UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the plan year ended December 31, 1998
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from
____________ to ____________
Commission file number 2-96881
-------
STOCK PURCHASE SAVINGS PLAN
OF
CAROLINA POWER & LIGHT COMPANY
------------------------------
Full title plan and the address of the
plan, if different from that of the issuer named below
CAROLINA POWER & LIGHT COMPANY
(a North Carolina corporation)
411 Fayetteville Street, Raleigh, North Carolina 27601-1748
-----------------------------------------------------------
Name of issuer of the securities held pursuant to the
plan and address of its principal executive office
<PAGE>
STOCK PURCHASE-SAVINGS PLAN
OF CAROLINA POWER & LIGHT COMPANY
FINANCIAL STATEMENTS AND EXHIBITS
TABLE OF CONTENTS
(A) Financial Statements PAGE
Independent Auditors' Report ..........................................3
Statement of Net Assets Available for Benefits, December 31, 1998......4
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1998..............................5
Statement of Net Assets Available for Benefits, December 31, 1997......6
Statement of Changes in Net Assets Available for Benefits
For the Period Ended December 31, 1997............................7
Notes to Financial Statements.......................................8-13
Item 27a - Schedule of Assets Held for
Investment Purposes as of December 31, 1998......................14
Item 27b - Schedule of Loans in Default
as of December 31, 1998..........................................15
Item 27d - Schedule of Reportable Transactions
For the Year Ended December 31, 1998.............................16
(B) Exhibits
Exhibit No. 23 - Consent of Deloitte & Touche LLP
<PAGE>
INDEPENDENT AUDITORS' REPORT
Stock Purchase-Savings Plan of
Carolina Power & Light Company
We have audited the accompanying statements of net assets available for benefits
of the Stock Purchase-Savings Plan of Carolina Power & Light Company as of
December 31, 1998 and 1997, and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31, 1998
and 1997, and the changes in net assets available for benefits for the periods
then ended in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of (1) assets held for investment purposes as of December 31, 1998, (2) loans in
default as of December 31, 1998 and (3) reportable transactions for the year
ended December 31, 1998 are presented for the purpose of additional analysis and
are not a required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental information by fund in the statements of net assets
available for benefits and the statements of changes in net assets available for
benefits is presented for the purpose of additional analysis rather than to
present the net assets available for benefits and changes in net assets
available for benefits of the individual funds. The supplemental schedules and
supplemental information by fund are the responsibility of the Plan's
management. Such supplemental schedules and supplemental information by fund
have been subjected to the auditing procedures applied in our audits of the
basic financial statements and, in our opinion, are fairly stated in all
material respects when considered in relation to the basic financial statements
taken as a whole.
\s\ DELOITTE & TOUCHE LLP
Raleigh, North Carolina
June 22, 1999
3
<PAGE>
<TABLE>
STOCK PURCHASE-SAVINGS PLAN
OF CAROLINA POWER & LIGHT COMPANY
Statement of Net Assets Available for Benefits
December 31, 1998
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
------------------------------------------------------------------------------------------------
PARTICIPANTS' EQUITY
--------------------------------------------------------------
ESOP EQUITY CAROLINA POWER PUTNAM NEW EUROPACIFIC
UNALLOCATED PARTICIPANTS' & LIGHT COMPANY OPPORTUNITIES GROWTH
TOTAL PLAN TO PARTICIPANTS LOANS COMMON STOCK FUND FUND
--------------- ---------------- ------------- ---------------- ---------------- ---------------
ASSETS
<S> <C> <C> <C> <C> <C> <C>
Investments:
Carolina Power & Light Company
Common Stock $ 911,584,248 $ 327,254,365 $ - $ 584,329,883 $ - $ -
Putnam New Opportunities Fund 16,694,725 - - - 16,694,725 -
EuroPacific Growth Fund 7,988,667 - - - - 7,988,667
Fidelity Equity - Income Fund 93,676,589 - - - - -
Fidelity Balanced Fund 11,226,601 - - - - -
Fixed Income Fund 17,243,042 - - - - -
Participants' Loans Receivable 21,309,019 - 21,309,019 - - -
--------------- ---------------- ------------- ---------------- ---------------- ---------------
Total Investments 1,079,722,891 327,254,365 21,309,019 584,329,883 16,694,725 7,988,667
Dividends/Capital Gains/Interest
Receivable 9,684,826 3,476,806 - 6,208,020 - -
Contributions Receivable 8,001,332 - - 8,001,332 - -
Cash and Cash Equivalents 19,149,302 7 432,479 18,716,816 - -
--------------- ---------------- ------------- ---------------- ---------------- ---------------
Total Assets 1,116,558,351 330,731,178 21,741,498 617,256,051 16,694,725 7,988,667
--------------- ---------------- ------------- ---------------- ---------------- ---------------
LIABILITIES
ESOP Loan Payable 168,274,083 168,274,083 - - - -
Participants' Loans Payable 21,741,498 - 21,741,498 - - -
Interest Payable - ESOP Loan 1,682,741 1,682,741 - - - -
--------------- ---------------- ------------- ---------------- ---------------- ---------------
Total Liabilities 191,698,322 169,956,824 21,741,498 - - -
