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 Progress Energy Announces 2009 Third-Quarter Results; Reaffirms Full-Year 2009 Earnings GuidanceOctober 30, 2009 RALEIGH, N.C., Oct. 30 /PRNewswire-FirstCall/ -- Highlights: Third Quarter 2009
-- Reports third-quarter GAAP earnings of $0.88 per share, compared to
$1.18 per share for the same period last year, primarily driven lower by
a litigation verdict related to discontinued operations
-- Reports third-quarter ongoing earnings of $342 million, or $1.22 per
share, compared to $306 million, or $1.17 per share, for the same period
last year
Year-to-date 2009
-- Reports GAAP earnings for the first nine months of 2009 of $2.16 per
share, compared to $2.77 per share for the same period last year,
primarily driven lower by a litigation verdict related to discontinued
operations
-- Reports ongoing earnings for the first nine months of 2009 of $704
million, or $2.53 per share, compared to $653 million, or $2.50 per
share, for the same period last year
-- Reaffirms 2009 ongoing earnings guidance of $2.95 to $3.15 per share
Progress Energy (NYSE: PGN) announced third-quarter GAAP earnings of $247 million, or $0.88 per share, compared with GAAP earnings of $309 million, or $1.18 per share, for the same period last year. Current period results include a charge of $101 million, net of tax, or $0.36 per share, to discontinued operations related to a litigation verdict. Third-quarter ongoing earnings were $342 million, or $1.22 per share, compared to $306 million, or $1.17 per share, for the same period last year. The significant drivers in ongoing earnings per share were increased revenues for interim and limited base rate relief, favorable returns on nuclear and environmental investments and O&M cost management, partially offset by lower retail growth and usage and share dilution. (See the discussion later in this release for a reconciliation of ongoing earnings per share to GAAP earnings per share.) (Logo: http://www.newscom.com/cgi-bin/prnh/20020923/CHM008LOGO-c ) "We remain on track to achieve our financial goals for the year," said Bill Johnson, chairman, president and CEO. "Against the backdrop of the ongoing economic recession, our company performed well operationally and financially during the third quarter. Our focus on continuous business excellence, cost management and operational efficiency helped to offset lower energy sales in our utilities." Progress Energy reaffirms its 2009 ongoing earnings guidance range of $2.95 to $3.15 per share. The ongoing earnings guidance excludes the impact, if any, from discontinued operations, CVO mark-to-market adjustment, potential impairments and plant retirement charges. Progress Energy is not able to provide a corresponding GAAP equivalent for the 2009 earnings guidance due to the uncertain nature and amount of these adjustments. See pages 3-6 for detailed third-quarter and year-to-date earnings variance analyses for the Progress Energy Carolinas (PEC), Progress Energy Florida (PEF) and Corporate and Other Businesses segments. RECENT DEVELOPMENTS Financial and Regulatory
-- Florida Public Service Commission (FPSC) delayed the decision on PEF's
rate case revenue requirement and rate design until January 11 and
January 28, 2010, respectively.
-- Received approval from the FPSC for PEF's proposed 2010 cost recovery
for new nuclear plant construction at Levy County and nuclear uprate at
Crystal River Unit 3.
-- Filed petitions with the FPSC for proposed 2010 cost recovery in Florida
through the following clauses: fuel, capacity, environmental and energy
conservation.
-- Filed petition with the North Carolinas Utilities Commission (NCUC) to
decrease the fuel component of customer rates and adjust the components
of energy-efficiency programs and renewable energy resources, resulting
in a slight net reduction in customer bills, effective December 2009.
-- Requested the NCUC delay implementation of the statewide poultry power
requirement of Senate Bill 3 by one year to 2012 and cut the ultimate
requirement by a third to 300,000 megawatt-hours per year.
-- Recorded a charge of $101 million, net of tax, related to a litigation
verdict in a breach-of-contract lawsuit with U.S. Global related to
ownership interests in certain of our now discontinued synthetic fuels
facilities. The Company intends to file post-trial motions and is
evaluating grounds for appeal.
-- Awarded $36 million in a breach-of-contract lawsuit against global
engineering, consulting and construction firm Black & Veatch and 12 firm
partners. In the event PEF recovers damages, it is not expected to
impact net income, given anticipated regulatory and accounting
treatment.
State-of-the-Art Power Plants
-- Received approval from the NCUC to build a new, 950-megawatt (MW)
combined-cycle natural gas plant in Wayne County, N.C., to replace the
neighboring 397-MW coal-fired Lee Plant. The project represents a total
investment of approximately $900 million and will substantially reduce
overall emissions beginning in early 2013.
-- Received site certification approval from Florida's Siting Board,
comprised of the governor and Cabinet, to build two nuclear power plant
units in Levy County.
Alternative Energy and Energy Efficiency
-- Awarded $200 million matching Smart Grid grant from the Department of
Energy through the American Recovery and Reinvestment Act.
-- Placed online a 650-kilowatt solar array, owned and operated by Carolina
Solar Energy, near Roxboro, N.C., from which PEC will purchase the
electricity under a 20-year solar power contract.
-- Signed agreement with MP2 Capital to purchase the energy produced by a
new 2.3-MW solar photovoltaic array in Laurinburg, N.C.
-- Signed multiple contracts for solar power through our SunSense
Commercial PV program totaling approximately 1 MW of electricity, which
brings the total amount of solar-generated electricity scheduled to be
purchased by PEC to more than 9 MW.
-- Announced partnership with Ford and General Motors to participate in
early vehicle demonstrations and assess changes in the demand on the
electric grid from the use of plug-in electric vehicles as part of the
auto companies' $60 million grant from the American Recovery and
Reinvestment Act.
