SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K ANNUAL REPORT (Mark One) [x] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the fiscal year ended December 31, 1997 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 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: SAVINGS PLAN FOR EMPLOYEES OF FLORIDA PROGRESS CORPORATION 263 13th Avenue South St. Petersburg, Florida 33701-5511 B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: FLORIDA PROGRESS CORPORATION One Progress Plaza St. Petersburg, Florida 33701 REQUIRED INFORMATION The following financial statements for the plan are being furnished herewith: Report of independent certified public accountant. Audited statements of assets available for benefits as of December 31, 1997 and 1996, prepared in accordance with the applicable provisions of Article 6A of Regulation S-X. Audited statements of changes in assets available for benefits for the years ended December 31, 1997, and 1996, prepared in accordance with the applicable provisions of Article 6A of Regulation S-X. Notes to financial statements. Schedules of Assets held for investment purposes as of December 31, 1997. Schedule of reportable 5% transactions for the year ended December 31, 1997. Report of Independent Certified Public Accountants To the Investment Committee of the Savings Plan for Employees of Florida Progress Corporation In our opinion, the accompanying statement of assets available for benefits and the related statement of changes in assets available for benefits present fairly, in all material respects, the assets available for benefits of the Savings Plan for Employees of Florida Progress Corporation at December 31, 1997 and 1996, and the changes in assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Investment Committee; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by the Plan's management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information included in Schedules I and II is presented for purposes of additional analysis and is not a required part of the basic financial statements, but is additional information required by ERISA. The Fund Information in the statement of assets available for benefits and the statement of changes in assets available for benefits is presented for purposes of additional analysis rather than to present the assets available for plan benefits and changes in assets available for benefits for each fund. Schedules I and II and the Fund Information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Price Waterhouse LLP - ----------------------- Price Waterhouse LLP Tampa, Florida May 19, 1998 Savings Plan for Employees of Page 1 of 4 Florida Progress Corporation Statement of Assets Available for Benefits December 31, 1997 and 1996 (in thousands) - ------------------------------------------------------------------------------------------------------------------------------ 1997 --------------------------------------------------------------------------------------------- Extended Market Index Indexed Company Stable Aggressive Indexed Equity Equity Stock Value Equity Bond Assets Total Fund Fund Fund Fund Fund Fund Investments Extended Market Index Equity Fund - (cost - $1,851 and $0 in 1997 and 1996, respectively) $ 1,784 $ 1,784 $ - $ - $ - $ - $ - Indexed Equity Fund - (cost - $81,294 and $50,600 in 1997 and 1996, respectively)* 99,750 - 99,750 - - - - Company Stock Fund - (cost - $67,440 and $86,997 in 1997 and 1996, respectively)* 115,105 - - 115,105 - - - Stable Value Fund - (cost - $94,476 and $98,398 in 1997 and 1996, respectively)* 94,476 - - - 94,476 - Aggressive Equity Fund - (cost - $55,811 and $51,208 in 1997 and 1996, respectively)* 63,737 - - - - 63,737 - Indexed Bond Fund - (cost - $3,112 and $250 in 1997 and 1996, respectively) 3,161 - - - - - 3,161 International Growth Fund - (cost - $5,616 and $630 in 1997 and 1996, respectively) 5,239 - - - - - - Balanced Conservative Fund - (cost - $5,440 and $1,069 in 1997 and 1996, respectively) 5,635 - - - - - - Balanced Moderate Fund - (cost - $28,423 and $17,570 in 1997 and 1996, respectively)* 30,861 - - - - - - Balanced Growth Fund - (cost - $11,565 and $2,288 in 1997 and 1996, respectively) 12,475 - - - - - - Echelon Stock Fund - (cost - $1,493 and $2,339 in 1997 and 1996, respectively) 3,860 - - - - - - Loan Fund - (cost - $19,228 and $18,497 in 1997 and 1996, respectively) 19,228 - - - - - - -------------- ------------- ------------- ----------- ---------- ------------ ----------- 455,311 1,784 99,750 115,105 94,476 63,737 3,161 Cash - Administrative working funds 326 - - 326 - - - Member and company contributions receivable - - - - - - - -------------- ------------- ------------- ----------- ---------- ------------ ----------- Total assets 455,637 1,784 99,750 115,431 94,476 63,737 3,161 -------------- ------------- ------------- ----------- ---------- ------------ ----------- Assets available for benefits $ 455,637 $ 1,784 $ 99,750 $ 115,431 $94,476 $ 63,737 $ 3,161 ============== ============= ============= =========== ========== ============ =========== * Represents 5% or more of assets available for benefits. The accompanying Notes to Financial Statements are an integral part of these financial statements. - 2 - Savings Plan for Employees of Page 2 of 4 Florida Progress Corporation Statement of Assets Available for Benefits December 31, 1997 and 1996 (in thousands) - ---------------------------------------------------------------------------------------------------------------------- 1997 -------------------------------------------------------------------------------- International Balanced Balanced Balanced Echelon Growth Conservative Moderate Growth Stock Loan