Florida Progress Corporation
Investor News
Analyst Contacts:
Greg Beuris (727) 820-5734
Lauran Willoughby (727) 820-5737
[LOGO OMITTED]
Florida Progress' third-quarter earnings per share up 15 percent
St. Petersburg, Florida, October 16, 1998 - Florida Progress Corporation
(NYSE:FPC), parent of St. Petersburg-based Florida Power Corporation, reported
third-quarter 1998 earnings of $117.3 million, or $1.21 per share, compared with
1997 third-quarter earnings from recurring operations (excluding one-time
nuclear outage costs) of $102.0 million, or $1.05 per share. The 15-percent
increase in earnings per share was due to continued hot weather during the
summer months as well as customer growth at Florida Power and improved results
from Electric Fuels Corporation, lead company for Florida Progress' diversified
operations.
Third-quarter earnings for 1997, including after-tax outage costs of $20.4
million, or $.21 per share, associated with Florida Power Corporation's Crystal
River Nuclear Plant, were $81.6 million, or $.84 per share. (See page 7, 1997
restatement schedule attached.)
FLORIDA POWER CORPORATION
Florida Power, the largest subsidiary of Florida Progress, earned $108.8
million, or $1.12 per share, on revenues of $795.6 million for the third quarter
of 1998, up 13 percent compared with third-quarter 1997 earnings from recurring
operations of $96.4 million, or $.99 per share, on revenues of $706.9 million.
Including the impact of the restated extended nuclear outage costs, Florida
Power's 1997 third-quarter earnings were $76.0 million, or $.78 per share.
The following is a reconciliation of Florida Power's third-quarter 1997 earnings
per share, as amended, with third-quarter 1998 earnings per share:
3 Months
Ended
September 30
------------
1997 EPS as amended $ 0.78
1997 Nuclear Outage 0.21
1997 EPS from recurring operations 0.99
Customer & non-weather usage growth 0.08
Estimated weather impact on sales 0.10
Operations & maintenance (0.02)
Depreciation & amortization (0.01)
Accelerated Tiger Bay amortization (0.04)
AFUDC & other 0.02
-----
1998 EPS from operations $ 1.12
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Page 2
Florida Progress Corporation
Investor News - 3rd quarter earnings
For the second straight quarter, Florida Power experienced a significant
increase in total system requirements due to continued hot summer temperatures.
System requirements for the third quarter of 1998 were 7.4 percent higher than
the third quarter of 1997.
Retail kilowatt-hour sales increased 7.1 percent over the same period a year
ago, driven primarily by the warmer weather. In addition to the weather, Florida
Power continues to benefit from the strong retail customer growth. The number of
retail customers served in the third quarter of 1998 was approximately 25,000,
or 2 percent, greater than the third quarter of 1997.
Wholesale kilowatt-hour sales, also benefiting from warmer weather, were nearly
60 percent higher than the third quarter of 1997. Most of the increase was due
to additional sales of short-term energy, along with higher sales to Florida
Power's largest wholesale customer. Short-term energy sales have a minimal
impact on Florida Power's earnings.
Florida Power accelerated the amortization of the Tiger Bay regulatory asset by
$7 million, which reduced the utility's third quarter results by $.04 a share.
ELECTRIC FUELS CORPORATION
Electric Fuels earned $10.5 million or $.11 per share, during the third quarter,
compared with $9.1 million or $.09 per share, in 1997. The improvement in
earnings was primarily attributable to improved results at the Inland Marine
business unit.
Earnings for the Inland Marine group were up $1.3 million over the third quarter
of 1997. The increased earnings were largely attributable to the expansion of
the MEMCO barge fleet.
The Rail Services group third-quarter 1998 results increased approximately $.4
million compared with a year ago. The improved results were primarily due to
continued strong demand for railcar parts and services from the major railroads.
Partially offsetting the earnings improvement were lower earnings from the
recycling division. The recycling division was negatively impacted by a decline
in market prices for scrap steel. Lower market prices have resulted from an
increase in finished steel imports and a decline in scrap steel exports.