-- Joined Edison Electric Institute members in a pledge to accelerate
adoption of plug-in electric vehicles by aggressive action in five focus
areas: charging infrastructure, customer service, customer education,
incentives and conversion of utility fleets.
Awards, Honors and Recognitions
-- Named to the Dow Jones Sustainability North America Index for the fifth
year in a row as an industry leader in managing economic, environmental
and social issues.
-- Named one of the Top Utilities in Economic Development by Site Selection
magazine for the seventh time in the last eight years.
-- Received award from the Project Management Institute for contributions
by Progress Energy's Project Management Center of Excellence in
developing a method to evaluate and rank projects so that appropriate
resources, requirements and governance are applied.
-- Received GovernanceMetrics International's highest rating for
best-in-class corporate governance standards.
-- Named to Newsweek's List of Top 500 Green Companies in the U.S.
Press releases regarding various announcements are available on the company's Web site at www.progress-energy.com/aboutus/news. THIRD-QUARTER 2009 BUSINESS HIGHLIGHTS Below are the third-quarter and year-to-date 2009 earnings variance analyses for the company's segments. See the reconciliation tables on pages 6-7 and on pages S-1 and S-2 of the supplemental data for a reconciliation of ongoing earnings per share to GAAP earnings per share. Also see the attached supplemental data schedules for additional information on PEC and PEF electric revenues, energy sales, energy supply, weather impacts and other topics. QUARTER-OVER-QUARTER ONGOING EPS VARIANCE ANALYSIS Progress Energy Carolinas
-- Reported third-quarter ongoing earnings per share of $0.76, compared
with $0.78 for the same period last year; GAAP earnings per share of
$0.74, compared with $0.77 for the same period last year.
-- Reported primary quarter-over-quarter ongoing earnings per share
favorability of:
-- $0.06 O&M primarily due to targeted cost reductions, lower net
nuclear plant outage and maintenance costs and the impact of changes
to an environmental reserve
-- $0.01 other margin
-- $0.01 wholesale revenues
-- $0.01 depreciation and amortization
-- $0.01 interest expense
-- Reported primary quarter-over-quarter ongoing earnings per share
unfavorability of:
-- $(0.05) retail growth and usage
-- $(0.02) income taxes primarily due to impact of changes in tax
estimates
-- $(0.05) share dilution primarily due to Progress Energy's issuance
of 14.4 million shares of common stock in January 2009
-- 13,000 net increase in the average number of customers for the three
months ended September 30, 2009, compared to the same period in 2008
Progress Energy Florida
-- Reported third-quarter ongoing earnings per share of $0.60, compared
with $0.53 for the same period last year; GAAP earnings per share of
$0.63, compared with $0.55 for the same period last year.
-- Reported primary quarter-over-quarter ongoing earnings per share
favorability of:
-- $0.09 retail rates primarily due to impact of interim and limited
base rate relief
-- $0.08 other margin primarily due to the net impact of returns on
nuclear and environmental cost-recovery clause assets
-- $0.02 weather
-- $0.01 O&M
-- $0.01 interest expense
-- Reported primary quarter-over-quarter ongoing earnings per share
unfavorability of:
-- $(0.03) retail growth and usage
-- $(0.03) depreciation and amortization primarily due to impact of
depreciable asset base increases
-- $(0.02) AFUDC equity primarily due to placing the repowered Bartow
Plant in service in June 2009
-- $(0.01) other
-- $(0.01) income taxes
-- $(0.04) share dilution primarily due to Progress Energy's issuance
of 14.4 million shares of common stock in January 2009
-- 8,000 net decrease in the average number of customers for the three
months ended September 30, 2009, compared to the same period in 2008
Corporate and Other Businesses (includes primarily Holding Company Debt and Discontinued Operations)
-- Reported third-quarter ongoing after-tax expenses of $0.14 per share,
compared with after-tax expenses of $0.14 per share for the same period
last year; GAAP after-tax expenses of $0.49 per share, compared with
after-tax expenses of $0.14 per share for the same period last year.
-- Reported primary quarter-over-quarter ongoing after-tax expenses per
share favorability of:
-- $0.02 income taxes primarily due to impact of changes in tax
estimates
-- $0.01 share dilution
-- Reported primary quarter-over-quarter ongoing after-tax expenses per
share unfavorability of:
-- $(0.02) interest expense primarily due to higher average debt
outstanding at the Parent
-- $(0.01) other
YEAR-OVER-YEAR ONGOING EPS VARIANCE ANALYSIS Progress Energy Carolinas
-- Reported year-to-date ongoing earnings per share of $1.56, compared with
$1.65 for the same period last year; GAAP earnings per share of $1.54,
compared with $1.64 for the same period last year.
-- Reported primary year-over-year ongoing earnings per share favorability
of:
-- $0.06 depreciation and amortization primarily due to depreciation
associated with accelerated cost-recovery program for nuclear
generating assets and Clean Smokestacks Act amortization recognized
during 2008, partially offset by impact of depreciable asset base
increases
-- $0.05 weather
-- $0.03 O&M primarily due to targeted cost reductions and lower
emission allowance expense, partially offset by higher net plant
outage and maintenance costs
-- $0.02 AFUDC equity primarily due to increased eligible construction
project costs
-- $0.02 interest expense primarily due to lower interest rates on
variable rate debt, partially offset by higher average debt
outstanding
-- Reported primary year-over-year ongoing earnings per share
unfavorability of:
-- $(0.10) retail growth and usage, primarily in the industrial sector
-- $(0.03) other operating primarily due to prior-year gain on land
sales
-- $(0.02) other primarily due to losses on balanced billing program
and lower interest income
-- $(0.01) wholesale revenues
-- $(0.11) share dilution primarily due to Progress Energy's issuance
of 14.4 million shares of common stock in January 2009
-- 15,000 net increase in the average number of customers for the nine
months ended September 30, 2009, compared to the same period in 2008
Progress Energy Florida
-- Reported year-to-date ongoing earnings per share of $1.37, compared with
$1.26 for the same period last year; GAAP earnings per share of $1.38,
compared with $1.29 for the same period last year.
