EXHIBIT 99.(a)
Florida Progress Corporation
Investor News
Analyst Contacts:
Mark A. Myers (813) 866-4245
Greg Beuris (813) 866-4442
[CORPORATE LOGO OMITTED]
Florida Progress reports decrease in 1997 first-quarter earnings
St. Petersburg, Florida, April 17, 1997 -- Florida Progress Corporation
(NYSE:FPC), parent of St. Petersburg-based Florida Power Corporation, reported
first quarter 1997 earnings of $42 million or $.43 per share, compared with
$48.3 million or $.50 a share in the first quarter of 1996. The decrease is due
to higher costs associated with the extended outage of Florida Power's Crystal
River nuclear unit, planned fossil unit outages and the impact of the March
floods along the Ohio and Mississippi rivers to Florida Progress' energy and
transportation operations.
Significant items influencing first-quarter results:
o Flooding hurts non-utility earnings - Extensive flooding along the
Ohio and Mississippi rivers caused damage to several river terminals
owned by Electric Fuels Corporation, a Florida Progress energy and
transportation subsidiary, and disrupted barge shipments.
o Higher utility operating & maintenance costs - Florida Power
incurred higher operating and maintenance expenses related to outage
work at its nuclear unit and several of its fossil-fired plants.
o Solid customer growth - Florida Power's retail customer base
continued to grow by about 2 percent during the first quarter 1997,
compared with the first quarter of 1996. This is approximately twice
the national average for investor-owned utilities.
o Mild winter weather lowers sales - The mild winter in Florida
resulted in an 8.1 percent reduction in kilowatt-hour sales. The
largest portion of this came from a 15.9 percent decline in
residential sales. However, the impact on Florida Power's earnings
was minimal because of revenue decoupling, which eliminates the
impact of abnormal weather on residential revenues.
Florida Power, the largest subsidiary of Florida Progress, earned $41.2 million
or $.42 per share, on revenues of $553.8 million for the quarter, compared with
earnings of $42.9 million, or $.44 per share, on revenues of $547.3 million for
the same period in 1996.
Florida Power's retail customer growth was about 2 percent for the first quarter
of 1997 compared with 1996. Residential and commercial customer growth rates in
the utility's Central Florida region were 3.4 percent and 3 percent,
respectively. Florida Power continues to benefit from an above-average growth
rate compared with the industry average.
-- more --
The mild winter weather of 1997 contrasted greatly to the abnormally cold
weather in 1996. Although this difference had a significant effect on
kilowatt-hour sales, there was little impact on Florida Power's earnings. This
is because residential revenue decoupling eliminates the earnings impact
abnormal weather has on residential sales, Florida Power's largest customer
group. Florida Power is in the last year of a three-year test of revenue
decoupling that was ordered by the Florida Public Service Commission.
Operating and maintenance expenses for Florida Power increased approximately $10
million during the first quarter of 1997 compared with 1996. The increase is due
primarily to additional maintenance costs associated with the prolonged outage
of the Crystal River nuclear plant and maintenance associated with certain
planned outages of fossil-fueled plants.
The nuclear unit was taken out of service on September 2, 1996, to repair an oil
pressure problem with its main turbine. While repairs were completed in October,
Florida Power kept the unit down to address certain backup safety system design
issues. The unit is currently scheduled to return to service by the end of 1997.
Florida Power's preferred dividends and depreciation expense were lower by about
$2 million and $3 million respectively for the first quarter of 1997 compared
with 1996. In the second half of 1996 Florida Power redeemed $105 million of
preferred stock that has resulted in lower financing costs for the utility.
Depreciation expense was higher in 1996 because the company accelerated the
write-off of certain regulatory assets.
Electric Fuels earned $3.3 million, or $.03 per share, in the first quarter of
1997 compared with $6.8 million, or $.07 per share, in 1996. The decrease was
due primarily to the impact of flood conditions along the Ohio and Mississippi
rivers. These floods, described as the worst since 1964, temporarily stopped
river transportation and terminal services and continue to disrupt barge traffic
along these rivers.
