SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
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
Indicate by check mark whether each registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ___X___ No ______
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Description of Shares Outstanding
Registrant Class at March 31, 1996
---------- -------------- ------------------
Florida Progress Corporation Common Stock,
without par value 96,720,259
Florida Power Corporation Common Stock,
without par value 100 (all of which were
held, beneficially and
of record, by Florida
Progress Corporation)
This combined Form 10-Q represents separate filings by Florida Progress
Corporation and Florida Power Corporation. Florida Power makes no
representations as to the information relating to Florida Progress' diversified
operations.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FLORIDA PROGRESS CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
FLORIDA PROGRESS CORPORATION
Consolidated Statements of Income
(In millions, except per share amounts)
Three Months Ended
March 31,
1996 1995
-------- --------
(Unaudited)
REVENUES:
Electric utility $547.3 $515.9
Diversified 192.2 187.3
--------- ---------
739.5 703.2
EXPENSES: --------- ---------
Electric utility:
Fuel used in generation 114.5 78.6
Purchased power 122.9 103.3
Deferred fuel (28.5) 7.4
Other operation 88.2 87.4
--------- ---------
Operation 297.1 276.7
Maintenance 30.8 33.0
Depreciation 77.6 70.7
Taxes other than income taxes 47.2 42.9
--------- ---------
452.7 423.3
--------- ---------
Diversified:
Cost of sales 159.0 152.9
Other 16.3 16.7
--------- ---------
175.3 169.6
--------- ---------
INCOME FROM OPERATIONS 111.5 110.3
--------- ---------
INTEREST EXPENSE AND OTHER:
Interest expense 35.2 36.6
Allowance for funds used during construction (1.7) (2.2)
Preferred dividend requirements of Florida Power 2.3 2.5
Other expense, net 0.5 0.8
--------- ---------
36.3 37.7
--------- ---------
INCOME BEFORE INCOME TAXES 75.2 72.6
Income Taxes 26.9 26.0
--------- ---------
NET INCOME $48.3 $46.6
========= =========
AVERAGE SHARES OF COMMON STOCK OUTSTANDING 96.5
95.3
========= =========
EARNINGS PER AVERAGE COMMON SHARE $0.50 $0.49
========= =========
DIVIDENDS PER COMMON SHARE $0.515 $0.505
========= =========
The accompanying notes are an integral part of these financial statements.
2
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FLORIDA PROGRESS CORPORATION
Consolidated Balance Sheets
(In millions)
March 31, December 31,
1996 1995
----------- -----------
ASSETS (Unaudited)
PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant in service and held
for future use $5,885.6 $5,867.5
Less - Accumulated depreciation 2,238.8 2,179.7
Accumulated decommissioning for nuclear plant 172.3 165.2
Accumulated dismantlement for fossil plants 108.3 104.4
---------- ----------
3,366.2 3,418.2
Construction work in progress 165.2 131.8
Nuclear fuel, net of amortization of $350.7
in 1996 and $348.7 in 1995 66.3 59.1
---------- ----------
Net electric utility property 3,597.7 3,609.1
Other property, net of depreciation of $194.2
in 1996 and $189.9 in 1995 450.4 455.2
---------- ----------
4,048.1 4,064.3
---------- ----------
CURRENT ASSETS:
Cash and equivalents 6.0 4.7
Accounts receivable, net 297.4 309.5
Current portion of leases and loans receivable 42.9 43.0
Inventories at average cost:
Fuel 50.5 63.0
Materials and supplies 98.4 101.3
Diversified materials 126.0 113.2
Underrecovery of fuel cost 19.3 0.3
Deferred income taxes 32.4 32.3
Other 13.5 12.2
---------- ----------
686.4 679.5
---------- ----------
OTHER ASSETS:
Investments:
Leases and loans receivable, net 333.5 340.8
Marketable securities 197.3 188.2
Nuclear plant decommissioning fund 176.5 161.1
Joint ventures and partnerships 73.5 73.7
Deferred insurance policy acquisition costs 108.6 106.4
Other 175.5 177.1
---------- ----------
1,064.9 1,047.3
---------- ----------
$5,799.4 $5,791.1
========== ==========
The accompanying notes are an integral part of these financial statements.
3
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FLORIDA PROGRESS CORPORATION
Consolidated Balance Sheets
(In millions)
March 31, December 31,
1996 1995
----------- -----------
CAPITAL AND LIABILITIES (Unaudited)
COMMON STOCK EQUITY:
Common stock $1,198.1 $1,187.6
Retained earnings 887.0 888.4
Unrealized loss on securities available for sale (0.2) 2.1
---------- ----------
2,084.9 2,078.1
CUMULATIVE PREFERRED STOCK OF FLORIDA POWER:
Without sinking funds 113.5 113.5
With sinking funds 25.0 25.0
LONG-TERM DEBT 1,621.3 1,685.2
---------- ----------
TOTAL CAPITAL 3,844.7 3,901.8
---------- ----------
CURRENT LIABILITIES:
Accounts payable 153.7 168.5
Customers' deposits 87.3 85.3
Income taxes payable 42.7 14.4
Accrued other taxes 36.7 15.9
Accrued interest 47.0 47.5
Other 102.5 103.4
---------- ----------
469.9 435.0
Current portion of long-term debt 196.1 183.9
---------- ----------
666.0 618.9
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes 687.5 694.3
Unamortized investment tax credits 99.5 101.5
Insurance policy benefit reserves 277.8 265.0
Other postretirement benefit costs 86.4 84.8
Other 137.5 124.8
---------- ----------
1,288.7 1,270.4
---------- ----------
$5,799.4 $5,791.1
========== ==========
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
FLORIDA PROGRESS CORPORATION
Consolidated Statements of Cash Flows
(In millions)
Three Months Ended
March 31,
1996 1995
-------- --------
(Unaudited)
OPERATING ACTIVITIES:
Net income $48.3 $46.6
Adjustments for noncash items:
Depreciation and amortization 89.5 86.7
Deferred income taxes and investment tax credits, net (9.3) (13.0)
Increase in accrued other postretirement benefit costs 1.6 4.3
Net change in deferred insurance policy acquisition costs (2.2) (5.3)
Net change in insurance policy benefit reserves 12.8 10.8
Changes in working capital, net of effects
from acquisition or sale of businesses:
Accounts receivable 12.0 11.7
Inventories 2.3 (7.3)
Underrecovery of fuel cost (19.0) 4.7
Accounts payable (14.8) (1.2)
Income taxes payable 28.3 32.3
Accrued other taxes 20.8 15.0
Other (0.7) (8.3)
Other operating activities 10.9 8.9
