FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File No.1-8349
FLORIDA PROGRESS CORPORATION
(Exact name of registrant as specified in its charter)
FLORIDA 59-2147112
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Progress Plaza
St. Petersburg, FL 33701
(Address of principal executive offices)
(Zip Code)
(813) 824-6400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ___X___ No ______
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of June 30, 1994, there were issued and outstanding 93,776,138
shares of the registrant's common stock without par value.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
FLORIDA PROGRESS CORPORATION
Consolidated Statements of Income
(In millions, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
------- ------- -------- --------
(Unaudited) (Unaudited)
REVENUES:
Electric utility $517.0 $461.9 $1,000.5 $868.9
Diversified 164.5 91.4 310.3 177.7
-------- -------- --------- ----------
681.5 553.3 1,310.8 1,046.6
EXPENSES: -------- -------- --------- ----------
Electric utility:
Fuel used in generation 127.9 114.6 218.6 221.0
Purchased power 80.4 51.1 136.7 81.0
Deferred fuel (34.6) (12.2) (19.4) (26.9)
Other operation 100.3 91.8 208.4 176.2
-------- -------- --------- ---------
Operation 274.0 245.3 544.3 451.3
Maintenance 33.2 33.3 63.4 66.4
Depreciation 64.9 59.2 129.4 116.8
Taxes other than income taxes 40.8 36.7 81.0 72.3
-------- -------- --------- ---------
412.9 374.5 818.1 706.8
-------- -------- --------- ---------
Diversified:
Cost of sales 135.5 69.0 257.3 135.6
Other 12.8 10.3 25.1 19.9
-------- -------- --------- ---------
148.3 79.3 282.4 155.5
-------- -------- --------- ---------
INCOME FROM OPERATIONS 120.3 99.5 210.3 184.3
-------- -------- --------- ---------
INTEREST EXPENSE AND OTHER:
Interest expense 36.4 35.9 72.4 70.9
Allowance for funds used during
construction (2.9) (3.9) (5.5) (8.6)
Preferred dividend requirements of
Florida Power 2.5 3.2 5.0 7.1
Other expense (income), net 1.1 (1.0) 1.6 (1.0)
-------- -------- --------- ---------
37.1 34.2 73.5 68.4
-------- -------- --------- ---------
INCOME BEFORE INCOME TAXES 83.2 65.3 136.8 115.9
Income Taxes 30.3 22.3 48.1 39.3
-------- -------- --------- ---------
INCOME BEFORE CHANGE IN ACCOUNTING 52.9 43.0 88.7 76.6
Cumulative effect of income tax
accounting change - - - 0.8
-------- -------- --------- ---------
NET INCOME $52.9 $43.0 $88.7 $77.4
======== ======== ======== =========
AVERAGE SHARES OF COMMON STOCK
OUTSTANDING 91.6 88.1 90.5 87.9
======== ======== ======== =========
EARNINGS PER AVERAGE COMMON SHARE:
Income before change in accounting $0.58 $0.49 $0.98 $0.87
Cumulative effect of income tax
accounting change - - - 0.01
-------- -------- --------- ---------
$0.58 $0.49 $0.98 $0.88
======== ======== ========= =========
DIVIDENDS PER COMMON SHARE $0.495 $0.485 $0.99 $0.97
======== ======== ========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
FLORIDA PROGRESS CORPORATION
Consolidated Balance Sheets
(In millions)
June 30, December 31,
1994 1993
----------- ------------
ASSETS (Unaudited)
PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant in service and held $5,422.3 $5,320.3
for future use
Less - Accumulated depreciation 1,916.2 1,846.2
Accumulated decommissioning for nuclear plant 124.7 118.3
Accumulated dismantlement for fossil plants 80.4 68.5
---------- ----------
3,301.0 3,287.3
Construction work in progress 264.8 285.7
Nuclear fuel, net of amortization of $ 309.5
in 1994 and $ 299.9 in 1993 66.1 68.4
---------- ----------
Net electric utility plant 3,631.9 3,641.4
Other property, net of depreciation of $ 151.0
in 1994 and $ 141.0 in 1993 396.2 391.6
---------- ----------
4,028.1 4,033.0
---------- ----------
CURRENT ASSETS:
Cash and equivalents 18.9 9.1
Accounts receivable, net 259.9 242.7
Current portion of leases and loans receivable 45.9 31.3
Inventories, primarily at average cost:
Fuel 88.3 79.5
Utility materials and supplies 112.7 112.2
Diversified materials and finished products 41.8 35.8
Underrecovery of fuel cost 31.9 7.1
Other 37.5 41.8
---------- ----------
636.9 559.5
---------- ----------
OTHER ASSETS:
Investments:
Leases and loans receivable, net 454.2 485.4
Marketable securities 148.0 129.3
Joint ventures and partnerships 86.5 88.4
Nuclear plant decommissioning fund 116.4 107.7
Deferred insurance policy acquisition costs 89.4 81.5
Other 170.6 154.0
---------- ----------
1,065.1 1,046.3
---------- ----------
$5,730.1 $5,638.8
========== ==========
The accompanying notes are an integral part of these financial statements.