Electric Fuels' Energy and Related Services group earnings were essentially
unchanged for the third quarter of 1998, compared with the third quarter of
1997.
Florida Progress (NYSE:FPC) is a Fortune 500 diversified utility holding company
with assets of $6.0 billion. Its principal subsidiary is Florida Power, the
state's second largest electric utility serving about 1.3 million customers.
Diversified operations include coal mining, marine operations and rail services.
###
FLORIDA PROGRESS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME Page 3
(UNAUDITED) (In millions, except per share amounts)
Three Months Ended Nine Months Ended Twelve Months Ended
September 30 September 30 September 30
------------------ ----------------- ------------------
1998 1997 1998 1997 1998 1997
-------- ------- -------- -------- --------- --------
REVENUES:
Electric utility $795.6 $706.9 $2,024.6 $1,857.9 $2,615.1 $2,420.8
Diversified 235.9 215.6 697.5 609.4 955.3 821.4
- -------------------------------------------------------------------------------------------
1,031.5 922.5 2,722.1 2,467.3 3,570.4 3,242.2
- -------------------------------------------------------------------------------------------
EXPENSES:
Electric utility:
Fuel 188.9 129.5 434.0 343.2 548.9 429.9
Purchased power 122.3 133.7 332.1 377.7 445.0 521.1
Energy conservation cost 24.5 21.7 60.1 49.3 77.8 60.8
Operations and maintenance 108.3 105.5 326.9 318.6 430.7 427.8
Extended nuclear outage -
O&M and replacement power costs - 33.1 5.1 130.9 47.4 130.9
Depreciation and amortization 89.5 78.8 260.9 227.3 359.5 310.0
Taxes other than income taxes 57.5 53.2 158.4 149.9 202.1 190.4
- -------------------------------------------------------------------------------------------
591.0 555.5 1,577.5 1,596.9 2,111.4 2,070.9
- -------------------------------------------------------------------------------------------
Diversified:
Cost of sales 201.0 187.0 587.6 527.9 813.6 707.9
Provision for loss on coal
properties - - - - - 40.9
Loss related to life insurance
subsidiary - - - - 96.3 1.3
Other 11.8 14.1 43.6 43.8 61.8 61.6
- -------------------------------------------------------------------------------------------
212.8 201.1 631.2 571.7 971.7 811.7
- -------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 227.7 165.9 513.4 298.7 487.3 359.6
- -------------------------------------------------------------------------------------------
INTEREST EXPENSE AND OTHER:
Interest expense 46.2 42.3 141.2 112.4 187.5 144.9
Allowance for funds used during
construction (4.4) (2.5) (12.4) (6.9) (15.2) (8.9)
Preferred dividend requirements
of Florida Power .3 .3 1.1 1.1 1.5 1.7
(Gain) on sale of business - - - - - (44.2)
Other expense (income) 1.2 (1.6) 1.3 (1.9) 4.7 (1.0)
- -------------------------------------------------------------------------------------------
43.3 38.5 131.2 104.7 178.5 92.5
- -------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 184.4 127.4 382.2 194.0 308.8 267.1
Income taxes 67.1 45.8 136.6 64.1 138.9 91.6
- ------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS 117.3 81.6 245.6 129.9 169.9 175.5
DISCONTINUED OPERATIONS, NET OF
INCOME TAXES - - - - - (1.3)
-------------------------------------------------------------------------------------------
NET INCOME 117.3 81.6$ 245.6$ 129.9 169.9 174.2
- -------------------------------------------------------------------------------------------
AVERAGE SHARES OF COMMON
STOCK OUTSTANDING 97.0 97.1 97.0 97.1 97.1 97.0
- -------------------------------------------------------------------------------------------
EARNINGS (LOSS) PER AVERAGE COMMON SHARE:
CONTINUING OPERATIONS $1.21 $.84 $2.53 $1.34 $1.75 $1.81
DISCONTINUED OPERATIONS - - - - - (.01)
- -------------------------------------------------------------------------------------------
$1.21 $.84 $2.53 $1.34 $1.75 $1.80
- -------------------------------------------------------------------------------------------
Regarding these financial statements:
In June 1998, Florida Power restated its financial results for the second, third
and fourth quarters of 1997 to reflect recognition of the extended nuclear
outage costs as incurred. The change affected the financial results for the
interim reporting periods but did not have any affect on the results for the
fiscal year ended 1997. Effective December 31, 1997, the Company deconsolidated
the accounts of Mid-Continent Life Insurance Company and established a provision
for loss for the full amount of its investment. The deconsolidation has not been
reflected in the consolidated financial statements of prior periods. Financial
results for the twelve months ended September 30, 1997 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's1997 Annual Report to
shareholders. This report does not constitute an offer to sell or the
solicitation of an offer to buy any securities.
