SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Exact name of Registrant as specified in I.R.S. Employer
Commission its charter, state of incorporation, address Identification
File No. of principal executive offices, telephone Number
------------ -------------------------------------------- ---------------
1-8349 FLORIDA PROGRESS CORPORATION 59-2147112
A Florida Corporation
One Progress Plaza
St. Petersburg, Florida 33701
Telephone (813) 824-6400
1-3274 FLORIDA POWER CORPORATION 59-0247770
A Florida Corporation
3201 34th Street South
St. Petersburg, Florida 33711
Telephone (813) 866-5151
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
-------------------------------------- -----------------------
Florida Progress Corporation:
Common Stock without par value and New York Stock Exchange
Preferred Stock Purchase Rights Pacific Stock Exchange
Florida Power Corporation: None
Securities registered pursuant to Section 12(g) of the Act:
Florida Progress Corporation: None
Florida Power Corporation: Cumulative Preferred Stock,
par value $100 per share
Indicate by check mark whether the registrants (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. YES X . NO .
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of each registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of
Florida Progress Corporation as of February 28, 1995(based on the closing
market price on the New York Stock Exchange Composite Transactions on February
28, 1995 was $2,937,117,946 (determined by subtracting from the number of
shares outstanding on that date the number of shares held by directors and
executive officers of Florida Progress Corporation).
The aggregate market value of the voting stock held by non-affiliates of
Florida Power Corporation as of February 28, 1995 was $-0-. As of February 28,
1995, there were issued and outstanding 100 shares of Florida Power
Corporation's common stock, without par value, all of which were held,
beneficially and of record, by Florida Progress Corporation.
The number of shares of Florida Progress Corporation common stock without par
value outstanding as of February 10, 1995 was 95,240,004.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for Florida Progress Corporation
dated March 1, 1995, relating to the 1995 Annual Meeting of Shareholders, are
incorporated by reference in Part III hereof.
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This combined Form 10-K represents separate filings by Florida Progress
Corporation and Florida Power Corporation. Information contained herein
relating to an individual registrant is filed by that registrant on its own
behalf. Florida Power Corporation makes no representations as to the
information relating to Florida Progress Corporation's diversified operations.
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TABLE OF CONTENTS
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PART I.
Item 1. - Business. . . . . . . . . . . . . . . . . . . . . . . . 5
Item 2. - Properties. . . . . . . . . . . . . . . . . . . . . . . 18
Item 3. - Legal Proceedings . . . . . . . . . . . . . . . . . . . 22
Item 4. - Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . . 30
PART II.
Item 5. - Market for the Registrants' Common Equity
and Related Stockholder Matters . . . . . . . . . . . 30
Item 6. - Selected Financial Data . . . . . . . . . . . . . . . . 32
Item 7. - Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . 33
Item 8. - Financial Statements and Supplementary Data . . . . . . 43
Combined Report of Independent Certified Public
Accountants. . . . . . . . . . . . . . . . . . . . . 43
Consolidated Financial Statements of Florida Progress . 44
Financial Statements of Florida Power . . . . . . . . . 49
Combined Notes to the Financial Statements. . . . . . . 54
Quarterly Financial Data (unaudited). . . . . . . . . . 77
Item 9. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . 79
PART III.
Item 10. Directors and Executive Officers of the Registrants . . 79
Item 11. Executive Compensation. . . . . . . . . . . . . . . . . 81
Item 12. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . 85
Item 13. Certain Relationships and Related Transactions. . . . . 87
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K. . . . . . . . . . . . . . . . . . . . . . 87
Signatures - Florida Progress Corporation . . . . . . . . . . . . 93
Signatures - Florida Power Corporation. . . . . . . . . . . . . . 95
Financial Statement Schedules . . . . . . . . . . . . . . . . . . 97
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GLOSSARY
When used herein, the following terms will have the meanings indicated:
TERM MEANING
1935 Act. . . . . . . . . . . . .Public Utility Holding Company Act of 1935
Btu . . . . . . . . . . . . . . .British thermal unit
CAAA. . . . . . . . . . . . . . .Clean Air Act Amendments of 1990
CERCLA or Superfund . . . . . . .Comprehensive Environmental Response
Compensation and Liability Act
DOE . . . . . . . . . . . . . . .United States Department of Energy
Electric Fuels. . . . . . . . . .Electric Fuels Corporation
EMF . . . . . . . . . . . . . . .electromagnetic fields, or electric and
magnetic fields
Energy Policy Act . . . . . . . .National Energy Policy Act of 1992
EPA . . . . . . . . . . . . . . .United States Environmental Protection Agency
FAS 115 . . . . . . . . . . . . .Financial Accounting Standard No. 115
FASB. . . . . . . . . . . . . . .Financial Accounting Standards Board
FDEP. . . . . . . . . . . . . . .Florida Department of Environmental Protection
(formerly the Florida Department of
Environmental Regulation)
FERC. . . . . . . . . . . . . . .Federal Energy Regulatory Commission
Financial Statements. . . . . . .Florida Progress' Consolidated Financial
Statements and Florida Power's Financial
Statements, for the year ended
December 31, 1994 contained under
Item 8 herein
Florida Power . . . . . . . . . .Florida Power Corporation
Florida Progress. . . . . . . . .Florida Progress Corporation
FM Industries . . . . . . . . . .FM Industries, Inc.
FP&L. . . . . . . . . . . . . . .Florida Power & Light Company
FPSC. . . . . . . . . . . . . . .Florida Public Service Commission
Georgia Power . . . . . . . . . .Georgia Power Company
HLW . . . . . . . . . . . . . . .high level radioactive waste
INPO. . . . . . . . . . . . . . .Institute of Nuclear Power Operations
KV. . . . . . . . . . . . . . . .kilovolts
KVA . . . . . . . . . . . . . . .kilovolt amperes
KWH . . . . . . . . . . . . . . .kilowatt hours
Lake. . . . . . . . . . . . . . .NCP Lake Power, Inc.
LTK line. . . . . . . . . . . . .Lake Tarpon to Kathleen Transmission Line
MW. . . . . . . . . . . . . . . .megawatts
Mid-Continent . . . . . . . . . .Mid-Continent Life Insurance Company
NEIL. . . . . . . . . . . . . . .Nuclear Electric Insurance, Ltd.
NRC . . . . . . . . . . . . . . .United States Nuclear Regulatory Commission
NWPA. . . . . . . . . . . . . . .Nuclear Waste Policy Act
Pasco . . . . . . . . . . . . . .Pasco Cogen, Ltd
Panda . . . . . . . . . . . . . .Panda - Kathleen L.P.
PCBs. . . . . . . . . . . . . . .polychlorinated biphenyls
Power Energy. . . . . . . . . . .Power Energy Services Corporation
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GLOSSARY - CONTINUED
Power Interstate. . . . . . . . .Power Interstate Energy Services Corporation
ppm . . . . . . . . . . . . . . .parts per million
Praxair . . . . . . . . . . . . .Praxair, Inc.
Progress Capital. . . . . . . . .Progress Capital Holdings, Inc.
PRP . . . . . . . . . . . . . . .potentially responsible party
Progress Credit . . . . . . . . .Progress Credit Corporation
Proxy Statement . . . . . . . . .The definitive proxy statement dated March 1,
1995, relating to Florida Progress' 1995
Annual Meeting of Shareholders
Reedy Creek . . . . . . . . . . .Reedy Creek Improvement District
SEC . . . . . . . . . . . . . . .Securities and Exchange Commission
SNF . . . . . . . . . . . . . . .spent nuclear fuel
Talquin . . . . . . . . . . . . .Talquin Corporation
Talquin Development . . . . . . .Talquin Development Company
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PART I
ITEM 1. BUSINESS
FLORIDA PROGRESS
Florida Progress Corporation ("Florida Progress"), a diversified electric
utility holding company, has its principal executive offices at One Progress
Plaza, St. Petersburg, Florida 33701, telephone number (813) 824-6400. Florida
Progress was incorporated in Florida on January 21, 1982. In March 1982,
Florida Progress became the parent company of Florida Power Corporation
("Florida Power") and its former subsidiaries, including Electric Fuels
Corporation, an energy and transportation company ("Electric Fuels"). The
corporate restructuring was done to accommodate diversification into certain
non-utility businesses. In August 1988, Progress Capital Holdings, Inc.
("Progress Capital") was formed to become the downstream holding company for
Florida Progress' diversified subsidiaries and to consolidate the financing of
non-utility operations.
Florida Progress defines its principal business segments as utility and
diversified operations. The utility segment is composed of Florida Power,
Florida Progress' largest subsidiary, and encompasses all regulated public
utility operations. See Item 1 "Business - Utility Operations - Florida Power".
The diversified operations segment includes Electric Fuels, Progress Credit
Corporation ("Progress Credit"), which is comprised of commercial lending,
leasing and real estate operations, and Mid-Continent Life Insurance Company
("Mid-Continent"), a life insurance company that was acquired in 1986. See
Item 1 "Business - Diversified Operations". For further information concerning
the operating profit and assets attributable to each of Florida Progress'
business segments, see Note 8 to Florida Progress' consolidated financial
statements and Florida Power's financial statements for the year ended December
31, 1994 contained herein under Item 8 ("Financial Statements").
Florida Progress is a public utility holding company under the Public Utility
Holding Company Act of 1935 ("1935 Act"). Florida Progress is exempt from
registration with the Securities and Exchange Commission ("SEC") under the 1935
Act and attendant regulation because its utility operations are primarily
intrastate. The SEC has the power, however, to revoke Florida Progress'
exemption upon a finding that the exemption is "detrimental to the public
interest or the interest of investors or consumers".
UTILITY OPERATIONS - FLORIDA POWER
Florida Progress' utility segment is composed of its largest subsidiary,
Florida Power, and encompasses all regulated public utility operations.
Florida Power was incorporated in 1899, and is an operating public utility
engaged in the generation, purchase, transmission, distribution and sale of
electricity. Florida Power has a system generating capability of 7,337
megawatts ("MW"), and in 1994, accounted for 75% of Florida Progress'
consolidated revenues, 90% of its earnings from continuing operations and 75%
of its assets.
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Florida Power provided electric service during 1994 to an average of
approximately 1,240,000 customers in a service area covering about 20,000
square miles in central and north Florida and along the west coast of the
state. The service area includes St. Petersburg and Clearwater as well as the
areas surrounding Walt Disney World, Orlando, Ocala and Tallahassee. Of
Florida Power's 1994 electric revenues billed, approximately 56% were derived
from residential sales, 24% from commercial sales, 9% from industrial sales, 5%
from other retail sales and 6% from wholesale sales. Important industries in
the territory include phosphate and rock mining and processing, electronics
design and manufacturing, health-care related manufacturing, and citrus and
other food processing. Other important commercial activities are tourism,
health care, construction and agriculture.
FUEL AND PURCHASED POWER
GENERAL: Florida Power's consumption of various types of fuels depends on
several factors, the most important of which are the demand for electricity by
Florida Power's customers, the availability of various generating units, the
availability and cost of fuel, and the requirements of federal and state
regulatory agencies. In 1994, Florida Power's energy mix was 45% coal, 16%
oil, 17% nuclear, 21% purchased power and 1% gas, as compared to 45% coal, 21%
oil, 18% nuclear, 16% purchased power and 0% gas for 1993.
Florida Power is permitted to pass the cost of recoverable fuel and purchased
power to its customers through fuel adjustment clauses. (See Note 1 to the
Financial Statements.)
The future prices for and availability of various fuels discussed in this
report cannot be determined with complete certainty. However, Florida Power
believes that its fuel supply contracts, as described below, will be adequate
to meet its fuel supply needs.
Florida Power's average fuel costs per million British thermal units ("Btu")
for each year of the five-year period ended December 31, 1994, were as follows:
1994 1993 1992 1991 1990
Coal $1.96 $1.96 $1.97 $2.01 $2.05
Oil 2.39 2.49 2.53 2.56 3.10
Nuclear .55 .54 .57 .65 .67
Gas 2.46 4.27 2.54 1.90 2.15
Average 1.75 1.79 1.86 1.89 2.11
OIL AND GAS: Oil is purchased under contracts with several suppliers. The
cost of Florida Power's oil is tied by contract to certain posted or published
market prices. These prices are largely influenced by the world market for
fuel. At present, management believes that Florida Power has contracts for an
adequate supply of oil for the reasonably foreseeable future. Florida Power's
natural gas is purchased on the spot market and delivered under firm and
interruptible transportation contracts. Existing contracts for oil are
sufficient to cover the requirements when natural gas is not available under
the interruptible contracts.
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NUCLEAR: Florida Power has one nuclear generating plant: Crystal River Unit
No. 3. In order to fuel this nuclear generating station, four distinct stages
are involved, and each is contracted separately. Stage I and Stage II involve
the mining and milling of the natural uranium ore to produce a concentrate and
the conversion of uranium concentrate into uranium hexafluoride. Stage III and
Stage IV entail the enrichment of the uranium hexafluoride, and the fabrication
of the enriched uranium hexafluoride into usable fuel assemblies.
Florida Power has contracts for the supply of uranium concentrates (Stage I)
and the conversion of uranium concentrates (Stage II) through 1997, and the
enrichment of uranium (Stage III) and the fabrication of uranium into fuel
assemblies (Stage IV) through 2004. Under anticipated operating conditions,
Florida Power has all stages of the nuclear fuel supply cycle under contract
for unit operations through the refueling planned in 1996.
It will be necessary for Florida Power to enter into future contracts to cover
the differences between the total unit lifetime requirements of Crystal River
Unit No. 3 and the requirements covered by existing contracts. Although no
assurances can be given as to that future availability or costs of such
contracts, Florida Power expects that future contract commitments will be
obtained at the appropriate time.
Spent nuclear fuel is stored at Florida Power's Crystal River Unit No. 3
pending disposal under a contract with the United States Department of Energy
("DOE"). (See Note 4 to the Financial Statements and Item 3 "Legal
Proceedings", paragraph 13.) At the present time, Florida Power has facilities
on site for the storage of spent fuel through the year 2010.
COAL: Florida Power anticipates a requirement of approximately 5,300,000 tons
of coal in 1995. Current environmental regulations limit sulfur content, at
12,000 Btu per pound, to 1.2% for Crystal River Unit Nos. 1 and 2, and 0.7% for
Unit Nos. 4 and 5. Most of the coal is expected to be supplied from the
Appalachian coal fields of the United States. Approximately two-thirds of the
coal is expected to be delivered by rail and the remainder by barge. The coal
is being supplied by Electric Fuels pursuant to contracts between Florida Power
and Electric Fuels.
Electric Fuels has long-term contracts with various sources for 75% of the coal
requirements of Florida Power's coal units. Electric Fuels acquires the
remainder in the spot market and under short-term contracts. The long-term
contracts have price adjustment provisions.
PURCHASED POWER: Florida Power, along with other Florida utilities, buys and
sells economy power through the Florida energy brokering system. In addition,
Florida Power has long-term contracts with The Southern Company for up to 407
MW of purchased power capacity annually through 2010, representing 4.6% of
Florida Power's total current system capacity. Florida Power has an option to
lower these purchases to approximately 200 MW annually, beginning in 2000, with
a three-year notice. The power is supplied by coal-fired generating units that
have a combined capacity of approximately 3,500 MW. The entire commitment is
guaranteed by The Southern Company's total system, which is approximately
30,000 MW.
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As of December 31, 1994, Florida Power had entered into long-term contracts
with cogenerators for 1,110 MW of capacity. These contracts have terms ranging
from nine to 35 years. In most cases, these contracts account for 100% of the
generating capacity of each of the facilities. Of the 1,110 MW under contract,
961 MW are currently available and the remaining future capacity is a part of
the utility's plans for meeting future electricity demand growth. All
commitments have been approved by the FPSC. (See Note 11 to the Financial
Statements.)
REGULATION AND FRANCHISES
Florida Power is subject to the jurisdiction of the FPSC with respect to retail
rates, customer service, planning, construction of facilities, accounting,
issuance of securities and other matters. In addition, Florida Power is
subject to regulation by the Federal Energy Regulatory Commission ("FERC") with
respect to accounting, transmission and sales of wholesale power and certain
other matters.
Florida Power's nuclear generating unit is subject to regulation by the United
States Nuclear Regulatory Commission ("NRC"). The NRC's jurisdiction
encompasses broad supervisory and regulatory powers over the construction and
operation of nuclear reactors, including matters of health and safety,
antitrust considerations and environmental impacts. Florida Power has a 90.4%
ownership interest in the nuclear unit it operates. (See Note 4 to the
Financial Statements.)
By virtue of state and municipal legislation, Florida Power holds franchises
with varying expiration dates to provide electric service in all municipalities
in which it distributes electric energy. The general effect of these
franchises is to grant Florida Power the right to enter upon and use streets,
alleys and other public places for erecting and maintaining poles, wires and
other apparatus for the sale and distribution of electric energy. All but one
of the existing franchises were for a 30-year period when granted, the maximum
allowed by Florida law. The one exception is a franchise that was for a 10-
year period when granted. There are a total of 110 franchises, of which 2
expire before December 31, 1999, 57 expire between January 1, 2000 and December
31, 2004, 3 expire between January 1, 2005 and December 31, 2009, 19 expire
between January 1, 2010 and December 31, 2014, 13 expire between January 1,
2015 and December 31, 2019, and 16 expire between January 1, 2020 and December
31, 2024. For further information concerning these franchise agreements, see
Item 1 "Business-Utility Operations-Utility Competition".
ENVIRONMENTAL MATTERS
Florida Power is subject to federal, state and local regulations dealing with
air and water quality and other environmental matters.
AIR: All of Florida Power's air emission sources meet the air quality
standards currently set by the Florida Department of Environmental Protection
("FDEP")and/or the United States Environmental Protection Agency ("EPA").
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The 1990 Amendments to the Clean Air Act ("CAAA"), under Title IV, Acid Rain
Control, require reduction in sulfur dioxide and nitrogen oxide emissions by
the year 2000 and set a permanent cap on those emissions. The reductions are
to be implemented in two phases. Phase I limitations apply in 1995 and Phase
II limitations are effective by 2000. Florida Power is not materially affected
by either Phase I or Phase II. Continuous emission monitors were installed on
most of Florida Power's units by the end of 1994 at a total cost of
approximately $11 million. These monitors are required on all affected units
under Title IV of the CAAA. To meet Phase II limitations, Florida Power is
implementing a strategy based primarily on burning cleaner fuels. Compliance
with nitrogen oxide limitations will require the installation of low nitrogen
oxide burners on some coal fired units. These costs will be approximately
$8 million and will be incurred between 1995-2000.
Under Title III of the CAAA, the EPA is studying the emission of hazardous air
pollutants and, where appropriate, promulgating emission limitations for
specific source categories. Depending on the results of these studies and the
EPA's determination of the need for additional limitations, Florida Power could
be required to incur additional capital expenditures and operating expenses.
Under Title V of the CAAA, Florida Power is required to pay annual operating
fees based on the previous year's emissions. In 1995, these fees will total
$750,000 and are expected to increase to $1 million per year for 1996 and
thereafter.
Florida Power's construction program includes approximately $14 million of
planned environmental expenditures for air quality projects for the two-year
period ending December 31, 1996.
WATER: Work began in 1994 on construction of the Polk County generating units
and related facilities. (See Item 2, "Properties - Utility Operations -
Planned Generation".) Approximately $8.5 million was expended in 1994 on
environmental commitments related to site development. Over the next 2 to 3
years of construction, approximately $9.3 million will be expended on
environmental commitments related to site development. In addition, Florida
Power's construction program includes approximately $8 million of additional
planned environmental expenditures for water quality projects for the two-year
period ended December 31, 1996.
WASTE MATERIALS: Florida Power is nearing completion of its program to reduce
electrical equipment utilizing polychlorinated biphenyls ("PCBs"). All
regulatory compliance dates have been met. All PCBs transformers (i.e. those
having greater than 500 ppm PCBs) now have been removed from all of Florida
Power's electric generating plants, except for one small plant. Removal of PCB
transformers from this final plant will be delayed until Florida Power decides
whether and for how long the plant will remain in operation.
STORAGE TANK PROGRAM: The regulation of underground and above-ground storage
tanks continues to expand, and by 1995 is expected to affect virtually every
Florida Power storage tank with a capacity of 100 gallons or greater, including
vehicular fuel tanks, bulk fuel storage tanks, mineral acid tanks, hazardous
material tanks and compression vessels. The FDEP's storage tank regulations
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require the replacement or upgrading of tanks that are not protected from
corrosion, and the installation of release detection and containment for spills
and leaks. These requirements must be met by 1999. Florida Power expects the
annual expenditures through 1999 related to compliance with these regulations
to be $1 million and $3 million for operating expense and construction,
respectively.
Under a FDEP program, revenues from taxes on imported oil are expected to be
used to reimburse Florida Power for the majority of past storage tank
contamination cleanup expenditures. With expansion of regulation and the
resulting increased monitoring of tank systems and oil filled electrical
equipment, further expenditures for contamination cleanup and retrofitting and
upgrading equipment are likely, but these expenditures are not expected to be
material to Florida Power.
ELECTROMAGNETIC FIELDS: The potential adverse effects of electromagnetic
fields, or electric and magnetic fields ("EMF") upon human health continues to
be an important issue in the siting, construction and operation of electric
transmission and distribution systems. Pursuant to its exclusive jurisdiction
to regulate EMF associated with electric transmission and distribution lines
and substation facilities in Florida, the FDEP has adopted rules which
establish certain EMF limits for new transmission lines and substations. The
rules, as revised in October 1992, also require an annual review of the state
of the scientific research into the potential adverse effects of EMF upon human
health. The staff of the FDEP provided its progress report to the
Environmental Regulation Commission on December 15, 1994; based on its review
of the scientific research, the staff recommended that "no revision of the
current EMF standards be made at this time." The Environmental Regulation
Commission made no revision to EMF standards. Florida Power believes that
compliance with these EMF rules, which at present essentially maintain the
status quo with respect to regulated EMF exposure levels, will not have a
material adverse effect on the cost of constructing or maintaining new
transmission lines or substations.
There has been substantial discussion in professional publications regarding
the potential for extensive litigation alleging adverse health effects of EMF
from transmission and distribution lines, but to date Florida Power is not
aware of any case arising out of such a claim that has resulted in a verdict
against an electric utility.
Florida Power's management monitors and reports to Florida Power's Board of
Directors at least annually on developments in research concerning the
potential health effects of EMF, EMF mitigation technologies and procedures,
and significant actions by principal federal and Florida agencies related to
EMF.
OTHER ENVIRONMENTAL MATTERS: Florida Power has received notices from the EPA
that it is or could be a "potentially responsible party" under the
Comprehensive Environmental Response Compensation and Liability Act ("CERCLA"
or "Superfund") 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 FDEP. In addition, Florida Power has been named as a
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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. For further information see paragraphs 14 and 15 under Item 3
"Legal Proceedings" and "Contaminated Site Cleanup" in Note 11 to the Financial
Statements.
RATE MATTERS
The underlying concept of utility ratemaking is to set rates at a level that
allows the utility to collect revenues equal to its cost of providing service
plus a reasonable rate of return on its equity. To accomplish this, the FPSC
and FERC use various ratemaking mechanisms.
The FPSC oversees the intrastate operations of the state's investor-owned
utilities. The FPSC authorizes retail "base rates" that are designed to
provide a utility the opportunity to earn a specific rate of return on its
"rate base", or average investment in utility plant. These rates are intended
to cover all reasonable and prudent expenses of utility operations and to
provide investors with a fair rate of return.
The FPSC allows utilities to recover fuel, purchased power and conservation
costs through an adjustment charge on monthly electric bills. This charge is
adjusted every six or 12 months and remains level throughout the period. The
adjustment charge includes projected costs for a six- or 12-month period plus
an adjustment to compensate for differences between estimated and actual costs
for the prior period, including interest.
At the request of state regulators, Florida Power submitted a revenue
decoupling plan for residential customers. Revenue decoupling is a ratemaking
concept that eliminates the direct link between and unit sales, measured in
kilowatt hours ("KWH") and revenues. The FPSC ordered a three-year test for
residential revenue decoupling, beginning in January 1995. (See the text under
the heading "Utility Regulatory Matters" in Item 7, and Note 1 to the Financial
Statements.) Under the plan, abnormal weather variances will no longer impact
earnings with respect to residential revenues. Historically, Florida Power's
revenues and KWH sales varied with the weather. This weather sensitivity
resulted primarily from customers using electricity to heat or cool their
residences or places of business, and revenues and KWH sales tended to be
higher in summer and winter. (See the financial information under the heading
"Quarterly Financial Data" which follows the notes to the Financial
Statements.)
FERC regulates wholesale and interstate transmission rates, acquisition and
disposition of certain property, and other matters. FERC is responsible for
accounting and reporting functions under the Federal Power Act to ensure that
reliable and consistent financial information is available for regulatory and
public purposes.
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Florida Power is interconnected with 22 municipal electric systems. Florida
Power's wholesale customers include Seminole Electric Cooperative, Inc., the
Florida Municipal Power Agency and 11 municipalities. During 1994, about 6% of
Florida Power's electric revenues were from its wholesale business.
For further information with respect to rate matters, see paragraphs 1 and 2
under Item 3 "Legal Proceedings" and Note 10 to the Financial Statements.
COMPETITION
The nation's electric utility industry expects increasing competition in
markets historically served by regulated utilities. Passage of the National
Energy Policy Act of 1992 ("Energy Policy Act"), new guidelines at the FERC and
increasing competition from nonregulated energy suppliers are expected to
result in some utility customers having alternative sources for their energy
needs. Regulators in California, Michigan and New Mexico are considering
landmark measures that would establish new policies for setting electric rates
and allow large customers to choose among electricity suppliers. In the years
ahead, many other states are likely to consider regulatory reform and institute
pricing structures that are more market-driven.
Not all electric utilities will be affected in the same way by increased
competition - some will struggle while others will thrive. Management believes
that as the industry undergoes further change, Florida Power will be able to
maintain its favorable competitive position. More than 90 percent of Florida
Power's total KWH sales comes from retail business, which is regulated by the
FPSC. Most of the utility's retail KWH sales are to residential and commercial
customers. Florida Power agrees with many industry experts that changes in the
way electricity is distributed to homes and businesses are probably still years
away. However, management believes it is important to anticipate change. Today,
steps are being taken that will put the utility in position to adjust to change
and take advantage of new opportunities.
A threat for some utilities is the risk of losing industrial customers.
Florida Power is well positioned with competitive electric rates to its
industrial customers, which account for about 12 percent of the utility's total
KWH sales. The average in the electric utility industry for industrial KWH
sales is about 35 percent.
In Florida, electric utilities have certain retail service territorial rights
granted by the FPSC. In providing electric service, utilities have negotiated
franchise agreements with local municipalities outlining the terms associated
with the use of public rights-of-way. Traditionally, municipalities have signed
30-year franchise agreements with electric utilities. Increasing competition
may affect new franchise agreements between utilities and municipalities.
Also, some municipalities may consider operating their own electric utility
systems. However, over the years, municipalities have seldom decided to
purchase and operate their own systems because the economics generally have
been unfavorable for the local residents. The last time a municipality
purchased a system in Florida was in 1947. Florida Power currently has 110
franchise agreements, only two of which will expire before the year 2000. These
two franchises represent slightly less than 5 percent of the utility's total
<PAGE>
<PAGE> 13
revenues. One of the two franchises expires in 1996 and accounts for the
majority of these revenues. Management expects to renew these two franchises.
In the wholesale market, the Energy Policy Act of 1992 will result in increased
competition for utilities serving cities, rural electric cooperatives and other
customers that resell electricity. Florida Power is committed to serving and
retaining its wholesale customers, which represent about 6 percent of the
utility's total KWH sales. For further information concerning wholesale
business, see paragraph 2 under Item 3 "Legal Proceedings".
Another challenge for electric utilities is to construct and operate new
baseload generation at prices competitive with nonutility generators. Florida
Power has received regulatory approval to construct two baseload units in Polk
County, Florida. The first unit is scheduled to be in service by 1998 and the
second a year later. The utility believes the generation from these units will
be competitively priced with other new power plants in Florida.
Electric utilities are beginning to face changes in the way transmission
services are priced. The FERC is encouraging the formation of regional
transmission groups to set pricing policies and work closely with state
regulators in the siting of new transmission lines. The FERC is also pursuing
policies that would deny a utility that owns transmission lines a competitive
advantage in the area of power generation over other utilities as well as non-
utility generators. Because it owns the second-largest transmission system in
the state, Florida Power believes it is important to establish fair policies
for pricing and access, particularly as the industry evolves into a more
competitive business.
In 1994, Florida Power took steps to streamline operations and reduce costs to
improve its competitiveness. These actions should help the utility offset
rising costs, such as environmental expenses, insurance costs, and nuclear
decommissioning and depreciation expenses. Florida Power expects to earn its
authorized return on equity while maintaining competitive prices and offering
high-quality, reliable service.
Management believes that Florida Power's operational and financial strength,
manageable construction program, strong growth potential and reasonable
regulatory environment are reasons why the utility is well positioned for the
future.
EMPLOYEES
Florida Power employed 5,529 employees at December 31, 1994, of which 4,972
were full-time employees. The International Brotherhood of Electrical Workers
represents approximately 2,200 full-time employees. The current union contract
was ratified in January 1995 and expires in December 1996.
DIVERSIFIED OPERATIONS
Florida Progress' diversified operations are owned directly or indirectly
through Progress Capital, a Florida corporation and wholly owned subsidiary of
Florida Progress that was incorporated in 1988. Progress Capital holds the
<PAGE>
<PAGE> 14
capital stock of, and provides funding for, Florida Progress' non-utility
subsidiaries, which include the following:
ELECTRIC FUELS - Formed in 1976, Electric Fuels is an energy and
transportation company serving utility and industrial companies,
including Florida Power. Its major businesses include coal mining,
procurement and transportation; bulk commodities transportation; railcar
repair and railcar parts manufacturing and reconditioning, and rail and
trackworks components. In 1993, Electric Fuels completed a major
expansion in the rail services segment of its business. The 1993
acquisition of the assets of an Alabama-based company increased the unit's
market share in the nation's rail services business. In 1994, Electric
Fuels' operations were further expanded by the acquisition of FM
Industries, Inc. ("FM Industries"), a railcar parts manufacturer and
reconditioner located in Fort Worth, Texas. In 1994, Electric Fuels also
acquired a rail-to-barge coal transloading facility near Huntington, West
Virginia.
MID-CONTINENT - Acquired in 1986, Mid-Continent is a life insurance
company, headquartered in Oklahoma City, Oklahoma, which has been in
business since 1909. Its principal product is a low-premium death benefit
policy which is sold through independent agents.
PROGRESS CREDIT - Formed in 1983, Progress Credit is a financial services
and real estate company with lending and leasing activities (primarily
involving commercial aircraft, real estate, locomotives and medical
equipment)and real estate projects. Progress Credit is not entering into
new transactions, unless they facilitate Florida Progress' business
withdrawal strategies, and plans to sell, over time, most of these assets.
As of December 31, 1994, Progress Capital and its subsidiaries employed
approximately 2,400 persons.
COMPETITION
Florida Progress' non-utility subsidiaries compete in their respective
marketplaces in terms of price, service reliability, location and other
factors. Electric Fuels competes in several distinct markets: its coal
operations in the eastern United States utility and industrial coal markets;
its marine transportation and barge operations in the coal, grain and bulk
products transportation markets on the Ohio and Mississippi rivers; and its
rail operations in the railcar repair, parts and associated services markets in
the eastern U.S. and, to a more limited extent, in the midwest and west.
Positive factors contributing to Electric Fuels' success in these markets
include a competitive cost structure, strategic locations and, in the
case of its marine transportation operations, a modern fleet. There are,
however, numerous competitors in each of these markets, although no one
competitor is dominant in the industry. The business of Electric Fuels and its
subsidiaries, taken as a whole, is not subject to significant seasonal
fluctuation. Mid-Continent actively competes with other insurance companies in
all jurisdictions in which it is located. Mid-Continent's strengths have
included low administrative costs, competitive premiums and commissions, and a
<PAGE>
<PAGE> 15
conservative investment portfolio. However, many of Mid-Continent's
competitors have more diversified lines of insurance coverage, substantially
greater financial resources and direct sales forces.
ENVIRONMENTAL MATTERS
Electric Fuels is subject to federal, state and local regulations which govern
air and water quality, waste disposal and other environmental matters. The
coal mining business is affected primarily by the Clean Water Act and the
Clean Air Act. The transportation and the railcar and marine repair businesses
are primarily affected by the Resource Conservation and Recovery Act, the
Emergency Planning and Community Right-To-Know Act and the Clean Water Act.
The Environmental Affairs Department of Electric Fuels reviews existing and
emerging environmental regulations, disseminates applicable environmental
information throughout the organization and conducts site specific
environmental compliance audits. Transactional environmental assessments are
performed on new acquisitions to determine the potential environmental
liabilities associated with the facilities being considered. Compliance with
environmental laws and regulations has not had a material effect on Electric
Fuels' capital expenditures, earnings or competitive position, and Electric
Fuels does not anticipate making any material capital expenditures for
environmental facilities through the end of 1996.
For further information concerning certain environmental matters relating to
Florida Progress' diversified operations, see paragraph 16 under Item 3 "Legal
Proceedings" and Note 11 to the Financial Statements.
EXECUTIVE OFFICERS
Kenneth E. Armstrong, Vice President, General Counsel and Secretary of Florida
Progress, and Secretary of Florida Power, and effective April 3, 1995, also
Vice President and General Counsel of Florida Power, Age 47
In April 1993, Mr. Armstrong was appointed to his position of Vice President,
General Counsel and Secretary of Florida Progress. In March 1995, he was also
appointed Vice President and General Counsel of Florida Power effective April
3, 1995. From April 1992 to April 1993, Mr. Armstrong served as Vice
President, General Counsel and Assistant Secretary of Florida Progress. He
joined Florida Progress in August 1986 as Assistant General Counsel, was
appointed Assistant Secretary in April 1987, General Counsel in July 1990, and
Vice President in April 1992. He also served as Assistant Secretary of Florida
Power Corporation from April 1987 until his appointment as Secretary in April
1993.
Dr. Percy M. Beard, Jr., Senior Vice President, Nuclear Operations of Florida
Power, Age 58
Since November 1989, Dr. Beard's principal occupation has been as shown above.
<PAGE>
<PAGE> 16
Jack B. Critchfield, Chairman of the Board and Chief Executive Officer of
Florida Progress, Age 61
Since December 1, 1991, Dr. Critchfield's principal occupation has been as
shown above. From January 1991 to December 1991, Dr. Critchfield was Chairman,
President and Chief Executive Officer, from February 1990 to January 1991 he
was President and Chief Executive Officer, and from February 1988 to February
1990, he was President and Chief Operating Officer of Florida Progress. From
January 1987 to February 1988, Dr. Critchfield was Group Vice President, Energy
and Technology Group of Florida Progress and President and Chief Executive
Officer of Electric Fuels. From November 1983 to January 1987, he served as
Vice President of the Eastern and Ridge Divisions of Florida Power. Dr.
Critchfield is a director of Barnett Banks, Inc., Jacksonville, Florida.
John A. Hancock, Senior Vice President, Power Supply of Florida Power, Age 54
Mr. Hancock became Senior Vice President, Energy Supply, effective January
1993. From September 1989, to January 1993, Mr. Hancock was Senior Vice
President, Power Operations, of Florida Power.
Jeffrey R. Heinicka, Senior Vice President and Chief Financial Officer of both
Florida Progress and Florida Power, Age 41
From December 1990 until appointment to his current positions in 1994, Mr.
Heinicka served as Vice President and Treasurer of Florida Progress. Mr.
Heinicka also served as Vice President and Treasurer of Florida Power from
April 1993 to March 1994, a position he held concurrently with his Vice
President and Treasurer position at Florida Progress. From March 1988 until
December 1990, he was Vice President, Treasurer and Controller of Electric
Fuels.
Allen J. Keesler, Jr., Group Vice President, Utility Group of Florida Progress,
and President and Chief Executive Officer of Florida Power, Age 56
Since February 1988, Mr. Keesler's principal occupation has been as shown
above. From January 1983 to February 1988, he served as President and Chief
Executive Officer of Talquin Corporation ("Talquin"), a former subsidiary of
Florida Progress. Mr. Keesler served as Group Vice President, Development
Group, of Florida Progress, from January 1986 to February 1988. Mr. Keesler is
a director of SouthTrust Corporation, Birmingham, Alabama.
Richard D. Keller, Group Vice President, Energy and Transportation of Florida
Progress, and President and Chief Executive Officer of Electric Fuels
Corporation, Age 41
Since May 1990, Mr. Keller's principal occupation has been as shown above.
He has served as President and Chief Executive Officer of Electric Fuels
since February 1988.
<PAGE>
<PAGE> 17
Richard Korpan, President and Chief Operating Officer of Florida Progress,
Age 53
Since December 1, 1991, Mr. Korpan's principal occupation has been as shown
above. From August 1989 to December 1991, he was Executive Vice President
and Chief Financial Officer of Florida Progress. He joined Florida Progress in
June 1989 to assume the position of Executive Vice President and Chief
Financial Officer. From 1986 to June 1989, Mr. Korpan was President and Chief
Executive Officer of Pacific Diversified Capital Company, a subsidiary that
comprises the non-utility operations of San Diego Gas & Electric Company. Mr.
Korpan is a director of SunBank of Tampa Bay and Acordia Central Florida, Inc.
David L. Miller, Senior Vice President, Corporate Services of Florida Power,
Age 50
Since January 1993, Mr. Miller's principal occupation has been as shown above.
From October 1990 to January 1993, Mr. Miller was Senior Vice President,
Administrative Services, of Florida Power. Prior to that time he served Florida
Power as Vice President, Suncoast Division, from April 1988 to October 1990,
South Suncoast Division Manager from October 1987 to April 1988, and as
Director of Conservation and Marketing during 1986.
Maurice H. Phillips, Executive Vice President of Florida Power, Age 56
Mr. Phillips is retiring from Florida Power effective April 1, 1995. Since
September 1989, Mr. Phillips' principal occupation has been as shown above.
