UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

                 For the quarterly period ended March 31, 2004

                                       OR

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

                For the transition period from         to        .
                                               -------   -------
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                 Exact name of registrants as specified in their charters, state
Commission       of incorporation, address of principal executive offices, and          I.R.S. Employer
File Number                              telephone number                             Identification Number

  1-8349                           Florida Progress Corporation                             59-2147112
                                    410 South Wilmington Street
                                  Raleigh, North Carolina 27601
                                     Telephone (919) 546-6111
                                 State of Incorporation: Florida

  1-3274                            Florida Power Corporation                               59-0247770
                                d/b/a Progress Energy Florida, Inc.
                                       100 Central Avenue
                                   St. Petersburg, Florida 33701
                                     Telephone (727) 820-5151
                                 State of Incorporation: Florida

                                               NONE
         (Former name, former address and former fiscal year, if changed since last report)
</TABLE>

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

Indicate  by check mark  whether  the  registrants  are  accelerated  filers (as
defined in Rule 12b-2 of the Exchange Act). Yes __ No X

This combined Form 10-Q is filed separately by two registrants: Florida Progress
Corporation and Florida Power  Corporation  d/b/a Progress Energy Florida (PEF).
Information  contained herein relating to either individual  registrant is filed
by  such  registrant  solely  on  its  own  behalf.  Each  registrant  makes  no
representation as to information relating exclusively to the other registrant.

Indicate the number of shares  outstanding  of each of the  issuers'  classes of
common stock,  as of the latest  practicable  date.  As of April 30, 2004,  each
registrant had the following shares of common stock outstanding:
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

           Registrant                          Description                              Shares
           ----------                          -----------                              ------
Florida Progress Corporation       Common Stock, without par value      98,616,658 (all of which were held
                                                                        by Progress Energy, Inc.)
PEF                                Common Stock, without par value      100 (all of which were held by
                                                                        Florida Progress Corporation)
</TABLE>

Florida Progress  Corporation and Florida Power  Corporation meet the conditions
set forth in General  Instruction H(1)(a) and (b) of Form 10-Q and are therefore
filing this form with the reduced disclosure format.

                                       1
<PAGE>

         FLORIDA PROGRESS CORPORATION AND PROGRESS ENERGY FLORIDA, INC.
                FORM 10-Q - For the Quarter Ended March 31, 2004


Glossary of Terms


Safe Harbor For Forward-Looking Statements


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

      Florida Progress Corporation

      Consolidated Statements of Income
      Consolidated Balance Sheets
      Consolidated Statements of Cash Flows

      Florida Power Corporation
      d/b/a Progress Energy Florida, Inc.

      Statements of Income
      Balance Sheets
      Statements of Cash Flows

Notes to Financial Statements
    Florida Progress Corporation and Florida Power Corporation
    d/b/a Progress Energy Florida, Inc.


Item 2. Management's Discussion and Analysis of Financial Condition and
        Results of Operations

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Item 4. Controls and Procedures


PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 6. Exhibits and Reports on Form 8-K


Signatures









                                       2
<PAGE>

                                GLOSSARY OF TERMS


The following  abbreviations  or acronyms used in the text of this combined Form
10-Q are defined below:

       TERM                                                   DEFINITION
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

AFUDC                                Allowance for funds used during construction
the Agreement                        Stipulation and Settlement Agreement
Bcf                                  Billion cubic feet
Colona                               Colona Synfuel Limited Partnership, L.L.L.P.
the Company or Florida               Florida Progress Corporation
     Progress
CR3                                  Progress Energy Florida Inc.'s nuclear generating plant, Crystal River
                                     Unit No. 3
DOE                                  United States Department of Energy
EITF                                 Emerging Issues Task Force
EPA                                  United States Environmental Protection Agency
FDEP                                 Florida Department of Environmental Protection
Federal Circuit                      United States Circuit Court of Appeals
FERC                                 Federal Energy Regulatory Commission
FIN No. 46                           FASB Interpretation No. 46, "Consolidation of Variable Interest Entities - An
                                     Interpretation of ARB No. 51"
Florida Progress or FPC              Florida Progress Corporation
FPSC                                 Florida Public Service Commission
MACT                                 Maximum Available Control Technology
MGP                                  Manufactured Gas Plant
NOx                                  Nitrogen oxide
NRC                                  United States Nuclear Regulatory Commission
NSP                                  Northern States Power
PEF or the utility                   Progress Energy Florida, Inc., formerly referred to as Florida Power
                                     Corporation
PFA                                  IRS Prefiling Agreement
the Plan                             Revenue Sharing Incentive Plan
PLRs                                 Private Letter Rulings
Progress Capital                     Progress Capital Holdings, Inc.
Progress Energy or the Parent        Progress Energy, Inc.
Progress Fuels                       Progress Fuels Corporation
Progress Rail                        Progress Rail Services Corporation
PTC LLC                              Progress Telecom LLC
PVI                                  Progress Ventures, Inc., formerly referred to as Energy Ventures
PUHCA                                Public Utility Holding Company Act of 1935, as amended
PWR                                  Pressurized water reactor
RAFT                                 Railcar Asset Financing Trust
Rail Services or Rail                Rail Services business segment
RTO                                  Regional Transmission Organization
SEC                                  United States Securities and Exchange Commission
Section 29                           Section 29 of the Internal Revenue Code
Service Company                      Progress Energy Service Company, LLC
SFAS No. 5                           Statement of Financial Accounting Standards No. 5, "Accounting for
                                     Contingencies"
SFAS No. 71                          Statement of Financial Accounting Standards No. 71, "Accounting for the
                                     Effects of Certain Types of Regulation"
SFAS No. 123                         Statement of Financial Accounting Standards No. 123, "Accounting for
                                     Stock-Based Compensation"
SFAS No. 133                         Statement of Financial Accounting Standards No. 133, "Accounting for
                                     Derivative and Hedging Activities"
SFAS No. 142                         Statement of Financial Accounting Standards No. 142, "Goodwill and Other
                                     Intangible Assets"
SFAS No. 143                         Statement of Financial Accounting Standards No. 143, "Accounting for Asset
                                     Retirement Obligations"


                                       3
<PAGE>

SFAS No. 148                         Statement of Financial Accounting Standards No. 148, "Accounting for
                                     Stock-Based Compensation - Transition and Disclosure - An Amendment of FASB
                                     Statement No. 123"
SMD NOPR                             Notice of Proposed Rulemaking in Docket No. RM01-12-000, Remedying Undue
                                     Discrimination through Open Access Transmission and Standard Market Design
SO2                                  Sulfur dioxide
the Trust                            FPC Capital I trust
</TABLE>




                                       4
<PAGE>

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

This combined report contains  forward-looking  statements within the meaning of
the safe harbor  provisions of the Private  Securities  Litigation Reform Act of
1995.  The matters  discussed  throughout  this  combined Form 10-Q that are not
historical  facts  are  forward-looking  and,  accordingly,  involve  estimates,
projections,  goals, forecasts,  assumptions, risks and uncertainties that could
cause actual results or outcomes to differ  materially  from those  expressed in
the forward-looking statements.

In  addition,   forward-looking   statements  are  discussed  in   "Management's
Discussion  and  Analysis of  Financial  Condition  and  Results of  Operations"
including,  but not limited to, statements under the sub-heading  "Liquidity and
Capital Resources" concerning operating cash flows.

Any forward-looking statement speaks only as of the date on which such statement
is  made,  and  neither  Florida   Progress  (the  Company)  nor  Florida  Power
Corporation doing business as Progress Energy Florida, Inc. (PEF) undertakes any
obligation  to update any  forward-looking  statement or  statements  to reflect
events or circumstances after the date on which such statement is made.

Examples of factors that you should consider with respect to any forward-looking
statements made throughout  this document  include,  but are not limited to, the
following:  the impact of fluid and  complex  government  laws and  regulations,
including those relating to the environment;  the impact of recent events in the
energy markets that have  increased the level of public and regulatory  scrutiny
in the energy industry and in the capital markets; deregulation or restructuring
in the electric  industry that may result in increased  competition and stranded
costs; the uncertainty regarding the timing,  creation and structure of regional
transmission  organizations;  weather  conditions  that  directly  influence the
demand  for  electricity;   recurring   seasonal   fluctuations  in  demand  for
electricity;  fluctuations  in the price of  energy  commodities  and  purchased
power;  successful  maintenance  and operation of PEF's energy  commodities  and
purchased power;  economic  fluctuations and the  corresponding  impact on PEF's
commercial and industrial  customers;  the inherent  risks  associated  with the
operation of nuclear facilities, including environmental, health, regulatory and
financial  risks;  the  impact  of  any  terrorist  acts  generally  and  on our
generating  facilities and other properties;  the ability to successfully access
capital  markets on favorable  terms;  the impact that increases in leverage may
have on the  Company  and PEF;  the  ability of the  Company and PEF to maintain
their current  credit  ratings;  the impact of derivative  contracts used in the
normal course of business;  investment  performance of pension and benefit plans
and the ability to control costs;  the  availability and use of Internal Revenue
Code  Section 29 (Section 29) tax credits by synthetic  fuel  producers  and the
Company's  continued  ability to use Section 29 tax credits  related to its coal
and synthetic fuels businesses;  the Company's ability to successfully integrate
newly  acquired  assets or  properties  into its  operations  as  quickly  or as
profitably  as expected;  and  unanticipated  changes in operating  expenses and
capital  expenditures.  Many of  these  risks  similarly  impact  the  Company's
subsidiaries.

These and other risks are detailed  from time to time in Florida  Progress'  and
PEF's  SEC  reports.  All  such  factors  are  difficult  to  predict,   contain
uncertainties  that may materially affect actual results,  and may be beyond the
control of the Company and PEF. Many, but not all of the factors that may impact
actual results of the Company and PEF are discussed in the Risk Factors  section
of PEF's annual  report on Form 10-K for the year ended  December 31, 2003 which
were filed with the SEC on March 12, 2004.  You should  carefully read these SEC
reports.  New  factors  emerge  from time to time,  and it is not  possible  for
management  to predict  all such  factors,  nor can it assess the effect of each
such factor on Florida Progress and PEF.


                                       5
<PAGE>

                          PART I. FINANCIAL INFORMATION


Item 1.  FINANCIAL STATEMENTS

                          Florida Progress Corporation
                    CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                 March 31, 2004

UNAUDITED CONSOLIDATED STATEMENTS of INCOME
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                                                Three Months Ended
                                                                     March 31,
                                                              ----------------------

(in millions)                                                       2004       2003
------------------------------------------------------------------------------------
Operating Revenues
   Utility                                                       $   784    $   728
   Diversified business                                              510        487
------------------------------------------------------------------------------------
      Total Operating Revenues                                     1,294      1,215
------------------------------------------------------------------------------------
Operating Expenses
Utility
   Fuel used in electric generation                                  269        185
   Purchased power                                                   121        130
   Operation and maintenance                                         160        141
   Depreciation and amortization                                      69         79
   Taxes other than on income                                         62         58
Diversified business
   Cost of sales                                                     454        438
   Depreciation and amortization                                      25         21
   Other                                                              33         37
------------------------------------------------------------------------------------
        Total Operating Expenses                                   1,193      1,089
------------------------------------------------------------------------------------
Operating Income                                                     101        126
------------------------------------------------------------------------------------
Other Income (Expense)
   Interest income                                                     1          1
   Other, net                                                         (5)        (6)
------------------------------------------------------------------------------------
        Total Other Expense                                           (4)        (5)
------------------------------------------------------------------------------------
Interest Charges
   Interest charges                                                   45         47
   Allowance for borrowed funds used during construction              (1)        (2)
------------------------------------------------------------------------------------
        Total Interest Charges, Net                                   44         45
------------------------------------------------------------------------------------
Income before Income Taxes                                            53         76
Income Tax Benefit                                                    (2)       (16)
------------------------------------------------------------------------------------
Net Income                                                       $    55    $    92
------------------------------------------------------------------------------------

See Notes to Interim Financial Statements.
</TABLE>

                                       6
<PAGE>
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Florida Progress Corporation
UNAUDITED CONSOLIDATED BALANCE SHEETS

