10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2000

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File No.	Exact name of Registrant as specified in its charter, state of incorporation, address of principal executive offices, telephone	I.R.S. Employer Identification Number
1-8349	FLORIDA PROGRESS CORPORATION A Florida Corporation One Progress Plaza St. Petersburg, Florida 33701 Telephone (727) 824-6400	59-2147112
1-3274	FLORIDA POWER CORPORATION A Florida Corporation One Progress Plaza St. Petersburg, Florida 33701 Telephone (727) 820-5151	59-0247770

      Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

      Indicate the number of shares outstanding of each of the registrants’ classes of common stock, as of the latest practicable date.

		Shares Outstanding
Registrant	Description of Class	at June 30, 2000
Florida Progress Corporation	Common Stock, without par value	98,615,927
Florida Power Corporation	Common Stock, without par value	100 (all of which were held by Florida Progress Corporation)

This combined Form 10-Q represents separate filings by Florida Progress Corporation and Florida Power Corporation. Florida Power makes no representations as to the information relating to Florida Progress’ diversified operations.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FLORIDA PROGRESS CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA PROGRESS CORPORATION
Consolidated Statements of Income
(Dollars in millions, except per share amounts)

			Three Months Ended						Six Months Ended
			June 30,						June 30,
			2000			1999			2000			1999
			(Unaudited)						(Unaudited)
REVENUES:
	Electric utility		$	701.4		$	671.7		$	1,323.3		$	1,242.4
	Diversified			392.1			304.6			720.3			554.3
				1,093.5			976.3			2,043.6			1,796.7
EXPENSES:
	Electric utility:
		Fuel		154.2			143.5			288.2			257.2
		Purchased power		120.3			108.4			223.4			198.7
		Energy conservation costs		15.9			19.4			30.0			36.5
		Operation and maintenance		109.5			120.8			209.5			217.9
		Depreciation and amortization		92.1			93.2			177.8			174.0
		Taxes other than income taxes		52.8			51.1			105.9			103.0
				544.8			536.4			1,034.8			987.3
	Diversified:
		Cost of sales		377.4			269.7			681.6			494.8
		Other		21.1			15.8			41.9			30.4
				398.5			285.5			723.5			525.2
INCOME FROM OPERATIONS				150.2			154.4			285.3			284.2
INTEREST EXPENSE AND OTHER:
	Interest expense			48.2			43.9			93.4			88.9
	Allowance for funds used during construction			(1.0	)		(1.2	)		(1.9	)		(6.3	)
	Distributions on company obligated mandatorily redeemable preferred securities			5.4			4.6			10.7			4.6
	Other expense / (income), net			(3.2	)		1.0			(3.6	)		(3.3	)
				49.4			48.3			98.6			83.9
INCOME BEFORE INCOME TAXES				100.8			106.1			186.7			200.3
		Income taxes		(9.1	)		29.5			.3			56.1
NET INCOME			$	109.9		$	76.6		$	186.4		$	144.2
AVERAGE SHARES OF COMMON STOCK OUTSTANDING				98.6			98.0			98.6			97.8
EARNINGS PER AVERAGE COMMON SHARE
	(Basic and Diluted):		$	1.11		$	.78		$	1.89		$	1.48
DIVIDENDS PER COMMON SHARE			$	.555		$	.545		$	1.11		$	1.09

The accompanying notes are an integral part of these consolidated financial statements.

2

FLORIDA PROGRESS CORPORATION
Consolidated Balance Sheets
(Dollars in millions)

					June 30,		December 31,
					2000		1999
					(Unaudited)
ASSETS
PROPERTY, PLANT AND EQUIPMENT:
	Electric utility plant in service and held for future use				$	6,835.0	$	6,784.8
	Less — Accumulated depreciation					3,038.1		2,923.8
				Accumulated decommissioning for nuclear plant		305.2		285.0
				Accumulated dismantlement for fossil plants		133.5		132.5
						3,358.2		3,443.5
	Construction work in progress					172.2		139.7
	Nuclear fuel, net of amortization of $412.3 in 2000 and $401.0 in 1999					51.0		68.7
			Net electric utility plant			3,581.4		3,651.9
	Other property, at cost, net of depreciation of $299.5 in 2000 and $275.0 in 1999					699.2		703.4
						4,280.6		4,355.3
CURRENT ASSETS:
	Cash and equivalents					9.4		9.6
	Accounts receivable, less allowance for doubtful accounts of $6.0 in 2000 and $5.8 in 1999					494.0		420.6
	Inventories, primarily at average cost:
		Fuel				88.7		76.4
		Utility materials and supplies				92.0		90.8
		Diversified operations				281.6		209.3
	Underrecovered utility fuel costs					27.1		—
	Deferred income taxes					28.0		41.3
	Prepayments and other					144.8		113.7
						1,165.6		961.7
DEFERRED CHARGES AND OTHER ASSETS:
	Costs deferred pursuant to regulation:
		Deferred purchased power contract termination costs				286.1		297.8
		Other				81.6		94.0
	Investments in nuclear plant decommissioning fund					385.1		377.2
	Goodwill					169.1		171.1
	Joint ventures and partnerships					65.1		66.2
	Other					213.2		204.9
						1,200.2		1,211.2
					$	6,646.4	$	6,528.2

The accompanying notes are an integral part of these consolidated financial statements.

3

FLORIDA PROGRESS CORPORATION
Consolidated Balance Sheets
(Dollars in millions)

		June 30,			December 31,
		2000			1999
		(Unaudited)
CAPITAL AND LIABILITIES
COMMON STOCK EQUITY:
	Common stock	$	1,274.2		$	1,267.3
	Retained earnings		818.8			741.8
	Other comprehensive income		(.5	)		(.4	)
			2,092.5			2,008.7
PREFERRED SECURITIES:
	Cumulative preferred stock of Florida Power without sinking funds		33.5			33.5
	Company-obligated mandatorily redeemable quarterly income preferred     securities (QUIPS) of a subsidiary trust holding solely Florida Progress     guaranteed junior subordinated deferrable interest notes		300.0			300.0
LONG-TERM DEBT			2,132.0			2,154.1
TOTAL CAPITAL			4,558.0			4,496.3
CURRENT LIABILITIES:
	Accounts payable		291.1			309.0
	Customers’ deposits		107.3			105.6
	Taxes payable		56.9			10.3
	Accrued interest		77.1			77.4
	Overrecovered utility fuel costs		—			31.6
	Other		79.0			112.4
			611.4			646.3
	Notes payable		226.0			153.1
	Current portion of long-term debt		188.2			163.2
			1,025.6			962.6
DEFERRED CREDITS AND OTHER LIABILITIES:
	Deferred income taxes		554.7			565.3
	Unamortized investment tax credits		66.1			70.0
	Other postretirement benefit costs		126.3			123.1
	Other		315.7			310.9
			1,062.8			1,069.3
		$	6,646.4		$	6,528.2

The accompanying notes are an integral part of these consolidated financial statements.

4

FLORIDA PROGRESS CORPORATION
Consolidated Statements of Cash Flows
(Dollars in millions)

				Six Months Ended
				June 30,
				2000			1999
				(Unaudited)
OPERATING ACTIVITIES:
	Net income			$	186.4		$	144.2
	Adjustments for noncash items:
		Depreciation and amortization			226.5			216.2
		Deferred income taxes and investment tax credits, net			(1.2	)		(22.3	)
	Changes in working capital, net of effects from sale or acquisition of businesses:
			Accounts receivable		(72.7	)		(13.7	)
			Inventories		(50.9	)		(89.2	)
			Overrecovered/underrecovered utility fuel costs		(58.7	)		(.5	)
			Accounts payable		(17.7	)		(79.1	)
			Taxes payable		36.8			107.0
			Prepayments and other		(59.1	)		(24.2	)
	Other operating activities				27.2			(.5	)
					216.6			237.9
INVESTING ACTIVITIES:
	Property additions (including allowance for borrowed funds used during construction)				(155.8	)		(279.9	)
	Acquisition of businesses				(33.9	)		(9.5	)
	Other investing activities				(7.7	)		40.7
					(197.4	)		(248.7	)
FINANCING ACTIVITIES:
	Issuance of long-term debt				—			50.0
	Repayment of long-term debt				(1.2	)		(52.8	)
	Increase in commercial paper with long-term support				16.5			(16.7	)
	Issuance of company obligated mandatorily redeemable preferred securities				—			300.0
	Sale of common stock				—			32.4
	Dividends paid on common stock				(109.4	)		(106.7	)
	Increase in short-term debt				72.9			(189.8	)
	Other financing activities				1.8			(1.0	)
					(19.4	)		15.4
NET INCREASE/(DECREASE) IN CASH AND EQUIVALENTS					(.2	)		4.6
	Beginning cash and equivalents				9.6			2.5
ENDING CASH AND EQUIVALENTS				$	9.4		$	7.1
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Cash paid during the period for:
		Interest (net of amount capitalized)		$	102.1		$	86.2
		Income taxes (net of refunds)		$	63.1		$	28.8

The accompanying notes are an integral part of these consolidated financial statements.

5

FLORIDA PROGRESS CORPORATION
Consolidated Statements of Common Equity and Comprehensive Income (Unaudited)
For the periods ended June 30, 2000 and 1999
(Dollars in millions, except per share amounts)

										Accumulated
										Other
					Common		Retained			Comprehensive
		Total			Stock		Earnings			Income
Balance, December 31, 1998		$	1,862.0		$	1,221.1	$	640.9		$	—
Net income			144.2					144.2
Common stock issued			35.3			35.3
Cash dividends on common stock			(106.7	)				(106.7	)
Balance, June 30, 1999			1,934.8			1,256.4		678.4			—
Balance, December 31, 1999			2,008.7			1,267.3		741.8			(.4	)
Net income			186.4					186.4
Foreign currency translation adjustment			(.1	)							(.1	)
	Comprehensive income		186.3			—		186.4			(.1	)
Common stock issued			6.9			6.9
Cash dividends on common stock			(109.4	)				(109.4	)
Balance, June 30, 2000		$	2,092.5		$	1,274.2	$	818.8		$	(.5	)

The accompanying notes are an integral part of these consolidated financial statements.

6

FLORIDA POWER CORPORATION
Statements of Income
(Dollars in millions)

			Three Months Ended						Six Months Ended
			June 30,						June 30,
			2000			1999			2000			1999
			(Unaudited)						(Unaudited)
OPERATING REVENUES:
		Residential	$	347.1		$	326.9		$	666.3		$	625.6
		Commercial		165.3			153.3			301.2			284.7
		Industrial		53.5			51.7			104.5			101.0
		Sales for resale		54.1			43.8			114.0			92.6
		Other		81.4			96.0			137.3			138.5
				701.4			671.7			1,323.3			1,242.4
OPERATING EXPENSES:
	Operation:
		Fuel		154.2			143.5			288.2			257.2
		Purchased power		120.3			108.4			223.4			198.7
		Energy conservation costs		15.9			19.4			30.0			36.5
		Operation and maintenance		109.5			120.8			209.5			217.9
		Depreciation and amortization		92.1			93.2			177.8			174.0
		Taxes other than income taxes		52.8			51.1			105.9			103.0
				544.8			536.4			1,034.8			987.3
	Income taxes:
		Currently payable		59.2			54.8			97.4			95.5
		Deferred, net		(11.3	)		(14.7	)		(11.0	)		(20.7	)
		Investment tax credits, net		(2.0	)		(1.9	)		(3.9	)		(3.9	)
				45.9			38.2			82.5			70.9
				590.7			574.6			1,117.3			1,058.2
INCOME FROM OPERATIONS				110.7			97.1			206.0			184.2
OTHER INCOME AND DEDUCTIONS:
		Allowance for equity funds used during construction		.5			.5			1.0			2.8
		Other income (expense), net		.7			(1.3	)		.5			.7
				1.2			(.8	)		1.5			3.5
INTEREST CHARGES
		Interest on long-term debt		26.1			26.7			52.0			53.6
		Other interest expense		6.4			4.4			12.7			8.9
				32.5			31.1			64.7			62.5
		Allowance for borrowed funds used during construction		(.5	)		(.7	)		(.9	)		(3.5	)
				32.0			30.4			63.8			59.0
NET INCOME				79.9			65.9			143.7			128.7
DIVIDENDS ON PREFERRED STOCK				.4			.4			.8			.8
NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK			$	79.5		$	65.5		$	142.9		$	127.9

The accompanying notes are an integral part of these financial statements.

