ML20042E865

Annual Rept 1989

ML20042E865
Person / Time
Site:	Crystal River
Issue date:	12/31/1989
From:	Critchfield J, Hines A FLORIDA PROGRESS CORP.
To:
Shared Package
ML20042E862	List: 3F0490-10, Forwards Annual Financial Repts for Six Participating Owners of Plant ML20042E865 ML20042E866
References
NUDOCS 9005030259
Download: ML20042E865 (52)

Text

r-7 d

, n,.'

' h'j, h

(/

.,, f;}

z a

[?

'h',j0lbi- :t :

h fl.

.aw f

s Yh'3 n,p q e, k ; hhhbfh *j p,< gl @

, pus hh'

hyb q$yQfr

sd

,m','W' :a ~

gjyp@?gg

'l5M,,,

i:f?i}l if;M

',4 '

71

,/

g.

\\

.y, r.-

9 o, a'uur,.,

b ay "47 61

NJ -,

a b-

13ggymmeWeerse!A5 WFy', N J

mt dw68.,8MiMitRLARFu s +,t

,,a m am st

~_,

1. w m,4 gq;;uen i

r s

y

+

bll h(Ela '

%V n,

i er u y.

t Awfv!gA em a

, t $d "' -

'D t

j$irmww par &w 2e w,1 s e%,a us g' ' p4 ew w

@%gn

$rar4t*

fiK j ih N ] s %p r E3; k !ff I Pkg[fb E

@gi E

d

}[l!!jjsiFsPsaiy=serbo

$ g w(S M :p a g % B R g

anpr jhff W sq s sa

% ab49

~

er a tt emntena

i,

s

_ g j'{ Nn L +!..

m-3 i

g

!a n-

_ e_ e %g t

. qI

.. g a(0 w ).

c p

pjk d

994 og 3,4x._

i e

, *, Fgphfh bgx 3

m d{ p Jg '

ja 7

3

%uwgP m w

x 1

s

,,u,g go u aaa u mm a

. q

+ g, ga;M$$$$g"$Nyaum s

y u

1 o

M hM ki 4.7, h*

"hd I.s.da $$.@

$M,@$i@PM.M, MMM@.M m.

39~4~9

.nd$aw w

n,

t t,y 4

. t p.

+

g.

...,j,,,, }

a y

[

y/.. >.,_ w -

~-

. ' ~.

9 1

k ' ',"

=

p.

'f f

r f:..

j

• c..

"[.'

• _., g,Q.1);}.ji'Q::

q f,

vj 9 gjp.f.,',{.q..

3 i l: "_ C}. ~.

y g:>

~

N.

.. y mz..

- 3..:,

.,n g$g f

, ;, l _ l '.$-,'. ",. g.

-~

f.,.

~

m

. p;e.

_'in

.';:' I'.. {C +.\\',.sh,y;t

-r f,

t,Q.

^.. - ',..,' * '

7 m ~

.~

.t..... : ' '. ; ' '

5

r,

t 7:,,,k: :n,; v Ma y

?.

' i

%WQ f$W[.

Aj&' k?*.g g g:vg, t.

g}ir gg n

. Qf 2

n o s sw

..u +.

, g

%g y@rgr,,SM,,v@.. _w;,,j% *m$N i,_ n.'

,g

..U. pt7g.. '-

i i, y.

t

., s. ;s mn ea y; 5

..a na c

we y :n:f;g,ne gggy pnggdggdpnq Qq.

g

.xge.

=

y c y g m w$q $m u yh k f f &; & h k>

v:

WhnYh,g$ kYh k

. o,.y C jW@)

ajy

mempg

.e 4,

..e yv$t +,2 m;

,: 3 m;myg4y w

+

1 x,

1. n,.

r n.g,,.; y4e 2

L.=.

c

+

.N r.

i 4.,

4 P.RDE R ESS, a 2 $6" 7

~

FL0RIDA

~

! - p. g EDRPORATIDN J

. n..

A N N'U A t

.J

)

NE dry

W W

A k

.s b

't WW*

.r 4

a j

k dIh.bN

$$$ih dNkI' n

i f4M% lhtVf' ITAEt'*IPLIffW '

. -..., p 4 yrs 44 flw wtektha S.

~

rpltatirtrr,hrby tuve g'

t

~

j g

neth{N4'#4} (thttp 914 A'P%dMl it218(WVhhhthiWTAIWitfWy

%t 11Wd Wffij fftSAtMd t$1?(Pt e

y

},

t m h ot H a t A w e41a w

~

ti,mg&d t aim w> h antt e.

i

- tWhtde nt w,itet s

.3 4

k th u unthrd edort wi ttrth in

~

' [

~

^

~

1. t wmi.hv dn ets:,0 As ont -

2

~

Y e

-' (

.s

'k. N' :k' Ikt

(:h bkN $^'

kst thw Itt%t (hnde fit <d win

'L -

x

~

~

etmue*N ntudvimpage in a

• y ghclothdit1hyv y

h

+

S ev.

~

k 2

x,

w 4'

m

.4 m

4 h.

,4 g

"e S'"

=-

e te 4

+

z e

M i

[

..r

?

N A

I'I k

_. g 4

4 J.

s.

e.-

g

,q,.

e k

s-3 e

I%

e-e-

g

• a Y

s e

?

r y,

_- s 4

4 k

2.

1 F-y.

t t

d" y

4

?

4 A

47 s

49 4

'j p

^

• - 3 4

~

W e

(; '

n s

s 5

4 e

e s

k3

'b w

f.

.c

^

t 4,

1 r~

'a i

g f

~

.e er t.

3-,

7

~

t'

~

v 4,

1. ~'

^

E

.v k

k-Y

.4

~

5.

i

,a 1 trePrmgressChrporationisa.

stHify%iambaasa ligh tahtyetedric 9

A

%dding cimpany that rumbitws its pridiary emitpanythat issthmgoperationallyadd,

efeefde #tRy kWacstwith diversified finaurially 4W41*ersification strategy 1s to operatinus The electric tetBy set *n asw offsw ~

wttet ed inta$st in htWtresses wikw earnings a*

ar.= em =y e ow+.aaerra mauwanyn.an.

Ireetbn oMptalRp servlee and kMstatesA har in order in ghieve a highetelal Miurn ka'

prjimary objec6ve is temudinge dg*veldping the shareholdera

~

4

^

n

+

i.

9 5

0l k.

k f

t'_

a

+

g b

r n.

't

,..:m

.' l r

~

Q V

r M

6 g

g g

s A

~

c s

+.

W s

A y '

g

+

g i

i t'

'R

>ho P

b.-

.te g

sJ.u-;.

f.

[ t.l s

'h 4

8 3

4g.<

4;

.~.l!.

y

' 3 3

h, 3

t efg r

1 i

j s

T.

[5.

I

}

g irj

)

t,

< p

+,

Q '-

e t

llf; m i.

~ r

.c

s

• s 4 U

-r. : -

e \\-"

' j' s,' '*,

i s

e,s k.

?

1 w

3 4

R g

1-y,f i

g

.n esei. U(.

' ["k' J^

r

' ~ y; y f 4, f[4a kg, c3i.

9 I

i h1$

% f.

.QO E

.,' '...' h'.9,

.c

~_s ?>

l -z h D., A

, w. e?a'

.M V D

?_

e.

^

,n

.s=. (

)

1"

%,, x 4,,-

j i0+

a,..

s$

, N $ _[.

h;jl',

t y 4

v

, c.3 N k. h,l,

/

5

-- %~ ~ (( j 4 ib,d i

g w

f. k j..h. v m

-e, o

4

. O g;M,o N M,.'f(A;n;V.y :xdg[w. Y,k } QQ q r w;t %. -. W/: q y,u.*/ N, I J h [! w a. 3 E

5 (2,

s.

2 i,.

c..

i-y3 e:4 m, J i' ' N

.h ',te f 9

s fs.

o

~&

n n'i g

/

gn.

~

.v/

W"1

,s s

y" t

s s

w+

., r:, g w am,.g!).Pe@M. r en. ;. ' 'p~,g>m(.

p s y, 97

!s.',

m. y: y

~t 7

A r

n @+

MM. e.3fr-4ynNSo

.,7 9

,,t.

m,"a x i

-- +

2 u n-(

1 p t, w-, ;._1, c ;,".,

-7, ay=

s we -

m s:

1 mh

- a k,.s.; y w_

.<4-s

,.,+W.s%

p o

n', =- %m 5

g 3

u, Q.

. +

j

!.gL u,,:

C.u 3

s-

' r.;1 w

e < '--

F7.

p 9k; ryv n

a m'hn i

m

,\\

v '. 4 %tydy ' d+k 6,-?t w&g ' \\

y y f

g'1' ['

a c g.

frg$

k N l,

'f fj g

Sp e v q'J

\\!

s

'a; s p' j 4,,p u m4 t.

1

. r3 3

i '( ' N f

g o

4 s1 N, [+g, e e,.

s %o r 4 %pq.

, n;a w-

A-1'

..e we W' ' *W' '

M 7 '1NN r

m

.A f:^ >= N ! a s N u aWD \\r% W s

+3

N > l f ;. - w s v.' &.

t i'

.s ks[

~;"

\\

> y

$ g. y+ f

-Vu w_ I^ : c

v.

a a

ma

. ~- m m y_, % <,[ m +

p-,

. i M Q ',., ;n....@[@ Op:

s4 i

.; c

,..r.

g, ncg. ; +

a :n. 4 v.. c. Q~,+,k, My g%

,[

'i'.. <. V r

~G

-,i1 cu r..$ K, >M*V Mg.w'^

1. u s

Q.,,.. y.

s.

c 8

a; t

- c;wy"msm e

~

mpv: > 9 m4_.

n.. :

.,wc

.- a

+

a d...

,. yy

j.,~ n,.v

g..

n no s yr y

e '..[

h. y fh Nhlg \\j.'p} K1, t,,p' #

th i

< ilj-8t a, -

g Q b Nc-

,T 1

4 h(

.(3 de 9

[Wp

.q."

s,A :')

(-.

g c;i se '.T N$l&$i&Rh&w; p&.}g A+y&q.,shhw&dAQ&? JW

? y:yd,q nn D O; u'*

i

--A a

,n

.y, a

7.

. n W, g -i q

..g,.,

n s e e%,.W,,

s ;3.-

4 4

W4 T}&:::q?W_ f. :h Q i

A.d. ; f..,0G:

! b,;.

,,.yAo s

-?

v

,.ngx -

8s synv :+ I s

- e.9 s

( a. ' Q? $r

.&Q!%p -&

t t

t a

4 ~3 a 4

m.t r

5:

f;;f i k h%:ha.

N

$},

lN %

d>

4 w

9h n r.,n+f,p. w, r, ~a~s,n u n

n a n n.

w w,fw ~.

m

+

hf '.

lxv ~m,.&uf w%;h, s

n x

fh f5

~

~

l, n, Q, J m m k ~ ln,, (w n g ~ w,y slu ~.yll

-. n n

.?

- ~ ~v_mv wn_& &qh,f %y%y,4 m % ~r M qlm :

%,, o w&g40,@n; 4My ' Zy, gJr ;n'%pu :; p% yh; rs.Q.a &;. R,+Q c

a,y Qy &, m,3 n

P

~y.m. G,Mggygy pyy;%,

g 4,

x y 5,m C

q g

Ik x-c 3

.~

A, m s %

01{&j., Mo-H sV l lg 4 q.

mm :s-4g, g, c hny m

y,wm

. y p*

. q"e * -

khihD:y %,

m$'t_ 'g.

p&g kp',s

~..,A,.

w w.

,.5

--a

.-Q p 8'

r p

s p

E.

+

s na f

f /

[ *Myj,p& fd j] f,a}@m,L g& & l &s sf d p 4_

y %*$(

&G f&y%.

}e[k k 3 Q, "i,g&Q ' {ycT3jf & 'l

1. l _ A f

W,r%s.,m<.mmlm :njff&. r C ry 4

1 u

y pmg

~v

<, Wr s t a f n,.cym gg.5q%s 9 x7 @Qw w n

,m %

qv;&+v

~#n s

a p %,,

~a<

s., a

p NMk YhMONNhkb[gg[kh. c n,t,y:?

xu y, q3 w

.-Wy A

m y.n my 8

a hs s

.m a

b e:m kN,'MUh/hkhEbM[$kkN

> S"kN-h

k,,M h

wan sg$ %gm:x YY,Ggg;3pg 1,

~ w a n w e gna m%unw(n g/p q1ge;g ',!h@@7 w a m v yg y y$ g. =1 P

g@yMQggg W

yg Q y

g 9

w.,D&fQg MQgitWaWWM

' &, m p w m a x m % v is.Q-Q Q M Qu? N $ f fig f9

.h-

6. wen % -mg%e m_. it 2.,.w,y3 4x,...w&e.e, u,

mi w W,%p f,h., s. %e.. @..z

' 4, s - -.e,

.n g W., m.., v t

a, <.s s

' ser vm]sggn]g$he wn@Ag[m %ggygc w&

e w< ; -j 2 ;

., m J ] %f'&g,,QQp Mpg l 3

,g c,

. O

.,c.

r

< a4t

. hYh X$f f.,

?

58,y.

hk h %

p ;<.ew!\\

fgf N S h

4

+

s >

• s f

YQp gQQhg@w&,U ska%gggg t@ y E

N, ff gg gj p QQ 4

~ '3 -

f gl e3 ;; q w weh w

h am&a&Nhh@hng$a$h$?p&$a$$p$a$kk&&g&g h

Qk

.9

.=mp p

gg y

m aumpwo%

ee u

% W m M g g g m e k myp m A epk jjgg @

g{

L e

s%mmagQamwpwwwwpm v

w h % Qhp& g ak s h m w$ s m,af Q wpdn p

, +44g wwwpae L

w 4 h M $ w% se h w#7@$

v T,.

e pM a hA Wgg%gg@pN p 7 M C M@n$$A,a p mg%n,MYM,@FMMM. mm$y[u%w%

c 3 49 4

m N$h~hbf@eL g

7tyd wwwww, om.w %;am.gjgg.gwnow,M,kw Y %m, nk N

%w 4s as

-a m

s, x,,

m,ea u

w wW v 4.s,g,on yM

~

ame ene

.m,m mgoywwe;s s.3' g_,,e m. wg m_ 4y N., p, g/gggqu@.e

,,' _ _.. _s.,_-.m_.

s.w q u%.

U %.

e

, #,g E'

.s ji. M > -

n W f 'e'

','-(

Y

~I

' ' ^ ' ' '

2'

)

, V1 -'

a x.a s

-..., _., %yi s.

4

'g

.,g d-whg,g"(.

i g4

. 4::, G.ukyAW OM+q'#-

f y4 w' t,

W J p.y.f.y'% c y s 4y'.

M' g

_ _ < { T '/

e=

r 4,

g s -

4

~-y-

. a.. p lY %

Qq 7p&w%yqw'WWf sch,@, M; %,lg;W:.;f;t-*4 %,, },"

s gf' y

T^3- -:

Q s'

'Y O ;'

'd i

n s

7,q:p 3 p

J.-

M tf y ~ ?+y. c )g :._ [ :

,1

,@y, y*

c.

, 9n.

g 2: h 'g~-. ',,; L,"

a u

wm

,x:s n

p<v - + --

.wm-

e <

mm c

w<

w.

a n.

p-

+4.:,; V > q o

,d n r. u,,s...w~%

a, s.... 3x -

by q J;s p

1 g

,,e n

-%V 3

o i

<n L.

a p*v ng y. x a,xo ; c, b g %. L 3 *

,c't V a:

M.

e u.

p#

se p :~17 v v :3my, -

+ym

,- f isb u

..c' c

r

, wl

• n 1

1 k

i q;

y:

c ','-

sG f,

-l-

i;,.?

