UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the plan year ended December 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to .
Commission file number 1-8349
SAVINGS PLAN FOR EMPLOYEES
OF
FLORIDA PROGRESS CORPORATION
Full title plan and the address of the
Plan, if different from that of the issuer named below
FLORIDA PROGRESS CORPORATION
100 Central Avenue
St. Petersburg, Florida 33701
Name of issuer of the securities held pursuant to the
plan and address of its principal executive office
Financial Statements as of and for the
Years ended December 31, 2004 and 2003
SAVINGS PLAN FOR EMPLOYEES OF FLORIDA PROGRESS CORPORATION
TABLE OF CONTENTS
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Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 2004 AND 2003:
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-8
SUPPLEMENTAL SCHEDULE - FORM 5500, SCHEDULE H, PARTI IV, LINE ITEM 4i -
(HELD AT END OF YEAR) AS OF DECEMBER 31, 2004 10
Note: All other schedules required by Section 2520.130-10 of the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 have been omitted because they are not
applicable.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Participants and Administrator of
Savings Plan for Employees of Florida Progress Corporation
We have audited the accompanying statements of net assets available for benefits
of Savings Plan for Employees of Florida Progress Corporation ("the Plan") as of
December 31, 2004 and 2003, and the related statements of changes in net assets
available for benefits for the year ended December 31, 2004. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Plan is not required to have,
nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Plan's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2004 and 2003 and the changes in net assets available for benefits for the year
ended December 31, 2004 in conformity with accounting principles generally
accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule
listed in the Table of Contents as of December 31, 2004 is presented for the
purpose of additional analysis and is not a required part of the basic financial
statements, but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This schedule is the responsibility of
the Plan's management. Such schedule has been subjected to the auditing
procedures applied in our audit of the basic 2004 financial statements and, in
our opinion, is fairly stated in all material respects when considered in
relation to the basic financial statements taken as a whole.
/s/ DELOITTE & TOUCHE LLP
June 27, 2005
SAVINGS PLAN FOR EMPLOYEES OF FLORIDA PROGRESS
CORPORATION
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2004 AND 2003
(In thousands)
- --------------------------------------------------------------------------------
2004 2003
ASSETS:
Participant-directed investments
Registered investment companies:
Goldman Sachs Growth Opportunities Fund $ 25 $ -
American Funds Growth Fund (R5) 1,430 292
Dodge & Cox Stock Fund 5,600 1,125
Fidelity Mid-Cap Stock Fund 29,908 33,016
Vanguard 500 Index Fund 48,496 46,950
Vanguard Extended Market Index Fund 9,330 6,602
Vanguard International Growth Fund 4,162 2,463
Vanguard LifeStrategy Conservative Growth Fund 5,536 4,573
Vanguard LifeStrategy Growth Fund 12,396 10,437
Vanguard LifeStrategy Moderate Growth Fund 14,763 12,852
Vanguard Total Bond Market Index Fund 5,375 5,248
---------- ----------
137,021 123,558
Vanguard Retirement Savings Trust 111,338 113,108
Progress Energy Company Stock Fund 41,403 44,735
Florida Progress CVO Fund 102 207
Participant Loan Fund 7,861 7,991
---------- ----------
Total investments 297,725 289,599
---------- ----------
RECEIVABLES:
Employer's contributions 163 151
Employees' contributions 417 378
---------- ----------
Total receivables 580 529
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $ 298,305 $ 290,128
========== ==========
See notes to financial statements.
2
SAVINGS PLAN FOR EMPLOYEES OF FLORIDA PROGRESS
CORPORATION
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2004
(In thousands)
- ------------------------------------------------------------------------------
2004
ADDITIONS:
Investment income:
Interest and dividend income--investments $ 8,674
Interest income, participant loans 423
Net appreciation in fair value of investments 11,156
---------
Total investment income 20,253
---------
Contributions:
Employer contributions 4,058
Participant contributions 10,500
---------
Total contributions 14,558
---------
Total additions 34,811
---------
DEDUCTIONS:
Payment of benefits 26,594
Administrative expenses 40
---------
Total deductions 26,634
---------
NET INCREASE 8,177
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of period 290,128
---------
End of period $ 298,305
=========
See notes to financial statements.
3
SAVINGS PLAN FOR EMPLOYEES OF FLORIDA PROGRESS CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004 AND 2003
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1. DESCRIPTION OF PLAN
The following description of the Savings Plan for Employees of Florida
Progress Corporation (the "Plan") provides only general information.