--------- ---------
180.5 185.9
--------- ---------
INVESTING ACTIVITIES:
Property additions (including allowance for
borrowed funds used during construction) (71.6) (72.7)
Proceeds from sale of properties and businesses 3.5 3.6
Purchase of leases, loans and securities (15.3) (11.0)
Proceeds from sale or collection of leases,
loans and securities 10.9 23.6
Other investing activities (13.3) (3.5)
--------- ---------
(85.8) (60.0)
--------- ---------
FINANCING ACTIVITIES:
Repayment of long-term debt (11.7) (10.0)
Decrease in commercial paper with long-term support (40.7) (14.4)
Sale of common stock 9.3 9.4
Dividends paid on common stock (49.7) (48.1)
Decrease in short-term debt - (55.3)
Other financing activities (0.6) -
--------- ---------
(93.4) (118.4)
--------- ---------
NET INCREASE IN CASH AND EQUIVALENTS 1.3 7.5
Beginning cash and equivalents 4.7 14.4
--------- ---------
ENDING CASH AND EQUIVALENTS $6.0 $21.9
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $34.0 $35.4
Income taxes (net of refunds) $7.9 $7.2
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
FLORIDA POWER CORPORATION
FINANCIAL STATEMENTS
FLORIDA POWER CORPORATION
Statements of Income
(In millions) Three Months Ended
March 31,
1996 1995
-------- --------
(Unaudited)
OPERATING REVENUES:
Residential $328.5 $283.7
Commercial 115.1 109.4
Industrial 47.8 43.1
Sales for resale 43.0 26.0
Other 12.9 53.7
--------- ---------
547.3 515.9
--------- ---------
OPERATING EXPENSES:
Operation:
Fuel used in generation 114.5 78.6
Purchased power 122.9 103.3
Deferred fuel (28.5) 7.4
Other 88.2 87.4
--------- ---------
297.1 276.7
--------- ---------
Maintenance 30.8 33.0
Depreciation 77.6 70.7
Taxes other than income taxes 47.2 42.9
Income taxes:
Currently payable 30.2 33.3
Deferred, net (3.0) (7.2)
Investment tax credits, net (2.0) (2.1)
--------- ---------
25.2 24.0
--------- ---------
477.9 447.3
--------- ---------
OPERATING INCOME 69.4 68.6
--------- ---------
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during construction 0.9 1.2
Miscellaneous other expense, net (0.5) (0.5)
--------- ---------
0.4 0.7
--------- ---------
INTEREST CHARGES
Interest on long-term debt 22.1 24.2
Other interest expense 3.3 2.8
--------- ---------
25.4 27.0
Allowance for borrowed funds used during construction (0.8) (1.0)
--------- ---------
24.6 26.0
--------- ---------
NET INCOME 45.2 43.3
DIVIDENDS ON PREFERRED STOCK 2.3 2.5
--------- ---------
NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $42.9
$40.8
========= =========
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
FLORIDA POWER CORPORATION
Balance Sheets
(In millions)
March 31, December 31,
1996 1995
----------- -----------
ASSETS (Unaudited)
PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant in service and held
for future use $5,885.6 $5,867.5
Less - Accumulated depreciation 2,238.8 2,179.7
Accumulated decommissioning for nuclear plant 172.3 165.2
Accumulated dismantlement for fossil plants 108.3 104.4
---------- ----------
3,366.2 3,418.2
Construction work in progress 165.2 131.8
Nuclear fuel, net of amortization of $350.7
in 1996 and $348.7 in 1995 66.3 59.1
---------- ----------
3,597.7 3,609.1
Other property, net 16.1 23.0
---------- ----------
3,613.8 3,632.1
---------- ----------
CURRENT ASSETS:
Cash and equivalents 3.5 0.8
Accounts receivable, net 192.1 200.7
Inventories at average cost:
Fuel 26.1 40.8
Materials and supplies 98.4 101.3
Underrecovery of fuel cost 19.3 0.3
Deferred income taxes 32.4 32.3
Other 4.0 3.9
---------- ----------
375.8 380.1
---------- ----------
OTHER ASSETS:
Nuclear plant decommissioning fund 176.5 161.1
Unamortized debt expense, being amortized
over term of debt 26.7 27.5
Other 78.2 84.1
---------- ----------
281.4 272.7
---------- ----------
$4,271.0 $4,284.9
========== ==========
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
FLORIDA POWER CORPORATION
Balance Sheets
(In millions)
March 31, December 31,
1996 1995
----------- -----------
CAPITAL AND LIABILITIES (Unaudited)
COMMON STOCK EQUITY:
Common stock $1,005.4 $992.9
Retained earnings 757.1 761.1
---------- ----------
1,762.5 1,754.0
CUMULATIVE PREFERRED STOCK:
Without sinking funds 113.5 113.5
With sinking funds 25.0 25.0
LONG-TERM DEBT 1,178.9 1,279.1
---------- ----------
TOTAL CAPITAL 3,079.9 3,171.6
---------- ----------
CURRENT LIABILITIES:
Accounts payable 90.0 89.8
Accounts payable to affiliated companies 21.0 24.8
Customers' deposits 87.3 85.3
Income taxes payable 34.2 8.9
Accrued other taxes 32.6 12.3
Accrued interest 37.7 32.9
Other 63.4 65.1
---------- ----------
366.2 319.1
Current portion of long-term debt 50.6 30.6
---------- ----------
416.8 349.7
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes 482.7 483.8
Unamortized investment tax credits 98.9 100.9
Other postretirement benefit costs 83.0 81.5
Other 109.7 97.4
---------- ----------
774.3 763.6
---------- ----------
$4,271.0 $4,284.9
========== ==========
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
FLORIDA POWER CORPORATION
Statements of Cash Flows
(In millions)
Three Months Ended
March 31,
1996 1995
-------- --------
(Unaudited)
OPERATING ACTIVITIES:
Net income after dividends on preferred stock $42.9 $40.8
Adjustments for noncash items:
Depreciation and amortization 82.0 79.8
Deferred income taxes and investment tax credits, net (5.0) (9.3)
Increase in accrued other postretirement benefit costs 1.5 4.1
Allowance for equity funds used during construction (0.9) (1.2)
Changes in working capital:
Accounts receivable 8.6 9.8
Inventories 17.6 (2.2)
Underrecovery of fuel cost (19.0) 4.7
Accounts payable 0.2 (8.8)
Accounts payable to affiliated companies (3.8) (1.7)
Income taxes payable 25.3 28.8
Accrued other taxes 20.3 14.0
Other 5.0 0.1
Other operating activities 14.8 4.5
--------- ---------
189.5 163.4
--------- ---------
INVESTING ACTIVITIES:
Construction expenditures (58.6) (59.2)
Allowance for borrowed funds used during construction (0.8) (1.0)
Additions to nonutility property (0.6) (0.7)
Proceeds from sale of properties 1.2 3.4
Other investing activities (13.3) (2.8)
--------- ---------
(72.1) (60.3)
--------- ---------
FINANCING ACTIVITIES:
