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, 1995
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 each 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
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 8, 1996 was $3,378,341,372
(determined by subtracting the number of shares held by directors and
executive officers of Florida Progress Corporation from the total number of
shares outstanding, then multiplying the difference times the closing sale price
from the New York Stock Exchange Composite Transactions).
The aggregate market value of the voting stock held by non-affiliates of Florida
Power Corporation as of February 29, 1996 was $-0-. As of February 29,
1996, 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 8, 1996 was 96,481,740.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for Florida Progress Corporation
dated February 29, 1996, relating to the 1996 Annual Meeting of Shareholders,
are incorporated by reference in Part III hereof.
----------------------------
This combined Form 10-K represents separate filings by Florida Progress
Corporation and Florida Power Corporation. Florida Power Corporation makes no
representations as to the information relating to Florida Progress Corporation's
diversified operations.
[THIS SPACE INTENTIONALLY BLANK]
<PAGE>
TABLE OF CONTENTS
----------------- -Page-
------
PART I.
Item 1. - Business. . . . . . . . . . . . . . . . . . . . . . . . 1-9
Item 2. - Properties. . . . . . . . . . . . . . . . . . . . . . . 9-13
Item 3. - Legal Proceedings . . . . . . . . . . . . . . . . . . . 13-18
Item 4. - Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . . 19
PART II.
Item 5. - Market for the Registrants' Common Equity
and Related Stockholder Matters . . . . . . . . . . . 19-20
Item 6. - Selected Financial Data . . . . . . . . . . . . . . . . 20-21
Item 7. - Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . 21-31
Item 8. - Financial Statements and Supplementary Data . . . . . . 32
Combined Report of Independent Certified Public
Accountants . . . . . . . . . . . . . . . . . . . . 32
Consolidated Financial Statements of Florida Progress 33-37
Financial Statements of Florida Power . . . . . . . . 38-42
Combined Notes to the Financial Statements. . . . . . 43-59
Quarterly Financial Data (unaudited). . . . . . . . . 60
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . 61
PART III.
Item 10. Directors and Executive Officers of the Registrants . . 61-62
Item 11. Executive Compensation. . . . . . . . . . . . . . . . . 63-67
Item 12. Security Ownership of Certain Beneficial Owners and
Management. . . . . . . . . . . . . . . . . . . . . . 67
Item 13. Certain Relationships and Related Transactions. . . . . 68
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K. . . . . . . . . . . . . . . . . . . . . . 68-71
Signatures - Florida Progress Corporation . . . . . . . . . . . . 72-73
Signatures - Florida Power Corporation. . . . . . . . . . . . . . 74-75
Financial Statement Schedules . . . . . . . . . . . . . . . . . . 76-77
<PAGE>
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 units
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 . . . . . . . .Energy Policy Act of 1992
EPA . . . . . . . . . . . . . . .United States Environmental Protection Agency
FAS 71. . . . . . . . . . . . . .Financial Accounting Standard No. 71
FAS 115 . . . . . . . . . . . . .Financial Accounting Standard No. 115
FASB. . . . . . . . . . . . . . .Financial Accounting Standards Board
FDEP. . . . . . . . . . . . . . .Florida Department of Environmental Protection
FERC. . . . . . . . . . . . . . .Federal Energy Regulatory Commission
FGT . . . . . . . . . . . . . . .Florida Gas Transmission Company
Financial Statements. . . . . . .Florida Progress' Consolidated Financial
Statements and Florida Power's Financial
Statements, for the year ended December
31, 1995 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
FPUC. . . . . . . . . . . . . . .Florida Public Utilities Company
Georgia Power . . . . . . . . . .Georgia Power Company
HLW . . . . . . . . . . . . . . .high level radioactive waste
KV. . . . . . . . . . . . . . . .kilovolts
KVA . . . . . . . . . . . . . . .kilovolt amperes
KWH . . . . . . . . . . . . . . .kilowatt hours
LTIP. . . . . . . . . . . . . . .Florida Progress Long-Term Incentive Plan
LTK line. . . . . . . . . . . . .Lake Tarpon to Kathleen Transmission Line
Mid-Continent . . . . . . . . . .Mid-Continent Life Insurance Company
MW. . . . . . . . . . . . . . . .megawatts
NEIL. . . . . . . . . . . . . . .Nuclear Electric Insurance, Ltd.
NRC . . . . . . . . . . . . . . .United States Nuclear Regulatory Commission
NWPA. . . . . . . . . . . . . . .Nuclear Waste Policy Act
PCBs. . . . . . . . . . . . . . .polychlorinated biphenyls
Praxair . . . . . . . . . . . . .Praxair, Inc.
Progress Capital. . . . . . . . .Progress Capital Holdings, Inc.
Progress Credit . . . . . . . . .Progress Credit Corporation
Proxy Statement . . . . . . . . .The definitive proxy statement dated February
29, 1996, relating to Florida Progress' 1996
Annual Meeting of Shareholders
PRP . . . . . . . . . . . . . . .potentially responsible party
SALP. . . . . . . . . . . . . . .Systematic Assessment of Licensee Performance
SEC . . . . . . . . . . . . . . .Securities and Exchange Commission
SERP. . . . . . . . . . . . . . .Florida Progress Supplemental Employee
Retirement Plan
Southern. . . . . . . . . . . . .The Southern Company
SNF . . . . . . . . . . . . . . .spent nuclear fuel
Talquin . . . . . . . . . . . . .Talquin Corporation
Talquin Development . . . . . . .Talquin Development Company
the utility . . . . . . . . . . .Florida Power Corporation
<PAGE>
PART I
ITEM 1. BUSINESS
FLORIDA PROGRESS
Florida Progress Corporation ("Florida Progress", which term includes
consolidated subsidiaries unless otherwise indicated), 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" or "the utility") 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 nonutility businesses. In August 1988, Progress Capital Holdings,
Inc. ("Progress Capital") was incorporated to become the downstream holding
company for Florida Progress' diversified subsidiaries and to consolidate the
financing of nonutility 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, Mid-Continent Life
Insurance Company ("Mid-Continent"), a life insurance company, and Progress
Credit Corporation ("Progress Credit"), which is comprised of commercial
lending, leasing and real estate operations. 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 7 to the
Florida Progress' consolidated financial statements and Florida Power's
financial statements for the year ended December 31, 1995 contained herein under
Item 8 (the "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 Power was incorporated in Florida 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 capacity of 7,347
megawatts ("MW"), and in 1995, accounted for 74% of Florida Progress'
consolidated revenues, 91% of its earnings and 74% of its assets.
Florida Power provided electric service during 1995 to an average of
approximately 1,270,000 customers in west central Florida from its headquarters
in St. Petersburg. The service area covers approximately 20,000 square miles
and includes the densely populated areas around Orlando, as well as the cities
of St. Petersburg and Clearwater. Of Florida Power's 1995 electric revenues
billed, approximately 56% were derived from residential sales, 23% from
commercial sales, 9% from industrial sales, 5% from other retail sales and 7%
from wholesale sales. Important industries in the territory include phosphate
and rock mining and processing, electronics design and manufacturing, and citrus
and other food processing. Other important commercial activities are tourism,
health care, construction and agriculture.
1
<PAGE>
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 1995, Florida Power's energy mix was 39% coal, 12%
oil, 19% nuclear, 26% purchased power and 4% gas, as compared to 45% coal, 16%
oil, 17% nuclear, 21% purchased power and 1% gas for 1994.
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 predicted 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, 1995, were as follows:
1995 1994 1993 1992 1991
Coal $1.93 $1.96 $1.96 $1.97 $2.01
Oil 2.70 2.39 2.49 2.53 2.56
Nuclear .49 .55 .54 .57 .65
Gas 1.98 2.46 4.27 2.54 1.90
Average 1.69 1.75 1.79 1.86 1.89
OIL AND GAS: Oil is purchased under contracts and in the spot market from
several suppliers. The cost of Florida Power's oil is determined by world
market conditions. Management believes that Florida Power has access to an
adequate supply of oil for the reasonably foreseeable future. Florida Power's
natural gas supply is purchased under firm contracts and in the spot market from
numerous suppliers and is delivered under firm, released firm and interruptible
transportation contracts. Existing contracts for oil are sufficient to cover
the requirements when natural gas that is purchased on an interruptible basis is
not available.
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. Florida Power does
not anticipate any problem in obtaining and converting uranium concentrates in
the short term (Stages I & II).
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 the future availability or costs of such
contracts, Florida Power expects that future contract commitments will be
obtained at the appropriate time.
2
<PAGE>
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 8.) At the present time, Florida Power has facilities on site for the
storage of spent nuclear fuel ("SNF") through the year 2010.
COAL: Florida Power anticipates a requirement of approximately 5,400,000 tons
of coal in 1996. 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 70% of the coal
requirements of Florida Power's coal units. These long-term contracts have
price adjustment provisions. Electric Fuels acquires the remainder in the spot
market and under short-term contracts. Electric Fuels does not anticipate any
problem obtaining the remaining Florida Power requirements with short-term
contracts and in the spot market.
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 for about 480 MW of purchased power with
other utilities, including a contract with The Southern Company for
approximately 400 MW. Also, Florida Power has entered into purchased power
contracts with certain cogenerators for 1,164 MW of capacity, of which 1,049 MW
is currently available. The capacity currently available from cogenerators
represents about 12% of Florida Power's total system capacity. (See Item 3,
paragraphs 2 through 6, Item 7 "Operating Results - Florida Power - Fuel and
Purchased Power" and Note 11 to the Financial Statements.)
REGULATORY MATTERS AND FRANCHISES
Florida Power is subject to the jurisdiction of the Florida Public Service
Commission ("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 transmission and sales of
wholesale power, accounting and certain other 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.
The FPSC oversees the retail sales of the state's investor-owned utilities. The
FPSC authorizes retail "base rates" that are designed to provide a utility with
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.
Beginning in 1995, the FPSC ordered Florida Power to conduct a three-year test
of revenue decoupling for its residential customers. (See Note 1 to the
Financial Statements.)
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 12 municipalities. During 1995, about 7% of
Florida Power's electric revenues were from its wholesale business.
For further information with respect to rates and regulations, see Note 10 to
the Financial Statements.
3
<PAGE>
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 impact. 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 nearly all
municipalities in which it distributes electric energy. Approximately 99% of
revenues from customers in incorporated areas are covered by franchises. 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 cover a 30-year period
from the date granted, the maximum allowed by Florida law. The one exception is
a franchise that covers a 10-year period from the date granted. There are a
total of 111 franchises, of which 8 expire before December 31, 2000, 51 expire
between January 1, 2001 and December 31, 2005, 4 expire between January 1, 2006
and December 31, 2010, 20 expire between January 1, 2011 and December 31, 2015,
17 expire between January 1, 2016 and December 31, 2020, and 11 expire between
January 1, 2021 and December 31, 2025. (For further information concerning
these franchise agreements, see Item 7 "Operating Results - Florida Power -
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").
The Clean Air Act Amendments of 1990 ("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 became effective 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
$11 million as required under Title IV. To meet Phase II limitations, Florida
Power expects to spend about $10 million between 1996 and 2000 to implement a
strategy based primarily on burning cleaner fuels and installing burners that
reduce nitrogen oxide emissions on some coal units.
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 1996, these fees are expected
to total approximately $725,000 and are expected to increase to approximately $1
million by 2000.
Florida Power's construction program includes approximately $6.5 million of
planned environmental expenditures for air quality projects for the two-year
period ending December 31, 1997.
WATER: Work began in 1994 on construction of the Polk County generating units
and related facilities. (See Item 2, "Properties - Utility Operations -
4
<PAGE>
Planned Generation".) Approximately $1.1 million was spent in 1995 on
environmental commitments related to site development. For the two-year period
ending December 31, 1997, approximately $5.1 million will be expended on
environmental commitments related to site development. In addition, Florida
Power's construction program includes approximately $4.4 million of additional
environmental expenditures for water quality projects at other Florida Power
facilities for the two-year period ending December 31, 1997.
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) 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 has expanded 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 require the replacement or
upgrading of tanks that are not protected from corrosion, and the installation
of release detection and containment capabilities 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 will be $1 million and
$3 million for operating expense and construction, respectively.
Under a FDEP program, revenues from taxes on imported oil either have been or
are expected to be used to reimburse Florida Power for the majority of past
storage tank contamination cleanup expenditures. In March 1995, the Governor of
the State of Florida enacted a moratorium on this FDEP program. However,
Florida Power expects to receive reimbursement for cleanup activities completed
prior to the moratorium. The expenditures needed to clean up the remaining
storage tank contamination are not expected to be material.
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 continue 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 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 in
February 1995; based on its review of the scientific research, the staff
recommended that no revision of the current EMF standards be made at that 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.
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.
5
<PAGE>
OTHER ENVIRONMENTAL MATTERS: Florida Power has received notices from the EPA
that it is or could be a potentially responsible party ("PRP") 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 to these designated sites, there are
other sites where Florida Progress affiliates may be responsible for additional
environmental cleanup. For further information concerning certain environmental
matters relating to Florida Power, see paragraphs 10 and 11 under Item 3 "Legal
Proceedings" and "Contaminated Site Cleanup" in Note 11 to the Financial
Statements.
COMPETITION
For information with respect to Florida Power and competition, see Item 7
"Operating Results - Florida Power Corporation - Utility Competition".
EMPLOYEES
As of December 31, 1995, Florida Power had 4,658 full-time employees. The
International Brotherhood of Electrical Workers represents approximately 2,080
of these 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. Progress Capital holds the capital stock of, and provides
funding for, Florida Progress' nonutility 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; river and offshore bulk commodities terminaling; bulk
commodities transportation; marine equipment repair; railcar repair and
railcar parts manufacturing and reconditioning; and manufacturing and
reconditioning of rail and trackworks components.
MID-CONTINENT - Acquired in 1986, Mid-Continent is a life insurance
company headquartered in Oklahoma City, Oklahoma. Mid-Continent has been
in business since 1909. Its principal product is a death benefit policy
which is sold through independent agents. During 1996, Mid-Continent will
replace its existing policy with a new product. The new policy is
expected to become Mid-Continent's core product. Other complementary
products will be introduced in the future.
PROGRESS CREDIT - Formed in 1983, Progress Credit is a financial services
and real estate company with lending and leasing activities (primarily
involving commercial aircraft and real estate) and real estate projects.
Progress Credit has continued an orderly withdrawal strategy from lending
and leasing activities, and real estate projects. Although Progress
Credit's current exit strategy has been successful, the continued weakness
in the airline industry and commercial real estate market has slowed
Progress Credit's withdrawal efforts. As a result, Progress Credit is
continuing to examine other business options that could accelerate the
process.
As of December 31, 1995, Progress Capital and its subsidiaries had 2,453 full-
time employees. (For additional information with respect to Progress Capital and
its subsidiaries, see Item 7 "Operating Results - Diversified Operations".)
6
<PAGE>
COMPETITION
Florida Progress' nonutility 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
compete in the eastern United States utility and industrial coal markets; its
marine transportation and barge operations compete in the coal, grain and bulk
products transportation markets on the Ohio and lower Mississippi rivers; its
marine equipment repair business competes in the inland river and gulf coast
repair markets; and its rail operations compete in the railcar repair, parts and
associated services markets in the eastern United States and, to a more limited
extent, in the midwest and west. 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 commissions, and a 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.
For further information with respect to Florida Progress' nonutility
subsidiaries and competition, see Item 7 "Operating Results - Diversified
Operations".
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, the Clean Air
Act and the Surface Mining Control and Reclamation Act of 1977. 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 1997.
For further information concerning certain environmental matters relating to
Florida Progress' diversified operations, see paragraph 12 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 Florida Power, Age 48
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,
7
<PAGE>
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 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 59
Since November 1989, Dr. Beard's principal occupation has been as shown above.
Jack B. Critchfield, Chairman of the Board and Chief Executive Officer of
Florida Progress, and Chairman of the Board of Florida Power, Age 62
Dr. Critchfield has been Chairman of the Board of Directors of Florida Power
since April 1990. Effective April 1, 1996, he will relinquish his title as
Chairman of the Board of Florida Power, but will remain a Director. Since
December 1991, Dr. Critchfield has been Chairman of the Board and Chief
Executive Officer of Florida Progress. From January 1991 to December 1991, Dr.
Critchfield was Chairman, President and Chief Executive Officer of Florida
Progress, 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. Dr. Critchfield is a director of
Barnett Banks, Inc., Jacksonville, Florida.
John A. Hancock, Senior Vice President, Energy Supply of Florida Power, Age 55
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 March 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.
Allen J. Keesler, Jr., Group Vice President, Utility Group of Florida Progress,
and President and Chief Executive Officer of Florida Power, Age 57
Effective April 1, 1996, Mr. Keesler is retiring from the above positions and
resigning from his position as a Director of Florida Progress. Mr. Keesler is
also a director of Florida Power and will remain so after retiring on April 1st.
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 Office of Electric Fuels
Corporation, Age 42
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.
8
<PAGE>
Richard Korpan, President and Chief Operating Officer of Florida Progress,
Age 54
In February 1996, Mr. Korpan was also appointed Chairman of the Board and Chief
Executive Officer of Florida Power effective April 1, 1996. Since December 1,
1991, Mr. Korpan's principal occupation has been President and Chief Operating
Officer of Florida Progress. 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 nonutility operations of San Diego Gas & Electric
Company. Mr. Korpan is a director of SunTrust Bank, Tampa Bay and Acordia of
Central Florida, Inc.
David L. Miller, Senior Vice President, Corporate Services of Florida Power,
Age 51
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.
Joseph H. Richardson, Senior Vice President, Energy Distribution of Florida
Power, Age 46
In February 1996, Mr. Richardson was appointed President and Chief Operating
Officer of Florida Power and Group Vice President, Utility Group of Florida
Progress, effective April 1, 1996. Since April 1995, Mr. Richardson's principal
occupation has been Senior Vice President, Energy Distribution of Florida Power.
From October 1993 to April 1995, he served as Senior Vice President, Legal and
Administrative Services, and General Counsel of Florida Power. From August 1991
through April 1995, Mr. Richardson also held the position of Senior Vice
President of 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.
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.
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 river barges and tug/barge units owned or
operated by Electric Fuels are subject to liens 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
secured lenders.
UTILITY OPERATIONS
GENERATION: As of December 31, 1995, the total net winter generating capacity
of Florida Power's generating facilities was 7,347 MW. This capacity was
generated by 13 steam units with a capacity of 4,661 MW and 44 combustion
turbine peaking units with a capacity of 2,686 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 "Regulatory Matters and Franchises" and "Environmental Matters"
9
<PAGE>
under Item 1 "Business - Utility Operations - Florida Power.") Operation of
these generating units may also be substantially curtailed by unanticipated
equipment failures or interruption of fuel supplies. On February 5, 1996,
Florida Power experienced a new peak of 8,745 MW. Florida Power met this demand
through system generating capacity, purchased power and demand-side management
programs. Florida Power expects to have sufficient system capacity and demand-
side management capabilities to meet anticipated future demand.
Florida Power's existing generating plants (all located in Florida) and their
capacities at December 31, 1995 are as follows:
Winter Net
Maximum
Dependable
Primary Location Steam Peaking Capacity
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 - 158 158
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 2,686 7,347
===== ===== =====
* Represents 90.4% of total plant capacity. The remaining 9.6% of capacity
was owned by other parties.
PLANNED GENERATION AND ENERGY SALES: Florida Power and Georgia Power Company
("Georgia Power") are expected to become co-owners of a 165 MW advanced
combustion turbine to be located at Florida Power's Intercession City site.
The unit is expected go into commercial operation in 1996. Florida Power
will operate and maintain the unit for both owners. Once this unit is in
commercial operation, Georgia Power will have the exclusive right to the
output of this unit during the months of June through September. Florida
Power will have that right for the balance of the year.
In a separate agreement, Florida Power has agreed to sell between 150 and 400 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 benefits both parties. Florida Power's
generation strategy includes continuing efforts to sign similar energy
agreements with other utilities.
In 1992, the FPSC granted Florida Power a certificate of need to build 470 MW of
new generation using combined cycle technology. In September 1994, Florida
Power purchased 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. Site development activities are currently
10
<PAGE>
underway. Commencement of construction of the initial unit is planned for 1996.
The first power block is a 470 MW combined cycle unit that is planned to come on
line in 1998. Florida Power plans to use natural gas to fuel the first phase of
the new energy complex in Polk County. (See Item 7 "Liquidity and Capital
Resources - Florida Power Corporation".)
Florida Power has obtained capacity on the Florida Gas Transmission Company's
("FGT") system for the transportation of natural gas to the planned combined
cycle unit at Polk County. The capacity was acquired through permanently
released capacity from Lake Apopka Natural Gas District, the City of
Tallahassee, Gainesville Regional Utilities, the City of Lakeland and the
Orlando Utilities Commission, as well as reserving some of the capacity of a
planned FGT expansion. The capacity will be released beginning in November 1996
with all capacity available to Florida Power by March 1998. The FGT expansion
capacity will require FERC approval.
Florida Power's expansion plan for generation is summarized in the table below:
<TABLE>
<CAPTION> Maximum Dependable
Winter Capacity
---------------------------------
Location Planned Steam Peaking Total
Plants (County) In Service MW MW MW
- ------------ -------- ---------- ------- -------- ----------
<S> <C> <C> <C> <C> <C>
Intercession City(1) Osceola 1996 - 165 165
Combined Cycle #1 Polk 1998 470 - 470
-----
635
Existing system generation 7,347
-----
Total planned system generation by the year 2000 is 7,982
=====
(1) Florida Power will co-own this unit with Georgia Power.
</TABLE>
Some of the capacity from the Polk County site will be used to meet the
requirements of a wholesale contract signed in 1995 to sell an additional 455
MWs to Seminole Electric Cooperative, beginning in 1999.
In connection with the construction of new power plants in Florida, the FPSC
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 this rule could eventually affect Florida
Power's ability to construct its own power plants, it will not affect the
construction of the gas-fired combined cycle generating unit 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 this unit.
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, 1995, Florida Power
distributed electricity through 344 substations with an installed transformer
capacity of 40,998,200 kilovolt amperes ("KVA"). Of this capacity, 28,166,750
KVA is located in transmission substations and 12,959,525 KVA in distribution
substations. Florida Power has the second largest transmission network in
Florida. Florida Power has 4,557 circuit miles of transmission lines of which
2,610 circuit miles are operated at 500, 230, or 115 kilovolts ("KV") and the
balance at 69 KV. Florida Power has 23,527 circuit miles of distribution lines
which operate at various voltages ranging from 2.4 to 25 KV.
11
<PAGE>
In 1995, the FPSC approved Florida Power's petition for the amortization of the
accumulated costs for the canceled Lake Tarpon-Kathleen Transmission line ("LTK
line"). The costs are being amortized over a four-year period that began on
January 1, 1995. (See Item 7 "Operating Results").
DIVERSIFIED OPERATIONS
ELECTRIC FUELS
Electric Fuels owns and/or operates approximately 1,800 railcars, 30
locomotives, 600 river barges and 21 river towboats that are used for the
transportation and shipping of coal, steel and other bulk products. Through
joint ventures, Electric Fuels has five oceangoing tug/barge units. An Electric
Fuels subsidiary, through another joint venture, owns one third of a large bulk
products terminal, located on the Mississippi River south of New Orleans, which
handles coal and other products. Electric Fuels provides drydocking and repair
services to towboats, offshore supply vessels and barges through operations it
owns near New Orleans, Louisiana.
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 170 million tons and controls, through mineral leases, additional
estimated proven and probable coal reserves of approximately 80 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. Electric
Fuels' total production of coal during 1995 was approximately 3.9 million tons.
In connection with its coal operations, an Electric Fuels subsidiary, through a
joint venture, has a 50% 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
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 13 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.
MID-CONTINENT
Mid-Continent owns an office building in Oklahoma City, Oklahoma.
PROGRESS CREDIT
Progress Credit, through its leasing operations, owns 18 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
12
<PAGE>
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 several office buildings in St. Petersburg and one in
Tallahassee, Florida, 2,000 acres near Lakeland, Florida, a marina in St.
Petersburg, Florida with 235 wet slips and 400 high and dry slips, and 10 acres
of property adjacent to the marina.
ITEM 3. LEGAL PROCEEDINGS
1. In re: Petitions of Florida Power Corporation for approval to increase the
accrual for nuclear decommissioning costs.
In November 1995, the FPSC approved a new site-specific study that
estimated total future decommissioning costs at approximately $2.0
billion, which corresponds to $404.6 million in 1995 dollars. Florida
Power increased its share of the retail portion of annual decommissioning
expense to the FPSC-approved level of $20.5 million, effective January
1995. Expecting similar treatment from the FERC in 1996, Florida Power
also has adjusted the wholesale portion of this expense in a comparable
manner, increasing it to $1.2 million annually.
2. 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.
Panda-Kathleen, L.P. v. Florida Public Service Commission, Supreme Court,
State of Florida, Case No. 87,175.
On January 23, 1995, Florida Power petitioned the FPSC for a declaratory
statement that Florida Power's standard offer contract is not available to
Panda-Kathleen, L.P. ("Panda") if it constructs a 115 MW facility. The
FPSC's rules limit standard offer cogeneration projects to 75 MW. Florida
Power's petition also seeks a declaration that the contract term is 20
years rather than 30 years. Panda intervened in the proceeding and filed
its own declaratory statement petition on the issues raised by Florida
Power and raised additional issues regarding postponement of significant
milestone dates in the contract pending the FPSC's resolution of the
proceeding. On June 29, 1995, Panda filed a petition for formal
evidentiary proceeding and full FPSC hearing alleging that there are
material issues of fact in dispute which must be resolved in a
fact-finding evidentiary hearing rather than through a declaratory order
proceeding. On August 16, 1995, the FPSC issued an order granting a
formal evidentiary hearing in this case. On September 12, 1995, Panda
filed a motion to dismiss this case, claiming that the FPSC did not have
jurisdiction. On December 26, 1995, the FPSC issued an order denying
Panda's motion to dismiss and motion to stay or abate proceedings. On
January 12, 1996, Panda filed a petition for writ of certiorari with the
Florida Supreme Court requesting reversal of this order and dismissal of
the FPSC case. The Florida Supreme Court has not yet taken action on this
petition. The FPSC held a hearing on this matter on February 19, 1996 and
is expected to issue a decision by the end of the second quarter 1996.
Panda-Kathleen, L.P. v. Florida Power Corporation, United States District
Court for the Middle District of Florida, Tampa Division, Case No.
95-992-CIV-T-24(C).
Panda instituted the above-referenced proceeding against Florida Power on
June 26, 1995, in the United States District Court for the Middle District
of Florida. On December 8, 1995, Panda voluntarily dismissed this case
without prejudice. This case is now considered terminated for reporting
purposes.
13
<PAGE>
Florida Power Corporation v. Panda-Kathleen Corp., United States District
Court for the Middle District of Florida, Tampa Division, Case No.
95-2145-CIV-T-25-B.
On December 27, 1995, Florida Power filed a complaint for declaratory and
other relief in the above-referenced case. A dispute exists between
Florida Power and Panda with regard to Panda's allegations that Florida
Power tortiously interfered with Panda's rights by contracting in 1995
with the City of Lakeland, Florida for certain rights to transport natural
gas over an interstate natural gas pipeline. The complaint requests the
court to enter a declaratory judgment that Panda had no contractual or
other right that was legally superior to Florida Power's right to
negotiate or contract with the City of Lakeland and declare that Florida
Power did not tortiously interfere with any contractual or legal right of
Panda with respect to the City of Lakeland. On January 24, 1996, Panda
filed a motion to dismiss Florida Power's complaint. The court is
expected to rule on this motion by the end of the second quarter 1996.
(See Notes 1 and 11 to the Financial Statements for further information
regarding purchased power expenses and commitments.)
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.
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., and Orlando Power
Generation I Inc., a subsidiary of UtilCo Group - filed suit against
Florida Power as general partners of and on behalf of OCL. As amended,
the suit sought 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 included 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.