FLORIDA PROGRESS CORPORATION
Consolidated Balance Sheets
(In millions)
June 30, December 31,
1994 1993
----------- -----------
CAPITAL AND LIABILITIES (Unaudited)
COMMON STOCK EQUITY:
Common stock $1,127.2 $1,008.3
Retained earnings 807.3 812.2
---------- ----------
1,934.5 1,820.5
CUMULATIVE PREFERRED STOCK OF FLORIDA POWER:
Without sinking funds 113.5 113.5
With sinking funds 35.0 35.0
LONG-TERM DEBT 1,857.9 1,866.6
---------- ----------
TOTAL CAPITAL 3,940.9 3,835.6
---------- ----------
CURRENT LIABILITIES:
Accounts payable 157.2 149.4
Customers' deposits 73.9 71.5
Income taxes currently payable 14.1 42.3
Accrued other taxes 43.9 11.0
Accrued interest 45.3 45.2
Other 63.2 66.4
---------- ----------
397.6 385.8
Notes payable 62.6 125.0
Current portion of long-term debt
and preferred stock 84.7 76.6
---------- ----------
544.9 587.4
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes 742.6 756.3
Unamortized investment tax credits 114.8 119.6
Insurance policy benefit reserves 206.9 186.5
Other 180.0 153.4
---------- ----------
1,244.3 1,215.8
---------- ----------
$5,730.1 $5,638.8
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
FLORIDA PROGRESS CORPORATION
Consolidated Statements of Cash Flows
(In millions)
Six Months Ended
June 30,
1994 1993
----------- -----------
(Unaudited)
OPERATING ACTIVITIES:
Income before change in accounting $88.7 $76.6
Adjustments for noncash items:
Depreciation and amortization 156.3 144.0
Deferred income taxes and
investment tax credits, net (10.4) (1.1)
Changes in working capital, net of effects
from acquisition or sale of businesses:
Accounts receivable (17.2) (9.0)
Inventories (12.2) 13.0
Underrecovery of fuel costs (24.8) (32.9)
Accounts payable 7.8 (1.5)
Income taxes currently payable (28.2) (21.8)
Accrued other taxes 33.0 29.6
Other (6.0) 11.5
Other operating activities 40.6 0.9
---------- ----------
227.6 209.3
---------- ----------
INVESTING ACTIVITIES:
Property additions (including allowance for
borrowed funds used during construction) (158.3) (188.5)
Proceeds from sale of properties and businesses 12.3 10.1
Purchase of leases, loans and securities (57.4) (77.5)
Proceeds from sale or collection of
leases, loans, and securities 48.9 52.0
Acquisition of businesses (16.8) (81.7)
(Investments in) or distributions from joint
ventures and partnerships, net (1.6) 1.4
Other investing activities (5.5) (8.0)
---------- ----------
(178.4) (292.2)
---------- ----------
FINANCING ACTIVITIES:
Issuance of long-term debt 100.4 178.6
Repayment of long-term debt (16.4) (276.6)
Increase (decrease) in commercial paper with
long term support (87.8) 188.7
Redemption of preferred stock - (45.2)
Sale of common stock 118.0 30.3
Dividends paid on common stock (90.5) (85.3)
Increase (decrease) in short-term debt (62.4) 89.0
Other financing activities (0.7) (0.9)
---------- ----------
(39.4) 78.6
---------- ----------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 9.8 (4.3)
Beginning cash and equivalents 9.1 8.1
---------- ----------
ENDING CASH AND EQUIVALENTS $18.9 $3.8
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $72.4 $71.4
Income taxes (net of refunds) $86.7 $62.2
The accompanying notes are an integral part of these financial statements.
