Filed by Carolina Power & Light Company
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Carolina Power & Light Company
Commission File No. 001-03382
On June 29, 2000, Carolina Power & Light Company posted the following
presentation on its internet web site.
<PAGE>
Donaldson, Lufkin & Jenrette
Fifth Annual Electric Power Conference
New York, NY
June 13, 2000
Presented by William Cavanaugh III
CP&L Chairman, President and CEO
I am delighted to be here in New York City at this conference and with this
group of attendees. You are very important to us--and it is only appropriate
that you be among the first to hear a presentation on the new CP&L.
I say new because basically CP&L has ascended to a new level over the past three
years. We've leveraged the company's core strengths, which are: a great service
territory; low cost/high reliability operations; a productive work force, and
responsible regulation.
[VIEWGRAPH APPEARS HERE WITH THE FOLLOWING INFORMATION:]
Donaldson, Lufkin & Jenrette
Fifth Annual Electric
Power Conference
New York City - June 13, 2000
Carolina Power & Light
Comments by
William Cavanaugh III
Chairman, President, & CEO
On top of this--with the North Carolina Natural Gas and Florida Progress
acquisitions--we are emerging as a much larger, more dynamic company with
greater depth and portfolio diversity.
My purpose today is to provide you with a vision of that new company; an
enterprise capable of--and committed to--delivering superior shareholder value.
I'll demonstrate that ability in four ways.
o First, our success in meeting past objectives
o Second, the significant steps we are taking to grow the company
o Third, our post-merger strategy, and then
o I'll wind up giving you an earnings outlook.
[VIEWGRAPH APPEARS HERE WITH THE FOLLOWING INFORMATION:]
Discussion topics
o Past commitments
o Activities underway
o Post-merger strategy
o Our commitment
COMMITMENTS ACHIEVED
Credibility is a valuable asset that you earn by doing what you say you're going
to do.
1
<PAGE>
In the 90s, we set out to improve core operations and cost competitiveness.
These three graphs tell the story.
o Our nuclear system performance has improved from the bottom to the top.
[VIEWGRAPH APPEARS HERE WITH THE FOLLOWING INFORMATION:]
Nuclear system capacity factor
Performance (%)
'91-'93 '97-'98
------- ------- = Industry Ranking #1
58 93
o We've reduced costs. O&M per kWh sold dropped a whopping 25% since 1994.
[VIEWGRAPH APPEARS HERE WITH THE FOLLOWING INFORMATION:]
O&M per kWh sold
1994 1999
---- ----
(cents/kWh)
1.6 1.2 (Down 25%)
o And, we have virtually eliminated price disparity between our company and
other major southeastern utilities.
[VIEWGRAPH APPEARS HERE WITH THE FOLLOWING INFORMATION:]
1999 Average revenue/kWh
Duke CP&L SCANA Dominion FP&L FPC
---- ---- ----- -------- ---- ---
(cents/kWh)
5.5 5.6 5.6 5.8 6.8 6.8
We delivered on our commitments. We have positioned ourselves to succeed.
2
<PAGE>
In 1997 we set about repositioning and growing the company. The objectives were
straightforward. By 2002, we would:
o Double the number of end-use customers
o Sell 20% more mWs
o Work with our regulators to enact reasonable deregulation legislation, and,
o Grow pre-tax income--from non-utility operations--to $100 million.
We will accomplish these.
[VIEWGRAPH APPEARS HERE WITH THE FOLLOWING INFORMATION:]
1997 growth objectives
o Double end-use customers
o Sell 20 percent more MW's
o Manage deregulation
o $100 million income from non-utility operations
And I want to make one thing clear, these objectives will be achieved in ways
that will contribute to the long-term growth of shareholder value. We are
committed to ensuring that CP&L investors receive a superior reward.
Now for the future, we have a number of new initiatives that will strengthen our
competitive position, improve earnings capability, and position us for success
throughout this decade.
First and foremost is our acquisition of Florida Progress. We are set to buy a
company that is every bit as large as we are. And when this transaction closes,
we will be in place--and doing business--at both geographic ends of a growing
and dynamic energy market in the Southeast. It will be an enviable position of
strength.
The transaction is currently on track for a fall 2000 closing. All required
filings have been made.
o The FERC decision is expected by late summer. So far, no significant issues
have been raised.
o The North Carolina Utilities Commission hearing is set for July 18, with
approval expected in September.
o Shareholder meetings to approve the merger are scheduled in August for both
CP&L and Florida Progress.
o No formal approval is required by the Florida Public Service Commission.
However, we are working with Florida to address any issues it may have, and
o No approval is required in South Carolina.
MERGER BENEFITS
I am extremely pleased with the integration efforts between the two companies,
and we are confident that the previously announced synergies are achievable. In
fact, we have already:
o Entered into a joint marketing arrangement with Progress Telecom to grow
revenues and build-out our fiber systems, something I'll talk about in more
detail later.