) '? E~,

q q

t y' 8',v5 1

,}.

e

, e n

n ~,>

z 3 3,h

, *(

.d" 1

.. Q;:.Wy;,

u A

p. q u p1i-I.1i s,

,E:y']. ~,

9 i

$\\i f

i t

c.,

m,

,1 O. [. ' %

, iv t g

y s

i5 5

,.+

-

t

_ j e

f

( $r:

d

}

3

.k-',

s

any

,-39

.L-(,

}

l

-?{

i k

IN VE B TD M H lWH110l#T5

-q

~

p l

INVESIDR HIGHLIGH13 (Dollars in millions, except per sharr amounts)

Annual Growth Rates 1989 1988 1988 89 84-89 OPERATING RESUL'IS Utility revenues

$ 1,627.0 $ 1,468.5 10.8 4.0 Diversified revenues 502.4 533.5 (5.8) 51.3 Income from operations 410.2 365.7 12.2 5.2 7

Net income 187.1 179.8 4.1 10.1 DATA PER COMMON SHARE Utility earnings 8

3.28 $ 3.31

(.9) 4.3 Diversified earnings

.39

.21 85.7 50.8 Consolidated earnings 3.67 3.52 4.3 6.3 Dividends paid 2.58 2.50 3.2 4.5 Book value 26.88 25.80 4.2 6.1 Stock closing price 40 35 14.3 11.0 Stock price range 40 %.33 %

37M-32 FINANCIAL POSITION AT DECEMBER 31 Assets

$4,634.0 $4,303.5 7.7 6.2 Capitalization 03,232.3 $2.973.0 8.7 4.8 Capital structure:

Short term debt 15.5 %

12.5 %

long-term debt 34.9 35.3 Preferred stock 7.2 7.9 Common equity 42.4 44.3 UTHER STATISTICS Return on average common equity 13.9 %

13.9 %

Dividend yield 6.5 %

7.1 %

(

Average common shares outstanding (in millions) 51.1 51.1 3.7 Employees 7,490 7,974 (6.1) 6.1 Eamings and Dividends Per Share Totalinvestment Retum Fne-year Aerage Growth Rate 1984-1989 l

ll 1985 1986 1987 1988 1%9 R Dnadends W Eam.ngs a Flonda Progress 3 S & P 21 a3&PSW Electnc Ut:htes l

Operating Locations EE8$ggh%p$ggg I

d id k

ff O Energy & Technology O Development O Financial Services Florida Power Corporation Service Area

(%E$Yi$$$N{lk%Ih

(e" gauw'bs$,p

< JACKSONVILLE dQPHl8dCOLA ;,f k'

ER PARK Y WORLD sa Sennce Area CLEARWATER ST PETERSBUR k

4

,u.

s Florida Power serves over 1.1 million

~

customers in more than 375 cities, towns, and rural communities. The l.

territory comprises about 20.000 square i

MIAMI miles with a population of more than 7+

4.3 million located in 32 of Flonda's 67 y;

counties.

l

P e

y 1

M 4-P+..m.^'~g mm v

+

g.

W 5

l

~

t h.

_i

~

n

.~

~1..

3 4

y 1

- FifHupe Mats

?

~

' 1-W MtPUSATRM,

^

i m ira untayr m yng mtm. mai

.:.1 I milhe ruwtmine in 2J 91 horutas (E < $:nmtaw 1

L.

t

=

ss r

4 1

J 3

e

~

~

i

'n

=

O d-

/j

• 3 I

e l

4 s'

e t-1 6,

4 d

.a v

J nWi"an ta$tsmaapaxrs1N I

+

5 e

omhebnt.marenwnt m utesportahi

~

,s nssrammann smmuntas,u H

7 I

%.',5N.

NY

)[,h

.9 e

t b

PNCM$NNM TFD4N(ylA.Niittis J

POR M AYIll.$ -

d NN)YN YY4 2k(#. M)

%Mk(1g.}K%jk g y L A 4 M.dNSN:OOk(NiMO&IN) Iid (PtdMQbgg' i 3 s . PROGRER$4NFRat CORFDRATKm g the 4WiMit owwrshp wahgwranmuit, d w igre g) antguantp w -[a g h m p g - ' s ( N + 8 i s . C 'k. { fr / (

r e ik (+ 2 Investor Highhghts s y g, t 4 4 f, l + 1 ~ s e i [ s -4 %w i ;;f,.. 2., I ,, g ',; AN.W319MEQ' ~ ~ TARAJiltN 0tMtPtSA' HON x Real edak dewetarmegt and = 5 q dr. tmwitwhy ~'* Repons m %buutatwilug aret Mrdattam te a "p'. Management and Auditors hiskknt ptottnett. H M W.1.41.h1Rtn D k putgigg3g(gggk %ected ConsoMated Data omna4am 44 s N3yrrd u manmemitestmg Selected Data of Florida Power Corporation .. Irweintedir43g i brMk}hIk (N) ( (Q-l 'fggg).g g_f h'g..gg g) g ,, i -. g 4 Directors a,id Officers littD494Tgj$gt gagt e 3 IN#43RANCE(qggp4Ny. i UHb ta* kep9%j#4% O' UWunn ' ( f Investor information MidtW nuie4wmbit g.pg W.. b :. ,t 4

~

Dear Fellou' Shareholders:

Our Development Group continues to face a slowdown in the Florida real estate market as well as stiff competition and low margins for building products. We are facing tough business decisions to make the most of our opporiunities in this area. "E he theme of the 1989 AnnualReport le ln 1 90 to Shareholders, " Charting our course," represents the current position of the Compa-Electric Fuels Corparation has shown a posi-ny and the importance of the on going plan-tive earnings growth trend over the last four years. ( ning effort to guide and direct us in the future. Earnings per share were up by 20% in 1989. Elec. tric Fuels' plan for steady and manageable expan-Gur current position is one of strength, as sion has proven successful. This year Electric Nels reached a milestone. Over half of the company's demonstrated bythe results for 1989. Con-earnings came from unaffiliated business. This area solidated earnings C.. offers considerable long-term potential. per share were f.. Favorable results allow us to increase the divi- $3.67, up 4.3% over ~ dends on your investment. For the 37th consecu-l 1988. Florida Pbwer 8 tive year, dividends paid per share increased. The d Corporation's contri-P Board of Directors set a new annual rate of $2.64 bution to earnings per share at the November meeting. per share was $3.28 At that meeting, I also announced my retire-compared to $3.31in' . ment as an active employee and Chief Executive 1988. A long, hot Officer of Florida Progress, effective February 1, summer and strong 1990. In a concurrent announcement, a long time customer growth business colleague, Mr. Ire H. Scott, is also retir-and usageincreased ing. Mr. Scott, who serves as Vice Chairman of Flori-retail kilowatt hour da progress and Chairman of Florida Power, will Andrew H. Hines,Jr. sales by 6.3% over retire at the end of February. Mr. Scott has served 1988. Sales growth offset the $.10 per share impact well over the past 40 years. lle has been a very valu-of the regulatory ruling that disallowed recovery able member of the management team, of coal transportation costs. In addition, utility earn-The Board elected Dr. Jack 11 Critchfield as ings in 1988 had benefited by $.15 per share for Chief Executive Officer following my retirement, gas turbine generators which are being returned Dr. Critchfield has had the responsibilities of Presi-to service from extended cold shutdown. dent and Chief Operating Officer for the past two Diversified results were up significantly from years. I 1988. Earnings per share were $.39 compared to It has been my pleasure to serve as Chief Ex-l $.21 the year before. 'fko non recurring items in ecutive Officer since 1973. These seventeen years the Financial Services Group explain most of the have been challenging and rewarding times of change. Financial Services suffered an $.08 loss in change for the utility industry and the Company. l. 1988, due to a reserve for an oil drilling rig lease The seventies brought the oil embargo and the in default. In 1989, it benefited from a $.09 gain tough decisions of fuel switching and building i on the sale of Better Business Forms Inc. after baseload generation. The eighties have further re-reserving $.03 for related discontinued operations. vealed signs of rising construction costs for new Financial Services' operating results were also posi-plants, continuing regulation and increasing com-tive, contributing $.23 per shan from the earnings petition for the utility industry. These signs led us in their commercial financing and life insurance to our diversification strategy and to forming Flori-businesses. da Progress in 1982.

Our Company now faces a new decade, one a size and level of performance for consistently likely to prove a period of even greater and faster meaningful earnings growth. We have a good start change. You can have great confidence in the toward such a prugram which can contribute to divi-leadership in place to steer the Company's course dend growth and add value for shareholders. In the nineties. Throughout the organization, we are placing the strategic and tactical planning effort as a top As I assume the position of CEO,1 take respon-priority. We will concentrate on the broad corporate sibillty for a corporation that is well prepared strategy needed to guide us beyond the year 2000, to deal with and Integrating operational and financial planning take advantage of within t his strategic framework will be a major de-change.Throughout ~ terminant in maximizing future accomplishments, this report we have in the broadest sense, planning is the mechan-utilized the early Ism for effective leadership. It is the process for toolsof navigation to creating and communicating a vision for the or-i symbolize thataswe ganization, for developing an elfective strategy to plan our iuture move in that direction, and motivating a team com-course, we rely on mitted to making its best contribution. I the fundamental values and the ex-This planning process must be dynamic. riex. periences that have 1 lbility and responsiveness are criticalif we are to 7 served this coipora-I ~ Afg3 adapt to changing circumstances while seizing the tion well over the opportunities they present. Tb maximize our years. or. Jack n. crlichnend resources and our competitive advantages, we must Florida Progress be prepared to respond to change. In fact, in our is primarily an electric utility and will be for the organization, leaders are encouraged to be agents foreseeable future. Our vision for the future places of change. Stimulating positive change can con-Florida Ibwer, first and foremost. Florida ibwer has tinue to improve quality, productivity and service. many strengths and opportunities. Our challenge in the years ahead, I willlook forward to report-1 is to take full advantage of them. Our primary fo-ing to you on our plans and how they evolve. The cus will be toward managing and developing this pages that follow provide you much information core business, about our operations during 1989. I urge you to. l Our future course continues to include diver-review this important report on your Company, silication. lt is the only strategy that avoids the risk To you, our shareholders, we express our ap-of being totally dependent on the utility business. preciation for your strong support. All of the men Without taking unacceptable risks, time is required and women of Florida Progress remain commit-to develop a diversification program, which is of ted to earning your confidence. l Y Dr. Jack R Critchfield Andrew H. Hines, Jr. I President and Chief Executive Officer Chairman of the Board February 8,1990 j

i C 0 R P Q R A T E O V E R V 1 E W th thejourncy's destination established, the navigator can plan and chart the best course. Our objective at Florida Progress Corporaon is clear - to provide a com-petitive return to our shareholders. We l' sieve the best way to achieve that objective is to adhere to two basic premises. First and foremost, we must main-tain Florida Ibwer Corporation's position as a high quality ekctric utility com-pany that is strong, operationally and financially. Second, we must select and invest in diversified businesses whose earnings can grow at a faster rate than the utility business in order to achieve a higher total return for shareholders. I Providing Competitive Returns Florida Progress has proven to be an excellent investment. During the ] 1980s, investmg in our Company provided a total annualized shareholder [ return of 33.3% as compared to 17.5% for the Standard & Ibor's index of 500 companies. Maintaining this track record of shareholder returns is a major j

i g

challenge for the future. g The utility is our core business and will be for years to come. The utility g as industry's future promises increasing competition and continually changing

• 5 regulation. For many companies, the days of increasing rate base are over, f

and for others, t he rate of increase is slower than in the past. Florida Ibwer '8 is fortunate that it serves a fast gmwing state. Our plan is to use this advan-tage to prepare the utility operations for future industry changes. Building Value with Diversification Diversification also is part of our strategy to meet the challenges of a changing utility industry. lb stand out in the group of high quality utility com-panies, diversified operations must pro-." vide the earnings growth necessary to maintain a competitive dividend gmwth h I( rate while ensuring financial integrity. The sections that follow review the operations and plans of our business y groups. Each has a different role to play i a in contributing to the success of Florida 3 Progress. 'Ibgether they have the potential 4 5) to build value, and with further planning and 5 = development, the potential to maintain com- \\ 7 petitive returns for our shareholders. h ? a v. h",

f K ~

jr ~ [ 3 .b _jl

C 0 R P 0 R A T E D V E R V 1 E W th thejourng's destination established, the navigator can plan and chart the best course. Our objective at Florida Progress Corporation is clear - to provide a com-petitive return to our shareholders. We believe the best way to achieve that objective is to adhere to two basic premiserm First and foremost, we must main-tain Florida ibwer Corporation's position as a high quality electric utility com-pany that is strong, operationally and financially. Second, we must select and invest in diversified businesses whose earnings can grow at a faster rate than the utility business in order to achieve a higher total return for shareholders. l Providing Competitive Returns Florida Progress has proven to be an excellent investment. During the 1980s, inves'.ing in our Company provided a total annualized shareholder l return of 33 3% as compared to 17.5% for the Standard & Ibor's index of i 500 compan es. Maintaining this track record of shareholder returns is a major g challenge for the future. g sa The utility is our core business and will be for years to come. The utility p industry's fut ure promises increasing competition and cominually changing regulation. For many companies, the days of increasing rate base are over, bg and for othert, the rate of increase is slower than in the past. Florida Ibwer

• f is fortunate tha? it serves a fast growing state. Our plan is to use this advan-tage to prepare the utility operations for future moustry changes.

Building Value w,tth Diversification Diversification aNo is part of our strategy to meet the challenges of a changing utility industiv. To stand out in the group of high quality utility com-panies, diversified operations must pro-vide the earnings growth necessary to maintain a competitive diwlend growth $ rate while ensuring financjal integrity. 1 1 The sections that follow review the } D operations and plans of our business y groups Each has a different role to play ( in contributing to the success of Florida Progress. Together they have the potential L i to build value, and wit h f urther planning and h development, the potential to maintain com-y petitive returns for our shareholders. s 1 j ,I w 5 h ~ i 4 3 i I

?* y ? p# W - a , u,. ~

• ]

A 4. 4 ,,y E15' ' M P ~ 3 .' l ~ .. ~ ,f-- ,1, gg' ' f agqqgpgwe'gp%- .g .,..,j, 4 4 m .u m mr e v. a x4, (.' / t :

f. %

-gt ' Gr ..,;..s

1.. - -

tha hia,1 lqngqu r u., p6 s j u, #*n.,..p.fr ~ p. l Q.. $ $f' A.*' ,l '"n> > %** ls'Wh 1.t 't flUt.

• 7(

= .q... ., 4., 4 ~,, nm, m s

r. :,.. % 1.

.e~ ~ ~ ~, r.m. .W aw3 bunween itw 1 (p,.}gtig gppggg yp gg @.. tewi t wt' 4AtM'%AIMA. t ~ + ~

k. yg (gynDfwr ;tv dewinh i

'MH $WIs ilt$$ hWh)$(e.h&% p t ./ (RN tM)f%Vt:' f' 10 { bid $ d f 'j (TB/Mdttill FdiftfMQ% QMMMI + air the WN em ev.# thal ut ~ 4 f' Vitl' RWdy 04W(Vitt Mtt6 I. ~ i (do ptovidt -the PuMMd p ad ha@v tu anme4 ^ + Antime gnmftuate that w .f utmputniw w& num thgh .-san.,

4. e pt40 htt Or Mmq q

Mti P&64r MtMtMRt Uno,: (YQWIPM $TfS101% that 3 40% tiYtR drhtfWhigt)t*1' a ktnyl 'lPMU julM tefum% ftM d mutestuh y B 'N.i g, d a

• g

- M (MWe YRett:IS$.BRI.W Wit $@t le et9masos# d h t# #enntt h sfaf% erEncyy. + campw . 4 1 _4

1 U T I L 1 T Y 0 P E R A T I O N S o ensure a successfuljournq, the helmsman must discern and anticipate the prevailing winds and currents. It is equally important to understand the market environment in the business world. Success in the utility industry is achieved by anticipating customers' needs and then delivering the highest quality service at the lowest possible price. The management and empkiyees of Florida ibwer are dedicated to setting and achieving Ihe highest standards to ensure customer satisfaction. Serving the Customer la Our Top Priority We have developed service goals to help ensure customer satisfaction. One of these goals is to provide reliable service to our customers more than 99.9% of t he time. This is a challenging goal because of t he frequent lightning strikes that occur during summer storms. However, the representatives at our telephone centers and our line crews work together to minimize the impact of these storms. Another service goalis to achieve a 95% favorable rating g on quarterly customer satisfaction surveys. These are only two of the many mas goals that emphasize our commitment to customer service. Customer convenience is another important part of our service philosophy. Florida Ibwer has 41 district offices operating in its 32 county service territory. The offices are conveniently located so that paying hills or requesting special service is made as easy as possible. In addition, we provide customer service centers in our urban counties for those who prefer conducting business over the telephone. Maintaining inw Customer Rates The final element in achieving customer satirr faction is providing service at the lowest possible rates. Florida Ibwer's residential, commercial and industrial rates are among the lowest in the state and the Southeast. We have achieved this position by controlling our costs for operations and mainte-nance. In comparing Florida Ibwer to other investor owned utilities in Florida, we have had the lowest operat ons and maintenance costs per customer for four of the last five years. Customer Growth Twice National Average fl Growth describes the state in which we reside. % I'lorida is the second fastest growing state in t he nation, t wit h approximately 900 people moving into the state each day. Coupled with the fact that Florida Ibwer's % customer base 6 nearly 90% residential, the constant influx of people means continued growth ir the demand for electricity. The residential base also provides stability in times of economic change. Utilities where the customer base is primarilyindustrial or commercial are much more vulnerable to downturns in the economy.

