<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 22, 1999
---------------
CAROLINA POWER & LIGHT COMPANY
(Exact name of registrant as specified in charter)
North Carolina 1-3382 54-0165465
-------------- ----------- -------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
411 Fayetteville Street
Raleigh, North Carolina 27601-1748
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (919) 546-6111
--------------
None
-----------------------------
(former name or former address if changed since last report)
<PAGE>
INFORMATION TO BE INCLUDED IN REPORT
Item 5: Other Events.
- ------ ------------
On August 22, 1999, Carolina Power & Light Company, a North Carolina
corporation ("CP&L"), and Florida Progress Corporation, a Florida corporation
("FPC"), entered into an Agreement and Plan of Exchange (the "Agreement"), dated
as of August 22, 1999, among CP&L, FPC and CP&L Holdings, Inc., a North Carolina
corporation and wholly owned subsidiary of CP&L ("Holdco"). CP&L is in the
process of creating a holding company structure with Holdco as the holding
company.
Under the terms of the Agreement, all the outstanding shares of common
stock, no par value, of FPC ("FPC Common Stock") would be acquired by Holdco in
a statutory share exchange (the "Exchange"). Each share of FPC Common Stock, at
the election of the holder, will be exchanged for (i) $54.00 in cash (the "Cash
Consideration") or (ii) the number of shares of common stock, no par value, of
Holdco ("Holdco Common Stock") equal to the ratio determined by dividing $54.00
by the average of the closing sale price per share of Holdco Common Stock (the
"Final Stock Price") as reported on the New York Stock Exchange composite tape
for the twenty (20) consecutive trading days ending with the fifth trading day
immediately preceding the closing date for the Exchange (the "Stock
Consideration") or (iii) a combination of cash and Holdco Common Stock (the
"Exchange Consideration"); provided, however, that shareholder elections shall
be subject to allocation and proration to achieve a mix of the aggregate
Exchange Consideration that is 65% Cash Consideration and 35% Stock
Consideration. The number of shares of Holdco Common Stock that will be issued
as Stock Consideration will vary if the Final Stock Price is within a range of
$37.13 to $45.39, but not outside that range. Thus, the maximum number of
shares of Holdco Common Stock into which one share of FPC Common Stock could be
exchanged would be 1.4543 and the minimum would be 1.1897.
The transaction has been approved by the Boards of Directors of FPC and
CP&L. Consummation of the Exchange is subject to the satisfaction or waiver of
certain closing conditions, including, among others, the approval of
shareholders of FPC and the approval by the shareholders of Holdco of the
issuance of Holdco Common Stock in the Exchange, the approval or regulatory
review by the Federal Energy Regulatory Commission, the Securities and Exchange
Commission (with respect to the Public Utility Holding Company Act of 1935, as
amended), the Nuclear Regulatory Commission, the North Carolina Utilities
Commission, the South Carolina Public Service Commission, and certain other
federal and state regulatory bodies, the expiration or early termination of the
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
and other customary closing conditions. In addition, FPC's obligation to
consummate the Exchange is conditioned upon the Final Stock Price being not less
than $30.00. Each of CP&L and FPC have agreed to certain undertakings and
limitations regarding the conduct of their respective businesses prior to the
closing of the transaction. The transaction is expected to be completed within
12 months.
2
<PAGE>
Either party may terminate the Agreement under certain circumstances,
including if the Exchange has not been consummated on or before December 31,
2000; provided that if certain conditions have not been satisfied on December
31, 2000 but all other conditions have been satisfied or waived then such date
shall be June 30, 2001. In the event that FPC or CP&L terminate the Agreement in
certain limited circumstances, FPC would be required to pay CP&L a termination
fee of $150.0 million, plus CP&L's reasonable out-of-pocket expenses (not to
exceed $25.0 million in the aggregate).
The joint press release announcing execution of the Agreement and
presentation materials used at analysts' meetings in connection with the
announcement by CP&L and FPC of the Agreement are filed herewith as Exhibits
99.1 and 99.2, respectively, and are hereby incorporated herein by reference.