Assets Fund Fund Fund Fund Fund Fund Investments Extended Market Index Equity Fund - (cost - $1,851 and $0 in 1997 and 1996, respectively) $ - $ - $ - $ - $ - $ - Indexed Equity Fund - (cost - $81,294 and $50,600 in 1997 and 1996, respectively)* - - - - - - Company Stock Fund - (cost - $67,440 and $86,997 in 1997 and 1996, respectively)* - - - - - - Stable Value Fund - (cost - $94,476 and $98,398 in 1997 and 1996, respectively)* - - - - - - Aggressive Equity Fund - (cost - $55,811 and $51,208 in 1997 and 1996, respectively)* - - - - - - Indexed Bond Fund - (cost - $3,112 and $250 in 1997 and 1996, respectively) - - - - - - International Growth Fund - (cost - $5,616 and $630 in 1997 and 1996, respectively) 5,239 - - - - - Balanced Conservative Fund - (cost - $5,440 and $1,069 in 1997 and 1996, respectively) - 5,635 - - - - Balanced Moderate Fund - (cost - $28,423 and $17,570 in 1997 and 1996, respectively)* - - 30,861 - - - Balanced Growth Fund - (cost - $11,565 and $2,288 in 1997 and 1996, respectively) - - - 12,475 - - Echelon Stock Fund - (cost - $1,493 and $2,339 in 1997 and 1996, respectively) - - - - 3,860 - Loan Fund - (cost - $19,228 and $18,497 in 1997 and 1996, respectively) - - - - - 19,228 --------------- -------------- ----------- ------------ ------------ ----------- 5,239 5,635 30,861 12,475 3,860 19,228 Cash - Administrative working funds - - - - - - Member and company contributions receivable - - - - - - --------------- -------------- ----------- ------------ ------------ ----------- Total assets 5,239 5,635 30,861 12,475 3,860 19,228 --------------- -------------- ----------- ------------ ------------ ----------- Assets available for benefits $ 5,239 $ 5,635 $ 30,861 $ 12,475 $ 3,860 $19,228 =============== ============== =========== ============ ============ =========== * Represents 5% or more of assets available for benefits. The accompanying Notes to Financial Statements are an integral part of these financial statements. - 3 - Savings Plan for Employees of Page 3 of 4 Florida Progress Corporation Statement of Assets Available for Benefits December 31, 1997 and 1996 (in thousands) - ------------------------------------------------------------------------------------------------------------------- 1996 ----------------------------------------------------------------------------------- Indexed Company Stable Aggressive Indexed Equity Stock Value Equity Bond Assets Total Fund Fund Fund Fund Fund Investments Indexed Equity Fund - (cost - $81,294 and $50,600 in 1997 and 1996, respectively)* $ 52,513 $ 52,513 $ - $ - $ - $ - Company Stock Fund - (cost - $67,440 and $86,997 in 1997 and 1996, respectively)* 133,047 - 133,047 - - - Stable Value Fund - (cost - $94,476 and $98,398 in 1997 and 1996, respectively)* 98,398 - - 98,398 - - Aggressive Equity Fund - (cost - $55,811 and $51,208 in 1997 and 1996, respectively)* 49,997 - - - 49,997 - Indexed Bond Fund - (cost - $3,112 and $250 in 1997 and 1996, respectively 250 - - - - 250 International Growth Fund - (cost - $5,616 and $630 in 1997 and 1996, respectively) 625 - - - - - Balanced Conservative Fund - (cost - $5,440 and $1,069 in 1997 and 1996, respectively) 1,051 - - - - - Balanced Moderate Fund - (cost - $28,423 and $17,570 in 1997 and 1996, respectively) 17,415 - - - - - Balanced Growth Fund - (cost - $11,565 and $2,288 in 1997 and 1996, respectively) 2,243 - - - - - Echelon Stock Fund - (cost - $1,493 and $2,339 in 1997 and 1996, respectively) 4,246 - - - - - Loan Fund - (cost - $19,228 and $18,497 in 1997 and 1996, respectively) 18,497 - - - - - ------------- ------------ ------------ ------------ ------------ ------------ 378,282 52,513 133,047 98,398 49,997 250 Cash - Administrative working funds 115 - 115 - - - Members and company contributions receivable 1,090 211 179 279 284 4 ------------- ------------ ------------ ------------ ------------ ------------ Total assets 379,487 52,724 133,341 98,677 50,281 254 ------------- ------------ ------------ ------------ ------------ ------------ Assets available for benefits $ 379,487 $ 52,724 $ 133,341 $ 98,677 $ 50,281 $ 254 ============= ============ ============ ============ ============ ============ *Represents 5% or more of assets available for benefits. The accompanying Notes to Financial Statements are an integral part of these financial statements. - 4 - Savings Plan for Employees of Page 4 of 4 Florida Progress Corporation Statement of Assets Available for Benefits December 31, 1997 and 1996 (in thousands) - --------------------------------------------------------------------------------------------------------------------- 1996 ------------------------------------------------------------------------------------ International Balanced Balanced Balanced Echelon Growth Conservative Moderate Growth Stock Loan Assets Fund Fund Fund Fund Fund Fund Investments Indexed Equity Fund - (cost - $81,294 and $50,600 in 1997 and 1996, respectively)* $ - $ - $ - $ - $ - $ - Company Stock Fund - (cost - $67,440 and $86,997 in 1997 and 1996, respectively)* - - - - - - Stable Value Fund - (cost - $94,476 and $98,398 in 1997 and 1996, respectively)* - - - - - - Aggressive Equity Fund - (cost - $55,811 and $51,208 in 1997 and 1996, respectively)* - - - - - - Indexed Bond Fund - (cost - $3,112 and $250 in 1997 and 1996, respectively) - - - - - - International Growth Fund - (cost - $5,616 and $630 in 1997 and 1996, respectively) 625 - - - - - Balanced Conservative Fund - (cost - $5,440 and $1,069 in 1997 and 1996, respectively) - 1,051 - - - - Balanced Moderate Fund - (cost - $28,423 and $17,570 in 1997 and 1996, respectively) - - 17,415 - - - Balanced Growth Fund - (cost - $11,565 and $2,288 in 1997 and 