(in millions)                                                            March 31,         December 31,
Assets                                                                        2004                 2003
----------------------------------------------------------------------------------------------------------
Utility Plant
  Utility plant in service                                               $   8,183            $   8,150
  Accumulated depreciation                                                  (2,866)              (2,845)
----------------------------------------------------------------------------------------------------------
        Utility plant in service, net                                        5,317                5,305
  Held for future use                                                            8                    8
  Construction work in progress                                                379                  328
  Nuclear fuel, net of amortization                                             63                   69
----------------------------------------------------------------------------------------------------------
        Total Utility Plant, Net                                             5,767                5,710
----------------------------------------------------------------------------------------------------------
Current Assets
  Cash and cash equivalents                                                     23                   27
  Accounts receivable                                                          507                  530
  Unbilled accounts receivable                                                  53                   59
  Receivables from affiliated companies                                         31                   27
  Inventory                                                                    433                  422
  Deferred fuel cost                                                           155                  204
  Assets held for sale                                                           6                   75
  Prepayments and other current assets                                         124                  137
----------------------------------------------------------------------------------------------------------
        Total Current Assets                                                 1,332                1,481
----------------------------------------------------------------------------------------------------------
Deferred Debits and Other Assets
  Regulatory assets                                                            123                  126
  Nuclear decommissioning trust funds                                          444                  433
  Diversified business property, net                                           869                  841
  Miscellaneous other property and investments                                  92                   90
  Prepaid pension cost                                                         225                  223
  Deferred tax asset                                                           240                  189
  Other assets and deferred debits                                             126                  132
----------------------------------------------------------------------------------------------------------
        Total Deferred Debits and Other Assets                               2,119                2,034
----------------------------------------------------------------------------------------------------------
         Total Assets                                                    $   9,218            $   9,225
----------------------------------------------------------------------------------------------------------
Capitalization and Liabilities
----------------------------------------------------------------------------------------------------------
Common Stock Equity
  Common stock without par value                                         $   1,701            $   1,699
  Retained earnings                                                            859                  842
  Accumulated other comprehensive loss                                         (26)                 (17)
----------------------------------------------------------------------------------------------------------
     Total Common Stock Equity                                               2,534                2,524
----------------------------------------------------------------------------------------------------------
Preferred Stock of Subsidiaries - Not Subject to Mandatory Redemption           34                   34
Long-Term Debt, Affiliate                                                      809                  809
Long-Term Debt, Net                                                          2,047                2,045
----------------------------------------------------------------------------------------------------------
        Total Capitalization                                                 5,424                5,412
----------------------------------------------------------------------------------------------------------
Current Liabilities
  Current portion of long-term debt                                             43                   68
  Accounts payable                                                             387                  452
  Payables to affiliated companies                                              99                   68
  Notes payable to affiliated companies                                        380                  636
  Short-term obligations                                                       242                    -
  Customer deposits                                                            128                  127
  Other current liabilities                                                    321                  295
----------------------------------------------------------------------------------------------------------
        Total Current Liabilities                                            1,600                1,646
----------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities
  Accumulated deferred income taxes and investment tax credits                  83                   85
  Regulatory liabilities                                                     1,364                1,348
  Asset retirement obligations                                                 344                  339
  Other liabilities and deferred credits                                       403                  395
----------------------------------------------------------------------------------------------------------
        Total Deferred Credits and Other Liabilities                         2,194                2,167
----------------------------------------------------------------------------------------------------------
Commitments and Contingencies (Note 12)
----------------------------------------------------------------------------------------------------------
         Total Capitalization and Liabilities                            $   9,218            $   9,225
----------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Interim Financial Statements.

                                       7
<PAGE>

Florida Progress Corporation
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                                                          Three Months Ended March 31,
(in millions)                                                                   2004           2003
-------------------------------------------------------------------------------------------------------
Operating Activities
Net income                                                                    $   55          $  92
Adjustments to reconcile net income to net cash provided by operating
activities:
      Depreciation and amortization                                              100            105
      Deferred income taxes and investment tax credits, net                      (32)            19
      Deferred fuel cost (credit)                                                 49            (54)
Cash provided/(used) by changes in operating assets and liabilities:
      Accounts receivable                                                         23            (25)
      Inventories                                                                (12)            15
      Prepayments and other current assets                                       (24)           (17)
      Accounts payable                                                           (32)            40
      Other current liabilities                                                   14            (46)
      Other                                                                       21             14
--------------------------------------------------------------------------------------------------------
         Net Cash Provided by Operating Activities                               162            143
--------------------------------------------------------------------------------------------------------
Investing Activities
Utility property additions                                                      (124)          (141)
Diversified business property additions                                          (47)          (165)
Nuclear fuel additions                                                             -            (38)
Proceeds from sale of assets                                                      83              -
Other                                                                             (4)            (1)
--------------------------------------------------------------------------------------------------------
          Net Cash Used in Investing Activities                                  (92)          (345)
--------------------------------------------------------------------------------------------------------
Financing Activities
Proceeds from issuance of long-term debt                                           -            639
Net increase (decrease) in short-term obligations                                242            (81)
Retirement of long-term debt                                                     (25)          (226)
Net change in intercompany notes                                                (257)          (159)
Equity contributions from parent                                                   2            133
Dividends paid to parent                                                         (39)          (123)
Other                                                                              3              -
--------------------------------------------------------------------------------------------------------
           Net Cash Provided by (Used in) Financing Activities                   (74)           183
--------------------------------------------------------------------------------------------------------
Net Decrease in Cash and Cash Equivalents                                         (4)           (19)
Cash and Cash Equivalents at Beginning of Period                                  27             34
--------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period                                    $   23          $  15
--------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Cash Flow Information
Cash paid during the year - interest (net of amount capitalized)              $   61          $  58
                            income taxes (net of refunds)                     $   (3)         $   1
--------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Interim Financial Statements.

                                       8
<PAGE>

                            Florida Power Corporation
                       d/b/a Progress Energy Florida, Inc.
                          INTERIM FINANCIAL STATEMENTS
                                 March 31, 2004


<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

UNAUDITED STATEMENTS of INCOME
                                                                          Three Months Ended
                                                                                March 31,
                                                                   ---------------------------------
(in millions)                                                             2004             2003
-----------------------------------------------------------------------------------------------------

Operating Revenues                                                       $ 784            $ 728

Operating Expenses
   Fuel used in electric generation                                        269              185
   Purchased power                                                         121              130
   Operation and maintenance                                               160              141
   Depreciation and amortization                                            69               79
   Taxes other than on income                                               62               58
-----------------------------------------------------------------------------------------------------
        Total Operating Expenses                                           681              593
-----------------------------------------------------------------------------------------------------
Operating Income                                                           103              135
-----------------------------------------------------------------------------------------------------
Other Income (Expense)
   Other, net                                                               (1)               -
-----------------------------------------------------------------------------------------------------
        Total Other Expense                                                 (1)               -
-----------------------------------------------------------------------------------------------------
Interest Charges
   Interest charges                                                         31               29
   Allowance for borrowed funds used during construction                    (1)              (2)
-----------------------------------------------------------------------------------------------------
        Total Interest Charges, Net                                         30               27
-----------------------------------------------------------------------------------------------------

Income before Income Taxes                                                  72              108
Income Tax Expense                                                          22               37
-----------------------------------------------------------------------------------------------------

Net Income                                                                  50               71
Preferred Stock Dividend Requirement                                         1                -
-----------------------------------------------------------------------------------------------------
Earnings for Common Stock                                                $  49            $  71
-----------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Interim Financial Statements.

                                       9
<PAGE>

FLORIDA POWER CORPORATION
d/b/a PROGRESS ENERGY FLORIDA, INC.
UNAUDITED BALANCE SHEETS
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

(in millions)                                                  March 31,         December 31,
Assets                                                              2004                 2003
------------------------------------------------------------------------------------------------
Utility Plant
  Utility plant in service                                      $  8,183             $  8,150
  Accumulated depreciation                                        (2,866)              (2,845)
------------------------------------------------------------------------------------------------
        Utility plant in service, net                              5,317                5,305
  Held for future use                                                  8                    8
  Construction work in progress                                      379                  328
  Nuclear fuel, net of amortization                                   63                   69
------------------------------------------------------------------------------------------------
        Total Utility Plant, Net                                   5,767                5,710
------------------------------------------------------------------------------------------------
Current Assets
  Cash and cash equivalents                                           15                   10
  Accounts receivable                                                158                  191
  Unbilled accounts receivable                                        53                   59
  Receivables from affiliated companies                               13                    7
  Inventory                                                          249                  230
  Deferred fuel cost                                                 155                  204
  Prepayments and other current assets                                12                   45
------------------------------------------------------------------------------------------------
        Total Current Assets                                         655                  746
------------------------------------------------------------------------------------------------
Deferred Debits and Other Assets
  Regulatory assets                                                  123                  126
  Nuclear decommissioning trust funds                                444                  433
  Miscellaneous other property and investments                        43                   40
  Prepaid pension cost                                               222                  220
  Other assets and deferred debits                                    30                   31
------------------------------------------------------------------------------------------------
        Total Deferred Debits and Other Assets                       862                  850
------------------------------------------------------------------------------------------------
         Total Assets                                           $  7,284             $  7,306
------------------------------------------------------------------------------------------------
Capitalization and Liabilities
------------------------------------------------------------------------------------------------
Common Stock Equity
  Common stock without par value                                $  1,081             $  1,081
  Retained earnings                                                1,072                1,062
  Accumulated other comprehensive loss                                (4)                  (4)
------------------------------------------------------------------------------------------------
     Total Common Stock Equity                                     2,149                2,139
------------------------------------------------------------------------------------------------
  Preferred Stock - Not Subject to Mandatory Redemption               34                   34
  Long-Term Debt, Net                                              1,904                1,904
------------------------------------------------------------------------------------------------
        Total Capitalization                                       4,087                4,077
------------------------------------------------------------------------------------------------
Current Liabilities
  Current portion of long-term debt                                   43                   43
  Accounts payable                                                   151                  161
  Payables to affiliated companies                                   102                   75
  Notes payable to affiliated companies                               84                  363
  Short-term obligations                                             242                    -
  Customer deposits                                                  129                  127
  Other current liabilities                                          110                  147
------------------------------------------------------------------------------------------------
        Total Current Liabilities                                    861                  916
------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities
  Accumulated deferred income taxes                                  360                  363
  Accumulated deferred investment tax credits                         40                   41
  Regulatory liabilities                                           1,364                1,348
  Asset retirement obligations                                       324                  319
  Other liabilities and deferred credits                             248                  242
------------------------------------------------------------------------------------------------
        Total Deferred Credits and Other Liabilities               2,336                2,313
------------------------------------------------------------------------------------------------
Commitments and Contingencies (Note 12)
------------------------------------------------------------------------------------------------
         Total Capitalization and Liabilities                   $  7,284             $  7,306
------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Interim Financial Statements.

                                       10
<PAGE>

FLORIDA POWER CORPORATION
d/b/a PROGRESS ENERGY FLORIDA, INC.
UNAUDITED STATEMENTS of CASH FLOWS

<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                                                         Three Months Ended March  31,
(in millions)                                                                     2004         2003
------------------------------------------------------------------------------------------------------
Operating Activities
Net income                                                                      $   50       $   71
Adjustments to reconcile net income to net cash provided by operating
  activities:
     Depreciation and amortization                                                  75           84
     Deferred income taxes and investment tax credits, net                          31           38
     Deferred fuel cost (credit)                                                    49          (54)
Cash provided/(used) by changes in operating assets and liabilities:
     Accounts receivable                                                            33           18
     Inventories                                                                   (18)          (4)
     Prepayments and other current assets                                           (4)           1
     Accounts payable                                                               17           37
     Other current liabilities                                                     (36)         (10)
     Other                                                                           8            3
------------------------------------------------------------------------------------------------------
         Net Cash Provided by Operating Activities                                 205          184
------------------------------------------------------------------------------------------------------
Investing Activities
Property additions                                                                (124)        (141)
Nuclear fuel additions                                                               -          (38)
Other                                                                                -            1
------------------------------------------------------------------------------------------------------
          Net Cash Used in Investing Activities                                  (124)        (178)
------------------------------------------------------------------------------------------------------
Financing Activities
Proceeds from issuance of long-term debt                                             -          639
Net increase (decrease) in short-term obligations                                  242          (81)
Retirement of long-term debt                                                         -         (226)
Net change in intercompany notes                                                  (279)        (218)
Dividends paid to parent                                                           (39)        (123)
Other                                                                                -           (1)
------------------------------------------------------------------------------------------------------
           Net Cash Used in Financing Activities                                   (76)         (10)
------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents                                 5           (4)
------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at Beginning of Period                                    10           16
------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period                                      $   15       $   12
------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Cash Flow Information
Cash paid during the year - interest (net of amount capitalized)                $   45       $   36
                            income taxes (net of refunds)                       $    3       $   10
------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Interim Financial Statements.