F, 1 + gi s 'meh 4. ) w J. , ji.. .__s.. f. ,9 / .I e i a +-

• .1 a -

( I SYb ] u, t r f 19 Ig - s' L ( g, i c ,g' 16 g K e f 's... A. ',. :' 4. - k -,8 v.i l-4' ,Y

• .io. ' 4 Y

gg m.

g..

(i,., -.M, s.. .c. .Ag=,j.tr.t.)<.!,/#*' .i w. w w I'_, F. i n. i i-e .A j kh ,,s (a y I k \\ f) v ' 3 ~ ~ / .. j ]. ' ~ E" M

ts s

.t. w .,y ..m. .1m n%% j 3 g a. g. g ..e , N,. ' ei -t '. B y k q $*k.; 'J,j \\g

v..

la - '\\ y, i 4 ( n,.a-N, S - ~- ,4 -(, t. ge 4 s' l V b w y 7 .k "N.. ^ ^^ 3

4. 4

.i.. -( cg 3 i,. .;{ {- 3 s ~.

• 4 i

apk N'r ,..p n D' y-g Y Y q. p 4 i k- 'IBkM Ch8 @fM4J4I$$Wi IW4;NW EON @

1. m36 MMtalabimju shpaghers tu ryttmwe the meelmamenwtuutenmeequisawa dechq danngWgMmsigggesn

.I ar W. .sei E ,n f., / ' 4

d' 4 t A =' 3 \\ f s m,.c : s.... s,. i a,y * *q

• P'ap1efrn'

$.e, k' Id h tRfin4dbtl$d4 hi'f' "..{'.. ~ tt41JMPsy1vaH' W mv up,ttipwn, af a raimpr*bvr ) ty-trt W6: #fr nukeM) Di#m ~ g :.. 44t4 N i m st9% yniwete Pterth twefts.-tm igrr ryest [ gtwMbwa 0 IinAomf95. m 1 lht? ?N t PttW I[IS.d itRfp terwe AdAMwerp IFAQNt Ag Me f K) @ '= c 1 diftAge i K:tPm4)1htiq[ PI m.amumcells Wahy'dMi-hwprothrtwwpOm (ternev> mm41 04n.r Inw 9 d:itete.h M tiple funtmp%

1. $linyt4fgtger.)

e .i k j .O ?

4. _

s T ' P p 1 ( g a h: 5 e. 4. A atverendh nonen ammastgytter me" etssenes 4 mt#ge-W N. W 4

M t t 111 bi f im io n s W Spince 19M, Florida ibwer's annual customer growth rate has averaged 4.1%, over twice the national average. This trend is expected to continue next year Customer growth has tmosted retail kiknvatt-hour sales, whit h have been growing at an average of 6.9% over the last five years. Florida Ibwer participates with the other state electric utilities in planning to meet Florida's growing energy demai.' in the 21st century. Florida is fortunate to have a regulatory commission that re ognizes the state's growing needs for energy and the necessity of planning and building adequate generation to meet these needs. Sufficient Generation Capability Sound long-range planning is essential to assure that we have sulficient capacity available to meet our customers' requirements, today and 1.i the future. Through existing generation, reactivation of the peakers in extended cold shutdown, t he addition of new peaking units and purchased power from The Southern Company, we have sulficient capacity into the mid-nineties. A site planning team has been formed to identify a large, coal <apable site for meeting our baseload generation requirements into the next century. Our conservation and load management programs aid us 5 the elficient h use of our generating facilities. load management enables us to postpone building generating facilities by controlling peak demand. Radio-controlled devices installed in participating residential and commercial customers' homes and businesses can be activated to control the use of electricity for selected major appliances. This nationally recognized program has grown to over 270,000 participating customers which, with th; voltage reduction and industrial interruptible customer programs, allows us to reduce winter peak demand by about 900 megawatts. Balancing Reliability with the Cost of Service All of these factors contribute to Florida Ibwer's ability to respond to the needs of its cus-tomers 99.9% of the time. Unfortunately,it is not economical to build a generation system that provides the additional fraction of reliability. We were reminded of that fact over the 1989 Christmas holidays. A severe arctic cold front swept into the state with two days of freezing temperatures p' that damaged agricultural crops throughout the p state and paralyzed road travel in the northern sections of Florida with snow and ice. The low temperatures persisted during this period, causing a strain on the ability o the state's electric utility companies to provide enough generation for customers to heat their homes. During the peak periods, the state's total ekttric demand was nearly 20% higher than the capacity available f rom generating units in service plus the maximum power obtainable from neighboring states. The major utility companies in the state had no alternative but to use rolling blackouts to curtail demand.

HMBE kirida R wer instituted rolling blackouts during the peak demand periodru While there were lessor 6s learned from this experience that can minimize the impact on customers in the future,it would not be reasonable to require customers to pay the year-round cost of installing equipment to meet winter demand levels that occur once every 10 to 15 years. Dedicated to Serving the Community We, at Florida Riwer, achieve our competitive advantage because of the hard work and dedication of our empkiyees. Working to serve the communities in our service territory goes beyond the workplace. Our management and p empkiyees believe they have a responsibility to give their time and talent back to the communities in which they live. ,) Florida Ibwer has developed many programs to encourage community involvement. Empkiyees participating in " Meals on Wheels" deliver food to y the elderly during their lunch hours. Members of the "I Am Im*olved" program dedicate many hours of their time to social agencies Through our " Gatekeeper" program, employees are trained to recognize signs of customers in distress and can ofler assistance in getting help from local agencies. These programs offer assistance while upholding the dignity and privacy of those involved. z They are successful because our employees really care. President's Award Recipient Florida Ibwer believa that efforts to assist people also must extend to the environment. As a testimony to this commitment, employees recently received president George ilush's "'Dtke pride in America" environmental award for their ef forts in cleaning up Weedon Island State preserve. located north of St Petersburg, the island had fallen prey to vandalism and littering. Thanks to the efforts of our employees. It has regained its 1atural beauty. Clean Air Standards Environmental and regulatory issues affeet every utility. Balancing the needs of customers, empkiyees and shareholders in addr essing these concerns will always he a challenge. We helieve that establishing standards for clean air is an important priority foi our nation. Acid rain legislation has been a controversial topic for some time and is now likely to be passed by Congress in 1990. While we support improving the nation's air standards, we are disappointed with the inequities of President llush's proposed law. The President's proposal impacts utility customers throughout the country in a manner that is not fair or uniform. States like Florida that already have stringent emission requirements in place are treated like states that have done little or nothing to solve their emission problems. In addition, the legislation's emission limits fail to recognize that fast growing states, like ours, will need to add new generating units to meet the future demand. The legislation does not allow for t he emission output to increase with population growth. To build a new coal plant to meet future demand, growth utilities will be forced to negotiate for emission credits frnm the utilities in the states that currently have the most severe emission problems. We are working with the Florida m l

4-n;, ~'" .[. ,f, s a,. 4 4 . ; fcg. pi.-; y. y, ,-.t 4 4 4, ' 'n.s k -,( ' " 4 m64%r umurkg wes #,amnwna% apn '~ +y M ey+ e IM Pme**A Ahm Amt hti bhuse(' ' dl ', 3- , r. k k'M$89F 4MM kL GO)tPVI))N #$%V6 TfUti $F angh9amuwen t. scwn tour te u% xmgursp w,uw see. wtw.+ ew e.m, 7,t, ; :. f \\,, .k g y t E \\ '\\ ~ )_ $, ' ~ y ,' 4 a* ( 3: l' ( g g, . ~g s N - j ... ff

• j.

.. ! ~ q gg#b.-g y w g s- - ww .y p-

• k 4 ;

4

• u s

l

1. p y 4

4 els ~ 4 t . m'hgR + n 3 :,.;A.. t ^ %%f ;;' ' 'y b t k + ,b 4 f.g>' .y ' ..n,y ~- __;. s ...h. m.,... .s. w, .c s . +,.

congressional delegation to propose provisions that would be more equitable for consumers that live in growth states. We M2 encourage our customers and shareholders to express their L 3 views on t his important issue to their congressional delegater< A Since I'lorida already has stringent emission stan-1 4 dards our customers would not be impacted under -- w -- Phase I of the proposal which begins in 1995. Higher M'a customer rates would result from Phase 11, recommended Ior t he year 2000, as we install additional pollution control equip- _MW ment This equipment could cost Florida ibwer as much as $1 billion [M! in capital expenditures over a period of several years o 1 l'lorida Public Service Commlnsion in the area of retail rate regulation,Ihe Florida Public Service Commission voted in October 1989 to change from a cost plus to a market based pricing methodology for affiliated coal purchases. Throughout the hearings for this _.g docket, testiinony was provided to t ne Commission for establishing a market- + + based price of coal at the mine site. In t he final rule adopted by the Commission, N transportation costs from the mine site to Florida Ibwer's coal plants also g were included as a cost of coal subject to the market pricing. g We disagree with this approach. Rail costs for coal are already market-a_ based since we competitively contract with Ihe railroads for transportation. g We have asked the Commission to reconsider its decision. In 1989, the Florida legislature adopted changes to the state statutes ? covering utility regulation. In the past, utility base rates were reviewed when a rate case was requested Under the new law, the Commission is required to review base rates if companies have not had a rate case within the last four years. Florida Ibwer, along with t he at het Florida investor owned electric companies, will ble prescribed rate documents in 1990. Florida lhwer is i scheduled to file by March 30,1990. Crystal River Nuclear Plant in the past year, the Crystal River nuclear plant has experienced some unusual problems. A broken pump shalt, manufacturing defects in the reactor coolant pump motor rotors, faulty emergency backup equipment, and component modifications required by the Nuclear Regulatory Commission were all factors contributing to outages in 1989. While we are dissatisfied with the plant's performance this past year, our 4 plant personnel responded appropriately to the problems and worked to minimize the outages. During the february 1990 fuel adjustment hearings, we will review the plant's performance with the Florida Public Service Commission. huproving ihe nuclear plant's performance in the future is a top priority. Dr. Ivrcy M. Ileard, Jr was recently appointed Senior Vice President, Nuclear Operations Dr lieard's knowledge of the nuclear regulatory process and his extensive operational experience wit h nuclear power will be valuable to our nuclear operations.

---

.i.i.

't A v-w ?h; n s NN NOM k $$$$ %HMI WM 4 t 64.U146 .g me yW pung @f99 septelegte wt Age el Ugalist her tW $b A (\\ .; f. .,, ,...e u e w 4' [..*' '8, p .'e- ,e 1 g .' '[j. ( s e f. p i { -) i s J .g ' +j i r y 1 i ~ 's. r j.. -' t I ~ ?. _q g 'k i k pj:r- .e> %,: d. ~ .p. 'f 3g W. 1 4 m 4 j e. R ... s. 4 . s ..I, m k ' ,3 p 8 4 ~ b

9. y i'

.a 3-r. 4 9 t, > < . y m.y. ) .{ g. 1 (< in 4 T T t er f eg [9, s '.f. s-4 -.-. m.....> m 4,,,, _ -*h ~ ?. ' l. : i k,.. ,.3 p,.:.<. - 3. +... + kd-4 p

• 9j.

c -,-, ,y b-d g s

DIVERS 1F1ED 0PEnATIONS Iile each crew member has an importantjob to perform, it is teamwork that will make the winning diffcrence. Our diversified operations consist of three major business groups: Energy and Technology, Development and Financial Services. l'ach hits an identity and a mission that fits our corporate strategy for diversifiation. The primary company within Energy and Technology is Dectric fuels Corporation. Liectric Fuels is an excellent example of synergy in actio".. A full service coal and transportation company operating principally in the eastern United States, Dectric FuehJ vertical integration into t he coal business ,i represents a good strategic fit for a utility holding company like Florida progress Reliahic, Competitively Priced Coal Supplier to Florida Power Dectric Fuels was established in 1976 to provide a reliable and economical source of coal for Florida Ibwer. It currently supplies the utility,vith approximately six milhon tons of coal annually, through long-term contracts wit h outside vendors, purc hases in the spot market, and from its own mining operations Ek ctric Fuels has been successiulin reducing the cost of delivered coal to Florida Ibwer by approximately 20% over the past five years. The cost reduction has contributed to l lorida lbwer having the lowest generated cost per kilowatt hour for coal-fired plants of investor owned utilities in Florida for three of the last four years. Dectric Fuels' success is not limited to supplying coal to Florida Ibwer. It has continued to diversify into other coal operations, water and rail transportation, and railcar repair facilities. Unregulated operations accounted for over half of Dectric Fuels' earnings in 1989 The return or equity for its unregulateci businesses was 24% in 1989. Dectric Fuels has an ownership interest in two operations, located in eastern Kentucky, that supply coal to a growing base of unaf filiated industrial and utility customers. The Diamond May Coal Company has both surface and underground operations, while Kentucky May Coal Company, Inc. is strictly a surface mining operation. Each has established a competitive market presence in the eastern United States and offers continuing coal sales } growth potential. t'f liigh Quality Coalin Reserve Through its subsidiary coat operations, Dectric fuels has developed a 'f 'f . large reserve of high quality coal that is estimated to contain in excess of 175 million tons. which includes 50 million tons of compliance coal. These reserves not only represent a resource that can help Florida Ibwer meet emission requirements f rom proposed acid rain legisla-tion, but can be an increasingly valuable resource for Dectric Fuels. We expect to realize increased profits from unaffiliated coal sales when the acid rain legislation is passed. I \\ (

(m I' t e 9 \\ 4 (' ,I ,e 1 -a s y .a g %1. 4 d L' P rfte - A o p. *cu u, I w f <n pt,p :me m ("'. _ + rp pu, t.gy,.r, M ,,I . o m n,w. I, t 'Yt, #p f(ygg(p1 hip TH new phy# tatt %rtvit t-I pugl W(t! tr tW44M1@nii + 3 (mygmg'4 opet#te te 1 -h5[-

• P pmNtaldn to'tughty rufupetikw matris Ibe totalifbehOh Mitely he

~ ?- se ymeusem tur,nuse we 7%n-1989 m ecAed a mnntoni< m GB9 whettt inwmut9uhited g .., g. [ YT30 iwwqbemyttdnt)

• 4 4 qJA t

Ntang um;uum IMM.MM MMif.tA h nyert tiw tWG W ... #M#. Df Q < at4mur in fly 14tS0s we m n., -n tofnpFMwlyptx:ed lugh w 41dd4 404t to Msak Pu g t g nis'tu6Rtat( &lMI e ' eaway re tyn#xms a p we evaludte new drtwe@6n + - and npe m an w n h0hGdNNdit}5 .( 1 4 = ..w ~ m. = (a 'y"T't e y e '*~.-awn._,...,,,g,,, che.,....,.....,,.j,,,,._,,,,).,. 4" ' * - i......... ;.,, ,,,,,,,y' *4 ......4 F'

1 s IElectric fuels continues to develop its transportation network through terminating facilities, river barges and railcars. It currently ownt, four river terminating fi.cilities near the northern Appalachian coal fields for processing and blending coal delivered by trucks and then loading it on to barger< Iketric fuels also owns an interest in International Marine Terminals, a deepwater terminallocated on the Mississippi River near New Orleant Marine Fxluipment Management Corioration, an Electric Fuels subsidiary, owns or manages about 330 river barges that move coal, grain and other bulk commodities primarily along the Ohio and Mississippi Rivers. Electric Fuels owns approximately 700 ralicars which operate as unit trains to transport N coal to customers Another subsidiary, Corbin Railway Service Company, f operateri three railcar repair businesses loc ated in Kentucky and Tennessee. L2 These facilities specialire in wreck repair and maintenance for railcarr< (8 Electric Fuels will continue to be a high quality source of coal for Florida Ibwer while expanding in areas geographically compatible with existing operations Electric fueli success stems from staying with its strategy for l@M steady and manageable growth in areas where it has the knowledge and experience to add value. The future plan is to continue on that course. 2"g The Development Group was formed to capitalize on Florida's growth. E in Ihe early 1980's, our real estate strategy was to invest in large land parcels t t hat could build value through appreciation as the propertieri were developed and sold. Except ior our income-producing citrus property, we did not expect the early land purchases to generate earnings until we sold them, lluilding products companies were added to t he Group to provide an earnings stream while real estate was being held or developed This strategy has met with mixed results. Within building pnxiucts, the two largest companies, Ashley Aluminum, Inc. and Gorman Co., Inc. have proven profitable. Ashley Aluminum is the state's largest aluminum wholesaler for fabricating and distributing aluminum huilding products Gorman is Florida's second largest wholesaler of plumbing, irrigation and swimming pool supplies Our plan is to achieve moderate growth in t he existing product lines and to change the sales mix toward higher margin products. *iko other companies, Crown Window Company and Gorman Air Conditioning Company, Inc., continue to face strong competition and low margins for their products which resulted in unprofitable operations in 1989. Recent management changes are expected to improve these operations and their profitability. Shorter Term Focus for Real Estate Our real estate strategy has evolved into a shorter term Iocus to meet our profit objectives. Since many of our early real estate invest-ments require a longer holding period before commercial development is viable, we plan an orderly liquidation of these holdings, as market conditions warrant. Our citrus properties have appreciated sig-nificantly and are now marketable. These properties arelikely to be sold in 1990.