1996, respectively) - - - 2,243 - - Echelon Stock Fund - (cost - $1,493 and $2,339 in 1997 and 1996, respectively) - - - - 4,246 - Loan Fund - (cost - $19,228 and $18,497 in 1997 and 1996, respectively) - - - - - 18,497 --------------- ------------ ------------ ----------- ------------- ------------ 625 1,051 17,415 2,243 4,246 18,497 Cash - Administrative working funds - - - - - - Members and company contributions receivable 16 7 73 37 - - --------------- ------------ ------------ ----------- ------------- ------------ Total assets 641 1,058 17,488 2,280 4,246 18,497 --------------- ------------ ------------ ----------- ------------- ------------ Assets available for benefits $ 641 $ 1,058 $ 17,488 $ 2,280 $ 4,246 $18,497 =============== ============ ============ =========== ============= ============ * Represents 5% or more of assets available for benefits. The accompanying Notes to Financial Statements are an integral part of these financial statements. - 5 - Savings Plan for Employees of Page 1 of 5 Florida Progress Corporation Statement of Changes in Assets Available for Benefits For the Years Ended December 31, 1997 and 1996 (in thousands) - ------------------------------------------------------------------------------------------------------------------ 1997 -------------------------------------------------------------------- Extended Market Index Indexed Company Stable Equity Equity Stock Value Total Fund Fund Fund Fund Investment income - Interest and dividends $ 19,611 $ 98 $ 1,953 $ 6,764 $ 5,327 ----------- -------------- ------------ ------------ ---------- Total investment income 19,611 98 1,953 6,764 5,327 ----------- -------------- ------------ ------------ ---------- Net investment gains (losses) - Realized gains (losses) on investments 23,600 (9) 3,358 17,465 - Unrealized appreciation (depreciation) of investment 31,508 (67) 16,565 1,978 - ----------- -------------- ------------ ------------ ---------- Total net investment gains (losses) 55,108 (76) 19,923 19,443 - ----------- -------------- ------------ ------------ ---------- Contributions - Members 20,500 52 4,800 2,870 4,143 Company, net of forfeitures 8,848 17 1,973 1,287 2,021 ----------- -------------- ------------ ------------ ---------- Total contributions 29,348 69 6,773 4,157 6,164 ----------- -------------- ------------ ------------ ---------- Withdrawals and expenses - Members' withdrawals 27,904 14 3,928 8,405 9,701 Administrative expenses 13 6 - 7 - ----------- -------------- ------------ ------------ ---------- Total withdrawals and expenses 27,917 20 3,928 8,412 9,701 ----------- -------------- ------------ ------------ ---------- Net change during the year prior to interfund transfers 76,150 71 24,721 21,952 1,790 Interfund transfers - 1,713 22,305 (39,862) (5,991) ----------- -------------- ------------ ------------ ---------- Net change during the year 76,150 1,784 47,026 (17,910) (4,201) Assets available for benefits - Beginning of year 379,487 - 52,724 133,341 98,677 ----------- -------------- ------------ ------------ ---------- End of year $ 455,637 $ 1,784 $ 99,750 $ 115,431 $ 94,476 =========== ============== ============ ============ ========== The accompanying Notes to Financial Statements are an integral part of these financial statements. - 6 - Savings Plan for Employees of Page 2 of 5 Florida Progress Corporation Statement of Changes in Assets Available for Benefits For the Years Ended December 31, 1997 and 1996 (in thousands) - ------------------------------------------------------------------------------------------------------------------ 1997 ---------------------------------------------------------------- Aggressive Indexed International Balanced Equity Bond Growth Conservative Fund Fund Fund Fund Investment income - Interest and dividends $ 1,499 $ 99 $ 220 $ 259 -------------- --------------- --------------- -------------- Total investment income 1,499 99 220 259 -------------- --------------- --------------- -------------- Net investment gains (losses) - Realized gains (losses) on investments 898 6 48 70 Unrealized appreciation (depreciation) of investment 9,131 49 (371) 214 -------------- --------------- --------------- -------------- Total net investment gains (losses) 10,029 55 (323) 284 -------------- --------------- --------------- -------------- Contributions - Members 5,125 150 536 222 Company, net of forfeitures 2,182 48 204 81 -------------- --------------- --------------- -------------- Total contributions 7,307 198 740 303 -------------- --------------- --------------- -------------- Withdrawals and expenses - Members' withdrawals 2,896 108 176 289 Administrative expenses - - - - -------------- --------------- --------------- -------------- Total withdrawals and expenses 2,896 108 176 289 -------------- --------------- --------------- -------------- Net change during the year prior to interfund transfers 15,939 244 461 557 Interfund transfers (2,483) 2,663 4,137 4,020 -------------- --------------- --------------- -------------- Net change during the year 13,456 2,907 4,598 4,577 Assets available for benefits - Beginning of year 50,281 254 641 1,058 -------------- --------------- --------------- -------------- End of year $ 63,737 $ 3,161 $ 5,239 $ 5,635 ============== =============== =============== ============== The accompanying Notes to Financial Statements are an integral part of these financial statements - 7 - Savings Plan for Employees of Page 3 of 5 Florida Progress Corporation Statement of Changes in Assets Available for Benefits For the Years Ended December 31, 1997 and 1996 (in thousands) - ---------------------------------------------------------------------------------------------------------------------- 