<PAGE>
Florida Progress Corporation
Notes to Financial Statements
1) In September 1992, the Florida Public Service Commission ("FPSC") granted
Florida Power Corporation ("Florida Power"), the largest subsidiary of
Florida Progress Corporation (the "Company"), an annual revenue increase
of $85.8 million, to be phased in from November 1992 through November 1993
as follows: approximately $58 million in November 1992, $9.7 million in
April 1993 and $18.1 million in November 1993. As a result of this
action, for the three and six months ended June 30, 1994, revenues
increased by $4.8 million and $11.5 million, and earnings increased by
$3.0 million and $7.1 million, respectively, compared to the same periods
last year.
2) In June 1994, the FPSC approved an agreement between Florida Power and the
FPSC staff to temporarily limit Florida Power's regulatory return on
equity ("ROE") to a maximum of 12.5% for the 12 months ended December 31,
1994. During the six months ended May 31, 1994, Florida Power's
regulatory ROE has ranged from 12.02% to 12.30%. The ROE range of 11% to
13% established in the last retail rate case will resume after 1994.
Florida Power does not expect this temporary limit to have a material
impact on its earnings or financial position.
3) In April 1994, the Federal Energy Regulatory Commission ("FERC") approved
Florida Power's 1994 settlement agreement with its wholesale customers
which provided for an annual revenue increase of approximately $9.8
million effective in two stages, in March 1994 and May 1994. Neither
stage resulted in a material impact on revenues or net income for the
three or six months ended June 30, 1994.
4) In late 1993, the Company offered an early retirement option to eligible
employees, with an effective retirement date of February 1, 1994. For
the three and six months ended June 30, 1994, the Company recorded an
after-tax charge of $1.6 million and $9.5 million, or $.02 and $.11 per
share, respectively, related to the "special termination benefit"
portion of the costs associated with the option.
5) Effective January 1, 1994, Financial Accounting Standard Interpretation
No. 39, "Offsetting of Amounts Related to Certain Contracts," provides
guidance regarding offsetting possible unrecognized liabilities and assets
on the balance sheet. Currently, the Financial Accounting Standards Board
is exploring the applicability of this interpretation as it relates to the
future decommissioning of nuclear power plants. If this interpretation is
determined to be applicable, Florida Power will record decommissioning
costs associated with its nuclear power plant as described in Note 9 to
the Financial Statements in the Company's Form 10-K for the year ended
December 31, 1993 (the "1993 Form 10-K").
6) COMMITMENTS AND CONTINGENCIES
INSURANCE COVERAGE - The Price-Anderson Act currently limits the liability
of an owner of a nuclear power plant for a single nuclear incident to $9.0
billion. Florida Power has purchased the maximum available commercial
nuclear liability insurance of $200 million with the balance provided by
indemnity agreements prescribed by the Nuclear Regulatory Commission
("NRC"). In the event of a nuclear incident at any United States nuclear
power plant, Florida Power could be assessed up to $79.3 million per
incident, with a maximum assessment of $10 million per year. Florida
Power has never been assessed for a nuclear incident under these indemnity
agreements. In addition to this liability insurance, Florida Power
carries extra expense insurance with Nuclear Electric Insurance, Ltd.
("NEIL") to cover the cost of replacement power during any prolonged
outage of the nuclear unit. Under this policy, Florida Power is subject
to a retroactive premium assessment of up to $2.7 million in any year in
which policy losses exceed accumulated premiums and investment income. In
addition, Florida Power currently carries approximately $2.1 billion in
nuclear property insurance provided through several different policies.
