ML20138H150
| ML20138H150 | |
| Person / Time | |
|---|---|
| Site: | Crystal River  |
| Issue date: | 12/31/1996 |
| From: | Critchfield J, Korpan R FLORIDA PROGRESS CORP. |
| To: | |
| Shared Package | |
| ML20138H133 | List:
|
| References | |
| NUDOCS 9705070085 | |
| Download: ML20138H150 (50) | |
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Annual Growth Rates (in percent) 1996 1995 1995-1996 1991 t996 OPERATING RESULTS Utility revenues
$2,393.6
$2,271.7 5.4 7.0 Diversified revenues (continuing) 764.3 736.1 3.8 27.5 Income from continuing operations 250.7 238.9 4.9 8.0 Loss from discontinued operations (26.3)
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Utility
$2.40
$2.27 5.7 2.2 Diversified
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.23 (17.4) 25.9 Discontinued operations
(.27)
Consolidated 2.32 2.50 (7.2) 1.6
/
Dividends 2.06 2.02 2.0 3.0 investor
/
Book value 19.84 21.55 (7.9) 1.6 Highlights Inside Cafei Closing stock price 32%
35%
(8.8) 4.8 Stock price range 31%.36% 29% - 35%
Company Proffles FINANCIAL POSITION AY DECWEER 31 kgtjer to Shareholders d
Assets
$5,348.4
$5,550.4 (3.6) 1.2 Total capitalization 3,773.6 4,052.6 (6.9)
.6 Pr' ogress On the Threshold Capitalization structure; of Opportunety I
Short-term debt, incluaing current maturities 1.0%
4.3%
NFanagement's Discussion Long-term debt 47.1 41.0
& Analysis 2:
Preferred stock
.9 3.4 i
Common stock equity 51.0 51.3 Consolidated Financial DTHER STATISTICS Return on common equity 10.9%
11.8 %
Notes to Consolidated w Dividend yield 6.4%
5.7%
Financial Statements 3d Average common shares outstanding (in millions) 96.8 95.7 1.1 4.7 Reports from Management -
Employees 7,291 7,174 1.6 (1.5) and Auditors 41 Registered shareholders 54,195 54,987
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See Note 9 to the Financial Statements for business segment information.
Board of l}irectors and Officers.
43
+
Per share For the penods ended December 31.1996 inwesI,or inf ormation 4!
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Electric Fuelsis a growing energy STRENGTHS
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- Extensive network of coal steady year-round usage of barge operations in 17 states. Serving cus-terminals and transioading fleet tomers in North America and around facilities
- Industry leader in rail services the world, Electric Fuels has coal-
- Solid base of utility and industrial e Well-positioned to take advantage mining operations in Kentucky and coal customers Virginia; owns an efficient river barge ofincreased outsourcing in the rail fleet;and is one of the largest inte.
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i Iorida Progressis a diversitied electric utility holding company with annualrevenues of
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company are Florida Power Corporation, the second largest electric utilityin Florida, and Electric Fuels Corporation, an energy and transportation company.
Florida Progressis building on nearly 100 years ofproviding quality electricservice. The company also has 20 years ofexperiencein coaloperations,inlandmarine transportation and l
railservices.
l As we approach the next century, Florida Progress andits subsidiaries are seeking opportunities '
to leverage theirstrengths andhelp achieve continuedsuuess.
L FLORIDA P0WERCORPORATION
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1 FLORIDA POWER SERVICE AREA Florida Power serves 1.3 million STRENGTHS i
customers in central and north
- Growing customer base:about 8mr*
Florida. Covering an area of about 2 percent in 1996
, ts*, a 20,000 square miles,its service
- Strong retail sales growth:2.9 l
territory includes the rapidly growing percent in 1996 areas around Orlando,as well as the gg %
- Financially solid: double A bond 3'
densely populated Gulf Coast cities rating 1
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' the world, Electric Fuels has coal-e Solid base of utility and industrial e Well-positioned to take advantage mining operationsin Kentucky and coalcustomers Virginia; owns an efficient river barge ofincreased outsourcingin the rail fleet;and is one of the largest inte-
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To ourshareholders:
1996STOCKPERFORMANCE We are pleased witn the successes of 1996 that Our common stock outperformed most electric utility helped prepare us for the future.
stocks for the first 10 months of the year. In October, Today,we find ourselves on the threshold of new however,the price of our common stock dropped after opportunities for our electric utilit ind energy and Florida Power announced an extended outage at its transportation businesses. We are excited by the chal, crystal River nuclear power plant.
lenges and possibilities that lie ahead for our company We feel the financial markets overreacted to this and our subsidiaries, news. Last fall,we emphasized to the financial com-This optimism inspired the theme of this year's annual munity our confidence that the events at the plant were report:" Progress On theThresholdofOpportunity."
not expected to impact our earnings or dividend growth prospects. We still believe that to be true today.
Our largest subsidiary, Florida Power Corporation, continued to experience strong customer growth and in 1996, rising interest rates pushed down utility increased energy sales in 1996. Our utility also adopted stock prices. Even with the decline,our company's total a new organizational structure during the year to help investment return finished the year on a par with the support its strong competitive position. As the electric Standard & Poor's Electrics Index. Over the past three-j power industry moves toward greater change, Florida and five-year periods,ending in 1996,our stock has con-Power now will be in a better position to move quickly tinued to outperform the S & P Electrics Index.
a..d decisively.
Also in 1996,our energy and transportation sub-j i
sidiary, Electric Fuels Corporation, continued to gain l
strength in the rail services and marine transportation industries. Its coal-mining operations were streamlined in an effort to cut costs and improve productivity.
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During the year,we made great strides toward com-pleting a divestiture strategy related to our other diver-A l
sified operations. We successfully spun off f a you,our s,
l shareholders, our company's commercial leasing, lend-ing and real estate operations. We also sold our interest i
in a small technology firm in 1996,and we made major I
operational changes at our life insurance '.ompany.
Restructuring these diversified operations has been
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a high priority for us. Though the actions taken in.1996
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these decisions will be to our long-term benefit as we c
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1 Power and Electric Fuels.
I Dr. Jack B. Critchfield, Chairman & Chief beca tre Officer
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Kentucky. This was offset largely by a gain from the sale
-L of Advanced SeparationTechnologies,inc.,of which we
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owned 80 percent. This sale resulted in an after-tax gain of $23.5 million,or 24 cents per share. Earnings report-ed by Mid-Continent Life insurance Company were down due to declining sales, restructuring costs and
,i higher death-benefit claims.
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The spin-off of our lending and leasing business and our real estate holdings resulted in a tax-free stock dividend to Florida Progress shareholders. The move allowed the new company, Echelon International Corporation,to be launched as a well-capitalized busi-ness,able to pursue growth strategies and maximize the value of its assets for shareholders.
ANNUALOlVIDENO Richord Korpan, President & Chief Operating Officer Earnings per share growth over the past three years has allowed Florida Progress to continue its long-stand-EARNINGSPERSNA#EUP4.4PER(ENT ing tradition of increasing the dividend while, at the sm me,f II wing ur board's strategy oflowering Florida Progretss reported 1996 consolidated earnings from continuing operations before nonrecurring items the dividend payout ratio. In 1996,the payout from cf $252.4 million,or $2.61 per share. This compares with ng ing perations was 79 percent,down significantly
$238.9 million,or $2.50 per share,in 1995, an increase of m severahears ago.
4.4 percent per share. We are pleased with the increase We are proud that our company has increased the and encouraged by the forecast of sustained earnings dividends paid per share each year for 44 consecutive 9rowth of 4 to 5 percent in our five-year business plan.
years. Our board realizes,however,that the dividend Certain factors that may affect our earnings forecast Policy should be evaluated annually,and it does so each and other forward-looking statements are discussed February. The board will continue to re-examine the on page 28.
dividend policy to ensure that our dividend payout and Florida Power contributed $232.6 million,or $2.40 dividend rate are appropriate,given our business plan, per share. This compares with $217.3 million,or $2.27 Projected earnings growth and outlook for the electric per share,in 1995. Higher energy sales and increased utility industry.
customer growth were the main reasons for the We see sustained earnings growth in our five-year improvement. In 1996, retail kilowatt-hour sMes rose business plan. Our confidence in earnings growth will 2.9 percent over the previous year.
continue to be one of several considerations used in Electric Fuels contributed $27.? million,or 28 cents setting dividend policy.
per share,in 1996, before a nonrecurring charge against earnings. This compares with $24 million,or 25 cents per share,in 1995. Electric Fuels achieved increased earnings from its marine and terminal operatices.
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- UTil.lTYOPERATl0#5 Meanwhilr, Florida Power continues to work with a Florida Power made a number of changes in 19% to special review panel from the NRC to oversee the unit's help prepare it for increased competition. In July,our restart. As part of that effort, management at the plant utility reorganized into strategic business units (SBUs),
has implemented a corrective action plan to address making it one of the first electric utilities in the country the NRC's concern over performance.
to adopt this operational structure.
The current estimate calls for the unit to return to ser-,
The three SBUs - Energy Supply, Energy Delivery vice in the fourth quarter of this year. We are confident and Energy Solutionsw - will focus on targeted seg.
that our utility has a comprehensive and effective plan ments of the overall utility business, for retuming the plant to top performance.
1 Energy Supply is responsible for strengthening Like many utilities, Florida Power found itself obligat-Florida Power's position as an efficient, low-cost ed to sign long-term purchased power contracts with l
producer of electricity.
nonutility power producers to comply with the Public Utilities Regulatory Policies Act of 1978.
1 Energy Delivery oversees our utility's transmission and distribution lines as well as system operations and Since those contracts were signed, however,there have been dramatic declines in the wholesale market l
planning. Its mission is to maintain and improve service reliability in the most cost-effective manner possible, price of electricity, made possible by lower than-predicted fuel costs, lower construction costs and Energy Solutions is focused on customer serv,ce, i
more eff..icient power plant technology.
i sales and mariceting,and finding ways to use emerging technology to develop new products and services.
To mitigate the impact of higher future costs on its "9""
99 in 1996, Florida Power also created a new Power strategy to reduce and restructure the financialimpact Marketing Group as part ofits response to new rules of these contracts.
issued by the Federal Energy Regulatory Commission.
The rules are designed to encourage increased compe-ELECTRKFUELSC0RPORATION
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tition in the wholesale power market.
Electric Fuels, our energy and transportation Floride Power continues to build new capacity for the subsidiary, continues to expand its rail and marine future,and is nearing completion of the first phase of a transportation units.
new power plant in Central Florida. When it goes into service in 1998,the 470-megawatt plant is expected to Progress Rail Services Corporation,an Electric Fuels be the lowest-cost, most-efficient generating unit in rail subsidiary, made two key acquisitions in 1996. In Florida.
July,it acquired the stock of Railcar,Ltd.,an Atlanta-based railcar leasing company. The following month, In September, the Crystal River nuclear power plant Progress Rail acquired the assets of Mansbach Metal j
was shut down temporarily to repair an oil pressure Company, a Kentucky-based firm involved in metal problem in the plant's main turbine. Later,the mainte-recycl ng and railcar dismantling, repair and leasing.
nance outage was extended to give plant officials time to resolve design issues, which related to operating With operations in 14 states, Progress Rail now is one l margins on the plant's backup safety systems.
of the largest integrated processors and suppliers of railroad materials in the country.
The Nuclear Regulatory Commission (NRC) was critical of the plant's overall performance in 1996 partic.
Marine Equipment Management Corporation ularly citing weaknesses in management oversight and (MEMCO), Electric Fuels'infand marine transportation in the unit's engineering area. In January 1997, Florida company,added 100 new river barges to its fleet in Power announced selection of a new senior nuclear 1996. MEMCO plans to continue increasing its fleet for managementteam. Additionalpersonnelalso have the next few years as it expands operations along the been hired to strengthen the plant's engineering staff.
Ohio and Mississippi rivers.
8
Coal operati:ns continue to be one of the biggest Long t:rm,Mid-Continent does not fit with the j
challenges for Electric Fuels. The market for c*ntral strategic direction of our company. W2 expect that it Appalachlars low-sulfur coal has been flat for several will take three to five years for Mid-Continent's plan to years and any improvement in that trend appears produce sufficient value before we can prudently divest unlik ly in the near term. This led to the decision to this business.
close the few mining operations that were unprofitable under today's market conditions. Electric Fuels still is PREPA###6TO(ROSSTHETHRES#0LD committed to improving coal sales by focusing on Florida Power enjoyed another successful year, incr:ased efficiency and productivity at its remaining despite the problems at the Crystal River nuclear power
""'S' plant. Our utility continued to experience solid and sus-Over the years, Electric Fuels has provided consistent tained growth. Recent organizational changes should results and excellent returns. We believe our energy strengthen Florida Power's position as a formidable and transportation subsidiary will continue to produce competitor in a deregulated electric utility industry, double-digit earnings growth.
Electric Fuels also continues to perform well and should perform even better now that it has restructured 0THERDIVERSIFIEDOPERATIONS its coal.m;n;ng operations.
.Several years ago, Florida Progress announced a strat-We've developed an exciting plan of action to open egy to divest those holdings outside of its core utility doors to new possibilities. We invite you to read the and cnergy and transportation businesses. Our decision pages ahead,to review our company's operations and in 1996 to spin off Echelon International completed our accomplishments, and to learn how we are " Progress.
cxit from the lending and leasing and real estate busi-On the ThresholdofOpportunity."
nesses. Another part of this strategy was completed in December when Florida Progress sold its interest in d
Advanced Separation Technologies.
j
/
Our r:maining noncore business is Mid-Continent Life Insuranca Company. Over the past few years,the life insuranca industry has become more competitive, result-Dr. Jack B.Critchfield ing in lower sales of new policies at Mid-Continent.
Chairman & ChiefExecutive Officer in an effort to reverse declining sales, Mid-Continent introduced a new insurance product in early 1996. The new policy replaced the company's principal product, which was determined to be inadequately priced. Sales
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of the n:w policy,however,were disappointing and Richard Korpan have not met our expectations. In December. cost-President & ChiefOperating Officer reducti:n measures were taken and restructuring occurred at Mid-Continent in an effort to improve February 6,1997 profitability.
In 1997,Mid-Continent plans to begin an orderly process to resolve the pricing issue of its principal insurance product. This move is expected to result in reduced policy dividends and increased premiums.
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- lorida Progress' twoprincipalsubsidiaries - Florida Power Corporation and Electric Fuels Corporation - tookstepsin 1996 toposition themselves forsolidandsteadygrowth.
Welook forward to the newmarket opportunities that awaitin a changing electricutility l
industry. Additionally,wearecontinuingtomakeinvestmentsinourgrowingenergyandtrans-portation businesses. Weintend to continue denloping strategic alliances, throughjoint ventures
)
cr acquisitions, with companies whose strengths complement our own.
4 In this annualreport, we willlook at the ways our business units a' re contributing to Florida l
Progress' success today, andin theyears ahead. We believe you willbepleased with ourprogress.
l kl0RIDAPOWERCQRPQRATION j
In 1996, Florida Power took an important step to becoming one of the
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g nation's leading energy companies. In anticipation of what lies ahead,the l ~
utility reorganized into three strategic business units, allowing each to focus l m
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on its defined market segments. This new organization is vital in helping Florida Power grow in a deregulated business environment.
. $1 1-The three business units operate as separate, relatively independent Q?
organizations within the corporation. Energy Supply is responsible for low-
' 7 cost power generation. Energy Delivery will focus on maintaining reliable, j
- D' cost-efficient transmission and distribution of electricity. Energy Solutions is responsible for customer service, sales and marketing,and development J
of new products and services.
The new organization will allow each business unit to better serve its customers and take advantage of new business opportunities, Energy Supply Energy Supply is responsible for Florida Power's fossil fuel (coal, oil and natural gas) operations. In short,the business unit seeks to produce reliable power at the lowest possible cost. Its power plants are efficient, cost effective and meet environmental standards. Every year since 1986, Florida Power's fossil-fueled units have ranked in the nation's Top 10 for steam unit efficiency.
