Filed by CP&L Energy, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Florida Progress Corporation
Commission File No. 333-40836
The following are excerpts of a booklet provided by Carolina Power &
Light Company at the Donaldson, Lufkin & Jenrette Fifth Annual Electric Power
Conference on June 13, 2000.
<PAGE>
CP&L at a glance
Corporate profile
Carolina Power & Light [NYSE: CPL] headquartered in Raleigh, NC is among the
nation's top energy companies. Our system generates more than 10,000 megawatts
of power through a flexible mix of fossil, nuclear and hydroelectric sources. In
turn, we deliver electric energy and natural gas to more than 1.2 million
customers in one of the fastest growing areas of the country. We also operate a
regional Internet / telecommunications business and provide energy services for
customers throughout North America.
Strategy
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CP&L is creating a bold new energy presence in the Southeast. Our strategic
growth plan is designed to transform CP&L from a traditional power-based utility
into a super-regional energy provider. CP&L's financial strategies include a
combination of solid earnings and dividend growth.
On August 23, 1999, CP&L and Florida Progress Corporation (FPC) announced plans
to combine operations to create the ninth largest U. S. electric utility based
on generating capacity.
Service territory
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[GRAPHIC OF MAP OF SERVICE TERRITORY APPEARS HERE.]
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CP&L Facts
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o 1.2 million electric customers
o 178,000 gas customers
o 17 power plants -- 10,288 MW's
o 64,000 miles of power lines
o 7,827 employees
o $8 billion assets
o $3 billion revenues
o 1,128 miles gas transmission
o 2,865 miles gas distribution
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<TABLE>
<CAPTION>
Financial highlights as of 5/31/00
<S> <C> <C> <C>
New York Stock Exchange: CPL Dividend yield 6.0%
Price as of 5/31/00: $34 3/8 Current indicated dividend $2.06
52-week range: $28 9/16 - 44 11/16 Dividend payout ratio 1999 78%
Market capitalization (billion): $5.3 YTD return CP&L 16.4%
Common shares outstanding (millions): 153.0 YTD return S&P Electrics 13.0%
Price/Earnings: 11.5
</TABLE>
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<PAGE>
Management focus
Deliver superior, long-term total shareholder returns relative to our industry
peers by achieving a sustainable competitive advantage.
Strategies
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o Achieve cost leadership within our geographical focus area by pursuing cost
efficiencies, economies of scale and an asset-based strategy. CP&L is
reducing costs on all fronts including:
- Non-fuel O&M - Already below the average for our region, CP&L has reduced
cost by 17 percent from 1994 to 1999 (excluding hurricane restoration
cost). Reductions were accomplished through improved nuclear operations,
benchmarking, and reengineering efforts.
- Fuel - Reduce dependence on long-term coal contracts. Long-term coal
contracts will decline from 86 percent of total coal requirements in 1998
to 37 percent by 2004 and 24 percent by 2006.
- Purchased power - Contracts at above-market rates will decline from 78
percent of purchases in 1998 to 48 percent by 2002 and 35 percent by 2007.
- Nuclear embedded cost - Reduce embedded cost per KW to levels comparable
to our southeast region by 2005. Reductions will occur as a result of
commission approved accelerated cost recovery of nuclear assets in the
amount of $750 million over a five year period beginning January 2000.
o Focusing on the Carolinas and the Southeast given the expectation of growth
over the long term. Recent examples include:
- Acquiring North Carolina Natural Gas (NCNG), a gas LDC, in July 1999
- Announcing plans to increase gas supply to better serve the region
- Constructing new gas-fired generation
- Announcing the merger agreement with Florida Progress Corporation in
August 1999
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<PAGE>
Holding company/merger update
Fast facts
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(Twelve months ended 12/31/99) CP&L FPC Combined
Headquarters Raleigh, NC St. Petersburg, FL Raleigh, NC
Kilowatt-hour sales (millions) 54,759 38,549 93,308
Employees 7,827 9,329 17,156
Service Area (square miles) 30,000 20,000 50,000
Customers (average number) 1.2 million 1.3 million 2.5 million
Generating capacity (megawatts) 10,288 MW 8,276 MW 18,564 MW
Revenues $3.4 billion $3.8 billion $7.2 billion
Net income $382 million $315 million $697 million
Assets $9.5 billion $6.5 billion $16 billion
</TABLE>
Merger agreement
Carolina Power & Light Company and Florida Progress Corporation announced on
August 23, 1999 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.
[GRAPHIC OF MAP OF CP&L AND FPC SERVICE TERRITORIES APPEARS HERE.]
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. 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 after the
transaction closing. CP&L and Florida Power will continue as principal
subsidiaries of the new holding company.