Joseph H. Richardson, Senior Vice President, Corporate Development of Florida
Progress, and effective April 3, 1995, also Senior Vice President, Energy
Distribution of Florida Power, Age 45
In August 1991, Mr. Richardson was appointed to his position as Senior Vice
President of Florida Progress. In March 1995, he was also appointed to the
position of Senior Vice President, Energy Distribution of Florida Power
effective April 3, 1995. From October 1993 to April 3, 1995, he served as
Senior Vice President, Legal and Administrative Services, and General Counsel
of Florida Power, positions he held concurrently with his position at Florida
Progress. He was President and Chief Executive Officer of Talquin from May
1990 until September 1993. From May 1990 to August 1991, Mr. Richardson was
Group Vice President, Development Group. From July 1986 to May 1990, he served
as Vice President of Talquin.
There are no family relationships between any director and/or any executive
officer of Florida Progress or Florida Power. The executive officers serve at
the pleasure of the Boards of Directors. Each executive officer is appointed
annually.
<PAGE>
<PAGE> 18
ITEM 2. PROPERTIES
Florida Progress believes that its physical properties and those of its
subsidiaries are adequate to carry on its and their businesses as currently
conducted. Florida Progress and its subsidiaries maintain property insurance
against loss or damage by fire or other perils to the extent that such property
is usually insured. (See Note 11 to the Financial Statements.) Substantially
all of Florida Power's utility plant is pledged as collateral for Florida
Power's First Mortgage Bonds. Certain tug/barge units owned or operated by
Electric Fuels are subject to the lien of mortgages in favor of certain
lenders, as are certain real estate properties held by Progress Credit.
Equipment owned by Progress Credit and leased under finance leases is subject
to liens in favor of the secured lenders.
UTILITY OPERATIONS
GENERATION: As of December 31, 1994, the total net winter generating
capability of Florida Power's generating facilities was 7,337 MW. This
capability was generated by 13 steam units with a capability of 4,661 MW and 44
combustion turbine peaking units with a capability of 2,676 MW. Florida
Power's ability to use its generating units may be adversely impacted by
various governmental regulations affecting nuclear operations and other aspects
of Florida Power's business. (See "Regulation and Franchises" and
"Environmental Matters" under Item 1 "Business-Utility Operations.") Operation
of the units may also be substantially curtailed by unanticipated equipment
failures or interruption of fuel supplies. In January 1994, a 40 MW
cogeneration unit located at the University of Florida in Gainesville was put
into service. This unit provides steam to the University campus and hospital
while generating electricity for Florida Power's system. Also in January 1994,
Florida Power put two of its older power plants, the Higgins and Turner steam
units, on extended cold shutdown status. The net maximum hourly demand served
during 1994 was 6,955 MW on February 3, 1994. On February 9, 1995, Florida
Power reached a new peak of 7,722 MW. Florida Power met this demand through
system generating capability, economy power purchases from neighboring
utilities and demand-side management programs.
[THIS SPACE INTENTIONALLY BLANK]<PAGE>
<PAGE> 19
Florida Power's existing generating plants (all located in Florida) and their
capabilities are as follows:
Winter Net
Maximum
Dependable
Primary Location Steam Peaking Capability
Plants Fuel (County) MW MW MW
---------------- ------- ------------- ------- ------- ----------
Crystal River: Citrus
Unit #1 Coal 373 - 373
Unit #2 Coal 469 - 469
Unit #3 Uranium 755* - 755
Unit #4 Coal 717 - 717
Unit #5 Coal 717 - 717
----- -----
3,031 3,031
Anclote: Pasco
Unit #1 Oil 517 - 517
Unit #2 Oil 517 - 517
Bartow Oil Pinellas 449 217 666
Turner Oil Volusia - 200 200
Intercession City Oil Osceola - 750 750
DeBary Oil Volusia - 786 786
Higgins Oil Pinellas - 148 148
Bayboro Oil Pinellas - 232 232
Avon Park Oil Highlands - 64 64
Port St. Joe Oil Gulf - 18 18
Rio Pinar Oil Orange - 18 18
Suwannee River Oil Suwannee 147 201 348
University of Fla. Gas Alachua - 42 42
----- ----- -----
4,661 2,676 7,337
===== ===== =====
* Represents 90.4% of total plant capability. The remaining 9.6% of
capability was owned by other parties at December 31, 1994.
PLANNED GENERATION AND ENERGY SALES: Florida Power and Georgia Power Company
("Georgia Power")will become co-owners of a 165 MW advanced combustion turbine
to be located at Florida Power's Intercession City Peaker site. Upon expected
completion of the turbine in 1996, Florida Power will operate and maintain the
unit for both owners. During the months of June through September, Georgia
Power will have the exclusive right to the output of this unit. Florida Power
will have that right for the balance of the year.
In a separate agreement, Florida Power has agreed to sell between 200 and 500
MW of summer peaking capacity annually to Georgia Power from 1996 through 1999.
Since Florida Power is a winter-peaking utility and Georgia Power is a
summer-peaking utility, this transaction presents unique advantages to both
parties. The agreement was accepted for filing by the FERC on March 11, 1994
and is pending approval by the Georgia Public Service Commission. Florida
Power's generation strategy includes continuing efforts to sign similar energy
agreements with other utilities. The revenues from these energy sales will
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<PAGE> 20
help Florida Power to offset some of its annual production costs and better
utilize its facilities year-round.
In 1992, the FPSC granted Florida Power a certificate of need to build two
gas-fired combined cycle generating units, each with a winter rating of 235 MW.
In September 1994, Florida Power completed the purchase of approximately 8,100
acres of mined-out phosphate land for the new power plant site. The site is
located in Polk County, Florida, approximately 50 miles east of Tampa.
Commencement of construction of these units is planned for 1996. The first
unit is planned to come on line in 1998, with the second unit to follow in
1999. Florida Power plans to use natural gas to fuel the first phase of the
new energy complex in Polk County. (See Part II, Item 7, under the heading
"Liquidity and Capital Resources - Florida Power Corporation".)
In September 1994, Florida Power announced that its subsidiaries were
withdrawing as equity partners in the proposed SunShine Pipeline. In February
1995, Florida Power announced that it was exercising its options to terminate,
effective March 2, 1995, two agreements related to the transportation of
natural gas through the proposed SunShine Pipeline. Florida Power is currently
evaluating a number of options for transporting natural gas to the new energy
complex in Polk County. (See Item 3 "Legal Proceedings", paragraphs 9 and 10.)
Florida Power's expansion plan for generation is summarized in the table below:
<TABLE>
<CAPTION> Maximum Dependable
Winter Capability
Planned ---------------------------------
Location In Service Steam Peaking Total
Plants (County) Date MW MW MW
------------ -------- ---------- ------- -------- ----------
<S> <C> <C> <C> <C> <C>
Intercession City(1) Osceola 1/96 - 165 165
Combined Cycle 1 Polk 11/98 235 - 235
Combined Cycle 2 Polk 11/99 235 - 235
-----
635
Existing system generation 7,337
-----
Total planned system generation by the year 2000 is 7,972
=====
(1) Florida Power will co-own this unit with Georgia Power.
</TABLE>
The FPSC has a rule regarding the construction of new power plants in Florida.
In general, the rule requires each investor-owned electric utility to engage in
a competitive bidding process for the construction of new generation unless the
utility demonstrates on a case by case basis that such a process is not in the
best interests of the utility's ratepayers. Although the adoption of this rule
could eventually affect Florida Power's ability to construct its own power
plants, the rule will not affect the construction of two gas-fired combined
cycle generating units at Florida Power's site in Polk County, Florida, because
as noted above, the FPSC already has granted Florida Power a certificate of
need for these units.
<PAGE>
<PAGE> 21
NUCLEAR PLANT AND NUCLEAR INSURANCE: Information regarding nuclear plant and
nuclear insurance is contained in Notes 4 and 11 to the Financial Statements.
TRANSMISSION AND DISTRIBUTION: As of December 31, 1994, Florida Power
distributed electricity through 344 substations with an installed transformer
capacity of 38,877,600 kilovolt amperes ("KVA"). Of this capacity, 26,708,925
KVA is located in transmission substations and 12,168,675 KVA in distribution
substations. Florida Power has 4,497 circuit miles of transmission lines of
which 2,580 circuit miles are operated at 500, 230, or 115 kilovolts ("KV")
and the balance at 69 KV. Florida Power has 22,917 circuit miles of
distribution lines which operate at various voltages ranging from 2.4 to 25 KV.
Florida Power has indefinitely deferred construction of a 500 KV transmission
line that would have connected its Lake Tarpon substation in Pinellas County to
its Kathleen substation in Polk County (the "LTK line"). Florida Power has
proposed alternatives to the LTK line in a petition filed with the FPSC. (See
Part II, Item 7, under the heading "Liquidity and Capital Resources - Florida
Power Corporation").
DIVERSIFIED OPERATIONS
ELECTRIC FUELS
Electric Fuels operates approximately 1500 railcars, 23 locomotives, 550 river
barges and 21 river towboats that are either owned or leased, and are used for
the transportation and shipping of coal, steel and other bulk products.
Through joint ventures, it has five oceangoing tug/barge units. An Electric
Fuels subsidiary, through another joint venture, owns and operates a large bulk
products terminal, located on the Mississippi River south of New Orleans, for
handling coal and other products. Electric Fuels provides drydocking and
repair services to towboats, offshore supply vessels and barges through an
operation it owns near New Orleans.
Electric Fuels controls, either directly or through subsidiaries, coal reserves
located in eastern Kentucky and southwestern Virginia. Electric Fuels owns, in
fee, properties that contain estimated proven and probable coal reserves of
approximately 180 million tons and controls, through mineral leases, additional
estimated proven and probable coal reserves of approximately 85 million tons.
Electric Fuels also owns a 50% undivided interest in coal reserves located in
West Virginia that currently are being leased to a third party under an
agreement that expires in March 1998. The reserves controlled by Electric
Fuels include substantial quantities of high quality, low sulfur coal that is
appropriate for use at Florida Power's existing generating units. The total
production of coal mined from these reserves during 1994 was approximately 4.2
million tons.
In connection with its coal operations, an Electric Fuels subsidiary, through a
joint venture, has an ownership interest in the operation of an underground
mining complex in southeastern Kentucky and southwestern Virginia. Other
Electric Fuels subsidiaries own and operate surface and underground mines, coal
processing and loadout facilities and a river terminal facility in eastern
Kentucky, a railcar-to-barge loading facility in West Virginia, and three bulk
<PAGE>
<PAGE> 22
commodity terminals: one on the Ohio River in Cincinnati, Ohio, and two on the
Kanawha River near Charleston, West Virginia. Electric Fuels and its
subsidiaries employ both company and contract miners in their mining
activities.
An Electric Fuels subsidiary owns railroad car repair and parts reconditioning
and rail and trackworks facilities in eleven states, including a railcar
hydraulic cushioning unit manufacturing and reconditioning facility in Fort
Worth, Texas.
Another subsidiary of Electric Fuels owns and operates a manufacturing facility
at the Florida Power Energy Complex in Crystal River, Florida. The
manufacturing process utilizes the fly ash generated by the burning of coal as
the major raw material in the production of lightweight aggregate used in
building blocks. Electric Fuels also operates an environmental testing
laboratory in Tampa, Florida.
PROGRESS CREDIT
Progress Credit, through its leasing operations, owns 21 aircraft, 3 spare
aircraft engines, 25 locomotives and other property. The aircraft and engines
are mainly leased to seven U.S. commercial airlines. Information concerning
Progress Credit's net investment in these assets is included in Note 6 to the
Financial Statements. Through its real estate development subsidiary, Talquin
Development Company ("Talquin Development"), Progress Credit owns real estate
throughout Florida. Barnett Tower, which is Florida Progress' headquarters
building, and the Carillon office park, account for about two thirds of the
real estate assets. Both properties are located in St. Petersburg, Florida.
Other holdings include 2,000 acres near Lakeland, Florida, a marina in St.
Petersburg, Florida with 235 wet slips and 400 high and dry slips, and 20 acres
of property adjacent to the marina. Through partnerships, Talquin Development
also has interests in two office buildings located in St. Petersburg and
Tallahassee, Florida.
MID-CONTINENT
Mid-Continent owns an office building in Oklahoma City, Oklahoma.
ITEM 3. LEGAL PROCEEDINGS
1. FERC Docket No. ER94-961-000.
In April 1994, the FERC approved Florida Power's 1994 settlement
agreement, which provides for rates designed to increase annual revenues
by approximately $9.8 million. The rate increases were effective in March
and May 1994 and allow Florida Power to recover costs for new generating
facilities and higher purchased power costs.
<PAGE>
<PAGE> 23
2. FERC Docket Nos. ER95-469-000 and ER95-457-000.
On January 23, 1995, Florida Power filed a wholesale rate increase with
the FERC for its municipal and cooperative customers, that was proposed to
become effective January 1, 1995. This increase was negotiated and filed
under a pre-filing settlement agreement with all wholesale customers,
except Reedy Creek Improvement District ("Reedy Creek"), which elected not
to participate. The settlement for all classes of service (except rates
for certain transmission service, which remained unchanged) is designed to
increase annual revenues from the municipal customers by $3.5 million and
from one cooperative customer by $5.1 million. Concurrently, Florida
Power filed in a separate docket a $920,000 rate increase for Reedy Creek,
which is based on the same rates proposed in the settlement agreement.
On March 21, 1995, the FERC issued an order accepting for filing the full
requirements and partial requirements generation rates proposed for the
municipal and cooperative customers, allowing these rates to become
effective as of January 1, 1995, without hearing or suspension. FERC also
accepted for filing the partial requirements generation rates proposed for
Reedy Creek, allowing them to go into effect after a one day suspension as
of January 2, 1995, subject to refund pending a hearing on their
lawfulness under the Federal Power Act. FERC also accepted for filing the
transmission rates proposed for all transmission customers, allowing them
to go into effect after a five-month suspension as of June 1, 1995,
subject to refund pending a hearing on their lawfulness under the Federal
Power Act.
In a related matter, on February 14, 1995, Reedy Creek notified Florida
Power that Reedy Creek is exercising certain contract demand termination
rights under its contract with Florida Power, based on Reedy Creek's
allegation that the total base rate increase filed with FERC is an
increase of 15 percent or more. Reedy Creek states that it will decrease
its contract demand from the current level of 60 MW to 30 MW in 1996, 10
MW in 1997, 10 MW in 1998, and 15 MW in 1999. Florida Power does not
believe that it has filed a total base rate increase in an amount of 15
percent or more, and will dispute Reedy Creek's notice of termination.
FERC also set this issue for hearing in its order of March 21, 1995.
3. Orlando Cogen (1), Inc. and Orlando Power Generation I Inc., as general
partners of and on behalf of Orlando CoGen Limited, L.P. v. Florida Power
Corporation, U.S. District Court, Middle District of Florida, Orlando
Division, Case No. 94-303-CIV-ORL-22.
Petition for Resolution of a Cogeneration Contract Dispute with Orlando
CoGen Limited, L.P. by Florida Power Corporation, Florida Public Service
Commission, Docket No. 940357-EQ.
In 1993, Florida Power notified Orlando CoGen Limited, L.P. ("OCL"), a
limited partnership selling electricity to Florida Power, that OCL was in
default of its purchased power contract with Florida Power by failing to
install and maintain backup fuel at its cogeneration facility. On March
10, 1994, the general partners of OCL - Orlando CoGen (1), Inc., a
subsidiary of Air Products and Chemicals, Inc. ("Air Products"), and
<PAGE>
<PAGE> 24
Orlando Power Generation I Inc., a subsidiary of UtilCo Group ("UtilCo") -
filed suit against Florida Power as general partners of and on behalf of
OCL. As amended, the suit now seeks unspecified damages under federal and
state antitrust laws and an order directing Florida Power to pay the
capacity payment under the contract. The suit also includes a breach of
contract count based on Florida Power's reliance on the pricing mechanism
specified in the contract, which allows Florida Power to pay an
as-available energy price rather than a higher firm energy price when the
avoided unit upon which the contract price is based would not have been
operated.
Florida Power filed an answer to the complaint and antitrust claims, and a
counterclaim against the partnership, Air Products, and UtilCo,
alleging that OCL never intended to maintain an uninterrupted fuel supply,
and therefore fraudulently induced Florida Power to execute a purchased
power contract.
On April 7, 1994, Florida Power filed a complaint with the FPSC requesting
the FPSC to enter an order stipulating that the contract between OCL and
Florida Power requires OCL to provide a backup fuel supply for its
cogeneration facility. OCL filed a motion to dismiss the FPSC case on the
grounds that the FPSC lacks jurisdiction to interpret this cogeneration
contract. On February 15, 1995, the FPSC issued an order granting OCL's
motion. For additional discussion of this matter, see Note 11 to the
Financial Statements.
4. Pasco Cogen, Ltd. v. Florida Power Corporation, Florida Circuit Court,
Sixth Judicial Circuit for Pasco County, Case No. 94-5331-CA-DIV-Y.
On October 14, 1994, Florida Power was served with a complaint brought
by Pasco Cogen, Ltd. ("Pasco"), a Florida limited partnership. Under a
purchase power contract, Pasco sells electricity to Florida Power from
Pasco's natural-gas-fired cogeneration facility located in Pasco County,
Florida. The dispute involves Florida Power's reliance on the pricing
mechanism specified in Pasco's contract, which allows Florida Power to pay
an as-available energy price rather than a higher firm energy price when
the avoided unit upon which the contract price is based would not have
been operated. Pasco seeks a declaratory judgment that it is entitled to
higher payments for energy delivered to Florida Power and a mandatory
injunction requiring Florida Power to pay higher energy payments, based on
Pasco's allegation that the avoided unit would have operated more often
than Florida Power's model indicates. Pasco also seeks unspecified
damages for Florida Power's alleged breach of the Pasco contract and
violations of Florida antitrust law. On November 2, 1994, Florida Power
moved for the court to dismiss the Pasco complaint. On December 8, 1994,
the court denied Florida Power's motion. On February 27, 1995, the court
issued an order dismissing an appeal Florida Power had voluntarily sought
to have dismissed. For additional discussion of this matter, see Note 11
to the Financial Statements.
<PAGE>
<PAGE> 25
5. NCP Lake Power, Inc. v. Florida Power Corporation, Florida Circuit Court,
Fifth Judicial Circuit for Lake County, Case No. 94-2354 CA-01.
On October 21, 1994, Florida Power was served a complaint brought by
NCP Lake Power, Inc. ("Lake"), a general partner of Lake Cogen Ltd, a
Florida limited partnership. Under a purchase power contract, Lake sells
electricity to Florida Power from Lake's natural-gas-fired cogeneration
facility located in Lake County, Florida. The dispute involves Florida
Power's reliance on the pricing mechanism specified in Lake's contract
price which allows Florida Power to pay an as-available price rather than
a higher firm energy price when the avoided unit upon which the contract
price is based would not have been operated.
Lake seeks unspecified damages for Florida Power's alleged breach of the
Lake contract, and a declaratory judgment that Lake is entitled to higher
payments for energy delivered to Florida Power. On November 10, 1994,
Florida Power moved for the court to dismiss the Lake complaint. On
February 7, 1995, the court issued an order denying Florida Power's
motion. For additional discussion of this matter, see Note 11 to the
Financial Statements.
6. In re: Petition of Florida Power Corporation for a Declaratory Statement
regarding the application of Rule 25-17-22.020, F.A.C., to certain
negotiated contracts for the purchase of firm capacity and energy, Florida
Public Service Commission, Docket No. 940771-EQ.
On July 21, 1994, Florida Power filed the above-referenced petition
seeking a FPSC declaration that Florida Power's reliance on the pricing
mechanism specified in 11 of its purchased power contracts is consistent
with FPSC regulations. The mechanism in question allows Florida Power to
pay an as-available energy price rather than a higher firm energy price
when the avoided unit upon which the contract prices are based would not
have been operated. Various non-utility generators have intervened for
the purpose of moving to dismiss this petition, arguing that this is a
contract dispute over which the FPSC lacks jurisdiction. On January 31,
1995, the FPSC granted the motion to dismiss. For additional discussion
of this matter, see Note 11 to the Financial Statements.
7. In re: Petition of Florida Power Corporation for determination that its
plan for curtailing purchases from Qualifying Facilities in minimum load
conditions is consistent with Rule 25-17.086, F.A.C., Florida Public
Service Commission, Docket No. 941101-EQ.
As a result of various factors, Florida Power has begun to experience a
condition where the total energy on its system may exceed the demand of
its customers during minimum load periods on certain days, usually during
the mild-weather period from mid-October through May. On October 14,
1994, Florida Power placed into effect a generation curtailment plan, and
filed the above-referenced petition with the FPSC to seek a determination
that the curtailment plan is consistent with FPSC rules. A hearing in
this matter has been set for May 8-9, 1995. For additional discussion of
this matter, see Note 11 to the Financial Statements.<PAGE>
<PAGE> 26
8. In re: Petition for declaratory statement regarding eligibility for
Standard Offer contract by Florida Power Corporation, Florida Public
Service Commission Docket No. 950110EI.
The FPSC's rules limit "standard offer" cogeneration projects to 75 MW.
Standard offers are pre-approved contracts which utilities are required to
offer, and which in turn are amenable to being accepted by a qualifying
facility of 75 MW or less. Panda-Kathleen L.P. ("Panda") entered into
a standard offer cogeneration contract with Florida Power on November 25,
1991. Recently Florida Power learned that Panda is planning to build a
115 MW facility. On January 23, 1995, Florida Power filed the
above-reference petition seeking a FPSC ruling that Florida Power's
standard offer contract is not available to Panda if it constructs a 115
MW facility. Panda has also attempted to extend the term of the standard
offer contract from 20 years to 30 years. Florida Power's petition also
seeks a declaration that the contract term is 20 years.
9. In re: Petition of Florida Power Corporation for approval to increase
accrual for nuclear decommissioning costs.
In December 1994, Florida Power filed a new site-specific study with the
FPSC that estimated total future decommissioning costs to be approximately
$1.7 billion, which corresponds to $391 million in 1994 dollars. Florida
Power filed a petition with the FPSC requesting that the retail portion of
annual decommissioning expense be increased to $17.7 million, beginning in
January 1995. Florida Power is not seeking an increase in rates to recover
the higher costs. The FPSC is expected to rule on this petition in 1995.
10. The Coastal Corporation, et al. v. Florida Power Corporation et al.,
District Court, Harris County, Texas, 125th Judicial Circuit, Docket No.
95-003374.
Florida Power and two subsidiaries, Power Energy Services Corporation
("Power Energy") and Power Interstate Energy Services Corporation ("Power
Interstate"), are parties to a June 30, 1993 letter agreement with the
Coastal Corporation and TransCanada Pipeline, and their subsidiaries,
which concerns the rights and obligations of the partners in the two
partnerships formed to develop the SunShine Pipeline project. Pursuant to
this letter agreement, on December 30, 1994, Florida Power demanded return
of Power Energy's and Power Interstate's capital accounts in the
partnerships which total approximately $6 million. Without refusing or
otherwise responding to this demand, on January 24, 1995, the Coastal
Corporation and TransCanada Pipeline, and their subsidiaries, sought
declaratory relief in the above-referenced action. The plaintiffs seek a
court order that as withdrawn partners, Power Energy and Power Interstate
have forfeited their right to return of their partnership capital accounts
or, in the alternative, that the capital accounts should not be returned
because the defendants have violated their fiduciary duties to the
partnerships by allegedly attempting to arrange alternative sources of
fuel supply for Florida Power generating plants.
<PAGE>
<PAGE> 27
On February 27, 1995, Florida Power entered a special appearance in this
case to present a motion objecting to the court's jurisdiction on the
grounds that no basis exists for maintaining this action in Texas and that
it should be dismissed for want of personal jurisdiction. On March 8,
1995, Power Energy and Power Interstate withdrew their demand letters
dated December 30, 1994 and waived their right to be paid their capital
accounts. On March 16, 1995, the plaintiffs filed a notice of voluntary
dismissal, with prejudice, of all claims and causes of action which they
asserted in this action.
11. Florida Power Corporation v. ANR Southern Pipeline et al., Circuit Court,
Sixth Judicial Circuit for Pinellas County, Florida, Case
No. 95-761-CI-11.
On February 2, 1995, Florida Power filed a complaint for declaratory
judgment declaring Florida Power's right to terminate, effective March 2,
1995, two agreements related to the transportation of natural gas through
the proposed SunShine Pipeline. Florida Power entered into these
agreements in April 1993, upon the condition that the proposed SunShine
Pipeline project would have all of its regulatory approvals on or before
March 1, 1995. In 1994, when it became evident to all parties that this
deadline would not be met, the SunShine development partnership took the
position that Florida Power had waived its right to terminate the
precedent agreements on March 1, 1995. Given Florida Power's right to
terminate for SunShine's failure to meet the regulatory approval
condition, and given SunShine's contention that Florida Power had waived
its termination right, Florida Power concurrently gave notice to the
SunShine development partnership of termination of the precedent
agreements and filed the above-referenced action to resolve this
controversy. The defendants' response to this complaint is due to be
filed in April 1995.
12. Praxair, Inc. v. Florida Power & Light Company ("FP&L") and
Florida Power Corporation, U.S. District Court for the Middle District of
Florida, Tampa Division, Civil Action No. 88-1672-CIV-T-13C.
On October 14, 1988, Praxair, Inc. ("Praxair"), formerly a part of Union
Carbide Corporation, filed this suit seeking both injunctive relief
and damages. Praxair claims Florida Power violated provisions of the
Sherman and Clayton Antitrust Acts, primarily by refusing to provide
retail electric service to Praxair's plant at Mims, Florida. Florida
Power's records indicate that a territorial agreement has been in effect
between it and FP&L for approximately 30 years, pursuant to which it was
understood and agreed that FP&L, not Florida Power, would provide retail
service in the area in question. Florida Power's records also indicate
that this territorial agreement was approved by the FPSC pursuant to a
state policy encouraging retail service territorial agreements, and that
at least one amendment to the territorial agreement was approved by the
FPSC as part of its supervision of Florida Power's and FP&L's territorial
arrangements.
<PAGE>
<PAGE> 28
On November 22, 1988, Florida Power and FP&L jointly filed a motion for
summary judgment contending that there is no dispute as to any material
issue of fact, and that the case should be decided in their favor as a
matter of law because the approved territorial agreement qualifies for the
state action exemption to the antitrust laws. The FPSC entered an
appearance in this case in support of the joint motion for summary
judgment. On May 2, 1989, the plaintiff filed a motion for partial
summary judgment as to the issue of liability. On December 8, 1993, the
court denied both motions. Praxair, FP&L and Florida Power all filed
motions for reconsideration of the December 8, 1993 order. On January 26,
1994, the court denied all motions for reconsideration on the basis that a
material issue of fact exists. The court has delayed additional discovery
and the setting of the case for trial in order to allow appeals of the
court's January 26th order. Florida Power and FP&L filed notices of
appeal with the U.S. Court of Appeals for the 11th Circuit on February 8,
1994, and Praxair filed a notice of cross appeal on February 22, 1994.
Briefs have been filed by all parties, as well as by the FPSC and the
Attorney General of Florida as amici curiae in support of the positions of
Florida Power and FP&L. On February 27, 1995, the U.S. Court of Appeals
set Florida Power's appeal for oral argument on April 11, 1995.
13. 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.
14. Florida Public Utilities Company v. Florida Power Corporation, Florida
Power & Light Company, Atlanta Gas Light Company, and City of Sanford,
Florida, United States District Court for the Middle District of Florida,
Orlando Division, Civil Action No. 92-115-CIV-ORL-19.
On February 7, 1992, Florida Power was served with a copy of a complaint
alleging damages caused by violations of CERCLA and Sections 376.302 and
376.313(3) Florida Statutes, by former owners of a coal gasification
plant previously operated at Sanford, Florida. The plaintiff, Florida
Public Utilities Company, currently owns the land which includes the
former plant site. The complaint states that the FDEP has completed its
initial investigation and has determined that hazardous substances have
<PAGE>
<PAGE> 29
been discharged and/or released at the site of the former gasification
plant. The plaintiff alleges that Florida Power owned and operated the
plant from 1944 until 1946 and that Florida Power is a successor in
interest through the merger of Florida Power with a previous owner of the
plant, Sanford Gas Company.
On February 3, 1994, the parties to this action submitted a completed
contamination assessment report to the FDEP. As of this date, Florida
Power has not received any further communication from the FDEP. Florida
Power anticipates an extended period of negotiation with the FDEP. The
lawsuit continues to be stayed pending the results of the FDEP's review.
On February 14, 1995, the parties filed a joint stipulation for dismissal
of this action without prejudice to the plaintiff. The dismissal will
permit the parties to continue discovery necessary for preservation of
testimony of elderly witnesses, although the time period for limitation on
actions of this type will begin to run again from the date of the order
approving the joint stipulation. Florida Power anticipates an extended
period of negotiation with the FDEP, which will continue even after the
dismissal of the plaintiff's action.
At the present time, Florida Power does not believe that its share of the
costs of cleaning up this site will be material, or that it will have to
bear a significantly disproportionate share of those costs. This matter
is being reported because liability for the cleanup of certain sites is
technically joint and several, and because the extent to which other
parties will ultimately share in the cleanup costs at this site is not yet
determinable. (See Note 11 to the Financial Statements for further
information regarding the potential costs.)
15. Peak Oil Company, Missouri Electric Works, 62nd Street, AKO Bayside,
Bluff Electric and Sydney Mine Superfund Sites.
Florida Power has been notified by the EPA that it is or could be a
"potentially responsible party" ("PRP") with respect to each of the above
Superfund sites. Based upon the information presently available, Florida
Power has no reason to believe that its total liability for the cleanup of
these sites will be material or that it will be required to pay a
significantly disproportionate share of those costs. However, these
matters are being reported because liability for cleanup of certain sites
is technically joint and several, and because the extent to which Florida
Power may ultimately have to participate in those cleanup costs is not
presently determinable. (See Note 11 to the Financial Statements for
further information regarding the potential costs.)
16. Peak Oil Company and Zellwood Groundwater Superfund Sites.
Florida Progress has been notified by the EPA that one or more former non-
utility operations whose assets have been divested are or could be PRPs
with respect to the Zellwood Groundwater or Peak Oil Company Superfund
cleanup sites. Based upon the information presently available, Florida
Progress has no reason to believe that its total liability for the cleanup
<PAGE>
<PAGE> 30
of these sites will be material or that it will be required to pay a
significantly disproportionate share of those costs.
With respect to the Peak Oil Superfund site, one of the subsidiaries of
Florida Progress agreed to settle with and pay the EPA $2,607.25, which
the subsidiary expects will bring the matter to a final conclusion.
In June 1994, a subsidiary of Florida Progress responded to the EPA's
supplemental information request with respect to the Zellwood Groundwater
Superfund site. The EPA is currently reviewing the more than 750
responses from the various PRPs named for this site.
These matters are being reported because liability for cleanup of certain
sites is technically joint and several, and because the extent to which
Florida Progress may ultimately have to participate in those cleanup costs
is not presently determinable. (See Note 11 to the Financial Statements
for further information regarding the potential costs.)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR THE REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
FLORIDA PROGRESS
Florida Progress' common stock is listed on the New York Stock Exchange and the
Pacific Stock Exchange. The high and low price per share of Florida Progress'
common stock for each quarterly period and the dividends per common share paid
on shares of Florida Progress' common stock during the last two fiscal years
appears on the "Quarterly Financial Data" table at the end of the Notes to the
Financial Statements, and is incorporated herein by reference.
In November 1994, Florida Progress' Board announced an increase of 2% in the
annual dividend rate from $1.98 to $2.02 per share. Florida Progress' current
dividend payout ratio is about 88 percent. Information concerning the Florida
Progress dividend payout ratio and dividend policy is set forth in Part II,
Item 7 hereof under the heading "Liquidity and Capital Resources".
Florida Progress' Restated Articles of Incorporation, as amended, do not limit
the dividends that may be paid on its common stock. However, the primary
source for payment of Florida Progress' dividends consists of dividends paid to
it by Florida Power. Florida Power's Amended Articles of Incorporation, as
amended, and its Indenture dated as of January 1, 1944, as supplemented, under
which it issues first mortgage bonds, contain provisions restricting dividends
in certain circumstances. At December 31, 1994, Florida Power's ability to pay
dividends was not limited by these restrictions.
<PAGE> 31
Florida Progress and Progress Capital have entered into an Amended and Restated
Support Agreement dated as of February 1, 1991, pursuant to which Florida
Progress has agreed to cause Progress Capital to have at the last day of each
month a net worth (defined generally as the sum of capital stock and retained
earnings minus the sum of treasury stock and intangible assets) equal to $150
million, plus 50% of Progress Capital's consolidated net income since January
1, 1990 (and not minus any consolidated net loss), plus the net proceeds to
Progress Capital of any capital stock or equity contribution issued to or made
by Florida Progress or any of its subsidiaries since January 1, 1990, other
than an equity contribution consisting of capital stock or assets of a
subsidiary of Florida Progress. As of December 31, 1994, Progress Capital's
net worth was $99.3 million higher than the amount required under this
agreement.
The approximate number of equity security holders of Florida Progress is as
follows:
Number of Record Holders
Title of Class as of February 10, 1995
------------------------------ ------------------------
Common Stock without par value 58,265
FLORIDA POWER
All of Florida Power's common stock is owned by Florida Progress, its corporate
parent, and hence there is no established public trading market for the stock.
For the past three years, Florida Power has paid quarterly dividends to Florida
Progress totaling the amounts shown in the Statements of Shareholder's Equity
in the Financial Statements.
Florida Power's Amended Articles of Incorporation, as amended, and its
Indenture dated as of January 1, 1944, as supplemented, under which it issues
first mortgage bonds, contain provisions restricting dividends in certain
circumstances. At December 31, 1994, Florida Power's ability to pay dividends
was not limited by these restrictions.
[THIS SPACE INTENTIONALLY BLANK]<PAGE>
<PAGE> 32
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Annual Growth Rates
(in percent)
1989-1994 1994 1993 1992 1991 1990 1989
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FLORIDA PROGRESS CORPORATION
Summary of operations (in millions)
Utility revenues 5.0 $2,080.5 $1,957.6 $1,774.1 $1,718.8 $1,709.1 $1,627.0
Diversified revenues (continuing) 20.3 691.0 491.4 321.2 355.9 301.7 274.3
Income from continuing operations 2.6 212.0 195.8 175.7 174.5 179.8 186.1
Income (loss) from discontinued
operations and change in accounting 0.8 - (2.4) (15.0) 1.0
Net income 2.5 212.0 196.6 175.7 172.1 164.8 187.1
-------------------------------------------------------------------------------------------------------------------
Balance sheet data (in millions):
Total assets 4.4 $5,718.7 $5,638.8 $5,333.0 $5,024.9 $5,045.9 $4,610.4
Capitalization:
Short-term capital (26.3) $108.2 $201.6 $201.9 $68.2 $681.0 $498.6
Long-term debt 10.6 1,859.6 1,866.6 1,656.4 1,659.1 1,326.2 1,125.8
Preferred stock (9.3) 143.5 148.5 216.0 231.0 233.5 233.5
Common stock equity 7.7 1,984.4 1,820.5 1,737.6 1,587.7 1,424.3 1,372.3
-------------------------------------------------------------------------------------------------------------------
Total capitalization 4.9 $4,095.7 $4,037.2 $3,811.9 $3,546.0 $3,665.0 $3,230.2
-------------------------------------------------------------------------------------------------------------------
Common stock data:
Average shares outstanding (in millions) 4.0 93.0 88.3 85.4 80.8 77.0 76.6
Earnings per share:
Utility (1.3) $2.05 $2.06 $1.99 $2.03 $2.15 $2.19
Diversified (continuing) (0.8) 0.23 0.16 0.07 0.13 0.18 0.24
Discontinued operations and
change in accounting - 0.01 - (0.03) (0.19) 0.01
Consolidated (1.3) 2.28 2.23 2.06 2.13 2.14 2.44
Dividends per common share 3.0 1.99 1.95 1.905 1.843 1.777 1.72
Dividend payout 87.7% 87.6% 93.0% 87.0% 82.9% 70.4%
Dividend yield 6.7% 5.9% 5.9% 6.0% 7.2% 6.6%
Book value per share of common stock 3.1 $20.85 $20.40 $19.85 $19.14 $18.37 $17.92
Return on common equity 11.1% 11.1% 10.6% 11.4% 11.8% 13.9%
-------------------------------------------------------------------------------------------------------------------
Common stock price per share:
High 33 5/8 36 3/8 33 1/4 31 1/2 27 26 3/4
Low 24 3/4 31 1/4 27 7/8 24 3/8 22 1/4 22 1/8
Close 2.4 30 33 5/8 32 5/8 31 1/4 25 1/2 26 5/8
Price earnings ratio (year-end) 13.2 15.1 15.8 14.7 11.9 10.9
-------------------------------------------------------------------------------------------------------------------
Other year-end data:
Number of employees (0.3) 7,394 7,825 7,301 7,350 7,879 7,490
Number of common shareholders 0.5 44,148 44,371 44,870 42,176 41,970 43,005
-------------------------------------------------------------------------------------------------------------------
FLORIDA POWER CORPORATION
Electric sales (million of KWH)
Residential 3.3 13,863.4 13,372.6 12,825.8 12,623.9 12,415.5 11,786.9
Commercial 3.4 8,252.1 7,884.8 7,544.1 7,489.2 7,328.7 6,989.8
Industrial (1.0) 3,579.6 3,380.8 3,254.5 3,303.0 3,455.7 3,766.1
Total retail sales 2.8 27,675.2 26,528.3 25,414.0 25,179.1 24,878.3 24,123.3
Total electric sales 2.5 30,014.6 28,647.8 27,375.5 27,350.2 27,143.7 26,510.5
-------------------------------------------------------------------------------------------------------------------
Residential service (average annual):
KWH sales per customer 0.9 12,597 12,420 12,214 12,257 12,319 12,059
Revenue per customer 4.2 $1,038 $983 $884 $899 $896 $845
Revenue per KWH $0.0824 $0.0792 $0.0724 $0.0733 $0.0727 $0.0701
-------------------------------------------------------------------------------------------------------------------
<PAGE>
<PAGE> 33
Financial Data:
Operating revenues $2,080.5 $1,957.6 $1,774.1 $1,718.8 $1,709.1 $1,627.0
Net income after dividends
on preferred stock $190.7 $181.5 $170.2 $164.1 $165.5 $ 167.2
Total assets $4,284.5 $4,259.5 $3,980.6 $3,643.2 $3,528.1 $3,422.6
Long-term debt and preferred stock
subject to mandatory redemption $1,393.8 $1,433.6 $1,318.3 $1,213.1 $1,119.8 $1,095.2
Total capitalization including
short-term debt (in millions) $3,265.4 $3,240.4 $3,029.2 $2,692.2 $2,633.4 $2,473.9
Capitalization ratios:
Short-term capital 2.8% 5.3% 4.4% 1.4% 7.4% 4.7%
Long-term debt 41.7 43.1 40.8 41.4 38.7 40.2
Preferred stock 4.4 4.6 7.1 8.6 8.9 9.4
Common stock equity 51.1 47.0 47.7 48.6 45.0 45.7
Ratio of earnings to fixed charges (SEC method) 3.90 3.83 3.84 3.87 3.89 3.79
Embedded cost of long-term debt (2.6) 7.1% 6.8% 7.5% 7.7% 7.9% 8.1%
Embedded cost of preferred stock (1.1) 6.8% 6.8% 7.3% 7.3% 7.2% 7.2%
-------------------------------------------------------------------------------------------------------------------
Operating Data:
Net system capability (MW) 2.9 7,295 7,563 7,002 6,623 6,571 6,309
Net system peak load (MW) 0.4 6,955 6,729 6,982 6,056 5,026 6,817
Net system summer peak load (MW) 6,681 6,729 6,357 5,925 5,946 5,832
BTU per KWH of net output 9,986 10,027 9,981 10,007 10,005 10,076
Capital expenditures 5.1 $319.5 $426.4 $472.9 $345.9 $265.3 $249.6
Net cash flow to capital expenditures 1.8 103% 63% 52% 66% 70% 94%
Fuel cost per million BTU $1.75 $1.79 $1.86 $1.89 $2.11 $2.10
Average number of customers 2.5 1,243,891 1,214,653 1,182,170 1,159,237 1,135,499 1,101,817
Number of full-time employees (2.2) 4,972 5,807 5,806 5,677 5,570 5,553
-------------------------------------------------------------------------------------------------------------------
</TABLE>
In the preceding table, certain reclassifications have been made to amounts in
prior years to conform to the current year's presentation.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
COMPETITION
The nation's electric utility industry expects increasing competition in
markets historically served by regulated utilities. See the text under Item 1
"Business - Utility Operations - Florida Power - Competition".
