UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
<TABLE>
<CAPTION>
Exact name of Registrant as specified in I.R.S. Employer
Commission its charter, state of incorporation, address Identification
File No. of principal executive offices, telephone Number
------------ -------------------------------------------- ---------------
<S> <C> <C>
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
</TABLE>
Indicate by check mark whether each registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Description of Shares Outstanding
Registrant Class at March 31, 1998
---------- -------------- ------------------
Florida Progress Corporation Common Stock,
without par value 97,046,291
Florida Power Corporation Common Stock,
without par value 100 (all of which were
held by Florida
Progress Corporation)
This combined Form 10-Q represents separate filings by Florida Progress
Corporation and Florida Power Corporation. Florida Power makes no
representations as to the information relating to Florida Progress' diversified
operations.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FLORIDA PROGRESS CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
FLORIDA PROGRESS CORPORATION
Consolidated Statements of Income
(In millions, except per share amounts)
Three Months Ended
March 31,
1998 1997
--------- ---------
(Unaudited)
REVENUES:
<S> <C> <C>
Electric utility $565.2 $553.8
Diversified 222.3 193.7
--------- ---------
787.5 747.5
EXPENSES: --------- ---------
Electric utility:
Fuel 109.2 94.9
Purchased power 99.0 127.2
Energy conservation cost 16.6 11.0
Operations and maintenance 102.4 102.4
Extended nuclear outage - O&M
and replacement fuel costs 5.1 7.9
Depreciation and amortization 81.0 74.3
Taxes other than income taxes 49.5 48.1
--------- ---------
462.8 465.8
--------- ---------
Diversified:
Cost of sales 193.8 171.8
Other 12.8 14.9
--------- ---------
206.6 186.7
--------- ---------
INCOME FROM OPERATIONS 118.1 95.0
--------- ---------
INTEREST EXPENSE AND OTHER:
Interest expense 47.3 34.3
Allowance for funds used during construction (3.9) (2.1)
Preferred dividend requirements of Florida Power .4 .4
Other expense (income), net (.5) .4
--------- ---------
43.3 33.0
--------- ---------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 74.8 62.0
Income Taxes 24.3 20.0
--------- ---------
NET INCOME $50.5 $42.0
========= =========
AVERAGE SHARES OF COMMON STOCK
OUTSTANDING 97.1 97.0
========= =========
EARNINGS PER AVERAGE COMMON SHARE $ .52 $ .43
========= =========
DIVIDENDS PER COMMON SHARE $ .535 $ .525
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
FLORIDA PROGRESS CORPORATION
Consolidated Balance Sheets
(In millions)
March 31, December 31,
1998 1997
---------- -----------
ASSETS (Unaudited)
PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant in service and held
<S> <C> <C>
for future use $6,172.5 $6,166.8
Less - Accumulated depreciation 2,570.3 2,511.0
Accumulated decommissioning for nuclear plant 230.6 223.7
Accumulated dismantlement for fossil plants 128.9 128.5
---------- ----------
3,242.7 3,303.6
Construction work in progress 336.3 279.4
Nuclear fuel, net of amortization of $359.9
in 1998 and $356.7 in 1997 63.2 66.5
---------- ----------
Net electric utility property 3,642.2 3,649.5
Other property, net of depreciation of $224.0
in 1998 and $219.3 in 1997 455.6 437.7
---------- ----------
4,097.8 4,087.2
---------- ----------
CURRENT ASSETS:
Cash and equivalents 8.2 3.1
Accounts receivable, net 370.9 373.7
Inventories at average cost:
Fuel 75.6 77.6
Materials and supplies 92.1 91.9
Diversified materials 139.6 126.8
Underrecovery of fuel cost 37.7 34.5
Income taxes receivable - 16.8
Deferred income taxes 40.6 5.8
Other 46.4 45.1
---------- ----------
811.1 775.3
---------- ----------
OTHER ASSETS:
Investments:
Loans receivable, net 31.6 24.0
Nuclear plant decommissioning fund 281.7 266.7
Joint ventures and partnerships 51.8 54.6
Deferred purchased power contract termination costs 344.6 348.2
Other 217.8 204.0
---------- -----------
927.5 897.5
---------- -----------
$5,836.4 $5,760.0
========== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
3
<PAGE>
FLORIDA PROGRESS CORPORATION
Consolidated Balance Sheets
(In millions)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------- -----------
CAPITAL AND LIABILITIES (Unaudited)
COMMON STOCK EQUITY:
<S> <C> <C>
Common stock $1,208.3 $1,209.0
Retained earnings 565.6 567.0
----------- -----------
1,773.9 1,776.0
CUMULATIVE PREFERRED STOCK OF FLORIDA POWER:
Without sinking funds 33.5 33.5
LONG-TERM DEBT 2,328.0 2,377.8
----------- -----------
TOTAL CAPITAL 4,135.4 4,187.3
----------- -----------
CURRENT LIABILITIES:
Accounts payable 222.3 253.2
Customers' deposits 99.1 97.1
Income taxes payable 12.5 -
Accrued other taxes 32.8 12.0
Accrued interest 48.8 56.8
Other 73.4 74.8
----------- -----------
488.9 493.9
Notes payable 267.5 214.8
Current portion of long-term debt 55.7 15.2
----------- -----------
812.1 723.9
----------- -----------
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes 504.4 471.2
Unamortized investment tax credits 83.7 85.7
Other postretirement benefit costs 109.0 107.4
Other 191.8 184.5
----------- -----------
888.9 848.8
----------- -----------
$5,836.4 $5,760.0
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
FLORIDA PROGRESS CORPORATION
Consolidated Statements of Cash Flows
(In millions)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
----------- -----------
(Unaudited)
OPERATING ACTIVITIES:
<S> <C> <C>
Income from continuing operations $50.5 $42.0
Adjustments for noncash items:
Depreciation and amortization 100.9 83.2
Deferred income taxes and
investment tax credits, net (7.3) (12.3)
Increase in accrued other postretirement
benefit costs 1.6 2.0
Net change in deferred insurance policy
acquisition costs - (2.1)
Net change in insurance policy benefit reserves - 16.0
Changes in working capital, net of effects from
acquisition or sale of businesses:
Accounts receivable 10.2 (15.5)
Inventories 3.1 (25.0)
Underrecovery of fuel cost (8.3) (23.0)
Accounts payable (33.0) (4.0)
Income taxes payable 29.9 9.4
Accrued other taxes 20.5 19.0
Other (11.8) (2.2)
Other operating activities (2.7) 1.7
----------- -----------
153.6 89.2
----------- -----------
INVESTING ACTIVITIES:
Property additions (including allowance for
borrowed funds used during construction) (103.0) (94.8)
Purchase of loans and securities, net (7.7) (4.5)
Proceeds from sale of properties 2.1 2.2
Acquisition of businesses (9.1) -
Investments in joint ventures and partnerships, net (.5) (9.3)
Other investing activities (5.2) (4.9)
----------- -----------
(123.4) (111.3)
----------- -----------
FINANCING ACTIVITIES:
Issuance of long-term debt 144.1 -
Repayment of long-term debt (169.4) (21.5)
Increase in commercial paper with
long-term support - 54.6
Dividends paid on common stock (51.9) (51.0)
Increase in short-term debt 52.7 51.8
Other financing activities (.6) (.5)
----------- -----------
(25.1) 33.4
----------- -----------
NET INCREASE IN CASH AND EQUIVALENTS 5.1 11.3
Beginning cash and equivalents 3.1 5.2
----------- -----------
ENDING CASH AND EQUIVALENTS $8.2 $16.5
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $52.7 $42.0
Income taxes (net of refunds) $2.3 $28.5
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
FLORIDA PROGRESS CORPORATION
Statements of Changes in Equity
For the periods ended March 31, 1998 and 1997
(Dollars in millions)
<TABLE>
<CAPTION>
Cumulative
Preferred Stock
Accumulated -----------------------
Other Without With
Common Retained Comprehensive Sinking Sinking
Total Stock Earnings Income Funds Funds
---------- --------- ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $1,957.7 $1,208.3 $716.5 $(0.6) $33.5 $ -
Comprehensive income
Net income 42.0 42.0
Unrealized loss on securities
net of $1.9 income tax expense (3.0) (3.0)
--------- -------- -------- -------- -------- ---------
39.0 - 42.0 (3.0) - -
Common stock issued / (redeemed) 0.6 .6
Cash dividends on common stock (51.0) (51.0)
--------- -------- -------- -------- -------- ---------
Balance, March 31, 1997 $1,946.3 $1,208.9 $707.5 $(3.6) $33.5 $ -
========= ======== ======== ======== ======== =========
Balance, December 31, 1997 $1,809.5 $1,209.0 $567.0 $ - $33.5 $ -
Comprehensive income
Net income 50.5 50.5
Other comprehensive income - -
-------- -------- -------- -------- -------- --------
50.5 - 50.5 - - -
Common stock issued / (redeemed) (.7) (.7)
Cash dividends on common stock (51.9) (51.9)
-------- -------- --------- --------- --------- --------
Balance, March 31, 1998 $1,807.4 $1,208.3 $565.6 $ - $33.5 $ -
======== ========= ========= ========= ========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
FLORIDA POWER CORPORATION
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
FLORIDA POWER CORPORATION
Statements of Income
In millions) Three Months Ended
March 31,
1998 1997
-------- --------
(Unaudited)
OPERATING REVENUES:
<S> <C> <C>
Residential $308.7 $290.7
Commercial 123.7 124.2
Industrial 47.8 51.9
Sales for resale 36.9 37.1
Other 48.1 49.9
-------- --------
565.2 553.8
-------- --------
OPERATING EXPENSES:
Operation:
Fuel 109.2 94.9
Purchased power 99.0 127.2
Energy conservation cost 16.6 11.0
Operations and maintenance 102.4 102.4
Extended nuclear outage - O&M
and replacement fuel costs 5.1 7.9
Depreciation and amortization 81.0 74.3
Taxes other than income taxes 49.5 48.1
-------- --------
462.8 465.8
-------- --------
Income taxes:
Currently payable 32.5 32.2
Deferred, net (6.3) (8.0)
Investment tax credits, net (2.0) (2.0)
-------- --------
24.2 22.2
-------- --------
487.0 488.0
-------- --------
OPERATING INCOME 78.2 65.8
-------- --------
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used
during construction 2.2 1.3
Miscellaneous other expense, net - (1.0)
-------- --------
2.2 .3
-------- --------
INTEREST CHARGES
Interest on long-term debt 30.6 22.3
Other interest expense 5.3 3.0
-------- --------
35.9 25.3
Allowance for borrowed funds used
during construction (1.7) (.8)
-------- --------
34.2 24.5
-------- --------
NET INCOME 46.2 41.6
DIVIDENDS ON PREFERRED STOCK .4 .4
-------- --------
NET INCOME AFTER DIVIDENDS
ON PREFERRED STOCK $45.8 $41.2
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
FLORIDA POWER CORPORATION
Balance Sheets
(In millions)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------- -----------
ASSETS (Unaudited)
PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant in service and held
<S> <C> <C>
for future use $6,172.5 $6,166.8
Less - Accumulated depreciation 2,570.3 2,511.0
Accumulated decommissioning for nuclear plant 230.6 223.7
Accumulated dismantlement for fossil plants 128.9 128.5
---------- ----------
3,242.7 3,303.6
Construction work in progress 336.3 279.4
Nuclear fuel, net of amortization of $359.9
in 1998 and $356.7 in 1997 63.2 66.5
---------- ----------
3,642.2 3,649.5
Other property, net 32.5 33.2
---------- ----------
3,674.7 3,682.7
---------- ----------
CURRENT ASSETS:
Cash and equivalents 5.6 -
Accounts receivable, less reserve of $3.5
in 1998 and $3.2 in 1997 221.4 243.9
Inventories at average cost:
Fuel 46.1 44.0
Materials and supplies 92.1 91.9