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<PAGE>
Holding company/merger update
A strategically sound transaction
o Two strong companies
o High-growth region
o Significant scale (ranked 10th in U.S. in terms of generating capacity)
o Greater access to competitive markets
o Constructive regulatory environments
CP&L/FPC merger timeline
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
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Filing/Application Date Filed Planned Filing Order Received Order Expected
Date
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Holding Company
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NRC 09/15/99 12/31/99
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NCUC 10/15/99 05/17/00
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SEC 10/18/99 2(nd) Quarter
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SCPSC 10/19/99 03/06/00
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FCC 10/21/99 02/09/00
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FERC 10/26/99 12/23/99
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Merger
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NRC - Transfer of Control 01/31/00 05/23/00
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NCUC - Merger Approval 02/03/00 3(rd) Quarter
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FERC - Merger Approval 02/03/00 2(nd) Quarter
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SEC - Merger Approval 03/14/00 3(rd) Quarter
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FCC - Transfer of Licenses 05/09/00 3(rd) Quarter
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FTC/DOJ (HSR) 06/09/00 3(rd) Quarter
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CPL shareholder vote 3(rd) Quarter NA
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FPC shareholder vote 3(rd) Quarter NA
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</TABLE>
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<PAGE>
Holding company/merger update
For more information on the Florida Progress acquisition visit our website at
www.cplc.com
[Photo of screen on CP&L's internet website showing the status of regulatory
approvals in connection with the Florida Progress acquisition.]
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<PAGE>
Holding company/merger update
Overview of the proposed transaction
(Implied value of consideration per FPC share)
Effect of Collar based on CP&L Stock Price
[Graph showing the effect of the collar on CP&L's stock price and the implied
value of consideration to be received by Florida Progress Shareholders.]
$30.00 $37.13 $41.26 $45.39
Walk-Away Bottom of Mid-Point Top of
Option for FPC Collar of Collar Collar
<TABLE>
<CAPTION>
Illustrations of Exchange Ratio Application and the Value of Cash and Stock Consideration to be Received
--------------------------------------------------------------------------------------------------------
Total Value of
Cash and Stock
Number of Whole $ Value of Consideration to
Average CP&L CP&L Energy CP&L Energy Cash Payment Cash be Received
Energy Closing Exchange Shares to be Shares to be for Fractional Consideration per 100 Florida
Price Ratio Received Received Share to be Received Progress Shares
----- ----- ------------------------------------------- ----- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
$27.00 1.4543 50 $1,350.00 $24.31 $3,510.00 $4,884.31
$28.00 1.4543 50 $1,400.00 $25.21 $3,510.00 $4,935.21
$29.00 1.4543 50 $1,450.00 $26.11 $3,510.00 $4,986.11
$30.00 1.4543 50 $1,500.00 $27.02 $3,510.00 $5,037.02
$33.00 1.4543 50 $1,650.00 $29.72 $3,510.00 $5,189.72
$35.00 1.4543 50 $1,750.00 $31.52 $3,510.00 $5,291.52
$37.13 1.4543 50 $1,856.50 $33.44 $3,510.00 $5,399.94
$39.00 1.3846 48 $1,872.00 $17.98 $3,510.00 $5,399.98
$41.00 1.3171 46 $1,886.00 $ 4.04 $3,510.00 $5,400.04
$42.00 1.2857 44 $1,848.00 $41.98 $3,510.00 $5,399.98
$44.00 1.2273 42 $1,848.00 $42.04 $3,510.00 $5,400.04
$45.39 1.1897 41 $1,860.99 $29.03 $3,510.00 $5,400.02
$48.00 1.1897 41 $1,968.00 $30.70 $3,510.00 $5,508.70
$50.00 1.1897 41 $2,050.00 $31.98 $3,510.00 $5,591.98
</TABLE>
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<PAGE>
Holding company/merger update
Holding company
In April, CP&L unveiled the new company's leadership team and organizational
structure - both designed to capitalize on the high-growth generation and
distribution markets in the Southeast.
Cavanaugh will lead the new company as chairman, president and chief executive
officer. He will also continue to serve as president and chief executive officer
of CP&L. The combined company will be organized into five primary business
units:
[GRAPHIC OF ORGANIZATIONAL CHART APPEARS HERE WITH THE FOLLOWING INFORMATION]:
CP&L Energy, Bill Cavanaugh, Chairman, President & CEO
Service Company, Bob McGehee, President
Energy Ventures, Tom Kilgore, President
Gas & Energy Services, Don Davis, Executive VP (NCNG, SRS)
Energy Supply, Skip Orser, President (Nuclear, Power Operations)
CP&L Energy Delivery, Fred Day, Executive VP
Florida Power, Joe Richardson, President
Energy Ventures
---------------
Energy Ventures, a new business unit, will focus on growing competitive energy
business throughout the Southeast through new generation strategies and will
manage all existing Electric Fuels Corporation (EFC) businesses.
Energy Supply
-------------
The Energy Supply unit will oversee generation operations in Florida, Georgia
and the Carolinas.
CP&L Energy Delivery
--------------------
The Energy Delivery unit will oversee transmission and distribution for the
North Carolina and South Carolina service area and customer service for the
combined company. This unit will be the energy delivery vehicle for CP&L, the
utility serving 1.2 million electric customers in the Carolinas.