On February 3, 1996, the parties executed a final settlement agreement
subject to the approval of the FPSC and OCL's lenders. In general, the
terms of the agreement provide for a mutually agreed upon (i) methodology
for computing the energy payments under the negotiated contract, (ii)
resolution of the dispute concerning backup fuel, (iii) off-peak
curtailment, (iv) escalation for the avoided unit variable operation and
maintenance expense portion of the energy payment to reflect more current
inflationary trends, and (v) adjustments to energy payments already made
under the negotiated contract. The parties have executed mutual releases.
The FPSC and OCL's lenders are expected to approve the agreement by the
end of the third quarter 1996. (See Notes 1 and 11 to the Financial
Statements for further information regarding purchased power expenses and
commitments.)
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
14
<PAGE>
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. The case is expected to go to trial
in 1996. (See Notes 1 and 11 to the Financial Statements for further
information regarding purchased power expenses and commitments.)
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 with 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
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 an
issue of liability that Lake is entitled to higher payments for energy
delivered to Florida Power. On November 17, 1995, Lake filed a motion for
partial summary judgment on the issue of liability. On December 14, 1995,
Florida Power filed an opposing motion for partial summary judgment
declaring that the contract provides for Florida Power to pay Lake at an
as-available rate during periods when the contractually-defined avoided
unit would not have operated. On January 23, 1996, the court entered a
partial summary judgment ordering Florida Power to pay Lake at the firm
energy cost rate when the avoided unit with operational characteristics of
an operable 1991 pulverized coal unit contemplated by the Lake/Florida
Power agreement would have been operating, and at the as-available energy
cost rate during those times when the avoided unit would not have been
operating. Florida Power is currently working to determine when that
avoided unit would have been operating. (See Notes 1 and 11 to the
Financial Statements for further information regarding purchased power
expenses and commitments.)
6. Metropolitan Dade County and Montenay Power Corp. v. Florida Power
Corporation, Circuit Court of the Eleventh Circuit for Dade County,
Florida, Case No 96-02990CA-22.
Metropolitan Dade County ("Dade") owns a municipal solid waste to energy
facility which is operated by Montenay Power Corp. ("Montenay"). Florida
Power has contracted to purchase 43 MWs from the facility for a term of 22
years beginning in 1991. During 1994, a dispute arose over the price paid
for energy under this contract. Florida Power began paying 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.
Dade claims that by mischaracterizing the avoided unit, Florida Power has
overstated the periods of time when the unit would not have operated.
On February 13, 1996, Dade and Montenay filed a complaint that Florida
Power's alleged failure to pay Dade in accordance with the contract
constitutes a breach of the contract. Dade's complaint also asks the
court to declare that Dade's interpretation of the contract's energy
pricing provision is correct. Finally, Dade alleges that Florida Power's
implementation of the energy pricing provision of the contract violates
federal and state antitrust laws, for which Dade seeks treble damages.
15
<PAGE>
On March 1, 1996, Florida Power filed a notice of removal of this case to
the United States District Court for the Southern District of Florida,
Miami Division. The United States District Courts have original
jurisdiction because the federal antitrust claim arises under the laws
of the United States. (See Notes 1 and 11 to the Financial Statements
for further information regarding purchased power expenses and
commitments.)
7. 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.
On October 14, 1988, Praxair, Inc. ("Praxair"), successor to a portion of
Union Carbide Corporation's former operations, 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 Florida Power & Light Company ("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.
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 from 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 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 were
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 September 19, 1995, the court of appeals reversed the district
court's denial of the summary judgment motion filed by Florida Power and
FP&L. The court of appeals held that summary judgment should have been
granted because sufficient "state action" by the FPSC existed so as to
allow Florida Power and FP&L to divide service territories in the county
in which Praxair is located without violating antitrust laws governing
restraints of trade. On December 15, 1995, Praxair's request for
rehearing of the September 19th order was denied. On March 15, 1996,
Praxair filed a petition for review with the United States Supreme Court.
Florida Power does not expect the United States Supreme Court to grant the
petition.
8. 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 DOE under the terms of the Nuclear Waste
Policy Act ("NWPA"). The NWPA requires the DOE to accept responsibility
16
<PAGE>
for spent nuclear fuel ("SNF") and high level radioactive waste ("HLW") by
January 31, 1998. The DOE has announced that it will not meet that
deadline. The utilities seek a declaration that the NWPA imposes on the
DOE an unconditional obligation to accept SNF and HLW by January 31, 1998,
and an order directing the DOE to develop a program with milestones and
appropriate reporting requirements, to ensure the DOE's compliance with
the statutorily mandated date. Failure of the 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,
the DOE does not begin accepting spent fuel and high-level waste,
eventually Florida Power will be forced to seek other temporary storage
options. The briefing and oral arguments were completed on January 17,
1996, and the parties are now awaiting a court order.
9. Wanda L. Adams, et. al. vs. Florida Power Corporation and Florida Progress
Corporation, U.S. District Court, Middle District of Florida, Ocala
Division; Case No. 95-123-CIV-OC-10.
On October 13, 1995, Florida Power and Florida Progress were served with a
multi-party lawsuit involving 17 named plaintiffs. All former Florida
Power employees, the plaintiffs generally allege age discrimination in
violation of the Age Discrimination and Employment Act and wrongful
interference with pension rights in violation of the Employee Retirement
Income Security Act as a result of their involuntary terminations. While
no dollar amount is requested, each plaintiff seeks back pay,
reinstatement or front pay through their projected dates of normal
retirement, costs and attorneys' fees.
On November 10, 1995, Florida Power filed its answer, a motion to dismiss
Florida Progress, and a counterclaim against five of the plaintiffs who
signed a career transition agreement and general release, promising, among
other things, not to sue Florida Power with respect to this matter. The
counterclaim seeks enforcement of the agreement, dismissal of plantiffs'
complaint, and an award of attorneys' fees and costs of litigation. On
November 28, 1995, the plaintiffs filed a motion to certify this case as a
class action. Florida Power filed a motion in opposition on January 15,
1996. The court is expected to rule on these motions by the end of the
second quarter 1996. This case is scheduled for trial in January 1997.
10. Sanford Gasification Plant Site, Sanford, Florida
The Sanford gasification site is a former manufactured gas plant site
located in the city of Sanford, Florida. It began operation in the 1880's
and continued through the early 1950's. Originally owned by Southern
Utilities Company, the plant was purchased in 1924 by the City of Sanford,
then sold again in 1928 to Sanford Gas Company. Sanford Gas Company,
which merged into Florida Power in 1944, operated the plant until 1946
when it was sold to South Atlantic Gas Company (later Atlanta Gas Light
Company). The plant was conveyed three more times, being purchased by the
current owner, Florida Public Utilities Company ("FPUC"), in 1965. The
FDEP began investigating the site in 1990. FPUC subsequently initiated an
action styled FPUC v. Florida Power, FP&L, Atlanta Gas 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, seeking
contribution from former owners or operators of the site, including
Florida Power. The complaint alleged with regard to Florida Power, that
its liability was based on prior ownership and operation of the
gasification plant between the years 1928 and 1946. This action was
dismissed without prejudice on February 17, 1995.
In response to the FDEP, the parties to the action initiated by FPUC had a
contamination assessment conducted. The report of this assessment was
forwarded to FDEP on February 3, 1994. The FDEP reviewed the report and
issued its site prioritization report, scoring the site with regard to the
17
<PAGE>
national priorities list. Currently, the site is evaluated at 25.9 with
28.5 as the threshold for listing the site on the national priorities
list.
In the first quarter 1996, the FDEP is scheduled to begin a supplemental
study of nearby Lake Monroe, due to some indication of contamination in
the water and soil. If confirmed, this could score the site well over the
28.5 threshold referred to above, thereby making the site a superfund site
under CERCLA. A railroad yard and a former sewage treatment facility,
unrelated to the gas plant site, could be responsible for any
contamination that might be detected in the lake. The study is expected
to be completed in 1996. The FDEP study will then be forwarded to the EPA
for comment and evaluation in connection with re-scoring the site.
Florida Power cannot at this time reasonably ascertain its share of the
costs of cleaning up this site because of variables beyond its control,
including: (i) whether the EPA will score the site above 28.5, thus
placing the site under federal regulations requiring a more costly
cleanup; (ii) whether litigation will ensue to determine the allocation of
liability, and if so, among what number of other PRPs; and (iii) the cost
of potential cleanup, monitoring or other work. 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.)
11. 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 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.)
12. Peak Oil Company and Zellwood Groundwater Superfund Sites.
Florida Progress has been notified by the EPA that Progress Packaging
Corporation ("Progress Packaging") is or could be a PRP in reference to
the Zellwood Groundwater site, and Crown Window Company ("Crown") is or
could be a PRP with respect to the Peak Oil Company site. Florida
Progress sold the assets of Progress Packaging in 1988 and sold assets of
Crown in 1991. Talquin Development, as successor to Crown by merger,
signed a de minimus administrative order of consent on February 25, 1995
agreeing to a total payment of $2,607. The de minimus settlement payment
was made to the EPA on September 14, 1995. This Peak Oil matter is now
considered terminated for reporting purposes. The Progress Packaging
matter has had no further development since Florida Progress responded to
the government's request for supplemental information in June 1994. Based
upon the information presently available, Florida Progress believes that
its total liability for the cleanup of the Zellwood site will not be
material. These matters are being reported because liability for cleanup
of certain sites is technically joint and several, and because, in the
case of the Zellwood site, the extent to which Florida Progress may
ultimately have to participate in the cleanup costs is not presently
determinable. (See Note 11 to the Financial Statements for further
information regarding the potential costs.)
18
<PAGE>
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 in Item 8 on the "Quarterly Financial Data" table for Florida Progress
at the end of the Notes to the Financial Statements, and is incorporated herein
by reference.
In February 1996, Florida Progress' Board announced an increase of about 2% in
the common stock quarterly dividend which on an annual basis would increase the
dividend from $2.02 to $2.06 per share. Florida Progress' current dividend
payout ratio is about 81% of earnings. Information concerning the Florida
Progress dividend payout ratio and dividend policy is set forth in Item 7 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, 1995, Florida Power's ability to pay
dividends was not limited by these restrictions.
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, 1995, Progress Capital's
net worth was $106.6 million higher than the amount required under this
agreement.
The approximate number of equity security holders of Florida Progress is as
follows:
Number of Registered Holders
Title of Class as of February 8, 1996
- ------------------------------ ----------------------------
Common Stock without par value 40,135
FLORIDA POWER
All of Florida Power's common stock is owned by Florida Progress, its corporate
parent, and as a result there is no established public trading market for the
stock. For the past three years, Florida Power has paid quarterly dividends to
19
<PAGE>
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, 1995, Florida Power's ability to pay dividends
was not limited by these restrictions.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Annual Growth Rates
(in percent)
1990-1995 1995 1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FLORIDA PROGRESS CORPORATION
Summary of operations (in millions)
Utility revenues 5.9 $ 2,271.7 $2,080.5 $1,957.6 $1,774.1 $1,718.8 $1,709.1
Diversified revenues (continuing) 21.0 783.9 691.0 491.4 321.2 355.9 301.7
Income from continuing operations 5.8 238.9 212.0 195.8 175.7 174.5 179.8
Income (loss) from discontinued
operations and change in accounting - - 0.8 - (2.4) (15.0)
Net income 7.7 238.9 212.0 196.6 175.7 172.1 164.8
- -----------------------------------------------------------------------------------------------------------------------
Balance sheet data (in millions):
Total assets 2.8 $ 5,791.1 $5,718.7 $5,638.8 $5,333.0 $5,024.9 $5,045.9
Capitalization:
Short-term capital (23.0) $183.9 $108.2 $201.6 $201.9 $68.2 $681.0
Long-term debt 4.9 1,685.2 1,859.6 1,866.6 1,656.4 1,659.1 1,326.2
Preferred stock (9.9) 138.5 143.5 148.5 216.0 231.0 233.5
Common stock equity 7.8 2,078.1 1,984.4 1,820.5 1,737.6 1,587.7 1,424.3
- -----------------------------------------------------------------------------------------------------------------------
Total capitalization 2.2 $4,085.7 $4,095.7 $4,037.2 $3,811.9 $3,546.0 $3,665.0
- -----------------------------------------------------------------------------------------------------------------------
Common stock data:
Average shares outstanding (in millions) 4.4 95.7 93.0 88.3 85.4 80.8 77.0
Earnings per share:
Utility 1.1 $2.27 $2.05 $2.06 $1.99 $2.03 $2.15
Diversified (continuing) 5.0 .23 0.23 0.17 0.07 0.13 0.18
Discontinued operations - - - - (0.03) (0.19)
Consolidated 3.2 2.50 2.28 2.23 2.06 2.13 2.14
Dividends per common share 2.6 2.02 1.99 1.95 1.905 1.843 1.777
Dividend payout 81.0% 87.7% 87.6% 93.0% 87.0% 82.9%
Dividend yield 5.7% 6.7% 5.9% 5.9% 6.0% 7.2%
Book value per share of common stock 3.2 $21.55 $20.85 $20.40 $19.85 $19.14 $18.37
Return on common equity 11.8% 11.1% 11.1% 10.6% 11.4% 11.8%
- -----------------------------------------------------------------------------------------------------------------------
Common stock price per share:
High 35 3/4 33 5/8 36 3/8 33 1/4 31 1/2 27
Low 29 3/8 24 3/4 31 1/4 27 7/8 24 3/8 22 1/4
Close 6.8 35 3/8 30 33 5/8 32 5/8 31 1/4 25 1/2
Price earnings ratio (year-end) 14.2 13.2 15.1 15.8 14.7 11.9
- -----------------------------------------------------------------------------------------------------------------------
Other year-end data:
Number of employees (1.9) 7,174 7,394 7,825 7,301 7,350 7,879
Number of registered shareholders (.7) 40,523 44,148 44,371 44,870 42,176 41,970
- -----------------------------------------------------------------------------------------------------------------------
20
<PAGE>
FLORIDA POWER CORPORATION
Electric sales (million of KWH)
Residential 3.8 14,938.0 13,863.4 13,372.6 12,825.8 12,623.9 12,415.5
Commercial 3.3 8,612.1 8,252.1 7,884.8 7,544.1 7,489.2 7,328.7
Industrial 2.3 3,864.4 3,579.6 3,380.8 3,254.5 3,303.0 3,455.7
Total retail sales 3.5 29,499.5 27,675.2 26,528.3 25,414.0 25,179.1 24,878.3
Total electric sales 3.6 32,402.6 30,014.6 28,647.8 27,375.5 27,350.2 27,143.7
- -----------------------------------------------------------------------------------------------------------------------
Residential service (average annual):
KWH sales per customer 1.5 13,282 12,597 12,420 12,214 12,257 12,319
Revenue per customer 4.5 $1,114 $1,038 $983 $884 $899 $896
Revenue per KWH 2.9 $0.0839 $0.0824 $0.0792 $0.0724 $0.0733 $0.0727
- ---------------------------------------------------------------------------------------------------------------------
Financial Data:
Operating revenues 5.9 $2,271.7 $2,080.5 $1,957.6 $1,774.1 $1,718.8 $1,709.1
Net income after dividends
on preferred stock 5.6 $217.3 $190.7 $181.5 $170.2 $164.1 $165.5
Total assets 4.0 $4,284.9 $4,284.5 $4,259.5 $3,980.6 $3,643.2 $3,528.1
Long-term debt and preferred stock
subject to mandatory redemption 3.1 $1,304.1 $1,393.8 $1,433.6 $1,318.3 $1,213.1 $1,119.8
Total capitalization including
short-term debt (in millions) 4.0 $3,202.2 $3,265.4 $3,240.4 $3,029.2 $2,692.2 $2,633.4
Capitalization ratios:
Short-term capital 1.0% 2.8% 5.3% 4.4% 1.4% 7.4%
Long-term debt 39.9% 41.7% 43.1% 40.8% 41.4% 38.7%
Preferred stock 4.3% 4.4% 4.6% 7.1% 8.6% 8.9%
Common stock equity 54.8% 51.1% 47.0% 47.7% 48.6% 45.0%
Ratio of earnings to fixed charges (SEC method) 4.41 3.90 3.83 3.84 3.87 3.89
Embedded cost of long-term debt (1.8) 7.2% 7.1% 6.8% 7.5% 7.7% 7.9%
Embedded cost of preferred stock (1.1) 6.8% 6.8% 6.8% 7.3% 7.3% 7.2%
- -----------------------------------------------------------------------------------------------------------------------
Operating Data:
Net system capacity (MW) 2.3 7,347 7,295 7,563 7,002 6,623 6,571
Net system peak load (MW) 9.0 7,722 6,955 6,729 6,982 6,056 5,026
BTU per KWH of net output 0.1 10,010 9,986 10,027 9,981 10,007 10,005
Capital expenditures (in millions) 1.3 $283.4 $319.5 $426.4 $472.9 $345.9 $265.3
Net cash flow to capital expenditures 125% 103% 63% 52% 66% 70%
Fuel cost per million BTU (4.3) $1.69 $1.75 $1.79 $1.86 $1.89 $2.11
Average number of customers 2.3 1,271,784 1,243,891 1,214,653 1,182,170 1,159,237 1,135,499
Number of full-time employees (3.5) 4,658 4,972 5,807 5,806 5,677 5,570
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OPERATING RESULTS
Florida Progress' 1995 consolidated earnings were $238.9 million, compared with
$212 million in 1994 and $196.6 million in 1993. Florida Power earned $217.3
million in 1995, compared with $190.7 million in 1994 and $181.5 million in
1993. Earnings from diversified operations were $21.6 million in 1995, compared
with $21.3 million in 1994 and $14.3 million in 1993. Florida Progress has
achieved a 6.7% annual compound earnings per share growth rate for the last
three years.
21
<PAGE>
EARNINGS PER SHARE
1995 1994 1993
- --------------------------------------------------------------------------------
Florida Power Corporation $2.27 $2.05 $2.06
- --------------------------------------------------------------------------------
Electric Fuels Corporation .25 .25 .17
Mid-Continent Life Insurance Co. .07 .08 .10
Progress Credit Corporation (.05) (.05) (.06)
Corporate and other (.04) (.05) (.05)
- --------------------------------------------------------------------------------
Diversified .23 .23 .16
- --------------------------------------------------------------------------------
Income before accounting change 2.50 2.28 2.22
Change in accounting - - .01
- --------------------------------------------------------------------------------
Consolidated $2.50 $2.28 $2.23
- --------------------------------------------------------------------------------
Florida Power's results improved in 1995 and 1994, mainly due to increased
energy sales from customer growth, higher average customer usage and a stronger
economy. Also contributing to the higher earnings were savings realized from the
utility's cost-control initiatives.
Beginning in late 1993, Florida Power started streamlining its operations to
lower its costs and improve efficiencies. As a result, the utility's work force
has been reduced by about 1,100 employees, or 20%, since year-end 1993.
Restructuring costs lowered annual earnings by $11.5 million, or $.12 a share,
in 1994 and by $3.4 million, or $.04 a share, in 1993.
In 1994, subsidiaries of Florida Power withdrew as equity partners from a
proposed natural gas pipeline project. The write-off of the investments lowered
Florida Power's 1994 net earnings by $3.9 million, or $.04 per share.
In 1995, Florida Power began amortizing $23.9 million of accumulated costs for
the canceled LTK line. (See "Utility Regulatory Matters".) The costs, which are
being amortized over four years, totaled $6.9 million in 1995.
The financial return on the utility's common equity was 12.7% in 1995, compared
with 11.9% in 1994 and 12.1% in 1993. Increases in retail energy sales and
ongoing cost-cutting initiatives allowed Florida Power to improve its return on
equity in 1995.
Excluding results from real estate and lending and leasing operations
(businesses from which Florida Progress is withdrawing), diversified returns on
equity were 10.9% in 1995, 11.5% in 1994 and 10.1% in 1993.
FLORIDA POWER
Utility Competition
As the electric utility industry moves toward increasing competition, Florida
Power is well-positioned today. The utility has competitive electric rates, a
manageable construction program, strong growth potential, reasonable state
regulation and financial strength. The challenge for Florida Power will be to
remain proactive in dealing with the changes and taking advantage of new
opportunities.
The most sweeping changes in 1995 were taken by federal regulators on behalf of
wholesale customers. The FERC proposed changes in its rules for transmission
service. The FERC's actions are aimed at facilitating a competitive wholesale
power market.
The proposed rules will give greater flexibility and more choices to wholesale
power customers. Florida Power intends to compete for wholesale business when it
22
<PAGE>
can earn a reasonable return. Florida Power's wholesale business produces about
7% of Florida Power's annual operating revenue. Florida Power's wholesale
customers accounted for approximately $150 million in sales in 1995, an increase
of approximately $20 million over the previous year. In 1995, Florida Power
entered into a three-year agreement to provide an additional 455 MWs of power to
its largest wholesale customer, beginning in 1999. This contract will increase
annual wholesale revenues by more than 40% and is projected to expand this
business segment to about 8% of total sales in 1999.
A major portion of Florida Power's business is covered under terms of franchise
agreements with municipalities and counties. In December 1995, the city of
Clearwater renewed its franchise agreement for another 30 years. Revenues
covered by this agreement account for about 5% of Florida Power's business.
Florida Power believes its quality service and competitive rates will be
important factors to other franchisees when their agreements come up for
renewal. No franchise agreements representing significant revenues are due to
expire for the next five years.
Florida Power's existing generating units are efficient and cost effective,
making the plants well-positioned for competition. Florida Power has received
regulatory approval to build a new generating complex in Polk County. This new
facility is expected to provide the utility with lower cost generation than what
other energy suppliers in Florida have paid to build new generation recently.
Some third parties would like to begin using utility transmission systems to
wheel power to large retail customers. Several states are evaluating retail
wheeling as a way to provide a choice of electricity suppliers to large
customers, in order to promote increased services and lower energy prices.
Because Florida utilities already provide competitive electric rates, the
Management of Florida Power believes there is less incentive for change in
Florida. Furthermore, Florida Power's industrial and commercial rates are
already among the lowest in Florida. The utility also has a relatively small
number of large customers in its service area.
As the electric utility industry becomes more competitive, Florida Power is
committed to strengthening its position by reducing costs and improving
efficiencies in producing and delivering power. Florida Power expects to earn
its authorized return on equity while maintaining competitive prices and
offering high-quality, reliable service.
Utility Regulatory Matters
In Florida Power's 1992 retail rate case, the FPSC authorized a 12% regulatory
return on equity for the utility with an allowed range between 11% and 13%. In
1995, Florida Power's retail regulatory return on equity was 12.5%.
The FPSC approved Florida Power's request to change the utility's load
management program, beginning in April 1995. The program is intended to defer
the need to build additional generation by lowering peak demand of electricity.
Recent improvements in technology have allowed electric utilities to build
generation less expensively. Because of these changes, Florida Power redesigned
its load management program. The utility reduced customer credits and introduced
sales thresholds to reflect more accurately the value of each participant's
contribution to the program. Overall, these program costs will be reduced about
$20 million annually.
In 1995, the FPSC also approved Florida Power's petition for amortization of the
accumulated costs for the canceled LTK line. Due to numerous legal and
regulatory delays, the total projected costs for the LTK line had increased to
more than $85 million, up from the initial estimate of $30 million. Florida
Power is implementing a more cost-effective alternative to enhance system
reliability.
23
<PAGE>
The FPSC approved a new site-specific decommissioning study for the Crystal
River Nuclear Plant that increased Florida Power's retail portion of
total annual decommissioning expense to $20.5 million per year, effective
January 1995. Florida Power increased its wholesale portion in a comparable
manner to $1.2 million per year. In both 1994 and 1993, decommissioning expense,
as approved by state and federal regulators, totaled $11.9 million. (See Note 4
to the Financial Statements.)
Florida Power has the second-largest transmission network in Florida. Florida
Power filed an open access transmission service tariff in 1995 that complies
with the new rules for nondiscriminatory wholesale transmission service. The
FERC has accepted Florida Power's tariff, subject to the final rules that are
expected to be adopted by federal regulators in 1996. (See Note 10 to the
Financial Statements.)
As a result of settlement agreements approved by the FERC, Florida Power
recognized increases in wholesale revenues of $9.5 million in 1995 and $8.2
million in 1994, compared with the preceding year. (See Note 10 to the Financial
Statements.)
UTILITY REVENUES AND SALES
Florida Power's operating revenues were $2.3 billion in 1995, compared with $2.1
billion in 1994 and $2 billion in 1993. Revenues rose in 1995 and 1994,
primarily because of increased retail KWH sales from customer growth, increased
average usage and a stronger economy during both years. Florida Power expects
to have sales growth of 3% to 4% per year through 2000.
The utility's retail KWH sales increased by 7.8% in 1995 and by 3.1% in 1994.
Customer growth was 2.2% in 1995 and 2.4% in 1994. Florida Power's annual
customer growth rate continues to be about twice the national average in the
electric utility industry. The total population of Florida Power's service area
is 4.5 million and is projected to grow to 5.1 million by the year 2000.
At the request of the FPSC, Florida Power implemented a revenue decoupling plan
for residential customers in 1995. Revenue decoupling is a ratemaking concept
that eliminates the direct link between KWH sales and revenues. The 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.
Since the utility's forecast is based on normalized weather, Florida Power does
not expect residential revenue decoupling to have a material effect on results
for the three-year test period. (See Note 1 to the Financial Statements.)
FUEL AND PURCHASED POWER
Florida Power recovers substantially all fuel and purchased power costs through
fuel and capacity cost adjustment clauses established by state and federal
regulators. Therefore, fluctuations in these costs have little impact year to
year on net income, but are important from a competitive standpoint.
Fuel and purchased power costs increased by $147.7 million in 1995 and $66.5
million in 1994, compared with each preceding year. The growth was primarily due
to increased purchased power costs and higher system requirements.
Florida Power has long-term contracts to purchase 1,164 MWs of power from
cogenerators. At the end of 1995, nearly all of the facilities were in service.
The cost of power from cogeneration facilities raised Florida Power's system
average cost for generation in 1995 and is anticipated to escalate faster than
the utility's cost for power from its own power plants.
24
<PAGE>
Florida Power projects that its retail rates will increase only about 1%
annually over the next five years, despite escalating cogeneration costs.
Management recognizes that it is important for Florida Power to minimize all of
its operating costs, including purchased power, to continue to offer competitive
rates.
The FPSC approved a generation curtailment plan in 1995 for use during periods
of low system demand. Energy purchases from cogenerators will be curtailed in
order to prevent the cycling off of Florida Power's coal units.
The cogeneration purchased power contracts employ separate pricing methodologies
for capacity payments and energy payments. Three cogenerators are disputing the
energy pricing methodology in separate lawsuits. A fourth dispute has been
settled pending approval by the FPSC and the cogenerator's lenders. (See Item
3, paragraphs 2 through 6, and Note 11 to the Financial Statements.)
NUCLEAR OPERATIONS
Florida Power's Crystal River nuclear plant achieved a capacity factor of 100%
in 1995. This compares to capacity factors of 83% and 85% in 1994 and 1993,
respectively.
In October 1995, the NRC reported the results of its recent Systematic
Assessment of Licensee Performance ("SALP") review of Florida Power's nuclear
power plant for the period from February 20, 1994 through September 16, 1995.
The NRC gave the Plant Support area a Category 1 rating, which is the best of
three possible ratings. The other three areas rated, Plant Operations,
Maintenance, and Engineering, received the Category 2 rating.
Florida Power's nuclear plant uses a fire-retardant material, called Thermo-Lag,
as a fire barrier around electrical conduits and cables. The NRC has determined
that this material does not provide the full fire protection originally claimed
by the manufacturer. Management believes that it will cost about $5 million to
implement the permanent solution to this deficiency. Until there is a permanent
solution, Florida Power has implemented surveillance procedures to continuously
inspect the areas protected by Thermo-Lag. Florida Power's solution is subject
to NRC review and approval.
Florida Power has cooperated with the NRC in its investigation of unauthorized
tests performed by control room operators at the Crystal River Nuclear Plant.
The tests were performed in September 1994 and violated normal operating
procedures at the plant as well as requirements set by the NRC. Florida Power
has taken various disciplinary actions against the six control room operators
involved in the tests. The discipline ranged from termination of employment,
to reassignment to non-control room responsibilities, to counseling. The NRC
has completed its investigation of the unauthorized tests and identified
several apparent violations of NRC regulations in connection with those tests.
