************************************
* A Powerful Southeastern Presence *
************************************
[CP&L Logo] [Florida Progress Corporation Logo]
Today's Presenters
- --------------------------------------------------------------------------------
William Cavanaugh III
- --------------------------------------------------------------------------------
Chairman, President and Chief Executive Officer
Carolina Power & Light Company
Richard Korpan
- --------------------------------------------------------------------------------
Chairman, President and Chief Executive Officer
Florida Progress Corporation
Glenn E. Harder
- --------------------------------------------------------------------------------
Executive Vice President and Chief Financial Officer
Carolina Power & Light Company
[CP&L Logo] [Florida Progress Corporation Logo]
Safe Harbor Language
- --------------------------------------------------------------------------------
. This presentation contains forward-looking statements within the meaning of
the safe harbor provisions of the Securities Exchange Act of 1934; these
forward-looking statements are subject to various risks and uncertainties.
. Discussion of factors that could cause actual results to differ materially
from management projections, forecasts, estimates and expectations may
include factors that are beyond the companies' ability to control or estimate
precisely, such as estimates of future market conditions, the behavior of
other market participants and the actions of Federal and state regulators.
. Other factors include, but are not limited to, actions in the financial
markets, weather conditions, economic conditions in the two companies'
service territories, fluctuations in energy-related commodity prices,
conversion activity, other marketing efforts and other uncertainties.
. Other risk factors are detailed from time to time in the two companies' SEC
reports.
. The press release also contains further discussion of factors affecting the
companies.
[CP&L Logo] [Florida Progress Corporation Logo]
******************************
* Overview *
******************************
Key Transaction Terms
- --------------------------------------------------------------------------------
Offer Price: $54 per Florida Progress share
Premium to FPC: 30%, based upon 20-day average
closing price ending 8/20/99
Total Transaction Value: $8.0 billion, including the assumption
of $2.7 billion of Florida Progress
net debt and preferred
Consideration: 65% Cash, 35% Common Stock of
CP&L Holdings (subject to proration
and collar)
Governance: 14 Board members
--10 from CP&L
--4 from Florida Progress
[CP&L Logo] [Florida Progress Corporation Logo]
Two High-Quality Energy Companies
- --------------------------------------------------------------------------------
Dollars in Millions
CP&L Florida Progress
------- ----------------
Market Value $ 6,000 $ 4,400
Enterprise Value $ 9,120 $ 7,130
Total Assets $ 8,863 $ 6,302
1998 Revenues $ 3,130 $ 3,620
1998 EBIT $ 898 $ 600
1998 Net Income $ 399 $ 282
Generation Capacity (MWs) 10,288 8,232
Customers (000's) 1,400 1,300
[CP&L Logo] [Florida Progress Corporation Logo]
Combination Creates
One of the Largest Energy Companies
- --------------------------------------------------------------------------------
CP&L U.S. New U.S.
Standalone Ranking Company Ranking
------------ ------- ------------ -------
Equity Market Value $ 6 Billion 18 $ 8 Billion 13
Total Assets $ 9 Billion 24 $ 15 Billion 14
Generation Capacity (MWs) 10,228 MW 17 18,520 MW 9
Customers 1.4 Million 25 2.7 Million 16
[CP&L Logo] [Florida Progress Corporation Logo]
Combined -
A Super Regional Powerhouse
- --------------------------------------------------------------------------------
Highlights
- ----------
. $6.7 billion total revenues
. $15.2 billion total assets [Map of Southeastern United States with CP&L
and Florida Progress Corporation market areas
highlighted county-by-county]
. 18,520 MWs power generation
. 2.7 million customers
. 7-8% EPS growth
[CP&L Logo] [Florida Progress Corporation Logo]
A Strategically Sound Transaction
- --------------------------------------------------------------------------------
. Two strong companies
. High-growth region
. Significant scale
. Greater access to competitive markets
. Constructive regulatory environments
[CP&L Logo] [Florida Progress Corporation Logo]
Financial Benefits
- --------------------------------------------------------------------------------
. Accretive
-- Annual synergies of $100-$175 million
. Platform for growth
-- Earnings growth of 7-8%
-- Improved cash flow
. Secure dividend
. Favorable risk/return opportunity
[CP&L Logo] [Florida Progress Corporation Logo]
Strengthing the Foundation for Growth
- --------------------------------------------------------------------------------
. Superior financial performance
-- Top-line revenue growth
-- Focused cost management
. Core strengths
-- Generation assets and wholesale marketing
-- Distribution of electricity and natural gas
. Regulatory transition for shareholders
. Enhance profitability through non-regulated business
-- Domestic investments
-- Focused diversification
[CP&L Logo] [Florida Progress Corporation Logo]
Continued Focus on
Maximizing Shareholder Value
- --------------------------------------------------------------------------------
[Bar Chart showing Total Return (%) over 3-Year, 5-Year and 10-Year periods for
CP&L, Florida Progress and S&P Electrics as indicated in the following table]
3-Year 5-Year 10-Year
------- ------- --------
Carolina P&L 16.5% 15.4% 16.2%
Florida Progress 16.0% 13.3% 14.2%
S&P Electrics 13.2% 10.6% 13.4%
[CP&L Logo] [Florida Progress Corporation Logo]
*************************************
* A Powerful Southeastern Presence *
*************************************
[CP&L Logo] [Florida Progress Corporation Logo]
*************************************
* A Profile of the *
* New Company *