Electric Fuels' Inland Marine group operates its fleet of over 700 barges and 20
tow boats along the Ohio and Mississippi rivers. The March floods resulted in
lost revenues and reduced profit margins for the first quarter of 1997. Electric
Fuels operates several docks along the Ohio, Big Sandy and Kanawha rivers, which
were directly impacted by the high flood waters. Terminal services at these
docks were suspended during this time, which also adversely affected the
delivery of coal to the terminals.
On April 14, 1997, the insurance commissioner of the state of Oklahoma received
approval from the Oklahoma County District Court to temporarily seize control of
the operations of Mid-Continent Life Insurance Company, a subsidiary of Florida
Progress Corporation.
The action taken by the insurance commissioner is known as judicial
rehabilitation. Judicial rehabilitation is similar to a Chapter 11 bankruptcy,
which is designed to rehabilitate a company, then return it to normal
operations.
-- more --
Florida Progress has previously stated that Mid-Continent is not a good
long-term fit and that Florida Progress intends to rationally exit this
business. Mid-Continent's earnings in 1996 were $1.9 million, which represent
less than one percent of Florida Progress' consolidated earnings. In addition,
the life insurance unit does not pay any dividends to Florida Progress. The
company's equity investment in Mid-Continent was approximately $85 million at
March 31, 1997.
A hearing is set for May 14, 1997 in Oklahoma City for Mid-Continent to appear
before the court to show cause why an order of rehabilitation should not be
entered against the insurance company and why a receiver should not be appointed
for Mid-Continent. Florida Progress and Mid-Continent expect to meet with the
insurance commissioner before the court hearing date in an attempt to resolve
the matter without judicial action.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: this news release contains forward looking statements, including those
related to the restart of Florida Power's Crystal River nuclear unit by the end
of 1997. These statements involve risks and uncertainties that could cause
actual results or outcomes to differ materially from expectations. Key factors
that have a direct impact on the company's ability to return the unit to service
before the end of 1997 include successful execution of the restart plan, actions
of regulatory bodies, absence of new plant modifications which extend the outage
beyond 1997 and other factors described in the company's Securities and Exchange
Commission filings.
Florida Progress (NYSE:FPC) is a Fortune 500 diversified utility holding company
with assets of $5.5 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
March 31 March 31
------------------- -------------------
(UNAUDITED) 1997 1996 1997 1996
-------- -------- -------- --------
REVENUES:
Electric utility $553.8 $547.3 $2,400.1 $2,303.1
Diversified 193.7 183.1 774.9 742.1
--------- --------- --------- ---------
747.5 730.4 3,175.0 3,045.2
EXPENSES: --------- --------- --------- ---------
Electric utility:
Fuel 94.9 85.0 419.6 422.2
Purchased power 127.2 122.8 536.0 465.0
Energy conservation cost 11.0 19.8 53.9 81.7
Operations & maintenance 110.3 100.3 423.3 394.8
Depreciation 74.3 77.6 320.9 300.6
Taxes other than income taxes 48.1 47.2 184.5 180.5
--------- --------- --------- ---------
465.8 452.7 1,938.2 1,844.8
--------- --------- --------- ---------
Diversified:
Cost of sales 171.8 155.1 659.6 630.5
Provision for loss on coal properties - - 40.9 -
Other 14.9 15.4 66.1 60.0
--------- --------- --------- ---------
186.7 170.5 766.6 690.5
--------- --------- --------- ---------
INCOME FROM OPERATIONS 95.0 107.2 470.2 509.9
--------- --------- --------- ---------
INTEREST EXPENSE AND OTHER:
Interest expense 34.3 34.6 135.6 138.1
Allowance for funds used during
construction (2.1) (1.7) (7.9) (6.8)
Preferred dividend requirements of
Florida Power 0.4 2.3 3.9 9.5
Gain on sale of business - - (44.2) -
Other expense (income) 0.4 (3.4) (0.4) (10.5)
--------- --------- --------- ---------
33.0 31.8 87.0 130.3
--------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 62.0 75.4 383.2 379.6
Income taxes 20.0 27.1 138.8 139.0
--------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS 42.0 48.3 244.4 240.6
DISCONTINUED OPERATIONS, NET
OF INCOME TAXES - - (26.3) -
--------- --------- --------- ---------
NET INCOME $42.0 $48.3 $218.1 $240.6
========= ========= ========= =========
AVERAGE SHARES OF COMMON STOCK
OUTSTANDING 97.0 96.5 97.0 96.1
========= ========= ========= =========
EARNINGS PER AVERAGE COMMON SHARE:
CONTINUING OPERATIONS $0.43 $0.50 $2.52 $2.51
DISCONTINUED OPERATIONS - - ($0.27) -
--------- --------- --------- ---------
$0.43 $0.50 $2.25 $2.51
========= ========= ========= =========
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 1996 Annual Report to shareholders. This report does not
constitute an offer to sell or solicitation of an offer to buy any securities.