7

FLORIDA POWER CORPORATION
Balance Sheets
(Dollars in millions)

				June 30,		December 31,
				2000		1999
				(Unaudited)
ASSETS
PROPERTY, PLANT AND EQUIPMENT:
	Electric utility plant in service and held for future use			$	6,835.0	$	6,784.8
	Less — Accumulated depreciation				3,038.1		2,923.8
			Accumulated decommissioning for nuclear plant		305.2		285.0
			Accumulated dismantlement for fossil plants		133.5		132.5
					3,358.2		3,443.5
	Construction work in progress				172.2		139.7
	Nuclear fuel, net of amortization of $412.3 in 2000 and $401.0 in 1999				51.0		68.7
					3,581.4		3,651.9
	Other property, net				9.5		10.0
					3,590.9		3,661.9
CURRENT ASSETS:
	Cash and equivalents				4.8		—
	Accounts receivable, less allowance for doubtful accounts of $4.5    in 2000 and $4.0 in 1999				247.5		210.8
	Inventories, primarily at average cost:
		Fuel			88.7		76.4
		Materials and supplies			92.0		90.8
	Underrecovered utility fuel costs				27.1		—
	Deferred income taxes				28.0		41.4
	Prepayments and other				108.5		101.3
					596.6		520.7
DEFERRED CHARGES AND OTHER ASSETS:
	Costs deferred pursuant to regulation:
		Deferred purchased power contract termination costs			286.1		297.8
		Other			81.6		94.0
	Investments in nuclear plant decommissioning fund				385.1		377.2
	Other				56.8		50.9
					809.6		819.9
				$	4,997.1	$	5,002.5

The accompanying notes are an integral part of these financial statements.

8

FLORIDA POWER CORPORATION
Balance Sheets
(Dollars in millions)

		June 30,		December 31,
		2000		1999
		(Unaudited)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
	Common stock	$	1,004.4	$	1,004.4
	Retained earnings		921.0		880.6
			1,925.4		1,885.0
CUMULATIVE PREFERRED STOCK:
	Without sinking funds		33.5		33.5
LONG-TERM DEBT			1,478.0		1,478.8
TOTAL CAPITAL			3,436.9		3,397.3
CURRENT LIABILITIES:
	Accounts payable		155.2		152.9
	Accounts payable to associated companies		22.1		23.1
	Customers’ deposits		107.3		105.6
	Income taxes payable		57.2		—
	Accrued other taxes		50.2		5.8
	Accrued interest		57.9		59.6
	Overrecovered utility fuel costs		—		31.6
	Other		39.5		79.3
			489.4		457.9
	Notes payable		99.7		153.1
	Current portion of long-term debt		76.9		76.8
			666.0		687.8
DEFERRED CREDITS AND OTHER LIABILITIES:
	Deferred income taxes		486.3		509.9
	Unamortized investment tax credits		65.6		69.5
	Other postretirement benefit costs		122.3		119.4
	Other		220.0		218.6
			894.2		917.4
		$	4,997.1	$	5,002.5

The accompanying notes are an integral part of these financial statements.

9

FLORIDA POWER CORPORATION
Statements of Cash Flows
(Dollars in millions)

			Six Months Ended
			June 30,
			2000			1999
			(Unaudited)
OPERATING ACTIVITIES:
	Net income after dividends on preferred stock		$	142.9		$	127.9
	Adjustments for noncash items:
		Depreciation and amortization		194.3			186.7
		Deferred income taxes and investment tax credits, net		(14.9	)		(24.6	)
	Changes in working capital:
		Accounts receivable		(36.7	)		(18.4	)
		Inventories		(13.5	)		(34.5	)
		Overrecovered/underrecovered utility fuel costs		(58.7	)		(.5	)
		Accounts payable		1.3			(41.2	)
		Taxes payable		111.8			100.3
		Prepayments and other		(57.2	)		(12.9	)
	Other operating activities			10.6			4.2
				279.9			287.0
INVESTING ACTIVITIES:
	Construction expenditures			(109.1	)		(168.2	)
	Allowance for borrowed funds used during construction			(.9	)		(3.5	)
	Other investing activities			(8.3	)		(8.2	)
				(118.3	)		(179.9	)
FINANCING ACTIVITIES:
	Repayment of long-term debt			(.9	)		(.8	)
	Dividends paid on common stock			(102.5	)		(100.0	)
	Decrease in short-term debt			(53.4	)		(.9	)
				(156.8	)		(101.7	)
NET INCREASE IN CASH AND EQUIVALENTS				4.8			5.4
	Beginning cash and equivalents			—			—
ENDING CASH AND EQUIVALENTS			$	4.8		$	5.4
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Cash paid during the period for:
		Interest (net of amount capitalized)	$	64.1		$	57.9
		Income taxes (net of refunds)	$	31.3		$	42.9

The accompanying notes are an integral part of these financial statements.

10

FLORIDA PROGRESS CORPORATION AND FLORIDA POWER CORPORATION

NOTES TO FINANCIAL STATEMENTS

1) Florida Progress Corporation’s (“Florida Progress” or the “Company”) principal business segment is its Utility segment. Florida Power Corporation (“Florida Power”), the largest subsidiary of Florida Progress, engages in the generation, purchase, transmission, distribution and sale of electricity. Florida Progress’ other reportable business segments are Electric Fuels Corporation’s (“Electric Fuels”) Energy and Related Services, Rail Services and Inland Marine Transportation units. Financial data for business segments for the periods covered in this Form 10-Q are presented in the table below:

				Energy and		Rail		Inland Marine
(In millions)		Utility		Related Services		Services		Transportation		Other			Eliminations			Consolidated
Three months ended  June 30, 2000:
	Revenues	$	701.4	$	57.3	$	284.4	$	43.6	$	5.7		$	1.1		$	1,093.5
	Intersegment revenues		—		66.4		.3		5.2		(3.1	)		(68.8	)		—
	Segment net income (loss)		79.5		33.0		1.9		3.5		(7.8	)		(.2	)		109.9
Six months ended  June 30, 2000:
	Revenues	$	1,323.3	$	106.0	$	525.0	$	81.5	$	5.5		$	2.3		$	2,043.6
	Intersegment revenues		—		131.0		.3		9.5		(5.0	)		(135.8	)		—
	Segment net income (loss)		142.9		53.3		2.8		4.8		(17.0	)		(.4	)		186.4
	Total assets		4,997.1		527.5		875.5		103.0		483.8			(340.5	)		6,646.4
Three months ended  June 30, 1999:
	Revenues	$	671.7	$	44.8	$	224.5	$	33.5	$	.6		$	1.2		$	976.3
	Intersegment revenues		—		62.3		.6		4.1		(1.9	)		(65.1	)		—
	Segment net income (loss)		65.5		8.3		5.7		2.2		(5.1	)		—			76.6
Six months ended   June 30, 1999:
	Revenues	$	1,242.4	$	87.6	$	398.5	$	63.7	$	2.1		$	2.4		$	1,796.7
	Intersegment revenues		—		128.1		1.0		8.1		(6.5	)		(130.7	)		—
	Segment net income (loss)		127.9		16.4		6.2		2.9		(9.2	)		—			144.2
	Total assets		4,972.9		326.5		754.2		96.5		523.9			(371.7	)		6,302.3

2) In November 1999, Florida Power received approval from the Florida Public Service Commission (“FPSC”) to defer nonfuel revenues towards the development of a plan that would allow customers to realize the benefits earlier than if they are used to accelerate the amortization of the Tiger Bay regulatory asset. The approval required that a plan be submitted to the FPSC by August 1, 2000. On July 31, 2000, Florida Power filed a motion with the FPSC requesting a two-month extension. If a plan is not filed by October 2, 2000, Florida Power would be required to apply the deferred revenues of $44.4 million, plus accrued interest, to accelerate the amortization of the Tiger Bay regulatory asset.

11

3) FLORIDA PROGRESS OBLIGATED MANDATORILY REDEEMABLE CUMULATIVE QUARTERLY INCOME PREFERRED SECURITIES (QUIPS) OF A SUBSIDIARY TRUST HOLDING SOLELY FLORIDA PROGRESS GUARANTEED SUBORDINATED DEFERRABLE INTEREST NOTES

In April 1999, FPC Capital I (“the Trust”), an indirect wholly owned subsidiary of Florida Progress, issued 12 million shares of $25 par cumulative Company-obligated mandatorily redeemable preferred securities (“Preferred Securities”) due 2039, with an aggregate liquidation value of $300 million and a quarterly distribution rate of 7.10%. Currently, all 12 million shares of the Preferred Securities that were issued are outstanding. Concurrent with the issuance of the Preferred Securities, the Trust issued to Florida Progress Funding Corporation (“Funding Corp.”) all of the common securities of the Trust (371,135 shares), for $9.3 million. Funding Corp. is a direct wholly owned subsidiary of the Company.

The existence of the Trust is for the sole purpose of issuing the Preferred Securities and the common securities and using the proceeds thereof to purchase from Funding Corp. its 7.10% Junior Subordinated Deferrable Interest Notes (“subordinated notes”) due 2039, for a principal amount of $309.3 million. The subordinated notes and the Notes Guarantee (as discussed below) are the sole assets of the Trust. Funding Corp.’s proceeds from the sale of the subordinated notes were advanced to Progress Capital Holdings, Inc. (“PCH”), a subsidiary of Florida Progress that provides financing for Florida Progress’ diversified operations, and used for general corporate purposes including the repayment of a portion of certain outstanding short-term bank loans and commercial paper.

The Company has fully and unconditionally guaranteed the obligations of Funding Corp. under the subordinated notes (the “Notes Guarantee”). In addition, the Company has guaranteed the payment of all distributions required to be made by the Trust, but only to the extent that the Trust has funds available for such distributions (“Preferred Securities Guarantee”). The Preferred Securities Guarantee, considered together with the Notes Guarantee, constitutes a full and unconditional guarantee by the Company of the Trust’s obligations under the Preferred Securities.

The subordinated notes may be redeemed at the option of Funding Corp. beginning in 2004 at par value plus accrued interest through the redemption date. The proceeds of any redemption of the subordinated notes will be used by the Trust to redeem proportional amounts of the Preferred Securities and common securities in accordance with their terms. Upon liquidation or dissolution of Funding Corp., holders of the Preferred Securities would be entitled to the liquidation preference of $25 per share plus all accrued and unpaid dividends thereon to the date of payment.