One of these policies, which also is underwritten by NEIL, provides $1.4
billion of excess coverage. Under this policy, Florida Power is subject
to a retroactive premium assessment of up to $6.5 million for the first
loss in any policy year in which losses exceed funds available to NEIL.
In the event of multiple losses in any policy year, Florida Power's
aggregate retroactive premium could total up to $13.9 million.
Effective November 1993, the FPSC authorized Florida Power to
self-insure its transmission and distribution lines against loss due to
storm damage and other natural disasters. On June 21, 1994, the FPSC
authorized Florida Power to increase the annual accrual for the storm
damage reserve from $3 million to $6 million effective January 1, 1994,
and defer any losses in excess of the reserve.
CONTAMINATED SITE CLEANUP - Florida Power and other subsidiaries of the
Company have received notices from the United States Environmental
Protection Agency ("EPA") that they are or could be a "potentially
responsible party" under the Comprehensive Environmental Response
Compensation and Liability Act ("CERCLA") and the Superfund Amendment and
Reauthorization Act and may be liable, together with others, for the costs
of cleaning up several contaminated sites identified by the EPA. In
addition, Florida Power has been named as a defendant in one suit brought
against four prior owners of a coal gasification plant site, seeking
contributions pursuant to CERCLA and Florida law toward the cost of
cleaning up that site and nearby property that may have become
contaminated. The best estimates currently available to the Company
indicate that its proportionate share of liability for cleaning up the
sites ranges from $.7 million to $1.5 million, and it has a current
reserve of $1.4 million against these potential costs. Liability for such
cleanup costs is technically joint and several. However, the Company
presently has no reason to believe that it will ultimately have to pay a
significantly disproportionate share of the cleanup costs of any of the
sites. Although it does not currently contemplate a need to do so,
Florida Power believes that it would have a sound basis for seeking
recovery through the ratemaking process in the event it ultimately has to
pay a significantly disproportionate share of the costs of cleaning up any
contaminated site. It is recognized, however, that no such recovery would
be assured.
UNION CARBIDE LAWSUIT - Florida Power and Florida Power & Light Company
("FP&L") are co-defendants in an antitrust action brought by Union Carbide
Corporation, a customer of FP&L, seeking injunctive relief and damages.
The suit challenges a long-standing territorial agreement between the two
unaffiliated, neighboring utilities, notwithstanding the defendants'
contention that the agreement was clearly authorized by state law and
approved by the FPSC. Florida Power believes that the state action
exemption from the antitrust laws is applicable to the agreement and
Florida Power's consequent refusal to provide electricity to Union Carbide
Corporation. Management believes it has a strong defense and intends to
vigorously defend against this action.
7) In the opinion of management, the accompanying financial statements
include all adjustments deemed necessary to summarize fairly and reflect
the financial position and results of operations of the Company for the
interim periods presented. However, it is suggested that these
financial statements be read in conjunction with the financial
statements and notes thereto in the 1993 Form 10-K.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
OPERATING RESULTS
The Company's earnings per share for the three and six months ended June
30, 1994, were $.58 and $.98 per share, respectively, which represents
increases of $.09 and $.10 compared to the same periods last year. Due
primarily to favorable weather, Florida Power, the Company's largest
operating unit, increased both quarterly and year-to-date earnings per
share by $.08 over 1993 by earning $.52 and $.88, respectively, compared to the
same periods in 1994. Diversified earnings increased $.01 for the three months
and $.03 for the six months ended June 30, 1994 largely due to improved
results of Electric Fuels, the Company's coal mining and transportation unit.
Utility
Florida Power's operating revenues were $55.1 million and $131.6 million
higher for the three and six months ended June 30, 1994, respectively, compared
to the same periods in 1993. Increased residential usage, due primarily to
warmer than normal temperatures in the second quarter and colder than normal
temperatures in the beginning of the year, customer growth and the continued
impact of a phased-in rate increase, contributed to the increase in revenues.
(See Note 1 to the Financial Statements with respect to the retail rate
increase.)