                                       11
<PAGE>

Florida Progress Corporation and Florida Power Corporation
d/b/a Progress Energy Florida, Inc.
NOTES TO INTERIM FINANCIAL STATEMENTS


1. ORGANIZATION AND BASIS OF PRESENTATION

     A. Organization

     Florida Progress Corporation (the Company or Florida Progress) is a holding
     company under the Public Utility Holding  Company Act of 1935 (PUHCA).  The
     Company became subject to the  regulations of PUHCA when it was acquired by
     Progress Energy,  Inc.  (Progress Energy or the Parent).  Florida Progress'
     two primary  subsidiaries  are Florida  Power  Corporation  d/b/a  Progress
     Energy Florida, Inc. (PEF) and Progress Fuels Corporation (Progress Fuels).

     PEF is a regulated  public  utility  engaged in the  generation,  purchase,
     transmission, distribution and sale of electricity primarily in portions of
     Florida.  PEF is regulated by the Florida Public Service Commission (FPSC),
     the Federal Energy Regulatory  Commission (FERC) and the Nuclear Regulatory
     Commission  (NRC).  Progress  Fuels  is a  diversified  non-utility  energy
     company,  whose principal business segments are Energy and Related Services
     and Rail Services.  Throughout the report,  the terms utility and regulated
     will be used to discuss items pertaining to PEF.  Diversified  business and
     nonregulated  will be used to discuss the  subsidiaries of Florida Progress
     excluding PEF.

     B. Basis of Presentation

     These financial statements have been prepared in accordance with accounting
     principles  generally  accepted in the United States of America  (GAAP) for
     interim  financial  information and with the  instructions to Form 10-Q and
     Regulation S-X. Accordingly, they do not include all of the information and
     footnotes required by GAAP for complete financial  statements.  Because the
     accompanying  consolidated  interim financial statements do not include all
     of the information  and footnotes  required by GAAP, they should be read in
     conjunction  with  the  audited  financial  statements  and  notes  thereto
     included  in  Florida  Progress'  and PEF's  Form  10-K for the year  ended
     December 31, 2003.

     In accordance  with the provisions of Accounting  Principles  Board Opinion
     (APB) No. 28, "Interim  Financial  Reporting,"  GAAP requires  companies to
     apply a levelized  effective tax rate to interim periods that is consistent
     with  the  estimated  annual  effective  tax  rate.  The  intra-period  tax
     allocation,  which will have no impact on total year net income,  maintains
     an effective tax rate  consistent with the estimated  annual  effective tax
     rate.  For the three  months  ended  March 31,  2004 and 2003,  income  tax
     expense  was  increased  by  $33  million  and  decreased  by  $5  million,
     respectively. The income tax provisions for the Company differ from amounts
     computed by applying the federal statutory tax rate to income before income
     taxes, primarily due to the recognition of synthetic fuel tax credits.

     The amounts included in the consolidated  interim financial  statements are
     unaudited but, in the opinion of management,  reflect all normal  recurring
     adjustments  necessary  to  fairly  present  Florida  Progress'  and  PEF's
     financial  position and results of operations for the interim periods.  Due
     to  seasonal  weather  variations  and the timing of  outages  of  electric
     generating  units,  especially  the  nuclear-fueled  unit,  the  results of
     operations for interim  periods are not  necessarily  indicative of amounts
     expected for the entire year or future periods.

     In preparing financial  statements that conform with GAAP,  management must
     make estimates and assumptions  that affect the reported  amounts of assets
     and  liabilities,  disclosure of contingent  assets and  liabilities at the
     date of the  financial  statements  and  amounts of revenues  and  expenses
     reflected  during the reporting  period.  Actual  results could differ from
     those  estimates.  Certain  reclassifications  for 2003  have  been made to
     conform to the 2004 presentation.

     The results of  operations  of the Rail  Services  segment are reported one
     month in arrears.

                                       12
<PAGE>

     C. Subsidiary Reporting Period Change

     In the fourth  quarter of 2003, the Company  ceased  recording  portions of
     Fuels' segment operations,  primarily synthetic fuel operations,  one month
     in arrears.  As a result,  earnings for the year ended December 31, 2003 as
     reported  in the  Company's  Form 10-K,  included  13 months of results for
     these  operations.  The 2003 quarterly  results for periods ended March 31,
     June  30 and  September  30 have  been  restated  for  the  above-mentioned
     reporting  period  change.  This resulted in four months of earnings in the
     first quarter.  The  reclassification of earnings between quarters resulted
     in an $11  million  increase  in net income from $81 million to $92 million
     for the first quarter of 2003.

     D. Stock-Based Compensation

     The  Company  measures  compensation  expense  for  stock  options  as  the
     difference  between the market  price of its common  stock and the exercise
     price of the option at the grant date.  The exercise price at which options
     are granted by the Company  equals the market price at the grant date,  and
     accordingly,  no compensation  expense has been recognized for stock option
     grants. For purposes of the pro forma disclosures required by SFAS No. 148,
     "Accounting for  Stock-Based  Compensation - Transition and Disclosure - an
     Amendment of FASB  Statement No. 123" (SFAS No. 148),  the  estimated  fair
     value of the  Company's  stock  options is  amortized  to expense  over the
     options' vesting period.  The following table illustrates the effect on net
     income and  earnings per share if the fair value method had been applied to
     all outstanding and unvested awards in each period:
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                                                     Three Months Ended
         (in millions)                                                   March 31,
                                                               -------------------------------
     FLORIDA PROGRESS CORPORATION                                  2004             2003
                                                               --------------  ---------------
     Net Income, as reported                                            $ 55              $92
     Deduct:  Total stock option expense determined under fair
       value method for all awards, net of related tax effects             1                1
                                                               --------------  ---------------
     Pro forma net income                                               $ 54              $91
                                                               ==============  ===============

                                                                     Three Months Ended
         (in millions)                                                   March 31,
                                                               -------------------------------
     PROGRESS ENERGY FLORIDA, INC.                                 2004             2003
                                                               --------------  ---------------
     Earnings for Common Stock, as reported                             $ 49              $71
     Deduct:  Total stock option expense determined under fair
       value method for all awards, net of related tax effects             1                1
                                                               --------------  ---------------
     Pro forma earnings for common stock                                $ 48              $70
                                                               ==============  ===============
</TABLE>

2.   IMPACT OF NEW ACCOUNTING STANDARDS

     FIN No. 46, "Consolidation of Variable Interest Entities"
     In January 2003, the FASB issued  Interpretation No. 46,  "Consolidation of
     Variable Interest Entities - an Interpretation of ARB No. 51" (FIN No. 46).
     This  interpretation  provides  guidance  related to  identifying  variable
     interest   entities  and  determining   whether  such  entities  should  be
     consolidated  or  deconsolidated.  FIN No. 46  requires  an  enterprise  to
     consolidate a variable  interest  entity when the  enterprise (a) absorbs a
     majority of the variable interest entity's expected losses,  (b) receives a
     majority of the entity's expected residual returns, or both, as a result of
     ownership, contractual or other financial interests in the entity. Prior to
     the effective date of FIN No. 46,  entities were generally  consolidated by
     an  enterprise  that had control  through  ownership  of a majority  voting
     interest  in the  entity.  FIN No. 46  originally  applied  immediately  to
     variable  interest  entities  created or obtained  after  January 31, 2003.
     During 2003 and the first quarter of 2004, the Company did not  participate
     in the creation of, or obtain a significant  new variable  interest in, any
     variable  interest entity.  In December 2003, the FASB issued a revision to
     FIN No. 46 (FIN No. 46R), which modified certain requirements of FIN No. 46
     and was effective for all variable interest entities as of March 31, 2004.

     The Company adopted FIN No. 46 for special-purpose  entities as of December
     31, 2003, and deconsolidated the FPC Capital I trust (the Trust) as of that
     date.  Upon the  adoption  of FIN No.  46R as of March 31,  2004,  no other
     variable interest entities were required to be deconsolidated.

     The Company has interests in several  variable  interest  entities  created
     before  January  31,  2003,  for  which  the  Company  is not  the  primary
     beneficiary.  These arrangements  include  investments in approximately six
     limited  partnerships,  limited liability  corporations and venture capital
     funds.  The  aggregate  maximum loss  exposure at March 31, 2004,  that the
     Company could be required to record in its income  statement as a result of
     these arrangements totals approximately $11 million. The creditors of these
     variable  interest  entities do not have recourse to the general  credit of
     the Company in excess of the aggregate maximum loss exposure.

                                       13
<PAGE>

3.   RAILCAR LTD. DIVESTITURE

     In  December  2002,  the  Progress  Energy  Board of  Directors  adopted  a
     resolution approving the sale of Railcar Ltd., a subsidiary included in the
     Rail Services segment. In March 2003, the Company signed a letter of intent
     to sell the majority of Railcar Ltd. assets to The Andersons,  Inc. and the
     transaction   closed  in  February  2004.   Proceeds  from  the  sale  were
     approximately   $82  million   before   transaction   costs  and  taxes  of
     approximately  $13  million.  The assets of Railcar  Ltd.  were  grouped as
     assets  held for sale and are  included  in  other  current  assets  on the
     Consolidated  Balance  Sheets at December 31, 2003 and March 31, 2004.  The
     assets were recorded at  approximately  $6 million and $75 million at March
     31, 2004 and December 31, 2003, respectively,  which reflects the Company's
     estimates of the fair value  expected to be realized from the sale of these
     assets less costs to sell. The primary component of assets held for sale at
     December 31, 2003 was property and equipment of $74 million.

4.   REGULATORY MATTERS

     A. Retail Rate Matters

     In February  2003, PEF petitioned the FPSC to increase its fuel factors due
     to continuing  increases in oil and natural gas commodity  prices. In March
     2003, the FPSC approved PEF's petition and new rates became effective April
     2003. In September 2003, PEF asked the FPSC to approve a cost adjustment in
     its annual  fuel  filing,  primarily  related to rising  costs of fuel that
     would  increase  retail  customer bills  beginning  January 2004. The total
     amount of the fuel  adjustment  requested  above  current  levels  was $322
     million.  In November  2003,  the FPSC approved PEF's request and new rates
     became effective January 2004.

     On April 29,  2004,  PEF,  the  Office of Public  Counsel  and the  Florida
     Industrial  Power Users Group executed a Stipulation  and Settlement  that,
     upon approval by the FPSC, will resolve the issue currently  pending before
     the FPSC  regarding  the costs PEF will be allowed to recover  through  its
     Fuel and  Purchased  Power  Cost  Recovery  clause in 2004 and  beyond  for
     waterborne  coal  deliveries by the  Company's  affiliated  coal  supplier,
     Progress Fuels Corporation.  The settlement sets fixed per ton prices based
     on point  of  origin  for all  waterborne  coal  deliveries  in  2004,  and
     establishes a market-based pricing methodology for determining  recoverable
     waterborne  coal  transportation  costs through a competitive  solicitation
     process or market  price  proxies  beginning  in 2005 and  thereafter.  The
     settlement  will  reduce  the amount  that PEF will  charge to the Fuel and
     Purchased  Power Cost  Recovery  clause for  waterborne  transportation  by
     approximately  $13 million  beginning in 2004. Also, on April 29, 2004, the
     parties filed a joint request with the FPSC for approval of the Stipulation
     and  Settlement,  which  the  FPSC is  expected  to act  upon  prior to the
     commencement of a hearing on the waterborne transportation issues scheduled
     for June 10, 2004.

