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, 1998


                                   OR

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

For the transition period from _______ to  _______

<TABLE>
<CAPTION>
                           Exact name of Registrant as specified in                                I.R.S. Employer
  Commission               its charter, state of incorporation, address                            Identification
     File No.              of principal executive offices, telephone                                   Number
 ------------              --------------------------------------------                            ---------------

      <S>                  <C>                                                                       <C>
      1-8349               FLORIDA PROGRESS CORPORATION                                              59-2147112
                           A Florida Corporation
                           One Progress Plaza
                           St. Petersburg, Florida 33701
                           Telephone (813) 824-6400

      1-3274               FLORIDA POWER CORPORATION                                                 59-0247770
                           A Florida Corporation
                           3201 34th Street South
                           St. Petersburg, Florida 33711
                           Telephone (813) 866-5151
</TABLE>

Indicate  by check  mark  whether  each  registrant  (1) has 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) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

                                   Description of        Shares Outstanding
         Registrant                    Class            at March 31, 1998
         ----------                --------------        ------------------

Florida Progress Corporation      Common Stock,
                                  without par value          97,046,291

Florida Power Corporation         Common Stock,
                                  without par value      100 (all of which were
                                                         held by Florida
                                                         Progress Corporation)

This  combined  Form  10-Q  represents  separate  filings  by  Florida  Progress
Corporation   and   Florida   Power   Corporation.   Florida   Power   makes  no
representations as to the information relating to Florida Progress'  diversified
operations.

<PAGE>


                         PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                          FLORIDA PROGRESS CORPORATION
                        CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

FLORIDA PROGRESS CORPORATION
Consolidated Statements of Income
 (In millions, except per share amounts)

                                                         Three Months Ended
                                                               March 31,
                                                           1998        1997
                                                        ---------   ---------
                                                             (Unaudited)
REVENUES:
<S>                                                      <C>        <C>
  Electric utility                                       $565.2     $553.8
  Diversified                                             222.3      193.7
                                                        ---------   ---------
                                                          787.5      747.5
EXPENSES:                                               ---------   ---------
  Electric utility:
    Fuel                                                  109.2       94.9
    Purchased power                                        99.0      127.2
    Energy conservation cost                               16.6       11.0
    Operations and maintenance                            102.4      102.4
    Extended nuclear outage - O&M
      and replacement fuel costs                            5.1        7.9
    Depreciation and amortization                          81.0       74.3
    Taxes other than income taxes                          49.5       48.1
                                                        ---------   ---------
                                                          462.8      465.8
                                                        ---------   ---------
  Diversified:
    Cost of sales                                         193.8      171.8
    Other                                                  12.8       14.9
                                                        ---------   ---------
                                                          206.6      186.7
                                                        ---------   ---------
INCOME FROM OPERATIONS                                    118.1       95.0
                                                        ---------   ---------
INTEREST EXPENSE AND OTHER:
  Interest expense                                         47.3       34.3
  Allowance for funds used during construction             (3.9)      (2.1)
  Preferred dividend requirements of Florida Power           .4         .4
  Other expense (income), net                               (.5)        .4
                                                        ---------   ---------
                                                           43.3       33.0
                                                        ---------   ---------
INCOME FROM CONTINUING OPERATIONS
  BEFORE INCOME TAXES                                      74.8       62.0
  Income Taxes                                             24.3       20.0
                                                        ---------   ---------

NET INCOME                                                $50.5      $42.0
                                                        =========   =========
AVERAGE SHARES OF COMMON STOCK
  OUTSTANDING                                              97.1       97.0
                                                        =========   =========

EARNINGS PER AVERAGE COMMON SHARE                          $ .52      $ .43
                                                        =========   =========

DIVIDENDS PER COMMON SHARE                                 $ .535     $ .525
                                                        =========   =========
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                  2
<PAGE>

<TABLE>
<CAPTION>

FLORIDA PROGRESS CORPORATION
Consolidated Balance Sheets
(In millions)

                                                       March 31,   December 31,
                                                         1998         1997
                                                      ----------   -----------
ASSETS                                               (Unaudited)

PROPERTY, PLANT AND EQUIPMENT:
  Electric utility plant in service and held
<S>                                                    <C>           <C>
    for future use                                     $6,172.5      $6,166.8
  Less - Accumulated depreciation                       2,570.3       2,511.0
         Accumulated decommissioning for nuclear plant    230.6         223.7
         Accumulated dismantlement for fossil plants      128.9         128.5
                                                       ----------    ----------
                                                        3,242.7       3,303.6
  Construction work in progress                           336.3         279.4
  Nuclear fuel, net of amortization of $359.9
    in 1998 and $356.7 in 1997                             63.2          66.5
                                                      ----------    ----------
        Net electric utility property                   3,642.2       3,649.5
  Other property, net of depreciation of $224.0
    in 1998 and $219.3 in 1997                            455.6         437.7
                                                      ----------    ----------
                                                        4,097.8       4,087.2
                                                      ----------    ----------
CURRENT ASSETS:
  Cash and equivalents                                      8.2           3.1
  Accounts receivable, net                                370.9         373.7
  Inventories at average cost:
    Fuel                                                   75.6          77.6
    Materials and supplies                                 92.1          91.9
    Diversified materials                                 139.6         126.8
  Underrecovery of fuel cost                               37.7          34.5
  Income taxes receivable                                   -            16.8
  Deferred income taxes                                    40.6           5.8
  Other                                                    46.4          45.1
                                                      ----------    ----------
                                                          811.1         775.3
                                                      ----------    ----------
OTHER ASSETS:
  Investments:
    Loans receivable, net                                  31.6          24.0
    Nuclear plant decommissioning fund                    281.7         266.7
    Joint ventures and partnerships                        51.8          54.6
  Deferred purchased power contract termination costs     344.6         348.2
  Other                                                   217.8         204.0
                                                      ----------   -----------
                                                          927.5         897.5
                                                      ----------   -----------
                                                       $5,836.4      $5,760.0
                                                      ==========   ===========


The accompanying notes are an integral part of these financial statements.
</TABLE>
                                  3

<PAGE>




FLORIDA PROGRESS CORPORATION
Consolidated Balance Sheets
(In millions)
<TABLE>
<CAPTION>


                                                    March 31,     December 31,
                                                      1998           1997
                                                  -----------     -----------
CAPITAL AND LIABILITIES                           (Unaudited)

COMMON STOCK EQUITY:
<S>                                                 <C>             <C>
  Common stock                                      $1,208.3        $1,209.0
  Retained earnings                                    565.6           567.0
                                                  -----------     -----------
                                                     1,773.9         1,776.0
CUMULATIVE PREFERRED STOCK OF FLORIDA POWER:
    Without sinking funds                               33.5            33.5