In April 1994, the Company released certain projections concerning Florida
Power's growth potential. Florida Power's retail energy sales are projected
to grow an average of more than 4% annually during the next five years. This
anticipated increase is twice the projected national average for the electric
utility industry.
Fuel and purchased power costs were $42.6 million and $53.3 million higher
for the three and six months ended June 30, 1994, respectively, compared
to the same periods in 1993, due primarily to higher purchased power costs
resulting from increased capacity payments to non-utility generators as
additional capacity comes on line. Florida Power recovers substantially all
of its retail fuel and purchased power costs through a FPSC ordered fuel
adjustment clause, thereby eliminating any impact on net income.
Other operation and maintenance expenses were $8.4 million and $29.2
million greater for the three and six months ended June 30, 1994,
respectively, compared to the same periods last year. The increase was due
primarily to costs associated with an early retirement option. An increase
in the accrual for the storm damage reserve and increased recoverable
energy conservation program costs also contributed to the higher expenses.
Similar to the recovery of fuel costs mentioned above, Florida Power recovers
substantially all of its energy conservation program costs, thereby eliminating
any impact on net income. (See Note 4 to the Financial Statements with respect
to the early retirement option and Note 6 with respect to the storm damage
accrual.)
Eleven cogenerators who sell electricity to Florida Power have been notified by
Florida Power that their energy output may need to be curtailed during minimum
load hours of the day. On July 18, 1994, Florida Power sent letters to each of
these qualifying facility power suppliers ("QFs") alerting them that a
curtailment program is being developed, which could lower energy payments
during these periods. Some QFs have already agreed to reduce or curtail their
output during minimum load periods. Florida Power has asked the FPSC to review
the QF agreements to reaffirm that they comply with commission rules. Payment
provisions in these contracts were based on the avoided costs for a
hypothetical coal unit built in 1991, as if it were operating around-the-clock,
every day. Current analysis indicates that Florida Power would be cycling off
such a coal unit during certain minimum load conditions. Florida Power expects
that payments to QFs will be reduced by implementing a curtailment program.
Payments would be less during low load periods than during peak load hours.
The changes are expected to result in a dispute with at least one QF. No
estimates of payment reductions can be made at this time.
The Company previously reported that a NRC staff report identified Florida
Power's nuclear power plant, which has a Babcock & Wilcox manufactured reactor
vessel, as one of 15 nuclear plants not meeting the NRC's threshold measure for
the strength of a reactor pressure vessel. (See Item 1 under "Business-Utility
Operations-Florida Power-Regulation and Franchises" in the 1993 Form 10-K.) In
April 1994, the NRC approved an industry trade group's analysis showing that
all the Babcock & Wilcox manufactured reactor vessels meet NRC safety criteria.
This approval was subject to the NRC receiving certain site specific
documentation from the individual plants, which Florida Power provided for its
reactor vessel in June 1994. This matter is now considered terminated for
reporting purposes.
In June 1994, the FPSC approved an agreement between Florida Power and the FPSC
to temporarily limit Florida Power's ROE to no more than a maximum of 12.5% for
the 12 months ended December 31, 1994. (See Note 2 to the Financial
Statements.)
In July 1994, Florida Power completed a planned refueling outage at its nuclear
power plant in 61 days at a cost of approximately $21.3 million.
As discussed in Item 1 under the heading "Business-Utility Operations-Florida
Power-Competition" in the 1993 Form 10-K, the electric utility industry in
general is expected to become increasingly competitive. In this regard, the
Company recently has been taking actions in two areas. The first involves the
possible annexation by the City of Orlando of areas currently included in
Florida Power's service territory. Florida Power and the Orlando Utilities
Commission are negotiating the terms of a new territorial agreement, and
Florida Power expects to take measures to vigorously protect its service
territory. The second involves Florida Power's rates and costs. Although
Florida Power's retail rates increased during the second quarter 1994 relative
to other Florida utilities, Florida Power continues to believe that it is in a
good competitive position. Florida Power is continuing to streamline
operations and cut costs to improve its competitiveness. These actions are
expected to allow Florida Power to offset other rising costs such as income
taxes, environmental expenses and insurance costs. Florida Power expects to
earn its authorized return on equity, while achieving its competitive cost
structure, which currently compares favorably with other utilities in Florida.
