directors Lew Hay Competitive Energy (Market-Facing Retail & Wholesale) Mayo Shattuck Regulated Utilities & Generation
Slide 11: The New Entity: A Unique And Compelling Combination
Wholesale Retail Florida Power & Light Baltimore Gas & Electric The New Entity: A Unique And Compelling Combination The premier competitive energy provider offering attractive growth and a balanced, moderate risk posture… Generation + + Corporate Strengths & Skills + …a solid base of stable, growing
Slide 12: Building The Leading Platform In The Competitive Energy Sector
Diverse Customer Mix Fuel Mix Renewables Dispatch Point Purchased Power Customer Size Customer Geography Contract Length Diverse Supply Base Building The Leading Platform In The Competitive Energy Sector Pre-eminent hedging, portfolio optimization and risk management platform Owned Generation
Slide 13: Building A Bigger, Stronger, And More Diversified Regulated Utility Business
FPL’s Florida Service Territory BGE’s Maryland Service Territory Attractive utility growth profile Constructive regulatory environment Earnings and regulatory balance Building A Bigger, Stronger, And More Diversified Regulated Utility Business (1) As of 9/30/05 (2) Trailing 12-months ended 9/30/05 3
Slide 14: Benefits To Regulated Utility Customers
Florida - Benefits to Customers Maryland – Benefits to Customers Benefits To Regulated Utility Customers Balance sheet strength Modest direct cost savings through leveraging utility expertise across a larger platform Opportunities to improve reliability through best practices sharing Mutual support
Slide 15: Growth Will Be Further Enhanced By Meaningful Synergies
Utility Operations Capital Deployment Opportunities Corporate Generation Competitive Supply Operations Increased Revenue/Gross Margin Growth Will Be Further Enhanced By Meaningful Synergies Best practice sharing Purchasing leverage Larger balance sheet Continued growth in related commodities Consoli
Slide 16: We Will Have The Financial Strength And Flexibility To Support Our Business
Financial Strength We Will Have The Financial Strength And Flexibility To Support Our Business Balanced Business Mix Regulated / Deregulated Generation technologies and fuel Geography $57 billion of total assets (1) $4.5 billion to $5.0 billion of cash flow from operations (2) Combined estimated deb
Slide 17: Creating A New FORTUNE 100 Company And An Industry Leader
#2 Regulated Electric Customers (5.5 million) #1 Wholesale Competitive Supplier (22,040 MWs) #1 Retail Competitive Supplier (16,550 MWs) #1 U.S. Generation (45,194 MWs) #1 Wind Generation (3,211 MWs) #3 Nuclear Generation (8,228 MWs) (1) Creating A New FORTUNE 100 Company And An Industry Leader (1)
Slide 18: A Unique Growth Platform
A Unique Growth Platform
Slide 19: Diverse Channels Of Growth Create Value For All New Constellation Energy Shareholders
New Capital Deployment Florida Power & Light Baltimore Gas and Electric Retail Competitive Supply Wholesale Competitive Supply Generation Growth Existing Generation EBIT Expansion Diverse Channels Of Growth Create Value For All New Constellation Energy Shareholders The building blocks of growth Shar
Slide 20: Combination Of Top-Performing Utilities
$176 (Ranks #1 of 91) 102 Top quartile 3.0% Florida Power & Light 103 Top quartile $249 (Ranks #8 of 91) 1.0% - 1.5% Baltimore Gas and Electric Combination Of Top-Performing Utilities Focus on customer satisfaction (2005 J.D. Powers Residential Survey) Low-cost operations (Electric O&M $ per custome
Slide 21: Growth In Florida
Growth In Florida FPL Delivered Sales CAGR 3.4% Net Income CAGR 5.3% Earnings Sales Delivered Sales (Billions kwhs) Net Income ($ millions)
Slide 22: Generation Margin Expansion Before Synergies
Generation Margin Expansion Before Synergies Constellation Energy – Mid-Atlantic Fleet FPL Energy – Merchant Generation (1) A revenue sharing agreement with previous owners begins upon PPA expiration (2) Expected to close in the first quarter of 2006 (3) Excludes planned uprate of 17% in 2006 See ap