LONG-TERM DEBT                                       2,328.0         2,377.8
                                                  -----------     -----------
TOTAL CAPITAL                                        4,135.4         4,187.3
                                                  -----------     -----------
CURRENT LIABILITIES:
  Accounts payable                                     222.3           253.2
  Customers' deposits                                   99.1            97.1
  Income taxes payable                                  12.5             -
  Accrued other taxes                                   32.8            12.0
  Accrued interest                                      48.8            56.8
  Other                                                 73.4            74.8
                                                  -----------     -----------
                                                       488.9           493.9
  Notes payable                                        267.5           214.8
  Current portion of long-term debt                     55.7            15.2
                                                  -----------     -----------
                                                       812.1           723.9
                                                  -----------     -----------
DEFERRED CREDITS AND OTHER LIABILITIES:
  Deferred income taxes                                504.4           471.2
  Unamortized investment tax credits                    83.7            85.7
  Other postretirement benefit costs                   109.0           107.4
  Other                                                191.8           184.5
                                                  -----------     -----------
                                                       888.9           848.8
                                                  -----------     -----------
                                                    $5,836.4        $5,760.0
                                                  ===========     ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                  4
<PAGE>



FLORIDA PROGRESS CORPORATION
Consolidated Statements of Cash Flows
(In millions)
<TABLE>
<CAPTION>
                                                         Three Months Ended
                                                              March 31,
                                                          1998         1997
                                                       -----------  -----------
                                                            (Unaudited)
OPERATING ACTIVITIES:
<S>                                                      <C>           <C>
   Income from continuing operations                     $50.5         $42.0
   Adjustments for noncash items:
     Depreciation and amortization                       100.9          83.2
     Deferred income taxes and
      investment tax credits, net                         (7.3)        (12.3)
     Increase in accrued other postretirement
      benefit costs                                        1.6           2.0
     Net change in deferred insurance policy
      acquisition costs                                     -           (2.1)
     Net change in insurance policy benefit reserves        -           16.0
   Changes in working capital, net of effects from
    acquisition or sale of businesses:
        Accounts receivable                               10.2         (15.5)
        Inventories                                        3.1         (25.0)
        Underrecovery of fuel cost                        (8.3)        (23.0)
        Accounts payable                                 (33.0)         (4.0)
        Income taxes payable                              29.9           9.4
        Accrued other taxes                               20.5          19.0
        Other                                            (11.8)         (2.2)
   Other operating activities                             (2.7)          1.7
                                                       -----------  -----------
                                                         153.6          89.2
                                                       -----------  -----------
INVESTING ACTIVITIES:
  Property additions (including allowance for
    borrowed funds used during construction)            (103.0)        (94.8)
  Purchase of loans and securities, net                   (7.7)         (4.5)
  Proceeds from sale of properties                         2.1           2.2
  Acquisition of businesses                               (9.1)            -
  Investments in joint ventures and partnerships, net      (.5)         (9.3)
  Other investing activities                              (5.2)         (4.9)
                                                       -----------  -----------
                                                        (123.4)       (111.3)
                                                       -----------  -----------
FINANCING ACTIVITIES:
  Issuance of long-term debt                             144.1             -
  Repayment of long-term debt                           (169.4)        (21.5)
  Increase in commercial paper with
    long-term support                                       -           54.6
  Dividends paid on common stock                         (51.9)        (51.0)
  Increase in short-term debt                             52.7          51.8
  Other financing activities                               (.6)          (.5)
                                                       -----------  -----------
                                                         (25.1)         33.4
                                                       -----------  -----------
NET INCREASE IN CASH AND EQUIVALENTS                       5.1          11.3
   Beginning cash and equivalents                          3.1           5.2
                                                       -----------  -----------
ENDING CASH AND EQUIVALENTS                               $8.2         $16.5
                                                       ===========  ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 Cash paid during the period for:
  Interest (net of amount capitalized)                   $52.7         $42.0
  Income taxes (net of refunds)                           $2.3         $28.5
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                  5
<PAGE>

FLORIDA  PROGRESS  CORPORATION
Statements of Changes in Equity
For the  periods  ended March 31, 1998 and 1997
(Dollars in millions)
<TABLE>
<CAPTION>


                                                                                               Cumulative
                                                                                            Preferred Stock
                                                                          Accumulated  -----------------------
                                                                             Other        Without       With
                                                   Common    Retained    Comprehensive    Sinking     Sinking
                                      Total        Stock     Earnings       Income         Funds       Funds
                                   ----------    ---------  ----------   ------------   ----------  -----------

<S>                                  <C>         <C>          <C>           <C>           <C>           <C>
Balance, December 31, 1996           $1,957.7    $1,208.3     $716.5        $(0.6)        $33.5         $  -

Comprehensive income
   Net income                            42.0                   42.0
   Unrealized loss on securities
     net of $1.9 income tax expense      (3.0)                               (3.0)
                                     ---------    --------    --------      --------     --------     ---------
                                         39.0          -        42.0         (3.0)          -              -

Common stock issued / (redeemed)          0.6          .6
Cash dividends on common stock          (51.0)                     (51.0)
                                     ---------    --------    --------      --------     --------     ---------
Balance, March 31, 1997               $1,946.3    $1,208.9     $707.5        $(3.6)        $33.5         $  -
                                     =========    ========    ========      ========     ========     =========

Balance, December 31, 1997            $1,809.5    $1,209.0     $567.0         $  -         $33.5         $  -

Comprehensive income
   Net income                             50.5                   50.5
   Other comprehensive income              -                                     -
                                      --------    --------    --------       --------    --------      --------
                                          50.5          -        50.5            -            -             -

Common stock issued / (redeemed)           (.7)        (.7)
Cash dividends on common stock           (51.9)                 (51.9)
                                       --------   --------    ---------    ---------     ---------     --------
Balance, March 31, 1998               $1,807.4    $1,208.3     $565.6         $  -         $33.5         $  -
                                       ========   =========   =========    =========     =========     ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                  6
<PAGE>

                           FLORIDA POWER CORPORATION
                             FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
FLORIDA POWER CORPORATION
Statements of Income
In millions)                                Three Months Ended
                                                 March 31,
                                              1998       1997
                                            --------  --------
                                               (Unaudited)
OPERATING REVENUES:
<S>                                          <C>       <C>
    Residential                              $308.7    $290.7
    Commercial                                123.7     124.2
    Industrial                                 47.8      51.9
    Sales for resale                           36.9      37.1
    Other                                      48.1      49.9
                                            --------  --------
                                              565.2     553.8
                                            --------  --------
OPERATING EXPENSES:
 Operation:
    Fuel                                      109.2      94.9
    Purchased power                            99.0     127.2
    Energy conservation cost                   16.6      11.0
    Operations and maintenance                102.4     102.4
    Extended nuclear outage - O&M
     and replacement fuel costs                 5.1       7.9
    Depreciation and amortization              81.0      74.3
    Taxes other than income taxes              49.5      48.1
                                            --------  --------
                                              462.8     465.8
                                            --------  --------
 Income taxes:
    Currently payable                          32.5      32.2
    Deferred, net                              (6.3)     (8.0)
    Investment tax credits, net                (2.0)     (2.0)
                                            --------  --------
                                               24.2      22.2
                                            --------  --------
                                              487.0     488.0
                                            --------  --------
OPERATING INCOME                               78.2      65.8
                                            --------  --------
OTHER INCOME AND DEDUCTIONS:
 Allowance for equity funds used
    during construction                         2.2       1.3
 Miscellaneous other expense, net                 -      (1.0)
                                            --------  --------
                                                2.2        .3
                                            --------  --------
INTEREST CHARGES
 Interest on long-term debt                    30.6      22.3
 Other interest expense                         5.3       3.0
                                            --------  --------
                                               35.9      25.3
 Allowance for borrowed funds used
    during construction                        (1.7)      (.8)
                                            --------  --------
                                               34.2      24.5
                                            --------  --------
NET INCOME                                     46.2      41.6
DIVIDENDS ON PREFERRED STOCK                     .4        .4
                                            --------  --------
NET INCOME AFTER DIVIDENDS
  ON PREFERRED STOCK                          $45.8     $41.2
                                            ========  ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                 7
<PAGE>