8
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About half of Florida Power's generation comes from t we i boca Po ce nn onnog one of coal,a reliable, low-cost fuel available at relatively stable Un: n.nm m.nhoa em v..u nnor,
,e-ou. ou, uuon market prices.
Tyulo >er n,on i tunpan, must tak" To help meet the electricity needs of tomorrow's cus-
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wanto of opportunor. th,n < ompeti tomers, Energy Supply is building a new power plant com-P ex in Polk County, Fla. The complex's first generators will e#.,o o' nu We'n need ro smune our l
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.m < on,penom, pu< ed use a combined-cycle technology,and be capable of pro-m <c
- p a. ano >ot w on no o" ne ducing up to 470 megawatts of power.
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n eu ion a n wn inc i omor n The estimated per-kilowatt cost of the new generators is h
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substantially lower than the cost of recently built generating facilities owned by other companies in Florida. Contributing
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to the cost savings was Florida Power's ability to buy plant J
components at favorable market prices. This is expected to wat we une, a s m m a,n tnicon.
make the new plant extremely cost competitive and should u 1. n. :
mpey,*na b o.o o help Florida Power lower its generation costs.
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Under provisions of the amended Clean Air Act, electric utilities are required to reduce sulfur dioxide emissions from their power plants. Florida Power complies with tod quality standards and has for several years. All four of the utility's coal units burn ty, low-sulfur coal,which helps reduce sulfur dioxide emissions. And when the new Polk County unit - which will be fueled by clean-burning natural gas - is added to Florida Power's system generation in 1998, the utility is expected to be able to meet tighter e slon standards several years earlier than required.
In the years ahead, Energy Supply will continue to strive for maximum efficiency and cost-effective production from its power plants. It also will look to take advantage of new opportunities for energy sales. In partic-ular, Energy Supply will seek strategic part-nerships and business alliances to further strengthen its capabilities.
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Other Energy Supply Resources y
- g Crystal River nuclear power plant was taken After achieving an average capacity out-put of 90 percent from 1993 to 1995, the I
off-line in September 1996 for maintenance
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and to resolve design issues related to back-
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up safety systems. The 860-megawatt unit represents about 20 percent of Florida a
Power's system capacity. The decision to Site preparation, including construction of giant cooling ponds, is nearing completion temporarily remove the plant from service it norlds Power's new Polk County hergy Complex near Bartow, Fin.
reflects Florida Power's commitment to mg;9,3;9;99 ggg y;9 gg, gggggg7g, nggagggy, 9
Additionally,in January 1997, Florida Power hired two top executives in the nuclear industry to oversee operations at the nuclea plant and retum the unit to service. Roy A. Anderson,formerly of Carolina Power &
joined the company to become Senior Vice President of Nuclear Operations,and John Pa Cowan, also from CP&l, will be the new Site Vice President. Both have extensive expe in helping nuclear power plants achieve world-class performance.
Florida Power also has approximately 1,050 megawatts of purchased power contracts with qualifying facilities. This is about 25 percent of the company's total system requir ments. These obligations date back to the late 1980s and early 1990s. Florida Power was required by federal law to purchase power from qualifying facilities at what is known as
" avoided cost." That is the cost the utility would have incurred had it built the plant itself purchased the power from another utility.
Today, however, because of the improvements in power plant efficiency and other f the capacity costs specified in these contracts are more than twice the actual cost of build ing new power plant capacity. In an effort to control future costs and keep its electric rates competitive, Florida Power has been negotiating to buy out or buy down some of these contracts.
In 1995 ar>d 19%, Energy Supply began to capitalize on its core strengths - steam and combustion turbine plant maintenance, power plant performance testing and fuel s services - to generate additional revenues by serving other companies and customers.
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Today, Energy Supply's System Maintenance Crew is well Ineup.!.upph;m mit./HI preo prepared to support the business unit's growth strategies.
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1 r3 In 1996,it won competitive bids for several maintenance energ c un;duc m on! D cs1at W /er c u,o contracts, including one agreement with Seminole Electric punt <. an ann.no um onist cosMfu u ot Cooperative,Inc.to perform boiler maintenance at e 8-ge
"' f *1a coal-fired plant located near Jacksonville, Fla.
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' Also in 1996, Energy Suppi upgraded two combustion b"1MI f ' ""M A a pn L'h" mM t <".t f
turbines at intercession Oty in Central Florida by converting
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them to operate on natural gas as well as oil. The ability to m 'rw teu punts And m the f uture x. ostom,n am nand gm.:s
<e < u ado use either fuel gives Florida Power greater flexibility and g.m,o atum < anci% m a m ounpentN,-
helps lower operating costs. Four more conversions of com-t u.t bustion turbines to dual-fuel units are planned in 1997.
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n s :nx Florida Power's Energy Delivery business unit is responsi-gg 99,g g.,..g 1yg <n,g,n ble for maintaining and expanding the utility's reliabie, cost-o,. to or a r d on i suda efficient transmission and distribution network. It operates Po' u o.ve i olesand cnes the state's second-largest electric grid, serving 1.3 million
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Energy Delivery's experienced work force is cost con-o g,,,
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scious and dedicated to keeping the system operating 3 nug o,k u.nutr acon,nen to smoothly. In 1996 employees implemented new practices
, u -nen} m ojeunons and m.nnte to strengthen Florida Power's customer service.
muu ym yn.coe semue It1 mn oom
- h. p' oi nte eleit e ity b i ft;u nta Pm :er For example,an extensive inspection program, imp!e-w, j
g, mented during the year, identified and corrected existing pm g g, n, jsg n, g injn,, p, g g. g t and potential maintenance problems. Also in 1996, Energy
' takum onu the opeutum of emhou Delivery negotiated favorable long-term contracts with amnn>unon s.siew Ag e c paa
< o n n.c a-12 a
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{ tree-trimming compar,ies to help further reduce service interruptions to
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In September 1996 Energy Delivery employees assisted utilities in
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lthe Carolinas with power restoration efforts following Hurricane Fran.
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lWhen called on to help during such emergencies, Florida Power line t
crews and support staff continually earn praise for their efficiency and eprofessionalism.
! Also in 1996, Florida Power continued to expand its distribution system'"i, 2
lto serve its customers today and those in the future. To better support the h!'
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! rapidly grow'ng Central Florida area, Energy Delivery recenti transferred its f
(transmission and distribution engineering design and operations staff to y
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lthe Orlando area. This move,which involved about 150 employees, locates the company's Energy Delivery resources closer to Florida Power #s fastest-c,
! growing customer region.
i Pow:rMzrketing l he increasingly competitive wholesale power market. The group works Formed in 1996 the Power Marketing Group buys and sells energy in
~ '
- t l optimize Florida Power's generation through bulk energy sales. And,by l negotiating economical power purchases,it is able to reduce the utility's l operating ccsts.
A Florlds Power crew Installs underground l In 1996 the Federal Energy Regulatory Commission adopted new rules 0r da res.
requiring open access to the nation's transmission systems. This was part of
!an ongoing effort to make wholesale electricity markets more ccmpetitive. Regulators set
! guidelines to ensure comparable treatment for all transmission users in the wholesale
' power market.
t j In response, Florida Power decided to aggressively pursue additional wholesale power l business. To support this effort,a sophisticated energy trading center was built at Florida
- Power's corporate headquarters in St. Petersburg. The new Nrading center opened in December 1996.
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l Wholesale power sales currently represent about seven l percent of Florida Power's business. This willincrease to
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keight percent in 1999 when the company begins selling an hdditional 455 megawatts of power to Seminole Electric pooperative,inc. In 1996,the Power Marketing Group also lsuccessfully negotiated contract extensions with four cities S
that buy wholesale power from Florida Power.
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hn:rgy Sclutions Customer needs and expectations are changing rapidly ss the electric utility industry becomes more competitive.
lventually, customers will be able to choose their energy
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The customers of tomorrow likely will be asking Florida A florlds Power energprder at ##e conspang new trading center in St. Petersburg, fis.
wer to provide them with more than kilowatt-hours;they ill be seeking energy solutions. That's what led Florida Power to create an Energy Solutions usiness unit - a group committed to retalning customers and adding new ones.
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Vice President...
Energ0 Golutio's n
L' Flonda Powet Qgiparatton
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. H'o'w do yondee the futote'of Energ[
Ssytions?
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. We intend to use emer in~g. tech-
.. ology to evely pro cts and l-serv es that
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ch cor tition filows j
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l Case at Florida Powers business effice kt Clearwater, Fla.
W e
at s por1uhttys to-of te r
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services along-wit iur ist g
1 Energy Solutions approaches customer service as if cus-h K.i b
a pil.t study.
in tw e nm hcatens tomers already have the right to choose. The business unit 4k rc st continue: to improve customer service,thyks in large mea-d sure to computer enhancements in 1996 to Florida Power's 1
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a ge advanced Customer Service System. The average response ti i
c tio iand.
time to customer service calls improved dramatically over
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ti se as veir as' 1995.
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l Energy Solutions is interested in customer opinion. A new
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- measure customer satisfaction and guide the company in L
4e 4[ 91]ij l maklag improvements in customer service, f.
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Franc.hise renewals are a good indicator of how well Florida h'._
Power is meeting customer expectations. In 1996 20 franchise
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agreements with municipalities were either amended or l renewed. One of those renewals was w:th the city of St.
l Petersburg,the largest city served by Florida Po.ver.
l A year ago,the second-largest municipality in Florida Power's
! service area - the city of Clearwater - renewed its 30-year l franchise agreement with the company. These contracts provide
! both Florida Power and the franchised communities it serves l with greater stability in the future.
l In 19%, Energy Solutions introduced a new marketing plan i designed to guide its business strategies. The plan helps identify l ways to increase customer satisfaction and prepare for increasing
! customer choice as weil as the development of new products florlds Power is testing customer acceptance of s new l and services.
prevenure maintenanceprogram.
{ customers protect their appliances and equipment against. service interruption One new program offers a wide range of power-quality options, designed to help a
i power surges. Energy Solutions also is testing several promising new products and services to determine their acceptance by customers.
For example, employees are developing a service that will offer large commercial and j industrial customers the option of having Florida Power install, manage and maintain their
' electrical equipment. And,for residential customers,the company is piloting a program that offers preventive maintenance for home heating and cooling equipment.
The most innovative program under way l Is a new two-way communications pilot
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- project being developed with Scientific-k l Atlanta,lnc.,one of the nation's leading N
g i communications technology companies.
( The project will test such services as auto-l matic meter reading, remote outage detec-
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In the future,this communications link
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with customers could enable Florida Power to offer aciditional technology-related ser-
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. h-vices like enhanced energy management, J
4 medical monitoring and home security.
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c Energy Solutions is at the forefront of the company's efforts to offer more services and
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grow beyond its current service territory.
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7 The new products and services being
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developed will offer existing and potential Several hundred homes in the Hunter's Creek community near Kissimmee, fis. are customers a powerful.sncentive to choose being equipped with a special twe way commutigations link to florlds Power.
Florida Power as their energy provider.
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~ IECTRICFUELSC0RP0 RATION E".
Electric Fuels'three strategic business units represent the verticalintegra-tion of energy and transportation,a good strategic fit for Florida Progress,
?,y 3 Y, supporting utility operations and providing excellent growth opportunities.
%4 Electric Fuels' mission is to be the supplier-of-choice in targeted domestic g
g" and foreign markets.
1 The company's Energy and Related Services business unit supplies coal to 4
Florida Power's Crystal River 2nergy Complex and other utility and industrial g
customers.
/
Electric Fuels' inland Mariae Transportation business unit,under the flag
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of Marine Equipment Management Corporation (MEMCO), transports coal and dry-bulk cargoes primarily a'ong the Mississippi and Ohio rivers.
The Rail Services business unit, led by Progress Rail Services Corporation, is one of the largest integr ated processors and suppliers of railroad materials in the country. With operations in 14 states, Progress Rail offers a full range of railcar parts, rail and other track material, railcar repair facilities, as well as railcar sales and leasing Electric Fuels' earnings from operations before the nonrecurring charge in i 1996 has increased are average of 22 percent annually for the past three oest cIc'oa at[he is onb*[sy$al years. Return on equity has averaged 14.1 percent over the past three years.
s Mine in Vicco, Ky.
Energy and Rett,ted Services The Energy ana Related Services unit produces and procures coal from mines in central Appalachia,and trans' loads and transports it to Florida Power's coal-fired plants in Crystal River, Fla. Florid a Power,its largest single customer, purchases about 5 million tons annually,which represents approximately 30 percent of Electric Fuels' annual revenue.
The unit's operations indude coal mines, river terminals and ocean-going tug-barges.
Energy and Related Services plays a significant role in helping Florida Power achieve the J
lowest generated cost per-kilowatt-hour for coal-fired plants among Florida's investor-owned electric utility companies.
The unit's focus on high-quality, low-sulfur
^
coal gives it a long-term opportunity in spe-e e; L cialty and niche markets that are generally more profitable than the utility coal market.
lts premium products include pulverized and I g
granulized coal,as well as special blends used a
C in various industrial applications.
Electric Fuels owns or controls substantial j
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as southwestern Virginia. In 1996, Energy and '
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Related Services initiated a Total Quality i
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tions to counter the effects of the stagnant F.
eastern coal market. As a result, unprofitable i
mining operations were shut down. The clos-l 1
ings will allow the company to reduce costs Electric fuels' barges carry coal along the Inland river system.
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Richard D. Keller newv a & Onef
/ t h <!!'t e l }ffo t" t A f a l,iefs th ujnn,)[sia Ili 'hc Le.t f o e :lcW %f I1;f tin f att,-
i,& acerauerl !nor e than ?O pertent e,p rung', pH shate pne th f rom,lP.
- 1Wp H'\\q tipt aid dli What a the <nitlook im 9,e ne a t ce,;ema 1 e spet i i(. ' et,t i t ultirtuation (Jf deuDie (huit emrungs gro /th for the 6 a ewe,ane f at,o e oai f neiw. anc\\
Keller al Florida Power's Crystal River Energy Complex In Citrus County, Fla.
kat t Se' h e. u:aup Juttated a {oit u.aM, Ma%)en sent P ogiam m 1996 L c, c n it. t h. et+ei t.. <,t pcu n n hu ket l
. n e19,! n n, F. ef,te m < md WeIec,ee and concentrate on improving the productivity and product o
.ig
- m. o ne g, n nl ' m,' HP. h (n h th6 effint quality ofits remaining mines.
y c m M u n-Ecupmtatnu. ano o R, n,a. U n e # to ta v To deliver coal cost-effectively, Electric Fuels owns a net-m m, e : p-n opport nune, work of terminals and transioading facilities, including docks e.a o m na*ue nee on the Ohio, Kanawha and Big Sandy rivers. The company
..g e.t.c H S ' m * & geh also owns an interest in International Marine Terminals on
- v. 3 : - - ' av to cma + ?neD the Mississippi River near New Orleans. Further,it owns
.. 7.,. m.m 9. o,. y e, - "#F s ecially designed ocean-going tug-barge units that trans-a g - wie, N. o. e m um port coal to Crystal River. Electric Fuels also transports other
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E k'5 inland MarineTransportation E
Electric Fuels has a modem and rowin9 ar9e fleet 9
b that is positioning the company to take advantage of many E
future opportunities. MEMCO transports coal, agricultural and other dry-bulk commodities up and down the Ohio
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MEMCO launched its strategy of acquiring new river
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depressed and hauling rates were low. Barges were not
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being replaced; shipyards were idle, Seeing an opportunity, d[""
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additional barges in subsequent years. This assured MEMCO mimmed ornumes' twnd. ano on Of a Consistent source of new barges at favorable prices.
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When riva commerce started to turn around, hauling rates climbed. At that time,MEMCO.was prepared to take advantage of the favorable market with capacity to meet the increasing demand. Today, MEMCO operates 700 barges with an average age of seven years, compared with most competitors,whose fleets average 15 years and older. The newer barges have been designed to allow deeper draft loading than conventional barges. The deeper loading allows 10 to 25 percent more tons of cargo to be carried per trip. This additional loading capacity, combined with a lower maintenance cost and longer useful life,in excess of 25 years, provides a distinct market advantage to MEMCO.