--------------- ---------------- ------------- ---------------- ---------------- ---------------
NET ASSETS AVAILABLE FOR BENEFITS $ 924,860,029 $ 160,774,354 $ - $ 617,256,051 $ 16,694,725 $ 7,988,667
=============== ================ ============= ================ ================ ===============
<PAGE>
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
--------------------------------------------------
PARTICIPANTS' EQUITY
--------------------------------------------------
FIDELITY FIDELITY FIXED
EQUITY- BALANCED INCOME
INCOME FUND FUND FUND
-------------- ------------- -------------
ASSETS
<S> <C> <C> <C>
Investments:
Carolina Power & Light Company
Common Stock $ - $ - $ -
Putnam New Opportunities Fund - - -
EuroPacific Growth Fund - - -
Fidelity Equity - Income Fund 93,676,589 - -
Fidelity Balanced Fund - 11,226,601 -
Fixed Income Fund - - 17,243,042
Participants' Loans Receivable - - -
---------------- ---------------- ---------------
Total Investments 93,676,589 11,226,601 17,243,042
Dividends/Capital Gains/Interest
Receivable - - -
Contributions Receivable - - -
Cash and Cash Equivalents - - -
---------------- ---------------- ---------------
Total Assets 93,676,589 11,226,601 17,243,042
---------------- ---------------- ---------------
LIABILITIES
ESOP Loan Payable - - -
Participants' Loans Payable - - -
Interest Payable - ESOP Loan - - -
---------------- ---------------- ---------------
Total Liabilities - - -
---------------- ---------------- ---------------
NET ASSETS AVAILABLE FOR BENEFITS $ 93,676,589 $ 11,226,601 $ 17,243,042
================ ================ ===============
See Notes to Financial Statements.
4
</TABLE>
<PAGE>
<TABLE>
STOCK PURCHASE-SAVINGS PLAN
OF CAROLINA POWER & LIGHT COMPANY
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1998
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
---------------------------------------------------------------------------------
PARTICIPANTS' EQUITY
-----------------------------------------------
ESOP EQUITY CAROLINA POWER PUTNAM NEW
UNALLOCATED PARTICIPANTS' & LIGHT COMPANY OPPORTUNITIES
TOTAL PLAN TO PARTICIPANTS LOANS COMMON STOCK FUND
--------------- --------------- -------------- ----------------- ---------------
ADDITIONS TO NET ASSETS
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividends/Capital Gains $ 45,790,000 $ 13,974,047 $ - $ 24,706,654 $ 514,168
Net Apppreciation in Fair Value 101,583,188 32,794,049 - 60,096,287 2,410,047
Interest 2,921,798 - 1,902,264 - -
Contributions:
Employer 22,246,450 5,561,911 - 16,684,539 -
Participants 27,540,722 - - 14,306,550 2,315,817
--------------- --------------- -------------- ----------------- ---------------
Total Additions to Net Assets 200,082,158 52,330,007 1,902,264 115,794,030 5,240,032
--------------- --------------- -------------- ----------------- ---------------
DEDUCTIONS FROM NET ASSETS
Interest Expense 11,827,059 10,357,936 1,469,123 - -
Allocation of Shares 24,763,719 24,763,719 - - -
Distribution of Benefits 73,739,535 - - 65,015,627 591,699
Participant Loan Trustee Expense 433,141 - 433,141 - -
--------------- --------------- -------------- ----------------- ---------------
Total Deductions from Net
Assets 110,763,454 35,121,655 1,902,264 65,015,627 591,699
--------------- --------------- -------------- ----------------- ---------------
NET INCREASE IN NET ASSETS 89,318,704 17,208,352 - 50,778,403 4,648,333
NET TRANSFERS AMONG INVESTMENT
OPTIONS - - - (6,663,884) 3,454,157
NET ASSETS - DECEMBER 31, 1997 835,541,325 143,566,002 - 573,141,532 8,592,235
--------------- --------------- -------------- ----------------- ---------------
NET ASSETS - DECEMBER 31, 1998 $ 924,860,029 $ 160,774,354 $ - $ 617,256,051 $ 16,694,725
=============== =============== ============== ================= ===============
<PAGE>
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
--------------------------------------------------------------------
PARTICIPANTS' EQUITY
--------------------------------------------------------------------
EUROPACIFIC FIDELITY FIDELITY FIXED
GROWTH EQUITY- BALANCED INCOME
FUND INCOME FUND FUND FUND
---------------- --------------- --------------- --------------
ADDITIONS TO NET ASSETS
<S> <C> <C> <C> <C>
Investment Income:
Dividends/Capital Gains $ 428,397 $ 5,158,407 $ 1,008,327 $ -
Net Apppreciation in Fair Value 604,617 4,952,482 725,706 -
Interest - - 1,019,534
Contributions:
Employer - - - -
Participants 1,117,756 7,314,885 1,519,593 966,121
---------------- --------------- --------------- --------------
Total Additions to Net Assets 2,150,770 17,425,774 3,253,626 1,985,655
---------------- --------------- --------------- --------------
DEDUCTIONS FROM NET ASSETS
Interest Expense - - - -
Allocation of Shares - - - -
Distribution of Benefits 327,628 5,739,424 661,525 1,403,632
Participant Loan Trustee Expense - - - -
---------------- --------------- --------------- --------------
Total Deductions from Net 327,628 5,739,424 661,525 1,403,632
Assets ---------------- --------------- --------------- --------------
NET INCREASE IN NET ASSETS 1,823,142 11,686,350 2,592,101 582,023
NET TRANSFERS AMONG INVESTMENT
OPTIONS (259,922) 2,812,201 1,214,195 (556,747)
NET ASSETS - DECEMBER 31, 1997 6,425,447 79,178,038 7,420,305 17,217,766
---------------- --------------- --------------- --------------
NET ASSETS - DECEMBER 31, 1998 $ 7,988,667 $ 93,676,589 $ 11,226,601 $ 17,243,042
================ =============== =============== ==============
See Notes to Financial Statements.