     B. Regional Transmission Organizations

     In  2000,  the  FERC  issued  Order  No.  2000  on  Regional   Transmission
     Organizations (RTOs), which set minimum  characteristics and functions that
     RTOs must meet, including  independent  transmission service. In July 2002,
     FERC issued its Notice of Proposed  Rulemaking  in Docket No.  RM01-12-000,
     Remedying Undue Discrimination through Open Access Transmission Service and
     Standard Electricity Market Design (SMD NOPR). If adopted as proposed,  the
     rules set forth in the SMD NOPR would  materially alter the manner in which
     transmission  and generation  services are provided and paid for. PEF filed
     comments in November 2002 and supplement comments in January 2003. In April
     2003, the FERC released a White Paper on the Wholesale Market Platform. The
     White Paper  provides an  overview  of what the FERC  currently  intends to
     include in a final rule in the SMD NOPR docket. The White Paper retains the
     fundamental  and most protested  aspects of SMD NOPR,  including  mandatory
     RTOs and the FERC's  assertion  of  jurisdiction  over  certain  aspects of
     retail  service.  FERC has not yet  issued  a final  rule on SMD  NOPR.  In
     December   2003,  the  FPSC  issued  an  order   requiring   further  state
     proceedings. The Company cannot predict the outcome of these matters or the
     effect that they may have on the GridFlorida  proceedings currently ongoing
     before the FERC. It is unknown what impact the future proceedings will have
     on the Company's earnings, revenues or prices.

     PEF has recorded $4 million  related to startup  costs for  GridFlorida  at
     March 31, 2004.  PEF expects to recover these startup costs in  conjunction
     with  the  GridFlorida  original  structure  or  in  conjunction  with  any
     alternate combined transmission structure that emerges.

                                       14
<PAGE>

5.   GOODWILL AND OTHER INTANGIBLE ASSETS

     The Company  completed the annual  goodwill  impairment  test in accordance
     with SFAS No. 142,  "Goodwill and Other Intangible  Assets," for the Energy
     and Related Services segment in the second quarter of 2003, which indicated
     that the Company's goodwill was not impaired. The first annual test for the
     Other segment will be performed in 2004, since the goodwill was acquired in
     2003.

     The changes in the carrying  amount of goodwill for the quarter ended March
     31, 2004, by reportable segment, are as follows:

                                               Energy and
                                                Related
     (in millions)                              Services     Other    Total
                                              --------------------------------
     Balance as of January 1, 2003                  $ 11      $  -     $ 11
     Divestitures                                     (1)         -      (1)
     Acquisition                                       -         7        7
                                              --------------------------------
     Balance as of December 31, 2003                $ 10      $  7     $ 17
     Purchase price adjustment                         -         3        3
                                              --------------------------------
     Balance as of March 31, 2004                   $ 10      $ 10     $ 20
                                              ================================

     In  December  2003,  $7 million in  goodwill  was  acquired  as part of the
     Progress Telecommunications  Corporation business combination and is in the
     Other segment.  The $3 million purchase price  adjustment  during the first
     quarter of 2004, resulted from changes in the estimated restructuring costs
     related to the partial acquisition of EPIK in December 2003.

     The Company has $9 million of net  intangible  assets at March 31, 2004 and
     December  31,  2003.  All of  the  Company's  intangibles  are  subject  to
     amortization.  The Company's  intangibles are primarily  acquired  customer
     contracts  that are amortized  over their  respective  lives.  Amortization
     expense recorded on intangible  assets for the three months ended March 31,
     2004 and 2003,  and estimated  annual  amortization  expense for intangible
     assets for 2004 through 2008 are not material to the results of operations.
     PEF has no goodwill or significant  intangible  assets at March 31, 2004 or
     December 31, 2003.

6.   COMPREHENSIVE INCOME

     Comprehensive  income for Florida Progress for the three months ended March
     31,  2004  and  2003  was  $46  million  and  $91  million,   respectively.
     Comprehensive  income for PEF for the three months ended March 31, 2004 and
     2003  was $50  million  and  $71  million,  respectively.  Items  of  other
     comprehensive  income  consisted  primarily  of  changes  in fair  value of
     derivatives  used to hedge cash flows related to interest on long-term debt
     and gas sales, and to foreign currency translation adjustments.

7.   FINANCING ACTIVITIES

     On February 9, 2004,  Progress Capital Holdings,  Inc. paid at maturity $25
     million 6.48% medium term notes with excess cash.

8.   BENEFIT PLANS

     The  Company  and  some  of  its   subsidiaries   (including  PEF)  have  a
     non-contributory    defined   benefit   retirement   (pension)   plan   for
     substantially all full-time  employees.  The Company also has supplementary
     defined  benefit  pension  plans  that  provide  benefits  to  higher-level
     employees.  In  addition to pension  benefits,  the Company and some of its
     subsidiaries  (including  PEF) provide  contributory  other  postretirement
     benefits (OPEB), including certain health care and life insurance benefits,
     for retired  employees who meet specified  criteria.  The components of the
     net periodic benefit cost for the three months ended March 31 are:

                                       15
<PAGE>
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                                                         Other Postretirement
                                                   Pension Benefits            Benefits
                                                  -------------------    --------------------
     (in millions)                                   2004       2003       2004       2003
                                                  -------------------    --------------------
     Service cost                                 $      5   $     5     $      1  $     1
     Interest cost                                      12        11            4        4
     Expected return on plan assets                   (18)      (15)            -        -
     Net amortization                                    1         -            1        1
                                                  -------------------    --------------------
     Net cost recognized by Florida Progress      $      -   $     1     $      6  $     6
                                                  -------------------    --------------------
     Net cost/(benefit) recognized by PEF         $    (1)   $     -     $      6  $     6
                                                  ===================    =================---
</TABLE>

     In  December  2003,  the  Medicare   Prescription  Drug,   Improvement  and
     Modernization Act of 2003 (the Act) was signed into law. In accordance with
     guidance  issued by the FASB in FASB Staff Position FAS 106-1,  the Company
     has  elected  to  defer  accounting  for  the  effects  of the  Act  due to
     uncertainties  regarding the effects of the  implementation  of the Act and
     the  accounting  for  certain  provisions  of  the  Act.  Therefore,   OPEB
     information  presented  in the  financial  statements  does not reflect the
     effects of the Act.  When  specific  authoritative  accounting  guidance is
     issued,  it could  require  plan  sponsors  to change  previously  reported
     information.  The Company is in the early stages of  reviewing  the Act and
     determining its potential effects on the Company.

9.   RISK MANAGEMENT ACTIVITIES AND DERIVATIVE TRANSACTIONS

     Progress  Energy and its  subsidiaries,  including the Company and PEF, are
     exposed to various  risks  related  to  changes in market  conditions.  The
     Company has a risk  management  committee that includes  senior  executives
     from various business groups. The risk management  committee is responsible
     for administering risk management  policies and monitoring  compliance with
     those policies by all subsidiaries.

     The  Company  under  its  risk  management  policy,  may use a  variety  of
     instruments  to manage  exposure to  fluctuations  in commodity  prices and
     interest rates.

     The Company uses interest rate  derivative  instruments to adjust the fixed
     and  variable  rate  debt  components  of its debt  portfolio  and to hedge
     interest rates with regard to future fixed rate debt issuances.

     Progress Fuels Corporation, through an affiliate,  periodically enters into
     derivative  instruments  to hedge its  exposure  to price  fluctuations  on
     natural gas sales.  As of March 31, 2004,  Progress Fuels  Corporation  has
     executed cash flow hedges of natural gas sales through December 2005. These
     instruments  did not have a material  impact on the Company's  consolidated
     financial position or results of operations.

10.  FINANCIAL INFORMATION BY BUSINESS SEGMENT

     The Company's  principal  business segment is PEF, a utility engaged in the
     generation,  purchase,  transmission,  distribution and sale of electricity
     primarily in Florida.  The other reportable  business segments are Progress
     Fuels' Energy & Related  Services and Rail  Services.  The Energy & Related
     Services segment  includes coal and synthetic fuel operations,  natural gas
     production  and  sales,   river  terminal  services  and  off-shore  marine
     transportation.  Rail Services'  operations  include railcar  repair,  rail
     parts  reconditioning  and sales,  providing rail and track  material,  and
     scrap metal recycling.  The Other category  consists  primarily of PTC LLC,
     the  Company's  telecommunications  subsidiary,  and the  holding  company,
     Florida  Progress  Corporation.  PTC markets  wholesale  fiber-optic  based
     capacity  service in the Eastern  United  States and also markets  wireless
     structure attachments to wireless communication  companies and governmental
     entities.  The  Company  allocates a portion of its  operating  expenses to
     business segments.

     The Company's  significant  operations  are  geographically  located in the
     United States with limited  operations in Mexico and Canada.  The Company's
     segments are based on differences  in products and services,  and therefore
     no additional  disclosures are presented.  Intersegment sales and transfers
     consist  primarily  of coal  sales from the  Energy  and  Related  Services
     segment of Progress  Fuels to PEF. The price  Progress Fuels charges PEF is
     based  on  market   rates  for  coal   procurement   and  for   water-borne
     transportation under a methodology approved by the FPSC. In April 2004, PEF
     executed a Stipulation  and Settlement  agreement with the Office of Public
     Counsel and the  Florida  Industrial  Power  Users  Group which  amends the
     transportation  rate. Approval for this agreement is still pending from the
     FPSC.  See  discussion  at Note 4A.  Rail  transportation  is also based on
     market rates plus a return allowed by the FPSC on equity in  transportation
     equipment  utilized in transporting coal to PEF. The allowed rate of return
     is  currently  12%.  No  single  customer  accounted  for  10% or  more  of
     unaffiliated revenues.

                                       16
<PAGE>

     The following summarizes the revenues and segment profits or losses for the
     reportable  business  segments.  The  combined  segment  profits and losses
     represents Florida Progress' total income.
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                                        Energy and
     (in millions)                            PEF         Related          Rail         Other     Consolidated
                                                         Services
     -----------------------------------------------------------------------------------------------------------
     Three Months Ended March 31, 2004:
       Revenues                                $ 784           $ 255         $ 240       $  15       $ 1,294
       Intersegment  revenues                      -              82             -         (82)            -
          Total revenues                         784             337           240         (67)        1,294
       Segment profit                          $  49           $  38         $   6       $ (38)      $    55
     ===========================================================================================================

                                                        Energy and
                                              PEF         Related          Rail         Other     Consolidated
                                                         Services
     -----------------------------------------------------------------------------------------------------------
     Three Months Ended March 31, 2003:
       Revenues                                $ 728           $ 302         $ 178       $   7       $ 1,215
       Intersegment  revenues                      -              82             -         (82)            -
          Total revenues                         728             384           178         (75)        1,215
          Segment profit (loss)                $  71           $  25         $  (3)      $  (1)      $    92
     ===========================================================================================================
</TABLE>

11.  OTHER INCOME AND OTHER EXPENSE

     Other  income and expense  includes  interest  income and other  income and
     expense items as discussed  below. The components of other, net as shown on
     the  accompanying  Consolidated  Statements of Income for three ended March
     31, 2004 and 2003, are as follows:
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                                                 Three Months Ended
      (in millions)                                                   March 31,
                                                             ----------------------------
                                                                 2004            2003
                                                             ------------    ------------
      Other income
      Net financial trading gain                                   $   -           $   1
      Nonregulated energy and delivery services income                 4               3
      AFUDC equity                                                     1               1
      Other                                                            -               1
                                                             ------------    ------------
          Total other income - PEF                                 $   5           $   6
      Other income - Florida Progress                                  1               -
                                                             ------------    ------------
          Total other income - PEF and Florida Progress            $   6           $   6
                                                             ------------    ------------

        Other expense

      Nonregulated energy and delivery services expenses           $   2           $   2
      Donations                                                        4               2
      Other                                                            -               2
                                                             ------------    ------------
         Total other expense - PEF                                 $   6           $   6
      Loss from equity investments                                     4               4
      Other expense - Florida Progress                                 1               2
                                                             ------------    ------------
         Total other expense - PEF and Florida Progress            $  11           $  12
                                                             ------------    ------------
      Other, net                                                   $  (5)          $  (6)
                                                             ============    ============
</TABLE>

     Nonregulated energy and delivery services include power protection services
     and mass market programs such as surge protection,  appliance  services and
     area light sales, and delivery,  transmission and substation work for other
     utilities.

12.  COMMITMENTS AND CONTINGENCIES

     Contingencies and significant changes to the commitments  discussed in Note
     19 of the Company's 2003 Annual Report on Form 10-K are described below.