EARNINGS PER SHARE
1994 1993 1992
------------------------------------------------------------
Florida Power Corporation $2.05 $2.06 $1.99
------------------------------------------------------------
Electric Fuels Corporation .25 .17 .14
Mid-Continent Life Insurance Co. .08 .10 .09
Progress Credit Corporation:
Lending and leasing .02 .02 .05
Real estate (.07) (.08) (.19)
Corporate and other (.05) (.05) (.02)
------------------------------------------------------------
Diversified .23 .16 .07
------------------------------------------------------------
Income before accounting change 2.28 2.22 2.06
Change in accounting - .01 -
------------------------------------------------------------
Consolidated $2.28 $2.23 $2.06
------------------------------------------------------------
<PAGE>
<PAGE> 34
OPERATING RESULTS
Florida Progress' 1994 consolidated earnings were $212 million, compared with
$196.6 million for 1993 and $175.7 million for 1992. Florida Power earned
$190.7 million in 1994, compared with $181.5 million in 1993 and $170.2 million
in 1992. Earnings from diversified operations were $21.3 million in 1994,
compared with $14.3 million in 1993 and $5.5 million in 1992.
In 1994 and 1993, Florida Power's retail KWH sales increased, compared with the
prior year. Customer growth and higher average usage were the main reasons.
Florida Power also benefited from higher retail electric rates, which state
regulators granted in Florida Power's 1992 retail rate case.
Florida Power continued to streamline its operations and improve efficiencies
in 1994. As a result, some positions were combined while other job functions
were eliminated. During 1994, Florida Power's work force was reduced by about
800, including 178 employees who elected to take early retirement under a
company program, effective February 1, 1994. Costs for restructuring and the
voluntary early retirement option reduced earnings by $11.5 million, or $.12 a
share, in 1994 and by $3.4 million, or $.04 a share, in 1993.
In September 1994, subsidiaries of Florida Power withdrew as equity partners
from a proposed natural gas pipeline project. Changing regulatory conditions
and competitive pressures in the electric power industry prompted Florida Power
to reassess its strategic priorities and decide to focus on its core electric
business. The write-off of the investments lowered Florida Power's 1994 net
earnings by $3.9 million, or $.04 per share.
Significantly higher revenues and earnings from Electric Fuels were the primary
reasons for the increase in diversified earnings during 1994. Electric Fuels'
earnings per share were higher in 1994 as a result of improved results from
marine and rail operations, including recent acquisitions. Mid-Continent's
earnings per share were lower in 1994 due to a change in life reserve
provisions to recognize unexpected persistency in certain insurance policies.
In 1993, Florida Progress' results were reduced by the negative impact of the
new federal income tax law. The tax law lowered Florida Progress' 1993
consolidated earnings by $6.4 million, or $.07 per share, compared with 1992.
Florida Power's 1993 earnings were reduced by $2.8 million and the diversified
operations' results, including a deferred income tax adjustment, were lowered
during the year by $3.6 million.
Diversified results were lower in 1992 primarily because the real estate unit
provided for expected losses on the sale of real estate, which reduced earnings
by $7.4 million.
The financial return on Florida Power's common equity was 11.9 percent in 1994,
12.1 percent in 1993 and 12.3 percent in 1992. Although the 1994 and 1993
Florida Power returns were bolstered by an increase in retail electric rates
and higher energy sales, these increases were offset primarily by higher income
taxes, increased insurance and depreciation expenses, costs for work-force
reductions and the early retirement program, and the investment write-off from
the gas pipeline project.
<PAGE>
<PAGE> 35
Excluding results from real estate, and lending and leasing operations -
businesses from which Florida Progress is withdrawing - diversified returns
were 11.5 percent in 1994, 10.1 percent in 1993 and 11 percent in 1992.
UTILITY REGULATORY MATTERS
In September 1992, the FPSC granted Florida Power an annual revenue increase of
$85.8 million. The FPSC approved increases in retail base rates of
approximately $58 million to be effective in November 1992, $9.7 million in
April 1993 and $18.1 million in November 1993. The retail rates are based on a
12-percent regulatory return on equity, with an allowed range between 11 and 13
percent.
The FPSC ruled that Florida Power's retail regulatory return on equity would be
restricted to 12.5 percent for 1994. This temporary earnings restriction did
not affect Florida Power's current retail rates or its authorized range for
return on equity. Florida Power's retail regulatory return on equity was 12
percent for 1994.
In 1991, the FPSC approved Florida Power's request to construct two natural-
gas-fired, combined-cycle generating units in Polk County. Florida Power
already has completed the permitting process and purchased 8,100 acres for the
energy site. Florida Power now is performing site development work and expects
the units to be completed in 1998 and 1999.
At the request of the FPSC, Florida Power submitted a revenue decoupling plan
for residential customers. Revenue decoupling is a ratemaking concept that
eliminates the direct link between KWH sales and revenues. This concept removes
the disincentive for utilities to urge customers to conserve electricity. The
FPSC ordered a three-year test for residential revenue decoupling, beginning in
January 1995. Under the plan, abnormal weather variances will no longer impact
earnings with respect to residential revenues. Florida Power does not expect
revenue decoupling to have a material effect on annual earnings. (See Note 1 to
the Financial Statements.)
In late 1994, Florida Power and the Orlando Utilities Commission, a municipal
utility, negotiated a new 10-year territorial agreement that specifically
defines electric service boundaries within Orange County, including areas
around Orlando. The agreement replaces the previous 20-year contract that
expired in July 1994. In February 1995, the Orlando City Council approved a
10-year franchise agreement allowing Florida Power to operate in the City of
Orlando. This will allow Florida Power to continue to serve those areas and
customers that are annexed into the City of Orlando in the future. The FPSC is
expected to approve the new territorial agreement in 1995.
On March 7, 1995, the FPSC voted to approve Florida Power's request to change
Florida Power's energy management program beginning in April 1995. While these
changes will lower energy costs to customers on average, there will be no
significant impact on earnings. The energy management program was originally
designed as a means to defer building additional generation by lowering peak
demand. Recent improvements in technology have allowed electric utilities to
build generation less expensively. These changes caused Florida Power to
reevaluate and redesign its energy management program. Florida Power is seeking
to reduce customer credits to reflect more accurately the value of each
participant's contribution to the program. <PAGE>
<PAGE> 36
In January 1995, Florida Power filed with the FERC two requests to increase
rates for wholesale service totaling approximately $9.5 million annually. One
request of $8.6 million represents a settlement agreement with all but one
wholesale customer. The second request seeks an increase of $.9 million for the
remaining customer. The increases are needed primarily to recover additional
purchased power capacity costs. On March 21, 1995, the FERC approved the
increases. The new generation and transportation rates will be effective
January 1995 and June 1995, respectively. The generation rate increase for the
one customer which protested the increase and the transportation rate increase
are subject to appeal. (See Item 3 "Legal Proceedings", paragraph 2.)
As a result of rate increases approved from previous settlement agreements,
Florida Power increased wholesale revenues by $8.2 million in 1994 and by $4.8
million in 1993. (See Note 10 to the Financial Statements.)
UTILITY REVENUES AND SALES
Operating revenues were $2.1 billion in 1994, compared with $2 billion in 1993
and $1.8 billion in 1992. Florida Power revenues rose in 1994 primarily because
of increased retail KWH sales, resulting from higher average usage and customer
growth during the year. During the year, average residential sales were up by
1.4 percent, average commercial sales increased by 2 percent and average
industrial sales rose by 3.3 percent. Phased-in increases in retail base rates
from Florida Power's 1992 retail rate case also boosted revenues. The new base
rates increased operating revenues by $18.3 million in 1994 and $43.4 million
in 1993 compared with each preceding year.
In 1994, Florida Power's retail KWH sales increased by 3.1 percent over 1993,
mainly due to customer growth and a stronger economy. Customer growth was 2.4
percent in 1994. In 1993, the average number of customers in Florida Power's
system increased 2 percent, after adjusting for the acquisition of the city of
Sebring's electrical distribution system. Florida Power's annual customer
growth rate continues to be about twice the national average in the electric
utility industry.
FUEL AND PURCHASED POWER
Florida Power recovers substantially all fuel and purchased power costs through
fuel and capacity adjustment clauses established by the FPSC. Therefore,
fluctuations in these costs have little impact year to year on net income.
Fuel and purchased power costs increased by $66.5 million in 1994 and by $49.9
million in 1993, compared with each preceding year. The growth was primarily
due to higher system requirements and increased purchased power costs.
Florida Power has long-term contracts to purchase 1,110 MW of firm power and
"as-available" energy from cogenerators. Of this amount, 961 MW were available
to Florida Power at the end of 1994. Because credit-rating agencies treat a
portion of purchased power capacity payments as a debt equivalent, these
commitments may weaken Florida Power's credit ratings. (See Note 11 to the
Financial Statements.)
<PAGE>
<PAGE> 37
The cost to Florida Power for many of its purchased power contracts is based on
what the utility would have paid to build and operate a new pulverized
coal-fired plant. In August 1994, Florida Power began paying cogenerators at an
as-available price rather than at the higher firm energy price during those
periods the utility's system requirements would not have required the use of
the avoided coal unit. Using the as-available pricing during off-peak hours
reduces payments to cogenerators by about $15 million annually.
Florida Power also established a generation curtailment plan for these
purchased power contracts to avoid having to cycle off lower-cost generating
units during periods of low-system demand. Under this plan, energy purchases
from cogenerators would be less during low-load periods.
In 1994, Florida Power filed petitions with the FPSC seeking approval for these
changes. On January 31, 1995, the FPSC dismissed the petition related to the
as-available energy price issue after ruling it to be a contract dispute over
which the FPSC had no jurisdiction. (See Part I, Item 3 "Legal Proceedings",
paragraph 6.) Three cogenerators are disputing the changes in separate
lawsuits. (See Note 11 to the Financial Statements.)
OTHER UTILITY EXPENSES
Other Florida Power operation and maintenance expenses decreased by $3.1
million in 1994, compared with 1993. Operation and Maintenance expenses
increased by $64.2 million in 1993, compared with 1992.
Recoverable energy conservation program costs increased by $3.7 million in 1994
and by $32.3 million in 1993. Florida Power recovers substantially all of its
energy conservation program costs through a clause in electric rates similar to
the fuel adjustment clause.
The lower 1994 expenses resulted from Florida Power's company wide,
cost-reduction efforts during the year. The increase in 1993 expenses was
primarily due to higher energy conservation costs, postretirement benefit costs
and the early retirement program.
Depreciation expense increased by $21.3 million in 1994, compared with 1993,
due to the addition of four combustion turbine units in late 1993 and other
plant additions. Depreciation expense increased by $30.7 million in 1993 over
1992 primarily because of higher fossil plant dismantlement costs that were
approved in Florida Power's 1992 retail rate case. In addition, a one-time
retroactive adjustment was made in 1992 that reduced depreciation expense.
Interest expense was impacted positively by lower interest rates in both 1992
and 1993. In 1994, interest expense was higher than in 1993 due to higher
rates and higher debt levels. Interest expense increased in 1993, compared with
1992, due to higher average debt levels in 1993.
Florida Power completed several major construction projects that caused the
allowance for funds used during construction to decrease by $4.7 million in
1994 and by $3.1 million in 1993, compared with the preceding years.
<PAGE>
<PAGE> 38
ELECTRIC FUELS CORPORATION
Florida Progress continues to expand the operations of Electric Fuels
Corporation, Florida Progress' energy and transportation unit. Electric Fuels
is building its rail services operations to better serve the needs of its rail
industry customers and accelerate expansion into new markets. In late 1994,
Florida Progress acquired FM Industries, a Fort Worth, Texas-based manufacturer
and reconditioner of cushioning units for rail cars. FM Industries had annual
revenues of about $42 million. The acquisition was accounted for as a pooling
of interests and increased Electric Fuels' 1994 earnings by $2.4 million, or
$.03 per share. The 1993 and 1992 financial statements were not restated for
this acquisition. (See Note 1 to the Financial Statements.)
In June 1993, Electric Fuels acquired the assets of Steel Processing Services,
Inc., an Alabama-based rail-car repair and parts-reconditioning company. The
acquisition increased 1993 revenues for Electric Fuels by approximately $80
million, compared with 1992.
Earnings for Electric Fuels in 1994, including results from FM Industries, were
$22.6 million, compared with $14.9 million in 1993 and $12.1 million in 1992.
Electric Fuels' return on equity for 1994 was 14.5 percent and has averaged
12.4 percent during the last three years.
MID-CONTINENT LIFE INSURANCE COMPANY
Florida Progress also is maintaining a growth strategy for its life insurance
unit, Mid-Continent Life Insurance Company, through the development of a
regional office network.
Mid-Continent's earnings for 1994 were $7.3 million, down from $8.5 million in
1993 and $8 million in 1992. The lower 1994 earnings were due mainly to a
change in life reserve provisions to recognize unexpected persistency, i.e.
renewal rates, in certain insurance policies. This offset the impact of growth
in premiums, net of related expenses, in 1994.
At the end of 1994, Mid-Continent had insurance-in-force totaling $13.9
billion, an increase of $1.1 billion from 1993 and an increase of $2.5 billion
from 1992. Mid-Continent's insurance-in-force has grown an average of 16
percent per year since Florida Progress acquired Mid-Continent in 1986.
PROGRESS CREDIT CORPORATION
Progress Credit is continuing an orderly withdrawal from the lending and
leasing business and is selling its real estate properties as market conditions
allow. The lending and leasing portfolio, which totaled $512 million at the end
of 1994, primarily contains commercial aircraft loans and leases and first
mortgage real estate loans. At the end of 1994, Progress Credit had reserves of
$33.7 million for the lending and leasing portfolio. Although the airline
industry continues to face financial pressures, management believes the
reserves are adequate to implement Progress Credit's withdrawal strategy as
long as there is no significant further deterioration in the airline industry.
<PAGE>
<PAGE> 39
Progress Credit's investments in its real estate portfolio totaled
approximately $133 million as of December 31, 1994. The majority of this
capital was invested in Florida Progress' headquarters building and in a
corporate office park.
In 1994, Progress Credit's losses from its combined lending and leasing
business and real estate operations totaled $4.9 million, compared with losses
of $5.2 million in 1993 and losses of $12.7 million in 1992.
In 1994, Progress Credit increased its provisions for loan and lease losses,
compared with 1993, which lowered earnings by $2.5 million. In 1993, the effect
of the new tax law reduced Progress Credit's net earnings by $2.5 million. This
reduction included a deferred tax adjustment related to the leveraged leasing
business.
Progress Credit is currently negotiating to restructure a $32.5 million
aircraft lease with Continental Airlines. The loss, if any, from this
restructuring would be charged against reserves. Management believes that at
most the loss from the restructuring could reach $5 million.
During 1994 and 1993, Progress Credit had lower operating and interest costs,
compared with 1992, due to lower debt levels in 1994, lower interest rates in
1993 and the sale of some properties in the real estate portfolio.
In 1992, the real estate unit provided for expected losses on real estate
sales, which reduced earnings by $7.4 million, or $.09 per share. This was the
major reason for the higher losses in 1992 at Progress Credit.
Any sale of real estate assets or the finance unit's holdings is expected to
result in lower revenues and interest expense for Progress Credit. The impact
on net income depends on the timing of these sales, the gains or losses on the
assets sold, the operating income earned or carrying costs incurred and the
interest rates on the associated debt repaid.
Because most of Progress Credit's remaining real estate properties are located
in growth areas, management believes the market for its holdings should
improve. Current weak commercial real estate markets will require Florida
Progress to hold these properties, and absorb the related carrying costs, until
the properties can be sold.
INCOME TAXES
In August 1993, the Omnibus Budget Reconciliation Act of 1993 was signed into
law. The major provision of the tax law affecting Florida Progress was the
increase in the maximum corporate income tax rate from 34 percent to 35
percent, effective retroactively to January 1, 1993. This 1-percent increase in
the tax rate, and the related impact on accounting for long-term leveraged
leases, lowered Florida Progress' 1993 net earnings by $6.4 million, or $.07
per share. (See Note 9 to the Financial Statements.)
OTHER
Even though the inflation rate has been relatively low in recent years,
inflation continues to affect Florida Progress by reducing the purchasing power
of the dollar and increasing the cost of replacing assets used in the business.
<PAGE>
<PAGE> 40
This has a negative effect on Florida Power because regulators generally do not
consider this economic loss when setting utility rates. However, such losses
are partly offset by the economic gains that result from the repayment of
long-term debt with inflated dollars.
Florida Progress adopted several new accounting standards in 1993 and 1994.
(See Note 1 to the Financial Statements.)
Several Florida Progress subsidiaries, including Florida Power, have been
notified by the EPA that each is or may be a potentially responsible party for
the cleanup costs of several contaminated sites. (See Note 11 to the Financial
Statements.)
Florida Progress has off-balance sheet risk related to debt of unconsolidated
partnerships. (See Note 11 to the Financial Statements.)
LIQUIDITY AND CAPITAL RESOURCES
Cash from operations has been the primary source of capital for Florida
Progress over the last five years. Other sources of capital have included
proceeds from the sales of properties and businesses, and the orderly
liquidation of the lending and leasing portfolio.
Florida Progress wants to continue to strengthen over time its capital
structure by increasing its common equity percentage and reducing its debt and
preferred stock levels.
Florida Progress has been issuing new equity in recent years primarily to fund
Florida Power's construction program. Florida Progress' goal is to maintain
capital structures for its utility and diversified operations that will enable
its subsidiaries to preserve their current credit ratings, which are listed
below:
CREDIT RATINGS
Standard Duff &
& Poor's Moody's Phelps
Florida Power Corporation
First mortgage bonds AA- Aa3 AA-
Medium-term notes A+ A1 A+
Commercial paper A-1+ P-1 D-1+
Progress Capital Holdings, Inc.
Medium-term notes A A2
Commercial paper A-1 P-1
In May 1992, Florida Progress sold 2.6 million shares of common stock through
an underwritten public offering. The net proceeds of the offering were $76.5
million. In a May 1994 public offering, Florida Progress sold an additional 3.6
million common shares. The net proceeds of this offering were $92.2 million.
During the last three years, Florida Progress also raised $162.3 million of
equity capital through its stock purchase and dividend reinvestment plan,
called the Progress Plus Stock Plan. In December 1994, Florida Progress issued
700,000 shares to acquire FM Industries. Florida Progress forecasts that its
equity needs will be minimal over the next few years.<PAGE>
<PAGE> 41
Florida Progress contributed $130 million in 1994, $60 million in 1993 and
$121.6 million in 1992 to Florida Power from the proceeds of Florida Progress'
public stock offerings and the Progress Plus Stock Plan. These funds were used
to reduce outstanding commercial paper and to further strengthen Florida
Power's financial position.
Florida Progress' common equity, as a percent of total capital, was 48.5
percent as of December 31, 1994, and 45.1 percent at the end of 1993.
Short-term debt, as a percent of total capital, was 2.6 percent in 1994 and 5
percent in 1993. Long-term debt was 45.4 percent in 1994, compared with 46.2
percent in 1993.
Management has recognized that Florida Progress' dividend payout ratio is above
industry averages. For the last two years, the board of directors has increased
the dividend at a significantly lower rate than in prior years. Management
recognizes that changes in the electric utility industry, or in Florida
Progress' operations, could make it necessary to retain more capital and,
therefore, change the policy from the last few years of moderately increasing
Florida Progress' annual dividend. When the board of directors reexamines
dividend policy in February 1996, it will again consider a range of options in
light of company and industry conditions.
FLORIDA POWER CORPORATION
Florida Power's construction expenditures for 1994 totaled about $320 million,
consisting primarily of distribution and production expenses. Florida Power's
five-year construction program includes planned expenditures of $330 million,
$365 million, $409 million, $344 million and $320 million for 1995 through
1999, respectively. Florida Power forecasts that 95 percent of these
construction expenditures will be financed with internally generated funds.
Florida Power's construction program includes two combined-cycle generating
units to be built in Polk County. Construction expenditures of $318 million are
planned for this new energy complex in the 1995-1999 forecast, with most of the
expenditures in the later years. Florida Power plans to use natural gas to fuel
the first two units at the Polk County complex. Florida Power is currently
evaluating a number of alternatives for transporting natural gas to the new
energy complex in Polk County. (See Part I, Item 2, under the heading "Utility
Operations - Planned Generation And Energy Sales".)
Florida Power's financial forecast also includes $58 million for construction
of the LTK line. Florida Power has indefinitely deferred construction of the
LTK line. On March 10, 1995, Florida Power filed a petition seeking approval
of the prudence of actions with regard to the LTK line and the amortization of
accumulated costs of about $23 million, and explaining proposed alternatives.
Due to numerous legal and regulatory delays, the total projected costs for the
line have increased to more than $85 million, up from the initial estimate of
$30 million. The FPSC is expected to issue a decision in 1995.
The CAAA requires electric utility companies to reduce sulfur dioxide emissions
in two phases. Florida Power is in compliance with Phase I and expects to meet
Phase II requirements in the year 2000 with minimal capital expenditures.
<PAGE>
<PAGE> 42
In 1994, Florida Power's net cash flow to capital expenditures was 103 percent.
In addition to funding its construction commitments with cash from operations,
Florida Power receives equity from Florida Progress and accesses the capital
markets through the issuance of commercial paper, medium-term notes and first
mortgage bonds.
Florida Power has a public medium-term note program, providing for the issuance
of either fixed or floating interest rate notes, with maturities that may range
from nine months to 30 years. Florida Power's interim financing needs are
funded primarily through its commercial paper program. Florida Power has
364-day and five-year revolving bank credit facilities, $200 million each,
which are used to back up commercial paper. (See Note 2 to the Financial
Statements.)
During 1993, Florida Power redeemed 800,000 shares of its Cumulative Preferred
Stock, totaling a par value of $80 million. In late 1994, Florida Power
redeemed an additional 50,000 shares, with a par value of $5 million.
Mandatory preferred stock redemption requirements for 1996 through 1999 are
$2.5 million annually. (See Note 3 to the Financial Statements.)
Florida Power's embedded cost of long-term debt was 7.1 percent as of December
31, 1994, compared with 6.8 percent at year-end 1993.
DIVERSIFIED OPERATIONS
Progress Capital is a downstream holding company of Florida Progress that
finances the activities of the diversified operations and consolidates the
collective financial strength of these operations. Progress Capital has the
benefit of a support agreement with Florida Progress, which helps to lower the
cost of capital to each of Florida Progress' diversified businesses. Progress
Capital funds diversified operations primarily through the issuance of
commercial paper and medium-term notes.
Progress Capital has a private $400-million, medium-term note program for the
issuance of notes with maturities that may range from nine months to 30 years.
Progress Capital also has two revolving bank credit facilities: a 364-day,
$100-million facility and a five-year, $300-million facility. These facilities
are used to back up Progress Capital's commercial paper program. (See Note 2 to
the Financial Statements.)
In 1994, total diversified capital expenditures were $40.9 million, primarily
for the non-regulated operations at Electric Fuels. Net proceeds from leases,
loans and securities were $28.1 million, $21.5 million and $70.1 million in
1994, 1993 and 1992, respectively, mainly due to the planned liquidation of the
finance unit's assets.
In 1995, diversified capital expenditures are expected to be about $40 million,
with most of these planned expenditures designated for Progress Credit and
Electric Fuels. These expenditures are expected to be financed through cash
generated internally and medium-term notes.
<PAGE>
<PAGE> 43
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
AUDITORS' REPORT
To the Shareholders of Florida Progress Corporation and Florida Power
Corporation:
We have audited the consolidated balance sheets of Florida Progress Corporation
and subsidiaries, and of Florida Power Corporation, as of December 31, 1994 and
1993 and the related statements of income, cash flows and shareholders' equity
for each of the years in the three-year period ended December 31, 1994. In
connection with our audits of the financial statements, we also have audited
the financial statement schedules listed in Item 14 herein. These financial
statements and financial statement schedules are the responsibility of the
respective managements of Florida Progress Corporation and Florida Power
Corporation. Our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Florida Progress Corporation
and subsidiaries, and Florida Power Corporation, as of December 31, 1994 and
1993, and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1994, in conformity with
generally accepted accounting principles. Also in our opinion, the related
financial statement schedules when considered in relation to the basic
financial statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
As discussed in Notes 1 and 7 to the financial statements, in 1993, Florida
Progress Corporation and subsidiaries, and Florida Power Corporation, changed
their methods of accounting for income taxes and postretirement benefits other
than pensions.
/s/KPMG PEAT MARWICK LLP
------------------------
KPMG PEAT MARWICK LLP
St. Petersburg, Florida
January 23, 1995
<PAGE>
<PAGE> 44
FLORIDA PROGRESS
Financial Statements
FLORIDA PROGRESS CORPORATION
Consolidated Statements of Income
For the years ended December 31, 1994, 1993 and 1992
(In millions, except per share amounts)
1994 1993 1992
-------- -------- --------
REVENUES:
Electric utility $2,080.5 $1,957.6 $1,774.1
Diversified 691.0 491.4 321.2
-------- -------- --------
2,771.5 2,449.0 2,095.3
EXPENSES: -------- -------- --------
Electric utility:
Fuel used in generation 431.9 460.8 471.9
Purchased power 294.6 209.5 140.4
Deferred fuel (1.5) (11.8) (3.7)
Other operation 388.8 378.0 310.9
-------- -------- --------
Operation 1,113.8 1,036.5 919.5
Maintenance 122.9 136.8 139.7
Depreciation 261.5 240.2 209.5
Taxes other than income taxes 162.8 152.6 138.3
-------- -------- --------
1,661.0 1,566.1 1,407.0
-------- -------- --------
Diversified:
Cost of sales 571.2 390.1 238.4
Other 63.3 50.2 45.1
-------- -------- --------
634.5 440.3 283.5
-------- -------- --------
INCOME FROM OPERATIONS 476.0 442.6 404.8
-------- -------- --------
INTEREST EXPENSE AND OTHER:
Interest expense 144.8 141.1 134.2
Allowance for funds used during construction (10.9) (15.6) (18.7)
Preferred dividend requirements of
Florida Power 10.1 13.4 16.7
Other expense (income), net 10.3 (2.5) 8.4
-------- -------- --------
154.3 136.4 140.6
-------- -------- --------
INCOME BEFORE INCOME TAXES 321.7 306.2 264.2
Income taxes 109.7 110.4 88.5
-------- -------- --------
INCOME BEFORE ACCOUNTING CHANGE 212.0 195.8 175.7
CUMULATIVE EFFECT OF INCOME TAX
ACCOUNTING CHANGE - 0.8 -
-------- -------- --------
NET INCOME $212.0 $196.6 $175.7
======== ======== ========
AVERAGE SHARES OF COMMON STOCK OUTSTANDING 93.0 88.3 85.4
======== ======== ========
EARNINGS PER AVERAGE COMMON SHARE:
Income before accounting change $2.28 $2.22 $2.06
Change in accounting for income taxes - 0.01 -
-------- -------- --------
$2.28 $2.23 $2.06
======== ======== ========
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 45
FLORIDA PROGRESS CORPORATION
Consolidated Balance Sheets
December 31, 1994 and 1993
(Dollars in millions)
1994 1993
-------- --------
ASSETS
PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant in service and held
for future use $5,603.4 $5,320.3
Less: Accumulated depreciation 1,981.6 1,846.2
Accumulated decommissioning for nuclear plant 135.2 118.3
Accumulated dismantlement for fossil plants 92.4 68.5
---------- ----------
3,394.2 3,287.3
Construction work in progress 222.1 285.7
Nuclear fuel, net of amortization of $322.8
in 1994 and $299.9 in 1993 52.9 68.4
---------- ----------
Net electric utility plant 3,669.2 3,641.4
Other property, net of depreciation of $163.5
in 1994 and $141.0 in 1993 420.9 391.6
---------- ----------
4,090.1 4,033.0
---------- ----------
CURRENT ASSETS:
Cash and equivalents 14.4 9.1
Accounts receivable, net 262.2 242.7
Current portion of leases and loans receivable 15.3 31.3
Inventories, primarily at average cost:
Fuel 75.2 79.5
Utility materials and supplies 110.4 112.2
Diversified materials 68.1 35.8
Underrecovery of fuel cost 1.8 7.1
Other 41.0 41.8
---------- ----------
588.4 559.5
---------- ----------
OTHER ASSETS:
Investments:
Leases and loans receivable, net 438.0 485.4
Marketable securities 148.3 129.3
Nuclear plant decommissioning fund 123.6 107.7
Joint ventures and partnerships 74.5 88.4
Deferred insurance policy acquisition costs 91.9 81.5
Other 163.9 154.0
---------- ----------
1,040.2 1,046.3
---------- ----------
$5,718.7 $5,638.8
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 46
FLORIDA PROGRESS CORPORATION
Consolidated Balance Sheets
December 31, 1994 and 1993
(Dollars in millions)
1994 1993
-------- --------
CAPITAL AND LIABILITIES
COMMON STOCK EQUITY:
Common stock without par value, 250,000,000 shares
authorized, 95,175,360 shares outstanding in 1994
and 89,259,572 in 1993 $1,148.1 $1,008.3
Retained earnings 842.9 812.2
Unrealized loss on securities available for sale (6.6) -
---------- ----------
1,984.4 1,820.5
CUMULATIVE PREFERRED STOCK OF FLORIDA POWER:
Without sinking funds 113.5 113.5
With sinking funds 30.0 35.0
LONG-TERM DEBT 1,859.6 1,866.6
---------- ----------
TOTAL CAPITAL 3,987.5 3,835.6
---------- ----------
CURRENT LIABILITIES:
Accounts payable 147.1 149.4
Customers' deposits 76.9 71.5
Income taxes payable 12.7 42.3
Accrued interest 47.3 45.2
Other 84.1 77.4
---------- ----------
368.1 385.8
Notes payable 55.3 125.0
Current portion of long-term debt 52.9 76.6
---------- ----------
476.3 587.4
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes 744.1 756.3
Unamortized investment tax credits 110.0 119.6
Insurance policy benefit reserves 222.5 186.5
Other postretirement benefit costs 67.8 47.4
Other 110.5 106.0
---------- ----------
1,254.9 1,215.8
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 11)
---------- ----------
$5,718.7 $5,638.8
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 47
FLORIDA PROGRESS CORPORATION
Consolidated Statements of Cash Flows
For the years ended December 31, 1994, 1993 and 1992
(In millions)
1994 1993 1992
------ ------ ------
OPERATING ACTIVITIES:
Income before accounting change $212.0 $195.8 $175.7
Adjustments for noncash items:
Depreciation and amortization 321.7 299.9 268.7
Deferred income taxes and investment
tax credits, net (32.3) (49.1) (17.4)
Increase in accrued other postretirement
benefit costs 20.4 23.6 -
Net change in deferred insurance policy
acquisition costs (10.4) (12.9) (12.9)
Net change in deferred insurance policy
benefit reserves 36.0 25.8 24.4
Changes in working capital, net of effects
from acquisition or sale of businesses:
Accounts receivable (17.4) (26.1) (18.6)
Inventories (10.1) 12.2 (36.8)
Overrecovery (underrecovery) of fuel cost 5.3 (2.7) (43.8)
Accounts payable (4.2) 17.7 14.2
Other (11.5) 23.4 23.1
Other operating activities 23.0 (4.7) (2.9)
------- ------- -------
532.5 502.9 373.7
------- ------- -------
INVESTING ACTIVITIES:
Property additions (including allowance for
borrowed funds used during construction) (368.1) (462.4) (519.6)
Proceeds from sale of properties and businesses 16.3 35.8 31.5
Purchase of leases, loans and securities (74.1) (128.6) (65.7)
Proceeds from sale or collection of leases,
loans, and securities 102.2 150.1 135.8
Acquisition of businesses (17.1) (80.5) (23.0)
Investments in joint ventures and partnerships (5.2) (24.1) (5.3)
Distributions from joint ventures and
partnerships 3.9 26.0 5.0
Other investing activities (10.8) (13.5) (15.1)
------- ------- -------
(352.9) (497.2) (456.4)
------- ------- -------
FINANCING ACTIVITIES:
Issuance of long-term debt 103.7 385.7 450.3
Repayment of long-term debt (86.7) (473.2) (315.3)
Increase (decrease) in commercial paper
with long-term support (61.2) 154.0 (34.1)
Redemption of preferred stock (5.0) (80.5) (5.0)
Sale of common stock 138.0 59.1 137.6
Dividends paid on common stock (185.9) (172.3) (163.4)
Increase (decrease) in short-term debt (75.6) 124.2 0.2
Other financing activities (1.6) (1.7) (2.7)
------- ------- -------
(174.3) (4.7) 67.6
------- ------- -------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 5.3 1.0 (15.1)
Beginning cash and equivalents 9.1 8.1 23.2
------- ------- -------
ENDING CASH AND EQUIVALENTS $14.4 $9.1 $8.1
======= ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $135.2 $138.1 $129.9
Income taxes (net of refunds) $171.5 $155.1 $91.5
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 48
FLORIDA PROGRESS CORPORATION
Consolidated Statements of Shareholders' Equity
For the years ended December 31, 1994, 1993 and 1992
(Dollars in millions, except per share amounts)
Cumulative
Preferred Stock
Unrealized of Florida Power
Loss on ----------------
Securities Without With
Common Retained Available Sinking Sinking
Stock Earnings for Sale Funds Funds
---------------------------------------------
Balance, December 31, 1991 $811.6 $776.1 $ - $133.5 $97.5
Net income 175.7
Common Stock issued -
4,596,938 shares 137.6
Cash dividends on common stock
($1.905 per share) (163.4)
Preferred stock redeemed or
reclassified to current -
150,000 shares (15.0)
----------------------------------------------
Balance, December 31, 1992 949.2 788.4 - 133.5 82.5
Net income 196.6
Common Stock issued -
1,729,716 shares 59.1
Cash dividends on common stock
($1.95 per share) (172.3)
Preferred stock redeemed -
675,000 shares (0.5) (20.0) (47.5)
----------------------------------------------
Balance, December 31, 1993 1,008.3 812.2 - 113.5 35.0
Net income 212.0
Common Stock issued -
5,215,788 shares 138.9
Common Stock issued in pooling
of interests - 700,000 shares 0.9 4.1
Cash dividends on common stock
($1.99 per share) (185.4)
Unrealized loss on marketable
securities available for sale (6.6)
Preferred stock redeemed -
50,000 shares (5.0)
----------------------------------------------
Balance, December 31, 1994 $1,148.1 $842.9 ($6.6) $113.5 $30.0
==============================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 49
FLORIDA POWER
Financial Statements
FLORIDA POWER CORPORATION
Statements of Income
For the years ended December 31, 1994, 1993 and 1992
(In millions)
1994 1993 1992
-------- -------- --------
OPERATING REVENUES $2,080.5 $1,957.6 $1,774.1
--------- --------- ---------
OPERATING EXPENSES:
Operation:
Fuel used in generation 431.9 460.8 471.9
Purchased power 294.6 209.5 140.4
Deferred fuel (1.5) (11.8) (3.7)
Other 388.8 378.0 310.9
--------- --------- ---------
1,113.8 1,036.5 919.5
Maintenance 122.9 136.8 139.7
Depreciation 261.5 240.2 209.5
Taxes other than income taxes 162.8 152.6 138.3
Income taxes 114.7 104.5 97.7
--------- --------- ---------
1,775.7 1,670.6 1,504.7
--------- --------- ---------
OPERATING INCOME 304.8 287.0 269.4
--------- --------- ---------
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used
during construction 6.1 8.9 10.4
Miscellaneous other income, net (6.5) (1.9) (1.0)
--------- --------- ---------
(0.4) 7.0 9.4
--------- --------- ---------
INTEREST CHARGES
Interest on long-term debt 96.3 91.7 84.2
Other interest expense 12.1 14.1 16.0
--------- --------- ---------
108.4 105.8 100.2
Allowance for borrowed funds used
during construction (4.8) (6.7) (8.3)
--------- --------- ---------
103.6 99.1 91.9
--------- --------- ---------
NET INCOME 200.8 194.9 186.9
DIVIDENDS ON PREFERRED STOCK 10.1 13.4 16.7
--------- --------- ---------
NET INCOME AFTER DIVIDENDS
ON PREFERRED STOCK $190.7 $181.5 $170.2
========= ========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 50
FLORIDA POWER CORPORATION
Balance Sheets
December 31, 1994 and 1993
(Dollars in millions)
1994 1993
-------- --------
ASSETS
PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant in service and held
for future use $5,603.4 $5,320.3
Less: Accumulated depreciation 1,981.6 1,846.2
Accumulated decommissioning for nuclear plant 135.2 118.3
Accumulated dismantlement for fossil plants 92.4 68.5
---------- ----------
3,394.2 3,287.3
Construction work in progress 222.1 285.7
Nuclear fuel, net of amortization of $322.8
in 1994 and $299.9 in 1993 52.9 68.4
---------- ----------
3,669.2 3,641.4
Other property, net 24.2 27.7
---------- ----------
3,693.4 3,669.1
---------- ----------
CURRENT ASSETS:
Accounts receivable, less reserve of $2.3
in 1994 and $2.4 in 1993 167.3 168.2
Inventories at average cost:
Fuel 52.6 58.9
Materials and supplies 110.4 112.2
Underrecovery of fuel cost 1.8 7.1
Deferred income taxes 28.8 29.2
Other 5.8 5.8
---------- ----------
366.7 381.4
---------- ----------
OTHER ASSETS:
Nuclear plant decommissioning fund 123.6 107.7
Unamortized debt expense, being amortized
over term of debt 29.6 31.6
Other 71.2 69.7
---------- ----------
224.4 209.0
---------- ----------
$4,284.5 $4,259.5
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 51
FLORIDA POWER CORPORATION
Balance Sheets
December 31, 1994 and 1993
(Dollars in millions)
1994 1993
-------- --------
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock without par value - 60,000,000 shares
authorized, 100 shares outstanding $942.9 $812.9
Retained earnings 724.5 709.5
---------- ----------
1,667.4 1,522.4
CUMULATIVE PREFERRED STOCK:
Without sinking funds 113.5 113.5
With sinking funds 30.0 35.0
LONG-TERM DEBT 1,363.8 1,398.6
---------- ----------
TOTAL CAPITAL 3,174.7 3,069.5
---------- ----------
CURRENT LIABILITIES:
Accounts payable 85.0 106.2
Accounts payable to associated companies 21.4 17.1
Customers' deposits 76.9 71.5
Income taxes payable 7.1 24.6
Accrued other taxes 11.3 8.4
Accrued interest 32.6 33.2
Other 36.2 34.2
---------- ----------
270.5 295.2
Notes payable 55.3 125.0
Current portion of long-term debt 35.4 45.9
---------- ----------
361.2 466.1
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes 488.0 472.7
Unamortized investment tax credits 109.3 117.8
Other postretirement benefit costs 65.4 46.2
Other 85.9 87.2
---------- ----------
748.6 723.9
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 11)
---------- ----------
$4,284.5 $4,259.5
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 52
FLORIDA POWER CORPORATION
Statements of Cash Flows
For the years ended December 31, 1994, 1993 and 1992
(In millions)
1994 1993 1992
------ ------ ------
OPERATING ACTIVITIES:
Net income after dividends on preferred stock $190.7 $181.5 $170.2
Adjustments for noncash items:
Depreciation and amortization 294.8 276.5 243.4
Deferred income taxes and investment
tax credits, net (0.9) (25.0) 8.6
Increase in accrued other postretirement
benefit costs 19.2 22.2 -
Allowance for equity funds used during construction (6.1) (8.9) (10.4)
Changes in working capital:
Accounts receivable 0.9 (18.4) (12.5)
Inventories 8.1 10.1 (21.7)
Overrecovery (underrecovery) of fuel cost 5.3 (2.7) (43.8)
Accounts payable (21.2) 35.2 9.6
Accounts payable to associated companies 4.3 (7.9) 4.4
Other (7.7) 25.1 (5.3)
Other operating activities 10.9 (8.0) (4.0)
------ ------ ------
498.3 479.7 338.5
------ ------ ------
INVESTING ACTIVITIES:
Construction expenditures (319.5) (426.4) (472.9)
Allowance for borrowed funds used during construction (4.8) (6.7) (8.3)
Additions to nonutility property (2.9) (7.6) (12.3)
Acquisition of electric distribution system - (53.9) -
Proceeds from sale of properties 7.7 6.0 3.8
Other investing activities (12.4) (18.4) (14.9)
------ ------ ------
(331.9) (507.0) (504.6)
------ ------ ------
FINANCING ACTIVITIES:
Issuance of long-term debt - 385.0 430.1
Repayment of long-term debt (46.0) (402.7) (243.2)
Increase in commercial paper with
long term support - 104.0 18.0
Redemption of preferred stock (5.0) (80.5) (5.0)
Dividends paid on common stock (175.7) (163.5) (155.4)
Equity contributions from parent 130.0 60.0 121.6
Increase (decrease) in short-term debt (69.7) 125.0 -
------ ------ ------
(166.4) 27.3 166.1
------ ------ ------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS - - -
Beginning cash and equivalents - - -
------ ------ ------
ENDING CASH AND EQUIVALENTS $ - $ - $ -
====== ====== ======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $101.5 $93.8 $89.7
Income taxes (net of refunds) $129.8 $120.3 $92.7
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 53
FLORIDA POWER CORPORATION
Statements of Shareholders' Equity
For the years ended December 31, 1994, 1993 and 1992
(Dollars in millions, except share amounts)
Cumulative
Preferred Stock
---------------
Without With
Common Retained Sinking Sinking
Stock Earnings Funds Funds
----------------------------------------
Balance, December 31, 1991 $631.3 $677.2 $133.5 $97.5
Net income after dividends on
preferred stock 170.2
Capital contribution by parent company 121.6
Cash dividends on common stock (155.4)
Preferred stock redeemed or
reclassified to current -
150,000 shares (15.0)
----------------------------------------
Balance, December 31, 1992 752.9 692.0 133.5 82.5
Net income after dividends on
preferred stock 181.5
Capital contribution by parent company 60.0
Cash dividends on common stock (163.5)
Preferred stock redeemed -
675,000 shares (0.5) (20.0) (47.5)
----------------------------------------
Balance, December 31, 1993 812.9 709.5 113.5 35.0
Net income after dividends on
preferred stock 190.7
Capital contribution by parent company 130.0
Cash dividends on common stock (175.7)
Preferred stock redeemed -
50,000 shares (5.0)
----------------------------------------
Balance, December 31, 1994 $942.9 $724.5 $113.5 $30.0
========================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 54
FLORIDA PROGRESS CORPORATION AND FLORIDA POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL - Florida Progress is an exempt holding company under the Public
Utility Holding Company Act of 1935. Its largest subsidiary, representing 75%
of total assets, is Florida Power, a public utility engaged in the generation,
purchase, transmission, distribution and sale of electric energy primarily
within Florida.