5
</TABLE>
<PAGE>
<TABLE>
STOCK PURCHASE-SAVINGS PLAN
OF CAROLINA POWER & LIGHT COMPANY
Statement of Net Assets Available for Benefits
December 31, 1997
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
------------------------------------------------------------------------------------------------
PARTICIPANTS' EQUITY
--------------------------------------------------------------
ESOP EQUITY CAROLINA POWER PUTNAM NEW EUROPACIFIC
UNALLOCATED PARTICIPANTS' & LIGHT COMPANY OPPORTUNITIES GROWTH
TOTAL PLAN TO PARTICIPANTS LOANS COMMON STOCK FUND FUND
--------------- ---------------- ------------- ---------------- ---------------- ---------------
ASSETS
<S> <C> <C> <C> <C> <C> <C>
Investments:
Carolina Power & Light Company
Common Stock $ 881,964,181 $ 320,368,814 $ - $ 561,595,367 $ - $ -
Putnam New Opportunities Fund 8,410,295 - - - 8,410,295 -
EuroPacific Growth Fund 6,102,592 - - - - 6,102,592
Fidelity Equity - Income Fund 76,630,397 - - - - -
Fidelity Balanced Fund 7,055,760 - - - - -
Fixed Income Fund 17,118,540 - - - - -
Participants' Loans Receivable 21,669,116 - 21,669,116 - - -
------------- ---------------- --------------- -------------- ------------- -------------
Total Investments 1,018,950,881 320,368,814 21,669,116 561,595,367 8,410,295 6,102,592
Dividends/Capital Gains/Interest
Receivable 13,610,664 3,666,758 - 6,427,699 181,940 322,855
Contributions Receivable 5,118,423 - - 5,118,423 - -
Cash and Cash Equivalents 620,926 - 620,883 43 - -
------------- ---------------- --------------- -------------- ------------- -------------
Total Assets 1,038,300,894 324,035,572 22,289,999 573,141,532 8,592,235 6,425,447
------------- ---------------- --------------- -------------- ------------- -------------
LIABILITIES
ESOP Loan Payable 177,687,308 177,687,308 - - - -
Participants' Loans Payable 22,289,999 - 22,289,999 - - -
Interest Payable - ESOP Loan 1,776,873 1,776,873 - - - -
Payable to Plan Sponsor 1,005,389 1,005,389 - - - -
------------- ---------------- --------------- -------------- ------------- -------------
Total Liabilities 202,759,569 180,469,570 22,289,999 - - -
------------- ---------------- --------------- -------------- ------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS $ 835,541,325 $ 143,566,002 $ - $ 573,141,532 $ 8,592,235 $ 6,425,447
============= ================ =============== ============== ============= =============
<PAGE>
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
--------------------------------------------------
PARTICIPANTS' EQUITY
--------------------------------------------------
FIDELITY FIDELITY FIXED
EQUITY- BALANCED INCOME
INCOME FUND FUND FUND
--------------- --------------- -------------
ASSETS
<S> <C> <C> <C>
Investments:
Carolina Power & Light Company
Common Stock $ - $ - $ -
Putnam New Opportunities Fund - - -
EuroPacific Growth Fund - - -
Fidelity Equity - Income Fund 76,630,397 - -
Fidelity Balanced Fund - 7,055,760 -
Fixed Income Fund - - 17,118,540
Participants' Loans Receivable - - -
--------------- --------------- ---------------
Total Investments 76,630,397 7,055,760 17,118,540
Dividends/Capital Gains/Interest
Receivable 2,547,641 364,545 99,226
Contributions Receivable - - -
Cash and Cash Equivalents - - -
--------------- --------------- ---------------
Total Assets 79,178,038 7,420,305 17,217,766
--------------- --------------- ---------------
LIABILITIES
ESOP Loan Payable - - -
Participants' Loans Payable - - -
Interest Payable - ESOP Loan - - -
Payable to Plan Sponsor - - -
--------------- --------------- ---------------
Total Liabilities - - -
--------------- --------------- ---------------
NET ASSETS AVAILABLE FOR BENEFITS $ 79,178,038 $ 7,420,305 $ 17,217,766
=============== =============== ===============
See Notes to Financial Statements.