4) CONTINGENCIES

Insurance— Florida Progress and its subsidiaries utilize various risk management techniques to protect certain assets from risk of loss, including the purchase of insurance. Risk avoidance, risk transfer and self-insurance techniques are utilized depending on the Company’s ability to assume risk, the relative cost and availability of methods for transferring risk to third parties, and the requirements of applicable regulatory bodies.

Florida Power self-insures its transmission and distribution lines against loss due to storm damage and other natural disasters. Pursuant to a regulatory order, Florida Power is accruing $6 million annually to a storm damage reserve and may defer any losses in excess of the reserve. The reserve balances at June 30, 2000 and 1999 were $28.6 million and $27.1 million, respectively.

Under the provisions of the Price Anderson Act, which limits liability for accidents at nuclear power
plants, Florida Power, as an owner of a nuclear plant, can be assessed for a portion of any third-party
liability claims arising from an accident at any commercial nuclear power plant in the United States. If total
third-party claims relating to a single nuclear incident exceed $200 million (the amount of currently available

12

commercial liability insurance), Florida Power could be assessed up to $88.1 million per incident, with a maximum assessment of $10 million per year.

Florida Power also maintains nuclear property damage insurance and decontamination and decommissioning liability insurance. Effective October 1, 1999, the total limit purchased for this type of insurance was reduced from $2.1 billion to $1.6 billion. The reduction was based on a review of the potential property damage exposure, the legal minimum required to be carried, and the amount of insurance being purchased by other owners of single unit nuclear sites. The first $500 million layer of insurance is purchased in the commercial insurance market with the remaining excess coverage purchased from Nuclear Electric Insurance Ltd. (“NEIL”). Florida Power is self-insured for any losses that are in excess of this coverage. Under the terms of the NEIL policy, Florida Power could be assessed up to a maximum of $5.3 million in any policy year if losses in excess of NEIL’s available surplus are incurred.

Florida Power has never been assessed under these nuclear indemnities or insurance policies.

Contaminated Site Cleanup — The Company is subject to regulation with respect to the environmental impact of its operations. The Company’s disposal of hazardous waste through third-party vendors can result in costs to clean up facilities found to be contaminated. Federal and state statutes authorize governmental agencies to compel responsible parties to pay for cleanup of these hazardous waste sites.

Florida Power and former subsidiaries of the Company, whose properties were sold in prior years, have been identified by the U.S. Environmental Protection Agency (“EPA”) as Potentially Responsible Parties (“PRPs”) at certain sites. Liability for the cleanup of costs at these sites is joint and several.

One of the sites that Florida Power previously owned and operated is located in Sanford, Florida. There are five parties, including Florida Power, that have been identified as PRPs at the Sanford site. A Participation Agreement was signed, and subsequently amended, among the PRPs of the Sanford site to allocate $1.9 million to perform a Remedial Investigation, Baseline Risk Assessment and Feasibility Study (“RI/FS”) for phases one and two of the cleanup. Florida Power is liable for approximately 40% of the costs for the RI/FS as agreed to in the Participation Agreement. In July 1999, the initial draft of the RI/FS was submitted to the EPA. In March 2000, the EPA selected a “preferred” remedy for the cleanup of the contaminated soils at the site, which was documented in a Record of Decision on July 5, 2000.

Additionally, the PRP group negotiated a second participation agreement that defined and allocated Remedial Design and Remedial Action costs among the participants for Phase I of the cleanup. Cleanup will be addressed in three phases for project management purposes. Florida Power’s future cost share allocation is approximately 43%. The discussions and resolution of liability for cleanup costs could cause Florida Power to increase the estimate of its liability for those costs. The range of any additional costs are not expected to have a material effect on Florida Progress’ or Florida Power’s financial position, results of operations or liquidity.

In December 1998, the EPA conducted an Expanded Site Inspection at a former Florida Power plant site near Inglis, Florida. Soil and groundwater samples were obtained from the Florida Power property, as well as sediment samples from the adjacent Withlacoochee River. A final copy of the report, along with a Request for Information under the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA” or “Superfund”) was received in December 1999. Upon review of Florida Power’s reply and further testing at the site, the EPA’s conclusions may change the current hazard ranking and ultimately result in the Inglis site being placed on the National Priorities List (“NPL”). If this property is placed on the NPL, then the EPA could conduct remediation actions at the site and seek repayment of those costs as well as investigative costs from any PRPs. Past costs currently exceed $3.5 million with Florida Power identified as the only major viable business associated with this site. In June 2000, Florida Power received confirmation that the EPA intends to issue a Consent Order, which would require Florida Power to enter into an agreement to conduct an RI/FS on the property. The EPA has indicated that it intends to conduct additional sediment sampling in the Withlacoochee River in September 2000. Such sampling could expand the scope, and thus the cost, of any required cleanup.

13

In addition to these designated sites, there are other sites where Florida Progress may be responsible for additional environmental cleanup. Florida Progress estimates that its share of liability for cleaning up all designated sites ranges from $9.0 million to $13.0 million. It has accrued $9.0 million against these potential costs. There can be no assurance that the Company’s estimates will not change in the future.

Age Discrimination Suit— Florida Power and Florida Progress have been named defendants in an age discrimination lawsuit. The number of plaintiffs remains at 116, but four of those plaintiffs have had their federal claims dismissed and 74 others have had their state age claims dismissed. While no dollar amount was requested, each plaintiff seeks back pay, reinstatement or front pay through their projected dates of normal retirement, costs and attorneys’ fees. In October 1996, the Federal Court approved an agreement between the parties to provisionally certify this case as a class action suit under the Age Discrimination in Employment Act. Florida Power filed a motion to decertify the class and in August 1999, the Court granted Florida Power’s motion. In October 1999, the judge certified the question of whether the case should be tried as a class action to the Eleventh Circuit Court of Appeals for immediate appellate review. In December 1999, the Court of Appeals agreed to review the judge’s order decertifying the class and scheduled oral arguments for October 2000. In anticipation of a potential ruling decertifying the case as a class action, plaintiffs filed a virtually identical lawsuit which identified all opt-in plaintiffs as named plaintiffs. This case had been held in abeyance until reactivated in July 2000 upon motion of the plaintiffs.

In December 1998, during mediation in this age discrimination suit, plaintiffs alleged damages of $100 million. Company management, while not believing plaintiffs’ claim to have merit, offered $5 million in an attempt to settle all claims. Plaintiffs rejected that offer. Florida Power and the plaintiffs engaged in informal settlement discussions, which terminated on December 22, 1998. As a result of the plaintiffs’ claims, management has identified a probable range of $5 million to $100 million with no amount within that range a better estimate of probable loss than any other amount; accordingly, Florida Power has accrued $5 million. In December 1999, Florida Power also recorded an accrual of $4.8 million for legal fees associated with defending its position in these proceedings. There can be no assurance that this litigation will be settled, or if settled, that the settlement will not exceed $5 million. Additionally, the ultimate outcome, if litigated, cannot presently be determined.

Advanced Separation Technologies (“AST”) — In 1996, Florida Progress sold its 80% interest in AST to Calgon Carbon Corporation (“Calgon”) for net proceeds of $56 million in cash. In January 1998, Calgon filed a lawsuit against Florida Progress and the other selling shareholder and amended it in April 1998, alleging misstatement of AST’s 1996 revenues, assets and liabilities, seeking damages and granting Calgon the right to rescind the sale. The lawsuit also accused the sellers of failing to disclose flaws in AST’s manufacturing process and a lack of quality control. Florida Progress believes that the aggregate total of all legitimate warranty claims by customers of AST for which it is probable that Florida Progress will be responsible for under the Stock Purchase Agreement with Calgon is approximately $3.2 million, and accordingly, accrued $3.2 million in the third quarter of 1999 as an estimate of probable loss.

Qualifying Facilities Contracts — Florida Power’s purchased power contracts with qualifying facilities employ separate pricing methodologies for capacity payments and energy payments. Florida Power has interpreted the pricing provision in these contracts to allow it to pay an as-available energy price rather than a higher firm energy price when the avoided unit upon which the applicable contract is based would not have been operated.

The owners of four qualifying facilities filed suits against Florida Power in state court over the contract payment terms, and one owner also filed suit in federal court. Three of the state court suits have been settled, and the federal case was dismissed. The most recent case to settle involved Dade County/Dade Cogen. In May 1999, the parties reached an agreement in principle to settle their dispute in its entirety, including all of the ongoing litigation. The settlement agreement was approved by the Dade County Commission in December 1999 and by the FPSC in June 2000.

14

In the remaining state court suit, the trial regarding NCP Lake Power (“Lake”) concluded in December 1998. In April 1999, the judge entered an order granting Lake’s breach of contract claim and ruled that Lake is entitled to receive “firm” energy payments during on-peak hours, but for all other hours, Lake is entitled to the “as-available” rate. The Court also ruled that for purposes of calculating damages, the breach of contract occurred at the inception of the contract. In August 1999, a Final Judgment was entered for Lake for approximately $4.5 million and Lake filed a Notice of Appeal. In September 1999, Florida Power filed a notice of cross appeal. Also in this case, in April 1998, Florida Power filed a petition with the FPSC for a Declaratory Statement that the contract between the parties limits energy payments thereunder to the avoided costs based upon an analysis of a hypothetical unit having the characteristics specified in the contract. In October 1998, the FPSC denied the petition, but Florida Power appealed to the Florida Supreme Court.

Management does not expect that the results of these legal actions will have a material impact on Florida Power’s financial position, results of operations or liquidity. Florida Power anticipates that all fuel and capacity expenses, including any settlement amounts incurred as a result of the matters discussed above, will be recovered from its customers.

Mid-Continent Life Insurance Company(“Mid-Continent”) — As discussed below, a series of events in 1997 significantly jeopardized the ability of Mid-Continent to implement a plan to eliminate a projected reserve deficiency, resulting in the impairment of Florida Progress’ investment in Mid-Continent. Therefore, Florida Progress recorded a provision for loss on investment of $86.9 million in 1997. Florida Progress also recorded an accrual at December 31, 1997, for legal fees associated with defending its position in current Mid-Continent legal proceedings.

In the spring of 1997, the Oklahoma State Insurance Commissioner (“Commissioner”) received court approval to seize control as receiver of the operations of Mid-Continent. The Commissioner had alleged that Mid-Continent’s reserves were understated by more than $125 million, thus causing Mid-Continent to be statutorily impaired. The Commissioner further alleged that Mid-Continent had violated Oklahoma law relating to deceptive trade practices in connection with the sale of its “Extra Life” insurance policies and was not entitled to raise premiums, a key element of Mid-Continent’s plan to address the projected reserve deficiency. While sustaining the receivership, the court also ruled that premiums could be raised. Although both sides appealed the decision to the Oklahoma Supreme Court, those appeals were withdrawn in early 1999.

In December 1997, the receiver filed a lawsuit against Florida Progress, certain of its directors and officers, and certain former Mid-Continent officers, making a number of allegations and seeking access to Florida Progress’ assets to satisfy policyholder and creditor claims. In April 1998, the court granted motions to dismiss the individual defendants, leaving Florida Progress as the sole remaining defendant in the lawsuit.

