Florida Progress Corporation
Investor News
Analysts Contacts:
Mark A. Myers (813) 866-4245
Greg Beuris (813) 866-4442
[LOGO OMITTED]
Florida Progress reports increase in 1996 earnings
St. Petersburg, Florida, January 27, 1997 -- Florida Progress Corporation
(NYSE:FPC), parent of St. Petersburg-based Florida Power Corporation, reported
1996 earnings from continuing operations before non-recurring items of $252.4
million or $2.61 per share, compared with $238.9 million, or $2.50 a share in
1995. This is an increase of 4.4% in earnings per share. The non-recurring items
were a $.26 per share after-tax charge for the provision for loss on certain
coal properties, a $.24 per share gain on the sale of Advanced Separation
Technologies Incorporated and a $.27 a share after-tax charge to earnings
related to the spin-off of Echelon International Corporation.
Significant items influencing 1996 results:
o Good Utility Growth - Strong residential customer growth of nearly 2%.
o Regulatory asset amortization - Accelerated the amortization of
certain regulatory assets which totaled $31 million.
o Provision for loss on coal properties - Electric Fuels Corporation
recorded a $25.2 million or $.26 per share after-tax charge to
earnings due to a provision for loss on certain unprofitable coal
properties.
o Lower earnings at Mid-Continent Life - Disappointing sales of a new
life insurance product along with higher death claims and
restructuring costs lowered 1996 earnings.
o Sale of Advanced Separation Technologies - Recorded an after-tax gain
of $23.5 million or $.24 per share.
o Spin-off of Echelon International to shareholders - Completed the
divestiture of Echelon International through a tax-free stock
dividend to shareholders in December 1996.
Florida Power, the largest subsidiary of Florida Progress, earned $232.6 million
or $2.40 per share, on revenues of $2.4 billion for the year, compared to
earnings of $217.3 million, or $2.27 per share, on revenues of $2.3 billion in
1995. This reflects an increase of 5.7% over 1995 earnings per share.
Residential customer growth of about 2% in 1996 was the primary reason for
Florida Power's 2.9% increase in retail energy sales over 1995. Contributing to
the increase was higher usage among commercial and industrial customers.
Operating and maintenance expenses increased $19.7 million or five percent over
1995. The increase is due primarily to additional maintenance costs associated
with the prolonged outage of the Crystal River nuclear plant and expenses
associated with customer service improvements for the company's telephone
centers and an expanded tree trimming program designed to improve service
reliability.
During 1996, continuing cost control efforts allowed Florida Power to further
strengthen its balance sheet by writing off $31 million in regulatory assets.
This included two oil-fired power plants -- Higgins and Turner -- which were
placed in extended cold shutdown in 1994. The Public Service Commission had
previously authorized the utility to amortize the costs of its canceled Lake
Tarpon-Kathleen transmission line over a four-year period beginning in 1995.
However, Florida Power chose to accelerate the amortization and complete the
write-off in 1996.
Interest expense and preferred dividends for Florida Power were $10 million
lower in 1996 compared to 1995. Improved cash flow resulted in lower debt
balances, and the redemption of $80 million of preferred stock in June 1996 and
$25 million in November 1996 lowered preferred dividends for the year.
Electric Fuels earned $27.1 million in 1996 before the provision for loss on
certain coal properties, up 12.9% over 1995 earnings of $24 million. The
increase is primarily attributable to higher tonnage handled by its marine and
terminaling services operations.
Electric Fuels began purchasing low-sulfur coal operations in the late 1980's as
part of a strategy to take advantage of the expected increase in demand for
low-sulfur coal. The increase was expected because of sulfur dioxide emission
requirements imposed on electric utilities by the Clean Air Act amendments of
1990. The supply of inexpensive low-sulfur coal from mines in the western United
States and the low cost of emission allowance credits have kept the price of
Central Appalachian low-sulfur coal lower than originally forecasted.
Since these coal market conditions are not considered by management to be
temporary, Electric Fuels' management decided to close and hold for sale certain
coal properties, which resulted in a provision for loss on these properties.