The violations will be the subject of pre-decisional enforcement conferences
scheduled to begin in late March 1996 with Florida Power and the operators.
OTHER UTILITY EXPENSES
Other utility operation and maintenance expenses decreased by $38.9 million in
1995 and $3.1 million in 1994, compared with the preceding years.
Recoverable energy conservation program costs decreased by $20.4 million in
1995, compared with 1994, due to the previously mentioned changes in the
utility's load management program. These changes had no significant impact on
earnings because Florida Power recovers substantially all of these costs through
a clause in electric rates similar to the fuel adjustment clause.
Excluding these recoverable energy conservation program costs, other utility
operation and maintenance expenses decreased by $18.5 million in 1995, compared
with the previous year. These expenses also decreased by $7.8 million in 1994,
25
<PAGE>
compared with 1993, even after recognizing the one-time costs for the voluntary
early-retirement option and restructuring plan that totaled $18.7 million in
1994. The lower operation and maintenance expenses resulted from the utility's
companywide, cost-reduction efforts during the past several years.
Florida Power expects that other operation and maintenance costs, excluding
conservation expenses, will decline in 1996 as part of Florida Power's ongoing
cost-cutting initiatives. Beyond 1996, the utility's goal is to limit increases
in these costs to less than the national inflation rate.
Depreciation expense increased by $32.2 million in 1995 and $21.3 million in
1994, compared with the preceding years. Higher depreciation expense is due to
plant additions, primarily new combustion turbine units in 1994, and in 1995,
increased nuclear decommissioning costs and amortization of the canceled LTK
line.
Because Florida Power completed several major construction projects in recent
years and is reducing construction expenditures wherever prudent, the allowance
for funds used during construction decreased by $3.6 million in 1995 and $4.7
million in 1994, compared with the preceding years.
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.
In terms of tropical storms and hurricanes, 1995 was one of the most active in
many years. The Florida Power service area was hit by three major storms during
the year: Allison in June, Erin in August and Opal in October. Florida Power
suffered the worst damage from Hurricane Erin. Approximately 325,000 customers
were without service at some point following the storm. Much of the damage was
caused by downed trees. Damage to Florida Power from Erin was estimated at $3.7
million.
DIVERSIFIED OPERATIONS
ELECTRIC FUELS
Florida Progress continues its strategy to expand the operations of Electric
Fuels, Florida Progress' energy and transportation unit. Electric Fuels has
three primary business units: coal, marine transportation and rail services.
Florida Progress is building Electric Fuels' existing operations through
internal expansion and is pursuing new market opportunities within the business
segments through acquisitions. This strategy will enable Electric Fuels to
better serve the needs of its customers and accelerate growth into new markets.
Since 1993, Electric Fuels has focused its acquisitions in the rail services
business. Acquisitions made since 1993 have helped Electric Fuels to become the
largest integrated rail services company in the country. Electric Fuels has
approximately 1,500 employees located in 13 states and offers a full range of
rail services including repair, parts reconditioning and manufacturing and
leasing. Electric Fuels is also increasing its production of new and
reconditioned track materials.
Electric Fuels made several acquisitions in 1995 that will help to expand
operations and serve customers in the western United States. In 1995, a
subsidiary of Electric Fuels acquired the assets of two rail services companies
in Nebraska and Colorado. The assets include three railcar repair and
maintenance facilities, two railcar wheel shops and a shortline railroad that
services customers on the Burlington Northern and Union Pacific railroads.
In late 1994, Florida Progress acquired FM Industries, Inc., a Fort Worth,
Texas-based manufacturer and reconditioner of cushioning units for railcars ("FM
Industries"). 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 financial statements were not restated for this acquisition.
26
<PAGE>
In 1993, a subsidiary of Electric Fuels acquired the assets of Steel Processing
Services, Inc., an Alabama-based railcar repair and parts reconditioning
company. (See Note 1 to the Financial Statements.)
Electric Fuels' rail services operations, including these recent acquisitions,
produced about $300 million in revenues in 1995.
Electric Fuels' marine services business has also expanded with efforts focusing
on the Ohio and lower Mississippi rivers. Electric Fuels' fleet, made up of
approximately 600 barges, is among the most modern and efficient on the river.
Electric Fuels' barges are specially designed to be able to carry higher volumes
of dry-bulk cargo when river conditions permit. Since 1992, Electric Fuels has
added approximately 300 new high-capacity barges to the fleet.
Additional equipment, increased demand and higher rates for transporting barge
freight improved the results of Electric Fuels' marine transportation operations
in 1995. The planned purchase of 100 new, high-capacity barges, each year in
both 1996 and 1997, and options to purchase additional barges, as well as
increased operating efficiencies, should allow Electric Fuels to continue to
grow the earnings of this business unit.
Earnings from Electric Fuels' coal operations were lower in 1995 due to a
depressed national coal market. Operational changes and cost reductions,
resulting from a quality management program, will be instituted in the mining
operations in 1996 to increase coal production and earnings.
Earnings for Electric Fuels in 1995 were $24 million, compared with $22.6
million in 1994 and $14.9 million in 1993. The increase in 1995 was largely
because of better results from Electric Fuels' inland marine division.
Electric Fuels' return on equity for 1995 was 13.8% and has averaged 13.3%
during the last three years. During the same three-year period, Electric Fuels
has increased its earnings per share an average of 21.3% per year.
MID-CONTINENT
Over the past few years, the life insurance industry has become more competitive
and, for the first time, Mid-Continent experienced a decline in new sales.
Mid-Continent's earnings for 1995 were $6.5 million, compared with $7.3 million
in 1994 and $8.5 million in 1993.
In 1995, it became clear that Mid-Continent needed to change its strategic
direction in order to remain successful over the long-term. In March 1995,
James Harlin was elected President of Mid-Continent. He brings 25 years of
insurance experience to Mid-Continent, including 15 years as a chief actuary.
In 1995, Mid-Continent developed a new comprehensive five-year business plan to
improve its market position. During 1996, Mid-Continent will replace its
existing policy with a new product. The new policy is expected to become
Mid-Continent's core product. Other complementary products will be introduced in
the future. Mid-Continent believes the new policy will be successful because it
offers better features and greater flexibility to customers.
PROGRESS CREDIT
Since announcing its strategy for an orderly withdrawal from the lending and
leasing and real estate businesses in 1991, Progress Credit has decreased its
assets by about $583 million, or 51% of its original portfolio.
The portfolio, which totaled $558 million at the end of 1995, contains primarily
commercial aircraft loans and leases, first mortgage real estate loans and real
estate assets. At the end of 1995, Progress Credit had loan and lease loss
reserves of $32 million. Management believes its reserves are adequate to
continue Progress Credit's withdrawal strategy, as long as there is no
significant further deterioration in the airline and real estate industries.
27
<PAGE>
Although Progress Credit's current exit strategy has been successful, the
continued weakness in the airline industry and commercial real estate market has
slowed withdrawal efforts. As a result, Progress Credit is continuing to
examine other business options that could accelerate the process.
Any sale of Progress Credit's assets is expected to result in subsequent lower
revenues and interest expense for Progress Credit. The impact on net income
depends on the timing of these sales and the relationship between the returns on
the assets sold, 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.
The current commercial real estate market may require Progress Credit to hold
these properties, and absorb the related carrying costs, until the properties
can be sold for a fair value.
OTHER
The major provision of the Omnibus Budget Reconciliation Act of 1993 was an
increase in the maximum corporate income tax rate from 34% to 35%, effective
January 1, 1993. The related impact on accounting for long-term leveraged leases
lowered Florida Progress' 1993 net earnings by $3.2 million, or $.04 per share.
Even though the inflation rate has been relatively low during the last three
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. 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 during the last three
years and others are expected to be adopted in 1996. (See Note 1 to the
Financial Statements.)
Several of Florida Progress subsidiaries, including Florida Power, have been
notified by the EPA that each is or may be a PRP 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. Other sources of capital have included proceeds from the sales of
properties and businesses, debt financings, issuance of common stock and the
orderly liquidation of the lending and leasing portfolio.
Florida Progress has been issuing new equity in recent years primarily to fund
Florida Power's construction program. Due to reductions in the utility's most
recent construction program forecast, Florida Power does not expect to have any
significant new equity or debt requirements over the next five years. 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:
28
<PAGE>
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
Several years ago, the Management of Florida Progress recognized that Florida
Progress' dividend payout was too high. In 1992, the payout was 93% of earnings.
Since then, Florida Progress has followed a strategy of lowering the payout
while working to increase earnings. The strategy has been successful. In 1995,
the payout was 81%. Improved earnings have allowed Florida Progress to continue
to increase the dividends paid per share, while lowering the payout.
Florida Progress expects sustained earnings growth in its five-year business
plan. Management's confidence in earnings growth will continue to be one of
several important considerations used in setting dividend policy. While
Management is pleased with Florida Progress' results and future prospects, it
recognizes that Florida Progress' earnings projections and dividend policy must
be evaluated in light of ongoing changes in the electric utility industry.
In a May 1994 public offering, Florida Progress sold 3.6 million shares of
common stock with net proceeds of $92.2 million. During the last three years,
Florida Progress also raised $142 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 contributed $50 million in 1995, $130 million in 1994 and $60
million in 1993 to Florida Power from the proceeds of Florida Progress' public
stock offerings and the Progress Plus Stock Plan. These funds were used to
further strengthen Florida Power's financial position.
Florida Progress' common equity, as a percent of total capital, was 50.9% as of
December 31, 1995, and 48.5% at the end of 1994. Short-term debt, as a percent
of total capital, was 4.5% in 1995 and 2.6% in 1994. Long-term debt was 41.2% in
1995, compared with 45.4% in 1994.
FLORIDA POWER
Florida Power's construction expenditures for 1995 totaled about $283 million.
This was primarily for distribution lines and other facilities related to the
utility's growing customer base. The utility's five-year construction program
includes planned expenditures of $265 million, $332 million, $291 million, $258
million and $230 million for 1996 through 2000. Florida Power forecasts that all
of these construction expenditures will be financed with internally generated
funds.
The new construction program, totaling $1.4 billion for the 1996-2000 forecast
period, is significantly lower than the prior five-year total of $1.8 billion
for the 1995-1999 period. The major reductions were due to lower estimates for
the planned Polk County Energy Complex, the cancellation of the LTK line and the
cancellation of a power plant fuel conversion. Florida Power was able to cancel
the LTK line and plant conversion because other, more cost-effective solutions
were found. By prudently reducing construction expenditures, Florida Power will
be able to lower its long-term revenue requirements for depreciation, taxes,
insurance and return on investment. These reductions will provide a more
competitive cost structure for the future.
29
<PAGE>
The Clean Air Act Amendments of 1990 require electric utility companies to
reduce sulfur dioxide emissions. Florida Power expects to meet these
requirements with minimal capital expenditures.
In 1995, Florida Power's net cash flow to capital expenditures was 125%. In
addition to funding its construction commitments with cash from operations,
Florida Power received 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 $200-million, 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. The utility has a 364-day revolving bank credit
facility and a five-year facility, $200 million each, which are used to back up
commercial paper. (See Note 2 to the Financial Statements.)
In 1995, due to additional cash generated by operations, Florida Power was able
to lower its total debt levels by about $145 million, compared with year-end
1994. Florida Power expects to be able to continue reducing its total debt in
the future.
Florida Power's embedded cost of long-term debt was 7.2% as of December 31,
1995, compared with 7.1% at year-end 1994.
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 1995, total diversified capital expenditures were $46.2 million, primarily
for operations at Electric Fuels. Net proceeds from leases, loans and securities
were $45 million, $28.1 million and $21.5 million in 1995, 1994 and 1993,
respectively, mainly due to the orderly divestiture of the finance unit's
assets.
In 1996, diversified capital expenditures are expected to be about $60 million,
with most of these planned expenditures designated for operations of Electric
Fuels. The marine transportation business unit will add 100 new barges in 1996
to continue to grow its business and take advantage of market opportunities.
Electric Fuels' rail services and coal operations also will be upgrading and
replacing facilities and equipment to reduce operating expenses and position
these businesses for future market expansions. These expenditures are expected
to be funded through cash generated internally and from outside financing
sources.
"SAFE HARBOR" STATEMENT UNDER
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Form 10-K contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, including (without limitation)
30
<PAGE>
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) adequacy and availability of fuel
supplies (Item 1. Business - Utility Operations - Florida Power - Fuel and
Purchased Power), (b) the effects of the CAAA; estimated amounts of capital and
operating expenditures and fees relating to compliance with environmental/safety
requirements and remediation of contaminated sites (Item 1. Business - Utility
Operations - Florida Power - Environmental Matters, including portions of the
Notes to Financial Statements referred to therein, Item 1. Business -
Diversified Operations - Environmental Matters and Item 7. MD&A - Florida
Power), (c) sufficiency of system capacity and demand-side management
capabilities to meet future demand and estimates of the completion of additional
generating capacity (Item 2. Properties - Utility Operations), (d) expectations
as to the timing, outcome or effect of legal or regulatory proceedings (Item 3.
Legal Proceedings), (e) expectations or beliefs as to (1) the effects of
competition on Florida Power, and (2) Florida Power's allowed rates of return
(Item 7. MD&A - Florida Power - Utility Competition and - Utility Regulatory
Matters), (f) projections as to the annual rate of increase of Florida Power's
retail rates (Item 7. MD&A - Fuel and Purchased Power), (g) estimates of the
cost of implementing a solution to the fire barrier deficiency at Florida
Power's nuclear facility (Item 7. MD&A - Nuclear Operations), (h) expectations
as to other operation and maintenance costs in 1996 (Item 7. MD&A - Other
Utility Expenses), (i) strategic plans for, and expected earnings growth of,
Electric Fuels (Item 7. MD&A - Diversified Operations - Electric Fuels),
(j) belief as to the success of Mid-Continent's new product offerings (Item 7.
MD&A - Diversified Operations - Mid-Continent), (k) adequacy of loan and lease
loss reserves relating to Progress Credit and beliefs that markets for Progress
Holdings' real estate properties should improve (Item 7. MD&A - Diversified
Operations - Progress Credit), (l) Florida Progress' projections as to capital
structures and its expectations of sustained earnings growth (Item 7. MD&A -
Liquidity and Capital Resources), (m) estimated construction expenditures and
expectations as to debt levels (Item 7. MD&A - Liquidity and Capital Resources
- - Florida Power) and (n) estimated diversified capital expenditures (Item 7.
MD&A - Liquidity and Capital Resources - Diversified Operations). These
statements, and any other statements contained in this Form 10-K 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-K, 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 allowed rates of return, industry and rate structure,
competition in the utility industry (e.g., retail wheeling and transmission
access), and environmental/safety requirements (a, b, c, d, e, f, g, h, l, m,
n), (2) pricing and other actions by competitors (a, c, d, e, f, h, i, j, k, l),
(3) unanticipated delays or actions by courts, administrative agencies or
regulatory authorities (a, b, c, d, e, f, g, h, i, n), (4) significant changes
from expectations in actual capital expenditures and operating expenses and
unanticipated project delays (a, b, c, f, g, h, m, n), (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
(a, c, e, f, h, i, j, l, m), (6) changes in Florida Power's environmental
compliance strategies or fuel strategies (a, b, c, f, h, i), (7) changes in the
availability of fuel (a, b, c, f, h, l, m), (8) the success of Mid-Continent's
marketing strategies for its new products (j, l), (9) significant changes in tax
rates or policies or in rates of inflation (i, j, k, l), and (10) any
deterioration in the airline or railroad industries, or various real estate or
coal markets (a, i, k, m, n).
31
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
AUDITORS' REPORT
To the Shareholders of Florida Progress Corporation
and Florida Power Corporation:
We have audited the accompanying consolidated balance sheets of Florida Progress
Corporation and subsidiaries, and of Florida Power Corporation, as of December
31, 1995 and 1994, and the related consolidated statements of income, cash
flows, and shareholders' equity for each of the years in the three-year period
ended December 31, 1995. In connection with our audits of the financial
statements, we also have audited the financial statement schedules listed in
Item 14 therein. 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 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, 1995 and
1994, and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1995, 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 Note 1 to the consolidated financial statements, in 1993,
Florida Progress Corporation and subsidiaries, and Florida Power Corporation,
changed their method of accounting for income taxes.
/s/KPMG Peat Marwick LLP
- ---------------------------
KPMG Peat Marwick LLP
St. Petersburg, Florida
January 22, 1996
32
<PAGE>
FLORIDA PROGRESS
Financial Statements
FLORIDA PROGRESS CORPORATION
Consolidated Statements of Income
For the years ended December 31, 1995, 1994 and 1993
(In millions, except per share amounts)
1995 1994 1993
-------- -------- --------
REVENUES:
Electric utility $2,271.7 $2,080.5 $1,957.6
Diversified 783.9 691.0 491.4
--------- --------- ---------
3,055.6 2,771.5 2,449.0
EXPENSES: --------- --------- ---------
Electric utility:
Fuel used in generation 433.7 431.9 460.8
Purchased power 440.7 294.6 209.5
Deferred fuel (1.7) (1.5) (11.8)
Other operation 358.7 388.8 378.0
--------- --------- ---------
Operation 1,231.4 1,113.8 1,036.5
Maintenance 114.1 122.9 136.8
Depreciation 293.7 261.5 240.2
Taxes other than income taxes 176.2 162.8 152.6
--------- --------- ---------
1,815.4 1,661.0 1,566.1
--------- --------- ---------
Diversified:
Cost of sales 642.3 571.2 390.1
Other 74.3 63.3 50.2
--------- --------- ---------
716.6 634.5 440.3
--------- --------- ---------
INCOME FROM OPERATIONS 523.6 476.0 442.6
--------- --------- ---------
INTEREST EXPENSE AND OTHER:
Interest expense 142.0 144.8 141.1
Allowance for funds used during construction (7.3) (10.9) (15.6)
Preferred dividend requirements of
Florida Power 9.7 10.1 13.4
Other expense (income), net 3.9 10.3 (2.5)
--------- --------- ---------
148.3 154.3 136.4
--------- --------- ---------
INCOME BEFORE INCOME TAXES 375.3 321.7 306.2
Income taxes 136.4 109.7 110.4
--------- --------- ---------
INCOME BEFORE ACCOUNTING CHANGE 238.9 212.0 195.8
CUMULATIVE EFFECT OF INCOME TAX
ACCOUNTING CHANGE - - 0.8
--------- --------- ---------
NET INCOME $238.9 $212.0 $196.6
========= ========= =========
AVERAGE SHARES OF COMMON STOCK OUTSTANDING 95.7 93.0 88.3
========= ========= =========
EARNINGS PER AVERAGE COMMON SHARE:
Income before accounting change $2.50 $2.28 $2.22
Change in accounting for income taxes - - 0.01
--------- --------- ---------
$2.50 $2.28 $2.23
========= ========= =========
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
FLORIDA PROGRESS CORPORATION
Consolidated Balance Sheets
December 31, 1995 and 1994
(Dollars in millions)
1995 1994
----------- -----------
ASSETS
PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant in service and held
for future use $5,867.5 $5,603.4
Less: Accumulated depreciation 2,179.7 1,981.6
Accumulated decommissioning for nuclear plant 165.2 135.2
Accumulated dismantlement for fossil plants 104.4 92.4
---------- ----------
3,418.2 3,394.2
Construction work in progress 131.8 222.1
Nuclear fuel, net of amortization of $348.7
in 1995 and $322.8 in 1994 59.1 52.9
---------- ----------
Net electric utility plant 3,609.1 3,669.2
Other property, net of depreciation of $189.9
in 1995 and $163.5 in 1994 455.2 420.9
---------- ----------
4,064.3 4,090.1
---------- ----------
CURRENT ASSETS:
Cash and equivalents 4.7 14.4
Accounts receivable, net 309.5 262.2
Current portion of leases and loans receivable 43.0 15.3
Inventories, primarily at average cost:
Fuel 63.0 75.2
Utility materials and supplies 101.3 110.4
Diversified materials 113.2 68.1
Other 44.8 42.8
---------- ----------
679.5 588.4
---------- ----------
OTHER ASSETS:
Investments:
Leases and loans receivable, net 340.8 438.0
Marketable securities 188.2 148.3
Nuclear plant decommissioning fund 161.1 123.6
Joint ventures and partnerships 73.7 74.5
Deferred insurance policy acquisition costs 106.4 91.9
Other 177.1 163.9
---------- ----------
1,047.3 1,040.2
---------- ----------
$5,791.1 $5,718.7
========== ==========
The accompanying notes are an integral part of these financial statements.
34
<PAGE>
FLORIDA PROGRESS CORPORATION
Consolidated Balance Sheets
December 31, 1995 and 1994
(Dollars in millions)
1995 1994
----------- -----------
CAPITAL AND LIABILITIES
COMMON STOCK EQUITY:
Common stock without par value, 250,000,000 shares
authorized, 96,420,627 shares outstanding in 1995
and 95,175,360 in 1994 $1,187.6 $1,148.1
Retained earnings 888.4 842.9
Unrealized gain (loss) on securities available
for sale 2.1 (6.6)
---------- ----------
2,078.1 1,984.4
CUMULATIVE PREFERRED STOCK OF FLORIDA POWER:
Without sinking funds 113.5 113.5
With sinking funds 25.0 30.0
LONG-TERM DEBT 1,685.2 1,859.6
---------- ----------
TOTAL CAPITAL 3,901.8 3,987.5
---------- ----------
CURRENT LIABILITIES:
Accounts payable 168.5 147.1
Customers' deposits 85.3 76.9
Income taxes payable 14.4 12.7
Accrued interest 47.5 47.3
Other 119.3 84.1
---------- ----------
435.0 368.1
Notes payable - 55.3
Current portion of long-term debt 183.9 52.9
---------- ----------
618.9 476.3
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes 694.3 744.1
Unamortized investment tax credits 101.5 110.0
Insurance policy benefit reserves 265.0 222.5
Other postretirement benefit costs 84.8 67.8
Other 124.8 110.5
---------- ----------
1,270.4 1,254.9
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 11)
---------- ----------
$5,791.1 $5,718.7
========== ==========
The accompanying notes are an integral part of these financial statements.
35
<PAGE>
FLORIDA PROGRESS CORPORATION
Consolidated Statements of Cash Flows
For the years ended December 31, 1995, 1994 and 1993
(In millions)
1995 1994 1993
------ ------ ------
OPERATING ACTIVITIES:
Income before accounting change $238.9 $212.0 $195.8
Adjustments for noncash items:
Depreciation and amortization 359.1 321.7 299.9
Deferred income taxes and investment
tax credits, net (80.0) (32.3) (49.1)
Increase in accrued other postretirement
benefit costs 17.0 20.4 23.6
Net change in deferred insurance policy
acquisition costs (14.5) (10.4) (12.9)
Net change in deferred insurance policy
benefit reserves 42.5 36.0 25.8
Changes in working capital, net of effects
from acquisition or sale of businesses:
Accounts receivable (44.3) (17.4) (26.1)
Inventories (29.8) (10.1) 12.2
Accounts payable 19.4 (4.2) 17.7
Other 43.1 (11.5) 23.4
Other operating activities 11.6 28.3 (7.4)
------- ------- -------
563.0 532.5 502.9
------- ------- -------
INVESTING ACTIVITIES:
Property additions (including allowance for
borrowed funds used during construction) (335.4) (368.1) (462.4)
Proceeds from sale of properties and businesses 13.8 16.3 35.8
Purchase of leases, loans and securities (56.2) (74.1) (128.6)
Proceeds from sale or collection of leases,
loans and securities 101.2 102.2 150.1
Acquisition of businesses (9.2) (17.1) (80.5)
Investments in joint ventures and partnerships (5.2) (5.2) (24.1)
Distributions from joint ventures and
partnerships 0.4 3.9 26.0
Other investing activities (11.0) (10.8) (13.5)
------- ------- -------
(301.6) (352.9) (497.2)
------- ------- -------
FINANCING ACTIVITIES:
Issuance of long-term debt - 103.7 385.7
Repayment of long-term debt (55.5) (86.7) (473.2)
Increase (decrease) in commercial paper
with long-term support 1.0 (61.2) 154.0
Redemption of preferred stock (5.0) (5.0) (80.5)
Sale of common stock 38.4 138.0 59.1
Dividends paid on common stock (193.4) (185.9) (172.3)
Increase (decrease) in short-term debt (55.3) (75.6) 124.2
Other financing activities (1.3) (1.6) (1.7)
------- ------- -------
(271.1) (174.3) (4.7)
------- ------- -------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS (9.7) 5.3 1.0
Beginning cash and equivalents 14.4 9.1 8.1
------- ------- -------
ENDING CASH AND EQUIVALENTS $4.7 $14.4 $9.1
======= ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $135.5 $135.2 $138.1
Income taxes (net of refunds) $214.7 $171.5 $155.1
The accompanying notes are an integral part of these financial statements.
36
<PAGE>
FLORIDA PROGRESS CORPORATION
Consolidated Statements of Shareholder's Equity
For the years ended December 31, 1995, 1994 and 1993
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Cumulative
Unrealized Preferred Stock
Gain of Florida Power
(Loss) on ----------------
Securities Without With
Common Retained Available Sinking Sinking
Stock Earnings for Sale Funds Funds
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
Net income 238.9
Common Stock issued -
1,245,267 shares 39.5
Cash dividends on common stock
($2.02 per share) (193.4)
Unrealized gain on marketable
securities available for sale 8.7
Preferred stock redeemed -
50,000 shares (5.0)
-------------------------------------------------
Balance, December 31, 1995 $1,187.6 $888.4 $2.1 $113.5 $25.0
=================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
37
<PAGE>
FLORIDA POWER
Financial Statements
FLORIDA POWER CORPORATION
Statements of Income
For the years ended December 31, 1995, 1994 and 1993
(In millions)
1995 1994 1993
-------- -------- --------
OPERATING REVENUES $2,271.7 $2,080.5 $1,957.6
--------- --------- ---------
OPERATING EXPENSES:
Operation:
Fuel used in generation 433.7 431.9 460.8
Purchased power 440.7 294.6 209.5
Deferred fuel (1.7) (1.5) (11.8)
Other 358.7 388.8 378.0
--------- --------- ---------
1,231.4 1,113.8 1,036.5
Maintenance 114.1 122.9 136.8
Depreciation 293.7 261.5 240.2
Taxes other than income taxes 176.2 162.8 152.6
Income taxes 129.5 114.7 104.5
--------- --------- ---------
1,944.9 1,775.7 1,670.6
--------- --------- ---------
OPERATING INCOME 326.8 304.8 287.0
--------- --------- ---------
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used
during construction 3.8 6.1 8.9
Miscellaneous other income, net (2.6) (6.5) (1.9)
--------- --------- ---------
1.2 (0.4) 7.0
--------- --------- ---------
INTEREST CHARGES
Interest on long-term debt 93.5 96.3 91.7
Other interest expense 11.0 12.1 14.1
--------- --------- ---------
104.5 108.4 105.8
Allowance for borrowed funds used
during construction (3.5) (4.8) (6.7)
--------- --------- ---------
101.0 103.6 99.1
--------- --------- ---------
NET INCOME 227.0 200.8 194.9
DIVIDENDS ON PREFERRED STOCK 9.7 10.1 13.4
--------- --------- ---------
NET INCOME AFTER DIVIDENDS
ON PREFERRED STOCK $217.3 $190.7 $181.5
========= ========= =========
The accompanying notes are an integral part of these financial statements.