Decrease in commercial paper with long-term support (80.3) (13.0)
Dividends paid to parent (46.9) (44.3)
Equity contributions from parent 12.5 12.5
Decrease in short-term debt - (55.3)
--------- ---------
(114.7) (100.1)
--------- ---------
NET INCREASE IN CASH AND EQUIVALENTS 2.7 3.0
Beginning cash and equivalents 0.8 -
--------- ---------
ENDING CASH AND EQUIVALENTS $3.5 $3.0
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $18.9 $20.3
Income taxes (net of refunds) $4.8 $4.3
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
FLORIDA PROGRESS CORPORATION AND FLORIDA POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS
1) As ordered by the Florida Public Service Commission ("FPSC"), Florida
Power Corporation ("Florida Power") is in its second year of conducting
a three-year test for residential revenue decoupling which began in
January 1995. The difference between target revenues and actual
revenues is included as a current asset or current liability on the
balance sheet. Revenue decoupling reduced residential billed revenues
by $0.1 million and $14.3 million for the three months ended March 31,
1995 and 1996, respectively.
2) Effective January 1, 1996, Florida Progress Corporation ("Florida
Progress") adopted Financial Accounting Standards ("FAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of." This standard requires that long-lived
assets and certain intangible assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable through future cash flows
from the use and disposition of the asset. The adoption of this
standard has had no impact on earnings. (As used herein, the term
Florida Progress includes its consolidated subsidiaries unless
otherwise indicated.)
Effective January 1, 1996, Florida Progress adopted FAS No. 123,
"Accounting for Stock-Based Compensation." Under its Long-Term
Incentive Plan, Florida Progress grants selected executives performance
shares, which, upon achievement of performance criteria for a
three-year performance cycle, result in the award of shares of common
stock of Florida Progress, two-thirds of which would be restricted for
periods of time. Florida Progress accounts for the fair value of common
stock shares awarded under this plan after December 31, 1995 as
recommended in FAS No. 123. Shares awarded for performance cycles
previous to the implementation of FAS 123 are accounted for in
accordance with Accounting Principles Board Opinion No. 25. There was
no impact on earnings as a result of implementing this standard.
3) CONTINGENCIES
PURCHASED POWER - Florida Power's cogeneration purchased power
contracts employ separate pricing methodologies for capacity payments
and energy payments. Two cogenerators have filed suit against Florida
Power in state court and a third in federal court challenging the
energy pricing methodology.
Another cogenerator entered into a standard offer cogeneration contract
with Florida Power and subsequently indicated its intention to build a
115 megawatt ("MW") facility. The FPSC's rules limit standard offer
cogeneration projects to 75 MWs and limit the maximum term for capacity
payments to the life of the avoided unit, which is 20 years for this
project. Florida Power filed a petition seeking a FPSC ruling that (i)
Florida Power's standard offer contract is not available if the
cogenerator constructs a facility with greater than 75 MWs and (ii) the
20-year term be affirmed. On April 30, 1996, the FPSC ruled in favor of
Florida Power's petition by affirming that its standard offer contract
is not available to the cogenerator if it constructs a 115 MW facility
and that the FPSC rules limit the term for making capacity payments to
20 years. After this ruling is issued in a written order to be released
on or about May 13, 1996, this cogenerator has 15 days to request FPSC
reconsideration of the decision. Florida Power also has filed a lawsuit
in federal court in connection with this dispute.
Management does not expect that the results of these actions will have
a material impact on earnings.
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'
10
<PAGE>
ability to assume risk, the relative cost and availability of methods
for transferring risk to third parties, and the requirements of
applicable regulatory bodies.
Florida Power self-insures its 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.
Under the provisions of the Price Anderson Act, which limits liability
for accidents at nuclear power plants, 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 the Nuclear Electric Insurance, Ltd.
("NEIL"), an industry mutual insurer, which provides business
interruption and extra expense 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 insurance and
decontamination and 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 $8.1 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 $15.9 million.
Florida Power has never been assessed under these nuclear indemnities
or insurance policies.
CONTAMINATED SITE CLEANUP - Florida Progress is subject to regulation
with respect to the environmental effects of its operations. Florida
Progress' disposal of hazardous waste through third-party vendors can
result in costs to clean up facilities found to be contaminated.
Federal and state statutes authorize governmental agencies to compel
responsible parties to pay for cleanup of certain abandoned or
uncontrolled hazardous waste sites.
Florida Power and former subsidiaries of Florida Progress, whose
properties were sold in prior years, have been identified by the
United States Environmental Protection Agency ("EPA") as potentially
responsible parties at certain sites. In addition to these designated
sites, there are other sites where Florida Progress affiliates may be
responsible for additional environmental cleanup, including a coal
gasification plant site that Florida Power previously owned and
operated. There are five parties which have been identified as
potentially responsible for this gas site, including Florida Power.
Liability for the cleanup costs of these sites is joint and several.
Florida Progress believes that its subsidiaries will not be required to
pay a disproportionate share of the costs for cleanup of these sites.