Mid-Continent Life Insurance Company introduced a new life insurance product in
1996 in an effort to reverse the decline in sales of new policies, and replaced
its previous product, which was determined to be inadequately priced. In 1997,
Mid-Continent plans to begin an orderly process to resolve the pricing issue.
This is expected to involve reducing policy dividends and increasing premiums.
Sales of the new policy have not met management's expectations. In November,
Mid-Continent restructured its operations to be able to reduce its workforce to
compete on a more focused and cost efficient basis.
Florida Progress sold its 80% share of Advanced Separation Technologies for $56
million and realized an after-tax gain of $23.5 million or $.24 per share.
Advanced Separation Technologies is a manufacturer of chemical separation
devices headquartered in Lakeland, Florida. It has annual sales of approximately
$27 million and 65 employees.
On December 18, 1996, Florida Progress completed the divestiture of Echelon
International, formerly Progress Credit Corporation, through a tax-free spin-off
to shareholders. As part of the transaction, Florida Progress recorded a $26.3
million after-tax charge to earnings for the write-down of certain non-core
assets of Echelon International and transaction costs associated with the
divestiture.
Restructuring its diversified businesses was a high priority for Florida
Progress in 1996. Through the spin-off of Echelon International, the sale of
Advanced Separation Technologies and the restructuring of Mid-Continent, Florida
Progress made significant strides in exiting those businesses that are not
related to its core businesses, Florida Power and Electric Fuels.
Florida Progress (NYSE:FPC) is a Fortune 500 diversified utility holding company
with assets of $5.3 billion. Its principal subsidiary is Florida Power, the
state's second-largest electric utility with about 1.3 million customers.
Diversified operations include coal mining, marine operations, rail services,
and life insurance.
FLORIDA PROGRESS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME Page 4
(In millions, except per share amounts)
Three Months Ended Twelve Months Ended
December 31 December 31
------------------- -------------------
(UNAUDITED) 1996 1995 1996 1995
-------- -------- -------- --------
REVENUES:
Electric utility $562.9 $533.5 $2,393.6 $2,271.7
Diversified 212.0 197.6 764.3 736.1
--------- --------- --------- ---------
774.9 731.1 3,157.9 3,007.8
EXPENSES: --------- --------- --------- ---------
Electric utility:
Fuel 86.7 94.6 409.7 431.3
Purchased power 143.4 109.7 531.6 436.5
Energy conservation cost 11.5 19.1 62.6 84.0
Operations and maintenance 109.2 101.6 413.4 393.7
Depreciation 82.7 76.4 324.2 293.7
Taxes other than income taxes 40.5 40.0 183.6 176.2
--------- --------- --------- ---------
474.0 441.4 1,925.1 1,815.4
--------- --------- --------- ---------
Diversified:
Cost of sales 180.0 169.4 642.9 624.6
Provision for loss on coal properties 40.9 - 40.9 -
Other 19.1 14.9 66.6 58.9
--------- --------- --------- ---------
240.0 184.3 750.4 683.5
--------- --------- --------- ---------
INCOME FROM OPERATIONS 60.9 105.4 482.4 508.9
--------- --------- --------- ---------
INTEREST EXPENSE AND OTHER:
Interest expense 32.5 33.9 135.9 139.4
Allowance for funds used during
construction (2.0) (1.7) (7.5) (7.3)
Preferred dividend requirements of
Florida Power 0.6 2.4 5.8 9.7
Gain on sale of business (44.2) - (44.2) -
Other expense (income) 0.9 (1.1) (4.2) (9.9)
--------- --------- --------- ---------
(12.2) 33.5 85.8 131.9
--------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 73.1 71.9 396.6 377.0
Income Taxes 27.5 25.9 145.9 138.1
--------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS $45.6 $46.0 $250.7 $238.9
DISCONTINUED OPERATIONS, NET
OF INCOME TAXES (1.3) - (26.3) -
--------- --------- --------- ---------
NET INCOME $44.3 $46.0 $224.4 $238.9
========= ========= ========= =========
AVERAGE SHARES OF COMMON STOCK
OUTSTANDING 97.0 96.2 96.8 95.7
========= ========= ========= =========
EARNINGS PER AVERAGE COMMON SHARE
CONTINUING OPERATIONS $0.47 $0.48 $2.59 $2.50
DISCONTINUED OPERATIONS ($0.01) - ($0.27) -
--------- --------- --------- ---------
$0.46 $0.48 $2.32 $2.50
========= ========= ========= =========
Regarding these financial statements:
Current and prior periods reflect the recapitalization of the spin-off company, Echelon
International, and its associated treatment as discontinued operations. These are
interim statements. Reference should be made to Florida Progress Corporation's 1995
Annual Report to shareholders. Neither this report nor any statement contained herein
is furnished in connection with the offering of securities or for the purpose of
promoting or influencing the sale or purchase of securities.