FLORIDA PROGRESS CORPORATION
CONSOLIDATED BALANCE SHEETS Page 5
(In millions)
March 31
-------------------------
(UNAUDITED) 1997 1996
----------- -----------
ASSETS
PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant in service and held for $5,986.5 $5,885.6
for future use
Less - Accumulated depreciation 2,394.9 2,238.8
Accumulated decommissioning for nuclear plant 200.3 172.3
Accumulated dismantlement for fossil plants 123.8 108.3
---------- ----------
3,267.5 3,366.2
Construction work in progress 198.2 165.2
Nuclear fuel, net of amortization of $356.7
in 1997 and $350.7 in 1996 59.9 66.3
---------- ----------
Net electric utility plant 3,525.6 3,597.7
Other property, net of depreciation of $178.1
in 1997 and $160.7 in 1996 314.3 302.9
---------- ----------
3,839.9 3,900.6
---------- ----------
CURRENT ASSETS:
Cash and equivalents 16.5 5.9
Accounts receivable, net 280.7 295.8
Inventories, primarily at average cost:
Fuel 80.1 50.5
Utility materials and supplies 95.4 98.4
Diversified materials 137.2 123.3
Underrecovery of fuel cost 105.6 19.3
Other 48.7 42.0
---------- ----------
764.2 635.2
---------- ----------
DISCONTINUED OPERATIONS:
Advances to discontinued operations - 132.9
Net assets of discontinued operations - 200.0
---------- ----------
- 332.9
---------- ----------
OTHER ASSETS:
Investments:
Loans receivable, net 57.6 31.0
Marketable securities 228.2 197.3
Nuclear plant decommissioning fund 219.2 176.5
Joint ventures and partnerships 51.0 33.9
Deferred insurance policy acquisition costs 123.0 108.6
Other 179.6 165.5
---------- ----------
858.6 712.8
---------- ----------
$5,462.7 $5,581.5
========== ==========
CAPITAL AND LIABILITIES
CAPITAL:
Common stock equity $1,912.8 $2,084.9
Cumulative preferred stock of Florida Power 33.5 138.5
Long-term debt 1,820.1 1,600.2
---------- ----------
3,766.4 3,823.6
---------- ----------
CURRENT LIABILITIES:
Accounts payable 189.2 153.4
Customers' deposits 94.3 87.3
Income taxes payable 37.0 39.8
Accrued other taxes 32.4 35.8
Accrued interest 39.1 46.3
Other 74.9 95.2
---------- ----------
466.9 457.8
Notes payable 55.9 -
Current portion of long-term debt 24.9 193.7
---------- ----------
547.7 651.5
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes 465.3 507.6
Unamortized investment tax credits 91.5 99.5
Insurance policy benefit reserves 341.3 277.8
Other postretirement benefit costs 102.0 86.2
Other 148.5 135.3
---------- ----------
1,148.6 1,106.4
---------- ----------
$5,462.7 $5,581.5
========== ==========
FLORIDA PROGRESS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS Page 6
(In millions)
Three Months Ended Twelve Months Ended
March 31 March 31
------------------- -------------------
(UNAUDITED) 1997 1996 1997 1996
-------- -------- -------- --------
OPERATING ACTIVITIES:
Income from continuing operations $42.0 $48.3 $244.4 $240.6
Adjustments for noncash items:
Depreciation and amortization 83.2 88.0 361.9 355.4
Gain on sale of business - - (44.2) -
Provision for loss on coal properties - - 40.9 -
Deferred income taxes and investment
tax credits, net (12.3) (6.9) (62.0) (34.0)
