-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CuKckgTQ6MlWn5sGfXWvjxwXeSeDwepBu1xxqWnTZ1Dvlw3s9Ap01iuyUNg7iu32 YFjnxrl1Z1aPRM0334vg3w== 0000357261-96-000031.txt : 19960517 0000357261-96-000031.hdr.sgml : 19960517 ACCESSION NUMBER: 0000357261-96-000031 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLORIDA PROGRESS CORP / CENTRAL INDEX KEY: 0000357261 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 592147112 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08349 FILM NUMBER: 96564677 BUSINESS ADDRESS: STREET 1: ONE PROGRESS PLZ CITY: ST PETERSBURG STATE: FL ZIP: 33701 BUSINESS PHONE: 8138246400 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLORIDA POWER CORP / CENTRAL INDEX KEY: 0000037637 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 590247770 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03274 FILM NUMBER: 96564678 BUSINESS ADDRESS: STREET 1: 3201 34TH ST SOUTH CITY: ST PETERSBURG STATE: FL ZIP: 33711 BUSINESS PHONE: 8138665151 10-Q 1 COMBINED FL PROGRESS/POWER 3/31/96 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Exact name of Registrant as specified in I.R.S. Employer Commission its charter, state of incorporation, address Identification File No. of principal executive offices, telephone Number ------------ -------------------------------------------- --------------- 1-8349 FLORIDA PROGRESS CORPORATION 59-2147112 A Florida Corporation One Progress Plaza St. Petersburg, Florida 33701 Telephone (813) 824-6400 1-3274 FLORIDA POWER CORPORATION 59-0247770 A Florida Corporation 3201 34th Street South St. Petersburg, Florida 33711 Telephone (813) 866-5151 Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ___X___ No ______ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Description of Shares Outstanding Registrant Class at March 31, 1996 ---------- -------------- ------------------ Florida Progress Corporation Common Stock, without par value 96,720,259 Florida Power Corporation Common Stock, without par value 100 (all of which were held, beneficially and of record, by Florida Progress Corporation) This combined Form 10-Q represents separate filings by Florida Progress Corporation and Florida Power Corporation. Florida Power makes no representations as to the information relating to Florida Progress' diversified operations. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS FLORIDA PROGRESS CORPORATION CONSOLIDATED FINANCIAL STATEMENTS FLORIDA PROGRESS CORPORATION Consolidated Statements of Income (In millions, except per share amounts) Three Months Ended March 31, 1996 1995 -------- -------- (Unaudited) REVENUES: Electric utility $547.3 $515.9 Diversified 192.2 187.3 --------- --------- 739.5 703.2 EXPENSES: --------- --------- Electric utility: Fuel used in generation 114.5 78.6 Purchased power 122.9 103.3 Deferred fuel (28.5) 7.4 Other operation 88.2 87.4 --------- --------- Operation 297.1 276.7 Maintenance 30.8 33.0 Depreciation 77.6 70.7 Taxes other than income taxes 47.2 42.9 --------- --------- 452.7 423.3 --------- --------- Diversified: Cost of sales 159.0 152.9 Other 16.3 16.7 --------- --------- 175.3 169.6 --------- --------- INCOME FROM OPERATIONS 111.5 110.3 --------- --------- INTEREST EXPENSE AND OTHER: Interest expense 35.2 36.6 Allowance for funds used during construction (1.7) (2.2) Preferred dividend requirements of Florida Power 2.3 2.5 Other expense, net 0.5 0.8 --------- --------- 36.3 37.7 --------- --------- INCOME BEFORE INCOME TAXES 75.2 72.6 Income Taxes 26.9 26.0 --------- --------- NET INCOME $48.3 $46.6 ========= ========= AVERAGE SHARES OF COMMON STOCK OUTSTANDING 96.5 95.3 ========= ========= EARNINGS PER AVERAGE COMMON SHARE $0.50 $0.49 ========= ========= DIVIDENDS PER COMMON SHARE $0.515 $0.505 ========= ========= The accompanying notes are an integral part of these financial statements. 2 FLORIDA PROGRESS CORPORATION Consolidated Balance Sheets (In millions) March 31, December 31, 1996 1995 ----------- ----------- ASSETS (Unaudited) PROPERTY, PLANT AND EQUIPMENT: Electric utility plant in service and held for future use $5,885.6 $5,867.5 Less - Accumulated depreciation 2,238.8 2,179.7 Accumulated decommissioning for nuclear plant 172.3 165.2 Accumulated dismantlement for fossil plants 108.3 104.4 ---------- ---------- 3,366.2 3,418.2 Construction work in progress 165.2 131.8 Nuclear fuel, net of amortization of $350.7 in 1996 and $348.7 in 1995 66.3 59.1 ---------- ---------- Net electric utility property 3,597.7 3,609.1 Other property, net of depreciation of $194.2 in 1996 and $189.9 in 1995 450.4 455.2 ---------- ---------- 4,048.1 4,064.3 ---------- ---------- CURRENT ASSETS: Cash and equivalents 6.0 4.7 Accounts receivable, net 297.4 309.5 Current portion of leases and loans receivable 42.9 43.0 Inventories at average cost: Fuel 50.5 63.0 Materials and supplies 98.4 101.3 Diversified materials 126.0 113.2 Underrecovery of fuel cost 19.3 0.3 Deferred income taxes 32.4 32.3 Other 13.5 12.2 ---------- ---------- 686.4 679.5 ---------- ---------- OTHER ASSETS: Investments: Leases and loans receivable, net 333.5 340.8 Marketable securities 197.3 188.2 Nuclear plant decommissioning fund 176.5 161.1 Joint ventures and partnerships 73.5 73.7 Deferred insurance policy acquisition costs 108.6 106.4 Other 175.5 177.1 ---------- ---------- 1,064.9 1,047.3 ---------- ---------- $5,799.4 $5,791.1 ========== ========== The accompanying notes are an integral part of these financial statements. 3 FLORIDA PROGRESS CORPORATION Consolidated Balance Sheets (In millions) March 31, December 31, 1996 1995 ----------- ----------- CAPITAL AND LIABILITIES (Unaudited) COMMON STOCK EQUITY: Common stock $1,198.1 $1,187.6 Retained earnings 887.0 888.4 Unrealized loss on securities available for sale (0.2) 2.1 ---------- ---------- 2,084.9 2,078.1 CUMULATIVE PREFERRED STOCK OF FLORIDA POWER: Without sinking funds 113.5 113.5 With sinking funds 25.0 25.0 LONG-TERM DEBT 1,621.3 1,685.2 ---------- ---------- TOTAL CAPITAL 3,844.7 3,901.8 ---------- ---------- CURRENT LIABILITIES: Accounts payable 153.7 168.5 Customers' deposits 87.3 85.3 Income taxes payable 42.7 14.4 Accrued other taxes 36.7 15.9 Accrued interest 47.0 47.5 Other 102.5 103.4 ---------- ---------- 469.9 435.0 Current portion of long-term debt 196.1 183.9 ---------- ---------- 666.0 618.9 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES: Deferred income taxes 687.5 694.3 Unamortized investment tax credits 99.5 101.5 Insurance policy benefit reserves 277.8 265.0 Other postretirement benefit costs 86.4 84.8 Other 137.5 124.8 ---------- ---------- 1,288.7 1,270.4 ---------- ---------- $5,799.4 $5,791.1 ========== ========== The accompanying notes are an integral part of these financial statements. 