Underrecovery of fuel cost 37.7 34.5
Income tax receivable - 13.5
Deferred income taxes 40.6 5.8
Other 31.9 32.2
---------- ----------
475.4 465.8
---------- ----------
OTHER ASSETS:
Nuclear plant decommissioning fund 281.7 266.7
Unamortized debt expense, being amortized
over term of debt 39.4 25.0
Deferred purchased power contract termination costs 344.6 348.2
Other 107.0 112.4
---------- ----------
772.7 752.3
---------- ----------
$4,922.8 $4,900.8
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
FLORIDA POWER CORPORATION
Balance Sheets
(In millions)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------- ------------
CAPITALIZATION AND LIABILITIES (Unaudited)
CAPITALIZATION:
<S> <C> <C>
Common stock $1,004.4 $1,004.4
Retained earnings 759.9 763.1
----------- ------------
1,764.3 1,767.5
CUMULATIVE PREFERRED STOCK:
Without sinking funds 33.5 33.5
LONG-TERM DEBT 1,747.0 1,745.4
----------- ------------
TOTAL CAPITAL 3,544.8 3,546.4
----------- ------------
CURRENT LIABILITIES:
Accounts payable 109.4 161.9
Accounts payable to associated companies 22.9 26.5
Customers' deposits 99.1 97.1
Income taxes payable 15.7 -
Accrued other taxes 29.4 7.9
Accrued interest 42.7 45.7
Other 54.6 59.2
----------- ------------
373.8 398.3
Notes payable 189.9 179.8
Current portion of long-term debt 1.5 1.5
----------- ------------
565.2 579.6
----------- ------------
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes 483.3 451.3
Unamortized investment tax credits 83.1 85.1
Other postretirement benefit costs 106.0 104.7
Other 140.4 133.7
----------- ------------
812.8 774.8
----------- ------------
$4,922.8 $4,900.8
=========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
FLORIDA POWER CORPORATION
Statements of Cash Flows
(In millions)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
---------- ----------
(Unaudited)
OPERATING ACTIVITIES:
<S> <C> <C>
Net income after dividends on preferred stock $45.8 $41.2
Adjustments for noncash items:
Depreciation and amortization 91.6 76.3
Deferred income taxes and investment
tax credits, net (8.3) (10.0)
Increase in accrued other postretirement
benefit costs 1.3 1.8
Allowance for equity funds used during construction (2.2) (1.3)
Changes in working capital:
Accounts receivable 22.4 (6.6)
Inventories (2.3) (6.6)
Underrecovery of fuel cost (8.3) (23.0)
Accounts payable (52.5) (11.2)
Accounts payable to associated companies (3.6) 1.3
Income taxes payable 29.2 23.9
Accrued other taxes 21.4 19.1
Other (5.2) 5.9
Other operating activities .7 4.7
---------- ----------
130.0 115.5
---------- ----------
INVESTING ACTIVITIES:
Construction expenditures (65.5) (81.2)
Allowance for borrowed funds used during construction (1.7) (.8)
Additions to non-utility property (.7) (.4)
Proceeds from sale of properties 1.3 1.2
Other investing activities (5.2) (4.8)
---------- ----------
(71.8) (86.0)
---------- ----------
FINANCING ACTIVITIES:
Issuance of long-term debt 144.1 -
Repayment of long-term debt (157.8) (20.0)
Dividends paid on common stock (49.0) (48.4)
Increase in short-term debt 10.1 51.8
---------- ----------
(52.6) (16.6)
---------- ----------
NET INCREASE IN CASH AND EQUIVALENTS 5.6 12.9
Beginning cash and equivalents - -
---------- ----------
ENDING CASH AND EQUIVALENTS $5.6 $12.9
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $36.3 $23.7
Income taxes (net of refunds) $3.6 $7.8
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
FLORIDA PROGRESS CORPORATION AND FLORIDA POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS
1) In December 1997, Florida Power Corporation ("Florida Power") ended the
three-year test period for residential revenue decoupling which was ordered
by the Florida Public Service Commission ("FPSC") and began in January 1995.
The difference between target revenues and actual revenues was included as a
current asset or current liability on the balance sheet for the period ended
December 31, 1997. The regulatory asset of $21.8 million, at December 31,
1997, will be recovered from customers beginning April 1998, over a two year
period, through the energy conservation cost recovery clause, as directed by
the FPSC decoupling order. Revenue decoupling increased residential revenues
by $7.5 million for the three months ended March 31, 1997.
2) Florida Progress Corporation ("Florida Progress") adopted Financial
Accounting Standard No. ("FAS") No. 128, "Earnings per Share" which was
issued by the Financial Accounting Standards Board ("FASB"), for the period
ending December 31, 1997. Because diluted earnings per share equals basic
earnings per share for Florida Progress, the statement did not have an
impact on earnings per share for the three month period ended March 31,
1998 and 1997, and no restatement was necessary.
Florida Progress adopted FAS No. 129, "Disclosures of Information about
Capital Structure," for financial statements issued for the period ended
December 31, 1997. As Florida Progress already disclosed the information
required by FAS No. 129, adoption of this statement did not have any effect
on the financial disclosures of Florida Progress.
Florida Progress adopted FAS No. 130, "Reporting Comprehensive Income," on
January 1, 1998. The standard defines comprehensive income as all changes
in equity of an enterprise during a period except those resulting from
shareholder transactions. As the standard addresses reporting and
presentation issues only, there was no impact on net income from the
adoption of this standard. A separate Statement of Changes in Equity is
included in the accompanying financial statements for Florida Progress.