6
</TABLE>
<PAGE>
<TABLE>
STOCK PURCHASE-SAVINGS PLAN
OF CAROLINA POWER & LIGHT COMPANY
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1997
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
---------------------------------------------------------------------------------
PARTICIPANTS' EQUITY
-----------------------------------------------
ESOP EQUITY CAROLINA POWER PUTNAM NEW
UNALLOCATED PARTICIPANTS' & LIGHT COMPANY OPPORTUNITIES
TOTAL PLAN TO PARTICIPANTS LOANS COMMON STOCK FUND
------------ --------------- ------------ --------------- --------------
ADDITIONS TO NET ASSETS
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividends/Capital Gains $ 46,519,271 $ 14,788,010 $ - $ 26,205,816 $ 181,940
Net Apppreciation (Depreciation)
in Fair Value 133,961,696 44,358,817 - 76,766,379 854,340
Interest 3,251,204 - 2,121,639 - -
Contributions:
Employer 18,149,431 4,802,037 - 13,347,394 -
Participants 25,659,644 - - 15,813,965 1,252,168
------------- ------------- ------------- ----------------- --------------
Total Additions to Net Assets 227,541,246 63,948,864 2,121,639 132,133,554 2,288,448
------------- ------------- ------------- ----------------- --------------
DEDUCTIONS FROM NET ASSETS
Interest Expense 12,390,844 10,907,612 1,483,232 - -
Allocation of Shares 21,045,028 21,045,028 - - -
Distribution of Benefits 100,346,313 - - 87,078,576 413,522
Participant Loan Trustee Expense 638,407 - 638,407 - -
------------- ------------- ------------- ----------------- --------------
Total Deductions from Net
Assets 134,420,592 31,952,640 2,121,639 87,078,576 413,522
------------- ------------- ------------- ----------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS 93,120,654 31,996,224 - 45,054,978 1,874,926
NET TRANSFERS AMONG INVESTMENT
OPTIONS - - - (28,517,814) 6,717,309
NET ASSETS - DECEMBER 31, 1996 742,420,671 111,569,778 - 556,604,368 -
------------- ------------- ------------- ----------------- --------------
NET ASSETS - DECEMBER 31, 1997 $ 835,541,325 $ 143,566,002 $ - $ 573,141,532 $ 8,592,235
============= ============= ============= ================= ==============
<PAGE>
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
------------------------------------------------------------------------
PARTICIPANTS' EQUITY
------------------------------------------------------------------------
EUROPACIFIC FIDELITY FIDELITY FIXED
GROWTH EQUITY- BALANCED INCOME
FUND INCOME FUND FUND FUND
--------------- --------------- --------------- -------------
ADDITIONS TO NET ASSETS
<S> <C> <C> <C> <C>
Investment Income:
Dividends/Capital Gains $ 441,243 $ 4,076,761 $ 825,501 $ -
Net Apppreciation (Depreciation)
in Fair Value (394,452) 12,034,457 342,155 -
Interest - - 1,129,565
Contributions:
Employer - - - -
Participants 714,185 5,941,388 890,557 1,047,381
--------------- --------------- --------------- -------------
Total Additions to Net Assets 760,976 22,052,606 2,058,213 2,176,946
--------------- --------------- --------------- -------------
DEDUCTIONS FROM NET ASSETS
Interest Expense - - - -
Allocation of Shares - - - -
Distribution of Benefits 220,923 9,078,174 1,023,591 2,531,527
Participant Loan Trustee Expense - - - -
--------------- --------------- --------------- -------------
Total Deductions from Net
Assets 220,923 9,078,174 1,023,591 2,531,527
--------------- --------------- --------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS 540,053 12,974,432 1,034,622 (354,581)
NET TRANSFERS AMONG INVESTMENT
OPTIONS 5,885,394 17,275,253 2,055,943 (3,416,085)
NET ASSETS - DECEMBER 31, 1996 - 48,928,353 4,329,740 20,988,432
--------------- --------------- --------------- -------------
NET ASSETS - DECEMBER 31, 1997 $ 6,425,447 $ 79,178,038 $ 7,420,305 $ 17,217,766
=============== =============== =============== =============
See Notes to Financial Statements.
7
</TABLE>
<PAGE>
STOCK PURCHASE-SAVINGS PLAN
OF CAROLINA POWER & LIGHT COMPANY
Notes to Financial Statements
Periods Ended December 31, 1998 and 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Stock Purchase-Savings Plan's (the "Plan") investments in the common stock
of Carolina Power & Light Company (the "Company"), the Putnam New Opportunities
Fund, the EuroPacific Growth Fund, the Fidelity Equity-Income Fund and the
Fidelity Balanced Fund are carried at fair value determined by quoted prices in
an active market. The investment in the Fixed Income Fund is carried at cost
plus accrued interest which approximates fair value. The Plan's investment
options are described in Note 3.
Dividends, interest and other income are accrued as earned, and expenses are
accrued as incurred. Benefits are recorded when paid.
The expenses incurred by Wachovia Bank of North Carolina, N.A. (the "Trustee")
and ADP, Inc., the third-party administrator, in the administration of the Plan
may be paid from assets of the Plan to the extent not paid by the Company.
Cash and cash equivalents include funds invested in Wachovia Bank's Short Term
Investment Fund (STIF) which is a money market fund (see Note 4).
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, and changes therein, and
disclosure of contingent assets and liabilities. Actual results could differ
from those estimates.