Florida Progress' best estimates indicate that its proportionate share
of liability for cleaning up all sites ranges from $2.5 million to $4.5
million. Florida Progress has reserved $2.8 million against these
potential costs. Further study of the coal gasification plant site by
the EPA is expected to be completed in the third quarter 1996 and could
cause Florida Power to increase its reserve for its portion of
liability for cleanup costs. Although estimates of any additional costs
11
<PAGE>
are not available, the results of the tests are not expected to have a
material effect on Florida Power's financial position, operations or
liquidity.
4) In the opinion of management, the accompanying financial statements
include all adjustments deemed necessary to summarize fairly and reflect
the financial position and results of operations of Florida Progress and
Florida Power for the interim periods presented. Results for the first
quarter are not necessarily indicative of results for the full year. It is
suggested that these financial statements be read in conjunction with the
financial statements and notes thereto in the combined Form 10-K of
Florida Progress and Florida Power for the year ended December 31, 1995
(the "1995 Form 10-K").
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
OPERATING RESULTS
Florida Progress' earnings per share for the three-month period ended March 31,
1996, were $.50 compared to $.49 for the same period in 1995. This increase
resulted from higher earnings at Florida Power, Florida Progress' largest
operating unit, which reported earnings of $.44 per share compared to $.43 per
share for the same period last year. The increase at Florida Power was due
primarily to higher average customer usage and continuing cost-control efforts.
Diversified earnings per share of $.06 for the quarter remained constant
compared to last year.
Florida Power - Operating Revenues
Florida Power's operating revenues were $31.4 million, or 6.1 percent, higher
for the three month period ended March 31, 1996, compared to the same period in
1995. Increased kilowatt hour ("KWH") sales due to colder than normal weather
and customer growth were the primary factors contributing to the increase.
However, residential revenue decoupling adjustments partially offset increased
KWH sales, by reducing billed revenues $14.3 million for the first quarter of
1996. Revenue decoupling did not have a material impact on Florida Power's
revenues or net income for the three months ended March 31, 1995. (See Note 1
to the Financial Statements.)
Florida Power - Operating Expenses
Fuel and purchased power costs, including deferred fuel expense, were $19.6
million, or 10.4 percent, higher for the quarter ended March 31, 1996 compared
to the same period in 1995 due primarily to higher system requirements,
increased capacity payments and nuclear outages. Florida Power recovers
substantially all of its fuel and purchased power costs through a FPSC ordered
fuel adjustment clause, thereby eliminating any significant impact on net
income.
Other operation and maintenance expenses for the three months ended March 31,
1996, were $1.4 million lower than the same period last year due primarily to
savings from cost-control initiatives partially offset by increased costs
associated with nuclear outages.
Florida Power - Other Operating Results
On April 16, 1996, Florida Power and Ridge Generating Station, L.P. ("Ridge")
entered into a settlement agreement resolving a dispute over the energy payments
to be made under a 1991 agreement for the sale to Florida Power of approximately
40 MWs from Ridge's cogeneration facility. The settlement agreement provides for
the resolution of the pricing dispute, including a reduction in the fuel cost
component of the firm energy price rate and its associated escalation rate. The
settlement agreement also provides for Ridge to curtail the output of its
facility during certain off-peak periods. Florida Power expects a net savings of
approximately $13 million over the life of the contract. The parties to the
12
<PAGE>
agreement intend to submit the settlement agreement to the FPSC for approval in
May 1996. (For additional information on cogeneration purchased power contracts,
see Note 3 to the Financial Statements.)
As previously reported in the 1995 Form 10-K, Note 10 to the Financial
Statements, the Federal Energy Regulatory Commission ("FERC") proposed in March
1995 new rules that would require the electric industry to provide open access
to the nation's interstate transmission network. On April 24, 1996, the FERC
issued its final rule on open access transmission. Within 60 days of that date,
each electric utility under FERC jurisdiction, including Florida Power, will be
required to file a nondiscriminatory open access transmission tariff that
complies with the new rule. The open access required under the rule will make
transmission systems available to all wholesale buyers and sellers of electric
energy. Florida Power expects that the new rule will not have a material effect
on Florida Power's revenues or earnings.
As previously reported in the 1995 Form 10-K, Part I, Item 7, under "Operating
Results - Florida Power - Nuclear Operations", Florida Power has cooperated with
the Nuclear Regulatory Commission ("NRC") in its investigation of unauthorized
tests performed by control room operators at the Crystal River Nuclear Plant.
The tests were the subject of pre-decisional enforcement conferences held in
March 1996 with the NRC, Florida Power and the operators. The NRC is expected
to rule on this matter in the second quarter 1996.
As previously reported in the 1995 Form 10-K, Part I, Item 7, under "Operating
Results - Florida Power - Utility Revenues and Sales", Florida Power is in its
second year of conducting a three-year test of residential revenue decoupling.
On February 21, 1996, the FPSC approved Florida Power's request to defer
disposition of a $17.7 million liability from the over-recovery of revenues
under the test during 1995, pending a presentation of Florida Power's proposal
to exchange future cogenerator capacity payments for up-front payments. This
presentation is due to the FPSC no later than October 1, 1996. (For additional
information see Note 1 and the text under the heading "Purchased Power" in
Note 3 to the Financial Statements.)
Florida Progress Diversified Operations
Florida Progress' diversified revenues were $4.9 million higher for the three
months ended March 31, 1996 compared to the same period last year. However, net
income and earnings per share remained fairly constant. Improved marine
operations and rail services operations from Electric Fuels Corporation, Florida
Progress' coal mining and transportation subsidiary, were offset by an increase
in death benefits at Mid-Continent Life Insurance Company, Florida Progress'
insurance subsidiary.
LIQUIDITY AND CAPITAL RESOURCES
Florida Power budgeted $265.3 million, excluding allowance for funds used during
construction, for its 1996 construction program, of which $58.6 million was
spent during the first three months of the year. These expenditures were
financed primarily with funds from operations.
In March 1996, Florida Progress contributed $12.5 million to Florida Power from
the sale of common stock through Florida Progress' dividend reinvestment and
stock purchase plan. These funds were used to repay commercial paper and for
general corporate purposes.
Florida Power has a public medium-term note program providing for the issuance
of notes with maturities ranging from nine months to 30 years. In April 1996,
Florida Power increased the amount available for future issuance under the
program to $300 million.