-- Reported primary year-over-year ongoing earnings per share favorability
of:
-- $0.15 other margin primarily due to the net impact of returns on
nuclear and environmental cost-recovery clause assets
-- $0.11 retail rates primarily due to impact of interim and limited
base rate relief
-- $0.06 weather
-- $0.06 AFUDC equity primarily due to increased eligible construction
project costs
-- $0.03 wholesale revenues primarily due to increased capacity charges
from new and amended contracts
-- $0.03 income taxes primarily due to deduction related to nuclear
decommissioning trust funds
-- $0.01 O&M
-- Reported primary year-over-year ongoing earnings per share
unfavorability of:
-- $(0.10) retail growth and usage
-- $(0.08) interest expense primarily due to higher average debt
outstanding
-- $(0.04) depreciation and amortization primarily due to impact of
depreciable asset base increases
-- $(0.03) other operating primarily due to regulatory disallowance of
fuel costs and prior-year gain on land sales
-- $(0.09) share dilution primarily due to Progress Energy's issuance
of 14.4 million shares of common stock in January 2009
-- 8,000 net decrease in the average number of customers for the nine
months ended September 30, 2009, compared to the same period in 2008
Corporate and Other Businesses (includes primarily Holding Company Debt and Discontinued Operations)
-- Reported year-to-date ongoing after-tax expenses of $0.40 per share,
compared with after-tax expenses of $0.41 per share for the same period
last year; GAAP after-tax expenses of $0.76 per share, compared with
after-tax expenses of $0.16 per share for the same period last year.
-- Reported primary year-over-year ongoing after-tax expenses per share
favorability of:
-- $0.01 other
-- $0.03 share dilution primarily due to Progress Energy's issuance of
14.4 million shares of common stock in January 2009
-- Reported primary year-over-year ongoing after-tax expenses per share
unfavorability of:
-- $(0.03) interest expense primarily due to higher average debt
outstanding at the Parent
ONGOING EARNINGS ADJUSTMENTS Progress Energy's management uses ongoing earnings per share to evaluate the operations of the company and to establish goals for management and employees. Management believes this presentation is appropriate and enables investors to more accurately compare the company's ongoing financial performance over the periods presented. Ongoing earnings as presented here may not be comparable to similarly titled measures used by other companies. The following table provides a reconciliation of ongoing earnings per share to reported GAAP earnings per share.
Progress Energy, Inc.
Reconciliation of Ongoing Earnings per Share to Reported GAAP
Earnings per Share
Three months ended Nine months ended
September 30 September 30
------------------ -----------------
2009 2008* 2009 2008*
---- ----- ---- -----
Ongoing earnings per share $1.22 $1.17 $2.53 $2.50
Tax levelization 0.02 0.01 (0.02) 0.03
Discontinued operations (0.36) - (0.37) 0.25
CVO mark-to-market 0.01 - 0.04 (0.01)
Impairment - - (0.01) -
Plant retirement charge (0.01) - (0.01) -
----- --- ----- ---
Reported GAAP earnings per
share $0.88 $1.18 $2.16 $2.77
===== ===== ===== =====
Shares outstanding (millions) 280 262 279 261
=== === === ===
* Previously reported 2008 earnings per share have been restated to
reflect the adoption of new accounting guidance that changed the
calculation of the number of average common shares outstanding.
Reconciling adjustments from ongoing earnings to GAAP earnings are as follows: Tax Levelization Generally accepted accounting principles require companies to apply an effective tax rate to interim periods that is consistent with a company's estimated annual tax rate. The company projects the effective tax rate for the year and then, based upon projected operating income for each quarter, raises or lowers the tax expense recorded in that quarter to reflect the projected tax rate. The resulting tax adjustment increased earnings per share by $0.02 for the quarter and increased earnings per share by $0.01 for the same period last year, but has no impact on the company's annual earnings. Because this adjustment varies by quarter but has no impact on annual earnings, management does not consider this adjustment to be representative of the company's ongoing earnings. Discontinued Operations The company has reduced its business risk by exiting nonregulated businesses to focus on the core operations of the utilities. The company recorded the impact of a verdict to pay damages in a breach-of-contract lawsuit related to ownership interests in certain of our synthetic fuels facilities that decreased earnings per share by $0.36 for the quarter. See page S-4 of the supplemental data for further information on the impact of discontinued operations. Due to disposition of these assets, management does not view this activity as representative of the ongoing operations of the company. Contingent Value Obligation (CVO) Mark-to-Market In connection with the acquisition of Florida Progress Corporation, Progress Energy issued 98.6 million CVOs. Each CVO represents the right of the holder to receive contingent payments based on net after-tax cash flows above certain levels of four synthetic fuels facilities purchased by subsidiaries of Florida Progress Corporation in October 1999. The CVO liability is valued at fair value, and unrealized gains and losses from changes in fair value are recognized in earnings each quarter. The CVO mark-to-market increased earnings per share by $0.01 for the quarter and had no impact on earnings for the same period last year. Progress Energy is unable to predict the changes in the fair value of the CVOs, and management does not consider this adjustment to be representative of the company's ongoing earnings. Impairment The company has recorded impairments of certain investments of its Affordable Housing portfolio. The impairments had no impact on earnings for the quarter