1997 ------------------------------------------------------------------- Balanced Balanced Echelon Moderate Growth Stock Loan Fund Fund Fund Fund Investment income - Interest and dividends $ 1,346 $ 489 $ - $ 1,557 --------------- --------------- ---------------- -------------- Total investment income 1,346 489 - 1,557 --------------- --------------- ---------------- -------------- Net investment gains (losses) - Realized gains (losses) on investments 377 217 1,170 - Unrealized appreciation (depreciation) of investment 2,593 956 460 - --------------- --------------- ---------------- -------------- Total net investment gains (losses) 2,970 1,173 1,630 - --------------- --------------- ---------------- -------------- Contributions - Members 1,653 949 - - Company, net of forfeitures 635 400 - - --------------- --------------- ---------------- -------------- Total contributions 2,288 1,349 - - --------------- --------------- ---------------- -------------- Withdrawals and expenses - Members' withdrawals 998 662 268 459 Administrative expenses - - - - --------------- --------------- ---------------- -------------- Total withdrawals and expenses 998 662 268 459 --------------- --------------- ---------------- -------------- Net change during the year prior to interfund transfers 5,606 2,349 1,362 1,098 Interfund transfers 7,767 7,846 (1,748) (367) --------------- --------------- ---------------- -------------- Net change during the year 13,373 10,195 (386) 731 Assets available for benefits - Beginning of year 17,488 2,280 4,246 18,497 --------------- --------------- ---------------- -------------- End of year $ 30,861 $ 12,475 $ 3,860 $ 19,228 =============== =============== ================ ============== The accompanying Notes to Financial Statements are an integral part of these financial statements - 8 - Savings Plan for Employees of Page 4 of 5 Florida Progress Corporation Statement of Changes in Assets Available for Benefits For the Years Ended December 31, 1997 and 1996 (in thousands) - ------------------------------------------------------------------------------------------------------------------ 1996 ------------------------------------------------------------------------------- Indexed Company Stable Aggressive Indexed Equity Stock Value Equity Bond Total Fund Fund Fund Fund Fund Investment income - Interest and dividends $ 18,060 $ 1,427 $ 8,628 $ 5,581 $ 395 $ 1 ------------ ----------- ----------- ----------- ----------- --------- Total investment income 18,060 1,427 8,628 5,581 395 1 ------------ ----------- ----------- ----------- ----------- --------- Net investment gains (losses) - Realized gains (losses) on investments 46,825 18,754 8,341 - 16,066 - Unrealized appreciation (depreciation) of investment (43,347) (10,985) (19,038) - (12,604) - ------------ ----------- ----------- ----------- ----------- --------- Total net investment gains (losses) 3,478 7,769 (10,697) - 3,462 - ------------ ----------- ----------- ----------- ----------- --------- Contributions Members 17,404 2,494 3,766 5,196 4,760 2 Company, net of forfeitures 8,257 1,192 1,840 2,573 2,074 5 ------------ ----------- ----------- ----------- ----------- --------- Total contributions 25,661 3,686 5,606 7,769 6,834 7 ------------ ----------- ----------- ----------- ----------- --------- Withdrawals and expenses - Members' withdrawals 31,195 2,671 13,843 10,569 2,410 1 Administrative expenses 71 1 65 3 2 - ------------ ----------- ----------- ----------- ----------- --------- Total withdrawals and expenses 31,266 2,672 13,908 10,572 2,412 1 ------------ ----------- ----------- ----------- ----------- --------- Net change during the year prior to interfund transfers 15,933 10,210 (10,371) 2,778 8,279 7 Interfund transfers - 3,948 (11,733) (6,125) 5,365 247 ------------ ----------- ----------- ----------- ----------- --------- Net change during the year 15,933 14,158 (22,104) (3,347) 13,644 254 Assets available for benefits - Beginning of year 363,554 38,566 155,445 102,024 36,637 - ------------ ----------- ----------- ----------- ----------- --------- End of year $ 379,487 $ 52,724 $ 133,341 $ 98,677 $ 50,281 $ 254 ============ =========== =========== =========== =========== ========= The accompanying Notes to Financial Statements are an integral part of these financial statements. - 9 - Savings Plan for Employees of Page 5 of 5 Florida Progress Corporation Statement of Changes in Assets Available for Benefits For the Years Ended December 31, 1997 and 1996 (in thousands) - ------------------------------------------------------------------------------------------------------------------------ 1996 ---------------------------------------------------------------------------------- International Balanced Balanced Balanced Echelon Growth Conservative Moderate Growth Stock Loan Fund Fund Fund Fund Fund Fund Investment income - Interest and dividends $ 17 $ 19 $ 637 $ 55 $ - $ 1,300 -------------- ------------- ----------- ----------- ---------- ---------- Total investment income 17 19 637 55 - 1,300 -------------- ------------- ----------- ----------- ---------- ---------- Net investment gains (losses) - Realized gains (losses) on investments - - 3,664 - - - Unrealized appreciation (depreciation) of investment (5) (18) (2,559) (45) 1,907 - -------------- ------------- ----------- ----------- ---------- ---------- Total net investment gains (losses) (5) (18) 1,105 (45) 1,907 - -------------- ------------- ----------- ----------- ---------- ---------- Contributions - Members 8 3 1,156 19 - - Company, net of forfeitures 19 9 500 45 - - -------------- ------------- ----------- ----------- ---------- ---------- Total contributions 27 12 1,656 