Certain 1997 amounts have been reclassified to conform to the 1998 presentation.
In order to upgrade the computer system to accept the enhanced Plan features and
to link the Company's, the Third Party Administrator's and the Trustee's
computer systems, a transaction moratorium, which limited access to account
transactions, was in place from September 20, 1998 to January 3, 1999.
2. DESCRIPTION OF THE PLAN
General Information Regarding the Plan
- --------------------------------------
The purposes of the Plan are to encourage systematic savings by employees and to
provide employees with a convenient method of acquiring an equity interest in
the Company and other investments. The notes which follow provide a high level
summary of Plan features. The Summary Plan Description and prospectus for the
Plan should be consulted for Plan details and limitations (see Note 5).
Participation in the Plan
- -------------------------
Generally, all full-time employees of the Company who are at least 18 years of
age are eligible to participate in the Plan on their first day of employment.
Certain part-time employees are also eligible. Only persons treated as employees
of the Company for federal tax purposes may participate in the Plan. Independent
contractors, leased employees and employees of subsidiaries are not eligible. If
employees wish to participate in the Plan, they must elect to do so and must
specify their level of savings and how their savings should be allocated among
the Plan's investment alternatives. Retired participants may retain investments
in the Plan but may not continue to make contributions to the Plan.
8
<PAGE>
Employee Contributions Under the Plan
- -------------------------------------
Employees who have eligible earnings equal to or less than a certain level
($80,000 for 1998 and 1997) may contribute 2%, 4%, 6%, 8%, 10%, 12% or 14% of
their before-tax eligible earnings (the "Deferred Contribution"). Effective May
1, 1998, the maximum contribution was increased to 16%. Employees with earnings
above this level may contribute 2%, 4%, 6%, 8%, 10% or 12% of their before-tax
eligible earnings. These contributions reduce, in like amount, the employee's
earnings subject to income tax for that year. An employee's total before-tax
contributions were limited to $10,000 for 1998 and $9,500 for 1997.
Participating employees may also elect to contribute an additional amount on an
after-tax basis. Employees who have eligible earnings equal to or less than a
specified level ($80,000 for 1998 and 1997) may elect to contribute an
additional after-tax amount equal to 2%, 4%, 6%, 8%, 10%, 12% or 14% of their
pay (effective May 1, 1998, a maximum of 16%). Employees with earnings above
this level may contribute an additional amount equal to 2%, 4%, 6%, 8%, 10% or
12% of their pay. These additional contributions are made after-tax and are not
matched by the Company. In no event may the before-tax contributions plus the
after-tax contributions exceed a total of 16%.
Company Contributions Under the Plan
- ------------------------------------
At the time employee contributions are made, the Company's matching allocations
are made to the Plan in an amount (the "Automatic SPSP Company-match") equal to
50% of the first 6% of each employee's before-tax contributions. All Company
matching allocations and any earnings on securities purchased with these
allocations are invested in common stock of the Company.
The Plan also has an incentive feature (the "Employee Stock Incentive Plan
Match") which provides for additional Company matching allocations to be made to
the Plan on behalf of each eligible employee when at least five out of ten of
the Company and business unit strategic goals set by senior management are met.
All employees eligible to participate in the Plan are eligible for these
additional Company matching allocations. Those eligible employees who do not
contribute to the Plan are, for the purpose of determining the additional
Company matching allocations, assumed to have made a before-tax contribution of
2% to the Plan. The Company made Employee Stock Incentive Plan Matching
allocations of $8.0 million for the Plan year ended December 31, 1998 and $5.1
million for the Plan year ended December 31, 1997.
Employees are 100 percent vested in the contributions they have made to the Plan
and 100 percent vested in the investment earnings credited on such
contributions. Upon attaining five years of service with the Company, employees
are 100 percent vested in all Company matches that have been made to their
accounts. Employees with less than five years of service will be vested in the
Automatic SPSP Company-match and the Employee Stock Incentive Plan Match at the
end of the second Plan year after the year in which the matching allocations and
the additional matching allocations were allocated to the employee's account.
Employee Stock Ownership Plan
- -----------------------------
In 1989, the Plan was restated as an Employee Stock Ownership Plan, which allows
the Plan to enter into acquisition loans ("ESOP Loans") for the purpose of
acquiring Company common stock. Common stock acquired with the proceeds of an
ESOP Loan is held by the Trustee in a suspense account ("ESOP Stock Suspense
Account"). Such common stock is released from the ESOP Stock Suspense Account
and made available for allocation to the accounts of participants as the ESOP
Loan is repaid as specified by provisions of the Internal Revenue Code.
ESOP Loan payments are made quarterly and may be funded by dividends on stock
held in the ESOP Stock Suspense Account, dividends on Company stock held in the
CP&L Common Stock Fund, Company contributions or the proceeds of stock sold from
the ESOP Stock Suspense Account.
9
<PAGE>
In October 1989, the Trustee purchased 13,636,362 shares of common stock (as
restated for the two-for-one stock split in February 1993) from the Company for
an aggregate purchase price of approximately $300 million. The purchase was
financed with a long-term ESOP Loan from the Company, bearing a 6% interest
rate. Prepayment of the loan without a penalty is allowed. Excluding the effects
of any future prepayments, required payments, including interest, are
$19,865,293 for each of the years 1999 through 2003 and a total of $137,438,117
from 2004 through 2010. The ESOP Loan is secured by the ESOP Stock Suspense
Account shares in the Plan, which totaled 6,953,612 shares at December 31, 1998.