or for the same period last year. Management does not consider this adjustment to be representative of the company's ongoing earnings. Plant Retirement Charge The company recognized a charge for the impact of PEC's decision to construct a new natural gas plant to replace certain coal-fired generating units, with resulting reduced emissions for compliance with the Clean Smokestacks Act's 2013 emission targets. The charge decreased earnings per share by $0.01 for the quarter. Since the coal-fired generating units will be retired prior to their estimated useful lives, management does not consider this charge to be representative of the company's ongoing earnings. Progress Energy's conference call with the investment community will be held October 30, 2009, at 10 a.m. ET (7 a.m. PT). Investors, media and the public may listen to the conference call by dialing 913-312-0731, confirmation code 9724260. If you encounter problems, please contact Investor Relations at (919) 546-6057. A playback of the call will be available from 1 p.m. ET October 30 through midnight November 13. To listen to the recorded call, dial 719-457-0820 and enter confirmation code 9724260. A webcast of the live conference call will be available at www.progress-energy.com/webcast. The webcast will be archived on the site for at least 30 days following the call for those unable to listen in real time. The webcast will include audio of the conference call and a slide presentation referred to by management during the call. The slide presentation will be available for download beginning at 10:30 a.m. ET today at www.progress-energy.com/webcast. Progress Energy (NYSE: PGN), headquartered in Raleigh, N.C., is a Fortune 500 energy company with more than 22,000 megawatts of generation capacity and $9 billion in annual revenues. Progress Energy includes two major electric utilities that serve approximately 3.1 million customers in the Carolinas and Florida. The company has earned the Edison Electric Institute's Edison Award, the industry's highest honor, in recognition of its operational excellence, and was the first utility to receive the prestigious J.D. Power and Associates Founder's Award for customer service. The company is pursuing a balanced strategy for a secure energy future, which includes aggressive energy-efficiency programs, investments in renewable energy technologies and a state-of-the-art electricity system. Progress Energy celebrated a century of service in 2008. Visit the company's Web site at www.progress-energy.com. Caution Regarding Forward-Looking Information: This release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The matters discussed in this document 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. 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 laws and regulations, including those relating to the environment and the Energy Policy Act of 2005; the ability to meet the anticipated future need for additional baseload generation and associated transmission facilities in our regulated service territories and the accompanying regulatory and financial risks; the financial resources and capital needed to comply with environmental laws and renewable energy portfolio standards and our ability to recover related eligible costs under cost-recovery clauses or base rates; our ability to meet current and future renewable energy requirements; the inherent risks associated with the operation and potential construction of nuclear facilities, including environmental, health, regulatory and financial risks; the impact on our facilities and businesses from a terrorist attack; weather and drought conditions that directly influence the production, delivery and demand for electricity; recurring seasonal fluctuations in demand for electricity; the ability to recover in a timely manner, if at all, costs associated with future significant weather events through the regulatory process; economic fluctuations and the corresponding impact on our customers, including downturns in the housing and consumer credit markets; fluctuations in the price of energy commodities and purchased power and our ability to recover such costs through the regulatory process; our ability to control costs, including O&M and large construction projects; the ability of our subsidiaries to pay upstream dividends or distributions to Progress Energy; the duration and severity of the recession; the ability to successfully access capital markets on favorable terms; the stability of commercial credit markets and our access to short- and long-term credit; the impact that increases in leverage may have on us; our ability to maintain our current credit ratings and the impact on our financial condition and ability to meet our cash and other financial obligations in the event our credit ratings are downgraded; our ability to fully utilize tax credits generated from the previous production and sale of qualifying synthetic fuels under Internal Revenue Code Section 29/45K; the investment performance of our nuclear decommissioning trust funds; the investment performance of the assets of our pension and benefit plans and resulting impact on future funding requirements; the impact of potential goodwill impairments; the outcome of any ongoing or future litigation or similar disputes and the impact of any such outcome or related settlements; and unanticipated changes in operating expenses and capital expenditures. Many of these risks similarly impact our nonreporting subsidiaries. These and other risk factors are detailed from time to time in our filings with the SEC. All such factors are difficult to predict, contain uncertainties that may materially affect actual results and may be beyond our control. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor can management assess the effect of each such factor on us. Any forward-looking statement is based on information current as of the date of this document and speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made.
