As filed with the Securities and Exchange Commission on December 16, 1996
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_____________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 5, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Exact name of Registrant as specified
Commission in its charter, address of principal State of I.R.S. Employer
File No. executive offices, telephone number Incorporation Identification No.
1-8349 FLORIDA PROGRESS CORPORATION Florida 59-2147112
One Progress Plaza
St. Petersburg, Florida 33701
Telephone (813) 824-6400
1-3274 FLORIDA POWER CORPORATION Florida 59-0247770
3201 34th Street South
St. Petersburg, Florida 33711
Telephone (813) 866-5151
</TABLE>
The address of neither registrant has changed since the last report.
This combined Form 8-K represents separate filings by Florida Progress
Corporation and Florida Power Corporation. Florida Power makes no
representations as to the information relating to Florida Progress' diversified
operations.
<PAGE>
Item 5. Other Events
In light of ongoing securities offerings by Florida Progress Corporation
("Florida Progress") and its subsidiaries, including Florida Power Corporation
("Florida Power") and Progress Capital Holdings, Inc., the following information
is being presented pending distribution of the combined Florida Progress and
Florida Power Annual Report on Form 10-K for the year ended December 31, 1996:
Florida Progress issued an investor news release dated December 5, 1996
to provide an update regarding Florida Power's Crystal River Nuclear plant, and
another investor news release dated December 12, 1996 announcing several
strategic decisions regarding Florida Progress' diversified businesses. Copies
of these news releases are being filed herewith as Exhibit 99.(a) and 99.(b),
respectively.
Item 7. Financial Statements and Exhibits
(c) Exhibits:
Exhibit Number (by
reference to Item 601
of Regulation S-K) Description of Exhibit
99.(a) Florida Progress Corporation Investor News release dated
December 5, 1996 regarding Florida Power's Crystal River
Nuclear Plant.
99.(b) Florida Progress Corporation Investor News release dated
December 12, 1996 announcing several strategic decisions
regarding its diversified businesses.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, each
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FLORIDA PROGRESS CORPORATION
FLORIDA POWER CORPORATION
/s/ James V. Smallwood
By:____________________________
James V. Smallwood
Vice President and Treasurer
Date: December 12, 1996
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit
99.(a) Florida Progress Corporation Investor News release dated
December 5, 1996 regarding Florida Power's Crystal River
Nuclear Plant.
99.(b) Florida Progress Corporation Investor News release dated
December 12, 1996 announcing several strategic decisions
regarding its diversified businesses.
EXHIBIT 99.(a)
Florida Progress Corporation
Investor News
Analyst Contact:
Mark A. Myers, Manager, Investor Relations (813) 866-4245
Florida Power Corporation's Crystal River Nuclear Plant Update
ST. PETERSBURG, Florida, December 5, 1996 -- Florida Power Corporation's Senior
Vice President of Nuclear Operations Percy "Pat" M. Beard, Jr., announced that
he will retire, effective April 1, 1997. A replacement for Beard has not been
named, but the recruitment process is underway and a new individual from outside
the company is expected to be in place by early 1997. Beard has been with
Florida Power since November 1989. He will remain with the company during the
transition and will stay in his current position until a replacement is on site.
Earlier this year, company president Joseph H. Richardson and Pat Beard mutually
agreed that seeking new leadership at the nuclear plant was the best decision
for the company. Florida Power remains committed to making the necessary changes
to achieve safety and operational excellence at its nuclear plant.
NRC RELEASES SALP REPORT
On December 2, the Nuclear Regulatory Commission staff reviewed the results of
the Systematic Assessment of Licensee Performance (SALP) report for the Crystal
River Nuclear plant with management. Shown below are the SALP scores for the
current and previous periods:
September 17, 1995 February 20, 1994 to
to October 5, 1996 September 16, 1995
Plant Operations 3 2
Maintenance 2 2
Engineering Support 3 2
Plant Support 2 1
The report concluded that performance in the functional areas of operations and
engineering declined from "good" to "acceptable" while performance in the
functional area of plant support declined from "superior" to "good." Performance
in the functional area of maintenance remained at the "good" level.
-- more --
<PAGE>
Florida Power expected a less favorable SALP report in light of the issues
identified during the past year. However, the company was disappointed with the
score in plant operations in view of the corrective action efforts in this area
and the most recent progress that has been made. However, there were no
additional areas of concern in the report that have not been previously
discussed during the last few months. Florida Power has already taken numerous
corrective action steps to address many of the areas of concern and continues to
regularly update the NRC staff on the company's progress in completing the
nuclear plant's corrective action plan.
STATUS ON NRC RESTART PANEL PROCESS
In October, Florida Power completed repairs to its nuclear plant resulting from
an oil pressure problem with its new turbine. Florida Power decided to
voluntarily keep the plant down to address several design basis issues and has
completed its review of the items necessary to restart the nuclear plant. On
November 1, the NRC staff established a special panel to provide oversight to
Florida Power in restarting its nuclear plant. The panel is chaired by Johns
Jaudon, Deputy Director of Region II Division of Reactor Safety.