,, lp'i *'- ' T 'e, 2,. ~s , kih. =,j.*, 's. , w' n t ,.,'s = I 4 4 4 p' m... .e h 3 C-td,b .?A, g.,< g

• ai a:

+ i 9 ,q 4 e s t..,#, 6 : ' k 'j S - = 4 '.4., e .I l . r. 4 g. ,c c....... 5 I

1. ._., i g

' F7 ' f:, ;b. ' k-f V ,.N. g .}, ).; pj ~ y e.l - ~ ~ <1 4 IF lIIMilh{ffik9ll 1 t(it}}s 3

h 3_ g."

g. W; (pf(**dkfl%.fflf. thM ffh ' 4 .,II.E..' ' ' ' i-3.4}}N @tJMITQe}AF Ifi g [et te $l#,".. d a yy g

• s r l, a g P.'-

4g.gg I s'. ',,, s. j., m. W 3 v. ~ ee ? l f@tt}d 3 tf d' P.'ddl.f: TFli(%ft) 4 4 T flipty i gy tp_ gggy,ggg. g y 4.h' k $rin% lby a.Pfit1. (7}}Mh . ' + ^ d wW t imhlhk (U dtM OfifLFI'fMihPN b L1)Ji FPg t

q. j_gy' g g 9

?*- / '- g jNiMWI% f.g{tgjg}(t.!yo, (.y. 'hMf' 40 dilVdNI'dQP Jf1. 3 (p148.!'}My} f('dj. (N{My + 's 46t$4 N. hitt-dus,p tilSt# / knowlmtge is Mtp Ftortup tudtht! pro M n p q m1 f.tethh% andkowo# 3 f. g Ta %INWhI:) OMi. IMNldfltj (H^H,6(iff MilfyMf).tR$. "u 'i bons! ugt guty trugi tm ~ Loll %ffdlif0M f4JMlI)]. NMM& NN141f.Ilpd%MTQ E $#hti.d$ JANdf IhK C4RflW

il6lbON1Q ($U31kl119 IhD 1

4 I' g Y fg{ggg, 9 g e + tt ~ 4 e s w* 4' 4 ..? _, s. ', ' IM'hMM'MQ4pM)$$ $ g m PMenjutugs:-seekseeWatasysgustannedt p s N W _ %;g, ~ at 1 [ A 9 .Y. E M. e 9 /k N ( i -' + ' ~ i. O c r

' N u a; c. g A t'I 6. O ~ N ~ ' c. ~ 'o gg

• /

e 1 "+t,- .,s ' ~ ps g \\.,. {.I Y ~ L } vy'; d4gfy$ e' j( i, q 'e g a n --x ..l I' ? ~ g. smo tw t tr W, 4 g %ft$ hlt er'( +. j, m tg .l i-h h' ' y g at a.. '"#'?"h Sp,- . 3 ~ ennea.n.n ' " ~ ~ ~

1. -^

Gett@ tent.t & M pSQue bh po% W8- ~[ ~ 'pYuguqtd a f amri era o g ww. ~ Ort ~ s ~ 9 tilRf31 M it'I & twngN got 3h.o4s s 44pr I tW puh1 y 6 4}$1f'dt hy* dl14',trif int}d4fydpatnuuhhe - ~ UpFI t!)? Rtt-y 6 inm. b) 4Pi ark.,4 P+ f%J ffElf?pP4thMT r. i M btalMd (*te -1 = i 1 4}Mipgh-c t I

WP #e pioru4J h

-en-x in.,rtel f*r ^ tQ RW Luntown.y 'l() 4?d3Jhg i H)eg .m m. f' . FD h 6 N.

==, w e.i.'h' M-M. a 4 ~ y 4 e N.f i 4 3 , t

- ptvinorit a appa'ation I tIur present and future real estate projects are expecte shorter payback period of three to live years. Ther,e investments will be of a size, location and quality that appeal to institutional investors. Since 1988, we have focused on apartment projects in partnerships with experienced developers. Ther,e projects target major growth narkets to achieve a break-even cash flow within 12 to 18 months. No projects are now nearing com-pletion and four other projects are underway. The changes we are making in these businesses are expected to improve the Development Group's performance in the future and are a necessary pari el the evolution of our diversification program. Progrenn Credit Finances Commercial Assets The Financial Services Group began in 1983 as Progress Financial Serv-ices incorporated. Its principal operation was leveraged leasing through Progress trasing Corporation, a joint venture with Xerox Credit Corpora-tion. As a result of the impact of the 'Ihx Reform Act of 1986 on leveraged leasing activities, the group expanded its financial activities to include se-cured commercial lending projects, as well as operating and direct finance leasing. During 1989, Pmgress Financial Services changed its name to Progress Credit Corporation to better represent this expansion. Progress Credit expanded its commercial credit portfolio in 1989, with N projects totaling $285 million-$120 million in its lending division and $165 million by its leasing division. The total year end portfolio, at the cost of equip-ment and investments financed was $1.2 billion.The portfolio was comprir,ed of 6% securities investments,11% senior secured Inans and 83% leased ar,- sets. Approximately 84% of the leasing portfolio consisted of locomotives and aircraf t. The average age of the aircraf t in the leasing portfolio is three years as compared to an average of 12 to 13 years for the U.S. domestic fleet, lueurance in Force Totain 87,4 Billion The other major company in the Financial Services Group is Mick _ Continent Life insurance Company, headquartered in Oklahoma This 1986 acquisition has proven to be an excellent investment. Si being acquired, the company has increased the number of agents by 176%, the number of state licent.es it holds by 23% and the number al regional oflices it operates by more than 90E The company's total in'- surance underwritten for policyholders, known as insurancein-force, reached $7A billion in 1989. Insurance in-force increased 18% in 1989 and has averaged 19% over each of the past four years. Mid Continent has achieved this growth through a unique low, level prem-lum product. During 1989, the company celebrated its 80th business an-niversary. For over a decade A.M. Best, an insurance rating agency, has given Mid Continent its highest rating of A+ Superior, in 1989, the Financial Services Group generated the largest share of earnings for our diversified operations. While Mid-Continent Life continues its steady earnings growth, Progress Credit is able to take advantage of its specialization and Florida Progress' financial strength to profitably finance leasing and lending division projects. Each of these businesses provide a com-patible fit within our diversified operations. I

I'IN ANCI AL REVIEW - M AN AGEMENT'S DISCUSSION AND AN ALYSIS 14 m torida Progress' annual financial perfor-ed the one tlme recognition of income for generating mance should be reviewedin the context ofits units in cold shutdown. In 1989, Florida Ibwer's in-long-term financialobj. tives andgoals. The creased customer kilowatt hour usage, favorable sum-ec mer weather and new customer growth contributed to Company's financial objectives, goals andper-utility revenues increasing $158.5 million over 1988. formance for 1989 are shown belout Retail kilowatt-hour sales increased 6.3% in 1989 and 7.9% in 1988 primarily due to customer growth of OPERN11NG RESU1'15 3.9% and 3.7%, respectively. Florida ibwer has con. The Company's earnings per share for 1989 were tinued to benefit from Florida's growth, with the cus- $3.67, compared to $3.52 in 1988 and $3.74 in 1987. A tomer growth rate averaging 4.1% annually over the last summary of earnings per share by group is as folkno: live years, which is over twice the utility industry rate. ,,,7 During 1989, Florida Ibwer's lower electric rates con-tributed to increasing average residential usage by about Utility $3.28 $3.31 $3.30 2.6%. Energy and Technology .14 .11 .13 in 1989, weather conditions boosted retall sales for Development (.03) .07 Florida Ibwer when compared to 1988. Billing degree-Financial Services .34 .14 .27 days provide a good indication of weather variations Corporate ,j.06) (.04) (.03) from y as to year. In 1989, warmer weather through. Diversifled .39 .21 .44 out the year re;ulted in cooling degrc~ days increasing Consolidated $3.67 $3.52 $3.74 15.3% over 1988. ~ These favorable results offset the $.10 per share im-Utility pact of a Florida Public Service Commission (FPSC) rul-24 Florida lbwer's 1989 earnings per share were slight-ing that disallowed recovery of certain affiliated ly below 1988 primarily because the prior year includ-transportation costs. This decision resulted from hear, qpngwgnmmngpeyppwgneny MCORrsel5Klaglent,988h0mm g;gQ. jQ g gk% yp y p g g p m q y p #q @ [ ' y Psovide'sistol slupetudest etwo that is eenpeelise Meekertipipelpdestrie:elulyespanies 4 W asvelop es casesarNasmes nii a manneresteuemenesteenesimenen V % ;, y Menimateasensmanseewisendsewnimesiteou$essameWenV% ; i, f W' R d cw y 43 : w.

y

%;m. m g w u ne ' S FMMMIMEL f ^ . ' )NN, $%IM / ~ i[ W DV+ pg y%, y sliIhMh,m$@@ 's $MnlainisiiiMAASe mancesimid_mak MAntORInseptteensesphee #$ gw n MW unan.ene pwQ J p u m m a w asam * *genewM U+seen a nauheory reneeiestenaeesunenequierwennteny g#ft,ft h,33 o N , %g~M, eLib -N o % allemande een, ge. el, it,t.h to 48. 4%, L.e t ge4.44 JlC 7 c

• @%. _tiestevleendsegmementswithoutemeessingagayoutscene < g ^ s $%r W,Qthlehis.sepsessessiivodoengsesepeniseteelee g

.m 9; W yy Wp Induary, W, f'W m. ms 4 .,.C M,;7, Ql, " 9My 27 J ' S tlainteln a Gaed M eg g Q t w 8 3 h i Q M 8 d W 3 W,F3,5.. W 5,, .m 3 p .w-o 4 e m

1. r ei C4 y J %nQg ' n ?

MM 4mmangy gesmatis.tesstimMesseden'agandiums MD3Nj[Y 4 s bi$ff 9 p ; e commeneom% er ommianosG m Mfh.r4 e Gu

1. WS henmainwashuasemi w a m m m p,.

J _ i f m a.iw agmapfermW4Q h(([m iemie.weset x ena m m [ s g% Mw i, %P ' " Qi$ M wQ 3M Hpdb jfi dg sesapIERAA.00414288WWEREMDermdWORIS i MM@40W8WelutA(NM YM N hrell$SieptenCthilld4hedlegir enkNetNig$N fAIMA000 AmesNuoAmaded g y moeumemejanssE%e.;.%m.,,<,,mme .f )%,,y$mm@lswamorW[< g P ga mma eme.e.e -,s m. s,. am 6andmMaanni(the'selaidades to supportde A veningas h Isleng company sigpert 9JN N /tyF Y 4 }AAehwawwwam.sgieement 43W Mg, f h A seggleff agesmest Efeguted I mudm.ahbam d t s 1 3

i Average Annual Customer Growth on perces December 31,1989. This decision was in response to 6 _.... _,... ' * ' ^, ~,j Ibwer estimates that this extension of the billing credit the company's 1989 regulatory rate of return. Florida ' b will reduce 1990 utility revenues by approximately $12.1 million. d Fuel and purchased power expenses increased in .. y j fV' 1989 due to higher oil prices and customer demand and l. an extended outage of the nuclear unit. An undern cov-ery of fuel costs in 1987 combined with an overrecov- { ery in 1988, caused an increase in iuel expenses in 1988. 2:. 7. j tional nuclear generation. Ilecause Florida Ibwer , 77 '. : However, on an incurred basis, fuel expenses decreawd f~~'... in 1988 due to declining coal and oil prices and add.- i ). recovers substantially all fuel costs through a fuel ad- ~ justment clause and defers over or underrecovery of fuel 0 -- -.. + c -- costs, these changes have little impact on net income. Since mid 1988, a number of unplanned outages oc-o ncmaa Aw a irwstor.owneo curred at Florida Ibwer's nuclear unit. As a part of the nects utet" February 1990 fuel hearings, the FPSC plans to review ings that began in December 1988 te consider conten. the prudence of nuclear unit outages. Florida lbwer has tions by Florida Ibwer s largest industrial custo ner and filed testimony with the FPSC supporting the compa-others that certain procurement and tranaportation ac-ny'nosihon mat nudar plam pamnd rnponded ap-propriatdv 1o the problems and worked to minimire the tivities by F.lectric Fuels Corporation were imprudent. The customer alleged that these activities resulted in outage tinie The cost of replacement fuel during the omagn eurrently under review was in excess of $50 mil-higher fuel costs totaling $129 milhon withinterest. In gjog August 1989, the FPSC disallowed approximately $5.4 million plus mterest. See Note 11 to the Consolidated Other utility operations and maintenance expense Financial Statements. increased in 1989 primarily due to production main-tenance expenses, recoverable energy conservation ex-Utility earnings in 19h benefited by $.15 per share from the one-time recogni on of previously deferred in-penses and higher health care costs. Depreciation come nssociated with the mh>wance of funds for certain expenses increased in 1989 due to increases in depreci-generatmg umts m extem ed cold shutdown. A rate set. ation rates and nuclear decommissioning expenses authorized by the FPSC. Since the FPSC authorized a tiement allowed these units to be included in the rate 1989 base ta'te increase to cover these changes, there base and the units are scheduled to be phased back into service by the end of 1991. wm no significant impact on net income (see Note 11). l'ffective January 1,198S the i,PM, approved a set-in November 1989, Florida lbwer filed a deprecia-tiement with Florida Ibwer to reduce base rates by ap-tion study wit h the FPSC and on January 1,1990 began applying' interim depreciation rates w hich will result in proximately $1/1.5 million 'I he reduction meluded $70.0 million resulting from lower income tax raterJI he a $172 million increase in annual depreciation expense. settlement replaced bilhng credits totaling $55.7 million that retail customers received in 1987. In addition, the d- - -.j(h' W ", ,f; company agreed to a one-time refund of $18 5 million A',; '. ' 3 in 1988 for " unprotected ' deferred income taxes. The

• j settlement reduced revenues for 1988 by $94 million as

.-g (W6 _. b - ' mmpared to 1987. ,M, In December 1988, the FPSC approved a $17.3 mil-e J<' lion increase in base rates etfective January 1.1989. This g increase in base rates included an additional $10.7 mil- / lion to cover increases in depreciation and nuclear l decommissioning expenses and $6 6 million related to " unprotected" deferred income taxes. The adjustment ] i .q-for deferred income taxes resulted Irom substituting an W $11.9 milhon additional ref und in 1989 for t he $18.5 mil-F A ' ~ lion refund made in 1988 In December 1989, the FPSC voted to continue the t customer billing credit that was scheduled to expire on