The materials filed as exhibits hereto contain forward-looking statements
within the meaning of the safe harbor provisions of the Securities Exchange Act
of 1934 (the "Exchange Act"). The forward-looking statements are subject to
various risks and uncertainties. Discussion of factors that could cause actual
results to differ materially from management's projections, forecasts, estimates
and expectations may include factors that are beyond CP&L's ability to control
or estimate precisely, such as estimates of future market conditions, the
behavior of other market participants and the actions of Federal and state
regulators. Other factors include, but are not limited to, actions in the
financial markets, weather conditions, economic conditions in the service
territory of CP&L and FPC, fluctuations in energy-related commodity prices,
conversion activity, other marketing efforts and other uncertainties. Other risk
factors are detailed from time to time in CP&L's reports under the Exchange Act
and the Securities Act of 1933.
Item 7: Financial Statements, Pro Forma Financial Information and Exhibits.
- ------- ------------------------------------------------------------------
c) Exhibits
--------
Number Exhibit
------ -------
99.1 Joint Press Release of Carolina Power & Light Company and
Florida Progress Corporation, dated August 23, 1999
99.2 Analyst Meeting Presentation Materials
3
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CAROLINA POWER & LIGHT COMPANY
Date: August 23, 1999 By: /s/ Glenn E. Harder
-----------------------------------
Glenn E. Harder
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
4
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
99.1 Joint Press Release of Carolina Power & Light Company and
Florida Progress Corporation, dated August 23, 1999
99.2 Analyst Meeting Presentation Materials
5
<PAGE>
[CP&L logo] [Florida Progress Corporation logo]
CAROLINA POWER & LIGHT AND FLORIDA PROGRESS
AGREE TO $17 BILLION COMBINATION
Creates Ninth-Largest Energy Utility
Company Focused on High Growth Southeast Region
Raleigh, NC and St. Petersburg, FL (August 23, 1999) - Carolina Power & Light
Company ("CP&L") [NYSE: CPL] and Florida Progress Corporation [NYSE: FPC] today
announced that their boards of directors have unanimously approved a definitive
agreement to combine the two companies.
Under the terms of the agreement, Florida Progress shareholders will receive
$54.00 per Florida Progress common share in a combination of cash and a new CP&L
holding company's common stock. The total value of the transaction is
approximately $5.3 billion. Florida Progress shareholders will have the right
to elect cash or stock subject to proration if the elections exceed 65 percent
in cash or 35 percent in stock. The stock component of the consideration is
subject to a collar if the average price of the new CP&L holding company's stock
for the 20-day period ending five days prior to closing is greater than $45.39
or less than $37.13. Both the cash and stock components will be taxable to
Florida Progress shareholders.
The combined company will have a total enterprise value of approximately $17
billion ($8.0 billion in equity; $9.1 billion in net debt and preferred stock).
The combination is expected to be accounted for as a purchase and is anticipated
to be accretive in the first full year after closing. Thereafter, CP&L expects
the combined company to have annual growth in earnings per share of 7 to 8
percent.
This combination creates the nation's ninth-largest energy utility based on
generating capacity of more than 18,500 megawatts. The combined company will
have total revenues of $6.7 billion (based on 1998) and 2.5 million electricity
customers in a 50,000-square-mile retail service area. The company will have a
powerful presence in the Southeastern electric and natural gas markets, and will
be dedicated to expanding the region's electric generation capacity and
delivering reliable, competitively priced energy throughout its high-growth
service area.
Mr. William Cavanaugh, chairman, president and chief executive officer of CP&L,
said, "The acquisition of Florida Progress represents a major step toward
fulfilling our strategic plan of becoming a leading energy provider in the
Southeast. Like the Carolinas, Florida is one of the highest-growth areas in
the country. The predominantly residential base of Florida Power (Florida
Progress' primary subsidiary) is an excellent complement to our mix of more
commercial and industrial customers. The complementary growth in both CP&L and
Florida Power territories and the wholesale market in the Southeast will enhance
our plans to add more gas-fired generating capacity and will increase our siting
options as well as the markets for our product. With our recent acquisition of
North Carolina Natural Gas Corp., this combination with Florida Progress will
enhance our competitive position in the generation, power marketing and delivery
of energy services in the best area of the country to be in the energy
business."