FLORIDA PROGRESS CORPORATION
CONSOLIDATED BALANCE SHEETS Page 5
(In millions)
December 31
-------------------------
(UNAUDITED) 1996 1995
----------- -----------
ASSETS
PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant in service and held for $5,965.6 $5,867.5
for future use
Less - Accumulated depreciation 2,335.8 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 309.3 307.0
---------- ----------
3,826.4 3,916.1
---------- ----------
CURRENT ASSETS:
Cash and equivalents 5.2 4.3
Accounts receivable, net 265.0 307.3
Inventories, primarily at average cost:
Fuel 67.1 63.0
Utility materials and supplies 95.4 101.3
Diversified materials 125.5 111.0
Underrecovery of fuel cost 82.6 0.3
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
---------- ----------
OTHER ASSETS:
Investments:
Loans receivable, net 68.1 31.5
Marketable securities 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 120.9 106.4
Other 176.4 167.6
---------- ----------
833.0 688.7
---------- ----------
$5,348.4 $5,550.4
========== ==========
CAPITAL AND LIABILITIES
CAPITAL:
Common stock equity $1,924.2 $2,078.1
Cumulative preferred stock of Florida Power 33.5 138.5
Long-term debt 1,776.9 1,662.3
---------- ----------
3,734.6 3,878.9
---------- ----------
CURRENT LIABILITIES:
Accounts payable 193.2 165.7
Customers' deposits 81.8 85.3
Income taxes payable 27.8 1.7
Accrued other taxes 13.4 15.6
Accrued interest 48.3 46.9
Other 78.5 97.0
---------- ----------
443.0 412.2
Notes payable 4.1 -
Current portion of long-term debt 34.9 173.7
---------- ----------
482.0 585.9
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes 475.4 512.0
Unamortized investment tax credits 93.5 101.5
Insurance policy benefit reserves 325.3 265.0
Other postretirement benefit costs 100.0 84.5
Other 137.6 122.6
---------- ----------
1,131.8 1,085.6
---------- ----------
$5,348.4 $5,550.4
========== ==========
FLORIDA PROGRESS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS Page 6
(In millions)
Three Months Ended Twelve Months Ended
December 31 December 31
------------------- -------------------
(UNAUDITED) 1996 1995 1996 1995
-------- -------- -------- --------
OPERATING ACTIVITIES:
Income from continuing operations $45.6 $46.0 $250.7 $238.9
Adjustments for noncash items:
Depreciation and amortization 91.6 91.3 366.7 352.7
Gain on sale of business (44.2) - (44.2) -
Provision for loss on coal properties 40.9 - 40.9 -
Deferred income taxes and investment
tax credits, net (19.4) 3.2 (56.6) (38.0)
Increase in accrued other postretirement
benefit costs 3.6 4.0 15.5 16.8
Net change in deferred insurance policy
acquisition costs (0.8) (2.8) (14.5) (14.5)
Net change in insurance policy
benefit reserves 16.3 11.1 60.3 42.5
Changes in working capital, net of effects
from acquisition or sale of businesses:
Accounts receivable 43.0 39.4 35.4 (35.2)
Inventories 7.0 (30.1) (10.9) (29.1)
Overrecovery (underrecovery)of fuel cost (35.2) 8.2 (82.3) 1.5
Accounts payable 0.3 0.4 21.6 16.4
Income taxes payable (36.7) (43.9) 23.3 (8.6)
Accrued other taxes (55.2) (54.0) (2.3) 1.0
Other (16.0) 7.8 (13.5) 29.0
Other operating activities (20.8) (6.6) (19.2) 7.3
--------- --------- --------- ---------