FLORIDA POWER CORPORATION
Balance Sheets
(In millions)
<TABLE>
<CAPTION>

                                                       March 31,   December 31,
                                                         1998         1997
                                                     -----------   -----------
ASSETS                                               (Unaudited)

PROPERTY, PLANT AND EQUIPMENT:
  Electric utility plant in service and held
<S>                                                    <C>           <C>
    for future use                                     $6,172.5      $6,166.8
  Less - Accumulated depreciation                       2,570.3       2,511.0
         Accumulated decommissioning for nuclear plant    230.6         223.7
         Accumulated dismantlement for fossil plants      128.9         128.5
                                                      ----------    ----------
                                                        3,242.7       3,303.6
  Construction work in progress                           336.3         279.4
  Nuclear fuel, net of amortization of $359.9
    in 1998 and $356.7 in 1997                             63.2          66.5
                                                      ----------    ----------
                                                        3,642.2       3,649.5

  Other property, net                                      32.5          33.2
                                                      ----------    ----------
                                                        3,674.7       3,682.7
                                                      ----------    ----------
CURRENT ASSETS:
  Cash and equivalents                                      5.6            -
  Accounts receivable, less reserve of $3.5
    in 1998 and $3.2 in 1997                              221.4         243.9
  Inventories at average cost:
    Fuel                                                   46.1          44.0
    Materials and supplies                                 92.1          91.9
  Underrecovery of fuel cost                               37.7          34.5
  Income tax receivable                                       -          13.5
  Deferred income taxes                                    40.6           5.8
  Other                                                    31.9          32.2
                                                      ----------    ----------
                                                          475.4         465.8
                                                      ----------    ----------
OTHER ASSETS:
  Nuclear plant decommissioning fund                      281.7         266.7
  Unamortized debt expense, being amortized
    over term of debt                                      39.4          25.0
  Deferred purchased power contract termination costs     344.6         348.2
  Other                                                   107.0         112.4
                                                      ----------    ----------
                                                          772.7         752.3
                                                      ----------    ----------
                                                       $4,922.8      $4,900.8
                                                      ==========    ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                 8
<PAGE>


FLORIDA POWER CORPORATION
Balance Sheets
(In millions)
<TABLE>
<CAPTION>
                                                       March 31,   December 31,
                                                         1998          1997
                                                      -----------  ------------
CAPITALIZATION AND LIABILITIES                        (Unaudited)

CAPITALIZATION:
<S>                                                     <C>          <C>
  Common stock                                          $1,004.4     $1,004.4
  Retained earnings                                        759.9        763.1
                                                      -----------  ------------
                                                         1,764.3      1,767.5
CUMULATIVE PREFERRED STOCK:
    Without sinking funds                                   33.5         33.5
LONG-TERM DEBT                                           1,747.0      1,745.4
                                                      -----------  ------------
TOTAL CAPITAL                                            3,544.8      3,546.4
                                                      -----------  ------------
CURRENT LIABILITIES:
  Accounts payable                                         109.4        161.9
  Accounts payable to associated companies                  22.9         26.5
  Customers' deposits                                       99.1         97.1
  Income taxes payable                                      15.7            -
  Accrued other taxes                                       29.4          7.9
  Accrued interest                                          42.7         45.7
  Other                                                     54.6         59.2
                                                      -----------  ------------
                                                           373.8        398.3
  Notes payable                                            189.9        179.8
  Current portion of long-term debt                          1.5          1.5
                                                      -----------  ------------
                                                           565.2        579.6
                                                      -----------  ------------
DEFERRED CREDITS AND OTHER LIABILITIES:
  Deferred income taxes                                    483.3        451.3
  Unamortized investment tax credits                        83.1         85.1
  Other postretirement benefit costs                       106.0        104.7
  Other                                                    140.4        133.7
                                                      -----------  ------------
                                                           812.8        774.8
                                                      -----------  ------------
                                                        $4,922.8     $4,900.8
                                                      ===========  ============
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                 9
<PAGE>


FLORIDA POWER CORPORATION
Statements of Cash Flows
(In millions)
<TABLE>
<CAPTION>
                                                          Three Months Ended
                                                               March 31,
                                                          1998         1997
                                                       ----------   ----------
                                                             (Unaudited)
OPERATING ACTIVITIES:
<S>                                                      <C>           <C>
 Net income after dividends on preferred stock           $45.8         $41.2
 Adjustments for noncash items:
   Depreciation and amortization                          91.6          76.3
   Deferred income taxes and investment
    tax credits, net                                      (8.3)        (10.0)
   Increase in accrued other postretirement
    benefit costs                                          1.3           1.8
   Allowance for equity funds used during construction    (2.2)         (1.3)
 Changes in working capital:
      Accounts receivable                                 22.4          (6.6)
      Inventories                                         (2.3)         (6.6)
      Underrecovery of fuel cost                          (8.3)        (23.0)
      Accounts payable                                   (52.5)        (11.2)
      Accounts payable to associated companies            (3.6)          1.3
      Income taxes payable                                29.2          23.9
      Accrued other taxes                                 21.4          19.1
      Other                                               (5.2)          5.9
 Other operating activities                                 .7           4.7
                                                       ----------   ----------
                                                         130.0         115.5
                                                       ----------   ----------
INVESTING ACTIVITIES:
  Construction expenditures                              (65.5)        (81.2)
  Allowance for borrowed funds used during construction   (1.7)          (.8)
  Additions to non-utility property                        (.7)          (.4)
  Proceeds from sale of properties                         1.3           1.2
  Other investing activities                              (5.2)         (4.8)
                                                       ----------   ----------
                                                         (71.8)        (86.0)
                                                       ----------   ----------
FINANCING ACTIVITIES:
  Issuance of long-term debt                             144.1             -
  Repayment of long-term debt                           (157.8)        (20.0)
  Dividends paid on common stock                         (49.0)        (48.4)
  Increase in short-term debt                             10.1          51.8
                                                       ----------   ----------
                                                         (52.6)        (16.6)
                                                       ----------   ----------
NET INCREASE IN CASH AND EQUIVALENTS                       5.6          12.9
   Beginning cash and equivalents                            -             -
                                                       ----------   ----------
ENDING CASH AND EQUIVALENTS                               $5.6         $12.9
                                                       ==========   ==========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 Cash paid during the period for:
  Interest (net of amount capitalized)                   $36.3         $23.7
  Income taxes (net of refunds)                           $3.6          $7.8
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                 10
<PAGE>


FLORIDA PROGRESS CORPORATION AND FLORIDA POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS

1) In December  1997,  Florida  Power  Corporation  ("Florida  Power") ended the
   three-year test period for residential  revenue  decoupling which was ordered
   by the Florida Public Service Commission  ("FPSC") and began in January 1995.
   The difference between target revenues and actual revenues was included as a
   current asset or current liability on the balance sheet for the period ended
   December 31, 1997. The regulatory asset of $21.8 million, at December 31,
   1997, will be recovered from customers beginning April 1998, over a two year
   period,  through the energy conservation cost recovery clause, as directed by
   the FPSC decoupling order. Revenue decoupling increased residential revenues
   by $7.5 million for the three months ended March 31, 1997.