In April 1996, Florida Power announced that on June 10, 1996, it will redeem all
500,000 shares of its 7.76% series cumulative preferred stock and all 300,000
shares of its 7.40% series cumulative preferred stock. The redemption price on
the 7.76% series will be $102.21 a share, plus an amount equal to the accrued
and unpaid dividends to June 10, 1996, of $.54 a share. The redemption price on
13
<PAGE>
the 7.40% series will be $102.48 a share, plus an amount equal to the accrued
and unpaid dividends to June 10, 1996, of $.51 a share. Florida Power
anticipates redeeming this preferred stock with funds from operations.
Florida Power's ratio of earnings to fixed charges was 4.50 for the twelve
months ended March 31, 1996. (See Exhibit 12 filed herewith.)
Progress Capital Holdings, Inc. ("Progress Capital"), a wholly owned subsidiary
of Florida Progress, has a private medium-term note program providing for the
issuance of notes with maturities ranging from nine months to 30 years. In April
1996, Progress Capital increased the amount available for future issuance under
the program to $300 million.
"SAFE HARBOR" STATEMENT UNDER
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Form 10-Q contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, including (without limitation)
statements as to expectations, beliefs, plans, objectives and future financial
performance, and assumptions underlying or concerning the foregoing, relating to
the following identified matters: (a) estimated amounts of capital and operating
expenditures and fees relating to compliance with environmental/safety
requirements and remediation of contaminated sites (Part II, Item 1. Legal
Proceedings, including portions of the Notes to Financial Statements referred to
therein), (b) expectations as to the timing, outcome or effect of legal or
regulatory proceedings (Part II, Item 1. Legal Proceedings and Part I, Item 2.
MD&A - Operating Results - Florida Power - Other Operating Results), (c)
expectations or beliefs as to (1) the Florida Power and Ridge cogeneration
settlement agreement, and (2) the effects on Florida Power of the FERC's new
rule on open transmission access (Part I, Item 2. MD&A - Operating Results -
Florida Power - Other Operating Results, including portions of the Notes to
Financial Statements referred to therein), and (d) the expectation or belief as
to the source of funds to be used for the June 1996 preferred stock redemption
(Part I, Item 2. MD&A - Liquidity and Capital Resources). These statements, and
any other statements contained in this Form 10-Q that are not historical facts,
are forward-looking and, accordingly, involve risks and uncertainties which
could cause actual results or outcomes to differ materially from those expressed
in the forward-looking statements.
In addition to those matters discussed elsewhere in this Form 10-Q, the
following are some of the important factors that could cause actual results or
outcomes to differ materially from those discussed in the forward-looking
statements (the categories of forward-looking statements described in the
preceding paragraph that could be affected by these factors are identified in
parentheses by their letter heading): (1) governmental actions and initiatives,
including those affecting industry and rate structure, and competition in the
utility industry (e.g., retail wheeling and transmission access), and
environmental/safety requirements (a, b, c, d), (2) pricing and other actions by
competitors (b, c, d), (3) unanticipated delays or actions by courts,
administrative agencies or regulatory authorities (a, b, c), (4) significant
changes from expectations in actual capital expenditures and operating expenses
and unanticipated project delays (a, b, c, d), (5) changes in economic
conditions (including population growth rates), demographic patterns and weather
conditions in Florida Power's service territory or the United States generally
(c, d), (6) changes in Florida Power's environmental compliance strategies or
fuel strategies (a, b, c, d), (7) changes in the availability of fuel (a, b, d),
and (8) significant changes in tax rates or policies or in rates of inflation
(a, d).
14
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
1) NCP Lake Power, Inc. v. Florida Power Corporation, Florida Circuit Court,
Fifth Judicial Circuit for Lake County, Case No. 94-2354-CA-01.
See prior discussion of this matter in the 1995 Form 10-K, Item 3,
paragraph 5. On March 27, 1996, the court issued an order staying the
action and deferring discovery, which granted a joint motion filed by
Florida Power and NCP Lake Power. The order stays the litigation while
the final terms of a settlement agreement are being negotiated. The
stay can be terminated by either party upon 30-days notice.
2) Praxair, Inc. v. Florida Power & Light Company and Florida Power
Corporation, U.S. District Court for the Middle District of Florida, Tampa
Division, Civil Action No. 88-1672-CIV-T-13C.
See prior discussion of this matter in the 1995 Form 10-K, Item 3,
paragraph 7. In March 1996, Praxair, Inc. filed a petition with the
United States Supreme Court seeking review of the decision of the court
of appeals granting the motion for summary judgement filed by Florida
Power and Florida Power & Light ("FP&L"). Florida Power and FP&L filed
pleadings in opposition to this petition in April 1996. On May 13,
1996, the Supreme Court denied Praxair's petition to review the
decision of the court of appeals. This case is now considered
concluded for reporting purposes.
3) Sanford Coal Gasification Plant Site, Sanford, Florida
See prior discussion of this matter in the 1995 Form 10-K, Item 3,
paragraph 10. In the third quarter 1996, the EPA is expected to
complete a supplemental study of nearby Lake Monroe, to determine if
contamination exists in the water or the soil. If this contamination is
confirmed, the site could score well over the 28.5 threshold referred
to in the 1995 Form 10-K, thereby causing the EPA to add this site to
the EPA's National Priorities List of sites that require cleanup. The
EPA is expected to coordinate with the Florida Department of
Environmental Protection in scoring the site. (For additional
information on environmental matters, see Note 3 to the Financial
Statements.)
4) Peak Oil Company, Missouri Electric Works, 62nd Street, AKO Bayside, Bluff
Electric and Sydney Mine Superfund Sites.
See prior discussion of this matter in the 1995 Form 10-K, Item 3,
paragraph 11. Florida Power and the plaintiffs to the Sydney Mine site
have reached a settlement in principle. Florida Power's settlement
amount is expected to be approximately $56,000. (For additional
information on environmental matters, see Note 3 to the Financial
Statements.)
5) In re: Standard Offer Contract for the purchase of firm capacity and
energy from a qualifying facility between Panda-Kathleen, L.P. and Florida
Power Corporation, FPSC Docket No. 950110-EI.