The consolidated financial statements include the financial results of Florida
Progress and its majority-owned operations. All significant intercompany
balances and transactions have been eliminated. Investments in 20% to 50%-owned
joint ventures are accounted for using the equity method.
ACCOUNTING FOR REGULATORY ASSETS AND LIABILITIES - Florida Power is regulated
by the FPSC and the FERC. Florida Power's records comply with the accounting
and reporting requirements of these regulatory authorities and generally
accepted accounting principles. The utility follows the accounting practices
set forth in Financial Accounting Standard No. 71, Accounting for the Effects
of Certain Types of Regulation. This standard requires utilities to capitalize
or defer certain costs if it is probable that these costs will be recovered
through the ratemaking process. Florida Power has regulatory assets and
liabilities that are being amortized over the periods prescribed. Current
regulatory practice allows or requires these items to be recovered or paid
through customer rates.
UTILITY PLANT - Utility plant is stated at the original cost of construction,
which includes payroll and related costs such as taxes, pensions and other
fringe benefits, general and administrative costs, and an allowance for funds
used during construction. Substantially all of the utility plant is pledged as
collateral for Florida Power's first mortgage bonds.
The allowance for funds used during construction represents the estimated cost
of equity and debt for utility plant under construction. Florida Power is
permitted to earn a return on these costs and recover them in the rates charged
for utility services while the plant is in service. The average rate used in
computing the allowance for funds was 7.8% for 1994, 7.9% for 1993 and 8% for
1992.
UTILITY REVENUES, FUEL AND PURCHASED POWER EXPENSES - Revenues include amounts
resulting from fuel, purchased power and energy conservation adjustment
clauses, which are designed to permit full recovery of these costs. The
adjustment factors are based on projected costs for a six- or 12-month period.
The cumulative fuel cost difference is shown on the balance sheet as
overrecovery or underrecovery of fuel costs. Any difference is refunded or
billed to customers during the subsequent period.
<PAGE>
<PAGE> 55
The FPSC ordered Florida Power to conduct a three-year test for revenue
decoupling for its residential customers. Decoupling eliminates the direct link
between KWH sales and revenues. Beginning in 1995, nonfuel revenues will be
determined by multiplying a revenue per customer amount by the total number of
residential customers. Monthly residential customer bills will be calculated
just as they were before decoupling. Differences between target revenues and
actual revenues will be collected or refunded over a 12-month period through
the conservation clause. The revenue per customer amount will be adjusted
annually for a growth factor.
Florida Power accrues the nonfuel portion of base revenues for services
rendered but unbilled.
The cost of fossil fuel for electric generation is charged to expense as
consumed. The cost of nuclear fuel is amortized to expense based on the
quantity of heat produced for the generation of electric energy in relation to
the quantity of heat expected to be produced over the life of the nuclear fuel
core.
EARNED INCOME ON FINANCE LEASES - Earned income, including any residual values
expected to be recognized, and the related deferred investment tax credits are
amortized as revenues over the term of the lease to provide an approximate
level return on the net investment. Residual values are determined principally
on the basis of independent appraisals.
INCOME TAXES - The financial statements for 1993 and 1994 reflect the
accounting for income taxes in accordance with Financial Accounting Standard
No. 109, Accounting for Income Taxes. This standard requires that deferred
taxes be provided on all significant temporary differences between the
financial and tax basis of assets and liabilities using presently enacted tax
rates. When Florida Progress adopted the new standard in 1993, net income was
increased by $.8 million due to Florida Progress' nonregulated activities.
Deferred investment tax credits, subject to regulatory accounting practices,
are amortized to income over the lives of the related properties.
DEPRECIATION AND MAINTENANCE - Florida Progress provides for depreciation of
the cost of properties over their estimated useful lives primarily on a
straight-line basis. Florida Power's annual provision for depreciation,
including a provision for nuclear plant decommissioning costs and fossil plant
dismantlement costs, expressed as a percentage of the average balances of
depreciable utility plant, was 4.8% for 1994, 4.8% for 1993 and 4.6% for 1992.
In October 1994, the FPSC approved Florida Power's updated depreciation study.
The study included results of a site-specific dismantlement analysis of Florida
Power's fossil generating facilities. Changes in depreciation rates became
effective in January 1995 and will not have a significant impact on annual
depreciation expense.
<PAGE>
<PAGE> 56
Florida Power charges maintenance expense with the cost of repairs and minor
renewals of property. The plant accounts are charged with the cost of renewals
and replacements of property units. Accumulated depreciation is charged with
the cost, less the net salvage, of property units retired.
INSURANCE PREMIUMS, POLICY ACQUISITION COSTS AND BENEFIT RESERVES - Life
insurance premiums are recognized as revenue over the premium-paying periods of
the policies. Florida Progress defers recoverable costs in its insurance
operations that directly relate to the production of new business. These costs
are amortized over the expected premium-paying period. Reserves are established
out of each premium payment to provide for the present value of future
insurance policy benefits, using reasonable assumptions for future investment
yield, mortality, withdrawals and the risk of adverse deviation.
PROFIT FROM REAL ESTATE SALES - Profit from the sale of real estate is
recognized only upon the closing of a sale, the transfer of ownership rights to
the purchaser and receipt of an adequate cash down payment.
ACCOUNTING FOR CERTAIN INVESTMENTS - Florida Progress considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents. Financial Accounting Standard No. 115, Accounting for Certain
Investments in Debt and Equity Securities ("FAS 115"), was adopted by Florida
Progress as of January 1, 1994. Under FAS 115, investments in debt and equity
securities are classified and accounted for as follows:
TYPE OF SECURITY ACCOUNTING TREATMENT
---------------- --------------------
Debt securities held to maturity Amortized cost
-------------------------------------------------------------------------------
Trading securities Fair market value with unrealized
gains and losses included in
earnings
-------------------------------------------------------------------------------
Securities available for sale Fair market value with unrealized
gains and losses, net of taxes,
reported separately in
shareholders' equity
-------------------------------------------------------------------------------
See Note 5 for held to maturity and available for sale securities at 1994
year-end. At December 31, 1994, Florida Progress had no investments in assets
classified as trading securities.
Prior to the adoption of FAS 115, these assets were measured at amortized cost
for debt instruments, and the lower of amortized cost or market for equity
instruments. In accordance with the new rules, the prior-year financial
statements have not been restated to reflect the change in accounting
principle. The adoption of this standard had no effect on net income or cash
flows.
<PAGE>
<PAGE> 57
ACCOUNTING FOR NUCLEAR OPERATIONS - The Financial Accounting Standards Board
("FASB") has a current project addressing the accounting for obligations
related to the decommissioning of nuclear power plants. Florida Power records a
provision for nuclear decommissioning costs over the expected life of its
nuclear plant. Currently, the accumulated provisions for nuclear
decommissioning costs are recorded as a contra asset on the balance sheet. One
alternative, if adopted, would require Florida Power's 90.4% share of total
estimated nuclear decommissioning costs of $391 million in 1994 dollars to be
recorded as a liability, with a corresponding plant or regulatory asset. There
would be no impact on earnings or cash flows. The FASB is expected to reach a
decision in 1995.
Florida Power accrues a reserve for maintenance and refueling expenses
anticipated to be incurred during scheduled nuclear plant outages.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS - Florida Progress implemented
Financial Accounting Standard No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions ("FAS 106"), in 1993. This standard requires that
an employer's obligation for postretirement benefits be fully accrued by the
date employees attain full eligibility to receive such benefits. Florida
Progress' costs for 1993 increased from $5 million to $23.9 million under FAS
106. A substantial portion of the additional costs is recovered from Florida
Power customers through retail base rates.
IMPAIRED LOANS - Florida Progress will be required to prospectively adopt
Financial Accounting Standard No. 114, Accounting by Creditors for Impairment
of a Loan, as amended by Financial Accounting Standard No. 118, Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosure, in
1995. These standards require Florida Progress to compute present values for
impaired loans when determining the allowance for credit losses. At December
31, 1994, approximately $72 million of loans receivable were impaired, and
Florida Progress anticipates assigning approximately $18 million of the
allowance for loan losses to these loans. Because Florida Progress' existing
allowance is adequate for any such impairment, no impact on earnings is
expected due to the adoption of these standards.
BUSINESS ACQUISITIONS - Florida Progress and its subsidiaries acquired several
businesses in 1994, 1993 and 1992. All acquisitions were accounted for as
purchases except the acquisition of FM Industries, Inc., in December 1994,
which was accounted for on a pooling of interests basis. Because the effect of
restating data related to this acquisition is not material, prior-year results
are not restated.
The 1994 Statement of Cash Flows does not reflect the value of the 700,000
shares of common stock issued for the acquisition of FM Industries. The market
value of the shares at the date of issuance was $21.1 million.
<PAGE>
<PAGE> 58
(2) DEBT
Florida Progress' long-term debt at December 31, 1994 and 1993, is scheduled to
mature as follows:
Interest
(In millions) Rate 1994 1993
-------------------------------------------------------------------------------
Florida Power Corporation:
First mortgage bonds:
Maturing through 1999:
1995 4.74%(a) $ 34.4 $ 34.4
1997 6.13% 16.7 16.7
1999 6.50% 75.0 75.0
Maturing 2002 and 2003 6.50%(a) 280.0 280.0
Maturing 2008 6.88% 80.0 80.0
Maturing 2021 through 2023 7.98%(a) 400.0 400.0
Discount, net of premium being
amortized over term of bonds (6.7) (7.3)
-------- --------
879.4 878.8
Pollution control financing obligations:
Maturing 2014 through 2027 6.59%(a) 240.9 240.9
Notes maturing:
1994-1995 6.67% 1.0 46.9
1996-2008 7.81%(a) 77.9 77.9
Commercial paper, supported by
revolver maturing November 30, 1999 5.98%(a) 200.0 200.0
Progress Capital Holdings:
Notes maturing:
1994-1995 9.20% 6.0 26.3
1996-2004 7.63%(a) 276.0 176.0
Commercial paper, supported by
revolver maturing November 30, 1999 6.01%(a) 183.8 245.0
Other debt, maturing through 2006 8.92%(a) 47.5 51.4
-------- --------
$1,912.5 $1,943.2
Less: Current portion of long-term debt 52.9 76.6
-------- --------
$1,859.6 $1,866.6
===============================================================================
(a) Weighted average interest rate at December 31, 1994.
Florida Progress' consolidated subsidiaries have lines of credit totaling $800
million, which are used to support commercial paper. The lines of credit were
not drawn on as of December 31, 1994. Interest rate options under line of
credit arrangements vary from subprime or money market rates to the prime rate.
Banks providing lines of credit are compensated through fees. Florida Power's
commitment fees on lines of credit vary between .08 and .10 of 1%, while
Progress Capital's commitment fees vary between .10 and .15 of 1%.
<PAGE>
<PAGE> 59
The lines of credit consist of four revolving bank credit facilities, two each
for Florida Power and Progress Capital. The Florida Power facilities, $200
million each, are for terms of 364 days and five years. The Progress Capital
facilities consist of $100 million with a 364-day term and $300 million with a
five-year term. In 1994, both 364-day facilities were extended to November
1995. In addition, both five-year facilities were extended to November 1999.
Based on the duration of the underlying backup credit facilities, $383.8
million of outstanding commercial paper at December 31, 1994, and $445 million
of outstanding commercial paper at December 31, 1993, are classified as
long-term debt. In 1994, Florida Progress and Florida Power had short-term
borrowings in the form of commercial paper, each with a weighted average
interest rate of 4.2% for the year.
Florida Power has a public $200-million, medium-term note program providing for
the issuance of either fixed or floating interest rate notes. These notes have
maturities ranging from nine months to 30 years. During 1994, Florida Power
repaid $45.9 million of the medium-term notes. The program has approximately
$170 million available for future issuance.
Progress Capital has a private $400-million, medium-term note program providing
for the issuance of notes with maturities ranging from nine months to 30 years.
In 1994, Progress Capital issued $100 million of 5-, 7- and 10-year medium-term
notes with a weighted average interest rate of 6.03%. A balance of $126 million
is available for issuance under this program at either fixed or floating rates.
The combined aggregate maturities of long-term debt for Florida Progress for
1995 through 1999 are $52.9 million, $176.4 million, $52.8 million, $16.1
million and $513.6 million, respectively, of which Florida Power's share is
$35.4 million, $30.6 million, $38.0 million, $1.5 million and $276.6 million,
respectively. In addition, about 17% of Florida Power's outstanding first
mortgage bonds have an annual 1% sinking fund requirement. These requirements,
which total $1.8 million for 1995, $1.3 million annually for 1996 and 1997, and
$1 million annually for 1998 and 1999, are expected to be satisfied with
property additions.
Florida Progress has a support agreement with Progress Capital that requires
the parent company to maintain a minimum net worth at Progress Capital. At
December 31, 1994, Progress Capital's net worth was $99.3 million higher than
the amount required under this agreement.
[THIS SPACE INTENTIONALLY BLANK]<PAGE>
<PAGE> 60
(3) PREFERRED AND PREFERENCE STOCK AND SHAREHOLDER RIGHTS
A summary of outstanding Cumulative Preferred Stock of Florida Power follows:
<TABLE>
<CAPTION>
Current Outstanding
Dividend Redemption Shares December 31
Rate Price Authorized Outstanding 1994 1993
-------------------------------------------------------------------------------------------------------------------
(In millions)
Without sinking funds, not subject to mandatory redemption:
<S> <C> <C> <C> <C> <C> <C>
4.00% $104.25 40,000 39,980 $ 4.0 $ 4.0
4.40% $102.00 75,000 75,000 7.5 7.5
4.58% $101.00 100,000 99,990 10.0 10.0
4.60% $103.25 40,000 39,997 4.0 4.0
4.75% $102.00 80,000 80,000 8.0 8.0
7.40% $102.48 300,000 300,000 30.0 30.0
7.76% $102.21 500,000 500,000 50.0 50.0
--------------------------------------------------------------------------------------------------------------------
$113.5 $ 113.5
--------------------------------------------------------------------------------------------------------------------
With sinking funds, subject to mandatory redemptions:
7.08% $104.72(a) 500,000 300,000 $ 30.0 $ 35.0
-------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) $102.36 after November 15, 1996; $100.00 after November 15, 2001.
The authorized capital stock of Florida Progress includes 10 million shares of
preferred stock, without par value, including 2 million shares designated as
Series A Junior Participating Preferred Stock. No shares of Florida Progress'
preferred stock are issued and outstanding, but the holders of Florida
Progress' common stock have the right to purchase shares of the Series A Junior
Participating Preferred Stock in certain circumstances according to Florida
Progress' Shareholder Rights Agreement.
Under the Shareholder Rights Agreement, each share of Florida Progress' common
stock has associated with it approximately two-thirds of one right, subject to
adjustment, which is exercisable in the event of certain attempted business
combinations. If exercised, the rights would cause substantial dilution of
ownership, thus adversely affecting any attempt to acquire Florida Progress on
terms not approved by Florida Progress' Board of Directors. The rights have no
voting or dividend rights and expire in December 2001, unless redeemed earlier
by Florida Progress.
The authorized capital stock of Florida Power includes three classes of
preferred stock: 4 million shares of Cumulative Preferred Stock, $100 par
value; 5 million shares of Cumulative Preferred Stock, without par value; and 1
million shares of Preference Stock, $100 par value. No shares of Florida
Power's Cumulative Preferred Stock, without par value, or Preference Stock are
issued and outstanding, while a total of 1.4 million shares of the Cumulative
Preferred Stock, $100 par value, are issued and outstanding in various series
as detailed in the chart above.
Preferred stock redemption requirements for 1996 to 1999 are $2.5 million per
year. <PAGE>
<PAGE> 61
(4) NUCLEAR OPERATIONS
JOINTLY OWNED PLANT - The following information relates to Florida Power's
90.4% proportionate share of the Crystal River Nuclear Plant at December 31,
1994 and 1993:
(In millions) 1994 1993
-------------------------------------------------------------------------
Utility plant in service $654.1 $622.7
Construction work in progress 13.1 22.8
Unamortized nuclear fuel 52.9 68.4
Accumulated depreciation 285.2 266.3
Accumulated decommissioning 135.2 118.3
-------------------------------------------------------------------------
Net capital additions for Florida Power were $21.7 million in 1994 and $20.1
million in 1993, and depreciation expense, exclusive of nuclear
decommissioning, was $27.3 million in 1994 and $26.2 million in 1993. Each
co-owner provides for its own financing. Florida Power's share of the asset
balances and operating costs is included in the appropriate consolidated
financial statements. Amounts exclude any allocation of costs related to common
facilities.
DECOMMISSIONING COSTS - Florida Power's nuclear plant depreciation expenses
include a provision for future decommissioning costs, which are recoverable
through rates charged to customers. Florida Power is placing amounts collected
in an externally managed trust fund. The recovery from customers, plus income
earned on the trust fund, is intended to be sufficient to cover Florida Power's
share of the future dismantlement, removal and land restoration costs. Florida
Power has a license to operate the nuclear unit through December 3, 2016, and
contemplates decommissioning beginning at that time.
In the last site-specific study approved by regulatory authorities, total
future decommissioning costs were estimated to be approximately $1.2 billion,
which corresponds to $227 million in 1994 dollars. Under this study, Florida
Power's share of decommissioning expense, as authorized by the FPSC and the
FERC, was $11.9 million annually for 1994, 1993 and 1992.
In December 1994, Florida Power filed a new site-specific study with the FPSC
that estimated total future decommissioning costs to be approximately $1.7
billion, which corresponds to $391 million in 1994 dollars. Florida Power filed
a petition with the FPSC requesting that the retail portion of annual
decommissioning expense be increased to $17.7 million, beginning in January
1995. Florida Power is not seeking an increase in rates to recover the higher
costs. The FPSC is expected to rule on this petition in 1995.
FUEL DISPOSAL COSTS - Florida Power has entered into a contract with the U.S.
Department of Energy ("DOE") for the transportation and disposal of spent
nuclear fuel. Disposal costs for nuclear fuel consumed are being collected from
customers through the fuel adjustment clause at a rate of $.001 per net nuclear
KWH sold and are paid to the DOE quarterly. Florida Power currently is storing
spent nuclear fuel on site and has sufficient storage capacity in place or
under construction for fuel consumed through the year 2010.
<PAGE>
<PAGE> 62
(5) FINANCIAL INSTRUMENTS
Estimated fair value amounts have been determined by Florida Progress using
available market information and discounted cash-flow analysis. Judgment is
required in interpreting market data to develop the estimates of fair value.
Accordingly, the estimates determined may be materially different than the
amounts that Florida Progress could realize in a current market exchange.
Estimating fair values for loans associated with the airline industry is
difficult due to a limited number of transactions in a troubled industry.
Management, therefore, has estimated a range of values for these loans.
Florida Progress currently has no derivative financial instruments, such as
futures, forwards, swaps or options contracts.
At December 31, 1994 and 1993, Florida Progress had the following financial
instruments with estimated fair values that differ from the carrying amounts:
1994 1993
Carrying Fair Carrying Fair
(In millions) Amount Value Amount Value
-------------------------------------------------------------------------------
ASSETS:
Loans receivable:
Commercial finance business:
Real estate $118.4 $117.1 $148.2 $147.2
Airline 58.4 14 to 43 62.7 27 to 48
Life insurance business:
Loans secured by real estate 7.8 8.6 9.1 10.5
Policy loans 10.4 8.5 10.0 8.9
-------------------------------------------------------------------------------
148.2 193.6
195.0 to 177.2 230.0 to 214.6
Allowance for loan losses (32.6) - (23.8) -
-------------------------------------------------------------------------------
$148.2 $193.6
Total loans receivable $162.4 to 177.2 $206.2 to 214.6
-------------------------------------------------------------------------------
Marketable securities: (a)
Available for sale $ 93.3 $ 93.3
Held to maturity 55.0 51.8
-------------------------------------------------------------------------------
Total marketable securities $148.3 $145.1 $129.3 $133.9
Nuclear plant decommissioning fund 123.6 123.6 107.7 112.9
-------------------------------------------------------------------------------
CAPITAL AND LIABILITIES:
Preferred stock with sinking funds $ 30.0 $ 29.6 $ 35.0 $ 37.1
Long-term debt:
Florida Power Corporation 1,399.2 1,298.5 1,444.5 1,525.4
Progress Capital Holdings 513.3 504.0 498.7 517.2
-------------------------------------------------------------------------------
(a) The 1993 securities have not been segregated per FAS 115. (See Note 1.)
<PAGE>
<PAGE> 63
(6) LEASES AND LOANS RECEIVABLE AND CONCENTRATION OF CREDIT RISK
At December 31, 1994 and 1993, investments in leases and loans receivable were
as follows:
(In millions) 1994 1993
------------------------------------------------------------------------------
Finance leases:
Rentals receivable $238.1 $244.3
Unguaranteed residual values 153.5 171.3
Unearned income (78.7) (82.1)
Deferred investment tax credits (20.5) (22.0)
-------------------------------------------------------------------------------
Total finance leases 292.4 311.5
-------------------------------------------------------------------------------
Loans receivable:
Commercial finance business 176.8 210.9
Life insurance business 18.2 19.1
-------------------------------------------------------------------------------
Total loans receivable 195.0 230.0
-------------------------------------------------------------------------------
Allowance for losses (34.1) (24.8)
-------------------------------------------------------------------------------
453.3 516.7
Less: Current portion 15.3 31.3
-------------------------------------------------------------------------------
$438.0 $485.4
===============================================================================
Rentals receivable from finance leases represent unpaid rentals less principal
and interest on nonrecourse third-party debt. Progress Credit's share of
rentals receivable is subordinate to the debt holders who have security
interests in the leased properties.
Finance leases consist primarily of leveraged investments in aircraft as
described below. The majority of the aircraft leases have terms of 15 to 20
years, with a maximum of 28 years. Net contractual maturities of rentals
receivable under these contracts are $13.9 million, $13.1 million, $11.2
million, $10.1 million and $13.2 million for 1995 through 1999, respectively,
and $176.6 million in total thereafter.
Progress Credit's commercial finance loans are secured by first mortgage liens
on the related commercial real estate or by security interests in aircraft,
aircraft engines or spare parts. These loans are further collateralized, where
applicable, by an assignment to Progress Credit of the borrowers' lease
agreements, and, in some cases, third-party guaranties.
<PAGE>
<PAGE> 64
At December 31, 1994 and 1993, Progress Credit's portfolio included investments
in the airline and commercial real estate industries as follows:
(In millions) 1994 1993
----------------------------------------------------------------------
Airline industry:
Finance leases $254.2 $263.9
Loans receivable 58.4 62.7
Joint ventures 37.6 41.1
Equipment on operating leases 7.4 8.4
----------------------------------------------------------------------
$357.6 $376.1
----------------------------------------------------------------------
Commercial real estate industry:
Finance leases $ 16.2 $ 15.9
Loans receivable 118.4 148.2
----------------------------------------------------------------------
$134.6 $164.1
======================================================================
New transactions are not being initiated unless they facilitate Progress
Credit's orderly withdrawal strategy. Due to conditions in the airline industry
and a weak real estate market, Progress Credit has experienced delinquencies in
ongoing lease and loan payments as well as loan principal maturities. Progress
Credit has negotiated the restructuring of certain transactions. Although most
of the outstanding real estate and aircraft loans mature during the next five
years, Progress Credit expects that some of the borrowers may not be able to
retire the loans at maturity. Progress Credit will pursue its options for any
nonperforming assets, including restructuring, remedial actions and
remarketing.
Progress Credit's portfolio at December 31, 1994, included a $16-million
aircraft lease, which was restructured in 1993. No aircraft leases were
restructured in 1994. Progress Credit's portfolio also includes $36.5 million
of aircraft loans restructured in 1994 to Pegasus Capital Corporation, a
company in which Progress Credit has a minority interest. Progress Credit
restructured an $11.2-million aircraft loan to Pegasus Capital Corporation in
January 1995. Progress Credit also restructured a $24.5-million real estate
loan in 1994. All restructured assets are performing in accordance with their
new terms and the restructurings will not materially reduce Progress Credit's
future annual revenue.
During 1994, 1993 and 1992, Progress Credit provided $9.9 million, $5.9 million
and $6.4 million, respectively, for possible loan and lease losses and had
write-offs totaling $.8 million, $4.2 million and $3.7 million, respectively.
Florida Progress believes Progress Credit's existing reserve of $33.7 million
is adequate to cover its planned orderly liquidation, assuming no significant
further deterioration in the airline and real estate industries.
Leases and loans generally are placed on nonaccrual status when management
believes the collectibility of interest or principal is unlikely. There were no
assets on nonaccrual status at December 31, 1994 and 1993.<PAGE>
<PAGE> 65
(7) RETIREMENT BENEFIT PLANS
STAFF REDUCTIONS - In late 1993, Florida Progress offered an early retirement
option to certain employees age 55 or over with at least 20 years of service
with Florida Progress. The effective retirement date for those employees
accepting the package was February 1, 1994. Florida Progress recognized pension
and other postretirement benefits expenses related to this offer of $5.6
million in 1993 and $15.5 million in 1994. In late 1994, Florida Power
eliminated approximately 300 positions. As a result, Florida Progress
recognized severance costs of $5 million, which was partially offset by a
reduction of $1.8 million in related accrued pension and postretirement benefit
costs.
PENSION BENEFITS - Florida Progress and certain of its subsidiaries have a
noncontributory defined benefit pension plan covering substantially all
employees. The benefits are based on length of service, compensation and Social
Security benefits. The participating companies make annual contributions to the
plan based on an actuarial determination and consideration of tax regulations
and funding requirements under federal law. Based on actuarial calculations and
the funded status of the pension plan, Florida Progress was not required to
contribute to the plan for 1994, 1993 or 1992.
Shown below are the components of the net pension expense calculations for
those years:
(In millions) 1994 1993 1992
-------------------------------------------------------------------------
Service cost $17.2 $16.3 $18.1
Interest cost 29.3 27.5 25.4
Actual losses (earnings)
on plan assets 6.6 (60.7) (37.3)
Net amortization and deferral (54.3) 17.9 (3.1)
-------------------------------------------------------------------------
Net pension cost (benefit) (1.2) 1.0 3.1
Regulatory adjustment - - (.9)
Staff reduction cost, net 10.0 .1 -
-------------------------------------------------------------------------
Net pension cost recognized $ 8.8 $ 1.1 $ 2.2
=========================================================================
Florida Power's share of the plan's net pension costs for 1994, 1993 and 1992
was $9 million, $1 million and $2.1 million, respectively.
The following weighted average actuarial assumptions at January 1 were used in
the calculation of pension expense:
1994 1993 1992
------------------------------------------------------------------------
Discount rate 7.25% 7.75% 7.25%
Expected long-term rate of return 9.00% 9.00% 9.00%
Rate of compensation increase 5.00% 5.50% 6.00%
========================================================================
<PAGE>
<PAGE> 66
The following summarizes the funded status of the pension plan at December 31,
1994 and 1993:
(In millions) 1994 1993
-----------------------------------------------------------------------
Accumulated benefit obligation:
Vested $267.8 $276.0
Nonvested 34.7 37.9
-----------------------------------------------------------------------
302.5 313.9
Effect of projected compensation increases 82.6 91.8
-----------------------------------------------------------------------
Projected benefit obligation 385.1 405.7
Plan assets at market value, primarily listed
stocks and bonds 480.0 505.0
-----------------------------------------------------------------------
Plan assets in excess of projected benefit
obligation $ 94.9 $ 99.3
-----------------------------------------------------------------------
Consisting of the following components:
Unrecognized transition asset $ 40.3 $ 45.3
Unrecognized prior service cost (7.5) (10.3)
Effect of changes in assumptions
and difference between actual and
estimated experience 73.8 67.2
Accrued pension costs (11.7) (2.9)
------------------------------------------------------------------------
$ 94.9 $ 99.3
========================================================================
Due to changes in interest rates, Florida Progress used a discount rate of
8.25% to calculate the pension plan's 1994 year-end funded status and a
discount rate of 7.25% to calculate the 1993 year-end funded status. The change
in the discount rate from 7.25% at December 31, 1993, to 8.25% at December 31,
1994, decreased the projected benefit obligation by $51 million and is expected
to decrease annual pension costs by $5 million, beginning in 1995.
OTHER POSTRETIREMENT BENEFITS - Florida Progress and some of its subsidiaries
provide certain health care and life insurance benefits for retired employees.
Employees become eligible for these benefits when they reach normal retirement
age while working for Florida Progress. Prior to 1993, Florida Progress' policy
had been to accrue benefits currently payable along with amortization of past
service costs of current retirees. Florida Progress had accrued $23.9 million
at December 31, 1992, using this method. Florida Progress implemented FAS 106
effective January 1, 1993. (See Note 1 to the Financial Statements.)
[THIS SPACE INTENTIONALLY BLANK]
<PAGE>
<PAGE> 67
The net postretirement benefit cost for 1994 and 1993 was:
(In millions) 1994 1993
------------------------------------------------------------------------
Service cost $ 5.3 $ 5.6
Interest cost 12.9 11.8
Amortization of unrecognized
transition obligation 6.1 6.5
Staff reduction cost 3.7 5.5
------------------------------------------------------------------------
$ 28.0 $ 29.4
========================================================================
Florida Power's share of the plan's net postretirement benefit cost for 1994
and 1993 was $27.1 million and $28.2 million, respectively.
The following summarizes the plan's status, reconciled with amounts recognized
in Florida Progress' balance sheet at December 31:
(In millions) 1994 1993
-----------------------------------------------------------------------
Accumulated postretirement benefit obligation:
Retirees $ 92.7 $ 94.3
Fully eligible active plan participants 1.5 2.0
Other active plan participants 74.2 76.2
Plan assets at fair value (1.5) -
-----------------------------------------------------------------------
166.9 172.5
Unrecognized transition obligation (107.8) (120.7)
Unrealized gains (losses) 8.7 (4.4)
-----------------------------------------------------------------------
Accrued postretirement benefit cost $ 67.8 $ 47.4
=======================================================================
The following weighted average actuarial assumptions were used in the
calculation of the year-end status of other postretirement benefits:
1994 1993
----------------------------------------------------------------------
Discount rate 8.5% 7.5%
Rate of compensation increase 5.0% 5.0%
Health care cost trend rates:
Pre-Medicare 12.25-5.75% 13.00-5.25%
Post-Medicare 9.00-5.50% 9.75-5.00%
======================================================================
The transition obligation is being accrued through 2012. A one-percentage point
increase in the assumed health care cost trend rate for each future year would
have increased the 1994 current service and interest cost by approximately $3
million and the accumulated postretirement benefit obligation as of December
31, 1994, by about $24 million. The change in the discount rate from 7.5% at
December 31, 1993, to 8.5% at December 31, 1994, decreased the projected
benefit obligation by $23 million and is expected to decrease annual
postretirement benefit costs by $1 million, beginning in 1995. <PAGE>
<PAGE> 68
Due to different retail and wholesale regulatory requirements, Florida Power
began making quarterly contributions in 1994 to an irrevocable external trust
fund for wholesale ratemaking, while continuing to accrue postretirement
benefit costs to an unfunded reserve for retail ratemaking. Florida Power
contributed approximately $1.6 million to the trust fund in 1994.
(8) BUSINESS SEGMENTS
Florida Progress' principal business segments are utility and diversified
operations. The utility is engaged in the generation, purchase, transmission,
distribution and sale of electric energy. Electric Fuels' operations include
bulk commodities transportation, rail services and the mining, procurement and
transportation of coal to Florida Power and other external customers. Other
diversified operations include activities in leveraged leasing, commercial
finance, life insurance, real estate and technology development.
Florida Progress' business segment information for 1994, 1993 and 1992 is
summarized below. No single customer accounted for 10% or more of unaffiliated
revenues.