Florida Power had no components of other comprehensive income for either
the three month period ended March 31, 1998 or 1997.
In June 1997, the FASB issued FAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information" which establishes standards
for additional disclosure about operating segments for interim and annual
financial statements. The standard requires financial and descriptive
information be disclosed for segments meeting certain materiality criteria
whose operating results are reviewed for decisions on resource allocation and
for which discrete financial information is available. It also establishes
standards for related disclosures about products and services, geographic
areas, and major customers. Florida Progress will be required to adopt this
standard for the fiscal year ending December 31, 1998 and for interim
periods thereafter. As the standard addresses reporting and disclosure
issues only, there will be no impact on earnings from the adoption of this
standard.
In January 1998, the FASB issued FAS No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits", which revises current note
disclosure requirements for employers' pensions and other retiree benefits.
Florida Progress will be required to adopt this statement for financial
statements for the year ending December 31, 1998. The standard addresses
reporting and disclosure issues only, and there will be no impact on earnings
from the adoption of this standard.
3) CONTINGENCIES
PURCHASED POWER COMMITMENTS - The purchased power contracts with qualifying
facilities ("QFs") employ separate pricing methodologies for capacity
payments and energy payments. Florida Power has interpreted the pricing
provision in these contracts to allow it to pay an as-available energy
price rather than a higher firm energy price when the avoided unit upon
which the applicable contract is based would not have been operated.
11
<PAGE>
Four cogenerators filed suit against Florida Power over contract payment
terms. Two of the suits have been settled. Currently trial dates are set for
late 1998 for the two remaining suits. Management does not expect that the
results of these legal actions will have a material impact on Florida Power's
financial position, operations or liquidity.
OFF-BALANCE SHEET RISK - Several of Florida Progress' subsidiaries are
general partners in unconsolidated partnerships and joint ventures. Florida
Progress or its subsidiaries have agreed to support certain loan agreements
of the partnerships and joint ventures. Those credit risks are not material
to the financial statements of Florida Progress. Florida Progress considers
those credit risks to be minimal, based upon the asset values supporting
the liabilities of these entities.
MID-CONTINENT LIFE INSURANCE COMPANY -- A series of events in 1997
significantly jeopardized the ability of Mid-Continent Life Insurance Company
("Mid-Continent"), Florida Progress' indirect wholly owned subsidiary, to
implement a plan to eliminate a projected reserve deficiency, resulting in
the impairment of Florida Progress' investment in Mid-Continent.
On April 14, 1997, the Insurance Commissioner of the State of Oklahoma
("Commissioner") received court approval to temporarily seize control of the
operations of Mid-Continent, and in May 1997, the Oklahoma County District
Court granted the Commissioner's application to place Mid-Continent into
receivership. The Commissioner had alleged that Mid- Continent's reserves
were understated by more than $125 million, thus causing Mid-Continent to be
statutorily impaired. The Commissioner further alleged that Mid-Continent
had violated Oklahoma law relating to deceptive trade practices in connection
with the sale of its "Extra Life" insurance policies and was not entitled to
raise premiums, a key element of Mid-Continent's plan to address the
projected reserve deficiency. While sustaining the receivership, the court
also ruled that premiums could be raised. Both sides appealed the decision to
the Oklahoma Supreme Court, and that appeal is still pending.
Even though the appeal is still pending, the Oklahoma District Court
continues to hear motions and conduct other proceedings relating to the
receivership. At a hearing on March 17, 1998, the judge rejected both the
Commissioner's and Mid-Continent's rehabilitation submissions. The judge
invited both parties to submit simplified plans that include premium
increases. In the annual statement filed by the Commissioner on behalf of
Mid-Continent, the estimated reserve deficiency was revised upward to $348
million. Florida Progress believes that this new figure is untenable and
not based on sound actuarial principles.
In December 1997, the Commissioner filed a lawsuit against Florida
Progress, certain of its directors and officers and certain former Mid-
Continent officers, making a number of allegations (as detailed in
paragraph 10 under Item 3 "Legal Proceedings" in the 1997 Form 10-K), and
seeking access to Florida Progress' assets to satisfy policyholder and
creditor claims. On April 17, 1998, the court granted motions to dismiss
the individual defendants, leaving Florida Progress as the sole remaining
defendant in the lawsuit. Florida Progress believes the Commissioner's
lawsuit is without merit, and intends to vigorously defend itself against
these charges. However, because of the uncertainties inherent in litigation,
the ultimate outcome of the matter cannot presently be determined.
Accordingly, Florida Progress has made no provision for any loss.
As a result of the Commissioner's actions and other factors described under
the heading "Mid-Continent Life Insurance Company" in Note 11 to the
financial statements in the 1997 Form 10-K, Florida Progress believed the
full amount of its $86.9 million investment in Mid-Continent at December
31, 1997 was impaired. Therefore, Florida Progress recorded a provision for
loss on investment of $86.9 million in 1997. In addition, tax benefits of
approximately $11 million related to the excess of the tax basis over the
book value in the investment in Mid-Continent as of December 31, 1997, were
12
<PAGE>
not recorded because of uncertainties associated with the timing of a tax
deduction. Florida Progress also recorded an accrual at December 31, 1997
for legal fees associated with defending its position in current
Mid-Continent legal proceedings.
Mid-Continent's financial statements have been deconsolidated effective
December 31, 1997. Prospectively, the investment will be accounted for
under the cost method.
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.
Florida Power self-insures its transmission and distribution lines against
loss due to storm damage and other natural disasters. Pursuant to an FPSC
order, 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 by NEIL under this policy in the event loss experience exceeds
NEIL's available surplus. Florida Power's present maximum share of any
such retroactive assessment is $2.7 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, Florida Power could be assessed
up to a maximum of $9.5 million in any policy year if losses in excess of
NEIL's available surplus are incurred.
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 these hazardous waste sites.