-more-
<PAGE>
-2-
"Florida Progress employees, like our own, bring considerable expertise and
experience to the larger company," Mr. Cavanaugh said. "The expanded diversity
of employee talents and skills will position us for leadership in the evolving
energy services industry. We will build on that talent and on both companies'
tradition of community service and delivering superior performance for customers
and shareholders."
Mr. Richard Korpan, chairman, president and chief executive officer of Florida
Progress, said, "This transaction provides shareholders with a premium that
recognizes the value inherent in our Florida franchise and our diversified
operations. The combination creates a larger, stronger company well-positioned
to leverage our joint capabilities for the benefit of our customers, while
delivering real - and increasing - value to our shareholders. Our two companies
are a great strategic fit, sharing complementary visions of how to provide our
markets with reliable energy and excellent service. Indeed, the combined
company will grow its generation, allowing it to meet future energy needs
throughout the Southeast.
"Looking to that future, Florida Progress employees will help create an
organization poised for continued growth. As a leading Southeast regional
service provider, the company will continue to play an important role throughout
Florida. Furthermore, CP&L's commitment to a continued presence in our service
area ensures that we enter our second 100 years with even greater ability to
serve the energy needs of our customers. As part of that commitment, CP&L will
continue the active community support that has been a hallmark of Florida
Progress' corporate citizenship for a century," Mr. Korpan added.
This announcement is the latest and most significant development in CP&L's
regional energy strategy, which continues to build momentum in 1999. This
summer, CP&L added 325 MW of electric generation part of a planned 7,000 MW of
generation additions over the next decade to meet growing retail needs and
increase sales in the competitive wholesale market. CP&L also acquired North
Carolina Natural Gas Corp. in July and is developing natural gas pipeline
expansion plans to fuel CP&L's planned power plants.
The combined company's non-utility businesses represent a strong platform to
supplement utility earnings growth. CP&L's non-utility subsidiaries primarily
include Interpath Communications, Inc., a network-based applications service
provider that operates a 2,000 fiber optic route mile network and Strategic
Resource Solutions Corp. (SRS) a technology-based energy services company.
Florida Progress' primary non-utility subsidiary is Electric Fuels Corporation
(EFC), which consists of three business segments: coal mining and coal
procurement, marine transportation and rail services. In addition, Florida
Progress owns a 1,100 fiber optic route mile network through its Progress
Telecommunications subsidiary. Non-utility revenues will represent approximately
15 percent of the revenues of the combined company.
-more-
<PAGE>
-3-
The companies expect annual synergies in excess of $100 million pre-tax, which
will partially offset annual goodwill expense of $83 million and will help
enable the transaction to be accretive in the first full year after closing.
These synergies result primarily from the elimination of duplicate corporate and
administrative programs and operating efficiencies including integration of the
Crystal River nuclear site with CP&L's three existing nuclear sites. Revenue
enhancements are also possible from generation expansion and wholesale marketing
opportunities. After the integration is completed, it is anticipated that the
company will have a combined workforce of approximately 16,000 employees,
reflecting a reduction of about 7 percent. The company will use a combination
of attrition and moderation in hiring to reduce the need for employee
separations. All union contracts will be honored.
CP&L expects the new holding company to continue CP&L's current dividend policy
which has resulted in dividend increases for 16 of the last 17 years. CP&L
currently pays an annual dividend of $2.00 per share. It is anticipated that
Florida Progress shareholders who elect stock will receive the CP&L dividend in
effect at the time of the close of the transaction.
William Cavanaugh will be chairman, president and chief executive officer of the
combined company. Richard Korpan will retire as chairman, president and chief
executive officer of Florida Progress at the close of the transaction and join
CP&L's board of directors. The board will have 14 members, 10 of whom will be
designated by CP&L and four of whom will be designated by Florida Progress. The
combined company will be headquartered in Raleigh with Florida Power
headquarters in St. Petersburg.
The transaction is conditioned, among other things, upon the approvals of
shareholders of both companies, Federal Energy Regulatory Commission, the
Securities and Exchange Commission (SEC), Nuclear Regulatory Commission and the
completion of state regulatory procedures. While there is no formal state
approval for this transaction in Florida, the companies will continue their
practice of constructively working with state regulators regarding their ongoing
jurisdiction over Florida Power. CP&L is in the process of creating a holding
company and anticipates registering as a utility holding company with the SEC
under the Public Utility Holding Company Act (PUHCA) of 1935 prior to the
transaction closing. It is anticipated that regulatory procedures could be
completed within 12 months. Upon closing of the transaction, the new holding
company will issue the common stock consideration to the former Florida Progress
shareholders. CP&L and Florida Power will continue as principal subsidiaries of
the holding company.
