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, 2001
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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
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SAVINGS PLAN FOR EMPLOYEES
OF
FLORIDA PROGRESS CORPORATION
----------------------------
Full title of the plan and the address of the
plan, if different from that of the issuer named below
FLORIDA PROGRESS CORPORATION
100 Central Ave.
St. Petersburg, Florida 33701
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Name of issuer of the securities held pursuant to the
plan and address of its principal executive office
SAVINGS PLAN FOR EMPLOYEES OF FLORIDA
PROGRESS CORPORATION
Financial Statements as of and for the
years ended December 31, 2001 and 2000
Additional information required for
Form 5500 for the year ended December 31, 2001
SAVINGS PLAN FOR EMPLOYEES OF FLORIDA PROGRESS CORPORATION
Table of Contents
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Page Number
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Report of Independent Accountants 1
Basic Financial Statements
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4 - 8
Additional Information *
Schedule I - Schedule of Assets (Held at End of Year) 9
* Other supplemental schedules required by Section 2520.103-10 of the Department
of Labor Rules and Regulations for Reporting and Disclosure under ERISA have
been omitted because they are not applicable.
Report of Independent Accountants
To the Participants and Administrator of
Savings Plan for Employees of Florida Progress Corporation
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of Savings Plan for Employees of Florida Progress Corporation (the "Plan") at
December 31, 2001 and 2000, and the changes in net assets available for benefits
for the years then ended, in conformity with accounting principles generally
accepted in the United States of America. 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 of these statements in accordance with auditing standards generally
accepted in the United States of America, 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
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) 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 supplemental schedule is the responsibility of the Plan's management.
The supplemental schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ PRICEWATERHOUSECOOPERS LLP
Philadelphia, Pennsylvania
June 20, 2002
SAVINGS PLAN FOR EMPLOYEES OF FLORIDA PROGRESS CORPORATION
Statements of Net Assets Available for Benefits
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(in thousands)
As of December 31,
2001 2000
--------------- ---------------
Investments, at fair value
Registered investment companies:
Putnam New Opportunities Class A Shares * $ 42,226 * $ 110,718
Vanguard 500 Index Fund * 53,351 * 129,203
Vanguard Extended Market Index Fund 3,253 6,899
Vanguard Federal Money Market Fund * 30,746 * 81,991
Vanguard International Growth Fund 2,143 6,620
Vanguard LifeStrategy Conservative Growth Fund 4,222 7,452
Vanguard LifeStrategy Growth Fund 9,571 20,764
Vanguard LifeStrategy Moderate Growth Fund 14,368 * 33,900
Vanguard Total Bond Market Index Fund 5,706 6,823
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165,586 404,370
Vanguard Retirement Savings Trust * 82,655 -
Progress Energy Company Stock Fund * 44,424 * 63,359
Florida Progress Contingent Value Obligation Fund 499 951
Participant Loans 8,527 17,176
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301,691 485,856
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Investments, at contract value
Florida Progress Stable Value Fund - * 116,488
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Receivables
Employer's contributions 138 352
Employees' contributions 318 1,099
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Total receivables 456 1,451
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Net assets available for benefits $ 302,147 $ 603,795
=============== ===============
* Represents 5% or more of net assets available for benefits.
The accompanying notes are an integral part of the financial statements.
2
SAVINGS PLAN FOR EMPLOYEES OF FLORIDA PROGRESS CORPORATION
Statements of Changes in Net Assets Available for Benefits
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(in thousands)
Year Ended December 31,
2001 2000
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Additions
Investment income:
Interest and dividend income, investments $ 20,250 $ 34,642
Interest income, participant loans 1,308 1,453
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21,558 36,095
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Contributions:
Employer 8,476 9,781
Participant 19,267 22,624
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27,743 32,405
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Total additions 49,301 68,500
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Deductions
Payment of benefits 76,718 53,307
Asset Transfers Out 212,565 -
Administrative expenses 32 35
Net depreciation in fair value of investments 61,634 27,821
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Total deductions 350,949 81,163
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Net decrease (301,648) (12,663)
Net assets available for plan benefits:
Beginning of period 603,795 616,458
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End of period $ 302,147 $ 603,795
=============== ===============
The accompanying notes are an integral part of the financial statements.