Participants should refer to the Savings Plan Summary Plan
Description/Prospectus, as amended, which is part of the Employee Handbook
and the "Plan Highlights" booklet, which is part of the enrollment package
from The Vanguard Group, Inc., the record keeper for the Plan ("Vanguard")
for more complete descriptions of the Plan's provisions.
General--The Plan is a qualified defined contribution plan subject to the
provisions of the Employee Retirement Income Security Act of 1974
("ERISA"). The Plan provides for bargaining unit employees of Progress
Energy Florida, Inc. (the "Company"), a wholly owned subsidiary of Florida
Progress Corporation, immediate eligibility upon employment for making
employee contributions (either pre-tax or after-tax). Employees become
eligible to receive matching employer contributions on employee
contributions made after completing at least six months of uninterrupted
employment or having worked at least 1,000 hours in a twelve-month period.
Participation in the Plan is voluntary.
As of January 1, 2003, Florida Power Corporation began doing business under
the assumed name Progress Energy Florida, Inc.
Contributions--Each year, eligible employees may elect to contribute from
1% to 20% of their annual base pay and may designate these contributions as
either regular savings after-tax and/or 401(k) pretax dollars. The Company
contributes each pay period an amount equal to 75% of the employees'
contributions, up to 6% of base pay, for those eligible to receive Company
contributions.
Participants Accounts-- Individual accounts are maintained for each plan
participant. Each participant's account is credited with the participant
contributions, the Company's contributions, plan earnings and charged with
withdrawals, allocations of plan losses and administrative expenses.
Allocations are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the benefit that
can be provided from the participant's vested account.
Investments - Participants direct the investment of their contributions
into various investment options offered by the Plan. The Plan currently
offers eleven registered investment companies, one common trust fund and
one Company stock fund as investment options for participants.
4
Vesting--Participants are vested immediately in their regular savings and
401(k) contributions and earnings thereon. The Company match account and
the earnings thereon vest gradually based on the following Years of
Continuous Service schedule:
Vested
Years of Continuous Service Percentage
Less than two 0 %
Two but less than three 25
Three but less than four 50
Four but less than five 75
Five or more 100
A year of continuous service is earned when a participant works at least
1,000 hours in a calendar year. A participant will also become fully vested
in the employer contributions and earnings thereon upon death, disability,
attainment of normal retirement or termination of the Plan.
Effective January 1, 2002, a participant shall be 100% vested in all
dividends earned on amounts invested in the Company Stock Fund. Dividends
not distributed in cash to the participant shall be invested in Progress
Energy Company stock in the Company Stock Fund.
Participant Loans--All actively employed Plan participants with available
account balances may apply for a loan from their own Plan account. No loan
shall exceed the lesser of $50,000 or one-half of the participant's vested
Plan account balance. This amount will be transferred from the
participant's account and placed in a separate Participant Loan fund. A
participant is permitted a maximum of four outstanding loans at any one
time. Each new loan shall bear a fixed rate of interest, as determined on a
quarterly basis, using a comparison of the current prime rate against the
Florida Saving Certificate of Deposit rate as published in The Wall Street
Journal, rounded up to the next quarter point and taking the higher of the
two rates. Based on this method of determining the interest rate for the
initiation of new loans each quarter, there are outstanding loans with
interest rates ranging from 4.25% to 9.5% as of December 31, 2004. Interest
charged on employee loans is credited to the individual participant
accounts.
A participant can choose repayment terms on a new loan ranging from 6 to 60
months. Repayments are made via payroll deduction for active regular
employees, by automated Clearing House Payment for active non-regular
employees and by direct payment to the Plan for inactive participants.
Additionally, participants can elect to prepay all or a portion of their
outstanding loan balance at any time during the term of the loan.
Repayments are returned to each participant account (reducing the
outstanding Participant Loan Fund balance). Excess loan repayments of
principal and interest over new loans issued during the year are reflected
as interfund transfers for reinvestment to the respective investment funds.
New loans are reflected as transfers out of the investment funds to the
Participant Loan Fund.
Payment of Benefits--Upon separation of service due to termination, death,
disability or retirement, participants may leave their account balance
within the Plan if their vested balance is greater than $5,000, elect to
receive a lump-sum amount equal to the value of their account balance, or
select from a menu of installment payment options. Although no further
employee contribution or partial withdrawals are allowed, terminated or
retired employees may continue to exchange amounts among the investment
options.
5
An active participant can apply for a hardship withdrawal from the
before-tax savings of their account within the limits specified by the
Internal Revenue Service ("IRS"). A participant must satisfy the
requirements in the plan document as to the hardship in order to obtain the
withdrawal. The amount of the withdrawal cannot exceed the amount of
employee contributions.