A new Commissioner was elected in November 1998 and has stated his intention to work with Florida Progress and others to develop a plan to rehabilitate Mid-Continent rather than pursue litigation against Florida Progress. Based on data through December 31, 1998, Florida Progress’ actuarial estimate of the additional assets necessary to fund the reserve, after applying Mid-Continent’s statutory surplus is in the range of $100 million. The amount put forth by the actuary hired by the former Commissioner was in the range of $350 million. Florida Progress believes that any estimate of the projected reserve deficiency would affect only the assets of Mid-Continent, because Florida Progress has legal defenses to any claims asserted against it. Florida Progress is working with the new Commissioner to develop a viable plan to rehabilitate Mid-Continent, which would include the sale of that company or assumption of its policies.

Proposals for a plan of rehabilitation were received and opened in June 1999. In October 1999,
the new Commissioner signed a Letter of Intent, subject to approval by the Oklahoma District Court,
with Iowa-based Life Investors Insurance Company of America, a wholly owned subsidiary of AEGON
USA, Inc., concerning the assumption of all policies of Mid-Continent. In a letter of intent in connection with
the proposed plan of rehabilitation, Florida Progress agreed to assign all of Mid-Continent’s stock to the

15

receiver, and contribute $10 million to help offset future premium rate increases or coverage reductions, provided that, among other things, Florida Progress receives a full release from liability, and the receiver’s action against Florida Progress is dismissed, with prejudice. The $10 million was proposed to be held in escrow by the Commissioner for a period of 10 years and invested for the benefit of the policyholders. Any proposed premium increases would have been offset by this fund until it was exhausted. The Mid-Continent plan was originally scheduled to be considered by the Oklahoma County District Court in December 1999, but the Court postponed its consideration. The Court ordered the filing of new proposals by May 22, 2000. The Commissioner has recommended the proposal submitted by American Fidelity Assurance Company. A confirmation hearing on the Commissioner’s recommendation is expected in September 2000.

Florida Progress now believes that as part of any plan of rehabilitation, the Company will be required to contribute the aforementioned $10 million regardless of which party ultimately assumes the policies of Mid-Continent. Accordingly, Florida Progress accrued an additional provision for loss of $10 million in December 1999. The loss was more than offset by the recognition of tax benefits of approximately $11 million, related to the excess of the tax basis over the current book value of the investment in Mid-Continent, and thus, did not have a material impact on Florida Progress’ consolidated financial position, results of operations, or liquidity. This benefit had not been recorded earlier due to uncertainties associated with the timing of the tax deduction.

In January 1999, five Mid-Continent policyholders filed a purported class action against Mid-Continent and the same defendants named in the case filed by the former Commissioner. The complaint contains substantially the same factual allegations as those made by the former Commissioner. The suit asserts “Extra Life” policyholders have been injured as a result of representations made in connection with the sale of that policy. The suit seeks actual and punitive damages. As allowed by the Court, plaintiffs filed a second amended petition after prior filings were dismissed as a result of defendants’ motions. Defendants’ motions to dismiss the latest petition were denied.

On April 17, 2000, Florida Progress filed an answer to the second amended petition. That answer denied all material allegations of the petition. On April 27, 2000, Florida Progress filed an amended answer and third party petition, which asserted claims for indemnity and contribution against John P. Crawford in his capacity as a prior actuary to Mid-Continent and Lewis & Ellis, Inc., the actuarial firm that designed the Mid-Continent “Extra Life” policy. On May 2, 2000, Florida Progress and other defendants filed an application for writ of prohibition in the Oklahoma Supreme Court, requesting that the Oklahoma Supreme Court resolve the issue of whether the policyholder plaintiffs have standing to pursue their lawsuit which was subsequently denied. The Commissioner has filed a motion in the rehabilitation court proceeding to enjoin the policyholder action.

Although Florida Progress hopes to complete the negotiated resolution of these matters involving Mid-Continent, it will continue to vigorously defend itself against the two lawsuits, if that is required. Although there can be no assurance as to the outcome of the two lawsuits, Florida Progress believes they are without merit and that their outcomes would not have a material adverse effect on Florida Progress’ consolidated financial position, results of operations or liquidity.

Share Exchange Litigation — In August 1999, Florida Progress announced that it entered into an
Agreement and Plan of Exchange with Carolina Power & Light Company (“CP&L”), and CP&L Energy,
Inc., a wholly owned subsidiary of CP&L. A lawsuit was filed in September 1999, against Florida Progress
and its directors seeking class action status, an unspecified amount of damages and injunctive relief,
including a declaration that the agreement and plan of exchange was entered into in breach of the fiduciary
duties of the Florida Progress board of directors, and enjoining Florida Progress from proceeding with the
share exchange. The complaint also seeks an award of costs and attorney’s fees. Florida Progress believes
this suit is without merit and intends to vigorously defend itself against this action. Management does not
expect that the result of this legal action will have a material adverse impact on Florida Progress’ financial

16

position, results of operations or liquidity. Accordingly, no provision for loss has been recorded pertaining to this matter.

Easement Litigation— In December 1998, Florida Power was served with a class action lawsuit seeking damages, declaratory and injunctive relief for the alleged improper use of electric transmission easements. The plaintiffs contend that the licensing of fiber optic telecommunications lines to third parties or telecommunications companies for other than Florida Power’s internal use along the electric transmission line right-of-way exceeds the authority granted in the easements. In June 1999, plaintiffs amended their complaint to add Progress Telecommunications Corporation, an indirect wholly owned subsidiary of Florida Progress, as a defendant and to add counts for unjust enrichment and constructive trust. In January 2000, the court conditionally certified the class statewide. In a mediation held in March 2000, the parties reached a tentative settlement of this claim, which is subject to the resolution of procedural issues relating to class matters as well as court approval. Management does not expect that the results of these legal actions will have a material impact on Florida Progress’ financial position, results of operations or liquidity. Accordingly, no provision for loss has been recorded pertaining to this matter.

Other Legal Matters — Florida Progress and Florida Power are involved in various other claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect upon either company’s consolidated financial position, results of operations or liquidity.

5) In the opinion of management, the accompanying financial statements include all adjustments deemed necessary to summarize fairly and reflect the financial position and results of operations of Florida Progress and Florida Power for the interim periods presented. Quarterly results are not necessarily indicative of results for the full year. These financial statements should be read in conjunction with the financial statements and notes thereto in the combined Annual Report on Form 10-K of Florida Progress and Florida Power for the year ended December 31, 1999 (the “1999 Form 10-K”).

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

OPERATING RESULTS

Florida Progress’ consolidated earnings for the three-month period ended June 30, 2000 were $1.11 per share compared to earnings of $.78 per share for the same period in 1999. Most of the increase is attributable to increased synthetic fuel sales from its diversified operations combined with the effect of a return to more normal weather conditions for Florida Power Corporation, the Company’s largest subsidiary.

For the six-month period ended June 30, 2000, Florida Progress’ consolidated earnings were $1.89 per share, a 28 percent increase over the $1.48 earnings per share reported for the same period in 1999.

A reconciliation of Florida Progress’ 2000 second quarter earnings per share is as follows:

1999 Florida Progress Second Quarter EPS
	Florida Power				$	.78
		Sales of electricity & other revenues	.09
		Operations & maintenance	.07
		Depreciation & amortization	(.02	)
						.14
	Electric Fuels					.21
	Corporate & other					(.02	)
2000 Florida Progress Second Quarter EPS					$	1.11

17

FLORIDA POWER CORPORATION

Florida Power, reported $.81 per share, for the second quarter of 2000 compared with $.67 per share for the same period last year. Florida Power’s earnings for the six-month period ended June 30, 2000 were $1.45 per share compared to earnings of $1.31 per share for the same period last year. The improved earnings for both the three and six month periods were due primarily to higher kilowatt-hour sales and lower operation and maintenance expenses.

Florida Power’s total kilowatt-hour sales increased 4.7 and 6.6 percent, respectively, during the three and six month period of 2000, compared with 1999. The improvement was primarily due to strong customer growth and a return to more normal temperatures.

Retail sales were up 5.6 percent for the quarter as Florida Power provided electric service to approximately 30,000 new customers during the second quarter of 2000 compared with last year. Weather during the second quarter returned to normal compared to the second quarter of 1999 when cooling degree days were 51 percent lower.

Operation and maintenance expense was down $11.3 million and $8.4 million during the quarter and year-to-date periods. Most of the decrease is due primarily to the timing of planned maintenance and reliability projects, most of which are expected to occur later this year.

DIVERSIFIED OPERATIONS

Revenues for diversified operations increased $87.5 million and $166.0 million, respectively, for the three and six months ended June 30, 2000 compared to the same period in the prior year. Cost of sales for Florida Progress’ diversified operations were $107.7 million and $186.8 million higher for the three and six months ended June 30, 2000 compared to the same period last year. The increases were due primarily to acquisitions in Electric Fuels’ Rail Services group and increased synfuel operations.

The sale of synthetic fuel results in a loss before the benefit of alternative fuel tax credits. Because of the increase in sales of synthetic fuel for the three and six month periods ended June 30, 2000 as compared to the same periods in the prior year, overall diversified operations gross profit declined in both periods of the current year.

ELECTRIC FUELS CORPORATION

Electric Fuels earned $.36 per share, in the second quarter, compared with $.15 per share, last year. Most of the improvement in earnings came from the Energy & Related Services group, which includes the Company’s synthetic fuel operations.

Earnings at the Energy & Related Services group were up $24.7 million and $36.9 million for the three and six months ended June 30, 2000 over the same periods in 1999, of which $11.1 million and $18.7 million was due to the timing of the recognition of alternative fuel tax credits. The remaining amount of the increase for both periods was due primarily to higher synthetic fuel sales compared with last year. Electric Fuels has interests in nine synthetic fuel plants, four of which were relocated and began operations during the first six months of 2000.

Income tax expense for the six month period ended June 30,2000 reflects the Company’s estimate of its consolidated annual effective tax rate. The rate differs from the U.S. Federal statutory rate of 35% primarily because of the estimated amount of alternative fuel tax credits expected to be generated during 2000.

18

During the three months ended June 30, 2000, the Company increased its estimate of alternative fuel tax credits expected to be generated in 2000. Income tax expense projected for the remainder of 2000 can change due to the amount of alternative fuel tax credits, projected or actually generated, from synfuel operations and from changes in pretax income.

Electric Fuels’ share of second-quarter sales of the coal-based synthetic fuel was approximately 1.4 million tons, compared with .3 million tons during the same period last year. Electric Fuels’ share of total synthetic fuel sales for 2000 from the plants it operates is expected to be approximately 5 million tons compared with 1.6 million tons sold in 1999.

In April 2000, an affiliate of CP&L Energy purchased a 90% interest in an affiliate of Electric Fuels that owns a synthetic fuels plant located at the company owned mine site in Virginia. In May 2000, an affiliate of CP&L Energy purchased a 90% ownership interest in another synthetic fuels plant located in West Virginia. The purchase agreements contain a provision that requires the CP&L Energy affiliate to sell, and an Electric Fuels affiliate to repurchase, the 90% interest should the share exchange between Florida Progress, CP&L Energy and CP&L not occur. The defined repurchase price approximates the original consideration given for the interest, adjusted by an amount to compensate Electric Fuels for a portion of the economic benefit realized by CP&L Energy during the period it owned the interest in the plants. Electric Fuels has accounted for the transactions as a sale for tax purposes and, because of the repurchase obligation, as a financing for financial reporting.

Earnings from the Inland Marine Transportation group were up $1.3 million and $1.9 million for the three and six-month periods ended June 30, 2000 compared to the same periods in 1999. A larger barge fleet and more favorable weather conditions more than offset the effect of higher diesel fuel prices compared to last year.