During the 1998 Plan year, 582,988 ESOP shares were released from the ESOP Stock
Suspense Account and allocated to participants.
Investment of Funds
- -------------------
At the election of the participating employee, contributions made by the
employee and any earnings on the securities purchased with these contributions
are invested in the investment options described in Note 3. Employee
contributions to the Plan can be allocated to one or more of the investment
options in increments of 5%; however, a minimum of 25% of the first 6% of
Deferred Contributions must be invested in Company common stock. This election
is made at the time the employee begins to participate in the Plan. The election
may be changed upon written request and is generally effective by the following
pay period. A participant may transfer current fund balances among the Plan
options subject to certain limitations. All Company matching allocations and any
dividends on stock purchased with Company matching allocations will be invested
in common stock of the Company (see Note 5).
For employees age 55 and older who have participated in the Plan for at least 10
years, the Company offers diversification of a portion of a participant's
accumulated investment in Company common stock acquired after 1986. Qualified
participants can elect annually, for a maximum of six years, to transfer to one
or more of the remaining investment options up to 25% (50% in the final year of
election) of 1) Company common stock acquired by the participant, 2) Company
matching allocations and 3) dividends on Company common stock accrued after
1986. At retirement, all contributions made by the participant in Company common
stock may be diversified.
Retirement, Death, or Termination of Employment
- -----------------------------------------------
Participants with five or more years of service with the Company are vested with
respect to all Company matching allocations. Generally, participants leaving the
employ of the Company with less than five years of service forfeit non-vested
Company matching allocations. In the case of an employee's death, retirement or
termination of employment with at least five years of service with the Company,
all employee and Company matching allocations, including those otherwise
non-vested, become payable upon request by the employee, the employee's estate
or other appropriate recipients. Forfeited matching allocations are used by the
Plan to reduce matching allocations otherwise required from the Company. These
forfeited matching allocations were approximately $336,000 in 1998 and $494,000
in 1997.
Withdrawals
- -----------
Participants may withdraw certain funds while employed at Carolina Power and
Light. Such withdrawals will be applied to the participant's account based on
the fund withdrawal hierarchy prescribed by the Plan (participants can not
direct that the withdrawal be applied to a specific fund). In general,
withdrawals of before-tax contributions - whether the contributions were from
the employee or from the Company - and their earnings are not permitted.
However, under certain specified circumstances, the IRS will allow limited
withdrawals of before-tax contributions. Financial hardship withdrawals are
permitted when an employee has a substantiated "immediate and heavy" financial
need. Once reaching age 59 1/2, employees may make a non-hardship withdrawal of
before-tax contributions without having to meet the hardship requirements.
10
<PAGE>
Loans
- -----
Participants are allowed to borrow against their accounts while continuing to
defer taxes on the amount of the loan. The tax deferral is preserved as long as
the principal and interest on the loan are repaid as due. The minimum loan
available is $1,000. The maximum is 50 percent of the participant's account
balance or $50,000, whichever is smaller. Loans are available in increments of
$100 only. The interest rate for loans is determined periodically by the SPSP
Committee, and is set at a reasonable amount in accordance with IRS regulations.
Loans from the Plan must be repaid within five years or when employment is
terminated at CP&L, whichever happens first. At December 31, 1998 and 1997,
there were approximately $21.3 million and $21.7 million, respectively, of
receivables for loans to participants. The loans are funded with a borrowing
arrangement by the Plan with an outside lending institution.
Federal Income Taxes
- --------------------
The Plan obtained its latest determination letter on May 16, 1996, in which the
Internal Revenue Service stated that the Plan and Trust, as then designed, was
in compliance with the applicable requirements of the Internal Revenue Code. The
Plan has been amended and restated since receiving the determination letter.
However, the Plan administrator believes that the Plan is currently designed and
being operated in compliance with the applicable requirements of the Internal
Revenue Code. Therefore, it is believed that the Plan was qualified and the
related trust was tax-exempt as of the financial statement date. No provision
for income taxes has been included in the Plan's financial statements.
Termination of the Plan
- -----------------------
The Company has reserved the right to amend, modify, suspend or terminate the
Plan at any time, except that no such action will have a retroactive effect and
none of the assets of the Plan will revert to the Company or be used for any
purpose other than the exclusive benefit of the participating employees,
provided that, in the event of Plan termination, shares of Company common stock
not allocated to participants' accounts may be sold to repay the ESOP Loans. In
the event of termination of the Plan, all contributions of the participants and
of the Company through the date of termination will be vested.