For the foreseeable future,the company intends to keep exercising its options to buy high-payload barges and addi-tional towboats at competitive prices.
MEMCO is expanding to serve diverse dry-cargo markets
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Acquisitions and internal expansion have helped make
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Progress Rail Services Corporation one of the largest inte-
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country.
Progress Rail serves all of the country's major railroads.
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It buys used railcars, surplus rail and other track materials;
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reconditions and manufactures railcar parts; sells and leas-es railcars; sells new and used rail and other track compo-
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2-The company's strength is its responsiveness to cus-u(M W
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tomers. Progress Rail has built a solid reputation for on-
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time delivery, comprehensive services and unsurpassed i
flexibility in meeting customer needs. These advantages 1
4 have translated well in foreign markets. The company sells l in Mexico, Canada, South America, Australia and New l
Zealand.
In the United States, mergers continue to reduce the j
number of major railroads. As consolidation continues,the
~ '.
l large railroads focus on their core business of transporta-tion,which greatly increases their operating efficiencies MEMC0's deep 4 raft barges are capable of carrying more cergo than consnuonal barger, g/r/ng the company a compenum advantage-and enhances their ability to compete in the overall trans.
portation market. This trend also presents growth oppor-tunitles for Progress Rail as the railroads increasingly outsource services previously provided in-house. Progress Rail also serves a growing number of shortline and regional railroads.
l Another market condition that offers an advantage to Progress Rail is the extended use of l
i tne nation's existing railcar fleet. This longer service life is expected to increase demand for repair services. P,rogress Rail is constructing a technologically advanced railcar repair facility in Kentucky to take advantage of new business opportunities.
~
In July 1996, Progress Rail acquired Railcar, Ltd.,a railcar leasing company. In August 1996, Progress Rail acquired the assets of Mansbach a
Metal Company,a metal recycling and railcar dismantling, repair and leasing company. These
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acquisitions complement Progress Rail's other
~ :
operations, including one of the country's i
largest networks of nonrailroad-owned wheel
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shops. Progress Rail also owns a new trackwork manufacturing facility and a company that man-t ufactures hydraulic-cushioning units for freight
.~
. cars. In addition, Progress Rail operates railcar l
repair shops, freight car parts refurbishing facili-ties, scrap metal recycling facilities,and railcar A machinist cuts a section of rail at a Progress Rallplant In Decoursey, Ky.
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.o 9 1,o x v : n; lexas. Theplantmanufacturesandreconditionshydraulic-cushioning units for ralicars.
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Florida Progress Corporation is at the forefront of the 3
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opportunities today.
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The following section, Management's Discussion &
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Fiorida Progressinto the future.
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OPERATMOESMT5 recorded a $263-million charge to eamings for the write-d wn of certain assets of Echelon and other costs associ-Florida Progress'1996 consolidated earnings from con-ated with the divestiture. Echelon is reported as discon-tinuing operations were $250.7 million,or $252.4 million t, ued operations. (See Note 10 to the Consolidated m
befora nonrecurring items. This compares with $238.9 mil-FinancialStatements on page 41.)
lion in 1995 and $212 mill;on in 1994. Florida Power eamed
$232.6 million in 1996, compared with $217.3 million in in December 1996, Florida Progress sold its 80-percent 1995 and $190.7 million 61994. Earnings from continuing interest in Advanced Separation Technologies,Inc.for
$56 million and realized an after-tax gain of $23.5 million, diversified operations were $19.8 million in 1996, compared with $21.6 million in 1995 and $213 million in 1994.
or $.24 per share.
Mid-Continent Life Insurance Company's earnings have
~ ~.
9 y
EARNINGS PER SHARE,
declined in each of the last three years primarily due to t
l1996-199s 1994 declining sales of its primary life insurance product and g
I Flo6ida PowerCorporation ' '
$2.40
'$227
- $2.05 e higher death-benefit claims.
I Electric Fuels Corporation.
'.28 -
425
. 25 In December 1996, Electric Fuels recorded a $252-ki-continent ufeinsurance Co.1 102
.07 ', y.08 :
million after-tax charge to earnings to establish a provision
{@0ther
' (.09) '
1 09)
~ 1.10)"
for loss on its unprofitable coal properties, now available e mesmed
.21 23
.23 for sale. The provision was necessary because manage-ment did not consider the unfavorable market conditions no r ing e
.2.s1 l s 2.50f, 22s i forloW-sulfur coalto be temporary.
Provision forloss on x
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4 n coatproperties. F C 1.as) :
- L '
The financial return on Florida Power's common equity was 12.9 percent in 1996 compared with 12.7 percent in f Gain on sale of business
.24 1--
3 Total continuing' operations g 2.se.
. 2.50 228 1995 and 11.9 percent in 1994, increases in retail energy sales and tight control over costs are enabling Florida
- Discontinuedoperations
. (.27) y consolidated '
$2J2 -
$2.50
'$228 Power to maintain its return on equity and continue its earnings growth. Florida Progress' diversification strategy e
,e Florida Power's 19% earnings per share were up 5.7 has centered on growing Electric Fuels. Return on equity percent over 1995 primarily due to continued customer from the energy and transportation subsidiary, before its i
~
growth. Residential customer growth of about 2 percent provision for loss on coal properties,was 14 percent in in 1996 continues to have the most significant effect on 19%,13.8 percent in 1995 and 14.5 percent in 1994.
[
Florida Power's earnings growth.
[
Contributing to Florida Power's 1996 eamings growth FLORIDA POWER CORPORATION were lower mterest and preferred dividend charges for 1996, compared with 1995. Lower debt balances resulting utility Competition l
from improved cash flow and the redemption of preferred in 1996 the Federal Energy Regulatory Commission stock lowered these costs by $10 million, issued new rules on transmission service to facilitate com-petition in wholesale generation on a nationwide basis.
The increase in 1995 earnings per share when com,
~
The rules give greater flexibility and more choices to pared with 1994 was due in part to certain charges in wholesale power customers.(See Note 1 on page 34.)
1994 that related to work-force reductions and the write, off of a proposed natural gas pipeline project. These Florida Power established a Power Marketing organiza-ch rges totaled $15.4 million,or $.16 per share,in 1994.
tion as part of its response to the new rules issued by fed-eral regulatos. The rules are designed to encourage
~ In 1996, Florida Progress made significant strides increased competition in the wholesale power market.
tow rd accomplishing its objective of divesting itself of businesses that are not strategically related to its core in 1995, Florida Power was successful in obtaining a businesses - Florida Power,the electric utility, and three-year agreement to provide an additional 455 Electric Fuels Corporation,its energy and transportation megawatts of power to Seminole Electric Cooperative, subsidi:ry.
Inc., beginning in 1999. The cooperative is Florida Power's in December 1996, Florida Progress completed the largest wholesale customer. The contract will increase annual wholesale revenues by more than 40 percent and divestiture of Echelon International Corporation,formerly Progr:ss Credit Corporation,through a tax-free stock divi-is projected to expand this market segment to about dend. As a pa-t of this transaction, Florida Progress eight percent of total salesin 1999, b
A major portion of Florida Power's retail business is Utility Revenues and Sales covered under terms of fr:nchise agreements with munic-ipalities and counties. In 1996,15 franchise customers Florida Power's operating revenues were $2.4 billion in clected early renewal of their 30-year agreements with 1996, compared with $2.3 billion in 1995 and $2.1 billion i
in 1994. Revenues rose in 1996 and in 1995,primarily Florida Power while five amended their existing agree-because of customer growth and continued improvement ments. The utility believes quality service and competitive in the economy, rates will continue to be important factors as other fran-chise agreements come up for renewal. No franchise The utility's retail kilowatt-hour sales increased 2.9 agreements representing significant revenues are due to percent in 1996 and 7.8 percent in 1995. Residential cxpire before the year 2000*
customer growth was about 2 percent in 1996 and in The power generation segment of the electric power 1995. Florida Power's annual customer growth rate contin-business is expected to be the most competitive in a ues to be twice the national average for electric utilities.
deregulated environment. While Florida Power's total Beginning in 1995, Florida Power was ordered by the production costs are comparable with the other investor-Florida Public Service Commission to conduct a three-year owned utilities in Florida,the utility is committed to further test of residential revenue decoupling. This ratemaking improving the efficiency ofits power plants. In 1998,a concept is designed to eliminate the direct link between new 470-megawatt natural gas-fired combined-cycle kilowatt-hour sales and revenues. Under revenue power plant is planned to be in service. It is expected t decoupling, abnormal weather does not impact earnings be one of the most cost-effective plants in the country.
from residential sales,which represents the single-largest customer group for Florida Power. A change in customer The pace of change in the electric utility industry con-usage due to extreme heating or cooling conditions will tinued to accelerate in 1996. Today, there are a record number of mergers pending in the industry. Many U.S.
not have a material effect on Florida Power's eamings, clectric utilities are merging or forming alliances with whereas customer growth and higher usage due to non-weather-related factors can affect earnings. (See Note 1 utilities overseas or investing in international projects.
on page 34.)
Several states are pursuing electric utility restructuring plans to provide retail customers with a choice for their Under Florida Power's revenue decoupling plan,the cnergy suppliers.
utility recorded a regulatory liability of $3.6 million for I
1996 and $18.7 million for 1995.
The momentum for retail competition has not been i
as strong in Florida as it has been in other states,where Fueland Purchased Power some provisions for retail choice have be en passed.
Fuel and purchased power costs primarily are recov-Competitive electric rates and the comparatively small ered through an adjustment recovery clause established number of large industrid and commer< lal customers are by state and federal regulators. Fluctuations in these costs the main reasons there has been less inuentive for change have little impact year to year on net income, but could in Florida. There is proposed federal let islation that could become increasingly important in a more competitive be enacted in the next couple of years : hat would expe-environment, dite the development of retail customt r choice in all Fuel and purchased power costs increased $152.2 states.
mill:an in 1996. This increase was offset by the deferral of Florida Power is regulated by the F orida Public
$82.3 million,which is recorded as a regulatory asset. The 5 rvice Commission and the Federalinergy Regulatory increase resulted primarily from the need for replacement Commission. The utility is able to capitalize er rbfer power due to an extended maintenance outage at the c:rtain costs or revenues if it is probtble these items will Crystal River nuclear power plant.
be recovered through the ratemakin g process. In the in January 1997, Florida Power filed a request with the future, regulatory changes due to co mpetition or other Florida Public Eervice Commission to increase fuel rates to reasons could result in the write-off of re,quiatory asset' recover the deferred costs of replacement power incurred and liabilities.
through March 1997. Florida Power expects to file an Florida Power b committed to pro viding high-quality, additional request with state regulators in 1997 for cost-competitive service in order to f etain custnmers replacement power costs that are incurred after March.
while, at the same time, developing new products and Management believes that state regulators will approve services that will attract new custon ers.
the increase in rates.
In 1995, fuel and purchased power costs increased
$147.7 million over the previous year. This was due to increased purchased power costs and higher system requirements. For 1997, fuel and purchased power costs b
likely will increase over 1996 because of higher replace-Depreciation expense incr:ased by $30.5 million in ment fuel costs associated with the expected unavailability 1996 and by $32.2 million in 1995. In 1995, Florida Power
- of the nuclear unit for most of 1997.
began amortizing $23.9 million of accumulated costs for Florida Power receives 1,050 megawatts of total capaci-the canceled Lake Tarpon-Kathleen transmission line over a four-year period. However,the utility chose to acceler-ty from cogeneration facilities. In 1996,the company ate amortization and complete the write-off in 1996.
spent $222 million for purchased power under these con-Florida Power also wrote off two oil-fired power plants in tracts. This represented 24 percent of system fuel and 1996 that were placed in extended cold shutdown in purchased power expenses for the year.
1994, increasing depreciation in 1996 by $11.7 million.
Costs associated with those contracts raised Florida Other factors contributing to the increase in 1996 were Power's system average cost for generation in 1995 and plant additions, pnmanly distribution facilities. The 1996,and this trend is expected to continue.
increase of $32.2 million in 1995 over 1994 wcs pnman,ly Florida Power is continuing to seek ways to mitigate due to new combustion turbines added in late 1994 and the impact of escalating payments from contracts it was increased nuclear decommissioning costs.
obligated to sign under provisions of the federal Pubhc Utilities Regulatory Policies Act of 1978.
Nuclear Operations One strategy being pursued is to buy down those After completing a record performance in 1995 by contracts that have prices that are projected to be above achieving a capacity factor of 100 percent,the Crystal future market prices. While paying a discounted price River nuclear power plant was shut down for much of today for these future obligations increases costs in the 1996. Beginning in February,the plant underwent a short t rm,the long-term benefit to ratepayers can be scheduled refueling outage that lasted until May when significant.
the plant returned to service.
Florida Power has several purchased power buy-down In September, an oil pressure problem in the main proposals before state regulators as well as a petition t turbine forced the plant to shut down until repairs could acquir; the 220-megawatt Tiger Bay cogeneration facility be made. When the repairs were completed in October, for $445 million. Tiger Bay is Florida Power's largest Florida Power decided to keep the plant down to address cogeneration power suppher, representing more than certain backup safety system design issues.
20 perc:nt of the 1,050 megawatts of total capacity the The primary issue involves an electrical loading prob-company receives from cogeneration facilities.
Iem with one of the plant's two emergency diesel genera-tors that are part of the emergency core cooling system.
Other Utility Expenses These generators would be activated in the event there is Utility operation and maintenance expenses increased a loss of off-site power. The utility is assessing several by $19.7 million in 1996. The increase was due primarily ptions to address the diesel loading issue and expects to to additional costs associated with the extended mainte-be able to restart the plant in the fourth quarter of 1997.
nanc2 cutage of the nuclear plant and expenses related The Nuclear Regulatory Commission established a special to improving service and reliability.
panel in late 1996 to provide regulatory oversight to in 1995, operation and maintenance expenses restarting the nuclear plant.
decr:ased by $18.5 million when compared with the pre-The Nuclear Regulatory Commission was critical of the vious year primarily due to companywide cost-reduction plant's overall performance in 1996, particularly in the efforts. The utility's commitment to cost control has areas of management oversight and engineering. In resulted in minimalincreases in operation and mainte-January 1997,the commission placed the Crystal River nance costs except for nuclear outage expenses. The nuclear plant on its" Watch List"as a plant whose opera-utility's goal for 1997 is to limit increases in nonnuclear tions will be monitored closely. Florida Power is disap-operation and maintenance costs to less than the national p inted with the commission's action,but remains com-inflation rate.
emen 9 sa e, a
and coMede Recoverable energy conservation program costs decr:ased by $21.4 million in 1996 and by $20.3 million in Florida Power hired two senior nuclear officers and 1995 due to a reduction in the credits paid to customers added other personnel to further strengthen the plant's who participate in the company's load management pro.
engineering staff. The utility's nuclear management and gram. The reduction began in April 1995. The change had staff have developed a thorough corrective action plan no significant impact on earnings because Florida Power that is designed to address those areas identified by regu-r: covers substantially all of these costs through a clause I tors as needing improvement. Florida Power's manage-in clectric rates similar to the fuel adjustment clause.
ment is confident that its action plan will return the unit to top performance.
' Unplanned operating and maint:ntnc2 expenses,and c: pit:1 costs usociated with th? extinded outig2 are not coal. The incr:ase was expected because of mor stringen expected to materially impact earnings.
sulfur dioxide cmission requirements imposed on electric utilities by the Clean Air Act amendments of 1990. The su ply of inexpensive low-sulfur coal from mines in the west-DIVERSIFIED OPERATIONS ern United States and the low cost of emission allowa For several years, Florida Progress has been executing credits have kept the price of central Appalachian low-an orderly withdrawal strategy from those diversified sulfur c 11 werthan originallyprojected, operations no longer related to its core utility and energy Because these coal market conditions are not consid and transportation businesses. Two restructuring deci-ered by management to be temporary, Electric Fuels.