Results in the Rail Services group decreased $3.8 million and $3.4 million for the three and six-month periods when compared to 1999. The decrease for the second quarter is the result of weak demand from the major railroad carriers for mechanical and track work. Although demand among the Class 1 carriers is not expected to improve substantially during the second half of 2000, the long-term outlook for these services remains positive.

Electric Fuels’ second-quarter results also reflect higher interest expense when compared with last year due largely to higher debt balances resulting from the expansion of its operations. In addition, employee-related general administrative expenses have increased when compared with the second quarter of last year.

CORPORATE & OTHER

Corporate and other expenses were higher during the three and six months ended June 30, 2000 compared with 1999 due primarily to costs associated with the business combination with Carolina Power & Light.

LIQUIDITY AND CAPITAL RESOURCES

Florida Progress’ capital expenditures are expected to be funded primarily from internally generated funds and debt. During the first six months of 2000, $109.1 million was spent on the Florida Power construction program and $45.1 million was spent in diversified operations.

The share exchange agreement with CP&L limits Florida Progress’ total capital expenditures, absent CP&L approval. (See prior discussion of this matter in the 1999 Form 10-K, Item 7 “MD&A — Future Cash Requirements.”)

Florida Power’s ratio of earnings to fixed charges was 4.53 for the twelve months ended June 30, 2000. (See Exhibit 12 filed herewith).

19

In April 1999, FPC Capital I, an affiliated business trust, completed the sale of $300 million of Cumulative Quarterly Income Preferred Securities, which were initially offered to the public at $25 per share. The securities are, in effect, fully and unconditionally guaranteed by Florida Progress. Quarterly distributions are payable at an annual rate of 7.10%. Florida Progress used the net proceeds to repay a portion of certain outstanding short-term bank loans and commercial paper and for other general corporate purposes. (See Note 3 to the Financial Statements.)

In March 2000, Florida Power established an uncommitted bank bid facility allowing it to borrow and re-borrow and have loans outstanding at any time, up to $100 million. The facility was established to temporarily supplement commercial paper borrowings, as needed. The bank bid facility was not drawn on as of June 30, 2000.

In April 2000, Progress Capital Holdings Inc. (“PCH”) updated its private medium-term note (“MTN”) program and now has $400 million of MTNs available for issuance.

PCH has uncommitted bank bid facilities authorizing it to borrow and re-borrow, and have outstanding at any time, up to $300 million. As of June 30, 2000, $60 million was outstanding under these bid facilities. The loans were used to temporarily supplement commercial paper borrowings, as needed.

In July 2000, PCH established a new $200 million, 364-day revolving bank credit facility. The facility is used to support the issuance of commercial paper. PCH has two additional revolving bank credit facilities: a 364-day, $100 million facility and a $300 million long-term facility that expires in 2003. In connection with the closing of the new $200 million credit facility, PCH increased its commercial paper program from $400 million to $600 million.

Florida Progress and Florida Power believe their available sources of liquidity will be sufficient to fund their long-term and short-term capital requirements. However, due to the pending share exchange with CP&L, Standard & Poor’s Ratings Services, Moody’s Investors Service and Duff & Phelps Credit Rating Co. have announced they are reviewing the rated securities of Florida Power, PCH and FPC Capital I for a possible ratings downgrade.

OTHER — COMBINATION WITH CP&L ENERGY

Florida Progress has mailed a Proxy Statement dated July 5, 2000, to its shareholders of record on June 29, 2000, regarding the Annual Meeting of Shareholders to be held on August 17, 2000. At the meeting, shareholders will vote on a proposal to approve the amended and restated agreement and plan of exchange among Florida Progress and Carolina Power & Light Company and CP&L Energy, Inc., pursuant to which Florida Progress will become a wholly owned subsidiary of CP&L Energy. A copy of the Proxy Statement, which shareholders should read because it contains important information, is available, without charge, at the Securities and Exchange Commission’s web site at , or by contacting Florida Progress’ Investor Services at P.O. Box 14042, St. Petersburg, FL 33733. Telephone: (800) 937 — 2640

On July 7, 2000, the FPSC opened a docket to review Florida Power’s earnings including the effects of the combination with CP&L Energy. The FPSC does not have the authority to approve or disapprove the combination, and the review is not expected to delay the closing of the combination, which is expected to occur in the fall of 2000. Florida Power continues to be subject to the June 1997 settlement agreement associated with the extended nuclear outage at Crystal River Unit No. 3 that precludes any party to the agreement from seeking or supporting any change to Florida Power’s return on equity range until July 2001.

On July 12, 2000, CP&L’s combination with Florida Progress received approval by the Federal Energy
Regulatory Commission (“FERC”) and the Federal Trade Commission (“FTC”)/Department of Justice (See Part II,
Item 1, paragraph 5). The FERC order approved the acquisition with the requirement that the companies must
make a filing on or before October 15, 2000 (as required under FERC Order 2000), to transfer operational
control of their transmission facilities to a regional transmission organization (RTO) on or before December 15,

20

2001. Both CP&L Energy and Florida Progress are on track to comply with the clarification in the FERC’s order. In its review, the Department of Justice and the FTC found no adverse effects on competition as a result of the combination.

FORWARD-LOOKING STATEMENTS

This report contains certain forward-looking statements, including the expected synfuel fuel sales level and related alternative fuel tax credits; the expected liability for cleaning up certain environmental sites; the savings associated with the restructuring of certain cogeneration contracts; the impact of the FPSC docket, FERC Order and other regulatory proceedings on the expected closing date of the combination with CP&L Energy; the impact of various legal proceedings on Florida Progress’ financial condition; and the effect of interest rate fluctuations on pretax earnings over the next fiscal year.

These statements, and any other statements contained in this report that are not historical facts, are forward-looking statements that are based on a series of projections and estimates regarding the economy, the electric utility business and Florida Progress’ other businesses in general, and on factors which impact Florida Progress directly. The estimates relate to the pricing of services, the actions of regulatory bodies, and the effects of competition. The words “should,” “estimates,” “believes,” “expects,” “anticipates,” “plans” and “intends,” and variations of such words, and similar expressions, are intended to identify forward-looking statements that involve risks and uncertainties.

Key factors that have a direct impact on the ability to attain these estimates include continued annual growth in customers; successful cost containment efforts; actions of various other regulatory authorities and the efficient operation of Florida Power’s existing and future generating units. Other key factors include the continued successful operation of synthetic fuel plants, market acceptance of synthetic fuel, competition from competing products, impact of environmental regulations on potential buyers, and economic and weather conditions affecting the demand for, and supply of, not only electricity but also Electric Fuels’ barge, rail and other services.

Also, in developing its forward-looking statements, Florida Progress and Florida Power have made certain assumptions relating to productivity improvements and the favorable outcome of various commercial, legal and regulatory proceedings and the lack of disruption to its markets.

If Florida Progress’ and Florida Power’s estimates regarding the economy, the electric utility business and other factors differ materially from what actually occurs, or if various legal or regulatory proceedings have unfavorable outcomes, then actual results could vary significantly from the performance projected in the forward-looking statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

Florida Progress is exposed to changes in interest rates primarily as a result of its borrowing activities.

A hypothetical 66 basis point increase in interest rates (10% of Florida Progress’ weighted average interest rate at June 30, 2000) affecting Florida Progress’ variable rate debt ($726.8 million at June 30, 2000) would have an immaterial effect on Florida Progress’ pre-tax earnings over the next fiscal year. A hypothetical 10% decrease in interest rates would also have an immaterial effect on the estimated fair value of Florida Progress’ long-term debt at June 30, 2000.

21

COMMODITY PRICE RISK

Currently at Florida Power, commodity price risk due to changes in market conditions for fuel and purchased power are recovered through the fuel adjustment clause, with no effect on earnings.

Electric Fuels is exposed to commodity price risk through coal and synfuel sales, the scrap steel market and fuel for its marine transportation business. A 10-percent change in the market price of those commodities would have an immaterial effect on the earnings of Florida Progress.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

1. Metropolitan Dade County and Montenay Power Corp. v. Florida Power Corporation, Circuit Court of the Eleventh Circuit for Dade County, Florida, Case No. 96-09598-CA-30

Metropolitan Dade County and Montenay Power Corp. v. Florida Power Corporation, U.S. District Court, Southern District, Miami Division, Case No. 96-0594-C.V.-LENNARD

In re: Petition for Declaratory Statement That Energy Payments Are Limited to Analysis of Avoided Unit’s Contractually Specified Characteristics, Florida Public Service Commission, Docket No. 980283-EQ.

See prior discussion of this matter in the 1999 Form 10-K, Item 3, paragraph 1. In June 2000, the Florida Public Service Commission approved the settlement agreement between the parties. This concludes this matter for reporting purposes, except to the extent that the Petition for Declaratory Statement before the Florida Supreme Court, which may now be moot as it relates to the Dade case, continues to have relevance to the NCP Lake case, which is discussed in the 1999 Form 10-K, Item 3, paragraph 2. (See Note 4 to the Financial Statements – Contingencies – Qualifying Facilities Contracts.)

2. State of Oklahoma, ex rel. John P. Crawford, Insurance Commissioner v. Mid-Continent Life Insurance Company, District Court of Oklahoma County, State of Oklahoma, Case No. CJ-97-2518-62

State of Oklahoma, ex rel, John P. Crawford, Insurance Commissioner as Receiver for Mid-Continent Life Insurance Company v. Florida Progress Corporation, a Florida corporation, Jack Barron Critchfield, George Ruppel, Thomas Steven Krzesinski, Richard Korpan, Richard Donald Keller, James Lacy Harlan, Gerald William McRae, Thomas Richard Dlouhy, Andrew Joseph Beal and Robert Terry Stuart, Jr., District Court of Oklahoma County, State of Oklahoma, Case No. CJ-97-2518-62 (part of the same case noted above).

Michael Farrimond, Pamela S. Farrimond, Angela Fry, Jowhna Hill, and Barbara Hodges, for themselves and all others similarly situated v. Florida Progress Corporation, a Florida corporation, Jack Barron Critchfield, George Ruppel, Thomas Steven Krzesinski, Richard Korpan, Richard Donald Keller, James Lacy Harlan, Gerald William McRae, Thomas Richard Dlouhy, Andrew Joseph Beal and Robert Terry Stuart, Jr., District Court of Oklahoma County, State of Oklahoma, Case No. CJ-99-130-65

See prior discussion of this matter in the 1999 Form 10-K, Item 3, paragraph 5, and the March 31,
2000 Form 10-Q, Part II, Item 1, paragraph 5. In the rehabilitation proceeding, Commissioner Fisher
has recommended the proposal submitted by American Fidelity Assurance Company. A confirmation
hearing on the Commissioner’s recommendation is expected in September. In the Farrimond case, the

22

Oklahoma Supreme Court denied the writ of prohibition that was filed by Florida Progress and other defendants requesting that the court resolve the issue of whether the policyholder plaintiffs have standing to pursue their lawsuit. The Commissioner has filed a motion in the rehabilitation court proceeding to enjoin the Farrimond action. (See Note 4 to the Financial Statements – Contingencies – Mid-Continent Life Insurance Company.)

3. Sanford Gasification Plant Site, Sanford, Florida (“Sanford Site”).

See prior discussion of this matter in the 1999 Form 10-K, Item 3, paragraph 11, and March 31, 2000 Form 10-Q, Part II, Item 1, paragraph 3. The revised target date for the EPA to issue the Record of Decision is September 30, 2000. (See Note 4 to the Financial Statements – Contingencies – Contaminated Site Cleanup.)

