ML20084A113
| ML20084A113 | |
| Person / Time | |
|---|---|
| Site: | Crystal River  |
| Issue date: | 12/31/1983 |
| From: | Hines A FLORIDA POWER CORP. |
| To: | |
| Shared Package | |
| ML20084A098 | List: |
| References | |
| NUDOCS 8404240410 | |
| Download: ML20084A113 (36) | |
Text
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J FloridaProgressCorporation 1 Annual Report 1983 y vmb.m.,n!AS #d m !!R
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Cover McNulty Station, the building represented on the cover, is the new location of Florida Progress's corporate offices.
The recently renovated building, which was built about 75 years ago,is part of the redevelopment of the downtown St. Petersburg area The renovation was done by Hunnicutt Equities, Inc., which is now a subsidiary of Talquin Corporation.
FLORIDA PROGRESS CORPORATION CORPORATE PROFILE Florida Progress Corporation November 1983 for the purpose of 18,500 or 38% of the Company's is a holdtng company which engaging in lease investments. Common shareholders participated in combines non-regulated operations Progress Equities incorporated the Company's Dividend with its primary utility business. The was formed in November 1983 for Reinvestment and Stock Purchase Company became the parent the purpose of engaging in equity Plan, up from over 14,600 or 33% at corporation of Fionda Power investments. the end of 1982. Dividends reinvested Corporation and its subsidiaries in under this Plan qualify for the March 1982. Holders of Fionda dividend exclusion provided by the Power's common stock automatica!!y INVESTOR INFORMATION Economic Recovery Tax Act of 1981.
became shareholders of Flonda investor Services Department Plan enrollments, withdrawals and Progress on a share-for-share basis- All dividend checks, shareholder other correspondence should be Florida Power Corporation, reports, proxy matenal and tax forms directed to the Investor Services the Company's principal subsidiary, is are handled from our St. Petersburg Department at the address shown.
a public utility in the business of General Office. All correspondence generating, transmitting, d:stnbuting, concerning address changes, Annual Reports on Form 10-K purchas:ng and selling e;ectric energy dividend checks and related matters and Statistical Supplement wholly within the State of Florida. First should be directed to: Upon request, the Company will incorporated in 1899, Flonda Power Florida Progress Corporation furnish its shareholders without has a generating capabbty of Investor Services Department charge a copy of its 1983 Form 10-K, 5,993.000 kilowatts and serves over P.O. Box 33042 without exhibits, as filed with the 861,000 customers in 32 counties St. Petersburg, Flonda 33733 Secunties and Exchange Commission along the gulf coast and through the Phone 873-895-1740 A Flonda Power Corporation 1983 central "ndge" sector of Flonda. Form 10-K, without exhibits, and a Inquiries concerning the transfer of Electric Fuels Corporation, detailed Ten-Year Statistical Report are stock certificates should be directed Florida Progress's largest non utility also available. Requests should be to our New York transfer agents.
subsidiary, was organized in 1976, for addressed to the Investor Services the purpose of obtaining and Transfer Agents and Registrars Department at the address snown.
transporting coal. It is presently Common Stock involved in coal mining activities, the Auditors Manufacturers Hanover Trust Company Arthur Andersen & Co.
operation of transloading facilit,es, rail P.O. Box 24935, Church Street Station Tampa, Florida cars, barges and tugs, and a coal-oil New York, New York 10249 mixture plant.
Flonda Power Corporation Analysts' Contact Talquin Corporation, formed in 1981, ehed Stock Clarence W. McKee, Jr. 813-895-170 is involved in real estate development, Chemical Bank Executive Vice President citrus and the production and sale of horticultural products. 55 Water Street Jerry H. Joyce 813-895-1705 New York, New York 10041 Treasurer and Controlic:
Southeastern Computer Corporation, formed in 1975 and Kerineth E. McDone'd 813-895-1733 Common Stock Listed Director, Investor Relations acquired by Florida Progress in New York Stock Exchange August 1983, is a Florida-based computer company involved in the Ticker symbol FPC Corporate Offices development and marketing of 270 First Avenue South computer software. Dividend Reinvestment Plan St. Petersburg, Florida 33701 The Company offers a Dividend Telephone 813-895-1700 Progress Financial Services Reinvestment Plan for shareholders of Incorporated was formed in record. At the end of 1983, over
Censolidated Financial Highlights 1983 1982 Revenues increased 10.3% $1,338,139,000 $1,213,671,000 Earnings increased 26.5% $103,868,000 $82,097,000 Earnings Per Share increased $2.64 $2.20 Dividends on Common Stock-Up 6.6% $1.95 $1.83 Book Value Per Share-Year End $19.61 $18.93 Stock Price Range $18-22% $14%-19%
Finrida Power Corporation-Operating Highlights 1983 1982 Sa!es of Energy-Up 5.6% 19.8 Billion KWH 18.8 Billion KWH Average Customers increased 3.8% 861,548 829,810 Average Residential Usage-Up 4.3% Due to the Weather and Strengthening of the Economy 10,388 KWH 9,964 KWH Peak Demand-Down Due to Capacity Shortages 4,913,000 KW 5,347,000 KW Construction Was Down About $100 Milkon $285,830,000 $385,274,000 1 Contents 1 Highlights 17 Southeastern Computer Corporation 2 Letter to Shareholders 18 Consolidated Financial Statements 4 Florida Progress Corporation 30 Selected Financial Data 4 Financial Review-Management's Discussion 31 Quarterly Data 7 Florida Power Corporation 32 Directors l
15 Electric Fuels Corporation 33 Officers 16 Talquin Corporation i s
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h In my letter to you last year, I "b I Mk $[d ~.kN
/ ! stated that "For Florida Progress, .e . .C . ' A '~ 1." S E D h i f t .:.l. y ?./..E .j [ Mj.&
l 1 believe that 1983 will bring an f> .O.
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i improving picture" This has been f.g.:h"Jf;y].Q
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J i true. Our earnings for 1983 -- " ~ . f .f .f:.f f.,. -
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- i increased from $2.20 per share to i p.pfr.%y.g < . ; h y 417;:J" 9 R ':' : :.. % L 4 - 9
$2.64 per share. In accordance cy ' 3 . - .j: 'J y[ ..m. - 9.;-f 7.H .. ._. ..( ' ;Ci.:d ' } J f~ l- 'SJ
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J with its past practice of 31 years, ; .' .?.x y. 4-b >
your Board of Directors increased .g. :t j z.h ;.1. ' b.y( l ' J E A ' N Uf .N ' ' - ..y
.il ! the annual dividends paid during y.y T.- pc - ~ jD ' i f;$
MyQ c y. ... .. U.i ;l. J ft-#. .. -.$ ..f i 1983. The current annual rate is .y . .~g$y, " ,[. . .
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j Progress are, of course, dominated by the results of Thh " ?. ~
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- l Florida Power, the electric utility Andrew H. Hines, Jr., Chairrnan of the Board and President. [
h ; from which it grew. During 1983 N
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! in kilowatt-hour sales. Sa!es for
- million. It is now in a decreasing frozen control line. The net result I %
l mode and was at the level of
? 1983 increased by 5.6%. Our $286 million in 1983. We have l wascapacity that and we were forced shorttoof f[
to resort t customer growth rate was 3.80/o projected $276 million for 1984 rotating outages during the 4 for the year, and that rate is rising, with a sharp drop to morning of December 26. This p(g i
' The performance of Crystal , approximately $179 million in was an extremely undesirable .W:
?.? River Unit No. 3 is continuing its : 1985. This will result in a major situation and one which we have Q l improvement. We completed an reduction in the a'nount of been able to avoid except for two %
y i 18-week outage for scheduled external financing needed occasions in the past M g refueling, maintenance and upgrading. This places the unit in
{ in the future. Turning to the cctivities of the [
4 g a position to operate until the l As a result of our addition of
! new coal-fired capacity, we other subsidia6es, Electric Fuels A Corporatior suffered the ills ?
b spnng of 1985 before another 3 ,
l announced in November a two- common to the coal and p ; refueling is needed. During 1983 year plan to place 662,000 transportation industry in 1983. O
? j our new 717,000 kilowatt coal-fired j kilowatts of oil-fired generatin9 However, several things .E.
4 l unit, Crystal River No. 4, operated
! very satisfactorily, exceeding capacity in extended cold materialized which should put i r i shutdown beginning in 1984. This Electric Fuels into a strong d e ! expecta' ions. The unit was a , will constitute a reserve for future position when the coal industry p g ,
major contributor in our program growth. This action will enable us begins to recover. During th- V.. -
g i of changing the fuel mix. This to reduce our operating expenses year, we bought out the in' sts .$
g- change has resulted in coal becoming the primary fuel in 1983.
at a time when severe pressures of our two partners in the E
- q on electric rates must be COMCO venture and are now in Y.