2) Florida  Progress   Corporation   ("Florida   Progress")  adopted  Financial
   Accounting Standard No. ("FAS") No. 128, "Earnings per Share" which was
   issued by the Financial Accounting Standards Board ("FASB"), for the period
   ending December 31, 1997.  Because diluted  earnings per share equals basic
   earnings  per share for Florida  Progress,  the  statement  did not have an
   impact on  earnings  per share for the three month  period  ended March 31,
   1998 and 1997, and no restatement was necessary.

   Florida Progress adopted FAS No. 129, "Disclosures of Information about
   Capital Structure," for financial statements issued for the period ended
   December 31, 1997.  As Florida Progress already disclosed the information
   required by FAS No. 129, adoption of this statement did not have any effect
   on the financial disclosures of Florida Progress.

   Florida Progress adopted FAS No. 130, "Reporting Comprehensive Income," on
   January 1, 1998.  The standard defines comprehensive income as all changes
   in equity of an enterprise during a period except those resulting from
   shareholder transactions.  As the standard addresses reporting and
   presentation issues only, there was no impact on net income from the
   adoption of this standard.  A separate Statement of Changes in Equity is
   included in the accompanying financial statements for Florida Progress.
   Florida Power had no components of other comprehensive income for either
   the three month period ended March 31, 1998 or 1997.

   In June 1997, the FASB issued FAS No. 131,  "Disclosures  about Segments of
   an  Enterprise  and  Related   Information"  which  establishes   standards
   for additional  disclosure about operating segments for interim and annual
   financial statements.  The standard  requires  financial and  descriptive
   information  be disclosed for segments  meeting  certain materiality criteria
   whose operating results are reviewed for decisions on resource allocation and
   for which discrete financial information is available.  It also establishes
   standards for related disclosures about products and services, geographic
   areas, and major customers.  Florida Progress will be required to adopt this
   standard  for the fiscal year ending  December 31, 1998 and for interim
   periods  thereafter.  As the standard addresses  reporting  and  disclosure
   issues only, there will be no impact on earnings from the adoption of this
   standard.

   In January 1998, the FASB issued FAS No. 132, "Employers' Disclosures about
   Pensions and Other Postretirement  Benefits",   which  revises  current  note
   disclosure requirements for employers'  pensions and other retiree  benefits.
   Florida Progress will be required  to  adopt  this  statement  for  financial
   statements for the year ending December  31,  1998.  The  standard  addresses
   reporting and disclosure issues only, and there will be no impact on earnings
   from the adoption of this standard.

3) CONTINGENCIES

   PURCHASED POWER COMMITMENTS - The purchased power contracts with qualifying
   facilities  ("QFs")  employ  separate  pricing  methodologies  for capacity
   payments and energy  payments.  Florida Power has  interpreted  the pricing
   provision  in these  contracts  to allow it to pay an  as-available  energy
   price  rather than a higher firm  energy  price when the avoided  unit upon
   which the applicable contract is based would not have been operated.
                                 11
<PAGE>

   Four  cogenerators  filed suit against Florida Power over contract  payment
   terms.  Two of the suits have been settled. Currently trial dates are set for
   late 1998 for the two remaining suits.  Management does not  expect  that the
   results of these legal actions will have a material impact on Florida Power's
   financial position, operations or liquidity.

   OFF-BALANCE  SHEET  RISK - Several of Florida  Progress'  subsidiaries  are
   general partners in unconsolidated partnerships  and joint ventures.  Florida
   Progress or its subsidiaries have agreed to support certain loan agreements
   of the partnerships and joint ventures.  Those credit risks are not material
   to the financial statements of Florida Progress.  Florida Progress  considers
   those credit risks to be minimal, based upon  the  asset  values  supporting
   the liabilities of these entities.

   MID-CONTINENT  LIFE  INSURANCE  COMPANY  -- A  series  of  events  in  1997
   significantly jeopardized the ability of Mid-Continent Life Insurance Company
   ("Mid-Continent"), Florida Progress' indirect  wholly  owned  subsidiary,  to
   implement a plan to eliminate a projected reserve  deficiency,  resulting in
   the impairment of Florida Progress' investment in Mid-Continent.

   On April 14,  1997,  the  Insurance  Commissioner  of the State of Oklahoma
   ("Commissioner") received court approval to temporarily  seize control of the
   operations of Mid-Continent, and in May 1997, the Oklahoma County District
   Court granted the Commissioner's application to place Mid-Continent into
   receivership.  The Commissioner had alleged that Mid- Continent's reserves
   were understated by more than $125 million,  thus causing Mid-Continent to be
   statutorily impaired.  The Commissioner further alleged that Mid-Continent
   had violated Oklahoma law relating to deceptive trade practices in connection
   with the sale of its "Extra Life" insurance policies and was not entitled to
   raise premiums, a key element of Mid-Continent's plan to address the
   projected reserve deficiency. While sustaining the receivership, the court
   also ruled that premiums could be raised. Both sides appealed the decision to
   the Oklahoma Supreme Court, and that appeal is still pending.

   Even  though the  appeal is still  pending,  the  Oklahoma  District  Court
   continues to hear  motions and conduct  other  proceedings  relating to the
   receivership.  At a hearing on March 17, 1998,  the judge rejected both the
   Commissioner's and Mid-Continent's  rehabilitation  submissions.  The judge
   invited  both  parties  to submit  simplified  plans that  include  premium
   increases.  In the annual  statement filed by the Commissioner on behalf of
   Mid-Continent,  the estimated reserve deficiency was revised upward to $348
   million.  Florida  Progress  believes that this new figure is untenable and
   not based on sound actuarial principles.

   In  December  1997,  the  Commissioner  filed  a  lawsuit  against  Florida
   Progress, certain of its directors and officers and certain former Mid-
   Continent  officers,  making  a  number  of  allegations  (as  detailed  in
   paragraph 10 under Item 3 "Legal  Proceedings" in the 1997 Form 10-K),  and
   seeking  access to Florida  Progress'  assets to satisfy  policyholder  and
   creditor  claims.  On April 17, 1998, the court granted  motions to dismiss
   the individual  defendants,  leaving Florida Progress as the sole remaining
   defendant  in the lawsuit.  Florida  Progress  believes the  Commissioner's
   lawsuit is without merit, and intends to vigorously defend itself against
   these charges.  However, because of the uncertainties inherent in litigation,
   the ultimate outcome of the matter cannot presently be determined.
   Accordingly, Florida Progress has made no provision for any loss.