64 - - -------------- ------------- ----------- ----------- ---------- ---------- Withdrawals and expenses - Members' withdrawals - - 995 2 - 704 Administrative expenses - - - - - - -------------- ------------- ----------- ----------- ---------- ---------- Total withdrawals and expenses - - 995 2 - 704 -------------- ------------- ----------- ----------- ---------- ---------- Net change during the year prior to interfund transfers 39 13 2,403 72 1,907 596 Interfund transfers 602 1,045 2,328 2,208 2,339 (224) -------------- ------------- ----------- ----------- ---------- ---------- Net change during the year 641 1,058 4,731 2,280 4,246 372 Assets available for benefits - Beginning of year - - 12,757 - - 18,125 -------------- ------------- ----------- ----------- ---------- ---------- End of year $ 641 $ 1,058 $ 17,488 $ 2,280 $ 4,246 $ 18,497 ============== ============= =========== =========== ========== ========== The accompanying Notes to Financial Statements are an integral part of these financial statements. - 10 - Savings Plan for Employees of Florida Progress Corporation Notes to Financial Statements (Dollar amounts in thousands) - -------------------------------------------------------------------------------- 1. Description of Plan and Summary of Accounting Policies: The following description of the Savings Plan for Employees of Florida Progress Corporation (Plan or Savings Plan) provides only general information. Participants should refer to the Savings Plan Summary Plan Description/Prospectus, as amended, which is part of the "You & Your Company: A Strategic Partnership" employee handbook and the "About Your Plan" booklet, which is part of the "The Power to Plan Your Future" package from The Vanguard Group, Inc. for more complete descriptions of the Plan's provisions. The Plan is a qualified defined contribution plan subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). An employee of the Participating Companies (as defined below) is eligible to participate in the Plan if he or she has completed at least six months of uninterrupted employment or worked at least 1,000 hours in a twelve-month period. Participation in the Plan is voluntary. Effective April 1, 1998, the Plan was amended to provide 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. The following companies participated in the Plan during the year ended December 31, 1997: Florida Progress Corporation Florida Power Corporation Electric Fuels Corporation Progress Energy Corporation Effective January 1, 1997, Talquin Development Company and Advanced Separation Technologies Incorporated no longer participated in the Plan. Contributions Eligible employees may elect to contribute up to 16% of their annual base pay and may designate these contributions as either Regular Savings after-tax and/or 401(k) pretax dollars. Each participating company contributes each month (each pay period effective January 1, 1997) an amount equal to 75% of the employees' contributions, up to 6% of base pay. Prior to January 1, 1997, each participating company contributed employer matching contributions monthly, in the amount equal to 65% of the employees' eligible contributions, up to 6% of base pay. Individual corporations, achieving certain predetermined goals and participating in the special company contribution portion of the Savings Plan, could make an additional contribution of 5% for each of two goals achieved (up to a maximum of 10%) on up -11- Savings Plan for Employees of Florida Progress Corporation Notes to Financial Statements (Dollar amounts in thousands) - -------------------------------------------------------------------------------- to 6% of eligible employee contributions to Regular Savings or 401(k). All corporations who participated in the special company contribution portion of the Savings Plan achieved a portion of their individual Savings Plan goals in 1996, resulting in additional special contributions of $1,090. Participant Accounts A separate account is maintained for each investment option of a participant by type of contribution. Plan earnings are allocated and credited to the account monthly (daily effective November 1, 1996), based on the adjusted balance of each participant's account. Forfeitures of non-vested employer contributions by terminated participants may be used to reduce employer matching contributions. Vesting Participants are immediately vested 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. Years of Continuous Service Vested Percentage --------------------------- ----------------- Less than 2 0% 2 but less than 3 25% 3 but less than 4 50% 4 but less than 5 75% 5 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. Payment of Benefits Upon separation of service due to termination, death, disability or retirement (after age 55), participants can elect to leave their account balance within the Plan, for any length of time up to age 70, or 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 contributions are allowed, terminated or retired employees may continue to exchange amounts among the investment options. The amounts of deferred vested benefits payable to terminated or retired participants at December 31, 1997 and 1996 were $73,556 and $56,213, respectively. Benefits are recorded when paid. -12- Savings Plan for Employees of Florida Progress Corporation Notes to Financial Statements (Dollar amounts in thousands) - -------------------------------------------------------------------------------- Loans to Participants All actively employed Savings Plan participants with available account balances may apply for a loan from their own Plan account. No loan shall exceed the lesser of fifty thousand dollars or one-half