     A. Guarantees

     As a part of normal  business,  Florida  Progress and certain  subsidiaries
     including  PEF  enter  into  various  agreements   providing  financial  or
     performance   assurances  to  third  parties.   Such   agreements   include
     guarantees,  standby letters of credit and surety bonds.  These  agreements
     are  entered  into  primarily  to support or enhance  the  creditworthiness

                                       17
<PAGE>

     otherwise  attributed  to a  subsidiary  on a  stand-alone  basis,  thereby
     facilitating   the  extension  of  sufficient   credit  to  accomplish  the
     subsidiaries'  intended commercial purposes.  At March 31, 2004, management
     does not believe  conditions are likely for significant  performance  under
     these agreements.

     Guarantees  at March  31,  2004,  are  summarized  in the  table  below and
     discussed more fully in the subsequent paragraphs:

     (in millions)
     Guarantees issued on behalf of the Company and affiliates
          Standby letters of credit
                                                                  $  33
          Surety bonds                                                -
          Other guarantees                                           21
     Guarantees issued on behalf of third parties
          Securities of affiliated trust                            300
          Other guarantees                                           10
                                                               --------------
        Total                                                     $ 364
                                                               ==============

     Standby Letters of Credit
     The Company has issued standby letters of credit to financial  institutions
     for the benefit of third parties that have  extended  credit to the Company
     and certain  subsidiaries.  Of the total standby  letters of credit issued,
     PEF has issued  commitments  totaling $2 million.  These  letters of credit
     have been issued primarily for the purpose of supporting  payments of trade
     payables,  securing  performance  under contracts and lease obligations and
     self  insurance  for workers  compensation.  If a  subsidiary  does not pay
     amounts when due under a covered contract, the counterparty may present its
     claim for payment to the financial institution,  which will in turn request
     payment from the Company.  Any amounts owed by the  Company's  subsidiaries
     are reflected in the Company's Consolidated Balance Sheets.

     Surety Bonds
     At March 31, 2004,  the Company had $0.2 million in surety bonds,  of which
     PEF accounted for the entire amount,  purchased primarily for purposes such
     as providing workers compensation coverage and obtaining licenses,  permits
     and  rights-of-way.  To the extent  liabilities are incurred as a result of
     the activities  covered by the surety bonds,  such liabilities are included
     in the Balance Sheets.

     Other Guarantees
     The Company has total other  guarantees  outstanding of  approximately  $31
     million.  Included  in the $31 million  are $10  million of  guarantees  in
     support of synthetic fuel operations at a third party plant.  The remaining
     $21 million in other guarantees is related primarily to prompt  performance
     payments and other payments subject to contingencies.

     Securities of Affiliated Trust
     The Company has guaranteed certain payments of an affiliated  company,  FPC
     Capital I (the Trust).  Due to the nature of the  relationship  between the
     Trust and Florida Progress Funding Corporation,  the Company has guaranteed
     the  payment  of  all  distributions  related  to the  Trust's  outstanding
     mandatorily  redeemable preferred securities.  At March 31, 2004, the Trust
     had  outstanding  12 million  shares of the  securities  with a liquidation
     value of $300 million.

     Guarantees Issued by Progress Energy
     Progress  Energy has issued  approximately  $47  million of  guarantees  on
     behalf of Progress Fuels and its  subsidiaries  for obligations  under coal
     brokering operations.

     B. Insurance

     PEF is  insured  against  public  liability  for a nuclear  incident  up to
     $10,760 million per occurrence.  Under the current  provisions of the Price
     Anderson Act, which limits liability for accidents at nuclear power plants,
     PEF,  as  owner  of a  nuclear  unit,  can be  assessed  a  portion  of any
     third-party  liability  claims  arising from an accident at any  commercial
     nuclear  power  plant  in the  United  States.  In the  event  that  public
     liability  claims from an insured  nuclear  incident  exceed  $300  million
     (currently  available through commercial  insurers),  each company would be
     subject to  assessments  of up to $101 million for each  reactor  owned per
     occurrence.  Payment  of  such  assessments  would  be  made  over  time as
     necessary  to limit the payment in any one year to no more than $10 million
     per reactor owned.  Congress is expected to approve  revisions to the Price
     Anderson  Act  during  2004,  that  could  include   increased  limits  and
     assessments  per reactor owned.  The final outcome of this matter cannot be
     predicted at this time.

                                       18
<PAGE>

     C. Claims and Uncertainties

     The Company is subject to federal,  state and local regulations  addressing
     hazardous  and solid  waste  management,  air and water  quality  and other
     environmental matters.

     Hazardous and Solid Waste Management

     Various  organic  materials  associated with the production of manufactured
     gas,  generally  referred to as coal tar, are  regulated  under federal and
     state laws.  The  principal  regulatory  agency that is  responsible  for a
     specific former  manufactured gas plant (MGP) site depends largely upon the
     state in which the site is  located.  There are  several MGP sites to which
     the Company has some connection.  In this regard, PEF and other potentially
     responsible parties, are participating in, investigating and, if necessary,
     remediating former MGP sites with several regulatory  agencies,  including,
     but not limited to, the U.S. Environmental  Protection Agency (EPA) and the
     Florida Department of Environmental  Protection (FDEP). In addition, PEF is
     periodically  notified  by  regulators  such as the EPA and  various  state
     agencies of its involvement or potential  involvement in sites,  other than
     MGP sites, that may require investigation and/or remediation.

     PEF has  filed  claims  with  the  Company's  general  liability  insurance
     carriers to recover costs arising out of actual or potential  environmental
     liabilities.  Some claims have been  settled and others are still  pending.
     The Company cannot predict the outcome of this matter.

     PEF At March 31,  2004,  PEF has  accrued  $20  million  for  probable  and
     estimable  costs related to various  environmental  sites. Of this accrual,
     $10 million is for costs  associated  with the  remediation of distribution
     transformers  which are more  fully  discussed  below.  The  remaining  $10
     million is related to two former MGP sites and other sites  associated with
     PEF that have required or are anticipated to require  investigation  and/or
     remediation  costs. PEF does not believe that it can provide an estimate of
     the reasonably  possible total  remediation  costs beyond what is currently
     accrued.

     In 2002,  PEF  accrued  approximately  $3  million  for  investigation  and
     remediation  costs associated with  distribution  transformers and received
     approval  from the FPSC for annual  recovery of these  environmental  costs
     through the  Environmental  Cost Recovery Clause (ECRC).  By December 2003,
     PEF accrued an additional $9 million for similar  environmental  costs as a
     result of increased  sites and estimated  costs per site.  PEF has received
     approval  from the FPSC to recover  these costs  through the ECRC.  As more
     activity  occurs at these  sites,  PEF will  assess  the need to adjust the
     accruals.

     In addition, PEF received insurance proceeds of approximately $3 million to
     address costs  associated  with  environmental  liabilities  related to its
     involvement with some MGP and other sites. All eligible expenses related to
     these sites are included in the amount accrued above and charged  against a
     fund containing these proceeds.

     These accruals have been recorded on an  undiscounted  basis.  PEF measures
     its  liability  for these sites based on available  evidence  including its
     experience in investigating and remediating environmentally impaired sites.
     This  process  often  includes   assessing  and   developing   cost-sharing
     arrangements with other potentially  responsible  parties.  Presently,  PEF
     cannot  determine the total costs that may be incurred in  connection  with
     the remediation of all sites.

     Florida   Progress  In  2001,   Progress   Fuels  sold  its  Inland  Marine
     Transportation  business to AEP Resources,  Inc. Progress Fuels established
     an accrual to address  indemnities  and  retained  environmental  liability
     associated  with  the  transaction.   Progress  Fuels  estimates  that  its
     contractual liability to AEP Resources,  Inc. associated with Inland Marine
     Transportation is $4 million at March 31, 2004 and has accrued such amount.
     The  previous  accrual of $10 million was reduced in 2003 based on a change
     in estimate.  This accrual has been  determined on an  undiscounted  basis.
     Progress  Fuels measures its liability for this site based on estimable and
     probable  remediation  scenarios.  The  Company  believes  that  it is  not
     reasonably  probable that additional  costs will be incurred related to the
     environmental  indemnification  provision  beyond the amount  accrued.  The
     Company cannot predict the outcome of this matter.

     Certain  historical  sites exist that are being  addressed  voluntarily  by
     Progress  Fuels and FPC.  An  immaterial  accrual has been  established  to
     address  investigation  expenses related to these sites. The Company cannot
     determine  the total costs that may be incurred  in  connection  with these
     sites. The Company cannot predict the outcome of this matter.

                                       19
<PAGE>

     Rail Services is voluntarily addressing certain historical waste sites. The
     Company cannot determine the total costs that may be incurred in connection
     with these sites.

     The Company is also currently in the process of assessing  potential  costs
     and exposures at other  environmentally  impaired sites. As the assessments
     are developed and analyzed,  the Company will accrue costs for the sites to
     the extent the costs are probable and can be reasonably estimated.

     Air Quality

     There has been and may be further proposed legislation requiring reductions
     in air emissions for nitrogen  oxides,  sulfur dioxide,  carbon dioxide and
     mercury.  Some of these  proposals  establish  nationwide caps and emission
     rates  over an  extended  period  of time.  This  national  multi-pollutant
     approach to air pollution control could involve  significant  capital costs
     which could be material to the Company's consolidated financial position or
     results of operations. Some companies may seek recovery of the related cost
     through rate adjustments or similar mechanisms. However, the Company cannot
     predict the outcome of this matter.

     The EPA is  conducting  an  enforcement  initiative  related to a number of
     coal-fired   utility  power  plants  in  an  effort  to  determine  whether
     modifications  at  those  facilities  were  subject  to New  Source  Review
     requirements or New Source  Performance  Standards under the Clean Air Act.
     PEF was asked to provide  information to the EPA as part of this initiative
     and  cooperated in providing the requested  information.  During 2003,  PEF
     received a supplemental  information  request from the EPA and responded to
     it. The EPA initiated civil enforcement  actions against other unaffiliated
     utilities as part of this  initiative.  Some of these  actions  resulted in
     settlement agreements calling for expenditures ranging from $1.0 billion to
     $1.4 billion.  A utility that was not subject to a civil enforcement action
     settled its New Source Review  issues with the EPA for $300 million.  These
     settlement  agreements  have generally  called for  expenditures to be made
     over extended time periods,  and some of the companies may seek recovery of
     the related  cost  through  rate  adjustments  or similar  mechanisms.  The
     Company cannot  predict the outcome of the EPA's  initiative or its impact,
     if any, on the Company.

     In 2003,  the EPA  published  a final  rule  addressing  routine  equipment
     replacement  under the New Source Review program.  The rule defines routine
     equipment  replacement  and the types of activities that are not subject to
     New Source Review  requirements or New Source  Performance  Standards under
     the Clean Air Act. The rule was challenged in the Federal Appeals Court and
     its  implementation  stayed. The Company cannot predict the outcome of this
     matter.

     In 1997,  the EPA's  Mercury  Study  Report and Utility  Report to Congress
     conveyed  that mercury is not a risk to the average  American and expressed
     uncertainty  about whether  reductions in mercury emissions from coal-fired
     power plants would reduce human exposure.  Nevertheless, the EPA determined
     in 2000 that regulation of mercury  emissions from coal-fired  power plants
     was  appropriate.  In 2003,  the EPA proposed,  and  solicited  comment on,
     alternative   control  plans  that  would  limit  mercury   emissions  from
     coal-fired  power  plants.  The rule is expected  to become  final in March
     2005.  Achieving  compliance with either proposal could involve significant
     capital costs which could be material to the Company's  financial condition
     or results of operations.  However,  the Company cannot predict the outcome
     of this matter.

     In conjunction  with the proposed  mercury rule, the EPA proposed a Maximum
     Available  Control  Technology (MACT) standard to regulate nickel emissions
     from  residual  oil-fired  units.  The agency  estimates  the proposal will
     reduce national  nickel  emissions to  approximately  103 tons. The rule is
     expected to become  final in March 2005.  The  Company  cannot  predict the
     outcome of this matter.

     In December 2003, the EPA released its proposed Interstate Air Quality Rule
     (commonly known as the Fine Particulate  Transport Rule and/or the Regional
     Transport Rule). The EPA's proposal  requires 28  jurisdictions,  including
     North  Carolina,  South  Carolina,  Georgia and Florida,  to further reduce
     nitrogen oxide (NOx) and sulfur dioxide (SO2)  emissions in order to attain
     pre-set NOx and SO2 emissions levels (which have not yet been  determined).
     The rule is expected to become final in 2004. The  installation of controls
     necessary to comply with the rule could involve significant capital costs.