Florida Power and former subsidiaries of Florida Progress, whose properties
were sold in prior years, have been identified by the Environmental
Protection Agency ("EPA") as potentially responsible parties ("PRPs") at
certain sites, including a coal gasification plant site in Sanford, Florida
("Sanford site") that Florida Power previously owned and operated. There
are five parties, including Florida Power, that have been identified as PRPs
at the Sanford site. Liability for the cleanup costs at these sites is joint
and several.
Negotiations are underway with the EPA to define the extent of
contamination that may be attributable to Florida Power's previous operation
at the site. In March 1998, the PRPs executed an Administrative Order of
Consent ("AOC") and submitted it to the EPA. Pursuant to the AOC, the PRPs
13
<PAGE>
have agreed to spend $1.5 million to perform a Risk Investigation and
Feasibility Study ("RI/FS"). Florida Power is liable for 39.7% of these
costs. When the RI/FS is completed, the EPA is expected to give further
direction on the extent of the cleanup. The RI/FS is expected to take 4 to 6
months.
The discussions and resolution of liability for cleanup costs could cause
Florida Power to increase its estimate of its liability for those costs.
Although estimates of any additional costs are not currently available, the
outcome is not expected to have a material effect on Florida Progress'
financial position, results of operations or liquidity.
In addition to these designated sites, there are other sites where
affiliates may be responsible for additional environmental cleanup.
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 $7.5 million. It has
reserved $4.7 million against these potential costs.
ADVANCED SEPARATION TECHNOLOGIES ("AST")- Florida Progress sold its 80%
interest in AST to Calgon Carbon Corporation ("Calgon") for $56 million
cash. Calgon filed a lawsuit in January 1998, and amended it in April 1998,
alleging misstatement of AST's 1996 revenues, assets and liabilities,
seeking damages and the right to rescind the sale. The lawsuit also accuses
Florida Progress of failing to disclose flaws in AST's manufacturing
process and a lack of quality control. No projection of an outcome or
estimate of a potential liability, if any, can be determined at this time.
Florida Progress intends to vigorously defend itself against this lawsuit.
AGE DISCRIMINATION SUIT - Florida Power and Florida Progress have been
named defendants in an age discrimination lawsuit involving 116 former
Florida Power employees and one current employee. While no dollar amount was
requested, each plaintiff seeks back pay, reinstatement or front pay through
their projected dates of normal retirement, costs and attorneys' fees. In
October 1996, the court approved an agreement to provisionally certify this
case as a class action suit under the Age Discrimination in Employment Act.
Estimates of the potential liability associated with this lawsuit cannot be
made until the final decision on whether to certify the case as a class
action suit has been made. A decision is not expected until late 1998.
4) In the opinion of management, the accompanying financial statements include
all adjustments deemed necessary to summarize fairly and reflect the
financial position and results of operations of Florida Progress and Florida
Power for the interim periods presented. Results for the first quarter are
not necessarily indicative of results for the full year. It is suggested that
these financial statements be read in conjunction with the financial
statements and notes thereto in the combined Form 10-K of Florida Progress
and Florida Power for the year ended December 31, 1997 (the "1997 Form
10-K").
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
OPERATING RESULTS
Florida Progress' earnings per share for the three month period ended March 31,
1998, were $.52 compared to $.43 for the same period in 1997. Florida Power,
Florida Progress' largest operating unit, reported earnings of $.47 per share
for the first quarter 1998 compared to $.42 per share for the same period last
year. The increase was primarily due to customer growth and increased customer
usage. Diversified earnings per share for the first quarter 1998 were $.05
compared to $.01 last year. The increase resulted from higher earnings at
Electric Fuels Corporation ("Electric Fuels"), Florida Progress' energy and
transportation subsidiary. The improvement in earnings at Electric Fuels was due
primarily to improved operations at the inland marine transportation group.
14
<PAGE>
Florida Power - Operating Revenues
Florida Power's operating revenues were $11.4 million, or 2.1 percent, higher
for the three month period ended March 31, 1998, compared to the same period in
1997. This was due largely to increased customer growth and usage, primarily
among residential customers. In 1997, residential revenue decoupling adjustments
increased residential revenues by $7.5 million for the three months ended March
31, 1997. Residential revenue decoupling was designed to eliminate the earnings
impact that abnormal weather had on residential sales, Florida Power's largest
customer group. (See Note 1 to the Financial Statements.)
Florida Power - Operating Expenses
Fuel and purchased power costs were $13.9 million, or 6.3 percent, lower for the
quarter ended March 31, 1998 compared to the same period in 1997. This was due
primarily to lower fuel costs due to the Crystal River nuclear unit's return to
service in mid-February 1998. Except as pursuant to Florida Power's June 1998
settlement agreement regarding replacement fuel and purchased power costs
resulting from an extended nuclear outage (see Note 9 to the financial
statements in the 1997 Form 10-K), Florida Power recovers substantially all of
its fuel and purchased power costs through a FPSC ordered fuel adjustment
clause, thereby eliminating any impact on net income. The disallowed fuel costs
for the extended nuclear outage were not recovered through the fuel adjustment
clause, per regulatory order.
Other operation and maintenance expenses for the three months ended March 31,
1998, were essentially level with the same period for 1997, excluding nuclear
outage costs, due to continuing efforts for cost control at the utility. This
was achieved despite the increased operating and maintenance costs related to
the Tiger Bay facility, and the increased number of customers.
Depreciation and amortization expense increased $6.7 million for the three
months ending March 31, 1998 compared to the same period last year due primarily
to the depreciation and amortization expenses associated with the 1997 buy-out
of the Tiger Bay purchased power contracts.
Interest expense increased $10.6 million in the first quarter of 1998 compared
to the same period in 1997. The increase was a result of higher debt balances
due primarily to increased costs associated with the nuclear outage and the
Tiger Bay transaction.