3
<PAGE>
o Next, we announced earlier this year that Florida Progress purchased and
installed four additional synthetic fuel plants that will add value to the
combined companies. Additionally, CP&L purchased--from Florida Progress--a
90% ownership interest in two of these plants, which will produce earnings
for CP&L this year, and finally,
o We're working with Florida Progress on their plans to build the 500 mW
combined cycle Hines 2 facility which is scheduled for completion in November
2003.
By the way, let me add that we've been authorized to organize as a holding
company, which will give us considerable flexibility to create and adequately
finance our business units and take advantage of the opportunities presented
in the evolving industry.
We also have a definitive, post-closing organizational framework and have
selected all but a handful of the combined company's executives.
SIGNIFICANT ACTIVITIES REVIEW
Of course, the acquisition isn't the only thing on our plate. We have been
working on other matters that could also positively impact shareholder value.
These include:
o Deregulation activities in the states we serve
o Our soon to be organized Energy Ventures subsidiary, and
o Other subsidiary activities
[VIEWGRAPH APPEARS HERE WITH THE FOLLOWING INFORMATION:]
Current activities
o Deregulation status
o Energy Ventures business unit
o Subsidiary activities
DEREGULATION PROCEEDING
Regarding deregulation, last month a legislative study commission in North
Carolina recommended the complete opening of the electricity market in 2006,
with early opportunities for limited choice in 2005 for half of the customers.
Other key recommendations include a rate freeze through 2004 and a hearing that
year to set rates and stranded cost charges for 2005 and beyond.
I am pleased to say CP&L was one of the leaders in achieving this result, and we
believe it supports the objectives of both shareholders and customers.
Let me add that the commission's recommendation has garnered widespread support
among the state's legislative and elected leaders.
The study commission's report, however, did not address one important issue.
There are 52 cities in the North Carolina Municipal Power Agency and they owe
$5.5 billion in debt associated with their electric systems.
The disposition of this debt is still being considered by the Study Commission.
This issue is significant and complex, but its resolution is expected to be part
of the Commission's final recommendation to the legislature in 2001. We will
actively participate in that effort and see it as an opportunity for CP&L.
We are comfortable with the Study Commission's approach and will be working
closely with Duke Energy in supporting the passage of restructuring legislation.
4
<PAGE>
As you also may be aware, the governor of Florida is establishing a study
commission to consider electricity restructuring. This appears to be a
reasonable and well-thought-out approach, which we will support.
Likewise, South Carolina is studying restructuring. We are participating in this
effort and expect the results to be similar to the likely outcomes in North
Carolina and Florida.
ENERGY VENTURES
Now, let me tell you about our new Energy Ventures subsidiary that will be
organized later this year. Tom Kilgore, currently our senior vice president for
power operations, will lead it.
o Energy Ventures will be responsible for fuel procurement and non-regulated
plants. Additionally, the unit will oversee our established wholesale
marketing and trading operations. By the way, our off-system marketing is
already a significant contributor and will earn at least $40 million this
year.
o I want to emphasize that we have a very balanced risk/return approach to
taking positions in the wholesale market. For example, we maintain a
substantial reserve of unsold capacity each day--usually 600 mW or so over
our native daily peak load. While this means we may miss some sales
opportunities, we also don't get caught short when the markets are at their
highest prices. We watch our exposure very carefully.
o Energy Ventures will also be responsible for Florida Progress's Electric
Fuels subsidiary which includes mining, gas property development, synthetic
fuels, barge and terminal operations, and rail car services.
Some parts of Electric Fuels will fit very well with our business strategy;
others may not. We are working closely with Florida Progress on a plan to
maximize shareholder value from these assets.
SUBSIDIARY UPDATE
Now, let me briefly update you on our current non-regulated subsidiary
activities, starting with Interpath. We have divided Interpath into two separate
entities: an application service provider and a carrier's carrier fiber
business.
o The ASP business will keep the Interpath name. This month, CP&L and Bain
Capital will close on a restructuring of Interpath. CP&L will own 35
percent and Bain, the remainder. Bain will manage Interpath, and will bring
to this venture a proven track record in growing companies and achieving
high value payoffs. Each of us is contributing $50 million to this venture,
and that should provide ample funding to allow this enterprise to develop
into a truly successful high tech company.
o CP&L retained 100 percent ownership of the fiber and the BellSouth PCS
assets that were in Interpath. We will combine our fiber with that of
Florida Progress', which will form a system that stretches from Miami to
Washington, D.C. This system by year-end 2000 will have over 110,000 fiber
miles and 3,000 route miles. I thought it worth noting that Progress
Telecom is negotiating an agreement to handle a portion of Latin America's
internet traffic into the United States.
o The second major CP&L subsidiary is SRS. In 1999 it moved into the black
with year-end revenues of $68 million. Retooled as a market-driven business
focused on providing high-
5
<PAGE>
margin, technology-based energy solutions, SRS is a better competitor with a
$75 million backlog and revenues that should approach $90 million this year.