(In millions) 1994 1993 1992
----------------------------------------------------------------
Revenues:
Utility $2,080.5 $1,957.6 $1,774.1
Diversified:
Electric Fuels:
Coal sales to electric utility 249.4 244.9 264.6
Sales to external customers 534.1 335.8 200.7
Other diversified 159.4 157.7 122.8
----------------------------------------------------------------
3,023.4 2,696.0 2,362.2
Eliminations (251.9) (247.0) (266.9)
----------------------------------------------------------------
Revenues from external customers $2,771.5 $2,449.0 $2,095.3
----------------------------------------------------------------
Income from operations:
Utility $ 419.5 $ 391.5 $ 367.1
Diversified:
Electric Fuels 41.6 30.3 21.1
Other diversified 14.9 20.8 16.6
----------------------------------------------------------------
476.0 442.6 404.8
Interest and other expense 154.3 136.4 140.6
----------------------------------------------------------------
Income before income taxes $ 321.7 $ 306.2 $ 264.2
----------------------------------------------------------------
<PAGE>
<PAGE> 69
Identifiable assets:
Utility $4,284.0 $4,254.2 $3,980.3
Diversified:
Electric Fuels 489.4 397.2 328.7
Other diversified 945.3 987.4 1,024.0
----------------------------------------------------------------
$5,718.7 $5,638.8 $5,333.0
----------------------------------------------------------------
Depreciation and amortization:
Utility $ 294.8 $ 276.5 $ 243.4
Diversified:
Electric Fuels 19.7 16.4 18.9
Other diversified 7.2 7.0 6.4
----------------------------------------------------------------
$ 321.7 $ 299.9 $ 268.7
----------------------------------------------------------------
Capital additions:
Utility $ 327.2 $ 440.7 $ 493.5
Diversified:
Electric Fuels 38.1 19.5 23.1
Other diversified 2.8 2.2 3.0
----------------------------------------------------------------
$ 368.1 $ 462.4 $ 519.6
================================================================
In June 1993, Electric Fuels acquired the assets of a rail-services company
that contributed approximately $80 million to 1993 revenues. In December 1994,
Florida Progress acquired FM Industries, which contributed approximately $42
million to Electric Fuels' 1994 revenues in a pooling of interests transaction.
(See Note 1 to the Financial Statements.)
(9) INCOME TAXES
FLORIDA PROGRESS
(In millions) 1994 1993 1992
-------------------------------------------------------------------
Components of income tax expense:
Payable currently:
Federal $127.7 $140.7 $ 98.1
State 14.3 18.8 7.8
-------------------------------------------------------------------
142.0 159.5 105.9
-------------------------------------------------------------------
Deferred, net:
Federal (20.6) (39.2) (9.3)
State (2.1) (5.1) 1.0
Effect of change in tax rate on
deferred assets/liabilities - 4.7 -
-------------------------------------------------------------------
(22.7) (39.6) (8.3)
-------------------------------------------------------------------
<PAGE> 70
Amortization of investment
tax credits, net (9.6) (9.5) (9.1)
-------------------------------------------------------------------
$109.7 $110.4 $ 88.5
===================================================================
The principal components of deferred income tax expense for 1992 were the
difference between the financial and tax accounting for leases, the
underrecovery or overrecovery of fuel costs and the difference between
accelerated and straight-line depreciation.
FLORIDA POWER
(In millions) 1994 1993 1992
-------------------------------------------------------------------
Components of income tax expense:
Payable currently:
Federal $ 95.3 $110.2 $ 75.4
State 17.1 19.1 13.6
-------------------------------------------------------------------
112.4 129.3 89.0
-------------------------------------------------------------------
Deferred, net:
Federal 7.0 (13.9) 14.3
State .6 (2.6) 2.2
-------------------------------------------------------------------
7.6 (16.5) 16.5
-------------------------------------------------------------------
Amortization of investment
tax credits, net (8.5) (8.5) (8.0)
-------------------------------------------------------------------
$111.5 $104.3 $ 97.5
===================================================================
The principal components of deferred income tax expense for 1992 were the
underrecovery or overrecovery of fuel costs and the difference between
accelerated and straight-line depreciation.
The primary differences between the statutory rates and the effective income
tax rates are detailed below:
FLORIDA PROGRESS
1994 1993 1992
--------------------------------------------------------------------------
Federal statutory income tax rate 35.0% 35.0% 34.0%
State income tax, net of federal
income tax benefits 2.4 2.8 3.0
Amortization of investment tax credits (3.1) (3.0) (3.2)
Effect of change in tax rate on deferred
assets/liabilities - 1.5 -
Other (1.2) (1.8) (2.3)
--------------------------------------------------------------------------
Effective income tax rates 33.1% 34.5% 31.5%
==========================================================================
<PAGE>
<PAGE> 71
FLORIDA POWER
1994 1993 1992
--------------------------------------------------------------------------
Federal statutory income tax rate 35.0% 35.0% 34.0%
State income tax, net of federal
income tax benefits 3.7 3.6 3.6
Amortization of investment tax credits (2.7) (2.8) (2.8)
Other (.3) (.7) (.5)
--------------------------------------------------------------------------
Effective income tax rates 35.7% 35.1% 34.3%
==========================================================================
The Omnibus Budget Reconciliation Act of 1993 included various rule changes
and increased the maximum federal corporate income tax rate from 34% to 35%.
The impact of the tax law increased Florida Progress' 1993 income tax expense
by $7.9 million. This included $3.2 million attributable to the new tax rate on
current income and $4.7 million resulting from an adjustment of nonregulated
deferred tax balances. The tax rate change increased Florida Power's deferred
tax balances by $18.3 million with a corresponding net increase to a regulatory
asset.
The following summarizes the components of deferred tax liabilities and assets
at December 31, 1994 and 1993:
FLORIDA PROGRESS
(In millions) 1994 1993
---------------------------------------------------------------------------
Deferred tax liabilities:
Difference in tax basis of property,
plant and equipment $564.8 $532.4
Difference in accounting for leveraged leases 226.6 242.8
Other 88.0 90.1
---------------------------------------------------------------------------
Total deferred tax liabilities $879.4 $865.3
---------------------------------------------------------------------------
Deferred tax assets:
Accrued book expenses $114.1 $ 89.1
Unbilled revenues 17.7 17.3
Other 32.4 31.8
---------------------------------------------------------------------------
Total deferred tax assets $164.2 $138.2
===========================================================================
At December 31, 1994 and 1993, Florida Progress had net noncurrent deferred
tax liabilities of $744.1 million and $756.3 million and net current deferred
tax assets of $28.9 million and $29.2 million, respectively. Florida Progress
expects the results of future operations will generate sufficient taxable
income to allow the utilization of deferred tax assets.
<PAGE>
<PAGE> 72
FLORIDA POWER
(In millions) 1994 1993
---------------------------------------------------------------------------
Deferred tax liabilities:
Difference in tax basis of property,
plant and equipment $527.9 $500.4
Deferred book expenses 10.4 13.8
Under recovery of fuel .7 2.8
---------------------------------------------------------------------------
Total deferred tax liabilities $539.0 $517.0
---------------------------------------------------------------------------
Deferred tax assets:
Accrued book expenses $ 50.5 $ 40.5
Unbilled revenues 17.7 17.3
Regulatory liability for deferred income taxes 8.3 11.9
Other 3.3 3.8
---------------------------------------------------------------------------
Total deferred tax assets $ 79.8 $ 73.5
===========================================================================
At December 31, 1994 and 1993, Florida Power had net non-current deferred tax
liabilities of $488.0 million and $472.7 million and net current deferred tax
assets of $28.9 million and $29.2 million. Florida Power expects the results
of future operations will generate sufficient taxable income to allow the
utilization of deferred tax assets.
(10) RATES AND REGULATION
RETAIL RATES - In September 1992, the FPSC granted Florida Power an annual
revenue increase of $85.8 million, based on a 1992 rate filing. The rates
provide Florida Power the opportunity to earn a regulatory return on equity of
12%, with an allowed range between 11% and 13%. The FPSC granted increases in
retail base rates of approximately $58 million to be effective in November
1992, $9.7 million in April 1993 and $18.1 million in November 1993.
The FPSC ruled that Florida Power's retail regulatory return on equity would
be restricted to 12.5% for 1994. This temporary earnings restriction did not
affect Florida Power's current retail rates or its authorized range for return
on equity. Florida Power's retail regulatory return on equity was 12% for 1994.
WHOLESALE RATES - In January 1995, Florida Power filed with the FERC two
requests to increase rates for wholesale service totaling approximately $9.5
million annually. One request of $8.6 million represents a settlement agreement
with all but one wholesale customer. The second request seeks an increase of
$.9 million for the remaining customer. The increases are needed primarily to
recover additional purchased power capacity costs. Florida Power requested that
both increases become effective January 1, 1995. The FERC is expected to
approve the requests in early 1995.
<PAGE>
<PAGE> 73
In April 1994, the FERC approved Florida Power's 1994 settlement agreement,
which provides for rates designed to increase annual revenues by approximately
$9.8 million. The rate increases were effective in March and May 1994 and allow
Florida Power to recover costs for new generating facilities and higher
purchased power costs.
In March 1994, the FERC approved Florida Power's settlement agreement with
its wholesale customers in its 1993 base rate proceeding. The agreement
provides for rate increases designed to produce additional annual revenues of
$5.7 million, effective February 1993.
In December 1992, Florida Power reached a settlement agreement with its
wholesale customers, which resulted in no significant change in revenues. The
1992 settlement was approved by the FERC and provided for a retroactive change
in Florida Power's depreciation rates, which increased 1992 net income by $3.1
million.
(11) COMMITMENTS AND CONTINGENCIES
FUEL, COAL AND PURCHASED POWER COMMITMENTS - Florida Power has entered into
various long-term contracts to provide the fossil and nuclear fuel requirements
of its generating plants and to reserve pipeline capacity for natural gas. In
most cases, such contracts contain provisions for price escalation, minimum
purchase levels and other financial commitments. Estimated annual payments,
based on current market prices, for Florida Power's firm commitments for fuel
purchases and transportation costs, excluding delivered coal and purchased
power, are $5.7 million, $4.3 million, $5.7 million, $46.9 million and $57.9
million for 1995 through 1999, respectively, and $1,211.9 million in total
thereafter. Additional commitments will be required in the future to supply
Florida Power's fuel needs.
In connection with the supply of coal to Florida Power and other customers,
Electric Fuels has entered into several contracts with outside parties for the
purchase of coal and also several operating leases related to coal procurement,
processing and transportation. Minimum coal purchases are approximately 4
million tons per year. The annual obligations under these contracts and leases,
including transportation costs, are $159.5 million, $94.8 million, $93.7
million, $79.4 million and $73.7 million for 1995 through 1999, respectively,
and $203 million in total thereafter. The total cost incurred for these
commitments was $199.2 million in 1994, $213.2 million in 1993 and $249.3
million in 1992.
Florida Power has long-term contracts for about 450 MW of purchased power with
other utilities, including a contract with The Southern Company for
approximately 400 MW of purchased power annually through 2010. This represents
4.6% of Florida Power's total current system capacity. Florida Power has an
option to lower these purchases to 200 MW annually, beginning in 2000, with a
three-year notice. The purchased power from Southern is supplied by generating
units with a capacity of approximately 3,500 MW and is guaranteed by Southern's
entire system, totaling more than 30,000 MW.
<PAGE>
<PAGE> 74
As of December 31, 1994, Florida Power had entered into long-term contracts
with cogenerators for 1,110 MW of capacity. These contracts have terms ranging
from nine to 35 years. In most cases, these contracts account for 100% of the
generating capacity of each of the facilities. Of the 1,110 MW under contract,
961 MW are currently available and the remaining future capacity is a part of
Florida Power's plans for meeting future electricity demand growth. All
commitments have been approved by the FPSC.
The following table shows actual payments for 1992-1994 and minimum expected
future payments for purchased power commitments. Because the purchased power
commitments have relatively long durations, the present value of these payments
using a 10% discount rate also is presented. These amounts assume that all
units are brought into service as contracted and meet contract performance
requirements:
Purchased Power Capacity Payments
-------------------------------------------
Present
(In millions) Utilities Cogenerators Value
-------------------------------------------------------------------------
1992 $22 $10 $ -
1993 41 33 -
1994 53 85 -
1995 66 180 224
1996 66 216 233
1997 66 232 224
1998 65 244 211
1999 66 256 200
2000-2025 396 9,766 2,142
========================================================================
Florida Power does not plan to increase the level of purchased power currently
under contract. Because credit-rating agencies treat a portion of purchased
power capacity payments as a debt equivalent, these contracts may weaken
Florida Power's credit ratings. However, the utility believes that its current
contracts help meet overall system demand and help reduce construction
expenditures.
The FPSC allows these capacity payments to be recovered through a capacity
cost recovery clause, which is similar to, and works in conjunction with, the
fuel adjustment clause.
During 1994, a dispute occurred over the price paid for purchased power to
cogenerators. Under certain contract pricing provisions, Florida Power began
paying "as available" prices for purchased power, which are lower than the firm
energy prices previously paid. The revised pricing reduces payments to
cogenerators by about $15 million annually. Two cogenerators filed suit against
Florida Power in state court challenging this pricing methodology. A third
cogenerator amended its complaint in a pending lawsuit regarding a backup fuel
dispute with Florida Power to include the pricing issue. Two of these three
lawsuits involve antitrust claims.
<PAGE>
<PAGE> 75
Florida Power also established a generation curtailment plan in 1994 for its
purchased power contracts with cogenerators to avoid having to cycle off
certain lower-cost units during periods of low-system demand. Under this plan,
energy purchases from cogenerators would be less during low-load periods.
Florida Power filed petitions with the FPSC to resolve these issues. It is
uncertain at this time whether the FPSC or the state court will ultimately have
jurisdiction in these matters.
UTILITY CONSTRUCTION PROGRAM - Substantial commitments have been made in
connection with Florida Power's construction program, which are presently
estimated to result in construction expenditures in 1995 of $330 million for
electric plant and nuclear fuel.
THERMO-LAG FIRE BARRIER - Florida Power's nuclear plant uses a fire-retardant
material, called Thermo-Lag, as a fire barrier around electrical conduit and
cables. The U.S. Nuclear Regulatory Commission wants this material replaced or
upgraded because it does not provide the full fire protection originally
claimed by the manufacturer. Although the most costly option of removing and
replacing all of the Thermo-Lag would total about $40 million, management
believes there are more effective and less expensive options available. Until
there is a permanent solution, Florida Power has implemented surveillance
procedures to continuously inspect the Thermo-Lag. Florida Power does not
expect to have to replace all of the Thermo-Lag.
OFF-BALANCE SHEET RISK - Several of Florida Progress' subsidiaries are general
partners in unconsolidated partnerships and joint ventures. Florida Progress or
subsidiaries have agreed to support certain loan agreements of the partnerships
and joint ventures. The totals of the debt support agreements were $31.9
million and $33.9 million at December 31, 1994 and 1993, respectively, of which
$24.9 million and $26.4 million were guaranties, and $7 million and $7.5
million were stand-by letters of credit, respectively. If the other partners
fail to perform their obligations and if the partnership assets, consisting
primarily of land and buildings, were worthless, those subsidiaries could be
liable for an additional $40.2 million as of December 31, 1994, which
represents partnership liabilities exceeding amounts mentioned above. Florida
Progress considers these credit risks to be minimal, based upon the asset
values supporting the partnership liabilities.
INSURANCE - Florida Progress and its subsidiaries utilize various risk
management techniques to protect assets from risk of loss, including the
purchase of insurance. Risk avoidance, risk transfer and self-insurance
techniques are utilized depending on Florida Progress' ability to assume risk,
the relative cost and availability of methods for transferring risk to third
parties, and the requirements of applicable regulatory bodies.
Effective November 1993, the FPSC authorized Florida Power to self-insure the
utility's transmission and distribution lines against loss due to storm damage
and other natural disasters. Florida Power is accruing $6 million annually to a
storm damage reserve and may defer any losses in excess of the reserve.
<PAGE>
<PAGE> 76
Under the provisions of the Price Anderson Act, Florida Power, as an owner of a
nuclear plant, can be assessed for a portion of any third-party liability
claims arising from an accident at any commercial nuclear power plant in the
United States. If total third-party claims relating to a single nuclear
incident exceed $200 million (the amount of currently available commercial
liability insurance), Florida Power could be assessed up to $79.3 million per
incident, with a maximum assessment of $10 million per year.
Florida Power is a member of an industry mutual insurer ("NEIL"), which
provides replacement power cost coverage in the event of a major accidental
outage at a covered nuclear power plant. Florida Power is subject to a
retroactive premium assessment under this policy in the event of adverse loss
experience. Florida Power's present maximum share of any such retroactive
assessment is $2.6 million per policy year.
Florida Power also maintains nuclear property damage and
decontamination/decommissioning liability insurance totaling $2.1 billion. The
first layer of $500 million is purchased in the commercial insurance market
with the remaining excess coverage purchased from NEIL. Florida Power is
self-insured for any losses that are in excess of this coverage. Under the
terms of the NEIL policy agreements, Florida Power could be assessed up to $8.4
million in any policy year if a loss in excess of NEIL's available surplus is
incurred. In the event of multiple losses in any policy year, Florida Power's
retroactive premium could total up to $15.8 million.
Florida Power has never been retroactively assessed under any of these nuclear
indemnities or insurance policies.
CONTAMINATED SITE CLEANUP - Florida Progress is subject to regulation with
respect to the environmental effects of its operations. The disposal of
company-generated hazardous waste can result in costs to clean up facilities
found to be contaminated due to past disposal practices. Federal and state
statutes authorize governmental agencies to compel responsible parties to clean
up certain abandoned or uncontrolled hazardous waste sites. Florida Power and
other subsidiaries of Florida Progress are currently potentially responsible
parties at certain sites. Florida Power has been named in one suit brought
against four prior owners of a coal gasification plant site. Liability for such
cleanup costs is joint and several. Florida Progress has no reason to believe
that it will have to pay a significantly disproportionate share of these
cleanup costs. The best estimate currently available to Florida Progress
indicates that its proportionate share of liability for cleaning up the sites
ranges from $1.3 million to $2 million, and it has reserved $1.8 million
against these potential costs. It is possible that additional claims could be
asserted relating to the coal gasification plant site that could increase
Florida Power's cleanup costs. Currently, no estimates of these additional
costs, if any, are available.
<PAGE>
<PAGE> 77
PRAXAIR LAWSUIT - Florida Power and FP&L are co-defendants in an antitrust
action. Praxair (formerly a part of Union Carbide Corporation) is a customer of
FP&L and is 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 its consequent refusal to provide electricity to the
customer. Management believes it has a strong defense and intends to vigorously
defend against this action.
(12) TRANSACTIONS WITH RELATED PARTIES
Florida Power has entered into two coal supply contracts with Electric Fuels to
meet substantially all of its coal requirements through 2004. The cost of coal
purchased for 1994, 1993, and 1992 was $249.4 million, $244.6 million, and
$261.1 million, respectively. The amount payable to Electric Fuels for coal
purchases at December 31, 1994 and 1993, was $21.1 million and $16.6 million,
respectively.
<PAGE> 77
<TABLE>
<CAPTION>
QUARTERLY FINANCIAL DATA
FLORIDA PROGRESS CORPORATION
(Unaudited)
Three Months Ended
(In millions, except per share amounts) March 31 June 30 September 30 December 31
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994
Revenues $639.2 $693.2 $756.2 $682.9
Income from operations 91.3 121.7 155.3 107.7
Net income 36.5 53.7 75.8 46.0
Earnings per average common share .41 .58 .80 .49
Dividends per common share .495 .495 .495 .505
Common stock price per share:
High 33 5/8 30 1/2 29 1/4 30 7/8
Low 29 1/8 24 3/4 25 3/4 27 5/8
---------------------------------------------------------------------------------------------------------------
1993
Revenues $493.3 $553.3 $768.9 $633.5
Income from operations 84.8 99.5 172.2 86.1
Net income 34.4 43.0 82.0 37.2
Earnings per average common share .39 .49 .93 .42
Dividends per common share .485 .485 .485 .495
Common stock price per share:
High 35 3/4 36 36 3/8 35 3/4
Low 31 1/4 32 3/8 34 1/4 32 1/4
--------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE> 78
<TABLE>
<CAPTION>
FLORIDA POWER CORPORATION
(Unaudited)
--------------------------------------------------------------------------------------------------------
(In millions) Three Months Ended
March 31 June 30 September 30 December 31
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994
Operating revenues $483.5 $517.0 $586.5 $493.5
Net income $34.3 $50.1 $72.0 $44.4
Earnings on common stock $31.8 $47.6 $69.4 $41.9
1993
Operating revenues $407.0 $461.9 $609.0 $479.7
Net income $35.4 $42.3 $84.7 $32.5
Earnings on common stock $31.5 $39.1 $81.5 $29.4
</TABLE>
<PAGE>
<PAGE> 79
The business of Florida Progress' largest subsidiary, Florida Power, is
seasonal in nature and it is management's opinion that comparisons of earnings
for the quarters do not give a true indication of the overall trends and
changes in operations. Florida Progress' quarterly financial data for the
first three quarters of 1994 has been restated, compared to previously issued
interim financial statements, for the acquisition of FM Industries in December
1994 in a pooling of interests transaction. (See Note 1 to the Financial
Statements.)
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
FLORIDA PROGRESS
Information concerning the Directors of Florida Progress is included under the
headings "Information as to Nominees" and "Information as to Continuing
Directors" in Florida Progress' Proxy Statement and is incorporated herein by
reference. Information concerning the executive officers of Florida Progress
is set forth in Part I, Item 1 hereof under the heading "Executive Officers".
Information concerning compliance by Florida Progress' directors and officers,
and persons who own more than ten percent of Florida Progress' common stock,
with the reporting requirements of Section 16(a) of the Securities Exchange Act
of 1934 is set forth under the heading "Compliance with Section 16(a) of the
Exchange Act" in Florida Progress' Proxy Statement and is incorporated herein
by reference.
FLORIDA POWER
DIRECTORS
R. Mark Bostick, Age 40, Director since 1992
Member - Executive Committee
Since January, 1989, Mr. Bostick's principal occupation has been President of
COMCAR Industries, Inc., a privately-held, diversified transportation company.
For more than five years before 1989, Mr. Bostick was Executive Vice President
of COMCAR Industries, Inc. Mr. Bostick is a director of NationsBank of
Florida, N.A.
Jack B. Critchfield, Age 61, Director 1975 - 1978 and since 1988 Chairman -
Executive Committee
Information concerning Dr. Critchfield is set forth in Part I, Item 1
hereof under the heading "Executive Officers".
Allen J. Keesler, Age 56, Director since 1988 Member - Executive Committee
Information concerning Mr. Keesler is set forth in Part I, Item 1 hereof under
the heading "Executive Officers".<PAGE>
<PAGE> 80
Richard Korpan, Age 53, Director since 1989 Member - Executive Committee
Information concerning Mr. Korpan is set forth in Part I, Item 1 hereof under
the heading "Executive Officers".
Frank C. Logan, Age 60, Director since August 1994
Mr. Logan has practiced law since 1962, primarily in the areas of estate
planning, probate, corporate and business law. Since September 1994, Mr. Logan
has been a partner in the law firm of Harris, Barrett, Mann & Dew, Clearwater,
Florida. Previously, he was with the Clearwater firm of McMullen, Everett,
Logan, Marquardt & Cline which became MacFarlane, Ausley, Ferguson & McMullen
after a 1993 merger with a Tampa firm. He serves on the Federal Judicial
Nominating Commission for Florida.
Clarence V. McKee, Esquire, Age 52, Director since 1988
Mr. McKee's principal occupation is Chairman and Chief Executive Officer of
McKee Communications, Inc., Tampa, Florida. From 1987 to 1992, he served as
Chairman and Chief Executive Officer of WTVT Holdings, Inc. He served as
Counsel to Pepper & Corazinni, a Washington, D.C. communications law firm, from
1980 until 1987 when he became a co-owner of WTVT Holdings, Inc., licensee of
WTVT-TV, Tampa, Florida. Mr. McKee is a director of Barnett Bank of Tampa,
Barnett Banks, Inc., and American Heritage Life Insurance Company,
Jacksonville.
Joan D. Ruffier, Age 55, Director since 1991 Member - Executive Committee,
Compliance Committee
Ms. Ruffier's principal occupation is a general partner of Sunshine Cafes,
Orlando, Florida, a food and beverage concession business at major Florida
airports. From 1978 to 1982, she served as a management consultant to the
National Association of Bank Women. From 1982 to 1986, she practiced public
accounting with the firm of Colley, Trumbower & Howell. In 1986, she assumed
her present position. Ms. Ruffier is a member of the Administrative Board of
Sun Bank, N.A. in Orlando, and the board of the Jacksonville Branch of the
Federal Reserve Bank of Atlanta. She also serves on the boards of directors of
SunHealth Corporation and Sun Health Enterprises, Inc. of Charlotte, North
Carolina.
Jean Giles Wittner, Age 60, Director since 1977 Member - Compliance Committee
Ms. Wittner is President of Wittner & Company, a St. Petersburg, Florida firm
involved in real estate management and insurance brokerage and consulting. She
previously served as President and Chief Executive Officer of a savings
association from 1975 until it was sold on December 31, 1986. She then became
President of Wittner Securities, Inc. In November 1989, she became President of
Wittner & Company.
All of the directors except Mr. Bostick and Mr. Logan are directors of Florida
Progress. Each director holds office until the next Annual Meeting of
Shareholders and until the election and qualification of a successor.<PAGE>
<PAGE> 81
EXECUTIVE OFFICERS
Information concerning the executive officers of Florida Power is set forth in
Part I, Item 1 hereof under the heading "Executive Officers".
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely on a review of the copies of Section 16(a) forms furnished to
Florida Power during 1994, or written representations that no forms were
required, Florida Power believes that all persons who at any time during 1994
were officers, directors or greater than ten-percent beneficial owners of
Florida Power's preferred stock, filed their applicable Section 16(a) reports
on a timely basis during 1994 and prior fiscal years.
ITEM 11. EXECUTIVE COMPENSATION
FLORIDA PROGRESS
The information under the heading "Compensation of Directors", "Compensation
Committee Interlocks and Insider Participation", "Executive Compensation" and
"Pension Plan Table" in Florida Progress' Proxy Statement is incorporated
herein by reference.
FLORIDA POWER
COMPENSATION OF DIRECTORS
With the exception of Messrs. Bostick and Logan, the compensation for all
outside directors of Florida Power (excluding employees of Florida Progress) is
a daily meeting fee of $1,500 for Board and committee meetings attended on any
one day. Messrs. Bostick and Logan receive these daily meeting fees and $7,500
per year as a retainer fee. Outside directors who also serve on the Board of
Directors of Florida Progress are paid an annual retainer in the amount of
$22,500, plus a fee of $1,500 for attendance at each meeting of Florida
Progress' Board of Directors and a per day meeting fee of $1,500 for subsidiary
and committee meetings attended on any one day. All or a portion of these fees
may be deferred at the discretion of a director.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Florida Power has no compensation committee of its Board of Directors or other
board committee performing equivalent functions. The compensation of Florida
Power's executive officers is established by the compensation committee of the
Board of Directors of Florida Progress, which is comprised solely of outside
directors of Florida Progress and includes two individuals who also are outside
directors of Florida Power: Clarence V. McKee and Jean Giles Wittner. None of
these individuals was during 1994, or formerly, an officer or employee of
Florida Power or any of its subsidiaries.
<PAGE>
<PAGE> 82
EXECUTIVE COMPENSATION
The following table contains information with respect to compensation awarded,
earned or paid during the years 1992-1994 to (i) the Chief Executive Officer,
and (ii) the other four most highly compensated executive officers of Florida
Power (the "Named Executive Officers") in 1994, whose total renumeration paid
in 1994 exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation (1) Compensation
Name and Principal LTIP All other
Position Year Salary Bonus Payouts (2) Compensation(3)
------------------ ---- ------ ----- --------- ---------------
<S> <C> <C> <C> <C> <C>
ALLEN J. KEESLER, JR. 1994 $383,011 $172,500 $178,904(4) $15,837
President and Chief
Executive Officer 1993 379,548 208,000 217,250 9,888
1992 374,163 36,000 9,603
MAURICE H. PHILLIPS 1994 $243,630 $ 96,000 $ 99,553(4) $10,402
Executive Vice President
1993 241,418 104,000 121,031 9,869
1992 237,365 23,000 9,514
JOSEPH H. RICHARDSON 1994 $212,122 $ 88,500 $ 81,326(4) $4,226
Senior Vice President
and General Counsel 1993 198,071 100,000 78,875 119
1992 192,554 38,000 1,908
PERCY M. BEARD 1994 $206,345 $ 83,000 $ 76,826(4) $9,090
Senior Vice President
1993 188,728 100,000 N/A 7,925
1992 182,706 18,000 7,400
JOHN A. HANCOCK 1994 $197,088 $ 72,500 $ 74,786(4) $8,700
Senior Vice President
1993 182,870 87,000 N/A 7,684
1992 178,136 17,500 7,213
<PAGE>
<PAGE> 83
(1) All other annual compensation paid to the Chief Executive Officer
and the Named Executive Officers during 1994, other than salary
and annual incentive compensation, does not exceed the minimum
amounts required to be reported pursuant to SEC rules.
(2) The following number and value of restricted Shares of Common Stock
of Florida Progress as of December 31, 1994 was held by the Chief
Executive Officer of Florida Progress and the Named Executive
Officers as a result of awards earned under the 1991-1993
performance cycle: Allen J. Keesler, Jr. 4,634 shares $139,020;
Maurice H. Phillips 2,582 shares $77,460; Joseph H. Richardson
1,682 shares $50,460.
(3) Contributions to its Savings Plan of Florida Progress and/or its Executive
Optional Deferred Compensation Plan on behalf of the Chief Executive Officer
and the Named Executive Officers.
(4) Represents the dollar value as of February 9, 1995, the date of grant,
of shares of Common Stock of Florida Progress earned under the 1992-1994
performance cycle of the Florida Progress Corporation Long-Term Incentive
Plan ("LTIP"), two-thirds of which are restricted. The total number of shares
earned are as follows: Allen J. Keesler, Jr., 5,526 shares; Maurice
H. Phillips 3,075 shares; Joseph H. Richardson 2,512 shares, Percy M. Beard, Jr.
2,373 shares and John A. Hancock 2,310 shares. The vesting schedule for the
restricted stock is 50% on January 1, 1996 and 50% on January 1, 1997. Dividends
are payable on the restricted Common Stock to the extent and on the same date as
dividends are paid on all other shares of Florida Progress Common Stock.
In the event of a change in control of Florida Progress, all
restrictions on all shares of restricted stock shall lapse upon such
change in control.
</TABLE>
The following table contains information with respect to Performance Shares
awarded in 1994 to the Chief Executive Officer and each of the Named Executive
Officers of Florida Power for the 1994-1996 performance cycle of the LTIP:
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLAN(1)
AWARDS IN 1994
Number of Performance Estimated Payout in shares at End of Period(3)
Performance Period ---------------------------------------------
Name Shares(2) Covered Threshold Target Maximum
---------------------- ---------- --------- --------- ------ --------
<S> <C> <C> <C> <C> <C>
Allen J. Keesler, Jr. 4,902 1994-1996 2,451 4,902 7,353
Maurice H. Phillips 2,729 1994-1996 1,365 2,729 4,094
Joseph H. Richardson 2,408 1994-1996 1,204 2,408 3,612
Percy M. Beard 2,352 1994-1996 1,176 2,352 3,528
John A. Hancock 2,240 1994-1996 1,120 2,240 3,360
(1) The LTIP is a Common Stock based incentive plan to reward participants for
long-term growth and performance of Florida Progress. It was approved by
the Florida Progress shareholders in 1990.
(2) Performance shares awarded under the LTIP which, upon achievement of
performance criteria established by the Compensation Committee of the
Board of Directors of Florida Progress, would result in the payout of
shares of Florida Progress Common Stock, two-thirds of which would be
restricted for periods of time. Payouts of shares of Florida Progress
Common Stock are made for achieving returns on equity equal to or
exceeding the thresholds established by the Compensation Committee. In
the event of a change in control of Florida Progress, 150% of all
performance shares awarded under the LTIP and then outstanding would
automatically be considered earned and would be paid in shares of
unrestricted Florida Progress Common Stock together with shares of
unrestricted Florida Progress Common Stock payable for dividend<PAGE>
<PAGE> 84
equivalents accrued to the change in control on performance shares awarded
for performance cycles starting after December 31, 1992. Also, all
restrictions on shares of restricted Florida Progress Common Stock
previously granted and then held would terminate.
(3) Awards are earned upon achievement of Florida Progress and/or subsidiary
return on equity goals for the three-year performance cycle.
</TABLE>
Pension Plan Table
The table below illustrates the estimated annual benefits (computed as a
straight life annuity beginning at retirement at age 65) payable under the
Florida Progress Corporation Retirement Plan and Nondiscrimination Plan for
specified final average compensation and years of service levels. As explained
below, the table also provides information about the estimated annual benefits
(also computed as a straight life annuity beginning at retirement at age 65)
payable under the Florida Progress Corporation Supplemental Executive
Retirement Plan ("SERP").
<TABLE>
<CAPTION>
Estimated Annual Retirement Benefits Payable Under
the Retirement Plan and Nondiscrimination Plan
-------------------------------------------------
Average Annual
Compensation Service Years
----------------
--------------------------------------------------------------------------------------------------------------
5 10 15 20 25 30 35 or more
------ ------ ------ ------ ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 18,000 $ 36,000 $ 54,000 $ 72,000 $ 90,000 $108,000 $126,000
300,000 27,000 54,000 81,000 108,000 135,000 162,000 189,000
400,000 36,000 72,000 108,000 144,000 180,000 216,000 252,000
500,000 45,000 90,000 135,000 180,000 225,000 270,000 315,000
600,000 54,000 108,000 162,000 216,000 270,000 324,000 378,000
700,000 63,000 126,000 189,000 252,000 315,000 378,000 441,000
800,000 72,000 144,000 216,000 288,000 360,000 432,000 504,000
</TABLE>
Under the Retirement Plan and the Nondiscrimination Plan, the compensation
taken into account is salary only; the years of credited service that would be
used in calculating benefits under the Retirement Plan and the
Nondiscrimination Plan for the executives named in the summary compensation
table are as follows: Mr. Keesler, 32 years of service; Mr Phillips, 34 years
of service; Mr. Richardson, 19 years of service; Mr. Beard, 5 years of service;
and Mr. Hancock, 27 years of service. The benefits under the Retirement Plan
and the Nondiscrimination Plan are subject to offset by an amount equal to 1
1/7% of a participant's primary Social Security Benefit for each year of
service (with a maximum offset of 40% of primary Social Security).
The executives named in the summary compensation table are also entitled to
benefits under the SERP. These benefits are offset by the benefits payable
under the Retirement Plan and the Nondiscrimination Plan, as well as 100% of
the executive's primary Social Security benefit. The estimated annual SERP
benefit for the named executives (prior to any offsets) may be determined using
<PAGE>
<PAGE> 85
the table set forth above for the Retirement Plan and the Nondiscrimination
Plan; for these purposes, the current compensation for each executive that
would be used in calculating benefits under the SERP is substantially the same
as that reported as salary and bonus in the summary compensation table, and the
number of years of deemed credited service that would be used in calculating
benefits under the SERP for each such executive is as follows: Mr. Keesler 35
years of service; Mr. Phillips 35 years of service; Mr. Richardson 19 years of
service; Mr. Beard 35 years of service; and Mr. Hancock 27 years of service.
Accrued benefits may also be paid under each of the Retirement Plan,
Nondiscrimination Plan and SERP if a participant terminates employment before
age 65 and meets the requirements for early retirement, disability, death or
other termination of employment benefits after becoming vested under the rules
of the particular plan.
The SERP also provides for a lump sum benefit payable in the event of a change
in control. In most instances, this benefit is equal to the sum of (1) two
times the executive's current annual salary and bonus, (2) the value of the
executive's prospective award under the SERP if he had continued to work until
age 65 (including amounts that later would have been payable to any surviving
spouse) and (3) the amount of any federal excise taxes (and income taxes on any
reimbursement under this provision) imposed on the executive under Section 4999
of the Internal Revenue Code with respect to all compensation plans and
arrangements of Florida Progress.
Mr. Phillips is taking early retirement effective April 1, 1995, pursuant to
the "special early retirement" provisions of the SERP which are separate and
in lieu of those mentioned above. Under his arrangement, Mr. Phillips will
receive, until age 62, an annual retirement benefit of $201,468. After age 62,
the annual benefit will be reduced by $11,436, the amount of his annual social
security benefit. After his death, his spouse will receive an annual survivor
benefit of $140,966. Approximately 60% of those benefits are payable pursuant
to the SERP, with the balance payable under the Retirement and
Nondiscrimination Plans. Florida Power will also pay 97% of his company
medical insurance premiums and 73% of his spouse's. Mr. Phillips will also be
eligible to be paid a pro rata 1995 annual bonus and two-thirds and one-third
of his 1993-1995 and 1994-1996 LTIP performance cycle awards, respectively, if
any are determined to be earned.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
FLORIDA PROGRESS
The information included under the headings "Security Ownership of Certain
Beneficial Owners" and "Security Ownership of Management" in Florida Progress'
Proxy Statement is incorporated herein by reference.
<PAGE>
<PAGE> 86
FLORIDA POWER
All of Florida Power's common stock is held beneficially and of record by
Florida Progress. None of Florida Power's directors or executive officers owns
any shares of Florida Power's common or preferred stock. Information
concerning shares of Florida Progress common stock that are held by persons
known to Florida Progress to be the beneficial owners of more than 5% of
Florida Progress common stock is set forth in the first table under the heading
"Security Ownership of Certain Beneficial Owners" in the Florida Progress Proxy
Statement and is incorporated herein by reference.
The table below sets forth as of December 31, 1994, the number of shares of
common stock of Florida Progress owned by Florida Power's directors, Chief
Executive Officer and Named Executive Officers individually and the directors
and executive officers of Florida Power as a group.
Florida Power Number of Shares Percent of
Officer or Director Name Beneficially Owned (1) Class (2)
------------------------ ---------------------- ----------
R. M. Bostick 200
Jack B. Critchfield 18,842
Allen J. Keesler, Jr. 45,358(3)
Richard Korpan 6,840
Frank C. Logan 900
Clarence V. McKee 1,750
Joan D. Ruffier 2,545
Jean Giles Wittner 8,521
Percy M. Beard, Jr. 183
John A. Hancock 12,470
Maurice H. Phillips 11,472
Joseph H. Richardson 6,026
All 15 directors and executive
officers as a group, including
those named above 128,333 .13%
(1) As used in this table, "beneficial ownership" means the direct or
indirect, sole or shared power to vote, or to direct the voting of, a
security and/or investment power with respect to a security.