Forfeited Accounts--Forfeitures of non-vested employer contributions by
terminated participants may be used to reduce employer matching
contributions. The value of forfeitures of non-vested employer
contributions were $489,752 and $432,229, respectively, at December 31,
2004 and 2003. In 2004 and 2003, $878 and $100,000 respectively, of
forfeited non-vested employer contributions were used to offset company
contributions.
Plan Termination--It is the intention of the Plan Sponsor that the Plan
continue in operation; however, the Company has the right to amend the
Plan, discontinue its contributions at any time, and/or to terminate the
Plan subject to the provisions of ERISA and the Bargaining Unit's
Memorandum of the Agreement. In the event of Plan termination, participants
will become 100% vested in their accounts.
2. SUMMARY OF ACCOUNTING POLICIES
The following accounting policies, which conform to accounting principles
generally accepted in the United States of America, have been used
consistently in the preparation of the Plan's financial statements:
Basis of Accounting--The financial statements of the Plan are prepared
under the accrual method of accounting.
Use of Estimates--The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires plan management to make estimates and assumptions that
affect the reported amounts of net assets available for benefits and
changes therein. Actual results could differ from those estimates. The Plan
utilizes various investment instruments. Investment securities, in general,
are exposed to various risks, such as interest rate, credit, and overall
market volatility. Due to the level of risk associated with certain
investment securities, it is reasonably possible that changes in the values
of investment securities will occur in the near term and that such changes
could materially affect the amounts reported in the financial statements.
Investment Valuation and Income Recognition--The Plan's investments are
stated at fair value. Shares of registered investment companies are value
at quoted market prices, which represent the net asset value of shares held
by the Plan at year-end. The Progress Energy Company Stock Fund and the
Contingent Value Obligation ("CVO") Fund are valued at their year-end unit
closing prices (constituting market value of shares owned or CVOs,
respectively, plus uninvested cash position). Progress Energy Company
common stock is valued at its closing market price as of the end of the
day. CVOs are valued at their last traded price which management believes
is an estimate of their fair value at the valuation date. CVOs do not trade
frequently. Therefore, the values presented are not necessarily indicative
of what the Plan could have recognized if CVOs were traded on the valuation
date. Participant loans are valued at cost, which approximates fair value.
Purchases and sales of investments are recorded on a trade-date basis.
Interest income is accrued when earned. Dividend income is recorded on the
ex-dividend date.
6
Management fees and operating expenses charged to the Plan for investment
in the mutual funds and common trust fund are deducted from income earned
on a daily basis and are not separately reflected. Consequently, management
fees and operating expenses are reflected as a reduction fo investment
return for such services.
Capital gain distributions are included in dividend income. When Progress
Energy Company common stock is distributed from the Progress Energy Company
Stock Fund to participants in settlement of their accounts, distributions
are recorded at the value of shares distributed.
Plan Expenses-- Plan expenses include trustee, audit, and investment
management fees as well as any other reasonable fees or expenses incurred
for the administration of the Plan and Trust. Plan expenses are paid by the
Plan to the extent not paid by the Company.
3. INVESTMENTS
The Plan's investments that represented 5% or more of the Plan's net assets
available for benefits as of December 31, 2004 and 2003 are as follows (in
thousands):
2004 2003
Fidelity Mid-Cap Stock Fund, 1,275,377 and 1,530,627
shares respectively $ 29,908 $ 33,016
Vanguard 500 Index Fund, 434,394 and 457,294
shares respectively 48,496 46,950
Vanguard Retirement Savings Trust, 111,338,277 and 113,107,474
units respectively 111,338 113,108
Progress Energy Company Stock Fund, 915,193 and 988,410
shares respectively 41,403 44,735
During 2004, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
in value as follows (in thousands):
2004
Registered investment companies $ 11,132
Common stock 24
---------
Net appreciation in fair value of investments $ 11,156
=========
4. RELATED PARTY TRANSACTIONS
An affiliate of Vanguard Fiduciary Trust Company ("VFTC") manages certain
Plan investments. VFTC is the trustee as defined by the Plan and therefore
these transactions qualify as party-in-interest transactions. Fees paid by
the Plan for investment management services were included as a reduction of
the return earned on each fund.