SEC Review of Accounting for Nuclear Outage Costs
Florida Power and the Securities and Exchange Commission ("SEC") are involved in
discussions regarding Florida Power's recording of accrued nuclear outage
operation and maintenance costs in June 1997. The outcome from the discussions
could result in the restatement of quarterly results for the second, third and
fourth quarters of 1997.
Total results for the fiscal year ending December 31, 1997, would be unchanged.
Florida Progress Diversified Operations
Revenues for the company's diversified operations were $28.6 million higher for
the three months ended March 31, 1998, compared to the same period last year.
The increase is largely attributable to Electric Fuels Corporation, lead company
for Florida Progress' diversified operations. In addition, diversified revenues
for the first quarter of 1998 reflect the absence of revenues from
Mid-Continent, which was placed into receivership in 1997. (See Note 3
"Contingencies - Mid-Continent Life Insurance Company" contained herein.)
Electric Fuels earned $8.2 million, or $.08 per share in the first quarter of
1998 compared with $3.3 million, or $.03 per share, during the same period in
1997. Most of the increase is attributable to improved operations at the inland
marine transportation group.
In the first quarter of 1997, flooding along the Ohio and Mississippi Rivers
significantly affected earnings for the inland marine transportation group.
Normal operating conditions thus far in 1998 combined with a larger barge fleet
have increased earnings from this group by $2.5 million or $.03 a share when
compared to the same period last year.
15
<PAGE>
Progress Rail, Electric Fuels' rail services group, continues to experience
increasing demand for its railroad related parts and services. Earnings from
this group were up $.5 million for the first quarter 1998.
Earnings for Electric Fuels' energy and related group were up $1.6 million or
$.02 a share in the first quarter of 1998 compared to the same period in 1997.
The improvement in earnings is due primarily to lower operating costs and
increased coal sales. The increase in sales resulted largely from a 1997 buy-out
of a 50-percent partner in one of Electric Fuels' coal properties. Electric
Fuels now recognizes 100 percent of the sales from this mine instead of 50
percent.
YEAR 2000
Florida Progress and Florida Power do not anticipate incurring significant costs
related to modifications of their information systems to prepare for the year
2000. In addition, the companies expect to complete the modifications on time.
LIQUIDITY AND CAPITAL RESOURCES
Florida Power budgeted $294 million, excluding allowance for funds used during
construction, for its 1998 construction program. This is expected to be financed
by internally generated funds. During the first three month period of 1998,
$65.5 million was spent on the construction program, financed primarily with
funds from operations.
In March 1998, Florida Power redeemed all of its outstanding $150 million
principal amount of First Mortgage Bonds, 8 5/8% series due November 2021 at a
redemption price of 105.17% of the principal amount thereof, together with
accrued interest. Substantially all of the redemption was funded from the net
proceeds of the $150 million of medium-term notes issued in February 1998, which
bear an interest rate of 6 3/4% and mature in February 2028.
Florida Power's ratio of earnings to fixed charges was 2.67 for the twelve
months ended March 31, 1998. (See Exhibit 12 filed herewith).
Progress Capital Holdings recently established uncommitted bank bid facilities
allowing it to borrow and re-borrow, and have outstanding at any time, up to
$275 million. Currently, $125 million is outstanding under these bid facilities.
The funds will be used for general corporate purposes.
Florida Progress and Florida Power believe their available sources of liquidity
will be sufficient to fund their long-term and short-term capital requirements.
"SAFE HARBOR" STATEMENT UNDER
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report contains certain forward looking statements, including projections
regarding the proportionate liability for cleaning up certain environmental
sites; the results of certain legal proceedings relating to Mid-Continent; and
the costs associated with modifying computers for the year 2000.
Risk Factors
These statements, and any other statements contained in this report that are not
historical facts, are forward-looking statements that are based on a series of
projections and estimates regarding the economy, the electric utility business
and Florida Progress' other businesses in general, and on factors which impact
Florida Progress directly. The projections and estimates relate to the pricing
of services, the actions of regulatory bodies, and the effects of competition.
Key factors that have a direct impact on the ability to attain these projections
include continued annual growth in customers, successful cost containment
efforts and the efficient operation of Florida Power's existing and future
generating units. Also in developing its forward-looking statements, Florida
Progress has made certain assumptions relating to productivity improvements and
16
<PAGE>
the favorable outcome of various commercial, legal and regulatory proceedings
and the lack of disruption to its markets.
If Florida Progress' and Florida Power's projections and estimates regarding the
economy, the electric utility business and other factors differ materially from
what actually occurs, or if various proceedings have unfavorable outcomes, then
actual results could vary significantly from the performance projected in the
forward-looking statements.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
Florida Progress is exposed to changes in interest rates primarily as a result
of its borrowing activities.
A hypothetical 56 basis point increase in interest rates (10% of Florida
Progress weighted average interest rate) affecting its variable rate debt
($767.5 million at March 31, 1998) would have an immaterial effect on Florida
Progress' pre-tax earnings over the next fiscal year. A hypothetical 10%
decrease in interest rates would also have an immaterial effect on the estimated
fair value of Florida Progress' long-term debt at March 31, 1998.
Commodity Price Risk
Currently, at Florida Power, commodity price risk due to changes in market
conditions for fuel and purchased power are recovered through the fuel
adjustment clause, with no effect on earnings.
Electric Fuels is exposed to commodity price risk through coal sales. A 10%
change in the market price of coal would have an immaterial effect on the
earnings of Florida Progress.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
1. 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.
Florida Power Corporation v. Panda-Kathleen Corp. ("Panda"), United States
District Court for the Middle District of Florida, Tampa Division, Case
No. 95-2145-CIV-T-25-B.