1lu% f Al HO f t & M AM L t. MD y g)t t,1 U (i, q u(A QA ga;p s q l m .. -. ~... 3 develop further, management does not expect any sig- '.S-nihcant contribution to earnings. Continued lower Development Group results for the f past two years were primarily due to poor operating 1 results in window manufacturing and in the distribution %~ of air conditioning products. In addition, there were no 8 f hg significant real estate sales during tbese yeani The Gmup ? F did benefit from a tax loss carryforward in 1989 gener-ated from the profitable sale of the door manufacturing business in the prior year. x In 1989, the Development Group continued to re- - g' fine its operational strategy. The Group has shortened its planned holding perk >d for real estate projectit The Gmup plans to sell, as market conditions warrant, earlier The interim depreciation rates will be cflective until a land purchases requiring a longer holding period since final ordet is received from the FPSC. these investments do not fit with the Company's plan The FPSC voted in October 1989 to change from for earnings growtn. The Development Group's current a cost-plus to a market based pricing methodology foi real estate strategy is to develop projects with three to affiliated coal purchases effective April l,1989 Through-give y.,ar paybacks Results in building products, out the hearings for this docket, testimony was provided although mixed, were down in 1989. Recent manage-to the FPSC to establish a market based price of coal ment changes are expected to improve these operations at the mine site. In the final rule adopted by the FPSC, and their profitability, transportation costs from the mine site to Florida Ibw-Increased earnings for Financial Services were er's coal plants also were included as a cost of coal sub-primarily aflected by Iwo one-time events. In 1988, the lect to market pricing. Management has requested the Company established a loss reserve of $.08 per share FPSC to reconsider its decision because of its potential for the default of an offshore drilling rig lease. In 1989, adverse impact (see Note 11) the Company sold Better Business Forms, Inc. for an in 1989. the Florida legislature adopted changes to af ter-tax gain of $.09 per share after reserving $.03 for the state statuter cover ing utility regulati"n. In the past-related discontinued operations. While business forms utility base rates were reviewed when a iate case was was a profitable operation for the Gtoup, further growth requested Under the new law, the FPSC is required to and expansion in the forms industry were not part of review base rates if companies have not had a rate revk w the Company's diversification plan due to the changing within the last four years. Florida lbwer, along with the nature of this industry. In 1989, the Group continued to other Florida investor owned electric utilities, will file benefit from steady growth within its leasing and lend-prescribed rate documents in 1990. Florida Ibwer iS ing finance operations, as well as the life insurance scheduled to file by March 30,1990-business. Diveralfled Operations Wit hin t he Energy and Technology Group, Electric Fuels' earnings per share increased to $.18 in 1989 f rom Retum on Equity onmeeno $ 15 in 1988 and $.12 in 1987 due to growth in unregu-20 lated operations. In 1989 Electric Fuels contmued to - 7 % % OkpMjh]Kz 'H E& '" ~ 1 earn the 1335"o authorized return on equity from its /,- regulated business with Florida Ibwer, while its unregu- .. c. Alttr#y,.a <,n lated operations earned a 24% return on equity The ~ f Q,-.~ 3 * ' f; 3 major factors affecting increased earnings were higher .A , k, g p; P I b. N c% epy ? ei margins in the coal and railcar repair businesses. The other two companies in the Energy and Tech-v nology Group are Progress Technologies Corporation E. "( Ygp ,.+' 'y ' % f, y \\., ,f f.,,5 ; and Progress Energy Corporation. Progress Technolo- '~ ,9 jg-gies continues to work on the research development 5 A W,,.y and marketing of apphcations for its lon Separation W $$ '.;? (ISEP) technology. These operations resulted in a per .~G share loss of $.03 and $.04 for 1989 and 1988, respec-o k N-tively. A cogeneration project in New York State, in f ' ' g ' g 9 09 ~ which Pmgress Energy has an indirect investment was completed in 1989. Until these two businesses grow and a ute a Dwed l

The return on equity chart highlights the relation-Souttes el Capital en tA>ns of Des) ship between utility and diversified operations. The 700 returns on utility common equity were 15.1% in 1989, 16.1% in 1988 and 16.5% in 1987. The declines in 1989 E and 1988 were primarily attributable to the rate reduc. tions given to customers under rate settlement agree. 500 ments for each year. The returns on diversified common equity were 8.4% in 1989,4.4% in 1988 and 10.6% in 1987. Diversified returns for 1989 and 1988 have been depressed by the lack of major real estate sales, increased E competition in building products resulting in lower mar. gins and the oil drilling rig lease default in 1988. The percentage of equity invested in diversified operations has remained under 20% over the last three years. demonstrating the Company's conservative approach 0 10 diversification. Interest Expense end Other Factors $4e64 ssess $4sts ses seats Interest expense increased in 1989 due to higher u operatens a Detmew Money) short term rates and increased borrowing for diversified a commonstock e ciner operations. Even though the inflation rate has been rela. tively low in recent years, inflation continues to afIcet The Company's capital requirements primarily con-sist of utility construction and property additions, divi. the Company by reduel..g the purchasing power of the dend payments to common shareholders, investments in the business. Regulators do not generally consider in financial instruments, debt redemptions and diversi-27 dollar and increasing the cost of replacing assets used this economic loss when utility rates are set.which has fied property additions. Other capital requirements in-a negative eflect on the Company,llowever, such loss-clude business acquisitions and joint venture investments, es are partly offset by the economic gaint that result from the repayment of long term debt with inflated dollars. Redemptions of high cost debt and preferred stock and favorable market conditions have alk>wed the Com-Income Taxes pany to lower the embedded cost of capital. Florida lbw-The effective income tax rate was kmer in 1988 and er's embedded cost of debt and preferred stock have 1989 than in 1987 primarily as a result of the reduction been reduced to 8.1% and 7.2% in 1989, respectively, in the federat income tax rate from 40% in 1987 to 34% from 8.8% and 9.3% in 1985, in 1988 and 1989 and the fiow through of "unprotect. As highlighted by the capital structure chart, the ed" deferred taxes. Company's financial position has improved over the last The Company expects to adopt Financial Account. five years as long-term debt and common stock equity ing Standard No. 96," Accounting for income Taxes", in 1992. When adopted, the Company expects to realize Capite%uienents psmsof Des) a one time cumulative benefit to income Irom the reduc-E tion of deferred income taxes due to kwer tax rates. The effect on net income for subsequent years is not ex-E pected to be material, except for years in which there is a change in tax rates. W LIQUIDITY AND CAPITAL RESOURCES Financing for utility and diversified operations is 2 coordinated and managed at the holding company level. A cash management program at the holding com-pany efIiciently utilizes cash balances of the diversified subsidiaries. Over the last five years, cash from operations has o been the primary source of capital for the Company.The Company also raised equity capital through the Divi-M g$ ja b dend Reinvestment plan from 1985 through 1987. Other sources of capital have included proceeds from the sale a Financiatinstruments a Redemptonse,onw, of property and businesses. m Dwemfied P,aperty e other

111t A N L} A1. E t, v M %. FI A N 8 bi hil 41 h bib t b b h tllh AM D 4 % A t v b l$ 4 m. Capital Structurmueno is $1 billion in capital expenditures, which would be add-ed to the construction program over several years. saa ~ <-aa A 1. *j To improve long-term debt financing flexibility. y, Florida Ibwer established a $200 million, medium-term note program in 1988. Medium term notes totaling 3 $130.5 million have been issued with maturities from 1990 tbrough 1997. The weighted average interest rate for these medium-term notes is 8.5%. Florida Ibwer also 0 i has registered with the Securities and Exchange Com-s mission $150 million of first mortgage bonds that can 3-be issued at any time. = Florida Ibwer's short-term financing needs are funded primarily through a $100-million commercial 4 paper program. Utility construction expenditures for o 1990 are expected to be funded primarily with inter-g, nally generated lunds and, initially, wit h short term debt. Diversified Operations e comnonsm a Peenedsm a tuomn@m a swuermDem Progress Capital Holdings. Inc. (PCH) was formed in 1988 to consolidate the financial strength of the diver-sified operations. This downstream holding company, continue to improve. Since Florida Ibwer has been able having the benefit of a support agreement with the Com-28 to internally generate substantially all of the funds for pany, helps to lower the cost of capital to the individual its construction program, the Company's consolidated businesses. long-term debt has declined from 45.1% in 1985 to 34.9% PCH currently has a $204million private placement, in 1989 Short term debt has increased from 7.6% in 1985 medium term note pmgram and a $75-million commer-to 15.5% in 1989 primarily to finance investments for cial paper program. In addition, PCH has the ability to Financial Services and for interim financing of other borrow from banks under an "as of fered" loan pmgram. diversified capital expenditures. Preferred stock has As the financing requirements for the diventification pro. declined from 9.8% in 1985 to 7.2% in 1989 as the com. gram grow, the company will consider other sources of pany has reduced the total preferred stock outstanding financings, such as committed bank facilities. Securities t hrough early redemption of several olits high cost ser. of PCH are rated A2 by Moody's investors Service and les. Some equity funds were received in 1986 and 19g7 A by Standard & lbor's. tbrough the issuance of new common shares under the in 1989 total diversified capital expenditures were Dividend Reinvestmem Plan. In 1988 and 1989, the $62.2 million, primarily due to additions in real estate Company purchased shares for the plan in the open mar. projects. For 1989, new investments in financial instru. ket. In 1990, it is the Company's intention to return to ments totaled $187.6 million primarily from the leasing issuing new common shares. and commercial lending activities of t he Financial Serv-ices Group The Financial Services Group obtained ap. Utility proximately $130 million in bank financing in 1989 to Florida Ibwer's construction expenditures for 1989 fundlendingandleasingtransactions. Allother require-were $249.6 million, consisting primarily of production, ments were financed by PCH. transmission and distribution expenditures. The five-For 1990, diversified capital expenditures are antic-year construction program includes planned expendi-ipated to reach approximately $55 million. The major-tures of $279.7 million, $321.9 million, $258 million, ity of these expenditures are planned for real estate $371.1 million and $327.4 million for 1990 through 1994. projects within the Development Gmup. Financial Serv-In forecasting the com;)any's growth potential Florida ices is expecting to fund up to $275 million in new k>ans Ibwer is considering t he need to accelerate t he planned and investments in 1990. Some of the new loans may additions of combustion turbine units which would af-be considered highly leveraged. Financial Services con-fect the timing of construction expenditures. siders a kian highly leveraged when the loan exceeds Florida Ibwer has not included expenditures for 75% of the collateral's fair market value, if secured by President Bush's proposed acid rain legislation in its five-real estate or commercial aircraft or when the borrow-year construction forecast because the company would er's debt to total assets exceeds 75%. The 1990 capital not be significantly impacted under Phase I. lf this legis-expenditures and commercial lending and leasing ac-lation is passed as currently draf ted. Phase 11 would re-tivities are to be financed primarily through commer-quire the Company to add pollution control equipment cial paper, medium term notes and bank loans obtained by the year 2000 The estimated cost for this equipment by PCH. I l

C0N50LIDATED F1NANCIAL STATEMENTS flDRIDA PROGRL55 CORPORATION CONSOLIDATED STATEMEN15 OF INCOME IUR THE' YF.ARS IWDID Dirl' Mill'.R 31.1989,19% AND 1987 (in tr:llNone, r.trept per share ainoants) 1:h9 1988 1987 REVENUES: Electric utility $ 1,627.0 $1,468.5 $1,472.2 Diversified 502.4 533.5 485.4 2.129.4 2,002.0 1.957.6 EXPENSES: Operations: Fuel and purchased power 621,4 556.3 526.0 Cost of diversified sales 354.3 389.7 349.1 Other 320.9 319.1 283.4 1,296.6 1.265.1 1,158.5 2h Maintenance 137.6 117.8 112.7 Depreciation 168.8 148.9 143.4 1hxes other than incorne taxes 116.2 IM.5 99.4 1,719.2 1.636.3 1.514.0 INCOME FROM OPERATIONS 410.2 365.7 443.6 INTEREST EXPENSE AND UTHER: Interest expense 131.2 117.3 120.1 Allowance for funds used during construction (5.2) (4.1) (4.3) Preferred dividend requirements of Florida ibwer 16.8 16.8 18.1 Other income, net (8.5) (7.7) (.3) 134.3 122.3 133.6 INCOME BEFDRE INCOME TAXES 275.9 243.4 310.0 income taxes 88.8 63.6 122.2 NET INCOME $ 187.1 $ 179.8 $ - 187.8 AVERAGE SilARFS OF COMMON STOCK OUTSTANDING 51.1 51.1 50.3 EARNINGS PER AVERAGE COMMON SHARE $3.67 $3.52 $3.74 The accornpartynng notes are un integralpart of these lunancsalstaternerits.

14 h blu iF A f l h 41 sks tli el kina r Mi g l b x 11DRI!A IWOkfA5 (DRMMT10N CON 80LIDATTD HALANCE SHEE15 DlflMit!R 31,1989 AND 19M (in milNo#es) IH9 IHR A$$lN$ PROPERTY, PLANT AND EQUIPMEN11 Eketric utility plant in service and held for future use $4,156.8 $4,013.3 less, Accumulated depreciation 1,383.4 1,252.4 2,773.4 2,760.9 Construction work in progress 124.7 78.9 Nuckar fuel, net of amortization of $196.2 in 1989 and $180.0 in 1988 100.0 90.3 Net electric utility plant 2,9s8,1 2,930.1 Other prt4>erty, net of depreciation of $81.9 in 1989 and $75.6 in 1988 308.9 270.0 3,307.0 3.200.1 CURRENT ASSE13: Cash and equivalents 32.2 13.1 Accounts receivable, less resene of $4.9 in 1989 and 1988 218.3 178.7 Imentories, primarily at average cost: Fuel 86.0 82.5 Utility materials and supplies 79.1 72.0 Diversified materials and finished products 66,4 66.3 Underrecovery of fuel cost 21.4 Other 18.3 35.1 521.7 447.7 ODIER ASSE1S: Investments: Financial instruments 624.6 473.2 Joint ventures and partnerships 47.5 61.9 Deferred insurance policy acquisition costs 36.9 30.2 Nuclear plant decommissioning fund 41,2 28.8 Otler 55.1 61.6 805.3 655.7 $4,634.0 ' $4,303.5 11w amunpagtng notes are on integrut part of these funancial statenwnts.

(in milNone) 1989 19h8 CAPITAL AND LIABill11ES COMMON STOCK EQUITY: Common stock without par value,90,(XKl.000 shares authorized, 51,051,200 shares outstanding 8 646.6 8 G16.6 Retained earnings 725.7 670.3 1,372.3 1,316.9 CUMUl.ATIVE PREFERRfD STOCK OF FLORIDA POWER: Without sinking funds 133.5 133.5 With sinking funds 100.0 100.0 g 233.5 233.5 1.ONCr1T.RM DEllT l.126.7 1.050.0 CURRENT II ADil.lT!ES: Accounts payable 118.6 92.3 Customers' deposits 59.2 57.1 Acensed taxes 12.8 9.4 Accrued interest 36.5 25.3 Overrecovery of fuel cost 33.3 Other 58.9 47.6 286.0 265.0 Notes payable 391.6 168.4 Current portion of long-term debt 108.2 204.2 785.8 637.6 DEFERRED CRED113 AND OniER 1.lABILITIFA Deferred income taxes 802.5 773.4 Unamortized investment tax creditr 154.9 164.3 Insurance policy benefit reserves 86.0 78.8 Nuclear refueling outage reserve 19.9 11.0 Other 52.4 38.0 1,115.7 1,065.5 COMMITMENIS AND CONTINGENCIES (Note 10) $4,634.0 $4.303.5

3 FtDRIDA PROGRESS CORPORATION CONSOLIDATED STATEMEN13 OF CASH FIDWS FOR Tile YEARS ENDED DECEMBER 31.1989,1988 AND 1987 (in anillions) - 1989 1988 1987- = OPERATING ACTIVITIES: Net income $187.1 - $179.8 - $187.8 ' Adjustments for non. cash items: Depreciation and amortization 195.7-190.4 = 170.9' ' Deferred income taxes and investment tax credits, net 41.0-36.4- . 84.9 Changes in working capital, net of effects from-acquisition or sale of businesses: Accounts receivable (47.5) .(9.5) (12.2) Inventorles ' (19.9) (15.5) (30.0)- Overrecovery (underrecovery) of fuel cost - - (54.7) 57.8. (36.0) Accounts payable ' 28.5 (8.6). . 20.3 ' income taxes payable 1.3 (2.2)- . (17.9) - Other 25.3-2.7 - 6.7 Other operating activities 21.1 22.5 - (24.8). 377.9 453.8: 349.7-d 1g-INVESTING ACTIVITIES: - Property additions (including allowance for borrowed funds - 1 used during construction) - (323.0)'. (247.9) - (240.5) 1 Proceeds from sale of properties 14.6 - 13.6 9.9 Purchase of financialinstruments (187.6). ' (98.8) > (91.8) - Proceeds from sale or collection of financial instruments 33.5' '31.5 22.2' Acquisition of businesses (8.4) -l Proceeds from sale of businesses 40.5 15.6 Investments in joint ventures and partnerships ' (13.4): (38.3) (4.9). Distributions from joint ventures and partnerships 26.3 Other investing activities (10.9) (11.2) - -(3.0)-_ (428.4) (335.5) (308.1) FINANCING ACTIVITIES: 1 issuance of long-term debt

284.3 167.9 203.5

=i Repayment of long-term debt - (303.9) (170.0) - (267.3)~ 1 i Sale of preferred stock 49.1 Redemption of preferred stock (53.0)' i Sale of common stock 46.0 Dividends paid on common stock (131.7) (127.6) '(121.6) I increase in short term debt