POST CLOSING: WHAT'S NEXT?
Now I know many of you want to know what you can expect of CP&L after the
Florida Progress closing.
First, with respect to another major acquisition, that prospect is off the table
until it's clear that we did this one right. We will deliver the results that
will give our investors confidence. So, you can expect us to focus on
demonstrating the value contribution that will come from Florida Progress before
we undertake anything else of significance.
Second, with respect to our overall business strategy, expect to see our new
company focus on three areas. They are:
o Expanding our competitive energy supply business.
o Leveraging our 2.5 million gas and electric customers, and
o Developing the fiber network business.
[VIEWGRAPH APPEARS HERE WITH THE FOLLOWING INFORMATION:]
Post-merger strategy
Three interrelated areas of focus
o Leverage Customer Base
o Expand Competitive Energy Supply Business
o Develop Fiber Network Business
These three areas meet our formula for success. They are interrelated, and each
provide substantial earnings and investment potential. And they each require
assets and customers. Our charge is to ensure that the assets are at the right
place and operating competitively and that our customers are satisfied, loyal,
and receptive to new offerings.
We are bullish about our prospects to grow these assets and create significant
value for our shareholders.
We feel our industry is still in the early stages of restructuring. By focusing
on the three areas I just discussed we are preserving our options and a degree
of flexibility.
EXPANDING OUR COMPETITIVE ENERGY SUPPLY BUSINESS
With regard to our competitive energy supply business, the new company will own
over 18,000 mWs of generation capacity with plans to add 4,000 mWs of gas-fired
capacity over the next two years. Most of this generation is currently under
state regulation. We plan to move all or most of this to non-regulated status as
the markets open in the states where we operate.
[VIEWGRAPH APPEARS HERE WITH THE FOLLOWING INFORMATION:]
Expand competitive energy
supply business
Critical success factors
o Cost leadership
o Marketing/trading capability
o Optimum asset mix
o Integrated fuel strategy
o Risk management program
These assets will be the centerpiece of our overall competitive energy supply
business, which I have previously referred to as our Energy Ventures subsidiary.
Clearly, we must manage this transition of generation assets so that it occurs
on a timely basis and in a manner that supports shareholder value.
6
<PAGE>
We see the critical success factors in this business to be:
o Maintaining the cost leadership position we have already achieved.
o Continuing to develop our marketing and trading
capabilities,
o Securing an optimum asset mix, emphasizing both fuel type
and location, as well as,
o Implementing an integrated fuel strategy which means, among other tactics,
potential upstream investments in such things as gas reserves and storage,
and
o Executing a risk management program fitting our business profile.
LEVERAGING THE DELIVERY CUSTOMER BASE
With regard to our customer base, the combined company will serve over 2.5
million customers, and that will grow at a rate of at least 50,000 per year. Our
strategy will be to expand this customer base and leverage the relationship to
encourage sales of value added services.
[VIEWGRAPH APPEARS HERE WITH THE FOLLOWING INFORMATION:]
Leverage customer base
Critical success factors
o Good location
o Customer focused operations
o Right regulatory platform
o Value-added services
o Distributed generation option
We believe the critical success factors in this area are:
o Having a good location--with a positive growth profile.
o Transitioning from an operating focus to a customer focus
whereby future customer loyalty will be retained.
o Creating the right regulatory platform--which means
reasonable tariffs and codes of conduct.
o Refining our marketing skills relative to value-added
customer services, and
o Maintaining a distributed generation option.
FIBER NETWORK MANAGEMENT
Now I'd like to discuss our third focus area, the new fiber subsidiary. We are
very excited about the upside potential that our combination with Florida
Progress is creating. The Progress Telecom subsidiary has been working in
primary, secondary, and tertiary markets in Florida and Georgia. The leadership
of this unit has a strong telecom background--and a sound business model that
can be easily overlaid on the assets of CP&L.
7
<PAGE>
After the closing, you can expect to see us provide capital to continue the
build-out of an integrated system.
We're going to continue to target locations primarily in secondary and tertiary
markets where competition is lower and margins are higher and more sustainable.
We'll also remain focused on responding to a customer's need for a timely
connection. We recognize that this task is as important in this undertaking as
it is in the energy business.