38
<PAGE>
FLORIDA POWER CORPORATION
Balance Sheets
December 31, 1995 and 1994
(Dollars in millions)
1995 1994
----------- -----------
ASSETS
PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant in service and held
for future use $5,867.5 $5,603.4
Less: Accumulated depreciation 2,179.7 1,981.6
Accumulated decommissioning for nuclear plant 165.2 135.2
Accumulated dismantlement for fossil plants 104.4 92.4
---------- ----------
3,418.2 3,394.2
Construction work in progress 131.8 222.1
Nuclear fuel, net of amortization of $348.7
in 1995 and $322.8 in 1994 59.1 52.9
---------- ----------
3,609.1 3,669.2
Other property, net 23.0 24.2
---------- ----------
3,632.1 3,693.4
---------- ----------
CURRENT ASSETS:
Cash and equivalents 0.8 -
Accounts receivable, less reserve of $5.2
in 1995 and $2.3 in 1994 200.7 167.3
Inventories at average cost:
Fuel 40.8 52.6
Materials and supplies 101.3 110.4
Deferred income taxes 32.3 28.8
Other 4.2 7.6
---------- ----------
380.1 366.7
---------- ----------
OTHER ASSETS:
Nuclear plant decommissioning fund 161.1 123.6
Unamortized debt expense, being amortized
over term of debt 27.5 29.6
Other 84.1 71.2
---------- ----------
272.7 224.4
---------- ----------
$4,284.9 $4,284.5
========== ==========
The accompanying notes are an integral part of these financial statements.
39
<PAGE>
FLORIDA POWER CORPORATION
Balance Sheets
December 31, 1995 and 1994
(Dollars in millions)
1995 1994
----------- -----------
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock without par value - 60,000,000 shares
authorized, 100 shares outstanding $992.9 $942.9
Retained earnings 761.1 724.5
---------- ----------
1,754.0 1,667.4
CUMULATIVE PREFERRED STOCK:
Without sinking funds 113.5 113.5
With sinking funds 25.0 30.0
LONG-TERM DEBT 1,279.1 1,363.8
---------- ----------
TOTAL CAPITAL 3,171.6 3,174.7
---------- ----------
CURRENT LIABILITIES:
Accounts payable 89.8 85.0
Accounts payable to associated companies 24.8 21.4
Customers' deposits 85.3 76.9
Income taxes payable 8.9 7.1
Accrued other taxes 12.3 11.3
Accrued interest 32.9 32.6
Other 65.1 36.2
---------- ----------
319.1 270.5
Notes payable - 55.3
Current portion of long-term debt 30.6 35.4
---------- ----------
349.7 361.2
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes 483.8 488.0
Unamortized investment tax credits 100.9 109.3
Other postretirement benefit costs 81.5 65.4
Other 97.4 85.9
---------- ----------
763.6 748.6
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 11)
---------- ----------
$4,284.9 $4,284.5
========== ==========
The accompanying notes are an integral part of these financial statements.
40
<PAGE>
FLORIDA POWER CORPORATION
Statements of Cash Flows
For the years ended December 31, 1995, 1994 and 1993
(In millions)
1995 1994 1993
------------------------
OPERATING ACTIVITIES:
Net income after dividends on preferred stock $217.3 $190.7 $181.5
Adjustments for noncash items:
Depreciation and amortization 329.7 294.8 276.5
Deferred income taxes and investment
tax credits, net (29.3) (0.9) (25.0)
Increase in accrued other postretirement
benefit costs 16.1 19.2 22.2
Allowance for equity funds used during construction (3.8) (6.1) (8.9)
Changes in working capital:
Accounts receivable (33.4) 0.9 (18.4)
Inventories 14.2 8.1 10.1
Accounts payable 4.8 (21.2) 35.2
Accounts payable to associated companies 3.4 4.3 (7.9)
Other 43.8 (2.4) 22.4
Other operating activities 8.6 10.9 (8.0)
------------------------
571.4 498.3 479.7
------------------------
INVESTING ACTIVITIES:
Construction expenditures (283.4) (319.5) (426.4)
Allowance for borrowed funds used during construction (3.5) (4.8) (6.7)
Additions to nonutility property (2.3) (2.9) (7.6)
Acquisition of electric distribution system - - (53.9)
Proceeds from sale of properties 10.8 7.7 6.0
Other investing activities (11.0) (12.4) (18.4)
------------------------
(289.4) (331.9) (507.0)
------------------------
FINANCING ACTIVITIES:
Issuance of long-term debt - - 385.0
Repayment of long-term debt (35.4) (46.0) (402.7)
Increase (decrease) in commercial paper with
long term support (54.8) - 104.0
Redemption of preferred stock (5.0) (5.0) (80.5)
Dividends paid on common stock (180.7) (175.7) (163.5)
Equity contributions from parent 50.0 130.0 60.0
Increase (decrease) in short-term debt (55.3) (69.7) 125.0
Other financing activities - - -
------------------------
(281.2) (166.4) 27.3
------------------------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 0.8 - -
Beginning cash and equivalents - - -
------------------------
ENDING CASH AND EQUIVALENTS $0.8 $ - $ -
========================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $97.9 $101.5 $93.8
Income taxes (net of refunds) $157.1 $129.8 $120.3
The accompanying notes are an integral part of these financial statements.
41
<PAGE>
FLORIDA POWER CORPORATION
Statements of Shareholder's Equity
For the years ended December 31, 1995, 1994 and 1993
(Dollars in millions, except share amounts)
Cumulative
Preferred Stock
--------------------
Without With
Common Retained Sinking Sinking
Stock Earnings Funds Funds
----------------------------------------
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
Net income after dividends on
preferred stock 217.3
Capital contribution by parent company 50.0
Cash dividends on common stock (180.7)
Preferred stock redeemed -
50,000 shares (5.0)
----------------------------------------
Balance, December 31, 1995 $992.9 $761.1 $113.5 $25.0
========================================
The accompanying notes are an integral part of these financial statements.
42
<PAGE>
FLORIDA PROGRESS CORPORATION AND FLORIDA POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL - Florida Progress is an exempt holding company under the 1935 Act. Its
largest subsidiary, representing 74% 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.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates.
ACCOUNTING FOR REGULATORY ASSETS AND LIABILITIES - Florida Power is regulated by
the FPSC and the FERC. The utility follows the accounting practices set forth in
Financial Accounting Standard No. 71, "Accounting for the Effects of Certain
Types of Regulation" ("FAS 71"). This standard allows utilities to capitalize or
defer certain costs or revenues if it is probable that these items will be
recovered through the ratemaking process.
At December 31, 1995, Florida Power had $99 million of regulatory assets and
$47 million of regulatory liabilities. Florida Power expects to fully recover
these assets and refund the liabilities through customer rates under current
regulatory practice.
If Florida Power no longer applied FAS 71 due to competition, regulatory changes
or other reasons, the utility would make certain adjustments. These adjustments
would include the write-off of all or a portion of its regulatory assets and
liabilities and the evaluation of property, plant and equipment and the write
down, if necessary, of these assets to their fair value.
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 1995 and 1994 and 7.9% for 1993.
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 difference between actual and projected costs is included on the
balance sheet as a current asset or current liability. Any difference is billed
or refunded to customers during the subsequent period.
Beginning in 1995, the FPSC ordered Florida Power to conduct a three-year test
of revenue decoupling for its residential customers. Decoupling eliminates the
direct link between KWH sales and revenues. A nonfuel revenue target is
determined by multiplying a revenue per customer amount by the total number of
43
<PAGE>
residential customers. Monthly residential customer bills are calculated just as
they were before decoupling. Differences between target revenues and actual
revenues are collected or re-funded over a 12-month period through the
conservation clause. The difference between target revenues and actual revenues
is included as a current asset or current liability on the balance sheet. The
revenue per customer amount is 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 realized, 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 - Deferred income taxes are provided on all significant temporary
differences between the financial and tax basis of assets and liabilities using
presently enacted tax rates in accordance with Financial Accounting Standard No.
109, "Accounting for Income Taxes," which was implemented in 1993.
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 5% for 1995 and 4.8% for 1994 and 1993.
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.
Florida Power accrues a reserve for maintenance and refueling expenses
anticipated to be incurred during scheduled nuclear plant outages.
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. Florida Progress' investments in debt and equity securities
are classified and accounted for as follows:
44
<PAGE>
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 securities held to maturity or available for sale at 1995 and
1994 year-ends. Florida Progress had no investments in assets classified as
trading securities at December 31, 1995 and 1994.
ACCOUNTING FOR DISPOSITION OF LONG-LIVED ASSETS - 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 reduction of Electric Plant in Service
on the balance sheet. One alternative, if adopted, would require Florida Power's
90.4% share of estimated nuclear decommissioning costs, totaling $366 million in
1995 dollars, to be recorded as a liability, with a corresponding plant asset.
There would be no impact on earnings or cash flows. The FASB is expected to
reach a decision in 1996.
IMPAIRED LOANS - Effective January 1, 1995, Florida Progress adopted 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." These standards
require Florida Progress to compute present values for impaired loans when
determining the allowance for credit losses. At December 31, 1995, approximately
$59 million of loans receivable were impaired, and Florida Progress has assigned
approximately $5 million of the allowance for loan losses to these loans.
Because Florida Progress' allowance is adequate for any such impairment, there
was no earnings impact as a result of implementing these standards.
IMPAIRED ASSETS - Florida Progress will be required to adopt Financial
Accounting Standard No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets To Be Disposed Of," in 1996. 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 is not expected to have
a material impact on earnings of Florida Progress or Florida Power.
STOCK COMPENSATION - Florida Progress will be required to adopt Financial
Accounting Standard No. 123, "Accounting for Stock-Based Compensation," in 1996.
This standard allows companies to account for stock issued to employees using a
new fair value method, or the method currently in use. Florida Progress has not
determined which method it will use, but does not expect a material impact on
earnings from the adoption of this standard.
BUSINESS ACQUISITIONS - Florida Progress and its subsidiaries acquired several
businesses in 1995, 1994 and 1993. All acquisitions were accounted for as
purchases except the acquisition of FM Industries, in December 1994, which was
accounted for on a pooling of interests basis. Because the effect of restating
data related to the FM Industries acquisition is not material, 1993 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 these shares at the date of issuance was $21.1 million.
45
<PAGE>
NOTE 2 DEBT
Florida Progress' long-term debt at December 31, 1995 and 1994, is scheduled to
mature as follows:
<TABLE>
<CAPTION>
Interest
Rate 1995 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Florida Power Corporation: (In millions)
First mortgage bonds:
Maturing through 1999:
1995 4.74% $ - $ 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
Pollution control revenue bonds:
Maturing 2014 through 2027 6.59%(a) 240.9 240.9
Notes maturing:
1995-1996 8.34%(a) 30.6 31.6
1997-2008 7.46%(a) 47.3 47.3
Commercial paper, supported by revolver maturing November 30, 2000 5.82%(a) 145.2 200.0
Discount, net of premium, being amortized over term of bonds (6.0) (6.7)
- ---------------------------------------------------------------------------------------------------------------
1,309.7 1,399.2
Progress Capital Holdings:
Notes maturing:
1995-1996 8.25%(a) 140.0 146.0
1997-2004 6.99%(a) 136.0 136.0
Commercial paper, supported by revolver maturing November 30, 2000 5.83%(a) 239.6 183.8
Other debt, maturing through 2006 8.79%(a) 43.8 47.5
- ---------------------------------------------------------------------------------------------------------------
1,869.1 1,912.5
Less: Current portion of long-term debt 183.9 52.9
- ---------------------------------------------------------------------------------------------------------------
$1,685.2 $1,859.6
- ---------------------------------------------------------------------------------------------------------------
(a) Weighted average interest rate at December 31, 1995.
</TABLE>
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, 1995. Interest rate options under the line of
credit arrangements vary from subprime or money market rates to the prime rate.
Banks providing lines of credit are compensated through fees. Commitment fees on
lines of credit vary between .06 and .10 of 1%.
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 1995, both 364-day facilities were extended to November 1996.
In addition, both five-year facilities were extended to November 2000. Based on
the duration of the underlying backup credit facilities, $384.8 million of
outstanding commercial paper at December 31, 1995, and $383.8 million of
outstanding commercial paper at December 31, 1994, are classified as long-term
debt.
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. 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.
A balance of $126 million is available for issuance under this program at either
fixed or floating rates.
46
<PAGE>
The combined aggregate maturities of long-term debt for 1996 through 2000 are
$183.9 million, $52.8 million, $16.1 million, $129.8 million and $393.8 million,
respectively. In addition, about 14% of Florida Power's outstanding first
mortgage bonds have an annual 1% sinking fund requirement. These requirements,
which total $1.3 million annually for 1996 and 1997 and $1 million annually for
1998 through 2000, are expected to be satisfied with property additions.
Florida Progress has a support agreement with Progress Capital that requires
Florida Progress to maintain a minimum net worth at Progress Capital. At
December 31, 1995, Progress Capital's net worth was $106.6 million higher than
the amount required under this agreement.
NOTE 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 1995 1994
- ---------------------------------------------------------------------------------------------------------------
(In millions)
Without sinking funds, not subject to mandatory redemption:
<S> <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 redemption:
7.08% $104.72(a) 500,000 250,000 $ 25.0 $ 30.0
- ---------------------------------------------------------------------------------------------------------------
(a) $102.36 after November 15, 1996; $100.00 after November 15, 2001.
</TABLE>
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. However, under Florida Progress'
Shareholder Rights Agreement, each share of common stock has associated with it
approximately two-thirds of one right to purchase one one-hundredth of a share
of Series A Junior Participating Preferred Stock, 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 table above.
Preferred stock redemption requirements for 1997 to 2000 are $2.5 million per
year.
47
<PAGE>
NOTE 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,
1995 and 1994:
(In millions) 1995 1994
- -------------------------------------------------------------------------------
Utility plant in service $656.6 $654.1
Construction work in progress 18.3 13.1
Unamortized nuclear fuel 59.1 52.9
Accumulated depreciation 310.9 285.2
Accumulated decommissioning 165.2 135.2
- -------------------------------------------------------------------------------
Net capital additions for Florida Power were $7.8 million in 1995 and $21.7
million in 1994, and depreciation expense, exclusive of nuclear decommissioning,
was $28.4 million in 1995 and $27.3 million in 1994. 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 November 1995, the FPSC approved a new site-specific study that estimated
total future decommissioning costs at approximately $2.0 billion, which
corresponds to $404.6 million in 1995 dollars. Florida Power increased its share
of the retail portion of annual decommissioning expense to the FPSC-approved
level of $20.5 million, effective January 1995. Florida Power also has adjusted
the wholesale portion of this expense in a comparable manner, increasing it to
$1.2 million annually.
Under the previous study, Florida Power's share of total annual decommissioning
expense, as authorized by the FPSC and the FERC, was $11.9 million for 1994 and
1993.
FUEL DISPOSAL COSTS - Florida Power has entered into a contract with the DOE for
the transportation and disposal of SNF. 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 SNF on site and has sufficient storage capacity in
place or under construction for fuel consumed through the year 2010.
NOTE 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 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 the
limited number of transactions. 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.
48
<PAGE>
At December 31, 1995 and 1994, Florida Progress had the following financial
instruments with estimated fair values compared with the carrying amounts:
1995 1994
Carrying Fair Carrying Fair
(In millions) Amount Value Amount Value
- -------------------------------------------------------------------------------
ASSETS:
Loans receivable:
Commercial finance business:
Real estate $106.8 $106.6 $118.4 $117.1
Airline 46.8 14 to 44 58.4 14 to 43
Life insurance business:
Loans secured by real estate 6.0 7.8 7.8 8.6
Policy loans 10.2 11.1 10.4 8.5
- -------------------------------------------------------------------------------
139.5 148.2
169.8 to 169.5 195.0 to 177.2
Allowance for loan losses (31.1) - (32.6) -
- -------------------------------------------------------------------------------
$139.5 $148.2
Total loans receivable $138.7 to 169.5 $162.4 to 177.2
- -------------------------------------------------------------------------------
Marketable securities:
Available for sale:
Nuclear plant decommissioning fund $161.1 $161.1 $123.6 $123.6
Progress Capital 135.2 135.2 93.3 93.3
Held to maturity 53.0 58.6 55.0 51.8
- -------------------------------------------------------------------------------
CAPITAL AND LIABILITIES:
Florida Power preferred stock
with sinking funds $ 25.0 $ 26.1 $ 30.0 $ 29.6
Long-term debt:
Florida Power 1,309.7 1,352.8 1,399.2 1,298.5
Progress Capital 559.4 566.2 513.3 504.0
- -------------------------------------------------------------------------------
NOTE 6 LEASES AND LOANS RECEIVABLE AND CONCENTRATION OF CREDIT RISK
At December 31, 1995 and 1994, investments in leases and loans receivable were
as follows:
(In millions) 1995 1994
- -------------------------------------------------------------------------------
Finance leases:
Rentals receivable $214.0 $238.1
Unguaranteed residual values 109.7 153.5
Unearned income (62.5) (78.7)
Deferred investment tax credits (14.7) (20.5)
- -------------------------------------------------------------------------------
Total finance leases 246.5 292.4
- -------------------------------------------------------------------------------
Loans receivable:
Commercial finance business 153.6 176.8
Life insurance business 16.2 18.2
- -------------------------------------------------------------------------------
Total loans receivable 169.8 195.0
Allowance for losses (32.5) (34.1)
- -------------------------------------------------------------------------------
383.8 453.3
Less: Current portion 43.0 15.3
- -------------------------------------------------------------------------------
$340.8 $438.0
- -------------------------------------------------------------------------------
49
<PAGE>
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. The
majority of the aircraft leases have remaining terms of 10 to 15 years, with a
maximum of 23 years. Net contractual maturities of rentals receivable under
these contracts are $12.6 million, $11.1 million, $10.4 million, $13.7 million
and $13.1 million for 1996 through 2000, respectively, and $153.1 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.
At December 31, 1995 and 1994, Progress Credit's portfolio included investments
in the airline and commercial real estate industries as follows:
(In millions) 1995 1994
- -------------------------------------------------------------------------------
Airline industry:
Finance leases $205.3 $254.2
Loans receivable 46.8 58.4
Joint ventures 36.3 37.6
Equipment on operating leases 6.2 7.4
- -------------------------------------------------------------------------------
$294.6 $357.6
- -------------------------------------------------------------------------------
Commercial real estate industry:
Finance leases $ 15.4 $ 16.2
Loans receivable 106.8 118.4
- -------------------------------------------------------------------------------
$122.2 $134.6
- -------------------------------------------------------------------------------
New transactions are not being initiated unless they facilitate Progress
Credit's orderly withdrawal strategy. Due to conditions in the airline industry
and the 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.
As of December 31, 1995, Progress Credit's portfolio includes $90.2 million in
loans and leases performing under restructured agreements. 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 1995, 1994 and 1993, Progress Credit provided $5.5 million, $9.9 million
and $5.9 million, respectively, for possible loan and lease losses and had
write-offs totaling $7.1 million, $.8 million and $4.2 million, respectively.
Florida Progress believes Progress Credit's existing reserve of $32 million is
adequate to cover its planned orderly withdrawal from these businesses, 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, 1995 and 1994.
50
<PAGE>
NOTE 7 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 products and services and the mining,
procurement and transportation of coal to Florida Power and other unaffiliated
customers. Other diversified operations include activities in leveraged leasing,
commercial finance, life insurance, real estate and technology development.
Florida Progress' business segment information for 1995, 1994 and 1993 is
summarized below. No single customer accounted for 10% or more of unaffiliated
revenues.
(In millions) 1995 1994 1993
- -------------------------------------------------------------------------------
Revenues:
Utility $2,271.7 $2,080.5 $1,957.6
Diversified:
Electric Fuels:
Coal sales to electric utility 236.8 249.4 244.9
Sales to unaffiliated customers 607.0 534.1 335.8
Other diversified 179.1 159.4 157.7
- -------------------------------------------------------------------------------
3,294.6 3,023.4 2,696.0
Eliminations (239.0) (251.9) (247.0)
- -------------------------------------------------------------------------------
Revenues from external customers $3,055.6 $2,771.5 $2,449.0
- -------------------------------------------------------------------------------
Income from operations:
Utility $ 456.3 $ 419.5 $ 391.5
Diversified:
Electric Fuels 52.1 41.6 30.3
Other diversified 15.2 14.9 20.8
- -------------------------------------------------------------------------------
523.6 476.0 442.6
Interest and other expense 148.3 154.3 136.4
- -------------------------------------------------------------------------------
Income before income taxes $ 375.3 $ 321.7 $ 306.2
- -------------------------------------------------------------------------------
Identifiable assets:
Utility $4,284.7 $4,284.0 $4,254.2
Diversified:
Electric Fuels 573.6 489.4 397.2
Other diversified 932.8 945.3 987.4
- -------------------------------------------------------------------------------
$5,791.1 $5,718.7 $5,638.8
- -------------------------------------------------------------------------------
Depreciation and amortization:
Utility $ 329.7 $ 294.8 $ 276.5
Diversified:
Electric Fuels 21.2 19.7 16.4
Other diversified 8.2 7.2 7.0
- -------------------------------------------------------------------------------
$ 359.1 $ 321.7 $ 299.9
- -------------------------------------------------------------------------------
Capital additions:
Utility $ 289.2 $ 327.2 $ 440.7
Diversified:
Electric Fuels 40.5 38.1 19.5
Other diversified 5.7 2.8 2.2
- -------------------------------------------------------------------------------
$ 335.4 $ 368.1 $ 462.4
- -------------------------------------------------------------------------------
51
<PAGE>
NOTE 8 INCOME TAXES
FLORIDA PROGRESS
(In millions) 1995 1994 1993
- -------------------------------------------------------------------------------
Components of income tax expense:
Payable currently:
Federal $192.5 $127.7 $140.7
State 23.9 14.3 18.8
- -------------------------------------------------------------------------------
216.4 142.0 159.5
- -------------------------------------------------------------------------------
Deferred, net:
Federal (63.9) (20.6) (39.2)
State (7.6) (2.1) (5.1)
Effect of change in tax rate on
deferred assets/liabilities - - 4.7
- -------------------------------------------------------------------------------
(71.5) (22.7) (39.6)
- -------------------------------------------------------------------------------
Amortization of investment
tax credits, net (8.5) (9.6) (9.5)
- -------------------------------------------------------------------------------
$136.4 $109.7 $110.4
- -------------------------------------------------------------------------------
FLORIDA POWER
(In millions) 1995 1994 1993
- -------------------------------------------------------------------------------
Components of income tax expense:
Payable currently:
Federal $136.8 $ 95.3 $110.2
State 22.1 17.1 19.1
- -------------------------------------------------------------------------------
158.9 112.4 129.3
- -------------------------------------------------------------------------------
Deferred, net:
Federal (18.9) 7.0 (13.9)
State (1.9) .6 (2.6)
- -------------------------------------------------------------------------------
(20.8) 7.6 (16.5)
- -------------------------------------------------------------------------------
Amortization of investment
tax credits, net (8.5) (8.5) (8.5)
- -------------------------------------------------------------------------------
Total income tax expense 129.6 111.5 104.3
Less: Amounts charged or (credited)
to non-operating income .1 (3.2) (.2)
- -------------------------------------------------------------------------------
Amounts charged to operating income $129.5 $114.7 $104.5
- -------------------------------------------------------------------------------
52
<PAGE>
The primary differences between the statutory rates and the effective income
tax rates are detailed below:
FLORIDA PROGRESS
1995 1994 1993
- -------------------------------------------------------------------------------
Federal statutory income tax rate 35.0% 35.0% 35.0%
State income tax, net of federal
income tax benefits 2.7 2.4 2.8
Amortization of investment tax credits (2.5) (3.1) (3.0)
Effect of change in tax rate on deferred
assets/liabilities - - 1.5
Other .2 (1.2) (1.8)
- -------------------------------------------------------------------------------
Effective income tax rates 35.4% 33.1% 34.5%
- -------------------------------------------------------------------------------
FLORIDA POWER
1995 1994 1993
- -------------------------------------------------------------------------------
Federal statutory income tax rate 35.0% 35.0% 35.0%
State income tax, net of federal
income tax benefits 3.7 3.7 3.6
Amortization of investment tax credits (2.4) (2.7) (2.8)
Other - (.3) (.7)
- -------------------------------------------------------------------------------
Effective income tax rates 36.3% 35.7% 35.1%
- -------------------------------------------------------------------------------
The following summarizes the components of deferred tax liabilities and assets
at December 31, 1995 and 1994:
FLORIDA PROGRESS
(In millions) 1995 1994
- -------------------------------------------------------------------------------
Deferred tax liabilities:
Difference in tax basis of property, plant and
equipment $565.5 $564.8
Difference in accounting for leveraged leases 184.3 226.6
Other 110.9 88.0
- -------------------------------------------------------------------------------
Total deferred tax liabilities $860.7 $879.4
- -------------------------------------------------------------------------------
Deferred tax assets:
Accrued book expenses $144.9 $114.1
Unbilled revenues 20.8 17.7
Other 33.0 32.4
- -------------------------------------------------------------------------------
Total deferred tax assets $198.7 $164.2
- -------------------------------------------------------------------------------
At December 31, 1995 and 1994, Florida Progress had net noncurrent deferred tax
liabilities of $694.3 million and $744.1 million and net current deferred tax
assets of $32.3 million and $28.9 million, respectively. Florida Progress
expects the results of future operations will generate sufficient taxable income
to allow for the utilization of deferred tax assets.
53
<PAGE>
FLORIDA POWER
(In millions) 1995 1994
- ---------------------------------------------------------------------------
Deferred tax liabilities:
Difference in tax basis of property,
plant and equipment $526.0 $527.9
Deferred book expenses 19.9 10.4
Under recovery of fuel 2.8 .7
Carrying value of securities over cost 4.5 -
- ---------------------------------------------------------------------------
Total deferred tax liabilities $553.2 $539.0
- ---------------------------------------------------------------------------
Deferred tax assets:
Accrued book expenses $ 64.4 $ 50.5
Unbilled revenues 20.8 17.7
Regulatory liability for deferred income taxes 13.4 8.3
Other 3.1 3.3
- ---------------------------------------------------------------------------
Total deferred tax assets $101.7 $ 79.8
- ---------------------------------------------------------------------------
At December 31, 1995 and 1994, Florida Power had net noncurrent deferred tax
liabilities of $483.8 million and $488.0 million and net current deferred tax
assets of $32.3 million and $28.9 million, respectively. Florida Power expects
the results of future operations will generate sufficient taxable income to
allow the utilization of deferred tax assets.
NOTE 9 RETIREMENT BENEFIT PLANS
STAFF REDUCTIONS - Florida Power recognized pension and other postretirement
benefit expenses of $5.6 million in 1993 and $15.5 million in 1994 related to
an early retirement option. In addition, in late 1994, Florida Power eliminated
approximately 300 positions. As a result, Florida Power recognized severance
costs of $5 million, which were 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 most 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 1995, 1994 or 1993.
Shown below are the components of the net pension expense calculations for those
years:
(In millions) 1995 1994 1993
- -------------------------------------------------------------------------------
Service cost $ 13.4 $17.2 $16.3
Interest cost 30.1 29.3 27.5
Actual losses (earnings) on plan assets (124.4) 6.6 (60.7)
Net amortization and deferral 77.7 (54.3) 17.9
- -------------------------------------------------------------------------------
Net pension cost (benefit) (3.2) (1.2) 1.0
Staff reduction cost, net - 10.0 .1
- -------------------------------------------------------------------------------
Net pension cost (benefit) recognized $ (3.2) $ 8.8 $ 1.1
- -------------------------------------------------------------------------------
Florida Power's share of the plan's net pension costs (benefits) for 1995, 1994
and 1993 was $(3) million, $9 million and $1 million, respectively.
54
<PAGE>
The following weighted average actuarial assumptions at January 1 were used
in the calculation of pension expense:
1995 1994 1993
- -------------------------------------------------------------------------------
Discount rate 8.25% 7.25% 7.75%
Expected long-term rate of return 9.00% 9.00% 9.00%
Rate of compensation increase 5.00% 5.00% 5.50%
- -------------------------------------------------------------------------------
The following summarizes the funded status of the pension plan at December
31, 1995 and 1994:
(In millions) 1995 1994
- -------------------------------------------------------------------------------
Accumulated benefit obligation:
Vested $315.8 $267.8
Nonvested 30.6 34.7
- -------------------------------------------------------------------------------
346.4 302.5
Effect of projected compensation increases 94.7 82.6
- -------------------------------------------------------------------------------
Projected benefit obligation 441.1 385.1
Plan assets at market value, primarily listed
stocks and bonds 585.0 480.0
- -------------------------------------------------------------------------------
Plan assets in excess of projected benefit obligation $143.9 $ 94.9
- -------------------------------------------------------------------------------
Consisting of the following components:
Unrecognized transition asset $ 35.4 $ 40.3
Unrecognized prior service cost (6.9) (7.5)
Effect of changes in assumptions and difference
between actual and estimated experience 123.9 73.8
Accrued pension costs (8.5) (11.7)
- -------------------------------------------------------------------------------
$143.9 $ 94.9
- -------------------------------------------------------------------------------
Due to changes in interest rates, Florida Progress used a discount rate of 7.25%
and a 4.5% weighted average rate of compensation increase to calculate the
pension plan's 1995 year-end funded status. The change in the discount rate from
8.25% at December 31, 1994, to 7.25% at December 31, 1995, increased the
projected benefit obligation by $60 million and is expected to increase the
annual pension costs by $8 million, beginning in 1996. The change in the
weighted average rate of compensation increase from 5% at December 31, 1994, to
4.5% at December 31, 1995, decreased the projected benefit obligation by $17
million and is expected to decrease the annual pension costs by $4 million,
beginning in 1996.