3. INVESTMENTS
CP&L Common Stock Fund
- ----------------------
The CP&L Common Stock Fund is partially funded through the release of shares
from the ESOP Stock Suspense Account (see Note 2). The price at which such
released shares are allocated to Plan participants is the closing price per
share quoted in the Wall Street Journal on the day prior to participant
---------------------
allocation. In addition, the CP&L Common Stock Fund may use available cash from
contributions and dividends to purchase CP&L common stock on the open market or
otherwise, including purchases from the Company of authorized but unissued
shares of common stock. The purchase price of shares of common stock acquired on
the open market for employee accounts will be the weighted-average price of all
shares purchased under the Plan during the applicable Investment Period. An
Investment Period with respect to shares purchased with employee payroll
deductions together with matching allocations of the Company is one pay period,
running from the payroll date deductions are taken to the day before the
following payroll date. If funds to be invested in Company common stock are used
to purchase authorized but unissued common stock directly from the Company, the
purchase price will be the closing price per share quoted in the Wall Street
-----------
Journal on the date of purchase. No brokerage commission or other charges shall
- -------
be deducted. The total annual return of the Company's common stock was 16.04%
for 1998 and 22.30% for 1997.
The CP&L common stock fund was converted from share to unitized accounting
during a current year transaction moratorium (see Note 5). This changeover
required a conversion of a small portion of the CP&L common stock fund into a
cash reserve during the moratorium. The reserve is necessary to provide the
liquidity required to process fund transfers by the close of market each day.
The cash reserve generally represents between 1 and 3 percent of the total fund
value, and varies depending upon account activity. The reserve may consist of
cash or cash equivalents. As of December 31, 1998, the reserve totaled
approximately $18.7 million.
11
<PAGE>
New Opportunities Fund
- ----------------------
The Putnam New Opportunities Fund of Pentium Investments, Inc. ("New
Opportunities Fund") invests principally in common stocks of companies in
sectors which Putnam Investments believes possess above-average long-term growth
potential. The New Opportunities Fund seeks long-term capital appreciation from
stocks of smaller to midsize companies and targets sectors of the economy that
are expanding rapidly and then selects fast-growing companies within these
sectors. It has a relatively higher risk as compared to certain other options in
the Plan, but has potential for higher returns over a long-term horizon. Current
income from dividends is only an incidental consideration. Income earned on the
New Opportunities Fund is reinvested in additional fund shares. No loading or
sales charges shall be applicable. The total annual return of the New
Opportunities Fund was 24.55% in 1998 and 22.55% in 1997.
EuroPacific Growth Fund
- -----------------------
The EuroPacific Growth Fund of Capital Research and Management Company
("EuroPacific Fund") invests principally in strong, growing companies based
chiefly in Europe and the Pacific Basin, ranging from small firms to large
corporations. The EuroPacific Fund seeks long-term growth of capital by
investing in securities of companies located outside the U. S. and has
relatively higher market risk as compared to certain other options in the Plan,
but has potential for higher returns over a long-term horizon. The fund is also
affected by the fluctuating value of the American dollar in relation to foreign
currencies. Income earned on the EuroPacific Fund is reinvested in additional
fund shares. No loading or sales charges shall be applicable. The total annual
return for the EuroPacific Fund was 15.54% in 1998 and 9.19% in 1997.
Fidelity Equity-Income Fund
- ---------------------------
Funds invested in the Fidelity Equity-Income mutual fund ("Equity-Income Fund")
are used primarily to purchase a variety of income-producing common or preferred
stocks, as well as bonds or securities which may be convertible into common
stock, and other similar types of investments. Normally, at least 80% of the
Equity-Income Fund's assets will be invested in such securities. The objective
of the Equity-Income Fund is to produce current income while taking into account
the potential for long-term growth through capital appreciation. Income earned
on the Equity-Income Fund is reinvested in additional fund shares. No loading or
sales charges shall be applicable. The total annual return of the Equity-Income
Fund was 12.42% in 1998 and 29.98% in 1997.
Fidelity Balanced Fund
- ----------------------
Funds in the Fidelity Balanced Fund ("Balanced Fund") are invested in a mutual
fund which consists of a diversified portfolio of securities, including foreign
and domestic stocks and bonds. At least 25% of the Balanced Fund's total
holdings will always consist of fixed-income securities. The objective of the
Balanced Fund is to provide as much income as possible, through dividends and
interest, while preserving capital. Income earned on the Balanced Fund is
reinvested in additional fund shares. No loading or sales charges shall be
applicable. The total annual return of the Balanced Fund was 20.29% in 1998 and
23.45% in 1997.
Fixed Income Fund
- -----------------
Contributions to the Fixed Income Fund may be invested in the American Express
Income Fund I. The Fixed Income Fund is considered a "current-income and
stability of principal" investment fund. The Fixed Income Fund consists of a mix
of investment contracts, primarily with insurance companies, along with other
high quality, short-term investments. The Fixed Income Fund's objectives are to
preserve principal and income while maximizing current income by investing in
credit-worthy investment products and by maintaining a well-diversified
portfolio. Income earned is reinvested in the Fixed Income Fund. No loading or
sales charges shall be applicable. The total annual return of the Fixed Income
Fund was 6.52% in 1998 and 6.42% in 1997.
12
<PAGE>
4. RELATED PARTY TRANSACTIONS
Plan investments include shares of money market funds managed by Wachovia Bank,
the Trustee as defined by the Plan, and therefore qualify as party-in-interests
transactions.