See prior discussion of this matter in the 1997 Form 10-K, Item 3,
paragraph 4. On April 7, 1998, the FPSC voted unanimously to deny Panda's
Motion for Extension of Milestone Dates. On April 22, 1998, Panda filed an
Emergency Motion with the Florida Supreme Court to Stay the effect of the
April 7, 1998 FPSC order denying Panda's motion for Extension of Contract
Milestone dates. The Florida Supreme Court granted Panda's Motion and
directed Florida Power to file a Response by May 12, 1998.
On April 20, 1998, the U.S. Supreme Court denied Panda's Petition for Writ
of Certiorari with respect to the Florida Supreme Court September 1997
decision affirming a 1996 FPSC order.
The District court case was dismissed in September of 1997. This concludes
the District court matter for reporting purposes.
2. Metropolitan Dade County ("Dade") and Montenay Power Corp. ("Montenay") v.
Florida Power Corporation, Circuit Court of the Eleventh Circuit for Dade
County, Florida, Case No 96-09598-CA-30.
Metropolitan Dade County and Montenay Power Corp. v. Florida Progress
Corporation, Florida Power Corporation and Electric Fuels Corporation,
U.S. District Court, Southern District, Miami Division, Florida, Case No
96-594-CIV-LENARD.
17
<PAGE>
In re: Petition for Declaratory Statement That Energy Payments Are Limited
to Analysis of Avoided Unit's Contractually Specified Characteristics,
Florida Public Service Commission, Docket No. 980283-EQ
See prior discussion of this matter in the 1997 Form 10-K, Item 3,
paragraph 2. On March 11, 1998, Dade and Montenay filed a Motion to
Intervene in the FPSC matter. On March 24, 1998, Florida Power filed a
Response in Opposition to the Dade and Montenay Petition. On April 6, 1998,
Dade and Montenay filed a Motion to Dismiss the Florida Power Petition for
Declaratory Statement.
3. NCP Lake Power, Inc. v. Florida Power Corporation, Florida Circuit Court,
Fifth Judicial Circuit for Lake County, Case No. 9402354-CA-01
In re: Petition for Expedited Approval of Settlement Agreement With Lake
Cogen, Ltd., Public Service Commission, Docket No. 961477-EQ
In re: Petition for Declaratory Statement Regarding the Negotiated
Contract for Purchase of Firm Capacity and Energy between Florida Power
Corporation and Lake Cogen, Ltd., Florida Public Service Commission,
Docket No. 980509-EQ.
See prior discussion of this matter in the 1997 Form 10-K, Item 3,
paragraph 3. On April 9, 1998, Florida Power filed a petition with the FPSC
for a Declaratory Statement that the FPSC approved negotiated contract
between the parties limits energy payments thereunder to the avoided costs
based upon an analysis of a hypothetical unit having the characteristics
specified in the contract.
4. Sanford Gasification Plant Site, Sanford, Florida
See prior discussion in this matter in the 1997 Form 10-K, Item 3,
paragraph 8. Florida Power, Florida Power and Light Company, Atlanta Gas
Company, Florida Public Utilities Company and the City of Sanford have
executed the EPA AOC and the Site Participation Agreement. By signing
the AOC, the PRPs have agreed, jointly and severally, to perform the RI/FS
at the Sanford site. By executing the Site Participation Agreement, the
PRPs have agreed to an allocation of costs for a RI/FS for up to $1.5
million. Florida Power's share is approximately 39.7% of these costs.
(See Note 4 to the Financial Statements under the heading "Contingencies -
Contaminated Site Cleanup".)
5. State of Oklahoma, ex rel. John P. Crawford, Insurance Commissioner v.
Mid-Continent Life Insurance Company, District Court of Oklahoma County,
State of Oklahoma, Case No. CJ-97-2518-62
State of Oklahoma, ex rel, John P. Crawford, Insurance Commissioner as
Receiver for Mid-Continent Life Insurance Company v. Florida Progress
Corporation, a Florida corporation, Jack Barron Critchfield, George Ruppel,
Thomas Steven Krzesinski, Richard Korpan, Richard Donald Keller, James Lacy
Harlan, Gerald William McRae, Thomas Richard Dlouhy, Andrew Joseph Beal and
Robert Terry Stuart, Jr.
See prior discussion in this matter in the 1997 Form 10-K, Item 3,
paragraph 10. At a March 17, 1998 hearing, the judge rejected the
submissions of both the Commissioner and Mid-Continent. The Commissioner
was told by the judge that if there were any recovery from the lawsuit
against former Mid-Continent directors and officers and Florida Progress,
that recovery could be used to offset any reserve deficiencies, but
directed the Commissioner and invited Mid-Continent to present simplified
plans that include premium increases. Mid-Continent is working to prepare
such a plan, although completing such a plan will be difficult because the
court denied Mid-Continent's motion to compel the Commissioner to produce
actuarial and other information to Mid-Continent. In the annual statement
filed by the Commissioner on behalf of Mid-Continent, the estimated reserve
deficiency was revised upward to $348 million. Florida Progress believes
that this new figure is untenable and not based on sound actuarial
principles. On April 17, 1998, the court granted motions to dismiss the
18
<PAGE>
individual defendants, leaving Florida Progress as the sole remaining
defendant in the lawsuit. (See Note 3 to the Financial Statements under the
heading "Contingencies - Mid-Continent Life Insurance Company".)
6. Florida Power Corporation and Seminole Electric Cooperative v. Ronald J.
Schultz, Circuit Court for Citrus County
See prior discussion of this matter in the 1997 Form 10-K, Item 3,
paragraph 14. On April 22, 1998, the court granted Schultz's Motion for
Summary Judgment and held that the statute upon which Florida Power relied
for the pollution control equipment tax exemption is unconstitutional. The
judge reserved jurisdiction on other outstanding issues.