- sions were made in 19% that had a significant impact on established a provision for loss on its unprofitable coal eamings from diversified operations. The spin-off of pr perties.
Echelon resulted in a $26.3-million after-tax charge to Electric Fuels has a business plan to improve productivity earnings while the sale of Advanced Separation Tech-and quality control in its coal operations in 1997. The plan nologies contributed an after-tax gain of $23.5 million.
calls for increasing output from the company's remaining Another nonrecurring item that affected 1996 diversified mines and directing production to higher-profit markets.
earnings was the provision for loss on unprofitable coal Earnings from Electric Fuels in 1996, before the provi-properties owned by Electric Fuels. This resulted in an si n f rI ss on unprofitable coalproperties,were $27.1 after-tax charge of $252 million or $.26 a share, million, compared with $24 million in 1995 and $22.6 million in 1994. The $3.1-million increase in 19% was due Electric Fuels Corporation largely to better results from Electric Fuels' energy and Electric Fuels, Florida Progress' energy and transporta.
related services operations.
tion subsidiary,has three principal business units: energy Before the provision for loss on coal properties in 19%,
cnd related services, inland marine transportation and rail Electric Fuels' earnings yielded a 22-percent average e
services. Florida Progress continues to build on Electric annual compound earnings growth rate over the last Fuels' existing operations through internal expansion and three years and averaged 14.1 percent retum on equity by pursuing new market opportunities, primarily with its for the same period.
inland marine transportation and rail services units.
4 In July 1996,an Electric Fuels subsidiary, Progress Rail ninen
- In5urance mnPany Services Corporation, acquired Railcar,Ltd.,an Atlanta-When Mid-Continent was acquired in 1986,it sold a based railcarleasing company. In August, Progress Rail Popular, low-priced death-benefit insurance policy. Over acquired the assets of Mansbach Metal Company,a metal the last few years,the insurance industry has become recycling and railcar dismantling, repair,and leasing com.
m re c mPetitive,resulting in lower sales of new policies pany based in Ashland, Ky. Progress Rail is one of the at Mid-Continent.
largest integrated suppliers of rail services in the United A new management team at Mid-Continent deter-States with locations in 14 states. Revenues from rail ser.
mined that the old product was not adequately priced.
vices in 1996 were $355.5 million,an increase of $33.3 in 1996, Mid-Continent replaced its existing policy with a I
million over 1995. The increase is due to recent acquisi.
new product callea" Basic Life." It resembled the old prod-tions and increased sales volumes as railroads continue uct that had been the company's principal policy, but outsourcing much of their service and repair needs.
offered more flexibility and guarantees to policyholders Expansion of Electric Fuels'infand marine trans-at a higher price.
portation unit has been achieved primarily through the Mid-Continent was hoping to rebuild market share and purchase of river barges. At the end of 1996,the unit achieve increased profitability with the " Basic Life" prod-
~
operated about 700 inland river barges with a commit.
uct. Sales of the new policy,however,have not met man-ment to purchase approximately 200 new high-capacity agement's expectations.
barges in 1997 and options for additional units in 1998 in December, Mid-Continent reduced its work force to cnd beyond if market demand warrants additional expan-be able to compete on a more focused and cost-efficient '
- sion. Expansion of the fleet is expected to enable Electric basis. In 1997, Mid-Continent plans to begin an orderly Fuels to increase its market share by focusing on long-process to resolve the pricing issue that is expected to term contracts with guaranteed volumes for hauling coal, involve reducing policy dividends and increasing wood chips, agricultural products and other dry cargoes.
premiums.
j i
Electric Fuels began purchasing low-sulfur coal proper-ties in the late 1980s as part of a strategy to take advan-tage of the expected increase in demand for low-sulfur i
28
i Mid-Continent does not fit with the long-t:rm strategic proceeds of $92.2 million. In Dec:mber 1994, Electric Fuels direction of Florida Progr:ss. It is expected to take three acquired FM industries,Inc.for 700,000 shares of Florida j
, to five years for Mid-Continent's business plan to result in Progress common stock.
sufficient value before Florida Progress can prudently
. Florida Progress contributed $12.5 mhlion in 1996, $50 divest this business.
mi!! ion in 1995 and $130 million in 1994 to Florida Power I
Mid-Continent's eamings in 1996 were $1.9 million, from the proceeds of the holding company's public stock compared with $6.5 million in 1995 and $7.3 million in offerings and the Stock Purchase Plan. These funds were 1994. Florida Progress does not expect significant future-used to further strengthen Florida Power's financial
. carnings contributions from Mid-Continent.
position.
1 Florida Progress' capital structure as of December 31, Other 1996,was 51 percent common equity,48.1 percent debt Fl: rid 2 Progress adopted several new accounting stan-and.9 percent preferred stock of Florida Power. Florida dards during the last three years.(See Note 1 on page 34.)
Progress' goal is to maintain capital structures for its utility j
Florida Power and a former company subsidiary have and diversified operations at levels that will enable its J
been notified by the U.S. Environmental Protection subsidiaries to preserve their current credit ratings.
Agincy that each is or may be a potentially responsible i
party for the cleanup costs of several contaminated sites.
L CREDIT RATINGS ~
(See Nots 11 on page 43.)
Standard '
Duff a ~
' Florida Progress has off-balance sheet risk related to
&Bmd Moodyi Ebeim :
debt of unconsolidated partnerships. (See Note 11 on
[ Florida rowercorporation page 42.).
First mortgage bonds
' AA-
- Aa3 :
- AA-
- Medium-term notes -
'. A+ -
, A1 1+ '
i Even though the inflation rate has been relatively low
' commercial paper.
- A-li P 'D4+"
- 3..
during the last three years, inflation continues to affect Florida Progress by reducing the purchasing power of the Progress CapitalHoldingsinc :
dollar and increasing the cost of replacing assets used in Medium-term notes.
- A ',,
A2 ;
th business. This has a negative effect on Florida Power
[ mmercialpaper f
- A4 N*
because regulators generally do not consider this eco-p nomic loss when setting utility rates. However,such losses
' are partly offset by the economic gains that result from Florida Power's construction expenditures in 1996 thi repayment of long-term debt with inflated dollars.
totaled about $217 million. This was primarily for distribu-tion lines and other facilities related to the utility's grow-UQUIDITYA##GPITAL#E50&#GS ing cust mer base. Florida Power's five-year construction program totals $1,4 billion for the 19970001 forecast Cash from operations has been the primary source period. It includes planned expenditures of $372 million, of capital for Florida Progress. Other sources of capital
$307 million,$252 million,$230 million and $269 million included proceeds from the sales of properties and busi-for 1997 through 2001. Florida Power expects construc-nesses, debt financing, issuance of common stock and the tion expenditures during this period will be financed with orderly withdrawal from the company's lending and leas-internally generated funds.
ing and r:al estate portfolio.
Florida Power has agreed to acquire the 220-megawatt Florida Progress has been issuing new equity in recent Tiger Bay cogeneration facility for $445 million using debt ye:rs primarily to fund Florida Power's construction pro-financing in 1997, subject to approval by other parties.
9 ram. Florida Power is forecasting lower construction Tiger Bay is Florida Power's largest cogeneration power cxpenditures in the years ahead. The utility does not supplier.
cxpect construction to require any significant increase in Amendments to the Clean Air Act in 1990 require elec-equity or debt over the next five years. Because of the tric utilitie to reduce sulfur dioxide emissions. Florida reduced equity requirements,the Stock Purchase Plan Power expects to meet these requirements with minimal
' began purchasing shares in the open market instead of capital expenditures.
Issuing new shares beginning in July 1996 in 1996, Florida Power's net cash flow to capital expen-For the first half of 1996 and for all of 1995 and 1994, ditures was 175 percent. In addition to funding its con-new equity was issued through the company's Progress struction commitments with cash from operations, Florida
, Plus Stock Plan. During the last three years,the company Power receives equity from Florida Progress and accesses
, raised $103 million of equity capital through its Stock the capital markets through the issuance of commercial
. Purchase Plan. In a May 1994 public offering, Florida paper, medium-term notes and first mortgage bonds.
Progr:ss sold 3.6 million shares of common stock with net b
i Florida Power has a public $300-million, medium-tirm El:ctric Fulls' rail services unit is expected to continu2 note program, providing for the issuance of either fixed or to grow by cxpanding geographically into ths Midwest floating interest rate notes,with maturities that may range and western markets. These expenditures are expected from nine months to 30 years.
to be funded through cash generated internally and from I Florida Power's interim financing needs are funded outside financing sources.
. primarily through its commercial paper program. The utility has a 364-day revolving bank credit facility and a FONMD-LOOMGSTMEMENTS five-year facility, $200 million each,which are used to back in this report, Florida Progress has projected the popu-up commercial paper. (See Note 6 on page 38.)
lation will grow to 5.1 million in Florida Power's service Florida Power used additional cash generated by area by the year 2000, sustained earnings growth of four operations to redeem $105 million of preferred stock in to five percent for Florida Progress over the next five 1996 and reduced total debt levels by about $145 million years,and double-digit earnings growth at Electric Fuels.
l in 1995.
The company also has projected that Florida Power's Florida Power's embedded cost oflong-term debt was nuclear unit will return to service in the fourth quarter of:
7.2 percent as of December 31,1996 and 1995.
1997, and that the outage will not have a material impact ]
on the company's overall financial results. The company
. Diversified Operat. ions believes that it will take three to five years to rebuild suffi-.
Progress Capital Holdings,Inc.,the downstream hold-cient value in Mid-Continent before that company can be I ing company of Florida Progress, consolidates the collec-divested at fair value.
tive financial strength of these operations and,with the 1
' benefit of a recently amended guaranty and support Risk Factors i
agreement with Florida Progress, helps to lower the cost These statements,and any other statements contained !
of capital of the diversified businesses. Progress Capital in this report that are not historical facts, are forward-funds diversified operations primarily through the looking statements that are based on a series of projec-
)
issuance of commercial paper and medium-term notes, tions and estimates regarding the economy,the electric (See Note 6 on page 38.)
utility industry and the company's other businesses in i
Progress Capital has a private $300-million, medium-general, and on key factors which impact the company l
term note program for the issuance of either fixed or directly. The projections and estimates relate to the floating interest rate notes,with maturities that may
. pricing of services,the actions of regulatory bodies,the l
range from nine months to 30 years, in 1996, Progress success of new products and services,and the effects Capitalissued $178 million of medium-term notes with ofcompetition.
maturities ranging from five to 10 years. The proceeds Key factors that have a direct bearing on the compa-were used mainly to repay $140 million of maturing ny's ability to attain these projections include continued medium-term notes.
annual growth in customers, successful cost containment Progress Capital also has two revolving bank credit efforts and the efficient operation of the company's exist-facilities:a 364-day, $100-million facility and a five-year, ing and future generating units. Also,in developing its
$300-million facility. These facilities are used to back up forward-looking statements,the company has made cer-commercial paper. (See Note 6 on page 38.)
tain assumptions relating to productivity improvements in 1996, total diversified capital expenditures were and the favorable outcome of various commercial, legal about $41 million, primarily for operations at Electric and regulatory proceedings,and the lack of disruption to Fuels. In 1996 Progress Capital received net proceeds its markets.
q of $53 million from the sale of Advanced Separation if the company's projections and estimates regarding Technologies and expended $54 million related to the economy,the electric utility industry and key factors acquisitions made by Electric Fuels or its affiliates, differ materially from what actually occurs, or if various
. In 1997, diversified capital expenditures are expected proceedings have unfavorable outcomes,the company's to be about $88 million,with most of these planned actual results could vary significantly from the perfor-expenditures designated for operations of Electric Fuels.
mance projected in the forward-looking statements.
. The inland marine transportation unit plans to add new barges in 1997 as it continues to take advantage of market opportunities that expand its business.
28
~~-
.)
umm (in anillions except per share amounts)
FOR THE YEARS ENDED DECEMBER 31,19%,1995 AND 1994 1996 1995 1994 REVENUES:
$2,393.6.
$2,271.7
$2,080.5 Electric utility 764.3 736.1 644.8 Diversified 3,157.9 3,007.8 2,725.3 EXPENSES:
Electric utility:
409.7 431.3 425.6 Fuel 531.6 436.5 294.6 Purchased power 62.6.
84.0 104.3 Energy conservation costs 413.4 393.7 412.2 Operation and maintenance 324.2 293.7 261.5 Depreciation 183.6 176.2 162.8 Taxes other than income taxes 1,925.1 1,815.4 1,661.0 Diversified:
642.9-624.6 552.1 Cost of sales 40.9 Provision for loss on coal properties 66.6 58.9 51.1 Other 750.4 683.5 603.2 482.4 508.9 461.1 INCOME FROM OPERATIONS INTEREST EXPENSE AND OTHER:
135.9 139.4 141.5 Interest expense Allowance for funds used during construction
-(7.5)
(7.3)
(10.9) 5.8 9.7 10.1 Preferred dividend requirernents of Florida Power (44.2)
Gain on sale of business (4.2)
(9.9)
(2.4)
Other expense (income), net 85.8 131.9 138.3 INCOME FROM CONTINUING OPERATIONS BEFORE INCOMETAXE5396.6 377.0 322.8 145.9 138.1 110.8 Income taxes 250.7 238.9 212.0 INCOME FROM CONTINUING OPERATIONS
' (26.3)
DISCONTINUED OPERATIONS, NET OF INCOME TAXE5
$ 224.4 5 238.9
$ 212.0 NET INCOME 96.8 95.7 93.0 AVERAGE SHARES OF COMMON STOCK OUTSTANDING EARNINGS PER AVERAGE COMMON SHARE:
$2.59
$2.50
$2.28 Continuing operations
(.27)
Discontinued operations
$2.32
$2.50
$2.28 The accompanying notes are an integralpart of these Gnancialstatements.
1 29
y consouomosamsnm n ;;;g;;;;g;;IIIg l DECEMBER 31,1996 AND 1995 (Dollarsinmillions) l ASSETS 1998 199s a
t PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant in service and held for future use
' $5,965.6,
$5,867.5 Less: Accumulated depreciation
- 2,335.8i 2,179.7 Accumulated decommissioning for nuclear plant 193.3 165.2 Accumulated dismantlement for fossil plants 119.6 104.4
'3,316.9 3,418.2 Construction work in progress 140.3 131.8 Nuclear fuel, net of amortization of $356.7 in 1996 and $348.7 in 1995 59.9 59.1 Net electric utility plant
~ 3,517.1 -
3,609.1 Other property, net of depreciation of $173.8 in 1996 and $157.3 in 1995 E 309.31 307.0
)
'3,826.4-3,916.1
- Y d
d CURRENT ASSETS:
Cash and equivalents 5.2 4.3 Accounts receivable, net 265.0-307.3 Inventories, primarily at average cost:
j Fuel 67.1 63.0 Utility materials and supplies 95.4 -
1013 i
Diversified materials 125.5-111.0 Underrecovery of fuelcosts
.82.6.i
.3 Other 48.2 41.6 689.0 628.8 DISCONTINUED OPERATIONS:
Advances to discontinued operations 116.0 Net assets of discontinued operations 200.8 316.8 j
OTHER ASSETS:
y Investments:
Loans receivable, net Marketable securities 68.1
.51.5
'217.9.