*************************************
Favorable Customer Mix
- --------------------------------------------------------------------------------
Revenues by Customer Class
[Pie Charts showing revenues by Customer Class as indicated in the following
table]
Carolina Power & Light Florida Progress New Company
----------------------- ----------------- -----------
Residential 33% 54% 42%
Commercial 21% 23% 22%
Industrial 23% 8% 16%
Wholesale/Other 23% 15% 20%
Source: 1998 10-Ks and Annual Reports
[CP&L Logo] [Florida Progress Corporation Logo]
Balanced Generation Portfolio
- --------------------------------------------------------------------------------
Instralled Capacity
[Pie Charts showing Installed Capacity as indicated in the following table]
Carolina Power & Light Florida Progress New Company
----------------------- ----------------- ------------
Total 10,228 MWs 8,232 MWs 18,520 MWs
Nuclear 31% 9% 21%
Coal 52% 28% 41%
Gas/Oil 15% 63% 37%
Hydro 2% 0% 1%
Source: 1998 10-Ks and Annual Reports
[CP&L Logo] [Florida Progress Corporation Logo]
A Strong Commitment to Nuclear Excellence
- --------------------------------------------------------------------------------
1998 License
Facility Megawatts Capacity Factor Expiration
-------- --------- --------------- ----------
Robinson #2 683 92% 2010
Harris 860 89% 2026
Brunswick #1 820 89% 2016
Brunswick #2 811 98% 2014
Crystal River 835 90% 2016
Recent Highlights
- -----------------
. Carolina Power & Light's nuclear plants set a combined generation record for
the fifth consecutive year; during that time, O&M costs have been lowered by
one-third
. Carolina Power & Light's plants have consistently been rated among the
industry leaders in terms of plant safety
. Crystal River nuclear unit has produced more than 100% of its rated capacity
since its restart in February 1998
[CP&L Logo] [Florida Progress Corporation Logo]
Attractive Non-Regulated Businesses
- --------------------------------------------------------------------------------
[Logos of Progress Rail Services, Memco Barge Lines, Inc., Strategic Resource
Solutions, Interpath Communications Inc., Progress Telecommunications
Corporation and Electric Fuels Corporation]
[CP&L Logo] [Florida Progress Corporation Logo]
*************************************
* Financial Terms *
* and Benefits *
*************************************
Key Transaction Terms
- -------------------------------------------------------------------------------
Offer Price: $54 per Florida Progress share
Premium to FPC: 30%, based upon 20-day average
closing price ending 8/20/99
Total Transaction Value: $8.0 billion, including the assumption
of $2.7 billion of Florida Progress
net debt and preferred
Consideration: 65% Cash, 35% Common Stock of CP&L Holdings
Taxable to Florida Progress Shareholders
Collar: Fixed Value at CP&L prices of $37.13
to $45.39 per share
Accounting Treatment: Purchase
Timing: Expected to close within 12 months
Regulatory Approvals: SEC, FERC, NRC
NC and SC state approvals required to
form holding company
[CP&L Logo] [Florida Progress Corporation Logo]
Regulatory Approvals/Filings
- ----------------------------------------------------------------------------
Two Steps
Holding Company Formation Merger Approval
* SEC * CP&L and
* FERC FPC Shareholders
* NRC * SEC
* NCUC * FERC
* SCPSC * NRC
* Dept. of Justice
* NCUC/SCPSC/FPSC,
as required
Early 2000 Within 12 Months
[CP&L Logo] [Florida Progress Corporation Logo]
Commitment to Credit Quality
- ------------------------------------------------------------------------------
. Establish a holding company with a funding subsidiary
. Access debt capital markets for acquisition financing
-- Expected holding company debt rating of BBB+
. Maintain current Carolina Power & Light and Florida Power utility ratings
. Reduce leverage over time to strengthen holding company ratings
-- Utilize hybrid preferred securities
[Graph showing projected FFO/Total Interest Expense from 2001 to 2004]
[Graph showing projected Debt/Capitalization from 2001 to 2004]
[CP&L Logo] [Florida Progress Corporation Logo]
$100 - $175 Million of Annual Synergies
- --------------------------------------------------------------------------------
[Pie Chart showing Annual Synergies and represented in the following table]
Description Percent
----------- -------
Shared Services 44%
Energy Supply 20%
Revenue Synergies 14%
Energy Delivery 14%
Retail 8%
[CP&L Logo] [Florida Progress Corporation Logo]
Pro Forma Earnings Impact Scenario
- --------------------------------------------------------------------------------
Dollars in Millions, Except per Share Data
2001 2002
---- ----
CP&L Standalone Estimated Net Income (1) $523 $547
FPC Standalone Net Income (1) 338 355
CP&L Incremental After-Tax Interest Expense (@7.50%) (160) (158)
Goodwill (83) (83)
Assumed Annual Synergies to Shareholders (Net of Tax) (2) 60 70
-- --
Pro Forma Net Income $678 $731
---- ----
Average Fully Diluted Pro Forma Shares Outst. (mm) 199 199
Pro Forma Fully Diluted EPS $3.41 $3.67
CP&L Standalone Fully Diluted EPS $3.40 $3.56
Accretion ($) $0.01 $0.11
Accretion (%) -- 3.1%
(1) Based on Merrill Lynch Research and assumes EPS growth rates of 4.8% for
CP&L and 5.5% for FPC.
(2) Assumes the recognition of a full year of synergies.
[CP&L Logo] [Florida Progress Corporation Logo]
******************************
* Conclusions *
******************************
A Compelling Combination
- --------------------------------------------------------------------------------
. Achieves goal of becoming a super regional utility
. Asset-based regionally focused strategy
. Conservative synergies lead to accretion in first full year
. Outstanding platform to deliver accelerated earnings growth
[CP&L Logo] [Florida Progress Corporation Logo]
*************************************
* A Powerful Southeastern Presence *
*************************************
[CP&L Logo] [Florida Progress Corporation Logo]