of the participant's vested Savings Plan account balance. The amount of each individual loan will be collateralized with an equivalent portion of the participant's Savings Plan account balance. This amount will be transferred from the participant's account and placed in a separate Loan Fund. A participant is permitted a maximum of four outstanding loans at any one time. Each loan shall bear interest at a reasonable rate, as determined by the Investment Committee for the Savings Plan for Employees' Trust of Florida Progress Corporation ("Investment Committee"). Effective October 1991, the loan interest rate is determined on a quarterly basis, using the Florida Savings Certificate of Deposit rate as published in The Wall Street Journal, as its primary factor. Interest charged on employee loans is credited to the individual participant accounts. Effective November 1, 1996, with the conversion to The Vanguard Group, Inc., 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 ("ACH") payment for active non-regular employees and by direct payment to the Savings 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 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. Deficits are reflected as transfers out of the investment funds to the loan fund. Plan Termination It is the intention of the Company 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. In the event of Plan termination, participants will become 100% vested in their accounts. 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 generally accepted accounting principles requires management to make estimates and assumptions that affect the reported -13- Savings Plan for Employees of Florida Progress Corporation Notes to Financial Statements (Dollar amounts in thousands) - -------------------------------------------------------------------------------- amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain amounts in the prior year financial statements have been reclassified to conform to the current year manner of presentation. These amounts do not have a material impact on the financial statements taken as a whole. 2. Investments: Effective November 1, 1996, the Plan Trustee was changed from Chase Manhattan Bank - Global Investor Services to The Vanguard Group, Incorporated; also at that time, the recordkeeper was changed from Hewitt Associates LLP to The Vanguard Group, Incorporated. Upon enrollment in the Plan, participants may direct employee and the participating company contributions in any of the following investment options (with the exception of the Echelon Stock Fund): Extended Market Index Equity Fund - Effective November 3, 1997, the Extended Market Index Equity Fund was added to the investment choices of the Savings Plan. This fund seeks to track the performance of the Wilshire 4500 Equity Index, a broadly diversified stock index of medium-size and small U.S. companies. Since none of these stocks are included in the Standard & Poor's 500 Composite Stock Price Index - the index that another Plan investment choice, the S&P Indexed Equity Fund, seeks to track - - the Extended Market Index Equity Fund was added to complement the S&P Indexed Equity Fund. Indexed Equity Fund - Seeks to provide long-term growth of capital and income from dividends by holding all of the 500 stocks that make up the unmanaged Standard & Poor's 500 Composite Stock Price Index, a widely recognized benchmark of U.S. stock market performance. Company Stock Fund - Invests in Florida Progress Corporation common stock to provide the possibility of long-term growth through increases in the value of the stock and the reinvestment of its dividends. Stable Value Fund - Seeks to preserve the value of your original investment and provide an attractive level of interest by investing primarily in investment contracts issued by insurance companies and banks, and other similar types of fixed-principal investments. It is designed to maintain a constant $1.00 share value. -14- Savings Plan for Employees of Florida Progress Corporation Notes to Financial Statements (Dollar amounts in thousands) - -------------------------------------------------------------------------------- Aggressive Equity Fund - Invests in a portfolio of stocks in certain emerging industry groups that offer above-average long-term growth potential. Current income is only an incidental consideration. Indexed Bond Fund - Seeks to provide a high level of interest income by attempting to match the performance of the unmanaged Lehman Brothers Aggregate Bond Index, a widely recognized measure of the entire taxable U.S. bond market. International Growth Fund - Seeks to provide long-term growth of capital by investing in stocks of high-quality, seasoned companies based outside the United States. Stocks are selected from more than 15 countries. Balanced Conservative Fund - Seeks to provide a high level of income and moderate long-term growth of capital and income by investing in five Vanguard funds: a domestic stock fund, an international stock fund, two bond funds, and an asset allocation fund. Balanced Moderate Fund - (formerly named the Balanced Fund) Seeks to provide a reasonable level of income and long-term growth of capital and income by investing in four Vanguard funds: a domestic stock fund, an international stock fund, a bond fund, and an asset allocation fund. Balanced Growth Fund - Seeks to provide long-term growth of capital by investing in four Vanguard funds: a domestic stock fund, an international stock fund, a bond fund, and an asset allocation fund. Echelon Stock Fund - A special temporary stock fund within the Plan was created on December 19, 1996 by a stock dividend allocated to participants with account