4 FLORIDA PROGRESS CORPORATION Consolidated Statements of Cash Flows (In millions) Three Months Ended March 31, 1996 1995 -------- -------- (Unaudited) OPERATING ACTIVITIES: Net income $48.3 $46.6 Adjustments for noncash items: Depreciation and amortization 89.5 86.7 Deferred income taxes and investment tax credits, net (9.3) (13.0) Increase in accrued other postretirement benefit costs 1.6 4.3 Net change in deferred insurance policy acquisition costs (2.2) (5.3) Net change in insurance policy benefit reserves 12.8 10.8 Changes in working capital, net of effects from acquisition or sale of businesses: Accounts receivable 12.0 11.7 Inventories 2.3 (7.3) Underrecovery of fuel cost (19.0) 4.7 Accounts payable (14.8) (1.2) Income taxes payable 28.3 32.3 Accrued other taxes 20.8 15.0 Other (0.7) (8.3) Other operating activities 10.9 8.9 --------- --------- 180.5 185.9 --------- --------- INVESTING ACTIVITIES: Property additions (including allowance for borrowed funds used during construction) (71.6) (72.7) Proceeds from sale of properties and businesses 3.5 3.6 Purchase of leases, loans and securities (15.3) (11.0) Proceeds from sale or collection of leases, loans and securities 10.9 23.6 Other investing activities (13.3) (3.5) --------- --------- (85.8) (60.0) --------- --------- FINANCING ACTIVITIES: Repayment of long-term debt (11.7) (10.0) Decrease in commercial paper with long-term support (40.7) (14.4) Sale of common stock 9.3 9.4 Dividends paid on common stock (49.7) (48.1) Decrease in short-term debt - (55.3) Other financing activities (0.6) - --------- --------- (93.4) (118.4) --------- --------- NET INCREASE IN CASH AND EQUIVALENTS 1.3 7.5 Beginning cash and equivalents 4.7 14.4 --------- --------- ENDING CASH AND EQUIVALENTS $6.0 $21.9 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest (net of amount capitalized) $34.0 $35.4 Income taxes (net of refunds) $7.9 $7.2 The accompanying notes are an integral part of these financial statements. 5 FLORIDA POWER CORPORATION FINANCIAL STATEMENTS FLORIDA POWER CORPORATION Statements of Income (In millions) Three Months Ended March 31, 1996 1995 -------- -------- (Unaudited) OPERATING REVENUES: Residential $328.5 $283.7 Commercial 115.1 109.4 Industrial 47.8 43.1 Sales for resale 43.0 26.0 Other 12.9 53.7 --------- --------- 547.3 515.9 --------- --------- OPERATING EXPENSES: Operation: Fuel used in generation 114.5 78.6 Purchased power 122.9 103.3 Deferred fuel (28.5) 7.4 Other 88.2 87.4 --------- --------- 297.1 276.7 --------- --------- Maintenance 30.8 33.0 Depreciation 77.6 70.7 Taxes other than income taxes 47.2 42.9 Income taxes: Currently payable 30.2 33.3 Deferred, net (3.0) (7.2) Investment tax credits, net (2.0) (2.1) --------- --------- 25.2 24.0 --------- --------- 477.9 447.3 --------- --------- OPERATING INCOME 69.4 68.6 --------- --------- OTHER INCOME AND DEDUCTIONS: Allowance for equity funds used during construction 0.9 1.2 Miscellaneous other expense, net (0.5) (0.5) --------- --------- 0.4 0.7 --------- --------- INTEREST CHARGES Interest on long-term debt 22.1 24.2 Other interest expense 3.3 2.8 --------- --------- 25.4 27.0 Allowance for borrowed funds used during construction (0.8) (1.0) --------- --------- 24.6 26.0 --------- --------- NET INCOME 45.2 43.3 DIVIDENDS ON PREFERRED STOCK 2.3 2.5 --------- --------- NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $42.9 $40.8 ========= ========= The accompanying notes are an integral part of these financial statements. 6 FLORIDA POWER CORPORATION Balance Sheets (In millions) March 31, December 31, 1996 1995 ----------- ----------- ASSETS (Unaudited) PROPERTY, PLANT AND EQUIPMENT: Electric utility plant in service and held for future use $5,885.6 $5,867.5 Less - Accumulated depreciation 2,238.8 2,179.7 Accumulated decommissioning for nuclear plant 172.3 165.2 Accumulated dismantlement for fossil plants 108.3 104.4 ---------- ---------- 3,366.2 3,418.2 Construction work in progress 165.2 131.8 Nuclear fuel, net of amortization of $350.7 in 1996 and $348.7 in 1995 66.3 59.1 ---------- ---------- 3,597.7 3,609.1 Other property, net 16.1 23.0 ---------- ---------- 3,613.8 3,632.1 ---------- ---------- CURRENT ASSETS: Cash and equivalents 3.5 0.8 Accounts receivable, net 192.1 200.7 Inventories at average cost: Fuel 26.1 40.8 Materials and supplies 98.4 101.3 Underrecovery of fuel cost 19.3 0.3 Deferred income taxes 32.4 32.3 Other 4.0 3.9 ---------- ---------- 375.8 380.1 ---------- ---------- OTHER ASSETS: Nuclear plant decommissioning fund 176.5 161.1 Unamortized debt expense, being amortized over term of debt 26.7 27.5 Other 78.2 84.1 ---------- ---------- 281.4 272.7 ---------- ---------- $4,271.0 $4,284.9 ========== ========== The accompanying notes are an integral part of these financial statements. 7 FLORIDA POWER CORPORATION Balance Sheets (In millions) March 31, December 31, 1996 1995 ----------- ----------- CAPITAL AND LIABILITIES (Unaudited) COMMON STOCK EQUITY: Common stock $1,005.4 $992.9 Retained earnings 757.1 761.1 ---------- ---------- 1,762.5 1,754.0 CUMULATIVE PREFERRED STOCK: Without sinking funds 113.5 113.5 With sinking funds 25.0 25.0 LONG-TERM DEBT 1,178.9 1,279.1 ---------- ---------- TOTAL CAPITAL 3,079.9 3,171.6 ---------- ---------- CURRENT LIABILITIES: Accounts payable 90.0 89.8 Accounts payable to affiliated companies 21.0 24.8 Customers' deposits 87.3 85.3 Income taxes payable 34.2 8.9 Accrued other taxes 32.6 12.3 Accrued interest 37.7 32.9 Other 63.4 65.1 ---------- ---------- 366.2 319.1 Current portion of long-term debt 50.6 30.6 ---------- ---------- 416.8 349.7 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES: Deferred income taxes 482.7 483.8 Unamortized investment tax credits 98.9 100.9 Other postretirement benefit costs 83.0 81.5 Other 109.7 97.4 ---------- ---------- 774.3 763.6 ---------- ---------- $4,271.0 $4,284.9 ========== ========== The accompanying notes are an integral part of these financial statements. 8 FLORIDA POWER CORPORATION Statements of Cash Flows (In millions) Three Months Ended March 31, 1996 1995 -------- -------- (Unaudited) OPERATING ACTIVITIES: Net income after dividends on preferred stock $42.9 $40.8 Adjustments for noncash items: Depreciation and amortization 82.0 79.8 Deferred income taxes and investment tax credits, net (5.0) (9.3) Increase in accrued other postretirement benefit costs 1.5 4.1 Allowance for equity funds used during construction (0.9) (1.2) Changes in working capital: Accounts receivable 8.6 9.8 Inventories 17.6 (2.2) Underrecovery of fuel cost (19.0) 4.7 Accounts payable 0.2 (8.8) Accounts payable to affiliated companies (3.8) (1.7) Income taxes payable 25.3 28.8 Accrued other taxes 20.3 14.0 Other 5.0 0.1 Other operating activities 14.8 4.5 --------- --------- 189.5 163.4 --------- --------- INVESTING ACTIVITIES: Construction expenditures (58.6) (59.2) Allowance for borrowed funds used during construction (0.8) (1.0) Additions to nonutility property (0.6) (0.7) Proceeds from sale of properties 1.2 3.4 Other investing activities (13.3) (2.8) --------- --------- (72.1) (60.3) --------- --------- FINANCING ACTIVITIES: Decrease in commercial paper with long-term support (80.3) (13.0) Dividends paid to parent (46.9) (44.3) Equity contributions from parent 12.5 12.5 Decrease in short-term debt - (55.3) --------- --------- (114.7) (100.1) --------- --------- NET INCREASE IN CASH AND EQUIVALENTS 2.7 3.0 Beginning cash and equivalents 0.8 - --------- --------- ENDING CASH AND EQUIVALENTS $3.5 $3.0 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest (net of amount capitalized) $18.9 $20.3 Income taxes (net of refunds) $4.8 $4.3 The accompanying notes are an integral part of these financial statements. 