See prior discussion of this matter in the 1995 Form 10-K, Item 3,
paragraph 2. On April 30, 1996, the FPSC ruled in favor of Florida
Power's petition by affirming that its standard offer contract is not
available to Panda-Kathleen, L.P. ("Panda") if it constructs a 115 MW
facility with a 30-year term for making capacity payments. The FPSC's
rules limit standard offer cogeneration projects to 75 MWs and limit
the term for making capacity payments to the life of the avoided
unit, which in this case is 20 years rather than 30 years. After this
ruling is issued in a written order to be released on or about May 13,
1996, Panda has 15 days to request FPSC reconsideration of the
decision. (For additional information on purchased power, see Note 3 to
the Financial Statements.)
15
<PAGE>
Item 4. Submission of Matters to a Vote of Security-Holders.
The Annual Meeting of Shareholders of Florida Progress was held on April 18,
1996. There were 96,481,740 shares of common stock entitled to vote. The
following matters were voted upon at the meeting:
1) Election of Directors
Class III - Terms Expiring in 1999
Votes Votes
For Withheld
Jack B. Critchfield 84,171,911 2,691,151
Clarence V. McKee 84,506,856 2,356,206
Richard A. Nunis 84,769,683 2,093,379
Jean Giles Wittner 84,781,461 2,081,601
2) Florida Progress proposal to approve a Stock Plan for Non-Employee
Directors of Florida Progress Corporation and Subsidiaries that would
pay 75% of each non-employee director's retainer fee in common stock.
Voting results:
For the proposal: 81,424,004
Against the proposal: 4,179,956
Abstentions: 1,259,102
Broker Non-votes: 0
3) Shareholder proposal to adopt a policy that requires annual salary
increases for executive officers that are greater than 4% of their
prior year's salary to be approved by a vote of the shareholders.
For the proposal: 14,804,427
Against the proposal: 56,915,606
Abstentions: 2,194,345
Broker Non-votes: 12,948,684
16
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
Florida Florida
Number Exhibit Progress Power
------ ------- -------- -------
10 Agreement dated March 21, 1996 between X X
Florida Progress and Allen J. Keesler, Jr.*
12 Statement Regarding Computation of Ratio X
of Earnings to Fixed Charges for Florida
Power.
27.(a) Florida Progress Financial Data Schedule. X
27.(b) Florida Power Financial Data Schedule. X
X = Exhibit is filed for that respective company.
* = Exhibit constitutes an executive compensation plan or arrangement.
(b) Reports on Form 8-K:
During the first quarter 1996, Florida Progress and Florida
Power filed the following reports on Form 8-K:
Form 8-K dated January 22, 1996, reporting under Item
5 "Other Events" a press release and related Investor
Information Report reporting Florida Progress' and
Florida Power's 1995 earnings, and a press release
dated January 17, 1996, reporting the retirement of
Florida Power's President.
Form 8-K dated February 8, 1996, reporting under Item
5 "Other Events" a news release dated February 8,
1996, reporting the declaration of a cash dividend on
Florida Progress common stock.
In addition, Florida Progress and Florida Power filed the
following report on Form 8-K subsequent to the first quarter
1996:
Form 8-K dated April 22, 1996, reporting under Item 5
"Other Events" a press release and related Investor
Information Report reporting Florida Progress' and
Florida Power's first quarter 1996 earnings.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FLORIDA PROGRESS CORPORATION
FLORIDA POWER CORPORATION
Date: May 14, 1996 /s/ John Scardino, Jr.
-----------------------------
John Scardino, Jr.
Vice President and Controller
Date: May 14, 1996 /s/ James V. Smallwood
-----------------------------
James V. Smallwood
Vice President and Treasurer
18
<PAGE>
Exhibit Index
Florida Florida
Number Exhibit Progress Power
------ ------- -------- -------
10 Agreement dated March 21, 1996 between X X
Florida Progress and Allen J. Keesler, Jr.*
12 Statement Regarding Computation of Ratio X
of Earnings to Fixed Charges for Florida
Power.
27.(a) Florida Progress Financial Data Schedule. X
27.(b) Florida Power Financial Data Schedule. X
X = Exhibit is filed for that respective company.
* = Exhibit constitutes an executive compensation plan or arrangement.
19
[LOGO] Florida Progress Corporation
One Progress Plaza 33701
P.O. Box 33042
St. Petersburg, FL 33733
813/824-6400
March 21, 1996
Allen J. Keesler, Jr.
President
Florida Power Corporation
3201 34th Street, South
St. Petersburg, FL 33733
Dear Allen:
In view of your impending retirement on April 1, 1996, this letter will serve as
a means for Florida Progress Corporation ("Florida Progress") and Florida Power
Corporation ("Florida Power") to acknowledge the benefits that they are willing
to provide in connection with your retirement as an officer of Florida Power.
Florida Progress and Florida Power agree to the following:
1. Your current salary shall continue through April 1, 1996, and
you shall be eligible to earn a pro-rata Management Incentive
Compensation Plan award for 1996. In addition, you will earn
compensation for any unused vacation that was earned in 1995. The
restricted shares you have earned under the 1992-1994 and the
1993-1995 performance cycles of the Long Term Incentive Plan shall
vest as of January 1, 1997, and all restrictions under that plan
shall lapse as of that date. You also shall be eligible to earn a
pro rata percentage of your Long Term Incentive Plan award for
Cycles IV and V.
2. You have been designated a participant under Article 5 of the
Florida Progress Corporation Supplemental Executive Retirement
Plan, as amended and restated as of October 1, 1994 ("SERP"), by
the Compensation Committee of the Board of Directors of Florida
Progress. Upon your retirement from Florida Power, the amount of
your total yearly retirement benefit, payable monthly pursuant to
Section 5.1(b)(1) of the SERP, would be $375,761.53 until you
reach age 62, assuming that you select the 50% contingent
annuitant option as a survivor benefit under the Employees
Retirement Plan of Florida Progress Corporation ("Retirement
Plan") and the Florida Progress Corporation Retirement Benefit
Nondiscrimination Plan for Excess Benefits ("Nondiscrimination
Plan"). You may select from several other survivor benefit payment
options under those two
<PAGE>
A. J. Keesler, Jr.
Page 2
plans; however, selecting another payment option would change
the amount of your total payments under those three plans, due to
the adjustment provided for in Section 6.1(c) of the SERP. For
example, your selection of the 100% contingent annuitant option
would result in a total annual benefit to you of $368,752.75 until
age 62. After age 62, your annual benefit, in any event, will be
reduced by $11,856, which is the amount of your annual social
security retirement benefit. Upon your death, your wife, Sarah,
shall be entitled to receive a surviving spouse benefit pursuant
to Section 5.2 of the SERP, provided she is your legal spouse on
your date of death. The foregoing amounts do not reflect any
required withholdings for federal tax purposes.