balances in the Company Stock Fund in a ratio of one share of Echelon International Corporation for every fifteen shares of Florida Progress Corporation stock held within the Savings Plan. Effective April 1, 1998, the Echelon Fund became frozen to all participant activity at which time an orderly liquidation of all remaining Echelon Fund shares was begun. This liquidation was completed on April 23, 1998, with the proceeds being transferred to the Company Stock Fund for the affected participants. Effective January 1, 1996, the frozen Employee Stock Ownership Plan ("ESOP") was merged with the Company Stock Fund to create an active ESOP within the defined contribution plan. Prior year fund balances have been restated to conform with current year presentation. Prior to November 1996, the valuation of each fund, with the exception of the Stable Value Fund, was determined at the end of each month based on published prices. The valuation of the -15- Savings Plan for Employees of Florida Progress Corporation Notes to Financial Statements (Dollar amounts in thousands) - -------------------------------------------------------------------------------- Stable Value Fund was determined at the end of each month based on invested principal and accumulated interest paid at contracted rates. Each employee's account value was based on the most recent valuation. The Stable Value Fund included investment contract arrangements whereby a specified rate of return was guaranteed by a creditworthy insurance company or bank for a specified period (six months). If the return on the underlying investments was different from the guaranteed rate of return during the guarantee period, that difference was factored into the guaranteed rate of return for the subsequent period. The underlying investments included U.S. Government, U.S. Government agency and corporate fixed-income securities. Effective with the change in Trustee on November 1, 1996, the valuation of all funds occurs daily. Each mutual fund's (the "Fund") share price or (net asset value) per share is determined by dividing the total market value of the Fund's investments and other assets, less any liabilities, by the number of outstanding shares of the Fund. Net asset value is determined as of the regular close of the New York Stock Exchange (generally 4:00 p.m. Eastern time) on each day the exchange is open for trading. The dividends for the Indexed Bond Fund and the Stable Value Fund are accrued daily and are distributed monthly in the form of reinvested shares. The dividends are computed and declared daily as of the regular close of business and are payable to participants of record as of the prior business day. In other words, participants whose purchases of shares are effective today will receive the dividend beginning tomorrow. For redemptions, participants will receive the dividend up to and including the day of redemption. The Stable Value Fund's investment contracts are carried at contract value, which represents contributions made plus interest accrued at the contract rate, less withdrawals. These contractual arrangements consist of investments in securities together with contracts under which a bank or other creditworthy institution provides for benefit-responsive withdrawals by participants at contract value. Purchases and sales of investments are recorded on the trade date with gains and losses determined by using an average cost basis for investments. Unrealized appreciation or depreciation is recorded based on the market value of investments on the valuation date. When Florida Progress Corporation common stock is distributed from the Company Stock Fund to participants in settlement of their accounts, these funds recognize gains or losses equal to the difference between average cost and the quoted market value of the shares distributed. 3. Expenses of the Plan: The Company pays a portion of the expenses for services necessary for the administration of the Plan. -16- Savings Plan for Employees of Florida Progress Corporation Notes to Financial Statements (Dollar amounts in thousands) - -------------------------------------------------------------------------------- 4. Reconciliation of Financial Statements to Form 5500: The realized gains and unrealized appreciation (depreciation) of the Plan assets reported in the financial statements are $23,600 and $31,508 and $46,825 and ($43,347) for 1997 and 1996, respectively. The calculation of these amounts is based on the historical cost of the assets. However, when the Plan files its Form 5500, these amounts are required to be calculated based on the fair market value of Plan assets as of the previous year-end. Using this calculation method, the amount of realized gains (losses) and unrealized appreciation (depreciation) is $4,871 and $50,237 and $12,569 and ($9,091), for 1997 and 1996, respectively. 