188.2 Nuclear plant decommissioning fund 207.8 161.1 Joint ventures and partnerships 41.9 33.9 Deferred insurance policy acquisition costs 120.0 106.4 Other 176.4' 167.6 833.0 638.7
$5,348.4
$5,550.4 i
Ihe accompanying notes are on integralpart ofthese Snancialstatements.
l 3D i
..a.
d (Dollarsin millions)
' i996 :
1995
- CAPf,TAL AND LIABILITIES COMMON STOCK EQUITY:
Common stock without par value,250,000,000 shares authorized, 0
97,007,182 shares outstanding in 1996 and 96,420,627 in 1995 h $1,208.3 j 3
$1,187.6 Retained earnings t
(716.5 i I 888.4
'(Alll 2.1 Unr:alized gain (loss) on securities available for sale f ';1,924.2 2,078.1
- CUMULATIVE PREFERRED STOCK OF FLORIDA POWER:
[
Without sinking funds I
33.5 J 113.5 With sinking funds 25.0 g
" LONG-TERM DEBT
. 1,776.9 "
1,662.3
' TOTAL CAPITAL 3,734.6 3,878.9 h'
r 4
- CURRENT LIABILITIES:
l Accounts payable.
l 193.21.
165.7 Customers' deposits k
'.81.8 ff 85.3
~
.2 L '
17.3 Taxes payable 41 Accrued interest 48.3 I 46.9 Othir 78 5 97.0 l
.443.0 e 412.2 Notts payable 4.1 e
Current portion of long-term debt 34.91 173.7
-482.0 585.9
~
f
]
!)J
\\
DEFERRED CREDITS AND OTHER LIABILITIES:
y Deferred income taxes
, 2475.4 512.0 j
Unamortized investment tax credits f
93.5 -
101.5
]
' Insurance policy benefit reserves 3253"~
265.0 I
. Other postretirement benefit costs
[
100.0 : >
84.5 l
Other
'137.6 -
122.6 I
i
' 1,131.8
1,085.6 1
. COMMITMENTS AND CONTINGENCIES (Note 11)
?'
' i $5,348.4 -
$5.550.4 4
The avmpanying notes we an integralpart of these Gnancialstatements.
/
i l
c0NSOUOATED STATStENTS 0F CASH FLOWS fllllll Flll'llll lllFlll1lll FOR THE YEARS ENDED DECEMBER 31,1996,1995 AND 1994 (In rnillions) l 1996 1995 1994 OPERATING ACTIVITIES:
income from continuing operations
$250.7 '
$238.9
$211.0 AJjustments for noncash items:
Depreciation and amortization 366.7-352.7 316.4 Gain on sale of business (44.2).
Provision for loss on coal properties 40.9 Deferred income taxes and investment tax credits, net (56.6).
(38.0)
(11.7) i Allowance for equity funds used during construction (4.6)
(3.8)
(6.1) I increase in accrued postemployment benefit costs 15.5 16.8 20.3 Net change in deferred insurance policy acquisition costs (14.5)
(14.5)
(10.4)
' Net change in insurance policy benefits reserves 60.3 42.5 36.0 Changes in working capital, net of effects from acquisition or sale of businesses:
Accounts receivable 35.4 (35.2)
(18.0) inventories (10.9)
(29.1)
(10.0)
Overrecovery (underrecoveryj of fuel cost (82.3) 1.5 5.3 Accounts payable
' 21.6 16.4 (4.0)
Taxes payable 21.0 (7.6)
(13.1)
Other (13.5) 29.0 15.1 Other operating activities (14.6) 11.1 15.7 Cash provided by continuing operations 570.9 580.7 547.5 Loss from discontinued operations (26.3)
Adjustments for noncash items 17.4 (17.6)
(153) j Cash used by discontinued operations (8.9)
(17.6)
(15.3) 562.0 563.1 532.2 INVESTING ACTIVITIES:
Property additions (including allowance for borrowed funds used during construction)
(264.0) -
(331.4)
(366.8)
Purchase ofloans and securities, net (including issuance of Echelon note) *
(70.4)
(28.9)
(31.6) ;
Acquisition of businesses (53.8)
(9.2)
(17.1) i Proceeds from sales of properties and businesses 61.1 13.1 9.3 Investing activities of discontinued operations 56.5-69.8 68.9 Other investing activities (37.0)
(15.0)
(15.6)
(307.6)
B01.6)
(352.9)
FINANCING ACTIVITIES:
Issuance of long-term debt 178.0 103.9 Repayment of long-term debt (190.4)
(45.8)
(78.9) increase (decrease) in commercial paper with long-term support
. (15.3):
1.0 (61.2)
Redemption of preferred stock (106.4)
(5.0)
(5.0)
Sale of common stock 18.5 38.4 138.0 Equity contributions to discontinued operations (23.7)
Dividends paid on common stock
' (199.5) increase (decrease) in short-term debt 4.1.
(193.4)
(185.9)
(55.3)
(75.6)
Financing activities of discontinued operations 85.2 (9.7)
(8.2)
Other financing activities (4.0)
(1.2)
(1.6)
{
(253.5)
(271.0)
(174.5) '
NET INCREASE (DECREASE) IN CASH AND EQUlVALENTS
.9 (9.5) 4.8 Beginning cash and equivalents 4.3 -
13.8 9.0 ENDING CASH AND FOUIVALENTS 5.2
$ 43
$ 13.8 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized)
$128.7.
$135.5
$135.2 l
Income taxes (net of refunds)
$189.3
$214.7
$171.5 The accompanying notes are on inregralpart of 6ese Gnancialstaternents.
i
sin esas um s
(Dollars in millions except per share amounts)
FOR THE YEARS ENDED DECEMBER 31,1996,1995 AND 1994 Unrealized Cumulative Preferred
- Gain (Loss)
Stock of Florida Power on Securities Without With Common Retained Available Sinking Sinking Stock Earninas for Sale Funds _
Funds Balince, December 31,1993
$ 1,008.3
$ 812.2
$113.5
$ 35.0 212.0 Net income Common stock issued - 5,215,788 shares 138.9 Common stock issued in pooling of interests - 700,000 shares
.9 4.1 Cash dividends on common stock ($1.99 per share)
(185.4)
Unrzatized loss on marketable securities available for sale (6.6)
(5.0)
Pref rred stock redeemed - 50,000 shares Balincr, December 31,1994 1,148.1 842.9 (6.6) 113.5 30.0 238.9
' Net income Common stock issued - 1,245,267 shares 39.5 Cash dividends on common stock ($2.02 per share)
(193.4) 8.7 Unrralized gain on marketable securities available for sale (5.0)
Pr:.fztred stock redeemed - 50,000 shares Balinca December 31,1995 1,187.6 888.4 2.1 113.5 25.0 224.4 ~
N:t income Common stock issued - 586,555 shares 20.7 ~
Echilon international stock dividend (194.5)
Cash dividends on common stock ($2.06 per share)
(199.5) :
Unrralized loss on marketable securities available for sale (2.7)-
Pref erred stock redeemed - 1,050,000 shares (2.3)
(80.0)
(25.0)
Balance, December 31,1996
$1,208.3~
' $716.5
$ (.6)
$ 33.5 The aaompanying notes are on Irrtegralpart ofthese financialstatements.
)
SUMMARY
OF 5/6NIfl(ANT P wer's n ndiscriminat ry pen access transmissi n t riff that A((OUNFl#6 POLIClf5 was filed to comply with the new rules. The new FERC rules did not have a material effect on the utility's revenues or General-Florida Progress Corporation (the Company) is an exempt holding company under the Public Utility Holding Utility Plant - Utility plant is stated at the original cost of Company Act of 1935. Its largest subsidiary, representing 80%
construction,which includes payroll and related costs such as of total assets,is Florida Power Corporation (Florida Power),a taxes, pensions and other fringe benefits, general and admin-public utility engaged in the generation, purchase,transmis.
istrative costs, and an allowance for funds used d.: ring con-sion,distdbution and sale of electric energy primarily within struction. Substantially all of the utility plant is pledged as Florida.
collateral for Florida Power's first mortgage bonds.
Tne consolidated financial statements include the financial The allowance for funds used during construction repre-results of the Company and its majority-owned operations. All sents the estimated cost of equity and debt for utility plant significant intercompany balances and transactions have been under construction. Florida Power is permitted to earn a eliminated. Investments in 20% to 50%ownedjoint ventures return on these costs and recover them in the rates charged 1
tre accounted for using the equity method.
for utility services while the plant is in service. The average i
The preparation of financial statements in conformity with r te used in computing the allowance for funds was 7.8%.
generally accepted accounting principles requires manage-ment to make estimates and assumptions. This could affect Utility Revenues, Fuel and Purchased Power Expenses -
the reported amounts of assets and liabilities and disclosure Revenues include amounts resulting from fuel, purchased of contingent assets and liabilities at the date of the financial power and energy conservation adjustment clauses,which statements and the reported amounts of revenues and are designed to permit full recovery of these costs. The expenses during the reported period. Actual results could adjustment factors are based on projected costs for a six-or differ from those estimates.
12-month period. The cumulativM;fference between actual and billed costs is included on the balance sheet as a current
)
Certain reclassifications have been made to prior year regulatory asset or liability. Any difference is billed or refund-
{
amounts to conform to the current year's presentation.
ed to customers during the subsequent period.
Regulation - Florida Power is regulated by the Florida Public As ordered by the FPSC, Florida Power is conducting a Service Commission (FPSC) and the Federal Energy Regulatory three-year test for residential revenue decoupling, which began,n January 1995. Decoupling elimmates the direct link Commission (FERC). The utility follows the accounting prac-i ween wa t-hour sales and revenues. A nonfuel revenue tices set forth in Financial Accounting Standard (FAS.) No.71, target is determ}ined by multiplying a revenue
" Accounting for the Effects of Certain Types of Regulation"FAS i
I 71 as amended. This standard allows utilities to capitalize or amount by the total number of residential customers. The defer certain costs or revenues based on management's ongo-difference between target revenues and actual revenues is ing assessment that it is probable these items will be recov-included as a current asset or liability on the balance sheet.
ered through the ratemaking process.
The revenue per customer amount is adjusted annually for a growth factor.
At December 31,1996, Florida Power had $173.8 million of regulatory assets, mcluding $82.6 million of underrecovery of Florida Power accrues the nonfuel portion of base revenues fuel costs, and $51.8 million of regulatory liabilities. The utility for services rendered but unbilled.
expects to fully recover these assets and refund the liabilities The cost of nuclear fuel is amortized to expense based on through customer rates under current regulatory practice.
the quantity of heat produced for the generation of electnc If Florida Power no longer applied FAS No. 71 due to com-energy in relation to the quantity of heat expected to be pro-duced over the life of the nuclear fuel core.
petition, regulatory changes or other reasons,the utility would make certain adjustments. These adjustments would include income Taxes - Deferred income taxes are provided on all the write-off of all or a portion of its regulatory assets and significant temporary differences between the financial and liabilities,the evaluation of utility plant, contracts and commit-tax basis of assets and liabilities using presently enacted tax ments and the recognition,if necessary,of any losses to reflect rates in accordance with FAS No.109," Accounting for income market conditions.
Taxes."
In April 1996, FERC issued new rules governing open trans" Deferred investment tax credits, subject to regulatory mission access, stranded cost issues and electronically offerir'9 accounting practices, are amortized to income over the lives information on transmission capacity. The new rules are of the related properties.
designed to provide open access to the nation's interstate transmission network. In July 1996, FERC accepted Florida 34
~ _
Depreciation and Maintenance -Th3 Ccmpany provides held-to-maturity thit falls below cost rzsults in a reduction in for depreciation of the cost of properties ov r thIir estimated carrying amount to fair value if the decline is not considered usefullives primarily on a straight-line basis. Florida Power's temporary. The impairment is charged to earnings and a new annual provision for depreciation, including a provision for cost basis for the security is established. Premiums and dis-nucle:r plant decommissioning costs and fossil plant disman-counts are amortized or accreted over the life of the related tlement costs, expressed as a percentage of the average bal-heid-to-maturity security as an adjustment to yield using the ances of depreciable utility plant,was 4.9% for 1996,5% for effective interest method. Dividend and interest income are i
1995 (nd 4.8% for 1994.~
recognized when earned.
Florida Power charges maintenance expense with the cost
. of repairs and minor renewals of property. The plant accounts
. Accounting for Long-Lived Assets -The Company adopted ar: charged with'the cost of renewals and replacements of the provisions of FAS No.121," Accounting for the impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed property un,ts. Accumulated depreciation is charged with i
Of,"on lanuary 1,199& This statement requires that long-
' the cost,less the net salvage,of property units retired, lived assets and certain identifiable intangibles be reviewed Florida Power accrues a reserve for maintenance and for impairment whenever events or changes in circumstances refueling expenses anticipated to be incurred during sched-indicate that the carrying amount of an asset may not be uled nuclear plant outages.
recoverable. Recoverability of assets to be held and used is
+
Insurance Premiums, Policy Acquisition Costs and Benefit measured by a comparison of the carrying amount of an asset fleserves - Life insurance premiums are recognized as rev-to undiscounted future net cash flows expected to be gener-ated by the asset. If such assets are considered to be enues over the premium-paying periods of the policies, impaired,the impairment to be recognized is measured by the
-l The Company defers recoverable costs in its insurance amount by which the carrying amount of the assets exceed 4
operations that directly relate to the production of new bush-the fair value of the assets. Assets to be disposed of are ness. These costs are amortized over the expected premium-reported at the lower of the carrying amount or fair value less paying period. Benefit reserves are established out of each costs to sell Adoption of this statement in January 19% did pr:mium payment to provide for the present value of futur" not have a material impact on the Company's financial posi-insuranci policy benefits. The Company reviews the adequacy tinn,results of operations, or liquidity.
and recoverability of the deferred acquisition costs and the The Financial Accounting Standards Board (FA5B) has a cur-benefit reserves based on a gross premium reserve analysis of T the in-force business.
rent project addressing the accounting for obligations related to the decommissioning of nuclear power plants. Florida Significant assumptions used in this analysis include esti-Power records a provision for nuclear decommissioning costs mat;s of future premium increases, mortality rates, withdrawal over the expected life of its nuclear plant. Currently,the accu-4 rates,cxpense rates, and investment yleid. The assumptions mulated provisions for nuclear decommissioning costs are are based on the Company's actual experience adjusted for recorded as a reduction of Electric Plant in Service on the bal-the effect of future actions affecting the in-force business.
ance sheet. One alternative,if adopted,would require Florida
' Although these assumptions are the Company's best estimate Power's 90.4% share of estimated nuclear decommissioning l
of the future experience, actual results may vary in either costs totaling $385 million in 19% dollars to be recorded as a direction and could significantly impact income in the period liability, with a corresponding plant asset. There would be no of change. Management believes deferred policy acquisition impact on earnings or cash flows.
costs cre recoverable at December 31,1996
- Accounting for Cartain investments -The Company con.
Stock-Based Compensation - Under its Long-Term incen-
- siders all highly liquid debt instruments purchased with a tive Plan (LTIP),the Company grants selected executives 2
maturity of three months or less to be cash equivalents. The perf rmance shares,which upon achievement of performance Company's investments in debt and equity securities are clas.
criteria for a three-year performance cycle, result ir, the award sified and accounted for as follows:
f shares of common stock of Florida Progress,two-tnirds of which would be restricted for periods of time. The Company Type of Security Accounting Treatment accounts for its LTIP in accordance with the provisions of
' Debt securities held to maturit Amortized cost Accounting Principles Board (APB) Opinion No.25," Account-
{
ing for Stock issued to Employees? On January 1,1996,the t
Trading securities fair market value with unrealized gains Company adopted FAS No.123," Accounting for Stock-Based and lossesincludeon eadnos Compensation,"and the Company elected to continue to Securities available for sale Fair market value with unrealized Dains apply the accounting provisions of APB No.25. There was no and losses, net of taxes, reported material difference in earnings as a result o'this election.
separately in shareholders' equity Business Acquisitions -The Company and its subsidiaries See Nota 2 on page 36 for securities held to maturity or avail-acquired several businesses in 1996,1995 and 1994. All acqui-l able for sale. The Company had no investments in assets classi-s tions were accounted for as purchases except the acquisition fied cs trading securities at December 31,1996 and 1995. A of FM Industries,Inc.,in December 1994,which was accounted decline in the market value of any security available-for-sale or for on a pooling ofinterests basis.