9 FLORIDA PROGRESS CORPORATION AND FLORIDA POWER CORPORATION NOTES TO FINANCIAL STATEMENTS 1) As ordered by the Florida Public Service Commission ("FPSC"), Florida Power Corporation ("Florida Power") is in its second year of conducting a three-year test for residential revenue decoupling which began in January 1995. The difference between target revenues and actual revenues is included as a current asset or current liability on the balance sheet. Revenue decoupling reduced residential billed revenues by $0.1 million and $14.3 million for the three months ended March 31, 1995 and 1996, respectively. 2) Effective January 1, 1996, Florida Progress Corporation ("Florida Progress") adopted Financial Accounting Standards ("FAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This standard requires that long-lived assets and certain intangible assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through future cash flows from the use and disposition of the asset. The adoption of this standard has had no impact on earnings. (As used herein, the term Florida Progress includes its consolidated subsidiaries unless otherwise indicated.) Effective January 1, 1996, Florida Progress adopted FAS No. 123, "Accounting for Stock-Based Compensation." Under its Long-Term Incentive Plan, Florida Progress grants selected executives performance shares, which, upon achievement of performance criteria for a three-year performance cycle, result in the award of shares of common stock of Florida Progress, two-thirds of which would be restricted for periods of time. Florida Progress accounts for the fair value of common stock shares awarded under this plan after December 31, 1995 as recommended in FAS No. 123. Shares awarded for performance cycles previous to the implementation of FAS 123 are accounted for in accordance with Accounting Principles Board Opinion No. 25. There was no impact on earnings as a result of implementing this standard. 3) CONTINGENCIES PURCHASED POWER - Florida Power's cogeneration purchased power contracts employ separate pricing methodologies for capacity payments and energy payments. Two cogenerators have filed suit against Florida Power in state court and a third in federal court challenging the energy pricing methodology. Another cogenerator entered into a standard offer cogeneration contract with Florida Power and subsequently indicated its intention to build a 115 megawatt ("MW") facility. The FPSC's rules limit standard offer cogeneration projects to 75 MWs and limit the maximum term for capacity payments to the life of the avoided unit, which is 20 years for this project. Florida Power filed a petition seeking a FPSC ruling that (i) Florida Power's standard offer contract is not available if the cogenerator constructs a facility with greater than 75 MWs and (ii) the 20-year term be affirmed. On April 30, 1996, the FPSC ruled in favor of Florida Power's petition by affirming that its standard offer contract is not available to the cogenerator if it constructs a 115 MW facility and that the FPSC rules limit the term for making capacity payments to 20 years. After this ruling is issued in a written order to be released on or about May 13, 1996, this cogenerator has 15 days to request FPSC reconsideration of the decision. Florida Power also has filed a lawsuit in federal court in connection with this dispute. Management does not expect that the results of these actions will have a material impact on earnings. INSURANCE - Florida Progress and its subsidiaries utilize various risk management techniques to protect assets from risk of loss, including the purchase of insurance. Risk avoidance, risk transfer and self-insurance techniques are utilized depending on Florida Progress' 10 ability to assume risk, the relative cost and availability of methods for transferring risk to third parties, and the requirements of applicable regulatory bodies. Florida Power self-insures its transmission and distribution lines against loss due to storm damage and other natural disasters. Florida Power is accruing $6 million annually to a storm damage reserve and may defer any losses in excess of the reserve. Under the provisions of the Price Anderson Act, which limits liability for accidents at nuclear power plants, Florida Power, as an owner of a nuclear plant, can be assessed for a portion of any third-party liability claims arising from an accident at any commercial nuclear power plant in the United States. If total third-party claims relating to a single nuclear incident exceed $200 million (the amount of currently available commercial liability insurance), Florida Power could be assessed up to $79.3 million per incident, with a maximum assessment of $10 million per year. Florida Power is a member of the Nuclear Electric Insurance, Ltd. ("NEIL"), an industry mutual insurer, which provides business interruption and extra expense coverage in the event of a major accidental outage at a covered nuclear power plant. Florida Power is subject to a retroactive premium assessment under this policy in the event of adverse loss experience. Florida Power's present maximum share of any such retroactive assessment is $2.6 million per policy year. Florida Power also maintains nuclear property damage insurance and decontamination and decommissioning liability insurance totaling $2.1 billion. The first layer of $500 million is purchased in the commercial insurance market with the remaining excess coverage purchased from NEIL. Florida Power is self-insured for any losses that are in excess of this coverage. Under the terms of the NEIL policy agreements, Florida Power could be assessed up to $8.1 million in any policy year if a loss in excess of NEIL's available surplus is incurred. In the event of multiple losses in any policy year, Florida Power's retroactive premium could total up to $15.9 million. Florida Power has never been assessed under these nuclear indemnities or insurance policies. CONTAMINATED SITE CLEANUP - Florida Progress is subject to regulation with respect to the environmental effects of its operations. Florida Progress' disposal of hazardous waste through third-party vendors can result in costs to clean up facilities found to be contaminated. Federal and state statutes authorize governmental agencies to compel responsible parties to pay for cleanup of certain abandoned or uncontrolled hazardous waste sites. Florida Power and former subsidiaries of Florida Progress, whose properties were sold in prior years, have been identified by the United States Environmental Protection Agency ("EPA") as potentially responsible parties at certain sites. In addition to these designated sites, there are other sites where Florida Progress affiliates may be responsible for additional environmental cleanup, including a coal gasification plant site that Florida Power previously owned and operated. There are five parties which have been identified as potentially responsible for this gas site, including Florida Power. Liability for the cleanup costs of these sites is joint and several. Florida Progress believes that its subsidiaries will not be required to pay a disproportionate share of the costs for cleanup of these sites. Florida Progress' best estimates indicate that its proportionate share of liability for cleaning up all sites ranges from $2.5 million to $4.5 million. Florida Progress has reserved $2.8 million against these potential costs. Further study of the coal gasification plant site by the EPA is expected to be completed in the third quarter 1996 and could cause Florida Power to increase its reserve for its portion of liability for cleanup costs. Although estimates of any additional costs 11 are not available, the results of the tests are not expected to have a material effect on Florida Power's financial position, operations or liquidity. 