5. SUBSEQUENT EVENTS
The Plan was amended and restated effective January 1, 1999. The following is a
high-level summary of the changes that became effective as a result of this
redesign:
a. Daily valuation of account balances to provide participants with same-day
valuation of fund transfers
b. Same-day transfer of assets between funds
c. Daily access to investment allocation, withdrawals and loan transactions
d. Diversification of matured Company-match allocations and certain pre-1989
shares into other Plan funds
e. The conversion of the CP&L common stock fund from share to unitized
accounting
13
<PAGE>
<TABLE>
STOCK PURCHASE-SAVINGS PLAN
OF CAROLINA POWER & LIGHT COMPANY
Item 27a - Schedule of Assets Held for Investment Purposes
As of December 31, 1998
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Identity of Issue Description of Investment Cost Value Fair Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Carolina Power & Light Company Common stock, no par or $426,132,344 $911,584,248 *
stated value, 19,369,652 shares
Putnam New Opportunities Fund Mutual fund - 285,722 shares 13,437,855 16,694,725
EuroPacific Growth Fund Mutual fund - 281,291 shares 7,788,095 7,988,667
Fidelity Equity-Income Fund Mutual fund - 1,686,347 shares 65,662,289 93,676,589
Fidelity Balanced Fund Mutual fund - 686,223 shares 9,896,360 11,226,601
Fixed Income Fund Various investments 17,243,042 17,243,042
Participants' Loans Receivable Loans to plan participants 21,309,019 21,309,019 *
---------- ----------
Total $561,469,004 $1,079,722,891
============ ==============
* Party in interest
14
</TABLE>
<PAGE>
<TABLE>
STOCK PURCHASE-SAVINGS PLAN
OF CAROLINA POWER & LIGHT COMPANY
Item 27b - Schedule of Loans in Default
As of December 31, 1998
<CAPTION>
Amount Received During
Reporting Year Amount Overdue
--------------------- ---------------------
Original Unpaid Original Date of Loan
Amount Balance at Interest Rate
Identity of Obligor of Loan Principal Interest End of Year Maturity Date Principal Interest
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
D. Biggers* $31,100 $6,067 $1,715 $17,010 March 1996 $1,711 $229
9.00%
February 2001
G. Butler* 2,500 94 26 1,747 January 1997 768 65
8.75%
January 2000
G. Coln* 19,700 2,694 161 1,608 December 1993 1,604 4
6.50%
December 1998
C. Gibson* 5,000 772 167 2,343 October 1995 299 15
9.50%
October 2000
L. Milliken* 33,200 689 351 33,033 September 1997 5,049 2,219
9.00%
August 2002
T. Parmley* 15,900 2,938 268 13,686 October 1997 803 189
9.00%
October 2002
J. Pearce* 4,000 567 119 3,538 August 1997 572 172
9.00%
August 2001
T. Pittman* 11,000 255 89 8,300 June 1996 1,869 537
8.75%
May 2001
M. Radford* 20,000 11,501 722 20,089 July 1998 1,104 560
9.00%
June 2003
J. Rawlings* 20,000 1,844 1,080 17,747 September 1997 1,599 480
9.00%
September 2002
D. Robinson* 6,000 16 0 873 December 1993 850 22
6.50%
June 1998
N. Welsh* 5,000 678 157 2,175 July 1995 367 50
9.50%
July 2000
* Party in interest
15
</TABLE>
<PAGE>
<TABLE>
STOCK PURCHASE-SAVINGS PLAN
OF CAROLINA POWER & LIGHT COMPANY
Item 27d - Schedule of Reportable Transactions
For the Year Ended December 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Expenses Current Value on
Identity of Party/Description of Asset Purchase Price Selling Price Incurred Cost Value Transaction Date Gain/Loss
- -----------------------------------------------------------------------------------------------------------------------------------
Carolina Power & Light Company
Common Stock:
<S> <C> <C> <C> <C> <C> <C> <C>
52 Sales - $61,373,295 - $33,449,033 $61,373,295 $27,924,262
------------
52 Transactions $61,373,295
===========
Wachovia Bank
Short-Term Investment Fund:
<S> <C> <C> <C> <C> <C> <C> <C>
426 Purchases $147,324,626 - - $147,324,626 $147,324,626 -
341 Sales - $132,887,107 - $132,887,107 $132,887,107 -
-------------
767 Transactions $280,211,733
============
16
</TABLE>
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
- ---------
the Stock Purchase-Savings Plan Committee has duly caused this Annual Report to
be signed on its behalf by the undersigned hereunto duly authorized.
STOCK PURCHASE-SAVINGS PLAN OF
CAROLINA POWER & LIGHT COMPANY
/s/ Robert B. McGehee, Chairman
-------------------------------------
Robert B. McGehee, Chairman
Stock Purchase-Savings Plan Committee
Date: June 23, 1999
<PAGE>
EXHIBITS INDEX
Exhibit Number
- --------------
Exhibit No. 23 Consent of Deloitte & Touche LLP
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-33520 on Form S-8 of Carolina Power & Light Company, of our report dated June
22, 1999, appearing in this Annual Report on Form 11-K of the Stock
Purchase-Savings Plan of Carolina Power & Light Company for the year ended
December 31, 1998.
\s\ DELOITTE & TOUCHE LLP
Raleigh, North Carolina
June 22, 1999