Xlf. l The completion in 1984 of a countered by any feasible means. control of this composite fuel , 3. -
M I duplicate coal-fired unit, Crystal Our electrical system faced a business. In addition to the !:
k River No. 5, should shift us further very severe test during the week contract for supplying a coal-oil @
., away from oil for the generation of of Christmas,1983. Extended mixture to Florida Power, Electric '. ~l-U electricity. This unit completes our ; cold weather, including some Fuels has secured a contract for fy
.1 plans for new generation bitterly cold days, tested the the sale of coal-oil mixture to a ::
A construction through the 1980's. system extensively. During that large phosphate company. We 5 Florida Power's construction time, we lost the output of Crystal have additional prospects for the ]V ji budget peaked in 1982 at $385 River Unit No. 4 because of a sale of finely powdered coal for yp
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Electric Fuels renegotiated """ "
supply contracts and, as a result, E!E a*'* * $5 was able to substantially reduce I I I I I the cost of coal to Florida Power.
This was most beneficial to our critical input on many major Florida Progress Corporation, I electnc customers, and we expect decisions over the years. indicated that the changes would continued improvement during John E. Gleason, vice president not have a material impact for 1984. Also, during the year we of Florida Power for Eastern and several years but that they offered entered into a joint venture to Ridge Divisions, retired in a promise of better days ahead.
determine the long-term December after 34 years with The experience of the past two possibilities for coal sales in the Florida Power. He has been years has confirmed the validity of Far East. succeeded by Dr. Jack B. this view. We have, particularly
, Talquin Corporation continued Critchfield. Dr. Critchfield joins during the year 1983, laid a very its real estate activities and Florida Power for a second time, solid foundation for expansion became active in the horticultural having served as a member of the and diversification into nonutility and citrus business. In November, Board while he was president of businesses. We are proceeding in we purchased a large orange Rollins College. He also has a a manner which we hope will grove in southeastern Florida. The strong background in utility prove to be both careful and grove survived the December management. creative. Our perspective is keyed freezes, and its prospects look to Florida's growth. This certainly Webster defines perspective as appears to be a basis for wide gnod. Talquin entered into an
,,the capacity to view things in ranging possibilities. We have agreement to develop a research their true relations or relative attempted to maintain a long .erm technology park on a site near the importance' The events affecting perspective, building the University of Florida.
the economy at both national and foundation and then erecting the Groundbreaking is scheduled for ,
international levels during the past structure. We had no earnings early 1984. Work continued on few years have greatly impacted from the nonregulated side in remodeling and property the perspectives of many of us. 1983, but expect a modest development in the downtown Maintaining a proper perspective improvement in 1984, and a more St. Petersburg area. We are also Y ny management. material impact in 1985.
developing a subdivision in the Tallahassee area.
s e ns stee i between short-term crises and I thank you for your confidence in August, Florida Progress opportunities, and long-term and support of our Company acquired Southeastern Computer trends with the problems and during this transitional period.
Corporation. This firm is a small potentials they imply. During computer software company recent years, planning horizons For the Board of Directors, j located in Clearwater. have shortened for many Southeastern Computer has a companies as they have become strong product in the property tax intensely preoccupied with the j administration area. This acquisition will help Southeastern problems of the immediate future.
Survival, of course, is the first rule /
- to expand its marketing capability. of nature but it can be confused
- Byron E. Herlong, a member of with a lack of willingness to look the Board for 17 years, will retire ahead. It is in perspective that the at this year's annual meeting. Mr. test of governments and Herlong has been a valuable businesses alike over the next few member of the Board, having yeurs will be given. Chairman of the Board and President served as chairman of the Audit in my letter to you two years
' Committee as well as providing ago, proposing the creation of - February 17,1984 3
.5 Florida Progress Corp. oration . Financial Review -
_f ormed t'wo new companies;-.
Management's Discussion Flon.da Progress Corporation Combines a growing number ~of; Progress. Financial Services 2 LIQUIDITY AND CAPITAL
. non-regulated operations with its - !ncorporated, and Progress - RESOURCES primary utility business.This: . Equities incorporated.
g m m y., m .y y combination provides shareholders .
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with a sound utility investment, Dun.n' g the past two years.) .x;3 y -
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along with the opportunity for earnings potential beyond trie; aHocating resources and coordinating the research and r 4,
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regulated business. FloridaL Progress actively seeks development of selected .
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I acquisitions and investments in technologiect in a move to- ,4"^y' Florida's industries,' people and intensify the commitment to these , .
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natural resources which can investments, the Company formed. ; l j
produce favorable returns on.our , the Progress Technologies, 1 . 3; 7l l shareholders' investment. Division. Included in the :
f technology projects are the :
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- }e in November 1983, as part of - development of chemical ? * " T #" S" le' '
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the corporate strategy to facilitate - Eprocesses for the recovery of ; a" W' J' and organize future acquisitions - . usable minerals and chemicalsi sc : re- 3e: ss en and investments, Florida Progress from coal ash and chemical waste. mow ~ e,~ wc . ,
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oroG'a" C ' e a:5e: *L~ 5372 Florida Progress Corporation's New Business Research Ubraryf . m v " o e" ~ ~ 1982 ' $56 6 CSatains corporate Information on almost all domestic businesses.1 -
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l Eon'ToL % * * ' 9 " i 7 i 7 we w-< lm m million, were contributed to Florida = Power for its construction . the sa es o com ns through the dividend reinvestment , plan and employee benefit plans was contributed to Florida Power. The decrease in 1982 revenues due to the effect of inflation .in all in December 1983, Florida w s largely the result of reduced areas of operation, combined with industrial kilowatt-hour sales. This the expenses of meeting Nuclear Power issued $87 miHion of Citrus declining trend reversed in Regulatory Commission County Annual Tender PoHution mid-1983 and industrial kilowatt- requirements at the Crystal River Control Revenue Bonds. Of the
$87 milhon, $25 million was used hour sales have been increasing Unit No. 3 nuclear plant.
each month when compared to defease Citrus County Pollution to 1982 Other Income and Expenses Control Revenue Bond Anticipation Notes in December Operating Expenses income attributable to the 1983. The balance was used to Fuel expense remained allowance for equity and defease $50 million of Citrus essentially at the same level in borrowed funds used during County Pollution Control Revenue 1983 as in 1982. Increases in fuel construction decreased in 1983 bonds due in May 1984 and to expense due to increased sales by $12.8 million primarily due to finance additional pollution control were offset by lower costs of fuel bringing Crystal River Unit No. 4 expenditures at Crystal River Unit and a favorable system heat rate. on-line in December 1982. The No. 5. The interest rate of 6%% in 1982, fuel expense decreased increases in 1982 and 1981 were on the bonds will be adjusted 14.4% compared to 1981, due to primarily due to construction yearly and Florida Power has the both lower prices and lower net expenditures related to Crystal option each year to fix the interest generation. River Unit Nos. 4 and 5. rate for the remaining term of Interest on long-term debt Purchased power decreased the bonds. $13.9 million or 12.6% in 1983, continued its increasing trend due reversing the trend experienced in primarily to the additional long-OPERATING RESULTS the prior years. The decrease in term financing necessary to 1983 was due to both a $10.4 support Florida Power's pera g revenues increased after the decline experienced in million decrease in net purchases construction program. The 1982. The Company s electric and $3.5 million decrease in increase in 1983 was primarily subsidiary, Florida Power, which rice. The increase in 1982 over due to the issuance by Florida accounted for substantiaHy a'l of 1981 was the result of increased Power of $100 million in First kilowatt-hour purchases, due to Mortgage Bonds in October 1982. the 1983 operating revenues, experienced revenue increases the availability of lower cost energy. The increase in 1982 was largely due largely to increases in attributable to the issuance by Other operation and Florida Power of a $75 million kilowatt-hour sa!es to residential maintenance expenses continued customers, and an increase in variable rate term loan in to increase in 1983. The December 1981. base rates. The major items percentage increases over prior affecting consolidated revenues years for 1983,1982 and 1981 are shown in the foHowing table; Accounting Change were 13.3%,15.2% and 22.4%, In 1981, a significant increase in 1983 1982 1981 respectively. The increase in 1983 income resulted from a change in was due pnmanly to production an accounting principle when (mion*) expenses which increased $19.0 Florida Power began accruing the
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, s ($ 92.1) ($21.3) $187.3 million or 19.2% over 1982. This non-fuel portion of revenues increased (decreased) inCredse was largely attributable related to service rendered but wowamnours sold s8.o (44 4) 33 4 to expenses related to the 1983 unbilled as of the end of the 5' 6 l"][*]['S 10*
- 3" deferred fuel revenue 32.7 (30.0) 27 2 nuclear refueling outage and an accrual for the scheduled 1985 period. Previously, revenues were recorded as billed. The effect of omer 11.0 (6 6) 14 6 nuclear refueling outage. Other the change in 1981 was a net of
$124.5 ($70 4) 5314 0 increases in 1983, as well as income taxes increase of $11.5 increases in 1982 and 1981, were million or $.34 per share.