4. Inglis Plant Site.

See prior discussion of this matter in the 1999 Form 10-K, Item 3, paragraph 12. The EPA has produced a draft of Special Notice Procedures and a Consent Order which appear to confirm that the EPA intends to require Florida Power to conduct a Remedial Investigation and Feasibility Study (RI/FS) on the property. Depending on the EPA’s course of action, the RI/FS could take up to two years to complete. Future clean-up costs cannot be estimated at this time. (See Note 4 to the Financial Statements – Contingencies – Contaminated Site Cleanup.)

5. In the Matter of CP&L Holdings, Inc. On Behalf of its Public Utility Subsidiaries and Florida Progress Corporation On Behalf of Its Public Utility Subsidiaries, Federal Energy Regulatory Commission Docket Nos. EC00-55-000 and ER00-1520-000.

Tampa Electric Company (“TECO”) has filed a request with FERC asking that it clarify, or in the alternative, grant rehearing of its July 12 Order that approved the combination between the Company and CP&L Energy. The request seeks two new ordering paragraphs. The first paragraph would require the companies to make a filing by October 15, 2000 for an RTO that is in compliance with FERC Order 2000, and that the combination cannot be consummated until the Commission issues an order that the filing is in compliance with Order 2000. The second paragraph would prohibit Florida Power from augmenting its uncommitted generating capacity for five years, other than to serve native load customers or existing firm wholesale transactions. The Company believes that there is no merit to either request, and that issues relating to RTO compliance with FERC Order 2000 belong in the FERC docket that will be opened when the Florida RTO files for FERC approval.

Under the Federal Power Act, requests for rehearing are deemed to have been denied if they are not acted upon within 30 days. FERC may issue an order within the 30 day time period granting or denying the request in whole or in part, or issue a “tolling order” granting the rehearing solely for the purposes of reconsideration. Rehearing requests are sometimes “tolled” to allow FERC additional time in which to rule. If a rehearing request is tolled, FERC rules do not require it to rule on the merits of the request within any time period. The Federal Power Act provides, however, that requests for rehearing do not operate as a stay of a FERC order unless otherwise ordered by FERC. TECO has not sought a stay of FERC’s July 12 order. In the absence of a stay or modification of the July 12 order, the request filed by TECO does not affect the authorization previously granted by FERC. (See Part I, Item 2, Management’s Discussion & Analysis — Other — Combination with CP&L Energy.)

23

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

		Florida	Florida
Number	Exhibit	Progress	Power
3.	Bylaws of Florida Progress, as amended July 10, 2000.	X
12	Statement Regarding Computation of Ratio of Earnings to Fixed Charges for Florida Power		X
27.(a)	Florida Progress Financial Data Schedule	X
27.(b)	Florida Power Financial Data Schedule (for SEC use only)		X
X  =	Exhibit is filed for that respective company

(b) Reports on form 8-K:

During the second quarter of 2000, Florida Progress and Florida Power filed the following combined reports on Form 8-K:

Form 8-K dated April 27, 2000, reporting under Item 5 “Other Events” Florida Progress’ and Florida Power’s first quarter 2000 earnings.

In addition, Florida Progress and Florida Power filed the following combined reports on Form 8-K subsequent to the second quarter 2000:

Form 8-K dated (date of earliest event reported) July 7, 2000, as filed with the SEC on July 7, 2000, reporting under Item 5 “Other Events” Florida Progress’ expected second quarter results.

Form 8-K dated (date of earliest event reported) July 11, 2000, as filed with the SEC on July 11, 2000, reporting under Item 5 “Other Events” the opening of a new Florida Public Service Commission Docket to review Florida Power’s earnings, including the effects of the business combination between Florida Progress and CP&L Energy.

Form 8-K dated (date of earliest event reported) July 12, 2000, as filed with the SEC on July 14, 2000, reporting under Item 5 “Other Events” the receipt of the approval of the Federal Energy Regulatory Commission, and the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, in connection with the pending business combination transaction between Florida Progress and CP&L Energy.

Form 8-K dated August 1, 2000, reporting under Item 5 “Other Events” Florida Progress’ and Florida Power’s second quarter 2000 earnings.

24

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.

		FLORIDA PROGRESS CORPORATION
Date:	August 11, 2000	By:  /s/ John Scardino, Jr. ______________________________ John Scardino, Jr. Vice President and Controller
Date:	August 11, 2000	By:  /s/ Edward W. Moneypenny ______________________________ Edward W. Moneypenny Senior Vice President and Chief Financial Officer

25

Exhibit Index

		Florida	Florida
Number	Exhibit	Progress	Power
3.	Bylaws of Florida Progress Corporation as amended July 10, 2000	X
12	Statement Regarding computation of Ratio of Earnings to Fixed Charges for Florida Power.		X
27.(a)	Florida Progress Financial Data Schedule	X
27.(b)	Florida Power Financial Data Schedule		X
X  =	Exhibit is filed for that respective company.

26 EX-3 2 ex3.htm BYLAWS OF FLORIDA PROGRESS

Exhibit 3

ADOPTED JANUARY 21, 1982
AMENDED AUGUST 16, 1984
AMENDED NOVEMBER 19, 1987
AMENDED JANUARY 21, 1988
AMENDED NOVEMBER 17, 1988
AMENDED APRIL 19, 1990
AMENDED AUGUST 16, 1990
AMENDED FEBRUARY 7, 1991, EFFECTIVE APRIL 18, 1991
AMENDED AND RESTATED APRIL 18, 1991
AMENDED FEBRUARY 6, 1992
AMENDED NOVEMBER 19, 1992
AMENDED FEBRUARY 8, 1996, EFFECTIVE APRIL 1, 1996
AMENDED MAY 15, 1997
AMENDED FEBRUARY 19, 1998
AMENDED FEBRUARY 19, 1998, EFFECTIVE APRIL 17, 1998
AMENDED APRIL 17, 1998, EFFECTIVE JULY 1, 1998
AMENDED FEBRUARY 18, 1999
AMENDED DECEMBER 14, 1999
AMENDED MARCH 3, 2000
AMENDED JULY 10, 2000

FLORIDA PROGRESS CORPORATION

BYLAWS

BYLAWS

FLORIDA PROGRESS CORPORATION

ARTICLE I
Offices

      Section 1. The registered office and headquarters of the Corporation are in the City of St. Petersburg, County of Pinellas, State of Florida.

      Section 2. The Corporation may also have an office at such other places as the business of the Corporation may require.

ARTICLE II
Seal

      The Corporate seal shall be circular in form and have inscribed thereon the following:

Florida Progress Corporation
Corporate Seal
Florida
1982

ARTICLE III
Meetings of Shareholders

      Section 1. Annual Meeting. An annual meeting of shareholders shall be held for the election of directors at such date, time and place, either within or without the State of Florida, as shall be determined by the Board of Directors. Any other proper business may be transacted at the annual meeting.

      Section 2. Special Meetings. Special meetings of the shareholders of the Corporation, or of the holders of any class or series of stock, required or authorized by law, shall be held for the purpose or purposes stated in the call of said meeting, on the call of the Chairman of the Board, or the President, or the Board of Directors, or when the holders of not less than ten percent (10%) of all the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting sign, date, and deliver to the Corporation’s Secretary one or more written demands for the meeting describing the purpose or purposes for which it is to be held.

      Section 3. Place; Record Date. Meetings of shareholders may be held within or without the State of Florida. The Board of Directors shall fix a record date in order to determine the shareholders entitled to notice of a shareholders’ meeting, to demand a special meeting, to vote or to take any other action.

      Section 4. Notice. Written notice stating the date, time and place of each meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) nor more than sixty (60) days before the meeting, either personally or by first class mail, by or at the direction of the President, the Secretary or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If the notice is mailed at least thirty (30) days before the date of the meeting, it may be done by a class of United States mail other than first class. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder as the address appears

- 2 -

on the stock transfer books of the Corporation, with postage thereon prepaid.

      Section 5. Notice of Adjourned Meetings. When a meeting is adjourned to another date, time or place, it shall not be necessary to give any notice of the adjourned meeting if the date, time or place to which the meeting is adjourned is announced at the meeting before the adjournment is taken, and at the adjourned meeting any business may be transacted that might have been transacted on the original date of the meeting. If, however, after the adjournment, the Board of Directors fixes a new record date for the adjourned meeting, a notice of the adjourned meeting shall be given as provided in Section 4 to each shareholder of record as of the new record date who is entitled to notice of such meeting.

      Section 6. Quorum and Voting. A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. When a specified item of business is required to be voted on by a class or series of stock, the holders of a majority of the shares of such class or series shall constitute a quorum for the transaction of such item of business by that class or series.

      If a quorum exists, action on a matter, other than the election of Directors, is approved if the votes cast by the holders of the shares represented at the meeting and entitled to vote on the subject matter favoring the action exceed the votes cast opposing the action, unless a greater number of affirmative votes or voting by classes is required by law or the Articles of Incorporation. The Directors shall be elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present.

      Any meeting may be adjourned from time to time, whether or not a quorum is present, by the chairperson of the meeting or by the vote of a majority of the votes entitled to be cast by the shares represented thereat. At such adjourned meeting at which the requisite amount of stock shall be represented any business may be transacted which might have been transacted at the original meeting if a quorum had been present.

      Section 7. Manner of Voting. A shareholder, other person entitled to vote on behalf of a shareholder pursuant to law, or attorney-in-fact may vote the shareholder’s shares either in person or by proxy in accordance with law.

      Section 8. Action by Shareholders Without a Meeting. Any action required by law, these Bylaws or the Articles of Incorporation of the Corporation to be taken at any annual or special meeting of shareholders of the Corporation, or any action which may be taken at any annual or special meeting of such shareholders, may be taken without a meeting, without prior notice and without a vote, if one or more written consents, setting forth the action so taken, shall be dated and signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted, and shall be delivered to the Corporation within sixty (60) days of the date of the earliest dated consent. If any class of shares is entitled to vote thereon as a class, such written consent shall be required of the holders of a majority of the shares of each class of shares entitled to vote as a class thereon and of the total shares entitled to vote thereon.

      Any written consent may be revoked prior to the date that the Corporation receives the required number of consents to authorize the proposed action. No revocation is effective unless in writing and until received by the Corporation.

      Within ten (10) days after obtaining such authorization by written consent, notice shall be given to those shareholders who have not consented in writing or who are not entitled to vote on the action. The notice shall fairly summarize the material features of the authorized action and, if the action be a merger, consolidation, sale or exchange of assets or other action for which dissenters’ rights are provided by law, the notice shall contain a clear statement of the right of shareholders dissenting therefrom

- 3 -

to be paid the fair value of their shares upon compliance with further provisions of law regarding the rights of dissenting shareholders.

      A written consent shall have the same effect as a vote cast at a meeting and may be described as such in any document.

      Whenever any action is taken by written consent, the written consents of the shareholders consenting to such action or the written reports of inspectors appointed to tabulate such consents shall be filed with the minutes of proceedings of shareholders.

      Section 9. Advance Notice Provisions for Election of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board of Directors may be made at any annual meeting of shareholders, or at any special meeting of shareholders called for the purpose of electing directors, (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any shareholder of the Corporation (i) who is a shareholder of record on the date of the giving of the notice provided for in this Section 9 and on the record date for the determination of shareholders entitled to vote at such meeting and (ii) who complies with the notice procedures set forth in this Section 9.