(2) Unless otherwise noted, less than 1% per individual.
(3) Includes 16,581 shares owned by Mr. Keesler's father, as to which Mr.
Keesler disclaims beneficial ownership.
<PAGE>
<PAGE> 87
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
FLORIDA PROGRESS
The information included under the heading "Certain Business Relationships
and Related Transactions" in Florida Progress' Proxy Statement is incorporated
herein by reference.
FLORIDA POWER
With respect to Florida Power, there are no relationships or related
transactions required to be reported under this item.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
FOR FLORIDA PROGRESS AND FLORIDA POWER
(a) 1. Financial Statements, notes to Financial Statements and
report thereon of KPMG Peat Marwick LLP are found in Item 8
"Financial Statements and Supplementary Data", herein.
2. The following Financial Statement Schedules and
reports are included herein:
Florida Progress
II-Valuation and Qualifying Accounts
for the years ended December 31,
1994, 1993 and 1992
Florida Power
II-Valuation and Qualifying Accounts
for the years ended December 31,
1994, 1993 and 1992
All other schedules are not submitted because they
are not applicable or not required or because the
required information is included in the financial
statements or notes thereto.
<PAGE>
<PAGE> 88
3. Exhibits filed herewith:
Florida Florida
Number Exhibit Progress Power
------ ------- -------- -------
4 Form of Certificate representing shares of X
Florida Progress Common Stock.
10.(a) Florida Progress Supplemental Executive X X
Retirement Plan.*
10.(b) Management Incentive Compensation Plan X X
of Florida Progress Corporation, as amended.*
10.(c) Executive Optional Deferred Compensation Plan.* X X
12 Statement of Computation of Ratios. X
21 Subsidiaries of Florida Progress. X
23.(a) Consent of Independent Certified Public X
Accountants to the incorporation by reference
of their report on the financial statements
into the following registration statements of
Florida Progress: Form S-3 (No. 33-51573)
(relating to the registration of 4.5 million
shares of common stock and filed with the SEC
on December 17, 1993); Form S-8 (No. 33-53939)
(relating to the Savings Plan for Employees of
Florida Progress and filed with the SEC on
June 1, 1994); Form S-3 (No. 33-45044)
(relating to the Progress Plus Plan and filed
with the SEC on January 13, 1992); Form S-8
(No. 33-47623) (relating to Florida Progress'
Long-Term Incentive Plan and filed with the
SEC on May 1, 1992); Form S-8 (No. 33-39153)
(also relating to the Long-Term Incentive Plan
and filed with the SEC on February 26, 1991);
and Form S-3 (No. 2-93111)(relating to the
acquisition of Better Business Forms and filed
with the SEC on September 5, 1984).
23.(b) Consent of Independent Certified Public X
Accountants to the incorporation by reference
of their report on the financial statements
into Florida Power's registration statements
on Form S-3 (No. 33-62210 and 33-55273)(relating
to Florida Power's first mortgage bond shelf)
and Form S-3 (No. 33-50908) (relating to Florida
Power's medium-term note shelf).
27.(a) Florida Progress Financial Data Schedule X
27.(b) Florida Power Financial Data Schedule X
<PAGE>
<PAGE> 89
4. Exhibits incorporated herein by reference:
3.(a) Bylaws of Florida Progress, as amended to date. X
(Filed as Exhibit 3(a) to Florida Progress'
Form 10-K for the year ended December 31, 1992,
as filed with the SEC on March 31, 1993).
3.(b) Restated Articles of Incorporation, as X
amended, of Florida Progress. (Filed as
Exhibit 3(a) to Florida Progress' Form
10-K for the year ended December 31, 1991, as
filed with the SEC on March 30, 1992.)
4.(a) Rights Agreement, dated as of November 21, X
1991, between Florida Progress and Manufacturers
Hanover Trust Company, including as Exhibit A
the form of Rights Certificate. (Filed as
Exhibit 4(a) to Florida Progress' Form 8-K dated
November 21, 1991, as filed with the SEC on
November 27, 1991).
4.(b) Amended Articles of Incorporation, as X X
amended, of Florida Power. (Filed as
Exhibit 3(a) to the Florida Power
Form 10-K for the year ended December 31,
1991, as filed with the SEC (File No. 1-3274)
on March 30, 1992).
4.(c) Indenture, dated as of January 1, 1944 (the X X
"Indenture"), between Florida Power and
Guaranty Trust Company of New York and The
Florida National Bank of Jacksonville, as
Trustees. (Filed as Exhibit B-18 to Florida
Power's Registration Statement on Form A-2
(No. 2-5293) filed with the SEC on January
24, 1944).
4.(d) Seventh Supplemental Indenture, dated as of X X
July 1, 1956, between Florida Power and
Guaranty Trust Company of New York and The
Florida National Bank of Jacksonville, as
Trustees, with reference to the modification
and amendment of the Indenture. (Filed as
Exhibit 4(b) to Florida Power's Registration
Statement on Form S-3 (No. 33-16788) filed
with the SEC on September 27, 1991).
4.(e) Eighth Supplemental Indenture, dated as of X X
July 1, 1958, between Florida Power and
Guaranty Trust Company of New York and The
Florida National Bank of Jacksonville, as
Trustees, with reference to the modification
and amendment of the Indenture. (Filed as
Exhibit 4(c) to Florida Power's Registration
Statement on Form S-3 (No. 33-16788) filed
with the SEC on September 27, 1991).<PAGE>
<PAGE> 90
4.(f) Sixteenth Supplemental Indenture, dated as of X X
February 1, 1970, between Florida Power and
Morgan Guaranty Trust Company of New York and
The Florida National Bank of Jacksonville, as
Trustees, with reference to the modification
and amendment of the Indenture. (Filed as
Exhibit 4(d) to Florida Power's Registration
Statement on Form S-3 (No. 33-16788) filed
with the SEC on September 27, 1991).
4.(g) Twenty-Ninth Supplemental Indenture, dated as X X
of September 1, 1982, between Florida Power
and Morgan Guaranty Trust Company of New York
and Florida National Bank, as Trustees, with
reference to the modification and amendment
of the Indenture. (Filed as Exhibit 4(c) to
Florida Power's Registration Statement on
Form S-3 (No. 2-79832) filed with the SEC on
September 17, 1982).
4.(h) Thirty-Eighth Supplemental Indenture dated as X X
of July 25, 1994, between Florida Power and
First Chicago Trust Company of New York, as
successor Trustee, Morgan Guaranty Trust
Company of New York, as resigning Trustee,
and First Union National Bank of Florida, as
resigning Co-Trustee, with reference to
confirmation of First Chicago Trust Company
of New York as successor Trustee under the
Indenture. (Filed as Exhibit 4.(f) to Florida
Power's Form S-3 Registration Statement
No. 33-55273 as filed with the SEC on August
29, 1994.)
10.(d) Amended and Restated Support Agreement, X
dated as of February 1, 1991, between
Florida Progress and Progress Capital
(Filed as Exhibit 10(d) to Florida Progress'
Form 10-K for the year ended December 31,
1990, as filed with the SEC on March 28,
1991).
10.(e) Florida Progress Corporation Long-Term X X
Incentive Plan, approved by Florida Progress'
Shareholders on April 19, 1990. (Filed as
Exhibit 10(d) to Florida Progress' Form 10-Q
for the quarter ended March 31, 1990, as
filed with the SEC on May 14, 1990). *
10.(f) Amended and Restated General Partnership X X
Agreement of the SunShine Pipeline Partners
dated May 5, 1993. (Filed as Exhibit 10(a)
to Florida Power's Form 10-Q for the quarter
ended June 30, 1993, as filed with the SEC
(File No. 1-3274) on August 3, 1993).<PAGE>
<PAGE> 91
10.(g) Amended and Restated General Partnership X X
Agreement of the SunShine Interstate
Pipeline Partners dated May 5, 1993. (Filed
as Exhibit 10(b) to Florida Power's Form 10-Q
for the quarter ended June 30, 1993, as filed
with the SEC (File No. 1-3274) on August 3,
1993).
10.(h) Precedent Agreement dated April 8, 1993 X X
between Florida Power and the SunShine Pipeline
Partners covering terms and conditions of service
to be provided to Florida Power by the
intrastate component of the SunShine Pipeline.
(Filed as Exhibit 10(c) to Florida Power's
Form 10-Q for the quarter ended June 30, 1993,
as filed with the SEC (File No. 1-3274) on
August 3, 1993).
10.(i) Precedent Agreement dated April 8, 1993 X X
between Florida Power and the SunShine Pipeline
Partners covering terms and conditions of service
to be provided to Florida Power by the
interstate component of the Sunshine Pipeline.
(Filed as Exhibit 10(d) to Florida Power's
Form 10-Q for the quarter ended June 30, 1993,
as filed with the SEC (File No. 1-3274) on
August 3, 1993).
10.(j) Letter Agreement dated June 30, 1993 X X
relating to the SunShine Pipeline.
(Filed as Exhibit 10(e) to Florida Power's
Form 10-Q for the quarter ended June 30,
1993, as filed with the SEC (File No. 1-3274)
on August 3, 1993). (Confidential treatment
has been granted with respect to a portion
of this document - omitted portion filed
separately with the SEC).
X = exhibit is filed for that respective company.
* Exhibit constitutes an executive compensation plan or arrangement.
In reliance upon Item 601(b)(4)(iii) of Regulation S-K, certain instruments
defining the rights of holders of long-term debt of Florida Progress and its
consolidated subsidiaries are not being filed herewith, because the total
amount authorized thereunder does not exceed 10% of the total assets of Florida
Progress and its subsidiaries on a consolidated basis. Florida Progress hereby
agrees to furnish a copy of any such instruments to the SEC upon request.
<PAGE>
<PAGE> 92
(b) Reports on Form 8-K:
During the fourth quarter of the year ended
December 31, 1994, Florida Progress and Florida Power
filed the following reports on Form 8-K:
Form 8-K dated October 20, 1994, reporting
under Item 5 "Other Events" a press release
and related Investor Information Report
reporting Florida Progress and Florida Power's
third quarter 1994 earnings.
Form 8-K dated November 17, 1994, reporting
under Item 5 "Other Events" the election of
W.D. "Bill" Frederick, Jr. to the Florida
Progress Board of Directors and the increase
in Florida Progress' annual common stock
dividend rate.
In addition, Florida Progress and Florida Power filed the
following report on Form 8-K subsequent to the fourth
quarter of 1994:
Form 8-K dated January 23, 1995, reporting
under Item 5 "Other Events" a press release
and related Investor Information Report reporting
Florida Progress' and Florida Power's 1994 earnings.
Form 8-K dated February 9, 1995, reporting under
Item 5 "Other Events" a press release and
related Investor Information report reporting
that Florida Power has filed suit to terminate
two agreements to transport natural gas through
the proposed SunShine Pipeline.
<PAGE>
<PAGE> 93
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
March 30, 1995 By: /s/ Jack B. Critchfield
----------------------------
Jack B. Critchfield,
Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Jack B. Critchfield Chairman of the Board, March 30, 1995
----------------------------- Chief Executive Officer
Jack B. Critchfield and Director
Principal Executive Officer
/s/ Jeffrey R. Heinicka Senior Vice President and March 30, 1995
----------------------------- Chief Financial Officer
Jeffrey R. Heinicka
Principal Financial Officer
/s/ John Scardino, Jr. Vice President and March 30, 1995
----------------------------- Controller
John Scardino, Jr.
Principal Accounting Officer
/s/ Willard D. Frederick, Jr. Director March 30, 1995
-----------------------------
Williard D. Frederick, Jr.
/s/ Michael P. Graney Director March 30, 1995
-----------------------------
Michael P. Graney
/s/ Allen J. Keesler, Jr. Director March 30, 1995
-----------------------------
Allen J. Keesler, Jr.
(Continued)
<PAGE>
<PAGE> 94
Signature Title Date
--------- ----- ----
/s/ Richard Korpan Director March 30, 1995
-----------------------------
Richard Korpan
/s/ Clarence V. McKee Director March 30, 1995
-----------------------------
Clarence V. McKee
/s/ Vincent J. Naimoli Director March 30, 1995
-----------------------------
Vincent J. Naimoli
/s/ Richard A. Nunis Director March 30, 1995
-----------------------------
Richard A. Nunis
/s/ Charles B. Reed Director March 30, 1995
-----------------------------
Charles B. Reed
/s/ Joan D. Ruffier Director March 30, 1995
-----------------------------
Joan D. Ruffier
/s/ Robert T. Stuart, Jr. Director March 30, 1995
-----------------------------
Robert T. Stuart, Jr.
/s/ Jean Giles Wittner Director March 30, 1995
-----------------------------
Jean Giles Wittner
<PAGE>
<PAGE> 95
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 POWER CORPORATION
March 30, 1995 By: /s/ Allen J. Keesler, Jr.
-------------------------
Allen J. Keesler, Jr., President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Signature Title Date
/s/ Jack B. Critchfield Chairman of the March 30, 1995
------------------------- Board and Director
Jack B. Critchfield
/s/ Allen J. Keesler, Jr. President, Chief March 30, 1995
------------------------- Executive Officer
Allen J. Keesler, Jr. and Director
Principal Executive Officer
/s/ Jeffrey R. Heinicka Senior Vice President March 30, 1995
------------------------- and
Jeffrey R. Heinicka Chief Financial Officer
Principal Financial Officer
/s/ John Scardino, Jr. Vice President March 30, 1995
------------------------- and Controller
John Scardino, Jr.
Principal Accounting Officer
/s/ R. Mark Bostick Director March 30, 1995
-------------------------
R. Mark Bostick
/s/ Richard Korpan Director March 30, 1995
-------------------------
Richard Korpan
/s/ Frank C. Logan Director March 30, 1995
-------------------------
Frank C. Logan
(Continued)
<PAGE>
<PAGE> 96
/s/ Clarence V. McKee Director March 30, 1995
-------------------------
Clarence V. McKee
/s/ Joan D. Ruffier Director March 30, 1995
-------------------------
Joan D. Ruffier
/s/ Jean Giles Wittner Director March 30, 1995
-------------------------
Jean Giles Wittner
<PAGE>
<PAGE> 97
<TABLE>
<CAPTION>
Schedule II
FLORIDA PROGRESS CORPORATION
Valuation and Qualifying Accounts
For the Years Ended December 31, 1994, 1993, and 1992
(In millions)
Balance at Additions Balance at
Beginning Charged to Other End of
Description of Period Expense Deductions Add (Ded) Period
---------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1994
<S> <C> <C> <C> <C> <C>
Nuclear Refueling Outage Reserve $11.5 $12.6 $17.7 $-- $6.4
======= ======= ======= ======= =======
Insurance policy benefit reserves $186.5 $36.0 $ -- $-- $222.5
======= ======= ======= ======= =======
Reserve for loan & lease losses $24.8 $10.1 $0.8 $-- $34.1
======= ======= ======= ======= =======
FOR THE YEAR ENDED DECEMBER 31, 1993
Nuclear Refueling Outage Reserve $8.7 $15.1 $12.3 $-- $11.5
======= ======= ======= ======= =======
Insurance policy benefit reserves $140.3 $26.8 $ -- $19.4 (A) $186.5
======= ======= ======= ======= =======
Reserve for loan & lease losses $23.3 $5.9 $4.4 $-- $24.8
======= ======= ======= ======= =======
FOR THE YEAR ENDED DECEMBER 31, 1992
Nuclear Refueling Outage Reserve $13.8 $25.2 $30.3 $ -- $8.7
======= ======= ======= ======= =======
Insurance policy benefit reserves $115.9 $24.4 $ -- $ -- $140.3
======= ======= ======= ======= =======
Reserve for loan & lease losses $20.5 $6.5 $3.7 $ -- $23.3
======= ======= ======= ======= =======
(A) Increase due to adoption of Financial Accounting Standard No. 113.
</TABLE>
<PAGE>
<PAGE> 98
<TABLE>
<CAPTION>
Schedule II
FLORIDA POWER CORPORATION
Valuation and Qualifying Accounts
For the Years Ended December 31, 1994, 1993, and 1992
(In millions)
Balance at Additions Balance at
Beginning Charged to Deductions End of
Description of Period Expense (See Note) Period
-----------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1994
<S> <C> <C> <C> <C>
1993 Nuclear Midcycle Outage Reserve (#9) ($0.7) $0.7 $0.0 $0.0
1994 Nuclear Refueling Outage Reserve (#9) 12.2 5.5 17.7 0.0
1996 Nuclear Refueling Outage Reserve (#10) 0.0 6.4 0.0 6.4
------- ------- ------- -------
$11.5 $12.6 $17.7 $6.4
======= ======= ======= =======
FOR THE YEAR ENDED DECEMBER 31, 1993
1993 Nuclear Midcycle Outage Reserve (#9) $4.2 $4.6 $9.5 ($0.7)
1994 Nuclear Refueling Outage Reserve (#9) 4.5 10.5 2.8 12.2
------- ------- ------- -------
$8.7 $15.1 $12.3 $11.5
======= ======= ======= =======
FOR THE YEAR ENDED DECEMBER 31, 1992
1991 Nuclear Midcycle Outage Reserve (#8) ($2.4) $2.6 $0.2 $0.0
1992 Nuclear Refueling Outage Reserve (#8) 16.2 13.7 29.9 0.0
1993 Nuclear Midcycle Outage Reserve (#9) 0.0 4.4 0.2 4.2
1994 Nuclear Refueling Outage Reserve (#9) 0.0 4.5 0.0 4.5
------- ------- ------- -------
$13.8 $25.2 $30.3 $8.7
======= ======= ======= =======
Note: Deductions are payments of actual expenditures related to the outage.
/TABLE
<PAGE>
<PAGE> 99 EXHIBIT INDEX
Florida Florida
Number Exhibit Progress Power
-------- -----
4 Form of Certificate representing shares of X
Florida Progress Common Stock.
10.(a) Florida Progress Supplemental Executive X X
Retirement Plan.*
10.(b) Management Incentive Compensation Plan X X
of Florida Progress Corporation, as amended.*
10.(c) Executive Optional Deferred Compensation Plan.* X X
12 Statement of Computation of Ratios. X
21 Subsidiaries of Florida Progress. X
23.(a) Consent of Independent Certified Public X
Accountants to the incorporation by reference
of their report on the financial statements
into the following registration statements of
Florida Progress: Form S-3 (No. 33-51573)
(relating to the registration of 4.5 million
shares of common stock and filed with the SEC
on December 17, 1993); Form S-8 (No. 33-53939)
(relating to the Savings Plan for Employees of
Florida Progress and filed with the SEC on
June 1, 1994); Form S-3 (No. 33-45044)
(relating to the Progress Plus Plan and filed
with the SEC on January 13, 1992); Form S-8
(No. 33-47623) (relating to Florida Progress'
Long-Term Incentive Plan and filed with the
SEC on May 1, 1992); Form S-8 (No. 33-39153)
(also relating to the Long-Term Incentive Plan
and filed with the SEC on February 26, 1991);
and Form S-3 (No. 2-93111)(relating to the
acquisition of Better Business Forms and filed
with the SEC on September 5, 1984).
23.(b) Consent of Independent Certified Public X
Accountants to the incorporation by reference
of their report on the financial statements
into Florida Power's registration statements
on Form S-3 (No. 33-62210 and 33-55273)(relating
to Florida Power's first mortgage bond shelf)
and Form S-3 (No. 33-50908) (relating to Florida
Power's medium-term note shelf).
27.(a) Florida Progress Financial Data Schedule X
27.(b) Florida Power Financial Data Schedule X
<PAGE>
<PAGE> 100
4. Exhibits incorporated herein by reference:
3.(a) Bylaws of Florida Progress, as amended to date. X
(Filed as Exhibit 3(a) to Florida Progress'
Form 10-K for the year ended December 31, 1992,
as filed with the SEC on March 31, 1993).
3.(b) Restated Articles of Incorporation, as X
amended, of Florida Progress. (Filed as
Exhibit 3(a) to Florida Progress' Form
10-K for the year ended December 31, 1991, as
filed with the SEC on March 30, 1992.)
4.(a) Rights Agreement, dated as of November 21, X
1991, between Florida Progress and Manufacturers
Hanover Trust Company, including as Exhibit A
the form of Rights Certificate. (Filed as
Exhibit 4(a) to Florida Progress' Form 8-K dated
November 21, 1991, as filed with the SEC on
November 27, 1991).
4.(b) Amended Articles of Incorporation, as X X
amended, of Florida Power. (Filed as
Exhibit 3(a) to the Florida Power
Form 10-K for the year ended December 31,
1991, as filed with the SEC (File No. 1-3274)
on March 30, 1992).
4.(c) Indenture, dated as of January 1, 1944 (the X X
"Indenture"), between Florida Power and
Guaranty Trust Company of New York and The
Florida National Bank of Jacksonville, as
Trustees. (Filed as Exhibit B-18 to Florida
Power's Registration Statement on Form A-2
(No. 2-5293) filed with the SEC on January
24, 1944).
4.(d) Seventh Supplemental Indenture, dated as of X X
July 1, 1956, between Florida Power and
Guaranty Trust Company of New York and The
Florida National Bank of Jacksonville, as
Trustees, with reference to the modification
and amendment of the Indenture. (Filed as
Exhibit 4(b) to Florida Power's Registration
Statement on Form S-3 (No. 33-16788) filed
with the SEC on September 27, 1991).
4.(e) Eighth Supplemental Indenture, dated as of X X
July 1, 1958, between Florida Power and
Guaranty Trust Company of New York and The
Florida National Bank of Jacksonville, as
Trustees, with reference to the modification
and amendment of the Indenture. (Filed as
Exhibit 4(c) to Florida Power's Registration
Statement on Form S-3 (No. 33-16788) filed
with the SEC on September 27, 1991).<PAGE>
<PAGE> 101
4.(f) Sixteenth Supplemental Indenture, dated as of X X
February 1, 1970, between Florida Power and
Morgan Guaranty Trust Company of New York and
The Florida National Bank of Jacksonville, as
Trustees, with reference to the modification
and amendment of the Indenture. (Filed as
Exhibit 4(d) to Florida Power's Registration
Statement on Form S-3 (No. 33-16788) filed
with the SEC on September 27, 1991).
4.(g) Twenty-Ninth Supplemental Indenture, dated as X X
of September 1, 1982, between Florida Power
and Morgan Guaranty Trust Company of New York
and Florida National Bank, as Trustees, with
reference to the modification and amendment
of the Indenture. (Filed as Exhibit 4(c) to
Florida Power's Registration Statement on
Form S-3 (No. 2-79832) filed with the SEC on
September 17, 1982).
4.(h) Thirty-Eighth Supplemental Indenture dated as X X
of July 25, 1994, between Florida Power and
First Chicago Trust Company of New York, as
successor Trustee, Morgan Guaranty Trust
Company of New York, as resigning Trustee,
and First Union National Bank of Florida, as
resigning Co-Trustee, with reference to
confirmation of First Chicago Trust Company
of New York as successor Trustee under the
Indenture. (Filed as Exhibit 4.(f) to Florida
Power's Form S-3 Registration Statement
No. 33-55273 as filed with the SEC on August
29, 1994.)
10.(d) Amended and Restated Support Agreement, X
dated as of February 1, 1991, between
Florida Progress and Progress Capital
(Filed as Exhibit 10(d) to Florida Progress'
Form 10-K for the year ended December 31,
1990, as filed with the SEC on March 28,
1991).
10.(e) Florida Progress Corporation Long-Term X X
Incentive Plan, approved by Florida Progress'
Shareholders on April 19, 1990. (Filed as
Exhibit 10(d) to Florida Progress' Form 10-Q
for the quarter ended March 31, 1990, as
filed with the SEC on May 14, 1990). *
<PAGE>
<PAGE> 102
10.(f) Amended and Restated General Partnership X X
Agreement of the SunShine Pipeline Partners
dated May 5, 1993. (Filed as Exhibit 10(a)
to Florida Power's Form 10-Q for the quarter
ended June 30, 1993, as filed with the SEC
(File No. 1-3274) on August 3, 1993).
10.(g) Amended and Restated General Partnership X X
Agreement of the SunShine Interstate
Pipeline Partners dated May 5, 1993. (Filed
as Exhibit 10(b) to Florida Power's Form 10-Q
for the quarter ended June 30, 1993, as filed
with the SEC (File No. 1-3274) on August 3,
1993).
10.(h) Precedent Agreement dated April 8, 1993 X X
between Florida Power and the SunShine Pipeline
Partners covering terms and conditions of service
to be provided to Florida Power by the
intrastate component of the SunShine Pipeline.
(Filed as Exhibit 10(c) to Florida Power's
Form 10-Q for the quarter ended June 30, 1993,
as filed with the SEC (File No. 1-3274) on
August 3, 1993).
10.(i) Precedent Agreement dated April 8, 1993 X X
between Florida Power and the SunShine Pipeline
Partners covering terms and conditions of service
to be provided to Florida Power by the
interstate component of the Sunshine Pipeline.
(Filed as Exhibit 10(d) to Florida Power's
Form 10-Q for the quarter ended June 30, 1993,
as filed with the SEC (File No. 1-3274) on
August 3, 1993).
10.(j) Letter Agreement dated June 30, 1993 X X
relating to the SunShine Pipeline.
(Filed as Exhibit 10(e) to Florida Power's
Form 10-Q for the quarter ended June 30,
1993, as filed with the SEC (File No. 1-3274)
on August 3, 1993). (Confidential treatment
has been granted with respect to a portion
of this document - omitted portion filed
separately with the SEC).
X = exhibit is filed for that respective company.
* Exhibit constitutes an executive compensation plan or arrangement.
EXHIBIT 4
COMMON STOCK COMMON STOCK
INCORPORATED UNDER THE LAWS
OF THE STATE OF FLORIDA SHARES
NUMBER
SEE REVERSE FOR
CERTAIN DEFINITIONS
CUSIP 341109 10 6
FLORIDA PROGRESS CORPORATION
THIS IS TO CERTIFY THAT
SPECIMEN
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK WITHOUT PAR VALUE
OF
Florida Progress Corporation transferable on the books of the Corporation by
the holder hereof in person or by duly authorized attorney upon surrender of
this certificate properly endorsed. This certificate and the shares
represented hereby are issued and shall be held subject to all the provisions
of the Amended Articles of Incorporation, as amended, of the Corporation, to
all of which the holder by acceptance hereof assents.
This certificate is not valid unless countersigned and registered by the
Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation, and the facsimile signatures
of its duly authorized officers.
Dated:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COUNTERSIGNED AND REGISTERED:
CHEMICAL BANK
(NEW YORK) TRANSFER AGENT
AND REGISTRAR Vice President and Chairman and
Treasurer Chief Executive
Officer
AUTHORIZED OFFICER
</TABLE>
REVERSE SIDE
FLORIDA PROGRESS CORPORATION
___________
THE PROVISIONS OF THE CORPORATION'S AMENDED ARTICLES OF INCORPORATION, AS
AMENDED, SHOWING THE CLASSES OF SERIES OF STOCK AUTHORIZED TO BE ISSUED BY THE
CORPORATION AND THE DISTINGUISHING CHARACTERISTICS THEREOF ARE HEREBY
INCORPORATED BY REFERENCE TO THE SAME EXTENT AS IF HEREIN SET FORTH AT LENGTH;
A COPY OF SAID PROVISIONS, CERTIFIED BY AN OFFICER OF THE CORPORATION, WILL BE
FURNISHED BY THE CORPORATION OR BY ITS TRANSFER AGENT, WITHOUT COST, TO AND
UPON THE REQUEST OF THE HOLDER OF THIS CERTIFICATE. REQUESTS MAY BE ADDRESSED
TO THE SECRETARY OF FLORIDA PROGRESS CORPORATION, ST. PETERSBURG, FLORIDA, OR
THE CORPORATION'S TRANSFER AGENT.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT--....Custodian....
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act............
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received, ______________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
_______________________________________________________________________________
_______________________________________________________________________________
_________________________________________________________________________shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint ________________________________, Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated_______________________
_____________________________
ON SIDE OF REVERSE
The signature to this assignment must correspond with the name
Notice: as written upon the face of the certificate in every particular,
without alteration or enlargement or any change whatever.
This certificate also evidences and entitles the holder of this certificate to
certain Rights as set forth in the Shareholder Rights Agreement (the "Rights
Agreement") between Florida Progress Corporation (the "Company") and Chemical
Bank, as successor to Manufacturers Hanover Trust Company, (the "Rights Agent")
dated as of November 21, 1991 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file at the
principal office of the Company. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate. The Company will mail to
the holder of this certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge, promptly after receipt of a written
request therefor. Under certain circumstances set forth in the Agreement,
Rights issued to, or held by, any person who is, was or becomes an Acquired
Person or any Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement), whether currently held by or on behalf of such Person or by
any subsequent holder, may become null and void. The Rights shall not be
exercisable, and shall be void so long as held, by a holder in any jurisdiction
where the requisite qualification to the issuance to such holder, or the
exercise by such holder, of the Rights in such jurisdiction shall not have been
obtained or be obtainable.
EXHIBIT 10.(A)
FLORIDA PROGRESS CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(Amended and Restated as of October 1, 1994)
<PAGE>
FLORIDA PROGRESS CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION> PAGE
<S> <C> <C>
ARTICLE 1. ESTABLISHMENT AND PURPOSE. . . . . . . . . . . . . . . . . . . . . . 1
1.1 Restatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Gender and Number. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 3. PARTICIPATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1 Eligibility for Participation. . . . . . . . . . . . . . . . . . . . . 8
3.2 Date of Participation. . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Duration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.4 Limitation on Participation. . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 4. REGULAR BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1 Normal Retirement Benefit. . . . . . . . . . . . . . . . . . . . . . . 9
4.2 Early Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . 9
4.3 Disability Retirement Benefit. . . . . . . . . . . . . . . . . . . . . 10
4.4 Vested Termination Benefit . . . . . . . . . . . . . . . . . . . . . . 12
4.5 Change in Control. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.6 Surviving Spouse Benefit . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 5. SPECIAL EARLY RETIREMENT BENEFITS. . . . . . . . . . . . . . . . . . 17
5.1 Special Early Retirement Benefit . . . . . . . . . . . . . . . . . . . 17
5.2 Surviving Spouse Benefit . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 6. SPECIAL BENEFIT PROVISIONS . . . . . . . . . . . . . . . . . . . . . 19
6.1 General Principles . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2 Optional Lump Sum Payment. . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 7. FINANCING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.1 Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.2 No Trust Created . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.3 Unsecured Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.4 "Rabbi" Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 8. ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.1 Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.2 Liability of Committee and Board; Indemnification. . . . . . . . . . . 22
8.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.4 Tax Withholding. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 9. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.1 Nontransferability . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.2 Amendment or Termination . . . . . . . . . . . . . . . . . . . . . . . 23
9.3 Impact of 1994 Amendments. . . . . . . . . . . . . . . . . . . . . . . 23
9.4 Forfeiture of Benefits . . . . . . . . . . . . . . . . . . . . . . . . 24
9.5 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
<PAGE>
FLORIDA PROGRESS CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
--------------------------------------
(Amended and Restated as of October 1, 1994)
ARTICLE 1. ESTABLISHMENT AND PURPOSE
1.1 RESTATEMENT. Florida Progress Corporation hereby amends and
restates, effective as of October 1, 1994, an unfunded plan of deferred
compensation for certain officers and other management personnel of the Company
and its subsidiaries and their beneficiaries as described herein, which plan
shall be known as the "Florida Progress Corporation Supplemental Executive
Retirement Plan" (the "Plan").
1.2 PURPOSE. The purpose of this Plan is to provide additional
retirement benefits to a select group of officers and other management
personnel with the goal of helping to attract and retain superior officers and
other management personnel.
ARTICLE 2. DEFINITIONS
------------------------
2.1 DEFINITIONS. Whenever used hereinafter, the following terms shall
have the meaning set forth below.
(a) "Accrued Benefit" means, at any particular date, a Participant's
Target Amount, but calculated on the basis of the number of
years and months of Deemed Credited Service of the Participant
and the Final Average Earnings of the Participant as of such
date rather than as of his or her Normal Retirement Date.
(b) "Actuarial Equivalent" means, with respect to determining the
amount of a lump sum payment, a benefit of equivalent value to
the benefit that would otherwise have been provided to the
Participant, determined on the basis of the actuarial
assumptions in effect under the Retirement Plan as of the date
such value is computed (except that the current monthly PBGC
rate shall be used in lieu of the PBGC rate used by the
Retirement Plan).
(c) "Board" means the Board of Directors of the Company.
(d) "Calculated under this Plan" means a calculation made as
otherwise indicated but without regard to any cost of living
adjustments occurring after retirement or other termination of
employment, and calculated as a straight life annuity without
regard to the actual form of payment under the Retirement Plan
or the Nondiscrimination Plan.
(e) A "Change in Control" means:
(1) a change in control of the Company of a nature that is
required, pursuant to the Securities Exchange Act of 1934
(the "1934 Act"), to be reported in response to (i) Item
1(a) of a Current Report on Form 8-K or (ii) Item 6(e) of
Schedule 14A, in each case as such requirements are in
effect on October 1, 1994;
(2) the adoption by the Company of a plan of dissolution or
liquidation;
(3) the closing of a sale of all or substantially all of the
assets of the Company;
(4) the closing of a merger, reorganization or similar
transaction (a "Transaction") involving the Company in
which the Company is not the surviving corporation or, if
the Company is the surviving corporation, immediately
following the closing of the Transaction, persons who were
shareholders of the Company immediately prior to the
Transaction own less than 75% of the combined voting power
of the surviving corporation's voting securities;
(5) the acquisition of "Beneficial Ownership" (as defined in
Rule 13d-3 under the 1934 Act) of the Company's securities
comprising 25% or more of the combined voting power of the
Company's outstanding securities by any "person" (as that
term is used in Sections 13(d) and 14(d)(2) of the 1934 Act
and the rules and regulations promulgated thereunder, but
not including any trustee or fiduciary acting in that
capacity for an employee benefit plan sponsored by the
Company) and such person's "affiliates" and "associates"
(as those terms are defined under the 1934 Act);
(6) the failure of the "Incumbent Directors" (as defined below)
to constitute at least a majority of all directors of the
Company (for these purposes, "Incumbent Directors" means
individuals who were the directors of the Company on
January 1, 1992, and, after his or her election, any
individual becoming a director subsequent to January 1,
1992, whose election, or nomination for election by the
Company's shareholders, is approved by a vote of at least
two-thirds of the directors then comprising the Incumbent
Directors, except that no individual shall be considered an
Incumbent Director whose initial assumption of office as a
director is in connection with an actual or threatened
"election contest" relating to the "election of directors"
of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A under the 1934 Act); or
(7) the occurrence of a "Triggering Event," as such term is
defined in Section 1(n) of that certain Shareholder Rights
Agreement by and between the Company and Manufacturers
Hanover Trust Company dated November 21, 1991, as it may be
amended from time to time.
Notwithstanding any provision above to the contrary, no Change
in Control shall be deemed to have occurred with respect to any
particular Participant by virtue of a transaction, or series of
transactions, that results in the Participant, or a group of
persons that includes the Participant, acquiring the Beneficial
Ownership of more than 25% of the combined voting power of the
Company's outstanding securities.
(f) "Code" means the Internal Revenue Code of 1986, as it may be
amended from time to time, or any successor statute. Reference
to a specific section of the Code shall include a reference to
any successor provision.
(g) "Committee" means the Compensation Committee of the Board.
(h) "Company" means Florida Progress Corporation, or any successor
entity.
(i) "Control Date" means the date on which a Change in Control
occurs.
(j) "Credited Service" shall have the same meaning in this Plan as
is found in the Retirement Plan; provided, that if a Participant
incurs a Disability, such Disability terminates, the Participant
returns to work with an Employer and the Committee determines
that such person shall continue as an active Participant in this
Plan upon such return to work, such Participant's Credited
Service shall be increased by the time he or she had a
Disability (but only to the extent such time is not otherwise
included in his or her Credited Service); and provided further,
that if a Participant is employed by an Employer that is not a
participating employer in the Retirement Plan, "Credited
Service" for such Participant means the number of years and
months equal to the number of years and months of Credited
Service the Participant would have had if his or her Employer
had been a participating employer in the Retirement Plan during
the entire time of the Employer's affiliation with the Company.
(k) "Current Earnings" means, at any particular time, the sum of the
Participant's then current monthly Earnings plus 1/12th of the
Participant's most recent MICP Award (if received no more than
15 months prior to such time).
(l) "Deemed Credited Service" means, with respect to a Participant,
the sum of the following (but not in excess of 35 years):
(1) such Participant's Credited Service; plus
(2) with respect to a person who becomes eligible to
participate under Article 4 at the time he or she first
becomes employed by an Employer, the additional years of
credited service, if any, awarded to the Participant by the
Committee at such time; plus
(3) with respect to a person who becomes eligible to
participate under Article 4 at a time he or she is not a
participant in the Retirement Plan (other than a person
covered by the provisions of subsection (l)(2) above), the
additional years of credited service, if any, awarded to
the Participant by the Committee at such time; plus
(4) with respect to a person who becomes eligible to
participate under Article 5, the additional years of
credited service, if any, awarded to the Participant by the
Committee at such time; plus
(5) solely for a person becoming a Participant on or before
October 24, 1994, the additional years of credited service,
if any, awarded to the Participant by the Committee at the
time of the adoption of the 1994 amendment and restatement.
In awarding Deemed Credited Service under the standards set
forth in this subsection (l), the Committee may establish
conditions on when the additional years shall be considered to
be earned and thus become effective (e.g., only upon the
Participant reaching a specified age or completing a specified
number of years of actual service, only on a graduated basis
pursuant to a schedule approved by the Committee, etc.); and in
any such event, for all purposes of this Plan, a Participant
shall be considered at any time only to have those years of
additional service previously awarded that then have been earned
under the conditions established by the Committee.
(m) "Disability" means the total and permanent disability of a
Participant by reason of sickness or injury to perform all of
the duties assigned to the Participant by his or her Employer,
with the existence of a Disability to be determined by the
Committee in its sole discretion.
(n) "Early Retirement Date" means the first day of the calendar
month next following the day on which the Participant has
attained age 55 and has five years of Credited Service.