Slide 23: FPL Group Wind Growth
FPL Group Wind Growth Historical Projected 4,460 - 4,710 3,835 - 3,960 3,211 2,758 2,720 1,745 1,421 1,000 2,000 3,000 4,000 5,000 05E 06E 07E MW
Slide 24: Wholesale Competitive Supply Growth
Attractive growth track record with modest capital requirements Wholesale Competitive Supply Growth (Constellation Energy Only) See appendix 2002 2003 2004 2005 2006 Historical Projected Gross Margin ($ millions)
Slide 25: Retail Competitive Supply Growth
Relative market share > 2x Retail Competitive Supply Growth (Constellation Energy Only) Gross Margin (Historical) Gross Margin (Projected) Market Share (Historical) Market Share (Projected) See appendix 16% 21% 24% 2003 2004 2005 2006 Gross Margin ($ millions) 0% 5% 10% 15% 20% 25% 30% Market Share
Slide 26: Complementary Merchant Business Strengths
Highest load serving market share Generation assets in NEPOOL / ERCOT Strong wind position Leading risk management expertise Complementary Merchant Business Strengths Constellation Energy FPL Group Both Focus on cost and operational efficiency Strong nuclear capability
Slide 27: A Unique Blending Of Related And Complementary Assets And Skills
A Unique Blending Of Related And Complementary Assets And Skills (1) Negative outlook BBB / Baa1 / A- A (1 ) / A2 / A Credit Ratings – S&P / Moody’s / Fitch (as of 12/16/05) Regulated Utility Operations (customers) - Renewables - Nuclear - Total Generation Operations (MWs) Wholesale Competitive Supp
Slide 28: Complementary Generation and Customer Businesses
FPL Group Constellation Energy Combined Constellation Energy’s customer market shares combined with FPL Group’s deregulated assets create a balanced footprint Complementary Generation and Customer Businesses ERCOT NEPOOL PJM Peak Load Served (1) Generation (2) Generation (2) Generation (2) 1,500 3,6
Slide 29: Value Of Constellation Energy's Competitive Supply Portfolio Scale
Value Of Constellation Energy’s Competitive Supply Portfolio Scale - 2003A 2004A 2005E 2006E Portfolio Size – Backlog ($ millions) PM&T Gross Margin ($ gross margin in millions) Portfolio Scale PM&T Gross Margin
Slide 30: Other Complementary Competitive Skills
Other Complementary Competitive Skills Pairing FPL Group’s leading wind business with Constellation Energy’s retail business Ability to market “green” products Applying FPL Group’s Qualifying Facility restructuring expertise to Constellation Energy’s Qualifying Facilities Marrying Constellation Ener
Slide 31: GROUP
Le GROUP 30 C*) Energy
Slide 32: 2007 Baseline: 16% Annual Growth Over 2005
2007 Baseline: 16% Annual Growth Over 2005 Utility New Wind Fleet Repricing Wholesale Comp. Supply Retail Comp. Supply 2005 (1) 2007 (1) Note: Note: Combined amounts exclude the effects of synergies, as well as purchase accounting, which are expected to be favorable (1) Assumes midpoints of FPL Grou
Slide 33: Balanced Earnings Profile
Balanced Earnings Profile 2007 Combined Estimated EBIAT (1) Contribution 3% Retail competitive supply 54% Total deregulated operations Deregulated operations 1% Other 12% Wholesale competitive supply 21% Baseload plants 17% Plants with PPAs (including wind) Deregulated operations 54% FPL 38% BGE 8%
Slide 34: Synergies
Shareholder synergies expected to be at least $200 – $250 million pre-tax by third year of combination Competitive Supply Generation Operations Utility Operations Corporate Overhead Synergies Balanced footprint and portfolio scale drive revenue opportunities Systems and process alignment and purchas
Slide 35: Significant value through 53% dividend increase
Significant value to Constellation Energy shareholders through 53% dividend increase Growing Dividends 1.444 Exchange ratio $1.34 Current Constellation Energy 2005 dividend 53% Effective Constellation Energy dividend increase (post-closing) (1) $1.42 Current FPL Group 2005 dividend (1) Dividends are