   As a result of the Commissioner's actions and other factors described under
   the  heading  "Mid-Continent  Life  Insurance  Company"  in  Note 11 to the
   financial  statements in the 1997 Form 10-K,  Florida Progress believed the
   full amount of its $86.9 million  investment in  Mid-Continent  at December
   31, 1997 was impaired. Therefore, Florida Progress recorded a provision for
   loss on investment  of $86.9 million in 1997. In addition,  tax benefits of
   approximately  $11 million  related to the excess of the tax basis over the
   book value in the investment in Mid-Continent as of December 31, 1997, were

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<PAGE>

   not recorded because of  uncertainties  associated with the timing of a tax
   deduction.  Florida  Progress also recorded an accrual at December 31, 1997
   for  legal  fees   associated   with  defending  its  position  in  current
   Mid-Continent legal proceedings.

   Mid-Continent's  financial  statements have been  deconsolidated  effective
   December 31, 1997.  Prospectively,  the  investment  will be accounted  for
   under the cost method.

   INSURANCE - Florida  Progress  and its  subsidiaries  utilize  various risk
   management techniques to protect  assets  from  risk of loss,  including  the
   purchase of insurance.  Risk  avoidance,  risk  transfer  and  self-insurance
   techniques are utilized depending on Florida Progress' ability to assume
   risk, the relative cost and availability  of methods for  transferring  risk
   to third parties, and the requirements of applicable regulatory bodies.

   Florida Power  self-insures its transmission and distribution lines against
   loss due to storm damage and other natural disasters. Pursuant to an FPSC
   order, Florida Power is accruing $6 million annually to a storm damage
   reserve and may defer any losses in excess of the reserve.  Under the
   provisions  of the Price Anderson Act, which limits liability  for  accidents
   at nuclear power plants, Florida Power, as an owner of a nuclear plant, can
   be assessed for a portion of any  third-party liability  claims  arising from
   an accident at any  commercial nuclear power plant in the United States. If
   total  third-party  claims relating to a single nuclear incident exceed $200
   million  (the  amount of currently available commercial liability insurance),
   Florida Power could be assessed up to $79.3 million per incident, with a
   maximum assessment of $10 million per year.

   Florida Power is a member of the Nuclear Electric Insurance, Ltd. ("NEIL"),
   an industry mutual insurer, which provides  business  interruption  and extra
   expense coverage in the event of a major accidental outage at a covered
   nuclear power plant.  Florida Power is subject to a retroactive  premium
   assessment by NEIL under this policy in the event loss  experience  exceeds
   NEIL's available surplus.   Florida Power's  present  maximum  share  of  any
   such  retroactive assessment is $2.7 million per policy year.

   Florida  Power  also  maintains   nuclear  property  damage  insurance  and
   decontamination and decommissioning liability insurance totaling $2.1
   billion.  The first layer of $500 million is purchased in the commercial
   insurance market with the remaining  excess  coverage  purchased  from  NEIL.
   Florida Power is self-insured for any losses that are in excess of this
   coverage. Under the terms of the NEIL policy, Florida Power could be assessed
   up to a maximum of $9.5 million in any policy year if losses in excess of
   NEIL's available surplus are incurred.

   Florida Power has never been assessed  under these nuclear  indemnities  or
   insurance policies.

   CONTAMINATED  SITE CLEANUP - Florida Progress is subject to regulation with
   respect to the environmental effects  of its  operations.  Florida  Progress'
   disposal of hazardous waste through third-party vendors can result in costs
   to clean up facilities found to be contaminated.  Federal and state  statutes
   authorize governmental agencies to compel responsible parties to pay for
   cleanup of these hazardous waste sites.

   Florida Power and former subsidiaries of Florida Progress, whose properties
   were sold in prior years, have been identified by the Environmental
   Protection Agency ("EPA") as potentially responsible  parties  ("PRPs") at
   certain sites, including a coal gasification plant site in Sanford,  Florida
   ("Sanford site") that Florida  Power  previously  owned and  operated.  There
   are five  parties, including Florida Power, that have been identified as PRPs
   at the Sanford site.  Liability for the cleanup costs at these sites is joint
   and several.

   Negotiations   are   underway   with  the  EPA  to  define  the  extent  of
   contamination that may be attributable to Florida Power's previous operation
   at the site. In March 1998,  the PRPs executed an  Administrative  Order of
   Consent ("AOC") and  submitted it to the EPA.  Pursuant to the AOC, the PRPs
  
                                 13
<PAGE>

   have agreed to spend $1.5  million to perform a Risk  Investigation  and
   Feasibility  Study ("RI/FS"). Florida Power is liable for 39.7% of these
   costs. When the RI/FS is completed,  the EPA is expected to give further
   direction on the extent of the cleanup.  The RI/FS is expected to take 4 to 6
   months.

   The  discussions  and resolution of liability for cleanup costs could cause
   Florida Power to increase its  estimate  of its  liability  for those  costs.
   Although estimates of any additional costs are not currently  available,  the
   outcome is not expected to have a material effect on Florida Progress'
   financial position, results of operations or liquidity.

   In  addition  to these  designated  sites,  there  are  other  sites  where
   affiliates may be responsible for additional environmental cleanup.

   Florida Progress believes that its subsidiaries will not be required to pay
   a disproportionate share of the costs for  cleanup  of these  sites.  Florida
   Progress' best estimates indicate that its proportionate  share of liability
   for cleaning up all sites ranges from $2.5 million to $7.5 million.  It has
   reserved $4.7 million against these potential costs.

   ADVANCED  SEPARATION  TECHNOLOGIES  ("AST")-  Florida Progress sold its 80%
   interest in AST to Calgon  Carbon  Corporation  ("Calgon")  for $56 million
   cash. Calgon filed a lawsuit in January 1998, and amended it in April 1998,
   alleging  misstatement  of AST's 1996  revenues,  assets  and  liabilities,
   seeking damages and the right to rescind the sale. The lawsuit also accuses
   Florida  Progress  of  failing  to  disclose  flaws in AST's  manufacturing
   process  and a lack of  quality  control.  No  projection  of an outcome or
   estimate of a potential liability,  if any, can be determined at this time.
   Florida Progress intends to vigorously defend itself against this lawsuit.

   AGE  DISCRIMINATION  SUIT - Florida  Power and Florida  Progress  have been 
   named defendants in an age discrimination lawsuit involving 116 former
   Florida Power employees and one current employee.  While no dollar amount was
   requested, each plaintiff seeks back pay, reinstatement or front pay through
   their projected dates of normal retirement,  costs and  attorneys'  fees. In
   October 1996,  the court approved an agreement to provisionally certify this
   case as a class action suit under the Age Discrimination in Employment Act.
   Estimates of the potential liability associated  with this lawsuit cannot be
   made until the final decision on whether to certify  the case as a class
   action suit has been made. A decision is not expected until late 1998.

4) In the opinion of management,  the accompanying  financial statements include
   all adjustments deemed necessary to summarize fairly and reflect the
   financial position and results of operations of Florida Progress and Florida
   Power for the interim  periods  presented.  Results for the first quarter are
   not necessarily indicative of results for the full year. It is suggested that
   these financial statements be read in conjunction with the financial
   statements and notes thereto in the combined Form 10-K of Florida Progress
   and Florida Power for the year ended December 31, 1997 (the "1997 Form
   10-K").