220.9 24.5 86.7 1

Other financing activities (2.2) 2.7 .i 69.6' (107.4) (53.9) L l NET INCREASE (DECREASE)IN CASH AND EQUIVALENTS 19.1 10.9 (12.3) lleginning cash and equivalents 13.1 2.21 '14.5 . ENDING CASH AND EQUlVALENTS 6 32.2 $ 13.1 - $ 2.2 ~ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: I Cash paid during the period for: Interest (net of amount capitalized) $121.9 $109.8 $128.4 Income taxes (net of refunds) $ 46.5 4 30.7 $ 54.7 The accornpanying notes are an integrut part of these nnandal statements. .l l 1

s. l FIDRIDA PROGRESS CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY FOR Tile YEARS ENDGi DECEMBER 31.1989.1988 AND 1987 (in millions, except per share amounts) Cumulathw Prefierrut Stock of Florida 1%utr. Without With Common Retained Sinking ~ Sinking ' Stock Earnings Funds Funde 81alance, December 31,1986 $600.6 $555.8 $133.5 $100.0 Net income 187.8 - 1,33t,231 common shares issued - 46.0 61,000 preferred shares issued - 7.84% series 50.0 i 500,000 preferred shares redeemed - 13.32% series (3.9) (50.0) [ Cash dividends on common stock ($2.42 per share) (121.6) Balance, December 31,1987 646.6 618.1 133.5 ' 100.0 1 Net income 179.8 Cash dividends on common stock ($2.50 per share) (127.6) . Balance, December 31,1988 646.6 670,3 133.5 100.0 Net income 187.1 Cash dividends on common stock (t2.58 per share) (131.7) =j Balance, December 31,1989 $646.6 $725.7 $133.5 $100.0 The accompanying notes are an integmipart of these hnancial statements. l N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N'T S i (1)

SUMMARY

OF SIGNIFICANT such as taxes, pensions and other fringe benefits, general ACCOUNTING POLICIES and administrative costs and an allowance for funds used i General-Florida Pmgress Corporatien (the Company) duringconstruction.Substantiallyallof theutilityplant is exempt from regulation as a registered holding com-is pledged as collateral for Florida Ibwer's First Mort-gage Bonds. pany under the Public Utility Holding Company Act of 1935. Its largest subsidiary, representing 74% of total as-Utility Revenues, Fuel and Purchased Power sets, is Florida lbwer Corporation (Florfda lbwer). a pub. Expenses-Florida Ibwer accrues the non-fuel por-lic utility engaged in the generaticn, transmission, tion of base revenues for services rendered but unbilled. : distribution and sale of electric energ;t within Florida. Revenues include amounts resulting from fuel and The consolidated financial statements combine the conservation adjustment clauses, which are designed - financial results of the Company and ali majority owned to permit full recovery of these costs. The adjustment - operations. All significant inter comoa ny balances and factors are based on projected costs for a six month peri-inter company transactions have beel eliminated, od. Revenues and expenses are adjusted for differences between recoverable fuel, purchased power and con. Utility Plant - Utility plant is stated at the original cost servation costs and amounts included in current rates. of construction, which includes payroll and related costs The cumulative fuel cost difference is shown in the i

%# yt s p t t k at.1!! A1 r Bp.H AM Od O AT F M R M{d o balance sheet as overrecovery or underrecovery of fuel sioning costs, expressed as a percentage of the average - cost. Any overrecovery or underrecovery of costs, plus balances of depreciable utility plant was 4.0% for 1989 - an interest fa 9.c. is to be refunded or billed to customers and 3.7% for 1988 and 1987. during the suosequent six month period. In November 1989, Florida Ibwer filed a deprecl/ The cost of fossil fuel for electric generation is ation study with the Florida Public Service Commission charged to expense as burned, The cost of nuclear fuel (FPSC) and on January 1,1990 began applying interim is amortized to fuel expense based on the quantity of depreciation rates which will result in a $17.2 million heat pro 9ced for the generation of electric energy in increase in annual depreciation expense. The interim relatiorv wnuty of heat expected to be produced depreciation rates will be elfective until a final order is over the life of k whr fuel core. received from the FPSC. Florida ibwer charges maintenance expense with Earned income on Finance Leat.en-The Company the cost of repairs and minor renewals of property.The uses the finance method for recognizing earned income plant accounts are charged with the cost of renewals : from linance leases, which are primanly leveraged icases and replacemems of property units. Accumulated having terms of three to 25 yars. Accordingly, earned depreciation is charged with the cost, less the net sal-income, including any residual values expected to be vage, of property units retired, recognized, and the related deferred investment tax credits are amortized as revenues over the term of the Allowance for Funds-The allowance for funds used transaction to provide an approximate level return on during construction represents the estimated cost of cap-the positive net investment. Ital funds (equity and debt) applicable to utility plant un-der construction. Recognition of this item as a cost of Income Taxes-Deferred income taxes have been utility plant under construction is appropriate because egg provided on all significant book-tax timing differences, it constitutes an actual cost of construction and, under 63"E except during periods when applicable regulatory established regulatory rate practices, Florida Ibwer is authoritles did not permit the recovery of such taxes . permitted to earn a return on these costs and to recover through rates charged to customers by Florida ibwer-them in the rates charged for utility services while the The cumulative net amount of income tax timing plant is in service. dilferences for which deferred taxes have not been Similar treatment has been authorized by the FPSC provided was approximately $103 million at December for the cost of funds applicable to certain existing gener-31,1989. As allowed under current regulatory practices, ating units held for iuture use. However,in compliance deferred taxes not previously provided are being col-with t he Federal Energy Regulatory Commission (FERC) lected in customers' rates as such taxes become payable, requirements, the return accrued on these units of $9.7 Deferred investment tax credits subject to regula-million through December 31,1987, was deferred. The tory accounting practices are being amortized to income FPSC and FERC allowed Florida Ibwer to record $8.8 over the lives of the related properties. Additionally,. million in other income in 1988 for the deferred amounts deferred investment tax credits associated with finance associated with the units that are to be returned to serv-lease transactions are being amortized to revenues as ice and which are now included in the rate base, aescribed above. The average rate used in computing the allowance The Company presently plans to adopt the provi-for funds was 8.0% for 1989 and 1988 and 9.7% for 1987, sions of Financial Accounting Standard No. 96," Account-ing for income 'Ihxes" in 1992. The new standard Insurance Policy Acquisition Costs and Benefit requires t he use ot the liability method under which the Reserves-The Company defers recoverable costs in elfects on deferred taxes of changes in tax rat s and laws its insurance operations that directly relate to the produc-are recorded as a component of tax expense in the peri, tion of new business. These costs are amortized over - od of change. The Company expects to realize, in the the expected premium paying period. Reserves are year of adoption, a one-time cumulative benefit to in-established out of each premium payment to provide come from the reduction of deferred income taxes result-for the present value of future insurance policy benefits ing from lower income tax rates. The effect on net using reasonable assumptions for. future investment income for subsequent years is not expected to be yield, mortality, morbidity, withdrawals and the risk of material, except for years in which there is a change adverse deviation. In tax rates. Marketable Securities-The Company considers all Depreciation and Maintenance-The Company pro-highly liquid debt instruments purchased with a vides for depreciation of the original cost of properties maturity of three months or less to be cash equivalents. over their estimated usefullives primarily on a straight-Fixed income securities are carried at amortized cost line basis. Florida Ibwer's annual provision for depreci-and other marketable securities are stated at the lower ation, including a provision for nuclear plant decommis-of aggregate cost or market value. 1

(2) INCOME TAXES 1989 1988 1987 . Components of income tax expense: Ibyable currently: Federal 8 41.1 $ 20.3 $ 29.9 - State 6.7 6.9 7.4 47.8 27.2 37.3 Deferred, net (see below): Federal 41.8-32.8 80.9 State 8.6. 8.2 - - 9.7 50.4 41.0 90.6 ] Amortization of Investment tax credits, net (9.4) (4.6)= (5.7) Income tax expense $ 88.8 $ 63.6 $122.2 q Components of deferred income tax: l Difference between financial and tax accounting for leases 6 44.0 $ 46.1 $ 57.6 - Excess of accelerated over straight line tax depreciation 32.4 29.9 36.7 Underrecovery (overrecovery) of fuel cost 12.3 (22.8) 10.7 Construction costs and other property items deducted for gj tax purposes, net of book depreciation (10.9) 4.0 (6.9) j Flow through of " unprotected" deferred Income taxes (7.6) (14.7) Alternative minimum tax carryforward (3.7) 9.7 (16.0) Other 16.1 (11.2) 8.5 8 50.4 $ 41.0 $ 90.6 The provision for income taxes as a percent of income before taxes and preferred dividend requirements was less than the statutor y federal income tax rate for each of the above years. The primary differences between the statutory . rates and the effective income tax rates are detailed below: 1989 I988 1987 Federal statutory income tax rates 34.0 % 34.0 % . 40.0% State income tax, net of federal income tax 3.5 3.8 3.1 Amortization of investment tax credits (3.2) (4.0) (4.2) Flow through of " unprotected" deferred income taxes (2.6) (5.6) Other (1.4) (3.8) (1.7) Effective income tax rates 30.3 % 24.4% ' 37.2 % -l (3) RETIREMENT BENEFIT PLANS below are the components of the net pension benefit ~ The Company and certain of its subsidiaries have calculations for those years: a non-contributory defined benefit pension plan cover-77,,,,,,,,,y

3,3 f3,g

,3g7 ing substantially all employees. The benefits are based on length of service, compensation during the highest Service cost 8 12.1 $ 10.2 $10.6 consecutive 60 of the last 120 months of employment Interest cost 18.5 16.5' 15.3 and social security benefits. The companies make an. Actual return on plan assets (64.1) (44.7) (20.0) nual contributions to the plan based on an actuarial de. Net amortization and deferral 32.0 16.1 (6.2) termination and in consideration of tax regulations and Net pension cost (benefit) (1.5) (1.9)' (.3) funding requirements under federal law. Regulatory adjustment 1.4 1.7 Based on actuarial calculations and the funded sta-tus of the pension plan, the Company was not required Net pension cost (benefit) to contribute to the plan for 1989,1988 and 1987. Shown recognized S (.1) $ ('2) $ (.3)

f worta u iDeut.joAtt D f rh Astint t;T AJt MEMn The following assumptions were use lin the calcu-(4) FINANCIAL INSTRUMENTS lation of pension costs: At December 31,1989 and 1988, investments in finan-1989 - 1988 1987 clal instruments were as follows: Discount rate 8.3% 8.5% 8.0% (In mmione) 1989 1988 Expected long term rate Finance leases: of return 9.0% 9.0% t'.5% Rentals receivable '8247.3' '$230.6-Rate of compensation increase 6.8% - 7.0% 7Ji% Unguaranteed residual values. 202.7 175.7-Unearned income. (82.0) (64.2) The following summarizes the funded status of the Deferred investment pension plan at December 31,1989 and 1988: tax credits - (36.3) (40.7) (in mimone) -1989 1988 331.7 301.4 - Marketable securities 138.9 96.4-6 Accumulated benefit obligation: Commercialloans 127.9 45.2 Vested $164.1 $122.3 Non vested 33.9 24.3 First mortgage loans on real estate 18.5 20.1 198.0 146.6 Insurance policy loans . 9.6 10.1-Effect of projected compensation Allowance for losses. (2.0) increases 84.0 73.1 $624.6 $473.2 Projected benefit obligation 282.0 219.7 Plan assets at market value 383.0 323.0 Finance leases consist primarily of leveraged imest-g' Plan assets in excess of projected mentsinalrcraft,whichrepresent 75%of rentalsreceiv - benefit obligation $101.0 $103.3 . able and residual values at December 31,1989. The Consisting of the following

majority.of these leases have terms of 15 to 22 years,-

components: with a maximum of 25 years. The rentals receivable. Unrecognized transition represent unpaid rentals less principal and interest on - asset 8 65.1 $ 70.1 non recourse third party debt participation. The Com-Unrecognized prior pany's share of rentals receivable is subordinate to the service cost (1.5) share of the debt participants who also have a security Elfeet of changes in assumptions interest in the leased property. Net contractual maturi-and diference between actual ties of rentals receivable under these contracts are (in and estimated experience 37.4 33.2 millions) $7.2, $12.4, $13.3, $10.4 and $12.4 for 1990 $101.0 $103.3 through 1994, and $198.8 thereafter. Deferred taxes applicable to leveraged leases were $223.9 million and $183.7 million at December 31,1989 and 1988, The following actuarial assumptions were used in mponentso ome mcognhe&m heragd. calculating the plan's year end funded status: leases were as follows.. 1989 1988 Discount rate 7.5% 8.3% I'" *****) Rate of compensation increase 6.8% 6.8% income (loss) before income taxes 89.5- $ (2.1). $ 8.6 Income tax effect (3.4)' 7.91(1.4) Amortization of investment In addition to providing pension benefits, the Com-tax credits 4.4 4.5 .7.2 : pany and certain of its subsidiaries provide certain health care and life insurance benefits for retired em. Net income 810.5 $10.3 $14.4 ployees. Employees become eligible for these benefits when they reach normal retirement age while work. At December 31,1989, the market value of mar-ing for the Company. The present value of retiree health ketable securities exceeded cost by $9.3 million, care and life insurance benefits for current retirees is estimated at $48.6 million of which $15.1 million have (5) NUCLEAR OPERATIONS been accrued at December 31,1989. The Company's Jointly Owned Plant-Florida Power's 90% owner-policy since January 1,1985 has been to accrue benefits ship share in the Crystal River nuclear unit, as of De-currently payable along with amortization of past serv-cember 31,1989, amounted to $527.5 million of utility ice costs. plant in service, $38.2 million of construction work in

y _ _ _ = - _ _ _ _ _ _. progress, $100 million of unamortized nuclear fuel and at a rate of $.001 per net nuclear generated kilowatt- ' $210.3 million of accumulated depreciation, which in-hour and are paid to the DOE quarterly. Florida Ibwer cludes $54.8 million of accumulated provisions for is currently storing spent nuclear fuel on site and has decommissioning costs. Each participant provides for sufficient storage capacity in place or under construc-Its own financing. Florida Ibwer's share of the operat. tion for fuel burned through the year 2009. ing costs is included in the appropriate expense captions in the consolidated statements of income. Plant Refueling Outages-Florida Ibwer accrues a Plant Decommissioning Costs-Florida Ibwer's: reserve for maintenance and refueling expenses antici- - nuclear plant depreciation ratesinclude a provision for pated to be incurred during scheduled nuclear plant future decommissioning costs that are recoverable r fueling outages. The next outage is scheduled for 14 through rates charged to customers. Florida Ibwer is weeks beginning in March 1990 and is presently esti. mated to cost $25 milhon, placing its collections in a managed trust fund. The recovery from customers, plus interest earned on the insurance-The Price Anderson Act currently limits trust fund, are intended to be sufficient to cover Florida the liability of an owner of a nuclear power plant for ibwer's share of the future dismantling, removal and a single nuclear incident to $7.6 billion. Florida Ibwer lend restoration costs. Florida Ibwer has a license to has purchased the maximum available commercial in-operate the nuclear unit through December 3,2016, and surance of $200 million with the balance provided by [ anticipates decommissioning beginning at that time. To-Indemnity agreements with the Nuclear Regulatory tal future decommissioning costs are estimated to be ap-Commission, in the event of a nuclear incident at any proximately $200 million in 1988 dollars. Decommis-U.S. nuclear power plant, Florida ibwer could be as-sioning expense was $9 8 million for 1989 and $5.4 mil- - sessed up to $63 million per incident, with a maximum lion for 1988 and 1987, The FPSC and FERC approved assessment of $10 million per year. In addition to this an increase in the annua! decommissioning expense I ability insurance, Florida lbwer carries extra expense [ from $9.8 million to $11.8 million beginning in 1990-insurance with Nuclear Electric insurance, Ltd. (NEIL) Fuel Disposal Costs - Florida Ibwer has entered into to cover the cost of replacement power during prolonged 1 . a contract with the Department of Energy (DOE) for the outages of the nuclear umt. Under this policy, Florida transportation and disposal of spent nuclear fuel. Dis-Ibwer is subject to a retroactive premium assessment posal costs for nuclear fuel consumed are being collect-of up to $3 million in any year in which policy losses ed from customers through the fuel adjustment clause exceed accumulated premiums and investment income, i (6) PREFERRED AND PREFERENCE STDCK The Company has ten million shares of authorized but unissued Preferred Stock without par value. Florida Ibwer has four million shares of authorized Cumulative Preferred Stock, $100 par value, of which 2.3 million shares are j outstanding. In addition, Florida Ibwer has one million shares of authorized but unissued Preference Stock, $100 par value, and five million shares of authorized but unissued Cumulative Preferred Stock, without par value. Minimum preferred stock redemption requirements during the next five years are $2.5 million in 1992 and $12.5 million in 1993 and 1994. A summary of outstanding Cumulative Preferred Stock of Florida Ibwer follows: Current Outstanding at INeidend Redemption Sharve Decernber 31 Rate Price Authorised Outstanding 1989 1988 (in millions) 4.00 % $104.25 40,000 39,980 $ 4,0 $ 4.0 4.40% $102.00 75.000 75,000 7.5 7.5 1 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% $103.22* 300,000 300,000 30.0 30.0 7.76% $102.98* 500,000 500,000 50.0 50.0 1 8.80 % $101.00 200,000 200,000 20.0 20.0 lbtal without sinking funds 133.5 '133.5 7.08% $ 107.08'" 500,000 500,000 50.0 50.0 7.84 % $107.84* 500.000 500.000 50.0 50.0 Total with sinking funds 100.0 100.0 $233.5 $233.5 (a) 4102.48 after August is,1992 (c) sl0172 after November 1s.1991. 8102.36 after November 1s.1996. 4100.00 after November 1s. 2001 - (b) 4102.21 after February 15.1994 (d) 8103,92 after November 15.1992. $101.96 after November is. 1993. 5100.00 after November is.1994