4) In the opinion of management, the accompanying financial statements include all adjustments deemed necessary to summarize fairly and reflect the financial position and results of operations of Florida Progress and Florida Power for the interim periods presented. Results for the first quarter are not necessarily indicative of results for the full year. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto in the combined Form 10-K of Florida Progress and Florida Power for the year ended December 31, 1995 (the "1995 Form 10-K"). Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. OPERATING RESULTS Florida Progress' earnings per share for the three-month period ended March 31, 1996, were $.50 compared to $.49 for the same period in 1995. This increase resulted from higher earnings at Florida Power, Florida Progress' largest operating unit, which reported earnings of $.44 per share compared to $.43 per share for the same period last year. The increase at Florida Power was due primarily to higher average customer usage and continuing cost-control efforts. Diversified earnings per share of $.06 for the quarter remained constant compared to last year. Florida Power - Operating Revenues Florida Power's operating revenues were $31.4 million, or 6.1 percent, higher for the three month period ended March 31, 1996, compared to the same period in 1995. Increased kilowatt hour ("KWH") sales due to colder than normal weather and customer growth were the primary factors contributing to the increase. However, residential revenue decoupling adjustments partially offset increased KWH sales, by reducing billed revenues $14.3 million for the first quarter of 1996. Revenue decoupling did not have a material impact on Florida Power's revenues or net income for the three months ended March 31, 1995. (See Note 1 to the Financial Statements.) Florida Power - Operating Expenses Fuel and purchased power costs, including deferred fuel expense, were $19.6 million, or 10.4 percent, higher for the quarter ended March 31, 1996 compared to the same period in 1995 due primarily to higher system requirements, increased capacity payments and nuclear outages. Florida Power recovers substantially all of its fuel and purchased power costs through a FPSC ordered fuel adjustment clause, thereby eliminating any significant impact on net income. Other operation and maintenance expenses for the three months ended March 31, 1996, were $1.4 million lower than the same period last year due primarily to savings from cost-control initiatives partially offset by increased costs associated with nuclear outages. Florida Power - Other Operating Results On April 16, 1996, Florida Power and Ridge Generating Station, L.P. ("Ridge") entered into a settlement agreement resolving a dispute over the energy payments to be made under a 1991 agreement for the sale to Florida Power of approximately 40 MWs from Ridge's cogeneration facility. The settlement agreement provides for the resolution of the pricing dispute, including a reduction in the fuel cost component of the firm energy price rate and its associated escalation rate. The settlement agreement also provides for Ridge to curtail the output of its facility during certain off-peak periods. Florida Power expects a net savings of approximately $13 million over the life of the contract. The parties to the 12 agreement intend to submit the settlement agreement to the FPSC for approval in May 1996. (For additional information on cogeneration purchased power contracts, see Note 3 to the Financial Statements.) As previously reported in the 1995 Form 10-K, Note 10 to the Financial Statements, the Federal Energy Regulatory Commission ("FERC") proposed in March 1995 new rules that would require the electric industry to provide open access to the nation's interstate transmission network. On April 24, 1996, the FERC issued its final rule on open access transmission. Within 60 days of that date, each electric utility under FERC jurisdiction, including Florida Power, will be required to file a nondiscriminatory open access transmission tariff that complies with the new rule. The open access required under the rule will make transmission systems available to all wholesale buyers and sellers of electric energy. Florida Power expects that the new rule will not have a material effect on Florida Power's revenues or earnings. As previously reported in the 1995 Form 10-K, Part I, Item 7, under "Operating Results - Florida Power - Nuclear Operations", Florida Power has cooperated with the Nuclear Regulatory Commission ("NRC") in its investigation of unauthorized tests performed by control room operators at the Crystal River Nuclear Plant. The tests were the subject of pre-decisional enforcement conferences held in March 1996 with the NRC, Florida Power and the operators. The NRC is expected to rule on this matter in the second quarter 1996. As previously reported in the 1995 Form 10-K, Part I, Item 7, under "Operating Results - Florida Power - Utility Revenues and Sales", Florida Power is in its second year of conducting a three-year test of residential revenue decoupling. On February 21, 1996, the FPSC approved Florida Power's request to defer disposition of a $17.7 million liability from the over-recovery of revenues under the test during 1995, pending a presentation of Florida Power's proposal to exchange future cogenerator capacity payments for up-front payments. This presentation is due to the FPSC no later than October 1, 1996. (For additional information see Note 1 and the text under the heading "Purchased Power" in Note 3 to the Financial Statements.) Florida Progress Diversified Operations Florida Progress' diversified revenues were $4.9 million higher for the three months ended March 31, 1996 compared to the same period last year. However, net income and earnings per share remained fairly constant. Improved marine operations and rail services operations from Electric Fuels Corporation, Florida Progress' coal mining and transportation subsidiary, were offset by an increase in death benefits at Mid-Continent Life Insurance Company, Florida Progress' insurance subsidiary. LIQUIDITY AND CAPITAL RESOURCES Florida Power budgeted $265.3 million, excluding allowance for funds used during construction, for its 1996 construction program, of which $58.6 million was spent during the first three months of the year. These expenditures were financed primarily with funds from operations. In March 1996, Florida Progress contributed $12.5 million to Florida Power from the sale of common stock through Florida Progress' dividend reinvestment and stock purchase plan. These funds were used to repay commercial paper and for general corporate purposes. Florida Power has a public medium-term note program providing for the issuance of notes with maturities ranging from nine months