Increase in accrued other postretirement
benefit costs 2.0 1.7 15.8 14.3
Net change in deferred insurance policy
acquisition costs (2.1) (2.2) (14.4) (11.4)
Net change in insurance policy
benefit reserves 16.0 12.8 63.5 44.5
Changes in working capital, net of effects
from acquisition or sale of businesses:
Accounts receivable (15.5) 11.5 8.4 (35.2)
Inventories (25.0) 3.0 (38.9) (19.5)
Underrecovery of fuel cost (23.0) (19.0) (86.3) (22.2)
Accounts payable (4.0) (12.3) 29.9 5.4
Income taxes payable 9.4 39.0 (6.3) (2.4)
Accrued other taxes 19.0 20.2 (3.5) 6.7
Other (2.2) (1.7) (14.0) 36.1
Other operating activities 1.7 11.0 (28.5) 11.4
--------- --------- --------- --------
Cash provided by continuing
operations 89.2 193.4 466.7 589.7
--------- --------- --------- ---------
Loss from discontinued operations - - (26.3) -
Adjustments for non-cash items - (12.5) 29.9 (32.0)
--------- --------- --------- ---------
Cash provided by (used for) discontinued
operations - (12.5) 3.6 (32.0)
--------- --------- --------- ---------
89.2 180.9 470.3 557.7
--------- --------- --------- ---------
INVESTING ACTIVITIES:
Property additions (including allowance
for borrowed funds used during
construction) (94.8) (70.7) (288.1) (330.5)
Purchases of loans and securities, net
(including issuance of Echelon note) (4.5) (11.8) (63.1) (43.2)
Proceeds from sales of properties and
businesses 2.2 3.3 60.0 12.9
Acquisition of businesses - - (53.8) (9.2)
Investing activities of discontinued
operations - 6.7 49.8 67.4
Other investing activities (14.2) (13.3) (37.9) (24.9)
--------- --------- --------- ---------
(111.3) (85.8) (333.1) (327.5)
--------- --------- --------- ---------
FINANCING ACTIVITIES:
Issuance of long-term debt - - 178.0 -
Repayment of long-term debt (21.5) (1.5) (210.4) (45.7)
Increase (decrease) in commercial
paper with long-term support 54.6 (40.7) 80.0 (25.3)
Redemption of preferred stock - - (106.4) (5.0)
Sale of common stock - 9.3 9.2 38.3
Equity contribuitions to discontinued
operations - - (23.7) -
Dividends paid on common stock (51.0) (49.7) (200.8) (195.0)
Increase in short-term debt 51.8 - 55.9 -
Financing activities of discontinued
operations - (10.2) 95.4 (11.5)
Other financing activities (0.5) (0.7) (3.8) (1.9)
--------- --------- --------- ---------
33.4 (93.5) (126.6) (246.1)
--------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS 11.3 1.6 10.6 (15.9)
Beginning cash and equivalents 5.2 4.3 5.9 21.8
--------- --------- --------- ---------
ENDING CASH AND EQUIVALENTS $16.5 $5.9 $16.5 $5.9
========= ========= ========= =========
Florida Progress Corporation
Selected Financial Information (Unaudited)
Page 7
Three Months Ended Percent Twelve Months Ended Percent
March 31 Positive March 31 Positive
1997 1996 (Negative) 1997 1996 (Negative)
--------- --------- --------- --------- --------- ---------
Earnings Per Share:
Florida Power Corporation $0.42 $0.44 (4.5) $2.38 $2.28 4.4
--------- --------- --------- ---------
Electric Fuels Corporation 0.03 0.07 (57.1) 0.24 0.26 (7.7)
Mid-Continent Life Insurance Co. - 0.01 (100.0) 0.01 0.05 (80.0)