yu(4s3atcuyoupA turtnMtAtStfitMrtig [ f (7)IDNGTERM DEN The Company's long-term debt is scheduled to mature as follows: Interest-Itate 1989' 1988-Florida Ibwer Corporation: First mortgage bonds: Maturing through 1994: October 1,1990 4.75 % $ '13.6 13.6 May 1,1992 4.25 % 14.4 14.4 Maturing 1995 through 1999 6.42%"' 106.6 -106.6 Maturing 2000 through 2003 - 7.82%"' 320.0 320.0 Maturing October 1,2006 8.75 % 80.0 80.0 Premium, being amortized over term of bonds 3.1 - 3.2 537,7 537.8-Guarantee of pollution control revenue bonds: Maturing 2000 through 2012 9.34%") 132.6 132.9 Annual tender bonds maturing in 2012 and 2013-7.00%* 108.6 108.6 = Notes maturing in: 1989 150.0-1991 8.76% 125.0 - sygg 19901997 8.50%*' 130.5 ' 40.5 e30 Progress leasing Corporation (All due within 5 years) 8.34%a' 57.0 99.9 Progress Capital Holdings Notes maturing 1990 2001 _ 9.42%"r 80.3-10.0 Other subsidiaries, debt maturing through 2007 II.35%"t 63.2 174.5 1,234.9' 1,254.2 less-Current portion of long term debt 108.2 204.2 $1,126.7 $1,050.0 (a) %ghted average interest rate at December 31,1989. The combined aggregate maturities of long-term debt for 1990 through 1994 are $108.2 million, $185.6 million, $36.6 million, $30.1 million and $71.2 million, respectively, in addition, all of Florida Ibwer's First Mortgage Bond - Issues have an annual 1% sinking fund requirement. These requirements, which total $6.0 million for 1990. $5.7 million for 1991 and 1992, and $5.5 million for 1993 and 1994 are expected to be satisfied with property additions. The Interest rate on the Annual Tender ibllution Control Revenue Bonds will be adjusted March I of each year and the bondholders may elect to tender their bonds prior to that date. The bonds outstanding at any point in time are supported by a $100 million three-year line of credit arrangement with money market based interest rate options and a 1/8% commitment fee. (8) SHORTTERM DEM other borrowings at December 31,1989. Interest rate At December 31, 1989, the Company and its options under line of eredit arrangements vary from sub-consolidated subsidiaries had lines of credit totaling $228 prime or money market rates to the prime rate. Banks million, of which $175 million was used to support providing lines of credit are compensated through commercial paper programs. The short term debt balances or fees. Balance requirements are based on outstanding at December 31,1989 and 1988,' consisted terms acceptable to the banks, and where specified, are - of commercial paper of $137.2 million and $135.5 based on 10% of the line or 15% of the amount million, respectively, bank borrowings of $234.2 million borrowed, whichever is greater. Commitment fees on and $32.9 million, respectively, and $20.2 million of lines of credit vary between 1/8 and 1/4 of 1%. 1

.1- ..-9 (9) BUSINESS $EGMENTS The Company delines its principal business segments as utility and diversified operations. The utility is engaged in the generation, transmission, distribution and sale of electric energy.The diversified segment includes the energy grougis coal mining, procurement and transportation operations that have significant sales to the utility. Other diversified operations include activities in leveraged leasing, commercial finance, life insurance, real estate, building products distribution and technology. The Company's business segment information for 1989,1988 and 1987 is summarized below. No single customer - accounted for more than 10% of unrelated revenues. Intra-segment sales have been eliminated and the Company's equity in the earnings of partnerships and joint ventures has been included in revenues. (In munone) 1989 1988 1987. I Revenues: Utility $1,627.0 $1,468.5 $1,472.2 Diversified: Energy group: Coal sales to electric utility 294.3 308.1 308.8 External customers 125.8 106.4 92.1 Other diversified 377.9 427.1 393.3 g 2,425.0 2,310.1 2,266.4 Eliminations (295.6) (308.1) (308.8) Revenues from external customers $2,129.4 $2,002.0 $1,957.6 Income from operations: Utility 8 363.2 $ 334.2 $ 397.4 Diversified: Energy group 17.3 15.6 14.9 Other diversilled 29.7 15.9 31.3 410.2' 365.7 443.6 l Interest and other expense 134.3 122.3 133.6 income before income taxes 6 275.9 $ 243.4 $ 310.0 Identifiable assets: Utility $3,413.8 $3,285.3 $3,219.6 Diversified: Energy group 217.6 188.5 186.3 Other diversified 1,002.6 829.7 726.0 $4,634.0 $4.303.5 $4,131.9 Depreciation: Utility $ 155.3 $ 136.8 $ 133.5 Diversified: - Energy group 4.6 3.4 2.9 Other diversified 8.9 8.7 7.0 - $ - 168.8 $ 148.9 $ 143.4 Capital additions: Utility $ 260.8 $ 206.8 $ 198.6 Diversified: Energy group 16.6 8.7 19.3 j Other diversified 45.6 33.2 24.7 8 323.0 $ 248.7 $ 242.6

u tn t s t o L u mu n a t Fa I r u an t A L s i A t t M r.N 1 s x... (10) COMMITMENTS AND CONTINGENCIES material adverse elfect on the Company's future finan-Utility Construction Program - Substantial commit- - ments have been made in connection with Florida Ibw-er's construction program, which ~are presently (11) RATES AND REGULATION estimated to result in construction expenditures in 1990 of $279.7 million for electric plant and nuclear fuel. Retall Rates - Effective January 1,1988, the FPSC ap-pr ved a settlement with Florida ibwer to reduce base CMM 'W rates by approximately $121.5 million. The reduction in-ply a portion of the fuel requirements of its generating cluded approximately $70.0 million resulting from lower plants, Florida Ibwer has entered into various long-term income tax rates. The settlement replaced billing credits commitments to provide fossil and nuclear fuels and t - totaling $55,7 million that retail customers received in reserve pipeline capacity for natural gas. In most cases, 1987, in addition, Florida ibwer agreed to a one time such contracts contain provisions for price escalation, refund of $18.5 million in 1988 for " unprotected" minimum purchase levels and other financial commit-deferred income taxes. The settlement reduced utility. ments. Additional commitments will be required in the revenues for 1988 by approximately $94 million as com-future to supply Florida Ibwer s fuel needs. pared to 1987 Florida Ibwer also has entered into long-term con-In December 1988, the FPSC approved a $17.3 mil-tracts with The Southern Company for up to 400,000 lion increase in base rates effective January 1,1989. This kilowatts of purchased power that may begin as early increase in base rates included an additional $10.7 mil < as 1990 and terminate in 2010. lion to cover increases in depreciation and. nuclear Debt Support Agreements-The Company has decommissioning expenses and $6.6 million related to agreed to support certain loan agreements of partner. " unprotected" deferred income taxes. The adjustment ships and joint ventures. The total amount of these sup-for deferred income taxes results from substituting an - port agreementsis $99.6 million of whlch $14.0 million $11.9 million refund in 1989 for the $18.5 million refund are cash deficiency agreements and $85.6 million are made in 1988. guarantees. In December 1989, the FPSC voted to continue the Retroactive insurance Premiums-As mentioned ' customer billing credit that was scheduled to expire on. under Note 5, " Nuclear Operations", Florida Ibwer is cember M,1989. The decision was in response to subject to retroactive premium assessments in connec-Florida Ibwer,s 1989 regulatory rate of return. Florida tion with its nuclear insurance, in addition, Florida ibwer wmsumates maws exteralon of the billing credit currently carries approximately $1.5 billion in property [i l reduce 1990 utility revenues by approximately $1 insurance provided through several different policies. One of these pohcies, which is also underwritten by The Florida legislature adopted changes in statutes NEIL, provides $975 milh,on of excess coverage. Under governing the regulation of electric and natural gas util-this pohey, Florida Ibwer is subject to a retroactive ities in 1989. Base rates which were previously reviewed only when a rate case was requested must now be= premium assessment of up to $7.1 million in any policy year in which losses exceed funds available to NEIL. reviewed every four years even if a rate case has not-been filed. Florida Ibwer along with the other Florida Waste Disposal Site Cleanup-Florida ibwer has investor owned electric companies will file modified received several notices from the Environmental Pro-- . minimum filing documents in 1990. Florida Power is tection Agency (EPA) that it is a "potentially responsi-scheduled to file by March 30,1990. ble party" under the Comprehensive Environmental Response Compensation and Liability Act and the Su-Wholesale Rates-Florida lbwer gave reductions of / $5.6 million in 1988 and $3.3 million in 1987 to its whole - perfund Amendment and Reauthorization Act and may sale customers to provide rate treatment comparable be required to share in the cost of cleanup of waste dis-to the retail rate settlements. I'orida Ibwer filed an ad-posal sites identified by EPA. In each instance, the Com-ditional rate change for wholesale customers that will pany s degree of responsibility,1f any, appears to be small : be wmparable to the retail rate treatment for 1989, in relation to the total for the large number of "poten-tially responsible parties" involved. Based on the cur. Fuel Cost Hearings-in December 1988, the FPSC. rent status of these matters, management believes the began hearings to consider contentions of Florida lbw-likelihood is remote that these actions will result in a er's largest industrial customer and others that certain

procurement and transportation activities by Electric market based since the Company competitively Fuels Corporation were imprudent. The customer al-contracts with the railroads for its rates. Florida ibwer leged that these activities tesulted in higher fuel costs has requested the FPSC to reconsider its decision totaling $129 million, including interest since January because of the potential adverse impact to the Company. 1,1984. A decision was reached in August 1989 to disal. This decision would mean that the Company could not low approximately $5.4 million plus interest,in fuel recover $7 to $8 per ton of costs under the coal contract. j - costs. As a result,19891ncome was reduced by approx-The result of this proceeding is not expected to have -l imately $5 million. Florida Ibwer expects to refund the a material impact on earnings. disallowed costs to customers as adjustments to the fuel Due to the extensive outages experienced by the charge during the six months beginning April 1,1990. Crystal River Nuclear Plant in 1989, the plant's operating in October 1989, the FPSC voted to change from performance will be examined by the FPSC in the i a cost plus to a market. based pricing methodology for regular February 1990 fuel adjustment hearings. Pre-an existing 850,000 ton per year coal contract with an filed testimony has been submitted for the August affiliated supplier eflective April l,1989. Testimony was hearings and more will be submitted prior to the provided to the FPSC to establish a market based price February hearings. Management is confident that plant of coal at the mine site. However, the final decision also personnel responded properly and worked to minimize l lacluded transportation costs from the mine to Florida outages. The cost of replacement fuel during the outages l ibwer's plant A Management disagrees with this decision currently under review was in excess of $50 million, because rail transportation costs for coal are already 41 QUARTERLY FINANCIAL DATA (Unaudited) (in mimons, except per short amounts) Thrre Months Ended March 31 June 30 September 30 December 31 1989 Revenues $473.0 $523.0 $607.4 $525.1 income from operations $86.9 $ 103.8 $ 138.8 $80.7 Net income $37.5 $45.3 $75.2 $29.1 Earnings per average common share $.73 $.89 $1.47 8.58 Dividends per common share $.64 $.64 6.64 $.66 Common stock price per share liigh $35% $36% $38% $40% low - $33% $33% $35% $36% 1988 Revenues $489.7 $479.3 $560.2 $472.8 income from operations $93.9 $89.5 $117.7 $64.6 i Net income $43.9 $41.6 $60.0 $34.3 Earnings per average common share $.86 $.81 $ 1.18 $.67 Dividends per common share $.62 $.62 $.62 $.64 Common stock price per share . High $37% $35% $35% $36% inw $32 $32 $33% $33% The business of the Company's largest subsidiary, Florida Itwer is seasonalin nature and it is management's opinion that comparisons of earnings for the quarters do not give a true indication of overall trends and changes in the Company's operations.

.. _..... = attenta ranM MunstMWt ann a utmint. Management's Report Report of Independent Certified Public Accountants 7b Our Shareholders: 7b the Shareholders ofFlorida hogress Corporation: Management is responsible for the integrity and obi We have audited the accompanying consolidated lectivhy of the fint.ncial and operating information balance sheets of Florida Progress Corporation (a contained in this annual report, including the con. Florida corporation) and subsidiaries as of Deceme solidated financial statements covered by the Indepen-ber 31,1989 and 1988, and the related consolidated - dent Auditors'. Iteport. These statements were statements of income, cash flows, and shareholders' prepared in accordance with generally accepted ac-equity for each of the three years ended December counting principles and necessarily include amounts. 31,1989. These financial statements are the respon-that are based on judgments and estimates by sibility of Florida Progress Corporation's manage-management, ment. Our responsibility is to express an opinion on these financial statements based on our audits.. The Company maintains internal accounting control systems and related policies and procedures designed We conducted our audits in _accordance with gener-to provide reasonable assurance that assets are ally accepted auditing standards. Those standards re-safeguarded, that transactions are executed as autho-quire that we plan and perform the audit to obtain g-rized and are properly recorded and that account-reasonable assurance about whether the financial ing records may be relied upon for the preparation - statements are free of material misstatement. An audit of consolidated financial statements and other finan-includes examining, on a test basis, evidence support-cial information. The design, monitoring and revision ing ihe amounts and disclosures in the financial state-of internal accounting control systems involve, among ments. An audit also includes assessing the accounting other things, management's judgment with respect principles used and significant estimates made by to the relative cost and expected benefits of specific management, as well as evaluating the overall finan-control measures. The Company also maintains an cial statement presentation. We believe that our au-internal auditing function that evaluates and formal-dits provide a reasonable basis for our opinion, ly reports on the adequacy and effectiveness of in-ternal accounting controls, policies and procedures, in our opinion, the financial statements referred to above present fairly, in all material respects, the finan-In addition, the Audit Committee of the Board of cial position of Florida Progress Corporation and sub-Directors, consisting solely of outside directors, meets sidiaries as of December 31,1989 and 1988, and the periodically with management, the internal auditors results of their operations and their cash flows for each and the independent auditors to review internal ac-of the three years ended December 31,1989, in con-counting controls, audit results, financial statements formity with generally accepted accounting prin-and financial report matters and annually recom-ciples. mends to the Board of Directors the selection of in. dependent auditors. For Management, f /: & n Richard Korpan Executive Vice President Tampa, Florida and Chief Financial Officer January 29,1990 q