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l 1 Florida Power Corporation USE OF ENERGY ! continued cutback in phosphate Florida Public Service Commission Total sales of energy increased production. However, since : requesting a $138.2 million annual 5.6% dunng 1983, compared to a . mid-1983 industnal kilowatt-hour i increase in retail r,tes. The
! sales have been increasing each ! request is based upon a 1984 test j decrease of 3.6% in 1982. This r
was due mainly to the economic l month when compared to 1982. , year, adjusted to reflect the ' recovery, along with an increase j ! annualized revenue requirements in heating requirements. Flonda ' associated with Florida Power's i Power's average customer growth RATES AND REGULATION new Crystal River Unit No. 5, ' rate was 3.8%, up slightly from t Florida Power must maintain its , currently scheduled for l the 3.4% in 1982. , financial integnty in order to meet i completion in December 1984. A j its objectives of furnishing ; decision on the rate request is Residential customers used ust rs with an adequate t 7.9% more electricity in 1983 than i ' expected by September 1984.
, supply of energy and providing a Florida Power also anticipates I in 1982' This is a significant M S "l
! change from the 4.2% decrease l l fding a request with the Federal
, pss was ma& on , Energy Regulatory Commission l
d in 1982 D es dential custom rs ; Po[er for an increase in wholesale rates l as u ho7 e" by the # 1 increased 3.5%, whde the ! Federal Ener Re ulator i
, of the retailincrease. The amount
'; average kitowatt-hour use per Commission to increase wholesale customer was up . . rates in two phases totaling $33.9 ! of the wholesale request has not been determined. Energy sales to commercial ! million, on an interim basis l ' customers rose 5.7% in 1983. The l pending a final decision. In l SYSTEM OPERATIONS i increase is attnbuted to a 6.6% i November 1983, the Commission Efficient use of its generating i j increase in customers and ; accepted a settlement between ! resources is one of Florida
; Florida Power and its wholesale improving economic conditions in l power's goals. As new generation Florida during the year. customers agreeing to a total !
Industnal energy sales i increase of $27.6 million. l becomes available, operational flexibility it a!!ows to choose the ! decreased .5% for 1983. The ! In February 1984, Florida ; lowest cost source of electric l decrease was due primanly to the , Power filed a petition with the l energy. This year marked the first i i Many of Florida Power's customers prefer to Customers are provided with prompt and courteous service by the pay their monthly billin person, customer service representatives at Florida Power's district offices. ( .. o 3 p 4 l
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Florida Power's construction energy representative discusses energy saving features with one of the many home
.y : builders whose new homes have qualified for the " Super Saver" award for energy
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Since its debut in July 1981 .' Florida Power's Travehng Energy Saver Show ' (TESS) has i been viewed by about a quarter of a milhon people TESS has .,
'~ appeared at schools, shopping \
I centers. f airs. and on television
^
- j Over 26.000 of Florida Power s
" " ~ ~ ~ residential customers took advantage of the Home Energy Finup Program during 1983. Work performed under this program. by local contractors includes the installat:on of water flow restrictors. caulking and other energy saving measures Flonda Power's residential audit representative shows a customer where additional weatherstripping is needed.
' Home energy audits are performed as part o' the energy conservation program l 9
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Florida Power serves over 861.000 customers in more than 375 cities. towns and rural communities The territory comprises approximately V em Map 2o- ' a " ' m " * " " "
- a " " ' ' " " ' * * ' ' - ' <* '"
J 32 of 67 Florida counties in addition to the generating plants indicated on the map. electric power can be supplied from interconnected electric utility systems throughout Florida and the Southeast W-n r y y,_ ,
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i LAAE W AL S'1 h Florida Power s bill distributors hand deliver E -"' ' approximately 26ao of the customer bills , 4 s aw. __ ff y3 3,;5P
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Over 39.000 electric meters were installed during 1983 to accommodate Florida Power's customer growth. 12 / f
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,/ ! March 1978, until September SYSTEM DEVELOPMENT
{ 1978. The $11.8 million settiement A primary responsibility of
, will cover about 94% of the direct Flonda Power is to furnish
, damage costs. customers with a dependable and adequate source of electric I energy at a reasonable cost.
Emphasizing flexibility in strategic Two ma;or ever,ts occurred pl nning is a major way of I during 1983 that Jemonstrated me ng s commhent %wm Florida Power's success in in cuctomer demand balanced converting its fuel mix from one w th the conservation of energy based prirrarily on oil to ont3 has delayed the need for future ba seo on domestic coal. Fi electric generating facilities. The cral became Florida Power s (st, ! only remaining unit planned for primary fuel with an annual the balance of the 1980's is consumption of approximately 3.8 currently under construction. million tons, representing 48% of Crystal River Unit No. 5 was the fuel mix. Second, the about 76% complcte at the end of 4 , successful operating experience 1983 and is scheduled to be in w !n a coal-oil mi>ture at Bartow service in December 1984. Unit No.1 has resulted in the buming of more than a million During 1983, Florida continued barrels of the coal-oil mixture to expenence economic Florida Power's perfortrance since that unit was converted. The expansion of its major industries.
*"' Tourism, Florida's major industry,
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p e"k*su**e'that higa Coal-oil rrixture is Supplied by standards are being met. . Electric Fuels Corporation. Electric remains a primary source of t ! Fuels also supplies all of Florida strength. Approximately 39 million l Power's coal requirements by tourists visited Florida in 1983.