to 30 years. In April 1996, Florida Power increased the amount available for future issuance under the program to $300 million. In April 1996, Florida Power announced that on June 10, 1996, it will redeem all 500,000 shares of its 7.76% series cumulative preferred stock and all 300,000 shares of its 7.40% series cumulative preferred stock. The redemption price on the 7.76% series will be $102.21 a share, plus an amount equal to the accrued and unpaid dividends to June 10, 1996, of $.54 a share. The redemption price on 13 the 7.40% series will be $102.48 a share, plus an amount equal to the accrued and unpaid dividends to June 10, 1996, of $.51 a share. Florida Power anticipates redeeming this preferred stock with funds from operations. Florida Power's ratio of earnings to fixed charges was 4.50 for the twelve months ended March 31, 1996. (See Exhibit 12 filed herewith.) Progress Capital Holdings, Inc. ("Progress Capital"), a wholly owned subsidiary of Florida Progress, has a private medium-term note program providing for the issuance of notes with maturities ranging from nine months to 30 years. In April 1996, Progress Capital increased the amount available for future issuance under the program to $300 million. "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including (without limitation) statements as to expectations, beliefs, plans, objectives and future financial performance, and assumptions underlying or concerning the foregoing, relating to the following identified matters: (a) estimated amounts of capital and operating expenditures and fees relating to compliance with environmental/safety requirements and remediation of contaminated sites (Part II, Item 1. Legal Proceedings, including portions of the Notes to Financial Statements referred to therein), (b) expectations as to the timing, outcome or effect of legal or regulatory proceedings (Part II, Item 1. Legal Proceedings and Part I, Item 2. MD&A - Operating Results - Florida Power - Other Operating Results), (c) expectations or beliefs as to (1) the Florida Power and Ridge cogeneration settlement agreement, and (2) the effects on Florida Power of the FERC's new rule on open transmission access (Part I, Item 2. MD&A - Operating Results - Florida Power - Other Operating Results, including portions of the Notes to Financial Statements referred to therein), and (d) the expectation or belief as to the source of funds to be used for the June 1996 preferred stock redemption (Part I, Item 2. MD&A - Liquidity and Capital Resources). These statements, and any other statements contained in this Form 10-Q that are not historical facts, are forward-looking and, accordingly, involve risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. In addition to those matters discussed elsewhere in this Form 10-Q, the following are some of the important factors that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements (the categories of forward-looking statements described in the preceding paragraph that could be affected by these factors are identified in parentheses by their letter heading): (1) governmental actions and initiatives, including those affecting industry and rate structure, and competition in the utility industry (e.g., retail wheeling and transmission access), and environmental/safety requirements (a, b, c, d), (2) pricing and other actions by competitors (b, c, d), (3) unanticipated delays or actions by courts, administrative agencies or regulatory authorities (a, b, c), (4) significant changes from expectations in actual capital expenditures and operating expenses and unanticipated project delays (a, b, c, d), (5) changes in economic conditions (including population growth rates), demographic patterns and weather conditions in Florida Power's service territory or the United States generally (c, d), (6) changes in Florida Power's environmental compliance strategies or fuel strategies (a, b, c, d), (7) changes in the availability of fuel (a, b, d), and (8) significant changes in tax rates or policies or in rates of inflation (a, d). 14 PART II. OTHER INFORMATION Item 1. Legal Proceedings. 1) NCP Lake Power, Inc. v. Florida Power Corporation, Florida Circuit Court, Fifth Judicial Circuit for Lake County, Case No. 94-2354-CA-01. See prior discussion of this matter in the 1995 Form 10-K, Item 3, paragraph 5. On March 27, 1996, the court issued an order staying the action and deferring discovery, which granted a joint motion filed by Florida Power and NCP Lake Power. The order stays the litigation while the final terms of a settlement agreement are being negotiated. The stay can be terminated by either party upon 30-days notice. 2) Praxair, Inc. v. Florida Power & Light Company and Florida Power Corporation, U.S. District Court for the Middle District of Florida, Tampa Division, Civil Action No. 88-1672-CIV-T-13C. See prior discussion of this matter in the 1995 Form 10-K, Item 3, paragraph 7. In March 1996, Praxair, Inc. filed a petition with the United States Supreme Court seeking review of the decision of the court of appeals granting the motion for summary judgement filed by Florida Power and Florida Power & Light ("FP&L"). Florida Power and FP&L filed pleadings in opposition to this petition in April 1996. On May 13, 1996, the Supreme Court denied Praxair's petition to review the decision of the court of appeals. This case is now considered concluded for reporting purposes. 3) Sanford Coal Gasification Plant Site, Sanford, Florida See prior discussion of this matter in the 1995 Form 10-K, Item 3, paragraph 10. In the third quarter 1996, the EPA is expected to complete a supplemental study of nearby Lake Monroe, to determine if contamination exists in the water or the soil. If this contamination is confirmed, the site could score well over the 28.5 threshold referred to in the 1995 Form 10-K, thereby causing the EPA to add this site to the EPA's National Priorities List of sites that require cleanup. The EPA is expected to coordinate with the Florida Department of Environmental Protection in scoring the site. (For additional information on environmental matters, see Note 3 to the Financial Statements.) 4) Peak Oil Company, Missouri Electric Works, 62nd Street, AKO Bayside, Bluff Electric and Sydney Mine Superfund Sites. See prior discussion of this matter in the 1995 Form 10-K, Item 3, paragraph 11. Florida Power and the plaintiffs to the Sydney Mine site have reached a settlement in principle. Florida Power's settlement amount is expected to be approximately $56,000. (For additional information on environmental matters, see Note 3 to the Financial Statements.) 5) In re: Standard Offer Contract for the purchase of firm capacity and energy from a qualifying facility between Panda-Kathleen, L.P. and Florida Power Corporation, FPSC Docket No. 950110-EI. See prior discussion of this matter in the 1995 Form 10-K, Item 3, paragraph 2. On April 30, 1996, the FPSC ruled in favor of Florida Power's petition by affirming that its standard offer contract is not available to Panda-Kathleen, L.P. ("Panda") if it constructs a 115 MW facility with a 30-year term for making capacity payments. The FPSC's rules limit standard offer cogeneration projects to 75 MWs and limit the term for making capacity payments to the life of the avoided unit, which in this case is 20 years rather than 30 years. After this ruling is issued in a written order to be released on or about May 13, 1996, Panda has 15 days to request FPSC reconsideration of the decision. (For additional information on purchased power, see Note 3 to the Financial Statements.) 