     In 2004,  a bill was  introduced  in the  Florida  legislature  that  would
     require significant  reductions in NOx, SO2 and particulate  emissions from
     certain coal, natural gas and oil-fired  generating units owned or operated
     by  investor-owned  electric  utilities,  including  PEF.  The  NOx and SO2
     reductions  would be effective  beginning  with  calendar year 2010 and the
     particulate  reductions  would be effective  beginning  with  calendar year
     2012. Under the proposed legislation, the FPSC would be authorized to allow
     the  utilities  to  recover  the  costs of  compliance  with  the  emission
     reductions  over a period not greater  than seven years  beginning in 2005,
     but the  utilities'  rates would be frozen at 2004 levels for at least five
     years of the maximum  recovery  period.  The legislature  took no action on
     this matter.

                                       20
<PAGE>

     Water Quality

     As a result of the operation of certain control equipment needed to address
     the air  quality  issues  outlined  above,  new  wastewater  streams may be
     generated.  Integration  of these  new  wastewater  streams  into  existing
     wastewater  treatment processes may result in permitting,  construction and
     water  treatment  challenges  to the Company in the  immediate and extended
     future.

     After  many  years  of  litigation  and  settlement  negotiations,  the EPA
     published  final  regulations  in February 2004 for the  implementation  of
     Section 316(b) of the Clean Water Act. The purpose of these  regulations is
     to minimize  adverse  environmental  impacts caused by cooling water intake
     structures and intake systems located at existing facilities. Over the next
     several years, these regulations may require the facilities to mitigate the
     effects to aquatic organisms by undertaking  intake  modifications or other
     restorative  activities.   Substantial  costs  could  be  incurred  by  the
     facilities in order to comply with the new regulations.  The Company cannot
     predict the outcome and impacts to the facilities at this time.

     The EPA has published for comment a draft  Environmental  Impact  Statement
     (EIS) for  surface  coal  mining  (sometimes  referred  to as  "mountaintop
     mining") and valley fills in the  Appalachian  coal region,  where Progress
     Fuels  currently  operates  a surface  mine and may  operate  others in the
     future.  The final EIS,  when  published,  may affect  regulations  for the
     permitting  of  mines  and  the  cost  of  compliance  with   environmental
     regulations. Regulatory changes for mining may also affect the cost of fuel
     for the coal-fueled  electric  generating plant. The Company cannot predict
     the outcome of this matter.

     Other Environmental Matters

     The Kyoto  Protocol  was  adopted in 1997 by the United  Nations to address
     global  climate  change by reducing  emissions of carbon  dioxide and other
     greenhouse  gases.  The United  States has not adopted the Kyoto  Protocol;
     however,  a number of carbon dioxide  emissions control proposals have been
     advanced   in   Congress   and  by  the  Bush   Administration.   The  Bush
     Administration  favors  voluntary  programs.  Reductions in carbon  dioxide
     emissions  to  the  levels   specified  by  the  Kyoto  Protocol  and  some
     legislative   proposals  could  be  materially  adverse  to  the  Company's
     financials  and  operations  if associated  costs cannot be recovered  from
     customers. The Company favors the voluntary program approach recommended by
     the administration,  and is evaluating options for the reduction, avoidance
     and sequestration of greenhouse gases.  However, the Company cannot predict
     the outcome of this matter.

     Other Contingencies

     1. Franchise Litigation

     Three  cities,  with  a  total  of  approximately  18,000  customers,  have
     litigation  pending  against PEF in various  circuit courts in Florida.  As
     discussed below, three other cities,  with a total of approximately  30,000
     customers,  have  subsequently  settled their  lawsuits with PEF and signed
     new,  30-year  franchise  agreements.  The lawsuits  principally seek (1) a
     declaratory  judgment  that the  cities  have the right to  purchase  PEF's
     electric distribution system located within the municipal boundaries of the
     cities,  (2) a  declaratory  judgment  that the  value of the  distribution
     system must be determined  through  arbitration,  and (3) injunctive relief
     requiring PEF to continue to collect from PEF's  customers and remit to the
     cities,  franchise fees during the pending  litigation,  and as long as PEF
     continues to occupy the cities'  rights-of-way to provide electric service,
     notwithstanding the expiration of the franchise  ordinances under which PEF
     had agreed to collect such fees.  Five circuit  courts have entered  orders
     requiring  arbitration  to establish the purchase  price of PEF's  electric
     distribution  system within five cities.  Two appellate  courts have upheld
     those circuit court decisions and authorized  cities to determine the value
     of  PEF's   electric   distribution   system  within  the  cities   through
     arbitration.

     Arbitration  in one of the  cases  (the  City of  Casselberry)  was held in
     August  2002.  Following   arbitration,   the  parties  entered  settlement
     discussions,  and in July 2003 the City approved a settlement agreement and
     a new, 30-year  franchise  agreement with PEF. The settlement  resolves all
     pending   litigation  with  that  City.  A  second  arbitration  (with  the
     13,000-customer  City of Winter Park) was completed in February 2003.  That
     arbitration  panel  issued an award in May 2003  setting the value of PEF's
     distribution  system  within the City of Winter Park at  approximately  $32
     million,  not including  separation and reintegration and construction work
     in  progress,  which could add several  million  dollars to the award.  The
     panel also awarded PEF approximately  $11 million in stranded costs,  which

                                       21
<PAGE>

     according to the award decreases over time. In September 2003,  Winter Park
     voters passed a referendum  that would authorize the City to issue bonds of
     up to  approximately  $50 million to acquire  PEF's  electric  distribution
     system.  While the City has not yet  definitively  decided  whether it will
     acquire the system,  on April 26, 2004, the City Commission  voted to enter
     into a hedge  agreement to lock into interest rates for the  acquisition of
     the system.  The City has sought and received  wholesale  power supply bids
     and has  indicated  that it will  seek bids to  operate  and  maintain  the
     distribution  system. At this time,  whether and when there will be further
     proceedings regarding the City of Winter Park cannot be determined. A third
     arbitration  (with the  2,500-customer  Town of Belleair)  was completed in
     June 2003. In September 2003, the arbitration panel issued an award in that
     case setting the value of the electric  distribution system within the Town
     at approximately $6 million.  The panel further required the Town to pay to
     PEF its requested $1 million in separation and  reintegration  costs and $2
     million in stranded  costs.  The Town has not yet  decided  whether it will
     attempt to acquire the system. At this time, whether and when there will be
     further proceedings regarding the Town of Belleair cannot be determined.  A
     fourth  arbitration  (with the  13,000-customer  City of  Apopka)  had been
     scheduled for January 2004. In December  2003,  the Apopka City  Commission
     voted on first  reading to  approve a  settlement  agreement  and a 30-year
     franchise  with PEF. The  settlement  and franchise  became  effective upon
     approval by the  Commission at a second reading of the franchise in January
     2004.  The  settlement  resolves  all  outstanding  litigation  between the
     parties.

     Arbitration in the remaining city's litigation (the  1,500-customer City of
     Edgewood) has not yet been scheduled.

     As part of the above  litigation,  two  appellate  courts have also reached
     opposite  conclusions  regarding  whether PEF must continue to collect from
     its  customers and remit to the cities  "franchise  fees" under the expired
     franchise  ordinances.  PEF has filed an appeal  with the  Florida  Supreme
     Court to resolve the conflict between the two appellate courts. The Florida
     Supreme  Court held oral  argument  in one of the  appeals in August  2003.
     Subsequently,  the Court  requested  briefing from the parties in the other
     appeal,  which was completed in November 2003. The Court has not yet issued
     a decision in these cases.  PEF cannot predict the outcome of these matters
     at this time.

     2. DOE Litigation

     As required  under the Nuclear Waste Policy Act of 1982, PEF entered into a
     contract  with the U.S.  Department  of Energy  (DOE)  under  which the DOE
     agreed to begin  taking  spent  nuclear  fuel by no later than  January 31,
     1998.  All  similarly  situated  utilities  were  required to sign the same
     standard contract.

     In  1995,  the DOE  issued a final  interpretation  that it did not have an
     unconditional obligation to take spent nuclear fuel by January 31, 1998. In
     Indiana & Michigan  Power v. DOE,  the Court of Appeals  vacated  the DOE's
     final interpretation and ruled that the DOE had an unconditional obligation
     to begin  taking  spent  nuclear  fuel.  The Court did not specify a remedy
     because the DOE was not yet in default.

     After the DOE  failed to comply  with the  decision  in  Indiana & Michigan
     Power v. DOE,  a group of  utilities  petitioned  the Court of  Appeals  in
     Northern  States Power (NSP) v. DOE,  seeking an order requiring the DOE to
     begin  taking  spent  nuclear  fuel by January 31,  1998.  The DOE took the
     position  that its  delay was  unavoidable,  and the DOE was  excused  from
     performance  under the terms and  conditions of the contract.  The Court of
     Appeals did not order the DOE to begin taking spent nuclear  fuel,  stating
     that the utilities had a potentially  adequate remedy by filing a claim for
     damages under the contract.

     After the DOE failed to begin  taking  spent  nuclear  fuel by January  31,
     1998,  a group of  utilities  filed a motion  with the Court of  Appeals to
     enforce the mandate in NSP v. DOE.  Specifically,  this group of  utilities
     asked the Court to permit the utilities to escrow their waste fee payments,
     to order the DOE not to use the waste fund to pay damages to the utilities,
     and to order the DOE to establish a schedule for disposal of spent  nuclear
     fuel.  The Court denied this motion  based  primarily on the grounds that a
     review of the matter was premature, and that some of the requested remedies
     fell outside of the mandate in NSP v. DOE.

     Subsequently, a number of utilities each filed an action for damages in the
     Federal  Court of  Claims.  The U.S.  Circuit  Court  of  Appeals  (Federal
     Circuit)  has  ruled  that  utilities  may sue the DOE for  damages  in the
     Federal Court of Claims instead of having to file an  administrative  claim
     with DOE.

                                       22
<PAGE>

     On January 14, 2004,  PEF filed a complaint  with the DOE claiming that the
     DOE breached the  Standard  Contract for Disposal of Spent  Nuclear Fuel by
     failing  to  accept  spent  nuclear  fuel  from  various   Progress  Energy
     facilities on or before January 31, 1998.  Damages due to DOE's breach will
     likely exceed $100 million.  Similar suits have been  initiated by over two
     dozen other utilities.

     In July 2002,  Congress  passed an override  resolution to Nevada's veto of
     DOE's  proposal to locate a permanent  underground  nuclear  waste  storage
     facility  at  Yucca  Mountain,  Nevada.  DOE  plans  to  submit  a  license
     application for the Yucca Mountain facility by the end of 2004. On November
     5, 2003,  Congressional  negotiators  approved $580 million for fiscal year
     2004 for the Yucca  Mountain  project,  $123 million more than the previous
     year. PEF cannot predict the outcome of this matter.

     PEF is  currently  storing  spent  nuclear fuel onsite in spent fuel pools.
     PEF's nuclear unit,  Crystal River Unit No. 3, (CR3) has sufficient storage
     capacity in place for fuel  consumed  through the end of the  expiration of
     the current  license in 2016.  PEF will seek  renewal of the CR3  operating
     license and if approved, additional dry storage may be necessary.

     3. Advanced Separation Technologies (AST)

     In 1996,  Florida  Progress  sold its 80% interest in AST to Calgon  Carbon
     Corporation  (Calgon)  for net  proceeds of $56  million in cash.  In 1998,
     Calgon  filed a lawsuit  against  Florida  Progress  and the other  selling
     shareholder  and amended it in April 1998,  alleging  misstatement of AST's
     1996 revenues, assets and liabilities,  seeking damages and granting Calgon
     the right to rescind  the sale.  The  lawsuit  also  accused the sellers of
     failing to  disclose  flaws in AST's  manufacturing  process  and a lack of
     quality control.  Florida Progress believes that the aggregate total of all
     legitimate  warranty  claims by  customers  of AST for which it is probable
     that Florida  Progress  will be  responsible  for under the Stock  Purchase
     Agreement with Calgon is approximately $3 million, and accordingly, accrued
     $3 million in the third  quarter of 1999 as an estimate  of probable  loss.
     All parties  filed motions for summary  judgment in July 2001.  The summary
     judgment motions of Calgon and the other selling shareholder were denied in
     April 2002. The summary  judgment motion of Florida  Progress was withdrawn
     pending a legal  challenge  to portions  of the report of Calgon's  expert,
     Arthur  Andersen,  which  had been  used to  oppose  summary  judgment.  In
     September 2003, the United States  District Court for the Western  District
     of  Pennsylvania  issued final orders  excluding  from evidence in the case
     that portion of Arthur  Andersen's  damage analysis based on the discounted
     cash flow  methodology  of  valuation.  The Court  did not  exclude  Arthur
     Andersen's use of the guideline publicly traded company  methodology in its
     damage  analysis.  Florida  Progress  filed a renewed  motion  for  summary
     judgment in October 2003, which is pending.  The Company cannot predict the
     outcome of this matter, but will present a vigorous defense.