! Unit No. 4 was orig.nally
- I i both water and ra'l transportation. Although the Florida economy has designed te generate 640,000 been improving throughout the 4 . kilowatts but performance tests ! Flonda Power is continuing its year, monthly patterns of new l! showed that the unit was capable pohey of maintaining firm fuel residential electric customers ll of producing m excess of that contracts with various suppliers, in indicate that the population did
(! amount. As a result, it was I order to maintain the reliability of l formally re-rated to 717,000 it; supp'y or other fuels. fncreas g bove 19 2 s vel until ,; kilowatts. Florida Power's fuel mix for . the last half of 1983. This is l 1983 was 48% coal, 28% oil, l because population trends PLANT DAMAGE SUIT SETTLED i 18% nuclear,4% gas and 2% generally lag Florida's other
' In December 1983, The coa'.'cil mixture. In 1985. tne fuel economic indicators. Housing Babcock & Wdcox Company and . mix is estimated to be 65% coal, starts increased steadily through Florida Power's insurers settled a l 8% nuclear,14% oil and 3% 1983 and had the best year since law suit with Florida Power j coal-oil mixture. i 1973. Reflecting the impact of resulting from damage caused by loose parts within the Crystal River , , , , ,
e igned he B cock & g a ! - Wilcox Compa y The incident gc i %i la j i the un w s shu d w f m J . E wen w o~ gr ~ i l i l I I I I I I Sorlds Powsr's commercial energy audit angineer chscks equipment efficiency at one if tha msny high technology companies that have moved to Florida, weatherstripping, sdoor end outdoor lighting load, insuhtlon, sculking gnd air conditioning units are )lso chsched. 13
construction activity, the order to reduce demand. In turn l cost of certain contractor unemployment rate for the state customers receive monthly bn, performed energy saving was consistently below the credits of up to $17. Aggressive measures. national average throughout marketing has added almost Florida Power certifies new the year. 38,000 customers to the load homes that meet high energy management program efficiency standards as " Energy during 1983. Savers During 1983' ENERGY MANAGEMENT approximately 300/o of all single-During 1983, an Energy Residential Conservation family new residential construction Management Department was Program in Florida Power's service area j formed to include the previous More than 38,000 residential received this award. functions of energy conservation, energy audits were conducted load management, load research during 1983. To assure that Commercial and Industrial and forecasting, economic i conservation measures are Conservation Programs development arid governmental actually completed, Florida Conservation activities in the sales. The objective of this Power's innovative Home Energy commercial and industrial area department is to plan and carry Fixup Program pays part of the were increased in 1983. Florida out a viable, well-balanced program of marketing and conservation for the benefit of Florida Power and its customers. Strong conservation and load gg'"gy "- management activities will show g. g V^ customers how to receive ' [I f maximum value for every dollar 2 y y* spent on energy, help reduce X _ , Florida Power's long-range need for costly new generating facilities, and help meet the goals established by the Florida Public Service Commission. At the same time, efforts will be devoted to energy sales that increase electrical use in non-peak periods. This better use of capacity can favorably affect costs per kilowatt-hour and future rates. Load Management Program Through this voluntary program, j Florida Power can control
' oarticipating customers' major energy using equipment, such as heating, air conditioning, water -,
y heaters and pool pumps, during j times of peak energy usage in Electric Fuels owns approximately 35,000 acres of coal reserves, of which 15,500 acres are actively being miried. Recoverable clean coal reserves are estimated to be about 185 million tons, p 14
Pose' of'ers se.mr 'gnes at F onaa Poner s eve,ees a's T'- moa 7 o p .s resco"3 o e hus "ess ene". e a ,;es 'o .iss s: 'enresentea ov *n s u on %e for 'ne ' ' na and o'envate nt Mie f ,s'rj n w >r :- r' e ei'.C U' ino ,ea' cc tract u n O' e x o 'ed coa f r LJ s :es l'C" id:' 'g
,se a. gr y , ,
opeo entea on Dece" Der 1' 1983 .as appro s ma:e ,185 a hor :n ,' recur menrU aae a; a , edenced un: F;or!da Po ^e' ana reserves oca'ea n me s'a'es o' of aus'r a r cr ' m er<.a 'ne un on auree on co" 'ac' V g n a West V 'g n a ana a; a 's au r % 1983 ^ J'eamce s hanges Kentucny Sn oments +ro"' 'nese
;n new ce : n, ' 500 c :es our og 1983 tota ea ro^ atts approx mate'v 750 000 'ons Ms Fa m Pn w' a s , ass s:s Electric Fuels ret ec:ea a moaest out nea m y f cn rects fu oog neers 'o me Corporation ncrease cons der-ng tne coor
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des u o e" c e' ' Electr:c Fue.s Corporat:or nan marke' cona t'ons over the comr v La ano na ;s" a: ce.e;oped a coa! managemen '00 000 tons sh coed !n 1982
; F1 a ' as l 1983 "m urcy'a- system tria' has proved to De Aitnougn the opera' ons group rex. Yo N'e "'a" 300 o' a- s! ccess+u! anc nignk 20 noet 'w nas supphea var aus naustr.es ne. nmerc a' < s'E.c: ; n supo?, ng coa' frorn mnr s,te to Feca Power Corporatro" F 1s na Poser - ste le area
*ne cus'orrer Th.s 'u A - niegrated ccot.nues to be "'e primary
- Dec a c; tea as boer 7, Des g" sysier" is comoosea o' %e cvstomer w,tn 1983 pu r chases Ae a J . noers esse' ::ai groups coa! coerat,ons totahng aporox! mate S 3 5 m'ii:on
'ra' ne and term:rw ng tons The operat!ons groun a :e'natise fue's ar'a .nte'na* ona aeseioced .nnosat:ve price
; UNION CONTRACT market,ng Tne niegration of reopeners aitnin long-term
- Cc au r p ,
oev ee^ trese g'oups unaer E1 '!nc Fueis contracts and successfutiy toor
! F:or a Power a' o t' management prov aes the advantage of market cond t.o':s
, interna: ona- Bwnemooa o' necessa'y exposu re to au chases anicn resu!ted .n Ioner onces for E;ect ca: Worners go: un ae' .a , of :ne coa; industry to e su e r Florida Power n Oc'Joer 198 3 Acou: 44 3 ^ c' cor1 nuea orof ttaole growth The marine and terminamng group provides efficient and 6 Electric Fuels' composite fuels preparation plant at Port Sutton, Florida, grinds renable ser .ce to coa l suppuers coal into a very fine powder and mixes it with fuel oil to produce COM, a coal
[ oil mixture. The plant also produces REDICOAL ' a powdered coal product; and users all over tne aorld in PETCOM, a petroleum coke-oil mixture; and has the capability to produce a manne transportat.on Dme Fuels coal-water mixture
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' p Florida's construction growth translates into more demand for lawn
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' : - and garden products. Talquin s Pasco Products Company.
-t, incorporated is providing many of these products. Above trucks are N- being loaded with horticultural products for deliveries to customers.
Left, the chipping and mulching nachines at Riverside Wood Products, Inc. (a Talquin subsidiary) turn cypress logs into decorative j ground cover to be bagged and sold by Pasco Products and other
~ '
wholesale customers.
" ">e-ar coa 'est ,amn, RED: COAL aen'g ,e" I coe'a'eu * , a" oaeoe ae' o e's + ' E:ecr : Fuem agen inte" "a Ma' 'e .i / e r u' . e '
's 7 -n Term na s sas ce c me 4 m aior 'e' m ' a ' -n me u~ ed State: . .bstr" a s 'c'ea,e ts Talquin Corporation tonnage o$ m 'a no e cess of Da ' ,1983 Talau n mee " 7 n~ a; g'983 corpg, anon transferrea > n erest E et r c Fee- . o + n e' ' ,n como;er soM,,a'e to
'e v.eDo w 'a ut ,e Soutneasterr Con T te'
'oe s *nrouT COMCO Corporat on and begar to A"+'< c 4 eaov '
e concen' rate on !ts rea: es'a'e
< , oc' re of coa -o > t
'e aeve;oomen' acw' es Ta,qu '
GOM) Preauct.o" at COMCO , acautred 119 acres . in n the city PcSa"on F!a'.da +acJ h .mlts o' Tacanassee Fior da and L rn'ea ar E ectr:c Fuels co" med to set recoras 190 acres near Ga nesv ne.
;w ,, ' " o s 'he secona arles' S oce 1982. tne 'acR t y F;or'da Tne Taltanassee propeny t,,<< ,
oo.'atog i ", e G m ' "asurnauced n excess o' ' 2 namea Royal Oaks w li contain
- M% m" a f.eet o' f ea- ma w el at C O M ln au c too s;ng;e famuy homes mu4tefampv 4
; a ' 2r; ro oarue ,, i 's D
- e to supovnq F:or.da Power dwell:ngs ana commercia!
Fmo.s L tea
- insports nroa. <ts Corpora' on COMCO nas enterposes Land clearing. roao for :a.or ne" ca'and gra- contractea to suona :naustr'a- construct on and utsty nork are in compan e< as .eo as coa' to' %stor e's , in :n's a.ternat se o' ogress and hu nd4ng snouia
/ t.e Anre' E ectoc Fue's f ue' REDICOAL' COMCOs begin dur<ng the first half of 1984 oartne, P s ' e .na: Mar ne nee pondered coa: oroduct 'or Tne property near Ga nesvule whi w w a n .+ materw ndustr ai and utsty >se. has be tne s te of the Fionda Resparch na"a na fac tv ,trateg.can proved to oe an econom!cai ana Technology Center In a iocated near me mo..m ofino rep lacement for fue! 0 : and partnersh:o agreement with the M+s,ss pp A ser Tne recer ' , natura; gas In Januar, 1984 Un'versity of Flonda Talquin wm e paned termm cons.sts of COMCO recemea 'tw t rst - develop and manaue the Center o oaern f ac ' t e' nc:ua "a a ' ate- comtrerca c'aer for The Center vill nave research 16
l space available for lease and sale l products, for sale under its corporations, and vehicle l to national firms, as well as j Suncoast and PPC labels and management systems for
; provide space for the University of private (abels. Customers include organizations with large fleets.