FLORIDA PROGRESS CORPORATION
CONSOLIDATED BALANCE SHEETS Page 4
(UNAUDITED) (In millions)
September 30
----------------------
ASSETS 1998 1997
--------- ---------
PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant in service and held for future use $6,286.8 $6,148.0
Less - Accumulated depreciation 2,676.7 2,494.1
Accumulated decommissioning for nuclear plant 246.6 215.8
Accumulated dismantlement for fossil plants 130.1 127.6
- -------------------------------------------------------------------------------
3,233.4 3,310.5
Construction work in progress 322.9 224.9
Nuclear fuel, net of amortization of $371.3 in 1998
and $356.7 in 1997 51.8 65.4
- -------------------------------------------------------------------------------
Net electric utility plant 3,608.1 3,600.8
Other property, net of depreciation of $230.8 in 1998
and $228.3 in 1997 521.5 367.2
- -------------------------------------------------------------------------------
4,129.6 3,968.0
- -------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and equivalents 21.1 15.2
Accounts receivable, net 435.0 361.7
Inventories, primarily at average cost:
Fuel 60.5 78.1
Utility materials and supplies 91.0 94.4
Diversified materials 142.3 133.0
Underrecovery of fuel cost 14.5 69.7
Deferred income taxes 47.3 13.4
Other 50.9 20.8
- -------------------------------------------------------------------------------
862.6 786.3
- -------------------------------------------------------------------------------
OTHER ASSETS:
Investments:
Loans receivable, net 31.0 35.1
Marketable securities - 257.2
Nuclear plant decommissioning fund 289.7 248.1
Joint ventures and partnerships 60.2 49.1
Deferred insurance policy acquisition costs - 123.7
Deferred purchased power contract termination costs 325.5 369.8
Other 326.6 224.7
- -------------------------------------------------------------------------------
1,033.0 1,307.7
- -------------------------------------------------------------------------------
$6,025.2 $6,062.0
- -------------------------------------------------------------------------------
CAPITAL AND LIABILITIES
CAPITAL:
Common stock equity $1,865.1 $1,904.3
Cumulative preferred stock of Florida Power 33.5 33.5
Long-term debt 2,348.1 2,343.4
- -------------------------------------------------------------------------------
4,246.7 4,281.2
- -------------------------------------------------------------------------------
CURRENT LIABILITIES:
Accounts payable 208.7 221.8
Customers' deposits 101.2 96.0
Income taxes payable 21.1 38.4
Accrued other taxes 71.6 71.8
Accrued interest 47.4 47.7
Other 70.0 81.6
- -------------------------------------------------------------------------------
520.0 557.3
Notes payable 183.2 23.6
Current portion of long-term debt 71.4 15.0
- -------------------------------------------------------------------------------
774.6 595.9
- -------------------------------------------------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes 601.6 450.6
Unamortized investment tax credits 79.4 87.5
Insurance policy benefit reserves - 369.0
Other postretirement benefit costs 114.0 106.6
Other 208.9 171.2
- -------------------------------------------------------------------------------
1,003.9 1,184.9