15 Item 4. Submission of Matters to a Vote of Security-Holders. The Annual Meeting of Shareholders of Florida Progress was held on April 18, 1996. There were 96,481,740 shares of common stock entitled to vote. The following matters were voted upon at the meeting: 1) Election of Directors Class III - Terms Expiring in 1999 Votes Votes For Withheld Jack B. Critchfield 84,171,911 2,691,151 Clarence V. McKee 84,506,856 2,356,206 Richard A. Nunis 84,769,683 2,093,379 Jean Giles Wittner 84,781,461 2,081,601 2) Florida Progress proposal to approve a Stock Plan for Non-Employee Directors of Florida Progress Corporation and Subsidiaries that would pay 75% of each non-employee director's retainer fee in common stock. Voting results: For the proposal: 81,424,004 Against the proposal: 4,179,956 Abstentions: 1,259,102 Broker Non-votes: 0 3) Shareholder proposal to adopt a policy that requires annual salary increases for executive officers that are greater than 4% of their prior year's salary to be approved by a vote of the shareholders. For the proposal: 14,804,427 Against the proposal: 56,915,606 Abstentions: 2,194,345 Broker Non-votes: 12,948,684 16 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: Florida Florida Number Exhibit Progress Power ------ ------- -------- ------- 10 Agreement dated March 21, 1996 between X X Florida Progress and Allen J. Keesler, Jr.* 12 Statement Regarding Computation of Ratio X of Earnings to Fixed Charges for Florida Power. 27.(a) Florida Progress Financial Data Schedule. X 27.(b) Florida Power Financial Data Schedule. X X = Exhibit is filed for that respective company. * = Exhibit constitutes an executive compensation plan or arrangement. (b) Reports on Form 8-K: During the first quarter 1996, Florida Progress and Florida Power filed the following reports on Form 8-K: Form 8-K dated January 22, 1996, reporting under Item 5 "Other Events" a press release and related Investor Information Report reporting Florida Progress' and Florida Power's 1995 earnings, and a press release dated January 17, 1996, reporting the retirement of Florida Power's President. Form 8-K dated February 8, 1996, reporting under Item 5 "Other Events" a news release dated February 8, 1996, reporting the declaration of a cash dividend on Florida Progress common stock. In addition, Florida Progress and Florida Power filed the following report on Form 8-K subsequent to the first quarter 1996: Form 8-K dated April 22, 1996, reporting under Item 5 "Other Events" a press release and related Investor Information Report reporting Florida Progress' and Florida Power's first quarter 1996 earnings. 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FLORIDA PROGRESS CORPORATION FLORIDA POWER CORPORATION Date: May 14, 1996 /s/ John Scardino, Jr. ----------------------------- John Scardino, Jr. Vice President and Controller Date: May 14, 1996 /s/ James V. Smallwood ----------------------------- James V. Smallwood Vice President and Treasurer 18 Exhibit Index Florida Florida Number Exhibit Progress Power ------ ------- -------- ------- 10 Agreement dated March 21, 1996 between X X Florida Progress and Allen J. Keesler, Jr.* 12 Statement Regarding Computation of Ratio X of Earnings to Fixed Charges for Florida Power. 27.(a) Florida Progress Financial Data Schedule. X 27.(b) Florida Power Financial Data Schedule. X X = Exhibit is filed for that respective company. * = Exhibit constitutes an executive compensation plan or arrangement. 19 EX-10 2 COMBINED FL PROGRESS/POWER 3/31/96 FORM 10-Q [LOGO] Florida Progress Corporation One Progress Plaza 33701 P.O. Box 33042 St. Petersburg, FL 33733 813/824-6400 March 21, 1996 Allen J. Keesler, Jr. President Florida Power Corporation 3201 34th Street, South St. Petersburg, FL 33733 Dear Allen: In view of your impending retirement on April 1, 1996, this letter will serve as a means for Florida Progress Corporation ("Florida Progress") and Florida Power Corporation ("Florida Power") to acknowledge the benefits that they are willing to provide in connection with your retirement as an officer of Florida Power. Florida Progress and Florida Power agree to the following: 1. Your current salary shall continue through April 1, 1996, and you shall be eligible to earn a pro-rata Management Incentive Compensation Plan award for 1996. In addition, you will earn compensation for any unused vacation that was earned in 1995. The restricted shares you have earned under the 1992-1994 and the 1993-1995 performance cycles of the Long Term Incentive Plan shall vest as of January 1, 1997, and all restrictions under that plan shall lapse as of that date. You also shall be eligible to earn a pro rata percentage of your Long Term Incentive Plan award for Cycles IV and V. 2. You have been designated a participant under Article 5 of the Florida Progress Corporation Supplemental Executive Retirement Plan, as amended and restated as of October 1, 1994 ("SERP"), by the Compensation Committee of the Board of Directors of Florida Progress. Upon your retirement from Florida Power, the amount of your total yearly retirement benefit, payable monthly pursuant to Section 5.1(b)(1) of the SERP, would be $375,761.53 until you reach age 62, assuming that you select the 50% contingent annuitant option as a survivor benefit under the Employees Retirement Plan of Florida Progress Corporation ("Retirement Plan") and the Florida Progress Corporation Retirement Benefit Nondiscrimination Plan for Excess Benefits ("Nondiscrimination Plan"). You may select from several other survivor benefit payment options under those two A. J. Keesler, Jr. Page 2 plans; however, selecting another payment option would change the amount of your total payments under those three plans, due to the adjustment provided for in Section 6.1(c) of the SERP. For example, your selection of the 100% contingent annuitant option would result in a total annual benefit to you of $368,752.75 until age 62. After age 62, your annual benefit, in any event, will be reduced by $11,856, which is the amount of your annual social security retirement benefit. Upon your death, your wife, Sarah, shall be entitled to receive a surviving spouse benefit pursuant to Section 5.2 of the SERP, provided she is your legal spouse on your date of death. The foregoing amounts do not reflect any required withholdings for federal tax purposes. 3. The amount by which the total monthly amounts payable pursuant to paragraph 2 above exceeds the sum of the monthly amounts payable pursuant to the Retirement Plan and the Nondiscrimination Plan are payable solely from and pursuant to Article 5 of the SERP. 4. You are entitled to receive medical benefits under the terms and conditions of the Florida Power Comprehensive Medical Plan. 5. You are entitled to receive life insurance coverage equal to your base salary until you reach age 70, at which point your life insurance will decrease to one-half of that base salary calculation. 