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.
The net postretirement benefit costs for 1995, 1994 and 1993 are detailed below:
(In millions) 1995 1994 1993
- -------------------------------------------------------------------------------
Service cost $ 5.1 $ 5.3 $ 5.6
Interest cost 13.5 12.9 11.8
Amortization of unrecognized transition obligation 6.1 6.1 6.5
Actual earnings on plan assets (.3) - -
Staff reduction cost - 3.7 5.5
- -------------------------------------------------------------------------------
$24.4 $28.0 $29.4
- -------------------------------------------------------------------------------
Florida Power's share of the plan's net postretirement benefit cost for 1995,
1994 and 1993 was $23.5 million, $27.1 million and $28.2 million, respectively.
55
<PAGE>
The following summarizes the plan's status, reconciled with amounts recognized
in Florida Progress' balance sheet at December 31, 1995 and 1994:
(In millions) 1995 1994
- -------------------------------------------------------------------------------
Accumulated postretirement benefit obligation:
Retirees $ 96.6 $ 92.7
Fully eligible active plan participants 2.6 1.5
Other active plan participants 91.4 74.2
Plan assets at fair value (3.2) (1.5)
- -------------------------------------------------------------------------------
187.4 166.9
Unrecognized transition obligation (103.6) (107.8)
Unrecognized net gains 1.0 8.7
- -------------------------------------------------------------------------------
Accrued postretirement benefit cost $ 84.8 $ 67.8
- -------------------------------------------------------------------------------
The following weighted average actuarial assumptions were used in the
calculation of the year-end status of other postretirement benefits:
1995 1994
- -------------------------------------------------------------------------------
Discount rate 7.25% 8.50%
Rate of compensation increase 4.50% 5.00%
Health care cost trend rates:
Pre-Medicare 11.50%-5.00% 12.25%-5.75%
Post-Medicare 8.25%-4.75% 9.00%-5.50%
- -------------------------------------------------------------------------------
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 1995 current service and interest cost by approximately $3
million and the accumulated postretirement benefit obligation as of December 31,
1995, by about $28 million. The change in the discount rate from 8.5% at
December 31, 1994, to 7.25% at December 31, 1995, increased the projected
benefit obligation by $28 million and is expected to increase annual
postretirement benefit costs by $2 million, beginning in 1996.
Due to different retail and wholesale regulatory rate requirements, Florida
Power began making quarterly contributions in 1994 to an irrevocable external
trust fund for wholesale ratemaking, while continuing to accrue post-retirement
benefit costs to an unfunded reserve for retail ratemaking. Florida Power
contributed approximately $1.4 million in 1995 and $1.6 million in 1994 to the
trust fund.
NOTE 10 RATES AND REGULATION
RETAIL RATES - Florida Power's currently approved retail rates provide the
opportunity to earn a regulatory return on equity of 12%, with an allowed range
between 11% and 13%. The utility's retail regulatory return on equity was 12.5%
for 1995.
WHOLESALE RATES - In 1995, the FERC approved Florida Power's two 1995 settlement
agreements. The new rates, effective January 1, 1995, are designed to increase
annual revenues by approximately $9.5 million primarily to recover additional
purchased power capacity costs. In 1994, the FERC approved Florida Power's 1994
and 1993 settlement agreements with its wholesale customers that provide for
rates designed to increase annual revenues by $9.8 million and $5.7 million,
respectively.
56
<PAGE>
In March 1995, the FERC proposed new rules that will require the electric
industry to provide open access to the nation's interstate transmission network.
Each utility under FERC jurisdiction will be required to file a
nondiscriminatory open access transmission tariff, making its transmission
system available to all wholesale buyers and sellers of electric energy. In
October 1995, the FERC accepted Florida Power's revised comparability tariff for
implementation, subject to refund, effective November 1995. Florida Power
expects that the FERC will hold hearings to review the proposed tariff by the
end of the second quarter 1996. Florida Power expects that the new tariff will
not have a material effect on Florida Power's revenues or earnings.
NOTE 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 $4 million, $11 million, $18 million, $18 million and $17 million for
1996 through 2000, respectively, and $182 million in total thereafter.
Additional commitments will be required in the future to supply Florida Power's
fuel needs.
Electric Fuels has entered into several contracts with outside parties for the
purchase of coal. Electric Fuels also has entered into several operating leases,
and rental or royalty agreements, relating to transportation equipment and coal
procurement and processing. The annual obligations under these contracts and
leases, including transportation costs, are $231.2 million, $176.3 million,
$104.5 million, $83.2 million and $67.7 million for 1996 through 2000,
respectively, and $126.6 million in total thereafter. The total cost incurred
for these commitments was $235.2 million in 1995, $199.2 million in 1994 and
$213.2 million in 1993.
Florida Power has long-term contracts for about 480 MWs of purchased power with
other utilities, including a contract with The Southern Company ("Southern") for
approximately 400 MWs 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 Southern purchases to approximately 200 MWs 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 MWs and
is guaranteed by Southern's entire system, totaling more than 30,000 MWs.
As of December 31, 1995, Florida Power had entered into purchased power
contracts with certain cogenerators for 1,164 MWs of capacity with expiration
dates ranging from 2002 to 2025. The purchased power contracts provide for
capacity and energy payments. Energy payments are based on the actual power
taken under these contracts. Capacity payments are subject to the qualifying
facilities meeting certain contract obligations. In most cases, these contracts
account for 100% of the generating capacity of each of the facilities. Of the
1,164 MWs under contract, 1,049 MWs are currently available. All commitments
have been approved by the FPSC. Florida Power does not plan to increase the
level of purchased power currently under contract.
Florida Power incurred purchased power capacity costs totaling $260.1 million in
1995, $138.6 million in 1994 and $74.3 million in 1993. The following table
shows minimum expected future capacity payments for purchased power commitments.
Because the purchased power commitments have relatively long durations, the
total 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:
57
<PAGE>
Purchased Power Capacity Payments
- -------------------------------------------------------------------------------
(In millions) Utilities Cogenerators Total
- -------------------------------------------------------------------------------
1996 $ 64 $ 221 $ 285
1997 67 238 305
1998 65 250 315
1999 66 262 328
2000 37 276 313
2001-2025 359 9,745 10,104
- -------------------------------------------------------------------------------
Total $658 $10,992 $11,650
- -------------------------------------------------------------------------------
Total net present value $ 3,372
- -------------------------------------------------------------------------------
The FPSC allows these capacity payments to be recovered through a capacity cost
recovery clause, which is similar to, and works in conjunction with, energy
payments recovered through the fuel adjustment clause.
The cogeneration purchased power contracts employ separate pricing methodologies
for capacity payments and energy payments. Two cogenerators had 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 MW
facility. The FPSC's rules limit standard offer cogeneration projects to 75 MWs,
and Florida Power filed a petition seeking an FPSC ruling that Florida Power's
standard offer contract is not available if the cogenerator constructs a larger
facility. Florida Power also has filed a lawsuit in federal court in connection
with this dispute.
Management does not expect the results of these legal actions will have a
material impact on earnings.
UTILITY CONSTRUCTION PROGRAM - Substantial commitments have been made in
connection with Florida Power's construction program. In 1996, total
construction expenditures of $265 million are projected, primarily for electric
plant and nuclear fuel.
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 debt support agreements totaled $33.4 million and $31.9
million at December 31, 1995 and 1994, respectively, of which $26.1 million and
$24.9 million were guaranties, and $7.3 million and $7 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
$37.4 million as of December 31, 1995, which represents partnership liabilities
in excess of amounts mentioned earlier. 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.
58
<PAGE>
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 EPA as PRPs 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. It has reserved
$2.8 million against these potential costs. Further study of the coal
gasification plant site could lead to increasing Florida Power's liability for
cleanup costs. It is too early to predict the outcome of the study. Estimates
of these additional costs are not available, but are not expected to have a
material effect on Florida Progress' financial position, operations or
liquidity.
59
<PAGE>
QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
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>
1995
Revenues $703.2 $742.9 $862.6 $746.9
Income from operations 110.3 123.6 180.9 108.8
Net income 46.6 55.2 91.1 46.0
Earnings per average common share .49 .58 .95 .48
Dividends per common share .505 .505 .505 .505
Common stock price per share:
High 32 5/8 32 3/8 32 1/2 35 3/4
Low 29 3/8 29 1/2 29 3/4 32 3/8
- ---------------------------------------------------------------------------------------------------------------
1994
Revenues $639.2 $693.2 $756.2 $682.9
Income from operations 91.3 121.8 155.2 107.7
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
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FLORIDA POWER CORPORATION
(Unaudited)
- --------------------------------------------------------------------------------------------------------------
Three Months Ended
(In millions) March 31 June 30 September 30 December 31
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
Operating revenues $515.9 $550.5 $671.8 $533.5
Net income $43.3 $53.0 $87.1 $43.6
Earnings on common stock $40.8 $50.6 $84.7 $41.2
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
</TABLE>
The business of Florida Progress' largest subsidiary, Florida Power, is
seasonal in nature and comparisons of earnings for the quarters do not give a
true indication of the overall trends and changes in operations.
60
<PAGE>
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 10% 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 41, Director since 1992. Member - Executive Committee,
Compliance 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 62, Director 1975-1978 and since 1988. Chairman -
Executive Committee. Member - Executive Committee effective April 1, 1996.
Information concerning Dr. Critchfield is set forth in Part I, Item 1 hereof
under the heading "Executive Officers".
Allen J. Keesler, Age 57, Director since 1988. Member - Executive Committee
until April 1, 1996.
Information concerning Mr. Keesler is set forth in Part I, Item 1 hereof under
the heading "Executive Officers".
Richard Korpan, Age 54, Director since 1989. Member - Executive Committee.
Chairman - Executive Committee effective April 1, 1996.
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 1994. Member - Executive Committee,
Chairman - Compliance Committee.
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.
61
<PAGE>
Clarence V. McKee, Esquire, Age 53, 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 Banks, Inc., and
American Heritage Life Insurance Company, Jacksonville.
Joseph H. Richardson, Age 46, Director and Member - Executive Committee
effective April 1, 1996.
Information concerning Mr. Richardson is set forth in Part I, Item 1 hereof
under the heading "Executive Officers".
Joan D. Ruffier, Age 56, Director since 1991.
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
SunTrust Bank, Central Florida N.A. in Orlando, and the board of the
Jacksonville Branch of the Federal Reserve Bank of Atlanta. She also serves on
the board of directors of the SunHealth Alliance of Charlotte, North Carolina.
She was a member and chairman of the Board of Regents of the State University
System of Florida. She also serves as a director of the University of Central
Florida Foundation, the University of Florida Foundation, the Community
Foundation of Central Florida Inc., Cyprus Equity Fund, and INVEST, INC.
Jean Giles Wittner, Age 61, Director since 1977.
Mrs. Wittner's principal occupation is President of Wittner & Company, St.
Petersburg, Florida, a 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. She has been a
director of Florida Power since 1977. She also serves on the board of Raymond
James Bank, F.S.B., Menorah Manor, a non-profit nursing home, and the Pinellas
County Education Foundation. She is also a member of the board of trustees of
Eckerd College.
All of the directors except Mr. Bostick, Mr. Logan and Mr. Richardson are
directors of Florida Progress. Mr. Keesler has resigned as a Director of
Florida Progress effective April 1, 1996. Each director holds office until the
next Annual Meeting of Shareholders and until the election and qualification of
a successor.
EXECUTIVE OFFICERS
Information concerning the executive officers of Florida Power is set forth in
Part I, Item 1 hereof under the heading "Executive Officers" and is incorporated
herein by reference.
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 1995, or written representations that no forms were
required, Florida Power believes that all persons who at any time during 1995
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 1995 and prior fiscal years.
62
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
FLORIDA PROGRESS
The information under the headings "Compensation of Directors", "Compensation
Committee Interlocks and Insider Participation", "Executive Compensation",
"Pension Plan Table" and "Employment Contracts and Termination of Employment" in
Florida Progress' Proxy Statement is incorporated herein by reference.
FLORIDA POWER
COMPENSATION OF DIRECTORS
For 1995, with the exception of Messrs. Bostick and Logan, the compensation for
all non-employee directors of Florida Power, excluding employees of Florida
Progress, was a daily meeting fee of $1,500 for Board and committee meetings
attended on any one day. Messrs. Bostick and Logan received these daily meeting
fees and $15,000 per year as a retainer fee. Non-employee directors who also
served on the Board of Directors of Florida Progress were 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 were allowed to be deferred at the discretion of a
director.
For 1996, compensation for all directors of Florida Power (excluding employees
of Florida Progress or subsidiaries) will be $1,500 for attendance at each
meeting of the Florida Power Board of Directors. Messrs. Bostick and Logan, and
effective April 1, 1996, Mr. Keesler will receive $20,000 per year as a retainer
fee and a meeting fee of $750 for attendance at each committee meeting.
Non-employee directors who also serve on the Board of Directors of Florida
Progress will be paid by Florida Progress an annual retainer in the amount of
$30,000, plus a fee of $1,500 for attendance at each meeting of Florida
Progress' Board of Directors, a $750 meeting fee to each Committee Chairman for
each meeting chaired, and a per day meeting fee of $1,500 for subsidiary and
committee meetings.
The foregoing payments are to be made effective January 1, 1996 in accordance
with the terms of the Stock Plan for Non-Employee Directors of Florida Progress
Corporation and Subsidiaries subject to approval by the shareholders of Florida
Progress at the 1996 Annual Meeting of Shareholders. If approved, 75% of the
directors' retainer fees will be paid in Florida Progress common stock. Only
the cash portion of directors' compensation will be allowed to be deferred.
EXECUTIVE COMPENSATION
The following table contains information with respect to compensation awarded,
earned or paid during the years 1993-1995 to (i) the Chief Executive Officer,
and (ii) the other four most highly compensated executive officers of Florida
Power (collectively the "Named Executive Officers") in 1995, whose total
remuneration paid in 1995 exceeded $100,000.
63
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation(1) ------------
Name and Principal ------------------------- LTIP All Other
Position Year Salary Bonus Payouts(2) Compensation(3)
- -------------------------- ----- ------ ----- ------------ ---------------
<S> <C> <C> <C> <C> <C>
ALLEN J. KEESLER, JR. (5) 1995 $397,848 $240,000 $260,419(4) $16,785
President and Chief 1994 383,011 172,500 178,904 15,837
Executive Officer 1993 379,548 208,000 217,250 9,888
JOSEPH H. RICHARDSON (5) 1995 $215,009 $113,000 $110,473(4) $ 8,835
Senior Vice President 1994 212,122 88,500 81,326 $ 4,226
1993 198,071 100,000 78,875 119
JEFFREY R. HEINICKA 1995 $211,200 $100,000 N/A $ 8,325
Senior Vice President and 1994 174,723 76,000 N/A 7,943
Chief Financial Officer 1993(6)
PERCY M. BEARD, JR. 1995 $209,997 $110,500 $113,608(4) $ 9,000
Senior Vice President 1994 206,345 83,000 76,826 9,090
1993 188,728 100,000 N/A 7,925
JOHN A. HANCOCK 1995 $199,992 $105,000 $109,974(4) $ 8,550
Senior Vice President 1994 197,088 72,500 74,786 8,700
1993 182,870 87,000 N/A 7,684
(1) All other annual compensation paid to the Chief Executive Officer and the Named Executive Officers
during 1995, 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 of shares of restricted Common Stock held by Named Executive Officers as of
December 31, 1995 as a result of awards earned under the 1991-1993 and 1992-1994 performance cycles and
the value of such shares, is as follows: Allen J. Keesler, Jr. 6,001 shares $212,285; Joseph M.
Richardson 2,515 shares $88,968; Percy M. Beard, Jr. 1,582 shares $55,963; and John A. Hancock 1,540
shares $54,478.
(3) Represents contributions to the Savings Plan of Florida Progress and/or the 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 8, 1996, the date of grant, of shares of Common Stock of
Florida Progress earned under the 1993-1995 performance cycle of the Florida Progress Long-Term
Incentive Plan ("LTIP"), two-thirds of which are restricted. The total number of shares earned are as
follows: Allen J. Keesler, Jr. 7,310 shares; Joseph H. Richardson 3,101 shares; Percy M. Beard, Jr.
3,189 shares and John A. Hancock 3,087 shares. The vesting schedule for the restricted stock is 50% on
January 1, 1997 and 50% on January 1, 1998, except that all of Mr. Keesler's restricted stock will vest
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 lapse.
(5) Allen J. Keesler, Jr. will retire as President and Chief Executive Officer of Florida Power on April 1,
1996. Joseph H. Richardson has been promoted to the position of President and Chief Operating Officer
of Florida Power effective April 1, 1996.
(6) No 1993 data is provided because Mr. Heinicka was not an executive officer in 1993.
</TABLE>
64
<PAGE>
The following table contains information with respect to Performance Shares
awarded in 1995 to the Chief Executive Officer and each of the Named Executive
Officers of Florida Power for the 1995-1997 performance cycle of the LTIP:
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLAN(1)
AWARDS IN 1995
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. 4,942 1995-1997 2,471 4,942 7,413
Joseph H. Richardson 2,324 1995-1997 1,162 2,324 3,486
Percy M. Beard 2,270 1995-1997 1,135 2,270 3,405
John A. Hancock 2,162 1995-1997 1,081 2,162 3,243
Jeffrey R. Heinicka 2,324 1995-1997 1,162 2,324 3,486
(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. The
Compensation Committee determined that Allen J. Keesler, Jr. will be able
to earn 42% of his award. 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
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 lapse.
(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 lifetime annual
benefits payable under the Florida Progress Corporation Supplemental Executive
Retirement Plan ("SERP").
65
<PAGE>
<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 in calculating benefits 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 Named Executive Officers in the summary
compensation table are as follows: Mr. Keesler, 33 years of service;
Mr. Richardson, 20 years of service; Mr. Heinicka, 18 years of service; Mr.
Beard, 6 years of service; and Mr. Hancock, 28 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%).
The Named Executive Officers 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 Executive
Officers (prior to any offsets) may be determined using 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. Richardson 20 years of service; Mr. Heinicka, 18 years of service; Mr.
Beard, 35 years of service; and Mr. Hancock, 28 years of service.
Accrued benefits may also be paid under each of the Retirement Plan,
Nondiscrimination Plan and the 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 (i) two
times the executive's current annual salary and bonus, (ii) the value of the
executive's prospective award under the SERP if he were to continue to work
until age 65 (including amounts that later would have been payable to any
surviving spouse) and (iii) 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. Keesler is taking early retirement effective April 1, 1996, pursuant to the
"special early retirement" provisions of the SERP which are separate and in lieu
66
<PAGE>
of those mentioned above. Under this arrangement, Mr. Keesler would receive,
until age 62, an annual retirement benefit of $375,762. After age 62, the
annual benefit would be reduced by $11,856, the amount of his annual Social
Security benefit. After his death, his spouse would receive an annual survivor
benefit of $187,881. The amounts of those benefits would be subject to
adjustment should Mr. Keesler select a survivor benefit under the Retirement and
Nondiscrimination Plans other than the 50% contingent annuitant payment option.
However, any adjusted benefit amounts would be actuarially equivalent to those
specified above. Approximately 61% of those benefits are payable pursuant to
the SERP, with the balance payable under the Retirement and Nondiscrimination
Plans. Florida Progress will also pay 95% of his medical insurance premiums and
71% of his spouse's. Mr. Keesler will also be eligible to be paid a pro rata
1996 Management Incentive Compensation Plan ("MICP") award and 75% and 42% of
his 1994-1996 and 1995-1997 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.
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 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, 1995, 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 28,249
Allen J. Keesler, Jr. 50,632
Richard Korpan 11,995
Frank C. Logan 1,900
Clarence V. McKee 1,770
Joan D. Ruffier 2,885
Jean Giles Wittner 8,639
Percy M. Beard, Jr. 2,483
John A. Hancock 15,588
Joseph H. Richardson 8,150
Jeffrey R. Heinicka 2,207
All 14 directors and executive
officers as a group, including
those named above 140,616 .15%
(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.
67
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
FLORIDA PROGRESS
The information included under the heading "Certain 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,
1995, 1994 and 1993
Florida Power
II-Valuation and Qualifying Accounts
for the years ended December 31,
1995, 1994 and 1993
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.
3. Exhibits filed herewith:
Florida Florida
Number Exhibit Progress Power
------ ------- -------- -------
3.(a) Bylaws of Florida Progress, as amended to date. X
3.(b) Bylaws of Florida Power, as amended to date. X
10.(a) Management Incentive Compensation Plan X X
of Florida Progress Corporation, as amended
to date.*
10.(b) Employment Agreement dated June 1, 1995
between Florida Progress and Richard Korpan.* X
68
<PAGE>
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);
Form S-3 (No. 2-93111)(relating to the
acquisition of Better Business Forms and filed
with the SEC on September 5, 1984; Form S-3
(No. 33-56873) (relating to the resale of shares
by the former shareholders of F.M. Industries,
Inc. ("FMI") and filed with the SEC on December
15, 1994); and Form S-3 (No. 333-547) (also
relating to the resale of shares held by the FMI
shareholders and filed with the SEC on January
30, 1996).
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
4. Exhibits incorporated herein by reference:
Florida Florida
Number Exhibit Progress Power
------ ------- -------- -------
3.(c) 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.)
3.(d) 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).
69
<PAGE>
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) 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.(c) 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.(d) 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).
4.(e) 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.(f) 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.(g) 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 Registration Statement on Form S-3
(No. 33-55273) as filed with the SEC on August
29, 1994.)
70
<PAGE>
4.(h) Form of Certificate representing shares of X
Florida Progress Common Stock. (Filed as
Exhibit 4 to Florida Progress' Form 10-K for
the year ended December 31, 1994, as filed with
the SEC on March 30, 1995.)
10.(c) Florida Progress Supplemental Executive X X
Retirement Plan. (Filed as Exhibit 10.(a) to
Florida Progress' Form 10-K for the year ended
December 31, 1994, as filed with the SEC on
March 30, 1995.)*
10.(d) Executive Optional Deferred Compensation Plan. X X
(Filed as Exhibit 10.(c) to Florida Progress'
Form 10-K for the year ended December 31, 1994,
as filed with the SEC on March 30, 1995.)*
10.(e) 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.(f) 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). *
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.
(b) Reports on Form 8-K:
During the fourth quarter of the year ended
December 31, 1995, Florida Progress and Florida Power
filed the following reports on Form 8-K:
Form 8-K dated October 19, 1995, reporting
under Item 5 "Other Events" a press release
and related Investor Information Report
reporting Florida Progress' and Florida Power's
third quarter 1995 earnings.
In addition, Florida Progress and Florida Power filed the
following report on Form 8-K subsequent to the fourth
quarter of 1995:
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
1996 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.
71
<PAGE>
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 20, 1996 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 20, 1996
- ----------------------------- Chief Executive Officer
Jack B. Critchfield and Director
Principal Executive Officer
/s/ Jeffrey R. Heinicka Senior Vice President and March 20, 1996
- ----------------------------- Chief Financial Officer
Jeffrey R. Heinicka
Principal Financial Officer
/s/ John Scardino, Jr. Vice President and March 20, 1996
- ----------------------------- Controller
John Scardino, Jr.
Principal Accounting Officer
/s/ Willard D. Frederick, Jr. Director March 20, 1996
- -----------------------------
Williard D. Frederick, Jr.
/s/ Michael P. Graney Director March 20, 1996
- -----------------------------
Michael P. Graney
/s/ Allen J. Keesler, Jr. Director March 20, 1996
- -----------------------------
Allen J. Keesler, Jr.
(Continued)
72
<PAGE>
Signature Title Date
--------- ----- ----
/s/ Richard Korpan Director March 20, 1996
- -----------------------------
Richard Korpan
/s/ Clarence V. McKee Director March 20, 1996
- -----------------------------
Clarence V. McKee
/s/ Vincent J. Naimoli Director March 20, 1996
- -----------------------------
Vincent J. Naimoli
/s/ Richard A. Nunis Director March 20, 1996
- -----------------------------
Richard A. Nunis
/s/ Charles B. Reed Director March 20, 1996
- -----------------------------
Charles B. Reed
/s/ Joan D. Ruffier Director March 20, 1996
- -----------------------------
Joan D. Ruffier
/s/ Robert T. Stuart, Jr. Director March 20, 1996
- -----------------------------
Robert T. Stuart, Jr.
/s/ Jean Giles Wittner Director March 20, 1996
- -----------------------------
Jean Giles Wittner
73
<PAGE>
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 20, 1996 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 20, 1996
------------------------- Board and Director
Jack B. Critchfield
/s/ Allen J. Keesler, Jr. President, Chief March 20, 1996
------------------------- Executive Officer
Allen J. Keesler, Jr. and Director
Principal Executive Officer
/s/ Jeffrey R. Heinicka Senior Vice President March 20, 1996
- ------------------------- and
Jeffrey R. Heinicka Chief Financial Officer
Principal Financial Officer
/s/ John Scardino, Jr. Vice President March 20, 1996
- ------------------------- and Controller
John Scardino, Jr.
Principal Accounting Officer
/s/ R. Mark Bostick Director March 20, 1996
- -------------------------
R. Mark Bostick
/s/ Richard Korpan Director March 20, 1996
- -------------------------
Richard Korpan
/s/ Frank C. Logan Director March 20, 1996
- -------------------------
Frank C. Logan
(Continued)
74
<PAGE>
/s/ Clarence V. McKee Director March 20, 1996
- -------------------------
Clarence V. McKee
/s/ Joan D. Ruffier Director March 20, 1996
- -------------------------
Joan D. Ruffier
/s/ Jean Giles Wittner Director March 20, 1996
- -------------------------
Jean Giles Wittner
75
<PAGE>
<TABLE>
<CAPTION>
Schedule II
FLORIDA PROGRESS CORPORATION
Valuation and Qualifying Accounts
For the Years Ended December 31, 1995, 1994, and 1993
(In millions)
Balance at Additions Balance at
Beginning Charged to Other End of
Description of Period Expense Deductions Add (Ded) Period
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31, 1995
Nuclear Refueling Outage Reserve $6.4 $12.7 $4.4 $-- $14.7
======= ======= ======= ======= ======
Insurance policy benefit reserves $222.5 $42.5 $ -- $-- $265.0
======= ======= ======= ======= ======
Reserve for loan & lease losses $34.1 $5.6 $7.2 $-- $32.5
======= ======= ======= ======= ======
FOR THE YEAR ENDED DECEMBER 31, 1994
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
======= ======= ======= ======= =======
(a) Increase due to adoption of Financial Accounting Standard No. 113.