I h
The 1994 Stat: ment of Cash Flows does not reflect the gyg g value of the 700,000 shares of common stock issued for the 5
- acquisition of FM Industries. The market value of these shares at the date of issuance w5s $21.1 million.
Onmim ns) 1996 1995 1994 Components of income tax expense:
Commitments and Contingencies - In October 1996, the Payable currently:
j American Institute of Certified Public Accountants issued Federal
$179.7
$157.3
$109.7 j
Statement of Position (SOP) 96-1," Environmental Remediation State 23.0 18.8 12.8 i
Liabilities." SOP 96-1 was adopted by the Company on 202.7 176.1 122.5 January 1,1997 and requires,among other things, environ.
D6terred. net:
mental remediation liabilities to be accrued when the criteria rederal (41.9)
(27.5)
(1.9) j State (6.9)
(2.0)
(.2) of FAS No.5," Accounting for Contingencies,"have been met.
The SOP also provides guidance with respect to the measure-Amonization of investment ment of the remediation liabilities. Such accounting is consis-t:nt with the Company's current method of accounting for
~.tx credits. net (8.0)
(8.5)
(9.6)
I
$145.9
$138.1
$110.8 environmental remediation costs and,therefore, adoption of this new statement did not have a materialimpact on the The primary differences between the statutory rates and Company's financial position,results of operations or hquidity.
the effective income tax rates are detailed below:
1996 1995 1994
/
FINANUAL INSTRUMfhT5 Federai statutory income tax rate 35.0 %
35.0%
35.0 %
l State income tax, net of federal Estimated fair value amounts have been determined by the income tax benefits 2.6 2.8 2.5 Company using available market information and discounted Am rteation of investment tax credits (2.0)
(2.2)
(2.9) j cash-flow analysis. Juc'gment is required in interpreting market h,$ve income tax rates 36 %
35 %
i data to develop the estimates of fair value. Accordingly,the estimates may be different than the amounts that the Company The following summarizes the components of deferred tax could realize in a current market exchange, liabilities and assets at December 31,1996 and 1995:
The Company currently has no derivative financial instru-Un millions) 1996 1995 ments, such as futures, forwards, swaps or options contracts.
Deferred tax liabilities:
At December 31,1996 and 1995,the Company had the fol-Difference in tax basis of property. plant and lowing financial instruments with estimated fair values and equipment
' $544.1
$550.8 i
Carrying amounts:
Deferred acquisition costs 35.9 37.2 l
smenUn pacers @s 2M 2M 1996 1995 Other 35.6 41.6 i
Total deferred tax habiaties
$635.7
$650.5 (in mimons)
Am n Va e A
Va e Deterred tax assets:
.j ASSETS:
Loss reserves not currently deductible
$ 69.5
$ 41.2 Loans receivable:
Accrued book expenses 90.6 79.2 Echelon international
$ 32.9
$ 32.9 Unbilled revenues 17.6 20.8 Life insurance business:
Loans secured by real estate 4.1 4.4 6.0 7.8 j
Policyloans 11.0 10.1 93 11.1 At December 31,1996 and 1995, Florida Progress had net 48.0 47.4 15.7 18 9 noncurrent deferred tax liabilities of $475.4 million and $512 j
Marketable securities:
million and net current deferred tax assets of $35.6 million J
Available for sale
$352.4
$352.4
$296.3
$296.3 and $32.3 million, respectively. The Company expects the Held to maturity 73.3 76.8 53.0 58.6 results of future operations will generate sufficient taxable CAPITAL AND LIABILITIES:
income to allow for the utilization of deferred tax assets.
Florida Power preferred stock mth sinking funds
$ 25.0
$ 26.1 Long-term debt:
Florida Power Corporation 1,317.7 1,335.3 1.309.7 1.352.8 Progress Capital Holdings, 494.1 497.1 526.2 532.8 1
l 38
NUGEAR OPERAll0NS RATES Florida Power's. retail rates are set by the FPSC. Florida l
Jointly Cwned Plant - The following information relates to Power's last general rate case was approved in 1992 and Florida Power's 90.4% proportionate share of the Crystal River allowed a 12% regulatory return on equity with an allowed nuclear plant at December 31,1996 and 1995:
range between 11% and 13%. The L.tility's retail s egulatory 1996 1995 (In mil /Ons)
~
return was 12.3% for 1996.
Utility plant in service
$643.6
$6566 Under Florida Power's revenue decoupling plan (see Note 1 Construction workin progress 14.8 18.3 on page 34),the Company has recorded a regulatory liability Uncmortized nuclear fuel 59.9 59.1 Accumulated depreciation 309.5 310.9 of $3.6 million for the 1996 time period and $18.7 million for Accumulated decommissioning 193.3 165.2 the 1995 time period.
The extended maintenance outage at the Cry stal River Net cg!tal additions /(retirements) for Florida Power were
$(16.5) million in 1996 and $7.8 million in 1995,and deprecia-nuclear plant requires the Company to incur higher replace-tion opense, exclusive of nuclear decommissioning, was $28.3 ment power costs. The cost of this replacement power million in 19% and $28.4 million in 1995. Each co-owner pro-exceeds the amount currently being recovered in Florida 1
vid:s for its own financing. Florida Power's sh&re of the asset Power's rates. As a result,the Company has an underrecovery
. balancis and operating costs is included in the appropriate of fuel and purchased power costs of approximately $82.6 j
[
consolid:ted financial statements. Amounts exclude any allo-million at December 31,1996. In January 1997, Florida Power c: tion of costs related to common facilities.
petitioned the FPSC for an increase in its rates to recover, 1
over a 12-month period beginning April 1997,the current l
Decommissioning Costs - Florida Power's nuclear plant balance of deferred fuel together with an estimate of under-d:pr:ciation expenses include a provision for future decom-recoveries through March 1997. The FPSC is scheduled to missioning costs,which are recoverable through rates charged have hearings in February 1997. Management believes that ll to customers. Florida Poweris placing amounts collected in the FPSC will approve the increase in rates.
J I an e.xternally managed trust fund. The recovery from cus-j l tomirs,plus income earned on the trust fund,is intended to be sufficient to cover Florida Power's share of the future dis-mantlement, removal and land restoration costs. Florida Power has a license to operate the nuclear unit through December 3,2016.and contemplates decommissioning r
beginning at that time, in flovember 1995,the FPSC approved a new site-specific study that estimated total future decommissioning costs at approximately $2.0 billion,which corresponds to $425.4 million in 1996 dollars. Florida Power increased its share of the r: tail portion of annual decommissioning expense to the FPSC-approved level of $20.5 million, effective January 1995.
Funding of the approved increase occurred during the first quirt:r of 1996, upon receipt in January 1996 of the FPSC's final ord:r, effective retroactively to January 1995. Florida Power also has adjusted the wholesale portion c,f this expense i
in a comparable manner, increasing it to $1.2 million annually.
Und:t the previous study, Florida Power's share of total l annual decommissioning expense,as authorized by the FPSC and the FERC,was $11.9 million for 1994.
Fuel Disposal Costs - Florida Power has entered into a con-tract with the U.S. Department of Energy (DOE) for the trans-portation and disposal of spent nuclear fuel. Disposal costs for nuctrar fuel consumed are being collected from customers through the fuel adjustment cbuse at a rate of $.001 per net nuclear kilowatt-hour sold and are paid to the DOE quarterly.
Florida Power currently is storing spent nuclear fuel on site l
l and has sufficient storage capacity in place or under construc-tion for fuel consumed through the year 2010.
l l
DEBT The Company's long-term debt at December 31,1996 and 1995,is scheduled to mature as follows:
Interest Rate 1996 1995 Florida Power Corporation:
First mortgage bonds:
Maturing in 1997 and 1999 e
Maturin0 2002 and 2003 6.50 %
$ 75.0
$ 91.7 Matunn0 2008 6.50%(a) 280.0 280.0 Matunng 2021 through 2023 6.88 %
B0.0 80.0 Pollution control revenue bonds:
7.98%(a) 400.0 400.0 Maturing 2014 through 2027 Notes maturing:
6.59%(a) 240.9 240.9 1998-2008 8.44%(a) 21.3 51.9
}
Commercial paper, supported by revolver maturing November 30. 2001 6.67 %
26.0 26.0 Discount, net of premium, being amortized over term of bonds 5.53%(a) 200.0 145.2 (5.5)
(6.0)
Progress Capital Holdings:
1,317.7 1,309.7 Notes maturing:
1996-1997 1998-2006 9.35 %
10.0 150.0 7.01%(a) 304.0 126.0 Commercial paper. supported by revolver maturing November 30. 2001 Other debt. maturin0 through 2006 5.71%(a) 169.4 239.6 6.81%(a) 10.7 101 Less: Current portion of long-term debt 1,811.8 1,836.0 34.9 173.7
$1.776.9
$1.662.3 (a) Weighted average Interest rate at December 31,1996.
The Corapany's consolidated subsidiaries have lines of interest rate notes. These notes have maturities ranging from credit totaung $800 million,which are used to support com-nine months to 30 years. All $300 million is available for mercial paper. The lines of credit were not drawn on as of issuance.
December 31,1996. Interest rate options under the line of Florida Power has registered $370 million of first mortgage credit arrangements vary from subprime or money market bonds which are unissued and available for issuance.
rates to the prime rate. Banks providing lines of credit are compensated through fees. Commitment fees on lines of Progress Capital has a private $300-million, medium-term credit vary between.06 and.10 of 1%'
note program providing for the issuance of either fixed or.
floating interest rste notes,with maturities ranging from nine The lines of credit consist of four revolving bank credit months to 30 years. A balance of $122 million is available for facilities,two each for Florida Power and Progress Capital issuance under this program at either fixed or floating rates.
Holdings,Inc. The Florida Power facilities,$200 million each, The combined aggregate maturities oflong-term debt for are for terms of 364 days and five years. The Progress Capital 1997 through 2001 are $34.9 million, $15 million, $128.6 million, i facilities consist of $100 million with a 364-day term and
$2.7 million and $472.4 million,respectively, in addition,about
$300 million with a five-year term. In 1996,both 364-day 12% of Florida Power's outstanding first mortgage bonds have facilities were extended to November 1997. In addition, both an annual 1% sinking fund requirement. These requirements,
)
five-year facilities were extended to November 2001. Based which total $1 million nnually for 1997 through 2000,are I
on the duration of the underlying backup credit facilities, expected to be satisfied with property additions.
$369.4 million of outstanding commercial paper at December Florida Progress and Progress Capital entered into an 31,1996, and $384.8 million of outstanding commercial paper
. amended guaranty and support agreement in 1996, pursuant 4
It December 31,1995,are classified as long-term debt. Florida to which Florida Progress has unconditionally guaranteed i
Power had another $4.1 million of outstanding commercial the payment of Progress Capital's debt as defined in the paper at December 31,1996,which was classified as short-agreement.
term debt.
Florida Power has a public $300-million, medium-term note program providing for the issuance of either fixed or floating i
I 38 i
PREFERRED AND PREFERENCE STOCK AND SHAREHOLDER RIGk 5 A summary of outstanding Cumulative Preferred Stock of Florida Power follows:
Outstanding Current Dividend Redemption Shares December 31 Rata Price Authorized OutstandinD 1996 1995 (In millions)
Witho'et sinking funds, not subject to mandatory redemption:
4.00 %
$104.25 40,000 39,980
$ 4.0
$ 4.0 4.40%
$102.00 75,000 75,000 7.5 7.5 4.58 %
$101.00 100,000 99,990 10.0 10.0 4.60 %
$103.25 40,000 39,997 4.0 4.0 4.75 %
$102.00 80,000 80,000 8.0 8.0 7.40%
$102A8 300.000 30.0 7.76 %
$102.21 500.000 50.0 334.967
$33.5
$113.5 With sinking funds, subject to mandatory redemption:
$ 25.0 7.uB%
$102.36 500.000 The authorized capital stock of the Company includes 10 The authorized capital stock of Florida Power includes three million shares of preferred stock,without par value, including classes of preferred stock:4 million shares of Cumulative 2 million shares designated as Series A Junior Participating Preferred Stock, $100 par value; 5 million shares of Cumulative Preferred Stock. No shares of the Company's preferred stock Preferred Stock,without par value;and 1 million shares of are issurd and outstanding. However, under the Company's F reference Stock, $100 par value. No shares of Florida Power's Shareholder Rights Agreement,each share of common stock Cumulative Preferred Stock,without par value,or Preference has associated with it approximately two-thirds of one right to Stock are issued and outstanding,while a total of 334,967 purchase one one-hundredth of a share of Series A Junior shares of the Cumulative Preferred Stock,$100 par value,are i
Participating Preferred Stock, subject to adjustment,which issued and outstanding in various series as detailed in the is exercisable in the event of certain attempted business table above.
combinations. If exercised,the rights would cause substantial During 1996, Florida Power redeemed 1,050,000 shares of dilution of ownership,thus adversely affecting any attempt its Cumulative Preferred Stock. Florida Power also redeemed to acquire the Company on terms not approved by the 50,000 shares in 1995 and 850,000 shares in 1994.
Company's Board of Directors. The rights have no voting or
. dividend rights and expire in December 2001,unless r: deemed earlier by the Company.
4 f
l i
,RfT/Rf" MENT'BE%$IT PL ANS decre sed the projected benefit obligation by $16.5 million and is expect:d to decrust the annual pension costs by Staff Reductions -The Company recognized pension and
$2.1 million, beginning in 1997.
other postretirement benefit expenses of $15.5 million in 1994 related ta an early retirement option. !n addition,in late 1994, Other Postretirement Benefits -The Company and some of Florida Power eliminated approximately 300 positions. As a its subsidiaries provide certain health care and life insurance result,the Company recognized severance costs of $5 million, benefits for retired employees. Employees become eligible for which was partially offset by a reduction of $1.8 million in these benefits when they reach normal retirement age while related accrued pension and postretirement benefit costs.
working for the Company.
The net postretirement benefit costs for 1996,1995 and Pension Benefits -The Company and certain of its sub-1994 are detailed below:
sidiaries have a noncontributory defined benefit pension plan (in mi# ions) 1996 1995 1994 covering most employees. The benefits are based on length service cost 85.3
$ 5.1 55.3 l of service, compensation and Social Security benefits. The interest cost 12.4 13.5 12.9 participating companies make annual contributions to the Amortization of unrecognized plan based on an actuarial determination and consideration of transition obligation 6.1 6.1 6.1
)
tax regulations and funding requirements under federal law.
$a s
Based on actuarial calculations and the funded status of the reduct on cost 3.7 pension plan,the Company was not required to contribute to
$23.5
$24.4
$28.0,
the plan for 1996,1995 or 1994.
{
The following summarizes the plan's status, reconciled with
- Shown below are the components of the net pension amounts recognized in the Company's balance sheet at cxpense calculations for those years:
December 31,1996 and 1995:
(!n millions) 1996 1995 1994 (In millions) 1996 1995 Service cost
$ 16.2
$13.4
$17.2 Accumulated postretirement benef41 obligation:
l Interest cost 31.3 30.1 29 3 Retirees
$100.4
$ 96.6 Actual losses (earnings) on plan assets (88.0)
(124.4) 6.6 Fully el:gible active plan participants 3.1 2.6 liet amortizatton and deferral 29.5 77.7 (54.3)
Other active plan participants 81.2 91.4 j Net pension cost (benefit)
(11.0)
(3.2)
(1.2)
_ Plan assets at fair value (4.7)
(3.2)
Staff reduction cost. net 10.0 180.0 1871 Net pension cost (Denefit) recognized
$(11.0)
$ (3.2)
$ 8.8 Unrecognized transition obligation (97.2)
(103.6)
Unrecognized net gains 17.2 1.0 The following weighted average actuarial assumptions at Accrued postratirement benefit cost
$100.0
$ 84.8 January 1 were used in the calculation of pension expense:
1996 1995 1994 The following weighted average actuarial assumptions were used in the calculation of the year-end status of other Discount rate 7.25 %
8.25 %
7.25 %
postretirement benefits:
Expected long-term rate of return 9.00 %
9.00 %
9.00 %
Rate of compensation increase 4.50 %
5.00 %
5.00 %
1996 1995 The following summarizes the funded status of the pension te of o ensation increase 4.