3. The amount by which the total monthly amounts payable pursuant
to paragraph 2 above exceeds the sum of the monthly amounts
payable pursuant to the Retirement Plan and the Nondiscrimination
Plan are payable solely from and pursuant to Article 5 of the
SERP.
4. You are entitled to receive medical benefits under the terms
and conditions of the Florida Power Comprehensive Medical Plan.
5. You are entitled to receive life insurance coverage equal to
your base salary until you reach age 70, at which point your life
insurance will decrease to one-half of that base salary
calculation.
6. You have previously been designated a participant in the SERP
under Article 4. As a vested participant, you and your wife,
Sarah, are entitled to certain benefits. However, under the SERP,
you may not receive the special early retirement benefits under
Article 5 if you are eligible for benefits under Article 4.
Consequently, you and Sarah hereby waive and relinquish all
benefits you are entitled to under Article 4 of the SERP and
withdraw as a participant thereunder.
7. Deferrals of compensation under the Executive Deferred
Compensation Plan will be paid out in the month that you designate
in 1996, or automatically in the first quarter of 1997.
In consideration of the preceding:
A. You agree not to sue or to file any action or charge, claim, or
lawsuit, and to fully release and discharge Florida Power and/or
Florida Progress Corporation ("Florida Progress") and their employees,
officers, and directors, from any and all claims, wages, causes of
action, expenses, attorneys' fees, damages, judgments, and liabilities
under applicable federal, state or local law, regulation, or ordinance
including, but not limited to, any claim for age or other type of
discrimination under the Age Discrimination in Employment Act, The
Older Workers' Benefits Protection Act, Title VII of the Civil Rights
Act of 1964, the Americans with Disabilities Act, or any other
federal, state, or
<PAGE>
A. J. Keesler, Jr.
Page 3
local law or ordinance. This waiver and release does not apply to
any claims or rights that may arise under the Age Discrimination in
Employment Act after the date that you sign this agreement. Florida
Progress expressly denies any violation of any of its policies,
procedures, or local, state or federal laws, regulations, or
ordinances.
B. You agree that you have been privy to certain confidential or
proprietary information concerning Florida Progress and its
affiliates, including, but not limited to, confidential or proprietary
information relating to strategic business plans, ongoing business
operations and practices, financial data (both historical and
projected), business relationships (including those with customers,
vendors and co-ventures or partners) and trade secrets. You agree that
you will not (i) divulge such information to any person or
organization, other than to further the business interests of Florida
Progress and its affiliates, (ii) use such information in a manner
that would be detrimental to Florida Progress or any of its
affiliates, or (iii) purchase or sell securities based upon such
information, unless in all cases such information becomes public
otherwise than as a result of a breach of confidence. Also, we expect
that you will refrain from accusing Florida Progress or its affiliates
of any wrongdoing based upon events that have occurred to date;
provided, however, that the foregoing undertaking on your part will
not preclude you from providing truthful testimony to or before a
court or regulatory body in the event you are required to do so and
provided, however, you may disclose information if the disclosure is
protected by the Florida Whistleblowers Act of 1986, or any similar
applicable federal or state statute.
C. You also acknowledge that you are aware of the forfeiture
provisions contained in Sections 5.05 of the Nondiscrimination Plan
and Section 9.4 of the SERP, which are attached hereto, and that they
impose obligations on you which if breached could result in the
forfeiture of benefits payable in accordance with this Agreement and
those plans. Among other things, you are obligated to not render any
services of any advisory nature or become employed by or participate
or engage in any business in competition with Florida Progress or any
of its subsidiaries, without the prior written consent of Florida
Progress. For purposes of this sub-paragraph C., any entity
(including, but not limited to, any investor-owned company, electric
co-operative, independent power producer, municipal or public agency
or authority) involved, directly or indirectly, in the ownership or
operation of facilities used for the generation, transmission,
distribution, or brokering of electricity shall be considered to be in
competition with Florida Power.
D. You also agree that the entitlement to be paid benefits under this
agreement and pursuant to the SERP and the Nondiscrimination Plan (but
not the benefits payable pursuant to the Retirement Plan), whether to
you or your surviving spouse, shall be discontinued and forfeited, and
Florida Progress and Florida Power shall have no further obligation
under the SERP to you or your surviving spouse if (1) you undertake or
engage in any act or conduct (whether alone, or with or on behalf of
any person or firm) that has or is reasonably likely to have an
adverse impact on the financial condition, operations or business
prospects of Florida Progress or any of its affiliates
<PAGE>
A. J. Keesler, Jr.
Page 4
and (2) within thirty days after Florida Progress requests that you
cease such act or conduct, you fail to cease such act or conduct.
The obligation of Florida Power and Florida Progress to provide the
above-described benefits is conditioned upon your acceptance of, and agreement
to comply with, the obligations contained or referred to in the preceding four
paragraphs. Should you accept those conditions and obligations and subsequently
breach their terms, Florida Power and Florida Progress shall have no further
obligations under this Agreement and may avail themselves of any judicial
relief, including, without limitation, the recoupment of all monies paid and the
value of all benefits conveyed under this Agreement, except for any monies paid
and benefits conveyed from the Retirement Plan.
Should Florida Progress or Florida Power waive performance of any of your
obligations, that will not constitute an ongoing waiver or a waiver of such
obligation in the future.
Should any party to this Agreement engage the services of an attorney in order
to enforce its rights under this Agreement in the event of a breach thereof, the
prevailing party in any action shall be entitled to recover all reasonable costs
and expenses (including reasonable attorneys' fees before and at trial and in
appellate proceedings), together with prejudgment interest on any amounts found
due from the date such amounts would have been payable at an annual interest
rate of six percent (6%).
It is recommended that you review this Agreement with an attorney prior to
signing and accepting its terms.