PROGRESS ENERGY, INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
September 30, 2009
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS of INCOME
Three months ended Nine months ended
September 30, September 30,
------------------- ------------------
(in millions except per
share data) 2009 2008 2009 2008
----------------------- ---- ---- ---- ----
Operating revenues $2,824 $2,696 $7,578 $7,006
------------------ ------ ------ ------ ------
Operating expenses
Fuel used in electric
generation 1,075 869 2,855 2,262
Purchased power 125 450 599 1,012
Operation and maintenance 423 439 1,360 1,370
Depreciation, amortization
and accretion 371 205 877 619
Taxes other than on income 152 141 425 387
Other 2 1 14 (6)
----- --- --- --- ---
Total operating expenses 2,148 2,105 6,130 5,644
------------------------ ----- ----- ----- -----
Operating income 676 591 1,448 1,362
---------------- --- --- ----- -----
Other income (expense)
Interest income 2 8 8 20
Allowance for equity funds
used during construction 20 34 95 84
Other, net 1 (7) 13 (9)
---------- --- --- --- ---
Total other income, net 23 35 116 95
----------------------- --- --- --- ---
Interest charges
Interest charges 174 178 534 493
Allowance for borrowed funds
used during construction (6) (11) (30) (27)
---------------------------- --- --- --- ---
Total interest charges, net 168 167 504 466
--------------------------- --- --- --- ---
Income from continuing operations
before income tax 531 459 1,060 991
Income tax expense 181 150 352 329
------------------ --- --- --- ---
Income from continuing operations 350 309 708 662
Discontinued operations, net
of tax (102) 1 (103) 67
---------------------------- ---- --- ---- ---
Net income 248 310 605 729
Net income attributable to
noncontrolling interests, net
of tax (1) (1) (2) (6)
------------------------------ --- --- --- ---
Net income attributable to
controlling interests $247 $309 $603 $723
========================== ==== ==== ==== ====
Average common shares
outstanding - basic 280 262 279 261
--------------------- --- --- --- ---
Basic and diluted earnings per
common share
Income from continuing
operations attributable to
controlling interests, net
of tax $1.24 $1.18 $2.53 $2.52
Discontinued operations
attributable to controlling
interests, net of tax (0.36) - (0.37) 0.25
---------------------------- ----- --- ----- ----
Net income attributable to
controlling interests $0.88 $1.18 $2.16 $2.77
========================== ===== ===== ===== =====
Dividends declared per common
share $0.620 $0.615 $1.860 $1.845
----------------------------- ------ ------ ------ ------
Amounts attributable to
controlling interests
Income from continuing
operations attributable to
controlling interests, net
of tax $349 $308 $706 $657
Discontinued operations
attributable to controlling
interests, net of tax (102) 1 (103) 66
---------------------------- ---- --- ---- ---
Net income attributable to
controlling interests $247 $309 $603 $723
========================== ==== ==== ==== ====
The Unaudited Condensed Consolidated Interim Financial Statements should
be read in conjunction with the Company's Annual Report to shareholders.
These statements have been prepared for the purpose of providing
information concerning the Company and not in connection with any sale,
offer for sale, or solicitation of an offer to buy any securities.
PROGRESS ENERGY, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
-----------------------------------------------
(in millions) September 30, December 31,
2009 2008
------------ ------------- ------------
ASSETS
Utility plant
Utility plant in service $28,041 $26,326
Accumulated depreciation (11,539) (11,298)
------------------------ ------- -------
Utility plant in service, net 16,502 15,028
Held for future use 38 38
Construction work in progress 2,392 2,745
Nuclear fuel, net of amortization 502 482
--------------------------------- --- ---
Total utility plant, net 19,434 18,293
------------------------ ------ ------
Current assets
Cash and cash equivalents 155 180
Receivables, net 939 867
Inventory 1,352 1,239
Regulatory assets 180 533
Derivative collateral posted 185 353
Income taxes receivable 8 194
Prepayments and other current assets 230 154
------------------------------------ --- ---
Total current assets 3,049 3,520
-------------------- ----- -----
Deferred debits and other assets
Regulatory assets 2,463 2,567
Nuclear decommissioning trust funds 1,300 1,089
Miscellaneous other property and investments 446 446
Goodwill 3,655 3,655
Other assets and deferred debits 311 303
-------------------------------- --- ---
Total deferred debits and other assets 8,175 8,060
-------------------------------------- ----- -----
Total assets $30,658 $29,873
============ ======= =======
Capitalization and Liabilities
Common stock equity
Common stock without par value, 500 million
shares authorized, 279 million and 264
million shares issued and outstanding,
respectively $6,797 $6,206
Unearned ESOP shares (1 million shares) (12) (25)
Accumulated other comprehensive loss (99) (116)
Retained earnings 2,695 2,622
----------------- ----- -----
Total common stock equity 9,381 8,687
------------------------- ----- -----
Noncontrolling interests 6 6
------------------------ --- ---
Total equity 9,387 8,693
------------ ----- -----
Preferred stock of subsidiaries 93 93
Long-term debt, affiliate 272 272
Long-term debt, net 10,834 10,387
------------------- ------ ------
Total capitalization 20,586 19,445
-------------------- ------ ------
Current liabilities
Current portion of long-term debt 400 -
Short-term debt 250 1,050
Accounts payable 771 912
Interest accrued 151 167
Dividends declared 174 164
Customer deposits 294 282
Derivative liabilities 246 493
Other current liabilities 474 418
------------------------- --- ---
Total current liabilities 2,760 3,486
------------------------- ----- -----
Deferred credits and other liabilities
Noncurrent income tax liabilities 1,065 818
Accumulated deferred investment tax credits 119 127
Regulatory liabilities 2,420 2,181
Asset retirement obligations 1,540 1,471
Accrued pension and other benefits 1,393 1,594
Capital lease obligations 222 231
Derivative liabilities 207 269
Other liabilities and deferred credits 346 251
-------------------------------------- --- ---
Total deferred credits and other liabilities 7,312 6,942
-------------------------------------------- ----- -----
Commitments and contingencies
-----------------------------
Total capitalization and liabilities $30,658 $29,873
==================================== ======= =======
PROGRESS ENERGY, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS of CASH FLOWS
---------------------------------------------------------
(in millions)
Nine months ended September 30 2009 2008
------------------------------ ---- ----
Operating activities
Net income $605 $729
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation, amortization and accretion 991 703
Deferred income taxes and investment tax credits, net 50 270
Deferred fuel cost (credit) 81 (330)
Allowance for equity funds used during construction (95) (84)
Loss (gain) on sales of assets 1 (71)
Litigation expense 115 -
Other adjustments to net income 186 94
Cash (used) provided by changes in operating assets
and liabilities
Receivables (99) 150
Inventory (118) (124)
Derivative collateral posted 155 (6)
Prepayments and other current assets 9 32
Income taxes, net 190 (92)
Accounts payable (91) 181
Other current liabilities 25 (24)
Other assets and deferred debits 51 (62)
Other liabilities and deferred credits (286) (7)
-------------------------------------- ---- ---
Net cash provided by operating activities 1,770 1,359
----------------------------------------- ----- -----
Investing activities
Gross property additions (1,644) (1,760)
Nuclear fuel additions (148) (158)
Proceeds from sales of discontinued operations and
other assets, net of cash divested - 63
Purchases of available-for-sale securities and other
investments (1,271) (1,190)
Proceeds from available-for-sale securities and other
investments 1,245 1,154
Other investing activities (5) (3)
-------------------------- --- ---
Net cash used by investing activities (1,823) (1,894)
------------------------------------- ------ ------
Financing activities
Issuance of common stock 557 106
Dividends paid on common stock (520) (481)
Payments of short-term debt with original maturities
greater than 90 days (29) (176)
Net (decrease) increase in short-term debt (871) 470
Proceeds from issuance of long-term debt, net 1,337 1,797
Retirement of long-term debt (400) (877)
Cash distributions to noncontrolling interests (5) (85)
Other financing activities (41) (71)
-------------------------- --- ---
Net cash provided by financing activities 28 683
----------------------------------------- --- ---
Net (decrease) increase in cash and cash equivalents (25) 148
Cash and cash equivalents at beginning of period 180 255
------------------------------------------------ --- ---
Cash and cash equivalents at end of period $155 $403
========================================== ==== ====
Progress Energy, Inc.