     4. Synthetic Fuel Tax Credits

     Florida Progress,  through its  subsidiaries,  is a majority owner in three
     entities and a minority owner in three  entities that own  facilities  that
     produce  synthetic fuel as defined under the Internal  Revenue Code (Code).
     The  production  and  sale of the  synthetic  fuel  from  these  facilities
     qualifies  for tax credits  under  Section 29 of the Code  (Section  29) if
     certain  requirements  are  satisfied,  including  a  requirement  that the
     synthetic fuel differs  significantly in chemical composition from the coal
     used to produce such  synthetic  fuel and that the fuel was produced from a
     facility  that was  placed  in  service  before  July 1,  1998.  All  three
     majority-owned entities and all three minority-owned entities have received
     private letter rulings (PLRs) from the Internal  Revenue Service (IRS) with
     respect  to their  synthetic  fuel  operations.  The PLRs do not  limit the
     production on which  synthetic fuel credits may be claimed.  Should the tax
     credits be denied on audit,  and the Company  fails to prevail  through the
     IRS or legal process,  there could be a significant  tax liability owed for
     previously taken Section 29 credits,  with a significant impact on earnings
     and cash flows.

     In September 2002, all three of Florida Progress'  majority-owned synthetic
     fuel entities,  including Colona,  and two of the Company's  minority owned
     synthetic fuel entities were accepted into the IRS's  Pre-Filing  Agreement
     (PFA) program.  The PFA program allows taxpayers to voluntarily  accelerate
     the IRS exam process in order to seek resolution of specific issues. Either
     the  Company or the IRS can  withdraw  from the  program  at any time,  and
     issues not  resolved  through  the program may proceed to the next level of
     the IRS exam process.

     In February 2004,  subsidiaries of the Company  finalized  execution of the
     Colona Closing  Agreement with the IRS  concerning  their Colona  synthetic
     fuel facilities.  The Closing Agreement provided that the Colona facilities
     were  placed  in  service  before  July  1,  1998,  which  is  one  of  the
     qualification  requirements  for tax credits  under Section 29 of the Code.
     The Closing Agreement further provides that the fuel produced by the Colona
     facilities in 2001 is a "qualified fuel" for purposes of the Section 29 tax
     credits.  This action concludes the IRS PFA program with respect to Colona.
     Although the  execution of the Colona  Closing  Agreement is a  significant
     event,  the PFA process  continues  with respect to the four synthetic fuel

                                       23
<PAGE>

     facilities owned by other affiliates of Progress Energy and FPC. Currently,
     the focus of that process is to determine that the  facilities  were placed
     in service before July 1, 1998. In management's opinion, Progress Energy is
     complying  with all the necessary  requirements  to be allowed such credits
     under  Section  29,  although  it cannot  provide  certainty,  that it will
     prevail if challenged by the IRS on credits taken. Accordingly, the Company
     has no current plans to alter its synthetic fuel  production  schedule as a
     result of these matters.

     In October  2003,  the  United  States  Senate  Permanent  Subcommittee  on
     Investigations began a general investigation  concerning synthetic fuel tax
     credits  claimed  under  Section  29 of  the  Code.  The  investigation  is
     examining the  utilization of the credits,  the nature of the  technologies
     and fuels  created,  the use of the  synthetic  fuel,  and other aspects of
     Section 29 and is not specific to the Company's  synthetic fuel operations.
     Progress   Energy  is  providing   information  in  connection   with  this
     investigation. The Company cannot predict the outcome of this matter.

     5. Other Legal Matters

     Florida  Progress  and PEF are  involved in various  other claims and legal
     actions arising in the ordinary  course of business,  some of which involve
     claims for substantial amounts. Where appropriate,  accruals have been made
     in accordance with SFAS No. 5, "Accounting for  Contingencies,"  to provide
     for such matters. Florida Progress and PEF believe the ultimate disposition
     of these  matters  will not have a  material  adverse  effect  upon  either
     Company's consolidated financial position or results of operation.


                                       24
<PAGE>

Item 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

The following  Management's  Discussion  and Analysis  contains  forward-looking
statements that involve estimates,  projections, goals, forecasts,  assumptions,
risks and  uncertainties  that could cause actual  results or outcomes to differ
materially from those expressed in the forward-looking statements. Please review
"SAFE HARBOR FOR  FORWARD-LOOKING  STATEMENTS"  for a discussion  of the factors
that may impact any such forward-looking statements made herein.

Amounts  reported in the interim  Consolidated  Statements of Income for Florida
Progress Corporation (Florida Progress) and the interim Statements of Income for
Progress  Energy Florida,  Inc. (PEF) are not necessarily  indicative of amounts
expected  for the  respective  annual or future  periods  due to the  effects of
seasonal  temperature  variations  on  energy  consumption  and  the  timing  of
maintenance on electric generating units, among other factors.

This discussion should be read in conjunction with the accompanying financial
statements found elsewhere in this report and in conjunction with the 2003 Form
10-K.

OPERATING RESULTS

The  Company's  segments  contributed  segment  profits  or losses for the three
months ended March 31, 2004 and 2003 as follows:

-------------------------------------------------------------
(in millions)                    Three Months Ended March 31,
-------------------------------------------------------------
Business Segment                             2004       2003
-------------------------------------------------------------
PEF                                          $ 49       $ 71
Energy and Related Services                    38         25
Rail                                            6         (3)
Other                                         (38)        (1)
                                  ---------------------------
    Segment profit/(loss)                    $ 55       $ 92
-------------------------------------------------------------

Progress Energy Florida

PEF  contributed  segment  profits of $49  million  and $71 million in the three
months ended March 31, 2004 and 2003, respectively.  The decrease in profits for
the three months ended March 31, 2004 when  compared to 2003 is primarily due to
the impact of milder  weather  and higher  O&M  costs,  partially  offset by the
additional return on investment on the Hines 2 plant.

PEF's  electric  revenues for the three months ended March 31, 2004 and 2003 and
the amount and percentage change by customer class are as follows:

-----------------------------------------------------------------------
(in millions of $)                  Three Months Ended March 31,
-----------------------------------------------------------------------
Customer Class                2004      Change     % Change    2003
-----------------------------------------------------------------------
Residential                     $ 402        $17    4.4%          $385
Commercial                        181         31    20.7%          150
Industrial                         63         15    31.3%           48
Governmental                       46          8    21.1%           38
Retroactive rate refund             -          -      -              -
Retail revenue sharing            (4)        (4)      -              -
                            ---------------------            ----------
    Total retail revenues         688         67    10.8%          621
Wholesale                          67        (4)   (5.6%)           71
Unbilled                          (6)        (5)      -            (1)
Miscellaneous                      35        (2)   (5.4%)           37
                            ---------------------            ----------
    Total electric revenues      $784        $56    7.7%          $728
-----------------------------------------------------------------------

PEF's  electric  energy sales for the three months ended March 31, 2004 and 2003
and the amount and percentage change by customer class are as follows:


                                       25
<PAGE>

-----------------------------------------------------------------------
(in millions of kWh)                Three Months Ended March 31,
-----------------------------------------------------------------------
Customer Class                2004      Change     % Change    2003
-----------------------------------------------------------------------
Residential                     4,291      (262)   (5.8%)        4,553
Commercial                      2,491         49    2.0%         2,442
Industrial                      1,023        107    11.7%          916
Governmental                      672         16    2.4%           656
                            ---------------------            ----------
    Total   retail   energy     8,477       (90)   (1.1%)        8,567
sales
Wholesale                       1,323         46    3.6%         1,277
Unbilled                        (135)      (190)      -             55
                            ---------------------            ----------
    Total kWh sales             9,665      (234)   (2.4%)        9,899
-----------------------------------------------------------------------

Revenues

PEF's revenues, excluding recoverable fuel revenues and other pass through items
of $448  million and $372  million for the three months ended March 31, 2004 and
2003,  respectively,  decreased $20 million.  This decrease was due primarily to
the impact of milder weather which was offset partially by the $7 million return
on Hines 2 which was placed in service in December 2003.

Expenses

Fuel and purchased power expenses are recovered  primarily through cost recovery
clauses and, as such,  changes in expense  have no material  impact on operating
results.

Operations and maintenance  (O&M) costs increased $19 million,  when compared to
the $141 million  incurred  during the three  months ended March 31, 2003.  This
increase is primarily  related to higher costs  associated  with scheduled plant
outages and planned reliability improvements of approximately $6 million each.

Depreciation  and  amortization  decreased  $10 million when compared to the $79
million incurred during the three months ended March 31, 2003,  primarily due to
the amortization of the Tiger Bay regulatory asset in the prior year. During the
first quarter of 2003,  Tiger Bay  amortization  was $15 million.  The Tiger Bay
asset  was  fully  amortized  in  September  2003.  The  decrease  in Tiger  Bay
amortization was partially  offset by additional  depreciation for assets placed
in service.

ENERGY AND RELATED SERVICES

The Energy and Related Services  segment's  operations  include  synthetic fuels
production,  natural gas production,  coal  extraction and terminal  operations.
Energy and Related  Services'  results for the three months ended March 31, 2003
were  restated  to reflect  four  months of  earnings  for  certain  operations,
primarily  synthetic  fuel  facilities.  Energy and  Related  Services'  segment
profits  increased  $13  million as  compared to $25 million for the same period
prior year due primarily to increased  earnings from gas operations  with a full
quarter of North Texas Gas volumes in the current year  (acquired  late February
2003) and higher gas prices in 2004.

The following  summarizes  Energy and Related  Services' segment profits for the
three months ended March 31, 2004 and 2003:

--------------------------------------------------------------
(in millions)                                2004       2003
--------------------------------------------------------------
  Synthetic fuel operations                  $ 26       $ 21
  Gas production                               13          7
  Coal fuel and other operations               (1)        (3)
                                     -------------------------
     Segment Profits                         $ 38       $ 25
--------------------------------------------------------------

Synthetic Fuel Operations

The  synthetic  fuels  operations  generated  net profits of $26 million and $21
million for the three  months ended March 31, 2004 and 2003,  respectively.  The
production and sale of synthetic fuel generate operating losses, but qualify for
tax credits under  Section 29 of the Code,  which more than offset the effect of
such losses. See Note 12 to the Consolidated Interim Financial Statements.

                                       26
<PAGE>

The  operations  resulted in the  following for the three months ended March 31,
2004 and 2003:

--------------------------------------------------------------
(in millions)                                   2004     2003
--------------------------------------------------------------
Tons sold                                        1.9      1.4
                                           -------------------

Operating losses, excluding tax credits        $ (24)   $ (15)
Tax credits generated                             50       36
                                           -------------------
    Net profits                                $  26    $  21
--------------------------------------------------------------

Synthetic  fuels'  tons sold and net profits  increased  as compared to the same
period in 2003 due primarily to a change in internal production schedule in 2004
compared to 2003.