      In addition to any other applicable requirements, for a nomination to be made by a shareholder such shareholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

      To be timely, a shareholder’s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation (a) in the case of an annual meeting, not less than 90 days nor more than 120 days prior to the date of the annual meeting; provided, however, that in the event that less than 100 days’ notice or prior public disclosure of the date of the annual meeting is given or made to shareholders, notice by the shareholder in order to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever occurs first; and (b) in the case of a special meeting of shareholders called for the purpose of electing directors, not later than the close of business on the 10th day following the day on which the notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever occurs first.

      To be in proper written form, a shareholder’s notice to the Secretary must set forth (a) as to each person whom the shareholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the number of shares of common stock of the Corporation which are owned beneficially or of record by the person and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder; and (b) as to the shareholder giving the notice (i) the name and record address of such shareholder, (ii) the number of shares of common stock of the Corporation which are owned beneficially or of record by such shareholder, (iii) a description of all arrangements or understandings between such shareholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such shareholder, (iv) a representation that such shareholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (v) any other information relating to such shareholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and

- 4 -

regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to be named as a nominee and to serve as a director if elected.

      No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 9. If the Chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.

      Section 10. Advance Notice Provisions for Business to be Transacted at Annual Meeting. No business may be transacted at an annual meeting of shareholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (c) otherwise properly brought before the annual meeting by any shareholder of the Corporation (i) who is a shareholder of record on the date of the giving of the notice provided for in this Section 10 and on the record date for the determination of shareholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 10.

      In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a shareholder, such shareholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

      To be timely, a shareholder’s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the date of the annual meeting; provided, however, that in the event that less than 100 days’ notice or prior public disclosure of the date of the annual meeting is given or made to shareholders, notice by the shareholder in order to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever occurs first.

      To be in proper written form, a shareholder’s notice to the Secretary must set forth as to each matter such shareholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of such shareholder, (iii) the number of shares of common stock of the Corporation which are owned beneficially or of record by such shareholder, (iv) a description of all arrangements or understandings between such shareholder and any other person or persons (including their names) in connection with the proposal of such business by such shareholder and any material interest of such shareholder in such business and (v) a representation that such shareholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

      No business shall be conducted at the annual meeting of shareholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 10, provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 10 shall be deemed to preclude discussion by any shareholder of any such business. If the Chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

- 5 -

ARTICLE IV
Directors

      Section 1. Number and Term of Office. The Board of Directors of the Corporation shall consist of nine (9) members, divided into three (3) classes serving staggered three-year terms in accordance with the Articles of Incorporation. The three classes shall be designated Class I, Class II and Class III with each Class consisting of three directors.

      Section 2. Function. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, the Board of Directors.

      Section 3. Qualification. Directors need not be residents of this state or shareholders of the Corporation.

      Section 4. Authority to Fix Compensation. The Board of Directors shall have authority to fix the compensation of the Directors of the Corporation.

      Section 5. Duties of Directors. A Director shall discharge his duties as a Director, including his duties as a member of any committee of the Board upon which he may serve, in good faith, in a manner he reasonably believes to be in the best interests of the Corporation, and with such care as an ordinarily prudent person in a like position would use under similar circumstances.

      In discharging his duties, a Director shall be entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, in each case prepared or presented by:

      (a) one or more officers or employees of the Corporation whom the Director reasonably believes to be reliable and competent in the matters presented;

      (b) legal counsel, public accountants or other persons as to matters which the Director reasonably believes to be within the persons’ professional or expert competence; or

      (c) a committee of the Board of Directors upon which he does not serve, duly designated in accordance with a provision of the Articles of Incorporation or the Bylaws, as to matters within its designated authority, which committee the Director reasonably believes to merit confidence.

      In discharging his duties, a Director may consider such factors as the Director deems relevant, including the long-term prospects and interests of the Corporation and its shareholders, and the social, economic, legal, or other effects of any action on the employees, suppliers, customers of the Corporation or its subsidiaries, the communities and society in which the Corporation or its subsidiaries operate, and the economy of the state and the nation.

      A Director shall not be considered to be acting in good faith if he has knowledge concerning the matter in question which would cause such reliance described above to be unwarranted.

- 6 -

      A Director is not liable for any action taken as a Director, or any failure to take any action, if he performed the duties of his office in compliance with this Section 5.

      Section 6. Removal of Directors. At a meeting of shareholders called expressly for that purpose, any Director may be removed, only for cause, if the number of votes cast to remove him exceeds the number of votes cast not to remove him. If a Director is elected by a voting group or class of shares under the Articles of Incorporation, only the shareholders of that voting group or class may participate in the vote to remove him.

      Section 7. Vacancies. Until the next election of Directors upon the expiration of their terms, any vacancy occurring in the Board of Directors, including any vacancy created by reason of an increase in the number of Directors, may be filled only by the affirmative vote of a majority of the remaining Directors, though less than a quorum of the Board of Directors. A Director elected to fill a vacancy shall hold office only until the next election of Directors by the shareholders and until his successor shall have been elected and shall qualify.

ARTICLE V
Chairman of the Board

      The Corporation may have a Chairman of the Board who shall be a Director and who shall preside at all meetings of the shareholders and of the Board of Directors, and shall be authorized to adopt and enforce rules for the conduct of such meetings. In such capacity, he shall have the authority to adjourn or postpone meetings of the shareholders, whether or not a quorum is present. He shall advise and counsel with the President. In addition to the responsibility for maintaining effective external relationships on behalf of the Corporation with industry groups, governmental agencies, scientific, educational and other similar groups, he shall exercise such other responsibilities and duties as shall be assigned to him by the Board of Directors. The Board of Directors shall have the power at any time to leave the office of Chairman of the Board vacant and, in such eventuality, the President shall assume and exercise all of the powers and responsibilities of this office.

ARTICLE VI
Meetings of the Board

      Section 1. Time, Place, and Call of Meetings. Meetings of the Board of Directors may be held within or without the State of Florida at the time fixed by these Bylaws or upon call of the Chairman of the Board or the President or the Secretary or any two Directors.

      Section 2. Annual Meeting. The annual meeting of the Board of Directors shall be held promptly following the annual meeting of shareholders.

      Section 3. Notice of Meetings. Written notice of the date, time and place of special meetings of the Board of Directors shall be given to each Director by either personal delivery, mail, telegram or cablegram at least two (2) days before the meeting.

      Notice need not be given of regular meetings held each quarter on dates promulgated before the end of the preceding year. Notice of a meeting of the Board of Directors need not be given to any Director who signs a waiver of notice, either before or after the meeting. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting and waiver of any and all objection to the place of the meeting, the time of the meeting, or the manner in which it has been called or convened, except when a Director states, at the beginning of the meeting or promptly upon arrival at the meeting, any objection to the transaction of business because the meeting is not lawfully called or convened.

- 7 -

      Neither the business to be transacted at, nor the purpose of, any meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

      A majority of the Directors present, whether or not a quorum exists, may adjourn any meeting of the Board of Directors to another time and place. Notice of any such adjourned meeting shall be given to the Directors who were not present at the time of the adjournment and, unless the time and place of the adjourned meeting are announced at the time of the adjournment, to the other Directors.

      Members of the Board of Directors or any committee of the Board of Directors may participate in a meeting by means of a conference telephone or similar communications equipment by means of which all Directors participating in the meeting may simultaneously hear each other during the meeting. Participation by such means shall constitute presence in person at a meeting. The vote on any matter before the Board or any committee of the Board, when members are present by means of a conference telephone or similar communication equipment, shall be by roll call.

      Section 4. Action Without a Meeting. Any action required to be taken at a meeting of the Board of Directors or a committee thereof may be taken without a meeting if one or more written consents, setting forth the action so to be taken, signed by all of the Directors, or all of the members of the committee, as the case may be, is filed in the minutes of the proceeding. Action taken under this section is effective when the last Director signs the consent, unless the consent specifies a different effective date. A consent under this section has the effect of a meeting vote and may be described as such in any document.

      Section 5. Quorum and Voting. A majority of the number of Directors fixed by these Bylaws shall constitute a quorum for the transaction of business. The act of the majority of the Directors present at a meeting at which a quorum is present when a vote is taken shall be the act of the Board of Directors.

      Section 6. Presumption of Assent. A Director of the Corporation who is present at a meeting of the Board of Directors or a committee thereof when corporate action is taken shall be deemed to have assented to the action taken unless he objects at the beginning of the meeting (or promptly upon his arrival) to holding it or transacting specified business at the meeting, or he votes against or abstains from the action taken.

      Section 7. Director Conflicts of Interest. No contract or other transaction between the Corporation and one or more of its Directors or any other corporation, firm, association or entity in which one or more of the Directors are directors or officers or are financially interested shall be either void or voidable because of such relationship or interest or because such Director or Directors are present at the meeting of the Board of Directors or a committee thereof which authorizes, approves or ratifies such contract or transaction or because his or their votes are counted for such purpose, if:

      (a) The fact of such relationship or interest is disclosed or known to the Board of Directors or committee which authorizes, approves or ratifies the contract or transaction by a vote or consent sufficient for the purpose without counting the votes or consents of such interested Directors; or

      (b) The fact of such relationship or interest is disclosed or known to the shareholders entitled to vote and they authorize, approve or ratify such contract or transaction by vote or written consent; or

      (c) The contract or transaction is fair and reasonable as to the Corporation at the time it is authorized by the Board, a committee, or the shareholders.

- 8 -

      Common or interested Directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or a committee thereof which authorizes, approves or ratifies such contract or transaction.

      Shares owned by or voted under the control of a Director who has a relationship or interest in the subject transaction may not be counted in the shareholders’ vote to determine whether to authorize, approve, or ratify a conflict of interest transaction under subparagraph (b) above.

ARTICLE VII
Committees

      Section 1. Committees. The Board of Directors, by resolution adopted by a majority of the full Board, may designate from among its members an Executive Committee, Audit Committee, Finance and Budget Committee, Compensation Committee, Nominating Committee and one or more other committees and may designate one or more Directors as alternate members of any such committee who may act in the place and stead of any absent member or members at any meeting of such committee.

      The members of committees, who shall be at least two in number, shall act only as a committee and the individual members shall have no power as such. Unless the Board of Directors elects a committee chairman, each committee shall elect its own chairman and secretary, and have full power and authority to make rules for the conduct of its business. The Board shall have the power at any time to change the membership of committees, fill vacancies, and to abolish committees.

      Neither the designation of any such committee, the delegation thereto of authority, nor action by such committee pursuant to such authority shall alone constitute compliance by any member of the Board of Directors not a member of the committee in question with his responsibility to act in good faith, in a manner he reasonably believes to be in the best interests of the Corporation, and with such care as an ordinarily prudent person in a like position would use under similar circumstances.

      Section 2. Executive Committee. The Executive Committee shall have and may exercise all of the powers of the Board of Directors during the intervals between the meetings of the Board in the management of the business and affairs of the Corporation. A majority of the Executive Committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at a meeting, at which a quorum is present, shall be the act of the Executive Committee. The Executive Committee shall keep a record of its acts and proceedings and make a report thereof from time to time to the Board of Directors.