7
Pursuant to an acquisition of Florida Progress by Progress Energy, Inc
("Progress Energy") during 2000, participants with investments in the
Florida Progress Stock Fund were given the option of either cashing in
their investments or exchanging their existing Florida Progress Stock Fund
shares for shares of the Progress Energy Company Stock Fund and cash. In
addition, Florida Progress Stock Fund shareholders received shares of the
Florida Progress CVO Fund. The CVO Fund invests in contingent value
obligations, each of which represents the right to receive contingent
payments based on the performance of four synthetic fuel facilities owned
by Progress Energy. While the Plan does not allow additional contributions
to the CVO Fund, participants are permitted to withdraw or exchange out all
or a portion of their account balance in accordance with applicable Plan
Provisions.
U.S. Trust Company, National Association ("U.S. Trust") serves as an
independent fiduciary of the CVO Fund. Among other responsibilities, U.S.
Trust instructs VFTC as to the management and dispositions of the CVO Fund.
Transactions in the CVO Fund qualify as party-in-interest transactions.
During 2000, the Plan was informed by legal counsel that the establishment
of the CVO Fund represented a prohibited transaction in accordance with
ERISA. The plan was granted a prohibited transaction exemption by the
United States Department of Labor by a letter dated October 22, 2001.
5. PLAN TERMINATION
Although it has not expressed any intention to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provision set forth in ERISA. In the
event that the Plan is terminated, participants would become 100% vested in
their accounts.
6. TAX STATUS
The IRS has determined and informed the Company by letter dated July 23,
2002, that the Plan is qualified under Internal Revenue Code ("IRC")
Section 401(a). Although the Plan has subsequently been amended since
receiving the determination letter, the Company believes that the Plan is
designed and is currently being operated in compliance with the applicable
requirements of the IRC. Therefore, it is believed that the Plan was
qualified and the related trust was tax-exempt as of the financial
statement date. As such, no provisions for income taxes have been included
in the Plan's financial statements.
******
8
SUPPLEMENTAL SCHEDULE OF SELECTED FINANCIAL DATA
SAVINGS PLAN FOR EMPLOYEES OF FLORIDA PROGRESS
CORPORATION
FORM 5500, SCHEDULE H, PART IV, LINE 4i - SCHEDULE OF ASSETS
(HELD AT END OF YEAR)
DECEMBER 31, 2004
- --------------------------------------------------------------------------------
Description of Investment, Including
Maturity Date, Rate of Interest,
Identity of Issue, Borrower, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Value
Goldman Sachs Growth Opportunities Fund Registered Investment Company ** $ 25
American Funds Growth Fund (R5) Registered Investment Company ** 1,430
Dodge & Cox Stock Fund Registered Investment Company ** 5,600
Fidelity MidCap Stock Fund Registered Investment Company ** 29,908
* Vanguard 500 Index Fund Registered Investment Company ** 48,496
* Vanguard Extended Market Index Fund Registered Investment Company ** 9,330
* Vanguard International Growth Fund Registered Investment Company ** 4,162
* Vanguard LifeStrategy Conservative Growth Fund Registered Investment Company ** 5,536
* Vanguard LifeStrategy Growth Fund Registered Investment Company ** 12,396
* Vanguard LifeStrategy Moderate Growth Fund Registered Investment Company ** 14,763
* Vanguard Total Bond Market Index Fund Registered Investment Company ** 5,375
* Vanguard Retirement Savings Trust Common/Collective Trust ** 111,338
* Progress Energy Stock Fund Company Stock Fund ** 41,403
* Florida Progress CVO Fund Company Stock Fund ** 102
* Various participants Participant loans (maturing
2005 to 2009 at interest
rates of 4.25% - 9.50%) ** 7,861
---------
Total Assets Held for Investment Purposes $ 297,725
=========
* Party-in-Interest
** Cost data omitted with respect to participant or beneficiary directed
transactions under an individual account plan.
10
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Savings Plan for Employees of Florida Progress Corporation Plan
Administrative Committee has duly caused this Annual Report to be signed on its
behalf by the undersigned hereunto duly authorized.
SAVINGS PLAN FOR EMPLOYEES OF
FLORIDA PROGRESS CORPORATION
ADMINISTRATIVE COMMITTEE
/s/ Masceo S. DesChamps, Secretary
----------------------------------
Masceo S. DesChamps, Secretary
Savings Plan for Employees of
Florida Progress Corporation
Administrative Committee
Date: June 28, 2005
11
EXHIBITS INDEX
Exhibit Number
Exhibit No. 23 Consent of Report of Independent Registered Public Accounting
Firm
12
Exhibit No. 23
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No.
333-52328 on Form S-8 of our report dated June 27, 2005 appearing in the Annual
Report on Form 11-K of the Savings Plan for Employees of Florida Progress
Corporation for the year ended December 31, 2004.
/s/ DELOITTE & TOUCHE LLP
Raleigh, North Carolina
June 27, 2005