Florida Power
-------------
Florida Power will exist as a separate business unit serving approximately 1.3
million customers in Florida.
Gas & Energy Services
---------------------
The Gas & Energy Services unit will oversee North Carolina Natural Gas (NCNG),
which provides natural gas and propane related services to 178,000 residential,
commercial and industrial customers in south-central and eastern North Carolina,
and Strategic Resource Solutions (SRS), an integrated facility- and
energy-management solutions company.
Service Company
---------------
The new Service Company will manage corporate relations, information technology,
administrative services, human resources, corporate communications and financial
services.
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<PAGE>
Deregulation/regulatory
Fuel cost recovery procedures by jurisdiction (continued)
Wholesale
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Base fuel components are approved during a general rate case proceeding. The
monthly billing factor is based on current estimates of fuel cost associated
with the kilowatt-hours billed and a "true-up" factor for the second preceding
month. The "true-up" is to collect or refund the difference between estimated
and actual fuel cost for the applicable month.
Natural gas retail and wholesale
--------------------------------
Deviations in the cost of gas from that established in the last general rate
proceeding are adjusted through purchase gas adjustment procedures established
by statute and administered by the NCUC. Under these provisions, any difference
between actual gas costs and their associated recoveries are reconciled through
special rate increments and/or decrements. The Commission formally reviews gas
costs during the historical test period ending October 31 of each year and the
Company has been allowed to recover 100% of incurred gas costs.
North Carolina restructuring
On April 3 a legislative study commission agreed on initial recommendations to
restructure North Carolina's electricity market. But it will be the 2001 session
before the General Assembly votes on these recommendations and others to be
developed later by the study commission. The commission will formally present
the recommendation to the legislature in May. The commission resumes meeting
later this year after the legislature's short session, which begins in May.
Recommendation highlights
-------------------------
o All customers to have choice of generation suppliers no later than 1-1-2006
o Up to half the customer load to have choice a year earlier
o Base rates to be frozen until 12-31-2004 to allow utilities an initial phase
of stranded-cost recovery
o The NC Utilities Commission to determine the rates for the transition year of
2005 and any remaining stranded costs that should be recovered after 2004
The legislative study commission deferred recommending a solution for the
staggering municipal power agency debt. The panel will make a recommendation to
the 2001 session of the General Assembly. No consensus has emerged for how to
resolve the nearly $6 billion debt of the 51 power agency cities.
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Deregulation/regulatory
South Carolina restructuring
o Senate and House subcommittees have been formed to study the issue
Federal restructuring
o The House is considering a number of different bills, but no definitive
bill has emerged to date
Regional transmission organization
o Federal Energy Regulatory Commission (FERC) issued a rule on Regional
Transmission Organizations (RTO) that sets forth minimum characteristics
and functions for transmission entities
o CP&L and Florida Progress have committed to file for FERC approval to
establish or form an RTO in their respective regions no later than 90 days
after completing the merger
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<PAGE>
Energy supply
Strategies
o Be a profitable, super-regional energy supplier
o Execute an asset-based plan that:
- Continues to serve our Carolina- and Florida-based
customers
- Grows our influence and presence in the southeast
marketplace
- Prepares for early, successful FPC synergies
Competitive strengths
o Operational excellence
- Plant performance, reliability, safety
- Competitive production costs
- Diverse generation portfolio
o Profitably growing assets
- Combined CP&L/FPC assets of [Symbol for About Equals] 18,500 MW's
- Grow assets by [Symbol for About Equals] 4,000 MW's by 2002
o Regional name recognition, customer relationships,
community involvement, experience
Expanding wholesale markets
[GRAPHIC OF MAP DEPICTING TRANSMISSION CAPABILITY AND INTERCONNECTION WITH
WHOLESALE MARKETS APPEARS HERE]
Generation Mix
[GRAPHIC PIE CHART APPEARS HERE WITH THE FOLLOWING INFORMATION]:
Hydro 1%
Gas/Oil 37%
Coal 41%
Nuclear 21%
The Florida Progress acquisition, when finalized, will reshape CP&L's generation
mix - creating a more balanced portfolio of fuel sources.
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[END OF TEXT BOOKLET]
<PAGE>
In connection with the share exchange between CP&L Energy and Florida Progress,
CP&L Energy has filed with the Securities and Exchange Commission (the "SEC") a
Registration Statement on Form S-4 and Florida Progress has filed with the SEC a
definitive proxy statement each of which contains the definitive joint proxy
statement/prospectus of CP&L Energy and Florida Progress. The definitive joint
proxy statement/prospectus was first mailed on or about July 11, 2000 to
shareholders of CP&L Energy and Florida Progress. 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 CP&L Energy and Carolina
Power & Light Company with the SEC can be obtained by contacting 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 (CX1H), St. Petersburg, Florida 33733, telephone: (800)
937-2640. Read the definitive joint proxy statement/prospectus carefully before
making a decision concerning the share exchange.