</TABLE>
76
<PAGE>
<TABLE>
<CAPTION>
Schedule II
FLORIDA POWER CORPORATION
Valuation and Qualifying Accounts
For the Years Ended December 31, 1995, 1994, and 1993
(In millions)
Balance at Additions Balance at
Beginning Charged to Deductions End of
Description of Period Expense (See Note) Period
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31, 1995
1996 Nuclear Refueling Outage Reserve (#10) $6.4 $12.7 $4.4 $14.7
------- ------- ------- -------
$6.4 $12.7 $4.4 $14.7
======= ======= ======= =======
FOR THE YEAR ENDED DECEMBER 31, 1994
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
======= ======= ======= =======
</TABLE>
77
<PAGE>
EXHIBIT INDEX
Florida Florida
Number Exhibit Progress Power
------ ------- -------- -----
3.(a) Bylaws of Florida Progress, as amended to date. X
3.(b) Bylaws of Florida Power, as amended to date. X
10.(a) Management Incentive Compensation Plan X X
of Florida Progress Corporation, as amended
to date.*
10.(b) Employment Agreement dated June 1, 1995
between Florida Progress and Richard Korpan.* 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);
Form S-3 (No. 2-93111)(relating to the
acquisition of Better Business Forms and filed
with the SEC on September 5, 1984; Form S-3
(No. 33-56873) (relating to the resale of shares
by the former shareholders of F.M. Industries,
Inc. ("FMI") and filed with the SEC on December
15, 1994) and Form S-3 (No. 333-547) (also
relating to the resale of shares held by the FMI
shareholders and filed with the SEC on January
30, 1996).
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
78
<PAGE>
4. Exhibits incorporated herein by reference:
Florida Florida
Number Exhibit Progress Power
------ ------- -------- -----
3.(c) 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.)
3.(d) 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.(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) 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.(c) 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.(d) 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).
4.(e) 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).
79
<PAGE>
4.(f) 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.(g) 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 Registration Statement on Form S-3
(No. 33-55273) as filed with the SEC on August
29, 1994.)
4.(h) Form of Certificate representing shares of X
Florida Progress Common Stock. (Filed as
Exhibit 4 to Florida Progress' Form 10-K for
the year ended December 31, 1994, as filed with
the SEC on March 30, 1995.)
10.(c) Florida Progress Supplemental Executive X X
Retirement Plan. (Filed as Exhibit 10.(a) to
Florida Progress' Form 10-K for the year ended
December 31, 1994, as filed with the SEC on
March 30, 1995.)*
10.(d) Executive Optional Deferred Compensation Plan. X X
(Filed as Exhibit 10.(c) to Florida Progress
Form 10-K for the year ended December 31, 1994,
as filed with the SEC on March 30, 1995.)*
10.(e) 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.(f) 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). *
X = exhibit is filed for that respective company.
* Exhibit constitutes an executive compensation plan or arrangement.
80
EXHIBIT 3.(a)
Bylaws of Florida Progress, as amended to date.
<PAGE>
Adopted January 21, 1982
Amended August 16, 1984
Amended November 19, 1987
Amended January 21, 1988
Amended November 17, 1988
Amended April 19, 1990
Amended August 16, 1990
Amended February 7, 1991, effective April 18, 1991
Amended and Restated April 18, 1991
Amended February 6, 1992
Amended November 19, 1992
Amended February 8, 1996, effective April 1, 1996
FLORIDA PROGRESS CORPORATION
BYLAWS
<PAGE>
BYLAWS
FLORIDA PROGRESS CORPORATION
ARTICLE I
Offices
Section 1. The registered office and headquarters of the Corporation are in
the City of St. Petersburg, County of Pinellas, State of Florida.
Section 2. The Corporation may also have an office at such other places as
the business of the Corporation may require.
ARTICLE II
Seal
The Corporate seal shall be circular in form and have inscribed thereon the
following:
Florida Progress Corporation
Corporate Seal
Florida
1982
ARTICLE III
Meetings of Shareholders
Section 1. Annual Meeting. There shall be an annual meeting of shareholders in
the month of April of each year on such date and at such time and place as shall
be designated by the Board of Directors for the election of Directors and for
the transaction of such other business as may properly be brought before the
meeting.
Section 2. Special Meetings. Special meetings of the shareholders of the
Corporation, or of the holders of any class or series of stock, required or
authorized by law, shall be held for the purpose or purposes stated in the call
of said meeting, on the call of the Chairman of the Board, or the President, or
the Board of Directors, or when the holders of not less than ten percent (10%)
of all the votes entitled to be cast on any issue proposed to be considered at
the proposed special meeting sign, date, and deliver to the Corporation's
Secretary one or more written demands for the meeting describing the purpose or
purposes for which it is to be held.
1
<PAGE>
Section 3. Place; Record Date. Meetings of shareholders may be held within or
without the State of Florida. The Board of Directors shall fix a record date in
order to determine the shareholders entitled to notice of a shareholders'
meeting, to demand a special meeting, to vote or to take any other action.
Section 4. Notice. Written notice stating the date, time and place of each
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten (10) nor more than
sixty (60) days before the meeting, either personally or by first class mail, by
or at the direction of the President, the Secretary or the officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting. If the notice is mailed at least thirty (30) days before the date of
the meeting, it may be done by a class of United States mail other than first
class. If mailed, such notice shall be deemed to be delivered when deposited in
the United States mail addressed to the shareholder as the address appears on
the stock transfer books of the Corporation, with postage thereon prepaid.
Section 5. Notice of Adjourned Meetings. When a meeting is adjourned to
another date, time or place, it shall not be necessary to give any notice of the
adjourned meeting if the date, time or place to which the meeting is adjourned
is announced at the meeting before the adjournment is taken, and at the
adjourned meeting any business may be transacted that might have been transacted
on the original date of the meeting. If, however, after the adjournment, the
Board of Directors fixes a new record date for the adjourned meeting, a notice
of the adjourned meeting shall be given as provided in Section 4 to each
shareholder of record as of the new record date who is entitled to notice of
such meeting.
Section 6. Quorum and Voting. A majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. When a specified item of business is required to be voted on by a
class or series of stock, the holders of a majority of the shares of such class
or series shall constitute a quorum for the transaction of such item of business
by that class or series.
If a quorum exists, action on a matter, other than the election of
Directors, is approved if the votes cast by the holders of the shares
represented at the meeting and entitled to vote on the subject matter favoring
the action exceed the votes cast opposing the action, unless a greater number of
affirmative votes or voting by classes is required by law or the Articles of
Incorporation. The Directors shall be elected by a plurality of the votes cast
by the shares entitled to vote in the election at a meeting at which a quorum is
present.
2
<PAGE>
If a quorum does not exist, the holders of a majority of the shares
represented in person or by proxy and who would be entitled to vote if a quorum
had been present shall have the power to adjourn the meeting from time to time,
until the requisite amount of stock shall be represented. At such adjourned
meeting at which the requisite amount of stock shall be represented any business
may be transacted which might have been transacted at the original meeting if a
quorum had been present.
Section 7. Manner of Voting. A shareholder, other person entitled to vote on
behalf of a shareholder pursuant to law, or attorney-in-fact may vote the
shareholder's shares either in person or by proxy executed in writing by the
shareholder or his duly authorized attorney-in-fact in accordance with law.
Section 8. Action by Shareholders Without a Meeting. Any action required by
law, these Bylaws or the Articles of Incorporation of the Corporation to be
taken at any annual or special meeting of shareholders of the Corporation, or
any action which may be taken at any annual or special meeting of such
shareholders, may be taken without a meeting, without prior notice and without a
vote, if one or more written consents, setting forth the action so taken, shall
be dated and signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted, and shall be delivered to the Corporation within sixty (60) days of the
date of the earliest dated consent. If any class of shares is entitled to vote
thereon as a class, such written consent shall be required of the holders of a
majority of the shares of each class of shares entitled to vote as a class
thereon and of the total shares entitled to vote thereon.
Any written consent may be revoked prior to the date that the
Corporation receives the required number of consents to authorize the proposed
action. No revocation is effective unless in writing and until received by the
Corporation.
Within ten (10) days after obtaining such authorization by written
consent, notice shall be given to those shareholders who have not consented in
writing or who are not entitled to vote on the action. The notice shall fairly
summarize the material features of the authorized action and, if the action be a
merger, consolidation, sale or exchange of assets or other action for which
dissenters' rights are provided by law, the notice shall contain a clear
statement of the right of shareholders dissenting therefrom to be paid the fair
value of their shares upon compliance with further provisions of law regarding
the rights of dissenting shareholders.
A written consent shall have the same effect as a vote cast at a meeting
and may be described as such in any document.
3
<PAGE>
Whenever any action is taken by written consent, the written consents of
the shareholders consenting to such action or the written reports of inspectors
appointed to tabulate such consents shall be filed with the minutes of
proceedings of shareholders.
ARTICLE IV
Directors
Section 1. Number and Term of Office. The Board of Directors of the
Corporation shall consist of eleven (11) members, divided into three (3) classes
serving staggered terms in accordance with the Articles of Incorporation. The
three classes shall be designated Class I, Class II and Class III. Class I and
III shall consist of four directors each, and Class II shall consist of three
directors.
Section 2. Function. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the Corporation shall be
managed under the direction of, the Board of Directors.
Section 3. Qualification. Directors need not be residents of this
state or shareholders of the Corporation.
Section 4. Authority to Fix Compensation. The Board of Directors
shall have authority to fix the compensation of the Directors of the
Corporation.
Section 5. Duties of Directors. A Director shall discharge his duties as a
Director, including his duties as a member of any committee of the Board upon
which he may serve, in good faith, in a manner he reasonably believes to be in
the best interests of the Corporation, and with such care as an ordinarily
prudent person in a like position would use under similar circumstances.
In discharging his duties, a Director shall be entitled to rely on
information, opinions, reports or statements, including financial
statements and other financial data, in each case prepared or presented by:
(a) one or more officers or employees of the Corporation whom the
Director reasonably believes to be reliable and competent in the matters
presented;
(b) legal counsel, public accountants or other persons as to
matters which the Director reasonably believes to be within the persons'
professional or expert competence; or
(c) a committee of the Board of Directors upon which he does not
serve, duly designated in accordance with a provision of the Articles of
Incorporation or the Bylaws, as to matters within its designated authority,
which committee the Director reasonably believes to merit confidence.
4
<PAGE>
In discharging his duties, a Director may consider such factors as the
Director deems relevant, including the long-term prospects and interests of the
Corporation and its shareholders, and the social, economic, legal, or other
effects of any action on the employees, suppliers, customers of the Corporation
or its subsidiaries, the communities and society in which the Corporation or its
subsidiaries operate, and the economy of the state and the nation.
A Director shall not be considered to be acting in good faith if he has
knowledge concerning the matter in question which would cause such reliance
described above to be unwarranted.
A Director is not liable for any action taken as a Director, or any
failure to take any action, if he performed the duties of his office in
compliance with this Section 5.
Section 6. Removal of Directors. At a meeting of shareholders called expressly
for that purpose, any Director may be removed, only for cause, if the number of
votes cast to remove him exceeds the number of votes cast not to remove him. If
a Director is elected by a voting group or class of shares under the Articles of
Incorporation, only the shareholders of that voting group or class may
participate in the vote to remove him.
Section 7. Vacancies. Until the next election of Directors upon the expiration
of their terms, any vacancy occurring in the Board of Directors, including any
vacancy created by reason of an increase in the number of Directors, may be
filled only by the affirmative vote of a majority of the remaining Directors,
though less than a quorum of the Board of Directors. A Director elected to fill
a vacancy shall hold office only until the next election of Directors by the
shareholders and until his successor shall have been elected and shall qualify.
ARTICLE V
Chairman of the Board
The Corporation may have a Chairman of the Board who shall be a Director and
who shall preside at all meetings of the shareholders and of the Board of
Directors. He shall advise and counsel with the President. In addition to the
responsibility for maintaining effective external relationships on behalf of the
Corporation with industry groups, governmental agencies, scientific, educational
and other similar groups, he shall exercise such other responsibilities and
duties as shall be assigned to him by the Board of Directors. The Board of
Directors shall have the power at any time to leave the office of Chairman of
the Board vacant and, in such eventuality, the President shall assume and
exercise all of the powers and responsibilities of this office.
5
<PAGE>
ARTICLE VI
Meetings of the Board
Section 1. Time, Place, and Call of Meetings. Meetings of the Board of
Directors may be held within or without the State of Florida at the time fixed
by these Bylaws or upon call of the Chairman of the Board or the President or
the Secretary or any two Directors.
Section 2. Annual Meeting. The annual meeting of the Board of Directors shall
be held promptly following the annual meeting of shareholders.
Section 3. Notice of Meetings. Written notice of the date, time and place of
special meetings of the Board of Directors shall be given to each Director by
either personal delivery, mail, telegram or cablegram at least two (2) days
before the meeting.
Notice need not be given of regular meetings held each quarter on dates
promulgated before the end of the preceding year. Notice of a meeting of the
Board of Directors need not be given to any Director who signs a waiver of
notice, either before or after the meeting. Attendance of a Director at a
meeting shall constitute a waiver of notice of such meeting and waiver of any
and all objection to the place of the meeting, the time of the meeting, or the
manner in which it has been called or convened, except when a Director states,
at the beginning of the meeting or promptly upon arrival at the meeting, any
objection to the transaction of business because the meeting is not lawfully
called or convened.
Neither the business to be transacted at, nor the purpose of, any
meeting of the Board of Directors need be specified in the notice or waiver of
notice of such meeting.
A majority of the Directors present, whether or not a quorum exists, may
adjourn any meeting of the Board of Directors to another time and place. Notice
of any such adjourned meeting shall be given to the Directors who were not
present at the time of the adjournment and, unless the time and place of the
adjourned meeting are announced at the time of the adjournment, to the other
Directors.
Members of the Board of Directors or any committee of the Board of
Directors may participate in a meeting by means of a conference telephone or
similar communications equipment by means of which all Directors participating
in the meeting may simultaneously hear each other during the meeting.
Participation by such means shall constitute presence in person at a meeting.
The vote on any matter before the Board or any committee of the Board, when
members are present by means of a conference telephone or similar communication
equipment, shall be by roll call.
6
<PAGE>
Section 4. Action Without a Meeting. Any action required to be taken at a
meeting of the Board of Directors or a committee thereof may be taken without a
meeting if one or more written consents, setting forth the action so to be
taken, signed by all of the Directors, or all of the members of the committee,
as the case may be, is filed in the minutes of the proceeding. Action taken
under this section is effective when the last Director signs the consent, unless
the consent specifies a different effective date. A consent under this section
has the effect of a meeting vote and may be described as such in any document.
Section 5. Quorum and Voting. A majority of the number of Directors fixed by
these Bylaws shall constitute a quorum for the transaction of business. The act
of the majority of the Directors present at a meeting at which a quorum is
present when a vote is taken shall be the act of the Board of Directors.
Section 6. Presumption of Assent. A Director of the Corporation who is present
at a meeting of the Board of Directors or a committee thereof when corporate
action is taken shall be deemed to have assented to the action taken unless he
objects at the beginning of the meeting (or promptly upon his arrival) to
holding it or transacting specified business at the meeting, or he votes against
or abstains from the action taken.
Section 7. Director Conflicts of Interest. No contract or other transaction
between the Corporation and one or more of its Directors or any other
corporation, firm, association or entity in which one or more of the Directors
are directors or officers or are financially interested shall be either void or
voidable because of such relationship or interest or because such Director or
Directors are present at the meeting of the Board of Directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction or
because his or their votes are counted for such purpose, if:
(a) The fact of such relationship or interest is disclosed or known to
the Board of Directors or committee which authorizes, approves or ratifies the
contract or transaction by a vote or consent sufficient for the purpose without
counting the votes or consents of such interested Directors; or
(b) The fact of such relationship or interest is disclosed or known to
the shareholders entitled to vote and they authorize, approve or ratify such
contract or transaction by vote or written consent; or
(c) The contract or transaction is fair and reasonable as to the
Corporation at the time it is authorized by the Board, a committee, or the
shareholders.
7
<PAGE>
Common or interested Directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
Shares owned by or voted under the control of a Director who
has a relationship or interest in the subject transaction may not be counted in
the shareholders' vote to determine whether to authorize, approve, or ratify a
conflict of interest transaction under subparagraph (b) above.
ARTICLE VII
Committees
Section 1. Committees. The Board of Directors, by resolution adopted by a
majority of the full Board, may designate from among its members an Executive
Committee, Audit Committee, Finance and Budget Committee, Compensation
Committee, Nominating Committee and one or more other committees and may
designate one or more Directors as alternate members of any such committee who
may act in the place and stead of any absent member or members at any meeting of
such committee.
The members of committees, who shall be at least two in number, shall
act only as a committee and the individual members shall have no power as such.
Unless the Board of Directors elects a committee chairman, each committee shall
elect its own chairman and secretary, and have full power and authority to make
rules for the conduct of its business. The Board shall have the power at any
time to change the membership of committees, fill vacancies, and to abolish
committees.
Neither the designation of any such committee, the delegation thereto of
authority, nor action by such committee pursuant to such authority shall alone
constitute compliance by any member of the Board of Directors not a member of
the committee in question with his responsibility to act in good faith, in a
manner he reasonably believes to be in the best interests of the Corporation,
and with such care as an ordinarily prudent person in a like position would use
under similar circumstances.
Section 2. Executive Committee. The Executive Committee shall have and may
exercise all of the powers of the Board of Directors during the intervals
between the meetings of the Board in the management of the business and affairs
of the Corporation. A majority of the Executive Committee shall constitute a
quorum for the transaction of business, and the act of a majority of those
present at a meeting, at which a quorum is present, shall be the act of the
Executive Committee. The Executive Committee shall keep a record of its acts and
proceedings and make a report thereof from time to time to the Board of
Directors.
8
<PAGE>
The Executive Committee shall not have the authority to:
(a) approve or recommend to shareholders actions or proposals required
by the Florida Business Corporation Act to be approved by shareholders;
(b) fill vacancies on the Board of Directors or any committee thereof;
(c) adopt, amend or repeal the Bylaws;
(d) authorize or approve the reacquisition of shares
unless pursuant to a general formula or method specified by the Board of
Directors; or
(e) authorize or approve the issuance or sale or contract for the sale
of shares, or determine the designation and relative rights, preferences, and
limitations of a voting group except that the Board of Directors may authorize a
committee (or a senior executive officer of the Corporation) to do so within
limits specifically prescribed by the Board of Directors.
Section 3. Audit Committee: The Audit Committee shall be composed of at least
three outside Directors. The Committee will nominate the public accounting firm
to conduct the annual audit of the Corporation and submit the nomination to the
Board of Directors for approval. The Audit Committee shall keep a record of its
acts and proceedings and make a report thereof from time to time to the Board of
Directors.
ARTICLE VIII
Officers
Section 1. Executive Officers. The officers of the Corporation may consist of
a Chairman of the Board of Directors, and shall consist of a President, a
Secretary, a Treasurer, and such other officers as may be determined and
appointed by the Board of Directors. Officers shall be appointed by the Board of
Directors at least annually, at the first meeting of Directors immediately
following the annual meeting of shareholders of the Corporation, and shall serve
until their successors are appointed and shall qualify. Any two or more offices
may be held by the same person.
Section 2. Duties. The officers of the Corporation shall have the
following duties:
(a) President. The President shall have general and active management of
the business of the Corporation and shall see that all orders and resolutions of
the Board of Directors are carried into effect, subject, however, to the right
of the Board to delegate to others, so far as it lawfully may, any specific
powers;
9
<PAGE>
and shall, in the absence of the Chairman of the Board, preside at all
meetings of the shareholders and of the Board of Directors. The President may
appoint such agents as he may deem necessary, who shall hold office during his
pleasure, and who shall have such authority and shall perform such duties as
from time to time he may prescribe.
(b) Secretary. The Secretary shall have custody of, and maintain, all of
the corporate records except the financial records, shall record the minutes of
all meetings of the shareholders and of the Board of Directors, send all notices
of meetings, authenticate records of the Corporation and perform such other
duties as may be prescribed by the Board of Directors or the President.
(c) Treasurer. The Treasurer shall have custody of all corporate funds
and shall perform such other duties as may be prescribed by the Board of
Directors or the President.
Section 3. Removal of Officers. Any officer or agent appointed by the Board of
Directors may be removed by the Board with or without cause, whenever in its
judgment the best interests of the Corporation will be served thereby.
Any vacancy, however occurring, in any office may be filled by the Board
of Directors.
An officer's removal does not affect the officer's contract rights, if
any, with the Corporation. An officer's resignation does not affect the
Corporation's contract rights, if any, with the officer. The appointment of an
officer does not of itself create contract rights.
ARTICLE IX
Capital Stock
Section 1. Certificates of Stock. The Board of Directors shall provide for
the issue and transfer of the capital stock of the Corporation and
prescribe the form of the certificates for such stock.
Section 2. Form. Certificates representing shares in the Corporation shall be
signed (either manually or in facsimile) by the President or Vice President and
the Treasurer or an Assistant Treasurer and may be sealed with the seal of the
Corporation or a facsimile thereof. In case any officer who signed such
certificate, or whose facsimile signature has been placed upon such certificate,
shall have ceased to be such officer before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer at
the date of its issuance.
If and to the extent the Corporation is authorized to issue different
classes of shares or different series within a class, each certificate
representing shares shall state or fairly
10
<PAGE>
summarize upon the front or back of the certificate, or shall state
conspicuously on its front or back that the Corporation will furnish to any
shareholder upon request and without charge a full statement of:
(a) The designations, preferences, limitations, and relative rights
applicable to each class.
(b) The variations in the relative rights, preferences and limitations
determined for each series, and the authority of the Board of Directors to
determine the variations for future series.
Every certificate representing shares which are restricted as to the
sale, disposition or other transfer of such shares shall state that such shares
are restricted as to transfer and shall set forth or fairly summarize upon the
certificate such restrictions, or shall state that the Corporation will furnish
to any shareholder upon request and without charge a full statement of such
restrictions.
Each certificate representing shares shall state upon the face thereof:
the name of the Corporation; that the Corporation is organized under the laws of
the State of Florida; the name of the person or persons to whom issued; the
number and class of shares; and the designation of the series, if any, which
such certificate represents.
Section 3. Transfer of Stock. The stock of the Corporation shall be
transferable or assignable on the books of the Corporation by the holders in
person or by attorney on the surrender of the certificates therefor.
ARTICLE X
Fiscal Year
The fiscal year of the Corporation shall be the calendar year.
ARTICLE XI
Indemnification of Directors, Officers and Employees
The Corporation shall indemnify any Director, officer, or employee or any
former Director, officer, or employee to the full extent permitted by law.
ARTICLE XII
Dividends
The Board of Directors of the Corporation may, from time to time, declare, and
the Corporation may pay, dividends on its shares in cash, property or its own
shares, except as prohibited by law, or
11
<PAGE>
when contrary to any restrictions contained in corporate indentures, bonds, or
other financing agreements.
ARTICLE XIII
Amendment
Except as provided in Article VIII of the Articles of Incorporation, these
Bylaws may be altered, amended or repealed and new Bylaws may be adopted by an
affirmative vote of at least two-thirds of the number of Directors constituting
the Board of Directors or by an affirmative vote of the holders of at least
two-thirds of the outstanding Voting Stock (as defined in Article VIII of the
Articles of Incorporation) of the Corporation.
ARTICLE XIV
Gender
All references herein to the masculine pronoun shall be deemed to include the
feminine pronoun.
PF2/BY-PROG.FPC
12
Exhibit 3.(b)
Bylaws of Florida Power, as amended to date.
<PAGE>
Adopted 2/16/78
As Amended 12/16/82
As Amended 1/17/85
As Amended 4/18/85
As Amended 10/15/87
As Amended 1/21/88
BYLAWS
FLORIDA POWER CORPORATION
ARTICLE I
Offices
Section 1. The registered office and headquarters of the Corporation are
in the City of St. Petersburg, County of Pinellas, State of Florida.
Section 2. The Corporation may also have an office at such other places as
the business of the Corporation may require.
ARTICLE II
Seal
The Corporate seal shall be circular in form and have inscribed thereon the
following:
Florida Power Corporation
Corporate
Seal
1899
Florida
ARTICLE III
Meetings of Shareholders
Section 1. Annual Meeting. The annual meeting of shareholders for any year
shall be held in the month of April of each year and at the time and place
designated by the Board of Directors of the Corporation. Business transacted at
the annual meeting shall include, but not be limited to, the election of
Directors of the Corporation.
Section 2. Special Meetings. Special meetings of the shareholders of the
Corporation, or of the holders of any class or series of stock, required or
authorized by law, may be held for the purpose or purposes stated in the call of
said meeting, and shall be called by the Chairman of the Board, or the
President, or by the Board of Directors, or when requested in writing by the
holders of not less than ten
1
<PAGE>
percent (10%) of all the shares entitled to vote at the meeting.
Section 3. Place. Meetings of shareholders may be held within or
without the State of Florida.
Section 4. Notice. Written notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten (10) nor more than
sixty (60) days before the meeting, either personally or by first class mail, by
or at the direction of the President, the Secretary or the officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail addressed to the shareholder as the address appears on
the stock transfer books of the Corporation with postage thereon prepaid.
Section 5. Notice of Adjourned Meetings. When a meeting is adjourned to
another time or place, it shall not be necessary to give any notice of the
adjourned meeting if the time and place to which the meeting is adjourned is
announced at the meeting at which the adjournment is taken, and at the adjourned
meeting any business may be transacted that might have been transacted on the
original date of the meeting. If, however, after the adjournment, the Board of
Directors fixes a new record date for the adjourned meeting, a notice of the
adjourned meeting shall be given as provided in Section 4 to each shareholder of
record on the new record date entitled to vote at such meeting.
Section 6. Quorum. The holders of a majority of votes entitled to be cast,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. When a specified item of business is required to be voted on by a
class or series of stock, a majority of the votes entitled to be cast of such
class or series shall constitute a quorum for the transaction of such item of
business by that class or series.
Unless otherwise provided by law or the Articles of Incorporation
of the Corporation, and provided a quorum is present, the affirmative vote of
the majority of the votes represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders.
Section 7. Voting. A shareholder may vote either in person or by proxy
executed in writing by the shareholder or his duly authorized attorney-in-fact.
2
<PAGE>
Section 8. Action by Shareholders Without a Meeting. Any action required by
law, these Bylaws or the Articles of Incorporation of the Corporation to be
taken at any annual or special meeting of shareholders of the Corporation, or
any action which may be taken at any annual or special meeting of such
shareholders, may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted. If
any class of shares is entitled to vote thereon as a class, such written consent
shall be required of the holders of a majority of the shares of each class of
shares entitled to vote as a class thereon and of the total shares entitled to
vote thereon.
Within ten (10) days after obtaining such authorization by
written consent, notice shall be given to those shareholders who have not
consented in writing. The notice shall fairly summarize the material features of
the authorized action and, if the action be a merger, consolidation, or sale or
exchange of assets for which dissenters' rights are provided by law, the notice
shall contain a clear statement of the right of shareholders dissenting
therefrom to be paid the fair value of their shares upon compliance with further
provisions of law regarding the rights of dissenting shareholders.
ARTICLE IV
Directors
Section 1. Number. The number of Directors constituting the Board of
Directors of the Corporation shall be at least three (3). The Board of Directors
may, by resolution, fix or vary from time to time the number of Directors of the
Corporation; provided, however, the Board of Directors shall not have less than
three (3) nor more than fifteen (15) members and that no decrease shall have the
effect of shortening the term of any incumbent Director. The Board of Directors
may, by a majority vote of the full Board, increase the membership of the Board
by not more than two (2) members between annual meetings of Shareholders.
Section 2. Function. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the Corporation shall be
managed under the direction of, the Board of Directors.
Section 3. Qualification. Directors need not be residents of this
state or shareholders of this Corporation.
3
<PAGE>
Section 4. Authority to Fix Compensation. The Board of Directors shall
have authority to fix the compensation of Directors of the Corporation.
Section 5. Duties of Directors. A Director shall perform his duties as a
Director, including his duties as a member of any committee of the Board upon
which he may serve, in good faith, in a manner he reasonably believes to be in
the best interests of the Corporation, and with such care as an ordinarily
prudent person in a like position would use under similar circumstances.
In performing his duties, a Director shall be entitled to rely on
information, opinions, reports or statements, including financial statements and
other financial data, in each case prepared or presented by:
(a) one or more officers or employees of the Corporation whom
the Director reasonably believes to be reliable and competent in the matters
presented;
(b) counsel, public accountants or other persons as to matters
which the Director reasonably believes to be within such person's professional
or expert competence; or
(c) a committee of the Board upon which he does not serve, duly
designated in accordance with a provision of the Articles of Incorporation or
these Bylaws, as to matters within its designated authority, which committee the
Director reasonably believes to merit confidence.