On December 3, the NRC panel conducted a meeting for its members at the Crystal
River energy complex in the morning and then met with Florida Power's restart
team in the afternoon. The purpose of the NRC morning meeting was to
independently identify restart items for the nuclear plant. During the afternoon
meeting, Florida Power reviewed its restart criteria and checklist with the NRC
panel. The meeting was constructive and Florida Power's restart team answered
questions from the NRC panel members about the company's restart action plan. At
the end of the meeting, Johns Jaudon said that while the restart panel has not
completed its review, there currently were not any major items on the NRC
restart that Florida Power had not already identified.
UPCOMING MILESTONES FOR RESTART
Florida Power expects to receive a revised checklist from the NRC restart panel
next week. The NRC panel indicated that they had eliminated about 40% of the
items from their original checklist as restart items and there are other items
on the checklist that will not be considered restart items. Florida Power's
nuclear restart team plans to compare the company's restart list to the NRC
checklist late next week. Once the restart plan can be determined, Florida Power
will be able to complete its manpower resource assessment and determine the
impact, if any, to the scheduled restart date of February 28. Florida Power
expects to complete its initial manpower assessment before the end of December.
The next scheduled meeting between the NRC panel and Florida Power's restart
team is January 10 at the Crystal River Energy Complex.
Florida Progress (NYSE:FPC) is a Fortune 500 diversified utility holding company
with assets of $5.8 billion. Its principal subsidiary is Florida Power, the
state's second-largest electric utility with about 1.3 million customers.
Diversified operations include coal mining, marine operations, rail services and
life insurance.
EXHIBIT 99.(b)
Florida Progress Corporation
Investor News
Analyst Contact:
Mark A. Myers, Manager, Investor Relations (813) 866-4245
Florida Progress Restructures Diversified Operations to Focus on Growing its
Energy and Transportation Businesses
ST. PETERSBURG, Florida, December 12, 1996 -- Florida Progress Corporation
announced several strategic decisions regarding its diversified businesses.
These decisions will allow Florida Progress to better focus on growth
opportunities for Electric Fuels Corporation, its energy and transportation
company.
Previously, Florida Progress decided that three of its businesses were not a
good long-term strategic fit. The companies were Advanced Separation
Technologies Incorporated, Mid-Continent Life Insurance Company and Progress
Credit Corporation (now Echelon International Corporation). Florida Progress has
been working to exit each of these businesses in a way that maximizes
shareholder value.
ADVANCED SEPARATION TECHNOLOGIES TO BE SOLD FOR A GAIN
Last week, an agreement to sell Advanced Separation Technologies was entered
into with Calgon Carbon Corporation of Pittsburgh, Pennsylvania for $70 million
and will result in an after-tax gain of about $23 million or $.24 a share for
Florida Progress' 80% share of the company. The sale is expected to close before
year end. Florida Progress has owned this company since the mid-1980's, when the
patented ion separation process was developed. Although being in the technology
business was not a strategic fit for Florida Progress, the company showed
promise. So Florida Progress waited until Advanced Separation Technologies had
developed a track record and demonstrated its sales potential to actively market
the company for sale.
Advanced Separation Technologies is a manufacturer of chemical separation
devices headquartered in Lakeland, Florida with annual sales of approximately
$30 million and 65 employees. Its principal product is an ion separation machine
that removes dissolved impurities and performs chemical separations in a
continuous process. The machines are used in industrial and environmental
processes throughout the world and Advanced Separation Technologies is a leader
in supplying separation systems to the lysine and corn syrup industries.
ELECTRIC FUELS TO WRITE-DOWN CERTAIN COAL OPERATIONS
Electric Fuels will record a $25 million, after-tax charge to earnings in
December 1996 for the write-down of certain coal operations in eastern Kentucky
due to management's revised assessment that depressed market prices for
low-sulfur coal are not temporary. These coal operations were originally
purchased in anticipation of higher prices
-- more --
<PAGE>
resulting from amendments to the federal Clean Air Act. The write-down is in
compliance with Financial Accounting Standard No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of,"
which was adopted by Florida Progress in 1996.
Electric Fuels began purchasing low-sulfur coal operations in the late 1980's in
an effort to capitalize on the expected increase in demand for low-sulfur coal.
The increase was anticipated because of the sulfur dioxide emission requirements
imposed on electric utilities by the Clean Air Act amendments of 1990. The Phase
I reductions went into effect on January 1, 1995. More stringent requirements
are effective in the year 2000.