SUPPLEMENTAL DATA - Page S-1
Unaudited
Earnings Variances
Third Quarter 2009 vs. 2008
Regulated Utilities
-------------------
Corporate and
Other
($ per share) Carolinas Florida Businesses Consolidated
--------- ------- -------------- ------------
2008 GAAP earnings 0.77 0.55 (0.14) 1.18 A
Tax levelization 0.01 (0.02) (0.01) B
---- ----- ----- -----
2008 ongoing earnings 0.78 0.53 (0.14) 1.17
---- ---- ----- ----
Weather - retail 0.02 0.02
Growth and usage -
retail (0.05) (0.03) (0.08)
Retail rates 0.09 0.09 C
Other margin 0.01 0.08 0.09 D
Wholesale 0.01 0.01
O&M 0.06 0.01 0.07 E
Other (0.01) (0.01) (0.02)
AFUDC equity (0.02) (0.02) F
Depreciation and
amortization 0.01 (0.03) (0.02) G
Interest expense 0.01 0.01 (0.02) - H
Income taxes (0.02) (0.01) 0.02 (0.01) I
Share dilution (0.05) (0.04) 0.01 (0.08) J
---- ---- ---- ----
2009 ongoing earnings 0.76 0.60 (0.14) 1.22
---- ---- ----- ----
Tax levelization (0.01) 0.03 0.02 B
Discontinued operations (0.36) (0.36) K
CVO mark-to-market 0.01 0.01 L
Plant retirement charge (0.01) (0.01) M
----- ---- ----- -----
2009 GAAP earnings 0.74 0.63 (0.49) 0.88
---- ---- ----- ----
Corporate and Other Businesses includes small subsidiaries, Holding
Company interest expense, discontinued operations, CVO mark-to-market,
tax levelization, purchase accounting transactions and corporate
eliminations.
In this analysis, individual variances are presented net of the effect
of pass-through items and other offsets.
A - GAAP earnings for 2008 is $0.01 less than previously reported due
to adoption of new accounting guidance that changed the calculation
of the number of average common shares outstanding.
B - Tax levelization impact, related to cyclical nature of energy
demand/earnings and various permanent items of income or deduction.
C - Florida - Favorable primarily due to impact of interim and limited
base rate relief.
D - Florida - Favorable primarily due to the net impact of returns on
nuclear and environmental cost-recovery clause assets.
E - Carolinas - Favorable primarily due to targeted cost reductions,
lower net nuclear plant outage and maintenance costs and the impact
of changes to an environmental reserve.
F - AFUDC equity is presented gross of tax as it is excluded from the
calculation of income tax expense.
Florida - Unfavorable primarily due to placing the repowered Bartow
Plant in service in June 2009.
G - Florida - Unfavorable primarily due to impact of depreciable asset
base increases.
H - Corporate and Other - Unfavorable primarily due to higher average
debt outstanding at the Parent.
I - Carolinas - Unfavorable primarily due to impact of changes in tax
estimates.
Corporate and Other - Favorable primarily due to impact of changes
in tax estimates.
J - Primarily due to Progress Energy's issuance of 14.4 million shares
of common stock in January 2009.
K - Discontinued operations consists of Terminals operations and
Synthetic Fuels businesses.
L - Corporate and Other - Impact of change in fair value of outstanding
CVOs.
M - Carolinas - Impact of decision to retire in-service generating
units prior to the end of their estimated useful life.
Progress Energy, Inc.