50.
pitn at December 31,1996 and 1995:
Health care cost trend rates:
- am 5M2%
R5N5M.
(In millions) 1996 1995 Post-Medicare 7.50 %-5.00 %
8 25W4.75%
Accumulated benefit obligation:
vested
$326.1
$315.8 The transition obligation is being accrued through 2012.
Nonvested 31.5 30.6 A one-percentage point increase in the assumed health care Effect of projected compensation increases
- N#
EoIected benefit obligation 452.0 441.1 1996 current service and interest cost by approximately Plan asrets at market value, primarily listed
$3 million and the accumulated postretirement benefit obl,ig-stocks and bonds 655.0 555.0 ation as of December 31,1996, by about $26.2 million. The Plan assets in excess of projected benefit obligation
$203.0
$143.9 change in the discount rate from 7.25% at December 31,1995, Consisting of the following components:
to 7.5% at December 31,1996, decreased the projected bene-Unrecognized transition asset
$ 30.4
$ 35.4 fit obligation by $6 million and is expected to decrease annual Unrecognized prior service cost (6.3)
(6.9) postretirement benefit costs by $.5 million, beginning in 1997.
rued) prepa p c
)
Due to different retail and wholesale regulatory rate
$203.0
$143.9 requirements, Florida Power began making quarterly contribu-tions in 1995 to an irrevocable external trust fund for whole-Due to changes in interest rates,the Company used a dis-sale ratemaking,while continuing to accrue postretirement count rate of 7.5%;o calculate the pension plan's 1996 year-benefit costs to an unfunded reserve for retail ratemaking, and funded status. The change in the discount rate from Florida Power contributed approximately $1.3 million in 1996 7.25% at December 31,1995,to 7.5% at December 31,1996, and $1.4 million in 1995 to the trust fund.
40.
BUSINESS SEGMENTS DISCONTINUE 0 OPERATIONS On November 21,1996,the Company's Board of Directors Th2 Company's principal business segments are utility and
- diversifi:d operations. The utility is engaged in the genera.
declared a spin-off distribution to common shareholders of record on December 5,1996,of the common shares of tion, purchase, transmission, distribution and sale of electric en:rgy. Electric Fuels Corporation's (Electric Fuels) operations Echelon International Corporation (* Echelon"),which com-include bulk commodities transportation, rail products and prised the Company's lending, leasing and real estate opera-tions. Common shares were distributed on the basis of one sirvic:s and the mining, procurement and transportation of coal to Florida Power and other unaffiliated customers. Other share of Echelon common stock for every 15 shares of the div:rsified operations include ownership of a life insurance Company's common stock.
subsidiary.
In connection with the spin-off,the Company has presented Th2 Company's business segment information for 1996, Echelon as a discontinued operation in the accompanying Consolidated Statements ofIncome. As of the date of the 1995 and 1994 is summarized below. No single customer accounted for 10% or more of unaffiliated revenues.
spin-off,the net assets of Echelon were $194.5 million. This amount has been charged against the Company's retained
. (in mulsons; 1996 1995 1994 earnings in the accompanying December 31,1996 Consoli-Revenues:
dated Balance Sheet to reflect the distribution of Echelon UtiMy
$2,393.6
$2.271.7
$2.080.5 common shares on December 18,1996. A summary of net assets distributed b as follows:
Ele c Fuels, combinod:
Coal sales to electric utility 272.1 236.8 249.4 (in millions)
Sales to external customers 609.0 607.0 534.1 Cash and equivalents
$ 53.8 Other 155.3 129.1 110.7 Assets held for sale 26.8 3,430.0 3.244.6 2,974.7 Leases and loans receivable. nel 272.0 Eliminations (272.1)
(236.8)
(249.4)
Property and equipment, nel 120.0 Revenues from external customers
$3,157.9
$3,007.8
$2.725.3 Other assets 39.9
~
income from operations:
Total assets 518.5 Utility
$ 468.5
$ 456.3
$ - 419.5 Totalliabilities (324 0)
Diverstfied:
Net assets distributed
$ 194 5 Electric Fuels recurring, combined 61.4 52.1 41.6 E ctric Fuels loss provision
(
Summarized income statement information relating to Echelon's results of operations (as reported in discontinued 482.4 508.9 461.1 interest and other expense 85.8 131.9 138.3 operations)is as follows:
Income from continuing operations Year ended December 31, before income taxes
$ 396.6
$ 377.0
$ 322.8 (in millions) 1996 1995 1994
- identifiable assets:
Sales and revenues
$63.2
$50.0
$48.8 Utility
$4,263.7
$4.284.7
$4.284.0 Loss from operations (net of income tax)
Diversified:
Provision for loss on El;ctric Fuels. combined 619.8 573 6 489.4 dispositionof assets (net Dther 464.9 692.1
$5 4537 of income tax benefits of $11.3)
(18.0) 679
$5.348.4
$5.550 4 1
Spin-off transaction costs (net
)
Depreciation and amortization:
f income tax benefits of $1.8)
(8.3)
Utility
$ 341.1
$ 329.7
$ 294.8 Diversified:.
Total discontinued operations
($26.3)
Electric Fuels, combined 23.5 21.2 19.7 Other 2.1 1.8 1.g fiscal year 1996 includes results of operations through
)
$ 366.7
$ 352.7
$ 316.4 December 18,1996. Results of operations include allocated
]
Capital additions:
interest expense of $8.7 million, $11.7 million and $12.4 million Utility
$ 222.9
$ 289.2
$ 327.2 for 1996,1995 and 1994, respectively.
Divsrsified:
Electric Fuels, combined 40.6
' 40.5 38.1 Dther
.5 1.7 1.5 l
$ 264.0
$ 331.4
$ 366 8 in December 1996, Electric Fuels revised its assessment that low-sulfur coal market prices were depressed temporarily.
Electric Fulls decided to close and dispose ofits unprofitable coal operations and recorded a provision for loss of $40.9 million,as shown above.
d
ggy7ppyy5 jgg ggg7fygggg$
Florida Pow:r incurrrd purchased power cap: city costs totaling $284 million m 1996, $260.1 million in 1995 and j
Fuel, Coal and Purchased Power Commitments - Florida
$138.6 million in 1994. The following table shows minimum Power has entered into various long-term contracts to provide
- pected future capacity payments for purchased power com '
the fossil and nuclear fuel requirements of its generating plants mitments. Because the purchased power commitments have and to reserve pipeline capacity for natural gas. In most cases, relatively long durations,the total present value of these pay-such contracts contain provisions for price escalation, minimum ments using a 10% discount rate also is presented. These purchase levels and other financial commitments. Estimated am unts assume that all units are brought into service as con-annual payments, based on current market prices,for Florida tracted and meet contract performance requirements:
Power's firm commitments for fuel purchases and transporta-Pwchased Power Capacity Payments tion costs, excluding delivered coal and purchased power,are (In millions)
Utilities 0, generators Total 4
$8 million, $28 million, $36 million, $33 million and $29 million 1997
$ 64
$ 233
$ 297 i for 1997 through 2001, respectively,and $324 million in total 1998 63 245 308 l thereafter. Additional commitments will be required in the 1999 64 256 320 future to supply Florida Power's fuel needs.
'y' Electric Fuels has entered into several contracts with out-2002-2025 324 9.293 9,617 side parties for the purchase of coal. Electric Fuels also has Total
$587 510.578
$11.165 entered into several operating leases,and rental or royalty Total net present value s 3.350 agreements, relating to transportation equipment and coal procurem.mt and processing. The annual obligations under As part of the Company's strategy to mitigate its exposure !
these contracts and leases, including transportation costs,are to these expensive cogencation contracts, Florida Power has j
$278.6 million, $131.6 million, $108.5 million, $77.3 million and agreed, subject to FPSC. aproval,to acquire a 220-megawatt l
$75.4 million for 1997 through 2001, respective.ly,and $85.6 cogeneration facility for $4*5 million.
million in total thereafter. The total cost incurred for these The cogeneration purchased power contracts employ sepa- !
commitments was $221.4 million in 1996, $235.2 million in rate pricing methodologies for capacity payments and energy j 1995 and $199.2 million in 1994.
payments. Four cogenerators filed suit against Florida Power Florida Power has long-term contracts for t. bout 480 over the contract payment terms. Florida Power entered into megawatts of purchased power with other utilities, including settlement agreements with three of the four cogenerators.
a contract with The Southern Company for approximately 400 One of those agreements already has been finclized and liti-i megawatts of purchased power annually through 2010. This gation terminated. The other two agreements are awaiting l
represents 4.5% of Florida Power's total current installed certain approvals from the FPSC and others before beir.g final- <
system capacity. Florida Power has an option to lower these ized. Management does not expect that the results of these Southern purchases to approximately 200 megawatts annual-legal actions will have a material impact on Florida Power's ly, beginning in 2000,with a three-year notice. The purchased financial position, operations or liquidity.
. power from Southern is supplied by generating units with a Florida Power was threatened in late 1995 with litigation capacity of approximately 3,500 megawatts and is guaranteed from another cogeneration developer, which claimed interfer-by Southern's entire system, totaling more than 30,000 ence involving an effort to obtain a gas transportation con-megawatts.
tract with a third party. However, no legal action has been As of December 31,19%, Florida Power had entered into taken by the developer.
purchased power contracts with certain cogenerators for about 1,160 megawatts of capacity with expiration dates Utility Construction Program - Substantial commitments have been made in connection with Florida Power's construc '
ranging from 2002 to 2025. The purchased power contracts provide for capacity and energy payments. Energy payments tion program. In 1997, total construction expenditures of are based on the actual power taken under these contracts.
$372 million are projected,primarily for electric plant and m a d et Capacity payments are subject to the qualifying facilities meeting certain contract performance obligations, in most Off-Balance Sheet Risk - Several of the Company's sub-cases, these contracts account for 100% of the generating sidiaries are general partners in unconsolidated partnerships capacity of each of the facilities. Of the 1,160 megawatts and joint ventures. The Cornpany or subsidiaries have agreed under contract,1,050 megawatts currently are available to to support certain loan agreements of the partnerships and Florida Power. All comtnitments have been approved by the joint venturer,. These credit risks are not material to the finan ;
FPSC. Florida Power does not plan to increase the level of cial statements and the Company considers these credit risks purchased power currently under contract.
to be minimal, based upon the asset values supporting the The FPSC allows the capacity payments to be recovered partnership liabilities.
through a capacity cost recemry clause, which is similar to, and works in conjunction v.
energy payments recovered through the fuel adjustme Jause.
h
- lnsurance - Florida Progress and its subsidi ries utilize vari-Contaminated Site Cleanup -The Company is subject to ous risk management techniques to protect tssets frorn risk of regulation with rzspect to th2 cnvironmental effects of its loss, including the purchase of insurance. Ris k avoidance, risk
- operations. The Company's disposal of hazardous waste transf;r and self-insurance techniques are utilized depending through third-party vendors can result in costs to clean up cn the Company's ability to assume risk,the relative cost and facilities found to be contaminated. Federal and state statutes tv:ilability of methods for transferring risk to third parties, and authorize governmental agencies to scompel responsible par-the requirements of applicable regulatory bocties.
ties to pay for cleanup of these hazardous waste sites.
Florida Power self-insures its transmission and distribution Florida Power and former subsidiaries of the Company, lines against loss due to storm damage and ott er natural dis-whose properties were so!d in prior years, have been identi-asters. Pursuant to a regulatory order, Florida Pcwer is accru-fled by the U.S. Environmental Protection Agency (EPA) as ing $6 million annually to a storm damage reserve and may potentially responsible parties at certain sites. In addition to defer (ny losses in excess of the reserve, these designated sites,there are other sites where Company Under the provisions of the Price Anderson Act..which lim, ffiliates may be responsible for additional environmental its li bility for accidents at nuclear power plants, Fbrida Power, cle nup, including a coal gasification plant site that Florida as an owner of a nuclear plant,can be assessed foi a portion Power previously owned and operated. There are five partie3 of:ny third-party liability claims arising from an act dent at that have been identified as potentially responsible for this any c^mmercial nuclear power plant in the United States. If gas site, including Florida Power. Liability for the cleanup
' tot:1 third-party claims relating to a single nuclear incident costs of these sites is joint and several.
- xceed $200 million (the amount of currendy availab'e com-The Company believes that its subsidiaries will not be mercial liability insurance), Florida Power could be assessed required to pay a disproportionate share of the costs for up to $79.3 million per incident,with a maximum assessment cleanup of these sites. The Company's best estimates indicate cf $10 million per year, that its proportionate share of liability for cleaning up all sites Florida Power is a member of NEIL,an industry mutual ranges from $3.7 million to $5,4 million. It has reserved $3.7 insurer,which provides business interruption and extra million against these potential costs. The EPA is expected to cxpense coverage in the event of a major accidental outage at further study the coal gasification plant site,which could cause a covered nuclear power plant. Florida Power is subject to a Florida Power to increase its reserve for its portion of liability retroactive premium assessment under this policy in the event f r cleanup ccsts. Although estimates of any additional costs of advirse loss experience. Florida Power's present maximum are not available,the results of the tests are not expected to sharm of any such retroactive assessment is $2.5 million per have a material effect on the Company's financial position, policy yeir.
results of operations or liquidity.
Florida Power also maintains nuclear property damage Age Discrimination Suit - Florida Power and Florida
- insurrnc2 and decontamination and decommissioning liability Progress have been served with an age discrimination lawsuit
' insur:nce totaling $2.1 billion. The first layer of $500 million involving 56 former Fiorida Power employees. While no dollar is purch sed in the commercialinsurance market with the amount was requested,each plaintiff seeks back pay, reinstate-r maining excess coverage purchased from NEIL Florida ment or front pay through their projected dates of normal
- Power is self-insured for any losses that are in excess of this retirement, costs and attorneys' fees. In October 1996,the coverag:. Under the terms of the NEIL policy agreements, court approved an agreement between parties to provisionally
. Florida Power could be assessed up to a maximum of $10.3 certify this case as a class action suit under the Age Discrimin-million in any policy year if losses in excess of NEll's available ation in Employment Act. A notice was sent to eligible former surplus ar;incuned.
employees informing them of their right to become a party to Floridi Power has never been assessed under these nuclear this provisional class action within 90 days. Estimates of the indemnities or insurance policies.
potential liability associated with this lawsuit cannot be determined until the size of the potential class has been determined.
43
. s.
u QUARTERLY FINANCIAL DATA (Unaudited) :
j Three Months Ended'
- (In millions, cxcept per share amounts) -;
March 31 ~
June 30 September 30 '
- December 31
'1996 OPERATING RESULT 5 Revenues from continuing operations -
. $730.4
. $773.6 '
$s79.0
$774.9 '-
! income from continuing operations -
48.3 58.7' 98.1
~- 45.6 i
Loss from discontinued operations?
(25.0)
(13)"
. Net income.
t 48.3.
33.7 98.1.'
44.31 O DATA PER SHARE..
Eamings:l
' Continuing operations '.
.50
'.61 -
' 1.01 -
.47 W ~ Discontinuedoperations
(.26) ~
(.01) --
4 % Consolidated L E
'l J0 J5 1.01.
.46 '
~
Dividends per common share -.
.515
.515
.515-
'.515 :
a 7. Common stock price per share:
- High -
a-1.ow 1 36% ;
' 34%
35% :
. 34% -
33 32 %
33 %
31% -
'1995 Revenues from continuing operations -
l $ 693.0 i$
~ OPERATING RESULTS :
,. $ 731,3 -
$ 852.4
_ $ 731.1 ---
. Income from continuing operations..
- 46.6 -
55.2:
' 91.1 i 46.0 L income (loss) from discontinued operations.
Oj
- Netincome :
46.6 55.2 -
91.1 46.044 DATA PER SHARE ~
Q i Earnings:
' Continuing operations
.49.