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

OPERATING RESULTS

Florida Progress'  earnings per share for the three month period ended March 31,
1998,  were $.52  compared to $.43 for the same period in 1997.  Florida  Power,
Florida Progress'  largest  operating unit,  reported earnings of $.47 per share
for the first  quarter 1998  compared to $.42 per share for the same period last
year. The increase was primarily due to customer  growth and increased  customer
usage.  Diversified  earnings  per share for the  first  quarter  1998 were $.05
compared  to $.01 last year.  The  increase  resulted  from  higher  earnings at
Electric Fuels  Corporation  ("Electric  Fuels"),  Florida  Progress' energy and
transportation subsidiary. The improvement in earnings at Electric Fuels was due
primarily to improved operations at the inland marine transportation group.

                                 14
<PAGE>


Florida Power - Operating Revenues

Florida Power's operating  revenues were $11.4 million,  or 2.1 percent,  higher
for the three month period ended March 31, 1998,  compared to the same period in
1997.  This was due largely to increased  customer  growth and usage,  primarily
among residential customers. In 1997, residential revenue decoupling adjustments
increased  residential revenues by $7.5 million for the three months ended March
31, 1997.  Residential revenue decoupling was designed to eliminate the earnings
impact that abnormal weather had on residential  sales,  Florida Power's largest
customer group. (See Note 1 to the Financial Statements.)

Florida Power - Operating Expenses

Fuel and purchased power costs were $13.9 million, or 6.3 percent, lower for the
quarter ended March 31, 1998  compared to the same period in 1997.  This was due
primarily to lower fuel costs due to the Crystal River nuclear  unit's return to
service in  mid-February  1998.  Except as pursuant to Florida Power's June 1998
settlement  agreement  regarding  replacement  fuel and  purchased  power  costs
resulting  from  an  extended  nuclear  outage  (see  Note  9 to  the  financial
statements in the 1997 Form 10-K),  Florida Power recovers  substantially all of
its fuel and  purchased  power  costs  through a FPSC  ordered  fuel  adjustment
clause,  thereby eliminating any impact on net income. The disallowed fuel costs
for the extended  nuclear outage were not recovered  through the fuel adjustment
clause, per regulatory order.

Other  operation and  maintenance  expenses for the three months ended March 31,
1998, were essentially  level with the same period for 1997,  excluding  nuclear
outage costs,  due to continuing  efforts for cost control at the utility.  This
was achieved  despite the increased  operating and maintenance  costs related to
the Tiger Bay facility, and the increased number of customers.

Depreciation  and  amortization  expense  increased  $6.7  million for the three
months ending March 31, 1998 compared to the same period last year due primarily
to the depreciation and amortization  expenses  associated with the 1997 buy-out
of the Tiger Bay purchased power contracts.

Interest  expense  increased $10.6 million in the first quarter of 1998 compared
to the same period in 1997.  The increase  was a result of higher debt  balances
due  primarily to increased  costs  associated  with the nuclear  outage and the
Tiger Bay transaction.

SEC Review of Accounting for Nuclear Outage Costs

Florida Power and the Securities and Exchange Commission ("SEC") are involved in
discussions  regarding  Florida  Power's  recording  of accrued  nuclear  outage
operation and  maintenance  costs in June 1997. The outcome from the discussions
could result in the restatement of quarterly  results for the second,  third and
fourth quarters of 1997.
Total results for the fiscal year ending December 31, 1997, would be unchanged.

Florida Progress Diversified Operations

Revenues for the company's diversified  operations were $28.6 million higher for
the three months  ended March 31,  1998,  compared to the same period last year.
The increase is largely attributable to Electric Fuels Corporation, lead company
for Florida Progress' diversified operations. In addition,  diversified revenues
for  the  first   quarter  of  1998   reflect  the  absence  of  revenues   from
Mid-Continent,  which  was  placed  into  receivership  in  1997.  (See  Note  3
"Contingencies - Mid-Continent Life Insurance Company" contained herein.)

Electric  Fuels earned $8.2  million,  or $.08 per share in the first quarter of
1998 compared with $3.3  million,  or $.03 per share,  during the same period in
1997. Most of the increase is attributable to improved  operations at the inland
marine transportation group.

In the first quarter of 1997,  flooding  along the Ohio and  Mississippi  Rivers
significantly  affected  earnings for the inland  marine  transportation  group.
Normal operating  conditions thus far in 1998 combined with a larger barge fleet
have  increased  earnings  from this group by $2.5  million or $.03 a share when
compared to the same period last year.

                                 15
<PAGE>

Progress  Rail,  Electric  Fuels' rail services  group,  continues to experience
increasing  demand for its railroad  related parts and  services.  Earnings from
this group were up $.5 million for the first quarter 1998.

Earnings for Electric  Fuels'  energy and related  group were up $1.6 million or
$.02 a share in the first  quarter of 1998  compared to the same period in 1997.
The  improvement  in  earnings is due  primarily  to lower  operating  costs and
increased coal sales. The increase in sales resulted largely from a 1997 buy-out
of a  50-percent  partner in one of Electric  Fuels' coal  properties.  Electric
Fuels now  recognizes  100  percent  of the sales  from this mine  instead of 50
percent.

YEAR 2000

Florida Progress and Florida Power do not anticipate incurring significant costs
related to  modifications of their  information  systems to prepare for the year
2000. In addition, the companies expect to complete the modifications on time.

LIQUIDITY AND CAPITAL RESOURCES

Florida Power budgeted $294 million,  excluding  allowance for funds used during
construction, for its 1998 construction program. This is expected to be financed
by  internally  generated  funds.  During the first three month  period of 1998,
$65.5 million was spent on the  construction  program,  financed  primarily with
funds from operations.

In March 1998,  Florida  Power  redeemed  all of its  outstanding  $150  million
principal  amount of First Mortgage  Bonds, 8 5/8% series due November 2021 at a
redemption  price of 105.17% of the  principal  amount  thereof,  together  with
accrued  interest.  Substantially  all of the redemption was funded from the net
proceeds of the $150 million of medium-term notes issued in February 1998, which
bear an interest rate of 6 3/4% and mature in February 2028.

Florida  Power's  ratio of  earnings  to fixed  charges  was 2.67 for the twelve
months ended March 31, 1998. (See Exhibit 12 filed herewith).

Progress Capital Holdings recently  established  uncommitted bank bid facilities
allowing it to borrow and  re-borrow,  and have  outstanding  at any time, up to
$275 million. Currently, $125 million is outstanding under these bid facilities.
The funds will be used for general corporate purposes.

Florida Progress and Florida Power believe their available  sources of liquidity
will be sufficient to fund their long-term and short-term capital requirements.

"SAFE HARBOR" STATEMENT UNDER
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This report contains certain forward looking statements,  including  projections
regarding  the  proportionate  liability  for cleaning up certain  environmental
sites; the results of certain legal proceedings  relating to Mid-Continent;  and
the costs associated with modifying computers for the year 2000.

Risk Factors

These statements, and any other statements contained in this report that are not
historical facts, are  forward-looking  statements that are based on a series of
projections and estimates  regarding the economy,  the electric utility business
and Florida  Progress' other businesses in general,  and on factors which impact
Florida Progress  directly.  The projections and estimates relate to the pricing
of services, the actions of regulatory bodies, and the effects of competition.