Corporate and other (0.02) (0.02) - (0.09) (0.08) (12.5)
--------- --------- --------- ---------
Diversified Continuing 0.01 0.06 (83.3) 0.16 0.23 (30.4)
--------- --------- --------- ---------
Continuing Ops before non-recurring 0.43 0.50 (14.0) 2.54 2.51 1.2
Provision for loss on coal properties - - - (0.26) - -
Gain on sale of business - - - 0.24 - -
--------- --------- --------- ---------
Total Continuing Operations 0.43 0.50 (14.0) 2.52 2.51 0.4
Discontinued Operations - - - (0.27) - -
--------- --------- --------- ---------
$0.43 $0.50 (14.0) $2.25 $2.51 (10.4)
========= ========= ========= =========
Avg. shares outstanding (millions) 97.0 96.5 0.5 97.0 96.1 0.9
Dividends per share $0.525 $0.515 1.9 $2.070 $2.030 2.0
Book value per share:
Florida Power Corporation $18.73 $18.22 2.8
Consolidated $19.71 $21.56 (8.6)
March 31 March 31
March 31 1997 1996
1997 1996 Amount Percent Amount Percent
--------- --------- ---------- ---------- ---------- ----------
Equity investments (percent): Capitalization (in millions):
Florida Power Corporation 87 87 Common stock $1,912.8 49.7 $2,084.9 51.9
Electric Fuels Corporation 9 9 Preferred stock 33.5 0.9 138.5 3.4
Mid-Continent Life Insurance Co. 4 4 Long-term debt 1,820.1 47.3 1,600.2 39.8
--------- --------- Short-term debt 80.8 2.1 193.7 4.9
Total 100 100 ---------- ---------- ---------- ----------
========= ========= $3,847.2 100.0 $4,017.3 100.0
========== ========== ========== ==========
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
March 31 Percent March 31 Percent
1997 1996 Change 1997 1996 Change
------- ------- ------- ------- ------- -------
Revenues:
Residential $290.7 $316.0 (8.0) $1,279.0 $1,256.3 1.8
Commercial 124.2 115.1 7.9 546.4 521.0 4.9
Industrial 51.9 47.8 8.6 210.9 194.0 8.7
Other retail sales 29.8 27.0 10.4 128.7 118.2 8.9
-------------------- --------------------
496.6 505.9 (1.8) 2,165.0 2,089.5 3.6
Sales for resale 37.1 43.0 (13.7) 154.0 166.6 (7.6)
-------------------- --------------------
533.7 548.9 (2.8) 2,319.0 2,256.1 2.8
Other electric revenues 12.8 7.9 62.0 58.1 62.3 (6.7)
Deferred fuel 7.3 (9.5) - 23.0 (15.3) -
-------------------- --------------------
Total $553.8 $547.3 1.2 $2,400.1 $2,303.1 4.2
==================== ====================
Kilowatt-hour sales billed:
Residential 3,296.3 3,919.5 (15.9) 14,858.2 15,537.1 (4.4)
Commercial 1,994.4 1,888.9 5.6 8,953.5 8,730.8 2.6
Industrial 1,049.9 1,000.9 4.9 4,272.7 4,004.8 6.7
Other retail sales 517.4 480.8 7.6 2,268.3 2,122.7 6.9
-------------------- --------------------
6,858.0 7,290.1 (5.9) 30,352.7 30,395.4 (0.1)
Sales for resale 531.9 752.6 (29.3) 2,487.0 3,213.4 (22.6)
-------------------- --------------------
Total electric sales 7,389.9 8,042.7 (8.1) 32,839.7 33,608.8 (2.3)
==================== ====================
System Requirements (KWH) 7,520 8,230 (8.6) 34,006 34,684 (2.0)
Retail KWH Sales
(Billed & Unbilled) 6,787 7,218 (6.0) 30,183 30,550 (1.2)
Billing Degree Days:
Cooling 25 - - 3,707 3,929 (5.7)
Heating 296 653 (54.7) 502 791 (36.5)
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.