Diversified Operations
Diversified revenues increased $73.1 million and $132.6 million for the
quarter and six months ended June 30, 1994 compared to 1993. The increases
were caused primarily by a June 1993 acquisition by Electric Fuels. Gross
margins increased $6.6 million and $10.9 million for the same periods. Improved
marine operations, as well as the impact of the acquisition noted above,
were the primary factors contributing to the positive results.
LIQUIDITY AND CAPITAL RESOURCES
Florida Power budgeted $344 million, excluding allowance for funds used
during construction, for its 1994 construction program, of which $145 million
was spent during the first six months of the year. These expenditures were
financed primarily with funds from operations and equity contributions from the
Company.
In May 1994, the Company issued 3.6 million shares of common stock through an
underwritten public offering. The Company contributed to Florida Power the
$92.2 million of proceeds from this public offering and an additional $7.5
million in June 1994 from the sale of common stock through its dividend
reinvestment and stock purchase plan. These funds were used to repay
commercial paper and for general corporate purposes.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
1) FERC Docket No. ER94-961-000.
See prior discussion of this matter in the 1993 Form 10-K, Part I, Item 3,
paragraph 2 and the Company's Form 10-Q for the quarter ended March 31,
1994 (the "First Quarter 1994 Form 10-Q"), Part II, Item 1, paragraph 2.
As ordered by the FPSC, Florida Power has provided information to the FERC
explaining how certain fuel adjustment clause fossil fuel costs will be
imputed if actual cogeneration fossil fuel costs are not available.
FERC's review of this information is pending.
2) Florida Gas Transmission Company v. Florida Public Service
Commission, Florida Supreme Court Case No. 82,171.
See prior discussion of this matter in the 1993 Form 10-K, Part I, Item 3,
paragraph 3 and the First Quarter 1994 Form 10-Q, Part II, Item 1,
paragraph 3. On April 21, 1994, the Florida Supreme Court issued its
opinion denying Florida Gas Transmission's appeal. No petitions for
rehearing were filed within the required time period. Accordingly, this
matter is now considered terminated for reporting purposes.
3) Kim S. McDowell and Talesa C. Lloyd v. Florida Power Corporation,
United States District Court for the Middle District of Florida,
Tampa Division, Case No. 91-1858-CIV-T-23B.
See prior discussion of this matter in the 1993 Form 10-K, Part I, Item 3,
paragraph 5. On April 19, 1994, the Court granted plaintiff's motion to
amend the complaint to bring the suit as a class action. On April 26,
1994, the plaintiffs filed an amended complaint which was intended to
clarify the earlier sexual discrimination and harassment complaint, but
did not raise class action allegations. Florida Power believes that its
exposure in this matter will not be material even if it is unsuccessful in
defending against the individual claims of the named plaintiffs. At this
time, the claimants have not plead any claims asserting class action
status. No trial date has been set at this time.
4) Northern States Power Company, et al., v. United States Department of
Energy, Case Number 94-1457, U.S. Court of Appeals, D.C. Circuit.
On June 20, 1994, Florida Power joined with 13 other nuclear utilities in
an action brought against the United States Department of Energy ("DOE")
under the terms of the Nuclear Waste Policy Act ("NWPA"). The NWPA
requires DOE to accept responsibility for spent nuclear fuel ("SNF") and
high level radioactive waste ("HLW") by January 31, 1998. DOE has
announced that it will not meet that deadline. The utilities seek a
declaration that the NWPA imposes on DOE an unconditional obligation to
accept SNF and HLW by January 31, 1998, and an order directing DOE to
develop a program with milestones and appropriate reporting requirements,
to ensure DOE's compliance with the statutorily mandated date. Failure of
DOE to accept SNF and HLW will not immediately affect Florida Power, which
has sufficient on-site storage capacity for spent fuel through about the
year 2010. If, however, DOE does not begin accepting spent fuel and
high-level waste, eventually Florida Power will be forced to seek other
temporary storage options.
<PAGE>
Item 5. Other
1) Reference is made to the fourth paragraph under Item 2 "Operating
Results-Utility" in the First Quarter 1994 Form 10-Q.