6. You have previously been designated a participant in the SERP under Article 4. As a vested participant, you and your wife, Sarah, are entitled to certain benefits. However, under the SERP, you may not receive the special early retirement benefits under Article 5 if you are eligible for benefits under Article 4. Consequently, you and Sarah hereby waive and relinquish all benefits you are entitled to under Article 4 of the SERP and withdraw as a participant thereunder. 7. Deferrals of compensation under the Executive Deferred Compensation Plan will be paid out in the month that you designate in 1996, or automatically in the first quarter of 1997. In consideration of the preceding: A. You agree not to sue or to file any action or charge, claim, or lawsuit, and to fully release and discharge Florida Power and/or Florida Progress Corporation ("Florida Progress") and their employees, officers, and directors, from any and all claims, wages, causes of action, expenses, attorneys' fees, damages, judgments, and liabilities under applicable federal, state or local law, regulation, or ordinance including, but not limited to, any claim for age or other type of discrimination under the Age Discrimination in Employment Act, The Older Workers' Benefits Protection Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, or any other federal, state, or A. J. Keesler, Jr. Page 3 local law or ordinance. This waiver and release does not apply to any claims or rights that may arise under the Age Discrimination in Employment Act after the date that you sign this agreement. Florida Progress expressly denies any violation of any of its policies, procedures, or local, state or federal laws, regulations, or ordinances. B. You agree that you have been privy to certain confidential or proprietary information concerning Florida Progress and its affiliates, including, but not limited to, confidential or proprietary information relating to strategic business plans, ongoing business operations and practices, financial data (both historical and projected), business relationships (including those with customers, vendors and co-ventures or partners) and trade secrets. You agree that you will not (i) divulge such information to any person or organization, other than to further the business interests of Florida Progress and its affiliates, (ii) use such information in a manner that would be detrimental to Florida Progress or any of its affiliates, or (iii) purchase or sell securities based upon such information, unless in all cases such information becomes public otherwise than as a result of a breach of confidence. Also, we expect that you will refrain from accusing Florida Progress or its affiliates of any wrongdoing based upon events that have occurred to date; provided, however, that the foregoing undertaking on your part will not preclude you from providing truthful testimony to or before a court or regulatory body in the event you are required to do so and provided, however, you may disclose information if the disclosure is protected by the Florida Whistleblowers Act of 1986, or any similar applicable federal or state statute. C. You also acknowledge that you are aware of the forfeiture provisions contained in Sections 5.05 of the Nondiscrimination Plan and Section 9.4 of the SERP, which are attached hereto, and that they impose obligations on you which if breached could result in the forfeiture of benefits payable in accordance with this Agreement and those plans. Among other things, you are obligated to not render any services of any advisory nature or become employed by or participate or engage in any business in competition with Florida Progress or any of its subsidiaries, without the prior written consent of Florida Progress. For purposes of this sub-paragraph C., any entity (including, but not limited to, any investor-owned company, electric co-operative, independent power producer, municipal or public agency or authority) involved, directly or indirectly, in the ownership or operation of facilities used for the generation, transmission, distribution, or brokering of electricity shall be considered to be in competition with Florida Power. D. You also agree that the entitlement to be paid benefits under this agreement and pursuant to the SERP and the Nondiscrimination Plan (but not the benefits payable pursuant to the Retirement Plan), whether to you or your surviving spouse, shall be discontinued and forfeited, and Florida Progress and Florida Power shall have no further obligation under the SERP to you or your surviving spouse if (1) you undertake or engage in any act or conduct (whether alone, or with or on behalf of any person or firm) that has or is reasonably likely to have an adverse impact on the financial condition, operations or business prospects of Florida Progress or any of its affiliates A. J. Keesler, Jr. Page 4 and (2) within thirty days after Florida Progress requests that you cease such act or conduct, you fail to cease such act or conduct. The obligation of Florida Power and Florida Progress to provide the above-described benefits is conditioned upon your acceptance of, and agreement to comply with, the obligations contained or referred to in the preceding four paragraphs. Should you accept those conditions and obligations and subsequently breach their terms, Florida Power and Florida Progress shall have no further obligations under this Agreement and may avail themselves of any judicial relief, including, without limitation, the recoupment of all monies paid and the value of all benefits conveyed under this Agreement, except for any monies paid and benefits conveyed from the Retirement Plan. Should Florida Progress or Florida Power waive performance of any of your obligations, that will not constitute an ongoing waiver or a waiver of such obligation in the future. Should any party to this Agreement engage the services of an attorney in order to enforce its rights under this Agreement in the event of a breach thereof, the prevailing party in any action shall be entitled to recover all reasonable costs and expenses (including reasonable attorneys' fees before and at trial and in appellate proceedings), together with prejudgment interest on any amounts found due from the date such amounts would have been payable at an annual interest rate of six percent (6%). It is recommended that you review this Agreement with an attorney prior to signing and accepting its terms. You will have forty-five (45) days from the date of your receipt of this Agreement to review it prior to signing. In addition, you will have the right to revoke this Agreement within seven (7) days of the date on which the Agreement is signed by the parties to the Agreement. In the event that you revoke this Agreement, the benefits described within this Agreement will not be paid to you. You understand and agree that the benefits under this Agreement will not be paid until the expiration of this seven (7) day period. This Agreement may not be altered, amended, modified or terminated except by an instrument in writing executed by an authorized representative of Florida Progress, Florida Power and you. You agree that, except for your rights under the plans listed in Schedule A hereto, this is the entire Agreement between you, Florida Progress and Florida Power, written or oral. The rights and obligations of each party under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of that party. A. J. Keesler, Jr. Page 5 The undersigned parties have had an opportunity to read and review this document and they freely, voluntarily and without coercion agree to the terms set forth within this Agreement and waive any rights in contradiction thereto. This document was received by you on March 22, 1996. FLORIDA PROGRESS CORPORATION By: /s/ Richard Korpan ------------------------------ Richard Korpan President and Chief Operating Officer Date: 3/21/96 FLORIDA POWER CORPORATION AGREED: /s/ Allen J. Keesler, Jr. By: /s/ Joseph H. Richardson - --------------------------- ------------------------------ Allen J. Keesler, Jr. Joseph H. Richardson Senior Vice President /s/ Sarah Keesler Date: 3/22/96 - --------------------------- Sarah Keesler Date: 3/28/96 Attachments Schedule A to Keesler Letter 1. Employees' Retirement Plan of Florida Progress Corporation. 