Natural Gas Operations

Natural gas operations  generated  profits of $13 million and $7 million for the
three  months  ended  March 31,  2004 and 2003,  respectively.  The  increase in
production  resulted  from the  acquisition  of North Texas Gas in late February
2003 and higher gas prices in 2004 contributed to increased  earnings in 2004 as
compared to 2003. In October 2003, the Company completed the sale of certain gas
producing  properties owned by Mesa Hydrocarbons,  LLC. The following summarizes
the gas production,  revenues and gross margins for the three months ended March
31, 2004 and 2003 by production facility:

----------------------------------------------------------------
                                                2004       2003
----------------------------------------------------------------
      Production in Bcf equivalent
Mesa                                               -        1.7
Westchester                                      4.0        3.2
North Texas Gas                                  2.7        0.5
                                          ----------------------
    Total Production                             6.7        5.4
                                          ----------------------

          Revenues in millions
Mesa                                            $  -       $  5
Westchester                                       22         15
North Texas Gas                                   13          4
                                          ----------------------
    Total Revenues                              $ 35       $ 24
                                          ----------------------

              Gross Margin
in millions of $                                $ 27       $ 19
As a % of revenues                                77%        79%
----------------------------------------------------------------

Coal Fuel and Other Operations

Coal fuel and other  operations  generated  segment losses of $1 million for the
three months ended March 31, 2004 compared to losses of $3 million for the three
months  ended  March 31,  2003.  The  decrease  in losses of $2  million  is due
primarily to the impact of the  retroactive  Service  Company  allocation in the
prior  year.  Results  for the same  period  in the prior  year were  negatively
impacted by the retroactive  reallocation of Service Company costs of $4 million
after-tax.

Rail

Rail's operations include railcar and locomotive repair,  trackwork,  rail parts
reconditioning and sales, scrap metal recycling and other rail related services.
The Company sold the assets of Railcar Ltd., a leasing subsidiary, in 2004.

Progress  Rail  contributed  segment  profit of $6 million for the quarter ended
March 31, 2004  compared  with a net loss of $3 million for the same period last
year.  Progress  Rail  earnings  were  positively  impacted by higher prices and
margins on  recycling  sales.  In  addition,  results for the same period in the
prior year were negatively  impacted by the retroactive  reallocation of Service
Company costs of $3 million after-tax.

                                       27
<PAGE>

OTHER

The Other segment  includes  telecommunications,  holding  company and financing
expenses.

Other segment profits  decreased to $37 million for the three months ended March
31, 2004  compared to the same period in the prior year.  This  decrease was due
primarily to the impact of tax  levelization  adjustments  booked each  quarter.
GAAP  requires  companies  to apply a  levelized  effective  tax rate to interim
periods that is consistent with the estimated annual effective tax rate.  Income
tax expense was  increased  by $33 million and  decreased  by $5 million for the
three months ended March 31, 2004 and 2003,  respectively,  in order to maintain
an effective tax rate consistent with the estimated annual rate. The tax credits
associated  with the Company's  synthetic fuel  operations  primarily  drive the
required levelization amount.  Fluctuations in estimated annual earnings and tax
credits  can also  cause  large  swings in the  effective  tax rate for  interim
periods.  Therefore,  this adjustment  will vary each quarter,  but will have no
effect on net income for the year.

LIQUIDITY AND CAPITAL RESOURCES

Statements of Cash Flows and Financing Activities

Cash provided by operating activities increased $19 million for the three months
ended March 31,  2004,  when  compared to the three months ended March 31, 2003.
The  increase  in  operating  cash flow was due  primarily  to the  recovery  of
previously  deferred  fuel costs which was partially  offset by lower  operating
results at PEF and higher corporate expenses.

Net cash used in  investing  activities  decreased  $253  million  for the three
months ended March 31, 2004,  when  compared to the three months ended March 31,
2003.   The  decrease  is  primarily   due  to  reduced   nonregulated   capital
expenditures,  primarily  the  purchase  of North  Texas Gas assets in the first
quarter of 2003 and proceeds from the sale of Railcar Ltd. in 2004.

On  February 9, 2004,  Progress  Capital  Holdings,  Inc.  paid at maturity  $25
million 6.48% medium term notes with excess cash.

The amount  and timing of future  sales of  company  securities  will  depend on
market  conditions,  operating cash flow,  asset sales and the specific needs of
the Company. The Company may from time to time sell securities beyond the amount
needed to meet capital  requirements in order to allow for the early  redemption
of  long-term  debt,  the  redemption  of  preferred  stock,  the  reduction  of
short-term debt or for other generation corporate purposes.

Future Commitments

As of March  31,  2004,  both  Florida  Progress'  and  PEF's  contractual  cash
obligations and other commercial  commitments  have not changed  materially from
what was reported in the 2003 Annual Report on Form 10-K.

                                       28
<PAGE>

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information called for by ITEM 3 is omitted pursuant to Instruction  H(2)(c)
to Form 10-Q (Omission of Information by Certain Wholly Owned Subsidiaries).

Item 4.  CONTROLS AND PROCEDURES

Florida Progress Corporation

Pursuant to Rule 13a-15(b)  under the Securities  Exchange Act of 1934,  Florida
Progress carried out an evaluation,  with the participation of Florida Progress'
management,  including Florida Progress'  President and Chief Executive Officer,
and  Chief  Financial  Officer,   of  the  effectiveness  of  Florida  Progress'
disclosure  controls and procedures  (as defined under Rule 13a-15(e)  under the
Securities  Exchange  Act of 1934) as of the end of the  period  covered by this
report.  Based  upon that  evaluation,  Florida  Progress'  President  and Chief
Executive Officer,  and Chief Financial Officer concluded that Florida Progress'
disclosure  controls and  procedures  are  effective in timely  alerting them to
material  information  relating to Florida Progress  (including its consolidated
subsidiaries) required to be included in Florida Progress' periodic SEC filings.

There has been no change in Florida  Progress'  internal  control over financial
reporting during the quarter ended March 31, 2004 that has materially  affected,
or is reasonably likely to materially affect, Florida Progress' internal control
over financial reporting.

Progress Energy Florida, Inc.

Pursuant  to Rule  13a-15(b)  under the  Securities  Exchange  Act of 1934,  PEF
carried out an evaluation, with the participation of PEF's management, including
PEF's President and Chief Executive Officer, and Chief Financial Officer, of the
effectiveness of PEF's disclosure controls and procedures (as defined under Rule
13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period
covered by this report.  Based upon that  evaluation,  PEF's President and Chief
Executive  Officer,  and Chief Financial Officer concluded that PEF's disclosure
controls  and  procedures  are  effective  in timely  alerting  them to material
information relating to PEF (including its consolidated  subsidiaries)  required
to be included in PEF's periodic SEC filings.

There has been no change in PEF's  internal  control  over  financial  reporting
during the  quarter  ended March 31, 2004 that has  materially  affected,  or is
reasonably  likely to materially  affect,  PEF's internal control over financial
reporting.


                                       29
<PAGE>

                           PART II. OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

Legal aspects of certain matters are set forth in Part I, Item 1. See Note 12 to
the Florida Progress Corporation and PEF Interim Financial Statements.

     1. U.S. Global,  LLC v. Progress Energy,  Inc. et al, Case No.  03004028-03
     and Progress Synfuel  Holdings,  Inc. et al, v. U.S. Global,  LLC, Case No.
     03004028-03

     A number of Progress Energy,  Inc.  subsidiaries and affiliates are parties
     to two  lawsuits  arising out of an Asset  Purchase  Agreement  dated as of
     October 19, 1999, by and among U.S. Global LLC (Global),  EARTHCO,  certain
     affiliates of EARTHCO  (collectively the EARTHCO Sellers),  EFC Synfuel LLC
     (which is owned  indirectly  be Progress  Energy,  Inc.) and certain of its
     affiliates, including Solid Energy LLC, Solid Fuel LLC, Ceredo Synfuel LLC,
     Gulf  Coast  Synfuel  LLC   (currently   named  Sandy  River  Synfuel  LLC)
     (Collectively  the  Progress  Affiliates),  as amended by an  amendment  to
     Purchase  Agreement as of August 23, 2000 (the Asset  Purchase  Agreement).
     Global has asserted  that  pursuant to the Asset  Purchase  Agreement it is
     entitled to (1) interest in two synthetic fuel  facilities  currently owned
     by the  Progress  Affiliates,  and (2) an  option  to  purchase  additional
     interests in the two synthetic fuel facilities.

     The first suit, U.S. Global, LLC v. Progress Energy,  Inc. et al, was filed
     in the Circuit Court for Broward County, Florida in March 2003 (the Florida
     Global  Case).  The Florida  Global Case  asserts  claims for breach of the
     Asset Purchase  Agreement and other contract and tort claims related to the
     Progress  Affiliates'  alleged  interference with Global's rights under the
     Asset Purchase  Agreement.  The Florida Global Case requests an unspecified
     amount of compensatory  damages, as well as declaratory relief. On December
     15,  2003,  the  Progress  Affiliates  filed a motion to dismiss  the Third
     Amended  Complaint in the Florida  Global Case. The motion to dismiss filed
     on behalf of the Progress Energy, Inc. subsidiaries and affiliates that are
     parties to the case will be heard by the Circuit  Court of Broward  County,
     Florida on June 7, 2004.

     The second suit,  Progress  Synfuel  Holdings,  Inc. et al. v. U.S. Global,
     LLC, was filed by the Progress  Affiliates  in the Superior  Court for Wake
     County,  North Carolina  seeking  declaratory  relief  consistent  with the
     Company's  interpretation  of  the  asset  Purchase  Agreement  (the  North
     Carolina  Global Case).  Global was served with the North  Carolina  Global
     Case on April 17, 2003.

     On May 15, 2003, Global moved to dismiss the North Carolina Global Case for
     lack of personal  jurisdiction  over  Global.  In the  alternative,  Global
     requested  that the court  decline to exercise its  discretion  to hear the
     Progress  Affiliates'  declaratory  judgment action. On August 7, 2003, the
     Wake County Superior court denied Global's motion to dismiss and entered an
     order staying the North  Carolina  Global Case,  pending the outcome of the
     Florida  Global Case.  The Progress  Affiliates  have appealed the Superior
     court's order staying the case; Global has cross appealed the denial of its
     motion to dismiss for lack of  personal  jurisdiction.  The North  Carolina
     Court of Appeals has not set a hearing  date for the  Progress  Affiliates'
     Appeal or Global's cross appeal.  The Company cannot predict the outcome of
     these matters, but will vigorously defend against the allegations.



                                       30


<PAGE>

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

    Exhibit                                                              Florida Progress        Progress Energy
     Number                          Description                           Corporation            Florida, Inc.
     ------                          -----------                           -----------            -------------

    3(ii)(a)      By-Laws of Progress Energy, Inc., as amended on               X                       X
                  March 17, 2004

     31(a)        Certifications pursuant to Section 302 of the                 X                       X
                  Sarbanes-Oxley Action of 2002 - Chairman and
                  Chief Executive Officer

     31(b)        Certifications pursuant to Section 302 of the                 X                       X
                  Sarbanes-Oxley Action of 2002 - Executive Vice
                  President and Chief Financial Officer

     32(a)        Certifications pursuant to Section 906 of the                 X                       X
                  Sarbanes-Oxley Action of 2002 - Chairman and
                  Chief Executive Officer

     32(b)        Certifications pursuant to Section 906 of the                 X                       X
                  Sarbanes-Oxley Action of 2002 - Chief Financial
                  Officer
</TABLE>


(b)  Reports  filed or  furnished  on Form 8-K since the  beginning  of the
     quarter:

     Florida Progress Corporation
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                               Financial
                 Item          Statements
               Reported         Included             Date of Event         Date Filed or Furnished
               --------         --------             -------------         -----------------------
                9, 12             Yes                 April 21, 2004             April 21, 2004
                  12              Yes              February 26, 2004          February 26, 2004
                  5                No              February 24, 2004          February 24, 2004
                  5                No               January 23, 2004           January 23, 2004
                9, 12             Yes               January 21, 2004           January 21, 2004

     Florida Power Corporation
     d/b/a Progress Energy Florida, Inc.

                               Financial
                 Item          Statements
               Reported         Included             Date of Event         Date Filed or Furnished
               --------         --------             -------------         -----------------------
                9, 12             Yes                 April 21, 2004             April 21, 2004
                  12              Yes              February 26, 2004          February 26, 2004
                  5                No               January 23, 2004           January 23, 2004
                9, 12             Yes               January 21, 2004           January 21, 2004
</TABLE>

                                       31
<PAGE>

                                   SIGNATURES


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                  FLORIDA PROGRESS CORPORATION
                                  FLORIDA POWER CORPORATION
                                  (Registrants)




Date:  May 6, 2004                By:  /s/ Geoffrey Chatas
                                       -------------------
                                  Geoffrey Chatas
                                  Executive Vice President and
                                  Chief Financial Officer


                                  By:   /s/Robert H. Bazemore, Jr.
                                  Robert H. Bazemore, Jr.
                                  Vice President and Controller
                                  Chief Accounting Officer




                                       32