A Director shall not be considered to be acting in good faith if
he has knowledge concerning the matter in question which would cause such
reliance described above to be unwarranted.
A person who performs his duties in compliance with this section
shall have no liability by reason of being or having been a Director of the
Corporation.
Section 6. Removal of Directors. At a meeting of shareholders called
expressly for that purpose, any Director or the entire Board of Directors may be
removed, with or without cause, by a vote of the holders of a majority of the
votes then entitled to be cast at an election of Directors. Whenever the holders
of the shares of any class are entitled to elect one (1) or more Directors by
the provisions of the Articles of Incorporation, the provisions of this section
shall apply, in respect to the removal of a Director or
4
<PAGE>
Directors so elected, to the vote of the holders of the outstanding shares of
that class and not to the vote of the outstanding shares as a whole.
Section 7. Vacancies. Any vacancy occurring in the Board of Directors,
including any vacancy created by reason of an increase in the number of
Directors, may be filled by the affirmative vote of a majority of the remaining
Directors though less than a quorum of the Board of Directors. A Director
elected to fill a vacancy shall hold office only until the next election of
Directors by the shareholders.
ARTICLE V
Chairman of the Board
The Corporation may have a Chairman of the Board who shall be a Director
and who shall preside at all meetings of the Shareholders and Directors. He
shall advise and counsel with the President and in addition to the
responsibility for maintaining effective external relationships on behalf of the
Corporation with industry groups, governmental agencies, scientific, educational
and other similar groups, he shall exercise such other responsibilities and
duties as shall be assigned to him by the Board of Directors. The Chairman of
the Board shall be an ex-officio member of all committees of the Board of
Directors. The Board of Directors shall have the power at any time to leave the
office of Chairman of the Board vacant and, in such eventuality, the President
of the Corporation shall assume and exercise all of the powers and
responsibilities of this office.
ARTICLE VI
Meetings of the Board
Section 1. Time, Place, and Call of Meetings. Meetings of the Board of
Directors shall be held within or without the State of Florida at the time fixed
by these Bylaws or upon call of the Chairman of the Board or the President or
the Secretary or any two (2) Directors.
Section 2. Annual Meeting. The annual meeting of the Board of Directors
shall be held promptly following the annual meeting of shareholders.
Section 3. Notice of Meetings. Written notice of the time and place of
meetings of the Board of Directors shall be given to each Director by either
personal delivery, mail, telegram or cablegram at least two (2) days before the
meeting.
5
<PAGE>
Notice need not be given of regular meetings held at times fixed
by these Bylaws. Notice of a meeting of the Board of Directors need not be given
to any Director who signs a waiver of notice, either before or after the
meeting. Attendance of a Director at a meeting shall constitute a waiver of
notice of such meeting and waiver of any and all objection to the place of the
meeting, the time of the meeting, or the manner in which it has been called or
convened, except when a Director states, at the beginning of the meeting, any
objection to the transaction of business the meeting is not lawfully called or
convened.
Neither the business to be transacted at, nor the purpose of, any
meeting of the Board of Directors need be specified in the notice or waiver of
notice of such meeting.
A majority of the Directors present, whether or not a quorum
exists, may adjourn any meeting of the Board of Directors to another time and
place. Notice of any such adjourned meeting shall be given to the Directors who
were not present at the time of the adjournment and, unless the time and place
of the adjourned meeting are announced at the time of the adjournment, to the
other Directors.
Members of the Board of Directors or any committee of the Board
of Directors may participate in a meeting by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other at the same time. Participation by such means
shall constitute presence in person at a meeting. The vote on any matter before
the Board or any committee of the Board, when members are present by means of a
conference telephone or similar communication equipment, shall be by roll call.
Section 4. Action Without a Meeting. Any action required to be taken at a
meeting of the Board of Directors or a committee thereof, may be taken without a
meeting if a consent in writing, setting forth the action so to be taken, signed
by all of the Directors, or all of the members of the committee, as the case may
be, is filed in the minutes of the proceeding. Such consent shall have the same
effect as a unanimous vote.
Section 5. Quorum and Voting. A majority of the number of Directors fixed
by these Bylaws shall constitute a quorum for the transaction of business. The
act of the majority of the Directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors.
Section 6. Presumption of Assent. A Director of the Corporation who is
present at a meeting of its Board of
6
<PAGE>
Directors at which action on any corporate matter is taken shall be presumed
to have assented to the action taken unless he votes against such action or
abstains from voting in respect thereto because of an asserted conflict of
interest.
Section 7. Director Conflicts of Interest. No contract or other transaction
between the Corporation and one or more of its Directors or any other
corporation, firm, association or entity in which one (1) or more of the
Directors are Directors or officers or are financially interested, shall be
either void or voidable because of such relationship or interest or because such
Director or Directors are present at the meeting of the Board of Directors or a
committee thereof which authorizes, approves or ratifies such contract or
transaction or because his or their votes are counted for such purpose, if:
(a) The fact of such relationship or interest is disclosed or
known to the Board of Directors or committee which authorizes, approves or
ratifies the contract or transaction by a vote or consent sufficient for the
purpose without counting the votes or consents of such interested Directors; or
(b) The fact of such relationship or interest is disclosed or
known to the shareholders entitled to vote and they authorize, approve or ratify
such contract or transaction by vote or written consent; or
(c) The contract or transaction is fair and reasonable as to the
Corporation at the time it is authorized by the Board, a committee, or the
shareholders.
Common or interested Directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
ARTICLE VII
Committees
Section 1. Committees. The Board of Directors, by resolution adopted by
a majority of the full Board, may designate from among its members an Executive
Committee and one or more other committees.
The members of committees shall act only as a committee and the
individual members shall have no power as such. Unless the Board of Directors
elects a committee chairman, each committee shall elect its own chairman and
secretary, and have full power and authority to make rules
7
<PAGE>
for the conduct of its business. The Board shall have the power at any time to
change the membership of committees, fill vacancies, and to abolish committees.
Neither the designation of any such committee, the delegation
thereto of authority, nor action by such committee pursuant to such authority
shall alone constitute compliance by any member of the Board of Directors not a
member of the committee in question with his responsibility to act in good
faith, in a manner he reasonably believes to be in the best interests of the
Corporation, and with such care as an ordinarily prudent person in a like
position would use under similar circumstances.
Section 2. Executive Committee. The Executive Committee shall have and may
exercise all of the powers of the Board during the intervals between the
meetings of the Board in the management of the business and affairs of the
Corporation. A majority of the Executive Committee shall constitute a quorum for
the transaction of business, and the act of a majority of those present at a
meeting, at which a quorum is present, shall be the act of the Executive
Committee. The Executive Committee shall keep a record of its acts and
proceedings and make a report thereof from time to time to the Board of
Directors.
The Executive Committee shall not have the authority to:
(a) approve or recommend to shareholders actions or proposals
required by law to be approved by shareholders;
(b) designate candidates for the office of Director, for
purposes of proxy solicitation or otherwise;
(c) fill vacancies on the Board of Directors or any committee
thereof;
(d) amend the Bylaws;
(e) authorize or approve the reacquisition of shares unless
pursuant to a general formula or method specified by the Board of Directors; or
(f) authorize or approve the issuance or sale of, or any contract
to issue or sell, shares or designate the terms of a series of a class of
shares, except that the Board of Directors, having acted regarding general
authorization for the issuance or sale of shares, or any contract therefor, and,
in the case of a series, the designation thereof, may, pursuant to a general
formula or method specified by the
8
<PAGE>
Board of Directors, by resolution or by adoption of a stock option or other
plan, authorize a committee to fix the terms of any contract for the sale of
the shares and to fix the terms upon which such shares may be issued or sold,
including, without limitation, the price, the rate or manner of payment of
dividends, provisions for redemption, sinking fund, conversion, voting or
preferential rights, and provisions for other features of a class of shares, or
a series of a class of shares, with full power in such committee to adopt any
final resolution setting forth all the terms thereof and to authorize the
statement of the terms of a series for filing with the Department of State.
ARTICLE VIII
Officers
Section 1. Executive Officers. The officers of this Corporation may consist
of a Chairman of the Board of Directors, and shall consist of a President, a
Secretary, a Treasurer, and such other officers as may be determined and
appointed by the Board of Directors. Each officer shall be elected by the Board
of Directors at the first meeting of Directors immediately following the annual
meeting of shareholders of the Corporation, and shall serve until a successor is
elected and qualified. Any two (2) or more offices may be held by the same
person.
Section 2. Duties. The officers of the Corporation shall have the
following duties:
(a) President. The President shall have general and active
management of the business of the Corporation and shall see that all orders and
resolutions of the Board of Directors are carried into effect, subject, however,
to the right of the Board to delegate to others, so far as it lawfully may, any
specific powers; and shall, in the absence of the Chairman of the Board, preside
at all meetings of the shareholders and Directors. The President may appoint
such agents as he may deem necessary, who shall hold office during his pleasure,
and who shall have such authority and shall perform such duties as from time to
time he may prescribe.
(b) Secretary. The Secretary shall have custody of, and maintain,
all of the Corporate records except the financial records, shall record the
minutes of all meetings of the shareholders and Board of Directors, send all
notices of meetings, and perform such other duties as may be prescribed by the
Board of Directors or the President.
9
<PAGE>
(c) Treasurer. The Treasurer shall have custody of all Corporate
funds and financial records, and shall perform such other duties as may be
prescribed by the Board of Directors or the President.
Section 3. Removal of Officers. Any officer or agent elected or appointed
by the Board of Directors may be removed by the Board with or without cause,
whenever in its judgment the best interests of the Corporation will be served
thereby.
Any vacancy, however occurring, in any office may be filled by
the Board of Directors.
Removal of any officer shall be without prejudice to the contract
rights, if any, of the person so removed; however, election or appointment of an
officer or agent shall not of itself create contract rights.
ARTICLE IX
Capital Stock
Section 1. Certificates of Stock. The Board of Directors shall provide
for the issue and transfer of the capital stock of the Corporation and prescribe
the form of the certificates for such stock.
Section 2. Form. Certificates representing shares in the Corporation shall
be signed by the President or Vice President and the Secretary or an Assistant
Secretary and may be sealed with the seal of the Corporation or a facsimile
thereof. The signatures of the President or Vice President and the Secretary or
Assistant Secretary may be facsimiles if the certificate is manually signed on
behalf of a transfer agent or a registrar other than the Corporation itself or
an employee of the Corporation. In case any officer who signed such certificate,
or whose facsimile signature has been placed upon such certificate, shall have
ceased to be such officer before such certificate is issued, it may be issued by
the Corporation with the same effect as if he were such officer at the date of
its issuance.
If and to the extent the Corporation is authorized to issue
shares of more than one class or more than one series of any class, every
certificate representing shares shall set forth or fairly summarize upon the
face or back of the certificate, or shall state that the Corporation will
furnish to any shareholder upon request and without charge a full statement of:
10
<PAGE>
(a) The designations, preferences, limitations, and relative
rights of the shares of each class or series authorized to be issued.
(b) The variations in the relative rights and preferences between
the shares of each such series, if the Corporation is authorized to issue any
preferred or special class in series and so far as the same have been fixed and
determined.
(c) The authority of the Board of Directors to fix and determine
the relative rights and preferences of subsequent series.
Every certificate representing shares which are restricted as to the
sale, disposition or other transfer of such shares shall state that such shares
are restricted as to transfer and shall set forth or fairly summarize upon the
certificate such restrictions, or shall state that the Corporation will furnish
to any shareholder upon request and without charge a full statement of such
restrictions.
Each certificate representing shares shall state upon the face
thereof; the name of the Corporation; that the Corporation is organized under
the laws of the State of Florida, the name of the person or persons to whom
issued; the number and class of shares; and the designation of the series, if
any, which such certificate represents; and the par value of each share
represented by such certificates, or a statement that the shares are without par
value.
Section 3. Transfer of Stock. The stock of the Corporation shall be
transferable or assignable on the books of the Corporation by the holders in
person or by attorney on the surrender of the certificates therefor.
ARTICLE X
Fiscal Year
The fiscal year of the Corporation shall be the calendar year.
ARTICLE XI
Indemnification of Directors, Officers and Employees
The Corporation shall indemnify any Director, officer, or employee or any
former Director, officer, or employee to the full extent permitted by law.
11
<PAGE>
ARTICLE XII
Dividends
The Board of Directors of the Corporation may, from time to time, declare,
and the Corporation may pay, dividends on its shares in cash, property or its
own shares, except as prohibited by law, or when contrary to any restrictions
contained in corporate indentures, bonds, or other financing agreements.
ARTICLE XIII
Amendment
These Bylaws may be amended or repealed and new Bylaws may be adopted by
the Board of Directors.
12
EXHIBIT 10.(a)
Management Incentive Compensation Plan of Florida Progress Corporation,
as amended to date.
<PAGE>
FLORIDA PROGRESS CORPORATION
MANAGEMENT INCENTIVE COMPENSATION PLAN
Amended and Restated
November 16, 1995
<PAGE>
FLORIDA PROGRESS CORPORATION
MANAGEMENT INCENTIVE COMPENSATION PLAN
- -------------------------------------------------------------------------------
Article 1. General Provisions
1.1 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.
1.2 Term of the Plan. The Plan, as amended and restated, shall be effective
as of January 1, 1996 (the "Effective Date"). The Plan shall remain in
effect until such time as the Company's Board of Directors elects to
terminate the Plan.
Article 2. 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:
2.1 "Base Salary Rate" shall mean the Participant's annual base salary in
effect as of December 31 of each Plan Year.
2.2 "Board" shall mean the Board of Directors of Florida Progress
Corporation.
2.3 "Chairman" shall mean the Chairman and Chief Executive Officer of the
Board of Directors of Florida Progress Corporation.
2.4 "Company" shall mean the Florida Progress Corporation and its
subsidiaries.
2.5 "Compensation Committee" or "Committee" shall mean the Compensation
Committee of the Board.
2.6 "Disability" shall have the meaning ascribed to such term in the
Participant's Company sponsored tax-qualified retirement plan, or if no
such plan exists, the following definition will apply.
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 Participant from engaging in and
performing all of the duties assigned to him and such Disability shall
have been in existence for a period of at least six months.
2.7 "Effective Date" means the date the Plan becomes effective, as set
forth in Section 1.2 herein.
Page 1 November 16, 1995
<PAGE>
2.8 "Employee" shall mean a person who is a full-time, active employee of
Florida Progress Corporation or a Subsidiary.
2.9 "Financial Goal(s)" shall mean the annual financial goal(s) established
for the Company or Subsidiary.
2.10 "Individual Goals" shall mean the established annual performance goals
and objectives for each Participant which will be used to determine the
Participant's Performance Award pursuant to the Plan.
2.11 "Participant" shall mean an Employee who is actively participating in
the Plan during any Plan Year.
2.12 "Performance Award" shall mean the amount of the cash award payable to
a Participant based on achievement of certain preestablished
performance goals during the applicable Plan Year.
2.13 "Plan" shall mean the Management Incentive Compensation Plan for the
Company as described and set forth herein.
2.14 "Plan Year" shall mean a calendar year beginning on January 1 and
ending on December 31.
2.15 "Pool" shall mean the total Performance Awards which are created and
funded based on the achievement of Financial Goal(s) with respect to
either the Company or a particular Subsidiary.
2.16 "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, as provided in Article 9 hereof.
2.17 "Retirement" shall have the meaning ascribed to such term in the
Participant's Company sponsored tax-qualified retirement plan, or if no
such plan exists, under that company's retirement policy.
2.18 "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.
2.19 "Supervisor" shall mean the immediate supervisor of Participant to whom
the latter reports on a day-to-day basis for operational and
administrative direction.
2.20 "Target Incentive" shall mean the percentage of Base Salary Rate at
risk by a Participant for 100% or full achievement of the applicable
Financial Goal(s).
Page 2 November 16, 1995
<PAGE>
Article 3. Administration
3.1 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, and subject to the terms of
the Plan, the Compensation Committee shall have the authority to:
(a) Review, and either accept, reject, or modify any or 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
the Chairman;
(c) Subject to Article 14 hereof, 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 amount
of each Pool, and achievement of Financial Goals; and
(e) Select Participants who shall be eligible to defer a
Performance Award with respect to any Plan Year, pursuant to
the criteria set forth in Section 10.1 hereof.
3.2 Chairman and Chief Executive Officer. As permitted by applicable law,
and subject to the terms of the Plan, 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, subject to the approval of the Committee, 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, two and
three 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; and
Page 3 November 16, 1995
<PAGE>
(d) Designate, at his discretion, an executive to administer the
Plan within the Company or any of its Subsidiaries.
Article 4. Eligibility and Participation
4.1 Eligibility. 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 President of each Subsidiary with the approval of the
Chairman.
4.2 No Right of Employment. Nothing in the Plan shall imply 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.
Article 5. Performance Measurement Period
The Plan measures and rewards performance achieved by the Company over the
course of the Plan Year.
Article 6. Performance Criteria
6.1 Financial Goals. The Plan's performance criteria for funding
Performance Awards shall be established each Plan Year consistent with
the Company's annual Financial Goal(s) and objectives.
6.2 Weighting of Financial Goals. Each Financial Goal established with
respect to Florida Progress Corporation and each Subsidiary shall be
weighted to reflect its relative importance in determining the size of
the 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
* Prescribed percentages of Subsidiary goals.
Article 7. Determination of Individual Performance Awards
7.1 Size of Individual Performance Awards. The size of individual
Performance Awards shall be based upon the assessment of the
Participant's achievement of Individual Goals during the Plan Year. All
Performance Awards are distributed from available funds in the
applicable Pool(s).
Page 4 November 16, 1995
<PAGE>
7.2 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, as determined by the
Committee, shall be from 10% up to 50% of the Participant's Base Salary
Rate.
7.3 Performance Award Pool. A Pool shall be established separately with
respect to the Company and each Subsidiary, and funds are not
transferrable between Pools. The amount of each Pool shall be
determined based on the level of achievement of the applicable
Financial Goal. As set forth below, at 100% achievement, the amount of
the Pool shall equal the TOTAL of the Participant Target Incentives; at
the Threshold achievement level, the amount of the Pool shall be 50% of
the TOTAL; and at the Maximum achievement level, the amount of the Pool
shall be equal to 150% of the TOTAL. Results between achievement levels
shall produce interpolated funding levels.
<TABLE>
<CAPTION>
Financial Goal Achievement
--------------------------------------------------------------
Threshold Target Maximum
--------------------------------------------------------------
<S> <C> <C> <C>
% of Target
Incentive 50% 100% 150%
</TABLE>
7.4 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 Individual Goals
are to be developed as the result of discussions between the
Participant and Supervisor. These Individual 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 Plan Year.
7.5 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.
7.6 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.
Page 5 November 16, 1995
<PAGE>
Article 8. Timing and Payment of Awards
8.1 Timing of Award Payments. Subject to deferrals made pursuant to
Articles 10 and 11 hereof, Participants in the Plan will receive their
Performance Awards, if any, as soon as practical after the completion
of the Plan Year.
8.2 Awards Payable in Cash. All Performance Awards payable under the Plan
shall be paid in cash. All Performance Awards shall be subject to the
Company's obligation to withhold the required amount of any Social
Security, federal, state, or local taxes attributed to any amounts
payable pursuant to the Plan.
Article 9. Limited Participation and Change in Target Incentive during Plan Year
9.1 Partial Plan Year Eligibility. Subject to Section 9.2 hereof, a
Participant must be an Employee of the Company or a Subsidiary as of
the last day of the Plan Year in order to be eligible to receive any
Performance Award pursuant to the Plan. In the event that an Employee
is a Participant in the Plan for less than a full Plan Year, the
following provisions shall apply:
(a) 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.
(b) The size of the Prorated Award payable pursuant to Section
9.1(a) hereof shall be determined by multiplying the
Performance Award which would have been earned by the
Participant for a full Plan Year's participation by the
fraction that reflects the number of months of active service
during the Plan Year, as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Prorated = Annual x Number of Months of Active
Award Performance Service During Plan Year
Award ------------------------
12
</TABLE>
9.2 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, 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 that reflects the number of months of active service during
the Plan Year, as set forth below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Prorated = Annual x Number of Months of Active
Award Performance Service During Plan Year
Award ------------------------
12
</TABLE>
Page 6 November 16, 1995
<PAGE>
9.3 Proration of Target Incentives. In the event a Participant's Target
Incentive changes during the Plan Year, the Performance Award shall be
determined as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Former x Former x # of + New x New x # of
Base Target Months Base Target Months
Salary Incentive ------ Salary Incentive ------
Rate 12 Rate 12
</TABLE>
Article 10. Deferral Opportunity
10.1 Eligibility. The Committee, in its discretion, may permit any eligible
Participant to defer all or a portion of his or her Performance Award
which may become payable under the terms of the Plan for any Plan Year.
It is the intent of the Company to extend eligibility to defer receipt
of Performance Awards only to those individuals who are deemed to
comprise a select group of management or highly compensated employees
such that the Plan will qualify for treatment as a "top hat" plan under
the Employee Retirement Income Security Act of 1974, as amended from
time to time or any successor act thereto.
In the event a Participant no longer meets the eligibility requirements
for making deferrals of a Performance Award under the Plan, as
determined by the Committee, such Participant shall become ineligible
to make further deferrals, retaining all the rights described in
Articles 10 and 11 hereof, except the right to make any further
deferrals, until such time that the Participant again becomes eligible
to make deferrals.
10.2 Participation. The Committee shall, in its discretion, determine the
Participants who are eligible to make deferrals for any Plan Year
pursuant to this Article 10 based on the criteria set forth in this
Section 10.1. Participants who are deemed eligible to defer a
Performance Award for any Plan Year shall be so notified in writing.
10.3 Mandatory Deferral of Awards. The Company shall defer paying any
Performance Award, including a Performance Award previously deferred by
a Participant, to the extent it would otherwise be disallowable as a
deduction under Section 162(m) of the Internal Revenue Code, as may be
amended from time to time, until such time as the payment will be
allowed as a deduction. Such deferral shall be subject to all of the
terms and provisions set forth in Articles 10 and 11 hereof, except to
the extent that any such terms or provisions are inconsistent with this
Section 10.3, as determined by the Committee. 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).
Page 7 November 16, 1995
<PAGE>
10.4 No Right to Defer. No Participant shall have the right to be selected
to defer a Performance Award under this Article 10 nor, having been so
selected for any given Plan Year, to be selected for any other Plan
Year.
10.5 Amount Which May Be Deferred. An eligible Participant may elect to
defer up to one hundred percent (100%) of his or her Performance Award
payable for any Plan Year. An election to defer a Performance Award for
any Plan Year shall be expressed by each Participant in increments of
ten percent (10%) of the Performance Award which may become payable
under the Plan.
10.6 Deferral Election. Eligible Participants shall make their elections to
defer the Performance Awards which may become payable under the Plan
for a given Plan Year prior to the beginning of that Plan Year, or such
earlier date as may be specified by the Committee. All deferral
elections shall be irrevocable, and shall be made on a "Performance
Award Deferral Election Form," as described herein.
Eligible Participants shall make the following irrevocable elections on
each "Performance Award Deferral Election Form":
(a) The percentage amount of the Performance Award to be deferred
for the Plan Year;
(b) The length of the deferral period, pursuant to the terms of
Section 10.7 herein; and
(c) The form of payment to be made to the Participant upon
Retirement, pursuant to the terms of Section 10.8 herein.
10.7 Length of Deferral. The deferral period elected by each Participant for
any Plan Year shall be either (a) until the Participant's Retirement;
or (b) for a period at least equal to one (1) year following the end of
the Plan Year in which the Performance Award is earned and no greater
than ten (10) years following such date; provided, however, that each
Participant may have only one (1) deferral period under this Section
10.7(b) outstanding at any one time. Notwithstanding the foregoing, no
deferral period selected pursuant to Section 10.7(b) may extend beyond
a Participant's Retirement.
Notwithstanding the deferral periods elected by a Participant, payment
of deferred amounts and accumulated interest thereon shall be made to
the Participant in a single lump sum in the event the Participant's
employment with the Company terminates for any reason other than
Retirement at a time prior to full payment of deferred amounts and
interest thereon. Such payment following employment termination shall
be made in cash as soon as practicable following the termination of the
Participant's employment.
Page 8 November 16, 1995
<PAGE>
10.8 Payment of Deferred Amounts. Amounts, together with interest earned
thereon, which are deferred to a date which occurs prior to a
Participant's Retirement shall be paid, in cash, in one lump sum as
soon as practicable following such date. With respect to amounts
deferred until Retirement, Participants shall be entitled to elect to
receive payment of such deferred amounts, together with earnings
thereon, in cash, commencing upon the effective date of their
Retirement, in a single lump-sum or in installments.
(a) Lump-Sum Payment. Such payment shall be made in cash as soon
as practicable following the Participant's Retirement.
(b) Installment Payments. Participants may elect payment of
deferred amounts in installments, with a minimum of two (2)
installments and a maximum of ten (10) installments. The
initial payment shall be made, in cash, as soon as practicable
following the effective date of the Participant's Retirement.
The remaining installment payments shall be made, in cash,
during the first quarter of each Plan Year thereafter, until
the Participant's entire deferred compensation account has
been paid.
The amount of each installment payment shall be equal to the
balance remaining in the Participant's deferred compensation
account immediately prior to each such payment, multiplied by
a fraction, the numerator of which is one (1), and the
denominator of which is the number of installment payments
remaining.
10.9 Financial Hardship. The Committee shall have the authority to alter the
timing or manner of payment of deferred amounts in the event that the
Participant establishes, to the satisfaction of the Committee, "severe
financial hardship." In such event, the Committee may, in its sole
discretion:
(a) Authorize the cessation of deferrals by such Participant under
the Plan; or
(b) Provide that all, or a portion, of the amount previously
deferred by the Participant shall immediately be paid in a
lump-sum cash payment; or
(c) Provide that all, or a portion, of the installments payable
over a period of time shall immediately be paid in a lump-sum
cash payment; or
(d) Provide for such other installment payment schedule as deemed
appropriate by the Committee under the circumstances.
For purposes of this Section 10.9, "severe financial hardship" shall
mean any financial hardship resulting from extraordinary and
unforeseeable circumstances arising as a result of one or more recent
events beyond the control of the Participant. In any event, payment may
not be made to the extent such
Page 9 November 16, 1995
<PAGE>
emergency is or may be relieved: (i) through reimbursement or
compensation by insurance or otherwise; (ii) by liquidation of the
Participant's assets, to the extent the liquidation of such assets
would not itself cause severe financial hardship; and (iii) by
cessation of deferrals under the Plan.
Withdrawals of amounts because of a severe financial hardship may only
be permitted to the extent reasonably necessary to satisfy the
hardship. Examples of what are not considered to be severe financial
hardships include the need to send a Participant's child to college or
the desire to purchase a home. The Participant's account will be
credited with interest in accordance with the Plan up to the date of
distribution.
The severity of the financial hardship shall be judged by the
Committee. The Committee's decision with respect to the severity of
financial hardship and the manner in which, if at all, the
Participant's future deferral opportunities shall be ceased, and/or the
manner in which, if at all the payment of deferred amounts to the
Participant shall be altered or modified, shall be final, conclusive,
and not subject to appeal.
Article 11. Participant's Accounts
11.1 Participants' Accounts. The Company shall establish and maintain an
individual bookkeeping account for deferrals made by each Participant
under Article 10 herein. Each account shall be credited as of the date
the amount deferred otherwise would have become due and payable to the
Participant.
11.2 Interest on Deferred Amounts. Amounts deferred under Article 10 shall
accrue interest as established by the Corporation based on the
investment return of the Stable Value Fund of the Florida Progress
Savings Incentive Plan. Each Participant's deferred compensation
account shall be credited on the last day of each calendar quarter,
with interest computed on the beginning quarterly balance in the
account. Interest on deferred amounts shall be paid out to Participants
at the same time and in the same manner as the underlying deferred
amounts.
11.3 Charges Against Accounts. There shall be charged against each
Participant's deferred compensation account any payments made to the
Participant or to his or her beneficiary.