j Florida. well-known building supply and Southeastern Computer's two in July 1983, Talquin purchased retail department stores. property tax administration j in November 1983, Talquin systems are called Tax Hunnicutt Equities, Inc. This purchased a 2,988-acre citrus Assessment and Collection f company was instrumental in (ne restoration of McNulty Station, grove near Lake Okeechobee, System (TACS) and Corporate which is now the headquarters of Florida. The grove has a mix of Property Tax Administration and l Control System (CORP-TACSW) l Florida Progress and Talquin. early and mid-season fruit Hunnicutt Equitres is presently consisting mostly of oranges. TACS is a collection of 7 l restoring the building next to Tatquin's grove was not affected sophisticated computer programs i McNulty Station which will be by the freeze that damaged that can be adapted to automate
} leased for office space and has some Florida citrus crops in the property tax assessment, ) also acquired otMr properties in December 1983. appraisal and collection process
), the St. Petersburg area for for any government or related 4 renovation and development. jurisdictional body. The CORP-Talquin became involved in the Southeastern Computer TACS computer programs l address the problems of ! production and sale of Corporallon identifying property and venfying horticultural products when it Since 1975, Southeastern the reasonableness of the
- acquired Riverside Wood Computer Corporation has been assessed value and property tax, I l Products, Inc., and Pasco involved in the research and while simphfying pl n e th il Products Company, incorporated development of complex -
l from Electric Fuels in January computer software systems. Its primary areas of expertise are Southeastern Computer's l 1983. Riverside Wood processes ' property tax administration FLEET System, which was cypress into mulch which is then systems for state and local transferred from Talquin in i sold to Pasco Products and other 1983, is a vehicle management l wholesale customers. Pasco - governments and major Products bags this material, as system designed to help large well as fertikzer, peat and other organizations reduce maintenance l and operating costs while southeastern Computer Corporation develops and markets property tax .j administration and vehicle management software programs. These computer application solutions are designed for use by many governmental agencies l l; and corporations. m g~ - - - - --w,- - A
/ :
. sts /
~-__ - ___ - , _ _ _
FLORIDA PROGRESS CORPORATION Consolidated Balance Sheets DECEMBER 31,1983 AND 1982 l Assets 1983 1982 j (Thousands) ELECTFilC PLANT: In service $2,861,121 $2,754,695 l Less- Accumulated depreciation 699,472 609,360 I 2,161,649 2,145,335 l Construction work in progress 382,139 245,004 l Nuclear fuel, at amortized cost 98,382 51,361 l 2,642,170 2,441,700 OTHER PROPERTY AND INVESTMENTS: I Property and investments 55,388 24,070 investment in unconsohdated subsidiaries and partnerships 15,911 23,405 71,299 47,475 CURRENT ASSETS: Cash 2,855 6,201 Special deposits 19,742 30,142 Temporary cash investments 2,068 - Accounts receivable, less reserve of $2,035,000 in 1983 and l
$1,317,000 in 1982 94,776 85,164 Accrued unbilled revenues 39,196 29,116 locome taxes receivab!e 12,189 -
Inventories, at average cost- ! Fuel 104,968 156,397 Materials and supplies 45,428 38,901 Prepayments 5,043 3,701 326,265 349,622 DEFERRED CHARGES: Unamortized debt expense, being amortized over term of debt 8,109 8,980 Accumulated deferred taxes 25,551 25,950 Deferred fuel expense 33,040 - Unamortized nuclear fuel disposal costs 6,461 30,628 Other 26,726 10,501 99,887 76,059
$3,139,621 $2,914,856 The accompanying notes are an integral part of these financial statements.
O
Capitalization and Liabilities 1983 1982 (Thousands) CAPITAL'ZAilON i (see accompanying statements): Common stock equity $ 818,309 $ 725,012 Florida Power Corporation cumulative preferred stock 274,309 275,859 Long term debt 1,207,902 1,195,147 2,300,520 2,196,018 CURRENT LIABILITIES: Accounts payable 73,085 61,607 Customers' deposits 34,961 33,098 Accrued income taxes - 1,204 Accrued other taxes 8,589 12,294 Accrued interest 23,995 25,759 Other 16,681 15,908 157,311 149,870 Long term debt due within one year 8,706 5,372 Notes payable 56,633 37,205 222,650 192,447 DEFERRED CREDITS AND OTHER LIABILITIES: Accumulated deferred income taxes 419,322 334,651 Accumulated deferred investment tax credits 163,145 164,007 Nuclear fuel disposal costs 23,346 - Deferred fuel revenue - 17,907 Other 10,638 9,826 616,451 526,391 COMMITMENTS AND CONTINGENCIES (Note 6) 83,139,621 $2,914,856 19
FLORlDA PROGRESS CORPORATION Consolidated Statements of income FOR THE YEARS ENDED DECEMBER 31,1983,1982 AND 1981 1983 1982 1981 (Thousands) OPERATING REVENUES $1,338,139 $1,213,671 $1,284,119 OPERATING EXPENSES: Operation-Fuel 506,110 514,335 600,678 Purchased power 95,914 109,797 102.275 Other 162,786 140,313 124,149 764,810 764,445 827,102 Maintenance 89,263 82,228 68,948 Depreciation 101,506 81,016 75,992 Taxes other than income taxes 71,096 63,172 64,990 Income taxes 92,754 54,006 72,893 1,119,429 1,044,867 1,109,925 OPERATING INCOME 218,710 168,804 174,194 OTHER INCOME AND DEDUCTIONS: Allowance for equity funds used during construction 13,221 19,077 8,144 Preferred dividend requirements of Florida Power Corporation (25,483) (22,089) (19,074) Miscellaneous other income-net 122 4,214 2,120 (12,140) 1,202 (8,815) INTEREST CHARGES: Interest on long-term debt 109,577 98,929 81,880 Other interest expense 9,752 12,575 11,719 119,329 111,504 93,599 Allowance for borrowed funds used during construction (16,627) (23,595) (11,786) 102,702 87,909 81,813 INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN AN ACCOUNTING PRINCIPLE 103,868 82,097 83,571 Cumulative effect to January 1,1981, of accruing unbilled revenues-net of income taxes of $10,916,000 - - 11,499 NET INCOME $ 103,868 $ 82,097 $ 95,070 AVERAGE SHARES OF COMMON STOCK OUTSTANDING 39,293,869 37,239,609 33,938,859 EARNINGS PER AVERAGE COMMON SHARE Before cumulative effect of a change in an accounting principle $2,64 $2.20 $2.46 Cumulative effect to January 1,1981, of accruing unbilled revenues-net - -
.34 EARNINGS PER AVERAGE COMMON SHARE $2.64 $2.20 $2.80 The accompanying notes are an integral part of these financial statements.
O
Consolidated Statements of Capitalization DECEMBER 31,1983 AND 1982 1983 1982 COMMON STOCK EQUITY: Common stock without par value, authorized 60,000,000 shares (335,220 shares reserved for conversion of convertible debentures), outstanding 41,718,836 shares in 1983 and 38,301,159 shares in 1982 3 448,723 $ 382,791 Retained earnings, including $48,137,000 not available for dividends on common stock 369,586 342,221 818,309 725,012 CUMULATIVE PREFERRED STOCK: Florida Power Corporation, $100 par value, authorized 4,000,000 shares-Without sinking funds 133,497 133,497 With sinking funds 140,812 142,362 274,309 275,859 LONG TERM DEBT: Florida Power Corporation-First mortgage bonds-3%% due November 1,1983 - 5,311 3%% due July 1,1984 6,249 6,459 3%% due July 1,1986 10,337 10,687 13%% due April 1,1987 100,000 100,000 4%% due July 1,1988 13,609 14,046 Maturing 1990 through 2012 - 4%% to 13.30% 743,092 745,892 Premium, being amortized over term of bonds 4,727 4.930 Par value of bonds reacquired to meet cash sinking fund requirements (3,999) (4,119) 874,015 883,206 Convertible debentures 4%% due August 1,1986 (convertible into shares of common stock at the rate of one share for each $20.50 of principal amount) 6,872 13,153 11% electric consumer capital notes due October 1,1985 4,678 4,685 Variable rate term loan due December 15,1986 75,000 75,000 Guarantee of pollution control revenue bonds and note-Maturing May 1,1984-9%% (Note 4) - 50,000 Matunng 2000 through 2012-6%% to 11%% 138,575 138,575 Annual tender bonds maturing December 1,2013 87,000 - Anticipation note due May 1,1984 (Note 4) - 25,000 Other subsidiaries 30,468 10,900 1,216,608 1,200,519 Long term debt due within one year (8,706) (5,372) 1,207,902 1,195,147
$2,300,520 $2,196,018 Th3 accompanying notes are an integral part of these financial statements.