(o) "Earnings" means a Participant's regular basic compensation
(base salary) from his or her Employer, prior to any reduction
in compensation pursuant to a plan established under the
authority of Section 125 or Section 401(k) of the Code and prior
to any reduction for amounts deferred under a deferred
compensation plan or arrangement. Any amounts deferred under a
deferred compensation plan or arrangement and thus included in
Earnings when earned shall not be included in Earnings when
actually received.
(p) "Employer" means the Company or any subsidiary thereof.
(q) "Final Average Earnings" means, on any particular date, the sum
of (1) the amount determined by dividing the sum of a
Participant's Earnings in the highest 36 consecutive months out
of the last 60 months prior to the Participant's termination of
employment or other applicable date by 36, plus (2) the amount
determined by dividing the sum of the Participant's three
highest MICP Awards paid during the last 60 months prior to the
Participant's termination of employment or other applicable date
by 36; provided, however, that in no event shall the Final
Average Earnings of a Participant decrease after such
Participant's Normal Retirement Date. Appropriate adjustments
will be made in determining Final Average Earnings for any
Participant who was not in active service for the 60 months
preceding his or her most recent termination of employment or
other applicable date, including any Participant who has less
than 36 months of service. Final Average Earnings shall then be
calculated based on Earnings and MICP Awards for all the months
during which the Participant was in active service; Final
Average Earnings shall equal the average determined by dividing
the sum of Earnings attributed to the 36 consecutive such months
that will produce the highest such average by 36, and for a
Participant with fewer than 36 months of service, such average
shall be taken over those months in which he or she was in
service.
(r) "Incentive Plan" means the Florida Progress Corporation
Management Incentive Compensation Plan and, if applicable, the
former Florida Power Corporation Management Incentive Plan, in
each case as it may be amended from time to time.
(s) "MICP Award" means an award paid to a Participant under the
Incentive Plan. For all purposes of this Plan, a MICP Award
shall be deemed to be paid at the time and in the amount as
initially provided, without regard to any deferral of payment in
whole or in part, whether the deferral is a voluntary deferral
by the Participant or is mandatory under the terms of the
applicable plan. Any portion of an award that is deferred and
thus included as part of a MICP Award as initially provided
shall not be taken into account when actually received.
(t) "Nondiscrimination Plan" means the Florida Progress Corporation
Retirement Benefit Nondiscrimination Plan for Excess Benefits,
as it may be amended from time to time.
(u) "Normal Retirement Date" means the first day of the calendar
month next following the day on which the Participant attains
age 65.
(v) "Participant" means any officer or other management employee of
an Employer who meets the eligibility requirements of the Plan,
as set forth in Article 3, to be and become a Participant, and
who continues to meet such requirements.
(w) "Plan" means the Florida Progress Corporation Supplemental
Executive Retirement Plan, as it is set forth herein and as it
may be amended from time to time.
(x) "Prospective Target Amount" means, at any particular date, a
Participant's Target Amount calculated using the Participant's
Final Average Earnings as of that date and the years and months
of Deemed Credited Service that the Participant would have at
his or her Normal Retirement Date if he or she continued to work
until such Normal Retirement Date.
(y) "Reorganization" means any change in personnel that is initiated
voluntarily by an Employer to accommodate or facilitate
enhancement of the operations or organization of the Employer.
(z) "Retirement Plan" means the Employees' Retirement Plan of
Florida Progress Corporation, as it may be amended from time to
time.
(aa) "Social Security" means estimated Social Security benefits; if
the Participant's termination of employment occurs before the
Participant attains age 55, the Participant's future earnings
are assumed to continue until his or her Normal Retirement Date
at the same rate as they were immediately prior to the
termination, and if the Participant's termination of employment
occurs at or after the time the Participant attains age 55, the
Participant's future earnings are assumed to be zero.
(bb) "Special Early Retirement" means, for purposes of Article 5, the
retirement of a Participant from service with his or her
Employer in connection with a Reorganization and pursuant to an
opportunity provided by the Committee, at any time after the
Participant has at least 15 years of Credited Service, but
before the Participant has attained age 65.
(cc) "Spouse" means a person to whom a Participant was married both
at the time of the termination of his or her employment and at
the time of his or her death.
(dd) "Target Amount" means the monthly normal retirement income
payable to a Participant under Section 4.01(a) of the Retirement
Plan and Article IV of the Nondiscrimination Plan, but
Calculated under this Plan, and further calculated on the basis
of the number of years and months of Deemed Credited Service
(without regard to the actual number of years and months of
Credited Service) of the Participant and the Final Average
Earnings (as defined in this Plan and not as defined in the
Retirement Plan) of the Participant as of his or her Normal
Retirement Date.
2.2 GENDER AND NUMBER. Except when otherwise indicated by the context,
any masculine terminology when used in the Plan shall also include the feminine
gender, and the definition of any term herein in the singular shall also
include the plural.
<PAGE>
ARTICLE 3. PARTICIPATION
3.1 ELIGIBILITY FOR PARTICIPATION. The Committee shall have the
exclusive right to designate which officers or other management employees of an
Employer shall be eligible to participate in this Plan. Participation shall be
limited to a select group of management or highly compensated employees and is
subject to change by the Committee from time to time.
3.2 DATE OF PARTICIPATION. Each retired or active officer or other
management employee who was a Participant in this Plan on October 1, 1994 shall
remain as a Participant. Thereafter, each officer or other management employee
who becomes eligible to participate in this Plan under Section 3.1 shall become
a Participant on such date as may be designated by the Committee.
3.3 DURATION. An officer or other management employee who becomes a
Participant shall continue to be a Participant until the earlier of (a) the
date he or she is no longer employed by an Employer or (b) the effective date
of a determination by the Committee that he or she shall not accrue additional
benefits under this Plan; provided, in either case, that if a Participant is
then vested in benefits under the Plan, he or she shall continue as a
Participant (even though not accruing additional benefits) for the purpose of
receiving his or her then accrued vested benefits pursuant to the provisions of
this Plan. In addition, a person eligible to receive a benefit under Section
4.5 shall cease to be a Participant as of the applicable Control Date (subject
to the right to receive benefits under such Section 4.5).
3.4 LIMITATION ON PARTICIPATION. A Participant shall be entitled to
receive benefits either under Article 4 or under Article 5, but not both. To
implement this provision, the Committee shall provide, with respect to each
Participant, whether such person shall be eligible to receive the regular
benefits under Article 4 or the Special Early Retirement benefits under Article
5. Accordingly, the term "Participant" as used in Article 4 shall only refer
to a Participant who has been designated to receive benefits under such Article
4, and the term "Participant" as used in Article 5 shall only refer to a
Participant who has been designated to receive benefits under such Article 5.
Notwithstanding the foregoing, a Participant under Article 4 may become
eligible for the Special Early Retirement Benefits under Article 5 provided
that such person first waives to the satisfaction of the Committee any and all
rights to benefits under Article 4.
ARTICLE 4. REGULAR BENEFITS
4.1 NORMAL RETIREMENT BENEFIT.
(a) ELIGIBILITY. A Participant whose employment with his or her
Employer terminates at or after (1) attaining age 65 and (2)
completing five years of participation in this Plan shall be
eligible for a normal retirement benefit under this Section 4.1.
(b) AMOUNT. A Participant who is eligible for a benefit under
subsection (a) above shall be entitled to receive a monthly
normal retirement benefit for his or her life equal to the
amount by which (1) below exceeds (2) below:
(1) This amount equals the Participant's Accrued Benefit as of
the date of his or her retirement, with no increase for
payment beginning after the Participant's Normal Retirement
Date.
(2) This amount equals the sum of (i) the monthly normal
retirement income payable to the Participant under the
Retirement Plan and the Nondiscrimination Plan (adjusted as
provided for in Section 6.1(c)), without regard to any
post-retirement increases in such benefit, plus (ii) the
monthly amount payable to the Participant as his or her
full primary Social Security benefit, without regard to any
subsequent increases in such benefit.
(c) COMMENCEMENT AND FORM OF PAYMENT. Monthly normal retirement
benefit payments shall commence at the same time as the
Participant's normal retirement benefits under the Retirement
Plan and shall continue to be paid for the life of the
Participant.
4.2 EARLY RETIREMENT BENEFIT.
(a) ELIGIBILITY. A Participant whose employment with his or her
Employer terminates (for reasons other than normal retirement,
death or Disability) at or after (1) attaining his or her Early
Retirement Date and (2) completing five years of participation
in this Plan shall be eligible for an early retirement benefit
under this Section 4.2; provided, however, that a Participant
shall not be entitled to an early retirement benefit unless (1)
if the Participant has fewer than 15 years of Credited Service,
the Participant first obtains the express, written consent of
the Committee or (2) if the Participant has 15 or more years of
Credited Service, the Participant provides the Committee with at
least six months prior written notice of such proposed
retirement.
(b) AMOUNT. A Participant who is eligible for a benefit under
subsection (a) above shall be entitled to receive a monthly
early retirement benefit for his or her life equal to the amount
by which (1) below exceeds (2) below:
(1) This amount equals the Participant's Accrued Benefit as of
the date of his or her early retirement, reduced for early
payment as provided in Section 4.2(c).
(2) This amount equals the sum of (i) the monthly early
retirement income payable to the Participant under the
Retirement Plan and the Nondiscrimination Plan (adjusted as
provided for in Section 6.1(c)), without regard to any
post-retirement increases in such benefit, plus (ii) the
monthly amount payable to the Participant as his or her
full primary Social Security benefit, assuming such
payments begin at age 62 or, if later, the date of the
Participant's early retirement (without regard to any
subsequent increases in such benefit); provided, however,
that the Social Security offset under this subsection
(b)(2)(ii) shall not be applied until the Participant
attains age 62.
(c) REDUCTION FOR EARLY PAYMENT. The amount of the Participant's
Accrued Benefit determined under Section 4.2(b)(1) shall be
reduced to the extent payment of the Participant's early
retirement benefit begins before the Participant's Normal
Retirement Date. Such reduced amount shall be computed by
multiplying the Participant's Accrued Benefit as so determined
by the factor set forth below based on the Participant's age at
the time payment begins:
Age When Payment Begins Factor
----------------------- ------
64 1.00
63 1.00
62 1.00
61 .95
60 .90
59 .85
58 .80
57 .75
56 .70
55 .65
(d) COMMENCEMENT AND FORM OF PAYMENT. Monthly early retirement
benefit payments shall commence on the first day of the calendar
month following the date of the Participant's early retirement
under this Plan.
4.3 DISABILITY RETIREMENT BENEFIT.
(a) ELIGIBILITY. A Participant whose employment with his or her
Employer terminates due to a Disability prior to his or her
Normal Retirement Date shall be eligible for a disability
retirement benefit under this Section 4.3; provided, however,
that a Participant shall not be entitled to receive and/or to
continue receiving any Disability benefits under this Plan
unless the Committee has determined in its sole discretion that
a Disability exists and continues. To this end, the Committee
may require the Participant to submit to a medical examination
or a series of medical examinations at any time and from time to
time to determine his or her eligibility and/or continued
eligibility for a disability benefit. The failure of the
Participant to submit to any such examination shall be
sufficient grounds for the denial of a disability benefit and/or
the continuation thereof.
(b) AMOUNT. A Participant who is eligible for a benefit under
subsection (a) above shall be entitled to receive a monthly
disability retirement benefit for his or her life (or if his or
her Disability terminates prior to the Participant's Normal
Retirement Date, until his or her Disability terminates) equal
to the amount by which (1) below exceeds (2) below:
(1) This amount equals the Participant's Accrued Benefit as of
the date of the termination of his or her employment by
reason of Disability, with no reduction for early payment.
(2) This amount equals the sum of (i) the monthly income
payable to the Participant under the Retirement Plan and
the Nondiscrimination Plan (adjusted as provided for in
Section 6.1(c)), without regard to any post-termination
increases in such benefit, plus (ii) the monthly amount
that would be payable to the Participant under any
long-term disability plan sponsored by his or her Employer
if the Participant had elected the maximum benefit option
thereunder available to the Participant, without regard to
the actual election, if any, made by the Participant, plus
(iii) the monthly amount payable to the Participant as his
or her Social Security disability benefit if he or she is
then eligible for such a benefit, or if he or she is not
then eligible for a Social Security disability benefit, his
or her full primary Social Security benefit, assuming such
payments begin at age 62 or, if later, the date of the
Participant's termination of employment by reason of
Disability (without regard to any subsequent increases in
such benefit); provided, however, that if the Participant
is not eligible for a Social Security disability benefit,
any Social Security offset under this subsection
(b)(2)(iii) shall not be applied until the Participant
attains age 62. For purposes of (ii) above, the maximum
benefit option available to a Participant is the maximum
benefit option that may be elected by a Participant as of
October 1, 1994, the 70% option) in the absence of an
adverse determination by the insurance carrier; or, in the
case of such an adverse determination, is the maximum
benefit allowed by the insurance carrier.
(c) COMMENCEMENT AND FORM OF PAYMENT. Monthly disability retirement
benefit payments shall commence on the first day of the calendar
month following the date of the termination of the Participant's
employment by reason of Disability and shall continue to be paid
for the life of the Participant or, if his or her Disability
terminates prior to his or her Normal Retirement Date, until the
Participant's Disability terminates.
(d) TERMINATION OF DISABILITY. If the Participant's Disability
terminates before his or her Normal Retirement Date and either
the Participant does not return to work for an Employer, or the
Participant returns to work for an Employer but the Committee
does not determine that such person shall continue as an active
Participant in the Plan upon such return to work, the
Participant shall be entitled to receive an early retirement
benefit under Section 4.2 (if he or she was eligible for such a
benefit on the date his or her employment terminated by reason
of Disability) or a vested termination benefit under Section
4.4; and in any such case, the benefit shall be calculated as of
the date the Participant's employment terminated by reason of
Disability. Any early retirement benefit referred to in the
first sentence of this subsection (d) shall begin on the first
day of the calendar month immediately following the termination
of the Disability, and any vested termination benefit referred
to in the first sentence of this subsection (d) shall begin on
the first day of the calendar month next following the day the
Participant attains age 62 or, if the termination of the
Disability occurs thereafter, on the first day of the calendar
month next following the date of such termination.
4.4 VESTED TERMINATION BENEFIT.
(a) ELIGIBILITY. A Participant whose employment with his or her
Employer terminates at or after the time he or she has a vested
Accrued Benefit under this Article 4, but who is not otherwise
entitled to a benefit under this Article 4, shall be eligible
for a vested termination benefit under this Section 4.4. Except
as provided in Section 9.3 with respect to Participants in the
Plan on October 1, 1994, a Participant shall not have a vested
Accrued Benefit under this Article 4 unless and until he or she
satisfies the provisions of Section 4.4(d).
(b) AMOUNT. A Participant who is eligible for a benefit under
subsection (a) above shall be entitled to receive a monthly
vested termination benefit for his or her life equal to the
amount by which (1) below exceeds (2) below:
(1) This amount equals the Participant's Accrued Benefit as of
the date of the termination of his or her employment, with
no reduction for early payment.
(2) This amount equals the sum of (i) the monthly income
payable to the Participant under the Retirement Plan and
the Nondiscrimination Plan (adjusted as provided for in
Section 6.1(c)), without regard to any post-termination
increases in such benefit, plus (ii) the monthly amount
payable to the Participant as his or her full primary
Social Security benefit, assuming such payments begin at
age 62 or, if later, the date of the Participant's
termination of employment (without regard to any subsequent
increases in such benefit).
(c) COMMENCEMENT AND FORM OF PAYMENT. Monthly vested termination
benefit payments shall commence on the first day of the calendar
month next following the day the Participant attains age 62 or,
if the termination of employment occurs thereafter, on the first
day of the calendar month next following the date of such
termination of employment, and shall continue to be paid for the
life of the Participant.
(d) VESTING. A Participant shall become 100% vested in his or her
Accrued Benefit when he or she has satisfied both of the
following conditions:
(1) the Participant has been a Participant for at least five
years; and
(2) one of the following has occurred:
(i) the Participant has attained age 55 and has at least
five years of Credited Service; or
(ii) the sum of the Participant's age and Credited Service
(in each case counting full months thereof) equals or
exceeds 65.
A Participant shall also become 100% vested in his or her
Accrued Benefit, even if the foregoing tests have not been
satisfied, at the time of the Participant's termination of
employment by reason of Disability or death; the occurrence of a
Change in Control; or the termination of this Plan.
4.5 CHANGE IN CONTROL.
(a) ELIGIBILITY. Upon the occurrence of a Change in Control, any
Participant employed by an Employer on the day immediately prior
to a Control Date shall be entitled to receive a benefit
calculated and paid as provided in this Section 4.5.
Notwithstanding any other provision of this Plan to the
contrary, upon the occurrence of a Change in Control, the
benefit provided by this Section 4.5 shall be the exclusive
benefit provided under this Plan to the Participants who are
eligible to receive such benefit (and to their spouses) and
accordingly each such person shall not be entitled to any other
benefits under this Plan without regard to the age of the
Participant, the vested status of the Participant or any other
factor; and upon receipt of his or her benefit under this
Section 4.5, a person shall cease being a Participant in this
Plan.
(b) AMOUNT AND FORM OF PAYMENT. A Participant who is eligible for a
benefit under subsection (a) above shall receive his or her
benefit in a lump sum, paid on or as soon as practicable after
the Control Date, but no more than five days after such date,
equal to the sum of the following:
(1) This amount equals the product of the Participant's Current
Earnings on the day immediately prior to the Control Date
and the number of months by which the Control Date precedes
the Participant's Normal Retirement Date (up to a maximum
of 24 months).
(2) This amount equals the "adjusted present value" (as defined
below) of a monthly benefit for the Participant's life in
an amount equal to the amount by which (i) below exceeds
(ii) below, plus (but only if the Participant is married as
of the Control Date) the "adjusted present value" (as
defined below) of a 50% surviving spouse's benefit for the
life of the surviving spouse:
(i) This amount equals the Participant's Prospective
Target Amount determined as of the Control Date, with
no reduction for early payment.
(ii) This amount equals the monthly deferred retirement
income that would be payable to the Participant under
the Retirement Plan and the Nondiscrimination Plan
beginning as of the Participant's Normal Retirement
Date (adjusted as provided for in Section 6.1(c)) if
the Participant's employment terminated as of the
Control Date. For these purposes, no pre-retirement
survivorship charges or early retirement reductions
shall be applied.
For purposes of this Section 4.5(b)(2), the "adjusted
present value" shall be calculated by determining the
Actuarial Equivalent of the stated benefit as if it were to
be paid in a lump sum on the Participant's Normal
Retirement Date and as if the equivalent monthly benefit
for the Participant's and (if applicable) the surviving
spouse's lives were to begin at the Participant's Normal
Retirement Date; no reduction shall be made for payment of
the lump sum prior to the Participant's Normal Retirement
Date.
(c) ADDITIONAL PAYMENT. A Participant who is eligible for a benefit
under subsection (a) above also shall be entitled to receive the
amount described below to the extent applicable: In the event
any payment under this Section 4.5 or under another plan or
agreement (collectively, the "Payments") are subject to the
excise tax imposed by Section 4999 of the Code (the "Excise
Tax"), the Participant's Employer shall pay the Participant an
amount (the "Gross Up") such that the net amount retained by the
Participant after deduction of any Excise Tax on the Payments
and the federal income tax on any payments under this Section
4.5(c) shall be equal to the Payments. For purposes of
determining the Gross Up, the Participant shall be deemed to pay
the federal income tax at the highest marginal rate of taxation
(currently 39.5%) in the calendar year in which the payment
under Section 4.5 is to be made. The determination of whether
such Excise Tax is payable and the amount thereof shall be made
upon the opinion of tax counsel selected by the Employer and
reasonably acceptable to the Participant. The Gross Up, if any,
that is due as a result of such determination shall be paid to
the Participant in cash in a lump sum within thirty (30) days of
such computation. If such opinion is not finally accepted by
the Internal Revenue Service upon audit or otherwise, then
appropriate adjustments shall be computed (without interest but
with Gross Up, if applicable) by such tax counsel based upon the
final amount of the Excise Tax so determined; any additional
amount due the Participant as a result of such adjustment shall
be paid to the Participant by his or her Employer in cash in a
lump sum within thirty (30) days of such computation, or any
amount due the Participant's Employer as a result of such
adjustment shall be paid to the Employer by the Participant in
cash in a lump sum within thirty (30) days of such computation.
4.6 SURVIVING SPOUSE BENEFIT.
(a) ELIGIBILITY. If at the time of the death of a Participant, (1)
(i) the employment of a Participant with his or her Employer had
previously terminated and the Participant was receiving or was
entitled to receive benefits under this Article 4 or (ii) the
Participant was still employed by his or her Employer and had
unpaid Accrued Benefits under this Article 4 (whether or not
vested at the time of death) and (2) the Participant is survived
by a Spouse, such Spouse shall be eligible for a surviving
spouse benefit under this Section 4.6. In no other
circumstances shall the Spouse of a Participant or any other
beneficiary of a Participant under the Retirement Plan or
otherwise be entitled to any benefit under this Article 4 in the
event of the death of a Participant hereunder, even if survivor
benefits are otherwise payable under the Retirement Plan. Also,
without limitation on the foregoing, and notwithstanding
anything to the contrary contained in this Section 4.6, no
benefit shall be payable to a Spouse of a deceased Participant
or former Participant who received during his or her lifetime or
who was entitled to receive at the time of death a benefit under
Section 4.5, or who received during his or her lifetime or who
was entitled to receive at the time of death a benefit under any
provision of this Article 4 in the optional lump sum form in
accordance with Section 6.2.
(b) AMOUNT. A Spouse who is eligible for a benefit under subsection
(a) above shall be entitled to receive a monthly surviving
spouse benefit for his or her life in an amount equal to the
amount by which (1) below exceeds (2) below:
(1) In the case of a Participant whose employment with his or
her Employer terminated prior to death, this amount equals
fifty percent (50%) of the monthly amount the Participant
was eligible to receive (even if only on a deferred basis)
or was receiving at the time of death under Section
4.1(b)(1), 4.2(b)(1), 4.3(b)(1) or 4.4(b)(1), as the case
may be, prior to the application of any applicable set-off,
with no reduction for early payment. In the case of a
Participant who was still in the employment of his or her
Employer at the time of death, this amount equals fifty
percent (50%) of the Participant's Accrued Benefit as of
the date of death, with no reduction for early payment.
(2) This amount equals the aggregate monthly income, if any,
payable to the Spouse and to any other beneficiary of the
Participant under the Retirement Plan and the
Nondiscrimination Plan as a result of the death of the
Participant (adjusted as provided for in Section 6.1(c)).
(c) COMMENCEMENT AND FORM OF PAYMENT. Monthly surviving spouse
benefit payments shall be payable to the Spouse for the life of
the Spouse and shall commence as soon as practicable following
the Participant's death.
ARTICLE 5. SPECIAL EARLY RETIREMENT BENEFITS
5.1 SPECIAL EARLY RETIREMENT BENEFIT.
(a) ELIGIBILITY. A Participant whose employment with his or her
Employer terminates by reason of Special Early Retirement shall
be entitled to a retirement benefit under this Section 5.1.
(b) AMOUNT. A Participant who is eligible for a benefit under
subsection (a) above shall be entitled to receive a monthly
retirement benefit for his or her life equal to the amount by
which (1) below exceeds (2) below:
(1) This amount equals the amount determined by the Committee,
but not in excess of the Participant's Prospective Target
Amount determined as of the date of the termination of the
Participant's employment by reason of Special Early
Retirement, with no reduction for early payment.
(2) This amount equals the sum of (i) the monthly income
payable to the Participant under the Retirement Plan and
the Nondiscrimination Plan (adjusted as provided for in
Section 6.1(c)), without regard to any post-retirement
increases in such benefit, plus (ii) the monthly amount
payable to the Participant as his or her full primary
Social Security benefit, assuming such payments begin at
age 62 or, if later, the date of the Participant's early
retirement (without regard to any subsequent increases in
such benefit); provided, however, that the Social Security
offset under this subsection (b)(2)(ii) shall not be
applied until the Participant attains age 62.
(c) COMMENCEMENT AND FORM OF PAYMENT. Monthly Special Early
Retirement benefit payments under this Section 5.1 shall
commence on the first day of the calendar month next following
the day of the Participant's termination of employment with his
or her Employer by reason of Special Early Retirement and shall
continue to be paid for the life of the Participant, or shall be
paid in such other form as may be determined in the sole
discretion of the Committee. Any such alternative benefit shall
be in an amount that is the Actuarial Equivalent of such monthly
benefit for life.
5.2 SURVIVING SPOUSE BENEFIT.
(a) ELIGIBILITY. If a Participant dies while eligible for a benefit
under Section 5.1 (i.e., his or her employment has terminated by
reason of Special Early Retirement) and is survived by a Spouse,
such Spouse shall be eligible for a surviving spouse benefit
under this Section 5.2. In no other circumstances shall the
Spouse of a Participant or any other beneficiary of a
Participant under the Retirement Plan or otherwise be entitled
to any benefit under this Article 5 in the event of the death of
a Participant hereunder, even if survivor benefits are otherwise
payable under the Retirement Plan. Also, without limitation on
the foregoing, and notwithstanding anything to the contrary
contained in this Section 5.2, no benefit shall be payable to a
Spouse of a deceased Participant who received during his or her
lifetime or who was entitled to receive at the time of his or
her death a benefit under Section 5.1 in the optional lump sum
form in accordance with Section 6.2.
(b) AMOUNT. A Spouse who is eligible for a benefit under subsection
(a) above shall be entitled to receive a monthly surviving
spouse benefit for his or her life equal to the amount by which
(1) below exceeds (2) below:
(1) This amount equals fifty percent (50%) of the monthly
amount the Participant was eligible to receive or was
receiving at the time of death under Section 5.1(b)(1),
prior to the application of any applicable set-off, with no
reduction for early payment.
(2) This amount equals the aggregate monthly income, if any,
payable to the Spouse and to any other beneficiary of the
Participant under the Retirement Plan and the
Nondiscrimination Plan as a result of the death of the
Participant (adjusted as provided for in Section 6.1(c)).
(c) COMMENCEMENT AND FORM OF PAYMENT. Monthly surviving spouse
benefit payments shall be payable to the Spouse for the life of
the Spouse and shall commence as soon as practicable following
the Participant's death.
ARTICLE 6. SPECIAL BENEFIT PROVISIONS
6.1 GENERAL PRINCIPLES.
(a) GENERAL RULE FOR OFFSET. The amount of any offset under Section
4.1(b)(2), 4.2(b)(2), 4.3(b)(2), 4.4(b)(2), 4.6(b)(2),
5.1(b)(2), or 5.2(b)(2), as the case may be, shall be determined
by using the amount payable to a Participant or other named
person during the month in question under the Retirement Plan,
the Nondiscrimination Plan and (if applicable) any long-term
disability plan, taking into account in general applicable
adjustments, if any, including without limitation those for
deferred payment or early payment, and pre-retirement
survivorship charges, but any such determination shall be
subject to the provisions of Section 6.1(c); provided, that no
adjustments shall be made for any cost-of-living or similar
changes in a Participant's benefits after the date that benefits
begin to be paid to the Participant. Furthermore, as provided
under Sections 4.2(b)(2), 4.3(b)(2) and 5.1(b)(2), a Social
Security offset may not be applicable prior to the time the
Participant attains age 62; and a benefit may not be payable
under the Retirement Plan, the Nondiscrimination Plan, and/or
any long-term disability plan for all months a benefit is to be
payable under this Plan. Thus, the amount of the offset may
vary from month to month.
(b) QUALIFIED DOMESTIC RELATIONS ORDER. If a Participant's spouse
or former spouse has received or is entitled to receive a
benefit under the Retirement Plan or the Nondiscrimination Plan
as a result of a Qualified Domestic Relations Order, the amount
of the offset applicable to the Participant shall include the
amount that is so paid or is payable to the spouse.
(c) SPECIAL ADJUSTMENT. In determining the amount payable during
the month in question under the Retirement Plan and the
Nondiscrimination Plan, the benefit, in the case of a
Participant who is not married for purposes of the Retirement
Plan, shall be calculated as a straight life annuity and the
benefit, in the case of a Participant who is married for
purposes of the Retirement Plan, shall be calculated as a 50%
joint and survivor annuity, without regard in each case to the
actual form of payment under the Retirement Plan or the
Nondiscrimination Plan.
6.2 OPTIONAL LUMP SUM PAYMENT.
(a) RIGHT TO RECEIVE. The benefit of a Participant under Section
4.1 (Normal Retirement), Section 4.2 (Early Retirement) and
Section 4.4 (Vested Termination) shall be paid in a lump sum if
payment in such form is elected by the Participant; provided,
however, that to be effective, such election must be made in
accordance with such rules and procedures as may be established
by the Committee from time to time and must be approved by the
Committee. Any lump sum benefit shall be in an amount that is
the Actuarial Equivalent of such monthly benefit for life.
(b) LIMITATION. Notwithstanding the foregoing provisions of this
Section 6.2, a Participant's election of a lump sum payment
shall be effective only if an irrevocable election is made by
the Participant and submitted to the Committee no later than the
last day of the calendar year that is at least two calendar
years prior to the calendar year of retirement or other
termination of employment or unless the benefit is reduced by
five percent (5%).
(c) PAYMENT. A validly elected lump sum shall be paid to a
Participant as soon as practicable following the date monthly
benefits would have begun to be paid to the Participant;
provided, however, that in the event, if payment were made at
such time, the Company would not be able to deduct for federal
income tax purposes the entire amount to be paid to the
Participant under this Plan because of the limits under Section
162(m) of the Code, full payment shall be delayed, with payment
to be made as soon as possible in one or more installments to
the extent and at such time or times as a deduction may be
obtained without limit under Section 162(m).
ARTICLE 7. FINANCING
7.1 FINANCING. The benefits under this Plan shall be paid out of the
general assets of the Company or other Employer.
7.2 NO TRUST CREATED. Nothing contained in this Plan, and no action
taken pursuant to the provisions of this Plan, shall create or be construed to
create a trust of any kind or a fiduciary relationship between any Employer and
any Participant, his or her spouse or any other person.
7.3 UNSECURED INTEREST. No Participant hereunder shall have any interest
whatsoever in any specific asset of the Company or any other Employer. To the
extent that any person acquires a right to receive payments under this Plan,
such right shall be no greater than the right of any unsecured general creditor
of the Company or other Employer.
7.4 "RABBI" TRUST. Notwithstanding the foregoing provisions of this
Article 7, the Company and the other Employers reserve the right to create and
contribute funds to a "Rabbi" trust for the purpose of paying some or all of
the benefits provided under this Plan, but the existence of any such trust
shall not in any way alter the relationship among the Company, any other
Employer and a Participant as described in this Article 7.
ARTICLE 8. ADMINISTRATION
8.1 ADMINISTRATION. The Committee shall have complete control over the
administration of the Plan, with all powers necessary to enable it to carry out
its duties in that respect. In connection with its administration of the Plan,
the Committee shall be empowered to exercise discretion, including with respect
to the interpretation of the terms of the Plan and in the determination of
eligibility for benefits and the amounts thereof; such discretionary
determinations and interpretations shall be binding upon all Participants and
others hereunder. Without limitation on the foregoing, the Committee shall be
authorized to construe and interpret all of the provisions of the Plan, to
adopt rules and practices concerning the administration of the same, and to
make any determination necessary hereunder, all of which shall be binding and
conclusive on all parties.
8.2 Liability of Committee and Board; Indemnification. To the extent
permitted by law, no member of the Committee or of the Board shall be liable to
any person for any action taken or omitted in connection with the
interpretation and administration of this Plan unless attributable to his or
her own gross negligence, fraud or bad faith. The Company shall indemnify the
members of the Committee and of the Board against any and all claims, losses,
damages and expenses, including counsel fees, incurred by them, and any
liability, including any amounts paid in settlement with their approval,
arising from their action or failure to act, except when the same is determined
to be attributable to their gross negligence, fraud or bad faith. The
provisions of this Section 8.2 are not intended to be exclusive, and nothing
contained in this Section 8.2 shall in any way limit indemnification provided
members of the Committee and/or members of the Board under the by-laws of the
Company, by contract, by statute or otherwise.
8.3 EXPENSES. The cost of payment from this Plan and the expenses of
administering the Plan shall be borne by the Company and the other Employers.
8.4 TAX WITHHOLDING. An Employer may withhold, or require the
withholding of, from any payment which it is required to make, any federal,
state or local taxes required by law to be withheld with respect to such
payment and such sum as the Employer may reasonably estimate as necessary to
cover any taxes for which the Employer may be liable and which may be assessed
with regard to such payment. Upon discharge or settlement of such tax
liability, the Employer shall distribute the balance of such sum, if any, to
the Participant from whose payment it was withheld, or if such Participant is
then deceased, to the beneficiary of such Participant. Prior to making any
payment hereunder, the Employer may require such documents from any taxing
authority, or may require such indemnities or surety bond, as the Employer
shall reasonably deem necessary for its protection.
ARTICLE 9. MISCELLANEOUS
9.1 NONTRANSFERABILITY. In no event shall the Company or any Employer
make any payment under this Plan to any assignee or creditor of a Participant
or of a beneficiary. Prior to the time of a payment hereunder, a Participant
or a beneficiary shall have no rights by way of anticipation or otherwise to
assign (including without limitation in connection with a divorce) or otherwise
dispose of any interest under this Plan nor shall rights be assigned or
transferred by operation of law.
9.2 AMENDMENT OR TERMINATION.
(a) AMENDMENTS; TERMINATION. The Plan may be amended or terminated
at any time by the Committee, and, except as provided to the
contrary in subsection (b) below, no Participant or beneficiary
of a deceased Participant shall have a right to receive benefits
under the Plan at any time. Notice of any such amendment or
termination shall be given in writing to each Participant and
beneficiary of a deceased Participant having an interest in the
Plan.
(b) EFFECT ON BENEFITS. No amendment or termination of the Plan may
adversely affect the benefits then payable or that may be
payable in the future with respect to any Participant (without
giving effect to such Plan amendment or termination) to the
extent described below:
(1) for a Participant whose employment with his or her Employer
has terminated prior to such Plan amendment or termination,
the benefits then payable or to be payable to the
Participant and his or her spouse shall not be altered;
(2) for a Participant under Article 4 whose employment with his
or her Employer has not terminated prior to such Plan
amendment or termination, the amount of the benefits
accrued as of the date of the Plan amendment or termination
shall not be decreased;
(3) for a Participant under Article 5 whose employment with his
or her Employer has not terminated prior to such Plan
amendment or termination, the benefits that would be
payable to the Participant and his or her spouse (without
giving effect to such Plan amendment or termination) upon
the termination of his or her employment by reason of
Special Early Retirement shall not be altered; and
(4) once there has been a Change in Control, any benefits
payable or that could be payable under Section 4.5 as a
result of such Change in Control shall not be altered.
9.3 IMPACT OF 1994 AMENDMENTS. Notwithstanding the provisions of Section
9.2, the following provisions shall govern the impact of the amendment and
restatement of this Plan as of October 1, 1994 on persons who were Participants
on October 1, 1994:
(a) a Participant in this Plan on October 1, 1994 who was then
receiving benefits shall not be affected by the amendment and
restatement and shall be governed in all respects by the
provisions of the Plan as in effect immediately prior to such
Participant's termination of employment; and
(b) a Participant in this Plan on October 1, 1994 who was not then
receiving benefits shall be entitled to receive as a benefit
under Section 4.1, 4.2, 4.3, 4.4, 4.5 or 5.1, as the case may
be, and assuming the Participant is otherwise eligible for such
benefit at some time (either then or in the future), an amount
equal to the greater of the benefit calculated under the
provisions of the Plan as in effect immediately prior to such
amendment and restatement or the benefit calculated under the
provisions of the Plan as so amended and restated. The benefits
payable to a Participant's surviving spouse under Section 4.6 or
5.2, as the case may be (taking into account, in calculating the
benefit payable to a Participant's surviving spouse, the benefit
available to the Participant under the preceding sentence) and
all other provisions relating to the payment of benefits under
the Plan (including, without limitation, the ability to receive
a lump sum payment) shall be governed by the provisions of the
Plan as so amended and restated.
Notwithstanding any provisions of Sections 4.1(a) or 4.2(a) to the contrary,
the requirement that a Participant have at least five years of participation in
this Plan in order to receive a benefit under such provisions shall be deemed
to be satisfied (without regard to the actual number of years of such
participation) with respect to each Participant in this Plan on October 1,
1994. Moreover, each Participant in this Plan on October 1, 1994 shall be
deemed to be 100% vested in his or her Accrued Benefit (as it may be from time
to time), without regard to his or her number of years of participation in the
Plan, number of years of Credited Service, age or any other requirement of
Section 4.4(d).
9.4 FORFEITURE OF BENEFITS. As a condition of receiving benefits under
this Plan, a Participant shall not, directly or indirectly, after the
termination of his or her employment with an Employer:
(a) use or disclose any financial or business information of the
Company and/or its subsidiaries obtained by the Participant
during the course of his or her employment, other than
information that has been previously made available to the
public through normal, authorized business channels, in a manner
that would be prejudicial to the interests of the Company and
its subsidiaries. Notwithstanding the preceding requirements of
this subsection (a), a Participant may disclose information if
required by legal process or if the disclosure is protected by
the Florida Whistle-blower's Act of 1986, or any similar
applicable federal or state statute; or
(b) render any services of an advisory nature or become employed by
or participate or engage in any business in competition with the
Company or any of its subsidiaries, without the prior written
consent of his or her Employer. A Participant shall be
considered as engaging in a business if he or she is a
shareholder or other owner, or partner, director, officer, or
employee of, or consultant to, the business; provided, that a
Participant shall not be prohibited from owning securities of a
competitor if (1) the securities owned constitute less that 2%
of the competitor's total outstanding securities of the same
class and (2) the Participant does not have the power to
control, direct or substantially influence the competitor's
management or policies.
Any breach of any of the foregoing conditions will result in complete
forfeiture of any further benefits under the Plan for both the Participant and
any surviving spouse of the Participant. The immediately preceding sentence
shall not require the forfeiture or the return of any benefit received or due
prior to the breach of any of the specific conditions.
9.5 APPLICABLE LAW. This instrument shall be construed in accordance
with and governed by the laws of the State of Florida, to the extent not
superseded by the laws of the United States.
EXHIBIT 10.(B)
FLORIDA PROGRESS CORPORATION
MANAGEMENT INCENTIVE COMPENSATION PLAN
January 1, 1985
As Amended October 24, 1994
<PAGE>
FLORIDA PROGRESS CORPORATION
MANAGEMENT INCENTIVE COMPENSATION PLAN
I. GENERAL PROVISIONS
1. PURPOSE The purpose of the Management Incentive Compensation Plan is
to benefit the shareholders and customers of the company by offering
annual award opportunities to management for their achievement of
financial and value added individual goals.