Merrill Lynch & Co. acted as financial advisor and provided a fairness opinion
to CP&L. Salomon Smith Barney acted as financial advisor and provided a
fairness opinion to Florida Progress.
-more-
<PAGE>
-4-
Florida Progress is a Fortune 500 diversified utility holding company with
assets of $6.3 billion. Its principal subsidiary is Florida Power, one of the
nation's leading electric utilities committed to serving its 1.3 million
customers in Florida with competitively priced energy, excellent reliability,
and outstanding customer service. Diversified operations include rail services,
marine operations and coal mining.
Headquartered in Raleigh, CP&L provides electricity and energy services to 1.2
million customers in the Carolinas and provides natural gas distribution and
service, through a wholly owned subsidiary, to about 178,000 customers in
eastern and southern North Carolina.
This press release contains forward-looking statements within the meaning of the
safe harbor provisions of the Securities Exchange Act of 1934. The forward-
looking statements are subject to various risks and uncertainties. Discussion
of factors that could cause actual results to differ materially from
management's projections, forecasts, estimates and expectations may include
factors that are beyond the companies' ability to control or estimate precisely,
such as estimates of future market conditions, the behavior of other market
participants and the actions of Federal and state regulators. Other factors
include, but are not limited to, actions in the financial markets, weather
conditions, economic conditions in the two companies' service territories,
fluctuations in energy-related commodity prices, conversion activity, other
marketing efforts and other uncertainties. Other risk factors are detailed from
time to time in the two companies' SEC reports.
# # #
Contacts for CP&L: Contacts for Florida Progress:
Media: Media:
Mike Hughes Cheryl Krauss
Phone: (919) 546-6189 Phone: (727) 820-5282
Investors: Investors:
Bob Drennan Greg Beuris
Phone: (919) 546-7474 Phone: (727) 820-5734
<PAGE>
************************************
* A Powerful Southeastern Presence *
************************************
[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
Today's Presenters
- --------------------------------------------------------------------------------
William Cavanaugh III
- --------------------------------------------------------------------------------
Chairman, President and Chief Executive Officer
Carolina Power & Light Company
Richard Korpan
- --------------------------------------------------------------------------------
Chairman, President and Chief Executive Officer
Florida Progress Corporation
Glenn E. Harder
- --------------------------------------------------------------------------------
Executive Vice President and Chief Financial Officer
Carolina Power & Light Company
[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
Safe Harbor Language
- --------------------------------------------------------------------------------
. This presentation contains forward-looking statements within the meaning of
the safe harbor provisions of the Securities Exchange Act of 1934; these
forward-looking statements are subject to various risks and uncertainties.
. Discussion of factors that could cause actual results to differ materially
from management projections, forecasts, estimates and expectations may
include factors that are beyond the companies' ability to control or estimate
precisely, such as estimates of future market conditions, the behavior of
other market participants and the actions of Federal and state regulators.
. Other factors include, but are not limited to, actions in the financial
markets, weather conditions, economic conditions in the two companies'
service territories, fluctuations in energy-related commodity prices,
conversion activity, other marketing efforts and other uncertainties.
. Other risk factors are detailed from time to time in the two companies' SEC
reports.
. The press release also contains further discussion of factors affecting the
companies.
[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
******************************
* Overview *
******************************
<PAGE>
Key Transaction Terms
- --------------------------------------------------------------------------------
Offer Price: $54 per Florida Progress share
Premium to FPC: 30%, based upon 20-day average
closing price ending 8/20/99
Total Transaction Value: $8.0 billion, including the assumption
of $2.7 billion of Florida Progress
net debt and preferred
Consideration: 65% Cash, 35% Common Stock of
CP&L Holdings (subject to proration
and collar)
Governance: 14 Board members
--10 from CP&L
--4 from Florida Progress
[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
Two High-Quality Energy Companies
- --------------------------------------------------------------------------------
Dollars in Millions
<TABLE>
<CAPTION>
CP&L Florida Progress
------- ----------------
<S> <C> <C>
Market Value $ 6,000 $ 4,400
Enterprise Value $ 9,120 $ 7,130
Total Assets $ 8,863 $ 6,302
1998 Revenues $ 3,130 $ 3,620
1998 EBIT $ 898 $ 600
1998 Net Income $ 399 $ 282
Generation Capacity (MWs) 10,288 8,232
Customers (000's) 1,400 1,300
</TABLE>
[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
Combination Creates
One of the Largest Energy Companies
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CP&L U.S. New U.S.