Cash provided by continuing operations 20.0 74.0 570.9 580.7
--------- --------- --------- ---------
Income (loss) from discontinued operations (1.3) - (26.3) -
Adjustments for non-cash items 6.3 (9.2) 17.4 (17.6)
--------- --------- --------- ---------
Cash provided by (used for) discontinued
operations 5.0 (9.2) (8.9) (17.6)
--------- --------- --------- ---------
25.0 64.8 562.0 563.1
--------- --------- --------- ---------
INVESTING ACTIVITIES:
Property additions (including allowance for
borrowed funds used during construction) (72.0) (119.6) (264.0) (331.4)
Purchases of loans and securities, net;
cash associated with Echelon note (45.3) (15.7) (70.4) (28.9)
Proceeds from sales of properties 1.4 3.5 8.4 13.1
Acquisition of businesses (8.7) (3.3) (53.8) (9.2)
Proceeds from sales of businesses 52.7 - 52.7 -
Distributions from (investments in) joint
ventures and partnerships, net (4.8) (0.4) (9.4) (4.0)
Investing activities of discontinued operations 21.3 23.5 56.5 69.8
Other investing activities (3.1) (2.7) (27.6) (11.0)
--------- --------- --------- ---------
(58.5) (114.7) (307.6) (301.6)
--------- --------- --------- ---------
FINANCING ACTIVITIES:
Issuance of long-term debt 60.0 - 178.0 -
Repayment of long-term debt (0.6) (16.3) (190.4) (45.8)
Increase (decrease) in commercial paper with
long-term support (10.0) 106.0 (15.3) 1.0
Redemption of preferred stock (25.5) (5.0) (106.4) (5.0)
Sale of common stock - 9.6 18.5 38.4
Equity contribuitions to discontinued operations (23.7) - (23.7) -
Dividends paid on common stock (50.0) (48.6) (199.5) (193.4)
Increase (decrease) in short-term debt (24.9) - 4.1 (55.3)
Financing activities of discontinued operations 96.5 - 85.2 (9.7)
Other financing activities (0.9) (0.8) (4.0) (1.2)
--------- --------- --------- ---------
20.9 44.9 (253.5) (271.0)
--------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS (12.6) (5.0) 0.9 (9.5)
Beginning cash and equivalents 17.8 9.3 4.3 13.8
--------- --------- --------- ---------
ENDING CASH AND EQUIVALENTS $5.2 $4.3 $5.2 $4.3
========= ========= ========= =========
Florida Progress Corporation
Selected Financial Information (Unaudited) Page 7
Three Months Ended Percent Twelve Months Ended Percent
December 31 Positive December 31 Positive
1996 1995 (Negative) 1996 1995 (Negative)
-------- --------- --------- --------- --------- ---------
Earnings Per Share:
Florida Power Corporation $0.44 $0.43 2.3 $2.40 $2.27 5.7
--------- --------- --------- ---------
Electric Fuels Corporation 0.07 0.07 - 0.28 0.25 12.0
Mid-Continent Life Insurance Co. 0.00 0.01 (100.0) 0.02 0.07 (71.4)
Corporate and other (0.02) (0.03) 33.3 (0.09) (0.09) -
--------- --------- --------- ---------
Diversified Continuing 0.05 0.05 - 0.21 0.23 (8.7)
--------- --------- --------- ---------
Continuing Ops before non-recurring 0.49 0.48 2.1 2.61 2.50 4.4
Provision for loss on coal properties (0.26) - - (0.26) - -
Gain on sale of business 0.24 - - 0.24 - -
--------- --------- --------- ---------
Total Continuing Operations 0.47 0.48 (2.1) 2.59 2.50 3.6
Discontinued Operations (0.01) - - (0.27) - -
--------- --------- --------- ---------
$0.46 $0.48 (4.2) $2.32 $2.50 (7.2)
========= ========= ========= =========