2. Florida Progress Corporation Retirement Benefit Nondiscrimination Plan for Excess Benefits. 3. Florida Progress Corporation Supplemental Executive Retirement Plan, Benefits under Article 5. 4. Savings Plan for Employees of Florida Progress Corporation. 5. Florida Progress Corporation Long-Term Incentive Plan. 6. Florida Power Comprehensive Medical Plan. 7. Florida Progress Executive Deferred Compensation Plan. 9.4 Forfeiture of Benefits. As a condition of receiving benefits under this Plan, a Participant shall not, directly or indirectly, after the termination of his or her employment with an Employer: (a) use or disclose any financial or business information of the Company and/or its subsidiaries obtained by the Participant during the course of his or her employment, other than information that has been previously made available to the public through normal, authorized business channels, in a manner that would be prejudicial to the interests of the Company and its subsidiaries. Notwithstanding the preceding requirements of this subsection (a), a Participant may disclose information if required by legal process or if the disclosure is protected by the Florida Whistle-blower's Act of 1986, or any similar applicable federal or state statue; or (b) render any services of an advisory nature or become employed by or participate or engage in any business in competition with the Company or any of its subsidiaries, without the prior written consent of his or her Employer. A Participant shall be considered as engaging in a business if he or she is a shareholder or other owner, or partner, director, officer, or employee of, or consultant to, the business; provided, that a Participant shall not be prohibited from owning securities of a competitor if (1) the securities owned constitute less that 2% of the competitor's total outstanding securities of the same class and (2) the Participant does not have the power to control, direct or substantially influence the competitor's management or policies. Any breach of any of the foregoing conditions will result in complete forfeiture of any further benefits under the Plan for both the Participant and any surviving spouse of the Participant. The immediately preceding sentence shall not require the forfeiture or the return of any benefit received or due prior to the breach of any of the specific conditions. 9.5 Applicable Law. This instrument shall be construed in accordance with and governed by the laws of the State of Florida, to the extent not superseded by the laws of the United States. RETIREMENT BENEFIT NONDISCRIMINATION PLAN ARTICLE V - GENERAL PROVISIONS 5.01 If and whenever the Board of Directors authorizes post-retirement increases in benefits in respect of Employees retired under the Retirement Plan, the Company shall, unless otherwise directed by the said Board, contemporaneously grant increases in benefits under this Plan to parallel the action taken by said Board with respect to Retirement Plan benefits. 5.02 The Company shall have the right to deduct from each payment to be made under this Plan any required withholding taxes. 5.03 Except as specifically provided herein, benefits payable hereunder shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge. 5.04 In the event that the Company shall find that an Eligible Employee or other person entitled to a benefit is unable to care for his affairs because of illness or accident, is a minor or has died, the Company may direct that any benefit payment due him, unless claim shall be have been made therefor by a duly appointed legal representative, be paid to his spouse, a child including an adopted child of the Eligible Employee, a parent or other blood relative, or to a person with whom he resides, and any such payment so made shall be a complete discharge of the liabilities of the Plan therefor. 5.05 In the event that an Eligible Employee shall commit any wrongful act, either directly or indirectly, against, and to the detriment of, the Company, and as a result thereof his employment is terminated, the Company shall have no further obligation to make payments either to the Eligible Employee or his beneficiary under the Plan. In addition, an Eligible Employee shall forfeit any benefit payments thereafter due him under the Plan if he, without the prior written consent of the company, at any time enters into or in any manner takes part either as an employee, agent, officer, director, owner, or otherwise, in any business which is in competition with the Company or any of its subsidiaries. The Company shall have the absolute right to determine in its sole discretion: (i) whether or not an Eligible Employee's employment was terminated as a result of a wrongful act and (ii) whether or not an Eligible Employee has in any manner entered into competitive activity so as to cause termination of his benefits hereunder. EX-12 3 COMBINED FL PROGRESS/POWER 3/31/96 FORM 10-Q Exhibit 12 FLORIDA POWER CORPORATION Statement of Computation of Ratios (Dollars In Millions) Ratio of Earnings to Fixed Charges: Twelve-Months Year Ended Ended March 31, December 31, 1996 1995 1995 1994 ------ ------ ------ ------ Net Income $228.9 $209.8 $227.0 $200.8 Add: Operating Income Taxes 130.8 120.5 129.5 114.7 Other Income Taxes 0.2 (0.9) 0.1 (0.8) ------ ------ ------ ------ Income Before Taxes 359.9 329.4 356.6 314.7 Total Interest Charges 102.9 107.7 104.5 108.4 ------ ------ ------ ------ Total Earnings (A) $462.8 $437.1 $461.1 $423.1 ------ ------ ------ ------ Fixed Charges (B) $102.9 $107.7 $104.5 $108.4 ------ ------ ------ ------ Ratio of Earnings to Fixed Charges (A/B) 4.50 4.06 4.41 3.90 ===== ===== ===== ===== EX-27.(A) 4 COMBINED FL PROGRESS/POWER 3/31/96 FORM 10-Q
UT 1,000,000 0000357261 FLORIDA PROGRESS CORPORATION DEC-31-1996 MAR-31-1996 3-MOS PER-BOOK 3,598 1,231 686 109 175 5,799 1,198 0 887 2,085 25 114 1,621 0 0 0 196 0 0 0 1,758 5,799 740 27 628 655 85 (2) 83 33 50 2 48 50 0 181 0.50 0.50
EX-27.(B) 5 COMBINED FL PROGRESS/POWER 3/31/96 FORM 10-Q
UT 1,000,000 0000037637 FLORIDA POWER CORPORATION DEC-31-1996 MAR-31-1996 3-MOS PER-BOOK 3,598 193 376 0 104 4,271 1,005 0 757 1,762 25 114 1,179 0 0 0 51 0 0 0 1,140 4,271 547 25 453 478 69 0 69 24 45 2 43 47 0 190 0.00 0.00
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