Standalone Ranking Company Ranking
------------ ------- ------------ -------
<S> <C> <C> <C> <C>
Equity Market Value $ 6 Billion 18 $ 8 Billion 13
Total Assets $ 9 Billion 24 $ 15 Billion 14
Generation Capacity (MWs) 10,228 MW 17 18,520 MW 9
Customers 1.4 Million 25 2.7 Million 16
</TABLE>
[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
Combined -
A Super Regional Powerhouse
- --------------------------------------------------------------------------------
Highlights
- ----------
. $6.7 billion total revenues
. $15.2 billion total assets [Map of Southeastern United States with CP&L
and Florida Progress Corporation market areas
highlighted county-by-county]
. 18,520 MWs power generation
. 2.7 million customers
. 7-8% EPS growth
[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
A Strategically Sound Transaction
- --------------------------------------------------------------------------------
. Two strong companies
. High-growth region
. Significant scale
. Greater access to competitive markets
. Constructive regulatory environments
[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
Financial Benefits
- --------------------------------------------------------------------------------
. Accretive
-- Annual synergies of $100-$175 million
. Platform for growth
-- Earnings growth of 7-8%
-- Improved cash flow
. Secure dividend
. Favorable risk/return opportunity
[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
Strengthing the Foundation for Growth
- --------------------------------------------------------------------------------
. Superior financial performance
-- Top-line revenue growth
-- Focused cost management
. Core strengths
-- Generation assets and wholesale marketing
-- Distribution of electricity and natural gas
. Regulatory transition for shareholders
. Enhance profitability through non-regulated business
-- Domestic investments
-- Focused diversification
[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
Continued Focus on
Maximizing Shareholder Value
- --------------------------------------------------------------------------------
[Bar Chart showing Total Return (%) over 3-Year, 5-Year and 10-Year periods for
CP&L, Florida Progress and S&P Electrics as indicated in the following table]
3-Year 5-Year 10-Year
------- ------- --------
Carolina P&L 16.5% 15.4% 16.2%
Florida Progress 16.0% 13.3% 14.2%
S&P Electrics 13.2% 10.6% 13.4%
[CP&L Logo] [Florida Progress Corporation Logo]
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* A Powerful Southeastern Presence *
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[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
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* A Profile of the *
* New Company *
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<PAGE>
Favorable Customer Mix
- --------------------------------------------------------------------------------
Revenues by Customer Class
[Pie Charts showing revenues by Customer Class as indicated in the following
table]
Carolina Power & Light Florida Progress New Company
----------------------- ----------------- -----------
Residential 33% 54% 42%
Commercial 21% 23% 22%
Industrial 23% 8% 16%
Wholesale/Other 23% 15% 20%
Source: 1998 10-Ks and Annual Reports
[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
Balanced Generation Portfolio
- --------------------------------------------------------------------------------
Instralled Capacity
[Pie Charts showing Installed Capacity as indicated in the following table]
Carolina Power & Light Florida Progress New Company
----------------------- ----------------- ------------
Total 10,228 MWs 8,232 MWs 18,520 MWs
Nuclear 31% 9% 21%
Coal 52% 28% 41%
Gas/Oil 15% 63% 37%
Hydro 2% 0% 1%
Source: 1998 10-Ks and Annual Reports
[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
A Strong Commitment to Nuclear Excellence
- --------------------------------------------------------------------------------
1998 License
Facility Megawatts Capacity Factor Expiration
-------- --------- --------------- ----------
Robinson #2 683 92% 2010
Harris 860 89% 2026
Brunswick #1 820 89% 2016
Brunswick #2 811 98% 2014
Crystal River 835 90% 2016
Recent Highlights
- -----------------
. Carolina Power & Light's nuclear plants set a combined generation record for
the fifth consecutive year; during that time, O&M costs have been lowered by
one-third
. Carolina Power & Light's plants have consistently been rated among the