21
FLORIDA PRO" ASS CORPOAATION Consolidatec' statements of Changes in Financial Position FOR THE YE ARS ENDED DECEMBER 31,1983,1982 AND 1981 1983 1982 1981 SO'JRCES OF FUNDS: (Thousands) Operations: Net income $103,868 $ 82,097 $ 95,070 items included in net income not requiring (providing) cash: Depreciation 101,506 81,016 75,992 Amortization of nuclear fuel 23,584 25,755 10,741 Nuclear plant outage reserve 6,975 - - Deferred fuel expense (50,947) 45,199 898 Deferred income taxes and investment tax credits 91,106 49,986 72,003 Allowance for all funds used during construction (29,848) (42,672) (19,930) 246,244 241,381 234,774 Financing and Other: Common stock 27,891 - 42,000 Common stock-employee benefit and dividend reinvestment plans 31,767 24,040 11,828 Preferred stock - 50,000 10,000 First mortgage bonds - 100,000 - Pollution controf revenue bonds and bond anticipation note 87,000 75,000 50,000 Vanable rate termloan - - 75,000 increase in notes payable-net 19,428 7,188 - Decreasein net currentassets(a) 30,798 - 7,725 Other-net - 9,485 5,174
$443,128 $507.094 $436.501 APPLICATIONS OF FUNDS:
Additions to e'ectric plant $285,828 $385,274 $379,752 Allowance for all funds used dunng construction (29,848) (42,672) (19,930) 255,980 342,602 359,822 Dividends on common stock 76,488 68,181 56,965 i increase in other property and investments 22,979 15,674 5,315 ' Long-term debt and preferred stock matured or reacquired for sinking funds 85,538 13,387 13,660 Decrease in notes payable-net - - 739 Increasein net current assets (a) - 67,250 - Other-net 2,143 - -
$443,128 $507.094 $436.501 (a) Analysis of increase (Decrease)in Net Current Assets-Specialdeposits ($10,400) $20,915 ($13.489) l Temporary cashinvestments 2,068 - -
l Accounts receivable 9,612 (2,533) 7.857 Accrued unbilled revenues 10,080 449 28,667 income taxes receivable 12,189 - (16,442) j loventories (44,902) 30,124 26,545 ' Accounts payable (11,478) 9,865 (31,340) Other-net 2,033 8,430 (9.523) ($30,798) $67,250 ($ 7,725) The accompanying notes are an integral part of these financial statements. 22
T Consolidated Statements of Retained Earnings FOR THE YEARS ENDED DECEMBER 31,1983,1982 AND 1981 1983 1982 1981 (Thousands) Balance at Beginning of Year $342,221 $328,709 $292,237 Add-Net income 103,868 82,097 95,070 446,089 410,806 387.307 Deauct: Cash dividends on common stock 76,488 68,181 56,965 Expense of issuing Flonda Power's equity secunties 15 404 1,633 76,503 68,585 58,598 Balance at End of Year $369,586 $342,221 $328,709 Notes to Consolidated Financial Statements (1)
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (2) Principles of Consolidation-The consolidated financial statements include the financer I results of Flonda Progress Corporaton, and its wholly-owned subsidianes. Flonda Power Corporaton. Flonda Progrest s largest subsidiary representing substantially all of its total assets. is an operating public utility engaged in the production, transmission, distnbution and sale of electrc energy wholly within the State of Flonda All signifcant intercompany balances and intercompany transactons have been eliminated, Certain reclassifcatons have been made to poor year amounts to conform with current year presentation. Flonda Progress is exempt from regulation as a registered holding company under the Pubic Utikty Holding Company Act of 1935. (b) Electric Plant-Electnc plant is stated at the onginal cost of constructon whch includes payroll and related costs such as taxes, pensions and other fringe benefits, general and administrative costs and an allowance for funds used dunng construction Substantially all the electnc plant is pledged as collateral for Flonda Power's first mortgage bonds. (c) Operating Revenues and Fuel Expense-Pnor to 1981. Flonda Power recognized utility revenues concurrent with billings to customers on a cycle bdhng basis. To more closely match revenues and expenses, in 1981 Flonda Power began accruing revenues for service rendered but unbilled. The cost of fossil fuel for electre generation is charged to expense as burned. The cost of nuclear fuel is amortized to fuel expense based on the quantity of heat produced for the generation of electric energy in relation to the quantity of heat expected to be produced over the life of the nuclear fuel core. Flonda Power is allowed to recover fuel and purchased power costs through fuel adjustment clauses Revenues o' fuel expenses are adjusted for differences between recoverable fuel costs and amounts included in current rates. Flonda Power recovers estimated future permanent storage and disposal costs of spent nuclear fuel through its fuel adjustment clauses. Nuclear fuel storage and disposal costs related to fuel that has been previously consumed and which has not yet been collected from customers has been set up as a deferred charge on the balance sheet. In June 1983, Flonda Power entered into a contract with the Department of Energy to dispose of fuel consumed prior to April 7,1983, the cost of which is $23,346,000, as well as fuel consumed after that dato at the current cost of .1C a kilowatt hour. 23
FLORIDA PROGRESS CORPORATION Notes to Consolidated Financial Statements i (d) Depreciation and Maintenance-Flonda Progress and its subsidianes provide for the depreciation of the onginal cost of propertres over their estimated useful lives on a straight line basis. The annual provtsion for depreciation, expressed as a 1 percentage of the average balances of depreciable electnc plant of Flonda Power was 3 68% for 1983 and 3.65% for 1982 and l 1981. Flonda Power provides for future nuclear plant decommissioning costs which are recoverable through rates charged to its customers. Pursuant to Flonda Public Service Commission requirements, Flonda Power is placing its retail collections in a I funded reserve. The combined recovery from all customers plus interest earned on the funded amounts is expected to provide for the future dismantling, removal and land restoration Costs which are presently estimated to be $362.000.000 in the year 2008. Flonda Power charges maintenance with the cost of repairs and minor renewals of property, the plant accounts with the cost of renewals and replacements of property units and accumulated depreciation with cost, less net salvage, of property units retired. l Flonda Power accrues a reserve for expenses anticipated to be incurred dunng scheduled nuclear plant refueling outages. ) l (e) Allowance for Funds Used During Construction (AFDC)-This item represents the estimated cost of funds applicable to l utility plant under construction. Recognition of this item as a cost of utihty plant is appropnate because it constitutes an actual cost of construction and, under established regulatory rate practices, Flonda Power is permitted to earn a return on these costs and to recover them in the rates charged for utility services. The average rate used in computing AFDC for the years 1983,1982, and 1981 was 10.08%,9.79% and 9 33%, respectively. (f) Pension Costs-Flonda Progress and its subsidianes have a retirement plan covenng substantially all of their employees. The total pension costs for 1983.1982 and 1981 were $6.872,000, $9,532,000 and $8,064,000,respectively. Pnor service costs, which were amortized over a 10 year penod pnor to 1983, became fully funded on January 1,1983, due to a change in the interest rate assumption. The change reduced the annual cost in 1983 by $2,065,000. Effective January 1,1982, the plan was amended to revise the early retirement benefits for long-service employees. This increased the annual cost in 1982 by $580,000 The plan was amended, effective December 31,1983, to increase the retirement benefits for employees. Annual contnbutions to the plan equal the amounts accrued for pension expense. A comparison of the actuarial present value of accumulated plan benefits based on an assumed rate of investment return of 8% a year and plan net Essets is presented below: January 1, 1983 1982 (Thousands) Actuanal present value of accumulated plan benefits: Vested S 61,491 $ 53.561 j Nonvested 9,110 8,054 { Total $ 70,601 5 61,615 i Net assets available for benefits $143,383 $113,449 The actuanal present value of accumulated plan benefits does not recognize any improvements in benefits and ignores the effects of future compensation increases on the benefits participants will receive for their past service. If this value is adjusted for projected compensation increases consistent with the assumed rate of investment return, the adjusted actuarial present value of j accumulated plan benefits would be approximately $106.400,000 and $92.600,000 for 1983 and 1982, respectively 24
l Notes to Consolidated Financial Statements (2) INCOME TAX EXPENSE 1983 1982 1981 (Thousands) Federal: Payable currently $ 531 $ 3,801 $11,376 Deferred to subsequent years (a) 119,183 47,030 64.938 Deferred income taxes-credits (39,571) (34,746) (30,735) Investment tax credits, net of amortization 1,974 35,638 33.245 income tax expense 82,117 51,723 78.826 Taxes included in miscellaneous other income and the cumulative effect of a change in an accounting principle 83 (4.370) (14.212) Income tax expense in operating expenses 82,200 47.353 64.614 State: Payable currently 1,067 5.153 5,334 Deferred to subsequent years (a) 13,581 5,589 7,751 4 Deferred income taxes-credits (4,061) (3.525) (3.196) Income tax expense 10,587 7,217 9,889 Taxes included in miscellaneous other income and the cumulative effect of a change in an accounting principle (33) (564) (1,610) Income tax expense in operating expenses 10,554 6.653 8.279 Income taxes S 92,754 $54.006 $72.893 (a) The components of income tax deferred to subsequent years were as follows: Federal: Excess tax over book depreciation $ 38,492 $34.667 $25,586 Construction costs and other property related items deducted for tax purposes 19,628 12,236 3,286 Repair allowance - - 766 Underrecovery (overrecovery) of fuel expenses 40,629 (3,228) 14.323 Other 20,434 3.355 20,977
$119,183 $47,030 $64.938 State.