5. Tax Status and Federal Income Taxes: The Internal Revenue Service has determined and informed the Company by a letter dated June 13, 1996, that the Plan is a qualified employees' trust under Section 401(a) of the Internal Revenue Code (Code). As such, the Plan is exempt from federal income taxes under Section 501(a). -17- Savings Plan for Employees of Schedule I Florida Progress Corporation Page 1 of 2 Item 27a - Schedule of Assets Held for Investment Purposes at December 31, 1997 (Dollar and share amounts in thousands) - ------------------------------------------------------------------------------------------------------------------- 1997 -------------------------------------------- Number of Shares or Identity of Issue Principal Current and Title of Issue Amount Cost Value - ------------------ -------------- ------------ ------------- EXTENDED MARKET INDEX EQUITY FUND - --------------------------------- Mutual Fund - Vanguard Index Trust Extended Market Portfolio 58 $ 1,851 $ 1,784 ============ ============= INDEXED EQUITY FUND - ------------------- Mutual Fund - Vanguard Index Trust 500 Portfolo 1,107 $ 81,294 $ 99,750 ============ ============= COMPANY STOCK FUND - ------------------ Common Stock of Florida Progress Corporation 9,824 $ 67,440 $ 115,105 ============ ============= STABLE VALUE FUND - ----------------- Structured Investment Contracts $94,476 $ 94,476 $ 94,476 ============ ============= AGGRESSIVE EQUITY FUND - ---------------------- Mutual Fund - Putnam New Opportunities Fund 1,310 $ 55,811 $ 63,737 ============ ============= INDEXED BOND FUND - ----------------- Mutual Fund - Vanguard Total Bond Market Portfolio 313 $ 3,112 $ 3,161 ============ ============= INTERNATIONAL GROWTH FUND - ------------------------- Mutual Fund - Vanguard International Growth Portfolio 320 $ 5,616 $ 5,239 ============ ============= BALANCED CONSERVATIVE FUND - -------------------------- Mutual Fund - Vanguard LifeStrategy Conservative Growth Portfolio 421 $ 5,440 $ 5,635 ============ ============= The preceding Notes to Financial Statements are an integral part of these financial statements. - 18 - Savings Plan for Employees of Schedule I Florida Progress Corporation Page 2 of 2 Item 27a - Schedule of Assets Held for Investment Purposes at December 31, 1997 (Dollar and share amounts in thousands) - ------------------------------------------------------------------------------------------------------------------- 1997 ---------------------------------------- Number of Shares or Identity of Issue Principal Market and Title of Issue Amount Cost Value - ------------------ ------------ ------------ ------------ BALANCED MODERATE FUND - ---------------------- Mutual Fund - Vanguard LifeStrategy Moderate Growth Portfolio 2,084 $ 28,423 $ 30,861 ============ ============ BALANCED GROWTH FUND - -------------------- Mutual Fund - Vanguard LifeStrategy Growth Portfolio 778 $ 11,565 $ 12,475 ============ ============ ECHELON STOCK FUND - ------------------ Common Stock of Echelon International Corporation 245 $ 1,493 $ 3,860 ============ ============ LOAN FUND - --------- Loans other than mortgages with interest rates ranging from 6.25% to 9.0%, maturing at various times up to five years $ 19,228 $ 19,228 $ 19,228 ============ ============ The preceding Notes to Financial Statements are an integral part of these financial statements. - 19 - Savings Plan for Employees of Florida Progress Corporation Schedule II Item 27d - Schedule of Reportable Transactions* For the Year Ended December 31, 1997 - ------------------------------------------------------------------------------------------------------------------------------------ Current Value Expense of Asset Identity of Purchase Selling Lease Incurred with Cost of on Transaction Party Involved Description of Asset Price Price Rental Transaction Asset Date Net Gain The Vanguard Group Indexed Equity Fund $81,370,702 $ -- $ -- $ -- $ -- $81,370,702 $ -- The Vanguard Group Indexed Equity Fund -- 54,056,001 -- -- 50,732,671 54,056,001 3,323,330 Vanguard/ Florida Progress Florida Progress Corporation Common Stock 34,238,768 -- -- -- -- 34,238,768 -- Vanguard/ Florida Progress Florida Progress Corporation Common Stock -- 69,510,056 -- -- 52,477,793 69,510,056 17,032,263 The Vanguard Group Stable Value Fund 92,249,452 -- -- -- -- 92,249,452 -- The Vanguard Group Stable Value Fund -- 96,175,448 -- -- 96,175,448 96,175,448 -- The Vanguard Group Aggressive Equity Fund 39,425,001 -- -- -- -- 39,425,001 -- The Vanguard Group Aggressive Equity Fund -- 35,713,246 -- -- 34,815,525 35,713,246 897,721 The Vanguard Group Balanced Moderate Fund 22,329,843 -- -- -- -- 22,329,843 -- The Vanguard Group Balanced Moderate Fund -- 11,853,612 -- -- 11,480,403 11,853,612 373,209 The Vanguard Group Balanced Growth Fund 17,352,924 -- -- -- -- 17,352,924 -- The Vanguard Group Balanced Growth Fund -- 8,294,165 -- -- 8,078,209 8,294,165 215,956 * Transactions or series of transactions in excess of 5% of the current value of the Plan's assets at December 31, 1996, as defined in Section 2520.103-6 of the Department of Labor Rules and Regulations for Reporting and Disclosures under ERISA. This Schedule was prepared from data certified by the Trustee of the Plan. The preceding Notes to Financial Statements are an integral part of these financial statements. - 20 - EXHIBITS 23 Consent of Price Waterhouse LLP, independent certified public accountants. SIGNATURES The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the Savings Plan for Employees of Florida Progress Corporation) have 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 Date: June 23, 1998 By: /s/ William G. Kelley --------------------------- William G. Kelley Plan Administrator for the Savings Plan for Employees Trust of Florida Progress Corporation By: /s/ James A. McClure, III --------------------------- James A. McClure, III Secretary and Member of the Investment Committee for the Savings Plan for Employees Trust of Florida Progress Corporation ( By: /s/ Jeffrey R. Heinicka ( --------------------------- ( Jeffrey R. Heinicka ( ( Members of the Investment ( By: /s/ Kenneth E. McDonald Committee for the Savings ( --------------------------- Plan for Employees Trust of ( Kenneth E. McDonald Florida Progress Corporation ( ( ( By: /s/ John Scardino, Jr. ( --------------------------- ( John Scardino, Jr. ( ( By: /s/ Karen T. Rezanka ( --------------------------- ( Karen T. Rezanka ( EXHIBIT INDEX Exhibit Number Description ------- ----------- 23 Consent of Price Waterhouse LLP