industry leaders in terms of plant safety
. Crystal River nuclear unit has produced more than 100% of its rated capacity
since its restart in February 1998
[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
Attractive Non-Regulated Businesses
- --------------------------------------------------------------------------------
[Logos of Progress Rail Services, Memco Barge Lines, Inc., Strategic Resource
Solutions, Interpath Communications Inc., Progress Telecommunications
Corporation and Electric Fuels Corporation]
[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
*************************************
* Financial Terms *
* and Benefits *
*************************************
<PAGE>
Key Transaction Terms
- -------------------------------------------------------------------------------
Offer Price: $54 per Florida Progress share
Premium to FPC: 30%, based upon 20-day average
closing price ending 8/20/99
Total Transaction Value: $8.0 billion, including the assumption
of $2.7 billion of Florida Progress
net debt and preferred
Consideration: 65% Cash, 35% Common Stock of CP&L Holdings
Taxable to Florida Progress Shareholders
Collar: Fixed Value at CP&L prices of $37.13
to $45.39 per share
Accounting Treatment: Purchase
Timing: Expected to close within 12 months
Regulatory Approvals: SEC, FERC, NRC
NC and SC state approvals required to
form holding company
[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
Regulatory Approvals/Filings
- ----------------------------------------------------------------------------
Two Steps
Holding Company Formation Merger Approval
* SEC * CP&L and
* FERC FPC Shareholders
* NRC * SEC
* NCUC * FERC
* SCPSC * NRC
* Dept. of Justice
* NCUC/SCPSC/FPSC,
as required
Early 2000 Within 12 Months
[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
Commitment to Credit Quality
- ------------------------------------------------------------------------------
. Establish a holding company with a funding subsidiary
. Access debt capital markets for acquisition financing
-- Expected holding company debt rating of BBB+
. Maintain current Carolina Power & Light and Florida Power utility ratings
. Reduce leverage over time to strengthen holding company ratings
-- Utilize hybrid preferred securities
[Graph showing projected FFO/Total Interest Expense from 2001 to 2004]
[Graph showing projected Debt/Capitalization from 2001 to 2004]
[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
$100 - $175 Million of Annual Synergies
- --------------------------------------------------------------------------------
[Pie Chart showing Annual Synergies and represented in the following table]
Description Percent
----------- -------
Shared Services 44%
Energy Supply 20%
Revenue Synergies 14%
Energy Delivery 14%
Retail 8%
[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
Pro Forma Earnings Impact Scenario
- --------------------------------------------------------------------------------
Dollars in Millions, Except per Share Data
<TABLE>
<CAPTION>
2001 2002
---- ----
<S> <C> <C>
CP&L Standalone Estimated Net Income (1) $523 $547
FPC Standalone Net Income (1) 338 355
CP&L Incremental After-Tax Interest Expense (@7.50%) (160) (158)
Goodwill (83) (83)
Assumed Annual Synergies to Shareholders (Net of Tax) (2) 60 70
-- --
Pro Forma Net Income $678 $731
---- ----
Average Fully Diluted Pro Forma Shares Outst. (mm) 199 199
Pro Forma Fully Diluted EPS $3.41 $3.67
CP&L Standalone Fully Diluted EPS $3.40 $3.56
Accretion ($) $0.01 $0.11
Accretion (%) -- 3.1%
</TABLE>
(1) Based on Merrill Lynch Research and assumes EPS growth rates of 4.8% for
CP&L and 5.5% for FPC.
(2) Assumes the recognition of a full year of synergies.
[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
******************************
* Conclusions *
******************************
<PAGE>
A Compelling Combination
- --------------------------------------------------------------------------------
. Achieves goal of becoming a super regional utility
. Asset-based regionally focused strategy
. Conservative synergies lead to accretion in first full year
. Outstanding platform to deliver accelerated earnings growth
[CP&L Logo] [Florida Progress Corporation Logo]
<PAGE>
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* A Powerful Southeastern Presence *
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[CP&L Logo] [Florida Progress Corporation Logo]