Excess tax over book depreciation S 4,010 $3.810 $2,922 Construction costs and other property related items deducted for tax purposes 2,236 1,401 376 Repair allowance 348 375 413 Underrecovery (overrecovery) of fuel expenses 4,649 (370) 1.638 Other 2,338 373 2.402
$13,581 $5,589 $7,751 25
l FLORIDA PROGESS CORPORATION Notes to Consolidated FinanClal Statements The investment tax credits, including job development investment tax cred;ts, have been deferred and are being amortized through credits to income over the lives of the related property The Company had unrealized investment tax credits in 1983 of $12,993.000 which will be recorded in future years when reakzed The provision for federal income tax as a percent of income before taxes, including amounts allocated to miscellaneous other income and deductrons, and cumulative effect of change in an accounting pnnciple, was less than the statutory federal income tax rate. The pomary differences between the statutory rates and the effective income tax rates are detaded below: 1983 1982 1981 46,0% 46 0 % 46 04o Federal income tax statutory rate (3.4) (4 4) (26) Amortization of investment tax credits (3,5) (67) (2 6) Allowance for equity funds used dunng construction Other ( .3) __ (1])_ _.1 _ 38.8 % 33 2 % 40 9 % Effective federal income tax rate Florida Power Corporation (3) EQUITY SECURITIES Florida Pre _ferred Stock Progress C p " ' The changes in equity secuntes for 1983, mm n i ng S ng Stock Funds Funds 1982 and 1981 are as follows-(Thousands)
$298,339 $133,500 $ 85.540 Balance December 31,1980 54,121 -
3,870,619 common shares issued
- - 10.000 11% seres,100,000 shares issued
- (1,569) 15.682 shares reacquired 352,460 133.500 93,971 Balance December 31,1981 30,331 -
1,807,890 common shares issued
- - 50,000 13 32% seres, 500,000 shares issued (3) (1.609) 16.120 shares reacquired 382,791 133,497 142,362 Balance December 31,1982 3,417,677 common shares issued 65.932 -
(1.550) 15.500 shares reacquired _
$448,723 $133,497 $140.812 Balance December 31,1983 Flonda Power has 1,000.000 shares of authonzed but unissued preference stock, $100 par value, and 5,000,000 shares of authonzed but unissued cumulative preferred stock, without par value.
(4) LONG-TERM DEBT On December 1,1983, Flonda Power completed the defeasance of $50,000,000 Pollution Control Revenue Bonds due May 1,1984, and the advance refunding of a $25,000,000 Anticipaton Note due May 1,1984 Suffcent funds in the form of United States Government secunt es were deposited with trustees to pay the respective pnncipals and the accrued interest up to the date of redemption or matunty. The effects of these transactions on not income were insignifcant. The defcasance and the advance refunding were funded by proceeds from the issuance of $87,000.000 Annual Tender Polluton Control Revenue Bonds, Seres 1983 Bondt The interest rate will be adjusted on December t of each year and the bondholders may e!ect to tender their Seres 1983 Bonds at that time. The entire amount of Senes 1983 Bonds outstanding at any point in time is supported by an equivabnt amount from a three year line of cred,t arrangement. The combined aggregate matuntos of long term debt and cash sinking fund requirements for 1984,1985,1986,1987 and 1988 are $8,706.000, $11,313,000, $98,908,000, $109,763,000 and $14.061,000, respectively.
Notes to Consolidated Financial Statements (5) JOINTLY-OWNED PLANT Flonda Power's 90% ownership share in the Crystal Arver nuclear unit amounted to $396.620.000 of electre plant in servce, $9.873.000 of construction work in progress, and $90,239,000 of accumulated depreciation, which includes
$11,496.000 of decommissioning costs, at December 31,1983. Each partcipant provides for its own financing. Florda Power's share of the operating costs are included in the appropnate expense captions in the statements of income.
(6) COMMITMENTS AND CONTINGENCIES (:) Construction Program-Substantial commitments have been made in connection with Fionda Power's construction program whch is presently estimated to be $276,100,000 in 1984, (b) Legal Proceedings-The 1978 forced shutdown of the Crystal River nuclear unit and ensuing Flonda Pubic Servce Commission (FPSC) investigation resulted in an order that Florda Power refund approximately $14,700,000 in increased fuel costs paid by its customers. On Apnl 8.1981, the FPSC reduced the required refund by $1,800,000 plus interest, but denied other points raised by Flonda Power. Flonda Power appealed this decision to the Florida Supreme Court on Apnl 24,1981. On December 16.1982, the Supreme Court issued its decision reversing the FPSC's Order and returned the matter to the FPSC for reconsderation. In making its decision, the Supreme Court ruled that the FPSC had improperly reired upon certa:n evidence. On July 13,1983, the FPSC issued an Order on Remand requinng Flonda Power to refund
$11,056.000 plus interest to its customers. On August 12,1983, Florda Power again appealed this matter to the Florda Supreme Court, contending that the FPSC had again improperly relied on the same evidence, contrary to the Court's previous decision. In the opinion of Flonda Power management and legal counsel, the resolution of this matter should not result in any matenal adjustment to the recorded provisions for Fionda Power's best estimate of its ultimate refund liability.
However, in the event this matter is resolved adversely to Flonda Power, the maximum amount that Flonda Progress's earnings would be adversely impacted, as of December 31,1983, would be $5,800,000, net of income taxes. (c) Nuclear insurance-The Prce Anderson Act currently limits the liability of an owner of a nuclear power plant to
$580.000,000 for a single nuclear incdent. Flonda Power has purchased the maximum available private insurance of j $160,000,000, and the balance is provided by indemnity agreements with the Nuclear Regulatory Commission. In the event of a nuclear incdent. Florda Power could be assessed up to $5.000,000 for the licensed reactor it owns with a maximum assessment of $10,000,000 in a year. Flonda Power carnes additional insurance with Nuclec,r Electric Insurance, Ltd. (NEIL) to cover the cost of replacement power dunng prolonged outages of the nuclear unit. Flonda Power is subject to a retrospective premium liability of up to $7,400,000 in any year in which losses exceed accumulated funds available to NEIL, Florda Power currently carnes apprommately $1,000,000,000 in property insurance representing the maximum available. This coverage is provded by vanous underwnters through several different policies. Under one of the polcies underwntten by NEIL, which provides $425,000,000 excess coverage, Flonda Power is contingently liable for a retrospective premium assessment of up to $6.500,000 in any one polcy year in the event NEll's excess property losses exceed available funds.