If the FPSC approves Florida Power's recommended change in depreciation
rates, Florida Power now believes that annual depreciation expense will
remain nearly unchanged.
2) Reference is made to paragraphs 7-9 under Item 2 "Operating
Results-Utility" in the First Quarter 1994 Form 10-Q.
In July 1994, the NRC issued a memorandum to its staff recommending that
utilities be required either to fix or replace the Thermolag at their
plants, or demonstrate why other options are more appropriate. Florida
Power has not yet completed its study of the feasibility and cost of the
various alternatives.
3) Reference is made to Item 1 "Business-Utility Operations-Florida
Power-Environmental Matters-Waste Materials" in the 1993 Form 10-K.
All transformers contaminated with polychlorinated biphenyls ("PCBs") now
have been removed from all of Florida Power's electric generating plants,
except for one small plant. Removal of PCBs from this final plant will be
delayed until Florida Power decides whether and for how long the plant
will remain in operation.
4) Reference is made to Item 1 "Business-Utility Operations-Florida
Power-Environmental Matters-Storage Tank Program" in the 1993 Form 10-K.
The storage tank requirements of the Florida Department of Environmental
Protection have varying compliance dates ranging from 1998 to 2009.
Florida Power now expects to complete its storage tank program in
accordance with the applicable compliance dates, rather than satisfying
all requirements by 1999.
5) Change of Trustee and Issuing/Paying Agent
Two subsidiaries of the Company recently have changed the Trustees
and/or Issuing and Paying Agents under Indentures and other documents
pursuant to which such subsidiaries issue certain debt securities.
Effective July 11, 1994, Morgan Guaranty Trust Company of New York
resigned and was removed as Issuing and Paying Agent under the Third
Amended and Restated Issuing and Paying Agency Agreement dated as of
August 27, 1993, pursuant to which Progress Capital Holdings, Inc. ("PCH")
issues its medium-term notes. PCH has appointed The First National Bank
of Chicago as successor Issuing and Paying Agent, and First Chicago has
accepted such appointment. Effective July 25, 1994, Morgan Guaranty Trust
Company of New York and First Union National Bank of Florida resigned and
were removed as Trustee and Co-Trustee, respectively, under Florida
Power's Indenture dated as of January 1, 1944, pursuant to which Florida
Power issues its first mortgage bonds. Florida Power has appointed First
Chicago Trust Company of New York as successor Trustee, and First Chicago
has accepted such appointment. Unless and until Florida Power shall
appoint another Co-Trustee, all the right, title and powers of the Trustee
under the Indenture shall be with First Chicago and its successors alone.
Finally, effective in 1993, NationsBank of Florida, N.A. became the
successor by merger to NCNB Bank of Florida, and therefore automatically
became the successor Trustee under the Indenture dated as of August 15,
1992 between Florida Power and NCNB, pursuant to which Florida Power
issues its medium-term notes.
6) FPSC Commissioner Resigns
Luis J. Lauredo resigned from the FPSC in April 1994. In July 1994, the
Public Service Commission Nominating Council selected three nominees for
the now vacant position. The Governor of Florida will have 60 days to
choose a new Commissioner from among the three nominees.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
None.
(b) Reports on Form 8-K:
During the second quarter 1994, the Company filed the following
report on Form 8-K:
Form 8-K dated April 21, 1994, reporting under Item 5
"Other Events" the Company's and Florida Power's first
quarter 1994 earnings, and the Company's plans to issue
up to 3,795,000 shares of common stock.
In addition, the Company filed the following report on Form 8-K
subsequent to the second quarter 1994:
Form 8-K dated July 21, 1994, reporting under Item 5
"Other Events" the Company's and Florida Power's second
quarter 1994 earnings.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FLORIDA PROGRESS CORPORATION
Date: August 5, 1994 /s/ Jeffrey R. Heinicka
-------------------------
Jeffrey R. Heinicka
Senior Vice President and
Chief Financial Officer
Date: August 5, 1994 /s/ David R. Kuzma
-------------------------
David R. Kuzma
Vice President and Treasurer