SUPPLEMENTAL DATA - Page S-2
Unaudited
Earnings Variances
Year-to-Date September 30, 2009 vs. 2008
Regulated Utilities
-------------------
Corporate and
Other
($ per share) Carolinas Florida Businesses Consolidated
--------- ------- -------------- ------------
2008 GAAP earnings 1.64 1.29 (0.16) 2.77 A
Tax levelization 0.01 (0.03) (0.01) (0.03) B
Discontinued operations (0.25) (0.25) C
CVO mark-to-market 0.01 0.01 D
---- ---- ---- ----
2008 ongoing earnings 1.65 1.26 (0.41) 2.50 A
---- ---- ----- ----
Weather - retail 0.05 0.06 0.11
Growth and usage -
retail (0.10) (0.10) (0.20)
Retail rates 0.11 0.11 E
Other margin 0.15 0.15 F
Wholesale (0.01) 0.03 0.02 G
O&M 0.03 0.01 0.04 H
Other operating (0.03) (0.03) (0.06) I
Other (0.02) 0.01 (0.01) J
AFUDC equity 0.02 0.06 0.08 K
Depreciation and
amortization 0.06 (0.04) 0.02 L
Interest expense 0.02 (0.08) (0.03) (0.09) M
Income taxes 0.03 0.03 N
Share dilution (0.11) (0.09) 0.03 (0.17) O
---- ---- ----- ----
2009 ongoing earnings 1.56 1.37 (0.40) 2.53
---- ---- ----- ----
Tax levelization (0.01) 0.01 (0.02) (0.02) B
Discontinued operations (0.37) (0.37) C
CVO mark-to-market 0.04 0.04 D
Impairment (0.01) (0.01) P
Plant retirement charge (0.01) (0.01) Q
----- ---- ----- -----
2009 GAAP earnings 1.54 1.38 (0.76) 2.16
---- ---- ----- ----
Corporate and Other Businesses includes small subsidiaries, Holding
Company interest expense, discontinued operations, CVO mark-to-market,
tax levelization, purchase accounting transactions and corporate
eliminations.
In this analysis, individual variances are presented net of the effect
of pass-through items and other offsets.
A - GAAP and ongoing earnings for 2008 are $0.01 less than previously
reported due to adoption of new accounting guidance that changed
the calculation of the number of average common shares outstanding.
B - Tax levelization impact, related to cyclical nature of energy
demand/earnings and various permanent items of income or deduction.
C - Discontinued operations consists primarily of 1) Terminals
operations and Synthetic Fuels businesses 2) CCO operations and
3) Coal Mining businesses.
D - Corporate and Other - Impact of change in fair value of outstanding
CVOs.
E - Florida - Favorable primarily due to impact of interim and limited
base rate relief.
F - Florida - Favorable primarily due to the net impact of returns on
nuclear and environmental cost-recovery clause assets.
G - Florida - Favorable primarily due to increased capacity charges
from new and amended contracts.
H - Carolinas - Favorable primarily due to targeted cost reductions and
lower emission allowance expense, partially offset by higher net
plant outage and maintenance costs.
I - Carolinas - Unfavorable primarily due to prior-year gain on land
sales.
Florida - Unfavorable primarily due to regulatory disallowance of
fuel costs and prior-year gain on land sales.
J - Carolinas - Unfavorable primarily due to losses on balanced billing
program and lower interest income.
K - AFUDC equity is presented gross of tax as it is excluded from the
calculation of income tax expense.
Carolinas - Favorable primarily due to increased eligible
construction project costs.
Florida - Favorable primarily due to increased eligible
construction project costs.
L - Carolinas - Favorable primarily due to depreciation associated
with accelerated cost-recovery program for nuclear generating
assets and Clean Smokestacks Act amortization recognized during
2008, partially offset by impact of depreciable asset base
increases. The North Carolina jurisdictional aggregate minimum
amount of accelerated cost recovery has been met and the South
Carolina jurisdictional obligation was terminated by the SCPSC.
PEC has ceased recording Clean Smokestacks Act amortization in
accordance with a regulatory order.
Florida - Unfavorable primarily due to impact of depreciable asset
base increases.
M - Carolinas - Favorable primarily due to lower interest rates on
variable rate debt, partially offset by higher average debt
outstanding.
Florida - Unfavorable primarily due to higher average debt
outstanding.
Corporate and Other - Unfavorable primarily due to higher average
debt outstanding at the Parent.
N - Florida - Favorable primarily due to deduction related to nuclear
decommissioning trust funds.
O - Primarily due to Progress Energy's issuance of 14.4 million shares
of common stock in January 2009.
P - Corporate and Other - Impairment of Affordable Housing portfolio
investments.
Q - Carolinas - Impact of decision to retire in-service generating
units prior to the end of their estimated useful life.
Progress Energy, Inc.