- -------------------------------------------------------------------------------
$6,025.2 $6,062.0
- -------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Florida Progress Corporation
Selected Financial Information (Unaudited) Page 5
Three Months Ended Percent Nine Months Ended Percent Twelve Months Ended Percent
September 30 Positive September 30 Positive September 30 Positive
1998 1997 (Negative) 1998 1997 (Negative) 1998 1997 (Negative)
-------- -------- ------------ ------ -------- ------------ ------- -------- ---------
Earnings (Loss) Per Share:
Florida Power Corporation $ 1.12 $ .99 13.1 $ 2.29 $ 2.04 12.3 $ 2.73 $ 2.48 10.1
------- ------ ------ ----- ----- ---- ---- ----- ----
Electric Fuels Corporation .11 .09 22.2 .30 .22 36.4 .41 .30 36.7
Corporate and other (.02) (.03) 33.3 (.06) (.10) 40.0 (.16) (.13) (23.1)
------- ------- ------ ------ ------ ----- ------ ------ ------
Diversified Continuing before non-
recurring .09 .06 50.0 .24 .12 100.0 .25 .17 47.1
------- -------- ------ ------ ------ ------ ------ ------ ------
Continuing Ops before non-recurring 1.21 1.05 15.2 2.53 2.16 17.1 2.98 2.65 12.5
Impact of nuclear outage - (.21) - - (.82) - (.27) (.82) 67.1
Provision for loss on coal properties- - - - - - - - (.26) -
Gain on sale of business - - - - - - - .24 -
Loss related to life insurance subsidiary - - - - - - (.96) - -
------- -------- ------ ------ ------ ----- ------ ----- ------
Total Continuing Operations 1.21 .84 44.0 2.53 1.34 88.8 1.75 1.81 (3.3)
Discontinued Operations - - - - - - - (.01) -
======= ======== ====== ====== ======
$1.21 $.84 44.0 $2.53 $1.34 88.8 $1.75 $1.80 (2.8)
======= ======== ====== ====== ====== ==== ====
Avg. shares outstanding (millions) 97.0 97.1 (.1) 97.0 97.1 (.1) 97.1 97.0 .1
Dividends per share $.535 $.525 1.9 $1.605 $1.575 1.9 $2.13 $2.09 1.9
Book value per share:
Florida Power Corporation $18.99 $18.54 2.4
Consolidated $19.22 $19.62 (2.0)
September 30 September 30
September 30 1998 1997
1998 1997 Amount Percent Amount Percent
-------- -------- ------------------------------------
Equity investments (percent): Capitalization (in millions):
Florida Power Corporation 89 87 Common stock $1,865.1 41.4 $1,904.3 44.1
Electric Fuels Corporation 11 9 Preferred stock 33.5 .7 33.5 .8
Mid-Continent Life Insurance Co. - 4 Long-term debt 2,348.1 52.2 2,343.4 54.2
-------- --------
Total 100 100 Short-term debt 254.6 5.7 38.6 .9
-------- --------
------------------------------------
Total $4,501.3 100.0 $4,319.8 100.0
------------------------------------
Note: In June 1998, Florida Power restated its financial results for the
second, third and fourth quarters of 1997 to reflect recognition of
the extended nuclear outage costs as incurred. The change affected the
financial results for the interim reporting periods but did not have
any affect on results for the fiscal year ended 1997. Financial
results for the twelve months ended 1997 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 6
(In millions, except billing degree days)
Three Months Ended Nine Months Ended Twelve Months Ended
September 30 Percent September 30 Percent September 30 Percent
1998 1997 Change 1998 1997 Change 1998 1997 Change
-------- ------- ---------- --------- --------- --------- --------- --------- ----------