You will have forty-five (45) days from the date of your receipt of this
Agreement to review it prior to signing. In addition, you will have the right to
revoke this Agreement within seven (7) days of the date on which the Agreement
is signed by the parties to the Agreement. In the event that you revoke this
Agreement, the benefits described within this Agreement will not be paid to you.
You understand and agree that the benefits under this Agreement will not be paid
until the expiration of this seven (7) day period.
This Agreement may not be altered, amended, modified or terminated except by an
instrument in writing executed by an authorized representative of Florida
Progress, Florida Power and you. You agree that, except for your rights under
the plans listed in Schedule A hereto, this is the entire Agreement between you,
Florida Progress and Florida Power, written or oral. The rights and obligations
of each party under this Agreement shall inure to the benefit of and shall be
binding upon the successors and assigns of that party.
<PAGE>
A. J. Keesler, Jr.
Page 5
The undersigned parties have had an opportunity to read and review this document
and they freely, voluntarily and without coercion agree to the terms set forth
within this Agreement and waive any rights in contradiction thereto.
This document was received by you on March 22, 1996.
FLORIDA PROGRESS CORPORATION
By: /s/ Richard Korpan
------------------------------
Richard Korpan
President and Chief Operating Officer
Date: 3/21/96
FLORIDA POWER CORPORATION
AGREED:
/s/ Allen J. Keesler, Jr. By: /s/ Joseph H. Richardson
- --------------------------- ------------------------------
Allen J. Keesler, Jr. Joseph H. Richardson
Senior Vice President
/s/ Sarah Keesler Date: 3/22/96
- ---------------------------
Sarah Keesler
Date: 3/28/96
Attachments
<PAGE>
Schedule A to Keesler Letter
1. Employees' Retirement Plan of Florida Progress Corporation.
2. Florida Progress Corporation Retirement Benefit Nondiscrimination Plan
for Excess Benefits.
3. Florida Progress Corporation Supplemental Executive Retirement Plan,
Benefits under Article 5.
4. Savings Plan for Employees of Florida Progress Corporation.
5. Florida Progress Corporation Long-Term Incentive Plan.
6. Florida Power Comprehensive Medical Plan.
7. Florida Progress Executive Deferred Compensation Plan.
<PAGE>
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 statue; 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.
<PAGE>
RETIREMENT BENEFIT NONDISCRIMINATION PLAN
ARTICLE V - GENERAL PROVISIONS
5.01 If and whenever the Board of Directors authorizes
post-retirement increases in benefits in respect of Employees
retired under the Retirement Plan, the Company shall, unless
otherwise directed by the said Board, contemporaneously grant
increases in benefits under this Plan to parallel the action
taken by said Board with respect to Retirement Plan benefits.
5.02 The Company shall have the right to deduct from each payment
to be made under this Plan any required withholding taxes.
5.03 Except as specifically provided herein, benefits payable
hereunder shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or
charge.
5.04 In the event that the Company shall find that an Eligible
Employee or other person entitled to a benefit is unable to
care for his affairs because of illness or accident, is a
minor or has died, the Company may direct that any benefit
payment due him, unless claim shall be have been made
therefor by a duly appointed legal representative, be paid to
his spouse, a child including an adopted child of the
Eligible Employee, a parent or other blood relative, or to a
person with whom he resides, and any such payment so made
shall be a complete discharge of the liabilities of the Plan
therefor.
5.05 In the event that an Eligible Employee shall commit any
wrongful act, either directly or indirectly, against, and to
the detriment of, the Company, and as a result thereof his
employment is terminated, the Company shall have no further
obligation to make payments either to the Eligible Employee or
his beneficiary under the Plan. In addition, an Eligible
Employee shall forfeit any benefit payments thereafter due him
under the Plan if he, without the prior written consent of the
company, at any time enters into or in any manner takes part
either as an employee, agent, officer, director, owner, or
otherwise, in any business which is in competition with the
Company or any of its subsidiaries. The Company shall have the
absolute right to determine in its sole discretion:
(i) whether or not an Eligible
Employee's employment was
terminated as a result of
a wrongful act and
(ii) whether or not an Eligible
Employee has in any manner
entered into competitive
activity so as to cause
termination of his benefits
hereunder.
Exhibit 12
FLORIDA POWER CORPORATION
Statement of Computation of Ratios
(Dollars In Millions)
Ratio of Earnings to Fixed Charges:
Twelve-Months Year Ended
Ended March 31, December 31,
1996 1995 1995 1994
------ ------ ------ ------
Net Income $228.9 $209.8 $227.0 $200.8
Add:
Operating Income Taxes 130.8 120.5 129.5 114.7
Other Income Taxes 0.2 (0.9) 0.1 (0.8)
------ ------ ------ ------
Income Before Taxes 359.9 329.4 356.6 314.7
Total Interest Charges 102.9 107.7 104.5 108.4
------ ------ ------ ------
Total Earnings (A) $462.8 $437.1 $461.1 $423.1
------ ------ ------ ------
Fixed Charges (B) $102.9 $107.7 $104.5 $108.4
------ ------ ------ ------
Ratio of Earnings to
Fixed Charges (A/B) 4.50 4.06 4.41 3.90
===== ===== ===== =====
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000,000
<CIK> 0000357261
<NAME> FLORIDA PROGRESS CORPORATION
<S> <C>
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<PERIOD-TYPE> 3-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,598
<OTHER-PROPERTY-AND-INVEST> 1,231
<TOTAL-CURRENT-ASSETS> 686
<TOTAL-DEFERRED-CHARGES> 109
<OTHER-ASSETS> 175
<TOTAL-ASSETS> 5,799
<COMMON> 1,198
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 887
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,085
25
114
<LONG-TERM-DEBT-NET> 1,621
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 196
0
<CAPITAL-LEASE-OBLIGATIONS> 0
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<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,758
<TOT-CAPITALIZATION-AND-LIAB> 5,799
<GROSS-OPERATING-REVENUE> 740
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<OTHER-OPERATING-EXPENSES> 628
<TOTAL-OPERATING-EXPENSES> 655
<OPERATING-INCOME-LOSS> 85
<OTHER-INCOME-NET> (2)
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<TABLE> <S> <C>
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<NAME> FLORIDA POWER CORPORATION
<S> <C>
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25
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