Key factors that have a direct impact on the ability to attain these projections
include  continued  annual  growth in  customers,  successful  cost  containment
efforts and the  efficient  operation  of Florida  Power's  existing  and future
generating units.  Also in developing its  forward-looking  statements,  Florida
Progress has made certain assumptions relating to productivity  improvements and

                                 16
<PAGE>

the favorable outcome of various  commercial,  legal and regulatory  proceedings
and the lack of disruption to its markets.

If Florida Progress' and Florida Power's projections and estimates regarding the
economy,  the electric utility business and other factors differ materially from
what actually occurs, or if various proceedings have unfavorable outcomes,  then
actual results could vary  significantly  from the performance  projected in the
forward-looking statements.

ITEM 3.           Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

Florida  Progress is exposed to changes in interest rates  primarily as a result
of its borrowing activities.

A  hypothetical  56 basis  point  increase  in  interest  rates  (10% of Florida
Progress  weighted  average  interest  rate)  affecting  its variable  rate debt
($767.5  million at March 31, 1998) would have an  immaterial  effect on Florida
Progress'  pre-tax  earnings  over the next  fiscal  year.  A  hypothetical  10%
decrease in interest rates would also have an immaterial effect on the estimated
fair value of Florida Progress' long-term debt at March 31, 1998.

Commodity Price Risk

Currently,  at  Florida  Power,  commodity  price  risk due to changes in market
conditions  for  fuel  and  purchased  power  are  recovered  through  the  fuel
adjustment clause, with no effect on earnings.

Electric  Fuels is exposed to commodity  price risk  through  coal sales.  A 10%
change  in the  market  price of coal  would  have an  immaterial  effect on the
earnings of Florida Progress.

                         PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

1.   In re: Standard Offer Contract for the purchase of firm capacity and
     energy from a qualifying facility between Panda-Kathleen, L.P. and
     Florida Power Corporation, FPSC Docket No. 950110-EI.

     Florida Power Corporation v. Panda-Kathleen Corp. ("Panda"), United States
     District Court for the Middle District of Florida, Tampa Division, Case
     No. 95-2145-CIV-T-25-B.

     See  prior  discussion  of this  matter  in the  1997  Form  10-K,  Item 3,
     paragraph 4. On April 7, 1998, the FPSC voted unanimously to deny Panda's
     Motion for Extension of Milestone Dates. On April 22, 1998, Panda filed an
     Emergency  Motion with the Florida Supreme Court to Stay the effect of the
     April 7, 1998 FPSC order denying Panda's motion for Extension of Contract
     Milestone dates.  The Florida Supreme Court granted  Panda's Motion and
     directed Florida Power to file a Response by May 12, 1998.

     On April 20, 1998, the U.S.  Supreme Court denied Panda's Petition for Writ
     of Certiorari  with respect to the Florida Supreme Court September 1997
     decision affirming a 1996 FPSC order.

     The District court case was dismissed in September of 1997.  This concludes
     the District court matter for reporting purposes.

2.   Metropolitan Dade County ("Dade") and Montenay Power Corp. ("Montenay") v.
     Florida Power Corporation, Circuit Court of the Eleventh Circuit for Dade
     County, Florida, Case No 96-09598-CA-30.

     Metropolitan Dade County and Montenay Power Corp. v. Florida Progress
     Corporation, Florida Power Corporation and Electric Fuels Corporation,
     U.S. District Court, Southern District, Miami Division, Florida, Case No
     96-594-CIV-LENARD.

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<PAGE>

     In re: Petition for Declaratory Statement That Energy Payments Are Limited
     to Analysis of Avoided Unit's Contractually Specified Characteristics,
     Florida Public Service Commission, Docket No. 980283-EQ

     See prior discussion of this matter in the 1997 Form 10-K, Item 3,
     paragraph 2.  On March 11, 1998, Dade and Montenay filed a Motion to
     Intervene in the FPSC  matter.  On March 24,  1998,  Florida  Power filed a
     Response in Opposition to the Dade and Montenay Petition. On April 6, 1998,
     Dade and Montenay  filed a Motion to Dismiss the Florida Power Petition for
     Declaratory Statement.

3.   NCP Lake Power, Inc. v. Florida Power Corporation, Florida Circuit Court,
     Fifth Judicial Circuit for Lake County, Case No. 9402354-CA-01

     In re:  Petition for Expedited Approval of Settlement Agreement With Lake
     Cogen, Ltd., Public Service Commission, Docket No. 961477-EQ

     In re:  Petition for Declaratory Statement Regarding the Negotiated
     Contract for Purchase of Firm Capacity and Energy between Florida Power
     Corporation and Lake Cogen, Ltd., Florida Public Service Commission,
     Docket No. 980509-EQ.

     See  prior  discussion  of this  matter  in the  1997  Form  10-K,  Item 3,
     paragraph 3. On April 9, 1998, Florida Power filed a petition with the FPSC
     for a  Declaratory  Statement  that the FPSC approved  negotiated  contract
     between the parties limits energy payments  thereunder to the avoided costs
     based upon an analysis of a  hypothetical  unit having the  characteristics
     specified in the contract.

4.   Sanford Gasification Plant Site, Sanford, Florida

     See prior discussion in this matter in the 1997 Form 10-K, Item 3,
     paragraph 8. Florida Power, Florida Power and Light Company, Atlanta Gas
     Company, Florida Public Utilities Company and the City of Sanford have
     executed the EPA AOC and the Site Participation Agreement. By signing
     the AOC, the PRPs have agreed, jointly and severally,  to perform the RI/FS
     at the Sanford site. By executing the Site Participation Agreement, the
     PRPs have  agreed  to an  allocation  of costs  for a RI/FS  for up to $1.5
     million.  Florida Power's share is approximately  39.7% of these costs.
     (See Note 4 to the Financial Statements under the heading "Contingencies -
     Contaminated Site Cleanup".)

5.   State of Oklahoma, ex rel. John P.  Crawford,  Insurance  Commissioner  v.
     Mid-Continent Life Insurance Company, District Court of Oklahoma County,
     State of Oklahoma, Case No. CJ-97-2518-62

     State of Oklahoma,  ex rel, John P.  Crawford,  Insurance  Commissioner  as
     Receiver for  Mid-Continent  Life  Insurance  Company v.  Florida  Progress
     Corporation, a Florida corporation, Jack Barron Critchfield, George Ruppel,
     Thomas Steven Krzesinski, Richard Korpan, Richard Donald Keller, James Lacy
     Harlan, Gerald William McRae, Thomas Richard Dlouhy, Andrew Joseph Beal and
     Robert Terry Stuart, Jr.

     See prior discussion in this matter in the 1997 Form 10-K, Item 3,
     paragraph 10. At a March 17, 1998 hearing, the judge rejected the
     submissions of both the Commissioner and Mid-Continent. The Commissioner
     was told by the judge  that if there  were any  recovery  from the  lawsuit
     against former  Mid-Continent  directors and officers and Florida Progress,
     that  recovery  could  be used to  offset  any  reserve  deficiencies,  but
     directed the Commissioner and invited  Mid-Continent to present  simplified
     plans that include premium  increases.  Mid-Continent is working to prepare
     such a plan,  although completing such a plan will be difficult because the
     court denied  Mid-Continent's  motion to compel the Commissioner to produce
     actuarial and other information to  Mid-Continent.  In the annual statement
     filed by the Commissioner on behalf of Mid-Continent, the estimated reserve
     deficiency was revised upward to $348 million.  Florida  Progress  believes
     that  this new  figure  is  untenable  and not  based  on  sound  actuarial
     principles.  On April 17, 1998,  the court  granted  motions to dismiss the

                                 18
<PAGE>

     individual  defendants,  leaving  Florida  Progress  as the sole  remaining
     defendant in the lawsuit. (See Note 3 to the Financial Statements under the
     heading "Contingencies - Mid-Continent Life Insurance Company".)