Revenues:
Residential $445.0 $397.0 12.1 $1,089.2 $994.0 9.6 $1,410.5 $1,292.4 9.1
Commercial 174.4 156.7 11.3 451.8 426.3 6.0 593.9 561.4 5.8
Industrial 55.5 51.0 8.8 158.5 158.0 .3 208.4 210.2 (.9)
Other retail sales 39.1 34.9 12.0 104.1 98.8 5.4 138.7 132.6 4.6
------- -------- ------- -------- ------ ------- -------
714.0 639.6 11.6 1,803.6 1,677.1 7.5 2,351.5 2,196.6 7.1
Sales for resale 74.3 47.7 55.8 155.0 105.1 47.5 200.6 138.4 44.9
------- -------- ------- -------- ------ ------- -------
788.3 687.3 14.7 1,958.6 1,782.2 9.9 2,552.1 2,335.0 9.3
Other electric revenues 18.1 23.2 (22.0) 87.4 75.7 15.5 87.7 78.5 11.7
Deferred fuel (10.8) (3.6) - (21.4) - - (24.7) 7.3 -
------- -------- ------- -------- ----- -------- ------- -----
Total $795.6 $706.9 12.5 $2,024.6 $1,857.9 9.0 $2,615.1 $2,420.8 8.0
------- -------- ------- -------- ----- -------- -------
Kilowatt-hour sales billed:
Residential 5,260.1 4,801.4 9.6 12,675.6 11,461.4 10.6 16,294.0 14,800.0 10.1
Commercial 2,880.9 2,651.6 8.6 7,409.5 6,915.0 7.2 9,751.8 9,101.7 7.1
Industrial 1,129.3 1,058.5 6.7 3,232.4 3,182.5 1.6 4,237.7 4,211.0 .6
Other retail sales 682.6 629.8 8.4 1,820.5 1,717.0 6.0 2,428.8 2,306.9 5.3
------- ------- ------ ------- ------- ------- -------
9,952.9 9,141.3 8.9 25,138.0 23,275.9 8.0 32,712.3 30,419.6 7.5
Sales for resale 1,390.1 700.4 98.5 2,779.1 1,539.4 80.5 3,679.3 2,161.4 70.2
-------- ------- ------- --------- ------ -------- -------
Total electric
sales 11,343.0 9,841.7 15.3 27,917.1 24,815.3 12.5 36,391.6 32,581.0 11.7
-------- ------- ------- --------- ------ --------- --------
System Requirements(KWH) 11,403 10,617 7.4 29,193 26,672 9.5 37,126 34,350 8.1
KWH Sales (Billed & Unbilled):
Retail 9,873 9,216 7.1 25,738 23,742 8.4 32,862 30,623 7.3
Wholesale 1,370 859 59.5 3,051 1,755 73.8 3,728 2,212 68.5
Billing Degree Days:
Cooling 2,454 2,220 10.5 3,297 2,715 21.4 4,016 3,326 20.7
Heating - - - 532 309 72.2 666 407 63.6
Note:
Revenues include amounts resulting from fuel, purchased power, and energy
conservation clauses; which are designed to permit full recovery of these
costs. 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 and
wholesale KWH sales includes both billed and unbilled sales. From 1995
through 1997, Florida Power, as ordered by state regulators, conducted a
three-year test of residential revenue decoupling. Under the plan, abnormal
weather variances did not impact earnings with respect to residential
revenues.
Florida Progress Corporation
Selected Financial Information (Unaudited) Page 7
(In millions, except per share amounts)
Three Months Three Months Three Months Three Months Twelve Months
Ended Ended Ended Ended Ended
March 31, 1997 June 30, 1997 Sept. 30, 1997 Dec. 31, 1997 Dec. 31, 1997
1997 as amended:
Florida Power:
Net income $ 41.2 $ 0.9 $ 76.0 $ 16.3 $ 134.4
Earnings per share 0.42 0.01 0.78 0.17 1.38
Florida Progress:
Net income (loss) 42.0 6.3 81.6 (75.6) 54.3
Earnings (loss) per share 0.43 0.07 0.84 (0.78) 0.56
1997 as originally reported:
Florida Power:
Net income (loss) $ 41.2 ($ 43.6) $ 96.4 $ 40.4 $ 134.4
Earnings (loss) per share 0.42 (0.45) 0.99 0.42 1.38
Florida Progress:
Net income (loss) 42.0 (38.2) 102.0 (51.5) 54.3
Earnings (loss) per share 0.43 (0.39) 1.05 (0.53) 0.56