.58
.95 '
'48
. Discontinued operations.
Consolidated
.49
'.58
.95 '
.48 -
D.Wdends per common share
.505
.505
.505>
.505 Common stock price per share:
Hif. -
32 %
32 %
32%.
35 %
1.ow c 29 %
29 %
29 %
' 32% -'
i The business of Florida Power is seasonalin nature and comparisons of earnings for the quarters do not give a true j
indication of overall trends and changes in the Company's operations. The divestiture of Echelon International Corporation is t
reflected in the loss from discontinued operations.
j i
t i
s i
3 44
a av ManalfWW Wa A a as MANAGEMENT'SREPORT AUDITORS' REPORT To OurShareholders:
To the Shareholders ofFlorida Progress Corporation:
Management is responsible for the integrity and objec-We have audited the accompanying consolidated bal-tivity of the financial and operating information con-
- ance sheets of Florida Progress Corporation and sub-tained in this 1996 Annual Report to Shareholders, sidiaries as of December 31,1996 and 1995,and the including the consolidated financial statements covered related consolidated statements ofincome, cash flows, by the Auditors' Report. These statements were pre-and shareholders' equity for each of the years in the pared in accordance with generally accepted accounting three-year period ended December 31,1996. These principlis and necessarily include amounts that are financial statements are the responsibility of Florida based on judgments and estimates by management.
Progress Corporation's management. Our responsibility Florida Progress Corporation maintains internal con.
is to express an opinion on these financial statements based on our audits, trii systems and related policies and procedures design:d to provide reasonable assurance that assets We conducted our audits in accordance with general-are saf:-guarded,that transactions are executed as ly accepted auditing standards. Those standards require authorized and are properly recorded and that account-that we plan and perform the audit to obtain reasonable ing r: cords may be relied upon for the preparation of Msurance about whether the financial statements are consolidated fmancial statements and other financial free of material misstatement. An audit includes exam-information. These policies and procedures include a ining,on a test basis, evidence supporting the amounts Cod 3 of Conduct program intended to ensure employ-and disclosures in the financial statements. An audit ees adh:re to the highest standards of personal and pro-also includes assessing the accounting principles used fessional integrity. The design, monitoring and revision and significant estimates made by management,as well of int:rnal control systems involve, among other things, as evaluating the overall financial statement presenta-manag: ment'sjudgment with respect to the relative tion. We believe that our audits provide a reasonable cost and expected benefits of specific control measures.
basis for our opinion.
The company also maintains an internal auditing func-in our opinion,the financial statements referred to tion that evaluates and formally reports on the adequacy above present fairly,in all material respects.the financial and effectiveness of internal controls, policies and position of Florida Progress Corporation and subsidiaries Proc:dures.
as of December 31,1996 and 1995,and the results of in addition,the audit committee of the board of direc-their operations and their cash flows for each of the years
' tors, consisting solely of outside directors, meets periodi-in the three-year period ended December 31,1996,in cally with management,the inte;nal auditors and the conformity with generally accepted accounting principles.
Independent auditors to review matters related to internal
- controls, audit results, financial statements and financial r
- porting. Annually,the audit committee recommends
. to th2 board of directors the selection of independent M d/[ M audit:rs. Both the independent auditors and the inter-l nal auditors periodically meet alone with the audit com-St. petersburg,riorida
' mittee and have free access to the committee at any January 27,1997 i tim 2.
l i For Management, A /M 1
l l Jeffr:y R.Heinicka l Senior Vice President and Chief Financial Officer 1
h
3
- :a 08 a 888 888 i
l Annual Growth Rates (in percent) 1991 1996 1986-1996 1996-'
1995 1994 FLORIDA PROGRESS CORPORATION Summary of operations (in millions):
Utility revenues
' 7.0 4.8 i $2,393.6 :
$2,271.7 '
$2,080.5 Diversified revenues (continuing) 27.5 17.0 764.3' 736.1 644.8 income from continulng operations 8.0 4.5 i i 250.7' 238.9 212.0 Income (Ins) from discontinued operations and change in accounting
- (26J) 2 Net income 6.4 3.4
- 224.4 E 238.9 212.0 Balance sheet data (in millions):
~.
i Total assets 2.7 3.8 i$5,348.4 -
$5,550.4 -
$5,453.1 l
Capitalization:
.,nort-term capital
~ (43.0)
'(153)
' $ 39.0
$ 173.7
$ 99.9 1.ong-term debt 6.7 3.8
- 1,776.9..
1,662.3 1,835.2 Preferred stock (322)
(18.7) 33.5 e 138.5 143.5 i
Common stock equity 6.2 6.6 1,924.2 ~,
2,078.1 1,984.4 i
Total capitalization
.6 3.4
$3,773.6
$4,052.6
$4,063.0 1
Common stock data:
1 Average shares outstanding (in millions) 4.7 3.5
' 96.8 95.7 93.0 l
Earnings per share:
Utility 22
.6
$2A0:
$227
$2.05 Diversified (continuing) 7.9 7.8
. 19 23 23 i
Discontinued operations and change in accounting
- (.27) '
Consolidated 1.6
(.1) 2J2.
2.50 2.28 Dividends per common share 3.0 3.5 2.06,
2.02 1.99 I
Dividend payout
' 88.9% !
81.0 %
87.7%
Dividend yield
. 6.4% i 5.7%
6.7%
Book value per share of common stock 1.6 3.2
- $19.84
$21.55
$20.85 - j Retum on common equity
~ 10.9% ?
11.8 %
11.1 % '
Common stock price per share:
High
- 36 % i 35 %
33 %
l Low 31%.
29%
24 %
)
Close 4.8 4.6
' 32% "
35 %
30
]
Price earnings ratio (year-end) 13.9 =
142 13.2 FLORIDA POWER CORPORATION I
Electric sales billed (millions of KWH):
Residential 4.5 5.4 1F,481.4 14,938.0 13,863.4 Commercial 3.8 5.7
' 8,848.0.
8,612.1 8,252.1 Industrial 4.1 2.9 4,223.7.
3,864.4 3,579.6 Total retail sales 4.4 5.1 L 30,784.8 '
29,499.5 27,6752 Total electric sales 43 4.6
-33,492.5 32,402.6 30,014.6 i
Residential service (average annual):
KWH sales per customer 1.9 22 13,560 13,282 12,597 Revenue per customer 4.9 2.6
! $1,138 -
$1,114
$1,038 Ratio of earnings to fixed charges (SEC method) 4.80.:
4.41 3.90 Embedded cost oflong-term debt (1.9)
(2.0) 7.2% 3 72%
7.1%,
s Embedded cost of preferred stock (8.7)
(6.8)
' 4.6% 5 6.8%
6.8% i Operating data:
Net system capability (MW) 2.2 2.1 l 7,341 7,337 7,295 Net system peak load (MW) 11.9 4.2 18,807 7,722 6,955 Construction expenditures (in millions)
(3.9) 1.1
$217.3 -
$283.4
$319.5
- Net cash flow to capital expenditures 202 2.4 175 %
125 %
103 %
Average number of customers 2.6 32 1,292,075' 1,271,784 1,243,891 Number of full-time employees (3.6)
(12)
'4,629 4,658 4,972 i
48
1993
.1992 1991 1990 1989 1988 1987 1986
$1,957.6
$1,774.1
. $1,718.8
$1,709.1
$1,627.0 ~
$1,468.5
$1,4722
$1,530.5 4303 281.1 263.8 227.1 171.6-145.7 128.2 103.0.
1 %.0.
.183.8 167.9.
170.9 171.4 172.0 169.6 166.9
.6 (8.1) '
4.2 (6.1) 15.7 7E 18.2 143-196.6 175.7 172.1-
-164E 187.1 179.8 187.8 1812
$5,338.0
$4,978.8
$4,683.4
' $4,682.9
$4,259.1
$3,927.1
$3,719.0
$3,505.8
$ ' 195.2 :
$.177.6 -
$ 60.8
$ 650.6
$ 468.6
$ 344.4
$ 252.8
$ 84.1 '
1,840.5 1,651 3 1,631 3 -
1,286.8 1,109.6 1,033.7 1,0773 1,222.4 148.5 216.0
. 231.0 2333 233.5 233.5 233.5 233.5 1,820.5
'1,737.6 '
1,587.7 1,4243 1,372.3 1,316.9 1,264.7 1,156.4
$4,004.7
$3,782.5 -
$3,5113
$3,595.2
$3,184.0
$2,928.5
$2,8283
$2,6%.5 883 85.4 80E 77.0 76.6 75.6-75A' 733
$2.06
$1.99
. $2.03
$2.15
$2.19 52.21
$220
$2.25
,16
' 21
.11
.13
.11
.11
.11
.09
.01
(.14)
(.01)
(.14)
.14
.03
.18
.13 2.23 2.06 2.13 2.14 2.44 235 2.49 2.47 1.95.
1.905 1E43 1.777 1.72 1.667 1.613 1.54 87.6%
93.0 %
87.0 %
82.9 %
70.4 %
71.0 %
64.7 %
61.4 %
5.9% -
5.9%
6.0%
7.2%
6.6%
73 %
. 7.6%
6.1%
$20.40.
$19.85
$19.14
$1837
$17.92
$17.20
$16.51
' $15.51 11.1 %
10.6%
11.4 %
11.8 %
13.9%
13.9%
15.5%
16.4%
36% '
33 %
31 %
27 26 %
25 %
29%
31 %
i 31 %
'27%
24% -
22%
22 %
21 %
19%
20%-
33 %
32 %
31'd 25 %
26 %
23 %
- 21%
26 %
15.1 15.8 14.7 11.9 10.9 9.9 8.7 10.7 l
-13,372.6 12,825.8 12,623.9 12,415.5 11,786.9 11,065.6 10,318.8 9,819.2 i
7,884.8 -
7,544.1 7,489.2 7,328.7 6,989.8 6,4724
- 6,016.4 5,573.0
[
. 3,380.8 3,254.5 3,303.0 3,455.7 3,766.1 3,680.6 3,349.4 :
3,1223 26,5283 25,414.0 25,179.1 24,8783 24,1233 22,691.7 21,039.6 19,833.8 28,647.8 27,375.5 27,350.2 27,143.7 26,510.5 26,130.9 24,103.7 23,170.0 112,420' 12,214 12,257 12,319 12,059 11,754 11,356 11,255
$983
$884
$899'
$8%
$845
$814
$827
$914
'l 3.83 -
- 3.84 '
3.87 3.89 3.79 3.79 4.08 429 l
' 6.8%
7.5%
7.7%
7.9%
8.1%
8.0%
8.1%
8.7%
'(
6.8%
73 %
73 %
7.2%
7.2%
72 %
7.2%'
8.4%
7,563
7,002 6,623 6,371
'6,309 6,086 5,966 5,%1 l
6,739
' 6,982 6,056.
- 5,026 6,817 6,188
. 5,087 5,977
)
$426.4
$472.9
$345.9
$2653
$249.6
$197.0
$188.5
$189.4 63 %
- 52%
66 %
70%
94 %
103 %
117%
116 %
1,214,653 1,182,170 1,159,237 1,135,499 1,101,817 1,060,971 1,023,222 980,427
{
5,807 -
5,806
'5,677-5,570 5,553 5.512 5,395 5,323 r
i h
~
--~_.
i Baaaa
~O as Dr. Jack B.Critchfield,63,is Chairman of ~
and Acordia of Central Florida,Inc.
as Chief of Staff and Deputy Chief to the 9oard and Chief Executive Of6ces of A company director since 1989,he is a Florida Governor Bob Graham. He is
. Florida Progress. He served as a Florida -
member of the Executive and Finance &.
a director of Capital Health Plan of Power Corporation director from 1975 to
- Budget Committees.
Tallahassee. A company director since l
1978 beforejoining the utility in 1983. He Clarence V.McKee,54,is Chairman and 1992,he is a member of the Finance &
. is a director of Florida Power and Bamett.
Chief Executive Of6cer of McKee Com-Budget and Nominating Committees.-
Banks,inc.,in Jacksonville, Florida. A com-munications,Inc.,a television and radio Joan D.Ruffier,57,is a genera pany director since 1988,he is cha,irman investment firm in Tampa, Florida. He is a Sunshine Cafes, Ltd., an Orlando-based of the Executive Committee.
direci:or of Florida Power, American food and beverage concession business, Willard D. Frederick,Jr.,62,is a citrus Heritage Life Insurance Company, Barnett '
which has operations at two Florida air-9 rower and investor. He served as mayor.
Banks,lnc.and Checkers Drive-In ports. A certified public accountant,she is '
~
( of the city of Orlando from 1980 to 1992.
' Restaurants,Inc. A company director a director of Florida Power, Cyprus Equity i
He retired as a partner from the law 6rm of since 1989, he is chairman of the Audit Fund and INVEST,Inc. A company director j Holland & Knight in 1995. He is a director Committee and a member of the since 1990, she is chairman of the Com-j of Atlantic Gulf Communities Corporation, Compensation Committee, pliance Committee and a member of the '
i and Blue Cross / Blue Shield of Florida. A Vincent J.Naimoli,59,is Chairman, Audit and Finance & Budget Committees.' I company director since January 1995, he is President and Chief Executive Of6cer of Robert T.Stuart,Jr.,64,is a retired a member of the Compensation and Anchor industries international,Inc., and Chairman and Chief Executive Of6cer of.
1 Compliance Committees.
Harvaid Industries,Inc., Tampa-based Mid-Continent Life Insurance Company in {
Michael P.Graney,53,is a partner in the operating and holding companies. He
. Oklahoma City,which Florida Progress law 6rm of Simpson Thacher & Bartlett in is also Managing General Partner of the acquired in 1986. A company director Columbus, Ohio. Specializing in utilities Tampa Bay Devil Rays, Ltd. baseball own-since 1986,he is a member of the
' IIw, litigation and antitrust, he is a mem-ership group,St. Petersburg, Florida. A Executive Committee.
ber of the American, District of Columbia, company director since 1992,he is a Jean Giles Wittner,62,is President of
}
Ohio and Colurnbus Bar Associations and member of the Finance & Budget and W ttner & Co.,Wittner Securities,Inc.,and : i
'the FederalEnergy Bar Association. A Nominating Committees-Wittner & Associates,inc.,St. Petersburg company director since 1991, he is chair-Richard A.Nunis,64,is Chairman of Walt
' firms involved in real estate management, man of the Nominating Committee and a
' Disney Attractions in Orlando, Florida. He insurance brokerage and consulting. She member 3he Executive and Compliance is a director of The Walt Disney Company previously served as President and Chief -
Committees.
and SunTrust Bank, Central Florida, N.A. in Executive Officer of a savings association 6
Richard Korpan,55,is President and Chief Orlando. A company director since 1989, untilit was sold in 1986. She is a director Operating Officer of Florida Progress and he is chairman of the Finance & Budget of Raymond James Bank, F.5.B.in St.
Chairman of the Board and Chief Exec-Committee and a member of the Exec-Petersburg. A Florida Power director since utive Officer of Florida Power. oejoined utive and Compensation Committees.
1977 and a company director since 1982, the company in 1989 as Executive Vice Charles 8. Reed,55,is Chancellor of the she is chairman of the Compensation President and Chief Financial Officer. He is State University Sys*em of Florida in Committee and a member of the Audit 1 a director of SunTrust Bank, Tampa Bay Tallahassee, Florida. He previously served and Compliance Committees.
O 3
l Dr. Jack B.Critchfield Kenneth E. Armstrong Joseph H. Richardson Chairman and Chief Executive Officer Vice President and General Counsel President and Chief Operating Officer, Richard Korpan.
John Scardino,Jr.
Florida Power Corporation President and Chief Operating Officer Vice President and Controller Richard D.Keller Jeffrey R.Heinicka James V.Smallwood President and Chief Executive Officer, SeniorVice President and Vice President and treasurer Electric Fuels Corporation
. Chief Financial Officer James L.Harlin.
Kathleen M.Haley i
President and Chief Executive Officer, Secretary Mid-Continent life insurance Company
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