6.   Florida Power Corporation and Seminole Electric Cooperative v. Ronald J.
     Schultz, Circuit Court for Citrus County

     See  prior  discussion  of this  matter  in the  1997  Form  10-K,  Item 3,
     paragraph  14. On April 22, 1998,  the court granted  Schultz's  Motion for
     Summary  Judgment and held that the statute upon which Florida Power relied
     for the pollution control equipment tax exemption is unconstitutional.  The
     judge reserved jurisdiction on other outstanding issues.

7.   FOCAS, Inc. v. Florida Power Corporation, U.S. District Court, Northern
     District of Georgia, Atlanta Division, Case No. CV-822-CC

     Florida Power entered into a contract  with FOCAS,  Inc.  ("FOCAS") for the
     supply  of  fiberoptic  cable.  A  portion  of the  cable  was  found to be
     defective, and was replaced. FOCAS invoiced Florida Power for the defective
     cable  in  the  amount  of  approximately  $1,990,000.   While  discussions
     proceeded regarding the matter, FOCAS sued Florida Power alleging breach of
     contract, unjust enrichment and fraudulent inducement, and requesting up to
     approximately  $76 million in damages,  representing,  among other  things,
     Florida Power's alleged profits over the estimated fifteen year life of the
     cable.  Florida Power intends to vigorously  defend this case, and on April
     9, 1998, filed a motion to dismiss.

Item 4.           Submission of Matters to a Vote of Security-Holders.

The Annual  Meeting of  Shareholders  of Florida  Progress was held on April 17,
1998.  There  were  97,044,941  shares of common  stock  entitled  to vote.  The
following matters were voted upon at the meeting:

1)          Election of Directors

            Class II - Terms expiring in 2001

                                                  Votes             Votes
                                                   For             Withheld

            W. D. ("Bill") Frederick, Jr.       81,152,984        1,979,702
            Frank C. Logan                      81,160,086        1,972,600
            Vincent J. Namoli                   80,654,489        2,478,197

2)          Shareholder proposal to require shareholder approval of annual
            salary increases for executive officers that are greater than 2% of
            their prior year's salary.

            For the proposal:                    9,629,447
            Against the proposal:               61,149,484
            Abstentions:                         1,765,569
            Broker non-votes:                   10,588,186

3)          Shareholder proposal to request that a special report on the
            Crystal River Nuclear plant be made available to all stockholders
            within six months of the 1998 stockholders' meeting.


            For the proposal:                    6,534,285
            Against the proposal:               59,280,200
            Abstentions:                         6,732,119
            Broker non-votes:                   10,586,082

                                 19
<PAGE>


Item 5.           Other.

Florida  Progress  has a  policy  not  to  comment  on  rumors  and  speculation
pertaining to strategic  transactions.  But in response to a reply that Scottish
Power made to its  exchange  authorities  on April 24,  1998,  Florida  Progress
confirmed  that the two  companies  did engage in  discussions  with regard to a
potential business combination. Those conversations were consistent with Florida
Progress'  stated intention to grow its market position within the evolving U.S.
utility market.  Both companies mutually agreed to terminate their conversations
during  the week of April 20,  1998.  Florida  Progress  does not intend to have
further comment on this matter.

Item 6.  Exhibits and Reports on Form 8-K.

     (a)  Exhibits:
                                                            Florida     Florida
        Number                         Exhibit              Progress     Power
        ------                         -------              --------    -------

          12      Statement Regarding Computation of Ratio       X
                  of Earnings to Fixed Charges for Florida
                  Power.

        27.(a)    Florida Progress Financial Data Schedule.      X

        27.(b)    Florida Power Financial Data Schedule.                   X

       X = Exhibit is filed for that respective company.

     (b)  Reports on Form 8-K:

               During the first quarter 1998, Florida Progress and Florida Power
               filed the following reports on Form 8-K:

                  Form 8-K dated January 13, 1998, reporting under Item 5 "Other
                  Events" an Investor News report to provide an update regarding
                  Florida Power's Crystal River 3 nuclear plant.

            Form 8-K dated January 26, 1998, reporting under Item 5 "Other 
            Events" a press release and related Investor News report regarding
            Florida Progress' and Florida Power's 1997 year-end earnings.

            Form 8-K dated  January  30,  1998,  reporting  under  Item 5 "Other
            Events" an  Investor  News  report to  provide  an update  regarding
            Florida Power's Crystal River Nuclear Plant.

            Form 8-K dated  February  9,  1998,  reporting  under  Item 5 "Other
            Events" an  Investor  News  report to  provide  an update  regarding
            Florida Power's Crystal River Nuclear Plant.

            Form 8-K dated  February  12,  1998,  reporting  under Item 5 "Other
            Events" an  Investor  News  report to  provide  an update  regarding
            Florida Power's Crystal River Nuclear Plant.

            Form 8-K dated  February  19,  1998,  reporting  under Item 5 "Other
            Events" an  Investor  News report  regarding  an increase in Florida
            Progress' annual dividend.

           In addition,  Florida  Progress and Florida Power filed the following
           report on Form 8-K subsequent to the first quarter 1998:

                  Form 8-K dated April 17, 1998,  reporting  under Item 5 "Other
                  Events"  the  first  quarter  1998  earnings,   and  Dr.  Jack
                  Critchfield's  retirement  as  Chairman  and the  election  of
                  Richard Korpan to succeed  Critchfield  as Chairman  effective
                  July 1, 1998.

                                 20

<PAGE>


                                   SIGNATURES

              Pursuant to the  requirements  of the  Securities  Exchange Act of
         1934,  each  registrant has duly caused this report to be signed on its
         behalf by the undersigned  thereunto duly authorized.  The signature of
         each of the  undersigned  on behalf  of each  listed  company  shall be
         deemed to relate only to matters having reference to such company.

                                             FLORIDA PROGRESS CORPORATION

                                             FLORIDA POWER CORPORATION


Date: May __, 1998                           /s/ John Scardino, Jr.
                                            -----------------------------
                                            John Scardino, Jr.
                                            Vice President and Controller



Date: May __, 1998                          /s/ Jeffrey R. Heinicka
                                           -----------------------------
                                           Jeffrey R. Heinicka
                                           Senior Vice President and
                                           Chief Financial Officer


                                 21


<PAGE>


                               Exhibit Index
                                                           Florida  Florida
Number               Exhibit                               Progress  Power
------               -------                               -------- -------


  12          Statement Regarding Computation of Ratio                 X
              of Earnings to Fixed Charges for Florida
              Power.

  27.(a)      Florida Progress Financial Data Schedule.       X

  27.(b)      Florida Power Financial Data Schedule.                   X

X = Exhibit is filed for that respective company.