Avg. shares outstanding (millions) 97.0 96.2 0.8 96.8 95.7 1.1
Dividends per share $0.515 $0.505 2.0 $2.060 $2.020 2.0
Book value per share:
Florida Power Corporation $18.82 $18.19 3.5
Consolidated $19.84 $21.55 (7.9)
<CAPTION
December 31 December 31
December 31 1996 1995
1996 1995 Amount Percent Amount Percent
--------- --------- ---------- ---------- ---------- --------
Equity investments (percent): Capitalization (in millions):
Florida Power Corporation 88 87 Common stock $1,924.2 51.0 $2,078.1 51.3
Electric Fuels Corporation 8 9 Preferred stock 33.5 0.9 138.5 3.4
Mid-Continent Life Insurance Co. 4 4 Long-term debt 1,776.9 47.1 1,662.3 41.0
--------- --------- Short-term debt 39.0 1.0 173.7 4.3
Total 100 100 ---------- ---------- ---------- ----------
========= ========= Total $3,773.6 100.0 $4,052.6 100.0
========== ========== ========== ==========
Note: Current and prior periods reflect the recapitalization of the spin-off company, Echelon International, and its
associated treatment as discontinued operations.
Florida Power Corporation
Selected Statistical Data (Unaudited) Page 8
(In millions, except billing degree days)
Three Months Ended Twelve Months Ended
December 31 Percent December 31 Percent
1996 1995 Change 1996 1995 Change
------- ------- ------- ------- ------- -------
Revenues:
Residential $285.9 $293.0 (2.4) $1,299.1 $1,252.7 3.7
Commercial 135.1 128.6 5.1 537.3 515.3 4.3
Industrial 52.2 49.0 6.5 206.8 189.3 9.2
Other retail sales 33.8 30.0 12.7 125.9 116.5 8.1
--------- --------- --------------------
507.0 500.6 1.3 2,169.1 2,073.8 4.6
Sales for resale 33.3 38.8 (14.2) 159.9 149.6 6.9
--------- --------- --------------------
540.3 539.4 0.2 2,329.0 2,223.4 4.7
Other electric revenues 15.3 3.8 302.6 58.4 51.5 13.4
Deferred fuel 7.3 (9.7) - 6.2 (3.2) -
--------- --------- --------------------
Total $562.9 $533.5 5.5 $2,393.6 $2,271.7 5.4
========= ========= ====================
Kilowatt-hour sales billed:
Residential 3,338.6 3,457.3 (3.4) 15,481.4 14,938.0 3.6
Commercial 2,186.7 2,146.5 1.9 8,848.0 8,612.1 2.7
Industrial 1,028.5 1,012.3 1.6 4,223.7 3,864.4 9.3
Other retail sales 589.9 535.3 10.2 2,231.7 2,085.0 7.0
--------- --------- --------------------
7,143.7 7,151.4 (0.1) 30,784.8 29,499.5 4.4
Sales for resale 622.0 882.1 (29.5) 2,707.7 2,903.1 (6.7)
--------- --------- --------------------
Total electric sales 7,765.7 8,033.5 (3.3) 33,492.5 32,402.6 3.4
========= ========= ====================
System Requirements (KWH) 7,678 7,896 (2.8) 34,715 33,667 3.1
Retail KWH Sales
(Billed & Unbilled) 6,881 7,059 (2.5) 30,613 29,745 2.9
Billing Degree Days:
Cooling 611 892 (31.5) 3,682 3,929 (6.3)
Heating 98 121 (19.0) 859 601 42.9
Note:
Total revenues include billed revenues and unbilled revenues that are accrued for accounting
purposes. Statistics for total kilowatt-hour sales include only billed kilowatt-hour sales. The
statistic for retail KWH sales includes both billed and unbilled sales. Beginning in 1995, Florida
Power was ordered by state regulators to conduct a three-year test of residential revenue
decoupling. Under the plan, abnormal weather variances will no longer impact earnings with respect
to residential revenues.