3
SAVINGS PLAN FOR EMPLOYEES OF FLORIDA PROGRESS CORPORATION
Notes to Financial Statements
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NOTE 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 "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.
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
employees of the Participating Companies (as defined below) 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. The following companies
participated in the Plan at December 31, 2001 (the "Participating Companies"):
o Progress Fuels Corporation ("Progress Fuels") - corporate employees only
o Florida Progress Corporation ("Florida Progress")
o Florida Power Corporation ("Florida Power")
o Progress Telecommunications Corporation ("Progress Telecom")
Effective November 30, 2000, CP&L Energy, Inc. ("CP&L Energy") acquired the
Participating Companies.
On December 4, 2000, CP&L Energy changed its name to Progress Energy, Inc.
("Progress Energy").
Effective December 31, 2001, all non-bargaining participants of the Plan and
their balances totaling $212,564,805 were transferred to the Stock
Purchase-Savings Plan of Progress Energy, Inc. Such participants include
non-bargaining employees of Florida Power, Progress Telecom, and corporate
employees of Progress Fuels.
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 pay period an
amount equal to 75% of the employees' contributions, up to 6% of base pay.
Participant Accounts
A separate account is maintained for each investment option of a participant by
type of contribution. Each participant's account is credited with the
participant's contribution and allocations of (a) the Participating Companies'
contribution and, (b) Plan earnings, and charged with an allocation of
administrative expenses. Plan earnings are allocated and credited to the account
daily based on the adjusted balance of each participant's account. The benefit
to which a participant is entitled is the benefit that can be provided from the
participant's vested account.
4
SAVINGS PLAN FOR EMPLOYEES OF FLORIDA PROGRESS CORPORATION
Notes to Financial Statements
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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.
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 the Florida Savings
Certificate of Deposit rate as published in The Wall Street Journal. 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
(after age 55), participants may make a written election to leave their account
balance within the Plan, for any length of time up to age 70 if their vested
balance is greater than $5,000, 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 or partial withdrawals are
allowed, terminated or retired employees may continue to exchange amounts among
the investment options.
Forfeited Accounts
Forfeitures of non-vested employer contributions by terminated participants may
be used to reduce employer matching contributions. Forfeited non-vested accounts
totaled $393,678 and $197,044 at December 31, 2001 and 2000, respectively.
5
SAVINGS PLAN FOR EMPLOYEES OF FLORIDA PROGRESS CORPORATION
Notes to Financial Statements
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Plan Termination
It is the intention of the Participating Companies 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.
NOTE 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
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and changes therein, and disclosure of contingent assets
and liabilities. Actual results could differ from those estimates.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value, except for its investment
contracts, which were valued at contract value (Note 4). Shares of registered
investment companies are valued 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 is valued at its year-end unit closing price (constituting market
value of shares owned plus un-invested cash position). 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. 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.
Payment of Benefits
Benefits are recorded when paid.
6
SAVINGS PLAN FOR EMPLOYEES OF FLORIDA PROGRESS CORPORATION
Notes to Financial Statements
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NOTE 3 - INVESTMENTS
During 2001 and 2000, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) (depreciated)
appreciated in value as follows:
Year Ended December 31,
2001 2000
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(in thousands)
Registered Investment Companies $ (57,912) $ (75,695)
Common Stock (3,722) 47,874
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$ (61,634) $ (27,821)
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All investments are participant-directed.
NOTE 4 - INVESTMENT CONTRACTS WITH FINANCIAL INSTITUTIONS, INSURANCE COMPANIES
AND BANKS
The Florida Progress Stable Value Fund (the "Fund") consisted of synthetic
investment contracts with various banks and insurance companies ("Issuers").