SUPPLEMENTAL DATA - Page S-3
Unaudited - Data is not weather-adjusted
Utility Statistics
Percentage
Three Months Ended Three Months Ended Change From
Sept. 30, 2009 Sept. 30, 2008 Sept. 30, 2008
---------------------- ---------------------- --------------
Operating Total Total
Revenues Caro- Progress Caro- Progress Caro-
(in linas Florida Energy linas Florida Energy linas Florida
millions) ----- ------- -------- ----- ------- -------- ----- -------
Residential $525 $806 $1,331 $495 $723 $1,218 6.1% 11.5%
Commercial 348 371 719 331 328 659 5.1 13.1
Industrial 197 85 282 200 82 282 (1.5) 3.7
Governmental 33 92 125 32 80 112 3.1 15.0
Unbilled (11) (2) (13) (16) (6) (22) - -
-------- --- -- --- --- -- --- --- ---
Total
Retail 1,092 1,352 2,444 1,042 1,207 2,249 4.8 12.0
Wholesale 186 115 301 196 175 371 (5.1) (34.3)
Miscellaneous
revenue 29 49 78 28 46 74 3.6 6.5
------------- -- -- -- -- -- -- --- ---
Total
Electric $1,307 $1,516 $2,823 $1,266 $1,428 $2,694 3.2% 6.2%
--------- ------ ------ ------ ------ ------ ------ --- ---
Energy Sales (millions of kWh)
Residential 4,824 5,905 10,729 4,929 6,093 11,022 (2.1)% (3.1)%
Commercial 3,923 3,405 7,328 4,079 3,523 7,602 (3.8) (3.3)
Industrial 2,789 863 3,652 2,879 981 3,860 (3.1) (12.0)
Governmental 437 872 1,309 437 901 1,338 - (3.2)
Unbilled (397) 52 (345) (250) (204) (454) - -
-------- ---- --- ---- ---- ---- ---- --- ---
Total
Retail 11,576 11,097 22,673 12,074 11,294 23,368 (4.1) (1.7)
Wholesale 3,607 1,096 4,703 3,746 1,944 5,690 (3.7) (43.6)
--------- ----- ----- ----- ----- ----- ----- ---- -----
Total
Electric 15,183 12,193 27,376 15,820 13,238 29,058 (4.0)% (7.9)%
-------- ------ ------ ------ ------ ------ ------ ---- ----
Energy Supply (millions of kWh)
Generated
Steam 6,869 3,467 10,336 7,394 4,906 12,300
Nuclear 6,289 1,587 7,876 6,258 1,653 7,911
Combustion
turbines/
combined
cycle 1,588 5,843 7,431 1,074 4,527 5,601
Hydro 93 - 93 52 - 52
Purchased 1,040 2,184 3,224 1,726 2,952 4,678
---------- ----- ----- ----- ----- ----- -----
Total
Energy
Supply
(Company
Share) 15,879 13,081 28,960 16,504 14,038 30,542
-------- ------ ------ ------ ------ ------ ------
Impact of Weather to Normal on Retail Sales
Heating Degree Days
Actual 8 - 9 - (11.1)% -%
Normal 16 - 16 -
Cooling Degree Days
Actual 1,092 1,402 1,090 1,348 0.2% 4.0%
Normal 1,087 1,389 1,095 1,389
Impact of retail
weather to
normal on
EPS $0.00 $0.00 $0.00 $0.00 ($0.01) ($0.01)
----------- ----- ----- ----- ----- ------ ------
Percentage
Nine Months Ended Nine Months Ended Change From
Sept. 30, 2009 Sept. 30, 2008 Sept. 30, 2008
---------------------- ---------------------- --------------
Operating Total Total
Revenues Caro- Progress Caro- Progress Caro-
(in linas Florida Energy linas Florida Energy linas Florida
millions) ----- ------- -------- ----- ------- -------- ----- -------
Residential $1,404 $2,023 $3,427 $1,256 $1,739 $2,995 11.8% 16.3%
Commercial 926 990 1,916 862 852 1,714 7.4 16.2
Industrial 533 248 781 555 230 785 (4.0) 7.8
Governmental 85 258 343 78 217 295 9.0 18.9
Unbilled (18) 28 10 (10) 20 10 - -
-------- --- -- -- --- -- -- --- ---
Total
Retail 2,930 3,547 6,477 2,741 3,058 5,799 6.9 16.0
Wholesale 544 327 871 566 427 993 (3.9) (23.4)
Miscellaneous
revenue 87 138 225 74 133 207 17.6 3.8
------------- -- --- --- -- --- --- ---- ---
Total
Electric $3,561 $4,012 $7,573 $3,381 $3,618 $6,999 5.3% 10.9%
--------- ------ ------ ------ ------ ------ ------ --- ----
Energy Sales (millions of kWh)
Residential 13,553 14,700 28,253 13,192 14,854 28,046 2.7% (1.0)%
Commercial 10,528 8,907 19,435 10,741 9,252 19,993 (2.0) (3.7)
Industrial 7,771 2,486 10,257 8,773 2,855 11,628 (11.4) (12.9)
Governmental 1,137 2,409 3,546 1,105 2,468 3,573 2.9 (2.4)
Unbilled (227) 740 513 (246) 492 246 - -
-------- ---- --- --- ---- --- --- --- ---
Total
Retail 32,762 29,242 62,004 33,565 29,921 63,486 (2.4) (2.3)
Wholesale 10,542 3,108 13,650 10,959 5,484 16,443 (3.8) (43.3)
--------- ------ ----- ------ ------ ----- ------ ---- -----
Total
Electric 43,304 32,350 75,654 44,524 35,405 79,929 (2.7)% (8.6)%
--------- ------ ------ ------ ------ ------ ------ ---- ----
Energy Supply (millions of kWh)
Generated
Steam 20,791 9,789 30,580 21,975 14,775 36,750
Nuclear 17,857 4,945 22,802 18,675 4,685 23,360
Combustion
turbines/
combined
cycle 2,985 12,912 15,897 2,026 10,095 12,121
Hydro 482 - 482 339 - 339
Purchased 2,952 6,822 9,774 3,359 7,853 11,212
---------- ----- ----- ----- ----- ----- ------
Total Energy
Supply
(Company
Share) 45,067 34,468 79,535 46,374 37,408 83,782
------------ ------ ------ ------ ------ ------ ------
Impact of Weather to Normal on Retail Sales
Heating Degree Days
Actual 1,851 391 1,765 286 4.9% 36.7%
Normal 1,899 385 1,896 386
Cooling Degree Days
Actual 1,756 2,588 1,670 2,533 5.1% 2.2%
Normal 1,630 2,526 1,645 2,526
Impact of retail
weather to
normal on
EPS $0.03 $0.02 $0.05 ($0.02) ($0.03) ($0.05)
----------- ----- ----- ----- ------ ------ ------
Progress Energy, Inc.
SUPPLEMENTAL DATA - Page S-4
Unaudited
Adjusted O&M Reconciliation (A)
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