.9(uttiA.Y.#iriattH. TEDssTRnsth lus FLDRIDA PI; OGRESS CORPORATION (Dollare in millions, except per shart amounts) Flew Year Annual Growth (In perrent) IH9 1%8 1987 1986 1985 Summary of operations: Utility revenues 4.0 $1,627.0 $1,468.5 $1,472.2 $1,530.5 $1,504.9 Diversified revenues 51.3 502.4-533.5 485.4 368.4 159.0 Income from operations 5.2 410.2 365.7 443.6 4 64.5 457.3-Wet income 10.1 187.1 179.8 187.8 181.2 160.9 Balance sheet data: - Ibtal assets 6.2 $4,634.0 $4,303.5 $4,131.9 $3,915.7 $3,666.6 Capitalization: Short term debt 38.8 8 499.8 $ 372.6 -$ 282.7 $ 101.5 $ 205.0 lxmg-term debt (3.0) 1,126.7 1,050.0 1,117.1 1,266.0 1,220.9 2.9 1,626.5 1,422.6 1,399.8 1,367,5 1,425.9 Q Preferred stock (2.7) 233.5 233.5 233.5 233.5 265.1 Common stock equity 9.2 1,372.3 1,316.9 1,264.7 1,156.4 1,014.2 Total capitalization 4.8 $3,232.3 $2,973.0 $2,898.0 $2,757.4 $2,705.2 l Capitalization ratios: Short term debt 15.5 % 12.5 % 0.8% 3.7% 7.6% j l ong term debt 34.9 35.3 38.5 45.9 45.1 Preferred stock 7.2 7.9 8.1 8.5 9.8 Common stock equity 42.4 44.3 43.6 41.9 37.5 Common stock data: - Average shares outstanding (in millions) 3.7 51.1 51.1 50.3 48.9 45.6 Earnings per averege common share 6.3 $3.67 $3.52 $3.74 $3.71 $3.53 Dividends per common share 4.5 $2.58 $2.50 $2.42 $2.31 $2.19 Dividend payout 70.3% 71.0 % 64.7 % 62.3 % 62.0 % Dividend yield 6.5% 7.1% 7.4% 5.8% 7.1% Book value per share of common stock 6.1 $26.88 $25.80 $24.77 $23.26 $21.63 Return on average common equity 13.9 % 13.9 % 15.5 % 16.4 % 16.8% Common stock price per share: High $40% $37% $43% $47 $31 low 33% 32 29% 30% 23% Close 11.0 40 35 32% 39% 30% Price carnings ratio (year-end) 10.9 9.9 8.8 10.7 8.7 Other year end data: Number of employees 6.1 7,490 7,974 8,116 8,030 7,208 Number of common shareholders (2.5) 43,005 44,929 46,147 46,586 48,052

St t FET E D B A T A l 9 7 5 19Vil I'lORIDA POWER CORPORN110N Annual Gmwth Roten (In sworent) 1984 89 1979 89 1989 1988 1987 Electric Sales (millions of KWH): Residential 6.6 5.5 11,786.9 11,065.6 10,318.8 Commercial 9.0 6.7 6,989.8 6,479.4-6,016.4 Industrial 4.7 1.6 3,766.1 3,680.6- - 3,349.4 Other 5.9 8.0 1,580.5 1,466.1 1,355.0 ~ "Rital retail sales 6.9 5.2 24,123.3-22,691.7 21,039.6 Sales for resale (6.4) (4.1) 2,387.2 3,439.2 3,064.1 Total electric sales 5.2 3.9 26,510.5 26,130.9' 24,103.7 Residential Service (average annual): KWil sales per customer 2.5 1.4 12,059 11,754 11,356' Revenue per customer .7 4.6 $845- $814 $827-Revenue per KWH (in cents) (1.8) 3.1 7.01 6.93 7.28 Financial Data: 'Ibtal capitalization (in millions) 1.2 5.4 $2,473.9 $2,359.5 $2,341.0 Capitalization Ratios'a': Short term debt. 19.9 18.6 4,7% 10.3 % 6.9%' Long term debt (3.6) 3.8 40.2 34.7 39.7 Preferred stock (2.7) .6 - - 9.4 9.9 10F Common stock equity 6.7 7.7 45.7 45.1 43.4' Ratio of earnings to fixed charges (SEC method) 4.3 1.2 3.79 3.79 4.08 Embedded cost of long-term debt 8.1% _8.0% - 8.1% Embedded cost of preferred stock o 7.2% 7.2% 7.2% Operating Data: Net generating capability (MW) .4 2.1 _ 6,041 6,086

5,966.

Net system winter peak load (MW) 7.0 4.9 6,817 6,188 5,087 Net system summer peak load (MW) 7.0 4.7 5,832 '5,309 5,196 BTU per KWH of net output (.4) 10,076 9,985 9,951-Construction additions (in millions) (2.2)- 2.8 $254.8 $201.1 ' $192.8 Itrcentage of construction expenditures generated internally 73 % -100 % 96%: Fuel cost per million lil'U (2.3) .4 $2.10 $1.83 - $2.09 Average number of customers 4.1 4.1 1,101,817 1,060,971 '1,023,222 Number of employees 1.8 3.6 5,553 5,512 5,395 (a) Capitalization growth rates calculated on total dollar amounts.

I ICh6 1985 1984 1983 1982 1981 1980 1979 9,819.2 9,175.0 8,553.6 8,009.5 7,425.0 7,752.3 7,379.8 0,927.3 5,573.0 5,106.6 4,547,7 4,118.6 3,895.2' 3,735.2 3,581.1 3,646.3 3,122.3 3,166.0 2,989.0 2,701.0 2,715.5 3,288.3 3,481.0 3,215.9 1,319.3 1,268.4 1,188.8 1,142.9 1,094.9 1,038.5 987,7 734.9 19,833.8 18,716.0 17,279,1 15,972.0 15,130.6 15,814.3 15,429.6 14,524.4 3,336.2 2,556.4 3,317.3 5,802.0 4,739.3 4,322.2 3,953.3 3,643.6 23,170.0 21,272.4 20,596.4 21,774.0 19,869.9 20,136.5 19,382.9 18,168.0 11,255 10,940 10,638 10,388 9,964 10,758 10,643 10,496- $914 $883 $818 $783 $720 $763 $591 $540 8.12 8.07 7.69 7.54 7.23 7.09 5.56 5.15 45 $2,275.6 $2.350.2 $2,328.0 $2,305.4 $2,200.3 $1,971,5 $1,751.0 $1,462.3 .2% 5.0% 2.0% 2.7% 1.6% 1.9% 1.6% 1.4% 46.9 45.4 51.4 51.2 53.8 52,0 52.2 46.7 10.3 11.3 11.5 11.9 12.5 11.5 12.5 15.1 42.6 38.3 35.1 34.2 32.1 31.6 33.7 36.8 4.29 3.81 3.07 2.94 2.42 3.19 2.80 3.35 8.7% 8.8% 9.2% 9.1% 9.6% 9.2% 8.6% 7.0% 8.4% 0.3% 9.3% 9.3% 9.3% 8.4% 8.3% 8.3% 5,961 5,989 5,927 5,993 5,899 5,255 5,117 .4,884 5,977 5,813 4,858 4,913 5,347 5,088 4,419 4,224 4 G14 4,548 4,163 4,610 4,086 4,355 3,995 3,667 9,865 9,928 10,074 10,082 10,383 10,357 10,443 10,503 i . $195.2 $201.2 $284.5 $285.8 $385.3 $379.8 $316.9 $193.1 100 % 100 % 99 % 66% 39 % 45% 10 % 58% $2.14 $2.63 $2.36 - $2.85 $2.78 $3.12 $2.52 $2.01 980,427 940,976 900,799 861,548 829,810 802,787 772,265 735,633 ~ 5,323 5,215 5,070 4,923 4,829 4,533 4,195 3,891 1 ...r...

il fit fi T,H R h A 'O F F lf. I' R $ DIREC1DRS lee H. Scott ' l.awton M Chiles, Jr. Director of the Collins Center for Public Iblicy Robert T. Stuart, Jr. Allahassee, Florida. Rancher and Investor Dr. Jack B. Critchfield President and Chief Executive Officer Jean Giles Wittner ms ent Andrew H. Hines, Jr.

• E""Y Chairman of the lloard (insurance consulting)

Frank M. Hubbard St. Ibtersburg, Florida investor Orlando, Florida Richard C.' Johnson Partner Andrew H. Hines, Jr. Johnson Simmons Company Chairman of the lloard (a development company) y,,, g, 3 Clearwater, Florida Vi Nlr d&DM Richard Korpan Dr Jack B. Critchtleid Q Executive Vice President - President and Chief Executive Officer and Chief Financial Officer Stanley A. Brandimore P. Scott Linder Executive Vice President and General Counsel Chairman of the lloard lander Industrial Machinery Company y Richard Korpan lakeland, Florida Executive Vice President and Chief Financial Officer Clarence V. McK :e Chairman of the floard WTVT Holdings, Inc. GROUP VICE PRESIDENTS (a television station) hmpa, Florida Joseph F. Cronin E " "E Clarence W. McKee, Jr. Investor Allen J, Keenter, Jr. St. litersburg, Florida Utility Group Corneal B. Myers Thomas S. Krzeninski ihrtner Finandal Services Group itters(m, Myers, Craig. Crews, Ilrandon & Mann, P.A. (Attorneys-at law) MHER OFFICERS 1.ake Wales, Florida Jerry 11. Joyce Richard A.Nunis Vice President and Treasurer Pn'sident henneth E. Armstrong Walt Disney Attractions Assistant General Counsel Orlando, Florida George Ruppet President Modern 'Ibol & Die Company of Florida Stephen D. Purifoy Pinellas Park, Florida Secretary

i h a j h I @ l Rf HM M A 1 (3.k 0 -~ e INVESTOR SERVICES COMMON S1DCK LISTED

All dividend checks, shareholder reports, proxy material New York Stock Exchange and tax forms are handled from our St. Ittersburg cor-Pacific Stock Exchange

. porate ollice. All correspondence concerning address Ticker symbol: FPC i changes, dividend checks and related matters should Newspaper listing: FlaPrg be directed to: Florida Progress Corporation investor Services ANNUAL REPORTS ON FORM 10 K-P. O. Box 33042 AND STATISTICAL SUPPLEMENT St Ittersburg, Florida 33733-8042 A copy of the Company's 1989 Form 10-K, without ex-Telephone (813) 895-1740 hibits, will be supplied without charge to shareholders requestlug it. A Florida Ibwer Corporation 1989 Form 10-K, without exhibits, and a detailed Ten-Year Statisti-. TRANSFER AGENT AND REGISTRAR cal Report also are available. Requests should be ad-dressed to investor Services at the address shown. Inquiries concerning the transfer of common stock cer-tificates of Florida Progress or preferred stock certifi-cates of Florida Ibwer should be directed to: ANALYSTS' CONTAC15 Manufacturers Hanover Trust Company Jerry H. Joyce (813) 895-1705 ' 47 { Stock Transfer Administration Vice President and 'lleasurer P. O. Box 24935, Church Street Station New York, New York 10249 Richard R. Champion (813) 895-1733 i Director, investor Relations Telephone (212) 613-7147 l - Mark A. Myers (813) 8954735 l Manager, Investor Communications DIVIDEND REINVESTMENT PLAN i The Company offers a Dividend Reimestment and Stock CORPORATE OFFICES Purchase Plan (Plan)for shareholders of record. At the end of 1989, approximately 40% of the Company's com. 240 First Avenue South mon shareholders participated in the Plan. Under the St. Petersburg, Florida 33701 Plan, the Company has the option to purchase shares Telephone (813) 8944141 for Plan participants by either issuing new shares or pur-chasing shares at a nominal commission in the open i market through an independent agent with reinvested dividends, optional cash payments and employee pay-roll deductions. The Company pays all of the costs of administering the Plan for shareholders. Plan enroll- . ments, withdrawals and other carrespondence should be directed to investor Services at the address shown. i COMMON S1DCK DIVIDENDS Record dates are normally on or about the fifth day of March, June, September, and December. Quarterly divi-dends are customarily mailed to reach shareholders on = or about the 20th day of March, June, September and December. J

' $ t t3M111A f HU6h ES E ' CUM PD K8110M Of ', ~ l l Long Glass - A hand held telescope used to identify landmarks, hazards and aids to navigation at a distance i One Hand Dividers - A pair of hinged, pointed arms used to gauge and step off distances y N. x on the nautical chart. w 48 \\ t ' \\. \\' jpe s Compass / Binnacle - Traditionally, the compass is a magnetic device with a rotating card that aligns with earth's north-south magnetic fields The compass card is marked in degrees (0 -359 J to give the navigator his ship s beanng. Normally, the compass is suspended in gimbals and housad in a case or stand with a light called a binnacle.

• y.

e w '.k v 4 f. Q. ' $q Nautical Charts - Seagoing maps of a portion of the earth's % Min A. kg%g%g

1. d!N 3-Surfaceemphasizingwaterareasofinteresttonavigators Charts

'. T h, contain information about water depth, dangers to navigation 4 ~ %,"(jg) -? and the location of vanous ids to navigation. Charts are used as worksheets upon which courses may be plotted and .h positions determined. g%,3 ] f.'%, "g,, h[g ' % yi: ik b 4 n:: % %y s %g

i wR 9 AA-14 0 A L h 1 t' n:t,1 + y Parallel Rules - Two rulers connected by linkages that keep thelr edges parallel at all Selttant - A mechanical device employing times. One edge is normally unented on lenses and mirrors used to sight objects and oneof thecompassrosesonachartwhile measure relative angles, particularlyin celestial the other edge ls " walked" outward to plot navigation. The relative angles between the a chosen course-earth's honzon and known celestial bodies, when measured at a precise time, assist the navigator in determining his latitude and longitude. ( Taffrail Log - Consists of a rotator (shown), a length of connecting kne and a recorder (a speedometer hke device) The q.4 rotator, or " fish:' is streamed over the stern Mb of the ship and spins in the water at a given $[M h. number of revolutions commensurate with l h the ship's speed in knots. N w-g Chrenmreter - A clock or watch g%g" designw to keep time with great accuracy SetinrelationtoGreenwich Time, the enronometer is used in conjunction with the sextant in { s celestial navigation. l

3[ 50 ~~ ~ i

,k

'y {k y,, a t guga t _ egepgma A"g!gg,_wg;ij$r(MIgh,sg wf wy.;sgh w;)q,I;N' >;j0p M';wa ;u&a._n'. o,

w y Ndif-( Y;fj; h(;b ll f

.me, _1< ( '( 2 ;'; - i, -y N gn hgdip@"n L y,gyga : % e x ww y N h x %~ N cM cx '- x Q4+'s. gx x I )$[, : Egg MM IEp/, > flf - q'., ?){tRS% g ) Q A*1* )S .. m,,-4 Y ' 'U$lh,hh&&QQ%QL :.x ~ tw 3 ,.t Li. . o m..

f ( k

ce i,

'i,. M g 3 -1 4.- ~ %2 s i .s .+ h h p Y r $: r ~, + e s 3 r y- .s W 4 + ,._+ +... + 9

• ~

v -< e 1 ,.s .t 2:..... .5 e, ~ s .a e a..,. e-r ~ , g 1:' y w 3 Wg 4 t 7. -g + t ~ 4,, ,7,.f a'ip i ', ,.' g. --a + / g e a ~ + ~ (.: v'< ; 9 . ". N . =-

3 y

'I~.,. ..a h.,, ,t . y;. y p, Y .p. ,.,'; A* U '_ 'b, i,,g:. hy ., -. ' }%_'} -p ,y,,. $ j) ..ss p.,., ect, pM v p Q R ,x.

p 3.N1v i

r .~ y em - ' q

• \\.n. p *

'.l'

• _4 ff s

, y v' ,.c c- [.n n(:.,.~ ;,.. q }:. ' _"";,4 ;, !,_ .:; (y [y n %{,P' 1flj[. J ~.,.,q;9A ~,

j.,.ygey

~-e w.

., ~

. ( 's ; - .. - '[,. ! } }, f s' '- .4 'y ,,,,(.. ep, hy,: g' V c t, v. - - 3 '. At.g;y,4u.... y46 q% - f ',,.,3l.,93 ;b. O, '.d ~. ,a. .e. c. 9,_ :~_. +.. [{<..., Q}.' @'f.9 7-i. dp '. f. ,e e a gg. . f > ; sf

• W ' ' p ' _ f i >

^ ^ ~.;'. g'.y g,. <.; 7,f:,;.,, - n - tb_; ? ,;,.j 4-s ,'7, c. t ' ie i n...y,.eg,:.pp, g s- < - + -: Jdn -. ; 3s - ~.. c ;. c/q. =.;.<,., - r j, .-.6 b, ' ;...>.j f Pj....; [f.,. y. -.. ~ .f..s, .:: - - } b ?.;k'-;p$'f'Q'"- .g, m .' 4 J ' ) # ' ' %. l., ;, f, h,p ..r

• _v

+- * + s u Y e . ~ s l' - C o#90M110M ( 4 RM.titMd 5114 WRiRt% fly #$2 ;) b%UM, 8 g .+. t fa y w e g a a a f}}