(7) SUPPLEMENTARY INFORMATION TO DISCLOSE THE EFFECTS OF CHANGING PRICES (Unaudited) The following suppiementary presentation is made consistent with Statement No. 33 of the Financial Accounting Standards Board and is intended to set forth the effect of both general inflation and changes in specifc prces on Flonda Progress and its subsdianes it should be viewed as an estimate of the approximate effect of inflation, rather than as a precise measure. Constant dollar amounts represent historcal costs stated in terms of dollars of equal purchasing power, as measured by the Consumer Prce Index for afi Urban Consumers. Current cost amounts reflect the changes in specifc prces of property, plant and equipment (plant) from the date the plant was acquired to the present, and differ from constant dollar amounts to the extent that specifc prces have increased more or less rapidly than the general rate of inflation. The current cost of plant is determired by indexing surviving plant by the Handy Whitman Index of Pubic Utility Construction Costs. Since the plant is not expected to be rtplaced precisely la kind, current cost does not necessanly represent the replacement cost of Florida Power's productive capacity. Amortization of nuclear fuel, an item included in operating and maintenance expense, and depreciation are determined by applying Florda Power's amortization and depreciation rates to the average indexed plant amounts. l l II
FLOHtDA PROGRESS CORPORATION Notes to Consolidated Financial Statements Since only histoncal costs are deduct.b!e for income tax purposes. the income tax expense in the histoncal cost financial statements is not adjusted i Under the rate-makng prescnbed by the regulatory commissions to which Flonda Power is subject, only the histoncal cost of plant is recoverab'e in revenues as amortization and depreciation. Therefore the excess of the cost of plant stated in terms of constant dollars or current cost that exceeds the histoncal cost of plant is not presently recoverable in rates as amortization or l depreciat>on. and is reflected as a reduction to net recoverable cost. To properly reflect the economics of rate regulation in the consohdated statement of income from continuing operations. the reduction of Flonda Power's net plant should be offset by the gain from the dechne in purchasing power of net amounts owed Dunng a penod of inflation, holders of monetary assets suffer a loss of general purchasing power while holders of monetary habilities expenence a gain The ga:n from the deci ne in purchasing power of net amounts owed is pnmanly attnbutabte to the substant,al amount of debt which has been used to finance plant. S'nce the amortt2ation and depreciat.on on this pfant is hmrted to the recovery of histoncal costs. Flonda Power does not have the opportunity to reahze a holding gain on debt and is hmited to recovery only of the embedded cost of debt capital COMSOLIDATED FIVE YEAR COMPARISON OF SELECTED SUPPLEMENTARY FINANCIAL DATA ADJUSTED FOR EFFECTS OF CHANGING PRICES (Thousands, Except Per Share Amounts, of Average 1983 Dollars) Years Ended December 31, 1982 1981 1980 1979 1983 Operating revenues $970,161 $835.465
$1,338,139 $1,213.671 $1.284,119 Histonca! $1,147.093
$1,338,139 $1.253.115 $1.407,394 $1.172,925 Adjusted Historical Cost Information Adjusted for General inflation income from contenu.ng operatiuns (exclud ng 17,377 3.216 (21,033) 10,135 reduction to net recoverable cost)* (14.039)
.44 .09 (.70) .35 income (! ass) per common share * ( 38) 803,252 735.849 723,010 682,752 699.518 Net assets at year end at net recoverable cost Current Cost Information income (!oss) from continuing operations (excluding (30,707) (4,929) 13,560 (15,609) 2.825 reduction to net recoverable cost)"
.35 ( 42) .08 (1.02) (.17)
Income (loss) per common share
- E xcess of increase in general pnce level over increase in specific poces after reduction to net recoverable 157,620 179.956 8,748 5,933 104.894 cost 803,252 735.849 723,010 682.752 699.518 Net assets at year end at net recoverable cost Genoral Information Gin from dechne in purchasing power of not 129,058 182.292 68,011 72,095 157.911 amounts owed Cash dedends declared per common share:
$1.95 $1.83 $1.68 $1.565 $1.41 Histoncal
$1.95 $1.89 $1.84 $1.89 $1.94 Adjusted Market pnce per common share at year end.
$20.25 $19 00 $15 625 $13 625 $14.125 Histoncal
$20,25 $19 62 $17.12 $16 49 $19.41 Adjusted 298,5 289.1 272.4 246 8 217.4 Average consumer price index
- The year 1981 excludes the cumulative effect of change in e1 accounting pnnciple for unbilled revenues.
m - - __ __ _
I Notes to Consolidated Financial Statements CONSOLIDATED STATEMENT OF INCOME FROM CONTINUING OPERATIONS ADJUSTED FOR CHANGING PRICES For the Year Ended December 31,1983 (Thousands) Conventional Constant Dollar Current Cost Historical Average Average Cost 1983 Dollars 1983 Dollars Operat:ng revenues $1.338.139 $1,338.139 $1,338.139 Operating and maintenance expense and taxes other than income taxes 925,169 927,415 927.415 Depreciation expense 101.506 185.751 189.568 income tax expense 92,754 92.754 92,754 Interest expense-net 102.702 102.702 102,702 Other income and deductions-net 12.140 12.140 12.140 1.234.271 1.320.762 1.324.579 income from continuing operations (excluding reduction to net recoverable cost) $ 103.868 $ 17.377 $ 13.560 Increase in specific pnces (current cost) of plant held dunng the year $ 13.031 Less increase in cost of plant adjusted for changes in general pnce level 151.689 Excess of increase in specife pnces over general pnce level (138.658) Reduction to net recoverable cost ($12.565) 129.910 (12.565) (8.748) Gain from deckne in purchas.ng power of net amounts owed 68,011 68.011 Net pnce level adjustment $55.446 $ 59.263 Report of Independent Certified Public Accountants To the Shareholders of Florida Progress Corporation: We have examined the consolidated balance sheets and statements of capitalization of Florida Progress Corporation (a Florida corporation) and subsidiaries as of December 31,1983 and 1982, and the related consolidated statements of income, retained earnings and changes in financial position for each of the three years in the period ended December 31,1983. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the financial statements referred to above present fairly the financial position of Florida Progress Corporation and subsidiaries as of December 31,1983 and 1982, and the results of their operations and the changes in their financial position for each of the three years in the period ended December 31, 1983, in conformity with generally accepted accounting principles applied on a consistent basis, subsequent to the change, with which we concur, in the method of recording revenues as desenbed in Note 1 to the consolidated financial statements. ARTHUR ANDERSEN & CO. Tampa, Flonda January 27,1984. 29
)
l FLORIDA PROGESS CORPORATION Selected Consolidated Financial Data 1979-1983
' 1982 1981 1980 1979 1983 (Thousands, Except Per Share Amounts)
$1,284,119 $970,161 $835,465 Operating Revenues $1,338,139 $1.213.671
$82,097 $95,070 $52,183 * $60,487
- Net income $103,868
$2.64 $2.20 $2.80 $1.73 * $2.09
- Earnings per Average Common Share
$1.83 $1.68 $1,565 $1.41 Divdends per Common Share $1.95
$3,139,621 $2,914,856 $2,589.240 $2,265,667 $1,931,673 Total Assets Capitalization
$1,207,902 $1,195,147 $1,028,524 $ 912,895 $ 682,605 Long-term Debt 140,812 142,362 93,971 85,540 87,125 Preferred Stock with Sinking Funds 1,348,714 1.337,509 1,122,495 998,435 769,730 133,497 133,497 133,500 133,500 133.500 Preferred Stock without Sinking Funds 818,309 725.012 681,169 590.576 538,181 Common Stock Equity
$2,300,520 $2,196.018 $1.937,164 $1.722,511 $1,441,411 Total Capitalization
- Pro forma - To give effect of a change in an account;ng pnnciple for unbilled revenues, Note 1c-Notes to Financial Statements.
Selected Operating Data of Florida Power Corporation 1979-1983 1983 1982 1981 1980 1979 Electnc Sales (Thousands of KWH) 8,009,520 7,424,984 7,752.265 7,379,740 6.927,339 Resdential 4,118,602 3,895,216 3,735,191 3,581.112 3,646.279 Commercial 2,701,022 2,715.541 3,288,325 3,480,993 3,215,932 Industnal 3,848,145 3,630,199 3.642,498 3,378,115 3,044,778 Sales for Resale 1,142,876 1,094,876 1,038,476 987,695 734,861 Other 19,820,165 18,760,816 19,456,755 18,807,655 17,569,189 Total Residential Service (Average Annual) 10,388 9.964 10,758 10,643 10,496 KWH Sales per Customer Revenue per Customer $782.96 $720.47 $763.19 $591.32 $540.29 7.54C 7.23e 7.09c 5.564 5.15C Revenue per KWH Operating Data 5,993,000 5,899,000 5,255,000 5,117.000 4,884.000 Net Generating Capability (KW) 4,913,000 5,347,000 5,088,000 4,419,000 4.224,000 Net System Peak Load (KW) 10,082 10.383 10,357 10,443 10,503 BTU per KWH of Net Output Fuel Cost per Million BTU $2,85 $2.78 $312 $2.52 $2.01 861,548 829,810 802,787 772.265 735.633 Average Number of Customers 4,923 4,829 4,533 4,195 3,891 Number of Employees i 30 1
Quarterly Financial Data (Unaudited) Three Months Ended March 31 June 30 September 30 December 31 (Thousands, Except Per Share Amounts) 1983 Operating revenues $315.323 $314.616 $390.828 $317.372 Net income $23.518 $20.667 $37,209 $22,474 Earnings per average commor, share $ 61 $.53 $.94 $.56 1982 Operating revenues $297.641 $285,148 $331,759 $299,123 Net income $17,751 $15,137 $28.826 $20.383 Earnings per average common share $.49 $.41 $.77 $ 54 i Earnings per average common share as presented above may not equal amounts reported in the Statements of income as a result of issurng additional shares of common stock dunng the periods. The business of the Company's largest subsidiary, Flonda Power Corporation, is seasonal in nature and it is management's opinion that compansons of earnings for the quarters do not give a true indication of overall trends and changes in the Company's operations. C:mmon Stock Data Price of Common Stock Dividends Paid I on New York Stock Exchange Per Share 1983 1982 1983 1982 High Low High Low First Quarter $19% $18% $17 $15% $.48 $.45 Second Quarter 21 % 18 17% 15% 48 .45 Third Quarter 20 % 18 17% 14 % .48 .45 Fourth Quarter 22% 19 % 19W 16 % .51 .48 > At December 31,1983, the number of common shareholders of record was 48,712. 31
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