      The Executive Committee shall not have the authority to:

      (a) approve or recommend to shareholders actions or proposals required by the Florida Business Corporation Act to be approved by shareholders;

      (b) fill vacancies on the Board of Directors or any committee thereof;

      (c) adopt, amend or repeal the Bylaws;

      (d) authorize or approve the reacquisition of shares unless pursuant to a general formula or method specified by the Board of Directors; or

- 9 -

      (e) authorize or approve the issuance or sale or contract for the sale of shares, or determine the designation and relative rights, preferences, and limitations of a voting group except that the Board of Directors may authorize a committee (or a senior executive officer of the Corporation) to do so within limits specifically prescribed by the Board of Directors.

      Section 3. Audit Committee: The Audit Committee shall be composed of at least three outside Directors. The Committee will nominate the public accounting firm to conduct the annual audit of the Corporation and submit the nomination to the Board of Directors for approval. The Audit Committee shall keep a record of its acts and proceedings and make a report thereof from time to time to the Board of Directors.

ARTICLE VIII
Officers

      Section 1. Executive Officers. The officers of the Corporation may consist of a Chairman of the Board of Directors, and shall consist of a President, a Secretary, a Treasurer, and such other officers as may be determined and appointed by the Board of Directors. Officers shall be appointed by the Board of Directors at least annually, at the first meeting of Directors immediately following the annual meeting of shareholders of the Corporation, and shall serve until their successors are appointed and shall qualify. Any two or more offices may be held by the same person.

      Section 2. Duties. The officers of the Corporation shall have the following duties:

      (a) President. The President shall have general and active management of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect, subject, however, to the right of the Board to delegate to others, so far as it lawfully may, any specific powers; and shall, in the absence of the Chairman of the Board, preside at all meetings of the shareholders and of the Board of Directors. The President may appoint such agents as he may deem necessary, who shall hold office during his pleasure, and who shall have such authority and shall perform such duties as from time to time he may prescribe.

      (b) Secretary. The Secretary shall have custody of, and maintain, all of the corporate records except the financial records, shall record the minutes of all meetings of the shareholders and of the Board of Directors, send all notices of meetings, authenticate records of the Corporation and perform such other duties as may be prescribed by the Board of Directors or the President.

      (c) Treasurer. The Treasurer shall have custody of all corporate funds and shall perform such other duties as may be prescribed by the Board of Directors or the President.

      Section 3. Removal of Officers. Any officer or agent appointed by the Board of Directors may be removed by the Board with or without cause, whenever in its judgment the best interests of the Corporation will be served thereby.

      Any vacancy, however occurring, in any office may be filled by the Board of Directors.

      An officer’s removal does not affect the officer’s contract rights, if any, with the Corporation. An officer’s resignation does not affect the Corporation’s contract rights, if any, with the officer. The appointment of an officer does not of itself create contract rights.

- 10 -

ARTICLE IX
Capital Stock

      Section 1. Certificates of Stock. The Board of Directors shall provide for the issue and transfer of the capital stock of the Corporation and prescribe the form of the certificates for such stock.

      Section 2. Form. Certificates representing shares in the Corporation shall be signed (either manually or in facsimile) by the President or Vice President and the Treasurer or an Assistant Treasurer and may be sealed with the seal of the Corporation or a facsimile thereof. In case any officer who signed such certificate, or whose facsimile signature has been placed upon such certificate, shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of its issuance.

      If and to the extent the Corporation is authorized to issue different classes of shares or different series within a class, each certificate representing shares shall state or fairly summarize upon the front or back of the certificate, or shall state conspicuously on its front or back that the Corporation will furnish to any shareholder upon request and without charge a full statement of:

      (a) The designations, preferences, limitations, and relative rights applicable to each class.

      (b) The variations in the relative rights, preferences and limitations determined for each series, and the authority of the Board of Directors to determine the variations for future series.

      Every certificate representing shares which are restricted as to the sale, disposition or other transfer of such shares shall state that such shares are restricted as to transfer and shall set forth or fairly summarize upon the certificate such restrictions, or shall state that the Corporation will furnish to any shareholder upon request and without charge a full statement of such restrictions.

      Each certificate representing shares shall state upon the face thereof: the name of the Corporation; that the Corporation is organized under the laws of the State of Florida; the name of the person or persons to whom issued; the number and class of shares; and the designation of the series, if any, which such certificate represents.

      Section 3. Transfer of Stock. The stock of the Corporation shall be transferable or assignable on the books of the Corporation by the holders in person or by attorney on the surrender of the certificates therefor.

ARTICLE X
Fiscal Year

The fiscal year of the Corporation shall be the calendar year.

ARTICLE XI
Indemnification of Directors, Officers and Employees

      The Corporation shall indemnify any Director, officer, or employee or any former Director, officer, or employee to the full extent permitted by law.

- 11 -

ARTICLE XII
Dividends

      The Board of Directors of the Corporation may, from time to time, declare, and the Corporation may pay, dividends on its shares in cash, property or its own shares, except as prohibited by law, or when contrary to any restrictions contained in corporate indentures, bonds, or other financing agreements.

ARTICLE XIII
Amendment

      Except as provided in Article VIII of the Articles of Incorporation, these Bylaws may be altered, amended or repealed and new Bylaws may be adopted by an affirmative vote of at least two-thirds of the number of Directors constituting the Board of Directors or by an affirmative vote of the holders of at least two-thirds of the outstanding Voting Stock (as defined in Article VIII of the Articles of Incorporation) of the Corporation.

ARTICLE XIV
Gender

      All references herein to the masculine pronoun shall be deemed to include the feminine pronoun.

- 12 - EX-12 3 ex12.htm COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

Exhibit 12

FLORIDA POWER CORPORATION
Statement of Computation of Ratios
(Dollars In millions)

Ratio of Earnings to Fixed Charges:

		Twelve Months Ended				Year Ended
		June 30,				December 31,
		2000		1999		1999		1998
NET INCOME		$	282.1	$	264.5	$	267.0	$	250.1
Add:
	Operating Income Taxes		160.7		146.6		149.1		140.3
	Other Income Taxes		2.6		1.5		2.2		.7
Income Before Taxes			445.4		412.6		418.3		391.1
Total Interest Charges			126.1		127.9		124.0		136.5
Total Earnings (A)		$	571.5	$	540.5	$	542.3	$	527.6
Fixed Charges (B)		$	126.1	$	127.9	$	124.0	$	136.5
Ratio of Earnings to    Fixed Charges (A/B)			4.53		4.23		4.37		3.87

EX-3

ex3

EX-12

ex12

EX-27.(A)

 

<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF FLORIDA PROGRESS CORPORATION FOR THE SIX MONTHS ENDED
JUNE 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.

<MULTIPLIER> 1,000,000
<CIK> 0000357261
<NAME> FLORIDA PROGRESS CORPORATION

                             
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-2000
<PERIOD-END>                               JUN-30-2000
<BOOK-VALUE>                                  PER-BOOK
<TOTAL-NET-UTILITY-PLANT>                        3,581
<OTHER-PROPERTY-AND-INVEST>                      1,141
<TOTAL-CURRENT-ASSETS>                           1,166
<TOTAL-DEFERRED-CHARGES>                           368
<OTHER-ASSETS>                                     390
<TOTAL-ASSETS>                                   6,646
<COMMON>                                         1,274
<CAPITAL-SURPLUS-PAID-IN>                            0
<RETAINED-EARNINGS>                                818
<TOTAL-COMMON-STOCKHOLDERS-EQ>                   2,092
<PREFERRED-MANDATORY>                              300
<PREFERRED>                                         34
<LONG-TERM-DEBT-NET>                             2,132
<SHORT-TERM-NOTES>                                  60
<LONG-TERM-NOTES-PAYABLE>                            0
<COMMERCIAL-PAPER-OBLIGATIONS>                     166
<LONG-TERM-DEBT-CURRENT-PORT>                      188
<PREFERRED-STOCK-CURRENT>                            0
<CAPITAL-LEASE-OBLIGATIONS>                          0
<LEASES-CURRENT>                                     0
<OTHER-ITEMS-CAPITAL-AND-LIAB>                   1,674
<TOT-CAPITALIZATION-AND-LIAB>                    6,646
<GROSS-OPERATING-REVENUE>                        2,044
<INCOME-TAX-EXPENSE>                                 1
<OTHER-OPERATING-EXPENSES>                       1,758
<TOTAL-OPERATING-EXPENSES>                       1,759
<OPERATING-INCOME-LOSS>                            285
<OTHER-INCOME-NET>                                   4
<INCOME-BEFORE-INTEREST-EXPEN>                     289
<TOTAL-INTEREST-EXPENSE>                           102
<NET-INCOME>                                       187
<PREFERRED-STOCK-DIVIDENDS>                          1
<EARNINGS-AVAILABLE-FOR-COMM>                      186
<COMMON-STOCK-DIVIDENDS>                           109
<TOTAL-INTEREST-ON-BONDS>                            0
<CASH-FLOW-OPERATIONS>                             217
<EPS-BASIC>                                       1.89
<EPS-DILUTED>                                     1.89


 

EX-27.(B)

 

<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF FLORIDA POWER CORPORATION FOR THE SIX MONTHS ENDED JUNE
30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.

<MULTIPLIER> 1,000,000
<CIK> 0000037637
<NAME> FLORIDA POWER CORPORATION

                             
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-2000
<PERIOD-END>                               JUN-30-2000
<BOOK-VALUE>                                  PER-BOOK
<TOTAL-NET-UTILITY-PLANT>                        3,581
<OTHER-PROPERTY-AND-INVEST>                        395
<TOTAL-CURRENT-ASSETS>                             597
<TOTAL-DEFERRED-CHARGES>                           368
<OTHER-ASSETS>                                      56
<TOTAL-ASSETS>                                   4,997
<COMMON>                                         1,004
<CAPITAL-SURPLUS-PAID-IN>                            0
<RETAINED-EARNINGS>                                921
<TOTAL-COMMON-STOCKHOLDERS-EQ>                   1,925
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                         34
<LONG-TERM-DEBT-NET>                             1,478
<SHORT-TERM-NOTES>                                   0
<LONG-TERM-NOTES-PAYABLE>                            0
<COMMERCIAL-PAPER-OBLIGATIONS>                     100
<LONG-TERM-DEBT-CURRENT-PORT>                       77
<PREFERRED-STOCK-CURRENT>                            0
<CAPITAL-LEASE-OBLIGATIONS>                          0
<LEASES-CURRENT>                                     0
<OTHER-ITEMS-CAPITAL-AND-LIAB>                   1,383
<TOT-CAPITALIZATION-AND-LIAB>                    4,997
<GROSS-OPERATING-REVENUE>                        1,323
<INCOME-TAX-EXPENSE>                                83
<OTHER-OPERATING-EXPENSES>                       1,034
<TOTAL-OPERATING-EXPENSES>                       1,117
<OPERATING-INCOME-LOSS>                            206
<OTHER-INCOME-NET>                                   2
<INCOME-BEFORE-INTEREST-EXPEN>                     208
<TOTAL-INTEREST-EXPENSE>                            64
<NET-INCOME>                                       144
<PREFERRED-STOCK-DIVIDENDS>                          1
<EARNINGS-AVAILABLE-FOR-COMM>                      143
<COMMON-STOCK-DIVIDENDS>                           103
<TOTAL-INTEREST-ON-BONDS>                            0
<CASH-FLOW-OPERATIONS>                             280
<EPS-BASIC>                                       0.00
<EPS-DILUTED>                                     0.00