2. TERM OF THE PLAN The Plan shall be effective as of January 1, 1985.
The Plan shall remain in effect until such time as the Company's
Board of Directors elects to terminate the Plan.
II. DEFINITIONS
The following definitions shall be established within the Plan text, and
unless the Plan text indicates otherwise, shall have the meanings set
forth below:
1. "Base Salary Rate" shall mean the Participant's annual base salary on
April 1 of each Plan Year.
2. "Board" shall mean the Board of Directors of Florida Progress
Corporation.
3. "Chairman" shall mean the Chairman and Chief Executive Officer of the
Board of Directors of Florida Progress Corporation.
4. "Company" shall mean the Florida Progress Corporation and its
subsidiaries.
5. "Compensation Committee" shall mean the Compensation Committee of the
Board.
6. "Employee" shall mean a person who is a full-time, active employee of
the Company.
7. "Executive Optional Deferred Compensation Plan" shall mean the
Company's deferred compensation plan under which a Participant may
irrevocably elect to defer awards emanating from this Plan for
payment at a specified future date.
8. "Financial Goal(s)" shall mean the annual financial goal established
for the company or subsidiary.
9. "Individual Goals" shall mean the established annual performance
goals and objectives for each Plan Participant which will be used to
determine the Participant's Performance Award pursuant to the Plan.
10. "Participant" shall mean an Employee selected by Senior Management
who is eligible to receive a Performance Award pursuant to the Plan.
11. "Performance Award" shall mean the amount of the annual cash award
paid to the Plan Participant as soon as it is practical after
completion of the Plan Year.
12. "Plan" shall mean the Management Incentive Compensation Plan for the
company as described and set forth herein.
13. "Pool(s)" shall mean the total of annual Performance Awards which are
created and funded annually by achievement under Financial Goals for
the company and each subsidiary.
14. "Prorated Award" shall mean the amount of a Performance Award paid to
a Participant for participating in the Plan less than the full Plan
Year or change of Target Incentive.
15. "Subsidiary" shall mean any operating company or other corporate
entity which is affiliated with the Company and designated by the
Board to be included in the Plan.
16. "Supervisor" shall mean the immediate supervisor of a Plan
Participant to whom the latter reports on a day-to-day basis for
operational and administrative direction.
17. "Target Incentive" shall mean the percentage of annualized base
salary at risk by a participant for the 100% or full achievement of
the financial goal.
III. CHAIRMAN AND CHIEF EXECUTIVE OFFICER
1. The Chairman or designee of his choice, is vested with authority to
manage the day-to-day activities of the Plan. The Chairman shall
make recommendations to the Compensation Committee as to the
establishment of financial and individual goals for the Plan Year and
other administrative matters which may evolve pursuant to the Plan
from time to time. Specific authorities of the Chairman shall be to:
(a) Determine the eligible Employees who are designated
Participants.
(b) Prepare, review and recommend to the Compensation Committee the
performance awards for participants who are one and two
management levels removed from him.
(c) Review and recommend to the Compensation Committee the total
expenditures for all performance awards according to each
subsidiary and achievement of financial goals.
(d) Designate at his discretion an executive to administer the plan
within the company or any of its subsidiaries.
2. COMPENSATION COMMITTEE. The Compensation Committee shall have the
final authority with respect to all matters pursuant to the Plan.
Based upon recommendations submitted by the Chairman, the
Compensation Committee shall have the authority to:
(a) Review, and either accept, reject, or modify all of the annual
financial goals.
(b) Review, and either approve, reject, or modify the recommended
Performance Awards designated for the Chairman and participants
who are one, two and three levels removed from him.
(c) Revise, amend, or otherwise change in any manner the terms,
provisions, or other features of the Plan as the Compensation
Committee sees fit from time to time.
(d) Review, and either approve, reject or modify the total
expenditures for all performance awards according to each
subsidiary and achievement of financial goals.
IV. ELIGIBILITY AND PARTICIPATION
1. ELIGIBLE EMPLOYEES. Eligibility for participation in the Plan will
be limited to those Employees who as members of management have
responsibility for decision-making and actions which significantly
influence the Company's annual performance. The nomination of
Participants will be left to the discretion of the top officers of
each subsidiary for the approval of the Chairman.
2. NO RIGHT OF EMPLOYMENT. Nothing in the Plan shall infer any right of
an Employee to continue in the employ of the Company or shall
interfere with the right of the Company to terminate such Employee's
employment at any time.
V. PERFORMANCE MEASUREMENT PERIOD
The Plan measures and rewards performance achieved by the Company over the
course of the calendar year, which shall be designated as the Plan Year.
VI. PERFORMANCE CRITERIA
1. FINANCIAL GOALS. The Plan's performance criteria for funding awards
is established each year consistent with the Company's annual
financial goals and objectives.
2. WEIGHTING OF FINANCIAL GOALS. Florida Progress Corporation and each
Subsidiary will have its financial goals weighted to reflect their
relative importance in determining the size of the award pool. The
weighting of the financial goals by organizational entity shall be as
set forth below:
ORGANIZATIONAL ENTITY WEIGHTING OF FINANCIAL GOALS
--------------------- ----------------------------
Florida Progress Corporation 75% Florida Power
25% Diversified Consolidated
Subsidiary Companies 100% Subsidiary Company
VII. DETERMINATION OF INDIVIDUAL PERFORMANCE AWARDS
1. THE SIZE OF INDIVIDUAL PERFORMANCE AWARDS. Shall be based upon the
assessment of the participant's achievement under Individual Goals
during the Plan Year. All Awards are distributed from available
funds in the Incentive Award Pools.
2. TARGET AWARD OPPORTUNITIES. Each Participant will be assigned a
Target Incentive as determined by management to be commensurate with
the responsibility and impact of their position on the Strategic,
Annual Profit Plan, and Operations Goals of the Company.
The range of participant Target Incentives shall be from 10% up to
50% of annualized base salary.
3. THE SIZE OF AN INCENTIVE AWARD POOL. Shall be determined by the
achievement under the Financial Goal. At 100% Achievement the size
of the Incentive Award Pool shall equal the TOTAL of the Participant
Target Incentives. At the Threshold achievement level the size of
the pool shall be 50% of the TOTAL, and at the Maximum achievement
level equal to 150% of the TOTAL. Incentive Award Pools are
established separately under each Financial Goal and funds are not
transferrable between Pools.
FINANCIAL GOAL ACHIEVEMENT
--------------------------
Threshold Goal Maximum
% of TOTAL
of Target 50% 100% 150%
Incentives
4. DEVELOPMENT OF INDIVIDUAL GOALS. During the first quarter of each
Plan Year, all Participants will develop Individual Goals which set
forth annual goals and objectives of the Participant. The annual
goals are to be developed as the result of discussions between the
Participant and Supervisor. These goals may be either quantitative
or qualitative and should be consistent with the company or
subsidiary, Strategic, Annual Profit Plan or Operations Goals for the
year.
5. MEASUREMENT AGAINST THE INDIVIDUAL PERFORMANCE PLAN. Following the
last quarter of the Plan Year, Management will assess the performance
and recommend a Performance Award based upon the achievement of each
participant.
6. FUNDS NOT ALLOCATED AS PERFORMANCE AWARDS. Any funds which are not
allocated to Participants shall be returned to the Company's
operating profits for the applicable Plan Year.
VIII. TIMING AND PAYMENT OF AWARDS
1. TIMING OF AWARD PAYMENTS. Subject to deferrals pursuant to Sections 3
and 4, Participants in the Plan will receive their Performance Awards
as soon as practical after the completion of the Plan Year in
accordance with Section 2.
2. AWARDS PAYABLE IN CASH. All awards under the Plan shall be paid in
cash. All awards shall be subject to the Company withholding the
amount of any Social Security, federal, state, or local taxes
attributed to any amounts paid pursuant to the Plan.
3. DEFERRAL OF AWARDS UNDER THE EXECUTIVE OPTIONAL DEFERRED COMPENSATION
PLAN. Any Participant in the Plan may elect to defer a portion or
all of an award pursuant to the Plan in accordance with the Executive
Optional Deferred Compensation Plan. The deferral of awards, an
election which a Participant may voluntarily make, shall be in
accordance with the terms and provisions of the Executive Optional
Deferred Compensation Plan. A Participant desiring to exercise the
deferral election pursuant to the Executive Optional Deferred
Compensation Plan shall notify the Company each year of his deferral
election. Such notice must be in writing, on a deferral election
form provided by the Company, and be delivered to the Company prior
to the beginning of each Plan Year. The Participant shall also
irrevocably specify on the deferral election the date upon which the
deferred award applicable to that year's deferral shall be paid.
4. MANDATORY DEFERRAL OF AWARDS TO PRESERVE THE COMPANY'S TAX DEDUCTION.
The Company shall defer paying any award, including an award
previously deferred by a Participant, to the extent that it would
otherwise be disallowable as a deduction under Section 162(m) of the
Internal Revenue Code, until such time as the payment will be allowed
as a deduction. Such deferral shall accrue interest in accordance
with the terms and provisions of the Executive Optional Deferred
Compensation Plan. In determining the extent that such payment would
be disallowable, all other remuneration to a Participant shall first
be taken into account for purposes of the limit imposed by Section
162(m).
IX. LIMITED PARTICIPATION DURING PLAN YEAR
An Employee who is a Participant in the Plan must be in the Company's
employ on the last day of the Plan Year in order to receive any awards
pursuant to the Plan. In the event that an Employee becomes a Participant
in the Plan for less than a full Plan Year, the following provisions shall
apply:
1. ELIGIBILITY DURING PLAN YEAR. An Employee who becomes eligible for
participation in the Plan due to initial employment, transfer, or
promotion during the Plan Year will be eligible to receive a Prorated
Award based upon the Participant's Target Incentive at the time of
induction. In no event, however, will Prorated Awards be made for
any employment period of time less than three months participation
during the Plan Year by the Participant. In order to be eligible for
a Prorated Award, the Participant must be an Employee on the last day
of the Plan Year. The size of the Prorated Award is determined by
multiplying the Performance Award which would have been earned by the
Participant for a full year's participation by the fraction of the
number of months of active service during the Plan Year, as
follows:
Prorated = Annual x Number of Months of Active
Award Performance Service During Plan Year
Award 12
2. TERMINATION OF EMPLOYMENT DUE TO RETIREMENT, DISABILITY OR DEATH. A
Plan Participant who is not an Employee on the last day of the Plan
year as a direct result of retirement, extended disability, or death
(in which case the rights would pass to the Participant's
beneficiary) will be eligible to receive a Prorated Award. The
Prorated Award will be determined by multiplying the Performance
Award which would have been earned by the Participant for a full
year's participation by the fraction of the number of months of
active service during the Plan Year, as set forth below:
Prorated = Annual x Number of Months of Active
Award Performance Service During Plan Year
Award 12
3. PRORATION OF TARGET INCENTIVES. In the event a participant's Target
Incentive changes during the year, the performance award shall be
determined as follows:
Former x Former x # of + New x New x # of
Base Target Months Base Target Months
Salary Incentive 12 Salary Incentive 12
X. AMENDMENT TO PLAN
The Plan may be amended in whole or part by the Compensation Committee.
XI. CHOICE OF LAW
The validity, interpretation, and administration of the Plan and the
rights of any and all persons having or claiming to have an interest
therein, shall be determined exclusively in accordance with the laws of
the State of Florida.
XII. FORFEITURE
Participants in the Plan are expected to provide vision and leadership in
the strategic management of the company, exhibit the corporate
philosophies and maintain trusteeship of corporate culture. Significant
activity which by its nature, impedes the achievement of company goals or
damages the reputation of the company, shall result in the immediate
forfeiture of participation.
EXHIBIT 10.(C)
FLORIDA PROGRESS CORPORATION
EXECUTIVE OPTIONAL DEFERRED COMPENSATION PLAN
November 1985
<PAGE>
FLORIDA PROGRESS CORPORATION
EXECUTIVE OPTIONAL DEFERRED COMPENSATION PLAN
I. PURPOSE
This Plan is an unfunded Deferred Compensation arrangement for a select
group of management who are rendering service to the Company.
II. DEFINITIONS
The following definitions shall be established within the Plan text, and
unless the Plan text indicates otherwise, shall have the meanings set
forth below:
1. "Beneficiary" shall mean any person or persons designated by the
Executive to receive amounts payable in accordance with this Plan in
the event of the Executive's beneficiary shall be deemed to be his
estate.
2. "Compensation Committee" shall mean the Compensation Committee of the
Company Board of Directors which is responsible for the
administration of this Plan in accordance with the provisions of
the Plan as set forth in this document.
3. "Company" shall mean the Florida Progress Corporation and its
subsidiaries, other than Florida Power Corporation.
4. "Compensation" shall mean annual awards which may be paid to an
Executive under the Company's Management Incentive Compensation Plan.
5. "Death" shall mean death from any cause.
6. "Deferred Compensation" shall mean the portion of a Participant's
Compensation for any Plan Year, or part thereof, that has been
deferred pursuant to the Plan.
7. "Deferred Compensation Account(s)," or "Account(s)" shall mean the
accounts that may be established each year by the Company as a book
reserve to which shall be credited the sum of the Participant's
Deferred Compensation for that year plus any earnings credited
thereafter in accordance with Section VI of this Plan.
8. "Deferral Election Form" shall mean the form made available annually
by the Compensation Committee to an Executive which, when properly
executed by the Executive, effects his participation in the Plan
for the next following Plan Year.
9. "Disability" shall mean any physical or mental disability arising out
of natural or accidental causes, or both, which originate subsequent
to the date of this Plan which prevents the Executive from engaging
in and performing all of the duties assigned him and such Disability
shall have been in existence for a period of at least six months.
The Compensation Committee shall determine the date on which such
Disability commenced for the purpose of establishing any amount
payable under this Plan and when such amount becomes payable.
10. "Effective Date" shall mean January 1, 1986.
11. "Executive" shall mean any employee of the Company who is a
participant in the Company's Management Incentive Compensation Plan.
12. "Management Incentive Compensation Plan" shall mean the Company's
annual management incentive bonus program.
13. "Participant" means any employee designated as an Executive who
elects to participate in the Plan according to Sections III and IV or
a person who was such at the time of his Retirement, Death,
Disability or Termination of Service and who retains, or whose
Beneficiary obtains, a benefit under the Plan which has not been
forfeited or distributed.
14. "Plan" shall mean the Executive Optional Deferred Compensation Plan
of Florida Progress Corporation as described in this instrument,
effective January 1, 1986 and, as may be amended, thereafter.
15. "Plan Year" shall mean the calendar year.
16. "Retirement" shall mean the date upon which the Executive retires
from the Company.
17. "Termination of Service" shall mean the termination of a
participant's employment as a regular employee of the Company for
reasons other than Death, Disability or Retirement.
III. ELIGIBILITY
1. PARTICIPANTS IN THE MANAGEMENT INCENTIVE COMPENSATION PLAN. Those
employees who are participants in the Company's "Management Incentive
Compensation Plan" are designated Executives for purposes of this
Plan and, as such, shall be entitled to participate in this Plan.
2. ELECTION TO DEFER. Any Executive may elect to defer receipt of his
Compensation under the Plan in accordance with Section IV and thereby
shall become a Participant under the Plan.
IV. ELECTION TO PARTICIPATE IN THE PLAN
1. EXECUTIVE ELECTION. Any Executive may elect to have a portion or all
of his Compensation to be received by him during each Plan Year
deferred and credited with earnings in accordance with the terms and
conditions of the Plan. The Compensation that may be so deferred
shall be the Executive's awards, if any, under the Company's
Management Incentive Compensation Plan, and may include as much as
100 percent of such awards.
2. NOTICE OF ELECTION. A Participant desiring to exercise such election
under Paragraph IV-1 above shall notify the Compensation Committee
each year of his deferral election. Such notice must be in writing,
on a Deferral Election Form provided by the Compensation Committee,
and delivered to the Committee at least 30 days prior to the
beginning of each Plan Year. The Participant shall also irrevocably
specify on the Deferral Election Form the date upon which his
Deferred Compensation Account applicable to that year's deferral
shall be distributed to him. In subsequent years the Participant may
irrevocably specify either the same distribution date or different
distribution dates with respect to Compensation deferrals, if any, in
such subsequent years.
3. CREDIT TO DEFERRED COMPENSATION ACCOUNT. The amount of a
Participant's Deferred Compensation shall be credited to his Deferred
Compensation Account.
4. NO RIGHTS TO DEFERRAL COMPENSATION ACCOUNT. No Executive or his
designated Beneficiary shall acquire any property interest in his
Deferred Compensation Account or any other assets of the Company,
their rights being limited to receiving from the Company deferred
payments as set forth in this Plan and these rights are conditioned
upon continued compliance with the terms and conditions of this Plan.
To the extent, that any Participant or Beneficiary acquires a right
to receive benefits under this Plan, such right shall be no greater
than the right of any unsecured general creditor of the Company.
V. TERMINATION OF PARTICIPATION IN THE PLAN
Any Executive having previously elected to participate in the plan shall
automatically cease to participate in the Plan if he fails (in a
subsequent year) to properly execute a Deferral Election Form as provided
for in paragraph IV-2 herein, in which event the accumulated credits in
his Deferred Compensation Account, prior to his termination of
participation, will continue to be subject to the provisions of the Plan.
VI. CREDITING OF EARNINGS
There shall be credited to the Deferred Compensation Account an additional
amount of earnings (i.e., in addition to the principal amounts credited to
such account), as established by the Corporation for each Participant or
for each group of Participants as it shall determine.
VII. DISTRIBUTION OF AMOUNTS DEFERRED UNDER THE PLAN
1. PAYMENT IN CASH. The amount payable to a Participant in accordance
with the provisions of the Plan (including earnings credited under
Section VI) shall be paid in cash.
2. PAYMENT AT TERMINATION OF SERVICE. Notwithstanding the above, in the
event of Termination of Service by the Executive, payment will be
made in a lump sum as soon as practical after his Termination.
3. AUTHORITY OF THE COMPENSATION COMMITTEE. Notwithstanding anything
herein contained to the contrary, the Compensation Committee shall
have the right in its sole discretion to vary the manner and time of
making distributions under the Plan.
VIII. DEATH
1. DESIGNATION OF BENEFICIARY. At the time that an Executive becomes a
Participant, he shall designate in writing a Beneficiary to receive
any payments to which he would have been entitled under the terms of
this Plan. The Beneficiary referred to in this paragraph may be
designated or changed by the Executive (without the consent of any
prior Beneficiary) on a form provided by the Compensation Committee
and delivered to the Compensation Committee before his Death. If no
such Beneficiary shall have been designated, or if no designated
Beneficiary shall survive the Executive, payments shall be payable to
the Executive's estate.
2. DEATH BEFORE RETIREMENT. If the Executive's employment is terminated
because of Death before Retirement and while he is in the employ of
the Company, then the Company shall make payments to his designated
Beneficiary in the same manner and to the extent as provide in
Section VII.
3. DEATH WHILE RECEIVING PAYMENTS. If the Executive should die while
receiving payments from this Plan but before receiving all payments
to which the Executive is entitled, the unpaid balance will continue
to be paid to his designated Beneficiary in the same manner as would
have been paid to the Executive. At the discretion of the
Compensation Committee, the unpaid balance may be paid in a lump sum.
4. DEATH OF BOTH EXECUTIVE AND BENEFICIARY. If both the Executive and
his designated beneficiary should die before all payments are made by
the Company, then the value of the remaining payments shall be
determined as of the date of death of the designated Beneficiary and
shall be paid as promptly as possible in one lump sum to the estate
of such designated Beneficiary.
IX. DISABILITY
If the Executive's employment is terminated because of Disability and
while he is in the employ of the Company, then the Company shall make
payments to the Executive in the same manner and to the same extent as
provided in Section VIII.
X. NON-ASSIGNMENT/NON-ATTACHMENT
Except as required by law, no right of the Executive or designated
Beneficiary to receive payments under this Plan shall be subject to
anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge, or hypothecation or to execution, attachment, levy or
similar process or assignment by operation of law and any attempt,
voluntary or involuntary, to effect any such action shall be null and void
and of no effect.
XI. CONDITIONS AS TO PAYMENT
Notwithstanding anything herein contained to the contrary, no payment of
any then unpaid installments of deferred compensation shall be made and
all rights of the Executive or his designated Beneficiary to receive
payments under this Plan shall be forfeited, if, after the Executive's
Retirement from the Company, he shall fail or refuse to provide advice or
counsel to the Company when reasonably requested to do so.
XII. INCAPACITY
If the Compensation Committee shall find that any person to whom any
payment is payable under this Plan is unable to care for his affairs
because of illness or accident or is a minor, any payment due (unless a
prior claim therefore shall have been made by a duly appointed guardian,
committee or legal representative) may be paid to the spouse, a child, a
parent, a brother or sister or to any person deemed by the Compensation
Committee in such manner as the Compensation Committee shall determine.
Any such payment shall be a complete discharge of the liabilities of the
Company under this agreement.
XIII. CONSTRUCTION
This Agreement shall be construed under the laws of the State of Florida.
Section headings and paragraph headings are for convenience only and shall
not be considered as part of the terms and provisions of the Plan.
XIV. CONSOLIDATION OR MERGER
In the event that the Company or any entity (resulting from any merger or
consolidation or which shall be a purchaser or transferee so referred to),
shall at anytime be merged or consolidated into or with any other entity
or entities, or in the event that substantially all of the assets of the
Company or any such entity shall be sold or otherwise transferred to
another entity, the provisions of this Plan shall be binding upon and
shall enure to the benefit of the continuing entity or the entity
resulting from such merger or consolidation or the entity to which such
assets shall be sold or transferred. Except as provided in the preceding
sentence, the Plan shall not be assignable by the Company or by any entity
referred to in such preceding sentence.
XV. AMENDMENT OF PLAN
The Plan may be amended in whole or in part from time to time by the
Company. Notice of every such amendment shall be given in writing to each
Participant and designated Beneficiary of a deceased Participant.
XVI. MISCELLANEOUS
1. NO LEGAL RIGHT TO CONTINUED EMPLOYMENT. Neither this Agreement, nor
any action of the Company or Compensation Committee, nor any election
to defer Compensation hereunder shall be held or construed to confer
on any person any legal right to be continued as an employee of the
Company, or any division, subsidiary or affiliate of the Company.
2. WITHHOLDING FOR TAXES. The Company shall have the right to deduct
from all payments any taxes required by law to be withheld with
respect to any payments made under this Plan.
3. GRAMMAR. Masculine pronouns used herein shall refer to men or women
or both, and nouns when stated in the singular shall include the
plural and when stated in the plural shall include the singular
wherever appropriate.
* * * *
IN WITNESS THEREOF, the Company has caused this Plan to be executed and its
Seal to be affixed by its officers thereunto duly authorized, and Mr. Andrew H.
Hines, Jr., Chairman and Chief Executive Officer of the Company, has signed
this Agreement, as of the 30th day of November, 1985.
Florida Progress Corporation
By: /s/ Andrew H. Hines, Jr.
-----------------------------
Chairman and Chief Executive Officer
(Seal)
ATTEST:
s/ Cathleen P. Kortright
-------------------------
Assistant Secretary
<PAGE>
FLORIDA PROGRESS CORPORATION
EXECUTIVE OPTIONAL DEFERRED COMPENSATION PLAN RESOLUTIONS ADOPTED BY THE
COMPENSATION COMMITTEE AT MEETING HELD 08/18/94
WHEREAS, pursuant to Section 15 of the Florida Progress
Corporation Executive Optional Deferred Compensation Plan (the "Executive
Deferred Plan"), the right is reserved to Florida Progress Corporation and
its subsidiaries (the "Company") through the Compensation Committee of the
Board of Directors of Florida Progress Corporation to amend the Executive
Deferred Plan; and
WHEREAS, the Company deems it is advisable to amend the
Executive Deferred Plan in principle at this time to effect certain
changes to the plan.
NOW, THEREFORE, BE IT RESOLVED, that, effective September 1,
1994, the provisions of the Executive Deferred Plan are amended to provide
for a new Pre-Tax Deferral portion that allows pre-tax employee base pay
deferrals with associated company matching contributions. These
resolutions will function as an addendum to the Executive Deferred Plan
document dated November, 1985 and effective January 1, 1986:
GENERAL PROVISIONS
1. PURPOSE The purpose of the Pre-tax Deferral portion of this plan is
to provide a select management group with the ability to save a
percentage of their total base salary rate on a pre-tax basis, with
associated company match, in a way which mirrors the Savings Plan for
Employees of Florida Progress Corporation to effectively eliminate
all Internal Revenue Service Code Section and regulatory limitations
imposed on qualified benefit plans.
2. EFFECTIVE DATE The effective date of the Pre-tax Deferral portion of
the Plan is September 1, 1994.
DEFINITIONS
1. Base Salary Rate, for the Pre-tax Deferral portion of the Plan only,
shall mean the Participant's annual base salary on the first day of
the month prior to the beginning of each Plan Year (i.e. August 1,
1994 for initial Plan Year 1994; December 1, 1994 for Plan Year 1995;
etc.). In Plan Years 1994 and 1995, increases or decreases in Base
Salary Rate which occur during the Plan Year will not change the
Pre-tax Deferral Election amount determined prior to the beginning of
each Plan Year.
2. Company shall mean Florida Progress Corporation and its subsidiaries.
3. Company Matching Deferred Contributions shall mean the amount of
Company Matching Deferred Contributions, as defined herein in
Paragraph 2 of the Contributions section, due a Participant based
upon the Participant's elected Employee Deferred Contributions.
4. Company Matching Deferred Contributions Account shall mean the
accounts that will be established by the Company as a book reserve to
which shall be credited the sum of the Participant's Company Matching
Deferred Contributions for that Plan Year plus any earnings credited
thereafter in accordance with Section VI of this Plan. This account
will also be credited with Regular Company Contributions and/or
Special Company Contributions that cannot be allocated to the Savings
Plan because they exceed the limitations prescribed by Section 415(c)
of the Internal Revenue Code of 1986.
5. Employee shall mean a person who is a full-time, active employee of
the Company.
6. Employee Deferred Contributions shall mean the amount of the Pre-tax
Deferral Election from 1% to 16% of a Participant's Base Salary Rate,
as defined herein in Paragraph 1 of the Contributions section.
7. Employee Deferred Contributions Account shall mean the accounts that
will be established by the Company as a book reserve to which shall
be credited the sum of the Participant's Employee Deferred
Contributions for that Plan Year plus any earnings credited
thereafter in accordance with Section VI of this Plan.
8. Participant, for the Pre-tax Deferral portion of the Plan, shall mean
an Employee selected by Senior Management who is eligible to receive
a Performance Award pursuant to the Management Incentive Compensation
Plan and who is eligible to participate in the Savings Plan, and
whose annual base salary exceeds the compensation limits outlined in
Code Section 401(a)(17) of the Internal Revenue Code of 1986.
9. Plan shall mean the Executive Optional Deferred Compensation Plan of
Florida Progress Corporation dated November, 1985 and effective
January 1, 1986, as amended herein and as may be amended hereafter.
10. Plan Year, for the Pre-tax Deferral portion of the Plan, shall mean
the calendar year beginning January 1, except in the initial year
when it will mean the period of time from September 1, 1994 to
December 31, 1994.
11 Pre-tax Deferral Election Form shall mean the form made available
annually by the Compensation Committee to a Participant which, when
properly executed by the Participant, effects his participation in
the Pre-tax Deferral portion of the Plan for the next following Plan
Year.
12. Savings Plan means the Savings Plan for Employees of Florida Progress
Corporation, as amended.
13. Valuation Date shall mean the last day of each calendar month.
ELECTIONS
1. PRE-TAX DEFERRAL ELECTION. Any Participant in the Pre-tax Deferral
portion of the Plan may voluntarily make an irrevocable election to
defer an amount from 0% to 16% of their Base Salary Rate as Employee
Deferred Contributions in a manner that is consistent with and in
agreement with the terms and provisions of the Plan, as modified
herein. Such election must be irrevocable and in writing, on a
Pre-tax Deferral Election form provided by the Compensation
Committee, and completed and delivered prior to the beginning of each
Plan Year.
2. TIMING OF DISTRIBUTION ELECTION. For Plan Year 1994, the Participant
shall not have any option to specify the date, other than separation
of service due to retirement, termination, disability, or death, upon
which the balances within the Employee Deferred Contributions and
Company Matching Deferred Contributions Accounts shall be paid. No
later than the Plan Year beginning in 1996, additional distribution
options for these accounts will be added.
CONTRIBUTIONS
1. EMPLOYEE DEFERRED CONTRIBUTIONS.
(a) Participants who choose to participate in the Pre-tax Deferral
portion of the Plan will make an irrevocable Pre-Tax Deferral
Election to defer an amount from 1% to 16% of their Base Salary
Rate. Employee Deferred Contributions made to the Pre-tax
Deferral portion of the Plan will be the difference between the
total Pre-tax Deferral Election amount and the lesser of (a) the
annual 401(k) maximum limit or (b) the maximum 401(k) deferral
election amount permitted by 401(k)/401(m) non-discrimination
testing for the previous year as determined by the Plan
Administrator for highly-compensated employees within the
Savings Plan.
(b) The Employee Deferred Contributions Account will be established
by the Company as a book reserve to which shall be credited the
sum of the Participant's Employee Deferred Contributions for
that year plus any earnings credited thereafter in accordance
with Section VI of the Plan.
2. COMPANY MATCHING DEFERRED CONTRIBUTIONS.
(a) The Company shall make Company Matching Deferred Contributions
on behalf of each Participant who chooses to participate in the
Pre-tax Deferral portion of the Plan in the amounts and at the
times Regular Company Contributions and Special Company
Contributions are allocated within the Savings Plan. Prior to
the reduction provided for in Paragraph (b) below, the Company
Matching Deferred Contributions will equal sixty-five percent of
Employee Deferred Contributions, up to six percent of a
Participant's Base Salary Rate, allocated monthly, and an
additional annual match of five percent or ten percent based on
the attainment of pre-determined Savings Plan Goals, as defined
within the Savings Plan, allocated in December of each year
goals are attained. However, no Special Company Contributions
shall be made for a Plan Year unless the Participant is an
Employee on the last day of the final pay period of the Plan
Year or the Participant's retirement or death occurred during
the Plan Year.
(b) The Company Matching Deferred Contributions will be the
difference between the Company Matching Deferred Contributions
on the total Pre-tax Deferral Election amount, up to 6% of the
Base Salary Rate, and the sum of Regular Company
Contributions and Special Company Contributions in the Savings
Plan on the lesser of (a) the annual 401(k) maximum limit or (b)
the maximum 401(k) deferral election amounts permitted by
401(k)/401(m) non-discrimination testing for the previous year
as determined by the Plan Administrator for highly-compensated
employees within the Savings Plan plus any Regular Company
Contributions and Special Company Contributions associated with
Member Contributions made to the Savings Plan on an after-tax
basis.
(c) The Company Matching Deferred Contributions Account will be
established by the Company as a book reserve to which shall be
credited the sum of the Participant's Company Matching Deferred
Contributions for that year plus any earnings credited
thereafter in accordance with Section VI of the Plan. This
account will also be credited with Regular Company Contributions
and/or Special Company Contributions that cannot be allocated to
the Savings Plan because they exceed the limitations prescribed
by Section 415(c) of the Internal Revenue Code of 1986.
VESTED PORTION OF ACCOUNTS
1. At any point in time, a Participant shall be vested in the following
portions of his Accounts:
(a) 100% of the Participant's Employee Deferred Contributions
Account, plus
(b) A percentage of his Company Matching Deferred Contributions
Account determined in accordance with the vesting schedule
applicable to the Savings Plan, as shown below:
Completed Years of Credited
Service on Valuation Date Vested Percentage
------------------------- ---------------------------
Under 2 0%
2 25
3 50
4 75
5 or more 100
(c) A Participant who is not 100% vested in his Company Matching
Deferred Contributions Account pursuant to paragraph (b) above
shall nevertheless be 100% vested in this account upon the later
of his attainment of age 65 or completion of 5 years of Credited
Service while in the employ of the Company or upon his death
while in the employ of the Company or upon his Retirement.
TIMING AND PAYMENT OF ACCOUNT BALANCES
1. FORM OF PAYMENT - Distribution of a Participant's Employee Deferred
Contributions Account and the vested portion of the Company Matching
Deferred Contributions Account shall be made in a cash lump sum to
the Participant or to his Beneficiary if the Participant is not
living. No later than the Plan Year beginning in 1996, additional
distribution options for these accounts will be added.
2. COMMENCEMENT OF PAYMENT - For Plan Year 1994, distribution of a
Participant's Employee Deferred Contributions Account and the vested
portion of the Company Matching Deferred Contributions Account shall
commence as soon as administratively practicable following the
Participant's retirement, termination of employment, disability, or
death. No later than the Plan Year beginning in 1996, additional
distribution options for these accounts will be added.
VALUATION AND REPORTING OF ACCOUNTS
1. VALUATION. The Employee Deferred Contributions Account and the
Company Matching Deferred Contributions Account will be valued at the
end of each month on the Valuation Date. Any applicable earnings
will be allocated to these accounts monthly on the Valuation Date.
2. STATEMENT OF ACCOUNT. At least once a year, but no more frequently
than quarterly, each Participant shall be furnished with a statement
setting forth the value and the vested portion of the Participant's
accounts.
3. The Compensation Committee shall have the final authority with
respect to all matters pursuant to the Plan and shall have the
authority to specify rules and administrative practices to be applied
uniformly to all Participants in this Plan. The Compensation
Committee may, at any time, revise, amend, terminate, or otherwise
change in any manner the terms, provisions, features, or
administrative practices as they see fit from time to time. However,
no modification, amendment or termination of the Plan shall adversely
affect the right of any Participant to receive the benefits granted
under the Plan by the Compensation Committee in respect to such
Participant as of the date of modification, amendment, or
termination.
TERMINATION OF PARTICIPATION IN THE PLAN
Any Executive having previously elected to participate in the Plan
shall automatically cease to participate in the appropriate portion
of the Plan if he or she fails (in a subsequent year) to properly
execute a Deferral Election Form and/or a Pre-Tax Deferral Election
Form as provided for within the Plan, in which event the accumulated
credits in his Deferred Compensation Account, Employee Deferred
Contributions Account, and Company Matching Deferred Contributions
Account, as applicable, prior to his termination of participation,
will continue to be subject to the applicable provisions of the Plan.
CREDITING OF EARNINGS
There shall be credited to the Deferred Compensation Account, Employee
Deferred Contributions Account, and Company Matching Deferred
Contributions Account an additional amount of earnings (i.e. in addition
to the principal amounts credited to such accounts), as established by the
Corporation for each Participant or for each group of Participants as it
shall determine."; and
FURTHER RESOLVED, that the Compensation Committee directs the proper
officers of the Company to take such other and further actions as shall be
necessary and proper in connection with the adoption and implementation of
the foregoing resolutions and to comply with all legal and procedural
requirements relating thereto.
Exhibit 12
FLORIDA POWER CORPORATION
Statement of Computation of Ratios
(Dollars In Millions)
Ratio of Earnings to Fixed Charges:
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
Net Income $200.8 $194.9 $186.9 $180.9 $182.3
Add:
Operating Income Taxes 114.7 104.5 97.7 92.8 102.0
Other Income Taxes (0.8) (0.1) (0.2) (0.1) 1.0
------ ------ ------ ------ ------
Income Before Taxes 314.7 299.3 284.4 273.6 285.3
Total Interest Charges 108.4 105.8 100.2 95.2 98.8
------ ------ ------ ------ ------
Total Earnings (A) $423.1 $405.1 $384.6 $368.8 $384.1
------ ------ ------ ------ ------
Fixed Charges (B) $108.4 $105.8 $100.2 $95.2 $98.8
------ ------ ------ ------ ------
Ratio of Earnings to
Fixed Charges (A/B) 3.90 3.83 3.84 3.87 3.89
====== ====== ====== ====== ======
EXHIBIT 21
Subsidiaries of Florida Progress Corporation
December 31, 1994
Name of Subsidiary * State of Incorporation
------------------- ----------------------
Utility segment:
Florida Power Corporation Florida
Diversified segment:
Progress Capital Holdings, Inc. Florida
Electric Fuels Corporation Florida
Mid-Continent Life Insurance Company Oklahoma
Progress Credit Corporation Florida
Progress Leasing Corporation Florida
PLC Leasing Corporation Florida
----------
* Each subsidiary does business under its own name.
Exhibit 23.(a)
The Shareholders
Florida Progress Corporation:
We consent to incorporation by reference in the registration statements No.
33-51573 on Form S-3, No. 33-53939 on Form S-8, No. 33-45044 on Form S-3, No.
33-47623 on Form S-8, No. 33-39153 on Form S-8, and No. 2-93111 on Form S-3 of
Florida Progress Corporation of our report dated January 23, 1995, relating to
the consolidated balance sheets of Florida Progress Corporation and
subsidiaries as of December 31, 1994 and 1993, and the related consolidated
statements of income, shareholders' equity and cash flows for each of the years
in the three-year period ended December 31, 1994, and all related schedules,
which report appears in the December 31, 1994 annual report on Form 10-K of
Florida Progress Corporation.
Our report refers to a change in the methods of accounting for income taxes and
postretirement benefits other than pensions.
/s/KPMG PEAT MARWICK LLP
------------------------
KPMG PEAT MARWICK LLP
St. Petersburg, Florida
March 30, 1995
Exhibit 23.(b)
The Shareholders
Florida Power Corporation:
We consent to incorporation by reference in the registration statements No.
33-62210 on Form S-3, No. 33-55273 on Form S-3, and No. 33-50908 on Form S-3 of
Florida Power Corporation of our report dated January 23, 1995, relating to the
balance sheets of Florida Power Corporation as of December 31, 1994 and 1993,
and the related statements of income, shareholders' equity and cash flows for
each of the years in the three-year period ended December 31, 1994, and all
related schedules which report appears in the December 31, 1994 annual report
on Form 10-K of Florida Power Corporation.
Our report refers to a change in the methods of accounting for income taxes and
postretirement benefits other than pensions.
/s/KPMG PEAT MARWICK LLP
-------------------------
KPMG PEAT MARWICK LLP
St. Petersburg, Florida
March 30, 1995
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