7. FOCAS, Inc. v. Florida Power Corporation, U.S. District Court, Northern
District of Georgia, Atlanta Division, Case No. CV-822-CC
Florida Power entered into a contract with FOCAS, Inc. ("FOCAS") for the
supply of fiberoptic cable. A portion of the cable was found to be
defective, and was replaced. FOCAS invoiced Florida Power for the defective
cable in the amount of approximately $1,990,000. While discussions
proceeded regarding the matter, FOCAS sued Florida Power alleging breach of
contract, unjust enrichment and fraudulent inducement, and requesting up to
approximately $76 million in damages, representing, among other things,
Florida Power's alleged profits over the estimated fifteen year life of the
cable. Florida Power intends to vigorously defend this case, and on April
9, 1998, filed a motion to dismiss.
Item 4. Submission of Matters to a Vote of Security-Holders.
The Annual Meeting of Shareholders of Florida Progress was held on April 17,
1998. There were 97,044,941 shares of common stock entitled to vote. The
following matters were voted upon at the meeting:
1) Election of Directors
Class II - Terms expiring in 2001
Votes Votes
For Withheld
W. D. ("Bill") Frederick, Jr. 81,152,984 1,979,702
Frank C. Logan 81,160,086 1,972,600
Vincent J. Namoli 80,654,489 2,478,197
2) Shareholder proposal to require shareholder approval of annual
salary increases for executive officers that are greater than 2% of
their prior year's salary.
For the proposal: 9,629,447
Against the proposal: 61,149,484
Abstentions: 1,765,569
Broker non-votes: 10,588,186
3) Shareholder proposal to request that a special report on the
Crystal River Nuclear plant be made available to all stockholders
within six months of the 1998 stockholders' meeting.
For the proposal: 6,534,285
Against the proposal: 59,280,200
Abstentions: 6,732,119
Broker non-votes: 10,586,082
19
<PAGE>
Item 5. Other.
Florida Progress has a policy not to comment on rumors and speculation
pertaining to strategic transactions. But in response to a reply that Scottish
Power made to its exchange authorities on April 24, 1998, Florida Progress
confirmed that the two companies did engage in discussions with regard to a
potential business combination. Those conversations were consistent with Florida
Progress' stated intention to grow its market position within the evolving U.S.
utility market. Both companies mutually agreed to terminate their conversations
during the week of April 20, 1998. Florida Progress does not intend to have
further comment on this matter.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
Florida Florida
Number Exhibit Progress Power
------ ------- -------- -------
12 Statement Regarding Computation of Ratio X
of Earnings to Fixed Charges for Florida
Power.
27.(a) Florida Progress Financial Data Schedule. X
27.(b) Florida Power Financial Data Schedule. X
X = Exhibit is filed for that respective company.
(b) Reports on Form 8-K:
During the first quarter 1998, Florida Progress and Florida Power
filed the following reports on Form 8-K:
Form 8-K dated January 13, 1998, reporting under Item 5 "Other
Events" an Investor News report to provide an update regarding
Florida Power's Crystal River 3 nuclear plant.
Form 8-K dated January 26, 1998, reporting under Item 5 "Other
Events" a press release and related Investor News report regarding
Florida Progress' and Florida Power's 1997 year-end earnings.
Form 8-K dated January 30, 1998, reporting under Item 5 "Other
Events" an Investor News report to provide an update regarding
Florida Power's Crystal River Nuclear Plant.
Form 8-K dated February 9, 1998, reporting under Item 5 "Other
Events" an Investor News report to provide an update regarding
Florida Power's Crystal River Nuclear Plant.
Form 8-K dated February 12, 1998, reporting under Item 5 "Other
Events" an Investor News report to provide an update regarding
Florida Power's Crystal River Nuclear Plant.
Form 8-K dated February 19, 1998, reporting under Item 5 "Other
Events" an Investor News report regarding an increase in Florida
Progress' annual dividend.
In addition, Florida Progress and Florida Power filed the following
report on Form 8-K subsequent to the first quarter 1998:
Form 8-K dated April 17, 1998, reporting under Item 5 "Other
Events" the first quarter 1998 earnings, and Dr. Jack
Critchfield's retirement as Chairman and the election of
Richard Korpan to succeed Critchfield as Chairman effective
July 1, 1998.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, each registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized. The signature of
each of the undersigned on behalf of each listed company shall be
deemed to relate only to matters having reference to such company.
FLORIDA PROGRESS CORPORATION
FLORIDA POWER CORPORATION
Date: May __, 1998 /s/ John Scardino, Jr.
-----------------------------
John Scardino, Jr.
Vice President and Controller
Date: May __, 1998 /s/ Jeffrey R. Heinicka
-----------------------------
Jeffrey R. Heinicka
Senior Vice President and
Chief Financial Officer
21
<PAGE>
Exhibit Index
Florida Florida
Number Exhibit Progress Power
- ------ ------- -------- -------
12 Statement Regarding Computation of Ratio X
of Earnings to Fixed Charges for Florida
Power.
27.(a) Florida Progress Financial Data Schedule. X
27.(b) Florida Power Financial Data Schedule. X
X = Exhibit is filed for that respective company.
Exhibit 12
FLORIDA POWER CORPORATION
Statement of Computation of Ratios
(Dollars In millions)
Ratio of Earnings to Fixed Charges:
Twelve Months Ended Year Ended
March 31, December 31,
1998 1997 1997 1996
-------- -------- -------- --------
NET INCOME $140.5 $234.7 $135.9 $238.4
Add:
Operating Income Taxes 71.9 132.8 69.9 135.8
Other Income Taxes .6 (.4) (.1)
-------- -------- -------- --------
Income Before Taxes 213.0 367.1 205.8 374.1
Total Interest Charges 127.9 98.3 117.3 98.4
-------- -------- -------- --------
Total Earnings (A) $340.9 $465.4 $323.1 $472.5
Fixed Charges (B) $127.9 $ 98.3 $117.3 $ 98.4
-------- -------- -------- --------
Ratio of Earnings to
Fixed Charges (A/B) 2.67 4.73 2.75 4.80
======== ======== ======== ========
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