Several factors that were not anticipated have kept the price of Central
Appalachian low-sulfur coal well below the market prices originally forecasted.
o The supply of western low-sulfur coal to eastern markets served by
Electric Fuels was greater than forecasted due in part to some
western railroads expanding track and more aggressively pricing
freight to certain large coal-fired plants east of the Mississippi
River. This allowed inexpensive coal from the Powder River Basin
to be marketed and sold to some large coal-fired plants east of
the Mississippi which had been forecasted to burn low-sulfur
Central Appalachian coal.
o Some midwestern states passed legislation requiring utilities to
install scrubbers for certain power plants to maintain high-sulfur
coal mining jobs in their state. This forced these plants to
continue burning high-sulfur coal instead of switching to
low-sulfur coal which had been forecasted to be the least cost
compliance option.
o Another alternative to purchasing low-sulfur coal to meet emission
requirements is to purchase emission allowance credits and burn
higher sulfur coals. Over compliance with Phase I of the Clean Air
Act has generated more than three million excess allowance credits
per year. Many of these are being generated by utilities which
installed scrubbers or are burning substantially lower sulfur coal
than required in Phase I. The excess supply of allowances has
reduced the cost of these credits thus making it a viable
alternative to purchasing low-sulfur coal.
Electric Fuels is committed to its energy-related businesses. Electric Fuels has
made some operational changes and brought in new leadership for its coal
operations with substantial coal industry experience. Electric Fuels has a
business plan to improve productivity and quality control. The plan calls for
increasing output from remaining company-operated mines and directing production
to higher profit markets.
Electric Fuels' strategy for growth has focused in recent years on its rail
services and marine transportation business units and has resulted in 21 percent
annual compound growth for the last three years. Electric Fuels plans to
continue growing these business units while seeking to improve results in its
energy-related businesses and expects to continue to achieve double-digit
earnings growth during its five-year forecast period.
-- more --
<PAGE>
RESTRUCTURED MID-CONTINENT LIFE INSURANCE
Mid-Continent Life Insurance Company was acquired in 1986. It was a small
insurance company that sold a popular, low-priced death benefit insurance
policy. Mid-Continent more than doubled in size by continuing to sell its
product and by increasing its distribution area. Over the last few years, the
life insurance industry has become more competitive, and for the first time,
Mid-Continent experienced a decline in new sales. A new president was selected
in 1995 and he developed a comprehensive business plan to combine new products
and ideas with the company's existing strengths.
The new management team at Mid-Continent determined that the old product was not
adequately priced to achieve targeted long-term profitability goals. In 1997,
Mid-Continent plans to begin an orderly process to resolve the pricing issue.
This may involve reducing policy dividends and increasing premiums.
A new insurance product called "Basic Life" was introduced in 1996 and it has
replaced the old product that was being marketed. It resembled the old product
that had been the company's principal policy, but offered more flexibility and
guarantees to policyholders at a higher price. Mid-Continent was hoping to
rebuild market share and achieve planned profitability with the "Basic Life"
product. Sales of the new policy have not met management's expectations.
Mid-Continent recently announced a reduction in its workforce and a new business
plan to be able to compete on a more focused and cost efficient basis. A
revamped and lower-cost marketing operation intends to offer a broader array of
products and marketing tools on behalf of Mid-Continent and other companies.
Although Florida Progress continues to believe that Mid-Continent is not a good
long-term fit, it appears that it will take three to five years for
Mid-Continent's business plan to result in values that allow Florida Progress to
rationally exit this business. Since Mid-Continent does not pay dividends to
Florida Progress and its earnings are not significant, this strategy is not
expected to affect Florida Progress' consolidated earnings growth rate or
dividend policy.
FOCUSED ON GROWING CORE BUSINESSES
Restructuring its diversified businesses has been a high priority for Florida
Progress in 1996. Earlier this year Florida Progress announced the spin-off of
Echelon International, its lending, leasing and real estate company, through a
tax-free dividend scheduled for December 18, 1996. The sale of Advanced
Separation Technologies and restructuring of Mid-Continent are other examples of
Florida Progress' commitment to exiting businesses that are not related to its
core businesses -- Florida Power and Electric Fuels. With the solid growth
potential of Florida Power and the continued growth of Electric Fuels,
management believes that Florida Progress should be able to maintain an annual
consolidated earnings per share growth rate of four to five percent.
-- more --
<PAGE>
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: this report contains forward looking statements, including statements
regarding expected after-tax gains on the sale of Advanced Separation
Technologies, the future of coal prices and earnings growth at Electric Fuels,
plans relating to the insurance business, and Florida Progress' earnings per
share growth rate and dividend policy. These statements involve risks and
uncertainties that could cause actual results or outcomes to differ materially
from those expressed. Pertinent risk factors include the impact of pricing and
other actions by competitors, changes in tax rates or policies or other
governmental actions, significant changes from expectations in actual capital
expenditures and operating expenses, changes in the marine, rail services or
coal industries, changes in overall economic conditions, and other risks
described in the Company's Securities and Exchange Commission filings.
Florida Progress (NYSE:FPC) is a Fortune 500 diversified utility holding company
with assets of $5.8 billion. Its principal subsidiary is Florida Power, the
state's second-largest electric utility with about 1.3 million customers.
Diversified operations include coal mining, marine operations, rail services and
life insurance.
###