Slide 36: Transaction creates significant value for both shareholder groups
Transaction creates significant value for both FPL Group and Constellation Energy shareholders FPL Group Shareholders Constellation Energy Shareholders Premium received $1.5 billion Value of synergies $1.0 - $1.4 billion Enhanced P/E Increased dividend Premium paid $1.5 billion Value of synergies $1
Slide 37: Commitment To Credit Quality
2007 Combined Estimated Key Ratios (1) Commitment To Credit Quality Debt / Total Capital Funds from Operations / Interest Coverage 40% - 42% 6.0x - 6.5x 31% - 33% Funds from Operations / Total Debt FPL Group and Constellation Energy believe they will retain solid investment-grade ratings on a combin
Slide 38: GROUP
Le GROUP 37 C*) Energy
Slide 39: Summary
Summary Compelling opportunity to create U.S. market leading competitive energy provider Well-matched, complementary contributions from two strong companies Multiple channels of growth, balanced by strong base of moderate risk cash flow and earnings Multiple sources of synergy Combined entity well-p
Slide 40: Transaction Timeline
Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Transaction Timeline Announce Transaction Make Regulatory Filings File Joint Proxy Statement Develop Transition Implementation Plans Receive Regulatory Approvals FPL Group & Constellation Energy Shareholder Meetings Close Transaction Major regulatory filings F
Slide 41: Two management teams with proven records of delivering shareholder value
Two management teams with proven records of delivering shareholder value Shareholder Value Focus (Stock Price Appreciation) CEG +112% FPL +52% S&P 500 +10% S&P Elec +36% (50%) (25%) 0% 25% 50% 75% 100% 125% 150% 2/ 28/ 4/ 30/ 6/ 30/ 8/ 30/ 10/ 30/ 12/ 30/ 3/ 1/ 5/ 1/ 7/ 1/ 8/ 31/ 10/ 31/ 12/ 31/ 3/
Slide 42: GROUP
Le GROUP Al C*) Energy
Slide 43: Constellation and FPL Generation and Retail Footprint
Illinois 965 MW Utah 26 MW Maryland 5,351 MW West Virginia 300 MW California 969 MW New York 2,045 MW Virginia 250 MW Texas 800 MW Pennsylvania 1,137 MW Constellation Retail Electricity or Natural Gas Constellation/FPL Retail Electricity or Natural Gas Source: Company Website and Presentations Const
Slide 44: Synergies
Synergies Retained revenue and cost synergies of at least $200 - $250 million by year three Excludes costs to achieve Approximately one-third in year one and second third achieved in year two Accretive to both former Constellation Energy and FPL Group shareholders in first full year of combined oper
Slide 45: More-Balanced Generation Mix
Balanced fuel, geography and dispatch with improved load serving capabilities Capacity 13% 73% 10% 32% 41% 7% 65% 18% More-Balanced Generation Mix FPL Group (1) Nuclear Other 1% Coal 3% Oil / Gas Wind 33,333 MWs Nuclear Other 4% Coal Constellation Energy (2) 11,861 MWs Nuclear Other 2% Coal Wind Oil
Slide 46: Non-GAAP Financial Measures
Non-GAAP Financial Measures
Slide 47: Summary of Non-GAAP Measures
Summary of Non-GAAP Measures Non-GAAP Measure Slide(s) Where Used in Presentation Most Comparable GAAP Measure Slide Containing Reconciliation Adjusted Net Income Reported GAAP Net Income FPL Group (12 months ended 9/30/05) Constellation Energy (12 months ended 9/30/05) Combined (12 months ended 9/3
Slide 48: Adjusted Net Income
Adjusted Net Income RECONCILIATION: ($s in Millions) Constellation Energy Notes FPL Group Notes Combined Reported GAAP net income $ $ 1,414 $ Adjustments Income from discontinued operations (16) a (16) Non-qualified hedges b d Workforce reduction costs c Total adjustments Adjusted Non-GAAP net incom
Slide 49: Adjusted & Projected Gross Margin
Adjusted & Projected Gross Margin (Constellation Energy Only) RECONCILIATION ($s in Millions) Revenue & Expense Categories GAAP Revenues GAAP Fuel & Purchased Energy Expenses Difference Adjustments in Arriving at Gross Margin Notes Gross Margin (Non-GAAP) Wholesale Competitive Supply 3,353 $ 3,113 a