Additionally, the Fund held shares of a money market mutual fund sponsored by
The Vanguard Group with a value of $22,014,812 at December 31, 2000. The Fund
was credited with interest income on its investments and charged for
administrative expenses. The investment contracts included in the Fund were
carried at contract value, which approximated fair value, because the contracts
were fully benefit responsive for normal participant directed-transactions. At
December 31, 2000, the synthetic investment contracts constituted investments in
collective investment funds, mutual funds and mortgage backed securities,
$95,899,684, and wrapper contracts, ($1,159,442). The crediting interest rates
of the investment contracts ranged from 5.14% to 7.18% at December 31, 2000.
During 2001, these assets were transferred to the Vanguard Retirement Savings
Trust.
NOTE 5 - RELATED PARTY TRANSACTIONS
The Plan invests in shares of mutual funds managed by an affiliate of Vanguard
Fiduciary Trust Company ("VFTC"). VFTC acts as trustee for certain investments
of the Plan. Transactions in such investments qualify as party-in-interest
transactions and are exempt from the prohibited transaction rules.
Pursuant to an acquisition of Florida Progress by 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 Contingent Value Obligation Fund (the
"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 Company. While the Plan
does not allow additional
7
SAVINGS PLAN FOR EMPLOYEES OF FLORIDA PROGRESS
CORPORATION
Notes to Financial Statements
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contributions to the CVO Fund, participants are permitted to withdraw all or a
portion of their account balance as desired.
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 disposition 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.
NOTE 6 - PLAN EXPENSES
The Company and the participants in the Plan share the expenses associated with
the Plan. The Company pays the fees for services necessary for the
administration of the Plan.
NOTE 7 - TAX STATUS
The Internal Revenue Service determined and informed the Company by letter dated
June 13, 1996, that the Plan is a qualified employees' trust that the Plan was
qualified under Internal Revenue Code ("IRC") Section 401(a). The Plan has
subsequently been amended and restated since receiving the determination letter.
The Plan has filed an application for a new determination letter, which is
currently pending. However, the Company believes the Plan is designed and is
currently being operated in compliance with the applicable requirements of the
IRC.
8
Additional Information
Required for Form 5500
SAVINGS PLAN FOR EMPLOYEES OF FLORIDA PROGRESS CORPORATION Schedule I
Schedule of Assets (Held at End of Year)
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(in thousands)
Savings Plan for Employees of Florida Progress Corporation, EIN 59-6769223
Attachment to Form 5500, Schedule H, Part IV, line i
Identity of Issue Investment Type Current Value
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam New Opportunities Class A Shares Registered Investment Company $ 42,226
* Vanguard 500 Index Fund Registered Investment Company 53,351
* Vanguard Extended Market Index Fund Registered Investment Company 3,253
* Vanguard Federal Money Market Fund Registered Investment Company 30,746
* Vanguard International Growth Fund Registered Investment Company 2,143
* Vanguard LifeStrategy Conservative Growth Fund Registered Investment Company 4,222
* Vanguard LifeStrategy Growth Fund Registered Investment Company 9,571
* Vanguard LifeStrategy Moderate Growth Fund Registered Investment Company 14,368
* Vanguard Total Bond Market Index Registered Investment Company 5,706
* Vanguard Retirement Savings Trust Common/Collective Trust 82,655
* Progress Energy Company Common Stock 44,424
* Florida Progress Corporation Contingent Value Obligations 499
* Savings Plan for Employees of Florida Progress Corporation Participant Loans (6.0% - 9.5%) 8,527
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Total assets $ 301,691
============
* Party in Interest
9
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Investment Committee of the Savings Plan for Employees of Florida Progress
Corporation 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
/s/ Brenda F. Castonguay, Plan Administrator
Brenda F. Castonguay, Plan Administrator
Date: June 24, 2002
EXHIBITS INDEX
Exhibit Number
Exhibit No. 23 Consent of PRICEWATERHOUSECOOPERS LLP