[VIEWGRAPH APPEARS HERE WITH THE FOLLOWING INFORMATION:]
Develop fiber network business
Critical success factors
o Target locations
o Customer responsiveness
o Pricing
o Low cost structure
o Reliability
It's a fact that pricing for return as well as volume will also be important,
considering this is a competitive business absent any tariffs. And a key to our
long-term success will be creating a reputation for superior reliability by
employing the latest technology and the most efficient engineering to produce a
low-cost structure.
EARNINGS OUTLOOK
Now, let me discuss our earnings expectations for 2000 and beyond. We are
comfortable with the street consensus for 2000 of around $3.00 per share for
CP&L on a stand-alone basis, barring some unusual event. And I don't want to
even talk about hurricanes.
o For 2001 we estimate earnings within the $3.25 to $3.35 range. Going forward
you can expect earnings to grow in the 7 percent to 8 percent range as we
consolidate our operations with Florida Progress.
CLOSING
In closing, I want to leave you with a picture of the fundamental strengths that
underscore the opportunities for this new company. By 2002, we will have:
o Over 22,000 mWs of capacity in the high-growth Southeast, with market reach
into other areas
o A competitive average embedded cost for the entire
generation fleet of $220 per kW
o Over 2.5 million customers--adding 50,000 more annually, and
o We expect to have responsible restructuring plans enacted into law in North
Carolina and quite possibly in South Carolina and Florida.
[VIEWGRAPH APPEARS HERE WITH THE FOLLOWING INFORMATION:]
Fundamental strengths
o 22,000 MW in the Southeast
o $220/KW average embedded cost of generation
o 2.5 million customers plus 50,000/year
o Responsible and reasonable deregulation
8
<PAGE>
Finally, having listed our commitments and having pledged to honor them, I want
to emphasize this final one: we are committed to 7 percent to 8 percent EPS
growth or better for the foreseeable future--and a bankable dividend to boot.
[VIEWGRAPH APPEARS HERE WITH THE FOLLOWING INFORMATION:]
Our commitment
Earnings growth--and a bankable dividend
EPS
2000 2001 And beyond
---- ---- ----------
$3.00 $3.00 7% to 8% minimum [graphic of arrow showing an
increase of EPS appears here]
Thank you, and now, I'd be pleased to answer your questions.
SAFE HARBOR STATEMENT:
THIS DOCUMENT 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 AREAS,
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. ANY FORWARD-LOOKING STATEMENT
SPEAKS ONLY AS OF THE DATE ON WHICH SUCH STATEMENT IS MADE, AND THE COMPANY
UNDERTAKES NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENT OR STATEMENTS
TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE ON WHICH SUCH STATEMENT IS
MADE.
--------------------------------------------------------------------------------
CP&L is a Fortune 500 company and is a member of the S&P 500, the
S&P Electric and the Philadelphia Utility Indices.
[End of text appearing on website]
9
<PAGE>
In connection with the share exchange between CP&L Energy and Florida Progress,
Carolina Power & Light and Florida Progress have filed with the Securities and
Exchange Commission (the "SEC") a preliminary joint proxy statement/prospectus.
CP&L Energy will file a Registration Statement on Form S-4 and Florida Progress
will file a definitive proxy statement each of which will contain the definitive
joint proxy statement/prospectus of CP&L Energy and Florida Progress in addition
to other relevant documents concerning the share exchange with the SEC. WE URGE
INVESTORS TO READ THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER
RELEVANT DOCUMENTS TO BE FILED WITH THE SEC BECAUSE THEY CONTAIN IMPORTANT
INFORMATION. Investors will be able to obtain the documents free of charge at
the SEC's web site, http://www.sec.gov. In addition, documents filed by Carolina
Power & Light and CP&L Energy with the SEC can be obtained by contacting
Carolina Power & Light and CP&L Energy at the following address and telephone
number: Shareholder Relations, 411 Fayetteville Street, Raleigh, North Carolina
27601, telephone : (800) 662-7232. Documents filed with the SEC by Florida
Progress can be obtained by contacting Florida Progress at the following address
and telephone number: Investor Services, P.O. Box 14042 (BT11B), St. Petersburg,
Florida 33733, telephone: (800) 937-2640. READ THE DEFINITIVE JOINT PROXY
STATEMENT/PROSPECTUS CAREFULLY BEFORE MAKING A DECISION CONCERNING THE SHARE
EXCHANGE.
CP&L Energy, its officers, directors, employees and agents may be soliciting
proxies from CP&L Energy shareholders in connection with the share exchange.
Information concerning the participants in the solicitation is set forth in the
preliminary joint proxy statement/prospectus filed by Carolina Power & Light
with the SEC on May 23, 2000.
Florida Progress, its officers, directors, employees and agents may be
soliciting proxies from Florida Progress shareholders in connection with the
share exchange. Information concerning the participants in the solicitation is
set forth in the preliminary joint proxy statement/prospectus filed by Florida
Progress with the SEC on May 23, 2000.