Article 12. Designation of Beneficiary.
Each Participant shall designate a beneficiary or beneficiaries who, upon the
Participant's death, will receive the amounts that otherwise would have been
paid to the Participant under the Plan. All designations shall be signed by the
Participant, and shall be in such form as prescribed by the Committee. Each
designation shall be effective as of the date delivered to the Vice
President-Human Resources of the Company by the Participant.
Page 10 November 16, 1995
<PAGE>
Participants may change their designations of beneficiary on such form as
prescribed by the Vice President - Human Resources of Florida Power Corporation.
The payment of amounts deferred under the Plan shall be in accordance with the
last unrevoked written designation of beneficiary that has been signed by the
Participant and delivered by the Participant to the Vice President - Human
Resources of Florida Power Corporation prior to the Participant's death.
In the event that all the beneficiaries named by a Participant pursuant to this
Article 12 predecease the Participant, the amounts that would have been paid to
the Participant or the Participant's beneficiaries shall be paid to the
Participant's estate. In the event a Participant does not designate a
beneficiary, or for any reason such designation is ineffective, in whole or in
part, the amounts that otherwise would have been paid to the Participant or the
Participant's beneficiaries under the Plan shall be paid to the Participant's
estate.
Article 13. Forfeiture
13.1 Forfeiture of Participation. 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, as
determined by the Committee in its sole discretion.
13.2 Forfeiture of Payment. 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 the Company:
(a) use or disclose any financial or business information of the
Company 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. 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, 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 than 2% of the competitor's
total outstanding
Page 11 November 16, 1995
<PAGE>
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.
Article 14. Amendment and Termination
The Committee, in its sole discretion, without notice, at any time and from time
to time, may modify or amend, in whole or in part, any or all of the provisions
of the Plan, or suspend or terminate the Plan entirely; provided, however, that
no such modification, amendment, suspension or termination may, without the
consent of a Participant (or beneficiary, as applicable), materially and
adversely affect the right of a Participant (or beneficiary, as applicable) to a
payment or distribution hereunder with respect to an outstanding Performance
Award or previously deferred amounts.
Article 15. Miscellaneous
15.1 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining parts of the Plan and the Plan shall be
construed and enforced as if the illegal or invalid provision had not
been included.
15.2 Costs of the Plan. All costs of administering the Plan shall be borne
by the Company out of the Company's general assets. Although not
prohibited from doing so, the Company is not required, in any way, to
segregate assets in any manner or to specifically fund any benefits
provided under this Plan.
15.3 Contractual Obligation. The Plan shall create a contractual obligation
on the part of the Company to make payments from the Participants
accounts when due. Payment of account balances shall be made out of
the general funds of the Company.
15.4 Unsecured Interest. No Participant or party claiming an interest in
deferred amounts under a Participant shall have any interest whatsoever
in any specific asset of the Company. To the extent that any party
acquires a right to receive payments under the Plan, such right shall
be equivalent to that of an unsecured general creditor of the Company.
The Company may establish one or more trusts, with such trustee as the
Committee may approve, for the purpose of providing for the payment of
deferred amounts. Such trust or trusts may be irrevocable, but the
assets thereof shall be subject to the claims of the Company's general
creditors. To the extent any deferred amounts or contributions under
the Plan are actually paid from any such trust, the Company shall have
no further obligation with respect thereto, but to the extent not so
paid, such deferred amounts shall remain the obligation of, and shall
be paid by, the Company.
Page 12 November 16, 1995
<PAGE>
Article 16. 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.
\1micp\micpdoc.95
Page 13 November 16, 1995
EXHIBIT 10.(b)
Employment Agreement dated June 1, 1995
between Florida Progress and Richard Korpan
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered as of the 1st day of June,
1995, by and between Florida Progress Corporation (the "Company") and Richard
Korpan (the "Employee").
W I T N E S S E T H:
WHEREAS, the Employee is currently serving as the President and Chief
Operating Officer of the Company; and
WHEREAS, it is the desire of both parties that the arrangements and
understandings of the parties concerning the continued employment of the
Employee be set forth in writing.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. Employment. The Company hereby agrees to continue the employment of
the Employee, and the Employee hereby accepts such continued employment, upon
the terms and subject to the conditions set forth in this Agreement.
2. Term. The term of employment under this Agreement (the "Term of
Employment") shall begin as of June 1, 1995, and, subject to the provisions of
termination as hereinafter provided in Sections 6 and 7, shall terminate on
March 1, 1998; provided, however, that beginning on March 1, 1996 and on each
March 1 (the "Renewal Date") thereafter, the Term of Employment shall
automatically be extended for one additional year unless either party gives the
other written notice of termination at least ninety (90) days prior to any such
Renewal Date.
<PAGE>
3. Duties.
(a) The Employee has been engaged as the President and Chief
Operating Officer of the Company. In addition, the Employee shall have such
other duties and hold such offices as may from time to time be reasonably
assigned to him by the Board of Directors of the Company with respect to the
business and affairs of the Company.
(b) The Employee agrees to act within the scope of authority
delegated to him from time to time pursuant to this Agreement and, so far as
reasonably practicable, to observe and abide by every limitation placed upon
such authority from time to time. No latitude, indulgence or forbearance granted
by the Company to the Employee shall be deemed a relinquishment of its right to
direct or control him or a waiver of its right to require performance and
fulfillment of the duties and responsibilities of his employment hereunder or of
any other provision hereof.
4. Extent of Services. During his Term of Employment, the Employee
shall devote his full time, energy and attention to, and actively participate
in, the management of the business and affairs of the Company and shall not
become employed, engaged or involved, in any capacity, in any commercial or
professional endeavor, business or business activity other than the business and
affairs of the Company, provided, however, that the foregoing shall not prevent
Employee from serving as a director or trustee of other corporations or
organizations if such service has been approved by the Company's Board of
Directors.
5. Compensation. The Company shall pay the Employee, and the Employee
agrees to accept from the Company, as compensation in full for the Employee's
services under this Agreement and the faithful performance and observance of all
of the Employee's obligations to the Company hereunder, the following:
(a) Base Salary. Throughout the Term of Employment, the Employee
shall be paid a base salary at the rate of Four Hundred and Forty Thousand
Dollars ($440,000) per
2
<PAGE>
year, or such greater amount as may from time to time be determined by the
Board of Directors of the Company, payable in accordance with the Company's
standard pay practices.
(b) Incentive Plans. In addition to the base salary provided for in
paragraph 5(a), Employee shall be entitled to participate in Florida Progress'
MICP, and Florida Progress' LTIP, or any other incentive compensation plans that
may be established by the Board of Directors; participation in the MICP and LTIP
shall be at a percentage target level not less than the level authorized for
1995.
(c) SERP. Employee will be entitled to continue to participate in
the Company's Supplemental Executive Retirement Plan (SERP), or any successor
plan thereto at not less than his current benefits together with any
improvements thereto.
(d) Employee Benefits. Employee shall be entitled to continue to
participate in the Company's Retirement Plan, Savings Plan, Executive Optional
Deferred Compensation Plan and all other benefit plans that are available to
employees of the Company.
6. Termination by the Company. The Company, acting by a vote of its Board
of Directors, may terminate Employee's employment hereunder (and consequently
his Term of Employment) under the following circumstances:
(a) Termination for Cause.
(i) The willful, substantial, continued, and unjustified refusal
of Employee to perform the duties required of him by this Agreement to
the extent of his ability to do so.
(ii) The willful engaging by Employee in conduct which is
demonstrably and materially injurious to the Company, financially or
otherwise. For purpose
3
<PAGE>
of this paragraph, no act, or failure to act, on Employee's part shall
be deemed "willful" unless done, or omitted to be done, by Employee
not in good faith and without reasonable belief that Employee's action
or omission was in the best interest of the Company.
(iii) Notwithstanding the foregoing, Employee shall not be deemed
to have been terminated for cause unless and until there shall have been
delivered to Employee a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership of
the Board of Directors at a meeting of the Board (after reasonable
notice to Employee and an opportunity for Employee, together with
Employee's counsel, to be heard before the Board), finding that, in the
good faith opinion of the Board, Employee was guilty of engaging in such
conduct.
(b) Termination due to Disability. The Employee shall be unable to
perform his duties hereunder by reason of disability that shall have continued
for a period of at least one hundred and eighty (180) consecutive days.
Moreover, during any such 180-day period the Employee shall receive the base
salary and bonus pursuant to this Agreement as if he were not disabled. The word
"disability" as used in this Agreement shall mean the inability of the Employee,
as determined by the Board of Directors of the Company, by reason of physical or
mental disability to perform the duties required of him under this Agreement.
(c) Termination Without Cause. The Company, acting by majority vote of
its Board of Directors, will have the right to terminate the Term of Employment
without cause upon thirty (30) days' written notice to Employee.
Upon termination of Employee's employment under paragraph 6(c) or
by the Employee for Good Reason as defined in paragraph 8(d), the Employee shall
be entitled only to provisions of Section 8 and the Company shall have no other
obligation to the Employee. In the event termination of the Employee's
employment under the provisions of paragraph 6(a) or
4
<PAGE>
6(b) or if the Employee terminates his employment under this Agreement for any
reason other than "Good Reason" as defined in paragraph 8(d), all rights of the
Employee under this Agreement shall terminate upon the effective date of the
termination of employment, the Employee shall have no further rights to be
employed or to receive any further benefit under this Agreement, and the
Company shall thereafter have no obligations to the Employee under this
Agreement, except for rights of the Employee vested and accrued prior thereto.
7. Death of Employee. If the Employee dies during the Term of Employment, all
rights of the Employee under this Agreement shall terminate upon his death
(other than rights vested and accrued prior thereto). The Company shall pay to
the estate of the Employee the compensation that otherwise would be payable to
the Employee through the end of the calendar month in which his death occurs,
and the Company shall have no additional obligation under this agreement to the
Employee or his estate.
8. Severance Pay.
(a) If Employee's employment is terminated by the Company without cause
under the provisions of paragraph (c) of Section 6, or if Employee's employment
is terminated by the Employee for Good Reason, as defined in paragraph 8(d) of
this Agreement:
(i) the Employee shall be entitled to receive and the Company
shall be obligated to pay to the Employee, an amount equal to three
times the sum of his annual base pay and the MICP target amount in
effect as of the date of termination.
(ii) In addition, if the Company's LTIP and SERP are in effect on
the date of termination, the Employee shall be entitled to receive:
5
<PAGE>
- all shares of the Company's common stock that have been
awarded under the Company's LTIP, which shall immediately
vest and have all restrictions removed; and
- the "Actuarial Equivalent" as defined in the SERP, of any
vested Accrued Benefit provided in the SERP. In the event
the Employee is terminated prior to March 1, 1997, the
Employee shall be deemed to have satisfied the vesting
requirements contained in the SERP.
(b) The Company shall pay the Employee the amount due under paragraph
8(a) in 36 equal monthly installments. The first installment shall be due and
payable on the first day of the month following the date of termination, with
subsequent payments being due and payable on the first day of each following
month.
(c) Any amount payable under this Section 8 is in lieu of, and not in
addition to, any further compensation payments for the then remaining Term of
Employment. Such amount shall be paid to the Employee regardless of whether the
Employee finds, seeks or receives an offer for alternative employment or
receives compensation from other sources. The Employee shall be under no duty to
mitigate damages or losses that he might incur by reason of such termination of
his employment by the Company.
(d) For purposes of this Agreement, "Good Reason" shall mean, without
the Employee's express written consent, the occurrence of any one or more of the
following:
(i) a change in the duties and responsibilities of the Employee's
position such that a substantial reduction occurs from the duties and
responsibilities in effect either as of the date of this Agreement or
immediately prior to the change in responsibilities.
6
<PAGE>
(ii) a reduction by the Company of the Employee's base salary as in
effect on the date hereof, as increased from time to time, except a
reduction consistent with salary reductions of all personnel on the
executive payroll.
(iii) The Company requiring the Employee to be based in a city
other than the city where the Employee is based on the date hereof.
9. Restrictive Covenants.
(a) During the Term of Employment, and for a period of two (2) years
after the expiration of the Term of Employment or other termination of the
Employee's employment hereunder, whether by the Employee, the Company or
otherwise, for whatever reason or no reason at all, the Employee shall maintain
the confidentiality of all confidential and proprietary information relating to
the business of the Company and its subsidiaries that he has previously acquired
as an employee of the Company or that he may acquire in the course of his
engagement hereunder, and shall not utilize such confidential and proprietary
information to the detriment of the Company or any of its subsidiaries, or
otherwise knowingly disclose any such confidential information to any third
person. Following expiration of the Term of Employment or other termination of
the Employee's employment hereunder, whether by the Employee, the Company or
otherwise, for whatever reason or no reason at all, the Employee shall promptly
return to the Company all written materials containing confidential and
proprietary information regarding the Company or any of its subsidiaries that
the Employee has previously acquired as an employee of the Company or that he
obtained in the course of the performance of his duties hereunder.
(b) During the Term of Employment, and for a period of two (2) years
after the expiration of the Term of Employment or other termination of the
Employee's employment hereunder, whether by the Employee, the Company or
otherwise, for whatever reason or no reason at all, the Employee:
7
<PAGE>
(i) shall not induce or attempt to induce any employee of
the Company to leave the employ of the Company or any of its subsidiaries;
and
(ii) shall not, directly or indirectly, own, operate, manage, have
a proprietary interest of any kind in, extend financial assistance to,
solicit, encourage or handle patronage for, be employed by or serve as a
consultant, or in any other capacity, for the principal or branch office or
facilities of any person engaged primarily in business the same as,
substantially similar to or in substantial direct competition with the
business of the Company or any of its subsidiaries and located within the
States of Florida, Georgia, Alabama, North Carolina and South Carolina,
except that the Employee may own stock in such a corporation so long as
such stock is publicly traded, the Employee does not own more than five
percent (5%) of the outstanding stock of said corporation and the ownership
of such stock does not in any way represent any form of compensation for
any services rendered by the Employee to said corporation.
(c) It is understood by and between the parties hereto that the
covenants set forth in this Section 9 are essential elements of this Agreement,
and that, but for the agreement of the Employee to comply with such covenants,
the Company would not have agreed to enter into this Agreement. Such covenants
by the Employee shall be construed as agreements independent of any other
provision in this Agreement. The existence of any claim or cause of action of
the Employee against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of
such covenants, or any of them.
(d) The Employee agrees that damages at law will be an insufficient
remedy to the Company if the Employee violates the terms of this Section 9 and
that the Company would suffer irreparable damage as a result of any such
violation. Accordingly, it is agreed that the Company shall be entitled, upon
application to a court of competent jurisdiction, to obtain injunctive relief to
enforce the provisions of this Section 9, which injunctive relief shall be in
addition to any other rights or remedies available to the Company.
8
<PAGE>
(e) The Employee agrees to pay to the Company all costs and expenses
incurred by the Company relating to the enforcement of the terms of this Section
9, including reasonable fees and disbursements of counsel and legal assistants
(whether incurred before trial, at trial, in appellate proceedings, or
otherwise).
(f) The restrictions of this Section 9 shall extend to all activities of
Employee, whether as a sole proprietor, an independent contractor, partner or
joint venturer, or as an officer, director, stockholder (except as otherwise
specified in paragraph (b) (ii) above), agent, employee or salesman for any
individual, firm, partnership, corporation or other entity, or otherwise.
(g) The period of time during which the Employee is prohibited from
engaging in certain business practices pursuant to the provisions of paragraphs
(a) or (b) of this Section 9 shall be extended by any length of time during
which the Employee is in breach of such covenants.
(h) It is agreed by the Company and the Employee that if any portion of
the covenants set forth in this Section 9 are held to be invalid, unreasonable,
arbitrary or against public policy, then such portion of such covenants shall be
considered divisible both as to time and geographical area. The Company and the
Employee agree that, if any court of competent jurisdiction determines the
specified time period or the specified geographical area applicable to this
Section 9 to be invalid, unreasonable, arbitrary or against public policy, a
lesser time period or geographical area that is determined to be reasonable,
non-arbitrary and not against public policy may be enforced against the
Employee. The Company and the Employee agree that the foregoing covenants are
appropriate and reasonable when considered in light of the nature and position
held by the Employee and the extent of the business conducted by the Company.
10. Insider Trading Restrictions. The Employee acknowledges and is aware that
applicable state and federal securities laws prohibit any person who has
material non-public
9
<PAGE>
information about a company from purchasing or selling the securities of that
company. The Employee further acknowledges that during the course of his
employment by the Company he may become privy to material non-public
information regarding the Company or other companies. The Employee agrees
and acknowledges that such material non-public information will be the
property of the Company and such other companies. The Employee covenants and
agrees not to disclose, and will not suffer or permit any of the employees or
agents of the Company under his supervision to disclose, to any third person or
make use of any material non-public information about the Company or any other
company in connection with the purchase or sale of any securities, including
securities of the Company and its subsidiaries. The foregoing covenants
regarding material non-public information shall not apply to the extent that
such information is publicly disclosed by the Company or otherwise publicly
disclosed in accordance with law by a person other than the Employee.
11. Compliance with Other Agreements. The Employee represents and warrants
that the execution of this Agreement by him and his performance of his
obligations hereunder will not conflict with, result in the breach of any
provision of or the termination of or constitute a default under any Agreement
to which the Employee is a party or by which the Employee is or may be bound.
12. Disputes. Should a Change in Control, as defined in Section 2.1(e) of the
SERP, occur, Employee shall be entitled to recover all reasonable costs and
expenses (including fees and disbursements of counsel and legal assistants,
whether incurred before trial, at trial, in appellate proceedings, or otherwise)
incurred with respect to any action relating to this Agreement, whether brought
by Employee, or by or on behalf of the Company or any successor or affiliate; in
all other cases, the prevailing party in any action relating to this Agreement
shall be entitled to recover all such costs and expenses.
13. Waiver of Breach. The waiver of the Company of a breach by the
Employee of any provision of this Agreement shall not operate or be construed as
a waiver of any
10
<PAGE>
subsequent breach by the Employee. No waiver shall be valid unless in writing
and approved by the Board of Directors of the Company.
14. Notice. All notices, requests, demands and other communications that are
required or that may be given under this Agreement shall be in writing and shall
be deemed to have been duly given when received, if personally delivered; when
transmitted, if transmitted by electronic fax, telecopy or similar electronic
transmission method (provided customary evidence of receipt is obtained); the
day after it is sent, if sent by recognized overnight delivery service; and
three days after it is sent, if mailed, first class certified mail, return
receipt requested, postage prepaid. In each case notice shall be sent to the
parties at the following addresses:
To the Company at: Florida Progress Corporation
P. O. Box 33042
St. Petersburg, FL 33733
Attn: Corporate Secretary
To the Employee at: Mr. Richard Korpan
4993 Turtle Creek Trail
Oldsmar, FL 34677
Personal delivery to the Company shall be only to an executive officer thereof
other than the Employee. Either party may change his or its address to which
notice is to be sent pursuant hereto by sending a notice of such change in
conformity with the foregoing requirements to the other party.
15. Binding Effect; Assignment. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company. This Agreement is a personal employment
contract, and the Employee acknowledges that the services to be rendered by him
are unique and personal. Accordingly, the Employee may not assign or otherwise
transfer any of his rights or delegate any of his duties or obligations under
this Agreement.
11
<PAGE>
16. Entire Agreement. The parties hereto agree that this Agreement constitutes
the entire agreement between the parties hereto pertaining to the employment of
the Employee, that this Agreement supersedes all prior and contemporaneous
agreements and understandings of the parties, and that there are no warranties,
representations or other agreements between the parties in connection with the
subject matter hereof except as specifically set forth in this Agreement.
17. Separability and Modification. In the event any provision of this
Agreement is invalid or unenforceable under the laws of the State of Florida,
such provision shall be deemed to be restricted in scope or otherwise modified
to the extent necessary to render the same valid and enforceable, or shall be
deemed excised from this Agreement if circumstances so require, and this
Agreement shall be constructed and enforced herein as so restricted or modified,
or as if such provision had not originally been contained herein, as the case
may be.
18. Amendment. The parties hereto may amend or modify this Agreement in
such manner as may be agreed upon only by a written instrument executed by such
parties.
19. Definition of "Person." For all purposes of this Agreement, the word
"person" shall refer not only to a natural person but also to any corporation,
partnership, joint venture, trust or other entity or business arrangement.
20. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Florida.
21. Headings. The headings of the various sections in this Agreement are
inserted for the convenience of the parties and shall not affect the meaning,
construction or interpretation of this Agreement. They are not intended to
modify or explain or to be a full or accurate description of the contents
hereof.
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
/s/ Kathleen M. Haley /s/ Richard Korpan
- ----------------------------- -------------------------------
Witness Richard Korpan
/s/ Karin S. Griffin
- -----------------------------
Witness FLORIDA PROGRESS CORPORATION
By:/s/ Jack B. Critchfield
/s/ Terry L. Hipps -------------------------------
- -----------------------------
Witness
/s/ Karin S. Griffin
-----------------------------
Witness
13
<PAGE>
MR. RICHARD KORPAN
ESTIMATED
VESTED ACCRUED BENEFIT
MARCH 1, 1997
ASSUMPTIONS:
Service at termination: 7 Years 9 Months
Service at normal retirement: 17 Years 9 Months
Final Average Earnings
Base salary: 3/7/1994 $440,000
Average of highest 3 consecutive years out of last 5 years $440,000
MICP paid in:
1993- Actual $45,000
1994 - Actual $265,000*
1995 - Actual $232,500*
1996 - Est. $198,000*
1997 - Est. $198,000
*One of highest 3 years out of last 5 years MICP
Average of highest 3 MICP awards $231,833
Final Average Earnings at death $671,833
Estimated annual Social Security - $14,520
OLD FORMULA
(35 yrs x 1.8%) X $671,833 $423,255
(35 yrs x 1.14286%) X $14,520 ($5,808)
--------
Subtotal $417,447
Career service reduction (7.75/17.75) 0.43662
--------
Total Estimated Accrued Benefit $182,266 *
Early payment factor at age 55 0.6500
Total Benefit payable at 3/1/97 $118,473
*Paid by Retirement Plan, Non-Discrimination Plan and SERP.
<PAGE>
MR. RICHARD KORPAN
ESTIMATED SEVERANCE BENEFIT
MARCH 1, 1997
PART 8(a)(i)
Current Earnings
Annual Base Salary $440,000
Target MICP (45%) $198,000
Total Earnings $638,000
Total Earnings x 3 $1,914,000
PART 8(a)(iii)
A. Estimated annual vested benefit
As of March 1, 1997 $118,473
Actuarial Equivalent Factor* 14.479
Total Present Value Accrued Benefit $1,715,371
Grand Total $3,629,371
*Actual factor at event date would be determined using the PBGC rate and
actual age in effect on that date
Exhibit 12
FLORIDA POWER CORPORATION
Statement of Computation of Ratios
(Dollars In Millions)
Ratio of Earnings to Fixed Charges:
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
Net Income $227.0 $200.8 $194.9 $186.9 $180.9
Add:
Operating Income Taxes 129.5 114.7 104.5 97.7 92.8
Other Income Taxes .1 (0.8) (0.1) (0.2) (0.1)
------- ------ ------ ------ ------
Income Before Taxes 356.6 314.7 299.3 284.4 273.6
Total Interest Charges 104.5 108.4 105.8 100.2 95.2
------- ------ ------ ------ ------
Total Earnings (A) $461.1 $423.1 $405.1 $384.6 $368.8
------- ------ ------ ------ ------
Fixed Charges (B) $104.5 $108.4 $105.8 $100.2 $95.2
------- ------ ------ ------ ------
Ratio of Earnings to
Fixed Charges (A/B) 4.41 3.90 3.83 3.84 3.87
======= ====== ====== ====== ======
EXHIBIT 21
Subsidiaries of Florida Progress Corporation
December 31, 1995
Name of Subsidiary * State of Incorporation
------------------- ----------------------
Utility segment:
Florida Power Corporation Florida
Diversified segment:
Progress Capital Holdings, Inc. Florida
Electric Fuels Corporation Florida
Progress Rail Services Corporation Alabama
Marine Equipment Management Corporation Delaware
Kentucky May Coal Company, Inc. Virginia
Mid-Continent Life Insurance Company Oklahoma
Progress Credit Corporation Florida
Progress Leasing Corporation Florida
PLC Leasing Corporation Florida
Talquin Development Company Florida
----------
* Each subsidiary does business under its own name. Other
subsidiaries omitted from this list do not, considered
in the aggregate as a single subsidiary, constitute a
a significant subsidiary as of December 31, 1995.
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, No. 2-93111 on Form S-3, No.
33-56873 on Form S-3, and No. 333-547 on Form S-3 of Florida Progress
Corporation of our report dated January 22, 1996, relating to the
consolidated balance sheets of Florida Progress Corporation and subsidiaries
as of December 31, 1995 and 1994, 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, 1995, and all related schedules, which
report appears in the December 31, 1995 annual report on Form 10-K of
Florida Progress Corporation.
Our report refers to a change in the method of accounting for income taxes.
/s/KPMG PEAT MARWICK LLP
- ------------------------
KPMG PEAT MARWICK LLP
St. Petersburg, Florida
March 20, 1996
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 22, 1996, relating to the
balance sheets of Florida Power Corporation as of December 31, 1995 and 1994,
and the related statements of income, shareholders' equity and cash flows for
each of the years in the three-year period ended December 31, 1995, and all
related schedules which report appears in the December 31, 1995 annual report on
Form 10-K of Florida Power Corporation.
Our report refers to a change in the method of accounting for income taxes.
/s/KPMG PEAT MARWICK LLP
- -------------------------
KPMG PEAT MARWICK LLP
St. Petersburg, Florida
March 20, 1996
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000,000
<CIK> 0000357261
<NAME> FLORIDA PROGRESS CORPORATION
<S> <C>
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<PERIOD-TYPE> YEAR
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,609
<OTHER-PROPERTY-AND-INVEST> 1,219
<TOTAL-CURRENT-ASSETS> 680
<TOTAL-DEFERRED-CHARGES> 106
<OTHER-ASSETS> 177
<TOTAL-ASSETS> 5,791
<COMMON> 1,188
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 890
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,078
25
114
<LONG-TERM-DEBT-NET> 1,685
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 184
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,705
<TOT-CAPITALIZATION-AND-LIAB> 5,791
<GROSS-OPERATING-REVENUE> 3,056
<INCOME-TAX-EXPENSE> 136
<OTHER-OPERATING-EXPENSES> 2,532
<TOTAL-OPERATING-EXPENSES> 2,668
<OPERATING-INCOME-LOSS> 388
<OTHER-INCOME-NET> (4)
<INCOME-BEFORE-INTEREST-EXPEN> 384
<TOTAL-INTEREST-EXPENSE> 135
<NET-INCOME> 249
10
<EARNINGS-AVAILABLE-FOR-COMM> 239
<COMMON-STOCK-DIVIDENDS> 193
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 563
<EPS-PRIMARY> 2.50
<EPS-DILUTED> 2.50
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000,000
<CIK> 0000037637
<NAME> FLORIDA POWER CORPORATION
<S> <C>
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<PERIOD-TYPE> YEAR
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,609
<OTHER-PROPERTY-AND-INVEST> 184
<TOTAL-CURRENT-ASSETS> 380
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 112
<TOTAL-ASSETS> 4,285
<COMMON> 993
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 761
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,754
25
114
<LONG-TERM-DEBT-NET> 1,279
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 31
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,082
<TOT-CAPITALIZATION-AND-LIAB> 4,285
<GROSS-OPERATING-REVENUE> 2,272
<INCOME-TAX-EXPENSE> 130
<OTHER-OPERATING-EXPENSES> 1,815
<TOTAL-OPERATING-EXPENSES> 1,945
<OPERATING-INCOME-LOSS> 327
<OTHER-INCOME-NET> 1
<INCOME-BEFORE-INTEREST-EXPEN> 328
<TOTAL-INTEREST-EXPENSE> 101
<NET-INCOME> 227
10
<EARNINGS-AVAILABLE-FOR-COMM> 217
<COMMON-STOCK-DIVIDENDS> 181
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 571
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
